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Bon, attached to the Comptroller General's report, and sell such bonds greatly below par, and the interest which the State of California has subsequently paid on such bonds is a valid charge against the United States. This matter has been put beyond all dispute by the opinion of the United States Supreme Court in United States o. State of New York (160 U. S. 598), where the Supreme Court held as follows:
The duty of suppressing armed rebellion, having for its object the overthrow of the National Government, was primarily upon that Government and not upon the several States composing the Union. New York came promptly to the assistance of the National Government by enrolling, subsisting, clothing, supplying, arming, equipping, paying, and transporting troops to be employed in putting down the rebellion. Immediately after Fort Sumter was fired upon its legislature passed an act appropriating $3,000,000, or so much thereof as was necessary, out of any moneys in its treasury not otherwise appropriated, to defray any expenses incurred for arms, supplies, or equipments for such forces as were raised in that State and mustered into the service of the United States. In order to meet the burdens imposed by this appropriation the real and personal property of the people of New York were subjected to taxation. When New York had succeeded in raising 30,000 soldiers to be employed in suppressing the rebellion, the United States, well knowing that the national existence was imperiled, and that the earnest cooperation and continued support of the States were required in order to maintain the Union, solemnly declared by the act of 1861 that “the costs, charges, and expenses properly incurred” by any state in raising troops to protect the authority of the Nation would be met by the General Government. And to remove any possible doubt as to what expenditures of a State act would be so met, the act of 1862 declared that the act of 1861 should embrace expenses incurred before as well as after its approval. It would be a reflection upon the patriotic motives of Congress if we did not place a liberal interpretation upon those acts and give effect to what, we are not permitted to doubt, was intended by their passage.
Before the act of July 27, 1861, was passed the Secretary of State of the United States telegraphed to the Governor of New York, acknowledging that that State had then furnished 50,000 troops for service in the War of the Rebellion, and thanking the governor for his efforts in that direction. And on July 25, 1861, Secretary Seward telegraphed: “Buy arms and equipments as fast as you can. We pay all.” And on July 27, 1861, that “Treasury notes for part advances will be furnished on your call for them.' On August 10, 1861, the Secretary of War telegraphed to the Governor of New York: "Adopt such measures as may be necessary to fill up your regiments as rapidly as possible. We need the men. Let me know the best the Empire State can do to aid the country in the present emergency.' And on February 11, 1862, he telegraphed: “The Government will refund the State for the advances for troops as speedily as the Treasurer can obtain funds for that purpose. Liberally interpreted, it is clear that the acts of July 27, 1861, and March 8, 1862, created on the part of the United States an obligation to indemnify the States for any costs, charges, and expenses properly incurred for the purposes expressed in the act of 1861, the title of which shows that its object was to indemnify the States for expenses incurred by them in defense of the United States."
So that the only inquiry is whether, within the fair meaning of the latter act, the words "costs, charges, and expenses properly incurred" included interest paid by the State of New York on moneys borrowed for the purpose of raising, subsisting, and supplying troops to be employed in suppressing the rebellion. We have no hesitation in answering this question in the affirmative. If that Stato was to give effective aid to the General Government in its struggle with the organized forces of rebellion it could only do so by borrowing money sufficient to meet the emergency; for it had no money in its treasury that had not been specifically appropriated for the expenses of its own government. It could not have borrowed money any more than the General Government could have borrowed money without stipulating to pay such interest as was customary in the commercial world. Congress did not expect that any State would decline to borrow and await the collection of money raised by taxation before it moved to the support of the Nation. It expected that each loyal State would, as did New York (and as was done by California), respond at once in furtherance of the avowed purpose of Congress, by whatever force necessary, to maintain the rightful authority and existence of the National Government.
We can not doubt that the interest paid by the State on its bonds issued to raise money for the purposes expressed by Congress constituted a part of the costs, charges, and expenses properly incurred by it for those objects. Such interest, when paid, became a principal sum as between the State and the United States; that is, became a part of the aggregate sum properly paid by the State for the United States. The principal and interest so paid constitutes a debt from the United States to the State. It is as if the United States had itself borrowed the money through the agency of the State.
In accordance with this opinion all other States except California have been reimbursed the interest paid on the principal of their war expenditures.
OBLIGATION OF THE UNITED STATES TO REIMBURSE CALIFORNIA
The obligation of the United States to indemnify and reimburse tho State of California is to be found:
First, in the recitals contained in the letter of the Secretary of State, Hon. William H. Seward, of October 14, 1861, addressed to the Governor of the State of California, prepared, issued, and proclaimed by order of the President of the United States. This order and act of Mr. Secretary Seward were the order and act of the President of the United States, and as such were in fact and in law the order and act of Congress itself, because Congress had declared:
That oll the acts, proclamations, and orders of the President of the United States after the 4th of March, 1861, respecting the Army and Navy of the United States and calling out or relating to the militia or volunteers from the States, are hereby approved and in all respects legalized and made valid to the same extent and with the same effect as if they had been
issued and done under the previous and express authority and direction of the Congress of the United States. (12 Stat. 326.)
Second, in the act of Congress of July 27, 1861, as legislatively construed and explained by Congress itself in its resolution adopted March 8, 1862.
Third, in the unrestricted resolution adopted by Congress, March 19, 1862.
Fourth, in the approval by Congress of the Territorial legislative act of Nevada of February 20, 1864, granting exactly similar additional pay to its volunteers.
Fifth, in that the legislative acts of the Legislature of the State of California granting additional pay to its volunteers were reported to the Secretary of War by the Commanding General of the Department of the Pacific and that the volunteers so recruited were called for and accepted by the Government with the knowledge of the conditions under which the State sought and obtained their enrollment.
Sixth, in that the conditions existing in the State of California on account of the high rates of wages, the high cost of living, the acknowledged inadequacy of the pay of the United States troops, and the great depreciation of Treasury notes in which they were paid made it impossible for the State to secure volunteers for the military service of the Government without the additional payments provided by the legislative acts of the State of California.
Seventh, in the official accounts of Gen. George Wright, United States Army, commanding the Military Department of the Pacific, and the similar accounts of Gen. Irwin McDowell, United States Army, commanding the Military Department of California and Nevada. These men, the highest commanding military officers on the
Pacific coast, duly conferred with the governor and the legislature of the State of California and jointly agreed upon the manner in which the defenses of said State for the common defense should be improved and perfected, and which system of defense so agreed upon was adopted by the legislature of California, as contemplated in said letter of Mr. Secretary Seward. These commanding generals spoke not in their own names but in the name of their highest military commander, to wit: The Commander in Chief of the Army, the President of the United States, all of whose official acts were approved, legalized, and made valid by Congress as if done by express authority and direction of Congress.
In addition, the State of California relied and now relies for full indemnity and reimbursement herein upon that general comity that has ever heretofore existed between the United States and the several States in all cases wherever and whenever the latter have been made, either expressly or impliedly, the agents of the United States in aiding to maintain the common defense during a period of actual war.
There was no war in California or between California and surrounding States. The Civil War was between the United States and the Confederate States. These war costs, charges, and expenses of the State of California so incurred under State and Federal authority, executive and legislative, were incurred not in the defense of said State, separate and apart from the rest of the States, but were incurred in aiding the United States to maintain the common defense; and when incurred were authorized by the State Legislature of the State of California, moved thereto at the urgent solicitation of the highest executive authority of the United States, with the approval and at the direction of the President of the United States and by the sanction and indorsement of Congress theretofore duly expressed in the act and resolutions herein before cited.
To all intents and purposes the State of California was made the agent of the United States for the purposes of enlisting, supplying, training, transporting, and paying troops, which were so enlisted, supplied, trainod, transported, and paid but for one purpose. That purpose was the common defense in time of war. For that purpose, and only for that purpose, the State of California depleted its treasury and extended its credit through the sale of its interest-bearing State bonds to the end that the common defense might be maintained and the integrity of the Union preserved.
It has been demonstrated that in all essential particulars tho State, through its responsible public officials, consulted and cooperated with the commanding. Army officer on the Pacific coast and what was done was done with his full approval and accorded with his best judgment.
The expenditures made were in all respects necessary expenditures in a time of great stress when the United States Government was in great need of men and money for use in the eastern theater of the war. California in recruiting troops to protect the overland mail route and for the expeditions into Arizona, New Mexico, Texas, Nevada, Idaho, Utah, and Oregon, acted for and in behalf of the United States as principal.
In the agency so undertaken the situation being remote, the con ditions being extraordinary, and the emergency one of national
concern, the State was expected to act and did act in concurrence with the recommendation and approval of the commander of the Department of the Pacific. The rule of agency, as expressed in Story on Agency, is applicable:
Whether the authority be expressed or implied, it necessarily carries with it or includes in it as an incident all the powers which are necessary or proper or usual as means to effectuate the purposes for which the agency was created.
In cases of necessity or great urgency it is only necessary that the agent should act bona fide and with reasonable discretion in order to bind the principal. (1 Story, 43.)
That the State of California acted in good faith and with reasonable discretion has never been questioned. Moreover, it so acted in cooperation with and with the approval of the highest military commander in the region of the emergency. A new State, widely separated from other States, sparsely populated, with small taxable resources, took upon itself a great debt, largely increasing its tax rate in order to Assist the Government of the United States.
The money raised by the State of California through the sale of its interest-bearing State bonds at a great discount was not expended for any purpose that was in any sense local to the State of California or for which such State might ordinarily make appropriations. It was expended only for the purpose of providing an effective military force for use in time of war in aid of the common defense, which is a Federal responsibility.
PRECEDENT No other State in the Union, with the possible exception of Oregon and Nevada, had to contend with such extreme, abnormal, conditions during the period of the Civil War as California had to contend with; and for that reason the reimbursement of California at this time, in view of the reimbursement of Nevada during the Seventieth Congress, should create no apprehension as to establishing a precedent. The reimbursement of California is just, meritorious, and honorable, so declared several times by the Senate by the passage of bills providing for reimbursement, and in the Seventieth Congress, Congress itself declared similar expenditures valid. Any objections now raised against reimbursement can be completely answered in the words of Senator Charles Sumner, of Massachusetts:
If the claim 18 just, the precedent of paying it is one which our Government should wish to establish. Honesty and justice are not precedents of which either Government or individuals should be afraid. (S. Rept. 4, 41st Cong., 1st sess., p. 10.)
The conclusion of the report submitted by the Judiciary Committee in the Nevada case (S. Rept. 1706, 70th Cong., 2d sess.) applies with equal force in the California case, as California is not asking reimbursement of a penny she has not actually and honestly expended on behalf of the Government, viz:
The Supreme Court of the United States in United States v. Realty Co. (163 U. S. 427) said:
“That the case as presented to Congress was enough upon which to base the assertion that there was a moral and honorable claim upon the Public Treasury which that body had the constitutional right to recognize and pay; that even though in its purely legal aspects an invalid law could not be made the basis of a legal claim, the planter had acquired a claim against the Government of an 'equitable, moral, or honorable nature'; that the Nation, speaking broadly, owed a debt' to an individual when his claim grew out of right and justice-when, in
other words, it was based upon considerations of a moral or merely honorary nature.
“Reimbursement in accordance with the account stated by the Comptroller General in Senato Document No. 210, Seventieth Congress, second session, is strongly based on 'right and justice,' as the State of Nevada is not asking Congress to appropriate a dollar sho bas not actually expended for the benefit of the United States."
STATE OF CALIFORNIA,
DEPARTMENT OF STAT). 1, Frank O. Jordan, secretary of state of the State of California, do hereby certify that I have carefully compared the transcript to which this certificate is attached, with the record on file in my office of which it purports to be a copy, and that the same is a full, true, and correct copy thereof. I further certify that this authentication is in due form and by the proper officer.
In witness whereof I have hereunto set my hand and have caused the great seal of the State of California to be affixed hereto this 22d day of January, 1931. (SEAL.)
FRANK C. JORDAN,
Secretary of State. By CHAB. J. HAGERTY,
Deputy. Assembly Joint Resolution 4 Adopted in assembly January 12, 1931.
ARTHUR A. OHNIMUS,
Chief Clerk of the Assembly. Adopted in Senato January 19, 1931.
J. A. BEEK,
Secretary of the Senato. This resolution was received by the governor this 22d day of January, A. D. 1931, at 10.15 o'clock &. m.
Ww. A. SMITH, Private Secretary of the Governor.
CHAPTER 14 Assembly Joint Resolution 4, relative to the reimbursement of the State of
California for moneys actually expended in aid of the Government of tho United States during the War between the States
Whereas the State of California has not been reimbursed for moneys actually expended by the State for costs, charges, and expenses incurred in enrolling, equipping, transporting, and paying its volunteer troops during the War between the States in response to the urgent calls of and under proper requisitions made by the commanding general of the military department of the Pacific under direct authority of the President and the Secretary of War, upon the understanding that all such costs, charges, and expenses actually incurred in raising troops for the United States would be reimbursed to the State, as shown by the letter from the Secretary of State, Hon. Wm. H. Seward, addressed to the Governor of California, dated October 14, 1861, wherein he stated:
“The President has directed me to invite your consideration to the subject of the improvement and perfection of the defenses of the State over which you preside and to ask you to submit the subject to the consideration of the legislature when it shall have assembled. Such proceedings by the State would require only a temporary use of its means. The expenditures ought to be made the subject of conference with the Federal authorities. Being thus made with the concurrence of the Government for general defense, there is every reason to believe that Congress would sanction what the State should do and would provide for its reimbursement"; and
Whereas the record shows that the expenditures by the State of California on behalf of the United States were made with the knowledge, cooperation, and approval of the commanding general of the department of the Pacific representing the Federal authorities; and Whereas the expenditures made by the State of California for, and
on account of the United States and at its most urgent calls, are set forth by the Comptroller
8. Repts., 74–1, vol. 1-44