The sudden disbandment of our volunteer hosts, besides their final payment on the ordinary forms of muster-out rolls and other discharge papers, has devolved upon this department an inordinate accumulation of "referred claims" transmitted for adjustment and payment. These have arisen from various causes but chiefly from the inability of the officers charged with the execution of the muster-out papers to reach a complete history as to pay, clothing, bounty, &c., of large number of enlisted men, so as to enable settlement at the time of discharge. To all such certificates of discharge are furnished upon which are indorsed the fact of non-payment, and the holders are directed to forward the same, as the basis of their claim, to the Paymaster-General for adjustment.

Such magnitude has this demand attained that it has been found necessary to organize a special division of paymasters as an attachment of this Bureau to take exclusive cognizance of this class of claims.

This "division of referred claims" is now composed of a chief supervising paymaster of much intelligence, judgment, and experience, with twelve other paymasters; also competent officers of experience and a corps of sixty-four active clerks. The peculiar labors of this division could not be near so well performed under any others organization, having, as this does, enlightened paymaster to supervise every branch of the work, each being responsible for his own.

Every claim sent to this division requires for its elucidation a careful and laborious search though all the previous rolls on file in this and the Second Auditor's Office, besides constant reference to the Adjutant-General's Office, to trace out through the past records all the facts touching the case, the charges, stoppages, forfeitures, &c., that it may be stated with accuracy the balance due the claimant. This done, vouchers in form covering that balance are filled out and transmitted to the claimant for his signature, which returned to the paymaster, the letter remits a check for the amount. From this it will be seen how tedious is the work of this division, what careful industry it demands, and how inevitable are the delays complained of by impatient claimants.

The clerical force of this Bureau is without material change since the date of my last annual report.

For months past, in anticipation of an early permanent reduction of that force, I have refrained from recommending now appointments to fill such vacancies as have occurred by resignation and other casualties.

This course, I apprehend, may continue without injury or material inconvenience to the public service. Such, however, is the sudden accumulation of the business of the Bureau, by reason of the present influx for examination of rolls other classes of vouchers, resulting from the recent and continued large payments to disbanded troops already adverted to, that but a very slight reduction in the number of clerks employed will be practicable for some months to come.

I need hardly urge the unqualified conviction that the compensation allowed by them Government to this indispensable class of public agents is quite inadequate in view of the present exorbitant cost of agents is quite inadequate in view of the present exorbitant cost of the necessaries of life. The clerks of this Bureau as a body are highly meritorious and deserving public servant. None, I am sure, better than they have by faithful industry earned just title to favorable consideration. It becomes my duty, therefore, respectfully, but