ance of all outstanding credits which may be presented in the course of settlement, there will probably be a final balance of nearly or quite two millions. It is very important that this business should be completed with as much expedition as the current transactions and the clerical force at my disposal will permit. I have, therefore, added one more clerk to the two hitherto comprising the bookkeeper's division. Besides this work, there has been opened in this division a defaulters' ledger, for all amounts where persons are out of the service and no representatives can be found. Also an appropriation ledger has been opened, by means of which the state and amount of any appropriation can be ascertained at a glance. New and increased care, as well as improved methods, have been applied to the books, and they were never at any former period in so neat, accurate, and accessible condition as now.

The tabular statement of the navy agent's division shows that the large number of six hundred and sixty-three accounts were settled during the last fiscal year, involving an amount of more than thirteen millions of dollars. The number of accounts settled by this division during the last fiscal year is vastly larger than during the previous twelve months. This arises from the fact that more than six hundred of them are those personal accounts to which I have already called attention, a large number of which can be dispatched in less time than one regular navy agent's account. The amount of labor, accuracy, accountant skill, and other indispensable clerical qualities which are required for the proper adjustment of these last, can only be known by those who are acquainted with them, or who have made a special examination of the matter. The amount of work performed by the navy agent's division was quite as large last year as this, and yet an inspection of the tabular statements of the two years would lead a person who was ignorant of the circumstances in the case to suppose otherwise. What is true of this division is also true of others, and shows that tabular statements, necessary as they are, and however carefully prepared, are not a correct index of the amount of work performed or demanded, unless accompanied by explanatory details, which cannot always be given without the employment of too much space. In the navy agent's division the current work was brought up to date at the close of the fiscal year, and the immense accumulations occasioned by the rebellion were finally wiped away. Hereafter current work will receive prompt attention, though to close up the personal accounts would alone be sufficient to employ this division for a long time.

The general claim division has been assiduously employed in its complex and responsible duties. The peculiar character of many of the claims which are there adjusted I specified in my report of last year. There is no division where so many letters involving nice and important legal points require preparation. This portion of the correspondence, the execution of which would be impracticable without much legal knowledge and careful research, has been most satisfactorily performed. The number of clerks employed in this division is nearly one-third less than during the previous year.

The pension and marine division, owing to the reduction of the force of the office, has been merged in the paymaster's and general claim divisions. The clerk, however, who has hitherto been its chief, continues to be employed upon the work, and to transact it in the same capable manner with which he has for years conducted it.

A ninth division might, perhaps, be added to those enumerated, although the duties are performed by one clerk, Mr. B. P. Davis, who has attended to the disbursements of the office, the monthly repor

attendance and absences, the various statements requested from time to time by the department, the making out of the current requisitions, the charge of the stationery, and a variety of other miscellaneous and im portant work, uniformly performed with promptitude and ability.

The files of the office, which are very voluminous and of great importance, have been moved no less than four times during the last six years, owing to the exigencies and necessary changes in the occupancy of the treasury building. Every transfer of these files delays and deranges business, is inevitably productive of damage to a greater or less degree, and is attended with liability to actual loss. They are at this time in a process of arrangement in new quarters, and it is to be hoped that when they are once more placed in excellent and commodious order they will be able to remain permanently in that condition. It has been my aim to have the files arranged in so convenient a manner as to make them readily accessible and as convenient for research and consultation as the books of a well-kept library.

There is one important matter connected with the office to which I beg leave to call your particular attention. This is the inadequacy of the bonds which are now required of paymasters of the navy. Acting assistant paymasters now give bonds in the sum of five thousand dollars, assistant paymasters in the sum of ten thousand dollars, passed assistant paymasters in the sum of fifteen thousand dollars, and paymasters in the sum of twenty-five thousand dollars. These sums are insufficient to guard the government from loss. These officers are not unfrequently intrusted with moneys to an amount twenty times that of their bonds, and their expenditures often reach hundreds of thousands of dollars in the course of twelve months, and during the war in many cases even to millions. The accounts of many paymasters have now reached the pe riod of final settlement, which, from the nature of their orders and posi tion, could not be had heretofore. It is found in many cases that there is an indebtedness to the government in sums varying from several thousand to fifty thousand dollars, and the bondsmen to the parties in question are only liable in sums ranging from five to twenty-five thousand dollars. I would recommend that Congress remedy this evil and protect the government by passing an act requiring a bond of paymas. ters of the various ranks adequate to the necessities of the case. sum should be a large one. From fifty to one hundred thousand dollars would not be too great. The history of the accounts now in process of settlement in this office are fully corroborative of this view. In this connection, however, I am pleased to pay a just tribute of praise to the paymasters of the navy as a class, and to testify to their ability and integrity, their courtesy as gentlemen, and their efficiency as officers. Nevertheless, the evils exist of which I speak, and I have deemed it my duty to call your attention to them. As a concluding illustration of the amounts placed in the hands of paymasters, I would say that during the last three years 2,832 requisitions have passed this office each for $50,000 and less, 208 requisitions for sums between $50,000 and $75,000, 117 requisitions for sums between $75,000 and $100,000, and 150 requisi tions for sums more than $100,000.

The

With the highest esteem, I have the honor to be, very respectfully, your obedient servant,

Hon. GEORGE S. BOUTWELL,

STEPHEN J. W. TABOR, Auditor.

Secretary of the Treasury.

REPORT OF THE FIFTH AUDITOR OF THE TREASURY.

TREASURY DEPARTMENT,

Fifth Auditor's Office, October 18, 1869. SIR: I have the honor to herewith submit to you the annual report of this office for the fiscal year ending June 30, 1869.

The tabular statement of expenses of assessing the internal revenue, for the fiscal year ending 30th June, 1869, is necessarily omitted in consequence of the delay in the adjustment of the accounts of the disbursing officers. This delay was caused, in part, by the numerous changes of revenue officers, which largely increased the number of accounts to be kept, and which otherwise added to the labor of examination and adjustment; in part, by the accounts not reaching the office until after the usual time, and in part by the decrease of the clerical force of the office, made necessary by the limit of the appropriation for the current year. The omission will be supplied by a supplementary statement, which will be prepared before the meeting of Congress.

The amount of fees received by salaried consuls compared with former years is very satisfactory, and shows a considerable margin in favor of the treasury. I am led to the conviction that the salaries now paid to many of our consuls are not adequate, and that the surplus, or part of the surplus, of fees collected at certain consulates might, with benefit to the government, be added to certain salaries. The representatives of this government ought to be placed on an equal footing with those of any other power in the world. The absence of sufficient recompense, in some instances at least, leads to abuses, which are alike discreditable to the incumbent and his country.

In the matter of accounts for the relief of seamen, flagrant abuses exist, many of which can only be detected and corrected by personal visits to consular offices, and inspection and investigation by those familiar with the service and the mode of making up these accounts and vouchers.

Considerable embarrassment exists from the delay in the transmission of some of the accounts of consuls to this bureau, and to the Department of State. If this evil could be remedied, much labor here, in the matter of the examination and payment of drafts, and in other particulars, would be saved.

At the breaking out of the rebellion, in 1861, quite an amount was due to the government from ministers, consuls, and commercial agents abroad, as appears from our books, summing up, in the aggregate, one hundred thousand dollars, ($100,000 00.) Since then the amount due from ministers, consuls, and agents has increased, and stands at the present time at one hundred and seven thousand seven hundred and sixty-six dollars and ninty-nine cents, ($107,766 99.) I am calling upon such debtors to the government, and their bondsmen, for a settlement of these apparent balances. In case of failure to receive evidence of payment into the treasury, I shall put statements of the accounts in the hands of the proper officer of the department, for further and final action.

Upon the appointment of a new revenue collector, under the law, as it now stands, the uncollected tax lists are delivered to the incoming collector, but he is not charged with them, or held responsible by the government for them. The outgoing collector has already been charged with them, and the government continues to hold him and his bondsmen for the amount, until voluntarily accounted for by the new collector. Millions of dollars are annually involved in this condition. The system

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is wrong in principle, and works badly in every way. The new collector, having large lists in his possession with which he is not charged, can, if he chooses, in the first months of his administration, deposit enough to keep the United States in debt to him, as far as the books show, and still retain large sums in his possession. Not being held accountable for these old lists, he has not sufficient motive to pay over promptly, or for collecting the scattered and difficult portions, or having the worthless items abated and closed out. Large amounts stand charged to the ex-collector long after they should have been accounted for. The injustice of holding the ex-collector and his sureties responsible for tax lists delivered by him to his successor, and over which he has no control, or authority whatever, must be apparent. Each retiring collector appears to be largely in debt to the United States. On the 15th of December, 1868, the amount thus standing against ex-collectors was ten million five hundred and forty thousand seven hundred and fifty-five dollars and seventy-eight cents, ($10,540,755 78.) At the present time it, beyond question, exceeds this. The accounting officers cannot determine how much of this indebtedness is real, and how much nominal, until these old lists are closed, and voluntarily accounted for by each successor, which is usually years after, and sometimes never. If the indebtedness is real, it gives the retiring collector and his bondsmen plenty of time to dispose of their property, if so inclined, before the United States officers can proceed against them. Besides, the bondsmen may be released by laches. Any amount found due the retiring collector for compensation or expenses, is necessarily withheld until the tax lists charged against him are accounted for, and where the indebtedness proves to have been only nominal, the withholding of the pay for years is unjust. These evils can be remedied by a provision in the law to the following effect: "When a collector has been appointed and qualified, all the lists of uncollected taxes of the district shall be delivered and charged to him. His receipt for said lists shall be sufficient to authorize the accounting officers of the treasury to carry the amount to the credit of the ex-collector from whom received, but such credit shall not discharge said ex-collector, or his sureties, from any liability incurred before or at the delivery of said tax lists." The language of such a provision should be such as to hold the retiring collector and his sureties responsible for any loss that may accrue, by his failure to collect at the proper time, or perform his duty in any manner, before he delivers the lists, and for any sums that may have been collected and not credited, notwithstanding the credit for the transfer. This transfer releases him and his sureties from any accountability for what may happen to the lists after their delivery to his successor. The present law is inoperative, for the reason that the Commissioner cannot make the certificate required.

Accounts for refunding taxes are stated in this office, but, by law, the Auditor's authority is limited to carrying out the decisions of the Commissioner of Internal Revenue, and the Commissioner's more important duties forbid his giving personal attention to each claim. The amount refunded for the year ending June 30, 1868, was one million eighteen thousand three hundred and thirty-four dollars and eighty-one cents, ($1,018,334 81,) and for the year ending June 30, 1869, three hundred and fifty-three thousand seven hundred and seventy-two dollars and fiftythree cents ($353,772 53.) This reduction is caused, largely, by the amount of claims not yet passed upon by the Commissioner. The contradictory decisions of different Commissioners open a wide field for these claims, which is being occupied by agents, who are stirring them up in all sec

A portion of the claims paid within the past two years, for instance, are for tax on beer now claimed to have been manufactured before September 1, 1862. The distance of time and the imperfect investigation, which investigation is mainly an examination of ex parte statements, render it difficult to reach the merits. A law limiting the time for presenting a claim to one or two years would largely abate the danger of abuse in this direction. I would also suggest a provision of law creating a board of officers, of a semi-judicial character, whose duty should be to fully investigate and pass upon all claims for refunding and abating.

Under a former administration, several assessors, collectors, and assist ant assessors were appointed in some of the southern States who could not take the oath prescribed by law, but who entered upon their duties after subscribing to "a qualified oath." They performed the work of their respective offices for a short period, but, as the law prohibits payment for their services, bills for the same have been disallowed in this office. Having performed their labor in good faith, by direction of those in power, equity would seem to require that authority should be given by Congress for their payment.

Soon after entering upon the duties of this office my attention was given to the subject of allowances to assessors of internal revenue for clerk-hire, and I became satisfied that a reform in this direction was very much needed, and with proper effort could be effected. The amount paid to assessors for this purpose, for the fiscal year ending June 30, 1868, was three hundred and sixty-one thousand five hundred and thirteen dollars and eight cents, ($361,513 08,) while for the year ending June 30, 1867, the sum paid was three hundred and two thousand nine hundred and ten dollars and forty-nine cents ($302,910 49) only, showing an increase for 1868 of fifty-eight thousand six hundred and two dollars and fifty-nine cents, ($58,602 59.) The collections for the fiscal year ending 30th June, 1867, were two hundred and fifty-four million four hundred and nine thousand six hundred and fourteen dollars and eighty-one cents, ($254,409,614 81,) and in 1868 they had fallen to one hundred and seventy-eight million four hundred and fifty-one thousand and twelve dollars and sixty four cents, ($178,451,012 64,) being a difference of seventy-five million nine hundred and fifty-eight thousand six hundred and two dollars and seventeen cents, ($75,958,602 17.) These two comparisons show conclusively that while the revenue was largely decreasing, the expenses of clerk-hire were increasing. Although it may not be true that the amount of collections should determine the cost for clerks in all cases, it is quite evident that changes in the laws which reduce largely the number of persons and articles subject to taxation cannot tend, in any considerable degree, to an increase of the labor in making the assessments and keeping the records. It is certain that, in consequence of the recent changes of laws, the revenue is now collected from a less number of persons by nearly one-third than in 1867. It is the natural tendency of all allowances, not definitely fixed by law, to run into abuses, and the personal and political influence at command of an officer, persistence in urging his demands and craftiness in their presentation, are often found to have quite as much to do in arranging such allowances as the business necessities of the office or the good of the service. If an energetic, enterprising officer desires to engage in some other business, requiring a considerable portion of his time, he has to employ one or more clerks of sufficient ability and character to manage the office. In every case of this kind the government has to pay for the 'services of two principals in lieu of one, as intended by the law. Offi.