The principal transactions may be found in the following brief statement: The aggregate amount involved in the accounts of quartermasters and commissaries received for adjustment during the year was $117,253,940 60; and there were audited and reported to the Second Comptroller of the Treasury, for his revision, similar accounts involving the sum of $51,363,263 63, leaving at the close of the year accounts on hand involving the sum of $65,890,676 97. During the first quarter of the present fiscal year there have been received similar accounts involving the sum of $31,236,275 SS; and there have been audited and reported during the same period accounts involving the sum of $28,957,077 88. The accounts of pension agents adjusted during the year involved the sum of $753,001 90; and 164 claims for arrearages of pensions, and for pensions due and unclaimed at the pension agencies for a period exceeding fourteen months, were settled, amounting to $13,235 18. Accounts of officers and agents disbursing under the special direction of the War Department were settled, involving expenditures to the amount of $62,738 38. These aggregates of work performed, although large beyond precedent in the accounting divisions, are still far below what will be required of the office in order to prevent accumulations of business. It will, therefore, be necessary to make provision for a further increase of clerical force; but I would not advise taking more than the number now authorized until the new clerks shall have been some time in office, and become familiarized with their duties. Before the close of the present fiscal year an increase may be made, and, accordingly, I have estimated for twenty additional clerks from 1st January next. These, with those already authorized, when fairly to work, will, I think, prevent further accumulations, and enable the office to gain on the arrearages.

In addition to the auditing of accounts above referred to, there are various classes of miscellaneous business devolved on this office by special acts of Congress; and since the breaking out of the rebellion, and the extensive military operations consequent thereon, numerous claims of various kinds are necessarily brought under its jurisdiction. Many such, indeed, are of a character not yet provided for by law, and must necessarily await legislation by Congress, whilst others, being embraced in and provided for by the regular appropriations for the various branches of the military service, are paid out of the appropriations to which they respectively pertain. Of the former class, for which no provision has yet been made, are claims for damages for property taken or destroyed in various localities, but more especially in the regions of country under military occupation, or within the scope of military operations. Of the latter class, such as for supplies, transportation, clothing, services rendered, &c., 829 claims were received during the year, 669 of which amounted to the sum of $1,502,768 34; there being no amount specified in the remaining 160, and claims to the amount of $1,161,227 80 have been investigated and allowed. During the first quarter of the present fiscal year 166 claims have been received, amounting to the sum of $157,601 77, as claimed, whilst in 21 others no amount is specified. Of these, and others previously on file, 154 have been examined and reported for payment to the amount of $98,932 40. All such claims, before being acted on in this office, receive the administrative examination and scrutiny of the proper military bureau of the War Department.

The act of 3d March, 1849, which is executed by the Third Auditor, provides for payment for horses and other property lost or destroyed whilst in the military service of the United States by impressment or contract, and under it numerous claims have been filed. During the last fiscal year 1,556 claims were received, amounting to $271,697 70, and 232 awards were made for payment, to the amount of $40,904 96; and 112 claims, amounting to $19,660 29, were rejected. During the first quarter of the present fiscal year 779 claims have been received, amounting to $147,533 97; and 48 awards were made for payment, to the amount of $8,319 38; and 28 claims, amounting to $4,163 25, were rejected.

The settlement of the Oregon and Washington Indian war claims, which was devolved upon the Third Auditor by a special act of Congress, approved March 2, 1861, is now nearly completed. Claims for services and supplies have been filed, amounting in the aggregate to $4,172,355, and awards thereon have been made to the amount of $1,916,600 75. Awards for pay of the volunteers have also been made, amounting to $212,566 23; total amount reported for payment, $2,129,166 98. Only $40,568 85 of claims are now on file unacted on-exclusive of some suspended for additional evidence-and these will be disposed of, it is believed, within the next thirty days. There will still be some claims coming in in small amounts, but they will hereafter be settled without delay. The claims, as reported by a commission appointed to investigate them, amounted to $6,011,457 36. On investigation and report by the Third Auditor, Congress appropriated for payment of claims for supplies, services, &c., $2,400,000, and for pay of volunteers $400,000; total, $2,800,000, of which there yet remains in the treasury the sum of $670,833 02. This will be fully adequate to meet all the outstanding claims, and, in all probability, a surplus will remain of the appropriation for services, supplies, &c. The scrip, or evidence of indebtedness, issued during the war, has been required to be surrendered by the holder in each case, so that there is scarcely a possibility of a double payment being made, the award also being entered on the books in which the respective claims are recorded.

The claim of the State of California for expenses incurred by her in the suppression of Indian hostilities therein, the investigation and settlement of which was devolved on the Third Auditor by special act of Congress of March 2, 1861, and for the payment of which an appropriation of $400,000 was made, has been settled, and the amount allowed, $229,987 67, has been paid to the State.

Under the act of July 27, 1861, to reimburse the States for expenses incurred by them in "enrolling, subsisting, clothing, supplying, arming, equipping, paying, and transporting" their troops "employed in aiding to suppress the present insurrection against the United States," claims have been presented by the States amounting in the aggregate to $26,458,451 79. A division has been organized for the investigation and settlement of these claims, under the rules approved by the Secretary, and considerable progress has been made therein. Partial settlements of some of the claims have been made as follows: Vermont, $613,766 58; Connecticut, $1,245,752 89; New Jersey, $356,667 49; Virginia, $26,319 24; Illinois, $3,351,517 56; Iowa, $29,279 92; Wisconsin, $556,440 99; Minnesota, $8,904 40; New Hampshire, $245,835 78; and Ohio, $1,907,045 28; amounting in the aggregate to $8,350,530 13. The claims of New York, Pennsylvania, Kentucky, New Hampshire, Maine, Massachusetts, Rhode Island, Michigan, Kansas, and Indiana, have been partially examined, and some of them are nearly ready to report to the Comptroller. Others have been temporarily laid aside, awaiting additional information or evidence from the State authorities. The claim of the State of Kansas, amounting to $12,351 04, was withdrawn by the State authorities for the purpose of being perfected and furnishing some additional evidence, and I have been informed by the governor that the papers, vouchers, &c., were destroyed at the late massacre in Lawrence. It will, doubtless, be impossible for the State authorities to furnish duplicate vouchers in lieu of those destroyed, and some legislation by Congress may therefore be necessary to enable the accounting officers to act in this particular case. Fortunately this office retained memoranda of the character and amount of the claim, as well as the portions objectionable or needing further evidence, and can therefore act intelligently on the subject, even in the absence of the original papers. These claims, being irregular in their character and outside of regulations, and, moreover, having been contracted under circumstances of great emergency, the authorities, relying on the good faith of the government for

reimbursement, have received as liberal consideration as could be allowed consistent with precedents heretofore established in analogous cases and what appeared to be sound principles in accounting. It necessarily turns out that in the hurry and excitement, and the employment, in many cases, of officers and agents entirely inexperienced in such matters, some expenditures have been made and claims presented which are not considered by the accounting officers a proper charge against the United States, and these must necessarily be disallowed. I believe, however, as far as the settlements have gone, they are generally satisfactory.

By section 22 of the act making appropriations for sundry civil expenses of the government, and for other purposes, approved March 3, 1863, the Secretary of the Treasury was directed to pay to the governor of the State of Minnesota, or his duly authorized agent, the costs, charges, and expenses properly incurred by said State in suppressing Indian hostilities within said State and upon its borders, in the year 1862, not exceeding $250,000, to be settled upon proper vouchers to be filed and passed upon by the proper accounting officers of the treasury; and it was provided that in determining the claims to be allowed, the same principles, rules, and regulations should be observed by the accounting officers in auditing said claims as have been applied to the claims allowed to States under the act approved July 27, 1861, entitled "An act to indemnify the States for expenses incurred by them in defence of the United States." Under this law the State of Minnesota has filed her claim, amounting to $324,569 01; but in consequence of the pressure of other business, it has not yet been acted on. On the 20th June last an advance or partial payment was made to the State of $200,000 on account of this claim.

In the act above referred to an appropriation was made of 600,000 "to defray expenses incurred in the raising, equipping, transportation, and subsistence of minute men and volunteers in Pennsylvania, Maryland, Ohio, Indiana, and Kentucky, to repel rebel raids," to be settled by the proper accounting officers of the treasury, and upon such principles, rules, and regulations as have been applied in the settlement of the claims of States above referred to. Only a few small claims have been filed under this act, and no settlements have yet been made.

At the last session of Congress a provision was inserted in the "act to promote the efficiency of the corps of engineers and of the ordnance department, aua for other purposes," amendatory of the act of 3d March, 1849, so as to include "steamboats and other vessels, and railroad engines and cars, in the property to be allowed and paid for when destroyed or lost under the circumstances providea for in said act." Under this law SS claims for steamboats, barges, &c., have been filed, amounting in the aggregate to $527,973. These, it is presumed, form but a small portion of the number to be filed under this act. In my last report I had the honor to make some reference to this subject, soine such claims having then been presented for settlement, under the act of on March, 1849, but of which I declined to take jurisdiction. As the law now stands, however, it is imperative on the Third Auditor to proceed with the execution of the act. A number of the claims have been partially examined, and some correspondence had in connexion therewith. But four awards have as yet been made, on which the sum of $44,500 has been allowed. I beg leave again to repeat the suggestion contained in my last report, that these claims should be referred to another jurisdiction. It is impossible for the Third Auditor of the Treasury, with the pressure of business hereinbefore referred to resting upon him, to devote the time and research necessary to a proper investigation of claims of this description. The claims come before him as prepared by the claimants, the testimony all ex parte, and just such and so much as the claimants consider necessary or advantageous to their case. On this testimony, with such other as the Auditor may, in his limited knowledge of the facts and circumstances attending each

particular case, be enabled to obtain, he is compelled to act, there being no means provided for taking testimony by a commission or otherwise. The rules adopted by the Secretary of War, relative to the evidence required, have been carefully prepared and with a view of requiring as much record evidence as possible; still I beg leave to repeat that, in my opinion, Congress should relieve the Third Auditor from this duty and provide for the reference of such claims to the Court of Claims, or to a commission which could take testimony in the localities where the losses happened. Meanwhile, however, I shall proceed with the execution of the act to the best of my ability, and give to it all the personal attention possible, consistent with the proper discharge of the current duties absolutely necessary to keep the machinery of the office in motion, exercise supervision over the various subdivisions, and decide questions that are constantly arising and frequently require much care and investigation. Since the business of the office has reached its present proportions the personal calls on official business and routine duties that cannot be delegated to another consume a large portion of my time. I therefore respectfully suggest whether an assistant should not be authorized, as has been done in some other offices, who could discharge such duties as might be assigned him by the Auditor, thus greatly relieving him and facilitating the despatch of the public business.

The system of monthly accounts required by the act of 17th of July, 1862, has at length got fairly into operation, the difficulties resulting from the discordant views of the military and treasury bureaus having been removed, after free consultation of the heads of bureaus, by General Order No. 165, War Department, June 5, 1863. For a considerable period after the passage of the law, disbursing officers, under instructions from the military bureaus, were required to make their accounts in triplicate; one copy with vouchers for the military bureau, another for the proper accounting officer of the treasury, and a third to be retained by the officer himself. Thus two accounts were rendered to the departments here, for one of which there was no necessity, and the expenditure and time involved in its preparation answering no valuable purpose whatever. Under the general order above referred to but two sets of vouchers and accounts are required, as under the old regulations, one of which is retained by the officer for his own protection, and the other sent to the proper accounting officer, to be by him referred to the chief of the proper military bureau for his administrative action before being taken up for settlement at the treasury. The accounts for the disposition of property are to be rendered to the chief of the military bureau, as heretofore. The advantages derived from this system may be summed up as follows: In affording to the treasury offices a knowledge of the actual condition of the officers' accounts with the government at regular and short periods, and in extracting therefrom information valuable for reference in connexion with the accounts or liabilities of other officers to whom advances or transfers of money may have been made, but of which the accounting officers, under the old system, would have had no knowledge until all the accounts were settled. For example: Many disbursing officers receive no advances of public money directly from the treasury; but they receive advances and transfers from other officers who do receive money directly from the treasury, and to whom they give their receipts for the respective amounts received by them. Therefore these officers are not charged on the treasury books, and cannot be until such time as the accounts of the officer making the advance or transfer of money are settled, at which time he will receive credit for the money advanced or transferred, and the officer receiving it will then be charged with the same upon his receipt. Meantime the officer to whom the advance was made may have gone out of the service, and if he has not properly accounted for the money, the government is without remedy, except by a suit on his official bond, if any be given, and frequently without even that to fall back upon. Now, however, as each officer's account is received, it is

registered, and in separate columns the amounts disbursed, balance due the gov ernment, &c., and all advances or transfers made by the officer to other officers are extracted from the account and entered on what is styled the "advance book," whose names are immediately entered on the list of officers having accounts to render. At the next monthly period, if these officers render no accounts, they are reported as delinquent, and it is competent for the War Department to order a stoppage of their pay until the delinquency is removed. Thus the officers are reminded of their duty, and the severity of the penalty, which may be extended in a flagrant case to dismissal from the service, seldom fails to accomplish the object desired, viz: a prompt rendition of the accounts. As an interesting item of information, it may be stated that on the 1st July last the sums of money in the hands of quartermasters and commissaries, unexpended, as shown by their accounts for the month of June, amounted in the aggregate to $22,173,362 47. This sum would be below the actual amount, as some accounts have not been received. The sums on hand, unexpended, on the 1st August, as shown by the accounts for July, amounted to $18,890,752 94. I trust I may be pardoned for remarking, in conclusion, that the position of the Third Auditor during the last two years has been peculiarly trying. The ratio of increase in the amount involved in accounts and claims, the investigation and settlement of which are devolved upon the office, large as it is, is greatly enhanced by the complications and difficulties in the accounts themselves, resulting from the necessary employment of a large number of disbursing officers and agents, who, when first entering the service, were totally inexperienced in their respective duties, and the forms and regulations established for their government. Hence many irregularities have occurred, and extraordinary difficulties inhere in the accounts, which in the employment of experienced and competent officers and agents would not have occurred. These things, however, were inseparable from the condition of the country, and the numerous and varied claims unavoidably arising from the military operations, many of which present strong equitable grounds for relief, but as yet are unprovided for by law, have been a frut.ful source of embarrassment. Claimants naturally suppose that all claims, of whatever description, if well founded, are entitled to be paid; forgetful or not aware of the fact that the accounting officers have only a limited jurisdiction, prescribed by law, and that they are restricted in their action. not only to the objects of appropriations made by Congress, but to the rules and regulations made in pursuance of law, and the observance of principles of accounting which long experience has sanctioned as necessary safeguards to the public interest. Thus, whilst they are liable on the one hand to the risk of allowing improper claims, they are exposed on the other to the denunciations of the whole army of claimants and their interested clamor. Hence it is that complaints have in some cases arisen. It has been my effort, however, by an adherence to law and regulations, and the most assiduous application to official duty, to guard the interests of the government, without prejudice to the just rights of individnals; and I believe I may say that this office can safely challenge the most thorough and critical investigation into all its official transactions and records. For the last two years I have not been absent a single day from official duties, and I believe the gentlemen connected with me have performed an amount of labor not exceeded by any other office in the department of the government.

At the last session of Congress I recommended the addition of four clerkships of class four, and seven of class three, to this office, which was granted. In the estimates submitted for the last half of the present and for the next fiscal year I have asked for two more of each of these classes. The addition of these clerkships was required, in my opinion, as an act of justice to the clerks in this office, and with a view of securing promotion to some of the gentlemen employed therein, who, from their experience and efficiency, were deserving of it. It has