PUBLIC DEBT. R. S. 3693. 3694. Payment in Coin, 138. Application of Coin Paid for Duties, 138. First. Payment of Interest on Public Debt, 138. Third. Residue, 138. Act of June 13, 1898, ch. 448, 138. Sec. 32. Loans - Certificates of Indebtedness-Counterfeiting, 138. 33. Issue of Bonds to Secure Loans, 139. R. S. 3695. Cancellation of Bonds Redeemed or Paid, 139. 3696. Addition to Sinking-fund, 139. 3697. Redemption of Six Per Cent. Bonds, 140. Act of March 3, 1881, ch. 133, 141. Sec. 2. Application of Surplus Moneys to Redemption of Bonds, 141. Act of Fuly 12, 1882, ch. 290, 141. Sec. 11. Three and a Half Per Cent. Bonds Received in Exchange for Three Per Cent. Registered Bonds, 141. Act of March 14, 1900, ch. 41, 142. Sec. 11. Five, Four, and Three Per Cent. Bonds Received in Exchange for Two Per Cent. Bonds, 142. B. S. 3698. Payment of Interest, 143. 3699. Anticipation of Interest, 143. 3701. Exemption from Taxation, 143. 3702. Duplicate for Bonds Destroyed, 144. 3703. Indemnity for Destroyed Bond, 145. 3704. Duplicate of Lost Registered Bond May Be Issued, 145. 3705. Indemnity for Missing Bond, 146. 3706. Exchange of Registered for Coupon Bonds, 146. 3707. Credit to Officers for Stolen Notes, 146. 3708. Imitating United States Securities or Printing Business Cards, etc., on Them-Penalty, 146. CROSS-REFERENCES. Of Cuba, see CUBA, vol. 2, p. 362. Of Philippine Islands, see PHILIPPINE ISLANDS, vol. 5, p. 709. Issue and Redemption of United States Notes, Treasury Notes, etc., see COINAGE, False Demand on Fraudulent Power of Attorney, see COUNTERFEITING AND FORGING, vol. 2, p. 309. False Personation of Holder, see FALSE PERSONATION, vol. 3, p. 92. Appropriations to Pay Interest, see ESTIMATES, APPROPRIATIONS, AND REPORTS, vol. 2, pp. 904-906. Payment of Interest On, see LEGAL TENDER, vol. 4, PP. 794-945; NATIONAL BANKS, vol. 5, p. 75. And see generally COINAGE, MINTS, AND ASSAY OFFICES, vol. 2, p. 105; COUNTERFEITING AND FORGING, vol. 2, p. 297; CURRENCY, vol. 2, p. 366; NATIONAL BANKS, vol. 5, p. 75; PUBLIC MONEYS; TREASURY DEPARTMENT. Sec. 3693. [Payment in coin.] The faith of the United States is solemnly pledged to the payment in coin or its equivalent of all the obligations of the United States not bearing interest, known as United States notes, and of all the interest-bearing obligations of the United States, except in cases where the law authorizing the issue of any such obligations has expressly provided that the same may be paid in lawful money or other currency than gold and silver. But none of the interest-bearing obligations not already due shall be redeemed or paid before maturity, unless at such time United States notes are convertible into coin at the option of the holder, or unless at such time bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin. The faith of the United States is also solemnly pledged to make provisions at the earliest practicable period for the redemption of the United States notes in coin. [R. S.] Act of March 18, 1869, ch. 1, 16 Stat. L. 1. Secs. 3693-3708 constitute title 42 of the Revised Statutes, entitled "The Public Debt." Compromised claim.-Parties having claims against the United States which are disputed by the officers authorized to adjust the same, may compromise the claim, and may accept payment in a different medium from that promised, or may accept a smaller sum than that claimed; and where it appears that the claimant voluntarily entered into a compromise and accepted payment in full in a different medium from that promised, or accepted a smaller sum than that claimed and executed a discharge in full for the whole claim, or voluntarily surrendered to the proper officer the evidences of the claim for cancellation, he cannot subsequently sue the United States and recover in the Court of Claims for any part of the claim voluntarily relinquished in the compromise. Savage's Case, (1861) 11 Ct. Cl. 215, citing Sweeny v. U. S., (1872) 17 Wall. (U. S.) 77; U. S. v. Child, (1870) 12 Wall. (U. S.) 244; Payment in different medium or by smaller sum.- The unconditional acceptance of a medium of payment different from that promised by the United States, or absolute acceptance of a smaller sum from the secretary of the treasury than the one claimed from the United States, even in a case where the amount relinquished is large, does not leave the United States open to further claim on the ground of duress, if the acceptance of the different medium or the smaller sum is voluntary, and without intimidation, and with a full knowledge of the circumstances; nor is the case changed if it appears that the claimant was induced to accept the different medium or the smaller sum in full as a means to secure an earlier payment of the claim than he could otherwise hope to procure. Savage's Case, 11 Ct. Cl. 215, citing Mason v. U. S., (1872) 17 Wall. (U. S.) 74. Sec. 3694. [Application of coin paid for duties.] The coin paid for duties on imported goods shall be set apart as a special fund, and shall be applied as follows: First. [Payment of interest on public debt.] To the payment in coin of the interest on the bonds and notes of the United States. Second. [Sinking-fund.] To the purchase or payment of one per centum of the entire debt of the United States, to be made within each fiscal year, which is to be set apart as a sinking-fund, and the interest of which shall in like manner be applied to the purchase or payment of the public debt, as the Secretary of the Treasury shall from time to time direct. Third. [Residue.] The residue to be paid into the Treasury. [R. S.] Act of Feb. 25, 1862, ch. 33, 12 Stat. L. 346. That SEC. 32. [Loans certificates of indebtedness-counterfeiting.] the Secretary of the Treasury is authorized to borrow from time to time, at a rate of interest not exceeding three per centum per annum, such sum or sums as, in his judgment, may be necessary to meet public expenditures, and to issue therefor certificates of indebtedness in such form as he may prescribe and in denominations of fifty dollars or some multiple of that sum; and each certificate so issued shall be payable, with the interest accrued thereon, at such time, not exceeding one year from the date of its issue, as the Secretary of the Treasury may prescribe: Provided, That the amount of such certificates outstanding shall at no time exceed one hundred millions of dollars; and the provisions of existing law respecting counterfeiting and other fraudulent practices are hereby extended to the bonds and certificates of indebtedness authorized by this Act. [30 Stat. L. 467.] This and sec. 33 following are from the Act of June 13, 1898, ch. 448, "An Act to provide ways and means to meet war expenditures, and for other purposes." Counterfeiting. See COUNTERFEITING AND FORGING, Vol. 2, p. 297. SEC. 33. [Issue of bonds to secure loans.] That the Secretary of the Treasury is hereby authorized to borrow on the credit of the United States from time to time as the proceeds may be required to defray expenditures authorized on account of the existing war (such proceeds when received to be used only for the purpose of meeting such war expenditures) the sum of four hundred million dollars, or so much thereof as may be necessary, and to prepare and issue therefor, coupon or registered bonds of the United States in such form as he may prescribe, and in denominations of twenty dollars or some multiple. of that sum, redeemable in coin at the pleasure of the United States after ten years from the date of their issue, and payable twenty years from such date, and bearing interest payable quarterly in coin at the rate of three per centum per annum; and the bonds herein authorized shall be exempt from all taxes or duties of the United States, as well as from taxation in any form by or under State, municipal, or local authority: Provided, That the bonds authorized by this section shall be first offered at par as a popular loan under such regulations, prescribed by the Secretary of the Treasury, as will give opportunity to the citizens of the United States to participate in the subscriptions to such loan, and in allotting said bonds the several subscriptions of individuals shall be first accepted, and the subscriptions for the lowest amounts shall be first allotted: Provided further, That any portion of any issue of said bonds not subscribed for as above provided may be disposed of by the Secretary of the Treasury at not less than par, under such regulations as he may prescribe, but no commissions shall be allowed or paid thereon; and a sum not exceeding one-tenth of one per centum of the amount of the bonds and certificates herein authorized is hereby appropriated out of any money in the Treasury not otherwise appropriated, to pay the expense of preparing, advertising, and issuing the same. [30 Stat. L. 467.] See note to section 32, supra. Sec. 3695. [Cancellation of bonds redeemed or paid.] All bonds applied to the sinking-fund, and all other United States bonds redeemed or paid by the United States, shall be canceled and destroyed. A detailed record of the bonds so canceled and destroyed shall be first made in the books of the Treasury Department. The amount of the bonds of each class that have been canceled and destroyed shall be deducted respectively from the amount of each class of the outstanding debt of the United States. [R. S.] Act of July 14, 1870, ch. 256, 16 Stat. L. 273. Sec. 3696. [Addition to sinking-fund.] In addition to other amounts that may be applied to the redemption or payment of the public debt, an amount equal to the interest on all bonds belonging to the sinking-fund shall be applied, as the Secretary of the Treasury shall from time to time direct, to the payment of the public debt. [R. S.] Act of July 14, 1870, ch. 256, 16 Stat. L. 273. Sec. 3697. [Redemption of six per cent. bonds.] The Secretary of the Treasury is authorized, with any coin in the Treasury which he may lawfully apply to such purpose, or which may be derived from the sale of any of the bonds which he may be authorized to dispose of for that purpose, to pay at par and cancel any six per centum bonds of the United States of the kind known as five-twenty bonds, which have become or shall hereafter become redeemable by the terms of their issue. But the particular bonds so to be paid and canceled shall in all cases be indicated and specified by class, date, and number, in the order of their numbers and issue, beginning with the first numbered and issued, in a public notice to be given by the Secretary of the Treasury, and, in three months after the date of such public notice, the interest on the bonds so selected and advertised to be paid shall cease. [R. S.] Act of July 14, 1870, ch. 256, 16 Stat. L. 273. Nature of Act. This is merely an Act providing for redemption in contradistinction from a payment. Morgan v. U. S., (1885) 113 U. S. 476; Stewart v. Henry County, (1895) 66 Fed. Rep. 131. Negotiability of bonds. "The Acts of Congress under which these and similar bonds of the United States were authorized and issued, do not in terms attach to them the legal quality of negotiable securities; but they are such in form and fact and obviously for the purpose of giving them the highest credit and the widest and most unfettered currency by passing by delivery, with a title unimpeachable in the hands of bona fide purchasers for value." Morgan v. U. S., (1885) 113 U. S. 476. "The Legal effect of call for redemption. bond becomes, after the maturity of a call for redemption, payable at the option of the holder on demand, but without future interest, at any time prior to the day fixed for ultimate payment, when it becomes unconditionally due. The construction which, after the maturity of such a call, reads the contract as if the day when interest is to cease had been originally inserted as the day of ultimate payment, confounds and obliterates the express distinction made in the law itself between redeemability and payability, and rewrites the contract upon a different basis. The legal effect of the call undoubtedly is to entitle the holder to demand payment at its maturity, and, even though not demanded, to exonerate the government from liability for interest accruing after that date; but, consistently with the terms of the statutes, and the obvious purposes in view in the original creation and issue of the securities in the form adopted, it cannot be that the legal effect of such a call for the purpose of redemption is the same as if the bond had been originally framed as an obligation to pay absolutely on a day previously fixed." Morgan . U. S., (1885) 113 U. S. 476, Rev. (1883) 18 Ct. Cl. 386. Value of bonds on call for redemption. By calling in the five-twenty bonds for redemption they are made equal in value as money to par and interest then due. Morgan v. U. S., (1885) 113 U. S. 476. After a Effect of call on negotiability. bill or note is due, it comes disgraced to the indorsee. No such presumption arises to affect the title of a holder of the bonds of the United States acquired by a bona fide purchaser for value prior to the date fixed in the bonds themselves for their ultimate payment; the only change in the original effect of the contract by the exercise of the right of earlier redemption is to stop the obligation to pay future interest. And as against one choosing for any purpose of his own to retain his bond as a continuing security for the value it always presents, having impressed upon it by the law of its creation the faculty of passing from hand to hand as money and therefore just as useful in the pursuits of trade and the exchanges of commerce and banking as so much money in the form of coin or bank notes, and more convenient because more portable, no such presumption can be entertained on the ground that its continued circulation is not in the due course of business, that it has fully performed all its intended functions and that it has been in any sense dishonored by a refusal on the part of the obligor to fulfil its obligation. Morgan r. U. S.. (1885) 113 U. S. 476, reversing (1883) 18 Ct. Cl. 386. Effect of call on interest and maturity."That law gives to the holder three months after the date of the call for redemption within which to present his bonds for payment or exchange with interest to the date of redemption; but the only penalty it prescribes, if the holder chooses to retain his original security, is the loss of future interest. In no other respect does it alter the original contract. It seeks to impose upon it no other disability, nor take from it any other immunity. It stands, therefore, upon its statutory basis as a bond redeemable at the treasury on demand, without interest after the maturity of the call, payable according to its original terms and not overdue in the SEC. 2. [Application of surplus moneys to redemption of bonds.] That the Secretary of the Treasury may at any time apply the surplus money in the Treasury not otherwise appropriated, or so much thereof as he may consider proper, to the purchase or redemption of United States bonds: Provided, That the bonds so purchased or redeemed shall constitute no part of the sinking fund, but shall be canceled. * * [21 Stat. L. 457.] * This is from the Sundry Civil Appropriation Act of March 3, 1881, ch. 133. By whom made. "The purchases are to be made by the secretary. He is to do this directly through the proper officers of the government and is not authorized by law to pay any commissions to private parties to purchase for the government. He is only authorized to apply the surplus money to the purchase of bonds and not to the payment of salaries or commissions." (1889) 19 Op. Atty. Gen. 279. Amount to be purchased. "The only express limitation to the exercise of the power to purchase conferred by this section is that the amount to be applied in the purchase or redemption of the bonds shall not at any time or in any event exceed the surplus in the treasury not otherwise appropriated. Within this maximum amount it confers on the secretary an official discretion to purchase or redeem from time to time whatever amounts may to him seem to be for the best interests of the United States." (1889) 19 Op. Atty.Gen. 279. Cash purchases only. "The power conferred by the statute does not extend to the making of contracts for future delivery, but is limited to actual cash purchases." (1889) 19 Op. Atty.-Gen. 279. Price to be paid. Except when special and emergent general financial necessities demand relief, it is the intention of law that only the market price at the time of purchase should be paid, and no commissions in addition to the par value of the bond and the premium thereon can be lawfully paid. (1889) 19 Op. Atty.-Gen. 279. Discretion of secretary.- "The intent of the law is that the exercise of the discretion should generally be dependent upon the state of the market as a chief element. Keeping this in view, the discretion was not intended to be so rigorously limited as to prevent purchases even though the market price by reason of such purchases or other natural cause might rise, or even in special emergencies, when a general financial crisis could be avoided or stayed by a moderate advance above the then market values. But the policy of the government generally applicable in its purchases is to buy in a free and open market where all sellers of the commodity can readily compete and where the government can have the benefit of such competition. This policy should be recognized in the exercise of the power." (1889) 19 Op. Atty.Gen. 279. SEC. 11. [Three and a half per cent. bonds received in exchange for three per cent. registered bonds.] That the Secretary of the Treasury is hereby authorized to receive at the Treasury any bonds of the United States bearing three and a half per centum interest, and to issue in exchange therefor an equal amount of registered bonds of the United States of the denominations of fifty, one hundred, five hundred, one thousand, and ten thousand dollars, of such form as he may prescribe, bearing interest at the rate of three per centum per annum, payable quarterly at the Treasury of the United States. Such bonds shall be exempt from all taxation by or under State authority, and be payable at the pleasure of the United States: Provided, That the bonds herein authorized shall not be called in and paid so long as any bonds of the |