Ꭱ Ꭼ Ꮲ Ꮳ Ꭱ Ꭲ

OF

THE SECRETARY OF THE TREASURY.

TREASURY DEPARTMENT,

December 6, 1869.

SIR: I have the honor to submit herewith the annual report of the doings and condition of the Treasury Department. In this report I naturally treat, first of matters of administration, and then of measures of public policy.

The officers in charge of the various bureaus and divisions of the Treasury Department have faithfully performed their duties, and I commend their several reports to the consideration of Congress.

The Treasurer of the United States has prepared an elaborate report, setting forth the present condition of the Treasury, and furnishing a resumé of the business of the Treasurer's office from 1861 to the present time.

The long and faithful services of the present Treasurer entitle him to the gratitude of the country.

The report of the Commissioner of Internal Revenue is respectfully commended to the attention of Congress. Since the appointment of the present Commissioner the administration of the office has been constantly improving. The increase of receipts for the first five months of the present fiscal year in the sum of $14,431,333 06 over the amount collected in the first five months of the last fiscal year is satisfactory testimony to the ability and integrity of the persons employed in that branch of the public service.

The amount paid by warrants for collecting the revenue from customs during the fiscal year ending June 30, 1868, was $6,378,385 43; and for the year ending June 30, 1869, $5,376,738 13, showing a decrease of $1,001,647 30. This decrease in the cost of collecting the revenue has not been attended by any loss of efficiency in the service. On the other hand, it is believed that the means for the detection of smuggling are better than ever before, and that the custom-house service is also constantly improving. It ought to be understood that the chief means of collecting the revenue and enforcing the revenue laws must be found in the administration of the appraiser's department. The frauds and losses arising from actual smuggling are unimportant when compared with the losses sustained through incompetent or dishonest examiners

and appraisers. Assuming that honest men may be obtained for these important positions at the present salaries, it is yet true that an incompetent appraiser or examiner may daily subject the government to losses far exceeding his annual salary.

Under existing laws, certain revenue officers and other persons appearing as informers are entitled to shares in fines, penalties, and forfeitures. During the fiscal year 1868-69 the Treasury Department distributed the sum of $286,073 61 to such officers and to informers in the various cases arising under the customs-revenue laws. A large additional sum was also paid through the Internal Revenue office. The reason on which the laws granting such allowances are based is that officers of the government are stimulated to greater activity in the discovery of frauds and in bringing offenders to punishment. There can be no doubt that such is the effect of the policy; but the experience I have had in the Treasury Department has convinced me that the evils attending the system are greater than the benefits derived from it. It often occurs that revenue officers are led to assert claims in behalf of the government which have no just foundation in law or in the facts of the respective cases; and where real claims exist it is often the object of the informers and officers who share in the penalties to misrepresent the case to the department, so as to secure the greatest advantage to themselves. But a more serious evil is found in the practice, quite general, of allowing persons to pursue a fraudulent course until a result is reached which will inure to the benefit of the officers and informers, instead of checking criminal practices at the outset. It is impossible to set forth in exact language the character of the evils that grow out of the present system. I am, however, clearly of the opinion that the government ought to rely upon public officers for the proper performance of their duties without stimulating them by any contingent advantages. I have elsewhere recommended an increase of the salaries of custom-house officers; and the abolition of the system of giving to them a share of fines, penalties, and forfeitures will be an additional reason for the increase of salaries in this department of the public service.

It has become a practice for clerks and other persons who have held office in the Treasury Department to accept employment as agents or attorneys for parties having claims against the department; and there is reason to believe that in some instances the information obtained while in the public service has been used in aid of the claimants. Without detailing all the objections to this practice, I respectfully suggest that a law be passed barring persons from practicing before the Treasury Department as agents or attorneys in behalf of claims that were pending when such persons were officers therein.

In March last there were employed in the Treasury Department at Washington 2,848 clerks, messengers, and laborers, at a monthly cost of $285,921 51. At present the whole number of such employés is 2,441, and their monthly pay amounts to $238,280 84; showing a decrease of

expenses at the rate of $571,688 04 per annum. It was found necessary, however, during the period mentioned, to increase the force in the Internal Revenue office and in the office of the First Comptroller. This increase, in the aggregate, is at the rate of $80,440 per annum. This statement does not relate to the force employed in the Bureau of Engraving and Printing.

In March last there were sixty-two special agents in the service of the department, receiving, in the aggregate, for their services the sum of $371 10 per day. Each of these agents made his reports to the department and acted under its direct orders. The number at present employed is fifty-four, and their daily pay amounts to $368 85. The pay of the agents has been increased generally, in the hope that more efficient services might be obtained. The seacoast and frontiers of the country have been divided into sixteen special agency districts, and a superintendent appointed for each. Assistants have been appointed and detailed to act under the several district agents. The orders of the department are in all cases sent to the agent in charge of the district, and the reports of his assistants are made to him. The agent is required to make a monthly report of his own doings and of the doings of his subordinates. The results thus far obtained appear to justify the organization introduced.

Arrangements have been made for the manufacture of paper for the currency and other obligations of the United States, and for the printing of the same, which increase the security of the government against unlawful issues from the genuine plates. Under the eleventh section of an act approved June 30, 1864, entitled "An act to provide ways and means for the support of the government, and for other purposes," a peculiar paper has been designated as the government paper, and by that act it is made a felony for any person to have or retain in his possession any similar paper adapted to the making of any obligation or security of the United States, except under the authority of the Secretary of the Treasury, or some other proper officer of the United States. Arrangements have been made for the manufacture of this paper by Messrs. Wilcox & Co., near Philadelphia, and the mills owned by them, which are exclusively devoted to this purpose, have been placed under the supervision of the officers of the government, and such precautions have been taken for the custody of portions of the machinery as to render it improbable that the paper manufactured can be obtained by dishonest means. It is received by an agent of the government, stationed at the mills, and, upon the requisitions of the department, is shipped to the National Bank Note Company, the American Bank Note Company, or to the Printing Bureau of the Treasury Department, as the case may require. Arrangements have also been made with each of the two companies mentioned for preparing one set of plates for every issue of currency or other obligation. The Engraving and Printing Bureau at Washington prepares a third set, and each office places an imprint upon

every obligation of the government. Notice of the transmission of paper from the agent at the mills and its receipt by each of the several offices, of the deliveries therefrom to the Sealing Bureau in the Treasury Department, and also of deliveries to the Treasurer of the United States, is given each day by telegram or by letter, and on the following day the accountants in the Treasury Department prepare a statement showing the disposition of every sheet of paper manufactured. In the month of November the paper at the mill and in each of the several printing establishments was carefully counted, and the result compared with the accounts in the Treasury Department. In an aggregate of about 7,000,000 of sheets received by the agent at the mills, discrepancies were found to the extent of sixty sheets of fractional currency paper, and for the money value of which the companies doing the work are responsible. It is believed that these arrangements furnish better security than has heretofore existed against the fraudulent issue of currency or other obligations of the government by the use of the original dies or plates, and the system of frequent examinations of the several establishments intrusted with the work will disclose at once any discrepancies in the accounts. It is not probable that the changes made will diminish the expense; indeed, the cost is greater than it would be if the work in all its branches were done in the Treasury Department. In my judgment, however, the additional security is of more consequence to the government than the mere economy of money in the expense of engraving and printing.

The marine hospital service of the country is upon the whole in an unsatisfactory condition. Several hospitals have been erected at points where at present they are not needed, while the great commercial cities of New York, Philadelphia, and Baltimore have no hospital accommodations for sick and disabled seamen. During the past season a careful examination of these institutions has been made by Dr. Stewart, an agent of the Treasury Department, and by Dr. Billings, of the United States Army. The result of their examination is that several hospitals have not been properly managed, that others should be closed, and that hospitals should be erected at New York, Baltimore, and Philadelphia. Measures have already been taken for the sale of the hospitals at several places where they are not needed. The hospital at New Orleans is represented as unsuitable, from bad location and other circumstances. The War Department is in possession of suitable hospitals at New Orleans and New York, which, as I am informed, are no longer needed for the use of the army. I respectfully recommend that they be transferred to the Treasury Department.

The revenue marine system is an important and expensive branch of the customs revenue service. There are thirty-six vessels belonging to the department, of which twelve are sailing vessels and twenty-four are steamers. They vary in size from forty to four hundred and eighty tons. One hundred and seventy-three officers and eight hundred and twenty

four men are required to man these vessels, and their running expenses amount to about $865,000 a year. Five of these vessels-side-wheel steamers, of four hundred and eighty tons burden-are lake steamers, and out of commission. They are rapidly diminishing in value, while the care of them involves an annual expense of about $70,000. The vessels now in the service have been purchased and built at various times, and, as far as I can ascertain, without special reference to the nature of the duty to be performed, and certainly without any matured plan. From one-half to three-fourths of the whole number are not adapted to the business. Congress recently appropriated $300,000 for the construction of four additional vessels, and proposals were issued and bids received under the authority thus conferred upon the Secretary of the Treasury, but no contracts have yet been made. An examination of the subject has forced the conviction upon me that it is inexpedient to incur the expenditure until the department is in possession of more accurate and complete information. I shall therefore take the opinion of a board of competent officers upon the following points: First. The size and character of vessels required by the nature of the service that they are to perform. Secondly. Whether they should be constructed of iron or wood, or of a combination of these materials. When the report of the commission shall have been received, proposals will be issued for the construction of four vessels as authorized.

In addition to the parent mint at Philadelphia, six branch mints have been established at various times in different parts of the country: one at San Francisco, one at New Orleans, one at Charlotte, North Carolina, one at Dahlonega, Georgia, one at Denver, Colorado, and one at Carson City, Nevada. A branch mint is also in process of erection at Dalles City, Oregon. Since the commencement of the war, the branches at New Orleans and Dahlonega have been closed. An assay office, it is believed, will satisfy the necessities of the mining interests in Colorado, and, for the present, only a limited business will be done at the Carson mint. Indeed, with the construction of railroads, and the consequently increasing facilities for communication, I am of opinion that the business of coining will be chiefly at one mint upon the Pacific, and at one mint upon the Atlantic coast. Under an act of Congress, passed July 23, 1866, preparations are making for the sale of the mints at Charlotte and Dahlonega. The mining and coining of the precious metals is now so large a national interest that it deserves more attention than it has hitherto received. At present there is no bureau or officer in the Treasury Department at Washington charged specially with the management of this great interest. I therefore recommend that provision be made for the appointment of a proper officer to be intrusted with this branch of the public business under the direction of the Secretary of the Treasury.

The coinage of the country is diminished in amount by the fact that in England and France the mint expenses are much less than with