8 EEPOET OF THE SECRETAEY. 



Disappointed in obtaining relief from tMs source, an appeal was made 

 to Mr. G. W. Eiggs to advance what might be required to pay the neces- 

 sary expenses of the establishment during the remainder of the year. 

 This he promptly consented to do at a time when loans of money could 

 scarcely be obtained unless at the most exorbitant rates ; and this, too, 

 without charge for interest. Such liberality could scarcely have been 

 expected, especially after the deposits had previously been withdrawn 

 from Mr. Eiggs on the plea of greater security. 



To relieve the Board of Eegents and the secretary in future from all 

 anxiety as to the safety of the semi-annual interest, I would advise that 

 hereafter it be placed in charge of tlie Treasurer of the United States. 

 I am informed that he is authorized to receive on deposit, from officers 

 of the Army and Navy, money which has been appropriated by Congress 

 to special objects, and as the Smithson income is the proceeds of a sacred 

 trust committed to the Government of the United States, the same priv- 

 ilege should be, and I doubt not would be, extended to it. 



The Smithson fund since the war has been much dimmished in effi- 

 ciency by the inflation of the currency, and the cou sequent high price of 

 labor and materials. It is true that the Government pays the Institu- 

 tion in gold, but the premium on this is by no means an equivalent for 

 the diminution of luu^chasing power of the money received : since 

 paper has been substituted as a legal tender, gold itself has become 

 an article of commerce, the price of which depends on the supply and 

 demand. While the premium on gold is, say, ten per cent., the differ- 

 ence of prices due to inflation is, in many cases, a hundred per cent. In 

 addition to the effect of the diminution of the value of the Smithson 

 fund by the inflation of the Government currency, is that of the gradual 

 inflation of the currency of the world by the products of the mines of 

 California and Australia. It is estimated that this, during the last 

 twenty-five years, has made a difference in prices throughout Europe 

 and this country equivalent to twenty per cent. 



To keep up, therefore, the efficiency of the Smithson fund in the way 

 of producing new results in intellectual labor, it was necessary that ad- 

 ditions should be made to it 5 and from the following financial exhibit, 

 and those which have been shown in preceding reports, it is evident 

 that this consideration has received proper attention. 



The following is a statement of the condition of the funds at the end 

 of 1873 or the beginning of 1874: 



The amount originally received as the bequest of James 

 Smithson, of England, deposited in the Treasury of the 

 United States, in accordance with the act of Congress of 



August 10, 1846 $515, 169 00 



The residuary legacy of Smithson, received in 1865, de- 

 posited in the Treasury of the United States, in accord- 

 ance with the act of Congress of February 8, 1867 26, 210 63 



Total bequest of Smithson 541, 379 63 



