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ANNUAL REPORT OF THE
SECRETARY OF THE TREASURY
ON
THE STATE OF THE
FINANCES
FOR THE FISCAL YEAR
ENDED JUNE 30
1926
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WASHINGTON
GOVERNMENT PRINTING OFFICE
1926
Treasury Department
Document No. 2970
Secretary
CONTENTS
Introduction 1
Recommendations for legislation 5-17
Taxation 5
Extension of the Federal reserve bank charters 10
Banking legislation 12
Disposition of sequestrated German property- and payment of mixed
claims 15
Receipts 18-26
Trend in receipts 19
The revenue act of 1926 21
Tax reduction 24
Expenditures 26-34
Total expenditures 27
Functional distribution 28
Prospect of reduction 33
The surplus 34
The public debt 38-46
Summary of transactions since July 1, 1925 38
3M per cent Treasury bonds of 1946-1956 40
Treasury certificates of indebtedness and Treasury notes 41
Purchase of third 43^'s for the sinking fund 42
Review of the last seven years 43
Treasurj^ financing and the credit situation 46-55
Short-term financing 46
Long-term financing 53
Obligations of foreign governments 55
World War Foreign Debt Commission 57-79
Summary of activities 57
Negotiations with the several countries 73
Armenia 73
Austria 74
Belgium 74
Czechoslovakia 74
Estonia 74
France 74
Greece 75
Italy 76
Latvia 76
Liberia 77
Nicaragua 77
Rumania 77
Russia 78
. ,„™ Yugoslavia 78
m
IV CONTENTS
Page
The currency 79-9 7
The composition of United States currency 79
Improvements in the supply of paper currency 81
Gold ^ 8 4
Silver 95
Funds administered by the Treasur}' 98-105
Adjusted service certificate fund . 98
District of Columbia teachers' retirement fund 99
United States Government life insurance fund 100
Civil service retirement and disability fund 101
Foreign service retirement and disability fund 103
Library of Congress trust fund . 104
Other financial operations 105-137
Federal farm loan system 105
Federal land banks 105
Joint-stock land banks 106
Federal intermediate credit banks 106
General 107
Federal reserve banks as fiscal agents of the United States 109
Depositaries of Government funds 118
Customs 120
Bureau of Internal Revenue 124
Checking accounts of Government corporations and agencies 128
War Finance Corporation 129
Railroads 130
Section 204 131
Section 209 131
Section 210 132
Director General of Railroads 133
Securities owned by the United States Government 134
Surety bonds 135
Miscellaneous functions 137-167
Activities for prohibition law enforcement 137
Prohibition Unit reorganization and policy 138
Legislation 143
Narcotic law enforcement 144
The Coast Guard 144
Public Health Service. - -- -- 146
Public buildings 154
Bureau of Supply 160
Purchases and issues 160
General Supply Committee 162
Bureau of Engraving and Printing 165
Administration and organization 168-172
Changes in Treasury organization 168
Budget and Improvement Committee 168
Enrollment and disbarment of attorneys and agents 169
Personnel 170
Number 170
Classification 170
Retirement of civil service employees 171
CONTENTS V
Fas*
Finance tables 172-179
Condition of the Treasury, June 30, 1926 172
Receipts and expenditures on the basis of daily Treasury statements
(unrevised) 175
Receipts and expenditures for the fiscal years 1925 and 1926, and
estimated receipts and expenditures for the fiscal years 1927 and
1928, on the basis of daily Treasury statements (unrevised) 176
Public debt expenditures and receipts for the fiscal j'ear 1926 and
estimates for the fiscal j^ears 1927 and 1928, on the basis of daily
Treasury statements (unrevised) 179
EXHIBITS
THE PUBLIC DEBT
Description of and regulations concerning prihlic debt
Exhibit 1. Brief description of Liberty bonds and Treasury bonds 183
Exhibit 2. Brief description of Treasury notes, certificates of indebtedness,
Treasury savings certificates, and war-savings certificates 184
Exhibit 3. Department Circular No. 368. General regulations governing
full-paid interim certificates 186
Exhibit 4. Fourth supplement to Department Circular No. 225. Receipt
of Liberty bonds, Treasury bonds, and Treasury notes for estate or
inheritance taxes 193
Offerings
Exhibit 5. Department Circular No. 367, ofi"ering for subscription 3^'
per cent Treasury bonds of 1946-56 194
Exhibit 6. Department Circular No. 364, offering for subscription S%
per cent Treasury certificates of indebtedness, series TD-1926 196
Exhibit 7. Department Circular No. 370, offering for subscription 33^
per cent Treasury certificates of indebtedness, series TJ-1927 198
Purchases for cumulative sinking fund
Exhibit 8. Department Circular No. 363. Purchase of third Liberty loan
43^ per cent bonds for the cumulative sinking fund 199
Exhibit 9. Department Circular No. 366. Purchase of third Liberty loan
4i\i per cent bonds for the cumulative sinking fund 201
Redem,ptlons of Treasury savings and war-savings certificates
Exhibit 10. Department Circular No. 361. Redemption of Treasury sav-
ings certificates, series of 1921, dated January 3, 1921 203
Exhibit 11. Department Circular No. 362. Redemption of war-savings
certificates, series of 1921 204
OBLIGATIONS OF FOREIGN GOVERNMENTS
Countries with settlements ratified since November 16, 1925
Exhibit 12. Statement by Secretary Mellon before the Ways and Means
Committee concerning the settlements of the indebtedness of Belgium,
Czechoslovakia, Estonia, Italy, Latvia, and Rumania 206
Exhibit 13. Press statement by Secretary Mellon comparing the debt set-
tlements made by Italv with Great Britain and the United States 213
/
VI CONTENTS
Page
Exhibit 14. Letter from Secretary Mellon to the President calling atten-
tion to some practical factors involved in the settlement of the indebted-
ness of Italy 214
Exhibit 15. Press statement by Secretary Mellon commenting upon the
prospect for the approval of the Italian debt settlement in the Senate. _ 216
Exhibit 16. An act to authorize the settlement of the indebtedness of
Italy to the United States 216
Exhibit 17. Statement of amounts payable to the United States on ac-
count of the proposed refunding bonds to be issued by Italy 218
Exhibit 18. An act to authorize the settlement of the indebtedness of
Belgium to the United States 219
Exhibit 19. An act to authorize the settlement of the indebtedness of
Estonia to the United States 220
Exhibit 20. Statement of amounts payable to the United States on account
of the proposed refunding bonds to be issued by Estonia 222
Exhibit 21. An act to authorize the settlement of the indebtedness of
Latvia to the United States 223
Exhibit 22. Statement of amounts payable to the United States on account
of the proposed refunding bonds to be issued by Latvia 224
Exhibit 23. Agreement for the funding of the indebtedness of Rumania to
the United States 225
Exhibit 24. Press statement by the World War Foreign Debt Commission
giving the terms of the agreement for the settlement of the indebtedness
of Rumania to the United States 230
Exhibit 25. An act to authorize the settlement of the indebtedness of
Rumania to the United States 231
Exhibit 26. Statement of amounts payable to the United States on ac-
count of the proposed refunding bonds to be issued bj' Rumania 232
Exhibit 27. An act to authorize the settlement of the indebtedness of
Czechoslovakia to the United States 234
Exhibit 28. Statement of amounts payable to the United States on ac-
count of the proposed refunding bonds to be issued by Czechoslovakia.. 235
Countries with unratified agreements
Exhibit 29. Agreement for the funding of the indebtedness of France to
the United States 236
Exhibit 30. Press statement by the World War Foreign Debt Commis-
sion giving the terms of the agreement for the settlement of the indebt-
edness of France to the United States 241
Exhibit 31. Statement of amounts payable to the United States on ac-
count of the proposed refunding bonds to be issued by France 242
Exhibit 32. Press statement by Secretary Mellon concerning the British-
French and the American-French debt settlements 243
Exhibit 33. Agreement for the funding of the indebtedness of the King-
dom of the Serbs, Croats, and Slovenes to the United States 244
Exhibit 34. Press statement of the World War Foreign Debt Commission
giving the terms of the agreement for the settlement of the indebted-
ness of the Kingdom of the Serbs, Croats, and Slovenes to the United
States 249
Exhibit 35. Statement of amounts payable to the United States on ac-
count of the proposed refunding bonds to be issued by tlie Kingdom of
the Serbs, Croats, and Slovenes J 250
CONTENTS Vn
Pas«
Exhibit 36. Statement by Secretary Mellon before the Ways and Means
Committee concerning the settlements of the indebtedness of France
and the Kingdom of the Serbs, Croats, and Slovenes 251
Miscellaneous
Exhibit 37. Total amounts to be received by the Treasury on account of
principal and interest under the debt settlements made with foreign
governments 255
Exhibit 38. Press statement of the British account with the United States
in connection with war loans 256
Exhibit 39. Speech of Secretary Mellon before the Union League Club at
Philadelphia on March 24, 1926, concerning the fiscal restoration of
Europe 256
Exhibit 40. Letter from Secretary Mellon replying to Mr. Frederick W.
Peabody's letter urging cancellation of the so-called war debts 259
RAILROADS
Exhibit 41. Summary of the liquidation of the Government's liability
growing out of Federal control 263
Exhibit 42. Appointment of Andrew W. Mellon as Director General of
Railroads 264
Exhibit 43. Designating and appointing Andrew W. Mellon, Director Gen-
eral of Railroads, and his successor in office as the agent provided for in
section 206 of the act of Congress, approved February 28, 1920 265
DISPOSITIOX OF GERMAN PROPERTY HELD BY THE ALIEN PROPERTY
CUSTODIAN AND THE SETTLEMENT OP MIXED CLAIMS
Exhibit 44. Press statement by Acting Secretary of the Treasury Winston
giving the Treasury plan for the disposition of German property held by
the Alien Property Custodian and the settlement of mixed claims 266
Exhibit 45. Letter from Secretary Mellon to the President of the Senate
in response to Senate Resolution 199, concerning alien property 269
Exhibit 46. Press statement by Secretary Mellon concerning factors in the
settlement of German property held by the Alien Property Custodian
and the payment of mixed claims 272
Exhibit 47. Reply of Secretary Mellon to Representative Oliver's sugges-
tion of a substitute for the plan proposed by the Treasury for the dis-
position of German property held by the Alien Property Custodian and
the payment of mixed claims 273
MISCELLANEOUS
Exhibit 48. Address of Undersecretary of the Treasury Winston before the
fifty-second annual convention of the American Bankers' Association
at Los Angeles on October 6, 1926, on the public debt of the United
States 274
Exhibit 49. Address b}- Undersecretary of the Treasury Winston before the
Bankers' Club of Kansas City, October 11, 1926, on currency stabiliza-
tion in Europe 280
Exhibit 50. Press statement by Secretary Mellon on the tariff question. _ 285
Exhibit 51. Summary of principal changes in taxes and tax rates in the
revenue act of 1926.. .. _ 291
VIII CONTENTS
Pas*
Exhibit 52. Individual income tax: Surtax rates, 1913 law-1926 law 294
Exhibit 53. Bases of statements showing Government receipts and
expenditures 296
Exhibit 54. Department Circular No. 154, revised. Acceptance of United
States bonds and notes as security in lieu of suret}^ or sureties on penal
bonds 298
Exhibit 55. An outline of the duties of the Secretary of the Treasury and
the various offices and bureaus in the Treasury Department 309
ABSTKACTS OF REPORTS OF BUREAUS AND DIVISIONS
Treasurer of the United States 333
Comptroller of the Currency 336-346
National banks organized, consolidated, insolvent, in voluntary
liquidation, and in active operation 336
Condition of national banks 339
Banks other than national 341
All reporting banks 342
Director of the Mint 346-350
Institutions of the mint service 346
Coinage 346
Gold operations 347
Silver operations 347
Refineries 347
Commemorative coins 348
Stock of coin and monetary bullion in the United States 348
Production of gold and silver 348
Industrial consumption of gold and silver 349
Import and export of domestic gold coin 349
Appropriations, expenses, and income 349
Deposits of gold and silver, income, expenses, and employees, by
institutions, fiscal year 1926 350
Bureau of Internal Revenue. 350-362
Receipts from internal-revenue taxes 350
Cost of administration 351
Income Tax Unit 352
Revenue agents' reports 352
Adjustment of claims 352
Additional revenue 353
Personnel 353
Miscellaneous Unit 354
Capital stock tax 354
Estate tax 354
Miscellaneous taxes 355
Tobacco taxes 355
Accounts and Collections Unit 356
General counsel 357
Appeals division 357
Interpretative division I 358
Interpretative division II 358
Civil division 359
Penal division 359
Prohibition Unit 360
Bureau and field personnel 362
CONTENTS IX
Page
Division of Bookkeeping and Warrants 363-367
Summary of receipts and expenditures 363
The general fund 363
Warrants issued during the fiscal year 1926 adjusted to basis of daily
Treasury statements (revised) 364
District of Columbia account of revenues and expenditures 365
Alien Property Custodian account 366
Purchase of farm loan bonds 366
State bonds and stocks owned by the United States 366
Bureau of Engraving and Printing -- 367
Customs Service 369-37 1
Volume of business 369
Receipts 370
Expenditures and statistics 370
Enforcement activities 371
Seizures 37 1
Special Agency Service, Customs 372
OflSce of the Supervising Architect 373-377
Building operations during the fiscal year 1926 373
Projects completed 375
Projects in course of construction 375
Expenditures, contract liabilities charged against appropriations, and
unencumbered balances 377
PubUc Health Service - 377-386
Scientific research 377
Division of domestic quarantine 380
Division of foreign and insular quarantine and immigration 380
Division of sanitary reports and statistics 382
Division of marine hospitals and reUef 383
Division of venereal diseases • 383
Division of personnel and accounts 385
Financial statement 386
Coast Guard-. 387-398
Summary of principal operations 387
Ice patrol to promote safety at sea 388
Winter cruising 388
Cruises in northern waters 389
Northern Pacific halibut fishery 389
Anchorage and movements of vessels 390
Removal of derehcts 390
Regattas 390
Communications 390
Aviation 391
Ordnance 392
Welfare 392
Recruiting 392
Coast Guard Academy.. 393
Coast Guard repair depot 394
Repairs and improvements to vessels and stations 394
Enforcement of customs and other laws 395
Award of life-saving medals 396
Personnel 396
Floating equipment 396
Miscellaneous 397
11438—261 2
X CONTENTS
Division of Loans and Currency 398-405
Summary of activities 399
Issue and retirement of securities 400
Maintenance of individual registered accounts 401
Issue of interest checks 401
Claims 401
Safe-keeping of securities 401
PubUcity 402
Destruction committee 402
Circulation — 404
Register of the Treasury 406
Division of Public Debt Accounts and Audit 408
Division of Paper Custody 410
Division of Deposits 410-413
Number of depositaries and amount of deposits 411
General national-bank depositaries of public moneys 411
Limited national-bank depositaries of public moneys 412
Insular depositaries of public moneys _ 412
Special depositaries of public moneys 412
Foreign depositaries of public moneys 412
Secret Service Division 413
Division of Printing 414-415
Printing and binding 414
Postage 415
Department advertising 415
Disbursing Clerk 415
Bureau of Supply 416-425
Expenditures by fiscal years 1923 to 1926, by appropriations.. 417
Purchases^ and issues of stationery supplies .. 419
General Supply Committee 422
TABLES
RECEIPTS AND EXPENDITURES
General tables
No. 1. Comparison of receipts for the fiscal years 1926 and 1925, on the
basis of warrants issued 429
No. 2. Comparison of expenditures for the fiscal years 1926 and 1925, on
the basis of warrants issued 434
No. 3. Ordinary receipts, and expenditures chargeable against ordinary
receipts, together with the surplus or deficits, by fiscal years from 1916
to 1926, on the basis of daily Treasury statements (unrevised) 443
No. 4. Ordinary receipts, and expenditures chargeable against ordinary
receipts, by fiscal years from April 6, 1917, to June 30, 1921, and by
months from July 1, 1921, to October 31, 1926, on the basis of daily
Treasury statements (unrevised) 444
No. 5. Receipts and expenditures of the Government for the fiscal years
1916 to 1926, on the basis of daily Treasury statements (unrevised) 448
No. 6. Expenditures of the Government, by months, for the fiscal year
1926, classified according to departments and establishments, on the
basis of daily Treasury statements (unrevised) 452
No. 7. Receipts and expenditures of the Government by fiscal years from
1791 to 1926, on the basis of warrants issued 456
CONTENTS XI
Special receipts and expenditures
Paga
No. 8. Postal receipts and expenditures for the fiscal years 1791 to 1926,
on the basis of reports of the Post Office Department 468
No. 9. Panama Canal receipts and expenditures for the fiscal 3'ears 1903
to 1926, on the basis of warrants issued 470
No. 10. Sources of internal revenue for the fiscal years 1863 to 1926, on
the basis of reports of collections 471
No. 11. Internal-revenue receipts, by States and Territories, for the
fiscal years 1925 and 1926, on the basis of reports of collections 477
No. 12. Merchandise imported and customs duties collected from 1890 to
1925, and recapitulation from 1867 to 1925 479
No. 13. Customs statistics, by districts, for the fiscal year 1926, on the
basis of reports of collections 485
No. 14. Interest collected by fiscal years, from June 1, 1913, to June 30,
1926, on deposits of Government funds with national-bank, insular,
and foreign depositaries 488
No. 15. Interest collected to June 30, 1926, by Federal reserve districts,
on deposits in special depositaries on account of sales of Liberty bonds.
Victory notes. Treasury notes, and certificates of indebtedness, and
income and profits tax payments, under acts of April 24, 1917, Septem-
ber 24, 1917, April 4, 1918, July 9, 1918, September 24, 1918, and March
3, 1919 488
Estimates of receipts and appropriations
No. 16. Estimated receipts for the fiscal years 1928 and 1927, and actual
receipts for the fiscal j^ear 1926 . 489
No. 17. Estimated receipts from customs, internal revenue classified ac-
cording to source, and miscellaneous receipts classified according to
departments and establishments for the fiscal years 1928 and 1927 490
No. 18. Estimates of appropriations for 1928 compared with appropria-
tions for 1927 491
No. 19. Appropriations made by Congress for the fiscal years 1914 to 1927,
including estimated permanent and indefinite appropriations and de-
ficiencies for prior yeai's 493
No. 20. Appropriations, expenditures, amounts carried to surplus fund,
and unexpended balances for the fiscal years 1885 to 1926 496
CONDITION OF THE TREASURY
No. 21. Condition of the United States Treasury at the close of the fiscal
years 1926, 1925, and 1924, on the basis of daily Treasury statements
(revised) 498
THE PUBLIC DEBT
Public debt outstanding
No. 22. Statement of the public debt of the United States, June 30, 1926_ 500
No. 23. PubUc debt of the United States outstanding June 30, 1926 502
No. 24. Principal of the pubHc debt at the end of each fiscal year, from
1853 to 1926, exclusive of gold certificates, silver certificates, currency
certificates, and Treasury notes of 1890 510
No. 25. Preliminary statement of the public debt, October 31, 1926 511
No. 26. Treasury notes and certificates of indebtedness which matured
during the fiscal year 1926, outstanding June 30, 1926, classified by
issues and denominations 512
No. 27. Interest-bearing United States bonds, notes, and certificates of
indebtedness outstanding June 30, 1926, classified by issues and de-
nominations 513
XII CONTENTS
Pagt
No. 28. Unmatured Liberty bonds, Treasury bonds, and Victory notes
outstanding from June 30, 1919, to August 31, 1926, classified by de-
nomination and form 516
No. 29. United States interest-bearing debt outstanding at the end of
each month from February 28, 1917, to August 31, 1926 518
Transactions in the public debt
No. 30. Summary statement of transactions in interest-bearing and
noninterest-bearing United States securities for the fiscal year ended
June 30, 1926 522
No. 31. Interest-bearing United States bonds, notes, and certificates of
indebtedness issued during the fiscal year ended June 30, 1926, classified
by issues and accounts 526
No. 32. Treasury bonds and certificates of indebtedness issued through
each Federal reserve bank and the Treasury Department during the
fiscal year ended June 30, 1926 528
No. 33. Interest-bearing United States bonds, notes, a ad certificates of
indebtedness retired during the fiscal year ended June 30, 1926, classified
by issues and accounts 529
No. 34. Summary of transactions in interest-bearing United States securi-
ties for the fiscal year ended June 30, 1926 531
No. 35. Transactions in interest-bearing pre-war bonds during the fiscal
year ended June 30, 1926 533
No. 36. Transactions in interest-bearing Liberty bonds and Treasury
bonds during the fiscal year ended June 30, 1926 534
No. 37. Transactions in interest-bearing Treasury notes during the fiscal
year ended June 30, 1926 536
No. 38. Transactions in interest-bearing certificates of indebtedness dur-
ing the fiscal year ended June 30, 1926 537
No. 39. Transactions in Treasury (war) savings securities during the
fiscal year ended June 30, 1926 538
No. 40. Transactions in interest-bearing and noninterest-bearing United
States securities during the fiscal year 1926, classified by issues 540
No. 41. Interest-bearing United States securities outstanding June 30,
1926, and transactions in such securities from date of inception, showing
reconciliation of account of the Treasurer of the United States with
security account 545
No. 42. Transactions in the public debt of the United States for the period
July 1, 1917, to June 30, 1926 - 548
No. 43. Public debt retirements chargeable against ordinary receipts for
the fiscal year 1926, and cumulative totals on June 30, 1925 and 1926.. 551
No. 44. Public debt retirements for the fiscal years 1918 to 1926, on the
basis of daily Treasurj^ statements (revised) 554
No. 45. Sources of debt increase and decrease for the fiscal years 1916 to
1926, on the basis of daily Treasury statements (unrevised) 560
Interest on the public debt
No. 46. Interest on the public debt of the United States payable, paid,
and outstanding unpaid, for the fiscal year 1926 561
Miscellaneous
No. 47. Registered interest-bearing bonds outstanding and number of
registered accounts, June 30, 1926, classified by issues, and amount of
interest payaljle, and number of checks drawn during the fiscal year
ended June 30, 1926 -. -- -- 562
CONTENTS XIII
Page
No. 48. Stock accountability of the Division of Loans and Currency for
United States and other securities for the fiscal year ended June 30, 1926_ 563
No. 49. Stock accountability of Federal reserve banks and other Treasury
agencies (exclusive of the Division of Loans and Currency) for United
States securities for the fiscal year ended June 30, 1926 568
No. 50. Retired and unissued United States securities on hand June 30,
1925, not previously reported (belonging to previous fiscal years and
delivered to the Register of the Treasury during the fiscal year ended
June 30, 1926) 572
INSULAR AND DISTRICT OF COLUMBIA LOANS
No. 51. Insular and District of Columbia loans, changes during the fiscal
year ended June 30, 1926 572
No. 52. Insular and District of Columbia securities, retired and unissued,
delivered to the Register of the Treasury during the fiscal year ended
June 30, 1926 574
SECURITIES OWNED BY THE UNITED STATES GOVERNMENT
No. 53. Securities owned by the United States Government, June 30, 1926. 576
FOREIGN OBLIGATIONS
No. 54. Principal amount of obligations of foreign governments originally
acquired under the acts of Congress mentioned and payments on account
of principal thereof; the funded indebtedness with payments on account of
principal thereof and the net principal outstanding as of November 15,
1926; the accrued and unpaid interest on all such indebtedness as of the
last interest period prior to or ending with November 15, 1926; and the
total indebtedness as of November 15, 1926 579
No. 55. Payments made by foreign governments on account of interest on
obligations held by the Treasury 580
RAILROADS
No. 56. Payments to carriers from November 1, 1925, to October 31, 1926,
inclusive, provided for in section 204 of the transportation act of 1920, as
amended, for reimbursement of deficits on account of Federal control 581
No. 57. Payments to carriers from November 1, 1925, to October 31, 1926,
inclusive, under the guarantj' provided for in section 209 of the trans-
portation act of 1920, as amended, and payments by carriers to the
United States under the same section 58 1
No. 58. Loans to carriers under section 210 of the transportation act of
1920, as amended, and repajunents on such loans from November 1, 1925,
to October 31, 1926, inclusive, with loans outstanding October 31, 1925,
and October 31, 1926 582
DISTRIBUTION OF MONEY
No. 59. Stock of money in the United States, classified by kind, at the end
of each fiscal year from 1860 to 1889 584
No. 60. Stock of money in the L^nited States, classified by kind, at the end
of each fiscal year from 1890 to 1926 585
No. 61. Stock of monej', money in circulation, and amount of circulation
per capita in the United States from 1860 to 1926 586
PERSONNEL
No. 62. Number of employees in the departmental service of the Treasury
in Washington, by months, from June 30, 1925, to September 30, 1926. _ 588
SECRETARIES OF THE TREASURY AND PRESIDENTS UNDER
WHOM THEY SERVED
Note. — Robert Morris, the first financial officer of the Qovernment, was Superintendent of Finance from
1781 to 1784. Upon the resignation of Morris, the powers conferred upon him were tran.sferred to the "Board
of the Treasury." Those who finally accepted positions on this board were John Lewis Qervais, Samuel
Osgood, and Walter Livingston. The board served until Hamilton assumed office in 1789.
Presidents
Washington.
Adams.
Jefferson -
Madison.
Secretaries of Treasury
Alexander Hamilton, New York
Oliver Wolcott, Connecticut
Oliver Wolcott, Connecticut.
Samuel Dexter, Massachusetts
Samuel Dexter, Massachusetts
Albert Gallatin, Pennsylvania
Albert Gallatin, Pennsylvania '
George W. Campbell, Tennessee
Alexander J. Dallas, Pennsylvania..
Wm. H. Crawford, Georgia
Monroe l Wm. H. Crawford, Georgia
Adams, J. Q Richard Rush, Pennsylvania '
Jackson 1 Samuel D. Ingham, Pennsylvania'.
Louis McLane, Delaware
Wm. J. Duane, Pennsylvania
Roger B. Taney, Maryland •
Levi Woodbury, New Hampshire...
Van Buren 1 Levi Woodbury, New Hampshire •.
Harrison
Tyler....
Polk.
Pierce
Buchanan
1, 1795
3, 1797
.,1800
3,1801
3,1801
3,1809
,,1813
5, 1814
1, 1816
., 1817
6, 1825
5,1829
0, 1831
., 1833
2,1833
5,1834
3,1837
3,1841
4, 1841
1,1841
1,1843
-.1844
4,1845
7,1846
5,1849
9,1850
2, 1850
8, 1863
5, 1857
.,1800
4,1861
6, 1861
0, 1864
3,1866
.,1866
' While holding the office of Secretary of the Treasury, Gallatin was commissioned envoy extraordinary
and minister plenipotentiary April 17, 1813, with John Quincy Adams and James A. Bayard, to negotiate
peace with Great Britain. On February 9, 1814, his seat as Secretary of the Treasury was declared vacant
because of his absence in Europe. William Jones, of Pennsylvania (Secretary of the Navy), acted ad
interim Secretary of the Treasury from April 21, 1813, to February 9, 1814.
' Rush was nominated March 5, 1825, confirmed and commissioned March 7, 1825, but did not enter upon
the discharge of his duties until August 1, 1825. Samuel L. Southard, of New Jersey (Secretary of the
Navy), served as ad interim Secretary of the Treasury from March 7 to July 31, 1825.
» Asbury Dickens (Chief Clerk), ad interim Secretary of the Treasury June 21 to August 7, 1831.
« McClintock Young (Chief Clerk), ad interim Secretary of the Treasury from June 25 to 30, 1834.
» McClintock Young (Chief Clerk), ad interim Secretary of the Treasury from March 4 to 5, 1841
« McClintock Young (Chief Clerk), ad interim September 13, 1841.
' McClintock Young (Chief Clerk), ad interim March 1 to 7, 1843.
' Spencer resigned as Secretary of the Treasury May 2, 1844; McClintock Young (Chief Clerk), ad interim
from May 2 to July 3, 1844.
» McClintock Young (Chief Clerk), ad interim March 6 to 7, 1849.
» Isaac Toucey, of Coimectieut (Secretary of the Navy), acted as Secretary of the Treasury ad interim
December 10 to 12, 1S60.
» George Harrington, District of Columbia (Assistant Secretary), ad interim July 1 to 4, 1864,
" George Harrington (Assistant Secretary), ad interim March 4 to 8, 1865.
XIV
Thomas Ewing, Ohio.
Thomas Ewing, Ohio* ,
Walter Forward, Pennsylvania '..,
John C. Spencer, New York '
Geo. M. Bibb, Kentucky
Geo. M. Bibb, Kentucky
Robt. J. Walker, Mississippi •
Wm. M. Meredith, Pennsylvania.
Wm. M. Meredith, Pennsylvania.
Thos. Corwin, Ohio
James Guthrie, Kentucky
Howell Cobb, Georgia"
Philip F. Thomas, Maryland
John A. Dix, New York
Lincoln j Salmon P. Chase, Ohio"
i Wm. P. Fessenden, Maine"
, Hugh McCuUoch, Indiana
Taylor..
Fillmore
Term of service
From—
To—
Sept.
11, 1789
Jan.
31,
Feb.
3, 1795
Mar.
3,
Mar.
4, 1797
Dec.
31,
Jan.
1, 1801
Mar.
3,
Mar.
4, 1801
May 13,
May
14, 1801
Mar.
3,
Mar.
4, 1809
Apr.
17,
Feb.
9, 1814
Oct.
•■).
Oct.
6, 1814
Oct.
21,
Oct.
22, 1816
Mar.
3,
Mar.
4, 1817
Mar.
6.
Mar.
7, 1825
Mar.
5,
Mar.
6, 1829
June
20,
Aug.
8, 1831
May 28,
May 29, 1833
Sept.
22,
Sept.
23, 1833
June
25,
July
1, 1834
Mar.
3,
Mar.
4, 1837
Mar.
3,
Mar.
6, 1841
Apr.
4,
Apr.
5, 1841
Sept.
11,
Sept.
13, 1841
Mar.
1,
Mar.
8, 1843
May
2,
July
4, 1844
Mar.
4,
Mar.
5, 1845
Mar.
7,
Mar.
8, 1845
Mar.
5,
Mar.
8, 1849
July
9,
July
10, 1850
July
22,
July
23, 1850
Mar.
6,
Mar.
7, 1853
Mar.
6,
Mar.
7, 1857
Dec.
8,
Dec.
12, 1860
Jan.,
14,
Jan.
15, 1861
Mar.
6,
Mar.
7, 1861
June 30,
July
5, 1864
Mar.
3,
Mar.
9, 1865
Apr.
15,
SECRETARIES OP THE TREASURY XV
Secretaries of the Treasury and Presidents under whom they seraed— Continued
Presidents
Secretaries of Treasury
Johnson.
Grant...
Hayes.
Garfield .
Hugh McCulloch, Indiana"
Geo. S. Boutwell, Massachusetts
Wm. A. Richardson, Massachusetts.
Benj. H. Bristow, Kentucky n
Lot M. Morrill, Maine
Lot M. Morrill, Maine
John Sherman, Ohio'*
Wm. Windom, Minnesota
■'Arthur Wm. Windom, Minnesota.
Term of service
Cleveland.
Chas. J. Folger, New York i«.. ! Nov
From—
Apr. 16,1865
Mar. 12, 1869
Mar. 17, 1873
June 4, 1874
July 7, 1876
Mar. 4,1877
Mar. 10, 1877
Mar. 8,1881
Sept. 20, 1881
Walter Q. Gresham, Indiana.
Hugh McCulloch, Indiana.
Hugh McCulloch, Indiana
Daniel Manning, New York
i Chas. S. Fairchild, New York
Harrison, Benj ....I Chas. S. Fairchild, New York
Wm. Windom, Minnesota"
' Chas. Foster, Ohio...
Cleveland j Chas. Foster, Ohio .....".
I John G. Carlisle, Kentucky
McKinley I John G. Carlisle, Kentucky
Lyman J. Gage, Illinois.
Roosevelt Lyman J. Gage, Illinois .".'^
L. M. Shaw, Iowa
George B. Cortelyou, New York...
Franklin MacVeagh, Illinois
^"son W. G. McAdoo, New York
I Carter Glass, Virginia.
j David F. Houston, Missouri.
^^''<^i°g j Andrew W. Mellon, Pennsylvania.
^°°"<ige .indrew W. Mellon, Pennsylvania
14, 1881
Sept. 25, 1884
Oct. 31,1884
Mar. 4,1885
Taft.
Mar.
Apr.
Mar.
Mar.
8, 1885
1, 1887
4, 1889
7, 1889
Feb. 25,1891
Mar. 4,1893
Mar. 7,1893
Mar. 4, 1897
Mar. 6,1897
Sept. 15, 1901
Feb. 1, 1902
4, 1907
8, 1909
6, 1913
16, 1918
2,1920
4, 1921
3, 1923
Mar.
Mar.
Mar.
Dec.
Feb.
Mar.
Aug.
To—
Mar. 3,1869
Mar. 16, 1873
June 3, 1874
June 20,1876
Mar. 3,1877
Mar. 9, 1877
Mar. 3, 1881
Sept. 19, 1881
Nov. 13, 1881
Sept. 4,1884
Oct. 30,1884
Mar. 3,1885
Mar. 7, 1885
Mar. 31, 1887
Mar. 3, 1889
Mar. 6,1889
Jan. 29,1891
Mar. 3,1893
Mar. 6,1893
Mar. 3, 1897
Mar. 5, 1897
Sept. 14, 1901
Jan. 31,1902
Mar. 3, 1907
Mar. 7, 1909
Mar. 5,1913
Dec. 15,1918
Feb. 1, 1920
Mar. 3, 1921
Aug. 2, 1923
'^" Chlfrlf.; P^ffi'n"/ -^f AT°® (Assistant Secretiiry), ad interim from March 5 to 11, 1869.
'ȣyE French of M^sslchn^^^^^^^^ Secretary),. ad interim June 21 to 30 [July 6], 1876.
16 cffis F fw ' of Mow v^ ®J^*^ (Assistant Secretary), ad interim March 4 to 7, 1881.
French of ^L.?aPhn.p/tffA'lI?'''f^^'''^*™^ ""^ '^t^rim September 4 to 7, 1884; Henry F.
interim SepSer 15 to 24?^^^^^^^^ Secretary), ad mter.m September 8 to 14, 1884; Chkrles E. Coon ad
»' A. B. Nettleton, of Minnesota (Assistant Secretary), ad interim January 30 to February 24, 1891.
UNDERSECRETARIES OF THE TREASURY AND PRESIDENTS
AND SECRETARIES UNDER WHOM THEY SERVED
Presidents
Secretaries
Harding.
Coolidge.
Mellon
Mellon
Mellon
Undersecretaries »
S. Parker Gilbert, jr., New Jersey,
S. Parker Gilbert, jr.. New Jersey,
Garrard B. Winston, Illinois
Term of service
From —
July 1, 1921
Aug. 3, 1923
Nov. 20, 1923
To—
Aug. 2, 1923
Nov, 17, 1923
> Office established act June 16, 1921.
XVI
ASSISTANT SECRETAEIES OP THE TREASURY
ASSISTANTS TO THE SECRETARY OF THE TREASURY => AND
PRESIDENTS AND SECRETARIES UNDER WHOM THEY SERVED
Presidents
Secretaries
Assistants to the Secretaries
Term of service
Washington
Wilson
Hamilton
McAdoo
Glass.
Houston.
From—
Sept. 11, 1789
Mar. 6,1917
To-
May 8,1792
George R. Cooksey, District of Colum-
bia.
Mar. 4,1921
» Office established Sept. 2, 1789; abolished act May 8, 1792; reestablished act Mar. 3, 1917. Appointed
by the Secretary.
ASSISTANT SECRETARIES OF THE TREASURY AND PRESIDENTS
AND SECRETARIES UNDER WHOM THEY SERVED
Presidents
Secretaries
Assistant Secretaries •
Term of service
From—
To-
Taylor
Meredith
Charles B. Penrose, Pennsylvania
Allen A Hail, Pennsylvania
Mar. 12, 1849
Oct. 10,1849
Oct. 9, 1840
Nov. 15, 1850
Filmore
Corwin.
WUliam L. Hodge, Tennessee
Nov. 16,1860
Mar. 4,1863
Mar. 13. 1853
Pierce
Guthrie.
Guthrie
Peter Q. Washington, District of Co-
lumbia.
Mar. 12, 1857
Buchanan
Cobb.
Philip Clayton, Georg^ia
Mar. 13, 1857
Jan. 16,1861
Thomas.
Dii.
Chase
George Harrington, District of Colum-
bia.*
Mar. 13, 1861
July 11,1865
Fessenden.
McCulloch.
Johnson... ......
McCulloch.
Chase
MaunseU B. Field, New York
Mar. 18, 1864
June 15,1865
Fessenden.
McCulloch.
Johnson
McCulloch.
Fessenden
WUliam E Chandler, New Hamp-
shire.
Jan. 5, 1865
Lincoln
Nov. 30, 1867
McCulloch.
McCulloch.
McCulloch
BoutweU.
July 11,1865
May 4,1875
Grant
Richardson.
Bristow.
McCulloch
BoutweU
Richardson
Edmund Cooper, Tennessee
Dec. 2,1867
Mar. 20, 1869
Mar. 8,1873
May 31, 1868
Grant
William A. Richardson, Massachusetts
Frederick A. Sawyer, South Carolina.
Mar. 17, 1873
June 11,1874
1 Bristow.
Charles F. Conant, New Hampshire..
July 1, 1874
Apr. 3, 1S77
Morrill.
Hayes
Sherman.
Curtis F. Burnam, Kentucky
Mar. 4,1875
Aug. 12, 1876
^ June 30,1876
Henry F. French, Massachusetts
Mar. 9,1885
Hayes ...
i Sherman.
Windom.
Garfield
1
• Office established act Mar. 3, 1849; appointed by the Secretary. Act Mar. 3, 1857, made the office Presi-
dential.
• Act Mar. 14, 1864, provides one additional Assistant Secretary
ASSISTANT SECRETAEIES OF THE TREASURY
XVII
Assistant Secretaries of the Treasury and Presidents and Secretaries under whom
they served — Continued
Presidents
Secretaries
Assistant Secretaries
Term of service
Arthur
Windom.
Folger.
Qresham.
McCulloch.
Cleveland
Manning.
From —
To—
Hayes
Sherman
Richard C. McCormick, Arizona
Apr. 3, 1877
Dec. 8, 1877
Sherman
John B. Hawley, Illinois
Dec. 9, 1877
Mar. 31, 1880
Sherman
J. Kendrick Upton, New Hampshire..
Apr. 10,1880
Dec. 31,1881
Garfield
Windom.
Windom.
Folger.
Arthur
Folger
John C. New, Indiana
Feb. 28,1882
Apr. 17,1884
Apr. 16, 1884
Folger
Charles E. Coon, New York. .
Nov. 10, 1885
Qresham.
McCulloch.
Cleveland
Manning.
Manning
Charles S. Fairchild, New York
Mar. 14, 1885
Apr. 1, 1887
Manning
WUliam E. Smith, New York
Nov. 10, 1885
June 30,1886
Manning
Hugh S. Thompson, South Carolina..
July 12,1886
Mar. 12, 1889
Fairchild.
•
Harrison
Windom.
Cleveland
Fairchild—
Isaac N. Maynard, New York
Apr. 6, 1887
Mar. 11, 1889
Harrison
Windom.
Windom
George H. Tichner, Illinois
Apr. 1, 1889
July 20,1890
Windom
George T. Batchelder, New York »....
Apr. 1, 1889
Oct. 31,1890
Windom
Foster.
A. B. Nettleton, Minnesota
July 22,1890
Dec. 1, 1892
Windom
Oliver L. Spaulding, Michigan
July 23,1890
June 30,1893
Foster.
Cleveland
Carlisle.
Harrison
Foster
Lorenzo Crounse, Nebraska
Apr. 27,1891
Nov. 22, 1892
Dec. 23,1892
Oct. 31,1892
Foster
John H. Gear, Iowa
Genio M. Lambertson, Nebraska
Mar. 3,1893
Foster
Apr. 3, 1893
Cleveland
Carlisle.
Carlisle
Charles S. Hamlin, Massachusetts
Apr. 12,1893
Apr. 7, 1897
McKinley
Gage.
Cleveland
Carlisle
William E. Curtis, New York
Apr. 13,1893
Mar. 31, 1897
McKinley
Gage.
Cleveland
Carlisle
Scott Wike, Illinois
July 1, 1893
May 4, 1897
McKinley
Gage.
Gage
William B. Howell, New Jersey
Apr. 7, 1897
Mar. 10, 1899
Gage
Oliver L. Spaulding, Michigan
Apr. 7, 1897
Mar. 4,1903
Roosevelt
Gage.
Shaw.
McKinley
Gage
Frank A. Vanderlip, Illinois.-
June 1, 1897
Mar. 5, 1901
Gage
Horace A. Taylor, Wisconsin
Mar. 13, 1899
June 3,1906
Roosevelt
Gage.
Shaw.
McKinley
Gage...
Milton E. Ailes, Ohio
Mar. 6,1901
Apr. 15, 1903
Roosevelt
Gage.
Shaw.
Shaw
Shaw
Robert B. Armstrong, Iowa
Mar. 5,1903
May 27, 1903
Mar. 5,1905
Charles H. Keep, New York
Jan. 21,1907
Shaw
James B. Reynolds, Massachusetts
Mar. 5,1905
Nov. 1,1909
Cortelyou.
Taft
Roosevelt
Shaw
Cortelyou.
John H. Edwards, Ohio
July 1, 1906
Mar. 15, 1908
Shaw
Arthur F. Statter, Oregon
Jan. 22,1907
Feb. 28,1907
Cortelyou
Beekman Winthrop, New York
Apr. 23,1907
Mar. 6,1909
Cortelyou
Louis A. Coolidge, Massachusetts
Mar. 17, 1908
Apr. 10,1909
• Act July 11, 1890, provides for an additional Assistant Secretary.
XVIII
ASSISTANT SECRETARIES OF THE TREASURY
Assistant Secretaries of the Treasury and Presidents and Secretaries under whom
they served — Continued
Presidents
Secretaries
MacVeagh.
MacVeagh
MacVeagh
MacVeagh
McAdoo.
MacVeagh
MacVeagh
McAdoo.
MacVeagh
McAdoo.
McAdoo ...
McAdoo
McAdoo
McAdoo
McAdoo
McAdoo
McAdoo--
Glass.
McAdoo
Glass.
Houston.
Mellon.
McAdoo
Glass.
Houston.
McAdoo
Glass.
McAdoo
Glass.
Houston.
Glass
Assistant Secretaries
Term of service
Taft
Charles D. Norton, Illinois
From—
Apr. 5, 1909
Apr. 19,1909
Nov. 27, 1909
June 8, 1910
Apr. 4, 1911
July 20,1912
Mar. 24, 1913
Aug. 1,1913
Oct. 1, 1913
Mar. 24, 1914
Aug. 17,1914
Apr. 17,1917
June 22, 1917
Oct. 5, 1917
Oct. 30,1917
Dec. 15,1917
Sept. 4,1918
Mar. 5,1919
Nov. 21, 1919
June 15,1920
July 6, 1920
Dec. 4, 1920
Dec. 4, 1920
Mar. 16, 1921
Aug. 3,1923
May 4,1921
Dec. 23,1921
Mar. 3,1923
Aug. 3,1923
July 9, 1923
Aug. 3,1923
July 1, 1924
Apr. 1, 1925
T
June
Apr.
July
July
Mar.
Sept.
Feb.
Aug.
Oct.
Jan.
Mar.
Aug.
Nov.
Aug.
July
Jan.
June
Nov.
June
Apr.
June
May
Mar.
Aug.
Mar.
July
July
Aug.
July
Aug.
Nov.
8, 1910
Charles D. Hilles, New York
3, 1911
Wilson
Taft
James F. Curtis, Massachusetts
A. Piatt Andrew, Massachusetts
Robert 0. Bailey, lUinois
31, 1913
3. 1912
3. 1913
Wilson
Sherman P. Allen, Vermont
Taft-
30, 1913
John Skelton Williams, Virginia
Charles S. Hamlin, Massachusetts
Byron R. Newton, New York
William P. Malburn, Colorado.
Andrew J. Peters, Massachusetts
Oscar T. Crosby, Virginia
Leo S. Rowe, Pennsylvania
James H. Moyle, Utah '-
2, 1914
9, 1914
1, 1917
26, 1917
16. 1917
28. 1918
20. 1919
26, 1921
5,1920
31, 1919
t
Harding
Wilson
Russell C. Lefflngwell, New York
Thomas B. Love, Texas
Albert Rathbone, New York
30, 1920
Jouett Shouse, Kansas. .
15, 1920
14. 1920
14. 1921
Houston.
Glass
Houston.
Houston-
Mellon.
Houston--
Mellon.
Houston
Mellon
Houston-
Mellon.
Norman H. Davis, Tennessee
Nicholas Kelley, New York
Harding--
Wilson
Harding
Wilson
S. Parker Gilbert, jr.. New Jersey '
Ewing Laporte, Missouri..
Angus W. McLean, North Carolina. .
Eliot Wadsworth, Massachusetts
Eliot Wadsworth, Massachusetts
Edward Clifford, Illinois--
30, 1921
31, 1921
4, 1921
Harding
Wilson
Harding-.
2,1923
31, 1925
Coolidge.-
Mellon...
Harding
Mellon
9, 1923
Mellon
Elmer Dover, Washington.
25, 1922
Mellon
McKenzie Moss, Kentucky
2,1923
Coolidge
Mellon
McKenzie Moss, Kentucky
13, 1926
Harding.
Mellon
Garrard B. Winston, Illinois
2, 1923
Coolidge
Mellon
Garrard B. Winston, Illinois ' ..
19, 1923
Charles S. Dewey, Illinois
Lincoln C. Andrews, New York
• Act Oct. 6, 1917, provided for two additional Assistant Secretaries for duration of war and six months
after.
' Became Undersecretary July 1, 1921.
• Became Undersecretary November 20, 1923.
PRINCIPAL ADMINISTEATIVE AND STAFF OFFICERS XH
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS OF THE
TREASURY DEPARTMENT, AS OF OCTOBER 31, 1926
OFFICE OF THE SECRETARY
Andrew W. Mellon Secretary oj the Treasury.
Garrard B. Winston .• Undersecretary of the Treas ury.
Charles S. Dewey Assistant Secretary of the Treasury.
Lincoln C. Andrews Assistant Secretary of the Treasury.
Vacant Assista7it Secretary of the Treas ury.
John Kieley Assistant to the Secretary.
W. Norman Thompson Assistant to the Undersecretary.
Charles R. Schoeneman Assistant tofthe Undersecretary.
Frank Dow Assistant to Assistant Secretary.
H. R. Sheppard Assistant to Assistant Secretary.
L. C. Martin Assistant to Astiistant Secretary.
Frank A. Birgfeld Chief Clerk and Superintendent.
John T. Burns Chief, Section of Mail and Files.
James E. Harper Chief, Division of Appointments.
Thomas L. Lawrence Chief, Section of Surety Bonds.
W. H . MoRAN Chief, Secret Service Division.
Michael J. O'Reilly Chief, Division of Bookkeeping and Warrants.
Frederick F. Weston Chief , Division of Printing.
John L. Summers Disbursing Clerk.
Joseph R. McCoy Government Actuary.
SPECIAL STAFF ASSISTANTS
Ellsworth C. Alvord Special Assistant to the Secretary.
F. Gloyd Awalt Member, War Loan Staff.
Floyd G. Blair Member, War Loan Staff.
David E. Finley Member, War Loan Staff.
Walter O. Woods Member, War Loan Staff.
Edward H. Bennett Consxdting Architectural Specialist.
PUBLIC DEBT SERVICE
William S. Broughton Commissioner of Die Public Debt.
S. R. Jacobs Deputy Commissioner.
Harley V. Speelman Register of the Treasury.
Frank A. DeGroot Assistant Register of the Treasury.
Charles N. McGroarty Chief, Division of Loans and Currency.
Melvin R. Loafman Chief, Division of Public Debt Accounts and
Audit.
Frank G. Collins Chief, Division of Paper Custody.
OFFICE OF THE COMMISSIONER OF ACCOUNTS AND DEPOSITS
Robert G. Hand Commissioner of Accounts and Deposits.
Daniel W. Bell Deputy Commissioner.
Edward D. Batchelder Chief, Division of Deposits.
E. R. Gray Acting Chief, Section of Statistics.
OFFICE OF THE COMPTROLLER OF THE CURRENCY
Joseph W. McIntosh Comptroller of the Currency.
E. WiLLEY Stearns Deputy Comptroller.
Charles W. Collins Deputy Comptroller.
Willis J. Fowler Deputy Comptroller.
J. W. Pole Chief, National Bank Examiners.
Robert D. Garrett Supervising Receiver, Insolvent National Bank
Division.
John G. Herndon Chief Clerk.
XX PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
OFFICE OF THE TREASURER OF THE UNITED STATES
Frank White Treasurer of the United tStates.
Frank J. F. Thiel Assistant Treasurer.
H. T. Tate Assistant Treasxirer.
W. F. Warner Chief Clerk.
OFFICE OF THE COMMISSIONER OF INTERNAL REVENUE
David 11 . Blaiu Commissioner of Internal Revenue.
Charles R. Nash Assistant to the Commissioner.
H. F. Mires , Deputy Commissioner.
R. M. EsTEs \ Deputy Comissioner.
Vacant Deputy Commissioner .
A. W. Gregg General Counsel.
Roy a. Haynes Prohibition Commissioner.
James E. Jones Director of Prohibition.
CUSTOMS SERVICE
Ernest W. Camp Director of Customs.
Joseph D. Nevius Assistant Director.
Henry A. Hayward Assistant Director.
Nathaniel G. Van Doren Director, Special Agency Service.
Thomas B. McKaig Assistant Director, Special Agency Service.
MINT BUREAU
Robert J. Grant Director of the Mint.
Mary M. O'Reilly Assistant Director.
FEDERAL FARM LOAN BUREAU
Albert C.Williams Farm Loan Commissioner.
Robert A. Cooper Member.
Louis J. Pettijohn Member.
John J. Gtjill, Jr Member.
Elmer S. Landes Member.
Edward E. Jones Member.
A. D. Bright Secretary.
N. S. Bean Chief Examiner.
BUREAU OF ENGRAVING AND PRINTING
Alvin W. Hall Director of the Bureau of Engraving and Print-
ing.
John J. Deviny Assistant Director {Production).
Clark R. Long Assistant Director (AdministraHve).
H.Preston Dawson Assistant Director {Service).
PUBLIC HEALTH SERVICE
Hugh S. Gumming Surgeon General.
S. B. Grubbs Assistant Surgeon General.
Thomas Paruan, Jr Assistant Surgeon General.
J. W. Kerr Assistant Surgeon General.
C. C. Pierce Assistant Surgeon General.
A. M. Stimson Assistant Surgeon General.
F. C. Smith Assistant Surgeon General.
W. F. Draper Assistant Surgeon General.
D. S. Masterson Chief Clerk.
PEINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
XXI
UNITED STATES COAST GUARD
Rear Admiral F. C. Billard Commandant.
Lieut. Commander S. S. Yeandle. Aide to Commandant.
Kendall J. Minot Chief, Division of Materiel.
Oliver M. Maxam Chief, Division of Operations.
OFFICE OF THE SUPERVISING ARCHITECT
James A. Wetmore Acting Su-pervising Architect.
Henry G.Sherwood Executive Officer.
BUREAU OF SUPPLY
Dan C. Vatjghan Director of Supply.
Robert Le Fevre Superintendent of Supplies, General Supply
Committee.
STANDING DEPARTMENTAL COMMITTEES
Budget and Improvement Committee
S. R. Jacobs, Chairman.
W. N. Thompson.
D. S. Bliss.
F. A. BiRGFELD.
W. O. Woods.
L. C. Martin.
D. W. Bell.
J. H. Schaefer.
Marvin Wesley.
M. E. Slindee.
F. G. Lawton, Secretary.
Committee on Enrollment and Disbarment of Attorneys and Agents
S. R. Jacobs, Chairman.
David E. Finley, Vice Chairman.
James B. Corridon.
George J. Schoeneman.
W. S. Blanchard.
H. C. Armstrong.
Lawrence Becker, Attorney.
W^iLMER G. Platt, Secretary.
Committee on Personnel
F. A. BiRGFELD, Chairman.
J. E. Harper.
S. R. Jacobs.
Committee on Civil Service Retirement
F. J. F. Thiel, Chairman.
F. A. BiRGFELD.
J. E. Harper.
E. W. Camp.
W. N. Thompson.
ANNUAL REPORT ON THE FINANCES
Treasury Department,
Washington, November 20, 1926.
Sir: I have the honor to make the following report:
Through the information the Treasury receives from income-tax
collections it is enabled to form an accurate picture of past financial
and business conditions through the country, but necessarily this
information does not cover the current year. From the preliminary
tax figures of profits and earnings for the calendar year 1925, just
compiled, it can be safely stated that the country has reached a level
of national income not before exceeded. Nineteen hundred and
twenty-six has brought no indication of an ebbing of this high tide,
and I believe this year has been as satisfactory as the last. This
country has undoubtedly been exceedingly prosperous for the past
few years and prosperity is continuing. We have worked hard and
we have progressed. Still in a nation as extensive as the United
States and having such varied interests there must be sections or
trades which may not at all times be sharing equally in this prosperity.
A land boom in Florida seems to have subsided without serious
injury. A bumper cotton crop has materially decreased the price
of cotton, but plans for withholding a portion of the crop and for
its orderly marketing are alreadj^^ well under way and the financing
for the purpose is available. The textile industry, which has been
unprofitable for the last few years, will have an opportunity for
recovery in the low cost of cotton. In some parts of the country a
surplus of farm lands, taken over by banks for loans, will have to be
worked out. Bituminous-coal mining, which has been depressed,
shows improvement through foreign demand. These are specific
instances of maladjustment, but if we take the United States as a
whole, the current year has been good. The high earning power of
our people, from which comes our great buying capacity, is indicated
by increases in sales during the year by mail-order houses and of agri-
cultural implements, motor cars, tractors, and many other articles
once considered luxuries. Another indication of well-being is the
amount of travel abroad and within the country by train and motor.
The strength of our present prosperity is the broadness of its base;
yet with all this spending, savings accounts have gone up, more life
1
2 REPORT OF THE SECRETARY OF THE TREASURY
insurance is being written, and sound securities are sought by the
small investor.
During the year commodity prices generally have declined slightly
and farm prices have not yet been restored to their relative position
as compared with all prices. There is little unemployment and wages
are good. Industry is active. There is a close margin between costs
and prices which has made competition severe, but due to the great
volume of business and quantity production profits, small in each
transaction, have been large in the aggregate. The most notable
improvement has been the restoration of the railroads to their proper
place in the community. They are beginning to make up for losses
following Government control. Their credit is good and their effi-
ciency is of the highest order. The railroads are one of the principal
factors in the strength of this country. Their ability to handle traffic
promptly and efficaciously is evidenced by the increase in carloadings
and by the practice of hand-to-mouth buying and curtailed inven-
tories of manufacturers and dealers, which would not be possible
with less effective transportation.
The financial structure of the Federal Government is in excellent
shape. The national debt is below 193^ billion dollars as compared
with a peak of 263^ just after the war. Government bonds are all
above par, and taxes are yielding ample revenue. Government
expenditures have been kept down, and the work of the Federal
Government is, I think, more efficiently handled. Credit throughout
the country seems to be ample. An indication of this is the ease
with which $16,000,000 has been recently raised through private
subscription for marketing corporations to handle the situation
arising out of the large cotton crop. Money for investment is
plentiful, and it is most encouraging to note the extent of security
investments represented by the small investor. On the whole it
seems to me our domestic situation is in good shape and we can look
forward to another satisfactory year.
America has become a large factor in the world's affairs and our
country in turn is influenced by world conditions. The past year
has seen a notable improvement in the stability of the world and in
the increase of its trade. A gold basis for currency has now been in
successful operation in England for nearly two years, and in spite of
a general strike England has not had to call at all on the credits
arranged in this country as insurance against emergencies. The
Dawes plan has completed two full years of operation and is function-
ing satisfactorily. The world is placing greater confidence in the
successful outcome of this great test. The finances of France, Italy,
and Belgium have improved ; Belgium has recently stabilized its cur-
rency on a gold basis, and I look for further progress in the case of
other nations. Settlements have been negotiated by the American
REPORT OF THE SECRETARY OF THE TREASURY 6
Debt Commission with practically all of the debtor nations and the
demand obligations held by the United States have been funded into
time obligations, definite in amount, and uncertainty has been re-
moved. These settlements have been ratified by Congress, and by the
interested countries, except in the cases of France and Yugoslavia.
I think Europe is progressing and we can look for continued improve-
ment abroad.
In America in particular lines there may have been some over-
building. Generally, however, the demand continues for better living
conditions and the building industry is sound. There is another
factor which is beginning to make itself felt. Public buildings,
Federal, State, and municipal, have not kept up with the growth of
the country either in amount or in character. The Federal Govern-
ment has practically done no building since the war, although govern-
mental activities have greatly increased. Congress has now adopted
a five-year building program involving the expenditure of $165,000,000.
In a great many States public institutions are inadequate to meet the
demand of the community and new buildings will have to come.
The program for hard roads is incomplete and requires continued
work. I believe that the influence of these governmental requirements
will supplement the private needs and should remove the fear of a
slump in this important industry.
The increase in installment-plan buying has caused much discus-
sion. An installment purchase means that instead of postponing the
enjoyment of some article until the purchaser has saved up the
money required to make the purchase, he takes immediate enjoy-
ment, paying out of future and not past savings. Within limits
there is nothing inherently unsound in this practice. It has been
customary to buy household furniture and pianos on the install-
ment plan, and its extension to automobiles, washing machines, and
similar things represents only a natural enlargement of the articles
purchased for personal use. One of the results of the extension of
installment purchases has been to increase the immediate consump-
tive power of the public and thus permit large production and full
employment to continue. The increase in savings deposits, in build-
mg and loan associations, in life insurance, and in investments
shows that installment buying has not yet progressed to a point
where it interferes with the intelligent saving of the American people.
There are, however, two elements of wealaiess against which we
should be on guard. The purchaser should be careful that the article
which he acquires upon credit has a real and permanent value and
that he does not tie up too much of his future earnings for his pres-
ent enjoyment. Secondly, if demand should decline there is danger
that to stimulate further consumption the terms of payment may be
so lightened as to make the credit unsound from a banking stand-
4 REPORT OF THE SECRETARY OF THE TREASURY
point, and the finance companies and the hanks thus become holders
of large amounts of slow or uncollectible paper. Subject to avoid-
ance of these dangers, installment buying does not yet seem to be
menacing our financial soundness.
The Liberty loan campaign to sell Government bonds taught
many people how to invest their savings. As a result of this educa-
tion, of more effective bond salesmanship, and of high earnings in
America, there has been created an investment market, and the
public readily buys large amounts of new security issues, resorting
to the banks for loans to assist in these purchases. Business con-
cerns have come to prefer permanent financing as distinguished
from commercial loans from the banks, and there has been a tendency
with a great many corporations, through the sale of bonds, notes,
or capital stock, to resort to the public for monej'' to meet their
corporate requirements. Partly because commercial bills are not
as frequently resorted to for credit and the banks have difficulty
in obtaining sufficient amount of these bills, and partly on account
of the demand of the public for loans to help carry securities pur-
chased, the banks have had to seek investments themselves in
securities or loans to customers secured by bonds and stocks. This
has brought into the assets of the banks an increase in investments
and loans on securities without a proportionate increase in short-
term commercial bills. Since it is the latter which are the most
easily liquidated, we are gradually noting a decline in assets which
may be rediscounted at the Federal reserve banks and thus in what
may be called the liquidity of bank assets. This trend has in no
way endangered the strength of our banking system, but it is a
movement which may require care lest it go too far.
For most of our national existence the United States has been
what is popularly called a "debtor" Nation. Large amounts of
foreign capital sought investment in this country and little American
capital went abroad. As a result of the war and the conditions which
have prevailed in America and abroad, investment funds have been
plentiful in the United States and scarce in a great many other
countries. American securities owned by foreigners have largely
been resold here, and money of the American investor has also gone
into'^the securities of other countries. We have become a -"creditor"
Nation. We are owed more than we owe. While this change is a
result of world conditions and not of conscious action by this country,
nevertheless the objection has been raised to foreign loans on two
general grounds: First, that the loans will be used to establish more
effective competition against American industry, and, second, that the
loans are not safe. Considering the subject as a whole it must be
remembered that the international bankers are not the investors
in foreign^securities. They simply act as agents in mobilizing the
REPOET OF THE SECRETARY OF THE TREASURY 5
savings of thousands of Americans seeking a sound place to invest.
The breadth of this market is indicated by the fact that in many of
the recent large foreign issues the average investment has been around
$3,000. The money which is seeking profitable employment is there-
fore not that of a single group of interests in the United States, but
of an intelligent and widespread body of our citizenship. If their
savings can make them a better return, all things considered, through
investments abroad than through investments at home, it would
seem that, so long as credit facilities here are ample, no harm is done
to the American fiscal system by the encouragement of foreign
investments.
The proposition that these loans create competition harmful to
America, in its final analysis, is not, I believe, sound. Money which
puts a nation on its feet through the stabilization of its currency or
which increases the productiveness of industry or trade in a foreign
country enlarges the earning capacity of the people and increases
their buying power and thus stimulates world trade as a whole.
In this trade America has a great share. For our manufacturers we
have the protection of the tarift', and for those for whom the tariff
does not give complete protection, particularly the farmer, we
should encourage the purchasing power of other countries so that
there will be a greater demand for American products.
The question of the soundness of a particular loan is not one upon
which the Federal Government should pass, but it is the banker
floating the loan in this country who must decide this question in
the first instance, and it is the investor using his savings to acquire
the security who must finally decide whether or not the risk is to be
accepted. The test of the securit.y of a foreign loan does not dift'er
from the test of the security of a domestic loan. There is, however,
mvolved in foreign loans the question of exchange, with which a
domestic loan is not concerned. The revenues of a foreign debtor
are usually in the currency of his own country and its obligations
sold in America are payable in American currency. If a foreign
loan is productive — and by that I mean that the debtor out of the
use of the money borrowed can repay the principal, the interest, and
make a profit for itself — then I think foreign loans are sound.
RECOIVrirENDATIONS FOR LE«ISLATIOX
Taxation
On Februar}^ 26, 1926, the President approved the revenue act of
1926. This law embodied changes in the administrative provisions
which the actual operation of the income tax law had found desir-
able; increased the personal exemptions from $1,000 and $2,500 to
$1,600 and $3,500: extended the credit for earned income; and re-
6 REPOKT OF THK SKCRETARY OF THE TREASURY
duced the normal tax to a 5 per cent niaxinuini and the surtaxes to a
20 per cent iiiaxinnmi. Tlie capital-stock tax on coi'porations was
removed and in lieu thereof 1 per cent additional income tax was
imposed to make up for the loss in revenue but with no increase in
the taxes paid by corporations. The estate tax M'as reduced and the
possible credit for inheritance or estate taxes paid to a State in-
creased from 25 to 80 per cent. The legality of this provision is now
pending in the Supreme Court. Many of the excise taxes were re-
moved, including taxes on trucks and accessories. The automobile
tax was decreased from 5 to 3 per cent. The income-tax provisions
were generall}-^ made applicable to the tax on income earned in the
calendar year 1925 and taxed in the calendar year 1926, and the
excise-tax changes became effective either upon the enactment of the
law or a few months later. The effect of the law, therefore, has been
felt by the Treasury only during the five months to date of this fiscal
year. The law also created a Joint Congressional Committee on
Internal Revenue Taxation consisting of five members of the Finance
Committee of the Senate and five members of the Ways and Means
Committee of the House of Representatives, with the duty of investi-
gating the operation and effect of the Federal system of internal-
revenue taxation. This committee has just begun its work. We
have then a new law to which the test of actual experience has only
just begun to be applied.
The Federal Government in time of peace should meet its expen-
ditures from current revenues. The source of a government's
revenue is taxation. Taxation must be sufficient to carry out the
policies which the Federal Government deems essential for the
welfare and liappiness of its citizens. It is the duty, therefore, of
the Government to determine what policies should be essential, and,
if they can be more than met over a series of years from taxation,
to reduce taxes. Conversely, if the governmental revenues are not
sufficient then it is the duty of the Government to increase taxes.
After every great war abnormal expenditures can be reduced, but
at the same time there is an opposing tendency of normal expendi-
tures to increase due to the growth of the country and the increase
in governmental activities. This latter increase tends to neutralize
and ultimately overcomes the reduction of war expenditures even with
the economies in government which this administration has enforced.
Without enumerating all the causes of greater expenditures by the
Government, I might mention among others : Contributions for good
roads, adjusted service compensation, appropriations to make up the
deficit in the civil service retirement fund, and a public building
program necessary to meet in part the Government's need of build-
ings untouched since before the war. Total expenditures chargeable
against ordinary receipts of six billion in 1920, the first real peace
EEPORT OF THE SECllETAKY OF THE TEEASURY 7
year, dropped to three and one-half billion in 1924, but, as I have
said, by reason of the increased activities of the Government further
decreases in expenditures have not been possible and the tendency
has been for these expenditures to increase slightly in spite of the
very considerable saving in interest on the public debt through its
retirement and refunding at lower interest rates.
The suggestion has been made that the expenditures of the Govern-
ment could be decreased by altering the sinking fund provision and
the use of the proceeds of repayments of foreign loans. These pro-
visions were adopted by Congress during and after the war, and on
the faith of them every Government obligation sold by the Treasury
since that time has been taken by the American people. I need not
again express my opinion that the United States will never repudiate
a contract which it has made with the purchasers in good faith of
its securities. Aside from the ethics of such repudiation, .which is
controlling, business sense demands an early retirement of the na-
tional debt. The total interest charges at 414 per cent on a $25,000,-
000,000 indebtedness retired uniformly over a 25-year term is
$16,000,000,000; over a 62-year term interest charges would be over
$46,000,000,000, or nearly three times as much interest to be paid over
the longer term as over the shorter term.
The real value of the dollar, that is, its value in terms of goods it
will purchase, does not remain constant. The experience with our
Civil War debt was that we borrowed a 54-cent dollar and repaid an
85-cent dollar (using the 1860 value as the base), or, in other words,
we paid back in value $3 for every $2 we borrowed. Using 1913 as
a base, our present war debt was borrowed on a 51-cent dollar, and
to-day the dollar is worth 66 cents. If the appreciation of the dollar
continues — and such has been fiscal history after other great wars —
then the longer we postpone payment the more in real value we will
have to pay. From both a moral and a financial standpoint the sink-
ing fund and the application of foreign repayments to debt retire-
ment should not be altered. An early repayment of our debt has been
the policy of this country after other great wars in our history. It
is sound policy that in the days of our prosperity we should prepare
for the next emergency.
If, as I have said, it does not seem probable that we can contem-
plate a reduction in Government expenditures in the next few years,
then we must turn to a consideration of Government receipts in order
to determine to what extent, if at all, taxes can be reduced. These
receipts have been of two general classes.
During the war and in the period of postwar adjustment the
Government made what might be called capital investments in such
things as war supplies, now surplus, loans to railroads, investments
in the War Finance Corporation, and in the bonds of the Federal
S l'.i;i'0!{T OF TICK SKCRKTARY OF THE TREASURY
land banks. In the last five fiscal years receipts from these and
other similar sources have returned to the Treasury some $950,-
000,000. Durino- the .same period collection of back taxes over
refunds of taxes, a contribution also from past years, has brought
in $400,000,000. In the current fiscal j^ear net receipts from
similar revenues should be $250,000,000. In the next fiscal year
similar receipts .should be about $50,000,000, a decrease of $200,-
000.000. Of tl)e investment assets there remains about $400,000,000,
but the ijrreater ])art is of doubtful or slow character, and by the
clo.se of the present fiscal year in June the Internal Revenue Bureau
should be substantially current on back taxes, and this item as a
material net receipt will disappear. In determining Government re-
ceipts for future years, therefore, this class of receipts can no longer
be relied upon.
The second general chiss is composed of the receipts from current
taxation. The three divisions, consisting of customs, income taxes,
and miscellaneous internal revenue, are estimated for the present fis-
cal year to bring in : Customs $015,000,000. income taxes $2,190,000,-
000. and miscellaneous internal revenue, $620,000,000, a total of
$3,425,000,000. In the next fiscal year, that ending June 30, 1928,
these figures are. respectively, $600,000,000, $2,090,000,000, and
$570,000,000, a total of $3,260,000,000. The loss on income-tax rev-
enue is the expected decrease in back taxes, and the loss in miscel-
laneous internal revenue is accounted for entirely by the reductions
of the revenue act of 1926, which in practice do not become fully
felt for several years. It is upon these current taxes that the Gov-
ernment must rely.
In the divisions of the spheres of taxation between the State and
municipal governments, on the one hand, and the Federal Govern-
ment on the other, one fundamental difference is particularly notice-
able. In general, taxes of the States and municipalities are based
upon real and personal property, the valuation of which is fairly con-
stant, and upon other sources, such as franchise taxes, which do not
vary substantially over a period of years. Federal Government
revenue on the contrary fomes almost entirely from sources which
may and do fluctuate violently from year to year. Income taxes are
based on a percentage of the income earned by the taxpayers. A
good year is immediately reflected in increased income and more
Government revenue, and a bad year will equally make itself felt in
decreased income and less Government revenue.
The gi-eater part of the miscellaneous interinil-revenue taxes are
dependent upon the purchasing power of the American people,
which in turn reacts promptly to good or bad times. This is also
true of customs. If consumption falls off, imports immediately
decrease, and with them customs duties. I know of no other great
EEPORT OF THE SECRETARY OF THE TREASURY 9
«
nation of which the revenues are so intimately linked with the pros-
perity or want of prosperity of its citizens. Under our present sys-
tem we have abundant revenues when business is good, and we may
expect diminished returns when conditions change materially.
We are now at a very high tide of prosperity in the United States.
There is no reason to expect at this time a marked reaction, but be-
fore determining that permanent tax reduction can be had we must
have reasonable assurance of a continued flow from the sources from
which our revenue is obtained. With only a few months' test of the
revenue act of 1926, common sense requires that we do not act pre-
cipitately. We face the near exhaustion of war-time assets and the
necessity of putting our sole reliance for Government revenue upon
a class of current taxes which are peculiarly susceptible to large
variations. Tax reduction applies not to one year but to every year
after its adoption. Surplus is a casual happening, occurring in one
year and not in another. A loss of revenue which could be easily
sustained in the fiscal year 1927 might result in putting the Budget
in the red in 1929 and require the imposition of additional taxation.
Business can easily adjust itself to a lowering of expenses through
a reduction in taxes, but if a decline in prosperity should come
business could not stand a raise in expenses through more taxes just
at a time when it needed not uncertainty but certainty, not tinkering
by the Government, but a sustained and known public policy.
The imperative necessity that we do not commit our Government
to an unsound fiscal policy for the future should not prevent the
Government treating its taxpayers fairly in any particular year in
which Government revenues are overabundant. I believe in debt
reduction along the program settled after the war, but I do not
believe in the payment of a pubhc debt to the undue burdening of
productive industry. A balance should be maintained between debt
reductions and tax reductions which is fair to all interests in our
country. According to present estimates, the present fiscal year
should end with a governmental surplus of about $350,000,000 after
providing for the retirement of debt through the sinking fund and
from repayment of foreign loans. I see no reason why the greater
part of this surplus might not be left in the pockets of the people
of the country by a credit upon their income taxes.
There is not time to pass legislation to cover the December 15,
1926, income tax payment date, but before March 15, 1927, the Con-
gress might provide for this credit against all income taxes, both
individual and corporate, which are due and payable in the first
six months of the calendar year 1927, being the last six months of
the Government's fiscal year. A credit might be allowed of 30 per
cent of the half year's taxes due and payable in the first six months
10 i:ki'<»kt of the secretary of the treasury
of 1927 This woukl represent a credit of 15 per cent on the total
taxes due for the entire calendar year 1927, but the whole credit
would be taken in the first six months of the year before the Gov-
ernment's fiscal year closes on June 30. If this policy were adopted
bv the Contrress, we should end the fiscal year having taken from
our taxpayers only sufficient to carry out the essential purposes of the
Federal Government. We will not have handicapped the finances
of the Government for the future by adopting a permanent reduction
of taxes which in lean years might prove inadequate to our needs.
With the Treasury and the taxpayer both protected, we can fairly
await further experience under the revenue act of 1926.
h'.r tension of the Federal reserve hank charters
The Federal reserve system has been in operation 12 years. The
original charters for the Federal reserve banks were for a period of
20 years, so that they now have less than 8 years to run. These
charters 'must be renewed sufficiently in advance of the expiration
of their present tenure to avoid any uncertainty as to continuity of
policies and administration. It would seem, therefore, that the
question of their renewal should not be delayed beyond the present
session of Congress. There is, fortunately, little difference of opin-
ion as to the advisability of extending these charters. In the few
years of their existence the Federal reserve banks have demonstrated
beyond any doubt their value to the country. During these years
the country has come safely through a great war, not only without
a panic but with a minimum of strain upon our financial structure.
The credit for this achievement is due in large measure to the
steadying influence exerted by the Federal reserve system.
It is difficult to imagine how this could have been accomplished
with the archaic banking system under which the country operated
prior to the passage of the Federal reserve act. That system con-
sisted of a network of independent banks, with scattered and im-
mobile bank reserves and a credit inelasticity which rendered it
totally inadequate to the country's needs. The old banking system
was so constituted that it operated to aggravate rather than to
relieve panic symptoms in any financial emergency. National banks
could issue currency only when secured bj^ Government bonds and
were consequently unable to increase the currency in times of
stringency. State banks could expand their credit facilities only
by borrowing from the larger metropolitan banks, with the result
that all loans in the end converged on New York. Instead of a
coordinated sj'stem of banks with a common reservoir of credit, we
had a large number of independent banking units, which in times of
stress struggled against each other, never working together as part
of one irreat financial structure.
KEPORT OF THE SECEETAEY OF THE TREASURY 11
These defects are cured by the Federal reserve system. The 12
regional banks, under the responsible coordinating influence of the
Federal Reserve Board, can effect that prompt mobilization of re-
serves which is so essential in preventing panics. These banks are
also able to provide the country with an elastic currency, which
expands or contracts with seasonal and trade needs. It is possible
to supply the farmers and the trade with adequate currency during
the crop-moving period and to effect the necessary contraction when
the seasonal requirements have been met. The reserves of each
regional banlc are available, through the discounting privilege, to
all other Federal reserve banks. The funds of the central reservoir
can be diverted to any bank in the system which has need of them,
so that the financing of an increasing or a decreasing volume of
business can be accomplished with ease.
Although the Federal reserve system was put into operation just
prior to the outbreak of the World War in a period of unprecedented
economic and financial strain, it not only emerged without any
impairment of its own strength and stability, but gave the country
the soundest financial structure in our history. It also enabled the
Nation to adjust itself to the new conditions following the war and
kept the financial crisis, which arose during the period of postwar
deflation, from degenerating into a panic. As a result, there was
no impairment of our financial structure at a time when such a
calamity would have had most serious consequences throughout the
world.
The Federal reserve system is to-day one of the most important
factors in the effort toward world stabilization. When England
made the momentous decision to tie its currency to gold and to re-
establish the pound upon a gold basis at its former value, it meant
that the old standard for financial transactions was to continue and
that America was not to be left holding the world's supply of a metal
for which the other nations were seeking a substitute. The Treas-
uries of the two countries supported this action, but great credit is
due to the Federal reserve banks for the part which they played in
bringing about this result. These banks extended a credit of $100,-
000,000 to the Bank of England, and the British Treasury arranged
for credits of an additional $200,000,000 with private American
bankers. England has been on a gold basis now for a year and a
half and has not used a single dollar of these credits; nevertheless,
without the support furnished by the Federal reserve banks, I do
not believe that stabilization would have taken j^lace at the time when
it actually occurred.
In the plans for the stabilization of the rest of Europe, the par-
ticipation of the Federal reserve banks is equally necessary; and in
11438— 26t 3
12 REPORT OF THE SECRETARY OF THE TREASURY
all this the interests of the American farmer and manufacturer are
vitally concerned. The nations of the world must be reestablished
on a sound financial basis if our surplus products are to find an
export market. The improvement in world markets and some ad-
justments in production have already accomplished more for agri-
culture in this country than unlimited extensions of credit or artificial
measures of price control could possibly have done.
The plans which are now taking shape throughout the world look
far ahead ; for this reason, it is important that no element of uncer-
tainty should be injected into the situation such as would come from
a delay in extending the charters of the Federal reserve banks. It is
equally important that the system should not be impaired by changes
which seek to benefit any special group of producers or consumers
but which, in the end, might prove to be fundamental and might
interfere seriously with the proper functioning of the banks as
reserve institutions. There must be changes from time to time and
adjustments to new conditions. But these changes must be made,
not for partisan purposes or to satisfy any class or group, but in
accordance with sound banking principles.
Ba/nking legislation
The Federal reserve S3'^stem is a most important element in the
continuation of prosperity in America and will be indispensable
again in any financial crises which may come. Its continued opera-
tion, however, depends upon its representing the bulk of the bank-
ing resources of the country and its power to retain these resources
in time of emergency.
Membership in the Federal reserve system is made up of all the.
national banks, which are required by law to be members, and of
such State banks as may voluntarily join the system. At present the
membership consists of all the national banks, about 8,000 in number,
and 1,400 out of 20,000 State banks. The combined resources of
member banks represent nearly two-thirds of the banking resources
of the country. If the system becomes one composed principally of
voluntary members, the system, the Government, and the country
might be embarrassed in time of emergency by the withdrawal of
membership and the depletion of the banking resources subject to
mobilization. It seems to me, then, desirable that Congress should
keep the national banks, which are always members of the Federal
reserve system, upon a reasonable equality of powers with the State
banks, so that the national banks may continue to meet the competi-
tion of State banks and survive.
The national bank is the creature of the Federal Government; the
State bank the creature of the particular State in which the bank is
REPORT OF THE SECRETARY OF THE TREASURY 13
located. National banks and State banks exist side by side in the
various States; and if in any State the law of that State grants a
power to the State bank which the laws of Congress deny to its
neighbor, the national bank, and if this power be a valuable business
privilege, the tendency is for the State bank to groAv at the expense
of the national bank until ultimately the stockholders of the national
bank abandon their national charter and take out a State charter.
With the development of banking some States have increased the
powers of their banks, and in some particulars Congress has also
liberalized the national bank act to equalize privileges between the
two classes of banks. For example, under certain conditions a
national bank may exercise trust powers in a State where like priv-
ileges are given to State banks. This is fair to each and is a policy
which should be followed by Congress, except in such cases as the
privilege granted to a State bank is in the opinion of Congress
unsound from a banking standpoint.
In the former Congress what has been known as the McFadden
bill was introduced, based on the principle of the equalit}^ of power
I have mentioned above and which also clarified some of the pro-
visions of the national bank att. The bill failed of passage in the
former Congress, was reintroduced in the present Congress, passed
both Houses, but in different forms, and is now pending in confer-
ence between the Senate and the House. I am advised that the prin-
cipal matter upon which agreement has not yet been had between
the two Houses is on the question of the Hull amendment.
The original McFadden bill gave national banks the right to estab-
lish branches within the corporate limits of the city in which the}^ were
located in States where a State bank was authorized to have branches.
The provisions of the bill were general and applied to any State in
the Union in which, at the time the national bank sought to establish
its branch, the policy of that State permitted branch banking. The
sole object of the Hull amendment was to limit the right of national
banlcs in establishing branches to those States in which at the titne
of the passage of the McFadden hill the policy of the State was in
favor of branch banking. Therefore, if any State, which prohibits
branch banking, should after the passage of the McFadden bill
change its policy in favor of branch banking, the Hull amendment
would deny to national banks the right to have home city branches
in such a State. In other words, under the Hull amendment a na-
tional bank in New York City, a State where to-day branch banking
is permitted, might establish branches within the city, but in St.
Louis, in a State where to-day branch banking is not permitted, i£
the State policy changed in the future to favor branch banking, a
national bank might never have branches. Thus the unfairness to
14 REPORT OF THE SECRETARY OF THE TREASURY
national banks sought to be removed by the McFadden bill would
be removed in New York State but not in Missouri.
A Federal law which would give certain powers to national banks
in 22 States and would deny the same powers in the future under the
same conditions to national banks in the remaining 26 States is not
proper Federal legislation. The Hull amendment adds nothing to
the protection given by the original McFadden bill to those States
Avhich do not permit branch banking. Under the original bill na-
tional banks may not have branches in such States. But if the policy
of a State should change and it permit State banks to have branches,
then it seems to me that the principle which gives limited branch
banking facilities to national banks in States now permitting branch
banking should equally apply to States which may adopt a similar
policy in the future. Want of equality between competitors is the
reason given for any Federal branch-bank legislation, and I can not
see why that reason is not applicable to to-morrow's want of equality
as well as to todaj^'s.
At the annual meeting of the American Bankers Association, held
in October, 1926, in Los Angeles, Calif., the association adopted a
resolution reconmiending to Congress the enactment of the so-called
McFadden bill, including the provisions rechartering the Federal
reserve banks, with the following restrictions upon branch banking :
First, that no national bank be permitted in any State to establish a branch
beyond the corporate limit of the municipality in which the bank is situated ;
second, that no national bank be permitted to establish a home city branch
in any State which does not at the time of such establishment permit the State
banks to establish branches ; third, that no State bank be permitted to enter
or to retain membership in the Federal reserve system if it has in operation
any branch which may have been established after the enactment of H. R. 2
beyond the corporate limits of the municipality in which the bank is situated ;
fourth, that no branches which may have been established after the enactment
of H. R. 2 beyond the corporate limits of the municipality in which the parent
bank is situated be permitted to be retained when the State bank converts into
or consolidates with the national bank, or when two or three national banks
consolidate.
With this recommendation and under the limitation therein set
forth, I thoroughly agi'ee. The national banks have waited patiently
for constructive banking legislation from Congress. Owing to the
unfortunate injection of the Hull amendment into the McFadden bill,
relief has not yet been had. Many banks have withdrawn from the
national bank system, and unless action is taken by Congress I am
fearful that the national bank sj^stem will be further weakened. The
Federal Government owes to its own banking corporations treat-
ment which will permit them to meet their competitors, the State
banks, upon at least fairly equal terms. We can not afford to destroy
the national banks, which are and must be the backbone of our Fed-
eral reserve system.
REPOET OF THE SECRETARY OF THE TREASURY 15
Disposition of sequestrated German property and payment of mixed
claims
It is eight years since the war ended, but reconstruction is difficult
and the task is not yet completed. America still has a duty to
remove sources of possible friction, and there is no greater cause of
misunderstanding between nations than the existence of unsettled
international questions. For this reason the administration has
urged the funding of inter-allied debts. As a further step in the
program of adjustment, the Treasury prepared last March a com-
prehensive plan for the settlement of the existing questions between
Germany and the United States, and a bill to accomplish this plan
was introduced in Congress by Representative Mills, of New York.
(A copy of the Treasury statement describing this plan appears as
Exhibit 44, page 266, of this report.)
This plan proposed in general:
1. That their property be returned to the German nationals.
2. That the United States advance the money necessary to pay the
private American claims.
3. That the United States pay compensation for the ships, radio
stations, and patents taken from German nationals and used by the
United States.
4. That the Treasury be authorized to borrow the money necessary
to make these payments and all receipts from Germany under the
Dawes plan go to pay interest and principal of the public debt, thus
reimbursing the Treasury.
This plan proposed to dispose of the three matters between the
United States and Germany left unsettled since the war.
Germany promised to pay the American claims, but Germany also
agreed to pay to the Allies an enormous bill for reparations. This
was more than Germany could do, and in effect it went into receiver-
ship. Under the reorganization plan proposed by the Dawes Com-
mission and accepted by all of Germany's creditors, including the
United States, by the Paris agreement, we are to receive a share of
the Dawes payments on account of the American claims, amounting,
when the plan is fully operative, to $11,000,000 a year. It would,
however, take 80 years to pay the awards of the Mixed Claims Com-
mission if this share alone is used. Unless we should confiscate the
private property of the German nationals which we hold and apply
the proceeds against these claims, the American claimants, receiving
only a fraction of their awards each year, would get little real com-
pensation for their losses. Payments in small installments over a
long period of time mean little to an individual, but are of benefit to
a government which is expected to continue in existence for cen-
turies. It would be no particular hardship, therefore, for the United
States, out of the money borrowed for the purpose, to pay oft' the
16 REPORT OF THE SECRETARY OF THE TREASURY
private American claimants and to rely upon subsequent receipts
from Germany for reimbursement.
The alternative is to confiscate the private property of German
nationals to pay the debt of their Government.
Although Germany is obligated to make good to her nationals
for any property taken to pay the debt of their Government to
American citizens, unless we know as a practical matter that such
payment will be adequate, for us to take the private property is
confiscation. It has always been American policy to recognize this
sanctity of private property of others, even though we are at war
with their government, and we should not change now. As a com-
mercial nation with large interests abroad, the continuation of this
policy as a part of international law may be to our own material
advantage in the future should another war ensue. And, finally, we
took the property as trustee, negativing the intention to confiscate
it, and under the Berlin treaty and joint resolution of Congress we
have agreed to hold the property only until suitable provision is
made for the payment of the American claims. Our own conduct
appears to have estopped us from using this private property to pay
Germany's debt even if the Constitution would permit confiscation,
now that we are at peace.
The payment for ships, radio stations, and patents, is but a recog-
nition of fair dealing that the United States, having received the
benefit of property taken and used, should pay just compensation.
The plan embodied in one piece of legislation all of the principal
matters left over from the war and would, if adopted, be a settlement
with honor to the United States.
Objection arose to the plan in the Committee on Ways and Means
of the House of Representatives because the plan imposed a burden
on the Treasury, and various other plans have been suggested. The
Treasury undertook the preparation of the plan in the first instance
for the purpose of presenting some constructive solution of the entire
problem. I have not considered that this particular plan is the only
one which Congress should adopt. I am quite ready to support any
legislation for the solution of the question which meets the two
requirements which I believe to be essential. First, that the United
States shall not take the private property of enemy nationals without
insuring adequate compensation to the owners; and, second, that the
United States shall not adopt a fair policy to foreign nationals with
whom we were at war at the expense of individual American citizens,
whose complete protection should be the first care of our own country.
The suggestions which have appeared up to the time of the writing
of this report as alternatives for the Treasury plan have recognized
the first of these principles, but not to the full extent the second.
EEPOET OF THE SECRETARY OF THE TBEASURY 17
I think it might be well for me to repeat some of the reasons why I
think the second principle is even more important than the first:
First. It is the duty of a nation as a nation to protect its citizens
against harm by another nation. Therefore, the burdens suffered
by an individual through the unlawful aggressions of Germany should
be borne not by the individual alone who has suffered, but by the
United States as a whole.
Second. In the Berlin treaty, which embodied certain provisions
of the Versailles treaty, Germany agreed that the alien property could
be used to pay American claims and that Germany would reimburse
her own nationals. In the Winslow Act, passed in 1923, for the pay-
ment of certain earnings to the owners of the alien property. Congress
seems to have ignored the right of the American claimants and in
effect estopped itself from making use of the property as it was
originally empowered to do under the Berlin treaty. In our partici-
pation in the Dawes plan through the Paris agreement, without the
consent of the American claimants, America in effect postponed and
placed upon an indefinite basis the American claims, both as to the
amount to be paid and time of payment. The action of Congress by
the Winslow Act and the United States' participation in the Dawes
plan, by taking rights away from the American claimants, put upon
this country the duty to see that American claimants do not suffer
from these acts.
In discussing the authority of Congress over enemy property the
Supreme Court, in the recent case of United States v. Chemical
Foundation (Inc.) (decided October 11, 1926), said:
There is no support for a construction that would restrain the force of the
broad language used. Congress was untrammeled and free to authorize the seiz-
ure, use, or appropriation of such properties without any compensation to the
owners. There is no constitutional prohibition against confiscation of enemy-
properties. * * * Au^ t}ie act makes no provision for compensation. The
former enemy owners have no claim against the patents or the proceeds derived
from the sales. It makes no difference to them whether the consideration paid
by the Foundation was adequate or inadequate. The provision that after the
war enemy claims shall be settled as Congress shall direct conferred no rights
upon such owners. Moreover, the Treaty of Berlin prevents the enforcement of
any claim by Germany or its nationals against the United States or its nationals
on account of the seizures and sales in question.
Under this decision a return of the property to the German owners
represents not a legal but a moral duty. This decision has not
changed my view that America can and should be generous in its
treatment of this private property. There has been set up a mixed
American-German Commission, which has determined the justice and
amount of the American claims. Payment of these claims must be
insured by the United States before the property of German nationals
should be returned. We can not be generous to the nationals of
Germany at the expense of individual American citizens.
18
REPORT OF THE SECRETARY OF THE TREASURY
RECEIPTS
The continued high level of Government receipts during the fiscal
year ended June 30, 1926, evidences the prosperity which has pre-
vailed in the nation since the early part of 1925. The increased
receipts from taxation, as shown in the following table, have more
than offset the reduction in miscellaneous receipts, and total ordinary
receipts for the fiscal year 1926 were $3,962,755,690, compared with
$3,780,140,684 for the fiscal year 1925, an advance of $182,609,006:
Ordinary receipts, fiscal years 1920 to 1926
(Basis of daily Treasury statements, unrevised]
Year ending
June 30—
Miscellaneous
internal revenue
Miscellaneous revenues,
including Panama Canal
Customs profits taxes
i
Proceeds
from foreign
obligations
All other
Total
1920
$322,902,650 ' $3,944,949,288
308,564,391 3,206,046,158
356,443,387 1 2,068,128,193
561, 928, 867 1, 678, 607, 428
545,637,504 1,842,144,418
547, 561, 226 1, 760, 537, 823
679,430,093 | 1.982.040.088
$1,460,082,287
1, 390, 379, 823
1, 145, 125, 064
945, 865, 333
953, 012, 618
828, 638, 068
855, 599, 289
$74, 296, 622
114,821,206
75,222,068
232, 989, 156
221, 774, 675
183, 637, 677
194, 237, 957
$892, 334, 542
605,121,383
464,185,439
587, 744, 697
449, 475, 487
459, 773, 890
351, 448, 263
$6, 694, 565, 389
1921
5, 624, 932, 961
1922
4, 109, 109, 151
1923
4, 007, 145, 481
1924
4, 012, 044, 702
1925
3, 780, 148, 684
3, 962, 755, 690
1926
Income taxes returned $1,982,000,000, compared with $1,760,000,-
000 in 1925, and $1,842,000,000 in 1924, notwithstanding the reduc-
tion in individual income tax rates in the revenue act of 1926 affecting
receipts the last half of the fiscal year. Collections on account of
income tax returns of prior calendar years were $19,000,000 larger
than similar collections in 1925. The increased tax receipts, however,
reflect primarily the marked growth in incomes of individuals and
corporations during the calendar year 1925, an increase which more
than compensated for the reduction in normal and surtax rates and
the increased personal exemptions and credits on incomes of indi-
viduals. Receipts from income taxes, corporation and individual,
in March and June, 1926, were $500,000,000 and $443,000,000 as
compared with $441,000,000 and $377,000,000 for the same months,
respectively, in 1925.
During 1926 imports reached their highest level since the postwar
adjustment. Customs receipts totaled $579,430,093, the largest in
the history of the country, nearly $32,000,000 more than was received
in the fiscal year 1925, and an increase of about $22,000,000 over
receipts estimated in October, 1925.
The increase in miscellaneous internal revenue for the fiscal year
1926 was not as great as estimated in October, 1925, largely because
of tax reductions in the new revenue act. However, receipts from
these sources were $27,000,000 more than in 1925, due to increased
REPORT OF THE SECRETAEY OF THE TKEASURY
19
collections on taxes on estates of decedents, tobacco and tobacco
manufactures, automobiles and parts, and corporation capital stock
tax. Receipts from miscellaneous sources fell off, primarily because
of a decline in receipts on account of Government-owned railroad
securities from $143,911,421 in 1925 to $36,735,327 in 1926.
Trend in receipts
The distribution of receipts for the fiscal year 1926 among the
different sources, as compared with a similar distribution in imme-
diately preceding years, shows again the trend of adjustment in the
peace-time revenue system. Diagram 1 shows the percentage dis-
tribution of ordinary receipts by sources for the fiscal years 1920 to
7,000 -r
6,000 - -
5,000
4000 -■
3,000
2,000 - -
1,000--
ALL OTHLIC
PH^OCLLDS FR-OM
rORJLlGN OBLIGATIONS
CUSTOMS
MISCLLLANLOUS
INTtltNAL RtVLNUL
INCOML AND
PR.OFITS TAXES
1920 1921 1922 1923 1924 1925 1926
Diagram 1.— Principal sources of ordinary receipts of the Government for the fiscal years 1920 to 1926
1926. Income taxes, a comparatively new source of Federal revenue,
have produced about half the ordinary receipts during all these
years. However, the proportion of receipts coming from these
sources dropped off considerably in 1921, 1922, and 1923 subsequent
to the first downward adjustment in tax rates in 1921, and during
the business depression of 1921 and 1922. Since 1923 the propor-
tion of receipts coming from income taxes has risen steadily, from
42 per cent of total receipts in 1923, to 50 per cent in 1926. This
has been due partly to increasing yield of income tax rates adjusted
to synchronize with the general prosperity of the country, and partly
to decreasing receipts from miscellaneous internal revenue resulting
11438— 26t 4
20
REPORT OF THE SECRETARY OF THE TREASURY
from reductions in tax rates and the repeal of taxes levied during
the war.
The postwar tax system thus evolved from the widespread use ot
income taxes, first levied on corporations in 1909 and on individuals
in 1913, is quite different from the pre-war system. Diagram 2
shows the distribution of tax receipts (warrant basis) between cus-
toms, income and profits taxes, and miscellaneous internal revenue
during the period 1900 to 1925.
In the years immediately preceding the war more than 90 per cent
of tax receipts came from indirect taxes, customs duties, and taxes
on articles of domestic consumption, largely tobacco products and
alcohohc beverages. Now, although receipts from customs and from
MILLIONS
noLLAHS
4,000
3.000
2..000
l.OOO
1915
Diagram 2. — Government receipts from customs, miscellaneous internal revenue, and income and profits
taxes for the fiscal years 1900 to 1926
miscellaneous internal revenue are larger than in pre-war days,
these sources are of minor importance compared with the income
taxes paid by individuals and by corporations. Indirect taxes, the
burden of which is distributed rather generally among the consum-
ing public, have been largely replaced by taxes on the income of
individuals, graduated according to the size of the income, and by
taxes on the income of business.
Receipts from miscellaneous sources other than taxation have
declined considerably since 1920. The following table shows these
receipts, distributed among the more important sources. Liquida-
tion of surplus supplies and of war corporations was responsible for
much of the high level of receipts from 1920 to 1923, and this liqui-
dation is now practically complete.
REPOET OF THE SECRETAKY OF THE TREASURY
Miscellaneous receipts, 1920 to 1926
[Basis of daily Treasury statements, unrevised; in millions of dollars]
21
Fiscal year
Proceeds from Government-
owned obligations
Sale of
surplus
war
supplies
Panama
Canal
tolls
All other
Total
Foreign
Railroad
All other
1920- -
74.3
114.8
75.2
233.0
221.8
183.6
194.2
(')
99.3
94.4
143.9
30.7
(')
(')
3 26.1
46.3
9.6
19.8
34.6
309.3
183.7
113.6
91.7
46.8
23.8
25.6
5.6
12.3
11.7
17.3
27.1
23.1
24.7
2 577. 4
2 409. 1
312.8
333.1
271.6
249.2
229.9
966. G
1921
719.9
1922
.539. 4
1923
820.7
1924- _
671.3
1925 - . . ...
643.4
1926- -
545.7
* Receipts on account of securities other than foreign-owned not shown separately for 1920 and 1921.
« Includes in 1920 $350,000,000 and in 1921 $100,000,000 from liquidation of the United States Grain
Corporation.
' Receipts on account of railroad securities not segregated.
Beginning with 1923, receipts on account of Government-owned
securities have been large, amounting to about half the miscellaneous
receipts. However, some of these sources are fast disappearing. Re-
ceipts on account of railroad securities, which ran from $94,000,000
to $144,000,000 for the years 1923 to 1925, can not be expected to
continue at this level. The amount of these obligations outstanding
has been greatly reduced by the large repayments. Most of the
strong roads have already paid, so less may be expected in the future.
Receipts from ''other securities" have increased in the last two
years with the repurchase by the Federal Farm Loan Board of the
Government holdings of farm loan bonds. Since the holdings of
these bonds had been reduced below $5,000,000 by October 1, 1926,
this source is now practically exhausted. "All other" miscellaneous
receipts include a small amount of revenue from each of a large
variety of sources. These receipts have declined since 1923, from
$333,000,000 to $230,000,000. Therefore, with the war supplies
liquidated, the holdings of railroad and other securities almost ex-
hausted, and receipts from "all other" sources declining, miscellane-
ous receipts can not be looked to in the future to make up for any
falling off in the yield of taxes.
Tlie revenue act of 1926
As the Treasury has pointed out in connection with other revenue
acts passed since the war, revenue revision must introduce not only
tax reduction but also tax reform, if the tax system is to be put on a
basis to furnish the maximum revenue with the minimum deterrent
effect on business. We probably have not yet reached the state of
having a permanent basis for our tax system involving sources of
sufficient stability and breadth to insure adequate revenue for the
Government's needs during good and poor years, and without putting
undue burdens on the productive forces of the country, but as I have
99
REPORT OF THE SECRETARY OF THE TREASURY
discussed elsewhere in this report I do not recommend a change in
the law until we have had the benefit of further experience in its
returns of revenue.
The revenue act of 1926 accomplished many of the reforms which
the Treasury believed the tax system needed and which the revenue
act of 1924 failed to incorporate and went further in the reduction
of the tax burden. Reductions were made in individual income taxes
in both normal and surtaxes. Personal exemptions have been in-
creased, thus freeing from tax about 3,400,000 taxpayers in the lower
income brackets. The credit for earned incomes was increased. The
effect of all these changes in individual income taxes for a typical case,
a married taxpayer without dependents, is shown in the following
table :
Taxation of individual income of varying amounts under the revenue acts of 19^4
and 1926
1 Taxpayer assumed a married man, wholly independent, with no children or other dependents, earned
income of $5,000]
Net income
Revenue act of 1924
Tax
Percentage
tax to
income
Revenue act of 1926
Tax
Percentage
tax to
income
$1,000..
$2,000..
$3,000..
$4,000..
$5,000..
$10,000.
$50,000.
$100,000
0
0
$7.50
22.50
37.50
207. 50
6, 137. 50
22,617.50
0
0
0.25
.56
.75
2.08
12.28
22. 62
0
0
0
$5.63
16.88
129.38
5, 079. 38
16, 259. 38
0
0
0
0.14
.34
1.29
10.16
16.26
Excise taxes on manufacturers' and dealers' sales were removed,
except taxes on pistols and revolvers and on passenger automobiles
and motor cycles, and the tax rate on the last was reduced. Certain
stamp taxes were removed. Taxes on distilled spirits and on admis-
sions were reduced. The corporation capital stock tax was repealed.
These revisions are reforms to the extent that the tax system is sim-
plified. Although the productivity of the tax system as a whole has
not been increased by the elimination of these sources, the loss of
revenue from many of the taxes is comparatively insignificant.
The repeal of the corporation capital stock tax was offset by an
increase in the tax rate on corporation income, from 121/^ to 13 per
cent for the calendar year 1925 and to 13J^ per cent for the following
calendar years. Therefore this repeal was really a change in method
of taxation and not in the burden of taxation on corporations. An
outline summary of the principal changes made in taxes and tax
rates by the revenue act of 1926 is given in Exhibit 51, page 291.
Although many of the tax changes in the revenue act of 1926
affected collections between March and June, 1926, the fiscal year
EEPORT OF THE SECRETARY OF THE TREASURY 23
ending June 30, 1927, will be the first to reflect the efi'ect of the
majority of the changes. Some mmor revisions will not be in com-
plete operation until subsequent fiscal years. The changes in the
following taxes will be in effect for the entire fiscal year 1927:
(1) Income taxes, corporation and individual.
(2) Repeal of gift tax.
(3) Reduction of rates on cigars.
(4) Increased exemption for admissions.
(5) Changes in excise taxes.
(6) Capital stock tax.
(7) Miscellaneous occupational taxes, including tax on use of boats.
(8) Stamp taxes.
(9) Tax on cereal beverages.
Other reductions which will be fully reflected in receipts of sub-
sequent fiscal years are those in estate taxes and in taxes on distilled
spirits.
The loss in collections from certain taxes repealed can be definitely
estimated, such as the capital stock tax, excise taxes, and miscella-
neous occupational taxes. However, the losses due to the reduced
rates on cigar products, passenger automobiles and motor cycles, and
distilled spirits, the increased exemption on admissions, and the
repeal of certain stamp taxes can be only roughly estimated, either
because the effect of the reduced rates on production is uncertain, as
in the case of cigars and automobiles, or because the lack of segregated
data on past collections makes it impossible to know what has been
collected from the taxes now removed, such as certain stamp taxes.
Until a full year's returns come in, the loss in revenue from these
sources can be only approximately known. While the difference in a
single tax may be slight, the total effect is cumulative. Although the
loss in revenue is not large compared with total tax collections, it is
significant in comparison with the estimated surplus of about
$383,000,000.
Compared with the internal revenue system in existence during the
war, which reached its most extensive development under the revenue
act of 1918, the revisions concluded by the revenue act of 1926 have
been far-reaching. Individual incomes in all brackets have been
relieved through two reductions in normal tax rates, three reductions
in surtax rates, successive increases in personal exemptions, and the
addition of a credit for earned income. The war-profits and excess-
profits tax on corporations has been removed. A substantial reduc-
tion has been made in estate taxes. Of the long list of about 26
excise taxes on the value of sales of articles, only two are remaining.
From the special taxes, including the capital stock tax and a variety
of occupational taxes, all have been repealed except the tax on
brewers and distillers, on the use of boats, and on the use of narcotics.
Some reductions have been made in taxes on documentary stamps.
24 REPORT OF THE SECRETARY OF THE TREASURY
admissions, distilled spirits, and tobacco products. Taxes on
transportation, on telegraph and telephone, on insurance, and on
nonalcoholic beverages have been removed. In brief, an internal
revenue system of relatively few taxes has been evolved from an
elaborate war-time tax system composed of numerous taxes on
commodities and activities, some yielding a large amount of revenue
and others a comparatively insignificant amount.
Tax reduction
The revenue act of 1926 marks the third reduction in the Federal
tax burden since the end of the war. Two of these reductions have
taken place within two years of each other, through the revenue act
of 1924, approved June 2, 1924, and through the revenue act of 1926,
approved February 26, 1926. The extent to which the revenue acts
have relieved the tax burden from year to year varies, depending on
the total volume of taxes collected. A rough measure of the reduc-
tion under each act is a comparison of the receipts during the first
fiscal year under the new act with what might have been collected
had the old act remained in effect a year longer. On this basis the
following annual reduction in tax burden under the revenue acts of
1921, 1924, and 1926 "is estimated: •
Estimated reduction
in tax burden a year
Revenue act of 1921 $663, 000, 000
Revenue act of 1924 519, 000, 000
Revenue act of 1926_ 422, 000, 000
Total 1, 604, 000, 000
As previously stated, the Treasury is of the opinion that no further
alterations in our tax system should be made until the full effect
of the revenue act of 1926 has been demonstrated. The revenue act
of 1921, approved November 23, 1921, was in effect for over two
years, and in full effect one complete fiscal year before the passage
of the revenue act of 1924. Furthermore, the productivity of the
act was tried out during the recovery period following a depression
and not during a period of great prosperity. Government expendi-
tures were declining rapidly with the termination of war activities
and the rigid program of economy pursued. Before the revenue bill
of 1926 was enacted, the revenue act of 1924, approved June 2, 1924,
had been in effect for a full fiscal year, and income tax receipts had
come in for the calendar year 1924, when business was only moder-
ately prosperous. The revenue act of 1926 had been in effect only
a few months by June 30, 1926. Receipts under the act must be
expected in following years to meet an upward trend in Government
expenditures. The decline resulting from the cessation of war
activities has ceased, and expenditures are beginning to increase with
REPOBT OF THE SECRETARY OF THE TREASURY 25
the normal expansion in Government activities. The most important
receipts under the new act, the receipts from corporation and indi-
vidual income taxes, have thus far been based on incomes of 1925,
one of the most prosperous years since the war. The real measure
of the productivity of a revenue act depends on the receipts it will
yield not only during the most prosperous years the country has
seen, but also during years of more moderate prosperity or of business
depression.
Large Government receipts similar to those for the fiscal year 1926
can not certainly be counted on for the years immediately following
1927. The increase in income of individuals from 1924 to 1925 just
about made up for the increased exemptions and credits and the
reduction in normal and surtax rates. Corporate income and taxes
increased in 1925 over 1924 more than estimated by the Treasury.
Collections on the miscellaneous taxes and on customs have been
similarly affected by the high level of prosperity. The prosperity of
the calendar year 1925 has continued thus far through the calendar
year 1926, with corresponding prospects for large corporate and indi-
vidual incomes and taxes to be reported for 1926. Large collections
for 1927 are certain because income taxes constitute about half the
internal revenue receipts and because collections for 1927 will be on
incomes of 1925 and 1926.
If the main sources of taxation were not affected by the ups and
downs of business and the large tax receipts of recent prosperous years
were thus certain for succeeding years, the prospect for tax reduction
would be somewhat different. However, income and profits taxes,
the source of about half the internal revenue receipts, vary with
changing business conditions. The following table shows fluctua-
tions in net income and income tax (exclusive of war-profits and excess-
profits taxes) returned by corporations reporting net income for the
calendar years 1919 to 1924:
Corporation net income and income taxes returned, 1919 to 1924
Calendar year
Net income
(millions)
$9,412
7,903
4,336
6,964
8,322
7,587
9,037
Income tax
(millio
1919
$744
1920.
637
1921.
366
1922
755
1923
937
1924
882
1925 1
1,101
1 Preliminary report.
During the moderate business recession of 1924 the amount of
income taxes returned declined $55,000,000. During the depression
from 1919 to 1921 the decline in taxes returned amounted to $378,-
26
REPORT OF THE SECRETARY OF THE TREASURY
000,000. If a decline should take place in business during 1927,
corporation taxes collected during 1928 on these incomes would
decrease. The amount of reduction would depend on the severity
of the business decline. Similarly, individual net income has fluc-
tuated with changing business conditions, although less widely than
corporation income. Other tax collections affected are customs, taxes
on sales of passenger automobiles, admissions, and documentary
stamps.
Thus to the uncertainty of the effect of the new revenue act on
Government receipts, even under the present prosperous conditions,
is added the uncertainty of the effect of possible changes in business
BfLLIONS
OF DOLLARS
20
18
WORLD
SPANISH
AiMERJCAN
WAR.
BILLIONS
or DOLLARS
20
18
WAR
16
14
12
10
1890 I900 19lO
Diagram 3.— Eipenditures chargeable against ordinary receipts for the fiscal years 1890 to 1926
prosperity on tax yield. Since the Treasury must have receipts
sufficient to cover Government expenditures, and these expenditures
are no longer declining as in the early postwar days, the Treasury
must take account of this possibility for smaller tax receipts in the
years immediately following 1927 before recommending further per-
manent tax reductions.
EXPENDITURES
The expenditures of a government summarize its activities. Both
the scope and relative importance of the various tasks required of the
Federal Government are shown more clearly by a summary of its
disbursements than in any other way. Furthermore, an analysis of
the trend of expenditures in the last few years furnishes the best
REPORT OF THE SECRETARY OF THE TREASURY
27
basis for judging the probability of a further reduction in the cost
of government in the immediate future — a question which is of wide-
spread interest on account of its bearing on the feasibility of tax
reduction. In any comprehensive survey of the Government's
fiscal condition, therefore, it is necessary to carefully examine its
expenditures.
Total expenditures
The total expenditures chargeable against ordinar}'^ receipts for each
year since 1890 are shown in the accompanying chart, diagram 3.
(Corresponding figures may be found in Table 7, page 456.)
The period from 1890 to 1916 depicts the so-called normal
growth of expenditures, while in the decade 1917 to 1926 the abnormal
demands of the World War and the subsequent return to a new peace
level are shown.
The mounting tide of governmental costs under normal conditions
is exhibited in the following table of the amounts of annual ordinary
expenditures from 1890 to 1915, and the corresponding per cent of
increase over the figure for 1890. Even after allowance is made for
price changes, the same trend is apparent, as is shown in the last two
columns of the table.
Increase in total ordinary expenditures, 1890 to 1915, with and loithout allowance
for -price changes
Increa'^e
over 1890
Increase
Total ordinary
expendi-
Fiscal year
Total ordinary
over 1890
expenditures
tures
expenditures
expendi-
at 1913 price
after cor-
tures
level
rection
for price
changes
Per cent
Per cent
1890
$318, 000, 000
$418, 000, 000
1895 ... ...
356, 000, 000
12
495, 000, 000
is
1900
521, 000, 000
64
685, 000, 000
64
1905..
567, 000, 000
78
692, 000, 000
66
1910.
694, 000, 000
118
723, 000, 000
73
1915
761, 000, 000
139
739, 000, 000
The tendency for expenditures to increase in ordinary times is not
confined to any one period or country but, on the contrary, seems to
be a universal phenomenon. Among the principal causes may be
enumerated :
1. the rising level of general prices,
2. the increasing population,
3. the increasing cost of armaments and accumulation of
expenses attributable to past wars,
4. the expanding sphere of governmental activity required by the
increasing congestion of population and made possible by
augmented national wealth, and
28 REPORT OF THE SECRETARY OF THE TREASURY
5. the rising standards in governmental activities and efl&ciency,
a necessary concomitant to a rising general standard of
living in a progressive country.
Expenditures that expand only in proportion to rising prices and
the growth of population signify no change in the quality or quantity
of service performed per capita. It is interesting to note that almost
one-half of the increase in Federal expenditures from 1915 to 1926 is
of this nature. But there has also been a real and permanent in-
crease. From the World War there has emerged a new and much
higher level of expenditures than has ever before been attained. For
not only were there created large continuing expenditures ascribable
to the war itself — such as interest on the public debt, public debt
retirements, and relief of veterans, which taken together account for
half of the Federal expenditures in the last five years — but the ex-
pansion of the civil establishment was also stimulated. This is the
usual result of war readjustments. In times of peace the expansion
of governmental activities lags behind the current demand, since the
burden of proof that enlargement is needed lies with those who favor
it. When expansion has once taken place through war necessity,
however, the new scale of operation becomes the accustomed one,
making a return to old limitations practically impossible, especially
if the new activities are supported by a rising general standard of
living.
The Federal Government, although it alone was directly involved
in military activity, has not been the only one to feel the war's
stimulus to expansion. In the decade 1915 to 1925 the govern-
ment-cost payments of States increased 226 per cent, and the corre-
sponding increase for 146 cities having a population of over 30,000
was 156 per cent. That the total ordinary expenditures of the
Federal Government during the same decade increased only 224 per
cent, in spite of the large amounts necessary for interest on the
public debt and the other legacies of the World War, is mainly due
to the aggressive economy campaign of the administration during
the last five years.
Functional distribution of expenditures
The accompanying chart, diagram 4, shows the expenditures of
the Federal Government since 1915 divided according to function
into four great classes.
Of these classes, the first in importance at present is the service of
the public debt, which includes debt retirements and interest payments.
From the chart it can readily be seen how the enormous national debt,
left as a legacy from the World War, dominates our national finance
and will continue to do so until it has been reduced to an easily man-
ageable size. The fiscal importance of rapid retirement of the debt
REPORT OF THE SECRETARY OF THE TREASURY
29
is apparent, for while these huge charges hold their predoininant
position it will be difficult to alleviate materially the present burden
of taxpayers through reduction in the cost of the Government. To
retard retirement appreciably means to lengthen correspondingly the
period during which these heavy expenditures will be required.
The second major class of expenditures may be described as those
for military functions, a special province of the Federal Government.
This group includes aid to war veterans and the cost of special
agencies for strictly military purposes, as well as the military expendi-
tures of the War, Navy, and other departments. The expenditures
under this head have, of course, been unusually expanded in the last
BILLIONS
OF DOLLARS
1915
1919 1923
Diagram 4.— Main classes of expenditures for the fiscal years 1915 to 1926
decade because of the World War, but seem to have reached their
new peace-time level.
A temporary group of expenditures appeared during the fiscal
years 1917 to 1921, when loans were made on a large scale for various
emergency purposes. The three major categories were loans to for-
eign governments, loans to special war agencies, and loans for agri-
cultural purposes. Since 1922 only the last type of loan has been
continued, and in no subsequent year has there been a significant
amount compared with total expenditures. In calculating future
expenditures, therefore, loans may be disregarded.
The fourth group includes expenditures for all other purposes.
After subtracting the amount of refunds, losses, contingencies, pay-
30
REPORT OF THE SECRETARY OF THE TREASURY
ments from trust funds, and other nonfunctional miscellaneous dis-
bursements, the cost of the ordinary civil activities of the Federal
Government is obtained. This amount, distributed under six main
heads, is shown in the following table:
Functional distribution of ordinary civil expenditures, fiscal years 1915 to 192^^
[Millions of dollars]
Fiscal year
General
govern-
ment
Internal
security
Develop-
ment and
regula-
tion
Public
domain,
works,
and in-
dustries
Local
govern-
ments
and In-
dians
Foreign
rela-
tions
Total
1915
45
46
49
68
105
122
119
105
105
106
104
102
24
21
22
24
31
141
53
45
51
50
74
74
52
51
59
102
160
101
119
103
105
106
108
109
119
87
112
1,051
2,300
1,661
934
198
345
221
290
274
27
27
28
31
33
38
44
42
41
44
54
56
5
5
5
9
9
10
8
10
14
14
15
16
27C
1916
237
1917
275
1918
1,285
1919
2,63s
1920
2,073
1921
1,277
1922
503
1923
661
1924
541
1925
645
1926
631
Under ''General government" are included expenditures for the
Congress and the Executive Office, and for administrative operations
of a general character, such as, for example, the Treasury fiscal
service, the work of the Civil Service Commission, and the mainte-
nance of public buildings.
Disbursements for law enforcement, immigration, naturalization,
public health, and special relief are grouped under "Internal secur-
ity." The large amount shown for 1920 is due principally to special
relief expenditures. "Development and regulation" includes, be-
sides education and research, the promotion or regulation of special
groups or industries, such as, for example, agriculture, banking,
commerce, labor, and railroads. The scope of the next division is
indicated by its name, "Public domain, works, and industries."
An important item in public works is the promotion of good roads,
for which expenditures amounted to $98,000,000 in the fiscal year
1926. The large expansion shown by this group in the years from
1918 to 1921, inclusive, is due almost entirely to expenditures for
the Emergency Fleet Corporation and the Federal control of railroads.
In the fifth classification, designated "Local governments and
Indians," are included expenditures for the governments of the
Territories and the District of Columbia, subventions to States, and
the cost of the Indian wards of the Nation. The term "Foreign
relations" explains the nature of the items grouped under the sixth
heading.
The total amount of all classes of ordinary civil expenditures has
more than doubled since 1915. Each of the six subdivisions of the
KEPOET OF THE SECRETARY OF THE TREASURY
31
group has also increased more than 100 per cent in the same period.
Expenditures for "Local governments and Indians" and for "Foreign
relation^" have shown a consistent expansion, stimulated to a
certain extent by the World War and, in the latter case, by the con-
sequent change in our international position. The other subdivisions
show an increase during the war period and a subsequent decrease
which now seems to have reached its limit. In the two classes where
decreases still continue, viz, those designated "General government"
and "Public domain, works, and industries," respectively, little if
any further reduction can be reasonably expected. Good roads, for
example, account for 36 per cent of the 1926 figure for the latter
group, and this basic item is not likely to decrease in the near future.
It seems evident, therefore, that a further reduction in total expendi-
tures is not to be expected by a contraction in civil functions.
An interesting exhibit of the relative importance of the functions
of the Federal Government is shown in the following table, in which
the amounts spent for the various classes of activity in each of the
fiscal years 1920 to 1926 are reduced to percentages of total expendi-
tures. Figures for pre-war years are not included in the table as
comparisons of such percentages would be entirely vitiated by the
-enormous growth of the public debt.
Functional distribution of expenditures, by percentages, fiscal years 1920 to 1926
1920
1922
1923
1924
1925
1926
General government
Internal security
Development and regulation
Public domain, works, and industries
Local governments and Indians
Foreign relations
Total ordinary civil functions...
Military functions
Public debt
Loans.
Trust funds
Refunds, losses, etc
Per cent
1.7
1.9
1.4
22.7
.5
.1
Per cent
2.4
1.1
2.4
19.1
Per cent
2.5
1.1
2.5
4.7
1.0
.2
Per cent
2.7
1.3
2.7
8.9
1.1
.4
Per cent
2.6
1.2
2.6
5.5
1.1
.3
Per cent
2.7
2.0
2.8
7.7
1.4
.4
Per cent
2.6
1.9
2.7
6.9
1.4
.4
28.3
32.2
30.2
8.2
.5
26.1
36.6
29.0
6.0
1.2
1.1
12.0
36.3
47.5
.4
1.7
2.1
17.1
34.4
43.3
1.9
2.0
4.1
13.3
29.9
50.4
.3
2.1
4.0
17.0
30.6
42.9
4.7
4.9
15.9
29.8
43.2
(?)
5.6
5.4
00.0 100.0 100.0 100.0 100.0 100.0
100.0
■ Credit.
- Loss than one-twentieth of 1 per cent.
As stated previously, in the discussion of total expenditures,
when disbursements increase only in proportion to rising prices and
the growth of population, it is prima facie evidence that no change
has taken place in the average quality or amount of service performed
per capita. Hence, after the expenditures for each function are
corrected for price changes and reduced to per capita figures, the
trends of real significance are more readily apparent. The following
table gives, for each function, the per- capita expenditures corrected
for price changes, beginning with the fiscal year 1915. The price
32
REPORT OF THE SECRETARY OF THE TREASURY
index used in this calculation is composed of price indexes of com-
modities and services entering into Government expenditures,
weighted according to their relative importance in the fiscW years
1924 to 1926, which constitute the base period.
Functional distributiori of per capita expenditures reduced to 1924-1926 price
level, fiscal years 1915 to 1926
[In dollars of 1924-1926 purchasing power!
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
General government-
0.65
.34
.76
1.71
.39
.07
0.64
.28
.71
1.22
.38
.07
0.62
.28
.76
1.42
.37
.07
0.76
.27
1.13
11.64
.34
.09
L07
.32
1.64
23.51
.34
.09
1.18
1.36
.98
16.10
.36
.10
1.12
.49
1.12
8.78
.41
.08
0.99
.42
.97
1.86
.39
.09
0.97
.47
.97
3.18
.38
.13
0.96
.45
.95
2.00
.39
.12
0.91
.65
.95
2.56
.47
.13
0.88
.64
Development and regula-
tion
Public domain, works,
and industries
.95
2.37
Local governments and
Indians
.49
Foreign relations ... .
.13
Total ordinary civil
functions
3.92
6.28
.33
3.30
6.29
.33
3.52
10.71
.32
11.46
.26
.30
14.23
81.43
2.18
54.30
.24
.38
26.97
119. 80
6.29
39.63
.25
.69
20.08
22.86
21.39
5.84
.33
.44
12.00
16.80
13.34
2.76
.55
.51
4.72
14.36
18.79
.15
.65
.83
6.10
12.27
15.41
1.32
.69
1.46
4.87
10.89
18.34
.09
.78
1.43
5.67
10.17
14.24
1.57
1.65
5.46
Military functions
Public debt
Loans .. . .
10.20
14.79
(?)
Trust funds
Refunds, losses, etc
.20
.22
.14
.30
1.91
1.85
10.95
10.35
26.57
152.76
193.63
70.94
45.96
39.50
35.61
36.40
33.30
34.21
« Credit.
» Less than one-half cent.
While total per capita expenditures adjusted for price changes are
three times as large in the fiscal year 1926 as in the pre-war fiscal
year 1915, the corresponding increase in expenditures for ordinarj^
civil functions is only 39 per cent and for military functions only 62
per cent. Most of the remaining enlargement of total per capita
expenditures is due to interest or retirement payments on the enor-
mous World War addition to the public debt. Of the $23.26 dif-
ference between the 1915 and 1926 total per capita disbursements on
a 1924-1926 price level, $14.46, or 62.2 per cent, is due to interest on
this new debt or its retirement; $3.92, or 16.8 per cent, to military
functions; and $1.54, or 6.6 per cent, to ordinary civil functions.
The remaining $3.34, or 14.4 per cent, is largely explained by the
growth of nonfunctional transactions in trust funds, and by an
increased amount of refunds of taxes.
In the various subdivisions into which the ordinary civil functions
are divided, the largest proportional growth is shown by the smallest
group, viz, "Foreign relations," an interesting indication of the changed
status of our Nation in international affairs. In this group, as in
"Internal security" and "Local governments and Indians," no great
war expansion took place. "Public domain, works, and industries,"
the most irregular of all the groups, expanded enormously during the
World War, but by 1922 attained what will probably prove to be its
new peace level. The two other divisions show moderate war expan-
REPORT OP THE SECRETARY OF THE TREASURY
33
sion followed by moderate retrenchment. "General government"
costs are still declining, while expenditures for "Development and
regulation," since reaching their lowest postwar level in 1924, have
barely kept pace with increases in population and prices. It is to be
expected, however, that a steady expansion in the latter group will
begin in the near future, since it is along this line that insistent
demand comes for new activities whenever the people find need for
a governmental agency to counteract the effects of increasing con-
gestion or to effect higher standards in governmental usefulness.
The amount and per cent of increase in per capita expenditures (of
1924-1926 purchasing power) from the fiscal year 1915 to (1) the
peak of war expansion and (2) the fiscal year 1926 are given by
subdivisions of ordinary civil functions in the following table:
Functional distribution of amount and per cent of increase in per capita ordinary
civil expenditures {of 1924-1926 purchasing power) from the fiscal year 1915 to
(1) the year of war peak and (2) the fiscal year 1926
[Per capita figures corrected for price changes]
General government
Internal security
Development and regulation.- _.
Public domain, works, and industries
Local governments and Indians
Foreign relations
Total ordinary civil functions. .
Increase from 1015 I Increase from 1S15
to year of war peak to 1926
' Increase from 1915 to 1919, the peak year for total ordinary civil functions.
Prospect of reduction in expenditures
The prospect of further retrenchment in expenditures has been
touched upon to some extent throughout this discussion. A summary
can be stated in a few words. First, ordinary civil expenditures have
already been reduced by every possible means, and the limit has been
reached. The only reasonable prospect of their future is a gradual
increase corresponding with the growth of the country. Secondly,
military expenditures, after undergoing a reduction culminating in
1925, have shown a small increase in 1926. Their future depends
largely on the nature of our foreign relations and the attitude of the
country toward preparedness, that is, upon policy and not upon
considerations of economy. Thirdly, we must consider the public
debt — the remaining major item and the most important of all. As
long as there are enormous fixed debt charges approximating two-
fifths of all expenditures each year, no large reduction in total expendi-
tures is possible in this direction. But the more rapidly the debt is
34
REPORT OF THE SECRETARY OF THE TREASURY
retired, the sooner will come the time when these charges can be
practicall}' eliminated. A reduction in the amount of total expendi-
tures, therefore, is not to be expected in the near future, but will
become a reasonable certainty when the public debt has become
a neghgible factor in Federal finances.
THE SURPLUS
An excess of ordinary receipts over expenditures chargeable against
those receipts is a surplus, and is the amount by which the income of
the Government, largely taxes paid by the people, exceeds the outgo
of the Government in performing its functions. Since 1920 there has
been a surplus each fiscal year varying, as shown in the following
table, between $86,723,771 in 1921, and $505,366,986 in 1924, and
totahng $2,056,000,000 for the seven-year period:
Ordinary receipts and expenditures chargeable against ordinary receipts, 1920 to 1926
[Basis of daily Treasury statements, unre vised]
Fiscal year
Total ordinary
receipts
Expenditures
chargeable
against ordinary
receipts
Surplus
1920
$6, 694, 565, 388
5, 624, 932, 960
4, 109, 104, 150
4, 007, 135, 480
4, 012, 044, 701
3, 780, 148, 684
3, 962, 755, 690
$6,482,090,191
5, 538, 209, 189
3, 795, 302, 499
3, 697, 478, 020
3, 506, 677, 715
3, 529, 643, 446
3,584,987,873
$212, 475, 197
1921 -
86,723.771
1922
313, 801, 651
1923
309, 657, 460
1924..
505, 366, 986
1925
250, 505, 238
1926.-
377,767,817
The surpluses since 1920 have occurred largely because expendi-
tures have been reduced in greater amount than have revenues under
the various revisions in the tax system and the liquidation of war
facilities. The expenditures each year, compared with the receipts,
are shown in diagram 5.
Although receipts fell off rapidly during 1921 and 1922 on account
of the cut in taxes in the revenue act of 1921 and the depression of
those years, receipts exceeded expenditures because expenditures
were cut in greater proportion. In 1923 and 1924 total receipts
changed little, but expenditures continued to decline, and the surplus
increased. In 1925, when expenditures increased slightly and receipts
declined, the surplus of the previous jqqx was cut in half. The
increase in surplus from $251,000,000 in 1925 to $378,000,000 in 1926
was due to the large yield of taxation. Had expenditures not con-
tinued the tendency to increase begun in 1925, but remained instead
at the 1924 level, the surplus in 1926 would have been almost $80,-
000,000 larger.
The surpluses since 1920 have been used to reduce the pubhc debt.
Pubhc debt retirements thus made do not occur at the end of each
REPORT OF THE SECRETARY OF THE TREASURY
fiscal year from excess receipts accumulated during the year but as
a part of Treasury financing from quarter to quarter. A few weeks
prior to the 15th of each September, December, March, and June
the Treasury determines what income it will need to meet expendi-
tures during the coming quarter, taking into account, on the receipt
side, the cash in the general fund and the Government receipts to be
expected, and, on the expenditure side, the amount of cash required
to meet obligations maturing during the quarter, and the probable
expenses of the Government during the quarter. The difference
between the receipts and expenditures is met by the issue of new
securities. If, therefore, receipts are exceeding expenditures charge-
BILLIONS
or DOLLARS
1920
Diagram 5
1921
1922
1923
1924
1925
1926
Ordinary receipts and expenditures chargeable against ordinary receipts for the fiscal years
1920 to 1926
able against ordinary receipts, the amount of new securities sold is
less than the amount of maturing securities. Thus surplus revenues
are applied to debt reduction. To consider a concrete case, the
Treasury had some $333,000,000 of certificates maturing on the 15th
of June, 1926, but with the cash then available in the general fund,
plus the expected income taxes and other receipts for June and the
succeeding two months, the Treasury found that these certificates
could be retired and Government expenses paid to the next
borrowing date in September without a new flotation of securities.
Therefore, no new securities were sold in June to replace the $333,000,-
000 paid off, and the excess of receipts over ordinary expenditures
was automatically used to reduce the debt.
36 REPORT OF THE SECRETARY OF THE TREASURY
The existence of a surplus in any particular year or group of years
is not prima facie evidence that the Government has sources of reve-
nue in excess of normal needs for the exercise of its functions. As I
have pointed out in the more detailed analysis of receipts and expendi-
tures, Government expenditures and Government receipts for a num-
ber of years in succession can not be known with any fine degree of
accuracy, especially for years when the Government and business are
both getting into their normal stride following a war. Since Gov-
ernment expenditures must be met year in and year out, especially
when there is a national debt, the Treasury must use the best method
possible to plan a sure balance between income and outgo. Unusual
revenues which are not certain for the more immediate future must be
discounted in estimates for coming years. Normal increases in ex-
penditures must be provided for in case those expenditures arise. If
surpluses persist in the face of such calculations, then taxes can safely
be cut to leave in the hands of the people that income which is un-
necessary for the execution of Government activities.
The Treasury has always had and will always have this particular
problem to face. During the period of its operation, since 1791,
there have been two years of surplus for every year of deficit. Dur-
ing much of the time these surpluses have occasioned relatively
little difficulty, as they were promptly absorbed in paying ofT the
public debt. This was especially true for the 45-year period from
1791 to 1835 when the debts of the Revolutionary War and of the War
of 1812 were being paid; and it was true again for about 20 years
following the Civil War.
However, during years of surplus when excess receipts could not
be turned readily to debt payments, the Treasury has struggled with
the problem of adjusting receipts to expenditures. The surpluses of
1836 and 1837, the two years following the extinguishment of the
debt of the Revolutionary War and the War of 1812, amounted to
over 40 per cent of receipts. Revenues from customs duties and the
sale of public lands, the principal sources, were tremendously inflated
by the great prosperity prevailing. The Treasury was embarrassed
with revenue for which there was no immediate use and which could
not be easily returned to taxpayers. Large outlays were planned for
public works and improvements and for a distribution of revenue
among the States. Then with the depression of 1837 receipts were
cut more than 50 per cent compared with the high level of 1836.
Increased expenditures could not be reduced immediately, and six of
the seven years from 1837 to 1843 showed deficits.
During the 10-year period 1881 to 1890, when revenue was plentiful
and when the Civil War debt redeemable at the option of the Govern-
ment had been reduced to a low figure, surpluses amounted to over
25 per cent of ordinary receipts. Again the Government was faced
KEPORT OF THE SECRETARY OF THE TREASURY 37
with the problem of either decreasing receipts or increasing expendi-
tures. In spite of reductions in internal taxes in 1883, surpluses con-
tinued. Appropriations" began to increase, especially for pensions,
and total expenditures which ranged between $243,000,000 and
S299,000,000 for the 10 years following 1880, ranged from $345,000,000
to $443,000,000 during the years 1891 to 1898. After 1890 when
revenues fell off on account of further tax reductions in 1890 and a
severe business depression, the Treasury lacked funds with which to
meet the increased expenditures. The surplus dwindled and several
years of deficit followed.
The history of Federal finances thus shows that a precise adjust-
ment of Government receipts to Government expenditures has
never yet been achieved. However, a balance of revenues has com-
plicated Government finances only when the unnecessary receipts
could not be absorbed in public debt retirements. The most serious
difficulties which the disposition of such surpluses has yet given the
Treasury are those of the two periods just described. Similar mal-
adjustments for shorter periods and with less deplorable consequences
have been experienced in other years. The fault has been largely
the revenue system which in pre-war days consisted of customs
duties and indirect taxes on domestic articles for consumption.
Excessive revenues could not be cut easily since such reduction in-
volved a change in tariff rates and in taxes on articles of consumption,
the effect of which on business and on Government receipts was
uncertain. Extravagant appropriations were a surer but less fortu-
nate solution. The new budget of expenditures could neither be met
nor quickly reduced in less prosperous years when revenues declined.
Furthermore, the added outlays were largely the result of an abnormal
development in Government activities.
The present surplus offers the Treasury none of the difficulties
involved in surplus financing just described. The Government is
still in the process of paying a large war debt. The ordinary receipts,
since 1920, in excess of expenditures chargeable against those receipts
have been no larger, relatively, than the surplus revenues immedi-
ately following the Civil War. It has always been the policy of the
Treasury during a postwar period to use surpluses for debt reduction
and thus to effect comparatively prompt relief from heavy debt
charges. Because the present balance of receipts can be thus readily
absorbed in the retirement of the public debt, there is no possibility
that large revenues will stimulate abnormal increases in expenditures.
In fact, the history of postwar financing of the Federal Government
is merely repeating itself, a history which has always resulted in
systematic and prompt reduction of a large war debt.
Furthermore, the more permanent solution of the surplus problem
during years of peace-time receipts is no longer as difficult as formerly.
38 REPORT OF THE SECRETARY OF THE TREASURY
The tax system has so developed that revenues which are temporarily
in excess of Government expenditures can be adjusted more easily
than in former years. The Government is in more direct contact
with the general body of taxpayers then in pre-war days through the
income taxes, first levied on corporations in 1909 and on individuals
in 1913. Under the revenue act of 1926 this group of taxes reaches
about 4,000,000 individuals and 400,000 corporations. If receipts
are unusualh^ large and the general fiscal situation does not justify
a permanent adjustment of taxes, a return to taxpayers can be made
as a credit on income tax payments, thus leaving with the people
that share of the prospective income of the Government over and
above fiscal requirements of the particular year, and eliminating
one of the most serious phases of earlier surpluses, the pressure for
increased expenditures. Over a period of years the surplus resulting
from a particular tax system will gradually be absorbed in expendi-
tures for the ever-increasing sphere of Government activities.
THE PUBLIC DEBT
Summary oj transactions since July 1, 1925
During the fiscal year 1926, public debt receipts aggregated
$3,008,453,761.83 and expenditures aggregated $3,881,431,334.54.
The total gross debt accordingly was reduced from $20,516,193,887.90"
to $19,643,216,315.19. The reduction of $872,977,572.71 was effected
(1) through retirements of $487,376,050.69 chargeable to ordinary
receipts in accordance with the established debt-payment program ,^
(2) application of the entire surplus of $377,767,816.64 to debt pay-
ment; and (3) reduction of $7,833,705.38 in general fund balance,
this amount being applied to debt reduction.
During the year the short-dated interest-bearing debt, that is, the
debt maturing within five years, was reduced from $6,253,994,504.52
to $4,943,764,740.05, a reduction of $1,310,229,764.47, and the
interest-bearing debt maturing after five years was increased $483,-
093,710— from $13,956,912,410 to $14,440,006,120.
At the beginning of the year the annual interest charge was
$829,525,300.72 on the basis of the interest-bearing debt then out-
standing. The corresponding charge at the end of the year was
$793,423,960.81. This saving of $36,101,339.91 in annual interest
charge is due to (1) reduction in principal outstanding, and (2)
average lower rates on refunding issues.
During the year it was necessary to offer only three regular issues
of interest-bearing public debt securities of the United States, all
as usual, on tax-payment dates — issues of September 15 and
December 15, 1925, taking the form of Treasury tax certificates of
indebtedness, and the issue of March 15, 1926, 'taking the form of
Treasury bonds. It was not necessary to offer an issue on June 15,
EEPORT OF THE SECRETARY OF THE TREASURY
39
1926. In the latter connection, on June 8, 1926, the following
announcement was made by the Secretary of the Treasury:
The Treasury will make no offering of Government obligations for sale on
June 15, 1926. This departure from the usual procedure on the quarterly tax-
payment dates has been made possible on account of the increase in income
tax and other receipts over earlier expectations, and the fact that the aggregate
public debt maturities due June 15 are somewhat less than usual. The amount
of taxes to be received in June together with the balances now on hand is expected
to be sufficient to meet the Treasury's cash requirements until September, when
further financing will be necessary.
New issues of public debt securities in regular course are made
only on tax-payment dates and the amount of the issue is determined
by the estimated cash requirements of the Treasury to the next pay-
ment date in excess of the cash in hand and the estimated current
receipts from taxes and other sources of revenue. Treasury require-
ments, of course, are based on estimated expenditures during the
three months' period for all accounts, including public debt maturities.
Details of the new issues offered during the fiscal year 1926, together
with those for the issue of September 15, 1926, are given hereafter in
this report.
The following tables show the interest-bearing securities (1)
matured, and (2) issued during the fiscal year, exclusive of special
short-term certificates of indebtedness :
Securities matured during the fiscal year 1926
[On basis outstanding June 30, 1925]
Issue
Interest
rate
Date of issue
Date of
maturity
Amount
Certificates of indebtedness:
Series TS-1925 ..-
Per cent
2H
3
4
3
3M
iVs
4Ji
24
Sept. 15, 1924
Mar. 16, 1925
Jan. 1, 1925
June 15,1925
Sept. 15, 1925
June 15,1922
Mar. 15, 1922
Jan. 3, 1921
Sept. 15, 1925
Dec. 15,1925
Jan. 1, 1926
June 15,1926
....do
Dec. 16,1925
Mar. 15,1926
Jan. 1, 1926
$229, 576, 000
Series TD-1925
adjusted service series
179, 462, 000
45, 400, 000
Series TJ-1926
Series TJ2-1926 -
124, 247, 000
J 251, 936, 000
Treasury notes:
Series B-1925
Series A-192fi
Treasury (war) saving certificates, series 1921
299, 659, 900
615, 677, 900
11, 187, 468
Total
1, 757, 146, 268
1 Represents amount of original issue in fiscal year.
' Approximate.
Securities issued during the fiscal year 1926
Issue
Interest
rate
Date of issue
Date of maturity
Amount
Postal savings bonds:
29th series -
30th series
Treasury bonds: Z% per cent bonds of 1946-1956.
Treasury notes:
Adjusted service series A-1931-
Adjusted service series B-1931
Certificates of indebtedness:
Series TJ2-1926
Series TD-1926
Adjusted service series A-1927
Per cent
2Ji
3M
4
4
3M
3^
4
July 1, 1925
Jan. 1, 1926
Mar. 15, 1926
Jan.
Mar.
1, 1926
5, 1926
July 1, 1926-1945
Jan. 1, 1927-1946
Mar. 15, 1946-1956
Jan. 1, 1927-1931
Jan. 1, 1927-1931
Sept. 15, 1925
Dec. 15,1925
Jan. 1, 1926
June
Dec.
Jan.
15, 1926
15, 1926
1, 1927
$238, 340
305, 820
494, 898, 100
53, 500, 000
70, 000, 000
251, 936, 000
452, 879, 000
38, 200, 000
Total.
1, 361, 957, 260
40 REPORT OF THE SECRETARY OF THE TREASURY
3% per cent Treasury bonds of 1946-1956
Some $015,000,000 4^ per cent Treasury notes became payable
on March 15, 1926. At the same time the Treasury was arranging
to purchase an amount of third 4^4 's for the sinking fund, and sub-
sequently did purchase something more than $120,000,000 for this
account. This meant the withdrawal from the market and the
redemption of more than $735,000,000 Government securities. To
meet this redemption and to provide for the Treasury 's cash require-
ments to June 15, 1926, the next quarterly tax-payment date, the
issue of about $500,000,000 new securities was indicated to supple-
ment the cash balance on hand and the March tax receipts.
Accordingly, on March 8, 1926, through Department Circular No.
367, announcement was made of an offering of 20-30 year Treasury
bonds, dated March 15, 1926, maturing March 15, 1956, and redeem-
able at the option of the United States on and after March 15, 1946,
on four months' notice of redemption. The offering was for $500,-
000,000, or thereabouts, 'the rate of interest was 3^ per cent per
annum, and the price was 1003^. Subscriptions for this offering
were closed on March 11, 1926, and aggregated $647,243,900, of
which amount allotments of $494,898,100 were made. Allotments
on subscriptions were made as follows: Subscriptions in amounts
not exceeding $50,000 were allotted in full; subscriptions in amounts
over $50,000 but not exceeding $100,000 were allotted 80 per cent,
but not less than $50,000 on any one subscription; subscriptions
in amounts over $100,000 but not exceeding $500,000 were allotted
60 per cent, but not less than $80,000 on any one subscription; and
subscriptions in amounts over $500,000 were allotted 50 per cent
but not less than $300,000 on any one subscription.
As shown above the face amount of the issue was $494,898,100.
For these bonds the Treasury received a premium of one-half of 1
per cent, amounting to $2,474,490.50. At the issue price the bonds
will yield 3.714 per cent to March 15, 1946, and 3.722 per cent to
March 15, 1956.
With this offering four issues of Treasury bonds in three series
have been made, all for refunding purposes as follows:
Issues of Treasury bonds
Title of series
Inter-
est rate
Date of issue
Issue
price
Amount
issued
Treasury bonds of 1047-1952
Per cent
Oct. 16,1922
Dec. 15,1924
Mar. 15, 1925
Mar. 15, 1926
100
100
mVz
$763, 962, 300
Treasury bonds of 1W4-19M..
4
756, 933, 800
Treasury bonds of 1946-1956
3%
290, 154, 700
494, 898, 100
Total
2,305,948,900
REPORT OF THE SECRETARY OF THE TREASURY 41
Treasury certificates of indebtedness and Treasury notes
To cover the cash reqmrements of the Treasury to December 15,
1925, an issue of 33^ per cent Treasury certificates of indebtedness,
series TJ2-1926, due June 15, 1926, m amount $251,936,000, was
made on September 15, 1925. Details of this issue were set forth
in my report for the fiscal year 1925.
On December 7, 1925, the Treasury announced an offering of 3^
per cent Treasury certificates of indebtedness, series TD-1926, dated
and bearing interest from December 15, 1925, maturing December
15, 1926. The amount of the offermg was placed at $450,000,000,
or thereabouts, and the Treasury offered to accept in payment for
the new certificates, Treasury certificates of indebtedness of series
TD-1925, and 4^ per cent Treasury notes of series B-1925, both
maturing on December 15, 1925, giving preferential allotment to
subscriptions for which payment was tendered in such certificates or
notes.
About $480,000,000 of Treasury notes and certificates of indebted-
ness became payable on December 15, 1925, and the offering on that
date was intended, with the cash balances on hand and the Decem-
ber tax receipts, to meet these maturities and to cover the Treasury's
further cash requirements until March. Subscriptions for the issue
closed on December 9, 1925, the aggregate amount of subscriptions
entered being $875,911,000. Of these subscriptions payment for
$167,340,700 was tendered in Treasury notes of series B-1925, or
Treasury certificates of indebtedness of series TD-1925, and such
subscriptions were allotted in full. Allotments on other subscriptions
were made as follows: All subscriptions in amounts not exceeding
$100,000 for any one subscriber were allotted 50 per cent, but not
less than $500 on any one subscription; and subscriptions in amounts
over $100,000 were allotted 30 per cent, but not less than $50,000
on any one subscription. The total amount finally allotted was
$452,879,000.
In accordance with the requirement of law that the Secretary of the
Treasury invest and reinvest the moneys appropriated and held in
the adjusted service certificate fund so as to return 4 per cent com-
pounded annually, an issue of Treasury certificates of indebtedness,
adjusted service series A-1927, in amount $38,200,000, was made
on January 1, 1926, and an issue of Treasury notes, adjusted service
series A-1931, in amount $53,500,000, was made on the same day.
A further issue of Treasury notes, adjusted service series B-1931,
in amount $70,000,000, was made on March 5, 1926. The funds
for these three issues, in aggregate amount $161,700,000, were
derived from the proceeds of the redemption of Treasury certificates
42 REPORT OF THE SECRETARY OF THE TREASURY
of iiidobtedness, adjusted service series, maturing January 1, 1926;
from interest on investments of certificates of indebtedness and
Treasury notes; and from the annual appropriation for 1926 granted
by Congress for the purposes of the adjusted service certificate fund.
On September 7, 1926, the Treasury announced an offering of
$350,000,000, or thereabouts, of 3}^ per cent Treasury certificates
of indebtedness, dated and bearing interest from September 15,
1926, and maturing June 15, 1927. The Treasury further offered to
accept in payment for the new certificates 4}4 per cent Treasury notes
of Series B-1926, maturing September 15, 1926, and provided for
preferential allotment of certificates for which such Treasury notes
were tendered in payment.
The oftering was necessary to provide for the Treasury's cash
requirements until the December quarterly tax period, such require-
ments including provision for the redemption of about $400,000,000
'^H per cent Treasury notes due for payment September 15, 1926.
Subscriptions for the issue closed on September 9, 1926, the
total amount offered being $996,660,000. Of these subscriptions
$144,953,000 represented subscriptions for which Treasury notes of
Series B-1926 were tendered in payment, all of which were allotted
in full. Allotments on other subscriptions were made as follows:
Subscriptions in amounts not exceeding $1,000 for any one sub-
scriber were allotted 50 per cent, and subscriptions in amounts over
$1,000 were allotted 25 per cent but in no case less than $500 on any
one subscription. The total amount of the issue allotted was
$378,669,500.
Purchase of third 4/i's for the siiiking fund
The early maturity of the third Liberty loan, and the fact that no
right exists of calling the issue before maturity, have indicated the
importance of discharging, from time to time, important amounts
of the bonds, when they may be acquired on terms advantageous
to the Government. Any retirements before the maturity date will
reduce to that extent the problem of financing for the payment of the
loan on September 15, 1928. During the fiscal year 1926 it was
found possible to apply the entire appropriation for the cumulative
sinking fund to the purchase of third 4^'s. In making purchases
for the sinking fund it has been the policy of the department to
make such purchases on the market or through brokers. In Novem-
ber, 1925, it was proposed to determine the feasibihty of making
such purchases, in part at least, directly from the holders, and thus
give all holders of third Liberty loan bonds the opportunity to sell
their bonds to the Government, with a saving of commission charges
REPORT OF THE SECRETARY OP THE TREASURY
43
not only to the Treasury but to the sellers. Accordingly, on Novem-
ber 27, 1925, under Department Circular No. 363, the Treasury
made a definite offer soliciting from the holders of third Liberty
loan bonds proposals to sell such bonds to the Treasury, and speci-
fying that from the lowest proposals received the Treasury would
purchase an aggregate amount of $50,000,000 par amount, or there-
abouts, if offered below or at 1013^ and accrued interest. The
privilege of tendering third Liberty loan bonds for sale to the United
States under this offer expired on December 10, 1925, on which date
$176,000,000 face amount had been tendered for sale within the
announced limit of 1013^2 and accrued interest, at prices which
averaged 101.34375. The Treasury accepted $66,274,750, at a
total principal cost of $67,069,605.07, the average cost being 101.19933.
A similar offer to purchase third Liberty loan bonds direct from
holders was made on March 1, 1926, under Department Circular
No. 366. In making the announcement it was stated that from the
lowest proposals received the Treasury would purchase third Liberty
loan bonds to an aggregate amount of $100,000,000, or thereabouts,
at the lowest prices offered, plus accrued interest from March 15,
1926, provided such prices were acceptable to the Secretary of the
Treasury. The privilege of tendering the bonds for sale to the
United States expired on March 10, on which date over $148,000,000
face amount of bonds had been tendered. All proposals for sale at
prices not exceeding 101.3125 were accepted, such proposals aggre-
gating $121,584,750, the total principal cost being $123,103,626.70,
and the average cost 101.24923.
During the year an additional amount of $129,232,250 third Liberty
loan bonds was otherwise purchased for the sinking fund at a total
principal cost of $131,011,236.43, or an average cost of $101.37658.
A recapitulation of the purchases during the year follows :
Purchases of third 4}4:'s for the cumulative sinking fund
Face amount
Principal cost
Average cost
Under Circular 363
$60, 274, 750. 00
121, 584, 750. 00
129, 232, 250. 00
$67, 069, 605. 07
123, 103, 626. 70
131,011,236.43
101.19933 (or 101 A+)
Under Circular 366
101.24923 (or 101A-)
otherwise
101.37658 (or 101 H+)
Total
317,091,750.00
321, 184, 468. 20
101.2907 (or 101 A+)
Review of the last seven years
During the past seven fiscal years the total gross debt has been
reduced $5,841,289,845, as shown by the following table, which sets
11438— 26t 5
44
REPORT OF THE SECRETARY OF THE TREASURY
forth the debt reduction and the means by which it was effected during
each fiscal year from 1920 to 1926, inclusive:
Debt retirements classified by source, for the fiscal years 1920 to 1926
Fiscal year
Retirements
chargeable
against ordi-
nary receipts
Retirements
through sur-
plus
Retirements
through reduc-
tions in the
I net balance in
I general fund
Total debt
reductions
1920.
1921.
1922.
1923.
1924.
1025.
1926.
Total --. 2,743,328,922
$78, 746, 350
1 427, 123, 566
422, 694, 600
402, 850, 491
457, 999, 750
466, 538, 114
487, 376, 051
$212, 475,
86, 723,
313, 801,
309, 657,
505, 366,
250, 505,
377, 767,
198
772
651
460
986
238
817
$893, 963,
» 191, 976,
277, 572,
s 98, 833,
135, 527,
17, 575,
7, 833,
145 $1
423
593 1
608
640 1
749
705
185, 184, 693
321, 870, 915
014, 068, 844
613, 674, 343
098, 894, 376
734, 619, 101
872, 977, 573
2, 056, 298, 122
1,041,662,801 I 5,841,289,845
' Includes $4,842,066.45 written olT the debt Dec. 31, 1920, on account of fractional currency estimated to
have been irrevocably lost or destroyed in circulation.
' Increase in net balance in general fund— operates as an increase in total gross debt.
During the seven-year period taken as a whole 47 per cent of the
retirements were chargeable against ordinary receipts, 35 per cent
were made through surplus receipts, and 18 per cent through reduc-
tion in the net balance in the general fund of the Treasury.
The established debt-payment program made effective in 1920
provides for definite retirements each year from ordinary receipts.
The following table shows for each fiscal year from 1920 to 1926,
inclusive, the debt retirements chargeable against ordinary receipts
classified by the source of the funds:
Debt retirements chargeable against ordinary receipts
[In thousands of dollars]
Fiscal year
Sinking
fund
Purchases
from
foreign
repay-
ments
Received
from for-
eign gov-
ernments
under
debt set-
tlements
Received
for estate
taxes
Purchases
from
franchise
tax
receipts
Forfeitures,
gifts, etc.
Total
1920
72, 670
73,939
64,838
32, 140
38,509
3,141
26,349
21,085
6,568
8,897
48
2,922
60, 725
60, 333
10, 815
3,635
794
568
13
'5,011
393
555
93
208
63
78,746
1 427 124
1921
261,100
276, 046
284,019
295, 987
306, 308
317,092
1922
422, 695
402, 860
458,000
466, 538
487 376
1923
68,753
Tin 870
1924
1925
386 158,794
4,393 165,260
1926
Total
1, 740, 552
286,875
503,686
66,088
139,792
6,336
2,743,329
I Includes $4,842,000 written off the debt Dec. 31, 1920, on account of fractional currency estimated to
have been irrevocably lost or destroyed in circulation.
EEPOKT OF THE SECRETAEY OF THE TEEASUKY
45
Of the total retirements chargeable against ordinary receipts set
forth in the above table, the sinking fund accounts for 63.4 per cent,,
receipts from foreign Governments 28.9 per cent, and miscellaneous'
receipts 7.7 per cent. For 1927 it is estimated that debt retirements
through the sinking fund and through application of payments by
foreign Governments under ratified debt agreements will amount to
$507,600,000, and that similar retirements during 1928 will amount
to $529,600,000. The sinking fund and payments by foreign gov-
ernments under debt agreements are the only two permanent sources
for debt retirement that can be definitely counted on.
The distribution of public debt maturities is shown in the following
table for the present year in comparison with previous years:
Interest-bearing debt, distributed by maturities, and total gross debt August 31, 1919,
to October 31, 1926 i
[Millions of dollars]
Date
Aug. 31, 1919.
Apr. 30, 1921.
June 30, 1921.
June 30, 1922.
June 30, 1923.
June 30, 1924.
June 30, 1925.
June 30, 1926.
Oct. 31, 1926 '
Maturing within five years
Within
one year
One
year to
two
years
572
4,494
366
1,432
927
1,182
500
2,807
Two
years to
five
years
5,045
4,209
425
2,044
2,647
4,817
3,567
2,780
291
Total
within
five
years
9,246
7,602
7,618
6,746
5,473
8,072
6,254
4,944
4.726
Matur-
ing after
five
years
17, 103
16, 158
16,119
15, 965
16, 535
12,910
13, 957
14, 440
14,440
Total
interest-
bearing
debt
26, 349
23, 760
23, 737
22,711
22, 008
20, 982
20,211
19, 384
19, 166
Total
gross
debt
26, 594
23, 994
23, 976
22, 964
22, 350
21,251
20, 516
19, 643
19,420
1 Exclusive of interest-bearing obligations redeemable at the pleasure of the Qover nment but not matur-
ing within the period covered.
2 From nrftliminary statement of the public debt, Oct. 31, 1926.
From the above table it will be noted that the total debt maturing
within five years was reduced $1,310,000,000 during the fiscal year
1926, and that the debt maturing after five years was increased
$483,000,000. A comparison of the maturities within the five-year
period, as between June 30, 1925, and June 30, 1926, shows an
increase of $159,000,000 in debt maturing within one year, a decrease
of $682,000,000 in debt maturing after one year but before two
years, and a decrease of $787,000,000 in debt maturing after two
years but before five years. However, an important change in the
distribution of maturities occurring within five years takes place in
the first quarter of the fiscal year 1927, when the third Liberty loan
falls into the class of debt maturing within the period from one to*
two years.
46
REPORT OF THE SECRETARY OF THE TREASURY
The composition of the short-dated debt and changes in its com-
position since 1919 are shown in detail in the following table:
Shor(-dated debt, August 31, 1919, to October 31, 1926 •
[Millions of dollars]
Total 1
short- ] Third
_ dated debt 1 Liberty
"^^^ 1 (maturing loan
within bonds
five years)
Victory
notes
Treasury
notes
Certifi-
cates of
indebt-
edness
Pittman
Act and
special cer-
tificates of
indebted-
ness
1
Treasury 4 per
(war) cent
savings loan of
securities 1925
Aug. 31, 1919 9, 246
4,113
4,060
3.914
1,991
3,938
2,548
2,451
1,755
1.031
263
272
249
74
931
713
June 30, 1921
7,618
311
2,247
4,104
694
Juno 30, 1922
June 30, 1923
6.746
5.473
8 072
679
337
413
386
360
358
9 907
3,736 : 808
2.404 579
1,613 ( 483
1,198 ' 862
118
Juno 30 1925
6,254 ; 2,' 885 1
4.944 ! 2,488
4,726 1 2. SOS _ „ -
Oct 31 19''6 '
' Exclusive of debt on which interest has ceased and interest-bearing obligations redeemable at the
pleasure of the Qoverninent but not maturing within the period covered.
> From Preliminary Statement of the Public Debt, Oct. 31, 1926.
TREASURY FINANCING AND THE CREDIT SITUATION
Of the many direct relations of the Treasury operations with the
money market, at least two deserve some statement in this report:
(1) The issue and redemption of short-term certificates of indebted-
ness and Treasury notes, and (2) the issue and redemption of long-
term Treasury bonds.
Short-term financing
The new issues of certificates of indebtedness during the fiscal
year 1926 bore somewhat higher rates of interest than the issues of
the fiscal year 1925. The accompanying schedule of issues for the
two years and diagram 6 on page 48 indicate the course of these rates,
although in interpreting them caution should be taken to observe that
the dates of issue, the terms, and the amounts issued are not strictly
comparable. It will be observed that the tendency of the rate borne
by the certificates to increase, which was evident in the latter part of
the fiscal year 1925, continued until the issue of December, 1925, when
it reached 3^ per cent, or 1 per cent higher than on September 15,
1924. The issues of September 15, 1926, were effected at 33^ per cent;
whether this slight decline means a real turning point in the trend of
these rates is, of course, not known, but the fact that this issue had
to be floated to meet Government requirement at the height of the
seasonal demand for funds and at the height of the business prosperity
which has reigned during the year is some warrant for that surmise.
The rate of interest on the new issues of certificates of indebtedness
is set by the Treasury in harmony with the rates ruling in the money
REPORT OF THE SECRETARY OF THE TREASURY
47
market for loans of comparable maturity and security. The follow-
ing table presents somewhat comparable short-term interest rates,
averaged monthly:
Short-term interest rates
Calendar
month and
year
Rate
on
prime
com-
mer-
cial
paper
Rate
on bills
dis-
Rate
Rate
on
call
loans
Rate
on
Yield
on cer-
tifi-
New issues of certificates of
indebtedness
Fis-
cal
year
1
ed"by- ti-e
rele?le:--ths
bank
bank- eates
ers' ofin-
ac- debt-
cept- edness.
anees 4 to 6
months
Nomi-
nal
rate
Date of issue
rpp„, .Vmount
^^™ issued
I 1924
July 3.52
August 3.25
September.. 3. 12
October i 3.12
November..: 3.22
December..' 3.55
1925
January 3.62
February...] 3.62
March j 3.91
\pril s 9.1
3. 89 2. 93
3.78 ' 2.89
2.05
1
■ 1
2. 06 ' 2. 13
Months
2.00 '2.10 2.26
!
3.69
3.65
3.09
3.00
2.06
2.40
2.22 2.35
2. 18 2. 62
2.75 Sept. 15,1924
12
$391, 369, 600
3.63
3.56
3.53
3.44
3. 22 2. 38
2.34 2.87
2. 92 2. 30
3 m 2 S3
3.64
3.70
.TSO
3.70
3.12
:::::::::::::::::::::::::::
1925
1
3. 56 3. 12 2. 81
i
3. 68 4. 15
3 73 1 4.02
3. 81 3. 25
4.00 3.17
2.95
2.88
2.93
3.02
3.21
3.33
3.29
3.65
3.74
3.60
3.68
3.37
3.28
3.16
3.33
2.82
3.20
3.45
3.50
3.66
3. 00 Mar. 16, 1925
9
219, 462, 000
May
June..
July
.\ugust
September..
October
November..
December..
1926
January
February...
March
April
May
June
July..
August .
September..
October
3.88
3.71
3.69
3.68
3.70
3.70
3.69
3.77
3.82
3.97
4.00
4.00
3.96
3.87
3.89
3.84
3.94
3.7b
3.85
3.99
4.35
4.51
4.88
4.91
4.99
4.76
4.70
4.66
4.22
4.06
4.18
4.41
4.70
4.92
4.96
3.81
3.18
1
j
3.88
3.90
3.97
4.28
4.38
4.38
4.38
4.31
4.19
4.28
4.19
4.05
3.88
3.93
4.20
4.39
4.50
3.94
4.15
4.19
4.50
4.81
4.75
5.38
4.38
3.19
3.19
3.19
3.38
3.44
3.44
3.44
S 69
3.00 Jime 15,1925
i2 124, 247, 000
I
1
3. 25 i Sept. 15, 1925
1
9 251, 936, 000
i92«
3. 75 i Dec. 15, 1925
1
12
453, 349, 000
4. 88 1 3. 69
4. 60 ' 3. 62
4.00 3.42
3. 88 3. 23
4. 18 ; 3. 31
4. 25 ] 3. 38
4. 44 1 3. 53
5. 08 1 3. 81
4.69 ' 3.81
1
1
.
3. 50 ; Sept. 15, 1926 | 9
378, 669, 500
1
While these rates differ among themselves on account of differences
in risk, marketability of the loans, seasonality, period, and other
factors, they all show a tendency to rise quite steadily from the
beginning of the fiscal year 1925 to December, 1925, and then to
decline slightly until May or June. This decline in the first half of
1926 had, however, been practically regained by October, due in part
no doubt to the usual seasonal tightening of money in the crop-
moving period.
To this movement of short-term interest rates the yield on the
United States certificates of indebtedness has closely conformed,
ranging for the most part slightly below the rate on even the best
of the other loans. This close conformity is, of course, due to the
fact that these investments are all competing in the loan market and
capital is easily diverted from one type to the other according to the
slight relative advantages that may exist among them.
48
REPORT OF THE SECRETARY OF THE TREASURY
When, therefore, the quarterly periods of refinancing are approach-
ing, the Treasury affixes a rate to the new issues of certificates which
apl^roxiniates that ruHng in the market on mvestments as nearly
simihir as exist. As the rates of the market increased from July,
1924, to December, 1925, the successive issues of certificates bore
higher and higher rates, rising from 2.75 per cent in September,
1924, to 3.75 per cent in December, 1925. But the fall in market
PER
CEWr
4 ■
^^
W^
o -
\* * /\ i
V
YIELD ON C.OF I'S.
NOMINAL RATE ON
NE.W ISSUERS
1
n -
•
1924
19 25
1926
Diagram 6.— Nominal rate of interest carried by new issues of certificates of indebtedness and
yield of outstanding issues for the calendar years l'J24 to 1926
rates since January this year made it possible to place the September
certificates at 3.50 per cent.
The three chief lines of demand for short-term money are (a) the
issue of short-term securities, (h) funds to support the stock and bond
market operations, and (c) the needs of commerce and industry for
working capital. The following schedules present the situation
during the past two fiscal years in respect to these three categories:
EEPOET OF THE SECEETAKY OF THE TEEASURY
49
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50 REPORT OF THE SECRETARY OF THE TREASURY
In these schedules the variation in the demand for short-term
funds for governmental purposes is represented by the volume of
temporary loans floated by the State, county, city, and other civil
divisions. It will be noted that these loans were heavier in the fiscal
year 1925 than in 1926, but that they are at all times very erratic,
depending more upon fiscal exigencies of the issuing governments
than upon the condition of the money market. The only period
when the Federal Government refinancing of its certificates competed
with unusually heavy municipal issues was in December, 1925, and,
as previously stated, this was the time when the rates borne by the
certificates reached their highest point. The issues of short-term
corporate bonds are a much less important factor in the market
than of municipals, but it happened also that the only financing
period in which the Government met much competition from the
corporate issues was in December.
The stock market has shown exceptional activity. Stock prices
rose steadily through 1924 and 1925 to unprecedented heights and
the slump of March, 1926, proved only temporary. Throughout
the period the number of shares sold has run extraordinarily high,
the course being frequently punctuated with two or three million
share days. Bond prices have also risen, with a slight interruption
in late summer of 1925, to new heights. To finance this speculative
market at higher prices and margins bank loans grew apace sup-
ported by security collateral.
The calendar years 1925 and 1926 have been marked with the very
flush of prosperity, as measured by any of the standard barometers.
For the past year and a half the output of our manufactures has stood
between 25 and 30 per cent higher than in midsummer, 1924. Since
that date the three basic industries — iron and steel, automobiles,
and buUding construction — have made new records at production,
as shown by the increase in the percentage of blast furnaces in blast,
the number of automobiles produced, and the volume of building
contracts awarded. The large figures for railroad freight revenues
and for mail-order sales signify a parallel prosperity in the distrib-
utive side of business. In the throes of this general prosperity
wholesale prices moved through a range of less than 10 per cent,
the course during the last fiscal year being steadily downward. With
the exception, therefore, of the commodity price level, the business
situation has called for a growing amount of short-term working
capital.
With such an active bullish stock and bond market and with such
high activity in general business, the banks of the country have
prospered. The following table gives the figures significant of this
prosperity for the members of the Federal reserve system that report
REPORT OF THE SECRETARY OF THE TREASURY
51
weekly their condition to the Federal reserve banks and for the
Federal reserve banks themselves:
Changes in volume of bank credit of reporting member banks
[In millions of dollars]
Fis-
cal
year
1925
1926
1927
Calendar year and
month
1924
July
August
September
October
November
December
1925
January
February
March..
April
May
June
July-.
August
September
October
November
December
1926
January...
February.
March
April
May
June
/July
\August.-.
Total
loans and
invest-
ments
17, 252
17, 571
18, 194
18,315
18,527
18, 599
18, 540
18, 538
18,704
18, 716
18,683
18, 892
18,723
18,918
19, 272
19, 345
19, 399
19, 697
19,454
19, 512
19, 546
19, 525
19, 678
19, 816
19, 627
19, 777
Invest-
ments
4,880
5,133
5,411
5,551
5,612
5,531
5,489
5,396
5,498
5,484
5,503
6,516
5,606
5,443
5,440
5,443
6,393
6,462
5,478
5,503
5,495
6,676
5,716
6,681
5,652
5,599
Collat-
eral
loans
4,431
4,570
4,663
4,547
4,721
4,863
4,888
4,940
4,978
5,079
5,141
5,347
5,204
5,302
6,471
5,472
5,583
5,930
6,691
6,605
5,568
5,464
5,568
5,723
6,696
5,711
Commer-
cial
loans
7,941
7,868
8,120
8,217
8,194
8,205
,163
,193
,228
,153
,039
,029
,013
,173
,361
,430
,423
,305
,285
,404
,484
,495
,394
,412
,380
,468
Total
earning
assets
825
915
983
1,024
1,187
1,249
1,130
1,087
1,028
1,064
1,127
1,021
1,126
1,267
1,260
1,352
1,501
1,149
1,207
1,226
1,114
1,186
1,168
1,106
1,202
Govern-
ment
securities
and
bankers'
accept-
ances
631
613
716
802
938
935
715
696
687
628
662
616
653
549
624
660
709
751
662
624
693
601
661
643
585
576
Redis-
coxmts
294
302
267
222
249
314
274
434
400
400
412
612
468
577
633
590
643
750
488
583
632
514
525
516
521
626
For week ending nearest the end of the month.
Of the reporting member banks the loans and investments have
increased during the fiscal year approximately $1,000,000,000, of
which increase less than one-sixth was in investment holdings. The
collateral loans, which rose steadily from $4,431,000,000 to $5,347, -
000,000 during the fiscal year 1925, continued upward to $5,930,-
000,000 in December, 1925; this movement was in pace with the
rising stock market on which presumably a large part of this type of
loan was used. The declension in stock prices in the first part of 1926
found a parallel in collateral loans, which dropped to $5,454,000,000
in April; since that date the general tendency, along with the stock
market, has been upward, standing at $5,711,000,000 in August.
The increase in commercial loans has been much less pronounced,
and is properly more consonant with the course of general business, in
it seasonality and trend, than with the stock market. Comparing
the July figures of the last years, the status of commercial loans of the
reporting member banks was in July, 1924, $7,941,000,000; in 1925,
$8,013,000,000; and in 1926, $8,380,000,000, a total increase of
11438--26t 6
52 REPORT OF THE SECRETARY OF THE TREASURY
$440,000,000, or less than 6 per cent. This was about one-third of
the increase of collateral loans during the period. Here is a remark-
able demonstration of banking capacity: Of a total expansion of
loans and investments of the reporting member banks from $17,252,-
000,000 in July, 1924, to $19,627,000,000 in July, 1926, or $2,375,-
000,000, only $439,000,000 went to commercial loans, at a time when
business was enjoying unwonted prosperity and commercial interest
rates hovered in the general vicinity of 4 per cent. The banking
capacity proved to be greatly in excess of commercial and industrial
needs and the banks have been forced to find employment for their
current funds through financial borrowers.
This great banking capacity springs (a) from the heavy gold im-
portations of the war and postwar period, which have flushed the
bank reserves; (6) from the accumulating savings of the people and
corporations during the recent prosperous years; (c) from the de-
clining price level, which makes it possible to float the same physical
volume of business on less current capital; (d) from the broadly
spreading method of hand-to-mouth buying, with less money tied
up in inventories; (e) from the disinclination of business men to carry
speculative inventories in the face of a steady or falling commodity
price level; and (f) from the better organization of transportation,
both of railroad and automobile truck, the greater speed reducing
the total amount of goods in transit and the capital so tied up, as
well as the waste en route. These and other factors have tended
either to increase the supply of short-term loanable capital or to
reduce the demand for it, with the consequence that the expansion
of commercial loans has been small in spite of the extraordinary
business activity and the low interest rates. Of course, it is likely
that a portion of the proceeds of the collateral loans is devoted to
commercial purposes, but banking statements do not reveal just
what this portion is; probably it is small.
During the past fiscal year the total earning assets of the Federal
reserve banks have fluctuated with seasonal demands, rising from
$1,021,000,000 in July, 1925, to $1,501,000,000 in December, then
dropping suddenly to $1,149,000,000 in January, and fluctuating
within a narrow range of about $100,000,000 thereafter. The invest-
ments of the Federal reserve banks in Government securities and
bankers' acceptances rose $200,000,000 during the first half of the
fiscal year 1926, after which they declined and fluctuated within
narrow range. Similarly the rediscounts rose from $468,000,000 to
$750,000,000 during the first half of the last fiscal year and dropped
off suddenly to $488,000,000 in January, 1926; since then they in-
creased with the spring revival in February and March, and dropped
off again until the harvest refinancing period in August.
It is evident from this review of business and banking that the
seasonal increase in demand for commercial and industrial uses
REPORT OF THE SECRETARY OF THE TREASURY
53
which occurred in the autumn and early winter months of 1925 was
conjoined with the demand for funds to finance the very crest of the
big bullish stock market. The higher rates w^hich it was necessary
to put on the certificates issued by the Treasury in the September and
December refinancing periods are thus explained. On the other
hand, the severe drop in the stock market in March released funds
for investment in the long-term Treasury bonds floated then and
made possible the lower rate thereon.
Long-term financing
The only long-term financing done by the Treasury during the
fiscal year ending June 30, 1926, was the issue on March 15, of
$494,898,100 of 3M per cent Treasury bonds of 1946-1956, at a pre-
mium of one-half of 1 per cent, the proceeds of which, together with
tax receipts and funds then in the Treasury, were designed to meet
the Treasury notes, series A-1926, maturing March 15, and to pro-
vide for the purchase for the sinking fund of $121,750,000 of the third
Liberty 4 \i per cent bonds, and to furnish cash funds for the last quar-
ter of the fiscal year.
The condition and trend of long-term interest rates durmg the
past two fiscal years are shown in the following table :
Yield on long-term investments
Fis-
cal
year
Calendar year and month
On 10
AAA
railroad
bonds
On 15
mimicipal
bonds
On United
States
Govern-
ment
bonds 1
( 1924
July -. -
4.60
4.61
4.64
4.62
4.61
4.65
4.61
4.64
4.61
4.62
4.55
4.55
4. 55
4.66
4.62
4.62
4.62
4.60
4. 55
4.53
4.52
4.44
4.43
4.43
4.47
4.47
4.16
4.15
4.08
4.10
4.09
4.12
4.10
4.08
4.07
4.05
4.02
4.01
4.06
4.03
4.12
4.15
4.22
4.13
4.10
4.09
4.09
4.07
4.06
4.06
4.06
4.04
4.040
4.026
4.037
4.005
4.026
4.068
1925
1925
4.069
4.064
4.075
4.046
4.016
3.974
July -
3.986
4.026
4.022
4.030
4.036
4.036
1926
1926
4.023
3.990
3.987
3.967
May
3.952
3. 955
fjuly -
3.973
1927
[August . -
3.995
» Average of average monthly yields of second and fourth Liberty bonds and of Treasury bonds of 1947-1952
calculated to date of maturity (not to first callable date).
54
REPORT OF THE SECRETARY OF THE TREASURY
The schedules of this table indicate that the yields of railroad,
municipal, and Government bonds had similar trends durmg the
last fiscal year, rising from June until November, 1925, and then fall-
incr until May, 1926, and rising slightly thereafter. Over the whole
penod since June, 1924, the general tendency of all yields has been
slightly downward. The long-terms financing in March, 1926,
occurred, therefore, at an opportune time, when interest rates were
low and falling, and the Government was able to float its require-
ments at a rate lower than the current yield of its outstanding bonds
and to refund the Treasury notes into bonds bearing a 1 per cent
lower rate.
Changes in certain important factors in the supply of and demand
for long-term investment capital during the last two fiscal years are
shown in the accompanying table:
Long-term investment capital
[In millions of dollars; i. e., 000,000 omitted]
Calendar year
and month
Demand (new security issues)
Supply
Fis-
cal
year
Total
cor-
porate
Total
munic-
ipal
Foreign
govern-
ment
1
Real
estate
New in-
corpora-
tions,
author-
ized
capital
New
York
State
savings
deposits
Life
insur-
ance
sales
in-
dus-
trial
divi-
dend
pay-
ments
Total
interest-
bearing
debt of
United
States
1924
July
279
288
312
418
243
373
509
504
353
483
296
379
423
241
311
371
376
518
615
414
480
443
453
472
474
112
121
93
96
120
74
121
78
110
107
188
145
123
87
1 121
85
72
1 166
I
! 75
1 146
119
118
142
146
90
10
48
42
214
102
91
.8
63
28
8
6
140
145
9
62
40
138
0
25
4
22
83
42
27
13
27
19
40
31
38
47
48
31
53
52
40
108
60
36
52
91
66
58
54
41
50
42
50
83
69
572
399
479
543
574
735
678
431
806
887
616
1,003
1,067
973
572
585
1,241
1.020
1,040
2,675
748
1,012
867
757
455
3,267
3, 261
3,302
3,308
3,318
3,388
3,409
3,418
3,462
3,469
3,464
3,517
3, 502
3, 503
3,487
3,529
3,533
3,603
3,594
3,625
3, 671
3, 669
3, 668
3,727
3,721
591
508
488
572
545
744
560
611
703
716
738
695
692
651
591
669
637
804
573
641
791
744
736
750
702
55
45
42
64
30
52
65
44
52
61
30
41
59
46
45
66
32
55
68
46
53
63
31
62
48
20,990
September
October
20,982
20,978
1925.
November
December
1925
January
20, 951
20,711
20, 789
February
March
April
May
20, 658
20,608
20,605
20,602
20,210
Julv
20,198
August
20, 165
September
October
20, 143
20, 140
1926.
November
December
1926
January
20, 139
19,982
20, 019
February
20,015
19,814
April .
19,808
1927.
May
Uune
July
19,803
19,384
19, 357
While these factors are not inclusive, they do indicate that the
volume of long-term financing in the fiscal year 1926 exceeded greatly
that of 192.5, boing particularly heavy both in corporate and municipal
lines in the period from December, 1925, until the end of June, 1926.
EEPOET OF THE SECRETAKY OF THE TREASURY 55
This swelling volume of demand for permanent capital reflected the
prosperity and expansion that have prevailed in business. But so
prolific have capital accumulations been that an excess has found its-
way into foreign securities and real estate operations in unprecedented
amounts. The demand for fixed capital in industry has not expanded
as much as might ordinarily be expected, on account of the surplus of
capital equipment erected during the war, the increased efficiency in
the use of equipment through better organization and hand-to-mouth
practices, and the falling price level.
Moreover, the supply of capital has been growing at an accelerated
rate. Steady employment at high wages but with falling cost of
living has resulted in a rapid increase in savings deposits. This is
the more remarkable when it is remembered that installment buying
of merchandise has made great inroads on the normal increase of
savings accounts, for the practice of buying and then paying from
current earnings removes the occasion of accumulating funds in the
savings bank in advance of purchase. The rapid expansion of life-
insurance sales is similar evidence of high prosperity and thrift. All
savings kept on deposit or put into insurance reach the investment
market. High general prosperity has also put corporate dividend
payments on a new level. A further important factor of supply of
capital is the funds released by the Government's policy of reducing
its debt, a reduction amounting to $841,000,000 from July, 1925, to
July, 1926.
The net result of all influences affecting the demand and supply of
long-term capital the past two fiscal years has been an excess of
supply, permitting the market rate to fall and, as said above, the
flotation of the Treasury bonds of 1946-1956 at the favorable rate of
3/€ per cent.
OBLIGATIONS OF FOREIGN GOVERNMENTS
The total principal amount of obligations of foreign governments
originally held by the Treasury was $10,338,058,352.20. For a state-
ment showing the principal amount of such obligations by countries
and classes and payments on account of principal thereof see Table
54, page 579, of this report.
Debt-funding agreements executed pursuant to the authority of
the act of February 9, 1922, as amended by the act of February 28,
1923, and as further amended by the act of January 21, 1925, provid-
ing for the funding of $9,811,094,094.03, principal amount of obliga-
tions of foreign governments held by the Treasury, have been con-
cluded with the Governments of Belgium, Czechoslovakia, Estonia,.
Finland, France, Great Britain, Hungary, Italy, Latvia, Lithuania,
Poland, Rumania, and Yugoslavia.
56
REPORT OF THE SECRETARY OF THE TREASURY
There is set out below a -statement showing by countries the prin-
cipal amount of obligations funded and the amount of accrued interest
thereon included in the principal of the debt as funded:
Country
Belgium
Ciecha'ilovakia
Estonia
Finland
France
Great Britain..
Hungary
Italy
Latvia
Lithuania
Poland
Rumania
Yugoslavia
Date of
agreement
Original
principal (net)
Aug.
Oct.
Oct.
May
-Vpr.
June
.Vpr.
Nov.
Sept.
Sept.
Nov.
Dec.
May
18, 1925
13, 1925
28. 1925
1, 1923
29. 1926
19, 1923
25. 1924
14. 1925
24, 1925
22, 1924
14, 1924
4. 1925
3. 1926
$377, 029,
91.879,
12, 066,
8, 281,
3, 340, 516,
4, 074, 818,
1,685,
1, 647, 869,
5, 132,
4, 981,
159, 666,
36, 128,
51, 037,
570.06
671. 03
222.15
926. 17
043.72
358.44
835.61
197. 96
287. 14
628.03
972. 39
494. 94
886. 39
9,811,094,094.03
Funded interest
$40, 750,
23. 120,
1,763,
718,
684, 483,
525, 181,
253,
394, 130,
642,
1,048,
18, 893,
8, 461,
11,812,
429. 94
328.97
777. 85
073.83
956.28
641. 56
164. 39
802.04
712. 86
371.97
027. 61
505. 06
113.61
1,711,259,905.97
Funded debt
$417, 780,
115,000,
13, 830,
9, 000,
4, 025, 000,
4, 600, 000,
1,939,
2, 042, 000,
5, 775,
6, 030,
178, 560,
44, .590,
62, 850,
000. 00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
11, 522, 354, 000. 00
The funding agreements with Estonia, Finland, Great Britain,
Hungary, Lithuania, Poland, and Rumania have been ratified by
the United States and by their respective Governments and the
new obligations provided for in the funding agreements have been
delivered to the United States. The agreements with Belgium,
Italy, and Latvia have been ratified by the United States and the
several debtor Governments. The agreement with Czechoslovakia
has been approved by the United States. The commission has not
yet been notified that action to ratify the agreement has been taken
by the Czechoslovak Republic. The agreements with France and
Yugoslavia have been approved by the House of Representatives,
but not by the Senate. The French Government has not yet ratified
the agreement with France, while the agreement with Yugoslavia
has been approved by that Government.
For brief reports regarding the negotiations and execution of the
funding agreements, see the annual reports of the World War Foreign
Debt Commission contained in the annual reports of the Secretary
of the Treasury for the fiscal years ended June 30, 1922, 1923, 1924,
and 1925, and pages 57 to 79 of this report.
There is set out below a statement showing the payments on
account of principal of the funded obligations up to November 15,
1926:
Cash
In United States obligations
Country
Face amount
Accrued in-
terest to date
of payment
Total
Belgium
$2,100,000.00
3,000,000.00
92, 000. 00
35, 723. 62
19, 690. 50
$2,100,000.00
3,000,000.00
137,000.00
70, 000, 000. 00
19, 690. 50
5, 000, 000. 00
60, 225. 00
200, 000. 00
200, 000. 00
Czechoslovakia
Finland
$44, 850. 00
69, 742, 700. 00
$150.00
221, 576. 38
Great Britain
Hungary
Italy
5, 000, 000. 00
Lithuania
60, 225. 00
200,000.00
200,000.00
Rumania
Yugoslavia
5, 707, 639. 12 , 74, 787, 550. 00
221, 726. 38
80,716,915.50
REPORT OF THE SECRETARY OF THE TREASURY
57
There is set out below a statement showing the payments on
account of interest on the funded obligations up to November 15,
1926:
In bonds
of debtor
Govern-
ments
Cash
In United States obligations
Country
Face amount
Accrued in-
terest to date
of payment
Total
$1, 740, 000. 00
50,000.00
783, 594. 28
49, 761, 339. 43
103, 245. 06
87, 000. 00
227, 706. 76
1, 750, 000. 00
$1, 740, 000. 00
Estonia
50, 000. 00
Finland
$154, 750. 00
428, 742, 600. 00
$550. 72
1, 376, 060. 57
938, 895. 00
Great Britain .
479, 880, 000. 00
Hungary
.$43, 555. 50
146, 800. 56
Latvia...
87, 000. 00
135, 225. 00
362, 931. 76
Poland
1, 750, 000. 00
178, 780. 50
54,502,885.53
428, 897, 350. 00
1, 376, 611. 29
484, 955, 627. 32
For a detailed statement of the principal amount of the indebted-
ness of foreign governments as of November 15, 1926, payments
made on account of the principal thereof, and the interest accrued
and unpaid thereon as of the last interest payment date prior to or
ending with November 15, 1926, see Table 54, page 579.
A statement of the payments made on account of interest on obli-
gations of foreign governments, funded and unfunded, appears as
Table 55, page 580.
WORLD WAR FOREIGN DEBT COMMISSION
The present members of the World War Foreign Debt Commission
are:
Andrew W. Mellon, Secretary of the Treasury, chairman.
Frank B. Kellogg, Secretary of State.
Herbert Hoover, Secretary of Commerce.
Reed Smoot, United States Senator.
Theodore E. Burton, Member of the House of Representatives.
Charles R. Crisp, Member of the House of Representatives.
Richard Olney, formerly Member of the House of Representatives.
Edward N. Hurley, formerly chairman of the United States Ship-
ping Board.
Garrard B. Winston, Undersecretary of the Treasury, is secretary
of the commission.
There have been no changes in the membership of the commission
since the publication of the last annual report.
Summary oj activities
There is set forth in the annual reports of the Secretary of the
Treasury for the fiscal years ended June 30, 1922, 1923, 1924, and
1925, a complete report of the activities of the commission to
58 REPORT OF THE SECRETARY OF THE TREASURY
November 15, 1925. The present report covers the period from
November 15, 1925, to November 15, 1926.
At the time of the creation of the commission the United States
held obligations of foreign governments, representing indebtedness
incurred in connection with the World War or arising out of conditions
resulting therefrom, aggregating in principal amount approximately
$10,102,000,000. Debt-funding agreements have been concluded
with Belgium, Czechoslovakia, Estonia, Finland, France, Great
Britain, Hungary, Italy, Latvia, Lithuania, Poland, Rumania, and
Yugoslavia. These settlements represent $9,811,094,094.03, principal
amount of the obligations held by the United States, or more than 97
per cent of the total principal amount of obligations held when the
commission was created.
Tlie World War Foreign Debt Commission was created by Congress
February 9, 1922, for a period of three years, and in 1925 its life was
extended for an additional two years. The existence of the World
War Foreign Debt Commission terminates, therefore, on February 9,
1927. The commission has practically completed the work intrusted
to it by Congress, and I do not now believe that its life need be
extended. Greece has not funded its debt, but has requested addi-
tional advances under credits heretofore established. In this case
the commission has taken the position that it will not make such
advances without specific authority from Congress, and the matter
is now before that body. If the occasion should subsequently arise
to undertake negotiations covering debts not yet funded, the matter
might be handled informally by the Secretary of the Treasury with
such former members of the debt commission as are in Washington
and reported direct to Congress.
The principles applied by the debt commission in the negotiations
consummated since the last annual report of the Secretary of the
Treasury are discussed in the statements made by the Secretary of
the Treasury to the Ways and Means Committee of the House of
Representatives under date of January 4, 1926, and May 20, 1926,
copies of which appear as Exhibits 12 and 36, pages 206 and 251, of
this report, and in various press releases, which appear as Exhibits
13, 15, 24, 30, 32, and 34, pages 213, 216, 230, 241, 243, and 249,
respectively. It seems unnecessary, therefore, to discuss in detail
again the principles of these settlements, but it might be well to
repeat the general considerations which in the opinion of the debt
commission controlled the terms of payment.
After the war the United States held large amounts of demand
obligations of many nations in Europe. These notes of hand
could not be paid according to their terms, and it became necessary
for the United States to make adjustments so that definite settlements
could be had. The debt commission was established by Congress and
undertook the negotiation of funding agreements. The poUcy
REPORT OP THE SECRETARY OP THE TREASURY 59
pursued was to treat each debtor nation on the basis of its particular
capacity to pay the debt. The first element was time. It would
have been preferable, of course, to have the matter out of the way
within a generation, but to insist upon such a period, brief as nations
go, would have been out of the question. This very extension of
time has been criticized as not an indulgence but a hardship to the
debtor nation. No one likes to pay a creditor over a 62-year period.
But if the whole debt can not be paid on demand, no other course was
open except to extend the period of repayment. This was done in the
first settlement, that with England, and similar extensions have
been granted to all other nations. The second problem was the
amount to be paid in the earlier years. It is these years that" are the
most difficult, because postwar readjustments are still incomplete,
and it is here that America has been most lenient. No debtor nation
will deny that the payments provided for these earlier years are
well within its capacity. The third question was the later years.
No one can insure the future, but given normal conditions, it is
believed a true balance has been held between the duty of the debt
commission to the American taxpayer and fairness toward those
nations to which was extended aid during and after the war. The
debts have not been canceled, but the impossible has not been
demanded. Since these settlements, England's excepted, have but
recently been completed, the American debt has meant practically
nothing to continental Europe in the eight years since the armistice,
and it can not become too heavy a load in the next few years. There-
after, much depends upon the progress of the world. With peace and
the development of trade internally and externally, these settlements
are quite workable. The principal fact is that settlements have been
made and a fair trial can be had, not on theory but in practice. The
debtor nations know what should be provided in their budgets and
uncertainty is eliminated.
From abroad has come again the suggestion that the indebtedness
of the nations of Europe between themselves and with the United
States should be canceled or should be pooled and a general joint
settlement take place. There has been some repetition of this sug-
gestion in the United States, and my position on the question of debt
cancellation appears in a letter from me to Mr. Frederick W. Peabody,
of July 14, 1926, Exhibit 40, page 259. This suggestion has been
presented in various forms, but upon analysis its essential basis seems
to be a belief that the advances of the United States during the war
were in the nature of subsidies and were, therefore, not loans at all,
or that these advances were contributions to a joint undertaking and
should be settled jointly by clearing one against the other. The
position of the debt commission that the advances were loans to be
60 REPORT OF THE SECRETARY OF THE TREASURY
repaid and that each debt must be funded on the basis of the capacity
to pay of the particular debtor has been the consistent policy of the
United States from the first. Until the war ended no intimation was
made that these advances were subsidies, or that they were contribu-
tions to a joint cause, or that they would be the subject of a general
pooling after the war.
Contemporaneous construction by the parties involved is the most
conclusive evidence of the true meaning of their actions. In this
connection the quotation following is interesting. On April 5, 1917
(war was declared April 6, 1917), our ambassador was instructed at
the instance of the Secretary of the Treasury to learn from the French
Ministei" of Finance the amount of loan or credit that would most
assist the French Republic during the next six months. The ambas-
sador immediately conferred with the French Premier, Ribot, who
had been for several years previous Minister of Finance. Mr.
Thierry was then Minister of Finance, but was out of Paris. Our
ambassador had a conference with the Premier and wired the Secre-
tary of State on April 11, 1917:
The Premier personally expressed the hope to me that no resolution would be
introduced or debated in Congress tending to make a gift to the Government of
France from the United States however much the sentiment of good will prompt-
ing it might be appreciated bj^ the French people. In view of France's action in
the Franklin agreements in the years 1782 and 1783 in the time of our own distress,
I hope I may be permitted to suggest that it would appear to be a generous and
gracious thing should such an arrangement prove feasible in making the French
loan at this time to stipulate that no interest shall be charged or be payable on
such a loan during the war and thereafter for a limited number of years.
An article in Le Matin of June 28, 1926, purports to contain copies
of cables between Ambassador Jusserand and the French Premier
about the time when the first advances were being made. The
following are translations of the dispatches :
DiPLOMATiE Paris:
April 12, 1917.
I have just had an interview with the Secretary of the Treasury regarding our
financial needs. The amount of $133,000,000 a month drew no observation from
him; the amount of $218,000,000, which would be reached by adding our expenses
outside the United States, appeared high to him, but it is not impossible that we
shall get it.
As one of our allies has made some remarks on the necessity of equal treatment
for all, under the pretext that the contrary would be humiliating, special favors
for France are no longer spoken of, although it is possible that more will be heard
of this later.
The rate of interest will be the same that the Government of the United States
will be able to obtain, probably 33^ per cent, with a guarantee that if subsequent
loans are made at a higher rate, the same interest will be paid to the holders of
the first loan.
REPORT OF THE SECRETARY OF THE TREASURY 61
This interest, by the terms of the law, shall be paid by all the allied countries
concerned. As to the term for repayment, I mentioned (supposing this to be
desirable) that of 15 years. Mr. McAdoo said that he had no objection to that.
(Signed) Jtjsserand.
April 17, 1917.
I shall do my best in the matter of repayment in 2.5 years, but I can not refrain
from pointing out how much easier things would have been made for me if,
instead of speaking, as was done, in the imprecise terms, in your telegram No.
536, of a term "as long as possible," the department had told me 25 years, since
it had a settled idea on this subject.
I believed that I had good reason to suppose that 15 years would be consid-
ered satisfactory.
I can not too urgently recommend the utmost possible precision in all these
practical and urgent affairs with which I am now occupied.
(Signed) Jusseraxd.
Paris, April 19, 1917.
French Ambassador, Washington:
The Minister of Finance insists that the term of amortization shall be 30
years, a normal and minimum term in such operations. While thoroughly
understanding the difficulties indicated in your telegram No. 477, I transmit
the pressing communication which I have received.
(Signed) Ribot.
The foregoing shows that no idea of subsidy existed at the time
the loans were made.
The principles upon which the American Treasury acted in deter-
mining the purposes for which war loans should be made are described
in an article by former Assistant Secretary of the Treasury Rathbone
in Foreign Affairs for April, 1925, as follows:
The financial requirements of each of the allied and associated Governments
fell into three classes — according as they arose at home, in allied or associated
countries, or in neutral countries. In general, the view of the United States
Treasury was that the first class could and should be met by the Government
concerned through taxation or domestic loans; that as regards the second class,
each country (if necessary) should stand ready to provide or arrange finance for
the requirements of its allies for expenditures within its borders; and that expend-
itures in neutral countries should, for reasons of finance, be reduced to a mini-
mum and should be met under some equitable arrangement by those countries
able to provide the necessary finance in the required currency.
For its own war purposes in Great Britain, France, and Italy, the United States
did not borrow pounds or francs or lire. Our Treasury was obliged to procure
these currencies for the use of our Army abroad. We bought pounds, francs,
and lire from the Governments of Great Britain, France, and Italy, and made
payment therefor in dollars here. The dollars thus obtained by Great Britain,
France, and Italy were applied by them toward the cost of their war purchases
here, and thus the amount of the dollar loans required by these countries from
our Treasury was diminished in a corresponding sum. * * *
The United States financed its own requirements in neutral countries. To
some extent our loans to support sterling exchange (which are referred to here-
after) provided the means necessary to pay for British purchases in neutral
countries, and to the extent they did not suffice Great Britain obtained for
62 REPORT OF THE SECRETARY OF THE TREASURY
herself the neutral currencies she required. Direct aid was required, however,
chiefly by France and Italy, to finance much of their necessary war purchases in
neutral countries. It was evident that the United States or Great Britain or
both would have to find much of the finance required by France and Italy in
neutral coiuitries. There was no particular principle under which all such
finance should be furnished by one of those countries and none b}' the other,"
both the United States and Great Britain were financially able to assume and
to carry the burden. Great Britain before we entered the war had supplied'
such neutral finance as France and Italy required and had not been able them-
selves to supply. Until we declared war on Germany the war had been the
Allies' war, not ours, and our Treasury therefore could not accept the theory
that, because before we entered the war Great Britain alone had furnished the-
assistance required by France and Italy for finance in neutral countries, it was
our duty alone to furnish such assistance after we entered the war.
Various considerations had to be taken into account in determining how and
to what extent the United States should aid in financing, in neutral countries,
necessary requirements of France and Italy arising from the time we entered
the war. Great Britain, as the great creditor nation, had available facilities for
obtaining neutral finance which we, at that time a debtor nation, did not have.
The apparent large lialance of trade in favor of the United States, after there
had been eliminated therefrom the United States exports paid for by the dollars
which we* had loaned the allied Governments, became a heavy adverse balance
against the United States, and this seriously handicapped the ability of the
United States to furnish financial aid to allied Governments in neutral countries.
Through its pre-war commercial interests and its well-established war organi-
zations. Great Britain was actually in a better position than we were in, or
could put ourselves in, to handle the obtaining and utilizing of such neutral
finance. Great Britain had capital interests in manv neutral countries, and for
years the ocean transportation of exports and imports of neutral countries had
been largely carried on by British ships. Between April, 1917, and November,
1918, as compared with the currencies of Sweden, Norway, Denmark, Holland,
Switzerland, Spain, India, Japan, the Argentine, Chile, Peru, and Bolivia, the
dollar was at a discount and generally at a very heavy discount, and the pound
was at an even heavier discount than the dollar. Consequently, purchases in
these countries, if paid for in dollars or in pounds at their current exchange value,
meant costs largely in excess of the high war prices as measured in terms of the
currencies of these countries. If we alone were to finance these neutral require-
ments, it was as a practical matter impossible for us to delegate to Great Britain
the control of the expenditure of our dollar loans for the neutral requirements
of France and Italy for which they were unable themselves to provide. For
the reasons elsewhere referred to, from the financial standpoint it was to our
interest, and to the interest of Great Britain as well, that purchases which France
and Italy could make in the United States or in Great Britain should be made
there rather than in neutral countries. After we entered the war, in view of
the considerations mentioned, Great Britain continued to furnish in the first
instance most of the neutral finance required by France and Italy; but the
United States Treasury, being prepared to bear its fair portion of the burden
of securing finance for France and Italy in neutral countries, effected arrange-
ments by which, after we entered the war, such purchases were ultimately in
part financed by our dollar loans to France and Italy. The cost of the neutral
finance so found after we entered the war was ultimately furnished, in the case
of Italy, approximately one-half by the United States and one-half by Great
Britain, and in the case of France something over one-half by the United States-
and the balance bv Great Britain.
REPORT OF THE SECRETARY OF THE TREASURY 63
Having thus fixed its general policy as to which countries should be the
lenders, the United States Treasury formulated its general policy as to the allied
Governments which should be the borrowers. This was, that our loans should
be made to each allied Government to meet the cost of commodities purchased
here for its own use; that we would not loan to one Government the dollars
needed for purchases to be made by or on behalf of another Government, and
that neither the financial condition of the borrower nor questions of political
expediency in our own country should be factors in determining the Govern-
ment to which our dollars should be loaned and whose obligation we would
consequently take.
The question of a general joint adjustment of all debts arising out
of the war did not arise until after the armistice. It first appears to
have been informally suggested by the British Chancellor of the
Exchequer to Assistant Secretary of the Treasury Crosley, who
was then in Europe, repudiated by him and apparently dropped for
the time being.
On January 15, 1919, Mr. Edouard de Billy, French Deputy High
Commissioner, wrote Secretary of the Treasury Glass as follows:
You are undoubtedly aware that several times lately I have had occasion to
■call the attention of Mr. Leffingwell and Mr. Rathbone to the question of defi-
nitely settling the status of the advances made up to the present by the United
States Treasury against the demand obligations of the French Government.
The procedure to be followed in this connection appears of such importance
to my Government that I deem it necessary, at the request of Mr. Klotz, to
give you in writing the French Government's point of view as already given
verbally to Messrs. Leffingwell and Rathbone.
Although prepared to abide by your final decision, my Government is desirous
of submitting to your kind consideration the reasons for which it appears that
the question of the reimbursement of the debts of the Allies can be satisfactorily
settled onh' at a conference to be held in Paris during the peace negotiations.
The financial relations among the Allies, brought about by the war, are closely
interwoven. The British and French Governments have both borrowed from
the United States; but France is also a debtor of England. The French and
Italian Governments have both borrowed from the United States; but Italy
is also a debtor of France. Although a debtor of the United States and of Great
Britain, France has loaned about 10,000,000,000 francs to its aUies.
It appears to my Government that, if the future adjustment of such mutual
accounts is to be made the object of separate and distinct agreements, privileged
situations might arise to the prejudice of some of the governments concerned.
If, on the contrary, all questions of debit and credit were considered at the same
time, and as a whole, it would be easier, according to equity, to settle the respec-
tive situation of these governments.
On the other hand, it appears that the possibility of reimbursement by certain
governments may be deeply affected by the conditions of the Treaty of Peace,
especially by the indemnities to be received eventually from Germany and, in
the case of some countries, as Serbia for instance, by the distribution of territory
and the establishment of new boundary lines.
In short, the French Government looks upon these questions as concerning
all the Allies and demanding a general and simultaneous settlement, in which,
at the same time, would be taken into consideration the respective positions
of each of the interested governments toward the others, and the reaction which
64 REPORT OF THE SECRETARY OF THE TREASURY
the peac-e conditions might have on the financial possibilities of these Govern-
ments.
My Government would consider it a favor to know the views of the Treasury
on this most complex problem, especially as in the beginning my Government
had understood that its views corresponded to those expressed on various
occasions by the representatives of the Treasury.
On January 29, 1919, Secretary of the Treasury Glass replied to
Mr. de Billy's letter of January 15, 1919, as follows:
I have received your letter of the 15th instant, in which you set forth certain
considerations in regard to the formulation of the scheme of repayments by your
Government of loans made to it by the United States.
I am entirely in accord with the view that the scheme should take into account
the recoveries from the enemy which are likely to be effected by your Govern-
ment. I do not, however, feel that these considerations lead to the conclusion
that discussion of the plans for repayment of debts due to the United States can
advantageously be undertaken in Paris in conjunction with the Peace Conference.
The conclusion I draw therefrom is rather that the United States should be
willing to postpone discussions until the probable amount, time, and form of
recoveries from the enemy can be estimated and the financial position of the
receiving Government considered in the light of this information.
I have heretofore stated to representatives of various of the allied Govern-
ments, that, if they desire, I am quite ready to discuss with them the questions
relating to any plan for the repayment of their obligations held by the United
States. This I am prepared to do as I do not think the arrangements between
the United States and the Governments to which it has made advances can
well be uniform or should necessarily be entered into simultaneously. On the
other hand, I have no wish to press the immediate consideration and discussion
of these questions upon any Government.
I recognize that in case a country has borrowed of more than one of the Govern-
ments associated in the war, it would be difficult to reach an equitable arrange-
ment unless the arrangements which could be made by the borrowing country
with the other associated Governments which had lent it important amounts
were taken into account, but I can not see that any country is concerned in such
arrangements other than the borrowing country and the particular countries
which have made advances to it. I agree with j'ou that where two or more of the
associated Governments have made loans to the same Government, none should
seek any unfair priority or advantage over others in terms of repayment, and
I am confident that all the associated Governments will be animated by this
principle. I assume that consideration of the advances to Russia must for a
time be postponed and the other cases, where both the United States and France
made advances to the same Government, are few in number, and only Great
Britain, besides the United States, has made loans to France, and I do not
anticipate that the treasuries of the respective countries will have any difficulty
in arriving at arrangements which will be equitable and free from discrimination.
After giving the views of your Government as expressed in your letter
careful consideration (the more so in view of the cordial expression of readiness to
accept the conclusion of the United States Treasury upon the question^, I feel
that discussion of the scheme of repayment of debts due to the United States
should take place in Washington as soon as possible after the financial terms
of the peace settlement have been decided, or earlier in the case of any Govern-
ment which so desires. I should expect that whenever such discussions are ini-
tiated by any country that country will join with me in the desire that any other
REPORT OF THE SECRETARY OF THE TREASURY 65
associated governments which shall have made loans to the country in question
will be asked at the same time to discuss with the borrowing country the scheme
for the repayment of the debt held by such other associated Government, and
that no final conclusion would be arrived at in respect to the obligations,
acquired during the war, of any one of the associated Governments without the
previous knowledge of all the associated Governments which have during that
period made loans of an important amount to the Government in question.
Mr. J. Simon, of the French High Commission at Washington,
wrote Secretary Glass on February 5, 1919, as follows:
The attention of my Government has been called to an article published recently
in the Washington papers, according to which President Wilson is said to have
been approached by French officials with a view of having the United States
share the war expenditures of the Entente in the same proportion as if your
Government had entered into the war in August, 1914.
The Prime Minister of France has cabled me in order to deny most emphati-
cally that such a suggestion has ever been made to President Wilson by any
French official.
On March 8, 1919, Assistant Secretary of the Treasury Rathbone
wrote to Mr. de Billy, Deputy French High Commissioner at Wash-
ington, as follows:
I learn that at a meeting of the Financial Drafting Committee appointed by
the Executive Council of ten at the peace conference one of the allied govern-
ments having proposed as one of the financial questions affecting peace, the
reapportionment and consolidation of war debts, this proposal was strongly
supported by the representatives of your Government, Mr. Klotz taking the
position that this question must be discussed while the delegates of all the powers
are in Paris. While I understand that the drafting committee did not report
this question as one to be dealt with in the peace treaty, I understand that it
did report to the Executive Council as a question which had been raised, "Inter-
allied agreements as to the consolidation, reapportionment, and the reassumption
of war debts."
I need not dwell on my surprise at the position taken by Mr. Klotz on behalf
of your Government, particularly in view of your letters of December 27, 1918,
and February 5, 1919, as to which I testified before the Ways and Means Com-
mittee of the House of Representatives of the Congress at the recent hearing on
the Victory Liberty bond bill.
I have, however, to state most emphaticallj^ that the Treasury, which, as
you are aware, is clothed by the Congress with full authority to deal with foreign
loans which it has made, will not assent to any discussion at the peace conference,
or elsewhere, of any plan or arrangement for the release, consolidation, or reap-
portionment of the obligations of foreign Governments held by the United
States.
You will appreciate also that the Treasury can not contemplate continuance
of advances to any alUed Government which is lending its support to any plan
which would create uncertainty as to its due repayment of advances made to it
by the United States Treasury.
I should be obliged if you would communicate to your Government the views
of the Treasury as expressed above, and I shall be anxious to receive its reply.
Assistant Secretary Rathbone was advised by Mr. de Billy on
March 10, 1919, that the contents of his letter had been transmitted
to his Government by cable.
66 REPORT OF THE SECRETARY OF THE TREASURY
On March 18, 1919, Mr. de Billy wrote Mr. Eathbone as follows:
By your letter of March 8 you informed me that at a meeting of the financial
drafting committee in Paris one of the allied Governments having proposed,
as one of the questions affecting peace, the reapportionment and consolidation
of war debts, this proposal was strongly supported by the representatives of
the French Government.
You expressed your surprise at the position taken by Mr. Klotz, and you
requested me to communicate to my Government the views of the Treasury
concerning this question.
I have just received an answer from Mr. Klotz by cable, the gist of which I
give you below:
The proposition referred to was presented to the commission encharged by
the executive committee with the study of the financial questions at a time
when the r61e of this commission was reduced to the establishment of a list of
the questions to be submitted to the executive committee, which had subse-
quently to decide which questions should be retained, and in such case, to whom
their examination should be confided. The Italian delegation of the said com-
mission having proposed that the question of the division among the allies
of the total of the war expenses be inscribed on this list and a discussion having
begun on this point, the French delegate asked that the Itahan proposition be
not discarded a priori.
The purpose of the commission was purely and simply to make a list of the
questions which the representatives of the Powers now assembled in Paris might
find it expedient to consider either in the general meetings or in meetings hmited
to the governments directly interested; the inscription of the Itahan proposition
on this list would not in any way preclude the decision of the executive committee.
Furthermore, Mr. Klotz points out that with reference to the attitude of the
French officials toward the principle involved in this question, the French Gov-
ernment never made any declaration favoring either the Italian proposition or
any other similar proposition reproduced in the press or in the French chambers.
It is to be noted that Assistant Secretary Rathbone's letter of
March 8, 1919, to Mr. de Billy, Deputy French High Commissioner,
stated that the Treasury could not contemplate continuance of
advances to any allied government lending its support to a plan which
would create uncertainty as to its due repayment of advances made
to it by the United States Treasury. Mr. de Billy in his reply of
March 18, 1919, removed this uncertainty as to due repayment.
The cash advances of the United States to France subsequent to
March 18, 1919, aggregated S690,000,000, and in addition there was
an indebtedness of $407,000,000 incurred by France to the United
States in the purchase of war stocks, a total of approximately
$1,100,000,000.
The correspondence then shifted to England. On November 8,
1919, Mr. Basil P. Blackett, British financial representative in Paris,
wrote to Assistant Secretary of the Treasury Rathbone, also in Paris,
as follows:
I have now had an opportunity of discussing with the Chancellor of Exchequer
the question of the conversion of the demand obhgations of the British and
allied Governments held by the United States Treasury into the form of long-
term bonds. The Chancellor of Exchequer desires me to say that, on the under-
REPORT OF THE SECRETARY OF THE TREASURY 67
standing that such conversion will not in any way prejudice the general question
of interallied indebtedness, to the ultimate settlement of which along broad
lines he attaches great importance, he is of opinion that a satisfactory solution
of the particular question of conversion of demand obligations can quickly be
reached along the general lines tentatively proposed in the memorandum which
you gave me on Saturday, November 1st. As I stated to you in Paris, the
Chancellor of Exchequer is prepared to give analogous treatment to the obliga-
tions of allied governments held by the British Treasury. In this connection
he desires me to express his entire concurrence in your view that their commu-
nity of interests as the two chief creditors makes close cooperation between the
British and American Treasuries of vital importance in these matters.
It is his strong hope that the two treasuries will work together with a view to
finding the right solution for the important problems which have arisen and
will arise in regard to questions of interallied indebtedness and German reparation.
*******
On November 18, 1919, Assistant Secretary Rathbone replied,
stating in part:
I note that the chancellor attaches great importance to the ultimate settlement
along broad lines of the general question of interallied indebtedness. Just what
is meant by that expression I do not know, but feel confident there is no such
question now under discussion or consideration. The United States Treasury
has in no wise changed the views it has expressed, or modified the position that it
has taken in the past, and regards the several obligations of the various allied
Governments held by the Government of the United States as representing the
debt of each to the United States.
Od February 4, 1920, Mr. Blackett wrote Mr. Rathbone and
referred to the interallied debt problem, saying:
They have more than once suggested informally to representatives of the
United States Treasury that steps should be taken by the two Governments
in concert to find some large solution of this problem, and as you are aware the
Chancellor of the Exchequer expressed himself ready to take any steps towards
relieving the Governments which are debtors to the British Government of the
burden of their debts which the United States Treasury might feel able to
propose in regard to the obligations of the Governments which it holds. The
suggestions have not hitherto been placed on formal record and it is for the pur-
pose of formal record that they are mentioned here.
On February 9, 1920, the British charg^ d'affaires at Washington
handed Assistant Secretary Lefl&ngwell a message from the Chan-
cellor of the Exchequer in which the following appeared :
* * * we should welcome a general cancellation of intergovernmental war
debts. The moral effect would even be a greater practical change and fresh hope
and confidence would spring up everywhere. The existence of these international
debts deters neutrals from giving assistance, checks private credits, and -will, I
fear, prove a disturbing effect in future international relations.
On March 1, 1920, Secretary Houston sent the British charg4
d'affaires a reply for transmission to the chancellor:
Your recent message through the British Embassy in which among other
things you suggest a general cancellation of intergovernmental war debts, has
been received, and Rathbone has transmitted a copy of the communication
68 REPORT OF THE SECRETARY OF THE TREASURY
sent him by Blaekett dealing with the funding of the demand obligations of the
allied Governments held by the United States and England, respectively, in
which the same subject is raised.
* ^: * * * * *
As to the general cancellation of intergovernmental war debts suggested by
you, you will, I am sure, desire that I present my views no less frankly than you
have presented yours. Any proposal or movement of such character would,
I am confident, serve no useful purpose. On the contrary it would, I fear, mis-
lead the people of the debtor countries as to the justice and efficacy of such a
plan and arouse hopes, the disappointment of which could only have a harmful
effect. I feel certain that neither the American people nor our Congress whose
action on such a question would be required is prepared to look w^ith favor upon
such a proposal.
Apparently there are those who have been laboring for some time under the
delusion that the inevitable consequences of war can be avoided. As far back as
January a year ago, Ijefore it could possibly be foreseen whether any measures
were necessary other than the adoption of sound economic policies, various schemes,
including that of a cancellation of intergovernmental war debts, were launched.
Of course I recognize that a general cancellation of such debts would be of advan-
tage to Great Britain and that it probably would not involve any losses on her
part. As there are no obligations of the United States Government which
would be canceled under such a plan, the effect would be that, in consideration
of a cancellation by the United States Government of obligations which it
holds for advances made to the British Government and the other allied
Governments, the British Government would cancel its debts against France,
Italy, Russia, and her other allies. Such a proposal does not involve
mutual sacrifices on the part of the nations concerned. It simply involves a
contribution mainly by the United States. The United States has shown its
desire to assist Europe. Negotiations for funding the principal of the foreign
obligations held by the United States Treasury, and for postponing or funding
the interest accruing during the reconstruction period are in progress. Since
the armistice this Government has extended to foreign governments financial
assistance to the extent of approximately four billions of dollars. What this
Government could do for the immediate relief of the debtor countries has been
done. Their need now is for private credits. The indebtedness of the allied
Governments to each other and to the United States is not a present burden
upon the debtor Governments, since they are not paying interest or even, as far
as I am aware, providing in their budgets or taxes for the payment of either
principal or interest. At the present time the foreign obligations held by the
Government of the United States do not constitute a practical obstacle to obtain-
ing credits here, and I do not think that the European countries would obtain
a dollar additional credit as a result of the cancellation of those obligations. The
proposal does not touch matters out of which the present financial and economic
difficulties of Europe chiefly grow. The relief from present ills, in so far as it
can be obtained, is primarily within the control of the debtor Governments and
peoples themselves. Most of the debtor Governments have not levied taxes
sufficient to enable them to balance their budgets, nor have they taken any
energetic and adequate measures to reduce their expenditures to meet their
income. Too little progress has been made in disarmament. No appreciable
progress has been made in deflating excessive issues of currency or in stabilizing
the currencies at new levels, but in Continental Europe there has been a constant
increase in note i.ssues. Private initiative has not been restored. Unnecessary
and unwise economic barriers still exist. Instead of setting trade and commerce
REPORT OF THE SECRETARY OF THE TREASURY 69
free by appropriate steps there appear to be concerted efforts to obtain from the
most needy discriminatory advantages and exchisive concessions. There is not
yet apparent any disposition on the part of Europe to make a prompt and
reasonable definite settlement of the reparation claims against Germany or to
adopt policies which will set Germany and Austria free to make their necessary
contribution to the economic rehabilitation of Europe.
After taking all the measures within their power, one or more of the debtor
Governments maj- ultimately consider it necessary or advantageous to make
some general settlement of their indebtedness. In such a case they would, I
presume, propose to all creditors, domestic and foreign, a general composition
which would take into account advantages obtained by such debtor country
under the treaty of peace. How the American people or the American Con-
gress would view participation in such a composition I can not say. It is very
clear to me, however, that a general cancellation of intergovernmental war
debts irrespective of the positions of the separate debtor Governments is of no
present advantage or necessity. A general cancellation as suggested would,
while retaining the domestic obligations intact, throw upon the people of this
countrj' the exclusive burden of meeting the interest and of ultimately extin-
guishing the principal of our loans to the allied Governments. This Nation has
neither sought nor received substantial benefits from the war. On the other
hand, the Allies, although having suffered greatly in loss of lives and property,
have, under the terms of the treaty of peace and otherwise, acquired very con-
siderable accessions of territories, populations, economic and other advantages.
It would therefore seem that if a full account were taken of these and of the
whole situation there would be no desire nor reason to call upon the Government
of this country for further contributions.
On March 13, 1920, the British charge d'affaires at Washington
transmitted to the Secretary of the Treasury a message from the
Chancellor of the Exchequer, from which the following appears:
I am much obliged for the full and interesting reply which you have been good
enough to make to my message to Leffingwell.
I fully appreciate the attitude of the United States to any proposal for a mutual
cancellation of international war indebtedness. I had no intention of renewing
this proposal to which I referred only in order to respond fully to Leffingwell's
request for my appreciation of the general situation of Europe as well as of this
country.
On May 21, 1920, Austen Chamberlain wrote Assistant Secretary
Rathbone at Paris as follows:
The Cabinet has this morning given prolonged and careful consideration to
the proposals which have been discussed between us for the treatment of British
indebtedness to the American Government and the parallel treatment by both
the United States and Great Britain of the debts due to them by France, Italy,
and other allied Governments.
Since I had mj^ last meeting with you the discussion between the Prime
Ministers of France and Great Britain at Lympne have on the initiative of the
French resulted in an agreement that in order to provide a solution for the
economic difficulties which are gravely weighing upon the general situation of the
world and in order to mark a definite beginning of the era of peace the settlement
of the debts between them and the other European Allies should proceed on par-
allel lines with that of the reparation debts of the Central Empires.
The question of European indebtedness to America was not discussed at this
conference at which no American representative was present, but before proceed-
ing further with the consideration of detailed proposals for the treatment of the
70 REPORT OF THE SECRETARY OF THE TREASURY
British debt to the United States Government which as explained by you were
intended to form the basis for similar arrangements between the United States
and Great Britain on the one hand and the allied nations indebted to both of
them on the other, we feel that their applicability to the general situation must
be furUier explored and that it raises questions of great importance unsuited for
departmental treatment between our two Treasuries. Discussions on the subject
took place at an earlier stage between President Wilson and the Prime Minister
and the Prime Minister proposes now to resume these discussions and will send
a communication on this subject for the President's consideration.
On May 24, 1920, Assistant Secretary Kathbone replied:
In view of the communication which the Prime Minister is about to send to the
President, I have referred your letter to the Secretary of the Treasury and shall
not now attempt to discuss the matter you refer to beyond restating the view of
the United States Treasury that the questions relating to the debt of the British
Government to the United States Government must be settled by those two
Governments only, and that the indebtedness of other governments to the Ameri-
can Government or to the British Government, and the payment by Germany
of reparations, are in no way related to the postponement of interest upon and
funding of the obligations of the British Government held by the United States
Treasury, nor to the other matters which were discussed during mj' month's
stay in England for that purpose.
On June 26, 1920, Secretary Houston handed to Sir Auckland
Geddes a memorandum, section II of which follows :
It has been at all times the view of the United States Treasury that questions
regarding the indebtedness of the Government of the United Kingdom of Great
Britain and Ireland to the United States Government and the funding of such
indebtedness had no relation either to questions arising concerning the war loans
of the United States and of the United Kingdom to other governments or to
questions regarding the reparation payments of the Central Empires of Europe.
These views were expressed to the representatives of the British Treasury con-
stantly during the period when the United States Government was making loans
to the Government of the United Kingdom and since that time in Washington,
in Paris, and in London. The views of the President on the subject were stated
at length to the Prime Minister in a letter dated May 5, 1919.
In a letter of July 23, 1920, to Mr. CeHer, of the Ministry of Finance
of France, Mr. Norman H. Davis, Undersecretary of State, wrote
as follows:
I may say, however, that the vague reports to the effect that it had been
decided that the various intergovernmental debts and the settlement thereof
would be made to depend directly upon the settlement of collection from Ger-
man reparations appeared to have a rather adverse reaction here.
It is felt here that the obligation on the part of debtor countries to liquidate
war debts is a matter entirely independent of the reparation problem. The
moneys were loaned before the question of reparations from Germany could be
considered. It is of course realized that the ability to pay these war debts in
full will in some cases depend upon the economic recovery of the debtor country,
and that the amount received by wa}' of reparations will be one of the elements
in such recovery. It is hard for the people of this country, however, to see the
justification for any plan of assignment of German reparation obligations in
payment of war debts, or the using of reparation payments as a controlling index
REPORT OF THE SECRETARY OF THE TREASURY 71
of payments to be required on war loans, when these loans and reparation obliga-
tions have no connection and receipts from reparations have at best only an
indirect and partial relation to the ability of the debtor nations to pay. It would
be impossible for me to express a personal opinion on any contemplated settle-
ment of the reparations problem without more specific information than is con-
tained in your letter. If the Secretary of the Treasury were inclined to tie up
the reparation question with intergovernmental indebtedness, which I believe
is not the case, it would be impossible for him to do so without congressional
approval, which, in my judgment, is out of the question. Under existing cir-
cumstances, I fear that any agitation along this line will simply be misleading
and make it more difficult eventually for this country to participate and coop-
erate with other countries in the adjustment of existing economic problems.
On August 5, 1920, Mr. Lloyd George, Prime Minister of England,
wrote President Wilson as follows:
I come now to the other question I wish to write to you about, and that is the
knotty problem of interallied indebtedness. Indeed, I promised Mr. Rathbone
long ago that I would write to you about it, but I have had to put it oif for one reason
and another till now. The British and French Governments have been discussing
during the last four months, the question of giving fixity and definiteness to
Germany's reparation obligations. The British Government has stood steadily
by the view that it was vital that Germany's liabilities should be fixed at a
figure which it was within the reasonable capacity of Germany to pay, and that
this figure should be fixed without delay because the reconstruction of Central
Europe could not begin nor could the Allies themselves raise money on the
strength of Germany's obligation to pay them reparation until her liabilities
have been exactly defined. After great difficulties with his own people, M.
Millerand found himself able to accejDt this view, but he pointed out that it was
impossible for France to agree to accept anything less than it was entitled to
under the treaty unless its debts to its Allies and associates in the war were
treated in the same way.
This declaration appeared to the British Government eminently fair. But
after careful consideration they came to the conclusion that it was impossible
to remit any part of what was owed to them by France except as part and parcel
of all round settlement of interaUied indebtedness. I need not go into the
reasons which lead to this conclusion which must be clear to you. But the
principal reason was that British public opinion would never support a one-
sided arrangement at its sole expense, and that if such a one-sided arrangement
were made it could not fail to estrange and eventually embitter the relations
between the American and the British people with calamitous results to the
future of the world. You will remember that Great Britain borrowed from the
United States about half as much as its total loans to the Allies, and that after
America's entry into the war, it lent to the Allies almost exactly the same amount
as it borrowed from the United States of America. Accordingly the British
Government has informed the French Government that it wiU agree to any
equitable arrangement for the reduction or cancellation of interallied indebtedness,
but that such an arrangement must be one that applies all round. As you know,
the representatives of the Allies and of Germany are meeting at Geneva in a
week or two to commence discussion on the subject of reparation.
I recognize that in the midst of a presidential election and with Congress not
in session it is impossible for the United States to deal with this question in a
practical manner, but the question is one of such importance to the future of
Europe, and indeed to the relations between the allied and associated powers
72 REPORT OF THE SECRETARY OF THE TREASURY
that I should very much welcome any advice which you might feel yourself
able to give me as to the best method of securing that the whole problem could
be considered and settled by the United States Government in concert with its
associates at the earliest possible moment that the political situation in America
makes it possible.
There is one other point which I should like to add. When the British Gov-
ernment decided that it could not deal with the question of the debts owed to
it by its allies except as part and parcel of an all-round arrangement of inter-
allied debts, the Chancellor of the Exchequer told Mr. Rathbone that he could
not proceed any further with the negotiations which they had been conducting
together with regard to the postponement of the payment of interest on the
funding of Great Britain's debts to America. I should like to make it plain
that this is due to no reluctance on the part of Great Britain to fund its debt^
but solely to the fact that it can not bind itself by any arrangement which would
prejudice the working of any interallied arrangement which may be reached in
the future. If some method can be found for funding the British debt which
does not prejudice the larger question, the British Government would be glad
to fall in with it.
On November 3, 1920, President Wilson, in replying to Mr. Lloyd
George's letter of August 5, 1920, said in part as follows:
I turn now to the problem of interallied indebtedness which you raise. I
must deal with this matter with great frankness, as I am sure you wish me to do.
It is desirable that our position be clearly understood in order to avoid any
further delay in a constructive settlement of reparations which may arise from
the hope that the debts to this Government can form a part of such settlement.
It will be helpful if first of all I indicate our legal situation.
The Secretary of the Treasury is authorized by United States law to arrange
for the conversion of the demand obligations of the British Government inta
obligations having a fixed date of maturitj', in accordance with the agreement
of the British Government to make such exchange on demand contained in its
existing obligations. In connection with such exchange, the Secretary of the
Treasury has authority to arrange for the postponement of interest payments.
No power has been given by the Congress to any one to exchange, remit, or
cancel any part of the indebtedness of the allied Governments to the United
States represented by their respective demand obligations. It would require
congressional authority to authorize any such dealing with the demand obli-
gations and the Congress has the same authority to authorize any disposition
of obligations of the British Government held by the United States, whether
represented by demand obligations or by obligations having a fixed date of
maturity. It is highly improbable that either the Congress or popular opinion
in this country will ever permit a cancellation of any part of the debt of the
British Government to the United States in order to induce the British Govern-
ment to remit, in whole or in part, the debt to Great Britain or France or any
other of the allied Governments, or that it would consent to a cancellation or
reduction in the debts of any of the allied Governments as an inducement towards
a practical settlement of the reparation claims. As a matter of fact, such a
settlement in our judgment would in itself increase the ultimate financial strength
of the Allies.
You will recall that suggestions looking to the cancellation or exchange of the
indebtedness of Great Britain to the United States were made to me when I
was in Paris. Like suggestions were again made by the chancellor of the ex-
chequer in the early part of the present year. The United States Government
by its duly authorized representatives has promptly and clearly stated its unwiU-
REPORT OF THE SECRETARY OF THE TREASURY 73
ingness to accept such suggestions each time they have been made and has pointed
out in detail the considerations which caused its decision. The views of the
United States Government have not changed, and it is not prepared to consent
to the remission of any part of the debt of Great Britain to the United States.
Any arrangements the British Government may make with regard to the debt
owed to it by France or by the other alUed Governments should be made in the
light of the position now and heretofore taken by the United States, and the
United States, in making any arrangements with other allied Governments regard-
ing their indebtedness to the United States (and none are now contemplated
beyond the funding of the indebtedness and the postponement of payment of
interest), will do so with the understanding that any such arrangement would
not affect the payment in due course of the debt owed the United States by
Great Britain. It is felt that the funding of these demand obligations of the
British Government will do more to strengthen the friendly relations between
America and Great Britain than would any other course of dealing with the same.
The United States Government entirely agrees with the British Government
that the fixing of Germany's reparation obligation is a cardinal necessity for the
renewal of the economic life of Europe and would prove to be most helpful in
the interests of peace throughout the world; however, it fails to perceive the
logic in a suggestion in effect either that the United States shall pay part of
Germany's reparation obligation or that it shall make a gratuity to the allied
Governments to induce them to fix such obligation at an amount within Ger-
many's capacity to pay. This Government has endeavored heretofore in a most
friendly spirit to make it clear that it cannot consent to connect the reparation
question with that of intergovernmental indebtedness.
The long delay which has occurred in the funding of the demand obligations
is already embarrassing the Treasury, which will find itself compelled to begin
to collect back and current interest if speedy progress is not made with the
funding. Unless arrangements are completed for funding such loans, and in
that connection for the deferring of interest, in the present state of opinion
here there is likely to develop a dangerous misunderstanding. I believe it to be
highly important that a British representative with proper authority proceed to
Washington without delay to arrange to carry out the obligation of the British
Government to convert its demand obligations held by our Treasury into long-
time obligations.
The United States Government recognizes the importance, in the interests
of peace and prosperity, of securing the restoration of financial and industrial
stability throughout Europe. The war debts of the allied Governments, the
treaty obligations of Germany under the reparation clauses of the Treaty of
Versailles and the annexes thereto, and of other enemy and ex-enemy countries
under the treaties negotiated with them, the administration of countries under
the mandates provided for by such treaties, and the existing arrangements
between the Governments of various countries have or may have an important
bearing in making plans to accomplish such restoration.
Negotiations with the several countries
There is set out below a brief statement by countries summarizing
the work of the commission since the last annual report:
Armenia
There is no Armenian Government in existence.
74 REPORT OF THE SECRETARY OF THE TREASURY
Austria
As stated iii the last annual report, the time of payment of principal
and interest of the Austrian obligation held by this Government was
extended until June 1, 1943, and the lien of the obligation subor-
dinated pursuant to special authority conferred by joint resolution
of Congress approved April 6, 1922. See Annual Report of the
Secretary of the Treasury for the fiscal year ended June 30, 1923,
page 33.
Belgium
The funding agreement with Belgium executed on August 18,
1925, was approved on the part of Belgium by the law of March 2,
1926, and on the part of the United States by the act of Congress of
April 30, 1926. xV copy of the act of Congress approving the settle-
ment appears as Exhibit 18, page 219. For a statement of amounts
payable to the United States under the funding agreement see the
Annual Report of the Secretary of the Treasury for the fiscal year
1925, page 287. The exchange of obligations provided for in the
agreement has not yet been made.
Czechoslovakia
The funding agreement with the Czechoslovak RepubUc executed
on October 13, 1925, was approved on the part of the United States
by the act of Congress of May 3, 1926. A copy of the act of Con-
gress approving the settlement and a statement of the amounts
payable annually to the United States appear as Exhibits 27 and 28,
pages 234 and 235. The commission has not yet been advised that the
agreement has been ratified by Czechoslovakia. The exchange of
obligations provided for in the funding agreement has not yet been
made.
Estonia
The fundmg agreement with the Republic of Estonia executed on
October 28, 1925, was approved on the part of Estonia by the law
of March 26, 1926, published in Official Gazette No. 36 of April
22, 1926, and on the part of the United States by the act of Congress
of April 30, 1926. A copy of the act of Congress approving the
settlement and a statement of the amounts payable annually to the
United States appear as Exhibits 19 and 20, pages 220 and 222. The
exchange of obligations provided for in the agreement took place on
October 18, 1926.
France
For a discussion of the negotiations with the French Debt Com-
mission, headed by M. Joseph Caillaux, see the Annual Report of
EEPORT OF THE SECRETARY O:^' thE TREASURY 75
the Secretary of the Treasury for the fi^on.^ year ended June 30,
1925, pages 59 to 63.
After the Caillaux commission returned to France negotiations
for the settlement of the debt were informally continued through the
French Embassy at Washington.
On December 1, 1925, the commission received and considered an
unoflScial proposal of settlement. The proposal was further consid-
ered at a meeting of the commission on December 3, 1925, when it
was decided that it did not furnish a satisfactory basis for discussion.
On January 23, 1926, Senator Henry Berenger, the newly appointed
French ambassador at Washington, called on the chau-man of the
commission and indicated that he desired to reopen negotiations for
the settlement of the debt. Further mformal conferences were held
from time to time with representatives of the commission. Settlement
of the debt was authorized at a meeting of the commission on April 29,
1926. The funding agreement was signed and approved by the Presi-
dent the same day. It has been approved by the House of Kepre-
sentatives, but has not yet been approved by the Senate. It has not
yet been ratified by France. Copies of the agreement and of the
statement issued to the press appear, respectively, as Exhibits 29 and
30, pages 236 and 241.
The amount of the debt funded was calculated on the same basis
as in previous settlements; that is, with interest at 43^ per cent to
December 15, 1922, and 3 per cent thereafter to June 15, 1925, the
date of the agreement. After deducting a cash payment of $386,-
686.89, made upon execution of the agreement, the total indebtedness
funded into bonds was $4,025,000,000. This amount is to be paid
in annuities commenciYig with $30,000,000 in the first year and rising
to $125,000,000 in the seventeenth year, continuing at this figure
until the sixty-second year, when the amount will be $117,674,104.17.
A statement of the amounts payable annually to the United States
appears as Exhibit 31, page 242. Under these annuities the total
principal funded will be repaid in full with interest thereon as follows:
after the first 5 years and for the next 10 years, 1 per cent per annum;
for the next 10 years, 2 per cent per annum; for the next 8 years,
2)4, per cent per annum; for the next 7 years, 3 per cent per annum;
and for the remaining 22 years, 3J^ per cent per annum. Over the
entire period the United States will receive $6,847,674,104.17. The
principal of the debt of France at the time of funding amounted to
approximately $3,340,000,000.
Greece
The Governments of Great Britain, France, and the United States
executed an agreement with Greece on February 10, 1918, providing
for advances to be made to Greece under certain conditions. As a
11438—261 7
76 KEPOHT OF ^jjE SECRETABY OF THE TREASURY
result of this agrt'onu'L mc I'nited States made advances to Greece
in 1919 and 1920 aggregaiing $15,000,000. Greece from time to time
has urged certain claims for additional advances, but none have been
made.
On November Iti, 1925, the Secretary of State was notified that the
Greek Govermnent had designated Mr. George Cofinas, former
Minister of Finance, and Mr. Drossopoulos, Director of the Public
Debt, to come to the United States to discuss questions bearing upon
the agreement. On December 26, 1925, the Greek minister at Wash-
ington notified the Secretary of State that a special commission,
consisting of Mr. George Cofinas and Mr. Michel Eulambios, one of
the directors of the National Bank of Greece, would arrive in Wash-
ington on December 28, 1925. The special commission, consisting
of Mr. Cofinas and Mr. Eulambios, accompanied by Mr. C. Diaman-
topoulos, First Secretary of the Greek Legation at Washington,
appeared before the commission on January 14, 1926, and presented
a memorandum setting forth the claims of Greece for additional
advances under the 1918 agreement and making certain proposals
regarding an adjustment of the indebtedness of Greece to the United
States conditional on the receipt of further advances. A second
meeting of the two commissions was held on January 18, 1926. On
January 22, 1926, the following announcement was made by the
chairman of the World War Foreign Debt Commission:
In view of some questions which have arisen in the course of the meetings with
the American Commission, the Greek Delegation have found it desirable to consult
with their Government and have suggested a postponement of the negotiations
pending the receipt of further instructions. M. Cofinas will return to Athens
for this purpose and the negotiations will be continued for the present through
the Greek minister.
Since then negotiations for the settlement of the questions between
the two Governments have been carried on with the Greek minister
at Washington.
Italy
The funding agreement with Italy executed on November 14, 1925,
was approved on the part of Italy by the law of February 14, 1926,
published in the Olhcial Gazette of February 20, 1926, and on the
part of the United States by the act of Congress of April 28, 1926.
A copy of the act of Congress approving the settlement and a
statement of the amounts payable annually to the United States
appear as Exhibits 16 and 17, pages 216 and 218. The exchange of
obligations provided for in the agreement has not yet been made.
Lutma
The funding agreement with the Republic of Latvia executed on
September 24, 1925, was approved on the part of the Republic of
Latvia by the Saeima of Latvia on March 26, 1926, and on the
REPORT OF THE SECRETARY OF THE TREASURY 77
part of the United States by the act of Congress of April 30, 1926.
A copy of the act of Congress approving the' settlement and a
statement of the amounts payable annually to the United States
appear as Exhibits 21 and 22, pages 223 and 224. The exchange of
obligations provided for in the agreement has not yet been made.
Liberia
There have been no developments regarding the settlement of this
debt since the last report. The amount involved is only about $30,000.
Nicaragua
The Republic of Nicaragua is making payments from time to time
on account of the original obligations of Nicaragua held by the
United States. It is expected that this indebtedness will be fully
liquidated by June 30, 1927.
Rumania
As stated in the annual report for the fiscal year ended June 30,
1925, a Rumanian Debt Commission, headed by Mr. N. Titulescu,
Rumanian minister at London, appeared before the commission on
November 9, 1925, to enter into negotiations for the settlement of
the Rumanian debt to the United States. Subsequent meetings of
the two commissions were held on November 19, November 21, and
December 1, 1925. A settlement was agreed upon at the final meet-
ing on December 1, 1925. A debt-funding agreement was signed on
December 4, 1925, and was approved by the President the same day.
It was ratified by Rumania by law of March 26, 1926, published in
the Official Monitor of March 29, 1926, and was approved by act of
Congress of May 3, 1926. Copies of the funding agreement, of the
press statement issued at the time the settlement was reached, and
of the act of Congress approving the settlement appear respectively
as Exhibits 23, 24, and 25, pages 225, 230, and 231.
Under the terms of the settlement the principal of the debt funded
is fixed as of June 15, 1925. Interest on the $36,128,494.94 original
indebtedness was calculated at 43^ per cent per annum to December
15, 1922, and from then until June 15, 1925, at the rate of 3 per cent
per annum, making the principal of the debt funded $44,590,000,
after deducting a payment in cash of $4,451.54 made by Rumania
upon execution of the agreement. The principal of the funded debt
is to be paid over a period of 62 years with interest at 3 per cent per
annum for the first 10 years and 33^ per cent per annum thereafter.
During the first 14 years, however, the following total amount? are
to be paid, the balance of each annuity at the above interest rates
being funded over the remaining 48 years: June 15, 1926, $200,000;
78 15KP0RT OF THE SECRETARY OF THE TREASURY
Juno 1;3, 1027, S300,000: June 15, 1928, $400,000; June 15, 1929,
$500,000; June 15, 1930, S000,000; June 15, 1931, $700,000; June 15,
1932, $800,000; June 15, 1933, $1,000,000; June 15, 1934, $1,200,000;
June 15, 1935, $1,400,000; June 15, 1936, $1,600,000; June 15, 1937,
$1,800,000; June 15, 1938, $2,000,000; June 15, 1939, $2,200,000.
A statement of the amounts payable annually to the United States
appears as Exhibit 26, page 232. The exchange of obligations pro-
vided for in the agreement took place on October 28, 1926.
Russia
There is no Russian Government recognized by the United States.
Yugoslavia
On January 27, 1926, a Yugoslav Debt Commission consisting of
Dr. Milan Stoyadinovitch, Minister of Finance and chairman of the
commission; Mr. George Diouritch, Minister of Yugoslavia in Lon-
don; Mr. Milan Radosavljevitch, Director of the Ministry of Com-
merce; Mr. Ranislav Avramovitch, former Assistant Minister of
Communications; Mr. Ivan Shvegel; Mr. Rudolph Steinmetz; and
Dr. Pavle Karovitch, general secretary of the commission, appeared
before the commission to enter into negotiations for the settlement
of the Yugoslav debt to the United States. The commission was
accompanied by Dr. A. Tresich Pavichich, minister at Washington,
and by Prof. M. I. Pupin, of New York, as advisers. Further meet-
ings of the two commissions were held on January 30, and February
8, 1920. On February 17, 1926, the chairman of the commission
made the following announcement to the press:
Negotiations for the settlement of the debt of the Kingdom of the Serbs,
Croats, and Slovenes to the United States are continuing between the American
Debt Commission and the Yugoslav Delegation. Owing principally to the pend-
ency of the tax bill in Congress, which has occupied Senator Smoot exclusively,
and to the absence of some of the members of the Debt Commission from Wash-
ington, a final agreement has not yet been arrived at. Doctor Stoyadinovitch,
the Minister of Finance of the Kingdom, has been obliged to return to Yugo-
sl.Tvia to take charge of his budget in Parliament. The other members of the
Delegation remain here to complete the negotiations. Many of the diflBculties
in the way of a settlement have now been disposed of and it is hoped an agree-
ment will be reached in a short time.
The Yugoslav commission returned to Yugoslavia with the excep-
tion of Dr. George Diouritch and a Yugoslav expert. Negotiations
for the settlement of the debt were mformally continued with Doctor
Diouritch. On May 1, 1926, a settlement of the debt was reached.
A funding agreement was signed on May 3, 1926, and was approved
REPORT OF THE SECRETARY OF THE TREASURY 79
by the President the same day. The agreement has been approved
by the House of Representatives but has not yet been approved by
the Senate. It was approved by Yugoslavia on June 19, 1926.
Copies of the funding agreement and of the press statement issued
at the time the settlement was concluded appear respectively as
Exhibits 33 and 34, pages 244 and 249.
The amount of the debt funded was calculated on the same basis
as other debt settlements at 4^ per cent interest to December 15,
1922, and at 3 per cent interest thereafter untU June 15, 1925, as of
which date the debt was funded. The total debt funded, after
allowing for a cash payment of $7,112.39, made upon execution of
the agreement, was $62,850,000, of which $51,037,886.39 represented
principal and $11,812,113.61 represented accrued interest.
Under the agreement annuities commence with $200,000 a year
for the first 5 years, increasing $25,000 a year the 7 succeeding years.
During the remaining 50 years payments on account of principal
increase annually. Beginning with the 13th year interest commences
at the rate of one-eighth of 1 per cent for 3 years, one-half of 1 per
cent for the next 14 years, 1 per cent for the next 3 years, 2 per cent
for the next 3 years, and 33^ per cent for the last 27 years of the
debt-funding period. A statement of the amounts payable annually
to the United States appears as Exhibit 35, page 250.
THE CURRENCY
The United States has been unique among the larger nations of the
world regarding the postwar status of its currency. Practically
every other important country has undergone a period of monetary
instability that has seriously retarded its recovery from the dis-
turbances of the World War. Such monetary disturbances in foreign
nations are of immediate concern to our own country, as to the rest
of the world, because of the direct bearing they have on international
commerce and finance. It is desirable, therefore, after summarizing
briefly the present composition of our currency, to review the events
of the year which have affected gold and silver, the bases of the
monetary systems of the world.
The composition of United States currency
The money in circulation in the United States consists of gold,
silver, nickel, and bronze coins, and various kinds of paper currency.
The gold dollar of 25.8 grains of gold 0.900 fine is the standard unit
of value. The denominations, fine metal and alloy content, and
80
nKPOHT OF THE SECRETARY OF THE TREASURY
woi^'lit of the various coius of the United States as at present issued
are shown in the following table:
l)i nominations, fine metal, alloy, and weight of the coins of the United Stales
Kind imd denomination
Gold: »
DouMf Piigle ($20)...
Kagli'($10)
lIiiIfoiiBlo ($5)
Quartor eagle ($2.50).
Silver:
Standard dollar
Half dollar
Quarter dollar
Hinie
Minor coins;
Five cents*
Cue cent*
Weight
(grains)
.516. 00
258.00
129. 00
M. 50
412.50
192.00
96. 45
.38.58
77. Ifi
48.00
' The alloy neither adds to nor detracts from the value of the coin.
' The coinage of the gold dollar was discontinued by the act of Sept. 26, 1890.
> Oold twid silver coins contain 900 parts of pure gold or pure silver and 100 parts of copper
• Soventy-five per cent copper, 25 per cent nickel.
• Ninety-five per cent coijper, 5 per cent tin :ind zinc.
opper alloy.
There are seven kinds of paper currency in circulation in the
United States: Gold certificates, silver certificates, United States
notes, Treasur}^ notes of 1890, Federal reserve notes, national-bank
notes, and Federal reserve bank notes.
Gold and silver certificates certify on their faces, respectively,
that ''there has been deposited in the Treasury of the United States
of America dollars in gold (or standard silver dollars)
payable to the bearer on demand." Gold and silver certificates are
in fact mere "warehouse receipts" issued by the Government in
exchange for gold coin or bullion deposited in the one case, or stand-
ard silver dollars deposited in the other case, or against gold or
standard silver dollars, respectively, withdraw^n from the general
fund of the Treasury.
United States notes are often referred to as "greenbacks" or
"legal tenders." They were first issued during the Civil War and
must now always be reissued when redeemed, the amount outstand-
mg consequently remaining at $346,681,016. United States notes
are protected by a gold reserve of appro.ximately $1.54,000.000 held
in the Treasur}\
Treasury notes of 1890 were issued in pavment of silver bullion
purchtised under the so-called Sherman Act. which also provided
for the comage of the silver purchased into standard silver dollars.
Only about $1,3.50,000 now remain in circulation, since thev are
canceled and retired whenever received, and no more mav be issued.
Ihe l^ederal reserve act, approved December 23, 1913, which
established the Federal reserve system, provided for an elastic
REPORT OF THE SECRETARY OF THE TREASURY 81
currency in the form of Federal reserve notes, to be issued at the
discretion of the Federal Reserve Board. Applications of the
Federal reserve banks for the issue of notes must be accompanied
by tender of collateral in amount equal to the amount of the Fed-
eral reserve notes applied for, and each Federal reserve bank is
required to maintain a reserve in gold of not less than 40 per cent
against its Federal reserve notes in actual circulation.
Any national bank may issue national-bank notes upon the deposit
in trust with the Treasurer of the United States of certain prescribed
United States bonds bearing the circulation privilege, the amount
issued not to exceed the par value of the bonds so deposited nor the
amount of the capital stock of the issuing bank actually paid in.
Federal reserve bank notes are identical in their legal attributes
with national-bank notes, except that the amount issued is not
limited to the paid-in capital stock of the issuing Federal reserve
bank. Since it is now the policy of the Federal Reserve Board to
retire all of these notes as they are received for redemption, only
about S5, 500, 000 are now outstanding.
Gold certificates. United States notes, Treasury notes of 1890,
and Federal reserve notes are directly redeemable in gold. National-
bank notes. Federal reserve bank notes, silver certificates, subsidiary
and minor coins are redeemable in lawful money of the United States,
which (including standard silver dollars), if not directly convertible
into gold, is, in the final analysis, legally on a par with gold under the
act of March 14, 1900. This act makes it the duty of the Secretary
of the Treasury to maintain all forms of mone}^ issued or coined by
the United States at a parity of value (equality of purchasing power)
with the standard unit of value — i. e., the dollar, consisting of 25.8
grains of gold 0.900 fine. The Federal reserve act reaffirms the parity
provisions mentioned above and the authority of the Secretary of the
Treasury to borrow or buj^ gold to maintain such parity. Each of
the various types of money discussed is eitlier full legal tender or
convertible into money which does possess this quality. The mone-
tary system, therefore, though diverse in origin and external features,
is unifomi in its essential characteristics of value in purchasing power
and legal tender attributes.
Improvements in the supply oj paper currency
In my last annual report I spoke of the serious situation existing in
regard to the supply of United States paper currency and the meas-
ures being taken to correct it. These measures were (1) the adoption
of a definitive program for increased printing to extend over a period
of years, (2) the establishment of a currency board to determine re-
quirements and control printing and distribution, and (3) a restudy
of paper currency designs.
82 REPORT OF THE SECRETARY OF THE TREASURY
The increased printing program was formulated in October, 1924.
To make it eflective, increased appropriations were necessary.
These were granted in part only for 1925, but were granted in full
for the past year, 192G, and for the year 1927 in accordance with the
dei)artnient's estimates. During 1925, 160,644,000 sheets of com-
pleted currency were delivered to the Treasurer of the United States,
an increase of 10,684,000 over 1924. This increase provided for
atiditional payments. During 1926, 176,242,000 sheets were delivered,
an increase of 15,598,000 over 1925 and 26,282,000 over 1924.
During the same year an adequate working reserve of incomplete
faces and backs was established in the Bureau of Engraving and
Printing. For 1927 provision has been made for the delivery of 191,-
500,000 sheets to the Treasurer, an increase of 15,258,000 over 1926,
and for 1928 the estimates submitted provide for the delivery of
approximately the same number of completed sheets. If the esti-
mated appropriations are granted for 1928, the close of that year will
find the i)rinting program, adopted in October, 1924, fully executed.
During 1926 the working reserve in the bureau was established;
increased demands for payment purposes were fully met; the Treas-
urer's reserve stock of completed currency was increased from
5,951,000 sheets at the beginning of the year to 20,625,000 sheets
at the end; the balance of new one-dollar notes in the cash of
the Federal reserve banks was increased from 23,000,000 notes, or
5,750,000 sheets, to 40,000,000 notes, or 10,000,000 sheets. The stand-
ard of fitness of the notes in circulation has not been raised. The
programs for 1927 and 1928 include the printing necessary to replace
all unfit notes and each year to add to the Treasurer's reserve of
completed notes approximately one month's normal requirements.
The currency board has continued as an effective control over
supply and distribution. A complete check of the situation is now
made each month and printing and distribution directed in accord-
ance with the known requirements.
A restudy of paper currency designs made necessary initially
through mechanical difficulties arising at the Bureau of Engraving
and Printing in the execution of the new designs adopted in Septem-
ber, 1923, as applied to Federal reserve notes, has been extended to
mclude many other matters in connection with the production of
currency with a view to improving the wearing qualities of the notes,
and if possible reducing the cost. On August 20, 1925, a committee
was appointed with the fiscal Assistant Secretary in charge, with the
best qualified experts in the Treasury as members, and with experts
from the Bureau of Efficiency and the Bureau of Standards as as-
sociate members. This committee was charged with the considera-
REPORT OF THE SECRETARY OF THE TREASURY 83
tion of every phase of design and of all matters having any relation
thereto. The studies of this committee have not been finished and
conclusions have not yet been presented for my consideration. A
report of the committee's work accordingly will not be made at this
time.
For some time past the Bureau of Efficiency and the Bureau of
Standards have been cooperating with the Bureau of Engraving and
Printing and the contractor for distinctive paper, with a view to
improving the wearing qualities of the notes in circulation. The
particular investigations are very technical and involve the character
of the paper, resizing, and finish. Extensive laboratory experiments
and tests have been conducted. Subsequently the laboratory experi-
ments have been transferred to a production basis at the paper mill
and at the bureau. These investigations are very largely in associa-
tion with the committee on design and are not yet completed. How-
ever, due to the improvements as a result of the investigations, and
to the established reserve in the bureau and the partially established
reserve in the Treasurer's office and the Federal reserve banks — the
reserves permitting ageing of the product — the life of the notes in
circulation has been considerably lengthened. Before the War one-
dollar notes remained in circulation approximately one year and
subsequently the life of these notes was reduced to about six months.
Now their life has been increased to between 9 and 10 months, and it
is confidently believed this span will be further increased.
The problem of currency supply is largely a problem of one-dollar
bills, for more than 80 per cent of the total printing of United States
currency is of this denomination. During the past year included in
total deliveries of 176,242,000 sheets of United States currency to
the Treasurer of the United States were 144,000,000 sheets (or
576,000,000 bills) of the one-dollar denomination. The supply of
this denomination was adequate in 1926 for payment purposes for
the first time in many years. At the same time a good start was made
on building up very necessary reserve stocks with the Treasurer and
the Federal reserve banks. Currency transactions as between the
public and the Treasury are handled almost entirely through Federal
reserve banks acting as distributing and redemption agents for the
Treasury. The volume of business may be appreciated from the
statement following showing transactions in one-dollar bills at the
Federal reserve banks during the fiscal years 1925 and 1926.
1143S— 26t 8
84
HEPORT OF THE SECRETARY OF THE TREASURY
Balance at beginning of year
Received from circulation
New notes received from Treasury
Fit notes received from other Federal reserve banks
Increase in balance of unassorted notes on hand during year.
1925
40, 065, 000
925, 057, 000
501,782,000
11,200,000
4, 758, 000
1926
65, 964, 000
975, 500, 000
517,150,000
;}2, 830, 000
3, 722, 000
Total ---I 1,482,862,000
Paid into circulation
Unlit sent to Treasury
Fit notes to other Federal reserve banks.
Balance at end of year
931,982,000
473,716,000
11,200,000
05, 964, 000
Total - 1,482,862,000
1, 595, 166, 000
986, 453, 000
501,773,000
31,832,000
75,108,000
1, 595, 16C, 000
Gold
Since gold is the basis of our currency and large amounts of silver
are used in the coinage of standard silver dollars and subsidiary
silver coins, the prevalence of the gold standard and the international
position of both gold and silver are of practical importance in connec-
tion with our currency-, and are treated in the following sections.
Since the World War placed a large number of European countries
on a paper currency basis and added to America's holdings a third of
the world's store of gold, the supply, production, possession, and
movement of gold have assumed even greater than their usual impor-
tance.
The event of greatest world significance relating to gold during the
past year has been the increase in the number of countries whose
currencies are based on gold. The movement back to gold, begun in
Europe as earlj^ as 1922, continued by Sweden, Germany, and certain
other European countries in 1924, and definitely established in the
spring of 1925, when Great Britain, the Netherlands, the Dutch
East Indies, Australia, New Zealand, and South Africa announced
the reestablishment of gold as the basis of their monetary systems,
has been augmented in the last year by the addition of Canada,
Switzerland, Finland, Hungary, Chile, and more recentl}" Belgium,
to the list of countries maintaining some form of gold standard.
The return to gold by a large part of the world records the im-
provement in the international economic and financial situation the
stability of which is the necessary basis for the growth of our foreign
trade and the expansion of our industry. Stabilization by Belgium
is looked upon as the initial step in a movement which will put the
remaining countries of the Latin Monetary Union on a gold basis.
If the recommendations of the Royal Commission on Indian Cur-
rency and Finance are adopted so that India, one of the greatest
oriental countries, is also included in the group of gold nations, a
broadening of commercial and industrial opportunities and increased
prosperity for India and the world as a whole should result.
REPOUT OF THE SECRETARY OF THE TREASURY
85 '
In the following table an attempt has been made to indicate, as
completely and currently as the information is available to the
Treasur}^"^ the status of the currencies of the several countries with
reference' to gold. The Treasury, however, does not vouch for the
absolute accuracy of the data presented.
86
REPORT OF THE SECRETARY OF THE TREASURY
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88
r.EPOHT OF THE SKCRETARY OF THE TREASURY
The most striking fact relating to the gold situation in the I'nited
State^^ in the past year is the reversal of the gold export movement
which began in December, 1924, and continued definitely through
June, 102o. In the fiscal year 102(5 gold has again flowed into the
United States.
The import movement of l'.l2(), b.owever. has been slight compared
with the similar movement of 1920 to 1924. After the gold export
impulse whicii followed the lifting of our gold embargo in tlune, 1919,
had spent itself, gold flowed into the coutitry in a continuous stream
for more than four years, amounting in all to about $1,700,000,000.
In December, 1924, however, we began to feel that long-predicted
demand for gold from Europe for purposes of monetary reconstruc-
tion and stabilization, and during the following seven months about
$180,000,000 in gold was exported from the United States. At that
time it was the general belief that a considerable part of the billions
of gold which had flowed to us during the war and postwar period
would probably return to those countries from whence it had come
and where it was apparently needed as a basis for a return to gold.
Instead of net exports, however, the year 1926 brought to the United
States net imports of S97, 000,000. The following table gives the
imports and exports of gold for the fiscal years 1920 to 1926:
Gold imports and exporli-; of the United States for the fiscal years 1920 to 1926
Fiscal year
Gold imports
Gold exports
Xet imports
Net exports
1920 -
$150, 540, 200
038,559.805
408, 318, 273
284, 089, 550
417. 025, 638
134, 145. 136
210, 726, 485
179, 319, 361
$466, 420, 606
133,537,902
27, 345, 282
49, 021, 975
10, 206. 941
248, 729, 698
113,438,4.i9
100, 743, 771
$315,880,406
1921
:S505. 021, 903
440,972,991
235, 067, 575
406, 818. 697
1922 ...
192;?
1924 . .
1925
114, 584, 562
1920
97. 28S, 020
78, 605, o^jO
1927 (July 1 to Nov. 1, 1926)
The import movement started in July, 1925, and while September
and November, 1925, and April and May, 1926, showed net exports,
net imports appeared in the remaining months amounting in March,
1926, to $39,000,000. The inward movement continued in July and
October; August and September, however, have shown net exports,
the former being the largest net export in any month since the
beginning of the fiscal 3'^ear. Net figures for each month beginning
witli July, 1925, are shown below:
EEPOKT OF THE SECRETARY OF THE TREASURY
89
Net gold imports and exports of the United Slates, by months, Juli/, 1925, to
October, 1926
Net imports Net exports
July
August
September.
October
November.
December..
1925
1926
February..
March
April
May
June
July
August
September.
October
$5, 787, 660
2, 720, 046
22,701,459
$2, 656, 149
1,248,277
16,264,332
21, 564, 281
39, 188, 012
13, 903, 956
15, 544, 558
14, 750, 518
4, 768, 232
6, 408, 262
7, 328, 862
17,764,423
7, 147, 555
Before the World War shipments of gold occurred in response to
fluctuations in the exchange rates of different currencies, to chaiiges
in the comparative levels of money rates in the different money
markets, or took place in the settlement of international balances.
The large movement of gold to the United States in the postwar
period, 1920 to 1924, however, instead of settling irreducible inter-
national balances, represented largely straight payments for goods
purchased in the United States; in other words, gold was shipped as
any other export commodity.
During the past year, however, with the return of England and
other countries to a gold basis, exchange fluctuations and money
rates have once more become important factors affecting the move-
ment of gold. The following table shows gold imports and exports
by countries for the fiscal year 1926;
Gold imports and exports of the United States, by countries, fiscal year 1926
Countries
Gold imports
Gold exports
Net imports
Net exports
Canada
$95, 838, 438
44. 502. 454
16, 067, 502
15, 000, 666
14, 147, 908
6,195,641
4,877,516
2, 60G, 894
1, 889, 036
1,523,753
1, 253, 438
1, 078, 726
636. 849
480, 000
6,021
650
160
$67, 735, 050
$28, 103, 388
44, 502, 454
16, 067, 602
14, 910, 666
5, 475, 863
6, 177, 153
4,877,516
2, 608, 894
337, 776
United Kingdom
Chile
60,"o6o"
8, 672, 105
18, 488
Japan _ .. ...
Mexico -
France _ .
Australia
Peru ...
Dutch East Indies ..
1,551,260
2. 007, 889
14, 486
9,927
2, 300, 000
8, 489, 421
2, 316, 640
3, 158, 126
8, 600, 763
2,850,040
2,851,152
1, 453, 666
1, 349, 446
Colombia _ .
$484, 136
Costa Rica .
1, 238, 952
1,068,799
Ecuador
Venezuela ..
1, 663, 151
Hongkong
8, 009, 421
Argentina
2,310,619
Germany .
3, 157, 476
British Malaya .
8 600 603
Salvador _
2, 850, 040
2, 851, 152
British India. ...'
China. j
1, 453, 666
All other
4, 620, 773
3,271,327
Total
210,726,485
113,438,459
97,288,026
■
90 REPORT OF THE SECRETARY OF THE TREASURY
The large import from England occurring mainly in October, 1925,
was due to changes in relative exchange and money rates in London
and New York. The position of Canadian exchange brought almost
one-third of our net imports during the year. Other shipments
represent payments of various kinds. Gold from Mexico, especially
large in June, July, and September, came in discharge of foreign
debts and other obligations abroad. The gold received from France
built up her balance in this country to meet an interest payment due
by the French Government on her debt to the United States Govern-
ment.
The gold export movement of 1925 was largely connected with the
reform and stabilization of foreign currencies. The effect of cur-
rency conditions on the gold movement in 1926, though not pre-
dominating, can still be traced. Gold from Chile came as reserve
for the new central bank organized as a part of that country's currency
reform program. Shipments from the Japanese Government from
October to February were for the purpose of improving the exchange
situation of the yen. The large export of gold to Germany in August,
September, and October represents gold previously listed in the Reichs-
bankstatement as "gold held in foreign banks, " the total item amount-
ing to about 260,000,000 marks before the Reichsbank began to with-
draw its New York holdings. This is what is known as ''earmarked"
gold, a term applied to dollar credits acquired in this country by
foreign banks which are converted into gold and held in trust here
for such banks. The title to this gold is actually vested in the foreign
bank. Although still physically present in this country and included
in statistics of our gold stock, this gold can not form the basis of
credit here; consequently the withdrawal of gold for earmarking
has the same effect upon credit conditions as the withdrawal for
export; vice versa, the actual export of earmarked gold is without
effect creditwise.
Our gold exports to India in the fiscal year 1926 have amounted to
less than $3,000,000, while in the fiscal year 1925 the United States
exported $67,000,000 in gold to that country. In the calendar year
1925 India absorbed about $200,000,000, more than one-half of the
world's gold production, about $60,000,000 of which was supplied to
her by the United States. Smce 1900, when India began her rapid
absorption of gold, she has taken $1,508,910,000 of the world's gold.
The disappearance of the gold sovereign from circulation means that
this immense absorption of gold by India has gone practically entirely
into the arts and hoarding, since the gold reserve held in India is
negligible in amount. One object of the recommendations of the
Royal Commission on Indian Currency and Finance is to secure for
India a currency system of such stability and obvious safety as to
bring these hoardings from their hiding places and through bank
deposit and investment add them to the world's credit bases.
KEPORT OF THE SECEETAEY OP THE TEEASUKY
91
While the commission recommends for India a currency system
based on gold, it does not recommend a gold circulation. In their re-
turn to gold the nations have not aimed at a return to a gold currency.
Great Britain has avoided the reintroduction of gold circulation; in
fact, with the exception of certain South and Central American
countries where gold has been in circulation for some time, the only
important countries which now have a gold circulation are the United
States, Switzerland, the Netherlands, and the Union of South Africa;
in the United States and certain of the South and Central American
countries gold circulates rather in theory than in practice, while the
circulations in Switzerland and the Netherlands seem to be of an
experimental nature and tend to return to the issuing banks.
When gold is not placed in circulation it would appear that large
amounts of the metal are not necessary to the maintenance of gold
parity, especially where credits in gold countries are held. The
following table shows the gold reserves, the foreign credits (balances
abroad, bills of exchange, foreign currencies, and foreign government
securities), and note liabilities of the principal European central
banks at the close of June, 1925, and June, 1926, as they appear in the
published statements of these banks. Note liabilities are converted
at current rates of exchange, as are foreign credits, except where
shown in gold. The gold reserve, of course, is converted at par.
Gold reserves, foreign credits, and note liabilities of principal European central banks,
last statements of June, 1925 and 1926
[Amounts in thousands of dollars]
Country
Austria
Belgium
Bulgaria
Czechoslovakia
Denmark
Finland
France
Germany
Great Britain..
Greece
Hungary
Italy.. _.
Netherlands
Norway
Poland
Portugal
Rumania
Russia
Spain
Sweden
Switzerland
Gold
reserves,
1925'
1,597
52, 551
7,853
30, 513
56,131
8,354
* 710, 696
252, 901
764, 935
8,688
8,865
218, 403
183, 040
39, 457
23, 193
9,268
' 26, 020
87,013
489, 565
62,915
96, 174
Gold
reserves,
1926 1
2,622
52, 856
8,190
27, 232
56, 051
8,326
* 711,126
355, 450
725, 089
14,096
21, 188
219, 180
171,457
39, 457
25, 996
10, 438
'49,022
75, 554
491, 238
61,223
80,941
Net foreign
credits, 2
1926 3
83, 537
I 5, 833
2,220
38, 022
14, 232
23, 835
1 113,910
« 77, 341
17, 020
18,801
20, 597
79, 736
17, 829
886
« 2, 106
m
26, 863
5,158
43, 376
2,771
Gold
reserves
and net for-
eign credits,
1926
86, 159
58,689
10,411
65,254
70,283
32, 161
825, 036
432, 791
725, 089
31,116
39,989
239, 777
251, 193
57,285
26,883
12, 589
102,418
496, 395
104, 599
S3, 712
' Converted at par.
2 Balance abroad, bills of exchange, foreign currencies, and foreign government securities.
' Converted at current rates when not otherwise specified.
* Excluding gold held by Bank of England.
5 Held as cover for notes; additional foreign assets held but not shown separately for this date.
' Foreign government securities. Bank statement shows in addition about $18.6 million in foreign
exchange, but this seems to he largely deposited as security for advances to the government.
' Excluding gold transferred to Russia.
' The actual gold value of foreign assets is not known.
92
REPORT OK THE SECRKIARY OF THE TREASURY
Gold reserves, foreign credits, and note liabililies of principal European central hanks,
last statement of June, 1925 and 1926 — Continued
(Amounts in thousands of dollars]
Country
Note
liabilities,
1925 3 ,
Xote
liabilities,
1926 3
Austiiii
BelKiuiii
Bulgtiria
(?Eec-hoslovakia
Denmurk
Finland
Fnuice
<lernuiny
Great Britain..
•Ireece
Ilungarv
Italy
Netherlands. ..
Noi wav
Poland"
rortufjal
Rumania
Russia
Spain
Sweden.
Switzerland
116,
340.
30.
20.5.
94,
32,
,999,
, 030.
, 12fi,
86.
64,
740,
356,
G9,
96.
&3,
89,
316,
629,
140,
161,
117,
234,
25,
213.
106,
32,
1.466,
» 1,034,
'« 1,847.
5.'),
69,
11 737,
32.5,
75,
41,
94,
100,
373,
698.
125,
154,
Per cent
of gold
reserves
to note
lialnlitios,
1925
1.4
15.4
2.5.8
14.8
59.5
25.8
35.5
24.5
36.0
10.0
13.8
29.5
51.4
56. 9
24. 0
11.1
29.1
27.5
77.8
44.9
.59.4
Per cent
of gold
reserves
to note
liabilities,
1926
Per cent
of gold
reserves
and net
foreign
credits to
note liii-
bilitios,
1926
2. 23
22^58
31.77
12. 73
52.75
25.45
48.49
34.30
33. 26
25.40
30. ,53
29.70
52.73
.52. 41
62.73
1 1. 11
48. 95
20. 22
70.30
48.67
52.24
73.17
25.07
40.38
30.51
66.14
98.30
56. 26
41.84
39.26
56.08
57. 62
32. 49
77. 25
76.09
64.87
27. 42
71.04
83.16
54.02
' Converted at current rates when not otherwise specified, i" Includes notes in currency notes account.
' Inr-ludes Roichshank ai'.d Rentenbank notes. " Includes threo banksofi.ssue and government.
The gold holdings of European banks as a whole have increased
only slightly over the holdings of a year ago. Germany, however,
has added over $100,000,000 to her gold reserve. Hungary has more
than doubled the amount of her gold for the completion of her currency
reform, and Austria has increased hers in the same cause.- The
National Bank of Rumania holds contracts with the chief gold-
mining enterprises in Rumania for the sale of their entire output to
the bank. The gold holdings of Greece and Bulgaria also materially
increased. In the Netherlands and Switzerland some of the reserve
has gone into circulation. Great Britain's holdings fell somewhat
with her return to the gold standard. Gold was also lost by Russia
and Czechoslovakia.
Decrease in the gold reserve has resulted in a lower gold reserve
ratio to note circulation except in the Netherlands where notes also
decreased, producing a slight improvement in the reserve ratio.
Slight decreases in that ratio occurred in Denmark, due to an increase
in note liabilities, and in Norway because of improvement in the
e.xchange position. All other countries in the above table showed
improvement in their gold reserve ratios. When holdings of foreign
credits, most of which are against gold currency countries and can
be used to secure gold, are added to the gold holdings, no reserve
ratio in the above table is below 25 per cent, and more than half are
above 50 per cent.
REPORT OF THE SECRETARY OF THE TREASURY 93
I
In the present status of oar international balance sheet the only
means in the final analysis by which Europe can secure gold from us is
through new loans. The fundamental reason for our gold imports,
of course, is that payments running to the United States from foreign
covmtries are very much larger than payments running from the
United States to foreign countries. The merchandise balance is
constantly in our favor, as are also interest payments to us on past
investments abroad. Such investments were estimated at the end
of 1925 at about $10,500,000,000, which included the following
amounts of new capital invested in foreign securities for years since
1922:
New capital invested in the United States in foreign securities, 1922 to 1925
{■par values)
Calendar year
.Vmount
Calendar year
Amount
1922. _.
1923...
$694, 000, 000
377,000,000
878, 000, 000
1925
192fi (9 months)
.... $1,031,000,000
7«8 Ofin nnn
1924...
Our main debit items of tourists' and charitable expenditures,
immigrant remittances, and ocean freight payments are not capable
of absorbing this favorable balance from trade and interest. Loans
to Europe are not only the natural means of balancing international
accounts at present but will assist in that rehabilitation of Europe
so desirable for the growth and expansion of our foreign trade.
The world's gold production figures for the calendar year 1925
show a slight increase. The total production stood at 1394,000,000,
as compared with $393,500,000 in 1924 and $470,000,000 in 1915,
the peak of production. The increase over the preceding year is
only slight in spite of a new high record for Canadian production,
further revival on the part of the Russian industry, and some increase
in the Transvaal output. Canadian production has increased from
about $19,000,000 in 1921, the first year in which postwar produc-
tion attained the pre-war peak, to $36,000,000 in 1925. The total
production of Russia and Siberia was $29,000,000 in 1914; the war
and the revolution, however, gradually brought the gold mines to a
standstill and in 1921 the output was only about $900,000. In
recent years a recovery has been made, and in 1925, with a produc-
tion of $22,000,000, Russia is supplying almost 75 per cent of her
pre-war output. Production in the United States declined slightly,
being $49,860,200 in 1925. The United States, however, after South
Africa, is the largest gold-producing country in the world.
Gold used in the arts in the United States in the calendar year 1925
was estimated at $65,953,870, of which $36,161,849 was new metal.
Gold reclaimed from the arts during the same period was about
$29,792,021.
94
REPORT OF THE SECRETARY OF THE TREASURY
The monetary stock of gold held by the United States reached its
highest point in the history of this country on December 1, 1924,
when it amounted to $4,570,000,000. It again reached the
S4, 500,000,000 mark on July 1, 1926. Gold imports during the fiscal
year 1926, together with our own production, increased our total stock
by SI 14,000,000. On November 1, 1926, our gold stock amounted
to $4,491,000,000. Since 1923 the gold stock in this country has
equaled about one-half of the visible stock of gold in the world.
Our present stock is 2.4 times as great as it was in 1913.
The gold holdings of the Federal reserve banks decreased during the
first half of the fiscal year, but during the last half of the year a
sufficient part of our import flowed to these banks to place their
holdings above the figure of July, 1925. Their proportionate hold-
ings of the total gold stock is slightly lower than at the close of the
fiscal year 1925.
The following table shows the monetary stock of gold in the United
States on the 1st of July of each year from 1913 to 1924, inclusive.
and on the first of each month from July 1, 1925, to November 1,
1926, together with the gold holdings of the Federal reserve banks
on or about the same dates:
Stock of monetary gold in the United Stales and total gold holdings of Federal reserve
banks, 1913 to 1926
Date
Stock
' in United
i States (in
millions of
dollars)
Per cent
of
amount
in 1913
Holdings
of Federal
reserve
banks (in
millions of
dollars)
Ratio of
gold
held by
Federal
reserve
banks to
total
July, 1913
July, 1914
July, 1915
July, 1916
July, 1917
July, 1918
July, 1919
July, 1920
July, 1921
July, 1922
July, 1923
July, 1924
July, 1925
August, 1925
September, 1925.
October, 1925
November, 1925.
December, 1925..
January, 1926...
February, 1926..
March, 1926
April, 1926
^lay, 1926
June, 1926
July, 1926
August, 1926
September, 1926.
October, 1926
November, 1926.
871
891
986
450
019
07G
113
709
298
785
050
491
386
391
400
399
442
426
409
415
445
495
497
494
500
519
511
499
491
100
101
106
131
161
164
166
145
176
202
216
240
234
235
235
235
237
237
236
236
238
240
240
240
241
242
241
240
240
329
543
1 1,237
1 1,928
2,148
I 1,854
2,468
3,021
3,095
3,128
2,790
2,783
2,767
2,760
2,783
2,743
2,704
2,792
2,765
2,767
2,797
2,797
2,835
2,851
2,828
2,807
2,807
Per cent
16.57
22.16
40.97
62.68
69.00
68.44
74.83
79.82
76.42
69.65
63.61
63.38
62.89
62.74
62.65
61.97
61.33
63.24
62.20
61.56
62.19
62.24
63.00
63.09
62.69
62.39
62.50
1 Excluding gold held abroad, which is not included in the monetary stock in the United States.
REPORT OF THE SECRETARY OF THE TREASURY
95
Gold and gold certificates in circulation and the proportion of
the gold circulation to total circulation has increased but slightly
during the past year. In March, 1922, the Treasury and the Fed-
eral reserve banks inaugurated the policy of paying out gold cer-
tificates with other forms of money in the ordinary course of business,
and since that date to November 1, 1926, gold certificates in circula-
tion have increased by about $675,000,000. At present about 30
per cent of the total money in circulation in the country consists of
gold coin and gold certificates; about 22 per cent is gold certificates
alone. The following table shows the total money in circulation
and the amount of gold coin and gold certificates in circulation out-
side the Treasury and the Federal reserve banks on July 1, 1922,
and subsequent dates:
Total gold and total money in circulation in the United States, by quarters, 1922 to
1926
Month
July 1, 1922.
Oct. 1, 1922.
Jan. 1, 1923.
Apr. 1, 1923.
July 1, 1923.
Oct. 1, 1923.
Jan. 1, 1924.
Apr. 1, 1924.
July 1, 1924.
Oct. 1, 1924.
Jan. 1. 1925.
Apr. 1, 1925.
July 1, 1925.
Oct. 1, 1925.
Jan. 1, 1926.
Apr. 1, 1926.
July 1, 1926.
Oct. 1, 1926.
Nov. 1, 1926
Gold coin
in circulation
$415,
412,
429,
410.
404,
397,
415,
408.
395,
427,
458,
469,
423,
413,
424,
450,
445,
422,
407,
937, 553
894, 448
192, 179
102, 015
181, 003
980,664
319, 417
061, 873
746, 934
969, 721
206, 331
447, 591
860, 506
973, 095
037, 335
787, 416
068, 360
052, 228
456, 265
Gold certifi-
cates
in circulation
$173,
214,
302,
319,
386,
465,
582,
687,
801,
898,
970,
914,
1, 004,
1.050,
1,114,
1, 089,
1, 057,
1,100.
1, 101,
342, 199
956 729
743, 899
068, 349
456, 089
279,009
029,209
252, 519
380, 819
165, 509
564. 239
968, 019
823, 302
056, 659
330, 649
002, 939
364, 119
919, 789
452. 799
Total gold
in circulation
$589,
627,
731.
729,
790,
863,
997,
1,095,
1, 197,
1, 326,
1, 428,
1, 384,
1, 428,
1,464,
1, 538,
1, 539,
1, 502,
1. .522,
1,508,
279, 752
851, 177
936, 078
170, 364
637, 092
259, 673
348, 626
314, 392
127, 753
135, 230
770, 570
415, 610
683, 808
029, 754
367, 984
790, 355
432, 479
972, 017
909,064
Total money
in circulation
$4, 374,
4, 520,
4, 732,
4, 655,
4, 729,
4.849,
4,951,
4, 812,
4,754,
4, 806,
4, 992,
4. 776,
4, 736,
4, 827,
5,008,
4, 805,
4, 834,
4, 906,
4, 933,
015, 037
895, 293
898, 991
675, 790
378, 516
921, 139
085, 383
861, 042
772 754
366, 540
930, 842
167, 142
464, 237
005, 324
120, 908
884, 836
710, 681
198, 326
169, 057
Ratio of
gold coin
and certifi-
cates to
total money
in circu-
lation
13. 5
13.9
15.5
15.7
16.7
17.8
20.1
22.8
25 2
27.6
28.6
29.0
30.2
30.3
30.7
32.0
31.1
31.0
30.6
The coinage of gold during the last year has decreased by about
70 per cent from the coinage of the preceding fiscal year. The
amount of gold coin in the Treasury decreased from $615,000,000 in
July, 1925, to $580,000,000 in November, 1926. Gold coin held in
the Treasury above the legal requirement that at least one-third of
the gold held against gold certificates in circulation be in the form of
gold coin, was less on November 1, 1926, than the amount so held
on July 1, 1925, by about $65,000,000.
Silver
Purchases of silver by the Government during the fiscal year 1926
amounted to about 5,000,000 fine ounces, costing about $3,500,000.
Deliveries of silver purchased under the terms of-the act of April 23,
96 REPORT OF THE SECRETARY OF THE TREASURY
1918, were completed in October, 1924, but about 11,400,000 silver
dollars were coined during the past year under the terms of this act,
leaving silver sufficient for the coinage of 6,500,000 dollars. About
55,000,000 subsidiary silver coins were executed during the year.
The New York market price of silver was sustained very near the
level of 1925 during the fiscal year ended June 30, 1926. The
average price for the year of $0.68317 per ounce varied very little
from the average price of $0.68813 tor the fiscal year 1925. The
range varied somewhat from that of 1925, the highest price being
$0.731875 on September 5, 1925, and the lowest $0.633025 on April
22, 1926, as compared with $0.66125 and $0.72375 in the fiscal year
1925. Influences operating favorably on the price of silver in the
late summer were the demand from China and purchases by the
United States Treasury for subsidiary coinage The high point of
silver prices in September was followed by an almost steady down-
ward drift to the low j)oint of April 22. Some reaction in price
occurred in the late spring and early summer, but by October 19,
1926, the price of silver had dropped to $0,515 in New York, the
lowest point in eleven years.
Much concern has been evidenced in the possible effect upon silver
of the adoption of the plan of the Royal Commission on Indian
Currency and Finance. While the plan of the Royal Commission
leaves undisturbed the place of the silver rupee in the circulation of
India, no more silver for coinage will be required at present. How-
ever, India's consumption of silver for coinage purposes in recent
years has been very small as compared with her total net imports
of the metal. For 1923 and 1924 the figures are:
Total net imports of silver
Consumption of .silver for coinage purposes.
Percentage of imports used for coinage
1923
1924
Fine ounces
Fine ounces
92, S2.5, 822
86, 523. 908
2, 279, 994
911, 715
2. ,5
1. 1
India's demand for silver would seem to depend more on the
general prosperity of the country and a favorable trade balance than
on the currency situation. India's trade position has been definitely
and increasingly favorable in the last few years, due largely to good
crops resulting from success! velj* good monsoons. At least a normal
monsoon this fall seems assured at the present writing.
Exports of silver from the United States to India in the fiscal year
1926 were less than those for 1925, the amounts being, respectively,
$42,794,176 and $54,803,754.
India and China have for many years, of course, been the large
absorbers of silver. In the calendar vear 1925 the two countries ab-
REPORT OF THE SECRETARY OF THE TREASURY
97
sorbed more than 70 per cent of the world's silver production. The
total net imports of silver into China during 1925 were more than twice
those of 1924. Influences aft'ectino; the Chinese demand for silver dur-
ing the past fiscal year, however, have been verj^ diverse. Active
warfare in China caused hoarding and at the same time a demand
for silver coin to pay troops, both tending to increase the demand for
silver. On the other hand, disturbed conditions tended to the accu-
mulation of silver stocks in the foreign banks of the treaty ports for
security, a condition which was aggravated by the boycott of British
and Japanese goods. Shipments of silver from China to London
resulted, an event which had not occurred for many years. This
had a depressing effect on the price of silver and indicated that the
import of silver to China had exceeded that country's power of absorp-
tion. The United States exported $43,742,077 in silver to China in
the fiscal year 1926 as compared with $23,022,808 in 1925. A more
settled condition in China would seem to promise a more stable
silver demand.
The world's silver production in the calendar year 1925 increased
over that for 1924 but was not quite up to the 1923 production.
Silver production for each of the last three years, however, has been
higher than in any previous year of the world's history. American
silver production in 1925 exceeded the 1924 production by $2,089,050,
being $45,911,864.
In addition to her own production, the United States received
silver imports amounting in all to $69,400,686, coming almost entireh*
from Mexico, Peru, Canada, and Chile, in the order named.
The following table shows the world's production of silver, the
proportion thereof absorbed by India and China, together with the
average price of the metal in New York:
World production of silver and net imports into India and China, 1916 to 1925
[In millions of fine ounces]
Percentage
World
Total net
of world
Average
Calendar year
production
imports
production
price of
of
into India
absorbed
silver in
silver
and China
by India
and China
New York
1916
180.8
72.4
40
$0.67
1917
186.1
83.5
45
.84
1918.
203.2
208.8
103
.98
1919.
179.8
235. 0
131
1.12
1920
173.3
115.5
67
1.02
1921-
171.3
90.9
53
.63
1922
209.8
116.3
55
.68
1923
246. 0
173.9
71
.65
1924
239.5
245.1
117.9
175.2
49
71
.67
1925
.69
98 REPORT OF THE SECRETARY OF THE TREASURY
FUNDS ADMINISTERED BY THE TREASURY
Adjusted service certificate fund
Investments for the account of the adjusted service certificate
fund were made during the fiscal year 1926 in special issues of Treas-
ury notes and certificates of indebtedness bearing interest at the
rate of 4 per cent per annum, in accordance with the procedure
outHned in the Annual Report of the Secretary of the Treasury for
the fiscal year 1925. The investments made January 1, 1925, were
$100,000,000 face amount of the adjusted service series obHgations
of which $4,600,000 were redeemed to June 30, 1925, to provide
funds for authorized payments to that date.
In the fiscal year 1926 the investments in similar obligations
aggregated $123,500,000 face amount. The funds available for this
purpose were appropriations of $50,000,000 and $70,000,000 available
January 1 and March 5, 1926, respectively, and $3,500,000 available
January 1, 1926, from interest on investments paid on that date.
Redemptions aggregating $15,000,000 face amount were made to
provide funds for authorized payments; $38,200,000 face amount of
the one-year certificates of indebtedness held in the investment
account of the fund matured January 1, 1926, and after redemption
the proceeds of the principal amount were invested in like obligations
maturing January 1, 1927.
When funds are required for authorized payments by the Veterans'
Bureau, approved requisitions are made on the Treasury for advances
to the disbursing clerk on accountable warrants in the same manner
as with other advances from appropriations expended through dis-
bursing clerks of the several departments and establishments. The
Treasury then redeems a sufficient face amount of the obligations to
honor the requisitions and deposits the principal amount and accrued
interest to the credit of the appropriation account of the fund and the
total is simultaneously advanced to the disbursing clerk. Under
that procedure the fund receives the full benefit from the investments.
A statement of the condition of the fund as of June 30, 1926, is as
follows :
Adjusted service certificate fund as of June 30, 1926
FUND ACCOUNT
Appropriations:
Jan. 1, 1925 $100,000,000.00
Jan. 1, 1926 50,000,000.00
Mar. 5, 1926 70,000,000.00
Interest on investments 3, 876, 975. 34
223, 876, 975. 34
EEPOKT OF THE SECRETARY OF THE TREASURY
99
Checks issued by Veterans' Bureau against credits from the
fund and paid by the Treasurer of the United States $19, 587, 982. 61
Balance in fund June 30, 1926. 204, 288, 992. 73
FUND ASSETS
Investments:
4 per cent Treasury notes —
Dated Jan. 1, 1925, maturing Jan. 1,
1930 -- $50,000,000
Dated Jan. 1, 1926, maturing Jan. 1,
1931 53, 500, 000
Dated Mar. 5, 1926, maturing Jan. 1,
1931 70, 000, 000
4 per cent one-year Treasury certificates —
Net issues $50, 000, 000
Redemptions to June 30,
1926 19,600,000
30, 400, 000
Net investments 203, 900, 000. 00
Balance to credit of disbursing officer of Veterans' Bureau (in-
cludes outstanding checks) 388, 992. 73
Total fund assets 204,288,992. 73
District of Columbia teachers^ retirement jund
Investments for account of the District of Columbia teachers'
retirement fund are made by the Treasurer of the United States as
and when funds are available upon reports received from the Com-
missioners of the District of Columbia. Purchases during the fiscal
year 1926 were made as follows: $48,750 face amount second Liberty
loan 434 per cent bonds at a principal cost of $49,039.45, and $241,100
face amount of Federal farm loan 43^ per cent bonds at a principal
cost of $246,701.68. The securities held in the investment account
June 30, 1926. and their principal cost are as follows:
Face
amount
Principal
cost
First Liberty loan 4M per cent bonds. -
Second Liberty loan 4J^ per cent bonds
Third Liberty loan 4}-i per cent bonds.
Fourth Liberty loan i]4 per cent bonds
Treasury i}i per cent bonds, 1947-1952.
Federal farm loan 4}^ per cent bonds...
Total- ---
$26, 850
202, 150
165, 450
735, 750
10,000
288,840
$27, 529. 64
203, 954. 62
157,611.47
704,371.27
10, 000. 00
295, 754. 53
1,429,040 1 1,399,221.53
100
RKPORT OF THE SECRETARY OF THE TREASURY
The following statement shows the transactions under the com-
bined appropriated and trust fund accounts during the fiscal year
1926, and includes cumulative figures from date of the approval of
the act, January 15, 1920, to June 30, 1926:
Fiscal
year 1926
Unexpended balance, June 30, 1925 - - $52,792.89
Credits:
Deductions from salaries - -- 263,919.72
Interest earned on investments - --- 49,471.88
Appropriations made by Congress ' ..- 60,807.86
Total.
Charges;
.\nnuities, refunds, etc
Investments, principal cost
Accrued interest on investments -
Unexpended balance, June 30, 1926 '.
Total--
426, 992. 35
94, 632. 45
2 295, 741. 13
1,295.74
35, 323. 03
Jan. 15,
1920, to
June 30, 1926
$1, 410, 128. 04
155,900.00
268, 429. 47
1, 834, 457. 51
397, 656. 44
3 1,399,221.53
< 2, 256. 51
35, 323. 03
426,992.35 I 1,834,457.51
' Exclusive of amounts carried to surplus fund.
» Face amount $289,850.
' Face amount $1,429,040.
' Repayable in 1927.
' E.xclusivc of imexpended balances in hands of District of Columbia disbursing olBcer, but includes
$7.73 unexpended balance of funds advanced to Treasurer for investment.
United States Government life insurance fund
The Secretary of the Treasury is required to invest in interest-
bearing obligations of the United States or in bonds of the Federal
land banks all moneys received in payment of premiums on converted
insurance in excess of reserve requirements and authorized payments,
pursuant to the provisions of section 18 of the act approved Decem-
ber 24, 1919, as amended March 4, 1923. Investments are made
as and when funds are available, upon advice received from the
Director of the United States Veterans' Bureau. During the fiscal
year 4)^ per cent Federal farm loan bonds were purchased for the
fund aggregating S37,350,000 face amount, at a principal cost of
$37,846,769.40. These purchases were made pursuant to an arrange-
ment between the fiscal agent of the Federal land banks, the director
of the bureau, and the Treasury. All securities purchased for this
account are registered in the name of the Secretary of the Treasury
for account of the United States Government life insurance fund. The
obligations of the United States in the fund are held in safe-keeping
by the Division of Loans and Currency of the Treasury Department,
and the Federal farm loan bonds are held by the Treasurer of the
United States. Monthly reports are made by the Treasury to the
Veterans' Bureau of all securities in the fund and the principal cost
thereof, and periodic verifications of the security holdings are made
through reports rendered to the director by the safekeeping offices
REPORT OF THE 3ECEETARY OF THE TREASURY
101
above mentioned. The securities held in the fund on June 30, 1926,
were as follows :
First Liberty loan converted 4}i per cent bonds..
Second Liberty loan converted 434 per cent bonds
Fourth Liberty loan 434 per cent bonds
■il4 per cent Treasury bonds - _
4} 2 I'er cent Federal farm loan bonds
Total
Par value Principal cost
$6, 639, 900
18, 089, 300
42, 661, 550
49, 173, 200
$6, 316, 209. 21
16, 247, 357. 00
39, 495, 573. 60
49, 201, 905. 28
116,563,950
69, 200, 000
111,261,045.09
69, 742, 644. 40
185,763,950 1 181,003,689.49
Civil-service retirement and disability fund
Under provisions of the amendment of July 3, 1926, to the act
approved May 22, 1920, establishing the civil-service retirement and
disability fund, and the regulations issued pursuant thereto by the
Comptroller General of the United States, it was necessary to make
certain changes in the accounting procedure beginning July 1, 1926,
Under the former procedure, expenditures for salary, pay, or com-
pensation of persons entitled to the benefits of the act were exhibited
in the ofEcial reports at 973^ per cent of the appropriations therefor
and the remainder appeared as (1) authorized payments of annuities^
refunds, etc., under the act, and (2) expenditures on account of
investments of funds not required for payments indicated in (1)
above. Under the new procedure, expenditures for salary, pay, or
compensation from applicable appropriations are exhibited at 100
per cent, and deductions of 3H per cent from salary, pay, or com-
pensation are paid by checks of disbursing officers making salary
payments, which are sent to the disbursing clerk. Bureau of Pensions,
who subsequently deposits them with the Treasurer of the United
States for credit of the civil-service retirement and disability fund.
Section 11 of the act as amended authorizes the Secretary of the
Treasury to invest from time to time in interest-bearing securities of
the United States or Federal farm-loan bonds such portions of the
civil-service retirement and disability fund as in his judgment may
not be immediately required for the payment of annuities, refunds,
allowances, etc., and that the income derived from such investments
shall constitute a part of such fund for the purpose of paying such
annuities, etc.
Where, under the provisions of section 12 of the act as amended,
gross or net returns are made of funds previously contributed by em-
ployees, accrued interest is required to be included therein, computed
at the rate of 4 per cent per annum compounded on June 30 of each
fiscal year.
102
REPORT OF THE SECRETARY OF THE TREASURY
The same considerations as to savings and simplified procedure
are accordingly now applicable to investments made by the Treasury
for account of the fund as are indicated in connection with invest-
ments for account of the adjusted service certificate fund appearing
in the article in the Annual Report of the Secretary of the Treasury
for the fiscal year 1925, page 118.
The following procedure, therefore, was prescribed, effective July
1, 1926:
(1) Investments for account of the fund will be made in special
issues of Government obligations bearing interest at the rate of 4 per
cent per annum payable on June 30 in each fiscal year, or on earlier
redemption, as follows: Certificates of indebtedness, civil-service
retirement fund series; Treasury notes, civil-service retirement fund
series. Such obligations will be issued in denominations of $100,000
or multiples thereof, and at par as of dates of issue.
(2) The Treasurer of the United States will act as disbursing officer
for the investments in the same general manner as at present, making
payments therefor from approved advances from the fund upon
accountable warrants. The Commissioner of Accounts and Deposits
will be responsible for the investments from available funds and the
Commissioner of the Public Debt for issuance of . the securities and
safe-keeping thereof in the same general manner as is done with the
adjusted service certificate fund. Credits to meet monthly requisi-
tions of the disbursing clerk of the Bureau of Pensions for authorized
payments will be provided from current deductions and through
redemptions of the special issues, after such deductions or the pro-
ceeds of the redemptions have been covered into the Treasury to
the credit of the fund.
During the fiscal year 1926, $2,050,000, face amount of Treasury
notes, series A-1926, were redeemed at maturity, March 15, 1926.
The investments during the year aggregated $11,335,700, face amount^,
of which $8,000,000 was in second Liberty loan 43<i per cent bonds
and $3,335,700 in fourth Liberty loan 4}4 per cent bonds. The net
investments during the year aggregated $9,285,700, face amount^
purchased at a principal cost of $9,472,154.96. The interest on
investments amounted to $2,204,513.36, and from August 1, 1920^
the effective date of the retirement act, to June 30, 1926, the earn-
ings amounted to $7,350,317.47.
The following statement shows the securities held in the fund as of
June 30, 1926:
Par value
Principal cost
Second Liberty loan 4Ji percent bonds
$30,500,000
23,524,050
$30, 656, 870. SO
Fourth Liberty loan 4>i per cent bonds
23,217,656.54
Total
54 024 050 ^^ s'^ •'^'" f^
' '
REPORT OF THE SECRETARY OF THE TREASURY
103
The receipts and expenditures on account of the fund for the
fiscal year 1926 and cumulative totals to June 30, 1926, are as follows:
Fiscal year 1926|VuieyS6'
Unexpended balance June 30, 1925..
Credits:
On account of 2H per cent deductions from basic compensation of
employees subject to the civil service retirement act 2
Receipts —
Interest on profits on investments
All other
Total
Charges:
On account of refunds to employees,[annuities, etc
On account of investments at cost'
.\ccrued interest on investments (net) paid ,
Unexpended balance June 30, 1926
Total
'$1,487,116.89
17, 871, 530. SO
2, 204, 513. 36
97, 647. 70
21, 660, 808. 75
$91,584,071.63
7, 350, 317. 47
334, 934. 7S
99, 269, 323. 88
10, 275, 000. 00
3 10, 872, 854. 96
• 57, 111. 94
570,065.73
44, 823, 885. 72
« 53, 874, 527. 04
845.39
570, 065. 73
21, 660, 808. 75 99, 269, 323. 88
1 This amount includes $1,407,868.33, representing $1,400,700 principal cost and $7,168.33 accrued interest
on $1,380,000, face amount, of second Liberty loan 4'i per cent bonds purchased on June 29, 1925, but not
cleared through the records in time for inclusion in the investment figures for the fiscal year 1925.
2 Act of July 3, 1926, vol ' 44, p. 910, sec. 10, increases amount of deductions to 3'/^ per cent, effective July
1, 1926.
3 Face amount, $10,665,700.
* Face amount, $54,024,050.
• Excess credits, deduct.
Foreign-service retirement and disability fund
The foreign-service retirement and disability fund, established
by section 18 of the act of May 24, 1924 (vol. 43, p. 144), was credited
during the fiscal year 1926 with the sum of $160,743.25, including
$7,589.86 earnings on investments. The fund was charged with
S63, 946.25 on account of annuities, and so forth, and $100,033.44
on account of investments, leaving an unexpended balance on
June 30, 1926, of $304.77. The administration of the fund is vested
in the Secretary of State, but the Secretary of the Treasury is re-
quired to make investments from time to time of such portion of
the fund as may not be required for authorized payments and to
credit the fund with the income. Part of the investments for 1926
were made in short-term obligations during a period when the funds
were not required for immediate disbursement. Such part of the
fund estimated not to be required for use during the fiscal year was
invested in longer-term securities. During the fiscal year 1926,
$1,500 face amount of Treasury certificates of indebtedness, series
TS-1925, held in the fund on June 30, 1925, matured and were
redeemed. Investments during the year and remaining in the
fimd June 30, 1926, were as follows: $74,600 face amount of second
Liberty loan 43^ per cent bonds purchased at a principal cost of
$75,532.50, and $26,000 face amount of 3^ per cent Treasury
certificates of indebtedness, series TD-1926, purchased at par.
With the exception of the 3^ per cent Treasury certificates of
indebtedness, series TD-1926, all of the securities in the investment
104
r.KPORT OF THE SECRETARY OF THE TREASURY
account on June 30, 1926, are registered in the name of the Secretary
of the Treasury in trust for account of the fund, and are held in
safe-keeping by the Division of Loans and Currency of the Treasury
Department. The total interest and profits earned and collected
on investments made to June 30, 1926, are $9,797.69.
The following statement shows the securities held in the fund as
of June 30, 1926:
Second Liberty loan converted 4Ji per cent bonds
Fourth Liberty loan 414 per cent bonds
3?i per cent Treasury certificates of indebtedness, series TD-1926
Total
Face
amount
Principal
cost
$74, 600. 00
79,150.00
26,000.00
$75, 532. 50
81,0(19.85
26, 000. 00
179,750.00 ! 182,602.35
The transactions in the fund for the fiscal year 1926 and cumulative
figures to June 30, 1926, are as follows:
Fiscal vear ' ^'"^ ^' ^^^'
fiscal year ^ to June 30,
^^26 j 1926
Unexpended bahince Juno 30, 1925
Credits:
On account of 5 per cent deductions from basic compensation of employees
subject to foreign service retirement act
Receipts-
Interest and profits on investments
Another
3, 541. 21
152,207.30
7, 589. 86
946. 09
Total.
Ch&rges:
On account of refunds to employees, annuities, etc.
On account of investments at cost
Unexpended balance Juno 30, 1926
164, 284. 46
$294, 382. 30
9, 797. 69
2, 673. 38
306, 853. 37
63, 946. 25
1 100, 033. 44
304.77
Total __ I 164,284.46
123,946.25
2 182, 602. 36
304. 77
306, 853. 37
■ Face amount $99,100.
' Face amount, $179,750.
Library of Congress trust fund
Under provisions of the act approved March 3, 1925, the Library
of Congress Trust Fund Board consists of the Secretary of the
Treasury, the chairman of the Joint Committee on the Library,
the Librarian of Congress, and two persons appointed by the Presi-
dent. The act authorizes the board to accept, receive, hold, and
administer such gifts or bequests of personal property for the benefit
of, or in connection with, the library, its collections, or its service
as may be approved by the board and by the Joint Committee on
the Library. The moneys or securities given or bequeathed to the
board arc required to be receipted for by the Secretary of the Treas-
ury, who is authoiized to invest, reinvest, or retain investments, as
the board mav determine.
REPORT OF THE SECRETARY OF THE TREASURY 105
As indicated in the Annual Report of the Secretary of the Treasury
for the fiscal year 1925, the first donation was made by Mr. James
B. Wnbur, of Manchester, Vt., and consisted of 1,000 shares 7 per
cent preferred capital stock of the Public Service Co. of Northern
Illinois. The donor reserved the right to receive six-sevenths of the
income during his lifetime, the remaining one-seventh to be credited
to the fund account of the board until such time as he might forego
a larger part or all of the income.
During the fiscal year 1926 a donation of $10,000 par value of
bonds was made by Mr. R. R. Bowker, of New York City, subject
to the condition that six-sevenths of the income therefrom be paid
to him during his lifetime, or to his wife during her lifetime should
she survive him, the remaining one-seventh to be credited to the
fund. These securities consisted of $5,000 face amount first mort-
gage 5 per cent gold bonds of the Detroit Edison Co., due January
1, 1933; $2,000 face amount 7 per cent gold bonds of the German
external loan, due October 15, 1949; $2,000 face amount 6K per
cent gold sinking-fund bonds of the Imperial Japanese Government
external loan of 1924, due February 1, 1954; and $1,000 face amount
7 per cent sinking-fund bonds of the Austrian Government guaran-
teed loan of 1923, due June 1, 1943.
All ot the above-described securities are held by the Treasurer of
the United States, subject to the order of the Secretary of the Treas-
ury, for account of the board. The earnings credited to the fund
during the fiscal year 1926 amounted to $774.29, which is the total
received to June 30, 1926.
OTHER FINANCIAL OPERATIONS
Federal jarm loan system
Federal land hanJcs. — During the fiscal year ended June 30, 1926,
the Federal land banks closed 36,803 loans, amounting in the aggre-
gate to $125,253,591. Net earnings for the same period amounted
to $8,596,543.62, a portion of which was used to increase reserve
accounts from $7,544,700 to $8,467,500. The net amount of out-
standing mortgage loans made by Federal land banks aggregated, as
of June 30, 1926, $1,043,954,725.03. The amount of farm loan bonds,
issued by Federal land banks, outstanding as of June 30, 1926, was
$1,029,375,635.
A notable achievement in this period was the reduction in the loan
rate from 53^ per cent, which obtained in all the banks of the system,
to 5 per cent in five of the banks and to 53<^ per cent in one other.
This was made possible both because of the favorable terms on which
farm loan bonds were being sold and because of the volume of business
106 REPORT OF THE SECRETARY OF THE TREASURY
now on the banks' books, enabling them to'operate on narrower
margins of profit.
The Treasury originally subscribed practically all the capital
stock in the Federal land banks. The law provides that this capital
is to be retired out of the proceeds of stock subscriptions by national
farm loan associations. On June 30, 1926, Government capital had
been reduced to $1,180,440. All Government capital has been retired
in seven banks.
The national farm loan associations, subsidiary organizations
through which Federal land bank loans are made, increased in number
during the fiscal year from 4,652 to 4,664. • The combined capital
stock in all Federal land banks on June 30, 1926, amounted to
$55,816,545, of which $54,066,950 is owned by national farm loan
associations, and the remainder, with the exception of $569,155, is
owned by the Federal Government.
Joint-stock land hanlcs. — During the fiscal year two joint-stock land
banks were chartered and four banks were liquidated. At the end
of the fiscal year there were 57 joint-stock land banks in actual
operation in all the States of the Union except the New England
States, Delaware, Florida, New Mexico, and Montana.
Loans amounting to $133,187,999 were made by joint-stock land
banks during the year to 21,220 borrowers.
The combined capital stock of all joint-stock land banks on June 30,
1926, was $43,494,020; reserve, $4,637,239.50; surplus and undi-
vided profits, $6,876,014.81. The net amount of outstanding mort-
gage loans made by joint-stock land banks aggregated, as of June 30,
1926, $600,149,835.63. The amount of farm loan bonds issued
by joint-stock land banks outstanding as of June 30, 1926, was
$571,476,800.
Federal intermediate credit hanlcs. — The 12 Federal intermediate
credit banks authorized by the agricultural credits act of 1923 have
been in actual operation practically three years. Each bank has a
paid-in capital of $2,000,000, with a call upon the Treasury for an
additional $3,000,000.
The following statement indicates the volume of their business and
the extent of their service :
Direct original advances to cooperative marketing associations from
the beginning of operations to June 30, 1926, aggregated $149,160,-
099.65. In addition, renewal notes equaled $108,643,976.32. Total
loans, therefore, amounted to $257,804,075.97. Of this sum $224,-
488,164.96 has been repaid, leaving outstanding at the close of the
fiscal year $33,315,911.01. These advances were distributed by
commodities, as follows:
EEPORT OF THE SECEETAEY OF THE TREASURY 107
Tobacco $52,239,909.50
Cotton 58, 281, 163. 06
Raisins 12, 600, 000. 00
Wheat 10, 138, 075. 26
Wool 3, 850, 145. 49
Prunes 1, 900, 000. 00
Canned fruit and vegetables 6, 630, 837. 09
Peanuts 565, 530. 00
Rice 1,914, 731. 65
Broom corn 335, 447. 60
Redtop seed 95, 800. 00
Olive oil 51, 960. 00
Coffee 406,500.00
Hay 75,000. 00
Grimm alfalfa seed 75, 000. 00
Total 149, 160,099.65
Original rediscounts aggregated $90,409,465.35 and renewals
$43,987,367.04 additional, or a total of $134,396,832.39. Repay-
ments have been made in the sum of $91,262,725, leaving outstanding
at the close of the fiscal year $43,134,107.39. The agencies through
which these rediscounts were made are classified as follows:
Agricultural credit corporations $62, 453, 694. 09
National banks 196, 215. 02
State banks 2, 853, 393. 11
Livestock loan companies 24, 376, 484. 71
Savings banks and trust companies 529, 678. 42
' Total 90,409,465.35
The Federal intermediate credit banks paid into the United States
Treasury, as provided in section 206, paragraph (b) of the agricultural
credits act of 1923, 50 per cent of the net earnings of said banks for
the calendar year ending December 31, 1925, or $508,589.86. On
June 30, 1926, the surplus, reserve, and undivided profits accounts
aggregated $2,088,618.32.
It is estimated that approximately 90,561 farmers have been
served through the rediscount of their individual notes and 882,129
served as members of cooperative marketing associations. The in-
terest rate on direct loans to cooperative marketing associations
continued at 43^^ per cent until early in November, when, due to the
condition of the debenture market, it was increased to 5 per cent.
Again, on June 15, 1926, it was reduced to 43^ per cent. The rate on
rediscounts was 5 per cent throughout the period covered by this
report.
General. — While the operations of the farm loan system have, gener-
ally speaking, proceeded in a satisfactory manner, there appear to be
many opportunities for substantial improvement in both the adminis-
trative and operating functions of the system. Some of these improve-
11488— 26t 9 -^
108 REPORT OF THE SECRETARY OF THE TREASURY
nuMits may be accomplished through revision of reguhitions,
roadjustments of personnel, or standardizing of procedure. The
remainder, and unquestionably the more important, may be achieved
only by amendment of the farm loan act.
With respect to those defects which maj^ be remedied without
legislation, the Treasury has already taken steps to apply corrective
measures.
xVs an example of what has been accomplished along these lines,
reference may be made to the revision of the regulations of the Farm
Loan Board. In October, 1925, attention was drawn to the fact that
some of the joint-stock land banks had evidenced an inclination to
interpret the regulations of the Farm Loan Board in such manner as
to enable them, by certain bookkeeping devices, to pay dividends
which, when viewed from a conservative standpoint, might be deemed
excessive. It is appreciated that under the act, which permits a
joint-stock land bank to sell its bonds to the extent of fifteen times its
capital, the business of the bank may be extended and satisfactory
service rendered the public only if the capital stock of the bank may be
increased as may be found necessary. Sound banking principles
demand, however, that dividends to investors in joint-stock land
bank stocks should be paid at a rate that can be maintained, and that
wide fluctuations should be avoided in the market values of the stock.
As soon as the Treasury was advised of the situation as above set
forth, an examination was directed to be made of certain of the banks
of the system. As a result of this examination it developed that the
regulations of the Farm Loan Board were not sufficiently compre-
hensive to enforce the adoption of standardized methods of account-
ing and banking practice by the joint-stock land banks. To remedy
this condition, revised regulations were prepared and promulgated in
June, 1926. While there continue to be many apparent opportunities
for the further strengthening of these regulations, it is felt that the
recent revision w^ill prove an adequate remedy for at least some of the
former defects in management.
Among the other improvements attained in the administration of
the system is the reinforcement of the bureau's examining facilities.
Due, in all probability, to the rapid growth of the system, the Federal
Farm Loan Bureau has fallen considerably in arrears in the examina-
tion of the banks of the system. An investigation was directed to be
made of this situation, as a result of which there has been formed in
the bureau an examining division, headed by a chief examiner, with
three assistant chief examiners and a force of examiners and reviewing
appraisers sufficient to conduct examinations of the banks of the
system, as required by the farm loan act. This division, in addition,
will assist the banks in standardizing methods of accounting and
banking practice and of preparing reports of condition.
REPORT OF THE SECRETARY OF THE TREASURY 109
The Treasury will continue to study the operations of the system
and will from time to time make such other improvements as are
shown to be necessary.
There are, however, several fundamental weaknesses in the organic
law. This is not intended, and should not be construed, as a criticism
of the framers of the original act, for the defects in question could be
ascertained only through several years of actual operation and could
not have possibly been foreseen at the time the law was enacted.
It is not possible at this time to set forth in full the particular pro-
visions which experience has demonstrated to be faulty. In brief,
they pertain to the administrative powers vested in the board and
to the control exercised by the Treasury over the operations of the
system. A careful analysis is being made of the situations which
have arisen in the past and which may be avoided in the future only
through revision of the organic act. As a result of such analysis
appropriate recommendations will be made to Congress.
The system has fully demonstrated its capacity for providing valua-
ble service to the farmer. Bonds of the system, offered to the invest-
ing public, are entirely sound and their popularity is continually
increasing. It is earnestly believed that with the passage by Con-
gress of the necessary remedial amendments to the act, and with the
continued introduction of improved methods of administration, the
system will in the future be able substantially to surpass the very
creditable record attained during the 10 years of its existence.
Federal reserve hanks as fiscal agents of the United States
In considering the Federal reserve banks as fiscal agents of the
United States a brief sketch of some of the outstanding incidents
leading up to their designation is in order.
Prior to the establishment of the Treasury Department in 1789,
the Government finances had been handled by boards or commissions,
appointed by the Continental Congress. This policy was due to the
reaction against centralized control arising in the Colonies thi'ough
the appointment of colonial governors by the King of England; and
the antipathy toward a centralized Treasury system continued on
this account for some time, despite the fact the commission plan had
proved most unsatisfactory.
The fiscal history of the United States from 1789 to 1916 may he
said to consist of a number of experiments in an attempt to liberate
the revenue of the Government to the use of the country as a whole,,
provide means of transferring currency to those points where it was
most needed, and to develop through the banking system of the
country a means of financing the Government's requirements.
The First Bank of the United States was chartered in 1791; and
although its charter made no specific provision for the deposit of
110 REPORT OF THE SECRETARY OF THE TREASURY
Government funds, Secretary Hamilton felt that it was his duty to
use the bank as a fiscal agent and pointed out that the Government
would doiive the following advantages:
(1) The bank would render the Federal Government special aid
in a sudden emergency, such as might arise through war.
(2) The bank would assist in collecting and handling taxes and
other revenue accruing to the Government.
(3) The bank would assist in making payments on foreign debts.
(4) The bank would assist in meeting the interest payments on
the public debt.
It may be said that during its life the bank carried out all of these
provisions in a manner at least more satisfactory than theretofore.
Funds were transferred with a saving to the Treasury Department
through its foreign-exchange operations it assisted in making remit-
tances on the foreign debt, and it advanced loans to the Government
to an extent that proved a handicap to the bank itself.
Prior to the closing of the First Bank of the United States there
was considerable growth of State bank organizations, and to these
Secretary Gallatin transferred many of the Government fiscal agency
functions when he realized that the First Bank would not be rechar-
tered. The State banks with inadequate capital attempted to fill
the gap left by the closing of the Bank of the United States, and this
additional financial burden, together with financing the War of 1812,
caused a large number of these banks to fail. Speculation and note
inflation depreciated their issues in some cases to 50 per cent below
par, causing a suspension of specie payment and a breakdown in
the ability of the Treasury to transfer its funds, causing great incon-
venience and loss.
This condition led Secretary Dallas in 1815 to recommend the
establishment of a national bank to strengthen the State banks,
restore the currency to a specie basis, and give public confidence.
The plan met with considerable opposition in Congress and it was not
until 1816 that the Second Bank of the United States was chartered.
The First Bank of the United States was organized principally
to extend public and private credit, and there was no special provision
for the keeping of public funds, but the act organizing the Second
Bank specifically authorized the Secretary of the Treasury to deposit
Government funds "in places in which the said bank and branches
thereof may be estabhshed." The Government funds were not at
once transferred to the Second Bank, owing to the inability of a large
number of the State banks to resume specie payment; and the effort
to collect them proved a diflScult and thanldess task and caused
considerable friction.
Under its charter the Second Bank paid no interest on Government
deposits but performed a certain number of banking functions free of
EEPOET OF THE SECRETARY OF THE TREASURY 111
charge. These consisted, as in the First Bank, of offering the neces-
sary facilities for transferring pubhc funds from place to place within
the United States, and distributing the funds in payment of the
public creditors without charging commissions or claiming allowance
on account of difference of exchange. These two functions were
performed in a satisfactory manner and at a saving to the Treasury.
Moreover, during its life the Second Bank made loans to the Govern-
ment and rendered timely aid in meeting pension claims payments
and paying both installments of principal and interest on the public
debt.
Opposition led by President Jackson prevented the renewal of the
charter of the Second Bank, and it ceased functioning as a national
institution in March, 1836, and the Government again relied upon
State banks as depositaries, of which by 1836 there were slightly
more than 700 chartered and doing business.
The year 1837 brought with it a panic, suspension of specie pay-
ment upon the part of the banks, and the usual inconvenience and
loss to the Government due to the unavailability of public deposits
or payment only in depreciated State bank notes.
From the founding of the Treasury Department to 1846 the public
debt bore a very close relationship to the public deposits and the
banks. During a large part of the period covered by the first two
banks of the United States, the Government leaned very heavily
upon them in its financial operations, and although they performed
their fiscal duties in a fairly efficient manner, they were abandoned
for reasons either of jealousy or politics in favor of the State banks.
The latter, with their undercapitalization and unregulated organiza-
tion, fell down under the burden. As a result public sentiment
demanded a complete separation of public finances from all banks in
general.
In 1846, after several years of vacillation and discussion. Congress
finally passed a bill establishing the Independent Treasury. The act
provided for four Assistant Treasurers and for a like number of sub-
treasuries, to be located at New York, Boston, Charleston, and St.
Louis. These officers were "required to keep safely, without loaning,
using, depositing in banks, or exchanging for other funds than as
allowed by this act, all public money collected by them." In other
words, the fiscal duties of holding public money on deposit and trans-
ferring it from point to point, heretofore performed by the banks,
were to be performed by these new independent branches of the
Treasury Department.
From 1846 until the outbreak of the Civil War, the Treasury De-
partment continued to keep the public money out of banks. The
financing of the Mexican War was relatively easy, as it was of short
duration and such loans as the Government made were well sub-
112 REPORT OF THE SECRETARY OF THE TREASURY
scribed. The country itself was entering a period of prosperity and
the only problem the Treasury had was the use to be made of its
surphis funds. In 1853 this became a matter of considerable moment
and was met by purchases of silver l)ullion. Wlien this did not ease
the stringency the Secretary of the Treasury purchased Government
bonds in the open market, forcing them to a high premium. Receipts
from customs duties continued to increase faster than Government
expenditures, thus piling up a large surplus in the subtreasuries;
and again in 1857 the Secretary of the Treasury entered the market
as purchaser of bonds, but the aid was poorly timed and had the
double effect of encouraging speculation and so reduced the Treasury
surplus that assistance could not be rendered when most needed
during, tlie actual financial crisis of that year.
The advent of the Civil War at once proved the inadequacy of the
Independent Treasury system to meet unaided a great emergency.
Practically the first step of Secretary Chase's financial program was
to ask the banks for a loan of $50,000,000. This was followed two
years later by a complete break away from the independent idea
through the establishing of the national-bank system and the designa-
tion of these banks as depositaries of public funds.
One of the great disadvantages of the Independent Treasury and
one which existed until its abolishment was its inability to supply
business with sufficient note circulation when needed, and to contract
the circulation when speculation reached a danger point. From
1870 to 1893 was a time of considerable prosperity in the United
States. Government receipts exceeded expenditures almost con-
tinually, thus piling up a Treasury surplus just at the time that
business needed currency in circulation. On at least three different
occasions during this period the Secretary of the Treasury entered
the bond market and purchased Government bonds with the intention
of relieving the monetary stringency. As Government bonds were
used by the national banks to secure their note circulation, the pur-
chase and retirement of any appreciable amount of bonds by the
Government had the tendency to reduce the national-bank note cir-
culation by an equal amount, thus defeating the purpose of the pur-
chase. Another expedient put into practice about 1880 to relieve
the money market was the depositing of public moneys in private
banks. This policy once reinaugurated was continued, but it was
not until 1890 that the Secretary of the Treasury made a serious
effort to force a wide distribution. This he did by allowing national
banks accepting Government deposits to secure them by pledging
other securities than Government bonds. Under this practice the
growth of national-bank depositaries increased quite rapidly, and by
1907 there was a distribution of deposits among about 1,400 banks
throughout the country. While this method of relieving the money
REPORT OF THE SECRETARY OF THE TREASURY 113
market produced some beneficial results, it placed too great a responsi-
bility upon the Secretary of the Treasury to decide in what sections
of the country deposits were most needed, and the further responsi-
bility of choosing banks that had satisfactory managements and would
not use the Government funds for speculative purposes.
It may be said of the Independent Treasury system that it had
the advantages of safety and of inspiring public confidence which the
early banks had lost. On the other hand, it was not capable of
keeping pace with the growth of business in the United States and had
far outlived its usefulness at the time the Federal reserve system was
inaugurated in November, 1914.
In order to give the Federal reserve banks full opportunity to
become properly organized, the Secretary of the Treasury did not
appoint them as fiscal agents of the Government until January 1,
1916, and they did not take over all of the duties of the subtreasury
system until the latter was abolished by act of Congress approved
May, 1920.
Space will not permit a description of the many ramificatiops
of the Federal reserve act, the composition of the Federal Reserve
Board, and the organization of the 12 banks, nor of the development of
the system since its inception to meet the trying times of the war and
the inflation that ensued. Suffice it to say that the Government
received the greatest cooperation from the Federal reserve system
and its member banks and other banking institutions in all the intri-
cate financial operations made necessary by the war and its after-
math. These operations proceeded smoothly and on a scale never
before conceived, and at all times the Federal reserve system guided
its policy that it might coordinate with the requirements of the
Government on the one hand and care for the expanded requirements
of business on the other. It is conceded by all students of finance
that the system made possible this Government's full participation
in the war, and after its termination brought the country back to
something approaching normal in a comparatively short time, with
a minimum of radical readjustment and in a manner that would have
been impossible under any of the former fiscal agency systems.
With the exception of certain depositary functions performed by
national and State banks, and which will be described hereinafter,
the Federal reserve banks to-day are the sole fiscal agents of the
United States Government. In commenting on their many duties,
first mention may be made of Government receipts. The Federal
tax legislation provides that payments of income taxes may be made
quarterly on the 15th day of March, June, September, and December.
These payments are forwarded by the taxpayers to the collector of
internal revenue of the locality, and by that collector in turn for-
warded to the Federal reserve bank of the district. Upon the receipt
114 REPORT OF THE SECRETARY OF THE TREASURY
of those nioiieys the bank credits them to the account of and advises
the Treasurer of the United States. Besides the quarterly income
tax payments, the Federal reserve banks are in receipt of various day-
to-day payments, such as miscellaneous taxes and the receipts from
general national-bank depositaries of excess funds deposited by
collectors of customs and other Federal collecting agencies.
A word of description should now be given of the three classes
of depositaries other than the Federal reserve banks which receive
and hold public money.
The policy of the Treasury Department is to establish general
national-bank depositaries only at points where there is a necessity
to meet the requirements of Government officers for cash for pay-
roll or other expenditures, or to receive deposits of cash from de-
positors of public moneys, and only where there is no Federal reserve
bank or branch located in the same city. These general depositaries
are given a fixed balance which they may retain on deposit, and all
monej's received in excess of this amount must immediately be
sent to the Federal reserve bank of the district.
Limited depositaries may be designated among national banks, at
such points as are required, to receive, up to specified maximum
amounts, deposits made by United States courts and their officers
and by postmasters for credit to their official checking accounts with
such depositaries.
Both of the above classes of national-bank depositaries must
qualify, before receiving any public deposit, by pledging as collateral
certain authorized securities. These securities are held for the
depositar}'^ bank by the Treasurer of the United States.
The third class, and the one receiving by far the largest deposits,
is known as the special depositary, carrying a "war loan" account.
Any incorporated bank or trust company desiring to participate in
deposits of public moneys arising from the sale of bonds. Treasury
notes, or Treasury certificates of indebtedness may make appHcation
for designation as such depositary to the Federal reserve bank of its
district, and quafify by the pledging of certain authorized securities
with the Federal reserve bank to secure such account.
New offerings of public debt securities are, before their issue,
announced to the Federal reserve banks, which in turn notify banldng
institutions and others in their districts as to the terms of the issue.
Beginning with the day of the offering, the Federal reserve banks
receive sui>scriptions and daily advise the Treasury of the total
received. The Treasury fixes a time for the closing of subscriptions
and after final reports are received notifies the Federal reserve banks
of the basis on which to allot the securities to subscribers.
Payments for subscriptions to public debt offerings are made in
the form of exchanges of maturing issues or in cash by nonmember
REPORT OF THE SECRETARY OF THE TREASURY 115
banks or others; by exchanges of maturmg issues, cash, or checks on
their reserve account when made by member banks; or in case the
bank making the subscription is a special depositary having a "war
loan" account, by a credit to that account in favor of the Federal
reserve bank of its district as fiscal agent of the United States, which
account, as has already been mentioned, is secured by the pledging
of authorized securities with the Federal reserve bank of the district.
Too great emphasis can not be placed on the importance of the
special depositary system. Since the new. issues of securities are
offered on tax-payment dates, if the subscribing banks were required
to make payment therefor in cash, such payment, together with the
heavy withdrawals by depositors for the purpose of meeting quarterly
installment of taxes, would create a serious financial disturbance
unless prompt redeposit of the funds was made in the same localities
from which drawn. Under the existing system, whereby the sub-
scribing bank is permitted to make payment for the securities by
credit in its "war loan" account, the full amount of the subscription
is for the time being retained by the bank. Withdrawals are subse-
quently made as the Government has need for funds, but such with-
drawals are gradual, covering a period of several months following
the deposit, with the result that there is complete avoidance of the
shock which would be inevitable if these subscriptions, in the first
instance, were required to be paid in cash on the date on which the
securities were issued.
Besides merely assisting the Treasury Department in originally
offering a loan to the public, the Federal reserve system has enabled
the Treasury to adopt a system by which short-term securities once
purchased can easily be traded in and a broad market assured. For
instance, if a citizen in Kansas City desires to sell a certain short-
term Government security, his purchaser may be some trust company
in New York. In order to make delivery it is not necessary to
forward the security to New York; it is merely delivered to the
Federal reserve bank in Kansas City, which wires the Treasury
in Washington for authority for the New York Federal Reserve
Bank to make delivery from its "denominational exchange stock"
to the New York purchaser. This is done, and the Treasury De-
partment credits New York's stock account and debits that of
Kansas City. This service insures the quickest sort of delivery and
makes an even market for short-term Government securities over
the entire country.
The Federal reserve system also pays Government securities and
coupons upon presentation at maturity. This transaction is com-
pleted by merely paying cash or crediting the reserve account of
the presenting bank, if the latter is a member bank, and debiting
the account of the Treasurer of the United States. Besides paying
11438— 26t 10
116 REPORT OF THE SECRETARY OF THE TREASURY
Government securities at maturity, the Federal reserve bank acts
as agent for the Treasury Department in purchasing Gcvernment
securities for the account of Government trust funds or for retire-
ment. This is completed in exactly the same manner as when
securities are paid at maturity, except, in the case of purchase for
a trust fund, that fund is debited through the account of the Treasurer
of the United States.
Perhaps the most important duty of the Federal reserve system,
so far as it affects the average citizen, is its function as depositary
of public money. As United States currency becomes available in
the cash the Treasurer of the United States ships new currency to
the Federal reserve banks in such amounts and denominations as
will provide an equitable proportion among all the banks of the
system. The receiving bank at once credits the account of the
Treasurer of the United States as a transfer of funds.
As the currency in circulation becomes worn and unfit for further
use it comes in to member and nonmember banks of the system,
which banks present it to the Federal reserve bank of their district
in exchange for new and fit currency or for credit to their reserve or
correspondents' accounts. The Federal reserve bank then sorts
and counts its receipts of unfit United States money, cancels it by
punching holes and cutting it in halves longitudinally, and forwards
the upper half to the Commissioner of the Public Debt and the
lower half to the Treasurer of the United States for accounting, and
at the same time debits the account of the Treasurer of the United
States as a transfer of funds.
The Federal reserve system's function of issuing its own notes to
supply the wants of commerce and industry and to augment the
supply of United States currency at times of business expansion is
well understood and will be only commented on here. Suffice it to
say that this ability to issue currency based on sound and extremely
liquid security has added to the currency structure of the United
States an elasticity never known prior to the estabhshment of the
Federal reserv^e system.
The account of the Treasurer of the United States with the Federal
reserve banks has been mentioned in connection with the public
debt and the transfer of funds. These, however, are a small portion
of the business, at least in volume, that passes through it. Checks
are drawn by the Treasurer of the United States directly against his
account in settlement of what are known as "preaudit" claims, or
ones that have already been audited by the Comptroller General of
the United States. This represents about 10 per cent of the total.
The balance of the checks are drawn by Government disbursing offi-
cers against credits established through advances from appropriations
EEPORT OF THE SECRETARY OP THE TREASURY 117
by law and placed to their credit on the books of the Comptroller
General of the United States.
Government checks after issue follow the course of most checks in
commercial business and are ultimately deposited in some bank.
The bank then presents them to the Federal reserve bank of its dis-
trict for payment or for credit in its "reserve account," and the
Federal reserve bank in turn debits the account of the Treasurer of
the United States.
' The constant debiting of the Treasurer's account in due course
depletes it to such an extent that it has to be built up, and this process
brings us back to the income-tax receipts, the sale of securities, and
the special depositary with a "war loan" account.
Prior to each quarterly tax-payment date the Treasury Department
estimates the amount of taxes it expects to receive, its probable
expenditures until the next tax date, and the amount of short-term
securities maturing. The difference between the total of the expendi-
tures plus the amount of securities maturing and the income tax and
other receipts and the balance on hand determines the amount of
new securities that must be offered.
As has been described, upon the sale of the new securities banks
which hold the designation of special depositaries do not make im-
mediate remittance for their subscriptions in cash, but make pay-
ment by credit in their "war loan " accounts, and it is to these accounts
that the Treasury Department turns when it wishes to build up the
Treasurer's depleted balances with the Federal reserve banks. By
this method public moneys, instead of being tied up in subtreasuries^
as they were under the old system or being redeposited more or less
arbitrarily in national banks throughout the country, as was later the
practice, to meet estimated demands for currency, are now left in
the hands of the banks from which in the first instance the money
came, and thus continue to be available to supply the needs of busi-
ness. Moreover, as the banks pay the Treasury Department 2
per cent interest on the average balance in their "war loan" accounts,
the Government has an interest earning which under the independent
subtreasury system was lost.
Prior to the war the Treasurer kept balances with the national
banks, subtreasuries, and the Federal reserve banks, amounting on an
average to about $100,000,000. Under the present system of reduc-
tion of all depositaries to only the essential ones the Treasury, with a
total annual Government expenditure of about $3,600,000,000, is
able to operate with an average working balance of $36,000,000, or
1 per cent of its annual budget of expenditures. At times just before
a tax-payment date, when it is known that sufficient cash will be
coming into the Federal reserve banks within a few days, it would be
unwise to call cash which is earning interest from the special deposi-
118 REPORT OF THE SECRETARY OF THE TREASURY
taries to build up the account of the Treasurer of the United States.
At these times all balances with the Federal reserve banks are de-
posited in one account with one bank and the excess of receipts or
expenditures of all the banks are cleared daily through this one
account until money commences coming in from tax receipts and the
strain is over. At such times the Treasurer's balances in the Federal
reserve banks will run down as low as five or six million dollars.
The foregoing outlines the more important of the fiscal agency
operations of the Federal reserve system. Its advantages over tJhe
old subtreasuries, even in the short 12 years of its existence, are so
numerous that there are scarcely any grounds for comparison.
However, the following facts are so outstanding that they deserve
special mention:
The Federal reserve system (1) avoids accumulation of idle balances
of public moneys; (2) provides an elastic currency; (3) permits the
Government to earn interest on balances of public money deposited
with special depositaries; (4) avoids disturbance of money and secur-
ity markets by the balancing of current income and outgo; (5)
enables the Government to operate on a smaller working balance.
Depositaries of Government funds
Experience has demonstrated the fact that the orderly and econom-
ical transaction of the Government's fiscal business requires the
maintenance of deposits of Government funds with banks at all
points where the receipts or disbursements of the Government are
sufficiently large to justify such action. Accordingly, deposits of
Government funds are maintained with Federal reserve banks and
their branches, special depositaries, foreign depositaries, national-bank
depositaries, and depositaries in the insular possessions of the United
States. Comparative statements, showing the number of these
depositaries by classes and the Government deposits held by them on
the basis of Treasury statements, revised, at the end of the fiscal
years 1925 and 1926, are shown in the abstract of the report of the
division of deposits, on page 411 of this report.
Such deposits, in general, serve a threefold purpose: First, through
the utilization of the facilities afforded by the Federal reserve system
and the banking institutions in this country and abroad, the essential
fiscal business of the Government is handled without unnecessary
delay; second, this system of deposits provides the best possible
means of safeguarding the public funds; and third, prevents any
unnecessary financial disturbance during the quarterly income-tax
payment periods and upon the sale of Government securities. Fur-
thermore, the maintenance of fixed deposits with national-bank
depositaries and demand deposits with special depositaries for re-
REPORT OF THE SECRETARY OF THE TREASURY 119
plenishment of the working cash balance of the Treasury with the
Federal reserve banks at and when required enables the Treasury to
derive a considerable revenue from the interest paid upon such
deposits. In recent years the policy of the Treasury with respect to
Government deposits has been directed to the establishment of a sys-
tem based strictly upon business principles. This policy has resulted
in very material economies by the elimination of all idle or unnecessary
Government deposits. During the fiscal year ended June 30, 1926,
the total of all Government deposits with banks was substantially
the same as in the preceding fiscal year, and, so long as the Govern-
ment's business continues upon its present basis, it is not believed
that there can be any further material curtailment of such deposits.
The bulk of the Government's fiscal business is now transacted
through the Federal reserve banks and their branches. The Govern-
ment accounts therewith are very active, and the balances from
day to day are subject to broad fluctuation. Supplementing the
Federal reserve banks and branches, the Treasury maintains deposits
with general national-bank depositaries and with depositaries in the
insular possessions of the United States and in foreign countries to
the number of approximately 325. Deposits to the credit of the
Treasurer of the United States with these depositaries are fixed in
direct proportion to the amount and character of the essential business
of the Government transacted, and the balances are adjusted from
time to time as conditions change. During the fiscal year ended
June 30, 1926, such deposits averaged about $7,000,000, and substan-
tially the same average maintained during the preceding fiscal year.
With these depositaries and limited national-bank depositaries, other
Government officers, such as postmasters and officials of the United
States District Court, also maintain official checking accounts to
facilitate local disbursements. Deposits of that character during the
past fiscal year averaged about $19,000,000, as against an average of
$21,500,000 during the fiscal year 1925. This reduction was largely
due to the transfer of a considerable number of postmasters' accounts
from national-bank depositaries to the books of the Treasurer of the
United States.
With special depositaries of public moneys is maintained the
greater part of the Government's deposits. Such deposits result
from the subscription of incorporated banks and trust companies^
which hold designation as special depositaries, to offerings of bonds,
Treasury notes, or Treasury certificates of indebtedness, for which
payment is made by crediting the Treasurer of the United States
in a war loan account on the books of the depositaries. These
deposits are in the nature of a reserve fund and are withdrawn by
the Treasury through the Federal reserve banks as needed to meet
120 REPORT OF THE SECRETARY OF THE TREASURY
current expenditures in the interim between quarterly tax-payment
periods.
Adjustments affecting the various classes of depositaries are set
forth in the abstract of the report of the division of deposits on
pages 410 to 413 of this report.
The interest received on Government deposits, exclusive of deposits
with special depositaries of public moneys, during the fiscal year
ended June 30, 1926, totaled $517,313.83. The total amount from
this source received from June 1, 1913, when this requirement became
effective, to June 30, 1926, was $18,410,380.25. The interest received
on deposits with special depositaries during the fiscal year 1926 was
$3,922,066.76, and the total amount received from April 24, 1917, to
June 30, 1926, was $69,433,735.62. Statements showing the revenue
derived from interest on Government deposits by fiscal years and,
in the case of special depositaries, by Federal reserve districts, are
attached as Tables 14 and 15, page 488 of this report.
Customs
The statement in the last annual report that valuable results
would be accomplished with the use of forfeited automobiles in
connection with the enforcement of the customs laws, as provided
by the act of March 3, 1925, has been fully justified by the experi-
ence of the past fiscal year. This will appear from the fact that
with the operation of an average of 131 automobiles during the
year, 866 seizures were made, consisting of liquors valued at$195,156;
alcohol valued at $17,642; 499 automobiles valued at $201,284; 42
boats valued at $22,680, seized when landing their cargoes; and
other commodities valued at $16,321. In connection with these
seizures fines were imposed amounting to $22,495, bringing the total
value to the Government, exclusive of liquors, to $280,422.
These patrol automobiles covered 1,301,065 miles and consumed
134,287 gallons of gasoline during the year. The cost of acquiring
these machines was $5,552, and the total cost of maintenance and
operation was $82,471.
Notwithstanding the severe strain under which the patrol auto-
mobiles are operated, the department has been able to reduce the
average cost of maintenance and operation to $0.0634 per mile and
the average cost per annum per machine to $672. The average cost
-on January 31, 1926, was $0.07 per mile and $1,007 per annum per
machine. The reduction in cost has been effected by establishing
repair shops at certain points where the number of automobiles in
•operation makes this economically possible; by the purchasing of
parts and accessories in quantity; and by the prompt replacement of
automobiles beyond economical repair and operation with more
serviceable machines, the unserviceable automobiles being sold as
REPORT OF THE SECRETARY OF THE TREASURY 121
surplus property in accordance with the provisions of section 3 of
the act of March 3, 1925.
The values of the seizures made by the patrols operating forfeited
automobiles and boats make their operation desirable even from the
standpoint of direct financial returns. Their greatest benefit, how-
ever, lies in the more strict enforcement of the law and the moral and
preventive effect exerted by such enforcement.
The efficiency of a patrol is measured not so much by the seizures
it makes as by the control it exercises over traffic and the influence
it thereby exerts for law observance. With the knowledge of almost
certain detection and capture, with the resultant penalties, the indi-
vidual, who before the establishment of the patrols was willing to
take the risk of smuggling because of the chance of successful evasion
of duties on his merchandise, now reports at the customhouse, regu-
larly enters his products, and pays the duties thereon.
This is demonstrated by the remarkable increase in customs re-
ceipts in the district of Maine and New Hampshire and the district
of St. Lawrence, in which the strongest border patrols were estab-
lished and operated during the past fiscal year. In the former, the
amount of duties collected was increased from $755,798 in 1925 to
$1,283,786 in 1926, an increase of 69 per cent; and in the latter, from
$1,743,077 in 1925 to $2,745,736 in 1926, an increase of 57 per cent.
In the district of Maine and New Hampshire the patrolmen checked
up the foreign crops along the border and the capacity of the storage
warehouses, so that in a given locality any excessive introduction of
products could be immediately detected.
While not as decided as the percentage of increase in the northern
border districts, the increase in customs receipts for the entire service,
nevertheless, was such as to make the collections for the year an
outstanding feature, the amount being the highest in customs history.
Approximately $580,000,000 was collected in customs duties, exceed-
ing by about $18,000,000 the previous high record of 1923. This
substantial increase contributed in no small way to the favorable
financial condition of the Treasury.
Thus does the tarift' act of 1922, after approximately four years of
operation, continue to bear out the official forecasts that it would be
productive of considerable increased revenue. To such an extent has
this been true that repeated revisions of the official estimates have
had to be made to keep pace with the increased collections.
Contrary to the predictions made in some quarters, not only has
there been a great increase of revenue but also a corresponding
increase in our foreign trade. The value of imports for the yeai"
increased by $642,485,446, having amounted to $3,824,128,375 for
the fiscal year 1925 and $4,466,613,821 for the fiscal year 1926. The
latter figure, considering unit values, represents a larger quantity of
122 ItKPORT OF THE SECRETARY OF THE TREASURY
merchandise than has ever been imported in any previous 12-month
period.
Nor has the tariff act operated to reduce wages. The statistics of
the Department of Labor show an increase in union wages of more
than 20 per cent, as against an increase of only about 5 per cent in
the cost of living in the last four years.
Notwithstanding "the large increase in collections during the year,
the total expense of collection was increased by only $288,762, the
total expenditures for the maintenance and operation of the service
for the fiscal year 1925 having been $16,675,461, and for the fiscal
year 1926, $16,964,223. The proportionate cost of collection per
dollar was reduced from $0.03 in 1925 to $0.0292 in 1926.
It was possible to handle the greater volume of customs business
without an appreciable increase in the total expense of collection and
at a reduced cost per dollar collected by the practice of the most
rigid economy generally, and particularly by the holdmg open of
vacancies as they occurred in the service, and through the faithful
and eflicient cooperation of all the employees of the service despite
the severe handicap of transacting an increased volume of business
with a decreased force.
Durmg the year there has been an average of approximately 200
vacancies in the field service not filled at the end of each month.
This reduction in the working force was made necessary to bring the
expenses within the appropriation available; but it is felt it exceeded
the limits of sound economy, particularly in view of the decided
mcrease in receipts in districts where an adequate customs super-
vision was provided, as hereinbefore detailed in this report.
The inadequate salaries paid in many positions in the service have
made it difficult to maintain the high standard of customs personnel
and have exerted a depressing influence on its morale. It is generally
felt throughout the service that customs salaries in many instances
are not commensurate with the grave responsibilities involved a
view which is shared by administrative officers. The dutiable value
and classification of merchandise are frequentlv predicated upon an
examination made by one man; and on his ability and judgment
depend the mterests of both the Government and the importer, as
well as the domestic manufacturer of competitive merchandise.
^ urthermore, a few hours' delay in the passing of merchandise or in
the clearance of a vessel may cause a loss of many thousands of
dollars. From the very necessity of the work, in many instances,
customs officers are so situated that they must exercise independent
jiidgment and act on their own responsibihty. The importance,
therefore, of paying salaries sufficiently adequate to attract to the
service, and to retain in the service, employees of the highest ability
and integrity can not be overemphasized
REPORT OF THE SECRETARY OF THE TREASURY 123
(
In view of this situation, the Bureau of Efficiency is cooperating
with the department in making a detailed study of all field positions
with a view to determining a fair rate of compensation for each
position based on the rates fixed for comparable positions in other
branches of the Government service.
Shipments from point to point in the United States through con-
tiguous foreign territory are protected by United States customs seals.
At ho time has the number of employees been sufficient to enable
customs officers to check and test all customs seals applied to "in
transit" freight cars. This led to a serious situation as the incentive
of high profits from the mtroduction of contraband liquors, and the
increasing difficulty of introducing such contraband through the usual
channels as the Government's enforcement activities expanded,
caused smugglers to attempt to make shipments into the United
States under "in transit" seals.
Changes in procedure were made and systems installed which made
possible a complete control and check of all seals issued, and enabled
the department to fix definitely the employee responsible for the
handling of any seal. However, the testing by customs officers of all
seals after their application to the cars was not established until a sup-
plemental appropriation was secured. This change facilitates the
detection and prevention of improper sealing which would allow a
later manipulation of the seals without showing evidences of tamper-
ing, and also makes it possible to ascertain that all seals were used
as reported.
The results obtained from the complete check and test of all cus-
toms seals fully justify the employment of the additional inspectors
necessary. At Buffalo during a period of 30 days, out of 8,500 cars
which departed from the yards at Black Rock, only 16 cars were
found improperly sealed. These were immediately resealed under
the supervision of the inspector. During the same period no reports
of improper sealmg were received at Buffalo from the ports of desti-
nation, showing that all imperfectly sealed cars were detected before
leaving the yards. Out of 11,000 cars entermg Black Rock only 11
cars were found improperly sealed, and these were opened and the
contents examined and checked. At Detroit during a similar period
no reports were received of cars imperfectly sealed arriving at ports
where such cars reenter the United States, showing the effectiveness
of the thorough inspection at that port.
Good progress is being made in the installation of large, automatic
scales for weighing general merchandise in truck-load lots. Eight of
these scales have been installed at the port of New York and one each
is in course of installation at the ports of Philadelphia and Boston.
The saving in labor effected by the use of these scales has exceeded
124 REPORT OF THE SECRETARY OP THE TREASURY
expectations, and the department contemplates the mstallation of
additional scales of this type at other ports.
During the year the regulations governing the customs accounting
procedure were revised and amplified, particularly with reference to
the examination of accounts by comptrollers of customs, as provided
by section 523 of the tariff act of 1922. The provisions of this act,
under which the examination of accounts by comptrollers of customs
was authorized to be extended to all customs districts, resulted in
great benefit to the Government, making possible a thorough and
complete audit of customs transactions with a minimum of expense
and no delay or interference with the transaction of customs business
in the offices of the collectors. Documents also are always available
for official use in connection with protests, hearings before the United
States Customs Court, etc. During the year the Government col-
lected the sum of $1,129,549.72 in increased receipts as a result of the
examinations made by comptrollers of customs.
The system works smoothly, enables the Secretary of the Treasury
to discharge his statutory duties in connection with the collection of the
customs revenues with promptness and, except as process of appeal
is provided by law, with finality, subject to no review by any other
officer of the Government which is as contemplated by various exist-
ing statutes. The procedure, it is generally conceded, is in accord-
ance with existing law, which view is supported by an opinion of the
Attorney General. However, in order that some difficulties because
of certain claims by the Comptroller General as to his duties in con-
nection with the review of customs transactions may be removed, a
bill has been introduced, which has the department's approval, and
is now pending before the Congress, so specifically prescribing the
procedure now followed as to eliminate all misunderstanding.
As the outcome of the investigation into the needs of the division
of customs referred to in my annual report for the fiscal year 1925, a
bill for the creation of a Customs Bureau was introduced in the
Congress, with the approval of the administration, which has passed
the House of Representatives and is now pending in the Senate.
Bureau oj Internal Revenue
Collections of internal revenue from all sources during the fiscal
year 1926 amounted to $2,835,999,892.19, compared with $2,584,-
140,268.24 for the fiscal year 1925, an increase of $251,859,623.95.
Income tax collections for the year 1926 amounted to $1,974,104,-
141.33 ($1,094,979,734.17 corporation and $879,124,407.16 indi-
vidual), compared with $1,761,659,049.51 for the year 1925 ($916,-
232,697.02 corporation and $845,426,352.49 individual).
KEPORT OF THE SECRETARY OF THE TREASURY 125
Collections of miscellaneous taxes amounted to $861,895,750.86,
compared with $822,481,218.73 for the year 1925, an increase of
$39,414,532.13.
In the foregoing statement of receipts no deductions have been
made on account of refunds, which during the fiscal year 1926 were
made from the following appropriations:
Refunding taxes illegally collected 1924 and prior years S737, 093. 65
Refunding taxes illegally collected 1926 and prior years 58, 944, 780. 59
Refunding taxes illegally collected 1927 and prior years 114, 475, 022. 77
Total 1 174, 156, 897. 01
Less amount by which repayments exceeded disbursements in
connection with the appropriation refunding taxes illegally
collected 1925 and prior years 36, 719. 27
Net total 174, 120, 177. 74
The above total includes interest allowed on claims under pro-
visions of the revenue acts of 1921, 1924, and 1926.
The fiscal year 1926 was the most productive in the history of the
Income Tax Unit. In all of its activities marked advance was
made toward bringing the work to a current basis.
During the year 1926 the Income Tax Unit audited 2,155,933
income and excess profits tax returns, compared with 1,751,613 for
the previous fiscal year. The number of unaudited returns on hand
at the end of the fiscal year 1926 was 742,740, compared with 2,011,084
on hand at the end of the fiscal year 1925, a net reduction of 1,268,344.
The total number of cases by tax years, including those reopened
as a consequence of claims filed, and pending before the Income
Tax Unit at the close of the fiscal year, compared with the number
on hand at the close of the three previous fiscal years, was as follows:
Return year
On hand
June 30,
1923
On hand
June 30,
1924
On hand
June 30,
1925
On hand
June 30,
1926
Total
audited
to date
1917
28,916
84,323
103, 198
458, 205
1, 190, 902
1, 167, 000
8,773
19, 364
61, 327
166, 484
353, 781
719, 902
1, 100, 624
3,417
6,002
12, 155
90, 746
171, 221
380, 045
372, 200
975, 298
1,372
1,877
2,628
7,121
8,192
141, 084
154, 329
170, 786
253, 402
1,949
1, 309, 864
1918 ....
1, 268, 770
1919
1, 489, 170
1920
1, 620, 296
1921.
1, 442, 228
1922
1,319,830
1923
1, 019, 265
1924
873, 962
1925
165, 813
1926
1,296
Total
3, 032, 544
2,430,055
2, Oil, 084
742, 740
10, 510, 494
Note. — The tabulation does not include returns in the 60-day file on which the unit has completed its
audit work.
Further evidence of the trend toward currency in the work is
shown by the reduction of the number of claims on hand June 30,
1926, compared with the number on hand at the close of the previous
fiscal year. The number of claims received during the fiscal year
126 r.EroRT of the secretary of the treasury
1926 was 72,195, involving $1,008,290,704.43, compared with 65,613'
involving $1,147,707,744.54 received during the fiscal year 1925. The
number of claims on hand June 30, 1926, was 29,234, compared with
73,441 on hand June 30, 1925, a net decrease of 44,207.
Indicative of the bureau's purpose to effect a just settlement as
promptly as possible, 53,848 certificates of overassessment were
scheduled during the year 1926 in cases in which the taxpayer did
not file claims. The object of this method is to relieve the taxpayer
of the necessity of filing and proving claims for taxes overpaid or
overassessed. Under the old procedure claims would have been
invited and filed before any certificates of overassessment could issue.
Reorganizations w^ere made within the Income Tax Unit during
the year, predicated upon three considerations:
(a) Avoidance of duplication of activities.
(6) Better coordination of effort and elimination of divided
responsibility, with corresponding improvement in the flow of
work from one branch of the unit to another.
(c) Concentration of activities, with accompanying reduc-
tion of overhead cost of administration and personnel.
Certain divisions and sections were abolished, and the work com-
bined with that of others. The number of sections in the personal
audit division w^as reduced from 6 to 3; in the corporation audit
division, from 6 to 4; in the consolidated returns audit division
from 8 to 6; and in the engineering division, from 5 to 4.
The decentralization program — transference to the field of functions
performed in Washington prior to August, 1923 — was amplified with
advantage to both the Government and taxpayer. Important
changes in the procedure and organization were made w4th a view to
placing in the jurisdiction of field oflices the largest measure of duty
and responsibility consistent with uniform procedure. The result of
these changes is to simplify the handling of returns; to expedite the
final closing of the audit; and to efl'ect valuable economies, conse-
quent to prompt settlement of income tax differences in a manner
agreeable to the Government and taxpayer. Under the decentraliza-
tion program, the taxpayer is more conveniently served. Usually he
is able to adjust his income-tax differences with the Government's
representative in the taxpayer's home district, thus avoiding an
expensive trip to Washington. Uncertainty as to w^hether a case
should be submitted to the field for verification also is eliminated.
Arrangements were made w^hereby returns in collectors' offices are
segregated by revenue agents into three classes, viz, returns accepted
as filed, returns requiring field investigation, and returns requiring
office audit only.
All fiduciary and partnership returns now are retained in the field
offices. This step was determined upon by reason of the fact that
EEPORT OF THE SECRETARY OP THE TREASURY 127
the major portion of such returns report distributive income of indi-
viduals, whose returns ordinarily are retained in the offices of col-
lectors and there audited.
In the discussion of disputed points between taxpayers and revenue
agents results have been most satisfactory. Agreements were
reached in more than 50 per cent of the cases in which change in tax
liability was recommended by revenue agents.
It is believed the production program of the Income Tax Unit for
the fiscal year 1927 will result in bringing all work to a current basis
by June 30, 1927. This contemplates the final closing of returns
reporting income earned in 1 924 and prior years.
Notwithstanding material reduction in personnel, the work of the
Miscellaneous Tax Unit is practically on a current basis. In conse-
quence of the repeal of various taxes by the revenue act of 1926, the
miscellaneous division was organized March 1, 1926, taking over the
work of the former sales tax division and the administration of the
miscellaneous taxes from the tobacco and miscellaneous division.
From that date the unit has been composed of four divisions: Capital
stock tax division (for the completion of work in connection with the
capital stock tax, repealed effective June 30, 1926), estate tax division,
miscellaneous division, and tobacco division.
Reports of the Accounts and Collections Unit show that of a total of
approximately 4,300,000 individual income tax returns filed, collectors
of internal revenue retained for audit approximately 3,670,000. Indi-
vidual returns retained by collectors show a gross income of S25,000
or less. During the previous year collectors retained for audit
approximately 7,350,000 out of a total of approximately 7,556,000
individual returns filed. The revenue act of 1926 materially reduced
the number of individuals required to file returns. The audit of
returns in collectors' offices is progressing satisfactorily. Indications
are that a large majority of returns retained by collectors for audit
will be completed well before the close of the calendar year 1926.
The Accounts and Collections Unit and the Income Tax Unit,
working in cooperation, prepared instructions with reference to the
preliminary examination of returns in collectors' offices. All indivi-
dual returns showing a gross income in excess of $25,000, as well as
all corporation returns filed during the 1926 filing period, were ex-
amined in collectors' offices for mathematical errors. The returns
then were reviewed by revenue agents, and a large number of cases
were definitely closed within a few weeks after the returns were filed.
As a result of this procedure, taxpayers were notified promptly of
corrections in the returns, and a substantial amount of revenue was
produced.
The field work was reorganized. During the year 106 division
offices and 30 stamp offices were discontinued, resulting in an annual
128 REPORT OF THE SECRETARY OF THE TREASURY
saving of $204,469 in personnel cost and rental. At the close of the
fiscal year there were 65 collectors' offices, 43 division offices, and
48 stamp oflices, 21 of which were operated in conjunction with divi-
sion offices. As the division chiefs assigned to these 106 division
offices have been assigned to the productive work of a zone deputy
the department has every reason to expect increased revenue with
no additional cost to the Government.
The office of General Counsel for the Bureau of Internal Revenue
was created by the revenue act of 1926, taking over the work of the
former office of the Solicitor of Internal Revenue. The general
counsel is appointed by the President, by and with the consent of
the Senate. Attorneys from the general counsel's office, represent-
ing the Commissioner of Internal Revenue, appeared in all cases
tried before the Board of Tax Appeals during the year.
The unsatisfactory^ conditions under which the bureau has been
forced to operate because of inadequate housing facilities continued
unchanged during the fiscal year 1926. However, under the act
passed by the Sixty-ninth Congress to enable the Secretary of the
Treasury to provide suitable accommodations in the District of Co-
lumbia for the executive departments, plans are being prepared by the
Supervising Architect, Treasury Department, for the construction
of an office building suitable for the housing of the personnel and
records of the bureau.
ChecMng accounts of Government corporations and agencies
Checking balances with the Treasurer of the United States have
been maintained during the year by the United States Shipping
Board Emergency Fleet Corporation, the United States Housing
Corporation, the War Finance Corporation, the several Federal
land banks, the Railroad Administration, and the United States
Sugar Equalization Board (Inc.) in the manner outlined in previous
annual reports of the Secretary of the Treasury.
There are shown in the following table the total amounts of checks
on these accounts and on similar accounts formerly maintained by
the United States Grain Corporation, the Russian Bureau of the
War Trade Board, and the United States Spruce Production
Corporation, paid by the Treasurer from the dates of the establish-
ment of the account to October 31, 1926, and the balances on deposit
with the Treasurer on the latter date:
REPORT OF THE SECRETARY OF THE TREASURY
129
Checks paid by the
Treasurer of the
United States
Period
Balances with
the Treas-
urer of the
United States
Oct. 31, 1926
Emergency Fleet Corporation
United States Housing Corporation. .
War Finance Corporation
United States Grain Corporation
Russian Bureau of the War Trade
$7,568,554,967.65
169, 987, 733. 33
3, 937, 749, 323. 06
933, 967, 229. 41
13, 333, 773. 99
36, 241, 165. 32
1,860,731,457.10
15, 437, 256. 78
6, 035, 275. 16
Feb. 28, 1918-Oct. 31, 1926...
July 27, 1918-Oct. 31, 1926...
June 2, 1918-Oct. 31, 1926....
Oct. 31, 1918-Feb. 2, 1922
Nov. 30, 1918-Sept. 28, 1920..
June 2, 1920-Oct. 31, 1926
$30, 563, 173. 03
692, 912. 55
36,815,224.50
0)
Federal Innd hnnks ...
Apr. 13, 1918-Oct. 31, 1926...
Apr. 7, 1922-July 15, 1926....
Dec. 20, 1921-Apr. 14, 1924...
44, 687, 439. 37
United States Sugar Equalization
(')
United States Spruce Production
(*)
1 Closed Feb. 2, 1922.
2 Closed Sept. 28, 1920.
« Closed July 15, 1926.
* Closed Apr. 14, 1924.
The plans worked out by the Treasury for haiidUng these accounts
have operated to the entire satisfaction of all concerned. The
results have been to assure absolute security to the funds and to save
withdrawals of large amounts from the Treasury until actually needed
to pay obligations of the Government, thus reducing the amount of
Government borrowings, with consequent savings in interest charges.
War Finance Corporation
The War Finance Corporation has made steady progress in the
liquidation of its affairs. The corporation ceased active operations
on December 31, 1924, and since that date the only advances that
have been made are those designated as "expense advances" — that
is, advances necessary for the care and preservation of the corpora-
tion's security in connection with the orderly liquidation of its
assets. The last annual report indicated the status of the cor-
poration's business on October 15, 1925. From that date until
October 15, 1926, the expense advances made by the corporation
aggregated $344,000. During the same period the repayments on
account of the corporation's agricultural and livestock loans, including
$498,000 on account of expense advances, totaled $14,536,000. Of
this amount, $6,895,000 was repaid by banking institutions, $7,209,000
by livestock loan companies, and $432,000 by cooperative marketing
associations, while $230,000 including $5,000 on account of expense
advances was repaid on the corporation's war loans, bringing the total
repayments for the year to $14,766,000. Of the total of $690,041,000
advanced by the corporation for all purposes since its creation in
May, 1918, $663,310,000 has been repaid, and the amount outstand-
ing on October 15, 1926, was $26,111,000, of which $16,745,000
represented war loans and $9,366,000 agricultural and livestock loans
(including expense advances of $31,000).
130 REPORT OF THE SECRETARY OF THE TREASURY
With the decline in the volume of outstanding loans, the corporation's
personnel and operating expenses have been steadily curtailed both
in Washington and in the field, and further reductions are being made
as rapidly as consistent with the proper handlmg of the corporation's
business and the protection of its interests.
Railroads
The total principal amount of railroad obligations owned by the
Government on June 30, 1926, which were acquired under the Federal
control and transportation acts, as amended, was $299,112,850.64,
as against $316,300,324.29 on June 30, 1925, a reduction of
$17,187,473.65. This reduction applies to obligations acquired
under Federal control act and transportation act, 1920, as follows:
Equipment trust notes $950, 600. 00
Section 207, transportation act 5, 919, 609. 00
Section 210, transportation act 10, 317, 264. 65
Total 17,187,473.65
The chief reduction in equipment trust notes was due to the sale
of the notes of the Atlanta, Birmingham & Atlantic Railway Co.
in the aggregate principal amount of $917,000 at par and accrued
interest to date of sale. The Director General of Railroads sold
at par and interest obligations acquired under section 207 aggregating
$5,913,000 principal amount. The payments on account of loans
under section 210 amounted to $10,317,264.65, of which $2,678,-
764.65 represented payments on account of maturities and $7,638,500
payments before maturity due to refinancing. For a detailed state-
ment of the holdings of railroad obligations on June 30, 1926, see
Table 53, page 576 of this report.
The total receipts on the basis of the daily Treasury statements
from railroad securities during the fiscal year were $36,735,326.87, of
which $19,415,364.65 was on account of principal and $17,319,962.22
on account of interest. The total net expenditures during the fiscal
year were $2,725,800.85, leaving net cash receipts for the fiscal year
of $34,009,526.02.
Under the transportation act net payments made during the fiscal
year for reimbursements of deficits under section 204 were
$74,253.27, and net guaranty payments under section 209 were
$3,275,222.11, while no new loans were made under section 210.
The total payments of $2,495,948.41 by the Railroad Administration
during the fiscal year were more than offset by receipts of $3,119,-
622.94, leaving excess receipts on account of Federal control of
$623,674.53.
During the period from July 1 to October 31, 1926, the proceeds
of railroad securities received by the Government amounted to
REPOET OF THE SECRETAEY OF THE TREASURY 131
$26,223,969.35, while net expenditures were $161,267.68, an excess of
receipts for the period amounting to $26,062,701.67. Of the total re-
ceipts, $18,562,214.16 was on account of principal and $7,661,755.19
on account of interest.
The payments under sections 204, 209, and 210 of the transporta-
tion act, 1920, as amended, are made by the Treasury in accordance
with certificates issued by the Interstate Commerce Commission.
The payments are summarized below.
Section 204- — This section provides for reimbursement of deficits
of the so-called "short-line" railroads during Federal control. In
making payments thereunder the Treasury is required, upon request
of the President, to deduct from the amount certified to be due the
carrier the amount certified to be due from the carrier to the Presi-
dent as operator of the transportation systems under Federal control
and payable to his agent, the Director General of Railroads. From
November 1, 1925, to October 31, 1926, $91,655.67 was paid under
this section, $72,907.89 to the carriers directly and $18,747.78 to the
Director General. Total payments under this section to October 31,
1926, amounted to $10,252,394.68, of which $8,333,876.77 was paid
to the carriers directly and $1,918,517.91 to the Director General.
(See Table 56, page 581.)
The indebtedness of $5,361.54 of the Texas State Railroad arising
out of an overpayment under this section referred to in the Annual
Report of the Secretary of the Treasury for the fiscal year ended
June 30, 1924, has not been paid.
Section 209. — This section provides for the guaranty of net railway
operating income during the six months' period immediately following
the termination of Federal control on March 1, 1920.
From November 1, 1925, to October 31, 1926, there was paid to
carriers under the provisions of this section $1,047,390.69, making
total payments up to October 31, 1926, of $532,909,298.21.
From November 1, 1925, to October 31, 1926, carriers have paid
into the Treasury on account of excess earnings during the guaranty
period pursuant to the provisions of paragraph (d) of this section, the
sum of $562.52, making total receipts of $446,637.81.
In the last annual report it was stated that the Interstate Rail-
road Co. was indebted to the United States in the amount of
$194,882.31 on account of excess earnings during the guaranty period.
The carrier refused payment of the claim on the ground that it did
not accept the provisions of section 209 of the transportation act, and
was not bound thereby. The collection of the amount due the
United States as certified by the Interstate Commerce Commission
was turned over to the Solicitor of the Treasury. The solicitor
brought suit through the United States attorney for the western
district of Virginia. On August 3, 1926, the court rendered a de-
132 REPORT OF THE SECRETARY OF THE TREASURY
cision in favor of the defendant. The Government will appeal from
the decision of the district court.
The following is a list of carriers indebted to the United States as
of October 31, 1926, by reason of overpayments under the provisions
of paragraphs ($r) and (h) of this section:
Alabama, Tennessee & Northern Railroad Corp — $32, 906. 93
BufTalo & Susquehanna R. R. Corporation 21,749.31
Chicago, Indianapolis & Louisville Ry. Co 198, 484 95
Fort Dodge, Des Moines & Southern R. R. Co 69, 065. 55
Great Northern Ry. Co. and subsidiaries 1, 322, 053. 27
Minneapolis & St. Louis R. R. Co., receiver 292, 022. 23
Missouri & North Arkansas R. R. Co., receiver 41, 375. 46
Northern Pacific Ry. Co. and subsidiaries 1, 269, 905. 20
Waterloo, Cedar Falls & Northern Ry. Co 6, 072. 49
Total 3, 253, 635. 39
In the last annual report attention was called to the rehearings
pending before the Interstate Commerce Commission of the claims
against the Chicago, Indianapolis & Louisville Railway Co., Great
Northern Railway Co. and subsidiaries, and the Northern Pacific
Railway Co. and subsidiaries. The commission has concluded these
hearings and transmitted reports to the Treasury reaffirming, with
some modifications, its original certificates. The carriers have re-
fused payment of the amounts certified to be due the United States,
taking the position that there is no legal basis for the action of the
commission. The questions involved are to be litigated.
The Buft'alo & Susquehanna Railroad Corporation has refused to
accept the findings of the Interstate Commerce Commission and has
requested a rehearing on its claim which is pending before the com-
mission. The Fort Dodge, Des Moines & Southern Railroad Co. has
initiated legal proceedings to compel the Interstate Commerce Com-
mission to review its decision. A claim for the amount due from the
Minneapolis & St. Louis Railroad Co. has been filed with the receiver.
The claim against the receiver of the Missouri & North Arkansas
Railroad Co. has not been paid. The Missouri & North Arkansas
Railway Co., the successor corporation, has denied liability. The
Treasury is awaiting an opinion from the Department of Justice
as to the validity of the claim and the action, if any, to be taken to
collect it.
A detailed statement showing partial and final payments to car-
riers and amounts received from carriers under this section from
November 1, 1925, to October 31, 1926, is attached as Table 57,
page 581.
Section 210. — This section established a revolving fund of $300,-
000,000 to be used for loans to railroads authorized by the Interstate
Commerce Commission under the conditions set forth and also for
REPORT OF THE SECRETARY OF THE TREASURY
133
paying judgments, decrees, and awards rendered against the Director
General of Railroads.
No loans were made to railroads under this section of the act from
November 1, 1925, to October 31, 1926. The total loans made aggre-
gated $350,600,667, divided among 84 railroads. Repayments on
account of the principal of these loans from November 1, 1925, to Oc-
tober 31, 1926, aggregated $11,327,764.65, of which $10,064,464.65
represented payments on account of principal in advance of maturity.
Total repayments of principal up to October 31, 1926, amounted to
$183,235,357.36. Payments received on account of interest on these
loans from November 1, 1925, to October 31, 1926, aggregated
$10,365,423.64, total receipts on account of interest amounting to
$65,837,787.96.
Advances made by the Treasury to the Director General of Rail-
roads from November 1, 1925, to October 31, 1926, for the purposes
authorized in the statute aggregated $2,000,000, making the net
total of such advances to October 31, 1926, $32,363,602.68.
The balance to the credit of the revolving fund at the close of
business on October 31, 1926, was $166,108,875.64.
The following is a list, as of October 31, 1926, of the carriers in
default in respect to loans made under this section:
Name of carrier
Gainesville & Northwestern R. R. Co.
Kansas City, Mexico & Orient R. R. Co. (receiver).
Minneapolis & St. Louis R. R. Co
Missouri & Nortli Arkansas Ry. Co
Salt Lake & Utah R. R. Co.
Virginia Blue Ridge Ry. Co
Virginia Southern R. R. Co
Waterloo, Cedar Falls & Northern Ry. Co
Wichita Northwestern Ry. Co
Total.
Principal
2, 500, 000
31,400
2, 531, 400
Interest
$15,
376,
237,
492,
104.
4,
5,
377,
57,
750. 00
574. 33
342. 46
453, 54
778, 55
5G0. 00
700. 00
268. 24
262. 50
Total
1, 671, 689. 62
$15,750.00
, 876, 574. 33
237, 342. 45
492. 453. 54
136.178.55
4, 560. 00
5, 700. 00
377, 268. 24
57, 262. 50
4, 203, 089. 62
A statement showing the amount of loans outstanding on October
31, 1925 and 1926, is attached as Table 58, page 582.
Director General of Railroads. — Hon. James C. Davis, Director
General of Railroads, resigned on December 31, 1925, his resigna-
tion becoming effective at midnight. Hon. Andrew W. Mellon,
Secretary of the Treasury, was appointed director general to succeed
Judge Davis. Proclamations of the President appointing the Sec-
retary of the Treasury Director General of Railroads and designat-
ing his successor in office as the agent provided for in section 206
of the transportation act, 1920, appear ae Exhibits 42 and 43, pages
264 and 265 of this report. A summary of the liquidation of the
Government's liability growing out of Federal control, released to the
press at the time of the resignation of Judge Davis, appears as Ex-
hibit 41, page 263. A report of the Director General of Railroads
134
REPORT OF THE SECRETARY OF THE TREASURY
for tlio period from January 1, 1925, to November 30, 1925, was
transmitted to the Congress of the United States by the President
on January 4, 1926. It was printed as House of Representatives
Document No. 182, Sixty-ninth Congress, first session.
Securities owned hy the United States Government
The aggregate amount of securities owned by the Government on
June 30, 1920, compiled from latest reports received, was $11,037,-
161,411.66, as against $11,106,469,990.90 on June 30, 1925, a decrease
of $60,308,579.24. A summarj'^ comparison of the holdings at the
end of the last two fiscal years is as follows:
Foreign obliKutions:
Funded under debt settlements
Another ,
Capital stock of war emergency corporations
Railroad obligations '.
Capital stock of Panama R. R
Capital stock of Inland Waterways Corporation
Federal laud bank securities:
Capital stock of Federal land banks
Federal farm loan bonds..
Capital stock of Federal intermediate credit banks
Miscellaneous securities received by War and Navy Depart
ments and United States Shipping Board
June 30, 1926
$4,725,490,865.00
5,807,062,185.73
June 30, 1925
$4,743,442,883.00
5,812,317,438.93
10,532,553,050.73 I 10,555,760,321.93
53,167,076.17
299, 112, 850. 64
7, 000, 000. 00
1,500,000.00
1,180,440.00
60,495,000.00
24,000,000.00
58, 152, 994. 12
55, 863, 326. 36
316.300,324.29
7, 000. 000. 00
1,500,000.00
1.513,045.00
88, 885, 000. 00
24, 000, 000. 00
55, 647, 973. 33
11,037,161,411.
11,106,469,990.90
The principal decreases, in round figures, were $23,000,000 in
foreign obhgations, $17,000,000 in railroad obligations, and $28,-
000,000 in Federal farm loan bonds repurchased by the Federal land
banks. The facts in regard to changes in the holdings of foreign
and railroad obligations arc treated elsewhere in this report under
separate captions. Since the close of the fiscal year and to October
31, 1926, the Federal land banks have repurchased $55,495,000 of
the Treasury's holdings on June 30, 1926. It is understood that
the remainder of these securities will be repurchased by June 30,
1927. Treasury purchases of these securities aggregating $195,-
925,000, principal amount, were made under authority of the act
approved January 18, 1918, as extended by joint resolution approved
May 26, 1920, which appropriated $200,000,000 for that purpose
and required the resale to the Federal land banks at par and accrued
interest. The respective receipts on account of interest and pay-
ments for principal have been covered into the Treasury as miscel-
laneous receipts. ,
A detailed statement of the securities held June 30, 1926, will be
found as Table 53 on page 576 of this report.
REPOET OF THE SECRETARY OF THE TREASURY
Surety bonds
135
Fifty-four insurance corporations now hold certificates of authority
from the Secretary of the Treasury to do a surety business with the
United States, 10 of which have been authorized during the past
year. In addition to these authorized companies, about 30 other
companies report to the department for reinsurance purposes.
The certificate of one company has been revoked and the certifi-
cate and rating of another company has been suspended.
There is keen competition among insurance companies for the
Government's bonding business, as will be noted by the additional
companies authorized each year. Since 1920 the number has more
than doubled and the resources of authorized companies have
materially increased.
The acceptance of insurance corporations as surety on bonds in
favor of the United States was originally authorized by the act of
Congress of August 13, 1894. This law was amended by the act of
March 23, 1910, to the extent that jurisdiction over these insurance
corporations was transferred from the Attorney General to the Sec-
retary of the Treasury. At that time 25 companies were authorized
to do a Government surety business. The annual reports of these
companies showed combined premium income of $31,759,637.71,
admitted assets of $60,460,402.71, liabilities of $27,511,113.46, and
combined capital and surplus of $32,949,289.25.
During the 10-year period, 1910 to 1920, the number of companies
competing for the Government's bonding business averaged about
25, but beginning with the year 1920 there has been a notable in-
crease both in the number of such companies and in their resources,
as will be noted in the following table:
Year
Com-
panies
Admitted assets
Liabilities
Capital and
surplus
1910
25
34
32
37
44
43
47
$60, 460, 402. 71
270, 299, 865. 08
299, 353, 927. 88
382,148,311.57
429, 516, 394. 52
480, 917, 244. 89
544, 528, 471. 28
$27, 511, 113. 46
188, 465, 595. 74
208, 641, 351. 53
259, 289, 577. 78
289, 724, 507. 58
328, 813, 168. 84
377, 991, 586. 86
$32, 949, 289. 25
1920
81, 834, 269. 34
1921
90, 712, 576. 35
1922
122, 858, 733. 79
1923
139, 791, 886. 94
1924
152, 104, 076. 05
1925
166, 536, 884. 42
Increase in 5 years
274, 228, 606. 20
189, 525, 991. 12
84, 702, 615. 08
The above does not include the seven additional companies author-
ized during 1926, nor the 30 companies which report to the Treasury
for reinsurance purposes only.
The above figures are especially interesting because of the notable
increase in resources and reserves over corresponding figures reported
in 1910 and 1920. All companies reporting to the Treasury for the
year 1910 showed combined premium income of about $32,000,000,
13G REPORT OF THE SECRETARY OF THE TREASURY
while in 1925 it amounted to $379,000,000. Under the provisions of
existing law, the Secretary of the Treasury must value the assets of
all companies reporting to the department and pass upon the suffi-
ciency of the reserves to meet their liabilities. This valuation is
made largely from a desk audit, since each company is required by
law to report its financial status to the department four times a year.
Whenever these reports fail, however, to satisfy the department as
to the standing of a company, the Treasury makes an examination
of the company direct from its home office records.
In the case of new companies, the department has found it advis-
able to make a direct examination of such companies before issuing
the initial authority in any case. This brings the Treasury in close
touch with both the management of the company and its organiza-
tion, so that first-hand information is available before the company
writes any business for the United States Government. The value of
this procedure has been satisfactorily demonstrated by the fact that
during the past few years a number of companies to which the
Treasury declined the issuance of authority have since gone into
receivership or liquidation because of insolvency. It is believed that
in this particular connection the department renders a most valuable
service to the entire Federal Government and its bonded principals,
since the discontinuance of a company places upon the Government
the additional expense involved in taking out superseding bonds,
necessitates considerable expenditure in the preparation and prose-
cution of Government claims against the insolvent estate, and sub-
jects the principal to the necessity of paying for a new bond before
he can obtain reimbursement for any unearned premium paid on the
first bond. Such a condition is avoided in most cases if the Treasury
is provided w^th first-hand information before the company writes
any bonds for the Government.
The Treasury has, however, experienced some difficulty in satis-
factorily discharging the responsibilities imposed upon the Secretary
under the provisions of existing law. The original law was approved
in 1894, at about the time that the business of corporate suretyship
and fidelity insurance had its inception in the United States on a
national scale. Only a few companies then actively transacted the
business, while during the 32 years intervening about one hundred
companies have entered the field, many of which have been forced to
retire. The statutory regulations on this subject, both Federal and
State, were so meager as to meet only the experimental conditions
and requirements as they then existed. But the demand for this
type of protection has resulted in the formation of so many competing
companies and the standards of requirements for their operations
have so changed as to make it difficult to obtain adequate security
under the provisions of the present law, which exists in its original
REPORT OF THE SECRETARY OF THE TREASURY 137
for tn with the single exception of transferring its enforcement from
the Attorney General to the Secretary of the Treasury. The capital
Ftock requirement is a striking illustration of the inadequacies of the
existing law. Any company with a capital of only $250,000, without
any surplus, may now request authority to do business with the
United States. There should be a minimum capital of $500,000, and
an initial surplus of not less than $250,000.
It is recommended that this law be amended so as to meet more
adequately the standards of requirements as they exist to-day, includ-
ing a provision for ascertaining the amount of obligations in favor of
the United States carried by each of these companies. Under present
arrangement it would be most difficult, if not impossible, to deter-
mine the extent of such obligations or the value of all claims existing
under them. Complete information of this character in a central
office would be most helpful whenever a company gets into financial
difficulty and it becomes necessary for the Secretary to revoke its
certificate of authority.
When jurisdiction over these insurance corporations was trans-
ferred to the Treasury in 1910 it was estimated that about 10,000
bonds were taken by the Government annually, not including bonds
involved in the operation of the postal service and those taken by the
Federal courts. It is now estimated that between 50,000 and 100,000
bonds are being executed annually by these insurance corporations
for the Government, exclusive of the Post Office Department and
the Federal courts. These bonds range in penalty from $100 to
several millions each. Consequently it is important that the Gov-
ernment should know the amount of potential liability which each
company carries for the United States. Such information would be
especially helpful in judging the status of a company whose financial
condition was considered unfavorable.
MISCELLANEOUS FUNCTIONS
Activities for prohibition law enforcement
Early in 1925 smuggling had become so extensively developed as a
source of illicit liquor traffic that the Treasury decided upon a com-
plete reorganization, placing under the direct charge of one Assistant
Secretary the three Treasury activities charged with its prevention.
On April 1, the immediate supervision of the Customs Service,
Coast Guard, and the Prohibition Unit was placed under one
Assistant Secretary, with a view to such reorganization and coordi-
nation of these services as would result in more rigid enforcement
of the prohibition law.
The results of this reorganization have been very gratifying.
Smuggling, as stated, had developed into tremendous proportions,
138 REPORT OF THE SECRETARY OF THE TREASURY
hundreds of ships in international trade being employed in operations
of this nature. Congress had made adequate appropriations, and the
Coast Guard had been rapidly expanded to meet the problem.
Treaties had been written with maritime nations, extending the
Government's jurisdiction over vessels to within an hour's sailing
distance from shore. A treaty had been negotiated with Canada,
designed to stop smuggling along the northern border; and with
Mexico in May, 1925, and Cuba in February, 1926, both for the same
purpose.
By the summer of 1925 the Coast Guard was sufficiently developed
in materiel and personnel to undertake the elimination of the so-
called "rum fleet," lying off our eastern coast from Atlantic City to
Boston. This required arduous work, continued vigilance having
to be maintained at sea for extended periods. This campaign proved
successful. The fleet being dispersed, and smuggling by sea along
this front being made so difficult, expensive and dangerous, very few
ships, if any, are now engaged in this practice off these coasts.
The illicit liquor traffic then turned to other methods and other
ports of the coast to continue their smuggling practices. American
coastwise shipping was employed by the smuggler, the illicit cargoes
being loaded from rum ships far out at sea and brought into port
concealed by legal cargoes. Steps have been taken to combat this
method.
Recognizing the fact that these extensive smuggling activities
required large capital and thorough organization, the Treasury
established, in September, 1925, a headquarters force calculated to
break up these organizations by obtaining information and evidence
of their operations. The detailed evidence acquired by the head-
quarters force clearly indicated that these operations were based
largely upon illegal practices involving international shipping.
Since it was through British colonial ports that these activities could
best be carried on, it naturally followed that most of the ships en-
gaged flew the British flag. It was believed, consequently, that if the
actual conditions as to illegal shipping could be brought to the at-
tention of British authorities, the latter would be prompt to furnish
the necessary remedy. Under the direction of our State Department,
a conference was held in London, attended by representatives re-
spectively of Great Britain and the United States. An agreement
was drawn under which facflities were made available for the ex-
change of such information and evidence as would render a continu-
ation of these illegal practices difficult, if not impossible.
Prohibition Unit reorganization and policy. — Prior to April, 1925,
the administration of the prohibition law, through the Prohibition
Unit of the Bureau of Internal Revenue, was largely centralized in
Washington. As a consequence of this centralization the adminis-
REPORT OF THE SECRETARY OF THE TREASURY 139
tration of the law was too far removed from the communities affected.
Moreover, there was need for better coordination between the field
forces of the Department of Justice and those of the Treasury. It
was recognized that this coordination was a prerequisite to successful
law enforcement, inasmuch as the Treasury representatives were
responsible only for the arrest of the offenders, while the Department
of Justice was responsible for prosecutions and penalties. This latter
consideration determined the plan of field organization adopted in
decentralizing the administrative force. The Federal judicial district
was made the basic geographic unit for the reorganization of the field
force. These Federal judicial districts were grouped into prohibition
administrative districts, each supervised by an administrator. On
this basis, the territorial United States was divided into 22 prohibition
administrative districts, while Hawaii and Porto Rico were each
designated a district, making 24 districts in all. In each district the
administrator was given full authority and charged with full respon-
sibility for the enforcement of the law.
In August, 1925, the prospective administrators were assembled
in Washington for instructions in the matter of administrative policy.
The administrators were appointed as of September 1, 1925, and were
allowed a preliminary period during which to effect their respective
organizations. This change in the administration of the law, while
radical in some respects, was generally recognized by business and
the public as offering many advantages over the previous method of
administration.
It has long been realized that the national prohibition law will
be successfully enforced only when the law and its enforcement
shall have met with general approval. The underlying thought,
therefore, in instructions issued to the field forces, and in the formu-
lation of all regulations, is that the law must be so administered as to
win popular approval. The field forces are held to the strictest
personal observance of the prohibition law, and are enjoined to use
only legal methods in their undertakings. The improvement in the
type of personnel employed, and in the conduct of office of this
personnel, is gradually becoming apparent. The Government's
witnesses m court are meeting with better cooperation on the part
both of court officers and of juries, and our representatives are receiv-
ing greater consideration from the public, when they are seen to be
dignified officers who conduct themselves seriously, courteously, and
lawfuUy in the prosecution of their tasks.
In the matter of policy, other than that mentioned above, the
Treasury felt with respect to local law enforcement that too much
responsibility had been placed upon the Federal Government. Even
in those States which already had satisfactory State laws, and in
11438— 26t 11
140 RKPOKT OF THE SECRETARY OF THE TREASURY
wliioli local niachincrv for enforcement had been provided, citizens
and ollicials were looking to the Federal forces for the performance
of police duties which were purely local. This misinterpretation of
jurisdiction, while ])erhaps natural and for that reason excusable,
proved a sei'ious hindrance to the successful enforcement of the
national prohibition law. Were the Federal Government to accept
this responsibility, it must organize large police forces in the various
communities, and, in addition, must provide adequate judicial
machinery for the disposition of the local cases — an interference by
the Federal Government with local government which could not be
other than obnoxious to every right-thinking citizen.
In many jurisdictions this condition had already resulted in flooding
the ofTices of Federal district attorneys, as well as the dockets of the
Federal courts, with thousands of untried cases. In order to remedy
tliis situation it was decided that the Federal Government should
accept the responsibility for the enforcement of such provisions of
the law as the eighteenth amendment by clear intent placed under
Federal jurisdiction. The principal duty which the Federal Govern-
ment should assume is the prevention of commercialized traffic in
liquor. It is the function of the Federal Government to eliminate
the sources of supply for the liquor traffic; to prevent the manufac-
ture, transportation, importation, and sale, in commercial quantities,
of intoxicating beverages. It should be the duty of the Federal forces
to point out to State, county, and municipal officers the necessity for
the prompt reassumption of the responsibilities of self-government,
as well as the urgent need for prompt local enforcement of the law.
This poUcy has been in force for nearly a year, and gratifying results
are beginning to be attained. The Federal forces have not, however,
wholly withdrawn from local enforcement, and continue to engage
to some extent locally in those communities where local officers have
been either slow or reluctant to take action. Generally speaking,
however, communities are recognizing the necessity both of replacing
local officers who are unfaithful to their trust and of exacting from all
other officers a more vigorous performance of their duties.
Prohibition field officers, meanwhile, are more actively cooperating
with the United States attorneys in the enforcement of the law.
Administrators have been instructed to assist the district attorneys
in the prompt clearance of court dockets.
Following the Government's vigorous attack on smuggling, the
liquor traffickers turned to the next available source — industrial
alcohol. This field, in fact, had previously been fairly well developed
by reason of the fact that the smuggled supply of liquor was insuffi-
cient to meet the demand. Imitation liquors made from alcohol,
moreover, were much cheaper than the genuine product, and provided
greater profit to the trafficker. The first important action to meet the
REPORT OF THE SECRETARY OF THE TREASURY 141
alcohol situation was taken in August, 1925, when the granting of
permits, together with certain other functions relating to the permis-
sive provisions of the law, was transferred from the Bureau of Internal
Revenue to the Prohibition Unit. Many serious and delicate prob-
lems arose from this phase of enforcement. Thousands of permits
had been granted to so-called legitimate business concerns. Wliile
the Treasury realized that the protection and encouragement of
legitimate industry should have first consideration, it appeared, on the
other hand, almost impossible to differentiate in every case between
the legitimate and the illegitimate. New regulations have been
formulated, and others are being prepared, with a view to meeting
these problems. Hundreds of permittees have been cited for hearings
and their permits revoked. In June, 1926, Congress appropriated
additional funds, enabling the department to estabhsh a squad of
alcohol specialists, 75 in number, whose services have already in-
creased the effectiveness of the administrators' efforts to disclose
illegitimate industrial alcohol permittees. The Treasury confidently
feels that this source of supply will within a reasonable time be prac-
tically ehminated.
The liquor traffic is already feeling the effect of the Government's
efforts to ehminate the diversion of alcohol for beverage purposes.
As this source of supply is removed, the trafficker is turning to the
manufacture of alcohol in illegitimate, unregistered distilleries. This
practice has been steadily developing and will unless prevented
continue to develop proportionately as other sources of supply disap-
pear. This liquor is commonly known as "moonshine." Wherever
distilleries are of such size as to be substantial sources of supply, their
existence will soon become known to the Federal agents and they
will be confiscated. The problem then remaining will be the small
"moonshine" stills scattered over the country, manufacturing smaller
quantities for local consumption. This development should be
anticipated throughout the country. It must be handled by local
law officers. It is hoped that its elimination will hasten the final
stage of law enforcement. The department has already taken steps
to forewarn the communities of this growing practice in order that
law-respecting citizens may work toward the election or appoint-
ment of law-enforcement officers who will faithfully enforce the pro-
hibition laws locally
Reference has hereinbefore been made to the coordination of the
operations of the Customs, Coast Guard, and Prohibiiion Unit.
Instructions early were issued establishing the Coast Guard as the
first line of defense against smuggling, making that service responsible
for the interception of liquor boats before they reached shore. The
Customs' forces constitute the second line of defense, and are respon-
sible for intercepting the liquor that actually reaches the shore.. TKe
142 KKPOKT OF THE SECRETARY OF THE TREASURY
forces of the Prohibition Unit constitute the third line, and are respon-
sible for the enforcement of the law behind the Customs' line. It was
early recognized that this effort to stop smuggling with, as it were,
bare hands — actually trying to catch each boat as it arrived at any
unicnown point along thousands of miles of coast line — was almost a
physical impossibility and demanded an unreasonable expenditure of
energy. The Treasury therefore applied its efforts toward stopping
this traffic, as above outhned, more nearly at its source, namely, at
the ports of embarkation. It is this last effort which should prove
successful in breaking up smuggling, and the direction of this work is
being carried on in close cooperation with the State Department by a
group established in the Prohibition Unit and designated the division
of foreign control. This division, as a result of the effective assistance
of the State Department, is reaching into many foreign ports and
intercepting ships before they start upon their unlawful voj'^ages.
Meanwhile, however, the additional border patrolmen authorized by
Congress in June, 1926, have been appointed and have not only aided
materially in the capture of smugglers and smuggled cargoes on the
land borders, but are rendering valuable service in the prevention of
coastwise smuggling along the water borders.
Control of the manufacture and distribution of beer has been
among the most important accomplishments of the Prohibition
Unit. While many cereal beverage manufacturers are endeavor-
ing to comply with the law, an equally large number of these manu-
facturers have proved the most determined group of law violators
with whom the Treasury has had to contend. It has been exceedingly
difficult, in many cases, to gain access to the plants g,nd obtain satis-
factory evidence of illegal operations. Congress, at the request of
the Treasury, placed an internal revenue tax upon the manufacture
of cereal beverages. This has proved helpful. Congress also
authorized, in June, 1926, an appropriation for a Federal squad of
75 expert brewery inspectors. As in the case of alcohol, this squad
is proving an effective aid to the administrators in preventing the
manufacture and distribution of beer.
Through the efforts of the division of chemical research of the
Prohibition Unit, the diversion of spirits through the illegitimate
use of permits to manufacture tonics, etc., has been materially de-
creased. In industrial alcohol, many formulas have been discarded
that were being used for the purpose of diversion to beverages.
New formulas have been devised after exhaustive research and ex-
periment, with a view both to assisting legitimate manufacture
and to rendering more difficult the diversion to beverage purposes.
The effort primarily has been to discover a denaturant, nonpoison-
ous, that either by taste or smell would be made laiown to the pur-
chaser for beverage purposes, so that he would have due warning
that the product contained industrial alcohol.
REPORT OF THE SECRETARY OF THE TREASURY 143
The great source of liquor traffic in wine was the diversion, in the
larger cities, of wine issued for sacramental use. After extended
study of the many difficulties in the matter of supplying wine for
sacramental use by persons of the Jewish faith, and after consulta-
tion with several of the older and more prominent rabbis, a new
regulation was formulated as a result of which the amount of sacra-
mental wine issued has been reduced more than 50 per cent, and
which when in complete operation will create further reduction and
ultimately eliminate this source of supply.
The Treasury has emphasized to its field forces the valuable re-
sults to be attained by adopting the so-called "padlock"' procedure in
connection with local law enforcement work performed by the Fed-
eral Government. In communities where liquor is sold in open vio-
lation of the law — where, in effect, the saloon is being reestablished —
there can be no question that these places are a public nuisance
and a menace to the community. The law provides a simple remedy
for the "abatement of this nuisance." Effort is being made through
the service to establish and use this effective remed}^ against the
saloon and other similar illegal places of business.
Legislation. — While Congress has enacted legislation aimed to
strengthen the Coast Guard in the matter of both personnel and
materiel, and has granted the required appropriations for the Pro-
hibition Unit and the Customs Service, certain other measures which
have been recommended by the Treasury and which are deemed
equally essential to the enforcement of the national prohibition act
have not yet been passed. The most important of these measures is
the proposed reorganization bill, providing independent bureau
organizations respectively for the Prohibition Unit and the Customs
Service. It is earnestly recommended that Congress, during the
forthcoming session, be urged to give early consideration to this most
essential reorganization bill, and to those other measures affecting the
enforcement of the national prohibition act, which have already been
discussed at length in committees or are otherwise advanced to the
stage where their passage should be achieved without prolonged con-
troversy. In the hope that these measures previously discussed in
committee may meet with favorable action, the Treasury will, with
one exception, propose to the coming session of Congress no nev/
legislation affecting the enforcement of the prohibition act. The
single exception noted is a measure designed to provide for such
distribution of medicinal spirits as will enable the Treasury to prevent
the diversion of such spirits to beverage purposes, and to furnish satis-
factory means for replenishing the existing national supply of medi-
cinal spirits which has been depleted to a point where replenishment
within the next year appears to be a serious necessity.
144 REPORT OF THE SECRETARY OF THE TREASURY
In conclusion, the Treasury feels that it has made real progress in
the solution of the many difficult problems arising in the administra-
tion of the national prohibition law. Certain legislation is, as stated
above, highly essential in order to obtain the maximum results.
Should this legislation be enacted, the Treasury feels confident that
its reorganized force, given the essential cooperation and assistance
of the Department of Justice, will be able, in the future, to achieve
even greater effectiveness in the enforcement of this law.
Narcotic law enforcement
The narcotic law enforcement has proceeded with increased vigor.
More of the large distributors of the illicit drugs were apprehended in
the past year than any previous year since the inception of the law.
There was an increase in the number of violations reported, as there
has been for each succeeding year for the past seven years. This
increase does not, as has been stated by some, indicate an increase in
addiction but, on the contrary, reflects the activity of the narcotic
force. Surveys recently made of narcotic addiction show that the
abuse of the use of narcotic drugs in the United States is not exten-
sive and is confined to a relatively small number of people. This
number is decreasing and the habit is not spreading.
Tlie Coast Guard
The fiscal year 1926 witnessed another period of intense activity
on the part of the Coast Guard in practically every field of its en-
deavor. The enlargement of the service and the extension of its
duties along comparatively new lines within the past two years
naturally are accompanied with vastly increased labor, heavily
multiplied responsibilities, and numberless problems of a complex
and serious nature. There is not a section or an avenue of serv^ice
business that has not been so affected. The Coast Guard has met
and is meeting this unprecedented and unusually difficult situation
with a fine spirit of fortitude and with a confidence that carries an
inspiration to do, that have been characteristic of the service from
its beginning.
The year's work was successful and noteworthy. During the 3^ear
the number of persons saved or rescued from positions of peril was
3,037, a record never before attained in this form of service in any
one year since the present organization of the Coast Guard in 1915,
and exceeding last year's number by 553. This is an achievement in
itself. The total number of instances of assistance rendered in the
course of the year by the units of the service was 4,831, also the
largest in the history of the Coast Guard and exceeding last year's
number by 429. The value of vessels assisted, including their cargoes,
REPORT OF THE SECRETARY OF THE TREASURY 145
amounted to $23,017,509. There were 15,398 persons on board the
vessels to which assistance was rendered. The derelicts and other
obstructions removed from the paths of marine commerce numbered
101, being 46 more than last year. The vessels boarded and exam-
ined in the interest of the enforcement of United States laws ran to
the unprecedented number of 53,080. This increase of 15,486 over
last year doubtless is due to the lately enlarged fleet of the Coast
Guard and to the continually increasing activity and watchfulness
of service craft. The law-enforcement activities of the Coast Guard
in connection with the prevention of the smuggling of liquor into the
United States from the sea have not resulted in any diminution of
the regular, normal work of the service having to do with the saving
of life and property at sea and along the coasts.
The law-enforcement program of the Coast Guard has been attended
during the year with satisfactory results. Foreign rum ships in vary-
ing numbers appear off certain sections of the coast, apparently
without regard to any fixed method or system, and seek to evade
the Coast Guard fleet and to reach our shores or to make contact
with the small-boat purchaser, but the "rum row" that formerly
hung close to our coasts has been effectively dispersed by the con-
stant watchfulness and picketing of Coast Guard craft. Unremitting
activity on the part of the Coast Guard is essential to prevent the
reestablishment of ''rum row" off our shores.
Very marked improvement as regards the prevention of liquor
smuggling into the United States from the sea has taken place since
my last annual report.
The Coast Guard continued to carry on the usual duties which it
performs from year to year, including the international ice patrol,
winter cruising, cruises in Alaskan and Arctic waters, supervision of
the anchorage and movements of vessels at ports where Federal
regulations are in effect, removal of derelicts from the paths of
marine commerce, patrol and supervision of regattas, and enforce-
ment of the customs, navigation, and motor-boat laws of the United
States.
The Secretary of the Treasury awarded during the year, under the
provisions of law, 68 life-saving medals of honor and 1 silver bar for
second service, in recognition of bravery exhibited in the rescue or
attempted rescue of persons from drowning in waters over which
the United States has jurisdiction or upon an American vessel; 11
of the medals were gold and 58, including the bar, were silver.
Attention is invited to the report of the Secretary of the Treasury for
1925 concerning the physical conditions existing at the Coast Guard
Academy at New London, Conn. The need of appropriate measures
to correct what is regarded as a very unsatisfactory situation at this
institution is very great.
146 REPORT OF THE SECRETARY OF THE TREASURY
There is need of the renewal of 16 miles of submarine cable
between Cape Henry and Cape Charles, Va., and 13 miles of sub-
marine cable between the mainland and Block Island, R. I.
The modernization program of the radio equipment of the service
is proceeding with good results.
The necessary steps are in progress tow'ard carrying out the pro-
visions of the act of July 3, 1926, entitled "An act to readjust the
commissioned personnel of the Coast Guard, and for other purposes. "^
The act of June 10, 1926, authorized the construction and equip-
ment of 10 Coast Guard cutters, to be designed and equipped for
Coast Guard duties, in accordance with the view expressed in last
year's report. Funds have been appropriated to commence the
construction of three of these vessels, and it is very important that
the department be authorized, without undue delay, to enter into
I contracts for the construction of the remaining seven cutters.
By act of March 3, 1926, an appropriation of $3,900,000 was made
for additional motor boats and their equipment, for five seaplanes
and their equipment, and for repairs or alterations to, or for equipping
and placing in commission, vessels or boats transferred from the
Navy Department to the Treasury Department. Five destroyers
were acquired from the Navy Department and are being reconditioned,
and thirty-three 125-foot patrol boats are in course of construc-
tion. Arrangements have been made with the Army and Navy
by which the seaplanes and engines will be obtained under Army
and Navy contracts for delivery to the Coast Guard. The additional
equipment provided by this legislation will be a great help in the
operations of the service.
Public Health Service
The Public Health Service, which with the close of the present
fiscal year has completed the one hundred and twenty-eighth year of
its existence, is charged by law with manifold duties, among the
more important of which are:
1. Protection of the United States from the introduction of dis-
ease from without.
2. Prevention of the interstate spread of disease and suppression
of epidemics.
3. Cooperation with State and local boards of health in health
matters.
4. Investigation of diseases of man.
5. Supervision and control of biological products.
6. PubHc health education and dissemination of health informa-
tion.
The researches of the service into the causes and prevention of
human diseases have been conducted at the Hygienic Laboratory
REPORT OF THE SECRETARY OF THE TREASURY 147
and in central stations in the field, and important advances have
been reported during the year in a number of these investigations.
The studies have covered a wide range and have included investi-
gations of industrial hygiene and sanitation, child hygiene, stream
pollution, municipal health practice, mental health, milk, and in-
vestigations of individual diseases, such as malaria, pellagra, tubercu-
losis, influenza, pneumonia, cancer, tularaemia, Rocky Mountain
spotted fever, leprosy, and typhus fever.
The plague-eradicative measures which were operative during the
fiscal year 1925 at New Orleans, La., and Oakland, Calif., due to the
occurrence of rodent plague at those places, were terminated at
New Orleans, La., on September 30, 1925, and at Oakland, Calif.,
on February 28, 1926. At these places plague was completely
eradicated as far as it is within human ability to determine. It is
also considered that plague has been eradicated from Los Angeles,
Calif., and service activities were discontinued at that place on
June 30, 1926, except that at the request of the local authorities an
assistant surgeon general and four employees were authorized to
remain at Los Angeles until August 31, 1926, to assist in completing
the organization of rodent-control work which the city will conduct
as a permanent activity as a means of preventing further widespread
outbreaks of plague.
At the present time plague exists nowhere on the North American
Continent except in the ground squirrels of California. This infected
territory, however, extends from the Carquinez Straits on the north
to Los Angeles County on the south, and embraces the central and
coast counties in this area. Outbreaks of plague may be expected to
occur from time to time in the cities and towns in this area unless
squirrel-free zones are maintained around them and unless the trap -
ping and examination of rodents are conducted as permanent routine
measures in order that rodent plague infection may be determined in
its incipiency.
Present methods of operation are not sufficiently extensive to
'eradicate ground-squirrel infection in California. Complete eradica-
tion can be accomplished only by an intensive, coordinated effort
covering the entire area known to have foci of infection, and main-
tained over a period of years. While work of this magnitude would
require a large sum of money, it is probable that the sums which
must be expended by the various localities for plague prevention
and eradication over a period of years will far exceed the cost of
general complete eradication.
Measures for safeguarding shellfish from pollution and contamina-
tion were continued in cooperation with the Bureau of Chemistry and
the Bureau of Fisheries. In this connection an important function
of the Federal Health Service is the promotion of reasonably uniform
11438— 26t 12
148 REPORT OF THE SECRETARY OF THE TREASURY
rules, regulations, and methods of enforcement in the various States,
and work toward this end has pro,<^ressed satisfactorily.
Cooperative demonstrations of rural sanitation w^ere conducted in
89 counties in 20 States under the same plan as in previous years.
The Twenty-fourth Annual Conference of State and Territorial
Health Authorities with the Public Health Service was held on May
24 and 25, 1026, in accordance with the act of July 1, 1902. Dele-
gates were present from 35 States, 1 Territory, and the District of
Columbia. The transactions of the conference covered subjects
of great importance to the public health of the coimtry.
Certification of water supplies used on common carriers, super-
vision of sanitation in the national parks, and trachoma eradication
work were continued as in former years. Public Health Service super-
vision of antimosc[uito work along the Texas-Mexican border was
discontinued June 30, 1926, due to the apparent eradication of yellow
fever in Mexico. The localities, however, are expected to continue
their activities to some extent.
The Public Health Service has continued its investigations, both
field and laboratory, of problems affecting particular industries and
industrial hazards. There is a growing appreciation on the part of
the public, employers, and labor of the importance of this work.
Marked exacerbations of cholera occurred in China, Siam, and the
Philippine Islands. A sharp outbreak in Japan, probably due to
importation from China, was quickly suppressed. The examination
of potential carriers and the prohibition of the embarkation of those
actually discovered at ports of embarkation in the Philippine Islands
effectually prevented the introduction of infection into the Hawaiian
Islands and the United States.
The widespread prevalence of plague mentioned in my last report
continued throughout the year, and in some parts of the world it is
invading new territory. Although there were considerable fluctua-
tions in the number of cases reported from specific localities, the gen-
eral distribution of this disease is remarkably similar to that during
the previous year, thus illustrating the difficulty of eradicating plague
once it has become established.
Smallpox continued to occur throughout the world, including the
United States of America. In the United States the number of cases
and deaths in 1925 was less than in 1924; but 144 deaths from this
disease in MinneapoHs during 1925, 87 deaths in Milwaukee, and 44
in Camden, N. J., show that smallpox is a dangerous disease in any
community where vaccination is neglected. Because of an epidemic
in Florida a quarantine was imposed against that State by the
quarantine board of the Bahama Islands and maintained for several
weeks. The undue and prolonged incidence of smallpox in Los
Angeles, Calif., aroused the apprehension of the sanitary authorities
of the Territory of Hawaii, so that it was deemed advisable to require
EEPOET OF THE SECEETAEY OF THE TEEASUEY 149
persons embarking at ports on the Pacific coast of the United States
to produce satisfactory evidence of immunity to smallpox before
embarkation. This restriction was continued in effect from April 5,
1926, to June 17, 1926. Similar measures were required for a time for
the protection of the Territory of Alaska. In England, where mild
smallpox has been prevalent for a number of years, more than 6,000
cases were reported in 1925. In Russia the cases reported decreased
from 27,000 in 1924 to 16,000 in 1925. British India reported 41,000
deaths from smallpox in 1925 and 55,000 in 1924. Many countries in
Africa reported increased prevalence of smallpox.
There was relatively very little change in the reported prevalence
of typhus fever, though most countries reporting noted a decrease in
the number of cases. Although this disease is widely distributed, it
is not regarded as epidemic except in Soviet Russia, where it is
apparently decreasing. Typhus reappeared in the Canary Islands
and Italy. It apparently increased in Czechoslovakia and Ireland
and diminished in Lithuania and Poland.
The number of cases of yellow fever reported w^as approximately
the same as was reported during the previous year. However,
the distribution was more extensive, since cases were reported from
the Gold Coast, the Ivory Coast, Liberia, Nigeria and Senegal,
Africa, and Brazil in South America. The sharp outbreak at Para-
hyba, Brazil, has caused some apprehension, but, due to the energy
and promptness of the measures for its eradication, will probably
soon be brought under control.
One amendment to the quarantine regulations was promulgated,
authorizing the Surgeon General to prescribe rules under which the
six-month period between fumigations may be extended for vessels
plying regularly between ports not infected with plague and for
vessels whose construction does not favor the harborage of rats.
In accordance with the terms of this amendment, quarantine officers
have been authorized to extend the period between fumigations for
an additional six months in the case of certain types of vessels if,
upon careful inspection, no evidence of rat infestation or harborage
is found. It is expected that this procedure will materially diminish
the number of vessels fumigated.
The official declaration that New Orleans, La., and Los Angeles
and Oakland, Calif., are free from plague, with consequent lifting of
the special restrictions made necessary during the last fiscal year, has
materially benefited commerce with foreign nations and relieved ship-
ping interests of the expenditures incident to quarantines imposed
by other countries or in accordance with international treaty obliga-
tions.
The question of the disinfection of the rags imported into the
United States for the manufacture of paper has for many years
150 KKPORT OF THE SECRETARY OF THE TREASURY
occupied the attention of the Public Health Service. On December
3, 1925, the inedicnl officers in charge of quarantine stations were
advised that consular certificates of disinfection or origin will no
longer be required as a prerequisite to admission of shipments of
rag^ into the United States, its possessions, or dependencies, but
that, when rags are obviously filthy or infected, their admission
should be refused.
Two meetings of the permanent committee of the International
Office of Public Hygiene were held during the year, one in October
and one in May. The United States was represented by Surg.
W. W. King. Subjects covering a considerable portion of the field
of public health were discussed.
An international conference, called by the French Government to
consider a revision of the sanitary convention of Paris in 1912, was
held in Paris from May 10 to June 21, 1926, and was attended by
delegates from 67 countries and dominions. The United States
was represented by Surg. Gen. H. S. Gumming, Senior Surg. Taliaferro
Clark, and Surg. W. W. King.
Since the changes in the treaty were, on the whole, satisfactory,
the American plenipotentiaries signed the convention with two reser-
vations, the first of which, following the policy of our Government,
disclaimed any recognition of the so-called Soviet Government of
Russia by reason of the signatures of delegates from that country to
the convention. The second reservation reserved to the United
States the right to decide what foreign ports or places should be
considered infected and to determine the measures to be applied
under special circumstances to arrivals at ports of the United States
from such areas.
The immigration act of 1924, approved May 26, 1924, by author-
izing American consular officers to withhold their visas from pro-
spective immigrants to the United States if it appears that the appli-
cant is inadmissible under the immigration laws, made it possible to
comply with the growing popular demand for the examination of
immigrants in the countries of their origin previous to embarkation
for the United States.
About the beginning of the fiscal year it was decided, by mutual
agreement of the Secretaries of the State, Treasmy, and Labor
Departments with the British Government, to conduct for a period
of three months an experiment to determine the feasibility of ex-
amining prospective immigrants in the country of origin. It was
planned that medical officers of the Public Health Service and inspec-
tors of the Bureau of Immigration should act as technical advisers
ill their respective lines to the consular officers who issue the immigra-
tion visas. In accordance with the plan, on August 1, 1925, medical
REPORT OF THE SECRETARY OF THE TREASURY 151
officers were detailed for duty at the American consulates at Belfast,
Cobh, Dublin, Glasgow, Liverpool, London, and Southampton.
The great advantage to the three classes of people directly concerned
in the medical inspection of immigrants abroad is evident. The
people of the United States are benefited because, when the pro-
spective immigrants are examined abroad, all those who are manda-
torily excludable under the law are refused visas, whereas, because
of the lack of funds and other factors, only a part of the immigrants
certified as ineligible upon arrival in the United States are actually
deported. Thus the law is more strictly enforced when the immi-
grants are examined abroad. The examination near their homes is
more satisfactory to the immigrants because, after they have success-
fully passed the examination, they are reasonably certain of admis-
sion to the United States. If, on the other hand, their visas should
be refused, they can return to their homes with but little expenditure
of time or money. The natural result is that the keen disappoint-
ment and great financial loss incident to rejection at the port of
arrival are either entirely avoided or, at least, greatly mitigated.
Transportation companies consider examination of aliens before
embarkation to be logical and businesslike, as it reduces the number
of fines imposed upon them for bringing those found to be inadmis-
sible. The approval of the plan is practically unanimous, as the
immigrants, transportation companies, officials of the Departments
of State, Labor, and the Treasury, and the press, both foreign and
domestic, are all convinced of its usefulness.
Because of the success of the experiment in Great Britain and
Ireland the examination of prospective immigrants has been extended
to Antwerp, Belgium, and Rotterdam, the Netherlands, and, it is
expected, will be introduced early in the next fiscal year at Berlin,
Bremen, Cologne, Hamburg, and Stuttgart, Germany; Copenhagen,
Denmark; Bergen and Oslo, Norway; Warsaw, Poland; and Gothen-
burg and Stockholm, Sweden.
With regard to local conditions in the United States other than
those mentioned, it may be said that, in general, the health of the
people of the United States was good during the calendar year 1925
as compared with preceding years, but the continued prevalence of
smallpox, diphtheria, and other communicable diseases which can
be easily controlled shows that much work remains to be done,
especially in educating the people and inducing them to take the
necessary measures to protect themselves and their communities
against the ravages of these diseases. Many thousands of lives could
be saved each year and much suffering and expense could be avoided'
by the use of known methods of prevention of disease. Lack of
appreciation of these facts and indifference leave a large part of the-
152 RKPORT OF THE SECRETARY OF THE TREASURY
peoplo id most of our comniuiiities susceptible to these diseases, and
the results are unnecessary suffering, expense, and loss of life.
During the fiscal year no case of cholera or yellow fever was re-
ported in the United States. Our people have come to regard these
diseases as mere memories of the past and not now threatening;
but if we are to continue free from their ravages we must be ever
watchful to prevent their getting a foothold here.
Plague in human beings has not been reported in the United States
since Januarj^, 1925, when two cases occurred in Los Angeles, Calif.,
the last of an outbreak which began four months earlier. However,
as already stated, plague exists among rodents in California and is
always a menace wherever commerce is carried on.
A mild form of typhus, known as "Brill's disease," exists in the
United States, and occasional cases of the virulent type are reported
near the Mexican border.
Typhoid fever in the United States during 1925 showed a reaction
from the downward trend which has prevailed for many years.
Thirty-five States reported 30 cases of typhoid fever per hundred
thousand population in 1924 and 40.1 cases per hundred thousand
in 1925." Reports for the early part of 1926, however, indicate
more favorable rates for this disease.
Diphtheria continues to show a reduction in death rates as reported
from the various States and cities. The Public Health Service is
using ever}^ endeavor to encourage the use of toxin-antitoxin in the
immunization of children against this disease.
The birth rate in the United States appears to be declining. Thirty
States reported 21.2 births per thousand population in 1925 and 22.6
per thousand in 1924. The fact that foreign-born mothers usually
have larger families than American-born mothers may be worthy of
careful consideration.
In 30 States the death rate in 1925 was 11.7 per thousand popula-
tion, while in 1924 it was 11.8. The lowest death rate ever recorded
in the registration area was 11.6 per thousand population in 1921.
The general death rate in the United States has been decreasing for
many years.
The infant mortality rate in the United States for the year 1925
was just a little higher than that for 1924, but the figures for both
years are much more favorable than those of a few years ago. This
rate is the number of deaths under 1 year of age per thousand births,
and during the 11 years since the establishment of the birth registra-
tion area it has decreased from 100 in 1915 to less than 75 in 1925, a
decrease of more than 25 per cent.
Everyone realizes the benefits derived from the use of automobiles,
but the constantly increasing death rate from automobile accidents
demands consideration. About 18,000 deaths per annum are due
REPORT OF THE SECRETARY OF THE TREASURY 153
to automobile accidents in the United States at present, and the
number still appears to be increasing.
The marine hospitals and other relief stations, where beneficiaries
of the United States Public Health Service are given medical relief,
operated under reduced appropriations. A lower unit cost of service
resulted, but it was necessary to reduce the amount of relief in order
to avoid a deficit. The average per diem cost for treatment in the
marine hospitals was reduced from $3.89 in 1924 and $3.80 in 1925
to $3.71 in 1926. Attention is invited to the statement made in my
last annual report that there is reason to believe that the cost at that
time was below the minimum compatible with efficiency and that
further retrenchments would result in lessened efficiency and provoke
dissatisfaction and criticism. The limit of rational economy in
supplying medical care to sick men seems to have been reached, and
perhaps passed. It is a matter of regret that it was necessary because
of insufficient funds to limit the amount of hospital care, although
the policy adopted by the Surgeon General was well calculated to
reduce public criticism to the minimum. It is hoped that the appro-
priations for the maintenance of hospitals and relief will hereafter
be made sufficient for the high purpose to which they are devoted.
The division of venereal diseases, as in other years, carried on
activities in accordance with the law creating the division, which
requires that the cause, treatment, and prevention of venerea]
diseases be studied, that the Federal bureau cooperate with the
State boards of health to control these diseases within the States,
and that the spread of venereal diseases in interstate traffic be
prevented.
In the past year an especial effort has been made to enlist the aid
of probation officers and all social workers who come in contact
with the delinquent and defective classes. To this end a manual
was prepared covering not only the medical aspects of syphilis,
gonorrhea, and chancroid, but including chapters on sex education
and the venereal diseases, sex morality and the law, the legal aspects
of venereal disease control, etc. This publication has been widely
distributed, and the approval with which it has been received in-
dicates that it supplies this most necessary information in a very
acceptable form.
Social pathology for the socionomic aspects, and venereal disease
information for the medical aspects of the venereal disease problem,
published monthly, are each year distributed to an increasing num-
ber of readers.
An undertaking which was satisfactorily completed in the past
year was the preparation of strip films depicting the various phases
of syphilis. These films are lent by the division to the State boards
of health. Their use within the State is directed by the health
154 REPORT OF THE SECRETARY OF THE TREASURY
officer. As a means of instruction in the diagnosis of the disease^
a irraphio presentation of syphilis in its various manifestations is
invahiable to the clinician and the general practitioner. The educa-
tion of the general practitioner to recognize syphilis in all its forms is,
of course, a most necessary step in the general program of disease
prevention.
The education of the public as to the seriousness of the venereal
diseases and the necessity for control and prevention is of the utmost
importance. Lectures and exhibits, meetings for special groups, and
newspaper publicity have been employed to further this end, while
intensive w^ork in the schools has been this year, as in former years,
one of the most important activities of the division. The interest
of such national organizations as the parent-teacher associations,
men's organizations, and nonofficial health associations, has done
much to carry forward the program, and insures continued interest
in the control of venereal diseases.
The total personnel of the service on June 30, 1926, was 8,865, of
which number 4,442 employees are designated collaborating epi-
demiologists and assistant collaborating epidemiologists and receive
nominal compensation. They are for the most part officers or em-
ployees of State and local health organizations who transmit to the-
service current reports of the prevalence of communicable diseases.
The number of full-time employees of the service has materially
decreased since June 30, 1925.
In previous reports I have emphasized the importance of enlarging
the corps of regular commissioned officers of the Public Health Serv-
ice. In order to discharge its full duties, the responsible scientific
personnel of this service should be mobile; and the method of appoint-
ment and status of medical and dental officers, sanitary engineers,.
and other scientists having like qualifications should be the same.
Moreover, provision should be made for orderly promotions. By
means of legislation, provision should be made to thus insure the
efficiency of the personnel and to coordinate the public health activi-
ties of the Government.
Public buildings
An act entitled "An act to provide for the construction of certain
public buildings, and for other purposes" was approved on May 25,
1926. The latest general public building authorization prior to the
above enactment was the so-called omnibus public buildings act of
March 4, 1913. Two omnibus public building bills had been passed
by the House of Representatives in the interval, viz, January 19, 1917,.
and February 15, 1926, but each failed of passage by the Senate.
The bill of February 15, 1926, referred to above, and the act of
May 25, 1926, present radical departures from the omnibus public-
EEPORT OF THE SECEETAKY OF THE TREASURY 155
building bills enacted at intervals between the years 1902 and 1913.
The evident purpose of the enactment of May 25, 1926, was to get
away from a type of bill which has been characterized as "a parceling
out of favors" and to substitute therefor a method based on business
considerations of determining where public buildings should be con-
structed or remodeled and enlarged. Under practically identical
bills introduced in each House of Congress large authority in this
direction was to be vested in the Secretary of the Treasury acting
jointly with the Postmaster General in cases where proposed build-
ings were to be occupied in whole or in part for postal purposes.
The bUl as enacted into law provides total authorizations to the
extent of $165,000,000, of which $50,000,000 may be expended for
sites and buildings in the District of Columbia, and $15,000,000 for
extensions of limits of cost of buildings authorized under the omnibus
public buildings act of 1913, and other acts, and not yet placed under
contract. There is thus left available for construction work in the
country at large the sum of $100,000,000. The act contains numerous
provisions limiting freedom of action. Expenditures may not exceed
$25,000,000 per annum, of which amount not more than $10,000,000
may be expended annually in the District of Columbia; and of the
expenditures made outside of the District of Columbia for the fiscal
years 1927, 1928, and 1929, respectively, at least one-third shall
be for buildings authorized in prior acts. The act contemplates
a survey of the public building needs of the country and provides
that the $100,000,000 authorized for public buildings outside the
District of Columbia shall be allocated to the different States, where
buildings are found to be necessary, in such manner as to distribute
the same fairly on the basis of area, population, and postal receipts.
A survey of the public building situation, embracing all com-
munities having postal receipts of $20,000 per annum and upwards
and in which no Federal building has been constructed or authorized,
is in progress. There are approximately 860 communities of this
character. In these communities the gathering of data relating to the
postal service is being handled by the Post Office Department and the
gathering of data relating to all other branches of the Federal service
is being handled by the Treasury Department.
In addition to the foregoing communities there are in round
numbers 1,300 cities in which public buildings have been constructed.
These cities also are being surveyed and the gathering of data respect-
ing all branches of the Federal service therein is being handled by the
Treasury Department, except in certain places where a joint survey
by the Post Office and Treasury Departments is deemed necessary or
desirable.
The object of the survey is to show what completed and occupied
buildings require enlargement, what new buildings should be con-
l."G HKPOKT OF THE SECRETARY OF THE TREASURY
structed to meet the needs of the Government and the public, and
to what extent such relief can be afforded within the authorization
contained in the recent public buildings act. These surveys are
proceeding satisfactorily.
The only construction work so far appropriated for under the
recent pubHc buildings act, chargeable to the $100,000,000 provided
for buildings outside of the District of Columbia, is for an extension
of the power house, etc., of the Chicago marine hospital, and for
additional stories on the Federal buildings at Sandusky, Ohio;
Birmingham, Ala.; Memphis, Tenn.; and Paris, Tex. In each of
these cases where additional stories are authorized, the limits of cost
fixed by Congress were rendered inadequate by reason of the increased
construction costs resulting from the World War. The contract for
the additional story for the Sandusky building has been let and in the
remaining cases the drawings are well under way.
The provisions in the act of May 25, 1926, hereinbefore referred
to, which authorize an increase of $15,000,000 in the aggregate
limit of cost of buildings authorized previously, cover 69 build-
ings. It is expected that they will all be under contract within
the next three years. Drawings and specifications are under way
for the first year's program, and estimates for the necessary appro-
priations will be submitted in due course of business.
Under the provisions of the act of May 25, 1926, the Public Build-
ings Commission, created by the act of March 1, 1919, is charged
with the approval of assignment and general arrangement of space
in Federal buildings to be constructed in the District of Columbia;
and is empowered to approve the sites for such buildings and to
determine the order in which buildings, or enlargements thereof, in
the District of Columbia, authorized under the provisions of the act
of May 25, 1926, shall be constructed. The commission has desig-
nated the following projects for the first year's program:
B-lding Project \l^^
Archives Additional land, and construction including stacks... $6,900,000
Internal Revenue ..I Additional land, and construction 7,950,000
Agricultural Department ..., (o) Purchase of Economics Building 325,000
I (6) Completion of central part of Administration 2,000,000
Building,
(c) Additional land and construction of an office build- I 5,750,000
ing.
Two additional stories and remodeling I 375,000
Construction (land owned by Government) 10,000,000
Liberty Loan
Department of Commerce _, ,„ „
Government Printing Office Purchase of additional lind.''..,"J.""/"/."''.'.'.'..'..'.'.'..'\ ii25oio66
The sites for some of the above buildings — the Archives, the Inter-
nal Revenue, and the Department of Commerce — are designated
to be within the area bounded by Pennsylvania Avenue, B Street
NW., Sixth Street, and Fifteenth Street. In the same area it will
REPOET OF THE SECRETARY OF THE TREASURY 157
be advisable, probably, to locate other Government buildings, viz,
the Department of Justice, the Department of Labor, the General
Accounting Office, and the independent establishments of the
Government.
A contract has been made for the purchase of the Economics
Building above referred to at a cost of $300,000. Steps have also
been taken to acquire the necessary sites, and work on the plans for
the Internal Revenue, Archives, and Liberty Loan Buildings is well
under way.
Also, it should be borne in mind that the property extending along
the proposed Mall from Sixth Street to Third Street, south of Penn-
sylvania Avenue, will be required to safeguard the plan of the Park
Commission of the District of Columbia of 1901, based upon the
plan of Peter Charles L 'Enfant, in its provisions for a fine approach
to the Capitol. In this connection the views expressed in the report
of the Public Buildings Commission of December 18, 1917, supported
by those of the Fine Arts Commission in the same report, are con-
curred in by this present report. They are as follows:
First. Public buildings, other than those of the executive depart-
ments, should face the grounds of the Capitol.
Second. New executive departmental buildings may well be
located * * * south of Pennsylvania Avenue along Fifteenth
Street to B Street, on the land already purchased and awaiting such
occupation.
Third. Both sides of the Mall, with the exception of the space
needed by the Department of Agriculture on its grounds, should be
occupied by museums and other buildings containing collections in
which the public generally is interested, but not by department
buildings.
Fourth. The space east of Fourteenth Street, between Pennsyl-
vania Avenue and the Mall, should be occupied by public buildings.
Congress has authorized a program for the location and construc-
tion of buildings to accommodate the departments and other execu-
tive offices now housed in temporary structures and in privately
owned buildings; and has limited the area of purchase and location
to the space between Pennsylvania and Maryland Avenues, Fifteenth
Street and the Capitol.
Within this area the Government has already acquired the squares
between Pennsylvania Avenue and the Mall, Fourteenth and Fifteenth
Streets, the square bounded by Eleventh, Twelfth, Little B, and C
Streets, and the block bounded by Tenth, Twelfth, Little B, and B
Streets. This area is available for the construction of department
buildings already authorized by Congress.
Congress has also provided for a site within the specified area for
an archives building and for its construction. Congress has further
158 REPORT OF THE SECRETARY OF THE TREASURY
provided lor the extension of B Street east to the Capitol, thus throw-
ing into the Mall all of the area east of Sixth Street and south of B
Street and providing two building sites facing both Pennsylvania
Avenue and the Mall. Within the specified area the Government
owns the Post Office Department building and the Center Market.
The available sites in the remainder of the area will be required for
Federal activities now occupying private buildings or temporary
Government structures, so that all of the land included within the
limits set by Congress must be acquired. From motives of economy
all of these squares should be acquired at once. Otherwise, Govern-
ment purchases made piecemeal will enhance the value of property
remaining in private ownership, and these increased prices must be
paid on later acquisitions.
The general character and bulk of the buildings of a departmental
nature differ generally from those already' occupying the Mall front-
age and those of future possibility of the Museum type. A sense of
order, harmony, and fitness seems to indicate the separation of these
two types of buildings into distinctive general locations.
The requirements as to space in architectural setting, accessibility,
and the number of people, both employees of the Government and
others going to and from these buildings, are so dissimilar as to rein-
force strongly the argument for their collective separation. Again,
the buildings on the Mall, although not necessarily finer than those of
the departments, should be, architecturally speaking, of a more
plastic, decorative, and a more generally varied form, suiting their
location in the park.
A large portion of the area designated as the "triangle" will be
necessary for the accommodation of the buildings now projected.
Even if it were not possible to foresee the ultimate use of all of the
land, nevertheless it may be stated with conviction that the choice
of the site for the buildings, the provision possibly of parking space
for automobiles and of adequate road circulation and approaches to
the buildings, and in short the economic and orderly planning of the
area immediately required, can not be made unless the area is re-
planned as a Avhole for this purpose. It may well be urged, also, that
unless all the land, with minor exceptions, is now taken by the Gov-
ernment, the construction of the new buildings and the removal of
the markets as proposed will induce a rise in values of the remaining
land, making it more costly to acquire.
In the Capital an example should be set for the country as a whole
in the matter of planning. Our national monuments will attract
seekers of the ideal in art. More and more it will become the ten-
dency to establish the headquarters of societies of literature and art
in Washington and to make bequests of collections to the National
Capital as well as to other great cities of the country. Already there
REPORT OF THE SECRETARY OF THE TREASURY 159
is a definite project to establish here in Washington a national gallery
of painting. Thus the Capital may be foreseen as an art center
responding to the desire of visitors from all over the world and satis-
fying that demand.
The example of the great capitals of Europe may be cited, that in
particular of Paris. Although the character of the cities of Washing-
ton and Paris differs in respects favoring the embellishment of our
own Capital, Paris besides being a capital is also a great business and
industrial center. Under the Haussmann plans of development of
Paris, during the period of some 30 years beginning about the middle
of the nineteenth century, the simi of $180,000,000 was spent on the
opening of thoroughfares and in general civic embellishment. A
similar sum was authorized for further development at the beginning
of this century, and in between those periods other great sums were
authorized and spent, estimated in all as upward of half a billion of
dollars. The Great War delayed the later program, although the
work involved has been and is being slowly carried out according to
plan. It is generally recognized that the really splendid nature of
city development in Paris is responsible in a large degree for the
number of visitors and that this work has contributed very largely to
making Paris the artistic center of the world.
In the plan of future development of Washington the treatment
of the great triangle of land south of Pennsylvania Avenue to the
Mall will play an important part. Assuredly the character, height,
and design of the great front to the south stretching from Fifteenth
Street toward the Capitol must be carefully considered as a whole.
It may be said to be the real frame or background of the Mall, with
its Museum buildings and memorials, present and to come. Oppor-
tunity must be given to treat it as a whole in relation to the Mall.
The problem of location of buildings to-day, although it involves
difficulties, is made less difficult by the existence of the general plan
of the commission of 1901. Correspondingly the work in the future
will be rendered easier and less costly if the plans of to-day are made
with foresight.
No expenditure of the magnitude contemplated under the new
building bill should be undertaken without a comprehensive study
of the entire situation. As has been outlined above, many features
must be taken into consideration, but the outstanding one is that
the public buildings, as finally located and constructed, should place
Washington in the forefront of the architecturally beautiful cities of
the world. This result can only be obtained by a thorough and com-
prehensive study of the entire subject. No building should be lo-
cated or its architecture decided upon until study has been made of
its effect upon the neighboring buildings to be built in the future and
the carrying out of the complete plan.
160 REPORT or THE SECRETAEV OF THE TREASURY
Bureau of Supply
Purchases and issues. — The Bureau of Supply has completed its
fourth full year of operation as the central purchasing, warehousing,
and distributing agency of the Treasury Department. Its organiza-
tion was the sequel to an inquiry by a representative of the Director
of the Bureau of the Budget early in the fiscal year 1922, and was
created by Department Circular No. 283, of March 28, 1922, by au-
thority of section 161 of the Revised Statutes, following an opinion by
the Comptroller General of the United States, dated January 13, 1922,
that there was no legal objection to establishing such an agency in
and for the Treasury Department.
The bureau purchases supplies and equipment for all branches of
the department both in Washington and the field, with the exception
of those for the Bureau of Engraving and Printing, whose purchases
are exempted bylaw from its supervision; those for the Coast Guard,
and to some extent those for the mint. The purchases of miscellane-
ous supplies are made from allotments to the Bureau of Supply from
appropriations for the several activities which it serves; while those
for stationery are made from the departmental appropriation for
stationery, which has, since the organization of the bureau, been
under its supervision; and it is purposed to transfer also to the bureau
on or prior to July 1, 1927, the appropriation for printing and binding
as well as administrative supervision over the work and personnel of
the Division of Printing, which is now a separate division in the
office of the Secretary.
In addition to its purchasing, warehousing, distributing, and
accounting functions, administrative supervision over the work of
the General Supply Committee and the traffic division of the Treasury
Department is vested in the Bureau of Supply.
Heretofore the Bureau of Supply has functioned with personnel
detailed to it from the various bureaus and offices of the Treasury
Department, but as it has now demonstrated its value as an econom-
ical and efficient arm of the service it is beHeved that it ought to
be recognized and supported as a permanent institution. Accord-
ingly, there has been prepared for submission to Congress through
the Bureau of the Budget an estimate for its personnel as a distinct
unit of the office of the Secretary, and to provide for this personnel
deductions exceeding the proposed appropriation have been made
from the several bureaus and offices from which the bureau now draws
its personnel on a detailed basis. Thus funds for operating the
agency will be furnished without increasing the sum of the appro-
priations to the department.
At the time of the organization of the Bureau of Supply, and as
its functions have been gradually widened, its personnel has been
BEPOET OF THE SECEETAEY OF THE TREASUEY
161
provided by assigning to it such employees of the several bureaus
and offices concerned as had previously devoted their entire time to
purchasing, warehousing, and shipping supplies and equipment and to
the accounting incident thereto. In making allocations of employees,
however, no consideration was given to those who devoted only a
part of their time to such duties, and as the work of the bureau
has become systematized approximately 15 employees have from
time to time been dispensed with, in spite of which, in arriving at
the amount of the estimate for its continuance on a permanent basis,
it has seemed possible, after a careful study of the organization,
functions, methods, and needs of the bureau, to effect a still further
reduction of seven employees, with salaries aggregating $14,700. In
addition the bureau will attempt to carry on the traffic work of the
department, which will require the services of several employees,
without asking for additional personnel therefor. The estimate sub-
mitted has accordingly been prepared on this basis, with a resulting
considerable saving to the department in the cost of carrying on
this important service.
There was expended by the bureau in 1926 a total of $5,409,132.78,
a decrease of $237,610.46 when compared with the expenditures for
the preceding year, which totaled $5,646,743.24.
The following table summarizes, for the past four fiscal years,
expenditures by the Bureau of Supply from appropriations to the
several bureaus and offices for the purchase of supplies and equipment :
Bureau or office
1926
Expended from allotments;
Chief Clerk and Superintendent
General Supply Committee
Division of Printing and Stationery
Supervising Architect
Bureau of Internal Re venue
Treasurer of the United States
Commissioner of the Public Debt
Division of Bookkeeping and Warrants
Public Health Service
Division of Customs _
$170, 938. 62
118, 506. 98
379, 971. 90
1 768, 419. 45
528, 231. 80
3, 942. 44
2 63, 124. 79
1, 493. 50
2, 069, 435. 02
$159, 562. 45
111,436.68
319, 293. 10
1, 925, 066. 63
436, 254. 19
141. 77
72, 902. 39
3, 193. 67
1,983,116.44
'46,117.78
Total from allotments
Purchases from appropriations from v^hich no
allotments were made
4, 104, 064. 50
165, 942. 19
5, 057, 085. 10
88, 953. 96
Grand total , 4,270,006.69
5, 146, 039. 06
$133, 812. 92
105, 606. 55
343, 202. 28
2, 031, 804. 68
543, 413. 74
67.95
49, 640. 01
2, 442. 41
2, 188, 128. 86
179, 643. 84
$120, 102. 51
118,528.44
368, 948. 86
1, 998, 537. 52
327, 992. 61
40, 735. 39
1, 269. 92
2, 067, 386. 85
233, 483. 02
5, 577, 763. 24
68, 980. 00
5, 276, 985. 12
132, 147. 66
5, 646, 743. 24
5, 409, 132. 78
' Purchasing for Supervising Architect transferred to Bureau of Supply on Oct. 17, 1922.
2 Purchasing for the Commissioner of the Public Debt transferred to Bureau of Supply on Sept. 15, 1922.
' Purchasing for Division of Customs transferred to Bureau of Supply on Apr. 1, 1924.
The purchasing work of the bureau in 1926 involved the issue of
34,957 formal purchase orders; the preparation of 5,993 sets of speci-
fications and invitations for proposals; and the examination and audit
for settlement of 84,465 vouchers. Cash discounts for prompt
payments were utilized to the extent of $10,856.87, only $296.99
being lost, which was due in great part to inability to obtain certifica-
tions of vouchers in the field within the limited discount periods.
162 REPORT OF THE SECRETARY OF THE TREASURY
The 192G appropriation to the department for articles of stationery-
was S437,760, of which $368,964.65 was expended and $68,795.35
reverted to the Treasury. The unexpended balance was a part of a
special allowance by Congress for the installation of a new and
improved system of filing income-tax returns in field offices, but it
was not practicable to complete the installation, and consequently
the unused part of the appropriation lapsed. There was expended
also for stationery items $67,440.52 from other available appropria-
tions, making the total purchases of stationery supplies for the
entire department $436,405.17, compared with $426,285.29 during
the preceding year.
The value of stationery supplies issued in 1926, as distinguished
from actual expenditures for replacement, totaled $452,224.24,
compared with $437,256.01 in 1925, or an increase of $15,968.23.
The excess of issues over expenditures ($16,819.07) was made
possible by a reduction of $10,487.02 in the value of stock on hand and
the utilization of $6,332.05 worth of articles surrendered to the bureau
by consuming offices for reissue.
The increase in both expenditures for and issues of stationery
supplies was due to increases in prices of certain items and to the
furnishing by legal authority of several articles not previously included
under stationery.
Shipments of stationery supplies to the field were made in 12,604
packages and boxes, weighing 598 tons. Of these, there were 3,367
franked parcels (each weighing less than 4 pounds); 1,543 parcel-
post packages, costing $1,044.88 for postage; and 7,694 express and
freight boxes, crates, etc., requiring the use of 2,346 Government
bills of lading. In addition the bureau sent through the mails approxi-
mately 5,500 sacks of printed matter, weighing about 275 tons.
Inventories taken July 1, 1926, show a stock on hand of stationery
suppHes valued at $157,399.28 and also 37,285,579 blank books and
forms (exclusive of Bureau of Internal Revenue stock, which is in
the hands of that bureau), valued at $135,905.56.
General Supply Committee. — The Bureau of Supply proper functions
for the Treasury Department alone, whereas the General Supply
Committee is an interdepartmental organization and, under the
direction of the Secretary of the Treasury, functions in behalf of all
the executive departments and independent Government establish-
ments. The Bureau of Supply, in addition to contracting duties, is
hIso charged with purchasing, warehousing, distributing, and account-
ing in relation to every requirement for supplies for both Washington
and field offices of the Treasury Department, while the activities of
the General Supply Committee, under its organic law, are concerned
only with the making of contracts for furnishing articles in common
u^e in two or more departments or establishments in the District
REPORT OF THE SECEETARY OF THE TREASUEY 163
of Columbia^ though certain requirements for a field service may be
provided for on request of a head of a department under which the
service operates.
The committee was created by section 4 of the act of June 17, 1910
(36 Stat. 531), and consists of a representative from each of the 10
executive departments, who serves on the committee without addi-
tional compensation, though clerical services for the committee,
including a superintendent of supplies, are provided for by an appro-
priation to the Treasury Department. It is required to prepare and
issue annually a general schedule of supplies, in which are listed the
articles for which contracts are made, with descriptions thereof,
the unit prices, times of delivery, and the names and addresses of
contractors. The committee is charged especially with the standardi-
zation of supplies and the elimination of unnecessary grades and
varieties.
At the close of the World War, the original duties of the com-
mittee were enlarged by Executive order, subsequently approved by
legislation, to include the disposition of surplus war supplies and
equipment in the District of Columbia. A large part of this material
was reissued to various offices and establishments; a greater part,
being either unserviceable or not likely to be needed for reissue, was
disposed of, usually by auction, and some of it still remains available
for reissue as called for from time to time. Articles reissued to
Government departments and establishments are charged, at a dis-
count below their original cost, to appropriations ordinarily available
for the purchase of such supplies, and receipts therefrom are deposited
to the credit of miscellaneous receipts of the Treasury.
Since the war surplus has become practically exhausted, the facili-
ties of the committee's organization have by authority of law been
availed of to receive and dispose of the vast quantity of property of
every character currently becoming surplus or unusable in Govern-
ment offices in the District of Columbia, which is disposed of in the
same manner as was the war surplus.
With the approval of the coordinating agencies of the Government
the committee has, with respect to a great many items, embarked
upon a policy of procurement in definite quantities at the beginning
of each quarter, rather than making annual contracts for furnishing
the articles in indefinite quantities from time to time to the various
establishments. Requirements for these items are assembled four
times a year, proposals therefor are solicited for immediate delivery,
and a single shipping direction placed for the entire quantity needed
at once. This policy has resulted in decidedly lower prices in many
lines, with a resulting saving to the Government of hundreds of
thousands of dollars.
164 REPORT OF THE SECRETARY OF THE TREASURY
Purchases reported by Government departments and establish-
ments under contracts negotiated through the General Supply Com-
mittee amounted to $6,725,600.35 during the fiscal year 1926, an
increase of $80,404.71 over the preceding year. Of the 20 classes of
items contracted for, purchases of 12 increased in varying amounts
and those of 8 decreased. A net increase of $526,054.07 is noted in
those classes of items containing commodities included in coordinated
purchases. The principal increase was in class 17, where purchases
of automobile tires and tubes amounted to $470,247.40, an increase
over the purchases of the preceding year of approximately 200 per
cent, due to a larger number of services obtaining this equipment
under General Supply Committee contracts. Increases reported
for 1925 in the purchases of items included in classes 9 and 18 (ofl&ce
furniture and filing equipment and typewriting machines, adding
machines, other labor-saving devices, etc.), are no doubt responsible
for the decreases of $94,817.12 and $304,013.98 shown in these
classes for 1926. A decrease of $86,356.71 also occurred in class 15,
electric lamps. Decreases are also shown in class 1, stationery;
class 6, electrical and plumbing supplies; class 12, photographic
supplies; class 16, incandescent gas-lamp supplies; class 19, electric
service; and class 20, telephone service.
Issues of surplus- supplies and equipment to various Government
activities decreased to $48,450.84 from the amount of $78,028.61
transferred during 1925. There was, however, an increase of $20,-
187.51 in the value of the material no longer usable by the Govern-
ment and disposed of at public auction. Similar material disposed
of by contract sale decreased $35,043.70, caused both by reduction
in quantity and in the price obtained, lower prices prevailing for
waste paper and other paper stock materials.
Attention is again directed to the disadvantage imposed by exist-
ing law which makes it impossible to secure the maximum benefit
from the consolidated purchases of commonly used supplies by
making single payments. The present requirement that each indi-
vidual department make payment for its share of a consolidated pur-
chase is cumbersome and unbusinesslike. It causes unnecessary
bookkeeping on the part of both the contractor and the Government,
delays payments, and frequently makes it impossible to take advan-
tage of discounts.
Much has been accomplished by consolidating requirements for
a number of commonly used items of supply and making bulk pur-
chases with a single delivery and inspection, but better prices could
be obtained by adopting the more businesslike method of making
single payments.
KEPORT OF THE SECEE'rARY OF THE TREASURY 165
Bureau of Engraving and Printing
During the fiscal year 1926 the bureau eclipsed all previous records
in the production and delivery of perfect work. Deliveries for the
year reached a total of 482,307,106 sheets, as compared with de-
liveries for the previous year of 464,869,695 sheets, an increase over
the preceding year of 17,437,411 sheets, or 3.75 per cent. This net
increase is accounted for by an increase of 21,507,386 sheets of cur-
rency, and a decrease of 4,069,975 sheets of bonds, notes, certificates,
stamps, and miscellaneous work.
In addition to the amount delivered the bureau printed for its
reserve, currency backs and currency backs and faces aggregating
30,924,312 sheets, for which $321,986.84 was expended.
The average number of persons employed in 1926 was 5,173, as
•compared with 5,098 in 1925, an increase over 1925 of 75 persons,
or 1.47 per cent.
There was expended during 1926 a total of $10,483,674.68, as com-
pared with $10,041,457.46 in 1925, an increase over 1925 of $442,-
217.22. Deducting $321,986.84 expended for reserve, the net increase
of expenditures for delivered work in 1926 was $120,230.38 over those
of the preceding year, or 1.19 per cent.
By summarizing the preceding paragraphs it will be noted that
while the sheets delivered for 1926 represent an increase over 1925
of 3.75 per cent, expenditures were increased 1.19 per cent and the
personnel was increased 1.47 per cent.
The spoilage of currency of all classes for 1926 was 3.7 per cent as
compared with the spoilage for the previous year of 5.8 per cent, a
decrease of 2.1 per cent. One of several reasons for the reduction
may be attributed to a change in the examination of sheets of cur-
rency backs, which resulted in a decrease of 60 per cent of mutila-
tions on back printings. By punching a hole on the outer margins,
opposite single mutilated notes, on four-subject sheets, the other
three notes which formerly were destroyed are being salvaged.
The executive committee, consisting of the fiscal assistant secre-
tary, the assistant to the fiscal assistant secretary, the director, the
assistant directors, and members of the planning unit, referred to in
the annual report for the fiscal year 1924, has continued its weekly
meetings. The meetings are formal in character. Matters of policy
and problems of major importance are subjects of consideration.
Records of the proceedings are maintained.
The bureau has continued its efforts to improve the wearing qual-
ities of the paper currency, being associated in this work with the
Bureau of Efficiency, the Bureau of Standards, and the contractor
for distinctive paper. Important results have been achieved during
the past two years as shown by the increased life of notes in circula
166 REPORT OF THE SECRETARY OF THE TREASURY
tion. Improvement in this respect has been brought about through
a modification in the character of the paper, improvements in tech-
nical procedure in the bureau, restoration of resizing, and estabhshing
in tlie bureau an adequate working reserve of incomplete notes, the
latter being made possible by action of Congress in granting the
necessary appropriation for printing 15,000,000 sheets of backs and
faces, and 15,000,000 sheets of backs. During the A^ear 144,000,000
sheets of one dollar bills were delivered, an increase of 13,000,000
over 1925, 23,000,000 over 1924, and 78,500,000 over 1917—10 years
ago. Increased deliveries of one dollar notes have permitted estab-
lishing, in part, w^ith the Treasurer of the United States, and with
the Federal reserve banks, reserve stocks of completed notes, permit-
ting ageing of the notes before payment into circulation and so add-
ing to their life.
In the last annual report reference was made to the fact that this
bureau was required to vacate a warehouse in which operating sup-
plies were stored. A warehouse located at First and L Streets NE.,
approximately 3 miles from the bureau has been leased at a cost of
$3,600 a year. Although the leasing of this property has relieved
storeroom congestion temporarily, there is still a great need for a
warehouse in close proximity to the bureau with spur track service,
so that unnecessary hauling and handling of materials may be
avoided.
Twelve 400-subject intaglio web rotary presses were received and
installed, making a total of 25 presses of this type engaged in postage
stamp production. About 60 per cent of the total number of stamps
of denominations to and including 10 cents, printed during 1926,
were made by this process, which resulted in a substantial saving
to the Post Office Department. On June 30, 1926, the installation
was practicall}" completed, and it is expected that all stamps of low
denominations will be printed by the rotary process during 1927, as a
result of which increased savings will be realized.
The work of reconditioning a section of the Auditors Building (old
bureau) was completed during the early part of the fiscal year. The
engraving division, excepting one unit, was moved from the main
building into this space. The new quarters are ideal and the change
has resulted in increased production and improved morale. This
transfer, which involved the handling of a large quantity of heavy
machinery from one building to another, was accomplished by
bureau employees, without interruption to the work of the engraving
division and without a special appropriation.
Woolen blanketing used on impression rollers on power presses
has been replaced by rubber drilling and tag board, with a great reduc-
tion in cost. The cost of printing 1,000 impressions of currency with
woolen blanketing was 29.6 cents, while the cost of printing the same
REPORT OF THE SECRETARY OF THE TREASURY 167
number of impressions with rubber drilling is 6.3 cents. Although
rubber blankets were not in general use on power presses until the
latter part of the fiscal year, substantial savings were realized.
Electrolytic plates are now used in printing approximately 50
per cent of the currency. These plates are being produced at less
than one-half the cost of producing steel plates. By the use of
electrolytic plates it has been possible to provide plates for a printing
program 15 per cent larger than the requirements for the fiscal year
1925, without increasing the personnel' of the engraving division.
Heretofore the numbering and the sealing of national-bank cur-
rency were accomplished in two operations. The numbers and seals
are now affixed in one operation, with resultant economy of time
and money. Only 8 presses are now necessary to accomplish the
work which previously required 15 presses.
A plan of delivering sheets of national-bank currency more or less
than the amount ordered has been adopted. Perfect sheets in
excess of orders are now delivered instead of being destroyed and
perfect sheets in numbers less than orders are being delivered as
completed orders, thereby avoiding reprints. This procedure has
resulted in a reduction in the cost of the manufacture of national-
bank cm-rency.
The examination of silver certificates and United States notes,
following the trimming operation, has been discontinued, thereby
eliminating the need of the services of 45 employees.
A system for a centralized control in the accounting division of all
stock maintained in the various storerooms has been adopted and is
being installed. When the installation of this system is complete
better control of the issue and use of materials will be afforded.
As a part of the Federal Government exhibit two presses were
sent to the Sesquicentennial Exposition at Philadelphia for the
purpose of demonstrating the methods employed in printing securi-
ties. Employees of the bureau were detailed to operate the presses
and conduct the exhibit.
The two investigators of the Bureau of Efficiency, detailed to the
planning unit, have continued their constructive study of methods
and procedures during the year. Many valuable suggestions were
received and adopted.
An auditing committee, consisting of five representatives of the
Division of Public Debt Accounts and Audit, Public Debt Service,
has been engaged in conducting spot counts of securities in process.
During the past year this committee has completed 84 audits and has
checked every class and denomination of securities printed in this
bureau. According to the reports made by the committee the
amounts on hand were found to be in agreement with the records
maintained in the divisions where the securities were kept, as well as
with the control records of the accounting division.
168 ItKPORT OF THE SECBETAP.Y OF THE TREASUBY
ADMINISTRATION AND ORGANIZATION
Changes in Treasury organization
. Under the provisions of section 1201 of the revenue act of 1926-
the ofTicc of General Counsel for the Bureau of Internal Revenue
was created, and coincident therewith the office of Solicitor of In-
ternal Revenue in the Department of Justice \vas abolished. No
other change of major importance in Treasury organization has taken
place during the year, the assignment of bureaus and offices to the
administrative supervision of the Undersecretary and the Assistant
Secretaries remaining the same as indicated in my annual report for
1925. Minor changes have taken place in the usual course of efficient
administrative operation.
Budget and im procement committee
The budget and improvement committee examines all Treasury
estimates of appropriations, makes inquiry as to the reserves which
ma}" be set up under the various appropriations, considers requests
subsequently made for releasing portions of sucli reserves for ex-
penditure, and makes investigations with the purpose of improving^
administrative methods and procedure. Its reports and recommen-
dations thereon are submitted to the Secretary through the budget
officer of the department.
Initial reserves amounting to SI, 156, 250 were set up from appro-
priations for the fiscal year 1926. Subsequently additional reserves
of $438,760 were added and reserves amounting to $432,750 were
released, leaving a balance of $1,162,260 in reserve at the end of the
year. For the fiscal year 1927, heads of bureaus and offices reported
reserves of $718,075. After examination by the committee $329,450
was added, making a total general reserve for the year of $1,047,525.
In addition, by direction of the President through the Director of
the Bureau of the Budget, reserves amounting to $1,318,409.60 on
account of "two per cent personnel club" were set up with the pur-
pose of saving not less than 2 per cent of the total amount available
for salaries of the executive civil service during the fiscal year 1927,
such savings to be accomplished by omitting to ffil current vacancies.
Supplemental and deficiency estimates were submitted during the
year aggregating $185,702,997.85, of w4iich $154,500,000 was for rcr
funds of internal-revenue taxes. After examination by the com-
mittee these estimates were revised and reduced to $185,144,361.70.
Preliminary estimates submitted by the heads of bureaus and
offices for the fiscal year 1928 amounted to $180,958,271.66, exclusive
of int(M-ost on and retirement of the public debt and amounts for the
Bureau of the Budget. The President allocated to the Treasury
Do])artmont as a tentative maximum amount $140,740,777 for annual
appropriations, and $36,168,815 for permanent and indefinite appro-
priations and special funds. The regular estimates submitted, total-
ing $178,433,801.44, were carefully examined by the committee to
KEPOET OF THE SECRETARY OF THE TREASURY 169
ascertain as to each item whether the expenditure is absolutely
necessary. On the committee's recommendation net deductions of
$4,328,188 were made. There were approved for permanent and
indefinite appropriations and special funds $31,145,040, for regular
annual appropriations $140,740,670.44, and as a supplemental state-
ment of the absolutely necessary requirements of the department
$2,219,903.
The committee has considered and reported on various matters
submitted to it, including proposed requests for legislation which
might affect expenditures of the department. Under special in-
structions of the budget officer a detailed examination was made of
one of the offices of the department and a report was submitted
thereon containing a number of recommendations for the betterment
of the service.
Enrollment and disbarment of attorneys and agents
During the year 2,647 applications for admission to practice as
attorney or agent before the Treasury Department were received,
2,283 were approved, and 50 were disapproved. Sixty-four attorneys
and agents who were enrolled prior to August 15, 1923, furnished the
affidavit relative to contingent fees required by Department Circu-
lar No. 230, as revised and reissued August 15, 1923, and were enrolled
to continue in practice before the department. On June 30, 1926,
14,725 enrolled attorneys and agents had, since August 15, 1923,
furnished the required affidavit relative to contingent fees, and thus
became eligible to practice or continue in practice before the
department.
There has been continued activity by the Committee on Enrollment
and Disbarment with reference to complaints charging enrolled
attorneys or agents with violation of the laws and regulations govern-
ing practice before the department, and whenever deemed necessary
or advisable action has been taken looking to the disciplining of per-
sons charged with such violations. In a number of instances the
attorney or agent was advised of the complaint and given an oppor-
tunity to show cause why formal disbarment proceedings should not
be instituted against him. On June 30, 1925, there were pending 56
cases in which formal disbarment proceedings had been instituted
against an enrolled attorney or agent. During the year new proceed-
ings were instituted against 114 individuals, making 170 in all.
In 11 cases the proceedings were dismissed by the Secretary on the
recommendation of the Committee on Em-ollment and Disbarment
without a formal hearing, the respondent's written answer to the
complaint being accepted as satisfactory. In 63 cases the respondent
was given a formal hearing by the committee, after which the com-
mittee submitted its finding of facts and recommendation to the
Secretary for his action. In 14 cases the Secretary dismissed the
complaint. In 49 cases, the complaint having been found proven
in whole or in part, the Secretary imposed penalties as follows: 7
170
REPORT OF THE SECRETARY OF THE TREASURY
were disbarred from further practice before the department, 13
were suspended from practice for various periods, and 29 were
reprimanded. In one case it developed from the respondent's answer
that he had been improperly enrolled as he was not a citizen of the
United States and his enrollment was canceled. There were 95 cases
not disposed of on June 30, 1926.
Personnel
Number. — From June 30, 1925, to September 30, 1926, there was a
net decrease of 1,713 in the personnel of the Treasury Department in
Washington. While there has been a tendency on the part of nearly
all branches of the Treasury to decrease the personnel, the greatest
reductions were made in the Division of Loans and Currency, where
a decrease of 149 occurred; the Office of the Register of the Treas-
ury, with a decrease of 211, and the Bureau of Internal Revenue,
where the net reduction was 1,482.
On June 30, 1925, there were on the rolls of the Treasury Depart-
ment in Washington 15,816 employees, and on September 30, 1926,
the force had been reduced to 14,103. The number of employees in
the departmental service of the Treasury, classified according to
bureaus and offices, at the end of each month from June, 1925, to
September, 1926, is shown in Table 62, page 588 of this report.
On June 30, 1925, there were in the field services of the Treasury
Department 46,794 employees, compared with 47,026 on June 30,
1926, a net increase of 232 employees. Increases of 59 in the Customs
Service and 545 in the Coast Guard were largely offset by decreases
in other branches of the service.
Comparison of the number of employees in the departmental and field services of the
Treasury on June SO, 1925 and 1926
Bureau or office
June 30, 1925
June 30, 1926
Increase (+) and
decrease (— )
Depart-
mental
Field
Total
?.s- ^-id
Total
Depart-
mental
Field
Total
Division of Customs
54
11
123
96
14
6,022
237
221
8,397
127
9,398
""'780"
13,312
8,838
5,918
8,451
138
9,521
96
794
19, 334
9,075
6,139
61
11
139
109
13
4,857
219
230
1,795
7,067
8,456
126
9,943
""742"
13, 115
8,673
5,940
31
8,517
137
10, 082
109
755
17, 972
8,892
6,170
1,826
7,067
+7
""+16"
+13
-1
-1, 165
-18
+9
+1, 795
+59
-1
+545
"■-38"
-197
-165
+22
+31
+66
Secret Service Division
United States Coast Guard..
Federal Farm Loan Bureau.
Mint Biirciiu
-1
+561
+13
-39
Internal Hovenue Bureau
Public Health Bureau
Supervising .\rchitect's Of-
fice
-1,362
-183
+31
Public Debt Service '
+1, 826
All other. ...
9,038
24
9,062
-1,971 -24
-1,995
Total
15,816
46,794
62, 610
14, 501
47,026
61,527
-1, 315 4-232
-1,083
1 Previous to June 30, 1926, the Public Debt Service was included under "All other."
Classification. — Beginning July 1, 1925, the Personnel Classification
Board provided new and special forms for making appeals for change
in allocation of positions in the departmental service. Under this new
procedure 382 appeals were presented to the department during the
year for transmittal to the Personnel Classification Board. Of the
total number of appeals presented, 47 were returned approved and
REPORT OP THE SECRETARY OF THE TREASURY 171
59 disapproved, leaving at the close of the fiscal year 276 appeals
not acted on by the board.
Each appeal is specially investigated and submitted by the clas-
sification officer of the department, approved or disapproved with
a brief summarizing the arguments for or against the employee's
appeal and citing allocations in such other cases as bear upon the
appeal either in the department in which the employee serves or
elsewhere in the departmental service.
Due to reorganization in several of the Treasury activities, par-
ticularly in the Internal Revenue and Prohibition Services, a con-
siderable amount of investigation was necessary. A great number
of change of duty sheets were accordingly handled in this connection.
Retirement of civil service employees
From October 1, 1925, to September 30, 1926, 135 persons were
retired on account of age and 77 were retired on account of disability.
Since the retirement law went into effect 2,162 employees have been
retired under the provisions of the law. At the present time only
105 persons above the retirement age are retained in the Treasury
Department in Washington and 507 in its field service. Of the total
number retained in the field service 258 are in the Customs Service,
where, on account of their long experience in the interpretation and
administration of the customs laws, many of these employees are more
valuable to the Government than new employees without experience
would be. Since my last report the Congress somewhat liberalized
the retirement law by increasing the annuities of retired employees.
At the same time the deductions from salaries for the retirement fund
were increased from 2 3/^ to 33^ per cent.
Prior to the passage of the amendatory act it had been the policy
of the department to retire all employees upon reaching the age of
80. The new act, however, provided that should an employee
eligible for retirement make application for retention and his record
indicates that he has been efficient and competent during the pre-
ceding two years, certification should be made to the Civil Service
Commission that the continuance of such employee would be advan-
tageous to the public service. The present policy, therefore, is to
treat all retirement cases on their merits without regard to age. In
view of this more liberal policy under the new law and the fact that
the annuities are still somewhat low, the number of employees retired
probably has not been as large as otherwise might be expected. In
my previous reports I have expressed the opinion that it would be
in the interest of efficient administration to reduce the age limits and
CO increase the annuities. While there has been some modification
of the law, I am still of the opinion that a more liberalized enactment
would be in the interest of the service.
The following table shows the number of persons retired and the
number retained in the departmental and field services of the Treas-
11438— 26t 13
172
REPORT OF THE SECRETARY OF THE TREASURY
ury under the provisions of the act of July 3, 1926, amending the
act of May 22, 1920, and the amendments thereto:
Statement showing total number of persons noiv retained in the departmental and
field services of the Treasury Department under the act approved July 3, 1926,
amending the act of May 22, 1920, and the amendments thereto, and the number
retired since August 20, 1920
DEPARTMENTAL
Retained
Retired on account
of ago
Retired on account
ofdisabUity
Retired
under
act
Sept. 22,
1922
Office
To
Sept. 30,
1925
From
Oct. 1,
1925, to
Sept. 30,
1926
To
Sept. 30,
1925
From
Oct. I,
1925. to
Sept. 30,
1926
Total
number
retired'
1
1
1
L
1
2
1
2
4
16
1
2
7
9
7
2
1
1
4
2
37
1
3
4
4
6
2
47
6
4
1
7
1
95
9
Public Health
1
4
Comptroller of Currency
22
1
1
5
28<
14 1 1
11 1 1
24
Supcrvisini; Architect . .
1
1&
1
1
Public Debt .
1
1
2
20
5
28
1
3
9
230
50
26
5
86
1^
2
3.
Secret Service
3
1
17
4
6
6
Rcpister's office
4
84
20
9
4
13
5
1
18-
Engraving and Printing
Internal Revenue
9
4
1
353.
8.3^
Chief clerk .. . .. ... .
43.
5
Auditors' offices
11
1
1
1
98-
4
War Risk
16
Total
105
529
40
192
38
18
817
FIELH SERVICE
Customs
258
27
2
14
62
154
389
232
8 ...
36
10
78
24
16
4
1
1
4
13
519-
Internal Revenue
71
341
Coast Guard.
9
Public Health
12
1.30
169
24 ..
6
13
30
3
7
46
3
22
Mint and Assay
1
155
Custodian
258'
Subtreasury
14
41
Total
507
964 1
95
161
39
86
1 345
Grand total
612
1,493 \
135
3.'i3
77
104
2,182:
FINANCE TABLES
Condition oi the Treasury, June 30, 1926
[Revised flgures]
General fund:
In Treasury offices —
Gold- $161, 784, 563. 70
Standard silver dollars 6, 031, 887. 00
United States notes 3, 835, 118. GO
Federal reserve notes 205, 849. 00
Federal reserve bank notes 134, 743. 00
National-bank notes 63, 612. 50
Subsidiary silver coin 6, 147, 965. 93
Minor coin 2, 439, 819. 92
Silver bullion (at cost) 8,431,438.88
Unclassified (unassorted currency,
etc.) _ 60, 801, 453. 14
$249, 876, 451. 07"
EEPOKT OF THE SECRETARY OF THE TREASURY 173
General fund — Continued.
In Federal reserve banks —
To credit of Treasurer of the United
States $10,718,586.49
Tn transit --- 6,629,183.48
in transit ' '_ $17,347,769.97
In special depositaries —
Account of sales of certificates of
indebtedness 202,728,706.99
In national-banli depositaries —
To credit of Treasurer of the United
States 6,642,814.30
To credit of other Governnaent offi-
cers 21, 184, 947. 21
Tn transit - - 2, 651, 280. 43
m transit ' 30,479,041.94
In treasury of Philippine Islands —
To credit of Treasurer of the United
States 1,032,444.73
In transit ; — 1,033,115.83
In foreign depositaries —
To credit of Treasurer of the United
States 87,928.12
To credit of other Government offi-
cers 66,342.00
In transit 725^ 154,995.12
501, 620, 080. 92
Deduct current liabilities —
Federal reserve
note 5 per cent
fund (gold)-- $152,373,227.61
Less notes in
process of re-
den.pt.on-,- 710,677.50 ^^^ ,,^,_ ,j„ „
National -bank
note 5 per cent
fund 26,301,669.29
Less notes in
process of re-
demption - 17, 696, 240. 00
aempLiuu - ^ ^ ^^ ^^^^ ^^g. 29
Treasurer's checks outstanding 808, 912. 83
Post Office Department balance... 6, 651, 315. 13
Board of trustees. Postal Savings
System balance 7, 000, 360. 78
Balance to credit of postmasters,
clerks of courts, disbursing offi-
cers, etc 53, 247, 758. 86
Retirement of additional circu-
lating notes, act of May 30, 1908. 4, 065. 00
Miscellaneous redemption accounts 62, 511, 610. 49 ^^^ ^^^ ^^^ ^^
Balance in the Treasury June 30, 1926, according to
statement of the pubUc debt of the United States. 211, 128, U78. 16
174 REPORT OF THE SECRETARY OF THE TREASURY
The following is a summary of the net change in the general fund
balances between June 30, 1925, and June 30, 1926, on the basis of
daily Treasury statements (revised):
General fund balances:
Balance per dailj' Treasury statement, June 30, 1925 $217, 835, 732. 09
Add excess of receipts over expenditures in June reports
subsequently received 2, 143, 708. 73
Net balance June 30, 1925, according to statement' ~
of the public debt of the United States 219, 979, 440. 82
Excess of ordinary receipts over expenditures chargeable
against ordinary receipts in the fiscal year 1926 376, 861, 681. 96
Total to be accounted for 596, 841. 122. 78
Public debt retirements from surplus revenue 376, 861, 681. 96
(This is additional to $487,376,050.69 sinking fund
and other debt retirements chargeable against ordinary
receipts.)
Public debt retirements resulting in decrease in general
fund balance __ 8,851,362. 39
Balance in the Treasury June 30, 1926, according to
statement of the public debt of the United States 211, 128, 078. 43
Total 596, 841, 122. 78
United States notes {greenbacks). — The redemptions of United
States notes unfit for circulation during the year amounted to
$298,800,000. An equal amount was issued in order to maintain
the outstanding aggregate of the notes as required by law.
Gold reserve jund. — The reserve fund was increased by $567,900.69
during the year, being the amount of franchise tax receipts paid
into the Treasury by the Federal reserve banks and Federal inter-
mediate credit banks on account of earnings in the calendar year
1925. The reserve fund now amounts to $154,188,886.20. There
were no redemptions of United States notes for gold from the reserve
fund during the year.
Trust funds. —The following table shows the trust funds held for
the redemption of the notes and certificates for which they are
respectively pledged:
Gold coin and bullion. $1, 680, 510, 609
Silver dollars 457, 903, 515
Silver dollars, 1890... 1, 356, 304
Total 2, 139, 770, 428
Gold certificates out-
standing $2, 168, 884, 959
Less amount in the
Treasury 488, 374, 354
Net 1, 680, 510, 609
Silver certificates out-
standing 460,340,363
Less amount in the
Treasury 2,436,848
Net 457, 903, 515
Treasury note s
(1890) outstanding. 1, 359, 804
Less amount in the
Treasury 3, 500
Net 1, 356, 304
Total 2, 139. 770, 428
REPORT OF THE SECRETARY OF THE TREASURY
175
Gold fund, Federal Reserve Board.— The balance to the credit of the
gold fund of the Federal Reserve Board on June 30, 1926, amounted
to $1,717,348,235.12, a decrease of $35,396,200 from the amount to
the credit of this fund on June 30, 1925.
The public debt. — The gross pubHc debt of the United States at
the close of the fiscal year 1926 amounted to $19,643,183,079.69.
This is shown in detail in Tables 22 and 23, pages 500 and 502, res-
pectively.
Receipts and expenditures on the basis of daily Treasury statements
(unrevised)
The following statements summarize cash receipts and expendi-
tures during the fiscal year 1926, and the estimated receipts and
expenditures for the fiscal years 1927 and 1928 on the basis of the
lastest information received from the Bureau of the Budget :
Summary of receipts and expenditures on the basis of daily Treasury statements
(unrevised) '
Net balance in the general fund at the beginning of fiscal
year
Receipts:
Ordinary
Public debt
Total-
Expenditures:
Ordinary.
Public debt chargeable against ordinary receipts.. -
other public debt
Net balance in the general fund at close of fiscal year. -
Total
POSTAL SERVICE
Postal receipts..
Postal expenditures '
Deficiency in postal receipts *
Actual, fiscal
year 1926
$217, 835, 732
3, 962, 755, 690
i 1, 106, 831, 762
5, 287, 423, 184
3,097,611,823
487, 376, 050
2 1, 492, 433, 284
210, 002, 027
5,287,423,184
659,819,801
699, 326, 291
39, 506, 490
Estimated,
fiscal year 1927
$210, 002, 027
4, 026, 780, 688
2 1, 009, 019, 258
5,245,801,973
3, 077, 545, 946
566, 155, 647
s 1, 392, 098, 353
210, 002, 027
5, 245, 801, 973
705, 000, 000
727, 143, 548
22, 143, 548
Estimated,
fiscal year 1928
$210, 002, 027
3, 772, 753, 077
« 915, 638, 511
4, 898, 393, 616
3,008,891,588
563, 157, 626
'1,116,342,374
210, 002, 027
4, 898, 393, 615
747, 500, 000
758, 189, 115
10, 689, 115
1 For explanation of different bases of statements showing Government receipts and expenditures in
this report, see page 296.
2 other public debt expenditures and public debt receipts, as shown in this statement, are exclusive
of $1,901,622,000 Treasury certificates issued and retired within the same fiscal year.
' The postal expenditures for 1926 and the deficiency in postal receipts for 1926, as shown in this table,
are exclusive of $10,472,289.59 transferred to the civil service retirement fund under the act of May 22,
1920.
* The postal deficiency for 1926 and the estimated postal deficiencies for 1927 and 1928 are included in the
ordinary expenditures shown above and in the general classification of ordinary expenditures and esti-
mated ordmary expenditures on p. 177.
176
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180 REPOET OF THE SECRETARY OF THE TREASURY
Attention is respectfully invited to the attached abstracts of the-
annual reports of the various bureaus and divisions of the Treasury-
Department and to the tables and exhibits accompanying the report
on the finances.
A. W. Mellon,
Secretary of the Treasury^
To the Speaker of the House of Representatives,
EXHIBITS
181
EXHIBITS
Exhibit 1
BRIEF DESCRIPTION OF LIBERTY BONDS AND TREASURY BONDS
Form and denomination. — Liberty bonds are issued in both coupon
and registered form in the following denominations: Coupon, $50,
$100, $500, $1,000, $5,000, and $10,000; registered, $50, $100, $500,
$1,000, $5,000, $10,000, $50,000, $100,000; except that the First 3j^'s
are not issued in coupon form in denominations of $5,000 and $10,000,
nor in registered form in the denomination of $50.
Treasury Bonds are issued in both coupon and registered form in
the following denominations: Coupon, $100, $500, $1,000, $5,000,
$10,000, $100,000; registered, $100, $500, $1,000, $5,000, $10,000,
$50,000, $100,000.
Where ohtainahle. — Subscriptions for bonds of a new issue may be
made to almost any banking institution in the United States, or
direct to the Federal Reserve Bank of your district, subject to
the terms of the circular announcing the issue. After the close of
the subscription books, bonds of any outstanding issue may be pur-
chased at the market price, and your own bank, or the Federal Re-
serve Bank of your district, will endeavor to fdl your order in the
market.
3}/2 'per cent Liberty Bonds exempt from Federal, State, and local
taxation. — Such bonds are exempt, both as to principal and interest,
from all taxation (except estate or inheritance taxes) now or hereafter
imposed by the United States, any State, or any of the possessions of
the United States, or by any local taxing authority.
4 per cent and, 4H P^r cent Liberty Bonds and all Treasury Bonds
exempt from State and local taxation and from normal Federal income
tax. — Such bonds are exempt, both as to principal and interest, from
all taxation now or hereafter imposed by the United States, any
State, or any of the possessions of the United States, or by any local
taxing authority, except {a) estate or inheritance taxes, and (6) gradu-
ated additional income taxes, commonly known as surtaxes, and
excess-profits and war-profits taxes, now or hereafter imposed by the
United States, upon the income or profits of individuals, partnerships,
associations, or corporations.
Jf per cent and 4M per cent Liberty Bonds and all Treasury Bonds
also entitled to limited exemptions from Federal income surtaxes and
profits taxes. — Such bonds are also entitled to limited exemptions from
graduated additional income taxes, commonly known as surtaxes,
and excess-profits and war-profits taxes, now or hereafter imposed
by the United States, upon the income or profits of individuals,
183
184 REPORT OF THE SECRETARY OF THE TREASURY
partnerships, associations, or corporations, in respect to the interest
on principal amounts thereof, as follows:
Durino; the life of the obligations —
S5,000 in the aggregate of First 4's, First ^}/i'^, First-Second
4M's, Second 4's, Second 434's, Third 4^'s, Fourth 4M's,
Treasuiy Bonds of 1947-52, Treasury Bonds of 1944-54,
Treasuiy Bonds of 1946-56, Treasury Certificates of In-
debtedness, War-Savings Certificates, and Treasury Saving
Certificates.
All bonds in hands of foreign holders exempt from taxes. — Bonds of
the United States, while beneficially owned by a nonresident alien
individual, or a foreign corporation, partnership, or association, not
engaged in business in the United States, are exempt, both as to
principal and interest, from any and all taxation now or hereafter
imposed bj^ the United States, any State, or any of the possessions
of the United States, or by any local taxing authority.
4}4: P^f cent Liberty Bonds and 4/4 V^^ ^^^^ Treasury Bonds receivable
at par in payment of Federal estate or inheritance taxes. — All such bonds
which have been owned by any person continuously for at least six
months prior to the date of his death and which upon such date con-
stitute part of his estate are receivable by the United States at par
and accrued interest in payment of Federal estate or inheritance taxes.
Cumulative Sinking Fund. — For the fiscal year beginning July 1,
1920, and for each fiscal year thereafter until all Liberty Bonds and
Victory Notes, and other bonds and notes issued for refunding pur-
poses under any of the Liberty Bond Acts, or the Victory Liberty
Loan Act, or under any of such acts as amended, are retired, the
Victory Liberty Loan Act appropriates, out of any money in the
Treasury not otherwise appropriated, for the purposes of the cumula-
tive sinking fund, an amount equal to the sum of (1) 23^ per cent of
the aggregate amount of such bonds and notes outstanding on July
1, 1920, less an amount equal to the par amount of any obligations of
foreign governments held by the United States on that date, and (2)
the interest which would have been payable during the fiscal year for
which the appropriation is made on the bonds and notes purchased,
redeemed, or paid out of the sinking fund during such year or in pre-
vious years.
The principal and interest of all Liberty Bonds and Treasury Bonds
are payable in United States gold coin of the present standard of value.
Libert)'^ Bonds and Treasury Bonds are issued under authority of
the acts of Congress approved April 24, 1917, September 24, 1917,
April 4, 1918, July 9, 1918, and September 24, 1918, as amended,
and pursuant to official Treasury Department circulars, from which
these statements are summarized and to which they are subject.
Exhibit 2
BRIEF DESCRIPTION OF TREASURY NOTES, CERTIFICATES OF
INDEBTEDNESS, TREASURY SAVINGS CERTIFICATES, AND WAR-
SAVINGS CERTIFICATES'
Form and denominations. — Treasury Notes are issued only in
coupon form, and in the following denominations: $100, $500, $1,000,
$5,000, $10,000, and $100,000.
> War^Savings Certificates are now matured.
REPOET OF THE SECKETAEY OF THE TREASUEY 185
Treasury Certificates of Indebtedness are issued in coupon form,
and in the following denominations: $500, $1,000, $5,000, $10,000,
and $100,000.
Treasury Savings Certificates have been withdrawn from sale, but
were issued only in registered form, with, maturity values of $25,
$100, and $1,000.
War-Savings Certificates ^ are obligations of the Government when
one or more War-Savings stamps with a maturity value of $5 each are
afhxed. War-Savings stamps have been withdrawn from sale.
Where oUainahle. — Subscriptions for notes or certificates of a new
issue may be made to almost any banking institution in the United
States, or direct to the Federal Reserve Bank of your district, subject
to the terms of the circular announcing the issue. After the close of
the subscription books, notes or certificates of any outstanding issue
may be purchased at the market price, and your own bank, or the
Federal Reserve Bank of your district, will endeavor to fill your
order in the market.
Treasury Notes, Treasury Certificates of Indebtedness, Treasury
Savings Certificates, and War-Savings Certificates,^ exempt from State
and local taxation and from normal Federal income tax. — All such notes
and certificates herein described are exempt, both as to principal and
interest, from all taxation now or hereafter imposed by the United
States, any State, or any of the possessions of the United States, or
by any local taxing authority, except (a) estate or inheritance taxes,
and (5) graduated additional income taxes, commonly known as sur-
taxes, and excess-profits and war-profits taxes, now or hereafter im-
posed by the United States, upon the income or profits of individuals,
partnerships, associations, or corporations. The interest on Treasury
Certificates of Indebtedness, Treasury Savings Certificates, War-
Savings Certificates, Liberty Bonds, and Treasury Bonds, the princi-
pal of which does not exceed in the aggregate $5,000, owned by an\
individual, partnership, association, or corporation, shall be exempt
from the taxes provided for in subdivision (b) above.
All Notes and Certificates of Indebtedness in hands of foreign holde?t
exempt from taxes. — Notes and certificates of indebtedness of the
United States are, while beneficially owned by a nonresident alien
individual, or a foreign corporation, partnership, or association, not
engaged in business in the United States, exempt, both as to principal
and interest, from any and all taxation now or hereafter imposed by
the United States, any State, or any of the possessions of the United
States, or by any local taxing authority.
Treasury Notes hearing interest at a higher rate than 4 V^^ ^^^^ V^f
annum, receivable at par in payment of Federal estate or inheritance
taxes. — All such notes which have been owned by any person continu-
ously for at least six months prior to the date of his death and which
upon such date constitute part of his estate are receivable by the
United States at par and accrued interest in payment of Federal
estate or inheritance taxes.
Treasury Notes and. Certificates of Indebtedness receivable in payment
of Federal income and profits taxes. — Treasury Notes are receivable
at par, with an adjustment of accrued interest, during such time and
under such rules and regulations as shall be prescribed or approved
by the Secretary of the Treasury, in payment of income and profits
J War-Savings Certificates are now matured.
186 REPORT OF THE SECRETARY OF THE TREASURY
taxes payable at or within six months before the maturity of the notes.
Treasury Certificates of Indebtedness maturing on quarterly tax
payment dates are receivable in payment of income and profits
taxes payable at the maturity of the certificates.
Cumulative Sinlcing Fund. — For the fiscal year beginning July 1,
1920, and for each fiscal year thereafter until all Liberty Bonds and
Victory Notes, and other bonds and notes issued for refunding pur-
poses under any of the Liberty Bond Acts or the Victory Liberty Loan
Act, or under any of such acts as amended, are retired, the Victory
Liberty Loan Act appropriates, out of an^^ money in the Treasury
not otherwise appropriated, for the purposes of the cumulative sinking
fund, an amount equal to the sum of (1) 23^ per cent of the aggregate
amount of such bonds and notes outstanding on July 1, 1920, less
an amount equal to tlie par amount of any obligations of foreign
governments held by the United States on that date, and (2) the
interest which would have been payable during the fiscal year for
which the appropriation is made on the bonds and notes purchased,
redeemed, or paid out of the sinking fund during such year or in
previous years.
Treasury Savings Certificates and War-Savings Certificates * — Limit
of Holdings. — Any one person at any one time may hold Treasury
Savings Certificates and War-Savings Certificates of any one series
to an aggregate amount not exceeding 15,000 (maturity value). The
certificates issued within any one calendar year constitute a separate
series under the serial designation of the year of issue.
The principal and interest of all Treasury Notes and Certificates
of Indebtedness are payable in United States gold coin of the present
standard of value.
Treasury Notes, Treasury Certificates of Indebtedness, Treasury
Savings Certificates, and War-Savings Certificates ' are issued under
authority of the acts of Congress approved April 24, 1917, September
24, 1917, April 4, 1918, July 9, 1918, September 24, 1918, March 3,
1919, and November 23, 1921, as amended, and pursuant to official
Treasury Department circulars, from which these statements are
summarized and to which the}^ are subject.
Exhibit 3
[Department Circular No. 3G8. Public Debt]
GENERAL REGULATIONS GOVERNING FULL-PAID INTERIM
CERTIFICATES
Treasury Department,
Office of the Secretary,
Washington, August 16, 1926.
The following regulations are prescribed relative to full-paid
interim certificates issued subsequent to August 16, 1926:
(1) Issue. — Federal Reserve Banks may issue full-paid interim
certificates in lieu of definitive securities, when specifically authorized
by the Secretary of the Treasury in connection with the sale, hereafter^
• War-Savings Certificates are now matured.
REPOET OF THE SECRETARY OF THE TREASURY 187
to the public, of United States securities. Interim certificates will
not be issued —
(a) In the names of two or more persons.
(6) In any form limiting legal title of the owner
No interim certificate shall be issued by an}^ Federal Reserve Bank
in exchange for an interim certificate issued by another Federal
Reserve Bank. Interim certificates of one issue will not be exchanged
for interim certificates of a different issue, whether or not both issues
bear the same date.
(2) Exchange for Definitive Securities. — Upon surrender of a
full-paid interim certificate at the Federal Reserve Bank of issue,
the definitive securities described therein, when prepared, will be
delivered to the subscriber named thereon, or his or its assigns, or to
the duly authorized representative thereof. No assignment of the
certificate will be required upon such surrender, but the subscriber,
or his or its assigns, or the duly authorized representative thereof,
must satisfy the Federal Reserve Bank as to his or its identity and
authority to receive the definitive securities, and must sign the receipt
on the back of the interim certificate.
Interim certificates will be honored only by the Federal Reserve
Bank by which issued, and in order to secure delivery of definitive
securities thej^ must be presented to such issuing Federal Reserve
Bank.
(3) Transfers. — The definitive securities described in a full-paid
interim certificate shall be delivered only to the suljscriber named
thereon, or his or its assigns, or to the duly authorized representative
thereof. The certificate, and rights under and by virtue thereof,
shall pass only by assignment and delivery of the certificate, and in
the event of such assignment delivery of the definitive securities shall
be subject to the same regulations as herein provided with respect to
the original subscriber.
(4) Assignments. — (a) By individuals. — Assignments must be
executed by the subscriber, or his or its assigns, or by the duly
. authorized representative thereof, in the presence of a notary public,
a justice of the peace, or an officer autliorized to witness the execution
and acknowledgement of assignments of United States registered
bonds. If an assignment is made by anyone other than the subscriber,
or his or its assigns, appropriate evidence of the authority of such per-
son to act must be produced and must accompany the certificate.
For the purpose of executing assignments, the forms appearing on the
back of the certificates must be used. Detached assignments will
not be recognized or accepted.
(6) By attorney s-in-J act. — The subscriber, or his or its assigns, may,
by duly-executed power of attorney, appoint an attorney-in-fact to
assign the certificates. The original power of attorney must in all
cases accompany the certificates: Provided, however, That where the
certificates are issued in the name of, or are assigned to, an attorney-
in-fact, as "John Jones, Attorney-in-Fact for Henry Jones," assign-
ments by the person so named, when executed under the representa-
tive title in the same wording as appears in the certificate or assign-
ment, will be recognized without requiring further proof of authority
to act.
(c) By partnerships. — Assignments by partnerships should be exe-
cuted by a member of the firm who is possessed of authority to|sign
188 REPORT OF THE SECRETARY OF THE TREASURY
for the firm, of which authority the officer witnessing the signature
must be satisfied. The assignment should read substantially,
"Smith and Jones, a Partnership, by John Jones, Member of the
Firm."
(d) By corporations. — Assignments by corporations should be made
by an oflicer or officers duly authorized for the purpose by resolution
01 the governing bod}', and a certified copy of such resolution, under
seal, must accompany the certificates or be on file with the Federal
Reserve Bank of issue. Where the charter or by-laws of a corpora-
tion, or a resolution of its governing body, authorizes the holder of a
particular office to execute assignments, a certified copy of the charter,
by-laws, or resolution should be furnished, together with a certificate,
imder seal, giving the name of the person holding such office. If,
however, the interim certificate is issued in the name of, or is assigned
to, an oflicer of a corporation, as "John Jones, President, The X
Corporation" (but not when issued in the name of, or assigned to,
the corporation, as "The X Corporation, eJohn «Tones, President"),
assignments by the person so named, when executed under the repre-
sentative title in the same wording as appears on the face of the cer-
tificate, or in the assignments, will be recognized without requiring
further proof of appointment and authority to act.
(e) By fiduciaries. — Assignments by trustees, executors, adminis-
trators, or guardians must be accompanied by duly-certified copies
of appropriate orders of courts of competent jurisdiction, under seal,
authorizing the sale and assignment of the certificates, except that
such orders of court will not be required where, under the laws of
the domicile of the subscriber, or of his or its assigns, as the case may
be, orders of court are not required or deemed by the Federal Reserve
Banks to be necessary: Provided, however, That where these certifi-
cates are issued in the name of, or are assigned to, a trustee, executor,
administrator, or guardian, assignments by the person so named,
when executed under the representative title in the same wording
as appears on the face of the certificate or in the assignment, will
be recognized without requiring further proof of appointment and
authority to act.
(/) Assignments hy trustees, etc., to tJiemselves individually. —
Assignments by trustees, executors, administrators, guardians,
agents, attorneys-in-fact, or officers of a corporation, or other repre-
sentatives, to themselves individually will not be recognized except
upon presentation of duly-certified copies of orders of courts of
competent jurisdiction authorizing the assignments; except that
where any such representative derives his authority from a written
instrument and is not appointed by, or under control of, a court,
an assignment to himself individually will be recognized if accom-
panied by the original instrument of authority expressly authorizing
such assignment.
ig) Instructions to witnessing officers. — Witnessing officers must
satisfy themselves as to the identity of the person executing an
assignment, and the person executing the assignment must actually
appear before the witnessing oflQcer. Witnessing officers will be
held to strict accountability in these respects, and will be expected
to respond in the event of any loss resulting from want of care on
their part. In all cases the witnessing officer must affix to the
assignment his official signature, title, address, and seal, and the
KEPORT OF THE SECRETARY OF THE TREASURY 189
date of the assignment; officers of incorporated banks and trust
companies must affix the seal of the bank or trust company. If
the officer does not possess an official seal, that fact should be made
known and attested.
(h) Forged assignments. — No title passes by a forged assignment
of a full-paid interim certificate even though the purchaser has
purchased the certificate in good faith and for value. Upon receipt
of notice that a certificate bears a forged assignment, the Federal
Reserve Bank of issue will immediately enter a caveat against the
delivery of the definitive securities described therein and when the
certificate is presented to the Federal Reserve Bank it will be for-
warded to the Treasury Department, together with a full statement
of the facts and a request for further instructions. Where delivery
of the definitive securities has already been made on the basis of
an assignment or receipt which is subsequently proven to be a
forgery, appropriate relief may, if warranted by the facts, be granted
to the true owner upon a complete report of the facts to the Treas-
ury and upon approval by the Secretary of the Treasury. Those
responsible on the assignment or receipt will be proceeded against
in the following order: (1) The person committing the forgery;
(2) the officer witnessing the forged assignment; and (3) the person
presenting the certificate to the Federal Reserve Bank, on his im-
plied warranty of titled In accordance with the general principles
of law, a person presenting United States full-paid interim certifi-
cates to the Federal Reserve Banks, as Fiscal Agents of the United
States, for transfer or exchange for definitive securities, gives an
implied warranty of title to the United States, and, therefore, is
liable to the United States in case the assignment on which the
transfer or delivery is effected is found to be forged or otherwise
defective.
(i) Assignments affected hj fraud. — Where the assignment of a
full-paid interim certificate is secured by fraudulent representations,
no relief can be granted if the assignment has been honored without
notice of the fraud. Otherwise, upon receipt of notice that the
assignment is claimed to have been secured by fraudulent repre-
sentations, a notation will be made against the transfer of the certifi-
cate or delivery of the definitive securities thereon, and when the
certificate is presented to a Federal Reserve Bank it will be for-
warded with a full statement of the facts to the Treasury Depart-
ment. The Treasury Department will require the subscriber as
well as the person presenting the certificate to substantiate their
respective claims, and may, in its discretion, take the position of a
stakeholder and withhold action on the assignment pending a settle-
ment of the case by agreement between the parties or by judicial
proceedings, if necessary.
(j) Forms. — Wherever appropriate, the forms adopted for use
in transferring United States registered bonds, reference to which
will be found in Treasury Department Circular No. 300, should be
used in support of assignments of these certificates, with such
changes therein as may be necessary.
(5) Lost, Stolen, Defaced, or Destroyed Interim Certifi-
cates.— (a) Immediately upon the loss, theft, defacement, or
destruction of a full-paid interim certificate, the owner should, in
writing, notify the Federal Reserve Bank by which it was issued of
190 REPORT OF THE SECRETARY OF THE TREASURY
tho iHct, ^iviiif? the amount of the interim certificate, the name and
address of the owner, the name and address of the bank or other
aijent, if any, connected with the purchase, the issue or series and
the date and number of the certificate. After it has been proved
to the satisfaction of the Secretary of the Treasury by clear and satis-
factory evidence that an interim certificate has been lost, stolen, or de-
stroyed so that the same is not held by any person as his own property
or is so defaced as to impair its value to the owner, the Secretary
will, as provided herein, issue definitive securities on account of such
interim certificate.
(6) In order to procure the issue of definitive securities on account
of such interim certificate, the claimant, who in cases arising under
this circular should be the owner or his recognized representative,
will be required to furnish to the Federal Reserve Bank which issued
the original certificate an affidavit showing (1) his name, age, and
residence in full; (2) the complete identification of the interim
certificate by issue or series, denomination, serial number, inscrip-
tion, and the name of the issuing Federal Reserve Bank; (3) his
ownership thereof; (4) that no pledge, loan, hypothecation, assign-
ment, exchange or transfer of the certificate has been made or
authorized by him in person or by attorney; and (5) that the certif-
icate has been lost, stolen, or destroyed so that the same is not
held by any person as his own property or is so defaced as to impair
its value. The affidavit must also show the interest of the affiant
therein and must state in detail the circumstances attending the
loss, theft, defacement, or destruction, and must contain every
fact within the know^ledge of the affiant bearing upon the circum-
stances, and must also contain any information which affiant has
received with reference thereto from any other person, stating from
whom received and whether or not affiant believes such information
to be true. The omission from the affidavit of any material fact
within the knowledge of the affiant or of any material information
that has been received by him prior to the making of the affidavit
will be suflicient cause to refuse relief. If the claim is presented by
an authorized representative of the owner, he should state the capac-
ity in which he is making the claim and should furnish evidence
of his authority to act.
If the definitive securities to be issued can be issued in registered
form, the affidavit shall state whether coupon or registered securities
are desired. If registered securities are desired, the name in which
they are to be registered, giving prefix (Mrs. or Miss), first name in
full, middle name or initial, and last name, and address in full, with
street and number, city or town, county and state, must be given.
(c) In addition to the afiidavit of the owner, the material facts
should be substantiated by the affidavits of all other persons ac-
quainted therewith. If such supporting affidavits are not furnished,
the owner's affidavit must show sufficient facts to satisfy the Depart-
ment that supporting affidavits can not be had. The omission to
furnish the supporting affidavits required by these regulations, where
such supporting affidavits can be obtained, will be sufficient cause
to refuse relief.
(d) The affidavits relative to the circumstances must show the
specific place of deposit of the missing certificate (that is, if kept in
house or office, it should be shown in what part thereof, whether in
REPORT OF THE SECRETARY OF THE TREASURY 191
desk, box, etc., and whether under lock and key) and whether or not
any person or persons other than the owner had access thereto. In
the event of its having been accessible to other parties, their affidavits
in addition to that of the owner should be furnished, showing their
knowledge of the existence of the certificate and of the facts as to
its loss, theft, defacement, or destruction. In the event the certifi-
cate was in the custody of a bank or was kept in a safety-deposit
box in a bank, or in the event that the claimant alleges he has no
recollection of having received the certificate from the bank through
which his purchase was made, his affidavit should show these facts,
giving the name of the bank, and should be accompanied by an
affidavit from an executive officer of such bank who is in a position
to be familiar with the circumstances showing what knowledge he
has of the existence of the certificate in the bank and the facts and
circumstances of its alleged loss, theft, defacement, or destruction.
Full details should be given in the affidavit, which should show the
result of the inciuiries he has made of the other officials and employees
of the bank who might have had access to the certificate and who
might have knowledge in connection wnth the facts.
(e) In addition, affidavits should be furnished from two responsible
and disinterested persons who are in no manner related to the claim-
ant, and who should, wherever possible, be officers of the United
States or executive officers of incorporated banks or trust companies,
identifying the affiant and showing that he is a person known to
them and whose statements, as set forth in his affidavit, are worthy
of the confidence and consideration of the Treasury Department,
and that he is the identical person named in the application. Like
evidence of credibility must accompany each of the supporting
affidavits furnished.
(J) In case of a claim on a defaced interim certificate, in addition
to the submission of the above-required evidence, the certificate, or
so much thereof as may remain, must be carefully packed to avoid
further mutilation and surrendered to the Federal Reserve Bank
for transmittal to the Department. In cases of this character affi-
davits of credibility may not be required.
ig) All affidavits submitted in connection with claims under this
circular must be acknowledged before a notary public, or other
officer authorized by law to administer oaths, and, unless authenti-
cated by the official impression seal of the officer, should be accom-
panied by a certificate from the proper official, showing that the
officer was in commission on the date of the acknowledgment. The
date when the officer's commission expires should appear in any
event. Only one certificate is necessary for each offilcer provided
the dates of the beginning and expiration of his com^mission are
shown thereon and such period of commission includes the date of
acknowledgment of the affidavit. Affidavits acknowledged before a
judge or clerk of a court and bearing the seal of the court need not
be accompanied by any further certification.
(k) The Federal Reserve Bank which issued the interim certificate
will examine the proof submitted and call upon the applicant to
submit any proof hereinabove required which may be missing. After
all the proof hereinabove required has been furnished, or after the
applicant has failed for a period of 60 days after request, or has
refused, to submit further proof required, the Federal Reserve Bank
192 REPORT OF THE SECRETARY OF THE TREASURY
shall transmit the papers to the Secretary of the Treasury, Division
of Loans and Currency, with a transcript of its record of the issu-
ance of the interim certificate in question, giving the number and
date thereof, and a report whether such interim certificate has been
presented by any other person, whether notice of its existence in the
hands of any other person has been given to such Federal Reserve
Bank, whether the certificate is identified to its satisfaction with the
record of issuance transmitted, and making recommendations as to
the disposition of the application.
(i) Upon receipt by the Secretary of the Treasury of such docu-
mentary evidence it will be referred to the Solicitor of the Treasury
for his opinion as to its sufficiency. The applicant will be advised
of the decision as soon as it is reached. If it be favorable to such
applicant, the Secretary of the Treasury will hold the application
until the expiration of a reasonable time from the date of the appli-
cation. If the original interim certificate shall not be found or pre-
sented within such period, a bond of indemnity will be prepared and
forwarded to the applicant for execution, and when this bond of
indenmity shall have been duly executed, returned to the Depart-
ment, and approved by the Solicitor of the Treasury and the Secretary
definitive securities, as requested, of the loan and denomination called
for by such interim certificate, will be issued to the applicant.
(j) The bond of indemnity shall be a for a sum equal to two and
one-half times the principal amount of the securities called for by
such interim certificate, and shall be in the form furnished by the
Treasury Department. If individuals act as sureties, they shall be
two in number, both of whom shall be citizens of the United States,
and it must be shown that they have sufficient unincumbered property
liable to execution to cover the penalty thereof. A married woman
will not be accepted as surety. If a woman acts as surety, she must
include in her affidavit in the bond of indemnity a statement of the
fact that she is unmarried. The statement of the sureties relative
to their responsibility may be investigated by the Department, and
any refusal to disclose material facts bearing on their responsibility
will be sufficient cause to reject the surety.
(k) The Acts of August 13, 1894, and March 24, 1910, authorize
the acceptance of a surety company (duly incorporated and duly
authorized to do business) by the Secretary of the Treasury, in lieu
of the two sureties above prescribed. When a surety company has
been duly accepted by the Treasury Department, its sufficiency need
not be certified as is required in the case of personal sureties.
(1) In case of a claim on account of a defaced interim certificate,,
if the defacement or mutilation appears to be immaterial or is so
slight that the certificate may be fully and completely identified, and
the missing fragments could not by any possibility form the basis of a
claim against the United States, the Treasury Department may grant
relief without a bond of indemnity.
In no event should a bond of indemnity he submitted until called for
by the Department, and it should be submitted then only on the pre-
scribed form furnished for the purpose.
(m) In all cases where notice is given to a Federal Reserve Bank
that an interim certificate has been lost, stolen, or destroyed, a
caveat will be entered against the issue of any definitive securitiies
against such certificate. No definitive security shall be issued on
REPORT OF THE SECRETARY OF THE TREASURY 193
any certificate against wliicli a caveat is entered, witliout special
instructions from tiie Treasury Department.
(n) In case the interim certificate alleged to be lost, stolen, or
destroyed has been presented by the subscriber, or his or its assigns,
and honored prior to granting relief under these regulations, the
apphcation will be denied.
(o) The Secretary of the Treasurj^ reserves the right to require
and permit the security of the bond of indemnity to be renewed,
strengthened, increased, or diminished as the facts may warrant, in
his opinion, from time to time.
(p) Certificates assigned in blank, or bearing assignments for
exchange for definitive securities without instructions restricting
delivery, are in effect payable to bearer, since title thereto may pass
by delivery without further assignment or indorsement. Accord-
ingly, under existing law, the Treasury Department can grant no
relief on account of the loss or theft of certificates so assigned, and,
if reported lost or stolen, will not enter caveats against their transfer
or exchange for definitive securities. The Treasury Department
assumes no responsibility with respect to certificates so assigned,
but if the issuing Federal Reserve Bank or the Department is notified
of their loss or theft, notations will be made on the records, and, in
the event that the certificates thereafter are received for transfer or
exchange, may require the person presenting such certificates to
submit evidence showing whether or not he is a bona fide holder in
due course. If it appears that the person presenting the certificates
is not a bona fide holder in due course, the Federal Reserve Bank
may withhold transfer or exchange, and, in any event, it will notify
the registered owner of the result of the inquiry. In case certificates
so assigned are destroyed or defaced, relief will be given upon appli-
cation in proper form on substantially the same terms and conditions
as heretofore prescribed, excepting that in case of destruction the
proof of the destruction must be clear and unequivocal.
RESERVATION CLAUSE
(6) The Secretary of the Treasury reserves the right to withdraw
or amend at any time or from time to time any or all of the foregoing
rules and regulations.
Garrard B. Winston,
Acting Secretary of the Treasury.
Exhibit 4
[Fourth supplement to Department Circular 225. Public Debt.]
RECEIPT OF LIBERTY BONDS, TREASURY BONDS, AND TREASURY
NOTES FOR ESTATE OR INHERITANCE TAXES
Treasury Department,
Office of the Secretary,
Washington, October 30, 1926.
1. The provisions of Department Circular No. 225, dated Januarj"
31, 1921, as supplemented June 30, 1922, July 31, 1923, and October
15, 1925, prescribing regulations governing the receipt of bonds and
notes of the United States for Federal estate or inheritance taxes are
194
HKPOHT OF THE SECRETARY OF THE TREASURY
luMohy supplemented to show the bonds and notes at this date out-
stiuidins:, l)earing interest at a higher rate than 4 per centum per
annum, which come within the provisions of Department Circular No.
225, dated January 31, 1921, as thus supplemented. The bonds and
notes are:
Description
(a) First Liberty loan converted Al4 per cent bonds of 1932-1947
(6) First Liberty loan second converted 4}4 per cent bonds of 1932-1947
(c) Second Libertv loan converted i'i per cent bonds of 1927-1942...
(d) Third Libertv'loan 4'.i per cent bonds of 1928_
(e) Fourth Liberty loan 4'4 pi'r cent bonds of 1933-1938.-
(/) 4}4 percent Treasury bonds of 1947-1952
(g) 4' 2 per cent notes, payable Dsc. 15, 1927
(h) i% per cent notes, payable Mar. 15, 1927
Date of issue
Mav 9, 1918
Oct. 24, 1918 I
May 9, 1918
do
Oct. 24,1918
Oct. 16,1922
Jan. 15,1923
May 15,1923
Short title
First 4Ji's.
First second 4K's.
Second 4'.-i's.
Third 4}-4's.
Fourth 4K's.
Treasury bonds of
1947-1952.
Series A-1927.
Series B-1927.
2. For the calculation of accrued interest on the current coupons of
bonds and notes tendered in payment of estate or inheritance taxes
under this circular, the method outlined in Exhibit B to Department
Circular No. 225, dated January 31, 1921, should be followed.
Interest tables at the various rates borne by the various issues, or
for other or future issues, may be obtained from the Treasury
Department, Division of Loans and Currency, Washington, upon
request.
A. W. Mellon,
Secretary of the Treasury.
Exhibit 5
I Department Circular No. 3G7. Public Debt]
UNITED STATES OF AMERICA— THREE AND THREE-QUARTERS
PER CENT TREASURY BONDS OF 1946-56, DATED AND BEARING
INTEREST FROM MARCH 15, 1926, DUE MARCH 15, 1956, RE-
DEEMABLE AT THE OPTION OF THE UNITED STATES AT PAR
AND ACCRUED INTEREST ON AND AFTER MARCH 15, 1946.
INTEREST PAYABLE MARCH 15 AND SEPTEMBER 15
The Secretary of the Treasury invites subscriptions, at 1003^ and
accrued interest, from the people of the United States, for three and
three-quarters per cent Treasury bonds of 1946-56, of an issue of
gold bonds of the United States authorized by the Act of Congress
approved September 24, 1917, as amended.' The amount of the
offering will be S500,000,000, or thereabouts.
DESCRIPTION OF BONDS
The bonds will be dated March 15, 1926, and will bear interest
from that date at the rate of three and three-quarters per cent per
annum payable semiannually, on September 15, 1926, and thereafter
on March 15 and September 15 in each year. The bonds will mature
March 15, 1956, but may be redeemed at the option of the United
States on and after March 15, 1946, in whole or in part, at par and
accrued interest, on any interest day or days, on four months' notice
EEPORT OF THE SECRETARY OF THE TREASURY 195
of redemption given in such manner as the Secretary of the Treasury
shall prescribe. In case of partial redemption the bonds to be
redeemed will be determined by such method as may be prescribed
by the Secretary of the Treasury. From the date of redemption
designated in any such notice, interest on the bonds called for redemp-
tion shall cease. The principal and interest of the bonds will be
payable in United States gold coin of the present standard of value.
Bearer bonds with interest coupons attached will be issued in
denominations of $100, $500, $1,000, $5,000, $10,000, and $100,000.
Bonds registered as to principal and interest will be issued in denomi-
nations of $100, $500, $1,000, $5,000, $10,000, $50,000, and $100,000.
Provision will be made for the interchange of bonds of different
denominations and of coupon and registered bonds and for the transfer
of registered bonds, without charge by the United States, under rules
and regulations prescribed by the Secretary of the Treasury.
The bonds shall be exempt, both as to principa and interest, from
all taxation now or hereafter imposed by the United States, any
State, or any of the possessions of the United States, or by any local
taxing authority, except (a) estate or inheritance taxes, and (b)
graduated additional income taxes, commonly known as surtaxes,
and excess-profits and war-profits taxes, now or hereafter imposed
by the United States, upon the income or profits of individuals,
partnerships, associations, or corporations. The interest on an
amount of bonds and certificates authorized by said act approved
September 24, 1917, and amendments thereto, the principal of which
does not exceed in the aggregate $5,000, owned by any individual,
partnership, association or corporation, shall be exempt from the
taxes provided for in clause (6) above.
The bonds will be acceptable to secure deposits of public moneys,
but do not bear the circulation privilege and are not entitled to any
privilege of conversion.
APPLICATION, ALLOTMENT, AND PAYMENT
Applications will be received at the Federal Reserve Banks, as
fiscal agents of the United States. Banking institutions generally
will handle applications for subscribers, but only the Federal Reserve
Banks are authorized to act as official agencies.
The right is reserved to reject any subscription and to allot less
than the amount of bonds applied for and to close the subscriptions
at any time without notice. The Secretary of the Treasury also
reserves the right to make allotment in full upon applications for
smaller amounts and to make reduced allotments upon or to reject,
applications for larger amounts, and to make classified allotments and
allotments upon a graduated scale; and his action in these respects
will be final.
Payment at 100^/2 and accrued interest for any bonds allotted must
be made on or before March 15, 1926, or on later allotment. Any
qualified depositary will be permitted to make payment by credit
for bonds allotted to it for itself and its customers up to any amount
for which it shall be qualified in excess of existing deposits, when so
notified by the Federal Reserve Bank of its district. Treasury notes
of Series A-1926, maturing March 15, 1926 (with coupon dated
March 15, 1926, detached) will be accepted at par, at the Federal
196 REPORT OF THE SECRETARY OF THE TREASURY
Reserve Banks, to be applied in part payment for any Treasury
bonds of 1946-56 now offered which shall be subscribed for and
allotted.
As fiscal assents of the United States, Federal Reserve Banks are
authorized and requested to receive subscriptions and to make
allotments thereon on the basis and up to the amounts indicatd^d
by the Secretary of the Treasury to the Federal Reserve Banks of
the respective districts. Allotment riotices will be sent out promptly
upon allotment, and the basis of allotment will be publicly announced.
FURTHER DETAILS
Bonds will be delivered after allotment and payment. Pending
delivery of the definitive bonds, Federal Reserve Banks may issue
interim receipts.
Further details may be announced by the Secretary of the Treas-
ury from time to time, information as to which may be obtained
from the Treasury Department, Division of Loans and Currency,
Washington, D. C, or from any Federal Reserve Bank.
A. W. Mellox,
Secretary of the Treasury.
Treasury Department,
Office of the Secretary,
March 8, 1926.
To the investor:
Almost any banking institution in the United States will handle your sub-
scription for you, or you may make subscrij)tion direct to the Federal Reserve
Bank of your district. Your special attention is invited to the terms of sub-
scription and allotment as stated above. If you desire to purchase, at the market
price, bonds of the above issue after the subscriptions close, or bonds of any
outstanding issue, you should apply to your own bank, or, if it can not obtain
them for you, to the Federal Reserve Bank of your district, which will then
endeavor to fill your order in the market.
Exhibit G
(Dipartraent Circular No. 364. Public Debt]
UNITED STATES OF AMERICA— THREE AND THREE-QUARTERS
PER CENT TREASURY CERTIFICATES OF INDEBTEDNESS.
SERIES TD-1926, DATED AND BEARING INTEREST FROM DE-
CEMBER 15, 1925, DUE DECEMBER 15, 1926
The Secretary of the Treasury, under the authority of the act
approved September 24, 1917, as amended, offers for subscription,
at par and accrued interest, through the Federal Reserve Banks,
Treasury certificates of indebtedness of Series TD-1926, dated and
bearing interest from December 15, 1925, payable December 15,
1926, with interest at the rate of three and three-quarters per cent
per annum, payable semiannually.
Applications will be received at the Federal Reserve Banks.
Bearer certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000. The certificates will have two interest
coupons attached, payable June 15, 1926, and December 15, 1926.
The certificates of said series shall be exempt, both as to principal
and interest, from all taxation now or hereafter imposed by the
REPORT OF THE SECRETARY OF THE TREASURY 197
United States, any State, or any of the possessions of the United
States, or by any local taxing authority, except (a) estate or inherit-
ance taxes, and (h) graduated additional income taxes, commonly
known as surtaxes, and excess-profits and war-profits taxes, now or
hereafter imposed by the United States, upon the income or profits
of individuals, partnerships, associations, or corporations. The
interest on an amount of bonds and certificates authorized by said
act approved September 24, 1917, and amendments thereto, the
principal of which does not exceed in the aggregate $5,000, owned
by any individual, partnership, association, or corporation, shall be
exempt from the taxes provided for in clause (6) above.
The certificates of this series will be accepted at par, with an
adjustment of accrued interest, during such time and under such
rules and regulations as shall be prescribed or approved by the
Secretary of the Treasury, in payment of income and profits taxes
payable at the maturity of the certificates. The certificates of this
series will be acceptable to secure deposits of public moneys, but will
not bear the circulation privilege.
The right is reserved to reject any subscription and to allot less
than the amount of certificates applied for and to close the sub-
scriptions at any time without notice. The Secretary of the Treasury
also reserves the right to make allotment in full upon applications for
smaller amounts, and to make reduced allotments upon, or to reject,
applications for larger amounts, and to make classified allotments
and allotments upon a graduated scale; and his action in these respects
will be final. Allotment notices will be sent out promptly upon
allotment, and the basis of the allotment will be publicly announced.
Payment at par and accrued interest for certificates allotted must be
made on or before December 15, 1925, or on later allotment. After
allotment and upon payment Federal Reserve Banks may issue interim
receipts pending delivery of the definitive certificates. Any qualified
depositary will be permitted to make payment by credit for certifi-
•cates allotted to it for itself and its customers up to any amount for
which it shall be qualified in excess of existing deposits, when so
notified by the Federal Reserve Bank of its district. Treasury notes
of Series B-1925, and Treasury certificates of indebtedness of Series
TD-1925, both maturing December 15, 1925, will be accepted at par,
in payment for any certificates of the series now offered which shall
be subscribed for and allotted, with an adjustment of the interest
accrued, if any, on the certificates of the series so paid for.
As fiscal agents of the United States, Federal Reserve Banks are
authorized and requested to receive subscriptions and to make
allotments on the basis and up to the amounts indicated by the
Secretary of the Treasury to the Federal Reserve Banks of the respec-
tive districts.
A. W. Mellon,
Secretary of the Treasury.
Treasury Department,
Office of the Secretary,
December 7, 1925.
To the investor:
Almost any banking institution in the United States will handle your sub-
scription for you, or you may make subscription direct to the Federal Reserve
Bank of j-our district. Your special attention is invited to the terms of sub-
scription and allotment as stated above. If you desire to purchase, at the market
198 REPORT OF THE SECRETARY OF THE TREASURY
price, certificates of the above issue after the subscriptions close, or certificates
of any outstanding issue, you should apply to your own bank, or, if it can not
obtain tlinn for you, to the Federal Reserve Banlv of your district, which will
then endeavor to fill vour orrler in the market.
Exhibit 7
[Department Circular No. 370. Public Debt]
UNITED STATES OF AMERICA— THREE AND ONE-HALF PER CENT
TREASURY CERTIFICATES OF INDEBTEDNESS. SERIES TJ-1927,
DATED AND BEARING INTEREST FROM SEPTEMBER 15, 1926,
DUE JUNE 15, 1927
Tlie Secretary of the Treasiuy, under the authority of the act
approved September 24, 1917, as amended, ofl'ers for subscription, at
par and accrued interest, through the Federal Reserve Banks,
Treasury certificates of indebtedness of Series TJ-1927, dated and
bearing interest from September 15, 1926, payable June 15, 1927,
with interest at the rate of three and one-half per cent per annum,
paj'able on a semiannual basis.
Applications will be received at the Federal Reserve Banks.
Bearer certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000. The certificates will have two interest
coupons attached, payable December 15, 1926, and June 15, 1927.
The certificates of said series shall be exempt, both as to principal
and interest, from all taxation now or hereafter imposed by the
United States, any State, or any of the possessions of the United
States, or by any local taxing authority, except (a) estate or inherit-
ance taxes, and (b) graduated additional income taxes, commonly
known as stu'taxes, and excess-profits and war-profits taxes, now or
hereafter imposed by the United States, upon the income or profits of
individuals, partnerships, associations, or corporations. The interest
on an amount of bonds and certificates authorized by said act
approved September 24, 1917, and amendments thereto, the princi-
pal of which does not exceed in the aggregate $5,000, owned by any
individual, partnership, association, or corporation, shall be exempt
from the taxes provided for in clause (b) above.
The certificates of this series will be accepted at par, with an
adjustment of accrued interest, during such time and under such
rules and regulations as shall be prescribed or approved by the Secre-
tary of the Treasury, in payment of income and profits taxes payable
at the maturity of the certificates. The certificates of this series
will be acceptable to secure deposits of public moneys, but will not
bear the circulation privilege.
The right is reserved to reject any subscription and to allot less
than the amount of certificates applied for and to close the subscrip-
tions at any time without notice. The Secretary of the Treasury
also reserves the right to make allotment in full upon applications for
smaller amounts, and to make reduced allotments upon, or to reject,
applications for larger amounts, and to make classified allotments
and allotments upon a graduated scale; and his action in these
respects will be final. Allotment notices will be sent out promptly
upon allotment, and the basis of the allotment will be publicly
announced.
REPOET OF THE SECRETARY OF THE TREASURY 199
Payment at par and accrued interest for certificates allotted must
be made on or before September 15, 1926, or on later allotment.
After allotment and upon payment Federal Reserve Banks may issue
interim receipts pending delivery of the definitive certificates. Any
qualified depositary will be permitted to make payment by credit for
certificates allotted to it for itself and its customers up to any amount
for which it shall be qualified in excess of existing deposits, when so
notified by the Federal Reserve Bank of its district. Treasury notes
of Series B-1926, maturing September 15, 1926, will be accepted at
par, in payment for any certificates of the series now offered which
shall be subscribed for and allotted, with an adjustment of the interest
accrued, if any, on the certificates of the series so paid for.
As fiscal agents of the United States, Federal Reserve Banks are
authorized and requested to receive subscriptions and to make allot-
ments on the basis and up to the amounts indicated by the Secretary
of the Treasury to the Federal Reserve Banks of the respective
districts.
Garrard B. Winston,
Acting Secretary qf the Treasury.
Treasury Department,
Office of the Secretary,
September 7, 1926.
To the Investor:
Almost any banking institution in the United States will handle your sub-
scription for you, or you may make subscription direct to the Federal Reserve
Bank of your district. Your special attention is invited to the terms of sub-
scription and allotment as stated above. If you desire to purchase, at the market
price, certificates of the above issue after the subscriptions close, or certificates
of any outstanding issue, you should apply to j^our own bank, or, if it can not
obtain them for you, to the Federal Reserve Bank of your district, which will
then endeavor to fill your order in the market.
Exhibit 8
[Department Circular No. 363. Public Debt]
PURCHASE OF THIRD LIBERTY LOAN 4^4 PER CENT BONDS FOR
THE CUMULATIVE SINKING FUND
Treasury Department,
Office of the Secretary,
Washington, November 27, 1925.
To Holders of Third Liberty Loan 4/4 V<^^ <^6^^ Bonds, and Others
Concerned:
The Treasury will purchase Third Liberty Loan Bonds for account
of the Cumulative Sinking Fund and solicits proposals for sale of
such bonds to the Treasury. Purchase will be made of $50,000,000
or thereabouts, of Third Liberty Loan Bonds, at the lowest prices
offered, if at or below the price of 101^ and accrued mterest. Pro-
posals must be presented to the Federal Reserve Banks by December
10, 1925, and payment will be made on December 29, 1925, for all
bonds delivered in accordance with accepted proposals.
All transactions in connection with the proposals for sale, the delivery
qf bonds, and payment therefor should be handled through banlcs or trust
companies, which will act as agents of the owners of the bonds. The
200 REPORT OF TPIE SECRETARY OF THE TREASURY
hanlcs and trust companies will deal with Federal Reserve BanJcs, iDhich
are the only official agencies of the United States in these transactions.
Proposals must be in writing and must reach a Federal Reserve
Bank before the close of business on December 10, 1925. (See form
on reverse side.) All proposals not received at Federal Reserve
Banks by the close of business December 10, 1925, will be rejected.
The Secretary of the Treasury reserves the right to reject or accept
in whole or in part any and all proposals, and his action in this respect
shall be final. All proposals not accepted by December 19, 1925 (due
time allowance being made for postal notification to the contrary),
shall be considered as rejected.
Upon the acceptance of any proposal by the Secretary of the
Treasury, the banking institution which forwarded such proposal
v.-ill be notiiied by the Federal Reserve Bank of such acceptance and
will thereupon transmit the Third Liberty Loan Bonds described in
the proposal, at the seller's own expense and risk, to the Federal
Reserve Bank. All bonds to be surrendered for purchase must reach
the Federal Reserve Bank on or before December 21, 1925, and the
Federal Reserve Bank, on December 29, 1925, will pay therefor at
the accepted proposal price. If not received by the Federal Reserve
Bank until after December 21, 1925, the bonds may, in the discretion
of the Secretary of the Treasury, be rejected. The Secretary of the
Treasury reserves the right to reject in whole or in part any and all
bonds, and his action in this respect shall be final.
All coupon bonds of the Third Liberty Loan presented for sale to
the United States in accordance with accepted proposals should have
the interest coupon due March 15, 1926, and interest coupons due
subsequent thereto, attached. All registered bonds of the Third
Liberty Loan presented for sale to the United States in accordance
with accepted proposals must be duly assigned to ''The Secretary of
the Treasury for Redemption," in accordance with the general regu-
lations of the Treasury Department governing assignments. Bonds
registered in the names of minors or incompetents will not be
accepted unless accompanied by a certificate of court of competent
jurisdiction showing that the person assigning such bonds has
authority to so assign.
Any further information which may be desired may be obtained
from any Federal Reserve Bank.
A. W. Mellon,
Secretary of the Treasury.
TUEASUKV DEPARTMENT
Division of Loans and Currency
Form P. D.941
PROPOSAL FOR SALE OF THIRD LIBERTY LOAN 4}i PER CENT BONDS
OF 1928 TO THE UNITED STATES
Important: Proposals should be made through a hank or trust
company, and delivered to a Federal Reserve Bank. Bonds should not
he surrendered to the Federal Reserve Bank with this proposal.
To the Secretary of the Treasury,
(through)
Federal Reserve Bank of
Pursuant to the provisions of Treasury Department Circular No.
363, dated November 27, 1925. the undersigned agrees to sell to the
EEPOET OF THE SECRETARY OF THE TREASURY 201
United States on December 29, 1925, $ face
amount of Third Liberty Loan 4 3^ per cent Bonds of 1928, at
, plus accrued interest from September 15, 1925, to the
(See footnote 1)
date of sale.
And further agrees upon receipt of notice of acceptance of this
proposal, in whole or in part, sent to ,
(See footuote 2)
to deliver on or before December 21, 1925, to the above-stated Federal
Reserve Bank, the designated amount of bonds, payment to be made
to the undersigned care of the bank or trust company named above.
(Signature)
(Address in full)
(Date)
1 state sale price on basis of $100 face amount exclusive of accrued interest, i.e., 100, lOOA, etc. Note. —
Fractions should be quoted in thirty-seconds or decimals.
2 Name of bank or trust company through which this proposal is made.
Exhibit 9
[Department Circular No. 366. Public Debt]
PURCHASE OF THIRD LIBERTY LOAN 4^4 PER CENT BONDS FOR
THE CUMULATIVE SINKING FUND
Treasury Department,
Office of the Secretary,
Washington, March 1, 1926.
To Holders of Third Liberty Loan 4)4: V^^ ^^'^^ Bonds, and Others
Concerned:
The Treasury will purchase Third Liberty Loan Bonds for account
of the Cumulative Sinking Fund, and solicits proposals for sale of such
bonds to the Treasury. Purchase will be made of $100,000,000, or
thereabouts, of Third Liberty Loan Bonds, at the lowest prices ojfered,.
plus accrued interest from March 15, 1926, provided such prices are
acceptable to the Secretary of the Treasury. The Secretary of the
Treasury reserves the right to reject or accept in whole or in part
any and all proposals, and his action in this respect shall be final.
Proposals must be presented to the Federal Reserve Banks by March
10, 1926, and for all bonds delivered in accordance with accepted
proposals payment will be made, in the case of coupon bonds, on
March 23, 1926, and, in the case of registered bonds, on March 23,
1926, or as soon thereafter as registration may be cleared.
All transactions in connection with the proposals for sale, the delivery
of bonds, and payment therefor should be handled through banks, trust
companies, or recognized dealers, which will act as agents of the owners
of the bonds. The banks, trust companies, and dealers will deal with
Federal Reserve Banks, which are the only official agencies of the United
States in these transactioius.
Proposals must be in writing, and must reach a Federal Reserve
Bank before the close of business on March 10, 1926. (See form on
reverse side.) All proposals not received at Federal Reserve Banks
by the close of business March 10, 1926, will be rejected. Federal
Reserve Banks will notify the presenting agency of the acceptance
or rejection of proposals.
202 REPORT OF THE SECRETARY OF THE TREASURY
Upon notification of the acceptance of any proposal, the agency
which forwarded such proposal will thereupon transmit the Third
Liberty Loan Bonds described in the proposal, at the seller's own
expense and risk, to tbe Federal Reserve Bank. All bonds to be
surrendered for purchase must reach the Federal Reserve Bank on
or before March 23, 1926, and the Federal Reserve Bank, on that
date, or as soon thereafter as practicable, will pay therefor at the
accepted proposal price. If not received by the Federal Reserve
Bank until after March 23, 1926, the bonds may, in the discretion
of the Secretary of the Treasury, be rejected. The Secretary of the
Treasury reserves the right to reject in whole or in part any and all
bonds, and his action in this respect shall be final. In order that
payment for registered bonds may be made on March 23, 1926, reg-
istered bonds must be presented well in advance of that date.
All coupon bonds of the Third Libertj^ Loan presented for sale to
the United States in accordance with accepted proposals should have
the interest coupon due September 15, 1926, and interest coupons
due subsequent thereto, attached. The interest coupon due March
15, 1926, should be detached and collected in ordinary course. All
registered bonds of the Third Liberty Loan presented for sale to the
United States in accordance with accepted proposals must be duly
assigned to "The Secretary of the Treasury for Purchase," in accord-
ance with the general regulations of the Treasury Department gov-
erning assignments. Bonds registered in the names of minors or
incompetents will not be accepted unless accompanied by a certificate
of court of competent jurisdiction showing that the person assigning
such bonds has authority so to assign. Bonds registered in the
names of two or more persons must be assigned by all of the
•coowners.
Any further information which may be desired may be obtained
from any Federal Reserve Bank.
A. W. Mellon,
Secretary of the Treasury.
Important: Third Liberty Loan 4J<^ per cent bonds will not mature until
September 15, 1928, and by their terms are not callable before maturity. The
right to tender bonds of this loan for sale, in accordance with the above circular,
may therefore be exercised in the discretion of the owner of the bonds.
TREASURY DEPARTMENT
Division of Loans and Currency
Form P. D. 95t3
PROPOSAL FOR SALE OF THIRD LIBERTY LOAN 4M PER CENT BONDS
OF 1928 TO THE UNITED STATES
Important: Proposals should he made through a hank, trust company,
or recognized dealer, and delivered to a Federal Reserve Bank. Bonds
should not he surrendered to the Federal Reserve Bank with this proposal.
To the Secretary of the Treasury,
(through)
Federal Reserve Bank of
In accordance with the provisions of Treasury Department Cir-
cular No. 366, dated March 1, 1926, the undersigned agrees to sell to
the United States on March 23, 1926, $._____
REPOKT OF THE SECRETARY OF THE TREASURY 203
face amount of Third Liberty Loan 43^ per cent Bonds of 1928, at
, plus accrued interest from March 15, 1926,
(See footnote 1)
to the date of sale.
And further agrees upon receipt of notice of acceptance of this pro-
posal, in whole or in part, sent to ,
(See footnote 2)
to deliver on or before March 23, 1926, to the above-stated Federal
Reserve Bank, the designated amount of bonds, payment to be made
to the undersigned care of the bank, trust company, or recognized
dealer named above.
(Signature)
(Address in full)
(Date)
' state sale price on basis of $100 face amount exclusive of accrued interest, i. e., 100, lOO^V, etc. Note. —
Fractions should be quoted in thirty-seconds or decimals.
' Name of bank, trust company, or recognized dealer through which this proposal is made.
Exhibit 10
[Department Circular No. 361. Public Debt]
REDEMPTION OF TREASURY SAVINGS CERTIFICATES, SERIES
OF 1921, DATED JANUARY 3, 1921
Treasury Department,
Office of the Secretary,
Washington, November I4, 1925.
To Owners of Treasury Savings Certificates oj the Series of 1921, dated
January 3, 1921, and Others Concerned:
United States Treasury Savings Certificates of the Series of 1921,
dated January 3, 1921, become due and payable January 1, 1926,
according to their terms. Treasury Savings Certificates of this series
are all in registered form, and bear on their face the title "United
States Treasury Savings Certificate, Issue of War-Savings Certifi-
cates" and the date "January 3, 1921." The Secretary of the Treas-
ury ofi"ers facilities for their redemption, as follows:
1. General. — Registered owners of Treasury Savings Certificates,
Series of 1921, dated January 3, 1921, will be entitled to receive, on
or after January 1, 1926, one thousand dollars ($1,000) for each
$1,000 certificate, one hundred doUars ($100) for each $100 certificate,
and twenty-five dollars ($25) for each $25 certificate. Certificates
are payable and must be presented and surrendered (by mail or other-
wise) at the Treasury Department, Division of Loans and Currency,
Washington, D. C. The demand for payment appearing on the back
of each certificate presented for redemption must be properly signed
by the owner in the presence of and duly certified by a United States
postmaster (who should affix the official postmark of his oflace), an
executive officer of an incorporated bank or trust company (who
should affix the corporate seal of the bank or trust company), or any
other person duly designated by the Secretary of the Treasury for
the purpose. In the event of the death or disability of the owner,
the demand for payment shall be executed by the person entitled to
receive payment under the provisions of Treasury Department Circu-
lar No. 149, Revised, dated August 1, 1922.
11438— 26t 15
204 REPORT OF THE SECRETARY OF THE TREASURY
2. Presentation hejore maturity. — In order to facilitate redemption
of maturing certificates, owners are offered the privilege, beginning
Docombor 1, 1925, of surrendering their certificates in advance, for
redemption as of January 1, 1926. Payment for any certificate so
presented in advance will be made by check payable to the order
of the registered owner, which check will be mailed to reach such
owner on or about January 1, 1926.
3. Presentation at or a'jter maturity. — Redemption will be made
only as of January 1, 1926. Payment will be made by check payable
to the order of the registered owner.
4. Procedure in case of death or disahility of the owner. — The pro-
visions of Treasury Department Circular No. 149, Revised, dated
August 1, 1922, further define the rights of holders of Treasury
Savings Certificates and will govern the presentation and surrender
of certificates for redemption in the event of the death or disability
of the registered owner.
5. Further information. — Any further information which may be
desired as to the redemption of Treasury Savings Certificates of the
Series of 1921, dated January 3, 1921, may be obtained from post
offices. Federal Reserve Banks and branches, or the Treasury De-
partment, Division of Loans and Currency, Washington, D. C.
6. The Secretary of the Treasuiy may at any time or from time
to time prescribe supplemental or amendatory rules and regulations
governing the redemption of Treasury Savings Certificates, Series
of 1921, dated January 3, 1921.
A. W. Mellon,
Secretary of the Treasury.
Exhibit 11
[Department Circular No. 362. Public Debt]
REDEMPTION OF WAR-SAVINGS CERTIFICATES, SERIES OF 1921
Treasury Department,
Office of the Secretary,
Washington, November I4, 1925.
To Holders of War-Savings Certificates of the Series of 1921, Post-
masters, Federal Reserve Banks, and Others Concerned:
United States War-Savings Certificates of the Series of 1921,
become due and payable January 1, 1926, according to their terms.
The Secretary of the Treasury offers special facilities for their redemp-
tion, as follows:
1. General. — Holders of War-Savings Certificates, Series of 1921
will be entitled to receive on or after January 1, 1926, $5.00 for each
War-Savings Stamp of the Series of 1921 then aflftxed thereto. Cer-
tificates liaving registered stamps affixed are payable only at the
post office where registered. Unregistered certificates are payable
at any money-order post office or at the Treasury Department in
Washington, and will likewise be accepted for payment at the Fed-
eral Reserve Banks and their branches, acting as fiscal agents of the
United States. Certificates presented for redemption must be duly
ivceiptcd in the name inscribed thereon, or, in the event of the
death or disability of the owner, in the name of the person entitled
REPORT OF THE SECRETARY OF THE TREASURY 205
to receive payment under the provisions of Treasury Department
Circular No. 108, Revised, dated August 1, 1923. Banking institu-
tions generally will handle redemptions for their customers, but the
only official agencies are the post offices, the Federal Reserve Banksi
and branches, and the Treasury Department at Washington.
2. Redem'ption. — Holders must present their certificates, at their
own expense and risk, to the post office where registered in the case
of registered certificates, or to any money-order post office. Federal
Reserve Bank or branch, or the Treasurer of the United States, at
Washington, D. C, in the case of unregistered certificates. Holders
will facilitate redemption by presenting unregistered certificates
through their own banks, for recognized banking institutions
generally will receive such certificates for account of the holders, or
may cash unregistered certificates for the holders and get cash reim-
bursement therefor, at maturity value, on or after January 1, 1926,
upon surrender of the certificates, duly receipted as herein pro-
vided, to the Federal Reserve Bank of the district.
3. Redemption will be made only as of January 1, 1926. In order
to facilitate redemption, however, any of the certificates may be
presented and surrendered in the manner herein prescribed, at any
time in advance of January 1, 1926, for payment on that date.
Certificates presented prior to January 1, 1926, should be receipted
as of January 1, 1926, and certificates presented on or after January
1, 1926, should be receipted as of the date of presentation. The
Treasurer of the United States and the Federal Reserve Banks and
branches will be prepared to make payment of matured certificates
immediately upon presentation, provided, however, that where
certificates are presented prior to January 1, 1926, a check payable
to the order of the holder will be mailed to reach him on or about
January 1, 1926. Post offices are not required to make payment
until ten days after receiving written demand therefor, but wherever
practicable will waive this requirement and make payment at an
earlier date, but in no event will any such payment be made prior
to January 1, 1926. Paj'^ment of certificates surrendered through
banks will be made to the bank through which presented, while
payment of certificates presented direct to post offices, Federal
Reserve Banks and branches, or the Treasurer of the United States
will be made direct to the holder.
4. Procedure in case of death or disability of the owner. — The pro-
visions of Treasury Department Circular No. 108, Revised, dated
August 1, 1923, further define the rights of holders of War-Savings
Certificates and subject to the provisions hereof will govern the pres-
entation and surrender of certificates for redemption in the event of
the death or disability of the owner. Where certificates are inscribed
in the name of a deceased owner and the estate is being administered
in a court of competent jurisdiction, the certificates should be
receipted by the legal representative of the estate and accompanied
by a certificate of his appointment or by duly certified copies of the
letters testamentary or letters of administration, as the case may be.
Certificates inscribed in the names of minors should be receipted by
the legal guardian, or, if there is no guardian, by the minor himself
if of sufficient competency and understanding to sign the receipt and
comprehend the nature thereof, or, if not of sufficient competency
and understanding, receipted for the minor by the parent or natural
206 REPORT OF THE SECRETARY OF THE TREASURY
guardian with whom the minor resides. Holders may obtain further
information as to the provisions of the circular from their own banks
or post offices.
5. Limitation of holdings. — Under the provisions of Section 6 of the
Act of Congress approved September 24, 1917, as amended, it is not
lawful for any one person at any one time to hold War-Savings
Certificates of the Series of 1921 to an aggregate amount exceeding
S5,000 (maturity value). Holders may, however, redeem their excess
holdings in accordance with the provisions of Treasury Department
Circular No. 178, dated Januar}^ 15, 1920, as amended and supple-
mented.
0. Further information. — Any further information which may be
desired as to the redemption of War-Savings Certificates of the Series
of 1921 may be obtained from post offices, Federal Reserve Banks and
branches, or the Treasury Department, Division of Loans and
Currency, Washington, D. C.
7. The Secretary of the Treasury may at any time or from time to
time prescribe supplemental or amendatory rules and regulations
governing the redemption of War-Savings Certificates, Series of 1921.
A. W. Mellon,
Secretary of the Treasury.
Exhibit 12
STATEMENT BY SECRETARY MELLON BEFORE THE WAYS AND
MEANS COMMITTEE CONCERNING THE SETTLEMENTS OF THE
INDEBTEDNESS OF BELGIUM, CZECHOSLOVAKIA, ESTHONIA,
ITALY, LATVIA, AND RUMANIA
Janxtary 4, 1926.
Statement of Secretary Mellon, chairman of the World War
Foreign Debt Commission, to the W^ays and Means Committee of
the House.
During the war the United States made loans to the Allies largely
to assist them in purchases of supplies in the United States. The
original loans bore interest at 33^ per cent, being the interest rate
carried on the First Liberty Loan issue. The rate was subsequently
made 5 per cent. After the armistice the United States continued
to make advances to the Allies to complete their contracts in the
United States and to purchase food and surplus war supplies from
the United States. Relief w^as also extended to a number of the
smaller nations largely born of the war. At the conclusion of the
war period, the Treasury held the obligations of some 20 nations, in
general paj^able on demand with interest at 5 per cent per annum.
The world was in a state of financial disorder. No nation could
have paid its debt had we demanded it. Most could not even pay
the interest rate of 5 per cent called for by their obligations. Only
with time and more settled conditions did possibility of adjustment
arise.
Recognizing the fact that our debtors could not pay on demand,
Congress originally authorized debt funding on not longer than a
25-year basis and at not less than 43^ per cent interest. Subse-
quently, when it was apparent that this basis of settlement was beyond
the capacity of most of the debtors, the American Debt Commission
EEPORT OF THE SECRETARY OF THE TREASURY 207
was given general authority to recommend settlements to Congress.
It is as the expert body created by Congress that we have presented
our recommendations in the six cases now pending.
Since foreign debt settlements do not seem to be clearly understood,
I wish to mention some rather elemental facts. The obligations held
by the Treasury generally call for payment on demand and such pay-
ment can not be made. We must find practical terms. Now, if we
are owed $62 and payment is made to-day, we receive the full value
of our loan. If payment is made at the rate of $1 a year for 62 years
without interest, we would be conceding a part of the debt. What
this concession amounts to can be variously estimated depending
on the rate of discount arbitrarily taken. If we used 43^ per cent,
the present value of a $1 annuity for 62 years is a little over $21;
if we use 3 per cent, its present value is $28. If, however, instead
of $1 a year for 62 years without interest we should charge interest
at the cost of money to us, we get the full value of the loan, since we
could borrow the $62 to-day, pay interest on the borrowing, and
repay the principal as annuities are received. From the United
States standpoint, therefore, the question of whether a particular
settlement represents a reduction in the debt depends on whether
the interest charged over the entire period of the agreement is less
than the average cost to us of money during that period. The
flexibility in debt settlements is found in the interest rate to be
charged.
The situation of each debtor nation is particular; that is, its
capacity to pay is not the same as the capacity of some other nation.
It has been felt by the Debt Commission, however, that repayment
of principal is essential in order that the debtor might feel that it
had paid its debt in full and that we might know that we had our
capital returned to us. The commission felt, therefore, that no
funding should be made which did not repay the principal, and thus
we have maintained the integrity of international obligations.
Adjustment to the capacity of each case is made in the interest to
be paid over the period of the agreement.
Great Britain was the first nation to recognize the desirability of
putting its house in order. Great Britain owed some $4,600,000,000
of principal and interest on its demand obligations. The American
Debt Commission recommended a settlement on the basis of prin-
cipal payments over a 62-year period, with interest at the rate of
3 per cent per annum for the first 10 years and 3^ per cent there-
after. Congress has approved the settlement. Taking into account
the current interest rate when the settlement was made, the British
agreement does not represent payment in full. If we figure the
present value of the settlement at 43^ per cent we canceled 20 per
cent of the debt. The settlement was, however, entirely based on
our estimation of Great Britain's capacity to pay. It is a precedent
for the recognition of the principle of capacity to pay and is not a
set formula to control other cases of substantially less capacity.
It is the rule that a debtor can not prefer one creditor over another.
The debtor must treat all creditors alike. On the other hand, the
creditor has the option of treating each of its debtors separately.
It may insist on payment in full from one, give time to another, and
cancel the indebtedness of a third, and no one of the three debtors
has a right to complain of the treatment accorded the other. There
208 REPORT OF THE SECRETARY OF THE TREASURY
follows from the foregoing that England, which is also a creditor
of many nations who are debtors to us, has the right to insist that
no debtor of it i)ay us more in proportion than England receives.
The debtor nation may not discriminate between its two creditors.
It has been frequently stated in Parliament that England has no
just cause of complaint if the United States settles with one of its
debtors on terms easier than those accorded England. As a matter
of fact, England itself in dealing wdth its European debtors has
made settlements more favorable to one than to another. I want to
be clear that the British-American settlement is one based on capacity
to pay, and not a fixed formula to wdiich all others, irrespective of
capacity, must conform, and that a creditor is free to settle with its
debtors as it ma}^ choose.
As other nations have approached the American Debt Commission
for a funding of their debts, it has been the position of the American
commission that since England represents the strongest of its debtors,
America would not ask heavier terms than those offered by England.
The commission w^ould consider the British-American basis as prima
facie a fair basis of settlement. If such a settlement was beyond the
capacity of the particular nation, then the commission would recog-
nize this capacit}'' by way of a reduction in the interest rate, but in
no event cancel any of the principal. As we settled with England
on her capacity, so consistently we must consider capacity in every
other case.
Generally speaking, our foreign indebtedness may be divided into
two general classes — advances to carry on the war, and advances
after the war for relief and for the stabilization of Europe. Among
the nations in the first class are included England, France, Italy, Bel-
gium, Russia, and Serbia, although loans were made after the arm-
istice. In the second class are the countries on the Baltic Sea, Fin-
land, Lithuania, Latvia, Estonia, and Poland; the former enemy
countries of Austria and Hungary; and the Balkan countries of
Czechoslovakia, Rumania, and Greece.
The general plan applied to the settlement of the second class
has been the British-American basis, with easier treatments in the
earlier years depending upon the particular circumstances of the
nation involved. Hungary, Finland, and Lithuania have been
settled on the straight British- American basis. Poland, Latvia, and
Esthonia have been given the option to fund 75 per cent of the pay-
ments which would have been due for principal and interest for the
first 5 years over the remaining 57 years of the agreement. Czecho-
slovakia for the first 18 years pays about three-fourths of what it
would have paid under the straight British-American basis and the
balance is funded over the remaining years of the 62-year period.
Rumania pays a graduated scale to reach the British-American
basis at the end of the twelfth year, and the balance is funded. In
every case the balance funded is at the interest rates of 3 per cent and
33^ per cent. The variations in the earlier years of these agree-
ments iiave been occasioned by the present fiscal situation of the
nation involved and represent a determination of the capacity of
payment for these earlier years. In each case the American Debt
Commission was of the opinion that over the whole period, subject
to the earlier modifications, the British-American basis was within the
capacity of the particular nation.
REPORT OP THE SECRETARY OF THE TREASURY 209
The debt-funding agreements of the nations in this second class
have been approved by Congress in the cases of Finland, Lithuania,
Poland, and Hungary. In the case of Latvia, Esthonia, Czecho-
slovakia, and Rumania, the debt-funding agreements are now pend-
ing. In the case of Austria, Congress has voted a 20-year mora-
torium, recognizing Austria's present want of capacity. Yugo-
slavia and Greece have not yet negotiated a settlement.
Coming now to the large debtors, no agreement has been reached
with France, but the commission has negotiated funding agreements
with Belgium and Italy.
In the Belgian agreement the indebtedness of Belgium has been
separated between prearmistice debt and postarmistice debt; that
is, indebtedness created before or after the 11th of November, 1918.
The postarmistice indebtedness has been settled on the British-
American basis, with the exception that during the first 10 years
interest rates are scaled up on an arbitrary basis to reach 3}^ per
cent at the beginning of the eleventh year. As to the prearmistice
indebtedness, the principal is to be repaid in substantially equal
installments over the period of 62 years. Accrued and accruing
interest is waived. The circumstances which influenced the American
Debt Commission in recommending this concession on the pre-
armistice debt were these: Almost all of Belgium was occupied by
Germany since the early days of the war. Germany had taken
from Belgium and moved into Germany most of the industrial
machinery and equipment which it had found in Belgium. The
value of the war damage done to Belgium w^as estimated at roughly
$1,000,000,000. During the period of occupation, Germany had
caused to be printed and circulated in Belgium paper money which
the Belgian people in the occupied territory were forced to receive.
At the conclusion of the war Belgium had to redeem this worthless
currency, issuing its own money in exchange therefor. The loss to
Belgium on this account was about $1,200,000,000. Belgium had
received prior to the armistice about $1,300,000,000 in advance
from France, Great Britain, and the United States, France advancing
over $600,000,000, Great Britain more than $500,000,000, and the
United States less than $200,000,000. At the time of the negotiation
of the Versailles treaty Belgium demanded that she bo given a pre-
ferred claim on reparations to the extent of her war damage, that
Germany be compelled to redeem in gold the worthless paper marks
taken up by Belgium, and that the three principal allies forgive
their prearmistice loans, and Belgium stated that unless such prefer-
ences were given she would withdraw from the peace conference.
In order to prevent a break in the negotiations, representatives of
the United States, England, and France proposed that Belgium be
given a prior charge on reparations of $500,000,000, that each repre-
sentative recommend to his respective government the adoption of
an arrangement under which the prearmistice debt of Belgium would
be assumed by Germany, and Belgium released, and that Belgium
withdraw her other demands for the remainder of war damage
and for reimbursement for the German currency. Accepting this
compromise, Belgium continued in the conference. Subsequently
the United States, entirely within its rights, declined to accept
Germany as a substitute for Belgium on the prearmistice debt.
The argument of Belgium was that it had waived its demand for
210 REPORT OF THE SECRETARY OF THE TREASURY
$2,200,000,000 of preferred reparations, relying on a promise which
was unfulfilled, and that it was now too late to restore Belgium to
the position it had formerly occupied. The American commission
felt that the equities were with Belgium. We would not agree to
substitute Germany as our debtor, although England and France
witii larger debts than ours have done so. We did not think it just,
however, to ask Belgium to repay more than the principal of the
prearmistice advances. Belgium continues solely liable to us.
Taking the Belgian settlement as a whole, both the prearmistice
and postarmistice, the American commission felt that the payments
required from Belgium substantially represent its capacity to pay. ^
Belgium is a small nation, densely populated, with few natural re-
sources, and obliged to import a large proportion of its food supply.
Its foreign investments have been exhausted by the war, the balance
of trade has for a great many years been adverse, and Belgium will
require in the near future large borrowings abroad in order to stabilize
its currency and to reduce the inflation caused by the paper money
issued by Germany during the occupation.
Another settlement now before Congress is that with Italy. To the
original principal of the Italian debt of $1,648,000,000 was added
interest at 43^ per cent per annum to December 15, 1922, the date of
the British settlement, and at 3 per cent per annum to the date of the
new settlement, making a total to be funded of $2,042,000,000.
Repayment of the new principal is made on the same scale as on the
British-American basis, with the exception that in the first five years,
there is a slight modification. To meet Italy's capacity to pay
interest rates during the period of the funding agreement after the
first 5 years have been fixed during successive 10-year periods at
one-eighth of 1 per cent, one-fourth of 1 per cent, one-half of 1 per
cent, three-fourths of 1 per cent, 1 per cent, and 2 per cent for the
last 7 years. The interest rates recognize the quite material dif-
ference between Italy and other debtor countries with whom negotia-
tions for settlement have been made. Italy has no natural resources
and no productive colonies. Its balance of trade has always been
adverse ; a large part of the country is mountainous and it must import
food for its rapidly increasing population. Coal, iron, copper, cotton,
oil, and other raw materials have to be imported. The standard of
living and the taxable capacity of its people are extremely low. The
assets of Italy are but the labor of its people and its water power.
No better example of the equitable principle of capacity to pay
which must apply to a debt settlement can be given than in the case
of Italy. Italy owes the United States over $2,000,000,000. It
owes England about 25 per cent more than this. Any payment to
the United States must be contemporaneously met by proportion-
ately greater payments to England. To pa}' a dollar to the United
States in debt settlement means that Italy must pay $1.25 to England.
The settlement of the Italian-American debt on the British-American
basis would have meant that Italy must pay at once $71,000,000 per
year, and a similar settlement of the British-Italian debt would require
the payment of $89,000,000 per year, a total to be added to the tax
burden of the Italian people of $160,000,000. The present total of
all Italian taxes is about $850,000,000. The present total of all
American taxes is about $7,500,000,000. Adding $160,000,000 to the
EEPOET OF THE SECKETAEY OF THE TREASUEY 211
Italian taxes would be the same as adding $1,400,000,000 to taxation
in America. This would be a terrific burden to America, but we
might stand it because our average income is high and the American
people would not be forced below the level of subsistence; that is,
we would still have enough to live on. The Italian people, however,
are now so heavily taxed in proportion to the national income that
this additional tax would have forced them below the level at which
life can be supported. Such payments to-day are impossible. We
should have made a China of Italy. You will appreciate what I
mean by the present close approach of the Italian to the level of
subsistence when it is understood that the adoption in the Italian
income-tax law of the same exemptions carried in our 1924 law (not
the increased exemptions under the proposed law) would reduce the
Italian Government's revenue from income tax by 99 per cent. An
insistence of a settlement of the Italian-American debt on the British-
American basis would have been entirely futile. Italy could not have
paid, and such an insistence would have meant only that the United
States would receive nothing.
The comparative burdens of the war debt settlements of England,
Belgium, and Italy are a fair test of the adequacy from an American
standpoint of the Italian settlement. It must be remembered that
Italy owes Great Britain 25 per cent more that it owes the United
States, and any American settlement will probably have to be fol-
lowed by an English settlement on substantially a proportionate
basis. There are three principal factors in the finances of any
country which furnish indices by which a comparison of the weight
of a new fiscal burden can be measured. These are the total budget,
representing what all instrumentalities of government collect from
the people; the total foreign trade, which has a bearing on the
capacity to transfer payments abroad; and the total national income,
which is the ultimate source of a country's capacity to pay. If
we apply these indices to the three settlements we obtain the fol-
lowing comparison: The British- American settlement calls for an
annual average payment equivalent to 4.6 per cent of the total
British budget expenditures; the Belgian settlement 3.5 per cent,
and the Italian settlement to America alone 5.17 percent, and to
America and Great Britain 11.47 per cent of Italy's total budget
expenditures. The British settlement calls for an annual average
charge corresponding to 1.9 per cent of the total British foreign
trade. This figure is 0.88 per cent with Belgium. Italy's average
payment to the United States is 2.87 per cent of its total foreign
trade, and the combined payments to the United States and England
6.32 per cent of its total foreign trade. Great Britain's average
annuity represents 0.94 per cent of its national income; Belgium's
0.80 per cent; Italy to the United States alone 0.97 per cent, and
to the United States and Great Britain 2.17 per cent of its total
national income. If we averaged the three indices, the comparative
Itahan burden of war debts would be represented by 6.72, the British
2.4, and the Belgian by 1.75. If instead of using the average annual
annuity we should compare the present value of the settlements
with the sum of these three indices— the total budget, the total
foreign trade, and total national income for a year of each of the
countries — the burden of the British settlement represents 11.7 per
11438— 26t 16
212 REPORT OF THE SECRETARY OF THE TREASURY
cent of this sum, the Belgian settlement 7 per cent, and the Italian
war debts to the United States and P^ngland combined 19.8 per cent.
Suppose that America had to assume a burden comparable to the
burden of war debts upon Italy based upon the above indices, the
present value of this burden would be over $15,000,000,000, or
three-fourths of our present public debt, and if we were to pay this
war debt on the same scale as in the Italian agreement, after five
years we would be paying an annuity of over $400,000,000, after
30 years of over a billion dollars, and by the end of the period of
considerably over two billions a year. Consideration must be given
in these comparisons to the income and standard of living in Italy,
which are lower than in either England or Belgium and very much
lower than in the United States, and which, therefore, would make
the same burden relatively higher in Italy than in other countries.
In its negotiations for the funding of the debt, the American Debt
Commission has been forced to consider these facts: No nation,
except by the pressure of public opinion and the necessities of its
own credit, can be compelled to pay a debt to another nation. An
insistence on a funding agreement in excess of the capacity of the
nation to pay would justify it in refusing to make any settlement.
None can do the impossible. If the debtor is to be able to pay and
if the creditor is to receive anything, a settlement fair to both
countries is essential. It follows that those who insist upon im-
possible terms are in the final analysis working for an entire repudia-
tion of the debts. The only other alternative which they might
urge is that the United States goes to war to collect.
Europe is our largest customer. Unless the finances of Europe
can be restored, her currency placed on a soimd basis, and her people
able to earn and to spend, this country will not be able to dispose
of its surplus products of food, materials, and goods. Our exports
to Belgium last year were $114,000,000, and imports $66,000,000.
Our exports to Italy were $185,000,000, and imports $75,000,000.
Of the total exports to the two countries, 26 per cent were foodstuffs
and 36 per cent were cotton. Nearly tw^o-thirds of the exports
represent the surplus products of the American farmer.
Germany began a reestablishment of sound currency in the latter
part of 1923. In that year it imported $149,000,000 of cotton from
us. With the Dawes plan and a proper financial system, exports
of cotton increased in 1924 to $223,000,000, and in the first 10 months
of 1925 to $198,000,000, or at the rate of $231,000,000 a year. Here
is the real interest of America in the stabilization of Europe, in
which prompt debt settlements are an integral part.
The countries of Europe nmst be restored to their place in civiliza-
tion. In this process of reconstruction certain essentials have to be
met: First, the budgets nmst be balanced. This is a domestic ques-
tion for each nation to solve. Second, payments coming due in the
future must be ascertained. Interallied debts constitute the prin-
cipal item in this essential, and in order that their settlement be
effective the terms must be definite in amount and time and within
the capacity of the debtors. We have learned the folly of imposing
indefinite and impossible terms from the experiment with Germany
before the Dawes plan. And third, America, with its excess of capital
seeking profitable investment, must aid by making private loans to
REPORT OF THE SECRETARY OF THE TREASURY 213
Europe for productive purposes. Only from these private loans
during the past year have the countries abroad been able to pay
for our wheat and cotton. It is these new loans which make our
exports possible. The American commission has not recommended
settlements of the debts to profit those who wish to loan money
abroad. It is possible, since any payment necessarily involves a
strain on the debtor country, that the insistence on impossible terms
which would justify a refusal of the debtor to fund might be more
acceptable to the international bankers. But the settlements are
made in the real interests of those American producers who must
have a foreign market able to pay. The American producer needs
these debt settlements. The entire foreign debt is not worth as
much to the American people in dollars and cents as a prosperous
Europe as a customer.
The capacity of a nation to pay over a long period of time is not
subject to mathematical determination. It is and must be largely
a matter of opinion; but we have been fortunate in the constitution
of the American Debt Commission to have a representation from the
administration, from Congress, and from private life, and from
both political parties. We have facilities to acquire information
through the State Department, the Treasury, and the Department
of Commerce. We bring a varied experience to the consideration
of the debt settlements, and our recommendations are unanimous.
While some may believe our recommendations too lenient and others
too harsh, I know that it is the honest judgment of the commission
that they are just settlements in the real interests of our countiy.
The President has approved each settlement.
Exhibit 13
PRESS STATEMENT BY SECRETARY MELLON COMPARING THE
DEBT SETTLEMENTS MADE BY ITALY WITH GREAT BRITAIN
AND THE UNITED STATES
Wednesday, January 27, 1926.
Secretary Mellon, chairman of the World War Foreign Debt Com-
mission, made the following statement this afternoon:
The Treasury has been informally advised that a settlement of
Italy's debt to Great Britain has been agreed to. This settlement
calls for annuity payments of £2,000,000 the first year, £4,000,000
the second and third years, £4,250,000 from the fourth through the
seventh year, and £4,500,000 from the eighth through the sixty-
second year. This represents a total payment of £276,000,000 over
the 62-year period to amortise an indebtedness of £583,000,000.
Italy owes to Great Britain $2,837,000,000, and to America S2,042,-
000,000. As compared with the Italian-American settlement, Great
Britain receives from Italy in the 62-year period total payments
of $1,346,000,000, of a present value on a 4^4 per cent basis of
$455,000,000, as against total payments under the Italian-American
settlement of $2,407,000,000, of a present value of $528,000,000.
The present value of the British-Italian settlement represents about
16 per cent of the indebtedness funded, and the present value of the
214 REPORT OF THE SECRETARY OF THE TREASURY
Italian-American settlement represents about 26 per cent of the
inde])tedness funded. It is understood also that in accordance with
the provisions of the Balfour note, if England receives from Ger-
man reparations and from its other war debtors more than sufficient
to pay her annuities to the United States, the Italian annuities shall
be proportionately reduced. The £22,000,000 of gold deposited by
Italy with the Bank of England is to be returned to it after the
second year in proportion to Italy's annuity payments on the debt.
Exhibit 14
letter from secretary mellon to the president, call-
ing attention to some practical factors involved
in the settlement of the indebtedness of italy
February 10, 1926.
Dear Mr. President: In connection with our discussion of
possible opposition in the Senate to the Italian debt settlement, I
should like to call your attention to some practical factors which
are involved.
Until comparatively recently, I think it has been the general
impression in Europe that interallied debts would be canceled or
in some way cleared against the German reparations. I think this
was particularly true in Italy, where until Mussolini took charge
the Government has let the people believe they would never have
to pay their war debts. At one time also there was quite a respect-
able body of opinion in America that we should cancel these obliga-
tions.
To dispel this belief in cancellation and to bring about an adjust-
ment of the war debts as commercial obligations, there w^ere three
influences which, in my opinion, were persuasive upon our debtors.
The first, and perhaps the strongest, of these was the belief that an
international obligation must be met so that a debtor would retain
its credit among its fellow nations and in its next emergency be able
to obtain financial aid. This is a little more selfish than the purely
moral view that irrespective of future benefits one ought to pay
one's debts.
Once a nation, either through expediency or idealism, recognizes
the desirability of paying its debt, it is necessary that it come to a
funding agreement with its creditor. It is quite obvious that none
of our debtors could pay their debts in accordance with the terms
of the obligations held by our Treasury, which are payable on de-
mand. The debt has to be funded, within the capacity of the
debtor, over a long period of years; and in order that its budget
may be balanced and its currency stabilized, the debtor must know
exactly how much each year it must pay out of government revenues
in the satisfaction of the debt. In other words, not only must
there be an extension of time for the payment of the entire debt,
but the expenditures on this account for the next few years must be
definitely ascertained.
About a year ago we began pressing our debtors for settlements.
At about the same time, England announced its intention of restor-
REPOKT OF THE SECRETAEY OF THE TKEASUEY 215
ing the gold standard. As an essential element in its program, the
London market had to be closed to foreign loans because such loans
would have meant a drain of gold upon England which would have
made a maintenance of the gold standard in its earlier months
uncertain. There was only one other large market for foreign
loans in the world — the market in this country. As a matter of
administrative policy it was determined to deny recourse to our
money market by the debtor nations or their nationals until the
nation negotiated a settlement of its debt to the United States.
These three influences which have brought about debt settle-
ments are, then, the desire of the debtor nation to be able to say
that it recognized its international obligation and agreed to settle
within its capacity; the necessity for determination, particularly
in the earlier years, of the revenue requirements of the debtor nation
to meet its foreign obligations ; and, finally, the desire of the debtor
nation to obtain new capital abroad for the stabilization of its
currency and for the reestablishment of its industries.
Assuming that the Italian debt settlement is not accepted by the
Senate, I should like to consider what arguments can be presented
to Italy which would influence it in negotiating with us a new and
more onerous settlement. Italy came to America with a representa-
tive delegation and with a very thorough preparation of its facts.
The delegation presented Italy's case to a bipartisan American com-
mission composed of three members of the Cabinet, a Senator, two
Representatives, and two members of the public. After thorough
discussion a settlement was arrived at whicli in the opinion of the
American commission fairly represents Italy's capacity to pay.
The settlement was approved by you and was passed by the House
of Representatives. If now the Senate failed to approve the settle-
ment, I think it would be obvious to the world that the reason was
political and not fiscal.
Italy, within its capacity, has met its international obligation in
the view of the expert American commission. Neither in America
nor Europe would her moral credit be hurt if, then, she refused to
renegotiate. No government could stand in Italy which undertook
in a new settlement to pay more than the expert American commis-
sion had said was fair. The Government, therefore, could safely
assume that its budget was balanced if it provided on its books f o
the amount called for by the American settlement. The Italian
Government has borrowed in the American market the $100,000,000
that it needed for Government purposes. The closing of the Amer-
ican money market now would simply mean that Italian industries
and municipalities would go to the London market, which is now
open to foreign flotations. It is my conclusion, therefore, that the
only practical eft'ect on Italy of a failure to approve the debt settle-
ment would be that Italy would be relieved, for the present at any
rate, of any payments, and no settlement more favorable to the
United States would likely be made in the future.
I have spoken of Italy alone because that is the immediate ques-
tion now pending. I feel that a failure to approve the Italian settle-
ment would render doubtful the possibility of an early settlement
with France. We would certainly be placed in an undesirable light
in Europe and we might retard the reestablishment in that continent
216 REPORT OF THE SECRETARY OF THE TREASURY
of sound fiscal systems. Here in America we can ill afford to hamper
the ciistoniers which alone permit our large exports. Without a
market to dispose of our surplus, our own prosperity would be
threatened.
Faithfully yours,
A. W. Mellon,
Secretary of the Treasury.
The President,
TJie ^mte House.
Exhibit 15
press statement by secretary mellon commenting
upon the prospect for the approval of the italian
debt settlement in the senate
Saturday, March 6, 1926.
Secretary Mellon, chairman of the American Debt Commission,
in commenting upon the prospect for the approval of the Italian
settlement in the Senate, said to-day:
It is very gratifying to know that the Italian debt settlement is not being made
a partisan matter. The settlement was negotiated with the Italian represen-
tatives by a bipartisan commission and received the unanimous approval of all
the members of the commission. It passed the House with a very large vote,
representing generous support from all parties, and has the support of members
of both j)arties in the Senate. This condition is reflected in the country where
api)roval is being voiced by editorial articles strongly urging Senate adoption of
the settlement by the press of both parties.
Exhibit 16
[Public No. 155, Sixty-ninth Congress. H. R. 6773]
AN ACT TO AUTHORIZE THE SETTLEMENT OF THE INDEBTED-
NESS OF THE KINGDOM OF ITALY TO THE UNITED STATES
OF AMERICA
Be it enacted hy the Senate and House of Representatives of the United
States of America in Congress assembled, That the settlement of the
indebtedness of the Kingdom of Italy to the United States of America
made by the World War Foreign Debt Commission and approved by
lihe President upon the terms and conditions as set forth in Senate
Document Numbered 3, Sixty-ninth Congress, first session, is hereby
approved in general terms as follows:
The amount of the indebtedness to be funded, after allowing for
certain cash payments made by Italy, is $2,042,000,000, which has
been computed as follows:
REPORT OF THE SECRETARY OF THE TREASUHY 217
Obligations taken for cash advanced by
Treasury $1, 648, 034, 050. 90
Accrued and unpaid interest at 43^ per
centum per annum to December 15,
1922 251,846,654. 79
$1, 899, 880, 705. 69
Accrued interest at 3 per centum per annum from December
15, 1922, to June 15, 1925 142,491,052.93
Deduct payments made on account of
principaf since December 15, 1922... $164, 852. 94
Interest on principal payments at 3 per
centum per annum to June 15, 1925. 7, 439. 34
2, 042, 371, 758. 62
172, 292. 28
Total net indebtedness as of June 15, 1925 •■» 042, 199, 466. 34
To be paid in cash upon execution of agreement 199, 466. 34
Total indebtedness to be funded into bonds 2, 042, 000, 000. 00
The principal of the bonds shall be paid in annual installments on
June 15 of each year up to and including June 15, 1987, on a fixed
schedule, subject to the right of the Kingdom of Italy to postpone
such payments falling due after June 15, 1930, for two years, such
postponed payment to bear interest at the rate of 41^ per centum
per annum. The amount of the annual principal installment during
the first five years shall be $5,000,000. The amount of the principal
installment due the sixth year shall be $12,100,000, the subsequent
annual principal installments increasing until in the sixty-second
year of the debt-funding period the final principal installment shall
be $79,400,000, the aggregate principal installments being equal to
the total principal of the indebtedness to be funded into bonds. .
The Kingdom of Italy shall have the right to pay off additional
amounts of principal of the bonds on June 15 and December 15 of
any year upon ninety days' advance notice.
The bonds to be issued shall bear no interest until June 15, 1930,
and thereafter shall bear interest at the rate of one-eighth of 1 per
centum per annum from June 15, 1930, to June 15, 1940; at the rate
of one-fourth of 1 per centum per annum from June 15, 1940, to
June 15, 1950; at the rate of one-half of 1 per centum per annum from
June 15, 1950, to June 15, 1960; at the rate of three-fourths of 1 per
centum per annum from June 15, 1960, to June 15, 1970; at the
rate of 1 per centum per annum from June 15, 1970, to June 15,
1980; and at the rate of 2 per centum per annum after June 15, 1980,
all payable semiannually on June 15 and December 15 of each year.
Any payment of interest or principal may be made at the option
of the Kingdom of Italy in any United States Government obliga-
tions issued after April 6, 1917, such obligations to be taken at par
and accrued interest.
Approved, April 28, 1926.
218 report of the secretary of the treasury
Exhibit 17
statement of amounts payable to the united states
on account of the proposed refunding bonds to be
ISSUED BY ITALY
Year
1926.
1927.
1928.
1930.
1934.
1935.
1936.
1937.
1938.
1939.
1940-
1941.
1942-
1943-
1944.
1945.
1946.
1947-
1948-
1949-
1950-
1951.
1952.
1953.
1954-
1955.
1956.
1957.
1958-
1959.
1960.
1961.
1962.
1963-
1964.
1965.
1966.
1967-
1968-
1969.
1970-
1971.
1972-
1973.
1974.
1975-
1976.
1977-
1978.
1979-
1980.
1981.
1982.
1983-
1984.
1985.
1986.
1987.
Principal
$2,
Total.
,000,
,000,
:,000,
,000
;,ooa
,000,
,900
, 700
>, 400,
,800,
,800,
,300
,100,
, 500,
, 300,
,500,
, 100,
, 100,
I, 500,
:, 200,
,200,
,600,
;, 600
.000.
,800,
1,800,
i,800,
,000,
,400,
,000,
,500,
,000,
1, 500
•, 900,
i, 400,
, 900,
., 400
;, 900,
, 400,
;, 900,
, 400,
. 400,
, 900,
,400,
,900,
,400,
,400,
,900,
, 900,
, 400,
,400,
i, 400,
,400,
,400
,400,
,400,
, 400,
,400,
, 400,
1,400,
.,400,
', 400
,000
1,000
,000
,000
1,000
1,000
1,000
1,000
1,000
1,000
i,000
1,000
1,000
1,000
i,000
1,000
1,000
i, 000
i, 000
1,000
i,000
1,000
i,000
000
I, 000
1,000
1,000
1,000
,000
i,000
1,000
1,000
i.OOO
,000
i,000
^000
1,000
1,000
1,000
1, 000
1,000
t,000
i,000
1,000
i,000
1,000
1,000
,000
1,000
1,000
1,000
,000
1,000
,000
•,000
1,000
i,000
i,000
(,000
1,000
(,000
1,000
Annual interest
Per cent Payments
Va
,250
,126
', 875
,500
,750
,500
,625
,875
1,625
,625
,750
:, 750
1, 250
,250
1,500
,000
,000
,000
,500
,500
,000
,000
,000
,000
,000
,500
,000
,500
,500
,000
,750
,000
i,750
,000
,750
,000
,000
1,750
,500
,250
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
1,000
,000
,000
,000
,000
,000
,000
Annual
principal
payments
,000,
,000,
,000,
,000,
,000,
,100,
,200,
,300,
,600,
,000,
, 500,
,200,
,600,
,200,
, 800,
,400:
,000,
,600,
,300,
',000,
', 600,
i,000,
•600,
,200,
,000
,000,
,800,
,600,
,400,
,500,
, 500,
;,500,
1,600,
1,600,
,500,
i,500,
,600,
,600,
,600,
1,600,
i,000,
I, 500,
,500,
,500,
,500,
, 000,
,500,
,000,
I, 500
,000,
,000,
,000,
(,000
,000,
,000,
,000,
,000,
,000,
,000,
,000,
,000,
, 400,
,000
1,000
1,000
,000
>, 000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
000
i;ooo
1,000
1,000
1,000
1,000
•,000
1,000
i,000
1,000
1,009
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
,000
1,000
1,000
1,000
1,000
,000
,000
i.OOO
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
',000
1,000
1,000
i,000
i,000
,000
>,000
1,000
i,000
1,000
,000
1,000
365,677,500 2,042,000,000
report of the secretary of the treasury 219
Exhibit 18
[Public No. 159, Sixty-ninth Congress. H. R. 6774]
AN ACT TO AUTHORIZE THE SETTLEMENT OF THE INDEBTED-
NESS OF THE GOVERNMENT OF THE KINGDOM OF BELGIUM
TO THE GOVERNMENT OF THE UNITED STATES OF AMERICA
Be it enacted hy the Senate and House of Representatives of the United
States of America in Congress assembled, That the settlement of the
indebtedness of the Government of the Kingdom of Belgium to the
Government of the United States of America made by the World War
Foreign Debt Commission and approved by the President upon the
terms and conditions as set forth in Senate Document Numbered 4,
Sixty-ninth Congress, first session, is hereby approved in general
terms as follows:
The indebtedness to be funded has been divided into two classes,
that incurred prior to November 11, 1918, called the prearmistice
indebtedness, and that incurred subsequent to November 11, 1918,
called the postarmistice indebtedness.
The amount of the prearmistice indebtedness to be funded is
$171,780,000, which is the principal amount of the obligations of
Belgium received by the United States for cash advances made prior
to November 11, 1918. The prearmistice indebtedness is payable in
annual installments without interest over a period of sixty-two years,
the first payment falling due June 15, 1926. Belgium is to pay the
following amounts on the dates specified: June 15, 1926, $1,000,000;
June 15, 1927, $1,000,000; June 15, 1928, $1,250,000; June 15, 1929,
$1,750,000; June 15, 1930, $2,250,000; June 15, 1931, $2,750,000;
June 15, 1932, to June 15, 1986, inclusive, $2,900,000 per annum;
June 15, 1987, $2,280,000.
The amount of the postarmistice indebtedness to be funded after
allowing for certain cash payments is $246,000,000, which has been
computed as follows:
Principal of obligations for casli advanced $175, 430, 808. 68
Accrued and unpaid interest at 4J^ per
centum per annum to December 15, 1922 __ 26, 314, 491. 66
TD • • 1 f ur .• f + • 1 ^1^ $201,745,300.34
Principal of obligations for war material sold ' '
on credit 29, 818, 933. 39
Accrued and unpaid interest at 434 per
centum per annum to December 15, 1922-. 491, 359. 24
30, 310, 292. 63
Total indebtedness as of December 15,
1922 232,055,592.97
Accrued interest thereon at 3 per centum per annum from
December 15, 1922, to June 15, 1925 17, 404, 169. 47
Total indebtedness as of June 15, 1925 249,459,762.44
Deduct:
Pa}-ments on account of interest received
between December 15, 1922, and June
15, 1925, on obligations for war mate-
rial $3, 442, 346. 20
Principal payment of $172.01 made Aug.
7, 1923, together with interest thereon
at 3 per centum per annum to June 15,
1925. .. 181.58
3, 442, 527. 78
Net indebtedness as of June 15, 1925 246, 017, 234. 66
To be paid in cash upon execution of agreement 17, 234. 66
Total indebtedness to be funded into bonds 246, 000, 000. 00
220 REPORT OF THE SECRETARY OF THE TREASURY
The principal of the bonds issued for the postarmistice indebtedness
shall be paid in annual installments on June 15 of each year up to
and including June 15, 1987, on a fixed schedule subject to the right
of the Government of the Kingdom of Belgium after June 15, 1935,
to make such payments in three-year periods. The amount of the
first principal installment shall be $1,100,000, the annual principal
installments to increase until in the sixtj'^-second year the amount of
the final principal installment shall be $9,600,000, the aggregate
principal installments being equal to the total principal of the post-
armistice indebtedness to be funded into bonds.
The Government of the Kingdom of Belgium shall have the right
to pay off additional amounts of the bonds on June 15 or December 15
of any year upon not less than ninety days' advance notice.
The bonds issued for the postarmistice indebtedness shall bear
interest from June 15, 1925, in the amounts and on the dates set forth
in the following schedule: December 15, 1925, $870,000; June 15,
1926, $870,000; December 15, 1926, $1,000,000; June 15, 1927,
$1,000,000; December 15, 1927, $1,125,000; June 15, 1928, $1,125,000;
December 15, 1928, $1,250,000; June 15, 1929, $1,250,000; Decem-
ber 15, 1929, $1,375,000; June 15, 1930, $1,375,000; December 15,
1930, $1,625,000; June 15, 1931, $1,625,000; December 15, 1931,
$1,875,000; June 15, 1932, $1,875,000; December 15, 1932, $2,125,000;
June 15, 1933, $2,125,000; December 15, 1933, $2,375,000; June 15,
1934, $2,375,000; December 15, 1934, $2,625,000; June 15, 1935,
$2,625,000 until and including June 15, 1935, and thereafter at the
rate of 33^2 P^i' centum per annum, payable semiannually on June 15
and December 15 of each year, until the principal of said bonds shall
have been paid.
Any payment of interest or principal may be made at the option
of the Government of the Kingdom of Belgium in any United States
Government obligations issued after April 6, 1917, such obligations
to be taken at par and accrued interest.
Approved, April 30, 1926.
Exhibit 19
[Public No. 160, Sixty-ninth Congress. H. R. 6775]
AN ACT TO AUTHORIZE THE SETTLEMENT OF THE INDEBTED-
NESS OF THE REPUBLIC OF ESTHONIA TO THE UNITED STATES
OF AMERICA
Be it enacted hy the Senate and House of Representatives of the United
States of America in Congress assembled, That the settlement of the
indebtedness of the Republic of Esthonia to the United States of
America, made by the World War Foreign Debt Commission and
approved by the President upon the terms and conditions as set
forth in Senate Document Numbered 7, Sixty-ninth Congress, first
session, is hereby approved in general terms as follows:
The amount of the indebtedness to be funded, after allowing for
the cash payment made by Esthonia, and the credit set out below, is
$13,830,000, which has been computed as follows:
EEPOET OF THE SECRETARY OF THE TREASURY 221
Principal amount of obligations to be funded $13, 999, 145. 60
Credit allowed for total loss of cargo on sinking of steamship
John Russ, sunk by a mine in Baltic Sea 1, 932, 923. 45
12, 066, 222. 15
Interest accrued and unpaid thereon to December 15, 1922, at
the rate of 43^ per centum a year 1, 765, 219. 73
Total principal and interest accrued and unpaid as of
December 15, 1922 13, 831, 441. 88
To be paid in cash by Esthonia upon execution of agreement.- 1, 441. 88
Total indebtedness to be funded into bonds 13, 830, 000. 00
The principal of the bonds shall be paid in annual installments on
December 15 of each year up to and including December 15, 1984,
on a fixed schedule, subject to the right of the Republic of Esthonia
to make such payments in three-year periods. The amount of the
first year's installment shall be $69,000, the annual installments to
increase until the sixty-second year. The amount of the final install-
ment will be $530,000, the aggregate installments being equal to
the total principal of the indebtedness to be funded into bonds.
The Republic of Esthonia shall have the right to pay off additional
amounts of the principal of the bonds on any interest date, upon
ninety days' advance notice.
Interest on the bonds shall be payable semiannually on June 15
and December 15 of each year at the rate of 3 per centum per annum
from December 15, 1922, to December 15, 1932, and thereafter at
ihe rate of 3^ per centum per annum until final payment.
The Republic of Esthonia shall have the option with reference to
payments on account of principal and/or interest falling due on or
before December 15, 1930, under the terms of the agreement, to
make the following payments on the dates specified: June 15, 1926,
$50,000; December 15, 1926, $50,000; June 15, 1927, $75,000; Decem-
ber 15, 1927, $75,000; June 15, 1928, $100,000; December 15, 1928,
$100,000; June 15, 1929, $125,000; December 15, 1929, $125,000;
June 15, 1930, $150,000; December 15, 1930, $150,000; total,
$1,000,000; and to pay the balance, including interest on all overdue
payments, at the rate of 3 per centum per annum, in bonds of
Esthonia, dated December 15, 1930, bearing interest at the rate of
3 per centum per annum from December 15, 1930, to December
15, 1932, and thereafter at the rate of 33^ per centum per annum,
such bonds to mature serially on December 15 of each year up to
and including December 15, 1984, substantially in the same manner
and to be substantially the same in other respects as the bonds of
Estonia received at the time of the funding of the indebtedness.
Any payment of interest or of principal may be made, at the option
of the Republic of Esthonia, in any United States Government obliga-
tions issued after April 6, 1917, such obligations to be taken at par
and accrued interest.
Approved, April 30, 1926.
222 report of the secretary of the treasury
Exhibit 20
statements of amounts payable to the united states
on account of the proposed refunding bonds to be
ISSUED BY ESTONIA
Year
1923..
1924..
1925. .
1920..
1927..
192S..
1929..
1930..
1931--
1932..
1933..
1934..
1935..
1936..
1937..
1938..
1939. .
1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
1948..
1949..
1950..
1951..
1952..
1953..
1954..
1955..
1956..
1957..
195S..
1959..
I960..
1961..
1962.,
1963-.
1964.,
1965..
1966- .
1967.
1908-
19G9-
1970-
1971-
1972.
1973.
1974.
1975.
1976
1977.
1978.
1979.
1980.
1981.
1982.
1983.
1984.
Annual
interest in-
stallments
at 3 per cent
for first 10
years; 3J^
per cent
thereafter
$13.
13,
13,
13,
13,
13,
13,
13,
13,
13,
13,
12.
12,
12.
12,
12,
12,
12,
12,
12,
11.
11,
11,
11,
11,
11,
11,
10,
10.
10,
10,
10,
10,
830,
701,
690,
617,
542,
464,
384,
302,
217,
129,
039.
947,
852,
754,
653,
548,
439,
326,
209,
088,
963,
834,
700,
562,
419,
271,
118,
959,
794,
624,
448,
266,
077,
882,
680,
471,
254,
030,
798,
558,
309,
052,
786,
511,
226,
931,
626,
310,
983,
644,
294,
931,
556,
168,
766,
350,
919,
473,
012,
535,
041,
530,
.\nnua!
principal
install-
ments
$414,900 J
412,830
410, 700 I
408, 510 ,
406, 260
4a3,920 I
401,520 i
399,060
396, 510 I
393,870 i
456,365 '
453, 145 i
449,820 !
446,390 i
442,855 i
439, 180
435,365 I
431,410
427,315
423,080
418, 705 I
414, 190 I
409,500 ■
404,670
399,665 I
394,485
389, 130 1
383, 565 I
377,790 i
371,840 !
365,680 !
359,310 I
352,695 '
345,870 I
338, 800 i
331,485 I
323, 890
316,050
307, 930
299, 530
290, 815
281,820
272, 510
262, 885
252,910
242, 585
231,910
220, 850
209, 405
197, 540
185, 290
172, 585
159,460
145, 880
131,810
117,2,50
102, 165
86, 555
70. 420
53, 725
36,435
18, 550
80,
82,
85,
88,
90,
92,
95,
98,
101
105,
109
113,
117
121
125
129,
134
138,
143,
148
153
159,
165,
170,
176
182,
189
195
202
209,
217
224,
232,
240,
249,
257,
266,
275,
285,
295,
305,
316,
327
339,
350,
363
375,
388,
402,
416
431
446,
461
4'
494
511
530,
.000
,000
,000
,000
,000
1,000
,000
i,000
,000
i,000
,000
,000
,000
,000
•,000 I
i,000 I
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
.000
,000
,000
;,ooo
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
,000
i,000
1,000
,000
,000
,000
,000
,000
.000
.000
,000
,000
,000
,000
1,000
19, 501, 140 13, 830. 000
eepoet of the secretary op the treasury 223
Exhibit 21
[Public No. 161, Sixty-ninth Congress. H. R. 6770]
AN ACT TO AUTHORIZE THE SETTLEMENT OF THE INDEBTED-
NESS OF THE GOVERNMENT OF THE REPUBLIC OF LATVIA TO
THE GOVERNMENT OF THE UNITED STATES OF AMERICA
Be it enacted hy the Senate and House of Representatives of the United
States of America in Congress assembled, That the settlement of the
indebtedness of the Government of the Repubhc of Latvia to the
Government of the United States of America made by the World
War Foreign Debt Commission and approved by the President upon
the terms and conditions as set forth in Senate Document Num-
bered 8, Sixty-ninth Congress, first session, is hereby approved in
general terms as follows:
The amount of the indebtedness to be funded, after allowing for the
cash payments made by Latvia, is $5,775,000 , which has been com-
puted as follows:
Principal amount of obligations to be funded $5, 132, 287. 14
Interest accrued and unpaid thereon to December 15, 1922, at
the rate of 4:\i per centum per annum 647, 275. 62
Total principal and interest accrued and unpaid as of
December 15, 1922 5, 779, 562. 76
To be paid in casli by Latvia upon execution of agreement 4, 562. 76
Total indebtedness to be funded into bonds 5, 775, 000. 00
The principal of the bonds shall be paid in annual installments on
December 15 of each year up to and including December 15, 1984,
on a fixed schedule, subject to right of the Government of the Republic
of Latvia to make such payments in three-year periods. The amount
of the first year's installment shall be $28,000, the annual installments
to increase until in the sixty-second year, the amount of the final in-
stallment will be $228,000, the aggregate installments being equal
to the total principal of the indebtedness to be funded into bonds.
The Government of the Republic o' Latvia shall have the right to
pay ofi" additional amounts of the principal of the bonds on any
interest date upon ninety days' advance notice.
Interest on the bonds shall be payable semiannually on June 15 and
December 15 of each year at the rate of 3 per centum per annum
from December 15, 1922, to December 15 1932, thereafter at the rate
of 3}/2 per centum per annum unti final payment.
The Government of the Republic of Latvia shall have the option,
with reference to payments on account of principal and/or interest
falling due on or before December 15, 1930, under the terms of the
agreement, to make the following payments on the dates specified:
June 15, 1926, $30,000; December 15, 1926, $30,000; June 15, 1927,
$35,000: December 15, 1927, $35,000; June 15, 1928, $40,000; Decem-
ber 15, 1928, $40,000; June 15, 1929, $45,000; December 15, 1929,
$45,000; June 15, 1930, $50,000; December 15, 1930, $50,000; total
$400,000, and to pay the balance, including interest on all overdue
payments at the rate of 3 per centum per annum in bonds of Latvia,
dated December 15, 1930, bearing interest at the rate of 3 per centum
per annum from December 15, 1930, to December 15, 1932 and there-
after at the rate of 33^2 per centum per annum, such bonds to mature
serially on December 15 of each year up to and including Deceniber 15,
1984, substantially in the same manner and to be substantially the
same in other respects as the bonds of Latvia received at the time
of the fimding of the indebtedness.
224
REPORT OF THE SECRETARY OF THE TREASURY
Any payment of interest or of principal may be made at the option
of the Kepubhc of Latvia, in any United States Government obUga-
tions issued after April 6, 1917, such obligations to be taken at par
and accrued ijiterest.
Approved, April 30, 1926.
Exhibit 22
STATEMENT OF AMOUNTS PAYABLE TO THE UNITED STATES
ON ACCOUNT OF THE PROPOSED REFUNDING BONDS TO BE
ISSUED BY LATVIA
Year
1923.
1924.
1925.
1926.
1927.
1928.
1929.
1930.
1931.
1932.
1933.
1934.
1935.
1936.
1937.
1938.
1939.
1940.
1941.
1942.
1943.
1944.
1945.
1946.
1947.
1948.
1949.
1950.
1951.
1952.
1953
1954.
1955.
1956.
1957.
19.58.
19.59.
1960
1961.
1962.
1963.
1964.
1965
1966.
1967.
1908
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
Principal
., 775, 000
I, 747, 000
I, 718, 000
, 688, 000
I, 657, 000
i, 625, 000
, 592, 000
i, 558, 000
i, 523, 000
i, 487, 000
, 450, 000
,412,000
, 373, 000
, 333, 000
,291,000
, 248, 000
, 203, 000
, 1.57, 000
, 109, 000
, 059, 000
., 008, 000
, 955, 000
:, 900, 000
, 843, 000
, 784, 000
, 723, 000
, 060, 000
, 595, 000
, 527, 000
, 457, 000
, 384, 000
, 309, 000
,231,000
,151,000
, 068, 000
, 982, 000
, 893, 000
.801,000
, 706, 000
, 007, 000
, 505, 000
, 398, 000
., 287, 000
, 173, 000
, 055, 000
:, 932, 000
:, 801, 000
:, 672, 000
, 534, 000
:, 391, 000
:, 243, 000
, 090, 000
, 932, 000
, 768, 000
, 598, 000
, 422, 000
, 240, 000
, 052, 000
857, 000
655, 000
446, 000
228,000
Schedule
of annual
interest
install-
ments at
3 per cent
for first 10
years; 3J^2
per cent
thereafter
$173, 250
172, 410
171,540
170, 640
169,710
168, 750
167, 7G0
166, 740
165, 690
164, 610
190, 750
189, 420
188, 055
186, 655
185, 185
183, 680
182, 105
180, 495
178,815
177, 065
17,5, 280
173, 425
171, 500
169, 505
167,440
165, 305
163, 100
160. 825
158, 445
155, 995
153, 440
150,815
148, 085
145, 285
142, 380
139, 370
136, 255
133, 035
129. 710
126, 245
122, 675
118, 930
115,045
111,055
106, 925
102, 620
98, 140
93, 520
88,690
83, 685
78, 505
73, 150
67, 620
61, 880
55, 930
49, 770
43,400
36. 820
29, 995
22, 925
15,610
7,980
Schedule
of annual
install-
ments to
be paid on
account of
principal
Total
annual
payments
8, 183, 635
$28,
29.
30,
31
32,
33,
34,
35,
36,
37
38,
39,
40,
42,
43
45,
46
48:
50,
51
53
55;
57,
59:
61
63,
65
68
70;
73,
75.
78,
80.
83:
86;
.89.
92:
95
99:
102:
107
111
114
118
123.
12a
132
138
143
148
153
158,
164
170,
170,
1S2.
188,
195.
202.
209
218
228
5, 775,
.,000
1,000
1,000
,000
:,000
,000
,000
,000
1,000
,000
,000
,000
,000
,000
,000
,000
1,000
i, 000
,000
,000
,000
1,000
,000 I
,000 I
,000 I
,000
1,000 I
,000
,000
.000
1,000
1,000
1,000
,000
,000
1,000
,000
1,000 I
,000 !
,000 I
,000 I
,000 i
,000 1
1,000 I
,000 '
1,000 \
,000 i
,000 I
.000 I
,000
,000 ;
,000
,000
,000 !
,000
:,()00 '
,000
.000 I
:,000
,000 i
,,000 j
,^000 J
.000 I
$201, 250
201,410
201,540
201,640
201, 710
201, 750
201, 760
201,740
■201, 690
201,610
223, 750
228, 420
•228, 055
2-28k655
228, 185
228,680
228, 105
228, 495
228, 815
228, 065
228,280
228, 425
228,500
228, .505
228, 440
228, 306
228, 100
228, 825
228, 445
228,995
228,440
228, 815
228, 085
228, 285
228, 380
228, 370
228, 255
228, 035
228. 710
228, 245
229, 675
229, 930
229, 045
■229, 055
■229, 925
■230, 620
■230, 140
231,520
231, 690
•231, 685
•231, 505
231, 150
•231, 620
231, 880
■2-31,930
■231, 770
■231,400
■231, 820
231, 995
231, 925
233, 610
235, 980
13. 958, 63.5
report of the secretary op the treasury 225
Exhibit 23
AGREEMENT FOR THE FUNDING OF THE INDEBTEDNESS OF
RUMANIA TO THE UNITED STATES
Agreement made the fourth day of December, 1925, at the City of Wash-
ington, District of Columbia, between the Kingdom of Rumania, here-
inafter called Rumania, party of the first part, and the United States of
America, hereinafter called the United States, party of the second part
WHEREAS, Rumania is indebted to the United States as of June
15, 1925, upon obligations in the aggregate principal amount of
$36,128,494.94, together with interest accrued and unpaid thereon;
and
WHEREAS, Rumania desires to fund said indebtedness to the
United States, both principal and interest, through the issue of bonds
to the United States, and the United States is prepared to accept
bonds from Rumania upon the terms and conditions hereinafter set
forth;
Now, therefore, in consideration of the premises and of the mutual
covenants herein contained, it is agreed as follows:
1. Amount of Indebtedness. — The amount of the indebtedness to
be funded, after allowing for cash payments made or to be made by
Rumania and the credit set out below, is $44,590,000, which has been
computed as follows:
Principal amount of indebtedness to be funded $36, 128, 494. 94
Interest accrued and unpaid thereon to December 15, 1922, at
the rate of 434 per cent a year 5, 365, 806. 08
Total indebtedness as of December 15, 1922 41, 494, 301. 02
Interest accrued and unpaid thereon to June 15, 1925, at the
rate of 3 per cent a year 3, 112, 072. 59
Credits allowed by War Department for material, together
with interest thereon
44, 606, 373. 61
11, 922. 07
Total net indebtedness as of June 15, 1925 44, 594, 451. 54
To be paid in cash upon execution of agreement 4,451. 54
Total indebtedness to be funded into bonds 44, 590, 000. 00
2. Payment. — In order to provide for the payment of the indebt-
edness thus to be funded Rumania will issue to the United States at
par bonds of Rumania dated June 15, 1925, in the principal amounts
and maturing serially on the several dates fixed in the following
schedule :
June 15 —
1926 $200, 000. 00
1927 300, 000. 00
1928 400,000.00
1929 500,000.00
1930 600,000.00
1931 700,000.00
1932 800,000.00
1933 1, 000, 000. 00
1934 1, 200, 000. 00
1935 1,400,000. 00
June 15 —
1936- $1,600,000.00
1937 - 1,800,000.00
1938 2,000,000.00
19.39 2,200,000.00
1940 430,560.43
1941 445,000.00
1942 462, 000. 00
1943 478,000.00
1944 494,000.00
1945 512,000.00
226
REPORT OF THE SECRETARY OF THE TREASURY
1946.
1947.
194S.
1949.
1950.
1951.
1952.
1953.
1954.
1955.
1956.
1957.
1958.
1959.
1960.
1961.
1962.
1963.
1964.
1965.
1966.
1967.
June 15 —
$529,
548,
567,
587.
608,
629,
651,
673.
697,
722.
747,
773,
800,
828,
857,
887,
918.
950,
984,
, 018,
, 053,
,090,
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
June 15 —
1968.
1969.
1970.
1971.
1972.
1973.
1974.
1975.
1976.
1977.
1978.
1979.
1980.
1981.
1982.
1983.
1984.
1985.
1986.
1987.
129, 000. 00
168, 000. 00
209, 000. 00
252, 000, 00
295, 000. 00
341, 000. 00
387, 000. 00
436, 000. 00
486, 000. 00
539, 000. 00
592, 000. 00
648, 000. 00
706, 000. 00
765, 000. 00
827, 000. 00
891, 000. 00
957, 000. 00
026, 000. 00
097, 000. 00
172,000. 00
Total 66, 560, 560. 43
Provided, However, That Rumania, at its option, upon not less
than ninety days' advance notice to the United States, may postpone
any payment on account of principal falling due as hereinabove
provided after June 15, 1939, to any subsequent June 15 or December
15 not more than two years distant from its due date, but only on
condition that in case Rumania shall at any time exercise this option
as to any payment of principal, the payment falling due in the next
succeeding year can not be postponed to any date more than one year
distant from the date when it becomes due unless and until the pay-
ment previously postponed shall actually have been made, and the
payment falling due in the second succeeding year can not be post-
poned at all unless and until the payment of principal due two years
previous thereto shall actually have been made.
3. Form of Bond. — All bonds issued or to be issued hereunder to the
United States shall be payable to the Government of the United
States of America, or order, and shall be signed for Rumania by its
Envoy Extraordinary and Minister Plenipotentiary at Washington,
or by its other duly authorized representative. The bonds issued for
the first fourteen annual payments shall be substantially in the form
set forth in the exhibit hereto annexed and marked "Exhibit A,'
shall be issued in fourteen pieces in the principal amounts fixed in the
preceding schedule, maturing annually on June 15 of each year up to
and including June 15, 1939, and shall not bear interest before
maturit3^ Tlie bonds maturing subsequent to June 15 1939, shall be
substantially in the form set forth in the exhibit hereto annexed and
marked "Exhibit B," and shall be issued in 48 pieces with maturities
and in denominations as hereinabove set forth and sha 1 bear interest
at the rate of 33^% per annum from June 15, 1939, payable semi-
annually on June 15 and December 15 of each year until the prin-
cipal of such bonds shall be paid.
4. Method of Payment. — All bonds issued or to be issued hereunder
shall be payable, as to both principal and interest, in United States
gold coin of the present standard of value, or, at the option of Rumania
upon not less than thirty days' advance notice to the United States,
REPORT OP THE SECRETARY OF THE TREASURY 227
in any obligations of the United States issued after April 6, 1917, to
be taken at par and accrued interest to the date of payment hereunder.
All payments, whether in cash or in obligations of the United States
to be made by Rumania on account of the principal of or interest on any
bonds issued or to be issued hereunder and held by the United States,
shall be made at the Treasury of the United States in Washington, or,
at the option of the Secretary of the Treasury of the United States,
at the Federal Reserve Bank of New York, and if in cash shall be made
in funds immediately available on the date of payment, or if in obliga-
tions of the United States shall be in form acceptable to the Secretary
of the Treasury of the United States under the general regulations of
the Treasury Department governing transactions in United States
obligations.
5. Exemption from Taxation. — The principal and interest of all
bonds issued or to be issued hereunder shall be paid without deduction
for, and shall be exempt from, any and all taxes or other public dues,
present or future, imposed by or under authority of Rumania or any
political or local taxing authority within the Kingdom of Rumania,
whenever, so long as, and to the extent that beneficial ownership
is in (a) the Government of the United States, (b) a person, firm, or
association neither domiciled nor ordinarily resident in Rumania, or
(c) a corporation not organized under the laws of Rumania.
6. Payments before Maturity. — Rumania, at its option, on June 15
or December 15 of any year, upon not less than ninety days' advance
notice to the United States, may make advance payments in amounts
of $1,000 or multiples thereof, on account of the principal of any
bonds issued or to be issued hereunder and held by the United
States. Any such advance payments shall be applied to the prin-
cipal of such bonds as may be indicated by Rumania at the time of
the payment.
7. Exchange of Marlcetahle Obligations. — Rumania will issue to the
United States at any time, or from time to time, at the request of the
Secretary of the Treasury of the United States, in exchange for
any or all of the bonds issued hereunder and held by the United
States, definitive engraved bonds in form suitable for sale to the
public, in such amounts and denominations as the Secretary of the
Treasury of the United States may request, in bearer form, with pro-
vision for registration as to principal and/or in fully registered form,
and otherwise on the same terms and conditions, as to dates of issue
and maturity, rate or rates of interest, if any, exemption from taxa-
tion, payment in obligations of the United States issued after April 6,
1917, and the like, as the bonds surrendered on such exchange.
Rumania will deliver definitive engraved bonds to the United States
in accordance herewith within six months of receiving notice of any
such request from the Secretary of the Treasury of the United States,
and pending the delivery of the definitive engraved bonds will deliver,
at the request of the Secretary of the Treasury of the United States,
temporary bonds or interim receipts in form satisfactory to the
Secretary of the Treasury of the United States within thirty days of
the receipt of such request, all without expense to the United States.
The United States, before offering any such bonds or interim receipts
for sale in Rumania, will first offer them to Rumania for purchase at
par and accrued interest, if any, and Rumania shall likewise have the
228 REPORT OF THE SECRETARY OP THE TREASURY
option, in lieu of issuing any such bonds or interim receipts, to make
advance redemption, at par and accrued interest, if any, of a cor-
respondinp; principal amount of bonds issued hereunder and held
by the United States. Rumania agrees that the definitive engraved
bonds called for by this paragraph shall contain all such provisions,
and that it will cause to be promulgated all such rules, regulations, and
orders as shall be deemed necessary or desirable by the Secretary of
the Treasury of the United States in order to facilitate the sale of
the bonds in the United States, in Rumania or elsewhere, and that if
requested by the Secretary of the Treasury of the United States,
it will use its good offices to secure the listing of the bonds on such
stock exchanges as the Secretary of the Treasury of the United States
may specify.
8. Cancellation and Surrender of Obligations. — Upon the execution
of this Agreement, the delivery to the United States of the
$60,560,560.43 principal amount of bonds of Rumania to be issued
hereunder, together with satisfactory evidence of authority for the
execution of this Agreement by the representatives of Rumania and
for the execution of the bonds to be issued hereunder, the United
States will cancel and surrender to Rumania at the Treasury of the
United States in Washington, the obligations of Rumania held by the
United States.
9. Notices. — Any notice, request, or consent under the hand of the
Secretary of the Treasury of the United States, shall be deemed and
taken as the notice, request, or consent of the United States, and
shall be sufficient if delivered at the Legation of Rumania at Wash-
ington or at the office of the Ministry of Finance in Rumania; and
any notice, request, or election from or by Rumania shall be sufficient
if delivered to the American Legation at Bucharest or to the Secretary
of the Treasury at the Treasury of the United States in Washington.
The United States in its discretion may waive any notice required
hereunder, but any such waiver shall be in writing and shall not extend
to or aft"ect any subsequent notice or impair any right of the United
States to require notice hereunder.
10. Compliance with Legal Requirements. — Rumania represents and
agrees that the execution and delivery of this Agreement have in all
respects been duly authorized and that all acts, conditions, and legal
formalities which should have been completed prior to the making
of this Agreement have been completed as required by the laws of
Rumania and in conformity therewith.
1 1 . Counterparts. — This Agreement shall be executed in two counter-
parts, each of which shall have the force and effect of an original.
IN WITNP:SS whereof Rumania has caused this Agreement
to be executed on its behalf by N. Titulescu, Envoy Extraordinary
and Minister Plenipotentiary to his Brittanic Majesty and President
of the Rumanian Debt Funding Commission at Washington, there-
unto duly authorized, subject, however, to ratification by Rumanian
Parliament, and the United States has likewise caused this Agree-
ment to be executed on its behalf by the Secretary of the Treasury
as Chairman of the World War Foreign Debt Commission, with the
approval of the President, subject, however, to the approval of
Congress, pursuant to the Act of Congress approved February 9,
1922, as amended by the Act of Congress approved February 28,
REPORT OF THE SECRETARY OF THE TREASURY 229
1923, and as further amended by the Act of Congress approved
January 21, 1925, all on the day and the year first above written.
The Kingdom of Rumania,
By N. TiTULEScu.
The United States of America,
For tlie World War Foreign Debt Commission:
By A, W. Mellon,
^Secretary oi the Treasury and Chairman of the Commission.
Approved :
Calvin Coolidge,
President.
Exhibit A
(Form of Bond)
The Kingdom of Rumania
S No.
The Kingdom of Rumania, hereinafter called Rumania, for value
received, promises to pay to the Government of the United States
of America, hereinafter called the United States, or order, on June 15,
19 , the sum of Dollars ($ ). This bond
is payable in gold coin, of the United States of America of the present
standard of value, or, at the option of Rumania, upon not less than
thirty days' advance notice to the United States, in any obligations of
the United States issued after April 6, 1917, to be taken at par and
accrued interest to the date of payment hereunder.
This bond is payable without deduction for, and is exempt from,
any and all taxes and other public dues, present or future, imposed
by or under authority of Rumania or any political or local taxing
authority within Rumania, whenever, so long as, and to the extent
that, beneficial ownership is in (a) the Government of the United
States, (b) a person, firm, or association neither domiciled nor ordi-
narily resident in Rumania, or (c) a corporation not organized under
the laws of Rumania. This bond is payable at the Treasury of the
United States in Washington, D. C, or at the option of the Secretary
of the Treasury of the United States at the Federal Reserve Bank
of New York.
This bond is issued pursuant to the provisions of paragraph 2 of
an Agreement dated December 4, 1925, between Rumania and the
United States, to which Agreement this bond is subject and to which
reference is hereby made.
IN WITNESS WHEREOF, Rumania has caused this bond to be
executed in its behalf by its
at the City of Washington, District of Columbia, thereunto duly
authorized, as of June 15, 1925.
The Kingdom of Rumania.
Bv
230 REPORT OF THE SECRETARY OF THE TREASURY
Exhibit B
(Form of Bond)
The Kingdom of Rumania
S . No.
The Kingdom of Rumania, hereinafter called Rumania, for value
received, promises to pay to the Government of the United States
o; America, hereinafter called the United States, or order, on June
15, 19 , the sum of Dollars ($ ), and to pay
interest upon said principal sum from June 15, 1939, at the rate of
3M% PtT annum, payable semiannually on the 15th day of Decem-
ber and June in each year, until the principal hereof has been paid.
This bond is payable as to both principal and interest in gold coin of
the United States of America of the present standard of value, or, at
the option of Rumania, upon not less than thirty days' advance notice
to the United States, in any obligations of the United States issued
after April 6, 1917, to be taken at par and accrued interest to the date
of payment hereunder.
This bond is payable as to both principal and interest without
deduction for, and is exempt from, any and all taxes and other public
dues, present or future, imposed by or under authority of Rumania
or an}^ political or local taxing authority within the Kingdom of
Rumania, whenever, so long as, and to the extent that, beneficial
ownership is in (a) the Government of the United States, (b) a person,
firm, or association neither domiciled nor ordinarily resident in Ru-
mania, or (c) a corporation not organized under the laws of Rumania.
This bond is payable as to both principal and interest at the Treasury
of the United States in Washington, D. C. or at the option of the
Secretary of the Treasury of the United States at the Federal Reserve
Bank of New York.
This bond is issued pursuant to the provisions of paragraph 2 of
an Agreement dated December 4, 1925, between Rumania and the
United States, to which Agreement this bond is subject and to which
reference is hereby made.
IN WITNESS WHEREOF, Rumania has caused this bond to be
executed in its behalf by its
at the City of Washington, District of Columbia, thereunto duly
authorized, as of June 15, 1925.
The Kingdom of Rumania.
By
Exhibit 24
PRESS STATEMENT BY THE WORLD WAR FOREIGN DEBT COM-
MISSION GIVING THE TERMS OF THE AGREEMENT FOR THE
SETTLEMENT OF THE INDEBTEDNESS OF RUMANIA TO THE
UNITED STATES
December 1, 1925.
The World War Foreign Debt Commission issued the following
statement to-day:
An agreement has been reached in settlement of the Rumanian debt to the
United States subject to the approval of Congress and the Rumanian Parliament.
The settlement has been approved by the President. The original indebtedness
REPOET OF THE SECRETARY OP THE TREASURY
231
of Rumania amounted to $36,128,494.94. Interest on this amount has been
calculated as in recent settlements making the principal of the debt to be
funded as of June 15, 1925, $44,590,000. The Rumanian Government agrees to
repay the principal of the funded debt over a period of 62 years with interest at
3 per cent a year for the first 10 years and 3>^ per cent a year thereafter. During
the first 14 years the following total annual amounts are to be paid, the balance
of each annuity at the above interest rates to be funded over the remaining 48
years :
June 15 —
1926 $200,000
1927.
1928.
1929.
1930.
1931-
1932.
300, 000
400, 000
500, 000
600, 000
700, 000
800, 000
June 15 —
1933 $1,000,000
1934 1,200,000
1935 1,400,000
1936 1,600,000
1937 1,800,000
1938 2,000,000
1939 2,200,000
A debt-funding agreement will be prepared for signatures and submission to
the President.
Exhibit 25
[Public No. 167, Sixty-ninth Congress. H. E. 6772]
AN ACT TO AUTHORIZE THE SETTLEMENT OF THE INDEBTED-
NESS OF THE KINGDOM OF RUMANIA TO THE UNITED STATES
OF AMERICA
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled, That the settlement of the
indebtedness of the Kingdom of Rumania to the United States of
America made by the World War Foreign Debt Commission and
approved by the President upon the terms and conditions as set
forth in Senate Document Numbered 5, Sixty-ninth Congress, jfirst
session, is hereby approved in general term^ as follows:
The amount of the indebtedness to be funded, after allowing for
the cash payments made by the Kingdom of Rumania and the credits
set out below, is $44,590,000, which has been computed as follows:
Principal amount of indebtedness to be funded $36, 128, 494. 94
Interest accrued and unpaid thereon to December 15, 1922, at
the rate of 434 per centum a year 5, 365, 806. 08
Total indebtedness as of December 15, 1922 41, 494, 301. 02
Interest accrued and unpaid thereon to June 15, 1925, at the
rate of 3 per centum a year 3, 112, 072. 59
44, 606, 373. 61
Credits allowed by War Department on material, together with "
interest thereon 11, 922. 07
Total net indebtedness as of June 15, 1925 44, 594, 451. 54
To be paid in cash upon execution of agreement 4, 451. 54
Total indebtedness to be funded into bonds 44, 590, 000. 00
The principal amount of the bonds *to be delivered to the United
States is $66,560,560.43, the increase over the funded indebtedness
as of June 15, 1925, being due to the smaller payments during the
first fourteen years than would have been payable upon the basis of
the British-American settlement, this difference being funded over
the remaining forty-eight years, compounded annually, at the rates
232
REPORT OF THE SECRETARY OF THE TREASURY
of 3 per centum per annum up to and including the tenth year and
33^ per centum per annum from the eleventh to the fourteenth year,
both inclusive. The principal of the bonds shall be paid in annual
installments on June 15 of each year up to and including .June 15
1987, subject to the right of the Kingdom of Rumania, after June 15,
1939, to make such payments in three-year periods. The first four-
teen annual installmenls are to be paid without interest on the dates
specified and in the following amounts: June 15, 1926, $200,000; June
15, 1927, $300,000; June 15,' 1928, $400,000; June 15, 1929, $500,000;
June 15, 1930, $600,000; June 15, 1931, $700,000; June 15, 1932,
$800,000; June 15, 1933, $1,000,000; June 15, 1934, $1,200,000; June
15, 1935, $1,400,000; June 15, 1936, $1,600,000; June 15, 1937,
$1,800,000; June 15, 1938, $2,000,000; June 15, 1939, $2,200,000.
The remaining forty-eight installments are to be paid annually on
June 15 of each year, with interest at the rate of 3J^ per centum per
annum from June 15, 1939, payable semiannually on June 15 and
December 15 of each year. The amount of the installment due in
the fifteenth jesir is $430,560.43, the annual installments to increase
thereafter until in the sixty-second year the amount of the final
installment will be $2,172,000, the aggregate installments being equal to
the total face amount of bonds to be delivered, namely, $66,560,560.43.
The Kingdom of Rumania shall have the right to pay off additional
amounts of the principal of the bonds on June 15 or December 15 of
any year upon not less than ninety days' advance notice.
Any payment of interest or of principal may be made at the option
of the Kingdom of Rumania in any obligations of the United States^
issued after April 6, 1917, such obhgations to be taken at par and
accrued interest.
Approved, May 3, 1926.
Exhibit 26
statement of amounts payable to the united states
on account of proposed refunding bonds to be issued
by rumania (interest at 3 per cent per annum for first
10 years and 31/2 per cent thereafter^all deferred
amounts are compounded annually at those rates)
Year
Principal
1926 $44,590,
1927 J 44,368,
1928 t 44, 139,
1929 43,903,
1930 43,660,
1931 43,410,
1932 43,152,
1933 .< 42,887,
1934 42,614,
1935 , 42,332,
1936 42,042,
1937 41,746,
1938 41,407,
1939 .1 40,856,
000. 00 $1
Annual | Annual Total
interest I principal amount due
due : due annually
000.00
000. 00|
000. ool
000. OOl
000. 00!
000. 00;
000. 00'
000. 00'
000.00
000.00
000. 00
110.00
358. 85:
337, 700. OOl
331, 040. 00;
324, 170. OOi
317,090.00!
309, 800. 00
302, 300. OOj
294, 560. 00,
286,610.00
278, 420. 00:
269, 960. 00'
471, 470. 00
461, 110.001
449, 248, 85|
429, 972. 56
.$222, 000.
229, 000.
236, 000.
243, 000.
250, 000.
258, 000.
265, 000.
273, 000.
282, 000.
290, 000.
296, 000.
338, 890.
5.50,751.
770, 027.
00 $1,
00 1,
00 1,
00 1,
00 1,
001 1,
00 1,
00' 1,
oo; 1,
00! 1,
00! 1,
00 I,
15 2,
44 2,
Total
amount to
be paid
annually
559, 700. 00
560, 040. 00
560, 170. 00
560, 090. 00
559, 800. 00
560, 300. 00
559, 560. OOl
559,610.00!
560, 420. OOl
559, 960. 00!
767, 470. ool
800, 000. 00
000, 000. 00
200, 000. 00
40, 086, 331. 41118, 863, 451. 41 4, 503, 668. 59 23, 367. 120. 00
$200,
300,
400,
500,
600,
700,
800,
1,000,
1,200,
1,400,
1, 600,
1,800,
2, 000,
2, 200,
000.00
000. 00
000. 00
000. 00
000. 00
000.00
000.00
000.00
000. 00
000.00
000.00
000.001-
000.00-
000. ooL
Amount
deferred
each year
Value of eacii
deferred
amount on
fifteenth year
359, 700. 00
200, 040. 00
160, 170. 00
060, 090. 00
959, 800. 00
860, 300. 00
759, 560. 00
559,610.00
360, 420. 00
.159, 960. 00
167, 470. 00
14, 700, 000. 00 8, 667, 120. 00 ' 11, 774, 229. 02
$2, 035, 817. 04
1,831,651.22
1, 637, 355. 26
1, 4.52, 535. 10
1, 276, 814. 66.
1,111,117.32
9.52, 433. 76
681, 272. 62-
425, 997. 58
183,557.62
185, 676. .84
1 Add value .~f amounts deferred
REPORT OF THE SECRETARY OF THE TREASURY
233
STATEMENT OF AMOUNTS PAYABLE TO THE UNITED STATES
ON ACCOUNT OF PROPOSED REFUNDING BONDS TO BE ISSUED
BY RUMANIA, ETC.— Continued
Year
1940.
1941.
1942.
1943-
1944.
1945.
1946.
1947.
1948.
1949.
1950.
1951.
1952.
1953.
1954.
1955.
1956.
1957.
1958.
1959.
1960.
1961.
1962.
1963.
1964-
1965-
1966.
1967.
1968.
1969-
1970-
1971-
1972.
1973.
1974.
1975.
1976.
1977.
1978.
1979.
1980..
1981.
1982.
1983.
1984.,
1985-.
1986.
1987..
Principal
Add total amount received first 14 years.
860, 560. 43
430, 000. 00
985, 000. 00
523, 000. 00
045, 000. 00
551, 000. 00
039, 000. 00
510, 000. 00
962, 000. 00
395, 000. 00
808, 000. 00
200, 000. 00
571, 000. 00
920, 000. 00
247, 000. 00
550, 000. 00
828, 000. 00
081, 000. 00
308, 000. 00
508, 000. 00
680, 000. 00
823, 000. 00
936, 000. 00
018, 000. 00
068, 000. 00
084, 000. 00
066, 000. 00
013, 000. 00
923, 000. 00
794, 000. 00
626, 000. 00
417, 000. 00
165, 000. 00
870, 000. 00
529, 000. 00
142, 000. 00
706, 000. 00
220, 000. 00
681, OCO. 00
089, 000. 00
441,000.00
735, 000. 00
970, 000. 00
143, 000. 00
252, 000. 00
295, 000. 00
269, 000. 00
172, 000. 00
Annual
interest due
815,
800,
784,
768,
751,
734,
716,
697,
678,
658,
638,
617,
594,
572,
548,
524,
498,
472,
445,
417,
388,
358,
327,
295,
262,
227,
192,
155,
117,
077,
036,
994,
950,
905,
858,
809,
759,
707,
053,
598,
540,
480,
418,
355,
288,
220,
149,
76,
119.62
050. 00
475. 00
305.00
575. 00
285. 00
365. 00
850. 00
670. 00
825. 00
280. 00
000. 00
985. 00
200. 00
045. 00
250. 00
980. 00
835. 00
780. 00
780. 00
800. 00
805. 00
760. 00
630. 00
380. 00
940. 00
310. 00
455. 00
305. 00
790. 00
910. 00
595. 00
775. 00
450. 00
515. 00
970. 00
710. 00
700. 00
835. 00
115. 00
435. 00
725. 00
950. 00
005. 00
820. 00
325. 00
415. 00
020.00
Annual
principal due
55, 945, 699. 62
445,
462,
478,
494,
512.
529,
548,
567,
587,
608,
629,
651,
673,
697,
722,
747,
773,
800,
828,
857,
887,
918,
950,
984,
1,018,
1, 053,
1, 090,
1, 129,
1,168,
1, 209,
1, 252,
1, 295,
1,341,
1, 387,
1, 436,
1,486,
1, 539,
1, 592,
1, 648,
1, 700,
1, 765,
1, 827,
1, 891,
1,957,
2, 026,
2, 097,
2, 172,
560. 43
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000.00
000. 00
000. 00
000. 00
51, 860, 560. 43
Total
amount to be
paid annually
$2, 245,
2, 245,
2, 246,
2, 246,
2. 245,
2. 246,
2, 245,
2, 245,
2, 245,
2. 245,
2. 246,
2, 246,
2, 245,
2, 245,
2. 245,
2. 246,
2, 245,
2, 245,
2, 245,
2, 245,
2, 245,
2, 245,
2, 245,
2. 245,
2. 246,
2, 245,
2, 245,
2, 245,
2,246,
2. 245,
2, 245,
2. 246,
2, 245,
2, 246,
2, 245,
2, 245,
2. 245,
2. 246,
2. 245,
2. 246,
2, 246,
2. 245,
2, 245,
2. 246,
2. 245,
2. 246,
2, 246,
2, 248,
680. 05
050.00
475. 00
305. 00
575. 00
285. 00
365. 00
850. 00
670. 00
825. 00
280. 00
000. 00
985. 00
200. 00
645.00
250. 00
980. 00
835.00
780. 00
780. 00
800. 00
805. 00
760. 00
630. 00
380. 00
940. 00
310. 00
455. 00
305. 00
790. 00
910. 00
595. 00
775. 00
450. 00
515. 00
970. 00
710. 00
700. 00
835. 00
115.00
435. 00
725. 00
950. 00
005.00
820. 00
325. 00
415.00
020. 00
107, 806, 260. C6
14, 700, 000. 00
122, 506, 260. 05
234 report of the secretary of the treasury
Exhibit 27
[Public No. 168, Sixty-ninth Congress. H. R. 6777]
AN ACT TO AUTHORIZE THE SETTLEMENT OF THE INDEBTEDNESS
OF THE CZECHOSLOVAK REPUBLIC TO THE UNITED STATES
OF AMERICA
Be it enacted by the Senate and House of Representatives of the Zinited
States of America in Congress assembled, That the settlement of the
indebtedness of the Czechoslovak Republic to the United States of
America made by the World War Foreign Debt Commission and
approved by the President upon the terms and conditions as set
forth in Senate Document Numbered 6, Sixty-ninth Congress, first
session, is hereby approved in general terms as follows:
The net amount of the indebtedness in settlement of the financial
differences between the two Governments and/or their agencies, both
principal and interest, is fixed as of June 15, 1925, at $115,000,000.
The principal amount of the bonds to be delivered to the United
States is $185,071,023.07, the increase over the funded indebtedness
as of June 15, 1925, being due to the smaller payments during the
first eighteen years than would have been payable upon the basis of
the British-American settlement, this difference being funded over
the remaining forty-four years, compounded annually, at the rates
of 3 per centum per annum up to and including the tenth year and
3/^ per centum per annum from the eleventh to the eighteenth year,
both inclusive. The principal of the bonds shall be paid in semi-
annual installments on June 15 and December 15 of each year up
to and including June 15, 1943, and thereafter in annual installments,
subject to the right of the Czechoslovak Republic, after June 15,
1943, to make such payments in three-year periods. The first
thirty-six semiannual installments are to be $1,500,000 each, and
are to be paid without interest on June 15 and December 15 of
each year. The remaining forty-four installments are to be paid
annually on June 15 of each year, with interest at the rate of 3 3^
per centum per annum from June 15, 1943, payable semiannually
on June 15 and December 15 of each year. The amount of the
installment due in the nineteenth year is $1,296,023.07, the annual
installments to increase thereafter until in the sixty-second year
the amount of the final installment will be $5,685,000, the aggregate
installments being equal to the total face amount of bonds to be
delivered, namely, $185,071,023.07.
The Czechoslovak Republic shall have the right to pay off addi-
tional amounts of the principal of the bonds on June 15 or December
15 of any year upon not less than ninety days' advance notice.
Any payments of interest or principal may be made at the option
of the Czechoslovak Republic in any United States obligations
issued after April 6, 1917, such obligations to be taken at par and
accrued interest.
Approved, May 3, 1926.
REPORT OF THE SECRETARY OF THE TREASURY
235
Exhibit 28
statement of amounts payable to the united states on
account of proposed refunding bonds to be issued
BY CZECHOSLOVAKIA (INTEREST AT 3 PER CENT PER ANNUM
FOR FIRST 10 YEARS AND 3}^ PER CENT THEREAFTER— ALL
DEFERRED AMOUNTS ARE COMPOUNDED ANNUALLY AT THOSE
RATES)
Fiscal
year
1926.-.
1927--.
1928. . .
1929. -_
1930- -.
1931...
1932...
1933...
1934...
1935...
1936---
1937...
1938. . .
19.39-.-
1940-..
1941-.-
1942-..
1943...
Principal
$115, 000,
114,425,
113,830,
113,220,
112,590,
111,945,
111,280,
110,590,
109, 880,
109, 150,
108, 400,
107, 630,
106, 835,
106, 010,
105, 155,
104, 270.
103, 3,55,
102, 410,
Annual
interest
due
Annual
principal
due
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00'
000.00 3
000.00 3
000.00 3,
450, 000. 00
432, 750. 00
414,900.00
396, 600. 00
377, 700. 00
358, 350. 00
338, 400. 00
317, 700. 00
296, 400. 00
274, 500. 00
794, 000. OOi
767, 050. OOi
739. 225. 00
710, 350. OO!
680, 425. 00|
649. 450. 001
617, 425. 00|
584, 3.50. 00
$575, 000. 00
595, 000. 00
610, 000. 00
630, 000. 00
645, 000. 00
665, 000. 00
690, 000. 00
710. 000. 00
730, 000. 00
7,50, 000. 00
770, 000. 00
795, 000. 00
825, 000. 00
855, 000. 00
885, 000. OOi
91,5,000.00'
945, 000. 00'
980, 000. 00'
Total
amount due
annually
Total
amount to
be paid
annually
000.00
750. 00
900. 00
600. 00
700.00 3,
350.00 3,
400.00, 3,
700. OOi 3,
400.00! 3,
500.00' 3,
000.00 3,
050. OOi 3,
22.5.00! 3_
3.50.00; 3,
425.00 3,
450.00 3,
42.5.00 3,
350.00' 3,
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
000, 000.
Amount
deferred
each year
101, 430, 000. 00 63, 199, 575. 00 13, 570, 000. 00 76. 769, 575. 00 54, 000, OOP. 00 22, 769, 575. 00 ' 29,641, 023. 07
025, 000. 00
027, 750. 00
024, 900. 00
026, 6 0. 00
022, 700. 00
023, 350. 00
028, 400. 00
027, 700. 00
026, 400. 00
024, 500. 00
564, 000. 00
562, 050. 00
564, 225. 00
565, 350. 00
565, 425. 00
564, 450. 00
562, 425. 00
564, 3.50. 00
Value of each
deferred
amount on
nineteenth
year
$1,761,
1,714,
1, 659,
1, 614,
1, .561,
1, 516,
1, 479,
1, 435,
1,392,
1, 349,
1, 989,
1, 920,
1, 857,
1, 796,
1, 735,
1, 675,
1,617,
1, 564,
086. 23
379. 79
8 -i 1.06
158. 82
192. 58
684. 65
775. 62
697. 46
117.83
068. 77
842. 79
156. 21
806. 57
273. 56
613.31
877. 95
109. 87
350. 00
Fiscal year
Principal
Annual interest
due
Annual prin-
cipal due
Total amount
to be paid
annually
1944
$131,071,023.07
129, 775, 000. 00
128, 435, 000. 00
127, 0,50, 000. 00
125, 615, 000. 00
124, 130, 000. 00
122, 590, 000. 00
121, 000, 000. 00
119. 355, 000. 00
117,650,000.00
115,885,000.00
114,060,000.00
112,170,000.00
110.210,000.00
108, 185, 000. 00
106, 085, 000. 00
103,915,000.00
101, 670, 000. 00
99, 345, 000. 00
96, 940. 000. 00
94, 450, 000. 00
91, 875, 000. 00
89, 210, 000. 00
86, 450, 000. 00
83, 595, 000. 00
80, 640, 000. 00
77, 580, 000. 00
74, 415, 000. 00
71, 135. 000. 00
67, 740. 000. 00
64, 230, 000. 00
60. 595. 000. 00
56, 835, 000. 00
52, 945. 000. 00
48, 915, 000. 00
44, 745, 000. 00
40, 430, 000. 00
35, 965, 000. 00
31, 340, 000. 00
26, 555, 000. 00
21. 605. 000. 00
16, 480, 000. 00
11,175,000.00
5, 685. 000. 00
$4, 587, 485. 81
4,542,125.00
4, 495, 225. 00
4, 446, 750. 00
4, 396, 525. 00
4, 344, 550. 00
4, 290, 6.50. 00
4, 235, 000. 00
4. 177, 425. 00
4, 117. 7,50. 00
4, 055, 975. 00
3, 992, 100. 00
3, 925, 950. 00
3, 857, 350. 00
3, 786, 475. 00
3, 712, 975. 00
3, 637, 025. 00
3, 558, 450. 00
3, 477, 075. 00
3, 392, 900. 00
3, 305, 750. 00
3, 215, 625. 00
3, 122, 350. 00
3. 025, 750. 00
2, 925, 825. 00
2, 822, 400. 00
2, 715, 300. 00
2, 604, 525. 00
2, 489, 725. 00
2, 370, 900. 00
2, 248, 050. 00
2, 120, 825. 00
1, 989, 225. 00
1,853,075.00
1, 712, 025. 00
1, 566, 075. 00
1, 415, 050. 00
1, 258, 775. 00
1, 096, 900. 00
929, 425, 00
756, 175. 00
576, 800. 00
391, 125. 00
198, 975. 00
$1,296,023.07
1, 340, 000. 00
1,385,000.00
1, 435, 000. 00
1, 485, 000. 00
1, 540, 000. 00
1, 590, 000. 00
1, 645, 000. 00
1, 705, 000. 00
1, 765, 000. 00
1, 825, 000. 00
1, 890, 000. 00
1, 960, 000. 00
2, 025, 000. 00
2, 100, 000. 00
2, 170, 000. 00
2, 245, 000. 00
2, 325, 000. 00
2, 405. 000. 00
2, 490, 000. 00
2, 575, 000. 00
2, 665, 000. 00
2. 760, 000. 00
2, 855, 000. 00
2. 955, 000. 00
3, 060, 000. 00
3, 165, 000. 00
3, 280, 000. 00
3, 395, 000. 00
3, 510, 000. 00
3, 635, 000. 00
3, 760, 000. 00
3, 890, 000. 00
4, 030, 000. 00
4, 170, 000. 00
4,315,000.00
4, 465, 000. 00
4, 625, 000. 00
4, 785, 000. 00
4, 950, 000. 00
5,125,000.00
5, 305, 000. 00
5, 490, 000. 00
5, 685, 000. 00
$5, 883, 508. 88
5, 882, 125. 00
5, 880, 225. 00
5 881 750 00
1945
1946
1947. .
1948
5, 881, 525. 00
5, 884, 550. 00
5, 880, 650. 00
5, 880, 000. 00
1949-
1950...
1951
1952
5, 882, 425. 00
5, 882, 750. 00
1953.
1954
5, 880, 975. 00
1955
5, 882, 100. 00
1956.
5, 885, 9.50. 00
5, 882, 350. 00
1957..
1958
5, 886, 475. 00
1959.
5, 882, 975. 00
1960. .. .
5,882,025.00
1961
5, 883, 450. 00
1962
5, 882. 075. 00
1963
5, 882, 900. 00
1964
5, 880. 750. 00
1965
5, 880, 625. 00
1966 . .
5, 882, 350. 00
1967 .
5, 880, 750. 00
1968.
5, 880, 825. 00
1969. ..
5, 882, 400. 00
1970 . -
5. 880, 300. 00
1971
5. 884, 525. 00
1972.
5, 884, 725. 00
1973 . . .
5, 880, 900. 00
1974
5, 883, 050. 00
1975.
5, 880, 825. 00
1976 .
5, 879, 225. 00
1977.
5, 883, 075. 00
1978 . .
5, 882, 025. 00
1979
5,881,075.00
1980.
5, 880, 050. 00
1981-. -
5, 883, 775. 00
1982
5,881.900.00
1983..
5, 879, 425. 00
1984 . .
5, 881, 175. 00
1985
5. 881, 800. 00
1986
5, 881, 125. 00
1987 - -.-
5, 883, 975. 00
Add total amount received first 18
years...
127,740,410.81
131, 071, 02.3. 07
258,811,433.88
54, 000, 000. 00
1 I
312,811,433.88
' Add value of amounts deferred.
11438— 26t 17
236 report of the secretary of the treasury
Exhibit 29
agreement for the funding of the indebtedness of
FRANCE TO THE UNITED STATES
Agreement made the 29th day oj April, 1926, at the City of Washington,
District of Columbia, between the French Republic, hereinafter called
France, party of the first part, and the United States of America,
hereinafter called the United States, party of the second part
WHEREAS, France is indebted to the United States as of June 15,
1925, upon obligations in the aggregate principal amount of $3,340,-
510,043.72, together with interest accrued and unpaid thereon; and
WHEREAS, France desires to fund said indebtedness to the
United States, both principal and interest, through the issue of
bonds to the United States, and the United States is prepared to
accept bonds from France upon the terms hereinafter set forth;
Now, therefore, in consideration of the premises and of the mutual
covenants herein contained, it is agreed as follows:
1. Amount of Indebtedness. — The amount of indebtedness to be
funded, after allowing for certain cash payments made or to be made
by France is $4,025,000,000, which has been computed as follows:
Principal of obligations held for cash ad-
vanced under Liberty Bond Acts $2, 9:33, 405, 070. 15
Accrued and unpaid interest at 4J<^%
to December 15, 1922 445, 066, 027. 49
Principal of obligations given for sur-
plus war supplies purchased on
credit 407, 341, 145. 01
Interest at 4}^ % fropi the last interest-
pavnicnt date prior to Deccml)er 15,
1922, to December 15, 1922 6, 324, 940. 79
$3, 37S, 471, 097. 64
413, 666, 085. 80
Total indebtedness as of December 15, 1922 3, 792, 137, 18:?. 44
Accrued and unpaid interest at 3% per annum on this
amount from December 15, 1922, to June 15, 1925 284, 410, 288. 75
Total indebtedness as of .Tune 15. 1 925., 4, 076, 547, 472. 19
Credits :
Payments received on account of
interest between December 15,
1922, and June 15, 1925 $.50, 917, 643. 13
Payments on account of principal
since December 15, 1922 2:50, 171. 44
Interest on principal payments at
3% per annum from date of pay-
ment to June 15, 1925 1. 12, 970. 73
51, 160, 785. 30
Net indebtedness as of June 15, 1925 4, 025, 386, 686. 89
To be paid in cash upon execution of agreement 386, 686. 89
Total indebtedness to be funded into bonds 4, 025, 000, 000. 00
2. Payment. — In order to provide for the payment of the indebted-
/ ness thus to be funded, France will issue to the United States at par,
' bonds of France in the aggregate principal amount of $4,025,000,000,
dated June 15, 1925, and maturing serially on the several dates and
in the amounts fixed in the following schedule:
KEPOET OF THE SECRETARY OF THE TREASURY
237
June li
1926_
1927-
1928_
1929_
1930_
1931-
1932-
1933-
1934-
1935-
1936.
1937-
1938-
1939-
1940-
1941-
1942.
1943-
1944.
1945.
1946.
1947.
1948.
1949.
1950.
1951_
1952 _
1953.
1954 _
1955.
1956.
1957.
$30,
30,
32,
32,
35,
1,
11,
21,
36,
42,
52,
63,
68,
74,
80,
51.
57,
58,
60,
61,
62,
63,
65,
66,
67,
55,
56,
57,
59,
60,
62,
63,
000,
000,
500.
500,
000.
350,
363,
477,
691,
058,
479,
004,
634,
320,
063.
728;
763,
918,
097,
299,
525,
775,
051,
352,
679,
040,
416,
827,
272,
754,
273,
830.
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
500. 00
135. 00
900. 35
825. 41
413. 07
207. SO
249. 88
592. 38
798. 30
872. 58
450. 02
719. 03
093. 41
035. 28
015. 98
516. 30
026. 63
047. 16
088. 10
837. 33
858. 27
279. 71
961. 71
785. 76
655. 40
490. 79
1958.
1959-
1960-
1961.
1962-
1963-
1964-
1965-
1966.
1967-
1968-
1969-
1970-
1971-
1972-
1973-
1974-
1975-
1976.
1977.
1978.
1979.
1980.
1981-
1982.
1983.
1984 _
1985.
1986.
1987.
June 15-
$65,
426,
259.
21
55,
474,
298.
82
57,
138,
527.
79
58,
852,
683.
62
60,
618,
264.
13
62,
436,
812.
05
64,
309,
916.
42
66,
239,
213.
91
58,
704,
122.
05
60,
820,
866.
32
62,
949,
596.
64
65,
152,
832.
52
67,
433,
181.
66
69,
793,
343.
02
72,
236,
110.
02
74,
764,
373.
88
77,
381,
126.
96
80,
089,
466.
40
82,
892,
597.
73
85,
793,
838.
65
88,
796,
623.
00
91
904,
504.
81
95
121,
162.
48
98
450,
403.
16
10]
896,
167
27
105
462
533
13
109
153
721
79
112
974
102
05
116
928
195
62
113
694
786
64
Total 4, 025, 000, 000. 00
Provided, However, That France, at its option, upon not less than
ninety days' advance notice to the United States, may postpone
so much of any payment on account of principal and/or interest
falling due in any one year as hereinabove provided after June 15,
1926, and prior to June^lG, 1932, as shall be in excess of $20,000,000
in any one year, to any subsequent June 15 or December 15 not more
than three years distant from its due date, and upon like notice
France, at its option, may postpone any payment on account of
principal falling due as hereinafter provided after June 15, 1932,
to any subsequent June 15 or December 15 not more than three years
distant from its due date, but any such postponement shall be only
on condition that in case France shall at any time exercise this option
as to any payment of principal and/or interest, the payment falling
due in the third succeeding year can not be postponed at all unless
and until the payment of principal and/or interest due three years,
two years and one year previous thereto shall actually have been
made. All such postponed payments shall bear interest at the rate of
4/4% per annum payable semiannually.
3. Form of Bond. — All bonds issued or to be issued hereundex,
to the United States shall be, ^payable to the Government of the
^^United States of America, or order, and shall be signed for France
by its Ambassador at Washington, or by its other duly authorized"
representative. The bonds shall be substantially in the form set
forth in the exhibit hereto annexed and marked "Exhibit A", and
shall be issued in 62 pieces with maturities and in denominations as
hereinabove set forth and shall bear no interest until June 15, 1930,
and thereafter shall bear interest at the rate of 1% per annum from
238 REPORT OF THE SECRETARY OF THE TREASURY
June 15, 1930, to June 15, 1940; at the rate of 2% per annum from
June 15, 1940, to June 15, 1950; at the rate of 23^% per annum from
June 15, 1950, to June 15, 1958; at the rate of 3% per annum from
June 15, 1958, to June 15, 1965, and at the rate of 33^% per annum
after June 15, 1965, all payable semiannually on June 15 and
December 15 of each year.
4. Method oj Payment. — All bonds issued or to be issued hereunder
shall be payable, as to both principal and interest, in United States
gold coin of the present standard of value, or, at the option of France,
upon not less than thirty days' advance notice to the United States,
in any obligations of the United States issued after April 6, 1917,
to be taken at par and accrued interest to the date of payment here-
under.
All payments, whether in cash or in obligations of tlie United
States, to be made by France on account of the principal of or interest
on any bonds issued or to be issued hereunder and held by the United
States shall be made at the Treasury of the United States in Washington,
or, at the option of the Secretary of the Treasury of the United States,
at the Federal Reserve Bank of New York, and if in cash shall be
made in funds immediately available on the date of payment, or if in
obligations of the United States shall be in form acceptable to the
Secretary of the Treasury of the United States under the general
regulations of the Treasury Department governing transactions in
J United States obligations.
5. Exemption from Taxation. — The principal and interest of all
bonds issued or to be issued hereunder shall be paid without deduction
for, and shall be exempt from, any and all taxes or other public dues,
present or future, imposed by or under authority of France or any
political or local taxing authority within France, whenever, so long
as, and to the extent that beneficial ownership is in (a) the Govern-
ment of the United States, (b) a person, firm, or association neither
domiciled nor ordinarily resident in France, or (c) a corporation not
organized under the laws of France.
6. Payments hejore Maturity. — France, at its option, on June 15
or December 15 of any year, upon not less than ninety days' advance
notice to the United States, may make advance payments in amounts
of $1,000 or multiples thereof, on account of the principal of any bonds
issued or to be issued hereunder and held by the United States. Any
such advance payments shall be applied to the principal of such
bonds as may be indicated by France at the time of the payment.
7. Exchange for MarTcetable Ohligations. — France will issue to the
United States at any time, or from time to time, at the request of the
Secretary of the Treasury of the United States, in exchange for any
or all of the bonds issued hereunder and held by the United States,
definitive engraved bonds in form suitable for sale to the public, in
such amounts and denominations as the Secretary of the Treasury of
the United States may request, in bearer form, with provision for
registration as to principal and/'or in fully registered form, and other-
wise on the same terms and conditions, as to dates of issue and ma-
turity, rate or rates of interest, if any, exemption from taxation, pay-
ment in obligations of the United States issued after April 6, 1917,
and the like, as the bonds surrendered on such exchange. France
will deliver definitive engraved bonds to the United States in accord-
ance herewith within six months of receiving notice of any such
REPORT OF THE SECRETARY OF THE TREASURY 239
request from the Secretary of the Treasury of the United States, and
pending the deHvery of the definitive engraved bonds will deliver,
at thei request of the Secretary of the Treasury of the United States,
temporary bonds or interim receipts in form satisfactory to the Sec-
retary of the Treasury of the United States within thirty days of the
receipt of such request, all without expense to the United States.
The United States, before offering any such bonds or interim receipts
for sale in France, will first offer them to France for purchase at par
and accrued interest, if any, and France shall likewise have the
option, in lieu of issuing any such bonds or interim receipts, to make
advance redemption, at par and accrued interest, if any, of a corre-
sponding principal amount of bonds issued hereunder and held by
the United States. France agrees that the definitive engraved bonds
called for by this paragraph shall contain all such provisions, and
that it will cause to be promulgated all such rules, regulations, and
orders as shall be deemed necessary or desirable by the Secretary of
tlie Treasury of the United States in order to facilitate the sale of
t1i(> ])onds in the United States, in France or elsewhere, and that if
re(i nested by the Secretary of the Treasury of the United States, it
will use its good offices to j^ccure the listing of the bonds on such
stock ejichanges as the Secretary of the Treasury of the United Staf?"v
liiay specify.
KT'Cdncellation and Surrender of Obligations. — Upon the execution
of this Agreement, the delivery to the United States of the principal
amount of bonds of France to be issued hereunder, together with
satisfactory evidence of authority for the execution of this Agree-
ment by the representative of France and for the execution of the
bonds to be issued hereunder, the United States will cancel and sui*^
render to France at the Treasury of the United States in Washington,j
the obligations of France held by the United States.
9. Notices. — Any notice, request, or consent under the hand of tho
Secretary of the Treasury of the United States, shall be deemed ai
taken as the notice, request, or consent of the United States, ai; 1
shall be sufficient if delivered at the Embassy of France at Wash-
ington or at the office of the Ministry of Finance at Paris; and anj
notice, request, or election from or by France shall be sufficient if
delivered to the American Embassy at Paris or to the Secretary of
the Treasury at the Treasury of the United States in Washingtom
The United States in its discretion may waive any notice required
hereunder, but any such waiver shall be in writing and shah not
extend to or affect any subsequent notice or impair any right of the
United States to require notice hereunder.
10. Compliance with Legal Requirements. — France represents and
agrees that the execution and delivery of this Agreement have in all
respects been duly authorized and that all acts, conditions, and legal
formalities which should have been completed prior to the making
of this Agreement have been completed as required by the laws of
France and in conformity therewith.
11. Counterparts. — This Agreement shall be executed in two
counterparts, each of which shall have the force and effect of an
original.
IN WITNESS WHEREOF France has caused this Agreement
to be executed on its behalf by Hon. Henry B^renger, its Ambassador
Extraordinary and Plenipotentiary at Washington, thereunto duly
240 REPORT OF THE SECRETARY OF THE TREASURY
^authorized, subject, however, to ratification in France, and the
Unite(i States has likewise caused this Agreement to be executed on
its behalf l)y the Secretary of the Treasury as Chairman of the
^Vorld Wai- Foreign Debt Commission, with the approval of the
President, subject, however, to the approval of Congress, pursuant
"to the Act of Congress approved Fe})ruary 9, 1922, as amended by
the Act of Congress approved February 28, 1923, and as further
amended by the Act of Congress approved January 21, 1925, all on
the dav and year first above written.
The French Republic,
By Henry Berenger,
The United States of America,
For the World War Foreign Debt Commission:
By Andrew W. Mellon,
Secretary of the Treasury avd Chairman of the Commission.
Approved :
Calvin Coolidge,
President.
Exhibit A
(Form of Bond)
The Republic of France
$ No.
The Republic of France, hereinafter called France, for value
received, promises to pay to the Government of the United States of
America, hereinafter called the United States, or order, on June 15,
19 , the sum of Dollars ($ ), and to pay
interest upon said principal sum after June 15, 1930, at the rate of 1%
per annum from June 15, 1930, to June 15, 1940, at the rate of 2%
per annum from June 15, 1940, to June 15, 1950, at the rate of 2^4%
per annum from June 15, 1950, to June 15, 1958, at the rate of 3%
per annum from June 15, 1958, to June 15, 1965, and at the rate of
''^^2% pw annum after June 15, 1965, all payable semiannualh^ on
the 15th day of December and June in each year. This l>ond is
payable as to both principal and interest in gold coin of the United
States of America of the present standard of value, or, at the option
of France, upon not less than thirty days' advance notice to the
United States, in any obligations of the United States issued after
April 6, 1917, to be taken at par and accrued interest to the date of
payment hereunder.
This bond is payable as to both principal and interest without
deduction for, and is exempt from, aiw and all taxes, and other public
dues, present or future, imposed bj^ or under authority of France or
any political or local taxing authority within France, whenever, so
long as, and to the extent that, beneficial ownership is in (a) the Gov-
ernment of the United States, (b) a person, firm, or association
neither domiciled nor ordinarily resident in France, or (c) a corporation
/—"not organized under the laws of France. This bond is payable as to
I both principal and interest at the Treasury of the United States in
I Washington, D. C, or at the option of the Secretary of the Treasury
\ of the United States at the Federal Reserve Bank of New York.
EEPORT OF THE SECRETARY OF THE TREASURY 241
This bond is issued pursuant to the provisions of paragraph 2 of
an Agreement dated April 29, 1926, between France and the United
States, to which Agreement this bond is subject and to which refer-
ence is hereby made.
IN WITNESS WHEREOF, France has caused this bond to be
executed in its behalf by its Ambassador Extraordinary and Pleni-
potentiar3^ at Washington, thereunto duly authorized, as of June
15, 1925.
The French Republic:
Ambassador Extraordinary and Plenipotentiary.
Exhibit 30
PRESS STATEMENT BY THE WORLD WAR FOREIGN DEBT COM-
MISSION GIVING THE TERMS OF THE AGREEMENT FOR THE
SETTLEMENT OF THE INDEBTEDNESS OF FRANCE TO THE
united states
Thursday, April 29, 1926.
The World War Foreign Debt Commission made the following
announcement to-day:
The American oommissioii has reached an agreement with Ambassador Ber-
enger for a settlement of the indebtedness of France to the United States. The
amount to be funded has been calculated on the same basis as in other debt
settlements, at 4J^ per cent interest to December 15, 1922, and at 3 per cent
interest thereafter to June 15, 1925, the date of the agreement. The total to be
funded after the cash payment to adjust the amount to round figures is
$4,025,000,000. Of this $4,025,000,000, $3,340,000,000 represents principal,
and $685,000,000 the accrued interest to the date of the agreement.
The agreement provides for annuities commencing with $30,000,000 in the
fiist year, and reaching $125,000,000 in the seventeenth year and thereafter
continuing at this figure, except for the sixty-second year, which is slightly less.
Under the agreement the total of the principal funded will be paid in full. On
this principal, interest will be paid as follows: After the first 5 years and for the
next 10 years 1 per cent per annum; for the succeeding 10 years 2 per cent per
annum; for the succeeding S years 2J^ per cent per annum; for the succeeding 7
years 3 per cent per annum; and for the remaining 22 years of the period 3J^
per cent per annum.
The total pavments to be received are $6,847,674,104.17, and the present
value of these payments on a 4J^ per cent basis is $2,008,122,624, or practically
50 per cent of the debt funded, as compared with the Italian settlement of 26
per cent.
The best offer heretofore received from France was made by M. Caillaux in
October last, of $40,000,000 a vear for 5 vears, $60,000,000 a year for the next
7 years, and $100,000,000 for the succeeding 56 years. M. Caillaux included as
the essential element of his proposed settlement a revision clause, called by him
a "safeguard" clause, the effect of which was to relieve France if Germany did
not pay reparations. A comparison of the Caillaux offer and the present settle-
ment shows the following:
(1) In the settlement the "safeguard" clause has been eliminated.
(2) Total pavments to be received under the settlement arc $6,847,000,000,
as against $6,220,000,000 offered by M. Caillaux. an increase of $627,000,000.
The present value of the settlement on a 414 per cent basis is $2,008,000,000, as
against $1,755,000,000 present value of the Caillaux offer, an increase of
$253,000,000.
(3) In the first five vears Caillaux offered $200,000,000; under the settlement
we are to redeive $160,000,000. The shghtly easier terms for the first five
years were made necessarv because the present fiscal condition of the French
Government is less strong' than it was at the time of the negotiations last Sep-
tember. Upon the present exchange rates pavment of the first annuity of $30,-
000,000 requires that France shall find 898,200,000 francs. In October, last,
242
llEPOitl Oi' THE SECItEiAliY OF THE TltEASUllY
a payment of $40,000,000 would ha\c re(iuired Ihat France find only 845,700,000
francs. The lower annuity in dollars represents to-day a higher annuity in
francs than the Caillaux offer.
(4) In the sixth to the tenth vear Caillaux offered $300,000,000; the settlement
provides for the payment of $3bo,000,000.
(5) In the eleventh to the fifteenth year Caillaux ofTered $420,000,000; the
settlement re(|uires the payment of $520,000,000.
(6) Caillaux's maximum annuity was $100,000,000, reached after the twelfth
year; the maximum annuity in the settlement is $125,000,000, reached after the
sixteenth year.
In view of the enormous burden of the domestic debt of France, the difficulty
of raising by taxation a sufficient revenue to meet the charges of this debt, to
carry on the ordinary Government operations, and to find the exchange necessary
to pay her foreign debt to the ITnited States and to England, the commission be-
lieves that this settlement rej)rescnts substantially France's capacity to pay.
Unless France is enabled promptly to fix the amount of its obligations abroad
so that it may know definitely its commitments and may provide for them in its
budget, there might be grave danger of a comj)lete breakdown of French finances.
This would be a serious blow to the reestat)lishment of Europe and would inevit-
ably affect not only the payments now being made to the United States by France,
but would seriously curtail the sale by our farmers of our export surplus abroad.
It is felt that the settlement meets the requirement of the statute from which the
commission's authority is derived that it be just both to our own citizens and to
our ally in the war.
This settlement substantiallv completes the work of the commission, there
remaining but $295,000,000 unfunded out of a total of $10,102,000,000 war debt.
Of these, $193,000,000 is Russian and $24,000,000 Austrian, which has already
been extended by Congress for 20 years; $51,000,000 is Yugoslavian, $15,000,000
is Greek, and $12,000,000 Armenian.
Exhibit 31
STATEMENT OF AMOUNTS PAYABLE TO THE UNITED STATES ON
ACCOUNT OF THE PROPOSED REFUNDING BONDS TO BE ISSUED
BY FRANCE
Fiscal year
Annual interest
Principal
Per cent Payments
Annual principal
payments
Total annual
payments
1926
1927
1928
1929
19.30
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945....
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
$4, 025, 000,
3, 995, 000,
3, 965, 000,
3, 932, 500,
3, 900, 000,
3, 8S5, 000,
3, 863, 650,
3, 852, 286,
3, 830, 809,
3, 794, 117,
3, 752, 058,
3, 699, 579,
3, 636, 575,
3, 567, 940,
3, 493, 620,
3, 413, 556,
3,361,827,
3, 304, 064,
3, 245, 145,
3, 185, 048,
3, 123, 749,
3,061,224,
2, 997, 448.
2, 932, 397,
2, 866, 045,
2, 798, 366,
2, 743, 325,
2, 686, 908,
2, 629, 081,
2, 569, 808,
2, 509, 053,
2, 446, 780,
2, 382, 949,
2, 317, 523,
000.00
000.00
000.00
000. 00
000.00
000.00
000. 00
500.00
365. 00
458. 65
633. 24
219. 57
011.77
761.89
169. 51
371.21
498. 63
048. 61
329. 58
236. 17
200. 89
184. 91
668. 61
641.98
594. 82
506. 72
669. 39
811. 12
531.41
569. 70
783. 94
128.54
631. 75
372. 54
2V2
214
2H
3
$38, 650,
38, 636,
38, 522,
38, 308,
37,941,
37, 520,
36, 995,
36, 365,
35, 679,
34, 936,
68,271,
67, 236,
66,081,
64, 902,
63, 700.
62,474,
61, 224,
59, 948,
58, 647,
57, 320,
69, 959,
68, 583,
67, 172,
65, 727,
64, 245,
62, 726,
61, 169,
59, 573,
69, 525,
000.00
500.00
865.00
093. 65
174. 59
586, 33
792. 20
750. 12
407. 62
201. 70
127.42
549. 98
280. 97
906. 59
964. 72
984.02
483.70
973. 37
952.84
911.90
162. 67
141.73
720. 29
038. 29
214. 24
344. 60
503.21
740. 711
701. 18
$30, 000,
30, 000,
32, 500,
32, 500,
35, 000,
1, 350,
11,363,
21,477,
36,691,
42, 058,
52, 479,
63, 004,
68, 634,
74, 320,
80, 063,
51,728,
57, 763,
58,918,
60, 097,
61, 299,
62, 525,
63, 775,
65,051,
66, 352,
67, 679,
55, 040,
56,416,
57, 827,
59, 272,
60, 754,
62, 273,
63, 830,
65, 426,
55, 474.
000.00
000.00
000. 00
000.00
000.00
000.00
500. 00
135. 00
906. 35
825. 41
413.67
207. 80
249. 88
592. 38
798. 30
872. 58
450. 02
719.03
093.41
035. 28
015. 98
516. 30
026. 63
047. 16
088. 10
837. 33
858. 27
279. 71
961.71
785. 76
655. 40
496. 79
259. 21
298. 82
$30, 000,
30, 000,
32, 500,
32, 500,
35, 000,
40, 000,
50. 000,
00, 000,
75, 000,
80, 000,
90, 000,
100, 000,
105, 000,
110,000,
115,000.
120, 0(K),
125, 000.
125, 000,
125,000,
125,000,
125, 000,
12.5,000,
125, 000,
125,000.
125,000,
125,000.
125, ono,
125, 000,
125,000,
125,000,
12.5,000,
125,000,
125, 000,
125, 000,
000.00
000.00
000. 00
000. 00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000, 00
000, 00
000, 00
000. 00
000.00
REPORT OF THE SECRETARY OP THE TREASURY
243
STATEMENT OF AMOUNTS PAYABLE TO THE UNITED STATES ON
ACCOUNT OF THE PROPOSED REFUNDING BONDS "^"0 BE ISSUED
BY FRANCE — Continued
Fiscal year
1960.
1961-
1962.
1963.
1964-
1965-
1966.
1967.
1968-
1969-
1970-
1971-
1972-
1973-
1974-
1975-
1976-
1977-
$2, 262,
2, 204,
2. 146,
2, 085,
2, 023,
1, 958,
1, 892,
1, 833,
1, 772,
1, 709,
1, 644,
1, 577,
1, 507,
1,435,
1, 360,
1, 283,
1, 203,
1, 120,
1978 1 1,034,
Principal
1979-
1980-
1981-
1982-
1983.
1984.
1985.
1986-
1987-
Totai.
945,
853,
758,
660,
558,
452,
343,
230,
113,
049, 073. 72
910, 545. 93
057, 862. 31
439, 598. 18
002, 786. 13
692, 869. 71
453, 655. 80
689, 533. 75
868, 667. 43
919, 070. 79
766, 238. 27
333, 056. 61
539, 713. 59
303, 603. 57
539, 229. 69
158,102.73
068, 636. 33
176,038.60
382, 199. 95
585, 576. 95
681, 072. 14
559, 909. 66
109, 506. 50
213, 339. 23
750, 806. 10
597, 084. 31
622, 982. 26
694, 786. 64
Annual interest
Per cent
3
3
3
3
3
3
3J^
3H
m
Z'A
3H
V-A
iVi
3\
VA
3J4
■iA
3A
VA
3A
3^2
354
3H
i'A
Payments
$67,861,
66, 147,
64,381,
62, 563,
60, 690,
58, 760,
66, 235,
64, 179,
62, 050,
59, 847,
57, 566,
55, 206,
52, 763,
50, 235,
47,618,
44, 910,
42, 107,
39, 206,
36, 203,
33, 095,
29, 878,
26, 549,
23, 103,
19,537,
15,846,
12,025,
8,071,
3, 979,
472. 21
316.38
735. 87
187. 95
083. 58
786. 09
877. 95
133. 68
403. 30
167. 48
818. 34
656. 98
889. 98
626. 12
873. 04
533. 60
402. 27
161.35
377. 00
495. 19
837. 52
596.84
832. 73
466. 87
278. 21
897. 95
804. 38
317.53
Annual principal
payments
$57, 138,
58, 852,
60, 618,
62, 436,
64, 309,
66, 239,
58, 764,
60, 820,
62, 949,
65, 152,
67,433,
69, 793,
72, 236,
74, 764,
77,381,
80, 089,
82, 892,
85, 793,
88, 796,
91,904,
95, 121,
98, 450,
101, 896,
105, 462,
109, 153,
112, 974,
116,928,
11.3,694,
527. 79
683. 62
264. 13
812. 05
916. 42
213. 91
122. 05
866. 32
596. 64
832. 52
181.66
343. 02
110.02
373. 88
126. 96
466. 40
597. 73
838. 65
623.00
504. 81
162. 48
403. 16
167. 27
533. 13
721.79
102. 05
195. 62
786. 64
2, 822, 674, 104. 17 4, 025, 000, 000. 00 6, 847, 674, 104. 17
Total annual
payments
$125, 000,
125, 000,
125, 000,
125, 000,
125, 000,
125,000,
125, 000,
125, 000,
125,000,
125,000,
125,000,
125,000,
125,000,
125,000,
125, 000,
125, 000,
12.5,000,
125,000,
125, 000,
125, 000,
125, 000,
125,000,
125, 000,
125,000,
125,000,
125, 000,
125, 000,
117,674,
000.00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000. 00
000.00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
104. 17
Exhibit 32
PRESS STATEMENT BY SECRETARY MELLON CONCERNING THE
BRITISH-FRENCH AND THE AMERICAN-FRENCH DEBT SETTLE-
MENTS
Friday, July 16, 1926.
Secretary Mellon, chairman of the World War Foreign Debt Com-
mission, in view of the erroneous comparisons in the American press
of the British-French settlement and the American-French settlement,
made the following statement:
The settlement of the French obligations to America has been made along
somewhat different lines from the settlement of French obligations to Great
Britain. With the British, banking advances and commercial obligations for
war stocks have V)een treated separately from the war del)t proper. If, however,
we compare the settlement of all of France's indebtedness to England with the
settlement of her indebtedness to America, France has had generous treatment
from us. Particularly is this true during the first five years, which will be most
difficult- for France. The present Caillaux-Churchill settlement does not differ
materially from the tentative Caillaux-Churchill agreement of last August, an
analysis of which appears in the documents of the Caillaux negotiations with the
American commission of September last, which was released to the press October,
1, 192.5.
The American settlement with France embraces all of France's indeVjtedness
and represents, in the opinion of the American commission, France's capacity to
pay. For obhgations incurred by France to America after the war ended,
France owes us to-day $1,655,000,000. The present vahie of the entire French-
American settlement, "at the rate of interest carried in France's existing obligations,
is $1,681,000,000. In effect, therefore, America has canceled the obligations of
France for all advances during the war, and France in the Mellon-Berenger
agreement has undertaken only to repay the advances and obligations subsequent
to the armistice. No other creditor of France has accorded such generous
treatment.
11438— 26t 18
244 repoht of thk secretary of the treasury
Exhibit 33
«
AGREEMENT FOR THE FUNDING OF THE INDEBTEDNESS OF THE
KINGDOM OF THE SERBS, CROATS, AND SLOVENES TO THE
UNITED STATES
Agreement made the 3rd day of May, 1926, at the City of Vtashington,
District of Columbia, between the Kingdom of the Serbs, Croats and
Slovenes, party of the first part, and the United States of America,
hereinafter called the United States, party of the second part
WHEREAS, the Kino:dom of the Serbs, Croats and Slovenes is
indebted to the United States as of June 15, 1925, upon obligations in
the aggregate principal amount of $51,037,886.39, together with
interest accrued and unpaid thereon; and
WHEREAS, the Kingdom of the Serbs, Croats and Slovenes
desires to fund said indebtedness to the United States, both principal
and interest, through the issue of bonds to the United States, and
the United States is prepared to accept bonds from the Kingdom of
the Serbs, Croats and Slovenes upon the terms hereinafter set forth;
Now, therefore, in consideration of the premises and of the mutual
covenants herein contained, it is agreed as follows:
1. Amount of Indebtedness. — The amount of indebtedness to be
funded, after allowing for certain cash payments made or to be made
by the Kingdom of the Serbs, Croats and Slovenes is $62,850,000,
which has been computed as follows:
Principal of obligations acquired for cash
advanced under Liberty Bond Acts $26, 126, 574. 59
Accrued and unpaid interest at 4J^% per
annum to December 15, 1922 4, 073, 423. 14
$30, 109, 997. 73
Principal of obligations acquired by Secretary
of War for surplus war supplies sold on
credit 24, 978, 020. 99
Accrued and unpaid interest at ^}/i% per
aiuium to Deccmljcr 15, 1922 3, 358, 790. 45
28,336,811.44
58, 536, 809. 17
Accrued interest at 3% per annum from December 15, 1922. to
.June 15, 1925 4,390,260. 69
62, 927, 069. 86
Credits:
Payments on account of princii)al since
December 15, 1922 $66,709. 19
Interest thereon at 3% to June 15, 1925.- 3, 248. 28
— 69, 957. 47
Total net indebtedness as of June 15, 1925 62, 857, 112. 39
To l)e paid in cash upon execution of Agreement 7, 112. 39
Total indebtedness to be funded into bonds 62, 850, 000. 00
2. Payment. — In order to provide for the payment of the indebted-
ness thus to be funded the Kingdom of the Serbs, Croats and Slovenes
will issue to the United States at par bonds of the Kingdom of the
Serbs, Croats and Slovenes in the aggregate principal amount of
$62,850,000, dated June 15, 1925, and maturing serially on the several
dates and in the amounts fixed in the following schedule:
REPORT OF THE SECRETARY OF THE TREASURY
245
June 15-
1926.
1927.
1928.
1929.
1930_
1931.
1932.
1933.
1934.
1935.
1936.
1937.
1938.
1939.
1940.
1941.
1942.
1943.
1944.
1945.
1946.
1947.
1948.
1949.
1950.
1951.
1952.
1953-
1954.
1955-
1956-
1957-
$200, 000
200, 000
200, 000
200, 000
200, 000
225, 000
250, 000
275, 000
300, 000
325, 000
350, 000
375, 000
400, 000
450, 000
488, 000
524, 000
562, 000
604, 000
648, 000
697, 000
707, 000
718, 000
729, 000
746, 000
764, 000
782, 000
801, 000
820, 000
838, 000
855, 000
873, 000
892, 000
June 15-
1958.
1959.
1960.
1961.
1962.
1963.
1964.
1965.
1966.
1967.
1968.
1969.
1970.
1971.
1972.
1973.
1974.
1975.
1976.
1977.
1978.
1979.
1980.
1981.
1982.
1983.
1984.
1985.
1986.
1987.
$912, 000
938, 000
961, 000
984, 000
, 018, 000
, 054, 000
, 090, 000
, 129, 000
, 168, 000
, 209, 000
, 251, 000
, 295, 000
, 340, 000
, 388, 000
, 436, 000
, 486, 000
, 538, 000
, 592, 000
, 648, 000
, 706, 000
, 765, 000
, 827, 000
, 891, 000
, 957, 000
, 026. 000
, 097, 0(i0
, 170, 000
, 246, 000
, 324, 000
, 406, 000
Total 62,850,000
Provided, However, That the Kingdom of the Serbs, Croats and
Slovenes, at its option, upon not less than ninety days' advance
notice to the United States, may postpone any payment on account
of principal falling due as hereinabove provided, after June 15, 1937,
to any subsequent June 15 or December 15 not more than two years
distant from its due date, but only on condition that in case t!)f'
Kingdom of the Serbs, Croats and Slovenes shall at any time exer-
cise this option as to any payment of principal, the payment falling
due in the second succeeding year can not be postponed at all unless
and until the payments of principal due two j^ears and one year
previous thereto shall actually have been made. All such postponed
payments of principal shall bear interest at the rate of 4}^% per
annum payable semiannually.
3. Form of Bond. — All bonds issued or to be issued hereunder to
the United States shall be payable to the Government of the United
States of America, or order, and shall be signed for the Kingdom of
the Serbs, Croats and Slovenes by its Minister at Washington, or
by its other duly authorized representative. The bonds shall be
substantially in the form set forth in the exhibit hereto annexed and
marked "Exhibit A," and shall be issued in 62 pieces with maturities
and in denominations as hereinabove set forth and shall bear no
interest until June 15, 1937, and thereafter shall bear interest at the
rate of %oi 1% per annum from June 15, 1937, to June 15, 1940; at
the rate of 3^ of 1% per annum from June 15, 1940, to June 15, 1954;
at the rate of 1% per annum from June 15, 1954, to June 15, 1957; at
the rate of 2% per annum from June 15, 1957, to June 15, 1960, and
at the rate of 3^% per annum after June 15, 1960, all payable
246 IJKt'dKT OF 11 1 1: SKCHKTARY OV TITE THEASURY
semiannually on June 15 and December 15 of each year, until the
principal thereof shall have been i^aid.
4. Method of Payment. — All bonds issued or to be issued hereunder
shall be payable, as to both principal and interest, in United States
pold coin of the present standard of value, or, at the option of the
Kingdom of the Serbs, Croats and Slovenes, upon not less than thirty
days' advance notice to the United States, in any obligations of the
United States issued after April G, 1917, to be taken at par and
accrued interest to the date of payment hereunder.
All payments, whether in cash or in obligations of the United
States, to be made by the Kingdom of the Serbs, Croats and Slovenes
on account of the principal of or interest on any bonds issued or to be
issued hereunder and held by the United States, shall bo made at the
Treasury of the United States in Washington, or, at the option of the
Secretary of the Treasury of the United States, at the Federal
Reserve Bank of New York, and if in cash shall be made in funds
immediately available on the date of payment, or if in obligations
of the United States shall be in form acceptable to the Secretary of
the Treasury of the United States under the general regulations of
the Treasury Department governing transactions in United States
obligations.
5. Exem'ption from Taxation. — The principal and interest of all
bonds issued or to be issued hereunder shall be })aid without deduction
for, and shall be exem])t from, any and all taxes or other public dues,
present or future, imposed by or under authority of the Kingdom
of the wSerbs, Croats and Slovenes or any political or local taxing
authority within the Kingdom of the Serbs, Croats and Slovenes,
whenever, so long as, and to the extent that beneficial ownership is in
(a) the Government of the United States, (b) a person, firm or asso-
ciation neither domiciled nor ordinarily resident in the Kingdom
of the Serbs, Croats and Slovenes, or (c) a corporation not organized
under the laws of the Kingdom of the wSerbs, Croats and Slovenes.
(>. Payments before Maturity. — The Kingdom of the Serbs, Croats
and Slovenes, at its option, on June 15 or December 15 of anv year,
upon not less than ninety days' advance notice to the United S:ates,
may make advance payments in amounts of $1,000 or multiples
thereof, on account of the principal of any bonds issued or to be
issued hereunder and held by the United States. Any such advance
payments shall be applied to the principal of such bonds as may be
indicated by the Kingdom of the Serbs, Croats and Slovenes at the
time of the payment.
7. Exchanye for MarJcetaUe Obligations. — The Kingdom of the
Serbs, Croats and Slovenes will issue to the United States at any
time, or from time to time, at the request of the Secretary of the
Treasury of the United States, in exchange for any or all of the bonds
issued hereunder and held by the United States, definitive engraved
bonds in form suitable for sale to the public, in such amounts and
denominations as the Secretary of the Treasury of the United States
may request, in bearer form, with provision for registration as to
principal, and/or in fully registered form, and otherwise on the same
terms and conditions, as to dates of issue and maturity, rate or
rates of interest, if any, exemption from taxation, payment in obliga-
tions of the United States issued after April 6, 1917, and the like, as
the bonds surrendered on such exchange. The Kingdom of the
REPORT OF THE SECRETARY OF THE TREASURY 247
Serbs, Croats and Slovenes will deliver definitive engraved bonds
to the United States in accordance herewith within six months of
receiving notice of any such request from the Secretary of the Treasury
of the United States, and pending the delivery of the definitive
engraved bonds will deliver, at the request of the Secretary of the
Treasury of the United States, temporary bonds or interim receipts
in form satisfactory to the Secretary of the Treasury of the United
States within thirty days of the receipt of such request, all without
expense to the United States. The United States, before offering
any such bonds or interim receipts for sale in the Kingdom of the
Serbs, Croats and Slovenes, will first offer them to the Kingdom of the
Serbs, Croats and Slovenes for purchase at par and accrued interest,
if any, and the Kingdom of the Serbs, Croats and Slovenes shall like-
wise have the option, in lieu of issuing any such bonds or interim
receipts, to make advance redemption, at par and accrued interest, if
any, of a corresponding principal amount of bonds issued hereunder
and held by the United States. The Kingdom of the Serbs, Croats,
and Slovenes agrees that the definitive engraved bonds called for by
this paragraph shall contain all such provisions, and that it will
cause to be promulgated all such rules, regulations, and orders as
shall be deemed necessary or desirable by the Secretary of the
Treasury of the United States in order to facilitate the sale of the
bonds in the United States, in the Kingdom of the Sorbs, Croats and
Slovenes or elsewhere, and that if requested by the Secretary of the
Treasury of the United States, it will use its good offices to secure the
listing of the bonds on such stock exchanges as the Secretary of the
Treasury of the United States may specify.
8. Cancellation and Surrender of Obligations. — Upon the execution
of this Agreement, the delivery to the United States of the principal
amount of bonds of the Kingdom of the Serbs, Croats and Slovenes
to be issued hereunder, together with satisfactory evidence of au-
thority for the execution of this Agreement by the representative
of the Kingdom of the Serbs, Croats and Slovenes and for the execu-
tion of the bonds to be issued hereunder, the United States will
cancel and surrender to the Kingdom of the Serbs, Croats and
Slovenes at the Treasury of the United States in Washington, the
obligations of the Kingdom of the Serbs, Croats and Slovenes held
by the United States.
9. Notices. — Any notice, request, or consent under the hand of
the Secretary of the Treasury of the United States, shall be deemed
and taken as the notice, request, or consent of the United States,
and shall be sufficient if delivered at the Legation of the Kingdom
of the Serbs, Croats and Slovenes at Washington or at the office of
the Ministry of Finance at Belgrade; and any notice, request or
election from or by the Kingdom of the Serbs, Croats and Slovenes
shall be sufficient if delivered to the American Legation at Belgrade
or to the vSecretary of the Treasury at the Treasury of the United
States in Washington. The United States in its discretion may waive
any notice required hereunder, but any such waiver shall be in writing
and shall not extend to or affect any subsequent notice or impair
any right of the United States to require notice hereunder.
10. Compliance with Legal Requirements. — -The Kingdom of the
Serbs, Croats and Slovenes represents and agrees that the execution
and delivery of this Agreement have in all respects been duly au-
248 HKl'OliT OF THE SECRETARY OF THE TREASURY
thorizod and that all acts, conditions, and legal formalities which
should have been completed prior to the making of this Agreement
have been completed as recjuired by the laws of the Kingdom of
the Serbs, Croats and Slovenes and in conformity therewith.
11. Counterparts.— Tlu?, Agreement shall be executed in two coun-
terparts, each of which sliall have the force and effect of an original,
IN WITNESS WHEREOF the Kingdom of the Serbs, Croats
and Slovenes has caused this Agreement to be executed on its behalf
by Dr. George Diouritch, its Envoy Plxtraordinary and Minister
Plenipotentiary to the Court of St. James and Commissioner for
the funding of the debt at Washington, thereunto duly authorized,
subject, however, to ratification in the Kingdom of the Serbs, Croats
and Slovenes, and the United States has likewise caused this Agree-
ment to be executed on its behalf by the Secretary of the Treasury,
as Chairman of the W^orld War Foreign Debt Commission, with the
approval of the President, subject, however, to the approval of
Congress, pursuant to the Act of Congress approved February 9,
1922, as amended by the Act of Congress approved February 28,
1923, and as further amended by the Act of Congress approved
January 21, 1925, all on the day and year first above written.
The Kingdom of the Serbs,
Croats and Slovenes.
By George Diouritch.
The United States of America,
For the World War Foreign Debt Commission:
By Andrew W. Mellon,
Secretary of the Treasury and Chairman of the Commission.
Approved :
Calvin Coolidge,
President.
Exhibit A
(Form of bond)
The Kingdom of the Serbs, Croats and Slovenes
$ No.
The Kingdom of the Serbs, Croats and Slovenes, for value received,
promises to pay to the Government of the United States of America,
hereinafter called the United States, or order, on June 15, 19 , the
sum of Dollars ($ ), and to pay interest upon
said principal sum after June 15, 1937, at the rate of 3^ of 1% per
annum from June 15, 1937, to June 15, 1940, at the rate of 3^ of 1%
per annum from June 15, 1940, to June 15, 1954, at the rate of 1%
per annum from June 15, 1954, to June 15, 1957, at the rate of 2%
per annum from June 15, 1957, to June 15, 1960, and at the rate of
3H% Pt^i' annum after June 15, 1960, all payable semiannually on the
15th day of December and June in each year, until the principal hereof
shall have been paid. This bond is payable as to both principal and
interest in gold coin of the United States of America of the present
standard of value, or, at the option of the Kingdom of the Serbs,
Croats and Slovenes, upon not less than thirty days' advance notice
EEPOET OF THE SECRETARY OF THE TREASURY 249
to the United States, in any obligations of the United States issued
after April 6, 1917, to be taken at par and accrued interest to the date
of payment hereunder.
This bond is payable as to both principal and interest without
deduction for, and is exempt from, any and all taxes and other public
dues, present or future, imposed by or under authority of the Kingdom
of the Serbs, Croats and Slovenes or any political or local taxing au-
thority within the Kingdom of the Serbs, Croats and Slovenes when-
ever, so long as, and to the extent that, beneficial ownership is in
(a) the Government of the United States, (b) a person, firm, or asso-
ciation neither domiciled nor ordinarily resident in the Kingdom of
the Serbs, Croats and Slovenes, or (c) a corporation not organized
under the laws of the Kingdom of the Serbs, Croats and Slovenes.
This bond is payable as to both principal and interest at the Treasury
of the United States in Washington, D. C, or at the option of the
Secretary of the Treasury of the United States at the Federal Reserve
Bank of New York.
This bond is issued pursuant to the provisions of paragraph 2 of
an Agreement dated May 3, 1926, between the Kingdom of the
Serbs, Croats and Slovenes and the United States, to which xigree-
ment this bond is subject and to which reference is hereby made.
IN WITNESS WHEREOF, the Kingdom of the Serbs, Croats and
Slovenes has caused this bond to be executed in its behalf by its
Envoy Extraordinary and Minister Plenipotentiary at Washington,
thereunto duly authorized, as of June 15, 1925.
The Kingdom of the Serbs, Croats and Slovenes
By
Envoy Extraordinary and Minister Plenipotentiary.
Exhibit 34
PRESS STATEMENT BY THE WORLD WAR FOREIGN DEBT COM-
mission giving the terms of the agreement for the
settlement of the indebtedness of the kingdom of
the serbs, croats, and slovenes to the united states
Saturday, May 1, 1926.
The World War Foreign Debt Commission made the following
announcement to-day:
The American commission has reached an agreement with Dr. George
Diouritch, commissioner of the Kingdom of the Serbs, Croats, and Slovenes, for
the settlement of the indebtedness of his Government to the United States. The
amount to be funded has been calculated on the same basis as in the other debt
settlements, at 4M per cent interest to December 15, 1922, and at 3 per cent
interest thereafter until June 15, 1925, as of which date the debt is funded. The
total to be funded after a cash payment to adjust the amount to round figures is
$62,850,000. Of this amount $51,037,886.39 represents principal, and $11,812,-
113.61 the accrued interest to the date of the settlement.
The agreement provides for annuities commencing with $200,000 a year for
the first five years, increasing $25,000 a year during the succeeding seven years.
For the remaining years, payments on account of principal increase annually.
Commencing with the thirteenth year interest is fixed at one-eighth of 1 per cent
for 3 years; one-half of 1 per cent for the succeeding 14 years; 1 per cent for the
following 3 years; 2 per cent for the next 3 years, and 3M per cent during the last
27 j^ears of the period.
250
REPORT OF THE SECRETARY OF THE TREASURY
The basis of settlement lias been the repayment of the principal in full and pay-
ment of interest in accordance with the capacity of Yugoslavia to pay. The
present value of the payments on a 41^ per cent basis is $20,236,715, or about 32
per cent of the del)t funded.
Exhibit 35
STATEMENT OF AMOUNTS PAYABLE TO THE UNITED STATES ON
ACCOUNT OF THE PROPOSED REFUNDING BONDS TO BE ISSUED
BY THE KINGDOM OF THE SERBS, CROATS, AND SLOVENES
Year
1926.
1927.
1928.
1929.
1930.
1931.
1932.
1933.
1934.
193.=).
1936.
1937.
1938.
1939.
1940.
1941.
1942.
1943.
1944.
1945.
1946.
1947.
1948.
1949.
1950.
1951.
1952.
1953-
1954.
1955.
1956.
1957.
1958.
1959.
1960.
1961.
1962.
1903.
1904.
1965.
1966.
1967.
1968.
1969.
1970-
1971.
1972.
1973.
1974.
1975.
1976.
1977.
1978.
1979.
1980.
1981.
19S2.
1983.
1984.
1985.
1986.
1987.
Principal
Total.
$62, 850,
62, 650,
62, 450,
62, 2,50,
62, 0.iO,
61, 850,
61, 625.
61, 375.
61, 100,
60,800,
60, 475,
60, 125,
59, 750,
59, 350,
58, 900,
58,412,
57, 888,
57, 320,
56, 722,
56, 074,
55, 377,
54, 670,
53, 952,
53, 223,
52, 477,
51,713,
50,931,
50, 130,
49, 310,
48, 472,
47, 617.
46, 744,
45, 852,
44, 940,
44, 002,
43,041,
42, 057,
41,039,
39, 985,
38, 895,
37, 766,
36, 09S,
35, 389,
34, 138,
32, 843,
31, 503,
30,11,'-),
28, 679,
27, 193,
25. 655,
24, 063,
22,41,5,
20, 709,
18, 944,
17,117.
15, 226,
13, 269,
11,243,
9, 146,
6, 976,
4, 730,
2,406,
000. 00
000.00
000. 00
000.00
0(K). 00
000.00
000. ou
000. 00
000. 00
000. 00
000.00
000.00
000. 00
000.00
000. 00
000. 00
000. 00
000.00
000. 00
000.00
000.00
000.00
000. 00
000. 00
000. 00
000.00
000. 00
000. 00
000.00
000. 00
000.00
000.00
000. 00
000. 00
000.00
000. 00
000.00
(M)0. 00
000.00
000. 00
000. 00
000.00
000.00
000. 00
000. 00
000. 00
000. 00
my 00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
000.00
Aniiual interest
Per cent
Vs
'A
%
Vi
Vi
¥z
J4
Yi
\i
Yi
Yi
H
Yi
Yi
Y2
1
1
1
2
2
2
3}
3}
3^2
3J/2
3^2
■iY>
31/2
33^2
332
312
Payments
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
3J4l 1,
3Vj
3}2l
33/2
33'i
314
332
332
332
332
31.2
332
33i
33^
33/2
334
3h
$74, 687. 50
74, 187. .50
73, 625. 00
292, 060. 00
289, 440. 00
286, 630. 00
283, 610. 00
280, 370. 00
276, 885. 00
273, 350. 00
269, 700. 00
266,115.00
262, 385. 00
258, 565. 00
254, 655, 00
250, 650. 00
246, 550. 00
484, 720. 00
476. 170. 00
467, 440. 00
917,040.00
898, 800. 00
880, 040. 00
,506, 435. 00
471,995.00
436, 365. 00
399, 475. 00
361, 325. 00
321,810.00
280, 930. 00
238,615.00
191, 830. CO
149, 50.'). 00
102, 605. 00
0,=4, 025. 00
003, 765. 00
951,755.00
897, 925. 00
842, 205. 00
784, 525. 00
724,81.5.00
()63, 040. 00
,599, 095. 00
.532, 910. 00
464,415.00
393, .50.''-. 00
320,110.00
244, 160. 00
165, 550. 00
84, 210. 00
.Vnnual
princi pal
payments
Total annual
payments
32, 327, 635. 00
$200,
200,
200,
200,
200,
225,
250,
275,
300,
325,
350,
375,
400,
450,
488,
524,
562.
604,
648,
697,
707,
718
729,
746
764,
782,
801,
820,
838,
855,
873,
892,
912,
938,
961,
984,
1,018,
1. 054.
1, 090,
1, 129,
1, 108,
1,209,
1,251
1,295
1,340,
1.388,
1,436,
1, 486,
1, 538,
1,,592,
1,648,
1,706,
1, 765,
1,82'
1,891,
1, 9.57,
2, 02(>,
2, 09'
2, 170,
2, 246,
2, 324,
2, 406,
000.00
000. 00
000. 00
000.00
000.00
000.00
000.00
000. 00
000.00
0(K). 00
000. IK)
000. 00
000.00
000. 00
0(X). 00
000.00
000. 00
000. 00
000.00
000.00
000.00
000.00
000 00
000.00
000. 00
000.00
000.00
0(M). 00
coo. 00
000.00
000.00
000.00
000.00
000.00
000.00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
000. 00
000.00
000. 00
000. 00
000. 00
000. 00
000.00
000.00
000.00
000. 00
000.00
000.00
000.00
000.00
000. 00
000.00
000. 00
000. 00
000.00
000. 00
000.00
62,850,000.00 \ 95,177,635.00
REPORT OF THE SECRETARY OF THE TREASURY 251
Exhibit 36
statement by secretary mellon before the ways and
means committee concerning the settlements of the
indebtedness of france and the kingdom of the serbs,
CROATS, AND SLOVENES
May 20, 1926.
On January 4, 1926, I appeared before the committee in connection
with the debt settlements with Belgium, Czechoslovakia, Esthonia^
Italy, Latvia, and Rumania, which were then before you for con-
sideration. I discussed briefly the principles apphed by the com-
mission in negotiating and effecting a settlement.
It is not necessary for me to repeat what I stated at that time.
Since then the commission has concluded two additional settlements,
one with France, the other with the Kingdom of the Serbs, Croats,
and Slovenes, or Yugoslavia. These have been presented to Congress
for approval.
I. SETTLEMENT WITH FRANCE
Referring first to the settlement with France: Tlie amount to be
funded has been calculated on the same basis as in the other debt
settlements, at 434 per cent interest to December 15, 1922, and at 3
per cent interest thereafter to June 15, 1925, the date of the agree-
ment. The total to be funded, after a cash payment of S386,686.89
to adjust the amount to round figures, is $4,025,000,000. Of this
amount $3,340,000,000 represents principal and $685,000,000 the
accrued interest to the date of the agreement.
Under the agreement France pays $30,000,000 a year the first two
years; $32,500,000 a year the third and fourth years, and $35,000,000
the fifth year. The annuities increase each year,reaching$125, 000,000
in the seventeenth year, thereafter continuing at that figure, except
for the sixty-second year, when the payment is approximately
$118,000,000. Under the agreement the total principal of the funded
debt (including $685,000,000 accrued interest) will be repaid in full
with interest on the funded principal as follows: After the first 5
years and for the next 10 years, 1 per cent per annum; for the suc-
ceeding 10 years, 2 per cent per annum; for the succeeding 8 years,
23/^ per cent per annum; for the succeeding 7 years, 3 per cent per
annum, and for the remaining 22 years, 33^ per cent per annum.
The total payments to be received from France on account of the
$3,340,000,000 originally loaned is $6,847,674,104.17. The present
value of these payments on a 434 per cent basis is $2,008,122,624,
or practically 50 per cent of the debt funded, as compared with the
Italian settlement of 26 per cent.
Although the United States has outstanding a substantial amount
of Liberty bonds bearing 434 per cent interest, a large part of the
Government's requirements are now being financed at a much lower
rate. The average cost of money to the United States probably
will continue to decline. Securities with high interest rates issued
during the war will be paid, redeemed, or refunded. If we assume
that the average cost of money to the United States for the next
62 years will approach a 3 per cent basis, and if we determine the
present value of the French annuities on that basis, we arrive at a
figure which would approximate their actual value to-day.
252 REPORT OF THE SECRETARY OF THE TREASURY
Tho present value of the French payments on a 3 per cent basis is
$2,734,000,000. This is approximatolv 82 per cent of the principal
amount of the S3,340,000,000 French debt.
Until the present negotiations and settlement the best offer received
from France was made last October after two weeks of negotiations
with a French commission. Under that offer France was to pay
§40,000,000 a year for 5 years, $60,000,000 a year for the next 7
years, and $100,000,000 a year for the succeeding 56 years. There
was included, however, as an essential element of the proposal, a
so-called "safeguard clause," the effect of which was to relieve
France of making payments to the United States if Germany did not
pay reparations. The receipt by the United States of the payments,
therefore, would be uncertain. A comparison of the previous offer
with the present settlement shows the following:
(1) The "safeguard clause" has been eliminated.
(2) Under the settlement the total payments to be received from
France are $6,847,000,000 against $6,220,000,000 under the ofter, an
mcrease of $627,000,000. The present value of this settlement on a
^H per cent basis is $2,008,000,000; the present value of the former
ofier was $1,755,000,000, an increase of $253,000,000.
(3) In the first five years France offered last October $200,000,000.
Under this settlement we are to receive $160,000,000. The slightly
smaller payments for the first five years were made necessary because
the present fiscal condition of France is less strong than It was at
the time of the negotiations last fall. Under present exchange rates
the payment of the first annuity of $30,000,000 requires that France
find approximately 1,060,000,000 francs. Last October to make a
payment of $40,000,000 France would have been required to find
846,000,000 francs. The lower annuity in dollars represents to-day
a higher annuity in francs.
(4) From the sixth to the tenth year under the offer the United
States would receive $300,000,000; under this settlement the United
States will receive $305,000,000.
(5) From the eleventh to the fifteenth year France offered
$420,000,000; under this settlement France will be required to pay
$520,000,000. ^ ^
(6) The maximum annuity under the offer was $100,000,000,
reached after the twelfth year; the maximum annuity in this settle-
ment IS $125,000,000, reached after the sixteenth year.
In conducting negotiations for settling the war debts we meet with
criticism from two extremes. One body of opinion would have us
forgive entirely the debts because the money was loaned during or
immediately after a war against a common enemy. Those who
maintain such a position fail to recognize the responsibility of the
representatives of a government to its citizens.
Public officials, whether in the legislative or executive branch
of the Government, are essentially trustees. They are trustees for
the citizens of their own country. They are not free to give away
the property of the beneficiaries of the trust. An individual can do
what he will with his own property. A public official, however,
must kepp firmly in view that he is dealing not with his own property
but with property intrusted to his care by the citizens of his country.
Moreover, those who urge a complete forgiveness of debts ignore
entirely the effect upon the country whose debt is forgiven. All
REPORT OF THE SECRETARY OF THE TREASURY 253
•self-respecting people desire to discharge their obligations. This is
true of nations as of men. It is true of France.
At the other extreme are those who insist that we should collect
the full principal and interest of the debts. In its final analysis
the maintenance of this position could but reach the practical result
that nothing would be collected, since the full payment of the debt is
beyond the capacity of the debtor. While a trustee may not give
trust money away, while he may not even be generous at the cost
of those for whom he is trustee, it is equally true that a trustee must
manage the trust with business intelligence. Any trustee would be
derelict in the performance of his duty if by demanding the impossible
he should lose the possible.
The settlement with France is but another application of the
principle of capacity to pay. I appreciate, as all reasonable men
must, that it is not possible for any set of men to determine with
mathematical accuracy the future capacity of a great nation to tax
itself and to transfer the avails of taxation to another nation. We
are forced to look at the present, and to estimate the future.
France at present is not able to set apart large sums to be trans-
ferred abroad as payments on account of her external debts. Despite
great efforts she has not yet fully repaired the losses in man power and
property caused by the war. Her domestic debt has reached enor-
mous proportions, her currency is inflated, and it is becoming increas-
ingly difficult to raise by taxation sufficient funds to meet the charges
on her debt and to pay her ordinary governmental expenditures.
Subject to the ill effects of a fluctuating currency, she has been making
every effort to balance her budget. France must fix the amount of
her obligations abroad so that she may definitely know all her com-
mitments. Having completed a settlement of her obligations to
this country, she has started negotiations with her other large creditor.
When a settlement has been reached with Great Britain, she will then
be in a position to balance her budget, check inflation, stabilize her
currency, and put her finances on a permanently sound basis. Until
these have been accomplished, France can not be expected to make
large payments on account of her war debts to the United States and
Great Britain. To insist on too heavy payments in the early years
might well jeopardize the accomplishment of these reforms essential
to her economic and financial rehabilitation.
Criticism has been made of France for the situation in which she
now finds herself. In our criticism we are likely to forget the factors
which contributed to that situation. The French people gave so
fully of their man power and their industry during the four years of
war, fought mainly on their own soil, that French taxation during
the period of the war and the period immediately following could
not be so heavy as in those countries which were never occupied by
the enemy. The richest industrial section of France lay directly in
the course of the German armies, and when recovered was in a
destroyed condition.
France was faced with the problem of deciding whether it would
leave the country in this condition, with its industry permanently
crippled, or would recondition the soil and rebuild its plants at
whatever cost, and thus increase the wealth-producing power of the
nation. The former course might have permitted more immediate
taxation. The latter course was in substance the re-creation of indus-
254 REPORT OF THE SECRETARY OF THE TREASURY
tries able in the future to bear a proper burden of taxation. France
chose the hitter course.
In my statement of January 4, 192G, I compared the burden of
the various setthMiients in terms of the total budget, total foreign
trade, and total national income and an average for the three indices.
The total budget represents what the government collects from
the people, the total foreign trade has an important bearing on the
capacity to transfer sums abroad, and the total annual income is in
final analysis the ultimate source of the country's capacity to pay.
The British settlement calls for an annual average payment
equivalent to 4.G per cent of the total British budget expenditures;
the Belgian settlement, 3.5 per cent; the Italian settlement to America
alone 5.17 per cent, and the F'rench settlement 7.33 per cent. The
]5ritish settlement calls for an average annual charge corresponding
to 1.9 per cent of the total British foreign trade, the Belgian settle-
ment 0.88 per cent, the Italian settlement 2.87 per cent, and the
French settlement 2.64 per cent. Great Britain's average annuity
represents 0.94 per cent of its national income, Belgium's 0.80 per
cent, Italy's 0.97 per cent, France's 1.47 per cent. If we average
the three indices, the comparative French burden of her debt would
be 3.81 per cent, the Italian, 3 per cent; the British, 2.4 per cent;
the Belgian, 1.75 per cent. .
If, instead of using the average annual annuity, we should compare
the present value of the settlements with the sum of these three
indices — the total budget, the total foreign trade, and total national
income for a year of each of these countries — the burden of the
French settlement represents 15 per cent, the British settlement
11.7 per cent of this sum, the Belgian settlement 7 per cent, and the
Italian settlement 8.58 per cent.
When discussing other debt settlements I have stressed the impor-
tance to America of the economic revival of Europe. When viewed
as a market for the surplus products of our fields, our mines, and our
industry, Europe must be taken as a whole. While the finances of
its nations are closely related, each presents a distinct problem
requiring individual treatment, but responsibility rests upon each
nation to effect its own stabilization. Our eft'orts to that end during
the past three years are known to all of you. We have concluded
debt settlements with 13 nations, among the larger being England,
Italy, and Belgium.
France is the last of our large debtors. Her future is bright.
She has been and is one of the great nations of the world. Her
people are able, hard-working, and frugal. W^hile the burden of the
debt settlement is relatively light in the earlier years, it is heavyjn
the latter years.
To have imposed too heavy a burden at the outset would have
rendered doubtful any subsequent payments.
The commission is confident that the settlement, giving due con-
sideration to the ability of the debtor as well as to the rights of the
creditor, is a just settlement, fair both to the American taxpayer
and to the French people.
II. SETTLEME?JT WITH THE KINGDOM OF THE SERBS, CROATS, AND
SLOVENES
The other settlement which is now before Congress is the settle-
ment with the Kingdom of the Serbs, Croats, and Slovenes. The
EEPORT OF THE SECRETAEY OP THE TREASURY
255
amount of the indebtedness to be funded was calculated on the same
basis as in the other debt settlements, at 4^^ per cent interest to
December 15, 1922, and at 3 per cent interest thereafter until eTune
15, 1925, as of which date the debt is funded. The total to be funded,
after allowing for a cash payment of $7,112.39 to adjust the amount
to round figures, is $62,850,000. Of this amount $51,037,886.39
represents principal and $11,812,113.61 the accrued interest to the
date of settlement.
Under the agreement, Yugoslavia is to pay an annuity of $200,000
a year for the first 5 years, increasing $25,000 a year for the succeeding
7 years. For the remaining 50 years payments on account of prin-
cipal increase annually. Commencing with the thirteenth year inter-
est is fixed at one-eighth of 1 per cent for 3 years; one-half of 1 per
cent for the next 14 years; 1 per cent for the next 3 years; 2 per cent
for the next 3 years; and 33^ per cent for the last 27 years of the
debt-funding period.
The total payments to be received under the settlement are
$95,177,635. The present value of the payments on a 434 P^r cent
basis is $20,236,000, or about 32 per cent of the debt funded. On a
3 per cent basis the present value is $30,286,000, or about 59 per
cent of the principal amount of the $51,000,000 Yugoslav debt.
The settlement is made on the basis of Yugoslavia's capacity to
pay. Although the country received considerable additions of ter-
ritor}- as a result of the war, it is relatively poor and its standard of
living is much the lowest of any of our debtors. It is almost totally
lacking in natural resources; its agriculture is poorly developed and
its industries are negligible. With the exception of 1924, its balance
of trade in recent j^ears has been adverse. The country was over-
run and devastated several times during the war. The work of
reconstruction has been carried on but slowly, the cost being met
•chiefly from German reparations. Railroad facilities, already inade-
quate, have been only temporarily restored. In an agricultural
•country without natural resources and lacking capital, increase in
wealth must necessarilj'' be slow. The commission feels that the
•settlement arrived at is fair and just to both countries.
Exhibit- 37
total amounts to be received by the treasury on ac-
count of principal and interest under the debt set-
tlements made with foreign governments (without
regard to any options that have been or may be
EXERCISED)
Belgium . - $417,780,000.00
Czechoslovakia 115.000,000.00
Estonia 13,830,000.00
Finland 9,000,000.00
France 4, 02,'i, 000, 000. 00
-Great Britain - --- 4,600.000.000.00
Hungary... 1,939,000.00
Italv . 2,042,000,000.00
Principal
Latvia.
Lithuania..
Poland
Rumania...
Yugoslavia.
5, 775, 000. 00
6, 030, 000. 00
178, 560, 000. 00
44, 590, 000. 00
62, 850, 000. 00
Interest
$310,
I 197,
19,
12,
2, 822,
6, 505,
2,
365,
8,
8,
257,
' 77,
32,
050, 500. 00
811,433.88
501, 140. 00
695, 055. 00
674, 104. 17
965, 000. 00
754. 240. 00
677, 500. 00
183, 635. 00
501, 940. 00
127, 550. 00
916, 260. 05
327, 635. 00
Total
.$727, 830,
312.811.
33, 331,
21, 695,
6, 847, 674,
11, 105, 965,
4, 693,
2, 407, 677,
13, 958,
14, 531,
435, 687,
122, 500,
95, 177,
500.00
433. 88
140. 00
055. 00
104. 17
000. 00
240. 00
500. 00
635. 00
940. 00
550. 00
260. 05
635. 00
Total.... 11,522,354,000.00 10,021,185,993.10 | 22,143.539,993.10
* Includes deferred pajrme nts which will be funded into principal.
256 report of the secretary of the treasury
Exhibit 38
press statement of the british account with the unit ed-
STATES IN CONNECTION WITH WAR LOANS
July 20, 1926.
The Treasury issued to-day the following statement:
A statement of the British account with the United States in connection with
war loans shows the following reported expenditures in the United States:
Munitions, including remounts $1, 330, 607, 8S3. 09.
jNluiiitions for other Govenunents 205, 495, 801. 10
Exchange and cotton purchases 1, 082, 419, 875. 31
Cereals: 1. 375. 379, 343. 57
Other foods 1, 169, 153, 585. 05-
Tobacco . :. 99, 174, 858. 34
Other supplies 215, 331, 787. 01
Shipping • 48, 890, 000. 00
Reimbursements 19, 302, 357. 55'
Interest 387, 732, 633. 50
Maturities 353, 501, 561. 66-
Relief 16, 000, 000. 00-
Silver 261, 643, 388. 81
Food for northern Russia 7, 029, 965. 94
Miscellaneous 47, 745, 629. 01
Total re})orted expenditures 7, 219, 408, 669. 94
These expenditures were met as follows:
By reimbursement from the other allies out of funds loaned
to those allies by the United States 1, 853, 612, 246. 37'
Bv dollar payments bv the United States Government for
"British currencies. . L 449, 496, 227. 55
By proceeds of rupee credits in gold from India 81, 352, 908. 06
Bv cash from Britain's "own independent resources" 760, 128, 929. 52
P^iindtKl in del)t settlement with the United States 4, 074, 818, 358. 44
7, 219, 408, 669. 94
From England's total reported expenditures in .Vniorica from April 6, 1917,.
to November 1, 1920, there should be deducted the $1,853,000,000 expenditures
for which Great Britain was .simply the i)urchasing agent for the other allies
and for which Grciat Britain was paid by the other allies from )uoney loaned to
them by the United States. This amount was not provided from England's
''own independent resources." This leaves $5,366,000,000. Of this amount,.
$1,682,000,000 represents "Exchange and cotton purchases." The greater part
of this expenditure was for the maintenance of sterling exchange, not neces.sary
for purchases in America, but which enabled England to make purchases in
other countries at an undei)reciated exchange rate; $2,643,000,000 was for food
and tobacco. A part of this item is probably included in the accomit out of which
England was reimbursed by the other allies and a part was resold by England
to its own civil jjopulation. To the extent of this resale England avoided the
nece.ssity of floating loans in its own country; $507,877,000 was for interest and
principal of England's commercial obligations maturing in America; $261,000,000
was for silver.
The total principal advances to England after the armistice were $581,000,000.,
Exhibit 39
SPEECH OF SECRETARY OF THE TREASURY MELLON BEFORE
THE UNION LEAGUE CLUB AT PHILADELPHIA ON MARCH 24,
1926, CONCERNING THE FISCAL RESTORATION OF EUROPE
War is a supreme effort. In it the individual merges his individu-
ality, his prejudices, and himself into the national spirit. With
EEPOKT OF THE SECEETAEY OF THE TREASURY 257
peace, this union of all in a common cause disappears. Again arise
selfishness and controversy exaggerated by the fact that victory has
not meant ease, but only more work. A nation's effort to win the
peace is much less effective than its effort to win the war, and to my
mind this is the reason why we find reconstruction so difficult. We
put every eft'ort into fighting the flood, and we hate the drudgery of
clearing the land of the mud and stones left by the retiring w^aters.
But this work must be done, and it requires clear eyes to see that
we Americans are acting in our own true interest in helping others
restore peace conditions. I wish to touch briefly upon some of the
aspects of this fiscal restoration in Europe and* of our own direct
concern therein.
If we think of the financial reorganization of Europe along the
same general lines as the reorganization of some large industrial cor-
poration heavily involved after a severe depression, I think we can
visualize in terms by wdiich you as business men will readily under-
stand the problems requiring solution. When through mismanage-
ment or misfortune a corporation has become financially embarrassed
and a plan for its future is to be worked out, the reorganization
managers must consider three things:
First, the expenses must be cut and sales increased, so that operating
loss be changed to operating profit. With a government, this means
that its budget must be balanced.
Second, the demand liabilities of the corporation must be deter-
mined and their payment so arranged that the corporation can meet
its obligations as they mature in the future. With a government,
this means the funding of its foreign indebtedness, now^ principally
the interallied war debts.
And, finally, the corporation must obtain new capital so as to pay
obligations which can not be funded and to make improvements
which will reduce costs and increase sales. With a government, this
means the obtaining of new loans abroad to stabilize the currency
and make productive the industries of the country.
The first problem, as you see, is entirely a matter of internal man-
agement. We in America have nothing to do with the budget of
another nation, either in the Treasury or as private lenders of capital.
There is the fact, however, that a nation will find difficulty in selling
bonds in America if it can not show its ability to meet current expenses
out of current revenues, just as it is impossible for reorganization
managers to get new capital if they can not show that their corpora-
tion can operate in the future at a profit. So we do exert an indirect
pressure upon even internal affairs abroad.
With the second problem the Government of the United States is
directly concerned. We contributed liberally in loans to our Allies
during the war, and we supported them, and many of the new nations
carved out of old countries in the period of tiieir extreme distress
immediately after fighting ceased. We have become, whether we
like it or not, the most important creditor of Europe. In this capac-
ity we are like the general creditors of the embarrassed corporation.
Our money is in and we want it out, but it is impossible to get more
than the debtor can pay. If we insist upon too difficult terms, we
receive nothing. We must then settle upon such terms as will give
our debtor reasonable opportunity to live and to prosper. More it
will not pay, and more we can not collect.
258 KHFOHT OF THK SECHI-nAltV OF THE THEA!?UKY
The third problem, that of new capital, is a matter for our private
bankers and for our investors. It is not an American Government
question. Like those who are asked to put money into the reorgan-
ized corporation, before they part with their money our investors
have a ri<j;ht to insist that the return be adequate, rislv considered;
that the borrower shall have put its financial house in order, actually
balanced its budget; and that the new loan shall contribute to the
productive capacity of the borrower and thus assure the loan's ability
to pay its way.
If, then, Europe is to be reestablished on a sound basis, it must
balance its budget, our Government must settle the war debts, and
the American investor, intelligently and profitably invest his sur-
plus capital abroad.
Budget equilibrium has been reached by the European nations
with some very important exceptions, and all, I think, now aj^preciate
the desiral)ility of obtaining this balance and are earnestly working
for it. We in the administration at Washington have been doing
our part, and there remains but France, Yugoslavia, and Greece
with whom debt-funding negotiations arc pending. The flotation
of foreign securities has become a commonplace in our money mar-
ket. We approach fiscal reconstruction in Europe.
But the question asked is what does all this reconstruction mean
to the ordinary American, not an investor, not a banker, not an
internationalist. I have outlined what must and is being done
toward reestablishment of sound fiscal conditions in Europe. I can
now show the material interest which everyone of us here in America
has to see that this stabilization is promptly effected.
Modern trade consists not in having each communit}^ sufficient
for its own needs, but in specialization of production and in con-
sumption throughout a large market. In the United States we may
grow wheat in the Dakotas, corn in Iowa, and fruit in Florida. We
may make steel at Pittsburgh, automobiles at Detroit, and shoes
in St. Louis. Through our efhcient transportation system we dis-
tribute articles to a market of 110, 000, 000 people of great consuming
capacity, speaking the same language and separated by not a single
customs barrier. In this market seems to me to lie the great indus-
trial power of America. Certainly nowhere else in the world does
such a favorable condition to industrial strength now exist. We
are enabled to manufacture cheaply because we manufacture in
quantity and in the territories where conditions of labor and raw
material are most favorable, and we can, and do, pay the highest
real wages in the history of labor. Our production, however, both
in agriculture and in industry exceeds even the capacity of our
great domestic market to consume. There is a surplus, and to dis-
pose of this surplus we must reach markets abroad, which means
having purchasers abroad with money or credit to buy.
Europe last year took from us $2,500,000,000 of our commodities,
principally foodstuffs, cotton, copper, and automobiles. Cut that
figure materially and consider its effect upon our prosperity. The
index of labor wages in 1925 was 222 as compared with 100 in 1913;
the cost of living 178; and of wholesale prices 159. Industry has
been able to pay these high wages because the large new investment
in equipment, the adoption of more efficient methods, and a con-
structive spirit in the worker have made labor more effective. The
REPORT OF THE SECRETARY OF THE TREASURY 259
margin between costs and prices is small. If costs should go up by
reason of lessened production, or prices should go down by reason
of narrower markets, the profit margin of industry might be ex-
hausted and depression and wage readjustments follow. It is the
same with agriculture. If the exportable surplus can not be dis-
posed of abroad, then prices in this country will drop. We all need
our best customer.
Europe can not continue to be a great consumer unless it be
restored to health. If, however, we can help the nations abroad get
on their feet, produce wealth, pay better wages, and buy, we share
in their prosperity. Just let me give you an instance. In negotiat-
ing the debt settlement with one of the smaller nations, it was shown
that the minimujn of existence in that country, a scale at which the
bulk of the peasants are now living, was $31 per man per year.
This included no meat, one suit of clothes, and one pair of sandals
a year. Think what it would mean in the aggregate to us to have
that country be able to increase the standard of living there so as
to include meat once a week, a cotton shirt once a month, and another
pair of shoes, and to have the bulk of the goods bought in America.
Look around the United States and note the improvement in general
prosperity through the increase in our own capacity to buy. Without
such increase the automobile, the telephone, the electric light, the
radio would be but comparatively insignificant industries. As
with Europe, so with the rest of the world, improvement elsewhere
means improvement to us.
Some of the debt settlements we have negotiated have been criti-
cized because it is claimed that our failure to collect the last cent
imposes an avoidable burden upon our taxpayers. I pass the prac-
tical fact that we have, I believe, made for the United States the
most favorable settlements which could be obtained short of force.
This criticism is without perspective and does not take conditions
in their true relative importance. I should rather have solvent
customers in the future which permit me to run a profitable business
than insist upon terms of debt settlement which will again force
my customers into bankruptcy. A business man would prefer
making $100 in his business than being repaid $5 of a debt. The
farmer or the laboring man would rather have a market for our
surplus in Europe than save a dollar of Federal taxes.
I have spoken to-night entirely from a material standpoint not
because I feel that America owes no moral obligation to assist
other peoples to work their way out of the wreckage of war. We
do, and we will carry out this duty. I "wish, however, to impress
upon you the fact that the administration believes not in charity
but in help, and our financial policies toward Europe are backed
not by sentiment but by sense.
Exhibit 40
LETTER FROM SECRETARY MELLON REPLYING TO MR. FRED-
ERICK W. PEABODY'S LETTER URGING CANCELLATION OF THE
SO-CALLED WAR DEBTS
July 14, 1926.
Dear Sir: By reference from the President, I have your letter
of June 30, 1926, urging cancellation by the United States of the
260 HKi'oirr OF THK sEcinyrAnv ok the treasury
so-callod war debts. Your arguments are confused, ])ut I believe
your points can be fairh'' summarized as follows:
1. As a le.ecal proposition, takinj? into account the message of
President Wilson, the debates in Congress, and the first Liberty
loan act authorizing advances to our Allies, the United States made
a gift and not a loan and neither party expected repayment.
2. As an equitable proposition, advances were nnide while the
Allies were fighting our battle for us and before we could put an
adequate military force in the field, and, therefore, the loans repre-
sent part of the cost to us of the war and should be canceled.
3. As a charitable proposition, America being wealthy and pros-
perous and the European countries being poor and heavily taxed, we
should, in the interest of humanity, cancel the debts.
The initial authority for the advances to foreign governments
occurs in the first Liberty loan act, passed just after we declared
war. As a lawjan-, you know that the interpretation of legislation
unambiguous on its face is determined from its language and not
from expressions in debates on the floor of the Congress. But even
ignoring this rule of construction, a reading of President Wilson's
message and of the debates shows no ground for your arguments.
The most that can be said of any expression you quote is a willing-
ness on the part of the speaker to make the loans even if our debtors
may not be good risks. This is far from an intention to make a
gift of the advances. Let us, however, consider the act itself. The
law is declared to be "for the purpose of more eft'eetually providing
for the national security and defense and prosecuting the war by
establishing credits in the United States for foreign governments."
A reading of section 2 is convincing that loans and not subsidies
were intended. The United States is authorized to purchase at par
the obligations of foreign governments. As to rate of interest and
other essentials the foreign governments' obligations are to have
the same terms and conditions as United States obligations (Liberty
bonds) issued under the authority of the act. Arrangements are
to be made for purchasing the foreign government obligations and
for the subse({uent payment thereof before maturity. If United
States bonds are converted into bonds bearing a higher interest
rate, the obligations of foreign governments are likcv\ise to be con-
verted. In section 3 of the same act, the Secretary of the Treasury
is authorized to receive on or before maturity payment of the foreign
government obligations; to sell the obligations at not less than the
purchase price, and to apply the proceeds of any payments made
on account of the obligations to the retirement of the debt of the
United States. It is clear that when the advances were made to
our Allies they knew and we knew they were loans, not gifts. From
the time of the original advjmces to date no responsible authority in
the United States Government has suggested cancellation, and each
of our debtor nations, except Russia, has recognized the debt created
by the advances and has offered to pay. The only question for
discussion in each settlement has been the extent of the capacity of
the debtor to make payment of an acknowledged liability.
Your second proposition is that the Allies held the line with men
until we could deliver an army and, therefore, cash advances made
during this period by the United States were our contribution to
the general cause of the war and should be canceled. I shall not
EEPOET OF THE SECRETARY OF THE TREASURY 261
'dispute with you the exact date when we became an effective force
■on the western front nor as to the time or extent of our service at
sea. We will assume America, as you infer, contributed nothing
military or naval to the common cause but only gave financial sup-
port. Even then you will have to admit that advances made to
our Allies after the armistice, when the war was over, can not be
•considered as a contribution pending effective entry into battle or
as saving American lives. We can eliminate at once, therefore, loans
made entirely after the armistice to Finland, Esthonia, Latvia,
Lithuania, Poand, Czechoslovakia, Hungary, Austria, Armenia, and
Rumania. The Allies to which we did make advances while the
war was on are England, France, Italy, Belgium, Serbia, and Russia.
As the figures I shall give will show, if we admit your argument is
sound, England alone is concerned.
The debt settlements have been negotiated on the basis of the
■capacity of the particular debtor to pay. None could pay its signed
obligations as called for by their terms. Accordingly, payment of
the principal had to be extended and the period of 62 years set in
the British agreement has been followed in all other agreements.
If the debtor nation paid the United States a rate of interest on the
postponed installments equivalent to the cost of money to us, we
would receive in present value payment of the full debt. Since,
however, such an interest rate is beyond the capacity of any of our
debtors to pay, the United States has, of necessity, accepted less
than the full value of the debt to the extent the interest to be re-
ceived under the settlement is below the cost of money to the United
States, now about 4^ per cent. Looking at the matter from the
standpoint of the debtor nation, the debtor has received a con-
'Cession in its debt to the extent the interest to be paid by it is below
the cost of money to the debtor. The obligations taken by us
from our debtors carry the interest rate of 5 per cent per annum.
Since this rate is less than most of the debtor nations now have to
pay for money, the rate of 5 per cent is certainly a fair measure of
the real burden put upon them by the settlements.
Let us see what relation the burden of our debt settlements bears
to our loans after the armistice. In this way we can determine accu-
rately our real contribution in money to the joint cause of the war.
In the case of England, postarmistice advances with interest amounted
to $660,000,000, and the present value of the entire debt settlement
is .13,297,000,000. It must be remembered that England borrowed a
large proportion of its debt to us for purely commercial as distinguished
from war purposes — to meet its commercial obligations maturing in
America, to furnish India with silver, to buy food to be resold to its
-civilian population, and to maintain exchange. Our loans to England
were not so much to provide war supplies as to furnish sterling for
home and foreign needs and to save England from borrowing from its
own people.
France's after-the-war indebtedness with interest amounts to
-$1,655,000,000. The settlement negotiated by Ambassador Berenger
with the American Debt Funding Commission has a present value
of $1,681,000,000.
Belgium's postarmistice borrowings with interest were S258,-
■000,000, and the present value of the settlement is $192,000,000. In
addition, Belgium has a share of the German reparations sufficient
•to pay her prearmistice debt to America.
262 REPORT OF THE SECRETARY OF THE TREASURY
With Italy the situation is simihir. Its postarmistice indebtedness
with interest is $800,000,000, and the present vahie of its debt settle-
ment is $426,000,000. It is the same as regards Serbia. In view of
these facts, in what respect do you still believe America has been
unfair to its allies?
The statement is made in your letter that the French debt settle-
ment takes annually about 60 per cent of the German reparation
payments which France is to receive. I believe you are not correctly
informed. France, in addition to reparations already received from
Germany, is to be paid under the Dawes plan 52 per cent of the
maxinmm reached three years from now of 2,500,000,000 gold marks
($625,000,000) after certain charges, about $300,000,000 annually.
The maximum annual payment required of France under our settle-
ment is $125,000,000, reached after the sixteenth year. I think you
will find that the reparations receivable from Germany by Belgium,
France, and Italy are more than the payments those nations have
agreed to make on their indebtedness to both the United States and to
England.
I come now to your third proposition: That to preserve our self-
respect and retain the affection of foreign nations for America we
must as a charity cancel the debts. A creditor is never popular, but
a debtor without credit is not in an enviable position. England's
prompt and courageous attitude when first of all othei-s it sought a
settlement of its debt seems to me to have been rewarded in her
present sound financial position, a rock in the turbulent seas of mone-
tary instability now washing over the other allied nations. Are you
so sure that your policy of cancellation will mean a happier future
for a world which will only continue to trust those who keep a promise
once made?
When cancellation of debts is viewed from the standpoint of the
United States you fail to recognize that the debt commission, the
President, and the Congress act not in their individual capacities
according to sentiment, but as trustees for those whom they represent,,
the American people. If these foreign debts are canceled the United
States is not released from its obligation to pay the very bonds
which were sold to our citizens to make the advances to the foreign
governments. We must collect through taxation from our people
if our debtors do not pay to us what they can. You call this a "spe-
cious reason," but nevertheless, again as a lawyer, you must know
the duty of a trustee. Were these trustees as certain as you seem to
be that their cestui qui trust the American people, demand a can-
cellation of the debts, it is within the province of popular government
to carry out that mandate. But neither generally from the people,
nor in the press, nor at all from the chosen representatives of the people
in Congress has come this demand.
I have, as have you, and every other good citizen, a profound
sympathy for the countries suffering from the after results of the Great
War which we in America have to a large extent escaped. But I feel
that a recognition of their external obligations by the European
nations and an undertaking bravely to meet them within their capac-
ity as each country has done, is a moral force of great service to per-
manent prosperity in the world. I can not agree with 3^ou that
England is on the edge of destruction. It is most sound of heart,
as its recent solution of a general strike has shown to all. Other coun-
REPORT OF THE SECRETARY OF THE TREASURY 263
tries are in monetary difficulties, but the very acuteness of the
disease has brought a clear understanding of the causes and of the
proper remedies. Dark as the financial sky now appears, I believe
Europe is to-day closer to a permanent sound solution of its economic
troubles than at any time since the war. The danger is there, but
with it the courage to fight. I do not despair of Europe.
Very truly yours,
A. W. Mellon,
Secretary of the Treasury.
Frederick W. Peabody, Esq.,
Counselor at Law, AsJiburnham, Mass.
Exhibit 41
SUMMARY OF THE LIQUIDATION OF THE GOVERNMENT'S LIA-
BILITY GROWJNG OUT OF FEDERAL CONTROL
December 14, 1925.
As a war measure, the Government of the United States, on the
28th day of December, 1917, took over the possession and active
control of all the class 1 railroads, together with sundry inland and
coastwise shipping lines. These properties were operated by the
' Government, under the direction of a Director General, for a period
of 26 months, ending February 29, 1920, when the respective prop-
erties were returned to their owners. The value of the property
taken over was some $20,000,000,000, and the annual compensation
represented by the average earnings for the three years prior to Fed-
eral control, v/as $2,087,323,593.97, a monthly rental in excess of
$80,000,000.
When the property was returned to its owners, claims were pre-
sented by the carriers, represented largely by the items of unpaid
compensation, undermaintenance of way and equipment, material
and supplies, and depreciation, in the sum of $1,014,402,446.72.
The Railroad Administration set up claims against the railroads,
largely for excess expenditures for maintenance, in the sum of
$440,353,715.08.
Congress directed the President, through his agent, as soon as
practicable to settle and adjust these and all other claims incident
to Federal control. Every one of the claims of the carriers whose
property was taken over has been adjusted. The creditor roads
were paid $243,652,196.91. There was collected from the debtor
roads $195,272,295.17. The balance paid by the Government
was $48,379,901.74, or less than 5 per cent of the claims as originally
presented.
There are perhaps two outstanding features in the adjustment:
It was made without litigation, and well within the appropriation
originally made by Congress for this purpose.
The liquidation has involved the handling of large sums. As an
outgrowth of Federal control, the Government took definitive
obligations of the railroads, for advances, funding of additions and
betterments, balance due on settlement, and the like, aggregating
$629,241,250. Of this amount there has been collected, or disposed
of at par, $495,705,450. This amount has been returned to the
United States Treasury.
264 REPORT OF THE SECRETARY OF THE TREASURY
The Railroad Administration for a number of years has been!
returning large sums to the Treasury. For the 11 months ended
November 30, 1925, the receipts in excess of expenditures were
$50,690,499.
The Hquidation of the claims of the railroads, now completed,
represents perhaps the largest liquidation of a single commercial
interest ever undertaken.
The Railroad Administration has cash assets, in the shape of
unexpended appropriations and other funds, aggregating $101,-
504,972.84, and still holds carrier obligations in the sum of
$133,535,800.
Aside from the claims of the railroads for the use of their property,
there were innumerable claims of third persons for freight over-
charge, reparation, loss and damage, personal injuries, fires, and the
like, while the Railroad Administration, on its part, had many claims
for demurrage and under charges. In the neighborhood of 50,000
lawsuits were instituted against the Railroad Administration growing
out of these transactions. The largest claim in this connection grew
out of the Minnesota forest fire, which occurred in October, 1918.
Some 1,500 square miles were burned over, including the city of Clo-
quet, it being claimed the fire was set out by railroads operated by the
Government. Fifteen thousand and three lawsuits were commenced,
demanding an aggregate of $73,112,146.17. After protracted liti-
gation, an arrangement was made to adjust these claims. Some
14,000 of these cases have been settled. The cost to the Government
of this fire will aggregate about $15,000,000. It is undoubtedly the
greatest fire in history for which a financial liability has been sus-
tained.
The greater portion of these outside claims have been adjusted,
and the entire liquidation is being rapidly concluded. The income of
the Railroad Administration, from interest on railroad obligations,
is largely in excess of an amount sufficient to finally conclude this
adjustment.
The total cost to the Government of Federal control, includmg the
operating losses during that period and the six months guaranty
period after Federal control, and the payment to deficit short lines,
will aggregate some $1,696,000,000.
It is understood that the President w4ll appoint the Secretary of
the Treasurj^ as his agent and director general to conclude the liqui-
dation, the Railroad Administration to be carried on as a bureau of
the Treasury Department.
Exhibit 42
appointment of andrew w. mellon as director general
of railroads
By the President of the United States of America
a proclamation
Whereas James C. Davis has tendered his resignation as Director
General of Railroads; and
Whereas such resignation has been accepted effective upon the
qualification of his successor,
EEPOET OF THE SECEETAEY OF THE TEEASUBV 265
Now, therefore, I, Calvin Coolidge, President of the United States,
under and by virtue of the power and authority so vested in me
under the transportation act of 1920, the unrepealed provisions of
the Federal control act of March 21, 1918, and the "Act making
appropriations for the support of the Army for the fiscal year ending
June 30, 1917, and for other purposes," approved August 29, 1916,
and of all other powers me hereto enabling, do hereby appoint,
effective at midnight on the 31st day of December, 1925, Andrew W.
Mellon, of Pennsylvania, Secretary of the Treasury, to be Director
General of Railroads in the stead of the said James C. Davis, and
do hereby delegate to and continue and confirm in him all powers
and authority heretofore granted to and now possessed by the said
James C. Davis as Director General of Railroads; and do hereby
authorize and direct the said Andrew W. Mellon, or his successor in
office, until otherwise provided by proclamation of the President or
by act of Congress, either personally or through such divisions,
agencies, or persons as he may authorize, to exercise and perform^
as fully in all respects as the President is authorized to do, all and
smgular the powers and duties conferred or imposed upon me by the
said unrepealed provisions of the Federal control act of Marcii 21,
1918, and the said transportation act of February 28, 1920, except
the designation of the agent under section 206 thereof.
In witness whereof I have hereunto set my hand and caused the
seal of the United States to be affixed.
Done by the President at the city of Washington this 14th day
of December, in the year of our Lord nineteen hundred and twenty-
five and of the independence of the United States the one hundred
and fiftieth.
Calvin Coolidge.
By the President:
[seal.] Frank B. Kellogg,
Secretary of State..
Exhibit 43
DESIGNATING AND APPOINTING ANDREW W. MELLON, DIRECTOR
GENERAL OF RAILROADS, AND HIS SUCCESSOR IN OFFICE,
AS THE AGENT PROVIDED FOR IN SECTION 206 OF THE ACT
OF CONGRESS, APPROVED FEBRUARY 28, 1920
By THE President of the United States of America
A proclamation
Whereas by proclamation dated August 13, 1923, James C. Davis
Director General of Railroads, was designated as the agent provided
for in section 206 of the transportation act, 1920; and
Whereas the said James C. Davis, Director General of Railroads,
as aforesaid, has tendered his resignation as said agent, which has
been duly accepted, effective upon the qualification of his successor:
Now, therefore, I, Calvin Coolidge, President of the United States,
under and by virtue of the power and authority vested in me by
said act, and of all other powers me hereto enabling, do hereby des-
ignate and appoint, eft'ective at midnight on the 31st day of Decem-
ber, 1925, Andrew W. Mellon, Director General of Railroads, and
266 KEPOKT OF THE SECKETARY OF THE TREASUEY
his successor in office, as the agent provided for in section 206 of
said act approved February 28, 1920.
In witness whereof I have hereunto set my hand and caused the
seal of the United States to be affixed.
Done by the President at the city of Washington this 14th day of
December, in the year of our Lord nineteen hundred and twenty-five
and of the independence of the United States the one hundred and
fiftieth.
Calvin Coolidge,
By the President:
[seal.] Frank B. Kellogg,
Secretary of State.
Exhibit 44
PRESS STATEMENT BY ACTING SECRETARY OF THE TREASURY
WINSTON GIVING THE TREASURY PLAN FOR THE DISPOSITION
of german property held by the alien property cus-
todian and the settlement of mixed claims
Monday, AIarch 29, 1926.
Acting Secretary of the Treasury Winston made the following
statement on behalf of the Treasury:
There have been introduced in this and the last Congress numerous bills for
the return of alien property and for various amendments to the alien property
act affecting particular interests, but no general plan has yet been presented for
the disposition of alien property and for the final settlement of the other ques-
tions between Germany and the United States left over from the war. A Mixed
Claims Commission has been set up by the United States and Germany for the
determination of American war losses. Claims have been presented to the com-
mission and most of the awards have been made, but unless the United States
Government intervenes the payment to private American claimants will be so
long delayed as to make the awards of the commission illusory. There is also
the liability of the United States for property of German nationals used by the
United States, of which there is as yet no machinery for determination and no
provision for settlement.
The Treasury has found it impracticable at this time to cover in the same
plan similar questions in connection with Austria and Hungary. In the case of
Germany the Mixed Claims Commission has been set up, the claims filed, most
of them already adjudicated, and an estimate of the amount of the awards and
the probable liabilit\^ thereunder can be made. In the Austrian and Hungarian
cases, while a commission has been constituted and claims are being received,
the period of limitation for filing claims has not run and no estimate can be
made of the total amount of claims which will be presented or the probable
amount of awards thereunder. In addition, the Dawes plan provides for pay-
ments by Germany to the United States on account of the awards, but there is
no like arrangement for payment by Austria or Hungary.
In order that the reasons which have influenced the Treasury in the prepara-
tion of a comprehensive plan for the disposition of these matters may be under-
stood, it is desirable to review the existing situation.
The Versailles treaty provided for reparations but did not fix their amount.
In the schedule of payments of May 5, 1921, the total reparation payments as
fixed by the reparation commission were notified to Germanv in the amount of
132.000,000.000 gold marks, plus the Belgian war debt (about 5,000,000,000
gold marks), less certain negligible credits, plus interest at 5 per cent on the capital
sum until paid. The obligation of Germany to pay the American mixed claims
is in the same category as Germany's obligations to pay reparations.
The amounts required of Germany are beyond its capacity. Unable to meet
its treaty requirements, Germany in effect went into receivership and a reor-
ganization was undertaken by the Dawes Commission. Under the plan adopted,
the total which it was found that Germany can pav on all its treatv obligations
REPORT OF THE SECRETARY OF THE TREASURY 267
arising out of the war was fixed, after a five-year recuperation period, at a maxi-
mum of 2,500,000,000 gold marks a year, subject to some adjustment under an
index of prosperity. Since this is all Germany can pay, it is obvious that the
United States, if it wished to receive anything from Germany, had to obtain
a share in the total payments represented by the Dawes annuities. Accordingly
the United States became a party to the Paris agreement dividing the Dawes
pavments and received a share to repav our armv of occupation costs at the rate
of 55,000,000 gold marks, or about $12,000,000 a year. In addition, the share
of the United States on account of the Mixed Claims Commission awards was
fixed at "2J4 per cent of all receipts from Germany on account of the Dawes
annuities available for distribution as reparations, provided that the annuity
resulting from this percentage shall not in any year exceed 45,000,000 gold
marks." The United States, then, is to receive on its own account the $12,000,000
annuity in repayment of Army costs and on its own and for the benefit of the
American private claimants the $11,000,000 annuity on account of the mixed
claims. The awards of the Mixed Claims Commission, plus interest, are esti-
mated at $60,000,000 to the United States and $190,000,000 to private American
citizens.
The United States under its war powers as a sovereign seized enemy property
through the Alien Property Custodian as a common-law trustee. The Versailles
treaty gave the allied and associated powers the right to dispose of enemy prop-
erty and Germany agreed to compensate its own nationals for the seizure. The
allied and associated powers were authorized to liquidate the property and to
apply the proceeds to satisfy debts owed by enemy nationals to their nationals
or as a credit on reparation account. Under the Berlin treaty, making peace
between the United States and Germany, the United States received the benefit
of these provisions of the Versailles treaty. But the joint resolution of Congress
of July 2, 1921, and the Berlin treaty specifically provided that the property of
enemy nationals "shall be retained by the United States of America and no dis-
position thereof made except as shall have been heretofore or specifically here-
after shall be provided by law until such time as the Imperial German Govern-
ment * * * shall have * * * made suitable provision for the satis-
faction of all claims against said Government" of American nationals. It was
further provided that such property should be retained until the German Gov-
ernment should have "confirmed to the United States of America all fines,
forfeitures, penalties, and seizures imposed or made by the United States of
America during the war * * * ^nd shall have waived any and all pecuniary
claims against the United States of America."
There has been no modification of the Versailles treaty or Berlin treaty with
respect to the payments due from Germany, and the duration of the Dawes plan
payments is not fixed. The practical effect of the Dawes plan is, however,
that Germany's creditors have accepted a reorganization under which their
rights are limited to their shares under the Paris agreement and an attempt to
return to the original treaty requirements for payments would be useless.
This is the general situation. Its application to the United States may be
considered.
It is estimated that all the awards of the Mixed Claims Commission which
Germany is obligated to pay will aggregate $190,000,000 of principal and
$60,000,000 of accrued interest to January 1, 1926, or a total of $250,000,000.
The awards bear 5 per cent interest. If no interest is to be paid upon accumu-
lated interest, an annuity of $11,000,000 would pay current interest and pay the
$60,000,000 accumulated interest in 40 years, and thereafter in 40 more years
would amortize the principal of the awards, a total period of 80 years. This is
on the assumption that the Dawes plan continues for that length of time and
that each year Germany is able to pay to the transfer agent in Germany andthe
transfer agent is able to transfer into the currencies of the creditor nations
2,500,000,000 gold marks per year. While our Army costs repayments are pre-
ferred, the mixed claims belong in the general category of reparations without
preference and any diminution in total payments will be felt by the mixed claims.
If the Dawes plan fails and the United States resorts to its rights to demand
payment of the mixed claims under the Berlin treaty, the Allies would seem to
have a like right to ask payment of the 132,000,000 gold marks of reparations,
plus 5 per cent per annum interest. This yearly interest alone is two and one-half
times the total Dawes annuities. It seems impractical, therefore, to expect from
Germany pavment of the mixed claims except but of the 234 per cent ainiuity
under the Dawes plan. While the annuity given the United States under the
Paris agreement is a fair proportion of the total demands on Germany by all her
11438—261 19
268 REPORT OF THE SECRETARY OF THE TREASURY
creditors, still, in view of the length of time it will take for this annuity to pay the
mixed claims, it must be recognized that the awards have little present value to
the private American citizen unless some other means of immediate payment
can be obtained.
It might be within the power of the United States under those provisions of
the Versailles treaty to the benefit of which the United States is entitled under the
Berlin treaty, to liquidate the private German property and to apply the pro-
ceeds to the payment of the mixed claims. The moral justification for such a
proceeding is doubtful and, moreover, there is some question as to the constitu-
tionality of such a procedure now we are at peace. The private German owners
of the property are not likely to receive from their government adequate compen-
sation for their property taken and used to pay the debts of their government.
The proceeding would practically amount to confiscation of private property.
Looking at the matter from the standpoint of a great commercial nation,
whose citizens now have enormous investments in foreign countries, it would
appear sound policy for us to continue as we have in the past, to recognize the
sanctity of private property of other nationals. By such a policy the property
of our nationals abroad may be saved from confiscation in the event of another
war. Aside from the moral and commercial policy questions affecting the con-
fiscation of the enemy property, doubt is raised by the Berlin treaty and the
resolutions of Congress as to our legal authority to liquidate the property to pay
the mixed claims. It is provided that the enemy property "shall be retained by
the United States * * * until such time as the Imperial German Govern-
ment * * * shall have * * * made suitable provision for the satis-
faction" of the mixed claims of our nationals. If the provision for a share in the
Dawes annuities is a suitable provision, then the property ought to be returned.
If it is not a suitable provision, then our right would seem to be to hold the
property until the naixed claims are paid — at least 80 years, and most likely
indefinitely. To keep property away from its owners and hold it in the hands of
a Government trustee, is a great economic loss. It is a vain thing indeed to
insist on retaining title to property not our own indefinitely. Matters between
nations should be settled and not permitted to be for many generations a source
of friction.
The only other practical method of payment of the awards to the private
American citizens is for the United States to advance the money necessary to
pay the awards to its own citizens (estimated between $180,000,000 and $190,-
000,000) and to recoup the Treasury for this advancement out of all moneys
received from Germany on account of mixed claims ($11,000,000 a year) and
Army costs ($12,000,000 a year). If the United States should borrow the
money at 3M per cent to pay the awards to American citizens, and use the
$30,000,000 of earnings made by the Treasury out of money of the Alien Property
Custodian on deposit with it prior to the Winslow Act, which gives later earnings
to the enemy nationals, and if the United States should receive all payments
provided under the Dawes plan for both mixed claims and Army costs, the debt
thus created would be retired with interest at 3% per cent in about eight years.
In other words, the United States would be made whole out of payments due the
American claimants and out of repayments to the United States for money spent
in past years in a short period of time, and thereafter all payments would go into
the Treasury. True the payment by the United States of the awards to
American citizens would be an expenditure in the Government accounts in the
year actually made and thus appear as an increase in governmental expenditures,
but looking at the matter in another aspect, it might be fair to consider that the
expenditure for payment of the mixed claims is in effect a capitalization to-day
of certain payments due from Germany in the future.
To summarize: The only practical way for the American citizen to get com-
pensation for his war loss is either for the United States to confiscate the property
of German nationals and apply the proceeds, or for the Treasury to advance the
money and to recover it later from the Dawes payments. The Treasury is
opposed to the confiscation of the private property of German nationals and
believes also that the burden of war losses suffered by some of our citizens should
be borne not by them alone when they can be relieved by its temporary assump-
tion by all of the people of the country, although this assumption carries with
it some risk of loss.
In addition to the question of the payment of the mixed claims and the return
of the alien property, there is a further matter betw^een the United States and
the German nationals which should be settled. During the war the United
States seized and used ships, radio stations and property belonging to German
REPOET OF THE SECRETARY OF THE TREASURY 269
nationals. The Berlin treaty provides that Germany will make suitable provision
for the satisfaction of all claims against the United States on account of such
seizures, but the situation is like that with respect to the enemy property. We
have taken the property of private citizens and used it for our own purposes.
The relief from their own Government is inadequate. We have enjoyed the
benefit and we ought to pay. This does not mean the creation of a new moral
obhgation on the part of the United States, but simply the recognition of what
we owe and the payment of fair compensation for property taken by the United
States from others.
The Treasury having in mind these various related matters between the United
States and Germany, presents for the consideration of Congress a plan to cover
in one piece of legislation (1) payment of the mixed claims; (2) ascertainment and
payment of compensation due private owners of German ships, radio stations,
and patents taken and used by the United States; and (3) disposition of the Ger-
man property. A bill embodying this plan has been introduced in the House of
Representatives by Representative Mills, of New York.
The bill proposes:
(1) That awards to American citizens on the mixed claims shall be paid.
(2) That an arbiter, appointed by the President, shall award compensation
due the German owners of ships, radio stations, and patents taken and used by
the United States, and that the United States shall pay these awards to ah
aggregate not exceeding $100,000,000.
(3) That the Treasury may borrow money to make such payments.
(4) That the property of German nationals in the hands of the Alien Property
Custodian shall be returned.
(5) That the earnings prior to March 4, 1923, on moneys deposited by the
Alien Property Custodian in the Treasury of the United States shall be retained
by the United States and applied towards payment of the awards of the Mixed
Claims Commission. March 4, 1923, is the date of the Winslow Act giving
similar earnings after that date to the enemy owners.
(6) That the United States shall pay up to the date of the Winslow Act
interest at 4 per cent per annum on moneys of American citizens wrongfully
seized by the Alien Property Custodian and deposited in the Treasury.
(7) That receipts by the United States from Germany on account of the
mixed claims and the Army costs shall be applied by the United States to the
payment of awards of the Mixed Claims Commission and of the arbiter, to interest
on any debt created by the United States for moneys borrowed to make the pay-
ments required by the bill, and to the retirement of the public debt.
The Treasury believes that the proposed bill is desirable for the reasons:
(a) It is a recognition of sound policy in the treatment of the war losses of our
own citizens and of the property of enemy nationals;
(b) It is a comprehensive settlement of all the principal questions between the
United States and Germany left from the war, and
(c) It is recognized on both sides as an equitable adjustment of our moral
and legal obligations, is in conformity with our traditional principles of fair
dealing, and will mean one more step toward the restoration of sound conditions
in the world.
Exhibit 45
LETTER FROM SECRETARY MELLON TO THE PRESIDENT OF THE
SENATE IN RESPONSE TO SENATE RESOLUTION 199, CONCERN-
ING ALIEN PROPERTY
April 16, 1926.
Dear Mr. President: In response to Senate Resolution 199, the
following report is made:
In the course of the preparation of the settlement of war claiins
act of 1926, which deals with the settlement and payment of Ameri°
can claims against Germany, the Treasury has at no time dealt,
directly or indirectly, with representatives of the German Govern-
ment. No representatives of the Treasury Department have
carried on negotiations in Germany.
270 REPORT OF THE SECRETARY OF THE TREASURY
In the last sessions of the former Congress and in the present Con-
gress numerous bills have been introduced for the disposition of the
propertj^ held by the Alien Property Custodian. Some of the bills
covered only particular classes of persons interested in the alien
property. Some of the bills returned all of the property and would
create a flood of claims against the United States which might become
a serious drain on the Treasury. There was no legislation introduced
to cover the subject as a whole and finally. Litigation is pending
against the United States for compensation for ships of German
cftizens taken during the war and is still undisposed of. The Mixed
Claims Commission set up between Germany and the United States
to determine American claims against Germany, is approaching the
completion of its work. There is, however, no provision for the
payment of awards of the Mixed Claims Conimission which ade-
quately compensates the private American claimants. The advice
of the Treasury had been sought by Frederick C. Hicks, the forrner
Alien Property Custodian, in reorganizing his office, and from its
study of the situation the Treasury believed that it was uneconomical,
both from the standpoint of the owner and of the United States, to
continue indefinitely the operation of the trusts by the Alien Prop-
erty Custodian. Questions of pohcy in the management of the
businesses and of the disposition of securities are continually arising
which are too complicated and responsible to be left to a public
trustee. These and other related matters had come to the direct
attention of the Treasury.
Here, then, was a series of questions of importance demanding
action and toward the entire solution of which there had been no
plan suggested. I believe that a sound national policy is against the
confiscation of the property of private citizens to pay the debts of
their government. Yet this German property was pledged as secur-
ity for the claims of our nationals against Germany. To release the
security without providing for the payment of American private
claims would be in effect to avoid confiscation of German private
rights by the confiscation of American private rights. To hold the
German property until the American claims were paid out of the
annuity provided under the Dawes plan meant holding the property
indefinitely, and therefore substantially confiscation of the German
property, and at the same time, since this annuity represents our
share of all Germany can pay, such inadequate payment of the
American claims as to render them valueless. If it is right that we
should reaffirm the American policy that private property shall not
be taken for public use without just compensation, then there seemed
to me to be no practical solution of the entire problem except that
suggested by the Treasury. The Treasury, therefore, in the interest
of all concerned, undertook the preparation of a plan for the consider-
ation of the Congress.
The Treasury was advised by Mr. Chandler P. Anderson, the
American commissioner on the Mixed Claims Commission, that
Dr. Wilhelm Kiesselbach, the German commissioner on the Mixed
Claims Commission, and Dr. Karl von Lewinski, the German agent
on such commission, as individuals, represented a group of the private
German owners whose property was held by the Alien Property
Custodian. The Treasury also learned that most of the American
claimants before the Mixed Claims Commission had united in the
REPORT OF THE SECRETARY OF THE TREASURY 271
American War Claimants Association. The Treasury consulted
with representatives from these groups and with others who appeared
interested in the questions involved and proposed a tentative plan,
which differed from that carried in the proposed "settlement of
war claims act of 1926" only in respect to the manner of financing
the payments. In the tentative plan it was proposed that the
United States should assign the payments to be received by it under
the Dawes plan to a trustee against the issue of bonds payable either
in marks or dollars and guaranteed by the United States. These
bonds were to be used for the payments required of the United
States. Since bonds instead of the cash in the hands of the Alien
Property Custodian belonging to Germans were to be returned and
bonds were also to be used in payment for German ships and Ameri-
can claims, it was deemed advisable that the consent of those who
were to receive the bonds should be had in order to avoid any charge
that just compensation was not paid. The representatives of the
American claimants consented. On November 23, 1925, I wrote
Doctor Kiesselbach a letter setting out in substance the tentative
plan. He took the letter to Germany and obtained there the con-
sent of the German owners of the ships and of the property in the
hands of the Alien Property Custodian. Doctor Kiesselbach did
not represent the German Government, but the private German
owners of ships and property.
The tentative plan provided for bonds bearing 5 per cent interest.
This rate of interest was necessary in order that bonds, payable in
marks in Germany, should be worth par in the German market,
where interest rates are very much higher than here. This is to us
a high rate of interest, and since the United States was guarantor of
the bonds and the sole beneficiary of the Dawes paj'^ments after the
bonds should be paid, upon further consideration I came to the
conclusion that it was preferable for the Treasury to use its own
obligation payable in dollars, which could be marketed on as low
as a 3^ per cent basis. In preparing the proposed ''settlement of
war claims act of 1926," therefore, the provision for financing the
project by the issuance of bonds against the payments to be received
from Germany, guaranteed by the United States, was eliminated,
and the plan simplified by meeting all payments in cash, just as any
other expenditures authorized by Congress, and leaving to the
Treasury the finding of the money under its general powers.
In preparing the plan the Treasury has been in consultation with
Mr. Bonynge, the American agent before the Mixed Claims Com-
mission, with the Alien Propertj^ Custodian, with representatives
from the Departments of State, Justice, War, and Navy, with repre-
sentatives of the American claimants, and with Doctor Kiesselbach
and Doctor von Lewinski, representing the private German owners
of ships and property. The purpose of these consultations was to
obtain the views of all interested parties in the preparation of a plan
to meet the many techincal difficulties involved and to cover the
entire field.
The consideration which induced me to prepare the plan was to
suggest to Congress comprehensive legislation to settle, promptly
and permanently, questions left over from the war with Germany,
to remove possible sources of friction between the two nations and to
reaffirm our high standard of national policy, just alike to the citizens
272 REPORT OF THE SECRETARY OF THE TREASURY
of a former enemy and to our own citizens who had been injured in
the war.
Very trulv vours,
A. W. Mellon,
Secretary of the Treasury.
Hon. Charles G. Dawes,
The President of the Senate.
Exhibit 46
PRESS STATEMENT BY SECRETARY MELLON CONCERNING
FACTORS IN THE SETTLEMENT OF GERMAN PROPERTY HELD
BY THE ALIEN PROPERTY CUSTODIAN AND THE PAYMENT
OF MIXED CLAIMS
Monday, April 19, 1926.
Secretary of the Treasury Mellon made the following statement
to-day:
Partisan opposition has developed in the Congress to the plan prepared by the
Treasury for the settlement of the private German property in the hands of the
Alien Property Custodian and for payment of the American mixed claims. I
should like to restate in substance the considerations which must be taken into
acco\int in any solution of these problems.
In the Versailles treat v Germany agreed to pay as reparations to the Allies
132,000,000,000 gold marks ($34,000,000,000), plus interest at 5 per cent. In
the Berlin treaty Germany agreed to pay to the United States the American
mixed claims, which are now estimated with interest at $250,000,000. These
treaty payments were more than Germany could make, and Germany went
into receivership. A creditors' committee investigated German v's economic
capacity and found that 2,500,000,000 gold marks a year ($625,000,000) was
Germanv's entire capacity to meet her treaty obligations. This annuity of
$625,000,000 may be comjjared to the $1,700,000,000 annual interest charge on
the reparations which by the Versailles treaty Germany had agreed to pay to
the Allies. Germany's creditors accepted their committee's recommendations
as embodied in the Dawes plan, and by the Paris agreement divided the total
annuity among the creditors. The United States signed the Paris agreement
and thereby accepted the Dawes plan. By the Paris agreement the annuity
for the payment of the American mixed claims was fixed at 45,000,000 gold
marks ($11,000,000). A Mixed Claims Commission between Germany and the
United States has been set up, and the American losses have l)een judicially
determined by an impartial tribunal of high character. The United States
holds the private German property as security for the payment of the private
American mixed claims.
It is futile to say that Germany must pay the American mixed claims immedi-
ately because under the Berlin treaty it has promised to do so. The United
States, by the Paris agreement, has agreed to the Dawes plan, which limits
Germany's payments. Even if the Paris agreement could be canceled and the
Dawes plan abandoned, the United States under the Berlin treaty would stand
in no better position than Germany's other creditors under the Versailles treaty,
whose claims are enormous and quite beyond Germany's capacity. We must,
of necessity, stick to the agreement we have signed in Paris.
There are three possible courses: (1) Confiscate the private German property
and use the proceeds to pay the American claims; (2) retain the private Ger-
man property as security until the American claims are paid by Germany;
(3) return the private German property.
(1) Confiscate the private German property and apply the proceeds to pay the
American claims. — I pass over the legal question of the power of Congress to
confiscate this property, in view (o) of the joint resolution of the Congress of
March 3, 1921, which specifically provided that the property should be held as
security for the payment of the American private claims; "(6) of the Winslow
Act of March 4, 1923, which recognized that title to the property was in the
German owners by providing for return of a portion of the property and for the
REPOKT OF THE SECRETARY OF THE TREASURY 273
payment of the income from the property to the German owners; (c) of the
fact that the war is over and the constitutional provision against the taking of
private property for pubhc use without just compensation is now applicable.
I believe that the question must be decided on broad grounds of national policy.
To confiscate the private property of enemy citizens is inconsistent with the
historical American policy, is detrimental to our own citizens who now have,
or will make, large investments abroad where similar confiscation might be
adopted, and is above all wrong in morals. I can see no justification for the
adoption of such a course.
(2) Retain the private German property as security until the American claims
are paid by Germany. — We can expect no larger payments from Germany than
those provided by the Paris agreement. If the Dawes plan works 100 per cent
it will take 80 years for the specific annuity to liquidate the American claims
with interest. To retain the private German property in the hands of a public
trustee indefinitely is virtual confiscation. To ask the American claimant to
wait 80 years for payment, is to deny him relief. This course gets us nowhere.
(3) Return the private German property. — If the private German property is
returned to its owners, the security of the American claimants for the payrnent
of their claims by Germany is taken awaj' by act of the United States. This
course will avoid confiscation of the private property of Germans only by con-
fiscating the private property of Americans. The United States can not do an
immoral act to its own citizens so as to do a moral act to German citizens.
It has seemed to the Treasury that the only practical solution of these prob-
lems, which are now before the Congress for determination is to return the
private German property and for the United States to advance the funds neces-
sary to pay now the American claims and to recover the amount advanced from
payments to be made to the United States under the Dawes plan, on account
both of the mixed claims and of the army of occupation costs. These payments
together should reimburse the Treasury for the advances with interest within
eight years.
I am quite open-minded. If those opposed to the Treasury plan have any
other practical plan to solve these questions, I believe it should be presented
for consideration. We need constructive, not destructive, criticism.
Exhibit 47
BEPLY OF SECRETARY MELLON TO REPRESENTATIVE OLIVER'S
SUGGESTION OF A SUBSTITUTE FOR THE PLAN PROPOSED BY
THE TREASURY FOR THE DISPOSITION OF GERMAN PROPERTY
HELD BY THE ALIEN PROPERTY CUSTODIAN AND THE PAYMENT
OF MIXED CLAIMS
April 23, 1926.
My Dear Congressman: I have your letter of April 21, suggest-
ing a substitute for the plan proposed by the Treasury for the disposi-
tion of the German property and the payment of the American mixed
claims.
There is but one substantial difference between us. I proposed
that the United States use the money now in hand in the unallocated
interest fund and with the transfer agent in Germany and advance
the balance necessary to pay the private American claims in cash.
You intend to use the same money now in hand, but instead of the
United States advancing the balance, you propose to pay the Amer-
ican claimants out of the proceeds of the Dawes annuities as they are
received from Germany, both on account of the mixed claims and
on account of the Army costs, until the private American claims are
paid. Under each plan the United States takes all of the annuities
after the claims are paid.
Under each plan the German property would be returned, under
my plan simultaneously with the payment of the American claims,
and under yours prior to such payment. The effect of your plan,
274 REPORT OF THE SECEETABY OF THE TREASURY
thorefore, is to deprive a large proportion of the American claims of
the security of the German property to which they are entitled under
the Berhn treaty and to substitute nothing in place of the security.
In other words, in order to do prompt justice to German citizens we
would be depriving American citizens of their rights.
If we use tiie estimate of SI 90,000,000 as the amount of the private
American claims, deduct from this $30,000,000 as representing the
unallocated interest fund and $8,200,000 of marks now in Germany
with the transfer agent, there would have to be paid $151,800,000.
If the United States should advance the money, it can borrow at
3^4 per cent, and the Dawes annuities, if paid in full, would reim-
burse the United States with interest in a little less than eight years,
at a total cost of $179,700,000. The awards of the mixed claims
carry 5 per cent interest, and taking the same principal amount of
American private claims to be paid and again applying all of the
Dawes annuities, it would take eight and one-half years to pay the
claims, at a total cost of $191,000,000. Under both plans the United
States is the sole beneficiary of all the Dawes annuities when the
American private claims are paid. Assuming full payment of the
Dawes annuities, the Treasury would save $11,900,000 by advancing
tlie money in the first instance, and there could be no objection to the
immediate return of the German property.
I am, as I have pubhcly stated, quite open-minded on this problem.
If some way can be found to give the American citizens adequate
substitute for the security of the German property to which they are
legally entitled, and if at the same time the plan will not be ultimately
more expensive to the Treasury, I should be glad to give it my support.
Very truly yours,
A. W. Mellon,
Secretary of the Treasury.
Hon. Frank Oliver,
House of Representatives.
Exhibit 48
ADDRESS OF UNDERSECRETARY OF THE TREASURY WINSTON BE-
FORE THE FIFTY-SECOND ANNUAL CONVENTION OF THE AMER-
ICAN BANKERS' ASSOCIATION. AT LOS ANGELES, ON OCTOBER
6, 1926, ON THE PUBLIC DEBT OF THE UNITED STATES
In peace times the United States does not resort to credit, but
pays cash. Except for some relatively small borrowings to strengthen
the currency and to build the Panama Canal, any national indebted-
ness has represented the price of war. So a picture of the public
debt is, in its broad outlines, a major war in which the countrv can
not pay as it goes but must borrow for a large share of its expenses;
then n period of gradual reduction of the debt so created; its continua-
tion at a low figure; another war; and a repetition of the process.
Ihe three cycles in our history, in the third of which we now are, were
the Revolutionary war, the Civil War, and the Great War. Other
wars may appear in the books, but they had little effect on the
national debt structure.
After the Revolutionary War our foreign and internal indebtedness,
which included the indebtedness of the States assumed by the Federal
REPORT OF THE SECRETARY OF THE TREASURY 275
Government upon Alexander Hamilton's insistence, aggregated in
1790 some $71,000,000. The foreign debt was paid by 1815, and the
entire debt retired by 1832. Figures as to the real burden of the debt
are incomplete, since we have no satisfactory estimate of national
wealth or of national income at that time, but when one remembers
that we were then a new nation, poverty stricken, and with little in-
dustrial development, this reduction of debt represents a truly great
effort.
In the Civil War cycle, we find an interesting comparison with our
situation to-day. We owed practically nothing when that war
commenced. At its close, the peak of the indebtedness was 2^
billions. In 1914 our debt of about 1 billion was represented prin-
cipally by bonds to secure national-bank circulation. We reached the
peak of 253^ billion dollars in 1919. In the seven years after the Civil
War the debt was reduced 22 percent. In the seven years since 1919 —
that is, to 1926 — the debt has been reduced 23 per cent. Six hun-
dred million dollars reduction then as against 6 billion dollars now,
but still by this great accomplishment we have put no greater burden
on the individual taxpayer since the last war than was done 60 years
ago. By 1892, or 27 years after the Civil War, the debt had reached
its low point of less than a billion dollars.
We may analyze the factors which went into the reduction of the
present debt to date and see what may be their influence in the future.
On August 31, 1919, the gross debt was as high as 263^ billions, but
this was at an intermediate point during a fiscal year just prior to a
tax-payment period and is not representative of the real debt. At the
close of the fiscal year 1919 the debt was about CSj^ billion dollars;
it is to-day about 19 1^ billion dollars. There are $5,800,000,000,
roughly $6,000,000,000, for which we should account.
Of this total sum, $1,000,000,000 represents a reduction in the cash
balance of the Treasury. Just after the close of the war the Treasury
was spending at the rate of a billion dollars every two weeks, and
necessarily it had to keep a large amount of cash in the general
fund. As expenditures fell off rapidly, the cash in the fund was
decreased, and the fund is nov/ on a peace-time basis, varying between
$100,000,000 and $300,000,000. Instead of owing 253^ billion
dollars and having $1,200,000,000 in cash, we owed 243^ billion
dollars and had $200,000,000 in cash. This source of debt reduction
is used up and can not affect the future. From securities used to pay
estate taxes, out of purchases from franchise taxes, and other mis-
cellaneous items we obtained a little over $200,000,000. These items
yielding over $80,000,000 in each of the years 1921 and 1922, brought
in less than $1,000,000 in 1926, and will not be again material.
The difference between Government receipts and Government
expenditures chargeable against such receipts is the surplus, and the
aggregate of $2,056,000,000 for the seven years went to reduce the
debt. An excess of receipts over expenditures increases the cash in
the general fund, and at the next quarterly refunding period the
Treasury can meet part of the maturing obhgations in cash and need
refund only the remainder. For example, this September we had
$415,000,000 41^ per cent notes maturing, and we sold a new issue of
$378,000,000 33^ per cent certificates. Out of existing or expected
surplus the national debt in September became $37,000,000 less.
11438— 26t 20
276 REPORT OF THE SECRETARY OF THE TREASURY
So, as long as the Treasury owes money and has to meet maturities,
cash surplus disappears in debt reduction.
Two billion dollars is a large excess of receipts over expenditures in
the seven years, but before it can be stated that this is entirely too
much to collect from industry to-day and devote to the reduction of a
debt which might be paid to-morrow, consideration should be taken
of the sources from which the money came in order to determine
whether it was entirely out of the pocket of to-day's taxpayers.
During the war and in the period of immediate postwar adjustment
the United States made what might be called capital investments.
No proper balance sheet can be set up for a government. Treasury
accounts must be kept on a cash basis. While in the long run this
practice gives an accurate picture of fiscal results, still, in periods of
wide fluctuations, one year may share the benefit of a previous year's
expenditure and a cash basis is temporarily uncertain. Prior to
1922 the Government had, among other things, used money for war
supplies, now become surplus, loans to the railroads, and investment
in the War Finance Corporation and in the bonds of the Federal
land banks. During the last five fiscal years the aggregate surplus
was SI, 750,000,000, and included in this surplus was $950,000,000
realized by the Treasury from previous investments. Most of these
assets have been turned into cash, but there still remains $400,000,000
to be received in this and succeeding fiscal years. Then the assets
will be exhausted.
In addition, the Bureau of Internal Revenue has been cleaning up
back taxes on the war years of high rates. We have detailed figures
for the last three years only, and these show a net receipt of back
taxes collected over refunds made of $400,000,000. On the expense
side of the accounts, the Army and the Navy, and to some extent,
other departments, have been using up old war supplies and thus
reducing current expenditures.
We have, you see, as a nation been living on the barrel of flour,
sides of bacon, and canned goods which we bought in previous years
and stored away. When these are exhausted we will be restricted
to current taxes and have less surplus.
In 1920 Congress enacted into law its financial program of handling
the debt. Roughly, $10,000,000,000 of debt represented borrowings
for our expenditures in the war, and $10,000,000,000 represented
borrovyings to loan abroad. Congress chose a sinking fund calculated
to re the the half represented by domestic borrowings in 24 years,
and, with the then expectation that foreign loans would be promptly
paid, directed that repayments of their indebtedness by foreign
nations should go to retire bonds, and thus meet the other half of
the debt within the 24 years. The sinking fund is not restricted to
10 billions of the debt, and so if foreign repayments are not made,
or arc not made in full, the entire war debt will ultimately be extin-
guished from the sinking fund, although at a period much later than
the 24 years originally contemplated. This sinking fund to date
has accounted for $1,750,000,000 of the 0 billion of debt reduction,
while foreign repayments of principal represent something less than
$300,000,000.
In the various debt settlements Congress has provided that the
debtor may pay both principal and interest in securities of the United
States at par. As a practical matter, of course, these securities are
REPORT OF THE SECRETARY OF THE TREASURY 277
not used unless they are quoted in the market at par or less on the
day they are to be surrendered. When the Treasury receives these
counters, which are its own obligations, there are two things it might
do: Cancel the securities and thus reduce the debt, or resell them to
the public. Since the Treasury has no authority to sell United
States securities at less than par, the second alternative is not prac-
ticable, and securities so received to the amount of $500,000,000
have been used to reduce debt.
Summarizing the debt reduction of $5,800,000,000 in the seven
years, 18 per cent came from decrease in the general fund balance
and 33^ per cent from miscellaneous sources. None of these sources
will influence future debt reduction. Thirty-five per cent came from
surplus, and half of this surplus represented return of capital invest-
ments, which will not continue to produce revenue in the future.
Thirty per cent came from the sinking fund, and 133^ per cent from
our foreign debtors.
There are two thoughts I wish to suggest at this point. If we retire
^a debt of $25,000,000,000 uniformly over a 25-year term and pay
an average rate of interest of 43^ per cent, the total interest cost will
be $16,000,000,000. If the term is made 30 years, over 33^ billion
is added to the total interest. If 62 years is taken, as some persons
have urged, total interest would be $46,272,000,000, or nearly twice
the original principal. So a 25-year program will cost the American
taxpayer a total of $41,000,000,000 and a 62-vear program would cost
$71,000,000,000. ]
The real value of the dollar does not remain constant. If we take
our Civil War experience and use as a base the dollar of 1860, we
borrowed a 54-cent dollar and we paid in an 85-cent dollar. We
repaid $3 for every $2 we borrowed. Referring to our present debt
and as a base the dollar of 1913, we borrowed a 51-cent dollar and we
paid back to date on weighted average a 56-cent dollar. To-day the
dollar is worth about 66 cents. Paying in the early years of the 7-year
period instead of waiting until 1926 saved the Treasury $600,000^000.
If the appreciation of the dollar continues — and such has been fiscal
history after other great wars — then the longer we postpone payinent
the more in real value we will have to pay.
So taking into consideration our historic policy, and the actual
sources out of which the debt has been reduced, debt retirement to
date, while large and most encouraging, has nevertheless been fair to
both the bondholder and to business.
The statement is made that we have had debt reduction at the
expense of adequate tax reduction. This is not true. Let us consider
for a moment what has been accomplished in tax reduction during the
past seven years. It has been the experience of the Treasury that
reduction of the individual income tax stimulates the creation of
taxable income and also increases the general prosperity of the coun-
try, so, that within certain limits, it appears to be true that a decrease
in rate of tax makes no decrease in the amount of tax received by
the Government. This variable of changing income subject to tax
makes difficult the ascertainment of the exact amount of taxes saved
to the people by a particular reduction in rates. If, however, we take
the revenue actually collected under the old law for the last year it
was in effect and compare it with the revenue which would have been
collected under the new and lower rates of tax had thev been in effect
278 REPOET OF THE SECRETARY OF THE TREASURY
in that year, a fair idea of the reduction can be had. On this basis,
the 1921 revenue act reduced taxation $663,000,000 a vear, the 1924
act Sr)19,000,000, and the 1926 act $422,000,000, or a total of $1,604,-
000,000 a year. If we go back, however, to the peak of our internal
revenue collection, we find that the Treasury collected 2J^ billion
less in 1926 than it did in 1920. If the 192*0 return from internal
revenue taxes had been maintained for the succeeding six j'^ears to
date, the American taxpaj'cr would have given his Government nearly
$14,000,000,000 of additional taxes. Compare this with 6 billion of
decrease in debt. It has been the policy of the Treasur}^ to recommend
a balance between debt reduction and tax reduction. On these
figures it will not be said that the balance is in favor of debt reduction.
A definite program for the future is difficult. While one can not
look far ahead in this complex world, there are certain factors which
should continue to reduce the still enormous debt. Some nations
apparently consider a large debt as a part of the permanent financial
structure of the country. During the 100 years from the fall of
Napoleon to the opening of the World War, England only reduced'
its debt from 43^ billion dollars to 33^ billion dollars. During the
same period the French debt increased steadily from a nominal figure
to $7,000,000,000. With this policy America differs. Congress in
1920, by providing for a sinking fund and for the application of for-
eign repayments to the retirement of the debt, definitely reaffirmed
our historic policy of having no permanent public debt. This legis-
lation has become a part of the contract between the United States
and the holders of its securities, and a change can not be made w^ith-
out repudiation. We will not have repudiation.
The use by our foreign debtors under the debt settlements author-
ized by Congress of United States obligations in payment of interest
is not within the control of the Treasury. Market conditions de-
termine whether or not it is advantageous to the foreign debtors to
use certain securities, and if so used there appears to be nothing for
the Treasury to do except cancel the securities received. To credit
the amount of these securities against the sinking fund would in effect
permit the foreign debtors and not the Treasury to determine the
particular bonds to be retired. For the past three years the Treasury
has been using the sinking fund almost exclusively toward the retire-
ment of the third Liberty loan, which still amounts to nearly 23^ bil-
lion, has no prior call date, and matures within two years. Until this
loan is out of the way, the right of the Treasury to apply the full sink-
ing fund to the most pressing maturity should have no interference.
We come finally to the factor of surplus, that is, the difl'erence
between receipts and expenditures. It is here that: flexibility lies
between tax reduction and debt reduction. First, consider what the
Government must spend. After every war there is a sharp decline
in Government expenditures as the country gets back to a peace
basis. As opposed to this there are increases through grow^th of the
country and the after-costs of war, principally in pensions. In a few
years the curve of decreasing abnormal expenditures is met by the
curve of increasing normal expenditures. President Garfield, when
he was chairman of the Appropriations Committee of the House,
calculated from a study of financial history of the world that these
curves should meet in a number of years after the war which is twice
the duration of the war. His calculation was correct in the Civil
REPORT OF THE SECRETARY OF THE TREASURY 279
War period, and it seems to be substantially right again to-day.
Total expenditures chargeable against ordinary receipts of 63^ bil-
lion in 1920, the first real peace year, dropped to 33^ billion in 1924,
or four years after a two-year war. They went up 25 million in
1925, another 50 million in 1926, and the President in his budget
speech last June stated that it might be possible to have a minimum
of $3,600,000,000 in 1927. Without the determined stand of the
President for economy, the expenditure figures would have been
greatly increased, but in spite of holding expenses to bedrock, the
growth of the country seems finally to have caught up and we can
not rely on further decreases to supply a surplus.
The purpose of government is to give its citizens life, liberty, and
the opportunity to pursue happiness. This is a large and expensive
order. Stated otherwise, the Government should provide the pro-
tection and facilities its people require. The sole source of a coun-
try's revenue out of which this duty can be performed is taxation.
Taxation, therefore, should be sufficient to meet the nation's policies,
but no more. It is not possible to estimate with absolute accuracy
this cost or the revenue for future years. Reductions in expendi-
tures are not likely except through decline in interest charges by
retiring or refunding at lower interest rates the public debt. A bit
of new legislation, a new activity of Government, may increase the
expenditures; a shading of prosperity, the exhaustion of a capital
asset now held, may decrease receipts — two types of influences
which are cumulative in their effect, both reducing surplus. With
an unbalanced budget a sinking fund is a mockery. We should not
contemplate in peace time spending more than we receive. We
should, therefore, consider an annual surplus of $100,000,000 as no
more than a properly balanced budget. This is only 13^ per cent
of our total receipts and expenditures, and is, one must admit, a
narrow margin. When this margin is insured, we can turn to fur-
ther tax reduction.
As I have stated, with a large existing indebtedness, the surplus of
prior years is not carried forward in cash, but goes into reducing
debt. Past surpluses are not available for future tax reduction.
A cut in taxes, other conditions being equal, works a loss of revenue
not for one year but for every year, whereas surplus may be an
isolated phenomenon appearing in one year and not in the next. It
is for this reason that the Government, whatever it may have received
in past years, can not afford to reduce its revenues below its expected
expenditures in future years.
There is a peculiar argument one hears advanced that it is proper
to add together the surpluses of two years to determine the amount
taxes can be reduced. On this theory a man who received $100 a
week and spent $95, and who had two $5 bills in his pocket, could
continue to break even week after week with his receipts cut to $90
and his expenses remaining at $95. This is political finance.
Some six months ago Congress reduced taxes in the revenue act
of 1926. The anticipation of this aided in bringing the country to
the present high tide of prosperity. The Treasury has shared
abundantly and the revenues will this year more than meet the cost
of government. The previous cuts in taxes have been possible
because of strict economy which has brought about war-cost defla-
tion promptly and the increasing business activity of the country
280 REPORT OF THE SECRETARY OF THE TREASURY
which has followed. As I have said, expenditures seem to have
reached a level, but it is quite too early to be assured that revenues
will keep up. Tides ebb and flow. They do not remain constant.
The people do not want a reduction one year and new taxes the next.
It would be most unfortunate to have to add to a declining prosperity
more taxation and thus accelerate the decline — uncertainty added
to uncertainty. The administration has gone far in the past few
years, and it should be sure the next step is not over the line. If a
full year's trial of the present taxes justifies the belief in a higher
surplus than S100,000,000 for several years, the excess should go to
tax reduction, but below that margin, and before we have that
assurance, we should not go.
To summarize, I quote from Secretary Mellon's statement to the
Ways and Means Committee in the last session of Congress:
This country is to-day exceedingly prosperous. It can afford to pay off its
debts without undue burden upon its taxpayers. Its liistory has always been
prompt extinguishment of its war debts. It is ready for the next emergency
when it comes. The time to repair your roof is in good weather, not when it is
raining. The time to pay your debts is when you can.
Exhibit 49
ADDRESS BY UNDERSECRETARY OF THE TREASURY WINSTON
BEFORE THE BANKERS' CLUB OF KANSAS CITY, OCTOBER 11,
1926, ON CURRENCY STABILIZATION IN EUROPE
The change from a debtor to a creditor nation has made America
the factor in any financial readjustment of Europe, and in turn a
financially sound Europe is essential to a continuance of our own
prosperity. One does not have to engage in international banking
to appreciate that America is a part of the world. Our export trade
to Europe last year amounted to some $2,700,000,000. Our manu-
facturers and farmers need this market. I think, therefore, that a
survey of Europe from a fiscal standpoint is not inappropriate out
here in the great Middle West, where so much of our exportable surplus
is produced.
England has successfully returned to a gold basis. Germany has
been reestablished through the Dawes plan, but in France, Italy, and
Belgium restoration is incomplete.
Before coming to a consideration of the particular question, it
is well to understand that the situation in Europe is nothing new or
unexpected. In every great war the expenditures of the Government
must exceed its current receipts. Cash with which to carry on must
come from borrowing and from the inflation of currency, that is,
printing more paper money. We can not criticize Europe. During
the Civil War we inflated by the issuance of greenbacks, so that our
paper was worth in gold only 35 cents on the dollar. The year after
the war w^e started to deflate, but two years later we abandoned the
attempt, and it was not until 14 years after the war and with bumper
crops that we actually resumed specie payments. The debates in
Congress during this period do not differ in tenor from the debates
in the European parliaments demanding inflation and protesting
against suffering the hardships of deflation. If it took this country
REPORT OF THE SECRETARY OF THE TREASURY 281
14 years to get over currency inflation, we can hardly blame Europe
if it is not on its feet 8 years after the World War.
There is another charge laid against the European countries which
it seems to me is unfair. It is said that the people do not pay taxes.
The true test of taxation is not the paper rates of tax or the fact
that some classes or some persons do not pay their proper proportion
of the tax, but how much money does the government collect out of
its people from all sources, direct and indirect, and what proportion
of the total income of the nation is this collection. If we apply this
test, the burden of taxation in France, Belgium, and Italy is very
high. Perhaps it is not as great as that paid by the English people,
but it is certainly much above what we pay in this country.
The war ended. The situation of France was typical. It found
itself presented with a verj^ difficult choice. A large part of its indus-
trial area had been destroyed. If France were willing to accept a
place as a second-class nation and no longer be a factor in the indus-
trial trade of the world, it might leave its territory just fields, of
ruins, shell holes, and rusted wire; but if France wished to continue
to occupy its place in the world it must rebuild the devastated area
promptly, no matter what the cost. Unless this area could be made
again productive, the remainder of the country could not support
the burden imposed by the war. It was just as if a manufacturer
had a plant partially destroyed by fire; he would have to rebuild
the plant so that his production would be large enough to cover his
overhead, and he would have to do this whether his insurance was
paid or not. The other alternative is to quit business. France
elected to keep on, and it was right. Keeping on meant enormous
expenditures in excess of the current receipts, further inflation, and
a postponement of stabilization. To a lesser degree the same con-
ditions existed in Italy and Belgium. The time has now come,
however, when each of these countries must decide whether it will
destroy all values by unsound policies or put its house in order.
The longer action is postponed the more difficult it becomes to follow
the sound course, and there is a point of complete collapse. If a
ship rolls beyond a certain angle, it can not right itself.
The problems of stabilization involve two factors — one political
and the other economic. There seems to be a defect in present
government in Europe the cause of which is fundamental and which
lies in the history and institutions of those nations. England over
the course of centuries evolved a system of parliamentary govern-
ment the success of which depends on having two parties. This
system differs from American constitutional government in the impor-
tant particular that England has no separation of the executive and
legislative powers. Continental Europe had lived under monarchies
where there was a strong executive and no legislative power, the
exact opposite of the English theory. In the nineteenth century the
English form of government was taken over bodily into Europe. It
was thought effective government could be assured by a representa-
tive legislature with the executive powers of the English parliament
and all would be well. Instead of a two-party government, where
the majority party has the power to adopt and make eft'ective its
program and is held solely responsible for the administration of the
country, and the minority party serves as a check on the action of
the majority, we have had in almost every country in Europe the
282 REPORT OF THE SECRETARY OF THE TREASURY
development of dozens of parties shading into each other. As a re-
sult, party government does not exist, but we have government by
coalition, a system of trades and dickers, no responsibility, and no
continuity. Europe struggled along under this system up to the
war. During the war military purpose substantially controlled
Parliament, but in the difficult days of reconstruction the system
has frankly broken down. Parliament seems to have failed except
in Switzerland and the Scandinvian countries, where local self-
government has been a part of their history. Italy, Spain, Portugal,
Poland, and Greece have abandoned the legislative and readopted the
executive power in the form of a dictatorship. It is this weakness in
government which has constituted one of the largest problems in a
financial stablization.
It is interesting to see how the three countries we are discussing have
met the problem. Italy is frankly a dictatorship. Mussolini is all
powerful, and within the limitation that even a dictator if he is to
coutinue must carry with him the support of his people, is able to act
on a purely economic basis. Belgium, after several failures in-
volving months when it was impossible to form any government, has
created her King temporarily a dictator, but the direction of her
fiscal afl'airs is in the hands of Mr. Francqui. In France the situation
became very bad indeed before Parliament recognized to the full the
duty it must perform. France seems to have met the problem by a
cabinet representing practically all of the important parties.
The solution of the political problem seems, then, to be on the way,
and we can approach the economic side. Now, as has been often
stated, the reorganization of a country's finance is very similar to
the reorganization of any large industrial corporation. First, it must
balance its budget, it must cut its costs, increase its sales, and get
out of the red. Second, it must ascertain and fund its demand or
short term obligations. This is like getting a corporate creditor to
take stock in the reorganized company. And thu'd, it must stabilize
its currency. There is nothing just similar in a corporate reorganiza-
tion, but stabilization is something analogous to putting a new com-
pany on a profit-making basis by additional capital and good manage-
ment.
The balancing of the budget involves two sides: First, a decrease
in expenditures, which means cutting down the number of the public
servants, the activities of the government and military costs, and
putting the public utilities, such as railroads and telephones, on a
commercial basis, and making them pay their way; second, on the
other side of the ledger, increasing rates and making a more productive
system of taxation, what we call in this country a reform of taxation
so that the taxes which are imposed will bring greater revenue and be
less burdensome. For example, I have been told that a bachelor in
France with a certain income is supposed to be taxed 95 per cent of
his income. Of course, he can not afford to pay such a tax, so all is
evaded. A lower tax would produce revenue.
A proposition closely connected with the balancing of the budget
is the ascertainment and funding of future liabilities so that they can
be met when they come due. This involves principally the settlement
of the war debts and funding the internal floating debt so as to relieve
the Treasmy from embarrassment on every occasion of financial
strain. The three countries have negotiated settlements of their
REPORT OF THE SECRETARY OF THE TREASURY 283
war debts and, except in the case of France where the agreement has
not yet been presented to Parliament, the settlements have been
approved. Belgium has already taken care of its floating debt by
a conversion of it into preferred stock of a company organized to take
over the Belgian state railways. France expects to handle this in
the more usual way through a sinking fund, gradual retirement, and
funding. Italy, because it has for several years balanced its budget
and is internally upon a sound basis, has the floating debt now well
in hand.
The third and most difficult step is the stabilization of the cm--
rency. Stabilization presents hardship but no great unusual diffi-
culty where the currency can be restored, as England has done
recently and as we did after the Civil War, at its original value.
But where this deflation is impossible, as it is in the three countries
we are discussing, the point of stabilization is extremely difficult to
determine. There arises at once a conflict in interest between those
who are investors in fixed interest-bearing securities or who have a
fixed income and those engaged in industry. Stabilization at any
point below former parity must mean appropriation by the State
of a part of the value of its bonds sold to its people. Whfle all of the
French bonds were not sold when the franc was worth 20 cents,
still figures I have seen indicate that the average of all investments
at home in France's obligations were at about 15 cents per franc, or
75 per cent of the pre-war value. If the franc should now be sta-
bilized at 3 cents, the Government will have taken four-fifths of the
value of the loans made to it by its own people. This is an enormous
capital tax which we should consider when we are discussing the
burden the French people have to bear.
If the stabilization point is too high, stabflization can not be main-
tained. If it is too low, there is an unnecessary capital tax and an
increase in the internal price level, bearing most heavily on those
with fixed income. Where this point should be depends largely upon
the external purchasing power of the currency, that is, its quotation
on the world's exchanges, and the internal purchasing power of the
currency, that is, what it will buy at home. These values vary
greatly during the period of inflation, and what is the true value of
the currency is difficult to determine. It seems to be desirable,
therefore, to remove the economic influences on the exchanges by
balancing the budget, by eliminating the threat of inflation, and by
restricting imports so that the balance of international payments will
not be adverse, then when the internal and external prices come
together and the current exchange rate ceases to fluctuate violently,
and when stabilization in fact exists, stabilize at that point by law.
It is toward this stabilization that these countries are now striving.
When we read in the papers that war bread is being eaten in Belgium;
that Italians may not go traveling abroad; or that France is growing
more of what it needs in its colonies, you can understand that these
are all means to the ends of improving the relation between the
receipts of the country from the world and its payments to the world.
The mere determination of a point of stabilization is not sufficient,
but assurance must be had that when the value of the currency is
fixed it can be maintained. It is here that America comes into the
picture. Credits or loans must be obtained to support the program
until fuH public confidence is restored. When England prepared to
284 REPORT OF THE SECRETARY OF THE TREASURY
go on a gold basis it first accumulated dollar exchange — that is, de-
posits in America — then the Bank of England arranged for a credit
of $100,000,000 with the Federal reserve banks of this country and
the British Treasury negotiated a credit with private bankers in
America for an additional $200,000,000. Credits are not loans, but
simply lights to borrow if necessity arises. Thus bulwarked against
any possible speculative assault and in position to meet any financial
crises which might arise, the free export of gold was made lawful.
England has now been on a gold basis for a year and a half. It has
faced the trying period of the coal strike and yet it has not had to
draw on a dollar of the $300,000,000 credit. It seems to me that
these credits bear a strong resemblance to the conspicuous delivery
of truck loads of currency to a sound bank upon which for some
reason there is a run of depositors. When the depositors know they
can get their money, the run stops. When the people know they
can get foreign exchange, export of capital ceases, money previously
exported returns, and the foreign exchange rests upon a sensible and
not a fright basis. Not only do these extensions of credit fortify
the country seeking to stabilize against attack, but the fact that
foreign bankere are willing to grant credits is notice to the world of
their confidence in the country, and in itself is a great help in removing
the fear of subsequent disaster. It is most effective window dressing.
I do not know whether the program of stabilization in the three
countries we have been talking about has advanced to the point
where such credits or foreign loans arc considered essential. These
credits are not granted by the Treasury, but by the Federal reserve
banks in connection with the banks of issue of other stable countries
and by private American bankers. If the time should come when
the credits are sought, or if it should be desirable to float a loan in
this country, it would be clearly to our interests in America that this
help be extended. Nothing is more productive than the money which
puts a country on its feet financially, and we here in America have the
money and with our large market abroad will benefit greatly through
stabilization in Europe.
If we compare the three countries, Italy has the least diflScult
governmental problem and the most difficult exchange problem.
A despotic form of government, intelligently run as it is in Italy, is
efficient. On the other hand, Italy is overpopulated, with few
natural resources, and must import many necessities. It requires
consummate skill to keep the payments that Italy makes to the
world less than those which Italy receives from the world. Belgium
occupies an intermediate position. Its Government can not be as
despotic as that of Italy. Temporarily at any rate, its affairs are
in the hands of a financier and not a politician. Its international
situation is somewhat better than Italy's. True, it owes a lot
abroad, hut it has large resources in the Congo and industrially it is
very productive. France is almost the reverse of Italy. Its Govern-
ment is a coalition of many diverse interests, working together
to-day but which may disintegrate to-morrow. Its economic position,
on the other hand, is excellent. Its visible balance of trade is not
excessively adverse, it still holds some good investments abroad,
and it has an enormous invisible export in foreign tourist expenditures.
I think that there is no doubt that the balance of international
payments is in favor of France and stabilization is feasible.
REPOET OF THE SECRETARY OF THE TREASURY 285
The administration has done its share in negotiating debt settle-
ments within the capacity of the debtors and has been extremely lenient
in the early difficult years. Our Federal reserve system and our pri-
vate bankers understand the real interest of the United States in
Europe and are helping. So with the full realization that these
countries now have of the problem before them and with the power
that the respective governments now possess through the support
of their people, I believe that Europe should soon again be in a sound
position and stabilization be an accomplished fact.
Exhibit 50
PRESS STATEMENT BY SECRETARY MELLON ON THE TARIFF
QUESTION
October 25, 1926.
There has recently appeared in the press of the world a "Plea for
the removal of restrictions upon European trade," signed by many
bankers of the European countries and some of the bankers of this
country, stating that tariff barriers, special licenses, and prohibi-
tions imposed in Europe since the war interfere with international
trade and prevent it flowing in natural channels and should be
removed. The fact which gave rise to this situation is the break-up
of the old political units and the rearrangement of the Continent
along ethnical and not commercial lines. For example, the Austro-
Hungarian Empire w^as a commercial, manufacturing, and agricul-
tural whole. To-day Austria, with its plants, banking facilities,
and railroads, is cut off from both its markets and its sources of raw
material. We have a brain without a body. It is just as if we
should make New York City with the southern portion of New
York State and the States of Connecticut and Rhode Island a
separate country. The city would be too large for the territory
which it could reach and the rest of the United States would be
deprived of that intensive manufacturing and financial center.
The situation in Europe since the war is different from the situation
in America. The two would only become comparable if we should
consider each of the 48 States a separate nation, each having its
own tariff, its own railroads, its own currency, and its ovm. language.
Under such conditions the industrial power of the United States
must and would end. What the plea of the bankers seeks to accom-
plish in its final analysis is not a change in the world but to bring
about in Europe a condition similar to that in the United States.
It is not criticism of us but emulation.
Nevertheless our public thought and some of our press argued
that because artificial barriers hinder readjustment in Europe we
must change our tariff policy; but one can not take a policy, which
is essential to the relief of Europe under conditions arising out of the
war, and say that this policy is proper for the United States, unless
it can be established that conditions are the same. Conditions are
not the same. The purpose of the pohcy in Europe is to provide a
territory large enough to contain raw materials, manufactures, and
a market so that industry may function where coal and iron and
laborers are convenient and food may be produced where conditions
286 REPORT OF THE SECRETARY OF THE TREASURY
for its production are favorable. No such limitation exisj;s in the
United States. We do not have to put a steel plant in. Kansas or
grow wheat around Gary, Ind. We have one transportation system;
we speak one language, and we have one kind of money among
120,000,000 people in an area the size of most of Europe outside of
Russia.
But there is a still greater distinction between Europe and the
United States, It is true there are different nationalities and differ-
ent languages on the Continent, but, generally speaking, the standard
of living among the principal nations abroad is about on the same
level, just as the standard of living of the people of the United
States is about the same, whether residents of Texas or Minnesota,
Massachusetts or California. But the standard of living of Euro-
peans is quite different from the standard of living of the United
States. Unless we are willing to bring our standard in America
down to the level of that of Europe, we can not consider a change in
our tariff however desirable such a change may seem to Europe.
Our tariff polic}'^ has been mainly responsible for the development
of manufacturing in America. Our tariff policy has brought to labor
the highest real wages in history. The development of manufactur-
ing has been accompanied by improved methods and quantity pro-
duction, and we have been able to make and distribute at a relatively
low price considermg the high cost of labor. In many lines we more
than meet foreign competition with its low labor costs. In turn,
high wages have created a great consuming population, which has been
the principal factor in our reaching quantity production and thus
low costs. A study of the industries in this country shows a very
small margm of profit per unit and large profits in the aggregate
possible only through large turnovers. These reasons, I think,
account for the present exceedingly prosperous condition generally
of our country.
Again, as I have said, the statement appears to be directed to
Em'opean and not American conditions. Still, the appearance of the
statement has been the occasion for an attack on American policies
upon the assumption that our tariff is harmful to the restoration of
world prosperity. I should like, therefore, to state my views on
American tariff policy.
When the present tariff measure was in process of enactment, it was
freely predicted that its passage would seriously restrict foreign trade,
particularly import trade. Some extremists contended that the
proposed rates were prohibitive and would result in a virtual embargo
on commerce. The tariff law has now been in operation for four
years and its influence on commerce is no longer a guess. With
disregard of the facts, statements are still being made that foreign
countries at the present time are unable to sell in the American
market. This is not a fact. During the fiscal year which ended
June 30, 1926, merchandise with a total value of nearly $4,500,000,000
was imported into the United States. With due consideration to
unit values, this represents a larger volume ■of imports by a very
considerable margin than has ever been brought to the United
States in any preceding 12-month period.
The trend of trade during the past few years convincingly confirms
the contention that the volume of imports is controlled by the pur-
chasing power of the Nation, rather than the rate of import duties
REPORT OF THE SECRETARY OF THE TREASURY 287
assessed. An unparalleled combination of high wages and industrial
activity has raised the purchasing power of the people of the United
States to new high levels, which has brought about increased con-
sumption of commodities of practically every description. A study
of the consumption of the more common commodities in the United
States in comparison with the total world production shovrs what
America means to the rest of the world.
During the calendar year 1925 the world production of coal
amounted to 1,500,000,000 tons. The United States' consumption
of coal amounted to 566,000,000 tons. In other words, with slightly
over 6 per cent of the world's population, the United States has con-
sumed 37 per cent of the total world's coal production. In pig iron
the percentage of world production consumed in the United States
was 48, in copper 46, in rubber 75, in coffee 51, in petroleum 75, in
tin 52, in raw silk 77, and in nitrate 48. British India exported
during the fiscal year ending March 31, 1925, 42,000,000 pounds of
shellac. Of this total, 21,000,000 pounds entered the United States.
Shellac is an almost exclusive product of British India, and 50 per cent
of the total exports found their way to the United States.
That the 6 or 7 per cent of the world's population who live in
continental United States should supply a market for such large
proportions of the world's total production of principal commodities
is a consideration of greatest importance to the world's commerce,
industry, and the employment of labor. No economic survey of
world conditions can reach correct conclusions unless this major
factor- — the high purchasing power of the United States — is taken
into account and its effect intelligently understood.
Whether the economic policies of the United States, our industrial
activity, and prosperous conditions are of benefit to foreign countries
can best be determined by analyzing the possible effect on other
nations of a reduction of the per capita consumption of commodities
in the United States to the world average. If, for example, the con-
sumption of rubber in the United States should be reduced to the
world average, it would mean that there would be no market for
more than 50 per cent of the world's present production. It would
mean bankruptcy to certain dependencies whose livelihood is predi-
cated almost exclusively on the rubber industry. A reduction in the
consumption of coft'ee in the United States to the world level would
wipe out the market for some 40 per cent the world now produces,
and would cause great financial losses to Brazil. A reduction in the
consumption of sugar in the United States to the world level would
bring financial ruin to Cuba, and likewise a reduction in the consump-
tion of wool would adversely aft"ect Australia. As the United States'
consumption is 77 per cent of the world's production of raw silk, a
reduction in the consumption of raw silk to the world's per capita
average would destroy the market for 70 per cent of the silk produced.
A reduction in the consumption of nitrate in the United States would
injure Chile, and a reduction in the United States in the use of shellac
would cause financial reverses in British India. American money
going to Japan for the purchase of silk, to Brazil for the purchase of
coffee, to Cuba for the purchase of sugar, to Chile for the purchase of
nitrate, and to British India for the purchase of shellac, enables these
countries to increase their purchases from European countries, as
well as the United States,
288 REPORT OF THE SECRETARY OF THE TREASURY
An individual out of employment, generally speaking, is \vitliout
purchasing power and is a detriment rather than an asset to his com-
munity. Likewise, a nation out of employment is a detriment to
the rest of the world. Conversely, a man well employed reflects
prosperity and is a benefit to his community; and a nation well em-
ployed reflects prosperity on other countries. Preeminently the
United States is prosperous and by furnishing a market for such
amazing proportions of what the world produces is reflecting pros-
perity on other nations. A fair survey of facts can not lead to a
conclusion other than that the economic policies of the United States,
and their resulting industrial activity and prosperity, have played a
leading role in aiding the world to recover from losses and damage
wrought by the war.
The tariff law of October 3, 1913, materially reducing import
duties, did not become effective as to all. its schedules until January
1, 1914, and early in August the outbreak of the World "War caused
a disruption of commerce. Therefore, the act of 1913, uninterrupted
by war conditions, was in operation for a period of but seven months.
A comparison of imports during the seven months ending July 31,
1914, with the seven months ending July 31, 1926, is as fair a com-
parison as can be made of the effect of the tv/o laws. While imports
in general have materially increased during the lapse of 12 years, the
kinds of imports, rather than the quantities, are of most interest in a
study of foreign trade.
In 1914 there was much unemployment, and, compared with this
year, the purchasing power of the nation was materially reduced.
The value of imports of crude materials for use in manufacturing
during the seven-month period in 1914 was less than S400, 000,000,
while during the corresponding months of this year the value of this
group of imports was SI, 120,000,000. In 1914 this group was 34
per cent of the total, and although the total imports have more than
doubled, this year the imports of this group constitute 42 per cent
of the total importations. The use of large quantities of crude mate-
rials is the necessary result of industrial activity and indicates
healthy industrial conditions. In 1914 partly manufactured articles
for further use in manufacturing amounted in value to $180,000,000,
or 15 per cent of the total, while this vear this group of imports
was valued at $480,813,000, or 18 per cent of the total. This
increase was an incidental also to increased industrial activity.
Manufactured foodstuffs in 1914 made up 14 per cent of the total
imports, while this year the percentage is 9; and of other finished
manufactures the percentage in 1914 was 22 and 18 this year. Fin-
ished manufactures, generally speaking, are competitive products,
and the relatively large imports of 1914 without question served to
aggravate the unemplojnnent situation then existing.
In the light of experience the contention can not be sustained that
reduced duties on competitive products would increase the aggregate
quantities of all things consumed in the United States. On the other
hand, the evidence is most convincing that the converse would obtain.
Assuming that temporarily the importation of competitive products
would increase with reduced duties and that the consumption of
such commodities in this country w^ould not increase but would
decline, it- would mean but one thing, and that is that American
labor would bo deprived of making these commodities to the extent
REPORT OF THE SECRETARY OF THE TREASURY 289
of the increase in the imports plus the decrease in consumption.
The decrease in consumption and the increase in imports would all
be at the expense of American industry — it would be at the expense
of the purchasing power of this nation and eventually would reduce
this country's purchases of foreign products whether competitive or
noncompetitive, dutiable or free.
Under the present law, generally speaking, competitive articles are
dutiable and noncompetitive articles free of duty. While imports
are steadily increasing, the increases are in the duty-free or non-
competitive products. For instance, dutiable imports in 1926 were
about $1,500,000,000, about the same as in 1924, but free imports
increased in the 3 years from $2,000,000,000 to nearly $3,000,000,000.
Under our present American policy, foreign countries are able to
sell the United States increasing quantities of the class of things
the United States does not produce. As a whole, these increased
imports are of a kind that supply the needs of this Nation's industries
and not the kind that injure such industries by displacing what
they produce. No doubt to those who have been misled into the
belief that at present foreign countries can not sell to the United
States, the statement that during the fiscal year 1926 no less than
65.2 per cent of the total imports were free of duty is a distinct
surprise and the fact that in 1926 imports free of duty exceeded the
total of imports both dutiable and free of the year 1914 by more
than 60 per cent is a revelation.
It is apparent that reduced tariff rates would materially change the
kinds of imports and the percentages of the various great groups
to the totals, but it is anything but apparent that the totals would be
increased, and there is much to indicate that the totals would decline.
It is fallacy to assume that reduced import duties will enable this
country to increase its purchases abroad, for the measuring stick
is the Nation's purchasing power and not the amount of duty assessed.
With business activity and high wages the United States will con-
tinue to be of great economic benefit to other nations; but any
economic policy that will occasion unemployment in the United
States and reduce its purchasing power will diminish this country's
consumption of commodities and cause large surpluses of the world's
principal products and result in serious financial losses to them. A
cut in the tariff would materially reduce rather than increase our
purchases abroad; it v/ould not enable foreign countries to sell more
in the American markets, but would prevent them from selling
as much; it would not help certain foreign nations to recover from
the losses occasioned by the war, but would retard such recovery.
Consider again what our tariff policy has meant to American labor.
I know personally of one manufacturing company which has plants
in France, in Brazil, and in the United States. The wages paid labor
to-day at these three plants reduced to American currency are as
follows: Unskilled labor gets in France 73^ cents an hour, in Brazil
123/^ cents, in this country 40 cents. Skilled labor lOj^, 21, and
65 cents, respectively. In other words, a laborer in this industry
gets six times more per hour in America than he does in France for
the same kind of work. Can it be to the interest of the United States
that equality be established by the removal of the protection of the
tariff?
290 REPOET OF THE SECRETARY OF THE TREASURY
As an example I might cite the case of the Aluminum Co. of
America. The raw product of aluminum is bauxite, deposits of
which occur in the United States, in British Guiana, and in many
other countries of the world. The principal cost of the manufacture
of aluminum is electric power and labor. The cheapest power in the
world is hydroelectric; the cheapest labor is foreign. The Alurriinum
Co. has many power properties in the United States, but others in
foreign countries, and the largest power of all is now being developed
in Canada. From its plants in the United States the American
market is supplied; from its plants abroad the foreign market is
supplied. If the present tariff on aluminum is maintained, develop-
ments for the expansion of domestic business will be made in the
United States. If the tariff be removed, these developments will
occur in foreign countries and part of the American market be sup-
plied from abroad. The effect of removing the tariff on aluminum
would not in the least be to hurt the Aluminum Co. but to deprive
the United States of the benefit of enlarged manufactory here. Less
capital will be invested here and less labor employed.
The same condition holds true of a great many other large manufac-
turing industries in the United States. If the tariff is taken off, a
larger share of manufacturing will be done abroad where the costs
are less.
The United States is the largest customer in the world to-day. If
we were not prosperous and able to buy, Europe also would suffer.
It is inconceivable to me that American labor will ever consent to
the abolition of protection which would bring the American standard
of living down to the level of that in Europe, or that the American
farmer could survive if the enormous consuming power of the people
in this country was curtailed and his market at home destroyed.
eeport of the seceetaey of the teeasury
Exhibit 51
291
SUMMARY OF PRINCIPAL CHANGES IN TAXES AND TAX RATES
IN THE REVENUE ACT OF 1926
Title in revenue act, tax, and
Revenue act of 1924:
Rates, credits, etc.
Revenue act of 1926
provision of tax
Rates, credits, etc.
Date effective
II
INDIVIDUAL INCOME TAX
■ l) '
Jan. 1, 1925
Credits:
Single individual
,$1,000-- -
$1,500...
Married individual or head
$2,500
$3,500- --
of family.
Earned income credit: Maxi-
$10,000
$20,000 -
imum net income on which
credit may be claimed.
Normal tax rates:
First $4,000 of taxable net
IH per cent
income.
Next $4 000 of taxable net
3 per cent . . .
income.
cess of $8,000.
Surtax rates: '
Rates apply to net income
in excess of.
$10,000 --
40 per cent on net in-
come in excess of
$500,000.
20 per cent on net income in
excess of $100,000.
$1,500 or over --
Individuals required to file re-
turn:
Single, or married and not
living with husband or
wife, and having net in-
come of.
Married and living with
husband or wife, and hav-
ing net income of.
Having gross income for tax-
able year of $5,000 or over.
$3,500 or over ---
Regardless of amount of
net income.
Do.
12H per cent.- . .
13 per cent for income of cal-
endar year 1925; 133^ per cent
after 1925.
On incomes of calendar year
1925, 24 per cent of tax each
of first 2 installments, and
26 per cent of tax each of last
2 installments. After 1925,
same as in revenue act of
1924.
12}^ per cent. -
of credits.
Requirement for installment
payments.
Tax rate on net income of life
insurance companies.
COHPOKATION AND INDIVIDUAL
INCOME TAX
Publicity of returns
4 equal installments
Do.
List made available for
public inspection, con-
taining name and ad-
dress of each person
making return, and
amount of tax paid.
$50 000 - -
List made available for public
inspection, containing name
and address of each person
making return.
$100,000
Retroactive revision of 1924
rates, 1 per cent to 25 per
cent.
1 per cent to 20 per cent
Not to exceed 80 per cent of
Federal tax.
III
ESTATE TAX
Net estate exempt from tax
Tax rates: Graduated rates on
net taxable estate; maximum
rate on net taxable estate in
excess of $10,000,000.
Credit for State inheritance,
etc., taxes paid.
Feb. 26,1926
1 per cent to 40 per cent.
(Revised retroactively
by revenue act of 1926.)
Not to exceed 25 per cent
of Federal tax.
June 2,1924
Feb. 26, 1926
Do.
» For detailed rates, see Exhibit 52, page 294.
292
REPORT OF THE SECRETARY OF THE TREASURY
Summary of principal changes in taxes and tax rates in the revenue act of 102S-
Continued
Title in revenue act, tax, and
provision of tax
Revenue act of 1924:
Rates, credits, etc.
Retroactive revision of 1924 tax
rates: Graduated rates on net
taxable gift; maximum rate
on net taxable gift in excess
of $10,000,1100.
IV
CIQAKS 3
1 per cent to 40 i)cr cent .
(Revised retroactively
by revenue act of 1926
and excess collections
made refundable.)
Tax rates ,
Weighing not more than 3
pound.s per thousand.
Weighing more than 3
pounds per thousand:
Retail at not more than
5 cents each.
Retail at more than 5
cents and not more
than 8 cents each.
Retail at more than 8
cents and not more
than l."; cents each.
Retail at more than 15
cents and not more
than 20 cents each.
Retail at more than 20
cents each.
V
ADMISSIONS 3
Admissions exempt from tax...
VI
EXCISE TAXES
On value of manufacturers'
sales:
Automobile chassis and
bodies and motor cycles.
Automobile truck chassis
and auto-wagon chassis
sold in excess of $1,000,
and bodies sold in excess
of $200.
Tires, parts, inner tubes,
accessories.
Cameras and lenses
Photographic films and
plates.
Firearms, shells, and car-
tridges.
Cigar or cigarette holders,
pipes, humidors.
Coin-operated devices or
machines.
Mah-jongg or similar
sets.
On value of dealers' sales:
Sculpture, painting,
works, etc.
Jewelry, pearls, etc
$1.50 per thousand.
$4.00 per thousand .
$6.00 per thousand .
$9.00 per thousand..
$12.00 per thousand.
50 cents or less.
5 per cent.
3 per cent .
2J/2 percent.
10 per cent..
5 per cent...
tile
art I
10 per cent.
....do
5 per cent..
10 per cent.
5 per cent..
....do
Revenue act of 1926
Rates, credits, etc.
Tax repealed
Retroactive revision of 1924
rates, 1 per cent to 25 per
cent.
$0.75 per thousand .
$2.00 per thousand .
$3.00 per thousand .
$5.00 per thousand . .
$10.50 per thousand.
$15.00 per thousand $13.50 per thousand
VII
8PECIAL TAXES
Capital stock tax ' $i for each $1,000 of fair
I average value of capi-
tal stock in excess of
$5,000.
' Other tobacco taxes unchanged.
75 cents or less.
3 per cent.
Repealed..
.do.
-do.
-do.
10 per cent on pistols and re-
volvers.
Repealed
.do.
-do.
.do.
.do.
.do.
Date effective
Jan. 1, 1926
June 2, 1924
Mar. 28, 1926
Mar. 28, 1926
Mar. 28, 1926
Feb. 26,1926
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
June 30, 1926
' Tax on dues unchanged.
REPORT OF THE SECRETARY OF THE TREASURY
293
Summary of principal changes in taxes and tax rates in the revenue act of 192
Continued
Title in revenue act, tai, and
provision of tax
Miscellaneous occupational
taxes:
Brokers, except produce
and merchandise brokers.
Pawnbrokers -.
Stiip brokers
Customhouse brokers
Proprietors of bowling
alleys and billiard tables.
Proprietors of shooting gal-
leries.
Proprietors of riding acad-
emies.
Persons operating passenger
automobiles for hire, ac-
cording to capacity of
automobile.
Brewer, distiller, etc
Manufacturers of tobacco
products.
Tax on use of boats..
Tax on narcotics; Physicians,
dentists, veterinary surgeons,
etc., distributing narcotics.*
VIII
STAMP TAXES »
Bonds of indebtedness: 5 cents
on each $100 of face value or
fraction thereof, applied to.
Conveyances of realty .
Entry of goods, wares, etc., at
warehouses, for consumption
or warehousing.
Entry of goods, wares, etc., at
warehouses for withdrawal.
Proxy for voting
Power of attorney
IX
DISTILLED SPIRITS
Tax rate, per proof gallon or
wine gallon when below proof,
and a proportionate tax at
like rate on fractional parts:
Nonbeverage use [$2.20 (revenue act
1918, as amendedj.
Revenue act of 1924:
Rates, credits, etc.
$50 each..
$100 each.
$50 each.,
do-
$10 per alley or per table.
$20 each
$100 each
$10 or $20 per automobile
$1,000 each
Graduated rates for man-
ufacturers of different
products.
Graduated by length of
boat in feet— $1 to $4
per toot.
$3 per annum.
All bonds, debentures,
or certificates of in-
debtedness issued by
any person, and all
instruments, however
termed, issued by any
corporation, etc.,
known generally as
corporate securities.
50 cents for value from
$100 to $500, and 50
cents for each addi-
tional $500 or fraction
thereof.
Graduated, 25 cents to
50 cents .
10 cents.
25 cents -
Beverage use.
CEREAL BEVERAGES
Containing less than one-half of
1 per cent of alcohol by vol-
ume.
$4.20 additional if used
or sold for beverage
(revenue act of 1918, as
amended) .
No tax.
Revenue act of 1926
Rates, credits, etc.
Date effective
Repealed .
.do.
.do.
.do.
-do.
.do.
.do.
Same
Repealed.
Applied only to foreign-built
boats, graduated rate by
length of boat— $2 to $8 per
foot.
$1 per annum
All bonds, debentures, or cer-
tificates of indebtedness is-
sued by any corporation, etc.
(remainder same as in 1924
act).
Repealed.
.do.
.do.
-do.
.do.
June 30, 1926
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Mar. 28, 1926
Do.
Do.
Do.
Do.
$2.20 until Jan. 1, 1927; $1.65,
Jan. 1, 1927-Jan. 1, 1928;
$1.10, Jan. 1, 1928, and there-
after.
$6.40 if used or sold for bever-
age pm'poses, with a credit
for tax paid at $2.20, $1.65,
or $1.10.
Tax of one-tenth of 1 cent per
gallon or fraction thereof.
Feb. 26,1926
Do.
« Other taxes on narcotics unchanged.
> Other stamp taxes unchanged.
294
REPORT OF THE SECRETARY OF THE TREASURY
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REPOET OF THE SECRETARY OF THE TREASURY
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296 report of the secretary of the treasury
Exhibit 53
bases of statements showing government receipts and ex-
penditures
The fact that receipts and expenditures of the Government, as
pubHshed in the annual report of the Secretary of the Treasury, are
on more than one basis has caused considerable' confusion to those
who do not thoroughly understand the reasons therefor and the
methods of compilation involved. It is believed that a short expla-
nation will tend to eliminate some of this confusion.
The receipts of the Government are pubHshed on four different
bases, namely: (1) Daily Treasury statements, unrevised (current);
(2) daily Treasury statements, revised (actual); (3) warrants issued;
and (4) collections reported by collecting officers; while the expendi-
tures of the Government are published on the bases of (1), (2), and (3).
Daily Treasury statements {unrevised). — The figures shown in the
daily statement of the United States Treasury are compiled from the
latest daily reports received by the Treasurer of the United States,
from Treasury offices, and public depositaries holding Government
funds. The daily Treasury statement, therefore, is a current report
compiled from latest available information, and, by reason of the
promptness with which the information is obtained and made public,
it has come into general use as reflecting the financial operations of
the Government covering a given period, and gives an accurate
idea of the actual condition of the Treasury as far as it is ascertain-
able from day to day. This is known as "current cash basis,"
according to dailj^ Treasury statements (unrevised). Statements
showing the figures on this basis are shown on pages 176, 179, 443, 444,
448, and 452 of this report.
Daily Treasury statements {revised). — On account of the di&tance of
some of the Treasury offices and depositaries from the Treasury, it is
obvious that the reports from all offices covering a particular day's
transactions can not be received and assembled in the Treasury at
one time without delaying for several days the publication of the
daily Treasury statement. It is necessary, therefore, in order to
exhibit the actual receipts and expenditures for any given month or
fiscal year, to take into consideration those reports covering the
transactions for the last few days of the month or fiscal year con-
cerned which have not been received in the Treasury until the
succeeding month or fiscal year. After taking into consideration
these reports the revised figures indicate the condition of the Treasury
on the basis of actual transactions occurring during the period under
review. This is known as "the basis of daily Treasury statements
(revised)."
It is not practical to delay the publication of the daily Treasury
statement in order to include the later reports, as the difference
between the revised and the unrevised figures is immaterial. The
unrevised figures as shown in current daily Treasury statements are
the basis for the Budget estimates submitted to Congress by the
President. The revised figures are of no practical use except to
enable the use of a true general fund balance on the monthly state-
ment of the public debt of the United States and to bring the daily
REPOBT OF THE SECRETARY OF THE TREASURY 297
Treasury statement figures into agreement with the figures based on
warrants issued. A summary of receipts and expenditures on this
basis is shown on page 363.
Warrants issued (receipts). — Section 305 of the Revised Statutes
provides that receipts for all moneys received by the Treasurer of the
United States shall be indorsed upon warrants signed by the Secre-
tary of the Treasury, without which warrants, so signed, no acknowl-
edgment for money received into the Public Treasury shall be valid.
The issuance of warrants by the Secretary of the Treasury, as pro-
vided by law, represents the formal covering of receipts into the
Treasury.
Certificates of deposits covering actual deposits in Treasury ojEfices
and depositaries, upon which covering warrants are based, can not
reach the Treasury simultaneously, and for that reason all receipts
for a fiscal year can not be covered into the Treasury by warrants
of the Secretary immediately upon the close of that fiscal year. It
is necessary to have all certificates of deposits before a statement
can be issued showing the total receipts for a particular fiscal year
on a warrant basis. The figures thus compiled will agree with the
figures compiled on the basis of daily Treasury statements (revised) .
Statements showing receipts on this basis are shown on pages 429
and 456 of this report.
Warrants issued (expenditures). — The Constitution of the United
States provides that no money shall be drawn from the Treasury but
in consequence of appropriations made by law. Section 305 of the
Revised Statutes requires that the Treasurer of the United States
shall disburse the moneys of the United States upon warrants drawn
by the Secretary of the Treasury. As the warrants are issued by the
Secretary they are charged against the appropriate appropriations
provided by law. Some of these warrants do not represent actual
payments to claimants, but are merely advances of funds to be placed
to the credit of disbursing oJ0&cers of the Government with the Treas-
urer of the United States for the payment of Government obhgations.
The disbursing oSicer then issues his check on the Treasurer in pay-
ment of such obligations. As far as the appropriation accounts are
concerned, the warrants issued and charged thereto constitute expendi-
tures, but it will be observed that such expenditures necessarily include
unexpended balances to the credit of the disbursing oflBcers. Under
normal conditions these balances over a period of several years
fluctuate very little in the aggregate, and the difference between the
total expenditures on a warrant basis and a cash basis (revised) is
immaterial. Statements of the expenditures on a warrant basis
are shown on pages 434 and 460 of this report. On pages 441 and
442 of this report also will be found an adjustment of the expendi-
tures on a warrant basis to the basis of daily Treasury statements
(revised), from which it will be noted that in order to reconcile the
two bases there must be taken into consideration unexpended dis-
bursing officers' balances, unpaid warrants at the beginning and end
of the year, and receipts credited direct to appropriations, the last
of which are explained in the footnotes on pages 433 and 441.
Collections reported by collecting officers. — Statements showing re-
ceipts on a collection basis are compiled from reports received by the
various administrative ofiices from collecting officers in the field, such
as collectors of internal revenue and collectors of customs. These
reports cover the collections actually made by these officers during the
298 REPORT OF THE SECRETARY OF THE TREASURY
period specified. The collections are then deposited in a designated
Government depositary to the credit of the Treasurer of the United
States, which depositarj^ renders a report to the Treasurer. The
reports of the collecting officers and the depositaries do not, of course,
coincide, for the reason that the collecting officers make collections
during the last few days of the fiscal year which are not deposited
until after the close of the fiscal year. On this account the two
reports w^ill not agree. The receipts are reported on a collection basis
merely for statistical purposes and to furnish information as to detailed
sources of revenue. Classification of such items on the basis of de-
posits has been found to be impracticable and uneconomical. State-
ments showing receipts on a collection basis are shown on pages 471,
477, and 485 of this report.
Exhibit 54
[Department Circular No. 154, revised.' Chief Clerk]
ACCEPTANCE OF UNITED STATES BONDS AND NOTES AS SECURITY
IN LIEU OF SURETY OR SURETIES ON PENAL BONDS
Treasury Department,
Office of the Secretary,
Washington, April 30, 1926.
To Bond-Approving Officers, the Treasurer of the United States, Federal
Reserve BanJcs, and Others Concerned:
Treasury Department Circular No. 154, dated August 30, 1924,
is hereby amended and supplemented so as to read as follows:
The following rules and regulations are prescribed for carrying
into effect Section 1126 of the Revenue Act of 1926, approved Febru-
ary 26, 1926, which provides as follows:
Sec. 1126. Wherever by the laws of the United States or regulations made
pursuant thereto, any person is required to furni.sh any recognizance, stipulation,
bond, guaranty, or undertaking, hereinafter called "penal bond," with surety or
sureties, such person may, in lieu of such surety or sureties, deposit as security
with the official having authority to approve such penal bond, United States
Libert}- bonds or other bonds or notes of the United States in a sum equal at
their par value to the amount of such penal bond required to be furnished, to-
gether with an agreement authorizing such official to collect or sell such bonds
or notes so deposited in case of any default in the performance of any of the
conditions or stipulations of such penal bond. The acceptance of such United
States bonds or notes in lieu of suret\- or sureties required by law shall have the
same force and effect as individual or corporate sureties, or certified checks, bank
drafts, post-office money orders, or cash, for the penalty or amount of such penal
bond. Tlie bonds or notes deposited hereunder and such other United States
bonds or notes as may be substituted therefor from time to time as such security,
may be dei)osited with the Treasurer of the United States, a Federal reserve
bank, or other depositarj- dul}' designated for that purpose by the Secretary,
which shall issue receipt therefor, describing such bonds or notes so deposited.
As soon as security for the performance of such penal bond is no longer necessary,
such bonds or notes so dej^osited shall be returned to the depositor: Provided,
That in case a person or persons supplying a contractor with labor or material as
provided by the Act of Congress, apJDroved February 24, 1905 (33 Stat. 811),
entitled "An Act to amend an Act approved August thirteenth, eighteen hun-
dred and ninety-four, entitled 'An Act for the ])rotcction of persons furnishing
materials and labor for the construction of public works,' " shall file with the
obligee, at any time after a default in the performance of anj- contract subject
« Superseding Treasury Department Circular No. 154, dated Augast 30, 1924.
EEPOET OF THE SECRETAEY OF THE TREASURY 299
to said Acts, the application and affidavit therein provided, the obligee shall not
deliver to the obUgor the deposited bonds or notes nor any surplus proceeds
thereof until the expiration of the time limited by said Acts for the institution of
suit by such person or persons, and, in case suit shall be instituted within such
time, shall hold said bonds or notes or proceeds subject to the order of the court
having jurisdiction thereof: Provided further, That nothing herein contained
shall afifect or impair the priority of the claim of the United States against the
bonds or notes deposited or any right or remedy granted by said Acts or by this
section to the United States for default upon any obhgation of said penal bond:
Provided further, That all laws inconsistent with this section are hereby so modified
as to conform to the provisions hereof: And provided further, That nothing con-
tained herein shall affect the authority of courts over the security, where such
bonds are taken as security in judicial proceedings, or the authority of any
administrative officer of the United States to receive United States bonds for
security in cases_ authorized by existing laws. The Secretary may prescribe
rules and regulations necessary and proper for carrying this section into effect.
I. BOND-APPROVING OFFICERS
The term ''bond-approving officers" as used in this circular means
the head of an Executive Department or Government EstabHshment
or an officer designated either by law or regulation to approve "penal
bonds." The Treasury of the United States assumes no responsi-
bility or liability on account of the acts of bond-approving officers.
The term "bond-approving officer" shall be deemed to include the
officer's successors in office.
II. ACCEPTANCE OF BONDS AND NOTES BY BOND-APPROVING OFFICERS
2. Any individual, partnership, or corporation required by the
laws of the United States or regulations made pursuant thereto to
furnish any recognizance, stipulation, bond, guaranty, or under-
taldng (hereinafter called penal bond), with surety or sureties, may,
in lieu of such surety or sureties, deposit as security with the official
having authority to approve such penal bond (hereinafter called
the bond-approving officer), United States Liberty bonds. Treasury
notes, or other United States bonds or notes in a sum equal at their
par value to the amount of the penal bond required to be furnished,
together with a power of attorney and agreement in the form here-
inafter prescribed, authorizing the bond-approving officer to collect
or sell such bonds or notes so deposited in case of any default in the
performance of any of the conditions or stipulations of such penal
bond. The acceptance of such United States bonds or notes in lieu
of surety or sureties required by law shall have the same force and
effect as individual or corporate sureties, or certified checks, bank
drafts, post-office money orders, or cash, for the penalty or amount
of such penal bond. Treasury certificates of indebtedness are not
acceptable under said Section 1126 of the Revenue Act of 1926 as
security in lieu of surety or sureties.
3. The individual, partnership, or corporation required to furnish
any penal bond, who deposits United States bonds or notes as
security in lieu of surety or sureties in accordance with the pro-
visions of this circular, must be the owner of the bonds or notes
deposited, and is hereinafter called the obligor. United States
bonds or notes may be deposited with bond-approving officers
pursuant to the provisions of this circular in either coupon or regis-
tered form. Coupon bonds or notes shall have attached thereto
all coupons unmatured at the date of such deposit, and all matured
11438—261 21
300 REPORT OF THE SECRETARY OF THE TREASURY
coupons should be detached. Registered bonds or notes must he
reghtered in the name of the obligor, and duly assigned, at or before
the date of such deposit, either to the bond-ap2)roving officer with whom
they are deposited or his administrative superior, or in blanTc, in accord-
ance with the regulations of the Treasury Department in relation to
United States bonds. (See Treasury Department Circular No. 300,
dated July 31, 1923.)
4. The United States bonds or notes to be deposited must in
every case be delivered to the bond-approving officer at the obligor's
risk and expense. Coupon bonds or notes and registered bonds or
notes assigned in blank or for exchange for coupon bonds or notes
can not safely be forwarded by registered mail unless insured by
the obligor against risk of loss in transit. Registered bonds or notes,
unless assigned in blank or for exchange for coupon bonds or notes,
need not be so insured when forwarded l)y registered mail, unless
the obligor so elects. The bond-approving officer shall issue a receipt
in duplicate, substantially in Form A, hereto attached, for the
United States bonds or notes so deposited, the original of the receipt
to be given to the obligor and the duplicate to be retained by the
bond-approving officer for his files.
5. At the time of the deposit of any United States bonds or notes
with a bond-approving officer in accordance w^ith the provisions of
this circular, the obligor shall deliver to the bond-approving officer
a duly executed power of attorney and agreement, in favor of the
bond-approving officer, authorizing such officer to collect or sell
such bonds or notes so deposited in case of any default in the per-
formance of any of the conditions or stipulations of the penal bond,
and to apply the proceeds of such sale or collection, in whole or in
part, to the satisfaction of any damages, demands, or deficiency
arising by reason of such default. The power of attorney and agree-
ment shall be, in the case of an individual, substantially in Form C,
hereto attached; in the case of a partnership, substantially in Form
D, hereto attached; and in the case of a corporation, substantially
in Form E, hereto attached.
6. In connection with the acceptance of United States bonds or
notes hereunder as security in lieu of surety or sureties, bond-
approving officers must satisfy themselves as to the ownership of
the bonds or notes deposited and the sufficiency of the power of
attorney and agreement, and in the case of registered bonds or
notes, as to the regularity of the assignments as well, and, in general,
that the deposit is made in conformity with the provisions of this
circular.
7. Any obligor who deposits United States bonds or notes in
accordance with the provisions of this circular may, upon written
application to and with the approval of the bond-approving officer,
substitute for the bonds or notes so deposited (a) other United
States bonds or notes in a sum equal at their par value to not less
than the par amount of the United States bonds or notes to be with-
drawn, upon compliance with all the provisions of this circular
applicable to an original deposit of United States bonds or notes in
lieu of surety or sureties, or (b) a penal bond with surety or sureties
or such other security as may be allowed by law. The bonds or
notes withdrawn shall be returned in the manner hereinafter pro-
vided for the return of bonds and notes deposited.
REPORT or THE SECKETAEY OF THE TREASURY 301
III. DEPOSITS OF BONDS AND NOTES BY BOND-APPROVING OFFICERS
WITH DEPOSITORIES
8. United States bonds and notes deposited with bond-approving
officers as security in accordance with the provisions of this cii'cular,
and such other United States bonds or notes as may be substituted
therefor from time to time as such security, may be deposited by
bond-approving officers with the Treasurer of the United States, a
Federal Reserve Bank or any branch Federal Reserve Bank having
the requisite facilities, or other depository duly designated for that
purpose by the Secretary of the Treasury; provided, however, that
bond-approving officers shall deposit with the Treasurer of the
United States all United States bonds and notes received by them
in the District of Columbia pursuant to the provisions of this circular.
Depositaries of public moneys are not authorized to act as deposi-
tories for United States bonds or notes accepted under this circular,
unless specifically designated for that purpose by the Secretary of
the Treasury. Any authorized depository receiving deposits of
United States bonds or notes from bond-approving officers in accord-
ance with this circular shall give receipt therefor in duplicate, de-
scribing the bonds or notes so deposited, substantially in Form B,
hereto attached, the original to be delivered to the bond-approving
officer and the duplicate to be retained by the depository for its own
files. The bond-approving officer will hold the original receipt sub-
ject to the instructions of his administrative superior. United States
bonds or notes so deposited with an authorized depository may be
withdrawn only by or on the written order of the bond-approving
officer.
9. United States bonds and notes accepted by bond-approving
officers from obligors under this circular, and not deposited by them
with authorized depositories, will be held at the risk of the respective
bond-approving officers, subject to such regulations and instructions
as may be prescribed for their guidance by their respective adminis-
trative superiors. Coupon bonds or notes and registered bonds or
notes assigned in blank or for exchange for coupon bonds or notes
are in effect bearer obligations and must be kept in safe custody at
peril; registered bonds or notes not assigned in blank or for exchange
for coupon bonds or notes must also be kept in safe custody, but in
the event of loss or destruction may be replaced upon compliance
with the provisions of law and the regulations of the Treasury Depart-
ment applicable thereto.
10. Bond-approving officers desiring to deposit United States
bonds or notes received by them with authorized depositories must
deliver such bonds or notes to the depository, without risk or expense
to the depository. Coupon bonds or notes and registered bonds or
notes assigned in blank or for exchange for coupon bonds or notes
can not safely be shipped by registered mail unless covered by insur-
ance. Registered bonds or notes not assigned in blank or for exchange
for coupon bonds or notes may be forwarded by registered mail
uninsured.
302 REPORT OF THE SECRETARY OF THE TREASURY
IV. RETURN OR OTHER DISPOSITION OF BONDS AND NOTES DEPOSITED
11. The obligor shall be entitled lo receive the interest accruing
uj^on United States bonds or notes deposited in accordance with this
circular, in the absence of any default in the performance of any of
the conditions or stipulations of the penal bond. The interest on any
registered bonds or notes which the obligor is entitled to receive here-
under will be paid by check in regular course to the registered holder.
The coupons for any interest on coupon bonds or notes which the
obligor is entitled to receive hereunder will, upon written application
from the obligor to the bond-approving officer, be detached, as they
mature, from the bonds or notes deposited and forwarded to the
obligor at the obligor's risk and expense, either by the bond-approving
officer or upon his written order bj^ the depository with which the
bonds or notes may be deposited, or, at the direction of the bond-
approving officer, collected by the depository and check therefor for-
warded to the obligor. In the absence of written application therefor
by the obligor, coupons for interest on coupon bonds or notes to
which the obligor may be entitled hereunder shall remain attached
to the bonds or notes deposited, subject to the provisions of this
circular.
12. As soon as security for the performance of the penal bond is
no longer necessary, the United States bonds or notes deposited in
lieu of surety or sureties on such penal bond, together w^th the power
of attorney and agreement accompanying such bonds or notes, shall
be returned to the obligor by the bond-approving officer, without
application therefor from the obligor. The determination of the
question whether securitj'^ is any longer necessary for the performance
of the penal bond shall rest with the bond-approving officer and such
other officers as shall have jurisdiction in the premises under the pro-
visions of law and administrative regulations which maj^ be appli-
cable; provided, however, that in case a person or persons supplying
labor or material as provided by the Act of Congress, approved
February 24, 1905 (33 Stat. 811), entitled ''An Act to amend an Act
approved August 13, 1894, entitled 'An Act for the protection of
persons furnishing materials and labor for the construction of public
works,'" shall file with the obligee, at any time after a default in the
performance of any contract subject to said Acts, the application
and affidavit therein provided, neither the obligee nor the bond-
approving officer shall deliver to the obligor the deposited bonds or
notes or an}^ surplus proceeds thereof until the expiration of the time
limited by said Acts for the institution of suit by such person or
persons (viz., one year from the date of final settlement of the con-
tract for the performance of which the bonds or notes were pledged),
and, in case suit shall be instituted within such time, shall hold said
bonds or notes or proceeds subject to the order of the court having
jurisdiction thereof; provided, further, that nothing herein contained
shall affect or impair the priority of the claim of the United States
against the bonds or notes deposited or any right or remedy granted
by said Acts or under this circular to the United States for default
upon any obligation of said penal bond.
13. Bonds or notes to be returned to the obligor will be forwarded
at the obhgor's risk and expense, either by the bond-approving
officer, or upon his written order by the depository with which the
REPORT OF THE SECRETARY OF THE TREASURY 303
bonds or notes may be deposited, and unless delivered direct to the
obligor, will be forwarded, in the absence of other written instructions
and remittance to cover expenses, by express, collect, except that
registered bonds or notes not assigned in blank or for exchange for
coupon bonds or notes may be forwarded by registered mail,
uninsured. Registered bonds or notes assigned to the bond- approving
officer or his administrative superior shall be reassigned to the obligor
before their return.
14. Any obligor who desires to withdraw a portion only of the
bonds or notes deposited, by reason of reduction in liability under the
penal bond, shall make written application for such withdrawal to
the bond-approving officer, who shall, if he approve such application,
return such portion of the bonds or notes to the obligor.
15. Upon the complete or partial return to the obligor of bonds
or notes deposited as security imder the provisions of this circular
the bond-approving officer shall require from the obligor a receipt in
duplicate, substantially in Form G, hereto attached, and shall further
require the obligor, in case of complete return, to surrender theoriginal
receipt on Form A.
V. FORM OF PENAL BONDS WITH UNITED STATES BONDS OK NOTES AS
SECURITY
16. Penal bonds on which United States bonds or notes are
accepted as security in lieu of surety or sureties may be substantially
in Form F, hereto attached. xVdministrative offices of the Govern-
ment may, however, use other forms of penal bonds appropriate to the
work of their respective offices, provided that upon the execution of
the penal bond the principal shall indorse on the face thereof and
sign the following statement:
The United States bonds/notes described iu the annexed schedule are hereby
pledged as security for the performance and fulfillment of the foregoing under-
taking in accordance with Section 1126 of the Revenue Act of 1926, approved
February 26, 1926, and Treasurv Department Circular No. 154, dated April
30, 1926.
Principal on the above bond.
17. Nothing contained in this circular shall be construed as
modifying the existing practice or duties of administrative offices in
handling penal bonds, except to the extent made necessary under
the terms of this circular, by reason of the acceptance of United
States bonds or notes as security in lieu of surety or sureties thereon.
VI. SPECIAL PROVISIONS
18. General Supply Committee. — United States bonds and notes
deposited to guarantee proposals or bids submitted to the General
Supply Committee, or as security for the performance or fulfillment
of contracts made through said committee, shall either be delivered
in person or forwarded by registered mail at the obligor's risk and
expense to the Chief Clerk of the Treasury Department, who shall
deposit said bonds or notes with the Treasurer of the United States
against receipts therefor which shall be made in quadruplicate; one
copy to be retained by the Treasurer, the original and the other two
copies to be delivered to the Chief Clerk of the Treasury Depart-
ment, who shall retain the original, give one copy to the obligor, and
304 Rr.roRT of tub skcretarv op the treasury
transmit one copy to the Director ol" Supply, Treasury Department,
Wasliinjjcton. Bonds or notes thus deposited may be withdrawn
only by or on the written order of the Director of Supply, counter-
signed by the Chief Clerk of the Treasury Department, and the
surrender of the original, duplicate, and triplicate receipt. In no
instance should United States bonds or notes be forwarded to the
General Supply Committee with the proposal or contract forms.
Coupon bonds or notes and registered bonds or notes assigned in
blank or for exchange for coupon bonds or notes forwarded by
registered mail should be insured by the obligor against risk of loss in
transit. Registered bonds or notes not assigned in blank or for
exchange for coupon bonds or notes need not be insured against loss
in transit, unless the obligor so elects. The regulations prescribed in
sections 2, 4, and 11 of this circular with respect to the assignment of
registered bonds or notes, the power of attorney and agreement to
accompany the bonds or notes, the substitution of other bonds or
notes, and the return of bonds or notes to the obligors shall apply to
all United States bonds or notes accepted by the General Supply
Committee as guarantees on proposals or as security for the per-
formance of contracts made by such committee. Bonds or notes
tendered by unsuccessful bidders will be returned promptly.
19. Collector of customs. — The acceptance by collectors of customs
of United States bonds or notes in lieu of surety or sureties on penal
bonds shall be governed by the general rules and regulations contained
in this circular, except as modified with the approval of the Secretary
of the Treasury to cover special cases.
20. Collectors oj internal revenue. — Special instructions for the
guidance of collectors of internal revenue in accepting United States
bonds or notes in lieu of surety or sureties on penal bonds will be
issued through the office of the Commissioner of Internal Revenue,
upon the approval of the Secretary of the Treasury.
21. Other Departments and establishments. — Bond-approving offi-
cers of other Departments and establishments of the Government
accepting Liberty bonds. Treasury notes, or other United States
bonds or notes in lieu of surety or sureties under the provisions of
Section 1126 of the Revenue Act of 1926 shall be governed by the
provisions of this circular. This circular may be modified or amended
only upon the approval of the Secretary of the Treasury.
VII. OTHER DETAILS
22. Nothing contained in this circular shall affect the authority of
courts over the security when United States bonds or notes are
taken as security in judicial proceedings, or the authority of any
administrative officer of the United States to receive United States
bonds or notes for security in cases authorized by provisions of law
other than Section 1126 of the Revenue Act of 1926, approved
February 26, 1926.
23. The Secretary of the Treasury may withdraw or amend at
any time or from time to time any or all of the foregoing rules and
regulations, subject, however, to the provisions of Section 1126 of
the Revenue Act of 1926, approved February 26, 1926.
A. W. Mellon,
Secretary of flie Treasury.
REPOEr OF THE SECRETARY OF THE TREASURY
305
Form A
RECEIPT OF BOND-APPROVING OFFICER FOR UNITED STATES BONDS OR NOTES
ACCEPTED AS SECURITY
(City) (State) (Date)
The undersigned hereby acknowledges receipt of the United States bonds/notes
hereinafter described, deposited as security in lieu of surety or sureties on
, filed with
(Description of penal bond) (Department or establishment)
, through for
(Bureau or ofiBce)
Said bonds/notes ^ are registered
(Description of obligation secured)
in the name of '_ , and
are assigned to
(State form of assignment)
Title of bonds/notes
Coupon
or regis-
tered
Total face
amount
Denomination Serial number
Interest dates
This receipt is executed in duplicate, and the original must be surrendered by
the obligor before the above-described bonds or notes deposited are returned to
him. This receipt is not assignable.
(Signature and official title of Bond- Approving Officer.)
Form B
RECEIPT OP DEPOSITORY FOR UNITED STATES BONDS OR NOTES DEPOSITED BY
BOND-APPROVING OFFICER
(City) (State) (Date)
The undersigned hereby acknowledges receipt from
(Name and official title of bond-
, of the United States bonds/notes hereinafter described, de-
approving oCacer)
posited by , as security in heu of
(Name of obligor)
suretv or sureties on '- > filed
(Description of penal bond)
Vith , through
(Department or establishment) (Bureau or office)
, for
(Description of obligation secured)
Said bonds/notes 2 are registered in the name of
, and are assigned tq
(State form of assignment)
» This information to be furnished only in case of registered bonds/notes.
306
REPORT OF THE SECRETARY OF THE TREASURY
Title. of bonds/notes
Coupon
or regis-
tered
Total face
amount
Denomination
Serial number
Interest dates
1
1
1
\~"' '
The above-described bonds/notes will be returned only to or on the written
order of said bond-approving officer or his successor in office, upon presentation
and surrender of the original of this receipt. This receipt is executed in duphcate
and is not assignable.
(Signature of Depository.)
Form C
POWER OF ATTORNEY AND AGREEMENT
(For individual)
Know all men by these presents, that I, the undersigned, of ,
do hereby constitute and appoint , and his
(Name and official title of bond-approving officer)
successors in office, as my attorney, for me and in my name to collect or to sell,
assign, and transfer certain United States Liberty bonds, Treasury notes,, or
other United States bonds or notes, described as follows :
such bonds/notes having been deposited by me, pursuant to authority conferred
by Section 1126 of the Revenue Act of 1926, approved February 26, 1926, and
subject to the provisions thereof and of Treasury Department Circular No. 154,
dated April 30, 1926, as security for the faithful performance of any and all of
the conditions or stipulations of a certain obUgation entered into by me with the
United States, under date of , which is hereby' made a part
hereof, and I agree that, in case of any default in the performance of any of the
conditions and stipulations of such undertaking, my said attorney shall have full
power to collect said bonds/notes or an\^ part thereof, or to sell, assign, and trans-
fer said bonds/notes or any part thereof, without notice, at public or private
sale, free from any equity of redemption and without appraisement or valuation,
notice and right to redeem being waived, and to apply the proceeds of such sale
or collection, in whole or in part, to the satisfaction of any damages, demands, or
deficiency arising by reason of such default, as my said attorney may deem best.
And I hereby for myself, my heirs, executors, administrators, and assigns,
ratify and confirm whatever my said attorney shall do by virtue of these presents.
In witness whereof, I have hereunto set mv hand and seal this day
of , 19-...
[seal.]
Before me, the undersigned, a notary pubhc within and for the county of
, in the State of (or the
District of Columbia) , personally appeared the above-named
and acknowledged the execution of the foregoing power of attorney.
Witness my hand and notarial seal this day of , 192
[Notarial seal.] _.
Notary Public.
REPORT OF THE SECRETARY OF THE TREASURY 307
Form D
power of attorney and agreement
(For partnership)
Know all men by these presents, that we, the undersigned, carrying on business
in partnership together under the firm name and style of ,
of , do, and each of us does, hereby constitute and appoint
, and his successors in office, as the attor-
(Name and ofificial title of bond-approving oiHcer)
ney of us and each of us, and of our said firm of , in the name or
names and on behalf of us and our said firm, to collect, or sell, assign, and transfer
certain United States Liberty bonds. Treasury notes, or other United States
bonds or notes, described as follows:
such bonds/notes having been deposited bv us, pursuant to authority conferred
by Section 1126 of the Revenue Act of 1926; approved February 26, 1926, and
subject to the provisions thereof and of Treasury Department Circular No. 154,
dated April 30, 1926, as security for the faithful performance of any' and all of
the conditions or stipulations of a certain obligation entered into by us with the
United States, under date of , which is hereby made a part
hereof, and we agree that, in case of any default in the performance of any of
the conditions and stipulations of such undertaking, our said attorney shall have
full power to collect said bonds/notes or any part thereof, or to sell, assign, and
transfer said bonds/notes or any part thereof without notice, at public or private
sale, free from any equity of redemption and without appraisement or valuation,
notice and right to redeem being waived, and to apply the proceeds of such sale
or collection, in whole or in part, to the satisfaction of any damages, demands, or
deficiency arising by reason of such default, as our said attorney may deem best.
And we hereby for ourselves, our heirs, executors, administrators, and assigns,
ratify and confirm whatever our said attorney shall do by virtue of these presents.
In witness whereof, we have hereunto set our hands and seals this
day of , 19
[seal.]
[seal.]
Before me, the undersigned, a notary public within and for the county of
, in the State of' (or the District
of Columbia), personally appeared the above-named ,
partners doing business under the firm name and style of ,
and acknowledged the execution of the foregoing power of attorney.
Witness my hand and notarial seal this day of , 19
[Notarial seal.j
Notary Public.
Form E
power of attorney and agreement
(For corporation)
Know all men by these presents, that , a corporation duly
incorporated under the laws of the State of , and having its
principal office in the city of , State of _ ,
in pursuance of a resolution of the board of directors of said corporation, passed
on the day of , 19 , a duly certified copy of
which resolution is hereto attached, does hereby constitute and appoint
, and his successors in office, as attorney for
(Name and oflacial title of bond-approving officer)
said corporation, for and in the name of said corporation to collect or to sell,
assign, and transfer certain United States Liberty bonds. Treasury notes, or
other United States bonds or notes, described as follows :
such bonds/notes having been deposited bv it, pursuant to authority conferred
by Section 1126 of the Revenue Act of 1926, approved February 26, 1926, and
subject to the provisions thereof and of Treasury Department Circular No.
154, dated April 30, 1926, as security for the faithful performance of any and
11438— 26t 22
308 IJKPORT OF THE SECRETARY OF THE TREASURY
all of the conditions or stipulations of a certain obligation entered into by it
with the United States, under date of , which is hereby made
a part hereof, and the undersigned agrees that, in case of any default in the per-
formance of any of the conditions and stipulations of such undertaking, its said
attorney shall have full power to collect said bonds/notes or any part thereof,
or to sell, assign, and transfer said bonds/notes or any part thereof without
notice, at public or private sale, free from any equity of redemption and without
appraisement or valuation, notice and right to redeem being waived, and to
apply the proceeds of such sale or collection, in whole or in part, to the satis-
faction of any damages, demands, or deficiency arising by reason of such default,
as its said attorney may deejn best.
And said corporation hereby for itself, its successors and assigns, ratifies and
confirms whatever its said attorney shall do by virtue of these presents.
In witness whereof, the , the corporation hereinabove
named, by , duly authorized to act in the
(Name and title of oflScer)
premises, has e.vecuted this instrument and caused the seal of the corporation
to be hereto affixed this day of , 19
(Corporate seal.]
By
Before me, the undersigned, a notary public within and for the county of
, in the State of (or the District of Colum-
bia), personally appeared and for
(Name and title of officer)
and in behalf of said , corporation, acknowledged the exe-
cution of the foregoing power of attorney.
Witness my hand and notarial seal this day of , 19
[Notarial seal.]
Notary Public.
Form F
fokm of penal bond for execution by india iduals, partnerships, or cor-
porations where united states bonds or notes are acceited a3
security in lieu of surety or sureties
Know all men by these presents, that , ,of the city
of , and State of , as obligor,
held and firmly bound unto the United States of America, in the penal sum of
dollars ($ ), lawful money of the United States,
for the payment of which sum, well and truly to be made to the United States,
without relief from valuation or appraisement laws, bind
, heirs, executors, administrators, successors, and
assigns, firmly by these presents.
The condition of the above obligation is such that
(Insert conditions and stipulations appropriate to the penal bond)
The above-bounden obligor, hi order the more fully to secure the United States
in the payment of the aforementioned sum, hereby pledges as security therefor
lionds/notes of the United States in the principal sum of
dollars ($ ), which said bonds/notes are numbered serially and are in
the denominations and amounts, and are otherwise more particularly described
as follows :
which said bonds/notes have this day been deposited with
(Name and oflficial title of bond-approving officer)
and his receipt taken therefor.
Contemporaneously herewith the undersigned has also executed and delivered
a power of attorney and agreement in favor of ,
(Name and official title of bond-approving officer)
authorizing and empowering said officer as such attorney to collect or sell the
above-described bonds/notes so deposited, or any j^art thereof, in case of any
default in the performance of any of the above-named conditions or stipulations.
In witness whereof, this bond has been signed, sealed, and deUvered by the
above-named obligor, this day , 19
[seal.]
[seal.]
Signed, sealed, and delivered in the presence of:
REPOET OF THE SECKETAEY OF THE TREASURY 309
Form G
receipt of obligor on return of bonds or notes
(City) (State) (Date)
The undersigned hereby acknowledges receipt of the United States bonds/notes
hereinafter described, deposited with as
(Name and official title of bond-approving officer i
security in heu of surety or sureties on filed
(Description of penal bond)
with , through ,
(Department or establisliment) (Bureau or office)
for Said bonds/notes- are registered
(Description of obligation secured)
in the name of , and are assigned to
(State form of assignment)
Title of bonds/notes
Ss° Total face
tere'd «™°""t
Denomination
Serial number
Interest dates
This receipt is executed in duplicate.
{Signature of Obligor.)
Exhibit 55
AN OUTLINE OF TEE DUTIES OF THE SECRETARY OF THE TREAS-
URY AND THE VARIOUS OFFICES AND BUREAUS IN THE
TREASURY DEPARTMENT
THE TREASURY DEPARTMENT
The following is an outline of the various offices and bureaus of the
Treasury Department and the divisions of the Secretary's office,
together with the duties of each :
The Secretary of the Treasury.
The Undersecretary of the Treasury:
The finances.
Commissioner of Accounts and Deposits.
(a) Division of bookkeeping and warrants.
(b) Division of deposits.
Foreign loans.
Advances and loans to railroads under the transportation act, 1920.
Federal Farm Loan Bureau.
Section of statistics.
Government actuary.
Assistant Secretary in charge of fiscal offices:
Treasurer of the United States.
Comptroller of the Currency.
2 This information to be furnished only in case of registered l)onds/notes.
310 REPORT OF THE SECRETAKY OF THE TREASURY
Commissioner of the Public Debt.
(a) Division of loans and currency.
(6) Register of the Treasury.
(c) Division of public debt accounts and audit.
(d) Division of paper custody.
Bureau of Engraving and Printing.
Mint Bureau.
Secret Service division.
Disbursing clerk.
Section of surety bonds of the division of appointments.
Assistant Secretary in charge of internal revenue and miscellaneous:
Chief clerk.
(a) Section of mail and files.
Bureau of Supply.
(a) General Supply Committee.
Division of appointments.
Division of printing.
Bureau of Internal Revenue.
Bureau of the PuV:)lic Health Service.
Supervising Architect's Office.
Assistant Secretary in charge of customs, Coast Guard, and prohibition:
Customs Service.
Coast Guard.
Prohibition Unit.
(a) Narcotic division.
The Secretary. — The Secretary of the Treasury is charged by law
with'^the management of the national finances. He prepares plans
for the improvement of the revenue and for the support of the public
credit; superintends the collection of the revenue, grants warrants
for'v|all moneys drawn from the Treasury in pursuance of appropria-
tions made by law, and for the payment of moneys into the Treasury;
and submits a report annually to Congress on the condition of the
public finances and the results of activities under his supervision.
He controls the construction and maintenance of public buildings;
the coinage and printing of money ; the administration of the Coast
Guard and the public health branches of the public service, and
furnishes generally such information as may be required by either
branch of Congress on all matters pertaining to the foregoing. He
is ex officio chairman of the Federal Reserve Board, created by act
approved December 23, 1913, Imown as the Federal reserve act; ex
officio chairman of the Federal Farm Loan Board, created by act
approved July 17, 1916, known as the Federal farm loan act; chair-
man of the World War Foreign Debt Commission; honorar}^ chairman
of the United States section of the Inter- American High Commission;
chairman Rock Creek and Potomac Parkway Commission; member
board of trustees. Postal Savings System; member board of trustees,
Smithsonian Institution; member Federal Narcotics Control Board;
chairman board of directors. War Finance Corporation.
llie Undersecretary. — The office of Undersecretary of the Treasury
was created in the deficiency appropriation act of June 16, 1921.
To the Undersecretary and the Assistant Secretary in Charge of
Fiscal Offices, who acts under the intermediate supervision of the
Undersecretary, are assigned the general supervision of all matters
relating to the fiscal bureaus, offices, and divisions, as follows: Foreign
loans, advances and loans to railroads under the transportation act,
1920; Commissioner of Accounts and Deposits; division of book-
keeping and warrants; division of deposits; Treasurer of the United
BEPOKT OF THE SECRETARY OF THE TREASURY 311
States; Comptroller of the Currency; Federal Farm Loan Bureau;
section of statistics; Government actuary; public debt service;
Bureau of Engraving and Printing; Mint Bureau; Secret Service
Division; disbursing clerk; and surety bonds section.
The Undersecretary also is charged with the supervision of the
finances, and is authorized to act, for and by direction of the Secre-
tary, in any branch of the department, and represents the Secretary
in dealings with the Federal Reserve Board, the War Finance Corpo-
ration, and the Farm Loan Board.
Assistant Secretaries of the Treasury. — To the Assistant Secretary
in charge of fiscal offices, acting under the intermediate supervision
of the Undersecretary, is assigned supervision of matters relating to
the fiscal bureaus, offices, and divisions as indicated under the duties
of the Undersecretary.
To the Assistant Secretary in charge of internal revenue and mis-
cellaneous is assigned the general supervision of all matters pertaining
to the following bureaus and divisions: Chief clerk; division of mail
and files; Bureau of Supply; General Supply Committee; division of
appointments; Bureau of the Public Health Service; division of
printing; Bureau of Internal Revenue; Supervising Architect's
Office.
To the Assistant Secretary in charge of Customs, Coast Guard,
and Prohibition is assigned the general supervision of those respective
services.
THE UNDERSECRETARY OF THE TREASURY
Comrrdssioner of Accounts and Deposits. — The Office of Commis-
sioner of Accounts and Deposits was created in January, 1920, on
account of the large increase in the accounting transactions of the
Treasury in connection with receipts and expenditures and the
deposit of public funds throughout the country. The commissioner,
under the Fiscal Assistant Secretary, was given administrative super-
vision over the division of bookkeeping and warrants and its relations
to the office of the Treasurer of the United States. He was later
given supervisory direction over the division of deposits, which was
created on May 19, 1920, as a part of this reorganization. The
commissioner likewise was given control of all accounts of invest-
ments of the Government and was made responsible for the proper
custody of all investments and securities held by the Treasurer of the
LFnited States and the Federal reserve banks for which the Secretary
is responsible other than those related to the public debt operations.
Division of hooJcJceeping and warrants. — This division, established in
1894, is by law the official bookkeeping organization of the Govern-
ment so far as appropriation accounts and covering of public moneys
into the Treasury are concerned. The accounts and records of
disbursements in this division are on a basis of warrants issued and
necessarily differ materially from the actual cash expenditures as
shown in the daily Treasury statement prepared in the office of the
Treasurer of the United States. Reconcifiations between these
accounts, both as to receipts and expenditures are made in order to
exhibit properly the receipts and expenditures of the Government.
Among the many functions of this division the following are the most
312 REPORT OF THE SECRETARY OF THE TREASURY
important: It makes analysis of all acts of Congress carrying appro-
priations and opens up the necessary appropriation accounts on its
ledgers ; it issues all warrants for placing disbursing funds to the credit
of disbursing officers and for the payment by the Treasury of claims
settled by the General Accounting Office; it issues all warrants
covering into the Treasury the revenues and receipts of the Govern-
ment from the various authorized sources, and all repayments to the
Treasury of the unexpended balances of appropriations; and handles
the work involved in the Secretary's special deposit accounts, includ-
ing those of the Alien Property Custodian kept with the Treasurer of
the United States. It compiles for submission through the Bureau of
the Budget the regular estimates of appropriations and the supple-
mentary and deficiency estimates for the service of the Treasury. It
compiles for transmission to Congress an annual combined statement
of the receipts, disbursements, and unexpended balances under each
appropriation account.
In addition to the above this division compiles and publishes the
annual digest of appropriations made by Congress and makes mis-
cellaneous statistical reports as requested by Congress or by the
Secretary of the Treasury and carries on the correspondence and
miscellaneous work incident to its activities. It has also been
assigned the duties formerly under the division of public moneys, so
far as they related to the covering of revenue and repayments into
the Treasury, the issuance of duplicate checks and warrants and the
certification of outstanding liabilities for payment.
Dwision of depo^nts. — This division is charged with the administra-
tion of matters pertaining to designation of Government depositaries
and the deposit of Government funds in the Federal reserve banks,
national banks, special depositaries under the Liberty loan acts,
foreign depositaries, Federal land banks, and the Philippine Treasury.
This division supervises all depositaries and obtains proper security
for all Government deposits. It issues directions to all public officers
as to the deposit of public moneys collected by them and is charged
generally with the administration of all matters pertaining to the
foregoing.
The Federal Farm Loan Bureau. — The Farm Loan Board, through
the Farm Loan Bureau, administers the farm loan act of July 17,
1916, and that part of the agricultural credits act of March 4, 1923,
providing for the establishment and operation of Federal intermediate
credit banks.
The Federal farm loan act was passed in order to provide the
American farmer with long-term credit at a low rate of interest.
Prior to the passage of this act the capital requirements of American
agriculture could not be met through the ordinary channels of com-
mercial banking or through the Federal reserve system. The inter-
mediate credits act of March 4, 1923, was designed to furnish to
agriculture a short-term credit but of a longer maturity than could
ordinarily be provided by commercial banks but not so long as that
provided by the Federal farm loan act.
The Federal farm loan act provides for 12 Federal land banks and
such number of joint-stock land banks and national farm loan
associations as the Farm Loan Board may approve. The oversight
REPORT OP THE SECRETARY OF THE TREASURY 313
and regulation of all these organizations are in the hands of the Farm
Loan Board. It is necessary that Federal land banks and joint-stock
land banks have the approval of the Farm Loan Board before smy
bonds can be issued and sold. Likewise, a Federal intermediate
credit bank must secure the board's approval before it can issue
debentures provided for under the agricultural credits act.
This board has such incidental powers as are necessary to fulfill its
duties and to carry out the purposes of the act creating the institution
for which it is responsible.
The section of statistics. — This section makes statistical studies on
receipts, expenditures, the public debt, and other questions of public
finance that arise in connection with the Treasury administration.
It estimates future tax receipts on the basis of a statistical analysis of
tax receipts and business conditions. It prepares correspondence and
reports for the Secretary and Undersecretary dealing with financial
subjects. Under the direction of the Undersecretary it assembles,
edits, and prepares articles for the annual report of the Secretary of
the Treasury. During the sessions of Congress the progress of
legislation in which the Treasury may be interested is summarized
daily and distributed to the various divisions and bureaus of the
Treasury Department. The library of the ofl&ce of the Secretary is a
part of the section of statistics.
The actuary. — This officer makes estimates relative to population,
revenues, and finances for the Treasury Department, for Congress,
and various committees of Congress and Members of Congress. He
assists in the preparation of revenue and tarift" acts by giving details
to the Ways and Means Committee and the Finance Committee. He
issues a monthly circular showing the market prices and investment
value of United States securities daily. He is sometimes detailed
to other departments and commissions to assist on actuarial work,
such, for instance, as the negotiation of trade treaties with foreign
countries through the Department of State, and to the Joint High
Commission m dealing with Canada. He is a member of the Board
of Actuaries in connection with the Bureau of Pensions.
ASSISTANT SECRETARY IN CHARGE OF FISCAL OFFICES
Treasurer of the United States. — The Treasurer of the United States
is charged with the receipt and disbursement of all public moneys
that may be deposited in the United States Treasury and in all other
depositaries authorized by the Secretary of the Treasury to receive
deposits of Government funds for credit in the account of the Treasurer
of the United States; is trustee for bonds held to secure national-
bank note circulation and public deposits in national banks and bonds
held to secure postal savings in banks; is custodian of miscellaneous
securities and trust funds and is fiscal agent for the issue and redemp-
tion of United States paper currency, for payment of principal and
interest on the public debt, and for payment of principal and interest
on bonds of the Porto Rican and Philippine Governments, of which
the Secretary of the Treasury is the transfer agent; and is treasurer
of the board of trustees of the Postal Savings System. The Treasurer
is agent for the redemption of national-bank notes, Federal reserve
314 REPORT OF THE SECRETARY OF THE TREASURY
notes, and Federal reserve bank notes, and makes exchanges and
redemptions of the paper money and the gold, silver, and minor coin
of the United States. Funds advanced to disbursing officers for the
use of Government departments and establishments under the
appropriation of Congress are credited in the accounts of such
disbursing officers on the books of the Treasurer and disbursements
therefrom are made by checks drawn on the Treasurer.
There are in the office of the Treasurer seven divisions : The chief
clerk, cashier, division of securities, redemption division, division of
general accounts, accounting division, and National Bank Redemption
Agency.
Chief clerk. — The chief clerk has supervision of all employees and
conducts all correspondence relative to personnel, and answers all
miscellaneous letters not properly chargeable to the other divisions.
He is responsible for the distribution of all mail, telegrams, etc., for
the office, and has direct supervision of the preparation of pay rolls
and payment of salaries. He prepares all requisitions for supplies
and prepares all estimates of appropriations for the Treasurer's
office. He supervises the operation of the confidential code and
system of test words between the Treasurer's office and the Federal
reserve banks and conducts all transactions under the retirement
act of May 22, 1920. He is charged with the responsibility of
enforcing those regulations of the department relating to the Treas-
urer's office. He prepares all special reports for the Budget and the
Secretary of the Treasury. He compiles reports of the different
divisions as to classification and efficiency ratings and is a member of
the board of review to pass upon such ratings. He is responsible for
the safe handling of the valuable mail received and sent.
Cashier. — The cashier receives public deposits made in Washington
and pays over the counter Treasury checks, interest checks, coupons,
and disbursing officers' checks when presented. He receives from
the Bureau of Engraving and Printing United States paper currency
and stores it in the reserve vaults until it is required for issue to
replace mutilated currency destroyed. He issues all United States
paper currency and makes shipment of it in denominations required
by the Federal reserve banks and the public. He makes collection
through Federal reserve banks and national-bank depositaries of all
checks deposited in payment of Government obligations.
Division qf securities. — This division has custody of all bonds held
to secure circulation of national-bank currency, for deposits of public
moneys, for postal savings deposits, and miscellaneous accounts for the
Secretary of the Treasury; collects the semiannual tax on national-
bank circulation and examines and proves all public debt items
charged as redemptions and taken up in the Treasurer's account
current affecting all public debt redemptions in both principal and
interest, and prepares requisition for reimbursement therefor; issues
Treasurer's checks in redemption of Treasury savings certificates
and other obligations of the United States; verifies and arranges
by loans all checks paid on account of interest on the public debt, mak-
ing search for stoppage of payment; issues interest checks on regis-
tered bonds of the Philippine Islands and Porto Rico, and renders the
account current of the Treasurer for these disbursements; makes
REPOBT OF THE SECRETAEY OF THE TREASURY 315
investments and holds securities for the District of Columbia teachers'
retirement fund; receives and verifies all securities purchased' for
retirement by the Secretary of the Treasury, and acts as disbursing
agent for the Secretary's account of investments for the civil service
retirement fund, foreign service retirement fund, and adjusted service
compensation fund; and has custody of and maintains an accurate
account of all foreign obligations to the United States.
Redemption division. — This division receives and verifies unfit
United States paper currency forwarded to the Treasurer for redemp-
tion and directs payment therefor; cancels and cuts in two lengthwise
this unfit currency, and delivers same to the division of loans and
currency for recount and destruction; receives and makes test counts
of the upper halves of unfit United States paper currency forwarded
by Federal reserve banks and their branches; adjusts dift'erences
found by the division of loans and currency in its complete count of
corresponding lower halves; receives from banks in Washington cur-
rency for telegraphic credit with the Federal Reserve Bank of Rich-
mond; keeps the necessary books covering all transactions, functioning
credits, or directing issue of checks in payment of remittances
received. It establishes the standard of fitness of notes for circula-
tion, and checks shipment of half notes received from Federal reserve
banks and branches, and reports in this particular matter to the Treas-
urer of the United States and to the Commissioner of the Public Debt.
The redemption division is charged with the responsibility of detecting
all counterfeit, short notes, pieced notes, and raised notes found in
currency presented for redemption.
Division of general accounts. — This division prepares and issues, for
the Secretary of the Treasury, the daily Treasury statement of the
United States, the monthly preliminary statement of the public
debt, and the monthly preliminary statement of classified expendi-
tures of the Government. It publishes the monthly statement of the
outstanding paper currency of the Government and maintains the
accounts from which it compiles the figures for such statements. It
issues Treasurer's checks as authorized by settlement warrants in
payment of claims settled by the Comptroller General, and certifi-
cates of deposit placing funds to the credit of disbursing officers as
authorized by accountable warrants; maintains registers as to such
warrants and checks issued, paid and outstanding; makes reclamation
of payment of checks returned by the Comptroller General for which
credit is disallowed in the Treasurer's account; collects interest on
daily balances with Government depositaries and renders report of
same to the Comptroller General; authorizes and directs transfers of
currency and coin between Treasury offices and Federal reserves bank
and branch banks; restores depleted balances in general national-bank
depositaries to the limits authorized by the Secretary of the Treasury;
and handles applications for coins received from banking institutions,
individuals, and others. It also maintains general Treasury ledger
accounts of all of the accounts of the trust fund, the reserve fund, the
gold settlement fund, and the general fund; the record accounts of the
classified assets and liabilities of the Government; the individual and
controlling reserve, issue and redemption accounts of the paper cur-
rency of the Government, by classes and denominations; the indi-
316 KKPORT OF THE SECRETARY OF THE TREASURY
vidual lcdo;er and individual transit accounts of Treasury offices,
Federal reserve banks and branch banks, foreign depositaries, and
national-bank depositaries; Federal reserve bank and branch bank
telegraphic report accounts; fiscal agent accounts of deposits in
special depositaries; and individual accounts, by banks and classes,
of payments for and redemption of public debt securities; and the
accounts of the covered and uncovered revenue and repayment
receipts of the Government. It renders the bullion fund accounts of
United States mints and assay offices; the Treasurer's quarterly
account of receipts and expenditures by warrants; and the account of
the Government's paper currency issued, redeemed, and in reserve.
Accounting division. — This division receives daily from the Federal
reserve banks and their branches and from the general national-bank
depositaries transcripts of the account of the Treasurer of the United
States with such banks, accompanied by certificates of deposit repre-
senting the credits in the Treasurer's account and by checks represent-
ing the charges in the Treasurer's account. It proves and classifies
the deposits and checks for posting to the general ledger accounts and
for use in the Daily Statement of the United States Treasury. It
maintains individual accounts with disbursing officers, examines and
proves checks presented for payment, and renders monthly state-
ments of such accounts to the disbursing officers and to the General
Accounting Office. It causes investigations to be made of claims of
nonreceipt of checks, reclaims payment from indorsers when checks
are fraudulently negotiated, and transmits to the payees the funds
thus recovered. It forwards to payees bonds of indemnity required
to obtain duplicates of disbursing officers' checks, interest checks,
and Treasurer's checks, and it receives and files bonds of indemnity
given to obtain duplicate Treasurer's checks and interest checks. It
maintains files of authorities required for the indorsement of checks.
The accounting division also records stoppages of payment, returns to
the presenting banks checks which can not be paid, and conducts cor-
respondence relating to disbursing officers' checks and accounts.
National Bank Redemption Agency. — The agency receives ship-
ments of national-bank notes. Federal reserve notes, and Federal
reserve bank notes sent to the Treasurer for redemption by Federal
reserve banks and other institutions. It directs payment for such
remittances either by Treasury checks, by credits with Federal
reserve banks, or by transfers between redemption funds. It makes
three assortments of national-bank notes in order to assemble the
notes according to the banks of issue, using as a basis of assortment
the charter numbers on the notes. Federal reserve notes and Fed-
eral reserve bank notes received from other than Federal reserve
banks are assorted to banks of issue by the agency. Federal re-
serve notes assorted and cut in half before shipment by Federal
reserve banks are verified by the agency as to count and assortment.
Federal reserve notes assorted and cut in half before shipment by
Federal reserve banks are verified by the agency as to count and
assortment.
The agency delivers all notes unfit for use or subject to retirement
to the Comptroller of the Currency and returns to the banks of
issue any notes that are fit for further circulation. It keeps accounts
of the redemption funds of the national and Federal reserve banks,
REPORT OF THE SECRETARY OP THE TREASURY 317
crediting the respective banks with deposits made and debiting them
with notes redeemed or refunds made. It keeps account of all
expenses incurred by the Government in the redemption and trans-
portation of national and Federal reserve currency and assesses such
expenses upon the banks in proportion to the amount of their notes
redeemed.
The agency is responsible for the integrity of the cash in its pos-
session, the detection of counterfeits, raised and pieced notes pre-
sented for redemption, and with protection of the Government against
fraud in the redemption of burned and mutilated currency.
Com'ptroller of the Currency. — The Comptroller of the Currency is
the chief officer of the Bureau of the Comptroller of the Currency,
established under the act of June 3, 1864, known as the national bank
act. In the beginning emphasis was placed primarily upon those
functions of the bureau concerned with the issue and regulation of
the national bank notes, secured by United States bonds. In the
course of time this phase of the work of the bureau has decreased
in relative importance and the primary functions of the Comptroller
of the Currency now are those relating to the organization of new
national banks, the general supervision over the national banks in
operation, and the administration through receivers of national
banks which have failed.
Under the direction of the comptroller, the national bank examiners
make regular examinations of the affairs of all national banks. A
report of each of these examinations is made in writing by the exam-
iner to the comptroller. These examinations show the condition
of the bank with reference to its solvency and whether or not it has
violated any of the provisions of the national bank act. In the case
of such violations of law, suit may be brought in the name of the
comptroller against any such bank for the forfeiture of its charter.
If it appears to the comptroller that any national bank is in an
insolvent condition, it is his duty to appoint a receiver therefor for
the purpose of winding up the affairs of the bank.
The reports of condition of all national banks are required to be
made to the comptroller by the banks not less than three times a
year upon a date fixed by the comptroller.
The Comptroller of the Currency is an ex officio member of the
Federal Reserve Board and sits regularly with the board. He also
by virtue of the provisions of the Federal reserve act executes and
issues the charters for the Federal reserve banks, and his bureau
issues to the Federal reserve banks the Federal reserve circulating
notes.
The Comptroller of the Currency is required by law to report
annually directly to Congress and to recommend to Congress amend-
ments to the national banking laws.
TTie Commissioner oj the Public Debt. — The Commissioner of the
Public Debt has supervision over all transactions in the public debt
and the paper currency issues of the United States, and the miscella-
neous work incident thereto. The public debt service includes the
division of loans and currency, the office of the Register of the Treas-
ury, the division of accounts and audit, and the division of paper
custody.
The division of loans and currency is the issuing branch of the
public debt service. It receives, examines, and has custody of all
318 REPORT OP THE SECRETARY OP THE TREASURY
public debt securities printed by the Bureau of Engraving and
Printing. It is charged with the original issue of public debt securi-
ties, and thereafter conducts transactions therein, including exchanges,
transfers, conversions, and replacements, the maintenance of accounts
with the holders of registered bonds, and the preparation of checks
for the payment of interest thereon. This division also handles the
public debt issues of the Philippine Government, the Government of
Porto Rico, and the District of Columbia; and audits all currency
notes of United States paper currency issues received for redemption.
The office of the Register of the Treasury is the retirement branch
of the public debt service. It is charged with the receipt, examina-
tion, and custody of all public debt securities retired for any account,
including paid securities and securities canceled against reissue or
otherwise. Paid securities, including interest coupons, are forwarded
by the Treasurer direct to the register, and the register's certificate
of audit is accepted by the Comptroller General as verification of
payment by the Treasurer. The register's certificate is also accepted
by the Secretary as evidencing credit to be given fiscal agents in the
matter of returned securities, and the same procedure exists with
respect to canceled securities delivered by the division of loans and
currency and by the Postal Service to the register for credit.
The division of accounts and audit maintains accounts of, and
exercises control over, all transactions in the public debt from the
time securities are printed until they are retired. It maintains the
general accounts of the public debt with the division of loans and
currency with respect to issues; with the Register of the Treasury as
to retirements; with the fiscal agents for all transactions conducted
by them; with the Postal Service in connection with Treasury (war)
savings securities; and with the Treasurer of the United States.
Through administrative audits conducted from time to time, this
division verifies the accuracy of public debt transactions. This
division also maintains controlling accounts over all distinctive and
nondistinctive security paper used by the Bureau of Engraving and
Printing and the work in process and conducts administrative audits
thereof.
The division of paper custody receives from various contractors
the distinctive paper used in printing the public debt obhgations and
the paper currency of the United States, internal-revenue stamps,
and other securities. It issues such paper to the Bureau of Engraving
and Printing and requires that bureau to account for every sheet
issued, either through delivery of perfect work to the several Treasury
offices or through the return of imperfect or mutilated stock to the
division of paper custody. The manufacture of the distinctive paper
used in the printing of public debt obligations and paper currency
issues is supervised by a representative of this division detailed to
the paper mills of the contractor for that purpose.
Bureau oj Engraving and Printing. — This bureau designs, engraves,
and prints for the Government all United States bonds, certificates of
indebtedness, Treasury notes, United States currency, national-bank
currency. Federal reserve notes. Federal farm loan and joint-stock
land bank bonds; revenue, customs, and postage stamps; disbursing
officers', pension, retirement, and interest checks; liquor permits,
drafts, warrants, transportation requests; certificates, commissions,
and licenses for various purposes; and many other classes of engraved
REPORT OP THE SECRETARY OF THE TREASURY 319
work for governmental use. It also designs, engraves, and prints
bonds, currency, revenue, and postage stamps as authorized by the
Bureau of Insular Affairs for the insular possessions of the Govern-
ment.
Mint Bureau. — The Director of the Mint has general supervision
of all the mints and assay offices of the United States. He prescribes
the rules, to be approved by the Secretary of the Treasury, for the
transaction of business at the mints and assay offices, receives daily
reports of their operations, directs the coinage to be executed, reviews
the accounts, authorizes all expenditures, superintends the annual
settlements of the several institutions, and makes special examinations
of them when deemed necessary. All appointments, removals, and
transfers in the mints and assay offices are subject to his approval.
Tests of the weight and fineness of coins struck at the mints are
made in the assay laboratory under his charge. He publishes quar-
terly an estimate of the value of the standard coins of foreign countries
for customhouse and other public purposes. An annual report is
prepared by the director, giving the operations of the mint service
for the fiscal year, printed in the Finance Report of the Secretary of
the Treasury, and giving statistics of the production of the precious
metals in the United States and the world for the calendar year.
Secret Service division. — This division is charged with the suppres-
sion of counterfeiting, the protection of the President of the United
States and his family and the person elected to be President, and
investigations of violations of the farm loan act, the war finance act,
and such other matters relating to the Treasury Department and the
several branches of the public service under its control as are directed
by the Secretary of the Treasuiy.
Disbursing cleric. — The work of this office is concerned with paying
by check or cash those obligations of the Treasury which have been
certified by the proper division as due. The payments for salaries,
expenses, and supplies cover disbursements for all bureaus and divi-
sions of the Treasury Department in the District of Columbia (except
the Bureau of Engraving and Printing) and a large proportion of the
salaries and expenses outside of the District of Columbia under the
Public Health Service, the Supervising Architect's Office, the Bureau
of Internal Revenue, the Federal Farm Loan Board, the Comptroller
of the Currency, the Coast Guard, the Secret Service, the customs
division, and the public debt service. Upon the approval of the
Commissioner of Internal Revenue, checks drawn on account of
claims for refund of internal revenue taxes illegally collected are
mailed directly by the disbursing clerk.
In addition to making disbursements, an important function of the
office is receiving and accounting for moneys due the United States
on accoimt of rents for buildings and real estate owned by the Gov-
ernment, as well as of public property under the various bureaus and
offices.
Section of surety bonds oj the division of appointments. — The division
of appointments has administrative control over 50 surety companies
authorized to transact business with the Government; fixes the quali-
fying power of each company; supervises the audit of the financial
statements of the companies quarterly; notifies the companies of the
settlement of fiscal officers' accounts under fidelity bonds, and has
custody of all bonds running to the Government except those for
post-office employees and certain internal revenue bonds.
320 KEPORT OF THE SECRETARY OF THE TREASURY
ASSISTANT SECRETARY IN CHARGE OF INTERNAL REVENUE AND
MISCELLANEOUS
Chief cleric. — The chief clerk and superintendent is tlie chief execu-
tive officer of the Secretary, and, under the direction of the Secretary,
the Undersecretary, and Assistant Secretaries, is charged with the
enforcement of departmental regulations general in their nature; is
by law superintendent of the Treasury Building, and in addition
superintends the Register's, Liberty Loan, Butler, Auditor's, and
Treasury Annex Buildings, and all other Treasury buildings in the
District of Columbia except the Bureau of Engraving and Printing;
has direct charge of motor trucks belonging to the department; the
direction of engineers, machinists, watchmen, firemen, laborers, and
other employees connected with the maintenance and protection of
the Treasury Building and annexes; the expenditures of appropria-
tions for contingent expenses; the administrative control of appropria-
tions made for Government exhibits at various expositions; handles
offers in compromise cases; the custody of the records and files of the
Secretary's office; the custody of all sites for proposed public build-
ings in Washington; custody of the official seal of the Treasury De-
partment; the handling of requests for certified copies of official
papers; as department representative handles all matters relating to
personnel classification and efficiency ratings; and has charge of all
business of the Secretary's office unassigned.
Under the chief clerk is operated the medical relief service which
was organized and is supervised by the Treasury physician. In the
various buildings occupied by Treasury personnel there are 10 relief
rooms operated b}^ graduate registered nurses. These rooms are
established for the relief and protection of employees who become ill
or are injured while on duty. So far as practicable, this service is
limited to first-aid treatments; however, this service is open to all
emplo3'ees in a building whether on the Treasury roll or not. The
main relief room, which is also the physician's office, is in charge of
the head nurse and is located in the Treasury Building.
An average of 66,500 employees are treated annually in the Treas-
ury relief rooms, about 25 per cent of whom are men.
Bureau of supply. — This bureau has charge of all of the functions
in connection with the purchase of equipment and supplies formerly
carried on by offices, divisions, services, and bureaus of the Treasury
Department in Washington and in the field, except those of the Mint
Bureau, Coast Guard, and Bureau of Engraving and Printing. The
bureau further has control over the storage and distribution of stocks
of stationery, etc., belonging to the department. Accounting for the
funds allotted to the bureau for the purchase of supplies, together
with the approval of vouchers for payments, is also a function of this
bureau. The bureau exercises supervision over the activities of the
General Supply Committee.
General Supply Committee. — The General Supply Committee was
created by the act of June 17, 1910, and is composed of one repre-
sentative from each of the executive departments, designated by the
head thereof. The superintendent of supplies, who is an official of
the Treasury Department, is ox officio secretaiy of the committee,
and he conducts its correspondence, supervises the preparation of its
conti-acts, and perforins such other duties as the Secretary of the
REPORT OF THE SECRETARY OF THE TREASURY 321
Treasury may direct. It is the duty of the committee to prepare^
annually a schedule of miscellaneous supplies in common use by oi
suitable to the ordinary needs of two or more executive departments
or Government establishments in Washington; to standardize such
supplies; and to solicit bids therefor, tabulate proposals received, and
recommend awards.
By the Executive order of December 3, 1918, and Treasury De-
partment Regulations dated December 10, 1918, the General Supply
Committee has charge of the transfer and sale of surplus office mate-
rial, supplies, and equipment in the hands of the executive depart-
ments and other establishments of the Government in the District of
Columbia.
The Executive order of August 27, 1919, carrving into effect the
provisions of the act of July 11, 1919, designates the General Supply
Committee as the central agency to maintain records of surplus
Government material, supplies, and equipment throughout the
United States.
Division of Aypointments. — This division has supervision over all
matters relating to the appointments and other changes in the per-
sonnel of the departmental and field services of the Treasury Depart-
ment; the preparation of nominations and commissions of presidential
officers and of all bonds of Treasury officials, where required ; prepares
and approves the pay rolls of the Treasury Department in Washing-
ton, and prepares reports relative to the personnel required by law
or requested by Congress. Has supervision over the work connected
with the retirement and retention of employees under the retirement
law and certifies to the Pension Office all amounts refunded under
this law to employees leaving the service. It also supervises the
preparation of correspondence with Members of Congress and others
relative to appointments and other personnel matters and conducts
correspondence with the United States Civil Service Commission and
other departments relative to personnel matters and changes in the
service.
Division oj printing. — This division orders from the Government
Printing Office, and supervises the production of, and accounting for,
all printing and binding for the Treasury Department, and its out-
side services and on requisition supplies such printed material to all
Treasury activities, wherever located. It orders from the Bureau of
Engraving and Printing and supervises the production of all plate
printing and engraving not having a money face value, including
disbursing officers' checks for the entire Government establishment.
Places department advertising, designating the new^spaper or period-
ical, issuing written authority for publication, and settling the ac-
counts therefor. Administers the Treasury appropriation for postage.
Burea/u oj Internal Revenue. — The Commissioner of Internal Rev-
enue, under the direction of the Secretary of the Treasury, has general
superintendence of the assessment and collection of all internal
revenue taxes; the enforcement of internal revenue laws; the enforce-
ment of the national prohibition act and the Harrison Narcotic Act;
the selection, compensation, and assignment to duty of all internal
revenue officers and employees, and the preparation and distribution
of instructions, regulations, forms, blanks, stationer}^, stamps, etc.
322 REPORT OF THE SECRETARY OF THE TREASURY
For the purpose of efficient and effective administration, the duties
of the bureau are assigned to various units as follows:
The Internal Revenue Bureau in Washington is made up as follows:
Prohibition Unit.
Miscellaneous Tax Unit.
Accounts and Collections Unit.
Income Tax Unit.
General Counsel's Office.
Commissioner and Miscellaneous Unit.
The Prohibition Unit is charged with the enforcement of the
Federal prohibition act and the Harrison Narcotic Act.
The iMiscellaneous Tax Unit is charged with the responsibility of
administering the estate tax, the gift tax, and the capital-stock tax
law^s; interpretation and administration of Titles V and VII of the
revenue act of 1924, and similar provisions of the revenue acts of
1917, 1918, and 1921, also completing cases under these prior acts
involving repealed sections imposing other sales taxes, tax on tele-
graph and telephone messages, and tax on transportation charges;
the administration of laws and regulations relating to taxes on
tobacco, snuff, cigars and cigarettes, cigarette papers and tubes,
oleomargarine, adulterated and renovated butter, mixed flour, filled
cheese, phosphorous matches, playing cards, documentary stamps,
sales of products for future delivery, tax upon the use of boats and
special taxes upon businesses and occupations.
The Accounts and Collections Unit is charged with the administra-
tion of matters having to do with the organization and management of
internal revenue collectors' offices, including their field forces; with
the administrative audit of the disbursing accounts of all collectors,
revenue agents in charge of divisions. Federal prohibition adminis-
trators, and other special disbursing agents in the Internal Revenue
Bureau and service; office procedure and accounting methods in
collectors' offices; the administrative audit of all revenue accounts
submitted by collectors, and the issue of stamps to collectors of internal
revenue.
The Income Tax Unit is the agency of the Bureau of Internal Reve-
nue for administering the income and profits tax laws. Its duties
are to prepare regulations for the administration of laws relating to
taxes on income and profits; to conduct correspondence relating to
the subject matter of income and profits taxes ; to receive from collectors
of internal revenue returns (except individual returns showing gross
income not in excess of $25,000) covering taxes on income and profits;
to audit and verify returns (except individual returns showing gross
income not in excess of $25,000); to see that all original and additional
assessments of income and profits taxes are made; to review and dispose
of claims for refund, abatement and credit of income and profits
taxes; to compile statistics relating to income and profits taxes, and
to control and operate the field forces of revenue agents and inspectors
assigned to the duty of auditing income and profits tax returns
(except individual returns showing gross income not in excess of
$25,000).
REPORT OF THE SECRETARY OF THE TREASURY 323
The General Counsel's Office is the legal branch of the bureau and
acts as the legal advisor to the commissioner and to the administrative
units of the bureau; represents the bureau in cases before the tlnited
States Board of Tax Appeals, and in cooperation with the Department
of Justice represents the Government in all Federal courts. The vari-
ous functions of this office are separated into five divisions as follows:
Civil division.
Penal division. ,
Interpretative division No. I.
Interpretative division No. II.
Administrative division.
Appeals division.
The Commissioner and Miscellaneous Unit comprises the immediate
office of the commissioner and his assistant, the intelligence unit,
appointment division, communication division, and division of sup-
plies and equipment, and makes all details of personnel to offices
outside of the bureau.
FIELD
There are three main divisions of the field service as follows :
Collection service. — Made up of 65 collection districts, each under a
collector of internal revenue appointed by the President, with the
advice and consent of the Senate. This field service is under the
immediate direction of the deputy commissioner in charge of the
Accounts and Collections Unit.
Field audit service. — Made up of 34 field divisions, each under a
revenue agent in charge. These 34 divisions are assembled into
eight supervisory districts, each under a supervising internal revenue
agent who is also the agent in charge of the division where his head-
quarters are located. These eight supervising agents answer directly
to the deputy commissioner of the Income Tax Unit.
ProJiihition service. — Made up of 24 districts, each under a Federal
prohibition administrator. This field service is under the direction
of the Assistant Secretary of the Treasury in charge of prohibition
enforcement.
In addition to the above three main divisions of the field service,
there are the following traveling. forces operating from Washington:
Intelligence service. — Under the immediate direction of the chief.
Intelligence Unit, who answers to the commissioner.
Force of supervisors of accounts and collections. — Operating under
the immediate direction of the deputy commissioner in charge of the
Accounts and Collections Unit.
Force of miscellaneous and sales tax agents. — Operating under the
immediate direction of the last named official.
Force of narcotics agents and inspectors. — Operating under the head
of the narcotics division, Prohibition Unit, who answers direct to the
Federal Prohibition Commissioner, who in turn answers to the
Assistant Secretary of the Treasury in charge of narcotic enforcement.
Force of prohibition investigators. — Operating under a chief prohi-
bition investigator who answers direct to the Assistant Secretary of
the Treasury in charge of prohibition enforcement.
Bureau of the Public Health Service. — The Bureau of the Public
Health Service at Washington comprises seven divisions, and the
chief clerk's office, the operations of which are coordinated and are
under the immediate supervision of the Surgeon General.
324 REPORT OF THE SECRETARY OF THE TREASURY
The division of scientific research conducts the scientific investi-
gations of the service. Intensive studies of diseases of man, inchid-
ing cancer, clonorchiasis, diphtheria, encephahtis lethargica, goiter,
influenza, leprosy, malaria, Malta fever, pellagra, pneumonia,
poliomyelitis. Rocky Mountain spotted fever, scarlet fever, smallpox,
trachoma, tuberculosis, tularaemia, typhoid fever, typhus fever; of
child, mental, and industrial hygiene; of public health administra-
tion; of morbidity; of milk; and of stream pollution and sewage are
carried on from special headquarters in the field in cooperation with
State and local health authorities. Technical and purely laboratory
studies are conducted at the Hygienic Laboratory in Washington,
at special field laboratories, and at the leprosy investigation station
in Hawaii, the latter being carried on in connection with the medical
treatment of lepers. Information obtained from these investigations
is disseminated through publications, correspondence, lectures, and
conferences with health authorities concerning the results of field
studies in their jurisdictions. Through this division the department
enforces the act of July 1, 1902, to regulate the sale in interstate traffic
of viruses, serums, toxins, and analogous products, including arsphen-
amine.
Through the division of foreign and insular quarantine and immi-
gration, the Surgeon General administers the quarantine laws and
regulations of the United States and conducts the medical inspection
of aliens. Seventy-three quarantine inspection stations are main-
tained in the United States and 27 stations in its insular possessions
and dependencies. Twenty-six of these stations are equipped for
the housing of persons detained in quarantine. Forty-six medical
"officers of the Public Health Service are assigned to American con-
sulates for the purpose of supervising the enforcement of the quaran-
tine regulations on the part of vessels about to depart for the United
States. The medical inspection of aliens is conducted by medical
officers of the Public Health Service at 120 stations in the United
States and Canada and at 9 stations in Europe. At 65 of the above-
named stations both quarantine and immigration activities are car-
ried on. The division of foreign quarantine is also concerned with
the observance of the international treaties relating to the public
health.
The division of domestic quarantine carries out measures to sup-
press epidemics, such as plague and typhus fever, and measures to
prevent the spread of epidemic diseases in the United States.
The latter includes:
1. Enforcement of the interstate quarantine regulations of the
United States.
2. Development of State departments of health, especially divi-
sions of communicable diseases and sanitary engineering.
3. Control over water supplies used for drinking and culinary
purposes on railroads, vessels, and other interstate carriers.
4. Sanitation of the national parks in cooperation with the Na-
tional Park Service.
5. Rural sanitation and measures against trachoma.
The division of sanitary reports and statistics collects and publishes
information regarding the prevalence and geographic distribution
of diseases dangerous to the public health in the United States and
foreign countries. Court decisions, laws, regulations, and ordi-
EEPORT OF THE SECRETARY OF THE TREASURY 325
nances pertaining to the public health are compiled, digested, and
published. Its publications contain articles on subjects relating to
the public health. The division issues the Public Health Reports
(weekly), and supplements to and reprints from the Public Health
Reports. The section on public health education cooperates with
State, local, and volunteer health agencies to extend health educa-
tional service throughout the United States. This involves the
preparation and distribution of bulletins, stereopticon slides, moving
pictures, exhibits, posters, placards, and charts on subjects relating
to public health.
Through the division of marine hospitals and relief, hospital and
outpatient treatment is provided at 25 marine hospitals and 127
other relief stations of the service to seamen from documented
American vessels and ships belonging to the Coast Guard, Lighthouse
Service, Coast and Geodetic Survey, Mississippi River Commission,
and Bureau of Fisheries, lepers, immigrants sick and detained at
Ellis Island, lighthouse keepers, Coast Guard surfmen, civil em-
ployees (seamen) on United States Army vessels, civil employees of
the Government injured while in the performance of their duties,
and patients of the United States Veterans' Bureau, are also bene-
ficiaries of the service. Physical examinations are made of Coast
Guard personnel, masters, mates, pilots, and engineers applying for
licenses, civil service applicants and employees, claimants of the
United States Bureau of Pensions, food handlers employed on vessels
in interstate trade, able seamen seeking rating as such, and all
seamen when presented to determine fitness for duty at sea. Instruc-
tion and examination in first aid are given to masters, mates, pilots,
and engineers applying for licenses. Medical advice to ships at sea
is transmitted by radio. Certificates for the purchase and possession
of narcotics and liquors to fulfill medicinal needs aboard ship are
issued. Medical and dental officers are assigned to duty at the
Coast Guard Academy and medical officers are furnished to all
cruising cutters and important shore stations of the Coast Guard.
Under the supervision of the Surgeon General, the division of per-
sonnel and accounts transacts all bureau matters relating to the ap-
pointment, promotion, transfer, resignation, or other change in status
of service personnel; convenes boards for the examination or dis-
cipline of medical officers; and maintains all personnel records.
Through the section of finance and accounts of this division all
appropriations for the service are allotted, all vouchers covering
expenditures examined, and all expenditures recorded. The property
record section maintains records, by stations, of all nonexpendable
property belonging to the service; prepares authorizations for trans-
fers of property between stations; and arranges for the inspection
and disposition of all property reported as worn out or unserviceable.
The division of venereal diseases was created by act of Congress in
July, 1918—
(r. To study and investigate the cause, treatment, and prevention of venereal
diseases; (2) to cooperate witli State boards or departments of health for the
prevention and control of such diseases within the States; and (3) to control
and prevent the spread of these diseases in interstate traffic.
The provision for cooperating with the State departments of health
provides concurrent opportunities for practical studies and investi-
gations of the social and clinical causes, treatment, and prevention
326 REPORT OF THE SECRETARY OF THE TREASURY
of these diseases. The results of these studies arc sliown in the pub-
hcations of the division and in the progressive improvement of the
control measures. During the past seven years this cooperative con-
trol resulted in the establishment of more than 900 locally supported
clinics for the examination and treatment of indigent patients;
a very much larger body of physicians has been interested in actively
cooperating with the health authorities; educational pamphlets,
motion-picture films, stereopticon slides, and poster exhibits have
been developed and made availa})le through each of the State boards
of health; schools and colleges have become interested in the teach-
ing of sex hygiene; standard laws and ordinances have been enacted,
and throughout the country there has arisen an indicative public
attitude which is reflected in the growing interest of life insurance
companies, large industries, labor organizations, civic organizations,
juvenile courts, and institutions. Interstate quarantine regulations
to prevent the spread of these diseases in interstate traffic have been
promulgated by the Secretary of the Treasury.
A review of the field to be covered and the work that has been done
indicates an outstanding achievement in modern public health main-
tenance.
The general inspection service carries out all special investigations
and makes inspections of all activities of the service.
The chief clerk has charge of the following: (1) Appointments,
promotions, and discipline of the clerical personnel of the bureau;
(2) time records and leave of absence; (3) office quarters occupied
by the bureau in Washington, and equipment therein; (4) furnish-
ing supplies of stationery and blanks to the bureau and field stations;
(5) the official files of the bureau and the receipt and dispatch of
mail; (6) the bureau library; (7) procuring of printing through the
Government Printing Office, and supervision of the appropriation
therefor; (8) improvement of office methods; (9) classification and
efficiency ratings.
Supervising Architect. — ^Subject to the direction and approval of
the Secretary of the Treasury, the duties performed by the Super-
vising Architect embrace the following: Securing cessions from States
of jurisdiction over sites and the payment for the same; preparation
of drawings, estimates, specifications, etc., for, and the superintend-
ence of the work of, constructing, rebuilding, extending, or repairing
public buildings; the care, maintenance, and repair of public build-
ings, the direction of the operating force in public buildings, and the
supply of furniture, carpets, lighting fixtures, mechanical equipment,
safes, and miscellaneous supplies for use of custodians' and engineers'
forces in the care of public buildings.
ASSISTANT SECRETARY IN CHARGE OF CUSTOMS, COAST GUARD,
AND PROHIBITION
Customs Service. — The principal function of the Customs Service
is the collection of import duties; incident to this the prevention of
smuggling, the difficulties in which latter connection are greatly
increased since the enactment of the prohibition amendment. The
special agency service which operates as a part of the Customs Service
REPOET OF THE SECRETAEY OF THE TREASURY 327
is an investigative service. There is a force of about 72 in the depart-
ment at Washington and approximately 8,100 in the field.
Import duties are either specific or ad valorem or both. The ad
valorem duties are assessed principally upon the foreign market value
or the export value. By far the greater part of the import duties
are collected from commercial shipments, the rest principall}^ frpm
mail importations and passengers' baggage.
The Customs Service also cooperates with other services in the
Treasury and other executive departments in the enforcement of the
preventive, sanitary, and other laws under their administration relat-
ing principally to articles brought to this coimtry and in some cases
to articles sent out of the country.
Coast Guard. — The Coast Guard is one of the oldest organizations
in the Government, having been established originally in 1790 as
a result of the need for the services of a coastal patrol for the enforce-
ment of the customs laws and an organized armed force for the
protection of the seacoast.
The commandant of the Coast Guard is charged by law with the
administration of the Coast Guard, under the direction of the
Secretary of the Treasury in time of peace and under the direction
of the Navy in time of war. Headquarters are located at present
in the Darby Building, Fourteenth and E Streets. The act of
January 28, 1915, provided that the Coast Guard be created in lieu
of the then existing Revenue Cutter Service and the Life Saving
Service, and to be composed of those two organizations. It also
provided that it shall constitute a part of the military forces of the
United States, and shall operate under the Treasury Department
in time of peace and operate as a part of the Navy, subject to the
orders of the Secretary of the Navy, in time of war or when the
President shall so direct.
In general, the duties of the Coast Guard may be classified as
follows: Rendering assistance to vessels in distress and saving life
and property; destruction or removal of wrecks, derelicts, and other
floating dangers to navigation; extending medical aid to American
vessels engaged in deep-sea fisheries; protection of the customs
revenue; operating as a part of the Navy in time of war or when the
President shall direct; enforcement of law and regulations governing
anchorage of vessels in navigable waters; enforcement of law relating
to quarantine and neutrality; suppression of mutinies on merchant
vessels; enforcement of navigation and other laws governing merchant
vessels and motor boats; enforcement of law to provide for safety
of life on navigable waters during regattas and marine parades;
protection of game and the seal and other fisheries in Alaska, etc.;
enforcement of sponge fishing laws.
To assist the commandant in conducting the business of his oflace
there are established at headquarters an inspector, having cognizance
of matters relating to the inspection of vessels, stations, boats, and
aU other property, and the following:
Division of operations: Having cognizance of matters relating to
the operations and personnel of the service.
Division of materiel: Having cognizance of matters relating
to supplies, outfits, equipment, accounts, and the files.
328 m:PORT OF THE SECKETAEY OF THE TEEASURY
Office of construction and repair: Having cognizance of matters
relating to the construction of and repairs to the hulls of vessels
and boats, stations, wharves and all other property.
Office of engineer in chief: Having cognizance of matters relating
to the construction of and repairs to the motive power of vessels and
boats and the machinery of all other property.
Under the direction of the commandant statistics are prepared of
casualties to vessels of the United States. He is also required to
acquaint himself, as far as practicable, with all means employed in
foreign countries which may seem to affect advantageously the
interests of the Coast Guard, and to cause to be properly investigated
all plans, devices, and inventions for the improvement of life-saving
apparatus for use at the stations which may appear to be meritorious
and available.
Prohibition Unit. — This unit is charged with carrying out the
provisions of the national prohibition act and the act supplemental
thereto (Willis-Campbell Act), the internal-revenue laws relating to
intoxicating liquor, and the Harrison Narcotic Act, as amended.
Its work involves securing evidence of violation of those acts, investi-
gating violations and alleged violations, including conspiracy cases,
and making reports thereof to the Department of Justice with a view
of bringing violators to trial; the issuance or withholding of permits
to use or sell intoxicating liquor, including industrial alcohol and
narcotic drugs; the assessment of taxes for illegal manufacture and
sale, and the handling of offers in compromise of civil liability incurred.
Narcotic division. — To the narcotic division, office of Federal Pro-
hibition Commissioner of the Bureau of Internal Revenue, is assigned
the enforcement of the act of December 17, 1914, as amended, known
as the Harrison narcotic law, the act of January 17, 1914, regulating
the manufacture of smoking opium, and related statutes. In devel-
oping cases of violation under the foregoing laws charges are often
also found to accrue under the narcotic drugs import and export act,
the disposition of which in such cases is also accomplished through
the narcotic division.
The head of the narcotic division is in direct charge of the narcotic
agents and inspectors which constitute the narcotic field force. The
country, including Hawaii, is divided into 15 divisions, each under
the supervision of a narcotic agent in charge. The activity of the
force is directed through these agents in charge who are directly
responsible to the head of the narcotic division of the bureau. All
reports, expense claims and papers pertaining to salaries, appoint-
ments, transfers, resignations, etc., follow these channels.
The work of this division is otherwise divided between two sections.
The legal section receives and examines all reports of violations of the
internal revenue narcotic laws, directing the action to be taken in
each case by investigating officers, makes recommendations with
respect to offers in compromise of violations which are submitted b^^
proponents, recommends the action to be taken with respect to each
application for parole filed by a convict serving sentence for violation
of the narcotic laws, fixes assessment of taxes under the act of Decem-
ber 17, 1914, as amended, and specific penalties and recommends the
action to be taken relative to all claims for abatement or refund of
taxes or specific penalties collected under that act. Model indict-
ments are drawn, opinions prepared, and all other work of legal
REPOET OF THE SECEETAEY OF THE TEEASURY 329
character performed which would be of advantage in the prosecution
of any case under the narcotic laws. The correspondence is con-
ducted chiefly with narcotic agents in charge, collectors of internal
revenue, and United States attorneys.
The other section, known as the returns section, audits all monthly
returns of purchases and sale of taxable narcotic drugs and prepara-
tions required to be rendered by importers, manufacturers, and
wholesale dealers. The purpose of this audit is to prevent any
diversion of opium or coca leaves permitted to be imported for the
purpose of manufacturing drugs and medicines needed for medicinal
preparations. Sales which appear to be excessive are reported to
field officers for investigation. In this section is compiled all statis-
tics relating to imports, exports, and sales of drugs, violations of the
laws and seizures and confiscations of narcotic drugs thereunder.
All statistical information required by the Federal Narcotics Control
Board to determine the quantities of crude opium and coca leaves to
be imported is furnished together with information necessary in con-
nection with the issuance of export permits by that board under the
provisions of the narcotic drugs import and export act.
ABSTRACTS OF REPORTS OF BUREAUS AND DIVISIONS
11438— 26t ^23 331
ABSTRACTS OF REPORTS OF BUREAUS AND DIVISIONS
The following is a summary of the reports of the various bureaus
and divisions of the Treasury Department:
TREASURER OF THE UNITED STATES
The total ordinary receipts from all sources (exclusive of postal
revenues) during the fiscal year 1926, on the basis of daily Treas-
ury statements, revised, were $3,962,971,564.97, an increase of
$181,635,611.95, as compared with those for the fiscal year 1925.
The cash expenditures chargeable against ordinary receipts amounted
to $3,586,109,883.01. The net result for the fiscal year was an excess
of ordinary receipts over total expenditures chargeable against
ordinary receipts of $376,861,681.96. The postal revenues deposited
in the Treasury and credited to the account of the Post Office Depart-
ment during the fiscal year 1926 amounted to $703,795,295.77.
The receipts from tolls, etc., for movement of tonnage through
the Panama Canal during the fiscal year 1926 were $23,941,917.87 as
compared with $22,553,732.44 for the previous fiscal year; while
the disbursements made on account of the canal, exclusive of forti-
fications, on the basis of warrants drawn (not cash expenditures),
were $8,419,333.57 for the fiscal year 1926, as against $9,050,509.73
for the fiscal year 1925.
The receipts and expenditures on account of the principal of the
public debt during the fiscal year 1926 are shown in the following
statement:
Receipts on account of—
Certificates of indebtedness $2, 317, 315, 000. OO
Treasury notes and certificates of indebtedness (ad-
justed service series) 161, 700, 000. 00
Treasury bonds • 494, 898, 100. 00
Treasury savings securities . 11, 676, 687. 37
Postal savings bonds 544, 160. OOi
Deposits for retirement of national -bank notes and
Federal reserve bank notes 22, 223, 475. 00^
Total 3, 008, 357, 422. 37
33a
334 REPORT OF THE SECRETARY OF THE TREASURY
Expenditures on account of —
Certificates of indebtedness $2, 89fi, o42, 500. 00
Treasury notes and certificates of indebtedness (ad-
j usted service series) 53, 200, 000. 00
Treasury notes 930, 485, 300. 00
Treasury bonds 1, 000. 00
War savings securities 11, 348, 535. 00
Treasury savings securities 22, 501, 290. 25
First Liberty bonds 12, 307, 350. 00
Second Liberty bonds 30, 950. 00
Third Liberty bonds 397, 104, 900. 00
Fourth Liberty bonds _ 9, 250. 00
Victory notes 2, 306, 600. 00
Loan of 1925 633, 150. 00
Other debit items 575, 509. 66
National-bank notes and Federal reserve bank notes 54, 400, 182. 50
Total 3,881,446,517. 41
Excess of expenditures 873, 089, 095. 04
The retirements of the debt were effected as follows :
From —
Cumulative sinking fund $317, 091, 750. 00
Purchases from repayments of foreign loans 4, 393, 500. 00
Receipts from foreign governments under debt settlements 165, 260, 000. 00
Franchise tax receipts (Federal reserve and intermediate
credit banks) 567, 900. 69
Forfeitures to the United States, gifts, etc 62, 900. 00
Total 487,376,050. 69
Surplus of ordinary receipts applied to public debt retire-
ments 376, 861, 681. 96
Retirements from reduction in general fund balance 8, 851, 362. 39
Total 873,089,095. 04
The gold in the Treasury at the beginning of the fiscal year 1926
amounted to $3,691,200,200.57. On March 30, 1926, the gold
holdings of the Treasury attained a maximum of $3,748,608,915.53
and at the close of the year on June 30, 1926, amounted to $3,713,-
832,294.02. The imports of gold during the fiscal year were
$210,726,485, and the exports $113,438,459. Set apart for the respec-
tive uses the gold was held on the following accounts:
Reserve fund $154, 188, 886. 20
Trust funds (for redemption of gold certificates in actual cir-
culation) 1, 680, 510, 609. 00
Gold fund. Federal Reserve Board 1,717,348,235. 12
General fund 161, 784, 563. 70
Total 3, 713, 832, 294. 02
Of the amount in the general fund, $152,373,227.61 was held for the
redemption of Federal reserve notes. The balance in the gold fund of
the Federal Reserve Board at the close of the fiscal year 1925 was
$1,752,744,435.12. During the fiscal year 1926 the deposits therein
REPORT OF THE SECEETARY OF THE TREASURY 335
amounted to $1,152,513,100 and the withdrawals to $1,187,909,300,
leaving a balance on June 30, 1926, of $1,717,348,235.12.
The reserve fund received an increment of $567,900.69 during
the fiscal year 1926. The Secretary of the Treasury, exercising
the discretion given him under provisions of existing law, directed
that the aggregate amount of franchise tax receipts paid into the
Treasury by the Federal reserve banks and Federal intermediate
credit banks on account of earnings in the calendar year 1925 be
applied to supplement the gold reserve against United States notes
and Treasury notes of 1890 established by the act of March 14, 1900.
At the close of the fiscal year 1926 the public moneys on deposit
in designated depositaries of the United States, exclusive of items
in traiisit, amounted to $242,461,769.84, distributed as follows:
Depositaries —
In Federal reserve banks $10, 718, 586. 49
In special depositaries 202, 728. 706. 99
In foreign depositaries 154, 270. 12
In national banks : ^ 26, 683, 764. 94
In insular depositaries ? 1, 143, 996. 57
In treasury of Philippine Islands 1; 032, 444. 73
Total 242, 461, 769. 84
United States bonds to the amount of $665,616,390, pledged to
secure bank-note circulation, were in the custody of the Treasurer
at the close of the fiscal year 1926. United States bonds and other
securities held to secure public deposits in national banks amounted
to $46,824,050, and securities held for the safe-keeping of postal
deposits in postal-savings depositaries amounted to $149,508,270.86.
Under provisions of law or by direction of the Secretaiy of the
Treasur}^ the Treasurer of the United States is custodian of several
special trusts consisting of bonds and other obligations to the amount
of $ 1 1, 144, 84 1,948. 64 K- The aggregate amount of the trust accounts
is $12,006,790,659.50%.
The proceeds of currency counted into its cash hj the National
Bank Redemption Agency during the fiscal year amounted to
$546,221,750.58. Of this sum $525,998,910 was in national-bank
notes, $1,509,738 in Federal reserve bank notes, $18,598,265 in
Federal reserve notes, and $114,837.58 in United States currency.
Federal reserve notes, canceled and uncanceled, amounting to
$1,282,686,600 were received from Federal reserve banks and branches
for credit to the account of Federal reserve agents. Such notes are
received, counted, and delivered by the National Bank Redemption
Agency, but are settled for between the Federal reserve banks and
the agents either directly or by adjustments in their redemption
funds and are, therefore, not taken into the cash accounts of the
National Bank Redemption Agency.
336 REPORT OF THE SECRETARY OF THE TREASURY
The pieces of paper currency issued directly by the Government
(gold certificates, silver certificates, and United States notes) during
the fiscal year 1926 numbered 646,267,503, with a value of $1,575,-
646,000, an increase over the fiscal year 1925 of 6,750,198 pieces
and a decrease of $69,736,000 in value. The increase in the number
of notes issued, whereas the total value shows a decrease, is explained
by the fact that during the fiscal year 1926 there was an unusual
demand for notes of the small denominations. Redemptions aggre-
gated 627,341,970 pieces, with a value of $1,496,388,888, as against
566,652,962 pieces, with a value of $1,178,636,294 in the fiscal year
1925.
The increase in the amount of gold certificates outstanding was
$72,189,500 and of silver certificates $7,103,590, while the Treasury
notes of 1890 decreased $32,078, leaving a net increase of $79,261,012.
The shipments of currency from Washington to Treasury offices
and to banks during the fiscal year 1926 amounted to $1,522,778,857,
as against $1,595,316,976 in the fiscal year 1925.
COMPTROLLER OF THE CURRENCY
National banks organized, consolidated, insolvent, in voluntary liqui-
dation, and in active operation
From the inauguration of the national banking system in 1863 to
June 30, 1926, charters have been issued to 12,952 national banking
associations, of which 8,038 are in active operation. By reason of
liquidations, consolidations, and failures, 4,914 associations have
been terminated.
By reference to the accompanying statement it will be noted that
the capital of the banks in active operation on June 30, 1926, was
$1,420,087,405, an increase during the fiscal year of $43,113,690.
While charters were issued during the year to 175 associations,
there was a net decrease of 74 in the number of banks, that is, from
8,112 to 8,038, by reason of voluntary liquidations, receiverships,
and consolidations.
Summaries of operations during the last year, relating to the
number and capital of national' banks organized, increases and
reductions of capital, with number of national banks organized
under various acts of Congress, and number closed for various
reasons during the existence of the system, together with the number
organized, consolidated, failed, liquidated, and in existence in each
State and geographical division, are shown in the statements
following :
REPORT OP THE SECRETARY OF THE TREASURY
337
Organisaiions, capital stock changes, and liquidations of national banks during the
fiscal year ended June SO, 1926
Num-
ber of
banks
Capital
Total
Number
of banks
Capital
Charters granted
Increases of capital (228 banks ').
Restorations to solvency
175
$26, 440, 000
51, 440, 000
240,000
Voluntary li quidations
Receiverships 2... -..,
Decreases of capital (19 banks)...
Closed under consolidation act Nov. 7, 1918, and amount of
capital decrease incident thereto c
149
80
25, 058, 300
5, 007, 500
965, 500
4, 525, 010
181
2 267
$78, 120, 000
2 35, 556, 310
Net decrease in banks
Net increase in capital
Charters in force June 30, 1925, and authorized capital.
74
'8," 112
43,113,690
1, 376, 973, 715
Charters in force June 30, 1926, and authorized capital.
8,038
1,420,087,405
1 Includes 7 increases aggregating $14,000,000 which were effected as a result of consolidations under the act
of Nov. 7, lyiS. and 84 increases by stock dividends aggregating $8,830,900.
2 Includes 2 banks with aggregate capital of $550,000 which had been previously reported in voluntary
liquidation.
Number of national banks organized since February 26, 1863, number passed out of
the system, and number in existence June 30, 1926
Organized under —
Act Feb. 25, 1863 456
Act Junes, 1864 7,903
Gold currency act, July 12, 1870 10
Act Mar. 14, 1900 4,583
Total number of national banks organized 12, 952
Voluntary liquidations 3, 603
Expirations of corporate existence 208
Consolidations under act Nov. 7, 1918 158
Eeceiverships, exclusive of those restored to solvency 945
Total number passed out of the system 4, 914
Number now in existence 8, 038
338
REPORT OF THE SECRETARY OF THE TREASURY
Xiunber of national banks organized, consolidated under act November 7, 19 IS,
insolvent, in voluntary liquidation, and in existence on June 30, 1926, by States
State
Organ-
ized
Consoli-
dated
under act
Nov. 7,
1918
Insol-
vent
In liqui-
dation ■
In
existence
113
73
76
345
65
115
1
1
1
6
2
3
54
13
22
169
49
43
58
New Hampshire -
16
1
6
55
46
Massachusetts..'.
154
Rhode Island . .
13
63
Total New England States
787
14
34
350
389
New York
873
352
1,115
29
127
30
21
12
51
10
48
257
46
183
10
41
11
544
New Jersey -.-
289
Pennsylvania . . . . - . .
872
19
Marvland - - -
2
3
84
District of Columbia
3
13
Total Eastern States
2,526
43
114
548
1 821
Virginia . .. . .
233
163
127
113
166
105
156
67
83
1, 025
120
227
191
8
2
2
5
4
7
G
13
9
18
14
12
2
8
, 55
9
6
10
44
31
30
27
62
26
41
28
39
299
26
77
73
174
West Virginia
124
82
South Carolina . - . .
72
Georgia -
82
Florida.
65
-Alabama .. . ....
103
Mississippi
37
Louisiana
2
8
1
5
2
34
Texas
663
.Arkansas
84
Kentucky .
139
Tennessee
106
Total Southern States ...
2,776
39
169
803
1 765
Ohio
630
397
700
260
237
433
493
267
11
5
3
2
2
2
3
6
34
18
25
16
11
38
43
14
234
131
172
111
65
83
126
111
351
Indiana
''43
Illinois
500
Michigan
131
Wisconsin...
159
Minnesota
310
Iowa..
321
Missouri
136
Total Middle Western States
3,417
34
199
1,033
■J 151
North Dakota
240
199
343
431
189
57
203
78
712
1
1
44
48
38
43
62
12
27
24
42
37
39
140
126
48
13
47
23
296
158
South Dakota...
111
Nebraska
165
Kansas
4
2
258
Montana
77
Wyoming
32
Colorado
2
127
New Mexico...
31
Oklahoma
2
372
Total Western States
2,452
12
340
769
1 331
Washington
198
134
461
106
38
16
29
4
30
12
16
23
3
2
3
55
25
169
27
13
4
9
109
Oregon...
97
California
10
266
Idaho
56
Utah
2
20
Nevada
10
Arizona
17
Total Pacific States
982
16
89
302
575
-Alaska
5
6
1
1
4
1
• i
Hawaii
")
Porto Rico
Total Alaska and insular possessions
12
6
6
Total United States
12, 952
158
945
3,811
8,038
REPORT OF THE SECRETARY OF THE TREASURY 339
Condition of national hanks
The total resources of 7,978 reporting national banks in the con-
tinental United States, Alaska, and Hawaii, June 30, 1926, aggregated
$25,315,624,000, as compared with resources of 8,072 national banks
amounting to $24,350,863,000 on June 30, 1925. The increase in
resources for the year amounted to $964,761,000.
Loans and discounts, including rediscounts, June 30, 1926, were
$13,417,674,000, which was greater by $743,607,000 than on June
30, 1925.
United States securities owned were $2,469,268,000, a decrease of
$67,499,000 over June 30, 1925, the decrease being accounted for in
part by eliminating from the banks' investments bonds and securities
borrowed. Holdings of other miscellaneous bonds and securities
show an increase of $179,308,000 in the year.
Balances due reporting banks from other banks and bankers,
including lawful reserve with Federal reserve banks, amounted to
$3,364,019,000, or $70,234,000 more than on June 30, 1925. Cash
in banks, $359,951,000, shows an increase of $346,000 in the year.
The paid-in capital stock shows an increase in the year of
$43,437,000, notwithstanding there were 94 fewer banks on June
30, 1926, than on the same date a year ago. Surplus funds and
undivided profits, totaling $1,676,486,000, show an increase of
$75,847,000 since June, 1925.
Liabilities on account of circulating notes outstanding increased
$2,661,000, amounting to $651,155,000 on June 30, 1926.
Balances on the books of reporting banks to the credit of corre-
spondent banks and bankers, including certified checks and cashier's
checks outstanding, amounted to $3,405,248,000, which is a decrease
in the year of $41,408,000.
Total deposit habihties amounted to $20,642,164,000, which
exceeds by $732,495,000 total deposits on June 30, 1925. Included
in deposit liabilities are United States and other demand deposits
of $10,923,107,000, an increase of $384,752^000 in the year; and
time deposits, including postal savings, $6,313,809,000, which amount
exceeds by $389,151,000 the time deposits reported on June 30,
1925. Total individual deposits (time and demand) show an increase
of $737,500,000 in the year.
Liability for money borrowed, represented by bills payable and
rediscounts, aggregated $522,608,000, which is an increase Jii Jthe
year of $43,627,000.
The percentage of loans and discounts to total deposits was
65, as compared with 63.66 on June 30, 1925.
11438— 26t 24
340
REPORT OF THE SECRETARY OF THE TREASUEY
The resources and liabilities of national banks at the date of each
report since June 30, 1925, are shown in the following statement:
Abstract of reports of condition of national banks at the date of each report .since
Jwie 30, 1925
[In thousands of dollars]
RESOURCKS
Loans and discounts (including redis-
counts) '
Overdrafts
United States Government securities
owned
other bonds, stocks, securities, etc., owned.
Customers' liability account of acceptances.
Banking house, furniture, and fixtures
other real estate owned
Lawful reserve with Federal reserve banks.
Items with Federal reserve banks in process
of collection
Cash in vault
.\mouul due from national banks
Amount due from other banks, bankers,
and trust companies
Exchanges for clearing house
Checks on other banks in the same place. -
Outside checks and other cash items
Redemption fund and due from United
States Treasurer...
United States Government securities bor-
rowed
Bonds and securities (other than United
States) borrowed
Other assets
June 30,
1925—
!,072 banks
Total.
LIABIUTIES
Capital stock paid in
Surplus fund
Undivided profits, less expenses and taxes
paid 1
Reserved for taxes, interest, etc., accrued..
National bank notes outstanding
Due to Federal reserve banks
Amount due to national banks
Amount due to other banks, bankers, and
trust companies
Certified checks outstanding
Cashier's checks outstanding
Demand deposits
Time deposits (including postal savings)...
United States deposits
Total deposits..
United States Government securities bor-
rowed
Bonds and securities (other than United
states) borrowed
Agreements to repurchase United States
Government or other securities sold
Bills payable (including all obligations
representing borrowed money other than
rediscounts)
Notes and bills rediscounted (including
acceptances of other banks and foreign
bills of exchange or drafts sold with in-
dorsement)..
Letters of credit and travelers' checks out-
standing
Acceptances executed for customers and to
furnish dollar exchange less those pur-
chased or discounted
Acceptances executed by other banks
Liabilities other than those stated above...
12, 674, 067
9,352
2, 536, 767
3, 193, 677
176, 583
585, 267
111,191
1, 326, 864
466, 787
359, 605
1, 096, 768
403, 366
988, 294
80, 727
69, 517
33, 038
238, 993
24, 350, 863
1, 369, 435
1,118,928
481,711
60, 078
648, 494
30, 740
1,028,168
1, 827, 492
224, 089
336, 167
10, 430, 254
5, 924, 658
108, 101
19, 909, 669
21, 684
3,530
3,413
245, 107
233, 874
12, 127
164, 569
28,773
49, 471
Sept. 28,
1925
!,085 banks
13, 134, 461
14,900
2, 512, 025
3, 242, 620
201, 083
593, 176
114,677
1, 324, 326
456, 666
362, 341
1, 120, 925
393, 869
733, 816
58, 326
54,094
32, 876
219, 346
24, 569, 527
1, 375, 009
1, 125, 495
543, 564
69, 792
649, 221
31, 820
1, 068, 420
1, 766, 708
251, 505
214, 594
10, 427, 544
5. 994, 374
175, 097
19, 9S0, 06S
24, 479
3,976
4,057
316, 627
245, 537
9,065
191,873
28,542
52, 228
Dec. 31,
1925—
1,054 banks
13, 535, 278
10, 554
2, 522, 810
3, 252, 016
277, 513
606, 474
113, 741
1, 376, 992
572, 090
390, 116
1, 192, 948
425, 518
1, 127, 241
109, 679
71, 320
33, 008
Apr. 12,
1926—
8,000 banks
235, 114
25, 852, 412
Total 24,350,863 24,569,527
1, 379, 101
1, 166, 601
476, 207
59, 170
648, 461
38, 321
1, 076, 397
1. 897, 555
261, 813
414, 856
11,151,126
6, 047, 370
193, 222
m, 080, 660
32, 718
3,625
1,984
384, 377
264, 505
7,525
257, 929
39, 595
49,954
13, 301, 306
10, 953
2, 540, 823
3, 269, 027
265, 066
621, 825
113,987
1, 288, 664
487, 345
367,^73
1,062,811
388, 932
774, 989
83, 095
68, 809
32, 905
215. 555
24, 893, 665
1, 410, 434
1, 188, 704
500, 519
63, 327
649, 452
35, 785
987, 311
1, 779, 579
258, 034
223, 885
10, 456, 694
6, 199, 806
234, 704
SO, 175, 798
25,611
4,053
2,497
265, 590
258, 713
7,760
246,199
39, 493
65,515
221, 131
29, 801
50,805
25, 852, 412 24, 893, 665 | 25, 315, 624
' Includes customers' liability under letters of credit.
REPOKT OF THE SECRETARY OF THE TREASURY 341
Banks other than national
The resources of 20,168 reporting banks other than national in the
various States, Alaska, and the insular possessions, on June 30, 1926,
aggregated $39,577,738,000, and exceeded the returns from 20,769
associations on June 30, 1925, in the sum of $1,871,564,000.
Loans and discounts of $22,583,356,000 were $1,550,273,000 more
than in the preceding year; investments in United States and other
miscellaneous bonds and securities of $9,972,888,000 were increased
$303,219,000, while banking house, furniture, and fixtures, $860,208,-
000 and other real estate owned, $243,048,000, showed increases of
$44,376,000 and $18,753,000, respectively.
Balances due from correspondent banks and bankers, including
lawful reserve with Federal reserve bank and other reserve agents,
amounted to $3,405,042,000, which was a decline of $75,565,000 in
the year. Checks and other cash items were reduced by $44,319,000,
and exchanges for clearing house were $27,115,000 less than the
returns from these associations in the year previous. Cash on hand
was increased from $591,681,000 to $636,569,000.
With the exception of amounts due to correspondent banks and
bankers, which showed a reduction of $53,360,000, all liability items
showed increases over the returns for June 30, 1925.
Paid-in capital stock in the current year was $1,860,431,000, surplus
$2,273,069,000, and undivided profits $585,584,000.
Individual deposits of $31,789,884,000 showed an increase of
$1,378,854,000; certified checks and cashiers' checks outstanding, an
increase of $11,252,000, and United States deposits an increase of
$4,204,000. Liabilities for money borrowed, represented b}' bills
payable and rediscounts, aggregated $501,186,000 and were $54,891,-
000 higher than these items on June 30, 1925.
342
REPORT OF THE SECRETARY OF THE TKEASUEY
Comparison of the resources and liabilities of these banks for the
years ended June 30, 1925 and 1926, is shown in the following
statement :
Resources and liabilities of baJiks other than national June 30, 1926, compared
with J.une 30, 1925
[In thousands of dollars]
June 30,
1925—
20,769
June 30,
1926—
20,168
Increase
Decrease,
601
banks
RESOURCES
Loans and discounts --.
Overdrafts - -..
Investments (including premiums on bonds)
Banking house (including furniture and fixtures).
Other real estate owned
Due from banks _
I^awful reserve with Federal reserve bank or other reserve
agents
Checks and other cash items -
Exchanges for clearing house
Cash on hand
other resources .-
Total resources-
LIABIUTIES
21,033,083
40,907
9, 669, 669
815, 832
224, 295
2, 088, 561
1,392,046
803, 933
238, 666
591, 681
807, 501
37, 706, 174
22,583,356 j 1,550,273
39,751
9,972,888 303,219
860,208 ! 44,376
243,048 18,753
1,859,627 I
1,545,415 I 153,369
759,614 I
211,551
636,569 I 44,888
865,711 I 58,210
39,577,738 | 1,871,564
Capital stock paid in 1,800,276
Surplus ! 2,054,406
Undivided profits (less expenses and taxes paid). ...j 525, 728
Due to all banks 1,484,509
Certified chocks and cashiers' checks.
Individual deposits (including dividends unpaid and
postal savings)
Unitcil States deposits (exclusive of postal savings)
Notes and hills rediscounted
Bills payable
other liabilities
Total liabilities.
138, 605
30, 411, 030
39, 119
94, 025
352, 270
806, 206
37, 706, 174
1, 860, 431
2, 273, 069
585, 584
1,431,149
149, 857
31, 789, 884
43, 323
114,833
386, 353
943, 255
60, 155
218,663
59, 856
11,252
1,378,854
4,204
20, 808
34,083
137, 049
39, 577, 738 1, 871, 564
1,156
228, 934
44,319
27,115
53, 360
All reporting hanks
[National, State (coniinercial), savings, and private banks, and loan and trust
companies]
On June 30, 1926, there were 7,978 reporting national banks and
20,168 reporting banks other than national, the returns of all show-
ing aggregate resources of S64, 893, 362,000, which was an increase
of $2,836,325,000 over the resources of all reporting banks on June
30, 1925.
Loans and discounts amounting to $36,233,490,000 showed an
increase of $2,349,757,000 and investments in bonds and securities
of $15,815,141,000, an increase of $415,028,000. Banking house,
furniture, and fixtures, with estimated value of $1,493,050,000, and
other real estate owned totaling $358,917,000 w^ere increased
$91,951,000 and $23,431,000, respectively.
REPOET OF THE SECEETAEY OF THE TREASURY 343
Balances due from correspondent banks and bankers were reduced
$213,007,000, while lawful reserve with the Federal reserve banks
and elsewhere was increased $207,676,000. Checks and other cash
items were less by $28,068,000, and exchanges for clearing house
showed a reduction of $115,508,000. Cash on hand, $996,520,000,
however, was $45,234,000 more than on June 30 of the previous
year.
The paid-in capital stock of $3,273,303,000 exceeded the sum
reported a year ago by $103,592,000, although there were 695 fewer
reporting banks in the current year. Surplus funds showed an
increase of $298,634,000 and undivided profits an increase of
$55,732,000.
Total deposits of $54,056,377,000 were $2,073,445,000 more than
reported in the preceding year. Included in the deposit liabilities
are amounts due to banks, $4,330,605,000, and certified checks and
cashiers' checks outstanding, $655,649,000, which were less than the
amounts of these items in the previous year by $40,304,000 and
$43,212,000, respectively. Individual deposits of $48,882,296,000,
however, were increased $2,116,354,000, and United States deposits
showed an increase of $40,607,000.
Liability for money borrowed on account of rediscounts was
$55,735,000 more than in the preceding year, and bills payable
showed an increase of $42,783,000.
The resources and liabilities of all reporting banks on or about
June 30 of each year from 1920 to 1926 are shown in the following
table:
344
REPORT Oi' THE SECRETARY OF THE TREASURY
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REPORT OF THE SECRETARY OF THE TREASURY
345
The following statement shows the number of national banks,
June 30, 1926, in each State, with the amount of capital and aggre-
gate assets, in comparison with similar information for all reporting
banks:
Number, capital, and assets of national banks, and all reporting banks, June SO,
1926, by States
National banks
All banks, including national
banks
States, etc.
Num-
ber of
banks
Capital
(000
omitted)
Aggregate
assets (000
omitted)
Num-
ber of
banks
Capital
(000
omitted)
Aggregate
assets (000
omitted)
Maine
58
55
46
154
13
63
$7,420
5,335
5, 110
74, 293
4,870
20, 252
$151, 478
78, 436
67, 843
1,465,195
59, 553
295, 580
148
123
105
443
38
247
$13,011
6,465
7,901
115, 683
14, 265
40, 211
$446, 145
290, 253
251 087
New Hampshire
Vermont .
Massachusetts
4, 221, 049
531 992
Rhode Island . . . .
1,225^397
Total New England States
389
117, 280
2, 118, 085
1,104
197, 536
6, 966, 923
New York
542
283
871
19
84
13
259, 461
44, 431
149, 660
1,759
18, 339
10, 277
6,093,431
928. 782
3, 058, 507
24, 863
299, 820
160, 540
1,144
541
1,658
59
245
43
568, 816
105, 931
334, 443
9,842
42, 743
24, 144
17, 373, 910
New Jersey '.
2, 385, 087
Pennsylvania ,
6, 250, 760
Delaware
137, 200
Maryland
893, 101
District of OolniTihifi ...
302, 865
Total Eastern States
1,812
483, 927
10, 565, 943
3,690
1,085,919
27, 342, 923
Viiginia
172
124
80
70
82
63
102
37
32
662
84
139
106
30, 158
13,511
14, 395
10, 610
15,000
15, 200
13, 170
5,410
9,075
84,046
7,600
18, 621
17, 774
389, 690
201, 780
196, 324
128, 428
200, 244
342, 582
179, 116
89,542
129, 460
; 69, 499
105, 181
282, 512
246,644
512
346
663
330
657
337
355
359
239
1,483
478
600
643
60,075
35.673
37, 231
22, 659
44,656
34,082
27,058
17, 375
33, 371
119, 603
23, 841
41,043
42,145
663, 169
West Virginia.
446, 653
North Carolina
505, 891
South Carolina
255, 054
Georgia .... . .. ...
488, 172
Florida
713,354
Alabama
339, 674
Mississippi
279, 006
Louisiana
534, 579
Texas
1, 276, 763
Arkansas
284, 355
Kentucky. .. .. .
564, 975
Tennessee
522,900
Total Southern States
1,753
254, 470
3, 461, 002
6,702
538, 712
6,874,646
Ohio
351
240
497
130
158
298
315
136
63,415
31, 765
97, 758
30, 533
27, 305
36, 564
25, 635
44,017
963, 786
445, 685
1, 763, 526
584. 989
456, 737
639. 810
382, 216
645, 427
1,084
1,087
1,882
783
983
1,298
1.536
1,522
177, 686
80, 140
266, 548
109, 556
63, 208
65, 763
75,905
123, 206
3, 055, 640
1, 193, 177
niinois
4, 518, 668
2, 144, 511
Wisconsin
1,067,969
1, 152, 941
Iowa
1,084,690
Missouri
1, 614, 894
Total Middle Western States...
2,125
356, 992
5, 882, 176
10, 175
962, 012
15, 832, 490
North Dakota
157
108
165
257
76
32
127
31
370
6,355
4,970
15, 120
18, 208
5,395
2,700
11,880
2,085
26, 230
101, 745
82, 572
242, 571
257, 605
84, 420
43, 515
263, 058
28, 993
418, 057
599
474
1,058
1,250
220
93
309
63
738
14,291
13, 283
38, 346
44,492
12, 185
4,540
17, 862
3,306
33, 674
190, 431
South Dakota
193, 662
Nebraska
563,890
Kansas
,146, 426
165, 200
Wyoming
67,204
340,985
New Mexico
39, 213
515,017
TotaljWestern States
1,323
92. 943
1, 622, 536
4,804
181, 868
2, 622, 028
346
REPORT OF THE SECRETARY OF THE TREASURY
Number, capital, and assets of national banks, and all reporting banks, June SO,
1926, by States — Continued
States, etc.
National banks
Num-
ber of
banks
Capital
(000
omitted)
Aggregate
assets (000
omitted)
All banks, including national
banks
Num-
ber of
banks
Capital Aggregate
(000 assets (000
omitted) omitted)
Washington.
Oregon
California. --
Idaho
Utah
Nevada
Arizona
Total Pacific States.
108
97
264
56
20
10
15
$18, 240
13, 795
64,355
3, 710
3,650
1, 385
1,325
570
106,460
Alaska (nonmember banks)
The Territory of Hawaii (nonmember
banks)
Porto Rico
Philippines
200
600
$320, 528
227,397
1,043,878
58,420
56, 114
19, 379
27, 150
364
272
621
156
112
34
47
$30,439
22,870
195, 481
6,788
11,723
3,097
4,782
1, 752, 866
3,971
9,045
Total Alaska and insular
sessions
po-
800
13, 016
Total United States.
7,978 I 1,412,872 I 25,315,624
1,606
65
28, 146
840
8,248
10, 359
12, 629
32, 076
$514, 516
335, 413
3, 706, 467
97, 924
171,223
45,209
78, 808
275, 180 4, 949, 560
12,522
94,585
61, 426
137, 360
305, 893
3,273,303 64,893,362
DIRECTOR OF THE MINT
Institutions of the mint service
Since the Charlotte assay office was closed on June 30, 1913, 11
mmt service institutions have been operated: Coinage mints at Phila-
delphia, San Francisco, and Denver; assay office at New York, which
makes large sales of fine gold bars; mints at New Orleans and Carson
City, conducted as assay offices; and assay offices at Boise, Helena,
Deadwood, Seattle, and Salt Lake City. The seven last-named insti-
tutions are, in effect, bullion-purchasing agencies for the large insti-
tutions and also serve the public by making assays of ores and bul-
lion. Electrolytic refineries are operated at the New York, Denver,
and San Francisco institutions.
Coinage
The domestic coinage made during the fiscal year ended June 30,
1926, consisted of $64,315,565 in gold, $19,183,178 in silver, and
$5,115,675 in minor coin, a total of $88,614,418 represented bj^ 372,-
171,282 pieces, which compares with the prior year's total domestic
coinage of $278,610,944 represented by 190,443,558 pieces. Each
of the three coinage mints, at Philadelphia, San Francisco, and Den-
ver, made gold, silver, and minor coins. The demand for nickels
and cents was again in evidence, nearly 302,000,000 pieces having
been made as compared with 111,000,000 during last year and
168,000,000 during the ue.xt preceding year. The gold coinage was
consequently materially reduced (by about 70 per cent). The num-
REPORT OF THE SECRETARY OP THE TREASURY 347
ber of silver dollars executed totaled 11,432,700 and subsidiary silver
coins 54,479,756 pieces, each of the three mints contributing thereto.
In addition to the above the mints struck 16,676,000 pieces of foreign
coin, as follov^'s: 40,000 pieces in gold for Costa Rica and Guatemala;
6,230,000 pieces in silver for Poland, Guatemala, Venezuela, and
Peru; and 10,406,000 pieces in nickel for Salvador and Peru. A
grand total of 388,847,282 pieces of coin as the output for 1926 com-
pares with 203,166,558 pieces during the prior year.
Gold operations
Gold acquired by the Government at the several mint service
institutions during the fiscal year 1926 totaled $178,800,676.48.
United States gold coin received by the mints for recoinage amounted
to $2,088,238.39; transfers of gold between mint offices totaled
$27,604,313.30; the aggregate amount of gold received by the sev-
eral mint service institutions during the fiscal year 1926 was $208,-
493,228.17, which compares with $225,681,342.27 during the prior
year.
Silver operations
Receipts of purchased silver during the fiscal year 1926 totaled
4,992,831.43 fine ounces, the average cost of which was 69^/^ cents
per ounce, total cost being $3,470,901.73. Silver received in exchange
for bars bearing the Government stamp totaled 1,656,972.97 fine
ounces; United States silver coin received for recoinage totaled
1,828,581.76 fine ounces, the recoinage value being $2,527,847.60;
silver deposited in trust by other governments totaled 2,489,563.52
fine ounces; and transfers between mint service ofiices totaled 2,048,-
557.39 fine ounces, making the aggregate quantity of silver received
by the several mint service offices during the fiscal year 13,016,507.07
fine ounces, as compared with 10,420,912.01 fine ounces during th^
prior year.
Silver dollars remaining to be coined from bullion purchased under
the Pittman Act amounted to about 6,500,000.
The New York market price of silver during the fiscal year ended
June 30, 1926, averaged $0.68317; the lowest price was $0.633025,
on April 22, 1926; and the highest price $0.731875, on September 5,
1925.
Refineries
The three refineries — at New York, San Francisco, and Denver —
were in operation throughout the year, reducing the large quantities
of unparted and unrefined bars into usable gold and silver bullion.
Production of electrolytic ally refined gold totaled during the past
fiscal year 3,272,689 ounces, as compared with 3,319,076 ounces dur-
ing the fiscal year 1925. Electrolytically refined silver totaled
4,977,646 ounces, as compared with 5,293,985 ounces during the
fiscal year 1925.
348 REPORT OF THE SECRETARY OF THE TREASURY
Commemorative coins
Special design coins authorized by Congress were issued during
the past fiscal A'ear as below:
Jn commemoration of the one hundred and fiftieth anniversary
(sesquicentennial) of the signing of the Declaration of Independence
a two and one-half dollar gold piece and a silver half dollar were
issued. The gold coin bears on its obverse a draped female figure
representing Liberty standing on a segment of the globe and holding
a lighted torch in one hand, while in the other is held a scroll (the
Declaration of Independence); the dates 1776 and 1926 also appear.
On the reverse is a likeness of Independence Hall. Other mottoes
and inscriptions are as required by the coinage laws. The coin w^as
designed by J. R. Sinnock, mint engraver.
The obverse of the sesquicentennial half dollar shows profile like-
nesses of Washington and Coolidge, while on the reverse is shown
an illustration of the Liberty Bell with the dates 1776 and 1926.
This coin also was designed by J. K. Sinnock.
In commemoration of the seventy-fifth anniversary of the admis-
sion of California into the Union, Congress authorized the issue of a
special design half dollar. The obverse illustrates a miner washing
or "panning" gold from gravel, with the wording "California's
Diamond Jubilee." On the reverse California's symbolic bear is
shown. This coin was designed by J. Mora.
The Vancouver half dollar, authorized by Congress in commemo-
ration of the one hundredth anniversary of the founding of Fort
Vancouver, Wash., by the Hudson Bay Co., bears on the obverse
the likeness and name of Dr. John McLoughlin, the builder of the
fort, with the dates 1825 and 1925. On the reverse appears a full-
length figure of a frontiersman with gun, while in the background
the fort and a mountain peak are illustrated. The coin was designed
by Mrs. Laura G. Frazer.
Stoclc of coin and monetary bullion in the United States
On June 30, 1926, the estimated stock of domestic coin in the
United States was !$2,054,657,476, of which $1,232,243,292 was gold,
$533,491,184 standard silver dollars, and $288,923,000 subsidiary
silver coins.
The stock of gold bullion in the mints, assay offices, and Federal
reserve banks on the same date was valued at $3,268,733,645, an
increase during the year of $102,687,731; the stock of silver bullion
was 10,073,737.60 fine ounces, a reduction of 7,547,023.58 fine ounces.
Production of gold and silver
Domestic gold production during the calendar year 1925 was
$49,860,200, as compared with $52,277,000 in 1924. The output
continues at approximately half of that for the record year 1915,
when the total was $101,035,700.
REPORT OF THE SECRETARY OF THE TREASURY
349
Silver of domestic production during 1925 totaled 66,155,424
ounces, valued at $45,911,864; this compares with 65,407,186 ounces,
valued at $43,822,814, for 1924, and with the record production of
191.'), 74,961,075 fine ounces, valued at $37,397,300.
Industrial consumption of gold and silver
Gold consumed in the industrial arts during the calendar year
1925 is estimated at $65,953,870, of which $36,161,849 was new
material.
Silver used in the arts is estimated at 39,826,579 fine ounces, of
which 29,929,163 fine ounces were new material.
As compared with the prior year, gold consumption was about
the same and silver consumption increased about 6,200,000 ounces.
Import and export of domestic gold coin
The net export of domestic gold coin during the fiscal year ended
June^O, 1926, was $46,614,511; during the prior fiscal year there
was net export of $107,910,658. During the 12 fiscal years since the
opening of the World War, 1915-1926, there has been a net export
of $935,718,226. Smce 1870 the net export of domestic gold coin
has been $1,813,367,290.
Appropriations, expenses, and income
Appropriations available for mint service during the fiscal year
1926 totaled $1,693,204.17, and reimbursements to appropriations
for services rendered amounted to $144,742.17, making a total of
$1,837,946.34.
Expenses amounted to $1,800,042.69, of which $1,735,217.74 was
chargeable to appropriations and $64,824.95 chargeable to income.
The income realized by the Treasury from the mint service aggre-
gated $10,400,989.25, of which $9,546,613.78 was seigniorage. The
seigniorage included $2,590,024.53 on the coinage of silver dollars,
which amount oft'sets an equal loss which was incurred when the
silver dollars were melted and sold under terms of the Pittman Act.
The seigniorage on subsidiary silver coin was $2,607,772.55; on
nickel coin, $2,165,755.84; and on bronze coin, $2,183,060.86.
Summary of appropriations, expenses, and balances, fiscal year 1926
Items
Salaries and
wages
Contingent Freight on
expenses bullion
Total
Appropriations
1 $1, 360, 929. 17
114,217.92
$324,775.00
30, 524. 25
$7,500.00
$1, 693, 204. 17
144,742.17
Total available. -
1,475,147.09
'1,409,204.10
355, 299. 25
319, 252. 82
7, 500. 00
6. 760. 82
1,837,946.34
Expenses
1, 735, 217. 74
65, 942. 99
36, 046. 43
739. 18
102,728.60
' Includes $749.17, paid from special fund— charges on silver-dollar bullion sold.
350
liKPOirr OF IIIK SECRETARY OF THE TREASURY
Deposits of gold and silver, income, expenses, and employees, hy
institutions, fiscal year 1926
The nuinber and value of deposits, transfers, gross income, and
expenses for the fiscal year 1926, and the number of employees on
June 30, 1926, at each institution, are shown in the following table:
Institution
Num-
ber of
de-
posits
of gold
and
silver
Num-
ber of
mint
serv-
ice
trans-
fers
Coining value
of gold and sil-
ver received '
Gross in- Gross ex-
come pense
Em-
E.xcess of in- ploy-
come {+) or of ees,
expenses (— ) June
30, 1926
Philadelphia
10,687
8,738
2,959
15,719
392
296
474
412
6
1,708
139
1,920
953
176
2,156
2
$13, 952, 824. 91
36, 833, 729. 92
9,431,676.64
123, 548, 102. 08
484, 404. 58
297, 546. 45
171, 981. 68
331, 807. 89
3, 150. 59
7,495,337.57
58,948.66
$6, 297, 180. 07
2, 411, 173. 09
$814,081.93
312. 593. 12
-t-$5, 483, 098. 14 336
San Francisco
-1-2,098,579.97 127
1, 241, 417. 24 222, 733. 24
442,230.631 342,594.39
577.921 11.593. 34
+1,018,684.00 85
New York
-f 99, 636. 24 125
New Orleans
-11,015.42 6
Carson City
797. 91
1,563.25
881. 80
417. 50
4,208.11
541. 73
5, 948. 63
7,745.37
6,561.93
5, 410. 00
27, 150. 68
4, 175. 28
-5, 150. 72 3
-6, 182. 12 4
Helena . .
-5, 680. 13 3
Deadwood
-4,992.50 3
-22, 942. K 11
Salt Lake City
-3, 633. 55, 2
Total
41, 530
5,207
192, 609, 510. 97
10, 400, 989. 25
1,760,587.91
39, 454. 78
+8,640,401.341 705
Bureau of the Mint
-39, 454. 78 14
Grand total
Fiscal year 1925.
41, 530
42,955
5,207
2,692
192, 609, 510. 97
219,935,306.48
10,400,989.25
9, 108, 120. 73
1, 800, 042. 69
1, 846, 646. 36
+8, 600, 946. 56 719
+7, 261, 474. 37 766
> Gold valued at $20.67+ per fine ounce, silver for standard dollars valued at $1.29+ per fine ounce,
and silver.' or subsidiary coin at $1.38+ per fine ounce.
BUREAU OF INTERNAL REVENUE
Receipts from internal-revenue taxes during the fiscal year 1926
compared with 1925 were as follows:
Sources
1925
1926
Increase
Income tax:
Corporation.
Individual
Total
Miscellaneous taxes
Total (all sources)
$916, 232, 697. 02 ,$1, 094, 979, 734. 17 $178, 747, 037. 15
845, 426, 352. 49 879, 124, 407. 16 33, 698, 054. 67
1, 761, 659, 049. 51
822, 481. 218. 73
1, 974, 104, 141. 33
861, 895, 750. 86
2, 584, 140, 268. 24 2, 835, 999, 892. 19
212,445,091.82
39, 414, 532. 13
251, 859, 623. 95
In the foregoing statement of receipts no deductions have been
made on account of refunds, which during the fiscal year 1926 were
made from the following appropriations:
Refunding taxes illegally collected 1924 and prior years $737, 093. 65
Refunding taxes illegally collected 1926 and prior years 58, 944, 780. 59
Refunding taxes illegally collected 1937 and prior years 114, 475, 022. 77
Total 174, 156, 897. 01
Less amount by which repayments exceeded disbursements in
connection with the appropriation refunding taxes illegally
collected 1925 and prior years 36, 719. 27
Net total 174, 120, 177. 74
REPORT OF THE SECRETARY OF THE TREASURY
351
The above total includes interest allowed on claims under provisions
of the revenue acts of 1921, 1924, and 1926.
The following comparative statement shows in greater detail the
internal-revenue receipts for the fiscal years 1925 and 1926:
Sources
1926
Increase (+) or
decrease (— )
Income tax:
Corporation '
Individual
Total
instates of decedents _._
Gifts of property _
Distilled spirits and alcoholic beverages
Receipts under national prohibition
Tobacco and tobacco manufactures.-.
Oleomargarine, adulterated and process or reno-
r vated butter, filled cheese, and mixed flour
Bonds, capital-stock issues, conveyances, capital-
stock transfers, sales of produce for future de-
livery, playing cards, etc
Excise taxes, manufacturers', including automo-
). biles, cameras, photographic films, etc..
Other excise taxes, including sculpture and paint-
ings, jewelry, clocks and watches, etc
Corporations, on capital stock
Brokers, bowling alleys, billiard and pool tables,
shooting galleries, riding academies, passenger
automobiles for hire, and use of pleasure boats,
etc
Admissions to theaters and other places of amuse-
ment and club dues _.
Karcotics: Opium, coca leaves, etc., including
special taxes of importers, manufacturers, and
dealers
Internal revenue collected through customs ofBees.
Other miscellaneous receipts *
Total miscellaneous taxes
Total receipts from all sources ^
$916, 232, 697. 02 ,$1, 094, 979, 734. 17
845, 426, 352. 49 879, 124, 407. 16
1, 761, 659, 049. 51
101, 421, 766. 20
7, 518, 129. 32
25, 904, 774. 72
560, 888. 07
345, 247, 210. 96
3, 064, 155. 39
49, 251, 784. 18
130, 357, 163. 05
10, 494, 934. 67
90, 002, 594. 56
5,811,558.04
39, 598, 397. 44
1,090,932.73
51, 054. 05
12,105,875.35
822, 481, 218. 73
2, 584, 140, 268. 24
+$178, 747, 037. 15
4-33, 698, 054. 67
1,974,104,141.33
+212,445,091.82
116,041,036.09
3, 175, 338. 73
26, 452, 028. 63
416, 197. 63
370, 666, 438. 87
3, 092, .540. 42
54, 014, 239. 36
142, 470, 447. 03
7, 727, 718. 85
97, 385, 755. 61
4, 546, 978. 21
34, 054, 515. 05
+14, 619, 269. 89
-4, 342, 790. 59
+547, 253. 91
-144,690.44
+25, 419, 227. 91
+28, 385. 03
+4, 762, 455. 18
+12, 113, 283. 98
-2, 767, 215. 82
+7, 383, 161. 05
-1,264,579.83
-5, 543, 882. 39
981,739.07 -109,193.66
55,065.43 I +4,011.38
815,711.88 1 -11,290,163.47
861, 895, 750. 86 ; +39, 414, 532. 13
2, 835, 999, 892. 19 ; +251, 859, 623. 95
1 Includes income tax on Alaska railroads (act of July 18, 1914) amounting to $15,573.74 for 1925 and
$15,784.13 for 1926.
■ Includes $12,068,035.75 for 1925 and .$803,551.69 for 1926. delinquent taxes collected under repealed laws.
3 The figures concerning internal-revenue receipts as given in this statement differ from such figures
carried in other Treasury statements showing the financial condition of the Government, because the
former represent collections bv internal-revenue officers throughout the country, including deposits by
postmasters of amounts received from sale of internal-revenue stamps, and deposits of internal revenue
collected through customs oflices, while the latter represent the deposits of these collections in the Treasury
or depositaries during the fiscal vear concerned, the differences being due to the fact that some of the col-
lections in the latter part of the fiscal year can not be deposited, or are not reported to the Treasury as
deposited until after June 30, thus carrying them into the following fiscal year as recorded m the state-
ments showing the condition of the Treasury.
Cost of administration
The expenditures in administering the internal-revenue tax laws
for the fiscal year 1926 were $34,948,483.37, not including expendi-
tures for refunding internal-revenue collections and taxes illegally
collected, which in no sense are administrative expenses. The aggre-
gate receipts of internal revenue were $2,835,909,892.19 which makes
the cost of operation for the fiscal year 1926 $1.23 for each $100 col-
lected, compared with $1.44 for each $100 collected for the fiscal
year 1925, or a reduction of 14.6 per cent.
There were also expended $9,573,791.64 for the enforcement of the
prohibition law and $1,233,136.73 for the enforcement of the narcotic
law from appropriations provided for those purposes.
352 REPORT OF THE SECRETARY OF THE TREASURY
Income Tax Unit
The number of income and excess profits tax returns audited during
the year was 2,155,933 (977,043 individual and 1,178,890 corporation),
compared with 1,751,613 (1,222,868 individual and partnership and
528,745 corporation) for the previous fiscal year.
The production was the second largest in the history of the Income
Tax Unit, being exceeded only in the fiscal year 1924 when 2,329,191
returns were audited. However, the 1924 audit included an accumu-
lation of returns for a three-year period — 1921 to 1923, inclusive —
b}' far the larger number of which were closed at the files. In 1926
the great majority of cases was closed only after intensive audit,,
the files audit covering 1924 returns alone.
The number of returns audited in 1926 exceeded the number of
new returns filed and those reopened on claims, revenue agents' re-
ports, etc., by 1,268,344. The number of returns imaudited at the
close of the year was 742,740, compared with 2,011,084 at the close
of the fiscal year 1925.
Revenue agents^ reports
The number of reports of field examinations submitted was 574,246^
compared with 290,241 for 1925, an increase of 98 per cent. The
number of returns sent to the field for examination was 830,498,
compared with 223,284 transcripts of returns for the previous fiscal
ye&r. The increases are due to the bureau's decentralization plan,
which is the transference to the field of many of its functions for-
merly performed in Washington.
Adjustment of claims
The number of claims scheduled was 103,319. In addition, 53,848
certificates of overassessment in cases in which no claims were filed
were scheduled. Of the claims scheduled, 54,473 were allowed. The
total amount involved, including overassessments in cases against
Avhich no claims were filed, was $424,072,181.86, of which amount
$116,623,311.92 was refunded and $307,448,869.94, abated or cred-
ited. The amount of interest paid on amounts refunded or credited
under section 1324 (a), revenue act of 1921; section 1019, revenue
act of 1924; and section 1116 (a), revenue act of 1926 was $40,883,-
726.53. The number of claims received was 72,195, involving $1,008,-
290,704.43, compared with 65,613 involving $1,147,707,744.54 for
the previous fiscal year. The number of claims rejected was 48,846
involving $503,429,020.78. The number of claims on hand at the
close of the fiscal year was 29,234, compared with 73,441 at the
close of the previous fiscal year, a decrease of 44,207.
REPORT OF THE SECRETARY OF THE TREASURY 353
The balance of claims on hand at the close of the year was the
smallest in recent years and results from improved procedure, elimi-
nation of duplication, and constant surveillance over this phase of
the work. The number of certificates of overassessment scheduled in
cases in which no claims were filed — 53,848 — is worthy of attention.
The residt of this was to relieve the taxpayer of the necessity of filing
and proving claims for taxes overassessed or overpaid. Under the
old procedure, claims would have been in\^ted and filed before
certificate of overassessment could issue.
During the year the Income Tax Unit directed particular atten-
tion to the adjustment of claims filed against assessments made in
1920 and prior years, effecting a net reduction of 4,827 in the number
of such cases.
Additional revenue
A total of $372,243,866.56 in additional taxes was assessed. In
order that the collection would not be jeopardized, it was necessary
to assess $148,867,165.26 without giving the taxpayer the benefit
of appeal. Of this amount $142,628,459.23 was assessed under the
revenue act of 1924 and, in cases where the claims were not adjusted
prior to the enactment of the revenue act of 1926, is subject to
claims in abatement and appeal to the United States Board of Tax
Appeals. The balance of $6,238,706.03, assessed under the revenue
act of 1926, is subject to appeal to the United States Board of Tax
Appeals, and abatement claims are not required. Further revenue
amounting to $61,981,464.02 was made available and subject to im-
mediate collection through the rejection of claims in abatement and
claims for credit.
The sorting section audited and closed 13,084 withholding returns
and examined 600,304 information returns. Based on the audit of
withholding retm-ns $10,892,133.70 was assessed, compared with
$10,048,561.66 for the previous fiscal year. The number of delin-
quent returns obtained as a result of the examination of information
returns was 9,948.
Personnel
Reduced appropriations for salary allotments necessitated a fur-
ther reduction in the force of the Income Tax Unit. The number of
separations during the year was 1,099, including 463 technical and
636 clerical employees. Of the technical separations, 223 were made
in the personnel of the Washington force and 240 in the personnel
of the field force. The number of clerical separations in the Wash-
ington force was 557 and in the field force 79.
On June 30, 1926, the technical force of the Washington office of
the Income Tax Unit numbered 1,489 and the clerical force 1,875,
a total of 3,364, while at the close of the previous fiscal year the
354 REPORT OF THE SECRETARY OF THE TREASURY
technical force numbered 1,942, and the clerical force 2,224, a total
of 4,166. In the field force there were on June 30, 1926, 2,442
revenue agents and 629 clerks, a total of 3,071, compared with
2,310 revenue agents and 521 clerical employees, a total of 2,831
on June 30, 1925.
In line with the decentralization plan, 240 auditors and 67 clerks
were transferred during the year 1926 from the Washington office
to the field, the auditors being assigned to duty as revenue agents.
The saving in salaries resulting from the reduction of the force of
the Income Tax Unit was $1,080,656.
Miscellaneous Unit
The Miscellaneous Unit is charged with the administration of all
taxes other than income tax and oertain taxes under the jurisdic-
tion of the Prohibition Unit. In consequence of the repeal of various
taxes by the revenue act of 1926 the miscellaneous division was
organized March 1, 1926, taking over the work of the former sales
tax division and the administration of the miscellaneous taxes from
the tobacco and miscellaneous division. The unit is now composed
of four divisions, the capital-stock tax division (for the completion
of the work in connection with the capital-stock tax, repealed effective
June 30, 1926), estate-tax division, miscellaneous division, and
tobacco division.
Capital-stoclc tax
Collections of the capital-stock tax for the fiscal year 1926 amounted
to $97,385,755.61, compared with $90,002,594.56 for the fiscal year
1925, an increase of $7,383,161.05. The capital-stock tax division,
as the result of the audit of returns, listed additional tax in the
amount of $8,798,643.54. The collector's offices listed a tax of
$89,263,253.01, making the total assessments $98,061,896.55. The
number of offers of compromise on hand at the beginning of the
fiscal year was 5,438, amounting to $72,631.65. There were received
13,542 offers, amounting to $207,315.02. The number of offers
accepted was 9,903, amounting to $135,600.22. The number re-
jected was 977, amounting to $19,875.18. There were pending on
June 30, 1926, 8,100 offers, amounting to $124,471.27.
Estate tax
Estate-tax collections aggregated $116,041,036.09, conipared with
$101,421,766.20 for the fiscal year 1925.
The number of returns audited was 13,912, compared with 19,752
for the previous year. The field force submitted 13,694 major
reports, compared with 15,606 for 1925. There were filed 15,982
new returns, compared with 13,962 for 1925.
EEPOKT OF THE SECEETARY OF THE TREASURY . 355
Additional assessments amounting to $20,540,328.39 in estate-tax
cases and $202,039.87 in gift-tax cases were made, due to office
audit and field investigations.
On July 1, f925, the number of refund claims on hand was 151,
aggregating $4,759,342.91. There were received during the year
2,402 refund claims, aggregating $28,257,119.68. The number of
refund claims allowed was 2,249, amounting to $8,554,823.09, including
$689,095.12 interest on such claims. There were 304 refund claims
on hand at the end of the fiscal year, amounting to $10,459,350.20.
The number of abatement claims on hand at the beginning of the
fiscal year was 10, amotmting to $601,366.28. The number received
was 345, amounting to $4,636,134.27, and the number allowed was
339, the abatements amounting to $3,124,785. The number on hand
at the end of the fiscal year was 16, amounting to $293,592.43.
Gift-tax collections for the fiscal year amounted to $3,175,338.73,
compared with $7,518,129.32 for the fiscal year 1925. There were
received 322 claims for refund of the gift tax, amounting to
$2,024,622.10. The number allowed was 274, the refunds amount-
ing to $311,459.64, including $815.26 interest. Two abatement
claims, amounting to $20,174.02, were received, both of which were
allowed in full. The number of claims for refund of the gift tax on
hand at the end of the fiscal year was 48, involving $805,342.21.
There were pending at the beginning of the fiscal year 102 protest
letters and 2,286 were received. There were 2,281 such letters dis-
posed of, involving $28,019,063.57, leaving 107 on hand at the close
of the fiscal year.
Miscellaneous taxes
Receipts from admissions, dues, and excise taxes amounted to
$184,252,680.93, compared with $180,450,495.16 for the fiscal year
1925. Collections from miscellaneous stamp and special taxes were
$61,653,757.99, compared with $58,127,497.61 for 1925.
During the year there were received and audited 270,501 monthly
returns covering admissions, dues, and excise taxes. Due to the
repeal by the revenue act of 1926 of certain sales taxes, the returns
for the last two months of the year were reduced to approximately
one-half the number filed for corresponding months in the preceding
year.
By reason of investigation in the field and by office audits and
reports, additional taxes in the amount of $5,142,599.50 were assessed.
Tobacco taxes
Collections from tobacco taxes were $370,666,438.87, an increase
of $25,419,227.91, or 7.36 per cent, compared with the previous year.
Such collections represent 13.07 per cent of the total internal-revenue
356 REPORT OF THE SECRETARY OF THE TREASURY
receipts from all sources, compared with 13.3G per cent for the fiscal
year 1925. Receipts from taxes on small cigarettes, amounting to
$254,824,808.19, represent 68.75 per cent of the tobacco collections,
and show an increase of $29,792,106.12, or 13.24 per cent, over the
preceding year.
The following seven States furnished 86.45 per cent of the total
receipts from tax on tobacco manufactures: North Carolina, $172,-
503,186.60; Virginia, $40,815,049.41; New York, $35,359,424.05;
New Jersey, $28,672,336.72; Pennsylvania, $22,322,302.04; Missouri,
$10,767,822.06; and California, $10,009,208.18.
Accounts and Collections Unit
The Accounts and Collections Unit, which has to do with the work
of the 65 collection districts, is divided into three divisions— division
of procedure and accounts, division of field allowances, and dis-
bursement division.
•»
The field work was reorganized during the year, and 106 division
offices and 30 stamp offices were discontinued, resulting in an annual
saving of $204,469 in personnel cost and rental. At the close of the
year there were 65 collectors' offices, 43 division offices, and 48 stamp
offices, of which 21 were operated in conjunction with division offices.
The average revenue production of a zone deputy is approximately
$37,000 a year. By reason of the discontinuance of 106 division
headquarters and the assignment of former division chiefs to the pro-
ductive work of a zone deputy, the department has every reason to
expect increased revenue with no additional cost to the Government.
Special attention w^as given by collectors' field forces to the serving
of warrants for distraint, the verification of returns filed indicating
additional tax due, and the conduct of delmquent drives. The
number of warrants for distraint served was 127,571, resulting in the
collection of $50,249,181, compared with 106,154 warrants served
and $25,471,000 collected for the fiscal year 1925. An average of
2,109 deputy collectors made a total of 492,367 revenue-producing
investigations, including the serving of warrants for distraint, com-
pared with 577,558 revenue-producing investigations, including the
serving of warrants for distraint, made by an average of 2,241 deputy
collectors for the fiscal year 1925. The total amount collected and
reported for assessment by deputy collectors during the fiscal year
1926 was $78,500,438, compared with $58,224,340 for the previous
fiscal j^ear. The average number of investigations made per deputy
was 233, and the average amount of tax collected was $37,222, while
for the fiscal year 1925 the average number of investigations made
per deputy was 258, and the average amount collected and reported
for assessment was $25,981.
KEPOET OF THE SECRETARY OF THE TRE.\SURY 357
An average of 103 internal-revenue agents (sales and miscellaneous
taxes), working under the direction of the Accounts and Collections
Unit, collected and reported for assessment $10,704,165, an average
of $103,924 per agent. During the preceding fiscal year an average
of 177 agents collected and reported for assessment $12,994,867, an
average of $73,417 per agent. The total collected and reported for
assessment, as a result of the activities of both the force of field deputy-
collectors and the special squads working under supervisors of accounts
and collections, amounted to $89,204,603, compared with $71,219,207
for the fiscal year 1925.
At the close of the fiscal year 1925 there was in the internal-revenue
collection service a total authorized force, including collectors, of
6,586 employees at an annual salary rate of $12,277,530. The
reduction during the year was 571 in the number of positions and
$885,770 in the annual salary rate, the reduction amounting to
approximately 8.67 per cent of the total authorized force and 7.21
per cent of the total annual rate.
During the year 1926, $295,345.82 was expended for rental of col-
lectors" offices and branch offices, compared with $329,146.35 for the
preceding fiscal year. The decrease of $33,800.53 w^as brought about
by the removal of certain offices from commercial to Federal space,
the discontinuance of various division offices housed in commercial
space, and the procurement of space at a lower rental rate to the
Government.
Out of a total of approximately 4,300,000 individual income-tax
returns filed, collectors of internal revenue retained for audit approxi-
mately 3,670,000. Those retained by the collectors show a gross
income of $25,000 or less. During the previous year collectors
retained for audit approximately 7,350,000 returns out of a total of
about 7,556,000 individual returns filed. However, the revenue act
of 1926 materially reduced the number of individuals required to
file income-tax returns.
General counsel
The work of the general counsel's office, which embraces the
whole field of Federal taxation, is divided into six divisions — appeals;
interpretative I; interpretative II; penal; civil; and administrative.
Appeals division
Attorneys of the appeals division, organized April 24, 1925, have
appeared as representatives of the commissioner in all cases tried
before the United States Board of Tax Appeals during the year, and
in practically all cases have made oral arguments, supplemented in the
more important cases by written briefs.
358 kj>:port of the secretary of the treasury
A field division of the United States Board of Tax Appeals held
hearings in St. Louis and Kansas City, Mo., in November and Decem-
ber, 1925. F'our attorneys of the appeals division accompanied
this division.
Four field divisions of tiie board left Washington in Api-il, 1920. for
a 30-day trip, during which hearings were held at Birmingham,
Ala.. New Orleans, La., Atlanta, Ga., San Francisco, Calif.. Los
Angeles, Calif., Oklahoma City, Okla., Dallas, Tex., Tulsa, Okla.,
Chicago, 111., and St. Paul, Minn. Seventeen attorneys of the appeals
division accompanied the board.
From July 1, 1925, to June 30, 1926, there were filed with the-
United States Board of Tax Appeals 12,867 appeals, of which 12,449
were serv^ed on the commissioner.
Decisions of the board are final in that the commissioner, if he
does not agree, must bring suit in the appropriate United States
district court in cases where hearings were held prior to the passage
of the 1926 act, and may appeal to a circuit court of appeals or the
Court of Appeals of the District of Columbia in cases heard since the
passage of the 1926 act. Nevertheless the commissioner, as a matter
of policy and necessity, must very largely accept the board's decision
as final; and of a large number of cases decided since the establish-
ment of the board comparatively few have not been acquiesced in.
Interpretative division I
Questions considered by interpretative division I relate solely
to the income and excess profits tax provisions of the several
revenue acts. During the year work has consisted exclusively of
rendering decisions on specific questions. These for the most part
are rendered in the shape of informal opinions in response to ques-
tions presented by the Income Tax Unit, and in passing on, approving,
or commenting upon letters prepared by the rules and regulations
section. Occasional requests for opinions have been made by the
appeals division in connection with cases pending before or just
decided by the United States Board of Tax Appeals. AH matter
proposed for publication in the Internal Revenue Bulletin is sub-
mitted to this division before publication is authorized. During
the fiscal year 1926, 894 cases were received by this division and
813 disposed of.
Interpretative division II
The work of interpretative division II during the year has been
to interpret the provisions of law relating to the miscellaneous. taxes,
to prepare and review regulations. Treasury decisions, informal
memoranda, and letters relating to such taxes ; to review and approve
claims for abatement, redemption, and refund of the miscellaneous
BEPORT OF THE SECRETARY OP THE TREASURY 359
taxes, involving amounts in excess of $500; to assist in the drafting
of contemplated legislation relating to miscellaneous taxes; to
supervise the disposition of real estate acquired by the Government
under the internal-revenue laws, and with the approval of the Sec-
retary of the Treasury, authorizing the sale at public vendue of the
interest of the United States in such realty; to consider questions
of a legal nature arising in connection with all internal-revenue
laws; to consider deficiency protests in estate-tax cases, and to handle
real estate cases before the United States Board of Tax Appeals.
The work of reviewing and approving miscellaneous claims was
limited to refunds involving amounts in excess of $50,000. The
work of reviewing and approving income tax claims involving refunds
in excess of $50,000, formerly handled by the review division, which
was abolished, was transferred to this division; administrative ques-
tions involving income tax were transferred to interpretative division
I, and the work of defending real estate tax cases before the
United States Board of Tax Appeals was transferred to the appeals
division. The division conducted 198 hearings and conducted 105
cases before the Board of Tax Appeals.
Civil division
The civil division, in cooperation with the Department of Justice,
and the United States attorneys' offices, handles all civil revenue
cases pending in the Federal courts. These cases include the prose-
cution of suits by the United States to recover unpaid taxes, and the
defense of suits brought by taxpayers against collectors of internal
revenue or the United States to recover taxes alleged to have been
erroneously assessed and collected. While the United States attor-
neys are charged with responsibility for the conduct of these cases,
the attorneys for the civil division assemble the evidence, prepare
and brief the cases for trial both as to the facts and the law, and
an attorney of the civil division is usually present to assist at
such trials.
The principal centers of litigation, with respect to the number of
cases pending and the amounts involved, are New York, Phila-
delphia, Boston, Chicago, Pittsburgh, and San Francisco. The
number of civil cases pending at the close of the fiscal year 1926
was 2,400 compared with 2,497 at the close of the fiscal year 1925.
During the year 1,983 new civil cases were received and 2,080 civil
cases were closed.
Penal division
Among several important changes in the functions of the penal
division during the year was the inauguration of a practice of prepar-
ing indictments in all cases referred by the commissioner to United
360 KF.POirr OF THK SECRETARY OF THE TREASURY
States attorneys for prosecution. This practice was adopted with
the approval of the Department of Justice, in order to assist United
States attorneys to whom such cases are referred and for the purpos
of obtaining greater uniformity in indictments in tax cases.
During the year two attorneys attached to the penal division were
assigned to permanent service in New York and Chicago, respec-
tively. Attorneys from the division frequently are sent to various
points throughout the United States to render assistance requested by
United States attorneys as special assistant to the Attorney General
to conduct grand jury proceedings and jury trials in collaboration
with United States attorneys.
At the beginning of the fiscal year there were pending in the penal
division 1,409 cases. The number of new cases received was 639,
making a total of 2,048 cases under consideration during the year.
The number of cases disposed of was 1,281, leaving 767 pending
June 30, 1926.
Prohibition Unit
The reorganization and decentralization of the Prohibition Unit,
planned and partly carried out in the fiscal year 1925, was completed
during the fiscal year 1926. The offices of the former 51 Federal
prohibition directors were abolished and 24 prohibition districts were
established in lieu thereof, each in charge of a prohibition adminis-
trator. The continental United States contains 22 such districts,
while the Hawaiian Islands and Porto Rico each comprise one. The
districts are bounded in every instance, save two, by Federal judicial
lines, and the prohibition administrators keep in close touch and
cooperate with United States attorneys in all matters connected
with prohibition enforcement. In order that this cooperation may
be as effective as possible, deputy prohibition administrators are
stationed in the same cities where United States attorneys have their
headquarters.
The Assistant Secretary of the Treasury in charge of the Customs
Service, Coast Guard, and Prohibition Unit, organized within the
Prohibition Unit two special squads to cooperate with prohibition
administrators in the enforcement of the national prohibition act, a
supplemental appropriation having been authorized for that purpose.
One squad, operating under a supervisor of alcohol control, combats
the diversion of alcohol to beverage purposes; and one, operating
under a supervisor of brewery control, is assigned to prevent breweries
from releasing high-powered beer. A supervisor of wine control also
was appointed to handle the control of sacramental wine. A force of
under-cover investigators was assigned to duty under a chief prohi-
bition investigator to conduct special investigations of major viola-
tions of the national prohibition act, especially smuggling.
EEPORT OF THE SECRETARY OF THE TREASURY 361,
Prohibition agents made 58,391 arrests during the year and seized
5,935 automobiles, valued at $2,877,894, and 187 boats, valued at
$225,561. As a result of the work of such agents, 52,989 prohibition
cases were handled in the Federal courts and 41,154 persons were
convicted.
The Federal courts imposed sentences aggregating 4,884 years for
violation of the national prohibition laws. In addition, as shown by
the records of the Solicitor of the Treasury Department, there were
certain collections through the Federal courts, such as fines and for-
feitures, incident to enforcing the national prohibition act, amounting
to $5,231,130.90, compared with $5,208,203.09 for the fiscal year 1925.
During the year the Prohibition Unit was completely reorganized
and its force greatly reduced, incident to the decentralization of the
prohibition service. A number of its activities, notably the issuance
of permits in Washington as well as the review of revocation and
assessment hearings, were discontinued.
During the year 4,097 compromise cases were examined and deter-
mined, 2,099 of which were favorably acted upon and 1,798 were
rejected, the total amount accepted being $932,289.99. A considera-
ble part of this amount is made up of large offers in compromise by
surety companies accepted too late in the fiscal year to be transferred
from their special compromise deposits by collectors of internal
revenue to their collection accounts, and will therefore appear in the
collections for the next fiscal year.
There were considered 371 applications for pardons from persons
serving sentences for violation of the national prohibition act, 30
of which were recommended for approval, 261 recommended for
rejection, 65 returned to the Department of Justice without recom-
mendation, and 15 referred to other departments. A total of 875
applications for parole from persons serving sentences for violation of
the national prohibition act was considered, of which 7 were recom-
mended for approval, 572 recommended for rejection, 222 returned
to the Department of Justice without recommendation, and 74
referred to other departments.
On June 30, 1926, 322 persons were registered under the Harrison
Narcotic Act, as amended, as importers and manufacturers, 1,826
as wholesale dealers, 48,459 as retail dealers, 143,879 as practitioners,
and 119,146 as dealers in and manufacturers of untaxed narcotic
preparations, the latter number including registrants not required
to pay special tax by reason of another tax under the act, or a total
of 313,632 registrations.
A total of 5,120 convictions under the internal-revenue narcotic
laws was had, compared with 5,600 for the fiscal year 1925. Sen-
tences for the year 1926 aggregated 6,797 years 11 months and 10
days, whereas the aggregate for the preceding year was 6,361 years
11 months and 7 days.
362 r.EPORT OF THE SECRETARY OF THE TREASURY
The industrial alcohol and chemical division conducts the chemical
work of the Bureau of Internal Revenue at Washington, and super-
vises generally the activities of the chemical laboratories in the field.
The laboratory at Washington made 18,346 analyses during the year,
and 86,755 analyses were made in the field laboratories.
During the year new laboratories were established at St. Louis,
Mo., Charlotte, N. C, Pittsburgh, Pa., New Orleans, La., Los Angeles,
Calif., Fort W^orth, Tex., and Seattle, Wash. A chemist in charge
also was stationed at Omaha, the use of a portion of 'the laboratory
at Fort Omaha having been placed at the disposal of the Prohibition
Unit by the commanding officer.
The program to concentrate distilled spirits is practically com-
plete. The contents of a few warehouses remain to be transferred,
but since the enactment of the concentration act 253 warehouses
have been discontinued. This results in a large permanent saving
and in much greater security to the spirits.
Bureau and field personnel
The total number of employees in the Bureau of Internal Revenue
on June 30, 1926, was 17,903, compared with 19,333 on June 30,
1925, a decrease of 1,430.
The number of employees in Washington on June 30, 1926, was
4,843, compared with 6,176 on June 30, 1925, a decrease of 1,333.
The number of employees in collectors' offices on June 30, 1926,
was 6,072 (exclusive of 55 temporary employees), compared with
6,453 on June 30, 1925.
The internal-revenue agents' force engaged in the collection of
income and estate taxes on June 30, 1926, was 3,276, compared with
3,010 on June 30, 1925. The 1926 figures are exclusive of 18 tem-
porary employees.
The internal-revenue agents' force engaged in the collection of
miscellaneous and sales taxes on June 30, 1926, was 56, compared
with 138 on June 30, 1925.
The prohibition field force, including narcotic officers, on June 30,
1926, numbered 3,263, compared with 3,173 on June 30, 1925, an
increase of 90. The number of supervisors of accounts and collec-
tions on June 30, 1926, was 40, compared with 42 on June 30, 1925,
The intelligence force on June 30, 1926, numbered 124, compared
with 112 on June 30, 1925.
The number of storekeeper-gangers on June 30, 1926, was 228, the
same number being employed on June 30, 1925.
Under the provisions of the retirement act, 18 classified employees
were retained in the service after reaching the age of 70; 38 were re-
tired on annuity, 11 of the latter being retired on account of total
disability.
REPORT OF THE SECRETARY OF THE TREASURY 363
k
DIVISION OF BOOKKEEPING AND WARRANTS
A summary of receipts and expenditures during the fiscal year
ended June 30, 1926, adjusted to the basis of daily Treasury state-
ments (revised), is set forth in the following table:
Ordinary receipts $3, 962, 971, 564. 97
Expenditures chargeable against ordinary receipts 3, 586, 109, 883. 01
Surplus of ordinary receipts over total cash expendi-
tures chargeable against ordinary receipts 376, 861, 681. 96
Surplus revenues applied to reduction of the public debt, in
addition to $487,376,050.69 debt retirements chargeable
against ordinary receipts, and $8,851,362.39 public debt
retirements resulting in decrease in general fund balance. . 376, 861, 681. 96
Public debt expenditures, including public debt expendi-
tures chargeable against ordinary receipts 3, 881, 446, 517. 41
Public debt receipts 3, 008, 357, 422. 37
Excess of total public debt expenditures over public
debt receipts 873, 089, 095. 04
Public debt retirements chargeable against ordinary receipts. 487, 376, 050. 69
Public debt retirements from surplus revenues 376, 861, 681. 96
Public debt retirements resulting in decrease in general fund
balance 8,851, 362. 39
Net reduction in public debt during fiscal year, as
above 873, 089, 095. 04
Total ordinary and public debt expenditures 6, 980, 180, 349. 73
Total ordinary and public debt receipts 6, 971, 328, 987. 34
Excess of all expenditures over all receipts 8, 851, 362. 39
Balance in general fund on basis of daily Treasury state-
ments (revised), June 30, 1925 219, 979, 440. 82
Balance in general fund on basis of daily Treasury state-
ments (revised), June 30, 1926 211, 128, 078. 43
Net decrease in balance in general fund June 30, 1926,
under such amount June 30, 1925 8, 851, 362. 39
The general fund
Balance according to the daily Treasury statement, June 30,
1925 (unrevised). $217, 835, 732. 09
Add net excess of receipts over expenditures in June reports
subsequently received 2, 143, 708. 73
219, 979, 440. 82
11438— 26t 25
364 REPORT OF THE SECRETARY OF THE TREASURY
Decrease in book credits of disbursing
officers and agencies with the Treasurer,
June 30, 1926, as compared with June 30,
1925 $13, 086, 167. 12
Decrease in unpaid warrants, June 30, 1926,
as compared with June 30, 1925 746, 513. 81
13, 832, 680. 93
Deduct e.xcess of receipts over pay warrants
issued ' 4,981,318. 54
$8, 851, 362. 39
Balance held by the Treasurer of the
United States June 30, 1926 211, 128, 078. 43
Balance held by the Treasurer, according to daily Treasury
statement, June 30, 1926 (unrevised) 210, 002, 026. 71
Add net excess of receipts over expenditures in June reports
subsequently received. 1, 126, 051. 72
211, 128,078. 43
Surplus of ordinary receipts over expenditures chargeable against ordinary receipts,
excess of public debt expenditures ^ over public debt receipts, and excess of all
expenditures over all receipts, according to unrevised daily Treasury statements
adjusted to the basis of revised daily Treasury statements, fiscal year 1926
Ordinary 3
Public debt 2
Total (or net)
Surplus of receipts according to daily Treasury state-
ment June 30, 1920 (unrevised)
$377, 767, 816. 64
2,171,071.90
< $385, 601, 522. 02
< 27, 363. 17
< $7, 833, 705. 38
Excess of receipts over expenditures in June, 1925,
reports subsequently received
2, 143, 708. 73
Excess of receipts over expenditures in June, 1926,
reports subsequently received
375, 596, 744. 74
1, 264, 937. 22
« 385, 574, 158. 85
« 138, 885. 50
* 9, 977, 414. 11
1, 126, 051. 72
Surplus of receipts on basis of daily Treasury state-
ment June 30, 1926 (revised)
376, 861, 681. 96
< 385, 713, 044. 35
< 8, 851, 362. 39
2 Exclusive of public debt expenditures chargeable against ordinary receipts.
' Includes public debt expenditures chargeable against ordinary receipts.
* Excess of expenditures over receipts.
Warrants issued during the fiscal year 1926 adjusted to basis of daily
Treasury statements (revised)
The following table shows the total number of warrants issued and
the gross amounts involved on account of the receipts and expendi-
tures recorded during the fiscal year, adjusted to basis of daily
Treasury statements (revised) :
' After adding $27,273.39, for increase in uncovered moneys, and deducting $7.50 for relief of John Burke,
former Treasurer United States, under act of June 3, 1922.
REPORT OF THE SECRETARY OF THE TREASURY
365
Warrants issued
.Adjustments to
basis of daily
Treasury state-
ments (revised),
on account of dis-
bursing officers'
credits, unpaid
warrants, un-
covered moneys,
and receipts
credited direct
to appropriations
General classes
Number
.\. mount
Adjusted figures
on basis of daily
Treasury state-
ments (revised)
Receipt warrants:
Ordinary
560
15
$3, 908, 452, 949. 51
3, 008, 357, 422. 37
-f $54, 518, 615. 46
$3, 962, 971, 564. 97
Public debt- ..-
3, 008, 357, 422. 37
Total
575
6, 916, 810, 371. 88
-f-54, 518, 615. 46
6, 971, 328, 987. 34
Pay and transfer warrants:
Ordinary
111,227
46
4, 092, 313, 839. 13
3, 881, 451, 069. 38
+13, 832, 688. 43
1 4, 106, 146, 527. 56
Public debt . .
2 3, 881, 451, 069. 38
Total
111, 273
7, 973, 764, 908. 51
+13, 832, 688. 43
7, 987, 597, 596. 94
Repay and counter warrants:
Ordinary
847
21
1, 061, 904, 037. 31
4, 551. 97
-54, 491, 342. 07
1, 007, 412, 695. 24
Public debt
4, 551. 97
Total
868
1, 061, 908, 589. 28
-54, 491, .342. 07
1, 007, 417, 247. 21
Pay warrants (net) .. .. . . .
6,911,856,319.23
+68, 324, 030. 50
6, 980, 180, 349. 73
Grand total of warrants issued .
112,716
15, 952, 483, 869. 67
' Exclusive of $487,376,050.69 public debt expenditures chargeable against ordinary receipts.
2 Includes $487,376,050.69 public debt expenditures chargeable against ordinary receipts.
Receipt accounts to the number of 1,167, representing receipts
from customs, internal revenue, public lands, miscellaneous sources,
Panama Canal tolls, and public debt and appropriation accounts to
the number of 8,405, covering expenditures for all executive depart-
ments, other Government establishments, the District of Columbia,
and the public debt, have been credited and charged, respectively,
to the general fund of the Treasury, details of which are exhibited
on pages 429 to 442 of this report. Of the total receipts and repay-
ments to appropriations deposited during the year, aggregating
$7,214,904,209.96, no amount remained uncovered by warrant as of
June 30, 1926.
Transfer and counter warrants amounting to $1,527,629,502.40
were issued for adjustment of appropriation accounts, largely for the
service of the Army and Navy, without affecting the general fund.
Appropriation warrants were issued to the number of 467, credit-
ing detailed appropriation accounts with amounts provided by law
for disbursement, and transfer-appropriation and surplus-fund war-
rants charging and crediting detailed appropriation accounts to the
number of 403, a total of 870.
District of Columbia account of revenues and expenditures
The total charges and credits to the District of Columbia for the
fiscal year ended June 30, 1926, on the basis of warrants issued, as
shown by the District of Columbia ledger of revenues and expendi-
366
REPORT OF THE SECRETARY OF THE TREASURY
tures established in accordance with the act of June 29, 1922 (42
Stat. 669), were as follows:
General funds
Special funds
Trust fimds
Total
Balance June 30, 1925
$8, 698, 789. 98
I 22, 188, 100. 18
9,000,000.00
$199, 413. 57
2, 276. 844. 21
$504, 332. 29
2 2, 382, 893. 52
$9. 402, 535. 84
26, 847, 837. 91
United States contribution act, Mar.
3 1925
9, 000, 000. 00
Expenditures, fiscal year 1926 .
39,886,890.16
' 29, 722, 017. 09
2, 476, 257. 78
2, 231, 552. 19
2, 887, 225. 81
2 2, 418, 599. 82
45, 250, 373. 75
34, 372, 169. 10
Balance June 30, 1926
10, 164, 873. 07
244, 705. 59
468, 625. 99
10. 878, 204. 65
' Exclu.'iivo of $376,705.30 general revenue of the District of Columbia covered into the Treasury to credit
of "Policemen and firemen's relief fund, trust fund," under act of Sept. 1, 1916 (39 Stat. 718, sec. 12), to
meet deficiencies in .said fund.
2 Includes amount referred to in note 1.
Alien Property Custodian account
Under the provisions of the act of Congress approved October 6,
1917, and the proclamations and Executive orders issued thereunder
by the President, the Secretary of the Treasury purchased during
the year for account of the Alien Property Custodian United States
securities of a par value of $179,263,500. There were on hand on
July 1, 1925, similar securities of a par value of $176,621,500. Secu-
rities amounting to $177,245,500 were sold or redeemed during the
year, the proceeds being reinvested as available. The total face
amount of such securities carried by the Secretary of the Treasury
in trust for the Alien Property Custodian on June 30, 1926, was
$178,639,500.
During the fiscal year 1926 payments aggregating $15,564,932.50
were made upon authorizations of the Alien Property Custodian and
the Attorney General.
Purchase of farm loan bonds
On July 1, 1925, there were held by the Secretary of the Treasury
$88,885,000 Federal farm loan bonds, purchased under the provisions
of the act of January 18, 1918, as amended by the joint resolution
dated May 26, 1920. During the fiscal year 1926 the Secretary
made no further purchases, but the Federal land banks repurchased
$28,390,000, thus leaving $60,495,000 of such bonds on hand at the
close of the fiscal year 1926.
State bonds and stoclcs owned by the United States
The following statement shows the nonpaying State bonds and
stocks, formerly in the Indian trust fund, now" in the Treasury,
belonging to the United States:
REPORT OF THE SECRETARY OF THE TREASURY
367
state
Principal
Interest
coupons due
and unpaid
$37, 000. 00
58, 000. 00
335, 666. 6634
$17, 220. 00
88, 140. 00
157. 830. 51
Total
430, 666, 66%
263, 190. 51
A history of these State stocks and bonds is given in House Docu-
ment No. 263, Fifty-fourth Congress, second session.
BUREAU OF ENGRAVING AND PRINTING
During the fiscal year ended June 30, 1926, the expenditures of
the Bureau of Engraving and Printing for delivered sheets v,^ere
increased $120,230.38, or 1.19 per cent, as compared with the pre-
vious year, and the net increase in deliveries was 17,437,411 sheets,
or 3.75 per cent. There were increases in delivered sheets of cur-
rency amounting to 21,507,386 sheets; decreases in bonds, notes,
and certificates of 942,267 sheets; decreases in stamps of 1,434,143
sheets; and decreases in miscellaneous work of 1,693,565 sheets.
A comparative statement of receipts and expenditures for the fiscal
years 1925 and 1926 follows:
/ Detail
Year 1926
Year 1925
Increase
Decrease
Appropriated by Congress (includes deficiency) :
.$460,540.00
3,826,083.00
1,955,200.00
1,496,327.00
112,522.07
1,780,831.99
560, 619. 62
997, 250. 31
$435, 000. 00
3,446,368.00
1,641,921.00
1,311,033.50
2.33,300.00
1,727,111.49
623, 552. 18
938, 391. 52
$25,540.00
379, 715. 00
313,279.00
185, 293. 50
Materials and miscellaneous expenses
New machinery and other equipment
1925 26
$120,777.93
Reimbursements to appropriations from other
bureaus for work completed:
53, 720. 50
62, 932. 66
Materials and miscellaneous expenses '
58,858.79
Total
11,189,373.99
10, 356, 677. 69
1,016,406.79
183, 710. 49
Net increase --.
832, 696. 30
Expended:
453,184.02
5, 239, 065. 05
2, 434, 684. 32
2, 305, 975. 03
50, 766. 26
419,039.69
5, 088, 226. 93
2, 264, 510. 85
2,148,902.06
120, 777. 93
34,144.33
150,838.12
170,173.47
157,072.97
Materials and miscellaneous expenses
New machinery and other equipment
1925 26
70,011.67
Total 2.. - -
10, 483, 674. 68
10,041,457.46
512, 228. 89
70,011.67
Net increase
1 442,217.22
Unexpended balance:
7,355.98
307, 849. 94
81,135.30
187, 602. 28
61, 755. 81
15,960.31
85, 252. 56
962. 33
100, 522. 96
112,522.07
8, 604. 33
282,597.38
80, 172. 97
87,079.32
Materials and miscellaneous expenses
New machinery and other equipment
1925-26 -
50, 766. 26
Total -
705, 699. 31
315,220.23
449, 849. 67
59, 370. 59
390, 479. 08
1 An additional amount of $78,913.58 received from sale of by-products and useless property was deposited
to the credit of the Treasurer of the United States as miscellaneous receipts.
2 Includes $201,861.05 and $193,352.52 transferred to retirement fund in the fiscal years 1926 and 1925,
■ espectively.
368
REPORT OF THE SECRETARY OF THE TREASURY
A comparative statement of deliveries of finished work in the
fiscal years 1925 and 1926 follows:
Classes
Sheets
1925
1926
Face value,
1926
Currency:
United States notes
Silver ccrtificrttes
Gold certificates
National-bank currency
Federal reserve notes
Silver certificates (for experimental purposes).
Total
Bonds, notes and certificates;
Pre-war bonds
Liberty bonds
Treasury bonds
Treasury notes
Certificates of indebtedness
Insular bonds —
Porto Rican
Philippine
Federal farm-loan bonds...
Collateral-trust debentures
Philippine treasury certificates
Philippine national-bank circulating notes.
Interim certificates for Porto Rican bonds.
Interim certificates for Philippine bonds...
Specimens —
Treasury bonds
Treasury notes
Certificates of indebtedness
Insular bonds —
Porto Rican
Philippine
Total.
stamps:
Customs ,
Internal-revenue—
United States
Philippine
Porto Rican
Virgin Islands...
Specimens-
United states
Postage-
United States
United States, surcharged "Canal Zone'
Philippine
Specimens^
United States.
Philippine
Postal savings
Specimens
Total .
Miscellaneous:
Checks
Drafts
Warrants. ,
Commissions
Cert ificates
Transportation requests
Passports
Liquor permits
Other miscellaneous
Specimens —
Checks
Certificates
Transportation requests
Liquor permits
Liquor permits, blank sheets.
other miscellaneous
Total.
Grand total.
26, 927, 000
122, 206, 000
11,511,000
14, 499, 035
30,916,500
28
22, 596, 000
141, 030, 000
12, 616, 000
13, 999, 949
37, 325, 000
$334, 932, 000
581, 348, 000
735, 040, 000
502, 663, 560
1, 091, 000, 000
206, 059, 563
227, 566, 949
3, 244, 983, 560
10, 453
114, 449^3'
530, 875
2,375
40, 350
15, 090
1,650
746. 068
26, 628
644, 000
896, 000
1,800
1,000
m
1
IH
3, 030, 760A
45, 875
82, 498, 957^4
63, 500
665, 000
3,222
160, 225, 329
50, 433M
476, 347
57-1%
15
5,515
50
244, 034, 30mi
6, 338, 316
1,550
50, 700
208, 699
2, 420, 805
255, 482
159, 474
1, 981, 125
328,9171
4,073
208, 233H
309, 833}^
1,650
45, 750
28, 115ii
3,860
1, 007, 840
12, 985
308, 000
150, 000
8,128
61, 636, 280
886,150,000
1, 554, 500, 000
245, 000, 000
1, 534. 500, 000
IS, 848. 000
2, 455, 000
424, 129, 855
123, 250, 000
785, 000
375, 000
"li'
2, 088, 493i^ ! 4, 851, 629, 135
32, 500
85,949,1851^
51, 556
673, 000
225
155, 428, 695
25, \66%
435, b02^
39x'in5
4,"284'""
Subjects, 19S6
1, 460, 000
7, 235, 629, 124
6, 555, 600
68, 300, 000
22, 500
17,097,101,616
2, 520, 000
44, 769, 000
2,792
428,160
242. 600, 158,% 24, 456, 789, 034
5, 745, 696
1,600
50, 100
72,331
993, 595
350, 485
89, 680
2, 384, 875
358, 015M
11,745,070}!
28, 717, 730
6,600
246,000
53, 900
2, 869, 895
1, 752, 425
89, 680
19, 079, 000
8, 346, 208
20
122 I
5, 000 I
2 !-
610
40, 000
10, 051, 505M
61, 202, 068
464, 869, 695?U 482, 307, 106 jUJ
REPORT OF THE SECRETARY OP THE TREASURY
369
The following statement shows total deliveries made, total ex-
penses, and average nmnber of employees engaged by the bureau
since 1878:
Fiscal
year—
Total num-
ber of sheets
delivered
Expenditures
Average
number
of em-
ployees
Fiscal
year—
Total num-
ber of sheets
delivered
Expenditures
Average
number
of em-
ployees
1878
13, 098, 756
$538, 861. 33
522
1903
155, 743, 691
$3, 136, 477. 73
2,850
1879
21,394,030
814, 077. 01
804
1904
159, 918, 061
3,159,940.69
2,928
1880
23, 605, 085
883, 171. 95
905
1905.
165, 354, 514
3, 292, 217. 06
3,002
1881
26, 017, 661
901, 165. 26
958
1906
180, 2S9, 766
3, 355, 786. 23
3,084
1882
31, 112, 484
936, 757. 62
1,011
1907
201, 123, 528
3, 849, 064. 39
3,437
1883
33, 330, 746
1, 104, 986. 43
1,173
1908
210, 589, 197
3, 841, 173. 60
3,572
1884
30,205,899
977, 301. 85
1,193
1909
239, 405, 723
4, 355, 935. 65
3,977
1885
28, 217, 706
965, 195. 47
1,133
1910
252, 710, 864
4, 375, 365. 57
3,964
1886
26,655,496
763, 207. 84
886
, 1911
262, 806, 113
4, 180, 284. 20
3,814
1887
32, 652, 207
794, 477. 90
840
1 1912
262, 434, 739
4, 319, 246. 57
3,899
1888
38, 040, 984
948,995.83
895
1913.
287, 192, 192
4, 449, 726. 22
3,920
1889
39, 207, 164
932, 577. 78
917
1914
280, 272, 828
4, 372, 922. 81
3,932
1890
36, 512, 719
1,012,789.18
895
1915
307, 634, 334
5, 039. 204. 80
4,119
1891
46,390,381
1, 265, 263. 29
1,161
1916
300, 711, 800
5, 066, 048. 72
4,048
1892
52, 508, 438
1,316,585.89
1,358
1917.
343, 345, 005
6, 324, 118. 70
4,221
1893-
48, 853, 528
1, 238, 464. 36
1,333
1918
396,790,285
9, 086, 303. 90
6,214
1894
65,516,961
1, 317, 389. 61
1,380
1919
447, 464, 105
11, 571, 179. 03
7,508
1895
70,886,033
1, 439, 265. 94
1,427
1920
402,711,759
11,854,171.45
6,912
1896
85, 050, 595
1,469,359.70
1, 519
1921
438, 694, 824
13, 965, 233. 57
7,097
1897.
86, 174, 766
1,450,611.86
1,605
1922
416,820,113
10, 812, 756. 38
6,416
1898
92,979,478
1, 570, 598. 46
1,623
1923
411,546,429
10, 106. 320. 28
5,535
1899
112, 161, 122
1, 884, 441. 39
1,903
1924
431,868,658
9, 401, 925. 68
4,980
1900
116,909,423
2,011,702.01
1,999
1925
464, 869, 695
10, 041, 457. 46
5,098
1901
121, 558, 291
2,393,494.26
2,364
1926
482, 307, 106
10, 483, 674. 68
6,173
1902
139, 167, 359
2,967,091.74
2,672
i
CUSTOMS SERVICE
Volume of business
The increased volume of customs business during the year, which
resulted in the collection of the highest amount of duties in its
history, is reflected in every line of activity, as is shown by the follow-
ing comparative statement of entries of merchandise for the fiscal years
1925 and 1926:
Class of entries
Number of entries, fiscal
year —
1926
Consumption:
Free
Dutiable
Informal
Mail....
Baggage declarations
Warehouse and rewarehouse.
Immediate transportation without appraisement
Transportation and exportation.
W arehouse withdrawals, duty paid
Warehouse withdrawals, all other..
All other entries
Drawback notices of intent
Drawback entries
Total
209, 319
226, 382
428, 989
459, 726
182, 505
196, 036
742, 917
768,811
340, 685
383, C07
58,983
60, 235
133, 164
144, 664
107, 033
117,621
216, 957
222, 097
39, 588
38, 425
12, 457
27, 451
164, 672
192, 070
21,477
24, 388
2, 658, 746
2,861,513
370
REPORT OF THE SECRETARY OF THE TREASURY
Receipts
The total amount of duties collected as covered into the Treasury
by warrants during the fiscal year is $579,716,610.62. The previous
high record was that for the fiscal year 1923, when the sum covered
into the Treasury during the year amounted to $562,189,038.87.
The miscellaneous receipts not included in the above amount of
duties also increased during the year, as indicated in the comparative
statement below:
Source
Fiscal
year—
1925
1926
Sale of unclaimed ni'irchandisc - . . - .
$3, 055
999, 775
171,018
1,629
80,003
$6, 146
1, 167, 781
Fines collected - -. -. . - -
155, 200
Sale of abandoned goods .. .
6,062
70, 873
Total
1,259,080
1,406,062
An amount from the proceeds of the sale of seizures equal to the
duties accruing on the merchandise is deposited as "Duties," and
the balance as "Sale of seizures." The amounts shown in the above
table, therefore, do not represent the net proceeds of sale but the
balances remaining after deduction of duties.
The amount of proceeds from sale of seizures deposited in the
Treasury during the year is $15,818 less than for the preceding
year. This is accounted for by the withdrawal from sale of for-
feited automobiles and boats which were taken for official use under
the act of March 3, 1925. Few such withdrawals from sale were
made during the preceding fiscal year, as the act authorizing such
withdrawals was not passed until toward the close of the year. The
appraised value of forfeited vessels and vehicles taken for official
purposes during the fiscal year 1926 is $145,122, which, added to the
proceeds of sale, brings the value to the Government realized from
seizures for the year considerably in excess of the proceeds for the
preceding year.
Expenditures and statistics
The total expense of collection and the proportionate cost of col-
lection per dollar, refunds made, and drawbacks paid, number of
vessels cleared, value of imports and exports, and the tonnage and
head taxes collected are shown in the table of customs transactions
published in connection with this report (Table 13, p. 485), both for the
entire service and by customs districts.
REPORT OF THE SECRETARY OF THE TREASURY
371
Enforcement activities
The enforcement of the customs laws against the introduction of
contraband was vigorously pushed, with very beneficial results.
This branch of the service was strengthened through cooperation
with the prohibition service, agents from that service having been
assigned for duty in certain border districts for patrol work under
the direction of the collectors of customs. The use of forfeited auto-
mobiles and boats for official purposes, as authorized by the act of
March 3, 1925, enabled the patrols to effectively discharge their
duties. So thoroughly are these patrols performing their work that
in a certain district in a recent raid the liquor seized in every instance
was of illicit domestic manufacture, although the seizures were made
in sight of foreign territory and in a district formerly supplied with
smuggled liquors from such territory.
Improvements made in the supervision of freight cars moving
from point to point in the United States through contiguous foreign
territory under United States customs seals, and the employment of
additional officers to inspect this traffic, have materially contributed
to the exclusion of contraband shipments.
Seizures
Beginning January 1, 1926, a classified record was kept of seizures
made for violations of the customs laws. As a record of this kind
was not previously kept, no data are available for comparative pur-
poses. The relative values of seizures of the various classes of com-
modities for the six-month period from January 1 to June 30, 1926,
as listed in the table below, however, may be of interest :
Class of commodities
Appraised
value
Number of
seizures
Beads and beaded articles
Furs
Jewelry and precious stones
Laces and embroideries
Livestoclc, farm, dairy, and meat productS-
Perfumery and toilet articles
Silk, linen, woolen, and cotton goods
All other, except as detailed below
Vehicles, etc., used in transporting liriuors:
461 automobiles
151 boats
78 horses and mules
37 horse-drawn vehicles
Liquors:
244,517 bottles, 39,553 cases, 2,220 barrels.
Alcohol:
36,885 gallons
Narcotics ..-
Total.
4,229
256, 715
3,:^]2
8,629
1,364
46,902
227, 060
183,445
363, 137
1,813
5,430
1,103,118
1,379,727
79, 024
32, 152
2,623
5,697
11438— 26t-
-26
372 r.EPORT OF THE SECRETARY OF THE TREASURY
SPECIAL AGENCY SERVICE, CUSTOMS
The special agency service of the customs has continued its
statutory and delegated functions, including the examination of the
books, records, and accounts of collectors of customs; the study of
field organization and methods, with recommendations for economy,
retrenchment, and improvement; the detection and prevention of
frauds against the customs revenue; investigations of foreign mar-
ket values, attempted undervaluation and dumping of foreign
merchandise; investigation of drawback transactions; dissemina-
tion of information concerning classification and market value
(Customs Information Exchange), officers of this bureau having
visited all appraising offices during the year with a view to har-
monizing appraisement methods. The foreign investigative branch
has been augmented, and special attention given to improved
methods of handling foreign inquiries with a view to reducing or
overcoming friction and opposition to this necessary work. Close
cooperation with diplomatic and consular officers has contributed
to this, and improved invoicing with corresponding increase in
revenue is anticipated.
Cooperative effort has been the keynote of the operations of this
service, and in the course of the performance of its regular functions
much valuable information regarding violations of the prohibition,
immigration, and other laws has been gathered and transmitted to
the proper governmental agencies having jurisdiction. United
States attorneys have found the expert assistance of this service of
great value in customs cases.
The increased volume of imports has resulted in increased demands
upon the special agency service, and the effort has been to success-
fully cope with these requirements without increasing the personnel
and at the same time reducing the cost of operations. This effort
has met with gratifying results, the personnel having been reduced
from 212 on June 30, 1925, to 198 on June 30, 1926, and the cost of
maintenance reduced from $781,558.31 in the fiscal year ending
June 30, 1925, to $746,675.76 in the fiscal year ending June 30,
1926.
As a measure of good administration the special agency service
was relieved, by T. D. 41097 of September 18, 1925, of a large part
of the work respecting liquor smuggling theretofore performed by
it — that is, the actual apprehension of liquor smugglers and contra-
band— this work being confined to the border patrols under the
immediate supervision of collectors of customs; special agency
activities in connection with liquor importations being concentrated
upon investigation and gathering of evidence, in which field they
have performed excellent service in assisting collectors. As a con-
REPORT OF THE SECRETARY OP THE TREASURY 373
sequence of this action the total value of separate seizures on this
account by agents of this service during the fiscal year is less than
that for the preceding fiscal year, the results of their work in con-
nection with liquor smuggling no longer showing separately, but
being covered in the collectors' reports of seizures.
As a direct result solely of the activities of this service during
the fiscal year, there has been collected and turned into the Treasury
of the United States $1,144,656.79 cash, which would otherwise
have been lost to the Government, and in addition the revenue from
customs has been augmented by increased duties upon all importa-
tions of similar merchandise imported subsequent to the individual
items which were the subject of investigation. Furthermore,
the chief value of this service lies not in the cash recoveries but in
the preventive work done, as a deterrent against fraud.
An outstanding feature of the operations of this branch of the
customs service during the fiscal year was the saving of $53,323.24,
representing the result of economical administration, $40,000 of
which was turned back to the general customs appropriation.
The statistical summary follows:
Number of ports examined ^°
Number of drawback investigations 795
Numbes of foreign investigations 2, 239
Number of arrests ^12
Number of convictions 282
Number of acquittals, 1"
Failures to indict ^^"^
Indictment cases pending ^1
Number of seizures made ^^2
Number of seizures appraised ^^'
Number of seizures released or pending 32
Appraised value of seized merchandise $1, 097, 194. 09
Proceeds of sale of seized merchandise 356, 266. 81
Merchandise entered free but found dutiable 94, 165. 16
Fines imposed by United States courts 302, 494. 05
Fines, penalties, and forfeitures incurred, exclusive of court fines 64, 248. IS
Bail forfeited 40, 305. 00
Amount of increased and additional duties collected 234, 100. 03
Amount deposited in offers of compromise 419, 819. 79
OFFICE OF THE SUPERVISING ARCHITECT
Building operations during the fiscal year 1926
The work of this office is considerably retarded by its inability
to employ, at rates of compensation provided, a sufficient number
of experienced architectural draftsmen in the intermediate grades,
the difficulty being that higher rates of pay prevail on the outside
for this class of service.
Since the date of the last report, 33 Federal buildings have been
completed and occupied, and 10 buildings under the control of the
Treasury Department have been placed under contract. Contracts
374 REPORT OF THE SECRETARY OF THE TREASURY
have also been awarded during the same period for remodeling or
extending 125 buildings, the cost of which was borne by the annual
appropriation for "Remodeling, and so forth, of public buildings,"
expenditures under which are limited to not more than 120,000
at any one building. Additional space has been provided in these
cases at an average cost of $7 per square foot.
In addition to the foregoing the work relating to repairs and
upkeep of over 1,300 Federal buildings and 57 marine hospital and
quarantine stations with their numerous buildings has been cared for.
This office has, during the same period, rendered assistance to
other departments and branches of the Federal service. It prepared
the plans and specifications for the hospital building at the Home
for Disabled Veteran Soldiers at Sawtelle, Calif., a project costing
approximately .11,200,000; for the buildings constituting the entire
plant of the Federal Industrial Institution for Women, at Alderson,
W. Va., $972,000, as a part of a total construction program of approxi-
mately $1,173,000; for a recreation building at the Veterans' Hospital
at Tuskegee, Ala., costing $80,000; and is superintending the construc-
tion of each of these projects. Had these projects been placed
in the hands of private architects the fee for the plans and specifica-
tions and local supervision (not superintendence) would have been
at least 6 per cent on the construction cost. The work, including
superintendence, is being carried on at a cost, for which the appro-
priations of this office are to be reimbursed, of approximately 3 per
cent on the construction costs.
Also, during the same period, plans were prepared for fireproofing
the second floor, remodeling and fireproofing the third floor, and for
a new roof of the White House.
All of the foregoing work performed for activities other than the
Treasury Department has been carried on without increase in the
personnel of the office because of such work.
Under a special appropriation of $100,000 to provide in part for
the demand for additional lock boxes, etc., in Federal buildings
throughout the country, installations have been made to the full
extent of the appropriation. Reports so far received from the
custodians of the buildings involved show that the receipts from
the rentals of these installations will recoup the Government for
the expenditure in about three years, and that the revenue from
this source will continue at this rate for an indefinite period.
The following statement shows the building operations of the
Office of the Supervising Architect for the year ending June 30,
1926:
Number of buildings completed (occupied or ready for occupancy)
at the end of the fiscal year 1925, exclusive of marine hospitals
and quarantine stations 1 280
EEPORT OF THE SECEETAEY OF THE TEEASURY 376
New buildings completed during the fiscal year ending June 30,
1926, exclusive of marine hospitals and quarantine stations 33
1, 313
Buildings placed under contract during the fiscal year ending June
30, 1926, exclusive of hospitals 10
Completed within the fiscal year 3
Buildings placed under contract prior to July 1, 1925, and not com-
pleted June 30, 1926 _' 1
Construction of new projects in force July 1, 1926 8
Total buildings completed and in course of erection June 30, 1926,
exclusive of marine hospitals and quarantine stations 1, 321
Buildings authorized prior to act of Mar. 4, 1913, and not under
contract June 30, 1926 11
Buildings, miscellaneous projects, etc., authorized in acts of Mar.
4, 1913, and subsequent, not under contract June 30, 1926 60
Total b)uildings, etc., completed in course of erection or authorized,
not including extensions 1, 392
In addition to the above buildings and projects there are 57
marine hospitals and quarantine stations (each including several
buildings) under the control of the Treasury Department.
Projects completed
During the fiscal year 1926, 33 Federal buildings were completed
at Amherst, Mass.; Andalusia, Ala.; Bakersfield, Calif.; Bluff ton,
Ind.; Cherokee, Iowa; Clinton, S. C; Douglas, Ga.; Fayette, Mo.;
Franklin, Pa.; Geneseo, 111.; Gilmer, Tex.; Harrison viUe, Mo.; Hinton,
W. Va.; Holly Springs, Miss.; Jersey ville, 111.; Kenton, Ohio; Mount
Pleasant, Tex.; Mystic, Conn.; North Vernon, Ind.; Pittsburg, Tex.;
Pittston, Pa.; Rochester, Ind.; Russell ville. Ark.; St. Johnsbury, Vt.;
Salisbury, Md.; San Luis Obispo, Calif.; Saranac Lake, N. Y.;
Steuben ville, Ohio; Thibodaux, La.; Thomasville, N. C; Vernal,
Utah; Washington Court House, Ohio, and Waterloo, N. Y. Also
22 major miscellaneous projects were completed with a total expendi-
ture of $410,005.12.
Projects in course oj construction
On June 30, 1926, 8 Federal buildings were in course of construc-
tion at Cheboygan, Mich.; Comanche, Tex.; Fairmont, Minn.;
Prescott, Ark.; Sandusky, Ohio; TuUahoma, Tenn.; Walden, N. Y.,
and Vineland, N. J.; and one quarantine station (Sand Point) Mobile,
Ala., at a cost of approximately $300,000 for this station.
Contracts have been awarded for a recreation building and assem-
bly hall for the veterans' hospital at Tuskegee, Ala., costing approxi-
mately $80,000, and the building is nearly completed.
376 REPORT OF THE SECRETARY OF THE TREASURY
Under the appropriation of $800,000 for "Remodeling and enlarg-
ing public buildings," 125 buildings received attention. In 95 of
these the contracts ranged from $1,000 to $20,000; the total space
gained under the entu-e appropriation was 105,126 square feet; the
average cost per square foot is $7.
This office is called upon to make the examinations of the structural
safet}'^ of the various buildings in Washington, D. C, under the control
of the Treasury Department as well as other departments, and also
give expert technical advice to various departments which includes
the preparation of drawings and specifications.
Under authority of act of June 7, 1924, plans were completed and
contracts awarded for the Federal Industrial Institution for Women
at Alderson, W. Va., amounting to nearly a million dollars. The
construction work is about 50 per cent completed.
Under authority of the act of March 4, 1924, plans and specifica-
tions were completed and contracts awarded for the construction of a
hospital for disabled volunteer soldiers at Sawtelle, (Santa Monica)
Calif., bed capacity 525, at a cost of approximately $1,200,000.
The construction is nearly 50 per cent completed.
Under the acts of August 25, 1919, March 6, 1920, and January 22,
1923, which permitted the filing of claims for release to contractors,
subcontractors, and others for reimbursement for losses alleged to
have been due to war conditions, 188 claims were paid up to July 1,
1925; and 5 more claims up to July 1, 1926, making a total payment
of $2,625,029.55 for 193 claims. The total amount appropriated by
Congress was $2,650,000, leaving a balance of $24,970.45. There are
still pending 57 claims awaiting audit and 2 claims awaiting court
decision.
Status of war claims, filed under act of Congress approved August 25, 1919, at the
close of business June 30, 1926
340 claims filed, original amount $3, 202, 113. 29
Special claim filed March, 1926 ' 90, 718. 50
3, 292, 831. 79
188 claims paid up to July 1, 1925 2, 576, 095. 97
3 claims paid from July 1, 1925, to July 1, 1926 1, 280. 76
1 claim special on account $47, 468. 59
1 claim on account of reservation No. 45 184. 23
47, 612. 82
Total payments to July 1, 1926 2, 625, 029. 55
Total amount appropriated by Congress 2, 650, 000. 00
Balance 24, 970, 45
• Sp)ecial claim is that of tlie Mahoney Construction Co. of Portland, Me., quarantine station, steerage
barracks construction, payment for which claim the Secretary of the Treasury was authorized to consider
under act of Congress approved February 27, 1926, amending the act of Congress approved August 25, 1919,
for the relief of contractors and subcontractors, etc.
REPORT OF THE SECRETARY OF THE TREASURY
377
90 claims disallowed or withdrawn July 1, 1925 $498, 413. 94
1 claim disallowed July 1, 1925 to July 1, 1926 2, 400. 00
Total 501,813.94
Total amount paid 2, 625, 029. 55
Total disallowed and withdrawn 501, 813. 94
Total 3, 126,843. 49
57 claims awaiting audit, amounting to 109, 359. 53
Amounts may be more or less in final audit.
2 claims awaiting court decision 22, 931. 51
Expenditures from July 1, 1925, to June SO, 1926, contract liabilities charged against
appropriations, and unencumbered balances
Expenditures
Contract lia-
bilities charged
against appro-
priations
Unencumbered
balances,
June 30, 1926
Statutory roll
Sites and additional land ._
Construction of new buildings
Extensions to buildings...
Miscellaneous special items
Rent of buildings
Veterans' hospitals
Remodeling and enlarging public buildings
Relief of contractors, etc., for public buildings under
Treasury.
Hospital construction, Public Health Service
Hospital facilities, etc., for war patients
Lands and other property of the United States
Repairs and preservation
Mechanical equipment
Vaults and safes
Operating supplies..
General expenses
Furniture and repairs.
Operating force
Additional lock-box equipment
$267, 167. 09
Total.
1, 564, 933. 92
403, 912. 99
40, 708. 20
$1, 058, 571. 00
888, 635. 12
103, 373. 93
33, 940. 25
493, 331. 65
48, 933. 58
3, 120. 20
20, 884. 74
23.42
888,S96.04
520, 446. 85
102, 025. 78
2, 872, 276. 79
467, 145. 78
807, 221. 85
5, 509, 032. 26
88, 376. 99
324, 852. 09
23, 519. 73
43, 789. 63
182, 216. 97
118,021.34
37, 536. 18
314, 780. 16
30, 175. 4G
165, 688. 92
504, 307. 55
11, 103. 70
14, 098, 438. 13
3, 840, 512. 03
$1, 854. 91
1, 849, 700. 00
6, 669, 280. 67
1,276,811.36
40, 997. 24
35, 000. 00
30, 223. 48
8, 297. 05
24, 970. 45
16, 290. 08
26, 743. 45
76.58
9, 250. 82
36. 343. 00
1, 828. 51
1 448, 895. 46
2 77, 195. 96
3 13, 808. 37
21, 869. 48
519. 31
10. 589, 956. 18
1 Includes $20,000 reserve, 1926.
s Includes $5,000 reserve, 1925; $5,000 reserve, 1926.
3 Includes $5,000 reserve, 1926.
PUBLIC HEALTH SERVICE
The activities of the Public Health Service during the fiscal year
ended June 30, 1926, are summarized by the Surgeon General as
follows :
Scientific research
The scientific research division has continued its field and laboratory
studies of the diseases of man and methods for their prevention, and
has carried on the inspections and tests required in the enforcement of
the law of July 1, 1902, which provides for Federal control of viruses,
serums, toxins, and analogous products in interstate traffic.
Surveys made by the ofiice of industrial hygiene and sanitation
during the year have included investigations of dusty trades where
employees are exposed to cement dust, granite dust, hard-coal dust,
soft-coal dust, cotton dust, and dust from silver polishing; a broad
378 REPORT OF THE SECRETARY OF THE TREASURY
survey of benzol poisoning in industries where benzol is manufactured
and used,cspecially in dry-cleaning and paint-spraying establishments;
studies of the effect of illumination on the eyesight and production;
investigation of the health hazards connected with the manufacture,
distribution, and use of tetraethyl lead, ethyl fluid, and ethyl gasoline;
investigation of the posture of healthy individuals and those in seden-
tary trades; causes of sickness, and sickness rates in a group of some
40 industries employing approximately 200,000 persons, and a
health study of 10,000 industrial workers in 10 major industries in
the United States.
The principal stream pollution investigations have been the com-
pletion of the study of the sewage pollution of Lake Michigan in the
vicinity of the Indiana-Illinois State line; cooperation in a study of
the pollution of the upper Mississippi River; laboratory studies of the
biology of wastes and water purification, which have already found
practical applications in the improvement of methods for testing
sewage and polluted streams and in facilitating the calculations
necessary in planning control measures; and laboratory and field
studies of the efficiency of water purification plants using rapid sand
filtration and chlorination.
The statistical investigations of morbidity have been continued,
and now embody a considerable volume of records of ill-health from
different causes among persons of both sexes and all ages living under
typical conditions, as well as of school children and of persons engaged
in industr3^ These data have been added to materially during the
past year, especially for respiratory diseases, which form the basis of a
new epidemiological study of the common cold, bronchitis, tonsillitis,
and other conditions, and of interepidemic mfluenza.
The child hygiene office continued its studies of the growth of school
children; the vision of school children; natural illumination of school
buildings; the physical and mental status of colored children in
Georgia, and the dental condition of children in a county in New
Mexico.
Epidemiological studies of malaria and studies of fish control of
mosquito production, the latter in cooperation with the Bureau of
Fisheries, which have been continued during the past few years,
have been completed. Studies of Anopheline mosquitoes were made
at the two field laboratories. The field studies of malaria continued
during the year included investigations of rural malaria control,
drainage, impounded water projects, and screening.
REPORT OP THE SECRETARY OP THE TREASURY 379
Two contributions of interest have been made during the year in
the study of nutritional diseases — one, that the white rat is apparently
admirably adapted for use in nutritional studies of pellagra; the
other, that a dietary factor which has been considered as homo-
geneous is probably composed of two distinct agents.
Two additional States have adopted the State milk-control program
recommended by the service and 47 additional cities have passed the
standard milk ordinance, making 10 States and 100 cities in all.
The work of measuring the milk sanitation status of these cities was
continued and a new study of pasteurization machinery was begun.
The following studies have been carried on by the Hygienic
Laboratory: Studies of tularaemia were continued; an increase in the
geographical distribution of the disease has been noted, it now having
appeared in 24 States. A vaccine for Rocky Mountain spotted fever
has been evolved and is now being given a practical test in the field.
Work on tuberculosis was confined largely to the chemistry and
biology of the cell bodies. Investigations of epidemic encephalitis
resulted in the isolation of a streptococcus from a case dying of an
acute attack; a syndrome in many respects similar to epidemic
encephalitis was produced in laboratory animals inoculated with the
organism. An investigation of 38 cases of post-vaccinal tetanus
confirmed observations made earlier, which have resulted in recom-
mendations for discontinuing the use of vaccination dressings.
Cultural and pathological studies of trachoma have been carried on
throughout the year at the branch laboratory in Rolla, Mo. Further
investigation of drug addiction develops the fact that the estimate
of 110,000 addicts in the United States made in 1924 would be some-
what too high for the present. The standardization of antidysenteric
serum has gone forward and a unit has been suggested for compara-
tive purposes in the testing of products at manufacturing establish-
ments. A standard scarlet-fever toxin was prepared and put to use
by manufacturers as a control toxin against which commercially
produced toxins may be measured. Work has been continued on the
toxic reaction of arsenicals; in general, a high standard has been
observed in the chemical quality of these products. Researches
upon pneumonia and typhus have been carried over from the pre-
ceding year. Investigations of oxidation reduction have gone
forward satisfactorily.
Other studies carried on throughout the year have included the
following subjects: Cancer, chlonorchiasis, goiter, leprosy, typhus
fever, and mental hygiene.
Twenty-two bulletins giving the results of the research work and
79 special articles by the division personnel were published during
the year.
380 REPORT OF THE SECRETARY OF THE TREASURY
Division of domestic quarantine
The plague campaign at New Orleans, La., which was begun in
December, 1924, terminated September 30, 1925. During this
period 266,916 rodents (mice included) were captured, of which 12
were found to be plague infected. The first plague rat was discovered
December 2, 1924, and the last was found on January 17, 1925.
The plague campaign at Oaldand, Calif., which was begun in
December, 1924, terminated February 28, 1926. During this period
81,755 rats (mice not included) were captured, of which 21 were
found to be plague infected. The first plague rat was discovered
December 11, 1924, and the last was found March 3, 1925.
The plague campaign at Los Angeles, Calif., which was begun by
the State and city authorities March 6, 1924, terminated June 30,
1926. The Public Health Service began operations July 1, 1925.
During the entire period there were 41 cases of human plague, with
34 deaths. The number of rodents captured throughout the cam-
paign was 474,099 (including mice), of w^hich 202 were plague infected.
The first case of human plague was diagnosed October 31, 1924.
The last human case occurred January 5, 1925. The first plague-
infected rat was determined November 15, 1924, and the last was
found November 6, 1925.
Plague in ground squirrels exists over a large section of California
and constitutes a continuous public-health menace. Present methods
of operation are not sufficiently extensive to eradicate this source of
infection.
Hospitals for the eradication of trachoma conducted in cooperation
with State and local authorities were operated at Knoxville, Tenn.,
Russellville, Ark., Rolla, Mo., and Eveleth, Minn.
Mosquito-control measures in counties along the Texas-Mexican
border for the prevention of the spread of yellow fever were turned
over to the local authorities completely on June 30, 1926.
Activities pertaining to the certification of water supplies used on
trains and vessels engaged in interstate traffic were conducted. as
heretofore, as were activities relating to the sanitary control of
shellfish and to sanitation in the national parks.
The twenty-fourth annual conference of State and Territorial
health authorities with the Public Health Service was held May 24
and 25, 1926.
Division of foreign and insular quarantine and immigration
Quarantine transactions. — During the fiscal year 1926, 26,698 vessels
and 3,010,539 persons were inspected by quarantine officers. Of
these 17,056 vessels and 1,777,064 passengers and seamen were
inspected upon arrival at stations in the continental United States,
REPORT OF THE SECRETARY OF THE TREASURY 381
2,868 vessels and 378,414 passengers and seamen were inspected at
insular stations, and 0,774 vessels and 855,061 passengers and sea-
men were inspected at foreign ports prior to embarkation for the
United States.
Of the passengers who embarked at European ports 159,279 were
vaccinated and 107,024 were deloused under the supervision of
medical officers of the service. Their clothing and baggage, amount-
ing to 111,720 pieces, were disinfected.
During the year 7,562 vessels were disinfected or fumigated either
because of the occurrence of disease on board or for the destruction of
rodents; 30,979 rats were destroyed, of which number 21,731 were
examined for plague infection.
The efforts of the service to exclude quarantinable disease from the
United States and its possessions were successful. During the year
30 cases of smallpox, 7 of leprosy, and 1 case of cholera reached our
quarantine stations. No case of plague, yellow fever, or typhus
arrived at quarantine. The prophylactic measures applied by
Public Health Service officers at foreign ports of departure undoubt-
edly contributed to this result.
Medical inspection of aZiens. -—There were 614,972 alien passengers
and 872,842 alien seamen examined by medical ofiicers at the various
stations. Of this number 23,876 passengers and 2,038 seamen were
certified in accordance with the act of Congress approved February
5, 1917.
The most important causes of certification of alien passengers
were: Trachoma, 408; tuberculosis, 195; feeble-mindedness, 212;
insanity, 86; syphilis, 147; and gonorrhea, 364.
Of the alien seamen certified, 129 were for trachoma, 25 for tuber-
culosis, 255 for syphilis, 336 for chancroid, and 540 for gonorrhea.
In accordance with the agreement among the Secretaries of State,
Labor, and the Treasury, the medical inspection of aliens was inau-
gurated at certain European ports. From August 1, 1925, to the
end of the fiscal year, 59,052 applicants for immigration visas were
examined by medical officers. Of this number 834 were reported to
the consular officers as afflicted with one or more of the diseases
listed in class "A" as mandatorily excludable, and 6,333 were
reported as afflicted with a disease or condition listed in class "B"
as liable to affect their ability to earn their own living. All of the
applicants reported in class "A" and 2,341 of those reported in
class "B" were refused immigration visas by the consular officers
because of the result of the medical examination.
382 ItKPORT OF TIIK SKCRKTAHY OF THE TREASURY
Division of sanitary reports and statistics
During the fiscal year reports of the prevalence of diseases dan-
gerous to the public health were better than ever before, though
much remains yet to be done in this field. Through the health sec-
tion of the League of Nations regular wireless and cable reports of
quarantinablc diseases were received from ports in the Far East,
where these diseases are often present. These reports, together with
the improvement in the reports received from other parts of the
world, enabled our health officers to learn earlier than was possible
heretofore of conditions which might be a menace to our people.
Officers of the Public Health Service stationed abroad and American
consular officers sent information regarding health conditions, and
there was an increase during the year in the official reports received
from foreign governments, some of these reports being sent pursuant
to the provisions of sanitary conventions.
Information as to diseases in the United States has been received
from officers of the Public Health Service; from agents in State,
county, and municipal health departments, who were appointed as
Federal officers for the purpose of securing the information; and from
State and local health officers throughout the United States.
The data received were carefully checked, tabulated when prac-
ticable, and published for the information of health officers and other
sanitarians.
The collection, compilation, and publication of laws, ordinances,
regulations, and court decisions pertaining to public health were
continued during the year.
During the latter part of the fiscal year blanks were sent out for
the collection of data regarding the mentally diseased, feeble-minded,
and epileptic inmates of institutions in the United States. Com-
prehensive statistics as to these classes in the United States are
needed.
The Public Health Reports were issued weekly throughout the
fiscal year. They contained information as to the prevalence and
geographic distribution of preventable disease, articles relating to
the cause, prevention, and control of disease, and other information
regarding sanitation and public health.
Radio broadcasts on subjects pertaining to health were prepared
and sent to stations in the United States and Canada. In this way
valuable information on health matters is presented to many
thousands of listeners each month.
The distribution of publications of the Public Health Service and
the loan of lantern slides for use by lecturers are other important
means of informing the public of facts which may vitally aft'ect the
health of many persons.
EEPORT OF THE SECRETARY OF THE TREASURY 383
Division of marine hospitals and relief
Owing to a large increase in the personnel of the Coast Guard, for
which the Public Health Service is required to furnish medical and
hospital services and to supply medical and dental officers to ships
and bases, the demands for medical services were increased. The
act of May 22, 1926, also increases the amount of medical services
rendered to the Lighthouse Service. The work performed for the
Employees' Compensation Commission is growing in volume. The
number of lepers segregated at the National Leper Home has been
increased to 259. Civil service applicants and persons applying for
retirement or pension have been given physical examinations in larger
numbers than ever before. The American merchant seaman is, of
course, the most numerous class of beneficiaries and receives 66.4 per
cent of the total amount of hospital relief furnished. The volume of
hospital care was reduced, however, by restricting admissions and
hastening discharges.
Listing the principal beneficiaries in the numerical order of their
importance, there were 107,594 American seamen treated during the
year; 56,993 of the Coast Guard; 47,245 patients of the Employees'
Compensation Commission; 16,524 of the Civil Service Commission
(physical examinations only); 6,521 of pilots and other ships' officers
(physical examinations only); 5,733 of the Immigration Service,
hospital patients at Ellis Island; 3,749 of the Veterans' Bureau;
1,761 of the Lighthouse Service; and 6,169 others, totaling 248,889
patients receiving medical service. There were furnished 1,321,309
patient days in hospital, 572,139 outpatient treatments, and 91,553
physical examinations not related to treatment but requiring special
written reports to meet some Government requirement.
To prevent deterioration and waste, the surplus stock of medical
supplies taken over from the Army after the World War has been
reduced chiefly by transfer of the excess to various departments of
the Government, which received, with the coordinator's sanction,
$456,006.21 worth of this material at the inventory value, which was
75 per cent of the original purchase price. Sales were made to States
and to charitable organizations of property valued at $149,785.13.
The total value of the excess disposed of amounted to $605,791.40.
Division of venereal diseases
For the fiscal year 1926 the amount appropriated for the division
of venereal diseases was $75,000— $74,000 less than the appropriation
for the previous year. With no provision for allowances to the States
for cooperative work in venereal disease control, the division is greatly
handicapped in carrying out an effective campaign.
384 REPORT OF THE SECRETARY OF THE TREASURY
Several of the venereal disease publications, printed and sold at
cost, are not, however, affected by this curtailment and are more
widely used each year. ''Venereal Disease Information," a monthly
periodical prepared for the use of those interested in the medical
aspect of venereal disease control, has completed another successful
year. It is printed by the Government Printing Office and can be
purchased at a small subscription price covering the cost of printing.
This year nearly 12,000 issues have been distributed each month.
Equally valuable is "Social Pathology," designed to acquaint
official and nonofficial agencies with the venereal disease problem
in all of its social implications. It is felt that its usefulness would
be greatly enhanced were it possible to give this to the public on the
same terms as "Venereal Disease Information" is offered.
The most important venereal disease bulletin issued in the past
year was, "Venereal Disease Manual for Social and Corrective
Agencies." This book was prepared especially for probation officers,
. social workers, matrons of detention houses — all who come in con-
tact with delinquent and defective persons. It is sold at cost by
the Government Printing Office. The manual has met with wide-
spread approval, and in the first three months since its publication
over 1,800 copies have been sold by the Superintendent of Documents.
The program of sex education was carried forward by means of
lectures, exhibits, and conferences. Intensive work in the schools
is an important part of the program. Efforts have been directed
toward interesting officials of railroads, steamship companies, and
large manufacturing plants in the detection and eradication of vene-
real diseases among their employees. Special work has been done
along these lines in Georgia, Indiana, and Tennessee, and in the New
England States.
A new departure in venereal disease control was inaugurated in
Kentucky. Under this plan at least one doctor in each county was
asked to serve as cooperative clinician. A school of instruction was
established at State board of health headquarters in order to prepare
these physicians for their special work. The purpose of the plan is
to provide for treatment of patients unable to pay more than a
nominal fee and to bring treatment within the reach of all infected
persons living in remote districts. Drugs and appliances are pro-
cured at cost price, one-half of the amount being borne by the State
board of health. The clinicians report to the board of health. Dur-
ing the short time that this plan has been in operation the encouraging
reports indicate that the solution of one of the most perplexing prob-
lems of treatment may have been found.
Activities of 416 clinics were reported to the State boards of
health during the year. New cases admitted to these clinics amounted
to a total of 100,776, an average admission per clinic of 242; 58,297
cases of syphilis, 39,636 cases of gonorrhea, and 2,843 cases of
REPORT OF THE SECRETARY OF THE TREASURY 385
chancroid make up the total. In diagnosing these cases, 291,803
Wassermann tests and 188,674 examinations for gonococcus infection
were made. The total number of treatments given was 1,881,380.
Cases of venereal diseases reported to the State boards of health
by clinics, physicians, hospitals, etc., amounted to 389,231, an
increase of 4.40 per cent over cases reported for 1925. Of this number
there were 215,547 cases of syphilis, 166,655 cases of gonorrhea, and
7,029 cases of chancroid. "
The division of venereal diseases received during the year 640
requests for medical advice. Each request is referred for answer to
the board of health of the State from which the query comes.
Requests for educational material to the number of 12,235 were also
received by the division. In response 46,014 pamphlets were
distributed.
State boards of health purchased or reprinted 731,044 educational
pamphlets and placards. Ninety-five exhibits, 2 sets of slides, and 35
films were also purchased or borrowed by State boards of health.
It is now eight years since the division of venereal diseases was
established, and it would seem an appropriate time to make an
appraisal of the legal measures which have been in force for a period
of years. Accordingly a general inquiry was sent to each State
health officer asking for an expression of opinion. With one or two
striking exceptions the replies indicate that the laws and regulations
are considered adequate. But there is a general feeling that certain
of the rulings are not capable of rigid enforcement — that the co-
operation of those concerned is necessary but can not, in the nature
of the case, be forced. The inevitable conclusion is, therefore,
reached that it is only by the willing cooperation of the members of
the medical profession, the legal profession. State administrative
ofl&cers, and the lay public that effective control can be accomplished.
It is felt that this is a matter of gradual achievement and that the
progress of the past years is satisfactory.
Division qf personnel and accounts
On June 30, 1926, the regular commissioned corps of the service
consisted of 213 officers, which included the Surgeon General,
3 assistant surgeons general at large, 22 senior surgeons, 135 surgeons,
19 passed assistant surgeons, and 33 assistant surgeons. Eighteen
officers were on waiting orders. Four resignations and four deaths
occurred during the year.
The number of reserve officers on active duty at the close of the
year totaled 64, and included 1 assistant surgeon general, 4 surgeons,
4 dental surgeons, 11 passed assistant surgeons, 12 passed assistant
dental surgeons, 26 assistant surgeons, and 6 assistant dental
surgeons.
386
REPORT OF THE SECRETARY OF THE TREASURY
The following statement shows the total of all personnel on duty
June 30, 1926:
Commissioned medical officers, regular corps •_ 213
Commissioned officers, reserve corps 64
Acting assistant surgeons 483
Attending specialists and consultants 219
Contract dental surgeons • 31
Internes . 16
Scientific personnel, general 24
Pharmacists 35
Administrative assistants 17
Druggists 12
Nurses 351
Aides 34
Dietitians 21
Laboratorians 28
Scientific — Hygienic Laboratory 29
Pilots L 34
Marine engineers 38
Clerks 459
All other employees 2, 315
Total 4,423
There are employed, in addition, 4,442 oflScers and employees of
State and local health organizations, at nominal compensation,
who assist in the collection of epidemiologic data.
Financial statement
A statement of appropriations and expenditures for the fiscal year
1926 follows:
Appropriation title
Public Health Service proper:
Salaries, ofTice of Surgeon General
Pay, etc., commissioned officers and pharmacists
Pay of acting assistant surgeons
Pay of other employees
Freight, transportation, etc
Maintenance, Hygienic Laboratory..
Preparation and tr^msportation of remains of officers
Boolcs
Pay of personnel and maintenance of hospitals
Quarantine service
Preventing the spread of epidemic diseases
Field investigations of public health
Interstate quarantine service
Studies of rural sanitation _..
Control of biologic products
Expenses, division of venereal diseases
Total, Public Health Service proper
Allotments from U. S. Veterans' Bureau:
Medical and hospital service, Veterans' Bureau
Salaries and expenses, Veterans' Bureau
Total, U. S. Veterans' Bureau funds
Grand total.
Appropriated
Expended
$101,
1, 125,
315,
1,020,
25,
43,
3,
5, 550,
470,
2 469,
282,
* 71,
75,
45,
75,
560. 00
000. 00
000.00
000.00
000.00
400. 00
000. 00
500. 00
037. 72
000. 00
173. 59
054. 00
691.80
000. CO
000.00
000. (JO
9,671,417.11
$100,
1, 124,
305,
1, 007,
24,
43,
5, 529,
461,
M49,
277,
«69,
73,
44,
65,
928. 35
143. 20
154. 78
719. 97
584. 01
055. 59
479. 57
193. 66
213. 12
972. 49
624. 70
663.66
798. 98
000. 00
960. 17
280. 86
9,578,073.11
357, 175. 00
6, 047. 67
363, 222. 67
10,034,639.78
355, 562. 00
6, 047. 67
361, 609. 67
9, 939, 682. 78
• Includes .$302,554.72 reimbursement for care and treatment of U. S. Veterans' Bureau patients and
miscellaneous.
2 Includes .$102,874.29 of deficiency appropriation available for the fiscal years 1925 and 1926.
» Includrs $99, 225. 67 of deficiency appropriation available for the fiscal years 1925 and 1926.
< Includes $4'.i,161 .SO of deficiency appropriation available for the fiscal years 1925 and 1926.
' Includas $48, 697. 20 of deficiency appropriation available for the fiscal years 1925 and 1926.
REPORT OF THE SECRETARY OF THE TREASURY 387
COAST GUARD
The principal operations of the Coast Guard during the fiscal year
ended June 30, 1926, are summarized by the commandant, as follows:
Lives saved or persons rescued from peril 3, 037
Persons on board vessels assisted 15, 398
Persons in distress cared for 490
Vessels boarded and papers examined 53, 080
Vessels seized or reported for violations of law . 1, 887
Fines and penalties incurred by vessels reported $743, 625. 00
Regattas and marine parades patrolled 160
Instances of lives saved and vessels assisted 2, 240
Instances of miscellaneous assistance 2, 591
Derelicts and other obstructions to navigation removed or
destroyed 101
Value of vessels assisted (including cargoes) $23, 017, 509. 00
Value of derelicts recovered and delivered to owners $464, 935. 00
Persons examined for certificates as lifeboat men 3, 986
Appropriation for 1926, office of the commandant $221, 650. 00
Expended and obligated $220, 094. 11
Unencumbered balance $1, 555. 89
Appropriation for 1926, maintenance of Coast Guard $20, 856, 835. 00
Expended and obligated $20,215,575.82
Unencumbered balance $641, 259. 18
Appropriation for 1926, repairs to cutters $1, 450, 000. 00
Expended and obhgated $1,422,435. 25
Unencumbered balance $27, 564. 75
Appropriation for additional vessels. Coast Guard, 1926, Dec.
31, 1926 $3, 900, 000. 00
Expended and obligated $3, 807, 742. 57
Unencumbered balance June 30, 1926 $92, 257. 43
Appropriation for construction and equipment, Coast Guard
cutter, 1925-26 $925,000.00
Expended and obligated $873, 148. 16
Unencumbered balance June 30, 1926 $51, 851. 84
It will be noted from the foregoing statement that the persons
saved or rescued from positions of peril during the year numbered
3,037, a record never before attained in this form of endeavor in any
one year since the present organization of the Coast Guard in 1915.
This exceeds the number, 2,484 for the fiscal year 1925, by 553. The
total number of instances of assistance rendered during the year was
4,831, also the largest in the history of the service, and exceeding
last year's record by 429. The value of vessels assisted, including
their cargoes, was $23,017,509, approximately $300,000 less than the
previous year 1925. There were 101 derelicts and other obstructions
to navigation removed or destroyed, numbering 46 more than last
year. In the interests of the enforcement of the laws of the United
States 53,080 vessels were boarded and examined, exceeding last
year's number by 15,486.
388 REPORT OF THE SECRETARY OF THE TREASURY
The record for the "year in the primary function of the Coast
Guard — the preservation of life and property from the perils of the
sea — continues to show, most gratifyingly, that the law-enforcement
work in connection with the prevention of the smuggling of liquor
into the United States from the sea, also calling heavily and increas-
ingly on the service forces, has in nowise been permitted to intrench
upon, break down, impede, nor diminish what is undoubtedly the
highest form of service it is the duty of the Coast Guard to perform.
Ice patrol to promote safety at sea
The international service of ice patrol in the vicinity of the Grand
Banks of Newfoundland along the trans-Atlantic steamship lanes
for the season of 1925 was still in progress at the close of the fiscal
year ended June 30, 1925, with the Coast Guard cutter Tampa on
patrol. The Coast Guard cutter Modoc relieved the Tampa at 8 a. m.,
July 9, 1925, and took up the patrol, completing the same on the
evening of July 12, 1925, when the ice patrol for the season of 1925
was discontinued.
During the season of 1926 the patrol was prosecuted by the Coast
Guard cutters Modoc and Tampa, based on Halifax, Nova Scotia,
with the Coast Guard cutter Mojave as the stand-by vessel. The
Tampa left Boston, Mass., March 25, 1926, inaugurating the patrol
two days later upon arrival in the vicinity of the Tail of the Grand
Banks. The Modoc relieved the Tampa on April 11, and thereafter
the patrol was carried on continuously throughout the season by these
two vessels, alternating every 15 days.
It appears, regarding the season as a whole, that it was a normal
ice season, with the majority of the ice, by far, packed into the
second two weeks in May. The patrol encountered an unusually
long rough spell of weather which persisted for the entire first month
of the season.
As in latter years, a commissioned officer of the Coa»t Guard was
detailed to accompany the cutters as scientific and oceanographic
observer, remaining with the patrol throughout the season. A note-
worthy feature of this season's patrol, and one denoting material
progress, was the employment of methods, learned abroad by the
commissioned officer serving in this detail, to determine and map
the currents around the Grand Banks.
The patrol was discontinued at midnight June 30, 1926.
Winter cruising
The President each year designates certain Coast Guard vessels
to perform special cruising upon the coast in the season of severe
weather, usually from December 1 to March 31, to afford such aid to
distressed navigators as their circumstances may require. On
REPORT OF THE SECRETARY OF THE TREASURY 389
November 10, 1925, the President, upon the recommendation of the
Secretary of the Treasury, designated the Coast Guard cutters
Ossipee, Tampa, Redwing, Acushnet, Tuscarora, Seneca, Seminole,
Gresham, Manning, Carrahasset, Modoc, and Yamacraw to perform
this duty. These cutters were actively engaged in this cruising
during the entire period above mentioned, with the exception of the
Modoc and the Tampa, which vessels were withdrawn early in March
1926, in preparation for the international ice patrol, to which duty
they were assigned.
In the prosecution of their winter-cruising duties the cutters cruised
nearly 57,000 miles and afforded assistance to 23 vessels in distress.
The value of vessels so assisted, including their cargoes, amounted
to more than $3,500,000. There were 328 persons on board the
vessels assisted. In addition to the primary duty of aiding vessels
in distress, the cutters boarded and examined 155 vessels in the
interest of the enforcement of the laws of the United States. They
also removed 11 obstructions to navigation.
Cruises in northern waters
The annual patrol of and visit to the waters of the north Pacific
Ocean, Bering Sea, and southeastern Alaska was conducted during
the season of 1925 by the Coast Guard cutters Algonquin, Bear,
Eaida, Snohomish, and JJnalga.
The Bear also made her usual trip to Arctic waters, visiting Point
Barrow. In the prosecution of the duties and activities of the
patrol, the vessels participating therein cruised approximately
47,106 miles, boarded and examined 180 vessels, and afforded medical
assistance to 274 persons.
The patrol for the present season of 1926 w^as in progress at the
close of the fiscal year, and was being performed by the Coast Guard
cutters Algonquin, Bear, Haida, Snohomish, and Unalga.
The Bear is probably on her last journey to Alaskan and Arctic
waters. Before another regular visitation of these regions is under-
taken this notable craft will have been succeeded by the new cutter,
named Northland, authorized by act of Congress approved January 7,
1925, to replace the Bear, which is no longer suitable for the northern
service.
Northern Pacific halibut fishery
At the request of the Bureau of Fisheries, Department of Commerce,
the commander of the northern division of the Coast Guard, at Seattle,
Wash., was given instructions to direct appropriate Coast Guard
vessels in that division to cooperate with the agents of the Bureau
of Fisheries in the enforcement of the law with respect to halibut
390 REPORT OF THE SECRETARY OF THE TREASURY
fishing in the waters off the coast of Washington and southeastern
Alaska.
The Coast Guard cutters Unalga and Snohomish were assigned to
this duty.
Anchorage and movements oj vessels
The Coast Guard during the year continued to enforce the rules
and regulations governing the anchorage and movements of vessels
at the larger ports of the countr}'^ and at other places where maritime
conditions are such as to require supervision. Coast Guard officers
are serving as captains of the port at a number of places. Like last
year, there has been no change during the fiscal year 1926 in the
general plan and arrangement of this activity. The duty has been
performed efficiently and to the satisfaction of the maritime interests.
Removal of derelicts
During the year the Coast Guard through the instrumentality of
its vessels and stations removed from the paths of marine commerce
101 derelicts and other floating dangers and obstructions to naviga-
tion. The estimated value of property involved in these trans-
actions, so far as values are given, amounted to $464,935.
Regattas
The vessels and stations of the service during the year pati'olled
and supervised 160 regattas, marine parades, and boat races.
This duty is always one of prime importance. The courses nmst
be kept clear, order maintained, and the movements of vessels
supervised and controlled, both in the interests of the safety of
participants and spectators.
Communicatio ns
The communications service is concerned with the provision,
construction, operation, and maintenance of all facilities of the
Coast Guard having relation to the subject of communications,
including the design, construction, and development of the material
associated with the work, and with the conduct of the communication
system of the Coast Guard. It also has to do with the training of
the personnel serving in this activity.
The Coast Guard owns and operates a telephone line system
consisting of about 182 separate and distinct telephone lines, amount-
ing approximately to 2,550 miles, including 460 miles of submarine
cable. All Coast Guard stations, and numerous other Government
agencies, are furnished telephone service over these lines.
REPORT OF THE SECRETARY OF THE TREASURY 391
The work during the year on the coastal communication system
has been confined chiefly to repairs, upkeep, and maintenance, with
some replacements and renewals.
In last year's report it was recommended that provision be made
for the renewal of 16 miles of submarine cable between Cape Henry
and Cape Charles, Va. It is desired again to emphasize the need of
this cable.
There is also need of 13 miles of submarine cable to replace an old
and worn-out cable between the mainland and Block Island, R. I.
Gratifying results are attending the modernization program of the
radio equipment of the service, to which subject reference was made
in last year's report.
A representative of the Coast Guard continues to represent the
entire Treasury Department on the Interdepartmental Radio Ad-
visory Committee. A representative of the Coast Guard also repre-
sents the Treasury Department on the Interdepartmental Electrical
Communications Committee, which committee is advisory to the
State Department on matters affecting electrical communications,
the immediate problem being to make preparations for the Inter-
national Radiotelegraph Conference to be held in Washington dur-
ing the calendar year 1927, and to prepare the proposals of the
United States for revision of the Radiotelegraph Convention signed
in London in 1912. At the request of the State Department the
Coast Guard sent a representative (Lieut. E. M. Webster) to observe
the proceedings of the International Telegraph Conference which
met in Paris, September 1, 1925.
Aviation
During the fiscal year 1926, the Coast Guard operated a seaplane
from Section Base 7, Gloucester, Mass., for the purpose of scouting
over sea areas off the New England and Long Island coasts. The
employment of this seaplane has proved to be very valuable in
obtaining information for use by surface craft in the prevention of
smuggling.
Congress has made appropriation for five seaplanes and their equip-
ment for use of the Coast Guard in enforcing the laws of the United
States and in performing the duties with which the Coast Guard is
charged. An arrangement has been made with the Army and Navy
by which these seaplanes and engines will be obtained on Army and
Navy contracts for delivery to the Coast Guard. These seaplanes
will be used on the east coast and operated from section bases.
392 REPORT OF THE SECRETARY OF THE TREASURY
Ordnance
All vessels constructed during the year have been furnished com-
plete outfits of ordnance equipment, including small arms and ammu-
nition, and plans have been made for like equipment of all vessels
now being built.
The supply of surplus ammunition which has been furnished by
the Navy without charge is becoming exhausted, which now makes it
necessary for the Coast Guard to increase its purchases of ammuni-
tion for the regular work of the service out of its own funds.
The duties in connection with the law-enforcement activities have
made it difficult for Coast Guard vessels to conduct the prescribed
target practice. Notwithstanding this situation the destroyers and
a number of the cruising cutters during the year have held short-
range battle practice, and some units small-arm target practice.
Every reasonable effort is being directed toward improvement in
this matter.
The Coast Guard expresses its cordial acknowledgment of the
assistance and cooperation it has received during the year from the
Bureau of Ordnance, Navy Department, from which bureau the
ordnance equipment of the service has been procured, and by which
it has been kept in repair.
Welfare
Numerous requests are coming from the field for funds with which
to provide means of recreation. These are augmented by the con-
stantly increasing number of units being created to meet the present-
day requirements and exigencies of the service. Last year's report
pointed out how necessary it is to provide adequate recreational
facilities and opportunities for the men who, perforce, must endure
the hardships, privations, exposure, discomforts, and monotony
attending the hazardous occupations and vigils of service at sea and
elsewhere. While the funds available for this most worthy object
have been insufficient, no effort has been spared to extend the advan-
tages to as many men as possible.
More than 1,200 correspondence courses for enlisted men have
been issued during the year.
It is gratifying, and it is encouraging, to note that the men show
a lively interest in and appreciation of the recreational advantages
and educational courses furnished them.
Recruiting
On July 1, 1925, the recruiting service of the Coast Guard consisted
of five recruiting stations located at the following places: Baltimore,
Md., Boston, Mass., Philadelphia, Pa., New York, N. Y., and Norfolk,
Va. As these stations were unable to effect a sufficient number
REPOET OP THE SECRETAEY OP THE TREASURY 393
of enlistments to keep the service at full complement, it was necessary
on January 1, 1926, to establish recruiting offices at Cincinnati,
Ohio, Pittsburgh, Pa., Chicago, 111., and New London, Conn., and
substations at Cambridge, Md., Hagerstown, Md., Elkridge, Md.,
Salisbury, Md., Salem, Mass., Worcester, Mass., Portland, Me.,
Springfield, Mass., Columbus, Ohio, Youngstown, Ohio, Providence,
R. I., Bridgeport, Conn., Brooklyn, N. Y., Jersey City, N. J., Newark,
N. J., Raleigh, N. C, Goldsboro, N. C, Washington, N. C, Rich-
mond, Va., Newport News, Va., Camden, N. J., Reading, Pa.,
Harrisburg, Pa., Wilmington, Del., and Erie, Pa., making a total of
9 main recruiting stations and 25 substations. During the first
three-quarters of the fiscal year 1926, there were 12,872 applicants
for enlistment, of which number 3,776 were enlisted, the remainder
being rejected for physical defects and other disabling causes. During
the last quarter of the fiscal year recruiting was suspended due to
the fact that appropriations for transportation for the year were
becoming depleted. However, during this period, recruiting was
carried on along limited lines and enlistments were effected only at
those recruiting stations where the men enlisted could be transferred
to Coast Guard units without involving any expense for transporta-
tion. During this period there were 1,650 applicants for enlistment
of which number 228 were enlisted, the remainder being rejected for
physical defects or other disabling causes, making a total of 14,522
applicants for the year, of which number 4,004 were enlisted.
On June 30, 1925, the enlisted personnel of the Coast Guard
numbered 8,230. At the close of the fiscal year 1926 there were
8,784 enlisted men in the service, an increase of 554 men.
The training of Coast Guard recruits by the Navy having been
discontinued during the fiscal year 1925 on account of an opinion
rendered by the Comptroller General, it became necessary to establish
a training unit at New London, Conn. In order that the recruits
might become fully indoctrinated with service routine and processes
a destroyer was utilized as a training ship at that station with excellent
results.
Coast Guard Academy
There were 18 line cadets and 22 cadet engineers under instruction
at the Coast Guard Academy, at New London, Conn., at the close
of the fiscal year. The resignations of eight line cadets and sixteen
cadet engineers were accepted during the year. In May, 1926, seven
line cadets and four cadet engineers were graduated, and commissions
thereupon were issued to them as ensigns in the line and in the
engineer corps, respectively. Entrance examinations of candidates
for cadets were held June 22, 1926, and appointments will issue to the
successful competitors in the ensuing August.
394 REPORT OF THE SECRETARY OF THE TREASURY
As stated in last year's report, the practice cruise for 1925 of the
Alexander Hamilton was in progress at the close of the fiscal year
1925. The vessel visited Gravesend, England; Cherbourg, France;
Gibraltar; Cadiz, Spain; Funchal, Madeira, and Bermuda, arriving
at the academy on the return voyage August 25, 1925. The cruise
was a very successful one and of great benefit to the cadets.
The Alexander Hamilton entered upon her practice cruise for 1926,
leaving the Academy, June 1, 1926. The cruise was in progress
at the close of the fiscal year.
It is desired to invite attention again to the very unfavorable
physical conditions existing at the academy which were pointed out
and discussed in the annual reports for the fiscal years 1924 and 1925.
A number of the buildings are wholly unsuitable and unpresentable
and entirely out of harmony with the character and dignity of the
institution. The seriousness of the situation is accentuated further
at this time by the fact that it has become imperative, undesirable
as such a plan is, to establish at the academy a training unit for
enlisted men. It is hoped that some means may be found at an early
day to remedy these very unsatisfactory conditions.
Coast Guard repair depot
During the year the following-named Coast Guard vessels were
overhauled, and repairs and improvements made on them, by the
Coast Guard repair depot at Curtis Bay, Md.: Manning, Pequot,
Redwing, Seminole, and Tuscarora. In the case of the Manning,
the work at the depot consisted of dismantling the vessel ready
for reconditioning by a private shipyard, and of fitting her out
after extensive repairs.
The boat-building shops at the depot constructed 54 standard
boats for distribution throughout the service. One of the service
picket boats was also rebuilt.
Repairs and improvements to vessels and stations
The usual routine repair and upkeep of vessels were proceeded
with during the year as found to be necessary. In addition to the
vessels overhauled at the Coast Guard repair depot, as stated under
the preceding heading, the 'Manning was extensively repaired,
reconditioned, and modernized so that she is now an efficient first-
class cruising cutter. As previously indicated, this work was done
by a private shipyard under contract.
Five 1,000-ton destroyers acquired from the Navy are being
reconditioned, under the supervision of Coast Guard personnel, at
the navy yard at Philadelphia, Pa., for Coast Guard duty. It is
expected that this work will be entirely completed in the late summer.
REPORT OF THE SECRETARY OF THE TREASURY 395
Considerable new construction work on vessels was carried out
during the year. The construction program of thirteen 100-foot
patrol boats was completed, with the exception of two boats, which
are to be delivered in July, 1926. The program for the construction
of 125-foot seagoing patrol boats was developed and the design work
completed and the contract awarded for the construction of 33 boats.
The design for the cruising cutter Northland, of special construction
for Coast Guard duty in Alaskan waters and for cruises into the
Arctic Ocean, to replace the Bear, was completed and the contract
awarded. Appreciable progress on the vessel has been made by the
contractor.
The preliminary work in connection with the reconditioning of
the Kickapoo as an icebreaker is well in hand, and it is expected that
the work will be completed before the beginning of the winter season.
Major repairs, improvements, alterations, and additions, more or
less extensive in character, were completed during the year at 18
Coast Guard stations and other shore units. Minor repairs, etc.,
were made to the buildings and accessories at 233 Coast Guard
stations and other shore units. Work authorized for six stations and
one other shore unit was under way at the closing of this report.
Enforcement of customs and other laws
The duties of the Coast Guard in connection with the enforcement
of the customs laws of the United States and the navigation and
motor-boat laws were zealously, assiduously, and efl&ciently carried
on during the year. In addition to the general enforcement of the
customs laws, harbor cutters and launches were assigned, as usual,
to various ports of the country to assist the customs authorities in
boarding incoming vessels and in performing other customs duties.
Assistance was also afforded, as needed, to other branches of the pub-
lic service in the enforcement of the Federal laws intrusted to their
jurisdiction.
The prosecution of the law-enforcement program of the service,
as laid out, for the prevention of the smuggling of hquor into the
United States from the sea, proceeded during the year with eminently
satisfactory results. Rum row, not so long ago as time is reckoned,
was infesting our coastal waters, flouting the laws of the United
States. That menace, in its old form, has been effectively dissipated
through the persistent, ceaseless efforts and hammering of the Coast
Guard. This does not signify, by any means, that another rum row
would not quickly appear off our coasts if the present deterrent
agencies of the Government should be withdrawn, nor does it mean
that the job is fully done. Foreign rum ships do appear off certain
sections of our seaboard in varying numbers, patiently watching
for an opportunity to run the Coast Guard blockade, or to serve the
11438— 26t 27
396 iiKPoirr of the secretary of tfie treasury
small-boat customer from the shore. Nothing short of everlasting
vigilance and constant picketing prevents the accomplishment of
the design of these scattered rum vessels. The Coast Guard is render-
ing whole-heartedly this important service.
The continuing support of the Congress in the measures proposed
for, and earnestly believed to be essential to, the fullest enforcement
of the law, is very gratifying and inspiriting to the entire Coast
Guard.
Award of life-saving medals
The Secretary of the Treasury, under the provisions of law,
awarded, during the year, 68 life-saving medals of honor, and one
silver bar for second service, in recognition of bravery exhibited in
the rescue or attempted rescue of persons from drowning in waters
over which the United States has jurisdiction or upon an American
vessel. Eleven of the medals were gold and 58, including the bar,
were silver.
Pe?'sonnel
On June 30, 1926, there were on the active list of the Coast Guard
233 regular commissioned officers and 89 temporary commissioned
officers, 18 line cadets, 22 cadet engineers, 22 temporary chief warrant
officers, 417 regular warrant officers, 328 temporary warrant officers,
8,784 enlisted men, and 35 civilian employees in the field. There
were 37 vacancies in the regular commissioned personnel, and 60
vacancies in the temporary commissioned personnel.
As soon as practicable after the approval of the act of July 3, 1926,
entitled, "An act to readjust the commissioned personnel of the
Coast Guard, and for other purposes," the necessary measures were
initiated toward carrying out the provisions of the law. They are
proceeding as speedil}^ as circumstances will permit.
Floating equipment
On June 30, 1926, there were in commission in the Coast Guard
17 cruising cutters, first class; 16 cruising cutters, second class;
20 Coast Guard destroyers; 34 harbor cutters and harbor launches;
ten 100-foot patrol boats; two hundred 75-foot patrol boats; 6 other
patrol boats, viz: Cool:, Cygan, Smith, Sioift, Tingard, and Vaughan;
71 cabin picket boats and 42 open picket boats. Four floating bases,
Moccasin, Pickering, Colfax, and Wayanda, and one destroyer floating-
flag-office, Argus, were also in commission. The following-named
seized vessels turned over to the Coast Guard are in commission:
Diana II, Florence, P-108, V~12216, and Virginia I, all operating as
patrol and picket boats, and Lincoln as a tender. The Hazel and
the Leopard were transferred to the Coast Guard from other depart-
ments of the Government. The Hazel is performing Coast Guard
riEPOP/r OF THE SECRETARY OF THE TREASURY 397
duty at Nome, Alaska, and the Leopard is operating on harbor duty.
Tlie Bullet (now CG-2373), acquired by purchase, is operating in law-
enforcement work. The foregoing floating equipment does not
include the primarily life-saving boat equipment attached to Coast
Guard cutters and stations.
It is gratifying to be able to state that the Congress by act approved
June 10, 1926, authorized the construction and equipment of 10
Coast Guard cutters to be designed and equipped for Coast Guard
duties, at a cost not to exceed $9,000,000. In the second deficiency
act, fiscal year 1926, approved July 3, 1926, the sum of $1,000,000
was appropriated to commence the construction of three of these
new cutters, and plans for these vessels are now under way. It is
very important that authorization be had, without undue delay, to
enter into contract for the construction of the remaining 7 cutters.
The act of March 3, 1926, appropriated $3,900,000 for additional
motor })oats and their equipment, for five seaplanes and their equip-
ment, and for repairs or alterations to, or for equipping and placing
in commission, vessels or boats transferred from the Navy Department
to the Treasury Department. Five destroyers were acquired from
the Navy Department and are now being reconditioned. Thirty-
three 125-foot patrol boats are under construction.
Miscellaneous
In addition to the existing 4 floating bases there are 14 shore
bases from which the service craft attached thereto operate against
smuggling activities.
There were 252 Coast Guard stations in an active status at the
close of the fiscal year.
In pursuance of law providing for the participation of the various
executive departments and independent establishments of the Gov-
ernment in connection with the holding of an international exhibition
in the city of Philadelphia, Pa., in 1926, in celebration of the one
hundred and fiftieth anniversary of the signing of the Declaration of
Independence, an exhibit of the Coast Guard has been assembled
on the grounds of the exposition, prepared and placed in full operation.
This exhibit consists of an especially designed building suitable for the
purpose in which is displayed articles of equipment, apparatus, and
machinery used in the service operations, and other representative
paraphernalia, including models, medals, decorations awarded to
members of the service, photographs, paintings, maps, etc.
A force of Coast Guard men has been detailed to the exhibit, and
daily (except Sunday) gives an exhibition of the various service
drills illustrating the actual operations of the Coast Guard.
398 KKPoirr Ol' I' UK SECRKTAFiY OF THE TREASURY '
The great body of officers and men of the Coast Guard, and the
faithful, devoted civilian employees at headquarters and in the field,
are deserving of unstinted praise, which it is not only a pleasure
but also a duty to extend, for the lo^'^alty, fidelity, resoluteness, and
nevor-failing allegiance to the Government and the service shown by
them in the discharge of their exacting duties during the year, and
for the high motives actuating their every endeavor, all in conso-
nance with the splendid traditions of the service.
DIVISION OF LOANS AND CURRENCY
This division is the active agent of the Secretary for the issue of
all public debt obligations of the United States and for conducting
transactions in such obligations after issue. It is also charged with
the issue of bonds or other obligations of the governments of Porto
Rico and the Philippine Islands as to which the Treasury Depart-
ment acts as fiscal agent. The division undertakes the safe-keeping
of public debt and insular loan securities for certain Government
offices, counts and delivers to a destruction committee United States
currency canceled as unfit, and mutilated paper (spoilage, etc.) from
the Division of Paper Custody and the Bureau of Engraving and
Printing.
For the conduct of this work, there were on the roUs of the division
at the beginning of the year 1,133 employees. During the year there
were 90 employees separated from the service on account of reduction
in force, 11 transferred to other bureaus, 70 resigned, and 4 retu'ed,
while there were 19 employees appointed by reinstatement and 17
by transfer from other bureaus. A net reduction in force of 139 em-
ployees was thus accomplished, leaving a personnel of 994 employees
on the rolls at the end of the fiscal year 1926.
A summary of the activities during the fiscal year follows:
REPORT OP THE SECRETARY OP THE TREASURY
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IIKPORT OF THE SECRETARY OF THE TREASURY
Issue and retirement of securities
Transactions in the interest-bearing debt of the United States, as
conducted by the Division of Loans and Currency, are reflected in
the general statements relating to the public debt service presented
elsewhere in this report, but of special note in this connection are the
following data regarding new issues and retirements for redemption.
The interest-bearing public debt was increased by the issue of
(1) Treasury 3M's of 1946-1956, 74,042 pieces amounting to
$494,898,100, of which 782 pieces amounting to $2,774,900 were in
registered form; (2) additional 23^ per cent postal savings bonds
(twenty-ninth and thirtieth series), 1,732 pieces amounting to
$544,160, of which 1,636 pieces amounting to $516,880 were in
registered form; (3) bearer certificates of indebtedness (series
TD-1926 and TJ2-1926), 80,144 pieces amounting to $704,815,000;
(4) three netv issues of registered United States 4 per cent Treasury
notes, 7 pieces amounting to $123,500,000, and registered United
States 4 per cent certificates of indebtedness, 382 pieces amounting
to $38,200,000, for investment purposes of the World War adjusted
service certificate fund. In addition to the foregoing, original issues
of Philippine Islands and Porto Rican securities were made to the
extent of 8,835 pieces amounting to $7,430,000 in both registered
and bearer form.
The public debt, matured and unmatured, was decreased by the
retirement for redemption of the following securities:
Security
Pre-war loans (registered) .
First 3>2's (registered) .
Total
Treasury notes (bearer) .
Certificates of indebtedness:
Registered (adjusted service series) .
Bearer
Total.
Treasury savings securities:
Certificates (registered) .
Stamps
Total.
Total public debt securities:
Registered
Bearer
Total
Pieces
Amount
Third 4,'<i's (registered) 13,812
Victory iH's:
Registered .
Bearer
298
18
13,812
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900. 000. 00
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850
41
196. 300. 00
2, 650. 00
891
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1
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16
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18, 500. 00
548
53, 218. 500. 00
254, 090
42, 473
28, 968. 330. 40
197, 541. 23
290, 563
29, 165, 871. 63
269,600
42, 531
101, 330, 300. 40
218, 791. 23
312,131 101.549,091.63
REPORT OF THE SECRETARY OF TflE TREi\SURY
401
In addition to the foregoing public debt retirements, there were
45 pieces amounting to $85,000 of insular loan securities retired for
redemption.
Maintenance of individual registered accounts
During the year the amount of Liberty bonds. Victory notes, and
Treasury bonds in registered form increased from $3,726,566,500 to
$3,735,249,500, a gain of $8,683,000, while the accounts mamtained
for these bonds decreased from 1,888,047 to 1,760,378, a loss of 127,669
accounts. A net gain in the registered principal of unmatured pre-
war loans was $846,210 and loss in accounts 572.
There were 211,938 individual accounts for registered Liberty
bonds. Victory notes, and Treasury bonds closed and 26,875 accounts
decreased, representing in principal amount the retirement of
$435,052,050. In connection with these loans, 84,269 new accounts
amounting to $443,735,050 were opened.
Fifty-one thousand nine hundred and ninety changes in address for
the mailing of interest checks were made on the registered accounts
during the year.
Issue of interest checlcs
Interest on registered Liberty and Treasury bonds was paid in the
form of 3,650,011 checks amounting to $155,419,366.48, and on
registered securities of the pre-war loans in the form of 47,160 checks
amounting to $15,459,221.05. Interest on registered Treasury notes
of the adjusted service series was paid in the form of one check for
$2,000,000.
Claims
Claims for relief on account of lost, stolen, destroyed, and mutilated
public debt securities handled by the division were as follows:
Claims
Pieces
Amount
Received
Settled:
By reissue or redemption of securities
By recovery of securities
By disallowance of claims
Total claims settled
3,844
2,644
1,118
120
3,882
14, 159 $1, 684, 425. 87
10, 026
2,762
958
747, 908. 12
891, 970. 00
24, 170. 00
13, 746 ! 1, 664, 048. 12
Safe-lceeping of securities
At the beginning of the year there were securities amounting to
$242,225,725 in safe-keeping for various Government offices, against
which formal audited receipts were outstanding. Throughout the
year securities amounting to $192,149,300 were received for safe-
keeping and receipts therefor issued, and securities amounting to
402 EEPORT OF THE SECRETARY OF THE TREASURY
$53,200,550 were delivered from safe-keeping upon the surrender of
outstanding receipts, leaving a balance of securities amounting to
$381,174,475 in safe-keeping June 30, 1926.
Publicity
On July 1, 1925, this division was charged with the maintenance of
a mailing list, in addition to its list of holders of registered bonds, for
the purpose of placing new Treasury offerings and such other matters
as it might wish before the public. This necessitated the embossing
of 217,158 addressograph plates and the mailing of approximately
2,386,500 department circulars.
Destruction committee
The following statement shows the securities received and destroyed
by the destruction committee, Office of the Commissioner of the
Public Debt, for the fiscal year 1926:
REPORT OP THE SECRETARY OF THE TREASURY
403
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406 CKI'OHT OF THE SECRETARY OF THE TREASURY
REGISTER OF THE TREASURY
The office of the Register of the Treasury performs the final audit
and has the custody thereof of all retired United States securities.
Tiie total amount of securities functioned during the fiscal year ended
June 80, 1926. amounted to $8,685,381,088.43 representing 56,339,274
pieces. Retired securities are divided into two main groups — canceled
securities and redeemed securities. Canceled securities surrendered
for various purposes, such as denominational exchange, transfer, etc.,
amounted to $4,092,924,646.50 or 11,532,603 pieces and do not affect
the principal of the public debt, while redeemed securities totaled
$4,592,456,441.93, representing 44,806,671 pieces.
Contact with the pubhc to a large extent is through the Federal
reserve banks, which act as fiscal agents of the United States, and
the Division of Loans and Currency. Canceled securities are received
direct from these sources but redeemed securities are transmitted
through the office of the Treasurer of the United States and subse-
quentl}'^ are delivered to the register for final audit. Certification is
then made by the register to the Comptroller General of the United
States clearing the Treasurer's accounts. Proper accounting reports
are received from these sources and adequate records kept of all
securities received.
Interest coupons make up a considerable part of the work of the
register's office and are handled in the same general way as canceled
and redeemed securities.
Detailed records are kept of all transactions, both the issue of
securities by the Division of Loans and Currency and the retirement
of securities by the register, including numerical registers of bearer
issues. Each individual security as received is recorded opposite its
corresponding number with appropriate data showing source, trans-
action, etc. This information is vital for the tracing of lost and stolen
securities and for general verification purposes.
The personnel of the register's office was reduced from 669 to 590
during the fiscal 3^ear. Of this number on the roll 87 employees were
on the separation list on account of reduction of the force and were
dropped during the early part of the succeeding fiscal year at the
expiration of the annual leave allowed them.
The total expenditures amounted to $1,031,671.56 which covers
balaries, rental, equipment, maintenance, supplies, etc.
The following statement sets forth by classes, pieces, and amounts,
the securities received, examined, and filed during the fiscal years
1925 and 1926, respectively.
EEPOKT OF THE SECRETARY OF THE TBEASUKY
407
Summary of securities received, examined, and filed in the register's office during
the fiscal years ended June SO, 1925 and 1926
Class of Sfcuiities
REDEEMED
Bearer
United States securities:
Pre-war loans
Liberty loans
Treasury bonds
Treasury notes
Certificates of indebtedness
Treasury (war) savings securities
Interest coupons
Securities not affecting public debt:
District of Columbia loans
District of Columbia interest coupons.
District of Columbia interest checks. .
Total
Registered
United States securities:
Pre-war loans
Liberty loans .
Certificates of indebtedness
Treasury (war) savings securities
Interest checks (Liberty loans)
Securities not alYecting public debt:
District of Columbia loans
District of Columbia interest checks.
Total
Total redeemed .
1926
Pieces
9,761
103, 605
290, 189
79, 086
3, 817, 770
*46, 587, 661
582
1,417
3
50, 890, 074
Pieces
,137,240.00 ' 1.2 64,633
105, 851, 550. 00
1, 373, 391, 800. 00
1, Oil, 454, 500. 00
14, 175, 366. 37
* 681, 784, 420. 07
171, 750. 00
•5,308.7554!.
33.38 ;.
100, 776
1
182, 615
67, 884
1, 916, 840
3 41,445,897
1.2 7
Amount
'.'$11,851,680.00
393, 044, 200. 00
1, 000. 00
930, 485, 300. 00
784, 042, 500. 00
6, 480, 196. 93
3 638, 089, 477. 86
1.2 3, 500. 00
3, 195, 971, 968. 57^1 43, 649, 373 ! 2, 740, 287, 494. 79
RETIRED ON ACCOUNT OF EXCHANGES FOR
OTHER SECURITIES, ETC.
Rearer
United States securities:
Pre-war loans
Liberty loans
Treasury bonds
Treasury notes
Interim certificates (Liberty loans)
Certificates of indebtedness
Treasury (war) savings securities
Interest coupons
Securities not allecting public debt:
Insular possessions loans
District of Columbia loans
Total .
Registered
United States securities:
Pre-war loans
Liberty loans
Treasury bonds
Certificates of i ndebtedness
Treasury (war) savings securities ,
Securities not affecting public debt:
Insular possessions loans
District of Columbia loans
Total.-
Total retired account exchanges, etc
1.2 20, 471
10, 072
79
2, 030, 195
12
960
119
3,332,000.00
61,921.10 -
1
2, 020, 966
1,059,369,139.34 1,157,298
1, 852, 168, 947. 14
52,911,040
4, 255, 341, 107. 91^1 44, 806, 671
4, 592, 456, 441. 93
90, 645
3, 492, 379
106, 886
731, 322
178
143, 923
271, 534
6, 734, 277
1,164
82
11, 572, 390
••« 149, 934, 678. 35
12, 960, 750. 00
1, 146, 100, 000. 00
46, 849, 108. 31
38.28
1.5, 544
14. 680
580
1, 126. 485
9
134, 432, 240. 00
18, 714, 850. 00
1,665,700,000.00
33, 321, 809. 33
47.81
66, 388, 190. 00
1, 187, 683, 400. 00
270, 524, 500. 00
1, 493, 257, 100. 00
16, 600. 00
836, 146, 000. 00
1,355,937.00
334, 161, 905. 70
1,164,000.00
38, 750. 00
52,
4, 330,
85,
372,
107,
7,
5, 935,
4, 190, 736, 382. 76
100, 625
419, 399
3,390
14
3, 643, 228
4,803
1,873
965, 002, 895. 88
345, 392, 500. 00
19, 446, 700. 00
327, 443, 225. 00
8, 079, 000. 00
6, 009, 000. 00
250
587
677
150
468
027
990
:,293
1 11
12, 322, 520. 00
1,157,817,550.00
269, 809, 200. 00
1,047,570,800.00
41,600.00
784,-S04, 500. 00
35, 158. 75
329, 874, 722. 75
2, 293, 000. 00
1 3, 700. 00
10, 894, 340 ' 3, 604, 272, 751. 50
4,173,332 ] 1,671,973,320.88
15,745,722 j 5,862,709,703.64
33, 668
391, 830
3,991
1
203, 835
4,938
61, 148, 070. 00
401, 544, 400. 00
15,047.100.00
(»)
4, 077, 325. 00
6, 835, 000. 00
638, 263
11, 532, 603
488, 651, 895. OO
4, 092, 924, 646. 50
» In adjustment of previous figures, a transfer from the redeemed to the c:mceled is made.
2 Counter entry; deduct. . , . , ,-^
3 Includes received figuies for May nnd June settlement months which are in process of audit.
< Adjusted to include audited instead of received figures.
* No value.
408
REPORT OF THE SECRETARY OF THE TRKASURV
Summary of securities received, examined, and filed in the register's office during
the fiscal years ended June 30, 1926 and 1026 — Continued
Class of securities
RECAPITULATION
Bearer
United States securities:
Pre-war loans..
Liberty loans. _
Treasury bonds
Treasury notes
Interim certificates (Liberty loans)
Certificates of indebtedness
Treasury (war) savings securities
Interest coupons
Securities not atYccting public debt:
Insular possessions loans..
District of Columbia loans
District of Columbia interest coupons.
District of Columbia interest checks. .
Total.
Registered
United States securities:
Pre-war loans
Liberty loans
Treasury bonds
Certificates of indebtedness
Treasury (war) savings securities
Interest checks (Liberty loans)...
Securities not aiTccling public debt:
Insular possessions loans
District of Columbia loans
District of Columbia interest checks. .
Total- _
Grand total
1925
Pieces
100, 406
595, 984
106, 886
021, 511
178
223,009
089, 304
321, 938
1,164
664
1,417
3
62, 462, 464
80, 154
429, 471
3,390
93
5, 673, 423
12
4,803
2,833
119
6, 194, 298
68, 656, 762
Amount
$75, 525, 430. 00
1, 293, 534, 950. 00
270, 524, 500. 00
2, 866, 648, 900. 00
16, 600. 00
1, 847, 600, 500. 00
15, 531, 303. 37
* 1,015,946,325.83
1, 164, 000. 00
210, 500. 00
5, 308. n%
33.38
1926
Pieces
1.2 11,746
4, 431, 026
85, 588
555, 292
1.50
175, 352
1, 923, 867
'47,381,887
2,293
4
7, 386, 708, 351. 33M
54, 543, 713
'$470,840.00
1,550,861,750.00
269, 810, 200. 00
1, 978. 056, 100. 00
41, 600. 00
1,568,547,000.00
6, 515, 355. 68
' 967, 964, 200. 61
2, 293, 000. 00
200.00
6, 344. 560, 246. 29
815,608,217.53
358, 353, 250. 00
19, 446, 700. 00
1, 146, 100. 000. 00
374, 292, 333. 31
38.28
8, 079, 000. 00
9,341,000.00
61,921.10
2, 731, 342, 460. 22
10, 118, 050, 811. 55M
49,
406.
3,
212
510
991
581
320
4,938
1, 795, 561
56, 339, 274
195,
420,
15,
1. 665,
37,
580, 310. 00
259, 250. 00
047, 100. 00
700, 000. 00
399, 134. 33
47.81
6, 835, 000. 00
2, 340, 820, 842. 14
8, 685, 381, 088. 43
' In adjustment of previous figures, a transfer from the redeemed to the canceled is made.
' Counter entry; deduct.
3 Includes received figures for May and June settlement months which are in process of audit.
< Adjusted to include audited instead of received figures.
DIVISION OF PUBLIC DEBT ACCOUNTS AND AUDIT
This division maintains control accounts over all official trans-
actions in public debt securities of all issues, including those conducted
by the Division of Loans and Currency, the office of the Register of
the Treasury, the Federal reserve banks as fiscal agents of the United
States, the Treasurer of the United States, and the Postal Service
(for Treasury (war) savings securities), and over the receipt, custody,
and issue of all distinctive silk fiber and nondistinctive paper used
for printing United States currency, national-bank notes. Federal
reserve notes. Federal farm loan bonds, public debt securities of all
issues, United States postage stamps, internal revenue stamps, and
other miscellaneous securities, from the point of manufacture and
delivery of the paper to the Division of Paper Custody to the point of
delivery by the Bureau of Engraving and Printing of printed securi-
ties to the administrative offices of issue, and/or the destruction of
imperfect or mutilated paper or securities delivered by the bureau
KEPORT OF THE SECEETABY OP THE TREASITRY
409
to the Division of Loans and Currency for verification and subsequent
delivery to the destruction committee. The division also conducts
continuous administrative audits of securities or security paper, as
the case may be, in the custody of the Division of Loans and Currency,
the office of the Register of the Treasury, the United States Govern-
ment paper mills, the Division of Paper Custody, and the Bureau of
Engraving and Printing while in process of printing, and also audits
accounting records in those several agencies relating to security
and security paper transactions. The following is a summary of
the audit activities of the division during the fiscal year :
Physical audits — fiscal year 1926
Transactions
In division of loans and currency:
Securities, unissued stock
Securities in safekeeping
Unclaimed securities
Surrendered securities in process of retirement
Interest checks, unissued stock
Void interest checks held for reference
Interest checks for destruction ._
Unclaimed interest checks
Registered bondholders' accounts
Treasury savings certificate stubs, representing outstanding certificates.
In office of Register of the Treasury:
Treasury savings certificates, retired
Numerical registers for third Liberty loan 4}^ per cent temporary
coupon bonds of the denomination of $100 .-.
In Division of Paper Custody:
Distinctive silk fiber and nondistinctive paper, unissued stock— sheets..
In Bureau of Engraving and Printing:
Distinctive silk fiber and nondistinctive paper in process — sheets
Pieces
11,453,434
1, 041, 851
130, 118
78, 721
321, 284
513, 318
268, 488
(')
1, 952, 740
93, 757, 507
Value
$9, 592,
313,
689, 801. 00
431, 225. 00
3, 437. 98
664, 400. 00
1,
2, 407,
85
041, 766. 66
625, 200. 00
886, 325. 00
38, 022, 000. 00
1 Completed second examination and reaudit involving a total issue of 7,309,871 pieces, total retirements
of 7,293,569 pieces and total outstanding of 16,302 pieces.
Detail of audits of distinctive silk fiber and nondistinctive paper in the Bureau of
Engraving and Printing
Num-
ber of
audits
Sheets audited in various divisions
Class of paper
Wetting
Examin-
ing
Surface
printing
Num-
bering
Postage
Or-
ders
En-
grav-
ing
Total
sheets
Currency
32
10
9
29
9
9, 514, 875
59, 695
352, 257
75, 978
1,216
34, 879, 169
5,791
123,305
53, 660
3,187
355,840
3,195,851
2, 269, 721
9
227
57
68
155
6
104
47, 019, 620
Bonds, notes, and cer-
3, 261, 668
9, 407, 508
9, 883, 127
32, 002, 645
1, 456, 183
32, 132, 351
1, 460, 741
Total
89
10, 004, 021
35,065,112
37, 010, 519
2, 269, 721
9, 407, 508
516
110
93, 757, 507
Note. — Fractional sheets disregarded in obtaining aggregate totals. Sheets counted in each audit were
found in agreement with bureau records and reconciled with controlling accounts in Division of Public
Debt Accounts and Audit.
Total number of sheets audited as indicated above includes 45,063,831 sheets package counted, repre-
senting 151,122 packages, as follows:
Currency..
Postage
Revenue...
Total
Sheets
9, 503, 000
7, 714, 079
27, 851, 752
45, 068, 831
Packages
8,862
30, 856
111,404
151, 122
410 HEPOIIT OF THE SECRETARY OF THE TREASURY
DIVISION OF PAPER CUSTODY
The following tables show transactions conducted by the Division
of Paper Custody during the fiscal year ended June 30, 1926:
Paper custody
Kind
On hand
July 1, 1925
Distinctive paper for United States currency, Fed-
eral reserve notes, Federal reserve and national-
bank currency
Internal-revenue paper.
Postage-stamp paper _
Chock paper
United States bond paper
Parchment, artificial parchment, and parchment
deed paper
Customs-stamp paper ..I
Miscellaneous paper
Philippine Islands paper: Distinctive paper for I
silver certificates, national-bank and Treasury
notes
Postage-stamp paper
Postal card.
Internal revenue.
Porto Rican internal-revenue paper..
Total..
Rolls postage-stamp paper
Rolls internal-revenue paper
Rolls United States security paper
Sheets
69, 787, 092
10, 222, 485
4, 900, 139
480, 050
3, 304, 629
141,817
25, 813
622, 837
464
Received
from con-
tractors
13, 455
29,324
90, 212, 362
885
318
3
SheeUs
' 236, 102, 141
98, 649, 204
3 22, 692, 166
♦ 2, 512, 456
« 1, 683, 416
165, 918
" "6,"266,"828
49, 875
127, 497
290, 567
, 540, 068
5, 708
301
Issued to
bureau
Sheets
2 269, 436, 073
85, 390, 482
21, 827, 817
i 2, 630, 529
" 1, 528, 859
108, 587
25, 813
4, 504, 444
300,000
464
25, 846
• 58,004
249, 573
6,491
5,483
467
On hand
June 30,
1926
Sheets
36, 453, 160
23, 481, 207
5, 764, 488
361, 977
3, 459, 186
199, 148
2, 446, 641
322, 837
24,029
82,948
70, 318
72, 665, 939
1,110
152
3
1 Includes 117 sheets net overs, 3,274 sheets replaced paper, and 178,750 sheets exchange paper.
2 Includes 669,200 sheets issued for exchange, 900 sheets transferred to mutilated paper account, 3,336
sheets delivered to destruction committee, 3,274 sheets shipped to mill for replacement, 570 portions 192S
contract and 80 portions 1927 contract to be shipped to mill and 2 sheets for contract 1927.
3 Includes 140,898 sheets of 20 by 32 inches and 146,898 trimmings from 20 by 32 inches, cut to 11^ bv
181/$ inches. ^* ■
* Includes net overs 2,852 sheets.
' Includes 46 sheets destroyed and 58 sheets issued for test.
^ Includes net overs 8 sheets.
■ Includes 6 sheets delivered to destruction committee.
* Includes 109 rolls delivered to bureau storekeeper.
Custody of Federal reserve notes, series .1914 and 19 IS
Federal reserve bank
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas _
San Francisco.
On hand
July 1, 1925
Boston $175,000,000
XT xr..,. 295,260,000
189, 520, 000
70, 480, 000
120, 500, 000
97, 120, 000
156,900,000
82, 640, 000
43, 220, 000
57, 460, 000
49, 940, 000
95, 740, 000
Total 1,433,780,000
Received
$78, 000,
179, 500,
133, 900,
216, 400,
(',6, 800,
92, 000,
111,400,
000
000
000
000
000
000
000
29, 000,
35. 600,
19, 000.
129. 400,
000
000
000
000
Issued
On hand
June 30, 1926
$90, 200, 000
280, 520, 000
117,720.000
149, 780. 000
79, 980, 000
153, 840, 000
109, 400, 000
IS. 780, 000
31, 240, 000
45, 000, 000
22, eOO, 000
119,340,000
$162, 800, 000
194, 240, 000
205, 700, 000
137, 100, 000
107, 320, 000
35, 280, 000
158, 900, 000
63, 860, 000
40, 980. 000
48, 000, 000
46, 340, 000
105, 800, 000
1,091,000.000 ; 1.218,460,000 I 1,306,320,000
DIVISION OF DEPOSITS
The following statements indicate the number of depositaries
maintained by the Treasury, other than the Treasurer of the United
States, and the amount of pubhc moneys held by such depositaries,
REPORT OP THE SECRETARY OF THE TREASURY
411
on the basis of revised Treasury statements, at the end of the fiscal
years 1925 and 1926:
Number of depositaries
^
June 30,
1925
June 30,
1926
Federal reserve banks (including branches)
12
7,645
10
299
873
6
12
Special depositaries -
7 478
Foreign depositaries
10
General national-bank depositaries.
310
Limited national-bank depositaries.
966
Insular depositaries (including PhUippine treasury)
7
Total
8,845
8 783
Amount of deposits
Deposits in Federal reserve banks and branches
Deposits in special depositaries
Deposits in foreign depositaries:
To credit of Treasurer of the United States
To credit of other Government officers
Deposits in national-bank depositaries:
To credit of Treasurer of the United States
To credit of other Government officers
Deposits in insular depositaries:
To credit of Treasurer of the United States
To credit of other Government officers
Deposits in Philippine treasury to credit of the Treasurer of the United
States
Total
June 30, 1925
$25, 434, 368. 53
150, 716, 572. 04
85, 129. 01
172, 842. 97
6, 514, 728. 01
20, 795, 022. 80
294, 540. 68
1,207,955.11
896, 150. 92
June 30, 1926
206,117,310.07
$10, 718, 586. 49
202, 728, 706. 99
87, 92S. 12
06, 342. 00
6, 485, 560. 61
20, 198, 204. 33
157, 253. 69
986, 742. 88
1, 032, 444.73
242, 461, 769. 84
A summary of the changes affecting the depositary system of the
Treasury during the fiscal year ended June 30, 1926, follows:
General national-bank depositaries of public moneys
General depositaries are those which are authorized to carry bal-
ances to the credit of the Treasurer of the United States, such bal-
ances being subject to analj^sis and adjustment semiannually upon
the basis of the amount and character of the essential Government
business transacted by such depositaries. Adjustments in the de-
positary accounts of general depositaries during the fiscal year
resulted in the discontinuance of 12 general depositaries carrying
aggregate fixed balances of $253,000 to the credit of the Treasurer of
the United States and reductions in the fixed balances held by 10
general depositaries totaling $168,000. During the year 23 general
depositaries, with fixed balances aggregating $303,000, were desig-
nated; and the fixed balances of 11 depositaries were increased in
the total amount of $229,000. There was, therefore, a net increase
of $111,000 in the fixed balances of general depositaries during the
fiscal year.
412 REPORT OF THE SECRETARY OF THE TREASURY ,
Limited national-hank depositaries of public moneys
Limited national-bank depositaries of public moneys are desig-
nated for the sole purpose of receiving up to specified maximum
amounts deposits made by postmasters and United States courts
and their officers, for credit in their official checking accounts, with
such depositaries. This class of depositaries is not authorized to
accept deposits for credit in the account of the Treasurer of the United
States. Dm'ing the fiscal year ended June 30, 1926, the Treasury
designated 148 additional limited national-bank depositaries of public
moneys; and 146 limited depositaries qualified, by pledging addi-
tional collateral, to accept increased amounts of deposits made by
postmasters and United States courts and their officers, for credit
in their official checking accounts. During the year 54 limited de-
positaries were discontinued and, as a result of the withdrawal of
collateral, reductions were made in the maximum qualification of 57
such depositaries.
Insular depositaries of public moneys
Insular depositaries are maintained upon substantially the same
basis as national-bank depositaries. During the fiscal year ended
June 30, 1926, there was one additional insular depositary designated
in Porto Rico. Such depositaries were also maintained during the
year in the Canal Zone, Panama, and the Philippine Islands.
Special depositaries of public moneys
Special depositaries of public moneys are designated under the
provisions of the act approved September 24, 1917, as amended
and supplemented, and are authorized to participate in deposits of
public moneys arising from such sales of bonds, notes, or Treasury
certificates of indebtedness of the United States ofTered from time to
time, as, under the terms of the official offermg, may be paid for by
credit. Any incorporated bank or trust company is eligible for
designation as a special depositary. During the fiscal year ended
June. 30, 1926, 108 banks were designated and 275 banks were dis-
continued as special depositaries. At the close of the fiscal year
7,478 banks held designation as special depositaries, of which 3,807
were national banks and 3,671 State banks and trust companies.
Foreign depositaries of public moneys
During the fiscal year 1926 the Treasury maintained depositaries
of public moneys in foreign countries, as follows: 1 in China, 4 in
England, 3 in France, 1 in Haiti, and 1 in Italy. The Government
deposits with foreign depositaries, including balances to the credit of
the Treasurer of the United States and balances to official credit of
rxKFonT OF thp: secretary of the tebasury 413
United States disbursing officers, were materially reduced during
the year. Such balances totaled $257,971.98 on June 30, 1925,
and $154,270.12 on June 30, 1926. The reduction in these balances
was due principally to the closing of activities of the United States
Government resulting from the World War.
In addition to the supervision of the depositary system of the
Treasury, the activities of the Division of Deposits comprised matters
relating to deposits of public moneys by public officers generally,
collateral security for Government deposits, lost and uncollected
checks issued in payment of obligations to the Government, claims
airainst insolvent depositaries, and other matters of a similar character.
SECRET SERVICE DIVISION
During the fiscal year ended June 30, 1926, 33 new counterfeit-
note issues were discovered in circulation, and although most of these
were unskilled productions, several were expertly executed and
extensively circulated. While these criminal operations were not
confined to any one section of the country, the greater volume of
counterfeit notes made and circulated centered in and around New
York City. During the year an aggregate of $500,893.25 in counter-
feit notes, including $86.25 in fractional currency, was captured or
seized by agents of the service, together with $16,152.17 in counterfeit
coins, 309 plates for the printing of counterfeit obligations and securi-
ties, 70 dies and 145 molds for counterfeiting coins, as well as a large
amount of miscellaneous materials and apparatus, including presses,
plating outfits, ladles, melting pots, inks, cameras, files, crucibles,
etc. There were also recovered a large number of stolen Treasury
checks either in blank or fraudulently prepared for negotiation.
Charged with these counterfeiting and forging operations, as well
as with misceUaneous offenses against the Federal statutes relating to
the operations of the Treasury Department and its several branches,
807 persons were arrested during the year by agents of the service or
by their direction. Of that number, 397 were note counterfeiters,
passers of counterfeit notes, or engaged in raising and passing altered
currency; 92 coin counterfeiters; and 260 check and bond forgers
and passers. Four hundred and six of these arrested persons were
convicted and sentenced; 228 are awaiting action of the courts; 29
were acquitted; and the rest were variously disposed of, some being
committed to insane asylums, others turned over to the military or
police authorities, 2 died, and 2 committed suicide before trial.
Seventeen hundred and sixteen forged-check cases and 238 bond
and 53 war-savings-stamp cases were investigated by secret service
agents during the year, together with a number of miscellaneous
matters involving frauds and irregularities affecting the several
branches of the Treasury Department.
414
REPORT OF THE SECRETARY OF THE TREASURY
DIVISION OF PRINTING
Printing and binding
The transactions in printing and binding for the Treasury Depart-
ment are shown in the following table. It will be seen that the total
expenditures for the fiscal year 1926 were $884,275.95, against
$912,817.43 for 1925, a decrease of $28,541.48.
Appropriations, expenditures, and reimbursements for printing and binding
Fiscal year Fiscal year
1925 1926
Increase
Decrease
Appropriation
$850, 000. 00
71,032.55
'$834,750.00
78. 745. 94
$15,250.00
Reimbursements
$7, 713. 39
Total credits
921, 032. 55
912, 817. 43
913, 49.5. 94
884, 275. 95
7, 536. 61
Total expenditures
28,641.4S
Balance 1
8, 215. 12
29,219.99
21,004.87
EXPENDITURES BY BUREAUS, OFFICES, AND DIVISIONS
Secretary, Undersecretary, and Assistant Secretaries...
Appointment Division i 1,
Boolikeeping and Warrants Division j 17,
Bureau of Engraving and Printing.. 1 7,
Bureau of Supply ; 3,
Chief Clerk and Superintendent i J,
Commissioner of Acc^ounts and Deposits j
Committee on Enrollment and Disbarment I
Comptroller of the Currency { 23,
Custodians of public buildings
Customs:
Bureau
Service
Special Agency
Disbursing Clerk
Division of Deposits
Federal Farm Loan Bureau...
General Supply Committee...
Government Actuary
Internal Revenue:
Bureau
Prohibition enforcement- .
Service
Loans and Currency Division
Mint:
Bureau j 3,
Service 2,
National-bank depositaries ! 2,
Printing Division i
Public Debt Service _ 22,
Public Health:
Bureau 88,
Service 2,
Register of the Treasury
Secret Service
Supervising Architect 2,
Treasurer of the United States. 13,
United States Coast Guard:
Bureau 11,
Service 19,
Miscellaneous _.. 51,
Materials for bookbinder
Total 841, 784.
Net decrease i
89, 675. S2
36, 254. S7
> Exclusive of $32,.')00, available for 1920-27; Public No. 492, Sixty-ninth Congress, approved July 3,
1926.
r.KPOPvT OF THE SECRETARY OF THE TREASURY
415
Appropriations, expenditures, and reimbursements for printing and binding — Con,
REIMBURSED EXPENDITURES
As^reoftural Credit Corporation^
Bttrcau of Engraving and Printing
■Contingent expenses, national currency
Customs service blank forms
Federal farm loan banks
Federal Farm Loan Bureau, miscellaneous expenses-
Insolvent national hank fund
Internal Revenue Bureau
National bank examiners
>iational Bank Redemption Agency
National Sesquicentennial Exhibition
Public Debt Service
World War Foreign Debt Commission
Total
Net increase -
Fiscal year ] Fiscal year
1925 1 1926
$724.
869.
39, 159.
252.
2, 595.
7, 729.
12, 190.
3, 994.
3, 3.59.
157.
$20. 65
, 803. 68
749. 14
,616.51
671. 59
, 734. 37
, 247. 05
404.44
202. 82
629. 61
666. 08
71,032.55 78,745.94
Increase
$20.65
, 079. 47
3, 456. 99
418. 91
3, 734. 37
213. 96
7, 208. 76
1,629.61
19. 270. 83
7, 713. 39
Decrease
$120. 30
348.40
7, 729. 73
3, S.M. 01
11,5,57.44
Postage
The appropriation for postage for the fiscal year 1926, to prepay
matter addressed to Postal Union countries and for postage for the
Treasury Department, was $1,000. The expenditures were as
follows: For postage stamps for department use, S806; for trans-
mission of matter addressed to Postal Union countries through the
Bureau of International Exchanges, $150.30; for publications mailed
by the Superintendent of Documents for the Department, $39.98,
& total of $996.28, leaving a balance of $3.72.
Department advertising
The number of authorizations for the fiscal year 1926 was 2,425,
an increase of 177 over 1925, and the expenditures were $17,473.26,
a decrease of $2,561.17.
DISBURSING CLERK
The following is a summary of the work performed by the office
of the disbursing clerk during the fiscal year ended June 30, 1926:
Disbursements:
Checks (salaries, expenses, supplies ,etc.)
Cash (salaries) - -- -■
Checks (refunding taxes illegally collected)
Total--. - ---
Collections on account of rents, sales, etc
Vouchers paid ■
Schedules of claims for tax refunds.. -.
.\ppropriations under which disbursements were made
Number Amount
292, 074
208, 041
296, 260
796, 375
3,959
193, 795
7,358
398
.$36, 202, 747. 69
13, 005, 588. 14
179,083.423.43
228, 291, 759. 26
442, 386. 28
416 IJKPORT OF THE SECRETARY OF THE TREASURY
The cash payments and the checks for salaries, expenses, supplies, I
etc., cover disbursements for all bureaus and divisions of the Treasury
Department in the District of Columbia (except the Bureau of
Engraving and Printing), and a large portion of the salaries and
expenses outside the District of Columbia under the Public Health
Service, the Supervising Architect's Office, the Bureau of Internal
Revenue, the Federal Farm Loan Board, the Comptroller of the
Currency, the Coast Guard, the Secret Service, the Customs Division,
and the Public Debt Service (Division of Loans and Currency).
Collections represent moneys received and accounted for on
account of rents of buildings and sites, sales of public property, etc.,
under various bureaus and offices of the department.
A new line of work has come to the office on account of General
Regulations No. 54 of the Comptroller General which requires the
disbursing clerk each month after July 1, 1926, to transmit his
check for the amount deducted from salaries on account of the
retirement fund to the disbursing clerk. Bureau of Pensions. This
office thus makes disbursement and accounts for 100 per cent of
salary appropriations instead of the net amount after making deduc-
tions for the retirement fund as heretofore.
BUREAU OF SUPPLY
The Bureau of Supply has now been in operation for four years as
the central purchasing, warehousing, and distributing agency of the
Department. It does the purchasing for all local and field activities
with the exception of the Bureau of Engraving and Printing, which
is exempted under the law, the Coast Guard, and to some extent the
Mint.
The following table gives the total cost of purchases made by the
bureau during each of the past four fiscal years from specified appro-
priations from which allotments were made to the bureau to cover
expenditures made by it, and also purchases chargeable to appropria-
tions from which no allotments were made:
REPORT OF THE SECRETARY OF THE TREASURY 417
Expenditures by Bureau of Supply, fiscal years 1923 to 1926, by appropriations
Bureaus and offices, and titles of appropriations
Chief Clerk and Superintendent:
Contingent expenses, Treasury Depart-
ment—
Carpets and repairs
File holders and eases
Freight, telegrams, etc
Fuel, etc
Furniture, etc
Furniture, 1924-25
Gas, etc
Motor vehicles
Miscellaneous items
Newspaper clippings and books
Rent -
I^abor-saving machines, Treasury Depart-
ment
Operating expenses —
Treasury Department Annex
Annex Building, Fourteenth and B
Streets NW _
Darby Building
Total.
General Supply Committee:
Transfer of office material, supplies, and
equipment
Salaries, General Supply Committee
Total.
Division of Bookkeeping and Warrants: Con-
tingent expenses, public moneys
Division of Customs: Collecting the revenue
from customs
Treasurer of the United States:
Repairs to canceling and cutting machines.
Labor-saving and filing devices..
Total.
Public Debt Service:
Expenses of loans (act Sept. 24, 1917, as
amended and extended)
Salaries and expenses incident to foreign
loans and transportation acts
Public Debt Service
Total.
Division of Printing and Stationery:
Contingent expenses, Treasury Depart-
ment—Stationery
Materials for bookbinder, Treasm-y Depart-
ment.
Total.
Bureau of Internal Revenue:
Collecting the internal revenue
Enforcement of narcotic and national pro-
hibition acts.
Total.
Public Health Service:
Pay of personnel and maintenance of hos-
pitals
Quarantine service
Interstate quarantine service
Interstate quarantine service, 1925-26
Maintenance of Hygienic Laboratory
Field investigations
Preventing the spread of epidemic diseases..
Preventing the spread of epidemic diseases,
1925-26
Expenses, Division of Venereal Diseases
Control of biologic products
1923
$351. 86
4, 968. 15
10, 008. 08
29, 973. 70
4, 873. 60
.$496. 17
4, 943. 55
10, 230. 05
24, 924. 57
4, 901. 43
24, 873. 34
4, 733. 00
15, 819. 58
489. 60
16, 850. 00
4, 587. 43
13, 469. 54
36, 156. 77
3, 783. 97
170, 938. 62
118,506.
(')
118, 506. 98
1, 493. 50
164. 48
3, 777. 96
3, 942. 44
20.47
39, 457. 82
63, 124. 79
379, 725. 06
246. 84
379, 971.
396, 824. 27
131, 407. .53
528,231.80
1,631,791.15
348, 693. 98
610. 69
27, 302. 51
14, 861. 52
20, 450. 15
2, 951. 72
19, 759. 90
23, 167. 95
4, 730. 17
14, 345. 77
493. 83
14, 650. 00
5, 694. 85
13, 949. 21
33, 053. 86
3, 981. 04
159, 562. 45
111,436.
(')
111,436.68
3, 193. 67
2 46,117.78
20, 825. 18
3.50
52, 073. 71
72, 902. 39
319, 045. 61
247.49
319, 293. 10
311, 279. 34
124, 974. 85
436, 254. 19
1, 568, 170. 65
303, 170. 57
363. 47
33, 831. 94
12, 369. 70
23,470.53
4, 541. 80
25, 658. 36
1925
$494. 02
3, 979. 50
9, 886. 50
19, 663. 58
4, 422. 57
1,991.84
20, 859. 45
7, 496. 24
13, 220. 33
483. 53
14, 649. 92
19,909.58
12, 935. 35
3, 820. 51
133, 812. 92
105, 606. 55
(0
105, 606. 55
2, 442. 41
179, 643. 84
67.95
67.95
3. 940. 36
45, 699. 65
49, 640. 01
342, 952. 44
249. 84
343, 202. 28
369, 278. 26
174, 135. 48
543, 413. 74
1, 7:^6, 589. 68
311,462.22
204. 92
1, 989. 66
33, 815. U
17, 624. 55
37, 495. 77
7, 200. 62
4, 423. 69
26, 452. 97
1926
$498. 93
3, 996. 87
9, 856. 30
18, 396. 30
4, 480. 25
18, 144. 52
6, 976. 42
12, 769. 81
985. 16
14, 650. 00
13,799.36
11,988.56
3, 560. 03
120, 102. 51
41, 339. 73
77, 188. 71
118, 528. 44
1, 269. 92
233, 483. 02
7,214.13
33, 521. 26
40, 735. 39
368, 948. 86
368, 948. 86
194, 899. 85
133, 092. 76
327, 992. 61
1, 632, 874. 69
296, 458. 24
474. 99
7, 115. 34
33, 959. 64
15, 600. 72
21, 704. 93
25, 165. 13
2, 302. 06
22, 671. 28
1 Appropriation accounting not done by Bureau of Supply.
2 The purchase and accounting for supplies for the Division of Customs assumed .\pr. 1, 1924.
'Included in appropriation for printing and binding.
418
REPORT OF THE SECRETARY OF THE TREASTTRY
Expendihires by Bureaxi of Supply, fiscal years 192S to 1926, by appropriations —
Continued
Bureaus and offices, and titles of appropriations
1923
1924
1925
1926
Public Health Service— Continued.
Books
Studies of rural sanitation
$212.01
388. 23
2, 402. 00
10.50
$494. 25
130. 12
708.00
$499. 93
200.00
3,110.00
$493.24
40 00
Boston (Mass.) Quarantine Station
Investigation of United States Coal Com-
mission
Marine hospital, Savannah, Qa. . . .
4,811.76
5,395.29
7, 059. 74
7, 641. 33
Marine hospital, Baltimore, Md
Marine hospital, New Orleans, La
885 26
1
Total...
2,069,435.02
1,983,116.44
2, 188, 128. 86
2,067,386.85
Supervising Architect:
Repairs and preservation of public buildings.
Mechanical ccjuipnient for public buildings..
Vaults and safes for public buildings
General expenses of public buildings
Furniture and repairs of same for public
buildings
61, 842. 31
50,046.00
37, 626. 28
4, 510. 37
279, 846. 16
334, 548. 33
107,455.18
95, 259. 00
53, 925. 18
7, 128. 17
441,397.27
1, 219, 901. 83
102, 176. 61
87, 493. 86
59, 971. 69
12, 981. 63
556,379.79
1,212,801.10
101,089.89
96, 140. 22
70,980.62
13, 567. 59
554, 955. 75
Operating supplies for public buildings
1,161,803.45
Total
768,419.45
1,925,066.63
2, 031, 804. 68
1, 998, 537. 52
Total from allotments.. . .
4, 104, 064. 50
165, 942. 19
5,057,085.10
88,953.96
5, 577, 763. 24
68, 980. 00
5,276,985.12
132, 147. 06
■purchases from appropriations from which no
allotments were made '
Grand total... .
4, 270, 006. 69
5, 146, 039. 06
5, 646, 743. 24
5,409,132.78
* Appropriation accounting for these purchases was done by bureaus and offices for which the purchases
were made.
The foregoing expenditures involved the examination and audit
for settlement through the disbursing clerk of the Department of
75,310 vouchers in 1926 and 72,498 in 1925, an increase of 2,812.
In addition 9,155 vouchers in 1926 and 7,709 in 1925 (an increase of
1,446), mostly for express and freight shipments, were examined,
approved, and forwarded to the General Accounting Office for direct
settlement. The total number of vouchers handled by the bureau
in 1926 was 84,465 and in 1925, 80,207, the total increase being
4,258. Cash discounts for prompt payments netted the Depart-
ment $10,856.87 and $11,407.11 in 1926 and 1925, respectively.
Losses of discounts because of inability to pay vouchers within the
discount periods amounted to but $296.99 in 1926, while in 1925
they were $1,468.96.
Due largely to the increasing practice of consolidating and co-
ordinating requirements in making purchases, there was in 1926 a
decrease of 3,861 in the number of formal purchase orders prepared
and issued by the bureau, the totals for 1926 and 1925 being 34,957
and 38,818, respectively. By the same token there was a widened
discrepancy between the totals of vouchers and purchase orders, as a
consolidated purchase order frequently involves numerous appro-
priations and points of delivery, for each of which a separate voucher
is required in order to avoid complicating Government accounting.
Open-market purchases by the bureau required the preparation
and circulation among approximately 80,000 prospective bidders of
REPORT OF THE SECRETARY OF THE TREASURY
419
5,993 sets of specifications and invitations for proposals in 1926,
compared with 5,668 sets in the preceding year, and in addition a
considerable number of informal proposals involving small purchases
in the field to meet emergencies were tabulated, compared with avail-
able prices elsewhere, and passed on by the bureau. In many cases
awards made to contractors were for continuing contracts, against
which numerous purchase orders were issued, or from which require-
ments of various offices and services were met.
The policy inaugurated in February, 1923, of moving all freight
shipments via the route offering the cheapest rate has been followed
each succeeding year. With an increased amount of shipping,
further effort has been made to effect additional economies through
consolidating numerous small shipments as far as practicable, and
thus effecting a decrease in the amount of dead^weight. The sum of
transportation charges for the fiscal year 1926 was approximately
the same as for 1925, viz, $600,000.
Purchases and issues of stationery supplies
Of the $437,760 appropriated to the Department for stationery
for the last fiscal year, $368,964.65 was expended and $68,795.35
reverted to the Treasury. The considerable balance unexpended
was due to the failure of one of the field services to install as rapidly
as had been expected a new system of office files; consequently the
fund which Congress had allowed for that purpose was utilized but
partially. In addition, $67,440.52 was expended for stationer}^ items
from other available appropriations. Thus the total expenditures for
stationery supplies were $436,405.17, compared with $426,285.29 in
1925.
In the following table are summarized the appropriations, reim-
bursements, and expenditures for articles of stationery for the last
two years:
Appropriations, reimbursements, and expenditures for stationery, fiscal years ended
June 30, 1925 and 1926
1925
1926
Increase (+)
or de-
crease (-)
$350, 000. 00
83, 332. 85
$437, 760. 00
67, 440. 52
+$87, 760. 00
-15,892.33
433, 332. 85
426, 285. 29
505, 200. 52
436,405.17
+71, 867. 67
+10, 119. 88
7, 047. 56
68, 795. 35
+61, 747. 79
There was an increase of $15,968.23 in the value of stationery
issued in 1926, compared with 1925, the total value of issues for the
two years being, respectively, $453,224.24 and $437,256.01. Of the
420
II K PORT OF THE SECRETARY OF THE TREASURY
total issues, $385,783.72 in 1926 and $353,923.16 in 1925 were charge-
able to the departmental appropriation for stationery, while $67,-
440.52 in 1926 and $83,332.85 in 1925 were reimbursed from various
other available appropriations. The increase in both issues and
expenditures is attributable iti part to increases in prices of a number
of commodities (specifically, rubber bands alone cost $16,885.62
more in 1926 than in 1925), and in part to the purchase and issue of
articles not previously included under the heading of stationery
(such as cards for accounting machines, and carbon rolls, index
strips, and mailing slips for flat-bed typewriters, which cost approxi-
mately $32,000).
The value of stationery articles issued was $16,819.07 in excess of
the expenditures therefor, the deficit being met by a reduction of
$10,487.02 in the value of stock on hand and by $6,332.05 in the net
value of supplies surrendered by various agencies for reissue.
The following table shows the value of stationery supplies issued
during the past two fiscal years, by bureaus, offices, and services:
Issues of stationery supplies to bureaus, offices, and services of the Treasury Depart-
ment, fiscal years ended June SO, 1925 and 1926
Bureau, office, or service
Chargeable direct to
appropriation "Con-
tingent expenses,
stationery"
Reimbursements
from other appro-
priations
Total
1925
1926
1925
1926
1925
1926
Secretary, Undersecretary, and
Assistants
.$1, 575. 06
941.49
$1, 630. 22
474. 80
.$1, 575. 06
941.49
$1, 630. 22
474. 80
Appointment Division
Board of Tax Appeals
$5, 209. 33
5, 209. 33
Bookkeeping and Warrants
476. 21
6, 192. 02
481. 67
7, 863. 68
476. 21
6, 192. 02
679. 55
2, 783. 81
1,057.99
99.93
7, 961. 47
334. 23
2, 048. 75
67, 686. 75
675. 00
119. 69
2, 610. 35
5, 000. 57
4. 235. 52
5.86
920. 97
250, 091. 53
943. 22
2, 005. 72
2, 004. 71
128. 47
23, 545. 90
1,5.327.47
845. ,"54
4, 002. 54
8, 3(M. 21
24, 520. 08
71.40
481. 67
Bureau of Engraving and Print-
ing -.
7, 863. 68
Bureau of tlie Budget
$679. 55
667. 36
667. 36
Bureau of Supply.
2, 783. 81
1, 057. 99
99.93
7, 961. 47
2, 914. 29
1, 364. 34
117. 29
7, 821. 33
2, 914. 29
1,364.34
Chief Clerk and Superintendent..
Commissioner of Accounts and
Deposits _
117.29
Comptroller of the Currency
7, 821. 33
Contingent expenses, national
currency _ _
334. 23
50.33
50.33
Custodians of public buildings
2, 048. 75
66, 888. 59
675. 00
119.69
2, 610. 35
2, 031. 57
66, 737. 00
551. 19
155. 36
2, 031. 57
Customs Service.
798. 16
362. 34
67, 099. 34
551. 19
Disbursing Clerk..
Division of Deposits
155 36
Federal Farm Loan Board
2, 282. 42
3, 547. 07
2, 282. 42
Federal Reserve Board
5,000.57
3, 547. 07
General Supply Committee
4, 235. 52
5.86
936. 56
9.58
936. 56
Government Actuarv
9.58
Insolvent national-bank fund
920. 97
47,911.64
919. 66
27, 738. 50
919.66
Internal Revenue Bureau
Mint Bureau
202, 179. 89
943. 22
233, 878. 04
1,284.48
261, 616. 54
1,284 48
National bank examiners
2, 065. 72
2, 004. 71
1,414,68
1,689.97
1,414.68
1 689 97
National Bank Redemption
Agency..
Printing Division
128.47
177. 79
177. 79
Public Debt Service--
23, 545. 90
23, 508. 17
23, 508. 17
Public Health Service..
15, .327. 4 7
845. 54
4, 002. 54
8, 304. 21
24, 520. 08
16, 443. 31
588. 82
4, 755. 34
10, 395. 03
25, 172. 03
16,443.31
Secret Service
588. 82
Supervising .\rchitect
4, 755. 34
Treasurer of the United States...
10, 395. 03
United States Coast Guard.
25, 172. 03
War Finance Corporation
71.40
50.69
50.69
Total
353, 923. 16
385, 783. 72
83, 332. 85
67, 440. 52
437. 256. 01
453 224 24
REPORT OF THE SECRETAEY OP THE TEEASURY
421
Shipments of stationery and miscellaneous supplies by the Bureau
of Supply from Washington to field offices totaled 12,604 packages,
boxes, etc., weighing 598 tons, in 1926, compared with 14,119 pack-
ages, etc., weighing 765 tons, in 1925. In detail the shipments in
1926 were made up of 3,367 franked parcels, weighing 10,101 pounds;
1,543 parcel-post packages, weighing 20,370 pounds, and costing
$1,044.88 in postage; and 7,694 express and freight boxes, crates,
etc., weighing 1,166,192 pounds. The shipments by freight and.
express involved the use of 2,346 Government bills of lading in 1926.
against 3,859 in 1925.
The apparent decrease in shipments was due to the use in 1926
(but not in 1925) of the franking privilege in shipping blank forms,
of which there were sent to the field about 5,500 bags, weighing
approximately 275 tons. This change in method followed a confer-
ence with representatives of the Bureau of the Budget and the Post
Office Department, at which the conclusion was reached that it was
more economical as well as more efficient to utilize the facilities of
the Postal Service for transporting printed matter.
A summary of conditions portrayed by the annual inventory of
the stock of stationery supplies is shown in the table following:
1925
1926
Increase
(+) or de-
crease (— )
On hand at beginning of fiscal vear_- .-_
$155, 290. 37
426, 285. 29
$162, 070. 26
436,405.17
+$6, 779. 89
Purchases during year
+10, 119. 88
Total
581, 575. 66
17, 983. 72
598, 475. 43
9, 851. 13
+16, 899. 77
Add value of stationery articles received from various divisions as
surplus for reissue
-S, 132. 59
Less value of stationery articles transferred to General Supply Com-
599, 559. 38
608, 326. 56
3, 519. 08
+8,767.18
+3, 519. 08
VaJue available for issue - .- - - -
.i99, 559. 38
437, 256. 01
604, 807. 48
453, 224. 24
+5, 248. 10
+15, 968. 23
On hand ii'. oiui of year
162,303.37
151, 583. 24
-10, 720. 13
Jnventorv value June 30 ' . _
162, 303. 37
162, 070. 26
151,583.24
157, 399. 28
-10, 720. 13
-4, 670. 98
' Inventory values are readjusted July 1 of each year in accordance with new prices on contracts effective
on that date, and invoices are based on replacement costs at dates of shipment. This slightly decreased
«ost of replacement on July 1, 192.5, decreased the inventory value of stock $233.11, while the increased cost
of replacement on July 1, 1926, increased it $5,816.04.
The July 1, 1926, inventory of blank books and forms revealed a
stock of 37,285,575, valued at $135,905.56. This is exclusive of
internal-revenue forms, the stock of which is held by the Bureau of
Internal Revenue.
422
REPORT OF THE SECRETARY OF THE TREASURY
General Supply Committee
Purchases l\y departments and independent Government estab-
lishments from General Supply Committee contractors during the
fiscal year 1926 increased $80,404.71, totals for the fiscal years 1925
and 1926 being, respectively, S6,645, 195.64 and $6,725,600.35.
From the disposition by auction of accumulated surplus and unusable
material $83,310.32 was realized, sales by contract of salvageable
•material (waste paper, etc.) amounted to $130,929.07, and receipts
from transfers to various activities of surplus articles netted
$48,450.84. Thus the receipts from the disposition of surplus
property totaled $262,690.23, all of which was deposited in the
Treasury.
The following statement summarizes these transactions for each
of the fiscal years 1925 and 1926:
1925
192(1
Increase (4-)
or
decrease (-)
Purchases from General Supply Committee contractors
$6, 645, 195. 64
$6, 725, 600. 35
+$80,404.71
Receipts from disposition of surplus property:
Auction sales. -
63,112.81
165, 972. 77
78, 028. 61
S3, 310. 32
130, 929. 07
48, 450. 84
+20, 197. 51
Contract sales
—35, 043. 70
-29, 577. 77
Total
307, 114. 19
262, 690. 23
-44,423.96
Grand total - -.
6,952,309.83
6, 988, 290. 58
+35,980.75
In the following tables the general activities of the General Supply
Committee are shown:
Value of purchases reported by executive departments under contracts negotiated by
the Secretary of the Treasury through the General Supply Committee, fiscal years
ended June SO, 1918-1926, by classes
Class No.i
1918
i2, 096, 321. 53
113, 616. 94
196, 087. 94
77, 760. 43
60, 625. 93
230, 721. 80
97, 432. 97
85, 216. S9
1,423,139.12
242, 403. 59
41, 360. 20
101,381.81
12, 831. 02
14 i 175,893.08
15 .....' 2,867,123.80
16 - i 1,955.99
17 1 26,615.00
Total.
1, 592, 225. 85
280,811.04
456, 496. 38
10, 180, 021. 31
1919
1920
$2,103,974.31
138, 763. 59
78, 288. 54
102, 438. 75
54, 671. 79
174, 502. 43
31, 253. 09
100, 930. 01
1,429,884.65
171,593.89
188, 363. 21
121,814.71
5, 262. 73
3, 234. 22
2, 530, 664. 35
3, 121. 64
No purchases.
1, 088, 558. 88
509, 022. 58
1, 485, 154. 81
$1, 641,
97,
262,
163,
63,
158,
142,
116,
999,
458,
207,
161,
21,
38,
1, 326,
3,
112.03
032. 92
145. 21
939. 37
631. 37
241. 44
954. 84
397.28
664. 35
324.05
816. 93
280. 90
269. 55
297. 73
218.87
282. 69
579. 38
475, 466. 85
486, 719. 30
795, 089. 76
10, 321, 438. 18 7, 627, 064. 82
1921
$2, 149, 091. 04
181, 574. 90
206, 681. 43
96, 875. 48
83, 308. 28
183, 775. 30
48, 126. 03
149, 400. 10
809, 858. 98
407, 640. 98
128, 896. 55
148, 757. 20
20, 692. 25
45, 583. 09
1, 314. 772. 50
4, 444. 08
Not adver-
tised.
223, 516. 45
486, 263. 77
634, 976. 99
1922
7, 324, 145. 40
$1,371,
87,
190,
179,
64,
U2,
124,
204,
615,
345,
99,
237,
11,
32,
1, 167,
1,
50,
881. 92
847.50
714.63
357. 34
064. 59
954. 79
815.24
822. 37
965. 55
089.87
050. 86
055. 15
289. 56
451.41
779. 99
504.57
473. 15
189,413.01
464, 000. 10
541, 393. 94
6, 091, 925. 54
' For titles of classes, see footnote at end of this table on next page.
rj-.POPvT OF THI': SECRETAEY OF THE TKEASURY
423
Value of purchases reported by executive departments under contracts negotiated by
the Secretary of the Treasury through the General Supply Committee, fiscal years
ended June 30, 1918-1926, by classes — Continued
Class No.i
1923
1924
1925
1926
1
$1,395,355.96
88, 299. 77
187, 917. 10
111,762.45
98,682.99
191, 409. 05
183, 059. 86
192, 563. 04
724,315.31
382, 231. 21
104, 535. 44
240, 303. 40
7, 003. 15
22, 444. 69
858, 537. 47
3, 018. 71
76, 772. 58
382, 308. 85
487, '259. 89
486, 180. 97
$1, 419, 197. 94
98, 555. 86
233, 839. 35
89,481.42
80, 007. 80
203,468.87
179,341.14
190, 733. 65
669, 787. 33
408, 683. 87
108, 753. 32
243, 486. 19
3,719.91
14, 730. 42
823, 926. 75
1, 510. 05
96, 633. 21
662, 764. 81
512,363.95
457, 633. 39
.$869, 003. 38
113,113.63
245, 870. 79
105, 523. 69
111,470.86
194, 093. 22
230, 667. 23
159,860.70
859, 060. 67
445, 897. 01
121, 599. 64
259, 412. 90
3.863.47
16, 784. 68
805, 073. 74
1, 546. 47
151,972.75
969. 308. 68
488,564.46
492, 507. 67
$860, 650. 96
134, 354. 67
314, 542. 71
106 719 49
2 ..
i .::..::... ::..
4 -
5 - -
118,689.42
6 - -
185,063 50
7
233 224 35
8
233,751 49
«
764, 243. 55
10
575 135 43
11.
124, 608. 39
254,731.02
4 312 42
12.
13
14.
20, 649. 20
718,717.03
1 513 03
15
16 .
17
485,911.78
665, 294. 70
463, 593 34
18
19
^
459, 893. 87
Total
6, 223, 961. 89
0, 498, 619. 23
0, 645, 195. 64
6, 725, 600. 35
1 Class No.—
1. Stationery, paper articles, and drafting supplies.
2. Hardware, metals, leather and leather goods.
3. Dry goods, clothing, boots and shoes, cloth bags, flags, wearing apparel, window shades, and
cordage.
4. Drugs and medicines, and chemicals.
5. Laboratory apparatus, and hospital appliances and surgical instruments.
6. Electrical, engineering, and plumbing supplies.
7. Lumber, millwork, packing boxes, building materials, and road oils and tar for road building.
8. Brushes, glass, lubricants, fuel oils, and paints and painters' supplies.
9. Furniture and floor coverings.
10. Groceries and provisions, cleaner, polish, floor wa.x and polishing compound, scouring com-
pound, soap and soap dispensers, meat, fish, lard, oleomargarine, and household supplies.
11. Forage, flour, and seed.
12. Photographic supplies, meteorological instruments, towers, etc., and meat-inspection supplies.
13. Engraving, printing, and lithographic supplies (excluding supplies for the Government Printing
Office and the Bureau of Engraving and Printing).
14. Ice.
15. Incandescent electric lamps.
16. Incandescent gas-lamp supplies.
17. Motor trucks, tires, tubes, and accessories.
18. Computing, dictating, transcribing, duplicating, folding, sealing, and typewriting machines;
labor-saving devices; tji^ewriter exchange allowances, repair parts, and equipment.
19. Electric service.
20. Telephone service.
Note.— Total purchases, all classes, for the fiscal year 1913 were $2,728,767.64; 1914, $2,382,203.52; 1915
$2,657,497.54; 1916, $2,714,883.17; and 1917, $3,734,923.85.
Receipts from surplus and salvaged materials disposed of by the General Supply
Committee, fiscal years 1921-1926
Auction sales
Contract sales
Transfers
Total
1921
$20, 186. 32
79, 595. 35
114,492.74
179, 613. 00
63, 112. 81
83, 310. 32
$989, 234. 25
685,097.35
324, 376. 77
150, 002. 96
78, 028. 61
48, 450. 84
$1,009,420.57
1922
$3, 230. 45
1 138, 129. 25
1 130, 390. 40
1 165, 972. 77
I 130, 929. 07
767, 923. 15
1923
576, 998. 76
1924 .
460,006.36
1925
307, 114. 19
1926 . -
262, 690. 23
1 Includes estimated amounts of $75,000 in 1923 and 1924, .$80,000 in 1925, and an actual amount of $50,633.58
in 1926, received from the sale of waste paper from the various departments, the receipts for which do not
pass through the General Supply Committee but are paid direct to the selling services and deposited in the
Treasury by them.
424
REPORT OF THE SECRETARY OF THE TREASURY
Number of specifications mailed by the General Supply Committee, bids received,
contracts entered into, items on which awards and no awards were made, and
samples received and retained, fiscal year ended June SO, 1926
Sets of
specifi-
cations
mailed
Bids re-
ceived
Samples
received
Contracts
No award
items
Class No.'
Number
Award
items
Samples
retained
1..
4,549
807
4,234
443
400
598
305
4,420
562
6,779
262
228
118
14
49
8
595
180
1
1
303
82
151
48
64
71
23
71
70
335
25
44
13
4
6
1
67
38
1
4,966
759
1,327
50
927
397
91
597
482
1,198
28
106
72
173
42
91
31
43
45
19
69
41
190
20
37
11
4
4
1
26
35
1
1
2,576
2,123
1,121
1,098
987
1,426
628
647
1,411
769
270
1,518
63
28
109
73
614
1,051
52
187
1,224
292
422
10
276
107
38
113
174
319
7
47
34
9»
2
. 216
3
245
4
58
6
182
6. --
161
7
86
8 --
47
9
162
10
178
11
43
12 -
217
13
20
14
16
36
16
2
17
260
25
53
22
19
18
17
19
Total -
24, 553
1.418
11. 321
874
16, 751
3,138
1,751
' See titles of classes on preceding page.
Statement of surplus property received and issued by the General Supply Committee,
fiscal year ended June SO, 1926, by departments and establishments
Departments and establishments
Agriculture Department
Alien Property Custodian.-
Board of Tax Appeals
Columbia Institute for Deaf
Commerce Department
District of Columbia
Employees' Compensation Commission
Federal Board for Vocational Education
Federal Power Commission
General Accounting OfTice
Government Printing OfBce _
House of Representatives..
Interior Department
Interstate Commerce Commission
Justice Department
Labor Department
Library of Congress
Marine Corps
National Advisory Committee for Aeronautics
National Training School for Boys
Navy Department
Smithsonian Institution
Pan American Union
Panama Canal
Public Buildings and Public Parks of the National Capital.
Post Office Department..
Reclaimed from salvage
State Department
Treasury Department
United States Botanic Garden _.
United States Efficiency Bureau
United States Railroad .Administration
United States Senate
United States Shipping Board..
United States Tariff Commission
United States Veterans' Bureau..
War Department
War Finance Corporation _.
Total 270,856.
Receipts Issues
(invoice
price) Cost 1 Charge ■
$1,390.00
160. 05
7,256.34
460. 50
6, 289. 78
1, 092. 50
17, 230. 01
2, 969. 90
1, 303. 69
35.00
4, 700. 95
19, 423. 44
"20,"8l6."22"
27, 377. 12
160,407.48
$2, 041. 23
260. 00
60.00
6.60
5, 384. 91
2, 627. 30
24.60
20.00
24.00
6.00
806. 50
551.90
1,712.20
5, 802. 33
2, 726. 36
83.50
957.00
30.00
37.50
25.00
907.40
93.50
266.00
927. 70
18.00
9,489.70
76.50
343. 50
284.00
513. 73
3, 102. 60
.24
53, 134. 89
$1,817.88
195.00
60.00
4.87
4, 921. 25
2,163.60
18.60
20.00
18.00
6.00
638.00
428. 92
1,691.27
4,476.47
2, 512. 76
76.00
717. 75
22.50
37.50
26.00
886.40
86.00
199.50
S98. 57
18.00
9, 338. 95
6, 792. 00
6,491.13
7,098.20
6,609.63
25.00
25.00
10.00
10.00
57.37
313. 87
221. 00
513. 73
2, 930. 08
.24
48,450.84
' Original cost as shown by transfer invoices.
' Net amount of vouchers.
REPORT OF THE SECRETARY OF THE TREASURY 425
Recapitulation of surplus property stores account of the General Supply Committee,
July 1, 1925, to June SO, 1926
Balanceofstoresasof June 30, 1925 $384,116.71 ; Net sales $48,450.84
Transferred to the General Supply ; Discount allowed on foregoing 4,684.05
Committee during fiscal year 1926 .. . 270,856.98 : Net proceeds from auction sales 83,310.32
Difference between invoiced value and
proceeds from auction sales 248, 858. 79
; Balance June 30, 1926 269,669.69
Total - 654,973.69! Total 654,973.69
Net decrease in stores during fiscal year 1928, $114, 447. 02.
TABLES
U438— 26t 2» 427
TABLES
RECEIPTS AND EXPENDITURES — GENERAL TABLES
Table 1. — Comparison of receipts for the fiscal years 1926 and 1925, on the ba.Hi
of warrants issued '
Ordinary receipts:
Customs $579,716,610.62
Internal revenue —
Income tax 1,074, H)4, )41. 33
Miscellaneous taxes 862,252,303.79
Collecticns under enforcement
of national prohibition act ' 415, 336. 63
1926
Miscellaneous-
Interest, premium, and dis-
count—
Interest on bonds of foreign
governments under fund-
ing agreements _
Interest on unfunded obliga-
tions of foreign governments
■ Interest on miscellaneous
obligations
Interest on overpayments
under section 209, transpor-
tation act, 1920, as amended.
Interest on farm loan bonds.,
Interest on public deposits...
Intercston advance payments
to contractors
Dividends on capital stock
of the Panama Railroad
owned by the United States
Gain by exchange
Sales of Government property —
Proceeds of sale of Govern-
ment property (unservice-
able) — -
Sale of cfRee material, etc.,
including auction sales
(General Supply Commit-
tee)
Disposal of properties.
United States Housing
Corporation
Sale of lands, etc., on account
of military post construc-
tion fund
Sale of war supplies...
Sale of buildings, plants, etc.
(war supplies)
Sale of seal and fox skins
Sale of public documents and
charts
Sale of card indexes. Library
of Congress
Miscellaneous Government
property
Public-domain receipts —
Sale of public lands
Keceipts under mineral leas-
ing acts
Forest reserve fund
National park revenues
Other
1925
$548,521,794.63
1,761,659,049.51
827, 372, 109. 63
3 414, 728. 29
139,804,662.99
19,566,925.99
989, 520. 80
17,811.46
3, 648, 139. 22
4, 530, 081. 48
194,161.69
350, 000. 00
24,418.98
4,736,341.60
51,20.5.07
2,239,195.40
6, 717,
13,655,
528,
177,
445,
143,
452,
754,
8, 477,
5,29),
797,
945,
754. 70
956. 39
522. 35
697. 37
224. 95
519. 58
543. 93
252. 79
539. 02
545. 76
446. 35
464. 68
Increase, 1926 Decrease, !92ii
$31,194,815.99
212,445,091.82
34, 880, 194. 16
608. 34
137,898,316.33
22,491,661.61
!, 190, 410. 16
34, 726. 77
4, 443, 624. 56
4, 501, 922. 54
120,582.29
350, 000. 00
519, 654. 75
5, 375, 002. 12
41, 092. 44
'2,512,949.40
16,580,191.88
1,906,340.66
$2, 934, 735. 62
200 889. 36
16,915.31
795, 485. 34
28, 158. 94
73, 579. 40
495, 235. 77
638, 660. 5>
in. 112. 63
5, 717, 754. 70
528, 522. 35
273. 7.54. 00
336,202.48 '
285,894.09 ; 1.59,330.86
139,238.21 ' 4,281.37
919,981.00 ' --
623,533.84 i 130,718.95
9,192,160.14 -
5,101,497.95 190,047.81
699,299.22 , 98,147.13
949,655.34 !
2, 924, 235. 4')
158, .505. n
467,437. i:J
714, 621. 1-J
' For explanation of different bases of statements showing Government receipts and
this report, see p. 296. . ^-.,,n,,-,i
2 Additional collections under national prohibition act, amounting to $o, 230,14/. Ii,
miscellaneous receipts on p. 430. «.- . -r ,.~o o,^,
' Addilional collections under natinnal prohibition a(^t, amounting to .$.>,3.)9,6-2. 89
miscellaneous receipts, on p. 430.
; 4, 190. M
expenditures in
included under
included under
430
REPORT OF THE SECRETARY OF THE TREASURY
Table I.— Comparison of receipts for the fiscal years 1926 and 1925, on the basin
of warrants issued ' — Continued
1926
Ordinary receipts— Continued.
Miscoilaneous— Continued.
Kcdcnil reserve biink tranchise
lux and net earnings derived
by the United States from
Federal intermediate credit
banks
Profits on coinage, bullion de-
l)osits, etc -
Revenue-producing enter-
prises—
Operation of properties,
United Slates Housing Cor-
poration.
Funds deposited for con- I
struction loans under sec-
tion 11, merchant marine |
act 1920
Center Market, Washington,
D. C... -
Earnings from radio service—.
Tolls, profits, etc., Panama
Canal
United Slates telegraph lines.
Laundry and dry-cleaning
operations (War)
Profits from sale of ships'
stores, Navy
Other
Rent of public buildings and
giounds.
Fees, tines, penalties, forfei-
tures, etc.—
Alaska fund
Fees on letters patent
Copyright fees
Fees and commissions (liand
OOice)
Consular and passport fees...
Tax on circulation of national
banks
Customs Service
Collections under enforce-
ment of national prohibi-
tion act (Treasury and
Judicial)
Commissions on telephone
pay stations in Federal
buildings, Washington,
D. C.
Navy fines and forfeitures
Naval hospital fund
Naturalization fees ,
Immigration Service
Judicial.
Forfeitures by contractors
Lifenses under Federal
water power act
Taxes, licenses, fines, etc..
Canal Zone.
Other
Gifts and contributions —
Library of Congre.ss gift fund
and chamber music audi-
torium
Return of incro:ise in salary
by Members of Sixty-ninth
Congress
Advance of funds for river
and harbor improvements.
Contributions for river and
harbor improvements ,
$567. 890. 23
9, 903, 032. 85
545, 040. 38
C, 458, 5G7. 90
2'15, 252. 28
200, 007. 20
23,725,100.42
274, 824. 97
1,412,178.96
316, 051. 27
67, 256. 58
1, 385, 423. 55
186,603.95
3,421,404.17
177, 64.5. 25
439, 004. 80
8, 624, 682. 68
3,277,512.90
1,429.792.67
« 5, 230, 147. 12
8. 326. 68
1,236,257.37
651,471.91
477, 650. 00
« 3, 592, 492. 49
3,261,604.97
31,001.06
244,985.11
216,816.81
1,452,544.63
45, 917. 03
2, 500. 00
944, 000. 00
2, 928, 545. 23
$641, 959. 88
8, 715, 150. 82
539,114.17
2, 938, 353. 88
249, 858. 66
250, 029. 70
22, 346, 539. 14
229,031.28
1,443,840.61
577, 498. 09
20, 128. 09
1, 338, 130. 44
196, 293. 30
2, 962, 653. 29
106,354.00
565, 877. 16
7, 448, 255. 53
4,001,574.78
1,275,826.61
• 5, 369, 072. 89
Increase, 1026
1,419,046.77
816,342.57
993, 783. 50
3,197,26.5.07
2,837,136.93
15. 657. 35
129, 448. 48
202, 538. 89
1,475,763.57
88, 050. 00
3, 125. 00
45, 000. 00
3, 783, 735. 00
$1, 187. 882. 03
6, 926. 21
3.520.214.08
1, 378, 561. 28
46. 793. 69
47,128.49
47,293.11
458, 750. 88
11,291.25
1,176,427.16
153, 906. 06
Decrease, 1926
8, 326. 68
395. 227. 42
424. 469. 04
1.5.443.71
115.536.63
14, 277. 92
899, 000. 00
1 For explanation of different bases of statements showing Government receipts and expenditures in this
report, see p. 296.
* Additional collections from this source, amounting to $415, 336. 63, are included under internal revenue,
on p. 429.
» Additional collections from this source, amounting to $414,728.29, are included under internal revenue,
n p. 429.
'Includes $3,051,430.35 head tax.
REPORT OF THE SECRETARY OP THE TREASURY
431
Table!.- Comparison of receipts for the fiscal years 1926 and 1925, on the basis
of warrants issued ^ — Continued
1926
Ordimry receipts— Continued.
Miscellaneous — Continued.
Ciifos and contri.miions — Con.
For Forest Service coopera-
tive work.
Contributions by \'ew York
Liberty loan associations...
For roads, bridges, and re-
lated works, Alaska
Money received from persons
unknown _ _ .
Donations to the United
States
Pan American Uiiion quotas.
Other _
Repayment of invest nents—
Principal of unfunded loans
made to foreign goveru-
mcn ts . -
Principal of bonds of foreign
governments under funding
agreements
Principal of sale of surplus
war supplies to foreign
governments..
Liquidation of capital stock,
Federal land banks
Sale of farm lo\n bonds
Return of advan.'es made to I
recJamalion fund .|
Principal of loins made by i
United States Housing
Corporation
Assess nents and reimburse-
ments-
Salaries and expenses, na-
tional-bank examiners
Expenses of redeeming
national currency
■ Assessments on Federal re-
serve banks for sal iries and
expenses. Federal Reserve
Board
Assessments on Federal in-
termediate credit and
Federal and joint-stock
land banks for sal iries and
expenses. Federal Farm
Loan Board
Payment by German
Government under terms
of the armistice ..."
Overhead charges on sales of
services of supplies (War
and Navy)
Settlement of claims (War
and Navy)...
Work done by individuals,
corporations, et al
Payment for quarters, sub-
sistence, and laundry serv-
ice. Veterans' Bui'eau
Fumigation and disinfection
of vessels. Public Health
Service
Collections under grain and
cotton standards acts
General railroad^contingent
fund
Reimbursement of appro-
priations made for Indian
tribes
Expense of international
service of ice observation
and patrol...
Reimbursement for Govern-
ment property lost...
Damages to Government
property
Other
$1,920,222,19
143, 308. 99
4, 551. 05
172 00
237, 747. 56
16, 105. 91
204, 917. 88
34,587,243.00
84, 207. 29
332, 605. 00
28, 390. 000. 00
1, 000, OOO. 00
35.3,992.77
2, 492, 387. 10
606, 366. 02
2,083,899.51
461, 374. 92
261, 150. 98
1, 300, 198. 42
103,410.87
1, 166, 210. 88
623,768.17
V?l,061.09
1,218,240.0.)
4,271.89
131, 099. 17
43, 945. 94
11,316.12
783, 970. 39
1925
Increase, 1926
.$2, 104, 219. 23
150, 000. 00
79, 078. 45
5, 695. 11
988. 99
92, 551. 74
13, 907. 50
132, 512. 71
23, 084, 672. 50
30, 513. SO
472. 4-),i, 00
13, 000, 000. 00
1, 000, 000. 00
1, 614, 391. 10
$64, 230. 54
14,5, 195. 82
2, 198. 41
72, 405. 17
11,502,570.50
53, 693. 43
Decrease, 1926
15,390,000.00
2, 436, 831. 34 I 55, 555. S2
721,797.52 L
1,869,374.71
390, 659. 16
14, 725, 1.54. 40
399, 443. 37
451, 940. 40
257, 757. 85
1,134,057.98
633, 703. 75
122, 085. CO
1,137,872.54
I, 137,72
214, .524. 80
70, 715. 76
848, 258, 02
32,152.90
80, 367. 49
3.1.34.17
111,53.^.72 I l!l, .'(10. 45
55,535.39 1...
246, 800. 79
1, 064, 841. 18
$183,997.04
150,000.00
1, 144. 05
816. 99
139,850.00
1,2C0,398.33
11.5, 431. ,50
14,725,1.54.40
138. 292. 39
154, 346. 98
9, 935. 58
1, 02-4. 51
' For explanation of different bases of statements showing receipts and expenditures in
p. 296.
11,589. 45
M
235, 484. 67
280, 870. 70
this report, soe
432
IIKIMMIT (JF THE SKCRETARY OF TUK TREIASURY
T.ipi^K I.— Canrj arif^on of receipt ff for the fiscal years 1926 and 1926, on the hasiit
of loarranls issued ' — Continued
192G
1925
Increase, 1926
Decrease, 1928
ordinary receipts— Coniiuued.
Miscellaneous— Continued.
District of Columbia—
Revenui's of the District of
Colunibiii—
District of Columbia share
(cxi-ludiiit; trust funds)...
Tinited States shai-e-
$24, 4f54. 944. W
93, 977. 94
6, 78:i, 707. 57
322, 190. ;i9
44, 484, 225. 31
6,730,905.38
2, 204, 513. 36
14, 448. 05
S. 128. 86
254. 86
3, 425. 38
2, 782. 29
13, 170. 70
60.00
32.92
1, 159. 1^5
lfi3.50
$19,902,213.46
757, 107. 82
8, 192, 201. 63
201,813.20
38, 644, 010. 63
5, 425, 905. 37
2,030,001.13
n, 140. 99
6, 514. 51
246. 00
■■'., 132. 00
2, 309. 88
8,320.11
$84, 562, 730. 93
J6B3, 129.8*.
Miscellaneous uncla^rsifled re-
ceipts-
Clothing and small stores
i26,'377.'i9"
.■^,840,214.68
i,;;o::,ooo.oi
174,512.23
1, 307. 06
1,614.35
8.86
293. 38
472. 41
4, 850. 59
60.00
1, 408, 494 06-
Other.-
I'rust funds-
Government life insurance
fund-
Premium on converted in-
Intercst
Civil service retirement and
disability fund—
Interest on investments
Deductions from Indian
tribal funds
Deduiitions from Indian
reimbursable appropria-
Deductions from salaries
from revenues of Virgin
Islands.
Deductions from salaries
payable by Porto Rican
Deductions from coopera-
tive employees (.\gricul-
lure)
Deferred deductions due
civil service retirement
and disability fund •..
Deductions from coopera-
tive employees, Geologi-
Deductions from coopera-
tive employees, Bureau
of Mines ..".
126. 66
362. 06
40. 87
82. 80
59, S19. 70
2, 207. 83
1, 727. 29
•
589,857.31
678, 958. 14
481,625.16
11,801,544.76
18, 868, 589. 88
1,422,547.56
53,210.60
93.74
Deductions from salaries of
employees. Insolvent
BanksDivision, OfTice of
Comptroller of the Cur-
797. 49
122. 63
Deductions from salaries of
employees. Federal Re-
serve Issue and Redemp-
tion Division, office of
Comptroller of the Cur-
rency
Deductions from cooiJera-
tivc employees, Secret
82.80-
Service ciedit par men ts....
Foreign service retirement
and disability fund-
54,021. .59
7, 589. 86
946. 09
45-1,019.70
1,691,264.18
333,613.58
21,816,544.57
2,672,448.98
1,645.407.59
479, 521. 08
5,498.11
5, 382. 03
Deferred deductions, etc.,
foreign service retirement
781. 20-
.^oldiers' Home permanent
135,237.61
Pay of the .\rmy deposit fund.
Navy and Marine Corps de-
1, 012. 306. 04
148,011.58
Indian moneys-
Oil and gas leases, etc.,
Osagu Reservation, Okla.
10,014,999.81
16,196,140.90
Proceeds of sale of Indian
222, 860. 03
426, 304. 58
Other
' For explanation of (lifYerent bases of statements showing receipts and c-spenditurcs in this report, see
J: 296.
EEPORT OF THE SECRETARY OF THE TREASURY
433
Table 1.— Comparison of receipts for the fiscal years 1926 and 1925, on the basis
of warrants issued ' — Continued
1926
1925
Increase, 1926
Decroase, 1926
Ordinary receipts— Continued.
Miscellaneous— Continued.
Trust funds— Continued.
Miscellaneous trust funds
$68,384.72
2,382,893.52
$478,859.35
1,877,174.78
$410,474.63
District of Columbia trust
funds
$505, 718. 74
Total miscellaneous receipts, in-
cluding Panama Canal and sales
of public lands
491,964,557.14
469, 685, 407. 64
71, 507, 012. 75
49, 227, 863. 25
Total _
3, 908, 452, 949. 51
8, 637. 17
3, 607, 653, 089. 70
17,562.91
350, 027, 723. 06
49,227,863.26
8, 925. 74
Deduct uncovered moneys, fiscal
years 1920 and prior, and items
counter-entered in fiscal year
subsequent to deposit thereof
Add uncovered moneys, fiscal years
1920, and prior, and items coun-
ter-entered in fiscal year subse-
quent to deposit thereof
3,908,444,312.34
13,262.97
36. 737. 707. 02
3, 607, 635, 526. 79
8, 637. 17
143. 926. 630. 98
350,027,723.06
4, 625. 80
49,218,937.51
Add receipts credited direct to ap-
propriations: "
Proceeds of railroad securities
owned by the Govornihent
107,188,923.96
Receipts from miscellaneous
11,988,875.44
Total ordinary receipts
3, 962, 971, 564. 97
3, 781, 335, 953. 02
350,032,348.86
168,396,736.91
Public debt receipts:
Certificates of indebtedness
(varous series)
2,317,315,000.00
161, 700, 000. 00
11,676,687.37
544, 160. 00
22, 223, 475. 00
1,876,578,500.00
100, 000, 000. 00
23,246,670.38
102,120.00
105,447,372.50
1, 047, 088, 500. 00
440, 736, 500. 00
61, 700, 000. 00
Treasury notes and certificates
of indebtedness (adjusted
service series)
Treasury (war) savings securi-
ties
11,569,983.01
442, 040. 00
Bank-note fund...
83, 223, 897. 50
Treasury bonds of 1944-1954
1,047,088,500.00
Treasury bonds of 1946-1956
494, 898, 100. 00
494, 898, 100. 00
Total public debt receipts
3,008,357,422.37
3, 152, 463, 162. 88
997, 776, 640. 00
1,141,882,380.51
Total receipts exclusive of
postal
6,971,328,987.34
659,819,801.08
6,933,799,115.90
699,591,477.59
1,347,808,988.86
60, 228, 323. 49
1,310,279,117.42
Postal revenues.. ..
Total receipts, including
postal
7,631,148,788.42
7,533,390,593.49
1,408,037,312.35
1, 310, 279, 117. 42
SUMMARY OF RECEIPTS BY ORGANIZATION UNITS
Ordinary leceipts:
Legislative.. I $769,838.60
Executive Office ...| 34.14
Independent offices ; 67, 040, 634. 45
Department of Agriculture 8, 180, 320. 83
Department of Commerce 4, 237, 247. 28
Department of the Interior > 41, 801, 315. 13
Department of Justice 9, 203, 028. 75
Department of Labor 4, 826, 202. 43
Navy Department 14, 000, 222. 55
Department of State I 8,930,945.60
Treasury Department |io3,fi67,978,452.40
War Department ! 30, 600, 373. 63
Panama Canal ...I 23,941,917.87
$625, 696. 64
68.84
57, 499, 477. 74
8, 109, 750. 09
1, 718, 328. 06
9 50, 224, 465. 95
8, 496, 331. 93
5, 212, 024. 75
16, 477, 324. 85
7, 874, 188. 28
ii3,365,433,4(i8. 47
40,891,737.60
22, 553, 732. 44
$144,141.96
9, 541, 156. 71
70, 570. 74
2, 518, 921. 22
707, 296. 82
1, 056, 757. 32
302, 544, 983. 93
$34.70
8, 423, 150. 82
385, 822. 32
2, 477, 102. 30
10, 291, 363. 97
1, 388, 185. 43
' For explanation of different bases of statements showing receipts and expenditures in this report, see
p. 296.
' Items of this character represent cash receipts which are credited against the expenditures shown on a
warrant basis. It is necessary, therefore, to add back the amounts to receipts by warrants in order to
adjust to an actual cash basis.
9 Includes $754,252.79 sales of public lands.
« Includes $623,533.81 sales of public lands.
'« Includes $579,716,610.62 customs receipts and $2,836,771,781.75 internal revenue receipts.
" Includes .$548,521,794.63 customs receipts and .$2,589,445,887.43 internal revenue receipts.
434
BEPOKT OF THE SECRETARY OF THE TREASURY
Table 1. — Comparison of receipts for the fiscal years 1926 and 1925, on the basis
of warrants issued ' — Continued
SUMMARY OF RECEIPTS UY ORGANIZATION UNITS— Continued
•
1926
1925 ' Increase, 1926
Decrease, 1026
Ordinary receipts— Continued.
District of Columbia-
District of Columbia reve-
$26,847,837.91
$21,779,388.24 $5,068,449.67
United States revenues
from District of Colum-
bia sources 93. 977. 94
757, 107. 82
$303, 129. 88
'
Deduct uncovered moneys, fiscal
years 1920 and prior, and items
counter-entered in fiscal year sub-
sequent to deposit thereof
3,908,452,949.51
8, C37. 17
3, 607, 653, 089. 70
17, 562. 91
323, 040, 463. 80
22,240,603.99
8, 925. 74
Add uncovered moneys, fiscal years
1920 and prior, and items counter-
entered iti fiscal year subsequent
3,908,444,312.34
13, 262. 97
3,607,035,526.79 323,040,463.80
8,C37. 17 j 4.62.5.80
22, 231, 678. 25
Add receipts credited direct to ap-
propriations:'
Proceeds of railroad securities
36, 737, 707. 02
17, 776, 282. 64
143, 926, C30. 98
29, 705, 158. 08
107, 188, 923. 96
Receipts from miscellaneous
11,988,875.44
Total ordinary receipts
Public debt receipts
3, 962, 971, 564. 97
3, 008, 357, 422. 37
3,781,335,953.02
3, 162, 463, 102. 88
323, 045, 089. 60
141,409,477.65
144, 105, 740. 61
Total receipts into the general
fund
6,971,328,987.34
659, 819, 801. 08
6,933,799,115.90 323,045,089.00
599,591,477.59 60.228.323.49
285, 515, 218. 16
Postal revenues under control of
the Postmaster General
Total receipts, including
postal revenues..
7, 631, 148, 788. 42
7, 533, 390, 593. 49
383, 273, 413. 09
285, 515, 218. 16
' For explanation of diSerent bases of statements showi ng receipts and expenditures in this report
see p. 296.
' Items of this character represent cash receipts which are credited against the expenditures shown on a
warrant ba.sis. It is necessary, therefore, to add back the amounts to receipts by warrants in order to
adjust to an actual cash basis.
Table 2. — Comparison of expenditures for the fiscal years 1926 and 1925, on the
basis of warranty issued *
1926
1925
Increase, 1926
Decrease, 1926
LEGISLATIVE ESTABLISHMENT
United States Senate
$2, 907, 127. 05
7, 552. 032. 08
20, 673. 73
1,164. 193.45
$2, 742, 807. 23
6,815,913.63
84, 201. 78
1, 304, 541. 27
102, 104. 61
1, 267, 285. 54
1, 826, 388. 97
$164, 319. 82
736,118.45
Legislative, miscellaneous
$63, 528. 05
Architect of tiio Capitol
140, 347. 82
Botanic Garden
Library of Congress
110,883.56
1, 363, 252. 97
8, 778. 95
95,967.43
973,564.21
Government Printing Office
2, 799, 953. 18
Total Legislative establish-
ment
15,918,116.02
14, 143, 243. 03
1, 978, 748. 86
203,875.87
EXECUTIVE orriCE
Salaries and expenses, Executive
Office
473, 289. 96
429, 852. 97
43, 436. 99
' For explanation of different bases of statements showing Government receipts and expenditures in this
report, see p 29.; This table includes unexpended balances to the credit of disbursing officers at the end of
the year, but not expenditures under such unexpended balances at the beginning of the year.
REPORT OF THE SECRETARY OF THE TREASURY
435
Table 2. — Comparison of expenditures for the fiscal years 1926 and 1926, on the
basis of warrants issued ' — Continued
1926
1925
Increase, 1926
Decrease, 1926
INDEPENDENT BUREAUS AND
OFFICES
Alaska relief funds
Alien Property Custodian
American Battle Monuments
Commission -.
Arlington Memorial Amphitheater
Commission
Arlington Memorial Bridge Com-
mission ,
Board of Mediation and Concilia-
tion
Board of Tax Appeals
Bureau of Efficiency ,
Civil Service Commission ..,
Commission of Fine Arts
Employees' Compensation Com-
mission.
Federal Board for Vocational Edu-
cation
Federal Oil Conservation Board. ..
Federal Power Commission
Federal Reserve Board
Federal Trade Commission..
General Accounting Office
Housing Corporation
Interstate Corumorce Commission..
Interstate Governmental Commis-
sion, Colorado River
Miscellaneous items
National Advisory Committee for
Aeronautics
Office of Public Buildings and Pub-
lic Parks of the National Capital-.
Perry's Victory Memorial Com-
mission..
Railroads ,
Railroad Labor Board...
Smithsonian Institution and Na-
tional Museum
United States Coal Commission
United States Food and Fuel Ad-
ministrations
United States Shipping Board
United States TarilY Commission...
United States Veterans' Bureau:
Salaries and expenses
Administrative expenses, World
War adjusted compensation
act.
Adjusted service certificate
fund
Adjusted service and depend-
ent pay
Medical and hospital services. ..
Military and naval compensa-
tion
Military and naval insurance
(appropriated fund)
Military and naval family
allowance
Miscellaneous items
Special funds -
Military and naval insur-
ance
Miscellaneous special funds.
Government life insurance fund
(trust fund)—
Investments
Expenses
Vocational rehabilitation
Increase of compensation
War Finance Corporation
$23,211,01
165, 633, 42
48, 437. 61
481, 360, 31
Total independent bureaus „„,„„,„,,
and offices 559.957,346.17
431, 000, 00
151,373.20
976, 132. 89
7, 700. 72
2,475,911.87
7, 399, 017. 07
5, 000. 00
37, 900. 60
2, 010, 909. 76
984, 225. 17
3, 630, 665. 09
563, 730. 46
6,979,118.60
»1, 47
899, 164. 34
561, 125. 88
2, 486, 817. 67
49, 185. 00
' 32, 265, 805. 00
272, 426. 87
832, 884. 99
5.75
» 1, 006. 26
23, 947, 694. 17
602, 218. 95
41, 796, 993. 84
2 12,393.75
120, 000, 000. 00
5, 799, 848. 68
35, 864, 266. 20
143, 955, 728. 11
119,961,857.36
2 123, 642. 99
.381, 491. 45
809, 987. 79
2 292, 576. 64
37, 846, 769. 40
13, 356, 056. 20
17, 003, 245. 20
2 146, 323. 35
$15, 921. 85
200, 665. 66
25, 000. 00
>3.15
10, 000. 00
6.42
144, 537. 00
981, 238. 86
5, 091. 49
2, 601, 628. 47
6, 724, 912. 16
33, 034. 42
1, 676, 733. 21
991, 148. 19
3, 669. 249. 09
682, 075. 92
5, 852, 269. 22
178, 154. 81
382, 805. 96
2, 415, 433. 00
.50, 000. 00
> 134, 571, 732. 53
312, 647. 68
792, 042. 25
6.75
6, 608. 74
41, 385, 691. 21
655, 677. 64
44, 840, 72^ 12
913, 418. 22
100, 000, 000. 00
3, 100, 000. 00
37, 185, 797. 05
140, 848, 427. 86
87, 999, 942. 50
2 110.64
119,707.62
3, 742, 848. 02
672. 25
32, 533. 709. 44
11.456,019.31
68, 40.5, 109. 72
2 151,87.5.22
3 3 499,000,000.00
2 32, 784, 770. 43
$7, 289. 16
23, 437. 61
471, 360. 31
431, 000. 00
6, 836. 20
2, 609. 23
674, 104. 91
5, 000. 00
4, 866 18
334, 176. 55
1, 126, 849. 38
>1.47
721, 009. 53
178, 319. 92
71, 384. 67
40, 842. 74
20, 000, 000. 00
2, 699, 848. 68
3, 107, 300. 25
31,961,914.80
2 123, 532. 35
261, 783. 83
$35, 032. 24
'3.15
5.42
5, 105. 97
125, 716. 60
6, 923. 02
38, 584. 00
118, 345. 46
815.00
2 102, 305, 927. 53
40, 220. 81
1.00
7, 613. 00
17, 437, 997. 04
53, 458. 69
3, 043, 72a 28
925,811.97
1, 321, 530. 85
2 293, 248. 89
5,313,059.96
1, 900, 036. 89
2, 932, 860. 23
51, 401, 864. 52
2 5, 551. 87
2 499, 000, 000. 00
68, 926. 248. 15 » 523, 815. 868. 46
1 ForexDlanation of different bases of statements showing Government receipts and expenditures in this
renorf see P 296 This table includes unexpended balances to the credit of disbursmg officers at the end of
the ye'rr l^t not expendiiures under such unexpended balances at the begmnmg of the year.
3 S^^eXra^Jo^int'rretireinent of capital stock, carried to surplus fund.
11438— 26t 30
436
REPORT OF THE SECRETARY OF THE TREASURY
Table 2. — Comparison of expenditures for the fiscal years 1926 and 1925, on the
basis of warrants issued ' — Continued
DISTRICT OF COLUMBIA
Salaries and expenses
Special funds:
Gasoline tax, road and street
improvements
Wnter department
Wnsliintiton Aqueduct
Miscellaneous special funds
Trust funds:
Miscellaneous trust-fund de-
posits
Washinpton redemption fund..
Policemen and firemen's relief
fund
Teachers' retirement fund —
Investments
Current expenses
Other trust funds
Total District of Columbia...
DEPARTMENT OF AGRICULTURE
Salaries '
Office of the Secretary
Offices of Editorial and Distribu-
tion Work
Office of Experiment Stations
Extension Service
States Relations Service...'.. 11111!
Bureau of Animal Industry
Meat Inspection, Bureau of Ani-
mal Industry
Bureau of Plant Industry""!^"!!
Forest Service
Bureau of Chemistry !!."""
Bureau of Soils I.'
Bureau of ICntomology ".!!!II!
Bureau of Biological Survey ' "I
Bureau of Public Roads
Bureau of Apricultural Economics
Federal Horticultural Board
Weather Bureau
Lands for protection of watersheds
and streams
Road construction '.V...
Increase of compensation
Enforcement of insecticide act, gen-
eral expenses
Cooperative agricultural extension
work
Division of Accounts and Disburse-
ments
Library .'.""'..
Bureau of Home Economics
Bureau of Dairying
Miscellaneous
Special funds:
Cooperative work, Forest Serv-
ice
Payments to States and Ter-
ritories from national forest
funds
Other special funds.
1926
Total Department of Agricul-
ture...
DEPARTMENT OF COMMERCE
Office of the Secretary
Bureau of Foreign and Domestic
Commerce
Bureau of the Census
Steamboat Inspection Service
$30, 166, 180. 26
953, 184. 34
1,071,294.11
191, 530. 98
9, 628. 26
999, 673. 95
435, 760. 92
150. 00
295, 741. 13
41, 244. 56
84, 045. 62
34,248,440.13
« 1, 082. 33
1, 717, 150. 02
340,413.37
2, 735, 242. 32
1, 528, 437. 53
2 17. 74
7, 245, 554. 48
646. 98
254. 03
738. 98
529. 54
299. 11
266. 17
965. 12
948. 75
227. 47
024. 96
450. 32
1025
$29,935,861.11
761, 253. 03
1, 078, 976. 93
198, 501. 61
60. 56
1,084,080.43 !.
348,981.27 I
36, 874. 67
255, 766. 30
27, 000. 00
69, 713. 22
Increase, 1926
$230,
191,
325. 15
931. 31
9. 567. 70
86, 779. 65
33, 797, 0C9. 13
974. 83
244. 56
332. 40
587, 155. 60
4, 781,
3, 722,
8, 991,
1, 478,
392,
2, 540,
1, 015,
498,
4, 486,
687.
2, 369,
750, 164. 63
97, 651, 148. 97
2 2, 337. 20
190, 270. 57
5, 879, 083. 90
7.5, 161. 16
69, 989. 63
115,502.99
521,296.00
1, 823, 225. 39
2, 119.787.29
1, 242, 953. 93
781, 936. 40
155, 754, 232. 74
1, 013, 829. 00
2,837,1)4.68
2, 350, 034. GO
1,009,500.51
76, 291. 76
1, 502, 394. 48
328, 738. 97
1,765, 516. .39
1, 494, 588. 68
2 76. 80
7, 941, 528. 48
4, 440,
3, 475,
9, 480,
1, 351,
351,
1, 944,
857,
409,
4, 095,
672,
2, 148,
616. 53
431. 66
938.22
375. 58
101.44
595. 59
998. 52
212. 77
606. 09
356. 65
956. 32
214, 755. 54
11.674.40
9r9, 725. 93
33, 848. 85
341,
246,
030. 45
822. 37
127,
41,
601,
157,
89,
390,
14,
220,
1.53. 96
197. 67
670. 58
966. 60
735. 98
621. 38
668. 31
494. 00
520, 798. 08
104, 944. 004. 90
75, 781. 66
149, 156. 38 i
5, 859, 605. 00
66, 675. 04
64, 275. 57
101,284.60
439,821.61
849, .545. 96
2.431.378.22
1, 301. 848. 22
586, 457. 73
229, 366. 55
41, 114. 19
19, 478. 90
8,486.12
5,714.06
14,218.39
81, 474. 39
973, 679. 43
195, 478. 67
159, 727, 804. 30
5, 030, 376. 72
I
I
1,0)0.000.73 '
2,677,502.60 |
6 4, 845, 186. 04 1.
1,024,357.73 I.
3, 828. 27
159, 612. 08
Decrease, 1926
$7, 682. 82
6,970.63
84, 406. 4&
36, 724. 67
135, 784. 60
77, 374. 09
« 59. 06
695,974.00
489, 199. 24
7, 292, 855. 93
78,118.86
3!l,590.93
58. 804. 29
9, 003, 948. 28
2,495,151.44
14, 857. 22
> For explanation of difTerent bases of statements showing Government receipts and expenditures in this
report, see p. 296. 'J'his table includes unexpended balances to the credit of disbursing officers at the end of
the ye;ir, but not expenditures under such unexpended balances at the beginning of the year.
• Excess of repayments, deduct.
< Covers salary items for 1924 and prior years only. For 1925 and 1926, salaries are carried in separate
accounts under the respective bureaus and ofBces.
•Includes $3,046,168.16 for census of agriculture.
REPORT OF THE SECRETARY OF THE TREASURY
437
Table 2.— Comparison of expenditures for the fiscal years 1926 and 1925, on the
basis of warrants issued ' — Continued
1926
DKPAETMENT OF COMMERCE— COntd,
Bureau of Navigation
Bureau of Standards
Bureau of Lighthouses.
Coast and Geodetic Survey
Bureau of Fisheries
Patent Office
Bureau of Minos
Increase of compensation. _ . .
Miscellaneous
Total Department of Com-
merce
DEPARTMENT OF THE INTERIOR
Interior civil:
Office of the Secretary
General Land Office
Puhlic Land Service
Bureau of Pensions —
Salaries and expenses
Armj' pensions
Navy pensions
Fees of examining; surseons.
Civil service retirement
and disability fund —
Investments.
Current expenses
Patent O lii ce.
Bureau of Education
C'oUegcs for agriculture and
mechnnic; arts
Office of Architect, Capitol
Reclamation Service —
General expenses
Reclamation fund
Geological Survey
Bureau of IM ine s'" —
General expenses
Adjustment and payment
of mineral claims, act of
Mnr. 2. ITilP
National parks
Beneficiaries
Territorial governments.
Alaska Railroad >•
Increase of com.pensation
Miscellaneous
$516,409.17
1,750,084.61
9,879,081.80
2,17.3,424.82
1,550,503.34
3, 702, 562. 41
2, 286. 644. 32
2 606. 18
10. 476. 30
29, 079, 059. 44
909,197.58
716, 2?6. 06
9, 219, 534. 65
1,527,505,78
198, 690, 240. 49
7,983,561.51
515, 819. 59
10. 872, 854. 96
10, 217, 888. 06
870, 800. 90
2, 550, 000. 00
2 24, 009. 26
3, 385, 387. 61
1, 856, 053. 34
2 5, 971. 04
Total Interior civil
Bureau of Indian Affairs:
Current > aad contingent ex-
penses
Fulfilling treaty stipulations..
Miscellaneous supports
Interest on Indian trust funds.
Support of Indian schools
Miscellaneous expense..
Trust funds
Total Bureau of Indian
Affairs
Total Department of the In-
terior
3, 47C., 539. 29
1, 850,362. 78
217, 366. 66
1, 463, 658. 04
43. 63
2, 782. 04
256, 265, 892. 67
1, 5.'^,6, 096. 21
601,602.48
840, 430. 25
135, 0i8. 90
5, 480, 283. 82
6, 072, 699. OS
33, 755, 979. 12
1925
$483, 448. 41
1,906,713.57
9, 414, 292. 09
2, 262, 905. 74
1,365,076.17
7 940,715.78
949. 97
12. 779. 43
25, 943, 928. 26
1,5.59.542.64
789, 600. 42
6, 820, 379. 43
1,609,555. ,52
209, 833, 4.^19. 21
7, 943, 335. 00
544, 630. 21
0, 745, 622. 04
8, 881,552. .31
» 2, 025, 822. 56
792, 883. 05
2, 550. 000. CO
9 8, 003. 20
70, 008. 71
.3, 829, 284. 36
1,665,270.02
2, 002, 543. 87
751.422.62
2, 579, 820. 30
1,660,409.90
276, 244. 16
2, 100, 697. 67
69,611.30
21,121.56
Increase, 1926
$32, 960. 76
464, 789. 77
185.427. 17
2,761,846.63
2, 286, 644. 32
5,89.5,109.00
Decrease, 1026
$156, 6;:8. 96
89, 480. 92
1, 556. 15
2, 303. 13
2, 759, 977. 82
2, 399, 155. 22
650, 345. 06
73, 374. 36
82, 049. 74
143, 218. 72;
28, 810. 62
1,127,232.92 L
1,336. .3,3.5. 75 .
" '2,02.5." S-i-i.'.W:
77.917.25 •.
190,783.32 ....
S. 003. 20
91.017.97
143. 896. 75
896. 768. 99
159, 952. 88
268, 130, 820. 72
6. 218. 372. 84
2, 008. 514. 9r
751 422. 62
58, 877. 50
637. 039. 63
69, 567. 7S
18, 339. 52
18, 093, 300. Sg'
48,442,119.86
304, 708, 012. 53
1,687,164. .53 I
860.562.02 I
7.'i9,762.91 | 80,667.34
796,104.04 I
5, 557, 44.5. 58
3, 827, 063. 18 i 2, 24.5, 635. 90
25,267,354.56 8.488,624.56
131,068. 3i-
258, 959. .54
661,075.14
77,161.76
38,755,456.82 1 10,814,927.80! 1,128,264.76
306,886,277.54 17,04.3,300.64 19,221, .565. 65
' For explanation of different b ises of statements showing Government receipts and ,-xpenditures in this
report, see p. 2'j6. This table includes unexpended balances to the credit of disbursing officer? at the endoC
the year, but not expenditures under su-jh unexpended balances at the bc:;inning of the year.
' Excess of repaynie:its, deduct.
s Tj'ider Department of the interior in 1925.
7 Expenditures of Patent Office prior to transfer to Department of Commerce un<ler p:xecutivo order ot
Mar. 17, 1925, amounting to $2,025,822.56 for 1925, are included under Department of the Interior, as above.
8 Patent Oluce was transferred to Department of Commerce by Executive order dated Mar. 17, 1925.
Expenditures thereunder subsequent to Apr. 1, 1925, amounting to .$940,715.78 for 1925, are shown under
Department of Commerce, above.
» Covers only expenditures under 1922 and prior ac-counts. For expenditures under later accounts
see leeislative establishment, p. 434. . , .-.-.r
" Bureau of .Mines was transferred to Department of Clommerce by Executive order dated June 4, I9.i.) .
" Formerly Alaskan Engineering Commission.
438
KKPORT OK THE SECRMTAKY OF THE TREASURY
Tablk 2. — Comparison oj expenditures for the fiscal years 1926 ana 1925, on the
basis of ^varrants issued ' — Contiimed
1926
1925
Increase, 1926
Decrease, 1926
1
DiTARTMENT OF JUSTICE
J'epartment of .lustice proper:
$2, 113, 7')). 12
2,231,930.01
' 343. 38
$1.941,68.3.73
2, 329, 139. 08
« 19, 048. 68
11,841,487.35
3,111,136.36
4, 190, 130. 58
2, 579. 48
$172,069.39
Detection and prosecution of ,
crimes i
$97. 209. 07
Increase of componsation ;
Judicial: '
Courts, salaries, and expenses..
» 18,705.30
12, 093, fi43. 88
2, 924, 493. 54
4,C41,0S2.21
746. 9fi
252, 150. 53
186,"642.'82
Penal institutions j
450, 951. 03
1,832.52
Total Department of Justice.
24, 005, 306. 34
23,397,107.90
875, 177. 55
266, 979. H
DEPARTMENT OF LABOR
Office of tlie Secretary
632,19.5.25
272. 003. 96
5,371,270.03
729,651.90
1,298,796.47
101,417.31
202, 570. 33
2 9. 21
5, 301. 85
667. 735. ,58
271,422.15
5,468,095.90
7(:0, 167. 94
1,24,3,107.81
108.757.52
221,922.78
M, 931. 22
12, 129. 63
35, 540. 33
581.81
Bureau of immigration
96, 825. 87
Burenu of Naturalization
30. 516. 04
55, 688. 66
Women's Bureau
7. 340. 21
19, 352. 45
» 4, 922. 01
Miscellaneous
6, 827. 78
Total Department of Labor..
8,613,197.89
8,748,408.09
56, 270. 47 i 191,480.67
NAVY DEPARTMENT
OlBcf of the Secretary:
1,751,690.29
1,401,923.82
42, 2S9. 05
96,951.81
244,422.47
3,434.882.11
2, 985, 952. 35
3, 770, 794. 60
17,987,324.67
17,017,805.16
11,115,514.38
119,827.268.60
19, 084, 620. 74
14,261,227.59
60, 142. r:9
9, 308. 156. 20
3 3,040,150.19
6,089,670.43
1, 059, 769. 86
4,151,264.54
10, 167, 181. 08
15, 708, 181. 40
1,810,294.01
15,178,801.22
8,270,583.23
388,331.80
31,265,245.86
3 2, 983, 950. 22
1, 155, 423. 96
2,414,161.37
1,432,528.61
44, 373. 08
96, 287. 94
252, 720. 72
4. 1.52, 917. 43
3, 376, 894. 91
4, 191, 564. 29
17, 737, 729. 46
15, 989, 078. 06
10, 731, 728. 43
113,780,001.51
21,9.57,670.18
14, 1 "4, 996. 07
687, 213. 05
8, 851. 945. 69
662,471.08
Other items
30, f 04. 82
2, 084. 93
OfTicoof Judi;e Advocate General
663. 87
Office cf Chief of Naval Operations..
Bureau of Navigation:
Organizing the Naval Reserve
Force
8, 298. 25
718,0.35.32
Transportation
390,942.56
420, 769. 69
Other items
Bureau of Engineering
249, .595. 21
1,028,727.10
383, 785. 95
6,047,267.39
Bureau of Construction and Repair.
Bureau of Ordnance.
Bure:\u of Supplies and Accounts:
Pav of the Navv
Pro visions ."
2,873,049.44
Fuel and transportation .
Freight
106, 231. 52
027,070.46
Maintenance
4:6,210.51
' 5, 240, 445. 35
'2,200,295.16
Clothing and small stores spe-
ciol fund..
8.225,472.91
« 3, 596, e09. 80
2, 987, 524. 70
10,092,103.21
13, 178, 692. 45
2,024,160.75
16,047,568.86
6,371,617.85
767, 192. 68
38.181,351.93
16, 624, 251. 10
S.'-0, 373. 63
2, 13,% 802. 48
Other items
4, 656, 369. 66
1, 163, 739. 84
7.5,077.87
3,529,488.95
Bureau of Medicine ^nd Surgery...
Bureau of Ya'-ds and Docks
Bureau cf Aeronautics
Naval .'.cadcmy
213, 866. 74
Marine Corps:
Pav.. . .
869,077.64
1, 898, 965. 38
Other items
378, 8f 0. 88
6. 916, 106. 07
19, 608, 201. 32
305, 050. 33
Total Navy Department
311,611,693.71
326, 3(>5, 466. 65 18, 901, 173. 58 | 33, 6,'-4, 946. .52
POST OFFICE DEPARTMENT
Deficiency in postal revenues
39,506,490.29
24, 565. 34
23, 216, 783. 58
96,941.83
16, 289, 706. 71
72,l76.'49
Total Post Office Department.
39.531,055.63
23,313,725.41 1 16,289.706.71 | 72.376.49
: — : 1 — '. _—
DEPARTMENT OF STATE
Department of State proper .-...
Foreign intercourse
1,676,2,51.09
14,308.474.24
1,460,376.32
14,425,529.12
21.5,874.77
117,054.88
Total Department of State...
15,984,725.33
15,885,905.44
215,874.77 \ 117, 054. 8&
1 For explanation of difTerent bases of statements showing Government i-ereipts and expenditures in this
report, see p. 2'Jfi. T his table includes unexpended balances to the credit of disbursing ofhcers at the end of
the year, but not expenditures under such unexpended balances at the beginning of the year.
* Excess of repayments, deduct.
REPORT OF THE SECRETARY OF THE TREASURY
439
Table 2. -Comparison of expenditures for the fiscal years 1926 and 1025, on the
basis of warrants issued^ — Continued
Increase, 1926 Decrease, 192fi
TBEASURY DEPARTMENT
Office of the Secretary
Oflice of the Chief Clerk and Super-
intendent
General Supply Committee _.
Office of (Commissioner of Accounts
and Deposits
Division of Bookkeeping and War-
rants
Division of Deposits.
Public Debt Service.
World War Foreign Debt Commis-
sion.
Division of Appointments
Division of Printing
Division of M:iil and Files
Office of Disbursing Clerk
Customs Service;
Administrative salaries
Collecting the revenue from
customs
Miscellaneous exjienses
Refunds, debentures, draw-
backs, etc_._
Bureau of the Budget
Federal Farm I.oan Bureau..
Office of Treasurer of the United
States.
Office of Comptroller of the Cur-
rency
Internal Revenue Service:
AdmiiMstrative salaries .
Collcctin;.' the revenue
Enforcement of narcotic and
prohibition acts .
MiscoUiUieous expenses.
Refunds, debentures, draw-
backs, etc .
Special funds
Coast Ouard .._-
Bureau of Engraving and Printing:
Administrative salaries
Compensation of employees
Materials and miscellaneous
expenses 1
New machinery and equipment.
Plate printing
Secret Service
Public Ikaith Service:
Administrative salaries and
m isccUaneous items
Hospital construction ^_
Medical and hospital services. .
Pay of conmiissioned oflicers,
pharmacists, acting assist-
ant surgeons, and other em-
ployees
Pay of personnel and mainte-
nance of iiospitals
Mints and assay officer
Public buildings:
Office of Supervising Architect.
Public buildings, constructioia
and rent
Hospitals
Quarantine stations
Repairs, equipment, and gen-
eral expenses ..
Operating expenses ;.-
American Printing House for thp
Blind.. i-
Increase of compensation L.
M iscellaneous
$171,302.02
941,
112,
180. 96
138. 56
1-0, 026. 50
H .'•-76,
4, 913,
3,
58,
88?,
19,
49,
383. 29
092.01
576. 96
971.28
735. 78
157.17
238. 58
877. 45
61, 639. 24
16,431,
246.
2a 2!":0,
IM,
4,'"'2,
1,446,
2, 479,
791,
33, 359,
857. 46
575. 80
OOfi. 61
244. 10
900. 54
893. 61
008. 07
912.81
971. 52
11,003,457.13
Total Treasury Department.
1 73. 030, 381. 08
2,310,119. 18
24,958,161.16
441,294.81
3, 456, 509. 22
1,450,810.29
bW, 789. 38
1,896,003.91
457,906.24
1,544,314.15
» 12, 383. 66
5,687.41
2, 306, 573. 56
5,129,862.54
1,603,368.03
265, 085. 00
1.825,325.15
i.» 1f;5,480.75
150, 194. 71
2, 586, 550. 35
9,221,97r. 11
50, 000. 00
2 2,130.35
'91,816.60
$171,330.78
905,
141,
17, 726. 00
12 718,
17,
5,310,
1.
02,
914,
19,
51,
53, 766. 74
10,302,
289,
22, 429,
169,
383,
1,654,
2,371,
497.
966.
264.
378.
652.
984.
795, 775.
35, 075, 308.
10,388,
4,
160, 174,
138,
26, 814,
407.
3, 246,
1,345,488.51
1,562,
461,
1,595,673.30
2 37, 177. 21
716. 69
2,344,817. 12
, 266,
,557,
.489,
' 583,
97,
, 054,
, 970,
,50,
'■ 106,
!146,
46
145.
941.
257.
496.
912.
000.
15,5.
047.
335, 459, 870. 87
317, 984. 148. 35
$36,011.31
2, 300. 50
2, 059. 04
7, 872. 50
129, 359. 71
5, 860. 742. ,50
"""69," 247." 78'
108,09,3.90
61.5.096.93
12,8.5,5,838.99
2,171,890.46
34, 194. 42
209, 602. 28
105,321.78
157,789.38
333, 448. 31
21, 7.56. 44
l5,'934,'57"
3, 448. 54
52, 937. 20
532, 053. 86
251,064.85
23,611,036.57
$2.8. 76
"29,'.m7i
141, 880: 64
1,914.47
397. 2,57. 64
3,658.19
32, 729. 41
220. 72
1,41.5.08
43, 390. 95
"".5,'i34.'30
208, 091. 00
3, 862. 46
2, 31.5, .336. 55
1, 855, 922. 05
51,3.59.15
2 24, 793. 55
136, 604. 23
663, 820. 24
418, 460. 66
■ 104, 025. 2.t
-'54,231.39
6,135,314.05
' For explanation of differ.mt bases of statements showing Qovernment receipts and expenditures in this
report, see p. 296. This table inulu'les unexpended balances ta the credit of disbursing officers at the end
of the year, but not expendituras under such unexpended balances at the beginning of the year.
2 Excess of repavments, deduct.
•2 Includes $11,499.57 for 1920 :md $65,000 for 1925, charges on silver dollar bullion ,<old.
'« Includes $37,S3:<.29 for 192() and $317,082.69 for 1925 under hospital facilities, etc., for war patients.
440
REPORT OF THE SECRETARY OF THE TREASURY
Table 2. — Comparison of expenditures for the fiscal years 1926 and 1025, on the
basis of ivarrants issued^ — Continued
1926
WAR PEPARTMENT
Military activities:
ORice of the Secretary of War.
General Staf! Corps
Adjutniit General's Department
Ofiice of Inspector General
Office of Judge Advocate Gen
eral
Army account of advances
Finance Department—
Pav of the Army
Mileage of the Army
Increase of compensation ".
Finance service
'hi iscellaucous items..
Quartermaster Corps-
Army transportation
Barracks and quarters
Clothinf,' and equipage
Construction and repair of
hospitals
General appropriations
Incideiital expenses of the
Army
Inland and port storage
and shipping facilities
llegular supplies of the
Army
Roads, walks, wharves,
and drainage
Subsistence of the Army . . .
Supplies, services, and
transportation
Water and sewers at mili-
tary posts
Miscellaneous items
Signal Corps.
Air Service.
Medical Department
Bureau oi Insular Affairs
Corps of Engineers
Fortitications, etc., Panama
Canal ---
Ordnance Department —
Ordnance service .--
Ordnance stores and sup-
plies
Ammunition... .-
Automatic rifles and manu-
facture of arms..
Nitrate plants
Armament of fortifications.
Arsenals
Field artillery armament...
Miscellaneous items
Chemical Warfare Service
National Board for Promotion
of liifle Practice
Chief of Infantry
Chief of Cavalry
Chief of Field Artillery
Chief of Coast Artillery..
Militia Bureau
Military Academy
Organized Ueserves
Total military activities
Nonmilitary activities:
National cemeteries —
Disposition of remains of
oflicers, soldiers, and civil
employees
Miscellaneous items
Medical Department-
Medical and hospital serv-
ices
Miscellaneous items ,
$1,505,268.10
273,575.74
1, 557, 459. 90
24, 12C. 73
68, 402. 47
4, 902, 287. 79
122,784.885.01
672, 102 94
25, 978. 40
1, 256, 857. 02
1,870,181.00
14,197,091.34
4, 308, 624. 24
5, 585, 498. 69
489. 25S. 78
! 55, 259. 09
3, 972, 548. 42
161,851.69
12, 633, 232. 88
803, 403. 47
16, 108, 236. 78
! 103, 568. 94
2,314,404.94
2, 807, 946. 26
1, 778, 493. 62
15,101,318.81
1, 198. 404. 44
75, 954. 40
1, 015, 070. 75
1, 153, 322. 38
1, 133, 127. 04
127, 329. 58
868, 232. 25
516, 665. 23
128, 869. 57
599, 244. 24
621, 562. 18
1, 554, 355. 42
455,416.39
987,470.14
88, 742. 42
67, 922. 29
18, 182. 12
23, 657. 39
319,218.91
29, 015, 725. 33
2.328,711.16
9. 193,037.07
$3,734,850.41
268, 476. 78
1, 502. 836. 55
24. 148. 46
64, 243. 22
« 6, 546. 393 82
123,390, 154 22
844.601.92
216.657.62
1,486,4.3.5.38
1,992,507.29
14,507,192.99
3,781.396.74
4, 229, 990. 66
563, 874 69
2 81, 210. 91
4, 765, 259. 10
10, 822. OS
12,292,411.79
752, 205. 02
16, 235, 163. 36
66, 559. 25
2, 111,3S4.04
1,933.895.17
2, 179,937.47
11.886,803.47
1,273,171.54
74. 8»3. 86
1, 032, 055. 59
872, 689. 93
1, 120, 600. 87
92, 492. 72
892, 795. 68
540, 434. 16
7, 350. 05
272, 427. 85
600, 947. 97
1,421,788.18
157,593.77
714,558.49
114,627.43
65, 494. 32
19, 044. 02
27, 1.56.94
249,911.38
29, 369, 725. 66
2, 280, 046. 64
8,661,071.60
Increase, 1926
Decrease, 1926
267, 260, 488. 29 252. 087. 035. 60
89,371.88
620, 902. 85
32.'i,014.01
693, 030. 40
$5, 098. 96
54, 623. 35
4,219.25
11,448,681.61
527, 227. 50
1, 355, 508. 03
145, 029. 61
340,821.09
111,198.45
203, 020. 90
934,051.09
3, 214, 515. 34
I,'070r54'
280, 632. 45
12, 526. 17
34, 836. 86
121, 519. 52
326, 816. 39
20, 614. 21
132, 567. 24
297, 822. 62
272,911.65
2, 427. 97
69, 307. 53
245, 999. 67
48, 664. 52
531, 966. 07
20, 743, 678. 59
$2, 229, 582. 31
21.73
605, 268. 61
172,498.98
190,679.22
229, 578. 36
116,326.29
310,101.65
74,615.91
2 25, 987. 22
792, 710. 68
126, 926. 58
170, 128. 19
401, 443. 85
"74;" 767!" 10
"i6,"984"84
24, 563. 43
29, 768. 93
25, 885. 01
861.90
3, 499. 55
5, 570, 225. 90
23.5, 642. 13
72, 127. 65
'12,033.21 3 12,033.21
47,645.58 64,833.08 7,187.50
» Fore.xplanation of different bases of statements showing Government receipts and expenditures in this
report, see p. 296. This table includes unexpended balances to the credit of disbursing oflicers at theend
of the year, hut not expenditures under such une,\pended balances at the beginning of the year.
' Kxcess of repayments, deduct.
» Exclusive of incr6ase of compensation under Panama Canal and National Homes for Disabled Volun-
leer Soldiers.
REPORT OF THE SECRETARY OF THE TREASURY
441
Table 2. — Comparison of expenditures for the fiscal years 1926 and 1925, on the
basis of warrants issued^ — Continued
1926
1925
Increase, 1926
Decrease, 1926
WAE DEPARTMENT— continued
Nonmilitary activities— Contd.
Signal Corps
$168, 951. 70
16.3.37.45
$978, 918. 20
32, 441. 71
1, 037, 420. 78
75, 294, 140. 46
499, 636. 19
3,635,266.28
1, 599, 906. 59
34, 000. 00
216, 621. 62
7, 839. 86
8, 494, 176. 70
3, 012, 424. 18
46.30
789, 2SS. 04
2, 500. 00
124, 422. 97
$809 966 50
Public buildings and grounds
under Chief of Engineers
16, 104. 26
Miscellaneous items under
Corps of Engineers ! 1.266.395.93
$228,975.15
Rivers and harbors-
Improving rivers
65, 332, 742. 19
188, 927. 25
3, 481, 883. 75
' 83. 23
7. 893. 30
153,792.40
9,961,308.27
Improving harbors
310,708 94
Special funds for rivers and
153, 382 53
Inland and coastwise water-
ways service . .
1, 599, 989 82
Monuments
26, 106.70
National military parks.
62, 829. 22
National homes for disabled
volunteer soldiers-
Medical and hospital
services
7, 839. 88
219, 459. 84
War cla'ms and relief acts . 1, 678, 785. 38
1, 333, 638. 80
Trust funds-
Estates of deceased soldiers.
United States Armv ■'5^3. 51
287. 21
Soldiers' Home permanent
762, 533. 24
1, 500. 00
117,704.04
26, 735. 40
Preservation of birthplace
1, 000. 00
Miscellaneous nonmilitary ac-
6, 718. 93
Total nonmilitaryactivities
(exclusive of Panama
Canal)
82, 649, 253. 76
96,819,874 76
448. 722. 20
14,619.343.20
Panama Canal, operation and
8, 419, 333. 57
9, 050, 509. 73
631, 176. 16
Total War Department
358, 329, 075. 62
357,957,420.09
21, 192, 400. 79
20, 820, 745. 26
.srECIAL ACCOUNTS
Iiiten St on the public debt
Premium on *bp public debt
83!. {69, 200. 12
5, 267, 173. 32'
882, 014, 950. 03
358, 336. 01
50, 545, 743. 91
4, 908, 837. 31
836, 736, 379. 44
882, 373, 286. 04
4, 908, 837. 31
50, 545, 743. 91
Deduct repayments counter-en-
tered in fiscal year subsequent to
the deposit thereof -
3, 030, 40:;, 801, 82
22, 653. 94
2, 464, 168, 872. 77
6.35
185, 554, 85.3. 71
22, 647. 59
2 380, 686, 075. 34
Total ordinary warrants ex-
penditures
3, 030, 387, 147. 88
36, 737, 707. 02
17, 776, 282. 64
7.50
344, 085, 919. 44
2, 565, 496. 84
6.35
2, 464, 168, 866. 42
143, 926, 630. 98
29, 765, 158. 08
196.00
771, 932, 016. 29
1,396,323.35
185, 532, 206. 12
2 380, 686, 075. 34
Adjustments to the general fund:
Add credits against expendi-
tures '* —
Proceeds of railroad securi-
ties owned by the Gov-
107, 188, 923. 96
Miscellaneous credits
Relief of John Burke, former
Treasurer of the United
States, act June 3, 1922..
Disbursing oiiicers' credits,
etc., at beginning of fiscal
11,988,875.44
188. 50
427, 846, 096. 85
Unpaid warrants at beginning
1, 169, 173. 49
6.35
Uncovered moneys at begin-
ning of year
3, 431, 552, 567. 67
3,411,189,191.12
186,701,385.96 166,338,009.41
» For explanation of different bases of statements showing Government receipts and expenditures in this
report, see p. 296. This table includes unexpended balances to the ere lit of disbursing officers at the end
of the year, but not expenditures under such unsxpended balances at the begmnin? of the year.
2 Excess of repayments, deduct. , . , ,, ,-.. u
1' Items of this oli ir.ictcr represent cash receipts which are credited against the expenditures showri ona
warrant basis. It is necessary, therefore, to add back the amounts to expenditures by warrants in order to
adjust to an actual cash basis.
442
REPORT OF THE SECRETARY OF THE TREASURY
Table 2. — Comparison of expenditures for the fiscal years 1926 and 1925, on the
basis of warrants issued^ — Continued
1026
1925
Increase, 1026
Decrease, 1920
WAR DiPABTMENT— continued
Deduct—
DisbursiiiR oflicers' credits,
$330, 999, 752. 32
1, 818, 983. 03
$344, 085, 919. 44
2, 565, 496. 84
$13,086,107. 12
Unpaid warrants at close of
fiscal year .
746, 513. 81
332, 818, 735. 35
346,651,416.28
13, 832, 680. 93
Total ordinary cash expenditures
on basis of daily Treasury state-
"3,098,733,832.32
3,064,537,774.84
$186, 701, 385. 96
152, 505, 328. 48
PUBLIC DEBT
First 1 <i berty loan
12, 306, 850. 00
500.00
30, 950. 00
397, 104. 900. 00
3, 050. 00
2, 050. 00
28, 400. 00
111. 822. fion. nn
12, 303, 800. CO
First Liberty loan, converted at 4H
1, 550. 00
Second Liberty loan, converted at
2, 550. 00
285, 282, 300. 00
Third Liberty loan
Fourth Liberty loan
9,250.00 ' 14; 350. 66
2,306,000.00 1 6,941,850.00
930, 485, 300. 00 1. 373. 391. 800. 00
5, 100. 00
4, 635, 260. 00
Treasury notes (various rates)
442, 906, 500. 00
Treasury bonds, 1944-1954
1, 000. 00
5, 080. 00
633, 150. 00
2, 396, 542, 500. 00
53, 200, 000. 00
33, 849, 825. 25
54, 400, 182. 50
500.00
1, 000. 00
Loan of 1908-1918- . . .
22, 240. 66
117,051,150.00
2, 152, 954, 500. 00
17, 160. 00
Loan of 1925
116,418,000.00
Certificates of indebtedness, vari-
243. .5SR nnn nn
Trcasury notes and certificates of
indebtedness (adjusted service
scries).
1
4, 600, 000. 00 1 48. 600. 000. 00
Treasury (war) savings securities...
50, 860, 618. 69
68, 974, 392. 00
1 . .-^so nn
17,010,793.44
Bank-note fund ....
14.574,209 50
Funded loan of 1907
850.00
Gold reserve increase against
United States notes
567,900.69 1 641.959.88
74, 059. 19
Miscellaneous redemptions
2, 028. 97
1, 104. 41
924.56
Total public debt expendi-
tures
3, 881, 446, 517. 41
3,887,311,414.98
589, 778, 574. 56
595. 643, 472. 13
Total cash expenditures, ex-
clusive of Postal Service,
payable from postal reve-
nues
6, 980, 180, 349. 73
659, 819, 801. 08
6, 951, 849, 189. 82
599,591,477.59
776,479,960.52
60, 228, 323. 49
748, 148,800.61
Postal Service, payable from postal
revenues
Total expenditures, includ-
ing Postal Service, payable
from postal revenues
7,640,000,150.81
7,551,440,667.41
836, 708, 284. 01
748, 148, 800. 61
• For explanation of different bases of statements showing Government receipts and expend itures in this
report, see p. 2t)6. This table includes unexpended balances to tlie credit of disbursing (jllicers at theend
of the year, but not expenditures under such unexpended balances at the beginning of the year.
'« Exclusive of public debt retirements chargeable against ordinary receipts during 1926 of $1S7, 376,050. 69
and during 1925 of $466,538,113.83, which amounts are included in this table under iiublic debt expenditures.
The totid expenditures chargeable against ordinary receipts during the fiscal years 1926 and 1925 were,
therefore, $3,580,109,883.01 and $3,531,075,888.67, respectively.
REPORT OF TtlK .SEt'Hi: TAHS OK IIIK 1 RKASURY
443
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REPORT OF THE SECRETARY OF THE TREASURY
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468
REPORT OF THE SECRETARY OF THE TREASURY
SPECIAL RECEIPTS AND EXPENDITURES
Table 8. — Postal receipts and expenditures for the fiscal years 1791 to 1926
Fiscal year
1791..
1792.,
1793..
1794..
1795..
1796.
1797..
1798..
1799..
1800.,
1801..
1802..
1803. ,
1804..
1805..
1806.
1807. ,
1808.,
1809.
1810.
1811.
1812.
1813.
1814.
1815.
1816.
1817.
1818.
1819.
1820.
1821.
1822.
1823.
1.S24.
1825.
1826.
1827.
1828.
1829.
1830.
1831.
1832.
1833.
1834.
1835.
1836.
1837.
IS.'IS.
I S3;).
1840.
1841.
1842.
1843.
1844.
1845.
1846.
1847.
1848.
1849.
1850.
1851.
1852.
1853.
1854.
1855.
1S56.
1857.
1858.
1859.
1860.
Receipts
$71,296
92, 988
103, 883
129, 186
163, 795
195, 043
213, 993
233, 145
264,850
280,806
320, 445
326,832
359. 952
389,711
422, 129
446, 520
484, 134
460, 718
506, 634
551, 755
587, 267
619, 151
703, 221
730. 953
1, 043, 022
961,718
1, 022, 973
1,130,203
1, 204, 737
1,111,760
058, 302
117,.=.,^)
130, 21 1
197, 2'J9
306, 2.')3
447, ORO
52t, 602
660, 276
778, 472
919, 314
105, 722
258, 570
617, 012
823, 749
993, 557
408, 323
945, 668
238, 733
484, 656
543, 522
407, 726
546, 850
296, 225
237, 288
289, 842
487, 199
880. 309
5,S,5,211
705, 176
499, 984
6, 410, 60 1
5, 184, 526
5, 240, 725
6, 255, 586
6, 642, 136
6,920,822
7,353,952
7, 486, 793
7, 96S, 484
8, 518, 067
Ex-
penditures '
567, 114
76, 586
74, 161
95, 398
125,039
136, 639
156, 588
185, 308
184, 835
207, 136
248, 142
275,857
316,312
333, 977
386,115
413,814
418,916
446, 915
505, 116
550, 991
517, 921
552, 472
6.35, 412
726, 375
743, 756
807, 875
917, 129
1, 031, 799
1,114,032
1, 163, 191
1,177,526
1, 167, 3.59
1, 158, 777
1, 190, 478
1, 23.S, 912
1, 395, 799
1,481,620
1, 679, 316
1, 872, 705
1, 950, 116
743
171
415
t)05
350
766
319
662
536
236
4, 907, 184
5, 728, 449
4, 396, 056
4, 296, 513
4, 320, 732
4, 8.86, 268
4,515,841
4, 349, 072
4, 479, 049
5, 212, 953
6, 278, 401
8, 149, 894
7, 394, 475
9,462,932
9, 720, 9.70
10,119,940
10,970,835
12, 235, 716
12, 777, 042
18,407,613
Excess of
receipts
$4,182
16, 402
29,722
33, 788
38, 756
58,404
57, 405
47,837
80, 015
73, 670
72, 303
50,975
43,640
55, 734
36, 014
32,706
65, 218
13, 803
1,518
764
69, 346
96,679
67,809 I
4,578 ,
299,266 '
153,843 I
85,844 '
98,404
90, 705
Excess of ex-
pendiliircs
6,821
67,341
51,861
42, 982
98, 979
236, 207
566, 557
1, 657, 349
206, 139
226,127
287, 031
132, 203
• Kxcluslve of departmental erpenditures in Washington by the ofHce of thfl Postmaster
diirini; the fi.sfal vears 1791 to 1922, inclusive. Includes moneys transferred to retirement fund
penditures from postal balances.
Note.— Tlie figures in this table are on the basis of reports of the Post Office Department.
REPORT OF THE SECRETARY OF THE TREASURY 469
Table S. — Postal receipts and expenditures for the fiscal years 1791 to 1926 — Continued
Fiscal year
1861.
1862.
1S63.
1864.
1865.
1866.
1867.
1868.
1869.
1870.
1871.
1872.
1873.
1874.
1875.
1876.
1877.
1878.
1879.
1880.
1881.
1882.
1883.
1884.
1885.
1886.
1887.
1888.
Receipts
1891.
1892.
1893.
1894.
1895.
1896.
1897.
1898.
1899.
1900.
1901.
1902.
1903.
1904.
1905.
1906.
1907.
190S.
1909.
1910.
1911.
1912.
1913.
1914.
1915.
1916.
1917.
1918.
1919.
1920.
1921.
1922.
1923.
1924.
1925.
1926.
$8,349,296
8, 299, 820
11,163,790
12, 438, 254
14, 556, 159
14,436,986
15,297,027
16, 292, 600
18,344,511
19, 772, 221
20, 037, 045
21,915,426
22,996,742
26,471,072
26,791,361
28, 644, 198
27,531,585
29, 277, 517
30,041,983
33, 315, 479
36, 785, 398
41, 876, 410
45, 508, 693
43, 325, 959
42, 560, 843
43,948,423
48, 837, 609
52, 695, 177
56,175,611
60,882,098
65,931,780
70,930,476
75, 896, 993
75, 080, 479
76, 983, 128
82, 499, 208
82,665,463
89,012,619
95,021,384
102,354,579
111,631,193
121, 848, 047
134, 224, 443
143, 582, 624
152, 826, 585
167,932,783
183, 585, 005
191, 478, 603
203, 562, 383
224, 128, 658
237, 879, S23
246,744,016
265, 619, 526
287,934,566
287, 24S, 165
312,057,689
329,726,116
344,475,962
364, S47, 126
437, 150, 212
463,491,275
484,853,541
532, 827, 925
572,948,778
599. 591. 478
659, 819, 801
Ex-
penditures
S13, 520, 191
11,861,549
11,913,104
13, 43S, 234
14, 806, 159
14,436,986
18, 813, 694
20, 345, 792
23, 740, 021
24, 616, 800
25, 168, 295
27, 090, 426
28,487,217
31, 185, 117
34,003,007
33, 736, 738
33,701,924
35,030,911
34,815,507
36, 386, 479
40, 6S1, 037
41, 876, 410
45, 583, 198
43,325,959
47, 102, 454
52,142,075
55, 338, 856
55,751,214
60,044,531
67, 757, 135
70, 673, ,55S
74,981,960
81, 843, 788
83, 330, 479
87,999,670
91,799,208
93, 814, 669
99, 516, 659
103, 232, 954
109, 585, 35S
116,585,955
124, 250, 200
136,993,302
150, 085, 155
167,891,842
180,606,077
191,214,388
204, 366, 704
223, 063, 445
232, 624, 270
Excess of
receipts
237,
248,
263,
283,
293,
311,
319,
327,
362,
418,
660, 705
312,211
136, 244
558, 103
884,758
728, 453
SS9, 904
070, 282
847, 785
722, 295
593, 764, 120
54.5,668,941
5.56,893. 129
587,412.7.55
639. 336, 505
679, 792, 180
Excess of ex-
penditures
J 2 19, 118
3, 483, 282
4, 376, 463
329, 236
9, 838, 212
17, 405, 6S0
1,999,341
18,427,917
$5, 170, 895
3,561,729
749,314
999,980
250,000
3, 516, 667
4, 053, 192
5, 395, 510
4, 844, 579
5,131,250
5,175,000
5, 490, 475
4,714,045
7,211,646
5, 092, 540
8, 170, 339
5,7.'J3,394
4, 773, .524
3,071,000
3, 895, 639
74, 503
4,541,611
8, 193, 652
6,501,217
3, 056, 037
3, 868, 920
6, 875, 037
4,741,772
4,051,490
5,946,795
8,250,000
11,016,542
9,300,000
11,149,206
10, .504, 040
8,211,570
7, 230, 779
4,954,702
2,402, i 5:3
2,768,919
6, 502, 531
1.5,065,257
12,673,294
7,629,383
12, 888, 041
19,501,062
8, 495, 612
1,568,195
" 6,' 636,' 593
130, 272, 845
60, 815, 400
24,065,204
14,463,977
39. 745, 027
19, 972, 379
I Exclusive of departmental expenditures in Washington bv the office of the Postmaster General
during the fiscal years 1791 to 1922, inclusive. Includes moneys tr.msferred to retirement fund and
expenditures from postal balances.
Note.— The figures in this table are on the basis of reports of the Post Office Department.
470
BEPORT OF THE SECRETARY OF THE TREASURY
Table 9. — Panama Canal receipts and expenditures for the fiscal years 1903 to
1926, on the basis of warrants issxied ^
Year
Construction,
maintenance,
and operation
Fortifications
Total
Interest paid
on Panama
Canal loans
Receipts
covered into
the Treasury
1903
.$9, 985. 00
50, IM, 500. 00
3,918.819.83
19, 379, 373. 71
27,198,618.71
38, 093, 929. 04
31,419,442.41
33,911,673.37
37, 038, 994. 71
34. 285, 270. 50
39, 917, 806. 71
31,452,359.61
24,427,107.29
14, 638, 194. 78
15.949,202.47
13, 299, 762. 56
10, 704, 409. 74
6.031,46.3.72
16, 230, 390. 79
2, 791, 035. 40
3, 620, 503. 37
7,141,711.97
9, 050, 509. 73
8,419,333.57
$9,985.00
50,164,500.00
3,918,819.83
19,379,373.71
27, 198, 618. 71
38, 093, 929. 04
31,419,442.41
33,911,673.37
37,069,603.46
35, 321, 367. 58
41,741,358.03
34, 829, 260. 46
29, 194, 712. 67
17, 506, .536. 75
19, 262, 795. 02
20, 787, 624. 92
12, 20.5, 774. 48
9, 465. 056. 54
18, 318, 398. 45
3, 687, 362. 85
4, 570, 692. 57"
7, 535, 675. 34
9, 923, 199. 66
9, 572. 655. 95
1904
1905
$371, 253. 06
1906
380, 680. 10
1907
1,178.949.85
1908
$785, 268. 00
1,319,076.58
1,692,166.40
1,691,107.20
3, 000, 669. 60
3, 201, 055. 81
3, 194, 105. 95
3, 199, 385. 05
3,189,024.79
3, 103, 250. 67
2,976,476.55
2, 984, 888. 33
3, 040, 872. 89
2. 994. 776. 66
2. 995, 398. 14
2,997,904.81
2,992,461.19
2, 988, 918. 80
2, 989, 598. 76
1, 083, 761. 49
1909
705. 402. 42
1910
3, 214, .389. 48
1911
$30, 008. 75
1,036,091.08
1, 823. 491. 32
3, 376, 900. 85
4, 767, 605. 38
2,868,341.97
3, 313, 532. 55
7, 487, 862. 36
1, 561, 364. 74
3, 433, 592. 82
2, 088, 007. 66
896, 327. 45
950, 189. 20
393, 963. 37
872, 689. 93
1,153,322.38
1,757.284.44
1912 -..
2, 982. 823. 92
1913
4,070,231.27
1914
698, 647. 87
1915
4.130,241.27
1916
2, 869, 995. 28
1917
6, 150, 668. 59
1918
6,414,570.25
1919
6, 777, 046. 55
1920
1921
9, 039, 670. 95
11,914,361.32
1922
12. 049. 060. 65
1923
17, 869, 985. 25
1924
26,074,513.33
1925
22, 553, 732. 44
1926
23,941,917.87
Total
479, 094, 524. 99
36, 053, 891. 81
615,148,416.80
51,336,406.18
166, 229, 787. 65
For explanation of different bases of statements showing Government receipts and expenditures in
this report, see p. 296.
REPORT OF THE SECRETARY OF THE TREASURY
471
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Beverages
(nonalcoholic),
soft drinks, etc.
; 1
i
Telegraph and
telephone
Transportation
of oil by pipe
lines
Passenger
transportation
a
1
but:
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251,306.52
261, 080. 66
271, 128. 84
331.010.66
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5,714,774.88
10, 888, 727. 50
14,257,837.14
15,239,181.78
14, 046, 613. 33
15, 505, 492. 58
15,611,003.43
14, 529, 885. 32
15,296,470.77
7,130,9.33.57
5,6'<3, 114 64
6,083,590 42
6, 049, 496. 92
6,004,475.15
5,9.36, 843. 01
6,237,5.38.57
7,133,696.30
7,375,255.72
7,569,108.70
7,05.3,0.^3.46
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14.50
7, 508. 50
231.96
658. 50
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40, 964, 365. 30
Sales (con-
siuners' or
dealers')
$64,003.87
141,231.58
4,062,243.54
4,002,282 91
3,999,360.31
4, 595, 909 04
8, 206, 839. 03
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484
REPOHT OF THE SECRETARY OF THE TREASURY
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487
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488
REPORT OF THE SECRETARY OF THE TREASURY
Table 14. — I lUeresl collected by fiscal year.-^, from June 1, 1913, to June 30, 1926,
on deposits of Government funds with national-hank, insular, and foreign
depositaries.
1913 $122, 218. 89
1914 1, 409, 42G. 07
1915 1, 222, 700. 93
1916 791,671.45
1917 703,771.76
1918 1, 134, 569. 09
1919 5, 507, 742. 43
1920 $1, 865, 975. 76
1921 2,580, 746. 84
1922 865,848.30
1923 584, 192. 96
1924 570, 336. 05
1925 ' 533, 859. 89
1926 2 517, 313. 83
Table 15. — Interest collected to June 30, 1926, by Federal reserve districts, on
deposits in special depositaries on account of sales of Liberty bonds, Victory
notes, Treasury notes, and certificates of indebtedness, and income and profits
tax paymenis, under acts of April 24, 1917, September 24, 1917, April 4, 1918,
July 9, 19 IS, September 24, 1918, and March 3, 1919
Federal reserve district
April 24 to
June 30, 1917
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
New Orleans branch.
Chicago
St. Louis
Minneapolis
Kansas City
Dallas..
San Francisco
$5,340.47
338, 480. eo
1, 044. 64
Total.
252. 06
9, 023. 53
1, 353. 62
2, 726. 51
358, 221. 43
Fiscal year Fiscal year Fiscal year
July 1, 1917, to July 1, 1918, to ' July 1, 1919, to
June 30, 1918 June 30, 1919 i June 30, 1920
$1, 252,
4, 904,
757,
1, 093,
210,
124,
80,
958,
325,
200,
190,
116,
346,
390. 26
637.35
344.83
702. 40
113.66
275. 95
653. 09
476. 78
138. 58
829. 89
531. 88
080. 10
483. 26
10, 566, 658. 03
872, 782.
689.021.
056, 104.
569, 142.
352, 238.
347, 716.
167, 145.
081, 734.
773, 272.
476, 583.
641, 252.
400, 980.
968, 232.
$818, 214. 39
,224,046.11
700, 612. 29
882, 228. 69
696, 026. 03
236, 710. 03
102,349.52
, 172, S.'JS. 15
365, 006. 43
276, 087. 26
254, 537. 32
300, 971. 08
429,319.59
20,996,209.01 11,458,976.89
Federal reserve district
Fiscal year
July 1, 1920, to
June 30, 1921
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
New Orleans branch.
Chicago
St. Louis...
Minneapolis..
Kansas City
Dallas
San Francisco..
$329, 002. 71
1,742,118.06
326, 357. 00
269, 748. 24
90, 524. 55
33, 575. 17
29,191.96
247, 372. 69
101, 2,57. 61
59, 185. 74
89, 859. 96
32, 407. 84
161,706.49
Total 3,512,308.02
Fiscal year Fiscal year
July 1, 1921, to July 1, 1922, to
June 30, 1922 June 30, 1923
$522,
2,513,
492,
548,
158,
65,
34,
769,
202,
138,
133,
120,
258,
344. 91
569. 67
945. 69
520. 22
870. 90
019. 63
628. 00
0.0. 62
594. 21
248. 51
263. 75
791.19
071. 05
$401, 286. 50
1, 830, 459. 16
488, 019. 97
362, 812. 55
214, 288. 01
110, 233. 06
50, 591. 26
562,095.11
164, 001. 86
139, 095. 64
130, 720. 93
130, 620. 90
251, 854. 79
5, 957, 918. 35
4,835,879.74
Fiscal year
July 1, 1923, to
June 30, 1924
$437, 680. 57
1,375,835.24
293, 249. 18
373,318.34
125, 633. 42
64, 121. 22
113,253.99
395, 571. 32
188, 757. 27
108,118.41
52,319.68
104, 520. 72
329, 493. 14
3,961,872.50
Federal reserve district
Fiscal year ' Fiscal vear I
July 1, 1924, to Julv 1, 1925, to (
June 30, 1925 J June £0, 1926 [
Total
Boston
New York
Philadelphia....
Cleveland ...
Richmond
Atlanta
New Orleans branch
Chicago.
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
.$497, 169. 20
.$335,382.98
$6,471,594.66
915, 859. 15
920,408.77
29, 454, 435. 85
519, 107. 16
478,816.55
5,713,601.69
401, 604. 61
421,255.80
5, 922, 333. 43
165,464.77
164,958.32
2, 178, 118. 48
57, 678. 49
110, 137. 98
1, 149, 730. 56
80,731.27
105, 174. 48
769. 719. 45
529, 280. 74
549, 630. 16
7.275,093.54
130, 731. 98
178, 004. 78
2, 428, 765. 04
102, 481. 51
88, 864. 46
1,581,, 49.5. 24
.54,411.38
64, 996. 55
1,611,893.73
99, 653. 99
143, 240. 99
1.4f0,621.40
309, 450. 64
361, 194. 94
3.418,332.55
3, 863, 624. 89
3.922,066.76
69,433,735.62
' .\mended figures.
Incomplete and subject to revision.
REPORT OF THE SECRETARY OF THE TREASURY
489
ESTIMATES OF RECEIPTS AND APPROPRIATIONS
Table 16. — Estimated receipts for the fiscal years 1928 and 1927, and actual
receipts for the fiscal year 1926, according to the latest information received from
the Bureau of the Budget
jEstimated, 1928
Estimated, 1927 1 Actual, 1926
Ordinary receipts: '
Customs '$601,800,000.00
Internal revenue— I
Income tax i2, 090,000,000.00
Miscellaneous taxes j 568,985,000.00
Miscellaneous:
Interest, premium, and discount —
Interest on loans to foreign governments
Interest on funded obligations of foreign govern
ments 140,029,291.00
Interest on miscellaneous obligations 2,017,301.00
Interest on farm loan bonds.
'$616,800,000.00 I $579, lao, 092. 80
2, 190,000
619, 685,
,000.00 1,982,040,088.
000.00 I 855,599,289.
2 7, 800. 00 2 19, 556, 925. 99
Interest on public deposits I 4, 179,
Premiums on veterans' term insurance
Dividend on capital stock
Gain by exchange
Interest on railroad securities.
Sales of Government property —
Sale of war supplies
Miscellaneous Government property
Public-domain receipts-
Sale of public lands
Receipts under mineral leasing acts...
Forest-reserve fund
National park revenues
Royalties from naval petroleum reserves
Other
Federal reserve and Federal intermediate credit
bank franchise tax
Profits on coinage, bullion deposits, etc
Revenue-producing enterprises —
Emergency Fleet Corporation, construction
loan funds
Panama Canal, tolls, profits, etc
Other
Rent of public buildings and grounds
Fees, fines, penalties, forfeitures, etc. —
Fees on letters patent. _.
Consular and passport fees
Tax on circulation of national banks
Customs service- .-
Collections under enforcement of national .
prohibition act (Treasury and Judicial)
Navy fines and forfeitures
Naturalization fees
Immigration head tax...
Judicial
Other
Gifts and contributions—
For river and harbor improvements
For Forest Service cooperative work
Other
Repayments of investments-
Principal of unfunded loans to foreign govern-
ments
Liquidation of capital stock. Federal land banks.
Principal of bonds of foreign governments under
funding agreements
Sale of farm loan bonds.
Return of advances made to reclamation fund..
Principal of loans made by United States
Housing Corporation
Principal of railroad securities
139, 915,
2, 022,
100,
4, 435,
5, 910.
037. 00
849. 00
000. 00
200. 00
780. 00
20,
13, 968;
2, 900.
19,118,
600,
8, 500,
6, 140,
722,
3, 600,
897,
800,
7, 500.
4, 140,
24, 000,
4, 691,
1, 170,
3, 700,
8, 328,
3, 300,
1,500,
5, 000,
900,
750,
3, 501,
3. 325,
1, 984,
3, 250,
1, 800,
230,
000. 00
848. 00
000. 00
043. 00
000. 00
000. 00
000. 00
474. 00
000. 00
000. 00
000. 00
000. 00
703. 00
000. 00
200. 00
695. 00
000. 00
000. 00
440. 00
000. 00
000. 00
000. 00
000. 00
200. 00
000. 00
175. 00
000. 00
000. 00
233. 00
180, 000. 00
68, 643, 185. 00
1, 000, 000. 00
35,
1, 433,
000. 00
100. 00
20,
15, 484,
3, 300,
15, 063,
600,
8, 500,
5, 810,
647,
6, 500,
897,
1, 000,
8, 500,
000. 00
654. 00
000. 00
930. 00
000. 00
000. 00
000. 00
090. 00
000. 00
000. 00
000. CO
000. 00
4, 913,
24, OCO,
4, 443,
1,171,
3, 488,
8,328,
3, 280,
1, 450,
5, 500,
1, 000,
750,
3,001,
3. 325,
1, 926,
3, 250,
1, 800,
224.
425,
200,
75, 322,
60, 495,
1, 000,
321,
17, 103,
490. 00
000. 00
200. 00
697. 00
960. 00
000. 00
495. 00
000. 00
000. 00
000. 00
000. 00
200. 00
000. 00
138. 00
000. 00
000. 00
.590. 00
682. 00
000. 00
893. 00
000. 00
000. 00
000. 00
600. 00
139, 804, 662.
1,201,493.
3, 648, 139.
4, 530, 081.
9, 875, 033.
350, 000.
24, 418.
17, 319, 962.
13, 655, 956.
14, 492, 004.
754, 252.
8, 477, 539.
5, 291, 545.
797, 446.
567, 890.
9, 903, 032.
6, 603, 156.
23, 725, 100.
3,090,611.
1, 385, 42.3.
3,421,404.
8, 624, 682.
3, 277, 512.
1, 429, 792.
5, 230, 147.
1, 236, 257.
477, 650.
3, 592, 492.
3, 201, 604.
3, 498, 668.
3, 872, 545.
1, 920, 222.
450, 302.
289, 125.
332, 605.
34, 587, 243.
28, 390, 000.
1, 000, 000.
353, 992.
19,415,364.
1 Includes $1,800,000 estimated by Department of Commerce for tonnage tax, receipts on account of
which are covered into the Treasury as customs revenue.
2 Includes interest on miscellaneous obligations of foreign governments.
490
EEPORT OF THE SECKETAKY OF THE TREASURY
Table 16. — Estimated receipts for the fiscal years 192S and 1927, and actual
receipts for the fiscal year 1926 according to the latest information received from
the Bureau of the Budget — Continued
Miscellaneous — Con.
Assessments and reimbursements —
Salaries and expenses, national-bank ex-
aminers ___
Expenses of redeeming national currency...^!
Reclamation fund
Assessments on Federal reserve banks and
Federal intermediate credit and land banks..
General railroad contingent fund
Payment by Qerraan Qovernment under
terms of the armistice
Work done by individuals, corporations, et al
Settlement of claims, War and Navy Depart
ments
Payment for quarters, subsistence, laundry, etc','
Veterans' Bureau
Other
District of Columbia-
Revenues of the District of Columbia-
District of Columbia share (excluding
trust funds)
United States share- '..'..I'.'.".
Miscellaneous uncla.ssified receipts. '....[
Army and Navy miscellaneous collections I
War Department replacing funds..
Trust fund.s—
Qovernment life insurance fund-
Premium on converted insurance
Interest _
Civil .service retirement and disability fund]" ^
Soldiers' Home permanent fund
Army, Navy, and Marine Corps deposit funds,
Indian money.s —
Proceeds of labor
Proceeds of sale of Indian lands and tiinber
Other
Miscellaneous trust funds
District of Columbia trust funds
Deduct excess of receipts by warrant over
cash receipts _.
Total miscellaneous receipts, including
Panama Canal and sales of public lands
Total ordinary receipts, exclusive of postal revenues.
Estimated, 1928 Estimated, 1927
$2, 250, 000. 00
523, 650. 00
5, C40, 000. 00
2, 574, 000. 00
3, 000, 000. 00
13, 101, 895. 00
178, 000. 00
$2, 250, 000. 00
550. 151.00
5, 860, 000. 00
2, 574, 000. 00
2, 000, 000. 00
13,101.895.00
177, 000. 00
2,555,610.00 I 2,693,574.00
27, 206, 000. 00
3. 715, 798. 00
1, 509, 900. 00
2, 500, 000. 00
57. 600. 000. 00
10, 950, 000. 00
3, 500. 00
757, 700. 00
1, 900, 000. 00
1, 500, 000. 00
18, 000, 000. 00
40, 000. 00
312, 376, 00
2,291,000.00
26, 160, 000. 00
6,415,847.00
2,198,200.00
2, 516, 000. 00
52, 650, 000. 00
9,001,860.00
3, 500. 00
690, 000. 00
1, 900, 000. 00
1, 500, 000. 00
20, 000, 000. 00
40, 000. 00
323, 361. 00
2, 255, 000. 00
Actual, 1926
$2,492,387.16
606, 3*^6. 02
7, 724, 880. 38
2, 545, 274. 43
1, 218, 240. 03
103. 410. 87
1, 300, 198. 42
1, 160, 210. 88
1, 980, 583. 75
24, 4G6, 334. 40
93, 977. 94
7, 620, 493. 06
337, 252. 13
511, 968, 077. 00
600, 295, 088. 00
511,968.077.00 | 600, 295, 688. 00
3,772,753,077. 00 ,4,026,780,688. 00
44, 484, 225. 31
6, 730, 905. 38
2, 302, 161. 06
451, 619. 70
2, 024. 877. 76
2, 672, 448. 98
23, 461, 952. 16
479, 521. 08
70, 920. 67
2. 382, 893. 52
547, 393, 892. 28
1, 707, 672. 84
545. C86, 219. 44
3, 962, 765, 690. 14
Table 17. — Estimated receipts from customs, internal revenue classified according
to source, and miscellaneous receipts classified according to departments and
establishments for the fiscal years 1928 and 1927 according to the latest informa-
tion received from the Bureau of the Budget
Source of revenue
Fiscal year 1928
Fiscal year 1927
Customs
'$601,800,000
1 $616. 800. 000
Internal revenue (under revenue act approved Feb. 26, 1926):
Income ta.x
2, 090, 000. 000
568. 985, 000
2, 190, 000, 000
619,685,000
Miscellaneous internal revenue (see details below)
Total internal revenue
2. 658, 985, 000
2, 809. 685. 000
Miscellaneous internal revenue —
Estate tax
35,000,000
17,000,000
385. 000, 000
23, 500, 000
70, 000. 000
200, 000
260, 000
25 000
72, 000. 000
24. 000. 000
380. 000, 000
25, 000. 000
70, 000, 000
200. 000
260, 000
25, 000
7, 000, 000
35, 000. 000
3, 500, 000
2. 700, 000
Alcoholic spirits, etc
Tobacco manufactures
Admissions and dues
Automobiles and motorcycles
Pistols and revolvers ..
Cereal beverages
Yachts and motor boats (use) ...
Corporation capital stock tax
Stamp taxes, including playing cards
32, 000, 000
3, 500, 000
2. 500, 000
Oleomargarine, process butter, etc
Miscellaneous, including prohibition and narcotic 'taxes," delinquent"
taxes under repealed laws, etc
Total
568, 985, 000
619,685.000
« Includes $1,800,000 estimated by Department of Commerce for tonnage tax, receipts on account of which
are covered mto the Treasury as customs revenue.
EEPOET OF THE SECRETARY OF THE TREASURY
491
Table 17. — Estimated receipts from customs, internal revenue classified according
to source, and miscellaneous receipts classified according to departments and
e^tahlishments for the fiscal years 1928 and 1927, according to the latest informa-
tion received from the Bureau, of the Budget — Continued
Source of revenue
Miscellaneous receipts by departments and Government establish
monts:
Legislative
Executive and independent offices
Department of Agriculture.
Department of Commerce
Department of the Interior
Department of Justice..
Department of Labor
Navy Department
Department of State
Treasury Department
War Department
Panama Canal
District of Columbia.
Total miscellaneous receipts __
Total estimated ordinary receipts
Fiscal year 1928 Viscal year 1927
$698. 225
108, 649, 617
8, 776, 000
4, 428, 500
38, 293, 353
8, 754, 000
4, 802, 050
9, 785, 200
8, 520, 959
230, 816, 553
34, 943, 620
24, 000, 000
29, 500, 000
511,968,077
3, 772, 753, 077
$678, 450
121.316,304
8, 527, 500
4, 308, 122
40,453,618
8, 739, 000
4, 803, 550
15. 945, 400
8,511,654
299, 982, 105
34,614,985
24, 000, 000
28,415,000
600, 295. 688
4, 026, 780, 688
Table 18. — Estimates of appropriations for 1928 compared with appropriations for
1927, according to the latest information received from the Bureau of the Budget
1928 estimates,
including per-
manent annual
1927 appropria-
tions, including
revised per-
manent annual
Increase, 1928
estimates over
1927 appropria-
tions (+),
decrease (— )
Legislative
Executive Office
Independent offices:
Alien Property Custodian
American Battle Monuments Commission
Arlington Memorial Bridge Commission
Board of Tax Appeals
Bureau of Efficiency
Civil Service Commission
Commission of Fine Arts
Employees' Compensation Commission
Federal Board for Vocational Education
Federal Power Commission
Federal Trade Commission
General Accounting Office
Housing Corporation
Interstate Commerce Commission
National Advisory Committee for Aeronautics
Office of Public Buildings and Public Parks of the
National Capital
Oldroyd collection of Lincoln relics
Public Buildings Commission
Board of Mediation
Smithsonian Institution
Tariff Commission
United States Commission for celebration of two
hundredth anniversary of birth of George Wash-
ington
United States Geographic Board
United States Shipping Board.
United States Vermont Sesquicentennial Commis-
sion -
U. S. Veterans' Bureau-
Salaries and miscellaneous.
Military and naval compensation
Medical and hospital facilities and services
Adjusted service certificate fund
Military and naval insurance
Protection of interests of United States in leases and
matters affecting oil lands in former naval re-
serves .- ---
Indigent in Alaska, special fund
District of Columbia
Department of Agriculture
Department of Commerce.
$16, 174, 988. 76
438, 460. 00
000.00
000.00
000. 00
000. 00
350. 00
742. 00
300. 00
740. 00
230. 00
500.00
350.00
000. 00
236.00
967.00
000.00
600,
2, 500,
570,
210,
1, 002,
7,
2, 694,
8, 165,
42,
984,
3. 783,
5G4,
6, 104,
523,
2, 422, 950. 00
390, 000. 00
909, 871. 00
682, 000. 00
3, 945. 00
12, 290, 000. 00
42, 625, 000. 00
168, 500, 000. 00
36, 275, 000. 00
112, 000, 000. 00
116,000,000.00
15, 000. 00
38, 519. 869. 00
144, 487, 820. 00
35, 240, 430. 00
$17, 834, 919. 57
819, 460. 00
130,
800,
2, 500,
614,
210,
1,001,
5,
2, 744,
8, 210,
32.
997,
1 3, 859.
673,
6, 153,
513,
650. 00
000.00
000.00
224. 64
350. 00
592. 00
295. 00
540. 00
620. 00
400. 00
000. 00
960. 00
398. 00
157. 00
000. 00
2 2, 306, 850. 00
£0, 000. 00
260, 000. 00
285, 220. 00
893, 301. 00
699. 000. 00
10, 000. 00
345.00
24, 198. 574. 00
1, 000. 00
44, 165, 000. 00
140, 800, 000. 00
39, 000, 000. 00
116.000,000.00
vn, 000, 000. 00
100, 000. 00
15,000.00
3 36. 532, 128. 00
139, 635, 823. 00
* 30, 632, 847. 00
-$1, 659, 930. 81
-381, 000. 00
-32, 650. 00
-200,000.00
-44, 224. 64
-1-1, 150. 00
+2, 005. 00
-49, 800. 00
-45, 390. 00
-f 10, 100. 00
-12.650.00
-76.960.00
-109,162.00
-48,190.00
-f 10, 000. 00
-1-116, 100. 00
-50,000.00
-260,000.00
-M04, 780. 00
-1-16, 570. 00
-17,000.00
-10,000.00
-f3, 600. 00
-11,908,574.00
-1.000.00
-1,540,000.00
-1-27, 700, 000. 00
-2,725,000.00
-4,000,000.00
-7,000,000.00
■100,000.00
-fl, 987, 741. 00
+i. 851, 997. 00
-t-4, 607, 583. 00
1 Exclusive of $5,000 transferred to Office of Public Bilildings and Public Parks of the National Capital.
2 Includes $5,000 transferred from General Accounting Office (see note 1).
3 Includes .$275,000for additional building.iail.District of Columbia.included in deficiency act of July 3,1 926.
* Includes .%50,000 for light station, Cleveland, Ohio, included in deficiency act of July 3, 1926.
11438— 26t 33
492
REPORT LP THE SECEETAEY OF THE TREASURY
^^^n^ry ^^■—^fiimates of appropriations for 1928 compared with appropriations for
ly^', according to the latest information received from the Bureau of the Budaet
Continued "
Department of the Interior:
CivU
^ Pensions and Pension Office ""'""
Indian Service IIIIIII'I""
Department of Justice I""I"I"""III""
Department of Labor '..'.'.'.'.'.
Navy Department:
Pay of the Navy
Provisions, maintenance, fuel, and'transportatfonll
Marine Corps
Increase of the Navy, "millllir"!!!"!!!^!
Other items under Navy Department "11
State Department
Treasury Department:
Collecting the revenue
Refunds, drawbacks, etc., of revenue I. .Ill"
Public buildings, construction, operating espenseV,
repairs, equipment, etc..
Other items under Treasury Department. ."II""
War Department
Interest on public debt II"
Sinking fund.. IIIIIIIIIIIIII
Other public debt retirements chargeable against" ordi-
nary receipts.
1928 estimates, | }?^^ appropria-
including per- tions.mcludmg
manent annual '"^^'^'e^ P^r- ,
manent annual
Total, excluding Postal Service payable from the
postal revenues
Post Office Department (payable from postal revenues).
Grand total 4,014,571, 124. 60
$30, 670, 331. 00
222, 996, 000. 00
32, 051, 265. 00
25, 895, 349. 50
8, 658, 540. 00
124, 300. 000. 00
40, 830, 000. 00
23, 377, 700. 00
25, 460, 000. 00
99, 847, 800. 00
11,969.119.41
52, 951, 860. 00
26, 640, 500. 00
14, 822, 550. 00
76, 053, 543, 00
366, 722, 142. 00
755, 000, 000. 00
354, 157, 085. 00
209, 472, 475. 93
3,256,602,009. 60
757, 969, 115. 00
$26, 443, 258. 00
193,921,000.00
32, 598, 060. 00
25, 628, 707. 00
9,561,305.00
119,863,500.00
42, 657, 000. 00
23, 620, 347. 00
35, 775, 000. 00
100, 146, 128. 00
17, 357, 062. 64
52, 924, 915. 00
21, 915, 000. 00
Increase, 1928
estimates over
1927 appropria-
tions (-1-),
decrease (— )
+$4, 227, 073. 00
-f 29, 075, 000. 00
-546,79.5.00
+268, 642. 50
-1,002,765.00
+4, 436, 500. 00
-1,827,000.00
-242, 647. 00
-10,315,000.00
-298, 328. 00
-5,387,943.23
+26, 945. 00
+4. 725, 500. 00
27, 630, 200. 00 i - 12, 807, 650. 00
74. 167, 350. 63 \ +1, 886, 192. 37
354,34.5,801.16 , +12,376,340.84
785,000,000.00 i -30,000,000.00
336, 058, 208. 26 ' +18, 098, 876. 74
233, 923, 596. 58
'3,259,222,093.48
738,805,303.00
-24, 451, 120. 65
-2,620,083.88
+19, 163, 812. 00
"3,998,027,396.48 +16,643,728.12
J 'After adding $44,398,406.40 increase for revised estimates covering principal and interest on the public
debt and amounts shown under footnotes 3 and 4. i. c t- u <.
REPORT OF THE SECRETARY OF THE TREASURY
493
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494
REPORT OF THE SECRETARY OF THE TREASURY
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REPORT OF THE SECRETARY OF THE TREASURY
CONDITION OF THE TREASURY
Table 21. — Condition of the United States Treasury at the close of the fiscal years
1926, 1925, and 1924, on the basis of daily Treasury statements (revised)
1926
1925
1924
GOLD
Assets:
Gold coin..
$581,330,755.28
3, 132, 501, 538. 74
$614,944,311.15
3, 076, 255, 889. 42
$459,971,195.04
Gold bullion
3, 326, 089, 793. 94
Total
3,713,832,294.02
3, 691, 200, 200. 57
3,786,060,988.98
Liabilities:
Gold certificates
1, 680, 510, 609. 00
1,717,348,235.12
154, 188, 886. 20
161,784,563.70
1,609,687,619.00
1,752,744,435.12
153, 620, 985. 51
175, 147. 160. 94
1 218,350,659.00
Gold fund, Federal Reserve Board..
2,260,891,035.12
Gold reserve
152,979,025.63
Gold in general fund .
153,810,269 23
Total
3,713,832,294.02
3,691,200,200.57
3,786,060,988.98
SILVER
Assets:
Silver dollars
465, 291, 706. 00
452,510,212.00
427, 694, 079. 00
Liabilities:
Silver certificates..
457,903,515.00
1,356,304.00
6,031,887.00
448,724,195.00
1,386,882.00
2,399,135.00
408,365,410.00
Treasury notes of 1890
1,422,626.00
Silver in general fund
17, 906, 043. 00
Total
465,291,706.00
452,510,212.00
427, 694, 079 00
GENERAL FUND
Gold
161,784,563.70
6,031,887.00
3,835,118.00
916, 526. 50
134,743.00
17, 759, 852. 50
6, 147, 965. 93
2,439,819.92
8,431,438.88
160,801,453.14
175,147,160.94
2,399,135.00
2,193,375.00
1,474,262.50
87, 890. 00
19,595,231.00
7, 537, 767. 75
1,782,509.74
16,387,694.52
3, 285, 897. 20
153, 840, 269. 23
17,90t;,043.00
4 260 547 00
Silver dollars
United States notes..
1,124,848.00
Federal reserve bank notes.
193,898.00
National-bank notes..
18,291,051.50
Subsidiary silver..
8,073,620.73
2, 738, 648. 76
Minor coin.
Silver bullion at cost
31,072,996.78
Unclassified
34 342 165 80
Public debt paid awaiting reimbursement
126, 949. 12
Total in Treasury offices
268,283,368.57
229,890,923.65 271,971,037.92
In Federal land banks—
To credit of Treasurer of the United States.
1,000,000.00
In Federal reserve banks—
To credit of Treasurer of the United States.
10,718,586.49
6,629,183.48
25,434,368.53 43,250,226.26
20, 701, 960. 10 3, 874 MO 84
Total in Federal reserve banks
17,347,769.97
46,136,328 63 47,124 767 10
In special depositaries account of sales of
Treasury notes and certificates
202,728,706.99
150, 716, 572. 04
162,091,572.40
In national-bank depositaries—
To credit of Treasurer of the United States.
To credit of other Government officers
In transit.
6, 642, 814. 30
21,184,947.21
2,651,280.43
6,809,268.69 ! 6,821,829.92
22,002,977.91 20,022,705.27
2,821,710.99 2,699,865.99
Total in national-bank depositaries
30,479,041.94
31,633,957.59 29,544,401.18
In treasury Philippine Islands—
To credit of Treasurer of the United States.
In transit
1,032,444.73
671.10
896, 150. 92 732, 487. 25
80 43 822 11
Total in treasury Philippine Islands
1,033,115.83
896,231.35 733,309.36
In foreign depositaries—
To credit of Treasurer of the United States.
In transit
87,928.12 85,129.01 i 135,907.47
66,342.00 172,842.97 i 244,349.32
725.00 ' 250.00 150 00
Total in foreign depositaries
154,995.12 258,221.98 380,406.79
Total assets in general fund
520,026,998.42 4.19 ."^9 M."; 94 .'ii9 JU."; -lai 7fi
'
' '
> Includes $58,701,051.63 in Federal farm loan drafts covering sale of bonds.
REPORT OF THE SECRETARY OF THE TREASURY
499
Table 21. — Condition of the United States Treasury at the close of the fiscal years
1926, 1925, and 1924, on the basis of daily Treasury statements {revised) — Con.
1926
1925
1924
GENERAL FUND— COQtinued
Liabilities:
Deposits —
Redemption of Federal reserve notes (5
per cent fund, gold).-
Redemption of national-banli notes (5
per cent fund, lawful money)
Retirement of additional circulating notes,
act of May 30, 1908
Board of trustees, Postal Savings System
(6 per cent reserve, lawful money)
Undistributed assets of insolvent national
banks.-
$152, 373, 227. 61
26, 301, 669. 29
4, 065. 00
7, 000, 360. 78
Total redemption and trust funds in
the general fund..
185,679,322.68
Exchanges of currency, coin, etc.
Treasurer's checks outstanding
Post Office Department balance
Balance to credit of postmasters, clerks of
courts, etc
162,511,610.49
808,912.83
6, 651, 316. 13
53, 247, 758. 86
$161, 594, 675. 70
26, 993, 525. 27
4,740.00
7, 043, 441. 20
2, 574. 41
195, 638, 956. 58
3,911,175.42
1, 277, 960. 18
8,036,827.50
30, 687, 874. 74
$141,
30,
046, 727. 99
314,179.01
8,745.00
867, 446. 87
151, 652. 94
184,388,751.81
37,359,742.51
1,267,180.66
14, 955, 576. 26
36, 844, 728. 78
Total liabilities, general fund .
Balance in general fund 2.
308,898,919.99
211,128,078.43
239, 552, 794. 42
219, 979, 440. 82
Total.
620, 026, 998. 42
489, 532, 235. 24
274,
238,
815,980.01
029, 514. 74
612,845,494.75
1 Includes $58,704,061.63 in Federal farm loan drafts covering sale of bonds.
» Balance in general fund for years 1791 to 1922 is shown in Table I of the annual report for *he fiscal
year 1922.
11438— 26t-
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REPORT OF THE SECRETARY OF THE TREASURY
Table 24. — Principal of the public debt at the end of each fiscal year, from ISoS to
1926,^ exclusive of (jold irrti/iratrs, silrer certificates, ciiriencii certificates, and Treasuni
notei of 1890
June 30-
Iiilerest
bearing '
MulureJ
Noniiitercst
bearing '
1853.
1854.
1855.
1856.
1857.
1858.
1859.
$59,642,412
42,044,517
35,418,001
31,805,180
28,503,377
44,743,256
58,333,156
64,683,250
1861 90, 423, 292
1862 305, 356, 045
1863 707, 834, 255
1864 1 , 360, 026, 91 4
1865 2,217,709,407
1866 2,322,116,330
1867 2,238,954,794
1868 2,191,326,130
1869 2,151,495,065
1870 2,035,881,095
1871 1,920,696,750
1872 1,800,794,100
1873 1,69(3,483,950
1874 1 , 724, 930, 750
1875 1,708,676,300
1876 1,696,685,450
1877 1,697,888,500
1878 1,780,735,650
1879 1,887,716,110
1880 1,709,993,100
1881 1,025,567,750
1882 1,449,810,400
1883 1,324,229,150
1884 1,212,503,850
1885 1,182,150,950
1886 1,132,014,100
1887 1,007,692,350
1888 936,522,500
1889 S15,85;5,990
1890 711.313,110
1891.
1892.
1893.
1894.
1895.
1896.
1897.
1898.
1899.
1900.
1901.
1902.
1903.
1904.
1905.
1906.
1907.
1908.
1909.
1910.
610,
585,
585,
635,
716,
847,
847,
847,
1,040,
l,02;i,
529, 120
0-^9, 330
037, 100
041,890
202, 060
363, 890
365, 130
367, 470
048, 750
478, 800
987,141,040
931,070,340
914,541,410
895,157,440
895, 158, 340
895,159,140
894, 8:34, 280
897, 503, 990
913,317,490
913, 317, 490
S162,249
199,248
170,498
168,901
197, 99S
170, 168
165,225
160, 575
159,125
230, 520
171,970
306,629
2,129,425
4,435,865
1,739,108
1,246,33-1
5,112,034
3,569,664
1,948,902
7,926,547
51,929,460
3,216,340
11,425,570
3,902,170
16,648,610
5,594,070
37,015,380
7,621,205
6,723,615
16,260,555
7,831,165
19,655,955
4, 100, 745
9,704,195
6,114,915
2, 495, 845
1,911,235
1,815,555
Total gros.s
debt
614,705
785, 875
094, 060
851,240
721, 590
636,890
346,880
262, 680
218,300
170, 320
1, 415, 620
1,280,860
1,205,090
1,970,920
1,370,245
1, 128, 135
1,086,815
4,130,015
2, 883, 855
2, 124, 895
S158,591
411,767
455, 4 57
458,090
429,211
409,474
390,873
388,503
397,002
399, 406
401,270
402,796:
431,785:
436, 174
430,258
393,222
373,088
374,181
37^,294
386,994
390,844
389,898:
393,087
392, 299;
413,941
451, 078,
445,613
431,705
409, 267
393, 662
380, 403:
374,300:
380, 004:
378,989
373, 728;
378, 081
384,112
389, 433;
238,701
233,015,
245,680
243, 659;
239, 130,
235, 828,
246, 235,
251, 257
276, 056;
232,114
231,497
390
456
271
180
734
321
992
491
510
489
191
935
640
779
158
793
595
153
567
363
689
603
639
474
255
029
311
286
919
736
636
600
087
470
570
703
913
654
733
585
157
413
656
510
695
098
398
027
584
$59,804,661
42,243,765
35,588,499
31,974,081
28,701,375
44,913,424
58,498,381
64,843,831
90,
524,
1,119,
1,815,
2,677,
2,755,
2,650,
2,583,
2,545,
2, 436,
582,417
177,955
773,681
830,814
929,012
763,929
168,223
440,456
110,590
453,269
2,322,052,141
2,209,990,838
2,151,210,345
2,159,932,730
2,156,276,649
2,130,845,778
2,107,759,903
2,159,418,315
2,298,912,643
2,090,908,872
2,019,
1,856,
1,721,
1,625,
1,578,
1, 555,
1,405,
1,384,
1,249,
1,122,
1,005,
968,
901,
1,016,
1,096,
1,222,
1,226,
1,232,
1,436,
1,263,
285,728
915,644
958,918
307,444
551, 169
659, 550
485, 294
631,656
470,511
396,584
806,561
218,841
431,766
897, 817
913,120
729,350
793,713
743, 063
700, 704
^16,913
1,221,572,245
1,178,031,357
1,159,405,913
1,136,259,016
1,132,357,095
1,142,522,970
1,147,178,193
1,177,690,403
1,148,315,372
1,146,939,969
Gros.s debt
per capita
$2.36
1.62
1.32
1.15
1.01
1.53
1.93
2.06
2.83
16.03
33.56
53.33
77.07
77.69
73.19
69.87
67.41
63.19
58.70
54.44
51.62
50.47
49.06
47.21
45.47
45.37
47.05
41.69
39.35
35.37
32.07
29.60
28.11
27.10
24.97
23.09
20.39
17.92
15.75
14.88
14.49
15.04
15.91
17.40
17.14
16.90
19.33
16.56
15.71
14.89
14.40
13.88
13.60
13.50
13.33
13.46
12.91
12.69
• Figures for 1853 to 1885, inclusive, are taken from "Statement of Receipts and E.xpeuditures of the
Government from 1S55 to 1SS5 and Principal of Public Debt from 1791 to 1SS5," compiled from the
ofBcial records of the Register's oUice. Later figures are taken from the monthly debt statements and
revised figures published in the annual reports of the Secretary of the Treasury.
» Exclusive of bonds issued to the Pacino railways (provision having been made bv law to secure the
Treasury against both principal and interest) and the Navy pension fund (which "was in no sense a
debt, the principal being the proj)eriy of the United States).'
« Includes old demand notes; Lnited States notes, less the amount of the gold reserve since 1900; postal
currency and fractional currency less the amoimts officially estimated to have been destroyed; and also
the redemption fimd held by the Treasury to retire national-bank notes of national banks failed, in
liquidation, and reducing circulation, which prior to 1890 was not Included In the published debt stafe-
ments. Does not include gold, silver, or currency certificates or Treasury notes of 1890 for redemption
of which an exact equivalent of the respective kinds of money or bullion was held in the Treasury.
IIEPOKT OF THE SECRETABY OF THE TREASURY
511
Table 24. — Principal of the public debt at the end of each fiscal year, from 185S to
1926,^ exclusive of gold certificates, silver certificates, currency certificates, and Treasury
notes of 1890 — Continued
Juno 30
Interest-
bearing '
Matured
Noninteresl-
bearing '
Total gross
debt
Gross debt
per capita
1911
1912
1913
1914
1915
$915,353,190
903,776,770
965.706,610
967.953,310
969, 759, 090
$1, 879, 830
1, 760, 450
1,659,550
1, 552, 560
1,507,260
1,473,100
14,232,230
20, 242, 550
11. 109, .370
6, 747, 700
10,939,620
25, 250, 880
98,172,160
30,241,2.50
30,242,930
13, 327, 800
$236,751,917
228,301,285
225, 681, 585
218,729,530
219,997,718
2,52, 109, 878
248, 836, 878
237, 503, 733
236,428,775
230, 075, 350
227. 958, 908
227,792,723
243,924,844
239,292,747
275,122,993
246, 084, 419
$1,153,984,937
1,193,838,505
1 , 193, 047, 745
1,188,235,400
1,191,264,068
1,225,145,568
2,975,618,585
12,243,628,719
25,482,034,419
24,297,918,412
23,976,250,608
22,964,079,190
22,349,687,758
21,251,120,427
20,516,272,174
19, 643, 183, 079
$12. 28
12.48
12.26
12.00
11.83
1916
1917
1918
971,562,590
2,712,549,477
11,985,882,4.36
11.96
38.57
115.65
1919
1920
1921
1922
1923
1924
1925
1926
1 25,234,496,274
24,061,095,362
23, 737, 352, 080
22,711,03.5,-587
22,007,590,754
20,981,586,430
20,210.906,251
19,383,770,860
240.09
228.33
221.82
209.25
200. 86
188. 59
179.80
170. 04
1 Figures for 1S53 to 1SS5, inclusive, are taken from "Statement of Receipts and Expenditures of the
Government from 1855 to 1885 and Prmcipal of Public Debt from 1791 to 1S85," compiled from the official
records of the Register's office. Later figures are taken from the monthly debt statements and revised
figures published m the annual reports of the Secretary of the Treasury.
» Exclusive of bonds issued to the Pacific railways (provision having been made by law to secure the
Treasury against both principal and interest) and the Navy pension fimd (which was in no sense a debt,
the principal being the property of the United States).
s Includes old demand notes; Tnited States notes, less the amount of the gold reserve since 1900; posia!
currency and fractional curreuev less the amounts officially estimated to have been destroyed; and also
the redemption fund held by the Treasury to retire national-bank notes of national banks failed, in liquida-
tion, and reducing circulation, which prior to 1890 was not included in the published debt statements
Does not include gold, silver, or currencv certificates or Treasury notes of 1890 for redemption ol which
an exact equivalent of the respective kinds of money or bullion was held in the Treasury.
Table 25. — Preliminary statement of the public debt, October SI, 1926
[On the basis of daily Treasury statements]
Bonds:
Consols of 1930 -- -- $5(«, 724, 050. 00
Panama's of 1916-1936 - 48,9.54,180.00
Panama's of 1918-1938 - - 25,947,400.00
Panama's of 1961 - 49,800.000.00
Conversion bonds -- 36,894,500.00
Postal savings bonds - ---- 12,881,080.00
$766, 201, 210. 00
First Libertv loan of 1932-1917 1.939,210,800.00
Second Liberty loan of 1927-1942 .--- 3,194,524,300.00
Third Liberty loan of 1928 - - 2,308,183,250.00
Fourth Liberty loan of 1933-1938. 6,324,466,150.00
13,676,334,500.00
Treasury bonds of 1947-1952 763,948,300.00
Treasury bonds of 1944-1954 1,047,087,500.00
Treasurv bonds of 1946-1956 - 494,898,100.00
— - — — — — — 2,305,983,900.00
Total bonds - - — - 16,748,469,610.00
Treasury notes:
Series A-1927, maturing Dec. 15, 1927 355,779,900.00
Series B-1927, maturing Mnr. 15, 1927 668,201,400.00
-Adjusted service-
Series A-1930 50,000,000.00
Series A-1931 - --- 53,500,000.00
Series B-1931 - 70,000,000.00
1,197,481,300.00
Treasury certificates;
Series TD-1926, maturing Dec. 15, 1926 - 452,879,000.00
Series TJ-1927. maturing .Tune 15, 1927 378.669,500.00
Adjusted service-
Series .\-1927 - - 25,600,000.00
Civil service retirement fund scries.. -- 4,70(vT)00. 00
— 861 , 848, 500. 00
512
REPORT OV rilE SECRETARY OF THE TREASURY
Table 25. — Preliminari/ staleineul of the public debt, October SI, 1.926 — Contd.
Treasury savinps certiflcates: '
Series 1921, issue of Doc. 15, 1»21 $1,832,424.00
Series 1922, issue of Dec. 15, 1921 95.762,656.60
Series 1922, issue of Sept. 30, 1922 14,480,760.80
Series 1923, issue of Sept. 30,1922 128,462,507.50
Series 1923, issue of Dec. 1, 1923 23,302,612.25
Series 1924, issue of Dec. l, 1923... 94,229,270.60
$358, 070, 231 . 75
Total interestbeariiik' debt. 19,165,869,641.75
Matured debt on wliidi interest lias ceased:
Old debt matured— issued prior to Apr. 1, 1917. 2, 181,990.20
Certificates of indebtedness. 432,500.00
Treasury notes 5,258, 100.00
3^4^ percent Victory notes of 1922-23 28,700.00
4;'4 percent Victory notes of 1922-23 4,029,250.00
1 1, 930, 540. 28
Debt bearing no interest:
United States notes _ 346,681,016.00
Less gold reserve 154,188,886.20
Deposits for retirement of national-bank and Federal reserve 192, 492, 129. 80
bank notes 44,146,709.50
Old demand notes and fractional currency 2,047,212.89
Thrift and Treasury savings stamps, unclassified sales, etc 3,674,575.92
242, 360, 628. 1 1
Total gross debt 19,420,160,810.12
Table 26 (see Table 30, Item I-E). — Treasury notes and certificates of indebted-
ness which matured during the fiscal year 1926, outstanding June SO, 1926,
classified by issues and denominations
Title of issue
.$100
$500
$1,000
$5,000
I. Treasury notes:
1. Series B-1925
$58,800
122, 300
$113,500
204,000
$229, 000
766,000
$105,000
2. Series .^.-1926
235,000
3. Total Trciisury notes
191,100
317,500
995,000
340, 000
II. Certificates of indebtedness:
1. Series TS-1925
1,500
2,500
.^1,000
41,000
1,000
12,000
303, 000
255, 000
2. Series TD-1 925
10,666
130, 000
3. Series TJ-1 926...
4. Series TJ2-1926
235, 000
5. Total certificates of indebtedness
96,000
571,000
375,000
- .
III. Total securities outstanding June 30, 1926, which
matured during the fiscal year 1926
191, 100
413,500
1,566,000
715,000
Title of issue
$10,000
70, 000
330, 000
$100,000
Total
Pieces
I. Treasury notes;
1. Series B-1925
$.586, 300
1, 172
2. Series A-1926-.
1,200,000
2,857,300 2,489
3. Total Treasury notes
400,000
1,200,000
3,443,600
3,661
II. Certificates of indebtedness:
1. Series TS-1925
2,500
i
2. Series TD-1925.
24, 500 19
3. Series TJ-1926
150, 000
470,000
634, 000 44f5
4. Series TJ2-1926
1,001,000
431
5. Total certificates of indebtedness
020,000
1,662,000
900
III. Total securities outstanding June 30, 1926, which
matured during the fi.scal year 1926
1,020,000
1,200,000
5,105,600
4,561
« Net redemption value of certificates outstanding.
REPORT OF THE SECRETARY OF THE TREASURY
513
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561
INTEREST ON THE PUBLIC DEBT
Table iQ.— Interest on the public debt of the United States payable, paid, and
outstanding unpaid for the fiscal year 1926
[Including accrued discount on Treasury (war) savings securities]
Class of security
Outstanding
unpaid interest
June 30, 1925
Interest due
and payable
fiscal year 1926
Interest pay-
ments fiscal
year 1926
Outstanding
unpaid interest
June 30, 1926
Pre-war loans -.
Liberty and Victory loans
Treasury bonds
Treasury notes
Certificates of indebtedness
Treasury (war) savings securities
Total
$403, 960. 97
46,437,174.92
1, 594, 463. 23
3,417,195.50
1, 262, 897. 56
15, 781, 077. 89
$16, 156, 741. 09
594,011,003.35
71, 876, 747. 38
102, 983, 344. 52
25, 261, 906. 06
11,912,059.30
$16, 161, 689. 73
595, 831, 072. 93
72, 129, 010. 90
104, 516, 268. 50
25, 317, 636. 87
17, 513, 527. 19
$399, 012. 33
44, 617, 105. 34
1, 342, 199. 71
1, 884, 271. 52
1, 207, 166. 75
I 10, 179, 610. 00
6, 770. 07
822, 201, 801. 70
2 831,469,206.12
59, 629 365. 65
1 This amount short of outstanding shown on public debt statement of June 30, 1926, by $22,155, which
represents counter entry of repayments functioned as of the fiscal year 1926 subsequent to publication of the
public debt statement.
2 This amount in agreement with expenditures account of interest on the public debt as shown in Table
7, but short of the amount shown in daily Treasury statement of June 30, 1926, by $468,494.04 on account of
the latter reflecting expenditures from a cash standpoint irrespective of the fiscal years to which they
pertain.
562
REPORT OF THE SECRETARY OF THE TREASURY
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REPORT OF THE SECRETARY OF THE TREASURY
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571
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75. 25
20, 410. 00
5.00
5.00
200. 00
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2, 200. 00
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572
REPORT OF THE SECBETARY OF THE TREASURY
Table 50 (see Table 30, Items II- A3 and F5). — Retired and unissued United
Slates securities on hand June SO, 1925, not previously reported (belonging to
previous fiscal years and delivered to the Register of the Treasury during the fiscal
year ended June SO, 1926)
Retired securities
Total
Title of issue
Redemp-
tion
Exchange,
conver-
sion, etc.
Loss or
destruc-
tion
Unissued
stock
Amount
Pieces
Pre-war securities:
6 per cent loan of 1847.
$56,800
1 1,600
'$56,800
6 per cent loan of 1863
$1,600
' 400,000
3 per cent Panama Canal loan of
1911-1901
1 15,000
2,380
110
85
160
'$415,000
848, 480
67, 175
16, 495
5,935
War savings certificates:
Series 1918
$846, 100
67,065
16,410
5,775
169, 696
13 435
Series 1919
Series 1920
3 299
Series 1921
1 187
Total-.
55,200
' 09, 065
935, 350
' 398,400 ^■''>^ f"*"^ 1 1S7 r.i7
' Deduct account adjustment in classification of amounts of securities previously reported.
INSULAR AND DISTRICT OF COLUMBIA LOANS
Table 51. — Insxdar and District of Columbia loans, changes during the fiscal
year ended June SO, 1926
Title of issue
Interest
rate
Outstand-
ing June
30, 1925
Issued
account
original
subscrip-
tion
Retired
account
redemp-
tion
Issued
and
retired
account
ex-
changes,
transfers,
etc.
Out-
standing
June 30,
1926
Philippine Islands loans:
Loan of 1904 (1914-1934) land purchase.
Per cent
4
4
4
4
4
4
4
4
$7, 000, 000
2, 500, 000
1,000,000
1, 500, 000
4, 000, 000
1, 000, 000
2, 000, 000
1,000,000
125,000
6, 000, 000
2, 750, 000
10, 000, 000
5, 000, 000
2, 750, 000
9, 500, 000
23, 000, 000
1,000,000
$486, 000
60,000
430, 000
32,000
200,000
196,000
$7, 000, 000
Public improvement —
Loan of 1905 (1915-1935), first series.
2, 500, 000
Loan of 1906 (1916-1936), second
series
1, 000, 000
Loan of 1909 (1919-1939) , third series.
1, 500, 000
Loan of 1916 (1926-1946)
4, 000, 000
City of Manila, sewer and water-
Loan of 1905 (1915-1935), first series.
1.000.000
Loan of 1907 (1917-1937), second
series _
123, 000 2. 000. 000
Loan of 1908 (1918-1938) , third series.
7,000
35,000
1,000,000
City of Cebu loan of 1911 (1921-1941),
sewer and water
4
125, 000
Loan of 1920 (1930-1950), Manila port
works and improvements
5H
5
4M
43^
5
4H
4M
4M
688,000
6, 000, 000
City of Manila 1920 (1930-1950)
2, 750, 000
Loan of 1921 (due 1941) , public improve-
ment
10, 000, 000
Loan of 1922 (due 1952)
5, 000, 000
Collateral loan of 1922 (due 1950)
2, 750, 000
Loan of 1922 (due 1952) , irrigation and
permanent public works
$2,300,000
11.800,000
Gold loan of 1922 (duo 19.52)
23, 000, 000
Gold loan of 1925 (19.35-1955)
250,000
976,500
428, 500
400, 000
1, 000, 000
1, 250, 000
Collateral loan of 1926 (1935-1956)
976, 500
Collateral loan of 1926 (due 1956), Pan-
gasinan
428, 500
Collateral loan of 1926 (due 1956), Occi-
dental Negros
400,000
Total
80,125,000
4,355,000
1
3, 247, 000
84, 480, 000
1
REPORT OF THE SECRETARY OF THE TREASURY
573
Table 51.
-Insular and District of Columbia loans, changes during the fiscal
year ended June 30, 1926 — Continued
Title of issue
Porto Rican gold loans:
San Juan Harbor improvements —
Loan of 1914 (1924-1939) (matured)
Loan of 1915 (192.S-1940)
Loan of 1917 (1927-1942)
Irrigation^
Loan of 1913 (1933-1943)
Loan of 1913 (1944-1950), series A to
G.
Loan of 1914 (1951-1954), series A
toD
Loan of 1915 (1955-1958), series E
toH :
Loan of 1916 (1959-1960), series I
and J
Loan of 1918 (1958-1959), series A
and B
Loan of 1922 (1961-1962), series A
and B
Loan of 1923 (1929-1941), series A
toM 1...
Loan of 1924 (1942-1949), series N
toU
Loan of 1925 (due 1963)
Loan of 1925 (1939-1959), series V
toEE
Public improvement —
Loan of 1914 (1925-1939)
Loan of 1916 (1927-1930), series A
toD
Loan of 1918 (1927-1930), series E
toll
Loan of 1919 (1931-1934), series I
toL
Loan of 1920 (1937-1940), scries A
toD
Loan of 1922 (1941-1944), series A
toD
Loan of 1923 (1944-1948), series A
toD
Loan of 1923 (1943-1955), series A
to F
Loan of 1926 (1956-1959), series A
toD
Loan of 1914 (1923-1953), series I to V,
refunding
Refunding-municipal —
Loan of 1915 (1919-1935), series A
to Q, second issue..
Loan of 1916 (1918-1927), series A to
J, third issue
Loan of 1920 (1930-1945), high school
building
Loan of 1920 (1930-1945), series A,
house construction
Loan of 1920 (1940-1942), series A and
B, workiugmen's house construc-
tion
Loan of 1924 (1929-1938), series A to J,
Munoz Rivera Park
Loan of 1925 (1935-1948), series A to D,
target range and aviation field
Interest
rate
Per
Total.
District of Columbia 50-year funded
loan of 1924 (matured)
Outstand-
ing June
30, 1925
cent
4
4
4
4
4
4
4
4
4
5
41^
4H
43-$
4
4
4
4^
5
5
5
4H
4
4
4
4M
4H
4J^
4>i
4H
3.65
Issued I Retired
^'=?<'."°^ 1 Account
07^1°?! i redemp-
sub^cnp- ,.,„P
$19,
192,
100,
1,000,
700,
400,
400,
200,
200,
250,
975,
999,
500,
500,
1, 000,
1, 000,
1,000,
1,000,
6,000
515, 000
173, 000
90, 000
300, 000
250, 000
500, 000
200, 000
$10, 000
30,000
$125, 000
750, 000
11,000
2, 000, 000
19, 063, 000
3, 075, 000 125, 000
105, 800
200, 000
25, 000
19, 000
30, 000
Issued
and
retired
account
ex-
changes,
transfers,
etc.
$140, 000
156, 000
39,000
10,000
3,000
165, 000
77, 000
250, 000
887, 000
33,000
58, 000
90,000
200
45,000
94, 000
159, 000
15, 000
1, 278, 000
12, 000
14, 000
17, 000
2,000
Out-
standing
June 30,
1926
200,000
$9,000
162,000
100, 000
1, 000, 000
700, 000
400,000
400,000
200, 000
200, 000
250, 000
975, 000
600, 000
125,000
750, 000
988,000
500, 000
500, 000
1, 000, 000
1, 000, 000
1, 000, 000
1, 000, 000
6, 000, 000
2, 000, 000
490, 000
154, 000
60, 000
300, 000
250, 000
500, 000
200,000
200, 000
3,744,000 22,013,000
105,600
574
REPUKT OF THE SECRETARY OF THE TREASURY
Table 52. — Insular and District of Columbia securities, retired and unissued,
delivered to the Register of the Treasury during the fiscal year ended June SO, 1926
Title of issue
Retired account
of—
Inter-
est
rate
Re-
demp-
tion
Philippine Islands loans:
Loan of 1904 (1914-1934) land purchase.
Publip improvement^
Loan of 1905 (1915-1935), first series..
Loan of 1 90(i (1 91 fi-l 93fi). second series .
Loan of 1909 (1919-1939), third series..
Citv of Manila sewer and water-
Loan of 1905 (1915-1935), first series...
Loan of 1!»07 (1917-1937), second series.
Loan of 1908 (1918-1938), third series..
City of Cebu, loan of 1911 (1921-1941),
sewer and water
Loan of 191(1 (1926-194G)
Loan of 1920 (1930-1950) Manila port
works and improvements.-
Gold loan of 1925 (1935-1955)
Per ct.
4
4
4
4
4
4
4
4
4
Total Philippine Islands loans.
Porto Rican loans:
Gold loan of 1913 (1933-1943), irrigation...
Gold loan of 1913 (1944-1950), irrigation-
Series .\ -
Series B
Series C —
Series E
Series F
Series O
Gold loan of 1914 (1951-1954), irrigation-
Series A
Series C
Gold loan of i9iy(Y955"-l95'8)Virrigati'on—
Series E
Series G
Series H
Gold loan of 1918 (1958-1959), irrigation-
Series A
Gold loan of 1923 (1929-1941), irrigation-
Series C...
Series D
Series F...
Series G
Series I -
Gold loan of r9"2"4"(Y94'2-m9)Vi"rrigati"on— "
Series N
Series O
Series P
Series Q..
Series R
Series S
Series T
Series U
Gold loan of 1925 (due 19f)3), irrigation
Gold loan of 1925 (1939-1959), irrigation-
Series V ■
Series W
Series X
Series Y .-
Series 7,
Series A A
Series BB -..
Series CO
Series DD
Series EE
Gold loan of 1914 (1925-1939), public im-
provement
Gold loan of 1910 (1927-1930), public im-
provement—
Series B
Series C
Series D
0X2.
5 .
Exchange,
transfer,
etc.
$486, 000
50,000
430. 000
32,000
196,000
123,000
7,000
35,000
200,000
688,000
1,000,000
iW.
4^i.
4K
4M
4H
4H
4>^
4M
4H
4)^2
4H
4J^
4H
4H
3, 247, 000
140,000
35,000
60, COO
27,000
2,000
7,000
25,000
15,000
12,000
12,000
7,000
1,000
2,000
3,000
30, 000
40, 000
20,000
60,000
7,000
8,000
15,000
6,000
Unissued
stock
Total
Pieces
234
41
61
32
52
87
7
35
92
355
1,000
1,996
40,000
16,000
250,000
90,000
70,000
75,000
65,000 ■•
75,000 I
75,000 I
112,000 !
75,000 i
100,000 '
150,000 I
33,000 ,
21,000
7,000
30,000
$.50,000
85, 000
100,000
100,000
108,000
125,000
125,000
103,000
165,000
75,000
75,000
75,000
75,000
75,000
75,000
75,000
75,000
75,000
75,000
17
40
7
21
7
4
50
100
100
102
108
135
125
106
415
165
145
150
140
150
150
187
150
153
158
REPORT OF THE SECRETARY OF THE TREASURY
575
Table 52. — Insular and District of Columbia securities, retired and unissued,
delivered to the Register of the Treasury during the fiscal year ended June SO, 1926 —
Continued
Retired account
'of—
Title of issue
Porto Eican loans — Continued.
Gold loan of 1918 (1927-1930), public im-
provement—
Series II
Gold loan of 1920 (1937-1940), public im-
piovement—
Series A
Series B
Series D
Gold loan of 1922 (1941-1944), public im-
provement—
Series A
Series B
Series C .
Series D :
Gold loan of 1923 (1944-1948), public im-
provement—
Series A
Series B
Series C
Series D
Gold loan of 1923 (1943-1955), public im-
provement^
Series D
Gold loan of 1926 (1956-1959), public im-
provement—
Series A
Series B
Series C
Series D
Gold loan of 1914 (1923-1953), refunding—
Series K
Series 1/
Series O
Series P
Series Q
Series S
Series V
Gold loan of 1915 (1919-1935), refunding,
municipal —
Series G
Series I
Series P
Gold loan of 1916 (1918-1927), refunding,
municipal-
Series H
Gold loan of 1920 (1930-1945), house con-
struction—
Series A
Gold loan of 1920 (1940-1942), working-
men's house construction —
Series B
Gold loan of 1925 (1935-1948), target range
and aviation field —
Series A
Series B
Series C
Series D
Inter-
est
rate
Re- Exchange,
demp- transfer,
tion etc.
Total Porto Rican loans.
District of Columbia fifty-year funded loan
of 1924 (matured)
Total securities delivered .
Per ct.
4
4H
4H
4^
4^
4H
4M
4
4
4
4
4
4
4
4
Hi
4}
4J^
4H
3.65
200
$90, 000
15,000
5,000
25, 000
14, 000
40, 000
10, 000
30, 000
123, 000
5, 000
16,000
15,000
15, 000
385, 000
400, 000
388, 000
105, 000
2,000
1,000
2,000
1,000
1,000
5,000
12,000
2,000
17,000
2,000
50,000
50,000
50, 000
50, 000
Unissued
stock
3, 744, 000
6, 991, 000
$56, 000
55,000
Total
Pieces
115,000
50, 000
50,000
50, 000
50, COO
2, 137, 000
385
400
388
105
36
2
1
2
1
1
1
100
100
100
100
5,235
Amount
$90, 000
15, 000
5,000
25,000
14,000
40,000
10, 000
30,000
123, 000
5,000
16,000
15,000
15,000
385, 000
400, 000
388, 000
105, 000
56,000
2,000
1,000
2,000
1,000
1,000
5,000
55,000
12, 000
2,000
115, 000
17,000
2,000
100. 000
100,000
100,000
100, 000
5, 881, 000
200
2, 137, 000 7, 235 9, 128, 200
576 REPORT OF THE SECRETARY OF THE TREASURY
SECURITIES OWNED BY THE UNITED STATES GOVERNMENT
Table 53. — Securities owned by Ihe United States Government, June SO, 1926
[Compiled from latest reports received by the Treasury]
Bonds of foreipn Oovornments received under agreements for funding
of their doMsto the United States, pursuant to the acts of Congress
approved Feb.'.), 1922, Feb. 28, 1923, March 12, 1924, May 23. 1924
and Dec. 22, 1924: . .. , ,
Finland.... 4... .$8,803,000.00
Great Britain 4,530,000,000.00
Hungary 1,952, Sr,.'",. 00
Lithuania ____ f,, 1 05, 000. 00
>-o\o.n(i. 178,560,000.00
1 OtUl _. ._« --- _. ^ 3:4 79'i 400 ^ft'^ nfv
ObligationsofforeignQovernments, underauthori'ty ofa'ctVapproved ' ' '' '
Apr. 24, 1917, and Sept. 24, 1917, as amended (on basis of cash ad-
vances, less repayments of principal): i
Belgium 347,210,808.08
Czechoslovakia gl 974 041 10
France ".".'"!.""[."' 2, 933^ 173^^71
^■"^ece 15,000,000.00
"<:\ly-. - 1,647,009,731.02
Liberia..... __ _ 20,000.00
Rumania 23,201,307.98
Russia - - 187,729,750.00
Serbia 26,059,865.40
1 otm c 040 04*1 dn*^ 40
Foreign obligations received from the Secretarvorwar'on'account "of
sale of surplus war supplies: '
Belgium 29,818,761.38
Czechoslovakia 20 004 SC 49
Esthonia ' ' ' 12! 213^377! 88
trance 407,341,145.01
Lat'*'''^- 2,521,809.32
Nicaragua _. . 2 31,882.99
Rumania 12,922,675 42
Russia _ 406,082.30
berbs, Croats, and Slovenes 24 978 020.99
Total _ _ ^IQ gog J^y <TQ
Foreign obligations received from the American Relief Administration ' '
on account of relief, pursuant to act approved Feb. 25, 1919- 1
Armenia... _ __ 8,028,412.15
Czechoslovakia 0,428,089.19
Esthonia _ _ 1,785,767.72
Latvia ___ 2,610,417.82
Russia _ __ 4,465,405.07
23,318,151.95
Total
Foreign obligations received from the Umted"¥t'at'e's Grain Corpora"
tion onaccount of final liquidation, given for relief pursuant to act
approved Mar. 30, 1920: i
^rmenia 3,931,505.34
Austria 24,055,708.92
Czechoslovakia 2,873^238.25
1 Otal _ _ QQ g^.Q ^eo e«
Capital Stock of war emergency corporations: ' "'" • . . .
Capital stock of the Emergency Fleet Corporation 50 000 000 00
Less cash deposited with the Treasurer of the United States to
the credit of the corporation _ 43_ 380 327. 25
Capital stock of the Iloboken Manufacturers Railroad Co . ' 400 000 00
Capital stock of the United States Housing Corporation, issued' 70"6o6 6o6"6o
Less amount retired plus cash deposits covered into Treasury
under act approved July 11, 1919 33,840,596.58
Capital stock of United States Sugar Eciualization Board (Inc.) . 5 000 000 00 . J - •
Offset by cash deposited with the Treasurer of the United
States to credit of the corporation 11 379 780.45
Capital stock of the United States Spruce Production Corporation.. 10 000 000 OO
Capital stock of the War Finance Corporation outstanding . i 006 666 00 ' '
Offset by cash deposited with the Treasurer of the United States ' '
to credit of War Finance Corporation 34,090,732. 16
Obligations of carriers acquired under section 7 of the Federal control
act, approved .Mar. 21, 1918, as amended:'
Boston & Maine Railroad 25 950 000 00
' The figures do not include interest accrued and unpaid.
' Includes $6,5C0 in obligations received from the Secretary of the Kavy
r..2h]^ amount does not include securities purchaseil by the Director" Geneial of Railroads under the
provisions of section 12 of the Federal control act, approved Mar. 21 1918
KEPOET OF THE SECRETARY OF THE TREASURY
577
Equipment trust 6 per cent gold notes, acquired by Director General of Railroads
pursuant to Federal control act of Mar. 21, 1918, as amended, and act approved
Nov. 19, 1919, to provide for the reimbursement of the United States for motive
power, cars, and other equipment ordered for carriers under Federal control: *
Minneapolis & St. Louis Railroad Co $302,400.00
Obligations of carriers acquired pursuant to section 207 of the transpor-
tation act, approved Feb. 28, 1920, as amended:
Ann Arbor Railroad Co $312,000.00
Boston & Maine Railroad. 1,030,000.00
Chicago & Eastern Illinois Railroad Co 3,425,000.00
Chicago, Milwaukee & St. Paul Railway Co 20,000,000.00
Erie Railroad Co 8,725,000.00
Kansas, Oklahoma & Gulf Railway Co 1,622,391.00
Minneapolis & St. Louis Railroad Co 1,250,000.00
New York, New Haven & Hartford RaUroad Co 60,000,000.00
New York, Susquehanna & Western Railroad Co 100, 000. 00
Norfolk Southern Railroad Co 200,000.00
Seaboard Air Line Railway Co 2,000,000.00
Washington, Brandywine & Point Lookout Railroad Co 50,000.00
Waterloo, Cedar Falls & Northern Railway Co 500,000.00
Western Maryland Railway Co 2,000,000.00
WheeUng& Lake Erie Railway Co.. 900,000.00
Total 102,114,391.00
Obligations of carriers acquired pursuant to section 210 of the transpor-
tation act, approved Feb. 28, 1920, as amended:
Alabama, Tennessee & Northern Railroad Corporation 275,250.00
Ann Arbor Railroad Co 225, 000. 00
Aransas Harbor Terminal Railway 50,000.00
Bangor & Aroostook Railroad Co 84,000.00
Boston & Maine Railroad 21,705,479.00
Central New England RaUroad Co 300,000.00
Central Vermont Railway Co 141,000.00
Charles City Western Railway Co 140, 000. 00
Chesapeake & Ohio Railway Co 8,073,023.97
Chicago & Eastern Illinois Railroad Co., receiver of 785, 000. 00
Chicago Great Western Railroad Co 2,205,373.00
Chicago, Indianapolis & Louisville Railway Co 155,000.00
Chicago, Milwaukee & St. Paul Railway Co 35, 000, 000. 00
Chicago, Rock Island & Pacific Railway Co 7,862,000.00
Chicago & Western Indiana Railroad Co 7,616,000.00
Cisco & Northeastern Railway Co 230,250.00
Cumberland & Manchester Railroad Co 375,000.00
Des Moines & Central Iowa Railroad, formerly the Inter-Urban
Railway Co - 633, 500. 00
Erie Railroad Co 11,574,450.00
Fernwood, Columbia & Gulf Railroad Co 20,000.00
Fort Dodge, Des Moines & Southern Railroad Co 200,000.00
Gainesville & Northwestern Railroad Co 75,000.00
Georgia & Florida Railway, receivers of 792, 000. 00
Greene County Railroad Co 36,000.00
Hocking Vallev Railway Co 1, 665, 000. 00
Kansas City, Mexico & Orient Railroad Co., receiver of the 2, 500, 000. 00
Lake Erie, Franklin & Clarion Railroad Co 13,750.00
LouLsville & Jefferson ville Bridge & Railroad Co 147, 000. 00
Minneapolis & St. Louis Railroad Co 1, 382, 000. 00
Missouri & North Arkansas Railway Co 3,500,000.00
Missouri Pacific Railroad Co 5, 309, 760. 00
National Railway Service Corporation 3,339, 173. 67
New York, New Haven & Hartford Railroad Co 27, 130, OOO. 00
Norfolk Southern Railroad Co 1, 463, 000. 00
Salt Lake & Utah Railroad Co 872,600.00
Seaboard Air Line Railway Co 14,4.53,900.00
Seaboard Bav Line Co 3, 376, 000. 00
Shearwood Railway Co -- 20,000.00
Toledo, St. Louis & Western Railroad Co., receiver of 462,000.00
Virginia Blue Ridge Railway Co lOfi, 000. 00
Virginia Southern Railroad Co 38,000.00
Waterloo, Cedar Falls & Northern Railway Co 1,260,000.00
Western Maryland Railway Co 2,622,800.00
Wheeling & Lake Erie Railway Co 2,060,000.00
Wichita Northwestern Railway Co. 381, 750. 00
Wilmington, Brunswick & Southern Railroad Co 90,000.00
Total - - 170,746,059.64
Capital stock of the'Panama Railroad Co 7,000,000. 00
Capital stock of the Inland Waterways Corporation (acquired pursuant to the act ap- '
proved June 3, 1924) — — 1,500,000.00
* The notes are in series, which mature, respectively, on the 15th day of January in various years^up ta
1935.
578 REPORT OF THE SECRETARY OF THE TREASURY
Capital stock of the Federal land banks (on basis of purchases less
repayments to date); -i >.oo
Springfield, Mass t^oo r-,- «„
Baltimore. Md " — *^,??."/.^^- ?"
Columbia, s. c .:.::::::."" m okw^
St. Louis, Mo f^'fi??m
Berkeley, Calif " Qio'S^^SS
Total
Capital stock of Federal intermedTaVe'credlt ba'nks; Mqulred'puVsuam^ "" *'" '*°' "°- °°
to the agricultural credits act of 1923, approved Mar 4 1923-
bpringlield. M;iss ' 9 nnn mn nn
Columbia, S. C .1 I II"" " " 2 om om m
Lou sville. Kv " " AOOO, 000. 00
St. Louis, Mo :: — - :^-2^^'Z-o"
St Pml Minn - .2,000,000.00
Om; la Neb? " " " " 2.000.000,00
Wichita. Kans^\":::::::::::- -- -- ^'Z-r,'!!!
Houston Tex ' " 2.000,000.00
bS^ ^(l:^:::::::::::::: -- '• Z' JJ^- Jili
Spokane, Wash ""i:::::::::::::::::::::::::: 1: 5 Z: m
Total ~
Federal farm loan bond's, acquired' Vui-rua"nrtoMt"ap'proved" Jan.' 18^ ' ' ^- °°
Federal farm loan iVi per cent bonds <•„ .q. ,^ „„
q«^n!-!H®' received by the Seci ctary of War on account of iale7 of"surplus"war "supnir^"" 3 ns tS' 47
tn^MT. '■^'^'■^''I by the Secretary of the Navy on account of sales of surplit prone fy" 8 3u' 838' 43
Securities received by the United States Shipping Board on account of sales of shTpTetc: 46, 012, 40i: 22
Grand total... ., ■ —
11, 037, 161, 4IL 66
MEMOKANDUM
Amount due the United States from the Central Branch of the Union Pacific Railroad
ZriT8f4,1nd Ml^TwsSf '''^° '''"'°'' "'^ '"'^'^' ""''' ^PProveriuly 1 S
Principal
Interest. $1,600,000.00
- 1,866,834.82
Total ;; •
3,466,834.82
TJl?J^A'Z^^}i^ statement is made up on the basis of the face value of the securiti&s therein described no
^Z^:^^^l}il^^:}^^%^}^:^-':-''^--^ fo-- repayments. To the'extentlhatXsccunUef a?l
overn-
States
tiSili;?\?^^l'?u^a ''"'"'' Custodianrthe Unli;^ St;it^^^;^mme;;r'i;fe i^u^^Sc^ 1^^'^^r^fi
REPORT OF THE SECRETARY OF THE TREASURY
579
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RKPORT OF THE SECRETARY OF THE TREASURY
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REPORT OF THE SECRETARY OF THE TREASURY
581
RAILROADS
Table 56. — Payments to carriers from November 1, 1925, to October SI, 1926,
inclusive, 'provided for in section 20 4 of the irans-portation act of 1920, as amended,
for reimbursement of deficits on account of Federal control
Carrier
Partial
payments
Final
payments
Deductions '
Total
certified
Cuyahoga Valley Ry. Co.- .
$57, 866. 86
24,791.98
18, 747. 78
9, 504. 31
14,568.24
$57, 866. 86
24, 791. 98
Delray Connpcting R. R. Co
Manistee & Repton R. R. Co
$18,747.78
18, 747. 78
9, 504. 31
Quincy R. R. Co
Western Cable Ry. Co..
14, 568. 24
Total
125, 479. 17
33, 823. 50
18, 747. 78
125, 479. 17
Less refund of overpayments: Louisiana
Railway & Navigation Co...
33, 823. 50
Payments from Nov. 1, 1925, to Oct. 31, 1926,
inclusive
91 655.67
7, 953, 087. eO
18,747.78
1, 899, 770. 13
91, 655. 67
Payments to Oct. 31, 1925 .
$2, 207. 651. 41
10 160 739.01
Total payments to Oct. 31, 1926
2, 207, 651. 41
8, 044, 743. 27
1,918.517.91
10, 252, 394. 68
1 Amount due from the carrier to the President (as operator of the transportation systems under Federal
control) on account of traflic balances or other indebtedness.
Table 57. — Payments to carriers from November 1, 1925, to October 31, 1926,
inclusive, under the guaranty provided for in section 209 of the transportation act
of 1920, as amended, and payments by carriers to the United States under the
same section
Carrier
Advances
Partial
Final i
Total
Atlanta, Birmingham & Atlantic
R. R. Co
$13, 453. 51
665, 244. 72
24. 040. 80
31,418.88
82, 645. 62
100. 130. 45
10, 571. 78
11.602.01
2,428.73
106, 832. 66
75, 698. 89
$13, 453. 51
Central R. R. Co. of New Jersey...
665, 244. 72
24. 040. 80
Farmers' Grain & Shipping Co
31,418.88
Georgia and Florida Ry. Co.,
receiver
82, 045. 62
Louisiana Railway & Navigation
Co... .
100, 130. 45
Northwestern Terminal Ry
10, 571. 78
Port Bolivar Iron Ore Rv. Co.. .
11,602.01
Unadilla Valley Railway Co
1 _
2, 428. 73
Vicksburg, Shreveport & Pacific
Ry. Co
■
100, 832. 66
75, 698. 89
Total ..
1,124,068.05
76, 677. 36
1,124,068.05
Less refund of overpayment by—
Atchison, Topeka &
Santa Fe Ry. Sys-
tem $4,538.03
Atlanta & St. An-
drews Bay Ry. Co.
(part) 13,086.56
Cumberland & Man-
chester R. R. Co. 8,000.00
Denver & Salt Lake
R. R. Co.... 40,094.62
Great Northern Ry.
Co 7,732.71
Nevada Copper Belt
R. R. Co. 3,225.44
76, 677. 36
Payments to carriers from Nov. 1,
1925, to Oct 31 1926
1, 047, 390. 69
98, 484, 121. 38
1,047,390.69
Payments to Oct. 31, 1925, inclusive.
$263,935,874.00
$169, 441, 912. 14
531,861,907.52
Total payments to Oct. 31,
1926, inclusive
263, 935, 874. 00
169, 441, 912. 14
99,531,512.07
532,909,298.21
• Amounts in this column represent balances due and paid after taking into account advances and partial
payments previously made.
582
REPORT OF THE SECRETARY OF THE TREASURY
Table 58. — Loans to carriers under section 210 of the transportation act oj 1920,
as amended, and repayments on such loans from November 1, 1925, to October
SI, 192f), inclusive, with loans outstanding October SI, 1925, and October SI, 1926
Carrier
Alabama, Teunessee & North-
ern R. R. CorporiUion.-
Ann Arbor R. R. Co
Aransas Harbor Terminal Ry..
Atlanta, Birmingham & At-
lantic Ry. Co
Baltimore &. Ohio R. R. Co...
Bangor it .\roostook R. R. Co..
Boston & Maine R R
Central New England Ry. Co..
Central Vermont Ry. Co
Charles City Western Ry. Co..
Chesapeake & Ohio Ry. Co
Chicago & Eastern Illinois
R. R. Co., receiver
Chicago Great Western R. R.
Co
Chicago, Indianapolis & Louis-
ville Ry. Co...
Chicago, Milwaukee «fe St. Paul
Ry. Co
Chicago, Rock Island & Pacific
Ry. Co.-
Chicago & Western Indiana
R. R. Co
Cisco & Northeastern Ry. Co...
Cumberland & Manchester
R. R. Co
Des Moines & Central Iowa
R. R. Co. (formerly the
Interurban Ry. Co.)
Erie R. R. Co..
Fernwood, Columbia & Gulf
R. R. Co _
Fort Dodge, Des Moines &
Southern R. R. Co
1 ( rt Smith & Western R. R.
Co. , receiver
Gainesville & Northwestern
R. R. Co
Georgia & Florida Ry., receivers.
Greene County R. R. Co
Hocking Valley Ry. Co
Kansas City, Mexico & Orient
R. R. Co., receiver
Lake Erie, Franklin & Clarion
R. R. Co
Louisville & Jeffersonville
Bridge & Railroad Co
Maine Central R. R. Co
Minneapolis & St. Louis R. R.
Co
Missouri & North Arkansas
Ry. Co._
Missouri Pacific R. R. Co
National Railway Service Cor-
poration account:
Minneapolis & St. Louis
R. R. Co
Wheeling & Lake Erie Ry.
Co
New York, New Haven &
Hartford R. R. Co
Norfolk Southern R. R. Co
Salt Lake & Utah R. R. Co....
Seaboard Air Line Ry. Co
Seaboard Bay Line Co.
Shearwood Ry. Co
Tennessee Central Ry. Co
Loans outstand-
ing Oct. 31, 1925
$392, 750. 00
290, 000. 00
50, 000. 00
180, 000. 00
2, 900, 000. 00
84, 000. 00
21,705,479.00
300, 000. 00
141,000.00
140, 000. 00
8, 073, 023. 97
785, 000. 00
2, 205, 373. 00
155, 000. 00
35, 000, 000. 00
7, 862, 000. 00
7,616,000.00
236, 450. 00
375, 000. 00
633,
11,574,
20,
200,
156,
75,
792,
36,
1,665,
2, 500,
15,
147,
2, 373,
500. 00
450. 00
000.00
000.00
000.00
000. 00
000.00
000.00
000. 00
000. 00
000. 00
000.00
000.00
1, 382, 000. 00
3, 500,
5, 389,
000.00
760. 00
362, 640. 02
3, 102, 498. 30
27,130,000.00
1,515,100.00
872, 600. 00
14, 453, 900. 00
3,611,000.00
29, 000. 00
1,500,000.00
Loans made from
Nov. 1, 1925, to
Oct. 31, 1926
Repayments from
Nov. 1, 1925, to
Oct. 31, 1926
$117,500.00
65, 000. 00
180,000.00
2, 900, 000. 00
141,000.00
785, 000. 00
276, 000. GO
6, 200. 00
156, 000. 00
6, 000. 00
1,665,000.00
Loans outstand-
ing Oct 31, 1926
2, 500. 00
147, 000. 00
2, 373, 000. 00
80, 000. 00
13, 175. 89
112,788.76
100, 000. 00
52, 100. 00
392, 000. 00
11,500.00
1,500,000.00
REPOKT OF THE SECKETAEY OF THE TREASURY
583
Table 58. — Loans to carriers under section 210 of the transportation act of 1920,
as amended, and re-payments on such loans from November 1, 1925, to October
31, 1926, inclusive, ivith loans outstanding October 31, 1925, and October 31,
iS;26— Continued
Carrier
Loans outstand-
ing Oct. 31, 1925
Loans made from
Nov. 1, 1925, to
Oct. 31, 1926
Repayments from
Nov. 1, 1925, to
Oct. 31, 1926
Loans outstand-
ing Oct. 31, 1926
Toledo, St. Louis & Western
R. R. Co
$508, 000. 00
106, 000. 00
38, 000. 00
1, 260, 000. 00
2, 722, 800. 00
2, 060, 000. 00
381, 750. 00
90, 000. 00
$4(5,000.00
$462, 000. 00
106,000 00
Virginia Blue Ridge Ry. Co. -
Virginia Southern R. R. Co
38, 000. 00
Waterloo, Cedar Falls &
Northern Ry. Co,..
1,260,000.00
Western Maryland Ry. Co.- .
100, 000. 00
100, 000. 00
2, 622, 800. 00
Wheeling & Lake Erie Ry. Co.
1, 960, 000. 00
381, 750. 00
Wichita Northwestern Rv. Co.
Wilmington, Brunswick &
Southern R. R. Co
90, 000. 00
Total
178,693.074.29
11, 327, 764. 65
171, 907, 592. 71
167,365,309.64
Loans and repayments to Oct.
31, 1925
$350, 600, 667. 00
Grand total
350, 600, 667. 00
183, 235, 357. 36
584
REPORT OF THE SECRETARY OF THE TREASURY
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586
REPORT OF THE SECRETARY OF THE TREASURY
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Abstracts of reports. (See Bureaus and divisions.) Page
Actuary, Government, duties of 313
Adjusted service certificate fund 98,454
Administrative and staff officers of tlie Treasury six
Admissions, tax on :
Ciiange in, revenue act of 1926 292
Revenue from 475
Advertising, department, cost of 415
Agents representing claimants, recognition of 169
Agricultural credit corporations, rediscounts of Federal intermediate
credit banks made through 107
Agriculture, Department of, expenditures 436,448,452
Alaska fund 430
Alaska relief funds 435
Alcoholic beverages and distilled spirits, revenue from tax on 351, 472, 490
Alien Property Custodian (see also Germany; Mixed Claims Commis-
sion) :
Account of 366
Expenditures 366,435
Alien property funds 366,450,452
American Battle Monuments, expenditures 435
American Debt Commission. {See World War Foreign Debt Commis-
sion. )
American Relief Administration, foreign obligations received from 576
American war claims against Germany. (See Germany.)
Amusement places, etc. (See Admissions.)
Appropriations, fiscal years :
1885-1926 496
1914-1927, classified 493
Estimated, 1928, compared with appropriations, 1927, classified, 491
Architect of the Capitol, expenditures 434
Architect, Supervising. (See Supervising Architect.)
Arlington Memorial Amphitheater, expenditures 435
Arlington Memorial Bridge, expenditures 435
Armenia, status of debt to United States, November 15, 1926 73, 579
Assay offices. (See Mint Service.)
Assistant Secretaries of the Treasury xvi
Assistants to the Secretary of the Treasury xvi
Attorneys representing claimants, recognition of 169
Attorneys of general counsel's office. (See Internal Revenue, Bureau of,
general counsel's office.)
Austria, obligations to United States :
Repayment postponed until 1943 74
Status of debt, November 15, 1926 579
589
590 INDEX
B
Bank logislatiou : Page
Hull amendment on national 13
McPadden bill on national 13
Treasury's views on 13
J 5ank notes :
Federal reserve. (See Federal reserve bank notes.)
National. (See National-bank notes.)
State, stock of, 18G0-187S L 584
Banks :
Federal intermediate credit. (See Federal intermediate credit
banks. )
Federal land. (See Federal land banks.)
Federal reserve. {See Federal reserve banks.)
Federal reserve member, reporting, loans and investments 51
Joint-stock land. (See Joint-stock land banks.)
National. (See National banks.)
Other tban national, principal resources and liabilities, June 30,
1925 and 1926 341
Reporting, all —
Assets, capital, and number, by States, June 30, 1926 345
Resources and liabilities, principal, 1920-1926 344
Banks and bankers, revenue from tax on 471
Banks under State supervision. (See Banks, other than national.)
Bases of statements of receipts and expenditures, explanation of 296
Belgium, obligations to United States :
Act to authorize settlement of 2l»
Amount of —
Funded debt 56, 579
Original principal 56, 579
Total to be received on account of 255
Payments on account of —
Funded debt 56, 57, 579, 580
Interest 57,580
Principal 56,579
Statement by the Secretary of the Treasury before Ways and Means
Committee concerning settlement 206
Status of debt, November 15, 1926 74, 579
Beverages, revenue from tax on :
Alcoholic and distilled spirits 293, 471
Nonalcoholic 293, 473
Board of Tax Appeals :
Expenditures 435
Work of 357
Board, Library of Congress Trust Fund 104
Bonds :
Owned by United States Government —
Farm loan 366, 578
State 366
Penal, sureties on 298
Sui'ety running to United States, enforcement of regulations in
regard to 135
INDEX
591
Bonds — Continued.
United States (see also Public debt; Liberty bonds; Victory notes:
Treasury bonds) — Page
Accepted as security on penal bonds 298
Amounts issued, retired, and outstanding, June 30, 1926 500
Delivered by the Bureau of Engraving and Printing to the Divi-
sion of Loans and Currency 56S
Description of 183, 194
Each issue —
Authorized, issued, and outstanding 502
Date redeemable or payable 502
Issued and retired 500
Price received for 502
Exchange, conversion, etc., 1926, classified-- 526, 529, 531, 533, 534, 540
Held in custody of Treasurer 335
Interest collected to June 30, 1926, by Federal reserve districts,
on account of sales of 488
Issued and retired from date of inception 545
Issued through each Federal reserve bank and Treasury De-
partment 528
Issued to public and to Federal reserve banks 565
Issued, 1926, classified 526
On hand, June 30, 1925 and 1926-
Federal reserve banks 568
Loans and Currency, Division of 563
Outstandings —
June 30, 1926, classified by issues and denominations 513
Monthly, February 28, 1917-August 31, 1926 518
October 31, 1926, preliminary statement 511
Registered, classified 562
Unmatured, by denominations 516
Payment of Federal estate or inheritance taxes in 193
Purchases of, for cumulative sinking fund 42,199,201
Received from Bureau of Engraving and Printing by Division
of Loans and CuiTency 563
Registered outstanding and number of accounts, classified 562
Retired, classified —
Fiscal year 1926 529
Fiscal years 1918-1926 554
Subscriptions, where obtainable 183
Sureties on penal bonds 29S
Transactions in —
Fiscal 5'ear 1926 531, 5-33. 534, 540
Since date of inception 545
Yield on 53
Bookkeeping and Warrants, Division of:
Abstract of report 363
Alien Property Custodian account 366
Civil service retirement and disability fund, transactions under 101
District of Columbia account (see also District of Columbia) 365
Duties outlined 311
Federal farm loan bonds held 366
592 INDEX
BuoUlveei)iiig iuid Warrants, Division of — Coutinued.
General fund, figures adjusted to daily Treasury statements, on Pase
basis of warrants issued 3G3
State bonds and stocks owned by United States 36G
Botanic Garden, expenditures 434
Budget and Improvement Committee, activities summarized 16S
Budget, Bureau of, expenditures 439
Buildings. (See Public buildings and Supervising Architect.)
Bullion (see also Gold and silver) :
Mints and assay offices, purchasing agencies 346
Stock in United States 348, 584
Bureau of Supply. (See Supply, Bureau of.)
Bureaus and divisions, abstracts of reports of :
Bookkeeping and Warrants 363
Coast Guard 387
Comptroller of the Currency 336
Customs Service 369
Customs Special Agency Service 372
Deposits 410
Director of the Mint 346
Disbursing clerk 415
Engraving and Printing 367
Internal Revenue 350
Loans and Currency 398
Paper Custody . 410
Printing 414
Public Debt Accounts and Audit 408
Public Health Service 377
Register of the Treasury 406
Secret Service 413
Supervising Architect 373
Supply 416
Treasurer of the United States 333
Bureiius and divisions, duties of 309
Bureaus, independent, expenditures 435
Business and financial conditions summarized 1
Butter, receipts from tax on adulterated, and lenovated or process — 351, 490
C
Cancellation of obligations of foreign governments, views on 59,259
Capital stock owned by United States. (See Securities owned by United
States.)
Capital-stock tax :
Receipts from 351, 475, 490
Repealed, revenue act of 1926 22,292
Carriers. (Sec Railroads.)
Cereal beverages, tax on, revenue act of 1926 293
Certificates of indebtedness:
Adjusted service series 41, 98
Description of IM, 196, 198
Income and profits taxes payable in 197, 198
Issued and retired from date of inception 547
INDEX
593
Certificates of indebtedness— Continued. Pas®
Issued and retired, outstanding issues, June 30, 1926 503, 537
Issued tliroutcli eacli Federal reserve bank and Treasury Department,
fiscal .ea; 1020 "'-'^o'S?
Issued, 1926, classified dJ, o^<
Maturities since August 31, 1919 *^
Offering of issues dated —
December 15, 1925, series TD-1926 196
September 15, 1926, series TD-1927 198
Operations in, 1926, summarized
Outstanding —
Date redeemable or payable
June 30. 1926, classified by issues and denominations 515
June 30, 1926, matured during 1926, classified 512
Monthly, February 28, 1917-August 31, 1926 518
October 31, 1926 46, 511
Rates on —
Relation to market rates '*'
Trend in 4^' ^^
Retirements, classified —
Fiscal year, 1926 334, 530
Fiscal years 1918-1926 554
Stock accountability of Treasury agencies for 564, 568
Tax exemptions 1^5, 196, 198
Transactions in 39, 41, 532, 537, 541, 545
Yields on '^'^
Certificates, interim, full paid, regulations governing 186
Checking accounts of Government corporations and agencies 128
Circulars, department :
154. Acceptance of United States bonds and nores as security in lieu
of surety or sureties on penal bonds (revised) 298
225. Receipt of Liberty bonds. Treasury bonds and Treasury notes
for estate or inheritance taxes (fourth supplement) 193
361. Redemption of Treasury savings certificates, series of 1921,
dated January 3, 1921 203
362. Redemption of war-savings certificates, series of 1921 204
363. Purchase of third Liberty loan 4% per cent bonds for the cumu-
lative sinking fund 199
364. United States of America 3% per cent Treasury certificates of
indebtedness, series TD-1926, dated and bearing interest from
December 15, 1925, due December 15, 1926 196
366. Purchase of third Liberty loan 4% per cent bonds for the cumu-
lative sinking fund 201
367. United States of America 3% per cent Treasury bonds of 1946-
1956, dated and bearing interest from March 15, 1926, due
March 15, 1956, redeemable at the option of the United States
at par and accrued interest on and after March 15, 1946, inter-
est payable March 15 and September 15 194
368. General regulations governing full-paid interim certificates 186
370. United States of America 31/2 per cent Treasury certificates of
indebtedness, series TJ-1927, dated and bearing interest from
September 15, 1926, due June 15, 1927 198
594 INDEX
Circulation :
Money in — Page
IJy yetirs, 1860-1926 5S6
July 1, 1926, classified 404
Per capita, lSGO-1926 586
Statement, July 1, 1926 404
Tax on uational-bauk, receipts from 430
Civil Service Commission, expenditures 435
Civil service employees, retirement of :
New act concerning 171
Number retired 172
Civil service retirement and disability fund :
Act regulating, amended, 1926 101
Changes in accounting procedure 102
Operations on account of 102, 454
Claimants, recognition of attorneys and agents representing 169
Claims :
Contractors' and other, filed under act of August 25, 1919 376
Interest-bearing security 401
Club dues, revenue from tax on 475
Coast Guard :
Abstract of report 387
Academy 393
Activities summarized 144, 327, 387
Appropriations and expenditures 387
Customs and other laws and regulations, enforcement of 395
Derelicts, removal of 390
Floating equipment, shore bases and stations 396
Life-saving medals, award of 396
Organization, personnel, recruiting, units, and ordance equipment- 392, 396
Patrol services 388, 389
Repairs and improvements to equipment 146, 394
Vessels clearing from ports, customs, by districts 485
Coastal communication 390
Coin and bullion :
Receipts at mints and assay oflSces 347
Stock in United States 348,584
Coin, stock in United States 348
Coinage :
Coining value of gold and silver received at mints and assay oflSces — 347
Fiscal year 1926 346
Other countries, for 347
Seigniorage on silver and minor coins 349
Coins :
Denominations, composition, and weight 79
Foreign, executed at mints 347
Collections, statement of receipts on basis of, explanation of 297
Commerce, Department of. expenditures 436, 448, 450, 452, 454
Commissions, expenditures, 1925 and 1926, classified 435
Commissions, independent bureaus and, expenditures 435
Comptroller of the Currency :
Abstract of report 336
Duties of 317
Condition of United States Treasury, fiscal years 1924, 1925, and 1926__ 498
INDEX 595
Cooperative marketing associations : Page
Loans from Federal intermediate credit banks, by commodities 106
Repayments on loans to War Finance Corporation ^. 129
Corporation capital stock tax. (See Capital stock tax.)
Corporation income tax :
1925 and 1926 124,351
Changes in, revenue act of 1926 291
Credit suggested on returns for 1926 9
Net income and taxes returned, 1919-1924 25
Publicity of returns 291
Counsel, general, ofHce of. (See Internal Revenue, Bureau of.)
Counterfeiting eases handled by Secret Service 413
Credit situation :
Long-term, factors in demand for and supply of 54
Short-term, factors in demand for 49
Treasury financing and 46
Cruises, Coast Guard. (See Coast Guard, Patrol service.)
Cuba, obligations to United States :
Amount 579
Payments on account of —
Interest 580
Principal 579
Cumulative sinking fund. (See Sinking fund, cumulative.)
Currency (see also Circulation: Loans and currency; Paper money;
Subsidiary silver) :
Board 81,82
Composition and redeemability of United States 79,81
Shipments to Treasury offices and banks 336
Stabilization in Europe, address by Undersecretary of the Treasury- 280
Customs :
Ad valorem rates (average) of duties collected. 1867-1925; by
schedule, 1890-1925 479
Expenses of collecting 485
Receipts —
April 0, 1917-October 31, 1926 444
By districts, 1926 485
Compared v,'ith estimate, 1926 18
Estimated, 1927 and 1928 8,176,489
Fiscal years —
1791-1920 456
1867-1925; by schedules, 1890-1925 479
1916-1926 448
Increased, 1926 - 18, 370, 429
Customs laws enforced by :
Coast Guard Service '- 395
Prohibition service 371
Customs Service :
Abstract of report 369
Accounting system revised 124
Activities summarized 120, 326, 369
Duties of 326
Enforcement activities 371
Expenses of collection 485
11438— 26t iO
596 INDEX
Customs Service — Continued, Page
Improvement in customs patrol 120, 372
Mail importations 369
Merchandise entries, 1925-1926 369
Sale of merchandise 370
Seizures, kind of commodities _ 371
Vessels and vehicles, use and value of forfeited 370, 371
Customs Special Agency Service :
Abstract of report 372
Activities, statistical summary of 373
Customs infoi'mation exchange, work of 372
Czechoslovakia, obligations to United States :
Act to authorize settlement 234
Amount of —
Funded debt 56, 579
Original principal 56, 579
Total to be received on account of 255
Payments on account of —
Funded debt 56, 579
Interest 580
Principal 56, 579
Schedule of payments under funding agreement 235
Statement by the Secretary of the Treasury before Ways and Means
Committee concerning 206
Status of debt, November 15, 192G 74, 579
D
Daily Treasury statements of receipts and expenditures, explanation
of basis of 296
Dealers' taxes. (See Sales,)
Debt Accounts and Audit, Public, Division of. {Sec Public Debt
Accounts and Audit.)
Debt settlements with foreign nations. (See World War Foreign Debt
Commission.)
Debt, United States. (See Public debt of the United States.)
Debts owed United States by foreign governments. (See Foreign govern-
ment obligations.)
Denominations of United States obligations 513, 516
Department circulars. (See Circulars, department.)
Departments, expenditures on account of. (See Expenditures.)
Depositaries :
Federal reserve bank 113,118,173,335,411
Foreign 118, 173, 335, 411, 412, 498
Functions 118
General statement concerning 118
Insular 118, 173, 335, 411, 412
Interest collected from 120, 488
National-bank, general and limited 114,118,173,335,411,412,498
Number of each class, 1925 and 1926 411
Postal savings, securities held against deposits in 335
Public money held by each class 335, 411
Special 114, 173, 335, 412, 488, 498
Deposits of Government funds. (See Depositaries.)
INDEX 597
Deposits, Division of: Page
Abstract of repoi't 410
Duties of 312
Development and regulation, Government expenditures for 30, 31, 32
Diagrams :
Certificates of indebtedness, yield and rates on 48
Expenditures chargeable against ordinary receipts, fiscal years 1890-
1926 26
Expenditures, main classes of, 1890-1926 20'
Receipts from customs, miscellaneous internal revenue, and income
and profits taxes, fiscal years 1900-1926 20
Receipts, ordinary, and expenditures chargeable against, fiscal years
1920-1926 ' 35
Receipts, principal sources of, fiscal years 1920-1926 19
Director of the Mint, abstract of report (see also Mint Service) 346
Disability fund, civil service retirement and 101, 450
Disbursements. (See Expenditures.)
Disbursing clerk, abstract of report 415
Distilled spirits and alcoholic beverages, revenue from tax on 351,471
District of Columbia :
Expenditures 436, 448. 452
Funded loan of 1925—
Changes in, 1920 573
Retired, delivered to Register of the Treasury, fiscal year 1926— 575
Receipts 365, 366, 434
Teachers' retirement fund 99, 436
Divisions. (See Bureaus and divisions.)
Dues, club, revenue from tax on 476
Duties. (See Customs.)
Duties of various offices and bureaus in the Treasury Department 309
E
Efficiency, Bureau of, expenditures 435
Emergency Fleet Corporation, capital stock owned by Government 576
Employees' Compensation Commission, expenditures 435
Employees, Treasury Department (see also various bureaus, etc.) :
Changes in force of, summarized 170
Classification of 170, 309
Classified by bureaus, etc 170, 309, 588
Retired, number 172
Engraving and Printing, Bureau of:
Abstract of report 367
Activities summarized 81, 165, 318
Appropriations and expenditures, 1925 and 1926 367
Audit of classes of paper, physical 410
Expenditures, 1925 and 1926 439
Improved methods adopted 166
Operations, deliveries, expenses, and number of employees, 1878-
1926 368,369
Output, classified 368
Printing program, paper currency 82
598 INDEX
Estate tax : Page
Administration of 354
Changes in, revenue act of 1926 291
Credit for State inheritance taxes, change in, revenue act of 1926 291
Public debt retirements through receipts from 44, 552, 557
Receipts from 472
United States bonds and Treasury notes received for 193
Estimates :
Appropriations, 1928, compared with appropriations. 1927 491
Internal revenue receipts, 1927 and 1928, classified 490
Receipts —
1927 and 1928, classified 490
1927 and 1928, compared with actual, 1926 489
Receipts and expenditures, 1927 and 1928, and actual, 1925 and 1926,
classified 176
Estonia, obligations to United States :
Act to authorize settlement 220
Amount of^ —
Funded debt 56, 579
Original principal 56, 579
Total to be received on account of 255
Payments on account of —
Funded debt 57, 579
Interest 57, 580
Schedule of payments under funding agreement 222
Statement by the Secretary of the Treasury before Ways and Means
Committee concerning settlement 206
Status of debt, November 15, 1926 74,579
Eui'ope :
Currency stabilization, address by Undersecretary of the Treasury 280
Fiscal restoration of, speech of the Secretary of the Treasury 256
Excise taxes. (See Sales, consumers' and dealers'.)
Executive Office, expenditures 448,450,452,454
Exhibits. (See Table of contents.)
Expenditures (see aUo Receipts and expenditures) :
Bases of statements 296,297
By departments and establishments, fiscal years —
1916-1926 (cash basis) 448
1925 and 1926, compared with estimates, 1927 and 1928 176
By months, 1926 452, 454
Chargeal)le against ordinary receipts, April 6, 1917-October 31,
1926 (cash basis) 446
Civil activities, ordinary, 1915-1926, classified 30, 32
Classified, fiscal years —
1791-1926 (warrant basis) 460
1915-1926 30, 32
Compared with appropriations, fiscal years 1885-1926 496
Comparison. 1925 and 1926, by departments in detail (warrant
basis) 434
Diagrams sho^^^ng 26, 29
Estimated for 1927 and 1928, cla.ssified 176
Factors causing increase in 27
INDEX 599
Expenclitui'es — Continued.
Functional distribution of, 1915-1926 — Page
Amount 30
Changes in_ 30, 32
Per capita, adjusted for price changes 32
Percentage distribution of_! 31
Increase in, fiscal year—
1915-1926 33
1928. estimated 491
Postal Service, fiscal years 1791-1926 468. 469
Preliminary statement of, monthly, July 1, 1925-June 30, 1926.
classified 452
Readjustment from war-time activities 6,33,274
Reduction in — •
Compared with war peak 33
Prospective 7, 33
Trend in 27. 28
Exports :
Gold 88,89
Merchandise, value of, by districts, 1926 485
F
Farm loan associations. {See National farm loan associations.)
Farm loan bonds.. (See Federal farm loan bonds.)
Farm loan system. (See Federal farm loan system.)
Federal Board for Vocational Education, expenditures 4.35
Federal farm loan bonds :
Owned by Government 21, 134, 366, 578
Purchased for United States life insurance fund 100
Federal farm loan bureau, duties of 312
Federal farm loan system (sec also Federal land banks) :
Activities summarized 105
Examining division, establishment of 108
Revisions of regulations of Federal Farm Loan Board 108
Weaknes.s.es of system 109^
Federal intermediate credit banks :
Activities summarized 10(i
Capital stock owned by Government 134,578
Earnings 107
Franchise tax. (See Franchise tax. Federal reserve and Federal
intermediate credit banks.)
Interest and discount rates 107
Loans to cooperative marketing associations, by commodities 100
Rediscounts, classified by agencies through which made 107
Federal land banks :
Activities summarized 105
Earnings of 105
Securities of, owned by Government —
Bonds —
Amount 134, 578
Reduction in, 1926 134,360
Capital stock 106, 134, 578
Federal reserve bank charters. Treasury views on extension of 10
600 INDEX
Federal reserve bank notes {sec also Nutioual-bank and Federal reserve
bank notes) : Page
Cirulation, .luly 1, 1926 404
CToneral statement concerning 81
Held in Treasury and by Federal reserve banks 404
National bank redemption agency, received by 335
Stock of 585
Federal reserve banks :
Certificates of indebtedness issued through each bank 528
Credit extended by member banks and reserve banks, monthly, July,
192^August, 1926 51
Extension of charters 10
Fiscal agencies for Government 113, 195, 200
Franchise tax. (See Franchise tax, Federal reserve and Federal
intermediate credit banlvS. )
Gold holdings and ratio to total 94
Important factors in world stabilization 11
Interim certificates, authority to issue 186
National Bank Redemption Agency, settlements with 335
Public moneys on deposit in 173, 411
Federal Reserve Board :
Expenditures 435
Gold fund of. (See Gold fund, Federal Reserve Board.)
Federal reserve notes :
Circulation, July 1, 1926 404
Custody of, by Division of Paper Custody 410
General statement concerning issue of 81
Gold held in Treasury for redemption 334
Held in Treasury and by Federal reserve banks 404
National Bank Redemption Agency, received by 335
Stock of 585
Federal reserve system :
Advantage of, compared with national bank system 10, 113, 118
Bank membership in 12
Importance of, in world stabilization 11
Federal Trade Commission, expenditures 435
Fees, receipts from 430
Financial conditions, general 1
Finland, obligations to United States :
Amount of —
Funded debt 56, 579
Original principal ^ 56, 579
Total to be received on account of 255
Payments on account of —
Funded debt 56, 57, 579. 580
Interest 57, 580
Principal 56. 579
Status of debt, November 15, 1926 579
First Liberty loans. {See Liberty bonds.)
Fiscal agents of the United States Government :
Disadvantages of independent Treasury system 112
Federal reserve banks —
Description of various functions 113
Summary of advantages 118
History of, since 1791 109
INDEX 601
Page
Foreign Debt Commission. {See World War Foreign Debt Commission.)
Foreign debt settlements. (See World War Foreign Debt Commission.)
Foreign depositaries :
Government funds of 173
Interest collected on deposits of Government funds from June 1,
1913, to June 30, 1926 488
Foreign government obligations owned by the United States {see also
World War Foreign Debt Commission) :
Amount originally received, by nations 56, 576, 579
Cancellation of, correspondence relating to 67
Estimated receipts, from 1927 and 1928 176
Funded indebtedness, by nations —
Amount of 56, 579
Total to be received under 255
Funding, summary of 55
Interest accrued and unpaid 579
June 30, 192G 576
Letter to the President from the Secretary of the Treasury replying
to letter which urged cancellation of the so-called war debts 259
Payments on, by nations —
Funded debt —
Interest 57,580
Principal 56, 579
Original obligations —
Interest 580
Principal 579
Policy of nations regarding payment, when contracting debt 60
Principles guiding Treasury in determining purposes for extending
loans 1 61
Public debt retirements from payments on 44, 551, 557
Purchased April 6, 1917-October 31, 1926 446
Receipts from fiscal years, 1920-1926 18, 21
Received from —
American Relief Administration 576
Funding agreements of World War Foreign Debt Commission 579
Secretaries of War and Navy on account of sale of surplus
war material 576,578
United States Grain Corporation . 576
Representing cash advances under Liberty bond acts 579
Status of, November 15, 1926 579
Foreign investments, general statement, concerning 4
Foreign relations, Government expenditures for, 1915-1926 30, 31, 32
Foreign service retirement and disability fund !_ 103
Foreign trade, vessels clearing from ports, by districts 485
Fourth Liberty loan. {See Liberty bonds.)
Fractional currency, stock, 1863-1878 584
France, obligations to the United States:
Agreement for funding 74, 236
Amount of —
Funded debt 56, 579
Original principal 56, 579
Total to be received on account of 255
602 INDEX
Fniuce, oblijjations to tlio Unitod States — CoiitimuHl.
Correspondence relative to policy and method of repayment — Page
1917, when loan was contracted 60
January 15, 1919-November 5, 1920 63
Payments on account of —
Interest 580
Principal 579
Press statements by —
Secretary of the Treasury comparing the British-French and
the American-French settlement 243
World War Foreign Debt Commission giving terms of agreement
for settlement 241
Schedule of payments under funding agreement 242
Statement by the Secretary of the Treasury before Ways and Means
Committee concerning settlement of 251
Status of debt, November 15, 1920 74,579
Franchise tax. Federal reserve and Federal intermediate credit banks :
Public debt retirements from receipts 44,551,557
Receipts —
Estimated, 1927 and 1928, compared with actual, 1926 489
Fiscal years 1925 and 1926 430
Funds :
Adjusted service certificate 41,98,450
Alaska 430
Alaska relief 435
Alien property 450
Civil service retirement and disability 101, 450
Cumulative sinking. (Sec Sinking fund, cumulative.)
Deposits of Government (see also Depositaries) 411
District of Columbia teachers' retirement 99, 436
Foreign service retirement and disability 103,432
General. {See General fund.)
Gold reserve 174, 3:34, 498
Gold, of Federal Reserve Board 175,334
Government life insurance 100,435
Trust, held for redemption purposes 174
G
General Accounting Office, expenditures 435
General counsel. (See Internal Revenue. Bureau of.)
General Fund:
Balance in : 172, 174, 175, 363, 498, 558
Changes in 174, 363, 558
Estimated net balance in, 1927 and 1928 175
Public debt retirements through reduction in net balance 38,
44, 363, 557, 560
Reduction in 44
General Supply Committee :
Abstract of reiwrt 422
Activities summarized 160, 320
Disadvantages of present law regulating purchases 164
Expenditures by Bureau of Supply, 1923-1926 417
Purchases under contracts, value of 164
. Specifications, bids, contracts, etc 424
INDEX 603
General Supply Committee — Continued.
Surplus property — Page
Receipts from and disposition of, fiscal years 1921-1926 423
Received from and issued to Government offices 424
Stores account 425
Germany, sequestrated property of and mixed claims against {see also
Alien Property Custodian, Mixed Claims) :
Letters from Secretary of Treasury —
Relative to substitute for Treasury plan of settlement 273
To Senate concerning settlement of 269
Plan and policy of Treasury with regard to settlement of, summar-
ized 15
Press statements by^
Acting Secretary of the Treasury, giving Treasury plan for —
Disposition of German property 266
Settlement of mixed claims 266
Secretary of the Treasury, concerning factors in settlement of 272
Gift tax, repeal of tax and retroactive revision of 1924 rates, revenue
act of 1926 292
Gifts and contributions to United States :
Public debt retirements from 553, 557
Receipts from 130
Gold {see also Mint Service) :
Arts, used for. calendar year 1925 93,349
Bullion —
Purchases by Mint Service 346
Stock in mints, assay offices, and Federal reserve banks 348
Coin —
Circulation 95
Net exports of, 1926 349
Stock in United States 348
Coin and bullion —
Stock in United States 348, 584
Stock in United States and ratio to total money, 1860-1926 584, 585
Coinage 95, 346, 347
Coins, commemorative 34S
Exports, fiscal years —
1926-1926 88
1926, by countries 89
Holdings of Federal reserve banks, 1913-1926 94
Imports —
1920-1926 88
1926, by countries 89
Monetary stock in United States, 1913-1926 94
Movement 89,90
Production, calendar year 1925 —
Domestic 348
World 93
Receipts at mints and assay offices, 1926 348
Refineries 347
Reserves and note liabilities of the principal European banks, 1925
and 1926 91. 92
Treasury holdings 334
604 INDEX
Gold certificates: Page
General statement concerning 80
Holcllngs of gold for redemption 334
Policy of Federal reserve banks and Treasury regarding payment of_ 95
Stock and amount in circulation 404
Gold fund, Federal Reserve Board :
Balance to credit of 175
Comparative statement, 1924, 1925, and 1926 498
Gold reserve fund 174
Gold standard :
Return of countries to 84
Status of currencies of several countries with regard to, in detail 80
Government bonds. (See Bonds. United States.)
Government corporations :
Accounts of, with Treasurer of United States 128
Capital stock of, owned by United States 576
Government deposits. (See Depositaries.)
Government, expenditures for general, 1915-1926 30, 31, 32
Government life insurance fund 100, 435
Government Printing Office, expenditures 434
Government savings securities. {See Savings securities, Treasury
(war).)
Grain Corporation, United States, foreign obligations received from 576
Great Biitain, obligations to United States :
Amount of —
Funded debt 56, 579
Original principal 56. 579
Total to be received on account of 255
Correspondence relative to policy and method of repayment 66
Payments on account of —
Funded debt 56, 57, 579, 580
Interest 57, 580
Principal 56.579
Press statement of the British account with the United States in
connection with war-loan expenditures 256
Status of debt, November 15, 1926 579
Greece, obligations to United States :
Negotiations with, relative to debt settlement 75
Payment of interest on 580
Status of debt, November 15, 1926 76, 579
Gross receipts, revenue from tax on, 1863-1902 471
H
Harrison law. (See Narcotic act.)
Head tax, receipts from, by districts, 1926 485
Health Service. (See Public Health Service.)
Hoboken Manufacturers Railroad Co., capital stock owned by Govern-
ment 576
Hospital service of Public Health Service 383
House of Representatives, expenditures 434
Housing Corporation, United States :
Capital stock of, owned by Government 576
Expenditures 435
INDEX 605
Hiingary, obligations to United States :
Amount of — Page
Funded debt 56, 579
Original principal 56, 579
Total to be received on account of 255
Payments on account of —
Funded debt 56, 57, 579, 580
Interest 57, 580
Principal 56,579
Status of debt, November 15, 1926 579
Ice patrol, Coast Guard. {See Coast Guard, patrol services.)
Immigration quarantine 380
Imports :
Gold 88, 89
Merchandise, value of and duties collected 479, 485
Income and profits taxes {see also Individual income tax; Corporation
income tax; Revenue act of 1926) :
Audit of returns-
Decentralization of 126, 354
Fiscal year 1926 125,352
Unaudited returns on hand, 1917-1923 125
Claims adjusted, 1926 352
Credit on 1926 returns, Treasury views on 9
Interest collected to June 30, 1926, by Federal reserve districts, on
account of payments of 488
Publicity of returns, revision in, revenue act of 1926 291
Receipts —
April 6, 1917-October 31, 1926 444
By States and Territories, 1925 and 1926 (basis of collectors'
reports) 477
Estimated —
1927 and 1928 8, 176, 489, 490
1927 and 1928, compared v?ith actual, 1926 176,489
Fiscal years—
1863-1920 471
1916-1926 448
1925 and 1926 477
Increase in, 1926 18,429
Prior year returns 8, IS
Trend in 19, 20
Refunds 350
Surtax rates. {See Individual income tax.)
Income Tax Unit :
Organization, changes in 126, 127
Work of 125
Independent bureaus and commissions, expenditures 435, 448,450, 452, 454
Indians, expenditures on account of, fiscal years 1701-1926 460
Individual income tax:
1925 and 1926 124,351
606 INDEX
Individual iucome tax — Continued.
Changes in, revenue act of 1926 — Page
Credits 291
Normal tax rates 291
Publicity of returns 291
Surtax rates 291
Credit on returns for 1926, Treasury views on 9
On incomes of varying amounts, revenue acts of 1924 and 1926 22
Revenue acts reducing 278
Surtax rates, 1913 law-1926 law 29 1
Inheritance tax. (See Estate tax.)
Inland Waterways Corporation, capital stock owned by United States__ 134,577
Installment buying, conditions summarized 3
Insular depositaries :
Interest collected on deposits of Government funds from June 1, 1913,
to June 30. 192G 488
Public moneys, for 411 412
Insular loans, classified :
Changes in, 192G 572.573
Retired and unissued, delivered to Register of Treasury, 1926 574, 575
Insurance :
Government life, receipts and expenditures 100
Revenue from tax on 473
Insurance fund. United States Government life 100
Interest on :
Loans to foreign governments. (See Foreign government obliga-
tions. )
Public debt of the United States. (See Public debt of the United
States.)
Interest rates on:
Long-term investments 53
Public debt, outstanding issues 502
Short-term loans __ _ ^y
Interest-bearing debt of United States, (^ee Public debt of the United
States.)
Interim certificates, full paid, description of ISO
Interior, Department of, expenditures 437,448,450,452,454
Intermediate credit banks. (See Federal intermediate credit bank's.)
Internal revenue :
Claims for refunds paid by disbursing cleik 415
Receipts —
Actual, 192G, compared with estimated. 1926 and 1927 489
April 6, 1917-October 31, 1926 (cash basis) : I 444
Back taxes g -iq
By States and Territories, 1925 and 1926 (basis of collectors'
reports) ^^^
Customs offices, through 351
Estimated, 1927 and 1928, classified 490
Fiscal year.s —
1791-1926 456
1863-1926, classified (basis of collectors' reports) 471
1925 and 1926 351_ 429 477
Income and profits taxes. (See Income and profits taxes.)
Increase in, 1926 IS ^.)q
INDEX
607
Internal revenue — Coutinuetl.
Receipts — Continued. ^^se
Miscellaneous "'
IS, 351, 354, 355, 429, 444, 448, 450, 456, 471, 477, 489, 490
Reduction iu^
Compared with debt reduction 277
Through revenue acts of 1921, 1924, and 1926, estimated 24
Reduction in sources of, since 1918 23
-Refunds of taxes illegally collected 125,350,415
Sources, tabulated statement of, fiscal years —
1863-1926 "^"^^
1925 and 1926 -— ^^^
Internal Revenue, Bureau of:
iVbstract of report-
350
Accounts and Collections Unit 127, 322, 356
Activities summarized 124, 321
Capital stock tax 354
Cost of administration 351
Employees, number of 362
Estate tax 351, 354, 472, 490
Expenditures from allotments, 1923-1926 417
General coun.sers office, work of 323,357
Gift tax 351, 355
Income and profits taxes. {See Income and profits taxes.)
Income Tax Unit, work of {see also Income and profits taxes)- 125,322,352
Joint Congressional Committee of Internal Revenue Taxation 6
Miscellaneous taxes 355
Miscellaneous Tax Unit —
Reorganization of 127, 354
Work of 322, 354
Narcotic division, work of 328, 361
Organization, changes in 1^^
Prohibition enforcement. {See Prohibition enforcement.)
Prohibition Unit, work of 322,328,360
Tobacco taxes . 351, 355, 471, 490
Internal security, Government expenditures for, 1915-1926 30, 31, 32, 33
Interstate Commerce Commission, expenditures 435
Investment situation, general statement concerning 4
Italy, obligations to United States:
Act to authorize settlement of 216
Amount of —
Funded debt ^^' ^'^^
Original principal ^^' ^'^^
Total to be received on account of 255
Letter to the President from the Secretary of the Treasury calling
attention to some practical factors involved in settlement of 214
Payments on account of—
Funded debt 5*5, 579
Interest-
580
Principal ^^' ^''^
Press statements by the Secretary of the Treasury-
Commenting on the prospect for approval of settlement in
the Senate.
216
608
INDEX
Italy, obligations to United States— Continued.
Press statements by the Secretary of the Treasury— Continued.
Comparing settlements made with Great Britain and with the Page
United States-
213
Schedule of payments under funding agreements 218
Statement by the Secretary of the Treasury before Ways and Means
Committee concerning settlement 206
Status of debt, November 1."., 1926 7q 579
J
Joint Congres-sioual Committee on Internal Revenue Taxation, created
by revenue act of 1926 g
Joint-stock land banks:
Activities of -^qq
Number -.qq
Justice, Department of, expenditures 438.448.452
L
Labor, Department of. expenditures 43S, 44,^^ 452
Land banks. Federal. (See Federal land banks.)
Lands, public, receipts from sales, 1791-1926 458
Latvia, obligations to United States:
Act to authorize settlement of 223^
Amount of —
P'unded debt -q 57*)
Original principal 5(5 579
Total to be received on account of 255
Payments on account of —
Funded debt 57 530
Interest 57^ 530
Schedule of payments under funding agreements 224
Statement by the Secretary of the Treasury before Ways and Means
Committee concerning settlement 206
Status of, November 15, 192G 76, 579
Legislative establishment, expenditures 434,448,452
Liberia, obligations to United States:
Amount of.
579
Payments of interest 580
Status of debt, November 15, 1926 77, 579
Liberty bonds {see also Bonds, United States; Victory notes j :
Accepted as security on penal bonds 298
Authorized and issued, outstanding issues 502
Description of 183
Exchange, conversion, etc., transactions. 1926 529,534,540
Issued and retired, outstanding issues, June 30. 1926 500
Issued, 102G, classified 526
Outstanding —
June 30, 1926, classified by issues and denominations 513
Monthly, February 28, 1917-August 31, 192G 518
October 31, 1926 5II
Payment of Federal estate or inheritance taxes in 193
Purchases of, for cumulative sinking fund 42, 199. 201
Registered outstanding, changes in and number, by issues, 1926 562
INDEX 609
Liberty bonds— Continued.
Retired, classified— ^^^
Fiscal year 1926
Fiscal years 191S-1926 -' ^^5
Stock accountability of Treasury agencies for ^^6, oo»
Tax exemptions ZoT'^^n mr
^ i.- • moR 534,540,545
Transactions m, 1926
Library of Congress, exi>enditures _
Library of Congress Trust Fund Board J-^^
Life insurance, Government, receipts and expenditures 43o
Liquor smuggling
Liquor taxes, revenue from, 1863-1926
Lithuania, obligations to United States :
^'''"Tf7^^f 56,579
Funded debt
Original principal
Total to be received on account of
Payments on account of — ^
Ti. , 1 i^if — 56. 57, 579, 580
Funded debt '_ ^^
interest 7:____ 56, 579
Principal
Status of debt, November 15, 1926 ^''
Livestock loan companies :
Rediscounts of Federal intermediate credit banks through 107
Repayments of loans by War Finance Corporation 129
Loan certificates. {See Certificates of indebtedness.)
Loans (see also Liberty bonds ; Public debt ; Treasury notes ; etc.) :
District of Columbia, changes in, 1926 ^'•
Foreign governments, to. {See Foreign government obligations.)
Insular. {See Insular loans.)
Railroads under transportation act as amended, section 210 577. 582
Loans and Currency. Division of {see also Money; Public debt) :
Abstract of report ^;^^
399
Activities summarized
Audits of securities, physical
Claims ^^
Destruction of securities "^
Personnel
40'>
Publicity, new Treasury issues
Registered accounts
Securities issued and retired ^^
Stock accountability of, for United States and other securities 563
' M
Manufactures and products :
Changes in taxes on, revenue act of 1926 292
Revenue from taxes on, 1863-1926 {see also Sales taxes) 471
Merchandise imported. {See Imports.)
Mint Service:
Activities summarized. ^^^
^70.
Appropriations, expenses, and income 349
Assay offices ^"^^
Coin and bullion, stock in United States, June 30, 1926 348
610 INDEX
Miut Service — Continued.
^ . , Page
Coinage, domestic and foreign 34q
Coining value of gold and silver received, by institutions 350
Comniemorative coins Q<g
Deposits of gold and silver, at mints and assay offices, 1925 and 1926_ 350
Director of the Mint, abstract of report 346
Employees at each mint and assay office 350
Expenses of mints and assay offices 35q
Gold coin, net exports, 1926 349
Gold operations, 1926 ~ 0-1^
Income of mints and assay offices 350
Institutions of 34^ oaj
Operations of mints and assay offices '347
Refineries 047
Service transfers 3-Q
Silver operations, 1926 347
Miscellaneous tax unit :
Organization of 227 354
Work of '"""";! 322^354
Mixed Claims Commission, members 270
Mixed Claims for American war losses. {See Germany.)
Money (see also Circulation; Paper money; Silver ; Subsidiary silver) :
Circulation and amount per capita, 1860-1926 5S6
Circulation statement, July 1, 1926 404
Composition and redeemability of 79
Federal reserve banks and agents, held by and for 586
Public, depositaries of 335 441
Stock, classified, 1860-1926 —
By kind 534
By money held in and held outside the Treasury 586
Total in circulation, ratio of gold coin and certificates to 95
Treasury, held in, 1860-1926 586
Narcotic act (see also Prohibition Unit, Bureau of Internal Revenue) :
Dealers and manufacturers under 361
Enforcement, expenses 35I
Receipts under 351
Narcotic tax on dentists, physicians, etc., distributing, change in, reve-
nue act of 1926 293
National Bank Redemption Agency:
Currency received, fiscal year 1926 335
Duties of 34g
Federal reserve notes received by 335
National banks :
Assets, by States, June 30, 1926 345
Capital stock of 336,345
Condition of, June 30, 1925, and 1926 339
Consolidations under act, November 7, 1918-June 30, 1926, by States. 338
Depositaries for Government funds, Treasury policy regarding use as_ 114
Hull amendment to limit branch establishments of 13
Insolvencies, by States, to June 30, 1926 338
Liquidations —
By States, to June, 1926 338
Fiscal years 1925 and 102G. and from February 25, 1863, to
June 30, 1926 336
INDEX.
611
National banks — Continued. ^»so
McFacIden bill, to give equality of power with State banks 13
Number, by States, to June 30, 1926 338, 345
Organized —
By States, to June 30, 1926 338
Fiscal year 1926, and from February 25, 1863, to June 30, 1926— 336
Powers compared with State banks 13
Public moneys on deposit in 335, 411
Rediscounts of Federal intermediate credit banks made through 107
Resources and liabilities, principal, June 30, 1925-1926 339
National farm loan associations 1^6
National-bank and Federal reserve bank notes :
Deposits to retire, 1867-1926 464
Redeemed, 1867-1926 464
Redemption account, retired, fiscal years 1918-1926 556
National-bank depositaries. {See Depositaries.)
National-bank notes :
Circulation, July 1, 1926 -'- 404
General statement concerning 81
Held in Treasury and by Federal reserve banks 404
Outstanding, June 30. 1925 and 1926 340
Redemption, presented for, 1926 335
Stock in United States, 1864-1926 584
Navy Depa rtment :
Expenditures 438, 448, 452, 460
Securities received by 578
Nicaragua, obligations to United States:
Amount of 579
Payments on —
Interest 580
Principal 579
Status of debt. November 15, 1926 77, 579
Notes. {See National-bank notes. Treasury notes, etc.)
O
Occupational taxes :
Changes in, revenue act of 1926 293
Revenue from, 1863-1926 475
Officers of Treasury Department. {See Treasury Department.)
Offices, independent, classified, expenditures, 1925 and 1926 435
Oil transportation by pipe line, revenue from tax on, 1918-1922 473
Oleomargarine, receipts from tax on, 1887-1926 475
Opium and narcotics, receipts from tax on 475
Ordinary receipts. {See Receipts; Receipts and expenditures.)
Organization of Treasury Department :
Bureaus and offices 309
Changes in, 1926 168
P
Panama Canal :
Receipts and expenditures, 1926 470
Receipts from tolls, 1920-1926 21
Panama railroad, capital stock'owned by United States 134, 577
Paper currency. {See Paper money.)
612 INDEX
Paper Custody, Division of : Page
Abstract of report 410
Audit of securities, physical 409
Paper money :
Demand for small denominations increased 336
Improvement in wearing qualities S3, 165
Issued, fiscal year 1926 336
Kinds in circulation 80
Printing program, operation of, 1926 82
Redemptions of, 1925 and 1926 336
Stock in United States, 1860-1926 584
Supply situation, report on methods to remedy 81
Transactions in one-dollar bills at Federal reserve banks 83
Patrol services, Coast Guard. {See Coast Guard.)
Penalties collected, revenue from 475
Pensions, expenditures on account of, 1791-1926 460
Personnel. {See Employees.)
Personnel Classification Board 170
Philippine Islands :
Loans —
Changes in, 192G 572
Retired and unissued, delivered to Register of the Treasury.
fiscal year 1926 574
Treasury of, public moneys deposited in 173,835,411,498
Plague suppression. {Sec Public Health Service.)
Playing cards, revenue from tax on 473
Poland, obligations to United States :
Amount of —
Funded debt 56, 579
Original principal 56, 579
Total to be received on account of 255
Payments on account of — •
Funded debt 57, 580
Interest 57, 580
Status of debt, November 15, 1926 579
Porto Rico :
Government depositary in 412
Loans —
Changes in, 1926 573
Retired and unissued, delivered- to Register of the Treasury,
fiscal year 1926 574
Post Office Department, expenditures (sec fl?.so Postal Service) _ 438,448,450,452
Postal Service :
Estimated postal receipts, expenditures, and deficiencies, 1927 and
1928 175
Expenditures from postal revenues, 1885-1928 496
Postal deficiencies, expenditures on account of, 1791-1926 461
Receipts and expenditures, 1791-1920 468
Surplus receipts covered into Treasury. 1793-1026 456
Pre-war bonds. {See Public debt of the United States.)
Printing, Bureau of Engraving and. {See Engraving and Printing,
Bureau of.)
INDEX
613
Printing. Division of: ^f-f^
414
Abstract of report
Advertising, department
Expenditures from allotments by Bureau of Supply, 1923-1926 41b
„ , 415
Postage —
Printing and binding, appropriations, expenditures, and reimburse-
414
nieuts for
Profits tax. (See Income and profits taxes.)
Prohibition enfoi-cement :
Activities summarized
Control over miscellaneous means of diverting spirits 14-
Division of Foreign Control established 1^2
Expended for ^
Industrial alcohol, issue of permits transferred to Prohibition Unit- 141
Legislation suggested JJ^
Prohibition Unit. Bureau of Internal Revenue, work of 6Z^, dou
Receipts under
Reorganization of
1ST
Smuggling, suppression of
Treasury policy with regard to Federal
Public buildings (see also Supervising Architect) :
Act of May 25. 1926, to provide for construction, summarized 154, 156
General plan for building development 1^^' 1^*
Rent of
Survey of public building situation 1^*^
Public Debt Accounts and Audit, Division of :
Abstract of report .^
Physical audits of securities
Public debt of the United States :
Address to American Bankers' Association by Undersecretary of the
2T4
Treasury on
Authorized and issued, each issue ^^^
Bonds and notes received for estate and inheritance taxes 193
Certificates of indebtedness. {See Certificates of indebtedness.)
Conversion, transfer, and exchange transactions, 1926. (See Public
debt of the United States: Transactions in.)
Coupon bonds retired and outstanding, June 30, 1925 and 1926 513, 562
Krvo
Date of each issue
Date redeemable or payable, each issue ^02
Debt per capita, gross, 1S53-1926 510
Expenditures —
Chargeable against ordinary receipts 446
Estimated on account of, 1927 and 1928, and actual, 1925 and^
1926, classified 1'^' ^'^^
Fiscal years —
1916-1926 (unrevised) daily Treasury statements 443
1917-1926 (unrevised) daily Treasury statements 446,448
1925 and 1926 178,333,442
Monthly, fiscal year 1926 453
Increase or decrease in. :^ource of, 1915-1926 560
Interest on —
Annual charge for, changes in, 1926 38
Expenditures for _ '^^^
Fiscal years 1791-1926, expenditures for 460
614 INDEX
Tublic debt of tlie United States — Continued.
Interest on — Continued. Page
On 25-year basis, compared with G2-year basis 7
Payable, paid, and unpaid, 1926 5G1
Interest rates and dates of payment 502
Interest-bearing —
By maturities, August 31, 1919-October 31. 192G 45
Description of 183, 184
Issued and retired, outstanding issues, June 30. 1920 500
Issued, 1926, by issues and accounts 526
Outstanding —
June 30, 1853-1926 510
June 30, 1926, classified by issues and denominations 513
Monthly, by issues, February 28, 1917-August 31. 1926 51S
Retired, 1926, by issues and accounts 529
Transactions in—
1926 522, 526, 529, 531, 533. 534, 536, 537, 538, 540, 548
Since date of inception ' 545
Interim certificates, regulations governing 186
Issued and retired, outstanding issues, June 30. 1926 500
Issued, 1926 522, 526, 528, 531, 533, 534, 536, 537, 538, 548
Liberty bonds. {See Liberty bonds; Victory notos.)
Matured debt :
Issued, outstanding Lssue.s, June 30, 1926 504
Outstanding 501, 509, 510, 542
Transactions in 542
Maturities, August 31, 1919-October 31, 1U26 45
Noninterest-bearing —
Outstanding 501, 509, 510, 542
Transactions in, 1926 544
Notes and certificates outstanding, June 30. 1926. matured during
1926, classified 512
Outstanding, total gross —
1853-1926 510
By issues —
June 30, 1926 500.502
October 31, 1926, preliminary 511
Premium on 441
Present status, summarized 38
Pre-war loans —
Authorized, issued, and retired, outstanding issues. June 30,
1926 : 500, 502
Outstanding, June 30, 1926, classified by issues and denomi-
nations 513
Outstanding, monthly, February 28, 1917-August 31, 1926 518
Retired, 1918-1926 529, 533, 554, 572
Stock accpuntability of Treasury agencies for, 1926 563, 572
Transactions in. 1926 531, 533, 540, 545
Prices, average, received for each issue 502
Receipts on account of 179, 333, 433
Registered accounts, interest payable, and checks drawn on ac-
count of 562, 401
Registered bonds outstanding 513, 562
INDEX 615
Public debt of the United States— Continued.
Retirements— ^^^f
Chargeable against (.rdinary receipts 446,448,4(33
Cumulative totals on June 30, 1925 and 1926 551
Fiscal year 1926 38,551
Fiscal years 1918-1926, by issues 554
Monthly, 1926, classified "^^^
Of war debt-
Factors in reduction ^'^
074.
Historic policy -'^
974
Treasury views on ^"^
7 9
Policy in regard to '"^
. . 977
Relation to tax revision
Sources of. fiscal years 1918-1926 557
Summary of. 1920-192G ^^
Short-dated —
Changes in, August 31, 1919-October 31, 1926 46
Outstanding, monthly, February 28, 1917-August 31, 1926 518
Sinking Tund. {See Sinking fund, cumulative.)
Statement of —
June 30. 1926 ^^^
October 31. 1926, preliminary 511
Stock accountability of Treasury agencies for issues of, 1926 563, 568
Transactions in —
1917-1926
-,Q9,, 522,526,529,531,533,534,536,537,538,540
~ 545
From date of inception
Treasury bonds of 1947-1952. (See Treasury bonds.)
Treasury bonds of 1944-1954. {See Treasury bonds.)
Treasury bonds of 1946-1956. {See Treasury bonds.)
Treasury notes. {See Treasury notes.)
Treasury savings securities. {See Savings securities. Treasury
(war).)
Public Debt Service : ^„, ^non ai-
Expenditures from allotments by Bureau of Supply, 1923-1926 4U
Receipts of : ~ """"
Public domain, works, and industries. Government expenditures for, 191. >-
qsr 30,31,32,33
Public Health Service :
Abstract of report of Surgeon General ^'*
Activities summarized '
Expenditures and appropriations ^^^'
Hygienic laboratory, studies by ^^^
Immigration inspection abroad J^^
Industrial hygiene and sanitation surveys ^' '
Marine hospitals and relief ' '^ '
Plague-suppression measures ^•*'' -'
Quarantine —
Domestic '
Foreign and insular, and immigration ^^^
Sanitary Reports and Statistics, Division of ^8-
Scientific Research, Division of -^^ ^^^
Summary of duties of irQ'3S3
Venereal Disease, Division of '^'*'
616 INDEX
Page
Public lands, receipts from sales of, 1796-1926 456
Purchasing agency of Treasuiy. (See Bureau of Supply.)
Q
Quarantine, domestic, foreign, and insular. (See Public Health Service.)
R
Railroad Labor Board, exix'uditures 435
Railroads :
Director General of Railroads — »
Appointment of the Secretary of the Treasury 133, 264
Resignation of 133
Expenditures of Government in connection with 130, 263, 435, 448
Government transactions with, summarized 130,263
Receipts from, 1926 130.264
Securities of, owned by the United States Government 130. 134, 576
Summary, liquidation of liabilities growing out of Federal control__ 263
Transportation act of 1920, as amended —
Loans to, under 577, 5S2
Payments and repayments on loans made luider section 210,
November 1, 1925-Oclober 31. 1926 132, 582
Payments under —
Section 204, November 1. 1025-October 31, 192G 131,581
Section 209, November 1, 1925-October 31, 1926 131, 581
Rates, Treasury, relation of, to the market 47
Receipts (see also Customs; Internal revenue; Receipts and expendi-
tures) :
1920-1926 (cash basis) 21
From capital investments 7
Miscellaneous —
Classified. 1925 and 1926 429
Estimated, 1927 and 1928, classified 176, 489
Trend in. 1920-1926 21
Summarized, 1926 18
Summary of by organization units 433
Receipts and expenditures. {See also Customs; Internal revenue; Pan-
ama Canal; Postal Service; Public debt; Public lands) :
Bases of statements of 296
Classified —
1791-1926 (warrant basis) 456
1916-1926 (cash basis) 448
1925 and 1926 (warrant basis) 429,435
April 6, 1917-October 31, 1926 (cash basis) 444
Estimated, 1927 and 1928, and actual 1926 176,489
Diagrams showing 19, 20, 26, 29, 35
Interest payments on bonds, stocks, and other obligations to United
States 429
Monthly, .July 1. 1925-June 30, 1926, classified 452
Ordinary receipts, fiscal years 1920-1926, classified IS
Ordinary receipts and expenditures chargeable against ordinary
receipts (cash basis), April G, 1917-Oetober 31, 1926 444
Ordinary receipts and expenditures, 1926 (cash basis, revised) 333
Postal. 1791-1926 468
Prospective changes in 0, 33
INDEX 617
Receipts and expenditures — Continued.
Public debt. {See Public debt of the United States.) Page
Repayments of investments 431
Refineries of gold and silver 347
Register of the Treasury :
Abstract of report 406
Audit of securities, physical 407
Personnel 406
Retired securities, received, examined, and filed 407
Regulations, United States securities. {See Circulars, department.)
Research Division, Public Health Service 377
Reserve fund, gold. {See Gold reserve fund.)
Retirement :
Civil-service employees of Treasury Department 171
Teachers, District of Columbia 99
Retirement and disability fund :
Civil service. {See Civil-service retirement and disability fund.)
Foreign Service 103
Revenue act of 1921, estimated effect on tax receipts 24
Revenue act of 1924, estimated effect on tax receipts 24
Revenue act of 192G :
Changes in, summarized * 5,22,291
Estimated effect on tax receipts 8, 22, 24
Joint Congressional Committee of Internal Revenue Taxation 6
Revisions to be fully effective, fiscal year 1927 23
Revenue agents, reports of 352
Revenue, surplus. {See Surplus.)
Revenues, Federal compared with State and municipal 8
Rumania, obligations to United States :
Act to authorize settlement of 231
Agreement for funding 77, 225
Amount of —
Funded debt 56, 579
Original principal 56, 579
Total to be received on account of 255
Payments on account of —
Funded debt 56, 579
Interest 580
Principal 56. 579
Press statement by the World War Foreign Debt Commission giving
terms of agreement for settlement of 230
Schedule of payments under funding agreements 232
Statement by Secretary of the Treasury before Ways and Means
Committee concerning settlement 206
Status of debt, November 15, 1926 77, 579
Russia, obligations to United States :
Payments of interest on 580
Status of debt, November 15, 1926 78, 579
S
Sale of Government property, receipts from 429
Sales (dealers' or manuf acturei's' ) taxes on:
Changes in, revenue act of 1926 292
Receipts from, 1925 and 1926 473
618 INDEX
Sanitary Reports and Statistics, Division of. {See Public Health
Service.)
Savings, securities, Treasury (war) : Pag«
Authorized and issued, outstanding issues 504
Description of 184
Issued and retired, outstanding issues, June 30, 1926 500
Outstanding 500, 504, 511, 518
Redemption of, scries of 1921, regulations concerning 203, 204
Retired, fiscal years 191S-1926 538,554
Stock accountability of Treasury agencies for, 1926 563, 568, 572
Transactions in, 1926 522, 531, 538, 540, 545, 548
Scientific Research, Division of, Public Health Service 377
Second Liberty loan. {See Liberty bonds.)
Secret Service Division :
Abstract of report 413
Duties of 319
Secretaries of the Treasury since 1791 xrv
Securities {sec also Loans and currency) :
Alien Property Custodian account 366
Interest collected to June 30, 1926, by Federal reserve districts, on
account of sales of 488
Owned by United States —
American Relief Administration, received from 576
Capital stock of —
Inland Waterways Corporation 134, 577
Panama Railroad 134. 577
War emergency corporations 134, 576
Changes in, 1926 134
Estimated receipts from, 1927 and 1928, classified 176, 489
Federal intermediate credit bank 134, 578
Federal land bank 134, 578
Foreign obligations. {See Foreign government obligations.)
June 30, 1926, classified 576
Miscellaneous securities received by War and Navy Departments
and United States Shipping Board 134, 578
Railroad 134, 576
Receipts on account of 21,176
State bonds and stocks 366
United States Grain Corporation, received from ^ 576
United States, owned by national banks 339
Received and destroyed by destruction committee 403
Retired and unissued —
Not affecting public debt, delivered to register, 1920 574
Not previously reported 572
Retired, received, examined, and filed in oflSce of Register of the
Treasury, fiscal years 1925 and 19261 407
Tax-exempt bonds, notes, and certificates of indebtedness 194, 196, 198
Treasurer, held in trust by 335
Treasury (war) savings. {See Savings securities, Treasury (war).)
United States. {Sec Bonds; Certificates of indebtedness; Liberty
bonds ; Victory notes ; Treasury bonds. )
Seigniorage on coinage : 349
INDEX
619
Serb-Croat-Slovene Kingdom, obligations to United States: Page
Agreeement for funding '<'8, 244
Amount of —
Funded debt »6, 579
Original principal 56, 579
Total to be received on account of 255
Payments on account of —
Funded debt 56, 579
Interest 580
Principal 56, 579
Press statement by World War Foreign Debt Commission giving
terms of agreement on settlement of 249
Schedule of payments under funding agreement 250
Statement by Secretary of the Treasury before Ways and Means
Committee concerning settlement of 254
Status of debt. November 15. 192G 78. 579
Shipping Board, United States :
Expenditures -^35, 448
Securities received by 578
Short-dated debt (see also Public debt of the United States) :
Changes in, August 31, 1919-October 31, 1926 46
Outstanding, February 28, 1917-August 31, 1926 518
Silver :
Arts, used for 349
Bullion —
Purchase by Mint Service 347
Stock in mints, assay offices, and Federal reserve banks__ 348
Coinage 346
Coins, commemorative 348
Coins, stock, July 1, 1926 348
Demand of India and China for 96
Dollars. {See Standard silver dollars.)
Imports into India and China, 1916-1925 (calendar years) 97
Operations of Mint Service 347
Price and average range 96,347
Production —
Domestic, calendar year 1925 97,349
World, 1916-1926 97
Purchases by Government, 1926 95
Received at mints and assay offices 347
Refineries 347
Royal Commission on Indian Currency and Finance, possible effect
of plan of 96,584
Subsidiary coin, stock. 1860-1926 (see also Subsidiary silver) 584
Silver certificates :
General statement concerning 80
Stock and amount in circulation. July 1, 1926 404
Sinking fund, cumulative :
Appropriated for. under Victory Liberty loan act 184, 186
Retirement of public debt on account of —
Estimated, 1927 and 1928 178
Fiscal year 1926 551
Fiscal years 1921-1926 448, 557
Purchase of third Liberty loan 42, 199
11438—261 41
620 INDEX
Page
Smithsonian Institution and National Museum, expenditures 435
Special depositaries. {See Depositaries.)
Special taxes :
Kccoipts from 475
Repealed, revenue act of 1926 292
Spirits distilled, taxes on :
Changes in, revenue act of 1926 293
Receipts from 471. 480
Spruce Production Corporation, United States, stock owned by Govern-
ment 576
Stamp taxes :
Changes in, revenue act of 1926 293
Receipts from 473
Standard silver dollars :
Circulation, July 1, 1926 4(»4
Number coined 347
Stock and amount in circulation, July 1, 1926 404
Stock, 1873-1926 584
State bonds and stocks owned by United States 366
State, Department of, expenditures 438.448,452
Stationery, purchases and issues of 162.419
Subsidiary silver :
Coined, 1926 347
Stock and amount in circulation, July 1. 1926 404
Stock, 1860-1926 584
Sugar Equalization Board (Inc.), United States, capital stock owned
by Government 576
Supervising Architect :
Abstract of report 374
Balances, unencumbered, June 30, 1926 377
Building operations 373
Claims under act of Aug. 25, 1919 376
Contract liabilities 377
Duties of 326
Expenditures 377, 418
Federal buildings completed, location of 375
General plan for public building development 156
Hospitals and other buildings, construction of 374
Survey of public buildings situation 155
Supplies, purchase of. {See General Supply Committee.)
Supply, Bureau of:
Abstract of report 416
Activities summarized 160, 320
Expenditures by and allotments to, from appropriations to various
bureaus and offices, fiscal years 1923-1926 161
Open market purchases 44S
Recommended to Congress, as permanent institution 160
Stationery, appropriations, expenditures, and reimbursements for,
fiscal years 1925 and 1926 419
Stationery supplies —
Issues of —
Purchases and 162. 419
To bureaus, offices, and services of Treasury Department 420
On hand 162
INDEX 621
Supply Committee. {See General Supply Committee.) Page
Sureties. United States bonds as 21)8
Surety companies :
Enforcement of regi;lations on writing Government bonds 135
Number certified 135
Recommendation for amendment of law regarding 137
Surgeon General, report of. (See Public Health Service.)
Surplus :
1920-192G, cash basis 34
Diagram showing 35
Estimated for fiscal year 1926 9
History of surpluses 36
Receipts over expenditures 443
Reduction suggested tlu'ough income-tax credit 9,38
Retirement of public debt through 38. 44. 557, 560
Surtaxes. {See Individual income taxes.)
T
Tables, general. {See T.able of contents.)
Tariff act of 1922:
Administration of 369
Compared with act of 1913 288
Turiff Commission. United States, expenditures '. 435
Tariff question, press statement by the Secretary of the Treasury on 285
Tax Appeals. Board of 357
Tax certificates. {See Certificates of indebtedness.)
Tax system, Federal, changes in 20, 23
Taxation (see also Revenue act) :
Investigation of system of internal-revenue taxation authorized.
revenue act of 1926 0
Reduction in —
Relation of debt retirement to 7,9,277
Revenue acts of 1921, 1924, and 1926 24, 279
Treasury views on further 8, 24, 279
Securities exempt from. (See Tax-exempt securities.)
Taxes. (See Corporation income taxes; Customs; Franchise tax; In-
come and profits taxes ; Individual income taxes ; Internal revenue ;
Internal Revenue. Bureau of.)
Tax-exempt securities, bonds, notes, and certificates of indebtedness 194,
196. 198
Teachers' retirement fund. District of Columbia 99
Telegraph and telephone messages, revenue from tax on 474
Third Liberty loan. (See Liberty bonds.)
Tobacco taxes :
Cigar tax rates, changes in. revenue act of 1926 292
Receipts from taxes on 351, 471
Tonnage tax, receipts from, by districts, 1926 485
Transportation taxes, revenue from 474
Treasurer of the United States :
Abstract of report : 333
Accounts of Government corporations and Railroad Administration
carried with 128
Duties of 313
Special trusts, custodian of , 335
622 INDEX
Treasury (see also Treasury Department) : i>ag«
Condition of. June ,30. 1924. 192.". 1926 498
General fund, balance in. June 30. 1924. 1925. 1926 498
Money held in, 1860-1926 586
Treasury bonds :
Authorized and issued, oustanding issues. June 30, 1926 502
Description of 183
Issued, summary of all series 40
Offered in 1926. Treasury bonds of 1946-1956 —
Amount of 40. 194
Description of 40, 194
Offering of issue 194
Premium on 40
Rate and yield 40
Tax exemption 40, 194
Outstanding 500. 502, 511. 514. 518, 535
Payment of Federal estate and inlieritance taxes in 193
Registered bonds outstanding, and number of accounts 562
Retirements 500. 530, 554
Stock accountability of Treasury agencies for 563,568
Tax exemption 183
Transactions in 526, 529, 535. 540, 545
Treasury certificates of indebtedness. (See Certificates of indebtedness.)
Treasury Department :
Assistant Secretaries of xvi
Employees. (See Employees, Treasury Department.)
Expenditures 439. 448, 452
Oflicers of. principal staff and administrative xix
Organization^ —
Bureaus and offices 309
Changes in 168
Personnel Classification Board 170
Practice before, regulation of 169
Secretaries of, and Presidents under whom they served xiv
Undersecretaries of xv
Treasury notes :
Accepted as security on penal bonds : 208
Adjusted service series 41, 98
Authorized and issued, outstanding issues, June 30, 1926 503
Description of 184
Issued and retired from date of inception 545
Issued, fiscal year 1926, classified 427, 436
Issued and retired, outstanding issues. June 30, 1926 536
Outstanding —
June 30, 1926, classified by issues and denominations 515
June 30, 1920, matured during 1926 512
Monthly, February 28. 1917-August 31, 1926 518
October 31, 1926, preliminary statement 511
Payment of —
Federal estate or inheritance taxes in 193
Federal income and profits taxes in 184
Retired —
1923-1926, classified ' 555
1926 530, 536
INDEX 623
Treasury notes — Continued. Page
Stock accountability of Treasury agencies for 564, 568
Transactions in, 1826 527, 530, 531, 536, 541, 545
Treasury notes of 1890 :
General statement concerning 80
Gold reserve supplemented 335
Outstanding, decrease in 336
Stock and amount in circulation, July 1, 1926 404
Treasury statements, daily, explanation of basis of receipts and expendi-
tures in 296
Treasury (war) savings securities. (See Savings securities, Treasury
(war).)
Trust funds :
Held for redemption purposes 174, 335
Investments of 436
Library of Congress, Board 104
United States bonds. {See Bonds.)
United States Government life insurance fund 100
United States Government, securities owned by. (See Securities.)
United States Grain Corporation, foreign obligations received from 576
United States Housing Corporation, capital stock owned by Government- 576
United States notes:
Circulation, July 1, 1926 404
General statement concerning SO
Gold reserve supplemented against United States notes of 1890 335
Redemption of unfit 174
Stock, 1862-1926 584
United States Senate, expenditures 434
United States Shipping Board. {See Shipping Board.)
United States Spruce Production Corporation, capital stock owned by
Government ^76
United States Sugar Equalization Board, capital stock owned .by Gov-
ernment • — '^^^
United States Tariff Commission. {See Tariff Commission.)
United States Veterans' Bureau. {See Veterans' Bureau.)
V
Vessels, Coast Guard. {See Coast Guard.)
Veterans' Bureau, United States, expenditures 435,450
Veterans of World War, vocational rehabilitation, expenditures 435
'\'ictory notes :
Outstanding 501, 508, 512, 518, 543
Retirements of 448, 543, 555
Vocational rehabilitation, expenditures 435
W
War claims. {See Germany, Mixed Claims Commission.)
War Department:
Expenditures 440, 448, 452, 460
Securities received by 576
624 INDEX
Pag:e
War emergency cori>orations, capital stock of, owiuhI by United States. 134, 576
"War Finance Cori)oratiou :
Cliecking account with Treasurer 128
Expenditures 435, 448, 452
Liquidation of liabilities, progress in 129
Loans —
Outstanding 129
Repayment of _129
War supplies, surplus :
Receipts from sales of 21
Securities received by Government from sales of 576, 578
Warrants, basis for statements of receipts and expenditures, explana-
tion of 297
War-savings certificates. (See Savings securities. Treasury (vpar).)
War-savings stamps. (See Savings securities, Treasiiry (war).)
World War Foreign Debt Commission (see also under names of various
countries) :
Activities of ^ 57
Correspondence relative to possible adjustment of war obligations.
April 11, 1917-November 3, 1920—
Cancellation of indebtedness 67, 72
Joint adjustment of obligations 63
Policy of countries in contracting 60
Relation to reparations settlement 70
With France 60
With Great Britain 66
Dates of debt funding agreements, by nations 56
Debt settlement with —
Belgium 74, 209. 219, 255
Czechoslovakia 74, 234, 235, 255
Estonia 74. 220, 222, 255
Finland 255
France 74, 236, 240. 241. 242, 243. 251. 255
Great Britain 255, 207
Hungary 255
Italy 76, 213, 216, 218. 255
Latvia 76, 223, 224, 255
Lithuania 255
Poland 255
Rumania 77, 225, 230. 231, 232, 255
Serb-Croat-Slovene Kingdom (Yugoslavia) ___ 78, 244. 249, 250, 254, 255
Members 57
Press statements :
Comparing Italian settlements with Groat Britain and the
United States 213
Concerning the British-French and the American-French settle-
ments 243
Giving terms of agreement between France and the United
States 241
Giving terms of agreement between the Kingdom of the Serbs.
Croats, and Slovenes and the United States 249
Giving terms of agreement for the Rumanian settlement 230
INDEX
625
World War Foreign Debt Oouuuission— Coiuiuued. Page
Statement by Secretary of the Treasury before Ways and Means
Committee concerning settlements of indebtedness with various
European countries -^^
Treasury views with regsird to joint adjustment of debts 59
Y
yields and rates on securities 47.53
Yugoslavia. {See Serb-Croat-Slovene Kingdom.)
o
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