Statement of number of men called for by the President of the United States, a Colored troops organized at various stations in the States in rebellion, embracing all not DECISION OF THE SECOND COMPTROLLER. Claims of States for interest, etc. The Second Comptroller of the Treasury in 1869 made Interest can in no case be allowed by the accounting DECISION OF THE COURT OF CLAIMS. Where a State, being requested by the President to raise and equip troops for the service of the General Government, sells its interest-bearing bonds to raise money for that purpose, the interest paid by the State is a proper subject of indemnity under a statute which directs the accounting officers to refund "the costs, charges, and expenses properly incurred by said State for enrolling, subsisting, clothing, supplying, arming, equipping, paying, and transporting troops." (State of New York v. The United States, 31 C. Cls. R., p. 459.) LETTER FROM THE ACTING SECRETARY OF THE TREASURY, IN RESPONSE TO SENATE RESOLUTION, DATED JANUARY 28, 1895, THAT THE SECRETARY OF THE TREASURY BE DIRECTED TO ASCERTAIN FROM THE CLAIMS OF THE SEVERAL STATES NOW ON FILE IN THE TREASURY DEPARTMENT, UNDER ACT OF JULY 27, 1861 (12 STAT., 276), THE AMOUNTS DUE THEM FOR EXPENSES INCURRED IN RAISING TROOPS, AS PROVIDED BY THE ORDER OF THE SECRETARY OF THE TREASURY OF FEBRUARY 8, 1893, AND REPORT THE SAME TO THE SENATE. TREASURY DEPARTMENT, January 15, 1896. SIR: In compliance with the resolution of the Senate, dated January 28, 1895— That the Secretary of the Treasury be, and is hereby, directed to cause to be ascertained, from the claims of the several States now on file in the Treasury Department, under act of July 27, 1861 (12 Stat., 276), the amounts due them for expenses incurred in raising troops, as provided for by the order of the Secretary of the Treasury, February 8, 1893, and to report the same to the Senate. I have the honor to transmit herewith the information called for as furnished by the Auditor for the War Department. Respectfully, yours, S. WIKE, Acting Secretary. The PRESIDENT OF THE SENATE. TREASURY DEPARTMENT, OFFICE OF AUDITOR FOR THE WAR DEPARTMENT, SIR: I have the honor to return Senate resolution of January 28, 1895, which was referred to this office on February 2, 1895, for report. The resolution directs the Secretary of the Treasury to cause to be ascertained, from the claims of the several States now on file in the Treasury Department, under act of July 27, 1861 (12 Stat., 276), the amounts due them 35559-08-20 for expenses incurred in raising troops, as provided for by the order of the Secretary of the Treasury, February 8, 1893, and to report the same to the Senate. The Secretary of the Treasury, by act of July 27, 1861, was directed, out of any money in the Treasury not otherwise appropriated, to pay to the governor of any State, or to his duly authorized agents, the costs, charges, and expense properly incurred by such State for enrolling, subsisting, clothing, supplying, arming, equipping, paying, and transporting its troops employed in aiding to suppress the insurrection against the United States, 18611865, to be settled upon proper vouchers to be filed and passed upon by the proper accounting officers of the Treasury. Secretary Chase in 1861 prescribed a set of nine rules to govern in the preparation and settlement of these claims under the act of 1861. Rules 2 and 3 are as follows: 2. It is only for expenditures on account of troops, officers, or men that have been or may be mustered and received into or actually employed in the service of the United States that reimbursements will be made. Organizations raised, or attempted to be raised, but not mustered and received into nor actually employed in the service will not be recognized. Nor will any reimbursement be made by the United States of expenses incurred in organizing, equipping, and maintaining troops for State purposes or home guard, whether called out by State or other local authority, unless such troops were called out and such expenditures incurred at the request or under the authority of the President or the Secretary of War. 3. Personal expenses of commissioned officers in recruiting their companies prior to their being mustered into service will not be allowed; but commissioned officers may be allowed the same rates for subsistence and quarters (board and lodging) as privates from the date of enrollment until mustered into service. The necessary and actual traveling expenses of recognized military agents of the State, when accompanied by bills or particulars and receipts for payments, will be refunded. Frequent controversies have arisen between the accounting officers and the representatives of the several States as to the true interpretation of these rules. Hitherto the accounting officers have steadily maintained that reimbursements under the law and the rules are necessarily limited to the cases in which officers and enlisted men had been actually accepted and mustered into the service of the United States, and that all claims on account of officers and enlisted men who failed to muster by reason of death, rejection on medical examination, or from other causes, whether intended for United States service or not, should be uniformly disallowed; that this interpretation is as broad as it should be, as it was not perceived how troops can be said to be " employed in aiding to suppress before they are under the military command of the United States. On the other hand, the representatives of the States have contended that however proper this construction seemed at the outset, it frequently worked inequity and hardship; that it is an inseparable incident to the preparation of troops on a large scale that some percentage of the men, after having been maintained for considerable time and at considerable cost, will not for various reasons go into actual service, and that if the United States had conducted the business directly and by its own officers the percentage of such loss would have been fully as great as under the management by the different States. In 1892 the States of Ohio, New York, Pennsylvania, and Kentucky applied to the Secretary of the Treasury for a modification of the rules, so that their application might be extended to the claims in question. The Second Comptroller made two reports on the subject, dated November 21, 1892, and December 22, 1892, recommending that the rules be modified as proposed by the States (vide Exhibits A and B, herewith). In addition, the following report was also made to the Secretary of the Treasury: TREASURY DEPARTMENT, OFFICE OF THE SECRETARY, Washington, D. C., February 7, 1893. SIR: Pursuant to your verbal request, I have the honor to report upon the advisability of changing the rules of Secretary Chase relating to the adjustment of State war claims: 66 First. By act of Congress of July 27, 1861, it was enacted That the Secretary of the Treasury be, and he is hereby, directed, out of any money in the Treasury not otherwise appropriated, to pay to the governor of any State or his duly authorized agents the cost, charges, and expenses properly incurred by such State for enrolling, subsisting, clothing, supplying, arming, equipping, paying, and transporting its troops employed in aiding to suppress the present insurrection against the United States, to be settled upon proper vouchers to be filed and passed upon by the proper accounting officers of the Treasury." Second. Secretary Chase interpreted the law to mean that the States could only be reimbursed for expenditures on account of troops, officers, and men who had been mustered into the service of the United States, and who were actually employed in aiding to suppress the insurrection against the United States, and, pursuant to the construction placed upon the law, framed nine rules for the guidance of the accounting officers in allowing claims of the States against the United States under act approved July 27, 1861. Third. The interpretation placed, upon said law by Secretary Chase and the rules formulated by him for the guidance of the accounting officers of the Treasury have been in force in the Treasury Department for fully thirty years. Fourth. Congress followed the construction put upon the said act of July 27, 1861, by Secretary Chase, for it is provided in the appropriation act of February 25, 1862, that reimbursement for State expenses shall be limited "to expenses incurred on account of volunteers called into the field." In the act of July 27, 1861, reimbursement was limited to expenses incurred on account of volunteers called into the field." Fifth. Sometime in the year 1877, application was made to the Hon. John Sherman, Secretary of the Treasury, to modify the rules formulated by Secretary Chase so as to authorize the accounting officers in the Treasury to allow claims of the States against the United States for the reimbursement for expenditures on account of the enrolling of troops, who, from some accident or unavoidable cause, were not actually mustered into the service of the United States, etc. Secretary Sherman declined to modify the rules in the letter addressed to the agents and attorneys of certain States, bearing date April 27, 1877, saying: "I have to inform you that these rules are founded on the reasonable presumption that the troops were only employed in aiding to suppress insurrection, after being properly mustered into the United States service. On that basis all settlements have heretofore been made, and the Secretary of the Treasury has not the power, nor would he deem it right, after the lapse of nearly sixteen years, to change the rules to admit a different class of claimants, or to extend their application to claims which have already been rejected. This is a proper subject for the action of Congress." Sixth. Application is made to the Secretary of the Treasury to modify the rules so as to authorize the accounting officers of the Treasury to allow claims of States for reimbursement for certain expenditures incurred by the States in enrolling troops and officers who were not actually mustered into the service of the United States. On the request of the Secretary of the Treasury, the Second Comptroller has made three reports, dated, respectively, November 21, 1892, December 22, 1892, and January 23, 1893, in which he recommends that "the rules of Secretary Chase be so modified that the just claims due the States for enrolling, etc., troops to aid the Government to suppress the rebellion can be allowed;" and he also recommends that rules 2 and 3 be amended to that purpose. I regret that I am unable to concur in the report and recommendation of the Second Comptroller. The construction put upon the act of July 27, 1861, by Secretary Chase is perhaps a very strict interpretation of the law; a broader and more equitable rule could, without doubt, have been established under the law. But as that interpretation and the rules then framed have been in force and been followed by the Department for thirty years, and as the sum total of all the claims of the different States may be very large, I do not feel like advising the Secretary of the Treasury to modify the rules as requested by the agents of the several States or as recommended by the Second Comptroller. I therefore recommend that no modification of the rules be made. Respectfully submitted. Hon. CHARLES FOSTER, Secretary of the Treasury. G. M. LAMBERTSON, In concluding the investigation the Secretary of the Treasury issued the following order: TREASURY DEPARTMENT, Washington, February 8, 1893. SIR: The matter of the application of the States' agents of the States of New York, Pennsylvania, Kentucky, and Ohio for a modification of certain rules formulated by the honorable Secretary of the Treasury, Salmon P. Chase, August, 1861, for the use and guidance of the accounting officers of the Treasury in the adjustment and settlement of the war claims of the States, under the act of Congress approved July 27, 1861, having been submitted to the honorable Second Comptroller of the Treasury for his examination and opinion, that officer recommends a change of said rule as clearly within the law of July 27, 1861." Believing that a more equitable rule could have been established under the law, it is ordered that, for the purpose of ascertaining the amount involved in the settlement of claims affected by such change of rules, the accounting officers of the Treasury open and adjust the claims now filed in the office of the Third Auditor on the basis of 66 |