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Annual Report
of the

Secretary of the Treasury
on the

State of the Finances
For the Fiscal Year Ended June 30y 1957




TREASURY DEPARTMENT
DOCUMENT NO. 3205
Secretary

U N I T E D STATES GOVERNMENT PRINTING O F F I C E . WASHINGTON
For sale by the Superintendent of Documents, U. S. Government Printing Office
Washington 25, D. C. - Price 32 (paper cover)




:

1958

CONTENTS
Fage

Transmittal and statement by the Secretary of the Treasury:

1

REVIEW OF FISCAL OPERATIONS
Summary of fiscal operations
--Budget receipts and expenditures
Budget receipts in 1957
.
,
Estimates of receipts in 1958 and 1959
Budget expenditures in 1957
Estimates of expenditures in 1958 and 1959
Trust account and other transactions
Account of the Treasurer of the United States_
Public debt operations and ownership of Federal securities
Public debt operations
Ownership of Federal securities
Corporations and certain other business-type activities of the United
States Government
Securities owned by the United States Government..Taxation developments
International financial and monetary developments

5
8
8
11
18
20
21
22
23
26
34
37
40
40
45

ADMINISTRATIVE REPORTS
Manageraent iraproveraent program
Coraptroller of the Currency, Bureau of the
Customs, Bureau of
Engraving and Printing, Bureau of
Fiscal Service
.
Internal Revenue Service
International Finance, Office of
Mint, Bureau of the
Narcotics, Bureau of
Production and Defense Lending, Office of
United States Coast Guard
.
United States Savings Bonds Division
United States Secret Service

^
'
.

:
.

61
65
67
81
89
117
125
126
130
133
134
152
154

EXHIBITS
PUBLIC DEBT OPERATIONS

Oiferings and Allotments of Treasury Certificates of Indebtedness and
Treasury Notes
1. Treasury certificates of indebtedness
2. Treasury notes

.
.

161
166-

Treasury Bills
3. Treasury bills

—

172

4. Third amendraent, January 4, 1957, to Department Circular No. 750,
Revised, regulations governing payments by banks and other financial institutions in connection with the redemption of United States
savings bonds
.
5. Second araendraent, March 7, 1957, to Departraent Circular No. 906,.
terminating the sale of Series J and K savings bonds

181

United States Savings Bonds




III

181

IV

CONTENTS
Fage

6. F o u r t h revision, April 22, 1957, of D e p a r t m e n t Circular No. 653,
increasing the interest rate and redemption values of Series E savings
bonds
.
7. Revision,^ April 22, 1957, of Departmerit .Circular. No. 905, increasing
'tlie iiiterest rate and redemption values of Series H savings b o n d s . .
8. Press release. M a y 2, 1957, announcing t h e future issuance in punchcard form of Series E savings b o n d s .
_.
.__
^

181
191
195

GUARANTEED OBLIGATIONS CALLS

9. Calls for partial redemption, before m a t u r i t y , of insurance fund debentures

195

LEGISLATION

10. An ..act temporarUy increasing the public d e b t l i m i t . _.
11. An act increasing t h e raaxiraura interest r a t e on United States savings
., . b o n d s .
.___--i. __:.._.
. _.

198
198

TAXATION DEVELOPMENTS

12. Stateraent by Secretary of the Treasury Huraphrey, M a r c h 19, 1957,
before t h e Senate Finance Coraraittee on H. R. 4090 to provide a
one-year extension of the existing corporate norraal tax r a t e and of
certain excise tax rates
^
13. Letter of Secretary of t h e Treasury Huraphrey, April 16, 1957, to t h e
Chairman of t h e House Ways a n d Means Comraittee reaffirming
t h e Treasury's position with respect to revision of t h e taxation of
cooperatives
14. Statement, of Secretary of the Treasury H u m p h r e y , M a y 7, 1957,
before t h e Senate Finance Comraittee on S; 1795 to lirait emergency
amortization strictly to defense items
15. Report of t h e Treasury D e p a r t m e n t , M a y 13, 1957, on S. 1795 to
araend Section 168 of t h e Internal Revenue Code of 1954 to limit
eraergency amortization strictly to defense items
16. Letter of t h e President^ July 15, 1957, to t h e Chairman of the House
Ways a n d Means Comraittee regarding tax relief for small business.

198

200
201
202
203

INTERNATIONAL FINANCIAL AND MONETARY DEVELOPMENTS

17. Remarks by Secretary of t h e Treasury Anderson, August 19, 1957,
before t h e First Plenary Session of t h e Economic Conference of the
Organization of American States, Buenos Aires, A r g e n t i n a .
18. S t a t e m e n t by Secretary of t h e Treasury H u m p h r e y , M a r c h 15, 1957,
before t h e Senate Banking and Currency Coraraittee on t h e araendraent to t h e Anglo-American Financial Agreement of 1945
19. Agreeraent between t h e Governraents of the United States and t h e
United Kingdora, M a r c h 6, 1957, to araend t h e Anglo-American
Financial Agreement of 1945
20. L e t t e r frora Mr. G. F . Thorold, Econoraic Minister of t h e British
Embassy, April 8, 1957, to t h e Secretary of t h e Treasury stating
t h a t t h e appropriate P a r l i a m e n t a r y action had been t a k e n on t h e
agreement amending the Anglo-American Financial Agreement of
1945
21. Letter from Secretary of t h e Treasury H u m p h r e y , April 25, 1957, to
t h e British Ambassador stating t h a t Congress h a d approved t h e
agreement amending t h e Anglo-American Financial Agreeraent of
1945
1
22. Stateraent by Secretary of t h e Treasury Anderson as Governor for the
United States, Septeraber 23, 1957, a t t h e twelfth a n n u a l raeeting
of t h e International Bank for Reconstruction a n d Developraent and
t h e International M o n e t a r y F u n d
.
23. Stateraent by Under Secretary of t h e Treasury Burgess as T e m p o r a r y
Alternate Governor for t h e United States, September 24, 1957, a t
t h e twelfth annual meeting of t h e International M o n e t a r y F u n d
24. S t a t e m e n t by Under Secretary Designate Baird, September 27, 1957,
a t the first annual meeting of the International Finance Corporation.




205
212
214

215

215

215
218
220

CONTENTS

V
Fage

25. Press release, July 31, 1956, announcing the temporary placing under
licensing procedure of the assets in this country belonging to the Suez
Canal Corapany and the E g y p t i a n Governraent
,.--.'
26. Press release, August 3, 1956, announcing the issuance of a General
License under the Egyptian. Assets Control Regulations
27. Press release, December 15, 1956, on the signing of an exchange
agreement between the United States and Bolivia
28. Press release, F e b r u a r y . 1 5 , 1957, on..the. signing of an..extension of the
Stabilization Agreement between the United States and Peru
29. Press release, April 1, 1957, on the signing of an extension of an exchange
agreement between the United States and Chile-^

221
221
221
222
222

ADDRESSES AND STATEMENTS ON GENERAL FISCAL AND OTHER POLICIES

30. Stateraent by Secretary Anderson, July 29, 1957, on assuraing duties
as Secretary of the Treasury
31. Reraarks by Secretary of the Treasury Huraphrey, October 8, 1956,
before the Econoraic Club of Detroit, Mich
32. S t a t e m e n t by Secretary of the Treasury H u m p h r e y , J a n u a r y 16, 1957,
in support of the President's Budget Message for the fiscal year 1958_33. E x t r a c t s of remarks by Secretary of the Treasury Huraphrey, April 18,
1957, before the National Industrial Conference Board, New York,
N. Y
.
34. S t a t e m e n t by Secretary of the Treasury H u m p h r e y , June 14, 1957,
before the Subcommittee on Fiscal Policy of the Joint Economic Coraraittee
.
.
35. Stateraent by Secretary of the Treasury Huraphrey, J u n e 18, 1957,
before the Senate Finance Comraittee on the financial condition of the
United States
....
36. Reraarks by Under Secretary of the Treasury Burgess, October 23,
1956, at the 82d Annual Convention of the Araerican Bankers Association, Los Angeles, Calif
37. R e m a r k s by Under Secretary of the Treasury Burgess, F e b r u a r y 5,
1957, before the Citizens Coraraittee for the Hoover Report in conjunction with their Third National Reorganization
Conference,
Washington, D . C
.
.._
38. Stateraent by Under Secretary of the Treasury Burgess, M a r c h 4,
1957, before the Subcoramittee on Housing of the House Coraraittee on
Banking and Currency
39. S t a t e m e n t by Under Secretary of the Treasury Burgess, April 3,
1957, before the Senate Finance Coraraittee
40. Stateraent by Under Secretary of the Treasury Burgess, July 29, 1957,
before t h e Senate Finance Coraraittee on the financial condition of the
United S t a t e s .
.
41. Stateraent by Under Secretary of the Treasury Burgess, August 9,
1957, before the Senate Finance Coraraittee on tlie financial condition
o f t h e United States
.
42. Stateraent by Assistant Secretary of the Treasury Kendall, July 29,
1957, before the House. W a y s and Means Coraraittee on the report on
and a m e n d m e n t s to the Antidumping Act
^ — _-_

222
222
226
228
229
230
260

262
263
264
265
293
295

ORGANIZATION AND PROCEDURE

43. Treasury D e p a r t r a e n t orders relating to organization and p r o c e d u r e - .

301

REPORTING AND ACCOUNTING CHANGES

44. Regulations governing the handling of certificates of deposit for credit
in the general account of the Treasurer of t h e United States (Departm e n t Circular No. 945 (Revised), Suppleraent 1, Araendraent 1, July
20, 1956, Araendraent 2, F e b r u a r y 11, 1957)
45. Regulations governing clairas for replacement of valuables or the value
thereof, shipped p u r s u a n t to the Gov.ernment Losses in Shipment Act
(Departrpent Circular, No. 577, Supplement 4, December 7," 1956)
46. Treasury D e p a r t m e n t and General Accounting Office Joint Regulation No. 4 (Revised), Supplement 1, J a n u a r y 10, 1957
.




311
314
315

VI

CONTENTS
Fage

47. Regulations governing the implementation of the act to improve
governmental budgeting and accounting methods and procedures
' • (Department Circular No. 987, AprU 26, 1957)
._
48. Treasury Departraent and General Accounting Office Joint Regulation
No. 3, Amendment 2, May 20, 1957
49. Regulations relating to delivery of checks and warrants to addresses
outside the United States, its Territories, and possessions (Department
Circular No. 655, Supplement 11, June 7, 1957)
50. Revised instructions governing the reporting bf estimated foreign
currency collections and requirements (Department Circular No. 967,
(Revised) June 17, 1957)
-_.
.
.
51. Statement relating to the preparation of the Combined Statement of
Receipts, Expenditures and Balances of the United States Government
(Department Circular No. 965 (Revised) Supplement 1, July 25, 1957).

315
316
316
317
318

MISCELLANEOUS

52. Letter from Secretary of the Treasury Humphrey, February 28, 1957,
reporting to Congress on the financial condition and results of the operations of the highway trust fund.
.
53. Principal provisions of law enacted in 1957 (85th Congress, 1st Session)
relating to acquisition and use of foreign currencies by the United States
Government (Supplement to exhibit 56, page 304, of the 1956 Annual
Report)
.
54. Letter of the Postmaster General to the Secretary of the Treasury
certifying extraordinary expenditures contributing to the deficiencies
of postal revenue for the fiscal year 1957

320

322
323

TABLES
Bases of tables
^
Description of accounts relating to cash operations

327
329

SUMMARY OF FISCAL OPERATIONS

1. Summary of fiscal operations, fiscal years 1932-57 and monthly 1957.

332

RECEIPTS AND EXPENDITURES

2. Receipts and expenditures, fiscal years 1789-1957
3. Budget receipts and expenditures, monthly for fiscal year 1957 and
totals for 1956 and 1957
4. Public enterprise (revolving) funds, fiscal years 1956 and 1957
5. Trust account and other transactions, monthly for fiscal year 1957
and totals for 1956 and 1957
6. Budget receipts and expenditures by major classifications, fiscal years
1950-57
7. Trust account and other transactions by major classifications, fiscal
years 1949-57
8. Budget receipts and expenditures, based on existing and proposed
legislation, actual for the fiscal year 1957 and estimated for 1958
and 1959
9. Trust account and other transactions, actual for the fiscal year 1957
and estimated for 1958 and 1959
10. Effect of financial operations on the public debt, actual for the fiscal
year 1957 and estimated for 1958 and 1959
11. Internal revenue collections by tax sources, fiscal years 1929-57
12. Customs collections and refunds, fiscal years 1956 and 1957
13. Deposits by the Federal Reserve Banks representing interest charges on
Federal Reserve notes, fiscal years 1947-57
14. Postal receipts and expenditures, fiscal years 1911-57
.
15. Cash income and outgo, fiscal years 1950^57
^




334
340
366
368
382
385
387
390
391
392
398
398
399
400

CONTENTS

VII

PUBLIC DEBT, GUARANTEED OBLIGATIONS, ETC.

I.—Outstanding
Fage

16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.

Principal of the public debt, 1790-1957
.
Public debt and guaranteed obligations outstanding June 30, 1934-57.
Public debt outstanding by security classes, June 30, 1946-57
Guaranteed obligations held outside the Treasury classified by issuing
Government corporations and other business-type activities,
June 30, 1946-57
Maturity distribution of marketable, interest-bearing public debt
and guaranteed obligations, June 30, 1916-57
Suraraary of public debt and guaranteed obligations by security
classes, June 30, 1957
Description of public debt issues outstanding June 30, 1957
Description of guaranteed obligations held outside the Treasury,
June 30, 1957
.
Postal Savings Systems' deposits and Federal Reserve notes outstanding June 30, 1947-57
Description of Postal Savings Systems' deposits and Federal Reserve
notes outstanding June 30, 1957
Statutory limitation on the public debt and guaranteed obligations,
June 30, 1957
Debt outstanding subject to statutory debt limitation as of selected
dates
.

407
409
410
412
413
414
415
430
431
431
432
433

II.—Operations
28. Public debt receipts and expenditures by security classes, monthly
for fiscal year 1957 and totals for 1956 and 1957
..
29. Changes in public debt issu es, fiscal year 1957
30. Issues, maturities, and redemptions of interest-bearing public debt
securities, excluding special issues, July 1956-June 1957
31. Public debt increases and decreases, and balances in the account of the
Treasurer of the U. S., fiscal years 1916-57
32. Statutory debt retirements, fiscal years 1918-57
_-^
_.
33. Cumulative sinking fund, fiscal years 1921-57
34. Transactions on account of the cumulative sinking fund, fiscal year
1957

434
444
462
481
482
483
483

III.—United States savings bonds
35. Summary of sales and redemptions of savings bonds by series, fiscal
years 1935-57 and monthly 1957
36. Sales and redemptions of Series E through K savings bonds by series,
fiscal j^ears 1941-57 and monthly 1957
37. Sales of Series E through K savings bonds by denominations, fiscal
years 1941-57 and monthly 1957
38. Redemptions of Series E through K savings bonds by denominations,
fiscal years 1941-57 and monthly 1957
39. Sales of Series E and H savings bonds by States, fiscal years 1956,
1957, and cumulative
40. Percent of savings bonds sold in each year redeemed through each
yearly period thereafter, by denominations
.

484
485
489
492
494
495

IV.—Interest
41. Amount of interest-bearing public debt outstanding, the computed
annual interest charge, and the computed rate of interest, June 30,
1916-57, and at end of each month during 1957
42. Computed annual interest rate and computed annual interest charge
on the public debt by security classes, June 30, 1939-57.
43. Interest on the public debt by security classes, fiscal years 1954-57..
44. Interest on the public debt and guaranteed obligations, fiscal years
1940-57 classified by tax status
^




501
502
504
505

VIII

CONTENTS
V.—Prices and yields of securities
Fage

45. Average yields of taxable long-term Treasury bonds by months, October 1941-June 1957
._
.
46. Prices and yields of raarketable public debt issues, June 30, 1956, and
June 30, 1957, and price range since first traded
^--

506
508

VI.—Ownership of governmental securities
47. Estiraated ownership of interest-bearing governmental securities '
outstanding June 30, 1941-57, classified by type of issuer
-48. Estimated distribution of interest-bearing governraental securities
outstanding June 30, 1941-57, classified by tax status and type of
issuer
-_,
^
^
49. Suraraary of Treasury survey of ownership of interest-bearing public
debt and guaranteed obligations, June 30, 1956 and 1957

510
512
514

ASSETS AND LIABILITIES IN THE ACCOUNT OF THE TREASURER OF THE UNITED
STATES

50. Assets and liabilities in the account of the Treasurer of the United
States, June 30, 1956 and 1957

516

TRUST FUNDS AND CERTAIN OTHER ACCOUNTS OF THE FEDERAL GOVERNMENT

51. Holdings of Federal securities by Governraent agencies and accounts,'at par value, June 30, 1947-57..
52. Adjusted service certificate fund, June 30, 1957
53. Ainsworth Library fund, Wialter Reed General Hospital, June 30,
1957
._
54. CivU service retireraent and disability fund, June 30, 1957
...
55. Colorado River Dam fund, Boulder Canyon Project, status by operating years ending May 31, 1933 through 1957..
56. District of Colurabia teachers' retireraent and annuity fund, June
30, 1957
.
.
57. District of Colurabia, Workmen's Compensation Act, relief and rehabilitation, June 30, 1957
_
.__
58. District of Columbia other funds—Investments as of June 30, 1956
and 1957
...
_.-59. Federal disability insurance trust fund, June 30, 1957
^
60. Federal employees'insurance fund, June 30, 1957
61. Federal old-age and survivors insurance trust fund, June 30, 1957
62. Foreign service retirement and disability fund, June 30, 1957
63. Highway trust fund,.June 30, 1957
.___
.
.__
64. Judicial survivors annuity fund, June 30, 1957
65. Library of Congress trust funds, June 30, 1957i_^___
66. Longshoreraen's and Harbor Workers' Corapensation Act, relief and
rehabilitation, June 30, 1957
__.
67. National Archives trust fund, June 30, 1957
68. National park trust fund, June 30, 1957
69. National service life insurance fund, June 30, 1957_
70. Pershing HaU Meraorial fund, June 30, 1957
71. Philippine pre-1934 bonds, payraent as of June 30, 1957
72. Public Health Service gift funds, June 30, 1957
..-_
73. Railroad retireraent account, June 30, 1957
74. Refugee Relief Act of 1953, loan program through June 30, 1957
75. Unemployment trust fund, June 30, 1957
_--__.
76. U. S. Governraent life insurance fund, June 30, 1957
77. U. S. Naval Acaderay general gift fund, June 30, 1957
._

518
521
522
522
524
525
526
526
528
529
530
532
532
533
534
536
536
537
537
538
539
540
540
541
542
546
547

STOCK AND CIRCULATION OF MONEY IN THE UNITED STATES

78. Stock of raoney, money in the Treasury, in the Federal Reserve
Banks, and in circulation, by kinds, June 30,,.19,57
__..__.._
79. Stock of money, money in the Treasury, in thie-.Federal Reserve Ba'nks, •.
and in circulation, June 30, 1913-57
-.
80. Stock of money, by kinds, June 30, 1913-57
....
81. Money in circulation, by kinds, June 30, 1913-57




548
550
551
552

CONTENTS

IX
Fage

82. Location of gold, silver bullion a t m o n e t a r y value, a n d coin held by
the Treasury on J u n e 30, 1957
_.._
...
83. P a p e r currency issued and redeemed during the fiscal year 1957, and
outstanding J u n e 30, 1957, by classes and denominations

553
553

CUSTOMS STATISTICS,

84. rSiunfimary pf customs collections and expenditures, fiscal year 1957 _ .
85. Customs coUections and p a y m e n t s , by districts, fiscal year 1957.._._
86. Value of dutiable and taxable imports for consuraption and coraputed
duties and taxes collected by tariff schedules, fiscal years 1956
a n d 1957
87. Value of dutiable imports and a m o u n t s of duties collected a t specific,
ad valorera, and compound rates, fiscal years 1 9 4 2 - 5 7 . . . . . .
88. C o m p u t e d customs duties, value of imports entered for consumption,
and ratio of duties to value of dutiable iraports and to value of all
iraports, calendar years 1946-56 and raonthly J a n u a r y 1956-June
1957
.
89. C o m p u t e d customs duties, value of dutiable imports, and ratio of
computed duties to value of dutiable imports, by tariff schedules,
calendar years 1946-56 a n d monthly J a n u a r y 1956-June 1957
90. Value of dutiable imports for consuraption and computed duties collected by countries, fiscal years 1956 and 1957
-^
91. Merchandise entries b y number, fiscal years 1956 a n d 1957
92. Vehicles and persons entering the United States by number, fiscal
years 1956 and 1957
93. Aircraft a n d aircraft passengers entering t h e United States b y num. ber, fiscal years 1956 and 1957
.._94. D r a w b a c k transactions, fiscal years 1956 and 1957
.
95. Principal commodities on which drawback was paid, fiscal years
1956 and 1957.
.
.
--.
96. Seizures for violations of customs laws, fiscal years 1956 and 1957___
97. Investigative activities, fiscal years 1956 and 1957
-_

554
555
557
558

559
560
564
565
566
566
567
567
568
568

FEDERAL AID TO STATES

98. Expenditures for Federal aid to States, individuals, etc., fiscal years
1930, 1940, 1950, and 1957
-.__.
99. Expenditures made by the Government as direct p a y m e n t s to States
under cooperative arrangements and expenditures within States
which provided relief and-other aid, fiscal year 1957

569
576

wGOVERNMENT LOSSES IN SHIPMENT

100. Government losses in ship rnent revolving fund

595

INTERNATIONAL CLAIMS

101. Mexican claims fund as of J u n e 30, 1957
102. Awards of the Mixed Claims Comraission, United States and Germ a n y , certified to t h e Secretary of the Treasury by t h e Secretary
of State, through J u n e 30, 1957.
103. Yugoslav claims fund as of J u n e 30, 1957

597
598
600

GOLD AND CURRENCY TRANSACTIONS AND FOREIGN GOLD AND DOLLAR HOLDINGS

104. United States net gold transactions with foreign countries and international institutions, fiscal years 1952-57
.
105. E s t i m a t e d gold reserves a n d dollar holdings of foreign countries as of
J u n e 30, 1956 and 1 9 5 7 - - : - .
.
106. vAssetS'.andvliabilities bf the exchange stabilization fund as of J u n e 30,
1956 a n d l 9 5 7
107. Sumraary stateraent of receipts, withdrawals, and balances of foreign
currencies acquired by t h e United States, principally under intergovernmental agreements, without purchase with dollars, July 1,
1956, t h r o u g h J u n e 30, 1957
,
-^
108. Foreign currency balances held by the United States, J u n e 30, 1957_-




601
602
604

605
607

X

CONTENTS
INDEBTEDNESS OF FOREIGN GOVERNMENTS
Fage

109. Indebtedness of foreign governments to the United States arising
from World War I, and payments thereon as of June 30, 1957
110. World War I indebtedness, payments and balances due under agreements between the United States and Germany as of June 30, 1957111. Outstanding indebtedness of foreign countries on United States
Government credits (exclusive of indebtedness arising from World
War I) as of June 30, 1957, by area, country, and major program..
112. Status of accounts under lend-lease and surplus property agreements
(World War II) as of June 30, 1957

608
610
611
612

CORPORATIONS AND CERTAIN OTHER BUSINESS-TYPE ACTIVITIES OF THE UNITED
STATES GOVERNMENT

113. Capital stock, notes, and bonds of Government agencies held by the
Treasury or other Government agencies, June 30, 1957, and net
changes during 1957
.
114. Borrowing power and outstanding issues of Government corporations and certain other business-type activities whose obligations
are issued to the Secretary of the Treasury, June 30, 1957
115. Comparative statement of obligations of Government corporations
and certain other business-type activities held by the Treasury,
June 30, 1947-57
116. Description of obhgations of Government corporations and certain
other business-type activities held by the Treasury, June 30, 1957-.
117i Changes in Treasury holdings of obligations of Government corporations and certain other business-type activities, fiscal year 1957
118. Comparative stateraent of the assets, liabilities, and net investraent of
Government corporations and certain other business-type activities, June 30, 1948-57
119. Statement of financial condition of Government corporations and
certain other business-type activities, June 30, 1957
120. Income and expense of Government corporations and certain other
business-type activities, fiscal year 1957
121. Source and application of funds of Government corporations and
certain other business-type activities, fiscal year 1957
^
122. Restoration of amounts of capital impairment of the Commodity
Credit Corporation, pursuant to the act of March 8, 1938, as
amended
.
^_
123. Reconstruction Finance Corporation notes canceled and cash recoveries made through June 30, 1957
124. Dividends, interest, and similar earnings received by the Treasury
from Government corporations and certain other business-type
activities, fiscalyears 1956 and 1957

615
618
619
620
623
624
626
632
634
636
637
638

FEDERAL PERSONAL AND REAL PROPERTY

125. Condensed statement of personal and real property inventory of the
United States Governraent as of June 30, 1957, 1956, and 1955
126. Summary statement of personal and real property inventory of the
United States Government by departments and agencies, as of
June 30, 1957

639
640

PERSONNEL

127. Number of employees in the departmental and field services of the
Treasury Department, quarterly from June 30, 1956, to June
30, 1957
.
.
.--.
128. Cash awards paid to employees and estimated savings under the
incentive awards program, fiscal years 1956 and 1957

642

INDEX

643

.-u

-

642

NOTE

In tables where figures have been rounded to a specified unit and where calculations have been made from unrounded figures, the details may not check
to the totals shown.




SECRETARIES, UNDER SECRETARIES, AND ASSISTANT SECRETARIES
OF THE TREASURY DEPARTMENT FROM JANUARY 21, 1953, TO
DECEMBER 16, 1957 i
Term of service
From—

Offieial

To-

Secretaries of the Treasury
Jan. 21, 1953
July 29, 1957

July 28, 1957

George M. Humphrey, Ohio.
Robert B. Anderson, Connecticut.
Under Secretaries 2

Jan.
Aug.
Aug.
Aug.
Sept.

28,
3,
3,
9,
30,

1953
1954
1955
1957
1957

July 31, 1955
Sept. 25, 1957
Jan. 31, 1956

Marion B. Folsom, New York.
W. Randolph Burgess, Maryland.
H. Chapman Rose, Ohio.
Fred C. Scribner, Jr., Maine.
Julian B. Baird, Minnesota.
Deputies to ihe Secretary

Jan. 21, 1953
Jan
9, 1957

Aug. 2, 1954

W. Randolph Burgess, New York.
Dan Throop Smith, Massachusetts.
Assistant Secretaries 2

Jan.
Jan.
Sept.
Aug.
Apr.
Dec.
Dec.

24, 1952
28, 1953
20, 1954
3, 1955
18, 1957
4, 1957
16, 1957

Feb. 28, 1957
Aug. 2, 1955
Dec. 15, 1957
Aug. 8, 1957

Andrew N. Overby, District of Columbia.
H. Chapman Rose, Ohio.
Laurence B. Robbins, Illinois.
David W. Kendall, Michigan.
Fred C. Scribner, Jr., Maine.
Tom B. Coughran, California.
A. Gilmore Flues, Ohio.
Fiscal Assistant Secretaries

Mar. 16, 1945
June 19, 1955

June 17, 1955

Edward F. Bartelt, Ilhnois.
WiUiam T. Heffelfinger, District of Columbia.
Administrative Assistant Secretary

Aug. 2, 1950

William W. Parsons, California.

» For officials from September 11,1789, through January 20,1963, see exhibit 56, p. 314, in the 1953 annual
report.
» The positions of an additional Under Secretary and an additional Assistant Secretary were established
under the provisions of an act approved July 22,1954 (5 U. S. C. 244,246).




XI

P R I N C I P A L A D M I N I S T R A T I V E A N D STAFF O F F I C E R S O F T H E
TREASURY D E P A R T M E N T AS O F D E C E M B E R 16, 1957
SECRETARY
R O B E R T B. ANDERSON

F r e d C. Scribner, J r
Robert D . H a r t s h o r n e , Jr...
William W. Parsons
Jaraes H . Stover
P a u l McDonald
J o h n D . Larson
WUlard L. Johnson
_._
Howard M . N e l s o n . _
S. T. Adams
Nils A. Lennartson

Under Secretary.
Assistant to the Under Secretary.
Adrainistrative Assistant Secretary.
Head, M a n a g e m e n t Analysis Staff.
Director of Administrative Services.
Assistant Director of Administrative Services.
Budget Oflficer.
Assistant Budget Officer.
Director of Personnel.
Assistant to t h e Secretary (for public
affairs).
Francis J. Gafford
._ Assistant to the Secretary and Personnel
Security Officer.
Julian B . Baird
Under Secretary for M o n e t a r y Affairs.
WUliam T. Heffelfinger
Fiscal Assistant Secretary.
M a r t i n L. Moore
Assistant to t h e Fiscal Assistant Secretary.
George F . Stickney
.- Technical Assistant t o the Fiscal Assistant
Secretary (Systems and Methods Staff).
H a m p t o n A. Rabon, Jr_._ Technical Assistant to t h e Fiscal Assistant
Secretary.
Boyd A. E v a n s . . .
Technical Assistant to t h e Fiscal Assistant
Secretary.
F r a n k F . Dietrich
Technical Assistant t o t h e Fiscal Assistant
Secretary.
P a u l I. W^ren
Assistant t o t h e Secretar}^.
F r a n k A. Southard, J r
Special Assistant to t h e Secretary.
Robert P. Mayo
Chief, D e b t Analysis Staff.
Laurence B . Robbins
Assistant Secretary.
R o b e r t W. Benner
Assistant to t h e Assistant Secretary.
T o m B . Coughran
^__
Assistant Secretary.
A. Gilmore Flues
Assistant Secretary.
Captain Q. R, AValsh, U. S. Aide to Assistant Secretary.
C. G.
J a m e s P . Hendrick
Assistant t o t h e Secretary.
Myles J. Ambrose_
Assistant t o t h e Secretary for Law E n forceraent.
Nelson P. Rose ^
General Counsel.
D a v i d A. Lindsay 2
Assistant to t h e Secretary and Head, Legal
Advisory Staff.
D a n T h r o o p Sraith
D e p u t y t o t h e Secretarj^ (in charge of t a x
pohcy).
Douglas H . E l d r i d g e . - _
Chief, T a x Anal3^sis Staff.
N a t h a n N . Gordon
Chief, I n t e r n a t i o h a l T a x Staff.
OFFICE OF THE GENERAL COUNSEL

Nelson P. Rose ^
Elting Arnold
J o h n K. .Qarlock
J o h n P." Weitzel ^
Arch M. Cantrall 3
D a v i d A. Lindsay 2
Raphael Sherfy.
Footnotes at end of list.

xn




.

General Counsel.
Assistant General Counsel.
. . Assistant General Counsel.
. Assistant General Counsel.
Assistant General Counsel.
Head, Legal Advisory Staff (Assistant to t h e
Secretary).
Associate Head, Legal Advisory Staff.

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
Frederick C. Lusk
Edward C. Rustigan
Hugo A. Ranta
Lawrence LinviUe
Kenneth S. Harrison
Trevor V. Roberts

j

Robert Charabers
Edwin F. Rains
Arch M. Cantrall 3
Elting Arnold
Alfred L. Tennyson.^
Thomas J. Winston, Jr
George F. Reeves

XIH

Assistant Head, Legal Advisory Staff.
Assistant Head, Legal Advisory Staff.
Assistant to the General Counsel.
Special Assistant to the General Counsel.
Chief Counsel, U. S. Coast Guard.
Chief Counsel, Office of the CoraptroUer of
the Currency.
Chief Counsel,. Bureau of Custoras.
Chief Counsel, Foreign Assets Control.
Chief Counsel, Internal Revenue Service.
Chief Counsel, Office of International
Finance.
Chief Counsel, Bureau of Narcotics.
Chief Counsel, Bureau of the Pubhc Debt.
Chief Counsel to the Fiscal Assistant
Secretary.

OFFICE OF INTERNATIONAL FINANCE

George H. WiUis
Elting Arnold

Director.
Acting Director, Foreign Assets Control.

OFFICE OF THE COMPTROLLER OF THE CURRENOY

Ray M. Gidney
L. A. Jennings
W. M. Taylor
G. W. Garwood
H. S. Haggard

ComptroUer of the Currency.
First Deputy Coraptroller of the Currency.
Second Deputy Coraptroller of the Currency.
Third Deputy Comptroller of the Currency.
Chief National Bank Examiner.

'

BUREAU OF CUSTOMS

Ralph KeUy_
David B. Strubinger
Walter G. Roy
C. A. Emerick
Lawton M. K i n g . .

Coramissioner of Custoras.
Assistant Coraraissioner of Custoras.
Deputy Coraraissioner of Appraisement Administration.
. Deputy Commissioner of Investigations.
Deputy Commissioner of Management and
Controls.
Chief, Division of Entry, Value and
Penalties.
Chief, Division of Classification and Drawbacks.
Chief, Division of Marine Adrainistration.
Chief, Division of Technical Services.

^
.

B. H. Flinn
W. E. Higman

.
,

J. W. Gulick
George Vlases, Jr

^

BUREAU OF ENGRAVING AND P R I N T I N G

Henry J. Holtzclaw
Frank G. Uhler

^

Director, Bureau of Engraving and Printing.
Assistant Director.

BUREAU OF ACCOUNTS (IN T H E FISCAL SERVICE)

Robert W. Maxwell
Harold R. Gearhart
Howard A. Turner.
Sidney S. Sokol
Samuel J. Elson
Edraund C. Nussear
Wallace E. Barker, Jr__
Harold A. Ball
^
Julian F. Cannon
. ,
Charles O. Bryant-_^
Maurace E Roebuck
George Friedman
Louis L. CoUie
Footnotes at end of list.




Coraraissioner of Accounts.
Assistant Coraraissioner.
Deputy Comraissioner—Central Accounts.
Deputy Commissioner—Accounting Systems.
Deputy Comraissioner—Central Reports.
Deputy Coraraissioner—Deposits and Investraents.
Assistant Comraissioner for Adrainistration.
Chief Auditor.
Chief Disbursing Officer.
Assistant Chief Disbursing Officer.
Assistant Chief Disbursing Officer.
Technical Assistant to the Coraraissioner.
Executive Assistant to the Coraraissioner.

XIV

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
BUREAU OF T H E PUBLIC D E B T (IN T H E FISOAL SERVICE)

Edwin L. Kilby
Donald M. Merritt
Ross A. Heffelfinger, Jr

Coraraissioner of the Public Debt.
Assistant Coraraissioner.
Deputy Commissioner in Charge, Washington Office.
. Deputy Commissioner in Charge, Chicago
Office

...

Charles D. Peyton

O F F I C E OF T H E TREASURER OF T H E U N I T E D STATES (IN T H E FISCAL SERVICE)

Ivy Baker Priest
William T. Howell
Willard E. Scott

Treasurer of the United States.
Deputy Treasurer.
Assistant Deputy Treasurer.
INTERNAL REVENUE SERVICE

Russell C. Harrington
O. Gordon Delk
Wilber A. Gallahan

-

Harry J. Trainor
Clifford W. Stowe
Richard W. Nelson
Justin F. Winkle
Arch M. CantraU^
- George C. Lea
Leo Speer

Commissioner of Internal Revenue.
Deputy Comraissioner.
Adrainistrative Assistant to the Commissioner.
Assistant Comraissioner (Inspection).
Assistant Coraraissioner (Operations).
Assistant to the Coraraissioner.
Assistant Coramissioner (Technical).
Chief Counsel.
Director of Practice.
Technical Advisor to the Commissioner.

BUREAU OF T H E M I N T

William H. Brett
Leland Howard

Director of the Mint.
Assistant Director.
BUREAU OF NARCOTICS

Harry J. Anslinger
George W. Cunningham
Henry L. Giordano

Commissioner of Narcotics.
Deputy Comraissioner.
Assistant to the Commissioner.
OFFICE OF D E F E N S E LENDING

Edward T. Stein

Director.
U N I T E D STATES COAST GUARD

Vice Admiral Alfred C. Richmond.
Rear Admiral James A. Hirshfield.
Captain Walter C. Capron
Rear Admiral Kenneth K. Cowart.
Rear Admiral Henry T. JeweU
Rear Admiral Frank T. Kenner
Rear Admiral Allen Winbeck
Commander Paul E. Trimble

Commandant, U. S. Coast Guard.
Assistant Commandant and Chief of Staff.
Deputy Chief of Staff.
Engineer in Chief.
Chief, Office of Merchant Marine Safety.
Chief, Office of Operations.
Chief, Office of Personnel.
Comptroller.

U N I T E D STATES SAVINGS BONDS DIVISION

James F. StUes, Jr.^
BUl McDonald
Arthur B. Hill

National Director.
Assistant National Director.
Assistant to the National Director.
U N I T E D STATES.SECRET SERVICE

U. E. Baughman
Russell Daniel
E. A. Wildy
Michael W. Torina
George W. Taylor
Footnotes at end of list.




.

Chief, U. S. Secret Service.
Deputy Chief.
Assistant Chief—Security.
Chief Inspector.
Administrative Officer.

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
TREASURY M A N A G E M E N T COMMITTEE

William W. Parsons
C a p t a i n W a l t e r C. C a p r o n ,
U. S. C. G.
J o h n K. Carlock
George W. C u n n i n g h a r a . Russell Daniel
O. Gordon Delk
Harold R. Gearhart
Ross A. Heffelfinger, Jr
William T. Heffelfinger
Leland Howard
Williara T. HoweU
L. A. Jennings
BiU McDonald
--D a v i d B. Strubinger
F r a n k G. Uhler

Chairman.
Member.
Meraber.
Meraber.
Meraber.
Meraber.
Meraber.
Member.
Member.
Member.
Meraber.
Meraber.
Meraber.
Meraber.
Meraber.

TREASURY AWARDS COMMITTEE

J a m e s H . Stover
S. T . Adams
Captain Walter
U. S. C. G.
John K. Carlock
0 . Gordon Delk
Leland Howard
Willard L. Johnson
Lawton M. King
John D . Lathera
Martin L. Moore
F r a n k G. Uhler

C.

Capron,
.
--_
:.'.

Chairman.
Vice Chairman.
Member.
Member.
Meraber.
Meraber.
Meraber.
Meraber.
Meraber.
Meraber.
Member.

WAGE BOARD

S. T. Adams
William T. Heffelfinger
Willard L. Johnson

,_--:

Chairman.
Meraber.
Member.

I N T E R D E P A R T M E N T A L SAVINGS BOND C O M M I T T E E

I v y Baker Priest

,

ChairmaUo

E M P L O Y M E N T POLICY OFFICER

WiUard E. Scott.
1 Appointed January
2 Appointed January
3 Appointed January
* Appointed January

28, 1958.
2, 1958.
29, 1958.
22,1958.




XV

•ORGANIZATION OF THE DEPARTMENT OF THE TREASURY-

December 4,1957

n

M

s
UNDER SECRETARY

OEPUrr TO
THF VCRFT4RY

SPECIAL ASST
TO THE
SECRETARY

'—'•~-.

ASSISTANT
TOTHE
SECRETARY

/

ASSISTANT
TO THE
SECRETARY

ADMINISTRATIVE
ASSISTANT
SECRETARY

Olfice ot Budget

Bureau of
ERjgraving and
Printing

Internal Revenue
Service

Bureau of
the Mint

Office of the
Comptrollerof
the Currency

Bureau of
Accounts

CHART

1.

1 Thp Opnprnl Counsel serves as lesal advisor to the Secretary, his associates, and heads of bureaus.
_ , ^ - , ^
^ ^ J.
-O
<
•
coordinates enforcement activities of the U. S. Secret Service, U. S. Coast Guard, Bureau of Customs, Bureau of
 2 T h i Assfstant t H h e s S
Narcotics, and Internal Revenue Service.



ANNUAL REPORT ON THE FINANCES
TREASURY DEPARTMENT,

Washington, D. C , January 31, 1958.
SIRS: I have the honor to report to you on the finances of the
Federal Government for the fiscal year ended June 30, 1957.
Present conditions of world tension emphasize the importance of
wise handhng of our finances. Essential military and civilian needs
must be met; and at the same time, the total demands on our available
resources must be kept within sustainable limits.
On the fiscal front, we must continue to examine every expenditure—military and civil—from the point of view of its contribution
to national defense or to the stability and good health of the economy.
Priority of national security over lesser needs must be recognized,
and Federal participation in programs which might be undertaken by
private business or which are the primary responsibility of States and
localities must be held to a minimum. This is a sound policy at all
times, but it is particularly urgent at present when an increasing share
of Federal revenues must be allocated to military research, training,
and procurement.
A full report follows on the Treasmy's operations during the 1957
fiscal year. During that period my predecessor, George M. Humphrey,
was Secretary of the Treasury.
ROBERT B . ANDERSON,

Secretary oj the Treasury.
To THE PRESIDENT OF THE SENATE.
To THE SPEAKER OF THE H O U S E OF REPRESENTATIVES.

438363—58-




'




REVIEW




OF F I S C A L

OPERATIONS




, Summary of FiscaUOperations
The Government's budget has been balanced for the second consecutive year with a surplus of $1.6 billion for the fiscal year 1957,
approximately the same as that achieved in the fiscal year 1956.
Net budget receipts of $71.0 billion and expenditures of $69.4 billion
were slightly higher than estimated, while the surplus was $0.1 billion
lower than estimated in January 1957. This surplus, together with
an excess of receipts in trust account and other transactions, and a
reduction in the balance in the account of the Treasurer of the United
States, made possible a reduction in the public debt of $2.2 billion.
As of June 30, 1957, the public debt outstanding was $270.5 billion
compared with $272.8 billion on June 30, 1956,, while,the Treasurer's
balance on these dates was $5.6 and $6.5 billion, respectively.
Results of the Government's budget operations and the change in
the public debt for the fiscal years 1956 and 1957 are summarized in
the table that follows. I t will be noted that net receipts for the fiscal
year 1957 were $2.9 billion higher than in fiscal 1956, while the expenditures were also $2.9 billion higher.

Budget results:
Net receipts---.--.
Net expenditures-.
Budget surplus-.
Plus:
Trust account and other transactions, excess of receipts, or expenditures (—)^
Change in Treasurer's balance: decrease, or increase (—)
Equals: Public debt decrease..
*Less than $50 million.
1 Includes net trust account transactions, etc.; net investment by Government agencies in public debt
securities; net sales or redemptions of obligations of Government agencies in the market; changes in clearing.
and other accounts necessary to reconcile to Treasury cash; and changes in amount of cash held outside the
Treasury.

The President's budget message for the fiscal year 1959 indicates an
estimated deficit of $0.4 billion in 1958 and an estimated surplus of
$0.5 billion in 1959. Net budget receipts are. estimated at $72.4 billion for the fiscal year 1958 and $74.4 billion for 1959. Expenditures
for these fiscal years are estimated at $72.8 billion and $73.9 billion,
respectively. Table 8 shows budget receipts and expenditures, actual
5




6

1957 REPORT OF THE SECRETARY OF THE TREASURY

for the fiscal year 1957 and estimated for the fiscal years 1958 and
1959, and table 10 shows the efi'ect of financial operations on the
public debt.

THE BUDGET
$Bil.

80

Surplus

t4.3

Expenditures

.xl^^

'53

1.6

1^6,

'54

— Fiscal Years —
C H A R T 2.

In furtherance of the policy enunciated by the President in his
Budget message of January 16, 1956, further progress was made in
reducing the unexpended balances of appropriations, including the
balances of revolving and management funds and other authorizations. The progress in reducing these balances is indicated in the
following table. I t shows an appreciable decline in unexpended
balances of appropriations from $78.4 billion on June 30, 1953, to
$43.9 billion on June 30, 1957. The total unexpended balances
which were $102.8 billion on June 30, 1953, declined to $68.8 billion
on June 30, 1957. During the fiscal year 1957 unexpended balances
were reduced by $4.2 billion. The table that follows shows the
amounts of balances at the end of each fiscal year from June-30, 1953
to 1957.




R E V I E W O F FISCAL OPERATIONS
Unexpended balances
[In billions of dollars]
Appropriated
funds

JuneSO

1953 1954
1955
1956
1957

.

-

_._

„

-

78.4
67.8
52.1
46.0
43.9

Revolving
and management
funds

Other
authorizations

1.7
2.9
5.4
4.1
3.4

22.7
23.6
22.2
22.9
21.7

Total

102.8
94.2
79.7
73.0
68.8

SOURCE: Budget ofthe United States Government for the Fiscal Year Ending June SO, 1969.

In fiscal 1957 there was a somewhat more even flow of net budget
receipts than in 1956. Receipts in the first half of the fiscal year 1957
were not only $2.8 billion greater than in the same part of the prior
year but also they comprised 40 percent of the total receipts for 1957
as compared with 37 percent in 1956. While the budget deficit of
$5.7 billion in the first half of 1957 was $2.2 billion less than the firsthalf deficit of 1956, there was still need for substantial amounts of
temporary borrowing. Budget receipts and expenditures and their
imbalances by quarters of the fiscal years 1956 and 1957 are shown in
the table which follows.
Federal budget operations
[In billions of dollar?]
1957

1956
Period

Net
budget
receipts

Budget
expenditures

Surplus,
or
deficit ( - )

Net
budget
receipts

Budget
expenditures

Surplus,
or
deficit ( - )

13.0
12.2

16.9
16.2

-3.9
-3.9

14.7
13.4

16.4
17.4

-1.7
-4.0

25.2

33.1

-7.9

28.1

33.8

-5.7

22.2
20.7

15.6
17.8

6.6
2.9

21.7
21.2

17.4
18.2

4.3
3.0

Total second half

42.9

33.4

9.5

42.9

35.6

7.3

Total fiscal year__

68.2

66.5

1.6

71.0

69.4

1.6

July-September
October-December
Total first half—

._

January-March
April-June -.. -

The increase in the proportion of total receipts which was received in
the first half of the fiscal year is due in most part to the acceleration
of the payment schedule for corporation income tax under the 1954
Internal Revenue Code. This requires for corporations with tax
liabihties in excess of $100,000 a gradual shift over a 5-year period to a
payment of 25 percent of estimated tax in each of the third and fourth
quarters of the taxable year and 25 percent in each of the ensuing
quarters. The schedule will be fully eft'ective in the fiscal year 1960.
I n fiscal 1957 the calendar year corporations to which this schedule
applies were required to pay 10 percent of their estimated tax on 1956




8

195 7 REPORT OF THE SECRETARY OF THE TREASURY

income in September 1956 and 10 percent in December 1956 and 40
percent each in March and June 1957. The progressive redistribution
of these corporation tax payments will tend to mitigate the seasonal
borrowing problem of the Treasury. However, paynnent of estimated
corporation taxes in the first half of the fiscal year are.reduced by the
$100,000 exemption and by the leeway permitted in the amounts
estimated. In addition, only one quarterly payment of estimated
individual income tax is received in the July-December period.
Therefore, comparatively large proportions of total receipts will continue to be received in the January-June period. If expenditures for
the first six months of a fiscal year remain as high as they have in the
past, the Treasury will continue to be required to resort to considerable seasonal borrowing.
BUDGET RECEIPTS AND EXPENDITURES
BUDGET RECEIPTS IN 1957

Net budget receipts in the fiscal year 1957 amounted to $71.0
billion, an increase of $2.9 billion over the previous high record of
$68.2 billion collected in 1956. Certain excise taxes included in net
budget receipts in 1956 were treated as trust fund receipts in 1957. If
the classification of these receipts had not been changed, the rise in
1957 would have been substantially larger. The increase in 1957
receipts reflected substantial gains in personal incomes and a moderate
rise in corporate profits.
A comparison of receipts, by major sources, in the two fiscal years
is shown in the following table.
Increase, or decrease (—)
1956

1957

Source

Amount

Percent

In billions of dollars
Internal revenue:
Individual income taxes—
__Corporation income taxes
Excise taxes
__Employment taxes
.-.
Estate and gift taxes
Internal revenue not otherwise classified..

35.3
21.3
10.0
7.3
1.2

(*)

3.7
.2
.6
.3
.2

21.5
10.6
7.6
1.4

(*)

Total intemal revenue.
Customs-.Miscellaneous receipts

75.1
.7
3.0

80.2
.8
2.7

Gross budgetreceipts
Deduct:
Transfer to .Federal old-age and survivors insurance
trust fiirid: J--:;^Jll'_-V—--l^----l--.::
rr___':.
Transfer to Federal disability insurance trust fund
Transfer to highway trust fund
J
_
Transfer to railroad retirement account..
Refunds of receipts

78.8

6.3
.3
1.5
.6
3.9

Net budget receipts..
*Less than $50 million.




.6
3.7

5.1

6.7
7.0
-8.6
6.2

(*)

83.7

6.3

10.5
1.1
6.3
3.9
17.7

4.9

39.0

(*)

(*)

.3
1.5

(*)
2.9

-2.9
6.3
4.2

REVIEW

OF FISCAL

OPERATIONS

9

All rnajor sources of revenue increased in 1957 except for the nontax
source, miscellaneous receipts. However, a large part of the rise in
gross receipts in 1957 did not carry through to net budget receipts,
principally because of initial transfers of certain excise tax collections
to the highway trust fund. The increase in 1957 may therefore be
attributed principally to the large increase in receipts from the individual income tax.
Indiviciual income taxes.—Receipts from individual income taxes
increased to $39,030 million, $3,696 million greater than the receipts of
$35,334 million in 1956. The continued increase in personal incomes
accounted for the rise.
Corporation income taxes.—Corporation income tax receipts amounted
to $21,531 million in the fiscal year 1957, as compared with receipts of
$21,299 million in 1956. The increase of $232 million reflected larger
profits in liability years 1955 and 1956, the liabilities which determined
receipts in fiscal 1957, as compared with profits in 1954 and 1955.
Other factors of a technical nature affecting the 1956-1957 comparison
of receipts were largely offsetting.
Excise taxes:—Receipts from this source are listed in the table which
follows.
Increase, or decrease ( - )
1956

1957
Amount

Source

Percent
I n millions of dollars

N e t excise t a x e s . -

_

.

.

2, 973
1,674
108
3, 762
336
1,719

53
61
-7
306
14
110

-^1

66

97

10, 638

633

1, 479

Gross excise taxes
. .
Deduct:
Transfer to h i g h w a y t r u s t fund

2,921
1,613
115
3,456
322
1,608

10,004

Alcohol taxes
Tobacco taxes..
T a x e s on d o c u m e n t s , o t h e r i n s t r u m e n t s , ' a n d p l a y i n g c a r d s .
M a n u f a c t u r e r s ' excise taxes
Retailers'excise taxes _ . - . - ._
Miscellaneous excise taxes
U n d i s t r i b u t e d d e p o s i t a r y r e c e i p t s - a n d u n a p p l i e d ^ collections J - I -

1,479

9,159

-846

10,004

1.8
3.8
-6.4
8.9
4.4
6.8

(')
6.3

-8.5

I Percentage comparison inappropriate.

Gross excise tax receipts in 1957 of $10,638 million were $633 million higher than receipts in 1956. Most of this increase was due to
higher tax rates and new taxes enacted in the Highway Revenue Act
of 1956 (26 U. S. C. 4426, 4481). Tax rate changes were primarily
responsible for the large gains reported in receipts from taxes on gasoline, tires and tubes (including the new tax on tread rubber), and
diesel 4 t i d ; ' a n d for the iitoderate rise in receipts from the tax on
automobile trucks and buses. Initial receipts from the new use tax
on certain vehicles also contributed to the increase in 1957.




10

1957 REPORT OF THE SECRETARY OF THE TREASURY

Most of the excise taxes were unaffected by rate changes and showed
moderate increases consistent with the gains in consumer incomes
and general business activity. However, the genera] increase throughout the excise tax list was offset to a considerable degree by the very
large decrease of $232 million in receipts from the tax on passenger
automobiles. This decline reflected a drop in automobile production
from the unusually high level attained in the calendar year 1955.
Collections of certain excise taxes in effect prior to the enactment
of the Highway Revenue Act are required b}^ the act to be transferred,
together with receipts from increased rates and new taxes, to the
highway trust fund. The deduction for transfers of previously existing taxes, made for the first time in 1957, resulted in a decline in net
excise taxes in the fiscal year 1957 as compared with 1956.
Employment taxes.—Receipts from the various employment taxes
are shown in the following table.

1956

1957

Increase, or decrease (—)
Amount

Source

Percent

In millions of dollars
Federal Insurance Contributions Act and Self-Employment Contributions Act
-.
Railroad Retirement Tax Act
.. .. .
Federal Unemployment Tax Act
..
Total employment taxes
Deduct:
Transfer to Federal old-age and survivors insurance
trust fund
Transfer to Federal disability insm'ance trust fund
Transfer to railroad retirement account....
, ..
Net employment taxes

.

6, 337
634
325

6,634
616
330

298
-18
6

4.7
—2.9
1.7

7,296

7,581

285

3.9

6,337
634

6,301
333
616

-36
333
-18

—2.9

325

330

6

1.7

-.6

Receipts from the Federal Insurance Contributions Act and the
Self-Employment Contributions Act increased in the fiscal year 1957,
principally as a result of higher tax rates in connection with the
establishment of the Federal disability insurance trust fund. Receipts from the Railroad Retirement Tax Act decreased slightly.
Estate and gift taxes.—Receipts from estate and gift taxes amounted
to $1,378 million in 1957, an increase of $207 million over the $1,171
million received from this source in 1956.
Customs.—Customs receipts increased by $50 million to $754 million in 1957.
Miscellaneous r^cezp^s.—Miscellaneous receipts declined to $2,749
million in 1957. The drop of $258 million from the $3,006 million
received in 1956 was principally accounted for by smaller receipts
from rents of Outer Continental Shelf lands and smaller receipts from
the sale of surplus property.




11

REVIEW OF FISCAL OPERATIONS

Refunds of receipts.—^Refunds of receipts increased $233 million to
$3,917 million in 1957. The increase over the $3,684 million refunded
in 1956 was mainly accounted for by an increase in individual income tax refunds.
ESTIMATES OF RECEIPTS IN 1958 AND 1959

The Secretary of the Treasury is required each year to prepare and
submit in his annual report to Congress estimates of the public revenue
for the current fiscal year and for the fiscal year next ensuing (act
of February 26, 1907 (5 U. S. C. 265)).
The estimates of receipts from taxes and customs for the current
and ensuing fiscal years are prepared in December of each year by the
Treasury Department. In general, the estimates of miscellaneous
receipts are prepared by the agencies depositing the receipts in the
Treasury.
The receipts estimates are based on the assumption that business
activity will resume expansion in 1958. I t is also assumed for the
fiscal year 1959 that legislation will be enacted extending tax rates at
their present levels for a year beyond July 1, 1958, as recommended by
the President.
Detailed estimates of budget receipts under both existing and proposed legislation are contained in table 8.
Net budget receipts in the fiscal year 1958 are estimated to be
$72,400 million, an increase of $1,371 million over actual receipts of
$71,029 million in 1957. A further rise of $2,000 million to $74,400
million is expected for 1959.
Fiscal year 1958
Actual receipts in 1957 and estimated receipts in 1958 are compared
by major sources in the following table. The amounts shown are the
net amounts after deductions of refunds and transfers to trust funds
and therefore differ from the amounts shown in table 8 which are on
a gross basis.
1957
actual

Source

1958
estimate

Increase,
or decrease (—),
1958 over
1957

In millions of dollars
Individual income taxes
Corporation income taxes
Excise taxes
Employment taxes
Estate and gift taxes...
Taxes not otherwise classified
Customs--- - Miscellaneous receipts
Net budget receipts.—




,
- -

—

^

35,620
21,167
9,055
328
1,365
14
735
2,746

37, 200
20,385
8,898
339
1,486
5
765
3,322

1,580
-782
-157
11
121
-9
30
576

71, 029

72, 400

1,371

12

1957 REPORT OF THE SECRETARY OF THE TREASURY

Receipts from the most important revenue source, the individual
income tax, are estimated to increase in 1958 by a substantial amount.
A large increase is also estimated for miscellaneous receipts which consist almost entirely of nontax revenues. Oft'setting these and other
smaller increases are estimated declines of 4 percent for corporation
income taxes and 2 percent for net excise taxes (after transfers to the
highway trust fund).
Individual income taxes.—The yield from this source on a gross and
net basis is shown in the following table.
1957
actual

Source

1958
estimate

Increase
1958 over
1957

I n millions of dollars
I n d i v i d u a l income taxes:
Withheld
Other

26, 728
12, 302

Gross iridividual iiicome taxes_
Less ref u n d s -

-

_-

N e t i n d i v i d u a l inco'me taxes

28, 200
12,600

1, 472
298

39,030'
3,410

40, 800
3,600

1,770
190

35, 620

-

37, 200

1,580

The increase in individual income taxes results from the higher
levels of income affecting fiscal year 1958 receipts.
Corporation income taxes.—Corporation receipts on a gross and net
basis are shown in the following table.

1957
actual

Source

1958
estimate

/

Increase,
or decrease ( - ) ,
1958 over
1957

I n millions of-dollars
Corporation income taxes
Less refunds

-

N e t corporation income taxes

_
-

--_
-

21,531
364

--

20, 800
415

-731
51

21,167

20,385

-782

The decline in corporatiori tax receipts reflects an estimate of lower
corporation profits in the calendar year 1957 than in 1956 and an




13

REVIEW OF FISCAL OPERATIONS

irregularity in ihe flow of corporation receipts that raised the fiscal
year 1957 total in comparison with those estimated for 1958.
Excise #aa;65.-^Receipts,.frpin.t^^ source areJisted.m the table-which
follows.
1957
actual

Source

1968
estimate

Increase,
or decrease ( - ) ,
1958 over
1957

In millions of dollars

Gross excise taxes
Deduct:
Refunds of receipts
Transfer to highway trust fund
Net excise taxes

_

-_

-_

..

._

3,036
V 1,735
112
4,184
355
1,770

63
61
4
422
19
51
—66

11,192

554

103
1,479

_-

2,973
.,..^^.l,•674
108
3,762
336
1,719
66
10, 638

Alcohol taxes
-.
.
Tobac.c4; taxes
^
.
Taxes ori documents, other instruments, and playing cards. Manufacturers' excise taxes
Retailers' excise taxes
'_ _
- Miscellaneous excise taxes
Undistributed depositary receipts and unapplied collections

174
2,120

71
641

9,055

8,898

-157

Gross excise taxes in 1958 are estimated to increase to $11,192 million from actual receipts of $10,638 million in 1957. The full year
effect .of increased and new taxes under the Highway Revenue Act of
1956 (26 U. S. C. 4426, 4481), as compared with the part year effect
in 1957, together with estimated higher levels of taxable goods and
services, is responsible for the estimated rise in gross receipts. All
major excise tax sources are expected to increase with the manufacturers' taxes showing the largest advances. Receipts from the gasoline tax furnish almost half of the increase shown for this group.
Although gross excise taxes are estimated to increase $554 million
in 1958, a decline of $157 million is estimated for net excise taxes.
Transfers of tax receipts to the highway trust fund will increase in
1958, not only because of increases in the revenue yields of the taxes
transferred, but also because transfers of both increased or new taxes
and taxes in effect prior to the act will occur on a full year basis in
1958. Refunds will also increase because of the gasoline tax refund
provision of the act.




14

1957 REPORT OF THE SECRETARY OF THE TREASURY

Employment to^s.—The yield of the employment taxes is shown in
the following table.
1957
actual

1958
estimate

Source

Increase,
1958 over
1957

In millions of dollars
Federal Insurance Contributions Act and Self-Employment Contributions Act
-.1
Railroad Retirement Tax Act
Federal Unemployment Tax Act

Net employment taxes—

7,763
620
342

1,129
4
12

7,681

8,725

1,144

3
6,301
i33
616

3
6, 900
863
620

599.
630;
4

328

Gross employment taxes..
Deduct:
Refunds bf receipts.-Transfer to Federal old-age and survivors insurance trust fund.
Transfer to Federal disability insurance trust iund
Transfier to railroad retirement account

6,634
616
330

339

11

All einployment taxes are expected to increase in fiscal 1958.
Higher levels of taxable wages and a full year effect of the higher
rates enacted to finance the Federal disability insurance trust fund are
primarily responsible.
Estate and gift taxes.—The yield from estate and gift taxes on a
gross and net basis is shown in the following table.
1957
actual

1958
estimate

Source

Increase,.
1958 over
1957

I n millions of dollars
E s t a t e a n d gift taxes
Less refunds

<:^*

-

N e t estate a n d gift taxes

...

-.:!

1,378
13

1,500
14

122^

1,365

,.....„..

1,486

121

t

Higher asset valuation is responsible for the estimated rise in these^
receipts in the fiscal year 1958.
Customs.—The yield of receipts from this source on a gross and
net basis is shown in the table which follows.
1967
actual

1958
estimate

Source

Increase,
1958 over
1957

I n millions of dollars
Customs
Less refunds

_- . -

N e t customs




_
-

_

_ _

764
20

785
20

31

735

765

305

REVIEW OF FISCAL

15

OPERATIONS

The estimated annual increase in customs receipts for the fiscal
year 1958 is expected to be concentrated mainly in the first half of
the year.
Miscellaneous receipts.—-Ro^cei^t^ from this source on a gross and
•net basis are shown in the following table.
1957
actual

Source

1958
estimate

Increase,
1968 over
1957

In millions of dollars
Miscellaneous receipts. _..•
Less refunds-- ._ _ ._

2,749
3

Net miscellaneous receipts

-

-

3,326
3

576

2,746

3,322

676

Miscellaneous receipts are estimated to increase substantially in
the fiscal year 1958. Interest'payments by Government enterprises
and foreign countries, rents and royalties on the Outer Continental
Shelf, and larger deposits by the Federal Reserve Board are primarily
responsible.
Fiscal year 1959
Estimated net receipts in 1958 and 1959 are compared by major
sources in the following table.
1958
estimate

1959
estimate

Source

Increase,
1959 over
1968

In millions of dollars
Individual income taxes
Corporation income taxes
Excise taxes
Employment taxes
Estate and gift taxes
Taxes not otherwise classified
Customs
Miscellaneous receipts
Net budget receipts

37, 200
20, 385
8,898
339
1,486
5
766
3,322

38, 600
20, 400
9,280
347
1,670
5
780
3, 518

,3oa

72, 400

74,400

2.000

15.
382

&

84

15
196.

Receipts are estimated to increase $2,000 million in the fiscal year
1959 as compared with 1958. Major increases are estimated to occur
in receipts from the individual income taxes and from excise taxes.
Other receipt sources are expected to show small gains or to remain
virtually unchanged.




16

195 7 REPORT OF THE SECRETARY OF THE TREASURY

Individual income taxes.—Receipts from the individual income
taxes on a gross and net basis are as follows:
1968
estimate

1959
estimate

Source

Increase,
1959 over
1968

I n millions of dollars
I n d i v i d u a l income taxes:
Withheld
other

28,200 .
12,600

Gross i n d i v i d u a l income taxes
Less refunds
-

-

. , N e t i n d i v i d u a l income taxes

.

29 400
12 900

1,200
300

40,800
3,600

-

42 300
3 800

1,600
200

..,38,500

:,, 1,300

. • 37, 200

-

An expected rise in personal income accounts for the increased
receipts from individual income taxes.
Corporation income taxes.—Receipts from this source on a gross and
net basis are shown in the following table.
1958
estimate

1959
estimate

Source

Increase,
1959 over
]968

I n millions of dollars
Corporation income taxes
Less refunds
-

-

--

N e t corporation income taxes

20, 800
415

20 815
416

16

20,385

-

20 400

15

Virtually unchanged receipts of corporation income taxes from fiscal
year 1958 to 1959 reflect the assumption that corporate profits will be
about the same in calendar year 1958 as in 1957. Although corporate
profits declined in the latter part of 1957, they are expected to improve
and average for the whole of 1958 at about the same level as in the
calendar year 1957.
Excise taxes.—Receipts from this source, b}^^ major groups, are listed
in the following table.
1958
estimate

1959
estimate

Source

Increase,
1959 over
1958

I n millions of dollars




-

234
12
88

11,633

441

174
2 120

Gross excise taxes
Deduct:
Refunds of receipts
Transfer to h i g h w a y t r u s t fund
N e t excise taxes

62
46

3,098
1,780
112
4 418
367
1,858

11 192

Alcohol taxes
.Tobacco taxes
Taxes o n d o c u m e n t s , other i n s t r u m e n t s , a n d p l a y i n g cards
M a n u f a c t u r e r s ' e x c i s e taxes
Retailers' excise taxes
Miscellaneous excise taxes

3,036
1,735
112
4 184
355
1 770

189
2,164

15
44

8 898

9 280

382

17

REVIEW OF FISCAL OPERATIONS

.Excise taxes under proposed legislation are estimated to increase
in 1959 on both a gross and a net basis. Expanded business activity
and increased consumer incomes are estimated for 1959 and these are
reflected in advances throughout the excise tax group.
These estimated increases also reflect enactment of legislation (1)
extending existing excise tax rates for another year and (2) providing
a new tax of 3K cents a gallon on jet fuels and an increase in the existing
tax rate on aviation gasoline to 3K cents from the present 2 cents.
Receipts from taxes on aviation gasoline and tires are presently
transferred into the highway trust fund; it is also proposed that
starting in 1959, receipts from aviation gasoline and tires be retained
in general receipts.
Employment taxes.—The yield of the employment taxes is shown
in the following table.
1958
estimate

1959
estimate

Source

Increase, •
1969 over
1968

I n millions of dollars
F e d e r a l Insm-ance C o n t r i b u t i o n s Act a n d S e l f - E m p l o y m e n t C o n tributions Act. J
R a i l r o a d R e t i r e m e n t T a x Act
F e d e r a l U n e m p l o y m e n t T a x Act

N e t e m p l o y m e n t taxes

.-1

7,988
625
350

225
5
8

8,725

8,963

238

3
6,900
863
620

3
7,100
888
625

200
25
5

339

Gross e m p l o y m e n t taxes
Deduct:
Refunds of receipts
Transfer t o F e d e r a l old-age a n d s u r v i v o r s insm-ance t r u s t f u n d . .
T r a u s t e r to Federal disability insurance t r u s t fund ,
Transfer to railroad r e t i r e m e n t account

7,763
620
342

347

8

All employment taxes are estimated to increase in fiscal 1959 as a
result of higher levels of taxable wages.
Estate and gift taxes.—Receipts from this source are shown in the
following table.
1958
estimate

1969
estimate

Source

Increase,
1959 over
1958

I n millions of dollars
E s t a t e a n d gift t a x e s . - - - .
Less refunds
N e t estate a n d gilt taxes

438363—58-




...
- -.

1, 500
14

1,686
15

85'
1

1, 486

i, 570

84

18

1957 REPORT OF THE SECRETARY OF THE TREASURY

An expected rise in asset valuation accounts for the estimated
increase in receipts in the fiscal year 1959.
Customs.—Receipts from this source on a gross and net basis are
shown in the following table.
1958
estimate

Source

1959
estimate

Increase,
1969 over
1958

In millions of dollars
785
20

Net customs

800
20

15

765

Customs
Less refunds

780

15

An estimated rise in business activity is responsible for the expected
increase in customs receipts.
Miscellaneous receipts.—Receipts from this source on a gross and
net basis are shown in the following table.
1958
estimate

Source

1969
estimate

Increase,
1969 over
1958

In miUions of dollars
Miscellaneousreccipts
T^ess refund."?,

-_

,,

,.

Net miscellaneous receipts

3,325
3

3, 521

196

3,322

,,

3,518

196

The estimated increase of $196 million in miscellaneous receipts is
attributable for the most part to larger collections of principal and
iriterest payments on loans.
BUDGET EXPENDITURES IN 1957

For the fiscal year 1957 the net budget expenditures were $69.4
billion, or $2.9 billion more than in the preceding fiscal year. The
following table gives comparative annual budget expenditure figures,
beginning with an average of 1949-50, the two fiscal years preceding
the Korean action, classified under major functional categories.




19

REVIEW OF FISCAL OPERATIONS

Fiscal year

Major
national
security i

International
affairs
and
finance

Interest

Veterans'
services
and
benefits

Other 2

Adjustment
to daily
Treasury
statement
basis

Total

In billions of dollars
1949-60 average.—
1951 ----1952
1953 -. -_
1954
1966
1966
1957
-

13.0
22.4
MO.O
'•61.8
M7.9
> 42.1
,Ml. 8
44.4

5.4
3.7
^.8
'•.7
-•.8
'.7
r .7
.8

5.6
6.7
5.9
6.6
6.5
6.4
6.8
7.3

6.7
5.3
4.9
4.3
4.3
4.5
4.8
4.8

8.6
7.5
8.7
10.8
8.4
10.9
12.4
12.1

-fO.3
-.7
-.9

39.644.1
65.4
74.367. 8• 64.6
66.5'
69.4-

NOTE.—The classification in this table is taken from the 1969 Budget document. The figures beginning:
with 1953 are on the basis of the Monthly Statement of Receipts and Expenditures of the United States Government (see "Bases of Tables"). Further details will be found in the tables section of this report,
> Revised for change in classification.
•
1 Includes, principaUy, military functions of the Defense Department, Mutual defense military assistance. Atomic Energy Commission, acquisition of strategic and critical materials under the General Services
Administration, and defense production expansion.
2 Functional breakdown shown in the accompanying table.

The cost of major national security increased to $44.4 billion,
which accounts for $2.6 billion of the total increase. This increase
in major national security is represented by increased expenditures of
the military services in the amount of $2.6 billion and the development and control of atomic energy in the amount of $0.3 billion,
partly offset by decreased expenditures for mutual defense assistance
in the amount of $0.3 billion, and for stockpiling and defense production expansion in the amount of $0.1 billion. The increased expenditures of the military services consisted of $1.6 billion for Air Force
defense, $0.4 billion for Army defense, and $0.7 billion for naval defense. Expenditures for international affairs and finance show increases for economic and technical development, foreign information
and exchange activities, and the conduct of foreign affairs amounting
to $0.2 billion. Interest expenditures, all of which related to public
debt obligations except $63 million, rose $0.5 billion from those in
1956, reflecting the general rise in money rates. Veterans' services
and benefits did not change materially over the previous year, although
the various programs showed nominal increases and decreases.
Other programed expenditures of the Government, as identified in
the table below, show nominal increases and decreases as follows:
Under ^'Labor and welfare'' the grants and other assistance for health,
education, and welfare increased by $0.2 billion; under ^^Agriculture
and agricultural resources" the price support program decreased by
$1.0 billion which was offset by increased payments of $0.7 biUion
under the soil bank and other agricultural programs for a net decrease
of $0.3 billion; under ^^Natural resources" the expenditures for conservation and development increased by $0.2 billion; under ^'Commerce and housing" a reduction of $0.6 billion represents primarily
the classification of Federal highway expenditures for 1957 as trust




20

1957 REPORT OF THE SECRETARY OF THE TREASURY

fund transactions; and under ^'General government" the increase of
$0.2 billion is due principally to the Federal payment of $0.5 billion
to the civil service retirement and disability fund, partially offset by
reduced expenditures for other functions.
Budget expenditures—other
[In billions of dollars]
Labor
and
weKare

Fiscal year

1949-50 average
19511952
1953 1954
1965
1966
_
1957.

____..._-.

L
-

_
-

-.

1.8
2.1
2.2
2.4
2.5
2.6
2.8
3.0

Agriculture and Natural
agricul- resources
tural
resources
2.6
.6
1.0
2.9
2.6
4.4
4.9
4.6

Commerce
and
housing

General
goverhment

1.9
2.2
2.6
2.5
.8
1.5
2.0
1.5

1.1
1.3
1:5
1.5
1.2
1.2
1.6
1.8

1.1
1.3
1.4
1.5
1.3
1.2
1.1
1.3

Total

8.6
7.5
8.7
10.8
8.4
10.9
12.4
12.1

ESTIMATES OF EXPENDITURES IN 1958 AND 1959

Actual expenditures for the fiscal year 1957 and estimates for the
fiscal years 1958 and 1959 are summarized by agencies in the following
table. Further, details will be found in table 8. The estimates are
based on those submitted to the Congress in the Budget of the United
States Government for the Fiscal Year Ending June 30, 1959.
Actual budget expenditures for ihe fiscal year 1957 and estimated expenditures for
1958 and 1959
[In millions of dollars. On basis of 1969 Budget document]
1957
actual
Legislative branch
The Judiciary
Agriculture Department (including Commodity Credit Corporation) -Atomic Energy Commission
Civil Service Commission
Commerce Department
Defense Department:
Military functions-.--Civil functions
Expansion of defense production
.
Export-Import Bank of Washington
General Services Administration
Health, Education, and Welfare Department
Housing and Home Finance Agency
Interior Department
Justice Department..
__-.Labor Department
-Mutual security:
Military assistance
Other mutual security programs--_
Post Office Department
_
Small Business Administration
State Department
Treasury Department:
Interest on the public debt
_--Other
Veterans Administration
Allowance for proposed legislation and contingencies:
Pay adjustment:
Postal
-Other (excluding Department of Defense)
Defense contingencies.
Other contingencies
All other
Net budget expenditures
^ Excess of credits (deduct).




1958
estimate

1959
estimate

97
39
5,006
1,990
545
562

116
44
6; 327
2,300
22
652

126
46
4,981
2,550
21
803

38, 439
639
130
i^lOO
568
2,296
a 23
672
214
418

38, 861
662
370
393
447
2,745
207
647
223
463

39, 779
701
272
51
413
2,864
455
663
228
452

2, 352
1,599
618
74
179

2,200
1,549
"686
92
228

2,200
1,668
a 16
63
228

7,244
817
4,805

7,800
841
5; 124

7, 800
791
4,977

464

200
589

160
179
500
300
689

69, 433

72. 788

73, 934

REVIEV^ OF FISCAL OPERATIONS

21

TRUST ACCOUNT AND OTHER TRANSACTIONS

In addition to the foregoing transactions of Federal agencies
relatirig to budgetary receipts and expenditures, there are other
financial activities which affect the cash balance of the Treasurer of
the United States as well as the cash held outside the Treasurer's
account. These transactions do not affect the Federal budget and
are classified in Treasury reports under: Trust and deposit fund
transactions; net investments by Government agencies in public debt
securities; or net sales or redemptions of obligations of Government
agencies in the market; D a t a as to monthty and fiscal year transactions in these categories will be found in the tables section of this
report. For the fiscal year 1957 the aggregate of these transactions
resulted in an excess of receipts of $195 million, as compared with an
excess of expenditures of $194 million in 1956.
Trust and deposit j u n d accounts.—These accounts are explained on
p. 33], under ^'Description of Accounts Relating to Cash Operations:
Nonbudget accounts." The trust funds are niaintained to account
for moneys held by the Government for use in carrying out programs
in accordance with trust agreements or statutes. Deposit fund
accounts are used to account for moneys held by the Government as
banker or ageat for others, or to accouat for funds held in suspense
temporarily and later refunded or paid into some other account of the
Government. Receipts and expenditures of most of the trust funds
are reported on a gross basis, although certain trust accounts operate
as revolving or working funds and are reported net. Deposit fund
transactions are reported net. Major trust funds include the Federal
old-age and survivors insurance trust fund, the unemployment trust
fund, the veterans' insurance funds, the civil service retirement and
disability fund, and the highway trust fund. During the fiscal year
1957 the aggregate of transactions in trust and deposit fund accounts
resulted in an excess of receipts in the amount of $1,409 million, as
compared with $2,250 million in 1956.
Investments of Government agencies in public debt securities {net).—These transactions are shown separately since they represent an
exchange of assets and have no effect on operating programs of the
fund involved. The investments provide interest earnings for the
trust and investment accounts until the moneys are needed to meet
the cash requirements of the programs. During the fiscal year 1957
the aggregate of investment transactions showed net purchases of
public debt and guaranteed securities amounting to $2,300 million as
compared with $2,617 million in 1956. These figures are exclusive
of net purchases by Government-sponsored enterprises amounting to
$39 million in 1957 and $548 million in 1956.




22

1957 REPORT OF THE SECRETARY OF THE TREASURY

Sales and redemptions of obligations of Government agencies in market
(net).—These transactions are also stated separately, representing
financing operations between the Government agencies and the
public. The transactions are reported at the par value of the securities and are classified as to those guaranteed and those not guaranteed
by the United States. Currently, these financing operations are confined to nonguaranteed securities, except for debentures issued by the
Federal Housing Administration in exchange for defaulted mortgages,
and redemptions of matured guaranteed obligations still outstanding
in nominal amounts. During the fiscal year 1957 the aggregate of
these transactions showed net sales of ' obligations of Government
agencies in the amount of $1,085 million as compared with $173 million
in 1956. These figures are exclusive of net sales of obligations of
Government-sponsored enterprises amounting to $86 million in 1957
and $872 million in 1956.
ACCOUNT OF THE TREASURER OF THE UNITED STATES

The assets held in the account of the Treasurer of the United
States consist of gold, silver, paper currency, coin, unclassified collection items, and deposit balances in the Federal Reserve Banks and
other depositary banks. The liabilities consist of gold and silver
certificates outstanding, gold reserve. Treasurer's checks outstanding,
balances to the credit of the Board of Trustees of the Postal Savings
System, and uncollected items, exchanges, etc. The difference between the assets and liabilities constitutes the balance in the account
of the Treasurer. The principal components of this balance represent
the Treasury's major operating funds, consisting of the gold balance,
available funds on deposit in the Federal Reserve Banks, and the
balances in the Treasury tax and loan accounts with special depositaries. Details of assets and liabilities are shown under the caption
''Account of the Treasurer of the United States" in the Daily Statement of the United States Treasury. The balance in the Treasurer's
account at the close of the fiscal year 1957 amounted to $5,590 million,
a decrease of $956 million during the fiscal year.
The net change in the balance in the ''Account of the Treasurer of
the United States" during the fiscal year, on the basis of the Daily
Statement of the United States Treasury, is accounted for as follows:




REVIEV7 OF FISCAL OPERATIONS

23
(In millions of dollnrs)

Balance June 30, 1956
,
_
6, 546
Add:
Net deposits-.
81, 875
Certain public debt redemptions included as cash
withdrawals below ^
2, 243 84, 118
Total
90, 664
Deduct:
Cash withdrawals
79, 183
Investments of Government agencies in public debt
securities, net
2, 460
Sales of obligations of Government agencies in market,
net
-743
Accrual of discount on savings bonds and Treasury
bills
1, 951
Net decrease in gross public debt
2, 224 85, 074
Balance June 30, 1957_-

5, 590

» Represents principally discount included in savings bond redemptions.

A comparative analysis of the assets and liabilities in the accounts
of the Treasurer of the United States as of June 30, 1956, and June 30,
1957, is shown in table 50.
The balance in the Treasurer's account during the fiscal year ranged
from a low of $2,112 million on January 16, 1957, to a high of $7,831
million on March 28, 1957.
PUBLIC DEBT OPERATIONS AND OWNERSHIP OF FEDERAL
SECURITIES

A net decrease of $2.2 billion in the public debt and guaranteed
obligations during the fiscal year reduced the total Federal debt outstanding to $270.6 billion on June 30, 1957. This brought the total
decline in the debt during the past two fiscal years to $3.8 billion.
The reductions achieved in these two years were the first since the
fiscal year 1951.
Interest-bearing public issues outstanding decreased by $3.1 billion.
This was accounted for entn-ely by the decline of $3.9 billion in nonmarketable securities, offset slightly by an increase of $0.8 billion in
marketable securities. Special issues to Government investment accounts also were increased by $1.7 billion. The small decreases in
matured debt and in debt bearing no interest accounted for the remainder of the net change..




24

1957 REPORT OF THE SECRETARY OF THE TREASURY

-THE PUBLIC DEBT-

CHART

3.

•Excluding Victory Loan proceeds used to repay debt in 1946.

A summar}'^ of changes in the debt during the year is shown in the
accompanying table. Changes in the level of the debt outstanding
since 1916 are illustrated in chart 3.Class of debt

Public debt:
Interest-bearing:
Public issues:
Marketable
Nonmarketable.-

June 30,1956 June 30,1957

Increase, or
decrease (—)

In billions of dollars

,

-

Total public issues.. Special issues to Government investment accounts....
Total interest-bearing public debt
Matured debt on which interest has ceased
Debt bearing no interest- Total publicdebt. - - Guai'anteed obligations not owned by the Treasury.Total public debt and guaranteed obligations

155. 0
69.8

155.7
66.0

.8
-3.9

224.8
45 1

221. 7
46 8

-3.1
1.7

269. 9
7
22

268 5
5
1 5

-1.4
—. 1
-.7

272 8
1

270 5
1

272 8

270 6

-2.2

(*)
-2.2

*Less than $50 million.

Progress toward debt management objectives

The Treasury continued in 1957 to shape its debt management
policy so as to make a maximum contribution to economic stability
and growth. Since January 1953 continued progress has been made
in improving the maturity structure of the debt as well as in distribut-




REVIEW OF FISCAL OPERATIONS

25

ing the ownership of the debt as widely as possible among the various
investor groups, particularly among nonbank investors.
During the fiscal year 1957 there was a heavy demand for credit
throughout the economy, and the Federal Reserve continued its
policy of credit restraint in order to bring demand more closely in
line with the supply of funds. Credit tightness made the situation
unfavorable for the issuance of long-term bonds; the Treasury was
successful, however, in placing over $3 billion of its new marketable
offerings in the medium-term area during the year. Treasury offerings
in February, in March, and in May included medium-term notes
varying in maturity from 3 to 5 years, along with certificates of
1-year or less maturity. These medium-term offerings helped to offset partially the effect of the passage of time, which is always operating to shorten the average length of the marketable debt.
The maturity structure of the debt made it necessary to refund a
large volume of maturing obligations during the year. The Treasury
was able to reduce the frequency of borrowing operations, however,
through a grouping of nearby maturities into single refunding operations. A considerable amount of new borrowing was required, owing
to seasonal operating deficits and to cash needs resulting from other
factors. Among these were heavy redemptions of sayings bonds
(particularly Series F, G, J, and K) and a sizable amount of maturing
marketable issues turned in for cash during exchange operations. Of
importance also were large drawings on the International Monetary
Fund by foreign countries and the Treasury's cash pay-off of taxexempt bonds in September. At the end of the year, approximately
$79 billion of the total marketable debt was in the over-one-year category. The structure of the debt at the end of the 1957 fiscal year is
shown in chart 4.
A significant feature of debt ownership changes during the year
was the continued substantial liquidation of Government securities
b}^ the commercial banking system. As in the previous year this
development was associated with heavy demands for private credit.
By the close of the fiscal year 1957 commercial bank holdings were
down to a little under $56 billion, the lowest year-end figure since
June 1943. Insurance companies and savings banks also continued
to liquidate Government securities to help meet the demands of
mortgage and corporate financings.
Although iadividuals reduced their holdings of Governments slightly
during 1957, they continued to makeup the largest single investor group
in the debt ownership structure. In line with the Treasury's policy
of encouraging individual ownership, improvements were made in the
savings bonds program during the year. The most important step
was revision of the terms for Series E and H savings bonds—the




26

1957 REPORT OF THE SECRETARY OF THE TREASURY

STRUCTURE OF THE PUBLIC DEBT, JUNE 30,1957„
Total

Nonmarketable

Marketable

$Bil

^EandH

Savings Bonds
-/.M200

'Other'

X Investment
Bonds.etc.

Time fo Maturity:''
.MT'x"
5 Years
' ^ and Over

Special Issues
to Trust Funds

^lto5
^ Years

IOO

^^WithinlYear .

C H A R T 4.
1 Callable bonds to earliest call date.

securities which best meet the needs of the small saver. Although
these bonds are sold primarily on their merits of convenience, liquidity, redemption at the option of the holder, and protection from market
price fluctuations, the Treasury nevertheless believed that new
buyers of E and H bonds should share in the higher returns available
on other forms of savings. Interest rates on both series were raised
accordingly from 3 percent to 3K percent for bonds issued on or after
February 1, 1957 (after Congress had approved an amendment to the
Second Liberty Bond Act, as amended, to permit the higher rate),
and at the same time interim yields on new bonds during the early
years of ownership were increased. The sale of Series J and K savings
bonds, primarily bought by larger investors, was discontinued on
April 30, 1957. Detailed information on revisions in the savings
bonds program during 1957 may be found in exhibits 4 through 7.
An account of the operations in the public debt and changes in the
ownership of the Federal securities during the year is given in the
pages immediately following. Further detail on the debt and its
ownership is given in the exhibits and tables sections of the report.
PUBLIC DEBT

OPERATIONS

As noted previously, the demand foi* long-term Government bonds
was not sufiicient to warrant further long-term offerings during the




REVIEW OF FISCAL OPERATIONS

27

fiscal year. In the first two major financings of the year, those of
July and December 1956, only securities in the one-year area were
offered. In the exchange offerings of February, however, holders of
maturing securities were offered a choice between a one-year certificate
and a note maturing in 3K years. The same choice was presented to
investors in the cash offering of March. The May exchange offering
again included a medium-term note, this time with a maturity of 4
years 9M months. In all, a little over $2 billion of the medium-term
note^ were issued in exchange for maturing securities, and about $1 billion of the notes were issued for cash. Optional exchange offerings
into a 1-year or a longer term security have characterized most of the
Treasury's market refinancing operations since the beginning of the
calendar year 1953.
Seasonal needs in the July-December deficit period were met
through the issuance of tax anticipation certificates, bills of the tax
anticipation series, and special bills. This borrowing was repaid out
of heavy tax receipts the following spring. The seasonal borrowing
brought the public debt to a high point for the year in late November
when debt subject to limit was within $1.3 billion of the temporary
statutory limit of $278 billion. A comparison of the statutory debt
limit with the public debt outstanding subject to the limit since
June 30, 1953, is shown in chart 5.

PUBUC DEBT SUBJECT TO LIMIT.




CHART

5.

28

1957 REPORT OF THE SEGRETARY OF THE TREASURY

An act approved July 9, 1956, had provided for a temporary increase of $3 billion in the $275 billion statutory limit on outstanding
debt in effect at that time. The increase was made effective for the
period beginning July 1, 1956, and ending June 30, 1957. For further
information on the statutory limit on the public debt and guaranteed
obligations as of June 30, 1957, see table 26, and for earlier years,
see table 27.
The Treasury paid off in cash approximately $1.0 billion of partially
tax-exempt 2% percent bonds of 1956-59 which were called for redemption on September 15, 1956. This was in line with the Treasury's
policy of making use of every opportunity to retire securities with
tax-exempt features.
The following tables summarize the financing operations during
the fiscal year and show the results of the public offerings of marketable
notes, certificates of indebtedness, and bills.
Public offerings of inarketable Treasury securities excluding refinancing of regular
.weekly bills, fiscal year 1957
[In millions of dollars]
Date of
issue

me
Apr. 1.-.
July 16..
Aug. 15Oct. 1.-.
Dec. 1...
Dec. 1...

Description of security and maturity date

Issued for
cash

Issued in
exchange
for other
securities

Total
issued

Notes and certificates of indebtedness
2 121
12,056
332
1,312
7,271

2 121
12,056
3,221
332
1,312
7,271

8,414
1,464

2,351
647

\Vi% exchange note—April 1,1961'
2%% note—Aug. 1, 1957
2%% certificate (tax anticipation) Mar. 22, 1957\yi% exchange note-Oct. 1, 19611
3Jr4% certificate (tax anticipation) June 24, 1957-.
3H certificate—Oct. 1, 1957

8,414
1,464
2,437
942
80
2,351
647

34,048

40, 648

1957
Feb. 15..
Feb. 15..
Feb. 153.
Feb. 153.
Apr. 1...
May 1_May l-_

^%% certificate-Feb. 14,1958
33^% note—May 15, 1960
Z%% certificate-Feb. 14,1958
?>yi% note—May 15, 1960
\Vi% exchange note—April 1, 1962 i..
31/2% certificate—April 15,1958
3H% note-Feb. 15, 1962
Total notes and certificates of indebtedness ^

1966

2,437
942

6,600

BillB <

Oct. 17-- 2.627% 91-day special bills—Jan. 16, 1957
Nov. 16. 2.617% 91-day special bills—Feb. 15, 1957
Dec. 17- 2.585% 95-day tax anticipation bills—Mar. 22, 1957..

1,603
1,750
1,006

1,603
1,750
1,006

1957
Jan.16-- 3.305% 159-day tax anticipation bills—June 24,1957
Feb. 15.- 3.231% 129-day tax anticipation bills—June 24, 1957
May 27- 2.825% 119-day tax anticipation bills—Sept. 23, 1957.,
Increase in offerings of regular weekly bills during period
Jan. 31 to Mar. 14, 1957
Totalbills

1

Total public offerings.

1,501

1,601
1,750
1,501

1,100

1,100

1,601
1,750

6,960

3,351

10,311

13, 560

37,399

50,959

1 Issued only on demand of owners in exchange for 2%% Treasury Bonds, Investment Series B—1975-80.
2 Amount issued subsequent to June 30, 1956.
3 Issued March 28,1957 (additional amount of the security dated February 15, 1957),
4 Amounts are maturity value. Treasury bills are sold on a discount basis with competitive bids for each
issue. The average sale price gives an approximate yield on a bank discount basis as indicated for each series.




29

•REVIEW OF FISCAL OPERATIONS

Disposition of matured marketable Treasury securities excluding refinancing of regular •
weekly bills, fiscal year 1957
[Dollars in millions]
D a t e of
refundm g or
retirement

1956

Called or m a t u r i n g s e c u r i t y Description a n d m a t u r i t y d a t e

Redeemed
for cash or
carried to
matured
debtl

Exchanged
for n e w
security

M a y 17,1955
Oct. 1,1951

$860
22

$11, 528
528

$12,388
; 550

93.1
96 0

Sept. 15,1936
D e c . 1,1955

982
500

8,583

982
9,083

94.5

M a r . 5,1956
Sept. 15,1953

282
578

6,937
2,418

7,219
2,997

96.1
80.7

522

531

98.3

2,998

3, 221
" 4, 155

72.2

Issue d a t e

Total

Percent
exchanged

Bonds, notes, and certificates
of indebtedness

J u l y 16-. 2% note—Aug. 15, 1956
J u l y 16
13^% n o t e - O c t . 1, 1956 . .
Sept. 15- 2 % % bond—Sept. 15, 1956-59,
' called Sept. 15, 1956
D e c . 1— 2 H % certificate—Dec. 1, 1956
1957
F e b . l S.- 2 ^ % c e r t i f i c a t e - F e b . 15, 1957—.
_
F e b . 15. 2 ^ % n o t e — M a r . 15, 1957
F e b . 1 5 - 13'^% exchange note—April 1,
1957
M a r . 22- 2 H % certificate (tax anticipation) M a r . 22, 1957
M a y 15- l^/i% n o t e — M a y 15, 1957
J u u e 24- 334% certificate (tax anticipation) J u n e 24, 1957

April

1,1952

9

A u g . 15,1956
Oct. 4,1954

3,221
1,157

.Dec.

1,312

1,1956

Total bonds, notes, and
certificates of i n d e b t e d ness
.-1957

8,924

1,312

33, 515

42,438

Bills

J a n 16
Special bills—Jan. 16, 1957
F e b . 15 Special bills—Feb. 15, 1957
M a r . 22. T a x a n t i c i p a t i o n bills—Mar. 22,
1957
J u n e 24- T a x a n t i c i p a t i o n bills—June 24,
1957
J u n e 24. T a x a n t i c i p a t i o n bills—June 24,
1957
Totalbills
T o t a l T r e a s u r y securities.

•

2 1, 603
2 1, 750

Oct. 17,1956
N o v . 16,1956

1, 603
1, 750

D e c . 17,1956

1, 006

Jan.

16,1957

1,601

1,601

F e b . 15,1957

1,750

1, 750

1, 006

4,357

3,353

7,710

13, 281

36, 868

50,148

1 Including amounts redeemed for taxes in the case of tax anticipation issues.
2 These special bills were replaced by tax anticipation bills at their maturity.

In handling its regular weekly offering of 91-day Treasury bills during the year, the Treasury raised $1.1 billion of new cash by increasing
the level of weekly offerings for seven consecutive weeks. The issues
of January 31, February 7, and February 14 exceeded the maturities of
those dates by approximately $100 million a week while the issues of
February 21, February 28, March 7, and March 14 exceeded the
respective maturities by approximately^ $200 million a week. The
other weekl}^ issues were refunded by new bills in approximately
equivalent amounts. The thirteen issues of regular weekly bills outstanding at the close of the fiscal year 1957 totaled $21.9 billion, as
compared with $20.8 billion at the close of the previous fiscal year.
To raise cash for current requirements, the Treasury also issued
91-day special bills in October and Noveinber 1956, amoimting to




30

1957 REPORT OF THE SECRETARY OF THE TREASURY

$3.4 billion. Upon maturity in January and February 1957, these
were refunded into tax anticipation bills, with both issues maturing on
June 24, 1957. In addition, $1.0 billion 95-day tax anticipation bills
were issued on December 17, 1956, maturing March 22, 1957, and
$1.5 billion 119-day tax anticipation bills were issued on M a y 27, 1957,
maturing September 23, 1957. All tax anticipation bills were acceptable at par in payment of taxes on the fifteenth of the month in which
they matured. (For additional information on aU bill issues see
exhibit 3.)
Credit tightness throughout the year was reflected in increased
borrowing costs for the Treasury. The average rate on new Treasury
bills, for example, ranged from about 2}i percent at the beginning of
the year to a high of more than 3% percent in June 1957. The weekly
average rates on new bill offerings throughout the year are shown in
exhibit 3. The average annual interest rate as computed on the total
interest-bearing public debt was 2.730 percent on June 30, 1957, as
compared with 2.576 percent a year earlier. (For further detail on the
computed annual interest rate by security classes, see table 42.)
The public nonmarketable debt declined $3.9 billion during the
fiscal year. Changes in this category of the debt, by type of security,
are shown in the following table.
June 30,
1956

Class of security

June 30,
1957

Increase, or
decrease (—)

In billions of dollars
United States savings bonds:
Series E
_
Series F and G _. _ _
SeriesH
Series J and K-__ __
Subtotal, savings bonds
__
Treasury bonds, investment series
Depositary bonds

37.9
13.5
3.0
3.1
_

Total interest-bearing nonmarketable issues




_-----__

38.0
10.1
3.5
3.0

0.1
—3.4
.5
—.1

67.5
12.0
.3

54.6
11.1
.2

—2 9
-.9
—. 1

69.8

66.0

-3.9

REVIEW OF FISCAL OPERATIONS

31

The decline of $0.9 billion in investment series bonds outstanding
was due principally to the exchange of the 2% percent convertible
Series B-1975-80 bonds for marketable 5-year IK percent notes.
The decline also reflected the direct redemption for cash of approximately $0.3 billion of 2% percent bonds for Treasury investment
accounts.
The largest portion of the nonmarketable debt is, of course, in
United States savings bonds. The total of all series of interestbearing savings bonds outstanding at the close of the fiscal year was
$54.6 billion as compared with $57.5 billion at the close of the previous
fiscal year. The decline of almost $3.0 billion in outstanding savings
bonds was due entirely to the large redemption of Series F, G, J, and K
savings bonds, both matured and unmatured.
As shown in chart 6, sales of the investment-type Series J and K
bonds combined (which replaced the F and G bonds beginning May 1,
1952) have been declining since the fiscal year 1955 while redemptions
have been rising. As previously noted, the sale of Series J and K
bonds was discontinued on April 30, 1957.
The amount of E and H bonds outstanding (including accrued
interest) reached an alltime peak of $41.5 billion on June 30, 1957, as
compared with $40.9 billion on June 30, 1956. An excess of redemptions of E and H bonds over sales during the fiscal year was more than
counter-balanced by the accrual in interest. Throughout the period
sales of the smaller denomination E bonds ($200 or under) continued
at record levels, while sales of the larger denomination bonds declined.
(For further detail on savings bonds sales by denomination, see table
37.)
The redemptions of savings bonds as a percentage of the total sold,
by yearly series, are summarized in the accompanying table. Detailed information on savings bonds from March 1935, when this type
of security was first offered, through June 30, 1957, is given in tables 35
through 40.




32

195 7 REPORT OF THE SEGRETARY OF THE TREASURY

R G, J AND K BONDS, FISCAL YEARS 1951-57
$Bil.

$Bi.

J and K Sales'

Amounts Outstanding

2
1.4
I

1954

'55

'56

'57

F,G,J andK Redemptions

41-

3.8
Unmo'^tured

^

1951

'53

'55

'57

• Fiscal Years
CHART

6.

I Including'Series F and J interest accruals.

E AND H BONDS. FISCALYEARS 195l-'57.




CHART 7.

tured

REVIEW

OF

FISCAL

33

OPERATIONS

Percent of Series E, F , G, H , J , a n d K savings bonds sold i n each year redeemed
through each yearly period thereafter ^
[On basis of P u b l i c D e b t accounts, see"Bases of T a b l e s " ]
R e d e e m e d b y e n d of—.
Series a n d cale n d a r year i n
w h i c h issued

52

OT

>>

>3

>>
0

1 i i i
>>
>i

oc

>>

0

CO

1 1 1
>:
.CO

Oi

Series E 2
E-1941 - E-1942
E-1943
E-1944
E-1945
E-1946
E-1947
E-1948
E-1949
E-1950
E-1951
E-1952
E-1953
E-1954
E-1955
E-1956

1
15
19
28
23
21
20
22
26
29
29
. 28
29
29
-•- 32

10
21
34
41
45
40
37
39
40
41
44
45
44
45

6
15
24
33
38
34
30
30
34
36
38
39
38
38
39

14
29
41
47
50
45
43
44
44
45
48
49
49

18
35
47
52
54
51
47
47
47
48
52
53

23
40
51
56
58
54
50
49
50
51
55

27
44
55
60
61
56
52
52
53
54

30
48
58
62
63
58 ,
55
54
55

34
52
61
64
65
60
57
56

40
58
65
68
68
64
61

62
68
71
73
73
69

67
71
75
76
76

70
74
78
79

72
77
80

75
79

77

'
Series F a n d O

F a n d a-1941...
F a n d a-1942...
F a n d a-1943-..
F a n d 0-1944
Fand a-1945-.
F a n d 0-1946
F and 0-1947...
F a n d 0-1948.. .
F a n d 0-1949
F a n d a-1950...
F a n d 0-1951...
F a n d 0-1952 .

1
i
2
2
2
3
3
2
3
3
4
6

5
7
10
10
11
12
12
9
13
11
14
16

3
4
6
6
7
8
5
9
9
9
12

15
17
20

10
14
19
18
18
20
21
13
20
16
20
24

13
18
22
21
21
23
24
16
23
18
26

15
21
26
25
24
27
28
18
26
28

18
24
29
28
27
30
31
21
34

20
28
33
31
30
33
34
31

24
31
36
34
32
36
40

27
34
39
36
34
39

68
60
68
72
72

97
95
95
96

98
97
97

99
98

99

Series H
H-1952
H-1953.
H-1954
H-1955
H-1956

3
3
3
4
4

8
8
7
11

13
12
13

17
17

21

Series J
J-1952
J-1953
J-1954
J-1955
J-1956

. .

2
2
3
4
6

14
14
28

6
8
14
17

18
20

28

Series K
K-1952
K-1953
K-1954
K-1955
K-1956

- -

2
3
1
2
4

9
10
19

6
6
6
12

12
15

19

NOTE.—The percentages shown in this table are proportions of the value of the bonds sold in any calendar
year which are redeemed before July 1, of the next calendar year and before July 1 of succeeding calendar
years. Both sales and redemptions are taken at maturity value.
1 Percentages by denominations may be found in table 40. '
2 Similar detail for Series A through E savings bonds may be found in the 1952 annual report, p. 77.
438363—58

4




34

1957 REPORT OF THE SECRETARY OF THE TREASURY
OWNERSHIP OF FEDERAL SECURITIES

Private nonbank investors held an estimated $136.2 billion of
Federal securities at the end of the fiscal year 1957—one-half of the
total debt outstanding. Private nonbank investors include individuals,
insurance companies, mutual savings banks, nonfinancial corporations,
pension funds, foreign accounts. State and local governments, and
nonprofit associations. Commercial banks^ and Federal Reserve
Banks together held $78.9 billion, representing about 30 percent of
the debt. The remaining 20 percent of the deb,t, $55.6 billion, was
held by Government investment accounts, primd^rily social security
and unemplo37^ment trust funds, veterans' insurance funds, and
Government retirement funds.
\

—OWNERSHIP OF THE PUBLIC DEBT, JUNE 3 0 > 9 5 7 _
\

TOTAL

Gov't. Invest.
Accounts

Nonbank Investors

Banks

$Bil.

l^p/zl
200

individuals
Savirigs
Institutions

IOO

Corporations j ^

| ^ ^

^

Another'^
y/^^y/.

ComI
Federal
Reserve

m
C H A R T 8.

Private nonbank investors decreased their holdings by $2.3 billion
during the fiscal year. Commercial banks decreased their Federal
security portfolios by $1.2 billion, while the Federal Reserve Bank
holdings declined by $0.7 billion. Ownership of the debt by Federal
Government investment accounts increased by $2.1 billion during
the year. The following table presents figures on bank and nonbank
ownership, together with pertinent details on the holdings of Federal
securities by the various investor classes. Their holdings as of June
30, 1957, are shown in chart 8.




35

REVIEW OF FISCAL OPERATIONS

Ownership of Federal securities by investor classes on selected dates, 1941-1957^
[Dollars in billions]

June 30,
1941

Estimated ownership by:
Private nonbank investors:
Individuals 3
Insurance companies
Mutual savings banks
Corporations *. _
__ _
State and local governments
Miscellaneous investors *.
Total private nonbank investors.
Federal Oovernment investment accounts-..
,
--..
Banks:
Commercial banks..
Federal Reserve Banks

Feb. 28,
1946 2

June 30,
1956

June 30,
1957

Change
during
fiscal year
1957

$11.2
7.1
3.4
2.0
.6
.7

$64.1
24.4
11.1
19.9
6.7
8.9

' $67. 5
13.3
8.4
'17.4
15.7
16.2

$67.4
12.3
7.9
15.7
16.9
16.1

-$. 1
—1.0
—.4
— 1.7
+1.2
—,1

25.0

135.1

138. 5

136.2

-2.3

8.5

28.0

53.5

55.6

+2.1

19.7
2.2

93.8
22.9

57.1
23.8

55.8
23.0

-1.2
—.7

Total banks

21.8

116.7

80.8

78.9

-2 0

Total gross debt outstanding

55.3

279.8

272.8

270.6

-2.2

Percent of total
Percent owned by:
Private nonbank investors:
Tnfiivi<iuals
Other-.
Total
Federal Oovernment mvestment accounts ...
Commercial banks
Federal Reserve Banks
Total gross debt outstanding

25
26

45

23
25
48

51

50

15
36
4

10
34
8

19
21
9

21
21
8

100

100

100

100

20
25

25
25

« Revised.
•
1 Gross public debt, and guaranteed obligations of the Federal Oovernment held outside the Treasury.
2 Immediate postwar peak of debt.
3 Includes partnerships and personal trust accounts. Nonprofit institutions and corporate pension trust
funds are included under "Miscellaneous investors."
^ Exclusive of banks and insurance companies.
8 Includes savings and loan associations, nonprofit institutions, corporate pension trust funds, dealers
and brokers, and investments of foreign balances and international accounts in this country.

Individuals' holdings (includiag personal trust accounts) amounted
to $67.4 billion on June 30, 1957, with savings bonds accounting for
nearly three-fourths of this total. Series E and H savings bonds increased $0.6 billion to a new high of $41.5 billion. Individuals' holdings of Series F, G, J, and K savings bonds decreased by $1.8 billion,
resulting in a net decline in total savings bonds held by individuals
of $1.2 billion. Individuals' holdings of securities other than savings
bonds, principally marketable, after showing a decline in the first half
of the year, increased significantly in the second half and were up $1.1
billion for the year as a whole.
Federal securities held by insurance companies at the end of the
fiscal year amounted to $12.3 billion, a decrease of $1.0 billion during
the year. Life insurance companies accounted for more than $7.2
billion, or almost 60 percent of total insurance holdings at the end of
the year. During 1957 these companies reduced their holdings by




36

195 7 REPORT OF THE SECRETARY OF THE TREASURY

$0.7 billion in order to provide funds for investment in the increased
supply of mortgages and corporate securities. This was a somewhat
smaller reduction than the liquidation of $1.1 billion in the fiscal year
1956.
Fire, casualty, and marine insurance companies held $5.1 billion of
Federal securities on June 30, $0.3 billion lower than a year earlier.
The securities held by these companies are primarily concentrated in
issues with a maturity of less than 10 years.
Mutual savings banks' holdings of Federal securities at the end of
the fiscal 3^ear were $7.9 billion, $0.4 billion lower than on June 30,
1956. Like the life insurance companies, mutual savings banks have
been increasing their mortgage and corporate securities portfolios since
the end of World War I I and liquidating some of their holdings of
Federal securities to aid in financing these acquisitions.
Average maturity of both life insurance companies' and mutual
savings banks' portfolios of Federal securities declined during the
course of the year and ended at approximately 8 years to first call or
maturity. This was below their prewar averages.
Federal securities held by corporations other than banks and insurance companies decreased by $1.7 billion during the fiscal j^ear,
bringing their holdings dowai to $15.7 billion. While outstanding
Federal income tax liabilities of these corporations were almost the
same in June 1957 as in June 1956, credit conditions continued tight
and corporations used more of their available funds to meet current
operating needs. This reduced the amount of corporate funds available for short-term investment in Government securities.
Holdings of Federal securities by State and local governments
amounted to $16.9 billion at the close of the fiscal year, an increase
of $1.2 billioa over the pre6eding year. About one-third of the Federal security holdings of these governmental units are in State and
local government employee retirement funds.
The holdings of all other private nonbank investors amouated to
$16.1 billion on Juae 30, 1957, a decrease of $0.1 billion. Savings
and loan associations increased their holdings by $0.5 billion as they
built up their secondary reserves against larger share balances. Corporate pension trusts decreased their holdings of Federal securities
by $0.3 billion, bringing them down to $2.7 billion at the close of the
3^ear. Ownership of Federal securities by foreign and international
accounts also declined by $0.3 bilhon, bringing the total down t© $7.6
billion on June 30, 1957. Holdings of the remaining classes in this
group (nonprofit associations, dealers and brokers, and certain smaller
institutioaal groups), showed very little change during the year.
Government investment accounts increased their holdings of Federal securities by $2.1 billion during, the year. This was less than




37

REVIEW OF FISCAL OPERATIONS

the $3.0 bilUon increase of the previous fiscal year, and primarily reflected a slower rate of accumulation by the Federal old age and
survivors insurance trust fund. Of the $55.6 billion held by these
accounts, $46.8 billion, or approximately 84 percent, was in the form
of special issues held only by these accounts. Details on the ownership of securities by Government investment accounts are shown in
table 51.
As already noted, holdings of Federal securities by banks and private
nonbank investors decreased during the year. An analysis of the.
estimated changes in bank versus nonbank ownership of Federal securities during the fiscal year 1957 is shown by type of issue in the
following table.
Estimated changes in ownership of Federal securities ^ by type ofissue, fiscal year 1957
[In billions of dollars]
Change accounted for b y Total
changes

Marketable securities:
Treasury biUs .
Certificates of indebtedness
Treasury notes
Treasury bonds, etc

Banks
Total

Commer- Federal
cial
Reserve

Nonmarketable securities, etc.:
United States savings bonds
Special issues to Government investment accounts
Treasury bonds, investment series
Other
Tctal nonmarketable, etc
..

_-.

2.'5
1.5
-2.2
-.3

-0.1
.1
.6
.1

0.2
2.7
-3.4
-.9

0.8
2.2
-2.8
-.9

-0.6

.8

_- _

Totalmarketable

Total change

Private Governnonbank ment ininvestors vestment
accounts

1.5

.6

-1.4

-.6

-.7

-2.9

-2.4

-.5

-.5

.2.6
4.2
-5.0
-1.0.

1.7
-.3

1.7
-.9
-.9

-.6
-.8

-3.0

-3.8

1.4

-.6

-.6

-2.2

-2.3

2.1

-2.0

-1.2

.4
-.6

(*)

-.1

(*)

-.1

-.7

*Less than $50 million.
1 Gross public debt, and guaranteed obligations of the Federal Government held outside the Treasury.

CORPORATIONS AND CERTAIN OTHER BUSINESS-TYPE ACTIVITIES
OF THE UNITED STATES GOVERNMENT

Corporations and certain other business-type activities of the
Government finance their lending and other operations from their own
receipts, from capital stock subscriptions or by appropriations, from
the sale of their obligations to the public, or from borrowing from the
United States Treasury. The Secretaiy of the Treasury is authorized
not only to purchase obligations of many of the agencies, but he is also,
under certain circumstances, authorized to approve the terms and
conditions of such obligations. Under provisions of the Government
Corporation Control Act (31 U. S. C. 868), the obligations of most
agencies issued to the public must be approved by the Secretary of the




38

195 7 REPORT OF THE SECRETARY OF THE TREASURY

Treasury; the few agencies which are exempt from this requirement
must consult with the Secretary of the Treasury before issuing obligations to the public. Most Government corporations and all other
business-type activities are required to maintain their checking
accounts with the Treasurer of the United States, although, with the
approval of the Secretary of the Treasury, such accounts may be kept
with the Federal Reserve Banks or with private banks designated asdepositaries or fiscal agents of the United States.
Advances by the Treasury

Cash advances during the fiscal year 1957 were made by the
Treasury to Government corporations and certain other business-type
activities pursuant to statutory authorizations in the amount of
$19,229 million. Repayments and refundings amounted to $16,550'
million, and cancellations authorized by law amounted to $3,671,
resulting in net advances during the year of $2,679 million. As of
June 30, 1957, the outstanding borrowings from the Treasury
amounted to $22,727 million. Detailed information relating to the
advances is shown in table 117.
Interest on advances by Treasury

The rates of interest on borrowings from the Treasury, except where
fixed by statute, are determined by the Treasury from month to month,
taking into account the cost which the Treasury would have to pay
to borrow money in the current market, as reflected by prevailing
market yields on Government obligations with maturities corresponding to the approximate duration of the advances to be used by
the agencies for their programs. A description of the obligations of
Government corporations and activities held by the Treasury for
borrowing outstanding as of June 30, 1957, together with the applicable
rates of interest, is given in table 116.
Borrowing authority and outstanding obligations

The borrowing authority of Government corporations and activities
is established by law, and the Secretary of the Treasury is authorized
to purchase the obligations of many of the agencies. New authorizations to borrow from the Secretary of the Treasury in the fiscal year
1957 amounted to $4,747 million and reductions in authorizations
were $178 million, resulting in a net increase in authorizations of
$4,569 million. As of June 30, 1957, the unused borrowing authority
of these corporations and activities amounted to $17,294 million.
Table 114 shows the status of the borrowing authority and the outstanding obligations of corporations and activities issued to the
Secretary of the Treasury.




REVIEW OF FISCAL OPERATIONS

39

Assets, liabilities, and net investment ofthe United States

Treasury Department Circular No. 966, as supplemented, requires
the submission of periodic financial statements by Government corporations and certain other business-type activities, to disclose fully
the results of their financial operations. The circular is designed to
provide, as completely as may be desirable and practicable, the necessary data regarding the assets, liabilities, and financial operations of
such activities. On the basis of reports to the Treasury, as of June
30, 1957, the combined assets were $89,812 million, the combined
liabilities were $5,317 million, leaving a net of $84,496 million repre.senting the Government's investment in these agencies. The major
assets consisted of inventories, loans, and real properties. The major
liability items consisted of accounts payable and obligations issued to
the public.
The statements of financial condition of the reporting agencies are
published quarterly, while the income and expense statements and the
source and application of funds statements are published semiannually
in the Treasury Bulletin. In this annual report, the combined statement of financial condition as of June 30, li957, is shown in table 119;
the income and expense statement for the fiscal year 1957 is shown in
table 120; and the source and application of funds statement for fiscal
1957 is shown in table 121. A comparative statement of assets,
liabilities, and net investment is shown in table 118.
Subscriptions to and repayments of capital stock of Government corporations

During the fiscal year 1957 there was a net reduction in the capital
stock of Government corporations amounting to $24.4 million. The
principal increases were subscriptions to the Federal Crop Insurance
Corporation of $13 million and Federal National Mortgage Association (secondary market operations) of $50 million. The principal
repayments were %^^ million made by the Reconstruction Finance
Corporation and $13.9 million, by the Federal Savings and Loan
Insurance Corporation. Table 113 gives detail relating to the capital
stock outstanding and the net changes during the fiscal year.
Other payments to the Treasury by Government corporations, etc.

During the fiscal year 1957, deposits into the Treasury by Government corporations and activities, representing payraents of interest,
dividends, and other earnings, amounted to $612 million as compared
with $619 million deposited in the fiscal year 1956. Table 124
gives detailed information concerning such payments into the
Treasury.
Guaranteed obligations of Government agencies

With the approval of the Secretary of the Treasury, the Federal
Housing Administration issues debentures in exchange for foreclosed




40

195 7 REPORT OF THE SECRETARY OF THE TREASURY

mortgages. Such debentures, guaranteed as to principal and interest
by the United States, were issued in the amount of $72 million and
redemptions amounted to $39 million, showing a net increase of $33
million for the fiscal year 1957. The amount outstanding on June 30,
1957, was $106 million. In addition, the nominal amount of $0.7
million in matured guaranteed securities, representing obligations
issued by the Federal Farm Mortgage Corporation and the Home
Owners' Loan Corporation, was outstanding on June 30, 1957. Funds
for payment of these obligations are on deposit with the Treasurer of
the United States. Table 23 gives detailed information relating to
these securities.
SECURITIES OWNED BY THE UNITED STATES GOVERNMENT

Various types of securities are held by the Government as a result
of its financing of certain Government activities and other programs
authorized by the Congress. The principal classes of securities consist of capital stock, bonds, and notes of Government corporations
and certain other business-t37-pe activities. Table 113 gives further
information relating to these securities. Securities evidencing loans
to home owners, farmers, railroads, foreign governments, etc., are
summarized in table 119, Part C. The amounts of securities representing mortgages acquired from the sale of real estate and other
property, and the securities evidencing United States participation in
the International Bank for Reconstruction and Development, the
International Monetary Fund, and other international organizations
are shown in table 119, Part D, in summary. The amounts of these
securities by agencies holding such securities were published in the
Treasury Bulletin of December 1957.
TAXATION DEVELOPMENTS

The President in his January 1957 Budget Message reaffirmed his
concern with the high level of tax rates and the importance of reducing
taxes further as soon as possible. 'Tt is my firm belief that tax rates
are still too high," he said, ''and that we should look forward to further
tax reductions as soon as they can be accomplished within a sound
budgetary polic}^. Reductions in tax rates would give relief to taxpayers and would also release funds for the activity and investment
necessary for sustained economic growth through private initiative.
However, the reduction of tax rates must give way under present
circumstances to the cost of meeting our urgent national responsibilities."
In the fiscal year 1957, the budget was balanced for the second consecutive year. Receipts exceeded expenditures in fiscal 1956 and 1957
b}^ $1.6 billion each, and a balanced budget was proposed by the




REVIEW OF FISCAL OPERATIONS

41

President for fiscal 1958. I t was the President's objective to
safeguard this budgetary balance as a contribution to sound national
economic growth and assistance in restraining the inflationary pressures which have developed with widespread national prosperity.
Moreover, the President wished to hold the line against preferential
tax reduction, group by group, because that would delay the time
when general tax relief could be given to every taxpayer in the United
States.
Corporate and excise rate extensions

In conformity with his fiscal policy, the President requested continuation of existing excise tax rates on tobacco, liquor, and automobiles, scheduled to be reduced on April 1, 1957, under existing law.
He recommended also continuation of the existing corporate tax rates
for another year. Without these extensions, fiscal 1958 budget
receipts would have fallen short of expenditures by approximately
$1 billion. " I t would be neither fair nor appropriate," the President
said, "to allow excise and corporate tax reductions to be made at a
time when a general tax reduction cannot be undertaken." In testifying before the Finance and Ways and Means Committees in support
of these tax rate extensions, former Secretary Humphrey noted that
"after two years of balanced budgets as a result of the continued hard
work of the Congress and the administration, it would be inexcusable
to slip back into deficit financing for next year." (See exhibit 12.^)
Legislation to extend the corporation income and the three groups
of excise tax rates to June 30, 1958, was passed by the House of Representatives on March 14, the Senate on March 27, and approved by
the President on March 29, 1957 (Pubhc Law 85-12). The full year
revenue effect of these extensions is estimated to be $3,052 million of
which $2,200 million is accounted for by the corporation income tax,
$231 million by the alcohol taxes, $185 million by the cigarette tax,
and $436 million b}^ the automotive excises. The cumulative revenue
effect of the 15-month extensions was estimated to be $3,824 million,
with $186 million falling into fiscal 1957, $2,496 miUion into 1958, and
$1,142 million into 1959.
Technical and administrative aspects of excises

During the fiscal year further consideration was given to technical
and administrative provisions of the Revenue Code relating to excise
taxes. A complete review of this general area of the Code had been
deferred at the time of the 1954 revenue revision and the Committee on
Ways and Means subsequently authorized and directed the appointment of a special subcommittee to make a study of these problems.
On the basis of public hearings held during fiscal year 1956 and
legislative suggestions developed by the Treasury and congressional




42

1957 REPORT OF THE SECRETARY OF THE TREASURY

staffs, the subcommittee approved specific recommendations on
technical excise revision for the consideration of the full Committee
on Ways and Means, which culminated in H. R. 12298. The Committee held additional public hearings in November and December
1956, directed both to the content of H. R. 12298 and phases of
excise taxation not covered by it. After organization of the 85th
Congress, the Subcommittee on Excise Taxes was reconstituted and
the bill H. R. 12298 reexamined in light of the additional testimony
received from iridustry and the general public and the suggestions for
revisions and deletions suggested by the Treasury. The Department
cooperated in the development of this legislation but opposed a
number of the items in the bill either because of tax principle or on
account of the revenue loss involved. An excise revisiori bill was
subsequently reintroduced in the new Congress as H. R. 7125, the
Excise Tax Technical Changes Act of 1957, reported favorably by
the Committee on Ways and Means on May 24, 1957, and passed by
the House of Representatives on June 20, 1957.
Technical revision of income, estate, and gift tax provisions

The Department also worked with a subcommittee on Internal
Revenue Taxation of the Committee on Ways and Means which is
developing legislation to correct unintended benefits and hardships
in provisions of the Internal Revenue Code passed over at the time
of the 1954 revenue revision or which require further tightening. The
subcommittee held public hearings in November 1956 and was
supplied with the results of Treasury studies on a number of problems.
The Committee's findings are incorporated in H. R. 8381, the
Technical Amendments Act of 1957, which the Committee on Ways
and Means reported favorably on July 9, 1957. The bill would amend
numerous sections of the Revenue Code, including, among others,
those pertaining to the retirement income credit, dealers in taxexempt securities, nonbusiness bad debts, charitable contributions,
amortizable bond premium, net operating loss deduction, and the
taxation of annuities.
Special amortization

Further progress was made in cutting back the special amortization
program adopted in 1950 in connection with the Korean emergency.
While special amortization may have served a useful purpose during
that emergency, the Department regards it as a dangerous type of
artificial stimulus which should be discontinued as rapidly as defense
requirements permit. Although some degree of defense mobilization
on a substantial scale may be essential for years to come, the vigorous
growth of our free economy will be better served if ex:pansion of major




REVIEW OF FISCAL OPERATIONS

43

productive facilities comes as an integral part of long-range economic
growth rather than the result of artificial stimulus.
Between November 1950 and March 20, 1957, almost 22,000 certificates were issued under the five-year amortization program, involving
total project costs of $39 billion. The five-year writeoff was made
available to almost $23 billion or about 60 percent of these costs. The
Tevenue lag from certificates issued through 1956 probably exceeds $5
Trillion during these early years. Although these revenues will be
substantially recovered in the years after 1960, they will ultimately
dnvolve an interest cost to the Government of about $3 billion on that
portion of the public debt which could be repaid if the taxes associated
with these amortization certificates were not deferred.
In view of these considerations, the Department supported enactxaent of the provisions of S. 1795 (amending H. R. 232) to restrict the
future issuance of certificates for rapid amortization to emergency
facilities devoted to producing new or specialized defense items and
to provide research, developmental, or experimental services for the
use of the Department of Defense or Atomic Energy Commission in
t h e national defense program. (See exhibits 14 and 15.) These provisions, together with that for the complete termination of the program as of December 31, 1959, were enacted by the Congress and
approved by the President on August 26, 1957 (Public Law 85-165).
Other taxation developments

The taxation of small business was given further consideration.
Although small business is benefiting materially from the tax reductions and revisions of the Revenue Code enacted during the present
administration, the President recommended that the Congress take
additional action to broaden the opportunities to small business by
enacting those tax relief proposals of the Cabinet Committee on Small
Business "which will give help with a minimum loss of revenue."
He reviewed these suggestions in light of the budget situation in a
letter, to Chairman Cooper of the Committee on Ways and Means in
July 1957 and suggested in addition that original investors in small
businesses be permitted to deduct, for income tax purposes, a limited
amount of losses realized on such stock investments. (See exhibit 16.)
During the first session of the 85th Congress several hundred tax
bills were introduced, some providing tax relief for restricted groups of
taxpayers, others providing large-scale tax reduction. In response to
requests from the committees of Congress the Treasury prepared
analyses and stated its position on many of these legislative items.
In conformity with the policy of the President, the Department consistently advised against enactment of legislation which would afford
special relief to limited groups of taxpayers, thereby postponing the
time when tax reduction might be provided to all taxpayers.




44

195 7 REPORT OF THE SECRETARY OF THE TREASURY

During the past congressional session a number of bills were enacted
to amend the revenue laws. Public Law 85-74, approved June 29,
1957, increased to 2.5 cents per mile the mileage rate limit on fares
eligible for the transportation tax exemption allowed servicemen on
official leave, furlough, or pass. Public Law 85-27, approved April
25, 1957, continued until June 30, 1958, the suspension of duties and
import taxes on metal scrap. Public Law 85-211, approved August
28, 1957, provided for duty-free entry of samples and advertising material and films to implement international conventions. Public Law
85-235, approved August 30, 1957, suspended until June 30, 1960,
the three-cent coconut oil tax on imported tanning material extracts.
A number of bills were enacted also affecting the old age, survivors,
and disability insurance systems. Public Law 85-109, approved
July 17, 1957, extended through June 30, 1958, the time for filing an
application for preservation of insurance rights. Public Law 85-226,
approved August 30, 1957, authorized interstate instrumentalities,
and Public Law 85-227, approved August 30, 1957, authorized California, Connecticut, Rhode Island, and Minnesota to divide retkement
systems for social security purposes. Public Law 85-229, approved
August 30, 1957, amended provisions relating to social secmity coverage for certain State and local employees and Public Law 85-238,
approved August 30, 1957, amended provisions relating to benefits for
alien survivors of certain members of the Armed Forces. Public
Law 85-239, approved August 30, 1957, extended the time within
which a minister may elect social security coverage as a self-employed
individual and included in the net earnings of ministers electing coverage the rental value of a parsonage and the value of meals and
lodgings furnished them for the convenience of the employer.
International tax developments

Eft'orts were accelerated during the year to initiate and conclude
bilateral tax conventions to eliminate or mitigate international double
taxation and to remove other tax impediments to the international
movement of private capital and skilled personnel. These tax
conventions establish rules for the allocation of income between the
signatory countries, provide for credits by one country for income
taxes paid to the other country on income derived within its borders,
provide tax exemption by one country under certain circumstances
to income derived by residents of the other, and establish the basis
for consultation between tax authorities to adjust excessive tax
burdens arising out of differences in tax concepts and administrative
practices.
These more or less traditional elements of tax treaties entered into
by the United States and other countries have been supplemented by a




REVIEW OF FISCAL OPERATIONS

45

new principle. At a Meeting of Ministers of Finance and Economy,
in Rio de Janeiro in 1954, the Secretary of the Treasury announced
that in connection with bilateral tax agreements the United States
would consider recognition, with appropriate safeguards, of foreign
tax incentive laws to promote private investment. Such recognition
was provided for the first time in a convention with Pakistan, signed
July 1, 1957, on which final action by the Senate had not been taken
when the first session of the 85th Congress ended.
Instruments of ratification of income tax and estate tax conventions
were exchanged with Italy and became effective on January 1 and
October 26, 1956, respectively. Instruments of ratification of an
income tax convention with Honduras were also exchanged, bringing
into operation the first treaty with a Latin-American country, on
January 1, 1957. The Senate gave its consent, and the President
ratified an income tax convention with Austria, a supplementary
convention modifying the income tax treaty with Japan, and a
supplementary convention modifying the income tax treaty with
Canada.
Supplementary conventions with Belgium and the United Kingdom
were concluded and transmitted to the Senate for advice and consent
to ratification. The one with Belgium would extend the income tax
convention with Belgium to the Belgian Congo and Ruanda-Urundi,
at the same time making certain modifications in the basic Belgian
convention in its application to these territories. The supplement to
the British convention modifies the conditions under which tax
exemption is granted to royalties paid from sources in one country to
enterprises in the other. The United Kingdom also served notice,
in accordance with the procedure laid down in the income tax convention, of its desire to have the treaty extended to a number of
overseas colonies and protectorates of the United Kingdom. In
accordance with commitments made to the Senate Foreign Relations
Committee at the time the British convention was under consideration.
United States acceptance of the notification must await the approval
of the Senate.
Negotiations with Mexico and Cuba, initiated in previous years,
were carried further during the year. Negotiations were also initiated
with Peru, and exploratory discussions were held with Chile.
International Financial and Monetary Developments
The fiscal year was generally characterized by world-wide prosperity. Levels of productioa rose and world trade expanded. Inflationary pressures were intensified in most countries, however, as
the demand for capital tended to outstrip savings. Many countries
took counter-inflationary action in the fiscal and monetary fields.




46

1957 REPORT OF THE SECRETARY OF THE TREASURY

though at the close of the period, inflationary tendencies continued
to be a problem of world-wide interest and importance.
Inflationary tendencies affected the balances of payments of many
countries while the Suez crisis in the last quarter of 1956 further influenced the level of exchange earnings and reserves. The accumulation of gold and dollar resources of all types by foreign countries
from transactions with the United States, which had continued without interruption since 1952, was sharply reduced during the flscal
year—a reflection of losses during the second and third quarters.
There was evidence, however, of a substantial unrecorded increase in
dollar assets held by foreigners. While some countries gained reserves, others lost considerably. The International Monetary Fund
made short-term credits available to some of its members in an unprecedented amount. The United States and the United Kingdom
agreed upon certain modiflcations to the Anglo-American Financial
Agreement and the Export-Import Bank extended a special line of
credit to the United Kingdom. The U. S. Government continued togive military and economic assistance to various countries. The U. S.
Treasury also made exchange agreements to assist several countries,
in carrying out programs of financial and exchange reform.
During the year several countries returned silver lend-leased to them
during the war and arrangements were made with others for settlement,
of their silver lend-lease obligations.
Some countries further liberalized exchange and trade restrictions,,
though others intensified their exchange restrictions. Several arrangements providing for wider transferability of currencies and
projects for trade liberalization on a regional basis were initiated
during the year.
The United States balance of payments and gold movements

During the fiscal year 1957 the United States exported $28.1 billion
in goods and services (including $2.3 billion under military aid programs), representing an increase of $3.8 billion over the previous year..
United States imports increased by $1.0 billion in the fiscal year
1957, amounting to $20.2 billion (including $3.1 billion in military
expenditures abroad). The surplus of exports, excluding goods and
services exported under military aid programs, thus amounted to$5.6 billion, more than double the $2.4 billion surplus in the fiscal
year 1956. ThCj net outflow of United States private capital in the
fiscal year 1957 amounted to $4.0 billion, a record high level representing an increase of $2.2 billion over the previous fiscal year. T h e
U. S. Government provided $2.4 billion net to foreign countries
through nonmilitary grant aid and by loans and other capital trans-




REVIEW OF FISCAL OPERATIONS

47

actions, in addition to the $3.1 billion in military expenditures included in the import figures above. As a result of all of the international transactions of the United States during the fiscal year
1957, the rest of the world, including intemational institutions, made
net recorded gains of $432 million in gold and long- and short-term
dollar assets of all types. Moreover, the "errors and omissions item"
in the United States balance of payments, which amounted to $1.2
billion for 1957 as compared with $292 million for the preceding fiscal
year, probably included a substantial unrecorded increase in dollar
assets held by foreigners. This overall result comprised gains of
$1.5 billion by foreign countries and losses of $1.1 billion by international institutions, reflectiag, to a large extent, substantial dollar
drawings by foreign countries from the International Monetary
Fund.
The gold and short-term dollar assets ^ of foreign countries (excluding U.S.S.R. gold holdings) amounted to an estimated $28.4 billion
on June 30, 1957, an increase of $1.0 billion over the $27.4 billion
held on June 30, 1956. The Federal Republic of Germany gained
$1.0 billion in gold and short-term doUar assets, matching the amount
gained by all foreign countries; other Western European countries
lost $520 million, in spite of $824 million in drawings from the International Monetary Fund by the United Kingdom and France. Venezuela gained $713 million, while holdings of other Latin American
countries as a group declined by $189 million after a $75 million Fund
drawing by Argentina. Canadian gold and short-term dollar holdings
rose by $310 million and Japanese assets fell by $413 million. At the
end of fiscal 1957, foreign countries also held $1.3 billion in U. S.
Government bonds and notes, an increase of $150 million over the
end of fiscal 1956, with the gain shared fairly equally by Canada and
Western Europe.
Reflecting the large dollar drawings by member countries on the
International Monetary Fund, the gold and short-term dollar assets
of international organizations declined by over $1.0 biUion during the
fiscal year 1957. These assets amounted to $2.7 billion on June 30,
1957. These organizations also held $366 million of U. S. Government bonds and notes, representing a small increase over the previous
year.
Total estimated world gold holdiags on June 30, 1957 (exclusive of
the U.S.S.R.) were $39.0 billion, of which the United States held
$22.7 billion and international organizations held $1.1 billion. Thus
1 Includes official gold reserves, and official and private holdings of short-term dollar assets as reported by
United States batiking in.stitutions. Tho short-term dollar assets include approximately $0 billion of
Treasury bills and certificates of indebteducss.




48

1957 REPORT OF THE SECRETARY OF THE TREASURY

the United States held 58 percent ot world gold reserves and 60 percent
of gold reserves held by individual countries.
United States gold policy was unchanged during the year.
Amendment to Anglo-American Financial Agreement

An Amendment to the Anglo-American Financial Agreement of
1945 was signed by the Secretary of the Treasury and the British
Ambassador on March 6, 1957, and approved by the Congress on
April 20, 1957. (See exhibits 18-21.) The purpose of the Amendment was to replace the waiver of interest provisions of the Agreement, which it had become substantially impossible to apply.
The original Agreement, which was signed on December 6, 1945,
and approved by the Congress on July 15, 1946, authorized a loan
to the United Kingdom of $3?^ billion at 2 percent interest. Repayment of principal and interest was to be made in 50 equal annual
installments beginning December 31, 1951. (A financial agreement
between Canada and the United Kingdom was also concluded in 1946
providing for a loan to the United Kingdom of $1% billion under
similar terms.) A settlement of Britain's lend-lease and surplus
property obligations to the United States in the amount of $622
million on the same terms was also agreed on December 6, 1945.
The total annual installment of principal and interest due the United
States on the two agreements is about $138.4 million.
Under these arrangements the United Kingdom paid in full the
principal and interest due in the years 1951 through 1955 and the
principal installment for 1956—total payments amounting to $773
million. In December 1956 the Government of the United Kingdom,
acting on its understanding of the provisions of the Agreement, informed the Government of the United States that the United Kingdom
claimed a waiver of the interest portion—$81.6 million:—of the December 31, 1956, pa3'^ment and set that amount aside in a special
account in the Federal Reserve Bank of New York until the matter
of the waiver could be determined.
The waiver clauses in the original Agreement provided that interest
due on the loans would be canceled in any year upon British Government request in certain circumstances related to the foreign exchange
position of the United Kingdom and to the United Kingdom's sterling
balance liabilities to other countries. Because of changes in conditions since the time when the Agreement was signed, the applicability
of these waiver clauses had become unclear. For all practical purposes, it became impossible to say \vhether the conditions prescribed
for the waiver had or had not been satisfied. On the other hand, the
spirit of the Agreement—that the United Kingdom should have some
relief when its international exchange situation so warranted—was




REVIEW OF FISCAL OPERATIONS

49

clear. Discussions were held by the two Governments to determine
appropriate modifications of the Agreement to carr}^ out the spirit of
the original document.
The Amendment, as approved, substitutes for the waiver provisions
of the original Agreement the following: The Government of the
United Kingdom may defer the payment of the annual installment of
principal and interest in any calendar 3^ear in which it advises the
Government of the United States that it finds that a deferment is
necessary in.view of the present and prospective conditions of international exchange and the level of Britain's gold and foreign exchange
reserves. Not more than seven annual installments may be so deferred. The first of an}^ such deferred installments shall be paid on
December 31, 2001, and the others shall be paid annually thereafter,
in order. In addition, the 1956 interest installment of $81.6 million
was deferred until the year after all other pa3^ments under the Agreement" have been completed. Interest of 2 percent is to be paid annualh^ on the total amount of each deferred installment.
The terms of the Canadian loan to the United Kingdom made in
1946 were also amended to provide comparable postponement terms.
If the United Kingdom avails itself of the right to postpone, it must
do so under both the American and Canadian agreements.
L e n d - l e a s e silver

During World War II, the United States transferred a total of 410.8
million ounces of Treasury silver to certain foreign governments under
authority of the Lend-Lease Act of March 11, 1942. While the agreements differed somewhat in detail, they provided that the debtor
countries were to return a like kind and quantity of silver within five
years after termination of the National Emergency as determined by
the President. Accordingly, the lend-lease silver was due to be returned by April 27, 1957, although the agreements with several of
the-countries permitted a postponement of part of the repayment for
an additional two years. In the course of the fiscal year, 97 million
ounces of. fine silver were returned and arrangements were made for
the return of an additional 227 million ounces. The Government of
Belgium had returned its lend-lease silver in 1947. The Governments
of Australia, the Netherlands, and the United Kingdom had begun
the return of silver prior to the due date. By the close of the fiscal
year 1957, the entire amount of silver due from Australia and the
United Kingdom (also acting for the Government of the Fiji Islands)
had been returned and taken into the account of the Treasurer of the
United States. At the close of the fiscal year all but a sriaall amount
of the silver diii^ from the Netherlands had been returned.
438363—58

5




50

1957 REPORT OF THE SECRETARY OF THE TREASURY
Lend-lease silver iransactions (fine ounces), as of June 30,. 1957
[In millions of

_

.

n.8

.
1

^

<

Silver transSilver referred from
turned and
the Treasury taken into Silver being Silver to be
to lend-lease the account
returned
returned
for account of Treasurer
of foreign
of United
governments
States

Country

Australia .
Belgium
Ethiopia
Fiji
India
Netherlands __
Pakistan
Saudi Arabia ._
United Kingdom

fineounces]-

_
_

Total

11.8
.3

.3
6.4
.2
172. 5
56.7
53.5
122.3
88.1

88.1

I 410.8

156.0

.2
3.3
52.4

54
169.3
4.3
53.5

227.1

22.3
27.8

1 Includes 1,031,250 ounces lost at sea while in transit.

During the fiscal year, negotiations were conducted with the Governments of India and Pakistan relative to the conclusion of agreements for the return of 225,999,904 ounces of silver furnished during
the war under lend-lease for use in undivided India. By agreement
between the Governments of India and Pakistan subsequent to the
partition, this obligation was divided—172,542,107 ounces to be
returned by India and 53,457,797 ounces by Pakistan. The United
States Government agreed to this division of the liability.
Agreement was reached with the Government of India in April,
and the first shipment of silver to the United States was made before
the date when the obligation became due—April 28, 1957. Under
the terms of the agreement, India agreed to ship to the United States
as soon as possible the 50,322,101 ounces which India had available
in refined form. Title to the remaining 122,219,999 ounces, which
was in alloy, was delivered to the United States Embassy in New
Delhi on June 5. Shipment to the United States of this portion of
the silver was to be arranged as soon as possible.
Agreement with Pakistan was reached in June relative to the return
of the 53,457,797 ounces of silver due from that country. Under the
agreement, Pakistan agreed to ship 15 million ounces of refined silver
to the United States as soon as possible and to turn over title to the
balance of its existing holdings of silver (approximately 15.5 million
ounces). The transfer of title was effected in Karachi on June 26,
1957. The United States agreed to an extension of time for the repayment of the balance of Pakistan's silver obligation (approximately
22.9 million ounces).
International Monetary Fund and Treasury exchange agreements

During the fiscal year 1957 greater use was made of the International
Monetary Fund's resources by its member countries than during all of




,.

REVIEW OF FISCAL OPERATIONS

51

the previous years of the Fund's operations. Of the total drawings on
the Fund of slightly more than $2.5 billion as of June 30, 1957, nearly
$1.3 billion represented transactions of the year under review. More
than $400 million of the current year's drawings were made under
terms of standby arrangements between the Fund and member
countries, which give assurance to members that, dm-ing a specified
period of time, they will be able to draw on the Fund up to a specified
maximum if the need arises for the currency or currencies covered by
the arrangement. As of June 30, 1957, the unutilized balances of
such arrangements still in effect amounted to $814.5 million.
The largest transactions with the Fund were by the United Kingdom, which in December 1956, d^^^^|^L5_mUlion, and in addition
entered into a standby arrangement, permitting further drawings up
to the equivalent of $738.5 million. No drawings were made under
this standby arrangement. Other large drawings during the fiscal
year were by France ($262.5 million), India ($200 million), Ai^gentina
($75 million), and Belgium ($50 million). Some of these drawings
were under standby arrangements which had been entered into with
the Fund during the current or earlier fiscal years.
The large drawings on the Fund during the year constituted a
substantial drain on its holdings of United States dollars. In order to
replenish its holdings, the Managing Director was authorized to sell a
portion of the Fund's holdings of gold to the United States Treasmy.
Under this authority the Fund sold the equivalent of $600 million in
gold to the Treasury in two transactions of $300 million each.
Several changes in par values occurred in the period under review.
In January 1957 an initial par value of 18 pesos per United States
dollar was established for the Argentine peso, and in March 1957, an
initial par value was also established for the Israeli pound, of 1.80
Israeli pounds per United States dollar. In May 1957, the par value
of the Iranian rial was changed from 32.25 to 75.75 rials per United
States dollar.
The membership of the Fund (and of the International Bank) stood
at 60 countries on June 30, 1957. Ghana, Ireland, Saudi Arabia, and
the Sudan subsequently became members of the two institutions.
There were several upward revisions of quotas in the Fund and Bank
during the year under review, but all of the increases were relatively
smaU.
The Twelfth Annual Meeting of the Board of the Governors of the
International Monetary Fund was held in conjunction with the
Twelfth Annual Meeting of the International Bank for Reconstruction
and Development and the First Annual Meeting of the International
Finance Corporation in September 1957. Secretary Anderson, as
United States Governor of the three international institutions, headed




52

195 7 REPORt O F THE SECRETARY OF THE TREASURY
i

the delegation. Deputy Under Secretary of State Dillon was Alternate ^ Governor and Under Secretary of the Treasury Burgess and
^
Special Assistant to'the Secr'etary of the Treasury Frank A. Southard,
Jr. (U. S. Executive Director of the Fund), served as temporary
alternate governors. The delegation also included members of the
Seriate and House Committees on Banking and Currency, members of
the National .Advisory Council on International Monetary and Financial Problems, and the President of the Federal Reserve Bank of
New York.
Presiderit. Eisenhower addressed the opening joint session. He
stressed the importance of action by the member countries in restraining infiationary tendencies in their economies. Secretary Anderson
reviewed the activities of the Bank and the Fund and also stressed
the importance of counter-inflationary policies as a means of realizing
the full benefits of increasing world trade and investment. (See
exhibit 22.) In his discussion of the Fund Annual Report, Under
Secretary Burgess commented on the use of the Fund's resources
during the year and noted the importance of maintaining the Fund'p
liquidity through repurchase of currencies drawn. (See exhibit 23.)
In the course of the fiscal year the Treasury Department renewed or
made new exchange agreements with various foreign countries. These
agreements were supplementary to standby arrangements entered into
between the International Monetary Fund and the respective couritries. In November 1956 the Tnternational Monetary Fund made a
standby arrangement with Bolivia in the amount of $7.5 million arid
shortly thereafter the Treasury made an exchange agreement for an
additional $7.5 million. (See exhibit 27.) The International Cooperation Administration also made $10 million available to support the
Bolivian Government's stabilization program. Under this program
a single free market rate for the boliviano replaced the former multiple
rate, system.
In February 1957, the International Monetary Fund renewed its
standby arrangement, and the Treasury renewed its exchange agreement with Peru. Each agreement provided for standby reserves up
to $12.5 million to assist Peru in maintaining external trade arid
payments substantially free of restrictions. (See exhibit 28.)
In March and April 1957, there was an extension for an additiorial
year of arrangements made a year earlier to assist Chile in its efforts
to achieve economic stability and freedom for trade and exchange
transactions. The International Monetary Fund extended its standby
arrarigement of $35 million. A group of American, banks renewed
credit lines amounting to $30 million and the Treasury extended
its :eifchange agreieinent in the airiount of $10 million. (See exhibit
29.) '




REVIEW OF FISCAL OPERATIONS

53

All of these agreements provide for the repurchase with dollars of
any local currencies purchased by the Stabilization Fund, No
purchases of dollars were made under these agreements during the
fiscal year.
Foreign investment, the Export-Import. Bank, the International Bank, and the
International Finance Corporation

A record increase of almost $4 billion (including reinvested earnings)
in American private investment abroad in calendar 1956 brought such
investment to an estimated total of $33 billion by December 31,1956.
The book value of direct investments in branches and subsidiaries of
United States corporations rose by $2.8 billion to a total of over $22
billion, and other long-term investments (principally portfolio holdings) and short-term claims rose by smaller amounts to a total of
$11 billion. Half of the increase in dnect investment was attributable
to the petroleum industry, but investment in manufacturing also
increased substantially, while mining, public utilities, and trade and
service industries showed smaller rises. Although substantial investments were made in all maj or geographical areas of the world, Cariada
and Latin America continued to account for nearly two-thirds of total
American private investment abroad. During the first half of 1957 a
high rate of investment abroad was maintained.
The indebtedness of foreign countries to the United States Government under various loan and credit agreements, concluded principally
since the end of World War II, amounted to $11.5 billion as of June
30, 1957. (See table 112.) .These agreements included settlement of
lend-lease, surplus property, and similar obligations, the loan under
the Anglo-American Financial Agreement, loans by the ExportImport Bank, and obligations arising under the mutual security and
foreign aid program.
The Export-Import Bank.—The Export-Import Bank authorized
182 new credit commitments totaling $1.1 billion during the fiscal
year 1957, including 143 credits totaling approximately $55 million
established at the request of United States exporters or financial
institutions. In addition, the Bank established eight new exporter
credit lines, totaling about $13.2 million. By far the largest single
Bank authorization was a line of credit of $500 miUion, established
on December 21, 1956, in favor of the British Government. This
authorization made dollars available for the importation of United
States goods and services, and of dollar costs of petroleum and petroleum products. This credit, together with the $1.3 billion made
available by the Iriternational Monetary Fund, was designed to
relieve the pressure on the British pound which accompanied the
Suez Canal difficulties. Other large credits included $151.4 million




54

1957 REPORT OF THE SECRETARY OF THE TREASURY

to Brazil and $100 million to the Argentine for various development
projects, and $60 million to Japan for the import of United States
cotton.
As of June 30, 1957, 124 exporter credit lines were outstanding in
an aggregate amount of $167.1 miUion. These credit lines give the
exporters assurance that, providing acceptable transactions are
proposed, financing will be avaUable within agreed amounts during a
particular period. In each instance the exporter finances a portion
of th^e credit extended to the foreign importer, with or without the
assistance of a financial institution, and the importer makes a substantial down payment.
The Bank disbursed $233 mUlion on loan commitments during the
fiscal year, and received $278 million in repayments of principal. Net
income for the year was $60.6 milliori, and, after paying a dividend
of $22.5 million on the capital stock of the Bank held by the Secretary
of the Treasury, the Bank's reserves and undistributed earnings stood
at $442.9 mUlion on June 30, 1957. The total commitments charged
against the Bank's lending authority amounted to $4.2 bUlion,
leaving $811 mUlion of uncommitted authority.
The International Bank.—The International Bank made 20 loans,
equivalent to $388 million, in 15 countries during the fiscal year 1957.
The total was slightly under the approximate $400 mUlion which
had been loaned in each of the two preceding years, but disbm'sements,
at $332 mUlion, exceeded those of the earlier years. The largest
loans, $75 mUlion to Iran, $75 mUlion to Italy, and $59 million to
Australia, were made in conjunction with broad programs of agricultural and industrial development. Other loans were made for
specific projects, such as expansion of electric power or steel production,
and development of port and highway facUities. The private capital
market assisted in a number of the loans, either through direct
participation by taking early maturities of the Bank's loans without
the Bank's guarantee, or by providing funds along with the Bank in
separate, but related, transactions. As of June 30, 1957, the Bank
had made 170 loans totaling $3.1 billion in 45 countries and territories,
and had disbursed $2.3 billion. The outstanding funded debt of the
Bank on the same date totaled $1.0 billion.
International Finance Corporation.—As reported last year, the
International Finance Corporation came into being on July 20, 1956,
when the nainimum requisites for membership and subscribed capital
had been attained. The United States subscription of $35,168,000
was paid in-August 1956, through a public debt transaction. The
Corporation has an authorized capital of $100 million, with subscriptions of mem.ber countries proportionate to their subscriptions
to the capital of the International Bank. As of June 30, 1957, 49




REVIEW OF FISCAL OPERATIONS

55

countries had become members of the IFC, with subscriptions totaling
approximately $92 mUlion.
On June 20, 1957, the International Finance Corporation entered
into its first investment transaction, when it agreed to invest $2
million in Siemens do Brasil Companhia de Electricidade. The IFC's
investment will be accompanied by an investment of the equivalent
of $8.5 million by Siemens of Germany, and the funds will be used
to expand the plant and facilities of Siemens do BrasU. The Corporation received an option on shares in Siemens do Brasil, which
may be exercised at a later date. At the close of the year other investments were under consideration.
International trade and payments

Although most countries still maintain exchange restrictions, there
were some further relaxations in restrictions on exchange operations,
as well as in exchange discriminations, in the fiscal year 1957.
During the year several European countries (the Netherlands,
Italy, Sweden, and Belgium-Luxembourg) established arrangements
for wider use of their currencies iri transactions among other nondollar countries, along the lines of the transferable sterling system of
the United Kingdom and the partly convertible deutsche mark system
of Germany. Steps were also taken by some European countries,
especiaUy Germany, to provide greater freedom for international
capital movements.
There was a further lessening by some European countries of restrictions on dollar expenditures. Austria, Norway, Italy, Sweden,
and Germany reduced restrictions on imports from dollar countries
during the year. Norway and the United Kingdom extended the
foreign exchange allowances for travel in nondollar countries to include travel to the dollar area. Outside Europe, Ceylon virtually
ended its discrimination against dollar imports. France, on the other
hand, withdrew in June 1957 all measures of trade liberalization previously in force and imposed quantitative restrictions on virtually
all imports from the E P U and dollar areas, and Indonesia, earlier in
1957, likewise reimposed trade restrictions.
The number and restrictiveness of bilateral payments arrangements
among members of the International Monetary Fund have also been
reduced, particularly those involving Argentina, Brazil, Japan, and
the OEEC countries. Although the number of bilateral payments
arrangements between members of the Fund and nonmembers has
increased, the restrictive effects of these arrangements have somewhat
diminished.
The European Payments Union was renewed iri M a y 1957, for
another year (to June 30, 1958) without change in the settlement




56

195 7 REPORT OF THE SECRETARY OF THE TREASURY

basis of 75 percent in gold and 25 percent in credit, which has been
in effect since August 1, 1955, and also without change in the provision
for replacing the Payments Union with a European Monetary Agreement if the Union should be terminated.
Ministerial meetings of the Organization for European Economic
Cooperation were held in July 1956 and February 1957. The^July
meeting was devoted to an analysis of the European economic situation and the proposal for a European free trade area, which would
include both the six countries intending to form a European common
market and the other OEEC countries. The February meeting agreed
to begin negotiations looking toward the establishment of the European free trade area. Under Secretary Burgess attended the July
ministerial meeting and the Treasury was represented at the February
meeting by Special Assistant to the Secretary Frank A. Southard, Jr.
The Treasury also participated in the eleventh regular meeting of
the Contracting Parties to the General Agreement on Tariffs and
Trade, as well as in a subsequent special meeting held on the initiative
of the United States in June 1957. This special meeting consisted of
consultations, in cooperation with the International Monetary Fund,
with a group of countries employing quantitative import restrictions
for balance-of-payments reasons, many of them discriminatory with
respect to American goods. As a result of these consultations, significant progress was made in the relaxation of such restrictions.
At their eleventh regular meeting the Contracting Parties also
considered proposals of the International Chamber of Commerce
designed to abolish or ameliorate the incidence of certain onerous
customs formalities. These proposals pertained to the certification
of consular invoices, the nationality of imported goods, and marks
of origin. Further consideration of these items is scheduled for the
twelfth meeting of the Contracting Parties.
Officers of the Treasury participated in various other international
conferences dealing with economic and financial problems. At the
Paris ministerial meeting of the North Atlantic Treaty Organization,
in December 1956, a report, prepared by a special committee of three
NATO foreign ministers calling for wider consultation among the
NATO countries on nonmilitary matters, was considered and approved. Secretary Humphrey and Assistant Secretary Overby
attended this meeting.
Secretary Anderson headed the United States delegation to the
Economic Conference of the Organization of American States, held
at Buenos Aires, Argentina, in August 1957. The Secretary made
the principal statement for the United States at this conference.
(See exhibit 17.) The Treasury also ^yas represented pn the United




REVIEW OF FISCAL OPERATIONS

57

States delegations to various United Nations bodies, the Southeast
Asia Treaty Organization, and the Colombo Plan Organization.
Foreigii assets control

For the purpose of preventing Communist China from obtaining
foreign exchange through the exportation of merchandise to the
United States, the Foreign Assets Control Regulations ^ prohibit the
unlicensed purchase and importation into the United States of Communist Chinese or North Korean merchandise, as well as numerous
other commodities therein specified which are of types that have
historically come from China in the past. The Control does not
issue licenses authorizing importation of Chinese-type merchandise
unless satisfactory evidence of their non-Communist Chinese origin
is presented.
Importation under general licenses is authorized with respect to
specific shipments of Chinese-type merchandise certified to be of nonCommunist Chinese origin by the government of a foreign country
frpm which they were directly exported, provided that the country in
quggtion has set up procedures for certification pursuant to standards
agreejivtolby the Treasury Department. The following Governments
now have such certification procedures: Australia, Formosa, France,
Hong Kong, Italy, Japan, the Netherlands, Switzerland, Viet-Nam,
and the Republic of Korea. Notices of the availability of certificates
of origin for particular commodities and of the governments prepared
to issue them are published from time to time in the Federal Register.
During the year, the Goverriments of Switzerland and Viet-Nam
entered into certification agreements, and a number of additional
individual items .became available for certification under existing
agreements with other governments.
The enforcement measures of the Control resulted in a number of
successful criminal prosecutions. In addition to the substantial
sums recovered as criminal penalties imposed by the Courts, large
sums were paid to the Treasury Department in mitigation of civil
penalties incurred in cases in which misdescribed merchandise was
imported in violation of the Regulations. Also, substantial quantities
of Chinese merchandise, such as human hair nets and silk waste, have
been seized either because such goods were smuggled into the United
States or because they were imported in violation of the Regulations.
On July 31, 1956, the Egyptian Assets Control Regulations were
issued by the Secretary of the Treasury pursuant to the authority of
Section 5 (b) of the Trading with the Enemy Act. These Regulations
blocked assets of the Government of Egypt and of the Suez Canal
Compan}^ in this country on that date, and placed under Treasury
licensing procedures all transactions affecting such assets.
' Described on page 125.







ADMINISTRATIVE




REPORTS




Manageinent Improvement Program
The objectives of the Treasury Department's management improvement program are to reduce costs and provide better services by
im.pi:oving the organization, methods, staffing, and general management of the Department and by eliminating any unessential activities.
The Secretary's full-scale search for economies which began in the
previous fiscal year was brought to a successful conclusion as a project
in March 1957. The encouragement and enthusiasm generated among
officers and employees engaged in the search indicates that many
continuing and additional benefits wUl accrue from this effort.
The economy search was further emphasized in a m.eeting held by
the Secretary on March 4, 1957, with his principal assistants and
bureau heads to review the budget program and to explore the operations of the Department for further economy possibUities. Also, the
Secretary directed the bureaus not to increase personnel above the
March 31, 1957, level without his specific approval. A system was
set up to establish and maintain ceUing and expenditure controls by
reviewing personnel and financial reports from the bureaus.
Reports received from the various bureaus show that significant
managem.ent improvements made during the year resulted in economies of over $6 m.Ulion. In addition, 22 parcels of land having a fair
m.arket value of $307,900 were declared surplus to the needs of the
United States Coast Guard, and total warehouse and ofiice space
used by the various bureaus throughout the country was reduced
considerably. All these economies have been accomplished without
adversely affecting the collection of revenue or reducing essential
services to the public although at a time when revenue collections
and m.ajor workload factors continued to increase.
Em.ployees throughout the Department are drawn into the economy
efforts through the incentive awards program., and special survey,
inspection, and review personnel are constantly searching for more
efficient and effective operating practices.
Incentive awards program.—^Promotion highlights during the year
included a poster contest, wherein 238 employees submitted over 500
posters; issuance of a booklet. Better Management through Incentive
Awards, which provides all officials with a handy reference guide;
issuance of revised incentive awards regulations; and increased
publicity through field offices. Awards were made to 3,005 em.ployees,
52 percent more than in 1956. Total awards paid increased 74 percent
to $175,051, and total estimated savings increased 172 percent to
$1,794,904. A detaUed comparison of results of the incentive awards
program for the fiscal years 1956 and 1957 appears in table 128.
Executive and supervisory development.-—Coniiximxig programs are
carried on to improve the quality of Treasury leadership in all phases
of m.anagement. Typica.1 programs include the Fiscal Service executive development program and Internal Revenue's executive development class and summer management institutes, in whibh over 500




61

62

1957 REPORT OF THE SECRETARY OF THE TREASURY

executives and supervisors participated during 1957. Short-term
management conferences were conducted and lectures given in various
field offices throughout the country.
Accounting improvement.—Further progress was made in improving
and modernizing accounting in the Treasury Department. Action
was taken with a view to practical compliance with the objectives of
the act approved August 1, 1956 (31 U. S. C. 66a (c)), relating to
accrual accounting. A number of improvements were made in procedures followed in accounting for taxes arid duties and public debt
transactions. Improvements were made also in the integration of the
•accounts relating to such matters with the central accounts of the
Government. There was published for the first time in the Combined
Statement of Receipts, Expenditures and Balances of the United States
' Government a com.prehensive statement of the cash assets and liabilities of the Government. Further details wUl be found in the Report
on Accounting Developments in the Treasury Department for the fiscal
year 1957, prepared by the Bureau of Accounts.
Safety program.—The Treasury Safety Council was reorganized
along functional lines. There are now four committees as follows:
•Promotion and Publicity, Records and Repprts, Rules and Regulations, and Training. The substantial decline in the accident frequency
rate is a very encouraging sign of achievement. The Treasury Department is one of six agencies with more than 50,000 employees nominated.
for the Presidential Safety Award for the accident prevention program
for the calendar year 1956. Although the accident frequency rate
increased slightly from 4.7 ^ in 1955 to 4.8 ^ in 1956, it has decreased
26 percent since 1949.
A pamphlet. Guidelines for Safety was prepared and distributed
to supervisory employees for use as a ready reference for the day-today execution of the safety program. The Secretary's Safety Award
was presented to the Office of the Treasurer of the United States and
to the Office of Production and Defense Lending, each of which
worked at least one full year and over two million man-hours without
a lost time injury.
Equipment replacement.—At the end of the fiscal year 19.57 the
first of eight new sheet-fed rotary currency presses was undergoing
production testing in the Bureau of Engraving and Printing. The
second, press was being, installed. The introduction of 32-subject
printing by the dry printing process will lead to substantial economies.
Associated with the new currency printing program was the development of new currency paper arid new ink formulas suitable for use in
printing currency by the dry intaglio process.
The fifth new postage stamp press was installed during the year.
Almost all postage, stamps are now being produced on these presses.
In spite of unexpected technical difficulties that arose both in the
production of stamps and in the experimental perforating-coiling
machine, significant savings are anticipated from the new equipment.
The installation of new melting and rolling equipment in the Philadelphia Mint was practically completed by the end of the fiscal year.
Also, two new hydraulic presses for production of medals and proof
coins were installed. I t is expected that unit manufacturing costs
J The nuinber of disabling injuries per million man-hours worked.




'

ADMINISTRATIVE REPORTS . .

,

63

willbe reduced significantly by this equipment modernization program.
The Coast Guard has installed an electric accounting machine in the
Norfolk District for preparation of pay checks, money lists, and related pay record postings and distribution vouchers. Reserve personnel accounting wiU also be performed on this machine. Similar
installations are being considered for other districts.
Advancement in electronic data processing^-—Certain bureaus with
large volume operations have initiated use of high-speed electronic
equipment and improved operations and savings in administrative
expenses are expected to result. Feasibility studies are continuing
in several areas. Accomplishments during the fiscal year included:
The successful operation of the electronic system installed in the
Office of the Treasurer of the United States which consolidated the
check payment and check reconciliation functions of the Government, with an estimated saving of $2,250,000 when all phases pf the
conversion are completed; the installation in the Boston regional
office of high-speed electronic check writing equipment which consists
of a single unit capable of printing, tabulating, and listing over 85,000
checks daily, far exceeding the output on conventional addressing
machines; and a plan to install electronic equipment for processing
Series E savings bonds was approved and facilities in Parkersburg,
W. Va., were established by the Bureau of the Public Debt for the
processing of the new punch card bond cominencing October 1,
1957. Savings in printing costs of the new bond will amount to
$500,000 annually and further savings are expected in the processing
steps.
Paperwork management.—The bureaus continued their efforts to
control paperwork in conjunction with other managenient studies.
Considerable progress was noted in records disposal which was 17
percent over last year, and in total records holdings which were
reduced 9 percent or 121,500 cubic feet. Forms analysis and control
programs resulted in the elimination of 438 forms and the revision of
179. Several large bureaus conducted surveys concerned with the
preparation and use of reports which resulted in the elimination of at
least 90 types of reports, as well as a number of feeder reports. Several
bureaus conducted correspondence and letter writing workshops.
Significant accomplishments.—Brief examples of other significant
actions taken during the fiscal year follow.
The regulation of monthly personnel ceilings, by the Division of Disbursement in the Bureau of Accounts, on the basis of volume of work,
cost, and application of production standards resulted in personnel
ceiling reductions of 16 employees with totalannual salaries of $50,000.
Consolidation of operating units and redistribution of work in the
Washington regional disbursing office made possible a net reduction
of 25 employees with salaries totaling $91,300.
Preparation of an additional 3,000,000 income tax refund checks
by the bill feed method resulted in savings of $56,000. The use of
lighter weight check envelopes at a lower contract price will save
$57,000 annually.
.
^
'
A simplified passenger's baggage declaration form is expediting the
customs clearance of persons arriving from abroad and eliminates
for many the requirement of actually listing articles purchased abroad.
This is calculated to save 10 man-years valued at $50,000.




64

1957 REPORT OF THE SECRETARY OF THE TREASURY

. Custom.s inspection teams covered 50 of the 104 collection, appraiser, and other field districts, m.aking staffing surveys and procedural im.provements that produced economies of over $200,000.
Included in the procedural improvem.ents was a method of exanaining
merchandise on the wharves, and by sample, rather than hauling
packages to appraisers' stores for examination.
The Bureau of Engraving and Printing obtained new equipm.ent for
packaging postage stam.p books which eliminated 21 jobs valued at
$74,500 previously needed for the m.anual operation. Manpower
utilization and other surveys in this Bureau resulting in the consolidation of functions, reorganizatious, and improvement of operatirig
procedures made possible a reduction of 23 positions having total
annual salaries of $78,700.
The Bureau of the Public Debt adopted the duo-style method of
microfilming Series E savings bond registration stubs, saving approximately 70 percent in fihn and cabinet costs. Based on current
volume, the savings will am.ount to $59,000 annually. Consolidation
of sm.all units and subunits in the Bureau resulted in the elimination of
11 positions having total annual salaries of $48,000.
The Office of the Treasurer of the United States devised multiplepart form.s for use in connection with stoppages of paym.ent against
checks drawn on the Treasurer and the handling of certain checks as
canceled item.s, resulting in economies in printing costs and personnel
totaling $56,000.
Maintenance of the merchant seaman locator file in the Coast Guard
was converted to a tabulating operation, eliminating the need for 12
clerical personnel having annual, salaries of $39,000.
The requhement for salvage equipment on U. S. Coast Guard
oceangoing tugs has been eliminated, resulting in savings in maintenance costs of approximately $65,000.
Removal of antisubmarine warfare equipm.ent from Coast Guard
aircraft wUl result in a $50,000 savings in m.aintenance, training, and
am.m.unition costs.
Consolidation of certain Coast Guard activities in the Baltim.ore
area and their relocation at the Coast Guard Yard wUl increase effectiveness of port security forces and provide better utilization of personnel resulting in savings of $60,000.
Realignment of United States Savings Bonds Division area boundaries within States and relocation of area m.anagers' posts of duty
resulted in the abolishment of 3 positions with annual salaries of
$22,600. A review of the organization and operations of the Division's
printing plant and distribution center resulted in reduction of 4 positions with annual salaries of $17,000. Reassignment of program
functions and responsibilities in headquarters and field offices of the
Division resulted in a reduction of 7 positions valued at $50,000.
Manufacturing, processing, and shipping practices involving proof
coins produced by the Mint were streamlined and further mechanized
during the year, resulting in the reduction of 13 em.ployees and estim.ated savings of $68,000.
The Internal Revenue Service adopted an improved method of
packaging incom.e tax and other form.s for shipment, to field offices




ADMINISTRATIVE REPORTS

, 65

that will reduce the cost of transportation by $113,000 annually.
Shipment of internal revenue stamps by insured motor freight instead
of by registered parcel post wiU result in estimated savings of $220,000'
annually.
The Service realized ?additionaLbenefits in the*flscal^year 1957 due
to im.proved methods, installed in 1956, to assist the public during
filing periods. Fewer technical em.ployees had to be detached from
their regular jobs of auditing returns and collecting tax accounts.
This reduced the cost of the taxpa3^er assistance program by an estim.ated $776,000, and placed more emphasis on the audit and collection
functions.
In addition, a notice of adjustm.ent form was revised and constructed in snap-out sets to provide for the preparation of the m.ultiple
copies in one writing. It is estim.ated that a saving of 85 man-years
valued at $290,000 will be realized annually.
The receipt stamping of certain tax and inform.ation returns has
been discontinued, resulting in annual savings of 51 man-years valued
at $151,000.
The program for processing high volum.e, low complexity work in
Internal Revenue Service centers was extended with the opening of a
Western Service Center at Ogden, Utah, in Decem.ber 1956. Work of
the Center includes m.aUing blank returns, processing Form 1040A and
certain Form 1040 incom.e tax returns, and processing information
returns.

Bureau of the Comptroller of the Currency ^
The Bureau of the Comptroller of the Currency is responsible for the
execution of laws relating to the supervision of national banking associations. Duties of the office include those incident to the form.ation
and chartering of new national banking associations, the exam.ination
of all national banks, the establishment of branch banks, the consolidation of banks, the conversion of State banks mto national banks,
recapitalization programs, and the issuance of Federal Reserve notes.
Changes in the condition of active national banks

The total assets of the 4,654 active national banks in the United
States and possessions ori June 6, 1957, am.ounted to $112,792 million,
as compared with the total assets of 4,675 banks am.ounting to
$111,036 m.illion on June 30, 1956, an increase of $1,756 million during
the year. The deposits of the banks in 1957 totaled $101,295 million,
which was $159 m.illion more than in 1956. The loans in 1957 were
$48,560 million, exceeding the 1956 figure by $2,561 m.illion. Securities held totaled $39,610 m.illion, a decrease of $108 million during
the year. Capital funds of $8,744 million were $490 million more than
ia the precediag year.
1 More detailed information concerning tbe Bureau of the Comptroller of the Currency is contained in the
separate annual report ofthe Comptroller ofthe Currency.
438363—58

6




66

1957 REPORT OF THE SECRETARY OF THE TREASURY

Abstract of reports of condition of active national banks on the date of each report
from June 80, 1956, to June 6, 1957
[In t h o u s a n d s of dollars]

J u n e 30,
1956 (4,675
banks)

Sept. 26,
1956 (4,671
banks)

D e c . 31,
1956 (4,659
banks)

M a r . 14,
1957 (4,657
banks)

45,999, 400

47, 031, 601

48,-248, 332

48, 001,120

30, 653,137

31,036, 665

31, 675, 780

31,098,160

4,132

3,662

4,305

4, 354

7,094,478
1, 736,150

7, 056, 565
1, 681, 609

7, 025, 220
1, 561, 566

7,124, 288
1, 613,360

ASSETS'

Loans and discounts, including overdrafts
U. S. Government securities, direct
obligations
Obligations guaranteed .by U. S. Government
Obligations of States and political subdivisions
Other bonds, notes, and debentures
Corporate stocks, including stocks of
Federal Reserve Banks
Total loans and securities
Cash, balances with other banks including reserve balances, and cash
items in process of collection
Bank premises owned, furniture, and
fixtures
Real estate owned other than bank
premises
Investments and other assets indirectly
representing bank premises or other
real estate
Customers' liability on acceptances
Income accrued but not yet collected..
Otherassets
Total assets

._.

230,864

232,852

236, 521

239, 585

85, 718,161

87, 042, 954

88, 751, 724

88,080,867

23,609, 546

23,356, 736

27,082, 497

23,466,004

1,031, 707

1, 063, 287

1, 088. 855

1,116, 041

29, 589

33, 367

33, 442

34, 601

79,187
162, 221
229, 972
175, 912

81, 016
200,139
237.155
160, 686

111, 036, 295

112,175, 340

117, 701, 982

113, 518, 643

83,
262,
237,
161,

963
397
865
239

87,
285,
243,
205,

238
033
595
264

LIABILITIES

Demand deposits of individuals, partnerships, and corporations._
Time deposits of individuals, partnerships, and corporations...
Deposits of U. S. Government and
postal savings
Deposits of states and political subdivisions
Deposits of banks
Other deposits (certified and cashiers'
checks, etc.)
.
.
Total deposits
Demand deposits
Time deposits
..Bills payable, rediscounts, and other
liabilities for borrowed money
Mortgages or other liens on bank premises and other real estate
A cceptances ou tstanding
_..
Income collected but not yet earned
Expenses accrued and unpaid
Otherliabilities
Totaliiabilities

54,492,378

55, 373, 256

59, 582, 348

56, 747,930

25, 760, 836

25,976, 713

26, 270, 576

27,164, 833

3, 224, 359

3,103,803

2,360, 270

1,455, 557

7, 607,153
8, 408,890

6,897, 426
8, 437, 734

7,467, 413
9, 850,100

7, 202,638
8, 091, 767

1, 642, 785

1, 434,095

1, 964,116

1, 541, 358

101,136, 401

101, 223, 027

107, 494, 823

102, 204,083

73,103, 910
2§; 032, 491

72, 991, 341
28, 231, 686

79,027, 557
28,467, 266

72, 737,144
29,466,939

150, 884

749, 376

18, 654

943, 278

907
170, 758
459, 943
370, 734
492, 868

849
211, 654
492, 860
495, 505
561, 026

1, 328
273,748
492.165
450.025
499,107

1,085
299, 249
516,180
509, 851
483. 542

102, 782, 495 103, 734, 297 109, 229, 850 104, 957, 268

CAPITAL ACCOUNTS

Capital stock
Surplus
Undivided profits
Reserves and retirement account for
preferred stock.
.
Total capital accounts
Total liabilities and capital accounts




2, 575,432
4, 006, 626
1, 413, 837

2, 597,113
4,044, 111
1, 541,333

2,638,108
4,138, 783
1,439,937

257, 905

258, 486

255, 304

8, 253,800

8, 441,043

8, 472,132

111, 036, 295 112,175,340

2, 690,465
4,178, 293
1,458, 631
233,986
8, 561,375

117, 701,982 113, 518, 643

67

ADMINISTRATIVE S E P O R T S

Summary of changes in number and capital stock of national banks

. The authorized capital stock of the 4,647 national banks in existence
on June 30, 1957, consisted of common stock aggregatiag $2,709 million, an iacrease duriag the year of $136 million, and preferred stock
aggregating $3.8 million, a decrease during the year of $68 thousand.
The total net iacrease of capital stock was $135.3 million. Duriag the
year charters were issued to 33 national banks having an aggregate
of $11 million of common stock. There was a net decrease of 31 in the
number of national banks in the system b y reason of voluntary liquidatioas, statutory consolidations and mergers, conversions to and
mergers or consolidations with State banks under the provisions of the
act of August 17, 1950 (12 U. S. C. 214), and 2 receiverships.
More detailed iaformation regardiag the changes in the number
and capital stock of national banks ia the fiscal year 1957 is shown in
the following table.
Organizations, capital stock changes, and liguidaiions of naiional banks, fiscal
1957
C a p i t a l stock
Number
of b a n k s
Common

Charters in force June 30, 1956, and authorized capital stock i
Increases:
Charters issued
Capital stock:
229 cases by statutory sale
_
322 cases by statutory stock dividends
29 cases by statutory consolidation
19 cases by statutory merger...

4,678
33

._

$3,859,170

10,860,000
47, 432, 552
71, 213, 852
6, 014, 562
7, 692, 500

'.

Total increases

$2, 572,319, 671

Preferred

33

143, 213,466

13
20
8
3
18
2

2,147, 000

Decreases:
Voluntary liquidations _
s t a t u t o r y consolidations
s t a t u t o r y mergers _
. . .
Conversions i n t o S t a t e b a n k s
M e r g e d or consolidated w i t h S t a t e b a n k s
Receiverships
l
Capital stock:
3 cases b y s t a t u t o r y r e d u c t i o n . .
1 case b y s t a t u t o r y consolidation >
3 cases b y r e t i r e m e n t

'.
. _ .-_

150, 000
4, 028, 500
530, 000
12, 532
25, 000

._
... ..

T o t a l decreases.

68,000
64

C h a r t e r s i n force J u n e 30, 1957, a n d authorized capital s t o c k . . .

68,000

31

N e t change

6, 893, 032
136, 320,434

-68,000

4,647

2,708,640,105

3, 791,170

1 These figures differ from those in the preceding table. The figures as of June 30, 1956, include 2 newly
chartered banks not yet open for business, and 2 banks in the process of merging or consolidating with State
banks under the provisions of the act of Aug. 17, 1950 (12 U. S. C. 214).

Bureau of Customs
The Bureau of Customs is responsible for the assessment and collection of duties and taxes on imported merchandise and baggage; prevention of smuggliag, undervaluations, and frauds on the customs
revenue; apprehension of violators of the customs and navigation laws;
entry and clearance of vessels and aircraft; issuance of documents and




68

1957 REPORT OF THE SECRETARY OF THE TREASURY

signal letters to vessels of the United States; admeasurement of vessels; collection of tonnage taxes on vessels engaged hi foreign commerce; supervision of the discharge of imported cargoes; inspection of
international trafiic; control of the customs warehousing of imports;
determination and certification for payrnent of the amount of drawback due upon the exportation of articles produced from duty-paid or
tax-paid imports; enforcement of the antidumping and export control
acts; regulation of the movement of merchandise into and out of
foreign trade zones; and enforcement of the laws and regulations of
other Government agencies affecting imports and exports,
Collections

Revenue collected by the Customs Service during the fiscal year 1957
totaled $1,059 million, the largest in history. Compared with $983
million collected in 1956, there was an increase of 7.7 percent. The
total includes, in addition to customs collections, certain internal
revenue taxes for the Internal Reveaue Service and some collections
for other Government agencies.
Customs collections alone amounted to almost $761 million, an increase of 7 percent over the $711 million collected in 1956. They consisted of duties, tonnage taxes, fees, and fines and penalties for the
violation of customs and navigation laws, etc. There was agaia a substantial uicrease in collectioris by Customs of internal revenue taxes on
iinported liquors, wines, perfumes, etc., which amounted to $298
million, 9.6 percent more than the $272 million collected in 1956.
Of the customs collections, more than $754 million were derived
from duties (including import taxes) levied on imported merchandise.
The source of duty collections by type of entry is shown in table 12
and by tariff schedule in table 86. Since the data in table 86 are restricted to commercial..importations, the totals shown are somewhat
smaller than the duties collected on all types of dutiable merchandise
and correspond roughly to duties collected on. consumption entries
and on warehouse withdrawals.
In 1957 slightly less than one-half of all imports into the United
States were duty free and included some commodities imported free for
Government stockpile purposes or authorized by special acts of Congress for free entry although dutiable under the Tariff Act of 1930, or
taxable under the Internal Revenue Code, such as copper and iron and
steel scrap. The 52 percent which was dutiable constituted the basis
of customs duties.^onarnpprts.
In only two months of this fiscal year, November and February,,
were collections of customs duties at a lower level than for the corresponding months of 1956. The 7 percent increase in duty collections,
however, was not as great percentagewise as the 12 percent increasein value of dutiable imports, which amounted to $6.5 billion ia fiscal
1957, as compared with $5.8 billioa in fiscal 1956.
By customs districts.—Of the 45 customs districts in which collections are covered into the Ti'easury of the United States, all but 12
reported larger customs collections than ia 1956. The collections for
each customs district are shown in table Sb.
By commQ:dities.Tz-^s i n the five4mm^diately preceding years, imports of metals andgmaiyi^^^^
siagle source, ofl




ADMINISTRATIVE REPORTS

69

customs revenue in fiscal 1957, with an increase of 22.7 percent more
ia duty collections than in fiscal 1956. The sundries schedule rose to
second ptoenvith an increase'of 12.7 percent. 'Although the>wool and
agricultural' schedules decreased percentagewise; they ranked third
and fourth place, respectively, in the amount of duties collected.
The value of dutiable and taxable imports for (consumption and
duties and taxes collected, by tariff schedules for fiscal years 1956
and 1957, will be found in table 86.
Tables 88 and 89 show the value of and duties collected on imports
for consumption by calendar years from 1946 .to.. 1956, and monthly
from January 1956, through June 1957. The trends in value and duty
yield for goods dutiable at specific, ad valorem, and compound rates
by fiscal years from 1942 tlmough 1957 are shown ia tiable 87.
By countries of origin.—For the second consecutive year since World
War I I imports from Japan were again the largest source of customs
revenue. Duties collected were 17.3 percent more than in fiscal year
1956. The United Kingdom retained second place with an increase of
9.5 percent, while West Germany, with an increase of 22.7 percent
ranked third, and Canada, with an increase in duty collections of 4
percent dropped to fourth place. The value of dutiable imports for
consunaptio^^raind4he duties collected, by countries for the-fiscal years
1956 a:nd^l957y fefe shown in table 90.
Extent of operations

Movement of persoiis.—-Duvixxg the fiscal year 1957, aii alltime high
was reached in the number of persons enteriag the United States.
More than 132 million people came through oui* seaports or across our
land borders last year, all subject to customs inspection. Mathematically, this means more than four persons every second, day and
night, 365 days of the year! More thaii 38 million vessels, aircraft,
automobiles, busses, and trains brought in tiearly 108 inillion passengers, while 25 million actuaUy walked across oui* borders.
The numbei? of various^typestof^vehicfea^^
:
United States during the ftscal years 1956'"and 19S7 is shown in table 92
and the number of aircraft and passengers arriving in districts where
this mode of travel is most prevalent is shown in table 93.
Entries of merchandise.—Formal entries of merchaiidise comprising
consumption, warehouse, and rewarehouse entries passed the one
million mark for the second consecutive year. There were 1,116,211
of these entries filed, or 4.4 percent more thaii in fiscal year 1956.
Informal entries and baggage declarations covering both mail importations and other shipments valued at less than $250 jumped 10 percent
over 1956 to a record total of 3,660,738. Almost all other types of
entries showed sunilar increase. The number of each, type of entry
filed durmg each of the past two fiscal years is shown in table 91.
Drawback ^ra7^sG^i!5s^M7?i}S1'-^Drawback,vwhichis allowed on the exportation of merchandise hitoufacturecl^froin-imported-mater
for
certain other export transactions, usually amounts to 99 perceiit of
the customs duties paid at the tioie the goods are entered. More
than 95 percent of the drawback allowed ia 1957 was due to the export
of products manufactured from iinported raw materials. The priacipal
imported materials used ia the manufac}tured exports in 1957 were




70

1957 REPORT OF THE SECRETARY OF THE -TREASURY

iron and steel semimanufactures, m.otor vehicle and aircraft partS)
crude petroleum, lead ore, matte, and pigs, tobacco, watch movements,
and sugar.
Tables 94 and 95 show the drawback transactions for the fiscal years
1956 and 1957. The amount of drawback allowed, as shown in table
94 does not correspond exactly with the drawback payments shown in
table 95 since not all drawbacks certified for payment are paid duriag
the same fiscal year.
Appraisement of merchandise (including Customs Information Exchange).—The number of ia voices and packages examiaed by appraisers^ personnel again iacreased in 1957. There were 1,790
thousand hi voices handled ia 1957 and 1,733 thousand in the previous
year, a 3 percent iacrease. The total packages examiaed by appraisers' personnel increased from 1,297 thousand to 1,365 thousand, a
5 percent increase.
Despite several drastic revisions of procedures which were iatroduced ia 1954 to enable existiag staffs to handle the iacreased workload, iacreases ia the volume and variety of merchandise since that
time have agaia caused a rise ia the backlog of unappraised iavoices.
Duriag 1957, this backlog increased from 157 thousand to 190 thousand, or by 21 percent.
As a result of a provision in the Customs Simplification Act of 1956
(19 U. S. C. 1402) a large amount of appraisement manpower was
devoted to the investiga tions precediag the establishment of the list of
commodities on which average decreases ia valuation of 5 percent or
more would result from the application of new valuation standards
prescribed by that act. This diversion of manpower from regular
appraiseinent duties contributed materially to the increased unap-praised invoice backlog.
The activities of the Custom.s Information Exchange, New York,
N.Y., contiaued to in crease as shown by the number of repprts receiveci
from and dissemiaated to appraisiag officers. Appraisers' reports of
value and classification, covering a cross section of im.portations of
merchandise received at each port, totaled 54 thousand in 1957, as
compared with 45 thousand in the previous year. These reports
iadicate the relative number of comraodity items received at any given
port for the first tune, as well as regular items received at new prices
or subject to different terms of sale from previous shipments.
Differences in value and classification indicate the number of
iastances where information varied at different ports as to value or
classification and ia which additional study and analysis were required
before establishmerit of a uniform price or rate. There were 6,118
reports of value differences ia 1957 as compared with 4,563 in the
previous year.
The number of classification differences totaled 3,154 in 1957, as
against 2,568 ia the previous year,, indica ting a substantial iacrease ui
the number of new commodities receiyed.
Contiauiag efforts to make an appraisement without resort to a
foreign investigation brought about a drop ia the number of such
foreign iaquiries, from 471 ia 1956 to 412 ia 1957.
Antidumping and countervailing cJi^^fT/,—The Bureau of Customs worked
with the office of the Secretary ia prepariag a report to Congress on
the operation and effectiveness of the Antidumpiag Act, as required




Ai)MINISTRATIVE REPORTS

'

•
'•

'

71'

by Section 5 of the Custom.s Sunplification Act of 1956. The report
summarized admiaistration of the Aiitidumpiag Act over the years and
recommended changes ia the law designed to provide for greater certainty, speed, and efficiency in its enforcement. There was an increased volume of complaints received during the fiscal year, at the
same time that the number of cases considered on the iaitiative of
customs appraisers also mcreased. The number of dumping cases
received in fiscal 1957 was 41, well over twice the comparable 1956
figure of 18. Fourteen dumpiag cases were disposed of duriag the
year, and 39 were on hand at the end of the year. The volume of
countervailing duty cases, on the other hand, was lower in fiscal 1957
than ia the previous year. Twelve complaints were received, as compared with 17 in 1956. Thirteen countervailiag duty cases were disposed of duriag the year and 15 remained on hand at the end of
the year.
Technical services.—This branch of the Customs Service furnishes
chemical, engineering, statistical sampling, and other scientific
and technical services; provides proper weighing and gauging equipment; designs and oversees the construction of border inspection stations; and directs the field operations of custoras laboratories.
The laboratories analyzecl over 110 thousand samples in 1957.
About one-half of the samples analyzed consisted of ores and metals,
sugar, and wool. The large majority were -import'' samples of dutiable merchandise analyzed to develop and report facts needed for
tariff identification purposes. Other types of samples tested included
those taken from customs seizures, m.ostly -narcotics and other prohibited items; preshipment samples of articles intended for shipment
to the United States, analyzed to assist in establishing a firm classification of such articles; and samples of stockpile items brought in
by official agencies.
Statistical quality control of sample weighing operations, by making
analyses of the cargo sample weighing data to assure that accuracy
and precision were within the control limits, was continued during the
fiscal year 1957. There were 827 such weighing operations, consisting
of 625 cargoes of raw sugar, 70 of refined sugar, 127 of cigarette
tobacco, and 5 of other merchandise. Statistical control over the
sample verification of liquidations (final- determinations of duties and
taxes due) was continued.
To facilitate the assessment of duties on imported coal-tar dyes, the
Customs Regulations were modified (T. D. 53593) to require certain
additional information on invoices of imported dyes. Simultaneously
there was set up in the Customs Laboratory, New York, N. Y., a file
of domestically, produced dyes, with similar information, for comparative purposes. Approximately 5,000 samples from domestic
manufacturers are filed in the laboratory. When an imported sample
is examined, i t is compared with the file of domestic samples. This
file is kept current by additions and withdrawals.
Arrangements were made with the Synthetic Organic Chem.ica,l
Manufacturers Association for submitting specifications of domestic
coal-tar intermediates to the New York Laboratory on a voluntary
basis for use in expediting^the analysis of imported coal-tar intermediates in New York and elsewhere. Specifications covering several
thousand items are now on file.




72

195 7 REPORT OF THE SECRETARY OF THE TREASURY

Export control.—More export declarations were authenticated in
1957 than in 1956. WhUe there was a decline in the number of shipments, examined, there.was a substantial increase.in the number and
value of seizures. The following table shows the volume of export
control activities during the fiscal years 1956 and 1957.

Activity

E x p o r t declarations a u t h e n t i c a t e d
Shipments examined
N u m b e r of seizures
_
V a l u e of seizures __ _
E x p o r t control employees

1957

1956

_
._-

.-

_

4,387, 465
563, 866
252
$216, 934
161

4, 596,141
339,127
309
$718, 891
198

Percentage
increase, or
decrease ( - )
4.8
-39.9
22.6
231.4
23.0

Protests and appeals.—For the second consecutive year fewer protests were filed by importers against the rate and amount of duty
assessed and other decisions by the collectors. The number of appeals for reappraisement filed by importers who did not agree with
appraisers as to the value of merchandise was slightly higher than in
1956. The following table shows the number of protests iand appeals
filed and acted on during the fiscal years 1956 aad 1957.

P r o t e s t s a n d appeals

Protests:
Filed w i t h collectors b y i m p o r t e r s
Allowed b y collectors
_ _
D e n i e d b y collectors a n d forwarded t o c u s t o m s c o u r t
A p p e a l s for r e a p p r a i s e m e n t filed w i t h collectors

Percentage
increase, or
decrease (—)

1957

1956

30,074
2,018
31, 842
15, 003

29,400
2, 651
25,664
15, 272

-2.2
31.4
-19.4
1.8

Marine activities.—The following table shows the number of entra^nces^and clearancesfOf vessels.^during,thefisGaLyears 1956 and il957.
Vessel m o v e m e n t s

Entrances:
D i r e c t from foreign ports
Via other domestic ports
Total

---

1957

Percentage
increase

49, 700
28, 837

__

__
._

__

54,423
28, 857

9.5
0.1

78, 537

__

-

Clearances:
D i r e c t to foreign ports
Via other domestic ports
Total

1956

83, 280

6.0

47, 885
27, 401

57, 511
29, 630

20.1
8.1

75, 286

87,141

15.7

The-steaAyrgTAWth of the,Amei-ican merchant marine influenced the
activities of the Division of Marine Administration. At the beginning of the fiscal year there were 43,538 documented vessels. This
figure increased to 44,579 as of June 30, 1957, even though 1,041
vessels went out of documentation. There were 3,231 complete admeasurements of vessels and 486 readmeasurements or adjustments
of tonnage during the fiscal year.




ADMINISTRATIVE

73

REPORTS

The following table shows the volum.e of m.arine documentation
activities during the fiscal years 1956 and 1957.
Activity

D o c u m e n t s issued (registers, em-ollments, a n d licenses)
Licenses renewed^.and chauges^bf.-inaster-.endidrsed....^.
^
M o r t g a g e s , satisfactions, notices'of hen, bills of sale, a b s t r a c t s of
title, a n d other i n s t r u m e n t s of title recorded
A b s t r a c t s of title a n d certificates of ownership issued
._.
N a v i g a t i o n fines imposed
.._.
T o n n a g e tax p a y m e n t s
__.

1956

1957

Percentage
increase

14, 380
•45? 577

15, 371
47," 748

6.9
4.8

12, 595
6,400
2,138
21, 993

13, 681
6,822
2,414
24, 739

8.6
6.6
12.9
12.5

Construction of the Saint LaAvrence Seaway and Power Project
was facilitated through the issuance of a series of waivers of the
navigation laws permittiag the use of the seaway of otherwise unqualified but needed vessels. In each case the action taken was found
by the Dep'artment of Defense to be necessary in the interest of
national defense. A general outline of the marine activities is covered
in the management improvement program under marine activities.
Legal problems and proceedings.—The Ofiice of the Chief Counsel
considered many legal problems and questions arisiag under the
a.dministration and enforcement of the customs and nayigation laws
and other related laws. Matters of particular interest included
questions about the American selling price of certaia rubber-soled
footwear; whether a person entering the United States under certain
circumstances was a '^resident" for the purpose of applying exemptions
from duty under the tariff act; and questions about the method of
marking imported merchandise to show the country of origin and
exemptions from the marking requirements in certain cases.
Special consideration was given to the implementation of the
provisions of the Customs Simplification Act of 1956 and regulations
and instructions were issued on the new currency rate system provided
for in this act. Reports to committees of Congress on pending bills
were prepared or reviewed and proposed legislation was drafted.
Considerable time and effort went into the preparation of a proposed
customs administrative bill for submission to Congress.
Liaison was maintaiaed with the office of the Assistant Attorney
General in charge of customs litigation and assistance. given in the
preparation of customs cases for trial and appeal. Procedures were
effected in cooperation with the Department of Justice to obtain
computations of overtime services and the amounts due in the remaining customs overtime cases involviag the former customs border
patrol service.
Law enforcement and investigative activities.—The Customs Agency
Service conducted 16,473 investigations during fiscal 1957 as compared
with 16,404 investigations in fiscal 1956. These investigations arose
not only under the customs, navigation, and related laws administered
by the Bureau of Customs, but also in connection with a number of
laws administered by other Government agencies and enforced by
Customs. Table 97 shows the investigative activities for the fiscal
years 1956 and 1957.




74

1957 REPORT OF THE SECRETARY OF THE TREASURY

The major enforcement problems involved the smuggling into the
United States of narcotic drugs, watches and watch movements, and
•diamonds.
There was a substantial increase in the number of investigations of
narcotic drug and marihuana smuggling and market value which
resulted in large measure frqm the augmentation of the force of the
Customs Agency Service in the United States and abroad. The
requirement of the Narcotic Control Act of 1956 (18 U. S. C. 1407)
that addicts and previous narcotic law violators register when departing from and returning to this country, added to the investigative
workload.
During fiscal 1957 there was a decline both in the number of
seizures of narcotic drugs and marihuana and in the amount of these
drugs seized. There were 166 seizures made during the year as
compared with 259 last year. Total drugs seized included 151
ounces of heroin, 180 ounces of smoking opium, 39 ounces of raw
opium, and 25,905 ounces of marihuana. These totals are considerably below the total seizures of these drugs shown in the Annual
Report for 1956 which, as noted in that report, included two unusually
large seizures. The number of marihuana cigarettes seized this year
by Customs was 7,868 as compared with 4,377 in 1956.
I t is significant to note that seizures of narcotics and marihuana
by Customs during the first three months of fiscal 1958 are up substantially over the first three months of the past year. Over 115
ounces of heroin and 374 ounces of smoking opium have been iatercepted in this period.
Heroin continues to be received from both Europe and the Far East.
A year ago, traffickers from Europe appeared to have developed a
transit route through Canada, but following several seizures made in
Paris, New York, and Montreal, this channel seems to have been
abandoned. Heroin from the Far East has been entering at West
Coast ports. There also have been several important seizures at our
southern ports which may indicate a changing pattern. Mexico continues to be the source of practically all important shipments of
marihuana.
The Narcotic Control Act of 1956 provided sharply increased penalties for violators of laws covering both narcotic drugs and marihuana.
In substantial cases, where the evidence has been clear, little difficulty
has been experienced in obtaining convictions, followed by sentences
according to the more severe scale.
There is evidence that the smugghng of watches and watch movements iacreased during the year. There were a number of important
arrests and seizures of these commodities, the largest seizure consisting
of 21,258 watches having an appraised value of $165,000. As an added
enforcement measure, the Bureau of Customs has invoked the provisions of the Swiss Trade Agreement, approved by the President on
January 9, 1936, which provides for the cooperation of the Swiss Government in the suppression of this type of smuggling.
The smuggling of diamonds is apparently continuing on a substantial scale. I t is undoubtedly motivated by the savings effected by
the offenders by evading iacome and luxury taxes and also by avoidiag
the customs duty imposed by this Government. These diamond




75

ADMINISTRATIVE REPORTS

shipments usually originate in Antwerp, Belgium, and their ultimate
point of destination is New York. .
Seizures of merchandise throughout the country for violations of
laws enforced by the Customs Service numbered 14,812 with an appraised value of $11,596,706 during 1957, as compared with 13,640
seizures in 1956, having an appraised value of $18,723,776. This was
. an increase of 8.6 percent in the number of seizures but a decrease of
38.1 percent in the appraised value. Title to only a small fraction of
these seizures actually passes to the Government, as the majority are
destroyed or remitted to their owners upon payment of fines or penalties. Details of seizures are shown in table 96.
There were 899 arrests for violations of laws enforced by the Bureau
of Customs in 1957, as compared with 910 in 1956. A large majority
of these arrests were made on the southern border. The following
tabulation shows the number of arrests and dispositions during fiscal
years 1956 and 1957.
Activity

Arrests
Convictions
Acquittals
Nolle prossed
Dismissed
Not indicted

1956

_. _
.

_._
.^..

Percentage
increase, or
decrease (—)

1957

910
460
61
29
121
50

899
457
35
86
86
58

-1.2
-0.7
-42.6
196.6
-28.9
16.0

Trade-mark information published.—In March 1957, the Bureau
published a pamphlet entitled Tourists Trade-Mark and Trade
Name Import Information. The pamphlet contains a list of the
trade-marks which have been recorded ia the Treasury. Department
that pertain to some of the more popular items purchased by tourists.
The publication also iadicates the type of consent, if any, which the
trade-mark owner has granted for the importation of its merchandise
as well as explanatory information concerning trade-marks.
Fines, penalties, and forfeiture data made available.—In September
1956 the Commissioner of Customs instructed collectors at the various
ports of entry to make available to the public information concerniag
closed fine, penalty, and forfeiture cases arising under the customs and
navigation laws administered by the Customs Service. Monthly
lists are prepared at each headquarters port showing the cases closed
during the previous month.
. Foreign trade zones.—Foreign Trade Zone No. 1 on Staten Island,
N. Y., lost one of its most important activities when a large tobacco
warehouse ceased operations on June 30, 1957. The firm had occupied
quarters in the zone for the past 18 years, but the dwindling demand
for Sumatra tobacco forced the discontinuance of their zone warehouse.
Fourteen vessels used the zone facilities for discharging foreign cargo
and 78 ships berthed in the zone to lade domestic ship's stores. Operations at this zone were at a considerably lower level than during j^he
previous year.
Operations at Foreign Trade Zone No. 2 in New Orleans, La., are
. still climbing; there were 1,452 more entries than in 1956, and approxi-




76

1957 REPORT OF THE SECRETARY OF THE TREASURY

mately $220 thousand more in duties were collected than in the previous year.
The volume of operations in Foreign Trade Zone No. 3 in San Francisco, Calif., decreased. This was refiected in the number of entries,
the am,ount of duties collected, and in the tonnage and value of merchandise received in. and delivered from, the zone.
There has been an^upward'^trend in thcamDunt of dutieSvCplleitlted in
Foreign Trade Zone No. 5 in Seattle, Wash. While the hurn.ber of
entries has not materially changed, increases occurred in the tonnage
of m.erchandise received in and delivered from the zone and in theam,ount of duties collected.
The following table contains a brief surnmary of foreign trade zone
operations.
Received in zone
T r a d e zone

Long tons
New York
N e w Orleans
San Francisco
Seattle.

.

Delivered from zone

Number
of entries

5,669
5,200
9,790
510

27, 760
44, 795
26, 467
9,937

Value
$26,009, 430
14, 980, 413
4, 767, 743
696,644

Long tons
39,094
41, 223
4,839
11,174

Value
$30, 280, 221
15,067,818
56, 282
963, 891

Duties and
internal
r e v e n u e taxes;
collected
$2,869,
1,032,
979,
106,

468
55S
204
562

Custoins districts, ports of entry, stations, and airports.—A new customs collection district was created by statute in the early part of the
year com.prising the State of New Mexico. The district was designated
Custom.s Collection District No. 50. The port of Columbus, N. Mex.,
was transferred from the El Paso District and became the headquarters
port of the newly created district.
The limits of the following ports were extended to include areas not
heretofore covered: PhUadelphia, Pa.; WUmington, Del.; Baton
Rouge, La.; Chicago, 111.; Toledo, Ohio; Lake Charles, La.; and Beaumont, Port Arthur, Orange, and Sabine, Tex. El}^, Minn., was designated as a customs station while Fort Pierce, Fla., and Cheboygan,
Mich., were redesignated, as customs stations. The designation of
East Chicago, 111., and Winton, Minn., as customs stations was
revoked. Port O'Minot Airport, Minot, N. Dak., and MiUer International Airport, McAllen, Tex., were designated as airports of entry
during the year.
Cost of administration

During 1957 regular customs employment again decreased, but the
addition of 171 new positions financed by the Department of Agriculture in connection with the joint efforts of that Department and
the Bureau to strengthen import controls over the importation of
potentially dangerous plant and animal products, and an increase in
export control employment brought the total 1957 employment in the
Bureau 1.3 percent above that of 1956. The following table shows
employment data during the fiscal years 1956 and 1957.




77

ADMINISTRATIVE RiBPORTS

Operation

1956

Regular c u s t o m s operations:
Nonreimbursable
Reimbursable i _

Percentage
increase, or
decrease (—)

..

.

7, 266
298

7,175
289

-1.3
—3.0

7,564
161

._

T o t a l regular c u s t o m s e m p l o y m e n t
.._
Export control...
A d d i t i o n a l inspection for D e p a r t m e n t of Agriculture
Total employment

1957

7,464
198
171

—1.3
23.0
100.0

7,725

7,833

1.4

1 Salaries'reimbursed to the Govemment by those private firms who received t h e exclusive services of
these-employees. - -

Customs operating expenses totaled $46,005,355, including export
control expenses for which the Bureau was reimbursed by the Department of Commerce, and the cost of additional inspection reimbursed
by the Department of Agriculture.
Management improvement program

Significant improvements were made in many areas of customs
activity, and the realized savings of nearly $450 thousand were used
to meet the demands of an ever-increasing workload. In addition,
the necessity for additional funds in the amount of $115 thousand
was obviated and space having an annual rental value of more than $35
thousand was released. The management improvement program
itself was strength ened?-thro ugh-a series^-of conferences held in the
Washington headquarters for principal customs field oflicers to stress
the importance of good management.
Travel and air commerce.—A new type of baggage declaration was
adopted to accelerate the clearance of passengers through customs.
The new form provides simple ^^yes" and ^^no" type questions which
indicate for the passenger whether he must hst articles acquired
abroad. In many instances, the listing of these articles is no longer
required. In the old type of declaration, all items acquired abroad
bad to be itemized, whether subject to duty or not. A similar form •
for passengers arriving from Mexico, where the United States resident
exemption requirements are slightly different, has also been adopted.
The: Customs Air Facilitation Committee/ (see page 69 of the 1956
Annual-Repo0) in its study of passenger, and baggage clearance a t
New York International Airport developed a radically new concept
of inspection and examination. Applying the methods followed in
modern supermarkets for ^^checking o u t " customers, the committee
evolved a plan to channel air passengers and their baggage through a
number of fij^ed inspection points which are manned by as m.any
customs officials as the incoming traffic requires. The system utilizes
conveyor belts for transporting baggage to the examining iaspectors.
Facilities incorporating these features are now being installed at New
York International Airport, and the operators of other air terminals
are being encouraged to consider these arrangements in future planning.




78

1957 REPORT OF THE SEGRETAl^Y .OF THE TREASURY

Certain changes made in the assignments of customs oflBicers to
inspect private aircraft and.pleasure vessels will greatly reduce overtime charges to private operators who arrive at ports of entry during
periods when customs inspection is not regularly scheduled.
Entry of merchandise.—Substantial progress was made during the
year in improving the handling and processing of foreign mail. At
New York the installation of modern conveyor belts to replace obsolete
hand-operated equipment was almost completed. These belts will
eliminate most of the drudgery in moving some 15 million parcels
through customs inspection and examination.
Arrangements were completed also with the Post Ofl&ce Department
for Customs to separate the dutiable foreign airmail parcels from nondutiable parcels at three major air terminals. The nondutiable
parcels are then dispatched to destination from the airport. This
saves the Post OflSice considerable expense in hauling between the
airport and the downtown post office and expedites delivery.
The policy of eliminating all documentation not essential to customs
was further extended by exempting from customs ia voice requirements
all shipments of crude oil imported in bulk.
New regulations governing the licensing of customhouse brokers
were issued following the transfer of this licensing function from the
OflSce of the Director of Practice in the Internal Revenue Service to
the Commissioner of Customs. The new directives require that both
the general laiowledge examiaation and the character investigation
be completed before the applications are forwarded to Washington for
final action.
As an added convenience to the public, the shipment of baggage
in-bond to customs stations (locations served by customs but without
full port of entry status) was authorized, and a list of customs stations
added to the regulations. Prior to this action, baggage could be
shipped in-bond only to customs ports of entry.
Other actions taken during the year: (1) Allowed vessel operators to
make a simple certification of passengers' baggage on passenger lists
rather than prepare a description of the baggage of each passenger as
was formerly required; (2) combined the forms for the listing of passengers and crew; (3) eliminated the need for customs supervision of
the discharge of dutiable bulk cargo under certain conditions which
reduces overtime costs to vessel operators; and (4) established standard procedures for handling tariff classification iaquiries.
Liquidation of entries.—In the face of a continuing increase in the
number of formal entries filed, the backlog of entries awaiting liquidation continued to increase despite improved procedures. ('^Liquidation" is the final determination of duties and taxes due on imported
merchandise.) Unconditionally free entries filed at subports, formerly
sent to headquarters ports, are now being liquidated at the subports..
Rapid handling procedures for liquidating simple type entries are
being installed wherever advantageous, and additional personnel have
been authorized at the ports where the bulk of the backlog exists.
Examination and appraisement.—Revised examination procedures,
at nine major ports produced considerable savings in cartage and
other costs. The new methods, designed to fit conditions at each port,
allow many additional types of merchandise to be examined on the
wharves, and by saraple, instead of the hauling of sample packages t o




ADMINISTRATIVE REPORTS

79<|

the appraiser's store for examination. In addition procedures for
requesting foreign value investigations were clarified and a branch of
the Miami appraiser's office was established at the Miami International Airport to expedite the examination and release of merchandise
arriving by air.
Marine activities.—A special committee established to study marine
problems made a number of recommendations to improve marine
administration. Among the improvem.ents were: Clarification of the
conditions under which vessels require boarding by custom.s; elimination of the requirement for certificates of lading on residue cargo
movements; reduction of outward manifest requirements for vessels
that have loaded merchandise at several domestic ports; authority
granted for coUectors of customs to permit diversions of vessels;
transfer to the Coast Guard of the function of certifying copies of
shipping articles; consolidation of forms used in awarding official
vessel numbers; revision and simplification of t h e reports of laid-up
vessels; relaxation of the requirements for oaths to be taken when
renewal space on vessel documents are fiUed; revision and simplification of the tonnage tax forms; and authority for collectors of customs
to approve all designations of home ports of vessels.
Legislation.—Public Law 927, entitled ''The Customs Simplification
Act of 1956," became law on August 2, 1956. One provision of this
act (19 U. S. C. 1402a-1402g) amended Section 402 of the Tariff Act
of 1930 relating to the valuation of merchandise imported into the
United States. Under the previous law the primary bases for appraisement were: The foreign market value, or the export value, whichever
was higher. This required that both values be determined before an
appraisement could be made. The 1956 act eliminated foreign market
value from consideration in the appraisement of m.any commodities,
and thus made it possible to sim.plify what has been in effect, a duplicate appraisal operation. The act excepted from this sim,plified
valuation procedure any commodity to which application of the new
valuation standards would result in average decreases in valuation of
5 percent or more over those which would result under the old valuation. I t further provided for the preparation of a list of the commodities on which such decreases would occur, and continued the valuation
of these commodities under the old law. This list was published in
August 1957. Other provisions of the 1956 act amended Section 522
of the Tariff Act of 1930 relating to the conversion of foreign currencies
for customs purposes, and repealed certain obsolete provisions of the
Tariff Act of 1930. These provisions have been implemented by
appropriate regulations.
Delegations of authority.—A number of delegations of authority to
principal customs field officers were m.ade during the fiscal 3''ear. Collectors of customs were authorized to approve manufacturers' statements covering five categories of products under the general drawback rates. This delegation facUitates prompt action at the field
level on drawback statements filed by manufacturers qf burlap bags
and meat wrappers; sugar and sirups; linseed oU, cake, and mea];
piece goods; and fur and fur skin articles.
Authority was delegated to collectors to settle all claims for
liquidated damages not exceeding $20 thousand assessed against
bonded carriers for shortages, or irregular or nondelivery of imported




80

1957 REPORT OF THE SECRETARY OF THE TREASURY

merchandise shipped in-bond. Extended authority was granted to
collectors to remit or mitigate penalties and forfeitures imposed under
a number of conditions set forth in the Tariff Act of 1930 and the
Air Commerce Act of 192,6 (49 U. S. C. 176). The authority of
principal customs field ofl&cers to act in personnel matters, including
disciplinary cases, was extended and clarified.
Other management improvements.—The supervision of the lading for
exportation of non-tax-paid alcoholic beverages and tobacco products
now conforms to the supervision of merchandise exported under bond.
This permits collectors to accept documentary and other types of
evidence, in lieu of actual physical supervision of lading, as proof of
exportation.
I n cooperation with the Immigration and Naturalization Service,
several hundred signs are being erected along the Canadian and
Mexican borders to direct travelers to the customs and immigration
inspection stations. This should help to reduce the number of instances in which a traveler, through lack of proper information, fails
to report his arrival.
During the year various improvements were made in the customs
laboratories. A master reference file of inform.ation on Americanmade coal-tar products was' estabhshed to permit accurate com.parisons to be made between imported and competitive domestic coal-tar
products for duty purposes. The sampling of Philippine raw sugar
is no longer required when satisfactory commercial test results are
available. The chief chemist at Baltimore was assigned to develop
data leading to the formulation of statistically controlled sampling
and weighing techniques. Further developments were made in the
application of spectrographic and X-ray diffraction apparatus in
chemical analysis.
During the fiscal year management inspection teams visited 50 of
the 104 collection, agency, appraiser, comptroller, and laboratory districts, and improvements directly attributable accounted for over $200
thousand of the management savings. Employees submitted 750
suggestions under the incentive awards program, of which 151 were
adopted with awards totaling $3,845. Identifiable savings resulting
from the suggestions adopted amounted to $9,200 annually.
Progress continued to be made in records management. During
the fiscal year a total of 11,184 cubic feet of records were disposed of,
and another 23,000 cubic feet transferred to Federal records centers.
Records holdings of the Bureau of Customs were reduced by 6,000
cubic feet.
Future plans and programs.—Representations have been made to
the Canadian Government for the institution at Dorval Airport,
Montreal, of preflight customs clearance for persons departing on
direct fiights to the United States. Clearing air passengers through
United States Customs prior to departure enables them to proceed
without further delay upon arrival in the United States. This is an
extension of a similar procedure in effect at the Toronto Airport for
several years.
The sustained and-continuing interest of the Bureau of Customs in
furtheringthe vprogram^'Of customs, simplification begun in 1953, and
in improving marine administration, is reflected in a number of
legislative proposals which have been prepared for submission to




ADMINISTRATIVE REPORTS

81

Congress. These would permit: Final determination of duties and
taxes on imported merchandise without awaiting final appraisement;
administrative review of appraisements which are now subject only
to judicial review; administrative designation of classes of imported
merchandise for which domestic merchandise may be substituted
to obtain payment of drawback (i. e., refund of import duties) on
exportation; and merchandise to be imported under bond without
payment of duty, subjected to manufacturing processes, and exported
(present law requires payment of duty on importation with 99 percent
refunded after exportation of the manufactured product).
Many proposals affecting marine administration, both legislative
and administrative, are under study. These would permit: Combining the several forms of vessel documents into one form; the use
of declarations rather than oaths on marine documents; clarifying
the laws governing coastwise trade; simplification of the regulations
governing vessel entry and clearance, admeasurement of vessels,
and port-to-port movement of vessels carrying residue foreign cargo,
and other improvements in marine administration.
Bureau of Engraving and Printing
The Bureau of Engraving and Printing designs, engraves, and prints
United States currency, Federal Reserve notes, securities, postage and
revenue stamps, various commissions, certificates, and other forms of
engraved work for Government agencies. The Bm-eau also prints
bonds and postage and revenue stamps for the governments of insular
possessions of the United States.
""
Deliveries of finished work during the fiscal year 1957 totaled
728,694,224 sheets. This reflected an increase in currency sheets of
5,145,111, or approximately 6 percent, and an increase in other work
of 17,844,358 sheets, or approximately 3 percent, as compared with the
quantities delivered in 1956. A compaiative statement of deliveries
of finished work in the two years is shown at the end of this report.
The rise in deliveries of finished products in 1957 resulted mainly
from increased requirements for currency, U; S. savings bonds, and
postage stamps. There was a decrease in production of Government
paper checks, because of the conversion to punchcard checks; The
increase in currency requirements was .met through reduction of the
substantial inventory in the Bureau. By the close of the year plans
were being made to eliminate the production of E savings bonds on
paper, since thereafter the bonds are to be purchased in punch-card
form from a commercial firm.
Organizational changes

On June 17, 1957, an assistant director was appointed and given
immediate supervision over the ofiices of Administrative and Maintenance Services, Industrial Relations, and Research and Development
Engineering. The remaining offices report directly to the Director.
The Office of Assistant to the Director was abolished. The Internal
Audit Staff, formerly designated the Internal Audit Branch under the
supervision of the Assistant to the Director, now reports directly to
the Director. The Chief of the Office of Industrial Relations was given
438363—58

7




82

1957 REPORT OF THE SEGRETARY OF THE TREASURY

additional duties and the title of Executive Officer. In this capacity
he assists the Assistant Director on projects which the Assistant Director has been authorized to assign to him.
Management improvements

Through studies relating to the Department's programs ' ' ^ Search
for Economies^\eLnd ^'Manpower Utilization,^' a number of projects
were brought to completion. In addition, other regular and special
studies made by management officials at the request of the Director
resulted in abolition of certain positions.
Technical improvement during the year was directed primarily
toward the dry intaglio printing of currency 32-subjects to the sheet.
Since 1955 two rotary, sheet-fed, experimental presses had been in the
process of evaluation. Upon completion of this phase of the program
invitations to bid were issued to eight firms to furnish presses for production purposes. Only one company submitted a bid and this was
accepted. The two experimental presses originally installed in the
Bureau, and used in the evaluation progra.m, were purchased later.
These presses are being used to conduct experiments on a continuing
basis for production where needed, and for training personnel. At the
end of the year final tests were in progress to determine acceptability
of the first of the eight new production rotary, sheet-fed, currency
presses.
Intensive research to develop paper and inks suitable for printing
currency by the dry intaglio process was associated with the development of the new press equipment. As a result, an improved paper
and new ink formulas were developed for use in printing curiency by
this method.
The inscription 'Tn God We Trust" will appear on the notes printed
on the 32-subject, rotary, sheet-fed currency presses, in accordance
with an act of Congress approved by the President on July 11, 1955
(31 U. S. C. 324a). This is the first time this inscription has appeared
on paper currency.
The fifth postage stamp press on order was put into operation during
1957. Although as yet no downward adjustment has been possible
in the bUling rates for postage sta:mps, it is anticipated that savings will
be realized when certain problems associated with the operation of
these presses and related processing operations have been resolved.
I t is expected that the processing of coil stamps will be greatly expedited when machinery is built to process coils fro.m wide webs of 432subject stamps printed on the new presses. Prototype equipment for
winding stamps into coils is being evaluated.
Through consolidation of duties, reassignment of employees, and
by not filling vacancies which occur from resignations and deaths, a
number of positions were declared excess during the year. This led
to savings of 45 man-years and over $153,200 on an annual basis. One
major improvement, which permitted a reduction of 21 jobs, was the
installation of new automatic equipment for packaging postage stamp
books. The new equipment includes a machine for shaping the
cartons which contain the books to be delivered, and machinery
which automatically seals and wraps the cartons. The addressograph
process is being introduced to print information on em.ployees' pay
envelopes to replace the typographic process used in the past. I t




ADMINISTRATIVE REPORTS

83

is estimated that this change will result in savings of approximately
$3,000 on an annual basis.
Savings on a one-tim.e basis am.ounted to $12,100. These savings
cam.e about through several instances of advantageous contracting
for products and through use of a cheaper filler in packages of book
stamps.
As a result of a complete review of the organization, work methods,
and procedures in the Currency Overprinting Branch, new equipment
was introduced, organization was improved, and better methods and
accountability controls were installed. Greater security, better
control of the work in process, and improved appeal ance of the working
area are the resulting benefits.
During the 3^ear plans were made for changes in procedures for
requisitioning postage stam.ps. Bulk requisitions will be submitted
by the various field offices dhectly to this Bureau instead of through
the Post Office Department central office as previously. In addition,
the Post Office Department has agreed to allow the Bureau to establish
desirable reserves of stock within the estimate rather than to adhere
to quarterly reserves previously established. This will enable the
Bureau to reduce the peaks and valleys experienced in the workload
during the year.
In the program, for paperwork m,anagement, the Bureau disposed
of 516 cubic leet of obsolete records and established reports controls
and instructions and m.anuals in a num.ber of clerical and operational
areas. There were 1,245 requests for forms processed, of which 1,114
were tor reprints and 131 for new form.s. Also, 188 form.s were declared
obsolete and 42 were elim.inated by consolidation.
Industrial relations activities

The total number of employees on the rolls at the beginning of 1957
was 3,568 and on June 30, 1957, there were 3,590.
Wage increases affecting approxim.ately 2,861 ungraded employees,
and amounting to approxim.ately $326,500, were made to keep wage
rates for Bureau jobs alined with those for comparable jobs in the
Government Printing Office and the Am.erican Bank Note Com.pany.
The Bureau acted upon 384 contributions under incentive awards
program.s in 1957 and adopted 108. Savings arising from the suggestion program and the special services program during the year
amounted to an estim.ated $32,500. The rate of participation by
employees in the suggestion program increased from. 100 suggestions
per 1,000 employees during 1956 to 104 suggestions during 1957. In
addition, there was a notable increase in the number of recommendations for awards for superior work performance and for special services.
Supervisors subm.itted recom.mendations for 91 employees and 3
employee groups, as compared with recommendations for only 23
individual awards and no group awards in 1956.
A new promotion policy for supervisor}^ positions has been prepared
in. final draft. Arrangem^ents have been made to provide eye tests
for all em.ployees who are being considered for promotion to positions
involving the examination of any printed product. These tests will
also be used in hiring new em.ployees.
The Bureau has intensified in-service training of personnel to coincide with the modernization program throughout the Bureau. In




84

195 7 REPORT OF THE SECRETARY OF THE TREASURY

addition to operational, management, and clerical training, the
management intern training program was revised with the approval
of the Civil Service Commission. Also, for the first time in many
years, an apprenticeship program was developed for the training of
two employees as apprentice-siderographers. The siderography craft
is essential in the manufacture of engraved steel printing plates. The
Bureau secured the cooperation of the National Bureau of Standards
and the Bell Vocational School in providing training in electronics
for some of the Bureau's electricians.
Training courses now under preparation include one in administrative procedures, with particular reference to the purchasing
processes, and a refresher course in stenography.
The Bureau's safety program continued to emphasize that improvements can be achieved only through complete participation by all
supervisory and nonsupervisory personnel, and all employee and union
groups. Great progress was made during the year by a safety shoe
program, b y a program to show safety films in production areas, b y
installing numerous additional safety guards, b y the safety staff's
participation in the review of designs and blueprints, and ia inspecting
pilot equipment involved in the Bureau's modernization program for
the purpose of seeing that eyery safety device possible is installed on
new types of ecjuipment when first used.
Because positions are available in the Federal Government for
which high school graduates might qualify, the Bureau arranged with
the Civil Service Commission to publicize the positions to the
thousands of students who visit this Bureau every year on tours.
This was accomplished during the year by the display of eye-catching
posters for visitors enteriag the maia building, and by distributing
publications. In their remarks to student groups the tour leaders
included a statement regarding the jobs which are available, and the
location of descriptive literature.
Continuing efforts to reduce the use of sick leave have resulted in
a reduction of three-fourths of a man-day per employee during the
calendar year 1956.
Long range research program

Through continuing research and development the Bureau has been
able to produce significant technological improvements over a period
of 3^ears. In addition to its broad program of developiag new and
modern types of operatiag equipment, new types of nonoffset iaks
have been developed, and improvements in currency paper m.ade.
Plans for the fiscal year 1958 kiclude further refinement of inks, other
materials, equipment, and procedures. A study of the relative length
of life of currency ia circulation priated b y the wet and dry iataglio
printing processes is to be made for the Bureau by the National Bureau
of Standards durhig 1958.
Development of machiaery which will automatically replace defective currency notes is being continued. I t is expected that a prototype model will be delivered b y a contractor in the near future.
New issues of stamps

Orders were received and dies were engraved for new issues of
postage stam.ps as follows:




85

ADMINISTEATIVE REPOETS

Denomination
(cents)

Issue

Nassau Hall, Commemorative, Series 1956
Labor Day, Commemorative, Series 1956
Devil's Tower, Commemorative, Series 1956
Wildlife Conservation (King Salmon) Commemorative, Series 1956
Children's World Peace, Commemorative, Series 1956
Oklahoma Statehood, Commemorative, Series 1957
American Steel Industry, Commemorative. Series 1957
^
International Naval Review—Jamestown Festival, Commemorative, Series 1957
American Flag, Commemorative, Series 1957
Alexander Hamilton, Commemorative, Series 1957
American People's Fight Against Polio, Commemorative, Series 1957
Coast and Geodetic Survey, Commemorative, Series 1957
American Institute of Architects, Commemorative, Series 1957
School Teachers of America, Commemorative, Series 1957

Production

A comparative statement of deliveries of work finished by the
Bureau in the fiscal years 1956 and 1957 follows.
Sheets

Class
1956
Currency:
United States notes
Silver certificates
Federal Reserve notes.
Total..
Bonds, notes, bills, certificates., and debentures:
Bonds:
Panama Canal, registered
Treasury, standard form
Stars !..._
,
Obsolete stock delivered to the Destruction Committee and destroyed
United States savings
Specimens
Consolidated Federal farm loan for the twelve Federal
intermediate credit banks
Stars 1
Specimens
Depositary, act of September 24,1917, as amended
Notes:
Treasury, modified new design
Stars 1
Specimens
Treasury, 1955 design
Stars 1
.
Specimens
Treasury, registered special series
Specimen
Consolidated Federal home loan banks, bearer
Stars 1
Specimens
Special of the United States International Monetary
Fund series
Bills:
Treasury, 1953 design
Certificates:
Of indebtedness, new design back.
Specimens
Special series
Specimens
Common stock of the Federal National Mortgage Association
Specimens
.
Of stock of the banks for cooperatives
Specimens
Postal savings
Military yen currency
A note inserted in place of a defective note.




Face value 1957
1957

2,120,000
2,175, 555
58, 690,889 56, 983, 556
25, 237, 778 32, 034, 667

$163,400,000. oa
1, 358, 744, 000.00
6,482, 600, 000.00

:6,048,667

91,193, 778

8, 004, 744, 000.00

300
202,000

915
138, 985
989

5,415, 000. C
O
1,352, 300,000.00
26,442, 700.00

95, 361, 500
17
119,025
1,136
35

7, 379,125,000.00
12, 825.00

86,800
478
1
290,119
1,473
4
200

1,094,000,000.00
17, 392,000.00
l; 000.00
27,937, 900. 000. 00
151,035, 000.00
4,000.0G>

90, 000
153

1, 665,000,000.00
23, 610, 000.00

200

200,000,000. O O
O

1,368,833
90,727,000
404
81,930
26
500
160, 200
3
46, 713
500
1
122, 750

1, 511,890,000.00
14,820, 700.00
35,000.00

1,029,000

1, 815,000 119,977,000,000.00

440, 526
5
700
1

458, 930 39, 438, 300, 000.00
1, 200, 005, 000.00
9
550
2
8,100
6

5,000

7,500
14

3,430
2, 624, 000

1, 621,000.00

86

1957 REPORT OF THE SECRETARY OF THE TREASURY
Sheets

Class
1956
Bonds, notes, bills, certificates, and debentures—Continued
Debentures:
Consolidated collateral trust for the twelve Federal
intermediate credit banks
Specimens
Of the thirteen banks for cooperatives, bearer
Specimens
Federal National Mortgage Association, secondary
market operations
Specimens
,
Federal Housing Administration:
War housing insurance fund
Title I housing insurance fund
...^
Mutual mortgage insurance fund
Housing insurance fund
Servicemen's mortgage insurance fund
,
Military housing insurance fund
.
Armed services housing mortgage insurance fund..
National defense housing insurance fund
Specimens
_
.
Total
Stock declared obsolete by the Commissioner of the
Public Debt and which was delivered for destruction
Total.

49, 500

Face value 1957
1957

i3,io6

70, 000
2
17, 640
3

$1,055, 000, 000.00
150, 000.00
300,000, 000.00
115,000.00

18,000

48, 700

1, 557, 000,000.00
10, 000.00

4,000

8,000
200
3,000
250

42, 650,000.00
1,000, 000.00
3, 625, 000.00
225, 000. 00

4,000

20,825,000.00

6,000
3,500
2,000
3,000
4,000
7, 500
24

96, 928, 538 98, 529,854 204, 976, 509, 225.00
676
96, 928, 538 98, 530, 530 204,976, 509, 225.00

Stamps:
Customs
1, 603, 000 2, 950, 000
Internal Revenue:
To oflQces of issue
. 288,619, 586 286, 934, 344 3,098, 551, 480.10
153
Specimens
1
2,053, 391
Puerto Rican revenue
2, 099,132
1,320
Virgin Islands revenue
1,260
19, 200
War savings.
30, 764
3,081, 400.00
United States savings
1, 081,140
1,018, 743
17, 607, 000.00
Specimens
18
Postage, United States:
182,802. 591 180,113, 596
Ordinary
.
-_._..
747, 670, 373. 40
Specimens
.
37
Fifth International Philatelic Exhibition souvenir
262,833
sheet
20, 000
52,! 800.00
I
,
15
Specimens
8,171, 095
Air mail
7, 360, 204
'57i'3i4,"j
:,"858~0032, 000
Certified mail
20,976, 264 29,122,177
Commemorative
"44,'6i9,"965."50
73
53
Specimens
^
1.102 000
1,083, 700
Special delivery
10,836, 500.00
18, 200
8,000
Special handling
,._.
66, 250.00
1, 719, 500 1, 630, 200
Postage due
•
.
17, 754,750.00
Canal Zone Postage:
3,400
27,700
252, 500.00
Ordinary
22,972
39, 500
Air mail
156, 232.00
1,300
Postage due
6, 50G. 00
District of Columbia beverage tax paid
. . . . 1, 028, 200 1, 203,100
7, 005,959.00
44, 800
39, 250
Federal migratory bird hunting..
8, 792,000.00
50,000
Slaight lock seals
:..
.
Total
509, 628, 302 513, 666, 522
Revenue items authorized by Internal Revenue Service
and delivered to the Smithsonian Institution
160, 317
Stock declared obsolete by requisitioning agencies and
which was delivered for destruction
2, 382, 784
206
Total.

509, 628, 508 516, 209, 623

Miscellaneous:
Checks
Certificates
Commissions..
Diplomas
Book labels.
Other miscellaneous.

Grand total of deliveries




245, 510, 625. 51

4, 259, 279,193. 51

6. 047, 519
637, 370
2, 549, 588 2,025,396
449, 423
62, 751
5,041
4,168
30, 000
31, 600
3,847,993 19,999,008

Total
Stock declared obsolete by requisitioning agencies which
was delivered for destruction
_
Total

4,013, 768, 568.00

12, 929, 564 22, 760, 293
169, 478

13,099,042

22, 760, 293

...1705. 704, 755 728, 694. 224 217, 240, 532. 418. 51

ADMINISTRATIVE REPORTS

87

Finances

The Bureau operations are financed by reimbursements to a working
capital fund authorized by law. A statement of income and expense
for the fiscal year 1957 and comparative balance sheets as of June 30,
1956 and 1957, follow.
Statement of income and expense for the fiscal year 1957
Income:
From sales of printing
.
$25, 627, 347
From operation and maintenance of incinerator
and space utilized by other Treasury activities.
320, 949
From sales of card checks
1, 120, 164
From other direct charges for miscellaneous services
__24, 108
Total income
Expense:
Cost of goods sold:
Purchase of direct materials
Deduct: Increase in inventor}^ of direct materials

$27, 092, 568
$4, 837, 909
22, 828

Direct materials used
Direct labor____
Manufacturing expenses-(excluding depreciation and amortization)
Depreciation and amortization

4, 815, 081
10, 093, 053

Total manufacturing costs
Add: Decrease in goods in process inventory.

24, 025, 376
1, 447, 302

Subtotal
Deduct: Increase in finished goods inventory.

25, 472, 678
100, 233

Cost of goods sold
Cost of operation and maintenance of incinerator
and space utilized by other Treasury activities.
Cost of card checks (purchases and related costs).
Cost of miscellaneous services
Nonoperating expense, loss on disposal of fixed
assets
.

25,372,445

Total expense
Net loss for the fiscal year 1957

7, 743, 763
1, 373, 479

320, 949
1, 120, 777
23, 993
275, 623
27, 113, 787
i 21, 219

1 In accordance with the. act approved August 4,1950 (31 U. S. C. 181-181e), the net loss will be recovered
from surplus accruing to the fund in a subsequent year before any surplus is deposited into the general fund
of the Treasury as miscellaneous receipts.




88

195 7 REPORT OF THE SECRETARY OF THE TREASURY
Comparative balance sheets as of June 30, 1956 and 1957
J u n e 30, 1956

J u n e 30, 1957

ASSETS

C u r r e n t assets:
Cash w i t h T r e a s u r y
A c c o u n t s receivable
Inventories:
R a w materials .
Goods in process
F i n i s h e d goods
. .
Stores
P r e p a i d expenses

• $5, 497, 222
1, 361, 417

. . .

T o t a l c u r r e n t assets

. _.

Fixed assets: i
Plant machinery and equipment
M o t o r vehicles
Offlce m a c h i n e s
.
F u r n i t u r e a n d fixtures
Dies, rolls, a n d plates
Building appurtenances
Fixed assets u n d e r construction

.

.

.

.

.. .
. ..

._

...

. .

Less p o r t i o n charged off as d e p r e c i a t i o n .
Excess fixed assets (estimated realizable valne) . .
T o t a l fixed assets .
Deferred charges

...

12, 557,452

15, 760,178
64, 069
138,180
480, 531
3,955, 961
956,196
123, 718

16, 297, 761
66, 866
161,150
419, 013
3, 955, 961
1, 226, 817
252, 674
22, 380, 242
6, 563, 970
15, 816, 272
1,985

15,868, 385

.

970, 844
2, 405, 676
1,109, 047
1,169,000
60, 698

15,865,101
3,284

._

._

948,016
3, 852, 978
1, 008, 813
1, 097, 364
73,728

21,478, 833
5, 613, 732

..
.
..

$4, 461, 458
2,380, 729

13,839, 538

. .
.

15, 818, 257

197, 258

Totalassets

452, 391

29, 905,181

:

28,828,100

LIABILITIES AND INVESTMENT OF THE U N I T E D STATES

Liabilities:
Accounts payable
Accrued liabilities:
Payroll
Accrued leave
Other
T r u s t a n d deposit liabilities
Otherliabilities
Totaliiabilities

636, 905
. ._

T o t a l i n v e s t m e n t of t h e U n i t e d States G o v e r n m e n t
T o t a l liabilities a n d i n v e s t m e n t of t h e U n i t e d States G o v e r m n e n t

.

3, 250, 000
22, 000, 930

25, 250, 930
- 1 0 , 443

T o t a l principal
E a r n e d s u r p l u s , or deficit (—)2

3, 608, 832

3, 250, 000
22,000, 930

. ..

I n v e s t m e n t of t h e U n i t e d States G o v e r n m e n t :
P r i n c i p a l of t h e fund:
A p p r o p r i a t i o n from U n i t e d States T r e a s u r y D o n a t e d assets, n e t
_.

638, 838
1,455, 463
96, 241
746, 281
1,661

4, 664, 694

. ...

670, 348

1, 662, 843
1, 670, 525
52, 093
642, 327
1

25, 250 930
- 3 1 , 662

25, 240, 487

25, 219, 268

29,905,181

28, 828,100

1 Fixed assets acquii-ed prior to July 1, 1950, are capitalized at appraised values (estimated replacement
cost as of July 1, 1951, reduced to recognize the depreciated condition of the assets being capitalized); subsequent additions have been capitalized at cost, except that on'and after July 1, 1951, all costs of manufacturing dies, rolls, and plates have been charged to current operations.
The act approved August 4, 1950 (31 U. S. C. 181-181e), which established the Bureau of Engraving and
Printing Fund, specifically excluded from the assets of the fund the land and buildings occupied by the
Bureau. In accordance with the Comptroller General's decision of October 4, 1951 (B-104492), however,
replacements of building facilities and improvements to buildings made on and after July 1,1951, have been
financed by the fund. Such items of significant dollar amounts have been capitalized at cost and appear in
the foregoing balance sheets under the caption "Building appurtenances."
2 Earned surplus or deficit arises through billing for products at unit prices established prior to the develop"
ment of actual costs. Section 2 (e) of the act of August 4, 1950, requires that any surplus accruing to the
revolving fund during any fiscal year be deposited into the general fund of the Treasury as miscellaneous
receipts during the ensuing fiscal year, provided that such surplus may fii-st be applied to offset any deficit
resulting from operations in prior years.




ADMINISTRATIVE REPORTS

89

Fiscal Service
The Fiscal Service of the Treasury Department is comprised of the
Office of the Fiscal Assistant Secretary, the Bureau of Accounts, the
Bureau of the Public Debt, and the Office of the Treasurer of the
United States. Their operations are under the general supervision
of the Fiscal Assistant Secretary.
The Fiscal Assistant Secretary, under the direction of the Under
Secretary for Monetary Affairs, administers the financing operations
of the Treasury; prepares estimates of the future cash position of the
Treasury for use of the Department in its financing; directs the distribution of funds between the Federal Reserve Banks and other Government depositaries; prepares calls for the avithdrawal of funds from the
special depositaries to meet current expenditures; directs fiscal agency
functions in general; and administers the Treasury responsibilities
with respect to the purchase, custody, transfer, and sale of foreign
exchange acquired by the United States under various executive
agreements with foreign governments in connection with United
States programs operated abroad.
In carrying out the responsibilities of the Fiscal Assistant Secretary,
liaison has to be maintained with the other departments, agencies, and
branches of the Government with respect to their financial operations
and the coordination of these operations with those of the Treasury.
The Fiscal Assistant Secretary supervises the administration of
accounting functions and related activities of all units of the Treasury
Department through the Commissioner of Accounts; and carries out
the Treasury's role in the joint accounting improvement program of
the Secretary of the Treasury, the Director of the Bureau of the
Budget, and the Comptroller General of the Uaited States in
accordance with the Budget and Accounting Procedures Act of 1950.
The several responsibilities of the Fiscal Assistant Secretary are
indicated more fully in the operations detailed in the following reports
by the Commissioner pf Accounts, the Commissioner of the Public
Debt, and the Treasurer of the United States.
BUREAU OF ACCOUNTS

Many of the varied fiscal functions of the Bureau of Accounts relate
to the responsibilities placed by law upon the Secretary of the Treasury
and have Government-wide significance. These responsibilities include: Maintenance of a system of central accounts and preparation of
central financial reports of the Government required by the act of
July 31, 1894 (5 U. S. C. 255) and the Budget and Accounting Procedures Act of 1950 (31 U. S. C. 66b); participation with the Office of
the Fiscal Assistant Secretary in the joint program for improving and
strengthening Government accounting and financial reporting; preparation of checks to Government creditors in payment of obligations
Incurred by the executive departments and agencies with certain
exceptions; investment of social security and other trust funds;
determination of qualifications and underwriting limitations of
surety companies to write fidelity and other surety bonds to cover
Government activities; administrative work relating to the designation




90

1957 REPORT OF THE SECRETARY OF THE TREASURY

of Government depositaries; administration of loans made by the
Treasury to Government corporations and other Federal agencies; and
maintenance of accounts and reporting of foreign currencies held by
the Treasury for use of Government agencies.
The Bureau of Accounts also makes payment of claims under
international agreemerits, maintains accounts and collects amounts
due from foreign governments under lend-lease and other agreements,
furnishes Treasury bureaus with technical guidance and assistance in
accounting matters, generally administers and coordinates internal
audit activities of Treasury bureaus, and assists the bureaus in developing comprehensive audit programs.
Accounting, Reporting, and Related Matters
Central accounting

The system of central accounts for the Federal-Government (provided for in Section 114 of the Budget and Accounting Procedures Act
of 1950, and prescribed by Treasury Department Circular No. 945,
dated M a y 11, 1954, as amended) was installed progressively throughout the fiscal year 1956 and placed in complete operation during the
fiscal year 1957. The central accounts record receipts of the Government by sources and expenditures according to each appropriation
and fund, as well as related data concerning the cash operations of
the Treasurer of the United States and other fiscal officers of the
Government.
Through the use of accounts for deposits in transit and related
reconciling procedures, the central accounts constitute an internal
check on deposits made by disbursing and collecting officers of the
Government for credit to the account of the Treasurer of the United
States. The Treasury's central accounts also provide the accounting basis for reports of receipts and expenditures published in the
official financial statements of the Government, such as the Monthly
Statement of Receipts and Expenditures of the United States Government, the annual Combined Statement of Receipts, Expenditures and
Balances of the United States Government, and the actual figures for the
last completed year in the Budget of the United States Government. As
a result of current maintenance of the Treasury's central system of
accounts, more effective integration of accounting between administrative agencies and the Treasury has been achieved. For example,
under the central accounting system, the various types of cash
transactions in transit during the closing days of the fiscal year,
which heretofore had been processed for recording during the first
month of the succeeding fiscal year, are now taken up in the central
accounts as of June 30, the last day of each fiscal year.
Other central accounting developments include provision for revised
statements of accountability in which collectors of cust6m.s and district
directors of internal revenue report receipts on the same basis as other
Government agencies. Accordingly, receipts of the two largest
revenue collecting agencies of the Government are now reported and
recorded in the central accoimts on the basis of collections received
rather than on a deposits accom.plished basis. Also, installation of
revised procedures for United States disbursing officers in foreign




ADMINISTRATIVE REPORTS

-: .

'

91

countries permits the statements of accountability by such officers to
be used as direct posting media to the central accounts.
The volum.e of accounting items processed through the central and
regional accounting offices of the Division of Central Accounts during
the fiscal year 1957, as compared with fiscal 1956, was as follows:
Work volume

Classification

1956

•
Receipts
Expenditures
Other items

.

.

Total

.

._

1957

r 2,211,145
' 3,153,370
8,950

2,121,118
3,106,785
11,383

' 5,373,465

5,239,286

' Revised.

Accounting procedures and systems

Technical assistance was given Treasury bureaus in developing their
accounting systems, including collaboration with the Internal Revenue
Service in revenue accounting and with the Bureau of the PubHc Debt
in the revision of accounting for transactions in the public debt.
Effective January 1, 1957, the number of monthly reports of deposits
of withheld taxes in Federal Reserve Banks was reduced from a
potential maximum of one to each of the sixty-four directors of internal revenue from each Federal Reserve Bank to a maximum of twelve
reports (one from each Federal Reserve Bank covering all internal
revenue districts), sent direct to the Bureau of Accounts in Washington.
Bureau participation in Government-wide projects under the joint
program for improvement of accounting included preparation of proposals for legislation to improve procedures for substitute and uncurrent checks; collaboration with the General Accounting Office and
the Bureau of the Budget in developing procedures under the act
approved July 25, 1956 (31 U. S. C. 701-708), for handling claims
and balances of expired appropriations; and in developing procedures
for the disposition of checks which cannot be delivered to the pa^^ees
because of changes of address and other reasons.
The Bureau staff also worked with the General Accounting Office
and the United States Civil Service Commission in developing revised
procedures, effective July 1, 1957, for the deposit of the Government's
share of contributions to the civil service retirement and disability
fund. This revision was based upon the act approved July 31, 1956
(50 U. S. C. 2254 (a)), which provided for charging the Government's
share of the cost of retirement of each agency's employees to its
appropriation. This revision was accompanied by an amendment to
Joint Regulation No. 3, dated May 20, 1957 (exhibit 48), which permits all retirement fund receipts to be treated as available for disbursement for authorized purposes immediately after credit in the
accounts of the disbursing officer.
An act approved August 1, 1956 (31 U. S. C. 18c, 24, 66a (c), 665
(g)), provides for consistency in budgeting and accounting classifications; improving support for budget justifications; accrual methods of
accounting to accomplish full disclosure of the results of financial




92

1957 REPORT OF THE SECRETARY OF THE TREASURY

operations; and simplifying agency aUotment patterns. The Secretary
of the Treasury assigned to the Bureau of Accounts and the Treasury
Department Budget Office the responsibility of working with each
bureau to the extent necessary to carry out the Treasury Department's program to implement the act.
FoUowing a study of the budgeting and accounting procedures in
each bureau, the Treasury Department under date of April 26, 1957,
issued Department Circular No. 987 (exhibit 47), which requires the
head of each bureau whose accounts currently develop only obligation
and disbursement data to refine such accounts so as to produce also
information on accrued expenditures, that is, cost of goods and services
received. These additional data are to be disclosed as of the end of
each fiscal year beginning with 1958, or more frequently if necessary.
Central reporting

Emphasis was continued during the year on the review and modernization of central financial reporting to meet the changing require^
ments of the executive branch, the Congress, and the public.
The Bureau also worked with Government agencies for the purposes
of: Obtaining more comprehensive reports of assets, liabilities, commitments, and contingencies; improving reports of cash transactions
for purposes of cash position management; developing and utUizing
agency administrative reports for substitution in place of those required by the Treasury; continuing the improvement of the Monthly
Statement of Receipts and Expenditures of the United States Government
for more effective use by the Bureau of the Budget in budget formulation and execution; eliminating duplication and overlapping of
financial reporting where possible in collaboration with the Bureau
of the Budget and the General Accounting Office; and continuing the
development of reports designed to serve the special needs of other
Government agencies and congressional committees.
Control of foreign currencies

Control of foreign currencies acquired without dollars since 1953
has been the responsibility of the Secretary of the Treasury pursuant
to provisions of law and executive orders. (See the Annual Report
for 1954, p. 101.) Additional laws enacted since 1953, as published
in exhibit 56 of the 1956 report and revised reporting instructions
have expanded the scope of foreign currency operations (see exhibit 50)
and Treasury responsibility for controlling collections and withdrawals, and the preparation of statements and reports of the transactions. The bulk of foreign currency activity is the result of operations under the Agricultural Trade Development and Assistance Act
of 1954, as amended (7 U. S. C. 1701, 1704, 1705), commonly referred
to as Public Law 480.
During 1957, the amount of foreign currencies collected or acquired
by Government agencies from all sources, without purchase with
dollars, was the equivalent of $1,636.0 million. Withdrawals of
foreign currencies which the Treasury Department sold to United
States Government agencies for dollars amounted to $258.6 million,
while transfers of foreign currencies made without reimbursement,
pursuant to provisions of law, were in the equivalent amount of
$575.5 million. The balances of foreign currencies in Treasury




ADMINISTRATIVE REPORTS

93

accounts as of June 30, 1957, amounted to the equivalent of $1,128.1
million. In addition, the unexpended balances of foreign currencies
transferred without reimbursement and held for the account of various
Federal agencies as of June 30, 1957, amounted to the equivalent of
$351.5 million. A summary statement showing foreign currency
collections, withdrawals, and balances for the fiscal year 1957, is
included in this report as table 107.
Internal auditing

Progress was made toward perfecting and coordinating uiternal
audit programs in Treasury Department bureaus generally. The
improvements, which varied in different bureaus, included better
programming, greater attention to operations where potential findings
may be material, gradual expansion in the scope of fiscal audits,improvements in format and content of audit reports and related
working papers, and better follow-up action on audit recommendations.
General administration and the coordination of the internal audit
activities of the Department as a whole were provided in several
ways. Assistance was given to particular bureaus in improving
audit policies and programs; regular liaison was maintained with
auditors of the General Accounting Office on mutual problems, and
particularly those of department-wide significance; general meetings of
the Treasury internal auditors were held for exchange of audit information and ideas; and professional publications on auditing were circulated to the Treasury internal auditors for their information and
assistance. Also, studies and appraisals were made of the internal
audit systems in operation in several bureaus and, where appropriate,
suggestions were offered for strengthening the system.
The audit of the Bureau of Accounts' activities continued in the
pattern of 1956 with some further expansion into new audit areas.
The latter included audits of certain segments of the central accounts
of the Government, the highway trust fund, and the individual retirenient records of employees of the Bureau of Accounts. Comprehensive audits, were concluded in five regional disbursing and accounting
offices, bringing to fourteen the number completed since establishment of the new audit program in 1956. Also, the audit policy of
the Bureau was rewritten and strengthened.
Commodity Credit Corporation appraisal

The act of March 8, 1938, as amended (15 U. S. C. 713 a~l), requires
the Secretary of the Treasury, as of June 30 of each year, to appraise
all of the assets and liabilities of the Commodity Credit Corporation
to determine the Corporation's net worth. The amended act defines
asset values, for the purpose of determining the net worth, as the cost
of such assets to the Corporation.
The appraisal, which included an examination of accounting
policies and practices, disclosed an impairment of the Corporation's
capital for the fiscal year ended June 30, 1956, in the amount of
$1,239,788,671. This amount does not include losses from programs
under specific legislation which authorize separate appropriations to
reimburse the Corporation for the losses. An amount equivalent
to the capital impairment as determined by the appraisal was appropriated by Public Law 85-118, approved August 2, 1957.




94

1957 REPORT OF THE SECRETARY OF THE TREASURY

Table 122 of this report, shows by years the elimination of capital
impairment by appropriations or cancellation of obligations of the
Corporation, and the amounts of surplus returned to the Treasury by
the Corporation.
Disbursing Operations
The Division of Disbursement, through its 21 regional offices,
performs disbursing services for 1,466 separate Government offices
located throughout the United States, its Territories, and the PhUippines. The Division serves all civilian executive departments and
agencies except the Department of Defense, the Post Office Department, the United States Marshals, the Panama Canal, and certain
other agencies and corporations. Its operations include: Disbursing
from appropriated, trust, and deposit funds; issuing substitute checks
pursuant to the act of December 3, 1945 (31 U. S. C. 528 (a)-(g)),
for all disbursing officers; issuing United States savings bonds under
the payroll savings plan for Federal employees; preparing monthly
payments to veterans, social security beneficiaries, retired Government
employees, and others; preparing payrolls for check pa3^ments to
Government employees; and miscellaneous services such as preparing
index and other record cards.
In addition to the foregoing activities, small cash payments are made
by delegation through more than 1,500 agents who are employees of
other agencies, but who, ia making payments, operate under the direction of the Division of Disbursement. For the most part, agent
cashiers are located at hospitals, penal institutions, and other stations
where on-the-spot cash payments must be made.
The Division exercises technical supervision over the disbursing
operations performed under delegation of authority from the Chief
Disbursing Officer by 97 disbursing officers stationed at embassies and
consulates in foreign countries, and serves as the focal point in arranging for disbursing services in those countries for all civilian
agencies of the-United States Government. Technical supervision is
exercised also over 180 assistant disbursing officers attached to other
agencies both in the United States and foreign countries.
Recurring annual savings of $451,877 were effected duririg the
fiscal year 1957 (considering carryover, the actual fiscal year savings
amounted to $365,600) through further improvements in mechanical
processes and streamlining of procedures carried out under the management improvement program. Improvements were made in the payment files by consolidating files for veterans' benefit payments. Procedures were developed for making address changes and redirecting
checks directly from original correspondence from payees rather than
only at the request of administrative agencies. Improvements were
made also in procedures for payroll processing and salary check issuance. During the third quarter of the fiscal year a prototype model
of a new high speed electronic printer was installed in the Boston
regional office for use in preparing checks and accounting records of
checks issued. In the test operation approximately one million
checks for income tax refunds were prepared.




ADMINISTRATIVE

95

REPORTS

For the fiscal year 1957 the unit cost for processing checks was
reduced to 4.09 cents from 4.34 ^ cents in 1956. The volume of payments made during 1957 compared with that in 1956 was as follows:
Number

Classification
1956
Payments made:
SocialSecurity
Veterans' benefits
Income tax refunds
Veterans' national service life insurance dividend program.
Other
Adjustments and transfers
.
Savings bonds issued
TotaL.

.

1957

91, 748,764
62,333,759
34,195, 231
3, 840, 588
30, 897,368
659,088
2, 853, 628

104, 293,035
70, 271, 452
35,333,566
3,619,058
26,408.136
302, 516
2,941,416

226, 528, 426

243,169,178

Deposits, Investments, and Related Operations
Federal depositary system

'Government depositaries furnish the various departments and
agencies with certain banking and financial services other than those
provided by the Office of the Treasurer of the United States and the
Bureau of the Mint. In addition to the Office of the Treasurer of the
United States and the twelve Federal Reserve Banks and their
branches, more than 11,000 commercial banks have been designated
by the Secretary of the Treasury to serve as depositaries. Most of
these are designated to receive proceeds from deposits from taxpayers
and sale of public debt securities, and about 3,700 are authorized also
to receive deposits from Government agencies and to furnish other
fiscal services. The supervision of the depositaries, under the general
direction of the Fiscal Assistant Secretary, is exercised through the
Bureau and is administered through Department regulations governing
the authority, qualifications, and other requirements.
Investments

The Secretary of the Treasury, in accordance with various provisions of law, has the dut}^ of investing trust and other funds in obligations of the United States. The Investments Branch is charged with
handling investment transactions of various trust funds and maintaining records of such investm.ents. Records of securities held in
safekeeping by the Treasurer of the United States and the Federal
Reserve Banks subject to the order of the Secretary of the Treasury
also are maintained by this Branch. Investment accounts handled
primarily by the Treasury are shown in table 51. The facilities of the
Treasury Department are used also for investment transactions for
other agencies of the Government, for quasi-governmental funds, and
for the Governm.ent of the District of Columbia.
f Revised.




96

1957 REPORT OF THE SECRETARY OF THE TREASURY

Highway trust fund.—Pursuant to Section 209 of the Highway
Revenue Act of 1956 (23 U. S. C. 173), approved June 29, 1956, the
highv^ay trust fund was established in the Treasury Department.
The act requires the Secretary of the Treasury to estim.ate the amounts
of Federal excise taxes on gasoline, tires, trucks, and other highwayuser levies to be transferred from the general fund and the amounts
which will be available for expenditures, and to invest such portion of
the fund as is not, in his judgm.ent, required to m.eet current withdrawals. Under the act it is also the duty of the Secretary of the
Treasury, after consultation with the Secretary of Comm.erce, to
report annually to the Congress on the financial condition and the
results of operations of the trust fund. The first such report was
transm.itted in a letter from the Secretary of the Treasury, dated
February 28, 1957 (exhibit 52). Appropriations made to the trust
fund during 1957 amounted to $1,478,925,050.21 and interest on
investments am.ounted to $3,094,002. Expenditures during the sam.e
period amounted to $965,683,564. Table 63 shows the status of the
fund as of June 30, 1957.
Loans and advances by the Treasury

Loan agreements with Government corporations and other agencies
which are authorized to borrow from the Treasury are prepared in the
Investments Branch. Records are maintained relating to loans and
also to subscriptions to the capital of Government corporations paid
by the Treasury.
Table 117 shows the status of loans m.ade by the Treasury to Government corporations and business-type activities, and repayments,
cancellations, and balances in the fiscal year 1957.
Saint Lawrence Seaway Development Corporation.—The act of May
13, 1954 (33 U. S. C. 981-985), established the Saint Lawrence Seaway
Development Corporation to construct that part of the Saint Lawrence
Seawaj? in United States territory in the interest of national security.
The act provided that the corporation may issue revenue bonds payable from corporate revenue to the Secretary of the Treasury to
finance its activities, and authorized and directed the Secretary to
purchase any obUgations of the corporation. Public Law 85-108, approved July 17, 1957, amended the origina] act by increasing the
total face value of all bonds which m.ay be so issued from $105,000,000
to $140,000,000; increased the amount of bonds which m.ay be issued
in any one year from 40 percent to 50 percent of the total, and also
provided that any interest accrued on such bonds and deferred by the
Treasury Department during the period prior to the collection of
revenues m.ay not be charged against the debt limitation of
$140,000,000.
During the fiscal year the Secretary of the Treasury purchased bonds
totaling $32,300,000. As of June 30, 1957, total purchases amounted
to $48,300,000.
Colorado River Dam fund.—The act of December 21, 1928 (43
U. S. C. 617a) established the Colorado River Dam fund. An explanation of the purposes and financial operation of the fund appeared
in the Annual Report for the fiscal year 1946, page 119. The status
of the fund is shown in table 55 of this report.




ADMINISTRATIVE REPORTS

97

Refugee relief.—The Refugee Relief Act of 1953, Section 16 (50
App. U. S. C. 1971n), authorized the Secretary of the Treasury to make
loans, not to exceed $5,000,000 in the aggregate, to public or private
agencies of the United States to finance the transportation, from ports
of entry to the places of resettlem.ent in the United States, of persons
receiving immigrant visas under the act who lacked the resources to
finance the expense involved. During the life of the act, which expired Decem.ber 31, 1956, twenty-nine agencies were certified by the
Departm.ent of State to the Treasury as eligible organizations to make
applications for loans. During the fiscal year ended June 30, 1957,
applications for loans aggregating $30,000 were approved by the
Secretary of the Treasury of which $15,000 was advanced. Table 74
shows those agencies which have had loans approved and the status of'
such loans.
District of Columbia.—Under the District of Columbia Appropriation Act of June 2, 1950, as am.ended (D. C. Code, Sec. 43-1540, 1951
edition), the Commissioners of the District of Colum.bia are
authorized to borrow funds not to exceed $35,000,000 from the
United States Treasury to finance the expansion and improvement of
the water system of the District of Columbia. Loans made during
the fiscal year amounted to $3,900,000. Through June 30, 1957,
total loans made for this purpose amounted to $8,100,000.
Surety bonds

Certificates of authority are issued by the Secretary of the Treasury
to corporate sureties makiag application and qualifying under the act.
approved July 30, 1947 (6 U. S. C. 8) to execute bonds in favor of the
United States. The Treasury publishes annually, on or about May 1,
a list of companies holding such certificates of authority. The Bureau
ot Accounts examines the applications of companies requesting authority to write Federal bonds and currently reviews the qualifications of
the companies so authorized. I t also examines and approves as to
corporate surety practically all bonds in favor of the United States,
except certain bonds of the Post Office Department and Department
of the Army, and has custody of a large portion of the bonds examined
with the exception of contract bonds.
As of June 30, 1957, there were 171 companies holding certificates
of authority, qualifying them as sole sureties on recognizances, stipulations, bonds, and undertakings permitted or required by the laws of
the United States, to be given with one or more sureties. There were
also 19 companies holdiug certificates of authority as acceptable
reinsurers only, issued under Department Circular No. 297, as
amended. Duruig the fiscal year certificates of authority to act as.
sole sureties were issued to 16 additional companies and the authority
of 3 was revoked. Certificates were issued to 2 additional companies
as acceptable reinsurers only under Department Circular No. 297, as
amended. The authority of 2 reinsurers was revoked and the authority of 1 reinsurer was extended to that of a sole surety. During the
year, 37,067 bonds and consent agreements cleared through the
Bureau for approval as to corporate surety.
Public Law 323, approved August 9, 1955 (6 U. S. C. 14), requires
the head of each department and independent establishment in the
438363—58

8




98

1957 REPORT OF THE SECRETARY OF THE TREASURY

executive branch of the Federal Government to obtain, under regulations promulgated by the Secretary of the Treasury, blanket, position
schedule, or other types of surety bonds covering civUian officers and
employees and mUitary personnel of each department or independent
establishment who are required to be bonded, and to pay bond premiums from any funds available for administrative expenses of the
em ploying agency.
The act also requires the Secretary of the Treasury to transmit to
Congress on or before October 1 of each year a comprehensive report
of bonding activities under the act. A summary of the information
reported by agencies for transmission to Congress in October 1957,
showing bonds in force June 30, 1957, as compared with coverage
April 30, 1956, foUows.
status of coverage in force
As of April 30,
1956
Number of oflQcers and employees covered
....
Number in Internal Revenue Service covered ^
Aggregate penal sums of bonds procured
Penal sums procured by Internal Revenue Service coverage V
Total premiums paid by:
Government
Internal Revenue Service i
Administrative expenses

930,164
' 24,859
$3, 291,163, 250
1 $140, 675,000
$598,256
1 $30, 236
$24,896

As of June 30,
1957
957,585

0)

$3, 459, 393,385

0)

$720, 904

0)

2 $20,748

• Bonds were originally procured by the Internal Revenue Service under the provisions of the Internal
Revenue Code of 1954 (26 U. S. C. 7803 (c)), for one year. Bonds were renewed during the fiscal year 1957
under the act of August 9,1955.
2 Administrative expenses were lower in fiscal 1957 as few bonds were procured during that year.

, Foreign Indebtedness
World War I

The Government of Finland made its annual payment in the amount
of $396,161.86 to the Treasury Department during the fiscal year 1957
representing installments of principal and interest which became due
December 15, 1956, and June 15, 1957, under the funding agreement
of M a y 1, 1923, and the moratorium agreements of May 1, 1941,
and October 14, 1943, relating to indebtedness growing out of World
War I. This amount was made available to the Department of
State for financing educational exchange activities in Finland and the
United States, in accordance v^th provisions of the act of August 24,
1949 (20 U. S. C. 222).
Tables 109 and 110 show the status of World War I indebtedness
of foreign governments to the United States.
Mixed Claims Commission, United States and Germany

The amount of $3,000,000 was received from the Federal Republic
of Germany in April 1957. This represents the fifth annual installment due under the terms of the agreement signed at London on
February 27, 1953, in partial settlement of German debts arising
from World War I. A summary of the terms of this agreement was
included in the Annual Report for 1954, page 109. This payment
permitted a further distribution of 5.3. percent on account of interest




ADMINISTRATIVE REPORTS

99

accrued on Class I I I awards (those over $100,000) of the Mixed Claims
Commission, United States and Germany, and of payments under
Private LawsNo. 509, approved July 19, 1940. A statement showing
payments on awards and the status of the accounts as of June 30, 1957,
is shown in table 102.
World War II

The Treasury Department received payments during 1957 from
debtor governments under lend-lease and surplus property agreements
in United States dollars amounting to $129.8 million, foreign currencies having an equivalent value in United States dollars of approximately $56.7 million, and real property and improvements to real
property having an estimated value of $.1 million, resulting in credits
totaling $186.6 mUlion to the debtor governments' accounts.
From inception of the lend-lease and surplus property programs,
payments in foreign currencies and real property and improvements
represent a total estimated value received of $392.4 million, while the
total United States dollar receipts and other credits have amounted
to $2,780.4 million.
Treasury sUver bullion totaling 409,782,670.47 fine troy ounces and
valued at $291,401,009.98 was transferred to certain foreign governments during World War I I for coinage and industrial use, pursuant
to the Lend-Lease Act of March 11, 1941 (22 U. S. C. 411-419). A
total of 97,142,341 fine troy ounces of sUver, valued at $67,585,043,
was received by the Treasury Department as repayments on these
accounts during the year. As of June 30, 1957, foreign governments
have returned a total of 155,973,431 fine troy ounces having a dollar
valueof $110,914,440.
The indebtedness of foreign governments under lend-lease and
surplus property sales agreements is stated in table 112. As of
June 30, 1957, the accounts receivable amounted to $2,080 million,
including the silver transferred under the lend-lease program.
Credit to the United Kingdom

The sixth annual payment of principal in the amount of $48,950,802.52 against the loan of $3,750,000,000 under the Anglo-American
Financial Agreement dated December 6, 1945, was made by the United
Kingdom on December 31, 1956. The amount of $70,385,447.48
representing interest due December 31, 1956, was deferred under an
amendment to the original agreement dated March 6, 1957, and
approved by Public Law 85-21 dated April 20, 1957. This amendment also permitted the deferment of interest installments which
became due on December 31, 1956, on the lend-lease and surplus
property accounts. (See exhibit 19.)
Germany, postwar (World War II) economic assistance

The agreement signed February 27, 1953, by the Federal Republic
of Germany and the United States provided for the settlement of
the claim of the United States for postwar (World War II) economic
assistance furnished Germany. The interest payments provided for
in the agreement in the amount of $12,500,000 each were received on
July 1, 1956, and January 1, 1957. Payments on the principal are
not due until July 1, 1958.




100

195 7 REPORT OF THE SECRETARY OF THE TREASURY
Claims Against Foreign Deposits

Foreign Claims Settlement Commission

The International Claims Settlement Act of 1949, as amended b y
an act approved August 9, 1955 (22 U. S. C. 1641-1641q), provides aprogram for receiving and determining claims of nationals of the United.
States against Soviet Russia which arose prior to November 16, 1933,
and a prefen-ed category for judgment and attachment lien-holders on
Russian properties transferred to the United States under the Litvinov
Assignment. I t also provides for receiving and determining claims of
American nationals against the Government of Italy arising out of the
war in which Italy was engaged from June 10, 1940, to September 15,.
1947, and for which no provision was made in the Italian Peace Treaty.
I t further provides for receiving and determining claims for war d a m ages, nationalization of property, etc., and a limited category of contract claims of American nationals against the Governments of Rumania, Bulgaria, and Hungary. The time for filing claims against the
Soviet Union expired on March 31, 1956, and for claims against the
Governments of Bulgaria, Hungary, Rumania, and Italy, on September 30,1956. The foregoing claims are currently being adjudicated
by the Foreign Claims Settlement Commission of the United States..
The Treasury Department has been designated as the paying agent for
awards of the Commission based on these claims and certified for
payment under the above act. Under the law, the claims program isto be completed by August 9, 1959. The Secretary of the Treasury
has authorized payment from the Soviet, Italian, and Rumanian claimsfunds in full of the principal amount of each award of $1,000 or less,.
and payment of $1,000 on account of the principal of each award in
excess of $1,000.
Soviet claims fund.—The United States has collected the sum of
$9,114,444 representing the net proceeds of properties liquidated under
the so-called Litvinov Assignment. This amount, less a 5 percentstatutory deduction for administrative expenses, is to be paid out toclaimants as their interests may appear. Over 4,000 claims were filed
with the Commission. As of June 30, 1957, the Treasury had received
certifications from the Commission on 194 Soviet claim awards for
payment in the total principal sum of $1,231,537.
Italian claims fund.—Under the so-called Lombardo Agreement with,
Italy,, the Government of Italy deposited the sum of $5,000,000 with •
the Government of the United States for the settlement of the American claims against Italy. This amount, less a 5 percent statutory deduction for administrative expenses, is to be paid out to claimants as.
their interests may appear. Over 2,000 claims were filed with the
Com,mission. As of June 30, 1957, the Treasury had received ceitifications from, the Comm.ission on two Italian claim.s awards for payment
in the total principal sum of $15,462.
Rumanian claims fund.—^A claims payment fund of 20 to 24 million,
dollars is expected to become available from the net proceeds of the
disposition of certain vested Rumanian assets by the Office of Alien
Property, Department of Justice. As of June 30, 1957, there have
been received from the Office of Alien Property for credit to the
Rumanian claims fund amounts aggregating $15,362,841. This
amount, less the 5 percent statutory deduction for administrative




ADMINISTRATIVE REPORTS

101

^expenses, is to be paid out to claimants as their interests may appear.
Over 1,000 claims were filed with the Commission. As of June 30',
1957, the Treasury has received certifications from the Commission
on 47 Rumanian claims awards for payment in the total principal sum
•of $127,244.
Hungarian and Bulgarian claims funds.-—Claims payment funds of
approximately $3,000,000 each are expected to become available from
the net proceeds of the disposition of certain vested Hungarian and
Bulgarian assets by the Office of Alien Property. Over 2,700 Hungarian claims and approximately 400 Bulgarian claims were filed with
the Commission. As of June 30, 1957, the Treasury had received certifications from the Commission on 29 Hungarian claims awards and 64
Bulgarian claims awards in the total principal sums of $25,462 and
$121,913, respectively. At the present time, sufficient funds have not
been received from the Office of Alien Property to enable the Secretary
of the Treasury to authorize an initial distribution of these awards.
Yugoslav claims fund

The status of the Yugoslav claims fund as of June 30, 1957, is
shown in table 103. A final distribution has been suspended pending
the outcome of litigation brought by certain claimants.
American-Mexican Claims Commission

The final distribution on awards under the Convention of November 19, 1941, with Mexico was authorized during the fiscal year 1956.
Payments amounting to $21,440.50 were made" during fiscal 1957 to
individuals who had not previously submitted an appropriate voucher
for the final distribution or who had not in previous years furnished
adequate evidence of their right to payment. A statement of the
Mexican claims fund appears as table 101.
Trading with the Enemy Act, as amended

The act of August 6, 1956 (50 App. U. S. C. 6b), authorized the
Attorney General to dispose of the remaining assets seized under the
Trading with the Enemy Act prior to December 18, 1941. Pursuant
to the provisions of Section 1 (c) of the act, the Assistant Attorney
General of the United States transmitted $86,879.36 and $30,621.40
to be placed in blocked accounts in the names of Czechoslovakia and
Poland respectively, and $86,879.36 to be deposited in the Rumanian
claims fund created by Section 302 of the International Claims Settlement Act of 1949, as amended.
Payment of pre-1934 Philippine bonds

The Treasury Department makes payments of principal and interest
on pre-1934 bonds issued by the Government of the Republic of the
Philippines through the use of funds held in a trust account established
in the United States Treasury, as provided in the act of August 7,
1939, as amended (22 U. S. C. 1393 (g) (4) (5)). Table 71 shows the
status of this trust account as of June 30, 1957.
Withheld foreign checks

Treasury Department Circular No. 655, dated March 19, 1941, as
amended, prohibiting the delivery of United States Government




102

1957 REPORT OF THE SECRETARY OF THE TREASURY

checks to payees residing in certain foreign areas, continued in eft'ect
during 1957. This restriction applied during the year to Albania,
Bulgaria, Communist-controlled China, Czechoslovakia, Estonia,
Hungary, Latvia, Lithuania, Rumania, the Union of Soviet Socialist
Republics, the Russian Zone of Occupation of Germany, the Russian
Sector of Occupation of Berlin, and to Poland for most of the year.
On June 7, 1957, Treasury Department Circular No. 655 was amended
by Supplement No. 11 to permit the delivery of United States Government checks to payees residing in Poland. (See exhibit 49.)
Delivery of checks to nationals of North Korea is also prohibited
by Foreign Assets Control regulations issued by the Treasury Department on December 17, 1950, except to the extent that delivery has
been authorized by appropriate Ucense.
Other Activities
Management improvement program

Total annual savings for the Bureau arising from improvements
adopted during the year will equal 128.6 man-years with estimated
annual recurring savings of $497,388. Nonrecurring savings amounted
to $23,418. Effects of the improvement program are revealed by
examples of some of the more significant money-saving achievements.
These included, with the estimated annual savings indicated, the
realignment and redistribution of work and reorganization of production line activities, $111,000; the purchase of Tighter weight check
envelopes, $57,000; the preparation of income tax refund checks by
bill feed method, $56,000; and the reduction of personnel ceUings
based on increased production standards, $50,000.
In the field of electronics, the Bureau's continuous search for new
machine applications and improved methods is yielding dollar savings.
The Bureau has continued its efforts to provide effective training
for its employees and participation in special safety training sessions.
The procedure for reports control was applied in all divisions of the
Bureau. Employees of the Bureau submitted 232 suggestions during
the year under the cash awards program. Adopted suggestions numbered 126 on which awards aggregating $1,985 were approved. There
were 27 suggestions submitted by employees of other Government
departments and agencies, of which 6 were adopted and awards of
$325 paid. There were also 16 outstanding and superior work performance awards.
The Government Actuary

The Government Actuary prepares for the Secretary of the Treasury
estimates of the annual appropriations required to be made to the
foreign service retirement and disability fund and the District of
Columbia teachers' retirement and annuity fund, and makes actuarial
valuations of each fund at intervals of 5 years or oftener if deemed
necessary by the Secretary. The Government Actuary also prepares
for the Secretary cost estimates of proposed legislation regarding other
Government retirement systems, as requested; such as the policemen
and firemen's retirement and disability system for the District. In
addition, the Actuary is a member of the Board of Actuaries for which
provision is made in the Uniformed Services Contingency Option Act




ADMINISTRATIVE REPORTS

103

(10 U. S. C. 1443). The second annual report on the operations
under the act was submitted in fiscal 1957.
Other work carried out by the Government Actuary includes
analyses and schedules in connection with Treasury loan and borrowing operations. Analyses and schedules are prepared also for other
Government agencies requesting actuarial assistance from the Treaisury Department.
Donations and contributions

So-called '^Conscience fund" contributions amounting to $64,386
and other unconditional donations amounting to $75,618 were deposited in the general fund by the Treasury Department during the
year. Other Government agencies received and deposited into the
general fund '^Conscience fund" contributions and unconditional donations amounting to $23,636 and $3,928 respective^. There was
also deposited to the credit of Library of Congress trust funds, permanent loan account $217,152, representing cash donations and proceeds
from the sale of securities belonging to the funds. Conditional gifts
in the amount of $711,000 were received to further the defense effort.
This amount was transferred to appropriation accounts deemed
proper to carry out the purposes for which the gifts were made.
Government losses in shipment

By a self-insurance plan the Government assumes the risk on its
shipments of mone}'^, bullion, securities, and other valuables while in
transit between the Treasury, other Government departments and
agencies, and depositaries. The plan, which supplanted contracts
with private insurance companies, eft'ective July 1, 1937, was established by the Government Losses in Shipment Act (5 U. S. C. 134134h; 31 U. S. C. 528, 738a, 757c (i)), and is under the jurisdiction of
the Treasury Department. The Bureau of Accounts is responsible
for the administrative work in connection with the payment of claims
for losses. On December 7, 1956, the regulations governing claims
were amended by Department Circular No. 577, Supplement No. 4
(see exhibit 45).
During the fiscal year 1957, claims amounting to $46,224.98 were
paid from the revolving fund established under the act, while recoveries
amounted to $710.58, making a net expenditure of $45,514.40 for
losses. Detailed statements relating to the operation of the Government Losses in Shipment Act are given in table 100.
Deposits of interest charged on Federal Reserve notes

Section 16 of the Federal Reserve Act (12 U. S. C. 414) authorizes
the Board of Governors of the Federal Reserve System to charge
Federal Reserve Banks interest on the amount of unredeemed Federal
Reserve notes issued to such banks in excess of gold certificates held
as collateral against such notes. By the exercise of tbis authority,
annual interest payments equal to approximately 90 percent of the
net earnings of the Federal Reserve Banks have been made to the
United States Treasury beginning in 1947.
The amount deposited in the fiscal year 1957 was $433,500,482 as
compared with the deposit of $287,280,500 in 1956. The total deposits since 1947 have amounted to $2,570,942,461 as shown in
table 13.




104

195 7 REPORT OF THE SECRETARY OF THE TREASURY

Withholding of income taxes for States and Territories

An agreement with the State of Indiana was concluded under the
act of July 17, 1952 (5 U. S. C. 84b, 84c), which authorizes the Secretary of the Treasury to enter into agreements with States for the
withholding of State income taxes from the compensation of Federal
employees regularly employed in the State. The agreement, which
was the thirteenth one made with States and Territories, provided
that withholding would commence with wages paid on or after July 1,
1957, or as soon thereafter as possible, but not later than August 15,
1957.
BUREAU OF THE PUBLIC DEBT

The Bureau of the Public Debt, in support of the management of
the public debt, has responsibility for the preparation of offering
circulars, the formulation of instructions and regulations pertaining
to each security issue, the direction of the handling of subscriptions
and making of allotments, the issuance of the securities and the conduct or direction of transactions in the issues outstanding, the final
audit and custody of retired securities, the maintenance of the control
accounts covering all public debt issues, the keeping of individual
accounts with owners of registered securities and the issue of checks
in payment of interest thereon, and the handling of claims on account
of lost, stolen, destroyed, or mutUated securities.
Two principal offices are maintained, one in Washington, D. C ,
which issues and conducts the subsequent transactions in public debt
securities (including governmental agency securities) outstanding
other than savings bonds, and audits and maintains custody of these
securities as they are retired; the other in Chicago, 111., where the
functions relate to transactions in savings bonds after their issue to
the public. In addition to the two principal offices, three field branch
audit offices, located in New York, Chicago, and Cincinnati, are maintained for the purpose of auditing retired savings bonds and preparing
records reflecting their retirement.
Under Bureau supervision, many transactions in public debt
securities are conducted through nationwide agents, which are,
principally. Federal Reserve Banks, as fiscal agents of the United
States, and their branches; selected post offices, financial institutions,
industrial organizations and others, approximately 23,000 in all,
which cooperate in the issuance of savings bonds; and over 18,000
financial institutions that redeem savings bonds.
Bureau~administration

Management improvement.—The fiscal year 1957 has been marked
by major accomplishments in the field of management improvement.
Three studies of major importance culminated in decisions with farreaching effects.
The Secretary approved the issue of LTnited States savings bonds
of Series E in punch card form. The punch card bond wUl closely
resemble the present paper type bond but the size wUl be reduced
from IYA by 4}^ inches to 7% by ?>){ inches. A contract for the manufacture of the card bond was let and the first punch card bonds were




ADMINISTRATIVE REPORTS

105

issued on October 1, 1957. The Bureau's administrative appropriation for the fiscal year 1958 was reduced by $500,000 in anticipation
of the savings to be realized in printing costs as a result of the conversion from the paper bonds to the card bonds. (See also exhibit 8.)
The Bureau also received approval for the employment of electronic data processing equipment and techniques in the issue and
retirement operations for card bonds. This decision was the result
of more than a year's study of various electronic systems, their
capabilities, and possible application to this Bureau's large volume
operations. The adoption of the punch card bond makes possible
the use of electronic machines which should result in the processing
of masses of data with greater efficiency and at a lower cost. Arrangements for the procurement and installation of such equipment are
now being made. In order to further the development of a more
effective performance of Bureau-wide operations, a new processing
center was established in Parkersburg, W. Va., during August 1957,
equipped to handle the registration stubs from card bonds issued and
card bonds retired.
Largely as a result of the decision to ship all retired card bonds to
the Parkersburg Processing Center, plans have been made to close
the Chicago savings bond audit branch of the Division of Retired
Securities. All shipments of bonds to that office were discontinued
on June 1, 1957, and the office ceased operations on August 1, 1957.
All retired paper bonds will contiaue to be handled by the two remaining savings bond audit branches in New York and Ciacinnati.
Savings realized from the closiag of the Chicago saviags bond audit
braach will offset in part the costof the new installation at Parkersburg.
As a result of the study of the major phases of the cash public
debt accounting system completed during 1957, the responsibility of
maintainiag detailed cash accounts relating to public debt principal
charges and priacipal credits in the accounts of the Treasurer of the
United States was transferred, effective July 1, 1957, from the Office
of the Treasurer to the Bureau of the Public Debt. Such charges
and credits will thereafter be reported daily to the Treasurer's Office
only at the summary public debt level. These operations have been
programmed to utilize fully punched-card techniques. A monthly
report, reflectiag all public debt priacipal debits and credits, will be
submitted to the Bureau of Accounts in lieu of various detailed
reportiag media. This revised procedure eliminates duplication of
accounting records, reduces the flow of documentation between Fiscal
Service offices, and simplifies the report form which provides the basis
for appropriation action.
In addition to these three major developments, the Bureau has
continued to implement its management improvement program, in
other areas. A review of the procedures followed by the Federal
Reserve Banks in reusing bearer securities received ia exchange
transactions has led to changes in departmental requirements, which,
in turn, have made it possible for the banks to shnplify their handling
procedures and reduce costs. The Chicago departmental office
has adopted the duo method of filming savings bond registration
stubs, which employs a greater reduction ratio and permits substantial economies in the use of film. Fees due paying agents who
redeem savings bonds are now paid by checks drawn on the Treasurer




106

195 7 REPORT OF THE SECRETARY OF THE TREASURY

of the United States, rather than by drafts drawn on the Federal
Reserve Banks. This change greatly simplified procedures in the
Banks and in this Bureau, and the Federal Reserve Banks have been
relieved of the necessity of carrying the ''float" on paid drafts between
the date of their payment and the date of reimbursement by the
Treasury. An adjustment ticket prepared in the savings bondaudit branch offices in connection with discrepancies disclosed in
audit has been revised so that the Federal Reserve Banks can use
copies of the same document as a basis for reimbursiag the paying
agents.
Among the continuing programs of the Bureau, the training and
records management programs have been particularly active during
the year. The executive and supervisory development phases of the
trainiag program have been especially emphasized. Bureau representatives attended several outside training courses on various aspects
of management. On-the-job, teclinical, and supervisory training
sessions conducted by Bureau personnel were continued, the most
extensive having been a series of six sessions to familiarize supervisors with all phases of the Bureau's management improvement
program. The records management program received additional
impetus from the approval of a comprehensive Bureau disposal
schedule. The program has been formalized, and emphasis on the
disposal aspect has resulted in a decrease of more than 25 percent
in the record accumulation in Washington. One of the more significant developments was the adoption of procedures bringing the
forms control and records management programs together more
effectively.
Fifty-seven suggestions were adopted under the incentive awards
program; estimated savings totaled $24,089 and awards paid amounted
to $1,380. Superior performance awards were made to 144 employees,
and 47 employees shared in four group awards. The Bureau has
been active in developing plans for recognizing and awarding employees engaged in measurable work of a repetitive nature whose
production or accuracy is superior.
The public debt.—A summary of public debt operations handled by
the Bureau appears on pages 26 to 33 of this report, and a series of
statistical tables dealing with the public debt will be found in tables
16 to 49.
The public debt of the United States falls into two broad categories:
(1) public issues, and (2) special issues. The public issues are
classified as to marketable obligations, consisting chiefi}^ of Treasury
bills, certificates of indebtedness. Treasury notes, and Treasury bonds;
and nonmarketable obligations, consisting chiefly of United States
savings bonds and Treasury bonds of the investment series. Special
issues are made by the Treasury directly to various Government
funds and payable only for account of such funds.
During the fiscal year 1957 the gross public debt decreased by
$2,224 mUlion and the guaranteed obligations held outside the Treasury
increased by $33 million. The most significant change in the composition of the outstanding debt during the year was the decrease of
$3,863 million ifl interest-bearing nonmarketable public issues, nearly




ADMINISTRATIVE

107

REPORTS

three-fourths of .which was due to the decrease during the year of all
United States savings bonds outstanding. Total public debt issues,
including issues in exchange for other securities, amounted to $189,975
million during 1957, and retirements amounted to $192,198 million.
The following statement gives a comparison of the changes during
the fiscal years 1956 and 1957 in the various classes of public debt
issues.
Increase, or decrease (—)
(In millions of dollars)
Classification
1956
Interest-bearing debt:
Treasui-y bonds, investment series
Treasury savings notes
United States savings bonds
Marketable obligations
Special issues
Other
Total interest-bearing debt
Matured debt and debt bearing no interest
TotaJ

1957

-579
-1,913
-869
-254
1,864
-107

-2,875
752
1,713
-114

-1,858
235

-1,398
-826

-874

- 2 , 224

United States savings bonds.—In terms of volume of work, the issue
and redemption of United States savings bonds represent the largest
administrative problem of this Bureau. Since these bonds are in
registered form and in the hands of millions of people, establishing and
maintaining alphabetical and numerical records of nearly 1.9 biUion
of these bonds which have been issued since 1935, replacing lost,
stolen, and destroyed bonds, and handling and recording retired
bonds present administrative tasks of considerable magnitude.
Receipts from the sales of savings bonds during the year were
$4,881 miUion and accrued discount charged to the interest account
and credited to the savings bonds principal account amounted to
$1,216 mUlion, a total of $6,097 mUlion. Expenditures for redeeming
savings bonds charged to the Treasurer's account during the year,
including about $4,115 mUlion of matured bonds, amounted to
$8,958 million. The amount of savings bonds of all series outstanding
on June 30, 1957, including accrued discount and matured bonds, was
$54,996 million, a decrease of $2,861 million from the amount outstanding on June 30, 1956. Detailed information regarding savings
bonds will be found in tables 35 to 40, inclusive, of this report.
During the fiscal year 1957, 91.1 million stubs representing issued
bonds of Series E were received for registration, making a total of
1,896.9 mUlion, including reissues, received through Juiie 30, 1957.
These original stubs are first arranged alphabetically in semiannual
blocks, by name of owner, and microfilmed. They are then arranged
in the numerical sequence of their bond serial number in a full calendar
year file and microfilmed, after which they are destroyed. The
microfilms serve as permanent registration records. Of the aggregate
of 1,896.9 million Series E bond stubs received, 1,649.1 mUlion have
been completely processed and destroyed, leaving a balance of 247.8




108

195 7 REPORT OF THE SECRETARY OF THE TREASURY ,

million stubs in process at various stages of completion. Tbe followingtable shows the processing, by steps, of the registration stubs of
Series E savings bonds.
Stubs of issued Series E savings bonds in Chicago Oflice
(In millions of pieces)
Alphabetically
sorted

Period
Stubs
received

Cumulative through June 30, 1952
Fiscal year:
1953
---.
1954
1955
1956
1957
Total

:...
_...

.-

Alpha- Numeri- Destroyed:
cally
after
Restrict- Fine sort betically
prior to
filming
filmed
basis
filmed
filming 2
sorti

1,456.3

1,434.0

1,408.5

1,375,4

1, 293.0

1,286.7

82.8
88.2
87.0
91.5
91.1

84.0
89.0
88.4
87.2
88.9

59.8
82.0
99.3
85.0
90.4

62.3
82.2
88.1
88.0
108.1

66.4
72.7
25.7
5.8
192.3

67.9
73.3
29.9191. 3;

1, 896.9

1, 871.5

1, 804.1

1, 655.9

1, 649.1

1, 825. 0

1 Not in complete alphabetical arrangement but sorted to such a degree that individual stubs can be
located. Includes those stubs fine sorted.
2 Completely sorted.

The audit of retired savings bonds is conducted in the savings bond
audit branch offices of the Division of Retired Securities. There
were 100.2 mUlion retired savings bonds of all series received in the
branch audit offices during the year. Retired bonds are audited and
then microfilmed, after which the bonds may be destroyed. T h e
bonds of aU series received in these offices have been audited, microfilmed, and destroyed to the extent indicated in the following table.
Retired savings bonds of all series in the branch audit oflices
(In miilions of pieces)

Period

Bonds
received
Cumulative through June 30,1952
Fiscal year:
1953
^
1954 1955
1956
1957
Total

__

.._.

Audited

Micro- Balance Balance Destroyed
filmed unaudited unfilmed i

580.9

679.0

563.3

1.9

17.6

485.0'

88.4
97.3
99.0
97.4
100.2

88.5
96.0
98.1
96.5
102.1

92.1
95.5
98.7
96.0
99.8

1.8
3.1
4.0
4.9
3.0

13.9
4.6
4.9
6.3
6.7

111. a
. 81.6
102.0'
117. 9'
100. a

21, 063. 2

1, 060. 2

1, 045.4

3.0

6.7

997.5

1 Beginning June 30, 1954, excludes 9.4 million pieces of unfilmed spoiled stock transferred to permanent
storage and 1.7 million pieces of unissued'stock to be destroyed without microfilming.
2 Includes 1,008 million pieces of redeemed Series A-E bonds. Does not include approximately 460 mniion
bonds paid and filed prior to establishment of branch audit offices.

After the retired bonds have been audited in the branch audit
offices, a list of the serial numbers is transmitted to the Chicago departmental office where the serial numbers are posted to numerical
registers, and the postings are verified. The following statement
shows the status of the posting of all series of retired savings bonds.




109

ADMINISTRATIVE EEPORTS

R e t i r e d savings b o n d s of all series recorded i n Chicago Office
(In millions of pieces)
Period
N u m b e r of
retired
b o n d s reported

s t a t u s of posting
Posted

Verified

Unposted

1,042.0

1,041.7

1,039.5

0.3

87.7
94.6
101.3
98.2
100.1

88.0
89.9
102.7
96.7
99.0

87.5
88.7
123.7
93.4
102.3

4.7
3.3
4.8
5.9

1, 523.9

•Cumulative t h r o u g h J u n e 30, 1952
Fiscal year:
1953
1954 _
1955
1956
----1957

1,518.0

1,435.1

5.9

- -

Total

Unverified
2.2
2.7
3.9
8.1
4.8
4.8

1 During the period October 1954 to June 1955, only a 7 percent test verification was made of the postings.

Of the 93.0 mUlion Series A - E savings bonds redeemed prior to
release of registration and received in the branch audit offices during
the year, 91.2 million, or 98.1 percent, were redeemed by more than
18,000 paying agents. These agents were reimbursed for this service
in each quarter-year at the rate of 15 cents each for the first 1,000
bonds paid and 10 cents each for all over the first 1,000. The total
amount paid to agents on this account during the year was $11,358,654,
which was at the average rate of 12.45 cents per bond.
The following table shows the number of issuing and paying agents
for Series A - E savings bonds, by classes.
Post
offices

J u n e 30

Banks

Building
a n d savings a n d
loan associations

Credit
unions

Companies
operating
payroll
plans

All
others

Total

Issuing agents
1945
"1950
1955
1956
1957

-

-

__.

_ _

24,038
25,060
2 2,476
21, 768
2 1,401

15,
15.
15,
15,
15,

232
225
692
845
978

3,477
1,557
1,555
1,606
1,665

2,081
522
428
411
379

1 9, 605
3,052
2,942
2,898
2,788

550
588
626
611

54,433
45, 966
23, 681
23,154
22,822

57
56
54
69

13,466
16, 691
17, 652
17, 933
18,282

P a y i n g agents
1945
- .
1950
1955
1956
1957 ._
-

-_

-

13, 466
15, 623
16, 269
16, 441
16, 613

874
1,188
1,300
1,438

137
139
138
172

1 Includes all others.
2 Estimated by the Post Office Department. Sale of Series E savings bonds was discontinued at
post offices at the close of business on December 31,1953, except in those localities where no other public
facilities for their sale were available.

During the fiscal year 1957, 6,368,154 interest checks were issued
•on current income type savings boncls with a value of $368,758,161.
This was a decrease of 555,332 checks from the number issued during
1956, and a decrease of $29,449,602. A total of 217,194 new accounts




110

1957 REPORT OF THE SECRETARY OF THE TREASURY

was established compared with 368,066 in the previous year. As of
June 30, 1957, there were 2,266,440 active accounts with owners of
this type savings bonds, a decrease of 254,425 accounts from the
previous year. There was a reduction of 357,063 in accounts of
Series G bonds which have been maturing since May 1, 1953, and an
increase of 102,094 in accounts of Series H bonds, which were first
sold on June 1, 1952, and 544 in accounts of Serie-s K which were
first sold on May 1, 1952, and discontinued eflfective at the close of
business April 30, 1957.
There were 55,014 applications during the year for the issue of
duplicates of lost, stolen, or destroyed savings bonds, in addition to
1,765 cases on hand at the beginning of the year, making a total of
56,779 cases. In 34,413. cases the bonds were recovered, and in
20,519 cases the issuance of duplicate securities was authorized.
On June 30, 1957, 1,847 cases remained unsettled.
Other United States securities

During the year 25,795 individual accounts covering publicly held
registered securities were opened and 35,491 were closed. This
reduced the total of open accounts on June 30, 1957, to 198,964
covering registered securities in the principal amount of $19.1 billion.
There were 380,722 interest checks with a value of $526,398,120 issued
to owners of record during the year. This was a decrease of 18,045
checks from the number issued during 1956, and a decrease in value
of $44,150,190.
Redeemed and canceled securities received for audit included
3,011,000 bearer securities and 212,000 registered securities, a total
of 3,223,000, as compared with 3,180,000 in 1956; and 13,460,000
coupons were received, which was 540,000 less than in 1956.
OFFICE OF THE TREASURER OF THE UNITED STATES

The Treasurer of the United States is charged by law with the receipt, custody, and disbursement upon proper order of the public
moneys and is required by law and administrative authority with
maintaining records and making periodic reports on the source,, location, and disposition of these funcis.
Although the Treasurer does not maintain branch or field offices,
the Federal Reserve Banks, as fiscal agents of the United States, perform many fiscal functions for the Treasurer throughout the country.
These include the verification and destruction of United States paper
currency, the redemption of public debt securities from the Treasurer's funds, holding on deposit most of the operating cash of the
Treasury, charging the Treasurer's account for the majority of the
checks drawn on the Treasurer, and the acceptance of deposits made
by Government officers for creciit of the Treasurer.
Commercial banks within the United States and its possessions, and
in foreign countries also are utilized by the Treasurer to provide banking facilities for local activities of the Government. Information on
the transactions handled in the name of the Treasurer by the Federal




ADMINISTRATIVE REPORTS

111

Reserve Banks and commercial banks flows into Washington where
it is taken into the Treasurer's general accounts.
Specifically, the Treasurer maintains current accounts of all receipts
and expenditures; pays the principal and interest on the public debt;
provides checking account facilities for Government disbursing officers, corporations, and agencies; pays checks drawn on the Treasurer
of the United States; procures, stores, issues, and redeems United
States currency; audits redeemed Federal Reserve currency; examines
and determines the value of mutilated currency; acts as special agent
for the payment of principal and interest on certain obligations of
corporations of the United States Government, Puerto Rico, and the
Philippine Islands; and maintains facilities in the Main Treasury
building for (a) the deposit of public moneys by Government officers,
(b) the cashing of United States savings bonds and checks drawn on
the Treasurer, (c) the receipt of excess and/or unfit currency and coins
from local concerns and banks, and (d) the conduct of transactions in
both marketable and nonmarketable public debt securities for banks
and for the public. The Office of the Treasurer prepares the Daily
Statement of the United States Treasury and the monthly Circulation
Statement of United States Money.
Under authority delegated by the Comptroller General of the United
States, the Treasurer acts upon claims arising from the forgery of
endorsements and other irregularities involving checks paid by the
Treasurer and, in the case of unpaid checks which are lost or destroyed,
instructs the claimants how to obtain substitute checks.
The Treasurer of the United States is also Treasurer of the Board of
Trustees of the Postal Savings System, and custodian of bonds held
to secure public deposits in commercial banks, bonds held to secure
postal savings on deposit in such banks, and miscellaneous securities
and trust funds.
Management improvement and internal audit

Continuing its program of appraising and reviewing operations and
methods, the Office has made changes during the fiscal year which
resulted in economies and increased efficiency. Among the more
significant improvements were the following:
Nearing com.pletion is the program to pay and reconcUe through
the use of electronic equipm.ent an annual volume of approximately
390 mUlion checks drawn on the Treasurer of the United States. This
program requires that all such checks be in card form payable only in
Washington, and that checking accounts be converted to 4-digit
symbols. As of June 30, 1957, checking accounts with an annual
volume of approximately 285 miUion checks had been converted. The
rem.aining accounts wUl be converted on or before January 1, 1958.
Even before installation of the electronic ecjuipment, this Office
began an intensive program to place in continuing positions employees who would be affected by the changeover. During the past
fiscal year 90 employees of the Check Payment and Reconciliation
Division were reassigned to other jobs in the Office or Departm^ent, or
were transferred to other agencies. Indications are that the Office will
be successful in completing the installation of the new system, without
dismissals of any employees.




112

1957 REPORT OF THE SECRETARY OF THE TREASURY

Adoption in disbursing operations of standard multiple-part forms
in connection with stoppages of payment against checks drawn on the
Treasurer and the handling of certain checks as collection items
effected savings in personnel and printing costs. Requisitioning
Treasurer's blank checks on a yearly instead of a continual basis also
resulted in personnel savings and better use of manpower in disbursing
operations.
The loss of coin bags furnished b}'^ the Treasurer when issuing coin
to local banks and public utilities has been materially reduced by personal contacts and close followups. Additional savings have been
made by repairing and reclaiming those bags cut or torn in use which
formerly had been discarded.
The Bureau released over 16,000 square feet of space for other
assignment, and a considerable quantity of furniture and equipment
was declared surplus.
Internal audits provide management with independent appraisals
of the fiscal activities of the Bureau. During the past fiscal year the
internal audit program was expanded to include the Division which
maintains the Treasurer's accounts, expendable supplies and personal
property of the Bureau, contractual policies relating to purchase and
selection of bids, and processing of claims and issuing of settlement
checks out of the reclam,ation suspense and forgery accounts. Audits
of cash, securities, and other assets aggregating many millions of
dollars were made. A number of recommendations resulting from the
audits were adopted to im.prove accountability for and control over
the assets for which the Treasurer is responsible.
Reports control, supervisory training, forms analysis and control,
and records management are all continuing programs. Under the
incentive awards program 7 cash awards were made for suggestions
adopted, 20 for outstanding performances, 19 for sustained superior
performance, and 9 were cited in group awards. Also, two employees
received the Treasury's Meritorious CivUian Service Honor Award
and another employee was given an Honorary Certificate, in addition
to a cash award, as the top winner of the Treasury Awards Committee
Poster Contest.
Moneys received and disbursed by the Treasurer

Moneys collected by Government officers are deposited with the
Treasurer at Washington, in Federal Reserve Banks, and in designated Government depositaries for credit of the account of the Treasurer of the United States, and all payments are charged against tbis
account. Total moneys received and disbursed for the fiscal years
1956 and 1957 are shown in the following table on the basis of the
Final Statement of Receipts and Expenditures of the United States
Government for the fiscal year 1957.




113

ADMINISTRATIVE REPORTS
Receipts, e x p e n d i t u r e s , a n d T r e a s u r e r ' s a c c o u n t
Receipts:
• "Budgetary (net)i
T r u s t accounts, e t c . 2 —
Public debt 3

1956

1957

Subtotal
B a l a n c e in t h e T r e a s u r e r ' s a c c o u n t a t beginning of y e a r
Total
Expenditures:
Budgetary •
«
T r u s t accounts, etc.2
I n v e s t m e n t s of G o v e r n m e n t agencies in p u b l i c d e b t securities
(net)
Sales a n d r e d e m p t i o n s of obligatipns of G o v e r n m e n t agencies in
m a r k e t (net)
C h a n g e s in a c c o u n t s necessary to reconcile to T r e a s u r y cash
Increase, or decrease (—), in balance of cash held o u t s i d e t h e
Treasury
Public debt 3
Subtotal
B a l a n c e in t h e T r e a s u r e r ' s a c c o u n t a t close of year

$68,165,329, 582
11, 685, 276, 896
172, 465,092, 527

$71,028, 649, 978
14,368, 794, 323
189, 974, 734, 733

252, 315, 699,005
6, 215, 665,047

275, 372,179,034
6, 546,183,869

258, 531, 364, 052

_...
.

281, 918, 362, 903

66, 539, 776,178
9, 435, 321, 817

69, 433,078, 428
12, 959, 315, 788
2, 299, 605, 800

- 1 7 3 , 429,163
r - 3 0 8 , 913, 913

-1,084,858,800
518, 305, 206

r - 2 1 3 , 041, 240
174, 088, 501, 681

4, 587, 633
192,198, 376, 486

251, 985,180,186
6, 546,183, 869

276, 328, 410, 541
5, 589, 952, 362

258, 531,364,055

Total

2, 616, 964, 826

281, 918, 362, 903

r Revised d u e to reclassification of a c c o u n t s .
1 T o t a l b u d g e t receipts less a m o u n t s transferred to t h e F e d e r a l old-age a n d s u r v i v o r s i n s u r a n c e t r u s t
fund a n d t h e railroad r e t i r e m e n t a c c o u n t a n d refunds of receipts. F o r details of receipts for 1957, see t a b l e 3.
2 F o r details for 1957, see t a b l e 5.
3 F o r details for 1957, see t a b l e 28.
^See t a b l e 1, footnote 3. F o r details for 1957, see t a b l e 3.

Assets and liabilities of the Treasurer's accounts.—The assets of the
Treasurer consist of gold and silver bullion, coin and paper currency,
deposits in Federal Reserve Banks, and deposits in the commercial
banks designated as Government depositaries.
A summary of the assets and liabilities in the Treasurer's accounts
at the close of the fiscal years 1956 and 1957 is shown in table 50.
Gold.-—Gold receipts during 1957 amounted to $1,042.6 million and
disbursements totaled $219.2 million, a net increase of $823.4 million
based on the daily Treasury statement. This increase brought the
total gold assets to $22,622.6 million on June 30, 1957. Liabilities
agaiQst these assets were $21,977.2 million of gold certificates and
credits payable in gold certificates and $156.0 million for gold reserve
against currency. The gold balance in the Treasurer's account on
June 30, 1957, was $489.3 million.
Silver.—During the year 5.3 million ounces of silver bullion, which
had been carried in the Treasurer's accoimt at a cost of $4.8 million,
were monetized at a monetary value of $6.9 million. This $6.9 million
increase in silver assets was offset by a decrease of $17.6 million in
holdings of silver dollars, making a net decrease of $10.7 million in
assets during the year. As of June 30, 1957, the silver assets of the
Treasurer (exclusive of subsidiary coin and bullion held in the Treasurer's account at cost and recoinage value) amounted to $2,438.8
million.

438363—58

y




114

1957 REPORT OF THE SECRETARY OF THE TREASURY

Liabilities against silver at the end of the year amounted to $2,409.3
million for silver certificates outstanding and $1.1 million for Treasury
notes of 1890 outstanding, leaving a net balance of $28.4 million in
the Treasurer's account.
The silver bullion held in the Treasurer's account at cost value (exclusive of the $28.4 million at monetary value) increased from $40.0
million on June 30, 1956, to $70.4 million on June 30, 1957. This increase of $30.5 million is accounted for as follows: $68.4 million net
purchases of silver less $4.8 million of silver monetized and less
$33.1 million of silver used for coinage.
Paper currency.—Under the laws of the United States the Treasurer
is the agent for the issue and redemption of United States currency.
All United States paper currency is procured by the Treasurer from
the Bureau of Engraving and Printing and issued from Washington
under the supervision of the Cashier.
The redemption of United States currency, except that received
from local sources in Washington and burned and mutUated currency,
is now accomplished by the Federal Reserve Banks and their branches
acting as agents of the Treasury.
An interesting phase in the redemption of burned or mutUated
currency is the highly specialized work of a group of women in the
Currency Redemption Division. These women minutely examine
and succeed in identifying for lawful redemption millions of dollars
worth of such currency each year. Money which has been charred,
torn, become moldy, or even in clay-like chunks, is identified. Under
Treasury regulations (Department Circular No. 55), material submitted must not only be identifiable as currency, but must be in such
condition as to permit positive identification of the engraved designs
on the face side. Identification has often been made of burnt paper
currency when combustion was incomplete. Tools employed by these
examiners include spatulas, needles, tweezers, magnifying glasses,
electric lights, skill, and patience. Mutilated currency is so examined
for approximately 45,000 claimants annually, from all States of the
Union and the Territories. In fiscal 1957, the value of such currency
identified for lawful redemption amounted to more than $6,500,000.
Table 83 shows by class and denomination the value of paper currency issned and redeemed during the fiscal year 1957, and the
amounts outstanding at the end of the year. A comparison of the
amounts of paper currency of all classes, including Federal Reserve
notes, issueci, redeemed, and outstanding, during the fiscal years
1956 and 1957 follows.
1956
Pieces
Outstanding at beginning of year
Issues during year. ..
Redemptions during year
Outstand ing at end of year

1957
Amount

3, 213, 753, 534 $32, 486. 328, 270
1,808,868,363
8,156,080, 000
1, 712,181,080
7, 625, 364, 067
3, 310, 440, 817 33,017,044,203

Pieces

Amount

3,310,440,817 $33,017, 044, 203
1, 743, m , 238
8,087, 208,000
1, 685, 386, 962
7, 661, 416,915
3,368,064,093
33, 442,835, 288

For further details on stock and circulation of money in the United
States, see tables 78 through 82.




ADMINISTRATIVE

115

REPORTS

Depositaries.—The following table shows the number of each class
of depositaries and balances as of June 30, 1957.
Deposits to the
Number of
credit of the
deposiTreasurer of the
taries 1
United States
June 30,1957

Class

Federal Reserve Banks and branches
Other banks in continental United States:
General depositaries.
_
_
Special depositaries. Treasury tax and loan accounts
Insular and territorial depositaries
..Foreign depositaries 2..^

$799,858,300.39
325,126, 023. 42
4,081, 776,860. 23
47,355, 207.99
67,186.015.30

Total

12,566

5,321,302,407.33

1 Does not include limited depositaries which have been designated for the sole purpose of receiving deposits made by Government oflBcers for credit in their oflficial checking accounts with such depositaries and
which are not authorized to accept deposits for credit of the Treasurer of the United States.
2 Principally branches of institutions in the. United States.

Checking accounts of disbursing officers and agencies.—As of June 30,
1957, the Treasurer maintained 2,503 disbursing accounts as compared
with. 2,832 accounts on June 30, 1956. This reduction, like that of
last year, was caused mainly by consolidation of disbursing accounts,
principally in the Post Office Department. The number of checks
paid, classified according to disbursing officers, during the fiscal years
1956 and 1957 foUows.
Number of checks paid
Disbursuig oflficers
1956'

19571

_
__
_

_.

_

- -

-

- _

-- -.

232, 574,656
29, 111, 565
33, 362, 755
26,326,581
24, 256,885

244,991,164
27,963,906
33,201,413
28,376, 769
28, 568, 675

345,632,442

Treasury. ___
Army
Navy
Air Force
Other

363,101, 927

f Revised.
1 To be revised when final count is available.

Of the 363,101,927 checks paid during the fiscal year, 253,372,241
were paid by the Federal Reserve Banks and the ManUa branch of the
First National City Bank of New York acting as fiscal agents of the
Treasurer and the remaining 109,729,686 checks were paid by
the Treasurer in Washington.
Approximately one out of every four checks issued by the Government and its agencies in fiscal 1957 was for a payment from the
Federal old-age and survivors insurance trust fund. Also, one out of
every four checks was for the Department of Defense. These two
categories of expenditure accounted for approximately 53 percent
of the checks paid in the fiscal year.
Check claims.—During the fiscal year the Treasurer of the United
States handled 112,433 paid check claims, of which 24,857 cases were
referred to the United States Secret Service for investigation of the
forging, altering, counterfeiting, or fraudulent issuance and negotiation
of Treasury checks. The Treasurer reclaimed $1,679,252 from those




116

195 7 REPORT OF THE SECRETARY OF THE TREASURY

having liability to the United States as the result of improperly
negotiated checks and made settlements and adjustments in the sum
of $1,943,299 from funds recovered during and prior to the 1957 fiscal
year. Disbursements from the check forgery insurance fund, established by Congress to enable the Treasurer to expedite settlement of
check claims, totaled $134,215. Claims for the proceecls of 72,262
outstanding checks were processed, resulting in the issuance of 42,934
substitute checks totaling $14,310,605 by the Chief Disbursing Officer
to replace checks which were not received or were lost, stolen, or
destroyed.
The Treasurer adjudicated 536 forgery claims for the proceeds of
the Philippine War Damage Commission and Veterans Administration
United States depositary checks payable to residents of the Philippines
in indigenous currency and certified 188 disbursements totaling
87,854 pesos.
Under an additional delegation of authority from the Comptroller
General of the United States, dated December 13, 1956, the Treasurer
of the United States now reviews, examines, and disallows paid check
claims, the recognition of which is barred by applicable statutes of
limitation. Also, under the authorization contained ia general regulations promulgated November 9, 1956, by the Comptroller General,
the function of canceling unavailable 4-digit symbol card checks, the
proceeds of which are not due the payees or representatives of their
estates, has been delegated to the Treasurer.
Treasurer's Cash Room.—The commercial checks, drafts, mone}^orders, etc., deposited by Government officers in the Treasurer's
Cash Room in Washington for collection aggregated 6,328,095 items
for the fiscal year 1957, as compared with 5,770,974 items for the
fiscal year 1956.
The Cash Division also prepared and sold to collectors approximately
46,000 sets of uncirculated coins minted in 1956. This service was
rendered at no expense to the Government as, in addition to the face
value of the coins, a fee of 50 cents a set was charged for the cost of
assembling and handling the coins.
Securities held in custody.—The face value of securities held in the
custody of the Treasurer as of June 30, 1956 and 1957, is shown in
the following table.
Purpose for which held
As collateral:
To secure deposits of public moneys iu depositary banks
To secure postal savings funds
In lieu of sureties—
In custody for Government officers and others:
For the Secretary of the Treasury i
For the Board of Trustees, Postal Savings System
For the Comptroller ofthe Currency
For the Federal Deposit Insurance Corporation
For the .Rural Electrification Administration
For the .District of Columbia
For the Commissioner of Indian Afiiairs
Foreign obligations
Others
For servicing outstanding Government issues: Unissued bearer securities
Total

1957

$340, 367, 400
29, 677, 800
7, 438, 700
23,142, 665,041
1, 378, 937,000
12, 428, 000
1,157, 709, 000
43, 784,810
32,821, 520
33, 669, 210
12, 086, 875,132
192, 825, 786
314, 452, 400

26,010, 142, 520
937,000
1, 096,
12, 925, 500
1,197, 509, 000
62, 042, 956
36, 249, 093
36, 081, 435
12, 083,875,132
108, 916, 090
394, 883,550

38, 773, 651, 799 41, 295, 465,376

' Includes those securities listed in table 113 as in the custody of the Treasury.
2 Includes United States savings bonds in safekeeping for individuals.




$221, 699, 400
27, 615, 000
6, 588, 700

117

ADMINISTRATIVE REPORTS

Servicing of securities for Federal agencies and for certain other governments

In accordance with agreements between the Secretary of t h e .
Treasury and various Government corporations and agencies and
Puerto Rico, the Treasurer of the United States acts as special agent
for the payment of principal of and interest on their securities (including pre-1934 bonds of the Philippine Government). The amounts
of such payments during the fiscal year 1957, on the basis, of the daily
Treasury statement, were as follows:
Principal

F e d e r a l h o m e loan b a n k s
$1,671,630,000
Federal farm loan b o n d s
429, 776. 200
F e d e r a l F a r m M o r t g a g e C?orporation...
29, 300
Federal H o u s i n g A d m i n i s t r a t i o n
39,043, 650
F e d e r a l N a t i o n a l M o r t g a g e Association.
199, 890 000
H o m e Ownei's' L o a n Corporation
55,150
Philippine Islands,
69,000
Puerto Rico.._._.
_.
957,000
Total

.

2, 341,450, 300

Interest paid
in cash
$34, 725, 952. 40
120, 529. 04
87.00
304, 279. 31
4,853,507.95

Registered
interest i

$1, 513,898. 91

C o u p o n interest

$35, 665, 070. 62
2, 858. 89

3,470, 899. 36

i, 517. 50
1, 680. 00

1, 822. 50
62, 625. 00

14,254, 525. 00
5, 662.17
171, 690.00
205,100.00

40,007, 553. 20

5, 049, 245. 77

50, 304,906. 68

1 On the basis of checks issueci.

Internal Revenue Service ^
The Internal Revenue Service is responsible for the collection of
the internal revenue and for the enforcem.ent of the internal revenue
laws and certain other statutes. These other statutes iaclude the
Federal Alcohol Administration Act (27 U. S. C. 201-212); the Liquor
Enforcement Act of 1936 (18 U. S. C. 1261, 1262, 3615); the Federal
Firearms Act (15 U. S. C. 901-909), and the National Firearms Act
(26 U. S. C. 5801-5862).
Review of operations

Collections.—Internal revenue collections for the fiscal year 1957
totaled $80.2 biUion, an increase of $5.1 billion from, the 1956 total.
"^^Tiile all major classes of taxes contributed to the increase, the
largest gain occurred in individual iQcom.e tax collections where the
continued rise in personal incomes was reflected.
Collections by tax sources for the fiscal years 1929-57 are shown in
detail in table 11 in the tables section of this report. A comparison
of collections from the principal sources of tax revenue for the fiscal
years 1956 and 1957 follows.
1 More detailed information will be found in the separate aimual report of the Commissioner of Internal
Revenue.




118

1957 REPORT OF THE SECRETARY OF THE TREASURY
I n t h o u s a n d s of dollars
Source
1956

I n c o m e a n d profits taxes:
Corporation
_
Individual:
Withheld b y employers * _
Other 1
._

21, 298, 522
_

_

.

.

^^--

T o t a l e m p l o y m e n t taxes -

T o t a l collections

26, 727, 543
12, 302. 229

. . .
.

35, 337, 642

39,029. 772

56, 636,164

-.

T o t a l tncome a n d profits t a x e s .
E m p l o y m e n t taxes:
Old-age a n d disability insurance ^
U n e m p l o y m e n t insurance
Carriers taxes—old-age benefits

21. 530, 653

24,015,676
11, 321. 966

.-

T o t a l i n d i v i d u a l income taxes

E s t a t e a n d gift taxes
Alcohol taxes
Tobacco taxes
O t h e r excise taxes
... .
T a x e s n o t otherwise classified 2

1957

60, 560, 425

6, 336,805
324, 656
634, 323

6, 634, 467
330,034
616,020

7, 295. 784

7, 580, 522

1,171, 237
2, 920, 574
1, 613, 497
5, 470,124
5,269

1, 377,999
2, 973,195
1, 674,050
5,990, 299
15, 482

75,112, 649

80,171,971

NOTE.—Collections in the fiscal year 1957 are adjusted to exclude transfers to the Government of Guam
under the act approved August 1. 1950 (48 U. S. C. 1421 h). Excluded for 1957 were $3,363,000 in individual
income tax withheld and $404,000 in corporation income tax.
1 Estimated. Collections of individual income tax withheld are not reported separately from old-age
and disability insm'ance taxes on wages and salaries. Similarly, collections of individual income tax not
withheld are not reported separately from old-age and disability insurance taxes on self-employment income.
The amount of old-age and disability insurance tax collections shown is based on estimates made by the
Secretary of the Treasury pursuant to the provisions of Sec. 201 (a) (4) of the Social Security Act as amended
(42 U. S. C. 401 (a)), and includes all old-age Insurance taxes and disabihty insurance taxes. The estimates
shown for the two classes of individual income taxes were derived by subtracting the old-age and disability
insurance tax estimates from the combined totals reported.
2 Includes amounts of unidentified and excess collections, depositary receipts outstanding 6 months or
more for which no tax account can be found, and profit from sale of acquired property.

Receipt and recording of returns.—The total number of tax returns
filed during fiscal 1957 was 93.2 million, representing an increase of
3.0 mUlion in the returns processing workload as compared with 1956.
Income tax returns filed by individuals and fiduciaries accounted for
60.2 million or nearly two-thirds of the total number received. The
number of information documents received and processed totaled
approximately 245 million.
About half of the increase in returns filed was accounted for by
individual and fiduciary income tax returns which rose 1.5 million.
Employment tax returns increased in number with the extension of
Federal Unemployment Tax Act coverage to include employers of
4 or more persons (formerly 8 or more) beginning with the tax year
1956. An increase in the number of excise tax returns resulted from
enactment of the Highway Revenue Act of 1956 (26 U. S. C. 4226,
4481).
. The processing operations included the assessment of the taxes
reported, verification of tax credits, computation or verification of
tax liability, the issuance of bills for unpaid accounts, and the scheduling of tax refunds. The tax liability was computecl by the Service
on 4.8 million Form 1040A returns, or about one-third of the 14.1
miUion individual income tax returns filed on this form; the remaining
two-thirds comprised returns on which taxpayers computed their
own tax prior to filing, under the option newly provided on Form
1040A for 1956. Income tax credits and refunds were scheduled for




ADMINISTRATIVE

119

REPORTS

over 35 mUlion individuals whose prepayments exceeded their
liabilities.
Verification of the mathematical steps shown in the taxpayers'
computations on income tax returns resulted in tax changes in
1,705,000 returns with tax increases aggregating $98,123,000 and tax
decreases totaling $42,979,000. The number and amount of these
adjustments increased, owing principally to the expansion of the
verification operation to include the Form 1040A returns previously
mentioned on which taxpayers took the new option of figuring their
own tax.
Enforcement activities.—Through continued improvement of selection and examination procedures and taxpayer assistance methods
the productivity of audit personnel was increased substantially.
This gain was reflected in the number of income tax returns examined,
which rose to 2,310,000 for the year as compared with 2,117,000 in
1956: A detailed comparison of the examined returns disposecl of by
the Audit Division in the 2 years follows.
In thousands of retums

Type of return

1956

1957

Income tax:
Corporation
Individual and fiduciary

166
1,951

170
2,140

Total income tax
Estate and gift taxes
Excise and employment taxes »

2,117
27
245

2,310
28
284

2, 389

2,622

Total examined returns disposed of.

1 Excludes examinations tn which there were no tax changes and which were completed as part of examinations covering both income and excise and/or employment tax returns.

The additional tax, interest, and penalties resulting from audit
totaled $1,451,674,000 for 1957, showing a gain of more than $200
million over the preceding fiscal year and representing the highest
total reached for any year since 1952. The amount saved through
the audit and disallowance of improper refund claims totaled
$497,653,000 as compared with $552,046,000 in the preceding year.
More attention was devoted to persons and firms who have failed
to file required returns and, as a result, the amount of tax, interest,
and penalty on delinquent returns was increased to $111,557,000 in
1957. A comparison of the overall enforcement revenue results for
1956 and 1957 follows.
In thousands of dollars

Source

1956
1,249,868
76,266
86,689

Additional tax, interest, and penalty resulting from audit
Increase in income tax resulting from mathematical verification
Tax, interest, and penalty on delinquent retums
Total
_
Claims disallow^ed

.

Grand total




._-

....

.\

1957

..

..

1, 451, 674
98,123
111, 557

1, 412,823
552,046

1, 661, 354
497, 653

1,964,869

2,159,007

120

195 7 REPORT OF THE SECRETARY OF THE TREASURY

For the second straight year inventories of past-due tax accounts
were reduced. At the close of fiscal 1957 delinquent accounts on
hand numbered 1,488,000 compared with 1,505,000 a year ago, and
the amount involved was $1,560,530,000 compared with $1,588,008,000
on the earlier date. Although the reductions were small, they were of
major significance in contrast to the pattern of steadily rising backlogs
which had prevailed in earlier years. The number of accounts placed
in the past-due category during 1957 was about 20 percent greater
than in the preceding year, mainly as a result of procedural changes
adopted in 1956 to provide earlier contact with delinquent taxpayers.
The number of closings was increased likewise, by strengthening the
oflice collection force assigned to the newer and relatively simpler
accounts, thus permitting collection oflicers to concentrate on the
more difficult and older accounts. The amount collected on past-due
accounts totaled $943,249,000 as compared with $824,504,000 for 1956.
In fraud investigations, emphasis was placed on cases considered
to have the greatest deterrent effect on other would-be violators.
Full-scale investigations completed by special agents during 1957
totaled 4,538, including 2,271 cases in which prosecution was recommended. In the preceding year 4,650 cases were completed, with
2,379 containing recommendations for prosecution. Indictments
were returned against 1,666 defendants during 1957 compared with
1,593 defendants indicted in 1956. In the cases reaching the courtroom, 1,118 defendants pleaded guilty or nolo contendere, 138 were
convicted after trial, 64 were acquitted, and 289 were dismissed. The
following table presents the record of convictions including pleas of
guilty or nolo contendere, for the years 1953 through 1957, in cases
involving all classes of internal revenue taxes except alcohol or tobacco
taxes.
Number of
individuals
convicted

Fiscal year

1953
1954
1955
1956
1957

. .
. .

.

.

.

_

929
1,291
1,339
1, 572
1, 256

The International Operations Division, newly organized in 1956 to
administer the revenue laws applicable to United States taxpayers
abroad, established a full program of enforcement activities at its
Washington, D . C , headquarters and in its permanent field offices in
France, Germany, Canada, the Philippines, Puerto Rico, and the
Canal Zone. In addition, provisions were made to supply tax assistance during the filing period to persons residing in 30 other countries
and to overseas military personnel.
Alcohol tax enforcement procedures were revised during 1957 to
place primary emphasis on (1) the prosecution of organized groups of
large-scale operators, (2) the planning of raids so as to increase the
number of violators arrested, and (3) an intensified program to reduce




ADMINISTRATIVE

121

REPORTS

the supply of raw materials available for illicit operations. The number of stills seized in 1957 decreased as a result of these policies, while
the number of arrests showed an increase. The following table
compares 1957 results with those for 1956 and earlier years.
Number of Wine gallons Number of
stills seized of mash seized arrests made *

Fiscal year

1940
1945
1950
1955 .
1956
1957

.

_.
.

.

._

. . . .
-

10,663
8,344
10,030
12, 509
14, 499
11,820

6, 480.200
2, 945,000
4, 892, 600
7, 375, 300
8, 643,200
6, 756, 600

25,638
11,104
10, 236
10, 545
11, 380
11, 513

1 Includes arrests for firearms violations and, beginning 1955, tobacco tax violations. Arrests involving
these two classes of violations duriag 1957 numbered 415 and 4, respectively.

Further progress was made this year in the legislative program for
simplifying alcohol tax administration and bringing up to date the
statutory requirements relating to production, warehousing, processing, removal, and use of all types of distilled spirits. The proposals
of the Service for extensive revision of the distilled spirits provisions
of the Code were incorporated, with minor modifications, in H. R.
7125 which was passed by the House of Representatives on June 20,
1957.
Refunds.—Refunds of internal revenue taxes and the interest thereon, as required by law, are paid out of appropriations separate from
that covering the Internal Revenue Service administrative expenses.
The total amount of these payments for the fiscal year 1957 was
$4,009,346,000 ^ as compared with $3,772,359,000 ' in the preceding
year, with individual income tax refunds accounting for the increase.
Interest payments on refunds (included in these totals) increased
from $53,747,000 ' in 1956 to $57,009,000 in 1957.
Status of appellate inventories.—Cases in which an agreement cannot
be reacheci in the Audit Division are referred, at the taxpayer's request,
to the Appellate Division for consideration of taxpayers' protests.
Reflecting the upward trend in audit activity, the number of protests
referred to the Appellate Division has increased each year since 1954.
In the face of these increases in workload, appellate offices nevertheless
acted upon protested cases about as rapidly as taxpayers and their
representatives were prepared to proceed. As a result, the inventories
at the close of the year were in a substantially current condition even
though the number of pending cases had increased. The inventory of
protested income, profits, estate, and gift tax cases pending in the
Appellate Division totaled 12,576 as of June 30, 1957, as compared
with 9,839 cases on hand at the beginning of the year. The inventory
of docketed Tax Court cases, in which the Appellate Division endeavors to reach agreements with, taxpayers prior to trial, increased
« Revised.
•
1 Figures have not been reduced by amounts of $58,190,000 in 1957 and $66 million in 1956, reimbursed
from the Federal old-age and survivors insurance trust fund. These amounts were covered into the Treasury as repayments to the account for refunding internal revenue collections.




122

1957 REPORT OF THE SECRETARY OF THE TREASURY

slightly, from 8,422 cases at the beginning of the year to 8,761 cases
at the close of fiscal 1957.
Rulings and other technical functions.—The technical functions of the
Internal Revenue Service include the preparation and issuance of
rulings and advisory statements to the public and revenue officials, the
preparation of regulations and other tax guide materials, technical
advice and assistance in the preparation and issuance of tax forms, and
the development of programs for clarification and simplification of tax
rules. Technical assistance also is provided in programs for legislative
revision and in conducting the negotiation of tax treaties.
Twenty-six notices of proposed rule making and 29 Treasury
Decisions relating to regulations under the 1954 Code were published
during the year. In the case of subtitle B, relating to estate and
gift taxes, publication of regulations in proposed form was completed.
Of the total of 139 separate Treasury Decisions (not including alcohol
and tobacco tax provisions) scheduled for preparation and issuance
under the 1954 Code to date, 60 have been published in final form
and an additional 34 in proposed form. Some of the more important
regulations published during the year related to pension, profit-sharing,
and stock bonus plans (T. D . 6203), tax on transportation of persons,
(T. D. 6206), annuities and certain proceeds of life insurance contracts
(T. D. 6211), income taxation of estates and trusts (T. D. 6217), and
accounting periods (T. D . 6226). One notice of proposed rule making
and 5 Treasury Decisions were published during the fiscal year 1957
under public laws other than the 1954 Code.
A total of 40,157 ^ requests for tax rulings and technical advice
were processed during the year. The requests included 35,672 from
taxpayers and 4,485 from field offices.
The total number of revenue rulings and revenue procedures
published in the Internal Revenue Bulletin during the year was 737,
compared with 672 in fiscal 1956.
Approximately 186 tax forms, instructions, and circulars for public
use were revised under a continuous program of seeking designs which
balance the needs of taxpayers for clarity and simplicity, the needs
of revenue officials for efficient processing and audit, and the overriding
necessity for legal accuracy.
Personnel.—The employees on Internal Revenue Service rolls at
the close of the year numbered 51,364, consisting of 2,832 employees
in the national office and 48,532 in the regional and district offices.
At the close of the preceding year the number of persons employed
totaled 50,682, comprising 2,689 ^ national office employees and
47,993 ^ regional and district office employees.
The number of employees in the various branches of the Internal
Revenue Service at the close of the fiscal years 1956 and 1957 is
shown in the following table.
1 Requests relating to alcohol and tobacco taxes are included for the first time. These numbered 2,328
for 1957.
'Revised.




123

ADMINISTRATIVE REPORTS

Location and type

Number on payroll at
close of fiscal year
1957

National ofiice '
Regional and district offices

B Y LOCATION

Permanent personnel, total

2,832
48, 532

50,308

50,797

BY TYPE

Supervisory persomiel—
Enforcement personnel:
Collection officers
Ofiice auditors
Returns examiners
Revenue agents
Special agents
Alcohol tax inspectors
Alcohol tax investigators
Storekeeper-gaugers

' 2, 689
' 47,993

—
6,660
2,127
1,361
10, 862
1,549
481
922

_
^
.

5,782
2,137
1,466
10, 822
1,542
465
954
833

23, 856

24, 001
. 501
3,978
21, 794

__.

Total enforcement personnel
_.
Legal personnel
Other technical persoimel
Clerical personnel, messengers, and laborers.
Temporary personnel
_
_.
Grand total

523

467
4,057
21, 417

374

567

50,682

51,364

r Revised.
^ National office figures Include Intemational Operations Division personnel (headquarters and field
offices) numbering 106 for 1956 and 230 for 1957. This group was included with regional and district office
personnel in the 1956 report.

Cost of administration.—ThQ entire cost of Internal Revenue Service
operations during the year, including all items of expense except
amounts refunded to taxpayers, was $305,537,814. The amount
avaUable for administrative expenses was $305,803,505 leaving an
unobligated balance of $265,691.
Management improvements

Efforts to improve management practices and procedures resulted in
more effective utUization of personnel and increased production in each
of the principal functional areas of the Service. The principal management actions and organizational changes stemming from these efforts
are summarized below.
Development of a ^^Blue Ribbon'' career service.—Attention was
focused during the year on the development of a ^^Blue Ribbon" career
service to attract and retain the highest possible caliber of people for
Revenue Service work. This program consists of seeking better
qualified individuals for employment, providing more extensive
training for both new employees and for those who are about to
enter upon more difficult assignments, setting salary grades which
are consistent with high professional standards of performance^
assuring prompt promotion of individuals who have demonstrated
qualifications for more responsible work, and selecting executive and
supervisory officials strictly on a merit basis.




124

195 7 REPORT OF THE SECRETARY OF THE TREASURY

Organizational changes.—Several components of the national office
were reorganized to clarify their staff fu.nctions and to enable them to
give more direct assistance to the Commissioner. The former office
of Assistant Commissioner (Administration) was redesignated Administrative Assistant to the Commissioner ajad made a part of the
Commissioner's personal staff. The former office of Assistant Commissioner (Plamning) was redesignated Assistant to the Commissioner,
was transferred to the Commissioner's personal staff, and was given
additional duties in the management planning and reporting field (see
Treasury Department Orders Nos. 150-43 and 150-44 in exhibit 43).
Budgetary functions were separated from other administrative activities and were assigned to a fiscal ma.nagement officer who was also
made a part of the Commissioner's personal staff. The training
function was separated from the personnel management function and
was established as a separate division.
Expansion of service center program.—The program for large-scale
mechanical processing of individual income tax returns and declarations of estimated tax was expanded by the establishment of a third
service center at Ogden, Utah. This installation, together with the
two centers previously established at Kansas City, Mo., and Lawrence,
Mass., handled returns from 38 internal revenue districts covering
29 States. In addition, the service centers processed the claims received throughout all district offices for refunds of excise taxes on
gasoline used on farms.
Informal conferences and appeals.—Procedures for handling tax
disputes in directors' offices were strengthened by the desig.nation of
conference coordi.nators with basic responsibility for the direction of
informal conferences with taxpayers. Provisions for administrative
appeals in excise and employment tax cases were changed to permit
Appellate Division consideraticn of unagreed cases prior to the
assessment of additional tax. Previously, excise and emplo3^ment
taxpayers could obtain an Appellate Division heari.ag only by filing
a claim for abatement or refund after the unagreed tax had been
assessed.
Change in depositary receipt accounting.—Under revised procedure
effective January 2, 1957, tax payments received through banks
under the depositary receipt S3^stem are accounted for centrally by
the Treasury Bureau of Accounts and such information is reported
monthly to the Internal Revenue Service for inclusion in its ccnsolidated reports of tax receipts. This new procedure is in lieu of the
former method under which the Federal Reserve Banks were required
to maintain accounting and reporting relationships with the 64
individual district directors' offices.
Revision of enrollment procedure.—The regulations governing the
^enrollment of tax practitioners were revised in October 1956 to provide that an application for renewal may be submitted at any time
during a 24-month period commencing 12 months before and ending
12 months after the expiration of an enrollment card. The purpose
of providing for this 24-month period is to stagger the renewal of
enrollments on a voluntary basis.
Shipping of revenue stamps.—A new procedure involving the shipment of revenue stamps by truck, instead of registered parcel post,
was put into effect with an estimated annual savings of $220,000.




ADMINISTRATIVE REPORTS

125

Office of International Finance
The Office of International Finance assists the officers of the Department in the formulation and execution of policies and programs in
international financial and monetary matters.
By direction of the Secretary, the responsibilities of the Office of
International Finance include the Treasury's activities in relation to
international financial and monetary problems, covering such matters
as the convertibility of currencies, exchange rates and restrictions,
and the extension of stabilization credits; gold and silver policy; the
Bretton Woods Agreements Act, and the operations of the International Monetary Fund, the Internationa] Bank for Reconstruction
and Development, and the International Finance Corporation; foreign
lending and assistance; the North Atlantic Treaty Organization; the
activities of the National Advisory Council on International Monetary
and Financial Problems; the Anglo-American Financial Agreeinent; the
United States Exchange Stabilization Fund; and the Foreign Assets
Control.
The Office also acts for the Treasury on the financial aspects of
international treaties, agreements, and organizations in which the
United States participates, and it takes part in negotiations with
foreign governments with regard to matters included within its
responsibilities. I t assists the Secretary on the international financial
aspects of problems arising in connection with his responsibilities
under the Tariff' Act. The Office also represents the Treasury in the
work of the subordinate organs of the National Advisory Council on
International Monetary and Financial Problems, of which the Secretary of the Treasury is chairman.
The Office of International Finance advises Treasury officials and
other departments and agencies of the Government concerning exchange rates and other financial problems encountered in operations
involving foreign currencies. In particular, it advises the Department of State and the Department of Defense on financial matters
related to their normal operations in foreign countries and on the
special financial problems arising from defense preparation and
military operations. In conjunction with its other activities, the
Office studies the financial policies of foreign countries, exchange
rates, balances of payments, the flow of capital, and other related
problems.
The Diyision pf Foreign Assets Control administers certain regulations and orders issued under Section 5 (b) of thfe Trading with the
Enemy Act. The Foreign Assets Control Regulations block all
property in the United States in which any Cornmunist Chinese or
North Korean interest exists and prohibit all trade or other financial
transactions with those countries or their nationals. The Control
carries on licensing activities in connection with transactions otherwise prohibited, takes action to enforce the regulations, and has
taken a census of Chinese and Korean assets located in the United
States.
. .
The Control administers the Egyptian Assets Control Regulations,
which were issued -pn July 31, 1956. These regulations block certain
assets of the Government of Egypt and the Suez Canal Company in
this country and require transactions affecting such assets to be




126

1957 REPORT OF THE SECRETARY OF THE TREASURY

effected pursuant to licensing procedures administered by the Control.
The Control also administers regulations which prohibit persons in
the United States from purchasing, selling, or arranging the purchase
or sale of strategic commodities outside the United States for ultimate
shipment to the Soviet bloc. These latter regulations supplement the
export control laws administered by the Department of Commerce.
In addition, the Control has responsibUities with respect to blocked
accounts of approximately $9 mUlion received from the sale of a
Czechoslovak-owned steel mUl sold pursuant to an order issued by
the Secretary on March 25, 1954.
Bureau of the Mint ^
The principal functions of the Bureau of the Mint include the manufacture of coin, both domestic and foreign; the distribution of domestic
coin between the mints, the Federal Reserve Banks and branches, and
the Treasurer of the United States in Washington, D. C ; the custody,
processing, and movement of gold and silver bullion; the administration of the regulations issued under the Gold Reserve Act of 1934, as
amended (31 U. S. C. 440-446) and Section 5b of the act of October 6,
1917, as amended (12 U. S. C. 95a), including the issuance and denial
of licenses, the purchase of gold, and the sale of gold bullion for industrial use; the administration of silver regulations issued under the acts
of July 6, 1939 (31 U. S. C. 316c), and July 31, 1946 (31 U. S. C.
316d); the manufacture of historic and special Government medals;
and other technical services.
Coinage

The PhUadelphia and Denver Mints manufactured a total of 1.9
billion domestic coins during the fiscal year 1957, an increase of 35
percent over the the previous year's output. No silver dollars were
coined during the year as the mint stock continues to be adequate.
The last dollar coins were manufactured in September 1935. Production of fractional coins in 1957 is shown in the following table.

1-cent pieces

. „

5-cent pieces

Composition

.

Dimes
._
Quarter dollars
Half dollars .
Total

_

_.

Bronze (95% copper, 5%
zinc and tin).
Cupronickel (75% copper,
25% nickel).
900 parts silver, 100 copper.
do
do

Number
of coins
Face value
produced i

Gross
weight 2

In millions

Denomination

Short tons

1,385.8

$13.9

4,751

152.0

7.6

837

214.8
126.3
27.1

21.5
31.6
13.6

692
870
374

1,906.0

88.1

7,424

1 Includes 1,248,140 sets of proof coins manufactured.
2 Consists of 1,652 tons of silver; 6,325 tons of copper; 209 tons of nickel; and 238 tons of zinc and tin.
1 More detailed information concerning the Bureau of the Mint is contained in the separate annual report
of the Director of the Mint.




ADMINISTRATIVE

127

REPORTS

The Philadelphia Mint manufactured 85,059,500 coins for four
foreign governments during the fiscal year 19.57, as follows:
Government and denomination

Number of
coins produced

Composition

Dominican Republic:
1 centavo.-

Bronze (95% copper, 5% zinc and tin).

El Salvador:
5 centavos
1centavo

Cupronickel (75% copper, 25% nickel)
Bronze (95% copper, 5% zinc)

Haiti:
20 centimes

Gerrnan silver (70% copper, 18% zinc, 12% nickel)...

Honduras:
10 centavos
5 centavos
2 centavos
1. centavo—

_.

_ ... _

3,000,000
8,000,000
10,000,000
18.000,000

Cupronickel (75% copper, 25% nickel)
.do .
Bronze (95% copper, 5% ziac and tin)
do

. . __

2, 500,000
7, 559, 500
6,000,000
18,000,000
30,000,000

.

61, 559, 500
Total..

85,059,500

During the fiscal year 1957 a continuing large demand for coins
in the United States required the mints to ship 66.7 million more
coins for circulation than in 1956. As usual, the one-cent denomination was in greatest demand. Shipments of the six denominations in
1957 are shown in the following table.
Number of
coins
shipped 1

Denomination

Gross
weight

Face value

In millions

Short tons

_

1,385.5
151.7
210.0
94.0
21.9
15.2

_ .

_.

_

Total.

$13.9
7.6
21.0
23.5
11.0
15.2

4,750
836
579
647
302
448

1.878.3

1-cent pieces
6-cent pieces _
Dimes
Quarter dollars
Half dollars..
Silver dollars

92.1

7,562

1 Includes 1,244,604 sets of proof coins sold by the Philadelphia Mint.

The stock of coins in the United States, comprising the amount
held in the mints and other Treasury offices, in Federal Reserve and
commercial banks, and the estimated amount held by the public, is
compared at the beginning and close of the fiscal year in the following
statement.
Face value (in millions)
stock of cohis in the United States

Minor coins
Subsidiarv silver coins...'
Silver dollars

„._




_

*

June 30, 1957

._.

__

Total

Increase, or
decrease (—)

July 1,1956

$463.5
1,317.4
488.7

$484.6
1,382.5
488.4

$21.2
65.0
-.2

- _ _

2,269.5

2,355.6

86.0

128

195 7 REPORT OF THE SECRETARY OF THE TREASURY

Gold
No additions or withdrawals of gold have been made at the Fort
Knox Gold Bullion Depository ui a number of years, the amount in
storage totaling 356.7 million fine ounces valued at $12.5 billion. A
net increase of 16 million fine ounces valued at $558.6 million occurred
duruig fiscal 1957 at the Philadelphia, Denver, and San Francisco
Mints, and the New York Assay Office. Total holdings of the five
institutions at the beginning and close of the year, and total receipts
and issues, are shown in the following table.
Gold holdings and transactions (excluding intermint transfers)

Holdings on June 30, 1956
Total receipts during fiscal year 1957.
Total issues duringfiscal year 1957...
Holdings on June 30, 1957
Net increase

Silver

The following statement summarizes silver bullion transactions
at the three mints and the New York Assay Office and West Point
Silver Depository during the fiscal year 1957.
Silver bullion holdings and transactions (excluding intermint transfers)

Holdiags on June 30, 1956

.

Receipts during fiscal year 1957:
Newly mined domestic silver, act of July 31, 1946 '
Lend-lease silver from foreign governments:
Australia
Fiji..
India
Netherlands
United Kingdom
Total lend-leased silver..

1,693.8
6.6

11.8
.2
3.3
10.1
69.7
95.0

Recoinage bullion from uncurrent United States silver coins..
Other miscellaneous silver
.
Total receipts-

1.6
.3
103.5

Issues during fiscal year 1957:
Manufactured into United States subsidiary silver coins.
Sold under act of July 31. 1946'
Other miscellaneous issues
Total issues

48.0
7.5
.1
65.6

Holdings on June 30, 1957
Net increase in silver bullion

Fine; ounces
(in millions)

1, 741.8
.

47.9

1 31 U. S. 0 . 316d.

Revenue and monetary assets

Revenue deposited by the Bureau of the Mint into the general fund
of the Treasury during the fiscal year 1957 totaled $50.5 million, an
increase of 103 percent over deposits made the previous fiscal year.




ADMINISTRATIVE REPORTS

129

Seigniorage revenue totaling $48.5 million, consisted of $30.0 million
on subsidiary coinage; $16.4 million on minor coinage; ahd $2.1
million on 5,300,000 ounces of silver bullion revalued from cost to
monetary value as security for silver certificates. Other miscellaneous
revenue amounted to $2.0 million. Monetary assets of gold, silver,
coins and other values in custody of the mint institutions totaled
$24.1 billion at the beginning of the fiscal year and $24.7 billion at
the close of the year, a net iacrease of $0.6 billion.
United States gold and silver production and consumption

The estimates of United States gold and silver production and the
issue of gold and silver for domestic industrial, professional, and
artistic use, made annually by the Office of the Director of the Mint,
are on a calendar year basis.
Duruig the calendar year 1956 total United States gold production
amounted to 1,865,200 fine ounces, of which 1,111,'441 fine ounces were
deposited at mint institutions. Total silver production in 1956
amounted to 38,739,400 fine ounces, of which 15,691,209 fine ounces
were deposited at mint institutions.
Gold issued for industrial, professional, and artistic use m the
United States during the calendar year 1956 amounted to 1,400,000
fine ounces, including 675,447 fine ounces issued by mint institutions.
Silver issued for commercial use amounted to 100,000,000 fine ounces,
including 4,325,221 fine ounces issued by mint institutions.
Management improvement

The modernization of the Philadelphia Mint continued to receive
considerable attention during the fiscal year 1957, and the installation
bf new me]ting and rolling equipment was practically complete by the
end of the year. The equipment is expected to reach full production
status within a few months, and as a consequence unit manufacturing
costs will be reduced considerably. A decision was reached during
the year 1957 to curtail further operations at the.San Francisco Mint,
and to operate that office as an assay office and bullion depository
only. Equipment and supplies which can be used by other Mint
offices will be transferred, and those which cannot be used to good
advantage will be sold. The Mint will retain only such space as
needed, releasing the remainder of the building to the General Servic^es
Administration for other purposes.
In addition to activities financed by appropriations, the Bureau of
the Muit had a substantial reimbursable program during the year,
the major portion of which involved the manufacture and sale of
proof coins to the public. Owing to the tremendous increase in the
volume of orders received, continuing attention of management was
directed toward mcreasing production to the extent possible, but the
hiring of additional personnel was Hmited to a minimum.
Continuing attention was given throughout the year also to the incentive awards program, records management, safety, control of
communication costs, and forms.and.reports control.
The total reduction in manpower requirements amounted to 16
employees, and total estimated savings to $90,600.

438363—58

10




130

195 7 REPORT OF THE SECRETARY OF THE TREASURY
Bureau of Narcotics ^

The Bureau of Narcotics administers a program designed to deal
with the control of international, national, and local sources of the
Ulicit supply of drugs.
Nationally, the Bureau is charged with the investigation, detection, and prevention of violations of the Federal narcotic and marihuana laws and of the Opium Poppy Control Act of 1942, and related
statutes. The scope of the Bureau's operations is enlarging gradually
as additional drugs are made subject to these laws. Opium and
coca leaves and their derivatives have been under national control
since 1915; marihuana has been under control since 1937; isonipecaine
was brought under control in 1944; and under the act of March 8,
1946 (26 U. S. C. 4731 (g)), a total of 24 synthetic narcotics have
been brought under control through findings by the Secretary of
the Treasury, proclaimed by the President, that the drugs possess
addiction liabUity similar to morphine.
Internationally, opium, coca leaves, marihuana, and their more
important derivatives have been under control by reason of the
Opium Conventions of 1912, 1925, and 1931. In addition to these,
under Article 11 of the 1931 Convention and the international Protocol
of November 19, 1948, two secondary derivatives of opium and
32 synthetic drugs have been found to have addicting qualities similar
to morphine or cocaine and brought under international control by a
procedure similar to that provided in our national legislation. The
agreement to limit the production of opium to world medical and
scientific needs signed at the United Nations on June 23, 1953, after
forty-four years of effort on the part of the United States to accomplish
such an agreement was approved by the U. S. Senate August 20, 1954.
By Senate Resolution 290 of June 14, 1956, other governments have
been urged also to ratify this Protocol. When it has been ratified by
a sufficient number of governments and becomes effective there should
be a large reduction in the amount of opium available for the illicit
traffic, particularly if production in Turkey and Iran is effectively
controlled.
In the United States important and effective aid in discouraging the
Ulicit traffic in narcotics and marihuana continued to be afforded by
the act approved November 2, 1951 (21 U. S. C. 174) which provided
for mandatory minimum penalties for violation of certain narcotic
laws, particularly for second and third offenders. The Narcotic
Control Act of 1956, approved July 18, 1956, further increased penalties and provided more effective measures of control.
The initial effects of the new law are refiected in the statistics of
sentences and fines imposed upon conviction. In Federal courts the
average sentence per conviction for unregistered narcotic violators
was 5 years 6 months in 1957 as compared with 3 years 7 months in
1956; and for marihuana violators it was 4 years 8 months as compared
with 3 years 4 months in 1956. The average fine per conviction for
unregistered narcotic violators was $199 in 1957 as against $224 in
1956; and for marihuana violators $317 in 1957 as compared with
1 Further information concerning narcotic drugs is available in the separate report of the Bureau of Nar
cotics entitled Traffic in Opium and Other Dangerous Drugs for the Year Ended December Sl, 1956.




ADMINISTRATIVE REPORTS

131

$105 in 1956. The gradual stiffening of penalties at both national
and State levels is slowly but surely producing a noticeably deterrent
effect on the Ulicit traffic in those areas where the heavier sentences
are imposed.
The Narcotic Control Act of 1956 has put into effect a number of
the recommendations of the President's Interdepartmental Committee
on narcotics by providing more drastic penalties and promoting a
greater degree of cooperation between Federal, State, and municipal
narcotic law enforcement agencies through establishment in the
Bureau of a statistical division to gather and exchange narcotic law
enforcement information, and a narcotic training school for State and
municipal officers. Both were set up during the year. A comprehensive index of addicts is being accumulated. The training school,
which is staffed by 22 experts in narcotic law enforcement, has already
graduated 223 State and municipal narcotic law enforcement officers,
representing 98 separate law enforcement agencies from 31 States and
Puerto Rico. Officers from Canada, Afghanistan, and Indonesia have
also attended the school.
Other activities in management improvement consisted of a revision
of the Bureau's field instruction manuals, and improved fiscal controls
which further synchronize its system of allotments and budgetary
procedures.
The Bureau directs its principal activities toward the suppression of
the illicit traffic in narcotic drugs and marihuana and the control of
the legitimate manufacture and distribution of narcotics through the
customary channels of trade. I t issues permits for import of the crude
narcotic drugs and for export and intransit movements of narcotic
drugs and preparations. I t supervises the manufacture and distribution of narcotic substances within the country and has authority to
issue licenses for the production of opium poppies to meet the medical
needs of the country if and when such production should become in the
public interest. Cooperation is given to States in local narcotic
legislation and enforcement and to the Department of State in the
discharge of the international obligations of the United States concerning the abuse of narcotic drugs and marihuana.
During the fiscal year 1957 the total quantity of narcotics seized
amounted to 2,089 ounces as compared with 2,385 ounces in 1956.
Seizures of marihuana during 1957 amounted to 1,049 pounds bulk,
and 3,051 cigarettes, as compared with 873 pounds bulk and 4,329
cigarettes in 1956.
Thefts of narcotics from persons authprized to handle the drugs
increased slightly in number during 1957; the quantity stolen was
1,514 ounces as compared with 1,371 ounces in 1956.
During the fiscal year there were approximately 302,000 persons
registered with directors of internal revenue under the Federal narcotic
and marihuana laws to engage in legitimate narcotic and marihuana
activities.
The table following shows for the fiscal year the number of violations
of the narcotic and marihuana laws by persons registered to engage in
legitimate narcotic and marihuana activities and by persons who have
not qualified by registration to engage in such activities, as reported
by Federal narcotic enforcement officers.




132

1957 REPORT OF THE SECRETARY OF THE TREASURY

Numher of violations of the narcotic a n d m a r i h u a n a laws reported during the
yfiar 1957 with their dispositions a n d penalties
N a r c o t i c laws
Registered persons
Federal
Court

Federal
Court

State
Court

State
Court

943

215

51

1,418

360
1

135

T o t a l t o b e disposed of.

2,361

576

21
2

2 928
13

253
20

303
1

36
8

1

33
1

11
1

9

7
1

59
4

.

5

1

-.

3

287
12

42
8

58
4

8

.

96

1.609

435

39

T o t a l disposed of.
P e n d i n g J u n e 30, 1957

752

141

Yrs. M o s .
Sentences imposed:
Federal
Joint
Total

Yrs. M o s .

Yrs. M o s .

Yrs. M o s .

Yrs. M o s .

50
4
_

Fines imposed:
Federal
Joint
Total..

Federal
Court

Nonregistered persons

84

P e n d i n g J u l y 1,1956
R e p o r t e d d u r m g 1957:
Federal i
Joint 1

Convicted:
Federal
Joint.
Acquitted:
Federal
Joint
Dropped:
Federal
Joint

M a r i h u a n a laws

Nonregistered persons

State
Court

fiscal

__
.

-

Average sentence p e r conviction:
1957
1956
Average fine p e r conviction:
1957
1956

.1

4

5,130
27

6

984
46

3 1,404
7
6

54

1

4

5,157

6 1,030

9 1,411

•

Yrs. M o s .

3

115
32

7
6

3

148

1

$8,150
250

$1, 700

$186, 531
258

$14,154
801

$96,504

$200
500

8,400

1,700

186, 789

14, 955

96, 504

700

2
2
$365
1,081

4
7

......
$340
1,667

10
4

5
3
$199
224

6
7

3
4
• $55
170

9
6

4
3
$317
105

8
4

3
3

4
1

$16
76

1 Federal cases are made by Federal oflicers working independently, while joint cases are made by Federal and State oflicers working in cooperation.
2 Includes 1 life sentence.

In foreign countries, investigation, surveillance, and negotiation are
undertaken to restrict the aniount of narcotic drugs" entering this
country. Through cooperation with the French, Italian, Turkish,
Greek, Lebanese, Colombian, and Cuban Governments several large
seizures of crude, semiprocessed and finished narcotics destined for
the United States were effected and three large clandestine laboratories
closed. The Bureau continues on guard against the large supplies of
opium and heroin which are available in Communist China.
Tbe importation, manufacture, and distribution of opiuin and its
derivatives are subjected to a system of quotas and allocations designed to secure their proper distribution for medical needs. Addittonail quantities of opium were imported . during ,,the year. Coca
leaf imports were sufficient both for medicinal purposes and for the
manufacture of nonnarcotic flavoring extracts.




ADMINISTRATIVE REPORTS

133

The quantity of narcotic drugs exported in 1957 was slightly more
than in 1956. The export total is not significant in comparison with
the quantity used domestically. The manufacture of opium derivatives continued high, principally because of the high medical consumption of codeine and papaverine.
OflSce of Production and Defense Lending
The Office of Production and Defense Lending was established on
December 7, 1954, by Treasury Department Order No. 181-3, under
the direct supervision of an Assistant Secretary. There were assigned to this Office all the functions which had been transferred to
the Secretary of the Treasury by or pursuant to the Reconstruction
Finance Corporation Liquidation Act of July 30, 1953. These functions were:
1. Liquidation of the Reconstruction Finance Corporation (Section
10 of the R F C Act, and Section 102 of the R F C Liquidation Act);
2. Administration of the Federal Facilities Corporation (Section
107 (a) (1) of.the R F C Liquidation Act, and Executive Order 10539);
3. Lending activities under Section 302 of the Defense'Production
Act (Section 107 (a) (2) R F C Liquidation Act, and Executive Order
10489); and
4. Lending activities under Section 409 of the Federal Civil Defense
Act of 1950 (Section 104 of the RFC Liquidation Act).
Liquidation of Reconstruction Finance Corporation

Liquidation of the loans, securities, commitments, and other assets
of the Reconstruction Finance Corporation was continued throughout
the fiscal year 1957. During the year there was paid into the Treasury
from the proceeds a totalof $60,000,000. Reorganization Plan No. 1
of 1957 abolished the R F C effective June 30, 1957, and transferred
the Corporation's remaining assets to other Government agencies
administering similar continuing functions.
Federal Facilities Corporation

Pursuant to the provisions of an act approved June 22, 1956 (50
U. S. C. 98), the tin smelter at Texas City, Tex., was sold by the
Federal Facilities Corporation to a private operator in January 1957.
After this sale, the principal remaining functions of the Corporation
were administration of: (1) the national security clauses of the contracts under which the S3mthetic rubber plants had been' sold, (2) one
synthetic rubber facility and an outstanding lease thereon, and (3)
purchase money mortgages taken in the sale of the synthetic rubber
plants and the tin smelter.
Effective June 30, 1957, responsibility for the remaining functions
of the Federal Facilities Corporation passed from the Secretary of
the Treasury to the Administrator of General Services in accordance
with the provisions of Executive Order 10720 of July 11, 1957.
Defense Lending Division

The actiyities of this Division were the administration of lending
programs authorized by Section 302 of the Defense Production Act




134

195 7 REPORT OF THE SECRETARY OF THE TREASURY

(50 App. U. S. C. 2092) and Section 409 of the Federal CivU Defense
Act (50 App. U. S. C. 2261). During the fiscal year 1957, no new
loans were approved under either of these authorities. On June 30^
1957, direct loans and commitments outstanding under Section 302
of the Defense Production Act amounted to $186,233,536; in addition^
commitments to participate on a deferred basis in loans made by
banks amounted to $18,326,532. Direct loans for civil defense purposes amounted to $1,207,289 on June 30, 1957: in addition, there
was outstanding $2,699,640 in commitments to participate on a
deferred basis in loans made by banks.
Effective July 1, 1957, the Defense Lending Division was abolished
by Treasury Department Order No. 185, and the functions of the
Defense Lending Division were transferred to the Office of Defense
Lending established by the same order.
Office of Defense Lending

In addition to the responsibilities under Section 302 of the Defense
Production Act and Section 409 of the Federal Civil Defense Act,
there were placed in the Office of Defense Lending all functions of the
Secretary of the Treasury under Reorganization Plan No. 1 of 1957,
principally the final liquidation of certain large R F C loans and securities which were transferred to the Secretary under the plan.
Treasury Department Order No. 185, as amended by Order No.
185-1, also abolished the Office of Production and Defense Lending
effective at the close of October 31, 1957.
United States Coast Guard
The basic duties of the United States Coast Guard are prescribed
in Title 14 of the United States Code. In general terms they include:
Enforcement or assistance in enforcing Federal laws on the high seas
and waters over which the United States has jurisdiction, in particular
laws governing navigation, shipping, and other maritime operations;
protection of life and property within this jurisdiction, promotion of
the safety and efficiency of merchant vessels; the development, establishment, maintenance, and operation of aids to maritime navigation
required to serve the needs of commerce and the armed forces; maintenance of a state of readiness to function as a specialized service in
the Navy in time of war; and maintenance and training of an adequate
reserve force.
A primary aim of the Coast Guard is the prevention of loss of life
and property due to Ulegal or unsafe practices. The maintenance of
maritime safety and order is not limited to the strict enforcement of
laws but includes an educational program to prevent marine casualties
through enlisting the cooperation and self-regulation of ship operators
and boatmen.
Search and rescue operations

In its promotion of marine safety the Coast Guard relies substantiaUy on its system of lifeboat stations, radio stations, communication centers, bases, aircraft, and floating units along the coasts,
inland waterways, Alaska, Hawaii, Bermuda, Puerto Rico, and




ADMINISTRATIVE REPORTS

135

Newfoundland. Allied in this safety work are the Coast Guard's ice
breaking services in rivers, harbors, canals, and the Great Lakes; its
operation of the International Ice Patrol in tbe North Atlantic Ocean;
and its six ocean stations in the Atlantic and Pacific Oceans.
Outstanding rescue operations of the Coast Guard during the year
were as follows:
Aircraft ditching.—The Pan American Clipper 10943, with 31 persons on board, ditched in the Pacific Ocean on October 16, 1956,
alongside the U. S. C. G. C. Pontchartrain on Ocean Station November,
halfway between Honolulu and San Francisco. Decision to ditch
was made after two of the plane's four motors had failed. For a
period of five hours the plane circled the ship awaiting daylight before
trying to land. WhUe the plane crew was making practice approaches,
the Pontchartrain provided Ulumination and laid a string of water
lights for a possible night landing. Shortly after daybreak, when all
was in readiness, Clipper 10943 made a successful ditching, following
a solid foam path provided by the Pontchartrain to mark the ditching
course. Although the plane's tail section broke off, there were no
serious casualties and almost immediately two liferafts were launched
from the plane. Within fifteen minutes all were picked up by lifeboats from the ocean station vessel. The plane sank 20 minutes
after ditching.
On May 12, 1957, the U. S. C. G. C. Wachusett on the same Ocean
Station November rescued the two-man crew who had bailed out of
an Air Force B57 because of fuel shortage.
Aircraft assistance.—Two Air Force F89 jet aircraft crashed on
October 4, 1956, in rugged mountain terrain abO/Ut four miles from
Mount Olympus, Wash. In a highly coordinated effort, lasting seven
days, the Coast Guard directed the search for the planes and crews.
Aircraft and helicopters from the Coast Guard Air Station Port
Angeles, Wash., assisted by light aircraft of the Coast Guard Auxiliary,
and planes and helicopters of the Navy and Air Force, located and
evacuated the four crew members, one of whom had died. Assistance
was provided also by the Canadian Air Force and ground search
parties of the Olympic National Park Service. Cooperation of all
participating units was outstanding.
The yacht Dragoon was reported on March 8, 1957, to be in a
sinking condition 10 miles off Great Isaac Light, British West Indies.
Shortly after midnight a U F aircraft from the Coast Guard Air Station Miami arrived and dropped a liferaft alongside the yacht. Within
two minutes all four yachtsmen had safely boarded the raft. The
plane then vectored a Navy tanker to the raft and the four men were
removed unharmed. Later, transfer was made to the cutter Travis
for return to Port Everglades, Fla.
Cutter assistance.—The U. S. C. G. C. Chincoteague, manning Ocean
Station Delta in the North Atlantic, received a distress message on
October 30, 1956, that the German freighter S. S. Helga Bolten was
taking on water and wished to abandon ship as soon as possible.
Twelve hours later Chincoteague arrived, but because of high winds
and 25-foot seas was unable to launch lifeboats. Two inflatable
lifeboats were passed, therefore, by shot line to the Helga Bolten and
the 33 crewmen aboard were removed to the cutter unharmed.
Chincoteague then stood by the drifting vessel for seven days whUe




136

1957 REPORT OF THE SECRETARY OF THE TREASURY

commercial tugs were making salvage attempts. All of the survivors
elected to return to Norfolk, Va., on board the cutter whUe a tug
towed the Helga Bolten to the Azores.
The U. S. C. G. C. Aurora out of Savannah, Ga., on October 15,
1956, weiit to the assistance of the disabled shrimp trawler Miss Beulah
about 10 miles off the Georgia Coast. After successfully taking the
vessel in tow a storm of gale proportions was encountered, breaking the
tow line and necessitating removal of the two-man crew. Unable to
use boats because of the mountainous seas, the Aurora was worked
in close to the trawler's bow and both men were able to jump aboard
the tossing cutter. When the storm abated the crew was returned to
the trawler, which was taken back safely in tow to Savannah.
After the collision in the late evening of July 25, 1956, of the liners
S. S. Andrea Doria and S. S. Stockholm about 17 miles from Nantucket
Lightship, at the approach of New York harbor, merchant ships, naval
vessels, and Coast Guard cutters converged on the scene and successfully removed over 1,600 survivors from the Andrea Doria before she
sank. Ten Coast Guard cutters assisted in this spectacular rescue.
Five injured persons were removed from the sinldng vessel by Coast
Guard and Air Force helicopters while cutters searched the area for
survivors, escorted the Stockholm to New York, marked the position
of the ^\mk&n. Andrea Doria, destroyed floating debris, and transported
rescued persons to port.
A statistical summary of search and rescue assistance during the
fiscal year 1957 follows.

Vessels assisted:
Refloated ( n u m b e r )
Towed (number)
Otherwise aided ( n u m b e r )
P r o p e r t y involved (value including cargo)
Miles t o w e d
Aircraft.assisted:
Escorted (number)
Otherwise aided ( n u m b e r )
P r o p e r t y involved (value including cargo)
Miles escorted
P e r s o n s involved ( n u m b e r ) :
Lives saved or rescued from peril
M e d i c a l assistance furnished
O t h e r assistance
.
M e n a c e s to n a v i g a t i o n r e m o v e d
Miscellaneous p r o p e r t y involved (value)

B y other
equipment 2

Total

B y au'craft

B y vessel»

13
33
207

152
1,837
643

1,045
6,702
1, 274

1,210
8,572
2,124
$542,170, 600
80, 315

342
49

Rescue operations

2
32

15
60

359
141
$524, 590,800
41,042

..

..

1,936
2,128
58, 576
1,538
$197, 728,100

1 Vessels 56-ft. and over in length.
2 Small "boats and vehicular and other equipment.

Rescue and survival training programs for overseas aircraft

Safety of overwater flight through indoctrination of flight crews in
emergenc}^ procedures is vigorously promoted through the Joint Air
Carrier-Coast Guard rescue and survival training program. Civil
and military flight crews engaged ih regular overwater flight operations have been keenly interested in the program since its inception in
1951, recognizing that the procedures taught insure the best possible
coordination between distressed aircraft and rescue agencies if the need
to ditch should arise.




ADMINISTRATIVE

137

REPORTS

The highly successful ditching of a large commercial airline^r alongside the Coast Guard vessel on Pacific Weather Station November in
October (described in an earlier paragraph) gave dramatic evidence
of the soundness of the techniques which have been developed. Both
aircraft crew and vessel had participated in the program a few months
before the incident.
The following tabulation shows the number of organizations and
personnerparticipating in the program during 1957.
Number of Number of
organiza- personriel
tions par- attending
ticipating

Coast Guard air stations

Brooklyn
Miami
SanDiego .
San Francisco
Port Angeles

.
...
..

23
14
5
77
.. 1

2,044
362
347
2.317
18

M a r i n e inspection and allied safety m e a s u r e s

Promotion by the Coast Guard of safety of life and property on
vessels subject to vessel inspection and navigation laws of the United
States include promulgation and related enforcement of regulations.
Encompassed are inspection of vessels and their equipment, construcTtion and repair of vessels, investigation of marine casualties, manning
and citizenship requirements, mustering and drilling of crews, and protection of merchant seamen. Also included are the licensing of officers
and pilots, certificating of seamen, load line requirements, pilot rules,
transportation of dangerous cargoes on vessels, outfitting and operation of motorboats, licensing of motorboat operators, and patrolling
regattas and marine parades.
Detailed investigations were made of 2,459 of the total 3,232 marine
casualties reported during fiscal 1957. Ten, considered major, were
investigated by marine boards of investigation. The investigations
revealed that 356 persons lost their lives in marine casualties, 211
persons lost their lives from marine hazards, and 256 persons lost their
lives from miscellaneous causes such as natural deaths and suicides.
Only one passenger's life was lost as a result of an accident on an inspected passenger vessel.
The most serious casualt}^^ during the year was the foundering of
the Liberty Ship Pelagia, laden with an ore cargo, while enroute from
Narvik, Norway, to Baltimore. Thirty-two crew members perished.
This disaster reemphasized the necessit}^ for establishing minirnum
standards for proper stowage of bulk and similar cargoes carried on
general cargo vessels. As a result, the Commandant of the United
States Coast Guard appointed a panel of industry representatives to
sit with the Coast Guard to analyze all phases of the carriage of ore
and ore concentrates, with the object of developing a specific ^'Code
of Good Practice" for t h e cariiage of the several't3^pes of such cargo
on general cargo vessels.
The second most serious casualty was the collision involving the
naval tanker Mission San Francisco and the Etna I I , a Liberian mer-




138

195 7 REPORT OF THE SECRETARY OF THE TREASURY

chant vessel, in the Delaware River. Following the collision, the naval
tanker exploded, caught fire, and sank, with the loss of ten lives.
A total of 19,807 plans were approved during the year relating to
vessel construction, machinery, and equipment for the merchant
marine. Included among the vessels under construction are four
large passenger ships; in addition, three large passenger ships were
delivered after major conversions. Tank ships continue to form a
large percentage of the tonnage under construction, and their size
continues to increase. Preliminary plans are now being formulated
for a vessel of over 100,000 deadweight tons.
An industry committee appointed to study safety requirements for
transportation of liquefied petroleum gases at low temperature submitted its final report. Tentative regulations for carrying such cargoes have now been adopted by the Coast Guard. This action clears
the way for approval of specific vessels to engage in the transportation
of liquefied methane.
The collision between the Swedish-American liner Stockholm and
the Italian liner Andrea Doria (described in an earlier paragraph under
search and rescue operations), although not investigated officially by
the Coast Guard since both vessels were under foreign flags, indicated
a need for reexamining the standards for watertight subdivision,
stability, and ballasting of passenger vessels contained in the 1948
International Convention on the Safety of Life at Sea. In accordance
with a recommendation made by the House Committee on Merchant
Marine and Fisheries for establishment of a special committee to
investigate this casualty, the Coast Guard is undertaking this reevaluation of standards.
The program of structural modifications to provide crack arresters
on existing C-3 type vessels has proceeded during the year. In
September 1956, the American Bureau of Shipping issued instructions
caUing for the strapping of other types of all-welded wartime buUt
vessels and this work also is under way.
A digest of certain phases of marine inspection follows.
Number of
vessels
Vessel uispections completed
.
Dry dock examinations
Reinspections
Special examinations by traveling inspectors of passenger, tank, and dry cargo
vessels
•
Miscellaneous uispections
Undocumented vessels numbered under provisions of the act of June 7, 1918,
as amended (46 U. S. C. 288)
Violations of navigation and vessel inspection laws
.
:
Factory inspections
Merchant vessel plans reviewed

5,964
4,601
2,602

Gross
tonnage
18, 795, 759
17,135,444

645
18,064.
419.118
10. 292
879,059
19,807

The Merchant Marine Council held three public hearings during
the year, which were supplemented by numerous Coast Guard district
commanders' informal hearings and discussions with those affected,
to consider proposed regulations for carrying out new legislation or
modernizing requirements. The regulations included the followiag:
{a) Rules and regulations for small passenger vessels not over 65
feet in length, which implement the act of May 10, 1956 (46 U. S. C.
390b).




ADMINISTRATIVE REPORTS

^

139

•(b) Rules and regulations for tank, cargo, and misceUaneous
vessels to permit a biennial instead of an annual inspection, in accordance with the act approved June 4, 1956 (46 U. S. C. 391 (a)-(e)).
(c) Special regulations for vessels engaged tn offshore muieral and
oil industry.
(d) Regulations describing inspection requirements for cargo gear
on passenger, cargo, and miscellaneous vessels.
(6) Regulations governing the examination and demonstration of
ability of lifeboatmen.
(/) Regulations goveming the appointment of licensed officers of
the United States Merchant Maruie as commissioned and warrant
officers in the United States Coast Guard.
Increased activity in offshore oil well drilling on the Outer Continental Shelf resulted in a small rise in tne number of vessels inspected
for certification during the fiscal year 1957. The new biennial
inspection of nonpassenger carrying vessels had no effect on the
number of inspections during the past fiscal year, but will materially
reduce inspection for certification and increase reinspection during
fiscal 1958.
That the American public is taking to the navigable waters of the
United States in greater numbers is evident from the increase inthe
number of vessels issued certificates of award of number (in accordance with the provision of the act of June 7, 1918, as amended (46
U. S. C. 288)). The 5 percent rise during fiscal year 1957 follows the
trend of recent years.
An important role of the Coast Guard during 1957 was participation
in meetings promoting marine safety. Among these were the marine
section of the National Safety Council's Exposition and Congress in
Chicago, IU.; the Merchant Marine Conference sponsored by the
U. S. PropeUer Club m New York, N . Y.; the Water Safety Conference in Augusta, Ga.; the Western Rivers Panel, the Oil Pollution
Panel, and the Motorboat and Yacht Advisory Panel of the Merchant
Marine Council, and the Offshore Mineral and Oil Industry Panel of
the Commander, 8th Coast Guard District.
The Coast Guard cooperated with the House Merchant Marine
and Fisheries Committee in its study to improve safety on navigable
waters in the United States. Also, recognizing that an estimated 25
mUlion persons will be using the navigable United States waters for
recreation this year, and that the number of small boats will total
approximately 5K million, the Coast Guard published a safety pamphlet for 1957 known as Motorboat Safety. This publication includes
safe practices recommended by the Coast Guard for the operation of
small boats, the purposes of the Coast Guard Auxiliary, the proper
application of approved safety equipment, articles based on casualties
investigated by the Coast Guard, and other information to increase
boating safety.
Merchant marine personnel.—Licensing and certificating of merchant marine personnel involved the issuance of 88,861 documents.
Of this number, 19,612 were issued to persons without prior sea
service and 505 were licenses issued to radio officers under the provisions of Title 46, Section 229c of the United States Code. In the
interest of national defense 136 individual waivers of manning requirements for merchant vessels were issued. Shipping commissioners




140

1957 REPORT OF THE SECRETARY OF THE TREASURY

supervised the execution of 11,264 sets of shipping articles in
connection with the shipment and discharge of seamen.
Investigating sections of marine inspection offices in major United
States ports and merchant marine details in certain foreign ports
continued to operate in the administration of discipline in the merchant marine, in accordance with the provisions of Section 4450 of the
Revised Statutes, as amended (46 U. S. C. 239), and the Narcotic
Violation Act approved July 15, 1954 (46 U. S. C. 239 a, and b).
Merchant marine details in London, Antwerp, Bremen (formerly at
Bremerhaven), Naples, Piraeus, and Yokohama operated throughout
the year.
Investigations of 13,950 cases involving negligence, incompetence,
and misconduct were conducted during the year. Charges were
preferred, and hearings on 1,271 cases were held by civilian examiners.
The decision of the 9th Circuit Court of Appeals in the case of
Parker vs. Lester ordered that all persons rejected for duty under the
security regulations prior to the decision are to be issued validated
merchant marmers' documents upon their application. Since issuance of the order, 234 applications have been received. Tbe regulations adopted pursuant to the decision have necessitated the reevaluation of all cases of the rejectees affected. There has been
considerable delay in holding any necessary rehearings, however,
because of the involved procedure for ascertaining availability of
witnesses in conformance with the decision. However, two cases
have been brought to the hearing stage. As of June 30, 1957, one
hearing had been completed but the decision has not yet been announced. The other case was scheduled for hearing on August 8,
1957.
The interpretation of data provided by radar was the subject of
additional questions prepared for the licensed deck officer examinations. This was in accord with the recommendations of the Bonner
Committee, which investigated the coUi^on between the S. S. Andrea
Doria and the M. V. Stockholm.
Law enforcement

The port security operations (conducted urider authority of Executive Order 10173, as amended by Executive Orders 10277 and 10352,
implementing provisions in the Espionage Act of June 15, 1917, as
amended (50 U. S. C. 191)), continued to consist of: Control of entry
of merchant vessels into United States ports; supervision of loading
of Class A explosives and administration of the regulations relative
to dangerous and hazardous cargoes; screening of merchant seamen
employed on certain categories of United States vessels and waterfront workers for admittance to waterfront facilities under certain
specified conditions; and protection of selected vessels and waterfront
facilities in designated port areas from the waterside, and, by spot
checks, from the shoreside.
A total of 28,978 persons to be employed on board merchant vessels
were checked for security risk, and-26,512.^mercbant mariners', documents bearing evidence of security clearance were issued to individuals.
After appropriate screening of warehousemen, pilots, and other water-




ADMINISTRATIVE REPORTS

141

front workers, 16,667 port security cards were issued. One hearing
was granted upon appeal by an individual who had been found to be
a poor security risk.
Security regulations of the Coast Guard have been revised to exempt
from the requirements for credentials certain vessels operating on
navigable waters of the Great Lakes and western rivers.
The following statistics reflect the volume of enforcement work of
the Coast Guard during the.year.
Vessels boarded
Waterfront facilities inspected
Violations of Motorboat Act reported
Violations of port security regulations reported
Violations of the Oil Pollution Act reported
Violations of other laws reported
Explosives loading permits issued
Explosives loadings supervised
Explosives covered by above permits
Other hazardous cargoes inspected
Anchorage violations

152, 091
64, 053
9, 193
767
213
543
850
1, 304
129, 639
6, 654
75

The Coast Guard also assisted the Federal agencies having primary
responsibility for enforcing the Oil Pollution Act (33 U. S. C. 4 3 1 437), anchorage regulations, laws relating to internal revenue, customs, immigration, quarantine, and the conservation and protection
of wildlife and the fisheries.
Cooperation with other Federal agencies

In addition, during the year the Coast Guard performed services
for other Federal agencies as follows:
Alcohol Tax Unit, Treasury (aircraft days)
Coast and Geodetic Survey: (aerial surveys days)
Fish and Wildlife (censuses taken)
Weather Bureau:
(a) Reports furnished
(b) Warnings disseminated

80
72
122
117, 495
24, 655

Aids to navigation

On June 30, 1957, there were 38,532 aids to navigation maintained
in the navigable waters ofcthe United States, its Territories, and
possessions, the Trust Territory of the Pacific Islands, and at overseas bases, consisting of loran stations, radarbeacon stations, light
stations, lightships, lighted and unUghted buoys, and minor lights
and da3^beacons.
During the year, 3,653 new aids to navigation were estabUshed,
mainly to mark completed river and harbor improvements; and 4,456
aids were discontinued, a decrease of 803. The decline was due, in
general, to seasonal changes in the number of buoys required to be
maintained in waters reflecting the various flood stages in the Mississippi River and its tributaries, and to a critical review of all aids
to navigation maintained by the Coast Guard in order to discontinue
unessential aids. The world-wide loran system as of June 30, 1957,
comprised 59 stations, of which 49 were operated by the Coast Guard.
No new stations were placed in service during the fiscal year 1957,
but plans for additional stations are mentioned in a later paragraph
on shore establishments.




\ 142

1957 REPORT OF THE SECRETARY OF THE TREASURY

A summary follows of Coast Guard aids to navigation at the close
of each of the last two fiscal years.
Type

Total number June 30—

Loran transmitters
Radiobeacons
Radarbeacons
Fog signals (except sound buoys)
Lights (including lightships)
Daybeacons
Buoys, lighted (including sound)
Buoys, unlighted sound
Buoys, unlighted metal ...^
Buoys, Mississippi River type...
Buoys, spar
Total

_

38,532

Ocean stations

Throughout the fiscal year 1957 the Coast Guard maintained four
ocean stations in the North Atlantic Ocean and two in the North
Pacific. Ocean station vessels located at strategic points provided
meteorological services for aid and marine commerce; communications for transocean traffic; air navigation facilities in the ocean areas
regularly traversed by aircraft of the United States and other cooperating governments; and the search and rescue facilities mentioned in
foregoing paragraphs. During the year Coast Guard vessels transmitted over 62,808 weather reports, rendered assistance in 152 cases
and cruised approximately 477,576 miles in this program.
International Ice Patrol

The Intemational Ice Observation and Ice Patrol Service in the
North Atlantic Ocean completed its calendar 1956 season by conducting a postseason oceanographic cruise during July 1956 and by
conducting aerial ice reconnaissance until September 1956.
Aerial ice reconnaissance begun during January 1957 shortly disclosed that the 1957 ice season was starting early and icebergs were
moving to threaten shipping lanes. A surface vessel patrol of the mpst.
dangerous ice was begun by the C. G. C. Acushnet early in March 1957.
Intermittent surface vessel patrols, aerial reconnaissance by four
P B l G aircraft, and oceanographic work by the C. G. C. Evergreen.
were ca-rriod out to provide the protection to shipping required by t h e
unusually severe ice year. Operations for the calendar 1957 ice season
were still in progress on June 30, 1957.
Bering Sea Patrol

The Bering Sea Patrol was carried out by the C. G. C. Winona
during July, August, and September 1956. This patrol carries out.
certain law enforcement; renders aid to distressed persons, vessels, and.
aircraft; assists other Federal agencies and the Territorial Government,
of Alaska in law enforcement; provides logistic service to outlying
Coast Guard units; performs aids to navigation duties; performs
marine inspection; cooperates with other Government agencies; furnishes medical and dental assistance to persons in remote places in the




ADMINISTRATIVE REPORTS

143

areas contiguous to the Bering Sea and the Arctic Ocean; and collects
hydrographic, oceanographic, and meteorological data.
During this patrol the Winona cruised 10,374 miles, carried 33
passengers on missions in the public interest, and supplied medical
treatment to 335 persons and dental treatment to 606.
Facilities, equipment, construction, and development

Floating units.—Large ships in active commission at the end of the
year consisted of 182 cutters and buoy tenders of various types, 81
patrol boats, 33 lightships, 39 harbor tugs, and 11 buoy boats. During
the year they cruised 2,795,729 miles as compared with 2,842,702.
miles the previous year. Included in the 182 cutters are two special
units, the C. G. C. Courier and the C. G. C. Eagle. The Courier, a
339-foot vessel equipped with radio broadcasting facilities, is manned
and operated by the Coast Guard for the United States Information
Agency. The Eagle, a 295-foot bark, is used exclusively for training
purposes. One new 95-foot patrol boat was completed and commissioned at the Coast Guard Yard.
Shore establishments.—Shore establishments at the end of fiscal year
1957 included:
12
2
4
26
20
2
9
3
1
1
1
9
11
1

District offices
Area offices
Inspection offices
Bases
Depots
Supply centers
Supply depots
Section offices
Receiving center
Training station
Academy
Air stations
Air detachments
Aircraft repair and supply
base
15 Radio stations
41 Lifeboat stations
49 Loran transmitting stations

46
6
11
30
1
297
57
1
3
1
49
5
10
1
9

Marine inspection offices
Merchant marine details
located in foreign ports
Examiner offices
Group offices
Shipyard
Manned light stations
Light attendant stations
Fog signal station
Radiobeacon stations
Electronic engineering station
Recruiting stations
Ship training detachments
Electronic repair shops
Field testing and development unit
Moorings

Captain of the Port offices, supplemented by port security units,,
continued to be maintained in major shipping centers.
Additional to the 7 loran sites selected during the fiscal year 1956
were 11 sites selected in 1957. Although acquisition of some of the
sites has been delayed because of difficulties in negotiations with the
various countries concerned, construction has begun of two and
completion of the 18 stations is planned for 1958. As part of a Department of Defense program, three Loran-C stations have been
established by the Coast Guard to be operated experimentally for
approximately two years. In August 1956 a Rescue Coordination
Center (RCC) was established at the Coast Guard Air Detachment,.
Bermuda.
Additional personnel have been authorized, and equipment provided in certain Coast Guard districts for 15 mobUe boarding (boating




144

1957 REPORT OF THE SECRETARY OF THE TREASURY

safety) teams. The teams will patrol various inland waters under
Federal jurisdiction.
A long-range program toward consolidating groups, and improving
organizational structure concerning subunits has begun. A reorganization within the Ninth Coast Guard District reduced the number
of groups from 21 to 11. Similar reorganizations are to be made in
other districts.
Under provisions of the Capehart housing program, plans for
construction of housing for families of Coast Guard personnel have
been completed, but lack of funds thus far has prevented further
action. A study of existing family housing has been conducted also
for determining the requirements for bringing these facilities up to
standards in proposed legislation under consideration by the present
Congress.
Aviation and aircraft.—On February 26, 1957, the Secretary of the
Treasury and the Commandant of the Coast Guard transmitted to
Congress their joint ^'Report on the Requirements of Coast Guard
Aviation." This report, based on a study by a special board of senior
Coast Guard officers presents a plan for meeting the rapidly increasing demands upon Coast Guard aviation. The main features of the
plan, to be carried out over the next six fiscal years, include replacement of overage planes with modern aircraft; reduction in the number of types of aircraft operated from the present 14 to 6; and an increase in the total aircraft fleet from the present authorized level of
128 to a level of 195. The increase in numbers of aircraft would be
made up largely of medium and light helicopters. In addition, the
plan contemplates augmenting some existing Coast Guard aviation
facilities, and establishing certain additional facUities in order to accommodate the total proposed aviation program.
A financial plan for accomplishing these changes was also submitted to Congress. The total estimated cost of approximately $100
million is to be funded over a period of six fiscal years, with the initial
installment of $12.9 million included in the budget for fiscal 1958.
I t is emphasized throughout the report that the plan is merely a
blueprint for accomplishing certain objectives during the next six
years, and that therefore all aspects of the plan will be subject to
continued review in the light of changing circumstances.
Fixed and rotary wing aircraft operated by the Coast Guard were
maintained between 128 and 125 during the year. This includes
those undergoing overhaul and modification. Four new aircraft were
acquired for replacement of overage aircraft. Two fixed wing and
one rotar}^ wing aircraft were lost through crashes; one fixed wing
aircraft was replaced by a new aircraft, the other was replaced by an
aircraft obtained from the Navy on loan. No immediate replacement could be provided for the crashed helicopter.
Coast Guard aircraft were used primarily for search and rescue
operations, and in support were deployed at nine air stations and
twelve air detachments. Aircraft were also used in carrying out the
following activities:
International Ice Patrol
Logistic support of isolated Coast Guard units
Flood and disaster relief and assistance




ADMINISTRATIVE REPORTS

145

Port security and law enforcement
Ship-based operations for ice reconnaissance
Cooperation with Coast and Geodetic Survey in aerial photography
Cooperation with Internal Revenue Service in location of illicit
distUleries
Fish and wildlife surveys and patrols
Cooperation with airline and mUitary agencies in training in search
and rescue overwater emergency procedures
Operational flight training of pilots and crews.
Communicatfiovs.—^The program to determine and establish new
standards for radiobeacon frequency usage continues with particular,
attention to the Long Island Sound area. Primary plans have been
completed for installations of V H F - F M 150 mc/s communication,
equipment for port security operations in the Norfolk-Newport News
area. A survey of the San Francisco Bay area is now being made.
A communication improvement program aboard miscellaneous class
buoy tenders is under way, and a reduction in the amount of equipment and replacement of selected equipment are being carried out.
A gradual improvement in rapid telephone circuits for search and
rescue also is being made.
Engineering developments

Continuing research and development in the various engineering
fields has led to improvements in the equipment and facilities used by •
the Coast Guard in the conduct of its many and varied functions.
Some recent projects are summarized as follows:
A 25-man liferaft, which should be effective in saving life and
property at sea, is being developed and tested. A new subminiature
gyrocompass, more rugged, lighter, smaller, and less expensive than
present equipment, is being evaluated for use on small vessels. The
launching of lifeboats from cutters at sea will become faster and safer
as a result of completed tests of two new winch designs.
Two new designs for buoys were completed, one for use on rivers
and the other a Targe lighted buoy, which will provide better service
at lower cost. Other design improvements on lighted buoys wUl bring
about further reductions in the high cost of servicing. The design
of the aids to navigation system for the Saint Lawrence Seaway, employing the most modern, efficient apparatus available, is approximately 50 percent complete.
In the area of electronics engineering, a pilot installation of a
microwave radio link across the entrance of Delaware Bay was undertaken, and the installation of F M communications equipment for port
security operations in major harbor areas was begun. Development
has progressed toward improved antennas and better frequency control for loran transmitters, and a new, longer range loran system of
much higher accuracy has been built in one area for evaluation and
Navy use. A special radar has been developed which will permit
accurate location and tracking of icebergs by aircraft in periods of low
visibility.
The joint effort of the Coast Guard, Navy, Maritime Administration, and the American Bureau of Shipping to improve the hull structures of merchant ships has produced a better understanding of the
438363—58

11




146

1957 REPORT OF THE SECRETARY OF THE TREASURY

reasons for plate failure, and how tb detect and deal with flaws. T h e
lanning for fundamental studies of the loads encountered by a ship's
ull in a seaway is also under way.

P

Coast Guard Reserve

The purpose of the Coast Guard Reserve is to provide trained units
and qualified persons available for active duty in time of war or national
emergency and at such other times as the national security requires.
In the administration of the reserve program, the Coast Guard conforms in general with policies outUned in Department of Defense
directives implementing the various laws relative to the reserve components, thus carrying out the intent of Congress as expressed in
Section 251 of the Armed Forces Reserve Act of 1952, as amended
(10 U. S. C. 101, 276), that the administration of all reserve components be as uniform as practicable.
Personnel

On June 30, 1957, the military personnel strength of the regular
Coast Guard on active duty was 29,940, consisting of 2,763 commissioned officers, 539 chief warrant officers, 370 warrant officers, 367
cadets, and 25,901 enlisted men. The civilian force consisted of 2,186
salaried personnel, 2,186 wage board employees, and 433 lamplighters^
exclusive of vacancies. The total strength of the Coast Guard Reserve
as of June 30, 1957, was 3,815 officers and 22,996 enlisted personneL
On June 1, 1957, 61 members of the Class of 1957 were graduated
from the Coast Guard Academy with Bachelor of Science degrees.
Of these, 56 were commissioned as ensigns in the U. S. Coast Guard
and 5 were commissioned as ensigns in the U. S. Coast Guard Reserve.
One long cadet practice cruise for all members of the three classes
of the Academy again was scheduled this year. The Coast Guard
cutters Eagle, Absecon, and Yakutat are participating in the current
cruise which will include visits to Bergen, Norway, London, England^
and LaCoruna, Spain.
During fiscal 1957 losses of regular commissioned officers totaled
149 through retirements, resignations, and deaths. In addition, 85
reserve officers were released from active duty following completion
of their obligated service. Losses through resignations were below
normal for Academy graduates because of the increase in the obligation
for active service from 3 to 4 years beginning with the class graduating
in 1954. These losses were replaced by the 61 Academy graduates^
Class of 1957, 227 graduates of the Officer Candidate School, and 1
appointment of a former merchant marine officer. The net gain of
55 was just sufficient to meet the increased commitments at the
beginning of the fiscal year 1958.
Action taken under the provisions of the act of August 9, 1955
(14 U. S. C. 247, 248), for the retirement or retention of captains and
flag officers, resulted in the retirement of one rear admiral and seven
captains. "One rear admiral was retired under other provision.
The integration of reservists in fiscal 1957 consisted of the permanent
appointment in the regular service of 1 lieutenant commander, 2
lieutenants, and 4 lieutenants (junior grade). One had been a reserve
officer and six had been temporary service officers.




ADMINISTRATIVE REPORTS

147

Throughout the year enlisted reservists without previous active
duty were called up for service under the provisions of Section 4
(c) (2) of the Universal MiUtary Training and Service Act as amended
(50 App. U. S. C. 451-473), and Section 261 of the Armed Forces Reserve Act of 1952, as amended (50 U. S. C. 1012). I t is estimated
that on June 30, 1957, there wUl be 1,700 reservists on active duty.
There were 269 voluntary retirements of enlisted men during the
year. The minimum service reached was 20 years. Of the total,
103 were retired for statutory reasons, that is for age, 30 years' service,
and physical disabilitv.
The 1957 competitive examination for appointment to the Coast
Guard Academy was held on February 25 and 26, 1957, m approximately 100 examining centers within the United States and overseas.
There were 2,207 applicants to participate in the examination, more
than 30 percent above last year's. A total of 1,702 young men were
authorized to participate in the competitive examination and an
eligibility list of 385 was established. A class of 256 reported to the
Academy on July 1 and 2, 1957.
With the exception of the program for the procurement of licensed
merchant marine officers pursuant to 14 U. S. C. 225 (5), there was no
change in officer procurement programs conducted during the year.
More appropriate age and experience qualifications, examination
requirements, and a provision for appointment in commissioned
warrant grade as weU as commissioned grade for qualified licensed
personnel resulted in 51 applicants filing for the 1957 examination.
Of the 32 who reported for examination, 25 were nominated for commissioning in the Coast Guard, 2 as lieutenant commanders, 15 as
lieutenants, 3 as lieutenants (junior grade), and 5 as commissioned
warrants. This represents a 325 percent increase in applications and
300 percent increase in licensed persoimel examined.
Under the stimulus of a greatly increased need for reserve officers for
assignment to reserve training units, the direct commissioning of the
Coast Guard Reserve was accelerated. A total of 120 applications
were received of which 105 were found professionally qualified, and 93
were recommended for appointment by selection boards. This
represented an increase of 158 percent in appointments over those in
1956.
The largest procurement program conducted during the fiscal year
again was that of officer candidates. College graduates with civilian
status and enlisted personnel with certain educational and active
service qualifications were designated as officer candidates, and were
assigned to the Academy for four months' indoctrination in order to
qualify as general duty officers. During the year 303 candidates were
appointed to commissioned grade and assigned to active duty with the
Coast Guard. Of this group, 191 received commissions as ensigns
in the Reserve and 112 enlisted personnel were appointed ensigns for
temporary service. Of the reserve ensigns, 73 were obligated to serve
only 6 months active duty; the remaining 230 ensigns replaced reserve
officers released from active duty and regular officers who resigned or
retired.
The Coast Guard had 32 recruiting stations, 18 substations, and 5
mobile recruiting units in operation on July 1, 1956. These imits




148

195 7 REPORT OF THE SECRETARY OF THE TREASURY

were manned by 220 recruiters (with a vehicle allowance of 30). Tosupport increased regular recruitment requiremen ts and the expanded
reserve reGruitment 'program the recruiting effort was intensified
during the year. At the end of the year there were in operation 52
recruiting stations, 14 substations, and 5 mobile recruiting units
manned by 299 recruiters (with a vehicle allowance of 79). The
recruitment program attracted 19,257 applications for enlistment in
the regular Coast Guard during fiscal 1957. Of the applicants, 5,333
qualified and enlisted; 5,564 were mentally disqualified; 1,800 were
physically disqualified; 3,100 were rejected for moral and other
reasons; and 3,460 failed to complete their applications.
Perspnnel enlisting in the regular Coast Guard are assigned to the
receiving centers at Cape May, N . J., or Alameda, Calif., for 12 weeks
of recruit training. During the year, 3,021 completed training at
Cape May and 1,068 at Alameda. The total represented an increase
of 1,222 over the number trained in 1956.
In the Coast Guard Reserve, of the total strength of 3,815 officers and
22,996 enlisted men, 1,392 officers and 7,186 enlisted men were in
training units on. June 30, 1957. Organized reserve training units in"
commission numbered 125, a 25 percent increase during the year. An
extensive prograim of active duty was carried out, with approximately
6,225 receiving training.
Of the 7,596 applicants for enlistment in the Reserve considered
during the year, 3,620 qualified and enlisted; 681 were disqualified
mentally; 398 were disqualified physically; 719 were rejected for moral
and other reasons; and 2,178 failed to complete their applications.
The;»six months' active duty program instituted in June 1956 was
intensified and accounted for approximately 42 percent of enlistments
in fiscal 1957. Of the total enlistments, 1,524 chose this program,,
exceeding the planned quota of 1,000. An additional reserve enlistment program was established in June 1957. This provides for
immediate active duty of two years for qualified appUcants enlisting
between the ages of 17 and 26 years. Previous enlistees awaiting
call-up are included in the program's authorized quota of 200 per
month.
A total of 368 enlisted men completed six months' reserve training
at the Cape May Receiving Center in 1957 under provisions of the
Reserve Forces Act of 1955 (50 U. S. C. 928 (f)). In addition, personnel from organized reserve training units were assigned to the receiving
centers at Cape May and Alameda for two weeks' summer training;
867 completed training at Cape May and 251 at Alameda.
Postgraduate training of selected officers was continued in 1957.
This consisted of specialized courses in naval architecture, electronics
engineering, nuclear research, command communications, financial
administration, and law.
Flight training to meet the needs of the Coast Guard remained at
the same numerical level as in fiscal 1956. During fiscal 1957, 43
officers entered flight training, 41 completed their training, and
42 were in training at the end of the year. Short courses were provided
in operation and maintenance of new aircraft .and equipment, and
25 aviators completed an eight-weeks course for qualification as
helicopter pilots.




ADMINISTRATIVE REPORTS

149

Short refresher courses, made available by the Navy and Army,
were continued to educate further the crews of Coast Guard vessels
on the manner of maintaining the state of readiness necessary for
mobilization. Other short courses were arranged in finance, communications, and other technical fields. A total of 102 officers completed such training during the year, and 130 officers completed indoctrination or refresher courses at the Coast Guard Training Station,
Groton, Conn., and at the Academy in preparation for assignment
to loran transmitting stations, or to aids to navigation billets, and
merchant marine safety billets.
The petty officer training program consists of training nonrated
men in basic petty officer schools of the Coast Guard and Navy and
rated men in advanced schools of the Coast Guard, Navy, other
services, and civilian institutions. During the year, 1,559 enlisted
men graduated from basic petty officer schools and 710 from advanced
schools. The total of 2,269 was an increase of 23 over the number in
fiscal 1956. Of those graduating in the year under review, 1,545 were,
from Coast Guard schools, and 724 from Navy and other schools.
During the year, 13,302 enrolled and 4,796 completed Coast Guard
Institute courses. During the same period, 2,429 enrolled and 403
completed courses offered by the United States Armed Forces Institute.
Naval correspondence courses were completed by 267.
More than 50 visitors from foreign countries were extended the use
of training and operational facilities of the Coast Guard. Approximately half of the visitors came to this country under the sponsorship
of the International Cooperation Administration for training in aids
to navigation, loran, merchant marine safety, vessel inspection, port
securit}^, and law enforcement. The visitors came from Chile, Iceland,
Indonesia, Italy, Japan, Korea, Philippine Islands, Portugal, Taiwan,
and Thailand. The remainder came from Brazil, Chile, Colombia^
Costa Rica, Greece, India, Indonesia, Spain, and Thailancl, under the
auspices of the Civil Aeronautics Authority, to observe Coast Guard
rescue coordinator centers in operation.
Public Health Service support.—On June 30, 1957, the following
Public Health personnel were assigned to duty with the Coast Guard:
46 dental officers, 32 medical officers, 10 nurses, 1 scientist officer,
1 sanitary engineering officer, and 1 pharmacist officer. Four full-time
medical officers were assigned at the Alameda Base for duty on ocean
weather station vessels manning station Victor in the Pacific Ocean.
Full-time coverage by medical officers was provided during the year for
ocean weather stations Bravo and Charlie in the Atlantic Ocean,
Full-time medical and dental officers were assigned to the vessel
engaged in the Bering Sea Patrol, and full-time medical officers were
assigned to other special cruise vessels, including operation Deep
Freeze I I .
Military justice.—There were 913 court-martial case records received
during the year, an increase of 177 over those in 1956. Although
general courts-martial declined from 17 to 16, special courts-martial
increased from 166 to 227 and summary courts from 553 to 670. The
16 general courts-martial included 10 cases reviewed by the Coast
Guard Board of Review pursuant to the requirements of Article 66 (b).
Uniform Code of Military Justice, four cases acted upon by the




150

1957 REPORT OF THE SECRETARY OF THE TREASURY

General Counsel of the Treasury Department under the provisions
of Article 69 of the Code, and two acquittals. Appellate review was
completed in the field in 111 of the 227 special courts-martial; action
by the General Counsel gave finality to the proceedings in 70 additional
cases, and the remaining 46 required review by the Board of Review.
Petitions to the United States Court of Military Appeals for grants
of review of Board of Review cases were presented in 10 Coast Guard
cases. The court granted two and denied three; two were withdrawn,
and three were awaiting determination as of June 30, 1957.
Board of Review, Discharges and Dismissals.—The function of the
Board of Review, Discharges and Dismissals is'to review discharges
and dismissals of former members of the Coast Guard in conformance
with the provisions of 33 C. F . R. 51. During the fiscal year the Board
reviewed 61 cases with the following results: 22 Discharges under
Honorable Conditions were reviewed, with 7 changed to Honorable
Discharge; 22 Undesirable Discharges were reviewed with 1 changed
to Honorable Discharge, and 5 changed to Discharge under Honorable
Conditions. Reviews of 14 Bad Conduct Discharges, 1 Dishonorable
Discharge, and 2 Ordinary Discharges (for undesirability) brought
no changes in the original decisions.
Personnel safety program.—During fiscal 1957, there were 1,198
accidents reported. Of the 37 fatalities, only 6 occurred between
November 30, 1956, and May 1, 1957. The Coast Guard had an
exposure of approximately 10,578,933 military man-days and 9,892,136
civUian man-hours with 900 disabling injuries. There were 10,834,865
vehicle miles reported. Both the number of reported accidents and
disabling injuries show slight reductions from previous years. The
1956 calendar year accident frequency rate was 9.14 per 100,000 mandays for mUitary personnel and 7.00 per 1,000,000 man-hours for
civUian.
Fiscal and supply management

Some of the more important administrative improvements in the
Coast Guard during the past year were as follows:
A method was adopted to use mechanical equipment for simultaneous preparation of military payrolls, posting to pay records, and
writing checks. A signfficant reduction will be realized in the manhours required to perform these tasks.
From experience gained in trial installations, a simplffied system of
funding work orders at industrial bases and depots was extended to
all Coast Guard districts, with the following significant improvements:
{a) Management is provided a more direct means of associating
total industrial costs with job estimates.
{b) Budgetary planning and payment for all costs have been made
the responsibility of the officer who authorized the work to be performed.
(c) Improvement in cost classification and techniques have simplified cost prorations so that more usefiU and meaningful reports can be
provided to management.
In accordance with a recommendation of the Hoover Commission
and the General Accounting Office, Coast Guard units in all but two




ADMINISTRATIVE REPORTS

'

151

districts within the continental limits of the United States now obtain
.general stores materials directly from the Navy. Negotiations are
under way to obtain simUar support in the two remaining districts
(Boston and New Orleans). Coast Guard stocks of general stores
material in the integrated districts were transferred to the Navy (with
reimbursement to the Coast Guard supply fund), thereby reducing
Coast Guard inventories. Outside the continental limits of the
United States a similar agreement has been made and carried out in
the Honolulu District.
^
In addition to integrating inventories, as just outlined, the Coast
Guard has moved its supply facUities to Navy property in Seattle,
Wash, and Great Lakes, IU., thereby releasing space rented by the
General Services Administration in Seattle and in Cleveland, Ohio.
Discussions are being held with the Navy for the purpose of moving
the Coast Guard Supply Depot, New Orleans, to the Naval Station,
Algiers, La. This would permit relinquishment of the Coast Guard
buUding in New Orleans.
Negotiations are in progress to obtain Air Force supply and service
support for Coast Guard units outside the continental limits of the
United States, which wUl materially improve supply support for
isolated Coast Guard units.
Coast Guard inventories were reduced by $2,288,993 in the 9
months ending March 31, 1957. Excess materials, amounting to
$747,286, were disposed of in the 9 months commencing JiUy 1, 1956^
and approximately $1,500,000 more was awaiting disposal on March
31, 1957.
Public Law 1014, approved August 7, 1956, which amended Section
"650, Title 14 of the United States Code, authorized the Coast Guard
to increase the existing capital of its supply fund by the value of usable
materials transferred to it from Coast Guard inventories carried in
other accounts. More than $500,000 worth of such material was
transferred on the basis of this authority through June 30, 1957.
Additional transfers wUl be made as rapidly as analyses of items,
quantities, and usage data are completed.
Coast Guard Auxiliary

The primary purpose of this voluntary, nonmilitary organization is
the promotion of safety in the maintenance, operation, and navigation
of small boats. Functioning in over 400 communities the AuxUiary
conducts public instruction courses in basic seamanship and safe
boat-handling. During the fiscal year these courses given gratuitously
had an enrollment of 33,826. Another phase of the Auxiliary is the
courtesy motorboat examination wherein the qualified Auxiliary
instructors check the vessels of fellow boatmen. If the examined
boat satisfies all requirements of the law and additional safety standards of the Coast Guard Auxiliary, a coveted ^^decal" is awarded to
the boat owner. Inspections of 38,997 motorboats were conducted
during the fiscal year. The AuxUiary also patrolled 353 regattas and
answered 2,040 calls for assistance. On June 30, 1957, the organization had 13,740 members and 7,946 facUities.




152

1957 REPORT OF THE SECRETARY OF THE TREiiStfllY

Funds available, obligations, and balances

The following table shows the amount of funds avaUable for the
Coast Guard during the fiscal year 1957, and the amounts of obligations and unobligated balances.
Funds
available
Appropriated funds:
Operatingexpenses
_.
Reserve training
Retired pay
Acquisition, construction, and improvements..
Total appropriated funds

$164,850,000 $164, 777,462
6,877, 875
7,000, 000
24, 811, 757
24, 925, 000
3,154, 484
1 9, 457, 726
206, 232, 726

Unobligated
balances
$72, 538
122,1 ^5
113, 243
i, 303, 242

Total reimbursements
Trust fund, United States Coast Guard gift fund___

___

_-

199, 621, 578

6, 611,148

23, 570, 967
57,416
1 7, 919, 085

23, 570, 967
57, 416
1, 098,332

6, 820, 753

31, 547, 468

Reimbursements:
Operating expenses
___
Reserve training
Acquisition, construction, and improvements..

Grand total

Net total
obligations

24, 726, 715

6, 820, 753

224,348, 761

13,442,451

111,018
237, 791, 212

10, 550

1 Funds available include unobligated balances brought forward from prior year appropriations as follows:
Acquisition, construction, and improvements:
Appropriated funds
$2,r057,726
Reimbursements
2,444,985
United States Coast Guard gift fund
.
4,050

United States Savings Bonds Division
The United States Savings Bonds Division serves as a Government
nucleus to promote the sale and retention of United States savings
bonds. With the aid and direction of this staff, thousands of publicspirited men and women act as a volunteer sales corps or as volunteer
issuing agents.
• I n the 23 years of their continuous sale, savings bonds have proved
a vital instrument in promoting thrift and nationwide saving by the
public. Through the payroll savings or bond-a-month plans, millions
of Americans have become savers for the first tim,e in their lives. They
have found these ^^save-as-you-earn" plans an ideal way of systematically building up financial reserves to meet emergencies and specffic
goals such as financing college educations for their chUdren, buying
homes, or supplementing retirement income. Moreover, the thrift
habit learned from the savings bonds program has been reflected in
increased savings in many forms.
Savings bonds promotion continues to be an important part of the
Government's effort to encourage the additional savings in all forms
needed to finance our growing economy soundly and provide even
greater future financial security for the people and Nation. Savings
bonds investments also contribute to economic stabUity by helping to
put the public debt on a sounder basis through keeping it widely
distributed among real savers.
Series E savings bonds, the most popular Government security,
marked their sixteenth anniversary in 1957. On June 30, 1957, E
bonds outstanding, together with their current-income companion, H




ADMINISTRATIVE REPORTS

153

iDonds (issued since June 1, 1952), had a cash value of $41}^ billion.
T h a t was the alltime record. I t means that 15 percent of the public
debt'is now held in E and H bonds, aiid that this investment represents
almost two-thirds of individuals' total holdings of the debt. More
than 40 mUlion persons hold these two series of savings bonds.
During the year the Savings Bonds Division continued to concentrate promotional efforts on the sale of E and H bonds, and gross
purchases totaled $4.6 bUlion. A new peacetime record was attained
in the number of bonds sold, but the doUar volum.e of sales slowed down
under the impact of higher interest rates avaUable on alternative forms
of savings and was 12.3 percent less than in 1956. The dollar decline
was reflected particularly in fewer purchases of bonds of large denomination ($500 and over). The combined purchases of $25 and $50
bonds, however, most of them by payi'oll savers, continued to rise and
reached the highest amount in any year since wartime 1946.
Although savings bonds are not sold primarUy for their yield, but
rather because they are completely safe investments, easily convertible into cash when funds are needed, and convenient to purchase,
nevertheless buyers must feel that they are getting a fair rate of
interest. Therefore, in February the Treasury asked authority from
Congress to increase from 3 to 3}^ percent the overall yield on E and
H bonds held to maturity. Legislation granting this authority was
enacted on April 20, 1957. The day the bUl was signed, the Treasury
announced that all E and H bonds purchased on or after February 1,
1957, will yield 3% percent per annum, compounded semiannually,
when held to maturity. Investment yields in the early years of holding were also substantiaUy improved. With the change in interest
return, the previous calendar year limit of $20,000 (face amount) on
purchases of each series by individuals was lowered to $10,000.
Throughout fiscal 1957, the retention rate on E bonds after their
original maturity continued at approximately 65 percent of original
maturity value. From May 1951, when the first E bonds started
maturing, through June 1957, approximately $23 billion in E bonds
came due. Less than $9 bUlion of that amount was turned in for
cash; the balance, over $14 biUion,. is being retained for a longer
period under the automatic extension option, and has earned $1.2
bUlion in additional interest. During the extension period, up to
ten additional years, E bonds issued from May 1942 through AprU
1957 earn interest at the rate of approximately 3 percent per annum,
compounded semiannually. E bonds issued in the year prior to May
1942 yield only slightly less.
Total redemptions of unmatured and matured E and H bonds during fiscal 1957 amounted to $5.2 billion, 9.4 percent above those in
1956. Of the total amount, $2.0 bUlion represented retirements of
matured E bonds.
The Division's experience discloses the payroll savings plan as the
most- effective method of channeling regular systematic savings into
E bonds. A survey by the Survey Research Center, University of
Michigan, during fiscal 1957 for the Savings Bonds Division found
the plan to be the most important single savings method for setting
aside liquid savings out of current income. The ever-growing volume
of $25 and $50 bond purchases indicates there are more payroll savers
now than at any time since World War I I . More than 8 miUion per-




154

1957 REPORT OF THE SECRETARY OF THE TREASURY

sons employed in industry and Government were signed up on the
payroll savings plan at the close of fiscal 1957. They work in more
than 42,000 separate businesses which operate payroll savings plans
for the benefit of their employees. These firms handle the bookkeeping and manage the plans as a public service without charge.
Of importance equal to that of the volunteer sales corps and the
16 years of fine public service by the voluntary issuing agents is the
generous free advertising donated by the Nation's advertisers as well
as all publicity and advertising media. Currently, the value of the
advertising contributed amounts to more than $50 mUlion a year.
As a result of all of this volunteer support, the promotional cost of
the program to the Government is only slightly over $1 for every,
$1,000 of E and H bonds sold.
The United States Savings Bonds Division is headed by a National
Director and is organized into four principal branches: Sales, Planning, Advertising and Promotion, and Administration. The heads
of these branches, together with the National Director, comprise the
Division's. Management Committee, whose main objective is the
improvement of services of the Division.
Further strengthening of the decentralized regional organizations
was continued during the year. Better manpower utUization was
achieved, with more economical and effective work schedules, through
realignment of area responsibility boundaries within State organizations, and also, in many instances, relocation of the area manager's
post of duty.
The procedural guides developed for headquarters and field staffs
have resulted in better controls. Without curtaUing the meeting of
requirements, economies have been made by consolidation of certain
types of printed material and more selective distribution methods
which have reduced the volume of promotional material and circular
mailings. A great deal of progress was made also in further standardizing methods, reports, and forms.
Training courses for personnel throughout the year were directed
not only to more effective sales techniques, but also to methods that
would result in economies and increase assistance to volunteers.
tJnited States Secret Service
The major functions of the United States Secret Service are protection of the person of the President of the United States and members of his immediate family, of the President-elect, and of the Vice
President at his request; the detection and arrest of persons committing any offenses against the laws of the United States relating to
obligations and securities of the United States and of foreign governments; and the detection and arrest of persons violating certain laws
relating to the Federal Deposit Insurance Corporation, Federal land
banks, joint-stock land banks, and national farm loan associations.
These and other duties of the Secret Service are defined in Section
3056 in Title 18 of the United States Code.




*

ADMINISTRATIVE REPORTS

155

Management improvement

On May 1, 1957, the headquarters office of the. Secret Service was
reorganized for more effective allocation of duties, clarffication of responsibUities, and reduction of the details requiring the personal attention of the Chief. Four divisions were established: namely. Investigations, Security, Inspection and Internal Audit, and Administration. Improvements made during the fiscal year provided for
stronger administrative controls and for more eff'ective use of personnel, space, and equipment. Noteworthy progress was made in
further developing and strengthening the Secret Service internal audit
program. A study of accountability procedures for contraband
property was completed and a new system, designed especially to
strengthen controls, was developed for use commencing July 1, 1957.
The laboratory maintained by the Counterfeit Section was combined
with the laboratory in the Protective Research Section.
Protective and security activities

Unusual protective activities by Secret Service agents during the
year included:
Protection of the President of the United States:
In July 1956, at the meeting of Presidents of the American
Republics in Panama;
In March 1957, on his visit to Bermuda to confer with the
Prime Minister of Great Britain.
Protection of the Vice President of the United States:
On an official trip around the world in July 1956, with stops in
Hawaii, Wake Island, Guam, Philippines, South Viet Nam,
Formosa, Thailand, Pakistan, Turkey, Mallorca Island, and
Bermuda;
On his trip to Europe in December 1956, for the purpose of
surveying conditions growing out of the Hungarian revolt, with
stops in Austria, Germany, and Iceland; and
On official visits to Morocco, Ghana, Liberia, Uganda, Ethiopia,
the Sudan, Libya, Italy, and Tunisia, in February and March,.
1957.
Enforcement activities

During the year 1957, Secret Service agents captured 12 plants for
the manufacture of counterfeit paper money and $1,548,167 in counterfeit notes. Of that total, $101,765 was passed on storekeepers
and cashiers. The balance of $1,446,402 was captured before it could
be put into circulation. The representative value of counterfeit coins
seized was $5,832.25, of which $5,530.21 had been circulated.
There were 101 new counterfeit note issues and variations detected
during the year and 319 persons were arrested for violating the counterfeiting laws as compared with 166 persons in the previous year.
The surreptitious use of equipment for counterfeiting purposes by
employees of legitimate printing firms became more widespread during
the year. Five of these cases culminated in arrests in Los Angeles




156

1957 REPORT OF THE SECRETARY OF THE TREASURY

and San Francisco, Calif.; Salt Lake City, Utah; Clay, Ky.; Chicago,;
111.; and Miami, Fla. A summary of some of these cases follows.
Two men were arrested in Gary,,fod., in October 1956 for passing
and possessing counterfeit $10 and $20 notes. One admitted the
manufacture of the $10 notes in a shop in San Francisco where he was
employed as a foreman, printing the notes at night. They also had
set up a plant in a trailer in Clay, Ky., and this plant was seized. At
the same time the owner of the trailer, who was implicated, was
arrested. Notes had been passed in six States.
In Chicago 15 persons were arrested during the month of June for
possessing and passing counterfeit $5 notes. The manufacturers also
arrested were employed at a legitimate printing plant where the notes
were printed after regular working hours.
Over a period of several months of investigation, 35 persons were
arrested in Michigan, 6 in Kentucky, and 2 in Tennessee for the manufacture, sale, possession, and passing of counterfeit $10 notes. Approximately $90,000 worth of these notes was printed in a camouflaged room in a Detroit service station. Of this amount, $5,930
reached circulation: The plant had been dismantled, but the press
was located and seized. Part of the counterfeit money was recovered
on a Texas farm where it had been buried.
In March the manufacturers of a new counterfeit $20 note were
arrested in Minneapolis. Both defendants were printers and admitted
making the notes at night on a press in a printing plant in Salt Lake
City where they had been employed for a week. More than $600,000
in counterfeit notes was seized in their motel room and automobile.
Also seized in the automobile was a 30-30 rifle, a .45 automatic, and
a .22 caliber pistol.
The first case in many years of attempted counterfeiting of Government bonds was uncovered through a routine police arrest for drunkenness in Pasadena, Tex. Police found 195 new counterfeit $100 notes
in the arrested man's automobile. The man subsequently admitted
manufacturing the notes, as well as counterfeit travelers' checks drawn
on the Bank of America, and checks drawn on commercial firms. His
plant was in St. Louis, Mo., and when seized it contained negatives for
$1,000 and $5,000 Treasury coupon bonds, prints of portions of Treasury bonds, and plates for simulating distinctive currency paper.
In June the Chief of the Secret Service called a meeting at Heidelberg, Germany, attended by military authorities and French police
officials to discuss the widespread traffic in counterfeit $10, $20, and
$100 notes in Europe. Plans were formulated for a concerted investigation to capture the counterfeiters. Through undercover investigation and surveillance two sources of notes were revealed. Arrests were
made and the counterfeiting plants seized. Paper sufficient to produce
$4,500yQ00.ip.cQunterfeit notes was among the material seized.
The following table summarizes seizures of counterfeit money during
the fiscal years 1956 and 1957.




ADMINISTRATIVE REPORTS

157

Counterfeit money seized fiscal years 1956 and 1957
1956
Counterfeit.:aiid.altered notes:
After circulTtion
Before circulation
"

'

Total

:.._:._:

Counterfeit coins seized:
After circulation
Before circulation

_.
:

_-__

Total
Grand total ___ _

1957

Increase, or
decrease (—)

Percentage
increase, or
decrease ( - )

$67, 635. 50 $101, 765.00
444,124. 50 1.446, 402.00

$34.129.50
1,002, 277. 50

50.5
225.7

1,548,167.00

1.036.407.00

202.6
2.3
-67.2

:..._

511, 760.00

. . _._

5, 405. 84
920. 32

5, 530. 21-,
302.04

124.37
-618, 28

6.326.16

5,832.25

-493.91

-7.8

518,086:16- ir^53,999. 25 1,035. 913.09

200.0

Forgery and fraudulent negotiation of Government checks continues to be a major criminal enforcement problem. During the
fiscal year 1957 the Secret Service received 24,852 forged Government
checks for investigation and agents completed investigations of
26,531, representing $2,370,506. There had been 11,713 forged checks
on hand at the beginning of the year, and at its close there was a
backlog of 10,034 awaiting investigation. There were 2,762 arrests
for forgery of Government checks.
In one case the manager of a business college in Arkansas sought
to keep up its income by retaining on the rolls the names of veterans
who had left the college. He filed false monthly certificates of attendance with the Veterans' Administration and up to the time of his
arrest had received and forged 18 veterans' checks amounting to
almost $2,000.
Two forgers who were arrested in New York City in October admitted forging and cashmg some 60 checks. They had received the
checks from a mail carrier who had removed the checks from mail he
was delivering. To make it appear to be the work of check thieves,
the carrier picked out checks intended for addresses at which mail
boxes had been broken open or he himself broke the boxes on the way
to work. Subsequently, the mail carrier also was arrested.
Forgers continued to steal and cash United States savings bonds.
Agents completed investigation of 3,594 forged bonds representing
$483,261 and arrested 68 persons for bond forgery during the year.
There had been 2,401 cases awaiting investigation at the beginning of
the year, and 3,382 forged bonds subsequently were received for
investigation.




158

1957 REPORT .OF.THE SECRETARY OF THE TREASURY

The following table shows the number of criminal and noncriminal
cases completed during the fiscal years 1956 and 1957.
Number of investigations of criminal and noncriminal activities, fiscal years 1956
and 1957
Cases closed

Increase, or
decrease (—)

1956

Percentage
increase, or
decrease (—)

Criminal cases:
Counterfeiting
_..
Forged Government checks.
Stolen or forged bbnds
Protective research
Miscellaneous (criminal)

1,474
30,619
4,398
931
230

1,739
26. 531
3,594
896
296

-4,C
-804
-35
66

18.0
-13.4
-18.3
-3.8
28.7

Total...
Noncriminal

37, 652
1,612

33, 056
1,540

-4, 596
-72

-12.2
-4.5

39, 264

34, 696

-4, 668

-11.9

Grand total

__

Secret Service agents arrested 123 persons for crimes other than
counterfeiting or forgery, making a total of 3,272 offenders arrested.
There were 2,915 convicted, representing 98.4 percent convictions in
all cases prosecuted, some of which were pending from the previous
year. Prison sentences during the year totaled 2,795 years and additional sentences of 3,191 years were suspended or probated. Fines
in criminal cases totaled $44,993.
Cases of all types received for investiga (don, including counterfeiting and forgery cases, aggregated 32,809 and 14,779 had been
pending at the beginning of the year. Although 34,596 were closed
durmg the year, as of Jime 30, 1957, there were 12,992 cases pendmg
and 1,003 defendants awaiting prosecution.
The following table is a statistical summary of Secret Service arrests and dispositions for the fiscal years 1956 and 1957.
Number of arrests and cases disposed of, fiscal years 1956 and 1957
1956

A r r e s t s for:
Counterfeiting.
Forged G o v e r n m e n t checks
Violation of Gold Reserve A c t
Stolen or forged b o n d s
.
P r o t e c t i v e research
Miscellaneous
_
Total

--

Oases disposed of:
Convictions in connection w i t h :
Counterfeiting
Forged G o v e r n m e n t checks
Violation of Gold R e s e r v e A c t
Stolen or forged b o n d s
P r o t e c t i v e research
Miscellaneous
Total
Acquittals
_
D i s m i s s e d n o t indicted or d i e d before trial
T o t a l cases disposed of




1957

Increase, or
decrease (—)

Percentage
increase, or
decrease (—)

166
2,881
5
89
85
86

*

•.

-

319
2,762
4
68
66
63

153
-119
-1
-21
-19
-33

92:2
-4.1
-20.0
-23.6
-22.4
-38.4

3,312

3,272

-40

-1.2

154
2,663
4
80
75
74

251
2,473
11
65
65
60

97
-190
7
-15
-10
-24

63.0
-7.1
175.0
-18.8
-13.3
-32.4

3, 050
54
256

2,915
46
217

-135
-8
-39

-4.4
-14.8
-15.2

3,360

3,178

-182

-5.4




EXHIBITS




Public Debt Operations
Ofiferings and Allotments

of Treasury Certificates of Indebtedness
Treasury Notes
EXHIBIT 1.—Treasury certificates of indebtedness

and

Two Treasury circulars containing representative certificate offerings dudng
the fiscal year 1957 are reproduced in this exhibit. The first circular is a cash
offering of the tax anticipation series and the second is an exchange offering of
the regular series of certificates. Circulars pertaining to the other offerings are
similar in form and therefore are not reproduced in this report. However, the
essential details for each issue are summarized in the first table following the
circulars and the final allotments of new certificates issued for cash or in exchange
for maturing securities are shown in the second table.
DEPARTMENT CIRCULAR NO. 980.

PUBLIC DEBT

TREASURY DEPARTMENT,

Washington, August 6, 1956.
1. OFFERING OF CERTIFICATES

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions from the people of the
IJnited States for tax anticipation certificates of indebtedness of the United States,.
designated 2^^ percent Treasury certificates of indebtedness of Series B-1957.
The amount of the offering is $3,000,000,000, or thereabouts. The books will be
open only on August 6 for the receipt of subscriptions.
II. DESCRIPTION OF CERTIFICATES

1. The certificates will be dated August 15, 1956, and will bear interest from
that date at the rate of 2% percent per annum, payable with the principal at
maturity on March 22, 1957. They will not be subject to call for redemption
prior to maturity.
2. The income derived from the certificates is subject to all taxes imposed
under the Internal Revenue Code of 1954. The certificates are subject to estate,
inheritance, gift, or other excise taxes, whether Federal or State, but are exempt
from all taxation now or hereafter imposed on the principal or interest thereof by
any State, or any of the possessions of the United States, or by any local taxing
authority.
3. The certificates will be acceptable to secure deposits of public moneys.
They will be accepted at par plus accrued interest to maturity in payment of
income and profits taxes due on March 15, 1957.
4. Bearer certificates will be issued in denominations of $1,000, $5,000, $10,000,
$100,000, and $1,000,000. The certificates will not be issued in registered form.
5. The certificates will be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States certificates.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Office of the Treasurer of the United States, Washington. Commercial
banks, which for this purpose are defined as banks accepting demand deposits, may
submit subscriptions for account of customers, but only the Federal Reserve Banks
and the Treasury Department are authorized to act as official agencies. Others
than commercial banks will not be permitted to enter subscriptions except for
their own account. Subscriptions from commercial banks for their own account
will be received without deposit,, but ^ill-be restricted in eachrca;'se];t6 amamount
not exceeding the combined capital, surplus, and,undivided.profits of the sub161
438363—58

12




162

1957 REPORT OF THE SECRETARY OF THE TREASURY

scribing bank. Subscriptions from air others must l^e accompanied by payment of
3 percent of the amount of certificates applied for, not subject to withdrawal until
after allotment. Following allotment, any portion of the 3 percent payment in
excess of 3 percent of the amount of certificates allotted may be released upon the
request of the subscribers.
2. Commercial banks in submitting subscriptions will be required to certify
that they have no beneficial interest in any of the subscriptions they enter for the
account of their customers, and that their customers have no beneficial interest in
the banks' subscriptions for their own account.
3. The Secretary of the Treasury reserves the right to reject or reduce any subscription, and to allot less than the amount of certificates applied for; and any
action he may take in these respects shall be final. Allotment notices will be sent
out promptly upon allotment.
IV. PAYMENT

1. Payment at par and accrued interest, if any, for certificates allotted hereunder must be made or completed on or before August 15, 1956, or on later allotment. In every case where payment is not so completed, the payment with
application up to 3 percent of the amount of certificates allotted shall, upon
declaration made by the Secretary of the Treasury in his discretion, be forfeited
to the United States. Any qualified depositary will be permitted to make payment by credit for not more than 80 percent of the amount of certificates allotted
to it for itself and its customers (up to the amount for which it shall be qualified
in excess of existing deposits) when so notified by the Federal Reserve Bank of its
district.
V. GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, 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 respective districts, to issue allotment notices, to receive payment for
certificates allotted, to make delivery of certificates on full-paid subscriptions
allotted, and they may issue interim receipts pending delivery of the definitive
certificates.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regukitions governing the offering,
which will be communicated promptly to the Federal! Reserve Banks.
G.

M.

HUMPHREY,

Secretary of the Treasury,

DEPARTMENT CIRCULAR NO. 983. PUBLIC DEBT
TRICASURY

DEPARTMENT,

Wa'shington, February 4, 1957,
I. OFFERING OF CERTIFICATES

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions from the people of the United
States for certificates of indebtedness of the United States, designated 3 ^ percent
Treasury certificates of indebtedness of Series A-1958, in exchange for 2 % percent
y
Treasury certificates of indebtedness of Series A-1957, maturing .February 15,
1957, 2% percent Treasury notes of Series A-1957, maturing March 15, 1957, or IY2
percent Treasury notes of Series EA-1957, maturing April 1, 1957. Exchanges
will be made par for par in the case of the certificates maturing February 15, and
at par with an adjustment of interest as of February 15 in the case of the notes
maturing March 15 and April 1. The amount of the offering under this circular
will be limited to the amount of maturing certificates and notes tendered in exchange and accepted. The books "will be open only on February 4 through
February 5 for the receipt of subscriptions for this issue.
2. In addition to the offering under this circular, holders of the maturing certificates and holders of the notes maturing March 15 are also offered the privilege
of exchanging all or any part of such securities for Wt percent Treasury notes of
Series A-1960, which offering is set forth in Department Circular No. 984, issued
simultaneously with this circular.




.

EXHIBITS

163

II. DESCRIPTION OF CERTIFICATES

1. The certificates will be dated February 15, 1957, and will bear interest from
that date at the rate of 3% percent per annum, payable on a semiannual basis on
August 15, 1957, and February 14, 1958. They will mature February 14, 1958,
and will not be subject to call for redemption prior to maturity.
2. The income derived from the certificates is subject to all taxes imposed under
the Internal Revenue Code of 1954. The certificates are subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, but are exempt
from all taxation now or hereafter imposed on the principal or interest thereof by
any State, or any of the possessions of the United States, or by any local taxing
authority.
3. The certificates will be acceptable to secure deposits of public moneys.
They will not be acceptable in payment of taxes.
4. Bearer certificates with interest coupons attached will be issued in denominations of $1,000, $5,000, $10,000, $100,000, $1,000,000, $100,000,000, and $500,000,000.
The certificates will not be issued in registered form.
5. The certificates will be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States certificates.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Office of the Treasurer of the United States, Washington. Banking
Institutions generally may submit subscriptions for account of customers, but
only the Federal Reserve Banks and the Treasury Department are authorized
to act as official agencies.
2. The Secretary of the Treasury reserves the right to reject or reduce any
subscription, and to allot less than the amount of certificates applied for; and any
action he may take in these respects shall be final. Allotment notices will be
sent out promptly upon allotment.
IV. PAYMENT

1. Payment at par for certificates allotted hereunder must be made on or before
February 15, 1957, or on later allotment, and may be made only in Treasury
certificates of indebtedness of Series A-1957, maturing February 15, 1957, Treasury notes of Series A-1957, maturing March 15, 1957, or Treasury notes of Series
EA-1957, maturing April 1, 1957, which will be accepted at par, and should
accompany the subscription. The full amount of interest due on the maturing certificates surrendered will be paid following acceptance of.the certificates.
Coupons dated March 15, 1957, must be attached to the notes of Series A-1957
when surrendered, and accrued interest from September 15, 1956, to February 15,
1957 ($12.15124 per $1,000) will be paid to subscribers following acceptance of
the notes. Coupons dated April 1, 1957, must be attached to the notes of Series
EA-1957 when surrendered, and accrued interest from October 1, 1956, to February 15, 1957 ($5.6456 per $1,000) will be paid to subscribers following acceptance
of the notes.
v. GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, 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 respective districts, to issue allotment notices, to receive payment
for certificates allotted, to make delivery of certificates on full-paid subscriptions
allotted, and they may issue interim receipts pending delivery of the definitive
certificates.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering,
which will be communicated promptly to the Federal Reserve Banks.




G.

M.

HUMPHREY,

. Secretary of the Treasury.

Summary of information pertaining to Treasury ceriificates of indebtedness issued during the fiscal year 1957
Department
circular
Date of
preliminary announceNumber
Date
ment

Concurrent
offering,
circular
number

1956
Aug. 6
Nov. 19

982

16

982 — d o — . .

,981

1957
Jan. 31

983

1957
Feb. 4

984

M'ar. 15
May 2

985
988

Mar. 18
May 6

986
989

1956
Aug. 3
Nov. 16

980
981

-,-.•.

Date of
Issue

1956
Aug. 15
Dec. 1

Certificates of indebtedness issued for cash or in exchange for maturing securities

29i percent Series B-1957 (tax anticipation series) issued
33^' percent Series C-1957 (tax anticipation series) issued
2% percent Series D-1956 certificates maturing Dec.
334 percent Series D-1957 issued in exchange for—
2^/i percent Series D-1956 certificates maturing Dec.

for cash
in exchange for1, 1956.

1957
Mar. 22
June 24

...dO-.._. Oct.

1, 1956.

- 1956
Aug. 6
Nov. 21

1 ...do.-...

1956
Aug. 15
Dec. 3
Do.

.

1957
Fleb. 15

1958
Feb. 14

1957
1957
Feb. 5 2 Feb. 15

...do..
May

35.^rpercent Series A-1958 issued in exchange for—
" "'-' 2^i percent Series A-1957 certificates maturing Feb. 15, 1957.
2^^ percent Series A-1957 Treasury notes maturing Maf. 15, 1957.
.•^ l\i percent Series EA-1957 Treasury notes maturing Apr. 1, 1957.
3^6, percent'Series A-1958 (additional issue) issued for cash..
3J;irpercent Series B-1958 issued in Exchange for—
IH percent Series B-1957 Treasury notes maturing May 15, 1957.

1 See;Department Circular No. 980, sections III and IV, in this exhibit, for provisions
for subscription and payment for certificates allotted.
S '2 Scie Department Circular No. 983, section IV, in this exhibit, for provisions for
payment of interest.
3 Commercial banks were permitted to subscribe for their own account for an amount
not exceeding the combined capital, surplus, and undivided profits of the subscribing

AUotment
Date payment
Date of subscrip- date on
or before
maturity . tion
(or on
bpoks
later
closed
allotment)

...do
Apr. 15

Mar. 18 3 Mar. 28
May 8 4 May 15

bank. Qualified depositaries were permitted to make payment for certificates allotted
to them arid their customers by credit in Treasury tax and loan accounts. Accrued
interest from Feb. 15 to Mar. 28, 1957 ($3.82251 per $1,000), for certifiTcates allotted was
paid by the subscribers.
* Following acceptance of surrendered notes with final coupons attached, accrued
interest from Nov. 15,1956, to May 1,1957 ($7.49655 per $1,000), was paid to subscribers;

Allotments of Treasury ceriificates of indebtedness issued during the fiscal yea,r 1957-, by Feder

•1^

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o
td
td

o

r7 T?o

[In thousands of dollars]

Federal Reserve district

Bostoii
New York
Philadelphia..
Cleveland

Cincinnati.
Pittsburgh
http://fraser.stlouisfed.org/

Federal Reserve Bank of St. Louis

2% percent
Series B-1957
certificates
(tax anticipation series)
issued for
cash 1

130. 972
, 407, 237
125, 384
130, 552
20, 767
49, 464

334 percent
Series C-1957
certificates (tax
anticipation
series) issued
in 0^ change for
'^% percent
Series D-1956
certificates
maturing
Dec. 1, 1956 2
43,029
812, 593
29, 370
52, 659
4,828
14, 416

334 percent
Series D-1957
certificates
issued in
exchange for
2 ^ percent
Series D-1956
certificates
maturing
Dec. 1, 1956 3

3% percent Series A-1958 certificates issued in exchange for—
2^i percent
2% percent
IM percent
Series A-1957 Series A-1957 Series EA-1957
Treasury notes Treasury notes
certificates
maturing
maturing
maturing .
Apr. 1, 1957
Feb. 15, 1957« Mar. 15, 1957«

Total
issued

Z% percent
Series A-1958
certificates
(additional
issue) issued
for cash «

33^ percent
Series B-1958
certificates
issued in
exchange for
lYs percent
Series B-1957
Treasury notes
maturing
May 15, 1957 8

W
td

>
d
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td
43,365
6, 515.491
21,-485
54. 531
13, 669
15, 663

35. 736
5, 694. 473
23, 459
55, 721
8,659
13, 945

72, 068
728,388
49,124
33. 917
17, 796
11,334

161
506, 028
1,944
829
116
1

107, 965
6,928.889
74, 527
90. 467
26, 571:
25, 280

61, 529
1,323,335
55, 798
30,010
13,931
8,678

Richmond:
Baltimore.Charlotte
_.
Atlanta
Birmingham
Jacksonville
Nashville
New Orleans
Chicago
.
Detroit
St. Louis
Little Rock
Louisville
Memphis
Minneapolis
Kansas City
Denver
Oklahoma City.
Omaha
Dallas
El Paso
Houston
San Antonio
San Francisco
Los Angeles
Portland
Salt Lake City..
Seattle
Treasury
Total certificate allotments
1
.
Maturing securities:
Exchanged in concurrent
offerings
.__:

62,161
32, 393
30,929
50, 074
14, 798
16,399
19, 803
28, 937
387, 900
100, 352
61, 263
4,643
12, 869
17, 956
84,886
41, 621
19, 823
25, 375
21, 879
91, 405
2,085
18, 891
6,962
59, 980
88, 443
20,540
8,753
25,105
11

6,463
11, 072
1,773
7,742
3,175
1,451
1,011
12, 217
124, 854
17,198
24, 688
124
8,862
1,923
32, 591
12, 960
241
8,542
2,754
5,017
609
12, 080
31, 560
11, 209
7,836
1,112
3,130
2,891

14, 941
9,561
3,001
23, 476
5.601
12, 409
4,682
14, 415
225, 266
11, 218
37, 475
5,588
35, 361
2,817
44, 630
18, 813
13, 827
9,089
8,433
13, 900
2,307
15, 277
3,690
39, 719
12, 203
3,454
1,007
6,137
8,441

3, 220, 612

1, 311, 980

7, 270, 942

10,917
5,:249
V913
13,217
1,916
3,310
3 " 428
,
5,457
258,-370
11,986
41, 665
522
11, 539
5,483
28, 472
25, 997
4,354
5.794
6, 399
'
6,486
336
5,515
1,999
58, 759
46, 653
5,950
1,198
8,124
4,373

100
29
108
15
610
3,484
265
816

17
6,524
400
237

13
350

15, 568
8,919
3,224
44, 790
6,250
12, 628
7,809
22,166
463,150
27, 476
57, 876
8,044
40, 823
8,444
74, 535
43, 458
11, 418
18, 200
11,137
11, 654
1,136
13, 458
6,295
87, 058
70, 842
32, 928
2,008

18,191
36

30, 631

53, 054
21,003
29, 028
32, 660
16, 307
35,127

18, 344
22,107
240, 917
92, 024
62, 227
4,179
11, 328
20, 530
58, 816
40,147
19, 395
14, 438
18, 941
96, 467
6,252
34, 524
3,813
148,184
65, 063
20, 716
9,299
43, 400
465

23, 262
24, 945
3,701
20,135
7,097
10, 754
11, 495
32, 588
240, 474
13,864
46, 904
3,162
• 10, 999
2,919
50, 309
24,107
14, 252
11,181
11, 968
27, 752
1,383
24, 367
7,453
172,133
35, 621
2,206
2,679
26, 850
3,321

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Total exchanged
Redeemed for cash or carried to matured debt...
Total maturing securities
1 Subscriptions for $100,000 or less were allotted
$100,000 were allotted 29 percent but not less than
2 Series D-1957 Treasury 3)4 percent certificates
maturity.
3 Series C-1957 Treasury 3}4 percent certificates
maturity.




4,551
3,641
1,311
31, 465
4,319
9,318
4,381
16, 099
201, 296
15, 225
15, 395
7,522
29, 267
2,961
39,539
17, 061
6,827
12, 406
4,738
5,168
800
7,943
4,296
28, 286
23, 839
26, 978
810
10, 067
26, 222
6, 393, 724

1,498,008

1, 463, 699

647,057

9, 877, 514

2,998, 219

869, 835

1,156, 711

531, 296 ,10,747,349

4,154, 930

7, 270, 942

1, 311, 980

543, 461

8, 582, 922

6, 937,185

2, 418, 246

522, 083

282, 294

578, 328

9,213

7, 219, 479

2, 996, 574

9, 083, 218

500, 296
9, 083, 218

in full and subscriptions In excess of
$100,000.
were also offered in exchange for this
were also offered in exchange for.this

2,351,162

8, 413, 815

8, 582, 922
500, 296

2, 436, 766

522, 083

920,238

4 Series A-1960 Treasury 33^ percent notes were also offered in exchange for this maturity; see exhibit 2.
6 Subscriptions for $100,000 or less were allotted in full and subscriptions in excess of
$100,000 were allotted 31 percent but not less than $100,000.
6 Series A-1962 Treasury 3% percent notes were also offered in exchange for this maturity; see exhibit 2. •

Ox

166

1957 REPORT OF THE SECRETARY OF THE TREASURY
EXHIBIT 2.—Treasury notes

Two Treasury circulars, one containing a cash a:Qd the other an exchange note
offering during the fiscal year 1957, are reproduced in this exhibit. Circulars
pertaining to the other note offerings during 1957 are similar in form to the exchange offering circular and therefore are not reproduced in this report. However, the essential details for each issue are summarized in the first table following
the circulars and the final allotments of the new notes issued for cash or in exchange
for maturing securities are shown in the second table.
DEPARTMENT CIRCULAR NO. 986i. PUBLIC DEBT
TREASURY

DEPARTMENT,

Washington, March 18, 1957.
I. OFFERING OF NOTES

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par and accrued interest,
from the people of the United States for notes of the United States, designated
3H percent Treasury notes of Series A-1960. The amount of the offering under
this circular is $750,000,000, or thereabouts. In addition to the amount offered for
public subscription, up to $100,000,000 of these notes may be allotted to Government investment accounts. The books will be open only on March 18 for the
receipt of subscriptions for this issue.
II. DESCRIPTION OF NOTES

1. The notes now offered will be an addition to and will form a part of the S}^
percent Treasury notes of Series A-i960 issued pursuant to Department Circular
No. 984, dated February 4, 1957, will be freely interchangeable therewith, are
identical in all respects therewith, and are described in the following quotation
from Department Circular No. 984:
" 1. The notes will be dated February 15, 1957, aiad will bear interest from that
date at the rate of 3J^ percent per annum, payable on a semiannual basis on
November 15, 1957, and thereafter on May 15 and November 15 in each year
until the principal amount becomes payable. They will mature May 15, 1960^
and will not be subject to call for redemption prior to maturity.
" 2 . The income derived from the notes is subject to all taxes imposed under
the Internal Revenue Code of 1954. The notes are subject to estate, inheritance,
gift, or other excise taxes, whether Federal or State, but are exempt from all
taxation now or hereafter imposed on the principal or interest thereof by any
State or any of the possessions of the United States, or by any local taxing
authority.
" 3 . The notes will be acceptable to secure deposits of public moneys. They
will not be acceptable in payment of. taxes.
"4. Bearer notes with interest coupons attached will be issued in denominations
of $1,000, $5,000, $10,000, $100,000, $1,000,000, $100,000,000, and $500,000,000.
The notes will not be issued in registered form.
" 5 . The notes will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States notes."
I l l , SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Office of the Treasurer of the United States, Washington. Commercial
banks, which for this purpose are defined as banks accepting demand deposits,
may submit subscriptions for account of customers, but only the Federal Reserve
Banks and the Treasury Department are authorized to act as official agencies.
Others than commercial banks will not be permitted to enter subscriptions
except for their own account. Subscriptions from commercial banks for their
own account will be received without deposit, but will be restricted in each case
to an amount not exceeding the combined capital, surplus, and undivided profits
of the subscribing bank. Subscriptions from all others must be accompanied by
payment of 3 percent of the amount of notes applied for, not subject to withdrawal until after allotment. Following allotment, any portion of the 3 percent
payment in excess of 3 percent of the amount of notes allotted may be released
upon the request of the subscribers.




EXHIBITS

167

2. Commercial banks in submitting subscriptions will be required to certify
that they have no beneficial interest in any of the subscriptions they enter for the
account of their customers, and that their customers have no beneficial interest
in the banks' subscriptions for their own account.
3. The Secretary of the Treasury reserves the right to reject or reduce any
subscription, and to allot less than the amount of notes applied for; and any
action he may take in these respects shall be final. Allotment notices will be sent
out promptly upon payment.
IV. PAYMENT

1. Payment at par and accrued interest from February 15, 1957, to March 28,
1957 ($3.96409 per $1,000), for notes allotted hereunder must be made or completed on or before March 28, 1957, or on later allotment. In every case where
payment is not so completed, the payment with application up to 3 percent of
the amount of notes allotted shall, upon declaration made by the Secretary of the
Treasury in his discretion, be forfeited to the United States. Any qualified depositary will be permitted to make payment by credit for notes 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.
v . GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, to make allotments on the basis and up to
the amounts indicated by the Secretary of the Treasury to the Federal. Reser ve
Banks of the respective districts, to issue allotment notices, to receive payment
for notes allotted, to make delivery of notes on full-paid subscriptions allotted,,
and they may issue interim receipts pending delivery of the definitive notes.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering,,
which will be communicated promptly to the Federal Reserve Banks.
G.

M.

HUMPHREY,

Secretary of the Treasury.
DEPARTMENT CIRCULAR NO. 989.

PUBLIC DEBT

TREASURY

DEPARTMENT,

Washington, May 6, 1957.
I. OFFERING OF NOTES

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond.Act, as amended, invites subscriptions from the people of the United
States for notes of the United States, designated 3 ^ percent Treasury notes of
Series A-1962, in exchange for lYs percent Treasury notes of Series B-1957, maturing May 15, 1957. Exchanges will be made at par with an adjustment of interest
as of May 1, 1957. The amount of the offering under this circular will be limited
to the amount of maturing notes of this series tendered in exchange and accepted.
The books will be open only on May 6 through May 8 for the receipt, of subscriptions for this issue.
2. In addition to the offering under this circular, holders of the maturing notes
are offered the privilege of exchanging all or any part of such notes for 3}^ percent
Treasury certificates of indebtedness of Series B-1958, which offering is set forth
in Department Circular No. 988, issued simultaneously with this circular.
I I . DESCRIPTION OF NOTES

1. The notes will be dated May 1, 1957, and will bear interest from that date
at the rate of 3 ^ percent per annum, payable on a semiannual basis on August 15,
1957, and thereafter on February 15 and August 15 in each year until the principal
amount becomes payable. They will mature February 15, 1962, and will not be
subject to call for redemption prior to maturity.
2. The income derived from the notes is subject to all taxes imposed under the
Internal Revenue Code of 1954. The notes are subject to estate, inheritance,
gift, or other excise taxes, whether Federal or State, but are exempt from all
taxation now or hereafter imposed on the principal or interest thereof by any
State, or any of the possessions of the United States, or bv any local taxing authority.




168

1957 REPORT OF THE SECRETARY OF THE TREASURY

3. The notes will be acceptable to secure deposits of public moneys. They will
not be acceptable in payment of taxes.
4. Bearer.notes with inter.est coupons attached will be issued in denominations
of $1,000, $5,000, $10,000, $100,000, $1,000,000, $100,000,000, and $500,000;000.
The notes will not be issued in registered form.
5. The notes will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing Unit<jd States notes.
III. SUBSCRIPTION AND ALLOTMENT

\

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Office of the Treasurer of the United States, Washington. Banking
institutions generally may submit subscriptions for account of customers, but
only the Federal Reserve Banks and the Treasury Department are authorized to
act as official agencies.
2. The Secretary of the Treasury reserves the right to reject or reduce any
subscription, and to allot less than the amount of notes applied for; and any
action he may take in these respects shall be final. Subject to these reservations j
all subscriptions will be allotted in full. Allotment notices will be sent out
promptly upon allotment.
IV. PAYMENT

1. Payment at par for notes allotted hereunder must be made on or before
May 15, 1957, or on later allotment, and may be made only in Treasury notes
of Series B-1957, maturing May 15, 1957, which will be accepted at par, and
should accompany the subscription. Coupons dated May 15, 1957, must be
attached to the notes when surrendered, and accrued interest from November 15,
1956, to May 1, 1957 ($7.49655 per $1,000), willbe paid to subscribers following
acceptance of the notes.
V. GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, 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 respective districts, to issue allotment notices, to receive payment
for notes allotted, to make delivery of notes on full-paid subscriptions allotted,
and they may issue interim receipts pending delivery of the definitive notes.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering,
which will be communicated promptly to the Federal Reserve Banks.




G. M.

HUMPHREY,

Secretary of the Treasuni.

~.t,.<^^

Summary of information pertaining to Treasury notes issued during the fiscal year 1957
Department
circular
Date of
preliminary announcement
Number
Date

Concurrent
offering,
circular
number

1956
July 12

978

1956
July 16

1957
Jan. 31

984

1957
Feb. 4

Mar. 15

986

Mar. 18

985

May 2

989

May 6

988

Treasury notes issued for cash and m exchange for maturing securities

2M percent Series D-1957 issued in exchange for—
.
2 percent Series B-1956 Treasury notes maturing Aug. 15, 1956.
IM percent Series EO-1956 Treasury notes maturmg Oct. 1, 1956.
983

3% percent Series A-1960 issued in exchange for—
2% percent Series A-1957 certificates maturing Feb. 15, 1957.
2J^ percent Series A-1957 Treasury notes m'aturmg Mar. 15, 1957.
33^ percent Series A-1960 (additional issue) issued for cash
3% percent Series A-1962 issued m exchange for—
.
\% percent Series B-1957 Treasm-y notes maturmg May 15, 1957.

Date of
issue

AUotment
Date payment
Date of subscrip- date on
or before
maturity
tion
(or on
.books
later
closed
allotment)

1956
July 16

1957
Aug. 1

1956
1956
July 18 iJuly 25

1957
Feb. 15

1960
May 15

1957
1957
Feb. 5 2 Feb. 15

.do..

Mar. 18 3 Mar. 28

Feb. 15

May 8 <May 15

.do.
May 1

fel
HH

W

. 1 Following acceptance of the surrendered notes with final coupons attached, accrued
Interest was paid to subscribers as follows: From Feb. 15 to July 16 ($8.35165 per $1,000)
on Series B-1956 and from Apr. 1 to July 16 ($4.34426 per $1,000) on Series EO-1956.
2 The full amount of interest due on the certificates surrendered and accepted, and
oJlowing acceptance of the surrendered notes with fimal coupon attached, accrued




mterest from.Sept. 15,1956, to Feb. 15,1957 ($12.15124 per $1,000) was paid to subscribers.
3 See Department Circular No. 986, sections III and IV, in this exhibit for provisions
for subscription and payment of interest.
4 See Department Circular No. 989, section IV, in this exhibit, for provisions for payment of interest.

HH

CO

Allotments of Treasury notes issued during the fiscal year 1957, by Federal Reserve districts
O

[In t h o u s a n d s of dollars]
2 % p e r c e n t Series D-1957 T r e a s u r y n o t e s issued
i n exchange for—
F e d e r a l Reserve district

Boston
New York
Philadelphia
Cleveland
.
Cincinnati
Pittsburgh
Richmond-Baltimore.
Charlotte
Atlanta
__.
Birmingham
Jacksonville
Nashville
N e w Orleans
Chicago
Detroit
_.
St. L o u i s
Little R o c k . _ _
Louisville
Memphis
Minneapolis
Kansas City
Denver
Oklahoma City.
Omaha___
Dallas.
E l Paso
Houston
San Antonio




3 H p e r c e n t Series A-1960 T r e a s u r y n o t e s issued
in exchange for—

2 p e r c e n t Series 13^ percent Series
B-1956 T r e a s u r y EO-1956 T r e a s u r y notes manotes maturing
t u r i a g Oct. 1,
A u g . 15, 1956
1956

2 ^ p e r c e n t Series 2J4 percent Series
A-1957 T r e a s u r y
A-1957 certificates m a t u r i n g
notes maturing
F e b . 15, 1957 i
M a r . 15, 1957 i

104,872
', 620,070
98,802
173, 506
21, 435
23, 469
21, 239
42,075
5,119
41, 397
14,028
22,089
7,548
65, 547
437, 727
55,079
88, 277
C

6,395
506,913
3,475
508
605
23
30
11
170
5!
115
65
220
3,247
723
859

Rll

43] 962
8,570
96,380
67,913
26,122
27,961
16, 755
61, 728
3,004
28, 417
18, 219

221
1,086
281
4
1
600
297
1
150

Total
issued

111.267
10,126,983
102. 277
174,014
22,040
23, 492
21, 269
42,075
5.130
41, 567
14,079
22, 204
7,613
55, 767
440, 974
55, 802
89,136
8, Gll
44,183
8,570
97. 466
58,194
26,126
27, 962
17. 355
62, 025
3,005
28,667
18, 219

9,107
384,707
14,096
10, 417
4,447
1,642
374
321
247
3,487
1,641
775
2,393
33
45, 605
2,306
3,248
223
12,195
2,315
6,590
1,529
2,600
5,634
512
3,323
145
1,401

48,871
383,646
43,199
45,847
4,660
4,137
12, 396
7,085
1,873
6,937
1,654
2,857
1,635
7,724
143, 610
49,097
18, 208
436
7,410
2,635
27, 479
14,062
3,905
6,390
4,403
7,750
1,143
1,810
2,367

Total
issued

57,978
768, 353
67, 295
66, 264
9,107
6,779
12, 770
7,406
2,120
9,424
3,195
3,632
3,928
7,757
189. 215
51, 403
21, 456
659
19, 605
4,950
34,069
15, 581
6,605
11,024
4,915
11, 073
1,143
1,956
3,768

35^ percent Series
A-1962 T r e a s u r y
33^ p e r c e n t Series n o t e s issued in
A-1960 T r e a s u r y
exchange for
n o t e s (additional 15^ percent Series
B-1957 Treasm-y
issue) issued
.notes m a t u r i n g
for cash 2
M a y 15,' 1967 3

42,220
244, 238
30, 665
24,460
7,192
25,352
21,449
8,163
7,164
11,136
3,336
12, 575
6,930
4,877
103,181
40,303
27.34R
2,268
7,807
5,645
37, 610
13,260
5,378
12,008
9,770
35, 760
3,259
7,130
2,390

4,304
475,825
6,352
15, 371
2,212
888
4,007
2,754
2,149
2,947
940
2,520
969
1,269
43,688
9,369
7

fiQR

'269
7,116
L078
13, 747
4,8874,586
1,669
3,216
3,130
362
3,172
L320

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hd
O
td
O

W
CQ

O
td
td

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Hi

W
td

>
CQ

d

178,408
81,607
6,426
4,265
22,040
5,689

1,112
15
355
202

179, 520
81,622
6,426
4,265
22,395
5,891

Total note allotments .
M a t u r i n g securities:
E x c h a n g e d i n c o n c u r r e n t offerings

11, 528,356

527, 735

12,056,091

T o t a l exchanged
.
.
R e d e e m e d for cash or carried t o
matured debt

11, 628,356

527, 735

859,979

22, 273

12, 388, 335

650,008

San Francisco
L o s Angeles
Portland
Salt L a k e C i t y
Seattle
Treasury
..
Government investment accounts

T o t a l m a t u r i n g securities

33,247
20, 559
868
687
3,222
539

39,340
22,190
1,202
843
4,005
13, 790

21,463
33,884
2,134
3,735
18, 460
6
100,000
942,426

8,090
2,678
1,100
254
6, 533
1, 700
647, 057

543, 461

920, 238

1, 463, 699

6. 393, 724

1, 498,008

7,891, 732

2,351,162

12,056, 091

6,937,185

2, 418, 246

9, 356, 431

2,998, 219

882, 252

282, 294

678, 328

860, 622

1,156, 711

12, 938, 343

7, 219, 479

2,996, 574

10, 216,053

4,154, 930

1 Series A-1958 Treasury 3 ^ percent certificates also offered in exchange for this
maturity: see exhibit 1.
2 Subscripticns for $100,000 or less were allotted in full and subscriptions in excess of
$100,000 were allotted 12 percent but not less than $100,000.




6,093
1,631
334
156
78313, 261

3 Series B-1958 Treasury 3}4 percent certificates were also offered tn exchange for
this maturity; see exhibit 1.

§

172

1957 REPORT OF THEc SECRETARY OF THE TREASURY
Treasury Bills
E X H I B I T 3.—Treasury bills

D u r i n g t h e fiscal year 1957 there were 52 weekly issues of Treasury bills, t w a
special issues of 91-day bills, and four issues of the tax anticipation series. Three,
press releases inviting tenders and three releases announcing the acceptance of
tenders are reproduced in t h i s exhibit. T h e press releases of October 8 and 11,
1956, are similar in form to t h e other press releases of bills issued for cash only
a n d t h e releases of October 18 and 23, 1956, are representative of t h e weekly
series of Treasury bills. T h e tax anticipation series is represented b y t h e re~
leases of December 10 and 13, 1956. T h e essential details regarding each issue
of Treasury bills during t h e fiscal year 1957 are summarized in t h e table following:
t h e press releases.
P R E S S R E L E A S E O F O C T O B E R 8, 1956
T h e Treasury D e p a r t m e n t , by this public notice, invites tenders for
$1,600,000,000, or thereabouts, of 91-day Treasury bills, to be issued on a discount basis under competitive and noncompetitive ])idding as hereinafter provided.
T h e bills of this series will be dated October 17, 1956, and will m a t u r e J a n u a r y 16,
1957, when the face a m o u n t will be payable without interest. T h e y will b e
issued in bearer form onlv, and in denominations of $1,000, $5,000, $10,000,
$100,000, $500,000, and $1,^000,000 (maturity value).
Tenders will be received a t Federal Reserve Banks and branches up to t h e
closing hour, two o'clock p. m., eastern daylight saving time, Wednesday, October
10, 1956. Tenders will not be received at the Treasury D e p a r t m e n t , Washington.
E a c h tender m u s t be for an even multiple of $1,,000, and in t h e case of ..competitive tenders t h e price offered m u s t be expressed on t h e basis of 100, with n o t
more t h a n three decimals, e. g., 99.925. Fractions m a y not be used. I t is
urged t h a t tenders be made on t h e printed forms and forwarded in t h e special
envelopes which will be supplied by Federal Reserve Banks or branches on
application therefor.
Others t h a n banking institutions will not be permitted to submit tenders except
for their own account. Tenders will be received without deposit from incorporated
b a n k s and t r u s t companies and from responsible a n d recognized dealers in inv e s t m e n t securities. Tenders from others must be accompanied by p a y m e n t of
2 percent of the face a m o u n t of Treasury bills applied for, unless t h e tenders are
accompanied by an express guaranty of p a y m e n t by an incorporated b a n k or
t r u s t company.
Immediately after t h e closing hour, tenders will be opened a t t h e Federal
Reserve Banks and branches, following which public announcement will be m a d e
by t h e Treasury D e p a r t m e n t of t h e a m o u n t and price range of accepted bids.
Those submitting tenders will be advised of t h e acceptance or rejection thereof.
T h e Secretary of t h e Treasury expressly reserves t h e right to accept or reject a n y
or all tenders, in whole or in part, and his action in anj^ such respect shall be final.
Subject to these reservations, noncompetitive tenders for $200,000 or less without
s t a t e d price from any one bidder will be accepted in full a t t h e average price (in
t h r e e decimals) of accepted competitive bids. P a y m e n t of accented tenders a t
t h e prices offered m u s t be made or completed a t t h e Federal Reserve Bank in.
cash or other immediately available funds on October 17, 1956, provided, however,
a n y qualified depositary will be permitted to make p a y m e n t by credit in its
Treasury tax and loan account for Treasury bills allotted to it for itself and itscustomers up to any a m o u n t for which it shall be qualified in excess of existing,
deposits when so notified by t h e Federal Reserve Bank of its district.
T h e income derived from Treasury bills, whether interest or gain from t h e
sale or other disposition of t h e bills, does n o t h a v e any exemption, as such, a n d
loss from t h e sale or other disposition of Treasury bills does not have a n y special
t r e a t m e n t , as such, under t h e I n t e r n a l Revenue Code of 1954. T h e bills a r e
subject to estate, inheritance, gift, or other excise taxes, whether Federal or




173

EXHIBITS

State, but are exempt from all taxation now or hereafter imposed on the principal
or interest thereof by any State, or any of the possessions of the United States,
or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold,by the United States is considered
W 6 e interest. Under-Sections,,04 (b)'and'^^^^^^
of the Internal Revenue
Code of 1954 the amount of discount at which"^bills issued hereunder are sold is
not considered to accrue until such bills are sold, redeemed, or otherwise disposed
of, and such bills are excluded from consideration as capital assets. Accordingly,
the owner of Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid
for such bills, whether on original issue or on subsequent purchase, and the amount
actually received either upon sale or redemption at maturity during the taxable
year for which, the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418, Revised, and this notice, prescribe
the terms of the Treasury bills and govern the conditions of their issue. Copies
of the circular may be obtained from any Federal Reserve Bank or branch.

PRESS RELEASE OF OCTOBER 11, 1956
The Treasury Department announced last evening that the tenders for
$1,600,000,000, or thereabouts, of 91-day Treasury bills to be dated October 17,
1956, and to mature January 16, 1957, which were offered on October 8, were
opened at the Federal Reserve Banks on October 10.
The details of this issue are as follows:
Total applied for
$4, 759, 044, 000
Total accepted (includes $421,914,000 entered on a noncompetitive basis and accepted in full at the average
price shown below)
1, 600, 768,000
Range of accepted competitive bids (excepting three tenders
totahng $1,200,000):
High, equivalent rate of discount approximately 2.433 %
per annum
99. 385
Low, equivalent rate of discount approximately 2.686%
per annum
99. 321
Average price, equivalent rate of discount approximately 2.627% per annum
99. 336
(32 percent of the amount bid for at the low price was accepted.)
T o t a l applied
for

Federal R e s e r v e district

Boston
New York .
Philadelphia-Cleveland
Richmond
Atlanta
Chicago . - _
S t . Louis
Minneapolis
Kansas City
Dallas
S a n Francisco

._

. _
.
. .

Total




.. . _ .

_

. . . .

T o t a l accepted

$220,0.40,000
2,245, 456, 000
171, 096, 000
293, 675, 000
152,285, 000
160. 704. 000
682.156. 000
142,384, 000
101, 745, 000
113,017,000
153,521.000
322. 965,000

$150,100,000
543 619, 000
75.866, 000
96. 935, 000
73,114,000
88,494, 000
205 086, 000
53, 736, 000
45,115, 000
58, 127, 000
100, 021, 000
110,555,000

4, 759, 044, 000

1, 600, 768,000

174

1957 REPORT OF THE SECRETARY OF THE TREASURY
PRESS RELEASE OP OCTOBER 18, 1956

The Treasury Department, by this public notice, invites tenders for $1,600,000,000, or thereabouts, of 91-day Treasury bills, for cash and in exchange for
Treasury bills maturing October 25, 1956, in the amount of $1,599,816,000, to be
issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided. The bills of this series will be dated October 25, 1956, and will
mature January 24, 1957, when the face amount will be payable without interest.
They will be issued in bearer form only, and in denominations of $1,000, $5,000,
$10,000, $100,000, $500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and branches up to the
closing hour, two o'clock p. m,, eastern daylight saving time, Monday, October 22,
1956. Tenders will not be received at the Treasury Department, Washington.
Each tender must be for an even multiple of $1,000, and in the case of competitive
tenders the price offered must be expressed on the basis of 100, with not more than
three decimals, e. g., 99.925. Fractions may not be used. It is urged that tenders
be made on the printed forms and forwarded in the special envelopes which will be
supplied by Federal Reserve Banks or branches on application therefor.
Others than banking institutions will not be permitted to submit tenders
except for their own account. Tenders will be received without deposit from
incorporated banks and trust companies and frora responsible and recognized
dealers in investment securities. Tenders from others must be accompanied by
payment of 2 percent of the face amount of Treasury bills applied for, unless the
tenders are accompanied by an express guaranty of payment by an incorporated
bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and branches, following which public announcement will be made
by the Treasury Department of the amount and price range of accepted bids.
Those submitting tenders will be advised of the acceptance or rejection thereof.
The Secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders in whole or in part, and his action in any such respect shall be final.
Subject to these reservations, noncompetitive tenders for $200,000 or less without
stated price from any one bidder will be accepted in full at the average price
(in three decimals) of accepted competitive bids. Settlement for accepted tenders
in accordance with the bids must be made or completed at the Federal Reserve
Bank on October 25, 1956, in cash or other immediately available funds or in a
like face amount of Treasury bills maturing October 25, 1956. Cash and exchange
tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue
price- of the new bills.
The income derived from Treasury bills, whether interest or gain from the saleor other disposition of the bills, does not have any exemption, as such, and loss
from the sale or other disposition of Treasury bills does not have any special
treatment, as such, under the Internal Revenue Code of 1954. The bills are
subject to estate, inheritance, gift, or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on the.principal
or interest thereof by any State, or any of the possessions of the United States, orby any local taxing authority. For purposes of taxation the amount of discount
at which Treasury bills are originally sold by the United States is considered to
be interest. Under Sections 454 (b) and 1221 (5) of the Internal Revenue Codeof 1954 the amount of discount at which bills issued hereunder are sold is notconsidered to accrue until such bills are sold, redeemed, or otherwise disposed of,,
and such bills are excluded from consideration as capital assets. Accordingly, the
owner of Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid,
for such bills, whether on original issue or on subsequent purchase, and the amount
actually received either upon sale or redemption at maturity during the taxable
year for which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418, Revised, and this notice, prescribe theterms of the Treasury bills and govern the conditions of their issue. Copies of ther
circular may be obtained from any Federal Reserve Bank or branch.




175

EXHIBITS
PRESS RELEASE OF OCTOBER 23, 1956

The Treasury Department announced last evening that the tenders for
$1,600,000,000, or thereabouts, of 91-day Treasury bills to be dated October 25,
1956, and to mature January 24, 1957, which were offered on October 18, were
opened at the Federal Reserve Banks on October 22.
The details of this issue are as follows:
Total applied for
$2,802, 560,000
Total accepted (includes $327,884,000 entered on a noncompetitive basis and accepted in full at the average
price shown below)
.___ 1, 600, 389, 000
Range of accepted competitive bids:
High, equivalent rate of discount approximately 2.900%
per annum
99. 267
Low, equivalent rate of discount approximately 2.912%
per annum
99.264
Average, equivalent rate of discount approximately
2.907% per annum
99. 265
(70 percent of the amount bid for at the low price was
accepted.)
Federal Reserve district

Total applied
for

Total accepted

Boston
New York
Philadelphia.
Cleveland
Richmond—
Atlanta
Chicago
St. Louis
Minneapolis.Kansas C i t y Dallas
San Francisco

$34, 958, OGG
2,011,347,000
42,296, 000
73, 553, 000
22.418,000
30,966. 000
286,025, 000
36,367, 000
12.878, 000
61,047,000
41,123,000
149,582, 000

$20,388,000.
1,035, 766,000
20, 500, 000
38,863. ooa
21,309, OOQ
20,066, ooa
214,220, 000
27, 532,000
12,189, ooa
44, 414, ooa
31,898, 000
113,244, ooa

Total...

2,802, 660,000

1,600,389, ooa

PRESS RELEASE OF DECEMBER 10, 1956
The Treasury Department, by this public notice, invites tenders for
$1,000,000,000, or thereabouts, of 95-day Treasury bills, to be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided. The bills of this series will be designated tax anticipation series, they will
be dated December 17, 1956, and they will mature March 22, 1957. They will
be accepted at face value in payment of income and profits taxes due on March 15,
1957, and to the extent they are not presented for this purpose the face amount
of these bills will be payable without interest at maturity. Taxpayers desiring
to apply these bills in payment of March 15, 1957, income and profits taxes have
the privilege of surrendering them to any Federal Reserve Bank or branch or to
the Office of the Treasurer of the United States, Washington, not more than
fifteen days before March 15, 1957, and receiving receipts therefor showing the
face amount of the bills so surrendered. These receipts may be submitted in
lieu of the bills on or before March 15, 1957, to the District Director of Internal
Revenue for the district in which such taxes are payable. The bills will be issued
in bearer form onlv, and in denominations of $1,000, $5,000, $10,000, $100,000,
$500,000, and $1,000,000 (maturity value).




176

1957 REPORT OF THE SECRETARY OF THE TREASURY

Tenders will be received at Federal Reserve Banks and branches up to the
closing hour, one-thirty o'clock p. m., eastern standard time, Wednesday, December 12, 1956. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of:
competitive tenders the,price offered must be expressed on the basis of 100, with
not" more than three decimals, e. g., 99:925. Fractions may not be used. It is
urged that tenders be made on the printed forms and forwarded in the special
envelopes which will be supplied by Federal Reserve Banks or branches on
application therefor.
Others than banking institutions-will not be permitted to submit tenders except for their own account. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized
dealers in investment securities. Tenders from others must be accompanied by
payment of 2 percent of the.face ampunt of Treasury bills.applied for, unless the
tenders are accompanied by an express guaranty of payment by an incorporated
bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and branches, following which public announcement will be made
by the Treasury Department of the amount and price range of accepted bids.
Those submitting tenders will be advised of the acceptance or rejection thereof.
The Secretary of the Treasury expressly reserves the right to accept or reject
any or all tenders, in whole or in part, and his action in any such respect shall
be final. Subject to these reservations, noncompetitive tenders for $200,000 or
less without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids. Payment of accepted
tenders at the prices offered must be made or completed at the Federal Reserve
Bank in cash or other immediately available funds on December 17, 1956, provided, however, any qualified depositary will be permitted to make payment by
credit in its Treasury tax and loan account for Tireasury bills 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.
The income derived from Treasury bills, whether interest or gain from the sale
or other disposition of the bills, does not have any exemption, as such, and loss
from the sale or other disposition of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift, orotherexcise taxes, whether Federal or State, butareexempt
from all taxation now or hereafter imposed on the principal or interest thereof by any
State, or any of the possessions of the United States, or by any local taxing
anthority. For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be interest. Under
Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954 the amount
of discount at which bills issued hereunder are sold is not considered to accrue
until such bills are sold, redeemed, or otherwise disposed of, and such bills are
excluded from consideration as capital assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in
his income tax return only the difference between the price paid for such bills,
whether on original issue or on subsequent purchase, and the amount actually
received either upon sale or redemption at maturity during the taxable year for
which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418, Revised, and this notice, prescribe the
terms of the Treasury bills and govern the conditions of their issue. Copies of
the circular may be obtained from any Federal Reserve Bank or branch.




177

EXHIBITS

PRESS RELEASE OF DECEMBER 13, 1956
The Treasury Department announced last evening that the tenders for
$1,000,000,000, or thereabouts, of tax anticipation series 95-day Treasury bills
to be dated December 17, 1956, and to mature March 22, 1957, which were offered
on December 10, were opened at the Federal Reserve Banks on December 12.
The details of this issue are as follows:
Total applied for
$3, 780, 088, 000
Total accepted (includes $351,874,000 entered on a noncompetitive basis and accepted in full at the average
price shown below)
1, 000, 086, 000
Range of accepted competitive bids (excepting one tender
of $300,000):
High, equivalent rate of discount approximately 2.456%
per annum
99.352
Low, equivalent rate of discount approximately 2.641 %
per annum
99.303
Average, equivalent rate of discount approximately
2.585% per annum
99. 318
(3 percent of the amount bid for at the low price was
accepted.)
Federal Reserve district

•
Boston
New York . . ._ __ _
Philadelphia
Cleveland- _ . .
._
Richmond
Atlanta .
Chicago
St. Louis
ATinneapolis

•

.

_.-

3, 780,088,000

1,000,086,000

. . _ _ . _ - _ _ _ _

."
..

.

.

.

.....

.

Total

438363—58-

._. _-.

$32,606,000
401,891,000
27, 248,000
24, 731,000
50, 271, 000
66 170,000
168, 707, 000
42.378, 000
• 45,832,000
48, 268,000
81,839, 000
10,145, 000

---

Kansas City
Dallas
SanFrancisco

.

-13




Total accepted

$155,856,000
1, 691,911,000
114,288,000
187, 111, 000
125,189, 000
156,475,000
538,397, 000
130, 603, 000
94, 442,000
94, 472,000
239, 989,000
251, 355, 000

_ ._ . .
_

Total applied
for

Summary of information pertaining io Treasury bills ^ issued during the fiscal year 1957 .
[DoUar amounts in thousands]

00

M a t u r i t y value

Prices a n d r a t e s

T e n d e r s accepted
Date
of
issue

Date
of m a turity

Days
to maturity

Total
applied
for

Total
accepted

On competitive
basis

On noncompetitive
basis 2

T o t a l b i d s accepted 2

For
cash

In
exchange

Average
price
per
hundred 3

Equivalent
average
rate 4
(percent)

C o m p e t i t i v e b i d s accepted
High
Price
per
hundred

Low

EquivaPrice
lent
per
rate 4
(percent) h u n d r e d

Equivalent
rate«
(percent)

Amount
maturing
on issue
d a t e of
new
offering

t=l
hd
O

O

Weekly Series
1956
July
5
12
19
26
Aug. 2
9
16
23
30
Sept. 6
13
20
27
Oct.

4
11
17
18
25
Nov. 1
8
15
16
23
29
Dec. 6
13
20
27
FRASER

1956
Oct.
4
11
18
25
Nov. 1
8
15
23
29
Dec. 6
13
20
27

91
91
91
91
91
91
91
92
91
91
91
91
91

1957
Jan.
3
10
16
17
24
31
Feb. 7
14
15
21
28
Mar. 7
14
21
28

91
91
16 91
91
91
91
91
91
16 91
90
91
91
91
91
91

Digitized for


$2, 410,116
2, 687, 830
2, 471, 860
2, 342, 216
2, 448, 560
2, 372, 662
2, 421, 563
2, 292, 665
2, 489, 607
2, 487, 539
2, 385, 326
2, 348, 329
2, 409, 840

$1, 600, 219
1, 601, 089
1, 600, 397
1, 599, 816
1, 600, 820
1, 600,112
1, 600,138
1, 600, 415
1, 601, 206
1, 601,146
1, 600, 383
1, 600, 404
1, 600, 515

$1, 362, 806
1, 306. 497
1, 279; 465
1, 320, 450
1, 323, 729
1, 342, 265
1, 336, 401
1, 345, 557
1, 350, 045
1, 380, 437
1, 306, 718
1, 258, 530
1, 298, 673

$247, 413
294, 592
320, 932
279. 366
277, 091
257, 867
263, 737
254, 858
251,160
220, 709
293, 665
341, 874
301, 842

2,350,443
1, 601, 247
2, 437, 532
1, 600, 272
4, 761,174
1, 602, 748
2, 572, 070 . 1,600,740
1, 600,142
2,802,310
1,601,624
2, 674, 609
2, 504,117
1, 600, 725
2, 493, 441
1, 601, 029
4, 637, 381
1, 749, 900
1, 599, 827
2, 405, 077
2, 605, 588
1, 600, 093
2, 232, 345
1, 600, 005
2, 309, 748
1, 599, 968
2, 351, 860
1, 600, 310
2, 386, 229
1, 614, 593

1, 319, 454
1, 287, 615
1,178, 754
1, 282, 090
1, 272, 508
1, 297, 503
1, 311, 822
1, 326, 358
1, 346, 980
1, 304, 617
1, 317,128
1, 318, 606
1, 285, 020
1, 266, 786
1, 331, 233

281, 793
312, 667
423, 994
318, 650
327, 634
304,121
288, 903
274, 671
402, 920
295, 210
282, 965
281, 399
314, 948
333, 525
283,360

$1, 487, 574
1, 526, 619
1, 665, 594
1, 673,133
1, 643, 668
1, 508, 693
1, 555, 540
1, 619, 695
1, 497, 541
1, 510, 306
1, 567,136
1. 562. 349
1, 566, 701

$112, 645
74, 470
34, 803
26, 683
57,152
91, 419
"44,598
80, 720
103, 664
90, 840
33, 247
38, 055
34, 814

99.391
99.397
99. 435
99.418
99. 399
99.394
99. 342
99. 280
99. 284
99.308
99.300
99. 265
99. 245

2.409
2.386
2.236
2.303
2.378
2.399
2.603
2.818
2.832
2.736
2.770
2.908
2. 986

99. 396
5 99.410
6 99. 441
7 99. 440
99. 440
8 99. 410
9 99. 360
10 99. 297
1199.300
12 99.312
13 99. 312
99.310
14 99 256

2.389
2.334
2.211
2.215
2.215
2.334
2.532
2.751
2.769
2.722
2.722
2.730
2.904

99. 389
99. 396
99. 432
99. 412
99. 396
99. 383
99.334
99. 262
99. 282
99. 306
99. 295
99.258
99. 242

2.417
2.389
2.247
2.326
2.393
2.441
2.635
2.888
2.840
2.745
2.789
2.935
2.999

93, 288
1, 507, 959
1, 507, 893
92,379
1, 602, 748
1, 566, 553 " l 4 , " i 8 7 '
1, 521, 568
78, 574
1, 509, 500
92,124
1, 504, 058
96, 667
1, 664, 338
36, 691
1, 749, 900
1, 477, 285 "i22,"542'
1, 432, 235
167, 858
1, 494,148
105, 857
1, 529,199
70, 769
1, 527, 845
72, 465
1, 582, 561
32, 032

99. 267
99.238
99.336
99. 235
99. 265
99. 270
99. 263
99. 247
99.339
99. 239
99.198
99. 216
99.174
99.158
99.187

2.899
3.013
2.627
3.025
2.908
2.888
2.914
2.979
2.617
3.043
3.174
3.102
3.268
3.331
3.217

99. 270
15 99. 250
17 99. 385
18 99. 242
99. 267
19 99. 280
99. 282
20 99. 280
99. 386
21 99. 260
22 99. 250
23 99. 224
99. 241
24 99.180
25 99.191

2.888
2.967
2.433
2.999
2.900
2.848
2.840
2.848
2.433
2.960
2. 967
3.070
3.003
3.244
3.200

99. 265
99. 230
99. 321
99. 234
99. 264
99. 269
99. 259
99. 243
99. 331
99. 234
99.189
99. 209
99.166
99.152
99.184

2.908
1, 600, 219
3.046
1, 601, 089
2.686
3.030 "1,'600,'397
2.912
1, 599, 816
2.892
1, 600, 820
2.931
1, 600,112
2.995
1, 600,138
2.647
3.064 '"'i,'600,'4i5
3.208
• 1, 601, 205
3.129
1, 601,146
3.299
1, 600, 383
3.365
1, 600, 404
3.228
1, 600, 515

.

$1, 600,109
1, 601, 221
1, 599, 963
1, 601, 522
1, 599, 603
1, 600, 626
1, 600, 678
1, 600, 042
1, 600, 060
1, 601, 732
1, 601, 543
1, 600, 241
1, 600, 808

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1957
Jan.
3
10
17
24
31
Feb.
7
14
21
28
Mar.
7
14
21
28
Apr.
4
11
18
25
May
2
9
16
23
31
June 6
13
20
27

Apr.

4
11
18
25
2
May
9
16
23
31
June 6
13
20
27
July 5
11
18
25
1
Aug.
8
16
22
29
Sept 6
12
19
26

91
91
91
91
91
91
91
91
92
91
91
91
91
92
91
91
91
91
91
91
91
90
91
91
91
91

378,174
543, 730
809, 687
416, 872
623, 706
626, 964
718, 742
579, 730
741,164
768, 818
829, 320
743, 595
648, 279
369, 085
562, 087
939, 029
706, 724
828, 426
584, 754
487, 833
531, 253
647, 730
461, 652
686, 693
444, 048
614, 473

1, 599, 988
1, 600, 456
1, 600, 483
1, 600, 512
1,700,240
1, 700,178
1, 700, 491
1, 799, 794
1, 801, 695
1, 800, 492
1, 802, 202
1, 603, 807
1, 600, 744
1, 603, 530
1, 611, 405
1, 600, 396
1, 600, 412
1, 701, 993
1, 699, 381
1. 700, 033
1, 800, 033
1, 800, 524
1, 799, 572
1, 799, 907
1, 600, 298
1, 601, 643

1, 317, 468
1, 226,373
1,173, 962
1, 285, 808
1,365, 355
1, 379, 254
1, 358, 565
1, 470, 622
1, 502, 798
1, 491, 339
1, 444, 695
1, 206, 252
1, 253, 238
1, 270, 886
1, 232, 607
1,188, 030
1, 236, 747
1,365, 513
1, 376, 805
1,379,048
1, 489, 981
1, 514,162
1, 490, 297
1, 434, 907
1, 226, 300
1,199, 465

282, 520
374, 082
426, 521
314, 704
334, 885
320, 924
341, 926
329,172
298, 897
309,153
357, 507
397, 555
347, 506
332, 644
378, 798
412, 366
363, 665
336, 480
322, 576
320, 985
310, 052
286, 362
309, 275
365, 000
373, 998
402,178
Tax

1956
Dec. 17

Mar.

22

95

3, 786,149

1, 005, 647

648, 212

1957
Jan.
16
F e b . 16
M a y 27

J u n e 24
24
S e p t . 23

159
129
119

2, 413, 854
2, 302, 048
3, 689,122

1, 601, 416
1, 749, 898
1, 500, 704

1, 490, 938
1, 633, 438
1,102,184




3.262
3.197
3.223
3.085
3.283
3.133
3.067
3.182
3.288
3.246
3.239
3.041
3.034
3.050
3.153
3.194
3.054
3.039
2.909
2.896
3.122
3.245
3.374
3.256
3.405
3.232

2.585

98. 540
98. 842
99. 066

3.305
3.231
2.825

99.187
26 99. 203
24 99. 221
99. 231
27 99.191
99. 216
99. 241
99. 246
28 99. 200
99.186
29 99.191
99. 236
99. 243
99. 241
30 99. 221
31 99. 212
99. 233
99. 241
99. 269
99. 285
99. 279
32 99. 216
33 99.156
99.186
34 99.160

3.216
3.163
3.082
3.042
3.200
3.102
3.003
2.983
3.130
3.220
3.200
3.022
2.995
2.970
3.082
3.117
3.034
3.003
2.892
2.829
2.852
3.136
3.339
3.220
3.323
3.212

99.170
99.187
99.183
99. 213
99.167
99. 204
99. 224
99.188
99.157
99.178
99.180
99. 230
99. 229
99. 218
99.200
99.192
99. 226
99. 230
99. 259
99. 261
99. 202
99.185
99.142
99.174
99.136
99.181

3.284
3.216
3.232
3.113
3.295
3.149
3.070
3.212
3.299
3.252
3.244
3.046
3.050
3.060
3.165
3.196
3.062
3.046
2.931
2.924
3.157
3.260
3.394
3.268
3.418
3.240

98. 520
98. 824
99.049

3.351
3.282
2.877

1, 601,247
1, 600,272
1, 600,740
1, 600,142
1, 601,624
1, 600,725
1, 601,029
1, 599,827
1, 600,093
1, 600,005
1, 599,
1, 600,
1, 614,
1, 599,
1, 600,455
1, 600,483
1, 600,512
1, 700,240
1, 700,178
1, 700,491
1, 799,794
1, 801,695
1, 800,492
1, 802,202
1, 603,807
1, 600,744

W
W

A n t i c i p a t i o n Series

357, 435

1,005, 647

110,
116,
398,

1, 663,174
1, 676, 827
1, 500, 704

478
460
620

99.175
99.192
99.185
99. 220
99.170
99. 208
99. 227
99.196
99.160
99.179
99.181
99. 231
99. 233
99. 221
99. 203
99.193
99. 228
99. 232
99. 265
99. 268
99. 211
99.189
99.147
99.177
99.139
99.183

99. 318

1, 419,165 180, 823
34, 971
1, 565, 484
1, 667, 066 33, 417
32, 617
1, 567, 895
1, 670, 715 29, 525
1, 667, 801
32, 377
1, 628, 393
72, 098
1, 696, 235 103, 559
1, 751, 309
50, 386
1, 743, 054
57, 438
1, 773, 512 28, 690
1, 540, 046
63,762
1, 669, 266
31, 478
1, 567,155
36, 375
1, 567, 956
43, 449
1, 552, 437
47, 959
1, 556, 582 43,830
1, 668, 224 33, 769
1, 666, 941
32, 440
1, 671, 774 28, 259
1, 705, 277
94, 756
1, 747, 685 52, 939
1, 744, 029
55, 543
1, 768, 265
31, 642
1, 558, 948
41, 350
1, 562,126
39, 517

38, 242
73, 071

2.456
36 98. 584
98. 882
37 99.108

3.206
3.120
2.698

1, 602, 748
1, 749, 900

CO

» The usual timing with respect to issues of Treasury bills is: Press release inviting
tenders, 7 days before date of issue; closing date on which tenders are accepted, 3 days
before date of issue; and press release armouncing acceptance of tenders, 2 days before
date of issue. Figures are final and differ in many instances from those shown in press
releases announcing details of a particular issue.
2 Noncompetitive tenders from any one bidder for $200,000 or less, without stated
price, were accepted in full at the average price for accepted competitive bids, except
that for the tax anticipation series dated May 27, the amount was $300,000.
3 Price at which noncompetitive tenders were accepted.
< Bank discount basis.
5 Except $126,000 at 99.485 and $150,000 at 99.423.
6 Except $50,000 at 99.457 and $400,000 at 99.455.
7 Except $250,000 at 99.475 and $300,000 at 99.469.
8 Except $400,000 at 99.444, $50,000 at 99.431, and $1,000,000 at 99.425.
0 Except $100,000 at 99.510, $76,000 at 99.450, $200,000 at 99.405, $200,000 at 99.400,
$100,000 at 99.388, $150,000 at 99.383, $300,000 at 99.380, and $300,000 at 99.375.
10 Except $100,000 at 99.360, $100,000 at 99.343, $1,100,000 at 99.342, $110,000 at 99.340,
$200,000 at 99.323, and $200,000 at 99.312.
11 Except $160,000 at 99.375 and $200,000 at 99.318.
1 Except $500,000 at 99.390.
2
13 Except $1,000,000 at 99.342.
1 Except $190,000 at 99.326, $200,000 at 99.304, and $300,000 at 99.280.
4
1 Except $110,000 at 99.326, $150,000 at 99.287, $200,000 at 99.280, $200,000 at 99.270,
5
$160,000 at 99.267, $200,000 at 99.265, and $100,000 at 99.261.




16 Special issue for casb.
1 Except $800,000 at 99.655 and $300,000 at 99.407.
7
1 Except $500,000 at 99.343 and $25,000 at 99.290.
8
1 Except $820,000 at 99.304, $1,000 at 99.300, $200,000 at 99.293, and $100,000 at 99.291.
9
20 Except $400,000 at 99.305.
21 Except $1,000,000 at 99.335, $25,000 at 99.285, and $800,000 at 99.280.
22 Except $150,000 at 99.325.
23 Except $15,000 at 99.241.
24 Except $100,000 at 99.241.
25 Except $100,000 at 99.300, $200,000 at 99.216, and $200,000 at 99.215.
26 Except $150,000 at 99.214.
27 Except $550,000 at 99.241, $150,000 at 99.235, $10,000 at 99.225, $300,000 at 99.220,
$100,000 at 99.213, and $75,000 at 99.210.
2 Except $100,000 at 99.346 and $200,000 at 99.241.
S
29 Except $1,000,000 at 99.216 and $800,000 at 99.196.
30 Except $200,000 at 99.242, $200,000 at 99.241, $200,000 at 99.237, and $180,000 at 99.230.
31 Except $300,000 at 99.231.
32 Except $100,000 at 99.300 and $200,000 at 99.241.
33 Except $100,000 at 99.216, $600,000 at 99.201, $300,000 at 99.200, and $200;000 at 99.166.
34 Except $200,000 at 99.191, $25,000 at 99.180, $750,000 at 99.177, $100,000 at 99.174, and
$100,000 at 99.170.
35 Except $300,000 at 99.925.
36 Except $100,000 at 99.631, $500,000 at 99.620, and $800,000 at 99.608.
37 Except $200,000 at 99.229.

06

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EXHIBITS

181

United States Savings Bonds
E X H I B I T 4.—Third a m e n d m e n t , January 4, 1957, to Department Circular No. 750,
Revised, regulations governing payments by b a n k s and other financial institutions, in conhection with the redemption of United States savings b o n d s
TREASURY

DEPARTMENT,

Washington, J a n u a r y 4, 1957.
Section 321.5 of Treasury D e p a r t m e n t Circular No. 750, Revised, dated J u n e .
30, 1945, as amended (31 C. F . R. 321), is hereby further amended to read as
follows:
Sec. 321.5. Reimbursement of agents^ costs.—(a) E a c h paying agent shall be
entitled t o receive reimbursement for its service for all bonds paid hereunder and
accounted for by it in each calendar guarter, according to the following scale:
15 cents each for t h e first 1,000 bonds
10 cents each for all over 1,000 bonds
E a c h Federal Reserve Bank is authorized to establish a definite and regular
closing time for determining those paid bonds to be considered as accounted for in
a calendar quarter. Such closing time may be based upon a time t h a t t h e paid
bonds are forwarded to, or received by, the Federal Reserve Bank and shall be
uniformly applied t h r o u g h o u t t h e district of such Bank. T h e scale of rates
shall be applicable separately to t h e agent and to each of its branches utilized in
making p a y m e n t s under this circular,' if t h e bonds paid by each are separately
scheduled a n d accounted for. T h e p a y m e n t of such a m o u n t as t h e agent is
entitled to receive will be m a d e by t h e Treasury D e p a r t m e n t .
(b) Paying agents shall not m a k e any charge whatever to owners of savings
bonds in connection with p a y m e n t s hereunder.
W.

RANDOLPH

BURGESS,

Acting Secreiary of the Treasury,
E X H I B I T 5.—Second a m e n d m e n t , M a r c h 7,1957, to Department Circular No. 906,
terminating the sale of Series J and Series K savings bonds
TREASURY

DEPARTMENT,

Washington, March 7, 1957.
T h e sale of United States savings bonds. Series J and Series K, offered under
Treasury D e p a r t m e n t Circular No. 906, dated April 29, 1952 (31 C F R 333), is
hereby t e r m i n a t e d effective a t t h e close of business April 30, 1957.
W,

RANDOLPH

BURGESS,

Acting Secretary of the Treasury.
E X H I B I T 6.—Fourth revision, April 22, 1957, of Department Circular No. 653,
increasing the interest rate and redemption values of Series E savings bonds
TREASURY

DEPARTMENT,

Washington, April 22, 1957.
D e p a r t m e n t Circular No. 653, Third revision, dated April 29, 1952, as amended
(31 C F R 316), is hereby revised to read as follows:
Sec. 316.1. Offering of bonds.—The Secretary of the Treasury, p u r s u a n t to the
a u t h o r i t y of the Second Liberty Bond Act, as amended (31 U. S. C. 757c), offers
for sale to t h e people of t h e United States, United States savings bonds of Series E
which hereinafter are generally referred to as bonds of Series E. These bonds will
be substantially a continuation of the bonds of Series E heretofore available, except
as otherwise indicated herein. This offering of bonds will continue until t e r m i n a t e d
by the Secretary of the Treasury.
Sec. 316.2. Term.—A bond of Series E will be dated as of the first day of the
m o n t h in which p a y m e n t of the issue price is received by an agent authorized to
issue the bonds. This date is the issue date and the bond will m a t u r e and be payable a t face value 8 years and 11 months from such issue date. T h e issue date is
t h e basis for determining the redemption periods or the m a t u r i t y date of the bond,
and should not be confused with the date appearing in the issuing agent's s t a m p ,
which indicates the actual date the bond is inscribed. The bonds m a y not be




182

1957 REPORT OF THE SECRETARY OF THE TREASURY

called for redemption by the Secretary of the Treasury prior to maturity, but any
bond may be redeemed prior to maturity, at any time after two months from the
issue date, at the owner's option, at fixed redemption values.
Sec. 316.3. Interest.—Bonds of Series E will be issued on a discount basis at
75 percent of their maturity value. No interest as such will be paid on the bonds,
but they will increase in redemption value at the end of each half-year period from
the issue date, as shown in table A at the end of this circular. The investment
yield will be approximately 3.25 percent per annum compounded semiannually,
if the bonds are held to maturity, but the yield will be less if the owner exercises
his option to redeem a bond prior to maturity.
Sec. 316.4. Applicability to bonds bearing issue dates of February 1
through April 1, 1957, as well as subseguent issue dates.—The term of maturity and
the yield provided for in sections 316.2 and 316.3 shall apply to all bonds of Series E
bearing issue dates of February 1 through April 1, 1957, as well as to those bearing
subsequent issue dates.
Sec. 316.5. Bonds purchased before new stock is available.—Until bonds have
been printed and supplied to issuing agents bonds of Series E in the form on sale
prior to February 1, 1957, will be issued for purchases made under this circular.
BONDS OF SERIES E PURCHASED IN THE INTERVAL UNTIL THE
NEW STOCKS ARE AVAILABLE WILL CARRY THE NEW INTEREST
RATE AND REDEMPTION VALUES AND ALL OTHER PRIVILEGES AS
FULLY AS IF EXPRESSLY SET FORTH IN THE TEXT OF THE BONDS
THEMSELVES. The owners, if they desire to do so, may exchange such bonds
at any Federal Reserve Bank or branch or at the Treasury bepartment, Washington 25, D. C , for bonds in the new form (with the same registration and issue
dates), when the latter become available but they need not do so because all paying
agents will redeem ALL bonds of Series E bearing issue dates on and after February 1, 1957, in accordance with the schedule of ledemption values set forth in
table A at the end of this circular.
Sec. 316.6. Description.—Bonds of Series E will be issued only in registered
form. See section 316.7 for information concerning registration. They will be
issued in denominations of $25, $50, $100, $200, $500, $1,000, and $10,000; and
$100,000 which is provided for trustees of employees' savings plans. Each bond
will bear the facsimile signature of the Secretary of the Treasury, and will bear
an imprint of the Seal of the Treasury Department. At the time of issue, the
issuing agent will inscribe on the face of each bond the name and address of the
owner and the name of the coowner or beneficiary, :if any; will enter the issue date
of the bond; and will imprint the agent's dating stamp (to show the date the bond
is actually inscribed). A bond of Series E shall be valid only if an authorized
issuing agent receives payment therefor, duly inscribes, dates, and stamps the
bond, and delivers it to the purchaser or his agent.
Sec. 316.7. Registration.—(a) General.—Generally, only residents of the United
States, its Territories, and possessions, the Commonwealth of Puerto Rico, the
Canal Zone and citizens of the United States temporarily residing abroad are
eligible to invest in bonds of Series E. The bonds may be registered in the names
of natural persons in their own right in the three conventional forms of registration, single ownership, coownership and beneficiary forms, heretofore available.
The bonds may also be registered in the names and titles of the legal representatives of natural persons (guardians, custodians, conservators, etc.) and of the
trustees of the limited classes of trusts described in paragraphs (b) and (c). Full
information regarding eligibility to invest in savings bonds and authorized forms
of registration and rights thereunder will be found in the regulations currently
in force governing United States savings bonds.^
(b) Trustees of personal trust estates.—Bonds of Series E may be registered ih
the name and title of the trustee or trustees of a personal trust estate. The
term "personal trust estate" as used herein is defined to mean, and is limited to,
trust estates established by individuals, that is, natural persons in their own right,
for the benefit of themselves or other such individuals, and common trusts
comprised in whole or in part of such trust estates.
(c) Trustees of employees^ savings plans.—
1. Definition of plan and conditions of eligibility.—Bonds of Series E may be
registered in the name and title of the trustee or trustees of an employees' savings plan or any similar trust for the accumulation of employees' savings established by the employer for the exclusive and irrevocable benefit of his employees
1 Department Circular No. 530




EXHIBITS

183

or their beneficiaries which affords employees the means of making regular savings from their wages through payroll deductions, provides for employer
contributions to be added to such savings, and provides in effect that:
(i) The entire assets thereof must be credited to the individual accounts
of participating employees and assets credited to the account of an employee may
be distributed only to him or his beneficiary, except as otherwise provided herein.
(ii) Bonds of Series E may be purchased only with assets credited to
the accounts of participating employees and only if the amount taken from any
account at any time for that purpose is equal to the purchase price of a bond or
bonds in an authorized denomination or denominations, and shares therein are
credited to the accounts of the individuals from which the purchase price thereof
was derived, in amounts corresponding with their shares. For example, if $37.50
credited to the account of John Jones is commingled with funds credited to the
accounts of other employees to make a total of $7,500, with which a bond of
Series E in the denomination of $10,000 (maturity value) is purchased in June
1957 and registered in the name and title of the trustee or trustees, the plan must
provide, in effect, that John Jones' account shall be credited to show that he is
the owner of a bond of Series E in the denomination of $50 (maturity value)
bearing issue date of June 1, 1957.
(iii) Each participating employee shall have an irrevocable right at any
time to demand and receive from the trustee or trustees all assets credited to
his account or the value thereof, if he so prefers, without regard to any condition
other than the loss or suspension of the privilege of participating further in the
plan, except that a plan will not be deemed to be inconsistent herewith, if it
limits or modifies the exercise of any such right by providing that the employer's
contribution does not vest absolutely until the employee shall have made contributions under the plan in each of not more than sixty calendar months
succeeding the month for which the employer's contribution is made.
(iv) Upon the death of an employee, his beneficiary shall have the
absolute and unconditional right to demand and receive from the trustee or
trustees all the assets credited to the account of the employee, or the value
thereof, if he so prefers.
(v) When settlement is made with an employee or his beneficiary with
respect to any bond of Series E registered in the name and title of the trustee or
trustees in which the employee has a share (see (ii) hereof), the bond must be
submitted for redemption or reissue to the extent of such share; if an employee, or
his beneficiary, is to receive distribution in kind, bonds bearing the same issue
dates as those credited to the employee's account will be reissued in the name of the
distributee to the extent to which he is entitled, in authorized denominations, in
any authorized form of registration, upon the request and certification of the
trustee or trustees in accordance with the provisions of the regulations governing
United States savings bonds.
2. Definitions of terms used in ihis section and related provisions.—(i) The term
''savings plan" includes any regulations issued under the plan with regard to
bonds of Series E; a copy of the plan and any such regulations, together with a
copy of the trust agreement certified by a trustee to be true copies, must be submitted to the Federal Reserve Bank of the district in order to establish the
eligibility of the trustee or trustees to purchase such bonds under this section.
(ii) The term ''assets" means all funds, including the employees' contributions and the employer's contributions and assets purchased therewith as
well as accretions thereto, such as dividends on stock, the increment in value on
bonds and all other income; but, notwithstanding any other provision of this
section, the right to demand and receive "all assets" credited to the account of an
employee shall not be construed to require the distribution of assets in kind when
it would not be possible or practicable to make such distribution; for example,
bonds of Series E may not be reissued in unauthorized denominations, and
fractional shares of stock are not readily distributable in kind.
(iii) The term "beneficiary" means the person or persons, if any, designated by the employee in accordance with the terms of the plan to receive the
benefits of the trust upon his death or the estate of the employee, and the term
"distributee" means the employee or his beneficiary.
Sec. 316.8. Limitation on holdings.—The limits on the amount of bonds of
Series E originally issued during any one calendar year that may be held by any one
person at any one time (which will be computed in accordance with the regulations
currently in force governing United States savings bonds) are:




184

1957 REPORT OF THE SECRETARY OF THE TREASURY

(a) General limitation.—$10,000 (maturity value) for t h e calendar year 1957 2
and each calendar year thereafter.
(b) Special limitation applicable to the employees^ savings plans described in
section 316.7 (c).—$2,000 (maturity value) multiplied by t h e highest number of
participants in an employees' savings plan at any i:ime during t h e year in which
t h e bonds are issued.
Sec. 316.9. Nontransferability.—Bonds of Series E m a y not be used as collateral
for a loan or as security for t h e performance of an obligation, or transferred inter
vivos by voluntary sale or gift, discounted or disposed of in any manner other t h a n
as provided in t h e regulations governing United States savings bonds. Except as
provided in said regulations, t h e Treasury D e p a r t m e n t will recognize only t h e
inscribed owner, during his lifetime, and thereafter his estate or heirs.
Sec. 316.10. Issue prices of bonds.—The issue prices of t h e various denominations of bonds of Series E follow:
Denomination (maturity
value)
$25.00 $50.00 $100.00 $200.00 $500.00 $1,000.00 $10, 000.00 1 $100,000
Issue (purchase) price
18.75 37.50
75.00
150.00
375.00
750.00 7,500.00
75,000
1 The $100,000 denomination is available for purchase only by trustees of employees' savings plans described in section 316.7 (c).

Sec. 316.11. Purchase of bonds.—Bonds of Series E m a y be purchased, while
this offer is in effect, as follows:
(a) Over-the-counter for cash.—(1) For individuals (natural persons) only (i) a t
such incorporated banks, t r u s t companies, and other agencies as have been duly
qualified as issuing agents, and (ii) at selected United States post offices; and (2)
for individuals (natural persons) or trustees of (Employees' savings plans and
trustees of personal t r u s t estates a t Federal Reserve Banks and branches a n d a t
t h e Treasury D e p a r t m e n t , Washington 25, D . C.
(b) On mail order.—By mail upon application to the Treasurer of t h e United
States, Washington 25, D . C , or to any Federal Reserve Bank or branch, accompanied by a remittance to cover the issue price. Any form of exchange, including
personal checks, will be accepted, subject to collection. Checks, or other forms
of exchange, should be drawn to the order of t h e Federal Reserve Bank or Treasurer of t h e United States, as the case m a y be. Checks payable by endorsement
are not acceptable. Any depositary qualified p u r s u a n t to t h e provisions of
Treasury D e p a r t m e n t Circular N o . 92, Revised (31 C F R 203) will be permitted
to make p a y m e n t by credit for bonds applied for on behalf of its customers up to
any a m o u n t for which it shall be qualified in excesis of existing deposits, when so
notified by the Federal Reserve Bank of its district.
(c) Savings stamps.—Savings stamps, in authorized denominations m a y be
purchased a t any post office where bonds of Series E are on sale and at such other
agencies as m a y be designated from time to time. These stamps m a y be used to
accumulate credits for the purchase of bonds of Series E. Albums, for affixing
t h e stamps, will be available without charge, and such albums will be receivable,
in t h e a m o u n t of t h e affixed stamps, on t h e purchase price of t h e bonds.
Sec. 316.12. Delivery of bonds.—Issuing agents are authorized to deliver bonds
of Series E by mail a t t h e risk and expense of t h e United States, a t the address
given by t h e purchaser, b u t only within t h e United States, its Territories and
possessions, and the Canal Zone.^ No mail deliveries elsewhere will be m.ade.
If purchased by citizens of t h e United States temporarily residing abroad, the
bonds will be delivered a t such address in t h e United States as the purchaser
directs.
Sec. 316.13. Retention of bonds of Series E at further interest after maturity:-,—
(a) Series E bonds bearing issue dates of May 1, 1941, through J a n u a r y 1, 1957.—
Owners of bonds of Series E bearing the issue dates specified in paragraphs ( 1 ) (3) have t h e option of retaining their m a t u r e d bonds for a 10-year period after
m a t u r i t y (hereinafter referred to as the "extension period") and of earning interest
upon t h e m a t u r i t y values thereof as follows:
(1) Series E bonds bearing issue dates of May 1, 1941, through April 1,
1942.—Such bonds earn interest after m a t u r i t y for each half-year period a t t h e
2 Effective May 1. Accordingly, investors who purchase $20,000 (maturity value) of bonds of Series
E-1957 bearing issue dates of January 1 through April 1 will not bo entitled to purchase additional bonds of
that series during 1957. Investors who have purchased less than $10,000 (maturity value) of bonds of Series
E prior to May 1 will be entitled only to purchase enough to bring their total for 1957 to $10,000 (maturity
value).
3 During any war emergency the Treasury may suspend deliveries to be made at its risk and expense
from or to the continental United States, its Territories, and possessions, and the Canal Zone, or between
any of such places.




TABLES

185

r a t e of 2}^ percent per a n n u m simple interest, if redeemed before the first 7}i
years of t h e extension period, and a t 'a higher rate thereafter so t h a t t h e aggregate
return for t h e extension period will be approximately 2.90 percent per a n n u m
compounded semiannually, in accordance with t h e schedule of redemption values
in table D a t the end of this circular.
(2) Series E bonds bearing issue dates of May 1, 1942, through April 1,
1952.—-Such bonds will earn interest after m a t u r i t y a t t h e rate of approximately
3 percent per a n n u m compounded semiannually for each half-year period of the
extension period and are redeemable in accordance with the schedule of redempti'on values in table C a t t h e end of this circular.
(3) Series E bonds bearing issue dates of May 1, 1952, through J a n u a r y ly
1957.—Such bonds will earn interest after m a t u r i t y a t t h e rate of approximately
3 percent per a n n u m compounded semiannually for each half-year period of the
extension period and will be redeemable in accordance with t h e schedule of redemption values in table B a t the end of this circular.
Interest under the above provisions accrues a t the end of t h e first half-year
period following m a t u r i t y a n d a t t h e end of each successive half-year period
thereafter. If t h e bonds are redeemed before t h e end of t h e first half-year period
following m a t u r i t y , the owner is entitled to p a y m e n t only a t the face value thereof.
T h e option provided in this section is as binding on t h e United States as if
expressly set forth in t h e text of the bonds. N o action is required of owners
desiring to t a k e a d v a n t a g e thereof. Merely b y continuing to hold their bonds
after m a t u r i t y t h e y will earn further interest in accordance with t h e schedule of
redemption values set forth in t h e pertinent tables referred to above. T h e t e r m
" o w n e r s " as used in this section includes registered owners, coowners, surviving
beneficiaries, next of kin, and legatees of deceased owners, a n d persons who have
acquired bonds p u r s u a n t to judicial proceedings against t h e owners, except t h a t
j u d g m e n t creditors, trustees in b a n k r u p t c y , and receivers of insolvents' estates
wiil^have t h e Tight only to p a y m e n t in accordance with the regulations governing
United States saviiigs bonds.
(b) Series E bonds bearing issue dates after J a n u a r y 1, 1957.—The terms of a
retention privilege, if any, for owners of bonds of Series E bearing issue dates
after J a n u a r y 1, 1957, will not be determined until later.^
Sec. 316.14. Taxation.—(a) General.—For the purpose of determining taxes
and tax exemptions, the increment in value represented by the difference between
t h e price paid for bonds of Series E (which are issued on a discount basis), a n d the
redemption value received therefor shall be considered as interest. Such interest
is subject to all taxes imposed under t h e Internal Reveniie Code of 1954. T h e
bonds are subject to estate, inheritance, gift, or other excise taxes, whether
Federal or State, b u t are exempt from all taxation now or hereafter imposed on t h e
principal or interest thereof by any State, or any of t h e possessions of t h e United
States, or by any local taxing authority.
(b) F'ederal income tax as applied io matured bonds of Series E.—A taxpayer who
has been reporting the increase in redemption value of his Series E bonds, for
Federal income tax purposes, each year as it accrues, m u s t continue to do.so if
he retains the bonds under section 316.13, unless in accordance with income t a x
regulations t h e taxpayer obtains permission from the Commissioner of I n t e r n a l
Revenue to Chan-ge to a different method of reporting income from such obligations. A t a x p a y e r who has not been reporting the increase in redemption value
of such bonds currently for tax purposes m a y in any year prior to final m a t u r i t y ,
a n d subject to the provisions of Section 454 of t h e Internal Revenue Code of
1954 and of the regulations prescribed thereunder, elect for-such year and subsequent years to report such income annually. Holders of, bonds of Series E who
have not reported t h e increase in redemption value currently are required to include such a m o u n t in gross income for the taxable year of actual redemption or
for the taxable year of final maturity, whichever is earlier. If further information concerning Federal taxes is desired, inquiry should be addressed to the
District Director of Internal Revenue of the taxpayer's district or t o the Internal
Revenue Service, Washington 25, D. C.
Sec. 316.15. Lost, stolen, or destroyed bonds.—If a bond of Series E is lost,
stolen, or destroyed, a substitute m a y be issued or p a y m e n t m a y be obtained
4 However, mider the previous revision (Thii-d revision, dated April 29, 1952) of this circular owners of
Series E bonds bearing issue dates of February 1 through April 1,1957, have the same option as owners of
the bonds described in section 316.13 (a) (3) and the redemption values set forth in table B under the heading
"Extended maturity period" apply to such bonds. Since their original maturity is shortened to 8 years and
11 months under section 316.4 of this revision, they will reach extended maturity in 18 years and 11 months
after issue date.




186

1957 REPORT OF THE SECRETARY OF THE TREASURY

upon identification of the bond and proof of its loss, theft, or destruction. • The
owner should keep a description of his bonds by series, denomination, serial n u m ber, and name of coowner or beneficiary, if any, a p a r t from t h e bonds, and in
case of loss, theft, or destruction should immediately notify .the Bureau of the
Public Debt, Division of Loans and Currency Branch, 53,6 South Clark Street,
Chicago 5, Illinois, briefly stating t h e facts and.' describing .the bonds. Full
instructions for obtaining substitute bonds or p a y m e n t will theri be given:
Sec. 316.16. Payment or redemption {in general).—A bond of Series E m a y be
redeemed a t t h e option of the owner at any time, after two m o n t h s from the issue
date at t h e appropriate redemption value as shown in tables A, B, C, and D
a t t h e end of this circular, which apply to bonds bearing various issue dates back
to M a y 1, 1941. The redemption values of bonds in t h e denomination of
$100,000 ^ (which was authorized as of J a n u a r y 1, 1954) are not shown in those
tables. However, t h e redemption values of bonds in t h a t denomination will be
equal to t h e total redemption values of ten $10.,000 bonds bearing the same
issue d a t e s ; accordingly, depending upon the issue date of bonds in the denomination of $100,000, refer to table A or table B. A bond of Series E in a denomination higher t h a n $25 (maturity value) m a y be redeemed in p a r t b u t only in the
a m o u n t of an authorized denomination or multiple thereof. P a y m e n t of a bond
of Series E will be made upon presentation and surrender of t h e bond b y t h e owner
to authorized paying agencies as follows:
(a) Federal Reserve Banks and branches and Treasurer of the United States^—
Owners of bonds of Series E m a y obtain p a y m e n t upon presentation of the bonds
to a Federal Reserve Bank or branch or to the Ti-easurer of the United States,
Washington 25, D. C , with the requests for p a y m e n t on the bonds duly executed
a n d certified in accordance with t h e provisions of t h e regulations governing
savings bonds.
(b) Incorporated banks, trust companies, and other financial institutions.—An
individual (natural person) whose name is inscribed on t h e face of a bond of
Series E either as owner or coowner in his own right m a y also present such bond
(unless marked " D U P L I C A T E " ) to any incorporated b a n k or t r u s t company or
other financial institution which is qualified as a paying agent under t h e provisions of D e p a r t m e n t Circular No. 750 or any, revision of or a m e n d m e n t thereto
(31 C F R 321). If such bond is in order for p a y m e n t by t h e paying agent, t h e
owner or coowner, upon establishing his identity to t h e satisfaction of t h e payingagent and upon signing t h e request for p a y m e n t and adding his home or business
address, m a y receive immediate p a y m e n t of t h e current redemption value.
Sec. 316.17. Payment or redemption in the case of disability or death.—In case
of t h e disability of t h e registered owner, or t h e d e a t h of t h e registered owner not
survived by a coowner or a designated beneficiary, instructions should be obtained from a Federal Reserve Bank or branch, or t h e Bureau of t h e Public Debt,
Division of Loans and Currency Branch, 536 South Clark Street, Chicago 5, Illinois, before t h e request for p a y m e n t is executed.
Sec. 316.18. General provisions.—(a) Regulations.—All bonds of Series E issued
p u r s u a n t to this circular shall be subject to t h e regulations prescribed from time
to time b y t h e Secretary of the Treasury to govern United States savings bonds.
Such regulations m a y require, among other things., reasonable notice in case of
presentation of bonds of Series E for redemption prior to m a t u r i t y . T h e present
regulations are set forth in Treasury D e p a r t m e n t Circular No. 530, current revision, copies of which m a y be obtained on application t o t h e Treasury D e p a r t m e n t
or t o any Federal Reserve Bank or branch.
(b) Reservation as to issue of bonds.—The Secretary of t h e Treasury reserves
t h e right t o reject any application for bonds of Series E, in whole or in part, and
t o refuse to issue or permit to be issued hereunder any such bonds in any case or
any class or classes of cases if he deems such action to be in t h e public interest,
a n d his action in any such respect shall be final.
«The $100,000 denomination is available for purchase only by trustees of employees* savings plans
described in section 316.7 (c).




187

EXHIBITS

(c) Previous circulars—Preservation of existing rights.—The provisions of previous Treasury D e p a r t m e n t circulars n o t in conformity herewith are hereby rnodified and amended accordingly: Provided, however, t h a t nothing contained in this
circular shall limit or be construed t o limit or restrict a n y existing rights which
owners of bonds of Series E have acquired under t h e circulars previously in force.
(d) Fiscal agents.—Federal Reserve Banks a n d branches, as fiscal agents of t h e
United States, are authorized t o perform such services as m a y be requested of
t h e m b y t h e Secretary of t h e T r e a s u r y in connection with t h e issue, delivery,
redemption, a n d p a y m e n t of bonds of Series E .
(e) Reservation as io terms of circular.—The Secretary of t h e T r e a s u r y rnay a t
any time or from time t o time supplement or a m e n d t h e terms of this circular,
or of a n y a m e n d m e n t or supplements thereto.
G. M .

HUMPHREY,

Secretary of the Treasury.
TABLE A.—UNITED STATES SAVINGS BONDS—SERIES E
TABLE OF R E D E M P T I O N VALUES AND I N V E S T M E N T YIELDS FOR BONDS BEARING ISSUE DATES B E G I N N I N G
F E B R U A R Y 1, 1957 1

Table showing: (1) How bonds of Series E bearing issue dates beginning February
1, 1957, by denominations, increase i n redemption value during successive half-year
periods following issue; (2) the approximate investment yield on the purchase price
from issue date to the beginning of each half-year period; and (3) the approximate
investment yield on ihe current redemption value from the beginning of each halfyear period to maturity. Yields are expressed i n terms of rate percent per annum^
compounded semiannually.
M a t u r i t y v a l u e . . $25.00 $50.00 $100.00 $200.00 $500.00 $1,000.00 $10,000.00
Issue price
18.75 37.60
75.00 150.00 375.00
750.00
7, 500.00

P e r i o d after issue
date •

First H year
H t o 1 year
1 to I K years
i H t o 2 years
2 to 2 H years
2 H to 3 years
3 to 3 H years
3 H to 4 years
4 to 4 H years
4 H to 5 years
5 to 6 H years
6 H to 6 years
6 to 6 H years
6 H t o 7 years
7 to 7 H years
7 H to 8 years
8 to 8 H years
SH years to 8
y e a r s a n d 11
months
M a t u r i t y value
(8 y e a r s a n d 11
months
from
issue d a t e )

(1) R e d e n i p t i o n v£dues d u r ing each half-year p•eriod 2
(Valut js increas e o n first d a y of I)eriod sho\^rn)

$18. 75 $37.60
18.90 37.80
19.18 38.36
19.48 38.96
19.81 39.62
20.15 40.30
20.60 41.00
20.85 41.70
21.21 42.42
21.67 43.14
21.94 43.88
22.31 44.62
22.68 45.36
23.06 46.12
23.44 46.88
23.83 47.66
24.22 48.44

$75.00 $150.00 $375.00
76.60 151.20 378.00
76.72 153. 44 383.60
77.92 155.84 389.60
79.24 158. 48 396. 20
80.60 161.20 403.00
82.00 164.00 410.00
83.40 166. 80 417.00
84.84 169. 68 424.20
86.28 172. 56 431.40
87.76 175. 52 438.80
89.24 178.48 446.20
90.72 181. 44 463. 60
92.24 184. 48 461. 20
93.76 187. 62 468.80
95.32 190.64 476.60
96.88 193.76 484.40

A p p r o x i m a t e investm e n t yield
(2) O n p u r - (3) O n curr e n t rechase price
from issue d e m p t i o n
d a t e t o b e - v a l u e from
begiiming
g i n n i n g of
each half- of each halfyear period 2
year period 2
to m a t u r i t y

$750.00
756.00
767.20
779.20
792.40
806.00
820.00
834.00
848.40
862.80
877. 60
892.40
907.20
922.40
937.60
953. 20
968. 80

$7,600.00
7,560.00
7,672.00
7,792.00
7,924.00
8.060.00
8,200.00
8,340.00
8,484.00
8, 628.00
8,776.00
8, 924.00
9,072.00
9,224.00
9,376.00
9,532.00
9, 688.00

Percent
0.00
1.60
2.28
2.56
2.77
2.90
3.00
3.06
3.11
3.14
3.17
3.19
3.20
3.21
3.21
3.22
3.23

Percent
33.25
3.35
3.38
3.39
3.39
3.39
3.38
3.38
3.37
3.37
3.36
3.36
3.37
3.37
3.39
3.41
3.49
3.81

24.61

49.22

98.44

196.88

492. 20

984.40

9,844.00

3.23

26.00

50.00

100.00

200.00

500.00

1,000.00

10,000.00

3.25

1 See footnote 4 to Sec. 316.13 with reference to retention privileges after maturity attaching to bonds
bearing issue dates of February 1 through April 1,1957.
2 5-month period in the case of the 8H-year to 8 year and 11 month period.
' Approximate investment yield for entire period from issuance to maturity.




188

1957 REPORT OF THE SEGRETARY OF THE TREASURY

TABLE B.—UNITED STATES SAVINGS BONDS—SERIES E
TABLE OF R E D E M P T I O N VALUES AND INVESTMENT YIELDS FOR BONDS BEARING ISSUE DATES FROM MAY 1, 1952
THIIOUGH JANUARY 1, 1957

Table showing: (1) How bonds of Series E bearing issue dates beginning May 1,
1952, by denominations, increase in redemption value during successive half-year
periods following issue or date of original maturity; (2) ihe approximate investment
yield on the purchase price from issue date to ihe beginning of each half-year period;
and (3) the approximate investment yield on ihe current redemption value from the
beginning of each half-year period (a) io maturity or (b) to exiended maturity. Yields
are expressed in terms of rate percent per annum, compounded semiannually.
Maturity v a l u e - $26.00 $60.00 $100.00 $200.00 $500.00 $1,000.00
Issue price..I
18.75 37.50
75.00 160.00 375.00
750.00

Period after
issue date

(1) Redemption values during each half-year period 2
(Values increase on first day of period shown)

First Hyear
$18. 75
H to 1 y e a r . . . . . . 18.85
1 to IH y e a r s . - . . 19.05
IH to 2 years
19.30
19. 55
2 to 2H years
2H to 3 years
19.80
20.05
3 to3H years
3H to 4 years
20.30
2D. 55
4 to',4H years
20.90
4H to 5 yeai-s
21. 25
5 to 5H years
21.60
6H to 6 years
21.95
6 to 6H years
22.30
6H to 7 years
22.65
7 to 7H years
23.00
7H to 8 years
23. 40
8 to 8H years
23.80
8H to 9 years
24.20
9 to9H years
9H years to 9
years and 8
24.60
months
Maturity yalue
(9 years and 8
months from
25.00
issue date)

$37. 50
37.70
38.10
38.60
39.10
39.60
40.10
40.60
41.10
41.80
42.50
43. 20
43.90
44. 60
4.5.30
46.00
46.80
47.60
48.40

$75. 00 $150. 00 $375. 00
75..40 150.80 377. 00
76.20 152. 40 381. 00
77.20 154. 40 386. 00
78.20 156. 40 391. 00
79.20 158.40 396.00
80.20 160. 40 401. 00
81.20 162. 40 406.00
82. 20 164; 40 411.00
83.60 167. 20' 418. 00
85.00 170. 00 425. 00
86.40 172. 80 432. 00
87.80 175. 60 439.00
89.20 178. 40 446. 00
90.60 181. 20 453.00
92.00 184. 00 460.00
93.60 187. 20 468.00
95.20 190.40 476. 00
96.80 193. 60 484.00

$750. 00
754. 00
762.00
772. 00
782.00
792. 00
802. 00
812.00
822. 00
836.00
850.00
864. 00
878. 00
892. 00
906. 00
920. 00
936.00
952.00
968.00

$7, 500
7,540
7,620
7,720
7,820
7,920
8,020
8,120
8,220
8,360
8,500
8,640
8,780
8,920
9,060
9,200
9,360
9,520

Approximate investment yield 1
(2) On purchase price
from issue
date to
beginning
of each
half-year
period 2
Percent
0.00
1.07
1.59
1.94
2.10
2.19
2.25
2.28
2.30
2.43
2.52
2.69
2.64
2.69
2.72
2.74
,2.79
2.83
2.86

49.20

98.40

196. 80

492.00

984. 00

9,840

50.00

100. 00

200.00

600.00

1,000. 00

10, 000

3.00

$10,000
10,150
10,300
10,450
10, 600
10,760
10,920
11,080
11, 240
11,400
11, 580
11, 760
11, 940
12,120
12, 300
12, 480
12, 660
12,860
13, 060
13, 260

3.00
3.00
3.00
2.99
2.99
2.99
2.99
2.99
2.98
2.98
2.98
2.992.99
2.99
2.99
2.99
2.99
2.99
2.99
3.00

13, 468

3.00

Period after
maturity date
First Hyear
H t o 1 year
1 to IH years
IH to 2 years
2 to 2H years
2H to 3 years
3 to 3H years
3H to 4 years
4 to4H years
4H to 6 years
5 to 5H years
5H to 6 years
Oto 6H years
6H to 7 years
7 to 7H years
7H to 8 years
8 to 8H years
8H to 9'years
9 to 9H years
9H to 10 y e a r s . . .
E x t e n d e d maturity
value
(10 years from
original maturity date) 4

$10,000
7,500

Extended maturity period
$25.00 $50. 00 $100. 00 $200.00 $500.00 $1,000.00
25. 37 "50. 75 101.'50 203.00 507. 50 1,015.00
25.75 51.50 103..00 206. 00 515. 00 1,030. 00
26.12 52.25 104. 50 209.00 522. 50 1,045. 00
26.50 53.00 106. 00 212.00 630. 00 1,060.00
26.90 53.80 107. 60 215. 20 538.00 1, 076.00
27.30 54.60 109. 20 218. 40 546. 00 1,092. 00
27.70 55.40 HO. 80 221. 60 554. 00 1,108. 00
28.10 56.20 112. 40 224.80 562. 00 1,124. 00
28.50 57.00 114. 00 228.00 570.00 1,140. 00
28.95 57.90 115.80 231. 60 579. 00 1,158. 00
29.40 58.80 117. 60 235. 20 688.00 1,176.00
29. 85 59.70 119.40 238.80 597. 00 1,194.00
30.30 60.60 121. 20 242.40 606. 00 1, 212.00
30.75 61.50 123. 00 246. 00 615. 00 1, 230.00
31.20 62. 40 124.80 249. 60 624.00 1, 248. 00
31.65 63. 30 126. 60 253. 20 633.00 1, 266. 00
32.15 64.30 128. 60 257. 20 643.00 1, 286. 00
32.65 65.30 130. 60 261. 20 653.00 1, 306. 00
33.15 66.30 132. 60 265. 20 663.00 1, 326.00

33. 67

67.34

134. 68

269. 36

673. 40

1,346.80

1 Calculated on basis of $1,000 bond (face value).
2 2-month period in the case of the 9H year to 9 year and 8 month period.
3 Approximate investment yield for entire period from issuance to maturity.
* 19 years and 8 months after issue date.




189

EXHIBITS

TABLE C — U N I T E D STATES SAVINGS BONDS—SERIES E
TABLE OF R E D E M P T I O N VALUES AND INVESTMENT YIELDS FOR BONDS BEARING ISSUE DATES FROM MAY 1, 1942
THROUGH APRIL 1, 1952

Table showing: (1) How bonds of Series E bearing issue dates from M a y 1, 1942
through A p r i l 1, 1952, by denominations, increase i n redemption value during
successive half-year periods following issue or date of original maturity; (2) the
approximate investment yield on the purchase price from issue date io the beginning
of each half-year period; and (3) the approximate investment yield on the current
redemption value from ihe beginning of each half-year period (a) to matiirity or (6) to
exiended maturiiy.
Yields are expressed in terms of rate percent per a n n u m , compounded semiannually.
•
Maturity value. $10.00 $25.00
Issue price
7.50 18.75

Period after issue
date

$50.00 $100. 00 $200. 00
37.50
75.00 150. 00

$1,000.00
750.00

(1) Redemption values during each half-year period
(Values increase on first day of period shown)

First H y e a r . . . . - $7.50 $18. 75 $37. 50 $75. 00
H to 1 year
7.50 18.75
37.50
75.00
7.55 18.87
37.75
1 to IH years
75.50
38.00
7.60 19.00
76.00
IH to 2 years
38.25
7.65 19.12
76.50
2 to 2H years
38.50
2H to 3 years
7.70 19.25
77.00
3 to 3H years
7.80 19.60
39.00
78.00
3H to 4 years
7.90 19.75
39.60
79.00
4 to 4H years
40.00
80.00
8.00 20.00
4H to 5 y e a r s . . . . 8.10 20.25 40.50 81.00
41.00
8.20 20.50
82.00
6 to 6H years
8.30 20.75
41.50
83.00
5H to Oyears
42.00
8.40 21.00
84.00
6 to 6H years
43.00
8.60 21.50
86.00
6y2 to 7 years
8.80 22.00
44.00
88.00
7 to 7H years
45.00
9.00 22.50
90.00
7H to 8 years
46.00
9.20 23.00
92.00
8 to 8H years
47.00
94.00
8H to 9 years
9.40 23.50
9 t o 9 H y e a r s - _ . . 9.60 24.00 48.00
96.00
9H to 10 years.-- 9.80 24.50 49.00 98.00
Maturity value
(10 years from
10.00 25.00
50.00 100.00
issue date)
Period after
maturity date

First H 5'ear
H to 1 year
1 to IH years
IH to 2 years
2 to 2H years
2H to 3 years
3 to 3H years
3H to 4 years
4 to 4H years
4H to 5 years
6 to 5H years
5H to Oyears
6 to 6H years
6H to 7 years-....
7 to 7H years
7H to8yearS--_-,
8 to 8H years
8H to 9 years
9 to 9H years
9H to 10 years-__
Extended maturity value (10
years from original maturity
date) 3

$500.00
375. 00

Approximate investment yield i
(3) On cur(2) On pur- rent rechase price demption
from issue value frombeginning
date of
beginning of each half-^
of each half- year period
year period (a) to maturity

$150. 00
150. 00
151. 00
152. 00
153. 00
154. 00
156. 00
158.00
160.00
162.00
164. 00
166. 00
168.00
172.00
176. 00
180. 00
184. 00
188. 00
192. CO
196.00

$375. 00
375. 00
377. 50
380. 00
382. 50
385. 00
390.00
395. 00
400.00
405. 00
410. 00
415. 00
420. 00
430.00
440. 00
450.00
460. 00
470. 00
480.00
490. 00

$760. 00
760. 00
765. 00
760. 00
765. 00
770. 00
780.00
790. 00
800. 00
810. 00
820. 00
830. 00
840.00
860.00
880.00
900.00
920.00
940. 00
960. 00
980. 00

Percent
0.00
.00
.67
.88
.99
1.06
1.31
1.49
1.62
1.72
1.79
1.85
1.90
2.12
2.30
2.45
2.67
2.67
2.76
2.84

200. 00

500. 00

1,000. 00

2.90
(b) to extended maturity

Extended maturity period

$10.00 $25. 00 $50. 00 $100. 00 $200.00
50.75 101. 50 203.00
10.15 25.37
51.50 103. 00 206. 00
10.30 25.75
62. 25 104. 50 209. 00
10.45 26.12
53.00 106. 00 212. 00
10.60 26.50
53.80 107. 60 215. 20
10.76 26.90
10.92 27.30
54.60 109. 20 218. 40
11.08 27.70 . 55. 40 110.80 221. 60
56.20 112.40 224.80
11.24 28.10
11.40 28.50 • 67.00 114. 00 228.00
57.90 115.80 231.60
11.58 28.95
58.80 117. 60 235. 20
11.76 29.40
11.94 29.85
59.70 119. 40 238. 80
12.12 30.30
60. 60 121. 20 242. 40
12. 30 30.75
61.50 123. 00 246. 00
62.40 124. 80 249. 60
12.48 31. 20
12. 66 31.65
63.30 126. 60 253. 20
64.30 128. 60 257. 20
12.86 32.15
32.65
65.30 130. 60 261. 20
13.06
66.30 132. 60 265. 20
13.26 33.16

$500. 00 $1, 000. 00
507. 50
1,015. 00
515. 00
1, 030. 00
522. 50
1,045. 00
530. 00
1, 060. 00
1,076. 00
538. 00
1,-092.00
546.00
1,108. 00
554. 00
1,124. 00
562. 00
1,140. 00
570. 00
1,158.00
579.00
1.176. 00
588.00
1,194. 00
597. 00
1, 212. 00
606. 00
1, 230. 00
615. 00
1, 248. 00
624. 00
1,266.00
633. 00
1, 286. 00
643.00
1,306. 00
653. 00
1, 326. 00
663. 00

2.90
2.90
2.90
2.91
2.90
2.91
2.91
2.91
2.91
2.91
2.92
2.92
2.93
2.93
2.93
2.93
2.93
2.94
2.94
2.94

•

13.47

33.67

67.34

134. 68

269. 36

673. 40

1,346.80

1 Calculated on basis of $1,000 bond (face value).
2 Approximate investment yield for entire period from issuance to original maturity.
3 20 years from issue date.




Percent
2 2.90
3.05
3.15
3.25
3.38
3.62
3.58
3.66
3.75
3.87
4.01
4.18
4.41
4.36
4.31
4.26
4.21
4.17
4.12
4.08

2.95

3.00
3.00
3.00
3.01
3.02
3.02
3.02
3.03
3.04
3.05
3.-04
3.04
3.03
3.04
3.05
3.07
3.12
3.10
3.10
3.14

190

1957 REPORT OF THE SECRETARY OF THE TREASURY

TABLE D.—UNITED STATES SAVINGS BONDS—SERIES E
TABLE O F R E D E M P T I O N VALUES AND INVESTMENT YIELDS FOR BONDS BEARING ISSUE DATES FROM MAY 1,
1941 THROUGH APRIL 1, 1942

Table showing: (1) How bonds of Series E bearing issue dates from May 1, 1941
through April 1, 194-2, by denominations, increase in redemption value during successive half-year periods following issue or date of original maturiiy; (2) the approximate investment yield on ihe purchase price from issue date io the beginning of each
half-year period; and (3) the approximate investment yield on ihe current redemption
value from the beginning of each half-year period (a) io maturity or (b) to extended
rnaturity. Yields are expressed in terms of rate- percent per annum, compounded
semiannually.
Maturity value_
Issueprice

Period after issue date

First H year
H to lyear
I t o IH years
IH to 2 years
"2 to 2H years
^H to 3 years..^
3 to 3H years
3H to 4 years
4 to 4H years
4H to 6 years
6 to 5H years
5H to 6 years
€ to 6H years
6H to 7 years
7 to 7H years
7H to 8 years
8 to 8H years
8H to 9 yearS;.—-9 to 9H years
9H to 10 years
Maturity value (10
years from issue date).

$26.00
18.75

$100. 00
75.00

$500.00 $1, 000. 00
375. 00
•750.00

$18.75
18.76
18.87
19.00
19.12
19.25
19.50
19.75
20.00
20.25
20.50
20.76
21. 00
21. 50
22.00
22.60
23.00
23.50
24.00
24.50

$37.50
37.50
37.75
38.(0
38.25
38. 50
39.(0
39.50
40.00
40.60
41.00
41.50
42.00
43.00
44.00
46.00
46.00
47.00
48.00
49.00

$75.00
75. C
O
75.50
76. C
O
76.50
77.00
78.00
79.00
80.00
81.00
82.00
83.00
84.(0
86.00
88.00
90.00
92.00
94.00.
96.(0
98.00

$375.00
375. C)
377.50
380.03
382. 60
385.00
390.00
395.00
400.00
405.00
410.00
415.00
420.03
430.03
440.03
450.03
460.00
470.(3
480.00
490.00

25.00

50.00

100. 00

500.00

$750.00
760. 00
755. 00
760. 00
765.00
770. 00
780. 00
790.00
800.00
810.00
820.00
830.00
840.00
860. 00
.880.00
900. 00
920. 00
940.00
960.00
980.00

1,000.00

yield i

Percent
0.00
.00
.67
1.06
1.31
1.49
1.62
1.72
1.79
1.85
1.90
2.12
2.30
2.45
2.57
2.67
2.76
2.84

(3) On current redemption value
from beginning of each
half-year
period (a) to
maturity
Percent
2 2.90
3.05
3.15
3.25
3.38
3.62
3.68
3.66
3.75
3.87
4.01
4.18
4.41
4.36
4.31
4.26
4.21
4.17
4.12
4; 08

2.90
(b) to extended
maturity

Extended maturity period

$25.00
25.21
25.62
26.94
26.25
26.56
26.87
27.19
27. 50
27.81
28.12
28.44
28.75
29.06
29.37
30.00
30.67
31.33
32.00
32.67

$50.00
60.62
61.25
51.87
62.60
63.12
53.76
54.37
55.00
55.62
56.25
56.87
57.50
58.12
58.75
60.00
61.33
62.67
64.00
65.33

$100.00
101. 26
102. 50
103.76
105. 00
106.25
107. 50
108. 76
110.00
111.25
112.50
113. 76
115. 00
116.25
117. 50
120.00
122.67
125.23
128.00
130.67

$500.00
506.25
612.50
618.75
625. 00
531.25
537. 50
543.75
550.00
656.25
562. 50
568.75
575. 00
581.25
587. 50
600.(0
613.23
626. 67
640.00
653.33

$1, 000. 00
1, 012. 60
1,025.00
1,037. 50
1,050. 00
1,062. 50
1,075.00
1, 087. 50
1,100. 00
1,112. 60
1,125. 00
1,137. 50
1,150. 00
1,162. 50
1,175. 00
1, 200. 00
- 1, 226. 67
'
1,253. 33
1,280.00
1,306. 67

2.90
2.88
2.86
2.84
2.82
2.81
2.79
2.77
2.75
2.74
2.72
2.71
2.69
2.67
2.66
2.70
2.76
2.79
2.83
2.87

33.33

66.67

133. 33

666. 67

1, 333.33

2.90:

» Calculated on basis of $1,000 bond (face value).
2 Approximate investment yield for entire period from issuarice to maturity.
s 20 years from issue date.




Approximate investment

(2) On purchase price
I from issue
(1) Redemption values during each half-year period date to begin(Values iacrease on first day of period shown)
ning of each
half-year
period

Period after maturity
date
First H year
__.
H to lyear
1 to IH years
IH to 2 years
2 to 2H years.
2H to 3 years..
3 to 3H years.--3H to 4 years
—.
4 to 4H years
4H to 5 years
5 to 6H years
5H to 6 years
-.
6 to 6H years
6Hto 7 years
7 to 7H years
7Hto 8 years
8 to 8H years
8H to 9 years
-.
9 t o 9 H years—9H to 10 years.:.Extended
maturity
value (10 years from
original
maturity
date) 3

$50.00
37.50

2.90
2.92
2.94
2.97
3.01
3.05
3.10
3.16
3.23
3.32
3.43
3.56
3.73
3.96
4.26
4.26
4.21
4.17
4.12
4.08

EXHIBITS

191

E X H I B I T 7.—Revision, April 22, 1957, of Department Circular No. 905,iricreasing
the interest rate and redemption values of Series H savings bonds
'

.

TREASURY DEPARTMENT,

Washington, April 22, 1957,
D e p a r t m e n t Circular No. 905, dated M a y 21, 1952, as amended (31 C F R
332), is hereby revised t o read as follows:
Sec. 332.1. Offering of bonds.—The Secretary of t h e Treasury, p u r s u a n t to
t h e a u t h o r i t y of t h e Second Liberty Bond Act, as amended (31 t l . S. C. 757c),
offers for sale to t h e people of t h e United States, United States savings bonds of
Series H (hereinafter referred to as bonds of Series H ) . These bonds will be
substantially a continuation of t h e bonds of Series H heretofore available, except
as otherwise indicated herein. This offering of bonds will continue until terminated by t h e Secretary of t h e Treasury.
Sec. 332.2. Description.—Bonds of Series H will be issued only in registered
form. See section 332.8 for information concerning registration. T h e y will be
issued at par in denominations of $500, $1,000, $5,000, and $10,000. Each bond
will bear t h e facsimile signature of t h e Secretary of t h e Treasury, and will bear an
imprint of t h e Seal of t h e Treasury D e p a r t m e n t . At t h e time of issue, t h e issuing
agent will inscribe on t h e face of each bond t h e name and address of t h e owner
and t h e name of t h e coowner or beneficiary, if a n y ; will enter t h e issue date of t h e
bond; and will imprint the agent's dating s t a m p (to show t h e date t h e bond is
actually inscribed). A bond of Series H shall be valid only if an authorized issuing agent receives p a y m e n t therefor, duly inscribes, dates, and stamps t h e bond,
and delivers it to t h e purchaser or his agent.
Sec. 332.3. Term.—A bond of Series H will be dated as of t h e first day of t h e
m o n t h in which p a y m e n t of t h e issue price is received by an agent authorized t o
issue t h e bonds. This date is t h e issue date and t h e bond will m a t u r e 10 years
from, such issue date. T h e issue date should not be confused with t h e date a p pearing in t h e issuing agent's s t a m p , which indicates t h e date the bond is actually
inscribed. T h e bonds m a y not be called for redemption by t h e Secretary of t h e
Treasury prior to m a t u r i t y , b u t any bond of Series H m a y be redeemed at P A R
prior t o m a t u r i t y , after 6 months from t h e issue date, at t h e owner's option, b u t
only upon one calendar m o n t h ' s notice as provided in section 332.14.
Sec. 332.4. Interest.—Bonds of Series H will be issued at par, and will bear
interest from t h e issue date payable semiannually by check drawn to t h e order
of t h e registered owner or coowners, beginning six months from issue
d a t e . Interest p a y m e n t s will be based on a graduated scale of a m o u n t s (as shown
in table A at t h e end of this circular) which have been fixed to afford an investment
yield of approximately 3.25 percent per a n n u m compounded semiannually, if t h e
bonds are held to m a t u r i t y ; if t h e owner exercises his option to redeem a bond prior
t o m a t u r i t y , t h e yield will be less. Interest will cease at m a t u r i t y , or in case of
redemption before m a t u r i t y , at t h e end of t h e interest period next preceding t h e
d a t e of redemption, exciept t h a t , if t h e date of redemption falls on an interest paym e n t date, interest will cease on t h a t date.
Sec. 332.5. Applicability, to bonds bearing issue dates of February 1 through
April 1, 1957, as well as subseguent issue dates.—The t e r m of m a t u r i t y and t h e
yield provided for in sections 332.3 and 332.4 shall apply to all bonds of Series H
bearing issue dates of F e b r u a r y 1 through April 1, 1957 (as well as to those bearing
subsequent issue dates). Final interest on such bonds will not be payable until
held 10 years from t h e issue date, instead of t h e end of 9 years and 8 months.^
Sec. 332.6. Bonds purchased before new stock is available.—Until bonds have been
printed and are ready for issue bonds of Series H in t h e form on sale prior to
F e b r u a r y 1, 1957, will be issued for purchases made under this circular. B O N D S
OF SERIES H PURCHASED IN T H E I N T E R V A L U N T I L T H E N E W
STOCKS ARE AVAILABLE WILL CARRY T H E N E W I N T E R E S T R A T E
A N D T H E T E R M O F M A T U R I T Y P R O V I D E D F O R I N S E C T I O N 332.3
A N D ALL O T H E R P R I V I L E G E S AS F U L L Y AS I F E X P R E S S L Y S E T
» Table B at the end of this circular shows the schedule of checks, the interim investment yields and the .
yield to maturity of bonds'of Series H bearing issue dates beginning June 1,1952 (when they were first offered
for sale), through January 1, 1957.




192

195 7 REPORT OF THE SECRETARY OF THE TREASURY

F O R T H I N T H E T E X T O F T H E B O N D S T H E M S E L V E S . T h e owners, if
they desire to do so, m a y exchange such bonds at any Federal Reserve Bank or
branch or at t h e Treasury D e p a r t m e n t , Washington 25, D . C , for bonds in t h e
new form (with t h e same registration and issue dates), when t h e latter become
available; b u t they need not do so because t h e Treasury D e p a r t m e n t will, as a
m a t t e r of course, issue interest checks for ALL bonds of Series H bearing issue
dates on and after February 1, 1957, in t h e appropriate a m o u n t s as set forth in
table A at t h e end of this circular.
, Sec. 332.7. Taxation.—The income derived from bonds of Series H is subject
to all taxes imposed under t h e Internal Revenue Code of 1954. T h e bonds are
subject to estate, inheritance, gift, or other excise taxes,'whether Federal or State,
b u t are exempt from all taxation now or hereafter imposed on t h e principal
Or interest thereof by any State, or any of t h e possessions of t h e United States,
or by any local taxing authority.
Sec. 332.8. Registration.—Generally, only residents of t h e United States, its
Territories and possessions, the Commonwealth of Puerto Rico, t h e Canal Zone,
and citizens of t h e United States temporarily residing abroad are eligible to invest
in bonds of Series H. The bonds m a y be registered in the names of natural
persons in their own right in t h e three conventional forms of registration, single
ownership,- coownership, and beneficiary forms, heretofore availably.; The-bonds
m a y also be registered in t h e names and titles of the legal representatives of
natural persons (guardians, custodians, conservators, etc.) and of trustees of
personal t r u s t estates. The t e r m ''personal t r u s t e s t a t e s " as used herein is
defined to mean, and is limited to, t r u s t estates established by individuals, t h a t is,
n a t u r a l persons in their own right, for the benefit of themselves or other such
individuals, and common t r u s t s comprised in whole or in p a r t of such t r u s t
estates. Full information regarding eligibility to invest in savings bonds a n d
authorized forms of registration and rights thereunder will be found in the regulations currently in force governing United States savings bonds,^
Sec. 332.9. Limitation on holdings.—The a m o u n t of bonds of Series H originally
issued during any one calendar year t h a t m a y be held by any one person at any
one time shall not exceed $10,000 (maturity value) for t h e calendar year 1957,^
and each calendar year thereafter, which will be computed in accordance with t h e
regulations currently in force governing United States savings bonds.
Sec. 332.10. Nontransferability.—Bonds of Series H m a y not be used as collateral for a loan or as security for t h e performance of an obligation, or transferred
inter vivos by voluntary sale or gift, discounted or disposed of in any manner
other t h a n as provided in t h e regulations governing United States savings bonds.
Except as provided in said regulations, t h e Treasury D e p a r t m e n t will recognize
only t h e inscribed owner, during his lifetime, a n d thereafter his estate or heirs.
Sec. 332.11. Purchase of bonds.—(a) Agencies.—Bonds of Series H m a y be
purchased only a t Federal Reserve Banks and branches, and a t t h e Treasury
D e p a r t m e n t , Washington 25, D. C. Customers of commercial banks and trust
companies m a y be able to arrange for t h e purchase of such bonds through such
institutions, b u t only t h e Federal Reserve Banks and branches a n d t h e Treasury
D e p a r t m e n t are authorized to act as oflficial agencies,.and t h e date of receipt.of
application and p a y m e n t a t an official agency will govern t h e dating of the- bonds
issued.
(b) Issue prices.—The issue prices of bonds of Series H of t h e various dehominations will be t h e p a r a m o u n t thereof as follows: $500, $1,000, $5,000, and
$10,000.
(c) Application.—In applying for bonds under this circular, care should be
t a k e n to furnish: (1) instructions for registration of t h e bonds t o be issued,
which must be in one of t h e authorized forms (see Sec. 332.8); (2) the post office
address of t h e owner; (3) t h e address for delivery of t h e bonds; and (4) t h e address
for mailing interest checks. The application should be forwarded to a Federal
Reserve Bank or branch, or to t h e Treasurer of t h e United States, Washington 25,
2 .Department Circular No. 530.
3 Effective May 1. Accordingly, hivestors who purchase $20,000 (maturity .value) of bonds of Series H 1957 bearing issue dates of January 1 through April 1 will not be entitled to purchase additional bonds of
that series dm-iag 1957. Investors who have pm-chased less than $10,000 (maturity value) of bonds of Series
H prior to May 1 will be entitled only to purchase enough to briag their total for 1957 to $10,000 (maturity
value).




EXHIBITS

193

D . C , accompanied by a remittance to cover the purchase price as shown in
p a r a g r a p h (b) hereof. Any form of exchange, including personal checks, will
be accepted, subject to collection. Checks or other forms of exchange should be
drawn to the order of the Federal Reserve Bank or t h e Treasurer of the United
States, as t h e case m a y be. Checks payable by endorsement are not acceptable.
Any depjositauy qualified p u r s u a n t to the provisions of Treasury D e p a r t m e n t
Circular No. 92, Revised (31 C F R 203) will be permitted to make p a y m e n t by
credit for bonds applied for on behalf of its customers up to any a m o u n t for which
it shall be qualified in excess of existing deposits, when so notified by t h e Federal
Reserve Bank of its district.
Sec. 332.12. Delivery of bonds.—Authorized issuing agencies will deliver bonds
of Series H either in person, or by mail a t the risk and expense of the United States,
a t t h e address given by t h e purchaser, b u t only within the United States, its
Territories and possessions a n d the Canal Zone.^ No mail deliveries elsewhere
will be made. If purchased by citizens of t h e United States temporarily residing
abroad, t h e bonds will be delivered a t such address in the United States as t h e
purchaser directs.
Sec. 332.13. Lost, stolen, or destroyed bonds.—If a bond of Series H is lost, stolen,
or destroyed, a substitute m a y be issued or p a y m e n t m a y be obtained upon
identification of t h e bond and proof of its loss, theft, or destruction. T h e owner
should keep a description of his bonds by series, denomination, serial humber a n d
n a m e of coowner or beneficiary, if any, a p a r t from t h e bonds, a n d in case of loss,
theft, or destruction should immediately notify t h e Bureau of t h e Public D e b t ,
Division of Loans a n d Currency Branch, 536 South Clark Street, Chicago 5,
Illinois, briefly stating the facts a n d describing the bonds. Full instructions for
obtaining substitute bonds or p a y m e n t will then be given.
Sec. 332.14. Payment or redemption.—(a) General.—A bond of Series H will be
redeemed A T P A R , in whole or in p a r t (in the a m o u n t of an authorized denomination or multiple thereof), a t t h e option of the owner, a t any time after 6 m o n t h s
from t h e issue date, b u t only on the first day of a calendar m o n t h and upon one
calendar m o n t h ' s notice in writing of desire to redeem by t h e owner. T h e request
for p a y m e n t of t h e bond m u s t be executed and certified in accordance with the
provisions of t h e applicable regulations. T h e presentation of t h e bond (with t h e
request for p a y m e n t duly executed) will be accepted as notice. P a y m e n t will be
m a d e when due following presentation of t h e bond t o (1) a Federal Reserve Bank
or branch, (2) t h e Bureau of t h e Public D e b t , Division of Loans and Currency
Branch, 536 South Clark Street, Chicago 5, Illinois, or (3) t h e Treasurer of the
United States, Washington 25, D . C. Formal notice to be effective, m u s t be
timely received b y one of t h e above agencies a n d t h e bond m u s t be presented to
t h e same agency not less t h a n 20 days before t h e redemption date fixed by the
notice.
(b) Disability or death.—In case of the disability of the registered owner, or t h e
death of t h e registered owner not survived by a coowner or a designated beneficiary,
instructions should be obtained from a Federal Reserve Bank or branch, or t h e
Bureau of t h e Public D e b t , Division of Loans a n d Currency Branch, 536 South
Clark Street, Chicago 5, Illinois, before t h e request for p a y m e n t is executed.
Sec. 332.15. General provisions.—(a) Regulations.—All bonds of Series H issued
p u r s u a n t to this circular shall be subject to t h e regulations prescribed from time
to time by t h e Secretary of t h e Treasury to govern United States savings bonds.
T h e present regulations are set forth in Treasury D e p a r t m e n t Circular No. 530,
current revision, copies of which m a y be obtained on application to the Treasury
D e p a r t m e n t or to a n y Federal Reserve Bank or branch.
(b) Reservation as io issue of bonds.—The Secretary of t h e Treasury reserves
t h e right to reject any application for bonds of Series H, in whole or in part,
a n d to refuse to issue or permit to be issued hereunder any such bonds in any case
or any class or classes of cases if he deems such action t o be in t h e public interest,
and his action in any such respect shall be final.
< During any war emergency the Treasury may suspend deliveries to be made at its risk and expense from
or to the continental United States and its Territories and possessions and the Canal Zone, or between
any of such places.
438363—58

14




194

1957 REPORT OF THE SECRETARY OF THE TREASURY

(c) Previous circulars—Preservation of existing rights.—The provisions of previous Treasury D e p a r t m e n t circulars not in conformity herewith are hereby
modified a n d amended accordingly: Provided, however, t h a t nothing contained
in this circular shall limit or be construed to limit or restrict a n y existing rights
which owners of bonds of Series H have acquired under t h e circular previously
in force.
(d) Fiscal agents.—Federal Reserve Banks a n d branches, as fiscal agents of t h e
United States, are authorized t o perform such services as m a y be requested of
t h e m by t h e Secretary of t h e Treasury in connection with t h e issue, delivery,
redemption, a n d p a y m e n t of savings bonds of Series H .
(e) Reservaiion as to terms of circular.—The Secretary of t h e Treasury m a y a t
a n y time or from time t o time supplement or amend t h e terms of this circular, or
of a n y a m e n d m e n t s or supplements thereto.
G.

M.

HUMPHREY,

Secreiary pf the Treasury.
TABLE A.—UNITED STATES SAVINGS BONDS—SERIES H
TABLE O F C H E C K S ISSUED AND INVESTMENT YIELDS FOR BONDS BEARING ISSUE DATES BEGINNING FEBRUARY
1, 1957

Table showing: (1) Amouni of interest checks paid on United States savings bonds
. .of Series H bearing-issue dates beginning February 1, 1957, by denominations, on
- each interest payment date following issue: (2) the approximate investment yield
on the face value from issue date to each interest pa^yment date; and (3) the approximate investment yield on ihe face value from each interest payment date to maturity.
Yields are expressed in terms of rate percent per annum, compounded semiannually:

{

Maturity value
Redemption value L . .
Issue price

Period of time bond is held after
issue date

$500

500
600

$1, 000
1,000
1,000

$5, 000
5,000
5,000

$10, 000
10, 000
10,000

(1) Amount of interest check for each
denomination
0

Hyear
1 year
...
IH years2. years
.
2H years
....
3 years
3H years
4 years
4Hyeai*s
6 years
6H years
6 years
6H years
7 years
7H years
;8 years
8H years
9 years
9H years.10 years (maturity)

$4.00
7.25
8.45
8.45
8.45
8.45
8.45
8.45
8.45
8.45
8.45
8.46
8.45
8.46
8.46
8.45
8.45
8.45
8.45
8.45

$8.00
14.50
16.90
16. 90
16. 90
16.90
16.90
16.90
16.90
16.90
16.90
16.90
16.90
16.90
16.90
16.90
16.90
16.90
16.90
16.90

$40. 00
72. 50
84.50
84.60
84.50
84.60
84.50
84.60
84. 50
84.50
84.60
84.50
84.50
84.50
84.50
84.50
84.50
84.50
84.50
84.50

145
169
169
169
169
169
169
169
169
169
169
169
169
169
169
169
169
169
169

Approximate investment
yield on face value
(2). From issue (3) From each
date to each interest payinterest pay- ment date to
maturity 2
ment date
Percent
1.60
2.25
2.62
2.80
2.92
2.99
3.04
3.08
3.11
3.14
3.16
3.18
3.19
3.20
3.21
3.22
3.23
3.24
3.24
3.25

Percent
3.35
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38
3.38

1 At all times, except that bond is not redeemable during first 6 months.
2 Approximate iavestment yield for entire period from issuance to maturity is 3.25 percent per annum.




195

EXHIBITS
TABLE B.—UNITED STATES SAVINGS BONDS—SERIES H

TABLE OF C H E C K S ISSUED AND INVESTMENT YIELDS FOR BONDS BEARING ISSUE DATES FROM J U N E 1, 1952
THROUGH JANUARY 1, 1957

Table showing: (1) Amount of, interest checks paid on United States savings bonds
of Series H, by denominations, on each interest payment date following issue; {2) the
approximate investment yield on the face value from issue date io each interest
payment date; and (3) ihe approximate investment yield on the face value from
each interest payment date to maturity. Yields are expressed in terms of rate
percent per annum, compounded semiannually.
Maturity value
Redemption value ^
Issueprice

{

Period of time bond is held after
issue date

H year
-..
1 year
IH years
.2 years—
2H years
3 years
--.
3H years
4 years—
4H years
6 years—---.
6H years
€ years
.^H years
7 years--7H years
-.
Syears
8H years
_
1
9 years
"SH years
9 years and 8 months (maturity)

$500
500
500

$1, 000
1,000
1,000

$5,000
5,000
5,000

$10, 000
10, 000
10,000

(1); Amount of interest check for each
\ denomination

$2.00
6.25
6.25
6.25
6.25
6.25
6.25
6.25
8.50
8.50
8.50
8.60
8.50
8.60
8.60
8.50
8.60
8.50
8.60
8.50

$4.00
12.50
12.50
12. 50
12.50
12.50
12.50
12.50
17.00
17.00
17.00
17.00
17.00
17.00
17.00
17.00
17.00
17.00
17. 00
17.00

$20. 00
62.50
62.50
62.50
62.50
62.50
62.50
62.50
85.00
• 85.00
85.00
85.00
85.00
85.00
85.00
85.00
85.00
85.00
85.00
85.00

$40
125
125
125
125
125
125
126
170
170
170
170
170
170
170
170
170
170
170
170

Approximate investment
yield on face value
(2) From issue (3) From each
date to each interest payinterest pay- rhent date to
ment date
maturity 2
Percent
0.80
1.65
1.93
2.07
2.15
2.21
2.25
2.28
2.40
2.49
2.57
2.63
2.69
2.73
2.77
2.81
2.84
2.87
2.89
3.00

Percent
3.13
3.18
3.22
3.27
3.34
3.41
3.49
3.58
3.60
• 3.63
3.66
3.69
3.74
. 3.81
3.91
4.07
4.36
5.10
10.37

1 At all times, except that bond is not redeemable during first 6 months.
2 Approximate investment yield for entire period from issuance to maturity is 3.00 percent per annum.

EXHIBIT 8.—Press release, May 2, 1957, announcing the future issuance in
punch-card form of Series E savings bonds
> The Treasury Department, beginning next October 1, will issue Series E savings
bonds in punch-card form, at an annual saving of $500,000 a year in printing costs.
The punch-card bonds will closely resemble the present paper-type bonds and
will have the same printed matter on both sides as now. But while the present
paper-type bonds are 7% by 4>^ inches in size, the punch^card bonds will be 7^^ by
S}i inches.
Present stocks of the paper-type E bond forms will be used until stocks are
•depleted, probably by the end of September, or for reissues of paper-type bonds.
General approval was expressed by bond buyers, volunteer bond salesmen,
financial institutions, and others consulted by the Treasury when the moneysaving change to card-type bonds was proposed several months ago.
The punch-card bonds will make possible the use of electronic data processing
machines for certain savings bonds procedures in the Bureau of the Public Debt,
and installation of such machines is now being arranged for. Some business firms
and others issuing bonds under the payroll savings plan will also be able to realize
economies in handling the new bonds.

Guaranteed Obligations Calls
EXHIBIT 9.—Calls for partial redemption,, before maturity, of insurance fund
debentures
During the fiscal year 1957, there were six calls for partial redemption, before
maturity, of insurance fund debentures, one dated September 20, 1956, and the
others dated March 18, 1957. The notices of call were published in the Federal




196

1957 REPORT Ot^ THE SECRETARY OF THE TREASURY

Registers of September 28, 1956, and March 29, 1957. T h e notice covering t h e
second call of t h e 2}^, 2^^, 2J^, 2%, and 3 percent Series AA m u t u a l mortgage insurance fund debentures is shown in this exhibit. Since t h e other notices of call
are similar t o t h i s exhibit, t h e y h a v e been omitted b u t t h e essential details a r e
summarized in t h e table following t h e notice of call.
N O T I C E O F CALL.

F E D E R A L R E G I S T E R O F S E P T E M B E R 28, 1956

To Holders of 2%, 2ys, 2%, 2}^, and 3 Percent Mutual Mortgage Insurance F u n d
Debentures, Series A A :
NOTICE OF CALL FOK PARTIAL REDEMPTION, BEFORE MATURITY, OF 2%, 2%, 2%, 2%
AND 3 PERCENT MUTUAL MORTGAGE INSURANCE FUND DEBENTURES, SERIES AA
(SECOND CALL)

P u r s u a n t to the a u t h o r i t y conferred by t h e National Housing Act (48 Stat.
1246; U. S. C , Title 12, Sec. 1701 et seq.) as amended, public notice is hereby
given t h a t 2J^, 2%, 2%, 2% and 3 percent m u t u a l mortgage insurance fund debentures, Series A A, of the denominations and serial numbers designated below, are
hereby called for redemption, a t p a r and accrued interest, on J a n u a r y 1, 1957,
on which date interest on such debentures shall cease:
2y2, 2%, 2%, 2)i, and 3 percent mutual mortgage insurance fund debentures, series A A :
Inclusive serial
numbers

Denomination

$50
100
500
1,000
5,000

63 t o 269
238 to 893
78 to 273
171 to 627
105 t o 110
112 to 345
10,000
70 t o 117
T h e debentures first issued as determined by t h e issue dates thereof were
selected for redemption by t h e Commissioner, Federal Housing Administration,
with t h e approval df the' Secretary of t h e Treasury.
No transfers or denominational exchanges in debentures covered by t h e foregoing call will be made on t h e books maintained by t h e Treasury D e p a r t m e n t
on or after October T, 1956. This does not affect t h e right of the holder of a
debenture to sell and assign t h e debenture on or after October 1, 1956, and provision will be made for the p a y m e n t of final interest due on J a n u a r y 1, 1957, with
t h e principal thereof to t h e actual owner, as shown by t h e assignments thereon.
T h e Commissioner of t h e Federal Housing Administration hereby offers t o
purchase any debentures included in this call at any time from October 1, 1956,
to December 3 1 , 1956, inclusive, a t p a r and accrued interest, to date of purchase.
Instructions for t h e presentation and surrender of debentures for redemption
on or after J a n u a r y 1, 1957, or for purchase prior t o t h a t date will be given by
the Secretary of t h e Treasury.
A P P R O V E D : September 24,-1956
NORMAN P.

MASON,

Federal Housing Commissioner.
W.

RANDOLPH

BURGESS,

Acting Secretary of ihe Treasury.

Final interest will be paid with principal a t t h e r a t e of $12.50 per $1,000 for
t h e 2 ^ . % ; $13.13 per $1,000 for t h e 2 % % ; $13.75 per $1,000 for t h e 23^%; $14.38
per $1,000 for t h e 2 % % ; a n d $15.00 per $1,000 for t h e 3 % debentures redeemed
on J a n u a r y 1, 1957.
Final interest will be paid with principal a t t h e r a t e of $0.067935 per d a y for
each $1,000 for t h e 2>^%; $0.071332 per day for each $1,000 for t h e 2 % % ; $0.074728
per d a y for each $1,000 for t h e 2 % % ; $0.078125 per day for each $1,000 for t h e
2 % % ; and $0.081522 per day for each $1,000 for t h e 3 % debentures from July 1,
1956, to d a t e of purchase on those purchased between October 1 and December
31, 1956.




Summary of information contained in the notices of call for partial redemption of insurance fund debentures during the fiscal year 1957
2]^, 2 H , 2%, 2 ^ , a n d 3 p e r c e n t m u t u a l m o r t gage i n s u r a n c e f u n d debentm-es, Series A A
Second call
N o t i c e of call
Redemption date
Serial n u m b e r s . called b y
denominations:
$50
$100
$500
$1,000
$5,000
$10,000
F i n a l d a t e for transfers or
. d e n o m i n a t i o n a l exchanges
. ( b u t n o t for sale or assign.ment).
R e d e m p t i o n o n call d a t e ,
a m o u n t of interest per
$1,000 p a i d in full w i t h
principal.
P r e s e n t a t i o n for p u r c h a s e
prior to call d a t e :
Period
A m o u n t of accrued uiterest per $1,000 per
d a y paid w i t h principal.




2yj p e r c e n t w a r h o u s ing i n s u r a n c e f u n d
debentures,
Series
H , s e v e n t e e n t h call

23^ p e r c e n t T i t l e I
housing
insurance
f u n d d e b e n t u r e s . Series L , s i x t h call

2% p e r c e n t T i t l e I
housing
insurance
f u n d d e b e n t u r e s . Series R , f o u r t h call

3 percent Title I housing i n s u r a n c e fund
d e b e n t u r e s . Series T ,
t h i r d call

T h k d call

Sept. 20, 1956-..
J a n . 1, 1957

M a r . 18, 1957.
J u l y l , 1957..

M a r . 18, 1957..
J u l y 1, 1957—.

M a r . 18, 1957..
J u l y 1, 1967-...

M a r . 18, 1957..
J u l y 1, 1967...

M a r . 18, 1957.
J u l y 1, 1957.

63-269
238-893.
..
78-273
171-627
105-110,112-345.
70-117
Sept. 30, 1956...

270-556.
894-1670
274-512
628-1135
346-570
118-200M a r . 31, 1957.

3661-3902
7033-8009, 11098-112381484-1753
8826-9012,11099-12401.
2878-3232
27683-31218
M a r . 31, 1967

124-13687-156-,
65-79--312-38213-33...

9-29..-.
17-103-.
6-19--.
33^9.-.
11-35--.

M a r . 31,1957..

M a r . 31, 1957..

42-94.
66-241.
20-116.
11-97.
9-79.
1^.
M a r . 31, 1957.

$12.50 for 2 H % , $13.13
for 2 H % , $13.75 for
2%%,
$14.38
for
2 ^ % , $16.00 for 3 % .

$12.60 for 2 H % , $13.13
for 2 H % , $13.75 for
2%%,
$14.38
for
2 l i % , $15.00 for 3 % .

$12.50-

$12.50.

$13.75-

$15.00.
W
Ul

Oct. 1-Dec. 31, 1 9 5 6 - . . A p r . l r J u n e 30, 1957...
2H%,
$0.067935 for 2^^%, $0.069061 for
$0.072514 for 2 H % ,
$0.071332 for 2 % % ,
$0.075967 for 2 % % ,
$0.074728 for 2 % % .
$0.079420 for 2 ^ % ,
$0.078125 for 2 % % ,
$0.082873 for 3 % ,
$0.081522 for "3%,
from J a n . 1, 1957, to
from J u l y 1, 1956;'to
d a t e of p u r c h a s e .
d a t e of p u r c h a s e .

A p r . 1-June 30, 1957...
$0.069061 from J a n . 1,
1957, to d a t e of p u r chase.

A p r . 1-June 30, 1957... A p r . 1-June 30, 1 9 5 7 - .
$0.069061 from J a n . 1, $0.075967 from J a n . 1,
1957, to d a t e of p u r 1957, to d a t e of p u r chase.
chase.

A p r . 1-June 30,1957.
$0.082873 from J a n . 1,
1957, to d a t e of p u r chase.

CO

198

1957 REPORT OF THE SECRETARY OF THE TREASURY

Legislation
EXHIBIT 10.—An act temporarily increasing the public debt limit
[Public Law 678, 84th Cong., 2d Sess., H. R. 11740]

Be it enacied by ihe Senate and House of Representatives of the United States of
America in Congress assembled. That, during the period beginning on July 1, 1956,
and ending on June 30, 1957, the public debt limit set forth in the first sentence
of section 21 of the Second Liberty Bond Act, as amended, shall be temporarily
increased by $3,000,000,000.
Approved July 9, 1956.
EXHIBIT 11.—An act increasing the maximum interest rate on United States
savings bonds
[Pubhc Law 85-17, 85th Cong., H. R. 5520]

Be it enacted by ihe Senate and House of Representatives of ihe United States of
America in Congress assembled, That the proviso in the second sentence of section
22 (b) (1) of the Second Liberty Bond Act, as amended (31 U. S. C , sec. 757c (b)
(1) ), is amended to read as follows: '^Provided, That the interest rate on, iand the
issue price of, savings bonds and savings certificates and the terms upon which
they may be redeemed shall be such as to afford an investment yield not in excess
of 3.26 per centum per annum, compounded semiannually".
SEC. 2. The authority granted .by the amendment made by the first section of
this Act may be exercised with respect to United States savings bonds and United
States Treasury savings certificates bearing issue dates of February 1, 1957, or
thereafter. For purposes of section 22 (b) (2) of the Second Liberty Bond Act,
as amended, such authority may be exercised with respect to those series E savings
bonds maturing on or after February 1, 1957, which are retained after maturity,
but only with respect to the investment yield after maturity.
Approved April 20, 1957.

Taxation Developments
EXHIBIT 12.—Statement by Secretary of the Treasury Humphrey, March 19,,
1957, before the Senate Finance Committee on H. R. 4090 to provide a oneyear extension of the existing corporate normal tax rate and of certain excise
tax rates
I appreciate this opportunity to appear before you in support of H. R. 4090,
which was passed by the House of Representatives on March 14, 1957. This
legislation would extend for one year the existing excise rates on liquor, tobacco^
and autombiles, and the tax rate on corporate income. If this legislation were
not adopted, the tax rates would drop on April 1.
The full year effect of the one-year rate extensions would be slightly more than
$3 billion; $2.2 billion of this comes from the corporation income tax; $231 million
from various alcohol taxes; $185 million from the tax on cigarettes; and $436
million from the tax on automobiles and automobile parts and accessories.
Of the total of more than $3 billion we estimate that $186 million will be collected in the current fiscal year; $2,166 million in the fiscal year 1958; and virtually
all of the rest in the fiscal year 1959.
The President made his recommendation for these rate extensions in his budget
message in the following terms:
'Tt is my firm belief that tax rates are still too high and that we should look
forward to further tax reductions as soon as they can be accomplished within a
sound budget.policy. Reductions-iij tax.rates ^would give relief to taxpayers and
would also release funds for the activity- and- investment necessary for sustained
economic growth through private initiative. However, the reduction of tax rates
must give way under present circumstances to the cost of meeting our urgent
national responsibilities.
**For the present therefore I ask for continuation for another year of the existing
excise tax rates on tobacco, liquor, and automobiles, which, under present law,
would be reduced next April 1. I must also recommend that the present corporate tax rates be continued for another year. It would be neither fair nor




EXHIBITS

199

appropriate to allow excise and corporate tax reductions to be made at a time
when a general tax reduction cannot be undertaken."
The estimated surplus for the fiscal year 1958 is considerably less than the revenue which will be received during that year from the legislation which is now before
you. Therefore, if these rates are not extended we would have a substantial
deficit in 1958. After 2 years of balanced budgets as a result of the combined
hard work of the Congress and the administration, it would be inexcusable to slip
back into defi^cit financing for next year.
We must have the revenue that a continuation of existing tax rates would
provide.
As I have said many times, the present tax rates are too high for long continued
retention and would in the long run seriously hamper our vigorous economic
growth. The most important and effective tax change that can possibly be made
to promote steady economic development is a reduction in all rates for all taxpayers
when our fiscal situation permits.
To make this general reduction possible for all taxpayers we must avoid new
special relief provisions for particular groups of taxpayers which will dissipate
our revenues.
Such relief provisions would not only still further complicate a law that is
already too complicated, but they also, in the aggregate, might involve so much
revenue loss as to postpone indefinitely the time when it will be possible to have
such general relief for all taxpayers.
I have been asked about two bills which would modify the corporate tax
structure to give lower taxes to corporations with smaller incomes. Before
commenting on the two bills, I would like to present a few figures which show
the present vitality of new enterprises in our private enterprise system.
The following facts stand out:
(1) At the end of 1955, the last full year for which figures are available, the
total business population stood at an alltime high of 4,252,000 firms. The net
increase during 1955 was 63,000 firms. This was the largest increase in any
year since 1948, when the surge of new business formations that followed World
War II came to a close. During the first half of 1956 there was a further growth
in the business population. The Small Business Administration estimates that
the total number in operation was between 4,275,000 and 4,300,000 firms on
June 30, 1956.
(2) In 1956 the record number of 140,775 new corporations were formed.
This exceeded the previous record of 139,651 estimated in 1955. There has
been an increase in the number of new corporations in every year beginning
with 1952.
(3) Though the number of business failures increased in 1956 over 1955, the
rate of business failures is still far below the prewar level and in fact it is far below
the average rate for the entire period since 1900.
Specifically stated in the last report of the Small Business Administration,
December 31, 1956:
**In 1956 the number of business failures per 10,000 firms was 48. In 1954 and
1955 there were 42 business failures per 10,000 operating businesses; in 1949, 34
per 10,000; and in 1952, 29 per 10,000.
" I n the prewar period of 1939, however, the failure rate was 70 per 10,000 firms,
and in 1940, 63 per 10,000. For the whole period, 1900-1956, the rate was 70 per
10,000 firms."
The increase in the number of failures should be appraised in perspective as
related to the earlier record. On that basis the present vitality of business
concerns is good.
Amendment 2-27-57-B would reduce the existing normal tax on corporation
income from 30 percent to 22 percent and increase the surtax on corporation
income over $25,000 from 22 percent to 31 percent. This is the Fullbright
proposal.
The total tax rate on income above $25,000 would thus be increased from 52
percent to 53 percent.
About 85 percent of small-business firms are proprietorships and partnerships
and are not taxed as corporations. Thus amendment 2-27-57-B provides tax
relief for only the 15 percent of small-business concerns which are organized as
corporations.
Special tax relief of the sort contemplated by S. 150 therefore directly discriminates against the overwhelming majority of small businesses which are not




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1957 REPORT OF THE SECRETARY OF THE TREASURY

conducted as corporations, a n d most importantly, discriminates against individual
taxpayers generally.
I n view of the very high rates now in effect, it would be unfortunate to increase
t h e relative tax burden on such a large group of taxpayers as would be done by
S. 150, especially for the benefit of such a comparatively small favored few.
S. 352, which is Mr. Sparkman's proposal, would make t h e corporate t a x
generally progressive, starting a t 5 percent on the first $5,000 of income and
rising by 5 and 10 percent steps to 55 percent on income over $100,000.
There is no justification for a progressive corporate tax. T h e analogy with
the progressive individual income tax is not correct.
Smaller and rhedium'sized corporations iii^y bie, and in fact often are, owned
by a few individuals each of whom has a sizable individual income, while the
larger corporations are most likely to be owned by a great m a n y individuals, large
numbers of whom have quite modest incomes.
T h e most recent figures dn the ownership of companies listed on the New York
Stock Exchange show t h a t two-thirds of t h e eight-million-six-hundred-and-thirtyodd shareowners of listed securities have incomes of less t h a n $7,500 a year.
Almost 38 percent of all share owners have incomes of less t h a n $5,000 a year.
T h e effect of a progressive corporate t a x t h u s in m a n y respects would be
altogether unfair in t h a t it would indirectly impose a disproportionately largf*
tax burden on the small investors who buy stock in large companies.
Moreover, a progressive corporate tax would actually work against t h e small
business itself which is seeking t a x relief to permit its growth a n d expansion. Under
a progressive t a x system t h e m o m e n t a company does in fact grow larger it will
have to p a y a higher rate of tax. T h u s t h e progressive tax scheme actually has a
built-in mechanism to retard t h e continued growth of a successful small business.
T h e present two levels in t h e corporate t a x (this is referring to t h e Fulbright
proposal) are justified if a t all only because t h e smaller companies are especially
dependent on retained earnings until t h e y pjpove themselves to h a v e become
sufficiently successful to induce more investors to p u t their funds into their
securities.
B u t it would be a great mistake to go from t h e present two levels to a generally
progressive corporate tax a n d thereby reduce investment incentive a t t h e very
time when increasingly successful proven operations make t h e need for expansion
a n d more capital investment continually more important.
E v e n if t h e proposed graduated rates (these are t h e graduated rates in t h e
S p a r k m a n proposal) could be so balanced t h a t there would be no net loss of revenue
from t h e proposed t a x changes, t h e Treasury would still oppose t h e proposal
because a n y action to change t h e spread between t a x rates on different sizes of
corporate income has such a far-reaching implication. This committee should
certainly not initiate a n y such sweeping changes in our tax system until their full
effects can be determined b y t h e most extensive public hearings a n d after full
consideration from every standpoint.
Certainly small business would be helped if its taxes were lower, just as every
other group in America would be better off with lower taxes. B u t we m u s t hold
t o t h e line and we must now avoid giving preferential t a x t r e a t m e n t , group b y
group, to a n y special group and so discriminate against all other groups and delay
t h a t h a p p y day when general t a x relief can again be given to every taxpayer in
America.
E X H I B I T 13.—Letter of Secretary of the Treasury H u m p h r e y , April 16, 1957, to
the Chairman of the H o u s e Ways and M e a n s Committee reaffirming the
T r e a s u r y ' s position with respect to revision of the taxation of cooperatives
D E A R M R . CHAIRMAN: This is in reply to your letter of M a r c h 15, 1957, which
referred t o m y letter t o you of J u l y 26, 1955. I n t h a t letter I described t h e problem which h a d arisen, because court decisions h a d made ineffective t h e 1951
legislation regarding t h e t r e a t m e n t of cooperatives. We h a v e no t h o u g h t of
double taxation. Our position as stated in our letter to you of J u l y 26, 1955,
remains unchanged.
Since sending you t h a t letter, t h e court decisions h a v e continued to go against
us, with some additional points raised in t h e opinions. We h a v e also been increasingly impressed with t h e very considerable differences of opinion among
various groups as to t h e precise way in which t h e objective of 1951 could best be
realized.




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201

We assume that your committee will expect to hold public hearings on the
subject to assure a full and systematic presentation of all of these views. We look
forward to the testimony in such hearings as a basis foir developing specific recommendations. The benefit of the material which can only be secured tlirough comprehensive and extensive public hearings is highly desirable for the preparation of
useful statutory language.
I and my associates will be glad to work with your committee and its staff in
this area.
Yours very truly,
G. M. HUMPHREY,

Secreiary of the Treasury.
EXHIBIT 14.—Statement of Secretary of the Treasury Humphrey, May 7, 1957,
before the Senate Finance Committee on S. 1795 to limit emergency amortization strictly to defense items
I am very glad to appear before the Senate Finance Committee in response to
your invitation to testify on your bill, S. 1795. I strongly support the general
purpose of this proposed legislation to limit emergency amortization to strictly
defense items.
In July 1955, I first expressed publicly before this very committee my growing
concern about the emergency amortization program before a subcommittee of
the House Committee on Government Operations. I stated that while emergency
amortization may have served a useful purpose during the Korean emergency, it
was an artificial stimulus of a dangerous type.
From November 1950 to March 20, 1957, almost 22,000 certificates were
issued under the 5-year amortization program. The total cost of these projects
was almost $39 billion. Almost $23 billion, or about 60 percent, was made
eligible for the 5-year writeoff.
Some degree of defense mobilization on a substantial scale may be essential
for years to come. But expansion of our major productive facilities should be
an integral part of our long-range, natural economic growth. Our basic defense
capacity, except for a few very special items, cannot be separated from the broad
base of our productive capacity.
Artificial stimulants may well become artificial controls. Because rapid amortization is not applied universally, it could create a competitive imbalance in the
sound, vigorous growth of our free economy. It is not the American way.
The revenue lag from certificates issued through 1956 probably exceeds $5
billion during these early years which will be recovered in the years after 1960.
But the interest cost to the Government, over the entire period of lag in tax
collections, will be roughly $3 billion.
The effects of a broadly applied amortization program go far beyond the
effects on Government revenue. First, there is the stimulating effect which can
temporarily add to inflation, with the possibility of a lag later. Then when
rapid writeoffs are permitted for facilities which will be largely used to supply
eventual regular civilian demand, there inevitably will be dislocations and unfair
advantages between whole industries—and individual companies within an
industry.
Much of the total has been of this type. For example, over 14 percent of the
total amortizable cost of facilities through December 28, 1955, was granted to
utilities and sanitary services; over 16 percent more went to railroads; and about
20 percent went to primary metal industries. Other whole industries had none.
There are many industries where some percentage of production would be
required in the event of war; but where without war our increased population and
productivity will require their continued expansion. These are in sharp contrast
to limited-purpose defense facilities such as shell loading or specialized aircraft
or armament plants.
Five-year amortization may be an alternative to direct Government construction and ownership of limited-purpose facilities since private capital is not
likely to go into them. But this is far different than giving rapid writeoff to
selected industries for general-purpose plants or equipment in an expanding
economy.




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1957 REPORT OF THE SECRETARY OF THE TREASURY

There is no fair or logical end to such a program. T h e margin of excess capacity
in such industries a t a n y time will regularly be absorbed b y growing civilian
d e m a n d a n d h a v e t o be regularly reestablished in later years. There would be
continuing costs a n d revenue lags and t h e creation of new competitive problems.
W e are n o t unaware b o t h of t h e desirability as well as of t h e financial problems
involved in modernizing a n d replacing old capital equipment. N o t h i n g is more
i m p o r t a n t t h a n obtaining t h e capital to increase our productivity a n d m a k e new
and better jobs.
Our high productivity of labor is possible only because of tremendous capital
investment—over $10,000 per m a n in general manufacturing, a n d over $50,000
in several industries.
Getting funds for t h e construction of new plants or facilities is a continuing
serious problem. High t a x rates make it harder t o save from current income.
T h e y also lessen t h e incentive a n d discourage t h e productive a n d p e r h a p s risky
use of savings.
I t is essential to reduce t a x rates as rapidly as can be done soundly. B u t t a x
reduction for favored groups only postpones t h e d a y when general t a x reduction
can be enjoyed by all t h e people.
T h e program, cut back by t h e executive branch of t h e Government, now
applies only a n d strictly to limited direct-defense items. I have consistently
advocated this a n d feel sure t h a t t h e present limitations should be continued.
S. 1795 is in line with this administration's policy in granting emergency
amortization certificates. Subject to some possible changes in language consistent with its objectives t o be worked out b y t h e technicians, I a m glad to
s u p p o r t this legislation.

EXHIBIT 15.—Report of the Treasury Department, M a y 13, 1957, on S. 1795 to
a m e n d Section 168 of the Internal Revenue Code of 1954 to limit emergency
amortization strictly to defense items
M Y D E A R M R . CHAIRMAN: This is in reply to your request for a report on your
bill, S. 1795. This would impose a strict s t a t u t o r y limitation on t h e use of 5year amortization certificates. F u t u r e certifications would be confined to facilities to produce new defense items or components of new defense items or to
provide research, development, or experimental services during the emergency
periods for D e p a r t m e n t of Defense or t h e Atomic Energy Commission, as a p a r t
of t h e national defense program. Such a limitation is, in principle, consistent
with t h e limitations imposed under present administrative policy.
T h e Treasury D e p a r t m e n t favors a s t a t u t o r y limitation which would restrict
amortization certificates to strict defense purposes. Widespread use of amortization certificates is very costly in terins of revenue during the period when they
are effective. Their availability and use in other t h a n strict defense applications
will result in dislocation and unfair advantages b o t h as between whole industries and as between individual companies within an industry.
T h e use of 5-year amortization for some p a r t of t h e cost of general purpose
plants or equipment to stimulate earlier construction of capacity is neither fair
nor logical. T h e margin of excess capacity, deemed to be needed for defense
purposes a t any one time, will regularly be absorbed by civilian demands in a
growing economy and would have to be regularly reestablished in later years.
There would be continuing revenue lags and continuing creation of new competitive problems.
Subject to possible technical changes consistent with t h e bill's objectives, t h e
Treasury D e p a r t m e n t strongly supports t h e general purpose of S. 1795 t o limit
emergency amortization to strictly defense items.
T h e Director, Bureau of t h e Budget, has advised t h e Treasury D e p a r t m e n t
t h a t there is no objection to the presentation of this report.
Sincerely yours,




G. M.

HUMPHREY,

Secretary of the Treasury.

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203

EXHIBIT 16.—Letter ofthe President, July 15, 1957, to the Chairman of the House
Ways and Means Committee regarding tax relief for small business
DEAR M R . CHAIRMAN: This is in further reply to your letter regarding small
business. As you will recall, the Cabinet Committee on Small Business made
fourteen recommendations, .including suggested changes in.the tax laws, the
latter conditioned on the budgetary outlook. It was suggested, subject to the
existence of appropriate budgetary conditions:
(1) That the taxes imposed on business corporations be modified by reducing
the tax rate from 30 percent to 20 percent on incomes up to $25,000.
(2) That businesses be given the right to utilize, for purchases of used property
not exceeding $50,000 in any one year, the formulas of accelerated depreciation
that were made available to purchasers of new property by the Internal Revenue
Code of 1954.
(3) That corporations with, say, ten or fewer stockholders be given the option
of being taxed as if they were partnerships.
(4) That the taxpayer be given the option of paying the estate tax over a
period of;iip to ten years in cases where the estate consists largely of investments
in closely held business concerns.
It now appears that the excess of income over disbursements in the fiscal
year 1958 will be so small that no action should be taken by the Congress
at this time which will involve any substantial tax reduction for anyone. In
the economic conditions that prevail currently and can be expected during the
next fiscal year, all the income which the present tax laws provide should be
reserved in order to maintain the balance between income and outgo as now
estimated and to make modest reductions in our national debt.
Therefore, it would be ill-advised to consider the first recommendation noted
above, because of the substantial revenue loss that it would entail. Also, in the
absence of a general tax reduction, which the budgetary situation does not permit
at this time, a tax reduction of this character would discriminate against all the
many small businesses which are conducted in the form of partnerships or
individual proprietorships.
The Congress should, however, in connection with its study of cases of unusual
hardship or unfairness in the operation of tax laws, appropriately consider some
of the other suggestions, which involve no more than a minimum loss of revenue.
On that basis, I commend for your committee's consideration the second,
third, and fourth recommendations in the committee's report as noted above,
and one additional change in the law to permit an original investor in small
business the right to deduct from his income, up to some m.aximum amount
prescribed by Congress, a loss, if any, realized on a stock investment in such
busiriess. At the present time the deduction Of such losses from income is subject
to the general limitation on net capital losses of $1,000. Each of these proposals
could be helpful in the financing, operation, or continued independent existence
of small businesses.
In your letter you asked for my views concerning the Fulbright proposal for
reducing the normal tax on corporations from 30 percent to 22 percent and
increasing the surtax on corporate incomes over $25,000 from 22 percent to 31
percent. This proposal would increase the tax rate on the portion of the income
in excess of $25,000 to 53 percent. Since about 85 percent of the small business
firms are proprietorships and partnerships, it is not fair to give tax relief to small
business concerns which are organized as corporations at the expense of other
taxpayers.
I earnestly look forward to reductions in tax rates for all taxpayers as soon as
that becomes possible. Until that time, selective relief of the sort contemplated
by the Fulbright proposal—and indeed by the first recommendation of the
Cabinet Committee—would discriminate against the overwhelming majority of
small businesses which are not conducted as corporations at a time when we must
:stand against any tax revision for anyone which might jeopardize our small
budget surplus. Furthermore, in view of the very high rates now in effect, it
would be unwise to increase the taxes on any group of taxpayers in order to
provide a tax reduction for another group, as would be done by this proposal.
For these reasons, I am opposed to the Fulbright Resolution. .




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1957 REPORT OF THE SECRETARY OF THE TREASURY

I know you are also interested in the status of the several Cabinet Committee
recommendations relating to matters other than taxes. As I mentioned above,
the committee gave me fourteen recommendations for governmental action,
only four of which dealt with taxes. Of the remaining ten recommendations, some
have been carried out by the executive branch; others must await congressional
action before the executive branch can act upon them. The following is a current
status report on these ten.
In its Recommendation No. 5, the Cabinet Committee proposed: "That the
President arrange for a comprehensive review of procurement policies and procedures of all departments and agencies, including the legislation pertaining
thereto, with a view to facilitating and extending the participation of small
businesses in work on Government contracts."
On September 26, 1956, I directed the Administrator of the General Services
Administration to plan and conduct such a review, in cooperation with other
major procurement agencies. The First Summary Report of the Task Force
set up by the Administrator of the General Services Administration under this
directive was issued on March 1, 1957. Several important improvements in
procurement procedures have already been accomplished as a result of the Task
Force efforts, and a comprehensive proposal for amendments to the procurement
laws has been developed by the Task Force and is currently being reviewed by
the cognizant executive agencies. The purpose of the amendments being reviewed
would be to bring about greater uniformity and simplification of Government
procurement procedures, and to improve the opportunities of small businesses
to participate in Government work.
In its Recommendation No. 6, the Cabinet Committee proposed: "That the
President direct departments and agencies engaged in extensive procurement to
adopt procedures which would insure that a need for advance or progress payments by a bidder will not be treated as a handicap in awarding a contract, and
which would facilitate and accelerate the making of such progress payments as
may be requested by small suppliers under Government contracts."
In my letter of August 18, 1956, I directed the procurement agericies to implement Recommendation No. 6. In order to ensure uniformity among the various
agencies the General Services Administration on December 31, 1956, laid down a
Government-wide regulation prescribing policy and procedures in consonance
with Recommendation No. 6. Federal agencies are taking steps to comply
with this.
, In its Recommendation No. 7, the Cabinet Committee proposed: "That the
Renegotiation Board clarify the fact that, although a contractor who subcontracts
work may not reasonably expect to be allowed as large a profit thereon as if he
had done the work himself, the practice of subcontracting, especially the extent
to which subcontracts are placed with small businesses, is encouraged by giving
it favorable consideration in determining allowable profits."
On September 24, 1956, the Renegotiation Board amended its regulations to
give effect to this recommendation.
In its Recommendation No. 8, the Cabinet Committee proposed: "That the
life of the Small Business Administration, which is now scheduled to expire in
mid-1957, be extended at the earliest opportunity."
Administration bills (S. 1789 and H. R. 6645), would remove the time limit on
the life of the Small Business Administration, thus giving it permanent status.
In its Recommendation No. 9, the Cabinet Committee proposed: "That the
maximum amount of an issue of corporate securities which the Securities and
Exchange Commission may exempt from registration be increased from $300,000
to $500,000."
I have recommended this change. Legislation (S. 810 and S. 843) is now before
the Congress to carry out this recommendation.
In its Recommendation No. 10, the Cabinet Committee proposed:" That the
President call a conference on technical research, development, and distribution,
for the benefit of small business."
I have directed the Secretary of Commerce and the Administrator of the Small
Business Admnistration to make plans for this conference.
These plans have been announced and a Conference on Technical and Distribution Research for the Benefit of Small Business will be held in Washingtori
September 24-26.
In its Recommendiaton No. 11, the Cabinet Committee proposed: "That
legislation be enacted to enable closer Federal scrutiny of mergers."




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205

Legislation to accomplish this objective is before t h e Congress, and t h e Attorney
General has outlined administration views in testimony before t h e House
Judiciary Committee.
I n its Recommendation No. 12, t h e Cabinet Committee proposed: " T h a t
procedural changes be made in t h e a n t i t r u s t laws to facilitate their enforcement."
I h a v e recommended three procedural changes in this area: first, t h a t cease
and desist orders of t h e Federal T r a d e Commission under t h e Clayton Act be
final when issued, unless appealed to t h e Courts; second, t h a t t h e Attorney
General be given t h e power, where civil procedures are contemplated, t o issue a
civil investigative demand, t h u s making possible the production of documents
before a complaint is filed, and without t h e need of grand jury proceedings;
third, t h a t t h e Federal T r a d e Commission, in merger cases where it believes a
violation of t h e law is likely, be authorized to seek a restraining injunction before
filing a formal complaint.
I n its Recommendation No. 13, t h e Cabinet Committee proposed: " T h a t wage
reporting by employers for purposes of social security records and income tax
withholding be simplified."
Legislation (H. R. 8309) t o give effect t o this recommendation has been submitted to t h e Congress.
I n its Recommendation No. 14, t h e Cabinet Committee proposed: " T h a t t h e
Office of Statistical Standards of t h e Bureau of t h e Budget u n d e r t a k e a comprehensive review of t h e reports and statistics required of small businesses."
T h e Bureau of t h e Budget has under way a s t u d y designed t o determine whether
t h e reports and statistics which small business m u s t now maintain for, or supply
to, t h e Government are unduly burdensome and, where necessary, t o suggest
remedial measures.
Pending t h e achievement of b u d g e t a r y conditions t h a t will permit a general
p r o g r a m of t a x reduction, these proposals for changes in our t a x laws would
appreciably improve t h e ability of small businesses to get started and, once started,
t o grow. Along with t h e administrative actions t a k e n in other areas, and with
favorable attention by t h e Congress to administration proposals for measures
t o benefit small business not yet enacted, they would provide a balanced program
of constructive aid a t a minimum loss of t a x revenues. Such aid is keenly needed
b y small business, t h e economic position of which is vitally i m p o r t a n t to t h e
soundness and vigor of our sj^stem of free competitive enterprise.
With kind regard
Sincerely,
DWIGHT D .

EISENHOWER.

International Financial and Monetary Developments
E X H I B I T 17.—Remarks by Secretary of the Treasury Anderson, August 19, 1957,
before the First Plenary Session o f t h e Economic Conference o f t h e Organization of AmericJah States, Buenos Aires, Argentina
I t is an honor to participate in this Conference with so many of t h e ministers
who deal with t h e financial and economic questions which continually arise in
t h e conduct of Government affairs in our American Republics. I t is a particularly
h a p p y occasion to come here as one of m y first official acts as Secretary of the
Treasury.
As a T e x a n , who has lived most of his life close to Latin America, I h a v e always
h a d a deep and w a r m persorial interest in its people, its culture, its traditions, a n d
its progress. One of rriy earliest employments was to teach Spanish in a town near
t h e place where I grew up. While I m u s t confess a neglect of t h e language in
t h e iriterveriing years, it is a fault I hope to correct. I t is m y earnest hope t h a t
m y present duties will give me new opportunities to visit t h e other American
Republics a n d t o experience more direct a n d personal contacts with this great
region, arid to continue and enrich t h e friendships which I have "established
here with t h e delegates of these American Republics.
This Conference follows in logical succession from t h e Conference a t Quitandinha
in 1954. I was deeply impressed by t h e enthusiasm with which m y predecessor,
Secretary H u m p h r e y , viewed t h e Quitandinha meeting. H e was convinced a t
t h a t meeting t h a t there was urianimity among t h e delegates as t o t h e great a n d
inspiring objectives which we seek in this hemisphere.




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195 7 REPORT OF THE SECRETARY OF THE TREASURY

These objectives are clear and can be defined simply: We w a n t our people all
around t h e Americas to live better, we w a n t t h e m to pursue more healthful lives,
we w a n t their lives filled with hope, enriched with progress, and inspired toward
t h e improvement of standards of well being. Above all we seek these goals while
preserving t h e freedom of our peoples.
I t was most encouraging to me t h a t in his eloquent address inaugurating this
Conference, President A r a m b u r u strongly reaflSrmed t h e validity of these views.
As practical men with responsibility for helping to shape our nations' economic
policies, we shall t r y to see our tasks as t h e y really are, and not as we might wish
t h e m to be. T h e y are m a n y , t h e y are difficult, a n d they are continuing. T h e y
are not to be dealt with by words alone, nor can they be laid to rest once and for
all by some dramatic pronouncement at this or any other conference. Patience,
persistence, and goodwill are t h e qualities of mind and heart which we m u s t
bring to our tasks.
I have talked a t length' with "Presiderit' Eisenhower about these m a t t e r s . H e
shares t h e conviction t h a t direct personal contacts a n d intimate exchanges between
those of us who carry public responsibilities are the surest guarantee t h a t our
efforts will be successful a n d our objectives transformed into practical a n d satisfactory realities.
You will all recall t h e unprecedented meeting of t h e chiefs of state of t h e
American Republics which took place in P a n a m a in July 1956, and the InterAmerican Committee of Presidential Representatives which developed from it t o
consider ways of strengthening the Organization of American States in fields of
cooperative effort which directly affect t h e welfare of the individual. As a result
of t h e committee's deliberations, a series of recommendations was drawn u p a n d
s u b m i t t e d t o t h e various chiefs of state. President Eisenhower on M a y 26
publicly expressed his hope t h a t m a n y of t h e recommendations would be p u t into
effect as p r o m p t l y as possible.
We should not regard the meeting in Quitandinha, t h e Conference in P a n a m a ,
or this Conference as. ends in themselves., R a t h e r , each Conference evidences
greater strides forward to our common- objectives. W h a t is really i m p o r t a n t is
the fact t h a t we continue to demonstrate t h a t 21 nations collectively, forming one
of the world's most i m p o r t a n t communities, have come to t h e same conviction
t h a t the welfare and progress of each member is related to t h e welfare and progress
of each other member. Our approach has been, a n d will continue to be, t h a t of
good partners.
How then shall t h e ministers of finance or economy of our governments go a b o u t
the task of increasing t h e effectiveness of their cooperative efforts? I t would be
presumptuous for me, one of the newest members of t h e group, to claim extensive
personal familiarity with the details of the questions which we shall discuss. T h e
delegation of the United States will express its views on the m a t t e r s of our agenda,
and I earnestly hope you will find t h e m forward looking and constructive.
Before we came here, m y Government reviewed and considered carefully t h e
views t h a t were expressed by t h e delegations in 1954 and weighed t h e m in t h e
light of t h e progress we have made in the interval of nearly three years since t h a t
meeting. We welcome this opportunity, indeed, we feel it a responsibility, t o
express to you t h e fundamental approach which we bring to the questions before
us. This Conference represents another i m p o r t a n t step in t h e continuing evolution of a long history of economic cooperation and business partnership. We are
deahng with fundamental and long range questions on which we can take stock
and fruitfully exchange thoughts arid points of view. B u t we recognize t h a t in
the economic field the march of day-to-day events and the cumulative effect of
specific decisions in business and in government play the major role.
A country achieves material progress by developing its h u m a n and material
resources. There is no other way to do it. T h e question t h a t faces this conference, therefore, is how can our countries most effectively develop their resources?
At inter-American meetings of this kind, when we consider economic development we sometimes tend t o talk as though Latin America were one great homogeneous area. I n fact, the economic development of Latin America is t h e sum
total of the economic development of each of the individual countries in the area.
When we examine the economic characteristics of the Latin American countries
one by one we find a natural diversity. Some countries have limited natural
resources. Others are among the most favoured nations in the world in this
respect. Some countries are a l m o s t entirely producers of raw materials. Others
produce not only raw materials b u t also a wide variety of manufactured goods.
B u t amidst this diversity let there be this unity: However we develop our econo-




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mies, however we use our resources or make our goods, or provide opportunities
for work, let us above all else guard freedom in all its aspects, for freedom is
indivisible.
There are certain profound convictions with which I come to our meeting.
T h e y are convictions which I have held throughout a lifetime. The first conviction is this: No difference exists between us as to t h e objectives we seek.
They are objectives t h a t can be defined only in terms of h u m a n well-being a n d
progress. We all agree t h a t m a n does not exist to enhance t h e importance and
power of t h e State, as the Communists would have us believe. The State exists
for m a n to respect his dignity as a child of God, to preserve his rights as an individual, and to provide opportunities which will enable him to develop, freely and
fully, in all the ways t h a t enrich h u m a n life a n d exalt its spiritual meaning and
dignity. And. this is w h a t we mean when we speak of- promoting commerce,
industry, agriculture, and development of all'of our resources. We promote t h e m
because they make for the better employment of our- citizens, better homes for
our families, better education for our children, greater satisfaction of our aspirations, in short, a better America for all of us.
History has demonstrated t h e vital role of t h e competitive enterprise system
in t h e economic life of our hemisphere. I t s promise for t h e future is even
greater. J u s t as t r u t h flourishes best in the climate of political freedom, so in t h e economic field the system of competitive enterprise promises to
yield most in the satisfaction of m a n ' s material needs. This system produces
most of what people w a n t most.
I hope t h a t at this Conference we can contribute to the growth and strengthening of this system. I t is wholesome t h a t we should explore the various ideas
presented to us. No one knows better t h a n a minister of finance or economy
how difficult it is to choose between alternative measures. No one knows better
t h a n we t h a t the fields of economy a n d finance are not.exact sciences. Let us,
therefore, approach-our discussions with the hope t h a t from a sincere and thoughtful exchange of views will come ways of doing things which are perhaps better
t h a n those which any of us alone, might have brought to this Conference.
This leads me to a second conviction which I hold strongly and which has been
substantiated in actual-experience. This is t h a t there is no question incapable
of resolution if we, as reasonable men of good will, and as the representatives of
our respective peoples, bring to bear on it t h e best and united effort of all of
our people.
President Eisenhower has characterized t h e Organization of American States
a n d its predecessors as " t h e most successfully sustained adventure in international
community living the world has ever k n o w n . " In this hemisphere we* have had
t h e courage to approach openly m a n y problems for which solutions had not been
found in international society. Some of these problems have found their first
solution in t h e America-S. On other problems we have made the greatest progress
toward an eventual solution t h a t has yet been achieved. W h y is this true? I
believe t h a t it is because we do not let differences of opinion divide us or breed
distrust among us. When we encounter a new problem or engage in a new field
of discussion we seek a road we can all follow and which will ultimately bring us
t o our common objective.
This method of approach has been a salient p a r t of our cooperative effort during t h e past 50 years and against the background of history has been little short
of remarkable. For example, we developed in the Americas a hemispheric approach to security which was sealed in the Rio T r e a t y of 1947. We unanimously
agreed t h a t an attack on any one State would be considered an a t t a c k on all.
This concept of collective security has served as a p a t t e r n for the strengthening
of the entire free world. Our purpose is peace, both with t h e rest of t h e world
and among ourselves. T h e repeatedly successful application of the Rio T r e a t y
to settle disputes between American States and the outstanding services of t h e
Inter-American Peace Committee for peaceful settlement have established beyond
d o u b t the desire and ability of the countries of the Americas to live peacefully
together.
This fact has great economic-significance. The assurances now provided by
our common defense system offer us a dramatic opportunity to give greater
emphasis to those economic activities t h a t can better the lot of our peoples.
Military expenditures, by their very nature, act as a brake on rising living
standards, and for t h a t reason they should be held to a level t h a t will provide an
adequate posture of defense. All of us in t h e Americas look forward to the day
when a changed world situation will permit a substantial reduction of our large




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195 7 REPORT OF THE SECRETARY OF THE TREASURY

military expenditures. In the meantime, however, we must all do everything we
can to control reasonably our expenditures in this area. All of us, I am confident,
will continue to scrutiriize our military budgets in an effort to a^'ccomplish savings
that would make resources available in each of our economies for the kind of
constructive development that advances economic well-being.
My third great conviction is that the progress and welfare of every American
State is directly related to the progress and welfare of each. None of us can ever
be indifferent to the problems and the suffering of another. Each of us has a
personal and strong interest in the welfare of each of our partners. Often in the
economic fields our problems are particularly subtle and stubborn. Our best
interests as members of this great American community clearly lie in pursuing a
policy of cooperation.
A basic aspect of this policy of cooperation is a firm determination on the part
of my country to preserve a climate that will lead to the maintenance of a growing prosperity in the United States, which continues to represent the largest,
most stable, and expanding market for the increasing production of the hemisphere. To seek to avoid any return to the depressed conditions of an earlier
decade with the costly shrinkage it meant in our own economy and with the harmful reduction of your markets is a fixed point in the policy of my Government and
of our whole people.
A further aspect of this policy of cooperation relates to the important areas of
trade and investment. Needless to say, each of us occasionally is compelled to
take action on the basis of important domestic considerations. Such departures
from the general policy should be held to an inescapable minimum and should
be justified by rigorous standards of necessity. In that way we can maintain
our basic course with respect to international economic cooperation and maintain
as well the integrity of those occasional departures from it which legitimate
national considerations require.
What are the results of our cooperative efforts during the past four years?
Today, the people of the American States are contributing more to the economic
progress and well-being of the world than at any previous time in our history.
The output of goods and services is rising continuously at the rate of about three
percent a year in the United States and at even higher rates in other American
republics. The average annual increase in the real gross national product for
Latin America, as a whole, is estimated by the Economic Commission for Latin
America at 4.3 percent for the four years 1953 through 1956. In several countries
the rate of growth has been even higher.
Rarely, if ever, in history have we witnessed such a sustained and vigorous level
of prosperity as we have been enjoying recently in the free world. Indeed in this
decade we find we have a striking contrast to the world of 20 years ago. Then trade
had shrunk, prices were depressed, and economic activity was feeble and discouraging. Today there is an increasing concern of an opposite character. In country
after country, the pressure of monetary demand is so great that inflation is either
an unpleasant reality or a constant threat.
In my country we are well aware of this fact. We are exerting our best efforts
to keep our prosperity healthy, and to avoid the adverse effects of inflation fever.
Many of you have experienced the effects of this economic illness, and as flnance
ministers know all too well what it brings. You know how it not only complicates
the task of the finance minister, but enters as a disturbing factor into all the
operations of business and the affairs of everyday life. You know how it can lead
a whole people into competitive efforts to seek protection of their assets rather than
employing them for the benefit of the community. You know how difficult it is
for domestic and foreign capital to play an effective role in productive investment
when there is continual worry and preoccupation with the dangers of a depreciating
currency. You are familiar with the exchange difficulties and the constant tendency to excessive imports which inflation brings in its train. You know how
exports may be discouraged when price relationships become distorted.
The United States applauds the efforts that are being made in many of the
other American Republics to deal with this menace and to achieve greater financial
stability and realistic and freer rates of exchange. We are happy that the International Monetary Fund has supported well conceived programs for combatting
inflation in a number of these countries. The Treasury Department and other
agencies of my Government have also supported these efforts. We recognize that
foreign trade and foreign investments are only one limited aspect of this broad
program of economic development. Inter-American transactions are themselves a
segment of the broader fabric of economic relations in the free world.




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209

Let me speak briefly, however, of t h e t r a d e and investment transactions between
m y own country and t h e other American Republics. Through these transactions
dollars become available t o be effectively used by our sister Republics. T h e flow
of these dollars is generated first, by our imports from t h e rest of t h e American
S t a t e s ; second, by our investments; and third, by our loans for economic development. I n each of these categories we have in recent years reached t h e highest
levels yet recorded.
When we met a t Quitandinha in 1954, imports into t h e United States from
Latin America h a d reached t h e impressive annual r a t e of $3.5 billion. I n 1956,
t h e y reached t h e record level of $3.8 billion. About 30 percent of our total
imports of goods from foreign countries are shipped from Latin America.
T h e increase of United States and other foreign private investment in Latin
America has been most impressive. T h e flow of private investment from t h e
United States, as shown by our balance of payments, has greatly increased in t h e
p a s t flve years. During t h e first 2)^ years following our meeting at Quitandinha,
t h e figure a m o u n t s to about $1.4 bilhon, or more t h a n three times t h e corresponding r a t e during a comparable period preceding t h e meeting.at Quitandinha.
This is largely due to very sharp expansion in direct investments, particularly in
1956.. I n t h a t year direct investments exceeded $600 million, and total private
investment aniounted to more t h a n $800 million.
I should like to refer to some aspects of t h e role of private enterprise and p r i v a t e
capital in t h e development of t h e American Republics.
I t is reasonable t h a t t h e governments and people of Latin America should
expect our United States investors to whom they extend a hospitable welcome, t o
be constructive members of t h e communities in which they operate. I t is our
earnest desire t h a t they shall be. These same investors, we believe, are substantially determined t h a t they shall be a factor toward progress in h u m a n welfare.
I n t h e field of foreign investment we think there is a danger t h a t undue attention
m a y be given to t h e very partial figures which appear in balance-of-payments state^
ments. F r o m these figures it might be inferred t h a t the investment of foreign
capital brings no advantage, on balance, to t h e international accounts of t h e
country receiving such investment. We believe such a conclusion would be
incorrect for several reasons.
First, t h e balance-of-payments d a t a do n o t show t h e complete picture. They
do not show, for example, t h e t o t a l a m o u n t of new investment which has t a k e n
place on behalf of private investors. T h e D e p a r t m e n t of Commerce of my Government made a special s t u d y of the operations of a large group of United States enterprises operating in Latin America. T h e s t u d y covered t h e year 1955 and included
companies holding nearly $6 billion of assets in Latin America. These companies represent about 85 percent of all United States operations in Latin America.
T h e s t u d y showed t h a t whereas t h e net capital these companies received from the
United States a m o u n t e d to $129 million, their total investment expenditures were
about four times t h a t amount, or $570 million. T h e difference between these t w o
figures was financed out of retained earnings, depreciation, and other sources of
funds.
T h e s t u d y showed further t h a t t h e operations of these companies resulted in
direct foreign exchange income to Latin America of $2.3 billion, or $1 bilhon more
t h a n t h e total exchange required by these companies for their operations and
remittances. This $1 billion remained in Latin American countries for other
exchange purposes.
I n connection with their t o t a l sales of nearly $5 billion, wages and salaries were
paid by these companies to 600,000 employees. Moreover, approximately $1
billion was paid to Latin American Governments in various forms of taxation.
T h e revenue derived from this source became available for the financing of highways, ports, a n d other activities which the Governments have u n d e r t a k e n .
This special study, has, we believe, helped to correct one misconception about
the effect of foreign investmerit upon the financial position of recipient countries;
it does not, however, tell t h e whole story. T h e advantages of foreign i n v e s t m e n t
d o - n o t end with their final effect upon the balance of p a y m e n t s position. A
chief value of t h e investment, whether i t b e domestic or foreign, lies in its capacity
to increase the total national production of the country in which it was made.
This comes through increased productivity.
We believe in my country t h a t technical improvements and managerial knowledge which lead to increased productivity m a y be even.more i m p o r t a n t to rising
s t a n d a r d s of living t h a n growth in the stock of capitkl. T h e shortage of m a n a gerial skiUs arid technical'kriowledge m a y be more real and more pressing t h a n any
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195 7 REPORT OF THE SECRETARY OF THE TREASURY

shortage of capital. P r i v a t e investment carries with it the most highly developed
technical and managerial skill. I t brings to bear on the development process
this essential and dynamic influence to which we a t t r i b u t e so much of our own
growth.
T h e managerial experience and knowledge of techniques and skills required for
t h e successful development of resources is a prerequisite to the most effective
use of increased capital funds. The technical knowledge and managerial skijls
acquired by citizens of Latin America, both on-the-job in plants and enterprises
financed by foreign capital as well as through the quite remarkable number of
visits to the United States sponsored by both private enterprise and our technical
cooperation programs, represent for this hemisphere an ever expanding fund of
w h a t might be called managerial wealth—ari asset of incalculable value.
As we all realize, the movement of private capital cannot be forced. Private
investment flows only where the situation is attractive. I n v e s t m e n t opportunities throughout the free world are so numerous t h a t all who seek investment capital
m u s t compete for it. Even in the most highly developed countries there is a
shortage of savings for investment. Nevertheless, as the figures demonstrate
t h e Latin American Republics have been successfully competing and obtaining
a sharply expanded flow of new capital funds. In this they have been more
fortunate t h a n m a n y other areas which have not been able to devote their resources so fully to peaceful and constructive purposes.
T h e process of private capital investment can of course be facilitated. As
you know, m y Government believes t h a t toward this end, governments should
remove tax obstacles t h a t lie in the way of capital formation and private investment. This can be done both through unilateral measures, which would remove
unsound tax policies and administrative practices, and through international tax
agreements.
We have been engaged in the negotiation of broad tax agreements with a number
of countries. In addition to establishing rules in these agreements by which to
assure fair tax t r e a t m e n t , we have sought to give recognition to so-called taxsparing laws which seek to encourage the inflow of capital by granting tax reduction for limited periods of time. T h e executive departments of our Government
are trying to devise a formula by which a credit would be allowed under our laws
for the taxes given up by a country seeking to a t t r a c t capital, in the same way
as a credit is giyen for taxes actually collected by t h a t country.
T a x agreements are, of course, a m a t t e r for negotiation between the executive
branches of two governments. Like all treaties, they, must, in the United States
as in m a n y other countries, obtain t h e approval of the legislative branches of
government before t h e y can become effective. We now have several prospective
treaties in varying stages of the procedure. One, which includes a credit for tax
sparing, is now under review by the legislative bodies of the signatory countries.
We realize t h a t much is to be done toward economic development in Latin
America. I n addition to private capital, credits from public institutions are
i m p o r t a n t sources of capital. M a n y hundreds of milhons of dollars, both jDrivateand public, will be involved. We feel a sense of responsibility and will participate,
in this development. T h e extent of our effort will be determined by careftiPplanning, by the ability of countries to absorb capital, and by the assurance of realistic
benefits to the economy and the people of the republics involved.
Here my country acts directly through the E x p o r t - I m p o r t Bank. You will
recall the policy of the E x p o r t - I m p o r t Bank, first announced a t the Caracas
Conference, and reaffirmed at the Quitandinha Conference. Our Government
indicated t h a t our country would be prepared to encourage the financing of all
sound economic development projects, including loans in the private sector, in the
best interest of the countries involved, and for which private capital was not
available. This policy has, I believe, produced impressive results..
I n the three-year period ending J u n e 30, 1957, the Bank has authorized credits
of some $840 million to Latin America. I t is sigriificant t h a t more t h a n 40 percent
of the B a n k ' s total authorizations in all countries during the last ten years have
been made in the Latin American Republics. Since the Quitandinha Conference,
the Bank has extended in Latin America almost 2)^ times as much in developmerit
loans as it had extended in the similar period before t h a t Conference.
,. . .
During t h e last fiscal year, indeed, the E x p o r t - I m p o r t Bank concentrated .e.^^'fen.^
more of its development lending in Latin America. Leaving^ aside its loans for
t h e purchase of agricultural commodities and livestock, and t h e special loan to
t h e United Kingdom which was made on a secured basis, t h e Bank's total of
development loans throughout t h e world was $482 million during t h e year. Of




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211

this a m o u n t no less t h a n $354 million, or.73 percent of the total, was extended
in Latin America.
As more and more sound economic projects are developed, t h e participation of
t h e E x p o r t - I m p o r t Bank will be intensified so as to meet.expanding needs. ,,The
Interriaitional Bank for Reconstruction and Development is also an i m p o r t a n t
source of development loans, and t h e International Finance Corporation is
becoming an additional significant source.
As far as we can see ahead, we believe t h a t t h e adequacy of capital to meet
t h e needs of sound development is not a question of additional institutions b u t
t h e fuller utilization of those in being so as to keep pace with t h e expanding
needs of constructive projects as they develop.
We. are, as well, providing i m p o r t a n t credits to our Latin American neighbors,
through t h e so-called Public Law 480 agreements, under which our G o v e r n m e n t
sells quarititie^s of our ~agricultural reserves to foreign 'governments'for local,
currencies. Under these agreements, substantial portions of the sales proceeds:
are lent t o t h e purchasing governments as additional sources of economic development capital. T h u s far t h e a m o u n t s allocated for loans, or actually lent, t o
Latin American countries through this arrangement total about $250 million.
I n addition to t h e expansion of t h e technical cooperation program in Latin
America, which was announced by the United States delegation at the Quitandinha
Conference in 1954, t h e United States through the International Cooperation
Administration continued its program of emergency economic assistance to Latin
America t o help resolve problems which were beyond t h e resources of t h e individual countries. During the last year, a special regional fund authorized b y
t h e Congress of the Uriited States was the source of grants amounting to $2 million
t o t h e Organization of American States for malaria eradication and for improved
research facilities a t the Inter-American I n s t i t u t e of Agricultural Sciences in.
Costa Rica. This fund was also the source of loans totalirig nearly $13 million t o
seven cpuntries for projects in t h e fields of education,, health and sanitation, a n d
land settlement.
All of these are encouraging developments. They are further evidence of a
wholesome trend in inter-American cooperation. But let us always remember
t h a t economic development in a large and complex area cannot be reduced t o
easy simplicity. More i m p o r t a n t t h a n any other factor will be t h e individual
efforts of each people and their dedication to a program of work and savings, a n d
t h e orderly m a n a g e m e n t of their own government and economic affairs.
Heartening as t h e flow of foreign capital into Latin America may be, we are
all fully aware t h a t such capital can, at the best, make only a partial contribution
to the total investment requirements of an expanding economy. T h e accumulation of domestic savings and the application of those savings in productive activity
are essential to sound economic progress. We must not lose sight of this import a n t fact. We should s t u d y with great care the general conditions which are
necessary to encourage domestic private savings and t o insure t h a t these are
used productively in t h e domestic economy.
You and I, as ministers bearing t h e principal responsibility for our governments
in this field, can find real encouragement in t h e current rate of development' in
our countries, b u t we riiust ask'^ourservesi .-afe^we justified in complacepc-y.^^^
satisfaction? We are not. The energetic and farsighted peoples of all' o f o u r
Republics demand t h a t we find effective ways to bring to more and more millions
of people throughout t h e hemisphere those standards of living which are attainable
if we make the best use of our h u m a n and natural resources and our capital.
I t is to consider ways of meeting this challenge t h a t we are. here.. I t will
never be simple to p u t together our natural resources, labor, and capital so as t o
produce the requirements of a rapidly growing population and, at t h e same time,
raise per capita standards. I t will always be a challenging task.. I t requires
unrelenting effort t o improve technology. I t requires improvement in organzation and skills. I t will depend upon the people and the leaders of each of our
countries and tlieir-willingness to.work, and save, and encourage efficiency.,.
T h e delegation-froni. ^ m y c ^
will apprpach this challenge with sincerity.
We'%1^1 n o f t u n d e r e s t i r & t i ; t h e problems of t h e future. :^Npne^f us wishes t o
encourage unjceasonabie. or impractical expectations. But I hope t h a t we all
share the conviction that\wlienrthe%time comes for us to return to pur respective
countries it will be with the knowledge t h a t each of us has made a contribution^
t o t h e discharge of our historic responsibility to make of these lands a b e t t e r
home for all of our citizens and for our children, and a better heritage for o t h e r
generations of Americans.




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1957 REPORT OF THE SECRETARY OF THE TREASURY

E X H I B I T 18.—Statement by Secretary of the Treasury H u m p h r e y , M a r c h 15,
1957, before the Senate Banking and Currency Committee on the a m e n d m e n t
to the Anglo-American Financial Agreement of 1945
President Eisenhower sent t o t h e Congress on March 6 a message transmitting
ari a m e n d m e n t to t h e Anglo-American Financial Agreement of 1945. The
President stated in his message:
" T h e a m e n d m e n t t o t h e agreement is a common sense solution which a t t e m p t s
to carry out t h e spirit of t h e agreement in a way t h a t is practical and fair to
b o t h parties.
" I recommend t h a t t h e Congress enact legislation approving t h e action of t h e
Secretary of t h e Treasury in signing t h e a m e n d a t o r y agreement on behalf of t h e
United States."
I ani" here t o d a y to support t h e President's recommendation.
. This a m e n d m e n t to t h e agreement was signed, for t h e United States by me as
Secretary of t h e Treasury, and for t h e United Kingdom by Sir Harold Caccia,
the British Ambassador. I t becomes effective after it has been approved by t h e
Congre.ss of t h e United States a n d appropriate p a r l i a m e n t a r y - a c t i o n - h a s been
taken.
For some time prior t o 1956 t h e United Kingdom h a d informally iridicated a
desire t h a t consultations t a k e place to clarify t h e provisions of the Financial
Agreement relating to t h e waiver, t h a t is, t h e forgiveness, of interest. Consultations are provided for in Section 12 of the agreement.
Last December t h e Government of the United Kingdom, acting on its understanding of t h e provisions of t h e 1945 agreement, informed t h e Government of
t h e United States t h a t the United Kingdom claimed a waiver of t h e interest portion ($81.6 million) of the December 31, 1956, p a y m e n t , and set t h a t a m o u n t
aside pending consultations. There followed discussions a n d consideration by
representatives of the United Kingdom a n d the United States looking to a p p r o priate modifications of t h e language of t h e 1945 agreement, t h e modifications
being designed to carry out t h e spirit of t h e original document.
. T h e Anglo-American Financial Agreement was signed on December 6, 1945,
a n d was approved b y t h e Congress after full debate on J u l y 15, 1946. T h e agreem e n t authorized a 50-year loan to t h e United Kingdom of $3% billion at 2 percent interest. R e p a y m e n t was to be made in equal annual installments of about
$119,336,250 covering b o t h principal and interest, beginning December 31, 195i.
A settlement of lend-lease a n d surplus property obligations in t h e a m o u n t of
approximately $650 million on t h e same terms was also made on December 6,
1945, with annual installments of about $19 million. The total annual installm e n t of principal and interest is $138.4 million. Under these arrangenients t h e
United Kingdom has paid $348.4 million in principal and $424^6 million in interest, representing p a y m e n t in full of installments due in 1951-55, and the principal
installment for 1956.
I t has been evident for several years t h a t t h e applicability of the waiver clauses
is not now. clear, because of changes in conditions sirice the time when the agreenient was signed. On t h e other hand, t h e spirit of t h e agreement, t h a t the
United Kingdom should have some relief when its international exchange situation so w a r r a n t s , is perfectly plain.
. T h e proposal before you would replace t h e waiver provisions with a simple and
clearly expressed authorization for t h e United Kingdom to postpone Aip to seven
installmerits of principal and interest under the Financial Agreement and the
related settlements. -The first of any, such deferred installments would be paid
in t h e year 2001 and the others annually thereafter, in order. I n addition, the
Decernber 31, 1956, interest installment" would not be. forgiven b u t would be
•deferred until after the other^payments under the.agreement h a v e been completed.
•Interest would be paid annually on each defefi^ed installment. I n short, the provision for forgiveness of interest in certain circurnstances would be replaced by
:an a r r a n g e m e n t under which the United States would be entitled to receive ultim a t e p a y m e n t in full of both interest and principal of t h e loan.
T h e provisions in the agreement dealing with the waiver of interest which would
t)e replaced under this proposal are Sections 5 a n d 6 ( i i i ) . Section 5 provides t h a t
t h e United Kingdom m a y obtain a waiver of interest when its foreign exchange
income is not sufficient to meet its prewar level of imports, adjusted to current
prices. Section.6 (iii) specifies, however,, t h a t waiver wfll not be permitted in. any




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213

year unless "releases or p a y m e n t s " , of sterling balances accumulated before t h e
d a t e of the agreement are reduced proportionately. I n other words, in 1956,
when interest was about 60 percent of the a m o u n t due us, the a m o u n t which
could be paid on the remaining 1946 sterling balances due from the United King.dom to foreign countries would have h a d to be cut down by 60 percent.
These provisions have not proved workable. Section 10 of the agreement noted
t h e United Kingdom's intention to m a k e certain arrangements with her sterling
creditors with regard to t h e balances then outstanding. P a r t of the balances were
to be made fully available a t once..and:..another p a r t were to be "adjusted" or
written off as a contribution by the creditors to the settlement of wartime indebtedness. A third portion of the balances was to be released by installments
over a period of years beginning in 1951, t h e first year in which p a y m e n t s were t o
begin on our loan. Sterling balances t h u s scheduled would be a clearly identifiable debt and releases or p a y m e n t s thereon would also be identifiable. Despite
vigorous efforts by the United Kingdom, a settlement of this kind did not prove
feasible.
At t h e time the agreement came into effect on July 15, 1946, the sterling holdings of foreign countries covered by Section 6 (iii) amounted to approximately
$12 billion. They were held b y m a n y countries t h r o u g h o u t t h e world. • For
most of these countries their sterling holdings represented their principal, if n o t
their only, significant international assets^.
The holders of these balances had felt wartime shortages of international commodities for a number of years, and looked upon these holdings of sterling as a
reserve to.be used to meet their heavy postwar requirements of goods and serviced.
Consequently they were not generally willing to write t h e m off or to freeze therii
in a funding arrangement which would limit annual "releases or p a y m e n t s " to a
fixed amount.
Under these circumstances there is no practical method to determine w h a t if
any p a r t s of "releases or p a y m e n t s " made in any year are applicable to the wartime balances as provided in Section 6 (iii).
T h e balances existing in 1946 have become confused with postwar accruals
through the constant flow of foreign exchange transactions. T h e present sterling
balances constitute essential working balances and reserves of m a n y countries.
Any significant curtailment of the availability of these balances could cause
serious financial problenis for the countries holding them. I t is also t r u e t h a t
t h e dollar value of these balances was sharply reduced by the devaluation of sterling in 1949, whereas the value of the repayments due us was not affected a t all.
T h e provision on the prewar level of imports is also h a r d to apply. I t expressly
depends in p a r t upon a calculation which would involve the annual "releases or
p a y m e n t s " from t h e sterling balances which, as I have just indicated, are not now
possible of determination. F u r t h e r m o r e it is subject to a number of complex
statistical questions, such as t h e difficulty of adequately measuring price changes
in a very large basket of commodities over t w e n t y years marked b y war a n d
inflation.
T h e British have always emphasized, and we concur, t h a t the spirit of t h e 1945
agreement was to provide relief to their currency by easing their debt servicing
problem when the pound was under strain. They have repeatedly suggested t h a t
with changed conditions the complicated waiver provisions prevented any m u t u a l
understanding as t o when and under w h a t circumstances this relief would be
effective. For five years, they have nevertheless made the p a y m e n t s in full,
without claiming w h a t they believed to be their right to a waiver.
I n 1956 t h e United Kingdom faced a serious lack of confidence in sterling.
They m e t this by short-term borrowing. At t h e same time they claimed t h e
waiver under t h e agreement. We consulted with t h e m with a view to working
out arrangements to replace t h e waiver with a limited number of postponements.
T h e .British have agreed to give up any right to claim cancellation of interest.
Although they firmly believe t h a t they are entitled to cancellation, and t h a t this
right would be advantageous to t h e m in t h e future, t h e y have recognized t h e
problems involved in a t t e m p t i n g to make an objective determination under t h e
provisions of t h e 1945 agreement. I t is also clear t h a t it is not practicable from
any point of view to handle t h e sterling balances of foreign countries in t h e way
t h a t was anticipated.
Both parties are agreed t h a t t h e desirable course is to make effective the simple
postponement provisions which I have outlined. T h e Canadian Government has




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1957 REPORT OF THE SECRETARY OF THE TREASURY

reached t h e same conclusions with regard to its loan to the United Kingdom made
in 1946 under terms similar to those in our agreement. If t h e British availed
themselves of the right to postpone, they would do so simultaneously under the
American and Canadian agreements.
T h e proposed a m e n d m e n t is a fair and businesslike arrangement. I t comes as
close to the spirit of the original agreement as is possible under t h e present circumstances. I urge t h a t it be approved b y your committee.

E X H I B I T 19.—Agreement between the Governments of the United States and
the United Kingdom, M a r c h 6, 1957, to a m e n d the Anglo-American Financial
Agreement of 1945
Subject to the provisions of p a r a g r a p h 3 hereof, it is hereby agreed between
t h e Government of t h e United States and the Government of t h e United Kingdom
of Great Britain and Northern Ireland as follows with regard to t h e Financial
Agreement executed by t h e m on December 6, 1945:
1. Section 5 is amended to read:
5. Deferment of annual installments.—(i) In any calendar year after December
31, 1956, in which t h e Government of t h e United Kingdom advises the Governm e n t ot t h e United States t h a t it finds t h a t a deferment is necessary in view of
t h e present a n d prospective conditions of international exchange and the level of
its gold and foreign exchange reserves, the Government of t h e United Kingdom
rriay defer t h e p a y m e n t of t h e annual installment for t h a t year of principal repaym e n t and interest specified under Section 4. N o t more t h a n seven (7) annual
installments m a y be so deferred. T h e first of any such deferred installments
shall be paid on December 31, 2001, and the others shall be paid annually thereafter, in order.
(ii) I n addition, the installment of interest in respect of the year 1956 is
hereby deferred, in lieu of any right of waiver hitherto existing. This installment
shall be paid on December 31 of the year following t h a t in which t h e last of all
other installments, including installments deferred under the preceding paragraph,
is due.
(iii) Deferred installments shall bear interest at the rate of 2 percent per
annum, payable annually on December 31 of each year following t h a t in which
deferment occurs.
(iv) P a y m e n t of deferred installments m a y be accelerated, in whole or in
part, a t t h e option of the Government of t h e United Kingdom.
2. Section 6 is amended to read:
6. Relation of this line of credit io other obligations.—The Government of the
United Kingdom undertakes not to defer an installment under Section 5 of this
Agreement in any year, unless it also defers the installment due in t h a t year
under t h e Financial Agreement between t h e Government of C a n a d a and t h e
G o v e r n m e n t of t h e United Kingdom, dated March 6, 1946.
3. This Agreement shall become effective when t h e Government of t h e United
States has notified t h e Government of the United Kingdom t h a t the Agreement
has been approved by t h e Congress and t h e Governnient of the United Kingdom
has notified t h e Government of the United States t h a t the appropriate Parlia m e n t a r y action has been taken.
Signed in duplicate this 6th day of March, 1957.
For t h e Government of the United States of America:
G.

M.

HUMPHREY,

Secretary of the Treasury of the
United States of America.
For t h e Government of t h e United Kingdom of Great Britain and Northern
Ireland:




HAROLD

CACCIA,

Her Majesty's Ambassador Extraordinary
and Plenipotentiary ai Washington.

EXHIBITS

215

E X H I B I T 20.—Letter from M r . G. F. Thorold, Economic Minister of the British
E m b a s s y , April 8, 1957, to the Secretary of the Treasury stating that appropriate Parliamentary action had been taken on the agreement amending the
Anglo-American A g r e e m e n t of 1945
BRITISH

EMBASSY,

Washington, April 8, 1957.
M Y D E A R M R . SECRETARY: In conformity with p a r a g r a p h 3 of the Agreement
of March 6th, 1957, amending the Financial Agreement of December 6th, 1945,
I am instructed by m y Government to inform you t h a t the appropriate Parliam e n t a r y action has been t a k e n in the United Kingdom.
Yours sincerely,
G.

F.

THOROLD.

E X H I B I T 21.—Letter from Secretary of the Treasury H u m p h r e y , April 25, 1957,
to the British Ambassador stating that Congress had approved the agreement
amending the Anglo-American Financial Agreement of 1945
TREASURY

DEPARTMENT,

Washington, April 25, 1957.
M Y D E A R M R . AMBASSADOR: T h e Agreement of March 6, 1957, amending the
Anglo-American Financial Agreement of December 6, 1945, has been approved
by the Congress.
P u r s u a n t to p a r a g r a p h three of the a m e n d a t o r y Agreement and in view of
your letter of April 8, 1957, notifying this Government t h a t t h e appropriate
P a r l i a m e n t a r y action has been t a k e n in the United Kingdom, t h e a m e n d a t o r y
Agreement becomes effective upon your receipt of this notice.
Sincerely yours,
GEORGE

M.

HUMPHREY,

Secretary of ihe Treasury.

EXHIBIT 22.—Statement by'^ Secretary of t h e Treasury Anderson as Governor
for the United States, September 23, 1957, at the twelfth annual meeting of
the International Bank for Reconstruction and Development and the International Monetary Fund
First I should like to associate myself with the welcome t h a t our country has
expressed t h r o u g h President Eisenhower and to extend m y own welcome to m y
fellow governors a n d members of their delegations. This is the first time t h a t
I have represented the United States on the Board of Governors, a n d I anticipate
an interesting a n d rewarding week of association with them.
This has been a very active year for both the Bank a n d the Fund, and m y
Government is gratified t h a t these institutions have continued to serve the free
world so well. I t is a pleasure to have Mr. Jacobsson sitting with us as Managing
Director of the Fund, after his long and distinguished career in economics a n d
finance.
Our Government is also pleased to welcome to membership four new
members who are sitting with us for the first time—Ghana, Ireland, Saudi Arabia,
and the Sudan. At this meeting we shall also participate in reviewing the first
annual report of the International Finance Corporation, which has now m a d e
initial investments which bode well for the future of this new institution.
I approach this international p a r t of m y duties as Secretary of the Treasury
with enthusiasm. M u c h of m y business experience has been in the international
field, and m y association with the D e p a r t m e n t of Defense of the United States
gave me a vivid awareness of the great range of problems which concern all of us.
During the year which we are reviewing, the Bank is to be congratulated on its
steady a n d continuing efforts to help develop projects a n d to provide useful
technical advice to its members. When we look back over the Bank's record, it
is most interesting to realize t h a t the loans of the Bank are now helping members
in projects to a d d to their power-generating capacity throughout the world more




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1957 REPORT OF THE SECRETARY OF THE TREASURY

electricity t h a n was ayailable in the whole of Latin America a t the time t h a t t h e
B a n k began its development financing. Yet loans for electric power comprise
only a b o u t one-third of t h e 2}i billion dollars t h a t the Bank has loaned for development. Transportation has received nearly as much, and industry a n d agriculture have been accorded loans which together represent one-third of the total.
As the operation of the Bank continues to expand, its continuing success in
raising capital on the capital m a r k e t s of the world is gratifying. I n the last year
a b o u t half of the funds raised by the Bank t h r o u g h new borrowings was provided
by investors outside of t h e United States. I n a very real sense t h e Bank is
becoming more and more international as it draws upon the savings of m a n y
countries. This is most desirable.
Also during the year i m p o r t a n t releases of capital have been made by countries
in the Western Hemisphere, the F a r East, Africa, a n d Europe. Although about
$600 million of the capital originally subscribed by members has not been yet
m a d e available for Bank lending, m y Government is glad to see t h a t the Bank
has crossed the billion-dollar m a r k in recording subscriptions of capital which
are either partly or fully available for lending operations.
The Bank's operations have t a k e n place against a background of truly vigorous
economic growth. Capital investment in general has gone forward a t an even
greater pace t h a n the unusually high level of the previous year. I n a number of
countries a very high proportion of total o u t p u t continues to be invested, as
compared with earlier decades. World trade has grown very sharply during t h e
past year. Production has expanded in industry, agriculture," a n d mining.
Postwar gains in production and t r a d e have not only permitted the servicing of
existing foreign loans, b u t have enabled countries in need of development t o
expand their external borrowings very markedly in the past ten years.
The technical assistance which it has been providing to the member nations
is a most i m p o r t a n t aspect of its activities. The Bank has given increasing help
t h r o u g h its advisers on the technical aspects of developnient work, and t h e
difficult stage of converting general ideas into bankable a n d well-engineered projects. I t has also continued to recruit a n d train advisers on econom.ic and financial
policies, railway and port administration, banking legislation, and other subjects.
The Economic Development Institute is also proceeding with gathering m o m e n tum.
We can all t a k e pride in the effectiveness with which the F u n d has effectively
demonstrated during the past year its usefulness as a revolving source of shortterm assistance to smooth out t e m p o r a r y disturbances in the world p a y m e n t s
situation. During this most active fiscal year of its existence, the F u n d acted
decisively a n d expended or committed a very large a m o u n t of its resources. We
can only speculate as to the position in which we might now find ourselves if the
F u n d had not been in existence, and had not been able to act as it did. We believe,
however, t h a t the active a n d vigorous course t h e F u n d pursued has been an
i m p o r t a n t factor in maintaining the m o m e n t u m of world trade and prosperity
during the past year. Through the breathing space and the reassurance in t h e
short-run provided by the Fund, the opportunity has been given to effect t h e
necessary longer-term adjustments, without a relapse into throttling restrictions
on international financial a n d t r a d i n g transactions. The F u n d will need to
reconstitute its resources, through r e p a y m e n t of the recent drawings, in convertible currencies, as it did in t h e years before 1956. In this way its revolving
character will be maintained, and it can meet new situations if and when they
arise again.
•
At the same time the F u n d has continued its steadfast efforts to promote
stronger financial structures a n d improve exchange systems, through its technical
advice a n d consultations and its financial participation in stabilization programs.
Increasingly the F u n d provides advice to its members on various aspects of financial problenis such as central banking, money markets, and public finance, as well
as the complexities of exchange policies per se. I n all of its consultations with
•members, a n d in the technical advice it gives to members, the F u n d emphasizes
t h e essential character of financial stability. I t is a good and proper thing t h a t t h e
policies of our two institutions in the use of their resources are keyed to the
progress which menibers make in arriving at economic and financial stability,
both in their economies a n d in their external transactions.
Although we can look back upon the previous j^ear, and take a great deal of
satisfaction in the expansion of production, world trade a n d world investment,
we cannot ignore problems a n d difficulties which remain before us. One m a t t e r
of continuing concern to us is the effect of inflationary pressures upon our econo-




EXHIBITS

.

.

217

mies. Most of us are heads or senior officials of treasuries and central banks a n d
a,nd our institutions bear a heavy share of responsibility for the strength of t h e
currencies of our countries, t h e solvency of our governments, and the soundness of
our financial systems.
. - .
Inflationary pressures, as President Eisenhower stated and as the chairman
reiterated, are, as of now, world-wide. Nearly everywhere costs and prices are
rising a n d demands for capital press heavily on t h e supply of savings. We are all
agreed t h a t these inflationary pressures m u s t be resisted. Of necessity, m a n y
difficult a n d troublesome decisions m u s t be made if we are successfully to encourage enduring values. I n the United States, though the rate of inflation has
been less than in m a n y countries, we are exerting our continued efforts to deal
with the situation. Our cooperative action as members of the Bank and F u n d
can mutually reinforce our individual efforts in the continuing vigil we m u s t keep
to a t t a i n economic growth along with, a n d based on, sound money.
For this reason this morning, I w a n t to emphasize the interdependence of all
of us upon the success of each of us in maintaining prosperity based on money of
enduring value a n d all t h a t this means in better, fuller lives for our people. E v e r y
governor a t this meeting is concerned with niaintaining a sound currency for his
country's economy. There is no other successful basis for durable, lasting, economic growth in a n y country.
T h e costs of inflation are heavy and t h e benefits of stability are great. Inflation
destroys existing savings and discourages new savings. Money markets become
unstable; m a n y businessmen, large and small, flnd it difficult to borrow; real
estate becomes t h e favorite investment; and income distribution becomes more
uneven and more inequitable. Such economic growth as occurs is frequently
poorly balanced so t h a t resources are wasted in half-completed or otherwise
inoperative projects.
I n t h e United States, our progress in achieving t h e objectives of a sound currency and an expanding economy has given us both satisfaction and concern. I n
this country, as in most of yours, we have had great prosperity during the past
year. Our prosperity, however, has been accompanied by some rising prices.
These price advances indicate, among other things, t h a t we have been trying t o
invest more t h a n we have actually saved out of our earnings.
E v e n though we feel t h a t we are gaining in t h e battle of inflation in t h e United
States, we cannot relax our efforts for one moment. As new ideas appear, we
must consider t h e m soberly. As new facts appear, we m u s t analyze t h e m carefully. We must take every precaution to assure t h a t we are doing everything
t h a t is h u m a n l y possible to keep inflation down and to keep America growing
and strong.
We believe th.at economic growth can march hand in hand with soundness in
morietary values. I n my view, this must be the objective of our separate national
efforts to meet the problems t h a t will constantly confront us.
A basic goal of t h e nations represented in these meetings is the development of
mutually beneficial t r a d e among t h e free nations of t h e world. This expansion
of t r a d e is not to be had merely for the asking. I t can be based only on competitive conditions of price and supply.
We believe t h a t one of t h e most i m p o r t a n t things t h a t t h e United States can
do to further world t r a d e is to maintain the American economy at a high level
with production expanding, and at the same time avoiding inflation. Our expanding production will require larger imports which will be beneficial to t h e
economies of other countries, which, in turn, can buy our exports.
None of us thinks of trade as an end in itself. Trade is i m p o r t a n t both for
economic reasons and m u t u a l understanding. The ultimate objective is to
improve the lives of people and their standards of living. And this is why we
m u s t all follow policies directed toward maintaining our own stability and our
own prosperity, which will be beneficial in the long run for all the free peoples
of t h e world.
The year t h a t has passed since our last annual meeting has been marked by a
sharp expansion in world trade. • T h e expansion in world trade has not been
evenly distributed throughout t h e trading countries, partly because of the differing intensity of inflationary pressures among t h e various countries. As a result,
substantial deficits in p a y m e n t s positions have developed in some areas, while
others have recorded significant increases in their international reserves.
The credit facilities of t h e F u n d have been called upon to enable some members
t o gain time to adjust their international accounts. I t is noteworthy t h a t these
adjustments continue for t h e most p a r t to be pursued by broad measures of




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195 7 REPORT OF THE SECRETARY OF THE TREASURY

fiscal, monetary, and economic policies t h a t are designed to strengthen the
fundamental position of t h e currency and t h e economy, rather thari through
nieasures which restrict world trade and isolate a country's economy. This, we
are convinced, is t h e right course.
We are living in a world subject to m a n y changes in t h e currents of international
payments. Recent developments in our own international accounts represent a
decided change from the position which prevailed during t h e six months October
1956 through March 1957.
Considerable attention has been drawn to the fact t h a t during t h a t six-month
period t h e transactions of the United States with the rest of the world resulted
in losses of about one-half billion dollars in the gold and dollar position of t h e
rest of the world.
Let us remember t h a t in t h e six years beginning with 1950, and through t h e
first three quarters of 1956, United States international transactions had been
marked by continuous gains of gold and dollar assets by the rest of the world,
amounting in all to nearly $13 billion. Preliminary figures for the second quarter
of 1957 show a sharp change from t h e first quarter results, and a return to t h e
earlier situation in which t h e world was gaining dollars. Our exports of goods
and services continued to exceed our imports by about t h e same margin as in the
first quarter. There was, however, a very large increase in private United States
capital investment abroad. T h e result of this record movement of private
United States capital and the rest of our international transactions in this quarter
was t h a t t h e rest of t h e world gained from us almost $200 million in gold and
dollar assets.
As the President stated, we are all fully aware and recognize the importance of
a helping hand, particularly to underdeveloped countries, although I am sure
t h a t we all agree t h a t in normal circumstances the well-being of any nation
depends primarily on a sound domestic economy. If this economy is to grow
a t a stead}^ rate, it m u s t provide the conditions in which capital can be invested
to finance the construction of plant and equipment, power and tools, a n d all the
thousands of other things which make for production and jobs, and the advancing
productivity out of which compensation can be paid without inflation. Both
domestic accumulation of capital and foreign investment can be encouraged by
sound fiscal policies which give the investor assurance t h a t his capital will be
preserved a n d t h a t it can earn income for him.
I n t h e making of our economic decisions, each of our countries in the long run
should strive for the maximum expansion of its productive capacity through the
investment of its own savings. As conditions become more attractive, private
investment would be expected to provide international financing with less dependence on the budgets of any of the countries of the free world. The burdens of
our respective taxpayers a n d the consequent restraints upon each of our budgetary
outlays constantly remind us t h a t there do exist limitations upon our several
abilities to meet government expenditures in the domestic and the international
fields.
I t is well for us to remember t h a t credit can be generated by various means
which could impose undesirable consequences, b u t true capital m u s t be saved by
the h a r d process of sound planning and careful expenditures.
All these things go h a n d in hand. The well-being of t h e peoples of the world
is dependent upon the development of sound economies in the individual countries.
I n this effort, t h e nations of the world are interdependent, for the accumulation
of capital, the flow of investment, and t h e expansion of trade are m a t t e r s of
common concern.
Furthermore, t h e a t t a i n m e n t of the maximum results and benefits requires t h e
concerted efforts of the governments of the various countries a n d these institutions which are meeting here today. As we have seen, a t t h e base of it all m u s t
be a pursuit in each of our nations of those m o n e t a r y and fiscal policies which will
result in healthy, stable, and growing economies. Only t h e n can we secure for
our peoples more and more of the better things of life.
E X H I B I T 23.—Statement by U n d e r Secretary of t h e T r e a s u r y Burgess as T e m porary Alternate Governor for t h e United States, September 24, 1957, at t h e
twelfth annual meeting of the International Monetary F u n d
Let me join with others in expressing great satisfaction with t h e report of t h e
F u n d which we have before us, with its completeness a n d the quality of its analysis
of t h e problems with which we are faced.




EXHIBITS

219

Let me particularly express our appreciation for the brilliant address given this
morning by Per Jacobsson a t the conclusion of his first year with the F u n d .
I t h i n k we all will carry home with us a new understanding of t h e problems we
have faced and a new faith in our power to solve t h e m .
I was particularly impressed by his analysis of the European situation, and,
for m y country, let me also express very great satisfaction a t the very firm s t a t e m e n t t h a t has been m a d e by the representative of the United Kingdom and t h e
correspondingly very helpful s t a t e m e n t b y the representative of the Republic of
Germany.
This has been, as has been said, a very active year for the M o n e t a r y Fund, as
t h e r e p o r t a n d t h e address of the Managing Director have a m p l y set forth. i?he
F u n d ' s actual transactions have reached an alltime high, a n d it has also increased
t h e a m o u n t of its s t a n d b y arrangements to a record level. If there were any
doubts before, certainly now the F u n d has a m p l y demonstrated its great value
to t h e member countries. I t has shown its capacity to support confidence in
currencies a t crucial moments, and to meet difficult situations swiftly, effectively,
and quietly.
T h a t the F u n d could meet t h e challenge of the events of the past twelve m o n t h s
is not an accident. I t is due to three main facts. The first is t h a t t h e F u n d
established a body of principles to guide it a n d the members both in the devising
of policies and in the use of its resources. The second is t h a t the F u n d patiently
acquired experience during the quieter years of its existence. The third is t h a t
t h r o u g h analysis a n d t h r o u g h consultation with members, the F u n d has assisted
members in devising sound policies and programs of action.
First, a word about consultations. The F u n d ' s consultations with its members
during the past year have carried missions to m a n y countries. On t h e occasion of
these visits, either as p a r t of the annual consultations or as t h e result of special
requests, t h e F u n d has h a d an opportunity for frank discussions with the responsible officials of the member countries. I t has given sound advice, which in
a great m a n y cases has been followed with good results.
A n u m b e r of countries have undertaken general programs of financial stabilization or exchange reform with t h e F u n d ' s advice. Others have t a k e n less conspicuous, b u t nonetheless significant, steps to improve their international position
by domestic measures or by simplification of exchange structures.
Standby
arrangements with t h e F u n d have given several of these countries effective
support.
T h e F u n d report ably summarizes t h e financial situation of t h e member countries. I t notes t h e general increase in gold and dollar reserves on the p a r t Of m e m bers, and also shows t h a t this accretion of m o n e t a r y reserves has not been uniform,
and t h a t some countries have lost reserves. The F u n d report notes t h a t in 1956,
other countries gained $545 million in gold and official dollar assets in transactions
with t h e United States, compared with over a billion in the preceding year. I
should like to point out, however, t h a t , by making t h e comparison in terms of
official holdings, t h e report does not include the dollar holdings of foreign private
banks, businesses, and individuals. These private holdings, in the form of b a n k
balances or short-term investments, are available for purchasing goods and services from t h e United States. As exchange restrictions are relaxed, presumably a
larger share of dollar holdings will appear in private accounts. This factor should
be given its proper weight in surveying changes in the world balance-of-payments
picture, particularly as t h e y relate to dollar reserves.
If private holdings are included, total foreign holdings of gold and liquid dollar
assets increased in 1956 by about $1 billion. I n addition, foreign direct and portfolio investm.ent in the United States increased by over a half-billion dollars, without taking into account unrecorded capital movements t h a t form a p a r t of t h e
sizable residual item in our international accounts. Since t h e overall figures
reflect reduced holdings of about $600 milhon by international institutions, it
would appear t h a t foreign countries actually increased their total gold and dollar
assets in 1956 by more t h a n $2 billion.
Now just a word about t h e world economic situation. Increased production
a n d high levels of employment of resources in labor and materials are the principal
means of improving living conditions t h r o u g h o u t t h e world, a fundamental purpose
of t h e free nations as well as of t h e International Monetary F u n d . But, as we all
have discovered, prosperity brings difficult problems, as do periods of industrial
stagnation. T h e most challenging present task is to reconcile t h e beneflts of
prosperity through high levels of production and employment with m o n e t a r y
a n d price stability, without which m a n y of these benefits will be dissipated




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1 9 5 7 REPORT OF T H E SiECRETARY OF T H E

TREASURY

through a shrinking value of money. Inflation, as has been said m a n y "times in
these meetings, destroys confidence in t h e future value of-currencies, which is the;
essential basis of all savings. Even now, savings have lagged behind t h e d e m a n d
for capital. T h a t every country should strive to push economic development as
rapidly as practicable is fully understandable, b u t w h a t is needed is a steady
economic growth based upon noninflationary finance.
• T h e United States is resolved to preserve its economy on a-sound basis. This
is n o t for us alone, b u t for t h e rest of the world, which needs to know t h a t this
country will continue operating a t a high level and with financial stability. I t is
our j u d g m e n t t h a t there is no contradiction between these two objectives. We
have tried t o deal with our inflationary trend by those well-known devices of a
budgetary surplus, or a small one, and a tightening of credit rates and interest
rates, in response t o t h e increasing demand for borrowed capital.
T h e United States is resolved to check inflationary pressures existing in its
economy. We are equally committed t o t h e preservation of our international
gold bullion standard. T h e dollar has traditionally been firmly linked to gold,
and it is our policy t o keep it firmly linked to gold a t $35 an ounce.
Now, a word as t o t h e use of t h e Fund. I n t h e past year there have been
balance-of-payments deficits on t h e p a r t of some of our members related in p a r t
t o t h e underlying inflationary trends which have been discussed so well in t h e
F u n d report, and in p a r t t o unusual events. At this juncture, t h e use of t h e
F u n d ' s resources provided an i m p o r t a n t support t o t h e reserves of these countries
which were in difficulty.
• As noted by t h e Managing Director, t h e F u n d ' s capacity to meet the requirements of this past year depended in p a r t on repurchases of drawings of previous
years. The F u n d has been a revolving fund, a n d its future vitality depends on^
its continuing t o h a v e t h a t character. T h e F u n d and its members m a y properly
t a k e pride in t h e record of F u n d repurchases. By 1956, most of the drawings
which h a d been outstanding from previous years h a d been reversed. T h e results
showed t h a t t h e F u n d ' s resources were revolving.
. Vital t o t h e F u n d ' s success has been t h e establishment of agreed policies regarding currency purchases a n d repurchases. T h e so-called gold t r a n c h e is freely
available, and t h e F u n d has been liberal in extending t o niembers t h e use of t h e
first credit tranche, if they are taking reasonable steps t o deal with imbalance.
B u t t h e F u n d has rightly insisted t h a t larger drawings require substantial justification in t h e form of decisive programs of action. T h e F u n d ' s resources are t h u s
available t o assist countries to t a k e those measures which are necessary t o b r i n g .
about an effective equilibrium in their international accounts, particularly countries undertaking comprehensive programs of financial a n d exchange reform.
We look back with satisfaction at t h e development of t h e F u n d over the past
few years. We are sure t h a t t h e F u n d will continue to make an effective and
i m p o r t a n t contribution t o international economic cooperation.
May I add a personal word. This is t h e fifth meeting t h a t I have sat here
when t h e F u n d report was being discussed. This is t h e last in which I shall sit
here representing t h e Treasury, for I am going in a few days to Europe to be t h e
representative of m y country on N A T O and t h e European Economic Organizations.
. Let me say t h a t I" have appreciated enormously t h e meeting with this group
of people representing this wide range of countries, and with t h e cooperative .
point of view which I a m sure means a great deal in t h e future of monetary and
economic affairs in t h e world.
I believe t h a t one can go t o a new t y p e of economic cooperation greatly strength- .
ened by t h e experience of t h e F u n d and t h e Bank, which has demonstrated, as
I believe never before, t h e effectiveness of international cooperation.EXHIBIT 24.—Statement by Under Secretary Designate Baird, September 27,
1957, at the first annual meeting o f t h e International Finance Corporation
On behalf of t h e United States Government I should like t o say t h a t my G o v - '
e r n m e n t has noted t h e progress of t h e International Finance Corporation with ;
great interest a n d encouragement. We believe t h e Corporation is t o be congratulated on having made such a diversified and hopeful s t a r t in its investments.
Now t h a t t h e practical experience has begun to point t h e way, we hope t h a t .
in t h e coming year a much larger n u m b e r of projects will be found suitable for
financing by the Corporation and will be brought to fruition.




,^^^,.^.. _.,^,.„,

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.EXHIBITS^

_

,.. . ^

22.1

, Your address, this morning, Mr. President, offered an unusually clear and
impressive s t a t e m e n t of w h a t m a y be expected from private enterprise -in t h e
development of our member countries. I am sure if t h e principles which you
outlined are appreciated and followed, we can look forward to a sound a n d continuing growth in the standards of living of t h e peoples of the free world.

iExHiBiT 2 5 . ^ P r e s s release, July 3 1 , 1956, announcing the temporary placing
u n d e r licensing procedure of the assets in this country belonging to the Suez
Canal Company and the Egyptian Government
T h e Treasury announced today t h a t it h a d temporarily placed under licensing
procedure t h e assets in this country of t h e Suez Canal Company and E g y p t i a n
Government pending determination of the ownership of these assets and clarifica^
tion of the existing ^situation. All transactions with respect to such assets will
be subject to Treasury license.. "This action does not in any way affect private
Egyptian funds.
E X H I B I T 26.—Press release, August 3, 1956, announcing the issuance of a
General License u n d e r the Egyptian Assets Control Regulations
T h e Treasury announced t o d a y t h a t k h a d issued the followirig General License
urider t h e E g y p t i a n Assets Control Regulations:
. ,
"Section 510.502. License authorizing current transactions. Except for transf
actions with respect to any funds ox other property which, as of the effective d a t e
of the Regulations, were blocked thereby, all transactions subject to Section
510.201 (the original order) are licensed, provided t h a t any p a y m e n t by or on
behalf of any ship owner or ship operator subject to the jurisdiction of the United
States m a d e in E g y p t or to t h e Government of E g y p t or any instrumentality
thereof :with respect to charges in connection with the transit of the Suez. Canal
is licensed only if accompanied by a s t a t e m e n t t h a t the p a y m e n t is m a d e 'under
protest and without prejudice t o all rights of recovery or otherwise.' "

E X H I B I T 27.—Press release, D e c e m b e r 15, i956, on the signing of an exchange
agreement between the United States arid Bolivia
Under Secretary of t h e Treasury W. Randolph Burgess, t h e Bolivian- Ambassador, Senor D o n Victor Andrade, and t h e President of t h e Central Bank of
Bolivia, Dr. Franklin Antezana Paz, have signed an exchange, agreement designed
t o support a comprehensive Bolivian program for abolishing trade and exchange
controls and attaining increased economic stability.
T h e Bolivian Government proposes to introduce a free exchange market in
which t h e value of its currency unit, t h e boliviano, will be determined by basic
supply and demand forces; it. proposes to discontinue air foreign exchaaige and
import controls. T h e Bolivian authorities will operate a stabilization fund t o
minimize exchange r a t e fluctuations' arising from temporary or erratic influences,
b u t n o t to resist fundamental changes, dictated by market forces. •
' T h e Bolivian Government has announced supporting domestic measures iricluding increased taxes, strict control of bank credit, and reduction of experiditures
by t h e government and governmental agencies.
• I n connection with these economic reforms, t h e Bolivian authorities have
entered into a s t a n d b y arrangement with t h e International Monetary F u n d .
F u r t h e r i m p o r t a n t support for t h e Bolivian stabilization effort will be provided
b y t h e International Cooperation Administration which has arranged to allocate
a specific portion of United States aid to Bolivia for direct support of t h e ^Bolivian
stabilization effort.
•
'
•
; :
T h e Treasury Exchange Agreement supplerrients these arrangements. I t provides t h a t the Bolivian authorities m a y request t h e United States Exchange
Stabilization F u n d t o purchase-bolivianos up to an a m o u n t equivalent to $7.5
million, should t h e occasion i o r such purchase arise. Bolivia would subsequently
repurchase for dbllars any bolivianos so acquired by t h e Treasury.




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1957 REPORT OF THE SECRETARY OF THE TREASURY

E X H I B I T 28.—Press release, February 15, 1957, on the signing of an extension of
the Stabilization Agreement between the United States and P e r u
Under Secretary of t h e Treasury W. Randolph Burgess and Ambassador
Fernando Berckemeyer of Peru t o d a y signed an agreement extending for a period
of one year t h e Stabilization Agreement between t h e United States and Peru.
T h e agreement extends until February 17, 1958, existing arrangements under
which t h e United States Exchange Stabilization F u n d undertakes t o purchase
Peruvian soles up to an a m o u n t equivalent to $12.5 million should occasion for
such a purchase arise. The agreement is designed to assist Peru in maintaining
external t r a d e and p a y m e n t s substantially free from governmental restrictions
and avoiding unnecessary fluctuations in t h e r a t e of exchange.
T h e International Monetary F u n d has also announced extension of its s t a n d b y
arrangement with Peru under which t h a t institution agrees to make available u p
to $12.5 million for t h e same purpose. T h e two agreements therefore provide a
t o t a l of $25 million in s t a n d b y resources for Peru.
E X H I B I T 29.—Press release, April 1, 1957, on the signing of an extension of an
exchange a g r e e m e n t between the United States and Chile
U n d e r Secretary of t h e Treasury W. Randolph Burgess and Ambassador
M a r i a n o P u g a of Chile t o d a y signed an agreement extending for a period of one
year t h e exchange agreement between t h e United States and Chile originally
instituted a year ago.
T h e agreement is designed to assist Chile in its continuing efforts to achieve
economic stability and freedom for t r a d e and exchange transactions. Under t h e
agreement, t h e United States" Exchange Stabilization F u n d undertakes to purchase Chileau'pesos up to an a m o u n t eq.uivalent to $40 million, shoiild t h e occasion
for such purchase arise.
T h e International Monetary F u n d has announced renewal of its s t a n d b y
arrangement with Chile in t h e a m o u n t of $35 million and t h e Treasury is informed
t h a t certain New York banks have renewed credit lines amounting to $30 million,
t h u s continuing t o t a l s t a n d b y facilities of $75 miUion for Chile.

Addresses and Statements on General Fiscal and Other Policies
E X H I B I T 30.—Statement by Secretary Anderson, July 29, 1957, on assuming
duties as Secretary of the Treasury
I t a k e on t h e duties of Secretary of t h e Treasury with humility, for I am aware
not only of t h e great honor of t h e office and t h e tremendous responsibility involved,
b u t of t h e challenge I face in succeeding such an able and outstanding m a n as
George H u m p h r e y .
T h e most I can do is pledge t h a t I will do m y utmost to. serve as Secretary of t h e
Treasury in t h e coritinued best interest of all t h e people. I t would be conjectural
for me to t r y to say. precisely what I will or wilLnOt do, or exactly how I will t r y
to meet situations whicfi m a y arise. ' This will deperid'ori what will best contribute
t o t h e general welfare of our country and our economy in light of circumstances
prevailing at any given time.
T h e continued health of our economy is of vital importance not only to t h e
individual well-being of our people, b u t to our continued security in the world.
We must do everything which will help maintain t h a t economic well-being.
I a m particularly pleased to have the continued assistance of such a fine and
able t e a m at t h e Treasury. Their experience and dedication,will be of enormous
value as I join t h e t e a m to work collectively with m y associates for t h e best
interests of our country.
E X H I B I T 31.—Remarks by Secretary of the Treasury H u m p h r e y , October 8, 1956,
before the Economic Club of Detroit, Detroit, Mich.
I , w a n t t o talk to you.for a few miriutes t o d a y about something t h a t almost
eyerybpdyj seems; to b^, talking about—tight money.
We cari't'have^ high'prosperity, a b u n d a n t jobs a t high pay, high confidence,
high spending, and wide general expansion with cheap, unlimited money and a
stable cost of living all a t the same time.




EXHIBITS

223

Our problems t o d a y are t h e problems of great prosperity. They are nonetheless real a n d difficult and m u s t be courageously faced if we w a n t t o keep true
prosperity in America—prosperity t h a t will continue and stretch forward into
t h e future.
Let me tell you why. And let's start, as Al Smith used t o say, by taking a look
a t t h e record.
Let's go back t o 1939, before t h e last world war, and come down t o t o d a y . I n
t h e period of about six years, from 1939 through the end of 1945, the year the war
ended, t h e value of t h e dollar in goods t h a t it would buy was reduced from 100
cents to 76 cents, a reduction of 24 cents or about one quarter. During t h a t
period interest rates, by deliberate design of t h e administration then in power
were artificially held a t low levels.
During t h e next seven years, from t h e end of 1945 through 1952, covering t h e
postwar period and prior t o t h e advent of this administration, and when we were
supposed t o be returning t o a peacetime economy, t h e value of t h e dollar in goods
t h a t it would buy was further reduced from 76 t o 52 cerits or another 24 cents, a
reduction this time of about one third. And, during most of t h a t period, by
deliberate design of the administration then in power, interest rates were still
being held t o a low level.
And all t h a t time t h e cost of living was steadily increasing until there was a
total increase during those 13 years of the previous administration of almost 100
percent in t h e cost of living while t h e dollar was cut nearly in half.
Since t h e election of this administration from 1952 right u p t o t h e present day,
almost four years, t h e value of t h e dollar in goods t h a t it would b u y has been
reduced from 52.1 t o 50.9 or about 1.2 cents. Interest rates have been allowed
to.fluctuate naturally, both up and down, in response t o t h e extent of demand.
T h e record is all too clear. T h e evidence of t h e actual facts is too convincing.
While we h a d arbitrarily cheap and plentiful money t h e cost of living doubled—
t h e value of t h e dollar was cut in half. Whereas with money advancing or declining more freely in response t o t h e pressure of demand, we have enjoyed a
perfectly remarkable stabilization in the cost* of living and as sound a dollar as
can ever be had.
There is plenty of talk nowadays of a new record high in the cost of living b u t
again lets look a t t h e record. From 1939 through 1952, under t h e deliberately
inflationary policies of the previous administration, there were 30—yes 30—separ a t e times when new record highs in t h e cost of living were set and t h e cost of
things for living rose from $1.00 t o $1.92. The cost of those same things t o d a y
is a t a record high a t $1.96}^. B u t the real point is t h a t of the total increase of
96)^ cents over t h e whole period 92 cents came during t h e 13 years under t h e inflationary policies of t h e previous administration as compared with only 4}^ cents
in nearly four years under t h e stabilizing policies of the administration now in
power.
A new record high now, yes, b u t built up b y 92 cents under deliberate inflation
in 13 years and held down to only 4)^ cents by a reversal of policy to stabilization
duiiri'g the 4 years just past.
No more effective demonstration of the difference between t h e two policies in
their effect upon t h e lives of t h e American people could possibly be made.
Now is there any reason why we should not learn from t h a t hard experience?
Is not this demonstrated fact of t h e past a reliable guide for t h e future t o show us
t h e pitfalls t o avoid and point t h e course t h a t we should follow if this great
prosperity, if these great good jobs, good p a y and good times are t o endure and
further sweeping increases in t h e cost of living are t o be held down?
I can give you no lecture on abstract economics, b u t I can call your attention
t o a few common sense basic facts.
Our problem is t h e problem of prosperity; t o continue t o live successfully and
permanently with prosperity, in peace and freedom.
I t m a y be even tougher t h a n t h e problems of adversity, for when you are in
trouble t h e whole idea is t o get it over with—to make a change. W h a t we have
now, we w a n t t o keep. We want good times t o continue. We w a n t t o have
exactly t h e same problem next year, t h e year after, and as far ahead as we can see.
T h e problem of learning t o live with prosperity,- at peace, and in the freedom
which we Americans regard as our birthright, is not alone t h e problem . of
government.
.
r
I t is equally your problem—the problem of every American. We cannpt place
upon t h e Government t h e exclusive.concern with t h e difficulties—we niight call




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1 9 5 7 REPORT OF T H E ..SECRETARY OF T H E

TREASURY

t h e m t h e h a p p y difficulties—that arise when you t r y t o make prosperity last in a
time of peace and in a free society.
I t might be called t h e problem of "too much all a t once." B u t there is a simpler
knd older name for it: t h e problem of supply .and demand. We are prosperous,
and. t h a t means we are working very close, t o t h e limits of our manpower and our
materials. We are at peace, so there is no place for wartime controls qr powers
t o ration work and materials. We are free and we w a n t to s t a y free, so we do
riot w a n t to dictate wages, prices, or rents. We do not w a n t to arbitrarily allocate
materials and labor by Governmerit order or decree.
B u t just because we are prosperous—in peace and in freedoni—because t h e
public in general has great confidence in the future, we all w a n t to buy a n d
expand. T h e public wants to earn riiore and spend more, all a t t h e same time.
T h e demand for money is unlimited, b u t the supplies of t h e things money b u y s —
goods, materials, and the labor, skill, and services of people—are limited. We
have neither the necessity of war nor the desire of dictatorial government to
ration those things. T h a t being so, we must keep t h e supply of money from growing beyond t h e supply of people and materials. T h a t is t h e pnly way to avoid
i-apidly rising prices and inflation while maintaining prosperity in company with
both peace and freedom.
I n years gone by the Government, deliberately encouraging inflatiori, arbitrarily
held t h e price of money down.
'•
" T h e cost of living doubled. Our debt went u p b y a large a m o u n t , p a r t l y
because t h e prices of t h e things t h e Gpvernment was then buying went up so
much in price. And all t h a t extra debt we still have with us to p a y with hard
yvovk and the sweat of our brows for the errors of the past.
T o d a y a very high percentage of all t h e people of t h e United States are employed,
and the goods of t h e United States are being largely absorbed. Materials in most
cases are in full demand and in some cases there are even shortages. Except for
a very few scattered soft spots, the situation by and large is one of great prosperity
straining t h e Nation's resources.
When as now, widespread confidence in the future is so high t h a t we seek t o go
further and faster t h a n t h a t , w h a t happens? We s t a r t drawing either manpower
or scarce materials away from each other. T h a t is going on today. If you d o n ' t
t h i n k it is, do w h a t I did t h e other day. T a k e t h e Sunday editions of half a dozen
major city newspapers across t h e country—including Detroit. T h r o w away all of
t h e pages except those pages which have t o do with advertising by various concerns to hire people, and in these half dozen papers those pages will be several
inches thick. P r e t t y nearly everybody in business is advertising in some paper
t o employ some m a n for some company other t h a n t h e one he is now working for.
The same thing is going on with m a n y materials.
There has to be some governor, some restriction, in this situation, otherwise
the price of materials and goods keeps going on up without producing any more
goods, and we all just p a y more for the same.
If this big demand for money is used t o expand sales and plant a n d capacity
and activity when expansion only means hiring more people and trying t o get
more goods t h a n there are, then the price of goods and services will rise with no
corresponding increase in either goods or productivity.
. But, if t h e price of money rises it will tend t o keep t h e demands for expansion
in line with t h e supply of our resources.
And, it is easier to contract the price of money when it has served its purpose
thari it is to contract the price of goods and services. You dori't contract w h a t
you p a y for services, goods, and materials without some very serious hardships
resulting. B u t you can contract the price of money without hurting people.
T h a t is why it is the best economic governor. I t protects jobs, prices, and wages
as it works.
We don't w a n t to go t h e " e a s y " money road, t h e old familar road t p inflation.
We don't w a n t to go up only to conie down. We w a n t to let natural corrections
a n d restraints operate freely." T h e Government is not p u t t i n g up t h e price of
money. I t is t h e accumulated demands of people and business t h a t is doing it.
As more and more people w a n t to expand and use more money to do so, t h e dem a n d for money increases and the, price rises. Now if the Federal Reserve Board
neither arbitrarily increases t h e supply nor arbitrarily holds down the price, interest rates naturally rise. As they rise,, and money costs more, some people refrain
from so much expansion and t h e demand for money decreases. As supply again
catches up with demand,.the price again begins t o decline a n d ' t h e pressure on t h e
cost of living is reduced without an excessive advance hurting all the people.




-EXHIBITS.

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225

. There are other sources of pressure t h a t must also be t a k e n into account. T h e
Government of t h e United States collects and spends so much money t h a t it has a.
tremendous effect on t h e economy.
•
I n this administration we have reduced our expenditures about eight billion
dollars. At t h e same time we cut taxes by nearly the same a m o u n t as the money
we saved. I n cutting taxes we gave back to t h e public to spend for themselves as^
t h e y t h o u g h t best t h e money we saved in Government spending. This helped toriiake jobs in private industry for those whose livelihood had formerly depended on
Government spending. They helped to produce more goods for all the people t o
buy, whereas when those Government employees were working for t h e Government
t h e y d i d n ' t produce any goods t h a t t h e rest of the people could purchase.
T o d a y we are spending in t h e neighborhood of forty billion dollars for military
goods and services. T h a t forty billion dollars is money t h a t goes out in wages a n d
for goods t h a t t u r n into wages. I t makes t h a t much spending power in the country.
Yet there isn't anybody involved in t h a t whole forty billion dollars who rnakesgoods t h a t a consumer can buy. Consumers d o n ' t b u y t a n k s or bombers.
Defense spending is necessary, and we will continue to spend on defense every
penny and every billion we need to spend to provide t h e Nation with security.
B u t t h e economic significance is t h a t t h e Government in its own fiscal policy isp u t t i n g a great pressure on t h e m a r k e t for goods by p u t t i n g t h a t much money intothis spending stream and not p u t t i n g added goods out for t h e people to buy.
T h a t brings us to t h e next point, t h e Government's policy with respect to d e b t
a n d savings. When interest rates are kept down arbitrarily, not only is t h e incentive to save monej^ reduced, b u t t h e fear of inflation helps t o create a lack of
capital—a lack from which t h e whole world is suffering.
We are short in this country a n d in t h e whole world of capital—that means
savings.
We have been through a period of years when there was little incentive to save.
I n t h e first place, t h e interest r a t e was held down so low t h a t there was very little
return. There was no natural incentive. I n t h e secpnd place, as t h e value of t h e
dollar declined and as inflationary pressures took hold, people were afraid to save
a dollar because it was constantly declining in value. As I have shown, six years
later it was w o r t h only seventy-six cents and in 13 years it went down to only fiftytwo cents. So t h e lack of incentive resulting from low interest and t h e fear of inflation first took away t h e reason to save and, as it went on, it actually kept people
from saving. On t o p of all this some of our public leaders t h e n scoffed at saving a s
outmoded and old fashioned and urged spending and more spending, regardless of
increasing debt or adequate income.
Saving money and thereby creating capital is no mystery. I t simply means t h a t
some one must deny himself the pleasure or desire to spend some p a r t of his p a y
check rather t h a n save it. P a r t of his income he must properly spend b u t p a r t
can be. laid away for t h e future if (1) there is sufficient incentive to do so because
of a fair r e t u r n in interest or dividend, and (2) if he feels safe in the continuing value
of his savings. Most all Americans are saving something t o d a y through purchase
of insurance, paynients forpensions, t h e purchase of Government bonds or in a
savings account or in t h e m a n y other ways to do so. As interest rates;rise all those
savers benefit. B u t if inflation sets in and t h e dollar declines they all are robbed of
p a r t of their savings. Inflation is t h e great thief. T h e young, t h e old, t h e sick;
t h e small saver, a l l those least able t o protect themselves, are t h e helpless prey of
wicked inflation. I t must be held in check.
We must also create more incentive for more saving, to have more capital available for expansion. We must have it because we in our growing country have a
million new people every year looking for new j o b s . ' Unless someone can invest
from ten to t w e n t y thousand dollars a piece for them, they cannot get a job in which
they can earn t h e kind of wages now being paid in America—wages 12 percent or
more above those paid in 1952. Such wages can only be paid on t h e basis of high
productivity, t h e kind of productivity t h a t comes only from skilled workers using
highly productive machines and power. Those machines and t h a t power cost
money. We can only have t h e plants, t h e machinery, t h e power, t h e transportation, and all t h e rest t h a t goes to make up our modern industrial and farm life bysaving and investing. Inflation kills t h e goose t h a t lays t h a t golden egg.
W i t h o u t savings a n d investmerits yoii cannot get high productivity.'. W i t h o u t
high productivity you cannot have high wages. Without high wages you cannot
h a v e t h e s t a n d a r d of living we all want. Inflation stops t h e whole process. T h a t
is soniething we all need to understand. T h e best known way to help control it is
a flexible price for money, because a flexible price for money is a governor t h a t
438363—58

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195 7 REPORT OF THE SECRETARY OF THE TREASURY

operates to hold down t h e cost of living and m a k e prosperity last, in peace and in
freedom.
There can be some differences of opinion as to timing and t h e degree with which
this process of using t h e price of money as our economic regulator takes place.
B u t t h e process is a sound, right step in t h e direction of sound money; a sound
economy; and continuing to have t h e people of this country working a t more a n d
better jobs a t higher p a y and with ever higher standards of living for all t h e people.
Now, I a m not here this noon to m a k e a partisan speech. B u t this all leads me
t o some vital conclusions about true prosperity. There are two roads we can
travel.
T h e p a s t performance, t h e platform a n d t h e campaign speeches of t h e opposition
p a r t y show clearly w h a t they propose. T h e y show one road.
They propose cutting taxes regardless of t h e a m o u n t of t h e Government's income. At t h e same time they propose new Government spending programs costing
m a n y additional billions of dollars. This is t h e policy of deliberate inflation and
m u s t result in a return to a budget unbalanced by several billion dollars with all
of t h e inflationary pressures t h a t would create.
T h e y profess concern about inflation. At t h e same time they a t t a c k all t h e
things which are our best defense against inflation.
They present a glaring contradiction. They cannot be for t h e principle of sound
money and all t h a t it means to continuing prosperity while they are against t h e
things which m a k e sound money possible.
T h e record of their past and their promises for t h e future are filled with concessions to t h e easy way which will destroy continuing prosperity.
T h e program of the Eisenhower Adniinistration is exactly opposite. I a m proud
t o p u t t h a t record before you. I t shows t h e other road.
T h e evidence of ourpreseritihighvprosperity is-abundant wherever ^we t u r n .
We h a v e record high employment—more t h a n 66 million people working a t
good jobs.
We have record high wages.
We have production of goods a n d services exceeding all previous records.
And we have this high prosperity—in peace—with b u t little change in t h e cost
of living during t h e past four years. T h e money of our people during this administ r a t i o n has stayed sound, because our Government has been doing t h e things we
said we would do in fiscal and monetary policy to stimulate confidence and incentive; to keep money sound.
And w h a t of our present promises? We propose to continue those things which
h a v e worked so well in the recent past.
We propose t o continue t o spend only so much as is required for security and
necessary services to the public.
We propose to keep our budget in balance.
We propose to cut taxes—not out of borrowed money which is inflationary a n d
only a means of passing our debts on to our children—but whenever our budget
surplus permits, when we can look ahead and see a G o v e r n m e n t surplus of income
over spending.large enpugh t o p a y for ,a. t a x c w t which can^be sprjead^ fairly a m o n g
all our people.
T h e record shows t h a t t h e policies we-have followed for nearly four years have
been successful. We propose to continue t h e m for t h e good of every American—
t o h a v e t r u e prosperity with peace and with freedom.

E X H I B I T 32.—Statement by Secretary of the Treasury H u m p h r e y , January 16,
1957, in support of the P r e s i d e n t ' s Budget M e s s a g e for the fiscal year 1958
In support of t h e President's Budget Message for t h e flscal year 1958, which
has just been presented to the Congress, there are several recommendations which
I w a n t particularly to emphasize.
T h e President has often said t h a t t h e basic fiscal problem confronting this
Government is how to nieet the necessary costs of an adequate defense and other
governmental activities a n d , . a t t h e same time, furnish the incentive necessary-to",
athriyingy^^growirigj' krid.;r^^spri^^
Failure in either direction
could well mean the gradual loss of our freedom and of our way of hfe.
, During t h e past few years the greatest strides in history have been t a k e n in t h e
development of modern lethal weapons which can literally destroy great cities
.and whole areas of population. The methods are completely new. They are




EXHIBITS

227

extremely costly. They are shared to some degree by two great powers with
wholly different ideologies.
I n this state of affairs, we m u s t remain b o t h militarily and economically strong.
To do so, t h e extremely high cost of the new weapons demands t h a t we be highly
selective a n d quick to a b a n d o n t h e expense of obsolete methods and equipment.
No one can say exactly how much we can continue to spend for defense and
all other governmental services without seriously weakening our economy. While
military manpower and equipment protect our lives and our land, they make virtually no addition to t h e permanent wealth of t h e N a t i o n — t o new plants and
machinery, new mines, new farms, new hornes, or to new;; jobs for, peacetime
living.
T h e billions of dollars spent annually by the Government for military equipm e n t and manpower go into the spending stream b u t are not matched by an increase in t h e production of peacetime goods, so t h a t heavy pressure is p u t on the
price of goods which all t h e people m u s t buy. This imbalance makes it more
difficult to keep the cost of living within bounds. Monetary measures alone may
not be sufficient for this task unless the Federal Government makes reductions
in its manpower and in its purchases which will help to increase t h e production
of additional peacetime goods and so help to hold down prices. Moreover, t h e
funds so released will then be available to build u p t h e capital needed to help
create t h e new jobs, to build t h e new schools, and t h e countless other improvments required in this growing country of ours.
Our reduction in Government expenditures three years ago made possible t h e
greatest tax cut in history, and stimulated the surge of national confidence which
has created the prosperity of t h e past two years, t h e greatest we have ever known.
These reductions in Government spending also helped to give greater stability
to t h e cost of living t h a n we have.ever had in a pe.rio-d. of ,auch.^p.rosperity. T h e cost'of living has recently moved up somewhat in spite of monetary measures to
restrain it. Governmental expenditures and the number of Government employees are now increasing. This trend should promptly be stopped.
This administration has a record of gratifying achievements in economical and
efficient m a n a g e m e n t of the Federal Government. T h e civilian working force
of t h e Government has been reduced by over 234,000 persons during t h e past
four years; t h e accounting and management procedures of Government have been
vastly improved; over 400 Federal enterprises competing with business have been
abolished; surplus.real estate worth $366,000,000 has been sold and turned back
to local tax rolls. These are b u t a few specific illustrations of our progress. We
all m u s t work together to widen and enlarge these accomplishments.
Long hours of painstaking and conscientious work have gone into t h e preparation of t h e budget for the fiscal year 1958. All D e p a r t m e n t s of Government
should be commended for the efforts they have made.
T h e President in his state pf the Union message has just said:
" T h r o u g h t h e next 4 years, I shall continue to insist t h a t t h e executive departments a n d agencies of Government search out. additional ways-to save money
a n d manpower. I urge t h a t the. Congress .be equally watchful 4nvf:this mattier."
Tp accprnplish these esseritiail'objectives'we'shbuld now all go to work, not
-simply to keep within the limits of this budget,^but to make a c t u a l and^^substantial
reductioris through improved efficiency of our operations during the period of
t h e next 18 months which this budget covers. To make this possible, every
d e p a r t m e n t of Government must with vigor and determination modernize and
streamline their services. T h e management of every service must be conducted
with t h e possibilities of economy always in mind.
T h e President has said t h a t the Federal Government alone cannot successfully
c o m b a t inflation without the earnest cooperation of all individuals and groups of
our citizens. As emphasized in the State of the Uniori Message, business leaders
and labor leaders, through their wage and price policies, m u s t make their full,
constructive contribution. All other groups m u s t also contribute to the common
effort.
\
First: We must seek the full cooperation of the public generally in limiting its
demands,upon the Federal Government for only essential Federal.functions,-especially a t this time.when t.he eQpn.p5i>|^mls. operating _at such a high levSl:^ Reqriests
should be avoided' for-services or assistance whieh^
can be supplied by
S t a t e s or local communities or by the citizens themselves.
Second: We m u s t request t h e support of t h e Corigress t o restrict the appropriation of public money to amounts within those recommended in the Budget which
m a y be required to carry out the necessary Federal functions.




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195 7 REPORT OF THE.. SECRETARY OF THE TREASURY

T h i r d : We rnust require every d e p a r t m e n t and agency of the Governmerit
to take vigorous measures, without h a r m to either security or service" to the'public^
to see t h a t actual expenditures are kept well within the present budgeted figures
"between now and the end of the next fiscal year and, as the President has said,
"search p u t additional ways to save money and manpower."
F o u r t h : We must plan for the 1959 budget, giving urgent attention to niaking
further reductions both in Government employment and in expenditures where
these savings will not lessen our security or the quality of the necessary services
rendered to the public.
If this program is adopted and resolutely followed, we can, a year hence, give
"consideration riot only to some'further p a y m e n t on the public debt b u t also.to
further tax reductions.. This, of course, must be conditioned upon continuation
"of our present prosperity. J u s t when and how a tax reduction should be made can
"be determined only when it is known how well these conditions have been fulfilled.
I n any event, any such tax cuts m u s t provide relief so t h a t every individual
;taxpayer m a y have some benefit. • In the meantime, and until this is accomplished,
.we m u s t cpritinue to oppose any revision of the tax laws which results in any
substantial" loss of Government incpme.
This program will provide more effective control of our spending. I t will become a desirable'restraint on in.flationar57^ pressures through release to the private
economy of added manpower and money which, in turn, can open the way to
lower taxes, with a sharper spur to incentive and greater opportunity, and production, and more and better jobs.
This is a program of genuine promise. I believe we m u s t push it vigorously
a n d a t once.
E X H I B I T 33.—Extracts of r e m a r k s by Secretary o f t h e Treasury H u m p h r e y , April
18, 1957, before the National Industrial Conference Board, New York, N . Y.
T h e President's letter, of this morning p u t s into propier perspective t h e problems
a b o u t t h e budget which have been the subject of discussion since the budget was
sent to the Congress in J a n u a r y .
.
At t h a t time the. President requested a further painstaking review of the budget
by the Bureau of the Budget and by all the d e p a r t m e n t s and agencies of Goverur
ment. This has now been prepared and discloses the feasibility of postponing
certain appropriation requests which can be made without serious damage to the
program.
. . . .
.. T h e President, however, stated t h a t actual spending in the coming fiscal year
cannot be cut by multibillion dollar, a m o u n t s without danger to the national
safety or interest, or the modification of sonie of the existing programs now authorized or required by law.
. I urge every citizen to earnestly consider and support the President's direct
and simple analysis of the principles involved in our budget problems.
T h e President's position not only guards the Nation against ill-considered or
dangerous slashing of t h e budget, b u t it also points the way to well-considered
•steps toward holding future .^FederaL spending down. Controlling the. upward
march of total Government spending is of greatest importance to us all.
" There is nothing new about this approach or the principles t h a t guide it. T h e y
'•
are the same principles t h a t have guided this administration for the p a s t four
years. We have been constantly vigilant to continually make every effort to live
within our means and t o get a dollar's worth for every dollar t h a t we spend.
We have continually striven to avoid waste and extravagance and to adequately
balance t h e necessary costs of our national safety with t h e equally necessary
maintenance of a strong and vigorous economy. We have sought to stabilize
t h e costs of living and foster more and better jobs, to protect t h e Government's,
as well as t h e people's, high income.
^
I t is perseverance in this continuing effort t h a t has brought us now to t h e
prospect of three balanced budgets in succession for t h e first time in 25 years.
B u t we have also been ever mindful of our position of leadership in t h e "world
a n d t h e obligations we m u s t necessarily bear in t h a t regard to protect our national
security.
' -•
- •
>
. .
•
T h e everlasting •search for possible reductions and t h e drive to make t h e m real
will necessarily continue in the future as it has in t h e past. With t h e help of t h e
Congress^ and t h e public, and t h e persisting efforts of t h e administration, progress




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•

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toward a proper balancing of our fiscal affairs and full performance of our national:
obligations will continue.
The proven principles set forth in the President's letter will serye both our
national security and the people's best interest. They deserve the full support'
of every American.
EXHIBIT 34.—Statement by Secretary of the Treasury Humphrey, June 14, 1957,
before the Subcommittee on Fiscal Policy of the Joint Economic Committee
I appreciate this opportunity to appear before you on the subject of current
budgetary and fiscal policy developments, a subject on which you have already,
heard from numerous witnesses.
Before responding to questions I want to repeat my conviction that although
present tax rates are too high and the present heavy tax burden will, in the long
run, seriously hamper necessary economic growth, no general tax reduction should
be considered at the present time. The most effective tax cut that can be made,
to promote healthy economic development is a reduction which will bring benefit
to all taxpayers—when our fiscal situation permits. By this, I mean when we
can see ahead a sufficient surplus of income over outgo to pay for such a tax re-.
duction. We should and will keep working vigorously for the day in the not too.
distant future when we can see such a surplus. Such a surplus does not exist:
at the present time.
In this connection we must keep a close watch of our budget position and make
certain that Government spending is conducted as efficiently as is humanly pos-.
sible. There is nothing new in this goal. We must continue to follow the principles that have guided this administration for the past four years. We must
make every effort to live within our means and to get a dollar's worth for every
dollar that we spend.
In watching our budget we must constantly guard against ill-considered, or,
dangerous, or so-called meat-axe slashing of the budget.
As the President said in his April 18 letter to the Speaker of the House of Representatives, actual spending in the coming fiscal year cannot be cut by multibillion dollar amounts without danger to the national safety or interest or the
modificationof some ofthe existing programs heretofore authorized by the Congress.
It is not the size of any particular budget which is our paramount concern. It is
control of the upward march of total Government spending which is of greatest
importance to all of us on a long-run basis.
The biggest budget problem, as I see it, is one of seeking out long-term savings.
The problem of how much and for what we should spend in the fiscal year 1959,
which will not end until two years from now, is already upon us. What we must;
continue to do vigilantly is to keep up not only the everlasting search for possible'
reductions but the drive to make them real. We must do this while being ever
mindful of our position of leadership in the world and the obligations which we
must necessarily bear in that regard to protect our national security.
We must balance the necessary costs of our national responsibilities with the
equally necessary maintenance of a strong and vigorous economy.
The administration's fiscal record is a good one. The budget in effect when we
took office in 1953 produced a $9.4 billion deficit, and the budget proposed by the
prior administration for fiscal year 1954 called for a $9.9 billion deficit. Our
administration, with the help of the Congress, cut spending, reducing the projected
deficit for 1954 by two-thirds, or to a final minus figure of $3.1 billion.
But for the largest tax cut in history (a $7.4 billion cut in 1954) the budget
would have been balanced in 1955. A balanced budget was delayed for one year
because it was then apparent that the savings we then had in prospect would be
sufficient before the end of the next year not only to cover the amount of the tax
cut but to give us a balanced budget at the same time.
By fiscal 1956 we had eliminated deficits and had a balanced budget with a
surplus of $1.6 billion.- We will have a surplus in the fiscal year ending this
nionth and the budget proposed for.fiscal 1958 also is balanced. This means that
we have in prospect a balanced budget for three consecutive years for the first
time in more than 25 years.
Federal spending was reduced from the rate of $74.3 billion in the inherited
budget of 1953 to $67.8 billion in 1954 and $64.6 billion in 1955. . Spending moved
up.to $66.5 billion in 1956. to an estimated $68.9 billion in the January budget




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1957 REPORT OF THE SECRETARY OF THE TREASURY

for t h e present fiscal year, and to a proposed $71.8 billion for 1958. Even with
t h e recent increases t h e budget for the current fiscal year is $5.4 billion below
t h e budget we inherited in 1953 and is 16 percent of our gross national product
as compared with 21 percent t a k e n by Federal spending in 1953.
If we are successful in properly controlling the size and spending of Government,
we can look forward to a continuing period of high prosperity for our country.
A major ingredient in this high prosperity is t h e confidence of t h e American
people—confidence in themselves, in each other and, of fundamental importance,
confidence in their Government.
T h e greatest hope for major reductions in Government spending lies in a better
world situation. Some day the nations of the world m u s t arrive a t some better
a n d insured form of understanding which will m a k e it possible to reduce t h e large
amounts of money and energy and resources now going into making things for
killing. I confidently beheve t h a t such a better day will come.
T h e relationship between monetary and credit restraint and our present high
prosperity is worthy of brief comment.
One thing t h a t can destroy not only our present prosperity b u t even jeopardize
our way of life is r u n a w a y inflation.
T h e record of this administration in helping control inflation has been good.
T h e value of the dollar, which dropped from 100 to 52 cents between 1939 and
J a n u a r y 1953, has changed only 2){ cents in t h e past four and one-half years,
compared with a t o t a l drop of almost 48 cents in t h e thirteen years prior to this
administration.
T h e credit policy of the Federal Reserve System is an i m p o r t a n t factor in sustaining t h e purchasing power of the dollar in this time of very high use of and
d e m a n d for both labor and materials. T h e alternative of easy money would
m e a n t h a t there would be more dollars bidding for t h e available supply of labor
a n d materials. This could only result in sharp increases in t h e cost of goods.
T h e dollar would b u y less.
Mounting increases in t h e cost of living would bring cruel hardship to millions
of our citizens least able to protect themselves. There would be less saving
which is t h e source of investment in plants and equipment which m a k e t h e everincreasing jobs t h a t we must, have for our growing population. W i t h o u t increased
savings—without the confidence t h a t money saved would retain its value—we
would have fewer of these new jobs. Over a period of time, growing unemploym e n t would result.
I t is essential t h a t t h e inflationary pressures arising from t h e high prosperity
t h a t we have enjoyed for t h e past m a n y months be controlled to t h e greatest
possible extent. Restraints on credit involving some increases in the cost of
money and the maintenance of taxes a t t h e present levels, a t least until such time
as we have a substantial excess of income over expenditures, are i m p o r t a n t factors
which will assist in restraining a substantial increase in t h e cost of living.
T h a n k you for t h e opportunity to present these observations to your committee.
E X H I B I T 35.—Statement by Secretary of the Treasury H u m p h r e y , J u n e 18, 1957,
before the Senate Finance Committee Hearings on the Financial Condition of
the United States

I am very glad indeed to have this opportunity to be here to appear
before this committee just before I leave the Government service, to
try to be as helpful as I can in discussing with you the serious problems that you have outlined all of which I recognize and whicb I
believe, as you bave suggested, are subjects of the most serious import
to our country, and deserve the most serious thought and consideration
of this committee.
Broadly speaking, your study relates to the financial condition of
the United States, t n order to assist you in this inquu*y, it seems
appropriate that I provide a statement as to the problems we have
faced, the goals we have set, and the record of our accomplishments
in the past 4 years.
This is a record of a prospering America with new high levels of
employment, rising income, and increasing purchasing power. It is




EXHIBITS

231

a record of more and better jobs, more homes, more cars, more leisure,
and more recreation. I t is a record of unequaled prosperity with both
the blessings and the problems of such a period.
Last year an average of 65 million of our people were gainfully
employed, an increase of 3,700,000 in only 4 years. During the same 4
3^ears, unemployment has averaged only 3.8 percent of the civilian
labor force compared to 4.1 percent during 1949 through 1952, and 15
percent from 1937 until the beginning of World War II.
The present low level of unemployment has been achieved although
the civilian labor force has increased from 63 million in 1952 to 68
million today. For the first 5 months of tbis year, unemployment
has averaged about 3.7 percent.
The record of the past 4 years is also a record of rising levels of
living, widely shared. During this period, average annual family
incom.e, after Federal incom.e taxes, has increased from less than $4,600
to an estimated $5,200, an increase of about 12 percent, even after
eliminating the effect of price changes.
In 1956, the average family purchased 12 percent more goods and
services, in real terms, than in 1952.
Almost 5 million families have moved into new homes since 1952.
Almost 30 million families own their own homes today, an increase of
13 percent in only 4 years.
The number of homes with electric refrigerators has increased from
38 million to 45^ million, accounting for 96 percent of all wired hom.es.
In only 4 years, the number of homes with food freezers has increased
from 5 million to 8^ m.illion; the number with clothes dryers (either
electric or gas) from Iji million to 5K million, and the number with
television sets from 21 million to 38}^ million. The number of families
owning automobiles has increased from 31 million to 37 million.
This growing prosperity has extended to nearly all segments of our
society except the farmer. The postwar adjustment in farm income
has only recently been reversed, with a small increase last year for the
first time in several years.
Farm income per worker last year was $1,862, up $151 from 1955.
Farm prices have been rising moderately in the last few months, and
on May 15, were up 3 points above the level of a year earlier.
The objective of this administration is to enable our farm families
soon to share more fully in the record prosperity which characterizes
the rest of the economy.
The record of the past 4 years is one of great enhancement in personal financia] security. The number of life-insurance policies increased from 219 million 4 years ago to an estimated 265 million in
1956, an increase of 21 percent, and the number of persons covered
by hospital insurance increased from 91 miUion to 112 million, or
23 percent.
Time deposits in banks and share accounts in savings and loan
associations increased from $79 billion to about $112 billion, or 41
percent, and the estimated number of shareholders in American
industry increased from 6K million to more than 8K million people.
The record of the past 4 years is also one of increased leisure.
There has been a 19 percent increase in the amount of time Americans
took for their vacations—85 percent with pay.




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195 7 REPORT OF THE SECRETARY OF THE TREASURY

About 55 million of our people visited national park areas last year,
.an increase of 30 percent in the last 4 years, and approximately 60
million are anticipated for this year.
Now, this great increase in the income, the living standard, the
recreation, and security of our people has been achieved a t a time when
there has been a substantial contraction in defense expenditures.
' Our free economy has again demonstrated its ability to absorb the
reductions in Government expenditures not by contracting, but by
-expanding employment and the living standards of our people.
The record of the past 4 years has been one of unequaled investment.
The Nation has devoted a vast amount of its resources to improving
.-and enlarging its productive capacity.
Businesses have spent an alltime high of $152 billion on new plant
and equipment, compared with $123 billion in the preceding 4 ^''ears.
'This record volume of capital outlays has provided a dramatic answer
t o those who would contend that our economy would run down without
the artificial stimulus of chronic deficit spending and the bacldog of
private demands deferred by the war.
i
Outlays to make better provision for needed public facilities have
also been at very high levels in recent years. Total public construction in 1956 was $13.4 billion, 23 percent above 1952 levels, and educational construction outlays during this same period increased 56
percent, from $1.6 billion in 1952 to $2.5 billion in 1956.
The increased confidence of our people and of our business concerns,
that they will be free to determine their own course—free from
unnecessary regulation or harassment—-greater confidence in the
-stability of our Government and the wider distribution of purchasing
power, have encouraged our consumers, our homeowners, our business
•concerns, and our communities, to plan for the future, and to buy the
^automobile, or the home, to build the factory or the schoolhouse, that
:a brighter future justifies.
Thus the record of the past 4 prosperous years has been characterized
by the many blessings of widely shared prosperity—but it has also been
"beset by one of the problems of prosperity.
The tremendous outla^^s to expand our public and private facilities
.have required financing, and this has inevitably given rise to a heavy
•demand for borrowings. With growing confidence on the part of
lenders as well as borrowers, there has been a rapid increase in the
volume of both long- and short-term credit.
Almost all of this increase has come from savings and not from an
increase of money supply in the banks. Nevertheless, there has been,
:and is, the ever-present threat of rising prices.
The monetary policies of the Federal Reserve and the fiscal policies
•of this administration have been designed to encourage the growth of
the supply of goods (as the foregoing figures indicate), but not to
•encourage excessive credit expansion.
The cost of living has risen an average of only six-tenths of 1 percent
per year for the past 4 years, as compared with an average increase
:at the rate of about 7 percent per year for the preceding 13 years.
In short, the rise in prices during this administration has been at
•only one-tenth the average annual rate of the preceding 13 years.
Even this rise is more than I like to see, but it is a record of far better
price stability than in many years.




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233

Nevertheless, prices have been rising a little faster for the past 12
months, and the threat of renewed inflation, which had been so
severe from 1946 to 1952, is perhaps our most serious domestic
economic problem.
The greater increase in demand for credit than in the supply thereof
has inevitably brought about higher interest rates.
The record of the past 4 years is one of sensitive and flexible adjustments to the release of controls, and to the return to free markets, an
accommodation of the post-Korea curtailment in military spending,,
and of a free market^s emphasis first on housing, then automobiles,
and now on new plant construction with continuous improvement iit
the total economy.
I t is a record of encouraging savings and investment in increa^sed
productive capacity, of encouraging an adequate volume of credit,
but of not encouraging that excess of credit which, in a period of
high employment, could only penalize our people by bidding up
prices without increasing production.
I t is essentially a record of flexible and quicldy adjusting fiscal and
monetary policy designed to continue the sound improvement iii levels
of living, widely shared, which is the wonder and ambition of all the
rest of the world.
I t is a most significant record, important to us all, because themonetary activities of the Federal Reserve System and the fiscal
activities of the Treasur}^ affect the wages, the standard of living, and
the savings—indeed the entire financial well-being—of each one of
our citizens.
I t is above all a record of the renewal of widespread confidence of
the people in the preservation of their individual freedom of choice,
in their jobs, in their right to the enjoyment of the fruits of their own
initiative and endeavor, and in the security of their savings. I t is a
record of renewed confidence in the security of our country.
Feeling as I do that there should be the widest possible public
interest in this subject, and feeling such a deep pride in what this
administration has done and is doing, I welcome this opportunity to
speak to your committee and, through you, to the more than 171
million Americans whom the Congress represents.
Let me review the major policies of, and the fiscal actions taken by^
this administration since we took office in January 1953.
In discussing fiscal, monetary, and credit policies, as I am doing
today, I do not want to give the impression that they alone can
prevent infiation and assure economic growth. They are, however, a
subject of the present inquiry and I shall concentrate my attention on
them.
Certainly if they are not sound, there is little chance for sound
money and sound long-term economic growth.
As a preface to our present policies, let us review the situation as i t
existed when we came into office. We came in in 1953.
The direction in which we had been going was as follows:
You will recall the tremendous changes that had occurred in the=
period before 1953. In 10 of the 13 fiscal years from 1939 through
1952, the Government operated at a deficit, as it had in the preceding9 years.




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195 7 REPORT OF THE SECRETARY OF THE TREASURY •

Largely as a result of World War II, the Federal debt increased in
only 13 years from $47.5 billion at the end of 1939, to $267.5 billion
.at the end of 1952. Those are figures that to me are simply astounding.
I t is attributable to a war period, but a debt going from $47.5 billion
to $267.5 billion, in only 13 years.
The interest charge on this indebtedness had grown from an annua)
rate of $1}^ billion per year in December of 1939, to $6)4 billion in
December of 1952, an average increase in interest cost of almost $400
million per year.
In 13 years, annual Federal taxes had increased from a little less
than $5 billion in 1939, to almost $65 billion in 1952. This amounted
to an increase in the average tax burden of each American citizen from
$36 in 1939, to $413 in 1952.
The conditions which we faced when we took office in 1953:
When this administration came to office in January of 1953, we
faced: 1. A Federal debt equal to 89 percent of our annual national
income.
2. Budget expenditures of $74.3 billion for fiscal 1953, and proposed
budget expenditures, a prepared and then existing budget, of $77.9
billion for 1954.
3. A budget deficit of $9.4 billion for 1953, and a planned deficit of
$9.9 billion, almost $10 billion, for 1954.
4. A continuing spiral of inflation which had reduced the purchasing
power of the dollar from 100 cents in 1939 to 77 cents by 1945, and
down to 52 cents by 1952.
In appraising these conditions and the course to pursue, we were
influenced by a recognition of the overpowering importance of preventing other devastating postwar inflation which, prior to 1953,
the Government was attempting to control by inadequate means.
Now, what were our goals?
Within less than a month of his taking office in 1953, President
Eisenhower, in his state of the Union message, called attention to
the ^inescapable need for economic health and strength," and he
stated:
Our immediate task is to chart a fiscal and economic policy that can—
First, reduce the planned deficits and then balance the budget, which means,
.among other things, reducing Federal expenditures to the safe minimum;
Second, meet the huge costs of our defense;
Third, properly handle the burden of our inheritance of debt and obligations;
Fourth, check the menace of inflation;
Fifth, work toward the earliest possible reduction of the tax burden;
Sixth, make constructive plans to encourage the initiative of our citizens.

Let us review these goals and our efforts, our difficulties, and our
accomplishments to date, in following them.
The first objective was to reduce the planned deficits and then
balance the budget.
To what extent have we accomplished this goal?
1. We first reduced and then entkely eliminated planned deficits.
The budget in effect when we took office in 1953 produced a $9.4
billion deficit, and the budget proposed for the fiscal year 1954 called
for a $9.9 billion deficit. Our administration immediately went to
work, with the help of the Congress, to reduce the planned deficit for




EXHIBITS

235

fiscal 1954, and indeed the final deficit ($3.1 billion) was only one-third
of that anticipated by the prior administration.
Without the largest tax cut in our Nation's history, the budget
would have been balanced in 1955. However, in view of the transition resulting from the reduction in military spending, and anticipated further reductions in spending which in fact materialized
concurrently with our action, we were able to pass some of the savings
from our reduced expenditures back to the people, even though this
meant another year's delay in achieving a balanced budget. Fiscal
1955 was, however, the last year of deficits.
2. We have balanced the budget.
By fiscal 1956, we had entirety eliminated deficits, balanced the
budget, and completed the year with a surplus of $1.6 billion.
The 1957 budget will result in another surplus, and the budget proposed b}^ the President for 1958 provides for a third successive surplus
for the first time in 25 years.
3. We have reduced Federal expenditures.
Federal expenditures were reduced from $74.3 billion in the inherited budget of 1953, to $67.8 billion in 1954, and down to $64.6
billion in 1955. As a result of additional programs authorized by the
Congress, substantial pay increases, and the need for increasingly
expensive military equipment, expenditures increased slightly in the
past year to $66.5 billion, with further increases anticipated to $68.9
billion for 1957 and $71.8 billion for 1958.
The 1957 budget is nearly $5.5 billion below the budget we inherited
in 1953, and is but 16 percent of our current gross national product
now as compared to 21 percent in 1953.
The second objective was to meet the huge costs of our defense.
Major national security expenditures have been reduced from $50.4
billion in 1953, to $46.9 billion in 1954, to an estimated $41.0 billion
in 1957, with a proposed $43.3 billion in 1958.
This reduction has been achieved despite the fact that, though not
at war, we are still engaged in a titanic contest which requires not
only the expense of preparedness, but extremely expensive research
and development.
Such research is necessary to assure preparedness for tomorrow,
and the days beyond, in the terrible race for primacy in the most
complete transition from old to new weapons in the history of the
world.
While our fantastically costly weapons of tomorrow are still in the
expensive research and development stage, we must continue to maintain our maximum strength in the weapons of today. This means
that during the transition period we must support increased costs of
two systems of defense.
We have met these huge costs with a balanced budget and with a
reduced tax burden. We have provided the necessary large amounts
of expensive and revolutionarily new equipment needed for our national
safety, greatly expanded our productive facilities, and at the same time
enabled far more capital and labor to be directed toward building
more cars, more houses, more of all of the good things our people
need and want.




236

1957 REPORT OF THE - SECRETARY OF THE TREASURY

Our third objective was to properly handle the burden of our
inheritance of debt and obligations.
As you have invited the Under Secretary, Mr. Burgess, to meet
with you, I have asked him to report to you in detail on our handling*^
of the debt.
In preface to his remarks, I might say that the management of $275
billion of debt is not a simple assignment under any circumstances.
The Federal Reserve's proper withdrawal from the pegging of the
Government bond market, which withdrawal was the most effective
single action taken in the battle against inflation, has made it more
difl&cult to manage debt operations than it was when a fixed rate was
assured.
Had such a policy continued, however, the resulting inflation would
eventually have produced even greater complications for debt management than we have experienced under a system whereby interest
rates are determined by the forces of the market.
In January 1953, when this administration took office, the average
rate on all Government interest-bearing issues outstanding was 2.35
percent. The total net computed interest cost at an annual rate at
that time was $6.2 billion.
Four years later the average rate on all Government issues outstanding was 2.67 percent, or an increase of about three-tenths of 1
percent. The total net annual computed interest cost, as of December
31, 1956, was $7.3 billion, of which $0.9 billion is due to increased
interest rates, and $0.2 billion is due to an increase in the debt incurred
to pay obligations inherited from previous commitments.
This increase in interest rates results from the free market influences
of supply and demand in a period of unparalleled prosperity. I t is
a continuation of a rise that has been going on for the past 10 years
under the growing pressure of borrowing demands.
In this little table the computed interest rate is shown:
December—
1946
1952
1956
May 1957

Computed interest rate on the public debt

Percent
2.06
2.35
2.67
2.75

So that the rate has increased over the 10-year period from 2.06 to
2.75, or a little less than three-fourths of 1 percent.
For the entire period from December 1946 through May 1957, there
was an increase of sixty-nine one-hundredths of 1 percent in the computed interest rate on the public debt. Of that increase, twent37^-nine
one-hundredths occurred prior to this administration, and forty onehundredths occurred during this administration, right up to now.
During the past 4 years there has been no increase in public debt
interest cost in relation to national income. The interest cost was
2.1 percent of national income in December 1952, and was exactly
the same percentage in December 1956, for the increase in interest
cost has only kept pace with the increase in national income.
Furthermore, the $1 billion increase in interest paid reflects increased
earnings received by the investors who own the securities.
Now, who are those investors?




EXHIBITS

'

•

237

Of the $7 billion of interest paid on the public debt during calendar
year 1956, $1.4 billion represented the payment of interest to socialsecurity funds and other Government inyestment accounts.
About $0.6 billion of public debt interest was received by the Federal
Reserve Banks, and 90 percent of that comes back to the Treasury as
surplus earnings.
Commercial banks received approximately $1.4 billion of such interest last year. About $0.6 billion went to other financial institutions,
mostly insurance companies and savings banks; about $0.5 billion to
•corporations, about $0.4 billion to State and local governments, and
about $0.4 billion to nonprofit institutions, foreign accounts, and so
forth.
The remainder, of about $1.8 billion, the largest single segment of
the interest on the public debt, went to individuals, either in the form
of cash payments or accumulated interest to the 40 million holders of
savings bonds. Millions of Americans are benefiting from these higher
interest rates.
I am asking Mr. Burgess to review other phases of our debt management program.
' The fourth objective, check the menace of inflation.
1. The problem
At the risk of oversimplification, let me condense the story of inflation to about a dozen lines.
Almost all of our employable labor force is employed—and at higher
wages than they have ever received before. Our people are buying
virtually all-that they are producing, but they want to buy more,
both more consumer goods and more productive facilities.
Being confident of the future, they desire to borrow to buy more.
The lenders are lending more than ever before, but still not as much
as the public would like.
' However, with most resources fully utilized, additional bank credit
would not put any more people to work—it would merely provide
additional demand in excess of the supply of both labor and goods.
Such a demand in excess of supply would cause a rise in prices if it
were fed by excessive bank credit expansion.
A rise in prices hurts every housewife, everyone on a pension, every
person with a fixed or lagging income, every saver. I t robs labor of
much of its gain in wages. This rise in prices has been a principal
cause of the farmers' difficulties, because while income per farm remained fairly static during the last 10 years, the farmer has had to.
pay higher prices. As a consequence, he has been particularly hurt
by the inflation which, to a lesser extent, injures every single..one of us.
There are two ways to check this rise in prices: {a) increase the
supply of goods, and (6) slow the expansion-in the number of dollars
bidding for the gppds.
We have utilized both methods. The administration in many ways
has encouraged an increase in productive facilities which is the only
way to increase the supply of goods. The Federal Reserve and the
administration have taken action to restrain a too rapid growth in
the number of borrowed dollars available to bid up the price of the
limited'supply-of goods-and-ser-vicesv—
-




238

1957 REPORT OF THE SECRETARY OF THE TREASURY

2. The respective roles of the Federal Reserve and the Treasury
. Now, what are the respective roles of the Federal Reserve and the
Treasury?
I would like to^take amonaentto identify the respective-rdles played,
on the one hand by the Treasury, which influences fiscal policy, through
its recommendations on tax and budget policy as well as its management of the public debt, and on the other hand by the Federal Reserve,,
which is responsible for monetary policy, through its influence on the
cost and availability of money and credit.
A mere statement of the respective functions demonstrates the major ^
role of the Federal Reserve'in the'effort to stop inflation. TheFederaf
Reserve has the authority and the tools to take monetary and credit
action. We do not.
The Treasury cannot determine the level of interest rates, but must
pay the rates determined by market forces. The Federal Reserve can
influence the levels of market rates, although there are deflnite limits to
its power to maintain any fixed level of rates, as is shown by history..
I do not point this out to shift any responsibility from the Treasury.
On the contrary, we approve wholeheartedly the course which the
Federal Reserve has followed, and have admiration for the courage
and decisiveness with which the Board has acted.
(a) Through 1952
As you will recall, vthrQughout the decade prior tO'195T,. the; Federal
Reserve followed a policy of supporting the market for United States
Government securities at or above par. This was done to enable the
Government to sell, at a low interest cost, the great volume of securities
which was necessary to finance World War II.
I t accomplished that purpose, but it created cruel inflationary
conditions which required the sale of more bonds and increased debt
to pay the resulting higher costs of the war.
In artificially holding interest rates at low levels, the Federal Reserve
made credit ctieap, not only for the Government, but for all borrowers.
By maintaining a market which enabled the banks to liquidate their
Government bonds at any time at par or better, it encouraged a
continuance of the war-born expansion of excessive bank credit.
This ch-eapvrand^plentiful credit was*an irnport^ant cause of the wartime inflation which, despite wartime restrictiohs of direct controls,
and rationing, robbed the dollar of 23 cents of its purchasing power
between 1939 and 1945.
Then follows a table which shows that the dollar was at 100 cents
in 1939, and was 77 cents in 1945.
Consumer
price index
(1947-49=100)

C a l e n d a r year average

1939:
19#.
i9«.
1942
1943...
1944...:_
1945

J . _

;
.

...




.

59.4
59.9
62.9
69.7
74.0
75.2
76.9

Purchasing
power of dollar
(1939=100)

looro"
99.2'
94.4
85.2'
80.3:
79. 0'
77.2-

239^

EXHIBITS

At the end of World War I I there was an acute shortage of goods.
There was, however, a pent-up demand, a demand made effective by
both a large amount of liquid assets accumulated during the war and
a rapid increase in private credit.
The war-born policy of the Federal Reserve, mistakenly continued
into peacetime under Treasury insistence, enabled the supply of credit
to rise too rapidly, with the result that this credit-backed demand for
goods exceeded the supply of goods.
While interest rates were held at artificially low levels, prices continued their serious rise, at an average annual rate, of over 7 percent
from 1945 to 1951, arrd in tht)se'6 3^ars the *d()irar''l^
cents of its purchasing power.
Then follows, another table, following out the rest of the preceding,
table, showing the period after the war.
Consumer
price index
(1947-49=100)

C a l e n d a r year average

1945
1946
1947
1948
1949
1950
1951 . .

1
.
_ .

76.9
83.4
95.5
102.8
101.8
102.8
111.0

Purchasing
power of dollar
(1939=100)
77. 271.2
62.257. 858.3
57.8^
53.5

The dollar at 77 cents in 1945 depreciated to only 53.5 cents in 1951.
I t was becoming clear to increasing numbers of observers that the
unwise credit stimulus provided b}^ the Federal Reserve should be
withdrawn. Such a withdrawal could be achieved only by pa3dng
the lesser penalty of an increase in the interest rates to be paid.
I t was clear that if the Federal Reserve ceased purchasing Government securities at par, natural market forces, reflecting increasing
demand for credit, would result in the higher interest rates which the
Federal Reserve purchase policy had so far postponed.
During this postwar period the Federal Reserve made several
modest moves toward freer short-term markets but was held back b y
the Tieasury. After a most thorough review of the relMive ad vantages
and disadvantages of such a change, the Subcommittee on Monetary,
Credit and Fiscal Policies, known as the Douglas subcommittee, concluded in 1950 that, and I quote from the Douglas committee report:
As a long-run matter, we favor interest rates as low as they can be w i t h o u t
inducing inflation, for low interest rates stimulate capital investment. B u t we
believe t h a t t h e advantages of avoiding inflation are so great and t h a t a restrictive
monetary pplicy can contribute so much to this end t h a t the freedom of theFederal Reserve to restrict credit and raise interest rates for general stabihzation
purposes should be restored even if the cost should prove to be a significant increase in service charges on the Federal debt and a greater inconvenience to t h e
Treasury in its sale of securities for new financing, .and refunding, purposes.

Partly as a result of that review and report, "the administration "then,
in office aiid the FederaL Reserve, by an agreement referred to as'the
^'accord," changed the prior policy, and the Federal Reserve began
to withdraw its support of the market for Government bonds im
March of 1951.




240

195 7

REPORT'

dF THE SECRETARY OF THE TREASURY

While this was a step in the right direction, it was not a complete
step. On a number of occasions during 1951 and 1952, the Treasury
still relied on Federal Reserve purchases to keep new issues from
sinking in the market.
Let me pause in this chronology to remind you of the facts about
t h a t change in policy.
I t was put into effect by an independent agency, the Federal
Reserve.
I t was urged by many of the best informed Members of Congress.
I t occurred during the preceding administration—21 months before
this administration took office.
This new policy of the Federal Reserve was not so much antiinflationary as it was a tempering of what formerly had been positively
inflationary action. The Federal Reserve began to reduce the amount
of credit it had been artificially creating. I t freed natural market
forces.
As an incidental result of the reduction in the volume of artificial
credit generated by the Federal Reserve, the supply of credit grew,
somewhat more slowly than the demand for credit. As a consequence,
interest rates began to rise, and the market prices of bonds went down.
Though the full force of this change in the Federal Reserve policy
was not immediately effective, almost a quarter of the increase in the
computed interest rate on the public debt (from 2.22 percent at the
time of the Federal Reserve-Treasur.y accord in 1951, to 2.75 percent
in May 1957) almost a quarter of that occurred in the 21 months
prior to the time this administration took office.
As a result, banks and insurance companies, which had such large,
blocks of Government securities, were more hesitant to sell them at a.
3- or 4-point loss in order to make a loan. This caused them to make
fewer loans than they would have made had the earlier policy been
continued.
Although by the accord of March 1951, the administration then in
office had reluctantly agreed to the right of the Federal Reserve to take
such monetary action, that administration itself continued to rely on
direct controls on wages, prices, and rents.
In addition, after the short-lived budget surplus of 1951, increasing
Government spending, and renewed deficits in 1952, largely as a result
of the Korean conflict, encouraged a further depreciation in the dollar
to 52.3 cents.
And then follows a table.
Consumer
Purchasmg
price index
power of dollar
(1947-49 = 100)
(1939=100)

Calendar year average
1951
1952 _ .-___

_.

. _

:

._

111.0
113.5

63.5
62.3

Inflation had been appreciabl}^ slowed, but if inflation was to be
effectively checked, the Federal Reserve's new policy had to be supported more vigorously and supplemented, with parallel fiscal policies.




EXHIBITS

241

(b) Since 1952
In 1952, General Eisenhower campaigned for the Presidency in
part on the ground that further inflation must be prevented, and
advocated, and I quote:
A Federal Reserve System exercising its functions in the money and credit
system without pressure for political purposes from the Treasury or the White
House.

i. We have conducted our affairs so as not to interfere with the
Federal Reserve's monetary policies.
We have lived up to that promise that the President made. To do
so, however, has subjected the Treasury to certain burdens, just as
it has other borrowers. Not to do so would have created much more
serious burdens for all of us.
Although new financing was less expensive and easier in 1954, it
has again become more costly. With a very high percentage of bank
and insurance company assets now in loans, these institutions are not
clamoring for long-term—or even intermediate-term^—Government
securities.
We must, therefore, at present, sell mostly shorter-term securities,
which are attractive because of their high liquidity. I do not say this
to complain, but to acknowledge an obvious fact.
We will meet these difficulties and solve them as we have in the
past, continuing our flexible policy, postponing debt extension when,
we must, achieving it whenever we can.
There is a strong demand for short maturities. Our bill auctions
each week are always well oversubscribed. The Treasury faces no
crisis. Our securities are the most highly regarded in the world.
But in a free market, we must compete for funds. That means
the factors of supply and demand determine the rates we must pay.
Rates may decline or they may go higher. I would be disappointed
to see them go higher, but if that is the price we must pay to prevent
growth of excessive credit and consequent inflation, it will well justify
the price.
This administration, in addition to supporting the Federal Reserve's
independence, has utilized its debt management and fiscal functions
to help check inflation.
ii. Planned deficits have been eliminated.
Federal deficits necessitate increased Federal borrowing. More
Federal borrowing, to the extent it comes from the banks, means the
creation of additional bank credit. This tends to create more spendable dollars than there are goods to buy.
As your chairman. Senator B^^-rd, so clearly pointed out in his
remarks to the Senate on August 13, 1954:
Deficit spending is perhaps the greatest single factor in the cheapening of the
value of the money.

In ending deficits, we have eliminated this very inflationary pressure,
iii. The debt is being reduced.
We reduced the public debt in fiscal 1956 as a result of our budget
surplus of $1.6 billion. Another budget surplus is being applied to the

438363—58

17




242

1957 REPORT OF THE SECRETARY OF THE TREASURY

debt this year, and we expect to do it again in 1958. Reduction of
the public debt is one of the best ways to fight inflation.
iv. Government expenditures have been reduced.
Government expenditures are inflationarj^, particulaii}^ when t h e
economy is at a high level of output and employment. Taxes divert
to Government spending some funds which, in the hands of the taxpa3^er, would have gone into savings.
Furthermore, some Government expenditures go into payrolls to
produce goods and services (especially military equipment and military
services) which neither contribute to the Nation's capital account nor
become available for private consumption.
Yet this additional purchasing power competes for the existing
supply of both goods and services.
By reducing Government expenditures, we have released more
workers and materials directly to private industry where they could
add further to the supply of goods and services needed to meet our
heavy demands for plant and equipment, and greatly increase the
supply of homes, cars, television sets, and other consumer productsnecessary for our rising standard of living. Reduced Government
expenditures have been an anti-inflationary influence.
V. We have reduced the floating debt.
The amount of marketable public debt matuiing within a year,,
plus demand obligations (other than E and H savings bonds) in the
hands of the public—securities which in many ways are close t o
cash—has been reduced by $25 billion from the high point m 1953.
vi. We have also shifted some of the debt away from the banks.
Since increases in bank loans represent additional spendable money,,
they tend to be more inflationary than loans that grow out of a transfer
of existing savings. As a consequence, one of the Treasury's longrange debt management objectives has been to reduce bank holdings,
of Government securities to a reasonable minimum.
To this end we have, in the past 4 3^ears, reduced the amount of
Government securities held by the banks by $4 billion. This hasbeen achieved in part by pa^dng off some securities and in part b y
designing the terms of new issues, such as tax anticipation bills and
certificates, to be particularly attractive to nonbank investors.
vii. We have stimulated increased savings.
Greater confidence in the future, higher rates of interest, and
increasing confidence in the stability of the dollar, have all encouraged
our people to save more, both in dollars and in relation to disposable
income.
As one means of encouraging savings and combating inflation, we
have emphasized the continued sale of series E and H savings bonds..
The amount of these small-saver bonds outstanding has increased
from $35.3 billion to $41.4 billion during the past 4 years.
Moving thus on all of these fronts, by ending deficits, b}^ reducing
the debt, by reducing expenditures, by keeping down the bank-held
debt, by reducing the floating debt, and by selling more E and H
savings bonds, as well as b^^^ working closely with the Federal Reserve.,
we have accomplished a tempering of inflationary pressures during
these y.ears, with a decline in the purchasing power of the dollar of
only eight-tenths of a cent in 4 years.




243

EXHIBITS

And then follows a table which shows that up to the end of the year
1956, the dollar went down from 51.9 to 51.1.
Consumers' Purchasing
power of
price index
dollar
(1947-49=100)
(1939=100)

Calendar year average

1953
1954 .
1955
1956

._.-

-

_

.

.-.-

-

.

.

-

114.4
114.8
114.5
116.2

51.9
51.7
51.0
5L1

The past 4 years have been characterized by greater price stability
than any other 4-year period since 1939. But inflation is not stopped.
I t is onl}^ slowed down.
Indeed, there has been a disturbing renewal of pressures in the l a s t
12 months, dming which, the dollar has lost almost 2 cents in purchasing power.
And then follows a table which shows that in April of 1956, the
dollar was 51.7, and in April of 1957, April just last past, was 49.8,,
down almost 2 cents.
Consumers' Purchasing
power of
price index
dollar
(1947-49=100)
(1939=100)

Month

195&—April
July
October
1957—January
February
March
April

-

'.

-

-

-

'.

---.-

114.9
117.0
117.7
118.2
118. 7
118.9
119.3

51.7
50.8.
50.5'
50.3
50; 0
50.0
49.8

This most recent decline in purchasing power is disturbing. I t
reinforces our conviction that we must continue the vigorous pursuit
of our present policies. We should certainly not abandon them.
3. The necessity for flexibility
While over the past 4 years it has been necessary to follow generally
anti-inflationary fiscal and monetary policies, we have had changes hi
the economy which have required us to moderate them on occasion;.
and we may encounter other chcumstances which, may require some
relaxation at some times in the future.
We approve the philosophy expressed in the Douglas subcommittee
repprt t h a t Timely flexibility toward easy credit at some times and credit restriction a t
other times is a,n essential characteristic of a monetary policy that will promote
economic stabihty rather than instability.

Our administration had been in office only a few months when t h e
coincidence of the full effect of the Federal Reserve's new policy, a n d
the curtailment of defense spending, temporarily changed the problem.
We were, at that time, more concerned with preventing a decline
in employment and production than with a rise in prices. Taxes




244

1957 REPORT OF THE SECRETARY OF THE TREASURY

were reduced, and the administration relaxed downpayment and
maturity terms on FHA- and VA-guaranteed housing loans.
At the same time, Federal Reserve policy also eased, making funds
more readily available. The decline was stopped and a sound economic expansion got underway with renewed public confidence in the
courage of the administration and the flexibility of its policies.
By 1955, economic activity was again vigorous and the problem
was one of inflationary pressures—which have continued—and easy
bank credit expansion was no longer encouraged.
What are the available alternatives?
Ji.. The available alternatives
In view of the breadth of the subject of your inquiry, it is appropriate that we consider what might have been some available alternatives to general monetary and credit policy.
Some of these alternatives are:
(a) Direct controls prohibiting or limiting certain types of credit.
(6) Compulsory saving.
(c) Ph3^sical controls on prices and wages, plus, perhaps, rationing
and allocation of materials and labor.
(d) Higher taxes and large governmental surpluses to be applied
on the bank-held debt.
{e) Greater individual savings and voluntary effort at restraint.
(/) A reversion to the pre-1951 policy of Federal Reserve purchase
of Government securities at or above par—and consequent encouragement of severe inflation.
The use of any of the first three alternatives in peacetime would
have been uiequitable, impractical, and inconsistent with our traditions of freedom.
The fourth alternative would have required the imposition of
additional taxes on top of our present heavy load, and would not have
been acceptable.
The fifth, which the President emphasized in his state of the Union
message just a few months ago—namely, voluntary eft'orts—can help
immeasurably, but can be achieved only if other policies are effective.
Thus, as a practical matter, the real choice is between the antiinflationary course which we have pursued, and a new round of
inflation.
Those who, in a period such as this, urge an abandonment of our
anti-inflationary policies, those who urge either deficit financing or a
policy of artificially creating more spendable dollars are, whether
unwittingly or by intention, inflationists.
No matter what their motives, their proposals for further credit
expansion are proposals to further reduce the purchasing power of
the dollar, to rob every housewife, every farmer, every pensioner,
every wage earner, and every family with savings. Their arguments
must be understood to urge just that.
There can be no doubt as to the wisdom of our choice in utilizing
the tools of monetary and credit policy. As to the extent to which
we used these tools, I can only say that I gain confidence from the fact
that we are criticized with equal vigor by those who feel that credit




EXHIBITS

245

has been restricted too severely, and those who feel it has not been
restricted severely enough.
Despite some recent tendency for prices to rise again, the administration can take considerable pride in what has been achieved to date
in respect to this, the President's fourth goal.
Now, the fifth goal was to work toward the earliest possible reduction of the tax burden.
The Eisenhower administration and the Congress, working together,
have already made possible the greatest single tax cut in history.
In 1954, in order that the people might benefit from the substantial
reduction in Government expenditures, we brought about a tax cut
that has provided them with annual savings of about $7.5 billion.
As the President pointed out in his letter of April 18, 1957, to the
Speaker of the House, this tax cut has already saved our people
almost $25 billion in taxes.
More than 60 percent of that reduction went to individuals. Every
taxpayer benefited.
That was a creditable accomplishment by the Congress and the
administration. Tax receipts are now at an alltime high as a result of
our current prosperity; but, even so, Federal taxes account for a
slightly smaller proportion of our national income than they did in
1953.
We intend to go further at the earliest justifiable opportunity, for
the tax burden is still far too heavy. However, the possibility of a
reduction hi taxes depends upon the degree of success of the administration and the Congress in keeping the budget position sound.
The sixth goal, to make constructive plans to encourage the initiative of our citizens.
A primary goal of this administration is a free and prosperous
America. To encourage the initiative, energy, and saviags of our
people, which are the only means to prosperity, our most important
steps were our anti-inflationary actions which have increased public
confidence in the security and stability of our economy.
In addition, we have taken other helpful action:
1. We relieved the public of the burden of controls.
When this administration took office in 1953, the country was still
handicapped with controls over prices and wages, and the use of certain materials. We promptly terminated these controls.
2. We have reduced Government activities which compete with
private business.
During the past 4 years, some 500 Federal enterprises competuig
with business have been abolished. We have disposed of the Government-owned synthetic rubber producing facilities and the Governmentowned tin smelter to private enterprise; and the Reconstruction Finance Corporation is now in the process of liquidation. Surplus real
estate, worth $366 million, has been sold and turned back to local tax
rolls.
3. We have created a more favorable climate for enterprise.
(a) We have moved vigorously to prevent monopolies.
The number of antitrust prosecutions.has been materially increased
and the number of convictions, guilty pleas, and consent decrees
obtained in the past 4 years has been more than 40 percent higher than
in the preceding 4 years.




246

1957 REPORT OF THE SECRETARY OF THE TREASURY

The number of prosecutions under Section 7 of the Clayton Act, as
amended in 1950, has increased from only 1 in the 2 years, 1951 and
1952, to 29 during this administration.
(b) We have encouraged small business.
Upon the success of small business firms to prosper and grow depends
much of our production and our survival as a free competitive society.
This administration has sought in many ways to aid smaller firms and
to relieve them of burdensome taxes and requirements.
In the past 4 years, small business has benefited materially.from tax
•law changes, the expiration of the excess profits tax law, the reduction
in personal income tax rates in 1954, and the extensive revision of the
Internal Revenue Code, Even more important to the smaller firms is
the general prosperity of the past 4 years.
To aid small firms which are unable to obtain adequate credit from
normal sources, President Eisenhower signed the Small Business
Administration Act on July 30, 1953. That act created the Small
Business Administration, and authorized a revolving fund of $275
million to provide needed loans to small business concerns.
Subsequently, the administration supported increases in the SBA
funds to $375 million in 1956, and to $455 million in 1957. The
.administration now has a bill pending to increase th's to $600 million,
and to make the SBA a permanent organization.
Each year the SB.tS. has made a larger number of loans, with over
$125 million made in the last 10 months, and currentl,y is making
loans to about 60 percent of the applicants whose files have been
reviewed.
(c) We have encouraged trade with other countries.
This administration has effected measures which have aided the
increase in our total foreign trade in 1956 b}^ 22 percent (exports 25
percent) over 1952.
In addition, the Treasury, with the cooperation of your committee,
has put into effect a number of customs simplification acts which
have reduced the complexities attendant on the movement of goods
into the United States. We have also provided greater certainty in
our administration of the tariff laws.
(d) We have enciouraged initiative and activity.
Throughout the past 4 3^ears this administration has continuously
attempted to encourage rather than discourage enterprise. As a result, our productivity and living standards have been rising steadily.
During the past 4 years, 500,000 new business corporations were
formed in the United States. Of course, not all succeeded. A free
economy is not a riskless economy. During that period, 44,000
enterprises, noncorporate as well as corporate, failed, but that is
lower in relation to the number of new corporations formed than during
the preceding 4 years—34,000 failures and 355,000 new incorporations.
(e) We have encouraged savings.
The importance of savings as the anti-inflationary source of financing
is so great that I would like to make these points:
i. There are many people who benefit from higher interest just as
there are many who find it an additional cost.
You and I hear complaints today about the increased cost of mone}''.
W"e know it is nowhere as important as the increased cost of labor, but




EXHIBITS

247

we also know that higher labor cost is a 2-sided coin, it is a 2-way
street. Someone pays more—but someone receives more.
Now, the same is true of interest.
Although many of us owe mone}^ in one form or another, it is equally
true that many of us have savings in one form or another. As a result,
we have a stake in protecting our principal against deterioration in the
value of the dollar.
We have a further stake in a higher interest return on our money.
We are owners of millions of share accounts in savings and loan
associations, time deposits in banks, and mutual life-insurance policies.
Many of us belong to a pension system, and our benefit payments
tend to increase as interest earnings rise.
Some critics allege that higher interest rates benefit only the bankers.
T h a t is nonsense. Earnings of insured commercial banks as a return
on average capital accounts in 1956 were 7.82 percent.
This is lower than the average for the prior 3 years, or for the years
1948-52. Such bank earnings have averaged 8.29 percent for the
past 4 years. This is less than the average of 8.62 percent for the
entire 8 years of the prior administration.
Bank earnings for 1956, of 7.82 percent, are substantially less than
the average earnings of all manufacturing companies which averaged
12.3 percent. In 1952, bank earnings of 8.1 percent compared with
manufacturing earnings of 10.3 percent.
Bankers are brokers of mone}''. When they receive more, they pay
more. Our people have approximately 90 million savings accounts
in banks and savings and loan associations. As you know, during the
past few years most banks and savings and loan associations have
increased the rates they pay to the saver.
The amount of return paid or accrued for savers in the savings and
loan associations (members of the Federal Home Loan Bank System)
increased from less than $500 million in 1952, to an estimated billion
dollars in 1956, a little more than double.
The amount of interest so accrued for savers in mutual savings
banks rose from $500 million to almost $800 million in 1956. Interest
paid or accrued to depositors in commercial banks increased from
about $450 million in 1952, to about $800 million in 1956.
In the past 4 years, interest rates on all these types of savings have
been moving upward and, in a modest way, we have followed with
our recent increase in the interest rates on newly purchased savings
bonds.
ii. Increased interest stimulates savings.
• The higher interest rates paid in the past few years have encouraged
greater savings. During the 4 years of the Eisenhower administration,
our people saved more, both in terms of dollars ($75 billion of personal
savings compared to $56}^ billion in the preceding 4 years), and in
relation to disposable income, 7.1 percent as compared to 6.4 percent.
iii. Increased savings are a major means of assuring continued high
employment and prosperit}^.
Increased capital investment—more tools, more factories, more
equipment—is necessary to provide the jobs with the high wage levels
which are paid in this country today. I t is the principal means by
which we can raise our living standards.




248

195 7 REPORT OF THE SECRETARY OF THE TREASURY

To the extent such increases in capital investment are provided-by
excessive bank credit expansion, they are inflationary. To the extent
they are financed out of savings, they are not.
With the great increase in capital investment in tools, it is essential
to encourage savings in order that as little of this investment as possible
be financed in such a way as to stimulate another round of inflation.
In the past 4 years, we have moved to an unparalleled prosperity.
More people are living better than ever before. I t is this prosperity,
in turn, which creates heavy demands for money and requires some
anti-inflationary restraint.
We have made great progress toward the sixth goal established by
the President, to make constructive plans to encourage the initiative
of our (citizens.
Current monetary and fiscal policies have been beneficial to the
economy.
This administration has successfully encouraged saving, enterprise,
and production. This is a demonstrable and desirable accomplishment. With such means as it has had at its disposal, the administration has attempted to arrest inflation and has been largely
successful.
I note, however, that there have been some complaints that the
monetary and fiscal policies have been too severe and have affected
certain segments of the economy unfairly.
A. Has the administration's anti-inflationary program been
injurious?
Let me review again what the administration has done to fight
inflation.
We have reduced the Government debt.
We have reduced Government expenditures.
We have balanced the budget.
We have reduced the floating debt.
We have moved some of the debt out of the hands of the banks and
put more of it into the hands of individual citizens.
The reduction in Government expenditures has perhaps injured
those corporations which might have received orders had the Government spent more money. The entire course of action, having been
anti-inflationary, may have injured those few who might have benefited, at the expense of the rest of our citizens, from runaway inflation.
But, except for these few, the good of the overwhelming majority
of our people was best served by the course we have followed.
We have also endorsed the independence of the Federal Reserve
and conducted our affairs in such a way as to avoid interference with
its anti-inflationary monetary policy.
B. Has the Federal Reserve's anti-inflationary program been
injurious?
1. By restricting the growth of credit?
The Federal Reserve's program is one of allowing the natural
market forces to operate, while adjusting credit availability to meet
the needs of normal seasonal activities and sustainable econoniic
growth.




249

EXHIBITS

The Federal Reserve has ceased its earlier policy of creating additional bank credit, except to the extent needed to meet the basic
requirements of a healthy economy. The Federal Reserve has not
reduced the volume of available credit.
Some current discussions of Federal Reserve policy proceed on the
mistaken assumption that the Federal Reserve has reduced the amount
of credit below an amount previously available.
Nothing could be further from the truth. Credit, the aggregate
of new savings and new bank credit, has expanded substantially in
the past 4 years, and at a rate fully equal to the need, to sustain a
very high use of both services and materials.
There is more credit outstanding today than ever before—$146^
billion more than in 1952.
I am going to read that again: There is more credit outstanding
today than ever before—$146K billion more than in 1952.
Then follows a table which outlines where that extension of credit
has taken place, and I would just refer to the last column to illustrate.
Uses and sources of credit
[In billions of dollars]
Amount outstanding
Dec. 31,1952 Dec. 31,1956
Uses of credit:
Individual:
Mortgage
Consumer
Other
Total
_
Corporate .
_ _
State and local government
Total (other than Federal)
Federal Government
Total

Change

82.4
27.4
25.7

_
_.. .
.._

i _ _

131 5
41.9
34.1

+49.1
+14.6
+8.4

135.5
202.9
31.2

207.5
249.3
50.0

+72.0
+46.4
+18.8

369.6
267 4

506.8
276 7

+137.2
+9.3

637.0

783 6

+146.6

Mortgage credit has gone up $49 biUion, consumer credit $14
billion. This is over a period of 4 years we are now talking about,
over the period of 1952 to 1956, tlirough December of 1956. Mortgage credit has gone up $49 billion; consumer credit $14 billion;
and ''Other," $8}^ billion, or a total of $72 billion.
Corporate has gone up $46.4 billion; State and local governments
nearly $19 billion, for a total of $137 billion.
Now then, the Federal Government has gone up during that same
period $9.3 billion, maldng a total, if you add it all up, of $146.5
billion which occurred during the 4-year period.
As important as the fact of the increase in credit, is the source of
this increase.
Now, the sources of the increase, Mr. Chairman, again a table, of
which I will read only the last figures:
Nonbank credit over the 4 years which came about through savings
during that period, nearly $136 billion; bank credit, less than $11
billion—for a total of $146.5 billion.




250

1957 REPORT OF THE SECRETARY OF TH^E TREASURY
Uses and sources of credit
[In billions of dollars]
Amount outstanding
Dec. 31,1952 Dec. 31, 1956

Sources of credit:
Nonbank credit (savings)
Bank credit (money supply)

508.0
129.0

._

643.8
139.7

+135.8
+10.7

637.0

. ..

Total.

Change

783.5

+146.5

In 1956 alone, total debt, other than Federal Government; increased $37.5 billion. Of this increase, $17.5 billion was individual
debt $15.5 billion corporate and $4.5 billion State and local government debt.
The increase in total credit in the past 4 years has been greater than
i n either of the 2 preceding 4-year periods. But a most important
fact to note is that 93 percent of this increase has come from savings
and only 7 percent from an expansion in the money supply.
Then follows another table which shows where this has come from,
and it shows that $136 billion came from nonbank credit; and about,
a little less than $11 billion from extension of bank credit, for the
total of $146 billion of extended credit, iricreased credit.
Uses and sources of credit
Increases in 4-year period
December
1944-48

December
1948-52

December
1952-56

In billions of dollars
Uses of credit:
Individual:
Mortgage.Consumer.
other

_

Total
Corporate
.
.
.
State and local government

19.4
9.3
3.7

32.0
13.0
7.4

49.1
14.5
8.4

32.4
29.6
2.7

52.4
63.2
11.5

72.0
46.4
18.8

64.7
20.8

127.1
14.5

137.2
9.3

_

..

85.5

141.6

146.5

^ ........

64.3
21.2

124.2
17.4

135.8
10.7

85.5

141.6

146.5

._
.

Total (other than Federal)
Federal Government
Total
Sources of credit:
Nonbank credit (savings).
_
Bank credit (money supply).---.
Total

-

-

•

Percent
Percent of increase accounted for by:
New savings money supply
Expansion in
Total

;




75
25

88
12

93
7

100

100

100

EXHIBITS

251

Of the $146.5 billion increase, $135.8 billion has come from existing
funds of nonbank investors, which amount may be called ''savings,"
and only $10.7 billion from bank credit expansion, or increased money
supply, new and additional spendable dollars.
The total increase has been adequate for our most healthy econoinic
expansion in many years. The growth in'the money supply, at the
rate of only 2 perceiit per year, has prevented any objectionable bank
credit inflation.
The secret of success in providing adequate funds for proper expansion without inflation is to encourage savings as the principal
source. That we have done.
The foregoing table points out three most important facts:
(i) Total loans have increased substantially in the past 4 years—^
indeed more than in either of the 2 preceding 4-year periods.
(ii) This increase has been primarily in private credit-:—credit t o
buy homes, cars, consumer goods^rather than tanks or guns.
(iii) This increase has come much more from savings and less from
bank credit expansion than in prior years—hence it has been much
less inflationary.
The Federal Reserve policy of not encouraging more rapid bank
credit expansion has been based on the premise that further expansion
of bank credit would merely have enabled more would-be buyers to
bid up the price of the limited supply of goods and services.
This policy has been necessary and in the best interests of the
great majority of our people. But despite the substantial credit expansion that has taken place since there has been less new credit
created than the demand therefor there has been some disappointment, and in some cases real hardship.
I t is said that the unavailability of unlimited credit has been
particularly burdensome on the housing industry, on small business,
and on State and municipal projecits. As these areas are very important to all of us, perhaps we should briefly review them.
Let's look at housing.
I t is charged that we have impeded the flow of credit to housing.
During the past 25 years, far from restricting credit to housing the
Government has greatly increased the volume of credit available to
this industry, over what it would be in a normal free market, by
stepping in and guaranteeing the payment of millions of homeowners^
mortgages.
This has helped to provide many Americans with homes which they
otherwise could not afford. On the whole, this has been a good program, but we must recognize that it has introduced certain artificialities into the free market for the purpose of diverting credit from other
uses into home mortgages, credit that wouldn't be available to housing
without these Government guaranties.
That was true under the prior administration; it is true under this
administration.
Has this administration restricted the terms on new housing loans?
We have not—we have relaxed them. We have lowered the minimum
downpayment on FHA loans, and we have permitted 30-year loan&
in place of the former 25-year maximum. We have materially liberalized F H A mortgage terms on existing homes.




252

1957 REPORT OF THE SECRETARY OF THE TREASURY

In addition, F N M A special-assistance programs have L^en innovated since 1952 to provide mortgage support for relocation, redevelopment, and rehabilitation housing under Sections 220 and 221 of the
National Housing Act, for housing for the elderly, and for Capehart
military housuig.
Also, the voluntary home mortgage credit program, started in 1954,
has helped obtain home financing for veterans and otliers in small and
remote communities, and for minority group members.
Has the administration restricted the availability of mortgage funds
by curtailing the F N M A secondary market operations? Again, let's
look at the record.
Purchases of mortgages by F N M A in the secondary mortgage
market, during the last 12 months, have totaled nearly a billion doUars,
an amount surpassed only in the calendar year 1950.
. Furthermore, in 1950, all of those funds were provided by the
Treasuiy; under the sounder participating program as Congress has
now revised it, the funds largely come from private sources.
• According to preliminary figures, in A/[ay of this year there were
96,000 private nonfarm housing starts. This is a second consecutive
monthly increase on a seasonally adjusted basis, and brings the annual
rate of new housing starts in M a y up to 990,000.
While this is somewhat below the annual rate of 1,146,000 starts in
M a y a year ago, and even further below the 1,398,000 rate in M a y
1955, it is still a substantial volume of housing.
There are undoubtedly many contributing causes to this decline.
For the past few years, home construction has been running ahead of
new family formation, with a consequent reduction in the backlog of
young families needing a home.
Building costs have risen substantially in the past 10 years. The
price of land has also risen, as have State and local taxes, which are
an element of cost. As the aggregate of these costs result in substantial increases in the price of a home, the number of potential
purchasers is reduced.
This cost increase has been accentuated by the host of new laborsaving appliances and luxury equipment which our people feel are
now necessary in a home. There has been actual overbuilding in
some localities and a diminishing supply of desirable building sites
in others.
All of these factors have had an adverse eff'ect on new home construction, but the unavailability of unlimited mortgage credit is also
a major factor, and it falls most heavily on those who heretofore have
been able to obtain mortgage credit only through Government assistance.
The number of new homes financed through conventional mortgages
(based entirel}^ on the credit of the borrower and the amount of his
equity) has not declined. Indeed the number of such housing starts
so financed in the first 5 months of this year (269,400) was slightly
higher than the number so financed in the first 5 months of last year.
: I t is the Government-guaranteed mortgages which are finding the
less receptive market. The number so financed in the first 5 months
of this year (114,200) was 42 percent less than the number financed
in the first 5 months last year. This decline is due to the lower interest
rate which such guaranteed loans bear.




EXHIBITS

253

The increase in the maximum rate on FHA loans from 4}^ percent
to 5 percent has given such financing renewed strength, but the lack
of congressional authorization of an increase in the rate on VAguaranteed mortgages has made it increasingly difficult for a veteran
to obtain such a loan.
The significance of rate limitations is indicated by the most recent
figures. Housing starts financed by conventional mortgages increased
from 63,900 in April to 69,000 in May, which compares with 64,500
in May 1956.
Housing starts under the FHA program increased from 12,100 in
April, to 15,000 in May, as compared with 19,700 in May 1956.
Housing starts under VA inspection declined from 13,500 in April,
to 12,000 in May, compared with 26,600 in May 1956.
Thus it appears that there is only a relatively limited supply of
mortgage credit available for the small downpayment, extendecl terms,
and 4}^ percent interest rate on VA guaranteed loans.
There is a substantial volume of mortgage money available for
FHA insured mortgages at the 5 percent rate, although there is some
insistence on higher downpayments than the minimum permitted
under FHA terms. There appears to be sufficient mortgage credit
available to finance those borrowers who can make an adequate
downpayment and pay the going rate of interest.
This is the result of a free money market. I t undoubtedly has
caused many young families to postpone the purchase of a new home.
Their disappointment, and that of the builder, is understandable.
Yet how much better off would they have been if a more than
adequate supply of credit had brought about increased prices, not
only of their home but of all of the other articles which they desire?
Let's look at small business.
I am sure that there have been some small business firms which
have been unable to obtain all of the credit that they would have
liked at the rates they would like to pay. I believe this has been
true in every year through history, and it has been true for each of
the past 4 years, but this does not mean that there has been any
reduction in the dollars of credit extended small business in the past
4 years. Quite the contrary. Both the number and amount of loans
made to small business have been increasing substantially.
In this connection, we must remember that the great majority of
our banks are themselves quite small, and the size of the loans they
can make is limited by law. Of the 13,101 insured commercial banks
in the United States, 10,853 have deposits of less than $10 million
each and, in general, cannot make loans above $100,000.
That is almost 11,000, out of the IO.OOA, that are small banks.
Total loans of banks in this catpa^^v increased by almost $2.1
billion during the past 4 years, an increase of 19 percent. Virtually
all of their loans are to farmers, homeowners, consumers, and small
business firms.
Another 1,802 banks generally can make loans up to $500,000, but
Iriost of their loans would actually be in amounts of less than $100,000.
Total loans of banks in this category increased by $4.4 billion during
the past 4 years, an increase of 44 percent.
The remaining 446 banks do indeed represent almost two-thirds of
the Nation's deposits, and are of great importance to the economy.




254

1957 REPORT OF THE SECRETARY OF THE TREASURY

They are the primary source of barik credit to larger business firms,
tet even they make many loans to small business.
A survey made of a representative group of 78 such large balnks
'indicated that in the year from September 1, 1955, to August 31, 1956,
their small business loans, for amounts of under $100,000, had iiicreased by $228 million, or 14 percent; and that the number of such
loans had increased by.5 percent.
Within this group there was more of an increase, both in numbers
and dollar amount, in the loans under $50,000 than in those between
$50,000 anci $100,000.
While it is true that total business loans of banks increased somewhat more rapidly than those loans for amounts under $100,000, this
is a pattern which would be expected in such a period of rapid economic
expansion, for the cyclical heavy goods industries naturally tend to
require a larger volume of credit in such a period.
At all times the established, successful firm is more able to obtain
necessary credit than is the new, unproven or unsuccessful'company,
and this is particularly true of a period of credit stringency. Not all
firms have obtained all of the credit they have wanted. Yet, in the
aggregate, they have obtained more than ever before.
In addition to the increased amount of bank credit received by small
business during ihe past 4 years, there has also been a sizable volume of
book credit extended by larger firms to smaller
firms—distributors,
merchants, and suppliers.
I do not mean to minimize the disappointment, inconvenience, and
in many cases real hardship, that some businesses have expeiienced
because of their inability to obtain as much credit as they would have
liked.
Indeed, this is a matter of deep interest to the adminis teration which,
as you know, has supported the creation of the Small Business Administration, the enactment of improved tax laws, and the granting
of exemptions from certain Securities and Exchange Commission
regulations.
' In addition, we have made vigorous efforts to see that more defense
work is subcontracted to smaller firms.
I understand that you intend to invite Mr. Muller, Assistant Secretary of Commerce, to testify before 3'ou, and I believe he will discuss
the matter of small business financing at somesvhat greater length. I
do, however, want to make the point that there has been a large
-volume of credit available to, and used by, small business in the past
4 years.
Let's look at States and municipalities.
In the past 4 years, a quarter of a million new schoolrooms have
been built for our ^^oungsters. Total public construction in 1956 was
23 percent above 1952 levels, and educational construction was up 56
percent.
During 1.956 alone, new borrowing b}^ States and municipalities
totaled $5.4 billion; and during the last 9 months for which figures
are now available, more elementary and secondary school bonds were
sold than in any 9-month period in our history.
State and mimicipal financing has increaseci b}^ $18.8 billion in the
past 4 years. This is more than it has ever increased iri any other




EXHIBITS

255

4-year period, and compares with only $11.5 billion during the period
1948-52.
These figures do not demonstrate any extraordinaiy burden on State
and municipal financing from lack of available credit. Undoubtedly,
local governments have been unable to obtain all of the funds they
would have wished, but they have built more and they have financed
more than in any other 4-3^ear period.
The Federal Reserve's monetary policy for the past 4 years has been,
and is, one of discouraging the growth of credit at quite as rapid a rate
as would-be borrowers desire. As a consequence, some individuals,
some home purchasers, some small businesses, and some municipalities,
and other categories of our citizens, have felt some pinch as a result
of limited credit. But in the past 4 years, small loans to business
have increased substantially.
In the past 4 years, $57.5 billion has been spent for housing—as
much as had been spent in the preceding 6 years.
In the past 4 3^ears, $16.7 billion has been.spent for new highway
construction—more than had been spent in the preceding 11 years.
In the past 4 years, $8.8 billion has been spent for school construction—more than had been spent in the preceding 20 years.
This is not the record of extreme credit stringenc}''. 4ny freer
credit would have further inflated prices.
Let's look at the rise in interest rates.
The Federal Reserve's abandonment of its pegging of prices in the
bond market has prevented an unlimited growth in credit. I t was
intended to, and did, slow' the rate of growth of bank credit.
I t also has resulted in some increase in interest rates. I t is alleged
by some that this increase in interest rates has brought about a
severe increase in the burden of taxes and in the prices we pay for
manufactured goods, or utility services; that it has materiall}'- increased
farmers' costs, or the price of a home.
Now, are these charges true?
Higher interest, although the result of a lesser supph^ of credit
than the demand therefor, a condition which prevents far greater
inflationary increases in other costs, is itself an element of general
costs and in some cases may be reflected in higher prices.
However, interest payments are such a small fraction of the total
cost of business operations, that a rise in the rate does not represent
much of an increase in total cost.
What is the interest burden on the taxpa37'er?
Total budget expenditures for fiscal 1957 are estimated at $68.9
billion. Of this, $7.2 billion, or 10.4 percent, represents interest
expenditures. The per capita cost of all expenditures of the Federal
Governm.ent for this fiscal 3^ear is $406; for interest alone, the per
capita cost is $42.40.
In 1952, interest on the public debt was $37.57 per capita. Thus
the increase in interest on the public debt during the past 4 years
amounts to less than $5 per person.
Now, what is the effect on the price of manufactured goods?
In 1946, gross sales of all manufacturers amounted to $132 billion.
Manufacturers had net interest expense in that year of about $154
million, equal to one-eighth of 1 percent of total sales.
In 1952, interest expense had increased to about one-fourth of 1




256

1957 REPORT OF THE SECRETARY OF THE TREASURY

percent; and on the basis of limited information now available, it
appears that the 1956 ratio will be about one-third of 1 percent.
Thus, interest costs are orily one-third of 1 percent of the average sales
price of manufactured goods.
Of the cost of an article selling for $100, about 33 cents represents
interest, with no more than 10 cents of that representing an increase
since 1952.
Furthermore, the increase in this minor item of interest costs
reflects an increase in the amount of debt as well as an increase in
interest rates.
The relative unimportance of interest as a part of total costs is
reflected in the fact that during the same 10-year period, prices of
goods that consumers buy rose 27K percent, or $27.50 on a $100 item
(due to labor and other costs), compared to the 20-cent increase due
to higher interest.
^
In other words, $27.50 for other items as compared to 20 cents for
interest.
The far greater significance of the increase in labor and other costs
is reflected quite clearly in the price of consumers' services which
have risen 4 3 ^ percent ciuring the same 10 years.
I t is apparent from these figures that even with increased interest
rates and increased indebtedness, the burden of interest costs on
manufacturers in reference to their total costs is very slight. The
effect of higher interest on the sales price of goods is hardly significant.
This is even more apparent when we compare the increased costs
of the last year. Prices of goods bought by consumers (which reflect
material, labor, interest, and profit) have risen 1.3 percent. .The
price of consumers' services (which reflect primarily labor costs) has
gone up 2.3 percent.
How does it affect public utility rates?
I t has been suggested that higher interest rates lead to substantial
increases in public utility rates. This sounds plausible because public
utilities rely heavily on bonded indebtedness.
However, the latest figures available indicate that the net interest
expense of public utilities is still less than 4 percent of gross revenue—
the same proportion as in 1952. Even for electric utilities, where
average interest cost on long-term debt now exceeds 5 percent of
gross revenue, the relative cost of interest has risen very slowly.
The estimated average of 5.2 percent for both 1955 and 1956
compares with 4.8 percent in 1952 and 5.0 percent for 1946. In
other words, 5.2 in the last 2 years; 5.0 percent in 1946.
Now, farmers' costs:
Difficult as the farmer's position has been, it is not the result of
interest rates. The Department of Agriculture estimates that only
about 5 percent of farmers' costs are for interest.
Interest rates on farm loans outstanding in insured commercial
banks on June 30, 1956, averaged 6.1 percent. This was fom'-tenths
of a percentage point higher than the average rate reported in a siniilar
survey made in 1947; less than one-half of 1 percent difference since
1947.
Thus this four-tenths of 1 percent increase in rate would be less
than one-half of 1 percent of his total costs or 5 cents on a sale of $10
worth of farm products.




257

EXHIBITS

Now, the cost of a home.
The effect of higher interest rates in relation to the decline in private
nonfarm housing starts from 465,000 units in the first 5 months of
last year to 384,000 for the same period this year, has been grossly
exaggerated.
Housing is perhaps the most dramatic example of the effect of risingcosts. Hourly wage rates in building.construction have risen 21 percent in the past 4 years. I n the manufacture of some products, the
increased cost due to hourly labor rates has been offset by greater
efficiency. Through use of additional capital goods—tools—the
productivity per man-hour has been increased enough so that the total
cost has been kept fairly stable. This is true of most of our home
appliances.
However, in those fields in which mechanization is not practicable
or in which restrictive practices or legal requirements have prohibited maximum efficiency, the cost of the finished product has risen
in close relation to the increase in hourly labor rates. There is no
better example of this than housing.
Many home purchasers consider only the size of the required
monthly payment—not the number thereof or the elements that make
it up. To them, interest is of no significance. To the more sophisticated purchaser who inquires as to the component elements in his
mortgage payments, increased interest rates are small in relation to
increased labor and material costs.
This is apparent if we compare the cost and financing charges of
the same house in the spring of 1946, the spring of 1953, and the spring
of 1957. Let us take as an example a house that cost $10,000 to build
in the spring of 1946, and compute the required monthly payments on
the basis of 15 percent down and the balance over a period of 20 years.
Spring of—
1946
Fstimatftd co.st of hou.«!ft
_.
Interest rate (FHA)
Monthly payment (for 20 years)
Increase in cost of house since 1946
Increase in monthly payment since 1946:
Due to interest rate
Due to other costs

_

__
percent..
...

$10,000
4
$51. 51

..

1953
$17,300
$91.06
$7,300

1957
$19,000
5
$106. 58
$9, 000
$8.71
$46. 36

NOTE.—Housing costs are based on data compiled by Roy Wenzlick & Co.

The preceding table shows that the $10,000 house in the spring
of 1946 cost $19,000 in the spring of 1957; and of the amount of
increase in monthly payments, $55.07, $46.36 was due to other costs
and $8.71 was for interest.
The monthly payment has more than doubled in 11 years. Of this
increase of $55.07, $46.36 reflects higher labor and material cost, and
$8.71 is due to higher uiterest rates.
During the past 4 years in which our policies have resisted inflation,
the sales price of that house has gone up much less—about $400 per
year as compared to about $1,000 per year from 1946 to 1953. And
I want to repeat that the increase in the cost of that house, from
438363—58-

-18




258

1957 REPORT OF THE SECRETARY OF THE TREASURY

$10,000 to $19,000, has gone up much less in the 4 years since we have
had these restrictive practices than it did in the 4 years when we had
the easy money.
In other words, it went up $400 in these years as against $1,000 in
the easy-money years, and the interest went up only $8 a month.
Which has been the major factor in discouraging xonstructiori?
The $9,000 increase in building cost ($46.36 per month), or the 1percent increase in the cost of interest ($8.71 per month)?
While interest is an element in the cost of mortgaged homes« the
increase in interest rates has not been the major factor in delaying
home construction. Mortgage interest rates were higher in 1955 than
in any prior recent year; yet new nonfarm housing starts were the
second highest in history, at more than 1,300,000.
Alm.ost 5 million new dwelling units have been built in the past
4 years. Less than 3K million new households have been formed in
that period, so that Iji million units have gone to satisfy prior shortages
and to cover houses' abaridohed or razed to make way for new construction. The proportion of married couples without their own household
has declined 21 percent since 1952.
A strong desire continues to exist for better housing, but it is
hindered from becoming an effective demand by today's inflated
prices. To attempt to force an acceleration in home construction
today by making more credit available for housing would add further
to the already increased building costs.
This would not only be inflationary, it would encourage uneconomic
practices and curtail the new construction that we might otherwise
expect in years to come.
The foregoing review of the eff'ects of this administration's fiscal
policies indicates that the supply of credit has not been reduced.
The supply of credit has m.erely been prevented from expanding as
rapidly as the demand therefor.
This slov^dng of the rate of growth of credit has inconvenienced those
who have found credit unavailable, and imposed a higher charge on
those who have borrowed. These results are hardly welcomed for
their own sal^e, but they are the price we have to pay for the price
stability that we have achieved in the past 4 years.
This has been a far greater stability in prices and in the purchasing
power of the dollar than we have enjoyed for two decades. Faced
with this choice between the inconvenience of limited credit and tho
robbery of renewed inflation, our people would certainly choose the
course which we have pursued for'the past 4 3'ears.
In conclusion, I have attempted to review for 3^011 the conditions
existing when the Eisenhower administration took office, the goals
that the President set for us, and our progress toward those goals.
We have not achieved perfection b3' a long wa3^ We have been,
unable to fully accomplish some of our debt-managem.ent objectives.
We have perhaps checked, but not entirel3^ stopped, inflationary
pressures.
In the process, some of our citizens, some of our municiiD aii ties,
and some of our businesses have been unable to obtain all of the creciit
they would have liked.
We have had a large m.easure of success in encouraging the initiative




EXHIBITS

259

of our citizens, but not ever3^ business has prospered as much as it
might, nor ever3^ citizen had all of the comforts he would enjoy.
I acknowledge imperfections in our accomplishments, but i entertain no doubt as to the propriety of our goals or the wisdom of our
policies. To aid 3^011 in your consideration of the alternative courses,
and to help you measure their promises against the actual results of
the past 4 years, let me remind you of soirie of our achievements.
When we took office in 1953, the Federal debt was equal to 89 percent of our national income—in December 1956, it was 79 percent, as
compared with 89.
For the fiscal year 1953, budget expenditures were $74.3 billion;
and, for the vear 1957, thev are estimated at $68.9 billion, and $71.8
billion for 1958.
For the fiscal year 1953, the budget resulted in a deficit of $9.4
billion—for 1957, it \vill result in a surplus.
From 1939 through 1952, the cost of living increased an average of
7 percent a 3^ear—for the.past 4 years, the average increase has been
only six-tenths of 1 percent.
In the past 4 3^ears, civilian employment has risen 6 percent,
average weekly earnings of production workers in manufacturing have
risen 18 percent and, after allowance for the 2.4-percent increase in
consumer prices which occurred between 1952 and 1956, the gain in
workers' earnings, after taxes, amounted to about $10 per week, or
more than 15 percent in real purchasing power gained during the
period.
Personal income of individuals has risen every year, from $272
billion in 1952 to $325 billion in 1956, a gain of 20 percent, and an
estimated $340 bilhon for 1957.
Labor income has not onh'^ risen in dollars; it has increased from
67.2 percent of national income in 1952 to 69.8 percent in 1956, while
corporate profits declined from 12.7 percent of national income to
11.9 percent.
Striking achievements have been made in housing. The 5 million
dwelling units that were constructed exceeded the number built in
any previous 4-3^ear period, and substantiall3^ enlarged the housing
stock available to the American people.
There were improvements in the size, design, and equipment of new
homes, and sizable outla3^s for repairs and alterations added to the
comfort and convenience of existing homes. A growing proportion of
our homes were .owner occupied-:—60 percent in 1956, as compared with
55 percent in 1950.
This is a gratif3dng record of the improvement in the level of living
that can be achieved only through a vigorous, competitive, free-market
economic system which ofi'ers both individual freedom of choice and
the stimulation of initiative through personal incentive.
In particular, it shows the capacity of such a system to bring about
confidence and daring in enterprise and widespread participation in
the benefits of economic expansion. This is in sharp contrast to the
artificial restrictions, interferences, and controls of a paternalistic
bureaucracy.
The past 4 years have demonstrated the ability of the Nation's
private econom3^ to expand, to provide an increasing number of better
jobs at better pa3^, and to raise levels of living.




260

1957 REPORT OF THE SECRETARY OF THE TREASURY

These 4 years have tested the capacity of our economy to adjust to
large changes in the pattern of demand and the efl'ectiveness of public
policies designed to promote growth of individual freedom and
stability in the economy.
Because the problems are continually changing in a dynamic economy, policies aimed at promoting stable growth must be flexible.
This fact was well illustrated in the past 4 years of the Eisenhower
administration. Our problems have shifted from those of a controlled,
wartime economy to those of a rapidly widening prosperity. We have
been able to encourage this prosperit37^.
Through the flexibility of monetary and flscal policies, the Government has been able to adjust to the rapid changes in our economy.
We have moved forward toward our goals and demonstrated the great
capacity of a free economy to correct imbalance and to maintain
growth with a high degree of stability.
We have accommodated the reduction in wartime Government
spending, accompanied by recordbreaking tax reduction, and off'set a
threatened decline in employment and business activit3^ in 1953-54.
We have encouraged an expansion of enterprise to new high levels,
and, through expenditure and debt reductions as well as debt management, we have slowed the growth of inflationary credit.
We have encouraged a rapidly rising econom3'^ which has brought
more wealth, more purchasing power, more comfort, more jobs, more
homes, more luxuries, more leisure, more education, and more security
to our people than they have ever enjoyed before.
Gentlemen, I take great pride in making this report.
EXHIBIT 36.—Remarks by Under Secretary of the Treasury Burgess, October 23^
1956, at the 82d Annual Convention of the American Bankers Association^
Los Angeles, Calif.
On behalf of the Treasury, let me acknowledge the great service which the
country's banks have rendered to the Government during the past year in handling
our funds, in helping to sell our security issues, and in many other ways.
We rely particularly on your voluntary efforts for the sale of savings bonds.
About 40 million Americans now own more than $41 billion of Series E and H
savings bonds, a new alltime high mark. In spite of the increased competition
of other investments at higher rates, sales of these bonds this year will exceed
$5 billion. Sales of small denomination bonds are ahead of last year.
Our partnership in the sale of savings bonds dramatizes the joint responsibihty
of Government and the banks for the preservation of the value of the United
States dollar. In selling these bonds to millions of people, we incur an obligation
to see that the dollars in which they are finally paid preserve their buying power.
In recent months, this issue has attracted much pubhc attention. The Government is being criticized for allowing, in nearly four years, a 2% percent increase
in the cost of living. The same critics are, at the same time, attacking the steps
taken by the Government to preserve the value of the dollar and keep prices
stable. Under the previous administration, which did not take effective steps
to preserve the value of the dollar, the cost of hving rose 92 percent and the value
of the 1939 dollar was cut to 52 cents. About half of this loss was after the conclusion of World War II.
Thus, there has been inflation, and the threat continues. This threat is not
solely a domestic issue. It is a world-wide problem. Everywhere recognition
grows of the wicked damage which inflation does to the young and the old, the
pensioner, the saver, the salaried and professional worker'—and to sound economic
growth.
One reason for the inflation danger is that we are now enjoying a great peacetime
prosperity—the first real peacetime prosperity in this generation. Month by-




EXHIBITS

261

month, we are making new records.in the country's national product and national
income. Our dollar wages and, more important, our real wages are at new
high levels.
With confidence in the future, American business is making unprecedented
investments in factories, machinery, public utilities, etc. Local and State governments are building roads and schools. In addition, we are building new homes
at a rate of better than a million a year.
Because of our great prosperity, the demand for money is greater than the
amount we are saving. And this in spite of very large savings. Individuals are
saving about 7 percent of their income, and business is saving and using for plant
development about half of its net income.
But all the money we are saving, as individuals and business, is not enough
to pay for all the things we Americans would like to have and to do. That is
fundamentally the reason why we are short of money and interest rates have risen.
Because of these huge demands, money for investment is being drawn from the
banks as well as from savings. Bank loans to business have risen by leaps and
bounds to alltime highs, with the seasonal peak still ahead. More people are
borrowing more money than ever before, but they want still more.
In such a situation, everybody who wants money simply can't have as much as
he wants. If the Government tried to provide it through the Federal Reserve
System, that would be straight inflation.
If we are to keep our prosperity and continue evenly our dynamic growth
without inflation and without ''boom and bust," we must, as a Nation, follow
policies directed toward two objectives: First, to restrain or postpone some of the
less essential uses of money, and, second, to encourage more saving.
These policies are a joint responsibility of the Government, of business and
banking. We are all in the same boat. We don't want ''boom and bust;" we do
want to continue our fine prosperity.
Here is what the Government is doing:
(1) We have brought the Federal budget into balance and started to reduce
the public debt. You can't have stable money if Government deficit spending is
feeding the fires of inflation.
(2) We have reduced taxes, leaving more money in the hands of the taxpayers.
(3) We have assured to the Federal Reserve System its freedom to exercise
independent judgment in its monetary policies. The System, in turn, has allowed
the relation between the supply and the demand for funds to express itself in
interest rates.
Protected by these policies, we have had remarkable price stability. Confidence
is high and savings are growing. These fundamental steps take time to work,
but we think they are working.
But the banks of the country also have a responsibility for preserving the value
•of the American dollar. They are at the crucial point of impact with the individual borrower. For national policy only becomes truly effective when the bank
officer sits down with the borrower and discusses specific loan problems.
With the present demand for money running beyond the accumulation of
savings, the banks have to be selective in their loans.
Fortunately, in this country, the Government does not try to dictate to the
banks just what kinds of loans they can make or not make. That rests in the
judgment of the individual banker. The banker thus assumes stewardship in
administering the national policy. The critical question in banking today is how
the banks carry out this stewardship. Do they freeze up at some point and
make no more loans? Do they, as I have heard suggested in some cases, say to
the borrower, "Bill, I would like to take care of you, but we are fresh out of
money because of Federal Reserve policy."?
Or does the banker screen his loans with care, trying to see that every sound
and essential requirement for credit is met but that more speculative and less
desirable requests are postponed or reduced? And does he explain the real
reasons for restraint in lending in the interest of the borrower?
I believe the evidence is conclusive that the banks of the country have generally
been following wise policies. The recent survey of the American Bankers Association of 78 representative banks shows that loans to small business are 14 percent
higher than a year ago. This and other evidence from many localities indicates
that the essential needs of sound borrowers are being met—but with proper
discrimination.
The action which you, as bankers, and we, in Government, take at this time
has a weighty impact on human welfare of tomorrow. What all of us do today




262

1957 REPORT OF THE SECRETARY OF THE TREASURY

will determine whether the pattern of our economy shall be that of "boom and.
bust" or whether we shall continue our high prosperity and dynamic growth
without serious interruption.
The way you deal with your customers at this critical time will affect thepublic reputation of banking more than any advertising campaign.
Our joint ability to recognize and explain Federal Reserve policies will influence
public opinion of the Reserve System and of sound money policies. If we should
lay all the blame for loan rejections on the Federal Reserve System, we might
undermine, its independence and invite political reprisals. Most of us here today
value highly the contribution of the Federal Reserve System to sound money,
and we must not take it for granted.
Without question, we have today—all of us working together—a great opportunity. The country is enjoying remarkable prosperity and vigorous growth.
With wisdom, understanding, cooperation, and courage that prosperity and
growth can be carried far into the future.
ExmBiT 37.—Remarks by Under Secretary of the Treasury Burgess, February 5,
1957, before the Citizens Committee for the Hoover Report in conjunction:
with their Third National Reorganization Conference, Washington, D. C.
Financial stabihty is one of the great foundations of the unparalleled prosperity and growth of our country. We have grown because of the enterprise of our
citizens, and that enterprise is founded on confidence, confidence that people can.
build for the future for themselves, their children, and their grandchildren.
The three great foundations of confidence are security from outside attack,
justice, and financial stability. Not the least of these is financial stability. For
financial instability is the thief and the robber that takes away by inflation the
fruit of labor, just as surely as the enemy or the unjust sovereign. Those who
believe this place financial stability at the very head of the list of economic and
social virtues.
The methods of achieving financial stability are not secret or novel. Theyare exactly those which Alexander Hamilton, with the support of George Washington, estabhshed in this country by almost superhuman wisdom and effort.
They are threefold: a balanced budget, an honored and properly managed debt,
and a banking mechanism dedicated to serve the people's welfare. Today, as
then, these three simple principles are the basis for financial stability.
These principles have always been recognized objectives of Government in.
the United States, and our record in achieving them has been better than that
of almost any other country. Therein lies perhaps the greatest secret of our
growth and prosperity.
We have proved the value of these principles, not only in their observance but
negatively also in their neglect. For at times when we have departed from them,
we have suffered inflation and deflation, boom and bust. Foreign experience is
equally convincing.
For a number of years we faltered seriously in following these principles, and
between 1939 and 1952 our currency lost about half of its buying power. The
burden fell on all groups of our people but most unfairly on some who have
deserved the best from their country—the thrifty, the salaried and professional
people, the pensioner, and, from time to time, the farmer.
In the past four years we have returned toward the more rigorous practices
of these three great principles. Between the fiscal year 1953 and the fiscal year
1955 expenditures of the Federal Government were cut by $10 billion, from $74
billion to $64 billion. This, together with rising revenue, financed a tax cut of
$7.4 billion and brought us a balanced budget for two years, with a third in
prospect.
With respect to monetary policy, the Federal Reserve System regained its
freedom to exercise its powers solely for the public welfare rather than to suppojt
the prices of Government bonds. The exercise of those powers helped to check
an inflationary movement early in 1953, helped to cushion a decline in 1954, and
has held back inflationary trends in the past 18 months.




EXHIBITS

263

In the management of the debt, we have regained freedom of action, and debt
management has supplemented, instead of crippling, the policies of the Federal
Reserve System. A smaller proportion of the debt is held by the banks and a
larger proportion is in the hands of the people.
As a result of these changes, the purchasing power of the dollar, as measured
by the cost of living, was stabilized within a narrow margin.
Today, under the pressures of huge defense needs and great prosperity—guns
and butter—these principles are in danger again. This is the kind of battle, never
finally won.- The adiiiinistration has been,able to preseiittb^the Congress a balanced budget for this and the next fiscal year, but by a narrow margin and at a
rising level. This balance is threatened by a wave of spending proposals coming
before the Congress.
The sound banking and monetary policies of the Federal Reserve System are
under attack from many quarters.
The cost of living index, which reflects the buying power of money, is moving
up again.
The President and the Secretary of the Treasury have stated and reemphasized
the determination of this administration to do its utmost to maintain financial
stability.
In the Treasury, which has a very special responsibihty in this area, we are
working at this problem every day in a great variety and complexity of ways.
Achieving sound money is no great overall process; it is an hour-by-hour,
uphill climb.
Pressures for increased spending come from many sources. The safety, in fact,
the very existence of this Nation requires a strong and ever stronger defense
establishment. The objective of most Government departments is to achieve
some specific service for our rapidly growing country. Most senators and congressmen are subject to pressures for increasing Government benefits for the
people they represent. Thus, the pressure for spending is enormous. There are
only a few people whose daily business it is to' make all of these desires and pressures conform to the pattern of sound finance. That is why we need every day
the help of citizens like you, who are willing to go to bat, not for what you want
for yourselves but for the public good.
One of the great virtues of the Citizens Committee for the Hoover Report is
that you are not content with reaflftrming and emphasizing general principles,
though you do that. You have also performed a great service in studying just
how these principles are carried out in detail.
The battle is not won by great, broad, sweeping decisions. It is won by
detailed actio'n on thousands of specific problems. The process is: "precept upon
precept, line upon line, here a little and there a little."
EXHIBIT 38.—Statement by Under Secretary of the Treasury Burgess, March 4,
1957, before the Subcommittee on Housing of the House Committee on
Banking and Currency
I am glad to come before your committee to discuss with you the important
problem of assuring an adequate flow of funds for housing.
The Treasury is interested in measures to permit the construction of vitally
needed housing throughout our Nation. The Treasury is also interested in
helping to insure that Federal Government financial policy is always in tune with
the achievement of sound economic growth within the framework of a relatively
stable price level. As building costs advance, the purchaser of housing receives
less for his money.
The volume of total construction is continuing at a very high level despite
some decline in housing starts. Total new construction expenditures (including
industry, stores, schools, roads, etc., as well as home building) were estimated by
the Department of Commerce at an annual rate of $44.8 billion in January 1957.
This is the highest in history with the exception of May and June 1956. A recent
joint statement by the Departments of Commerce and Labor concluded that
outlays for new construction are expected to total $46.4 billion in 1957, about 5percent above the record volume of $44.1 billion in 1956.




264

1957 REPORT OF THE SECRETARY OF THE TREASURY

This heavy volume of construction has been accompanied by increasing prices.
The composite index of construction costs, as prepared by the Department of
Commerce, stood at 132.8 in December 1956, an increase of 5 percent over December 1955, and Sji percent over December 1954.
It has been suggested that more funds would be available for housing if part
of the assets of the national service life insurance fund could be invested in guaranteed mortgages. The Treasury is opposed to such a plan. The funds held for
this account are not in idle cash but are currently fully invested in special issues
of Government obligations. To raise the cash necessary for the purchase of
mortgages would require the Treasury to redeem the obligations now held by
the fund. This would involve an equivalent arnount of borrowing in the market
by the Treasury, thus adding to the pressure on available funds for private investment. This borrowing would have to be done from many of the same financial institutions and other investors who provide money for mortgages. All
this suggestion would do is to increase funds available for mortgages on the one
hand and take funds away with the other. There is no "magic well" of untapped
available credit.
The other major objection which the Treasury has to this proposal is that
investment in mortgages would violate the established principles which have
heretofore governed the investment of Federal trust funds—that they should be in
United States Government securities, the world's best investment. With this as
a precedent, pressure would be built up for similar relaxation of the investment
policies of other Government trust funds, such as the unemployment trust fund,
Federal old-age and survivors insurance trust fund. Federal employees retirement
funds, and the railroad retirement account.
EXHIBIT 39.—Statement by Under Secretary of the Treasury Burgess, April 3,
1957, before the Senate Finance Committee
I am glad to be with you today in support of H. R. 5520, which would raise the
ceiling on the interest which the Treasury can pay on savings bonds.
The savings bonds program has played an important role in our national life
ever since it was first introduced in 1935. There are now more than $41 billion
of Series E and H savings bonds outstanding in the hands of about 40 million
investors. This program has been a principal means of achieving a wide distribution of the public debt in the hands of individuals.
There are approximately 8 million people now buying bonds through payroll
savings plans alone. The program is encouraging thrift at a time when the
Nation requires additional savings to balance spending and avoid inflation.
Savings bonds have many unique qualities. They are free from market
fluctuations. They are protected against loss. They are easy to purchase and
easy to redeem.
For the vigorous continuation of the program it is also essential that the buyer
of savings bonds feels that he is getting a fair interest return on his savings.
With increases in interest rates on other types of savings during recent years, a
modest upward adjustment in the rate of interest on new E and H bonds is indicated. That is the purpose of the present legislation. It is simply to give the
millions of small buyers of savings bonds the benefit of the interest rates the large
buyers of bonds are already receiving.
The legislation which the Treasury requested from the House of Representatives in February would, have given the Treasury the same discretion with regard
to interest rates on savings bonds that is permitted on other types of Treasury
bonds. That maximum permissible rate is 4}^ percent. H. R. 5520, which has
just been passed, fixes the savings bond ceiling at 3% percent. While the greater
flexibility suggested by the Treasury is preferable, H. R. 5520 would enable the
Treasury to put into effect its plans to increase from 3 percent to 3}i percent the
yield to maturity on all E and H bonds sold beginning February 1, 1957, and




EXHIBITS

265

would provide some additional flexibility to meet possible future changes in conditions. We are therefore prepared, in the interest of prompt action, to accept
H. R. 5520, as passed by the House of Representatives.
The E bonds which the Treasury has been offering sell for 75 percent of their
face value and the bonds yield 3 percent when held to their maturity of 9 years
and 8 months. If this bill is passed, the Treasury proposes to leave the issue
price and face value of the new E bonds unchanged. The increase in the interest
return from 3 percent to S}i percent would be accomplished by shortening the
term of the bond from 9 years and 8 months to 8 years and 11 months.
We also propose to increase the redemption values of new bonds to provide a
substantially higher yield to owners who find it necessary to cash their bonds
early. The return on the new bond when held for 3 years, for example, would be
3 percent compared with 2}^ percent at present.
The Treasury also plans to offer, effective February 1, 1957, a revised 10-year
Series H savings bond, paying interest each 6 months by check, with yields
generally comparable to the new E bond.
EXHIBIT 40.—Statement by Under Secretary of the Treasury Burgess, July 29,
1957, before the Senate Finance Committee Hearings on the Financial Condition of the United States

I am very glad to appear before your committee today to discuss
the problems of the management of our public debt in more detail
than was included in Secretary Humphrey's presentation, and this,
I realize, is a very technical subject. We will try to make it as clear
as we can with the use of charts and slides. But we appreciate greatly
the chance to tell the committee our story.
Let me review first some of the more important changes in the debt
in recent years, with particular emphasis on the period of 4}^ years
since we have been at the Treasury.
1. Trends in the size of the debt: The history of our national debt
is, of course, a direct reflection of wars and depressions and changing
financial policies over the years. I n the first of several charts which
illustrate some of our problems is a comparison of the debt over the
past 40 years, and we have large copies of these charts so that you can
see them. The audience has copies of the text before them, so they
are not completely shut off from seeing these.
The public debt just before World W a r I was only $1 billion, but
by the end of that war the Treasury was faced with the management
of a then unprecedented debt of $26 billion. There was $10 billion of
debt reduction out of budget surpluses during the prosperity of the
twenties, but then came the depression and the debt trebled—from
$16 billion to $471/^ billion. That was just before World W a r I I .
During World W a r I I , the debt rose to new heights and reached
a peak of $280 billion in February 1946. P a r t of that debt, however, represented a large amount of borrowing during the Victory
loan in December 1945, which, as it turned out, was not needed because of a more rapid reduction in war spending than had been
anticipated. Therefore^ about $20 billion of that excess cash was
used to pay down debt in the remainder of that year—the year 1946.
The figure of $2591/^ billion in December 1946 is a more representative figure of the public debt at the end of the war, so we have shown
that on the chart.




:266

1957 REPORT OF THE SECRETARY OF THE TREASURY
CHART A

THE PUBLIC DEBT

1916 19

'30

'39

'46

'52 '56

- December* Excluding Victory Loan proceeds used to repay debt in 1946.
-Office of the Secretary of the Treasury

3-1204-12

Post-World War II debt reduction out of budget surpluses in 1947
-and 1948 was about $8 billion. Then with Korea, and an expanded
defense program, there was further deficit financing and the debt
,grew to $267K billion in December 1952.
Inherited deficits, which could only gradually be eliminated,
brought the debt to an all-time seasonal peak of $281 billion, in round
figures, by the end of 1955. This past December the debt was back
down to $277 billion, reflecting budget surpluses and a better balanced
seasonal pattern of corporation tax payments.
Our debt of $270i/^ billion on June 30,1957, the seasonal low point,
was $2 billion below a year ago. Of course, to get the figure you have
to deduct the surplus, and you have to make allowance for a little
-change in the cash balance.
While this debt reduction is not large, the important point is that,
despite huge defense expenditures, the upward sweep of the debt has
been checked and reversed—not by much, but by a little.
2. The burden of the Federal debt relative to our strength: As our
economy grows steadily and confidently, so does our ability to carry a
given amount of public debt without too great a strain on the economy.
Thus the sound economic growth of our Nation in recent years has
made the Federal debt somewhat less burdensome. That is shown
on chart B.




267

EXHIBITS
CHART B

RELATIVE SIZE OF THE PUBLIC DEBT

51600

800 h

I9!6'I9 '30 '39 '46 '52'56
*

December

'Office of the Secretary of the Treasury

1916'19 '30 '39 '46 '52'56
'

'

December

'
6-1207-9

The left-hand side of chart B shovv^s the relative size of the Federal
debt on a per capita basis. By December 1946, it had risen to a high
point of $1,832 for ever}^ man, woman, and child in America.
By December 1956, it had shrunk by about $200 per capita, by reason of the growth of the population. By June 30,1957, the per capita
debt was down further—to $1,581.
When the Federal debt is related to national income—on the righthand side of chart B—the reduction in burden is much greater. Ten
years ago the $259i/^ billion public debt was one-third larger than
•our national income of about $190 billion.
National income has now grown to more than $350 billion, so that
our $277 billion national debt in December 1956 was equal to only 79
percent of national income. As of June 30, 1957, the ratio had fallen
further—to 75 percent.
Unfortunately, however, a part of this reduced ratio of debt to
income—particularly prior to the Federal Reserve-Treasury accord
in 1951—was a reflection of the inflation of the earlier postwar years
which brought about a significant decline in the purchasing power of
the dollar.
In spite of inflation, however, a large share of the reduction represents the growing productivity of our Nation in real terms—the increased ability to produce more houses, industrial plants, highways,




268

1957 REPORT OF THE SECRETARY OF THE TREASURY

schools, cars, TV sets, and so forth. With greater price stability
during the past 4 years, up to a few months ago, increased productivity
has accounted for almost all of the reductions since 1952.
In this way we are gradually growing up to the debt, so that even
though the dollar amount of debt is not declining as much as we might
wish^ the debt still becomes somewhat less burdensome.
I am not arguing for doing nothing. I think we ought to be actually
reducing the debt; but even though we do not, the situation, from the
economics of the country, is becoming a little better in spite of us.
Another way of looking at the public debt is in terms of its interest
burden.
The left-hand side of chart C shows the computed interest charge on
the debt, which has been rising during the past decade, partly because
of the increased size of the debt and partly because of the increased
interest rates associated with the strong demand for money in our
record prosperity.
By December 1956, the interest charge on the debt had risen to
$7.3 billion a year, an increase of $1.1 billion in 4 years as against an
increase of $0.9 billion in the preceding 6 years.
That is, this is not something, this increase in the interest rate, that
just started. I t has been going on ever since the war.
CHART C

INTEREST BURDEN OF THE PUBLIC DEBr
7.3

Computed Interest
Chcirge
6.2

%

6

Interest Charge as % of:
4.2%

ThePublicDebt
33^

(Computed Int Rate)

5.3
2.7%

I

Ndfllncome

%^
2.1% 2.1%

i.l

i.l
l.l

nD
.6

i.4%

i.4%

.9%
<<\

kcf

^ 1916 19 '30 '39 '46 '52 '56 ^ 1916 '19 '30 '39 '46 '52 '56
'
December
^
*
^
December
'
^Excluding guaranteed securities, ''less than $50 million. **Less than .05%.
Officeof theSecretary of theTreasury




6-1219-6

EXHIBITS

269

I t should be remembered that these total interest costs are not a
proper measure of the net cost of interest to the people of the country
or the net drain on the Federal budget.
The money used to pay the interest is collected from many people
in taxes, and the money is paid out again partly to the same people
and partly to others. I think it is fair to say that about as many
people benefit directly or indirectly from these interest payments as
are hurt by them.
As to the budget, the Federal Treasury gets back promptly in
taxes a substantial slice of the interest it pays out. Also, much of
the interest goes to Government trust accounts—or to the Federal
Eeserve System, which returns 90 percent of its net earnings to the
Government.
The upper right-hand side of chart C shows that the computed interest rate on the public debt has risen by about three-tenths of 1
percent in the 4 years ending December 1956, after increasing about
three-tenths of 1 percent from 1946 through 1952. The rate as of
J u n e 1957 was 2.7 percent; and even after the current refunding
operation is completed, the rate will be 2.8 percent.
Looking back, we note that the current average interest charge on
the debt is not much higher than it was in 1916, just prior to our entry
into World W a r I ; it is well below the average rates in the twenties;
and it is very close to what it was in 1939 at the outbreak of World
W a r I I , despite the fact that the earlier rates were partially taxexempt.
I t makes quite a bit of difierence now. I t did not make so much
difference then, because the tax rate was low.
Of course, during World W a r I I , interest rates were held at artificially low levels, and that carried over into the postwar era. The
current rates are high only in comparison with the abnormally low
rates during periods of depression, war, and ratepegging. I n terms
of history, these are not very high interest rates.
Relating these interest rates to national income we find that now,
as in 1952, they represent only 2.1 percent of national income as
against a high point of 2.8 percent of national income in 1946. That
is, national income has increased so that, even though the dollars have
increased, it is smaller in percentage of income.
We should, of course, continue vigorously our policy of seeking to
reduce the debt. That is the American way. We have done it before;
we are doing it right now. Debt reduction helps to combat inflation;
it releases funds for other uses; it strengthens our national readiness
for any contingency.
3. The Federal debt and other debt: Another way to look at the
Federal debt is in its relation to other kinds of debt in the United
States. Chart D shows the total public and private debt on a gross
basis over a span of years.




270

1957 REPORT OF THE SECRETARY OF THE TREASURY
CHART D

PUBLIC AND PRIVATE DEBT^
$Bil.

^Federal
600

State and
" Local
Corpor^ ation

300

^Individual
1939

946
December —

956

'Gross debt

The chart starts in 1939, just before the war, w h e n t h e total publicand private debt of the Nation was $207^ billion. In financing the
war.overall debt was increased tremendously, with almost all of the
change in the Federal sector as the Federal debt rose from $47)^ billion
to $259)^ biUion.
During the war, when civilian activities were kept under wraps,,
private debt increased very little. Financial as well as physical resources were diverted to the war effort. State and local government
debt actually decreased because maturities were paid off and new
projects were limited. The corporation and individual debt increased only slightly during those 7 years.
The change during the past decade is shown by the bars in the
middle and on the right side of chart D. The Federal debt has increased $17K billion since 1946. In term.s of percentage of the total
debt structure, however, it has declined from 58 percent of the total
to 35 percent, but it still exceeds the prewar percentage of 23 percent
by a substantial margin.
The total debt at the end of 1956 was $7831/2 billion, which is u p
about 75 percent over the past decade. During that same period




EXHIBITS

271.

our national income has nearly doubled, again partly by inflation
and partly by real growth. Thus, our total debt today, of all sorts,,
is a smaller percentage of our national income than it was 10 years-^
ago.
State and local government debt increased as the States and localities went ahead with new highways, schools, hospitals, public buildings, and utility services on an unprecedented scale—programs which,
had been held back during the war. The total State and local debt
is now about $50 billion.
That has been increasing at the rate of $5 billion a year for the
past 3 years, which is a rate never before equaled, and I think beforeyou gentlemen get through your inquiry, it would be very interesting
to analyze that debt-a little bit.
The corporate debt also has increased by leaps and bounds as corporations have undertaken postwar expansion and modernization
programs. These figures include bank loans and accounts payable
as well as new corporate bonds and notes.
The pressure on the security markets of these huge demands for
money is the major source of present problems in Treasury financing.
The individual debt more than tripled during the last 10 years,,
from $601/^ billion to $2071/2 billion, mostly in the form of increased'
home mortgages and consumer debt.
As Secretary Humphrey has already mentioned to you, the totals
of all debt has increased $1461/^ billion during the past 4 years, with
all but $101/2 billion of the increase accounted for by nonbank sourcesrather than by increases in the money supply.
I t thus rests very largely on a sound base of savings rather than
on any excessive bank credit expansion, but it has been heavier than
the present flow of savings could take care of without straining thecapital markets. Many buyers of bonds and mortgages have beengetting part of their funds by selling Government securities.
Of the record of the past 2 years, it might well be said that almost
everybody except the Federal Government has been increasing his
debt. Nevertheless, the Federal debt is still the largest single sector
of debt, and has a great impact on the country.
The effect of the huge public debt on the country's economic growthand stability depends a great deal on how the debt is distributed among^
the citizens and financial institutions and the types and maturities of
the securities which make it up. So I ask your indulgence in presenting the facts on these points.
4. Who holds the debt? Chart E presents the picture on the
ownership of the public debt from 1946 to date.
During the 4 years, looking at the left-hand side of the chart, during the 4 years ending in December 1956, the debt has risen—as shown;
earlier—^by $91/^ billion, 3 deficits and 2 surpluses.




272

1957 REPORT OP THE SECRETARY OF THE TREASURY
CHAKT

E

PUBLIC DEBT OWNERSHIP TRENDS
$Bil.

260

Total Debt

^*^'''

259'4

yjfivest.yy
220
Com1 Banks
74'/2

6 3 ' / 2 ^ 59Ji

60
1946
^

'52
Dec.

'56

1946

'

>

'52

'51

Dtc.

About $8 billion of that is accounted for by an increase in the
ownership of Government securities by Government investment
accounts, shown by the top part of the chart—largely representing
savings by or for individuals in the form of social security, veterans'
life insuraQce, retirement reserves, and so forth.
With Federal Eeserve bank holdings of Governments—which is
the next strip down in the chart—showing no net change during these
4 years—it Avent up from $23% billion to $25 billion in 1952, and it is
still $25 billion, they have not changed their holdings—this left only
about $11/2 billion to be absorbed privately.
As shown on the right-hand side of the chart, at the end of December
1956, commercial banks held $591^ billion of the debt. That was
$4 billion less than in December 1952. There had been no expansion
of bank credit due to an increase of holdings of Government
securities.
I t should also be noted that the banks had only 36 percent of their
earning assets in Government securities at the end of 1956 as against
45 percent in 1952 and 65 percent 10 years ago, when we had completed
the war financing.
Bank holdings were further reduced through June 1957. These
reductions reflect bank sales of Govermnents to get funds to meet
the loan demands of their customers. Financing the Treasury during
this period without adding to bank holdings of United States securities has kept down one inflationary potential.
We had not had a credit expansion due to deficit financing.




EXHIBITS

273

The upper right-hand part of chart E, which is the private, nonbank investors, shows an increase of $5% billion in the holdings of
Government securities by what we call private nonbank investors.
All of this increase may be credited to those individuals who have
added more than $6 billion to their holdings of series E and H savings
bonds during the past 4 years.
The Treasury has put great emphasis on the widespread sale of these
small-saver bonds.
Pension funds—State and local as well as corporate—have also
been net buyers of Government securities, and so have short-term
investors, such as foreign accounts and State and local general funds.
These increases have been enough to more than offset net sale by
insurance companies and savings banks as they also have responded to
the tremendous demands on them for money for mortgages and capital
expenditures.
5. Maturity structure of the debt: Parallel to the question of who
holds the debt is that of the distribution of the debt among maturities.
The cheapest and easiest way to borrow is usually at short term,
relying first on temporarily idle funds of corporations, trust funds,
foreign funds, and—when necessary—on the banks, which in their
turn might borrow from the Federal Eeserve System.
There is indeed a large legitimate short-term market for the Treasury to tap, particularly today when lenders of money are trying to
keep liquid. The present weekly rollover of $1.6 billion to $1.8
billion of 91-day Treasury bills meets an important market need, is
not inflationary, and does not strain the market.
I say "not inflationary" because it does not increase the total amount
of bank credit.
But there are a number of reasons why short-term debt becomes
undesirable beyond some reasonable amount.
First, a large body of short-term debt increases the frequency as
well as the volume of Treasury financing. I t may constitute an
irritant at times to the smooth operation of the market for short-term
funds and for corporate and municipal securities.
Also, to the extent that the anticipation, the announcement, the
offering, and the digestion of new Treasury issues spreads over a
large part of a year, the time available for the Federal Eeserve to
take appropriate credit and monetary policy actions may be restricted.
A large volume of short-term debt adds to the liquidity of banks
and businesses and others who hold short-term Government securities
as practically a cash reserve. This strengthens the position of the
holders, but by the same token makes them less responsive to changes
in monetary policy. They can get cash readily by selling their shortterm Government securities.
Also, if at any time in the future the Treasury is faced with a
financing emergency, it will probably have to fall back on short-term
borrowing.
I t is important, therefore, that this source of funds not be depleted
unnecessarily ahead of time. I n that way any minor emergency
which arises may be handled by selling short-term securities to the
private market rather than-having to use the Treasury's authority
to borrow directly from the Federal Eeserve System.
438363—58

19




274

195 7 REPORT OF THE SECRETARY OF THE TREASURY

That is a question somebody has asked about, and I will pick it up
later.
Of course, when short-term borrowing means increasing bank
credit; namely, the volume of money, that is directly inflationary.
I t is for these reasons that any country in time of war makes a
vigorous effort to sell as much of its securities as possible outside the
banks as well as for a longer term.
To the extent war is financed out of taxes and savings, the worst
pressure for inflation is checked.
5 a. W a r and postwar program through 1952: I n the Treasury
war-loan drives, which all of us had some part in, I am sure, of World
W a r I I , the typical package of securities included savings bonds and
notes, a long-term 2i/^ percent bond, not eligible for purchase by commercial banks, a 10-year 2-percent bond, or similar bond, and also
a short-term certificate and perhaps a medium-term note.
During the war, a large volume of bonds could be sold because
investors had a limited humber of other uses for accumulating savings.
Few new mortgages were being written, and neither business nor local
govermnent units were heavy borrowers, as we saw in the chart on
public and private debt.
The postwar period brought different problems. All types of
borrowers began clamoring for money. Government bonds were
relatively unattractive at their low pegged interest rates, and it was
clear to most lenders that rates could not be held at these levels, even
though the Treasury tried.
I n any event, little progress was made from 1946 to 1952 in funding
the debt, though there were several issues of notes and two short
bonds prior to 1953.
The refunding in 1951 and 1952 of a large block of 21^ percent
bonds into 2 % percent nonmarketable series B investment bonds with
an optional exchange into 5-year notes had actually the effect of
shortening the average length of the marketable debt. I t was, however, the price of getting through the accord between the Treasury
and the Federal Eeserve, and that was worth a very substantial price.
Excluding these issues, the average maturity of the marketable
debt declined by about 40 percent in the 6 years ending in 1952,
largely through the passage of time.
One is reminded of the quotation from Alice in Wonderland where
the Eed Queen said, "You have to run very fast to stand still," and
that is true of the debt. Because every month that elapses, the maturity gets shorter if you do not do anything about it.
5 b. Program of the past 4% years: When the new administration
came in, we set a goal of selling longer-term securities and giving the
debt a wider distribution whenever the market made it possible.
We redoubled our efforts to sell series E and H savings bonds
Avidely to the people.
We began to shut down on the sale of other debt payable on demand
at the option of the holders.
We began promptly the sale of long-term bonds to the market in
the spring of 1953 at the interest rates necessary to sell them. I will
review that 1953 issue in more detail a little later on.




EXHIBITS

275

I n 1954 and 1955, we made substantial progress toward our objective by selling a large volmne of intermediate-term securities,
together with $2% billion of 3 percent 40-year bonds, the longest
bonds that had ever been sold since the Panama Canal issue.
I n 1956 and 1957, in the midst of the current tremendous capital
boom, we have sold no ncAv bonds and only a limited amount of
intermediate-term notes.
There are a number of ways of measuring the changes in the debt
structure over the years. Some of them refer only to the marketable
debt, such as figures on the average length of the debt. Others—
more comprehensive—take into account not only the maturity distribution of the marketable debt, but also the demand character of
other portions of the debt.
All of these "yardsticks" show that we have moved forward in
improving the structure of the debt during the past 4i/2 years, especially in comparison with the record of the earlier postwar period.
6. Average maturity of the marketable debt: One measure of the
structure of the debt is the average length of time that the marketable debt has to run to maturity. The amount outstanding of each
security making up the marketable debt is multiplied by the number
of months it still has to run.
These amounts are then added up and divided by the amount of
marketable debt outstanding to give a figure on average length of
maturity.
Although the average length of the marketable debt does not reflect changes in other types of debt like savings notes and savings
bonds, it is still useful as a yardstick since it encompasses nearly 60
percent of the total debt outstanding, including the most volatile
areas of the debt.
The average length of the marketable debt to maturity—calculated
to first call date on callable bonds—amounted to 7 years and 2 monthg
in December 1939.
By December 1946, that average had fallen to 6 years and 3 months,
that is even after selling a very large amount of bonds during the
war, but of course the increase in the debt was so large that we could
not quite keep up with it. That figure is after excluding, to make the
comparison fair, those 2% percent long-term bonds sold in 1944 and
1945 which were exchanged for nonmarketable investment bonds in
1951 and 1952.
By December 1952, the average had fallen further, to 3 years and
10 months, compared to 6 years and 3 months in 1946.
Although the average rose above 4 years for a while during 1954
and 1955 when Treasury debt extension was most active, at the end
of 1956 it was back down to 3 years and 9 months—1 month shorter
than 4 years earlier.
By June 1957, the average had fallen by 2 more months.
This record indicates a loss in average length of 3 months during a
period of the past 4i^ years, as against a loss of 29 months during
the 6 preceding postwar years. The loss since December 1952 is even
less when only publicly held securities are considered, since Federal
Eeserve-held securities, many of longer maturity originally, are being
refunded into short-term issues under the present policy.




276

1957 REPORT OF THE SECRETARY OF THE TREASURY

The average length, exclusive of Federal Eeserve, was 4 years and
1 month in June 1957, as compared with 4 years and 2 months in December 1952. I n other words, by running very hard, we have managed to stand still on that.
Furthermore, this measure of average maturity takes no account
of nonmarketable demand debt, which has proved an awkward inheritance.
7. The "floating debt": A more accurate measure of changes in
the structure of the public debt from the point of view of the job of
the debt manager is a comparison between the "floating debt" on the
one hand and intermediate and longer term issues on the other, basing
the figures on publicly held debt.
This means excluding securities held by the Federal Eeserve banks
and Government investment accounts, but including in the floating
debt the most volatile part of the nonmarketable debt payable on
demand.
The following table shows the composition of the debt from this
point of view.
That is the one you want to study. I t shows in detail just what
these sections of the debt are. What we call the floating debt is the
section held by the public.
Structure of the public debt
[In billions of dollars]
D e c e m b e r 31
June 30,
1957
1952
H e l d b y Federal Reserve b a n k s a n d G o v e r n m e n t i n v e s t m e n t
accounts _ .
-

T o t a l , held b y t h e p u b l i c

P e r c e n t floating d e b t t o total

70 6

.

_

-

-

74 2

79 0

78.6

42
5
22
3

58
6
21
3

8
0
0
5

45 6

50.6

14 9
3 5

13.1
3.0

89.3

63.9

66.7

35.3
9.1

_.-

I n t e r m e d i a t e a n d longer t e r m issues:
E a n d H savings b o n d s
I n v e s t m e n t Series B b o n d s
Marketables maturing in:
1-5 years
5-10 years
Over 10 years
._

Total debt

1956

74.6

Held b y t h e public:
Floating debt:
U n d e r 1-year m a r k e t a b l e s . .
Savings notes
F , G, J , a n d K savings b o n d s . .
Miscellaneous d e m a n d d e b t i
T o t a l floating d e b t

1953

36.7
8.6

41.4
7.5

41.5
7.2

33.3
19.8
24.8

24.9
15.5
26.1

42.3
14.2
28.4

38.8
11.3
26.5

9
8
6
4

122.3

111.7

133.8

125.3

267.4

275.2

276.7

270.6

27.9

32.4

23.1

24.7

^ Includes investment series A bonds, depositary bonds, matured debt on which interest has ceased,
and debt bearing no interest.

The ainount held by the public. Floating debt: The under-l-year
maturities at the end of 1952 were $42.9 billion. That rose in 1953,
because we inherited a lot of debt maturing that year, and 1954, so we
' had a jump to $58.8 billion.




EXHIBITS

27.7

^ That was worked down to $45.6 billion in 1956, and is now $50.6
billion, which is higher than it was at the end of 1952, but it is lower
than it was in 1953 when you take into account the maturities that
slapped us in the face in 1953 and 1954.
Savings notes, those are the 3-year notes which the Treasury used
to sell to corporations and others so they could use them for taxpayments, but they were redeemable on demand. That is, a corporation
could bring them around any time and get their money, or use them to
pay taxes, and we terminated that because we found it to be an undesirable form of debt. But it was something we had to take care of.
The next is F , G, J , and K savings bonds. Those were the larger
savings bonds, in lots as large as $100,000, which were sold, some to
the banks, some to the trusts, some to individuals. But that again
proved to be a very awkward kind of savings bond because it was held
by large holders who could shift their money around, and they began turning the stuff in, so that has gone from $22.6 billion down to
$13.1 billion. We were hit with $3 billion of that in the past year,
and we had to dig up the cash to take care of it, so that was part of
the floating debt. We paid that down by $9 billion in 4 years, or a
little more.
Miscellaneous demand debt: That is not as important. That is
series A investment bonds, and depositary bonds in banks, and a few
other things like that. I t does not vary much.
In that total of the floating debt, we had practically $75 billion.
I t ran up on us to $89 billion by the end of 1953. There was nothing
we could do about it. We tried to push some of it out, but those
were the maturities that existed. That was reduced by the end of
1956 to $63.9 billion, and it is up a little bit for June 30, to $66.7
billion.
But if you will compare that with the high point, the floating debt
as defined in this way, it is down more than $20 billion from what it
was in 1953; and from that point of view, the jpb of the debt manager
is a lot easier than it was when we took over.
Here is the rest of the debt:
Intermediate and longer term issues. We put the E and H savings
bonds in that. That, in a sense, is demand debt, but experience has
shown it is a relatively stable figure; even with the redemptions that
you had in the past 12 months, the amount of E and H bonds outstanding has continued to increase a little. While the sales are less
than the redemptions, the accumulated interest is enough to take care
of that, so that this year that actually has been increasing.
So from the point of view of the debt manager, that is a part of
the debt that does not bother us. I t is a good, solid part of the debt.
That is held by millions of our people, and it is only in that way
that you can get that very wide distribution.
Now, the investment series B bonds, I have referred to. Those were
the 2 % percent bonds that are convertible into 5-year notes, so that
they can become short-term debt or relatively short-term debt, and
about a third of the $15 billion that were issued have been converted
that way.
Then the marketables: Maturing in 1 to 5 years are up from 1952,
but they are down from 1956.




278

195 7 REPORT OF THE SECRETARY OF THE TREASURY

The 5 to 10 years are doAvn.
The over 10 years is up a little. That is the long-term bond area.
Now take the bottom figure, the percentage of the floating debt to
the total was 27.9. I t rose to 32.4 percent. I t is doAvn to 24.7 percent.
So it is a little better than it Avas. So we have made progress in our
efforts to reduce the amount of floating debt, which the Treasury may
be called upon to handle each year.
The floating debt as defined above has two basic ingredients: (1)
Publicly held marketable securities maturing within 1 year—including callable bonds when they actually are taken care of; and (2) nonmarketable demand debt which is payable practically on demand and
is in the hands of rather large holders who move freely from one investment to another in response to changing market conditions.
We do not include series E and H savings bonds, the small saver's
bonds, as part of the floating debt since they are not as sensitive to
fluctuations in market interest rates and the total outstanding is quite
stable in contrast to the widely fluctuating volume of other savings
bonds and savings notes.
Chart F presents data on the ^^floating debt'^ over the last decade.
This type of debt Avas reduced by more than $10 billion between December 1952 and December 1956, and the figure at the end of last
year was more than $25 billion beloAv the all-time peak in 1953.
Federal Reserve bank oumership of U. S. Oovernment securities
[In millions of dollars]
•

M a t u r i t y distribution i
E n d of year or
month

1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1956
1957

---

--

.—
(June)
(December).„
(June)

Bills

14, 745
11,433
5,487
4,829
1,296
596
1,341
2,993
2,204
1,722
855
1,918
287

Certificates

7,496
6,797
6,078
6,275
2,334
12, 793
5,061
5,967
13, 882
6,002
10, 944
10, 975
11, 367

Notes

355
1,477
791
562
12, 527
5,068
13, 774
13, 289
6,044
14, 259
9,157
9,219
8,579

Bonds

753
2,853
10, 977
7,218
4,620
2 5, 344
4,522
3,667
2.802
2,802
2,802
2, 802
2,802

Total
holdings

23,350
22, 559
23, 333
18,885
20,778
23,801
24,697
25, 916
24, 932
24, 785
23, 758
24, 915
23,035

Within
1 year
22, 313
19,923
12,426
11, 983
16,003
15.057
15, 613
16, 972
19,417
20, 742
20, 242
22,113
20, 246

Ito 5
years
832
1,377
3,258
1,922
1,285
5,102
6,655
6,155
3,087
1,614
1,087
373
681

5 to 10
years
72
426
434
1,388
982
1,014
1,070
1,374
1,014
1,014
1,014
1,014
750

Over 10
years
133
834
7,215
3,593
2,508
2 2,629
1,358
1,415
1,415
1,415
1,415
1,415
1,358

1 Prior to December 1953, callable bonds classified according to nearest call date.
2 Includes $1,214,000,000 nonmarketable issues.
Source: OlH.ce of the Secretary of the Treasury.

This type of debt, the floating debt, was reduced by more than
$10 billion between December 1952 and December 1956, and the
figure at the end of last year was more than $25 billion below the
all-time peak in 1953, which reflected largely the inheritance of scheduled maturities from earlier years and financing growing out of the
1953 deficit.
While the under-l-year marketable debt held outside Federal Eeserve banks and Government investment accounts was $2^2 billion




279

EXHIBITS

higher at the end of 1956 than in 1952, it was nevertheless $13 billion
below its all-time peak in 1953.
I n contrast, this part of the floating debt rose by more than $10 billion between 1946 and 1952, when primary reliance was placed on the
issuance of short-term securities and the passage of time kept shortenins: the debt.
CHART F

THE FLOATING DEBT^
$B!{I.

75
, Jl, ^ Nonmarketable
' ,2 DemandDebf

Marketables
Maturing
Within I Year
'52
December
""Held outside of Federai Reserve Banifs and Govt invest Accts
"^Excluding Ato E a n d H Savings Bonds

One of the most important ways in which the floating-debt picture
has changed, as you Avill note from the chart, is through the reduction
of nonmarketable demand debt in the hands of large investors.
I t has been, reduced by $13 billion since 1952.
The elimination of the sale of short-term savings notes in the fall
of 1953, and the recent dropping of sales of the investment-type J and
K savings bonds as of April 30, 1957, represent major steps in the
reduction of the more volatile Treasury demand debt.
8. Opening up the long-term market and adding to the supply of
intermediate-term securities: In the absence of extensive debt payoffs,
the objective of reducing the floating debt can be accomplished only
by selling, more securities outside the 1-year area.
Chart G shows the history of Treasury financing over the past
decade, year by year, in terms of the relative amounts of short term
and longer term financing.
The chart also shows the seasonal borrowing which has grown during recent years—borrowing repaid out of increasingly heavy taxpayments each spring up until 1956, when the return to a more even
quarterly distribution of corporate-tax payments began.




280

1957 REPORT OF THE SECRETARY OF THE TREASURY
CHART G

VOLUME OF TREASURY MARKET FIMANCING
(Excluding Weekly Roll-Over of Bills)

$Bil.
60

^ S ' l O Year Bonds
Long-Term Bondsy
-^ Other Notes

40

37.5

Certs.
andSbort
^ Notes'"

20

un^Seasonal
'50

^52

Calendar Years
* Notes originally 2 0 montlis or less to maturity

As chart G shows, there was a modest amount of interinediate-term
securities issued in 1949 and 1950—those are notes, $4.7 billion inl949
and $12.2 billion in 1950—which helped to reduce the Treasury's
financial burden in 1951.
Two short-term bonds were sold in 1952. The major efforts at debt
extension, however, have been made during the past 4 % years.
Since 1952, the Treasury has sold $4% billion of long-term bonds.
The first of these, the 3 ^ s , totaling $1.6 billion, in the spring of 1953,
represented the Treasury's first long-term market issue since the end
of World W a r I I financing.
Then in 1955, we sold $2.7 billion of the 3-percent bonds of 1995,
the longest Treasury bond issued since the Panama Canal bonds were
issued in 1911.
This $4% billion of long bonds, together with the $261/2 billion of
5- to 10-year bonds issued in 1953 and 1954.
This $23% billion, I can correct that figure for the financing we
just concluded, that becomes $26 billion of 2- to 5-year notes issued
since 1952, has thus made it possible for the Treasury to keep up with
the ever-shortening public debt, and start reducing a little the annual
volume of Treasury market financings.
Also, the long-term offerings gave greater breadth and depth to the
free long-term Government securities market.
A complete list of marketable securities issued since January 1,
1946, which mature in more than 2 years, is shown in appendix A ;
and then in appendix B we have given a complete list of all the
securities, except bills, we put out since we have been in.




281

EXHIBITS

Before every Treasury financing, we canvass the market for a longterm bond among dealers and potential buyers. I n these 41/2 years, I
do not think we have failed to take advantage of any favorable opportunities to sell bonds successfully.
Our job in calendar 1957 is larger than in 1956, and perhaps a little
above 1955. During the first half of the year we completed $22 billion
of financing. $3 billion of that was extended beyond 3 years through
the issuance of Treasury notes, so our record of debt extension in the
first half of 1957 was already somewhat ahead of 1956.
On July 3, we sold $3 billion of March 1958 tax bills for cash, that
is, by inviting bids, as you know, and as will be covered later, we are
now completing the refunding of nearly $24 billion of August and October maturities, more than $14^2 billion of which are held by Federal
Eeserve banks or Government investment accounts.
I have a little section later which reviews that whole operation, so
you will have the whole picture.
We will have a December maturity, which arises from this last
financing, to refund, and we will also have more seasonal tax anticipation financing before then. T h a t is, we will sell some Treasury bills
or certificates that will mature at time of tax payments next year and
can be paid off out of taxes.
This will bring our total job for 1957 to more than $55 billion, exclusive of weekly Treasury bill offerings.
Treasury bills outstanding as of Aug. 1,1951
Rate of inter- Date of issue
est (percent) 1
Treasury bills (maturity value)—series maturing:
Aug. 8, 1957
Aug. 15, 1957
Aug. 22, 1957
Aug. 29, 1957
Sept. 5, 1957
Sept. 12, 1957
Sept. 19, 1957
Sept. 26, 1957
Oct. 3, 1957
Oct. 10, 1957
Oct. 17, 1957
-.
Oct. 24, 1957
Oct. 31, 1957
Total..

2.909
2.895
3.122
3.245
3.374
3. 256
3.405
3.231
3.238
3.171
3.092
3.158
3.363

May
May
May
May
June
June
June
June
July
July
July
July
Aug.

9,1957
16,1957
23,1957
31,1957
6,1957
13,1957
20,1957
27,1957
5,1957
11,1957
18,1957
26,1957
1,1957

Amount issued

699,381,000
700,033,000
800,033,000
800, 524,000
799, 572,000
799,907,000
600, 298,000
601, 643,000
599, 216,000
599, 742,000
600, 562,000
600, 512,000
699,862,000
21,901, 285,000

1 Treasury bills are sold on a discount basis with competitive bids for each issue. The average sale price
gives an approximate yield on a bank discount basis as indicated for each series.
Office of the Secretary of the Treasury, July 31,1957.

If Federal Eeserve bank holdings are omitted, the total job this year
is only about $35 billion—that is, the total job we have had to do in
1957.
These financings continue to be in competition with very heavy
demands for funds in the capital markets. They require attractive
rates and careful planning.
I think I will repeat what I said before, that they constitute a problem, but not a crisis, Mr. Chairman. We are not in a crisis in Government financing.




282

195 7 REPORT OF THE SECRETARY OF THE TREAStJRY

9. Encouraging thrift by selling more securities to individuals. I
have already mentioned that individuals' holdings of Government
securities have been growing and now stand near their all-time high.
The major factor in this growth has been the series E and H savings
bonds program. The vigorous promotion of this program, aided by
an improvement in terms in May 1952—I want to give credit for a
very sound step taken in May 1952 to improve the savings bond
program.
But vigorous promotion of this program, aided by an improvement in terms in May 1952, brought an increase of more than $6 billion in E- and H-bond hoMings during the 4 years ending December
1956.
The core of this thrift program has been the payroll savings plans,
under which about 8 million workers are now buying savings bonds
regularly. We estimate that approximately 40 million Americans
now own $41% billion of these E- and H-bonds.
Some figures on E and H savings bonds may be interesting.
This table shows the growth of E and H savings bonds averages for
calendar years, in billions of dollars.
Growth of E and H savings honds, averages for calendar years
[In billions of dollars]
Cash sales and redemptions
Annual averages

Sales

Redemptions

Net

8.6

2

4.2
3.5
4.9

Wartime: 1941-45
Postwar:
1946-49
_
1950-52
1953-56

Interest
accruals

4.1
4
4.5

Net
Amount
change in outstandoutstand- ' ing, end of
ing
period

6.6

0.1

6.6.

30.7

.1
-.6
.4

.6
1.1
1.1

.8
.5
1.5

33.8
35.3
41.4

Groioth of E and H savings honds, 1941-^1
[In billions of dollars]
Cash sales and redemptions
Fiscal years

Redemptions

Sales

1947
1948
1949
1950 .
1951
1952
1953
1954
1955 .
1956
1957

4.3
4.0
4.3
4.0
3.3
3.3
4.1
4.7
6.2
5.3
4.6

4.4
3.8
3.5
3.5
4.3
4.0
4.0
4.3
4.6
4.7
6.2

Interest
accruals

Net

(0

-0.1
+.2
+.7
+.5
-1.0
-.7'
+.3
+.7
+.5
-.6

0.6
.6
.8
.9
1.0

Net change
in outstanding
+0.4
+.8
+1.5
+1.4
+1.1
+1.4
+1.8
+1.6
+.6

Amount
outstanding
endof
period

30.8
31.6
33.1
34.5
34.6
34.9
36.0
37.5
39.3
40.9
41.6

1 Less than $50 million.
Source: Office of the Secretary of the Treasury, July 25,1957.

Of course, the heavy loss was in the 1956-57 period until we
changed the rate. I t has picked up a little, but not very much,
because the interest rates have gone on up, the general market rates.




EXHIBITS

283

The record of savings bonds sales during the 4 years 1953-56 has
been better on the average than during other periods since the end
of the war. Eedemptions have risen somewhat in recent years—
partly because of the cashing of bonds which have reached their
10-year maturity in increasing amounts. Nevertheless, the net excess
of cash sales over redemptions of these bonds was higher in 1953-56
than in either earlier postwar period.
About a year ago, as you gentlemen know, savings bond sales
started to slow down uncier the impact of higher interest returns
available in alternative forms of savings. Then, as your committee
is aware, the Treasury received from the Congress authority to raise
from 3 to 3^4 percent the overall yield on E- and H-bonds if held to
maturity. The interim yields have also been increased.
Savings bonds are not sold primarily for their yield but for their
security, their redeemability, and their convenience. However, the
buyer must feel he is getting a fair rate. The action you took was
helpful.
The savings-bond program is one of the best means we have of
achieving a wider distribution of the debt and of encouraging the
overall volume of savings which the country so much needs to keep
pace with the tremendous demands of the people for all forms of
goods and services.
I n summary, then, these are the ways in which the Treasury has
sought to manage the debt so as to make it less of a disrupting influence on our economy. We have not always been able to move as fast
as we might like toward our long-range objective of achieving a
better debt distribution, but we have reduced the floating debt and
the bank-held debt and so reduced the inflationary threat which the
debt carries. I n addition, we have widened the sale of savings bonds
and reopened the market for long-term bonds.
10. Now, let me say a word about the techniques of debt management. Before I conclude, I want to discuss with you briefly the way
in which the Treasury approaches each of its debt management decisions which involve the issuance of new marketable certificates,
notes, and bonds.
Each Treasury financing represents an important event in the
money markets of the country. I t is, therefore, essential that the
Treasury take every precaution to get information from every useful
source in making decisions about these operations.
I n the course of exploring the facts relating to a new Government
issue, the Treasury consults a great many people. We get valuable
help from the Federal Eeserve Board and the 12 Federal Eeserve
banks, with their offices throughout the country which are in contact
with a large number of people and with the money and capital markets. I might add that the Federal Eeserve Bank in New York is
particularly helpful. They have a group of very able officers, and
their help to us in deciding about Treasury issues has been invaluable,
and I say that not just because I was an officer of that bank for 18
years, Mr. Chairman.
We maintain contact with the people who handle investments of
commercial banks, savings banks and insurance companies, pension
funds—State, municipal, corporate and other private funds—security
dealers, and trust companies which have money to invest.




284

1957 REPORT OF THE SECRETARY OF THE TREASURY

I may say we did not put in this statement that we also get monthly
reports from banks and other principal holders of Government bonds
as to their holdings, so we have a statistical series that runs back
pretty well and gives us changes in the security holdings of the principal holders.
We rely upon the banks and security dealers to keep their customers informed about our offerings of securities, in addition to our
public announcements. After a new issue is announced the banks and
dealers do an enormous amount of writing and telephoning to their
customers to tell them about the new issue. I n this way, hundreds of
thousands of investors are reached promptly.
The rates of interest which our securities carry are determined
basically by the quotations in the Government securities market.
Many millions of dollars of Government securities are bought and
sold every day in the free market and the price determined in this
way indicates the rates we have to pay on new issues.
Perhaps the best indication of the pricing of new Treasury issues
is the record of the prices at which our issues have sold in the market
on the day they were actually issued, usually a week or 10 days after
the subscription books were closed.
I n 1953 the Treasury put on the market almost $44 billion of
certificates, notes, and bonds—those securities on which we had to
decide on a rate of interest. These issues were quoted in the market
on the issue date at an average price of par and 5 and one-half thirtyseconds of a dollar per $100 bond. Prices in the Government securities market are quoted in dollars and thirty-seconds; a thirty-second
is equal to 3 % cents.
I n 1954 we sold $59% billion of this type of security, and the price
on those in the market on the issue date was par and eleven thirtyseconds. Money rates were going down a little. I t was a more
favorable market.
Since then, our pricing has worked out even closer: Exactly par
on the average on $49 billion of such issues in 1955, and par and one
thirty-second on $33 billion in 1956, and exactly par again on $16
billion of new coupon issues in the first half of 1957. Appendix B
shows these figures in detail, for each issue, what it was quoted at on
the day of issuance and the first day it was quoted. And I will give
you the figures on our latest 4-percent job in full, also, later.
These figures encompass tho entire $201% billion of certificates,
notes and bonds we issued from January 1953 through June 1957. The
problem is to make each new issue attractive enough to sell without
being too generous.
The attractiveness of a new issue is affected by such influences as the
expectation of the market on interest rates and the volumes of funds
purchasers have available for investment. Also large issues and
longer-term issues have to have a little more margin to assure their
successful sale. That is one reason the 1954 issues show a little more
margin, because quite a number of those were bonds.
I n addition to these coupon securities, certificates, notes, and bonds,
the Treasury sells from $1.6 billion to $1.8 billion of 91-day Treasury
bills at public auction each week and from time to time tax anticipation
bills are also offered on the same bid basis; they may be 9 months, 6
months, whatever it works out.




EXHIBITS

285

The rates at which these securities sell are determined by the mark e t ^ n o t by the Treasury. We have sold more than $375 billion of securities in this way since January 1953—actually much more than we
have sold with interest rates fixed by the Treasury.
The interest rates on these bills, together with the yields on purchases and sales of all types of securities in the open market, build u p
a pattern of interest rates which makes it reasonably clear what rate
a new issue of securities has to carry to be sold successfully. The differ-^
ence is usually a difference of an eighth one way or the other in your
decision.
Thus, our discussions prior to a financing are not so much concerned
with the rates of interest as with the question of what kind of security
we should sell: a bond issue, over 5 years to maturity; an issue of notes,
1 to 5 years; or a short-term certificate, 1 year or less; or a bill—and
just what maturity.
The advice we receive is frequently conflicting and the Secretary
makes his decision, subject to Presidential approval on maturities
over 1 year, only in the last hour before the public announcement.
That is literally true.
11. Now, let me take up the 314s that have been discussed at considerable length on the floor of the Senate and the House over a period,
and also this last offering. The offering of the 3 ^ s in 1953. This
general plan of preparation for financing was followed when the
Treasury offered the 3 ^ percent bonds of June 1978-83 in the spring
of 1953.
This was not only the first long-term marketable bond that the
Treasury had offered since 1945, but it was also the first to be put out
without Federal Eeserve market support for a much longer period.
As you know, the Federal Eeserve used to be in there supporting the
market for a bond issue.
As you will remember, inflationary pressures were heavy in the last
part of 1952 and early 1953, under the impact of a then record demand for money. Despite this heavy demand for private funds,
we were assured that there were some funds available for investment in a long-term Government bond.
Our offering of the 3i/4s presented as difficult a pricing problem
as the Treasury has ever had to face. We had to set the interest rate
on the new issue in a market in which prices were moving gradually
lower—a market which was still in the process of adjusting to freer
market conditions.
Our longest outstanding bond, the Victory 2V2S of December
1967-72, had fallen from almost three-quarters of a point above par—
2.45 percent yield—to 95^—2.80 percent yield—between the Federal
Eeserve-Treasury accord in March 1951 and the end of 1952.
Let me say that again: Before we came in, in the 2 years 1951 and
1952, the prices of the Victory 214s had fallen 5 points, so they would
be priced at 95% in December 1952.
By April 8, 1953, when the 3i^s were announced, it had fallen to
94; that is 1% points more. The big fall took place before we came
in. A t 94, they yieMed 2.90.
Now, somebody said the other day that we did this in a 2% percent
market. That is just nonsense. The Victory 2i/^s were quoted when
we put out the 3i/4s at 2.90 yield basis.




286

1057 REPORT OF THE SECRETARY OF THE TREASURY

There were no long-term Treasury issues outstanding which would
serve as a real guide to the interest rate such an issue should carry.
The Victory 2%s were 10^^ years shorter than the new issue, and the
market curve of rates, if you plot out a curve, rose as maturities
lengthened. One-year inoney was worth about 2% percent as far as
Government securities were concerned, and 5-year money a little more
than 21/2 percent. I am giving you the mathematics of this.
Therefore we took the market curve on outstanding Treasury issues
and extended it parallel to the curve on high-grade corporate issues,
retaining, of course, a proper spread between the two types of obligations.
That curve produced a rate of 3.08 percent as of June 15, 1978,
which was the call date on the new bonds, and 3.12 as of June 15,
1983, the maturity date of the new bonds.
The 31/4 coupon would appear to offer a rate, therefore, approximately 15 basis points—15 one-hundredths of 1 percent—above the
market curve, but the spread would be much less than that if you take
into consideration the fact that we were issuing the bond in corapetition with outstanding issues available in the market at a discount,
another technical point, which had a capital gains advantage for tax
purposes.
The Victory 2%s at 94 were as attractive to a corporate taxpayer
in aftertax yield as a new hypothetical 3.10 percent issue at par would
be if both were held to a 1972 maturity.
I do not know whether that is clear to you. But if you buy a discount bond, you pay your regular income taxes on the coupon, and
then you pay a capital gains tax when it matures for the 5 points that
you gain when it is redeemed at par. You pay only half the tax on
the capital gain, so that on these quotes you will find they have to
quote the outstanding bonds just on a strict yield basis, to take account
of the capital gain.
This 31/4 percent rate proved sufficient to enable the Treasury to
sell $1.2 billion of the new bonds for cash and to induce the holders of
$0.4 billion of maturing F and G savings bonds to exchange them for
the new issue.
We gave all the F and G bonds maturing in 1953 the option of exchanging for the new bond, and 400 million of them took advantage of
it. That was less than a third of the amount that could have.
The estimated yield spread of about 15-basis points above the market was quite modest, however, compared to the 23-basis point average spread between the 11 new high-grade corporate issues put out
during 1953 and the outstanding corporate market. That is, when
a corporation sells a bond in the inarket, a new bond, it has to pay a
higher yield than the outstanding seasoned bonds. If you are doing
an underwriting job you have to pay a higher yield, as you all know,
and there was an average spread of 30-basis points on the 58 new highgrade corporate bonds that had been issued since January 1, 1951, in
relation to the outstanding market, taking Moody's Aaa bonds as a
basis.
Nevertheless, the 314 percent rate was not sufficient to give a real
incentive—I would like to put in the "real," because there are always




EXHIBITS

287

some speculators around—to speculators who thought they could turn
over the new issue at a profit.
The first price quotation in the market on the new 3i/4s was par and
%2 on April 15, 1953. That is what the market said it was worth on
this bond that was supposed to be so overpriced. Trading on the
new bond between that date and the issue of the bond fluctuated
between a high of par and i%2 ^^^ ^ ^^^ of 992%2.
On the issue date of May 1, the 3i/4s were selling in the market at
992%2—that is at a discount—with a yield to the buyer of 3.26 percent. I t was mid-July before the new 3i^s again rose above par.
These figures demonstrate, I believe, that the 3% percent rate was
the lowest rate at which we could possibly have sold at 25- to 30-year
bond in a free market in the spring of 1953.
12. Our current refunding: This same general pattern of financing
was also followed in our most recent refunding program which was
announced Thursday, July 18. As you know, this offering did not
involve the raising of any new cash. I t was concerned solely with
the refunding of four maturing issues: $12,056 inillion 23/4-percent
notes maturing August 1, $3,792 million 2-percent notes maturing August 15, $7,271 million 3%:-percent certificates maturing October 1,
and $824 million ll/2-percent notes maturing October 1, $23,943 million
total maturing issues, of which more than $14% billion was held by
Federal Eeserve banks and Government investment accounts.
With an unprecedented heavy demand for funds in the private
area we were convinced quite early in our studies that there was no
substantial demand for long-term Government securities. The package offering that we decided upon included two certificates and a note,
to be issued on August 1: A 3%-percent certificate, maturing in 4
months (December 1, 1957), a 4-percent certificate maturing in 12
months (August 1, 1958), and a 4-percent note maturing in 4 years
(August 1, 1961), but redeemable at the option of the holder in 2
years (August 1, 1959). The choice of all 3 issues was given to the
holders of the August maturities but the October holders were allowed to choose only between the 2 longer issues. I t did not make
much sense to give an October 1 holder an option of converting into
December 1, you see, only 2 months, so we let them spread it out.
This package was designed to provide a very short security for
corporations and other short-term investors who want their money
before the end of the year, an attractive 4-percent 1-year security for
other short-term investors, and a longer 4-percent issue which would
appeal to 2 somewhat different groups of buyers: (1) those who were
not sure that they wanted to invest funds for as long as 4 years in
case interest rates continue to rise and, therefore, liked the idea of
being able to redeem at the end of 2 years, and (2) those who felt
that the present heavy demand for money is perhaps close to its
peak and were anxious to get part of their portfolios invested for a
longer period than 2 years at a 4-percent rate on the theory that a
4-percent rate might not be available again for a long time.
The pricing on these three issues was done in line with the outstanding market. The market pattern of yields at noon on July 18, just
before the announcement was made, showed rates of approximately
3 % percent at the 4-month point on the curve, 3.90 percent at the




288

195 7 REPORT OF THE SECRETARY OF THE TREASURY

1-year point, 3.95 percent at the 2-year point, and 3.98 percent at the
4-year point.
This pricing was as close or closer to the market curve than the
average pricing that the Treasury has done during the entire period
of more than 6 years since the Federal Eeserve-Treasury accord in
1951.
The new pricing was not, however, quite as thin as on the issues
that we put out in February and May of this year, when new shortterm issues fell slightly below par on their first market quotation.
The large volume was also a factor in pricing the new issues.
•\Vhen you are dealing with $24 billion, you can't cut it quite as
thin as you can when you have four to sell.
All three new issues showed closing bid-price quotations of par
and one thirty-second on the first day of trading—Monday, July 22^
I may say they went down to an even par bid Tuesday afternoon and
Wednesday morning.
The operation was successful. The cash turn-in of $1.1 billion on
this refunding—these are preliminary figures—was the smallest
percentage of publicly held maturities turned in for cash of any
refinancing since March a year ago.
Furthermore, we succeeded in selling $2% billion of the new 4year notes, again helping to keep the debt from shortening.
When we term this a successful operation we do so with full recognition that this refunding alone has added one-tenth of 1 percent to the
computed interest rate on the entire public debt, with an increase of
about $250 million in our computed annual interest charge.
More than one-half of this added interest comes back directly to
the Treasury since $14% billion of the $24 billion maturity was
held by the Federal Eeserve banks and 90 percent of their net earnings are returned to us.
The remainder of approximately $100 million does not represent
a net addition to the Federal budget since a substantial share of it
will be paid back to the Treasury in taxes.
We would prefer to do our borrowing at lower rates. Naturally,
any debtor would. We fully recognize, however, that this is one of
the costs to the American taxpayers of a monetary and credit policy
which is the primary bulwark against the loss of untold billions of
dollars through inflation.
I have presented the background of the 3i/4 percent bond issue
and the recent financing to illustrate the point that the Treasury does
not force rates up, as sometiines stated. I t has always been our policy
to sell our securities at the lowest interest rates at which the maturities offered can be sold.
Attached to this statement are appendixes A and B which will give
you the complete information about the offerings. The first one, appendix A, going back to 1946, and showing the amounts of each issue
of securities that was put out beyond the one-year maturity—these
public issue securities, 2 to 5 years, 5 to 10, and over 10.
And the other, appendix B, shows every issue of marketable securities other than Treasury bills that have been put out by this administration.




APPENDIX

A

Treasury offerings of intermediate and long-term marketable securities, J a n u a r y 1946-August 1957
[In millions of dollars]
2 TO 5 YEARS
P e r i o d to m a t u r i t y

Description of security
Percent
1946» --- -1947 1
1948 1
1949—Dec. 5
1950—Feb. 17
Dec. 4
19511
19521 _---1953—Sept. 2
1954—May 4
Sept. 23
1955—Feb. 1
N o v . 28 —
1956—Mar. 15
1957—Feb. 4
M a r . 18 .
M a y 6—. _
J u l y 22
Total..

-

Type

Months

Years

Date

Cash

Exchange

Total

Note
Note
Note

D e c . 15
M a r . 15
D e c . 15
-

M a r . 15, 1954
M a r . 15, 1955
D e c . 15, 1955

.

.

4
5
5

4,675
5,365
6,854

4,675
5,365
6,854

2,997
2,897

647
4 2, 481

2,997
5,102
4,155
3,792
2,283
2,109
1,464
942
647
* 2, 581

35, 564

42, 966

927

3

927
4,245
620
2,239
1,748

4,675

}

12, 219

__Sept.
May
Oct.
Feb.
Dec.
Dec.
Feb.
Feb.
._ M a y
Aug.

...
.
_

A m o u n t issued
Yearly
totals

D a t e of
issue

D a t e subscription books were o p e n e d

15
17
4
15
1
1
15
15
1
1

2% N o t e
No e
IK N o tt e
2
Note
2% N o t e
2% N o t e
33^ N o t e
33/2 N o t e
3^8 N o t e
Note
4

__

-

M a r . 15, 1957
F e b . 15, 1959
M a y 15, 1957
A u g . 15, 1957
J u n e l S , 1958
J u n e l S , 1958
M a y 15, 1960
M a y 15, 1960
F e b . 15, 1962
A u g . 1, 1961 2

3
4
2
2
2
2
3
3
4
24

6
9

7H
6
6
6
3
3
9H

2,205
4,155

3,792
2,283
2,109
1,464
942
3 100
7,402

_-

2,997
9, 257

1
\

6,075
2,109

•-I

w

H

Xfl

6,634

5 TO 10 YEARS
19461
1947 1
1948 1 - - - 19491
19501
1951 1
1952—Feb. 18
J u n e 16-- 1953—Feb. 2
Oct 28
N o v . 18

-

•

-

_-

-

_-

_-_

See footnotes at end of table.



Mar. 1
July 1
F e b . 15
Nov. 9
F e b . 15

2H
2H
2M
2H

Bond
Bond
Bond
Bond
Bond

. ,

M a r . 15, 1957-59—
J u n e l S , 1958
D e c . IS, 1958
Sept. 15, 1961
D e c . 15, 1958

7
5
5
7
5

llH
10
10
10

4,245
• 620
2,239
1, 748

}

5,172
4,607

00

APPENDIX

A

CO

o

Treasury 'offerings 'of inierrn'ediate and iong-iei^m marketable securities, JdhUary i'946-August 1'957—Continued
[In millions of dollars]
5 T O 10 Y E A R S — C o n t i n u e d
Description of s e c u r i t y
D a t e subscription books were o p e n e d

Yearly
totals
Percent

1954—Feb. 1
Aug. 3
N o v . 22
1955 1
1956 1
19571

-

_ _

A m o u n t issued

Period t o m a t u r i t y

Dateof
issue

F e b . 15
. - A u g . 15
D e c . 15

Type

Date
N o v . 15, 1961
N o v . 15, 1960
A u g . 15, 1963

2K Bond
23^ B o n d 2M B o n d

Years

Months
7
6
. 8

Cash

Total

11,177
3,806
6,755

9
3
8

6,484

Total...-

Exchange

11,177
3,806 \
6,755

25,033

O

31, 517

21,738

a

OVER 10 YEARS
19461
1947 1
19481
1949 1
19501
19511
19521.
1953—Apr. 13 __
1954.
1955—Feb. 1
July 11. _
19561
19571.-

>

.
-

O
May
._

1

F e b . 15
F e b . 15

m

Bond
Bond

J u n e l S , 1978-83.:.

Bond

3
3

.

Total
1 None.
2 Redeemable in 2 years (Aug. 1, 1959) at option of holder.
3 Issued in special allotment to Government mvestment accounts.
* Preliminary.




o

.--

30

F e b . 15, 1995
F e b . 15, 1995

40
40

IM

1,606

1,606

1,924

1,188

1,924
821 }

2,745

2,342

4,351

418

821

W
S3

2,009

>

3

APPENDIX B

Market prices of each neio marketable Treasury issue on first date quoted and on date of issue,^ January 1953-August 1957
First quote

A m o u n t issued (millions)

Issue

Issue d a t e q u o t e

Maturity
Percent

Cash

Type

1953
2K
2H

Certificate
. - . .
Bond
Bond
Certificate..
2K T a x certificate .
2 ^ Certificate
2% Certificate.
^Vs N o t e
B o n d .Note
Bond

.

n

.

_
-

_

-

li
2}4

Total

-

.

-

Exchange

Total

8,175
1,748

F e b . 15, 1954
D e c . 15, 1958
J u n e 15, 1978-83
J u n e 1. 1954.
M a r . 22, 1954
A u g . 15, 1954
S e p t . 15, 1954
M a r . 15, 1957
S e p t . 15, 1961
D e c . 15, 1954
D e c . 15, 1958 3

34,442

43,771

7,007
11,177
3,886
2,897

7,007
11,177
3,886
5,102
3,734
3,558
3,806
4,155
4,919
5,359
6,755

49,364

59,458

8,472
3,792
1,924

$1,188

$8,114
620
1,606
4,858
5,902
2,788
4,724
2,997
2,239
8,175
1,748

4,919
6,359
6,755

_.

8,472
3,792
1,924
3,210
5,706
2,202

$8,114
620
418
4,858

5,902
2,788
4,724
2,997
2,239

.

9,329

Date

Feb.
Feb.
Apr.
May
July
Aug.
Sept.
Sept.
Oct.
Nov.
Nov.

2,1953
2,1953
15,1953
20,1953
7,1953
5,1953
2,1953
2,1953
29,1953
18,1953
18,1953

Price 2

100.03
100.033^
100.09
100.00
99.31
100.033^
100.043^
100.043^
100.28
100.09
100.11

Date

Feb.
Feb.
May
June
July
Aug.
Sept.
Sept.
Nov.
Dec.
Dec.

16,1953
16,1953
1,1953
1,1953
15,1953
17,1953
15,1953
15,1953
9,1953
1,1953
1,1953

100.053^

Price 2

100.05
100.06
99.29
99.30
100. 01
100.04
100.08
100. 09
100.24
100.08
100.11

tei

100.053^

1954

H-t

2)4
V/R

fs
IM
l^A
VA
IH
2M

Certificate
.
Bond
Certificate. —
Note
T a x certificate
Certificate
Bond
Note
Certificate
Certificate
Bond

_. . . .

........

.
—

.. .
-

Total

Feb.
Nov.
May
- - Feb.
Mar.
Aug.
Nov.
May
Dec.
Dec.
Aug.

15, 1955
15, 1961
17, 1955
15, 1959
22, 1955
15, 1955
15, 1960
15, 1957
15, 19553.
15, 1955
15, 1963.-

2,205
3,734

3,558
3,806
4,155
10,094

-

Feb.
Feb.
May
May
July
Aug.
Aug.
Sept.
Nov.
Nov.
Nov.

1,1954
1,1954
5,1954
5,1954
22,1954
3,1954
3,1954
24,1954
22,1954
22,1954
22,1954

100.12
100.12
100.113^
100.15M
100.02
100.11
100.12
100.01
100.06
100.06
100.06

Feb.
Feb.
May
May
Aug.
Aug.
Aug.
Oct.
Dec.
Dec.
Dec.

15,1954
15,1954
17,1954
17,1954
2,1954
15,1954
15,1954
4,1954
15,1954
15,1954
15,1954

100.14
100. 24
100.09
100.08
100.02
100. I I M
100.19
100.00
100.02
100.02
100.11

ZP

100.11

100.09

1955
IVs N o t e . . .
2
Note „
3
Bond
T a x certificate
Note
VA T a x certificate

f'

.

.

-

See footnotes at end of table.




-.

.
-^

-.. Mar.
Aug.
-_. F e b
. . June
Aug.
Mar.

15, 1956
15, 195715, 1995
22, 1955
15, 1956
22, 1956

_

-

3,210
2,532
2,202

3,174

Jan.
Jan.
Jan.
Mar.
May
July

28,1955
28,1955
28,1955
23.1955
4,1955
11,1955

100.04
100.04
100.11
100.00
99.31H
99.313^

Feb.
Feb.
Feb.
Apr.
May
July

15,1955
15,1955
15,1955
1,1955
17,1955
18,1955

100.02
100.00
100.06
99.31
100.00
100.02

CO

APPENDIX

B

CO

Market prices of each new marketable Treasury issue on first date quoted and on date of issue,^ J a n u a r y 1953-August
Issue

First quote

A m o u n t issued (millions)

1957—Continued
Issue d a t e q u o t e

Maturity
Percent
1955
3
2
2
2%
2M
2%

Type

Cash

Bond
T a x certificate
Note.
T a x certificate
Certificate
Note

Feb.
June
Aug.
June
Dec.
June

_

-

15, 1995 3
22, 1956
15, 1956 3
22, 1956
1, 1956
15, 1958

Exchange

$821

Total

9,083
2,283

$821
1,486
6,841
2,970
9,083
2,283

37,055

7,219
2,109
12,056
1,312
7, 271

7,219
2,109
12, 056
3, 221
1,312
7, 271

29,967

8,414
1,464

11,1955
20,1955
20,1955
4.1955
28.1955
28,1955

33,188

2,970

11,735

July
July
July
Oct.
Nov.
Nov.

48, 790

$1,486
6,841

Total

Date

Price 2

100.03
100.013^
100.02
99.31
99.31
99.31

Date

J u l y 20,1955
A u g . 1.1955
A u g . 1,1955
Oct. 11,1955
D e c . 1,1955
D e c . 1,1955

Price 2

100.00
99.313^
99.29
99. 303^
99.31
99.31

o
H
O

100.00

100. OIA

W
&

1956
2^
2M
2%
2H
V-A

tn

Certificate
.
Note
Note
T a x certificate
T a x certificate
Certificate

F e b . 15, 1957
J u n e 15, 1958 3^
A u g . 1, 1957
M a r . 22, 1957
J u n e 24, 1957
Oct. 1, 1957...

. . .
.
. . .

._„

Total

3,221

3,221

M a r . 5,1956
M a r . 5,1956
J u l y 16,1956
A u g . 7,1956
N o v . 19,1956
N o v . 19,1956

100.033^
100. 033^
99. 313^
99.29
100. 00
100.00

M a r . 5,1956
M a r . 5,1956
J u l y 16,1956
A u g . 15,1956
D e c . 3,1956
D e c . 3,1956

100. OSA
100.033^
99. 31A
99.28
100.02
100.03
100.01

100.003^

m
teJ
o

>
K!

1957

O
3M
33^
35^
33^
ZA
^H
3A
4
4

Certificate
Note
Certificate
Note
Certificate
Note
Certificate
Certificate
Note .-

.

.
.

__- - - - . . . . . . .
-.-

-

-

-

- . _--

-

Feb.
May
Feb.
May
Apr.
Feb.
Dec.
„ . . Aug.
Aug.
-

14, 1958
16, 1960
14, 1958 3
15, 1960 3 , . .
15, 1958
15, 1982
1, 1 9 5 7 , . .
1,1958
1, 1961

Total through August
T o t a l , J a n u a r y 1953-August 1957
1 Marketable certificates, notes, and bonds; excludes Treasury bills, and note.s issued
solely in exchange for normiarketable 2% percent investnient bonds, series B.
2 Closing bid quotations as reported by the Federal lieserve B^nk of New York,
3 Reopening of existing issue.




MOO
UOO
MOO

2,351
647
5 9,869
810,462
5 2,481

8,414
1,464
2,437
942
2,351
647
« 9,969
fi10, 562
5 2, 581

3,679

35,688

39, 367

38,058

186, 516

224, 574

-..
2,437
942

Feb.
Feb.
Mar.
Mar.
May
May
July
July
July

4,1957
4,1957
19,1957
19,1957
6,1957
6,1957
23,1957
23,1957
23,1957

100. 01
100.01
99. 293^
99. 313^
99.29
99.29
100. 01
100.01
100.01

Feb.
Feb.
Mar.
Mar.
May
May
Aug.
Aug.
Aug.

15,1957
15,1957
28,1957
28,1957
6,1957
6,1957
1,1957
1,1957
1,1957

100.01
100.04
99.30
100.023^
99.29
99.29

(^)
(^)
(«)

100. 003^

100.00

100. 04

100.043^

< Issued in special allotment to Government investraeut accounts,
6 Preliminary.
9 Not available,

>

Ul

d

EXHIBITS

293

EXHIBIT 41.—Statement by Under Secretary of the Treasury Burgess, August 9,
1957, before the Senate Finance Committee Hearings on the Financial Condition of the United States

I t has been a privilege to have had the opportunity to appear before this committee.
I have been glad to participate because I believe that it is imperative
that we have an enlarged public understanding of current monetary
-and fiscal policies and their influence on the levels of living of every
American family. Your committee, in these hearings, and the study of
^other groups in parallel investigations, aid in developing increased
jpublic interest and knowledge.
I would like to summarize what appear to me to be the most import a n t facts which have been developed in these hearings up to this point.
1. The economy is, and for some time has been, operating at a very
i i g h level.
Employment is at an all-time peak. We are producing more goods
:and services than ever before. Personal income is at a high level and
is widely shared throughout the population. This has encouraged
a large volume of purchases, with resort to extensive credit to augjment purchases further, and without the usual resistance to price
increases.
2. After 4 or 5 years of stable prices, we have been faced with a
jrenewal of inflationary pressures, and it is important that this should
be curbed.
As Secretary Humphrey said in his opening statement, "The threat
of renewed inflation is perhaps our most serious domestic economic
problem."
While some few benefit from inflation, it is a cruel injustice to the
great majority of our people and ultimately saps the economic vitality
of a nation.
I t runs the risk of "boom and bust," a point that Senator Bennett
made so clearly. If these economic movements go so far that they are
badly out of balance, then the resulting crack is much more severe
than if they are checked earlier.
3. The Federal Reserve has been following monetary policies intended to resist inflationary pressures.
I t s principal policy has been to limit the growth of credit and, hence,
exercise some restraint on the demand for goods and services, and
thereby restrain prices.
As a consequence of this policy and the heavy demand for funds,
interest rates have been rising.
4. This administration has followed fiscal practices designed to resist inflationary pressures.
For the past 2 years, the budget has been balanced and the surplus
has been applied to debt reduction. Some of the public debt has been
shifted from banks and into the hands of the public, and the floating
debt has been reduced. Governmental expenditures were reduced
through 1955, but both defense and nondefense items increased in the
1957 and 1958 budgets.
I t is true that, in cutting taxes in 1954 and in helping housing, small
business, and the farmer, the administration may have increased demands for goods and services somewhat, but these measures simply




294

195 7 REPORT OF THE SECRETARY OF THE TREASURY

gave some relief in those areas where the impact of credit restraint
has been felt most severely.
5. To date, these monetary and fiscal practices have not fully overcome the inflationary pressures.
Consumer prices have risen for 15 of the past 16 months. While the
amount of these monthly rises has been small, the consumer price
index is now nearly 5 percent higher than it was 16 months ago.
There is some evidence that the current inflationary pressures may
abate in the near future, though this is uncertain. Furthermore,
such abatement may prove temporary unless measures are taken
which affect the underlying causes.
6. This raises the question whether these policies should be relaxed
or whether there is some better way to deal with inflation.
The relaxation of these policies has serious dangers. It would
result in increasing the demand for goods and accentuating the inflation.
7. We should not underrate the effectiveness of present policies but
should have patience to allow them to work.
These are the policies which have been effective in this country and
in other countries over many years. They have proved historically
powerful influences for economic stability. They require time and
patience t'o become effective.
8. No feasible alternatives to present policies have been presented
in these hearings.
The alternatives of direct controls are not desirable.
Governmentally enforced wage or price controls, or forced savings^
during peacetime, are inconsistent with our traditions of freedom.
Specific curbs on credit for particular purposes during peacetime
are an undesirable interference with the individual's freedom and
discriminate against a particular segment of our society.
9. A more anti-inflationary governmental fiscal policy is desirable.
In the present high state of prosperity in this country, the Federal
Government should have a larger surplus and should be retiring debt
more rapidly.
This is probably the most effective step which could be taken by
the Federal Government.
10. Similar restraint in excessive spending should be practiced by
States and municipalities, businessmen, and consumers.
All such segments of the population have been increasing their
debts at much more rapid rates than the Federal Government.
There needs to be greater public recognition of the dangers of overexpansion and overconsumption—on borrowed money—at a time like
this.
The citizens of the country cannot look to the Federal Government
alone for the necessary restraint in meeting this situation.
11. Such restraint should be matched by equal restraint on the
part of business and labor in their demands for profit and wage increases.
As was pointed out by one of the members of your committee, a
principal cause of the current renewal of inflationary pressures is the
continued—
increases in profits and wages greater than increases in productivity.




EXHIBITS

295^

President Eisenhower, in his Economic Report of last January,,
said:
Business and labor leadership have the responsibility to reach agreementson wages and other labor benefits that are fair to the rest of the community
as well as to those persons immediately involved. Businesses must recognize
the broad public interest in the prices set on their products and services.
12. Such restraint throughout all segments of the economy is necessary for lasting abatement of inflationary pressures.
The monetary and fiscal practices of the past several years may be
bringing about a lessening of the current inflationary pressures. But
continued vigilance must be maintained against their recurrence.
13. The needed economic statesmanship on the p a r t of Federal^
State, and local governments, the consumer, business, and labor, will
arise only from an appreciation of the evils of inflation.
Restraint is inevitably unpopular.
I t can be achieved only if the alternatives are recognized as even
less desirable.
14. And finally, it is for these reasons that I believe that such a
hearing as your committee is conducting may prove a most useful
instrument.
Such a hearing develops and disseminates the information needed
to make the public aware of the disastrous results of inflation and the
necessity for self-restraint to prevent it.

EXHIBIT 42.—Statement by Assistant Secretary of the Treasury Kendall, July 29,
1957, before the House Ways and Means Committee on the report on and
amendments to the Antidumping Act
The scheduling of these hearings is very much appreciated.
Even at the risk of oversimplification it might clear the atmosphere a little
bit in this highly technical field if right now it is pointed out that the amendments suggested are for the purpose of accomplishing two objectives.
First, put an end to the anomalous situation whereby sales can be made at
less than fair value, with injury to American industry, but no dumping duties
collected;
Second, bring the value definitions of this 1921 law up to date.
There will be arguments advanced by a number of people appearing before
you that we do not go far enough, or that we go too far. You will be told on
the one hand that dumping duties should be imposed in almost every case of
price discrimination, irrespective of whether there is in fact injury to American
producers. You will be told on the other hand that the dumping law should
be invoked only where American producers are about to be put out of business
entirely.
Many say that this is middle of the road legislation. I don't agree. Rather
do I think that our proposal is intended to construct a wide and all-inclusive
highway toward accomplishing the twin objectives and one which will stand the
test of time with its pendulum which moves in the field of economy and Government from one side to the other of the tariff problem as the years go by.
In my judgment, neither of the views which you will hear proposed by understandable and worthy proponents of such views is tenable and, after the lengthy
study and careful consideration given by the Bureau of Customs and by Mr.
Hendrick who is here with me, a complete new law is not what is required but
rather the comparatively simple and common sense changes which are recommended by this study within the framework of a congressional directive.
The congressional directive
The directive of the Congress in the Customs Simplification Act of 1956
addressed to the Secretary of the Treasury was a review of the operation and
efifectiveness of the Antidumping Act of 1921 after consultation with the United




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195 7 REPORT OF THE SECRETARY OF THE TREASURY

States Tariff Commission. I should like to say that the Commission has been
of very real help in all of our deliberations leading up to the report and the
proposed bill which were presented to the House and to the Senate in the latter
part of January.
This provision of the Customs Act of 1956 reflected the concern of many
Americans and American businessmen and industry representatives that at
worst the Antidumping Act was not effective and was not carrying out the purposes for which it had been enacted; and at best thirty-six years is a long time,
many changes have occurred in international trade and in industry in general,
and that a good hard look should be taken first at the administration of the act
and secondly at its effectiveness.
As you know, the Secretary, after consultation with the Tariff Commission, was
to report to the Congress within six months of the date of the enactment of the
statute, which turned out to be early in February, and recommend any amendment considered desirable or necessary to provide for greater certainty, speed, and
efficiency in the enforcment of the Antidumping Act.
Objectives of Antidumping Act
Before getting into the technicalities of the amendments which we are proposing,
and they are technical, I should like to discuss the objectives behind them so that
they may be weighed and decided upon in the atmosphere of trade and industry
rather than just pure legal language.
The first thing to bear in mind is that we are as always considering the best
interests of the IJnited States. These interests are inseparably associated with the
best interests of American industry and American trade. Obviously, it is to the
best interests of American industry that foreign producers' dumping price raids
which injure American industry should be made actionable. They should be met
with full and swift enforcement of the law.
However, we believe it is not to the best interests of either the United States or
of American industry if you assess dumping duties merely because of technicalities, where there has not been injury and where common sense shows that action
is not warranted. This does not help American industry. On the other hand such
findings invite retaliation by other countries. This is a bad thing for our export
markets. Not only this: Increases in price caused by dumping duties hurt the
American consumer and they hurt American industries processing foreign imports.
There is absolutely no reason that we can find from our study why complete
and vigilant protection of American industrj^ cannot go hand in hand with a careful weighing of the facts in each of the cases where suspected dumping is called to
attention.
What constitutes dumping actionable under the law
I would like to step back for a moment and examine with you what has become
today the traditional belief and philosophy of the administration as to what
actually constitutes dumping.
The approach to the problem is complicated because of differing interpretations
given to the word. The Antidumping Act does not define ''dumping." The
generally accepted economists' view is that the word ''dumping" merely means
export sales below home price. On the other hand it is also clear that these same
economists feel that such sales should not be subject to duties except when there is
injury. I have a memorandum on this subject which, if you desire, I can put in
the record.
In any event the act clearly provides that dumping duties are to be imposed only
if two elements are present: first, sales at less than fair value and, secondly, injury
to a United States industry. The administration believes that this is right.
Administration of the law
The Treasury Department calculates whether there are sales at less than fair
value. The Tariff Commission investigates the facts as to injury and draws the
conclusion as to whether or not injury has occurred. That is one of the reasons
why, in the Customs Simphfication Act of 1956, the Secretary of the Treasury
was directed to make his report after consulting with the United States Tariff
Commission.
As you probably know—and this is parenthetical—after we had drawn our first
draft of the report and proposed legislation and after that draft had been discussed by members of my staff and the staff of the Tariff Commission, I sat down




EXHIBITS

297

in conference with the individual members of the Tariff Commission to go over the
report as well as the amendment and the consequent two papers presented you are
the result of a meeting of the minds of the Commissioners and the Treasury.
Sales at less than fair value
Now how do we determine whether or not there have been sales at less than
*'fair value" under the Antidumping Act? Really the "fair value" we are talking
about is a term of art. Ordinarily it means the price for consumption in the country
of export^ or, to use the language of the trade, the home consumption price.
To find whether there are sales at less than fair value, you compare the foreign
producer's home consumption price with his price to the United States purchaser.
Let us suppose that we have an item sold for home consumption in country X and
also by that country to the United States, with prices as follows:
Home consumption price
.
$20. 00
Price to U. S. A
15. 00
Difference
5. 00
This is a typical case of sale at less than fair value.
Adjustments
In comparing the two prices it is necessary to reduce them to comparable terms.
The simplest way to do this is to calculate them on an f. o. b. factory basis. Here
is an example. Let us suppose that a merchant in country X goes to a factory
there and says, "I want to buy one hundred bicycles. I am going to sell these in
country X." The factory owner says: "Here they are. Cost is $20 a bicycle.
Take them away." Then suppose an American importer goes to the same factory
and says, "I want to buy one hundred bicycles, to import into the United States.'*
The factory owner says: "Here they are. Cost is $20 a bicycle. Take them
away. You take care of getting them to the United States."
This is not selling at less than fair value.
The example is, as you will recognize, oversimplified. Actually the price to the
United States will generally include various charges for which adjustments must
be made.
Transportation
For instance, if in the bicycle case above cited the factory manager had said to
the American importer: "Cost is $20 a bicycle, and I will take care of the shipping
charges," then the situation would be as follows:
Home consumption price
,
•
$20. 00
Price to U. S. A
$20. 00
Less ocean transportation
3. 00
Price to U. S. A. f. o. b. factory
17. 00
Difference
3. 00
Because of the adjustment this is selling at less than fair value.
Quantity differentials
Adjustment may be made for quantity differentials in line with the ordinary
course of trade for the merchandise under consideration. For example, if the
American purchaser of bicycles from country X buys 10,000 bicycles, he might
reasonably expect a lower price than the purchaser of 100.
Circumstances of sale
If the home consumption sale and the sale to the United States market are made
under differing circumstances, adjustment can be made for that. Let us suppose
that the bicycle manufacturer in country X gives a service guaranty for bicycles
purchased for use in country X, but none for bicycles exported to the United
States. The servicing costs him $0.50 per bicycle. At the same time he pays for
American dealers' advertising of the country X bicycle at the rate of $2.00 a
bicycle, but does not pay for advertising bicycles sold for use in country X. The
price comparison would be as follows, assuming a price in each case of $20 per
bicycle.




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195 7 REPORT OF THE SECRETARY OF THE TREASURY

H o m e consumption price
Less servicing cost
Plus advertising cost
Adjustment
Adjusted home consumption price
Price to U. S. A

$20. 00
$0. 50
2. .00
1. 50
21. 50
20. 00

Difference
1. 50
This would be a sale a t less than fair value.
Remission of import duties and internal taxes
F u r t h e r b y way of reducing t h e price to t h e United States m a r k e t and t h e home
consumption price to comparable terms, allowance is made, in calculating this
price, for various internal taxes, such as sales taxes, which are remitted by t h e
country of export.
**Such or s i m i l a r " merchandise
If a foreign producer sells his product only to the United States, there is no way
to determine fair value by reference to his home consumption sales, because he
m a k e s none. I n this case we can determine fair value on t h e basis of t h e h o m e
consumption price charged by other producers in the same country. Another
way of determining fair value is by reference to comparable merchandise produced by the same or other producers. There was once a case of shovels sold to
t h e United States with long handles. T h e producing country had no m a r k e t for
such shovels; its workmen used shovels with short handles. We would base fair
value on the short handled shovels sold for home consumption, making adjustm e n t for the fact t h a t long handles cost more t h a n short ones.
Third country prices
If comparison with home consumption prices is not feasible because home consumption sales are not m a d e in sufficient quantities to be representative, then
comparison will be m a d e with sales for exportation to countries other t h a n t h e
United States.
Cost of production
I n the absence of home consumption or third country sales or offers, fair value
is based on w h a t is now called cost of production, or w h a t we would propose u n d e r
t h e a m e n d m e n t be called constructed value.
Withholding of appraisement
So m u c h for fair value. For a m o m e n t I would like to t u r n to something which
should appropriately be called to your attention here. While fair value is being
determined a n d immediately upon suspicion of sales a t a dumping price we withhold appraisement. This means t h a t final determination of the d u t y cannot be
calculated and paid until decision on t h e question of dumping has been reached.
This insures t h a t every entry can be m a d e subject to a dumping d u t y when a
finding of dumping is finally m a d e . Withholding of appraisement necessarily
creates uncertainty. I t is a major deterrent, often more feared t h a n the imposition of t h e d u t y .
Determination as to injury
If t h e Treasury determines there are not sales a t less t h a n fair value, t h e case is
closed. If it determines there are sales a t less t h a n fair value, t h e case goes to the
Tariff Commission for determination as to injury. With its staff of experts
experienced in escape clause, peril point, and similar investigations, this is a job
it is well qualified to handle.
If t h e determination is t h a t there is injury, dumping duties are assessed, t h e
collection of which is again a d u t y of t h e Treasury.
T h e a m e n d m e n t s proposed
H a v i n g given you this sketchy background of t h e law and its administration,
let me t u r n to t h e a m e n d m e n t s proposed.
At the outset, w h a t we have been looking for and w h a t we propose to you are
a m e n d m e n t s which contribute to t h e certainty, speed, and enforcement of t h e
Antidumping Act. We believe firmly t h a t certain definitions should be incor-




299

EXHIBITS

porated in the act and the modifications which we propose are those needed to
carry into effect this stated purpose. With equal firmness, there are certain terms
in the act which we believe should be left broad and undefined.
The amendments proposed—first objective
As stated, the first objective to be accomplished by the amendments is to
assure that dumping duties will be collected in all cases where there are sales at less
than fair value, with injury to American industry.
Duty measured by third country price.—There are cases where the foreign
producer is principally an exporter. He sells mostly to other countries; little
within his own country. Under these circumstances we judge fair value by the
prices to third countries—that is, to countries other than his own and other than
the United States. But if we get a finding under the Antidumping Act, we must
under the present law measure dumping duties by the difference between the price
to the United States and the price for consumption in the country of export.
Under the proposed amendment the same measuring equation would be applicable
to both determinations.
Duty measured by restricted home consumption price.—A second type of situation,
slightly more complicated, but of even greater importance, is where the home
consumption sales are in substantial volume, but are not "freely offered."
Let us suppose that most country X bicycles are sold for consumption in country
X, and sold at $20.00 a unit, but with a clause in the contract limiting the area in
which the country X purchaser may resell. Such a contract renders the sales
within country X "restricted"—they are not "freely offered." They can not be
used, under the present law, in calculating dumping duties. Reference must therefore be had under the present law to the sales to third countries (which, we will
•assume, are freely offered). Under the proposed amendment, the dumping duties
would be calculated on the basis of the sales within country X. Here is the result,
in figures:
Dumping Dumping
Number
of bicycles Unit price duty under duty under
amendsold
present
ment
law
For home consumption _ .
For export to tliird countries
For export to U. S. A_
Dumping duty per unit

100,000
1,000
50,000

$20.00
15.25
15.00

$5.00

..
$0.25

Once again we have a case of sales at less than fair value. I find it hard to
believe that the dumping duty should be calculated on the basis of sales to third
countries. Or, if the price for consumption in country X was $15.00 instead of
$20.00, and thus not less than the price to the United States, I would find it
equally hard to believe that any dumping duties should be imposed based on the
$15.25 third country price.
Restricted home consumption sales are common practice in many foreign countries, especially those which have cartels. As a result, at present and for some years
it has been possible that we may have a finding under the act; yet we are unable
either to collect dumping duties or the dumping duties are so infinitesimal as
hardly to deter a foreign producer. Concomitantly, this failure and apparent
impotency are the source of a good deal of irritation as well as a real detriment to
American industry.
The amendments proposed—second objective
As to the second of our objectives: There are a number of technical terms used
in the Antidumping Act which are also used in the law relating to valuation for
assessment of ordinary duties. Among these are the definitions of "sold or . . .
offered for sale," "ordinary course of trade," "such or similar merchandise,"
"usual wholesale quantities." These definitions were brought up to date, as to
valuation for ordinary duties, in the Customs Simplification Act of 1956. We feel
that they should be incorporated also, to the extent applicable, in the Antidumping
Act to achieve uniformity, avoid needless confusion, and make the body of customs
laws more cohesive.




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1957 REPORT OF THE SEGRETARY OF THE TREASURY

Injury under the Antidumping Act
We are not suggesting an amendment to the act which will define what is
meant by "injury," although a great many persons have strongly urged a definition in terms of injury bordering on bankruptcy while a great many others
have argued with equal vigor doing away with the injury test altogether. The
conflict is one of long standing.
Legislative history
If we look at the legislative history, we find that certain members of Congress
in 1921 were considering the problem quite simply from the standpoint of price
differential, without any reference to injury. Others adopted a test bordering;
on destruction of an American industry. The resultant law was a compromise,
A price differential alone was not enough; injury, too, must be present; although
the degree of injury was not defined.
Shortly after the law was passed the Treasury in effect announced that its
determination of price differential was going to be made simply on the basis of
arithmetic, without any reference to whether the import price was "fair"—meaning "equitable." This policy has never been seriously challenged by Congress..
In 1954 a careful reexamination of the Antidumping Act was made, as a result
of which the law was changed so as to place in the quasi-judicial forum of the
Tariff Commission, an arm of the United States Congress, the decision on injury.
The decision on fair value remained in the Treasury.
Sales less than fair value not of themselves unfair
Selling at less than fair value, as we define it (that is the foreign exporter
selling to the United States at a price less than his price for consumption in the
country of exportation, calculated f. o. b. foreign factory) is a benefit to the
American consumer and to the American reprocessor, as well as the American
importer. It may or may not injure an industry in the United States. The
fact that a sale is at less than "fair value" is not of itself an indication of injury,
nor does it indicate the price is "unfair." "Fair" in this sense does not mean
"equitable"; it merely means what a willing purchaser pays to a willing seller
for consumption in the country of export, that is, the fair market value.
Comparison of delivered prices U. S. A. for injury determination
Essentially American industry does not look to the foreign competitor's foreign
price. American industry looks to what the foreign product sells for in the
United States. That means delivered price. If the delivered price of the foreign
product is lower than the price of the comparable American product, we have an
indication—one indication—that there may be injury. On the other hand, if
the delivered price of the foreign product is not lower than the price of the comparable American product, the foreign producer is not underselling American
competition, although he may be selling at less than fair value. Here is no
price raid, or injury to American industry.
Definition of injury and industry not required
To try to define "injury" is very much like trying to define precisely some of
the phases of the common law or of equity where the court's tradition may and
should come to its judgment by weighing all of the factors in balance; and in any
one case the balance may be very different from that of another. Injury to a
large corporation or to the owner of a chain of stores may be very different from
injury to the corner grocer. Injury to one industry may be very different from
injury to another. IJnder the same set of facts mathematically opposite conclusions or differing conclusions could be drawn. These are questions of economics, not sensitive to either exact science or to predetermined close lines or
channels of thought.
So, too, does "industry" beggar proper definition when one is concerned with
comparisons. And we have felt right along that the act should neither define
industry nor injury for these reasons.
It is interesting to note that on the one hand some people think injury should
be very broadly defined while others would narrow the definition of injury until
it disappears. The incompatibility of these differing points of view is strangely
compelling. To us neither is correct and the Tariff Commission's hands and
minds must not be fettered to the end that their determination may be as realistic
as is possible within the set of facts before them—realistic from the standpoint
of pure business judgment.




EXHIBITS

301

I n general s u m m a t i o n , t h e Treasury welcomed t h e m a n d a t e of t h e Congress
w i t h t r u e objectivity a n d has h a d t h e careful, expert guidance of Mr. Hendrick;
t h e practical, h a r d h e a d e d approach of t h e m a n y able people of t h e Bureau of
C u s t o m s ; a n d also from time to time, distinguished scholarly assistance from t h e
•outside.
W h a t you h a v e before you in our report a n d in our proposed a m e n d m e n t s
results from exhaustive studies. T h e proposal for legislation, on this basis, represents w h a t we believe t o be an Antidumping Act which will meet your requirem e n t s now a n d will do so for a long time to come.

Organization and Procedure
E X H I B I T 43.—Treasury Department orders relating to organization and
procedure
No. 81 ( R E V I S E D ) , R E V I S I O N , D E C E M B E R 3, 1 9 5 6 . — A B O L I T I O N OP T H E C O M M I T T E E
ON P R I N T I N G AND P U B L I C A T I O N

This order supersedes Treasury D e p a r t m e n t Order No. 81 (Revision No. 2)
of October 30, 1953, a n d abolishes the Committee on Printing a n d Publication
set u p b y t h a t order.
The Committee's functions were to supervise generally all printing a n d binding
originating in and procured for the D e p a r t m e n t , a n d to recommend printing
regulations for t h e D e p a r t m e n t , subject t o approval of t h e Administrative Assistant Secretary, The Administrative Assistant Secretary shall continue to be
responsible for these functions.
DAVID W . KENDALL,

Acting Secretary of the Treasury.

No.

83 ( R E V I S E D ) , R E V I S I O N , A P R I L 9, 1 9 5 7 . — D E S I G N A T I O N S R E L A T I V E TO T H E
S E C U R I T Y O F F I C E R AND P E R S O N N E L S E C U R I T Y O F F I C E R

P u r s u a n t t o the provisions of Executive Orders No. 10450 a n d 10501 and of
Treasury D e p a r t m e n t Orders No. 82, Revised, a n d 160, Revised, Mr. Francis J.
Gafford, Assistant to the Secretary, has been designated as Security Officer a n d
Personnel Security Officer for t h e Treasury D e p a r t m e n t . Mr. A. Glenn Meerdink
shall serve as Alternate Legal Officer.
All officers a n d employees of the Treasury D e p a r t m e n t are directed to comply
with requests for information received from the persons designated above a n d to
cooperate with t h e m t o the fullest possible extent.
This order supersedes Treasury D e p a r t m e n t Order No. 83 (Revised), dated
J a n u a r y 17, 1956.
F R E D C . SCRIBNER,

Jr.,

Acting Secretary of the Treasury.

No.

83

( R E V I S E D ) , R E V I S I O N , M A Y 16, 1 9 5 7 . — D E S I G N A T I O N
PERSONNEL SECURITY OFFICER

OF A L T E R N A T E

P u r s u a n t t o t h e provisions of Executive Orders No. 10450 a n d 10501.and of
Treasury D e p a r t m e n t Orders No. 82, Revised, a n d 160, Revised, Mr. Francis J.
Gafford, Assistant t o t h e Secretary, has been designated as Security Officer a n d
Personnel Security Officer for t h e Treasury D e p a r t m e n t .
Mr. T h o m a s M .
Hughes is designated as Alternate Personnel Security Officer. Mr. A. Glenn
Meerdink shall serve as Alternate Legal Officer.
All officers a n d employees of t h e Treasury D e p a r t m e n t are directed to comply
with requests for information received from the persons designated above a n d t o
cooperate with t h e m t o the fullest possible extent.
This order supersedes Treasury D e p a r t m e n t Order No. 83 (Revised), d a t e d
April 9, 1957.




F R E D C . S C R I B N E R , Jr.,

Acting Secretary of the Treasury.

302

1 9 5 7 REPORT OF T H E SECRETARY OF T H E TREASURY

N o . 148. ( R E V I S E D ) , R E V I S I O N , A P R I L 18, 1 9 5 7 . — S U P E R V I S I O N
THE T R E A S U R Y D E P A R T M E N T

OF BUREAUS O F

T h e following assignments of bureaus of t h e Treasury D e p a r t m e n t are hereby
ordered:
Under Secretary (Mr. W. Randolph Burgess):
Assistant Secretary (Mr. Laurence B. Robbins):
Office of Production a n d Defense Lending:
Defense Lending Division.
Federal Facilities Corporation.
Reconstruction Finance Corporation (In liquidation).
Fiscal Assistant Secretary (Mr. William T . Heffelfinger):
Bureau of Accounts.
Office of t h e Treasurer.
Bureau of t h e Public D e b t .
Office of t h e Comptroller of t h e Currency.
United States Savings Bonds Division.
Office of International Finance (including Foreign Assets Control).
Assistant t o t h e Secretary ( M r . Nils A. L e n n a r t s o n ) :
Information Service.
Assistant t o t h e Secretary (Mr. Paul I. Wren).
Special Assistant t o t h e Secretary (Mr. F r a n k A. Southard, J r . ) .
Assistant Secretary (Mr. D a v i d W. Kendall):
United States Coast Guard.
United States Secret Service.
Bureau of Customs.
Bureau of t h e Mint.
Bureau of Narcotics.
Assistant t o t h e Secretary (Mr. J a m e s P . Hendrick).
Technical Assistant t o t h e Secretary for Enforcemerit.
Assistant Secretary (Mr. Fred C. Scribner, J r . ) :
I n t e r n a l Revenue Service.
Administrative Assistant Secretary (Mr. William W. Parsons):
Office of Administrative Services.
Office of Budget.
Office of Personnel.
Bureau of Engraving a n d Printing.
Assistant t o t h e Secretary (Mr. Francis J. Gafford):
Personnel Security (5ffice.
General Counsel (Vacancy):
Legal Division.
Assistant t o t h e Secretary (Mr. Russell E . Train) :
Legal Advisory Staff.
D e p u t y t o t h e Secretary [in charge of t a x policy] (Mr. D a n Throop S m i t h ) :
Analysis Staff.
G. M . H U M P H R E Y ,

Secretary of the Treasury.
N o . 150-42, J U L Y 27, 1 9 5 6 . — R E M O V A L O F P A N A M A C A N A L Z O N E , P U E R T O RicOy
AND T H E V I R G I N I S L A N D S FROM I N T E R N A L R E V E N U E R E G I O N S AND D I S T R I C T S

B y virtue of t h e a u t h o r i t y vested in m e as Secretary of t h e Treasury it is hereby
ordered:
1. T h e P a n a m a Canal Zone is removed from t h e Internal Revenue District^
Jacksonville, a n d from t h e A t l a n t a Region; a n d Puerto Rico a n d t h e Virgin
Islands of t h e United States are removed from t h e I n t e r n a l Revenue District^
Lower M a n h a t t a n , a n d from t h e New York City Region.
2. T h e Commissioner shall, t o t h e extent of a u t h o r i t y otherwise vested in him,
provide for t h e administration of t h e United States internal revenue laws in t h e
P a n a m a Canal Zone, Puerto Rico, a n d t h e Virgin Islands.
3. This order shall not be deemed t o affect t h e procedures for administrative
appeal existing immediately prior t o August 1, 1956.
4. This order shall be effective as pf August 1, 1956.




DAVID W . KENDALL,

Acting Secretary of the Treasury,

EXHIBITS

303

N o . 150-43, O C T O B E R 5, 1 9 5 6 . — R E D E S I G N A T I O N O F O F F I C E O F ASSISTANT C O M MISSIONER OF I N T E R N A L R E V E N U E AS O F F I C E O F A S S I S T A N T TO T H E C O M M I S SIONER

By virtue of t h e authority vested in m e as Secretary of t h e Treasury, t h e
office of Assistant Commissioner of I n t e r n a l Revenue (Planning), in t h e Washington H e a d q u a r t e r s Office of t h e I n t e r n a l Revenue Service, as established i n
Treasury D e p a r t m e n t Order N o . 150-24, dated April 10, 1953, is redesignated
as t h e office of Assistant t o t h e Commissioner.
T h e provisions of Treasury D e p a r t m e n t Order N o . 150-24 are revised accordingly b y this order.
G. M. H U M P H R E Y ,

Secretary of the Treasury.
N o . 150-44, N O V E M B E R 16, 1 9 5 6 . — E S T A B L I S H M E N T OF T H E O F F I C E O F A D M I N ISTRATIVE A S S I S T A N T TO T H E C O M M I S S I O N E R O F I N T E R N A L R E V E N U E

By virtue of t h e authority vested in m e as Secretary of t h e Treasury, including
t h a t conferred by Section 2 of Reorganization Plan N o . 1 of 1952, t h e office of
Assistant Commissioner of I n t e r n a l Revenue (Administration), as established in
Treasury D e p a r t m e n t Order No. 150-24, dated April 10, 1953, is hereby abolished.
I t is determined t h a t there shall be in t h e national office of t h e I n t e r n a l Revenue
Service t h e office of Administrative Assistant t o t h e Commissioner.
This order is effective December 1, 1956.
G. M. H U M P H R E Y ,

Secretary of the Treasury.
N o . 150-45, A P R I L 22, 1957.—AUTHORIZATION OF T H E C O M M I S S I O N E R OF I N T E R N A L
R E V E N U E T O P R E S C R I B E R E G U L A T I O N S FOR T H E E N F O R C E M E N T OF T H E F E D E R A L
FIREARMS A C T

T h e Commissioner of I n t e r n a l Revenue is hereby authorized t o prescribe all
needful rules a n d regulations for t h e enforcement of t h e Federal Firearms Act
(U. S. C , Title 15, Chapter 18), subject t o approval b y t h e Secretary or his
delegate.
F R E D C . S C R I B N E R , Jr.,

Acting Secretary of the Treasury,

N o . 158 ( R E V I S E D ) , R E V I S I O N , A U G U S T 23, 1 9 5 6 . — D E S I G N A T I O N O F O F F I C E R S
T o W I T N E S S ASSIGNMENTS OF REGISTERED ISSUES OF T H E UNITED STATES

D e p a r t m e n t Circular No. 300, Revised,. prescribing regulations with respect
to United States bonds a n d notes, makes provision for the assignment of registered
issues a t t h e Treasury D e p a r t m e n t . T h e following officers are hereby authorized
to witness such assignments:
The Secretary of t h e Treasury.
T h e Under Secretaries of t h e Treasury.
The Assistant Secretaries of t h e Treasury.
The General Counsel of t h e Treasury.
The Commissioner of t h e PubHc Debt.
The Assistant Commissioner of t h e Public Debt.
T h e D e p u t y Commissioner of t h e Public Debt.
The Chief of the Division of Loans a n d Currency, Bureau of the Public Debt.
The Assistant Chief of t h e Division of Loans a n d Currency.
The Treasurer of t h e United States.
T h e D e p u t y a n d Acting Treasurer of t h e United States.
T h e Assistant D e p u t y Treasurer of t h e United States.
The Chief of t h e Securities Division, Office of t h e Treasurer of t h e United
States.
T h e Assistant Chief of t h e Securities Division.
The Assistant to t h e Chief of t h e Securities Division.




304

195 7 REPORT OF THE SECRETARY OF THE TREASURY

N o other officers in the Treasury D e p a r t m e n t a t Washington are authorized
to witness the assignments of registered issues of the United States.
The attention of all officers authorized to witness assignments is called to the
D e p a r t m e n t ' s requirement t h a t the witnessing officer must make certification
t h a t t h e person executing the assignment appeared personally before him, t h a t
such person was known or proved to him to be the payee of the particular security
assigned, or his duly constituted assign, and t h a t such person executed the transfer,
acknowledging it to be his free act and deed. Witnessing officers will be held
to strict accountability in those respects, a n d will be expected to respond in respect
to any losses resulting from w a n t of care on their p a r t . T h e witnessing officer
m u s t affix to the assignment his official signature, title, and address, and t h e
date of the assignment.
A.

N.

OVERBY,

Acting Secretary of the Treasury.
No.
165 ( R E V I S E D ) , A M E N D M E N T , OCTOBER 29, 1 9 5 6 . — D E L E G A T I O N TO T H E
COMMISSIONER O F CUSTOMS OF A U T H O R I T Y T O T A K E F I N A L A C T I O N IN C E R T A I N
P E N A L T Y AND L I Q U I D A T I O N D A M A G E C A S E S

By virtue of the authority vested in me b y Reorganization Plan No. 26 of
1950 (3 CFR, 1950 Supp. Ch. I l l ) , it is hereby ordered t h a t subparagraph (h)
of Treasury D e p a r t m e n t Order No. 165, Revised, issued on November 2, 1954
(T. D . 53654; 19 F . R. 7241), as amended December 5, 1955 (T. D . 53966; 20
F . R. 9320), is further amended to read as follows:
"(h) No decision with respect to a n y claim (including claim for liquidated
damages), fine, or penalty (including forfeiture) in excess of $20,000 shall be made
without the approval of the Secretary of the Treasury, except t h a t such approval
shall not be required with respect to a n y claim (including claim for liquidated
damages), fine, or penalty (including forfeiture) incurred or arising under:
"(1) Section 3114, Revised Statutes, as amended (19 U. S. C. 257), for failure
to report, make entry, a n d p a y duties on certain equipments and repairs for
"(2) Section 432, Tariff Act of 1930 (19 U. S. C. 1432), for omitting from the
vessel manifest any articles to be retained on board as sea stores, ship's stores,
or bunker coal or bunker oil, or for landing a n y such articles without the required
permit;
"(3) Section 453, Tariff Act of 1930 (19 U. S. C. 1453), for lading or unlading
merchandise or baggage valued a t $500 or more without obtaining the required
license or permit;
"(4) Section 460, Tariff Act of 1930, as amended (19 U. S. C. 1460), for failure
to report or to file a manifest as required b y Section 459, Tariff Act of 1930, as
amended (19 U. S. C. 1459) in t h e following cases:
"(i) Violations due to ignorance of the reporting requirements or to inadvertence
a n d either no merchandise, or only typical personal or souvenir merchandise
which would have been free of duty, if entered, is carried on the vessel or vehicle, or
"(ii) Where the violation is the first offense, although not due to ignorance or
inadvertence, and no intended commercial use or t h r e a t to t h e revenue is involved;
"(5) Section 584, Tariff Act of 1930, as amended (19 U. S. C. 1584), for having
on board, or unlading from, a vessel or vehicle, any merchandise which is not
included or described in the manifest or does not agree therewith;
"(6) Section 8 or 204 (b), Anti-Smuggling Act, approved August 5, 1935
(19 U. S. C. 1708, 1584), for failure of a vessel not exceeding 500 net tons importing
spirits, wines, or other alcoholic liquors to have the certificate required by Section
7 of the Anti-Smuggling Act (19 U. S. C. 1707);
"(7) Section 585, Tariff Act of 1930, as amended (19 U. S. C. 1585), in respect
of any vessel or vehicle which departs or a t t e m p t s to depart from a n y collection
district without making the required report or entry, or unlades any merchandise
before such report or entry;
• "(8) Section 592, Tariff Act of 1930 (19 U. S. C. 1592), if the Commissioner
finds t h a t t h e decision is in accordance with an established policy of mitigation
or remission which has been approved by the Secretary in a factually similar case;
"(9) The act of February 24, 1915 (46 U. S. C. 14), for false o a t h to obtain a
register for a wrecked vessel;
"(10) Section 4143, Revised Statutes (46 U. S. C. 21), for false o a t h as to
ownership b y owner to obtain registry of vessel;




EXHIBITS

305

"(11) Section 4163, Revised Statutes (46 U. S. C. 33), for false oath by agent
or attorney to obtain registry of a vessel;
"(12) Section 4177, Revised Statutes, as amended (46 U. S. C. 45), in respect
of documented vessels failing to have the required number permanently m a r k e d ;
"(13) Section 4179, Revised Statutes (46 U. S. C. 50), for changing, or engaging
in deceptive practices with respect to, the name of a documented vessel;
"(14) Section 4189, Revised Statutes, as amended (46 U. S. C. 60), in respect
of any vessel for which a n y certificate of registry, enrollment or license, or other
record or document granted in lieu thereof is knowingly a n d fraudently obtained,
or used;
"(15) Section 4153, Revised Statutes, as amended (46 U. S. C. 77), in respect
of documented vessels for failing to have the number denoting net tonnage permanen tlv m a r k e d ;
"(16) "Section 4339, Revised Statutes (46 U. S. C. 272), for refusal to take,
or for taking falsely, the required oath with respect to equipment a n d repairs
for vessels;
"(17) Section 4337, Revised Statutes (46 U. S. C. 278), in respect of vessels
proceeding on a foreign voyage while enrolled and licensed or licensed;
"(18) Section 1 of t h e act of M a y 28, 1906 (46 U. S. C. 292), in respect of
foreign-built dredges engaging in dredging in t h e United States;
"(19) Section 4365, Revised S t a t u t e s ' ( 4 6 U. S. C. 311), in respect of vessels
licensed for t h e fisheries and found within three leagues of the coast with foreign
merchandise exceeding $500 in value on board without having t h e permission t o
touch and t r a d e at foreign ports required by Section 4364, Revised Statutes (46
U . S . C . 310);
"(20) Section 4370, Revised Statutes, as amended (46 U. S. C. 316 (a) and
(d)), in respect of any vessel employed in towing in violation of subsection (a) of
t h a t section, as amended, or of any foreign vessel engaging in salvaging operations
not excepted or authorized by subsection (d) of t h a t section, as amended;
"(21) Section 7, act of J u n e 19, 1886, as amended (46 U. S. C. 319), in respect
of certain vessels trading coastwise, or engaged in the fishery, without a valid
document and in respect of such vessels having on board foreign merchandise or
taxable alcoholic liquors on which the duties or taxes have not been paid or secured t o be paid;
"(22) Section 4377, Revised Statutes, as amended (46 U. S. C. 325), in respect
only of licensed vessels employed in any other t r a d e t h a n t h a t for which licensed,
found with a forged or altered license or one granted for any other vessel, or
found with a n y foreign merchandise or taxable alcoholic liquors on board on
which t h e duties or taxes have not been paid or secured t o be paid;
"(23) Section 4240, Revised Statutes (46 U. S. C. 723), in respect of any vessel
transporting t o a foreign p o r t any property t a k e n from a wreck within United
States jurisdiction off t h e coast of Florida;
"(24) Section 27, Merchant Marine Act, 1920, as amended (46 U. S. C. 883),
in respect of merchandise transported coastwise in a vessel ineligible under t h a t
section t o engage in such t r a n s p o r t a t i o n ;
"(25) Bonds t a k e n p u r s u a n t t o Section 308, Tariff Act of 1930, as amended (19
U. S. C. 1308), if t h e Commissioner is satisfied t h a t t h e importation was properly
entered under Section 308 and there was no intent t o defraud t h e revenue or
delay t h e p a y m e n t of d u t y ;
"(26) Bonds t a k e n p u r s u a n t t o Section 304, Tariff Act of 1930, as amended (19
U. S. C. 1304), if t h e marking d u t y due under Section 304 of t h e tariff act has
been deposited and t h e Commissioner is satisfied t h a t t h e importer was not"
guilty of negligence or bad faith in permitting t h e not-properly-marked articles
t o be distributed, has been diligent in a t t e m p t i n g to secure compliance with t h e
marking requirements, and has a t t e m p t e d by all reasonable means t o effect redelivery ;
"(27) Bonds t a k e n p u r s u a n t to Section 551, Tariff Act of 1930, as amended (19
U. S. C. 1551), if t h e Commissioner is satisfied t h a t all t h e merchandise in respect of which t h e claim for liquidated damages was incurred has actually been
exported or destroyed and t h a t any failure t o obtain customs supervision was"
without intent t o evade any law or regulation;
• '^(28) Bonds t a k e n p u r s u a n t t o Section 565, Tariff Act of 1930 (19 U. S. C.
1565);
"(29) Bonds ta;ken p u r s u a n t t o Section 1 (par. 1101), Tariff Act of 1930, as
amended (19 U. S. C. 1001, par. 1101), if no loss of revenue is involved; and
"(30) Any bond for failure t o make entry and deposit estimated duties a n d
438368—58

21




306

1957 REPORT OF THE SECRETARY OF THE TREASURY

taxes or for failure t o produce required documents within t h e time required b y
t h e law or regulation, if t h e Commissiorier is satisfied t h a t such failure was n o t
due t o a n y purpose t o evade a n y law or regulation." .
DAVID W . KENDALL,

Acting Secretary of the Treasury.

N O . 165-5, OCTOBER 17, 1 9 5 6 . — D E L E G A T I O N TO T H E COMMISSIONER OF C U S T O M S
OF F U N C T I O N S U N D E R P U B L I C L A W N O . 362, 8 4 T H C O N G R E S S , 1 S T SESSION .

By virtue of t h e authority vested in m e b y Reorganization Plan No. 26 of 1950
(3 C F R , 1950 Supp., Ch. I l l ) , there are transferred to the Commissioner of Customs
all t h e functions of t h e Secretary of t h e Treasury under Public L a w N o . 362,
84th Congress, 1st Session (act of August 11, 1955, 21 U. S. C. 198a, 198b, 198c).
The functions herein transferred m a y be delegated b y t h e Commissioner of
Customs to .subordinates as he deems necessary.
T h e transfer of functions t o t h e Commissioner of Customs b y this order is in
addition t o the transfer of functions t o t h e Commissioner of Narcotics by Treasury
D e p a r t m e n t Order N o . 180-3, d a t e d August 22, 1955, published in t h e Federal
Register on August 26, 1955. T h e intent of t h e two orders is t o transfsr t h e
functions t o t h e t w o commissioners t o be performed in their respective fields of
operation.
DAVID W . KENDALL,

Acting Secretary of the Treasury.

NO.

165-6, J U N E 26, 1 9 5 7 . — D E L E G A T I O N TO T H E COMMISSIONER O F C U S T O M S
OF A U T H O R I T Y T O M A K E C E R T A I N R E F U N D S O F I M P O R T T A X E S

• B y virtue of t h e a u t h o r i t y vested in m e b y Reorganization Plan No. 26 of 1950
(3 C F R , 1950 Supp., Ch. I l l ) a n d Section 6418 (a) of t h e Internal Revenue Code
of 1954, as amended, there is hereby delegated t o t h e Commissioner of Customs
t h e a u t h o r i t y contained in Section 6418 (a) of t h e Internal Revenue Code, as
amended, t o make refunds of import taxes paid under Section 4501 of t h e Internal
Revenue Code of 1954, as araended, or a n y extensions thereof, with respect t o
manufactured sugar or articles composed in chief value of manufactured sugar.
The a u t h o r i t y herein delegated m a y be redelegated b y the Commissioner of
Customs t o other officers or employees of t h e Customs Service in such manner as
t h e Commissioner shall direct.
DAVID W . KENDALL,

Acting Secretary of the Treasury.

N o s . 167-22 T H R O U G H 1 6 7 - 2 9 . — D E L E G A T I O N O F F U N C T I O N S TO T H E COMMANDANT, U. S. C O A S T G U A R D

N o . 167-22, July 24, 1958
By virtue of t h e a u t h o r i t y vested in m e b y Reorganization Plan No. 26 of 1950
a n d 14 U. S. C. 631, there are transferred t o the C o m m a n d a n t , U. S. Coast Guard,
t h e functions of t h e Secretary of the Treasury under:
1. Public L a w 548, 84th Congress, approved June 4, 1956.
2. Public L a w 549, 84th Congress, approved June 4, 1956. T h e Command a n t shall have final action on appeals made in accordance with Section 1 (d) of
this act.
3. Public L a w 64, 84th Congress, approved June 8, 1955.
The C o m m a n d a n t ma,y m a k e provisions for t h e performarice b y subordinates
in t h e Coast Guard of all functions contained in t h e above acts except t h e issuance
of regulations a n d t h e action taken on appeals made in accordance with Section
1 (d), Public Law 549, 84th Congress.
DAVID W . KENDALL,

:.. ,




Acting Secretary of the Treasury.

EXHIBITS

307

N o . 167-23, J u l y 27, 1956
By virtue of t h e a u t h o r i t y vested in me b y Reorganization Plan N o . 26 of
1950 a n d 14 U. S. C. .631, there are transferred t o t h e C o m m a n d a n t , U. S. Coast
Guard, t h e functions of t h e Secretary of t h e Treasury under t h e act of June 4,
1956 (Public Law 550, 84th Congress), an act which relates to t h e establishment,
maintenance, a n d operation of aids t o maritime navigation on fixed structures.
DAVID W .

KENDALL,

Acting Secretary of the Treasury.
N o . 167-24, August 30, 1956
P u r s u a n t t o t h e a u t h o r i t y vested in me b y Reorganization Plan No. 26 of
1950, and 14 U. S. C. 631, there is hereby delegated to t h e C o m m a n d a n t , U. S.
Coast Guard, t h e a u t h o r i t y under 14 U. S. C. 650, as amended by Public Law
No. 1014, dated August 7,1956, to: Continue t h e Coast Guard supply fund; prescribe
regulations for designating t h e classifications of material to be stocked under
t h e fund; and increase t h e existing capital of t h e fund by t h e value.of usable
materials transferred thereto from Coast Guard inventories carried in other
accounts. Existing regulations for accounting for t h e fund are hereby confirmed
a n d continued.
W.

RANDOLPH

BURGESS,

Acting Secretary of the Treasury.
N o . 167-25, September 10, 1956
By virtue of t h e authority vested in me by Reorganization Plan No. 26
of 1950 and 14 U. S. C. 631, there is transferred t o t h e C o m m a n d a n t , U. S. Coast
Guard, t h e function of t h e Secretary of t h e Treasury in Public Law 916 of t h e
84th Congress (act of August 2, 1956) to specify effective date of retirement for
physical disability for uniformed members of t h e Coast Guard.
'

DAVID W .

KENDALL,

Acting Secretary of the Treasury.
No. 167-26, November 8, 1956
By virtue of a u t h o r i t y vested iri me by Reorganization Plan No. 26 of 1950
( l o U. S. C. 2311 a n d 14 U. S. C. 631), there'are transferred t o t h e C o m m a n d a n t ,
U. S. Coast Guard, t h e functions of t h e Secretary of t h e Treasury under:
1. C h a p t e r 137, Title 10, United States Code, except t h e authority t o make
determinations a n d decisions under clauses (11)-(16) of Section 2304 (a), or
Section 2307 (a).
2. Clause (11) of Section 2304 (a). Title 10, United States Code, b u t only
for contracts requiring t h e expenditure of not more t h a n $25,000.
T h e C o m m a n d a n t m a y make provision for t h e performance by subordinates
in t h e Coast Guard of any of t h e functions transferred by p a r a g r a p h 1, and by
t h e Comptroller of t h e Coast G u a r d of t h e function transferred by p a r a g r a p h 2.
DAVID W .

KENDALL,

Acting Secretary of the Treasury.
No. 167-27, November 27, 1956
By virtue of t h e a u t h o r i t y vested in me by Reorganization Plan No. 26 of 1950
(3 C F R , 1950 Supp., Ch, I I I ) , there is transferred t o the C o m m a n d a n t , U. S.
Coast Guard, t h e function of issuing true and certified copies of shipping articles
containing t h e names of t h e crews of vessels bound on foreign voyages from ports
of t h e United States, as provided in Section 4575 of t h e Revised Statutes, as
amended (46 U. S. C. 676).
T h e C o m m a n d a n t m a y m a k e provision for t h e performance by subordinates i Q
t h e Coast Guard of t h e function transferred.




DAVID W . KENDALL,

Acting Secretary of ihe Treasury,

308

1957 REPORT OF THE SECRETARY OF THE TREASURY
No. 167-28, December 3, 1956

By virtue of t h e authority vested in me b y Reorganization Plan No. 26 of 1950
and 14 U. S. C. 631, there are transferred t o t h e C o m m a n d a n t , U. S. Coast Guard,
t h e functions of t h e Secretary of t h e Treasury under t h e a c t of August 1, 1956
(PubHc Law 881, 84th Congress), an act which provides benefits for t h e survivors
of servicemen a n d veterans.
DAVID W . KENDALL,

Acting Secretary of the Treasury.

No. 167-29, J a n u a r y 25, 1957
B y virtue of t h e authority vested in me b y Reorganization Plan No. 26 of 1950
a n d 14 U. S. C. 631, there is transferred t o t h e C o m m a n d a n t , U. S. Coast Guard,
t h e function of t h e Secretary of t h e Treasury under 14 U. S. C. 248 (a), which
provides for annual convening of a board t o select certain captains for retention.
DAVID W . KENDALL,

Acting Secretary of the Treasury.

N o . 170-3, J A N U A R Y 9, 1 9 5 7 . — E S T A B L I S H M E N T
SECRETARY

O F P O S I T I O N O F D E P U T Y TO T H E

There is hereby established in t h e Office of t h e Secretary t h e position of D e p u t y
t o t h e Secretary. By virtue of t h e authority vested in m e b y Reorganization
Plan No. 26 of 1950, t h e functions a n d resporisibilities of t h e posi;ti6n. Special
Assistant t o t h e Secretary in Charge of T a x Policy, are hereby transferred t o t h e
position of D e p u t y t o t h e Secretary.
This order amends Treasury D e p a r t m e n t Orders No. 148 (Revision No. 2),
d a t e d August 3, 1955, a n d No. 150-41, dated February 13, 1956.
G. M . H U M P H R E Y ,

SecretaryoftheTreasury.

N o . 170-4, A P R I L 26, 1 9 5 7 . — D E L E G A T I O N O F F U N C T I O N S TO T H E A D M I N I S T R A TIVE ASSISTANT SECRETARY C O N C E R N I N G T H E E X C H A N G E STABILIZATION
F U N D , AND D E S I G N A T I O N OF P E R S O N S A U T H O R I Z E D TO S I G N O F F I C I A L P A P E R S
IN H I S A B S E N C E

By virtue of t h e authority vested in me b y Reorganization Plan N o . 26 of
1950, it is hereby ordered t h a t :
(1) T h e Administrative Assistant Secretary is authorized t o approve personnel
fanfolds a n d other obligation a n d disbursing documents relating t o t h e administrative expenses of t h e Exchange Stabilization F u n d . This authority shall n o t
aff'ect existing allotment, budgetary, accounting, a n d certification procedures
presently followed with respect t o t h e expenditures a n d personnel of t h e Exchange
Stabilization F u n d .
(2) I n t h e absence of t h e Administrative Assistant Secretary, t h e following are
authorized t o sign as Assistant t o t h e Administrative Assistant Secretary t h e
documents relating t o t h e administrative expenses of t h e Exchange Stabilization
F u n d a n d all other classes of official papers which t h e Administrative Assistant
Secretary is authorized t o sign:
D e p a r t m e n t Budget Officer.
Director of Personnel.
Director of Administrative Services.
Head, M a n a g e m e n t Analysis Staff.
This order shall be effective today.




W. RANDOLPH BURGESS,

Acting Secretary of the Treasury.

EXHIBITS

309

N o . 177-11, J U L Y 10, 1 9 5 6 . — D E L E G A T I O N TO T H E ASSISTANT N A T I O N A L D I R E C TOR OF T H E U N I T E D S T A T E S SAVINGS B O N D S D I V I S I O N OF A U T H O R I T Y TO N E G O TIATE C E R T A I N CONTRACTS

1. P u r s u a n t t o a delegation of a u t h o r i t y dated July 3, 1956, from t h e Administ r a t o r of General Services to t h e Secretary of t h e Treasury under t h e Federal
P r o p e r t y a n d Administrative Services.Act of 1949 (63 Stat. 377) as amended,
and p u r s u a n t t o authority of Section 307 (a) thereof, authority is hereby redelegated t o t h e Assistant National Director of t h e United States Savings Bonds
Division t o negotiate, without advertising, under Section 302 (c) (9) of t h a t act,
contracts for t h e procurement of audio a n d visual services for use in connection
with t h e fall program for promoting t h e sale of United States savings bonds.
2. T h e a u t h o r i t y t h u s delegated t o t h e Assistant National Director of t h e
United States Savings Bonds Division shall be exercised b y him personally or
through such responsible subordinates as he m a y designate, a n d shall be exercised in accordance with all applicable limitations a n d requirements in t h e act,
a n d in accordance with applicable policies, procedures, a n d controls prescribed
by t h e General Services Administration.
DAVID W . KENDALL,

Acting Secretary of the Treasury.

No.

177-12,

O C T O B E R 23, 1 9 5 6 . — D E L E G A T I O N O F A U T H O R I T Y P E R T A I N I N G TO
RECORDS MANAGEMENT

By virtue of authority vested in m e b y Reorganization Plan N o . 26 of 1950,
there are transferred t o t h e head of each bureau, t o be exercised with respect t o
records managemerit in his bureau, t h e functions of t h e Secretary of t h e Treasury
under Section 506 of t h e Federal Records Act of 1950 (44 U. S. C. 396).
T h e head of each bureau m a y delegate t h e functions transferred herein t o such
subordinates in his bureau as he deems necessary.
A. N .

OVERBY,

Acting Secretary of the Treasury.

N o . 177-13, M A R C H 19, 1 9 5 7 . — D E L E G A T I O N TO T H E C H I E F D I S B U R S I N G O F F I C E R
OF THE F U N C T I O N O F I S S U I N G C E R T A I N C H E C K S

By virtue of t h e a u t h o r i t y vested in t h e Secretary of t h e Treasury b y Reorganization Plan No. 26 of 1950 a n d consistent with t h e provisions of Executive Order
No. 6166, dated J u n e 10, 1933,' as amended, there is hereby transferred to t h e
Chief Disbursing Officer t h e function of issuing checks in p a y m e n t of interest on
public d e b t obligations of t h e United States. Such checks shall b e issued over
t h e title of t h e Secretary of t h e Treasury by t h e Chief Disbursing Officer or such
Regional Disbursing Officer or officers as he m a y designate.
. Such personnel, equipment, a n d records as a r e determined b y t h e Commissioner
of t h e Public D e b t and t h e Chief Disbursing Officer to be necessary to perform t h e
foregoing function shall be m a d e available b y t h e Bureau of t h e Public D e b t t o
t h e Chief Disbursing Officer.
F u n d s heretofore or hereafter appropriated to t h e Bureau of t h e Public D e b t
covering this function shall, with t h e approval of t h e Secretary of t h e Treasury, be
transferred t o t h e appropriation of t h e Division of Disbursement.
This order shall be effective M a y 1, 1957: Provided, T h a t its operation m a y be
postponed in whole or in p a r t b y t h e Fiscal Assistant Secretary until n o t later
t h a n September 1, 1957.




W. R A N D O L P H B U R G E S S ,

Acting Secretary of the Treasury.

310

1957

REPORT OF T H E SECRETARY OF T H E

TREASURY

N o . 1 8 0 - 4 , ' J U L Y 24, 1 9 5 6 . — D E L E G A T I O N TO T H E COMMISSIONER OF N A R C O T I C S
' OF A U T H O R I T Y R E L A T I V E TO T H E S U R R E N D E R OF H E R O I N AND I T S U S E FOR
SCIENTIFIC RESEARCH PURPOSES

By virtue of t h e a u t h o r i t y vested in me by Reorganization Plan N o . 26 of 1950,
there is hereby delegated to t h e Commissioner of Narcotics, with right to r e d e l e gate, a u t h o r i t y to perform a n y function of t h e Secretary of t h e Treasury u n d e r
Section 1402 of Title 18 of t h e United States Code (PubHc Law 728, 84th Cong.,
2nd Session) relating to t h e surrender of heroin a n d t h e use of heroin for scientific
research purposes.
DAVID W . KENDALL,

• '

Acting Secretary of the Treasury.

N o . 182 ( R E V I S E D ) R E V I S I O N , N O V E M B E R 30, 1 9 5 6 . — D E L E G A T I O N OF F U N C T I O N S
P E R T A I N I N G TO T H E S I G N I N G OF O F F I C I A L P A P E R S I N T H E O F F I C E OF T H E
TREASURER i

By virtue of the a u t h o r i t y vested in me b y Section 304 of t h e Revised S t a t u t e s ,
as amended, (31 U. S. C. 144), and by Reorganization Plan No. 26 of 1950, a n d
upon t h e recommendation of the Treasurer of t h e United States, I hereby a u t h o r ize t h e persons who occupy t h e positions identified below in t h e Office of t h e
Treasurer of t h e United States to sign as Special Assistant Treasurers or under
their official titles, when required by the Treasurer of t h e United States, checks,
letters, telegrams, and other official documents in connection with the business
of t h e Treasurer's Office:
The D e p u t y a n d Acting Treasurer.
The Assistant D e p u t y Treasurer.
T h e Assistant to the D e p u t y and Acting Treasurer.
The Administrative Officer.
T h e Chief, General Accounts Division.
The Cashier, Treasurer's Office.
The Chief, Check P a y m e n t and Reconciliation Division.
The Asst. Chief, Check P a y m e n t and Reconciliation Division. .
The Technical Asst. Chief, Check P a y m e n t a n d Reconciliation Division.
The Chief, Check Claims Division.
T h e Assistant Chief, Check Claims Division.
The Assistant to t h e Chief, Check Claims Division.
The Chief, Securities Division.
The Chief, Currency Redemption Division.
The Asst. Chief, Currency Redemption Division.
This order supersedes all prior authorizations to employees of t h e Treasurer's
Office t o sign checks, letters, telegrams, and other official documents in connection
with t h e business of t h e Treasurer's Office.
A. N . O V E R B Y ,

Acting Secretary of the Treasury.

N o . 185, J U N E 28, 1 9 5 7 . — E S T A B L I S H M E N T OF T H E O F F I C E OF D E F E N S E L E N D I N G
AND T R A N S F E R OF F U N C T I O N S P E R T A I N I N G TO L E N D I N G AND L I Q U I D A T I O N

By virtue of t h e a u t h o r i t y vested in me as Secretary of t h e Treasury, including
t h e a u t h o r i t y in Reorganization Plan N o . 26 of 1950 and the a u t h o r i t y in Reorganization Plan No. 1 of 1957, it is ordered as follows:
1. There are transferred to Assistant Secretary Laurence B. Robbins all of t h e
functions of t h e Secretary of t h e T r e a s u r y under Reorganization Plan N o . .1 of
1957. Assistant Secretary Robbins m a y make provisions for t h e performance
of a n y of these functions and any of t h e functions under Section 409 of t h e Federal
Civil Defense Act of 1950 and Section 302 of t h e Defense Production Act of 1950,
as amended, heretofore transferred t o him by Treasury D e p a r t m e n t Order N o .
181-3, by subordinates in t h e Office of Defense Lending.
2. There is estabhshed t h e Office of Defense Lending which shall be under t h e
supervision of Assistant Secretary Robbins and shall perform such of t h e functions
transferred to him as he m a y assign t o it.
* This order supersedes Treasury Department Order No. 182 (Revised), dated December 21,1954.




311

EXHIBITS

3. The Defense Lending Division established by Treasury D e p a r t m e n t Order
No. 181-3 is abolished.
^
4. P a r a g r a p h s 1, 2, and 3 of this order shall be effective July 1, 1957.
'
5. Effective a t t h e close of September 30, 1957,^ t h e Office of Production a n d
Defense Lending estabhshed by Treasury D e p a r t m e n t Order No. 181-3 is abohshed,
F R E D C . S C R I B N E R , Jr.

Acting Secretary of the Treasury.

Reporting and Accounting Changes
E X H I B I T 44.— Regulations governing the handling of certificates of deposit for
credit in the general account of t h e T r e a s u r e r of the United States
[Department Circular No. 945 (Revised), Supplement No. 1, Amendment No. 1.
TREASURY

Accounts]

DEPARTMENT,

Washington, J u l y 20, 1956.
To Heads of Government Departments and Agencies Whose Accounts Are Required
to be Reconciled with Accounts Current of the Division of Disbursement, Treasury
Department^ and Others Concerned:
I. Purpose of these regulations
1. General. These regulations are issued t o (a) a m e n d A t t a c h m e n t No. 4''of
Supplement No. 1 of D e p a r t m e n t Circular No. 945—Revised, dated M a y 3,
1955, in order to provide for certain new deposit symbols, a n d (b) t o establish
a new form of consolidated a b s t r a c t of deposits to be prepared by Federal R e serve B a n k s and branches and certain Treasury offices, in lieu of Treasury F o r m
17C which was temporarily a d a p t e d for this purpose.
2. New deposit symbols. Under t h e system for paying a n d reconciling checks
d r a w n on t h e Treasurer of t h e United States by electronic d a t a processing methods
new 4-digit symbols will be assigned to all disbursing offices. Certain disbursing
offices are being brought under t h e new system effective August 1, 1956. F o r
t h e Division of Disbursement, Treasury D e p a r t m e n t , only t h e Washington regional office is affected on t h a t date. T h e new symbols t o be used on certificates
of deposit affecting t h a t office, beginning August 1, 1956, are shown in t h e following list, which also sets forth other changes m a d e in symbols originally indicated on A t t a c h m e n t N o 4 of Supplement No. 1. I t is planned t h a t t h e new
symbols for all other regional offices of t h e Division of Disbursement will be
estabhshed effective J a n u a r y 1, 1957, and advice of such symbols will be forthcoming a t a later date.

Treasury regional office locations

Office deposit
symbols
Street address
Former

New

A. Within continental United States
Washington 25, D. C :
Deposits affecting all accounts other than
those listed below.
Exchange Stabilization Fund
German, Austrian, and Hungarian Deposit funds.
All other Deposit Funds, Secretary of
the Treasury.
Neopit, Wisconsin (Branch of Chicago)
New York Branch (Veterans' Administration).
Oak Ridge, Tenn. (Branch of Atlanta)
—

300

9000

329
65-853

4917
4916

325

Annex No. 1, Madison Place and Pennsylvania Ave. N. W.

6091
1429
421

Menominee Indian Mills.
252 7th Ave., N. Y., N. Y.

428

1428

P. 0 . Box 336.

1321
1323

324
343

1324

402

B, Outside continental United States
Honolulu, T. H
Juneau, Alaska

._

San Juan, Puerto Rico (Branch of New York).

328 Federal Building.
Box 921, 129 Federal and Territorial
BuUding.
Box 3409, 231 Federal Bldg.

NOTE.—The changes in symbols shown on this page are already in effect, as modffications of Attachment No. 4 of Supplement No. 1.
1 The termination date was changed to October 31,1957, by an order dated September 30,1957.




312

1957 REPORT OF THE SECRETARY OF THE TREASURY

I I . Consolidated abstract of deposits and debit vouchers, Treasury Form No. 17V
[This section is applicable to Federal Reserve Banks and branches and certain Treasury offices]

3. Preparation and use of Treasury Form No. 17V (Attachment No. 1). Consolidated Abstract of Deposits and Debit Vouchers functioned in t h e Treasurer's
general account. Treasury F o r m No. 17V, is hereby prescribed t o be prepared,
beginning October 1, 1956, by Federal Reserve Banks a n d branches; t h e Office of
t h e Treasurer of t h e United States, Cash Division; m i n t a n d assay offices of t h e
Bureau of t h e M i n t ; and offices of t h e Bureau of t h e Public D e b t affected, in lieu
of Treasury F o r m No. 17C, t o t h e extent t h a t t h e latter form has been prepared
heretofore by such offices for t h e special purpose of a consolidated abstract of
deposits and debit vouchers.
(a) For each regular daily transcript of t h e Treasurer's general account, as
well as for each consolidated transcript covering documents received from general
depositaries, t h e Federal Reserve Banks and branches, t h e Treasurer's Cash
Division, and t h e mints and assay offices will arrange t h e originals of certificates
of deposit (Standard Form No. 201) and t h e originals of related debit vouchers
(Treasury F o r m 5504) for each confirmation m o n t h according t o each Treasury
regional office affected within t h e forty-eight States, using t h e city identifications
in t h e upper right corner of these documents as t h e p r i m a r y guide.
(6) A separate Consolidated Abstract, Treasury Form No. 17V, will be prep a r e d in an original a n d two copies for each Treasury regional office group of
documents. W i t h respect to t h e Treasury's Washington regional office a separate
consolidated abstract is required for each of t h e four office deposit symbols involved, as indicated in t h e list under p a r a g r a p h 2 above.
(c) T h e heading of each F o r m No. 17V will be completed t o identify:
(1) T h e Federal Reserve Bank or branch, t h e Treasurer's Cash Division,
or t h e mint or assay office.
(2) T h e Treasury regional office affected (city and office deposit symbol).
I t is possible t h a t some certificates of deposit or debit vouchers will be received,
following t h e effective date of a change in office deposit symbol, which bear t h e
former symbol. Such documents should be included in t h e same Form 17V with
documents for t h e corresponding new symbol. T h e symbol t o be shown in t h e
heading of t h e F o r m 17V should in all cases be t h e new symbol.
(3) T h e date of t h e transcript of t h e Treasurer's general account which t h e
F o r m 17V supports.
If t h e separate consolidated abstract pertains to t h e separate consolidated
transcript for general depositaries, blocks are provided for indicating whether t h e
documents apply t o t h e current m o n t h or a prior m o n t h .
(d) I n those cases where a change is later required in t h e a m o u n t of a certificate
of deposit or a debit voucher included in a consolidated abstract sent to a Treasury
regional office, t h e Federal Reserve Bank or b r a n c h or t h e Treasurer's Cash Division
will prepare, for t h e a m o u n t of t h e increase or decrease, respectively, (1) a debit
voucher, if a certificate of deposit is t o be decreased or if a debit voucher is to be
increased; or (2) a certificate of deposit, if a certificate of deposit is to be increased
or if a debit voucher is t o be decreased. I n either case an explanation should be
shown on t h e reverse of t h e document as t o t h e reason for t h e adjustment.
These
adjusting certificates of deposit or debit vouchers should be listed on t h e appropriate consolidated abstract t o be included in t h e current transcript of t h e Treasurer's general account. T h e originals of such adjusting documents should be
furnished t o t h e Treasury regional office concerned in t h e regular manner and t h e
appropriate copies sent t o t h e depositors concerned.
4. Distribution of copies of Treasury Form No. 17 V. Fede.ral Reserve Banks
and branches, t h e Treasurer's Cash Division, a n d mint and assay offices will
distribute t h e copies of t h e new F o r m 17V as follows:




EXHIBITS

313

(a) T h e original will accompany t h e daily transcript to t h e Treasurer's office,
in support of t h e respective totals carried to Treasury Form 17C which in turn,
supports t h e total receipts stated on t h e transcript.
(b) T h e first copy, together with each original certificate, of deposit and debit
voucher listed thereon, will be forwarded t o t h e Treasury regional office affected.
For each of t h e last few days of t h e month, this material should be airmailed in
those cases where regular mail would not be delivered to t h e Treasury regional
office by t h e first business day of t h e following m o n t h . Also, t h e documents for
transcripts of t h e last day of t h e m o n t h should be placed in t h e mail on t h a t day.
(c) T h e second copy will be retained by t h e Federal Reserve Bank or branch,
Treasurer's Cash Division, or t h e mint or assay office, as t h e case m a y be, together
with (1) t h e duplicate copy of each certificate of deposit and debit voucher listed,
or (2) t h e copy of t h e t r a n s m i t t a l form received from general depositaries on which
are listed such documents as m a y be included in t h e consolidated abstracts, t h e
copies of which documents are retained by t h e general depositaries.
5. Supply of Treasury Form No. 17 V. A supply of Treasury F o r m No. 17V
will be furnished to Federal Reserve Banks and branches and mints and assay
offices by t h e Office of t h e Treasurer of t h e United States in time to be. used
beginning October 1, 1956.
W. T.

HEFFELFINGER,

Fiscal Assistant Secretary.

[Department Circular No. 945 (Revised), Supplement No. 1, Amendment No. 2. Accounts]
TREASURY

DEPARTMENT,

Washington, Febriiary 11, 1957.
To Heads of Government Departments and Agencies Whose Accounts are Required To Be Reconciled With Accounts Current of the Division of Disbursement, Treasury Department, and Others Concerned:
I. Purpose of these regulations
1. General. These regulations are issued to (a) further amend A t t a c h m e n t
No. 4 of Supplement No. 1 of D e p a r t m e n t Circular No. 945—Revised, dated
May 3^ 1955, in order to provide new deposit symbols for regional offices (other
t h a n Washington, D . C.) of the Division of Disbursement, Treasury Department, a n d (b) incorporate in A t t a c h m e n t No. 4 new deposit symbols estab-.
lished for the Washington regional office, effective August 1, 1956, as indicated
in the first amendment, dated July 20, 1956, to Supplement No. 1 of Departm e n t Circular No. 945—Revised. There is a t t a c h e d hereto a revised a t t a c h m e n t No. 4.
2. New deposit symbols—Regional offices of the Division of Disbursement,
Treasury Department. Under the system for paying a n d reconciling checks
drawn on the Treasurer of t h e United States by electronic d a t a processing methods
new 4-digit symbols have also been assigned to the other Treasury regional,
offices for use when such offices are brought under the new system. The new
symbols will be used as deposit symbols a n d shown on certificates of deposit.
3. Effective date. The new 4-digit symbols indicated in A t t a c h m e n t No. 4 —
Revised will be used as deposit symbols, effective with the conversion date set
forth for each symbol in Division of Disbursement Circular No. 116, Supplem e n t No. 18, or a n y amendments thereof.




W. T.

HEFFELFINGER,

Fiscal Assistant Secretary.

314

195 7 REPORT OF THE SECRETARY OF THE TREASURY

Attachment No. 4, Second Amendment—Information to be shown on certificates of
deposit. Standard Form No. 201 to identify Treasury regional offices
Office location i

Office
symbol 2

Street address

A. Within continental United States
Atlanta 3, Georgia
Oak Ridge, Tennessee
Birmingham 3, Alabama.
Boston 9, Massachusetts
Chicago 7, lUinois
Railroad Retirement Board..
Neopit, Wisconsin
Cleveland 14, Ohio
Dallas 2, Texas
Denver 2, Colorado
Kansas City 6, Missouri
_.
lios Angeles 12, California
Mumeapolis 8, Mttmesota
New Orleans 12, Louisiana
ISIew York 1, New York
•New York Branch (Veterans Administration).
Philadelphia 6, Pennsylvania
Portland 5, Oregon
Richmond 20, Virginia
Salt Lake City 1, Utah
San Francisco 2, California
St. Louis 1, Missouri
Washington 25, D. C.3
.
Deposits affecting all accounts other than
those listed below.
Exchange Stabilization Fund
German, Austrian, and Hungarian deposit
funds.
All other deposit funds, Secretary of the
Treasury.

10th Floor, Peachtree Baker Bldg.
P. O. Box 336.
2225 3rd Avenue North.
710 Federal Buildmg.
818 U. S. Post Office Bldg., 433 West Van
Buren Street.
844 Rush Street, Chicago, Illiaois.
Menominee Indian Mills.
116 Federal Building.
1114 Commerce Street.
Building 56, Denver Federal Center.
301 U. S. Court House, 811 Grand Ave.
446 U. S. P . 0 . & Court House Bldg.
2908 Colfax Avenue South.
502 Federal Office BuUdiag.
341 Ninth Avenue.
252 7th Ave. New York, New York.
400 U. S. Custom House.
425 New U. S. Court House.
900 North Lombardy Street.
411 Federal Buildiag.
256 Federal Office Building.
716 New Federal Building.
Annex No. 1, Madison Place and Pennsylvania Avenue, North West.

B. Outside continental United States
Sari Juan, Puerto Rico (Branch of N . Y.)..
Manila, Philippine Islands
Juneau, Alaska..
Honolulu, T. H -

Box 3709, Recinto Sur & San Justo Sta.
7th Floor U. S. V. A. Building, Escolta
and David Streets.
Box 921, 105 Federal and Territorial
Building.
328 Federal Buildiog.

1 City to be shown in upper right corner of Standard Form 201, affectiag Treasury regional offices in
continental United States.
2 Office code to be shown on line "For Credit Of" on all Standard Forms 201, followed by "Treasury
Regional Office (City and State)."
8 The Secretary's accounts constitute separate account units within the Washington regional office,
requiring the preparation of a separate consolidated abstract of deposits by the Federal Reserve Banks
and branches and the Treasurer's Cash Division for each symbol.
E X H I B I T 45.—Regulations governing claims for r e p l a c e m e n t of v a l u a b l e s or t h e
value thereof, shipped p u r s u a n t to t h e G o v e r n m e n t L o s s e s in S h i p m e n t Act
[Department Cii-cular No. 577, Supplement No. 4. Accounts]
TREASURY

DEPARTMENT,

Washington, December 7, 1956.
To the Heads of the Executive Departments, Independent Establishments, Agencies,
Wholly Owned Corporations, Officers and Employees of the United States, Federal
Reserve B a n k s When Acting on Behalf of the United States or Agencies Thereof,
and Others Concerned:
P a r a g r a p h 6 of Treasury D e p a r t m e n t Circular N o . 577 d a t e d August 13, 1937,
a s a m e n d e d b y t h e Second S u p p l e m e n t d a t e d N o v e m b e r 22, 1943, a n d t h e T h i r d
S u p p l e m e n t d a t e d M a y 27, 1953, has been rescinded.
Consignors are, therefore, no longer required to s u b m i t periodic reports t o
t h e Secretary of t h e T r e a s u r y on F o r m l O D D , revised, covering shipments of
valuables.
Consignors are n o t relieved, however, of keeping basic records
from which t h e y will be in a position in t h e e v e n t of loss of valuables t o s u b m i t




EXHIBITS.

315

adequate proof necessary to satisfy the Secretary of the Treasury when submitting a claim under the Government Losses in Shipment Act, that such loss
or damage to shipments occurred while in course of shipment.
W. T. HEFFELFINGER,

Fiscal Assistant Secretary
EXHIBIT 46.—Treasury Department and General Accounting Office Joint Regulation No. 4 (Revised), Supplement No. 1, January 10, 1957
Subject: Modification of warrant procedures and elimination of certain checking
accounts
As contemplated by paragraph 7 of Joint Regulation No. 4 (Revised), dated
April 29, 1955, the Secretary of the Treasury and Comptroller General of the.
United States have determined that the provisions of paragraph 4 of said regulation, concerning the elimination of funded checking accounts for the issuance and
payment of checks drawn on the Treasurer of the United States, shall become
operative, not later than July 1, 1957, with respect to the additional disbursing
activities designated below.
1. Post Office Department, exclusive of the separate accounts maintained under
the postal savings system.
2. Library of Congress.
3. Government Printing Office.
JOSEPH CAMPBELL,

Comptroller General of the United States.
W. RANDOLPH BURGESS,

Acting Secretary of the Treasury.
EXHIBIT 47.—Regulations governing the implementation of the act to improve
governmental budgeting and accounting methods and procedures
[Department Circular No. 987. Accoimts]
TREASURY DEPARTMENT,

Washington, April 26, 1957.
To Heads of Bureaus, Treasury Department:
I. Public Law 863, approved August 1, 1956, amends the Budget and Accounting Procedures Act of 1950 by adding Section 106 as follows:
"Sec. 106. The head of each executive agency shall, in consultation with the
Director of the Bureau of the Budget, take whatever action may be necessary to
achieve, insofar as is possible, (1) consistency in accounting and budget classifications, (2) synchronization between accounting and budget classifications and
organizational structure, and (3) support of the budget justifications by information on performance and program costs by organizational units.''
The law further amends Section 3679 (g) of the Revised Statutes, as amended,
by adding at the end thereof the following sentence:
"In order to have a simplified system for the administrative subdivision of
appropriations or funds, each agency shall work toward the objective of financing
each operating unit, at the highest practical level, from not more than one administrative subdivision for each appropriation or fund affecting such unit."
The head of each bureau should review his operations with the view of taking
such further action as may be required to accomplish the foregoing objectives.
II. Public Law 863 also amends Section 113 of the Budget and Accounting
Procedures Act of 1950 by adding at the end thereof the following new subsection:
"(c) As soon as practicable after the date of enactment of this subsection, the
head of each executive agency shall, in accordance with principles and standards
prescribed by the Comptroller General, cause the accounts of such agency to be
maintained on an accrual basis to show the resources, liabilities, and costs of
operations of such agency with a view to facilitating the preparation of costbased budgets as required by Section 216 of the Budget and Accounting Act,
1921, as amended. The accounting system required by this subsection shall
include adequate monetary property accounting records as an integral part of
the system."




316

195 7 REPORT OF THE SECRETARY OF THE TREASURY

W i t h respect t o this provision, t h e pamphlet attached t o Budget Circular 57-5
provides:
,
'
'•
" I n accordance with t h e principles a n d standards issued by t h e Comptroller
General, t h e degree t o which t h e accrual basis will be applied in individual agencies
wdll vary with t h e kind of operations conducted. T h e accounting provisions of
Public Law 863 mean a t a minimum t h a t all agency systems which currently
develop only obligation a n d disbursement d a t a should be refined t o produce also
^at appropriate time intervals information on accrued expenditures—the cost of
.goods and. services received. Depending on t h e t y p e of program conducted by
t h e agency, this change in t h e agency accounting sj^stem m a y involve further
refinement t o produce information on t h e cost of goods a n d services used, t h e cost
of items procured or produced, or t h e cost of work in place. T h e accrual basis
should be applied in each case t o t h e extent t h a t t h e additional information obtained will be more useful to agenc}^ m a n a g e m e n t in t h e conduct of operations, a n d
provide for more complete a n d accurate disclosure of financial status a n d t h e
results of agency operations. I n all cases, accounting on an accrual a n d cost
basis m u s t be i n t e g r a t e d with such other accounting records as are needed t o
provide for control a n d information on obligations a n d t o provide for information
on disbursements."
I n order t o comply with these minimum accounting requirements of Public
Law 863, t h e head of each bureau whose accounts currently develop only obligation a n d disbursement d a t a will refine such accounts t c also produce information
o n accrued expenditures, i. e., cost of goods a n d services received, as a t t h e close
of each fiscal year beginning with t h e fiscal year 1958. Bureaus which need such
-data more frequently t h a n once annually m a y establish accounting procedure t o
produce such d a t a a t such time intervals as t h e information is useful.
T h e Bureau of Accounts a n d t h e Budget Office of t h e Treasury will cooperate
w i t h a n d assist bureaus in completing such action as m a y be required under this
circular.
.
W.

RANDOLPH

BURGESS,

Acting Secretary of the Treasury.

E X H I B I T 48.—Treasury Department and General Accounting Office Joint Regulation N o . 3, A m e n d m e n t N o . 2, M a y 20, 1957
Subject: A m e n d m e n t of t h e definitions of available a n d unavailable receipts
Amendment No. 1, dated December 21, 1951, t o Joint Regulation N o . 3 is
hereby amended by deleting t h e last u n n u m b e r e d p a r a g r a p h thereof concerning'
transactions of t h e civil service retirement a n d disability fund, since procedures
have now been developed for t h e handling of all receipt transactions of t h e fund
as available receipts under Joint Regulation N o . 3. This a m e n d m e n t will be
.effective July 1, 1957.

JOSEPH

CAMPBELL,

Comptroller General of the United States.
W.

RANDOLPH

BURGESS,

Acting Secretary of the Treasury.
E X H I B I T 49.—Regulations relating to delivery of checks a n d warrants to a d d r e s s e s
outside the United States, its Territories, and possessions
[Department Circular No. 655. Supplijrnent No. 11. Accounts]
TREASURY

DEPARTMENT,

Washington, J u n e 7, 1957.Section 211.3 (a) of D e p a r t m e n t Circular N o . 655, dated March 19, 1941 (31
C. F . R. 211.3 (a)), as amended, is hereby further amended t o read as follows:;
" T h e Secretary of t h e Treasury hereby determines t h a t postal, transportation,
or banking facilities in general or local conditions in Albania, Bulgaria, Communistcontrolled China, Czechoslovakia, Estonia, Hungar}^, Latvia, Lithuania, Rumania,
t h e Union of Soviet Socialist Republics, t h e Russian Zone of Occupation of,
Germany, a n d t h e Russian Sector of Occupation of Berlin, Germany, are such;
t h a t there is n o t a reasonable assurance t h a t a payee in those areas will actually




EXHIBITS

.

317

receive checks or w a r r a n t s drawn against funds of the United States, or agencies
or instrumentalities thereof, and be able to negotiate the same for full value."
Except to the extent t h e y have been authorized by appropriate unrevoked
licenses, or are authorized by specific license issued by the D e p a r t m e n t of Justice,
Office of Alien Property, remittances by United States Government agencies
from any accounts in which a German or Japanese interest existed on or before
December 31, 1946, will continue to be restricted by Executive Order No. 8389,
as amended, a n d rules a n d regulations issued p u r s u a n t thereto, including in
particular General Ruling 11 A, as amended. Attention is directed to the Foreign
Assets Control Regulations issued by t h e Secretary of t h e Treasury on December
17, 1950, p u r s u a n t to Executive Order No. 9193, which prohibit transactions
involving p a y m e n t s to nationals of China and N o r t h Korea except to t h e extent
t h a t they Kave been authorized by appropriate license.
W.

RANDOLPH

BURGESS,

Acting Secretary of the Treasury.

E X H I B I T 50.—Revised instructions governing the reporting of estimated foreign
currency collections and requirements
[.DepartmentsCircular No. 967 (Revised). Accounts]
TREASURY

DEPARTMENT,

Washington, J u n e 17, 1957.
To Heads of Government Departments and Agencies and Others Concerned:
This circular is issued p u r s u a n t t o Section 114 of t h e Budget and Accounting
Procedures Act of 1950 (31 U. S. C. 66b), Executive Order No. 10488, d a t e d
September 23, 1-953, and Section 4 (b) of Executive Order No. 10560, d a t e d
September 9, 1954, a n d contains revised instructions for reporting estimated
foreign currency collections and requirements.
For purposes of t h e President's Budget, the Treasury must compile overall
estimates of receipts to be derived from t h e sale of foreign currencies to Governm e n t agencies. Hence, t h e Treasury m u s t obtain annually, from t h e agencies
concerned, t h e following reports on estimated foreign currency collections and
requirements:
1. Estimate of foreign currency collections
This report (Exhibit A)i will show the estimated a m o u n t s (stated in U. S.
dollar equivalents) of foreign currencies to be acquired without purchase with
dollars, under agreements with foreign governments a n d from other sources,
providing all or p a r t of such currencies are to be available for making expenditures chargeable to appropriations or other dollar fund accounts. More specifically, t h e estimate should include: (a) collections of currencies for credit t o
foreign currency accounts of the Treasury (20FT symbol accounts), and (b)
collections of currencies which are authorized to be purchased immediately by
disbursing officers (consular fees, repayments, etc.) and credited directly t o
receipt, appropriations, or other dollar fund accounts without passing t h r o u g h
Treasury F T accounts. However, currencies for credit to those Treasury F T
accounts which are available exclusively for transfer to agency F T accounts
without reimbursement to t h e Treasury should not be reported.
Currencies which are restricted, by international agreement or otherwise, for
sale to particular agencies, or for sale for particular purposes, will be identified
and t h e n a t u r e of t h e restrictions noted.
This report should be detailed by kind (country) and source of currency
(provision of law or agreements with foreign governments). T h e source
should be identified -by F T account symbol for all accounts for which a symbol
has been established in t h e Treasury publication "Receipt, Appropriation, anxl
other F u n d Account Symbols and Titles." Collections of currencies which are
authorized to be credited directly to dollar fund accounts may be reported in
two columns—one for estimated credits to miscellaneous receipt accounts, a n d
one for credits to all other accounts.
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1957 REPORT OF THE SEGRETARY OF THE TREASURY

2. Estimate of foreign currency requirements
This report (Exhibit B)^ will show t h e estimated gross requirements (stated
in U. S. dollar equivalents) for foreign currencies to be used for making
expenditures chargeable to appropriations or to other dollar fund accounts. T h e
estimate should not include currencies which are to be acquired and expended
without charge to dollar fund accounts.
T h e report will be in two sections. Section A will consist of one column and
will include all requirements which m a y be met by currencies purchased by disbursing officers from any nonrestricted source including purchases from nonrestricted Treasury F T accounts, purchases on the market, and purchases of fee
collections, repayments, etc. Section B will include requirements which are t o
be met by purchase from those Treasury F T accounts which are restricted for
sale to particular agencies or sale for particular uses.
This report will be detailed by kind (country) of currency and, in t h e case of
restricted currencies, by the accounts from which the requirements are to be met.
T h e foregoing reports will be submitted by Government agencies which are
responsible for administration under agreements with foreign governments
involving the acquisition of such currencies, collect currencies as the result of
loans or other credits, collect currencies incident to their operations, or require
foreign currencies for making expenditures chargeable to appropriations.
E a c h report will include estimates for t h e current fiscal year (the fiscal year in
progress a t the time of the report) and the next succeeding year. As far as a p plicable the d a t a for both years should be consistent with the regular budget
estimates submitted to the Bureau of the Budget. T h e first reports under this
revised instruction will cover t h e fiscal years 1958 and 1959.
All estimates will be stated in U. S. dollar equivalents and will reflect
t h e m a r k e t rate of exchange in effect on J u n e 30 preceding the d a t e of the report.
Estimates of collections which are based on dollar a m o u n t s (for instance, the dollar
a m o u n t s stated in agreements, or t h e dollar value of commodities to be sold for
foreign currencies) must be adjusted