Senate Report Jan 16 1917 (1)

8/7/2019 Senate Report Jan 16 1917 (1)

1/7HeinOnline -- 54 Cong. Rec. 1467 1917

1917.: . ' CONGRESSIONAL' REOORD-SENATE., 1461Mr. SMOOT. Yes; if i t were .legislated in that way, i twould be.'1\h'. SlJTHERLAND. The authorities have said over andover again that we are to look at the'substance of the proposedlegislation and not at the form, and ,,'hen we come to do thatand anal5ze this p r ~ v i s i o n w!l. find that it does, two things:Fii'st of all, i t creates an office, and that, is a legislative act,because the office could no t 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 isgeneral legislation. I never have heard it doubted heretoforethat the cl'eation of an office was general legislation. There

are precedents here, one after another. Here is one that catchesmy eye, on page 134, Forty-seventh Congress:'The President pro tempore (Mr. Davis) {leclded that an amendmentto the naval appropriation bill adding 140 surgeons, of whom 50 shallbe designated as surgeons, of the first class, etc., was 'not In orderunder Rule XXIX, an d 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 additional140 surgeons, it is general legislation to provide for an add it i o n ~ l 1 surgeon. The fact that there is only one in the classdoes not prevent it fl'om being a class.Mr. SMOOT. The Senator takes the position, then, that noincrease can be made in an office on an appropril\tion bill?Mr. SUTHERLAND. No; the Senator does not take thatpOSition. 'Ve can increase the salary paid to an office alreadyin existence, bu t we can not create a new office. They are twovel'y distinct and different things.1\Ir. SMOOT. I recogn ize that entirely. There is not anyquestion about that, and that ha s been universally held. Bu tthe Senator takes the position, then, that the only way in whichwe could have an assistant to the Secretary of the Treasury isby 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 questionas to whether it is general legislation or special legislationgeneral legislation as distinguished from special, or generallegislation in the sense that it is public, as distinguished from,private legislation-and if it is proposed to an appropriationhill there is a rule which says that if it is general legislation itwill not be admitted.l\fr. OVERMAN. 'l'his is not general legislation.

1\11'. SMOOT. There is not an appropriation bill passed bu tthat there is the cI'eation of some kind of an office by the appropriation bill.Mr. GALLINGER. A point or order could be made againste\'ery one of them.1\It-. S1\IOOT. Of course; if it is general legislation, then theonly way you can create a new office is to pass a bill throughCongress creating it, and then appropriate the money to paywhateyer salary is attached to it.1\Ir. SUTHERLAND. We do that sometimes, but it is donebecause no one objects. I f the point was made--- 'MI'. OVERMAN. Could we appoint a clerk1 Would that begeneral legislation?Mr. SUTBEHLAND. How does the Senator mean?Mr. OVERMAN. Instead of saying ' that there should' be40 clerks for a certain department, suppose we put in 46; wouldthat be general legislation? 'Mr. SUTHERLA.i\,D. Additional clerks?1\k OVERMAN. Yes.MI'. SUTHERLAND. I think undoubtedly i t would be general legislation if it is the creation of a new office.MI'. OVERMAN. Well, if that is so, it would be the end ofal l legislation. We never would be able to keep the Government going. The wheels would be clogged. The Governmentcould not move. 'Ve could not get along at all. We never could'pass general bills through Congress for these clerks. Thatwould be the enu of it. This is simply special legislation; it isnot general.Mr. SMOOT. If that were the case, Mr. President, the Houseof I ~ p r e s c n t a t i v e s might just as well make up the appropriation bill and have it become a law in that shape and nevercome to the Senate of the United States for amendment bythem. .Mr. GALLINGER. Oh, well, if the Senator will permit me,an apl)l'OI)l'iation bill is not entirely composed of clerks. Therear e some other things in appropriation bills.Mr. O V I ~ R l \ I A N . There is not much else in the legislativehill.1\lr, BHANDEGEK Mr. President, I have heard this question l . l i s c l l ~ s e d m'el' all(l over again as to what was generalleg-i;;.t::tion. r nCYCI' II:! YC heen able to form an exact standardwhU', it \\w:; ;:;nfe to o ] l ~ . J ' a t e un(]el'. I wish to ask the Senator

from Utah, if he will, permit me to do so, what he thinks is thedistinction between general'legislation and special legislation"Does he think that everytliing that is not generai legislationhas to be, so to speak, private legislation1Mr. SUTHERLAND. No; it may be distinguished' in avariety of ways. ' " ,, Mr. BRANDEGEE. What would be some speCial instancesof speCial legislation which could go on an appropriation bill?Mr. SUTHERLAND. I t may be distinguished along the linethat it applies geographically to the whole country or that itapplies only to a l i m i t ~ d portion of the country. Legislation,for example, that 'applies to the whole State, in the case otState legislation, would be general legi,slation. I f it applied toa local subdivision, it would be special legislation. But ' i t issufficient for this purpose to say that, so fa r as I know, it nevel;has been doubted that the creation of an office by legislationwas general legislation as distinguished from special legislation. I t is not always easy to draw the distinction. I t is oneof those difficult things where the c1ivision, instead of being aline, 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 theother, that you have' got speCial legisla tion. Now, intermediately there are a number of cases which it is som,etimes difficult to assign to the appropriate class; but here is a casewhich by all the authorities falls clearly outside of the zoneon the side of general legislation. So it is unnecessary torefine about it.Mr. HITCHCOCK. Mr. President, I should like to ask theSenator from Utah if he does not think there is a clear distinction between merely adding a clerk in a department and aprovision 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 i t is quite likely that there is a distinction in thelaw; but, as i t seems to me, it is not llecessary to refine uponit, 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 donot know what genernl legislation is.The PRESIDING OFFICER. The question is, Shall theruling 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 bythe Secretary of the Treasury himself in regard to the necesSity for having this office created, so that Senators may seethat the reason why the committee pu t it in was because i t wasjust and right and ought to be done.I therefore ask to have the statement incorporated in theRECORD.

The PRESIDING OFFICER. I f there be no objection, i t willbe 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 Iconfess I present with an extreme degree of diffidence, and If It werono t practically Imperative I would no t present It. That is the questionI presented here two years ago to the House committee, of an assistantto 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 th e official estimate to the President of the Senate.Senator OVERMAN. You want that to go into the, record?Secretary McADOO. Yes; you can pu t In the estimate and the letteralso I f you wish.(The Jetter an d estimate referred to arc as follows:). TREASUllY DEPARTMENT, OFFICE OF THE SEClll'lTAlty,lVashinyton, Deccmbcr 26, 1916.The PRESIDEXT OF THE SEXATE:-SIlt: I have the honur to submit herewith for the favorable actionof Congress an estimate of appropriation for salary of an assistant to'the Secretary of the 'l.'reasury, to be appointed by th e Secretary, withcompensation at the rate of $5,000 per annum, the same to be availablefrom the date of the approval of the act. 'The duties that have been recently Imposed upon the Secretary of thoTreasury 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 thepromotion of Increased financial and commercial relations with theseveral HepubUcs of Central and South America, together with thetremendous growth of the business of the Treasury Department, makeIt Imperative that the Secretary be granted addltlonai assistance, andI can not too strongly urge upon the Congress the grantiug of thisrequest, Inasmuch as tbe Secretary himself and his three assistauts and,their respective staffs are drl\'en to the utmost to discharge the dutiesof their offices. .Respectfully, W. C. lIICADOO, Secrctary.Secretary MCADOO. Not only has the worl< of the Treasury Department increased tremendously In the last three years, bu t new dutieshave been Imposed upon th e Secretary which arc very exacting. For



1468 CONGRESSIONAL . R E O O R , D - S E N A ~ : E l . JiANUARY 16;instance:\: take' the Federal reserve act. Under that law the Secretaryof. the " r e a ~ u r y is., chairman. of the, Federal Reserve Board, being amember of the board ex officio. While the Secretary can, not a t t e ~ d . every meeting of the board, he must attend, meetings frequently, and Ido attend just as often ns'I can. Sometimes those meetings; requiretwo homs,.nnd sometimes mOJ:e out'of the day. 'In addition to that, the Federal farmloan act created the I!'ederalFarm 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 strikei out : . 'i . Federal Far'm Loan Bureau: For salaries and expenses under' tile F ~ d . i eral Farm Loan, Board createil by the ac t 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 farmfoan'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! beI made to Congress. ", And'to insert:That work requires a. great deal of time and patience, and as tim.egoeR on the Secretary of tile 'rrcasury' w!l1 Ile obUged to give a. greatdeal of attention to, those two organiZlLtions. It Is Ilterally impossiblefor. me to keep up with aU of. tile work which t h ~ Secretary has to do Federal Farm Loan Bureau: For four members, of the lJOard, at $7.500with 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; clerksm o ~ t important parts of the work. I!'or instance, t l l ~ r e 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 $720a mnn sitting next to me, intimately familIar with, the matters a n ~ . 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 erethat 110 may relieve the Secretary of a lot of tile detaiL work which he ated by the ac t approved Jnly 17, 191!6, including the actual necessarynow 'has to try to do himself. I thin l' that any S e c r e t ~ r y 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 farmloan 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 hereunderlarge 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 ~ o a n 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 ~ h c n we have an Assistant Seclot',,: .. in charge of the fiscal bureaus. 'f "rOLLIS' ",r.. 1?d I k .Under him are tile Internalnev(]ll1l



1917. CONGR,ESSIONAL REOORD-'SENATE. 1469class 1, 12 a t $1,000 each, 11 a t $900 each; check allsorter- (unapportioned). $900; 2 messengers; 2 assistant messengers; laborer; In all,$139,430.Th e amendment was agreed to.The i'eading was continued to page 48, line 25.Mr. OVERMAN. I offer a committee amendment nt thispoint. It makes no change in the appropriation whatever, butis merely transferring one clerk to the propel' place.The PRESIDENT pro tempore. The amendment will bestated,The S ~ : C R E T A R Y . 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" andi n ~ e r t "$27,100," so as to read:Ollice of Register of th e 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 c l ~ R s 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 th e Coast Guard: Two chiefs of division, at $3,000 each;2 assistant chiefs of division, a t $2.200 each; title and contract clerk,$2.000; law and contract clerk, $1,800, an(l $200 additional while th eollice is held by th e present Incumbent; t o p o g r a ~ h e r an d hydrographer,$1 800' civil engineer. $2,250; draftsman, $1,uOO; private secretaryfo r 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 page53, line 1, before the word" clerks," to strike out" $3,500" andin>;el't "$3,000"; and in line 3, after the words "in all," tostl'ike out" $17,120" llnd insel't "$16,120,". so as' to make the



147(]) OON,GRESSIONAL RECORD-.SENATE. JANUARY 16,MI:. NELSON. ;r .canaccount for .that, The bill came fromthe House in that ~ V a Y , If .tlle Senator wiU allow :me, 'I willstate 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 u t t e r l ~ needless, utterly useless, There is a third of a milliondollars tllat coulc1 be saved as easy as not. .Mr. VARDAMAN, Well, it ought to be done.1\'11'. NELSON.' Subcreasurles are provided in th e bill at fourother places for which there lllay be some justification, bec!1Use

t h e r ~ is no :reserve bank in those cities. They are Baltimore,Cincinnati, New Orleans, and Pltillldelphia ; bu t the total amountfor those four Subtreasurie s Is only $131,390. As I said, therelJIay 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 retainthem in the cities where we have a reserve bank.So if the Senate wants to .economize and do no injustice toflnybody, but a benefit to the Government, it ought to strikeout{1'Olll the bill Boston,Chicago, New Yor.k, St. Louis, and SanIPrnncisco, because each of them has a Federal reserve bauk,~ v h i l e they might lea1'e in for the present, though I 'hardly thinkH is llccessm:y, the 'ollier four places, that have no reserve 'bank.The .total Hlnount at tllOse four places is only $181,390, while attJlC five 'places that have:a reserve bank it is upward of a thirdof a .million donal'S.I call the attention of the committee to this because I belieew.e ought to ,persist in u spirit of economy, and tbel'e is :no occasion to Illaintain these Independent TreaslIl'y systems \vherewe have Federal reserve banks, . .l\ir. HITCHCOCK and Mr. ROBINSON addressed the Chair.:Mr. ROBINSON, Will th e 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 Idesired. I quite agree with him that that economy should belooked 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 askedme 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 husobserved the fact tllRt the Committee on kppropriations Inserted in the bill an amendment which has already been agreedto :by th e Senate, 'instructing the iBureau of Efficiency to " investigate the worl{ performed .by tbe Subtreasuries and report toCongress at the ,beginning of the next regular seSSion ~ v h a t p a r . t of the 'Worl{ of llie Subtreasuries, may be trunsferred :to otheroffices of the Govermnent or 'banks of the Federal Reserve System," and so forth,I presume the Senator from Minnesota is also aware of thefact that ,this propOSition was the subject of debate in the Honseof Representatives, and the House of Representatives declined tostrike out the Subtreasuries.

1 ~ h e Senate Committee on Appl'opriations considered the .advisability of adopting and recommending' to the Senate anu mendment similar to that now snggested by the Senator fromMinnesota, but were unable to gain sufficient information on thesubject to determine on the advisability of it s uc'option, in viewof tlle fact that the Secretary of the Treasury recommended theretention in the bill of the Subtreasuries. The Senate committee lliought, under those circulllstances, it was best to havethe matter in,estigated by the Bureau of Efficiency, and procurefull and reliable informntioll with regard to the subject, with a view of action upon the matter the next time t I ~ e questionarises, probably during the next session of Congress.1\'[1'. NELSON. I apprehend the Bureau of Efliclency couldnot by any possibility throw any new light on the subject. I t is not a matter, if Senators will reflect, that requires :any investigation.'What is the occasion of having the Goernment services.duplicated at these pOints? If we hav.e a Federal 'reserve bank,why can not the Goverument carryon its fiscal operations asit lIas a right to .do in those banI,s, and why should we retainthis other system side by side in those places '/Out of extreme caution I have segregated the places. . I t maybe that at the four places-Baltimore; CinCinnati', New Orleans,and Philadelphia-where they have no reserve biwks, it woul



1917. OONGRESSIONAL REOORD-SENATE. 1471pounded or may be impounded in the Tl'eusury so that the endless chain of wIthdrawing' gold from the Treasury may bestopped, That is not a danger in existence now; it has beenobviated.I have not any desire to antagonize the Senator's suggestionof an amendment, but it occurs to me that before we make itwe ought to be sure that the Federal reserve banks are Iu a po-sition to perform all the functions of the Tleasury..1I1r. OVERMAN.. Mr. President, I mel'ely want to read alongthe 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, private corporations, just as are the national banks, the duty of providingthe necessary storage vaults and of assuming the custody an d controlof these trust funds could no t be imposed upon the Federal reservebanks by legislation. I t could only be accomplished by negotiation andagreement, involving, necessarily, compensation for the service performed. Whether or no t arrangements could be made with Federal'reserve banks, or any private institutions, for the cnstody of thesetrust funds upon terms and ~ l l l d e r conditions satisfactory to the Government, an d at a saving in cost over the Subtreasury methods, whilea t the same time providing all of the conveniences in hnndling thesefunds and the same measure of security as now a.ft'orded by the SubtreaRury system, is a matter upon which 1 am unable to express anopinion.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 prhateInstitution or Instlttltions.I t is a long report. I believe I will have it printed in tbeRECOllD. 'Vhen this matter was before the Senate committee it

was our disposition to take some action in r ~ g a r d to the Subtrea.':mries. We did not InlOW anything about tlle necessity forthem, and we began to inquire and had this report sent. to us.We made inquiries of the Treasury Department as to whetherthey could not be dispensed with. The Secretary of the Treasurysays finally in this report:I am of the opinion that It woul,l be inadvisable at this time tonbolish all, or . any, of the Subtrcusuri'!8. I t is an important matterand ~ h o u l d be considered deliberately. With th e test of further experience it may develop that the tunctions of the Subtteasurles, or some otthem, may be tranSferred to W a . ~ h i n g t o n or to some other agency, .butaction should no t be taken bastily or inadvisedly.Therefore, as the Senator flOlll Arlmnsas [Mr. llOBINSON] hasstated, In order to get all the information before us so ru; tounderstand the matter thoroughly we have provided in the billan appropriation for the purpose of investigating the subject sotllat we can act intelligently upon it at the next session of Con-gress.I ask that the report of the Secretary of the Treasury be

printed in the llECORD,The PRESIDENT pro tempore. Without objection, the reportwill be printed in the R':COIlD.The report of the Secretury of the T l " e r ~ s u r y refelTed to is asfollows: .TREASuay DEPARTMENT,OFFICE OF TIlE SECIIEXARY,Wa8hington, December lG, 101G.

The SPEAKER OF TH E HOUSE OF R E P l l E S E ~ X , I T I V E S . SIR: In the legislative, executive. and judicial appropriation actapproved May 10, 191G, it is provided t hn t - ... l'he Secretary of the Treasury is authorized a'od directel1 to reportto Congress at the beginning of it s 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 fo rsuch continuance; also, If any or all of said Subtreasuries may be discontinued, what legislation will he necessary in oruer to transfer the!rduties and functions to some other branch of the public service or tothe Federal reserve banks." .In accordance with the above authorization and direction, I have thehonor to report as follows:. There arc nine Subtrpasuries located, respectively,' in the cities ofBoston. Mass.; New York City. N. Y. ; Philadelphia, Pa.; Baltimore,Md.; Cincinnati, Ohio; Chicago. I l l . ; St . Louis, Mo.; New Orleans,La.; an d San Flant!sco, Cal. The Subtreasury system was authorizedby the ac t of August G, 184G. and subsequent acts amendatory thereof.The duties an d functions of the Subtreasuries may be stated generallyas follows:Issue of gold order certificates on gold deposits.Acceptance of gold coins for exchange.Acceptance of standard silver dollars fo r exchange.Acceptance of fractional silver for redemption.Acceptance of minor coins fo r 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 berequested. .Rmnittances from United States depositary banks of their surplnsdpposits of internal-rel-enlle, customs, moncy-ortler, posta1, nnd similarfun(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 paymentby a Subtreasury located thcreat. .Encashment of checks warrants, and drafts drawn against th e '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 alarge part of the reserve and trust funds, conSisting of the gold coinan d bullion and silver dollars deposited to secure gold and sllyer certificates and greenbacks.The receiving of deposits and payment of checks has been a s ~ u m e < l to a large extent since the establishment of the Federal Reserve Systemby the designation of Federal reserve banks as Government depositariesIn those Subtreasury cities where Federal reserve banks are located.

l ~ e d e r n l reserve banks ar e located in the Subtreasury cities of Boston,New York, Philadelphia, Chicago, St. Louis, and San Francisco. NewOrleans l u L ~ a hrancil of the Federal . reserv e bank of Atlanta, whileneither Baltimore nor Cincinnati has a Federal reserve bank,I t has always been deemed advisable to deposit th e gold reserve an dtrUBt 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 ac t docs not expressly, .or by implication, contcmplate th e substitution of the Federal reserve banks .for the Subtreasul"les, nor would it , in my opinion, be possible, or adYisable i fpossible, to attempt such a substitution. While the general o:r currentfund 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 [th e Government, viz, gold coin and bullion and silver dollars held Int.l'U8t by tile Government against outstanding gold und sliver certificatesund greenbacks, nrc no t included in this authorization. ',rile gold eolnand bullion held against gold certificates, amounting at present tomore than $2,000,000,000. a considerable part of which is depositedIn the Subtreasuries, should not, in my opinion... be committed to thecustody of any private corporations-and the l"ederal reserve bunks'are private corporations-but should be in the phYSical control of theGovernment itself. 'rills applies with equul force to th e $1(;2,979,025of gold reserve held against United States notes and Treasury notes of1890 and the silver dollars held against silver certificates. If , )IOWever, it silould be deemed advisable to transfer the custody of thesetrust fllniIB to l?ederlll reserve banks or to any other private corporation or corporations, it would be necessary to make a special deposit ofs.uch funds in vaults espeCially constructed for the purpose and ,tomaintain 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 providingthe necessnry storage vaults and of assuming the custody and controlof these trust {undH could not he imposed upon the ],"ederal reserveban Its by legislation I t could ,only be accomplished by negotiation an dagreement. involving. n e ~ s s a r i l y , compensation for the service performeil. Whether or no t arrangements could be made with Federal reserve banks, or any private institutions, for th e custody of these trustfunds upon terms and under conditions satisfactory to the Government.and at a saving in cost over the subtreasury methods, while, at thesame time,. proviclinr; all of th e conveulences In handllng these fundsan d the .same mcasure of security as now afforded by the subtreasurysystem, IS. a matter upon which I am unable to express an opinion. Idesire to repellt, however. my earnest conviction that i t would be unwise 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 ar e distinctly a governmental function and should be exercised only by the Government.Aside from the custody of the trust funds of the Government, theSubtreasuries perform a highly useful service to the public in ' makingexchanges of money, supplying money an d coin where needed, an dreducing the cost anl1 el(pense of shipments of money and coin froma common center. I t Is necessary to maintain the facllities an d conveniences proyliled by the Suhtreasurles in the large centers of hus!ness in the country, such as tbe cities in which the Subtreasuries arenow located. J';v8n I f these particular functions could be transferrellto Federal reserve lianks where they exist, the services rendered bythe substituted agencies would ha,e to lie compensated for. Thiswoulcl inyolye cl(penses to the Government, while, a t the same time,th e faemtirs provide(1 might no t be as thorough and satisfactory asthose supplied by the Subtreasuries themselves.It . has ueen suggested that the Subtreasuries are merely conyCnlences and not necessities, and that their duties might be performedentirely by th e 'rreasury in Washington. This is in a sense true,bu t the cost of hanrlling all tbe business from a common center. ina country so extensive as the Unltell States, might be greater thanth e expense of the SUbtreasury system, whereas the delays anr} inconveniences which the public woulcl haye to suITer might prove a veryserious handicap upon business. It could with equal force be arguedthat internal-revenue ofilces throughout the United States could beabolished and all of the work done at Washington, and, In lilte mauner,that many of the customs omees throughout the country could beaboliShed and al l of the work done from Washington. It Is the autyof the Government to provide adequate facil1tles to meet the CODvenience and necessities of the pulllie In al l parts of the country. nndthe problem must be consillered as a whole anll no t merely in detail.

It Illay be possiule to reduce the expense of admin!stration of some,or all, of tile Subtreasuries. I t has been only one year since the Federal reserve banks were lilllde Government depOSitaries and fisc;tlagencies ana th e current or general funds of the Government In suchcities transferred to Federal reserve banks. About that time I appointed au impl'Q,'ement committee (llescribed in my annual report of1(15) to mak" a careful study of departmental methods in all (lirection" and to report upon the best means of improving the general administration



1472,' CONGRESSIONAL R,EOORD-SENATE. JANUARY 16,Subtreasury. Governmentfunds heldJuno 30, 1916.

Total transoo- E ~ ~ ~ ~ o ~ tions, fiscal year nance fiscal1916. yeRr'1916.Baltimore.. . . . . . . . . . . . . . . . . . . . . . . . . . $12,1>73, a7l. 07 $108,215,675.59 133,749.63Bostou. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,452,695.24 217,020,680.17 52,051.298 r ~ ~ f ~ ~ a t : i . . : : : : : : : : : : ::::: :::::: ::: I ~ N ~ ~ : ~ J , n ~ . r ~ ~ : ~ g g : g ~ U g ~ a i U : Now Orle:ms. . . . . . . . . . ....... . . . 31,917,751.13 .73, 990, 519. 44 . 27,481. 22Now York. . . . . . . . . . . . . . . . . . . . . . . . . . 329, '102, 485. 45 2,464,715,492.12 187,587.75l'hiludelphia . . . . . . . . . . . . . . . . ; . . . . . . . 26,183,266.27 473,623, 903. IS 57,792.76St. LOllis............................ 4S,62'J,847.19 193,370,692.54 37,385.63San Francisco........................ 99,088,010.01 291,058,033.63 25,812.27

Total. . . . . . . . . . . . . . . . . . . . . . . .1 -73-4,-1-73-,-67-1-.0-5-1-4-,-525-,-0-63-,-11-1-.8-2-:1:-63-5-,0-0-4-.63It wllI be seen that the cost of mnlntalnlng these Institutions, treating the Subtreasury ~ y s t e m as a whole, Is only one onehundredth of 1""1' cent, approximately, on the total transactions Involved-an inslgnlilcant sum compare!! with business done, the Important service performed, and the conveniences afforded to the public. Aside from NewYorl(, tile cost of maintaining the otller eight Subtreasuries Is $847,41U.88, which is a comparatively small sum to pay for th e service an dconvenience they provide. I f these Institutions were abolished, th etotnl cost of operating them would no t be saved, as a counter expendlture by the office of the Treasurer In Washington, resulting from theincreased worlt that would be thrown upon that office, would be entailed,I um of the opinion th"t I t would be Inadvisable at this time toahollsh nil, or any, of tile Subtreasuries. I t Is an important matterund should be considered deliberately. With the test of further experlence i t moy deyelop that th e functions of the Subtreasuries, orsome of them, may be trnnsferred to Washington, or to some other:lgency, bu t action should no t be taken hastily or Inadvlsedly.I regl'et exceedingly that my necessary absence from Washington, inconnection with the establishment of the Federal farmloan banks andother public business, made It Impossible to r 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 connection 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 themajority of the body; I have shown them the true light, and Ithink I will leave it to them to say whether they will follow theputh I huve blazecl out for them nnd be ,as economical as theycun well be, If they so deSire, under the amendment I havesuggested. I f they have nQt sufiicient interest to offer amendnients themselves, I am sure I will not draw them out of theDemocratie slough of despond.. Mr. WEEKS. I will not take the time under those circumstances to discuss this proposition. I will merely say that Ithink 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 i tcan be done without any possible detriment to the service. I fthere is a provision in the bill, as I understand fl'om the Senatorfrom Arkansas, that this I11l1tter shall be investigated and a report made to Congress next December, I think that is the betterway to proceed, although I would vote, if the motion were made,to strUm out the appropriation for the Subtreasuries and' yotefor that proposition. I think , however, when the bill goes toconference, the proper Treasury ollicers should be brought before the conferees and full Imowledge obtained from them asto it s desirability or wllat reasons they may have for Hot tal,ingsuch action.The PRESIDliJNT pro tempore. The reading of the bill willbe 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 oforder which was made by the Senator from Washington a fewmoments 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'. ~ : H O M A S . The point to which I referred was madeagainst the amendment on pnge 37, beginning at line 13, providing for an assistant to the Secretary of the Treasury andfixing his salary. The point was made the amendment seeks toincorporate generlll legislation into an appropriation bill, andthe pOint of order was sustained. I make the same point oforder to a similar provision on p'age 51, line G.MI'. OVERMAN. -Mr. President, of course, this amendmenthas been adopted.~ : l I e PHElSIDElNT pro tempore. The amendment as statedby the Senatol' from North Carolina has been adopted.Mr. '.rHOMAS. Then I reserve the right to maIm a point oforder against the amendment when the bill reaches the Senate.

Mr. OVERMAN. I f the Chair was correct In his precedingruling, we might le t everything which is in the bill relative tothe 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 numberof my colleagues and without taking more time than is absolutely necessary, I move to strike from the bill all under thetitle 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 tostrike out the language relative to Boston.Mr. OVERMAN. Does the Senlttor make the motion as toal l of those p ~ a c e s ? Mr. NELSON, No; I leave out foul' of them.Mr. OVERMAN. I shall not consent to that. I f the Senatorwill le t them all go out and If there is a necessity for any ofthem going out, the matter can go into conference and therebe considered. I shall not object to tliat.Mr. NELSON. Would the Senator ruther I should make themotion as to ull of them?Mr. OVERMAN. I would rather the Senator would make themotion as to all of them, so that if we make an investigationat all, we may investigate as to all of them.Mr. NELSON. Very well, then, I will move that they all goout. ' .Mr. GALLINGER. Mr. President, pending that motion, Isuggest the absence of a quorum.Mr. OVERMAN. That suggestion is not in order now underthe agreement under which we are proceeding.The PRESIDENT pro tempore. The Senator from NewHampshire suggests the absence of a quorum. The Chair, however, desires to cull the attention of the Senator from Minnesota[Mr. NELSON] and of the Senator fl'om North Carolina [MrOVERMAN] to the fact that we are proceec1lng by unanimousconsent, first, to consider amendments reported by the commlttee.Mr. OVERMAN. I myself made that pOint of order just nowand I was going to say to the-Senator from Minnesota that whenhe made this motion I wanted him to make it in accordance withthat agreement, and that he was proceeding out of order.The PRESIDENT pro tempore. The Chair did not hear theSenator from North Carolina when he made that point.Mr. NELSON. I was not aware of the situation. I f theSenator objec t s - -Mr. OVEJRMAN. I do not object, bu t we are proceedingunder a unanimousconsent agreement, and I was going to suggest that to the Senator when I was called down.

Mr. NELSON. Very well, I will wait .Mr. GALLINGER. Under those circumstances I shall 116tinsist upon my suggestion. I withdraw the suggestion.The PRESIDENT pro tempore. The Chair thought possiblythe Senatol' from New Hampshire woulll do so. The ClJair did.not want to control the action of the Senate, but he thoughtI t proper to call the attention of Senators to the fact.The reading of the bill was resumed. 1'he next amendmentof. the Comrllittee on Appropriations was, under the head of"'Val' Department," on page 71, line 7, before the worll "assistants," to strike:out "61" and to insert "40," so as to read

Adjutant General's Office: Chief clerk, $2,500; 10 chiefs Of dlvislo11sat $2.000 each; clerks-58 of class 4, 74 of class 3, 116 of class 2231 of class 1, 03 at $1,000 each; engineer, $1,400; assistant engineert,$000; 2 firemen; sldlled mechanic, $1,000; 11 messengers; 40 assistanmessengers; 4 watchmen.Mr. GALLINGER. Mr. Pres ident, it was at my instance inthe committee that that amenllment was placed in the bill. Ireceived a letter from a friend on the outside who called attention to the number of assistant messengers in the oftice ofThe Adjutant General, the bill, ns it came from the other House,providing for 11 messengers and 61 assistant messengers. Thestatement is made thut they did not require any such numberof messengers. Fo r the purpose of sending the matter to conference, I moved the amendment which was agreed to by the. committee. Since that time I have learned from Adjt. GenMcCain, one of the most accomplished ollicers in the Govern'ment, as I loolc upon him, that an injustice has been done to hisoffice by that amendment. I asked Adjt. Gen. McCain to muke awritten statement as to the matter, and, if Sepaors will listento me, I shoulc1like to read it. I t is not long.I will say, before reading the Jetter, Mr. President, that I wasluboring under the impression that The Adjutant General'softice, while'of great importance, yet did not include enough rooms'to require the assistance of such a number of messengers andassistant messengers-61 in nIl,. I believe-but The AcljutantGeneral writes nrguing to the contrary. He says:



19.17., CONGRESSIONAL ,"RECORD-SENATE. 1413The Adjutant General's Office occupies approximately 150 rooms Inth e State, War, and Navy Bulldlng, and has branches of it s divisionslocated In four outside buildings, two of which are -occupied exclusivelyby the office, which Is charged with their custody, maintenn.nceandcleaning, The office Is also required to clean those portions of the 'othertwo outside buildIDgs which It occupies as well as al l of It s rooms In theState, War, and'Navy Building. ' 'Adequate com,munlcation by means of messengers must be maintainedbetween the maID office and the .branches, and internal messenger service must be provided for these branches also. In three of the outsidebuildings the floor space occupied Is large-the Ford's Theater "Buildingand annexes, with three floors; ,the bulldlng at 610 Seventeenth StreetNW., with five floors; and.a large area in -.the Army Medical MuseumBuilding.I t will readlly be seen that the work of cleaning 150 rooms in ona

building, an d a large nUlllber of rooms In other bulldings, providing Icewater 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 th epresen t messenger force. .The Increase In the Army authorized by recent legislation :bas addedlargely to the worle of the office, and the demand for communication bymessenger with other burl'ans of the department bas correspondinglyincreased. In addition to this, there has been transferred to this .officeth e 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 iskept up to date is it s five-minute mall messenger service, by means ofwhich cases ar e carried to every part of the office with the utmostpromptness. There are 12 messengers engaged on this lIiatl route, withth e necessary number of substitutes.All of th e .assistant messengers estimated for are absolutely necessaryfor th e work of the ofllce, and the rednction proposed in the Senate re port on the legislative blll,by which there Is a reduction of aSSistantmessengers from 61 to 40, would render i t impossible for the ofllce tomaintain Its present state of efllclency. .Mr. President, it was a revelation to me that The AdjutantGeneral's Office occupied 150 rooms in the main building, andalso had the Ford's Theater Building at its 'command, and likewise a building on Seventeenth Street. I confess that afterreading that statement by Adjt. Gen. McCain, and having askedhim to come and talk with me about the matter, I felt that Iha d done an injustice in moving the amendment. I now thinkthat 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 assistantmessengers?Mr. OVERMAN. They receive, respect ively, $840 and $720.Mr. GALLINGER. I am informed that the messengers receive $840 and the assistant messengers $720. It is very low pay.Mr. ROBINSON. Will the Senator from New Hampshire yieldto a question?Mr. GALLINGER. I yield.Mr. ROBINSON. In the same paragraph is carried an itemfor 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 furtherquestion. Ha s his investigation satisfied him that the amendment should Dot be agreed to and that the Senate should disagreeto the amendment? .. .Mr. GALLINGER. That is ilie feeling I have after talkingwith The Adjutant General about the matter. I confess that Iknew little about it at the .time 1 offered the amendment incommittee.Mr. OVERMAN. Does ,the Senator .not think th e matter ha dbetter go to conference? 'Mr. GALLINGER. As I was saying, when I offered the amendment in committee I confess I knew but little about It, exeeptfrom a letter I had received from an outside party, saying thatthat office was loaded down with unnecessary employees andhe particlilarly mentioned assistant messengers. When i sa wthe lUlmber which was appropriated for, it struck me that itwas very large, and perhaps unnecessarily large.Mr. OV]

Senate Report Jan 16 1917 (1)

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