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accrued at the times they were paid, and then to diminish it only to the extent of such excess."
The accounting officers of the treasury did not adopt this rule, but did adopt a method by which, when the United States had made a payment, by way of refundment, to Maryland, the interest was calculated at the rate of six per cent. up to the date of that payment and carried into the interest column; the amount refunded was deducted from the principal and the remainder formed a new sum, upon which interest was calculated until another payment was made, when the interest that had accrued in the mean time was again carried into the interest column, the amount refunded again deducted from the principal, and so on.
The Auditor also departed from the mode of settlement proposed by the State in this : that he allowed no interest after January 1, 1817, when Maryland paid her debt by the sale and transfer of her interestbearing stocks.
The amount of interest thus allowed was $66,563 22. It was received by the State, though under a protest from her legislature in the form of a memorial, addressed to Congress, to the effect that the mode of adjustment adopted was not "upon the principles of established usage and common justice,” and asking, in substance, that a law might be passed authorizing such a settlement as the State desired. A similar claim has been asserted by acts and resolutions of her legislature at different times since said last-named adjustment. No further application in this behalf appers to have been made to the Treasury Department, except that in February, 1827, a member of the U. s. House of Representatives, from Maryland, in consequence of resolutions passed by her legislature, addressed a note to the Third Auditor of the Treasury, asking to be informed “wherein he had departed, if at all, from the rule in the adjustment and allowance of interest due the State of Maryland, from that observed in the like account with the State of Virginia. To this the Third Auditor replied that he was “not aware, in the settlement of the interest account of the State of Maryland, of having departed, in any respect, from the rule of allowance which governed in the adjustment of the interest account preferred by the State of Virginia." No other application or notice was made to that department until since the pendency of the present bill.
One or more agents of Maryland appear to have been at Washington for the purpose of urging her claim against the government for interes', at different times, during a period of several years, after the allowance of interest under the act of 1826, and prior to the introduction of this bill.
During the sccond session of the nineteenth Congress, February 5, 1927, the State made application, by memorial presented to the House of Representatives, for an additional allowance of interest on this same account. The memorial was referred to the House Committee of Claims. The committee, at the same session, reported adversely, and were discharged from the further consideration of the subject.
At the first session of the twentieth Congress, the State renewed her application by a resolution of inquiry, introduced in the House. On the 12th of March, 1828, the Committee of Claims, to whom the subject
had been referred, made a report, in which, after setting forth the claim and reciting the provisions of the act of 1826, already quoted, they said: “The committee cannot see the propriety or necessity of relaxing the provisions of the law above cited. The same provisions have been adopted in relation to other States claiming, under similar circumstances, interest on advances which they have made, and the committee think no greater allowance ought to be granted either to Maryland or any other State. The following resolution is, therefore, submitted to the House:
“ Resolved, That the prayer of the petition ought not to be granted.” This report was laid upon the table, and the matter was not further
It also appears, that during the same session of the same Congress, a bill, entitled “An act providing for the final settlement of the claims of certain States therein mentioned, for interest on their advances during the late war," which had passed the Senate, was brought before the House of Representatives. The claim of Maryland was one of those included in this bill. It prescribed the same rule now proposed by that Slato for the calculation of interest. The House Committee of Claims, to whom the bill was referred, on the 5th day of May, 1828, made an adverse report, in which it was said, among other things, that the Committee think the rules of settlement prescribed in the bill from the Senate are an impolitic, if noi a dangerous, innovation upon the usages of the government, heretofore sanctioned by Congress." The report closed with a "csolution that the bill be indefinitely postponed. It was referred to the Committee of the Whole House, and there the matter rested.
During the first session of the twenty-second Congress, on the 12th of January, 1932, another resolution of inquiry was introduced in the House of Representatives by a member from Maryland. The matter, with directions to "consider and report thereon," was afterwards, on the 24th of the same month, referred to a Select Committee, of which the member from Maryland who introduced the resolution was chairman. The committee appear never to have made any report, and thus that application ended. This is believed to have been the last movement in Congress upon the subject prior to the proceedings commencing in March, 1854, which resulted in the passage, by the Senate, of the pending bill; except that during the first session of the thirty-first Congress, in 1850, a member of the Senate of the United States, from Marrland, introduced in that body a bill for the seulement of this claim. The bill was referred to the Committee on the Judiciary; and afterwards, during the same session, the committee was discharged from its further consideration
The foregoing is a summary of the facts which seem to bear most directly upon the questions now presented.
Thiš bil prescribes, in effect, ihe same mode of settlement for which Maryland has heretofore contended. It is based upon the objections made by the State to the action of the Treasury Department, under the act of 1826. These objections may be stated as follows:
1. That the sums, amounting to $279,626 54, paid 10 the State from 1818 to 1821, and applied in full extinguishment of the principal, should have been respectively applied, first, to the satisfaction of the interest
due at the times of such payments, and the residue, if any, in reduction, pro tanto, of the principal.
2. That the State of Maryland having paid her debt, January 1, 1817, by an assignment of interest-bearing stocks, and having thus failed to receive the interest after that day, should now be allowed to recover interest up to the day when the claim, as now made, shall be finally discharged, instead of being stopped on the day when she paid her debt; and that, at any rate, by virtue of the third rule prescribed by the act, as already quoted, interest should have been allowed up to the time of the payment, to the State, of the first instalment in October, 1818. These rules of computation, if adopted, would, it is estimated, as applied by the State in her account presented, make due to Maryland, on ihe 4th of March next, the sum of $261,932 71, or thereabouts.
The committee have examined this application with the serious consideration due to the fact that it is preferred by a State of this Union; though we are not aware that, for this cause, it should be determined by a rule varying, in any respect, from that which would govern a like application from an individual citizen. We are deeply sensible of the meritorious nature of the original claim of Maryland, as well as of the patriotic and highly honorable action of that State upon the occasions out of which the demand arose. But we are of opinion that the grounds on which it rests are untenable. We think that the mode of adjustment adopted by the accounting officers of the treasury, under the act of 1826, was required by the spirit and by the terms of the law, as weli as in accordance, in its most material features, with the general and proper usage of the government.
Upon the sums advanced by Maryland, she had actually paid interest up 10 January 1, 1817, when she discharged both principal and interest. The United States had already refunded to her the principal debt. The interest alone was left unsettled. It was to provide for the settlement of this interest that the act of 1826 was passed. This purpose was clearly expressed by the title of the act and by all its terms. The form of the proceedings under it shows that its object was so understood by both parties. It authorized the refundment of the money which the State had paid as interest, and nothing more. The rule of computation followed by the Third Auditor was in accordance not only with the law, but with the custom of the government at that time in other similar cases. The intention of Congress and of the department seems to have been, not to recognise the liability of the government for interest as such, but to reimburse creditors for moneys actually espended for the government's use and benefit. To have adopted the method proposed by the claimants would have been in derogation of this rule. By treating a portion of the principal as still unpaid, and assuming the payment of that residue with interest thereon, it would have involved an infraction of the law which authorized the repayment of interest only. It is true that the government has, at a later period, varied the rule in cases of debts against the government, which had been paid by instalments, so far as to apply the payments, first, to the extinguishment of the interest accrued, and the balance, if any, to the principal, as is proposed by the bill. But this fact is not deemed a
sufficient reason for disturbing the settlements made in this and in so many similar instances before the new rule was adopted.
The committee think the accounting officers did right in stopping the interest at the time Maryland paid her debt, January 1, 1517. The law provided, in so many words, that “no interest should be paid the State on any sum on which she had not paid interest.” We have no doubt but this clause must be construed to mean that no interest should be paid to the State except what she had actually paid. This was the construction given by Altorney General Wirt to a precisely similar provision in the act for the settlement of the claim of the State of Virginia for interest, heretofore referred to, passed March 3, 1825, of which the act of 1826 was literally a transcript, except as to the necessary change of names. That construction was adopted by the government in the settlement with Virginia, and was acquiesced in by all the parties concerned. The clause upon its face seems to admit of no other reasonable explanation. To have interpreted it as Maryland now proposes, would have imposed the liability to pay the State interest to the time of final satisfaction upon sums on which she might have paid interesı but for a single day. Maryland, in fact, paid no interest after January 1, 1817, when she discharged both principal and interest in full. It follows, if our understanding of the law be correct, that she could receive none after that day. The claim, as made, was warranted neither by the first nor by the second of the directory clauses of the act of 1826, but was excluded by both. The amount charged for interest was neither “expended for the use and benefit of the United States," nor was it a “sum on which the State had paid interest.” The mode of calculation adopted seems to us to have been required also by the clear and necessary construction of the third of said clauses. The settlement by the department, then, was strictly in accordance with the law by which it was instituted and controlled Nor do the comınittee per. ceive any difference in principle arising from the fact that the indebtedness was paid by a transfer of interest-bearing stocks. The interest on the stocks was, of course, computed and allowed to the time of the transfer. The State parted with them at their par value. She inade over to her creditors so much stock as, on that day, amounted, with interest, to the sum of her own debt and interest. Not only did she not pay interest atier that time, but the committee are unable to see that she “lost” interest in any proper acceptation of the word. The most that can be said of it is, that having parted with her stocks at par value for their full amount, she, as a matter of course, failed to receive interest on them after that time. She owed a debt carrying interest. She owned stocks drawing interest. She cancelled the debt and interest she owed by a sale and transfer of an equal amount of the debt and interest due to her. Her failure to realize interest on her stocks, is compensated by her ceasing to pay interest on her debt. Had she retained her stocks, and left her debt unsettled, she would indeed, as is alleged, have received interest on the former, but she would have had to pay it on the latter. Nor is the case, in our view, different from what it would have been had she retained her stocks, and paid the debt with money from her treasury. In that event, she would have disposed of a fund she might otherwise have so invested that it would
have produced interest. Occasion would have arisen for increased taxation 10 supply the place of the money paid away. Alike in both cases, the State is deprived of the use of the means so appropriated. She can be said to have “ lost” interest as well in one case as in the other. As the payment of the debt by Maryland in the mode adopted, rather than by money from her treasury, caused no damage to the State, so il occasioned no additional advantage to the United States. No special benefit having been conferred by the choice of methods, the committee see no ground for any extraordinary claim for compensation. It has been stated that the stocks transferred by Maryland were securities issued by the general goverument. They continued to draw interest, into whose hands soever they might go. If the claimant's ground be sustained, ihe United States will, in effect, be charged with interest a second time, because the State preferred to sell those stocks at their full value, instead of retaining them and paying her debt with some other funds. The United States would be subjected to the payment of interest up to the time of final settlement under this bill, though the interest on the stocks transferred by Maryland ceased many years ago, when those securities were taken up and cancelled.
Independently of the provisions of the particular law in question, the committee are of opinion the true rule is, and ought to be, that the government will pay such interest only as it has contracted to pay, or as its creditors have actually paid, for its use and benefit. The instances, not numerous, in which a different principle has, to some exlent, obtained, are regarded as exceptions which we do not propose to justify, and whose number we do not think it desirable to increase. The government is presumed to be always able and willing to meet all just demands. For this reason the original rule was, as before stated, that it would pay no interest except where the same had been previously contracted for. It has been extended to warrant the refundment of such interest as its creditors have actually paid. As thus modified, it was laid dowr, and enforced by Attorney General Wirt in bis opinion upon the claim of Virginia, heretofore adverted to—a claim which was settled upon principles strictly analogous, in all their leading features, with those applied to that of Maryland. To carry the rule further, the committee think would be neither sound in theory nor expedient in practice. To enlarge it in the manner and to the extent now proposed, might involve not only a re-opening of the claim of Maryland, but also of that of Virginia, and many others. It would, in effect, prepare the way for a re-adjustment of a large proportion of all the claims, in whole or in part, for interest, which have been settled since the organization of the government. It would open the door for the abstraction from the treasury, under the name of interest, of sums the large amount of which could not readily be foresern.
The foregoing considerations seem to dispose also of the objection, which the committee understand to be made, that interest should have been allowed, at least, up to the time of the first payment by the government in October, 1818, by virtue of the third regulation prescribed by the act of 1826, which has been already cited, and was as follows: " That where the principal, or any part of it, has been paid or refunded by the United States, or money placed in the hands of Mary