HeinOnline -- 54 Cong. Rec. 1467 1917 1917.: .' CONGRESSIONAL' REOORD-SENATE., 1461 Mr. SMOOT. Yes; if it were .legislated in that way, it would be.' 1\ h'. SlJTHERLAND. The authorities have said over and over again that we are to look at the'substance of the proposed legislation and not at the form, and ,,'hen we come to do that and anal5·ze this w!l. find that it does, two things: Fii'st of all, it creates an office, and that, is a legislative act, because the office could not exist until Congress had spoken; and then it provides for filling the office by an appointment. Obviously this piece of legislation creates an office, and it is general legislation. I never have heard it doubted heretofore that the cl'eation of an office was general legislation. There are precedents here, one after another. Here is one that catches my eye, on page 134, Forty-seventh Congress: 'The President pro tempore (Mr. Davis) {leclded that an amendment to the naval appropriation bill adding 140 surgeons, of whom 50 shall be designated as surgeons, of the first class, etc., was 'not In order under Rule XXIX, and was general legislation to a general appropria- tion bill. . On appeal, the decision ,was sustained-yeas 26, nays 21. Now, if it is general legislation to provide for an additional 140 surgeons, it is general legislation to provide for an add i- 1 surgeon. The fact that there is only one in the class does not prevent it fl'om being a class. Mr. SMOOT. The Senator takes the position, then, that no increase can be made in an office on an appropril\tion bill? Mr. SUTHERLAND. No; the Senator does not take that pOSition. 'Ve can increase the salary paid to an office already in existence, but we can not create a new office. They are two vel'y distinct and different things. 1\Ir. SMOOT. I recognize that entirely. There is not any question about that, and that has been universally held. But the Senator takes the position, then, that the only way in which we could have an assistant to the Secretary of the Treasury is by a general bill creating the office? 1\11'. SUTHERLAND. The only way is to pass legislation; anti when the legislation Is passed it may becqme a question as to whether it is general legislation or special legislation- general legislation as distinguished from special, or general legislation in the sense that it is public, as distinguished from, private legislation-and if it is proposed to an appropriation hill there is a rule which says that if it is general legislation it will not be admitted. l\fr. OVERMAN. 'l'his is not general legislation. 1\11'. SMOOT. There is not an appropriation bill passed but that there is the cI'eation of some kind of an office by the ap- propriation bill. Mr. GALLINGER. A point or order could be made against e\'ery one of them. 1\It-. S1\IOOT. Of course; if it is general legislation, then the only way you can create a new office is to pass a bill through Congress creating it, and then appropriate the money to pay whateyer salary is attached to it. 1\Ir. SUTHERLAND. We do that sometimes, but it is done because no one objects. If the point was made--- ' MI'. OVERMAN. Could we appoint a clerk1 Would that be general legislation? Mr. SUTBEHLAND. How does the Senator mean? Mr. OVERMAN. Instead of saying 'that there should' be 40 clerks for a certain department, suppose we put in 46; would that be general legislation? ' Mr. SUTHERLA.i\,D. Additional clerks? 1\k OVERMAN. Yes. MI'. SUTHERLAND. I think undoubtedly it would be gen- eral legislation if it is the creation of a new office. MI'. OVERMAN. Well, if that is so, it would be the end of all legislation. We never would be able to keep the Govern- ment going. The wheels would be clogged. The Government could not move. 'Ve could not get along at all. We never could' pass general bills through Congress for these clerks. That would be the enu of it. This is simply special legislation; it is not general. Mr. SMOOT. If that were the case, Mr. President, the House of might just as well make up the appropria- tion bill and have it become a law in that shape and never come to the Senate of the United States for amendment by them. . Mr. GALLINGER. Oh, well, if the Senator will permit me, an apl)l'OI)l'iation bill is not entirely composed of clerks. There are some other things in appropriation bills. Mr. There is not much else in the legislative hill. 1\lr, BHANDEGEK Mr. President, I have heard this ques- tion m'el' all(l over again as to what was general leg-i;;.t::tion. r nCYCI' II:! YC heen able to form an exact standard whU', it \\w:; ;:;nfe to un(]el'. I wish to ask the Senator from Utah, if he will, permit me to do so, what he thinks is the distinction between general'legislation and special legislation" Does he think that everytliing that is not generai legislation has to be, so to speak, private legislation1 Mr. SUTHERLAND. No; it may be distinguished' in a variety of ways. ' " , , Mr. BRANDEGEE. What would be some speCial instances of speCial legislation which could go on an appropriation bill? Mr. SUTHERLAND. It may be distinguished along the line that it applies geographically to the whole country or that it applies only to a portion of the country. Legislation, for example, that 'applies to the whole State, in the case ot State legislation, would be general legi,slation. If it applied to a local subdivision, it would be special legislation. But' it is sufficient for this purpose to say that, so far as I know, it nevel; has been doubted that the creation of an office by legislation was general legislation as distinguished from special legisla- tion. It is not always easy to draw the distinction. It is one of those difficult things where the c1ivision, instead of being a line, is a zone. You may be quite cel'tain, when you are out- side of the zone on one side, that you have got genernl legisla- tion and quite certain, when you are outside of the zone on the other, that you have' got speCial legislation. Now, interme- diately there are a number of cases which it is som,etimes diffi- cult to assign to the appropriate class; but here is a case which by all the authorities falls clearly outside of the zone on the side of general legislation. So it is unnecessary to refine about it. Mr. HITCHCOCK. Mr. President, I should like to ask the Senator from Utah if he does not think there is a clear dis- tinction between merely adding a clerk in a department and a provision which empowers the President to make an appOint- ment, subject to the confirmation of the Senate? Mr. SUTHERLAND. There is a very clear practical dis- tinction, and it is quite likely that there is a distinction in the law; but, as it seems to me, it is not llecessary to refine upon it, because we have here a case where by the proposed legisla- tion an office is to be created which is to be filled by presiden: tial appOintment. Now, if that is not general legislation, I do not know what genernl legislation is. The PRESIDING OFFICER. The question is, Shall the ruling of the Chair stand as the judgment of the Senate? , The ruling of the Chair was sustained. , MI'. OVERMAN. Mr. President, I desire to put in the REC- ORD the remarks made' before the Appropriations Committee by the Secretary of the Treasury himself in regard to the neces- Sity for having this office created, so that Senators may see that the reason why the committee put it in was because it was just and right and ought to be done. I therefore ask to have the statement incorporated in the RECORD. The PRESIDING OFFICER. If there be no objection, it will be so ordered. The Chair hears no objection. The matter referred to is as follows: ASSISTAXT TO THE SECRETARY OF THE TREASURY. . Secretary McADOO. Gentlemen, there Is one other itom here which I confess I present with an extreme degree of diffidence, and If It wero not practically Imperative I would not present It. That is the question I presented here two years ago to the House committee, of an assistant to the Secretary of the Treasury. Sen!ltor OVERMAN. Yon have a letter on that, also? Secretary MCADOO. Yes. Senator OVERMAN. Is that an official estimate? Secretary McADOO. That Is my letter, transmitting the official esti- mate to the President of the Senate. Senator OVERMAN. You want that to go into the, record? Secretary McADOO. Yes; you can put In the estimate and the letter also If you wish. (The Jetter and estimate referred to arc as follows:) . TREASUllY DEPARTMENT, OFFICE OF THE SEClll'lTAlty, lV ashinyton, Deccmbcr 26, 1916. The PRESIDEXT OF THE SEXATE: -SIlt: I have the honur to submit herewith for the favorable action of Congress an estimate of appropriation for salary of an assistant to 'the Secretary of the 'l.'reasury, to be appointed by the Secretary, with compensation at the rate of $5,000 per annum, the same to be available from the date of the approval of the act. ' The duties that have been recently Imposed upon the Secretary of tho Treasury through the creation of the Federal Heserve Board, the, Fed- eral Farm Loan Board, the new tariff and Internal-revenue legislation, ,the Income tax, and taxes upon Inheritances, munitions, etc., and the promotion of Increased financial and commercial relations with the several HepubUcs of Central and South America, together with the tremendous growth of the business of the Treasury Department, make It Imperative that the Secretary be granted addltlonai assistance, and I can not too strongly urge upon the Congress the grantiug of this request, Inasmuch as tbe Secretary himself and his three assistauts and ,their respective staffs are drl\'en to the utmost to discharge the duties of their offices. . Respectfully, W. C. lIICADOO, Secrctary. Secretary MCADOO. Not only has the worl< of the Treasury Depart- ment increased tremendously In the last three years, but new duties have been Imposed upon the Secretary which arc very exacting. For
Transcript
HeinOnline -- 54 Cong. Rec. 1467 1917
1917.: .' CONGRESSIONAL' REOORD-SENATE., 1461 Mr. SMOOT. Yes; if it were .legislated in that way, it
would be.' 1\ h'. SlJTHERLAND. The authorities have said over and
over again that we are to look at the'substance of the proposed legislation and not at the form, and ,,'hen we come to do that and anal5·ze this pr~vision w!l. find that it does, two things: Fii'st of all, it creates an office, and that, is a legislative act, because the office could not exist until Congress had spoken; and then it provides for filling the office by an appointment. Obviously this piece of legislation creates an office, and it is general legislation. I never have heard it doubted heretofore that the cl'eation of an office was general legislation. There are precedents here, one after another. Here is one that catches my eye, on page 134, Forty-seventh Congress:
'The President pro tempore (Mr. Davis) {leclded that an amendment to the naval appropriation bill adding 140 surgeons, of whom 50 shall be designated as surgeons, of the first class, etc., was 'not In order under Rule XXIX, and was general legislation to a general appropria-tion bill. .
On appeal, the decision ,was sustained-yeas 26, nays 21. Now, if it is general legislation to provide for an additional
140 surgeons, it is general legislation to provide for an add ition~l 1 surgeon. The fact that there is only one in the class does not prevent it fl'om being a class.
Mr. SMOOT. The Senator takes the position, then, that no increase can be made in an office on an appropril\tion bill?
Mr. SUTHERLAND. No; the Senator does not take that pOSition. 'Ve can increase the salary paid to an office already in existence, but we can not create a new office. They are two vel'y distinct and different things.
1\Ir. SMOOT. I recognize that entirely. There is not any question about that, and that has been universally held. But the Senator takes the position, then, that the only way in which we could have an assistant to the Secretary of the Treasury is by a general bill creating the office?
1\11'. SUTHERLAND. The only way is to pass legislation; anti when the legislation Is passed it may becqme a question as to whether it is general legislation or special legislationgeneral legislation as distinguished from special, or general legislation in the sense that it is public, as distinguished from, private legislation-and if it is proposed to an appropriation hill there is a rule which says that if it is general legislation it will not be admitted.
l\fr. OVERMAN. 'l'his is not general legislation. 1\11'. SMOOT. There is not an appropriation bill passed but
that there is the cI'eation of some kind of an office by the appropriation bill.
Mr. GALLINGER. A point or order could be made against e\'ery one of them.
1\It-. S1\IOOT. Of course; if it is general legislation, then the only way you can create a new office is to pass a bill through Congress creating it, and then appropriate the money to pay whateyer salary is attached to it.
1\Ir. SUTHERLAND. We do that sometimes, but it is done because no one objects. If the point was made--- '
MI'. OVERMAN. Could we appoint a clerk1 Would that be general legislation?
Mr. SUTBEHLAND. How does the Senator mean? Mr. OVERMAN. Instead of saying 'that there should' be
40 clerks for a certain department, suppose we put in 46; would that be general legislation? '
Mr. SUTHERLA.i\,D. Additional clerks? 1\k OVERMAN. Yes. MI'. SUTHERLAND. I think undoubtedly it would be gen
eral legislation if it is the creation of a new office. MI'. OVERMAN. Well, if that is so, it would be the end of
all legislation. We never would be able to keep the Government going. The wheels would be clogged. The Government could not move. 'Ve could not get along at all. We never could' pass general bills through Congress for these clerks. That would be the enu of it. This is simply special legislation; it is not general.
Mr. SMOOT. If that were the case, Mr. President, the House of I~prescntatives might just as well make up the appropriation bill and have it become a law in that shape and never come to the Senate of the United States for amendment by them. .
Mr. GALLINGER. Oh, well, if the Senator will permit me, an apl)l'OI)l'iation bill is not entirely composed of clerks. There are some other things in appropriation bills.
Mr. OVI~Rl\IAN. There is not much else in the legislative hill.
1\lr, BHANDEGEK Mr. President, I have heard this question l.liscll~sed m'el' all(l over again as to what was general leg-i;;.t::tion. r nCYCI' II:! YC heen able to form an exact standard whU', it \\w:; ;:;nfe to o]l~.J'ate un(]el'. I wish to ask the Senator
from Utah, if he will, permit me to do so, what he thinks is the distinction between general'legislation and special legislation" Does he think that everytliing that is not generai legislation has to be, so to speak, private legislation1
Mr. SUTHERLAND. No; it may be distinguished' in a variety of ways. ' " , , Mr. BRANDEGEE. What would be some speCial instances of speCial legislation which could go on an appropriation bill?
Mr. SUTHERLAND. It may be distinguished along the line that it applies geographically to the whole country or that it applies only to a limit~d portion of the country. Legislation, for example, that 'applies to the whole State, in the case ot State legislation, would be general legi,slation. If it applied to a local subdivision, it would be special legislation. But' it is sufficient for this purpose to say that, so far as I know, it nevel; has been doubted that the creation of an office by legislation was general legislation as distinguished from special legislation. It is not always easy to draw the distinction. It is one of those difficult things where the c1ivision, instead of being a line, is a zone. You may be quite cel'tain, when you are outside of the zone on one side, that you have got genernl legislation and quite certain, when you are outside of the zone on the other, that you have' got speCial legislation. Now, intermediately there are a number of cases which it is som,etimes difficult to assign to the appropriate class; but here is a case which by all the authorities falls clearly outside of the zone on the side of general legislation. So it is unnecessary to refine about it.
Mr. HITCHCOCK. Mr. President, I should like to ask the Senator from Utah if he does not think there is a clear distinction between merely adding a clerk in a department and a provision which empowers the President to make an appOintment, subject to the confirmation of the Senate?
Mr. SUTHERLAND. There is a very clear practical distinction, and it is quite likely that there is a distinction in the law; but, as it seems to me, it is not llecessary to refine upon it, because we have here a case where by the proposed legislation an office is to be created which is to be filled by presiden: tial appOintment. Now, if that is not general legislation, I do not know what genernl legislation is.
The PRESIDING OFFICER. The question is, Shall the ruling of the Chair stand as the judgment of the Senate? , The ruling of the Chair was sustained. ,
MI'. OVERMAN. Mr. President, I desire to put in the RECORD the remarks made' before the Appropriations Committee by the Secretary of the Treasury himself in regard to the necesSity for having this office created, so that Senators may see that the reason why the committee put it in was because it was just and right and ought to be done.
I therefore ask to have the statement incorporated in the RECORD.
The PRESIDING OFFICER. If there be no objection, it will be so ordered. The Chair hears no objection.
The matter referred to is as follows: ASSISTAXT TO THE SECRETARY OF THE TREASURY.
. Secretary McADOO. Gentlemen, there Is one other itom here which I confess I present with an extreme degree of diffidence, and If It wero not practically Imperative I would not present It. That is the question I presented here two years ago to the House committee, of an assistant to the Secretary of the Treasury.
Sen!ltor OVERMAN. Yon have a letter on that, also? Secretary MCADOO. Yes. Senator OVERMAN. Is that an official estimate? Secretary McADOO. That Is my letter, transmitting the official esti
mate to the President of the Senate. Senator OVERMAN. You want that to go into the, record? Secretary McADOO. Yes; you can put In the estimate and the letter
also If you wish. (The Jetter and estimate referred to arc as follows:)
. TREASUllY DEPARTMENT, OFFICE OF THE SEClll'lTAlty, lV ashinyton, Deccmbcr 26, 1916.
The PRESIDEXT OF THE SEXATE: -SIlt: I have the honur to submit herewith for the favorable action
of Congress an estimate of appropriation for salary of an assistant to 'the Secretary of the 'l.'reasury, to be appointed by the Secretary, with compensation at the rate of $5,000 per annum, the same to be available from the date of the approval of the act. '
The duties that have been recently Imposed upon the Secretary of tho Treasury through the creation of the Federal Heserve Board, the, Federal Farm Loan Board, the new tariff and Internal-revenue legislation,
,the Income tax, and taxes upon Inheritances, munitions, etc., and the promotion of Increased financial and commercial relations with the several HepubUcs of Central and South America, together with the tremendous growth of the business of the Treasury Department, make It Imperative that the Secretary be granted addltlonai assistance, and I can not too strongly urge upon the Congress the grantiug of this request, Inasmuch as tbe Secretary himself and his three assistauts and ,their respective staffs are drl\'en to the utmost to discharge the duties of their offices. .
Respectfully, W. C. lIICADOO, Secrctary. Secretary MCADOO. Not only has the worl< of the Treasury Depart
ment increased tremendously In the last three years, but new duties have been Imposed upon the Secretary which arc very exacting. For
instance:\: take' the Federal reserve act. Under that law the Secretary of. the "rea~ury is., chairman. of the, Federal Reserve Board, being a member of the board ex officio. While the Secretary can, not atte~d. every meeting of the board, he must attend, meetings frequently, and I do attend just as often ns'I can. Sometimes those meetings; require two hom·s,.·nnd sometimes mOJ:e out'of the day. '
In addition to that, the Federal farm·loan act created the I!'ederal Farm Loan Board as a new bureau In the Treausry Department, whiCh, of course; must be administered; undel"' the' direction of' the Secretary. '.rhla law also makes the Secretary of the Treasury a member, ex officio, und chairman of the Farm Loan Board.
The next amendment was" on page 41, after line 17, to strike i out: . ' i . Federal Far'm Loan Bureau: For salaries and expenses under' tile F~d. i eral Farm Loan, Board createil by the act approvedi July 17, 1916, : including the sal1iries of four members at the rate' of $10,000 each per : annum, and their actual necessary traveling, expenses and such salaries, i fees; and expenses as are authorized by said' act! including farm·foan 'registrars, examiners, and' such. attorneys; experts, assistants, clerks, laborers, and other employees as the· Farm Loan Board may find neces·.
i sary, $300,000. A detailed statement of expenditures hereunder shILl! be I made to Congress. " , And'to insert:
That work requires a. great deal of time and patience, and as tim.e goeR on the Secretary of tile 'rrcasury' w!l1 Ile obUged to give a. great deal· of attention to, those two· organiZlLtions. It Is Ilterally impossible for. me to keep up with aU of. tile work which th~ Secretary has to do Federal Farm Loan Bureau: For four members, of the lJOard, at $7.500 with the present assistance I \lave. I must have, In order to be' full;V each; chief, bond division, $3,000; secretary to the board, $3,000; pUll. cll'ec!:iyc in the work, an assistant who is at my hand to, taltc' up, the i lic!ty agent, $2,000 -i four private seeretarles at $1,800' each; clerksmo~t important parts of the work. I!'or instance, tll~re are a great : 1 of class 4, 1 $90u, 3 at $720 each, 1 $600; clerk' and stenographer, mall v matters relating to official corrcspolld'ence for which I should have ',$1,200; stenographers-T at $1,000 each, 4 at $900 each, 3 at $720 a mnn sitting next to· me, intimately familIar with, the matters an~ . each; messenger; and 3' assistant messengers; in all', $67,620. baving full lmowledgc of nil that Is going on· In tire Secretary's office" so·, For salaries and expenses under ·the I!'ed'eral Farm Loan Board ere· that 110 may relieve the Secretary of a lot of tile detaiL work which he ated by the act approved· Jnly 17, 191!6, including the actual necessary now 'has to try to do himself. I thinl' that any Secret~ry of the Treas· traveling expenses of the· members of the boarll and' such salaries, fcc". ury will be more efl'ective in the' future if he. can devote Ills time' and and expenses as arc authorized by said act, inc1u!Jing farm·loan regis' his abilities to the larger affairs of the departmenf. I can not get that trars, eXlLminers, and such attorneys, experts, assistants, clerks, laborers. relief through: any of the assistant secretlLrles of, the '.rreasury, because and other employees as the· Farm Loan Board may find necessary, $182,: each of them, under the organization of the department, has a very 380; in all, $250,000. A detailed statement of expenditures hereunder large division of' the bureaus under him, and Ile has got· to· administer shan be made to Congress. . those particular bureaus. ))'or instnnce, we· have an assistant secretary, Estimates In detail for aU expenditures. under the Federal Farm I~oan in charge of public buildings and ml,,,,,llaneous offices. He has abso· : Bureau for the fiscal year 1919\ ancl annua\:ly thereafter; shall be sub. lutely no t.ime to devote ·to any other ·,ork.. ' mUted to Congress in the annual Book of Estinuttes.
'l~hcn we have an Assistant Secl·ot',,: .. in charge of the fiscal bureaus. 'f "rOLLIS' ",r .. 1?·d I k . Under him are tile Internal·nev(]ll1l<J Hcrvlce, the NaHonall' Banlling lV r . .<: • lv.u:. res 1 ent, ma e the pomt of order that Hystem of the country, In· regard to which the Comptroller of the Cur· this amendment changes, existing law and is not estimated for, rency reports to the Assistant Secrc.tury, and many. other important, and pending the· decision of thut point of order I deSire to say Pl~~~rth~tel~ecgg~~iriut'tnetl~e~'l~~a~~,~i~fi\c~~ devote to the matters which • to the Senate that" this. Ipatter comes, as a cOlllpl~te surprise 110
Then we have· another Assistn:nt Secretary who has charge of the : me. It is a matter which I have· very much. at heart, and 1 Customs Division. His time Is fully absorbed In that work. : want to- '
So the' Secretary of the Treasury Is coustantly hampered, and' in' fact· M OV'T,' ",rAN 0 f S t finds It Impossillle to meet the demands of the thousand' and' olle de tans I £ r. .dJR1Y.t. ' ne minute, i . the ena or please; Does, which he now has to consider in the dlllly work of the 01llce; and' which i he mean the,\vhole amendment? it would take a long time to describe to you. The correspondencp of· Mr. HOLLIS .. Yes; I mean the whole· amendment. the Secretary's o1llce alone· is a procllglous undertaking, and many M O\TERl\"'AN D tl S t tl d t f· people resent It-anel I think It is not unnatural-H the replies, to· their £ 1'. < ~ I. oes· le ena or mean. le amen lllell IX· letters are not signed by the Secretary himself. They do not thin I, that ing the salaries of the clerks, and so, 'on, or simply the reduction thc matter has received attention unless It gets to the heud of the o:fl the salaries of the members of the board to $7,500 each? department, So that if the Secretary lIad only the two new activities 'U HOLLIS mh . t i ·f th S t ·11 ·t which]; have mentioned added to 'his muny duties, I should think. that ",,,,r.· ' .. "" e· POlll'; S, 1 e· ena or. WI perml me, enc assistant for which·I am now asking. is imperative.. that 1 just. want to make-' -
In addition, during the last two years we have been maklng, as you Mr. OVERMAN. The Senator has the floor, and I am inquir· know, a very earnest effort In the Tr~asury Department to improve our i of 11· , Does tIle Senn·tOI' m ll'e tIle point as to the whol commercial and financial relations with South and Central American ng lhl. ,u: l' , . ' e countries. 'Out of that grew the first Pan American financial confer. amendment?' ence of 1915, which was held by authority of Congress, and. wllich :rilr. HOLLIS. The point is that I have not llUd. an opportullity created an international hIgh commission' composed of nine men from to examine it, and I do, not kno,v, whether the point' of orlier each of the Latin American Republlcs and the United States, the ·mln· ,",oulel, ll·e. to tIle wllole, n.mendruellt or not. I am (wing to :lsk Ister of finance or the Secretary of the '.rreasury of" cach country being '" u ~' chairman of each section or me commISSIOn. '.rhe commission met ,at the Senator to allo,,! this amendment to be pa::;sed over, and pmit· Buenos Aires last April and' effected an organization by the creation d t·t t tl t I cn I n au OPI)Ortunitv t) of a central executive council. The. delegates at Buenos Aires pam pone un 1 o·morrow, so la "n l"ve . . '. ( the United States the compllment,' as well as the coul'tesy, of electing look it up, : ' , , the officers of the United States section of the interna.tional high com· Mr. OVERMAN. I hnve no objection to that. Let it j)e passed mission as the ollicers of the central cxecutlve council. So long as that over, organization continues, and unless a. change should be made, the Sccre" 1\,r." •. HOi':L"S. Tlle~~"ore, I. aok u'n,nn';""OHS consent thut the tary of the Treasury wlll remnln at tile head of that commission'" and lY.LL "" '" ."'" "'''~ as iong as the commission keeps Its headquarters in the city of Wash· entire amendment be passed over, with the point of order pend· ingtoJl, I feel that that work'is of the utmost Importance to the country ing; to be taken up to-morrow. at It~~s j~tn~~fJ:·:it is going to 'be necessary to maintain this as' a perma. The PRESIDENT pro tempore. Is there objection'! The nent organization, but certainly at this time and for the next two years Chair hears none, it will be of great value to contlnue·1t. Diplomacy, as you know, deal.s Mr. FLETCHER. I raise the further point'of order tlgai.nst more partlcul1irly with. political questions, between governments, and tl d t th t·t· 11 . 1 t· on a n. JP opri It· III commercial and financial questions arc not' s'o' much the subject of . le amen men nIlS genera egIs a 1011 ' , III ,'I r l.1( diplomatic attentl'on and negotlatlolli. Having this direct touch, with bill. The whole an1endment violates that ru:le. the ministers' of finance of the countries of Latin. America thuough' an The. PRESIDENT pro tempore, '.rhe C\'lair .understands that organization autllorlzed by each country, to look after the commercful ! nnder unanimous consent. the amendment is, passed over. and financial questions, arising' bet\veen them and, this· counery, we have the means of rather direct cOllllilnniCation and of direct action, Mr. HOLLIS .. And that it goes over until to-monow? and as we go along we find that we are establfshlng relations of the Mr. OVERMAN. It is underst00d that it goes over until utmos't cordiality throu.,h these se~tlons and that weare getting ma)1y 'to.morrow. .. tangible and practical results. In my annual report for 1916 r Wive referred somewhat coplousl.y to. the work that has' been done recently, The· next amendment WtlS, 011 page' 44, after line 6, to insert: and the commission itself has made a report to· the· Presi<1ent which,' For law books" including' their exchange, to •. be' expended under I tho has been filed with, the Congress. For the time' being this worle imposes cllrectlon. of, the Comptroller of the'Treasury., $250. npon the Secretary a. very large responslbllLty and·a very large bm'dkn, but as I regard that as perhaps of It temporary character I do not urge Tbe amendment was· agreed to. it as a special reason, for the appointment of an assistnnt to the· Secre· The next amendment was; OIl page 45, line 4" after the wor(l tal'Y of the Treasury. l am requesting it on· other grounds. ... clerks" to strike: out" clerks-13, of class 4, 24 (including,1
The reading of the bill was resumed. . transfel:recl from register's' office) ," and, insert "14: (includi.ng The next. amendment w:as, on pag~ 37, line 25, after the ,yards l' transferred; from register's office) of class 4, 23," and. in line
" in all," to strike. out" $61,420," and, insert. " $6S,086~67." : 11, nfter the words ".in all," to strike out" $152,910 " and insert ,Mr. OLIVER. Mr. President, I suggest that that amendment "$-15S,lHr," 'so' as to make the clause, read:
is not necessary now, since we, struclt out the prov.ision fOl" all' Office of Auditor' fon' Navy Depar.trnent: Auditor, $4,00,0·; chief cIeri, assistant. to. the: Secretary of the· Treasury. ,and chief: of cllvfslon.,,· $2,250; law clerk, $2,.000;, ,chIef: of division,
, . 82000· assistant cMe! of division. $2,000; clerks-14 (including' 1 Mr. OVERMAN. No. I ask. that the clerks at. the d~sk· be transfe'rred from register's office) of class 4, 23 of' Class 3; 21 of clas!!!
allowed to· arrange the· totals after the ·bill is, passed.. That, is. 2, 25 of class 1, 8 at $1,000 each, 7 at $900 each (in~ludl~g 1 trans, usual. . ferred from rcgister.'s.ollice) i helper, $900;. messenger; .] aSsultant meso
. sengers'; 3 laborers; in all', ;:0153,110. The' PRESIDING OFFICER. In the absence of obj.ection; The mnendment was. agreecl to. , ,
that order will be Illade. . The next amendn,l. ent was, on page 45, line 17, after the word MI,; OVERMAN. III this case, howev.er, we should cllsag):"ee k tb "nssorter," to insert "(unap))ortione(l)'" so as to ma 'e e
to, the anlCndrnent. clause react: , ' ~I:he PIt]~SIDING Oll'FICgn. The question is on agreeing to Omee of Auditor for Interior Dcpa,·.tmcnt: Auditor, $4,000; ~hief
the amendment.clerk· and chief of division, $2,250'; law c1crR., $2,000; chief of dlVlsl· The a'lil(!llillll()Ilt was rejected. 'slon, $2,000; clerks'"-14 of class 4, 17' of class a, 17 of dass :!, 22 ot
HeinOnline -- 54 Cong. Rec. 1469 1917
1917. CONGR,ESSIONAL REOORD-' SENATE. 1469· class 1, 12 at $1,000 each, 11 at $900 each; check allsorter- (unapportioned). $900; 2 messengers; 2 assistant messengers; laborer; In all, $139,430.
The amendment was agreed to. The i'eading was continued to page 48, line 25. Mr. OVERMAN. I offer a committee amendment nt this
point. It makes no change in the appropriation whatever, but is merely transferring one clerk to the propel' place.
The PRESIDENT pro tempore. The amendment will be stated,
The S~:CRETARY. On page 48, line 23, strike out the word " two" where it first occurs and insert in lieu thereof "one"; in the saine line strike out" one" and insert in lieu thereof " two"; and in line 25, in the total, strike out "$27,300" and in~ert "$27,100," so as to read:
Ollice of Register of the Treasury: Register, $4,000; Assistant neglst(>r $2 ;;00 : chief of division, $2,000; clerks-1 of class 4, 2 of class 3, 2 of cl~Rs 2, a of class 1, :3 at $1,000 each, 3 at $900 (·nch; messenger; laborer; In all; $27,100,
The amendment was agl'eed to. 'fhe reading was continued. The next amendment was, on page 51, line 6, after'" $1,500,"
to insert "private secretary for captain commandant, $1,400," and in line 10, after the words" in all," to strike out" $72,710 " nnd insel't "$74,110," so as to make the clause read:
Ollice of the Coast Guard: Two chiefs of division, at $3,000 each; 2 assistant chiefs of division, at $2.200 each; title and contract clerk, $2.000; law and contract clerk, $1,800, an(l $200 additional while the ollice is held by the present Incumbent; topogra~her and hydrographer, $1 800' civil engineer. $2,250; draftsman, $1,uOO; private secretary for captain commandant, $1,400; derks-4 of class 4, 9 of class 3, 5 of class 2, 8 of class 1, 7 at $1,000 each, fi at $900 each; 2 messen, gers; asslstaut messenger; laborer;. In all, $74,110.
The amendment WitS agreed to. 'fhe next amendment was, on page 52, line 24, after the word
"Chief," to strike out "$4,500" anti insert "$4,000"; on page 53, line 1, before the word" clerks," to strike out" $3,500" and in>;el't "$3,000"; and in line 3, after the words "in all," to stl'ike out" $17,120" llnd insel't "$16,120,". so as' to make the <:lause rend:
Secret Sen-Ice Division: Chief. $4.000: assistant chief. who shall dlscbarge the duties of chief clerk, $3,000; clerks-1 of class 4, 1 of class 3, 2 of class 2, 1 of clnss 1, 1 $1,000; assistant messenger; in all, $1(;,120.
~:he amendment wns agreed to. 'I'he next amendment was, undel' the subheall "Collecting in
ternal revenue," on page 59, line 5, nfter the word "law," to strike out" including pel' diem not to exceed $4 in lieu of subsistence," so as to make the clause read:
ll'or salarle., anI] expenses of 40 revenue agents rorovhled for by law, fees and expenses of gaugers. and salaries and expenses of storekeepers and storekeeper-gangers, $2,200,000.
The amendment was agreed to. 'fhe next amendment was, in the item of appropl'iation for
"Collecting the income tax," on page 59, line 20, aftel' the word "district:,:," to stt'ike out" including not to exceed $4 per diem in lieu of subsistence," so as to read:
Collecting the Income tax: For expenses of assessing and collecting the Income tnx as provided In '.ritie [ of an act entitled "An act to Increase the revenue, an.] for other purposes," approved September 8, 1916, including the employment of agents. inspectors, deputy collectors, clerks, and messenger. in the District of Columbia and the several collection districts, to be nppointed hy the Commissioner of Internal Ue\'l'nue, with the approvnl of the Secretary of the Treasury, nnd the purchase of such supplies, equipment. mechanical devices, IInll other articles as may he necessary for use In the District of Columbia nnd the several collection districts, $1,700,000.
The amendment was agreed to. The reading of the bill was continued to line 20, page 62. Mr. NIDLSON. Mr. President, I desire to call the attention of
the Senate for a moment [md especially the Committee on Appropriations to the fact that we have reached a point in the bill where they can easily save $332,000 in this appropriation bill. During the existence of the last Bank of the United Stutes the fiscal operations of'the Goyernment were carried on through that bank. Aftel' the bank suspemled and went out of exist~ '3l1ce as a sequel to that there was established what we call a Subtreasury system, 1111 Independent Treasury system in a number of cities of the country thl'ough which the Goyernment cal'ried on its fiscal opel'Utiolls. That system still remains,
Undl',l' the act which we passed two years ago establishing the l"erlerai Reserye System we provided for reserve banks. There is no occasioll in those cities whel'e we have a Federal L'eserye bank for the Government to maintain a Subtreasury such as we have now. The Independent or Subtreasury was established for' the l)lll'pose of having a place whet'e the Government in the large cities could CatTY on its fiscal operations and for the Vllrpose of distributing the money of the country in the Subtreasuries instend of having it all congested and piled up here in Washington.
There are nine Independent· Subtreasuries provided for In the bilI, 'In five of the places we ha\'e a Federal reserve bank, and there is no reason under the sun why the Federal Government should not carryon its fiscal operations at those points where we have a Federal reserve bank.
Let me call yOUl' attention in detail to this matter. At Boston there is a Federal reserve bank. The bill appropriates $46,570 to maintain a Subtreasury or Independent Tr~asury at that point. There is no need of that. It is a duplication and nothing else. The Government can carryon all its fiscal operations in the reserve bank at Boston, and there is no occasion for the Independent Treasury or Subtl'easury system at Boston.
I come next to Chicago. Tilere is another Independent Treasury. Chicago undel' the Federal reserve law has a Federal reserve bank, and there is no reason why the Federal Government can not carryon its fiscal operations in that Federal reserve bank. There is no occasion for the maintenance of the Independent or Subtteasury system at that pOint.
The expense for the Subtreasury ut Chicago is $71,420. as appears in the bill.
New York is unother place where there is a Subtreasury or Independent Treasury, \Ve have a Federal reserve bank in that city. There is no occasion to maintain an Independent Subtreasury as we did under the old system, and there is no reason under the sun why the Federal Government can not curry on its fiscal operations through the Federal reserve bank at New York. The totul cost as appears from the bill of the Subtreasury system at New York is $154,460.
St. Louis is in the same category. We have a Federal reserve bunk thel'e.
Ml'. OVEHMAN. Mr. President--The PHESIDIi:NT pro tempore. Does the Senator from
Minnesota yield to the Senator from North Carolina: Mr. ·NELSON, Certainly. Mr. OVERMAN. Does the Senator move all amendment? Mr. NELSON. I will move to strike it out. Mr. OV.I<JRMAN. I was going to say thnt I shall not resist
it, and we will let it go into conference. \Ve ngreed in the cOlllmittee that vrobably this will be done next year, if it is not done [his year; but we did not have faets sufficient to gUHl'Hntee us iu striking it out after the OPPOSition made by the Secretary of the Treasury, but if the Senatol' will inti'odUl!e an amendment to strike it out I shall not resist it.
MI'. N1<JLSON. I am just explaining where the Government can save $332,000 a year. There is no reason why the Government ean not carry 011 its fiscal operations through its own bank at that city. The cost of the Subtreasury system at St, Louis is $33,860. The Slllue holds good as to San Francisco, We have a Subtreasury system at San }'ranc[sco provided for in the bill at a cost of $25,720. We have a Federal reserve bauk at San Francisco.· Here are five cities-Boston, Chicago, New York, St. Louis, and San Francisco-where we have five Government reserve banks, uud there is no reason under the sun why the Government should not carryon its fiscal operations through those banks. There is no necessity for keeping the Indepell(lent TreasUl'Y system alive in those cities.
Mr. V AHDAMAN. Mr. President--The PRESIDEN'f pro tempore, Does the Senator from
Minnesota yield to the Senator from Mississippi: Mr. NELSON. Chtainly, I yield. . 1\[r. VAI1DAMAN. Will the Senator state what are the pe
culiar functions of the Subtreasuries there: Is there any reason why--
Mr. NELSON. If I recall the date, it: seems to me that they were established in the administmtioll of President Van Buren. I am not clear about the date, but they were inaugurated by the Government to relieve a situation which had grown out of the fact that the Bank of the United States was extinguished an(\ we had nothing left except a system of State banks. The Goverulllent established Subtreasuries in these cities in ordel' to carryon its fiscal operations and to distribute the money in the country so as not to have it all congested at one central pOint. Thut was the purpose and that is what has kept the' system alive: There was some justification for it up to the time we crented the l.'ederal Reserve System, .
Now, under the Federal Heserve System the Federal reserve bunks that we have established are .Governll1ent institutions. The Secl'etary of the Treasury is authorized. to deposit as he sees fit all the Government funds in' those institutions and to check upon them. Such being the case, these reserve banks can perform all the functions. that are required, and there is no use to retain the Subtreasury system at those places. .
1\fto. VARDAMAN. I quite agree with the Sennt'or from Minnesota, The thing I can not understand is how they hapI,encd to be retnined in the bill. It seems to me-
HeinOnline -- 54 Cong. Rec. 1470 1917
147(]) OON,GRESSIONAL RECORD-.SENATE. JANUARY 16,
MI:. NELSON. ;r .canaccount for .that, The bill came from the House in that ~VaY, If .tlle Senator wiU allow :me, 'I will state that tlle total amount at these five places is $882,000,
Mr. VARDAMAN, That is the cost of running the Subtreasuries?
Mr. NELSON, Of nmning ·these Subtreasuries, which are · utterl~ needless, utterly useless, There is a third of a million dollars tllat coulc1 be saved as easy as not. .
Mr. VARDAMAN, Well, it ought to be done. 1\'11'. NELSON.' Subcreasurles are provided in the bill at four
other places for which there lllay be some justification, bec!1Use ther~ is no :reserve bank in those cities. They are Baltimore, Cincinnati, New Orleans, and Pltillldelphia ; but the total amount for those four Subtreasuries Is only $131,390. As I said, there lJIay b.e some excuse and some justification in those four places ,where there is no Federal ·reserv:e bank to retain the Subtre'asu.ries' for the present, .but there certainly is no ,occasion to retain them in the cities where we have a reserve bank.
So if the Senate wants to .economize and ·do no injustice to flnybody, but a benefit to the Government, it ought to strikeout {1'Olll the bill Boston,Chicago, New Yor.k, St. Louis, and San IPrnncisco, because each of them has a Federal reserve bauk, ~vhile they might lea1'e in for the present, ·though I 'hardly think H is llccessm:y, the 'ollier four places, that have no reserve 'bank. The .total Hlnount at tllOse four places is only $181,390, while at tJlC five 'places that have:a reserve bank it is upward of a third of a .million donal'S.
I call the attention of the committee to this because I belie¥e w.e ought to ,persist in u spirit of economy, and tbel'e is :no ·occasion to Illaintain these Independent TreaslIl'y systems \vhere we have Federal reserve banks, . .
l\ir. HITCHCOCK and Mr. ROBINSON addressed the Chair. :Mr. ROBINSON, Will the Senator yield to me for a moment? Mr. NELSON. I ought to yield· first to the Senator from Ne-
braska, I think. ' Mr. VARDAMAN. I IlUve elicited f')'om the Senntor all I
desired. I quite agree with him that that economy should be looked after, :an(\ I hope the Senator will propose an amendment.
Mr. NELSON. If the Senator from Arkanslls will excuse me, I will yield first to the Senator from Nebraska. I think he asked me first to yield.
Mr. HITCHCOCK. I defer to the member of the cOIllJJlittee. I had only a question to put.
Mr. NELSON. .I yield to tile Senator from Arkunsas. . Mr. ROBINSON, I presume the Senator fl'om Minnesota hus observed the fact tllRt the Committee on kppropriations Inserted in the bill an amendment which has already been agreed to :by the Senate, 'instructing the iBureau of Efficiency to " investigate the worl{ performed .by tbe Subtreasuries and report to Congress at the ,beginning of the next regular seSSion ~vhatpar.t of the 'Worl{ of llie Subtreasuries, may be trunsferred :to other offices of the Govermnent or 'banks of the Federal Reserve System," and so forth,
I presume the Senator from Minnesota is also aware of the fact that ,this propOSition was the subject of debate in the Honse of Representatives, and the House of Representatives declined to strike out the Subtreasuries.
1~he Senate Committee on Appl'opriations considered the .advisability of adopting and recommending' to the Senate an u mendment similar to that now snggested by the Senator from Minnesota, but were unable to gain sufficient information on the subject to determine on the advisability of its uc'option, in view of tlle fact that the Secretary of the Treasury recommended the retention in the bill of the Subtreasuries. The Senate committee lliought, under those circulllstances, it was best to ·have the matter in,estigated by the Bureau of Efficiency, and procure full and reliable informntioll with regard to the subject, ·with
· a view of action upon the matter the next time tI~e question arises, probably during the next session of Congress.
1\'[1'. NELSON. I apprehend the Bureau of Efliclency could not by any possibility throw any new light on the subject. It is
· not a matter, if Senators will reflect, that requires :any investigation.
'What is the occasion of having the Go¥ernment services .duplicated at these pOints? If we hav.e a Federal 'reserve bank, why can not the Goverument carryon its fiscal operations as it lIas a right to .do in those banI,s, and why should we retain this other system side by side in those places '/
Out of extreme caution I have segregated the places .. It may be that at the four places-Baltimore; CinCinnati', New Orleans, and Philadelphia-where they have no reserve biwks, it woul<1 be a proper subjeCt for investigation ; but I cohceive in the five cities which I lmvenamed-Boston, Ohicago, New York, St.
Louis, and :San FranCisco-where 'they 'have :i ,Federal reserve 'bank, there is no occasion for maintaining this Independent or Subtreasury system.
I want to say fnrtheJ' I express my indi,idual view-I belong ~o this side of the Chamber. It is up to your side. If you are 111 favor of'economy, as .you say you are, 'if you are in favor of retrenchment, there 'never was a better opportunity than you have.in this 'b1l1 -to cut out in one cut a' third of a million dollars, 'without doing 'harm to anybody, without injuring the public service in the least, and leaving the public service intact with all the financial eqUipment that it needs in the cities I have named. In fact, whIm the bill creating the Federal reserve banks was under consideration it was a serious question at that time whether we ought 'not to require the Governmcut to carry on all its fiscal operations through the reserve banks; that is" to haye the revenues go 'into the banks and then the Government check against the l'evenues and in that way keep the money of the country in circulation. .
Mr. ROBINSON. Will the Senator yield for a question? 1\'[r. NELSON. Certainly. Mr. ROBINSON. The Senator realizes that it is necessary
to 'have legislation upon tile subject transferring the functions of the various Subtreasuries to the reserve banks and that it requires some degree of careful consideration?
Mr. NELSON, I do .not llilnl, it is necessary at all because the Secretary of the Treasury under the Federal reserve law has the right to deposit the Federal funds in the reserve banks, and if you ,remove entirely tbe Subtreasury system you have the reserve banks and the Secretary of the Treasury has ample power to deposit all the :flunds in those !banlrs,
MI'. HITCHCOCK. I should like to ask--Mr. NELSON. As I said, I will 'not quarrel wiNI you gentle
men. I 'have presented the facts in this case to you and shown yon where you can economize to the extent of a third of a million dollars. I 11ave shown you -the way of gl'ace, and if you do not cal'C to accept It it is up to you; I have done my duty.
Mr. HITCHCOCK. I desire to ask the Senator from Minnesota whether it is not true that the Subtreasuries in some cases perform functions that are hardly possible for the Teserve banks to perform under existing law?
Mr. NELSON. I do not think so. Mr. HITCHCOCK. ' I am not sure that I know, but I notice
in the press from time to time when gold is imported from abroad in large quantities the banks or bankers who import it deposit the gold in the .Subtreasuries. I infer lliat they do it for the purpose of getting gold certificates. I have the impression tlmt that is not possible under the existing law to be done through the Federal reserve banks.
Mr. OVERMAN. If the Senntor will allow me to interrupt him, that is exactly one of tile reasons tile ,Secretary of the Treasury gives here in his report.
Mr. NELSON. I wish to call the attention of the Senate to a mutter .that transpired during ,t.he last portion of Mr. Cleveland's last administration. Certnin ba'nkers of New York, when goW was at a premium, were ill the habit of gOing to tlle Subtreasury. They would go there with their ·greenbacl,s. They would get Treasury notes-what we call greenbacks-and go to llie Subtreasury of New York and draw out gold and ship it to Europe. They could go on repeating that operation, and t'hey can repent it to-day in the Subtreasuries. If there is any gold in the Subh'easury, you or I or any of those New York bankers can go there with the greenbacks and say we W!lnt gold and deplete the Subtreasury. That is one of the causes tllat bronght out llie stringency Mr. Cleveland bad to overcome with his gold alone during the last two years ·of his uflministratlon. They can not ·carry on the same operation to that extent in the li'ederal reserve banks. But, as I said, I will not argue with you. If you. want to keep these two systems gOing, if you want 1'11is luxury, in God's name, take it.
Mr. HITCHCOOK. Mr. President, I have not any desire to get into a discussion with the Senator from Minnesota, because I am rather in sympathy with the idea of abolishing tilese Subtreasuries, if possible; but it has occurred to me that there are certain functions which they perform in the large cities that under ·existing law can not be performed by the Federal reserve ,banks. I suggested to the Senator that ·this country during the last two years has been importing hundl'eds and millions of dollars of gold which under the present practice is depOSited with the Subtreasuries and ,those certificates taken out in its pluce, ancl that function can not be performed under exlsting law by the Federal reserve banks.
Now, as to what the' Senator says about the Treasury being depleted, he will recall the fact that that danger has been remedied by' a change of law under which greenback!'! are im-
HeinOnline -- 54 Cong. Rec. 1471 1917
1917. OONGRESSIONAL REOORD-SENATE. 1471 pounded or may be impounded in the Tl'eusury so that the endless chain of wIthdrawing' gold from the Treasury may be stopped, That is not a danger in existence now; it has been obviated.
I have not any desire to antagonize the Senator's suggestion of an amendment, but it occurs to me that before we make it we ought to be sure that the Federal reserve banks are Iu a position to perform all the functions of the Tl·easury ..
1I1r. OVERMAN .. Mr. President, I mel'ely want to read along the line the Senator mentions exactly what is stated in the report of the Secretary of the Treasury. He says:
Since the Federal reserve bani,s are, as I have already stated, pri· vate corporations, just as are the national banks, the duty of providing the necessary storage vaults and of assuming the custody and control of these trust funds could not be imposed upon the Federal reserve banks by legislation. It could only be accomplished by negotiation and agreement, involving, necessarily, compensation for the service performed. Whether or not arrangements could be made with Federal' reserve banks, or any private institutions, for the cnstody of these trust funds upon terms and ~lllder conditions satisfactory to the Gov· ernment, and at a saving in cost over the Subtreasury methods, while at the same time providing all of the conveniences in hnndling these funds and the same measure of security as now a.ft'orded by the Sub· treaRury system, is a matter upon which 1 am unable to express an opinion.
He says he Iws $152,079,000 gold in the Subtreasuries. He. adds:
I desire to repeat, however. my earnest conyiction that it wouM b(' unwise to commit the custody of these trust funds to any prh·ate Institution or Instlttltions.
It is a long report. I believe I will have it printed in tbe RECOllD. 'Vhen this matter was before the Senate committee it was our disposition to take some action in r~gard to the Sub· trea.':mries. We did not InlOW anything about tlle necessity for them, and we began to inquire and had this report sent. to us. We made inquiries of the Treasury Department as to whether they could not be dispensed with. The Secretary of the Treasury says finally in this report:
I am of the opinion that It woul,l be inadvisable at this time to nbolish all, or. any, of the Subtrcusuri'!8. It is an important matter and ~hould be considered deliberately. With the test of further experience it may develop that the tunctions of the Subtt·easurles, or some ot them, may be tranSferred to Wa.~hington or to some other agency, .but action should not be taken bastily or inadvisedly.
Therefore, as the Senator fl·Olll Arlmnsas [Mr. llOBINSON] has stated, In order to get all the information before us so ru; to understand the matter thoroughly we have provided in the bill an appropriation for the purpose of investigating the subject so tllat we can act intelligently upon it at the next session of Congress.
I ask that the report of the Secretary of the Treasury be printed in the llECORD,
The PRESIDENT pro tempore. Without objection, the report will be printed in the R':COIlD.
The report of the Secretury of the Tl"er~sury refelTed to is as follows: .
TREASuay DEPARTMENT, OFFICE OF TIlE SECIIEXARY,
Wa8hington, December lG, 101G.
The SPEAKER OF THE HOUSE OF REPllESE~X,ITIVES. SIR: In the legislative, executive. and judicial appropriation act
approved May 10, 191G, it is provided thnt- . .. l'he Secretary of the Treasury is authorized a'od directel1 to report
to Congress at the beginning of its next session which of the Subtreasuries. if any. should be continued after the end of tile fiscal year 1017, lIml !Y. In his opinion, any should be continued the reasons In full for such continuance; also, If any or all of said Subtreasuries may be discontinued, what legislation will he necessary in oruer to transfer the!r duties and functions to some other branch of the public service or to the Federal reserve banks." .
In accordance with the above authorization and direction, I have the honor to report as follows:
. There arc nine Subtrpasuries located, respectively,' in the cities of Boston. Mass.; New York City. N. Y.; Philadelphia, Pa.; Baltimore, Md.; Cincinnati, Ohio; Chicago. Ill.; St. Louis, Mo.; New Orleans, La.; and San Fl·ant!sco, Cal. The Subtreasury system was authorized by the act of August G, 184G. and subsequent acts amendatory thereof.
The duties and functions of the Subtreasuries may be stated generally as follows:
Issue of gold order certificates on gold deposits. Acceptance of gold coins for exchange. Acceptance of standard silver dollars for exchange. Acceptance of fractional silver for redemption. Acceptance of minor coins for redemption. Acceptauce of United States notes for redemption. Acceptance of l'reasury notes for redemption. Ac(:eptnnce of gold and silYer certificates for redemption. Cancellation (befpre shipment to Washington) of unfit currency. Lllundering of unfit eurrencv which permits of this process. EXcbange of various kinds' of money for other kin(Js that muy be
requested. . Rmnittances from United States depositary banks of their surplns
dpposits of internal-rel-enlle, customs, moncy-ortler, posta1, nnd similar fun(ls.
D"posits of postal-saving_ funfls direct. Dl'posits of money-order' funds direct and indIrect.
- Deposits of post-office funds direct and indirect. Deposits on account of 5 pcr cent redemption fund. Deposits of interest on public deposits. Deposits of funds belonging to disbursing officers. Funds dcposited for transfer to some other point through a payment
by a Subtreasury located thcreat. . Encashment of checks warrants, and drafts drawn against the 'l;rens-
11I"er of the United Stafes and presented at the .Subtreasury for payment.
The payment of United States coupons and interest checks. In addition to the foregoing the Subtreasuries haYe the custody of a
large part of the reserve and trust funds, conSisting of the gold coin and bullion and silver dollars deposited to secure gold and sllyer cer· tificates and greenbacks.
The receiving of deposits and payment of checks has been as~ume<l to a large extent since the establishment of the Federal Reserve System by the designation of Federal reserve banks as Government depositaries In those Subtreasury cities where Federal reserve banks are located. l~edernl reserve banks are located in the Subtreasury cities of Boston, New York, Philadelphia, Chicago, St. Louis, and San Francisco. New Orleans luL~ a hrancil of the Federal . reserve bank of Atlanta, while neither Baltimore nor Cincinnati has a Federal reserve bank,
It has always been deemed advisable to deposit the gold reserve and trUBt funds of the Government in sevel'al places rather than to concentrate them in one, for reasons of security as well as public conyenience.
The Federal reserve act docs not expressly, .or by implication, contcmplate the substitution of the Federal reserve banks .for the Subtreasul"les, nor would it, in my opinion, be possible, or adYisable if possible, to attempt such a substitution. While the general o:r current fund of the Treasury may, in the discretion of the Secretary, be deposited In the b'cderaJ reserve banks, the resen'c and trust 'funds 0[ the Government, viz, gold coin and bullion and silver dollars held In t.l'U8t by tile Government against outstanding gold und sliver certificates und greenbacks, nrc not included in this authorization. ',rile gold eoln and bullion held against gold certificates, amounting at present to more than $2,000,000,000. a considerable part of which is deposited In the Subtreasuries, should not, in my opinion ... be committed to the custody of any private corporations-and the l"ederal reserve bunks' are private corporations-but should be in the phYSical control of the Government itself. 'rills applies with equul force to the $1(;2,979,025 of gold reserve held against United States notes and Treasury notes of 1890 and the silver dollars held against silver certificates. If, )IOWever, it silould be deemed advisable to transfer the custody of these trust fllniIB to l?ederlll reserve banks or to any other private corporation or corporations, it would be necessary to make a special deposit of s. uch funds in vaults espeCially constructed for the purpose and ,to maintain a Ji'ederal guard or some form of adequate Goyernment con-trol oyer such I'aults. . .
. Since the Federal reserve banks are, as I have already stated, private corporations, just as are the national bani,s,. the duty of providing the necessnry storage vaults and of assuming the custody and control of these trust {undH could not he imposed upon the ],"ederal reserve ban Its by legislation It could ,only be accomplished by negotiation and agreement. involving. ne~ssarily, compensation for the service performeil. Whether or not arrangements could be made with Federal reserve banks, or any private institutions, for the custody of these trust funds upon terms and under conditions satisfactory to the Government. and at a saving in cost over the subtreasury methods, while, at the same time,. proviclinr; all of the conveulences In handllng these funds and the .same mcasure of security as now afforded by the subtreasury system, IS. a matter upon which I am unable to express an opinion. I desire to repellt, however. my earnest conviction that it would be un· wise to commit the custody of these trust funds to nny private Instl.tution 01' institutions. The custody of these trust fundS, their mnintenance, direction, control, and administration are distinctly a governmental function and should be exercised only by the Government.
Aside from the custody of the trust funds of the Government, the Subtreasuries perform a highly useful service to the public in' making exchanges of money, supplying money and coin where needed, and reducing the cost anl1 el(pense of ·shipments of money and coin from a common center. It Is necessary to maintain the facllities and conveniences proyliled by the Suhtreasurles in the large centers of hus!· ness in the country, such as tbe cities in which the Subtreasuries are now located. J';v8n If these particular functions could be transferrell to Federal reserve lianks where they exist, the services rendered by the substituted agencies would ha,·e to lie compensated for. This woulcl inyolye cl(penses to the Government, while, at the same time, the faemtirs provide(1 might not be as thorough and satisfactory as those supplied by the Subtreasuries themselves.
It. has ueen suggested that the Subtreasuries are merely conyCnlences and not necessities, and that their duties might be performed entirely by the 'rreasury in Washington. This is in a sense true, but the cost of hanrlling all tbe business from a common center. in a country so extensive as the Unltell States, might be greater than the expense of the SUbtreasury system, whereas the delays anr} inconveniences which the public woulcl haye to suITer might prove a very serious handicap upon business. It could with equal force be argued that internal-revenue ofilces throughout the United States could be abolished and all of the work done at Washington, and, In lilte mauner, that many of the customs omees throughout the country could be aboliShed and all of the work done from Washington. It Is the auty of the Government to provide adequate facil1tles to meet the CODvenience and necessities of the pulllie In all parts of the country. nnd the problem must be consillered as a whole anll not merely in detail.
It Illay be possiule to reduce the expense of admin!stration of some, or all, of tile Subtreasuries. It has been only one year since the Federal reserve banks were lilllde Government depOSitaries and fisc;tl agencies ana the current or general funds of the Government In such cities transferred to Federal reserve banks. About that· time I appointed au impl'Q,'ement committee (llescribed in my ·annual report of 1(15) to mak" a careful study of departmental methods in all (lirection" and to report upon the best means of improving the general administration <'f the Treasury service in its various important branches. 'l'he adminiRtra rlon of the Subtreasuries is one of the subjects for In· vestigation, und I sincerely hope that within another year It lllay .be found possible to reduce the expense of operating these institutlons in SOIlle, if not in all, of the cities where they are now located.
The amount of the Government funds in each SubtreasUl'y, the yolume of the toml transactions annually performed by them, and the eost of maintaining these institutions arc set forth in the followIng table:
HeinOnline -- 54 Cong. Rec. 1472 1917
147·2,' CONGRESSIONAL R,EOORD-SENATE. JANUARY 16,
Subtreasury. Government funds held
Juno 30, 1916.
Total transoo- E~~~~o~ tions, fiscal year nance fiscal
It wllI be seen that the cost of mnlntalnlng these Institutions, treat· ing the Subtreasury ~ystem as a whole, Is only one one·hundredth of 1 ""1' cent, approximately, on the total transactions Involved-an inslgnlilcant sum compare!! with business done, the Important service per· formed, and the conveniences afforded to the public. Aside from New Yorl(, tile cost of maintaining the otller eight Subtreasuries Is $847,· 41U.88, which is a comparatively small sum to pay for the service and convenience they provide. If these Institutions were abolished, the totnl cost of operating them would not be saved, as a counter expendl· ture by the office of the Treasurer In Washington, resulting from the increased worlt that would be thrown upon that office, would be entailed,
I um of the opinion th"t It would be Inadvisable at this time to ahollsh nil, or any, of tile Subtreasuries. It Is an important matter und should be considered deliberately. With the test of further ex· perlence it moy deyelop that the functions of the Subtreasuries, or some of them, may be trnnsferred to Washington, or to some other :lgency, but action should not be taken hastily or Inadvlsedly.
I regl'et exceedingly that my necessary absence from Washington, in connection with the establishment of the Federal farm·loan banks and other public business, made It Impossible tor me to submit this report to the Congress at an earlle" date.
Respectfully, W, G. lIIcADOO, Sce,·ctary. Mr. WEEKS. Is there a motion before the Senate?' The PRESIDENT pro tempore. There is no motion in con
nection with the matter. Mr. WEEKS. I ask the Senator fl'om Minnesota if he is go-.
iug to make a motion? . . Mr. NELSON, I huYe pointell out the path of duty to the
majority of the body; I have shown them the true light, and I think I will leave it to them to say whether they will follow the puth I huve blazecl out for them nnd be ,as economical as they cun well be, If they so deSire, under the amendment I have suggested. If they have nQt sufiicient interest to offer amendnients themselves, I am sure I will not draw them out of the Democratie slough of despond. . ·Mr. WEEKS. I will not take the time under those circum
stances to discuss this proposition. I will merely say that I think the Senator from Minnesota Is probably right in the contention which he has been making. I um not sure about the detlli1s in the matter of Subtrellsuries and Federal reserve bunks, and I am not quite clear in fnct in my own mind to say that it can be done without any possible detriment to the service. If there is a provision in the bill, as I understand fl'om the Senator from Arkansas, that this I11l1tter shall be investigated and a report made to Congress next December, I think that is the better way to proceed, although I would vote, if the motion were made, to strUm out the appropriation for the Subtreasuries and' yote for that proposition. I think, however, when the bill goes to conference, the proper Treasury ollicers should be brought before the conferees and full Imowledge obtained from them as to its desirability or wllat reasons they may have for Hot tal,ing such action.
The PRESIDliJNT pro tempore. The reading of the bill will be continued.
Mr. THOMAS. I ask permission to turn back to page 51, line 6. '1'here is a committee amendment on page 51, line 6, which reads, .. Private secretary for captain commandant, $1,400." I make against that amendment the same point of order which was made by the Senator from Washington a few moments ago to the amendment on page 37.
'J:he PRESIDENT pro tempore. '.rhe Chai!.· did not understand to what.amendment the Senator referred.
1\-[1'. ~:HOMAS. The point to which I referred was made against the amendment on pnge 37, beginning at line 13, providing for an assistant to the Secretary of the Treasury and fixing his salary. The point was made the amendment seeks to incorporate generlll legislation into an appropriation bill, and the pOint of order was sustained. I make the same point of order to a similar provision on p'age 51, line G.
MI'. OVERMAN. -Mr. President, of course, this amendment has been adopted.
~:lIe PHElSIDElNT pro tempore. The amendment as stated by the Senatol' from North Carolina has been adopted.
Mr. '.rHOMAS. Then I reserve the right to maIm a point of order against the amendment when the bill reaches the Senate.
Mr. OVERMAN. If the Chair was correct In his preceding ruling, we ·might let everything which is in the bill relative to the fixing of salaries go out.
Mr. THOMAS. I think everything which increases the number of employees ought to go out.
Mr. NELSON. Mr. PreSident, at the iilstance of a number of my colleagues and without taking more time than is absolutely necessary, I move to strike from the bill all under the title of .. Independent Treas"tll'y," pertaining to Boston, Chicago, New York, St. Louis, and San FranCisco, in five pluces. The language Is found on pages 63, 64, and 65; and I move to strike out the language relative to Boston.
Mr. OVERMAN. Does the Senlttor make the motion as to all of those p~aces?
Mr. NELSON, No; I leave out foul' of them. Mr. OVERMAN. I shall not consent to that. If the Senator
will let them all go out and If there is a necessity for any of them going out, the matter can go into conference and there be considered. I shall not object to tliat.
Mr. NELSON. Would the Senator ruther I should make the motion as· to ull of them?
Mr. OVERMAN. I would rather the Senator would make the motion as to all of them, so that if we make an investigation at all, we may investigate as to all of them.
Mr. NELSON. Very well, then, I will move that they all go out. ' .
Mr. GALLINGER. Mr. President, pending that motion, I suggest the absence of a quorum.
Mr. OVERMAN. That suggestion is not in order now under the agreement under which we are proceeding.
The PRESIDENT pro tempore. The Senator from New Hampshire suggests the absence of a quorum. The Chair, how ever, desires to cull the attention of the Senator from Minnesota [Mr. NELSON] and of the Senator fl'om North Carolina [Mr OVERMAN] to the fact that we are proceec1lng by unanimous consent, first, to consider amendments reported by the com mlttee.
Mr. OVERMAN. I myself made that pOint of order just now and I was going to say to the-Senator from Minnesota that when he made this motion I wanted him to make it in accordance with that agreement, and that he was proceeding out of order.
The PRESIDENT pro tempore. The Chair did not hear the Senator from North Carolina when he made that point.
Mr. NELSON. I was not aware of the situation. If the Senator objects--
Mr. OVEJRMAN. I do not object, but we are proceeding under a unanimous·consent agreement, and I was going to sug gest that to the Senator when I was called down.
Mr. NELSON. Very well, I will wait. Mr. GALLINGER. Under those circumstances I shall 116t
insist upon my suggestion. I withdraw the suggestion. The PRESIDENT pro tempore. The Chair thought possibly
the Senatol' from New Hampshire woulll do so. The ClJair did. not want to control the action of the Senate, but he thought It proper to call the attention of Senators to the fact.
The reading of the bill was resumed. 1'he next amendment of. the Comrllittee on Appropriations was, under the head of "'Val' Department," on page 71, line 7, before the worll "as sistants," to strike:out "61" and to insert "40," so as to read
Adjutant General's Office: Chief clerk, $2,500; 10 chiefs Of dlvislo11s at $2.000 each; clerks-58 of class 4, 74 of class 3, 116 of class 2 231 of class 1, 03 at $1,000 each; engineer, $1,400; assistant engineer
Mr. GALLINGER. Mr. President, it was at my instance in the committee that that amenllment was placed in the bill. I received a letter from a friend on the outside who called at tention to the number of assistant messengers in the oftice of The Adjutant General, the bill, ns it came from the other House, providing for 11 messengers and 61 assistant messengers. The statement is made thut they did not require any such number of messengers. For the purpose of sending the matter to con ference, I moved the amendment which was agreed to by the
. committee. Since that time I have learned from Adjt. Gen McCain, one of the most accomplished ollicers in the Govern 'ment, as I loolc upon him, that an injustice has been done to his office by that amendment. I asked Adjt. Gen. McCain to muke a written statement as to the matter, and, if Sepaors will listen to me, I shoulc1like to read it. It is not long.
I will say, before reading the Jetter, Mr. President, that I was luboring under the impression that The Adjutant General's oftice, while'of great importance, yet did not include enough rooms' to require the assistance of such a number of messengers and assistant messengers-61 in nIl,. I believe-but The Acljutant General writes nrguing to the contrary. He says:
HeinOnline -- 54 Cong. Rec. 1473 1917
19.17.«, CONGRESSIONAL ,"RECORD-SENATE. 1413 The Adjutant General's Office occupies approximately 150 rooms In
the State, War, and Navy Bulldlng, and has branches of its divisions located In four outside buildings, two of which are -occupied exclusively by the office, which Is charged with their custody, maintenn.nceand cleaning, The office Is also required to clean those portions of ·the 'other two outside buildIDgs which It occupies as well as all of Its ·rooms In the State, War, and'Navy Building. ' '
Adequate com,munlcation by means of messengers must be maintained between the maID office and the .branches, and internal messenger service must be provided for these branches also. In three of the outside buildings the floor space occupied Is large-the Ford's Theater "Building and annexes, with three floors; ,the bulldlng at 610 Seventeenth Street NW., with five floors; and.a large area in -.the Army Medical Museum Building.
It will rea·dlly be seen that the work of cleaning 150 rooms in ona building, and a large nUlllber of rooms In other bulldings, providing Ice water for their occupants (the ice being brought dally from the Bubbasement of the building), .and the messenger work that necessarily Is .required In ·an office as large as .this fully occupies the time of the presen t messenger force. .
The Increase In the Army authorized by recent legislation :bas added largely to the worle of the office, and the demand for communication by messenger with other burl'ans of the department bas correspondingly increased. In addition to this, there has been transferred to this .office the work of distributing practically all the publlcatlons of the War Department, wor.k which was heretofore done at the War College.
One of the most effective means by which the work of the ollke is kept up to date is its five-minute mall messenger service, by means of which cases are carried to every part of the office with the utmost promptness. There are 12 messengers engaged on this lIiatl route, with the necessary number of substitutes.
All of the .assistant messengers estimated for ·are absolutely necessary for the work of the ofllce, and the rednction proposed in the Senate report on the legislative ·blll,by which there Is a reduction of aSSistant messengers from 61 to 40, would render it impossible for the ofllce to maintain Its present state of efllclency. .
Mr. President, it was a revelation to me that The Adjutant General's Office occupied 150 rooms in the main building, and also had the Ford's Theater Building at its 'command, and likewise a building on Seventeenth Street. I confess that after reading that statement by Adjt. Gen. McCain, and having asked him to come and talk with me about the matter, I felt that I had done an injustice in moving the amendment. I now think that we ought to recede from the amendment. That is my personal feeling.
Mr. STONE. l\ir. PreSident, can the Senator from New Hampshire state the compensation for these messengers and assistant messengers?
Mr. OVERMAN. They receive, respectively, $840 and $720. Mr. GALLINGER. I am informed that the messengers re
ceive $840 and the assistant messengers $720. It is very low pay. Mr. ROBINSON. Will the Senator from New Hampshire yield
to a question? Mr. GALLINGER. I yield. Mr. ROBINSON. In the same paragraph is carried an item
for 21 laborers in connecti9n with The Aq.jutant General's Office, What se!"vice do those laborers perform?
lHr. GALLINGER. I do not know; I did not make any inquiry of The Adjutant General {)n that point.
Mr. ROBINSON. I should like to ask the Senator one further question. Has his investigation satisfied him that the amendment should Dot be agreed to and that the Senate should disagree to the amendment? .. .
Mr. GALLINGER. That is ilie feeling I have after talking with The Adjutant General about the matter. I confess that I knew little about it at the .time ·1 ·offered the amendment in committee.
Mr. OVERMAN. Does ,the Senator .not think the matter had better go to conference? '
Mr. GALLINGER. As I was saying, when I offered the amendment in committee I confess I knew but little about It, exeept from a letter I had received from an outside party, saying that that office was loaded down with unnecessary employees and he particlilarly mentioned assistant messengers. When i saw the lUlmber which was appropriated for, it struck me that it was very large, and perhaps unnecessarily large.
Mr. OV]<JRMAN. Mr. Prel?ident, I suggest to the Senator that we ascertain all about the matter in conference. I am .glad the Senator brought the amendment to our attention and I myself suggested to Gen. McCain that I thought the ·m~tter ought to go to conference. We could there better investigate it than we can here. If it is right that the amendment should ·go out I think the conferees will :agree to let it.go out. '
.Mr. WARREN. Mr. President, I hope that the amendment WIll go out of the bill. It is rather invidious that we should attack that particular department. There is certainly no more ably conducted department than that of The Adjutant General and it has almost ·always been so. It is a department tb.at i~ made up ·of several others combined. There are'some 500.cler"ks or m?re, and they are scattered ever tHfferent parts efthe;town. To. dIspense with the messengers weuld simp1y put the Clerks to demg that messenger serv-ice, and there would then be.a'demalld for more clerks. .
Mr. G:A.LLINGER. The Senator !from ·Wyeming is wreng in suggesting that we have attacked that department. There is no sucll purp.ose at all.
Mr. WARREN. I understand there is no such intention on the part .of the .Senator, but it really amounts to that when we depend on the ,statements of some one on the .outside who wishes us to reduce the employees of any. one particular department.
.Mr. GALLINGER. I will say that this gentleman on ,the outside had had service .in tIle depar.tments .of the Government and is a pretty W€ll informed man.
:Mr. ROBINSON. Mr. President, will the Senator from New Hampshire yield to a further question?
Ml·.GALLINGER. Certainly. Mr. ROBINSON. The Senate committee amendment now
under consideratien invelves ·the striking' out .of the language down te line 12, on page 71. .
Mr. GALLINGER. Yes. Mr. ROBINSON. I will ask the Senator from New Hamp
shire if he has advised himself as to whether that language should go out or whether his amendment should be rejected?
Mr. GALLINGER. Mr. PreSident, I was likewise responsible fer that amendment. I moved the runendmentfor the .:reasen that I had found that that seemed to 'be the .only office where the inhibition could be found that theJ;"e should be no transfer of the employees from that particular office. It did not apply to ti1eethers. I noticed also in my invel'!tigation that the Cemmissien en Economy and EffiCiency, approved by President Taft; had recemmended the change. I was unable to see why thnt exception should be applied t.o this particular office. In talking with .The Adjutant General I found him very insistent that the law should remain as it iS,but I was ne.t fully persuaded that he was correct about it. He intimated that his clerks would be transferred and that his w.ork would be thereby crippled. Of course, if I believed his work was g.oing t.o be crippled I would .not advocate the amendment at all; but.it has .occurred to me that there iii no adequate reason why the exception should be applied simply to one office in the War Department. There may be some good reason why the change should not be made but it does not appeal to me. '
Mr. WARREN. Mr. President, that .occurred in this way: During the administration of a former Adjutant General, Gim. Ainsw.orth, affairs in that office and .others had- become rather .offensive te all parties on account .of the frequent transfers and the calling on the .offices at times when they might be busiest' for a dozen, m.ore ·01' less, clerks for use ".in some ·other bureau. The matter was brought before the Military Committee, and from there before t~e Appropriations· Committee, and the effort was made to prOVIde each office or bureau with the proper number .of clerks and, in so far as was possible to ,break up the objectionable system then prevailing. In this particular office we cut .out, as I remember, a very large number of -clerks because of that. Gen. Ainsw.orth reduced the number of clerks materially when he brought together the Record and Pension Office and ~he Adjutant Generars .and .other .offices, each year disposing of a number of clerks fer some three .or f.our years. It was .for that reason that thisrunendment WilS recommended and the Committee .on Approprlatiens ad .opted it. '
I a~ not prepared to say whether or·not it is necessary now. I am prepared to say, however, that ·1 should prefer to fellow the ,earnest desire of the -head of that office, wh.o I believe is trying not only to conduct it properly but with the ieast expe~se. I shohld very much like to ,see both of those amendments disagreed to; but certahHy the one as to the niductlon in the number of messengers should not remain in the bill.
Mr. GALLINGER. Mr. Preliident,'beyond a question tilere is n great deal ·of red tape in that particular office, as well as in all the .other offices of the Government. ·1 had thought of reading fr.om the rElPort of the Commission on Economy and Efficiency a .paragraph .on that pOint, because, as I said to Ben. McCain frankly this morning, it was more interesting than any novel I have read in recent years ; but as we have provided in the bill that the Bureau of Efficiency shall inquire into aU these matters cOnnected with the departments ;[ have no disposition to prolon,g the debate.
~lr. ": ARREN .. T~le War Department is not the only one ;WhlCh has been -excerlated. .
. Mr. GAI;LINGER. No, Mr. President; I did not say that it was. I smd aU departments. I am going to read fram the report of the ]<Jcon.omy and Efficiency Commissi.on for the ·informa'- . tion-and I do not know but for the amusement--:-of the ,Senate, because it is a most extraordinary showing. Here is what the commission says:
Pvt. Rentz ~aci~ application t~ purchase his discharge fro~ the Government, und his superior officer recommended that the discharge be granted. '.rhe application came to the War Department, and, according
