16 REPORT OF THE SECRETARY. 
ment and that of last year is that the balance now in the hands of 
the treasurer is $2,500 less than before. This difference is mainly 
due to the increase of prices and the consequent necessity of a greater 
expenditure in carrying on the ordinary operations. 
In view of the great expenditures of the government on account of 
the war, the Institution did not at first claim, as it might reasonably 
have done, to have the annual income from the original bequest paid 
in specie, as all the older funded debts of the United States are paid. 
But since a large outlay will be required to repair the damages caused 
by the fire, the necessity could not be avoided of calling the atten- 
tion of the Secretary of the Treasury to this measure. That this 
claim is a just one was the unanimous opinion of the Board of 
Regents, and among them of Chief Justice Chase, and in accordance 
with the instructions of the Board I have presented this matter to 
the department. It was referred by the Secretary to his legal ad- 
viser, the Solicitor of the Treasury, who has decided that in accord- 
ance with the usage of the government the Institution is entitled to 
receive the interest from the original bequest of Smithson in coin. 
The premium on this will therefore, in future, increase the balance 
in the hands of the treasurer.* 
It was mentioned in the last report that a part of the original be- 
quest, amounting to £5,015, was left by Mr. Rush in England as the 
principal to secure an annuity payable to the mother of Smithson’s 
nephew. The annuitant having died, a power of attorney was sent 
in November, 1862, to Messrs Fladgate, Clark and Finch, (the same 
firm originally employed by Mr. Rush,) to collect the money. After 
a considerable delay, arising principally from technical difficulties, 
the money was obtained and deposited to the order of the Institution, 
with George Peabody & Co., bankers, London. It was subsequently 
drawn through the agency of the Secretary of the Treasury, and, in 
accordance with the law of Congress directing that the money of the 
Smithsonian bequest should be invested in United States securities, 
it was expended in the purchase of government bonds, bearing in- 
terest at the rate of 7,3; per cent. The amount realized in bonds of 
this denomination, at par, was $54,150. It was at first supposed that 
this money, or at least the interest upon it, could immediately be ap- 
plied to the uses of the Institution, but from a critical examination 
of the enactments of Congress in reference to the Smithsonian fund, 
* The premium on the coin received since the presentation of the report, on account of the 
interest due Ist January, was $7,472 70, which sum added to $29,484 08 gives $36,956 78 
as the amount in the hands of the treasurer 
