During the year $4,000 Indiana State bonds were paid in full, and $2,000 included in the above table have been paid since the close of the fiscal year and the bonds surrendered to said State. Soon after assuming my duties as Treasurer, the condition of the Indian trust fund was taken up, and the following letter was addressed to the Secretary of the Treasury: TREASURY OF THE UNITED STATES, SIR: My attention having been called to certain bonds and stocks of the Indian trust fund, held in custody in this office, on which principal and interest are due and unpaid, I have the honor to submit at once the accompanying statement of such bonds. Under the act of June 10, 1876, Revised Statutes, volume 19, page 58, transferring the Indian trust fund from the Department of the Interior to the custody of this office, it is made the duty of the Treasurer of the United States to make all purchases and sales of bonds and stocks authorized by treaty stipulations or by acts of Congress, when requested so to do by the Secretary of the Interior, and to collect all interest falling due upon the bonds and stocks so held. The principal and interest of a large number of these bonds have become due and remain unpaid, some of them for many years. While it is made the duty of the Treasurer, under the act, to make all purchases and sales of bonds and stocks when requested so to do by the Secretary of the Interior, and to collect all interest falling due without such request, there may be a ques-. tion as to the responsibility or duty of the Treasurer in reference to such past-due bonds and the interest thereon. I desire, therefore, for my guidance and information (if any action is to be taken by this office), to know (1) What steps are necessary to collect the principal of overdue State bonds, or to prevent statutes of limitation in the respective States from barring any action that may hereafter become necessary. (2) What steps are necessary to collect past-due interest on such bonds, or on bonds not yet matured. (3) What proceedings should be taken where the bonds are liens upon railroads and other corporations, as in the case of some of the bonds of the State of North Carolina. Formal demand has been made for the payment of certain North Carolina bonds and refused, and correspondence has been had with the authorities of States in reference to the payment of past-due bonds with similar results. Under section 3481, Rev. Stats. U. S., moneys due certain States have been stopped by this Department and the amount applied to the payment of interest due. The items are set forth in the accompanying list. The statutes of the different States authorizing these bonds are not accessible to this office, and therefore the conditions under which the bonds were issued and the full nature of the liens are not known here. Several of the State authorities have made propositions, authorized by their respective legislatures, for the exchange of bonds at certain rates for those of a new issue, which propositions could not be entertained without the authority of Congressional action. If it shall be held that further demands be made for the payment of overdue principal, or that demands be made or suits instituted for the payment of overdue interest, I respectfully ask for instructions. Very truly, Hon. DANIEL MANNING, Secretary of the Treasury. (Statement of bonds and stocks inclosed with letter.) C. N. JORDAN, Treasurer United States. This letter and statement were referred by the Secretary of the Treasury to the Solicitor, Hon. A. McCue, who made reply, as follows: TREASURY DEPARTMENT, OFFICE OF THE SECRETARY, Washington, D. C., May 26, 1885. 'SIR: I have received your letter, "J. C. B.," of the 7th instant, asking for infor mation respecting your duties as custodian of certain bonds and stocks of the Indian trust fund, under the act of June 10, 1876. In reply I inclose herewith copy of communication dated 22d instant, from the Solicitor of the Treasury, to whoin your letter had been referred, stating his views on the subject of your inquiry. Very respectfully, To the TREASURER OF THE UNITED STATES. C. S. FAIRCHILD, Acting Secretary. DEPARTMENT OF JUSTICE, OFFICE OF SOLICITOR OF THE TREASURY, Washington, D. C., May 22, 1985. SIR: By the act of June 10, 1876, the securities held by the Secretary of the Interior in trust for the benefit of Indian tribes were transferred to the custody of the United States Treasurer. It was made the duty of this officer to collect the interest falling due thereon and deposit the same, and issue certificates of deposit therefor in favor of the Secretary of the Interior as such trustee, and to make purchases and sales of the securities authorized by treaty or acts of Congress when requested by the Secretary of the Interior. From a statement made by the Treasurer it appears that the principal and interest of a large number of these securities have become due, and have remained unpaid, some of them for years. He asks, in view of this fact, what steps are necessary for him to take to collect the principal and interest of overdue State bonds, and what proceedings should be taken where the securities are liens on railroads or other corporations. The statute to which I have referred places a certain responsibility on the Treasurer. He is to be the custodian of the bonds. He is to collect the interest as it fails due, and he is to make purchases and sales of bonds when requested so to do by the Secretary of the Interior. His duties, it seems to me, as defined by the act, are ministerial simply. If the principal of the stock or bonds or the interest on the same falls due and is not paid on demand made by the Treasurer of the United States, that fact should be communicated by him to the trustee, the Secretary of the Interior. Whether or not such suit should be brought or other proceedings taken to compel payment from the defaulting maker of the bonds or other securities rests with the Secretary of the Interior, the trustee. Very respectfully, Hon. DANIEL MANNING, Secretary of the Treasury. A. McCUE, Solicitor of the Treasury. This correspondence was then referred to the Secretary of the Interior, with the accompanying letter, the reply to which is herewith given: TREASURY OF THE UNITED STATES, SIR: I have the honor to transmit herewith a copy of an opinion of the Hon. A. McCue, Solicitor of the Treasury, delivered to the Hon. Secretary of the Treasury, in reference to certain unpaid stocks and bonds of the Indian trust fund, in respouse to a request made by myself on the 7th instant, a copy of which is also inclosed. If, in pursuance of this opinion, it is necessary to take any action in reference to the unpaid principal and interest of said bonds, I respectfully ask for instructions in relation thereto. Very respectfully, Hon. L. Q. C. LAMAR, Secretary of the Interior. C. N. JORDAN, Treasurer U. S. DEPARTMENT OF THE INTERIOR, SIR: I have the honor to acknowledge the receipt of your letter of the 28th of May ast, inclosing, for the information of the Secretary of the Interior, as trustee for certain Indian trust funds, a copy of an opinion of the Solicitor of the Treasury regarding the duties of the Treasurer of the United States in the matter of certain unpaid State stocks and bonds belonging to the Indian trust fund. The State bonds now belonging to the Indian trust fund which have matured and remain unpaid are as follows: The interest on these bonds is also due and unpaid by the States for different and various periods. The Indian trust funds were invested in these bonds by the Secretary of the Interior prior to 1861. The laws governing the matter at the time of purchase will be found in the act of January 9, 1837 (sec. 2096, R. S.), and act of September 11, 1841, (sec. 3659, R. S.). By the act of June 10, 1876 (19 Statutes, 58), the stocks, bonds, securities, &c., of the Indian trust fund were transferred to the Treasurer of the United States as custodian, and it was thereafter made his duty to collect the interest thereon as it became due, &c. The Solicitor holds in the opinion referred to that the Treasurer's duties as defined by this last-named act are "ministerial simply." "If the principal of the stock or bonds or the interest on the same falls due and is not paid on demand made by the Treasurer of the United States, that fact should be communicated by him to the trustee, the Secretary of the Interior. The duty of the Treasurer in this regard ends here. Whether or not suit should be brought or other proceedings taken to compel payment from the defaulting maker of the bonds or other securities rests with the Secretary of the Interior, the trustee." In view of this opinion, you request instructions in relation to the unpaid principal and interest of said bonds, if it is necessary to take any action in relation thereto. This matter has heretofore been considered by Congress. By the act of March 3, 1865 (13 Statutes, 539), appropriations were made for the Indians for whom the nonpaying bonds were held, in sums equal to the interest then due and unpaid. Since that date annual appropriations have been made to meet the unpaid interest, not only on the bonds not yet matured, but also on those which have matured. The act of March 2, 1867 (14 Statutes, 497), required: "That the Attorney-General of the United States shall be and is hereby instructed to inquire into the condition of all funds held in trust by the United States for said fribe (Chickasaw) and for all other tribes of Indians, and what proceedings should be taken for the security of the United States in respect to the same, and report thereon to Congress on the first Monday in December next." The report of the honorable Attorney-General made in compliance with this law is found in House Ex. Doc. No. 59, Fortieth Congress, second session. The concluding portion of the report is as follows: "So far as the States are liable upon these, either as principal obligors under the bonds issued by them respectively, or as guarantors of bonds issued by private or municipal corporations, I see no ground upon which that liability can be enforced either at law or in equity. A State can be sued only by its own consent. I am not advised that either of these States has, by its own consent, submitted itself to suit in any court. Nor is there a case made here for original suits against either of these States in the Supreme Court of the United States under the Constitution of the United States; for whether we regard these bonds as belonging to the United States or to the respective Indian tribès, the right to bring an original suit upon them against a State in the Supreme Court of the United States does not exist either in favor of the United States or any of these Indian tribes; for neither the United States nor an Indian tribe is a foreign state within the meaning of the constitutional provision, and as such entitled to bring an original suit against a State in the Supreme Court of the United States. But if any of these States holds claims against the United States, it may be deemed expedient to exercise the right of retention and application in the nature of a set-off, following the precedent set by the joint resolution of March 3, 1845 (5 Statutes at Large, page 801). "This resolution is as follows: "That whenever any State shall have been or may be in default for the payment of interest or principal on investments in its stocks or bonds, held by the United States in trust, it shall be the duty of the Secretary of the Treasury to retain the whole, or so much thereof as may be necessary, of the percentage to which such State may be entitled of the proceeds of the sales of the public lands within its limits, and apply the same to the payment of said interest or principal, or to the reimbursement of any sums of money expended by the United States for that purpose.' "As to the remedy upon the bonds issued by private or municipal corporations by action at law to recover the amount due for principal or interest, or by proceedings in foreclosure, where the bonds are secured by mortgage, or in mandamus to compel the levying of a tax by municipal corporations, in order to provide payment, the remedy would be the same in favor of the United States as in favor of any individual creditor upon the bonds. "I am at a loss to suggest any specific measure for further security in respect to these bonds. But it may happen that the indebted States and corporations may offer propositions for compromise favorable to the bondholders, and Congress may deem it expedient to give the Secretary of the Interior authority to entertain, and, in the exercise of a proper discretion, to agree to such propositions." Sums of money found by the Treasury due the States in default of payment of interest on bonds, have been from time to time covered into the Treasury to reimburse the United States for moneys appropriated by reason of such default. The authorities of the State of North Carolina submitted in 1883 a proposition for the substitution of the old bonds of that State for those of a new issue, authorized by act of the State legislature. It was considered by my predecessor on December 11, 1883, who, under the circumstances of the case, declined to accede to the proposition, stating among other reasons that he doubted whether it would be proper for the Secretary of the Interior to make the exchange without the grant of special legislation therefor by Congress. Bills were pending in the Forty-eighth Congress which contemplated the granting of the necessary authority, but no law was enacted on the subject. The facts regarding these State bonds which have matured, as well as those upon which instalments of interest are past due, are essentially the same or similar to those which obtained at the time of the report made by the honorable Attorney-General, whose opinion and conclusion on the subject are quoted above. In view of the opinion of the Attorney-General, and of the further facts herein set out, the Secretary of the Interior does not consider it necessary or proper that any further means should be attempted with reference to the collection of the unpaid principal and interest of the bonds under consideration until appropriate legislation therefor shall have been enacted by Congress. Very respectfully, Hon. C. N. JORDAN, Treasurer United States. L. Q. C. LAMAR, It will, therefore, be seen that special attention has been given to the matter in question, and that further action must depend upon appropriate legislation by Congress, as stated by the Secretary of the Interior, trustee, in his letter given above. The conclusion to be deduced from this correspondence applies with equal force to State bonds held in this office for the Secretary of the Treasury for account of the United States, a list of which is given in this report, and on which principal and interest are in default. MISCELLANEOUS TRUSTS. The following amounts are held for the different trusts stated: American Printing House for the Blind, 4 per cents $250,000 200,000 75,000 55,000 The first-named bonds are in the name of the Secretary of the Treasury, trustee, interest to the Treasurer of the United States for credit of appropriation to promote the education of the blind, act of Mareli 3. 1879. The Pennsylvania Company bonds are held in pursuance of a circular of the Treasury Department in reference to bonds to be given by transportation companies as security for merchandise while in transit. The 4 per cent. bonds of the Manhattan Savings Institution are held as indemnity for certain stolen bonds, and those for the Alaska Commercial Company are held as security in the contract between said company and the Government. The following described bonds are held for the Secretary of the Treasury: These bonds are owned by the United States. Of the Arkansas bonds $538,000 were formerly in the Smithsonian Institution fund; the remainder, $87,000, was transferred from the Indian trust fund, amounts equal to principal and interest having been paid by appropriations for account of the Indian tribes for which the bonds were held. The bonds of North Carolina, Tennessee, and Virginia were also transferred from the Indian trust fund in the same manner. The bonds of the Nashville and Chattanooga Railroad Company became the property of the United States under an act of Congress providing for the collection of debts due from Southern railroad corporations, approved March 3, 1871 (16) Statutes, 473). All the bonds are non-interest paying, excepting the bonds of the Nashville and Chattanooga Railroad Company, the interest on which is paid as it accrues. The bonds held by this office should receive the serious attention of the legislative power, the greater part of these bonds having been lying in the vaults of the Treasury, paying no interest save such as may have been sequestered from sums due the respective defaulting States, notwithstanding the fact that these States have in great part compromised with their creditors, and are now paying interest on a portion or the whole of their debt. These securities have cost the United States par, and there would seem to be no good reason why proper efforts should not be made to obtain payment in full or effect some compromise with the insolvent States. By a former ruling of this Department it has been held that money due the respective defaulting States could not be seized except for the current interest, and that no ⚫ attention should be paid to the fact that by reason of default the principal had become due. The Treasurer has advised, under date of October 8, 1886, each of the secretaries and accounting officers who may be called upon to settle the accounts of these States, that all sums due the respective States should be held by them in order that such sums shall be applied to the payment of the principal or interest, or both, when any indebtedness from the Government to these States may arise. The correspondence in regard to this matter is herewith submitted. TREASURY OF THE UNITED STATES, SIE: Referring to section 3481, Revised Statutes of the United States, providing for the retention of moneys due from the United States to any State that may be in default in the payment of principal or interest on stocks or bonds issued by said State and held in trust by the United States, I have the honor to call your attention to the following States whose bonds are held in this office in trust, on which principal and interest are due and unpaid; and to request that payment of moneys due any of said States be withheld and this office advised of such action: Arkansas, Florida, Louisiana, North Carolina, South Carolina, Tennessee, Virginia. Very respectfully, To the FIRST Comptroller. C. N. JORDAN, Treasurer United States. In connection with the bonds of the various States mentioned in the foregoing as held by the Treasury in trust, attention is called to the present status of the debts of the States named. The following memorandum, made up from the best attainable sources of information, will afford some idea of the sums that may be recovered by proper action of Congress on the subject of defaulted State bonds: |