Evening star., 1915-02-25
Deficiency Bill Carries Refund
of 3.65 Bond Interest
to United States.
CONTROLLERS DECISION
NOT FULLY FOLLOWED
Full Accounting of Equities Would
Show Heavy Credit for
the District.


priation bill, just reported to the
House, carries provision for the
refund by the District to the
United States of one-half of adj
vances made by the United States
to the District for the payment of
the interest on the sos bonds be-
tween 1876 and 1873. amounting
to over half a million dollars.
This provision purports to be
based on Controller Downey's S
decision, but the controller did
not recommend that Congress
take this action. He decided that
congressional action was an es-
sential prerequisite OF such re-
fund, and suggested that Con-
gress in legislating on the subject
would not be bound by techni-
calities, but could take into con-
sideration the equitable defenses
urged by the District and decide
the case on broad principles OF
justice and fair play.
Controller Downey's decision in the
matter of the milli0n-do1lar claim
against the District to reimburse the
United States in full for advances to pay
interest ON the 3.65 bonds In 1877 and
1873 was rendered December IS, 1914,
and was based on Representative john
sons contention that this million dol
lars, In accordance with the terms of
the law under which 1t was advanced
by the United States, should he now re-
paid in full by the District. and that
this Reimbursement could lawfully he
made by the Secretary of the Treasury
from District funds In his hands with
out further lesislation by Congress-.
The Districts response to the con-
tenti0n OF Representative johnson was
% that II anything was coIlectible ON
this account 1T was only one-half and
not the whole Of the million claimed: CD
that this claim Of the United States was
offset by claims of the District arisin z
under the half-and-half Arrangement
during the four years between 1874
and 1878, and that in full adjustment
Of the account for these years ON the
half contribution basis the United
States would be Indebted to the Dis
trict, and (3) that If old claims and
equit: prior to 1873 are to be revived
In favor of the United States then they
must also In consistency and fairness
be revived In favor Of Warrington. The
old claim of the District against me
nation which revives If 1t was not
merged in the bankruptcy settlement
of 1873 amounts to more than $4,000
900.
The controller decided ~ that the
half-and-half principle applies to the
debt and that only one-half is collect
ibie. II any, and CD that Congress must
legislate on the subject before any
thing IL paid. In regard to the Dis
tfict's contention of q merger OF the
claim In the bankruptcy settlement of
Congress not to collect this advance,
because 1t was Offset by claims OF the
District against the United States aris-
ing on the half-cOntri: ion basis dur-
ing the four years fro.a 1874 to 1878.
the controller says the whole question
Of the equities in the case must he
considered by Congress. which fs not
bound by technica1ities and which can
decide the issue ON broad principles Of
equity.
The claims and equities of the Dis
trict In this connection whi h are to
he considered by Congress in decidinx
this question were summarized in edi-
torial correspondence in The Star Of
December 22. 1913, as follows:
Any claim of the United States agains,
the District for advances on interest of
the 1856 bonds between 1876 and 1873
United States in 1874 to contribute pro-
portionately in payment Of these bonds
and the fixing of that proportion in 1873
at one-half, be only for the surplus over
by the United States.
Irrespective of the conditions under
which 1t was created, this cla:m if 1t
survived the bankruptcy settlement of
1878. survived as an ordinary debt OF the
District to be met like other interest
and sinking fund payments on the bonded
debt as an expense of the District and
paid as such under the half and half
provision of the organic act. If through
neglect of the nations agents this claim
was not collected In full prior to 1878 it
could only be collected after that date
on the half and half principle as an ex-
pense under the organic act. Since 1873
the nation has been under obligations To
fund on all the Districts debts, includ.
ing this debt: and If the nation collects at
all in 1913 1t can equitably collect from
the District only one-half OF this debt: or
IL must contribute one-half to the paw
ment of the debt. which amounts to the
same thing.
II
Between 1874 and 1878 the District
was in the hands of national receivers
in bankruptcy. The District had been
rendered bankrupt by the failure of
Uncle Sam, a debtor in many millions,
to meet his capital-making obligations.
In 1873 the affairs of this bankrupt
were settled by compromise agree
ment affecting both past and future.
Uncle Sans debt to the District was
discharged by these proceedings in
bankruptcy, except as carried over into
the agreement of 1878. and so were all
the debts of the bankrupt capital. ANY
claim of the United States for any
amount on this 1S767S interest ad-
vance account was thus Cancelled by
the equitable compromise or bank
ruptcy settlement OF 1878. 1t has been
treated as thus settled or wiped out
by every Congress and every national
executive administration in the thirty
five years since 1873. 1t was treated as
thus settled by the Treasury Depart
ment in 1886. when the possibility of