SATURDAY, FEBRUARY 18, 1922. DISTINCTIVE PAPER. STATEMENT OF MR. WILLIAM S. BROUGHTON, COMMISSIONER OF THE PUBLIC DEBT. The CHAIRMAN. Mr. Broughton, you are asking a deficiency appropriation of $213,281.25 for the additional amount necessary to complete the purchase of 150,000,000 sheets of distinctive paper for United States currency, national-bank currency, etc. You are back again with an old friend. You insist on using more distinctive paper than we want you to use. Mr. BROUGHTON. Mr. Chairman, I do not think there will be much trouble over this item. The CHAIRMAN. It is a lot of money. Mr. BROUGHTON. It was covered in the hearings on the Treasury bill and, of course, you remember those hearings. The CHAIRMAN. We do not have much trouble with anybody, because we do not let them trouble us. Mr. BROUGHTON. For the current year Congress authorized and provided funds for a printing program of 150,000,000 sheets. The CHAIRMAN. I thought it was 142,000,000 sheets. Mr. BROUGHTON. That is for next year. For the current year there is a program authorized and money appropriated for the printing of 150,000,000 delivered sheets, and in another part of the sundry civil bill the Secretary is authorized to purchase 150,000,000 sheets for this authorized printing. The CHAIRMAN. The Bureau of Engraving and Printing is not authorized to do the printing? Mr. BROUGHTON. Yes; you authorized the purchase and printing of 150,000,000 sheets: ordinarily you authorize the Secretary to buy 5 per cent more than the bureau is authorized to print. For the current year, because of our stock balance, we did not ask for the 5 per cent. Congress, in appropriating for the purchase of 150,000,000 sheets, appropriated $750,000, which was not sufficient by the amount of this deficiency based on the current contract price. The CHAIRMAN. Did you say the price was going up or down? What are you using? Mr. BROUGHTON. We are very fortunate in being able to secure 50 per cent linen. The CHAIRMAN. What is the price of linen, what is the price of cotton, and what is the price of the combination? Mr. BROUGHTON. The current contract price for 100 per cent cotton is 43 cents, for 100 per cent linen 53 cents, and the 50-50, 48 cents, which is what we now pay. The CHAIRMAN. What was the price when this estimate was made? Mr. BROUGHTON. Originally, you mean? The CHAIRMAN. That is, when the original estimate was made. Mr. BROUGHTON. We were paying 45 cents for all cotton, but before the year was over we were paying 49 cents for 50 per cent linen, so we are now getting it for 1 cent less than—— The CHAIRMAN (interposing). It is 48 cents now? Mr. BROUGHTON. Yes. The CHAIRMAN. At what price did you estimate? Mr. BROUGHTON. We estimated it at the average, 49 cents; that is, we estimated at 49 originally, but it is now revised to 48 cents. The CHAIRMAN. How much does 1 cent mean on the 150,000,000 sheets? Mr. BROUGHTON. $18,750; but you will recall an appropriation was not made on the basis submitted, but a flat $750,000 was appropriated to purchase 150,000,000 sheets. The CHAIRMAN. That is all you save there. What is it that makes it cost $213,281.25 more? Mr. BROUGHTON. Because 150,000,000 sheets of paper at 48 cents per pound will cost $963,281.25, The CHAIRMAN. And the appropriation was how much for that? Mr. BROUGHTON. $750,000. The CHAIRMAN. And this $213,000 is the difference? Mr. BROUGHTON. It is the difference between the amount appropriated and the amount necessary to purchase 150,000,000 sheets in order to execute the authorized program for the year. The CHAIRMAN. Do you have to use all this paper? Mr. BROUGHTON. Yes, sir; we will. The CHAIRMAN. Could you not get along without it until the 1st of July? Mr. BROUGHTON. Then we would have to reduce our printing program. The CHAIRMAN. That is all right. Nobody would suffer, would they? Mr. BROUGHTON. We think they would. If you will recall the former condition of the currency and the condition to-day The CHAIRMAN (interposing). You say the currency does not last long when made out of cotton and linen mixed, so that you have to print oftener than if it was all linen? Mr. BROUGHTON. That is true, and the requirements for this year are on the basis of 150,000,000 sheets printed at the bureau and no more. The CHAIRMAN. Do you call this currency in for cancellation oftener than it is necessary to call it in? Mr. BROUGHTON. No, sir: we do not; we watch that very carefully. The CHAIRMAN. You could leave it out longer if you wanted to. We will put it that way. Suppose we did not give you this $213,000; what effect would that have on the circulation? Mr. BROUGHTON. We now have money enough to buy for the current year approximately 118,000,000 sheets, and we have placed an order- The CHAIRMAN (interposing). Do you mean you have actually placed an order or that you have made a suggestion that you will probably want more? Mr. BROUGHTON. No; we have actually placed orders for 100,000,000 sheets so far for this fiscal year; this has for the most part been made and delivered. You see, we have been running on the basis of 150,000,000 sheets authorized for the year. The CHAIRMAN. Do you mean you have placed an order for 100,000,000 sheets for the entire fiscal year? 91019-22-21 Mr. BROUGHTON. No; up to date. We propose to purchase 150,000,000 for the year. The CHAIRMAN. When was the last of the 100,000,000 sheets delivered? Mr. BROUGHTON. These orders are just about completed and another order is due to be placed. The CHAIRMAN. That is all you need if you have not had all of the 100,000,000 sheets delivered. Mr. BROUGHTON. We have them all delivered except a few million sheets. The CHAIRMAN. And you have only four months of the year to go. I thought you said you had not had any of it delivered. Mr. BROUGHTON. No; we have been running on a 150,000,000 basis. The CHAIRMAN. Would there be any serious damage if you did not have these additional sheets? Mr. BROUGHTON. We would not have any new currency to pay out during two months of the year and we would have to stop the bureau for two months. The CHAIRMAN. That would not hurt anybody, would it? Mr. BROUGHTON. I think it would. It is absolutely necessary to meet redemptions as the notes are presented. If worn out, they can not be replaced. We are actually using this currency to-day on the 150,000,000 basis. Now, as a matter of fact, Congress cut us 25 per cent over what we estimated was necessary for this year. We asked for 200,000,000 sheets. The CHAIRMAN. You never fail to ask for more than enough, but somebody has got to stop and think about what is going to finally happen to the taxpayers of the United States. We are dealing with a problem that involves a lot of hardship all over the country, and we are in a condition where we must deal with it. Mr. BROUGHTON. Last year Congress authorized deliveries of 136,000,000 sheets, and it was deemed not sufficient, and for this year they authorized 150,000,000 sheets. Because of the better quality of the paper, we have assented to your cut to 142,000,000 sheets for next year, and we are not going to ask you for any more. but we do feel it would be very injudicious to cut below what has already been authorized for this year; and to print 150,000,000 sheets it is necessary to buy 150,000,000 sheets of paper. The CHAIRMAN. Suppose we compromise with you and give you about half of the difference between what you want and what we think you ought to have. If we did that, there would not be any serious trouble about it, because you would know how to work it out. Mr. BROUGHTON. Really, Mr. Chairman, I feel very keenly about this. The CHAIRMAN. I know you do, and so do we. You are a smart fellow, a mighty nice fellow, and you generally try to cooperate with us. Mr. BROUGHTON. You have given us 150,000,000 sheets for next year, and have authorized the printing of 142,500,000 delivered sheets. For this year you have authorized and provided the neces sary appropriation for the bureau to print 150,000,000 sheets, but we need more money to buy the paper. The CHAIRMAN. What would be the figures if we took off 8,000,000 sheets? Mr. BROUGHTON. You see, we have money for 118,000,000 sheets and we are authorized to buy 150,000,000 sheets; that is a difference of 32,000,000 sheets, and if you should take off 8,000,000 sheets that would be cutting off one-quarter, or $53,250, or we would require $150,000, as I roughly figure it. The CHAIRMAN. That cuts off one-quarter of this $213,000? The CHAIRMAN. Do you really think you need that much? Mr. BROUGHTON. I feel very keenly that we do. The work is authorized and we have made it our program for the year. The CHAIRMAN. We have your problem before us and we will think it over. If we have to trim you a little more just feel happy about it. Mr. BROUGHTON. We are always going to do what you want us to do. Of course, that is what we are down there for. The CHAIRMAN. We are very much interested in seeing that you get such facilities as should be afforded if they are essential and necessary to the service, but we must make reductions which do not result in a detriment to the service. Mr. BROUGHTON. If the price had been reduced as Congress anticipated it would be we would not be here. The CHAIRMAN. We did not anticipate it; you anticipated it. Mr. BROUGHTON. No; I do not think so. Next year I hope to show a saving. SATURDAY, FEBRUARY 18, 1922. STATEMENT OF MR. ROLAND A. CROXTON, ASSISTANT TO THE UNDERSECRETARY OF THE TREASURY. PAYMENT TO HARRIMAN NATIONAL BANK FOR INTEREST ERRONEOUSLY PAID. The CHAIRMAN. You are asking a deficiency appropriation of $4.950.04 to pay the claim of the Harriman National Bank, New York, N. Y., for the refund of the sum erroneously paid into the United States Treasury by the claimant bank as interest on deposits of public moneys from April 18, 1918, to June 30, 1920. Mr. CROXTON. Mr. Chairman, that amount represents interest on public deposits which that bank paid by mistake, and the Comptroller of the Treasury and the Comptroller General have held that there is no appropriation out of which we can properly pay that money to the bank. The CHAIRMAN. How did they come to pay this interest? Mr. CROXTON. There is a peculiar chain of circumstances. The bank acted for the Harriman National Bank, of Seward, Alaska. The officers of the Alaskan Engineering Commission in Alaska had to have a lot of cash up there to pay expenses; they had been carrying that money at their own risk, and we decided to increase the balance of the Harriman National Bank, of Seward, Alaska, as a depository, in order that it might furnish this cash. The CHAIRMAN. They have a bank up there? Mr. CROXTON. There was no direct relation between those two banks, although they have the same name. One was the corre spondent of the other. So we wanted to increase the balance of the Seward bank as a depository and give them a balance of $100,000 which would enable them to supply cash to the officers of the Alaska Railway Commission, but the bank only had a capital of $25,000 and they did not have the necessary bonds to put up. We require collateral in like sum. The CHAIRMAN. So you could not deposit the $100,000? Mr. CROXTON. No; and they could not borrow the collateral. The Comptroller of the Currency held that even if anybody loaned it to them he could not permit it under the law. So we made a proposition to this Harriman National Bank, of New York. We said, "If we make a deposit of $100,000 with your correspondent bank in Alaska, will you put up the required collateral?" And they said they would. It was purely an accommodation to the Government. We shipped the money to the bank in Alaska and no money went to the bank in New York. Upon the Harriman National Bank, of New York, agreeing to do that, we wrote the usual letter of designation and in that we put the requirement of 2 per cent interest, which we require of all depositories. They wrote back and said they were willing to perform these services, but would not pay the 2 per cent interest. Through oversight on the part of the Treasury that letter was not answered; we did not go into that question at all, and although the bank said they would not pay the 2 per cent interest, they did pay it, and paid it down to June 30, 1920. The CHAIRMAN. That is, the man who figured the interest on the balance just sent a check for the amount? Mr. CROXTON. Yes; he just automatically paid it. Now, the bank says that their bookkeeper, who was a green man put on during the war, was not authorized to do that, and that the officers of the bank knew nothing about it, and they presumed it was not being done. The CHAIRMAN. And the Treasury Department admits it is not entitled to this money? Mr. CROXTON. The Secretary said that if the question had been raised at the time and brought to his attention he would never have required the 2 per cent interest, and he has subsequently waived the requirement. The CHAIRMAN. And, as a matter of fact, the designation of the Harriman National Bank of New York was simply made as a matter of accommodation for the Alaska Railway Commission? Mr. CROXTON. That was done for the purpose of preventing those officers up there from keeping money at their own risk. The CHAIRMAN. You could not designate the Harriman National Bank of Alaska? Mr. CROXTON. No; without collateral, and they could not furnish it. The CHAIRMAN. But you would have increased the balance of that bank if they had been able to put up the securities? Mr. CROXTON. Yes, sir; and it was to our advantage to do so. The CHAIRMAN. And the only relationship between the Harriman National Bank of New York and the Harriman National Bank of Alaska is that one was the correspondent of the other? |