Henry Stanbery to the House of Representatives, 16 December 1867

Commences December 16, 1867. Attorney General's Office. December 16, 1867. To the House of Representatives: By a provision of the Act of March 2, 1867, entitled "An Act making Appropriations for the current and contingent expenses of the Indian Department," etc. (Sess. Laws 39th Congress, 2d Sess. p.497,) the Attorney General is instructed to enquire into and report to Congress upon the following subjects, Viz: 1. The condition of all funds held in trust by the United States for the tribe of Chickasaw Indians, and for all other tribes of Indians. 2. What stocks so held are non‑paying, and the value thereof. 3. What remedy exists for the security of the United States respecting such non‑paying stocks. 4. What proceedings should be taken for the security of the United States in respect to such non‑paying stocks. 1. From information furnished by the Interior and Treasury Departments, at the request of this Office, it appears that, with the exception of $600,412:01, for which provision is made by the Act of July 12, 1862, hereinafter referred to, these Indian Trust Funds have all been invested in National, State, and other securities, of which the amount, held by the Secretary of the Interior, (exclusive of $84,000, abstracted Bonds,) is $2,983,000; and the amount held by the Secretary of the Treasury is $1,308,808:20; the total amount of securities thus held by these officers being $4,291,808:20. [See the accompanying exhibits "A." and "F," to which reference is also made for a detailed statement of the various Indian tribes for whom these securities are held, as well as the several treaties and acts under which the investments were made.] The abstracted Bonds above mentioned are understood to be a part of those which were stolen while in the custody of Jacob Thompson, formerly Secretary of the Interior, but for which Congress has made no provision, beyond the payment of the accruing interest on $83,000 thereof. [See 13 Stat. at L. pp. 180, 558; Sess. Laws, 39th Congress, 1st Sess. p. 279; ibid, 2d Sess. p. 514;] and appear to have belonged to the Cherokee National and School Funds, with the exception of a $1000 Bond (stated to be in the hands of Hon. G. N. Fitch) which belonged to the Pottawatamie Educational Fund. By Act of July 12, 1862 [12 Stat. at Large, p. 539.] sums amounting in the aggregate to $660,412:01 were appropriated to be placed to the credit of certain tribes therein named, for and in place of the same amounts theretofore invested by the Government under treaty stipulations with said tribes, as aforesaid. These sums are declared to be held in trust for the tribes concerned, and the Treasurer of the United States is authorized to pay five per cent per annum interest thereon. The particular securities in which the funds of the Chickasaw tribe, as well as of each of the other tribes, are invested, together with the amount thereof, belonging to the several tribes, and the rate of interest payable thereon, etc. will be found in exhibits "B." and "F," [see likewise exhibit "C."] A separate statement respecting the funds of certain tribes invested in Indiana Bonds, accompanied by an extract from a Report of the Acting Commissioner of Indian Affairs, dated March 13, 1867, will be found herewith [see exhibits "E." and "G."] The condition of the Trust funds of the various Indian tribes may be briefly stated thus:

Amount invested in National, State, and other securities held by the Secretaries of the Interior and Treasury ......	$4,291,808:20
.....Am't invested in "abstracted bonds," which are as yet unprovided for .........	84,000:00
.....Am't held in trust by the United States, under Act of July 12, 1862 .......	660,412:01
Total	$5,036,220:21

2. The amount of non‑paying securities in which these Trust Funds are invested, is found to be $2,704,966:66, of which $1,691,300 is held by the Secretary of the Interior, and $1,013,666:66 is held by the Secretary of the Treasury. [See exhibits "D" and "F."] A description of these non‑paying stocks, the names of the tribes whose funds are invested therein, and other particulars, are given in the last‑mentioned exhibits. To arrive at the value of these non‑paying securities, a descriptive list thereof was recently submitted to Wm. S. Huntington, Esq. Cashier of the First National Bank of Washington, with a request that, if the information was at his command, he would note, on said list, the current market value of each of the securities mentioned, and return the same to this office. In compliance with this request, Mr. Huntington, on the 11th of December, 1867, returned the list, with the quotations found thereon. [See Exhibit "H."] The following statement presents the aggregate amount of each of the non‑paying securities described in exhibit "H," now held by the Government, the accumulated interest thereon, where it has been reported by the Interior and Treasury Departments, and the market rates which these securities command at present, so far as this office has been able to ascertain:

		Amount of Bonds	Accrued Interest Thereon	Market Value
Florida	7 per cent Coupon Bonds	$132,000	60,060	no market
Georgia	6   "    "     "   "    [with back interest to 1866 funded; interest from 186 paid; see exhibit "H."]	3,500	1,365	72 to 74
Missouri	6 per cent coupon Bonds [with 15 per cent back interest, & July coupons paid—See same exhibit]	95,000	37,250	96½
Same	5½ percent Coupon Bonds	63,000	22,522:50	no market
N. Carolina	6   "   "     "      "    with interest funded—See same exhibit	205,000	82,290	64
S. Carolina	6 per cent Coupon Bonds [with coupons on, 50—see same exhibit]	125,000	52,500	36 to 38.
Tennessee	6 per cent Certificate	125,000	48,750	not quoted
same	6   "   "    Coupon Bonds [30 per cent Int. funded—balance cash—See same exhibit]	40,000	15,600	65
same	6 per cent Coupon Bonds [same as last aforesaid]	104,000	not reported	65
same	5¼ per cent Bonds Ex. int.—see exhibit "H."	66,666:66	"     "	58
Virginia	6 per cent Coupon Bonds [clear Bonds—interest funded]	43,500	16,965	46
same	6 per ct. (City of Wheeling) Bonds	168,000	65,520	no market
same	6 pr. ct. Certificate or Reg. Bonds	585,300	228,267	35 to 40
Louisiana	6 per ct. Coupon Bonds	37,000	15,540	no market
Indiana	6  "   "     "    "	141,000	not reported	3 to 5
same	5  "   "     "    "	69,000	40,653	70 to 75
Arkansas	6  "   "     "    "	90,000	nor reported	no market
Nashville & Chattanooga RR	6 per cent Bonds. (if endorsed by state, interest paid.) see exhibit "H."	512,000	"    "	64
Richmond & Danville RR	6 per ct. Bonds	100,000	"    "	no market

The Bonds of the City of Wheeling and of the Richmond and Danville RR. above described, for which there is reported "no market" are guaranteed by the State of Virginia. This may give them the same value in the market as the certified Bonds of that State, which are quoted at 35 @ 40 c. The Bonds of the Nashville & Chattanooga RR. are guaranteed by the State of Tennessee. In regard to the Bonds of the Richmond & Danville RR. it appears that the President of that Company, on the 20th of June last, addressed a letter to the Secretary of the Treasury, in which he states that early in 1866 that Company offered to bondholders to resume the regular payment of interest, from and after May 1866, provided the interest arrearages to that date were funded in the same securities. This arrangement, he says, has been promptly and generally acceded to by bondholders, the only considerable amount of bonds unarranged being those held by the government. He asks in behalf of the Company, the Secretary to authorize the funding of the interest accrued and due the Government, prior to January, 1866, the interest since that period to be paid in cash. This letter has been laid before the Attorney General by the Secretary, who asks advice as to "what should be done in the matter." It would seem from the action of Congress hitherto in reference to these non‑ securities, that the obligation of the United States to make good the interest accruing thereon is recognized by the Legislative branch of the Government. Thus by Act of March 3, 1865, (13 Stat. at L. p. 559,) an appropriation of $446,433:50 was made "for payment of interest on $1,690,300, non‑paying stock, held by the Secretary of the Interior in trust for various Indian tribes, up to, and including, the interest payable July 1, 1866." So also by Act of March 2, 1867, (Sess. Acts 39th Congress, 2d Sess. p. 514,) an appropriation of $100,153 was made for payment of interest on same non‑paying stock, up to, and including, that payable July 1, 1867. So by the last-named Act, (ibid. p. 497,) an appropriation of $119,859:98 was made for payment of interest on "certain non‑paying stock held in trust by the Secretary of the Treasury for the Chickasaw Indians, for the two fiscal years ending June 30, 1868, per tenth article Treaty of April 28, 1866." The article here referred to is as follows: "The United States reäffirm all obligations arising out of Treaty stipulations, or acts of legislation with regard to the Choctaw and Chickasaw nations, entered into prior to the late rebellion, and in force at that time, not inconsistent herewith; and further agree to renew the payment of all annuities and other moneys accruing under such Treaty stipulations, and acts of legislation, from and after the close of the fiscal year ending on the 30th of June, in the year 1866." If the Government, as trustee for these Indian tribes, is bound to make good the interest accruing on the bonds in which their funds have been invested, perhaps the same obligation would extend to the principal also; and this view of the subject may have prompted the call by Congress upon the Attorney General for advice as to what remedy exists, and what proceedings should be taken for the security of the United States respecting the aforesaid non‑paying securities. 3 and 4. I now proceed to consider the remaining branches of this reference, viz., the remedy that exists, and proceedings which should be taken for the security of the United States. Of the $2,704,966:66 invested in non‑paying securities, but a comparatively small portion thereof appears to be invested in the Bonds of private and municipal corporations, while the remainder is invested in the Bonds of different States.—The former are, however, guaranteed by the several States in which the corporations referred to are located, and by which they were created. So far as the States are liable upon these bonds, either as principal obligors under the Bonds issued by them respectively, or as guarantors of Bonds issued by private or municipal corporations, I see no ground upon which that liability can be enforced by proceedings either at law or in equity. A State can be sued only by its own consent. I am not advised that either of these States has, by its own consent, submitted itself to suit in any court. Nor is there a case made here for original suits against either of these States in the Supreme Court of the United States, under the Constitution of the United States; for, whether we regard these Bonds as belonging to the United States, or to the respective Indian tribes, the right to bring an original suit upon them against a State, in the Supreme Court of the United States, does not exist either in favor of the United States, or of any one of these Indian tribes; for neither the United States nor an Indian tribe is a foreign State within the meaning of the Constitutional provision, and, as such, entitled to bring an original suit against a State in the Supreme Court of the United States. But if any of these States hold claims against the United States, it may be deemed expedient to exercise the right of retention and application in the nature of a set‑off, following the precedent set by the Joint‑Resolution of March 3, 1845 [5 Stat. at L., p. 801.]—The Resolution is as follows: "That whenever any State shall have been or may be in default for the payment of interest or principal, on investments in its stocks or bonds, held by the United States in trust, it shall be the duty of the Secretary of the Treasury to retain the whole or as much thereof as may be necessary of the per centage to which such State may be entitled, of the proceeds of the sales of the public lands within its limits, and apply the same to the payment of said interest or principal, or to the reïmbursement of any sums of money expended by the United States for that purpose." As to the remedy upon the bonds issued by private or municipal corporations, by action at law to recover the amount due for principal or interest or by proceedings in foreclosure where the bonds are secured by mortgage, or in mandamus to compel the levying of a tax by municipal corporations in order to provide payment, the remedy would be the same in favor of the United States as in favor of any individual creditor upon the bonds. I am at a loss to suggest any specific measure for further security in respect to these bonds. But it may happen that the indebted States and corporations may offer propositions for compromise favorable to the bond‑holders, and Congress may deem it expedient to give the Secretary of the Interior, or Secretary of the Treasury authority to entertain, and, in the exercise of a proper discretion, to agree to such propositions. I have the honor to be, With great respect, Henry Stanbery, Attorney General.