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ANNUAL REPORT OF THE Secretary of the Treasury ON THE STATE OF THE FINANCES FOR THE FISCAL YEAR ENDED JUNE 30 1919 With Appendices WASHINCrON GOVERNMENT PRINTING OFHCE 1920 T R E A S U R Y DEPARTMENT, Document No. 2842. Secretary. CONTENTS, R E P O R T OP THE SECRETARY OF THE T R E A S U R Y : Page. - Financial cond:i.tions and the Treasury's program 1 The international financial situation 11 Currency and credit expansion..•. 17 Economy 22 Taxation 23 Cost of the war 25 Public debt ........ 30 Fourth Liberty loan 1 31 Victory Libert^,^ loan 32 Treasury certificates of indebtedness 54 War-savings cejctificates.— : 60 Loans to foreigja Governments 64 War Loan Organization. 68 War loan publicity 71 National Wom{i,n's Liberty Loan Committee 72 Liberty bonds and Victory notes outstanding 72 Conversion of l i b e r t y bonds. 77 Interconversio]! of Victory notes 81 Exchange and transfer of Liberty bonds and Victory notes 81 Purchases of Liberty bonds by the Treasury. 82 Cumulative sinking fund \ 84 Victory Liberty loan subscriptions by persons in the inilitary and naval forces '. 86 Acceptance of Liberty bonds as security 86 Acceptance of Liberty bonds and Victory notes in payment of estate or inheritance taxes 87 Loans secured by obligations of the United States ... 88 Liberty loan subscriptions in default 89 Coupon Liberty bonds in permanent form °... 90 Official titles oit Liberty bonds and Victoi*y Liberty notes 91 Authorizations for issues of Liberty bonds and Victory notes 91 Illegitimate traffic in Government obligations 93 Issues of fraudiilent and worthless securities '. 95 Tax exemptioits of Liberty bonds and Victory notes 96 Bond and note designs 100 Currency designs 100 Federal Reser^re System 101 War Finance Clorporation : • 103 Capital Issues Committee 107 Gold 108 Silver 110 Public moneys and special depositaries 112 United States depositaries in foreign countries, 113 Payment of Sjianish-American war bonds 113 Bond-secured ciirculation of the national banks 114 Funds for Army payments in Europe 115 Audit of accounts abroad • 115 A budget systeim 1.16 Revolving funds and reimbursements of appropriations . 126 Incorporated C-rovernment agencies 129 Checking accounts of Government corporations and the Railroad Administration candied by the Treasurer . 132 Salaries of Gox-^ernment officers and employees 134 Retirement of civil-service employees 135 Federal Farm Loan System 136 III IV CONTENTS. REPORT OF THE SECRETARY OF THE TREASURY—Continued. Page. Seed-grain loans to farmers '. 139 Bureau of Internal Revenue 144 Synthetic glycerin formula : 149 War risk insurance 1 149 Organization 151 Marine and.seamen's insurance '. ]52 Military and naval allotments and family allowances 153 Military and naval compensation 154 Military and naval insurance ;...... 156 United States Government life insurance 158 Amendments159 Enemy or ally of enemy insurance companies and other foreign insurance companies 160 Soldiers' and sailors' civil relief act and bonds issued thereunder ' 160 Customs 161 Public Health 163 After-the-war program 164 Influenza. 3.66 ' Public buildings 166 Contractors' relief act : 167 National archives building 168 Coast Guard ' , 168 Anchorage control 169 Bureau of Engraving and Printing. 170 Contracting and purchasing 170 General Supply Committee : 174 International High Commission ., : 176 Surety bonds for Government officers • 179 Representation of Treasury on War Trade Board ].80 Panama Canal 181 Contingent fund 181 Finances , 181 Receipts and disbursements,,, fiscal year 1919 181 General fund -• 181 Summary of general-fund transactions 184 Postal Service 185 . United States notes (greenbacks) 185 Gold reserve fund.. -• 185 Trust funds 185 Sinking f u n d . . . - - . . .' 186 Condition of the Treasury June 30, 1919 186 Cash in the Treasuiy June 30, 1919. -. 187 Comparison of receipts, fiscal years 1919 and 1918. 188 Comparison of disbursements, fiscal years 1919 and 1918. 190 Estimates of receipts and expenditures for the fiscal years 1920 and 1 9 2 1 . . 198 Estimates of appropriations, fiscal year 1921,' as submitted b y the executive departments 206 Postal Service, estimated revenues and expenditures, 1921 206 Estimates for 1921 and appropriations for 1920 . 208 Statement of estimates of appropriations for 1921 compared with appropriations for 1920 .• 208 Exhibits accompanying the report on the finances. E x h i b i t 1: Preliminary financial statement of the United States Government from April 6, 1917, to June 30, 1919.' E x h i b i t 2: Proclamation revoking proclamations, orders, etc.i prohibiting t h e exports of coin, bullion, and currency, etc E x h i b i t 3: Cash expenditures of the Government, fiscal years 1917, 1918,. and 1919, as published in daily Treasury stateraents ' E x h i b i t 4: Financial statement of t h e United States Government June 30, 1919 .: Exhibit 5: Results of fourth Liberty loan, compiled by War Loan Organization on basis of subscriptions originally reported E x h i b i t 6: Draft of fifth Liberty bond bill proposed by the Treasury Department Exhibit 7: Victory Liberty loan act of March 3, 1919. ." 213 217 219 220 225 231 235 CONTENTS. V REPORT OF THE SECRETARY OF THE TREASURY—Continued. Exhibit 8: Formal offering of Victory Liberty loan, under Department Circular No. 138 Exhibit 9: Forni of application for notes of the Victory Liberty loan Exhibit 10: Form of application by an incorporated bank "or trust company for coupon no1;es of the .Victory Liberty loan for advance delivery Exhibit 11:. Results of Victory Liberty loan subscriptions, compiled by War Loan Organization Exhibit 12: Issues of certificates of indebtedness from April 6, 1917, to October 31, 1919 Exhibit 13: Treasury certificates of indebtedness, series V A, 4^ per cent, dated December 5, 1918, due May 6, 1919 Exhibit 14: Tre;;isurv certificates of indebtedness, series V B, 4^^ per cent, dated Decemtber 19, 1918, due May 20, 1919..: : Exhibit 15: Tre;;isury certificates of indebtedness, series V C, 4^ per cent, • dated January 2, 1919, due June 3, 1919 Exhibit 16: Tre;;isury certificates of indebtedness, series V D, 4^ per cent, dated January 16, 1919, due June 17,1919 Exhibit 17: Treasury certificates of indebtedness, series V E, Ah per cent, dated January 30, 1919, due July 1, 1919 : \ Exhibit 18: Treasury certificates of indebtedness, series V F, 4^ per cent, dated February 13, 1919,.due July 15, 1919 Exhibit 19: Treasury certificates of indebtedness, series V G, 4^ per cent, dated February 27, 1919, due July 29, 1919 : Exhibit 20: Treasury certificates of indebtedness, series y H, 4^ per cent, dated March 3.3, 1919, due August 12, 1919 Exhibit 21: Treasury certificates of indebtedness, series V J, 4^ per cent, dated April 10, 1919, due September 9, 1919 E x h i b i t 22: Treasury certificates of indebtedness, series V K, 4^ per cent, dated May 1, 1919, due October 7, 1919 ; Exhibit 23: Fo\:ir and one-half per cent Treasury certificates of indebtedness, series A 1920, dated August 1, 1919, due January 2, 1920. Exhibit 24: Four and one-half per cent Treasury certificates of indebtedness, series B 1920, dated August 15, 1919, due January 15, 1920 Exhibit 25: Four and one-half per cent Treasury certificates of indebtedness, series C 1920, dated Septeniber 2, 1919, due February 2,. 1920 Exhibit 26: Four and one-half per cent Treasury certificates of indebtedness, series T 2, dated January 16, 1919, due June 17, 1919 Exhibit 27: De])artment Circular No. 136, 4 | per cent Treasury certificates of indebtedness, series T 3, dated March 15, 1919, due June 16, 1919 Exhibit 28: Dejpartment Circular No. 146, 4^ per cent Treasury certificates of indebtedness, dated June 3, 1919, series T 4, due Septeniber 15, 1919; series T 5, due December 15, 1919 E x h i b i t 29: De]:)artment Circular No. 152, 4^ per cent Treasury certificates of indebtedness, dated July 1, 1919, series T 6, due September 15, 1919; series T 7, du<;) December 15, 1919 Exhibit 30: De]:)art'ment Circular No. 155, 4^ per cent Treasury certificates of indebtedness, series T 8, dated July 15, 1919, due March 15, 1920 Exhibit 31: Dej^arfment Circular No, 162, Treasury certificates of indebtedness, dated September 15, 1919, series T 9, 4^ per cent, due March 15, 1920; series T 10, 4^ per cent, due September 15, 1920 Exhibit 32: Call for redemption before maturity of Treasury certificates of indebtedness, series IV D Exhibit 33: Call for redemption before maturity of Treasury certificates of indebtedness, series IV E Exhibit 34: Offer to redeem before maturity, at holder's option. Treasury certificates of indebtedness, seriesV A Exhibit 35:' Offer to redeem before maturity, at holder's option, TreavSury certificates of :i.ndebtedness of all series matuxing on or before July 1,1919.. Exhibit 36: Call for redemption before m a t m i t y of certificates of indebtedness, series V G Exhibit 37: Offer to redeem at holder's option Treasury certificates of indebtedness of series V G prior to the date on which such certificates had been called for redemption Exhibit 38: Offer to redeem before maturity at holder's option Treasury certificates of indebtedness, series V F Exhibit 39: Offer to redeem before maturity at holder's option Treasury certificates of indebtedness, series V J . . : . . . : Page. 241 250 251 253 258 266 267 268 269 270 271 272. 273 274 275 i 276 278 , 279 280 r 281 283 284 285 ' 286 288 288 288 289 289 289 290 • 290 VI CONTENTS. R E P O R T OP THE SECRETARY OP THE TREASURY—Continued. E x h i b i t 40: Call, for redemption, before maturity, of Treasury certificates • of indebtedness, series V K Exhibit 41: Offer to redeem before maturity, at holder's option, Treasury certificates of indebtedness, series maturing September 15, 1919, and also series V K, prior to date on which called for redemption E x h i b i t 42: Department Circular No. 128, war-savings certificates, series of 1919 E x h i b i t 43: Department Circular No. 143, Treasury savings certificates... E x h i b i t 44 Depart:ment Circular No. 149, Treasury savings certificates... E x h i b i t 45: Department Circular No. 126, surrender of war-savings certificate stainps, series of 1918, held b y agents of the first class. Exhibit 46: Department Circular No. 130, distribution and sale of warsavings certificates and stamps, series of 1918 E x h i b i t 47: Department Circular No. 131, surrender of war-savings certificate stamps, series of 1918, held by agents of the second class Exhibit 48: Statement showing dates and amounts of credits established in favor of foreign governments, etc : Exhibit 49: Statement showing dates and amounts of cash advances to foreign governments, etc Exhibit 50: Statement of denominational exchanges b y Federal reserve districts of $50, $100, $500, $1,000, $5,000, and $10,000 coupon Liberty bonds and Victory notes, as of September 30, 1919 Exhibit 51: Recapitulation of transactions in Liberty bonds and Victory notes, etc Exhibit 52: Liberty loans (Form L and C 265), interest coupons. Exhibit 53: Department Circular No. 137, extension of conversion privilege. Exhibit 54: Supplement to Department Circular No. 137, supplemental regulations governing extension of conversion privilege Exhibit 55: Second supplement to Department Circular No. 137, Liberty loans; supplemental regulations governing extension of conversion privilege Exhibit 56: Department Circular No. 158, exchange and conversion of 4 per cent coupon Liberty bonds Exhibit 57: Department Circular No. 139, Victory Liberty loan; rules and regulations governing exercise of the conversion privilege Exhibit 58: Supplement to Department Circular No. 139, Victory Liberty loan; supplemental rules and regulations governing exercise of the conversion privilege •. Exhibit 59: Letter of Secretary of the Treasury to banks and trust companies regarding regulations governing transactions in Liberty bonds and Victory notes. Exhibit 60: Department Circular No. 141, rules and regulations concerning transactions in Liberty bonds and Victory notes Exhibit 61: Information with respect to registration of Liberty bonds and Victory notes (Form L and C 222) Exhibit 62: Regulations defining special arrangements for subscriptions to 4f per cent notes. Victory Liberty loan, from persons in the military forces of the United States Exhibit 63: Regulations defining special arrangements for subscriptions to 4f per cent notes. Victory Liberty loan, from persons in the naval forces of the United States Exhibit 64: Department Circular No. 154, acceptance of United States bonds as security in lieu of surety or sureties on penal bonds Exhibit 65: Department Circular No. 132, receipt of Liberty bonds for estate or inheritance taxes • .' Exhibit 66: Department Circular No. 151, receipt of 4 | per cent Victory notes for estate or inheritance taxes Exhibit 67: Department Circular No. 135, first Liberty loan subscriptions in default ." Exhibit 68: Department Circular No. 156, second Liberty loan subscriptions in default Exhibit 69: Letter from Secretary of Treasury to House Ways and Means Committee and Senate Finance Committee, and draft of bill to.protect the public against issues of fraud ulent and worthless securities Exhibit 70: Letter from Secretary of Treasury to Delegate from Alaska regarding gold production •'. Page. 290 290 291 295 302 308 309 311 312 316 324 338 344 348 352 354 358 362 369 373 375 394 397 399 402 412 421 424 425 426 431 CONTENTS. R E P O R T OP THE SECRETARY OP THE TREASURY—Continued. Exhibit 71: Department Circular No. 92 amended and supplemented; special deposit of public moneys under act of September 24, 1917, as amended and supplemented Exhibit 72: Department Circular No. 144, instructions in connection with collection" aiid deposit of checks received in payment of internal-revenue taxes. , E x h i b i t 73: Treasury Department telegram; seed-grain loans Exhibit 74 Guaranty fund agreement; second seed-grain loans for fall planting in 1918 Exhibit 75: Joint Circular No. 2 (Departments of Treasury and Agriculture), reguliitions relative to farmers' seed-grain loans for spring-wheat planting in 1919 in drouth-stricken areas Exhibit 76: Joint Circular No. 3 (Departments of Treasury and Agriculture) , regulations relative to farmers' seed-grain loans in drouth-stricken areas in the ] natter of determining crop failure for the purpose of replanting. Exhibit 77: Joint Circular No. 4 (Departments of Treasury and Agriculture), supplemental regulations relative to farmers' seed-grain loans in drouth-stricken areas covering the matter of insurance of crops Exhibit 78: S(?ed-grain loan instructions Exhibit 79: Premium rates for United States Government life insurance. . Exhibit 80: Act of February 25, 1919, amending act establishing Bureau of War Risk Insurance Exhibit 81: Act of July 11, 1919, amending vocational rehabilitation act of •Tune 27, 1918 .' Exhibit 82: ./kCt of August 6, 1919, amending act establishing Bureau of War Risk Insurance Exhibit 83: Act of March 8. 1918, soldiers'and sailors'civil relief act Exhibit 84: Department Circular No.. 115, regulations governing United States bonds issued under authority of soldiers' and sailors' civil relief act approved March 8, 1918 Exhibit 85: International gold clearance fund convention; safeguarding the inviolability of gold deposits for clearance operations. Exhibit 86: Convention concerning commercial travelers VII Page. 432 438 443 444 447 455 457 459 460 463 464 466 467 473 475 477 Abstracts of reports of bureaus and divisions. Treasurer of tlie United States 481 District of Columbia 484 Comptroller oii the. Currency 485 Number of national banks and amount of capital stock, etc., June 30, 1919. 487 Number of national banks organized, insolvent, in voluntary liquidation, an.d in operation, etc 490 Mint service. 491 - Operations of the mints and assay offices 491 Stock of coin and bullion in the United States. 493 Production of gold and silver 493 Industrial arts. 493 Export of gold coin 493 Appropriations, expenses, and income 493 Deposits, income, expenses, and employees, by institutions, fiscal year 1919 496 Bureau of Internal Revenue 496 Revenue .Act of 1918 ,. 497 Cost of ad ministration 497 Income and profits taxes 498 Estate taxes 499 Capital-stock taxes. 499 Child-lab<:)r tax law , 499 Taxes on sales, special and miscellaneous commodities, occupations, and adraissions and dues •. " 500 Distilled iL^pirits , 500 Denatured alcohol 501 Industrial distilleries 501 Distilleries 501 Fermented liquors 502 Wines and cordials 502 Prohibition enforcement 502 . VIIT CONTENTS. REPORT OF THE SECRETARY OF THE TREASURY—Continued. Bureau of War Risk Insurance M.arine and seamen's insurance Military and naval allotments and family allowances .' Military and. naval.compensation. Military and naval insurance Bureau of Engraving and Printing : Customs Tea inspection , Office of the Supervising Architect Buildings '... .^ ., Statement of appropriations Summary of acts carrying appropriations for the fiscal year 1920 Public Plealth Service. Division of Scientific Research Division of Interstate Quairantine ^ • Division of Foreign and Insular Quarantine and Immigration Division of Sanitary Rej^orts and Statistics. : Division of Marine Hospitals and Relief ' Division of Personnel and Accounts Division of Venereal Diseases • Public health education Recommendations Coast Guard Award of life-saving medals Loans and Currency Interest-bearing debt of the United States; changes duriho; the fiscal • year 1 9 1 9 . . . ! .". Interest on registered bonds and registered certificates of indebtedness. Insular and District of Columbia loans; changes during the year Circulation ,. : Paper custody. : Custody of Federal reserve notes, series of 1914 and 1918 Audit and destruction of retired currency, thrift cards, and war-savings stamps Liberty bonds and Victory, notes Consolidated report, war-loan registered issues, and interest pajrments. Coupons issued upon exchanges; Treasury cases Claims on account of lost, stolen, or destroyed interest-bearing securities ^ r War-loan securities audit account, April 6, 1917, to June 30, 1919 Division of Public Moneys : Division of Bookkeeping and Warrants General fund State bonds and stocks owned b y the United States Secret Service Division Division of Printing and Stationery Printing and b i n d i n g . . . : Stationery : '....... Postage, materials for bookbinder, and department advertising Office of the disbursing clerk General Supply Committee Page. 503 503 506 507 510 514 515 520 522 522 523 524 526 526 530 535 538 539 540 542 542 543 545 545 551 551 552 552 553 554 554 554 555 556 557 557 558 559 561 562 562 563 564 564 566 568 568 570 Tables accompanying the report on the finances. Table A.—Statement of the outstanding principal of the public debt of the United States, June 30, 1919 Table B.—Statement of the outstanding principalof the public debt of the United States on the 1st of July of each year from 1856 to 1919, inclusive Table C.—Analysis of the principal of the interest-bearing public debt of the United States from July 1, 1856, to July 1, 1919 Table D.—Statement of the issue and redemption of loans and Treasury notes and of deposits and redemptions in bank-note account for the fiscal year ended J u n e 30,1919 Table E.—Sinking-fund account for fiscal year 1919 to March 3, 1919 581 610 612 614 .615 CONTENTS. R E P O R T OF THE SECRETARY OF THE TREASURY—Continued. IX i^age Table F,—Pop>ulation, ordinary receipts, and disbursements of the Government from 1840 to 1919, exclusive of postal, and per capita on receipts and per capita on disbursements 616 Table G,—Sta1;ement showing the ordinary receipts and disbursements of tlie Government by months; net gold and available cash in tlie Treasury at the end of each month; and the imports and eiicports of gold from July, 1896, to June, 1919, i n c l u s i v e . . . 618 Table H.—Statement of the balance in the general fund of the Treasury, including the gold reserve, b y calendar years from 1791 to 1842, and by fiscal years from 1843 to 1919 626 Table I.—Receipts and disbursements of the United States 627 Table J.—Internal and customs receipts and expenses of collecting from 1858 to 1919 640 Table K,—Statement of United States bonds and other obligations, re- • C(;!ived and issued b y the Office of the Secretary of the Treasury from July 1, 1918, to June 30, 1919, a.nd with respect to war issues from^ April 7, 1917, to June 30, 1919 642 Table L.—Statement of the coin and paper circulation of the United - States from 1860 to 1919, inclusive, with amount of circulation per capitta 645 Table M.—Cpllections, expenses, and average number of persons employed in the Internal Revenue Service, fiscal year ended June 30, 1 9 1 9 . . . . . . . . 646 Table N.—Statement of business of the customs districts and ports for the . fiscal year ended June 30, 1919 647 Table 0.—Statement, by districts and ports, showing total entries of merchandise, receipts, and expenses for the fiscal year ended June 30, 1919 699 R E P O R T OF THE T E E A S U R E R : Receipts and disbursements for 1918 and 1919 709 Panama Canal , 710 Extraordinary disbursements 710 Receipts and disbursements on account of the Post Office D e p a r t m e n t . . . . . . . 711 Transactions in the public debt , , 711 Currency issued and redeemed : 712 Public debt 1.918 and 1919 712 . Payment of intc^rest on registered bonds of the United States 713 Reserve fund '. :. 713 State of the Treasury, general fund—cash in the vaults 714 Net available cash balance, 1910 to 1919 716 Gold i n T r e a s u r y from 1910 .'.. 716 Bonds held as si3curity for national-bank circulation and deposits 717 Bonds held as security for postal savings funds 718 Postal savings bonds and inA'estments therein 721 Withdrawal of bonds to secure circulation 721 Depositaries of i^he United States. 722 Public moneys ;i.n depositary banks 722 General account of Treasurer of the United States 723 Gold settlement fund • : 723 Monetary stock, 1918 and 1919 724 Ratio of gold to total stock of money '. 725 Money in circulation 725 Circulation and population. 725 Paper currency issued directly by the Government i 726 United States notes 726 Treasury notes of 1890 :...: 727 Gold certificates 728 Silver certificat<;;s ' 728 Changes in denominations during fiscal year 1919 729 Pieces of United States paper currency outstanding 730 Cost of paper currency 730 Average life of })aper currency . 731 Paper( currency prepared for issue and amount issued 731 Papers currency held in the reserve vault , 732 Paper currency redeemed : 733 Standard silver dollars •. 734 Subsidiary silver coin 735 X CONTENTS. R E P O R T OP THE TREASURER—Continued. Minor coin United States currency : , Transfers for deposit in New York—money for moving the crops, etc Telegraphic transfers for foreign coin .^ . Deposits of gold bullion at mints and assay offices, 1917,1918, and 1919 Shipments of currencv from Washington, 1918 a,nd 1919 l... Recoinage, 1918 and 1919 Redemption of Federal reserve and national curren03^ Special trust funds and changes therein during the fiscal year District of Columbia sinking fund Tables accompanying the report of the Treasurer Page. 736 736 738 739 741 741 741 742 743 744 746 R E P O R T or THE DIRECTOR OF THE M I N T : . Operations of the mints and assay offices 813 Coin demand 813 Silver dollars converted' to bullion 813 New assay office at New York 813 Platinum 814 Refineries : 814 Minor coinage metal fund increased 814 Institutions of the Mint Service 814 Deposits of gold and silver 815 Minpr assay offices 815 Gold operations 815 Silver operations. 1.1 815 Coinage 816 Stock of coin and bullion in the United States 816 Production of gold and silver 816 Industrial arts consumption 816 Export of gold coin 816 Estimates for the fiscal year 1921 816 Appropriations,' expenses and income 817 Philippine Mint equipment 817 Philadelphia. Mint improvements. 817 Denver Mint iihprovements 820 New York assay office improvements 820 Income and expenses of the fiscal year 1919 •. 820 Deposits, income, expenses, and employees, by institutions, fiscal year 1919 821 Coinage, details of, executed during fiscal year. 1919 ...".. 822 Deposits of foreign gold bullion and coin •. 823 Deposits of foreign silver bullion and coin • 823 Issue of fine gold bars for gold coin and gold bullion 824 Balances, receipts, and disbursements of gold bullion 825 Purchase of minor coinage metal for use in domestic coinage 826 Purchase of minor coinage blanks prepared for coinage 826 Sale of minor coinage metals 826 Distribution of ininor coins... . . . .^ 827 Minor coins outstanding . . , 827 Operations of the assay departments. 828 Proof bullion (1,000 fine) : 828 Operations of the melting and refining and of the coining departments, fiscal year 1919 829 Refining operations : 830 Bj^'-products of Government refineries 1 831 Ingot melts made 832 Fineness of melts for gold and silver ingo1;s 833 Commercial and certificate bars manufactured ., 833 Melts for fine gold and fine silver 834 Ingots operated upon by coining departments and percentage of coin produced ' .... 834 Percentage of good coin produced to pieces struck..: 835 Sweep cellar operations >... 835 Bullion gains and losses I... 836 Wastage and loss on sale of sweeps I... 836 Engraving department ...:... 837 Dies manufactured -.! 837 Medals sold J' 838 The progress of the numismatic collection ( 839 CONTENTS. XI R E P O R T OP THE DIIIIECTOR OP THE MINT—Continued, Employees , Visitors Work of the mirior assay offices Ore assays... :. Gold receipts at Seattle Laboratory of the Bureau of the Mint Proceedings of the Assay Commission, 1919 Tables, Report Director of t h e Mint Page. , : '... : 839 839 840 840 841 841 842 846 R E P O R T OF THE COMPTROLLER OF THE CURRENCY: Submission of report • , National banks in t h e reconstruction period .,... Economic pr.obl ems needing settlement Heayy^ shrinkage in production of essentials Diminished production with price inflation does not enrich a country Our colossal foreign trade ,. ' •Foreign balances collectible in goods, not in gold Prosperity to endure must b e based on sound principles Bankers' influence may help correct evils and avert perils. Meaning of t h e liihrinkage in value of foreign exchange No responsibility on us to maintain parity of gold and paper money of other countries Subordinate Geiimany 's internal debt to obligations due allied nations The banking power of t h e United States Enormous foreign trade of t h e United States Merchandise imports and exports from 1914 to 1919 Gold and silver imports and exports from 1914 to 1919 Gold, silver, ami paper money in t h e world.. Nearly 22^ billions of assets in national banks. Growth of national banks b y five-year periods. Vast growth of national banks in 20 years. Chart showing "Enormous growth in resources, deposits, and capital of national b a n k s " .^ •. Close observance of laws and regulations b y national banks . National banks gratifying imniunity from failure °. State bank failures in 1919 Chart showing " Increased stability and safety of national banks " Comparative figures of national and State banks '. Growth of national and State banks for six-year period Many national banks increasing their capital , Large number ol' State banks nationalizing Earnings and dividends of national banks Chart showing " Unprecedented prosperity of national banks " Wider diffusion of t h e country's wealth and credit Big growth of Middle West. Huge increase in t h e Southern States Western Sts^tes gain 500 per cent. Pacific States b a n k s ' assets advance 1,340 per cent Growth of 1,000 per cent or more i n each of 16 States Largest actual increases. Some strikrag comparisons -....: Number of depositors in oirr national b a n k s . . . . : Healthy distribmtion to investors of Liberty bonds and Victory notes Location of t h e country's largest national banks 120 banks w i t h over 25 million asset's now; 19 such banks in 1899 .. Big banks m 39 cities in every p a r t of t h e country T h e West had three big banks i n 1899 and 48 in 1919 Productivity of loans and bond investments of national banks Condition of thei national banks i n each State National and F<5deral reserve currency issued and redeemed Federal Reserve) System , Condition of national banks at date of each call during t h e report year Resources of national banks— Loans and discounts Bills receiv:;ible eligible for rediscount with Federal reserve banks Amount and classification of loans b y national ba,nks in.central reserve cities 893 893 894 895 896 896 897 898 898 899 900, 901 901 . 902. 903 903 903 906 907 907 908 909 909 909 910 910 910 911 911 911 911 912 913 913 913 913 914 914 914 915 919 919 919 920 920 921 921 924 925 926. 928 929 936 XII CONTENTS. R E P O R T OF THE COMPTROLLER OF THE CURRENCY—Continued. Resources of national banks—Continued, . Three-year comparative statement of loans by national banks in reserve cities and country banks....'. " .' Direct and indirect liability of officers and directors of national banks, June 30, 1919 ---. Classification of loans by national banks in New York in June, 1915 to 1919 • - - -.. - : -. -. Overdrafts United States Government securities owned, Other bonds, securities, etc :..... Stocks. .-.....: •. •. Investment securities of national banks classified ' Domestic and foreign securities held by national banks Liberty bonds and United States certificates owned, etc., on December 31, 1918, and March 4, 1919 -.-.-• Subscriptions b y national banks for Victory notes, June 30, 1919.. United States war securities owned and held as collateral by national banks, September 12, 1919 •--•.. Classification of Foreign Government bonds owned by national banks,June 30. .•-... Bank premises and other real estate owned Due from banks 1 National-bank deposits with Federal reserve banks Specie, gold and silver certificates Exchanges for clearing house Liabilities—: Capital stock, surplus, and undivided profits , • Circulation outstanding.. .^ Due to banks Individual deposits .„ Bonds and money borrowed. Bank acceptances . Changes by geographical divisions in principal items in reports of condition of national banks..'.. , • Relation of capital to deposits, etc., of national banks Percentage of principal ite;ns of assets and liabilities of national banks.... Reserve Reserve required and held by national banks in Federal reserve cities, etc -. - -: Classification of loans (including paper bought) as shown b y reports made b y 600 banks located in cities of more than 50,000 population Growth of national banks since 1913 Foreign branches of national banks Organization of national banks— National-bank charters applied for, granted, and refused Increases and reductions of capital stock Liquidation of national banks ,. Consolidation of national banks Steady growth in number of national b a n k s . . . . . . : , National banks organized since 1900 State banks converted into national banks since 1900 Organization and liquidation of national banks, 1863 to 1919 National banks chartered year ended October 31, 1919 Number of national banks chartered in each month from March 14, 1900, to October 31, 1919 Conversion of State banks and primary organizations as national banks since 1900 State banks converted into national banks 1863 to 1919 Classified capitalization of banks by States ,.. Expirations and extensions of charters of national banks Reextension of charters { Increases and reductions in capital stock of national banks by States. . •... Changes in title of national banks ".: Increasing immunity from failure National banks organized, failed, and liquidated, by States, year ended October 31, 1919 Page. 936 • 937 939 939 939 940 940 940 941 . 945 948 952 956 956 956 957 957 958 958 958 959 959 959 959 960 961 961 961 962 963 976 979 982 982 982 983 985 985 985 985 989 .994 995 995 995 997 99-8 998 999 1000 1001 CONTENTS. . R E P O R T OF THE COMPTROLLER OF THE CuRRENCY-^Continued. Xlir Page. Causes of failure, etc 1004 Banks' investments in United States bonds 1005 Bonds availabi GI as security for national-bank circulation 1005 Increase, etc., in national-bank circulation 1007 Monthly issues of national-bank circulation 1007 Denominations of. national-bank circulation 1008 Vault account of national-bank circulation 1008 Profit on national-bank circulation. 10.09 Redemption of national-bank circulation. 1009 Taxes on national-bank circulation 1011 Monthly statement relating to bonds on deposit to secure circulation and circulation secured thereby 1011 Interest-bearing d ebt of t h e United States 1012 Prices and investment value of United States bonds 1012 Federal reserve notes 1012 Federal reserve bank notes 1018 Legislation enacted r.elating to national banks 1021 Consolidation of national banks. , 1021 Denominations of and signatures on national-bank currency '. 1022 Earnings of Federal reserve banks—Discounts for mem.ber banks 1023 > Investments b y national banks in stock of corporations engaged in foreign financial operations 1024 Loan limit by national banks 1024 Liability limit of national banks 1026 Gold certificates legal tender : 1026 . Banking coi'porations authorized to do foreign business 1026 Comptroller's recommendations for new legislation. 1031 Digest of court (decisions on national bank cases 1039 Liability of directors of national banks 1039 Retention of pai't of loan as deposit is usurious 1041 National bank examinations , \ 1041 National bank examiners 1042 National bank officers convicted of criminal violationsof law 1043 Banks other than national 1044 State banks, savings banks, private banks, and loan and trust companies 1044 State banks 1047 Mutual savings b a n k s . : 1048 Stock saving^s banks 1051 Mutual and stock savings banks 1053 Loan and trust companies 1054 Private banks .^ 1055 Abstracts b y Sta,tes of reports of condition'of State and private banks 1057 Comparative. statement of condition of all reporting national and State banks in the United States. 1061 Comparison of principal items of resources and liabilities of national and • State banks for years 1918-19. • 1062 Summary of combined returns from all banks in the United States and island possessions : • 1065 Comparative statement of resources and liabilities of all national, State, and private banks, 1914-1919 1066 Growth of all reporting banks, 1863 to 1919, inclusive. 1072 Individual deposits of all reporting banks -. 1074 Cash in all reporting banks , 1074 Money in the United States 1075 Rates for money in New York. .' 1077 Discount rates oi: the Federal reserve banks 1078 Sterling exchange 1079 Transactions of clearing house associations. : 1080 Transactions of ITew York Clearing House 1081 " United StatesTostal Savings System 1081^ Federal Farm Lc>an S5^stem '. 1084 Condition of Federal loan banks 1085 Farm loan bonds : 1087 Farm loan associations 1087 Joint stock land banks - . . -. 1089 Loans b y joint stock land banks, closed; etc 1090 XIV CONTENTS. R E P O R T OP THE COMPTROLLER OP THE CURRENCY—Continued. Building and loan associations i n t h e United States All financial institutions in t h e District of Columbia.: Savings banks i n t h e principal countries of t h e world A century of banking i n t h e United States Conclusion Page. 1091 10*93 1094 1097 1097 R E P O R T OF THE COMMISSIONER OF INTERNAL R E V E N U E : Collections Revenue act of 1918 Advisory t a x board Regulations : Forms ." Treasury Decisions Administrative rulings Tax adjustments Solicitor of internal revenue ... Field service ' Observance and enforcement Analysis of experience Cost of administration Bureau organization Personnel '. '. :. Housing : Stamps -, Chemical analvses Glycerin. .^. Incomes and profits Training program Information service Statistics Claims. Special activities Divisional organization Capital stock Estates :.... Child labor Sales—Special and miscellaneous commodities—Occupations and privileges Alcohol...:.-. Distilled spirits and alcoholic beverages Denatured alcohol Industrial distilleries Fermented liquors Wines and cordials Tobacco 1 Floor taxes ' Oleomargarine Adulterated butter ' Renovated b u t t e r . . ." Mixed flour Narcotic drugs Prohibition enforcement : Statistical tables Digest of court decisions 1101 1102 1104 1106 1107 1108 1108 1110 llll 1114 1118 1121 1122 1123 1124 1125 1126 1127 1128 1128 1130 1130 1131 1131 1131 1132 1133 1135 1139 1141 1142 1144 1145 1145 1146 1147 1147 1149 1150 1151 1152 1152 1152 1154 1156 1162 ANNUAL REPORT ON THE FINANCES. TREASURY DEPARTMENT, Washington, Novemher 20, 1919. SIR: I have th.e honor to make the following report: F I N A N C I A L CONDITIONS AND THE TREASURY'S PROGRAM. In this period of readjustment from war to peace, of reconstruction of regions swept bare by the havoc of the greatest war of all time, of political and economic change, and of world-wide unrest and anxiety, America stands strong economically, financially, and politically among the nations of the earth. She has emerged from the colossal struggle with strength tested and unimpaired. The impious hand of the enemy has not touched any part of her fair land, and there are no waste places here to restore. A large share of the cost of the war already has been paid for by taxes and the public debt is but a fraction of our national wealth, our credit and financial structure is sound and secure, our gold reserves are the greatest in the world, prosperity flourishes in every branch of industry and in every part of the Nation, and the people of the country are fully employed. On the other hand, there are serious and grave problems that challenge our statesnitanship and our patriotism. I n the train of the great physical and spiiitual effort the Nation put forth in the supreme task of winning the war, it is not surprising, in the light of the experience of mankind followi]ig wars of every age, that there should appear a certain spirit of reac^tion that finds its concomitant in discontent and dissatisfaction. The continuation of prosperity and the financing of our domestic and foreign trade, the full and peaceful employment of labor and capital, credit expansion, speculation and the cost of living are great social and €iconomic problems, but they are susceptible of American solution. To entertain the thought of failure in finding an effective remedy for every phase of discord and dissatisfaction in America is to shatter the hopes of mankind. The answ'er to these great questions, which are far less grave in the United States than elsewhere in the world, is to be found in the courage and ability and spirit of Americans and tlieir love of the United States. These are attributes which have stood the test of time from the birth of thirteen struggling colonies to the iiaaturity of a great nation. The men who went to Europe to fight for the freedom of the world, and their compatriots who mobilized to support them to the utmost at home, will not be 140325—PI 1919 1 1 2 REPORT ON T H E FINANCES. found wanting in these critical times and can be relied upon to grapple, with these questions in the same indomitable and loyal spirit that won the war and with the traditional appreciation and respect of Americans for the rights of their fellowmen,. in full confidence of the vindication of right and justice in every element of our life as a nation. This spirit of optimism and hopefulness is born of the Nation's performances of the past and has its immediate revival in the great achievements of the people during the war and in the index afforded by the Treasury's favorable outlook for the future, if dur course is directed along intelligent lines of efficiency and rigorous economy in public and private finance. During the 19 months of ^ active warfare, the people of the country cheerfully contributed taxes for the support of the Government in greater measure than ever before in our history, and generously subscribed to four great popular Liberty loans. The success of these stupendous operations was made possible only by the devoted patriotism of the American people. In the highest and truest sense, the people of the country financed the war, and they deserve the credit for the great achievement. The loyal and efficient work of the organization in the Treasury, the Federal reserve banks and the Liberty loan committees, great and effective as it was, would have amounted to naught had it not sounded the note of patriotic appeal. Since the signing of the armistice, taxes have been paid with equal willingness in even larger amounts than during the period of hostilities, although not so great as would have been necessary if the war had continued. During the year that has elapsed since the previous report of the Secretary of the Treasury,, i t has been necessary to issue only one popular loan—short-term Victory Liberty notes—as compared with four issues of long-term bonds in the previous 19 months. In the face of many gloomy forecasts that the Victory issue must be sold on a strictly commercial basis and that it would" be impossible again to appeal to the patriotism of the American people, the loan, launched without the impulse of the enthusiasm of war, was another overwhelming success that again reflected the financial and economic strength of America and the solidarity and patriotism of the people of the country. Tax receipts, payments of Victory loan subscriptions and the diminishing expenditures of the Government have permitted the issue of Treasury certificates of indebtedness on a decreasing scale for the purposes of temporary financing. This has been particularly true since the close of the fiscal year 1919. On October 31, 1919, the total amount of outstanding Treiasury certificates, which on April 30 aggregated $6,250,000,000, had been reduced to $3,736,352,300, of which only $1,634,671,000 were loan certificates. There are no maturities SECRETARY OF T H E TREASURYo 6 of certificates to provide for prior to 1920, as the certificates maturing December 15, 1919, are more than covered by the income and profits tax installment due on that date. In these circumstances, it is believed that the time will soon be in sight when the expenditures of the Government, including interest and sinking fund charges on the public debt, may be met by current receipts, without incurring new floating debt except Treasury certificates of indebtedness issued in anticipation of income and profits taxes. I confidently expect that by the time the cumulative sinking fund begins to operate on July 1, 1920, temporary financing will be substantially o^'er and the certificates will have disappeared from the market except to the extent that financing may be done and certificates issueid in anticipation of income and profits taxes. That is the goal toward which the Treasury is aiming, but its realization is dependent upon, the continuation of taxes at the present aggregate level and the vigorous enforcement of economy. The Treasury's financial program can best be expounded in detail through various public letters setting forth the facts as they developed in gradual stages during the 'early months of the current fiscal year. The condition of the Treasury and the state of the public debt on June 30, 1919, was analyzed in a letter sent to the Chairmen of the Senate Committee on Finance and the House Committee on Ways and Means early in July. That statement revealed that the Treasury was on the t/hreshold of a more favorable period and enabled the department to confirm the announcement which had been made on April 14, 1919, to the effect that the issue of Victory notes would be the last Liberty loan and further to point out that while the ultimate amount of expenditures for the fiscal year 1920 was uncertain, it was confidently exp(3cted that the Goyernment would be able, not only to meet its furtlier temporary requirements for the decreasing scale pf expenditure by the sale of Treasury certificates of indebtedness bearing interest at the rate of 4^ per cent or less, but also to fund as many of these as may be desirable by the issue of short-term- notes, in moderate amounts, at convenient intervals, w;hen market conditions were favoi-able and upon terms advantageous to the Government. The foll(.)wing is a copy of the letter mentioned: WASHINGTON, July 9, 1919. . M Y D E A R CONGRESSMAN : I take pleasure in handing you herew ith, for your information and t h a t of the Committee on Ways and Means, the followirg statements:^ A. Preliminary fi]iancial statement of t h e United States Government for the period from April 6, 1917, to June 30, 1919 (Exhibit 1, page 213). B . Preliminary statement of the pubUc debt on June 30,1919 (Exhibit 1, page 214). C. Statement showing classified receipts, exclusive of the principal of the public debt, b y months, from April 6, 1917, to June 30, 1919, as published in daily Treasury statements (Exhibit 1, page 215). 4 . REPORT ON THE FINANCES. • D. Statement showing classified disbursements, exclusive of the principal of the public debt, by months, from April 6, 1917, to June 30, 1919, as published in daily Treasury statements (Exhibit L page 216). Expenditures in the month of June just ended amounted in round figures to $809,000,000, or less than for any month since September, 1917. Expenditures for the fiscal year just ended amounted to $18,514,000,000. • Expenditures for the war period amounted to $32,427,000,000, and of these more than $9,384,000,000, or about 29 per cent, were met out of tax receipts and other revenues than borrowed money, although paynient of nearly half of the income and profits taxes for the fiscal year 1919 has not yet been made, such payinent being deferred until the fiscal year 1920. In this calculation no deduction is made of expenditures for loans to the Allies, which on June 30 amounted to $9,102,000,000, or for other investments, such as ships, stock of the War Finance Corporation, bonds of the Federal land banks, etc. If we assume that the expenditures of the Government on a peace basis would have been at the rate of $1,000,000,000 a year, or for the period under discussion of nearly 27 months would have equaled $2,250,000,000, then we may estimate the gross cost of the war to June 30, 1919, at $30,177,000,000. The gross public debt (without any deductioa for loans to the Allies or other investments) amounted on June 30,1919, to $25,484,000,000. Of this sum only $3,634,000,000 was in the form of Treasury certificates, or floating debt.. Of such certificates more than $608,000,000 matured or were redeemed on July 1, 1919, and were paid out of the net balance in the general fund on June 30, 1919, which amounted to $1,251,000,000. Deducting the certificates last referred to, the floating debt on June 30, 1919, was little more than $3,000,000,000, which is roughly the estimated amount of the deferred installments of the income and profits taxes for the fiscal year 1919 and of the deferred installments of the Victory loan subscriptions. In the announcement given to the press on April 14,1919, of the terms of the Victory Liberty loan, I made the following statement with reference to financing the future requirements of the Government: ''This will be the last Liberty loan. Although as the remaining war bills are presented further borrowing must be done, I anticipate that the requirements of the Government in excess of the amount of taxes and other income can, in view of the decreasing scale of expenditure, be readily financed by the issue of Treasury certificates from time to time as heretofore, which may be ultimately refunded by the issue of notes or bonds without the aid of another great popular campaign such as has characterized the Liberty loans." I confirm the statement above quoted. The decision then taken has been fully sustained by the experience of the past three months. The successful flotation of the Victory loan and the adjustment of the amount and terms of the issue have resulted, as I hoped they would, in a strong market at about par for these notes, without the necessity of Government support, and in an improving market for the bonds of the second, third, and fourth Liberty loans, evidenced not only by the firm market quotations but by strong undercurrents of investment buying, which give reason for the hope that with the continuance of favorable general conditions, there will be consistent appreciation in the market prices of these bonds. I do not now think it will be wise to make any further issues of long-term bonds before the maturity or redemption of the Victory notes, when there will have been such an interval in Government offerings of all kinds as must inevitably result inmarked improvement of the market prices of the existing issues, with corresponding decreases in the interest bases at which they are selling, and consequent assurance that the Government will be able to finance itself for a longer period upon better terms. It is not possible at this time, when appropriations for the coming year are under consideration by the Congress, when contract claims by and against the United SECRETARY OF THE TREASURY. 5 States are still ih process of settlement, when demobilization is still incomplete, when the extent of the liability oh the wheat guaranty is unascertained, and when the business upon which the income and profits tax receipts in the first half of the calendar year 1920 are to be based is still only half transacted, to make a formal estimate of the receipts and expenditures of the United States during the fiscal year 1920. B u t so large a part of the war expenditures has been paid or provided for out of taxes and the issue of bonds or notes already sold and so small a part is unfunded that I confidently expect that the Government will be able not only to meet its further temporary requirements for the decreasing scale of expenditure b y the sale of Treasury certificates of indebtedness bearing interest at the rate of 4^ per cent or less, b u t also to fund as many of these as it may be desirable to fund, by the issue of short-term notes, in moderate amounts, at convenient intervals, when market conditions are favorable, and upon terms advantageous to the Government. I t will not be desirable to fund all the certificates of indebtedness, for the issue of certificates of indebtedness in anticipation of income and profits tax installments not only furnishes ' a means of financing the requirements of the Government temporarily upon easy terms, b u t constitutes an almost necessaiy financial expedient, to enable .the taxpayer to save and to prepare gradually for the great tax payments, and to relieve the banking machinery of the country of the great strain which would be imposed upon it if these tax installments had to be paid on a single day without such preparation. I need scarcely say to you that the realization of these sanguine expectations is contingent upon the practice of the most rigid economy by the Government and the continuance of ample revenues from taxation. Such a course, accompanied by the practice of sober economy and wise investment by our people and strict avoidance of waste and speculation, will make it possible for the American people to respond to the demands to be made upon them privately for capital and credit by the nations and peoples of Europe—demands which are reinforced by the strongest and most vital ties of sympathy for the Allies, who fought and won the war with us, as well as by the most obvious dictates of self-interest. I am writing a similar letter to the Hon. Boies Penrose, chairman of the Committee on Finance. I t has seemed to me only proper at the end of the last fiscal year of the war period to lay these facts and opinions before the Committee on Ways and Means, and the Finance Committee, which bear so large a measure of responsibility for the war-loan, legislation; and to.make them public also, since they vitally concern the millions of Americans whose purchases of Government securities, and tax payments, made this record of war finance possible. Very truly, yours. CARTER GLASS, Secretary. Hon. JOSEPH W . FORDNEY, Chairman Committee on Ways and Means, House of Representatives. The above announcement was the most encouraging news from the viewpoint of Government finance that the country had received since the cessation of hostilities. I t was closely followed on Jtily 25, 1919, with a statement that, allowing for all the elements of uncertainty, the Treasury had no reason to believe, that the expenditures of the Government during the fiscal year 1920. would exceed the amount of revenue to be received under existing law and from the remaining installments of the Victory Liberty loan. This would mean a deficit for the year of only $1,032,000,000 and a net increase 6 REPORT ON T H E FINANCES. in the gross public debt at the end of the year by that figure, which was the amount of the deferred installments of the Victory Liberty loan. This estimate was contained in an open letter to the banking institutions of'the country apprising them of the financial program for the ensuing five months, including the period of heaviest expenditure during the fiscal year 1920. The plan contemplated the resumption of the issue of loan certificates after an interval of three months, during which it had been possible to suspend the issue of such certificates by reason of the rapid decrease in the current expenditures of the Government, the very large early payments on the Victory loan, and the ready sale of tax certificates. The policy is elaborated in the letter, a copy of which follows: WASHINGTON, July 25, 1919. D E A R SIR: I am writing the banking institutions of the coun,try, in pursuance of the plan followed by my predecessor during the past year and a half, to inform them of the financial plans for the remainder of the calendar, year and the probable requirements of the Treasury during that period, and indeed during the^ fiscal year ending June 30, 1920," in so far as they may now be foretold. I have only recently had occasion to lay before the appropriate committees of Congress a report of the financing of t h e war to t h e end of the fiscal year June 30, 1919. A copy of this report may be had upon application to any Federal reserve bank or to the Treasury Department. I t is not possible at this time, when appropriations for the coming year are under consideration by the Congress, when contract claims by and against the United States are still in process of settlement, when demobilization is still incomplete, when the extent of the liability on the wheat guaranty is unascertained, and when the business Upon which the income and profits tax receipts in the first half of the calendar year 1920 are to be based is still only half transacted, to make a formal estimate of the receipts and expenditures of t h e United States during the fiscal year 1920 (ending June 30, 1920). I do not hesita,te to say, however, that I anticipate that the Government will be in receipt of revenues under existing law and from the Victory Liberty loan d u u n g the fiscal year 1920 to the amount of^at least $6,500,000,000, divided somewhat as follows: Internal revenue Customs .Sale of public lands Miscellaneous.. Total ordinary receipts Victory Liberty loan installments Total 1.. $4, 940, 000, 000 260, 000, 000 , 3, 000, 000 300, 000,000 5, 503, 000, 000 1, 032, 000, 000 6, 535, 000, 000 I n the absence of a budget system or of any Treasury control of governmental expenditure, i t is even more difficult to foretell the expenditures than the receipts of the Government. Current expenditures, which reached the maximum of $2,060,000,000 in December, 1918, fell in June to $809,000,000, and, after deducting the amount of the certificates of indebtedness of the Director General of Railroads paid during the present month of July, should shovW a still further decrease in this month. Allowing for all the elements of uncertainty above referred to, I have no present reason to believe that the expenditures of t h e Government during the fiscal year SECRETARY OF THE TREASURY. 7 1920 will exceed the amount of its receipts as above indicated, excluding transactions in the principal of the public debt other than the Viqtory loan. If these expectations prove to be correct, the gross public debt of the United States, which on June 30, 1919, amounted to... $25, 484, 506,160. 05 should be increased during the fiscal year 1920 by not more than the amount of the deferred installments of the Victory Liberty loan payable in the fiscal year 1920. 1, 032, 000, 000. 00 making a total public debt on June 30, 1920, when presumably the whole cost of the war will have been financed, of, say 26, 516, 506,160. 05 The realization of these sanguine expectations is contingent upon the practice of most rigid economy by the Government and the continuance of ample revenues from taxation. The heaviest period of expenditure during the current fiscal year will probably fall in the summer months of July, August, and September, because of the heavy disbursements of the ]ilailroad Administration heretofore held back for lack of an appropriation, the heav^y^ payments in settlement of Army contracts and on account of demobilization, and the maturities of-certificates issued in anticipation of the "Victory loan. The amount of certificates outstanding in anticipation of the Victory Liberty loan at any one tirae (excluding certificates redeemed, tax certificates, etc.), which on May 5 had reached the peak at $5, 797, 296, 500 had up to July 22 been reduced by 4, 402, 519, 000 Leaving outstanding 1, 394, 777, 500 During the next few months, therefore, the actual cash requirements of the Treasury can not be expected to show ai heavy further decrease, and, on the other hand, the proceeds of the deferred installments of the income and profits taxes for the year 1919, and the deferred installments on Victory loan subscriptions will not have been fully received until nearly the end of the calendar year 1919. Three months have passed since the last offering of Treasury certificates other than those issued in anticipation of taxes. This interval has been made possible by the rapid decrease in the current expenditures of the Government, the very large early payments on the Victory loan, and the ready sale of tax certificates. Beginning early in June, these have been issued up • to July 22 to the aggregate amount of $1,875,437,500, but in amouuts less than the income and profits tax receipts due at their respective maturities. Having borrowed as much as it is, in the Treasury's judgment, proper to borrow in anticipation of the income and profits tax installments payable September 15 and December 15, and having already sold up to July 22 Treasury certificates maturing March 15, 1920, to the amount of about $275,000,000, so that the limit of that issue also would soon be reached, the time has come when the issue of loan certificates ishould be resumed. The Treasury has, accordingly, determined to issue loan certificates, of five months' , maturity, and, with a view to aiding the banking institutions of the country in the distribution of these certificates, will issue the certificates on the 1st and 15th of each month, beginning August 1, 1919, thus making the issue semimonthly^ instead of biweekly as heretofore, and setting fixed dates in each month on which the issues will open. Treasury certificates, which, at the beginning of our participation in the war, had little or no market outside of the banking institutions of the country, have come to be appreciated by a great and steadily increasing class of investors. Banking institutions, on the other hand, which at the outset were loath to sell certificates to their customers,, fearing loss of deposits, have come increasingly to realize the wisdom and advantage of buying and distributing the certificates. Those incorporated banks and trust companies (numbering some 9,500) which have availed themselves of the 8 / . REPORT ON T H E FINANCES. privilege j open to all, of becoming depositaries of the proceeds of the certificates purchased, have found ample compensation in the resulting deposits. The minimum amount of each semimonthly issue o f t h e certificates should not in any casie exceed say $500,000,000, and, after September and during the balance of the calendar year, should not on t h e average exceed half of t h a t amount, for then all the Victory loan certificates will have been piaid or provided for, and such progress should have been made in Army settlements and in demobilization as greatly to reduce the requirements of the current program. That would mean the issue, during the remaining five months of the calendar year, of certificates to the amount of, say $3, 500, 000, 000 During the same period there will mature and b e paid loan and tax certificates to the aggregate amount of 2, 997, 540, 500 Net increase : 502,. 459, 500 The figures which the Treasury is now able to present seem fully to justify the announcement made in April that the Victory loan would be the last Liberty loan • and the statement, made in the report to the committees of Congress above referred to, that t h e Treasury expects to be able to meet its further temporary requii-ements b y the sale of Treasury certificates of indebtedness, bearing interest at the rate of 4^ per cent or less, and also to fund as many of these as it may be desnable to fund b y the issue of short-term notes, in moderate amounts, at convenient intervals, when market conditions are favorable, and upon terms advantageous to the Government. The Federal reserve banks will advise all national and State banks and trust companies in their respective districts of the minimum amounts of certificates they are expected to take from time to time in pursuance of this program, which should be not less than 1.6 per cent of the gross resources of each bank and trust company for each semimonthly issue during August and September, and may fall as low as, say, 0.8 per cent toward the end of the calendar year. The program may be varied at opportune times by the substitution of an issue of tax certificates or b y an alternative offering of such certificates, to which no quota will be applicable. I t is with confidence that I lay before the banking institutions of America, who did so much to make our successful record of war finance possible, the present program of the Government's current requirements for the balance of the calendar year, and ask each of them not only to subscribe its quota for each semimonthly issue of Treasury certificates, b u t to use its best efforts to distribute these certificates as widely as may be among investors. Cordially, yours. CARTER GLASS. To the P R E S I D E N T OP THE B A N K OR T R U S T COMPANY A D D R E S S E D . The progress of the certificate program and the success of the first two issues pf certificates in pursuance of the plan were such as to permit the following announcement on August 25, 1919, in which the banking institutions of the country were informed that the third semimonthly issue, dated September 2, would be offered without asking them to subscribe for any specified quota: The second semimonthly issue of Treasury certificates of indebtedness (Series B, 1920) in pursuance of t h e program for financing t h e current necessities of t h e Government set forth i n Secretary Glass's letter of July 25, 1919, to all banks and trust companies, was oversubscribed. The splendid response of t h e banking institutions of the country to t h e Treasury's plan for financing t h e current needs of t h e Government as set out in t h e Secretary's circular letter of July 25, gives assurance that t h e Treasury may count upon unquali- SECRETARY OF THE TREASURY. U fied and ample support whenever needed. The success of the first two issues, which realized a total of $1,065,953,500, has placed the Treasury in a very satisfactory cash position. This makes it possible to make the following anouncements as to the program for the next few weeks: 1. There will be no fixed minimum amount for the issue of loan certificates dated September 2 and miaturing February 2 (Series C, 1920). The issue will not remain open for any stated period, but will be closed without nd'tice. Federal reserve banks will not assign quota in respect to this issue to the banking institutions of their districts. . 2. There will be no issue of loan certificates upon September 15. An issue or issues of tax certificates of longer maturity may be substituted. 3. The Secretary of the Treasury has authorized the Federal reserve banks on and after Tuesday, September 2, to redeem in cash before maturity at the holder's option, at par and accrued interest to the date of such optional redemption. Treasury certificates of indebtedness of Series V J, dated April 10, 1919, and maturing September 9, 1919. This offering of certificates without suggesting to the banks the amount that should be subscribed was a very great success and further reflected the splendid condition of the Government's credit, the investment value of these securities and the increased marketability of the certificates through redistribution by the banks to investors. The large subscription of the three issues of certificates dated August 1, August 15, and September 2, the fortunate cash position qf the Treasury, and the increasing investment demand enabled the department to advance another important step forward in the gradually developing program that was taking the Treasury out of the securities market to the greatest extent possible and revealing the continuing improvement in the situation. On September 8, the plan, as had been customary from the beginning, was varied by suspending the sale of loan certificates for the time being and offering two series of tax certificates, both dated September 15, 1919, one series maturing in six months and bearing interest at the rate of 4J per cent, and the other maturing in one year and bearing interest a t the rate of 4J per cent. This was the first time in over a year that certificates had been offered at less than 4 i per cent. In addition, it was announced that all certificate maturities prior to 1920 were provided for from tax receipts or cash in bank, which was further evidence of progress in the policy of financing the balance of the war debt so as to avoid great refunding operations by spreading maturities and meeting them, so far as may be, from tax receipts. The situation and the offering were described in detail in the subjoined letter to the banks and trust companies of the country: WASHINGTON, September 8, 1919. DEAR SIR: The third semimonthly issue of Treasury certificates of indebtedness, Series C 1920, in pursuance of the program outlined in my letter of July 25, 1919, was, in accordance with the announceinent made on August 25,1919, offered without asking the banking institutions of the country to subscribe for any specified quota. The 10 REPORT ON THE FINANCES. Treasury felt confident that these certificates could be sold in amounts more than sufficient to meet the reduced needs of the Government without assigning the usual quota to individual banking institutions. This confidence was amply justified by the event. The certificates of Series C ] 920 were dated September 2 and subscriptions closed on September 3, the following day. The aggregate amount of certificates of this series subscribed for and allotted was $573,841,500, a sum greater by about $40,000,000 than the amounf subscribed for either of the two preceding issues, each of which had definite quota assignments and remained open a week after the date of issue.. This aggregate was in excess of the immediate requirements of the Treasury but allotment was nevertheless made in full upon all subscriptions made on the date of issue and the day following, in order not to disappoint those subscribers who had presented their subscriptions with reasonable promptness; and the opportunity was taken to redeem on September 15 the certificates of Series V K maturing October 7, 1919 (the last of the certificates issued in anticipation of the Victory Loan). The redemption of these certificates should have a beneficial effect in coimection with the large payments of income and profits taxes due on September 15. The aggregate amount of Treasury certificates of indebtedness still outstanding on August 30 of the several series maturing or called for redemption on September 9 and . 15, 1919, was $1,799,041,500. This entire sum (which has since been reduced by exchanges and cash redemptions) is provided for from cash in bank and income and profits taxes due September 15, leaving an ample balance in the general fund. There remain no maturities of certificates to provide for prior to 1920, as the certificates maturing December 15 are more than covered by the income and profits tax installment due on that date. In the month of August just past ordinary and special disbursements exceeded ordinary receipts by less than $500,000,000. In September, because of the income and profits tax installment payment; ordinary receipts should exceed ordinary and special disbursements by approximately $500,000,000. The success of recent issues of Treasury certificates, the fortunate cash position of the Treasury at the moment and the reinvestment demand which will result from the payment of so large an amount of certificates on or before September 15 create a situation which should be availed of to make an important step forward in financing the debt growing out of the war. In my letter of July 25, above referred to, I indicated that the Treasury certificate program might be varied at opportune times by the substitution of issues of tax certificates. This obviously is an opportune time, and accordingly the Treasury is offering two series of so-called tax certificates, both dated September 15, 1919, Series T 9 maturing March 15, 1920, and bearing interest at the rate of 4^ per cent, and Series T 10 maturing September 15, 1920, and bearing interest at the rate of 4^ per cent, payable semiannually. It is not possible to say definitely when semimonthly issues of loan certificates will be resumed nor upon what terms they will be issued; but such issues will certainly not be resumed before October 15, and the minimum amount offered should not exceed $250,000,000. In view of the important fact that now for the first time in over a year certificates (of Series T 9, maturing March 15) are offered at a lower rate than 4J per cent, I deem it proper to say that, if hereafter certificates maturing on or before March 15,1920, should be issued bearing interest at a higher rate "than 4J per cent, certificates of Series T 9 will be accepted at par with an adjustment of accrued interest in payment for certificates of such series which may be subscribed for and allotted. I hope that each and every banking institution in the United States will not only subscribe liberally for one or both issues of the certificates now offered but also will use its best endeavors to procure the widest possible redistribution of such certificates among investors. The certificates, although acceptable in payment of income and profits taxes payable at maturity, are, as you know, payable in cash when they mature, SECRETARY OF THE TREASURY. 11 and should make a ^nde appeal to investors generally because of their valuable exemptions from taxation and attractive maturities. The success of these issues will be an important advance in the process of financing the war debt in such a way as to avoid the necessity for great refunding operations, by spreading maturities and meeting them, So far as may be, out of tax receipts. Incorporated banks and trust companies which are not qualified depositaries are urged to become such in order that they, like others, may participate in the temporary deposits growing out of these issues. The patriotic, loyal, and enlightened support which the banking institutions of the country gave tc> the Treasury during the darkest days of the war and continued through the perhaps more difficult period after the cessation of hostilities, when war expenditures were at their peak, justifies the Treasury in addressing to them this confident appeal now that the turn of the tide has come. Cordially, yours. CARTER GLASS. To the PRESIDENT OP THE BANK OR TRUST COMPANY ADDRESSED. The response to these two offerings of tax certificates was so great that it was found desirable to close the issue in three days after September 15. The total subscriptions aggregated $758,600,500, of which $101,131,500 represented the 4i per cent six-month series and $657,469,000 the 4J per cent one-year series. In view of the success of the issues it vt^as possible to suspend for another period the offering of further loan certificates. The international financial situation. The international financial situation is one of great importance and in which we are seriously interested. The present position relative to foreign financing and the general policy of the Treasury concerning this vital problem should be fully stated. Smce the armistice the United States has advanced to the Governments of the Allies, as of the close of business October 31, 1919, the sum of $2,329,257,138.55, and there remained on that date an unexpended balance.of $593,628,111.45, from the total loans of $10,000,000,000 authorized under the Liberty loan acts. The Treasury asked and obtained power for the War Finance Corporation to make advances up to the amount of $1,000,000,000 for nonwar purposes and the Wa;r Finance Corporation is prepared to make such advances. By the act approved September 17, 1919, the Federal Reserve Board is authorized to permit, until January 1, 1921, national banks to invest to a limited extent in the stock of American corporations principally engaged in such phases of international or foreign financial operations as may be necessary to facilitate exports. The Secretary of War is authorized to sell surplus Army stores on credit. The United States wheat director is authorized to sell wheat to Europe on credit. 12 REPORT ON T H E FINANCES. The ipower which at present exists in the Government or governmental agencies to assist in meeting Europe's financial needs is, therefore, considerable. This power must, of course, be exercised with extreme caution and with the most careful regard for the urgent needs of our own people for an ample supply of foodstuffs and other necessities of life at reasonable prices. The Treasury is considering with representatives of the Governments of the Allies the funding of the demand obligations which the United States holds into.long-time obligations, and at the same time the funding during the reconstruction period, or say for a period of two or three years, of the interest on the obligations of foreign Governments acquired by the United States under the Liberty loan acts. The Treasury believes t h a t the need of Europe for financial assistance, very great.and very real though it is, has been much exaggerated both here and abroad. Our hearts have been so touched b y , the suffering which the war left in its train, and our experience is so recent of the financial conditions which existed during the war (when men were devoting themselves to the business of destruction) that we are prone to overlook the vast recuperative power inherent in any country which, though devastated, has not been depopulated, and the people of which are not starved afterwards. We must all feel deep sympathy for the suffering in Europe to-day, b u t we must not allow our sympathy to warp our judgment and, by exaggerating Europe's financial needs, make it more difficult to fiU them. Men must go back to work in Europe, must contribute to increase production. The industries of Europe, of course, can not be set to work without raw materials, machinery, etc., and, to the extent that these are to be secured from the United States, the problem of financing the restoration of Europe belongs primarily to our exporters. Governmental financial assistance in the past and talk of plans for future Government or banking aid to finance exports have apparently led our industrial concerns to the erroneous expectation that their war profits, based so largely on exports, will continue indefinitely without effort or risk on their part. To them will fall the profits of the exports and upon them will fall the consequences of failure to make the exports. So soon as domestic stocks, which were very low at the time of the armistice, have been replenished, those industries which have been developed to meet a demand for great exports, paid for out of Government war loans, wiU be forced to close plants and forego dividends unless they maintain and develop an outlet abroad. The industries of the country must be brought to a realization of the gravity of this problem, must go out and seek markets abroad, must reduce prices at home and abroad to a reasonable level, and create or cooperate in creating the means of financing export business. SECRETARY OF THE TREASURY. 13 There is no reason for high commodity prices in the specter of European demand nor for high interest rates in the specter of European credits. Our fear must be that the cessation of war exports will result in closed plants, passed dividends, and general depression. The way to avoid those evils is to stimulate production and encourage industrial and commercial activity and not to burden them with high interest rates which are a deterrent to these things, b u t unfortunately are not a deterrent, except temporarily, in such times as these to speculation. Since armistice day, the consistent policy of the Treasury has been, so far as possible, to restore private initiative and remove governmental controls and interferences. I t has been the view of the Treasury that only thus can the prompt restoration of healthy economic life be gained. The embargoes on gold and silver and control of foreign exchange have been removed, as well as the voluntary and informal control of call money and the stock exchange loan account. The control exercised by the Capital Issues Committee over capital issues has been discontinued. Thus the financial markets of the United States have been opened to the whole world and all restrictions removed that might have hindered America's capital and credit resources, as well as its great gold reserve, from being available in aid of the world's commerce and Europe's need. There are those who believe that the dollar should be kept at par— no more, no less—in the market of foreign exchange. If effective action were taken to carry out such a policy, it could only be done by drawing gold out of the United States when the dollar would otherwise be at a discount and by inflating credit when the dollar would otherwise be at a premium. The dollar is now at a premium almost everywhere m the world. Its artificial reduction and maintenance at the gold par of exchange in all currencies is quite unthinkable unless we propose to level all differences in the relative credit of nations and for our gold reserve substitute a reserve consisting of the promises to pay of any nation that chooses to become our debtor. Inequalities of exchange reflect not only the trade and financial balance between two countries, but, particularly after a great war such as that we have been through, the inequalities of domestic finance. The United States has met a greater proportion of the cost of the war from taxes and bond issues than any other country. Largely as a consequence of this policy, the buying power of the dollar at home has been better sustained than has the buying power at home of the currency of any European belligerent. For the United States to determine by governmental action to depress the dollar as measured in terms of foreign exchange and to improve the position of other currencies as measured 14 REPORT ON THE FINANCES.. in terms of dollars would be to shift to the American people the tax and loan burdens of foreign countries. This shifted burden would be measured by the taxes to be imposed and the further loans to be absorbed by our people as a consequence, and by increased domestic prices. United States Government action at this time to prevent in respect to foreign exchange the ordinary operation of the law of supply and demand, which automatically sets in action corrective causes, and to prevent the dollar from going to a premium when its natural tendency is to do so, would artificially stimulate our exports, and, through the competition of export demand with domestic demand, maintain or increase domestic prices. The view of the Governments of the. Allies, I take it, is that had they (after the war control of their imports had been relaxed) attempted to continue to ' ' p e g " their exchanges here at an artificial level by Government borrowing, the effect would have been to stimulate their imports and discourage their exports, thus aggravating their already unfavorable international balances. I t is not, of course, to be expected that the breach left by the withdrawal of governmental support of exchange can be filled by private initiative until the ratification of the treaty of peace has given reasonable assurance against the political risk which, rather than any commercial or credit risk, now deters private lenders. Some progress has already been made in placing here through private channels the loans of allied and neutral European countries and municipalities. The Treasury favors the making, in our markets, of such loans, which contribute to relieve the exchanges. I am sure t h a t when peace is consummated, and the political risk" measurably removed, American exporters and European importers will lay the basis of credit in sound business transactions, and I know t h a t American bankers will not fail then to devise means of financing the needs of the situation nor American investors to respond to Europe's demand for capital on a sound investment basis. Meanwhile it is well to remember the invisible factors, which are always at work toward a solution of the problem. Immigrants' remittances to Europe are, and will continue to be, a very large item in rectifying the exchanges. As soon as peace is concluded foreign travel will be a further item. Another very important factor is the purchase of European securities and properties and repurchase of foreign-held American securities by American investors. But the principal factor in Europe's favor is the inevitable curtailment of her imports and expansion of her exports. These processes, of course, are stimulated by the very position of the exchanges which they tend to correct. SECRETARY OF THE TREASURY. 15 The exchange situation as it exists to-day and the steps which were taken for the removal of all war restrictions as ra])idly as conditions would warrant may be summarized as follows: On May 6, 1919, the Federal Reserve Board announced that thereafter licenses for the export of silver bullion or silver coin of foreign mintage would be granted freely and without condition. This was followed on June 9, 1919, by the announcement that after consultation with the Secretary of the Treasury, and with his approval, the Federal Reserve Board had recommended to the President, and the President had approved the recommendation, that the control theretofore exercised over transactions in foreign exchange and over the exportation of coin, bullion, and currency be terminated except as to the importation or exportation of ruble notes or exchange transactions with that part of Russia under the control of the so-called Bolshevik government, and except as to exchange transactions with territories in respect of which such transactions were at that time permitted only through the Ainerican Relief Administration. At the same time it was announced that until formal action was taken by the President applications for the export of gold would, like applications for the export of silver, be freely granted irrespective of amount or destination except as above stated, and that during that interim licenses required to consummate specific transactions in foreign exchange would be freely granted, except as set forth above. On June 26, 1919, the President issued a proclamation, which is attached hereto as Exhibit 2, page 217, giving effect to the above recommendations. This was followed by the removal h j the Federal Reserve Board, on June 30, of the restrictions on remittances to countries to which remittahces had theretofore been permitted only through the American Relief Administration, leaving in force and ^effect only the prohibition against the shipment of ''coin, bullion, and currency to that part of Russia now under the control of the socalled Bolshevik government, and any and all dealings or exchange transactions in Russian rubles or transfer of credit or exchange transactions with that part of Russia now under the control of the socalled Bolshevik government." On August 12, the Federal Reserve Board announced the issuance of a general license permitting the exportation from the United States of Russian rubles, provided that notice of such exportations be given to the Customs Division of the Treasury and to the Division of Foreign Exchange of the Federal Reserve Board. With the exceptions above noted, therefore, there is now no control over foreign exchange or the export of coin, bullion, or currency. The improvement of our exchanges with neutral countries and the decline to normal, and in many cases to a very considerable dis- 16 REPORT QN THE FINANCES. count, of the currencies of those countries which had been ruling at considerable premium in the United States, is illustrated by the following table showing (1) the highest premiums reached by certain foreign currencies between April, 1917, and July 31, 1918; (2) the highest premiums during the month of July, 1918; (3) the premiums on November 15,1918; and (4) the premiums or discounts of each currency as of November 1, 1919: Table showing highest premium's reached by certain foreign currencies in New York between April, 1917, and July 31, 1918; premiums on Nov. 15, 1918, and premiums or discounts as of Nov. 1, 1919. [Based on quotations for demand bills.] ' Highest premium between April, 1917, and July 31,1918. Carrency of— Per cent. Sweden Norway Denmark ,. Holland Switzerland Spain India Japan Argentina .• Chile Peru (cable r a t e s ) . . . Bolivia (cable rates). 69.78 44.59 44.59 29.35 35.28 54.15 23.30 7.82 12.25 78.24 20.83 10.25 Month in which reached. November, 1917. do do July, 1918....... May, 1918 April, 1918...... September, 1917. July, 1918....:.. December, 1917.. June, 1918 July, 1918 December, 1917.. Highest premium, July, 1918. Premium, Nov. 15, 1918. Discount, Nov. 1, 1919. Per cent. Per cent. Per cent. 3.55 33.58 11.00 1.68 17.91 16.42 16.79 .75 21.08 29.35 3.86 5.94 31.50 7.50 3.21 42.75 3.63 .10 10.14 10.14 1 29.47 7.82 9.33 11.81 5.61 5.04 .24 75.48 31.54 14.39 20.83 3.10 2.19 1.54 13.00 1 Premium.. NOTE.—Quotations for Chile are for inconvertible paper cuiiency and premiums are calculated upon the average value of 18,8 cents per paper peso during the nrst 6 months of 1914 as a base. There is, therefore, no premium or discount properly so-called. I t will be observed that of these currencies the only ones now -ruling at a premium are those of Japan, Bolivia, and India. In the case of Japan and Bolivia the premium roughly measures, the cost, including loss of interest, of the export of gold from the United States to those countries, and may, therefore, be regarded as a normal quotation. With a free gold market in the United States, as we now have it, the currency of no gold-standard country should rise above such moderate premium as measures the cost of transportation of gold from this country to the country in question. That is the normal maximum. The normal minimum with any gold-standard country enjoying a free gold market would be a discount equal to the transportation cost from that country to the United States. As the above table indicates, exchange on India is selling at a very considerable premium. The situation is anomalous. The currency of India at the present time, while nominally on a gold basis, is practically on a silver basis. This is due to the fact that the circulating medium of India is the silver rupee, designed to be and formerly SECRETARY OF T H E TREASURY. 17 actually a token coin, the present market value of whose silver content, however, is far above its rated gold value as Indian currency. That rated value is 32.44 cents per rupee, and when silver is selling at 94.37 cents per ounce of fine silver the rated value of the rupee at par, viz, 32.44 cents per rupee, is equal to the market value of its silver content. The present quotation of the Indian rupee roughly measures the present market value of the silver content of the rupee. Owing to the propensity of the natives to hoard the precious metals, the Indian Government is unwilling to permit the importation into India of unlimited amounts of gold, which would thus to all intents and purposes be lost to the world, but very considerable amounts of gold have been sent to India and placed by the Government in the reserve against rupee currency notes. The exchange rate on India, therefore, in the present circumstances, is disconnected from the value of gold and responds roughly to the value of silver in the same manner as rates of exchange on China and Hongkong. A British commission was appointed early in 1919 to investigate the entire subject of the Indian currency. CURRENCY AND CREDIT EXPANSION. The progressive rise in commodity prices and wages has led to considerable public discussion as to whether there existed an inflation of the currency, and whether such inflation, if it existed, was a cause contributing to high prices. The discussion led to the introduction in the Congress of a resolution requesting an inquiry into the advisability of legislation providing for the gradual reduction of the currency in circulation. The chairman of the Senate Committee on Banking and Currency requested the views of the Federal Reserve Board on the subject, and I fully concur in the answer of the board, as embodied in Gov. Harding's letter to Senator McLean, under date of August 8, 1919. There is no escape from the conclusion that under our system currency can be issued only in response to a demand therefor as circulating medium and that such currency is automatically retired when it is no longer required as circulating medium. Currency expansion, therefore, is an effect and not a cause of advancing prices. The remedy for high prices, as stated in Gov. Harding's letter, is " t o work and to save; to work regularly and efficiently in order to produce and distribute the largest possible volume of commodities; and to exercise reasonable economies in order that money, goods, and services may be devoted primarily to the liquidation of debt and to the satisfaction of the demand for necessities, rather than to indulgence in extravagances or the gratification of a desire for luxuries." 140325—FI 1 9 1 9 — 2 1.8 REPORT ON THE FINANCES. Credit expansion must be carefully distinguished from currency expansion. The primary cause of high prices was the demand for coinmodities.by the European belligerents before our entry into the war and by the United States and the European belligerents combined after our entry into the war. So far as the United States Government was concerned, payment by the Government for war commodities rendered inevitable a certain measure of credit expansion, as it was impossible to bring about at once a restriction of private consumption by our people commensurate with the growing needs of the Government. This credit expansion, therefore, was the effect of the war demand for commodities by the United States Government and a necessary concomitant of t h a t demand. The primary cause of high prices was war demand for commodities; credit expansion was a necessary concomitant thereof, and currency expansion an effect of the rise of prices. The following is a copy of Gov. Harding's letter to the chairman of the Senate Committee on Banking and Currency: WASHINGTON, August 8, 1919. DEAR SIR: The Federal Reserve Board acknowledges receipt of your letter of the 5th instant asking for an expression of its views as to the advisability of legislation providing for the gi'adual reduction of the currency in circulation as proposed by Senate Resolution 142. • The Board would suggest that in determining whether or hot legislation is necessary or desirable to regulate the volume of currency in circulation, consideration be given to the various forms of money which make up the sum total of our volume of currency. A distinction should also be drawn between the stock of money in the country and the amount actually in circulation. With respect to gold coin, gold certificates, standard silver dollars, silver certificates, subsidiary silver and Treasury notes of 1890, the Board assumes that it is recognized that no legislation is necessary. The United States notes, or legal tenders, which have remained at the fixed amount of $346,681,016 since March 31, 1878, have not been a disturbing factor since the passage of the act of March 14. 1900. An adequate gold reserve of more than 45% is now held against these notes, most of which are in the form of small bills of $1, $2, and | 5 denominations. Notes of these denominatons are needed in the daily transactions of the public, and were the United States notes to be retired, the issue of an equal volume of small bills in some other form of currency would be necessary. To efiect the retirement of the United States notes, funds would have to be withdrawn from the Treasury to be supplied either by taxation or by the sale of interestbearing obligations. The Board does, not believe that any legislation with respect to United States notes is necessary or desirable at this time. The national bank notes outstanding on August 1,1919, amounted to 1658,118,555.00, a reduction of nearly $60,000,000 since July 1, 1914. The greater part of these notes is secured by United States 2% bonds, and provision has already been made in Section 18 of the Federal Reserve Act for their gradual retirement. Federal reserve bank notes, which are secured by United States obligations and are taxed just as national bank notes are, have been issued only to replace in part national bank notes retired, and standard silver dollars melted or broken up and sold as bullion under authority of the act of April 28, 1918, known as the Pittman Act. SECRETARY OF THE TREASURY. 19 The issue of these notes has, therefore, brought about no increase in the circulating medium. The amount of Federal reserve notes outstanding has increased from $357,239,000 on April 1, 1917, to $2,504,753,000 on August 1, 1919. It appears therefore that those who see in the larger volume of circulation in the United States the prime cause of increased costs of living and who>seek a remedy by a forced contraction of the currency must have in mind the Federal reserve note and Section 16 of the Federal Reserve Act as amended June 21, 1917, which provides for its issue and redemption. lucanalyzing our present monetary situation, and in considering the causes which have led to the expansion of credits and note issues during the war, we should not lose sight of some of the.4evelopments-of the pre-war period and of their effect upon credits and prices. Very heavy'purchases of supplies of all kinds were made in this country by European belligerents during the years 1915 and 1916, payment for which involved the shipment to us of large amounts of gold. The stock of gold in.the United States on July 1, 1914, was $1,890,678,304. This amount increased steadily until April, 1917, the date of our own entry into the war, when it reached $3,088,904,808, an increase of about $1,200,000,000. Bank deposits likewise show a large increase, the net deposits of national banks having risen from $7,495,149,000 on June 30, 1914, to $10,489,217,000 on March 5, 1917, while the net deposits of all banks in the United States increased from $17,966,150,000 in June, 1914, to $24,891,218,000 in June, 1917. Net deposits of national banks had further increased up tp May 12, 1919, to $11,718,095,000, and those of all banks in June, 1918, (the latest date for which figures are available) to $26,769,. 546,000. Shortly after April 6, 1917, when the Congress declared war, the Treasury began to sell bonds, notes and certificates in large amounts resulting in. a net increase in the public debt to August 1, 1919, of $24,518,064,840. On July 1, 1914, the total stock of nioney in the United States, exclusive of that held by the United States Treasury, was $3,419,168,368. ,0n April 1, 1917, the stock of money, estimated on the same basis, was $4,702,130,941, an increase of $1,282,962,573 of which increase $883,481,028 was in gold. On July 1, 1914, there were no Federal reserve notes in existence, while on April 1, 1917, there were outstanding $357,239,000. The amendment to the Federal Reserve Act approved June 21, 1917, changed substantially the original reserve requirements for member banks and provided that their entire lawful reserve should be carried with the Federal reserve banks. The same amendment authorized the Federal reserve banks to exchange I'ederal reserve notes for gold. The result of these two changes in the law was to transfer immediately large sums of gold from the vaults of the member and nonmember banks and from general circulation to the Federal reserve banks, and this caused a change in the methods of accounting for gold by the Federal reserve banks and Federal reserve agents. In order to avoid confusion in determining the volume of money in actual circulation, it is necessary to distinguish between tables showing the total stock of money in the country, and tables showing the circulation outside of the Treasuiy and Federal reserve agents' vaults, and to limit our view to amounts helcj by member and nonmember banks and the public, which are exclusive of amounts on hand at Federal reserve banks, held by Federal reserve agents, and held in. the Treasury. The reserve money held by or for the Federal reserve banks serves, of course, as a basis for credit, but it forms no part of the currency in circulation. Upon, this basis, the amount of money in circulation on July 1, 1914 (there being no Federal reserve banks in operation at that time), was $3,419,168,368, made up as follows: Gold coin and certificates $1,649,775,803; silver dollars and silver certificates, including Treasury notes of 1890, $552,203,610; all other currency $1,217,188,955, being circulation per capita $34.53. " 20 REPORT :0N THE FINANCES. The corresponding amounts of money in circulation on April 1, 1917, December ] , 1918, and August 1, 1919, are shown in the following table: Amount of money outside the Treasury and Federal reserve banks. Aug. 1, 1919. Apr. 1,1917. Dec. 1,1918. Gold coin and certificates Silver dollars and silver certificates (including Treasury notes of 1890) Federal Reserve notes Federal Reserve barik notes All other currency $1,989,152,000.00 $861,245,000.00 S728,046,000.00 532,700,000.00 357,239,000.00 3,170,000.00 1,218,715,000.00 372,489,000.00 2,607,445,000.00 87,737,000.00 1,201,069,^000.00 241,505) 000.00 2,504,753,000.00 166,289,000.00 1,156,297,000.00 Total : Amount per capita outside the Treasury and the Federal Reserve banks 1 4,100,976,000.00 5,129,985,000.00 4,796,890,000.00 39.54 48.13 45.16 Assuming that the date December 1, 1918, marks the beginning of the post-war period, the table shows changes during this period up to August 1, 1919. as follows Gold coin and certificates in circulation decreased $133,199,000; silver dollars and silver certificates, including Treasury notes of 1890, decreased $130,984,000; Federal reserve notes decreased $102,692,000; Federal reserve bank notes increased $78,552,000; all other currency decreased $44,772,000, being a net decrease in circulation for the post-war period of $333,095,000, or $2.97 per capita. In considering the question of currency in circulation, there should be taken into account the various factors which have entered into the demand for currency, among which are: The gradual enlargement of pay rolls, both as to the number of workers and amount paid to each; the effect of higher wages upon deposits in banks and upon the amounts of money carried by shopkeepers in their tills and by individuals in their pockets; the amounts of nioney locked up or carried on their persons by workmen who have been receiving high wages and who, especially in the case of ignorant foreigners, are unwilling to deposit their savings in banks or to invest in Government bonds; the amount of money carried away by workmen returning to their homes in foreign countries; and the fact that the circulating media of the Philippine Islands, Hawaii, Cuba, Porto Rico, Santo Domingo, Efaiti, Honduras, Panama, and ih part, Mexico, includes United States paper currency and subsidiary silver. The amount required in these countries, most of which are very prosperous, have greatly increased in the last few years. The total foreign cu'culation of United States currency can not be stated accurately, but is estimated to be at least one hundred and fifty million dollars. The difficulty, indeed the impossibility, of keeping in circulation an excessive volume of Federal reserve notes should be understood. The issue of these notes has been carefully safeguarded by the Federal Reserve Act, and ample provision has been made for their redemption. Federal reserve no'tes are redeemable in gold; they can not be forced into circulation in payment of the expenses of the Government, or for any other purpose, as they can be issued only in exchange for gold or against a deposit of negotiable paper growing out of a legitimate commercial transaction, plus the required gold reserve of not less than 40 per centum. Upon payment of commercial paper which has been deposited to secure Federal reserve notes, there results either an immediate return of an equal amount of notes to the bank, or an automatic increase ih the percentage of gold reserve available for their redemption. Federal reserve notes are not legal tender, nor do they count as reserve money for member banks. They are issued only as a need for them develops, and as they become redundant in any locality they are returned to the Treasury at Washington, or to a Federal reserve bank for redemption. Thus there can not at any time be more Federal reserve notes SECRETARY OF T H E TREASURY. 21 in circulation than the needs of the country at the present level of prices require, and as the need abates the volume of notes outstanding will be correspondingly reduced through redemption. The increased volume of Federal reserve notesi in circulation during the past three years, in so far as it is not the result of direct exchanges for gold and gold certificates which have been withdrawn from circulation, is the effect of advancing wages and prices, and not their cause. There has undoubtedly taken place during the last two years a cei'tain amount of credit expansion which, under the circumstances connected with our war financing, was inevitable, b u t this will be corrected as the securities.issued by the United States Government for war purposes are gradually absorbed by investors. This credit expansion is equal to the difference between the total of the war, exp<3nditures of the Government on the one hand, and on the other, the total amounts raised, by the Government through taxation and by the sale of its obligations so far as paid for out of savings.. No reliable estimate can be made of this difference, which must be gradually absorbed! through future savings for the reason that banks are lending and will always lend! freely on Government bonds as collateral. The principal cause of the advance of prices before and during the war was the urgent need of the governments of the allied world for goods of all Ikinds for quick delivery in large volume, and the competition of this buying by governments with purchases by private individuals who failed to contract their expenditure's at a rate commensurate with the growing expenditures of these governments. I n the post-war period, through which we are now passing, the country has experienc:ed rising prices owing, in part, to a general relaxation of the war-iime regime.of personal economy, resulting in an increased demand for commodities by individuals who restricted their purchases during the war b u t who are now buying in competition with export demand. I n addition, accrued incomes and increased wages have led to heavy demands for commodities not of prime necessity, which have resulted in diverting labor and material from essentials to nonessentials. The Federal Reserve Board believes that any currency legislation at this t i m e is unnecessary and undesirable, and would suggest that whether -Ndewed from an economic or financial standpoint, the remedy for the present situation is the same, namely,, to work and to save; to work regularly and efficiently in order to produce and distribute the largest possible volume of commodities; and to exercise reasonable economies in order that money, goods, and services may be devoted ]orimarily to the liquidation of debt and to the satisfaction of the demand for necessities, rather than toindulgence in extravagances or the gratification of a desire for luxuries. The war isover—in a military sense—and while the bills have been settled by loans to the Government, these obligations, so far as they are carried by the banks, must be absorbed before the war chapter of the financial history of the country can be closed. Very truly, yours, W. P. G. H A R D I N G , Governor.. Hon. GEO. P. MCLEAN, Chairman Committee on Banking and Currency, United States Senate, Washington, D . C^ 22 REPORT ON T H E FINANCES. ECONOMY. Accepting a warning from the innumerable requests that are constantly being pressed upon the Congress for grants from the general fund, it becomes the clear duty pf this department to point out that there appears to be grave danger that the extraordinary success of the Treasury in financing the stupendous war expenditures may le.ad to a riot of public expenditure after the war, the consequences of which could only be disastrous. It can not be too often repeated or too strongly urged that the optimistic outlook of the future of the 'Government's finances, as presented in the beginning of this report, ts based upon the practice of the most rigid economy and the continuance of ample revenues from taxation. Any other policy means £i calamitous upsetting of the entire program. Government expenditure is, I need scarcely say, the most vital, fundamental factor in increasing the cost of living. Its evil effect in that respect is mitigated, but can not be wholly eliminated, by the wisdom and practical success of the financial measures adopted by the Government to meet its expenditures. Roughly speaking, the worst of these methods (which has been adopted in greater or less degree in the countries of Europe and not at all in the United States) is currency inflation. Far less harmful as a means of financing Government expenditures is the issue of bonds, notes, and other obligations of the Government, which, to the extent that they find lodgment in the hands of investors who pay for them from savings, are a means of meeting expenditures without expansion. The least harmful of all means of meeting Government expenditures is taxation, because this enforces a considerable measure of saving on the part of the taxpayer, who is not, as in the case of loans, furnished with a new basis of credit in exchange for the buying power he transfers to the Government. Of taxes the least harmful is the personal-income tax, graduated in accordance with the means of the taxpayer, since this is a direct tax and is only with great difficulty and to a limited extent shifted to the consumer. Indirect taxes, such as protective tariffs, consumption taxes, and the excess-profits tax, though less harmful than currency inflation or loans, and having a less direct effect in increasing the cost of living, nevertheless have an appreciable influence in that direction. Inevitably, then. Government expenditure increases the cost of living. The function of the Treasury, once the expenditure has been determined upon, is to devise means of meeting it with the least injurious results. What increases the general cost of living imposes an indirect tax on the whole people of the United States which, in the nature of things, bears more heavily upon the poor than upon the rich, and upon the needy than upon the poor, because expenditures for SECRETARY OF THE TREASURY. 23 the necessities of life absorb practically the whole income of the poor and needy and a negligible portion of the income of the rich. Measures for governmental expenditures for the benefit of a portion bf the community at the expense of the whole by adding to the cost of living, and to the burden it imposes upon the community as a whole, will only aggravate evils which the.sentimental supporters of. those measures think to mitigate, and the burdens thus imposed invariably fall most heavily upon those least able to bear them. I have ventured thus to recall to mind the general f>rinciples of economics and finance which underlie the present situation and which so frequently are ignored by the advocates of specific policies and measures that are subversive of sound principles. I discussed the matter somewhat in detail before the House Select Committee on the Budget on October 4, and my statement to that committee is quoted elsewhere in this report under the heading ^'A Budget System." It is earnestly urged that the- Congress deny every proposal for expenditures in new fields or the continuance or expansion of old unless they represent imperative and unquestioned need. This policy is particularly important in this period, when the solution of the problem of the cost of living is to be found in such large measure in the most rigid economy in public expenditure and in the firm determination to meet that expenditure from current taxes. TAXATION. Though any appreciable reduction in the amount of the revenues from taxation is not to be thought of during a fiscal year when the Government's current disbursements wiU exceed its current receipts, when its unfunded debt amounts to upward of $3,736,000,000 (October 31, 1919, on the basis of daily Treasury statements), and when the Congress is considering various measures carrying vast additional appropriations, it is, I believe, the duty of the Congress to give its closest attention. to the study of the incidence of taxation with a view to the revision of the revenue act on lines which will produce the necessary revenue with the minimum of inconvenience and injustice. The Treasury's objections to the excess-profits tax even as a war expedient (in contradistinction to a war-profits tax) have been repeatedly voiced before the committees of the Congress. Still more objectionable is the operation of the excessprofits tax in peace times. It encourages wasteful expenditure, puts a premium on overcapitalization and a penalty on brains, energy, and enterprise, discourages new ventures, and confirms old ventures in their monopolies. In many instances it acts as a consumption tax, is added to the cost of production upon which profits axe figured in 24 . REPORT ON THE FINANCES. determining prices, and has been, and will, so long as it is maintained upon the statute books, continue to be, a material factor in the increased cost of living. The revenue sacrificed by elimination or reduction of this tax must be sought in an increase of the normal income tax (from which the income on Liberty bonds is exempt) and of the lower brackets of the surtax. The upmost brackets of the surtax have already passed the point of productivity, and the only consequence of any further increase would be to drive possessors of these great incomes more and more to place their wealth in the billions of dollars of wholly exempt securities heretofore issued and still being issued by States and municipalities, as well as those heretofore issued by the United States. This process not only destroys a source of revenue to the Federal Government, but tends to withdraw the capital of very rich men from the development of new enterprises and place it at the disposal of State and municipal governments upon terms so easy to them (the cost of exemptions from taxation falling more heavily upon the Federal Government) as to stimulate wasteful and nonproductive expenditure by State and municipal governments. In that connection I call attention to the urgent necessity of revision of the revenue law so as to require that, for the purpose of ascertaining the amount of surtax payable by a taxpayer, his income from State and municipal bonds shall be reported and included in his total income, and the portion of his income which is subject to taxation taxed at the rates specified in the act in respect to a total income of such amount. The Treasury's recommendations in this respect have been transmitted to the appropriate committees of Congress in connection with the Eevenue Act of 1918, and again in the present calendar year. Under the present law a person having an income of, say, $1,000,000,from taxable securities would, upon the sale of half his property and the investment of the proceeds of that half in State or municipal bonds, not only obtain exemption for the income derived from such investment in State and municipal bonds, but greatly reduce the surtaxes payable in respect to his other income. It is intolerable that taxpayers should be aUowed, by purchase of exempt securities, not only to obtain exemption with respect to the income derived therefrom, but to reduce the supertaxes upon their other income, and to have the supertaxes upon their other income determined upon the assumption, contrary to fact, that the> are not in possession of income derived from State and municipal bonds. It is impossible to determine the actual gain in revenue to the Government which would result from such an amendment of the law. That it would be very material I have no doubt. A still more SECRETARY OF T H E TREASURY. 25 important result of the amendment of the law in this respect, however, would be the reflex beneflt to Liberty bonds which carry exemption from normal income tax, but as to the great bulk not from surtaxes. The very great advantage the States and municipalities now have in conferring upon holders of their bonds larger exemptions from Federal taxation than the Federal Government itself confers upon holders of Liberty bonds should be reduced, so far as it may be reduced, by the adoption of appropriate administrative provisions in the Federal revenue law. A question has been raised concerning the right of the Federal Government under the Constitution to tax the incomes from State and municipal bonds, but there can be no doubt of the constitutionality of such an administrative provision. The proposal is not to tax the income derived from State and municipal securities, but to prevent evasion of the tax in respect to other income. The principles involved are abundantly established in the decisions of the Supreme Court sustaining taxes upon corporations, bank stock, etc., computed after taking into account income derived from Government, State, and municipal bonds. I am calling attention to these matters because it is of the utmost importance that the Congress should follow the wise precedent adopted by the last Congress in determining in advance of the year's business the basis upon which taxes are to be imposed. Uncertainty in respect to taxation during any given business period results in each taxpayer's setting aside for taxes an ample margin to cover variations in the tax law which may affect him onerously and calculating his costs and prices on that basis. Even a bad law is better than a retroactive law. I t is, therefore, of the utmost importance, in my judgment, that the Congress should give consideration in the calendar year 1920 to the question of revision of the tax law with a view to making such revision effective well in advance in respect to the incomes and proflts of the calendar year 1921. The administration of the RevenueAct of 1918 is discussed later under the heading ^^ Bureau of Internal Revenue." THE COST OF THE WAR. The total expenditures of the Government, exclusive of the principal of the public debt and postal disbursements from postal revenues, for the war period from April 6, 1917, to October 31, 1919, amounted to $35,413,000,000, according to statistics compiled on the basis of the daily Treasury statements. Of that great total covering the disbursements for two years and seven months, $11.,280,000,000, or nearly 32 per cent,'was met out of tax receipts and other revenues than borrowed money, although the amount of taxes does not include 26 REPORT ON T H E FINANCES. the December 15, 1919, installment of income and proflts taxes for the flscal year 1919, nor any part of such taxes for the flscal year 1920. The above calculation includes capital outlays as well as expenditures that have been permanently absorbed. No deduction is made for loans to the Allies, or for other investments, such as ships, stock of the War Finance Corporation, bonds of the Federalland banks, etc.. Foreign loans on October 31, 191&, aggregated $9,406,000,000, and if that amount is deducted from the total expenditures, the disbursements for the purposes of the American Government during the war period under consideration were $26,007,000,000. And on that basis, the proportion met out of tax receipts and revenues other than borrowed money was over 43 per cent. If it is assumed that the expenses of the Government on a peace basis would have been at the rate of $1,000,000,000 a year, or $2,583,000,000 for the two years and seven months mentioned, the estimate of the gross cost of the war to October 31, 1919, would be $32,830,000,000, inclusive of loans to foreign Governments, or $23,424,000,000 exclusive of such loans. The following tables, based on the daily Treasury statements, show the classifled disbursements and receipts, exclusive of the principal of the public debt, by months, from April 6, 1917, to October 31, 1919, and the total disbursements and receipts for that period: Classified disbursements, exclusive of the principal of the public debt, by months, from Apr. 6, 1917, to Oct. 31, 1919, as published in the daily Treasury statements. Apr. 6 to 30, 1917 May, 1917 June, 1917 (revised) Total Apr. 6 to June 30, 1917 •.. July, 1917 August, 1917 September, 1917 October, 1917 November, 1917 December, 1917 January, 1918 February, 1918. March, 1918 April, 1918 May, 1918 June, 1918 Total for flscal year 1918.. July, 1918 August, 1918 September, 1918 October, 1918 November, 1918 December, 1918 January, 1919 February, 1919 March, 1919 April, 1919 May, 1919 Jime, 1919.... •.., : Total for fiscal year 1919.. Ordinary. Foreign loans. Other special 871,328.006.70 114,102,809.68 131,687,849.61 $200,000,000.00 407.500,000.00 277,500,000.00 $7,885,770.50 4,962,746.28 919,445.78 $279,213,777.20 526,565.555.96 410,107,295.39 317,118,665.99 885,000,000.00 13,767,962.56 1,215,886,628.55 208,299,031.05 277,438, 000.64 349,013, 305.34 462,045, 359.94 512,952, 035.17 611,297, 425.62 715,302, 039.83 675,209, 068.43 819,955, 367.26 910,756,758.95 1,068,203,026.82 1.263,914, 905.86 452,500,000.00 478,000,000.00 396,000,000.00 480,700,000.00 471,929,750.00 492,000,000.00 370,200,000.00 325,000,000.00 317,500,ooo:00 287,500,000.00 424,000,000.00 242,700,000.00 1,511,814.92 2,019,363.50 1,364,980.35 1,623,392.58 1,200,022.36 1,914,433.70 4,854,005.86 12,477,917.31 18,338,4.41.98 17,031,020.28 15,992, 206.83 5,958, 796.56 662, 310,845.97 757 457,364.14 746,378,285.69 944, 368,752.52 986, 081.807.53 1,105, 211,859.32 1,090, 356,045.69 1,012, 686,985.74 1,155, 793,809.24 1,215;287,779.23 1,508,195,233.65 1,512, 573,702.42 7,874,386,324.91 4,738,029,750.00 84,286,396.23 12,696,702,471.14 1,259,782, 599.23 1,524,901, 777.74 1,274,505, 845.05 1,174,622, 406.40 1,655,051, 004.19 1,670,890. 396.88 1,059,580; 520.24 1,035,130; 805.19 1,042,182, 523.55 1,003,862, 122.73 907,492, 923.94 727,845, 814.48 343,485,000.00 279,250,000.00 282,150,000.00 489,100,000.00 278,949,697.70 389,052,000.00 290,250,800.00 145,397,302.30 322,350,000.00 409,008,608.27 194,911,857.29 54,750,000.00 5,015,055.21 1,361,445.28 608,440.22 1,139,854.59 1,248,607.04 1,033,458.60 12,519,629.59 9,385,796.13 15,279.261.96 15,457,575.38 9,932,690.50 26,794,135.35 1,608, 282,654.44 1,805, 513,223.02 1,557; 264,285.27 1,664, 862,260.99 1,935 249,308.93 2,060; 975,855.48 1,962, 350,949.83 1,189, 913,903.62 1,379, 811,785.51 1,428, 928,306.38 1,112, 337,471.73 809, 389,949.83 14,935,848,739.62 3,479,255,265.56 99,775,949.85 18,514,879,955.03 Total. 27 SECEETARY OF THE TKEASUEY. Classified disbursements, exclusive of the principal of the public debt, by months, from Apr. 6, 1917, to Oct. 31, 1919, as published in the daily Treasury statements—Gon. Ordinary. July, 1919 August, 1919 September, 1919. October, 1919 TotalJulyltoOct.31,1919 Foreign loans. Other special. Total. $878,411,103.11 709,827,320.86 565,618,231.14 524,724,964.06 $97,650,000.00 54,275,945.99 102,006,000.00 50,154,927.00 $212,467.23 1,694,477.53 1402,600.90 1,469,314.52 $976,273,570.34 765,797,744.38 667,221,630.24 576,349,205.68 2,678,581,619.17 304,086,872.99 2,973,658.38 2,985,642,150.54 885,000,000.00 317,118,665.99 7,874,386,324.91 4,738,029,750.00 14,935,848,739.62 3,479,255,265.56 2,678,581,619.17 304,086,872.99 13,767,962.56 84,286,396.23 99,775,949.85 2,973,658.38 1,215,886,628.55 12,696,702,471.14 18,514,879,955.03 2,985,642,150.54 9,406,371,888.55 200,803,967.02 35,413,111,205.26 RECAPITULATION. Apr. 6 to June 30,1917 Fiscal year 1918 Fiscal year 1919 July 1 to Oct. 31, 1919 Grand total 25,805,935,349.69 » Excess of credits. Classified receipts, exclusive ofthe principal ofthe public debi, by months, from Apr. 6,1917, to Oct. 31,1919, as published in the daily Treasury statements. to 00 Customs. Apr. 6 to 30,1917 May, 1917 J u n e , 1917 (revised) T o t a l A p r . 6,1917, to J u n e 30,1917 J u l y , 1917. A u g u s t , 1917 S e p t e m b e r , 1917. October, 1917 N o v e m b e r , 1917 D e c e m b e r , 1917 . J a n u a r y , 1918 F e b r u a r y , 1918 March, 1918 A p r i l , 1918 M:ay, 1918 J u n e , 1918 '. ; : T o t a l for fiscal y e a r 1918 July,1918 A u g u s t , 1918 S e p t e m b e r , 1918 October, 1918 N o v e m b e r , 1918 D e c e m b e r , 1918 J a n u a r y , 1919 F e b r u a r y , 1919 March, 1919 A p r i l , 1919 M a y , 1919 J u n e , 1919 T o t a l for fiscal year 1919 July,1919 A u g u s t , 1919 S e p t e m b e r , 1919 October, 1919 T o t a l J u l y 1,1919, to Oct. 31,1919. Income and profits t a x . Miscellaneous internal revenue. Miscellaneous revenue. P a n a m a Canal.. Total. $17,863,547.22 28,660,148.60 18,686,805.14 $24,075,386.24 107,601,090.34 195,230,281.19 $35,387,512.86 50,009,778.45 56,993,915.16 $5,804,920.33 11,361,950.32 14,120,100.17 $314,793.31 634,421.46 694,056.30 $83,446,159.96 198,267,389.17 285,725,157.96 65,210,500.96 326,906,757.77 142,391,206.47 31,286,970.82 1,643,271.07 567,438,707.09 15,805, 129.91 15,902; 255.99 15,201,388.70 13,647, 946.24 11,935, 389.41 11,247,214.10 12,163, 216.06 12,019, 441.74 18,106,373.13 16,445,531.99 19,925 706.94 17,598, 789.28 9,478,880.98 4,248,091.69 6,026,475.01 5,987,904.91 6,720,898.26 13,725,534.51 11,428,560.88 13,200,936.38 31,424,027.09 83,012,299.95 342,104,796.75 1,786,647,885.43 50,895, 959.22 43,922, 598.77 41,265, 393.95 50,318, 414.27 81,536, 702.42 61,425,075.62 61,665, 347.96 59, l i s ; 478.32 89,635, 237.66 93,113, 711.68 135,081,929.01 104,052,171.39 7,575,979.09 9,839,107.31 12,967,317.09 20,226,866.64 39,175,579.26 18,034,677.89 17,796,189.59 14,177,234.29 16,536,309.47 16,111,894.79 97,254,972.78 22,817,686.62 171,687.08 584,477.10 648,787.75 277,158.50 122,208.09 626,568.30 302,895.38 585,348.96 1,047,330.70 635,705.85 378,705.51 655,481.06 83,927,636.28 74,496,530.86 76,109,362.50 90,458,290.56 139,490,777.44 105,059,070.42 103,356,209.87 99,098,439.69 156,749,278.05 209,319.144.26 594,746,110.99 1,931,772,013.78 179,998,383.49 2,314,006,291.84 872,028,020.27 292,513,814.82 6,036,354.28 15,837, 889.72 14,175, 802.76 12,719, 024.43 11,453, 096.69 12,583, 861.29 9,681, 907. 59 12,732, 514.54 14,979, 078.02 17,876, 270.46 20,141, 486.97 20,896, 644.65 21,3S0, 290.27 497,496 376.62 30,795; 666.13 36,308, 166.21 30,136, 620.58 28,820, 184.49 61,916,648.37 43,141,373.49 30,341,342.50 1,129,821,269.04 107,696, 034.35 50,614, 139. 20 971,695,866.31 105,948, 066.11 83,736, 123.50 89,005, 937.44 93,327, 251.94 99,743,394.83 117,658,483.35 112,287, 675.18 94,310, 163.04 118,240, 897. 00 135,059, 064.46 115,265, 091.71 131,919, 143.11 21,974 810.55 22,645 000.23 .13,757;134.67 16,058,975.73 169,112,403.43 14,213,636.93 27,054, 788.82 22,361, 050.46 31,555, 382.12 159,228! 529.45 92,026! 548.47 56,151',439.19 619,994.14 899,439.10 94,391.05 604,815.02 734,419.15 431,587; 99 626,489.31 767,529.81 355,127.60 427,185.33 459,786.65 353,824.88 3,664,582,864.70 641 877,137.14 ' 152, 252,031.72 151 884,653.80 151,580,759.96 310, 994,263.19 203, 902,264.23 195, 842,841.34 162, 759,163.83 1,297,848,946.22 422, 552,300.56 279, 262,210.68 1,181, 500,563.76 184,457,867.39 3,018,783,687.29 1,296,501,291.67 6,374,590.03 5,152,257,136.43 20,498,245.83 21,053,662.06 24,724,214.48 24,276,476.04 44,043,414.30 28,615,312.08 944,897,366.34 34,903,495.13 110,038,601.29 113,817,095.93 140,757,151.39 139,333,735.95 52,821,655.11 104,727,062.34 31,852,288.83 58,201,459.39 90,552,598.41 1,052,459,587.85 503,946,584.56 247,602,465.67 646,139,700. 05 379,786.49 325,698. 55 324,424.13 394,588.72 1,424,497.1 O H O •H M 227,781,703.02 268,538,830. 96 1,142,555,445.17 257,109,755.23 1,895,985,734.38 ^ o RECAPITULATION. A p r . 6, 1917 to J u n e 30,1917 Fiscal year 1918 Fiscal year 1919 J u l y 1, 1919 t o Oct. 31,1919 ...._. Grand total 65,210,500.96 179,998,383.49 184,457,867.39 90,552,598.41 326,906,757.77 2,314,006,291.84 3,018,783,687.29 1,052,459,587.85 142,391,206.47 872,028,020. 27 1,296,501,291.67 503,946,584.56 31,286,970.82 292,513,814.82 646,139,700.05 247,602,465.67 1,643,271.07 6,036,354.28 6,374,590.03 1,424,497.89 567,438,707.09 3,664,582,864.-70 5,152,257,136.43 1,895,985,734.38 520,219,350.25 6,712,156,324.75 2,814,867,102.97 1,217,542,951.36 15,478,713.27 11,280,264,442.60 Total receipts and disbursements from Apr. 6, 1917, to Oct. 31, 1919, as published in the daily Treasury statements. RECEIPTS. DISBURSEMENTS. Net balance in the general fund Apr. 5, 1917 $92, 317, 710. 27 Receipts, exclusive of principal of public debt, Apr. 6, 1917, to Oct. 31, 1919 11,280,264,442.60 Public debt receipts, Apr. 6, 1917 to Oct. 31, 1919. 55, 234, 272, 754. 36 Disbursements, exclusive of principal of public debt, Apr. 6, 1917, to Oct. 31, 1919 $35, 413, 111, 205. 26 Public debt disbursements, Apr. 6,1917 to Oct. 31, 1919 30,305,711,180.75 Net balance in the general fund Oct. 31, 1919 888,032,521. 22 .66,606,854,907.23 66, 606, 854, 907. 23 o > O ^^ H H to CO 30 EEPOKT ON T H E FINANCES. There is attached hereto as Exhibit 3, page 219, a table showing the cash expenditures of the Government for the fiscal years 1917, 1918, and 1919, as published in the daily Treasury statements and classifled according to departments. THE PUBLIC DEBT. The gross public debt, on the basis of the daily Treasury statements, amounted to $26,210,530,000 on October 31, 1919, without any deduction for loans to the Allies or other investments. Of this sum, only $3,736,352,000 was in the form of Treasury certiflcates or floating debt. The total figures mentioned represented a gross debt increase since April 6, 1917, of $24,928,561,000. Deductmg the net increase in the general fund balance from the gross debt increase results in a net debt increase for the war period from April 6, 1917, to October 31, 1919, of $24,132,846,000. ^ The following statement shows the debt classified by issues and the gross and net increase for the war period: Public debt Oct. 31, 1919, on the basis of the daily Treasury statements. Bonds: Consols of 1930 Loan of 1925 Panama's of 1916-1936 Panama's of 1918-1938 Panama's of 1961 Conversion bonds Postal savings bonds $599, 724, 050. 00 118, 489, 900. 00 48, 954,180. 00 25, 947, 400. 00 50,000,000. 00 i. 28, 894, 500! 00 11, 453,100. 00 —•• $883,463,130.00 1, 984, 783, 330. 00 3, 526, 377, 747. 60 3, 904, 313,017. 50 6, 613, 907,148. 00 16, 029, 381, 243.10 First Liberty loan Second Liberty loan Third Liberty loan Fourth Liberty loan Total bonds Notes:" Victory Liberty loan Treasury certificates: Loan and tax Pittman Act Special issues 16, 912, 844,' 373.10 4, 413, 933,116. 53 3, 465,136,000. 00 255,475,000.00 .. 15, 741, 300. 37 War-savings certificates (net cash receipts) Old debt on which interest has ceased Total interest-bearing debt Noninterest-bearing debt Total gross d e b t . ....« 3, 736, 352, 300. 37 910, 684,987. 44 2,144,970. 26 25, 975, 959, 747. 70 234,570, 522.19 26,210,530,269.89 31 SECBETAEY OF THE TREASUKY. Gross and net increase of the public debt for the war period, Apr. 6, 1917, to Oct. 31, 1919, on the basis of the daily Treasury staternents. Total disbursements for war period, exclusive of principal of public debt. $35,413, 111, 205.26 Total receipts for war period, exclusive of principal of public debt -. '. 11,280,264,442.60 Excess of disbursements over receipts for war period 24,132,846,762.66 Total gross debt Oct. 31,1919... $26,210,530,269.89 Total gross debt Apr. 5,1917.... 1,281,968,696.28 Gross debt increase foi" war period 24,928,561,573.61 Net balance in the g e n e r a l fund Oct. 31, 1919 S888,032,521.2:2 Net balance in the g e n e r a l fund Apr. 5, 1917 92,317,710.27 Net increase in balahce in general fund 795,714,810. 95 Net debt increase for war peri od 24,132,846,762. 66 There is attached hereto as Exhibit 4, page 220, the financial statement of the United States Government as of June 30, 1919, which shows the state of the Treasury and of the public debt on that date. THE FOURTH LIBERTY LOAN. The annual report of the Secretary of the Treasury for the fiscal year 1918 reported the approximate final results with respect to subscriptions to the fourth Liberty loan. I t was necessary subsequently to make several adjustments in the compilation. The figures, corrected to September 30, 1919, show that the total amount of subscriptions allotted was $6,992,927,100. The amount of bonds issued and deliverable as a result of these subscriptions was $6,964,524,650. This was the largest of the Liberty loans and was the greatest issue of bonds in history. I t is estimated that the vast amount allotted was subscribed by 22,777,680 persons. Eighty-four per cent of that number subscribed in amounts of $50 and $100, while more than 99 per cent subscribed in amounts ranging from $50 to $10,000. The following table shows the subscriptions allotted, payments received, and original deliveries of coupon and registered bonds as of September 30, 1919: The fourth Liberty loan^-Statement of subscriptions allotted, payments received, and original delivery of coupon and registered bonds as of Sept. 30, 1919. Boston. New York. Philadelphia. Cleveland. Richmond. Subscriptions allotted S632,101,250 $2,044,901,750 S598,763,650 S701,!;i09,800 $352,685,200 Payments received by Treasurer of United States : 632,101,250 2,044,901,750 598,763,650 '701,S>09,800 352,685,200 Less part payments 632,101,250 2,044,901,750 598,763,650 701,^109,800 352,685,200 Original delivery—Coupon bonds 574,977,4'50 Original delivery—Registered bonds. 57,123,800 Original delivery—Total 632,101,250 1,889,516,600 155,385,150 577,866,400 20,897,250 636,847,700 65,062.100 316,264,000 36,421,200 2,044,901,750 598,763,650 701,909,800 352,685,200 Full-paid subscriptions Deliverable against full-paid subscriptions 32 REPORT ON THE FINANCES. The fourth Liberty loan—Statement of subscriptions allotted, payments received, and original delivery of coupon and registered bonds as of Sept. 30, 1919—Continued. Atlanta. Chicago. St. Louis. Minneapolis. Subscriptions allotted S217,885,200 $969,209,000 $295,340,250 $242,046,050 Paynjents received by Treasurer of United States... 217,816,808 969,209,000 295,340,250 242,046,050 12,308 Less part payments Full-paid subscriptions 217,804,500 Original delivery—Coupon bonds Original delivery—Registered bonds Original delivery—Total. 969,209,000 295,340,250 242,046,050 195,244,050 840,150,950 22,508,450 129,058,050 253,415,200 41,925,050 209,367,350 32,678,700 217,752; 500 969,209;000' 295,340,250- 242,046,050 Deliverable against full-paid subscriptions 52,000 Kansas City. Dallas. San Francisco. Special. Total. Subscriptions allotted : $295,951,450 $145,997,950 $462,250,000 $33,885,550 $6,992,927,100 Payments received by Treasurer of the United States 295,949,750 145,978,405 462,242,190 5,596,950 6,964,541,053 16,403 Less part payments 2,905 990 200 145,97.5,500 462,241,200 5,5S6,950 6,964,524,650 Original delivery—Coupon bonds 219,445,750 132,719,800 13,255,700 Original delivery—Registered bonds.. 76,475,100 Original delivery—Total. 295,920,850. 145,975,500 436,417,400 25,823,750 5,594,750 2,200 6,287,827,400 676,616,500 462.241,150 5,596,950 6,964,443,900 Full-paid subscriptions Deliverable against full-paid scriptions ' 295,949,550 sub- 28,700 50 80,750 The statistical information with respect to results of the fourth Liberty loan, attached hereto as Exhibit 5, page 225, was compiled by the War Loan Organization and is based upon the subscriptions as originally reported. Since that time there have been various adjustments in the figures, particularly with respect to Army subscriptions, which, under the special plan, were subject to cancellation in certain circumstances. The final allotment and issue, corrected to September 30, 1919, is in accordance with the above table. THE VICTORY LIBERTY LOAN. Early in the calendar year 1919 it became clear that it would be necessary, as predicted in November, to issue another loan in the spring to fund the floating debt, which was rapidly accumulating as the result of mounting expenditures in the months immediately succeeding the signing of the armistice. The situation was one of very great and very grave difiiculty with respect to the successful continuation of the Government's program of war flnance. The country was passing tlirough the period of readjustment from the most colossal organization for war in our history to the normal processes of peace. This transition naturally was to be accomplished through gradual stages and inevitably was to be marked by uncertainties and perplexities that affected the whole structure of industry, SECRETARY OF THE TREASURY. - 33 business, and finance. I n addition, the cessation of hostilities, with the knowledge that the terms of the armistice made it impossible for Germany to resume flghtingj caused many people hastily to assume that the large flnancial requirements of the Government were at an end. There could be no greater error, or even calamity if the impression were not quickly eradicated. The patriotism of war had made memorable successes of four great Liberty loans, but all of the war bills had not been paid. The flfth loan, to be floated without the accompaniment of the enthusiasm and delirium of war and the presence of imminent danger in the face of a national enemy, was to test the quality of the patriotism of peace of the people of America. In the face oJ- these unfavorable conditions, the Treasury was told by men of steady judgment that we must approach the problem of the flfth loan in a distinctly cold-blooded mood; that things had assumed a different aspect; that our attitude of mind and heart was altered; that we must.consider the matter strictly from an investment point of ^dew and put the loan on a commercial basis. Some students of the situation believed it would be impossible again to appeal to the patriotism of the American people. The Treasury held no such vi(3W. Furthermore, it was impossible to float the loan strictly on a commercial basis. After floating billions of dollars of Liberty bonds, it was unthinkable to expect the assimilation, purely for investment purposes, of a loan of the proportions required. This department recognized that an appeal.must be made to the patriotism of Americans, and its unfaltering faith in the result of that appeal was never shaken. The honor of the Government was involved in the payment of the war bills; and the Government's honor is the people's honor. To have lost confldence in the loyalty of the fathers and mothers, brothers and sisters, and compatriots of the flne men who went to France to save the freedom of the world would have brought despair into the Treasury, and despair in the Treasury, of all places, would have meant the failure of the loan. I t was the desire of the department to postpone the offeririg of the issue, which it was decided to name the Victory Liberty loan in honor of the heroic achievements of our gallant Army and Navy and the successful conclusion of the war, until the latest possible date in order to give the country time to recover from the tremendous transactions involved in the fourth Liberty loan, to permit the progress of readjustment to the utmost limit, and to afford the largest measure of preparation for the issue to be floated under such unusual and untried conditions. In the circumstances, it was out of the question to determine in detail all the terms and conditions-of the loan before the third session of the Sixty-flfth Congress expii-ed 140325—FI 1919 3 . 34 , REPORT ON T H E FINANCES. by' iconstitutibaal limitation on March 4, 1919, and, consequently, it was necessary to ask the Congress for larger discretion- than had hitherto been granted, if the Government was to obtain, all the advantages accruing from the ability to fix the rate of interest and other terms, of the loan at an opportune and appropriate time in order to meet conditions as they might exist when the offering was made to the public. The subject accordingly was presented to the House Committee on-Ways and Means on February 10, 1919, in the following letter to the chairman of the committee, a copy of which also was sent to the chairman of^ the Senate Committee on Finance: WASHINGTON, D . C , February 10, 1919. D E A R M R . KITCHIN: Now t h a t the reveriue bill has passed t h e House, I desire, i n accordance with t h e intimation contained in my letter of January 15 to you and my talk with you and Mr. Fordney, to ask the attention of t h e Ways arid Means Committee to t h e necessity of t h e immediate enactment of legislation amending t h e Liberty bond acts so as to make possible the funding by a Victory Liberty loan in the spring of t h e floating debt which has been incurred and will be incurred up to that time.. T h e Victory Liberty loan could not be issued successfully now t h a t hostilities have ceased, within t h e limitations imposed by existing laws. After most careful consideration of the matter and after receiving and considering t h e views of bankers. Liberty-loan workers, and others whose views are most entitled to consideration, very reluctantly I am constrained to say that I can not wisely determine now in February the terms of t h e bonds or other obligations which i t would be wise to offer for subscription in April when t h e Liberty-loan campaign should probably begin. At the moment we are in a period of readjustment. To t h e slackening of industrial and commercial activity incident to the termination of active warfare has been added the usual dullness of the winter season. The necessary and desirable contraction of our credit structure has begun and will be greatly facilitated by t h e enactment, of appropriate legislation to permit the liquidation of claims arising under informal Army contracts. Steps have been taken to break the deadlock which has arisen growing out of the maintenance, nominally at least, of war prices in certain basic industries. Upon the enactment of appropriate legislation to enable the Food Administration to protect t h e guarantiies given by t h e United States, I am hopeful t h a t i t will prove possible to restore the operation of the law of supply arid demand with respect to foodstuffs with, as I believe, a consequent reduction in the cost of living. A period of rising prices and of intense industrial activity such as we have experienced during t h e past four years is always a period of great apparent prosperity, and a period of falling prices and of t h e contraction of credits is always a period of depression. The retardation of t h e process of readjustment by artificial means can only increase the evils inherent in t h e situation. Buying will not begin and activity will riot set in until the community at large is satisfied t h a t prices have reached bedrock. I am very hopeful t h a t measures now under, discussion may result in t h e rapid acceleration of t h e readjustment, and I am firmly convinced t h a t if that b e done America has before her a new period of great and growing prosperity. I am even sanguine enough to believe t h a t it is within the range of t h e possible that sa much may have been accomplished on t h e lines above indicated before the expiration of two months from now t h a t t h e whole situation will have been changed and that we may look forward to t h e successful issue of the Victory Liberty loan on terms which to-day would seem quite impossible. SECRETARY OF T H E TREAStJRY. 35 Furthermore, merely as a matter of the technique of bond selling, it would be-a fatal mistake to fix t h e terms of t h e loan so long in advance of t h e offering. T h e issue would become stale and its attractions would have been cliscounted long before t h e loan campaign begins. I t will be remembered t h a t the second Libertybond act was approved as late as September 24 and the bonds were offered on "October 1, 1917; t h a t the third Liberty-bond act was approved April 4 and t h e bonds offered on April 6, 1918; and t h a t the supplement to t h e fourth Liberty-bond act was approved September 24 and the bonds offered on September 28,-1918. Therefore, and in view of the early expiration of the life of the present Congress and the apparent impossibility of convening and organizing the new Congress in time to enact further bond legislation before the Victory Liberty loan campaign begins, I reluctantly ask greater latitude in the exercise of a sound discretion as to the terms of the Victory Liberty loan than has been conferred by the Congress in respect to previous loans. I should be only too glad to have the Congress share with me the responsibility of -this extraordinarily difficult determination, but, believing that it would be a grave mistake to reach a final determination at this time, 1 must ask authority to deal with the matter as the situation may develop. Holding these views, I have ventured to have prepared, and I submit to you herewith, a draft of a bill to amend the Liberty-bond acts and for other purposes (Exhibit 6, page 231). This bill would (1) increase the authorized issue of bonds from $20,000,000,000 to $25,000,000,000; (2) remove the limitation as to interest rate so far as regards bonds maturing not more than 10 years from the date of issue; (3) authorize the issue of not to exceed $10,000,000,000 of interest-bearing, non circulating notes having maturities from one to five years; (4) authorize the issue of bonds and notes payable at a premium; (5) exempt Avar-savings certificates from income surtaxes; (6) confer authority upon, the Secretary of the Treasury to determine the exemptions frorn taxation in respect to future issues of bonds and notes and to enlarge the exemptions of existing Liberty bonds in the hands of subscribers for new bonds and notes; (7) exempt from income surtaxes and profits taxes all issues of Liberty bonds and bo'nds of the War Finance Corporation held abroad; (8) extend the period for conversion of the 4 per cent Liberty bonds on the lines suggested in my lett<ir of January 15 to you; (9) create a 2^ per cent cumulative sinking fund for the retirement of the war ' d e b t ; (10) continue the existing authority for the purchase of obligations of foreigri governments after the termination of the war in. accordance with the views expressed by Secretary McAdoo,. by letter and in his testimony before the Ways and Means Committee; and (11) extend the authority of the.War Finance Corporation so as to permit it to make loans in aid' of our^ commerce, thus supplementing the aid which may be giA^en by the Treasury on direct loans to foreign governments and in a measure relieving the Treasury of demands for such loans. I am sure that your committee will wish to discuss all of these matters fully with me, and I shall not burden you at this time with a fuller statement of my views concerning them. I am sending a copy of this letter to Senator Simmons.. Very truly, yours, CARTER GLASS. Hon. CLAUDE KITCHIN, House of Representatives. The situation was explained in further detail three days later— Februaiy 13, 1919—in the following statement before the Committee on Ways and Means: On the date the armistice was signed the United States was in the fortunate position of having outstanding no short-time indebtedness, excluding war-savings certificates, t h a t was not covered and raore than covered by the deferred installments on subscrip- 36 REPORT ON THE FINANCES. tions for the bonds of the fourth Liberty loan. But expenditures in November, December, and January, according to the daily Treasury statement, exclusive of transactions in the principal of the public debt, amounted to $5,958,576,114.24, or at the rate of nearly $2,000,000,000 a month, and the amount of Treasury certificates of indebtedness outstanding on January 31 was $4,798,064,800, of which $3,225,099,500 were issued in anticipation of the Victory Liberty loan. Expenditures for the first seven months of the fiscal year ending June 30, 1919, exclusive of the principal of the public debt, amounted to $12,594,498,537.96. It is apparent that unless there should be a very radicahreduction in expenditures during the last five months of the current fiscal year Secretary McAdoo's hope that the expenditures for the whole fiscal year would be in the neighborhood of only $18,000,000,000 must be disappointed. I have not as yet been able to obtain revised estimates from the War Department and other departments of the Government of their probable expenditures. The cash disbursements during the first 10 days of the current month of February have shown a gratifying decrease, but the knowledge that heavy payments on the settlement of informal Army contracts are being held in abeyance awaiting the enactment of appropriate legislation, and that protracted discussion concerning the terms of peace will necessitate the continuance of large military expenditures abroad, the continuance of large expenditures by the Shipping Board, the Navy program, and the guaranties and commitments of the Food Administration prevent me from looking forward to any great reduction in cash disbursements in the early future. With these things before us and with a floating.debt of nearly $5,000,000,000, increasing at the rate of, say, $1,400,000,000 a month, you will, I know, not be surprised by mj'" recommendation of an increase in the authorized a;mount of bonds. The amount of bonds authorized and unissued under existing Liberty bond acts is slightly in excess of $5,000,000,000; the authorization under the first bond act haying been $2,000,000,000, and under the second, third, and fourth acts $20,000,000,000, and approximately $17,000,000,000 of bonds having been issued under the four acts. It is needless to say that the Treasury does not contemplate the issue in connection with the Victory Liberty loan of any such amount of bonds as $10,000,000,000. . It has, however, been the practice of the Treasury since the second Liberty loan to allot the entire amount of bonds subscribed for. In order to be in a position to do this in connection with the Victory Liberty loan, if it should then be thought wise to follow that policy, it is necessary to authorize some increase in the amount of bonds authorized to be issued. In making the change it seemed wise to suggest an increase to a figui'e which, so far as at present information is available, would seem to represent the maximum possible amount of the bonded debt growing out of the war. Not in addition to but as an alternative of the issue of such bonds, I have suggested the authorization of an issue of notes limited to $10,000,000,000, and I should like to suggest also an increase, in the maximum amount of Treasury certificates from $8,000,000,000 to $10,000,000,000. It can not be too plainly stated that these three items of $10,000,000,000 each are not cumulative. I should like to draw the attention of the committee especially to that, as an editorial in one of the New York papers several days ago seemed to think they are to be cumulative. ' It is contemplated merely that authority should be given to the Treasury to finance the existing and expected indebtedness, either by the issue of Treasury certificates or by the issue of notes or by the issue of bonds. It may be desirable to adopt all of these methods in succession. It may be desirable to issue Treasury certificates in the first instance and bonds to refund them, as has been done in.the past. It may be desirable to refund the Tresisury certificates into notes and the latter ultimately into bonds. Conditions may be such that the issue of a series of notes of a shorter matmity than is indicated in section 4 of the second Liberty bond act as appropriate SECRETARY OF THE TREASURY. 37 for a bond issue, but of a longer maturity than that permitted for Treasury certificates bf indebtedriess, would be desirable. ', Conditions in April might be such that it would be easy and wise to issue a shorttime note bearing a relatively high rate of interest and carrying with it the privilege of conversion, into bonds bearing interest at a lower rate and having a longer maturity. This would make necessary authority for the issue of both the notes and the bonds to the full amount to be raised, but, of course, would not necessitate the existence of both as outstanding indebtedness at any one time. On the other hand, it might be desirable to make an alternative offer of bonds and notes, leaving the subscriber a choice between the two. This also would necessitate double authorization, but only one debt. In respect to the notes and also in respectto bonds of a maturity of 10 years or less I, have asked authority to determine the interest rate as the situation may develop. . I am by no means convinced that conditions will be such in April a,s to necessitate an. increase in the interest rate over that provided in existing law to an important extent, if at all, yet if I were obliged to determine now what is the lowest rate at which T could undertake with certainty to finance the requirements of the Goverhment when the issue is offered in April I should be obliged to name a maximum rate much higher than that which, if developments are as favorable as I expect they Mill be in the interval, will, I hope, be sufficient to float thie loan. There is not, I venture to say, a solvent banking house in America which would enter into a firm obligation to-day to purchase in April any important amount of securities of any character at any price whatever—certainly not at a price which failed to make such an allowance for contingencies in the interval as would be regarded as prohibitive by the borrower. Yet that is exactly what the Congress would require the Secretary of the Treasury to do if it were to fix the interest ra^te to-day. I can not undertake the responsibility of skj^ing now at what rate the bonds or notes may be sold in April; and if you were to-day to fix a maximum rate such as to be sufficient in any possible contingenc)'- you would bj^ that very act tend to force the adoptjion of that maximum rate when the loan is offered. No Liberty loan has ever been sold at lower rate than the maximum fixed by the act under which it was issued. On the other hand, in the second Liberty bond act, which was approved nearly a year and a half ago, you conferred upon Secretary McAdoo authority to issue Treasury certificates of indebtedness without limit as to the rate of interest, and he and I have been able to piaintain- the rate of 4^ per cent for such certificates during a full year, including the period when our war prospects were at their darkest and the recent period when the cessation of hostilities has made the problem of selling Government securities most .difficult. The floating debt, represented by Treasury certificates now outstanding and to be issued in the interval before the Victory Liberty loan is offered, must be refunded, and bonds or notes must be sold to an amount sufficient to accomplish this, purpose. To withhold from the Secretary of the Treasury the power to issue bonds or notes bearing such rate of interest as may be necessary to make this refunding possible might result in a catastrophe. To specify in the act the maxiriium amount of interest at a figure sufficient to cover all contingencies would be costly, because the maximum would surely be taken by the public as the minimum.I have'suggested that authority be conferred upon the Treasury to issue bonds or notes payable at a premium at maturity, believing that it might be found desirable to issue bonds following the lines of the British national war bonds, which have been issued so successfully during the past year and a half. Payment of a sUght premium at maturity would have a number of advantages over an increase in the nominal interest rate: (1) It would carry with it an inducement to saving and to the retention of the bonds; (2) it would tend to limit depreciation in the niarket; (3) it would probably have a somewhat Jess injurious effect upon the market value of existing, issues of Liberty bonds and other securities than a flat increase in the interest rate; and (4) it 38 ..REPORT ON T H E FINANCES. would make possible more exact computation of the effective interest rate to be borne by the,bonds or notes than is possible where bonds are issued and paid at par. A fractional semiannual interest payment involves infinite annoyance to bondholders, banks, and the Government itself, which would be to a great extent avoided by payment of a small premium, only once—at maturity. I do not undertake to say that it will be found v^ise to issue bonds or notes payable at a premium,.but I do say that the Treasury should be equipped with authority to do so if that be found expedient. . I have asked for authority to determine the exemptions from taxation to be carried by the bonds, notes, and Treasury certificates. Such exemptions could not be grieater than that conferred by the Congress in the first Liberty bond act. I t would not be lass than exemption from State and local taxes. Within these limits I believe it is expedient that the Treasury should have authority to determine the exemptions. As a matter . of principle, I agree entirely with Secretary McAdoo that exemptions from taxation, even in respect to the Government's own bonds, are undesirable. He, however, found it necessary, as a practical matter to modify those views to meet the exigencies of the situation in connection with the fourth Liberty loan. The bonds of the second l i b e r t y loan carried a higher rate of, interest than those of the first, the bonds of the third carried a higher rate of interest than those of the second, and the bonds of the fourth carried greater exemptions from taxation than those of the third. That something must be done to make the bonds or notes of the Victory Liberty loan more attractive than their predecessors is apparent. Whether the needed attraction should be found in increased interest rate or in additional exemptions from taxation, or by a combination of both, would be unwise to determine.now. In the discussion of the pending revenue bill and of the supplement to the fourth Liberty bond act Secretary McAdoo called attention to the relation between income taxes and the. rate of interest on the bonds. In his letter of J u n e 5, 1918, to Mr. Kitchin concerning the reveriue bill Secretary McAdoo wrote.as follows: This brings me to another consideration pf great moment in the Government's financial plans. I hope that it will not be necessary further to increase the interest rate on. Government bonds. The number of subscribers to the three Liberty loans aggregated 30,000,000. The people who subscribed are impatient of those who have not. Various plans have been urged upon me for forcing the people to buy Liberty bonds. The man of small means who buys a SlOO bond wants his neighbor to do so, too. There is a popular demand also for high taxes upon war profits. There is also a popular demand that all the people should contribute to financing the war. There should, theiefoie, be a substantial increase in the normal income-tax rate and a higher tax should be levied upon so-called unearned than on earned incomes. Income derived from Liberty bonds would be exempt from this taxation, and the relation between income from Liberty bonds and.income from other secmities would be readjusted without increasing the rate of interest on Liberty bonds. I t would not tax the patriotic purchasers of l i b e r t y bonds on their holdings, but it would weigh heavily . upon the shirkers who have not bought them. I t would make the return fi-om Liberty .bonds compare favorably with the return from other securities. It would give the Government's bonds an essential and necessary advantage over those of corporate borrowers, and would very greatly decrease the relative advantage which State and municipal bonds now enjoy through the total exemption which they cany. It would produce a gradual readjustment of the situation in the investment markets instead" of an abrupt one, as would be the case if the interest rate on Liberty bonds should be increased. . •A normal tax falls upori all alike. Therefore, as I pointed out in m y statement before the Ways and Means Committee last summer, there is not'the same objection to the exemption from normal income taxes as there is to the exemption from surtaxes. A substantial increase iri the normal income tax is the soundest and surest way of stabilizing the price of Government bonds. If we have to increase the interest rate on Government bonds, the increased rate may continue for 10 to 30 years, and some of the bonds which we have issued will go to great premiums not lon^: after the war is over. If we make the bonds at the present rate more attractive b y increasing, t h e normal tax, then the decrease in taxation which will ..follow the close of the war will automatically adjust the situation. I believe that to stabilize the p u c e of Government bonds by first increasing and subsequently reducing the normal income SECRETARY OF THE TREASURY. 39 ' taxes j' from which the holders of these'bonds are exempt, is sound finance and sound economics. ' There is another feature deserving of consideration.' We are askhig the.people to finance this war and we are offering them an investment paying 4^ per.cent interest. The people, have responded wonderfully to this appeal. I n the last Liberty loan campaign 17,000,000, approximately, subscribed. T h e r e i s a widesp:pead feeling that many people who are able to do so, especially those who are making vast profits out of the war, are not doing their part either in the puichaseof Liberty bonds or in the payment of taxes; that they are investing in corporate stocks and bonds producing high returns instead of in the bonds of their own Government, producing reasonable returns, when the first duty of patriotism, and self-pro tec tion demands that they.shall buy Government bonds for the protection of the Nation in its hour of peril. . There is a natural feeling among the masses of t h e people that taxation, upon incomes and upon war profits should be high enough to bring the return fi'om coiporate investments more nearly on a parity with the return from Government bonds; that the Government should not be forced to compete for credit with war industries, which are profiting abnormally and which, unless restrained by the exercise of sound and just taxation, will constantly add to the difficulties of the people of the United States in their effort to supply the Government at reasonable interest rates with the ciedit i t needs to fight successfully this war for liberty. And on September 5, 1918, Secretary McAdoo wrote to Mr. K i t c h i n . concerning the supplement to the fourth Liberty bond bill as follows: The delay in the enactment of the tax bill, the fact that the rates of income surtaxes, to which the interest on Liberty bonds, except the first Liberty loan, is subject, will be higher, and the rate of normal income tax on unearned income will be lower, than-1 had contemplated, materiall}^ affect the prospects of the fourth Liberty loan. ^ -x- ^ ^ -x- * -st The market price of Liberty bonds, which responded faA^orably to the suggestion of an increased normal tax, from which the bonds will be exempt by their terms, was depressed by the newspaper reports of a greatly increased surtax, to which the interest on the bonds will be subject. ^ -X- -X- ^ ¥r ^ ^ Last year I had t h e privilege of explairiing to you and your colleagues on the Ways and Means Committee very fully the reasons why I advocated maldng the income from Liberty bonds subject to income surtaxes, t still believe that that course was wise and that the arguments advanced in favor of it were sound. I t m i l not do, however, to press any theory, however sound, to an extremity, and it is (Dbvious that as a practical matter we can not keep t h e interest rate on Government bonds stationary or substantially so, and continue indefinitely to increase the siirta>:es to which t h e income from those bonds is subject without at the same time limiting the market for Liberty bonds to those who have little or no surtaxes to pay. I n order to give the numerous small holders of Liberty bonds th<3 advantage of a market upon which they may sell their bonds in case of necessity, and also to attract subscriptions from the great number of investors of ample means, b u t not of great wealth, it will be necessary immediately either to increase the interest rate or to neutralizerthe increased surtaxes by freeing the bonds to a limited extent from such taxes. •X- ¥r ^ -je- * -x- * I am influenced in this determination by the fact that it continues necessary to sell Liberty bonds in competition with billions of dollars of bonds of the United States, the various States and municipalities, which are wholly exempt from surtaxes, as well as from all forms of taxation, so that the person whose income is subject to surtaxes is apt to make a comparison of the income return from the Liberty bonds which he is asked to subscribe for, not with the income return from corporation and other securities such as carry no exemption from taxation, b u t with the income return from wholly exempt bonds of the United States and the various States and municipalities. Under the existing state of the Constitution and laws, such a comparison can not be avoided. I n these circumstances we must find a middle ground between the sound view which would refuse all exemptions from surtaxes and the practical necessity of taking into account the fact that such exemptions will in any event be gained, as surtaxes are steadily increased, by shifting funds into governmental. State, and municipal bonds, . the income from which is exempt from surtaxes as well as from normal taxes. I n granting such exemption, I think appropriate provision should! be made to the end that those who subscribe for bonds bf the fourth Liberty loan may, to the extent 40 REPORT ON THE FINANCES. of a specified portion of their holdings, participate in the exemption in respect to bonds of the first Liberty loan converted, the second Liberty loan converted and unconverted, and the third Liberty loan. The considerations which led Secretary McAdoo to recommend increased exemptions from taxation in September are more potent now. The Capital Issues Committee, which had exercised a restraining influence upon the issue of State and municipal securities, has ceased to function and such securities are now being issued without restriction. The Treasury itself has found it necessary to resume the sale of bonds of the Federal land banks, and these must continue to be issued in increasing amounts carrying as they do exemption from all taxatibn. Those who are subject to higher rates of surtaxes will escape taxation at those rates to a very considerable degree by investment in the $8,000,000,000 or $10,000,000,000 of existing securities carrying exemption therefrom and the mew securities of the same character continually being offered. They will seek also for investment more speculative securities carrying a very high nominal income rate. Low-rate taxable bonds have no attraction for them. The cessation of hostilities, the discontinuance of war work, and war wages have greatly decreased the investment power of the millions of patriotic Americans of small means who subscribed so liberally to the second, third, and fourth Liberty loans. They will, I know, subscribe, and subscribe largely, to the Victory Liberty loan. But whether it be in their power to subscribe as largely as they have subscribed for bonds of other loans I do not know. In any event it is essentially in their interest that an obligation be devised which will not only be attractive to them in the first instance, but which will have such characteristics as will tend to insure the main-' tenance of its market price after the drive is over. I can not now determine what those characteristics should be, but I regard it as essential that I should be free to enlarge the exemptions from taxation if, when the time comes to determine the terms of the new issue, that should seem desirable. I believe it essential that in connection with the issue of the Victory Liberty loan a plan should be devised which will fully protect the interests of the holders of the existing Liberty loan bonds. As a matter of public policy it would not be wise nor right to make a gift to the holders of those bonds, but I believe it will be wise and proper to confer upon those holders of the old bonds who subscribe to the new loan additional exemptions from taxation under terms and conditions and within limitations to be determined. Such a course would not only be a great aid to the sale of the obligations of the new loan, but should be effective to improve the market price of existing issues, which has suffered, from heavy liquidation, due, I believe, in large measure, to the changed conditions following the cessation of hostilities., I have recommended that the holders of war-savings certificates be exempt from taxation to the same extent as the holders of bonds of the first Liberty loan. These certificates are of short maturity. The maximum amount which may be held by anyorie is limited to $1,000. The interest is not payable until maturity or earlier redemption, and holders who await the date of maturity before collecting their certificates will in any event escape war taxation. The effort has been and is being made to get the widest possible distribution of these certificates among the people of the United States. I believe the loss in revenue from this exemption will be negligible and that-the conferring of the exemption will make the certificates what they ought to be, clearly the most deshable security issued by the Government, for I feel entirely confident that the Government will not under any conditions which can now be foreseen ever have to issue any security more attractive than an obligation bearing interest at the rate of 4 per cent per annum compounded quarterly and exempt from all taxation. I have suggested that Liberty bonds and War Finance Corporation bonds held abroad should be exempt from all taxation. This is an enlargement of a provision already adopted by the Congress in relation to such bbnds payable in foreign moneys. SECRETARY OF T H E TREASURY. 41 The early cessation of hostilities p u t an end to efforts to sell obligations payable in foreign moneys before any important amount had been sold. I belies ve substantial amounts would be invested in t h e United States Government bonds of t h e various Liberty loans by persons in neutral countries with which t h e exchanges are now adverse to t h e United States if such investors could be assured of exempty)n from taxatiori in the United States. This would supply a number of desirable markets for t h e secondary distribution of Liberty bonds and would have a beneficial effect upon those exchanges which are now adverse. As tb the extension of t h e privilege of converting t h e 4 per cent Liberty loan bonds, into 4 i per cent bonds, I expressed myself fully in m y letter of January 15. to Mr. Kitchin, as follows: WASHINGTON, January 15, 1919. D E A R M R . KITCHIN: The total amount issued of 4 per cent bonds of t h e first Liberty loan coriverted was $568,318,450, of which there remain outstanding as of December 31, 1918, in t h e hands of t h e public, unconverted, after deducting bonds purchased and retired b y means of t h e bond purchase fund and.bonds held b y the War Finance Corporation, $200,680,900; the total amount issued of 4 per cent bonds of t h e second Liberty loan was $3,807,862,350, of which there remain outstanding as of December 31, 1918, in t h e hands of t h e public, unconverted, after deducting bonds purchased by means of t h e bond purchase fund and bonds held b y t h e War Finance .Corporation, $866,999,900; total 4 per cent Liberty bonds outstanding as of Dece]nber 31, 1918, $1,067,680,800. Under t h e terms of t h e contract with t h e holders of these bonds t h e conversion privilege expired on November 9, 1918, six months after i t arose. E^/ery effort was made b y Secretary McAdoo to give publicity to t h e fact of t h e conversion privilege and its approaching expiration, and t h a t privilege remained open for six months. My belief is t h a t those who did not avail themselves of t h e conveirsion privilege within t h e period fixed b y the terms of t h e contract which t h e Government made with t h e m fall among t h e class of small holders who are unaccustomed to bond investments and who, on account of t h e very wide distribution of Libei'ty loan bonds, were not reached by general publicity, and could not, except in the cage of registered bonds, be reached by department circular. Insistence upon t h e letter of t h e contract will result in loss to a group of patriotic bondholders toward whom a special d u t y of consideration exists. The United States has suffered nothing b y ' t h e i r failure to act promptly i n t h e exercise of t h e conversion right, and it is m y judgment t h a t t h e conversion privilege should be extended. I propose to submit to your committee in connection with t h e bond bill which it will be necessary for me to present at an early date for your consideration, a provision intended to extend 1ihe conversion privilege so t h a t t h e higher rate of 4i'per cent shall be effective from t h e semiannual interest payment date next succeeding t h e date of presentation for conversion. I, am writing this letter to you now and giving it to t h e press in order t h a t the holders of these bonds may be informed of m y views concerning t h e matter. I am sending a copy of this letter to Senator Simmons. Very truly, yours. CARTER GLABS. Hon. CLAUDE KITCHIN, Chairman Committee on Ways and Means, House of Representatives. I believe t h a t immediate steps should be taken to set u p a sinking fund for t h e retirement of t h e vrar debt. I have suggested t h e creation of 2^ per cent cumulative sinking fund calculated to retire the whole debt, so far as I can now esthrnate it, within a period of some 25 years. A cumulative sinking fund has t h e advantage of making t h e amount to be set aside for t h e service of the debt both on account of interest and sinking fund substantially a permanent item at a fixed figure until t h e debt is retired. The maturities and redemption dates for existing Liberty loan bonds have been arranged with great wisdom and thoughtfulness b y Secretary McAdoc, t h e bonds of t h e second loan being redeemable during t h e period between 1927 and 1942, those of t h e third loan being payable in 1928, those of t h e forth loan beiag redeemable during the period between 1933 and 1938, and those of t h e first loan being redeemable duririg t h e period between 1932 and 1947. Secretary McAdoo announced before he retired, and I have confirmed the announcement, t h a t t h e Victory Liberty loan will 42 . R E P O R T ON T H E :F.INANCES. . be of short maturities. Assuming t h a t these maturities will cover t h e period between one year after t h e termination of the war and the year 1927 it will always be in t h e power, of t h e Government to use the sinking fund effectively for t h e redemption of bonds of t h e Liberty loans. . , r I,should accompany the,bill with a recommendation for the repeal of the existing paper sinking funds had not this recommendatiori been repeatedly made in the annual reports of the Secretary of the Treasury without action.. I have with me and would like to make a part.of my statement the following: (1) Statements showing classified receipts and disbursements, exclusive of the principal of the public debt, by months from March 1, 1917, to January 31, 1919, as published in daily Treasury statements. (2). Memorandum concerning the existing authorizations for issues of Liberty bonds showing the balance of authority under existing law. (3) Statement showing the interest-bearing debt,of the United Staites as of January 31, including the issue of Treasury certificates which opened on January 30,- thi final figures for which were not received until a week or 10 days later. (4) Statement of the bonds purchased by the Treasury for the bond-purchase fund to January 31, 1919. (5) Statement showing the final allotment of subscriptions to the fourth Liberty loan corrected to February 1. (6) Copy of the British war-loan act of July 30, 1918. This latter, I think, will interest you as bearing upon the extent of the discretion which I have asked the Congress to repose in me under the unusual circumstances now confronting the Treasury. Following is the authority conferred upon the British treasury by the Parliament: .1. (1) Any money required for the raising of any supply granted to His Majesty for the ser\ice of the year ending the thirty-first day of March, nineteen hundred and nineteen, and, in addition, of a sum not exceeding two hundred and fifty milliori pounds, or for the raising of any sum required for cancelling securities or treasury bills under the powers of this act, may be raised in such manner as the treasury think fit, and for t h a t purpose they may create and issue any securities by means of which any public loan has been raised or may be raised, or such other securities bearing such rate of interest and subject to such conditions as to repayment, redemption,' or otherwise, as they think fit. The bill contains two provisions designed to meet a situation which is of vital importance both to the United'States and the European allies. The first of these provisions authorizes loans to the allied Governments to provide for purchases in the United States for export therefrom, for expenditures in the United States in connection with such purchases, and for the payment of interest to the United States, subject to two limitations—one t h a t the credits shall cease one year after the termination of the war and the other t h a t the total amount advanced shall be limited to the amount remaining unexpended of the sum authorized by previous legislation to be loaned to foreign governments for war purposes. The second provision authorizes the War Finance Corporation to make advances under proper restrictions to promote exports not to exceed at any one time the sum of $1,000,000,000. These proposals are designed to meet partially the situation growing out of the temporary exhaustion of the European allies as regards foreign commerce and finance and out of the transition of the United States from a debtor to a creditor nation which has been brought about by the war. Destruction of property by the eriemy, demands bn the man power and manufacturing facilities of the nations, and the limitations imposed by shipping requirements upon the supplies of raw materials have combined to reduce the commercial production of the European allied countries available for export to small proportions, SECRETARY-OF THE TREASURY. 43 -and at the same time the needs of the war have compelled them to make imports *on a scale far transcending anything known before the war. During' the years 1917 and 1918 our foreign trade showed a net balance of :$6,40P,000,000 (or.$3,200,000,000 a year), and our trade with Great Britain, France, :and Italy alone accounted. for $6,235,000,000 of this balance. In the ye ar iinmediately preceding the opening of the European war, i. e., the year ending June 30, 1914, our total balance of trade was $471,000,000 and our balance with the three countries named $337,000,000. The trade figures for Great Britain for 1918 (up to November) show that its exports for the year were in money value smaller and in quantity far ;smaller than iri the preceding year, and her total trade for the 11 months ending November showed an excess of imports of practically $3,500,000,000,. The necessity of foreign purchases before we entered the war has greatly impaired t h e resources of the European allies available to meet an adverse balance of trade, :so t h a t to-day they can not import goods they need without financial assistance. The Treasury has insisted that, as far as possible, this finance should be secured through " private channels; but the United States, before the war, was an importer/of capital Tather than an exporter, and it is not to be expected that our pecple will adjust themselves to the changed situation so.rapidly as to make it possible for all or even t h e greater part of the needs of these countries to be met privately. Investment in foreign securities was practically unknown in the United States hefore the commenceriient of the European war, and the habit is one which can not be widely extended i n a short period of time. Some measure of governmental aid during the transition period is therefore necessary if we are to be able to export the food supplies and other commodities which European allies desire to secure and which it is to our interest to sell them. In asking the extension of the powers of the War Finance Corporation, it has been my thought to avail of methods approximating, as nearly as possible, to commercial practice and to enable the funds to be secured without resort to the Treasury or the issue of Liberty bonds. The War Finance Corporation will, of course, if the legislation is enacted, secure funds b y . t h e issues of its bonds to the public which it is already authorized to make. I do not feel, however, that this action alone will meet the situation. Our exporters will, of course, be liable to the War Finance Corporation for all advances made by it, and must limit their.commitments, however well secured they may be. Moreover, in rsome cases- our Government will either directly, or in effect, be the yondor. The machinery of the War Finance Corporation is not applicable to su<:h pases. It is anticipated that substantial sales of property of the United States Government, now i n Europe, to foreign Governments can be effected to the mutual advantage of the Governments concerned. The materials referred to include railroad materials and equipment, j)ort and dock equipment, and other property of the American Expeditionary Forces. Again, the Government as guarantor of the price of wheat has a direct interest in the foreign sales of wheat. The interest payments.due frorn the several Governments on their obligations held by the United States now aggregate over $200,000,000 each half year, and it is probable that few of the Governments at the present time can meet these payments m t h o u t assistance. The requirements for the reconstruction of Belgium and northern France can not yet be fully determined, but it is probable that some of them will be such aa can not be met without Government loans. For these reasons I urgently ask the authority to broaden the purposes for which the loahs to foreign Governments may be made. I do not ask an increased appropriation and it would not be my purpose to avail of the authority where commercial loans or the powers of the War Finance Corporation could, in my judgment, be used to meet the requirements. I do, however, feel very strongly that before the Congress adjourn? powers should be given sufficiently broad to enable the situation to be dealt with. 44 REPORT ON T H E FINANCES. We are creditors of the European allies to the extent of over $8,000,000,000 and we have a very real interest in the early restoration of their economic life and their ability to enter upon foreign trade. These allies include the countries to which for many years the greatest voliune of our exports has flowed, and if our foreign trade is to continue and to grow our trade ^vith these countries m.ust continue to be a large part of the total. Business in the United States is now. hesitant and unemployment is gro\\ing. Upon the maintenari^e of our exports depends in a large measure whether this situation shall become aggravated or relieved. I am con^inced that exports must be greatly curtailed unless the Government for the present emergency (and only during that emergency) lends financial aid along the lines I have indicated. I \ i e w with the greatest concern the task of raising the funds needed by the Government during this year; but I am, neA-eitheless, willing somewhat to increase thbse needs for this purpose, being satisfied that the resultant effects Mn\] be such that the task as a whole v*ill thereby be lightened. What I have said, gentlemen, is a general explanation and elaboration of the letter which I sent to the committee. While the Congress did not grant in full the authority requested by the Treasury, it responded, through the Victory Liberty loanact, approved March 3, 1919 (Exhibit 7, page 235), with a law t h a t entrusted sufficient power and discretion to the Secretary of the Treasury with respect to the fifth loan to enable him to deal with the situation as it might develop. The new statute authorized the issue of notes of the United States to the extent of not over $7,000,000,000 upon such terms and conditions and at such rate .or rates of interest as the Secretary might prescribe. I t was provided that the maturities should be iiot less than one year nor more than five years from the date of issue. The act included certain alternative proposals with respect to exemptions from taxation and the Secretary was given discretion to choose from among four classes of exemptions. The right to fix the rate of interest and the latitude given with regard to exemptions from taxation permitted the Treasury to wait until the very eve of the loan campaign, if necessary, before naming the terms and conditions of the issue. For the purpose of stabilizing the market for the 4 per cent and 4 J per cent Liberty bonds, the law provided additional exemptions from taxation for the outstanding issues. During the war. Secretary McAdoo. had very wisely issued longterm bonds with maturities and redemption dates spread over the period from 1927 to 1947, leaving the field for short-term securities , free, with the exception of war-savings certificates and the temporary certificates of indebtedness, for use in meeting the situation that followed the period of active fighting. After a careful survey of financial conditions in all parts of the country, it was decided to take advantage of the favorable field for short-term securities and exercise the authority conferred by the Victory Liberty loan act for the issue of short-term notes rather than long-term bonds, which latter, under the law, were limited as to rate of interest to 4 J per cent per SECRETARY OF THE TREASURY. > 45 annum and were subject, with an unimportant exception, to supertaxes and profits taxes. As soon as this conclusion was;, definitely reached the people of the country were promptly advised;- The first public announcement was made on March 12, 1919, when it-was stated that the notes would be sold as a popular issue by means of another great^intensive campaign which would open on Monday, April 21, and close on Saturday, May 10. I t was not possible, that far in advance of the opening of the campaign, to determine the rate of interest or the exemptions from taxation which the notes would enjoy because those questions must be based on conditions existing immediately prior to the public offering. The public statement of March 12, 1919, was as follows: The Victory Liberty loan campaign will open on Monday, April 21, and will close on Saturday, May 10. Under the act of Congress approved September 24, 1917, and amendments thereto, the Secretary of the Treasury still has the authority to issue bonds similar to those of the second, third, and fourth Liberty loans to the extent of not over $5,022,518,000, but any issue of bonds under authority of this act is limited as to rate of interest to a maximum of 4J per cent per annum and would be subject to supertaxes and profits taxes except for the right to participate in the exemption of $5,000 principal amount with other outstanding issues of Liberty bonds and certificates. The Congress has now passed the Victory Liberty loan act which was approved March 3, 1919, under which the Secretary of the Treasury is authorized to issue notes of the United States to the extent of not-over $7,000,000,000 upon such terms and conditions and at such rate or rates of interest as he may prescribe. I t is provided in this act that these notes shall be payable at such time or times, not less than one year or more than five years from the date bf issue, as m a y b e prescribed b y t h e Secretary. After studying financial conditions in all parts of the country, I have determined that the interests of the United States will best be served at this time by the issuance of short-term notes rather than of longer term bonds which would have to bear t h e limited rate of interest of 4J per cent. The Victory Liberty loan will therefore take the form of notes of the United States maturing in not overfiA^eyears from the date of issue. These notes will be, as were the Liberty loan bonds, the direct promise to pay of the United States, will be issued both in registered and coupon form, and the coupon notes will be in final form and wil I have attached the interest coupons covering the entire life of the notes. I am hopef ii 1 that the notes in final engraved form will be ready for delivery by the opening of th e campaign on'April 21. I am led to adopt the plan of issuing short-term notes rather than long-term bonds largely because of the fact that I believe that a short-term issue will maintain a price at about par after the campaign is concluded far more readily than would a longer term issue. I have not yet reached a conclusion as to the rate of interest and exemptions from taxation which these notes will bear because this decision must be based on existing conditions immediately prior to the opening of the campaign. I take this opportunity to repeat what I have already stated, that it is the intention of the Treasury Department to carry on the same kind of intensive campaign for distribution as heretofore. I t would be a most unfortunate occurrence if the people of the United States failed tb take these notes, thus placing the burden of subscriptions on the banks. The business of the country looks to the banldng sys tem for credit wherewith to carry on its operations, and if this credit is absorbed to at large extent by the purchase of Government securities, there will be many liinita- 46 REPORT'ON THE FINANCES. tions placed upon t h e supply of credit for business purposes. Our merchants and manufacturers need ample credit for setting t h e wheels of industry in motion for peace-time production and.distribution, and the wage earner is d h e c t l y interested in seeing that these wheels are kept moving at a normal rate in order that full employment at good wages may continue, and where readjustment conditions have necessitated a slowing down of industry, it is ^dtally important that activity be resumed and labor reemployed at the earliest possible moment. I, therefore, ask t h e American people once again to give their support to their Government i n order that this great loan may be made an overwhelming success b y the widest possible distribution. During the weeks immediately preceding the campaign there still remained a small minority among the people, including men of influence in public life, who looked pessimistically upon the outlook for the success of the loan. Senator Calder aptly expressed this feeling in' a letter which he wi^ote to the Secretary on March 27, 1919, drawing the department's attention to the decline in the market prices of Liberty bonds and urging the calling of an extra session of the Congress to pass remedial legislation to prevent t h e failure of the Victory loan. The Treasury did not in any sense share such gloomy forebodings and set forth its viewpoint in detail in the following reply to the Senator from New York: WASHINGTON, March 31, 1919. MY D E A R SENATOR : I received your letter of March 27. I do not share your present, fear for t h e Victory Liberty loan nor do I understand what unfavorable developments have taken place since you addressed the Senate upon the 1st of March apparently in support of (certainly not in opposition to) t h e Victory Liberty loan bill tolead you to the \ i e w you now express. On March 1 in your speech in t h e Senate you said, among other things: Mr. President, I do not share the hopelessness expressed b y some Senators. Wehave had deposited in the banks and other financial institutions of the United States during t h e past four years sums totaling over $5,000,000,000 more than those institutions contained previous to that time. Then, too; Mr. Presiderit, t h e wealth of this country totals in t h e neighborhood of $235,000,000,000. • So I see no reason why we should not feel certain of the future,' provided Congress legislates intelligently and does everything in its power to keep|down t h e costs of Government. I do not share the hopelessness now expressed b y you nor your present desire toincrease the costs to t h e Government by increasing its interest charges. The VictoryLiberty loan bill became law after very full and adequate consideration b y t h e Congress. You, yourself, advocated one amendment to t h e bill, b u t only one, t h a t requhing that a vignette of Col. Roosevelt should be printed on all t h e notes (which, if it had been adopted, would have so delayed t h e work of t h e Bureau of Engravingand Printing as to have made impossible the delivery of t h e notes during or at t h e close of t h e campaign). The printed hearings before the Ways arid Means Committee of t h e Hoiise occupy 99 printed pages. The printed .hearings before theFinance Committee of t h e Senate occupy 54 printed pages. Thirty-six large pages^ in double columns and fine type of t h e Congressional Record are devoted to the^ debates and addresses in t h e House and 40 pages to those in t h e Senate concerning the bill. The bill was reported b y a unanimous vote by the Ways and Means Cbmr mittee of t h e House and passed t h e House with a practically unanimous vote, threeCongressmen only being recorded in the negative. This is to the lasting honor of themembers of that committee and of t h e House who, without distinction of party,. SECRETARY OF THE TREASURY. 47 joined in writing and passing this bill which was so necessary to the welfare of t h e people and to the preservation of the credit and financial strength of our great country. I t is true that political issues had arisen before the bill was reported by t h e Finance Committee or passed the Senate which prevented like unaniimity in those bodies. B u t although a few Senators expressed criticism of one or another provision of t h e bill, there was, be it said to the credit of the Senate, no concerted opposition to t h e bill or to any important feature of it and t h e bill passed the Senate without a record vote two days and a half before t h e Senate adjourned. The enactment of the bill was received with relief and giatification by the country at large and by the members of the gi-eat Liberty loan organization. They evinced rio lack of confidence in the Treasury's ability to solve the problems entrusted to it by the Congress; nor have I any fear of the Treasury's ability to solve those problems given, as I am assured,it will hav^e,'the patriotic support of the'great Liberty loan organization and of a united and victorious people. To act in accordance with 3''our suggestion and ask the President to call the Congress in special session tp enact iminediately additional legislation in aid of the Victory Liberty loan would imply a distrust which I do not feel of the action already taken by the Congress and approved b^^ the President, for there have been no ad vei'se developments since that action was taken. With a view to determining the terms of the Victory Liberty loan i t has been m^^ duty to inform myself npt only concerning the surface conditions, which should be obvious to you and to every well-informed American, but also concerning the undercurrents affecting our financial and industrial welfare and which bear directly and indirectl}^ upon the Victory Liberty loan. I have been engaged, with the aid of t h e best minds at my disposal—and they include the members of the great war loan organization both at the Treasur}^ in AVashington and throughout the c o u n t r y which has so successfully and brilliantl y supported the Treasury of the United States throughout the period of active warfare—in the study of those conditions, and I a,m glad indeed to be able to tell you that as a result of that study I take a very optimistic view of t h e prowspect for the Victory Libert}^ loan and of the future of this country. I t is perhaps not unnatural that we Americans, like all the other peoples of t h e world, should ha,ve had to go through a period of depression and discontent, even of bitternesSj after the winning of the gi'eat war. But this was only the natural reaction from the intense physical and spiritual effort which the war called lorth from t h e overstimulation of all our energies and actiyities. The cessation of hostilities followed hard upon a bitter political fight, and came just before the approach of winter, a time when the resumption of normal peace actiAities was most difficult. I'he winter has passed and we have every expectation of the early conclusion of peace. Already commerce and industry begin to show signs of the renewed life which must follow t h e removal of the restraints and interferences which war made.necessary. The problems which arose from the failure of the Congress to enact legislation for relief of the rail-, roads and other important legislation presented a very serious situation and one of great embarrassment to the Government, but means will be found to carry them along until the time when the Congress shall be called in special session. The war is won. Our present national debt of less than $25,000,000,000 and our ultimate national debt, after all war bills are paid, which ought not in any event to exceed $30,000,000,000, against which we shall hold some $10,000,000,000 of obligations of foreign governments, is the barest fraction of our national resources. The relation of our debt to our population and resources is small indeed corapared to that of any of the great countries of Europe. The discontinuance of governmental interference with the foreign exchanges, made possible by the cessation of hostilities, has demonstrated the true position of dollar exchange, which not only is at a premium in relation to the currencies of all of 48 , REPORT ON THE FINANCES. the European countries which were engaged ih the war, but has now approached par or actually reached a premium with respect to the cunencies of European neutralb. Our reserve, the greatest in amount in the world, the greatest in relation to circulation and deposit in any of the cbuntries which were engaged in the war, was on March 28, 1919, 51.9 per cent of the combined Federal reserve note and deposit liabilities of the Federal reserve banks. This compares most favorably with a combined reserve of 49.8 per cent on November 8, 1919, just before the armistice, particulariy in view bf the fact that since that date the Government's expenditures, for the most part growing out of the war, have approximated $8,000,000,000, the greater part of which has necessarily been provided by the sale of Treasury certificates of indebtedness tb the banking institutions of the country. There is to-day no insufficiency of credit for the needs of any useful enterprise nor insufficiency of gold to support our credit structure. The payment of the. Government's bills, the settlement of its contracts, and the liquidation of its liabilities should go forward with all possible speed. There never has been and never will be lack of cash in the Treasury to make the payments.' Now that the war is over and the in' dustry of the country is no longer subjected to the forcing process which was necessary to stimulate the maximum of production of war supplies, the needs of industry and commerce for credit will automatically be greatly reduced. The Government's expenditures, which shortly after the armistice reached a maximum in excess of $2,000,000,000 in a month, should, after the war bills have been paid, shrink quickly back to, say, $2,000,000,000 a year in addition to, the interest and sinkirig fund charges on the public debt. This debt is widely distributed among perhaps 20,000,000 of our people, and involves merely a payment by the taxpayers to the taxpayers—for we are fortunate above all the great countries of the world in haAing practically no foreign debt. . I know of no one who does not believe that the Liberty bond.s of the outstanding issues will sell well above par long before their maturity. The Congress has provided in the Victory Liberty loan act a sinking fund which is calculated to retire all the bond^ and notes of the Liberty loans in less than 25 years. The liquidation which has taken place in Liberty bonds since the armistice is, in my judgment, and, I believe, in that of most thoughtful financiers, traceable to other causes than the interest rate aind terms of the bonds. Foremost of these causes is the fact that many patriotic Americans, individuals and companies, subscribe for bonds in a spirit of patriotic fervor induced by the war, in excess of their ability to hold. The "oversold" condition of the market for Liberty bonds thus created was accentuated' by the reaction following the armistice, which made many feel they were released from the duty of holding their bonds in aid of the Government's credit; by the desire to realize losses before the end of the year and thus reduce taxes; by the changed financial position of many bondholders growing out of the termination of hostilities; and, worst of all, • by the wicked devices of bond sharps and swindlers who took advantage of the inexperience of many small investors in Liberty bonds whom the Treasury was, failing the necessary legislation, powerless to protect. Ariother element in depreciating the market value of Liberty bonds has, no' doubt, been the pessimistic utterances of many people who, like yourself, have seen only the dark side of the page and who have exaggerated both publicly and privately the difficulty of floating the Victory Liberty loan. This pessimism has, I think, already been more than discounted in the market price of existing issues. I have not allowed myself to be disconcerted by these pessimistic utterances because I know that similar opinions were expressed to Secretary McAdoo before each of the four Liberty loans offered duiing the period of active warfare, although during that period those who held such views were for the most part considerate enough to express them to the Treasury privately and avoid public utterances, which would have added to its burdens. SECRETARY OF THE TREASURY. i 49 • I believe t h a t all these adverse influences have spent their force; I, am sanguirie, to believe that the market for Liberty bonds has seen its worst and that the market position of the bonds will improve as true understanding of the immense strength of the financiial position of the United States becomes disseminated and as the Victory Liberty loan campaign proceeds. ' I.am encouraged to take these hopeful views not only because of the general considerations to which I haA'e called your attention, but also because of the special success which the Government's financial operations have met since the a^'mistice. Since the armistice the banking institutions of the country have responded to the request bf the Treasur}^ to' meet the current requirements of the Government by purchases of Treasury certificates without any diminution of their patriotic enthusiasm. The sale of Treasury certificates of indebtedness at the rate of 4^ per cent established over a year ago has continued with undiminished success. Indeed, such sales have recently proceeded so successfully and in such large.amounts as to make necessary the omission just now of one of the regular biweekly offerings. This success was contemporaneous with another financial operation of the Treasury no less gratifying. Approximately $1,000,000,000 of income and profits taxes were paid into the Treasury during the period of two or three weeks before and after March 15, without financial disturbance, thanks to the provision which had been made in advance by the sale of Treasury certificates of indebtedness maturing March 15 and to the effective cooperation of the Federal reserve banks, and this notwithstanding that the activities of the subcomrriittee on money of the Liberty, loan committee had come to.an end about two months before. I n writing you thus fully in answer to your letter I have proceeded upon the assumption that it was written with the intention of aiding in solving the financial problems before us. I have made this assumption notwithstanding that the suggestion, thus made by you but little.more than three weeks before the opening of the campaign, was given to the press before it reached me, that you made no such suggestion when the bill was before the.Senate, and that-you have sought no opportunity to confer with me concerning it in the weeks that have intervened. I now aek that you give to the Treasury of the United States, upon which, subject to the approval of the President and to the limitations imposed by the acts of Congress, rests the responsibility for determining the terms of the Victory Liberty loan, that patriotic support and confidence without which no financial program of such magnitude can be successful. The welfare of all our people is at stake. The great Liberty loan organizatibn is truly representative of all the people. I t has pledged its patriotic support to the Victory Liberty loan, the sarrie patriotic support which it gave to four previous loans, and I ask you to join with me and them to make t h ^ Victory Liberty loan, this last great popular loan, the success it can and should b e , riot for the honor and glory of the Secretary of the Treasury or of this adininistration, b u t for the welfare and greater good of the' whole American people, and as a lasting monument of our appreciation of those heroic men who went out from among us to suffer and, some of them, to die, for all of us in France. Sincerely, yours, CARTER G L A S S . Hon. WILLIAM M . CALDER, . 1648 Eleventh Avenue, Brooklyn, N . Y. The above exposition of the situation was heartily indorsed by the members of the War Loan Organization, whose views coincided with those of the Treasury and were guided by an abiding faith in the patriotism of the American people and their willingness and14032.5—FI 1919 A 50 REPORT ON THE FINANCES. ability to do whatever was necessary in the circumstances to pay the bills of the war. With all plans completed for the campaign, it was found possible to decide the terms and conditions of the loan on April 14, 1919, when the information was immediately given to the country. The formal offering of the issue was made in Department Circular No. 138, dated April 21, 1919, attached hereto as Exhibit 8, page 241. The form of application for the notes by subscribers generally, and the form of application by incorporated banks or trust companies for coupon notes for advance delivery, are attached hereto as Exhibits 9 and 10, pages 250 and 251, respectively. The public announcement of April 14, summarizing the terms and conditions of the loan, was as follows: . The Victory Liberty loan, which will be offered for popular subscription on April 21, will take the form of 4 | per cent three/four year convertible gold notes of the United States, exempt from State and local taxes, except estate and inheritance taxes, and from normal Federal income taxes. The notes will be convertible, at the option of the holder, throughout their life into 3 | per cent three/four year convertible gold notes of the United States, exempt from all Federal, State, and local taxes, except estate and inheritance taxes. In like manner the 3f per cent notes will be convertible into the 4f per cent notes. The amount of the issue will be $4,500,000,000, which, with the deferred installments of income and profits taxes payable, in respect to last year's income and profits, during the period covered by the maturity dates of Treasury certificates of indebtedness now outstanding, will fully provide for the retirement of such certificates. The issue will be limited to $4,500,000,000 except as it may be necessary to increase or decrease the amount to facilitate allotment. Oversubscriptions will be rejected and allotments made on a graduated scale similar in its general plan to-that adopted in connection with the first Liberty loan. Allotment will be made in full on sub" scriptions up to-and including $10,000. The notes of both series will be dated and bear interest from May 20, 1919, and will mature on May 20, 1923. Interest will be payable on December 15, 1919, and thereafter semiaririually on June 15 and December 15, and at maturity. All or any of the notes may be redeemed before maturity at the option of the United States on June 15 or December 15, 1922, at par and accrued interest. In fixing the terms of the issue, the Treasury has been guided largely by the desire to devise a security which will not only prove attractive to the people of the country in the first instance, but, the terms of which should insure a good market for the notes after the campaign is ever and identical prices for the two series, and should not affect injuriously the market for the existing bonds of the Liberty loans. This will be the last Liberty loan. Although as the remaining war bills are presented further borrowing must be done, I anticipate that the requirements of the Government, in excess of the amount of taxes and other income can, in view of the decreasing scale of expenditure, be readily financed by the issue of Treasury certificates from time to time as heretofore, which may be ultimately refunded by the issue of notes or bonds without the aid of another great popular campaign such as has characterized the Liberty loans. <^ I am sure that the people of America will subscribe to this Victory loan in the same spirit of patriotism which they have shown in the past"to the end that the notes may be as widely distributed as possible,.and that our banking institutions may be left free to supply the credit necessary for the purpose of industry and commerce and the full SECRETARY OF THE TREASURY. 51 employment of labor. Let the world see that the patriots of America, out of their boundless resources, arid with the same enthusiasm and devotion to country with which they, prosecuted the war to a \ictbrious conclusion, are determined to finish .the job. Probably as a result of the certificate program, the country had acquired the impression that the loan would amount to $5,000,000,000 or $6,000,000,000, and the announcement that $4,500,000,000 would be sufficient for the issue had a beneficial effect. In fixing the amount of the loan, the Treasury?- exercised its best judgment as to the sum which, having regard to the huge tax receipts which were being collected during the year, and the huge amounts of Liberty bonds so recently issued, it believed could be well absorbed. I t was decided to reject any oversubscription of the issue, because the offering of an unlimited amount of the notes undoubtedly would have decreased any buying power, or eliminated the possibility of any buying power, after the loan was over and in effect would have curtailed the subscriptions. After the first loan and during the time of hostilities, with an unknown war period before us and unknown liabilities growing out of the war afterwards, the Ti-easury was bound to take all or substantially all the subscriptions it could get. Unquestionably that was a wise course during the period of the war. Now that hostilities were over and we knew approximately the dimensions of the Government's problem, it was believed that the closed issue would better serve the purpose. One of the principal diificulties that confronted the department at the opening of the campaign and in the months immediately jpreceding was a certain apathy among the people owing to a lack of understanding of the financial needs of the Government. I t was necessary for the Treasury and the Liberty loan committees to undertake an extensive campaign to inform the public that while the guns had,,ce£ised.to..fire, ithe war, bills..were.stilLbeing, received and many obligations of the Government yet remained to be satisfied. The Secretary made a tour of the country for the purpose of arousing the interest of the people and advising them of the requirements of the Treasury. He visited and made public speeches in the following cities: Pittsburgh, Pa.; Minneapolis, Minn.; St. Paul, Miim.; Chicago, 111.; Baltimore, Md.,; Richmond, Va.; Norfolk, Va.; New York City; Cleveland, Ohio; Cincinnati, Ohio; Louisville, Ky.; Indianapolis, Ind.; Omaha, Nebr.; Denver, Colo.; Hutchinson, Kans.; Oklahoma City, Okla.; St. Louis, Mo.; Atlanta, Ga.; Charleston, S. C.; Philadelphia, Pa.; Boston, Mass.; and Providence, R. I. The campaign for the loan found its expression and echo iii every city, town, hamlet, and rural district of the country. T'he Treasury felt that all that was needed to assure the subscription of the notes was to reach the people with full and reliable information as to the Government's necessities. That faith was fully sustained by the result!' • ^ •••- ^ •''••• ••• 52 REPORT ON T H E FINANCES. Like all previous issues, the loan was a great success, amply rewarding all the preparation and all the laborious work of the War Loan Organization and justifying the confident expectation of the Governinent and its steady trust in the loyalty of Americans and their capacity to accomplish the seemingly impossible. The patriotism of peace proved to be as great and as self-sacrificing as, the patriotism of war. The Victory loan was more than a victory; it was a thanksgiving. The result was a significant achievement in the face of dire predictions and was a further manifestation of the solidarity of the people and their love of the United States. The total subscriptions, which were widely distributed among the people, amounted to $5,249,908,300—an oversubscription of $749,908,300, or 16.66 per cent. In accordance with the terms of the issue the oversubscription was rejected, and subscription's allotted to the amount of $4,500,000,000, which has been since slightly reduced as the result of adjustments and cancellations of Army and Navy subscriptions. The ainount of subscriptions allotted, corrected to September 30, 1919, was. $4,498,312,650. Allotment of subscriptions was made on the following basis: Class of subscriptions. Per cent allotted. A and B, up to and including S50,000 C and D, over $50 000 and up to and including $200,000.. <E, asfollows: Over $200,000 and up to and including $500,000 Over $500,000 and up to and including $2,500,000 '... Over $2,500,000 and up to and including $15,000,000 Over $15,000,000 and up to but not including $30,000,000 $30,000,000 and up to but not including $50,000,000 $50,000,000 100 per cent. 80 per cent but not less than $50,000 notes. ... . . 70 per cent but not less than $160,000 notes. 60 per cent but not less than $350,000 notes. 50 per cent but not less than $1,500,000 notes. 45 per cent but not less thaa $7,-500,000 notes. 42.4 per cent. 42.39 plus per cent—($21,196,600 notes). In order to facilitate the gradual payment for subscriptions and accommodate the convenience of investors in the notes as far as possible, subscribers were permitted to make payment on the following installment plan, stretching over the six months' period from May 10, 1919, to November 11, 1919: 10 per cent with application on or before May 10. 10 per cent on July 15. 20 per cent on August 12. 20 per cent on September 9. 20 per cent on October 7. 20 per cent on November 11, with accrued interest on deferred installments. Payment in full could be made with application or on May 20 (except as to subscriptions subject to allotment, in which case payment might be completed on June 3) provided the 10 per cent required with 53 SECRETARY OF THE TREASURY. application had been duly paid on or before May 10. I t was also permissible to complete payment on any installment date with accrued interest. The subjoined table shows the subscriptions allotted, payments received, and original deliveries of registered and coupon notes as of September 30, 1919: Staiem,ent of subscriptions allotted, payments received, a.nd original deliveries of registered and coupon notes of the 4 i per cent a.nd <5f per cent. Victory Liberty loan as of Sept. 30,_ 1919. ' Boston. Philadelphia. New York. "• Cleveland. Richmond. Subscriptions allotted (corrected to Sept. 30, $371,910,150.00 $1,318,041,150.00 $376,290,100.00 $443,802,250.00 $210,889,300. 00 1919) P a y m e n t s received b y Treasurer U n i t e d S t a t e s 349,784,050.00 1.276,177,120.00 363,527,915.00 426,552,970.00 194,508,750. 00 62,696,520.00 17,755,265.00 25,873,920.00 24,459,150.00 33,189,150.00 Less p a r t p a y m e n t s F u l l paid subscriptions 316,594,900.00 1,213,480,600.00 345.772.650. 00 400.679,050.00 170,049,600.00 Original delivery: 4f , per cent coupon notes ' . . 238,248,150.00 4|- per cent registered 28,106,150.00 notes Total 4J per cent notes 266,348,300.00 Original delivery: 3 | per cent coupon notes .:. 3f per cent registered notes T o t a l 3i p e r c e n t notes G r a n d t o t a l , origin a l deliveries 755,379,950.00 278,048,050.00 316,764,750. 00 141,583,500.00 77,506,100.00 16,124,250.00 42,593,500.00 18,962,400.00 832,886,050.00 294,172,300.00 359,358,250.00 160,545,900.00 42,741,450.00 362,998,500.00 45,742,600.00 31,725,550.00 9,153,150. 00 3,430,700^00 6,247,500.00 1,016,300.00 2,580,850.00 332,050.00 46,172,150.00 369,246,000.00 46,758,900.00 34,306,400.00 9,485,200.00 312,520,450.00 1,202,132,050.00 340,931,200.00 393,664,650.00 170,031,100.00 ' v i c t o r y L i b e r t y loan notes deliverable 4,074,450.00 • 11,348,550.00 Atlanta. / 4,841,450.00 Chicago. 7,014,400.00 'St. Louis. 18,500.00 Minneapolis. S u b s c r i p t i o n s allotted (corrected to Sept. 30, 1919) $133,080,800.00 $694,330,000.00 $201,787,600.00 $170,076,650.00 P a y m e n t s received b y T r e a s u r e r U n i t e d 125,860,424.50 states • 10,538,724.50 Less p a r t p a y m e n t s F u l l paid subscripticms Original delivery: 4 | per cent coupon n o t es 3 | per cent registered n otes T o t a l 4 | per cent not es Original delivery: 3f per c e n t coupon n o t es 3f per cent registered E otes • Total 3 | per c e n t notes G r a n d t o t a l , original deliveries Victory L i b e r t y loan notes d e l i v e r a b l e . . . 659,130,130.00 52,770,030.00 197,009,530.00 154,687,159.07 7,153,230.00 22,583,869.07 115,321,700.00 606,360,100.00 189,856,300.00 132,103,300.00 92,920,400.00 10,706,450.00 454,313,350.00 87,904,500.00 148,700,500.00 100 ."iQO 700 00 36,046,050.00 24,124,860.00 103,626,850.00 542,217,850.00 184,746,650.00 124 715 550 00 5,615,900.00 896,900.00 56,673,950.00 6,059,600.00 6,512,800.00 62,633,650.00 110,139,650.00 604,851,400.00 5,182,050.00 1,508,700.00 4,450,000.00 544,900.00 4,428,760:00 1 251 650 00 4,994,900.00 5,680,400.00 189,741,450.00 130,396,950; 00 114,850.00 1,707,350.00 • 54 REPORT ON T H E FINANCES. Statement of subscriptions allotted, payments received, and original deliveries of registered and coupon notes,of the 4\ per cent and 31 per cent Victory Liberty loan as of Sept. 30, 1919—Continued. Kansas aty. Dallas. San Francisco. Special Treasury allotment. Total. Subscriptions allotted (corrected to Sept. 30,1919).... $192,429,300.00 $84,002,600.00 $294,905,060.00 i$6,767,800.00 $4,498,312;650.00 Payments received by Treasurer United States 179,258,260.00 74,264,690.00 275,361,397.50 1,836,850.00 4 277 938 136.07 Less part payments 319,873,936.07 19,080,660.00 14,483,240.00 29,290,297.50 Full paid subscriptions .160,177,700.00 69,771,350.00 246,061,100.00 1,836,860.00 3,968,064,206.-00 Original delivery: 4f per cent coupon notes. 103,879,460.00 48,216,600.00 216,989,360.00 1,836,860.00 2,896,470,600.00 4 | per cent registered notes 42,212,400.00 6,262,000.00 14,258,000.00 403,790,660.00 Total 4 | per cent notes Original delivery: 3f per cent coupon notes. 3 | per cent registered notes , Total dl per cent notes Orand total, original deliveries. Victory Liberty loan notes deliverable................ 146,091,850.00 63.468,600.00 230,247,360.00 1,836,860.00 3; 300,261,250.00 7,128,660.00 2,862,300.00 14,362,450.00 587,773,250.00 1,798,960.00 710,400.00 649,800.00 25,519,600.00 8,927,600.00 3,672,700.00 16,002,260.00 613,292,850.00 166,019,460.00 57,041,300.00 246,249,600.00 1,835,850.00 3,913,564,100.00 6,158,250.00 2,730,050.00 811,500.00 44,510,100.00 1 Includes adjustment Oct. 1,1919. NOTE.—Payments as shown by Treasurer United States. Full-paid subscriptions and couppn notes delivered as shown by monthly statement of Federal reserve banks. Registered notes delivered as shown by records of Secretary's offlce, Division of Loans and Currency. There are attached hereto a;S Exhibit 11, page 253, various tables showing the results of the Victory loan. These were compiled by the War Loan Organization and are based upon the subscriptions a» originally reported. Since that time there have been various adjustments in the figures, particularly in connection with Army and Navy subscriptions, which, under the special plan, were subject to cancellation in certain circumstances. The final allotment and deliveries upon original issue, corrected to September 30, 1919, are in accordance with the above table. TREASURY CERTIFICATES OF INDEBTEDNESS. Every issue of Treasury certificates of indebtedness from the beginning of the war to date has been a success. This means oftemporary financing has provided the Government with funds in advance of receipts from the sales of bonds or notes or in anticipation of revenue from income and profits taxes, and has served the additional helpful purpose of distributing the payments of bond and note subscriptions and of taxes gradually over extended periods of time, avoiding tremendous transfers of funds on any one date and consequent money stringency. SECRETARY OF THE TREASURY. 55 The execution of the certificate and Liberty loan ]program was made possible by the creation of a great system of depositary banks, referred to more in detail elsewhere in this report undcj.' the heading '^Public Moneys and Special Depositaries." Bank deposits in America are distributed among some 30,000 banks and trust companies scattered throughout the country. By the designation of nearly 10,000 banks and trust companies as special depositaries of the Government and the sale to them and to many others of certificates of indebtedness, the Treasury tapped the whole credit resources of the people and made them available to the Government for the winning of the war in the intervals between the great Liberty loans and in anticipation of income and profits taxes. Through the development of this plan, banks and trust companies are having increasing success in the distribution of the securities to their customers. The issues pf certificates have fallen into three general classes, (I) those issued in anticipation of loans, (2) those issued in anticipation of income and profits taxes, and (3) special issues. The special issues may be subdivided into three groups, (a) those issued under the Pittman Act, (&) issues payable ,in foreign currency and discussed elsewhere in this report under the heading "Loans to Foreign Governments," and (c) special issues of very short maturity for temporary purposes. ° The aggregate amount of all issues since the beginning of the war to October 31, 1919, was $32,706,964,903.34. Of that sum $18,657,988,000 was placed with the public in anticipation of sales of bonds and notes, $6,060,866,000 in anticipation of tax payments, and $7,988,110,903.34 comprised the special issues: The amount outstanding on October 31, 1919, aggregated $3,736,352,300.37, consisting, as shown by the following table, of $1,827,586,500 tax certificates, $1,634,671,000 loan certificates, $255,475,000 issues under the Pittman Act, $15,741,300,37 other special issues, and $2,878,500 matured certificates on which interest has ceased:. . Statement of Treasury certificates outstanding Oct. 31, 1919. Tax certificates: Series T-5 dated June 3, 1919, due Dec. 15, 1919 Series T-7 dated July 1, 1919, due Dec. 15, 1919. , Total tax certificates due Dec. 15, 1919 . $236, 760, 500. 00 510,109, 000. 00 746, 869, 500. 00 Series T-8 dated July 15, 1919, due Mar. 15, 1920 322,116^ 500. 00 Series T-9 dated Sept. 15, 1919, due Mar. 15, 1920 101,131, 500. 00> Total tax certificates due Mar. 15, 1920 Series T-lO dated Sept. 15, 1919, due Sept. 15, 1920 .^. 423, 248, 000. 00 657, 469, 000. 00 56 . REPORT ON T H E FINANCES. Loan certificates: Series A-^1920 dated Aug. 1, 1919, due Jan. 2, 1920. . Series B-1920 dated Aug. 15, 1919, due U n . 15, 1920 ..... Series C-1920 dated Sept. 2, 1919, due Feb. 2, 1920... .^ Total loan certificates series 1920 $532, 024, 500.00 530, 329, 000. 00 572, 317, 500. 00^ 1, 634, 671, 000. 00 RECAPITULATION. Tax certificates due Dec. 15j 1919 T a x certificates due Mar. 15, 1920 Tax certificates due Sept. 15, 1920. '. : :-,--.-.. . Total tax certificates. • Loan certificates due Jan. 2, Jan. 15, and Feb. 2, 1920.. Total tax and loan certificates Pittman Act certificates.... .Other special certificates. . ' Matured certificates on which interest has ceased Total outstanding Oct. 31, 19l9. 1, 827, 586, 500. 00 1, 634, 671, 000. OQ : '.•.. '. .\' $746, 869, 500. 00 423, 248, 000. 00 657; 469, 000. 00 3, 462, 257, 500. 00 255, 475, 000. 00 15, 74.1, 300. 37 2, 878, 500. 00 3, 736, 352, 300. 37 The certificate program subsequent to the Victor}^ Liberty loan is discussed in the beginning of this report. In an.ticipation of that loan there were 10 issues of certificates offered in the main at fortnightly intervals over the period from December 5, 1918, to May 1, 1919. The plan for these issues was announced, as far as it could be determined in advance, in the following letter from Secretary McAdoo to the banks and trust companies of the country: WASHINGTON, November 27, 1918. DEAR S I R : I am sure that every patriotic banker as well as ever^'' patriotic citizen in the United States recognizes the imperative duty of financing the Government not only to the conclusion bf the armistice b u t until peace has been determined and war bills have be^n paid. Until the peace treaty is signed a splendid army of American heroes must be kept on duty in France as a guaranty that the kind of peace' for which America has fought will be secured. The expense of maintaining our forces in .'Europe, both upon land and upon sea, and other war bills, must be paid. They can not be paid unless the Treasury continues to have the adequate support ^ of the bankers and people of America. I am sure that I do not have to emphasize the appeal to the patriotism of America. That patriotism is not of the incomplete or unfinished sort; it will not be content with half doing the glorious work we have so auspiciously begun. I t will be content only with a realization of all of the fruits of our glorious victories, and this can not be accomplished until the war has been finsinced and peace—the handsome peace which America wishes to secure to the world—has been escorted back to America as well as to the other nations of the world. I t is, therefore, necessary that a rational program of Government financing shali be executed. The policy adopted in February last and again in June of laying before the banking institutions of the country as nearly as may be the requirements of the Government during the period prior to the third and fourth Liberty loans m e t with very gratifying response, which provided adequately for the necessities of t h e Government without strain or inconvenience; and I am writing now to inform you of the program for the ensuing five months, so far as one can be made at this time, in order that every bank and trust company in the United States may haye adequate SECRETARY OF THE TREASURY. -57 notice and be able to prepare itself to meet patriotically the requirements of t h e Goyernment. I am sending a similar letter, to every bank and trust company in the United States. The expenditures of the Government, excluding transactions i n the principal of the public debt, during this fiscal year, beginning July 1, 1918, to and includingNovember 23, 1918, a period of less than five months, amounted to $8,213,070,568.65, according to the daily Treasury statements. Such expenditures during the current month of November to and including November 23 amounted to $1,577,148,144.93,. or at the rate of nearly $2,000,000,000 for the month. The proceeds of the fourth Liberty loan in excess of the arnount of Treasury certificates issued in anticipation of that loan have been exhausted; and the remaining installment payments to be rnade on; subscriptions to the fourth Liberty, loan will but little more than cover the Treasury' certificates of indebtedness issued in anticipation of that loan and as yet unpaid. Evidently some time must pass before the readjustment from a war to a peace basis can reflect itself in material diminution of the daily csish outgo from" the Treasury. Indeed, the wise policy of prompt liquidation, of contracts might actually result for a time in the acceleration of demands upon the Tireasur^^ whilestrengthening and making more liquid, the banking position of the country. Uncertainti^sr^dth respect to pending revenue legislation make it impracticable and inexpedient to borrow further at this time in anticipation of. taxes. In this period of readjustment it would be difficult to set in motion any plan for the continuous sale of Government bonds, and it seems that the wise policy vdll be to planfor ohe more great popular campaign in the spring for the sale of bonds, which should be of short maturities, and meanwhile to provide for the Government's necessitiesby the issue of Treasury certificates at fortnightly intervals. The firist issue of the: certificates will be dated December 5, 1918, and will mature-May 6,1919, with interest at 4^ per cent; and similar issues, i t is expected, will be made on Thursday of every other week following December 5. I t is not at this moment possible to forecast the cash disbursements of the Government during the peiiod of some five months which must intervene before the proceeds of another great public loan could reach the Treasury, nor, therefore, to announce at this time the minimum amount of each fortnightly issue of certificates further than'to say that in all probability it will not be less than $500,000,000 nor more than $750,000,000. The Federal reserve banks will advise all National and State banks in their respective districts of the amount of certificates' which they are expected to take from time to time in pursuance of this program, which amount can be figured, roughly to equal 2^ per cent of the gross resources of each bank and trust company for every period of two weeks, or a tbtal of 5 per cent monthly. I appeal with confidence to the patriotic bankers to continue to furnisJi the financial! assistance imperatively required by the Government to support America's sons on land and sea until the final consummation of their wonderful victories. . Cordially, yours, 'W. Gr. MCADOO. To the P R E S I D E N T OF THE B A N K OR T R U S T COMPANY A D D R E S S E D . The maturity of each issue in anticipation of the Victory loan was five months (except series V K, where the maturity exceeded five months by only one week) and the rate of interest was 4^ per cent.. The aggregate amount issued was $6,157,589,500, which has all been retired from Victory note subscriptions, cash in bank, or refunding operations. Some of the issues were called for redemption in advance of maturity and in other cases, when possible, offers were made to redeem the certificates in advance of maturity at the option of the 58 REPORT ON T H E FINANCES. holders. To the extent that such calls were made or such offers accepted, the retirement of the certificates was facilitated, and the expense of interest charges to the Government was saved. This policy has been consistently pursued whenever the position of the Treasury would permit. , Including^ two issues mentioned in the pr^eyioiis; arinuai report of the Secretary of the Treasury, there were eight issues of certificates, aggregating $3,354,787,500, in anticipation of income and profits taxes payable in the calendar year 1919. There have been three issues, aggregating $1,081,675,000, in anticipation of income and profits taxes payable in the calendar year 1920. The first issue on August 20, 1918, in anticipation of 1919 taxes, bore interest at the rate of 4 per cent. All succeeding issues were at the rate of 4J per cent until September 15, 1919, when the rate for the series inaturing in six months, series T 9, was reduced to 4J per cent. The maturities of all the outstanding issues of tax certificates coincide with the dates for the payments of income and profits taxes. The outstanding issues mature on December 15, 1919, March 15, 1920, and September 15, 1920. December 15, 1919, is the date for the payment of the fourth installment of income and profits taxes for the year 1919. March 15 and September 15, ,1920^ are the first and third installment dates for the payment of inconie and .profits, t for the year 1920. I n offering tax certificates to the public, every possible effort has been made to advise taxpayers of their availability. About the middle of January, 1919, in advance of the passage of the revenue act approved February 24, 1919, and when it was uncertain what installment dates for the payment of income and profits taxes would ultimately be carried in the new law, the Treasury offered an issue of certificates with sufficient elasticity as to the date when they would be receivable in payment of such taxes to cover any possible changes in the bill as it was then pe,nding" in the Congress. The issue was described in the following letter addressed to taxpayers: WASHINGTON, January 14, 1919. DEAR S I R : In order that those who will have income and profits taxes to pay may prepare themselves in advance for these payments and accumulate gradually the funds necessary to meet them, an issue of 4^ per cent Treasury certificates of indebtedness, dated January 16, 1919, and maturing June 17, 1919, is being offered for subscription. These certificates, which are more fully described in the inclosed Treasury Department Circular No. 133 (Exhibit 26, page 280), will be accepted at par with an adjustment of accrued interest in payment of income and profits taxes when payable at or within sixty days before the maturity of the certificates (i. e., on and after April 18 and on or before June 17). Under the existing revenue law, income and profits taxes are payable on June 15, except in the case of those corporations wnich pay their taxes on the basis of a fiscal year other than the calendar year. Under the pending revenue bill aspassed by-the Senate aninstallment of such taxes is payable on June 15, except in the case of those persons and corporations who pay their taxes on the basis of a fiscal SECRETARY OF T H E TREASURY.'."' 59- year other than the calendar year; and I am informed that the House conferees have indicated their acceptance of this provision of the Senate bill. These Treasury certificates are absolutely payable in cash at rnaturity if the holder does not make use of them in payment of taxes, and the United States reserves no option to call them for redemption before maturity. They carry exemption from State and local taxes, except inheritance taxes, and from the normal Federal income tax. These features, together with the liberal interest rate and short maturity,.make these certificate&'particulaily-desirableas aHemporarydnvestmeht for o t h e i ^ A similar issue of certificates dated November 7, 1918, maturing March 15, 1919, was announced on November 6 and it became necessary to close the issue on November 27, although very heavy subscriptions were being reported daily and the demand had by no means been satisfied.. The total amount of subscriptions allotted for that issue was $794,172,500 and it was not believed desirable to have any greater amount of certificates maturing on that date. . Taxpayers and others who purchase these certificates will not oidy make a wise investment of their money insuring a liberal return and early repayment, but will be performing a service of patriotism b y lending material aid to the Government in meeting the tremendous expenditures growing out of the war. At the moniiBnt the armistice was signed the effort of the United States in men and materials was about reaching the peak, and the bills which were incurred during that period are coming fast into t h e Treasury. The expenditures of the Government during the si::t months ended December 31 exceeded ten and one-half billion dollars and in the month of December alone exceeded two billion dollars. I t is safe to say that without the unstinted effort which was made by America the war could not have been brought as promptly to a successful conclusion. We shall'not now. grudge the-payment of the bills-which were incurred to bring about that glorious result. Very truly, yours, CARTER GLASS, Secretary. To the TAXPAYER ADDRESSED. Wide publicity has been given to all offers of tax certificates from time to time, in order that taxpayers might paitriotically assist the financial operations of the Government and at the same time serve their own convenience by saving in anticipation of their taxes by means of a wise investment, assuring a liberal return. Similar efforts to obtain the largest possible distribution among invcistors of loan certificates have been made in respect to all the issuers subsequent to the Victory loan. The success of these efforts for. the distribution of loan and tax certificates appears from the fact that of $3,465,136,000 of loan and tax certificates outstanding on October 31 the Federal Keserve Board's reports show that the holdings of all reporting member banks as of November 7, 1919, amounted to only $847,558,000. From the fact that on the average 80.5 per cent of the subscriptions for certificates are made by qualified depositaries and that on the average 79 per cent of the Government deposits during the period of the offerings were held by the banks included in these reports to the Federal Reserve Board, the Treasury estimates t h a t 63.5 per cent of the certificates outstanding, or $2,200,361,360, were originally subscribed for by all reporting memb(ir banks, and that therefore they have distributed among investors about 62 per cent of the certificates originally subscribed for by them- 60 EEPORT ON T H E FINANCES. A table showing in detail all the issues of certificates of indebtedness, from the beginning of the war to October 31, 1919, is attached hereto as Exhibit 12, page 258. Public announcements of the variousofferings of c'^rtificates of indebtedness in anticipation of loans and taxes, togethjcr with calls for redemption, before maturit}^, and offers-. to redeem at.^he option of the holders, which have been issued sincethe previous--annual report of the Secretary of the Treasury, are likewise attached as Exhibits 13 to 41, gages.266 to 290. WAR-SAVINGS CERTIFICATES. Sales of war-savings stamps and certificates and thrift stamps have proceeded throughout the year, and the Treasury plans the continuation of this wholesome movement with unabated vigor in theinterest of savings and investment in Government securities.' Thecampaign was conducted in the calendar year 1919 under an organization remodeled, according to the plan evolved in the latter part of 1918 and described in the previous report of.the Secretary of the Treasury. The work i n the field has been in charge of organizations for each of the several Federal reserve districts under the direction and supervision of the governors of the respective Federal reservebanks. Each governor appointed a district director. I n some districts a ''director of war-loan organization'^ was appointed ih charge of all war-loan activities, including those relating to the war-savings securities, but in other districts a separate ''director of savings" was designated. At the beginning of the calendar year 1919, a savingsdivision was created in the Treasury in charge of a director of savings. This division is part of the Treasury's War Loan Organization and is under the general supervision of the Treasury director of War Loan Organization.' The governors of the Federal reserve banks areresponsible for the conduct of the savings rnovem^ent in their respective districts, and the work is carried on under plans adapted to the special needs of the particular districts, subject to general principles outlined by the Secretary of the Treasury. The Treasury savings division, initiates or executes the work of a general or national character, coordinates the activities in the districts, and acts as a service bureau, furnishing the district organizations with suggestions and. material for local use. No change was made in 1919 in the thrift stamps used in 1918, thestamps being undated and non-interest-bearing securities. The 1919 war savings stamps and certificates are identical in terms with thestamps and certificates of the 1918 issue, except for the fact that they mature on January 1, 1924, instead of January 1, 1923. The form,, however, was changed. The 1919 stamps are smaller in size, blue in color, and bear the portrait head of Benjamin Franklin.. The terms- SECRETARY OF THE TREASURY. 61 of the issue appear in Department Circular No. 128, dated. December 18, 1918, attached hereto as Exhibit 42, page 291. ..<K.- • ^ I n order to meet the demand for war-savings securities in single denominations larger than $5, the Treasury, in July, 1919, announced t h e issue of war-savings certificates of two additional denominations, one of $100 and the other of $1,000, maturity value. These certifi-cates, which for convenience were described as "Treasury savings •certificates," are a part of the 1919 series of war-savings certificates and are subject to the provision of the authorizing act that it is not lawful for any one person at any one time to hold war-savings certificates of any one series (of whatever issue or denomination) to an aggregate amount exceeding $1,000, maturity value. The Treasury savings certificates are war-savings certificates of larger denominations, and they have corresponding terms as to increasing sales and redemption values each month and the same period of maturity. The certificates are all registered, by means of detachable registration stubs, and the registration records are kept in the Treasury rather than in the post offices. I t was also provided that the redemption should be made by the Treasury direct rather than through the post offices. Like other war-savings certificates, these certificates may be redeemed prior to maturity, but they differ in that they can not be redeemed before the second calendar month following the month in which they were purchased. Treasury Department Circulars Nos. 143 a n d 149, dated July 1, 1919, and J u l y 31, 1919, respectively, attached hereto as Exhibits 43 and 44, pages 295 and 302, describe the new certificates in detail and prescribe the terms and conditions governing their issue and redemption and the rights of their holders. The sales of these certificates up to the present indicate that they meet a real demand. The cash receipts from the sale of thrift and war savings stamps and Treasury savings certificates, using the figures in the daily Treasury statements for the last day of each month, from the first month of their issue to October 31, 1919, have been as follows: 1917—December. 1918—January February March April May June. July August September October November. December. .' .^ $10, 236, 451, 32 24,559, 722.15 41,148, 244.22 53, 967, 864, 49 60,972, 984.12 57, 956, 640.12 : 58, 250, 485.00 - . . . . , 211, 417, 942. 61 . . 129, 044, 200.62 97, 614,581.48 89, 084, 097.31 73, 689, 846.00 63,970, 813.47 " 1971,913,872.91 62 REPORT ON T H E FINANCES. 1919—January February March....> April..... May... June July August September October Total ............:.... .....:.............. : : $70,996,041.14 15,816,539.27 10,143,081.68 9,572,728.48 6,558,198.33 5,269,535.51 5,176, 865.12 ..,. 6,201,164.07 ^ 6, 111, 944.78 ^ 7,316,467.60 $143,162,565.98 1,115,076,438.89 While, naturally, with the termination of the popular campaigns of the- war period, which.^made instant- appeal .to > the patriotic, impulse of that time, sales dropped sharply to a lower level, the upward trend appearing in the figures for the recent months indicates that the efforts of the savings organization to combat the present tendency to waste and extravagance which has come as a reaction to the wartime economies are now having their effect. The redemptions for the same period have totaled $204,391,451.45. These redemptions were largely of the issues preceding 1919, and it is felt that they represent chiefly the release of securities purchased as a result of the war-time appeal by persons who were not prepared to hold them permanently as an investment. The measure of the usefulness of the war-savings organization and of the savings movement is not to be found in the sales of war savings securities alone. The war-savings organization is charged with the duty of carrying oh a movement for saving and investment in, and holding of. Government securities of all kinds—Liberty bonds^ Victory notes, and Treasury certificates of indebtedness as well as war-savings securities. - These activities of the savings organization are specificaUy contributory to the sale from time to time of Government securities of all kinds to finance the remainder of the war bills and the floating debt. The savings movement has two objects— first, to sell the war-savings securities; and, second, to develop and protect the secondary market for all war issues, to assure the permanence of the war-time achievement in selling Government securities to millions of investors among the American public, to increase the number of such investors, and to build up permanently habits of regular saving and investment in United States Government securities. The two objects focus to the same point, namely, promoting the steady purchase and holding of United States Government securities of all kinds. In addition to selling the war-savings securities, the organization carries on a work largely of an informational character designed to protect the value of the outstanding war loans and to prepare .the marke,t. for new .offerings, This involves a cam- SECRETARY OF THE TREASURY. 63 paign to defeat the efforts of traffickers who attempt to obtain the securities for less than the market prices or in exchange for worthless stocks or shares in fraudulent promotions, and also the dissemination of general information as to the value and desirability of Government securities. The most is made of every legitimate opportunity to impress the importance of saving and investment in Government securities upon the public through established publications and through special printed matter where it is believed that results can be obtained thereby. The present high cost of living has presented a real opportunity of service for the movement to enforce the realization that increased production, saving, and investment present the most direct and potent means of solving this pressing economic problem. The organization has accomplished a very important work in organizing the savings movement in the schools of the country. I t has been realized that the schools are a most important means of inculcating the saving habit and of building up for the future a body of people who have the habit of saving and the tendency to turn to Government securities for investment. The Department of the Interior, through its Bureau of Education, is rendering valuable cooperation. Important progress has been made in securing the cooperation of State superintendents of education and in obtaining the introduction of savings material in textbooks, and it is expected that next year the study oi saving will be a part of the regular course in a very great number of public schools and other educational institutions throughout the country. The schoolrooms, to a large degree, have also been organized for the regular purchase of thrift and warsavings stamps. Another very important work has been in establishing the movement in industrial and commercial organizations. A la:rge number of associations, plants, and mercantile establishments have given the savings movement their indorsement and have organiz.ed savings societies for the regular purchase of the war-savings securities. The movement has also been indorsed and organized in women's clubs, fraternal organizations and labor bodies, and assistance has been received-frbm the churches. Through the valuable cooperation of the Department of Agricultiire, effective work has been done among agricultural organizations. The cooperation of the schools and the other organizations described not only has great present value, but it promises for the future a_ means to carry on the movement with a reduction of expense and of direct effort on the part of the Treasury and district savings organizations. The sale of the war-savings securities will be continued in 1920, and the new series are now in course of preparation. SubstantiaUy the same thrift stamps and thrift cards now iii use wiU be used 64 ; REPORT ON THE FINANCES. in 1920. The war-savings stamps and certificates and the Treasuryi> savings certificates for 1920 wiU be substantiaUy the same in terms-; and conditions, but some alterations wiU be made in the forms. The 1920 war-savings stamp will be carmine in color/ wiU bear the head of George Washington, and the size will approximate the larger stamp used in 1918. The Treasury savings certificates, $100 denomination,= wiU be orange in color, and the $1,000 denomination wiU be green. The Treasury savings division was recently reorganized, and. a similar reorganization is now in process in the' districts, as a consequence of which it is hoped that they will render greater and more effective service in 1920, notwithstanding the fact that the expense of their operations will be materially less than in formcT years. Detailed provisions for the surrender and exchange, by agents, of th(3 war-savings stamps, series of 1918, and for the continuation, appointment and operations of agents for the year 1919 appear in Department Circulars Nos. 126, 130, and 131, the first dated-December 10, 1918, and the latter two December 23, 1918, which are attached as Exhibits Nos. 45, 46, and 47, pages 308, 309 and 311. LOANS TO FOREIGN GOVERNMENTS. Under the acts of Congress of April 24, 1917, September 24, 1917, April. 4, 1918, and July 9, 1918, the Secretary of the Treasury continued to establish credits in favor of foreign Governments engaged in war with enemies of the United States and to the extent of credits so established to make advances to such Governments through the purchase at par of their respective obligations. Since the last report credits were established in favor of Belgium, the Czecho-Slovak Republic, France, Great Britain, Greece, Italy, Roumania, and Serbia, and advances have been made to these countries and also to Cuba.and Liberia under credits previously estab-^ lished. No credits, were established in favor of Russia during the year, nor were any advances made to that country, and the balance of credit which had previously been established above^'the amount of the cash actuaUy advanced was withdrawn. In certain instances, in which the purpose was accomplished for which a credit had been established or an advance had been made without. requiring the total amount of the credit or the advance, the balance of credit was withdrawn or the unused portion of the advance was repaid. Certain other repayments were made in connection with the routine of the accounts. None of the repayments constitutes part of a general program of repayment by any foreign Government. The total appropriation provided by Congress for loans to foreign Governments is $10,000,000,000. From April 24, 1917, up to November 15, 1919, 65 SECRETARY OF THE TREASURY. the credits established, after deducting credits which had been withdrawn, and the cash advances were as follows: Credits established. Belgium Cuba Czechoslovakia France Great Britain -.1 Oreece Italy y. Liberia... . Ronman'a Russia Serbia Total Cash advanced. S343,445,000.00 10,000,000.00 55,330,000.00 3,047,974,777.24 4,277,000,000.00 48.236,629.05 1,620;922,872.99 . 5,000,000.00 25,000,000.00 187,729.750.00 '.. 26,780; 465.56 I $338,745,000.00 10,000,000.00 52,690,000.00 2 2,887,477,800.00 3 4,277,000,000.00 9,647,419,494.84 9,416,371,888.55 - "i '1,610,922,872.99 26,000.00 25,000,000.00 187,729,7.50.00 26,780,465.56 Other charges agamst credits. Balances under established credits. $4,700,000.00 "$ii6,'o6o,'66i).'66" 48,236,029.05 158,236,629.05 2,640,000.00 50,496,977.24 10,000,000.00 4,974,000.00 72,810,977.24 1 $10,000 of this amount repaid by the Belgian Government. 2 $12,147,000 of this amouni; repaid by the French Government. 3 $57,164,007.99 of this amount repaid by the British Government. I t is difficult to exaggerate the great purposes served and the great results accomplished by these advances to foreign Governments. I n the most critical stages of the war they immeasurably assisted America's gallant associates in obtaining the munitions, supplies, and equipment that were so imperatively needed to meet the enemy's offensives or to carry the fighting into his territory, and probably of equal importance was the fact that they served to hearten the allied armies and peoples by the Iviiowledge that the vast credit resources of the United States were being shared with them for the effective prosecution of a common cause. Conversely, it is not difficult to estimate the disheartening effect that these loans of biUions and the willingness of America to lend for the prosecution of the war as much more as was needed to the limit of her ability must have had upon the spirit and morale of the peoples and armies of the enemy. I n the beginning, before the creation of our great Army, the principal assistance of America'was necessarily through foreign loans, and it was then that these advances proved so very potent in contributing to the final victory. Loans to Russia in 1917 kept that great nation in the war and held the German troops upon the eastern front for six precious months. Similarly in each grave crisis, whether on the Italian front or on the battle fields of France or Belgium, the loans from the United States gave the Allies the means of replenishing supplies and equipment, and inspired their fighting forces and the peoples behind them witbrenewed hope and confidence and with strengthened determination in the face of an advancing foe. The service of these loans in assisting to hold the battle fronts of Europe until the might of our heroic Army could be felt effectively, made possible, beyond the shadow of a doubt, the ending of the war in the 140325—FI 1 9 1 9 — - 5 66 REPORT ON T H E FINANCES. fall of 1918. Without this aid to "the allied Governments, the war , unquestionably would have been prolonged, if not lost, with the resultant great additional cost in life and treasure. Detailed statements showing the dates and amounts of credits and advances to foreign Governments ^are attached hereto as Exhibits 48 and 49, pages 312 and 316. , Currencies needed by the United States in France, Great Britain, and Italy for our war expenditures in those countries continued to be provided by the respective foreign Governments under an arrangement whereby the dollar equivalent of the amounts so provided was made available to the respective foreign Governments for use to meet their war expenditures in the United States, and thus the needs of these Governments for advances from the United States were reduced by a corresponding amount. This plan was also extended to Belgium. The following tabulation shows the amount of foreign currencies so placed at the disposal of the United States and the dollar equivalents paid therefor in the United States for the period commencing during the month of January, 1918, up to November 15, 1919: Country. Belgium France Great Britain Italy. Total Francs. 2,500,000.00 " 5,709,031,418.08 Pounds sterling. 87,768,387/13/1 Lire. 97,583,742.51 Dollar equivalent. 366,300.37 1,110,138,235.98 401,393,060.05 14,425,092.25 1,526,322,688.65 In June,. 1918, the requirements of the American Expeditionary Forces for pesetas were indicated to the Treasury to be extremely heavy. At that time Spanish exchange was at a premium of about 40 per cent. In order to obviate the necessity of purchasing pesetas at so large a premium a representative of the Treasury went to Spain and in August, 1918, made arrangements whereby a syndicate of Spanish banks agreed to extend credits up to 250,000,000 pesetas to be availed of through the acceptance, of bills drawn by American banks, members of the Federal Reserve ^System. In, order to avail of this arrangement the Treasury sold certificates of indebtedness payable in pesetas. The total amount of credits availed of and of obligations so sold aggregated 155,000,000 pesetas. The bills were discounted on the basis of 44 per cent interest, which, together with the acceptance commission and certain other charges, made the total cost of the money at the rate of about 5J per cent per annum. Partly as a result of the credits so arranged the rate for Spanish exchange soon began to drop, and the Treasury has lately reduced by 80,000,000 pesetas the amount of its peseta obligations. So far as necessary this was done by the purchase of pesetas in the exchange market at par or less. SECRETARY OF THE TREASURY. 67 All interest which has become due on the obligations of foreign Governments held by the United States has been paid in cash with *a relatively unimportant exception pending adjustm.Qnt. To the extent that such interest has not been paid from other resources of the foreign Governments concerned it has been paid from the proceeds of loans made by the United States Government. With the termination of the war and the rapidly approaching exhaustion of the appropriation it was considered necessary and appropriate for the Secretary of the Treasury, as contemplated by the Liberty bond acts, to take up with the foreign Governments the funding of the^ demand obligations now held by the United States into long-time obligations and the funding during the reconstruction period, say for two or three years, of interest on the obligations. In view of the present derangement of the foreign exchanges it would add to the difficulties of the situation and would not be to the advantage of the United States to require cash payment of interest. The authority given by first, second, third, and fourth Liberty bond acts to make loans to foreign Governments was for the purpose of national defense and the prosecution of the war. In order to assist in meeting needs growing out of the war, the Treasury recommended the enactment of legislation extending the authority \^ithin certain limits b u t without increasing the aggregate amount of the appropriation. By the Victory Liberty loan act approved March 3^ 1919 (Exhibit 7, page 235), the Secretary of the Treasury was authorized, within the $10,000,000,000 previously appropriated, to make loans to foreign Governments then engiaged in \v^ar with enemies of the United States for the purpose of providing for purchases of any property owned directly or indirectly by the United States not needed by the United States or of any wheat, the price of which has been or may be guaranteed by the United States. The Secretary of the Treasury is empowered to establish credits under this auth ori t}^ untU the expiration of 18 months after the proclamation df peace. Thus far no credits have been established under this provision. ' The Inter-Ally Purchasing Commission, constituted in August^ 1917, through formal arrangements entered into by the Secretary of the Treasury with the approval of the President on behalf of the United States with representatives of the Governments of the Allies, was terminated on December 14,1918, and such of its functions- as it was desirable to continue were taken over by the Treasury. These functions came to an end when the foreign Governments ceased making new purchases to be paid for out of advances from, the Treasury. 68 REPORT ON TFIE FINANCES. WAR LOAN ORGANIZATION. The flotation of the Victory Liberty loan and the sales of certificates of indebtedness were conducted through the same form of organization which made such memorable successes of the previous offerings of war securities to the public. Under the general direction and guidance of the Treasury, the 12 Federal reserve banks, as fiscal agents of the United States, continued to serve as the centers of the War Loan Organization in their respective districts throughout which were organized Liberty loian committees composed of volunteers who operated in their respective localities in behalf of the Victory campaign. During the months following the armistice and preceding the offering of the Victory loan, there developed a very natural desire on the part of the members of the War Loan Organization throughout the country, who had left their usual pursuits in life to serve the Government in the critical crisis of war, to return to their normalactivities. These men and women were volunteers in the great cause of liberty; their families and businesses had been neglected and personal matters required their attention. I t could not be expected that they would continue indefinitely in the volunteer service of the Government at the expense of every personal consideration and of their own livelihood. The patriotism and mettle of these workers were so well known to the Treasury that it was believed that an appeal for one more and final effort in a great popular campaign would receive a gratifying response. On December 20, 1918, a few days after assuming the office of Secretary of the Treasury, I issued the following appeal for the continued support to the Treasury of the War Loan Organization: In assuming the office of Secretary of the Treasury, I desire to say a few words to the American people, and particularly to the splendid organizations of men and women whose unselfish labors, under the leadership of my great predecessor, have made the story of our war finance one of the most glorious chapters in the history of America's -part in the war. Millions of Americans have contributed in the most vital, tangible, and necessary way to the winning of the war. They have loaned their dollars to their country with no small sacrifice of personal comfort and enjoyment, and have given largely of personal effort and service. For all time we have disproved the slander that Americans are a money-loving people, incapable of risiug above materialistic thiugs. In the 18 short months of the war the American people subscribed for $18,000,000,000 of Liberty bonds and war-savings certificates. The banking institutions and the people of the country financed the requirements of the war in anticipation of the Liberty loans and of the taxes for the fiscal year ended June 30, 1918, by the purchase of a total of 112,500,000,000 of Treasury certificates of indebtedness, all of which had been retired or provided for out of taxes or bond issues at the time the armistice was signed. The expenditures of the Government, excluding transactions in the principal of the public debt, during the current fiscal year, beginning July 1,1918, to and including SECRETARY OF THE TREASURY. , 69 December 16, 1918, exceeded $9,600,000,000. Expenditures in the month of November nearly equalled $2,000,000,000, and in the current month (Df December, to and including December 16, exceeded $1,000,000,000. The proceeds of the fourth Liberty loan so far received have all been spent and the remaining installments payable on subscriptions to that loan will be needed to meet maturing Treasury certificates of indebtedness issued in anticipation of that loan and as yet unpaid. Since the armistice was signed Secretary McAdoo has estimated that the cash outgo from the Treasury during the current fiscal year ending June 30, 1919, will amount to $18,000,000,000 and much more than half of that amount has already/' been expended in the five and one-half months which have elapsed. The treaty of i»eace has not yet been signed, nor any important part of our Army demobilized. Production of war materials and supplies had reached the peak at the time the armistice was signed and the bills incurred during that period of maximum production must be paid. The Treasury must issue another large loan before the end of the fiscal year, and I am entirely in accord with the policy aheady outlined—that this loan should take the form of securities of short maturities. It is vitally important that the Treasury should continue in a most energetic way the sale of war savings stamps and certificates. Among the valuable and much needed lessons we have partly learned from the war is that of thrift and intelligent expenditure. Thrift helped to win the war and will help us to take full advantage of a victorious peace. It is therefore imperative that we do not rela^i: into old habits of wasteful expenditure and imperative that the habit of reasonable living (on the part of those of both large and small means) so easily acquired during the war period be continued. Millions of our people have become holders of bonds of their Government, but some of them seem to feel that they are under no further obligation to retain these bonds, and they are selling them and using the money for unnecessary purpoees or exchanging them for other securities of very doubtful value. So long as the United States needs to sell bonds those who hold the present issues should not dispose of them except under the spur of urgent necessity. They have invested in the best security in the world, and it is both to their own interest and to that of their Government that these securities be retained. Organizations of patriotic men and women numbering probably well over 2,000,000 have been created and have given their time and services to the sale oi Liberty bonds and war-savings certificates. These great bodies of earnest and patriotic people, called together almost at the outset of the war and augmented continually by new recruits, have accomplished a task which seems almost superhuman. My admiration is great not only for the work accomplished but for the spirit in whicb it was accomplished. It is my earnest wish to retain and continue these great organizations until the work has been completed. We face this work at a time when we are handicapped in many ways. There is no doubt that there is throughout the country a feeling of relaxation—;a feeling of selfsatisfaction at the work already performed and a strong and not unrcjasonable call to take up once more individual and business interest and activities. The organizations were prepared for the task which would have confronted them had the war continued throughout the year 1919, or longer, and I am confident that despite these handicaps they will not now relax their efforts and leave the task unfinished. Victory has come to us earlier than we might reasonably have expected, but victory will not jCause us to neglect the completion of that work which made Adctory possible. Our men on the other side still have their work before them and so have we. They will not leave until the task is fully accomplished, nor shall we. I am sure then that the Treasury Department can, with confidence, offer another Liberty loan, and continue the sale of war-savings certificates kno\^ing that the or- 70 . , REPORT ON THE FINANCES. ganizations will respond once more to the call for service and will at once prepare the ground and sow the seed so that the harvest may be abundantly fruitful. The above statement was later followed by an announcement that the Victory loan would be the last Liberty loan; that is to say, the last war loan floated by means of a great popular campaign. I t was anticipated that necessary future borrowings could be made in the form of certificates of indebtedness which, if need be, might be refunded by the issue of notes or bonds without the aid of another popular campaign, such as those of the Liberty loans. T h a t statement of policy saved the Liberty loan committees from disintegration, and saved the Victory loan from failure, because it €ould not have been floated as a popular issue without the services of these volunteer workers. As was to be expected from men and women of such proved sterling worth and exalted love of country, they answered the Treasury's call with definite assurances that a supreme effort would be made by every worker to make the loan a success that was comparable with the results of the issues sold during the period of actual warfare. These pledges were entirely fulfilled and, with the disbandment of this great volunteer army of workers, the Treasury desires to make due acknowledgment of the value of their patriotic service and to express its sincere gratitude for the loyal and effective work which made the unprecedented results of the loans possible. The Victory loan campaign conducted by the War Loan Organization pointed out the great investment value of the notes, and its keynote was an intensive call to the patriotism of the people to ''finish the j o b ' ' with the largest possible distribution of the securities. Banks, bankers, trust companies, business men, associations and societies, and thousands of men and women throughout the country patriotically cooperated with the Treasury and the War Loan Organization in making the last popular loan a splendid and unqualified success. Men and women in every part of the land patriotically and unselfishly devoted their best efforts through days of unflagging labor to the service of the Government, and richly earned the Nation's gratitude. ' The organization for the sale of war savings securities is discussed elsewhere in this report under the heading ^'War savings certificates. '^ After the conclusion of the Victory loan, Lewis B. Franklin, of New York, who had served as director of the War Loan Organization from the beginning, resigned to return to private life, and was succeeded by John H. Mason, of Philadelphia, who had been a member of the Liberty.loan organization of the Philadelphia Federal Reserve district, and who since the fall of 1918 had served as director of tho organization in that district. SECRETARY OF THE TREASURY. 71 War loan imhlicity. The publicity campaigns conducted by the War Loan Organization of the Treasury in the interest of the five war loans are without parallel in history. The campaign in behalf of the Victory issue was as intensive and widespread as those for the previous loans. I t embraced every avenue of publicity and propaganda. -A.U media of arousing the interest and inviting the attention of the people to the imperative needs of the Government and the great value of the Victory notes as a means of saving and investment were utilized. Machinery drafted for publicity purposes ranged from the seeiningly insignificant subscriber's button to the mightiest engines of war from land and sea. The printed and spoken word of men prominent in all walks of life and the greatest art of the Nation were m.arshaled into service. The combined result was an agency that foicibly carried the message of the Treasury into every home in the country. Newspapers, magazines, trade journals, and other publications gave unlimited space in their news and advertising columns to the interest of the loan. Press associations carried columns of reading material. Millions of posters designed by leading artists, street-car advertising cards, and innumerable booklets were distributed. Five thousand widely known men and women spoke in behalf of the issue under direction of the Speakers' Bureau of the Treasury. More than 100,000 clergymen of all denominations delivered Liberty loan sermons, while Four-Minute Men to the number of several thousand spoke dafly in theaters and at other places of assembly,. , War exhibit trains traveled from city to city carrying American, aUied, and captured German war materiel. Aerial demonstrations by celebrated aces were given in over 80 cities. Eighty-five thousand captured German helmets were presented to salesmen as prizes. Medals cast from German cannon were presented as rewards to workers. An honor flag was granted to cities that exceeded their quotas. Theatrical managers and members of the profession cooperated heartily. Sales were made in theaters, and actors and actresses contributed of their time and talent to the success of the issue. Motionpicture theaters and stars of the profession gave their support unstintedly. Films were purchased at cost and many were contributed. American soldiers, sailors, and marines from the camps and ships in America and from the army of Gen. Pershing and the fleet of Admiral Sims lent valiant aid to the campaign both as speakers and salesmen. Picked veterans from the armies of the nations associated with America in the war toured many cities of the country and captured German submarines were exhibited in important ports. The above relates to the publicity which was conducted on a national scale. I n addition, the publicity branch of the War Loan 72 REPORT ON T H E FINANCES. Organization in the Treasury supervised and coordinated the propaganda activities of the publicity committees in the several Federal reserve districts, which operated under the immediate direction of the Federal reserve banks. These committees conducted extensive campaigns of publicity that were of especial application locally or met the particular needs of the districts concerned. They heartily cooperated with the central organization in Washington and rendered service of very great magnitude and value. Since the conclusion of the Victory loan, publicity has been continued in connection with the sale of certificates of indebtedness and thrift stamps and war savings stamps and certificates, and in promotion of the movement for saving and investment in Government securities. NATIONAL W O M A N ' S LIBERTY LOAN COMMITTEE. The successful service of the national woman's Liberty loan committee and of its effective nation-wide organization of patriotic women was brought to a notable climax in the Victory loan campaign. With the signing of the armistice and the natural tendency of all volunteers to feel that their services were no longer required, the disintegration of this organization seemed inevitable. In response to the appeal of the Treasury, however, the committee and each of its State chairmen assured the department that the organization would remain intact and efficient as long as its services were required in the loan operations of the Government. The entire organization redeemed that promise by the continuation of its splendid work during the Victory loan campaign. The Treasury desires to record its deep appreciation of the effective service of the patriotic women who so loyally worked for the loans and cooperated with the department in each of the campaigns. The committee assisted in immeasurable degree in mobilizing the womanhood of the United States and, in helping the mothers, wives, and sisters of the heroic sons of America who went to France for the sake of the liberty of their country and of mankind to understand the purposes of the war and the needs of the Government to prosecute it to a successful.conclusion. The committee and its organization achieved a high degree of success in arousing the sentiment of the people and in obtaining subscriptions to the securities of the Government. LIBERTY BONDS AND VICTORY NOTES OUTSTANDING. On June 30, 1919, the total amount of Liberty bonds and Victory notes outstanding and deliverable was $19,126,517,200. Exclusive of interim certificates which were issued only in connection with the SECRETARY OF THE TREASURY. 73 first Liberty loan, this large amount was distributed in 78,710,703 pieces, represented by denominations ranging from $50 to $100,000. Of t h a t number, 39,932,957, or more than one-half, consisted of $50 bonds and notes. The number of $50 and $100 bonds and notes outstanding was 66,644,458, or more than 84 per cent of the total, while the number of $50, $100 and $500 bonds and notes was 70,244,817, or more" than 89 per cent- of the total. These percentages would have been increased if the entire Victory loan had been issued by June 30. The Victory notes were in process qi issue at that time and only a part of the total was outstanding at the close of the fiscal year. The amount represented by the $50 denomination on June 30, 1919, was $1,996,647,850; by the $100 denomination $2,671,150,100; by the $500 denomination $1,800,179,500, and by the $1,000 denomination $7,936,230,000. These figures show that $6,467,977,450 Was represented by $50, $100 and $500 bonds and notes, or approximately 33 per cent of the total outstanding. The combined total of $50, $100, $500 and $1,000 denominations amounted to $14,404,207,450, or 75 per cent of the total outstanding, whfle the combined total of the denominations ranging from $50 to $10,000 was $18,331,117,450, or 95 per cent of the total amount outstanding. Whfle the large number of small bonds and notes which were stfll outstanding at the close of the fiscal year is encouraging as indicating the continued widespread distribution of the bonds among investors who never before had placed their savings in securities of any.kind, unfortunately it is unquestionably true that a large number of small holders have parted with their bonds and notes when it was most desirable for themselves and their Government t h a t they should hold them as investments. There is attached hereto as Exhibit 50, page 324, a detailed statement of denominational exchanges of all coupon Liberty bonds and Victory notes, by Federal reserve districts, up to .September 30, 1919. The original deliveries of $50 coupon bonds and notes amounted to $2,661,386,150. Of these there was surrendered for denominational exchange a total of $737,806,600 and there was issued on denominational exchange a total of $189,987,000 of $50 coupon bonds and notes, making a net decrease in the amount of outstanding $50 coupon bonds and notes on September 30, 1919, of $547,819,600. The original deliveries of $100 coupon bonds and notes amounted to $3,196,166,800. Of these there was surrendered for denominational exchange a total of $576,129,500, and there was issued on denominational exchange a total of $132,848,100 of $100 coupon bonds and notes, making a net decrease in the .amount of outstanding $100 coupon bonds and notes on September 30, 1919^ of $443,281,400. The original deliveries of $1,000 coupon bonds and notes amounted to $9,417,227,000. Of these there 74 REPORT ON THE FINANCES. was surrendered for denominational exchange a total of $445,039,000, and there was issued on denominational exchange a total of $1,540,545,000 of $1,000 coupon bonds and notes, making a net increase in the amount of outstanding $1,000 coupon bonds and notes of $1,095,506,000 on September 30, 1919. I t is obviously impossible to demonstrate what proportion of the bonds and notes surrendered for the purposes of exchange into other denominations have been sold, b u t unquestionably a large part of the transactions mentioned above represent sales of the small denominations. This assumption is borne out by the large amount of such bonds or notes which were exchanged for higher denominations, particularly the $1,000 denomination. The observation of the Department has been t h a t in practicaUy all cases the high point of surrender of the securities for the purpose of exchange appears to be at or near the termination of the life of partial payment plans. This would indicate t h a t many small investors, as soon as they complete the payment for their securities, offer them on the market for sale. I t is a great mistake for the peoJ)le of the country, who patrioticaUy bought the Government's obligations during the period of the war, to forego the great advantages which accrue to them by holding their securities. They represent savings which wiU improve their welfare, and rather than part with them they should determine upon a course of further saving and invest their accumulations in Government obligations. I t is sincerely to be hoped t h a t all holders of Liberty bonds and Victory notes wiU retain and increase their investments and dispose of them only under the pressure of compelling necessity. The following table shows in detaU the outstanding issues of Liberty bonds and Victory notes, by denominations, at the close of the fiscal year. ^ Liberty bonds and Victory notes outstanding, by denominations, June 30, i9l9. Denominations. Total. Loans. F i r s t L i b e r t y loan 3^ per cent b o n d s of 1932-1947 a n d i n t e r i m certificates: Coupon. Registered I n t e r i m certificates First L i b e r t y loan c o n v e r t e d 4 per c e n t b o n d s of 1932-1947: Coupon Registered F i r s t L i b e r t y loan c o n v e r t e d 41 per c e n t b o n d s of 1932-1947: Coupon Registered F i r s t L i b e r t y loan second c o n v e r t e d 4^ per cent b o n d s of 1932-1947: Coupon Registered Second L i b e r t y loan 4 per cent b o n d s of 1927-1942: Coupon : Registered. : " Second L i b e r t y loan c o n v e r t e d 4J per c e n t b o n d s of 1927-1942: Coupon Registered T h i r d L i b e r t y loan 4^ per c e n t b o n d s of 1928: Coupon Registered F o u r t h L i b e r t y loan 4J per c e n t b o n d s of 1933-1938-. Coupon : Registered F o u r a n d three q u a r t e r s per cent V i c t o r y L i b e r t y loan notes of 1922-1923: Coupon Registered , .• T h r e e a n d t h r e e - q u a r t e r s per c e n t V i c t o r y L i b e r t y loan notes of 1922-1923: Coupon Registered $50 SlOO $500 $1,000 $5,000 $57,946,350 $69,795,000 3,957,500 $68,018,000 4,266,000 $923,700,000 21,569,000 $24,920,000 $10,000 $50,000 $100,000 $76,700,000 $44,850,000 $112,600,000 $1,119,459,350 288,862,500 1,749,750 146,729,800 21,062,950 O 42,517,900 401,950 48,499,900 5,061,500 22,816,000 4,410,500 30,926,000 7,059,000 1,310,000 1,870,000 660,000 1,960,000 300,000 29,939,500 1,190,700 55,181,000 7,780,900 54,644,500 13,092,500 144,947,000 28,029,000 16,210,000 11,635,000 15,930,000 13,610,000 5,650,000 276,550 31,700 379,800 123,000 260,000 164,000 1,218,000 349,000 105,000 155,000 140,000 . 290,000 2,379,350 1,112,700 H 163,161,500 4,142,150 173,255,400 14,578,300 84,233,500 13,532,500 168,221,000 23,790,000 15,410,000 9,150,000 13,980,000 10,100,000 3,000,000 618,261,400 85,942,950 H 124,721,500 4,453,650 196,634,900 21,024,200 197,000,500 1,223,864,000 93,839,000 37,424,500 215,540,000 49,620,000 460,070,000 91,210,000 39,450,000 107,400,000 2,417,830,900 444,421,350 d 555,450,250 15,099,050 603,876,600 58,497,800 352,259,500 1,374,936,000 109,048,000 63,915,500 181,430,000 43,040,000 359,880,000 69,970,000 37,650,000 133,500,000 3,427,832,350 530,720,350 715,355,650 26,192,150 897,695,500 108,313,400 501,403,000 2,425,595,000 103,415,000 172,057,000 427,125,000 67,390,000 965,420,000 120,320,000 46,300,000 216,900,000 5,932,594,150 860,887,550 252,601,050 2,862,500 384,758,700 20,792,300 246,486,000 30,887,000 894,724,000 65,877,000 152,180,000 15,895,000 306,750,000 14,930,000 7,700,000 17,800,000 2,237,499,750 176,743,80q_ 302,000 1,750 927,500 16,900 1,906,500 44,500 225,911,000 571,000 36,530,000 1,555,000 131,180,000 2,740,000 2,600,000 4,700,000 396,757,000 12,229,150 7,650,000. 5,600,000 316,852,000 86,588,100 ;> o ^^ M- CTI Liberty bonds and Victory notes outstanding, by denominations, June 30, 1919—Continued. Oi Denominations. Total. . Loans. $50 Total: Coupon . Registered Interim certificates Grand total Total number of pieces (exclusive of interim certificates) .... $100 $500 $1,000 $5,000 $10,000 $50,000 $100,000 $1,942,272,250 $2,431,004,300 $1,529,027,500 $7,414,042,000 $1,045,840,000 $2,254,010,000 $16,616,196,050 .522,188,000 54,375,600 240,145,800 271,152,000 225,230,000 401,830,000 $192,150,000 $601,500,000 2,508,571,400 1,749,750 1,996, 647,850 2,671,150,100 1,800,179,500 7,936,230,000 39,932,957 26,711,501 3,600,359 7,936,230 1,271,070,000 2,655,840,000 254,214 265,584 192,150,000 601,500,000 19,126,517,200 3,843 6,015 78,710,703 o o H W H-l > o w Ul SECRETARY OF THE TREASURY. 77 A recapitulation of transactions in Liberty bonds and Victory notes from the dates of the respective issues to June 30, 1919, separately .compiled for each loan, is embraced in Exhibit 51, page 338. These figures indicate that in the vast operations of the five loans the department issued securities of an aggregate value of $27,868,140,100, of which $8,814,442,250 had been retired through conversion, exchange, purchase, etc. Including $72,819,350 of securities in process of issue against securities canceled, the amount outstandingon June 30, 1919, was, as stated ahove, $19,126,517,200. There is attached hereto as Exhibit 52, page:) 344, Form L & C 265, dated October 16, 1919, which shows the dates on which interest on the various issues of Liberty bonds and Victory notes is payable and the amount of any interest coupon pertaining to any bond or note of the Liberty issues. CONVERSION OF LIBERTY BONDS. On January 15, 1919, attention of the Congress was drawn to the fact that a large number of holders of 4 per cent Liberty bonds had not exercised the privilege of converting such bonds into 4i per cent bonds, and announcement was made that a recommendation would . be submitted for the extension of the privilege, which had expired on November 9, 1918. It was believed that those who had not availed themselves of the conversion privilege fell chiefly among the group of small holders who were unaccustomed to bond investments and who,^ on account of the very wide distribution of Liberty bonds, were not reached by the general public announcements of the Treasury and could not, except in the case of registered bonds, be reached by department circular. The Congress adopted the recommendation of the Treasury, and in section 5 of the Victory Liberty loan act (Exhibit 7, page 235) authorized the extension of the privilege of converting the 4 per cent bonds of the first Liberty loan converted and the 4 per cent bonds of the second Liberty loan into 4 J per cent bonds for such period and upon such terms and conditions and subject to such rules and regulations as. the Secretary of the Treasury may prescribe. Regulations governing these conversions are embodied in Department Circular No. 137, dated March 7, 1919, and in the supplements thereto dated June 10, 1919, and November 1, 1919 (Exhibits 53, 54, and 55, pages 348, 352, and 354). Under the terms of these circulars the extended privilege may be terminated on six months' public notice given in such ma.nner as the Secretary of the Treasury shall prescribe. . In spite of this extension of the conversion privilege and the publicity which has been given to it, approximately $750,000,000 face amount of 4 per cent Liberty bonds in coupon form remained outstanding unconverted on September 1, 1919. Of these coupon bonds. 78 REPORT ON T H E FINANCES. the second Liberty loan 4 per cent bonds had no coupons attached for interest accruing after November 15, 1919, and the first Liberty loan converted 4 per cent bonds had no coupons attached for interest accruing after December 15, 1919. On and after said dates,, respectively, these bonds would become exchangeable, according totheir terms, for like bonds with all subsequent coupons attached^ but if not presented for conversion until said dates, respectively, would not be deemed to be converted until May 15 and June 15, 1920, respectively, and the bonds issued upon conversion would not begin to bear interest at 4^ per cent per annum until said dates. The 41 per cent bonds so issued would have no coupons attached, and would be exchangeable on and after said dates, respectively, for like bonds with all subsequent coupons attached. I n order to avoid expense to the United States and inconvenience to holders of the 4 per cent coupon Liberty bonds, and in order to make the necessary provisions for the payment of the 4 per cent interest accruing thereon after November 15 and December 15, 1919,. respectively, special rules and regulations were accordingly prescribed governing the exchange and conversion of 4 per cent coupon bonds, of the second Liberty loan and of the first Liberty loan converted. These rules and regulations are set forth in full in Treasury Depar,tment Circular No. 158, dated September 8,1919 (Exhibit 56, page 358)^ and are in substance as follows: (1) Holders of 4 per cent coupon bonds of the second Liberty loan and of the first Liberty loan converted desiring to avail themselves of the conversion privilege were urged to present them for conversion promptly, before November 15, 1919, and December 15,. 1919, respectively, and it was provided that in that event they would be deemed to present their bonds for conversion only and wouldi receive upon such conversions bonds bearing interest at 4 J per cent per annum from November 15, 1919, and December 15, 1919, re-^ spectively, with coupons attached covering interest to May 15, 1920,^ and June 15, 1920, respectively. (2) Holders of 4 per cent coupon bonds of the second Liberty loan and of the first Liberty loan converted desiring to avail themselves of the conversion privilege but neglecting to present their bonds for conversionbefore November 15,1919, and December 15,1919,respectively,, were advised to retain their 4 per cent coupon bonds temporarily until the Treasury Department should announce that the 4^ per cent coupon bonds of the second Liberty loan converted and of the first Liberty loan converted with coupons attached covering interest to maturity were available for delivery (which, it is exjpected, will beabout March 15, 1920), and then present their 4 per cent bonds, promptly for conversion and exchange into such 4J per cent bonds... In this connection, it was provided that all 4 per cent coupon Liberty^ SECRETARY OF T H E TREASURY. 79 bonds presented on or after November 15, 1919, and December 15, 1919, respectively, for exchange into bonds with all subsequent' coupons attached would, unless otherwise expressly indicated in writing by the holder, be deemed to be presented for conversion into 4 J per cent bonds, as well as for exchange, and be held in suspense pending the date when the 4 J per cent bonds with all subsequent coupons attached should be available for delivery. (3) I t was further provided that, after November 15, 1919, and December 15, 1919, respectively, 4 per cent bonds of the second Liberty loan and of the first Liberty loan converted, with all subsequent coupons attached, would be issued in exchange for the 4 per cent bonds for which they are expressed to be exchangeable; if specifically requested, but that it was not expected that such permanent 4 per cent bonds would be available for delivery before March 15, 1920. The following statement, by denominations, of unconverted 4 per cent bonds outstanding on June 30, 1919, indicates that the amount is chiefly in the, liands of small investors: . Outstanding June 30, 1919. Denomination. $50 100 500 1,000 5,000 10,000 50,000 100,000 First 4's. Second 4's. $42,919,850 53,561,400 27,226,500 37,985,000 3,180,000 2,620,000 300,000 $167,303,650 187,833,700 97,766,000 192,011,000 24,560,000 24,080,000 7,650,000 3,000,000 167,792,750. 704,204,350 On April 24, 1919, the privilege of converting 3§ per cent bonds of the first Liberty loan into first Liberty loan second converted 4J per cent bonds expired pursuant to the terms of Departinent Circular No. 123, dated October 24, 1918, set forth as an exhibit to the previous annual report. Only $3,492,050 face amount of 4^ per cent bonds were issued pursuant to this conversion privilege. The following tabulation shows the total conversions of Liberty bonds from the dates when the respective privileges arose to the termination thereof, or to June 30, 1919: First Liberty loan converted 4 per cent bonds of 1932-1947, Nov..15, 1917-May 15, 1918. Surrendered for conversion: First Liberty loan 3^ per cent interim certificates of 1932-1947... |473, 917,250 First Liberty loan 3i per cent coupon bonds of 1932-1947 89,103, 500 First Liberty loan 3^ per cent registered bonds of 1932-1947. 5, 297, 700 Total 568, 318,450 8'0 REPORT ON T H E FINANCES. Issued upon conversion: First Liberty loan converted 4 per cent coupon bonds of 1932-1947. $498, 275,700 First Liberty loan converted 4 per cent registered bonds of 19321947 70, 042,750 Total • 568, 318, 450 First Liberty loan converted 4 \ per cent bonds of 1932-1947, as of June SO, 191.9. Surrendered for conversion: • First Liberty loan 3^ per cent coupon bonds of 1932-1947 First Liberty loan ^ per cent registered bonds of 1932-1947 First Liberty loan converted 4 per cent coupon bonds of 1932-1947. First Liberty loan converted 4 per cent registered bonds of 19321947 Total i $6,118, 650 1,454, 800 344, 648, 850 53, 220, 850 405, 443,150 Issued upon conversion: First Liberty loan converted 4^ per cent coupon bonds of 19321947 : : First Liberty loan converted 4^ per cent registered bonds of 19321947. ! Total 326, 718,150 78, 725, OOO 405,443,150 First Liberty loan second converted 4 \ per cent bonds of 1932-1947, Oct. 24,1918-Apr. 24t 1919. Surrendered for conversion: First Liberty loan 3^ per cent coupon bonds of 1932-1947 $2, 900, 550 First Liberty loan 3^ per cent-registered bonds of 1932-1947 ' 591, 500 Total : 3,492, 050 Issued upon conversion: First Liberty loan second converted 4J per cent coupon bonds of 1932-1947 First Liberty loan second converted 4J per cent registered bonds of 1932-1947.: • ... Total :..... 2, 442, 900 1,049,150 3,492,050 Second Liberty loan converted 4 i per cent bonds of 1927-1942, as of June 30, 1919. Surrendered for conversion: Second Liberty loan 4 per cent coupon bonds Second Liberty loan 4 per cent registered bonds Total Issued upon conversion: Second Liberty loan 4^ per cent coupon bonds. Second Liberty loan 4J per cent registered bonds Total....; $2, 715,294, 400 31Q, 315,450 , . 3,034, 609, 850 2, 620,595, 200 414,014, 650 3,034, 609,850 No privflege of conversion arose with respect to previous issues of Government securities by reason of the issue of Victory notes. SECRETARY OF T H E TREASURY. 81 INTERCONVERSION OF VICTORY NOTES. Under the terms of the offering of the Victory Liberty loan, the two series of notes of that issue, bearing interest, respectively, at 3 | per cent and 4 | per cent per annum, are freely interconvertible throughout their life, subject to the terms of the circular offering the notes and the rules and regulations of the Secretary bf the Treasury. Rules and regulations governing the exercise of the conversion privilege are. embodied in Department Circular No. 139, dated May 20, 1919, and supplement thereto, dated November 1, 1919 (Exhibits 57 and 58, pages 362 and 369). The issue of the notes upon full-paid subscriptions was sufficiently advanced to permit the opening of the conversion privilege on July 15, 1919. EXCHANGE AND TRANSFER OF LIBERTY BONDS AND VICTORY NOTES. From the beginning of the war to the close of the fiscal year 1919 there were 17,373,132 Liberty bonds and Victory notes exchanged or transferred in an aggregate face amount of $2,661,104,450, the transactions including exchange of coupon for registered issues, and vice versa, denominational exchanges and transfers ofregistered issues. Transactions involving coupon issues only were conducted chiefly at the Federal reserve banks as fiscal agents of the United States. WhUe some transactions in connection with the registered issues were conducted in part at the Federal reserve banks, all such dsxchanges or transfers are finaUy consummated at the Treasury, where the record of registered bonds is kept. Treasury Department Circular No. 141, dated September 15, 1919 (Exhibit 60, page 375), establishes rules and regulations governing transactions in Liberty bonds and Victory notes. There was also issued on the same date a statement giving information with respect to the registration of bonds and notes (Exhibit 61, page 394). The widest possible distribution of these announcements has been made in order to familiarize the people with the method of effecting exchanges and transfers. A copy of the circular and of tlie statement were sent to every bank and trust company in the United States, accompanied by a letter urging their cooperation in handling transactions for their customers (Exhibit 59, page 373). This circular covers the matter of exchange and transfer of Liberty bonds and Victory notes in detail, including such important matters as assignments in case of death of a registered owner, assignments for minors, and the rules respecting bonds or notes registered in the names of two or more persons. I t also sets forth the ofiicers authorized to witness assignments. The Treasury is anxious to facilitate the assignments of registered bonds and notes, but its policy in this 140325—FI 1 9 1 9 — - 6 82 . REPORT ON T H E FINANCES. respect must be controlled by considerations of safety to the Government and to the registered holder. The department believes it has gone as far as it may with security in conferring general authority with respect to witnessing assignments. The Treasury must rely upon the good faith of the witnessing officer in requiring positive identification of the registered holder executing the assignment, and it is deemed wise to restrict the general authority to witness assignments to certain Treasury and other Federal officers, the executive officers of the Federal reserve banks, and the executive officers of incorporated banks and trust companies. From the beginning of the war-loan operations the Treasury has been particularly anxious to afford every possible inducement to investors in Government securities to hold them in registered form. This is particularly desirable in the case of the small denominations which are in the hands of people who have no facilities for safekeeping, and the department has repeatedly urged upon the public the great advantages of registration. The result of its efforts in this direction may be seen from the fact that the registered issues of the first four loans up to June 30, 1919, had increased over $600,000,000 from the time of original deliveries. PURCHASES OF LIBERTY BONDS BY THE TREASURY. The authority conferred upon the Secretary of the Treasury by section 6 of'the act approved April 4, 1918 (Third Liberty bond act), to purchase Liberty bonds in order to stabilize the market prices of the securities, has been exercised from time to time during the year. Liberty bonds have been purchased, canceled and retired in accordance with the law, as necessary to support the market. As a matter of practical convenience the services of the War Finance Corporation have been utilized in this«*connection. The bonds have been purchased by the corporation at the market price for its own account, and subsequently the accumulated stocks have been taken over by the Treasury at the average cost to the corporation, plus accrued interest. These purchases have served the purposes of the law, particularly when heavy sales were pressing upon the market. Many of these sales were the result of conditions produced by the ending of the war. Some of the smaUer holders, who changed their occupations during the winter on account of the dislocation of industries, found it necessary to dispose of their securities. Large corporations that during the war had been able to hold Government bonds, either with their own resources or on borrowed capital, also found it necessary to liquidate on account of changed financial conditions due to economic dislocation attendant upon the ending of the war. During all this period without endeavoring to hold the borids to levels that could 83 SECRETARY OF THE TREASURY. not be maintained, it was the constant endeavor of the Treasury to maintain the stability of the market for Government securities. The terms of the Victory loan had a favorable influence on the market situation. The following bonds have been purchased, canceled, and retired by the Treasury from the bond-purchase fund to November 15, 1919: Liberty bonds purchased from bond-purchase fund from Apr. 12, 1918, to Nov. 15, 1919. Loan. First Liberty loan converted 4 per cent and 4^ per cent bonds of 1932-1947 Second Liberty loan 4 per cent and converted 4^ per cent bonds of 1927-1942 Third Liberty loan 4^ per cent bonds of 1928 Fourth Liberty loan 4^ per cent bonds of 1933-1938....-. . . . Total Principal amount purchased. Amount paid. $25,115,000 $23,841,677.60 $398,633.59 371,215,000 208,635,500 348,115,000 353,346,965.55 200,895,393.00 329,821,4&5.00 6,364,544.95 1,687,060.05 5 052 217. 71 953,080,500 907,905,523.15 13,502,456.30 Amount of accrued interest paid. The difference between the par amount of bonds purchased and the principal amount paid therefor, $45,174,973.85, appears on the books of the Treasury as a miscellaneous receipt. Section 3 of the act approved April 24, 1917 (first Liberty bond act), and section 3 of the act approved September 24, 1917 (second Liberty bond act), as amended, authorize the Secretary of the Treasury to apply any repayments of the principal of loans to foreign Governments to the redemption or purchase of any bonds issued under authority of such acts. Certain of the loans to foreign Governments have been repaid, as stated elsewhere in this report under the heading ^'Loans to foreign Governments,'' and the proceeds of the repayments have been applied to the purchase of Liberty bonds, which have been canceled and retired, as follows: Bonds purchased as the result of payment of foreign loans, to Nov. 15, 1919. OBLIGATIONS OF FOREIGN GOVERNMENTS REPAID. Government. France Do. Do. . . . Belgium France. . . . . Great Britain Do. . . Do Do. . . . Do Date. Jan. 1,1919 Mar. 31,1919 Mar. 14,1919 July 18,1919 Aug. 11, 1919 do Sept. 18,1919 Sept. 23,1919 Oct. 11,1919 Oct. 27,1919 Amount repaid. $3,384,000.00 588,000.00 3,598,000. 00 10, 000.00 4,577,000. 00 22,000,000. 00 10, 000,000. 00 10,000,000. 00 7,164,.007.99 8,000,000.00 84 REPORT ON T H E FINANCES. Bonds purchased as the result of payment of foreign loans, to Nov. 15,1919—Continued. BOND PURCHASES. Loan. Third Liberty loan 4^ per cent bonds of 1928 Fourth Liberty loan 4^ per cent bonds of 1933-1938 Total...: Principal amount purchased. Amount paid. Amount of accrued interest paid. $62, 297, 200 $59,090,313.78 2,5.14,950 2,230,482.32 $702,901.66 51, 690. 47 61,320,796.10 754 592.13 64,812,150 The bond-purchase fund, while designed primarily for another and more immediate purpose, has operated also, as the above analysis shows, in the nature of a preliminary sinking fund in advance of the operation of a scientific plan for the retirement of the debt through purchases or redemptions over a period of years. , The authority to purchase bonds through the bond-purchase fund expires one year after the termination of the war. The Congress, how^ever, has already provided the plan for t h e gradual retirement of the debt by means of a cumiUative sinking fund. CUMULATIVE SINKING FUND. Provision for the establishment of a cumulative sinking fund in the Treasury for the retirement of bonds and notes issued under the first, second, third, and fourth Liberty bond acts and the Victory Liberty loan act is made by section 6 of the act approyed March 3, 1919 (Exhibit 7, page 235), in accordance with recommendations submitted by the Ti-easury and adopted by the Congress. The law permanently appropriates for such sinking fund for the fiscal year beginning July 1, 1920, and for each fiscal year thereafter until the debt is discharged an amount equal to the sum of ^' (1) 2J per centum of the aggregate amount of such bonds and notes outstanding on July 1, 1920, less an amount equal to the par amount of any obligations, of foreign governments held by the United States on July 1, 1920, and (2) the interest which would have been payable during the fiscal year for which the appropriation is made on the bonds and notes purchased, redeemed, or paid out of the sinking fund during such year or in previous years./' I t will be noted that the Secretary of the Treasury, in accordance with the terms of this law, will ascertain the aggregate amount of such bonds and notes outstanding on July 1, 1920, less the par amount of obligations of foreign governments held by the United States on that date. Two and one-half per cent of that sum is appropriated annually as a fixed amount and without variation for the payment of such bonds and notes a t maturity or fbr their redemption or purchase before maturity. As bonds or notes are paid, SECRETARY OF THE TREASURY. 85 redeemed, or purchased from this appropriation, there is also appropriated yearly and cumulatively for the sinking fund an amount equivalent to the interest which would have been payable on such bonds or notes if they had not been retired. A cumulative sinking fund has the advantage of making the amount to be set aside for the service of the debt both on account of interest and sinking fund substantially a permanent item at a fixed figure until the debt is retired. The maturities and redemption dates for Liberty loan bonds, as stated in my testimony before the Ways and Means Committee, were arranged with great wisdom and thoughtftilness by Secretary McAdoo, the bonds of the second loan being redeemable during the period between 1927 and 1942, those of the third loan beiiig payable in 1928, those of the fourth loan being redeemable during the period between 1933 and 1938, and those of the fii'st loan being redeemable during the period between 1932 and 1947. The notes of the Victory Liberty loan are of short maturity, being redeemable in 1922 and payable in 1923. With redemption dates and maturities stretching over the period from 1922 to 1947, it will always be in the power of the Government to use the sinking fund effectively for the redemption or payment of bonds and notes of the Liberty loans. It is calculated that the operation of the cumulative sinking fund provision will retire the funded war debt of the United States in the neighborhood of twenty-five years, except with respect to an amount equal to the loans to foreign governments outstanding on July 1, 1920. The retirement of the latter is provided for by the authority to apply repayments of foreign obligations to the retirement of United States obligations, and as foreign obligations are paid a corresponding amount of United States obligations may be redeemed or purchased, and canceled and retired. The act of March 3, 1919, also repealed the old sinking-fund statutes which had proved unworkable and resulted in nothing more or less than a bookkeeping account. They did not retire the debt. The new law which takes the place of the provisions tl].us repealed can never descend to the state of uselessness which they occupied as long as the Government keeps faith with investors in its obligations. The formal offering of the Victory Liberty loan by Department Circular No. 138 quoted the cumulative sinking-fund section of the Victory Liberty loan act. To make the plan effective, sinking-fund charges must be met out of revenues received from taxation. Any thought in the future of suspending the operation of the cumulative sinking fund or of meeting its charges through the sale of securities would be mot only unwise in the extreme from the standpoint of the Government's finances and the ultimate wiping out of the war debt 86 REPORT. ON T H E FINANCES. but would be a breach of faith with every subscriber to the Victory Liberty loan and with every holder of the Liberty bonds. Whatever may be necessary in the future financing of the Government, nothing must be peimitted to interfere with the effective operation of the cumulative sinking fund and the consequent gradual retirement of the war debt. VICTORY LIBERTY LOAN SUBSCRIPTIONS BY PERSONS IN THE MILITARY AND NAVAL FORCES. At the time of the Victory Liberty loan campaign, both mflitary and naval forces were undergoing rapid demobilization, and the efforts of the Treasury and of the War and Navy Departments in connection with the purchase of Victory notes by soldiers and sailors were directed chiefly toward affording them full opportunity to place subscriptions on reasonable terms. Under date of April 21, 1919, the Secretary of the Treasury promulgated regulations defining special arrangements for subscriptions from persons in the mflitary forces (Exhibit 62, page 397). These regulations followed the same general lines as were in force for the third and fourth Liberty loans, as reported in the annual report for the fiscal year 1918, payments being made, however, by reservations from pay instead of by allotments of pay. In addition. Treasury regulations defining special arrangements for subscriptions by persons in the naval forces were prescribed by the Secretary for the first time, under date of April 21, 1919 (Exhibit 63, page 399). These regulations followed the same lines as those prescribed for the Army, payment being made for the^ notes subscribed for by means of checkages against pay. Cash sales to persons hi the military and naval forces also were made in considerable amounts during the campaign with the cooperation of the respective departments. The total subscriptions for Victory notes reported by the Army under the special regulations, including cash sales, amounted to $1,906,050, and the total subscriptions reported by the Navy under the special plan, including cash sales, amounted to $6,912,750. Apart frora the subscriptions made by members of the military and naval forces, many officers and men, by speeches and other activities, imparted a marked additional stimulus to the general Liberty loan campaign. ACCEPTANCE OF LIBERTY BONDS AS SECURITY. I n accordance with the recommendation contained in the annual report for the fiscal year 1918, provision was made by section 1320 of the revenue act of 1918, approved February 24,1919, for the acceptance of Liberty bonds and other United States bonds as security in SECRETARY OF THE TREASURY. 87 lieu of surety or sureties on penal bonds. For the purpose of this statute, the term penal bond is defined to include any recognizance, stipulation, bond, guaranty, or undertaking, with surety or sureties, required to be furnished by the laws of the United States or regulations made pursuant thereto. Pursuant to the authority so conferred, the Secretary has prescribed detailed rules and regulations for carrying the section into effect, in Treasury Department Circular No. 154, dated June 30,1919 (Exhibit 64, page 402). Completefiguresas to the bonds deposited in lieu of surety or sureties pursuant to this circular are not avaflable,' inasmuch as the bonds may be accepted by bondapproving officers of the Government generally, and may be deposited with the Federal reserve banks and - branches as well as with the Treasurer of the United States. More than $520,000 face amount of bonds so accepted, however, had been deposited with the Treasurer of the United States up to October 31, 1919. Special regulations also have been issued in line with this statute and circular, under which Liberty bonds may be accepted as security in lieu of penal bonds to secure the payment of floor taxes on distflled spirits, tobacco manufactures, and other commodities, and as security for claims for abatement, and in connection with replacement funds. The following amounts of Liberty bonds have been received by the Bureau of Internal Revenue and held as security for the payment of floor taxes or otherwise taken as' security in lieu of sureties: Received during the fiscal year ended June 30, 1918. Received during the fiscal year ended June 30, 1919.... Received from June 30 to Oct. 31, 1919 Total.... , $4, 431, 450 1, 269, 300 5, 050 5, 705, 800 ACCEPTANCE OF LIBERTY BONDS AND VICTORY NOTES IN PAYMENT OP ESTATE OR INHERITANCE TAXES. As stated in the annual report for the fiscal year 1918, the act of April 4, 1918, added a new section, 14, to the act approved September 24, 1917, known as the second Liberty bond act, providing that bonds of the United States bearing interesi) at a higher rate than 4 per cent per annum might be accepted at par and accrued interest, under rules and regulations prescribed by the Secretary of the Treasury, in payment of estate or inheritance taxes iihposed by the United States, if owned continuously by the decedent for at least six month prior to the date of death and a part of his estate at the time of death. Pursuant to this section, detailed rules and regulations governing the acceptance of Liberty bonds for estate or inheritance taxes were prescribed by the Secretary in Treasury Department Circular No. 132, dated January 30, 1919 (Exhibit 65, page 412). The 88 REPORT ON T H E FINANCES. act of March 3, 1919, known as the Victory liberty loan act (Exhibit 7, page 235) added to the second Liberty bond act a new section. No. 18, authorizing the issue of notes of the United States, subdivision (d) of which extended the provisions above described to notes issued under authority of said section. Pursuant to this provision, the 4 | per cent Victory notes will be receivable in payment of estate or inheritance taxes, and rules and regulations governing their acceptance have been prescribed in Treasury Department Circular No. 151, dated June 24, 1919 (Exhibit 66, page 421). The 3 | per cent Victory notes are not under existing law acceptable in payment of estate or inheritance taxes. The following table shows the total face amounts of Liberty bonds accepted in payment of estate or inheritance taxes up to and including October 31, 1919: Loan. Par amount of bonds. First Liberty loan converted 4J per cent b o n d s . . . Second Liberty loan converted 4J per cent bonds. Third Liberty loan 4^ per cent bonds — Fourth Liberty loan 4£ per cent bonds Total........ LOANS SECURED BY OBLIGATIONS OF THE UNITED Interest paid. , $16,450 143,350 109,300 2,000 $101.72 1,439.68 1,324.13 29.37 271,100 2,894.90 STATES. Section 5200 of the Revised Statutes as amended by the acts of September 24,1918, March 3,1919, and October 22,1919, authorizes any national bank to lend to a single borrower, on the security of Liberty bonds, Victory notes, or Treasury certificates of indebtedness, to a practically unlimited extent if such loans conform to the regulations prescribed by the Comptroller of the Currency with the approval of the Secretary of the Treasury. Under these regulations it is provided that in addition to a loan amounting to 10 per cent of the unimpaired capital and surplus fund, already permitted by law, a national bank may grant another loan to the same borrower amounting to 10 per cent of the unimpaired capital and surplus if secured by a like face amount of Liberty bonds. Victory notes, and certificates of indebtedness of the United States issued since April 24, 1917, and a further unlimited amount if secured by such obligations having a face value of $105 for every $100 loaned. It is believed that this increased authority to lend on the security of Government pbligations had a very beneficial effect in aiding in the flotation of the fourth Liberty loan, the largest of the four Liberty loans placed, and also aided in the placing of the Victory notes. The regulations promulgated by the Comptroller of the Currency and approved by the Secretary of the Treasury ena-bled the national banks to make these loans to an unlimited extent as long as the loans were secured by 105 per cent of Liberty bonds. Victory notes, SECRETARY OF THE TREASURY. 89 or Treasury certificates of indebtedness, ''until December 31, 1920, or until such later date as the Comptroller of the Currency, with the approval of the Secretary of the Treasury, may prescribe. ^^ The mere fact that national banks had the right to lend to customers on the security of Liberty bonds to this unlimited extent had a stimulating effect even upon buyers of Liberty bonds who did not have occasion to pledge their holdings. The knowledge that they could borrow on them if they needed to do so naturally encouraged many to subscribe for more than they would otherwise have taken. The sworn reports of the national banks show that on September 12, 1919, the total amount of Liberty bonds of all issues upon which all national banks were lending was $915,211,000. The amount of Treasury certificates of indebtedness upon which the national banks were lending on the same date was $32,379,000. These figures are interesting when we consider that the total amount of Liberty bonds placed through the national banks was $8,603,711,205, or 50.6 per cent, a majority of the entire allotments by the Government, amounting to approximately $17,000,000,000. These records, therefore, show that on September 12, 1919, the national banks were making loans on less than 5 J per cent of the total amount of Liberty bonds which the Government allotted. The amount of Victory notes allotted by the Government was $4,500,000,000. On September 12, 1919, the national banks reported that the total amount of Victory notes held as coUateral aggregated $297,819,000. LIBERTY LOAN SUBSCRIPTIONS IN DEFAULT. Pursuant to the provisions of Treasury Department Circular No. 78, dated May 14, 1917, offering the first Liberty loan for subscription, the Secretary of the Treasury has declared forfeited all delin-quent first Liberty loan subscriptions filed with an official agency, together with all payments made thereon and all right and interest in the bonds allotted. This forfeiture was declared by Treasury Department Circular No. 135^ dated February 5, 1919, attached hereto as Exhibit 67, page 424. Pursuant to this circular all forfeited installment payments are covered into the Treasury to the credit of miscellaneous receipts. Similar action has been taken pursuant to the provisions of Treasury Department Circular No, 90, dated October 1, 1917, offering the second Liberty loan for subscription, as to all delinquent subscriptions to the second Liberty loan, by Treasury Department Circular No. 156, dated November 15, 1919, attached hereto as Exhibit 68, page 425. 90 REPORT ON T H E FINANCES. COUPON LIBERTY BONDS IN PERMANENT FORM. The difficulties experienced in the issue of coupon bonds of the first Liberty loan, to which were attached coupons covering interest to the final maturity date, together with the possibilities of conversions pursuant to the conversion privilege and the certainty that large numbers of coupon bonds would be exchanged for registered bonds, caused the Treasury, beginning'with the 4 per cent bonds of the second Liberty loan, to issue coupon bonds in so-called temporary form—that is, with coupons attached covering interest for only two years or two years and a fraction. This procedure has enabled the department to make early delivery of coupon , bonds subscribed for and has materially reduced the loss which would otherwise have been involved in the cancellation, upon conversion or exchange, of bonds with all coupons to maturity attached. The determining factor responsible for the issue of these temporary bonds, however, was the impossibility of printing bonds by the million of pieces for delivery within any reasonable period if such bonds were to have attached thereto coupons covering interest to the final maturity of the loan. The work of preparing coupon bonds of the several issues with coupons attached covering interest from the date of the last coupon originally attached to the date of final maturity with respect to each loan is proceeding satisfactorily at the Bureau of Engraving and Printing. I t is expected that the 4J per cent bonds of the third Liberty loan will be available for delivery on and after March 15, 1920; that the 4J per cent bonds of the second Liberty loan converted will be available for delivery on and after May 15, 1920; that the 4J per cent bon.ds of the first Liberty loan' converted will be available for delivery on and after June 15, 1920; that the 4J per cent bonds of the fourth Liberty loan will be available for delivery on and after October 15, 1920; and that the 4^ per cent bonds of the first Liberty loan second converted will be available for delivery on and after December 15, 1920. The 4 per cent bonds of the first Liberty loan converted and the 4 per cent bonds of the second Liberty loaii will be available for delivery on or about March 15, 1920, and every effort will be made to have the 4J per cent bonds of the first Liberty loan converted and of the second Liberty loan converted available for delivery on or about the same date. I n accordance with the terms of the so-called temporary bonds originally issued, such bonds are exchangeable, without charge by the United States, on and after the maturity date of the last coupons thereto attached for like bonds with all subsequent coupons attached. The department is proceeding with arrangements to SECRETARY OF THE TREASURY. 91 provide for these exchanges with the least possible inconvenience to the holders, and the public will be advised with respect thereto by Treasury Department circular prescribing fullrules and regulations. OFFICIAL TITLES OF LIBERTY BONDS AND VICTORY LIBERTY NOTES. Recognizing the need for short titles for the various issues of Liberty bonds and Victory Liberty notes, the Treasury ha;s give.n its official sanction to the use of certain abbreviated titles that are fairly descriptive of the respective loans. These will serve as a inatter of convenience in connection with the daily transactions in these securities, and it is to be hoped that banks, newspapers and all others having occasion to refer to the bonds and notes will employ the officially approved short titles so that the people of the country may become so familiar with the names of the respective issues that they will readfly identify them and thus be protected from misrepresentation with respect to any of the outstanding securites. Following are the official or formal titles of the several issues and the approved short titles thereof: Formal titles. Short titles. First Liberty loan 3^ per cent bonds of 1932-47.. .First 3^'s. First Liberty loan converted 4 per cent bonds of 1932-47 First 4's. First Liberty loan converted 4^ per cent bonds of 1932-47 First 4-|-'s. First Liberty loan second converted 4^ per cent bonds of 1932-47' First Second 4i's. Second LibertyToan 4 per cent bonds of 1927-42 Second 4's. Second Liberty loan converted 4^ per cent bonds of 1927-42 Second 4J's. Third Liberty loan 4^ per cent bonds of 1928 Third 4J's. Fourth Liberty loan 4^ per cent bonds of 1933-38... : . . . . . .Fourth 4i'8. Victory Liberty loan 4} per cent convertible gold notes of 1922-23 .Victory 4 f s . Victory Liberty loan 3 | per cent convertible gold notes of 1922-23 Victory 3|^s. AUTHORIZATIONS FOR ISSUES OF LIBERTY BONDS AND VICTORY NOTES. The Secretary of the Treasury was authorized by the first, second, third, and fourth Liberty bond acts to issue bonds in amounts aggregating $22,000,000,000. ' The authority has been exercised to the extent of $16,977,335,850, leaving a balance of Liberty bonds which may be issued under existing law of $5,022,664,150. By the Victory Liberty loan act the Secretary was authorized to issue notes of the United States to the aggregate amount of $7,000,000,000. Deducting the amount of allotted subscriptions to the Victory Liberty loan, corrected to September 30, 1919, namely $4,498,312,650, the balance of Victory notes which may be issued under existing law is approximately $2,501,687,350. The following statement summarizes the authorizations for bonds and notes, the issues, and the amount of such securities that may be issued under existing law. 92 REPORT ON T H E FINANCES. The first Liberty bond act (Apr. 24, 1917) authorized new issues of bonds not to exceed | 5 , 000, 000, 000 The same act authorized the issue under the terms of such act of the unissued bonds previously authorized as follows: For construction of Panama Canal (act Aug. 5, 1909), but including the unissued Panama Canal bonds authorized to be issued for the nitrate plant (act June 3, 1916) and for the Shipping Board (act Sept. 7, 1916), the amount of issued postal-savings bonds being deducted from the amount authorized (approximately) -^ 225, 000, 000 For extraordinary expenditures (act Mar. 3, 1917) 100, 000, 000 For expediting naval construction (act Mar. 4, 1917) 150, 000, 000 And an additional amount to provide for payment of loan of 1908-1918 63, 945, 460 Total authorization under first Liberty bond act First Liberty loan subscriptions allotted ' 5, 538, 945, 460 2, 000, 000, 000 Balance bonds unissued under first Liberty bond act 3, 538, 945, 460 The second Liberty bond act (Sept. 24, 1917) authorized the issue of bonds (in addition to the |2,000, 000, 000 alloted under the first Liberty bond act), not to exceed in the aggregate 7, 538, 945, 460 And provided that of such sum $3, 538, 945, 460 should be in lieu of unissued bonds authorized by the first Liberty bond act. The third Liberty bond act (Apr. 4, 1918) increased the authority for the issue of bonds to 12, 000, 000,000 The fourth Liberty bond act (July 9, 1918) further authority to Issues of Liberty bonds under second Liberty bond act act as amended: Subscriptions allotted— Second Liberty loan. Third Liberty loan. Fourth Liberty loan increased such 20, 000, 000,000 and under such $3, 807, 891, 900 4,176, 516, 850 6, 992, 927,100 14, 977, 335, 850 Balance authority under existing law" for issues of Liberty bonds : 5, 022, 664,150 Authorization of issues of Victory notes. The Victory Liberty loan act (approved Mar. 3, 1919) authorized the issue of notes of the United States not to exceed in the aggregate-. $7,000,000,000 Issues of Victory notes: Victory Liberty loan, allotted subscriptions, corrected to Sept. 30, 1919 4, 498,312, 650 Balance authority under existing law for issues of notes 2, 501,687, 350 RECAPITULATION. Under existing authority of law there may be issued: Bonds.. Notes Total 5,022,664,150 2, 501, 687. 350 7, 524, 351, 500 SECRETARY OF T H E TREASURY. 93 ILLEGITIMATE TRAFFIC IN GOVERNMENT OBLIGATIONS. The Treasury has been much concerned during the past year over the illegitimate and dishonest traffic in Liberty bonds and war-savings certificates and stamps. A number of unscrupulous and mipatriotic persons, by advertisements in the daily press and through personal solicitation in letters and otherwise, have purchased these securities from the owners at prices far below their market price in the case of bonds, and in the case of war-savings certificates considerably below their redemption value, and have redeemed such certificates at a profit by cashing them at post offices. The Treasury has used every means to frustrate the operations of such swindlers and has urged owners of Government securities, whenever it becomes necessary for them to part with them, to deal with reliable banks, trust companies, and others of dependable reputation, and in case of war-savings certificates to go direct to a postmaster, the only official redeeming agency. On January 28, 1919, the following public warning against dishonest operators in Liberty bonds was issued: My attention has been directed to the activities of unscrupulous persons who have been operating extensively throughout the country and who are swindling the owners of Liberty b.onds by purchasing bonds at prices far below their actual worth. These swindlers get the attention of Liberty bond owners by publishing advertisements calculated to make the unsuspecting bond owner believe that the highest market price can be secured for his bond through the agency of the advertiser. Such is rarely, if ever, the case. Records of transactions of this character, brought to the attention pf the Department of Justice and the Treasury Department, prove conclusively that these swindlers take every advantage of bond owners who are forced into their clutches by paying the lowest possible price which the owner will accept—and generally far below the actual value of the bonds. I regret to observe that many reputable newspapers are being victimized by accepting the advertisements of these swindlers, and I appeal to all newspaper publishers to scrutinize very carefully the character of individuals who use their columns to offer to buy Liberty bonds. As a newspaper publisher, I believe that it is the duty of publishers to protect their readers against imscrupulous advertisers. ; Other swindlers endeavor to trade worthless articles or securities of little value for. Liberty bonds, and I appeal to patriotic publishers to assist in putting an end to this practice. The Treasury Department will take such steps as are possible under the law to protect the interests of holders of Liberty bonds, and will use every means at its command to bring to justice all who seek to defraud the people who have so patriotically assisted in winning the war by investing their savings in Liberty bonds and war-saving stamps. Owners of Liberty bonds and war-sa^dng stamps should in no circumstances part with these securities unless necessity compels, and then they should deal only with reliable banks, trust companies, banking institutions, and others whose reputation for integrity is beyond question. If it is necessary to sell Liberty bonds the highest market value should be received. The Treasury Department will welcome information concerning the operations of these swindlers in any part of the country. 94 REPORT ON T H E FINANCES. The Treasury, with the cooperation of the Post Office Department, has also taken various steps throughout the year to meet the situation with respect to war-saving certificates and stamps. These certificates, by the terms of their issue, are not transferable. Under date of January 23, 1919, the Post Office Department issued instructions to postmasters throughout the country directing them to refuse to pay any war-savings certificates where it was apparent that changes had been made in the name of the original owner or where the certificate was presented by anyone known to be publicly buying or offering to buy war-savings stamps or certificates from the owners, unless positive evidence was submitted that the certificate presented was originally issued to the person then demanding payment. On January 27, 1919, the Secretary of the Treasury issued the following statement calling the attention of the public to the activities of these sharpers: My attention. has been directed, to the numerous offers made by unscrupulous persons through advertisements and in other ways to b u y war-savings certificate stamps, and as a result of such offers I am informed that owners of such securities have suffered material losses which could have been avoided b y redemption of the warsavings certificate stamps at post offices as provided by law. I therefore direct the attention of the public, particularly such persons as have made offers of the character above mentioned, to the following terms and conditions which are printed on the back of the war-savings certificate of the series of 1918: This certificate is of no value except to the owner named hereon, and is not transferable. • The law provides that no one person shall at any one time hold war-savings certificates to an ag2:regate amount exceeding $1,000. Certificate.—This certifies that, subject to the terms and conditions printed hereon^ the owner named on the back hereof will be entitled to receive on January 1, 1923, in respect of each United States war-savings certificate stamp of the series of 1918 then aflaxed hereto, the amount indicated thereon as then payable, or, at his option, will be entitled to. receive at any earlier date, in respect of each such stamp then affixed hereto, the lesser amount indicated in the table printed hereon.. Treasury Department Circular No. 128, issued December 18, 1918, and referring to war-savings certificate stamps, series of 1919, contains amongst others the following provisions: Any owner of a war-savings certificate, series of 1919, at his option, will be entitled to receive, at any time after January 10, 1919, and prior to January 1, 1924, at a moneyorder post office (the office where registered in the case of a registered certificate), upon surrender of his certificate and upon compliance with all other provisions thereof, in respect of each war-savings certificate stamp, series of 1919, then affixed to such certificate, the amount indicated in the following table, but no post office shall make any such payment until 10 days after receiving: written demand therefor, and such certifi. eate must be surrendered for payment within 60 days after such demand, otherwise the demand will be deemed to be waived and a new demand will be required before payment. War-savings certificates, series of 1919, are not transferable and will be payable only to the respective owners named thereon, except in the case of the death or disability of any such owner. I t shall not be lawful for any one person at any time to hold war-savings certificates of any one series to an aggregate amount exceeding $1,000 (maturity value). I n order that the interests of owners of war-savings certificate stamps of either series may be safeguarded, I hereby notify all persons to refrain from offers to buy warsavings stamps or accept same in trade. SECRETARY OF' THE TREASURY. 95 The Post Office Department, cooperating with the Treasury Department, has issued instructions wherebj^ payment will be refused whenever it is apparent that changes have been made in the name of the-original owner of any certificates which may be presented to post offices for redemption. ' I earnestly request newspapers and magazines to give this matter the fullest amount of publicity in order that the rights of millions of people—investors in United States Government securities—may be fully protected.' And again on May 26, 1919, the following announcement was. made urging holders to redeem their certificates through post offices, if necessity coinpelled them to dispose of their stamps, and to avoid dealing with scalpers: The Treasury has been greatly concerned by the receipt of reports of dishonest ^traffic in war-savings certificates and stamps. These securities were not intended to be negotiable and, for the protection of the owners in case their necessities required, provision was made for redemption-of war-savings certificates at post offices upon 10 days' notice at a fixed price, representing the original purchase price with an addition for'interest. No obstacles have at any time been placed by the Treasury in the way of the redemption of these war-savings certificates, and it should be generally understood that the owner of a certificate has an absolute right to redeem it in accordance with its terms. Any case of a refusal to make such redemption, if brought to the attention of the Treasury, will result in prompt action. The Government needs the money and hopes the holders of war-savings certificates will retain them, b u t it will place no obstacle in the way of those bona fide holders who request repayment. On the other hand, the Secretary will exercise every means within the power of the Treasury, and has asked the cooperation of the Post Office Department, to prevent payment being made to those rascals who are buying the certificates and stamps for less than their redemption value and promptly turning them in to the Government for redemption at a profit, and serves notice upon those people who are engaging in this disreputable business that this is the settled pplicy of the Treasury. I n this connection attention is invited to the following extract from the instructions issued to postmasters by the Post Office Departinent, under date of January 23, 1919, with respect to the redemption of war-savings certificates presented by persons or firms known to be buying or publicly offering to buy war-savings stamps or certificates from their owners:' Postmasters are further instructed not to pay any war-savings certificates presented by persons or firms known to be buying, or publicly offering to buy, war-savings stamps or certificates from the owners, unless positive evidence is submitted that the certificates were originally issued to the persons or firms presenting them for payment. I urge all patriotic holders of war-savings certificates to hold their certificates if they can and, if they can nqt, to avoid all dealers in war-savings certificates and redeem the certificates through post offices. The savings organization, by publicity and otherwise, has also worked to the same end; and other measures of a more direct nature are in contemplation. ISSUES OF FRAUDULENT AND WORTHLESS SECURITIES. The attention of the Congress again is invited to the necessity of enacting legislation to protect the people of the United States from grave injury growing out of the issue of securities of doubtful worth 96 REPORT ON T H E FINANCES. and in many cases of fraudulent character. Unscrupulous promoters, moreover, have tempted patriotic subscribers to the war obligations of the Government, particularly those who were unaccustomed to investments, to exchange Liberty bonds for their worthless stocks, causing financial loss to innocent victims and prejudicing the national finances by the resultant sale on the market of Government securities by those who have thus obtained possession of them. The Capital Issues Committee has reported upon the subject somewhat in detail. During the war the committee was unable to reach the unpatriotic or dishonest stock vendor because of lack of power under the law to compel submission to its jurisdiction. The experience of the committee, however, has been laid before the Congress and the Treasury has presented to the House Ways and Means Committee and to the Senate Committee on Finance a bill proposed by the Capital Issues Committee and with the general purposes of which this departjaient is in accord. The Secretary's letter and the committee's bill are attached hereto as Exhibit 69, page 426. The importance of the enactment of legislation along these lines was emphasized by the President in his address to the Congress, August 8, 1919, on '^The Cost of Living" in the following words: May I not add that there is a bill now pending before the Congress which, if passed, would do much to stop speculation and to prevent the fraudulent methods of promotion by which our people are annually fleeced of many millions of hard-earned money? I refer to the measure proposed by the Capital Issues Committee for the control of security issues. . It is a measure formulated by men who know the actual conditions of business and its adoption would serve a great and. beneficent purpose. I t may be that action by the Congress alone will not suffice to suppress the evil effectually and that the problem will require supplementary legislation by the several States to reach agents who rely upon personal conversations and solicitations without the use of the mails or any other governmental agency of the United States. The Treasury respectfully urges the Congress to give consideration to this important matter, and it is earnestly hoped that such action as is necessary will be taken by the States in coordination with legislation by the Congress. TAX EXEMPTIONS OF LIBERTY BONDS AND VICTORY NOTES. The 4 | per cent Victory notes are exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (&) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States upon the income or profits of SECRETARY OF.THE TREASURY. ° 97 individuals, partnerships, associations, or corporations. T h e ' 3 | per cent Victory notes are exempt, both as to principal and interest, from all taxation (except estate or inheritance taxes) now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority. The Victory Liberty loan act also provided, in section 2, for certain further exemptions of Liberty bonds from Federal income surtaxes and profits taxes. These exemptions were in addition to the exemptions conferred by the second Liberty bond act and the supplement to the second Liberty bond act, and were designed to stabilize further the market prices of the outstanding Liberty bonds. Section^ 2 (a) of the Victory Liberty loan act granted an exemption up to $30,000 in the aggregate of first Liberty loan converted 4 per cent bonds, first Liberty loan converted 4J.per cent bonds, first Liberty loan second converted 4J per cent bonds, second Liberty loan 4 per cent bonds, second Liberty loan converted 4^ per cent bonds, third Liberty loan 4J per cent bonds, and fourth Liberty loan 4J per cent bonds, as to the interest received on and after January 1, 1919, until the expiration of five years after the termination of the war. This exemption was not made conditional upon subscription to Victory notes. Section 2 (h) granted a further exemption up to $20,000 in the aggregate of such 4 per cent and 4 J per cent Liberty bonds as to the interest received on and after January 1, 1919, this exemption being conditional upon original subscription to and continued holding at the date of the tax return of one-third as many notes of the Victory Liberty loan, and extending through the life of such notes of the Victory Liberty loan. Accordingly the tax exemptions of Liberty bonds and Victory notes may now be summarized as follows: I. Four per cent and 4i per cent bonds and 4f per cent Victory notes are exempt from all Federal, State, and local taxation, except (a) estate or inheritance taxes, and (6) Federal income surtaxes and profits taxes, as follows: (1) First Liberty loan converted 4 per cent bonds of 1932-1947 (first 4's); (2) first Liberty loan converted 4J per cent bonds of 1932-1947 (fia:st 4^'s); (3) first Liberty loan second converted 4J per cent bonds of 1932-1947 (first second 4i's); (4) second Liberty loan 4 per cent bonds of 1927-1942 (second 4's); (5) second Liberty loan converted 4J per cent bonds of 1927-1942 (second 4}'s); (6) third Liberty loan 4J per cent bonds of 1928 (third 4i's); (7) fourth Liberty loan 4i per cent bonds of 1933-1938 (fourth 4i's); and (8) Victory Liberty loan 4} per cent convertible gold notes of 19221923 (4} per cent Victory notes) are. exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (6) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed . by the United States upon the income or profits of individuals, partnerships, associations, or corporations. 140325—n 1919 7 98 REPORT ON T H E FINANCES. I I . Four per cent and 4J per cent bonds are entitled to limited exemptions .''rom Federal income surtaxes and profits taxes, as follows: Four per cent and 4^ per cent Liberty bonds (but not 4 | per cent Victory notes) are entitled to certain limited exemptions from graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed b y the United States, upon the income or profits of individuals, partnerships, associations, or corporations, in respect to the interest on principal amounts thereof, as follows: 1. Five thousand dollars in the aggregate of first 4's, first 4J's, first second 4^'8, second 4's and 4|^'s, third 4Vs, fourth 4^'s, Treasury certificates, and war-savings certificates. 2. Thirty thousand dollars'of first second 4^'s, until the expiration of two years after the* termination of the war. 3. Thirty thousand dollars of fourth 4^'s, until the expiration of two years after the termination of the war. 4. Thirty thousand dollars in the aggregate of first 4's, first 4.i's, first second 4^'s, second 4's and 4J's, third 4J's, and fourth 4^'s, as to t h e interest received on and after January 1, 1919, until the expiration of five years after the termination of the war. 5. Forty-five thousand dollars in the aggregate of first 4's, first 4i's, second 4's and 4i's, and third 4i's, as to the interest received after January 1,1918, until the expiration of two years after the termination of the war; this exeniption conditional on original subscription to, and continued holding at the, date of the tax return of, two-thirds as many bonds of the fourth Liberty loan. 6. Twenty thousand dollars in the aggregate of first 4'8, first 4^'s, first second 4J'8, second 4's and 4^'s, third 4 | ' s , and fourth 4|'8, as to the interest received on and after January 1, 1919; thia exemption conditional upon original subscription to, and continued holding at the date of the tax return of, one-third as many notes of the Victory Liberty loan, and extending through the life of such notes of the Victory Liberty loan. " One hundred and sixty thousand dollars total possible exemptions from Federal income^surtaxes and profits taxes, subject to conditions above summarized. I I I . Three and one-half per cent bonds and 3f per cent notes are exempt from all Federal, State, and local taxation, except estate or inheritance taxes, as follows: (1) First Liberty loan 3^ per cent bonds of 1932-1947, and (2) Victory Liberty loan 3f per cent convertible gold notes of 1922-1923, are exempt, both as to principal and interest, from all taxation (except estate or inheritance taxes) now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority. In this connection I believe it my duty to direct your attention to the need of simplification of the limited exemptions from surtaxes and profits taxes, summarized in paragraph II above, which were con-r ferred upon the holders of Liberty bonds by legislation enacted from time to time during the period of the war. Of these exemptions, exemption No. 1-continues throughout the life of the various securities concerned and is not susceptible of change or consolidation with any other exemption. Exemptions No. 3 and No. 5 both continue untfl the expiration of two years after the termination of the war. No. 3 is unconditional, but No. 5 is conditioned on original subscription to and continued holding at the date of the tax SECRETARY OF THE TREASURY. 99 return of two-thirds as many bonds of the fourth Liberty loan. I suggest, accordingly, that No. 3 and No. 5 be consolidated, and inasmuch as the condition which was imposed at the time exemption No. 5 was conferred has served its purpose, that that condition may now be removed in the interest of simplicity of administration, and also for the benefit of the market for Liberty bonds. Exemption No. 2 is confined to one issue of bonds which aggregates only $3,492,050, and it can not be removed, nor be consolidated with other exemptions without grave loss to the revenue. Exemptions No. 4 and No. 6 continue, the one untfl the expiration of five years after the termination of the war and the other through the life of the notes of the Victory Liberty loan. No. 4 is unconditional, but No. 6 is conditioned on original subscription to and continued holding at the date of the tax return of one-third as many notes of the Victory Liberty loan. I suggest that these two exemptions be combined and that, for the reasons above given with relation to exemption No. 5, the condition be removed. This will extend somewhat the life of the $20,000 exemption, but I believe the simplicity of administration and the benefit to the market for Liberty bonds wfll justify the course proposed. . The only objection to these simplified arrangements which occurs to the Treasury is that they may confer upon holders of bonds who did not subscribe or hold bonds or notes as required by the acts of Congress certain exemptions from taxation, which were conferred upon original subscribers. On the other hand, they take away no right which any holder has and in so far as they confer rights upon those not now holders, they will in the end benefit original subscribers who are still holders by improving the market value of their bonds or notes. I t is impossible to present any accurate calculation of the consequences to the Treasury of the amendments of the law proposed. I do not hesitate, however, to express my confident judgment that the loss in revenue wfll be relatively slight and that the gain to the Treasury which will result from the increased attractiveness of the taxable issues of the Liberty loans and the consequent benefit to the Government's credit, as well as the simplicity of administration, wfll amply compensate the Treasury for that slight loss. These simplified exemptions could be established by a statutory provision reading substantially as follows: That in addition to the exemptions provided in section 7 of the second Liberty bond act and in subdivision (3) of section 1 of the supplement to second Liberty bond act, 4 per cent and 4i per cent Liberty bonds shall be exempt from graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations, in respect to the interest on aggregate principal amounts thereof, as follows: $125,000 aggregate principal amount thereof 100 REPORT ON T H E FINANCES. after January 1, 1920, and until the expiration of two years after the date of the termination of the war between the United States and the German Government, and $50,000 aggregate principal amount thereof after the expiration of two years and until the expiration of five years after the date of the termination of t h e war between t h e United States and t h e German Government. The exemptions hereby conferred are not subject to the conditions and limitations respectively imposed in subdivisions (1) and (2) of section 1 of the supplement to second Liberty bond act and in section 2 of t h e Victory Liberty loan act, and are in lieu of and not in addition to the exemptions therein contained. BOND AND NOTE DESIGNS. In the preparation of the Liberty bonds and the Victory notes,, involving the issuance of so many millions of pieces of war securities, every effort has been made to protect the Treasury and the public and to circumvent counterfeiting and denominational raising. The Government's established high standards of engraving and plate printing have been maintained. Color work has been introduced when appropriate, and the bonds and notes have been printed on the distinctive bank-note paper adopted by the Treasury for currency issues, in which rows of red and blue silk fiber are woven during the process of manufacture. Profiting by experience of the past with respect to currency issues, a multiplicity of designs has been avoided. Distinctive portraits have been assigned to each denomination for all issues, and following the same principle the backs of each denomination are printed in a uniform color for all issues. These distinctive features will greatly serve in preventing denominational raising. With such a vast amount of war securities outstanding, it is important that the people become thoroughly familiar with the characteristics of each issue in order that they may not be imposed upon by the unscrupulous. In general, the distinctive features appertaining toall issues of Liberty bonds and Victory notes are as follows: Denomination. S50 100 500 1,000 5,000 10,000 50,000 100,000 Portrait on face of bonds. Jefferson Jackson . ; Washington Lincoln Monroe CleV eland McKinley Grant Color of backs of bonds and coupons. Brown. Orange. Dark blue. Green. Red. Purple. . Olive. Light blue. One exception occurs: the backs of the $10,000 denomination of the first 3Vs, registered, are printed in brown. CURRENCY DESIGNS. Following the policy pursued with respect to uniform denominational designs for Liberty bonds and Victory notes, the Treasury is now undertaking to adopt a distinctive characteristic for each denom- SECRETARY OF THE TREASURY. 101 ination of all forms of currency in circulation. Instructions have been issued to the Bureau of Engraving and Printing to prepare a uniform portrait that will represent each denomination of all issues of paper money. As Federal reserve notes and Federal reserve bank notes are now largely in circulation, it has been decided to adopt for. all forms of currency the portraits that appear on those notes. The bureau is engaged on the work and the changes will be effected as soon as possible. This standardization will serve as a safeguard and protection against note raising, as well as in the interest of economy. I t will assist bankers, business men, and the people generally in detecting attempted counterfeits, one of 'the most fruitful causes of which has been the absence of distinctive denominational features in the currency. One of the greatest dangers to the Treasury and to the public in connection with the question of counterfeiting has been the multiplicity of designs of our various forms of currency. The question of revision of currency designs has been under consideration by the Treasury for many years, but it has been deemed important to take this particular step with respect to denominational distinction without awaiting deliberation on the general subject. The denominational portraits appearing on Federal reserve notes and Federal reserve bank notes, and which now have been prescribed for future issues of all kinds of currency, are as follows: Denominations. ' $1 2 5 10 20 50 Portrait. Washington. Jefferson. Lincoln. Jackson. Cleveland. Grant. Denominations. $100 500 1,000 5,000 10,000 Portrait. Franklin. Marshall. Hamilton. Madison. .Chase. THE FEDERAL RESERVE SYSTEM. During the past year the Federal reserve system has continued to render important service by assisting the Government in its war finance operations and by enabling the banks to support the efforts of the Treasury without neglecting the interests of commerce and industry. Between October 25, 1918, and October 31, 1919, the total of discounted bills held by the Federal reserve banks has grown from $1,546,164,000 to $2,128,547,000. Of the latter total, $1,681,082,000 is represented by paper secured by Government war obligations, as against $1,092,417,000 on the earlier date. During the period under review the Federal reserve banks, as before, very properly abstained from directly investing their funds in Government war securities. The bulk of Government securities held at present by the Federal 102 REPORT ON THE FINANCES. reserve banks consists of United States bonds and 1-year 2 per cent certificates to secure Federal reserve bank-note circulation. Holdings of Government war securities proper represent almost altogether temporary'purchases of Liberty bonds. Victory notes, and Treasury certificates to accommodate member and nonmember banks. No material changes in members' reserve deposits or in net deposits of the F.ederal reserve banks have occurred during the year, increases in these items being due largely to the accession of new members. Federal reserve note circulation stood on October 31, 1919, at $2,752,876,000, only slightly below the highest figure on record ($2,753,457v,000 reported for October 24, 1919), the corresponding amount for October 25, 1918, being $2,507,912,000. The large amount of notes in circulation on both dates mentioned is due in part to the seasonal requirements for currency during the cropmoving period, while the greater amount this year compared with the preceding year reflects largely the higher price level prevailing a t the present time. During the period the Federal reserve banks' aggregate liabilities on Federal reserve bank notes in circulation increased from $58,859,000 to $254,933,000, this increase corresponding approximately to the amount of silver certificates of small denominations retired in accordance with the provisions of the act of April 23, 1918, known as the Pittman Act. Gold reserves of the Federal reserve banks, which were $2,045,132,000 on October 25, 1918, continued to increase, largely through deposits by the Treasury, and stood a t $2,201,804,000 on June 6, 1919, just before the removal by the Goyernment of the embargo on gold exports on June 9. After that date an almost continuous decline in gold reserves is noted for a period of three months, .deposits by the Treasury not being sufficient to offset withdrawals for export. During the months of September and October gains in gold reserves were caused through the acquisition by the Federal reserve banks of gold received in payment for food sold by the United States Grain Corporation to the German Government. „ On October 31, total gold reserves were $2,138,000,000, or about 93 millions more than on October 25, 1918. Owing largely to the seasonal character of Government income and profits tax collections, great variation is shown in the amounts of balances carried by the Federal reserve banks on Government account, the maxiinum amounts occurring on the dates when large tax payments felldue. During the period under review the total Government balances ranged between 26 millions on June 6, 1919, and 286 millions on March 21, 1919, the Friday following the date when the first installment of income and excess-profits taxes fell due. The average of these balances for the period covered was 126 millions, 103 SECRETARY OF THE TREASURY. an average somewhat lower than the corresponding average for the calendar year 1918. Discount rates of the Federal reserve banks show but little change during the fiscal year and whatever changes occurred were parallel to changes in the rates charge/! on war paper. The rate on 15-day paper secured by United States war obligations early in 1918 was raised to 4 per cent, and this was the ruling rate at which the bulk of the discounts was made by most of the Federal reserve banks. The 90-day rate on war paper was maintained at 4i per cent, except that temporarily a 4 per cent rate was adopted to encourage the financing by the member banks of the fourth Liberty loan. Rates on ordinary commercial paper, as a rule, were fixed one-fourth to three-fourths per cent higher than the corresponding rates on war paper, with the result that since the middle of December, 1918, the share of war paper in the banks' holdings of discounted bills never fell much below 80 per cent. A statement showing the changes for the period, November 1,1918, to June 30, 1919', in the loans and discounts'of national banks, their holdings of Government securities and their gross deposits follows: [In thousands of dollars.] Date. Nov. 1,1918. Dec. 31.1918. Mar. 4,1919.. May 12,1919. June 30,1919 Loans and discounts. 10,096,940 9,918,294 9,691,187 9,904,821 10,574,838 Government securities. 3,156,312 2,949,878 3,681,607 4,028,140 3,171,912 Gros? deposits. 15,051,473 15,423,081 15,299,807 15,903,796 15,924,865 .Loans and discounts showed relatively small changes between November 1, 1918, and May 12, 1919, but increased by over 650 millions between the latter date and June 30. On the other hand. Government security holdings which had gone up from 3,156 millions on November 1, 1918, to 4,028 millions on May 12, declined to 3,172 millions on June 30, as the result largely of the redemption of Treasury certificates. Gross deposits, with the exception of the period between the last of December, 1918, and March, 1919, show a continuous growth, the total on June 30 last being about 874 inillions in excess of the November, 1918, total. WAR FINANCE CORPORATION. With the signing of the armistice there was necessarily a narrowing of the scope of the operations of the War Finance Corporation because of the limitation of the law which restricted the advances of the corporation to/^purposes necessary and contributory to the war." The corporation previously had entered into a number of engage- 104 REPORT ON THE FINANCES. ments, however, which it was necessary to carry out in accordance with the terms agreed upon, as borrowers had made their plans in good faith, relying upon the assistance of the corporation. Among such advances were cattle loans in drouth-stricken sections of the country for the purpose of preserving the breeding herds. These loans were, as previous ones of the same character, of very great service in conserving the meat supply of the Nation. While considerable amounts thus were advanced, a large amount of money was returned to the corporation during the year in repayment of advances, and with very few exceptions the emergency funds provided by the Government have been promptly repaid on maturity of the loans. In line with! the recommendations of the Treasury, the Congress extended the functions of the corporation with respect to financing foreign trade by the following amendment to the War Finance Corporation Act, which was incorporated in the Victory Loan act: SEC 21. (a) That the corporation shall be empowered and aujhorize'd, in order to promote commerce with foreign nations through the extension of credits, to make advances upon such terms, not inconsistent with the provisions of this section, as it may prescribe, for periods not exceeding five years from the respective dates of such advances: (1) To any person, firm, corporation, or association engaged in the business in the United States of exporting therefrom domestic products to foreign countries, if suchperson, firm, corporation, or association|is, in the opinion of the board of directors of the corporation, unable to obtain funds upon reasonable terms through banking channels. Any such advance shall be made only for the purpose of assisting in the exportation of'such products, and shall be limited, in amount to not more than the contract price therefor, including insiu-ance and carrying or transportation charges to the foreign point of destination if and to the extent that such insurance and carrying or transportation charges are payable in the United States by such exporter to domestic insurers and carriers. The rate of interest charged on any such advance shall not be less than 1 per centum per annum in excess of the rate of discount for ninety-day commercial paper prevailing at the time of such advance at the Federal reserve bank of the district in which the borrower is located; and (2) To any bank, banker, or trust company in the United^ States which after this section takes effect makes an advance to any such person, firm, corporation, or association for the purpose of assisting in the exportation of such products. Any such advance shall not exceed the amount remaining unpaid of the advances made by such bank, banker, or trust company to such person, firm, corporation, or association for such purpose. (b) The aggregate of the advances made by the corporation under this section remaining unpaid shall never at any time exceed the sum of $1,000,000,000. (c) Notwithstanding the limitation of section 1 the advances provided for by this section may be made until the expiration of one year after the termination of the war between the United States and the German Government as fixed by proclamation of the President. Any such advance made by the corporation shall be made upon the promissory note or notes of the borrower, with full and adequate security in each instance by indorsement, guaranty, or otherwise. The corporation shall retain power to require additional security at any time. The corporation in its discretion may upon like security extend the time of payment of any such advance through renewals, SECRETARY OF THE TREASURY. 105 the substitution of new obligations, or otherwise, but the time for the payment of any such advance shall not be extended beyond five years from the date on which it was originally made. During the first few months after the passage of the above amendment, loans made by the Treasury to foreign governments, the authorization of the War Department to sell its surplus stock on credit, the authority of the Food Administration to sell on credit, and special measures passed by the Congress fbr the relief of European nations sufficed to maintain an exceptionally high level of exports, but the time has now arrived when this new authority conferred upon the War Finance Corporation is beginning to be used in the way contemplated by the law. Failure of the appropriation for the Eailroad Administration created a sudden emergency in which the War Finance Corporation was able to be of great assistance.. I t was felt by the directors t h a t this aid came well within the powers of the corporation in view of the fact that the maintenance of our transportation system for the purpose of keeping up a steady fiow of supplies to American troops still in Europe and for the purpose of facilitating demobihzation constituted an essential part of operations necessary and contributory to the war. I n March, 1919, the directors, farcing the large requirements of the railroads, decided to issue $200,000,000 of 1-year 5 per cent bonds of the corporation. This issue was quickly taken) just prior to the issue of the Victory loan and ample funds, for any emergency were thereby provided. In connection with the financing of railroad requirements, the War Finance Corporation advanced to the Director General, on proper security, $50,000,000, and to the raihoads on security of certificates of indebtedness of the Director General of Railroads $65,094,830. The action of the War Finance Corporation not only furnished money in the sums mentioned, but made feasible the prompt and patriotic cooperation of the bankers of the country in assisting the raihoads. On the assembling of the Congress, the appropriation for the raihoads was promptly passed and both the Raihoad Administration and the railroads repaid these emergency loans. The corporation still has outstanding loans to railroads to the extent of $70,358,210. The corporation has continued its function as a dealer in Government securities under section 11 of the act, and has been of great service in stabihzing the Government bond market. After the signing of the armistice, numerous changes in the organization of the War Finance Corporation occurred. W. P.'\G. Harding resigned as managing director, continuing as director, and was succeeded as managing director by Eugene Meyer, jr. Clifford M. Leonard, who served as director during the war period, found it necessary on 106 REPORT ON THE FINANCES. account of his health and business to resign. Sherman Allen, secretary and treasurer, resigned to enter private business,, and was succeeded by R. R. Burklin. The general counsel of the corporation, George S.. Franldin and Samuel W. Fordyce, jr., as well as associate counsel Frank M. Peters and Morton G. Bogue, were compelled to give u p their public service to resume their private activities. M. C. Elliott was elected consulting counsel and Louis B. Wehle general couiiseL The subjoined statement shows the condition of the corporation as of November 15, 1919: ASSETS. Due from depositaries: Treasurer ofthe United States Cattle loan agency -. S13,467,262.56 1,466.41 • $13,468,728. ^7 Advances under the provisions ofthe act: Total Total Balance Balance advances. repayments, outstanding, outstanding. Section 7.paragraphs... $2,997,202.61 $2,596,410.12 $400,792.49 Section 7; paragraph 2... 1,712,575.00 437,125.00 1,275,450.00 Sections 550,000.00 550,000.00 Section 9: Railroads 204,794,520.00 134,436,310.00 $70,358,210.00 • Public utilities 39,661,400.00 17,124,767.85 22,536,632.15 Warehouse receipts . 25,211,500.00 25,211,500.00 Industrial loans 23,776,152.00 22,737,500.00 1,038,652.00 Cattle loans 7,779,826.13 5,074,915.28 2,704,910.85 96,638,405.00. Total.'. 306,483,175.74 208,168,528.25 United States bonds and Treasury certificates of indebtedness United States bonds purchased, not yet delivered Public utility bonds Accrued interest receivable on loans Furniture and equipment Total assets 98,314,647.4^ 482,544,097.70 4,208,269.2958,400.00. 1,174,554.00 9,242.49 599,777,939.94 LIABILITIES. .Capital stock paid in (authorized $500,000,000) $455,000,000.001-year 5 per cent gold bonds, Series A $200,000,000.00 Less araount repurchased by corporation 67,807,000.00 132,193,000.00' Interest and sundry profits.. 17,830,069.86 Less: Interest paid on 1-year 5 per cent gold bonds of the War Finance Corporation $3,873,171.40 Accrued interest paid on United States Government obligations purchased i 888,761.03 Expenses, of issue of 5 per cent gold bonds of the War Finance Corporation 233,079.23 Administrative expenses since organization 250,118.26 5,245,129.92 Net interest and sundry profits (collected) ." 12,584,939.94 Total liabilities *. 599,777,939. 94 From the above statement it wUl be seen that the War Finance Corporation holds large amounts of the various issues of Liberty bonds as well as considerable amounts of Treasury certificates. Liquidation of the Treasury certificates at maturity and the sale of a large part of the holdings of bonds to the Treasury for its bond purchase SECRETARY OF THE TREASURY. 107 fund will enable the corporation to liquidate its bonded indebtedness due April 1, 1920, and also to provide funds to a considerable extent for advances to foreign trade. CAPITAL ISSUES COMMITTEE. The Capital Issues Committee completed its work shortly after the signing of the armistice and suspended active operations on December 31, 1918. The committee rendered its final report to the Congress on February 28, 1919, and was formally dissolved by the President on August 30, 1919. From the date of its organization on May 17, 1918, to the close of its active operations on December 31, 1918, the committee received and passed upon 3,309 applications involving new securities of an aggregate value of $3,777,313,000. The total amount disapproved by the committee was $917,133,000. In passing upon issues of securities for public and private enterprises entirely from the standpoint of the national interest, the committee performed a most important function during the war and served an imperative purpose in conserving investment capital, labor, and material for the use of the Government and essential industries. The committee operated as the logical corollary of the War Finance Corporation. The proclamation of the President dissolving the committee on August 30, 1919, and placing its records in the custody of the Federal Trade Commission was as follows: BY T H E P R E S I D E N T OF T H E U N I T E D S T A T E S OP A M E R I C A — A PROCLAMATION. Whereas Congress on-April 5, 1918, enacted a law known as "The war finance corporation act;" and Whereas, under section 206 of said act, it is provided that the President may at any time by proclamation declare that the title relating to the capital issues-committee is no longer necessary and that'thereupon it shall cease to be in effect: Now therefore, I, Woodrow Wilson, President of the United States, by virtue of the authority in me vested, do hereby proclaim and declare that title 2 of said war finance corporation act, relating to the capital issues committee, is no longer necessary, and I further direct that the committee shall close up its affairs, and that all the records, including letters, correspondence, and testimony in the possession of said committee be turned over to the Federal Trade Commission. In witness whereof I have hereunto set my hand and caused the seal of the United States to be aflaxed. Done this 30th day of August, in the year of our Lord 1919, and of the independence of the United States of America the one hundred and forty-fourth. WOODROW WILSON. By the President: ROBERT LANSING, Secretary of State. 108 REPORT ON T H E FINANCES. GOLD. The stock of gold money in the United States, including coin and bullion, was $2,872,525,066 on November 1, L919, a decrease of $207,259,700 as compared with November 1, 1918, and an increase of $985,254,402 as compared with August 1, 1914, or at the beginning of the war in Europe. About one-third of the world's monetary stock of gold is estimated to be held by the United States. After the termination of the embargo on the export movement of gold on June 9, 1919, there were moderate withdrawals, which naturally reduced the monetary stock. The amount of gold money in the country on June 1, 1919, and on the first day of each succeeding month until November was as follows: J u n e 1, 1919 J u l y l , i919..... Aug. 1, 1919 $3,092, 037, 699 3,026,591,090 2,989,548,109 Sept. 1, 1919 Oct. 1, 1919 Nov. 1. 1919 $2,944,727,731 2,905,726,555 2, 872, 525,066 The rising cost of labor and material has rendered gold mining, not only in this country, but in all parts of the world, progressively less and less profitable during the past two years, with the result of a decreased output of gold in all parts of the world. There resulted considerable public discussion as to what steps, if any, might wisely be taken to relieve this situation. On November 2, 1918, my predecessor appointed a committee, consisting of Albert Strauss, vicegovernor of the Federal Reserve Board, chairman; Edwin F. Gay, dean of the graduate school of business administration. Harvard University; Raymond T. Baker, Director of the Mint; Emmet D. Boyle, governor of Nevada; and Pope Yeatman, mining engineer, to consider and report on the subject. The conclusions reached by the committee commend themselves to me as sound and meet with my entire approval. Their report follows: F E B R U A R Y 11, 1919. To the Honorable the SECRETARY OP THE T R E A S U R Y . ' SIR: On November 2, 1918, your predecessor appointed the undersigned a committee to investigate present conditions in the gold-mining industry and to study the problem carefully and thoroughly with a view to definitely ascertaining all the difficulties confronting gold production and submitting suggestions of sane and sound methods of relief. The nature of the problem submitted to the committee was well stated in the letter . of Secretary McAdoo to Delegate Sulzer, of Alaska, under date of June 10, 1918, to which reference has been made in almost all resolutions or discussions of the subject since that time. That letter is reproduced herewith (Exhibit 70, page 431). At that time the war was at its height and there was every prospect of a prolonged war. Contrary to the belief apparently entertained in many quarters the structure of banking credit in any country during war.time does not depend very much, if at all, on the amount of gold t h a t can be made available as a reserve for that structure. Undoubtedly the rise in prices in this country since 1914 is to a great extent due to the heavy importations of gold during 1915 and 1916, but it does not follow that the SECRETARY OF THE TREASURY. 109 export of a corresponding amount of gold at the present time would operate to bring down prices. As a matter of fact it is the judgment of this committee that it would not so operate until we.have reached or approached normal peace conditions. In time of peace the gold reserve is undoubtedly an important factor in controlling the credit structure, but in time of war that structure is determined by other causes. This distinction is sometimes overlooked and much inaccurate thinking is due to this oversight. Under war conditions the imperative necessity of the Government for the production of war essentials determines Government expenditure, and this expenditure can not be modified to meet the banking needs of the country; on the contrary, the banking policies of the country must conform to the fiscal policy of the Grovernment. Under these circumstances, the only way in which the expansion of banking credits can be checked is by a reduction of civil demands to correspond with the expanding needs for Government expenditure. The credit saved through this reduction of civil demands becomes available to the Government through the purchase of Government securities, or through the payment of taxes. To the extent to which such saving and resulting investment does not take place Government obligations must be taken by the banks, giving rise to credits to the Government which create additional purchasing power for the.use of the Government. This additional purcha,sing power, in turn, competes with the demands of private individuals, driving up prices against the Government and against the civil consumer and ultimately impairs the individual's purchasing power to an amount roughly equivalent to the impairment that might better have been brought about through voluntary saving. The credit structure thus erected depends inevitably upon Government needs and upon the willingness and ability of the community to impose upon itself voluntary restraint in expenditure. In other words, the structure will be high if the community fails to save. The results in saving achieved in the United States were remarkable, but no program of saving can be instantly put into effect, and the expansion of the credit structure that took place under these circumstances was inevitable and could not have been controlled through any reduction in the gold reserve. This being so and a long war being believed in prospect, it was important to maintain a strong gold reserve in order that there might be no impairment of confidence in the convertibility of our currency and in our ability ultimately to settle any international indebtedness in gold. The cessation of hostilities has radically changed this situation, and, with the change in the situation, any need of particular effort to promote or stimulate our gold production which may have existed has ceased. There is now no danger of an impairment of confidence. The dimensions of our financial problems are becoming clear and we know that we can without permanent strain meet any financial requirement the Government will be willing to assume. Some further expansion of credit may result from our expenditures for demobilization and readjustment, but we can look forward to a comparatively early contraction of our credit structure with the attending circumstances of a free gold market and a gold reserve that shall once more perform its normal function of regulating credit conditions. That movement will, we believe, be both preceded and accompanied by lower commodity prices. Under these circumstances, there is in our opinion no need for artificial stimulation of gold production. Not only has any need therefor passed, but there have come into operation causes that will in due time restore all industry, including the mining of gold, to a normal basis. Gold mining will then become again normally profitable and respond automatically to normal stimuli. It is therefore the judgment of this committee that no steps should be taken by the Government to stimulate or promote the production of gold. The representatives of.the gold mining interests very properly based their suggestions for relief on the public necessity for a larger production of gold and not on the hardships 110 REPORT ON TFIE FINANCES. suffered b y them as parties interested in an industry in which the margin of profit had been rapidly shrinking, and in many cases had entirely disappeared or been tm-ned into a loss. They recognized that such diminishing profits and such losses were inevitable under the shifting conditions of war, and that merely as producers they had no better claim to relief than any other section of the community suffering a reduction of profits or incurring losses under the changing incidence of war conditions. In the course of its consideration of the subject referred to it this committee has conferred with a committee appointed b y the American Gold Conference held at Reno in August, 1918, under the presidency of Gov. Emmet D. Boyle, of Nevada. I t has had the benefit of the very complete survey of the conditions of the gold mining industry contained in the report dated October 30, 1918, of the committee appointed by the Secretary of the Interior to study the gold situation, of which Hennen Jennings, esq., was chairman, and of the report dated November 29, 1918, of the gold production com. mittee appdinted by the commissioners of the British Treasury under the chairmaaship of Lord Inchcape. T h e y h a v e conferred with or secured the views of Prof. Irving Fisher and other eminent economists, besides which they have had referred to them a considerable volume of correspondence expressing widely varying views which had been received b y the Secretary of the Treasury and the Director of the Mint. I t is interesting to note that the British Treasury committee arrived at the same conclusion as that which we have reached. We can not refrain from expressing gratification at the substantial unanimity of opinion among those whose position or experience entitles their views to respectful consideration against suggested measures of relief that would have had a" tendency to undermine or upset our standards of value. Respectfully submitted. ALBERT STRAUSS. E D W I N F . GAY. RAYMOND T . B A K E R . EMMET D . BOYLE. P O P E YEATMAN. SILVER. The conversion of silver dollars for use as bullion continued virtually throughout the fiscal year, the work having been coinpleted on May 6, 1919, when the Secretary announced that he did not contemplate any further sales of silver under the act of April 23, 1918, generally known as the Pittman Act, except to the Directorof the Mint. Over 191,000,000 standard silver dollars were melted during the year. That amount, together with the dollars melted in the preceding fiscal year, enabled the Treasury to complete the arrangement entered into in May, 1918, with the British Government for the shipment to India of 200,000,000 fine ounces of silver resulting from the melting of silver dollars under the authority of the Pittman Act. The following tables show various operations under that act from the date of its passage to October 31, 1919: Ill SECRETARY OF T H E TREAStJRY. TABLE I.—Silver dollars melted. Dollars melted (whereof $3,177,554 represented dollars in Treasury and the balance was made available b y t h e retirement of silver certificates) $260,121, 554 TABLE I I . ^ S i l v e r certificates withdrawn from circulation and canceled. Denominations. $1 $2 $5..... $10 $20 $50 $100 $500 Amount net. $112,718,265 35,624,260 '.... 92,960,115 6,956,820 6,396,340 2,262,400 24,300 1,500 , : Total face value 256, 944, 000 TABLE III.—Federal reserve bank notes issued Apr. 30, 1918, to Oct. 31, 1919. Net issue. $174,241,436 46,624,364 34,170,435 1,608,910 1,254,700 $1 S2 $5 $10 $20 Total Less notes redeemed but not assorted by denominations Notes outstanding October 31,1919 , 257,899,845 1,656,000 256,243,845 The Federal reserve bank notes which have been issued, as stated in the above table, are secured as follows: United United United United Special States loan of 1925, 4 per cent States consols of 1930, 2 per ceut States Panama loan 1916, 2 per cent States Panama loan 1918, 2 per cent certificates of indebtedness, 2 per cent TotaL... , $1, 768,000 4,523,100 130, 300 258,000 255,475,000 262,154,400 The announcement of May 6, 1919, coupled with the removal on that day of all restrictions on the export of silver, more fully discussed elsewhere in this report under the heading ^^The International Financial Situation,'^ had the effect of freeing the silver market from the control of war measures. The market price of silver in the New York market has since fluctuated as follows: Maximum and minimum prices of silver, by months, since Moy 6, 1919. Maximum. May. June Juiy. $1,215 1.1425 1.09375 Minimum. $1.0125 1.085 1.035 Maximum. Minimum. August — September October..- $1.1675 1.2125 1.2575 $1.0825 1.12 1.1725 112 REPORT ON T H E FINANCES. PUBLIC MONEYS AND SPECIAL DEPOSITARIES. The Treasury continued throughout the year the policy of deposit-* ing proceeds from Liberty loan subscriptions and purchases of certificates of indebtedness in incorporated banks and trust companies designated by the Secretary as special depositaries for the purpose. Any incorporated bank or trust company is eligible for such special designation in accordance with the provisions of Department Circular No. 92, as amended and supplemented, April 17, 1919 (Exhibit 71, page 432). The entire receipts from Liberty loan subscriptions and certificate sales during the fiscal year 1919 were deposited with special depositaries, the Federal reserve banks, branch Federal reserve banks, and the Treasurer of the Uhited States. At the beginning of the fiscal year 1919 there were 6,510 special depositaries and at the close of the year there were 9,550, of which 4,511 were national banks and 5,039 State banks and trust companies. Both national and State banks were designated as such depositaries in every State in the Union, i The amount of Government deposits in these depositaries out June 30, 1919, was $905,397,000, and on October 31, 1919, $422,776,000. These speciah deposits, like deposits in the regular depositaries for Government funds, paid the Treasury interest at the rate of 2 per cent per annum. The amount of interest received from such depositaries for the fiscal year 1919 was $20,996,202.36, while the amount of interest received from this source from the date, of the creation of the special depositaries in the early part of the war to June 30, 1919, was $31,921,081.82, as shown by the following table: Interest collected to June 30, 1919, by Federal reserve districts, on deposits in special depositaries on account of sales of Liberty honds. Victory notes, and certificates of indebtedness and income and profits tax payments under acts of Apr. 24-> 1917, Sept. 24, 1917., Apr. 4, 1918, Sept. 24, 1918, July 9, 1918, and Mar. 3, 1919. Federal reserve district. April 24 tc July I t o Dec. Jan. 1 to June July 1 to Dec. Jan. 1 to June Jime 30, 31,1918. 31,1917. 30,1918. 30,1919. 1917. Total. Boston $733, 867.20 $3,130, 513.40 $5,340.47 $495,044.28 , $757,345.98 $1,138,915.47 6,720,162.97 2,968,858.77 14,932, 139.69 New York 338,480.60 2,418,335.72 2,486,301.63 1,059,668.15 596,436.23 2,414, 493.85 1,044. 64 Philadelphia 200,276. Q4 557,068.79 872,392.10 696,750.48 2,662, 844.98 Cleveland , 290,482.56 803,219.84 109,503.64 242, 735.18 562, 352.48 Richmond , 81,252.94 128,860.72 144,165.99 203; 550.98 472, 244.98 252.06 Atlanta 28,189.21 96,086.74 974j334.63 1,107; 399.81 9,023.53 3,049, 234.75 300,428.59 658,048.19 Chicago 403,488.76 56,412.34 268,726.24 St. Louis 369, 776. 91 1,098, 404.25 164,790.29 677, 413.71 32,520. 68 168,309.21 Minneapolis 311, 793.53 332,145.49 831, 784.16 39,634.27 150,897. 61 Kansas City 309, 106. 79 268,329.88 1,353.62 518, 414.69 35,888. 58 80,191.52 Dallas 132, 651.09 377,421.12 2,726.51 590, 811.02 1,317, 441.91 137,996. 92 208,486.34 San Francisco New Orleans 79,005.33 8,140.55 26,332.71 60,320.38 branch 253,798. 97 Total. 358,221.43 4,142,794.84 6,423,863.19 12,644,323.82 8,351,878.54 31,921,081.82 Si:CRETARY OF T H E TREASURY. 113 The necessity for depositing income and profits taxes in special depositary banks during the fiscal year 1919 was obviated by two factors: (1) Such taxes were permitted by law to be paid in four quarterly installments instead of having to be made in one payment as heretofore. . (2) Treasury certificates of indebtedness receivable in payment of income and profits taxes were sold in advance to taxpaj/^ers. By this method the financial problem had adjusted itself before the taxes were due and no shifting of large sums of money resulted. By Department Circular No. 144 (Exhibit 72, page 438) collectors of internal revenue are required to deposit their entire receipts i n Fed. eral reserve banks or branch banks where such banks are located in the headquarters city of the collector. Where the collector is not located in a Federal reserve or branch Federal reserve city, he deposits cash and checks drawn on local banks (other than checks received exclusively in payment of income and profits taxes in the months of March, June, September, and December) with local national bank depositaries. AU out-of-town checks (and checks in payment of income and profits taxes in the months of March, June, September, and December) are forwarded to the Federal reserve bank or a branch of the Federal reserve bank in the district in which the collector's office is located. This use of the coUection system of the Federal reserve banks permits the Treasury to obtain earlier credit for checks received in payment of internal-revenue taxes and obviates the necessity of maintaining larger public balances in depositary banks to enable them to carry the float resulting from the . immediate credit to the Government's account of the amount of.the . great number of checks received on account of taxes. UNITED STATES DEPOSITARIES I N FOREIGN COUNTRIES. Depositaries of public moneys of the United States were appointed in Belgium during the fiscal year 1919, and in addition the Treasury continued such depositaries in France, Great Britain, Italy, Spain, Switzerland, Argentina, and Canada. These depositaries were designated under the authority vested in the Secretary of the Treasury by section 8 of the act of September 24, 1917, as amended. They were of great service to disbursing officers of the Government, particularly those of the Army and Navy, in making prompt payments and transacting public business in foreign countries. PAYMENT OF SPANISH-AMERICAN WAR BONDS. Additional bonds of the 3 per cent loan of 1908-1918, popularly known as the Spanish-American war loan, which matured and ceased to bear interest on August 1, 1918, were presented to the '.Freasury 140325—EI 1919 -8 114 REPORT ON T H E FINANCES. for payment during the fiscal year 1919. On the date of maturity there were $63,945,460 of these bonds outstanding.. During the first moiith after maturity $55,414,960, of the securities were presented for payment. Other amounts have been presented from time to time until on June 30, 1919, $936, 000 were outstanding, and on October 1, .1919, $858,600 were outstanding. Thus during the period of the creation of a new war debt—the greatest in the history of America— the debt remaining from- the last previous war in which the United States was engaged has been virtually extinguished. While the amount is relatively small when measured 3y the standards of these record-breaking days, its payment, particularly in the circumstances, reflects the policy of the United States in promptly discharging its obligations BOND-SECURED CIRCULATION OF THE NATIONAL BANKS. The situation with respect to operations under section 18 of the Federal reserve act in connection with the retirement of bond-secured circulation of the national banks and the refunding of 2 per cent bonds bearing the circulation privilege into one-year 3 per cent Treasury notes and 30-year 3 per cent bonds remained unchanged throughout the fiscal year 1919., Owing to the demands for currency, applications from member banks for the sale of bonds securing circulation were negligible and no 2 per cent bonds bearing the circulation privilege were retired during the year. I t should be pointed out, however, t h a t the amount of bonds available for securing circulation Was reduced during the year by $63,945,460 by reason of the maturity of the Spanish-American war 3 per cent bonds which became due and payable on August 1, 1918. On January 1, 1919, the balance of $9,301,000 one-year 3 per cent Treasury notes then outstanding matured, were paid, and the optiori held for their renewal was not exercised by ihe Secretary. With this payment the total amount of one-year 3 iper cent Treasury notes, aggregating $27,362,000, issued under section 18 of the Federal reserve act in lieu of retired 2 per cent boniis having the circulation privilege has been retired and no longer appears as an item of thc public debt. j United States bonds bearing the circulation privilege were outstanding on October 31, 1919, as follows: 4 2 2 2 per per per per cent cent cent cent loan of 1925 consols of 1930 Panamas of 1916-1936 Panamas of 1918-1938 J $118,489,900 599,724, 050 48, 954,180 25, 947, 400 793,115, 530 SECRETARY OF THE TREASURY. 115 The amount of national bank circulation secured by United States bonds on October 31, 1919, was $722,394,325, as compared with $721,471,138 on October 31, 1918. FUNDS FOR ARMY PAYMENTS IN EUROPE. The method of providing Army payments in Europe, which was outlined in the report for the fiscal year 1918, has been continued up to the present time. This plan has greatly facilitated payments to United States troops in Europe and the settlement of other Government obligations incurred in foreign countries. Minor- modifications of the original scheme have been made to meet changing conditions abroad, such, for instance, as the transfer frona Paris to Washington, toward the end of the fiscal year, of the auditing of the accounts of disbursing officers in the military establishment. Under the provisions of the Army payment plan, the cash balance maintained in France has been available to pay the checks of any disbursing officer of the Army located in that country; likewise, the cash balance maintained in England has been available to pay checks of any Army disbursing officer located in that country. I t has not been necessary to carry a balance for the credit of each officer and under each appropriation. This method has greatly reduced the amount of cash balances in foreign countries required to finance the Army. I t has been of great assistance to the Treasury in reducing the constant drain on the general fund. Since the Government has had to borrow money to meet its current expenditures, the reduction of transfers from the general fund results in the saving of interest charges. Much has been saved in that direction and experience has fully justified the value of the Army payment plan. AUDIT OF ACCOUNTS ABROAD. The general purposes of section 12 of the act of Septeinber 24, 1917, providing for the audit of the accounts of the military establishment abroad, were fulfiUed during the fiscal year. The audit was authorized by law not only to facilitate the operations of disbursing officers of the military forces but also to avoid the necessity of shipping each month from Europe the originals of vouchers and pay roUs, thus subjecting them to the danger of loss by submarines and other war perils. Because of the progress made in the demobi-. lization of the Army the Assistant Auditor for the War Department abroad was recalled just prior to June 30, 1919, and the work carried on at Paris by t h a t office is now being performed by a division, established for the purpose, in the office of Auditor for the War Department at Washington. 116 REPORT ON T H E FINANCES I t was thought advisable to continue the office of the assistant comptroller in Paris after tlie recall of the auditor's force untU such time as disbursements by the military establishment abroad should be reduced materially. I t was believed that Army disbursing officers would be assisted and many erroneous payments prevented by continuing the facUities -accorded them of obtaining advance decisions on proposed pa3nn:ents and such similar assistance as could be rendered by the office. This view has been justified by subsequent events and in addition the services of the assistant comptroUer in Paris have beeii utUized in connection with financial transactions under the direction of the Secretary of the Treasury, such as the daily transmission to the Treasury Department of a statement of receipts, disbursements, and balances reported by the French Treasury, the supervision over indemnity bonds and issuance of duplicate checks where disbursing officers' checks have been lost, and other miscellaneous work of the department. After the close of the fiscal year 1919 the assistant comptroller's office in Paris was directed to close up its work about October 1, and the employees of that office were directed to return to Washington. The accounts of disbursing officers, with the vouchers and papers connected therewith, ffied with the assistant auditor in Paris, were shipped to Washington in June, 1919. | These accounts contain the original pay rolls and vouchers covering the disbursements of the Army during the entire period of our participation in the fighting in Europe. Through the cooperation of the War Department in arranging for the transportation, these papers, filling several freight cars, were received in Washington promptly and safely. Their value historically and in adjusting the pay due soldiers, living and dead, as well as in settling claims of all kinds, is apparent. They will be needed as original evidence for many years. A BUDGET SYSTEM. For many years the question of a budget system has been discussed by the country in a rather desultory and disinterested manner. Secretaries of the Treasury have earnestly recommended the creation of a budgetary plan under which the Government's outgo would be properly related to its income along the lines of intelligent and scientific control and responsibility. The time when this question might be considered from a purely academic point of view as to what is desirable as an improvement has now passed. The compelling force of necessity has arrived. There has been a wholesome public discussion of the matter in recent months, accompanied by an increasing realization on the part of the pub' ic of the imperative need of budgetary reform. The large expense involved in the aftermath of the war, the interest and sinking-fund charges on the public debt, SECRETARY OF THE TREASURY. 117 and the growth of the Government leave no room for doubt that we shall never return to the prewar standard of expenditures. The cost of running the Government of this great Nation will mount into huge sums, which will be increased as additional burdens upon,the taxpayers of the country by every element of duplicated effort, waste and inefficiency. There can be no question or argument now as to the necessity of a budget system, and the people of the country, aroused to the needs of the situation, will sooner or later insist upon. the adoption of an effective plan, for the answer to inaction is increased taxation. The Treasury is pleased to note that the Congress already is giving careful consideration to this important question and has been glad of the opportunity to present its views. That there should be one single authority responsible for the preparation and execution of the Governinent's program of finance and that appropriations should be made not independently of each other but with reference to one single comprehensive plan of expenditure properly related to the Government's income there can be no doubt. The burden of preparing the budget must, in the nature of the case, if the work is to be properly done and responsibility centered instead of divided, rest upon the Executive. The supervision of the preparation of the budget should be vested in the Secretary of the Treasury, who is the chief fiscal officer of the Government and, as such, should be the representative of the President in budgetary control. The budget, as thus prepared for the President and on his responsibility, should not, as such, be increased by the Congress, and the department has ventured to express the opinion that appropriations should be considered by a single committee of the House of Representatives and the Senate. As a further step in the plan, unquestionably the audit system should be reformed by the consolidation of the offices of the Comptroller of the Treasury and the Auditors of the Treasury into one central organization, to which would be transferred the present duties and powers of the comptroller and the auditors, with the added authority to examine into and make report upon the inethods emploj^ed and the results obtained by the executive departments of the Government. Such reports should be submitted to the Congress and to the Secretary of the Treasury. Some sincere advocates of a budgetary system, in their enthusiasm to see the movement started and believing that it is not possible to obtain a reasonably complete plan in the beginning, have suggested that the reform be accomplished by gradual stages. With that view the Treasury does not agree, because such a program undoubtedly would retard rather than accelerate true budgetary reform. All movements of change proceed slowly and gradually through a period of discussion, but when the time for action arrives they must take 118 REPORT ON THE FINANCES. effective form if they are to succeed. Modification of the present system will not be a budget simply because it is called a budget. An effective plan must deal with the three fundamental aspects of the problem, namely, the centering of responsibility in the Executive, the exercise of self control in the Congress and the consolidation and expansion of the audit system. Any other plan would be misleading to the country and only result in the postponement of the desired reform. The Treasury sincerely hopes that the Congress will proceed promptly and vigorously with the consideration of this important question. The views of this Department are set forth in detail in the following statement, which was presentejd to the Select Committee on the Budget of the House of Representatives on October 4, 1919: I am heartily in favor of a budget system. Without effective control over governmental expenditures and limitation of them to the |Government's income we shall bring down upon our heads the splendid structure which our fathers have built and which we have preserved. The very success (which you \vill pardon me if I call brilliant) with which the Treasury has financed the stupendous requirements imposedupon America by the great war may become a menace. All sense of values seems to have departed from among us. The departments, bureaus, and boards, all inspired by a laudable enthusiasm for their work, but some by a less laudable instinct to magnify its importance, bombard the committees of Congress with projects, some more or less meritorious, some of no merit whatever, but all conceived in sublime indifference to the fact that the great business of government is being run at a loss and that each one of these projects increases the deficit of the Government, and consequently the burden to be thrown upon the great body of people, whether the deficit be met by increasing taxes or byfioatingadditional loans. For no fallacy is more grotesque than the assumption that by issuing bonds or notes.or certificates of indebtedness now we may pass on to future generations, the burden of our own extravagance. . The burden of these issues will have tp be met to-day, not only in the interest and sinking-fund charges added to an already heavy load but in the expansion of credit which is inevitable as a result of the issue of such securities, constituting as they do a prime basis for additional credit in the hands of the holders, whoever they may be. I shall not elaborate upon that point, but I want to say to you in all solemnity that one hundred inillion American people will pay for the extravagance of the Government, whether that extravagance finds its incidence in governmental waste or in the desire to accomplish real or fancied benefits for a portion of the community. Let us now get back to bedrock. Let us remember that there can be no spending by the Government without paying by the Government and that the Government can not pay except out of the pockets of the people, Let us remember, too, that in the last analysis taxes and the cost of Goverhment loans are borne by 100,000,000 people. The burden of taxation, the burden of credit expansion, is inevitably shifted to the whole people of the United States. Some methods of finance are better than others. Some taxes are less readily adapted to being shifted from the backs of the original taxpayers, presumably better able to bear them, to the backs of the people as a whole, but in the long run the burden of governmental waste and extravagance falls more heavily upon the poor than upon the well-to-do and more heavily upon the wellto-do than upon the rich. By graduated income taxes we tend to mitigate this consequence, but we can not wholly avoid it. Let us notl fail to remember that the Government of the United States is simply a name for the| people of the United States and that all of the people of the United States will pay^in inverse order to their ability SECRETARY OF THE TREASURY. 119 for extravagances of the * Government perpetrated in the interest of a portion of t h e people or a section of the country. You, gentlemen, I am sure, have learned as well as 1 by long service in Congress t h a t the instincts and enthusiasms of departments, bureaus, and boards find support in the committees of Congress appointed to have charge of their particular affairs. As a result we find that governmental expenditure initiated in a department of the Government charged with the specific business of creating an army, or of creating a navy, or of creating a merchant marine, or of stimulating commerce, or of protecting labor, or of aiding the development of agriculture, is submitted to the Congress without consultation with or approA^al by the finance officer of the Government, the Secretary of the Treasury, who serves merely as a messenger, and whose office is charged with t h e heavy burden of finding financial means in loans and taxes to meet expenditures; and when it reaches the Congress is referred to the corresponding committees of t h e Congress whose specific function is also to see to the development of the Army, t h e Navy, the merchant marine, etc. And the Congress passes upon all of these projects-^good, bad, a n d indifferent—^without a report from the Committee on Ways and Means or the Committee on Finance, the committees of Congress which share with t h e Secretary of the Treasury the heavy burden of finance. I t undoubtedly is true that, oftener than otherwise, the sum of- department estimates is greater than allowed by the committees of Congress. I have heard it said t h a t this is invariably so. I suspect that estimates are frequently contrived with a confident expectation of such a fate. Nevertheless, it must be admitted that each jurisdictional committee deals with estimates in a singularly sympathetic spirit that would not be manifested by a budgetary official charged with the responsibility of advising the Congress as to the levying of taxes as well as with the responsibility oif collecting the money of which appropriations are made. Moreover, it will not be denied that these various jurisdictional committees, acting separately and without complete information concerning, the activities of one another, accentuate the importance of the departments, bureaus, and boards which they respectively have under their care. This would not be so if appropriations were made by a single committee, any more than would the initial estimates be allowed so far to exceed the- probable revenues if the finance, minister of the Government were given power to- assemble, review, and alter them before transmitting them to the Congress. Extravagance of executive departments and bureaus would thereby be appreciably restrained. I think it amazing that.-under such a system the Congress has done so well for so long a time;, b u t I feel constrained to warn you gentlemen, in view of the greatly expanded activities of the Government and the extraordinary financial burdens-which the country must end-iu'e,: that it would be hazardous to continue on the old way of transacting t h e public business. The Government of t h e United States is like a great company whose operating managers, publicity managers, sales managers, purchasing departm ent ^ are given. carte blanche to make- expenditures conceived by them to be in the interest of t h e 4evelopment of the business, without consultation, with, or control, by those officers, of the company who are charged with t h e business of ascertaining its revenues and-, borrowing the money to make good their deficiencies. Or, again, the Government of the United States is like a private family in which t h e wife, having charge of the spending part of the family's business, were given carte blanche to buy houses, yachts, automobiles, clothes,>nd food, and to. employ servants, as she might find wise, with, a view to increasing the comfort, improving the education, cultivating the taste, and enhancing the prestige and social standing ofthe family; and the husband's sole business were to see that there was money in the bank to meet her checks as they Were presented. That is a most pronounced hyperbole, b u t it is literally true that the Secretary of the Treasury under existing law and practice is unable to obtain from any department 120 REPORT ON THE FINANCES. of the Government an accurate or approximately accurate estimate of its expenditures for a few weeks in advance, not to say months or years. He must be guided not by information furnished by them, but'by his own shrewid guess as a result of putting together an infinite number of little facts and figures. That the Treasury has been able, notwithstanding these intolerable Conditions, to finance the Government through the great war and up to this date without impairing the credit, but, on the contrary, with enhancement of the credit of the Government of the United States, is due', first, to the loyalty and devotion of the whole American people throughout the period of the war, to the magnificent efforts of the patriotic Liberty loan organizations, to the unqualified support given the Treasury by the Congress without regard to party, and, if I may say soj to the rather exceptional skill and ingenuity with which the Treasury has been conducted during this difficult period. But 1 say to you it is an intolerable thing that such conditions should exist and that the welfare and economic life of the American people should be at the hazard of such things as these. As a former colleague, and in a spirit of frank comradeship which such association inspires, I am prompted here to enter a complaint which may not be ascribed to a •desire to be critical, but to a hope that it may be given serious attention in behalf of :administrative efficiency. The Congress votes with a lavish hand stupendous sums ^conceived in a magnificent spirit of generosity with a view to the enhancement of the prestige of the Nation, or for the benefit of this or that element in the community. This it does upon the advice of the committee of Congress charged with the business of caring for such special interests. Then, speaking through the great Committee on Appropriations, it pursues a policy of restriction with relation to the expenditures of some of the departments of the Government which makes it impossible for those departments to conduct the vast affairs imposed upon them with efficiency and economy. The Government of the United States today is spending hundreds of millions of dollars, even billions of dollars, for armies, fbr navies, for merchant fleets, and other magnificent activities and at the same time refusing the payment of a living wage to the faithful clerks and employees in departments of the Government charged with the stupendous responsibility of transacting these vast affairs honestly, expeditiously, and economically. While your committee is considering a budget and an audit in the interest of the Government, the Government of the United States is in danger of losing millions of dollars because some of the departments charged with the conduct of its business are undermanned, limited to the employment of less efficient help than they should have, and provided with insufficient space to house those eniployees. While you are considering the reform of the audit, the work in the office ofl the auditors is months behind because of the failure to provide" ah adequate force or adequate space to transact their business. While you discuss the budget plans and audit plans the Congress withholds the necessary funds to erect an adequate vault for the protection of the vast gold store of the United States. It withholds the necessary appropriation to enable the Treasury of the United States to count Federal reserve bank notes and national-bank note^ turned in for redemption, with the result that the Treasury is unable to take credit for those notes and is obliged to borrow corresponding sums of moneys at interest running at 4J per cent and 4^ per cent and this notwithstanding that any appropriation made for this purpose will be charged back to the banks and cost not one penny to the Government of the United States. Bonds, notes, and gold with the custody of which the Treasury is charged are inadequately protected. There is an insufficient force to care for them. The force we have is underpaid! The work in the Treasurer's Office is behind, the work in the Division of Loans and Currency is behind, the work in the Division of Public Moneys is behind, the work in the Register's Office is behind, the work in the offices of all the auditors is behind, and the securities and moneys of SECRETARY OF THE TREASURY. 121 the United States are inadequately protected because the Congress withholds the necessary appropriations. I have spoken of the need of an executive budget covering all appropriations asked for by the executive departments. But let us be honest with ourselves and honest with the American pjeople. A budget which does not cover the initiation or increase of appropriations by Congress "will be a semblance of the real thing. I note that not a little has been said about the constitutional prerogatives of Congress, but I know of no clause in our Constitution that will prevent^ the Congress exercising self-control. The Houses of Congress can, by amendment of their own rules, surround with proper safeguards the initiation and the increase of appropriations by Congress. To-day the credit of the United States is imperiled by projects initiated and supported on the floor of Congress with a view to captm'ing the so-called soldier vote. I do not believe for a minute there is any such thing as the soldier vote. I do not believe that that magnificent body of strong, brave, lusty young men who went out to France, or were ready to go, want to see the people of the United States exploited.in order that each of them may receive a donation. I do not believe these fine young men, if they ' realized what it is that is proposed in their behalf, would accept a gift made at the expense of their fathers and mothers and sisters and the children that are to come after them in order'to give them a holiday. While of course you can not commit to terms of money the value of the service rendered by the Army of America, I call your attention to the fact that the actual pay of our soldiers was doubled at the outset of the war, that our soldiers have been paid with liberality never dreamed of in the history of this or any other country, and that the projects now advocated so lavishly and with so little regard for the welfare of the Arcierican people are not limited to those heroic men who suffered injury or death at the hands of the enemy, nbt even to those who actually saw the front, not even to those who were sent to France. These projects extend to everyone of some four and one-half million men, mostly young men, who were included in the military and naval forces of the United States, even to those of their number who sought and obtained employment of a character which would relie've them from being exposed to personal risk. It has been the disheartening task of the Treasury to examine scores and scores of bills drawn and presented with a view to benefiting a section of the country or a portion of its citizenship at the expense of the whole. Many of these bills were apparently devised to avoid the appearance of an appropriation by requiring the Secretary of the Treasury to issue bonds, notes, or certificates of indebtedness to meet the expenditure involved, and all of these bills were such as would not be reached by a purely executive budget. I have said the finances of the United States are in excellent condition. I have said in substance that I do not anticipate a deficit in the current fiscal year in excess of $1,000,000,000, and that that deficit is covered by deferred installments of the Victory loan, payable within the fiscal year. I have said that there need be no more Liberty loans. But I say to you in all solemnity that if a prompt and immediate halt is not called to this great peril there must be another Liberty loan, and you gentlemen will have to go out to the people of the United States and call'upon them to subscribe for bonds, the proceeds of which are to be given away to the well and strong young men who you and I and the American people know went out in a spirit of unselfishness, not one of self-seeking, to fight for their country. You may ask the old men and the widows, the school children, the rich and the poor, who responded to the call of their country to the number of twenty millions during the period of the war to respond again to this call for a donation. I hope I shall never shrink from the performance of any public duty, yet I do not covet the task of making such an appeal, and I shall not willingly be a party to offering this affront to the generous, heroic, unselfish Army and Navy of America that saved the freedom of the world. 122 REPORT ON T H E FINANCES. The Congress may propose to pay this gift in bonds themselves; but that should n o t fool anyone. If bonds are given away to the soldiers the issuance in that manner of those bonds will depress the prices of existing bonds so gravely as to imperil the credit of the United States and force additional sacrifices fi-om the twenty million peoplewho participated in financing the war, in providing the pay, food, and munitions which made it possible for our splendid Army to contribute decisively to the great victory." I have spoken of the initiation of appropriations in Congress. Let me speaksalso> of the increase of appropriations. As you all know, and as I know after 17 years i n Congress and not more than half as many months in the Treasury, the processes employed in framing and passing public buildings and rivers and harbors bills lead tO' a great waste of the money of the people. The continuance of the United States Government's activities where ihey are not needed, whether those activities be Army posts or subtreasuries or hospitals, would have scant consideration in a real businessbudget submitted b y a finance minister duly empowered b y law and managed through. Congress by a single committee under rules of limitation imposed by the Congress OIL itself. In my belief you can not make a real budget unless you face these facts and deal with them. The Congress of the United States in attempting this great reform in the interest of economy and efficiency will fail and fail utterly if, while imposing the necessary firm control over the expenditures of the executive departments, it failsto exercise the sublime quality of self-control. Coming to matters of detail, let me summarize briefiy my views as follows: First,. a budget, to be effective, must cover all appropriations and all increases of appropriations, whether initiated in the executive departments or in the Congress. The bureau of the budget should be in the office of the Secretary of the Treasury, the officer of the Government charged with the heavy burden of finding the means to finance its requirenients. The division of responsibility is the bane of our Government. I t is intolerable that the Secretary of the Treasury should have no voice in the determination of the expenditures of the Government. It is intolerable to think that his function should be merely to go out and borrow the money when someone else has spent it without consultation with him or consideration of the means to raise it. The preparation of the budget should be the principal duty of the finance minister. We a l l know that the President can not do this thing. We all know that a bureau chief in the office of the President would be helpless toassert his opinion in opposition to the members of the President's Cabinet. Projectsof the Government involving expenditures should | be determined in conference between the members of the Cabinet concerned, and jthe President's decision should be final. So far as concerns the question how much money can be raised in loanS:; and taxes and to what amount, therefore, the total expenditures of the Government, should be limited and for all budgetary work the President should obtain his ^advicefrom the Secretary of the Treasury and not from a iDureau chief appointed for thepurpose and parallelling the work of the Secretary of the Treasury. The budget plans presented to this comrnittee generally do not contemplate increasing the voiceof the Secretary of the Treasury in determining the Government's expenditures, but, on the contrary, contemplate depriving him of such voice as he already has.. I ask you what there is in-the record of the Treasury of the United States from the time of Alexander Hamilton to this present day which justifies this distrust? Which of the departments of the Government has deserved better of the American people or of this Congress? What reason, have you to believe that the Secretary of the Treasury, with the support of the great institution over which he presides, the oldest of Government departments, can not, if due authority be conferred upon him, undertake this task so vital to the welfare of the people and so vital to the success of the administration. of his office? We multiply boards and bureaus, we multiply clerks and statisticians, and perpetually we attempt to hobble those great officers of the Government upon. SECRETARY OF THE TREASURY. 123' whom rest the responsibility for producing the necessary results. Why not go back to first principles and trust these men until they fail you and then get rid of them?" What good can come of a policy of imposing tremendous responsibility upon the great officers of the Government and. then tying their hands so that they can accomplish nothing? Whether the budget service should be iii the form of a bureau in the Treasury is a matter of detail which can b e worked out. V^atever form such a staff of the Secretary of the Treasury should take, I am inclined to believe that it should be composed of experts whose"tenure of office, with the possible exception of the head, would be in the nature of permanence. If this additional duty should be imposed upon the Secretary of the Treasury, I think it would.be wise to relieve him of acti^dties which have no relation to the financial operations of the Government. The department should retain all the fiscal bureaus and divisions, and the Coast Guard, which has to d o m t h the collection and protection of the revenue; b u t in a readjustment of this character I think that it could well dispense with.the Bureau of War Risk Insurance, the Bureau of Public Health and perhaps the Super^^ising Architect's Office. Second, when the budget has been received.by the Congress it will be accepted as the President's program of finance. If I may venture an opinion as to whether the budget should be considered in one committee or distributed among the present committees that consider appropriations, I should say that it would be preferable to consider it as a whole and by one committee. The forum of consideration, however, is not quite so important as the question of the disposition of the budget at the hands of Congress. That, in my judgment, is of the essence of an effective budget. AVhile Congress shpuld retain the right to reduce the estimates, I believe that it should, as far as the budget itself is concerned, put some distinct limitation on the right to iricrease any item either in committee or on the floor unless recornmended by the Secretary of the Treasury, or, in the absence of such recommendation, unless approved by twothirds of the membership of Congress. The only increase on the floor which should be permitted would be the restoration of an item reduced by the committee to t h e original figure recommended by the Secretary. Under such a scheme the budget would come out of Congress practically as t h e President's budget and for which he must stand definitely responsible before t h e country. If the Congress desired .to propose new expenditures, it should be done in a separate bill, and if the expenditure which such legislation would entail would m a k e . the total expenditures exceed the estimated revenues, the Congress should provide in the bill of appropriation specifically for the requii^ed revenue t o m a k e up the deficit. In this^ way Congress would not forfeit any right to initiate appropriations, but such right would be only separated from the budget. The program would stand before the country with a clear line of demarcation as to the appropriations for which the President was responsible and those for which the Congress assumed the principal responsibility. Third, there should be an audit and an effectiye audit. The audit now provided by law is effective when made to insure that expenditures have been made in accordance with law. The first step before Congress is to appropriate funds sufficient to enable the auditors to make the audit which is provided for under existing law. T h e second step is to enlarge the scope of the audit, strengthen the powers and enlarge t h e force so that there may be covered also the question whether expenditures have been made efficiently, economically, and without duplication. For this purpose i t is vitally necessary, that there should be.only one auditor instead of half a dozen. I t is desirable that the offices of the comptroller and auditors should be rolled into one. As a step in that direction Secretary McAdoo on October 25*, 1918, issued an order directing t h e Comptroller of the Treasury to exercise administrative supervision and direction of all the auditing offices. This was the first time that the auditors were placed under 124 REPORT ON T H E FINANCES, the administrative control of the comptroller, and the order Vv^as as far as it was possible to go without amendment of the law. In connection with the suggestion that the Comptroller of the Treasury and the auditors be divorced from the Treasury Department and erected as an independent establishment, it is not clearly defined in any of the proposals just what change is contemplated in the accounting system. I t must be reraembered that the comptroller and the auditors are not merely auditors of expenditures with'respoct to their regularity and legality, b u t they are the accounting officers of the Treasury. They pass upon and check t h e accounts in connection with every financial transaction, whether i t relates to t h e receipt of money, to direct pa^onents out of t h e Treasury, to repayments to t h e credit of appropriations, to credif;s to disbursing officers, or to payments b y disbursing officers. I n t h e management of t h e Nation's finances t h e Secretaary of t h e Treasury must have an effective system of accounting and bookkeeping. If t h e comptroller and auditors were transferred from t h e Treasury I am inclined to t h i n k t h a t it would be necessary to duplicate much of this accounting and bookkeeping in their offices. If t h e comptroller, as an independent officer, is to be in a position to give information to t h e Congress, as t h e suggestion seems to contemplate, unquestionably it would be necessary for him to duplicate t h e bookkeeping operations of t h e ^Division of Public Moneys and t h e Division of Bookkeeping and AVarrants of t h e Treasury Department, and also some of t h e bookkeeping operations of t h e office of t h e Treasurer of the United States. At t h e present time, however, I express no definite opinion on this suggested change because it has not been p u t forward in such detail as to permit t h e expression of judgment from the standpoint of t h e accounting and bookkeeping requirements of t h e Treasury. If the auditing department should be without t h e walls of t h e Treasury, it is vital t h a t t h e auditor or comptroller, whatever he may be called, should be as free from interference b y t h e members of the legislature and by members of t h e other departments of the Government as he is now in t h e Treasury. I t has been t h e d u t y and t h e pleasure of the Treasury Department to uphold the comptroller in his independence as a quasi judicial officer, even in cases where his determinations did not commend themselves to t h e Treasury. I t is, of course, only human for the comptroller to favor his own personal elevation from a subordinate to an independent position. There is nothing blameworthy in that. The present comptroller has m y support and confidence. He is a brave, upright and, on t h e whole, wise public servant. Whether any comptroller would be able to exercise his functions as effectively and freely, deprived' of t h e support and prestige of t h e great Treasury Department and left to s t a n d upon his own feet as t h e head of an independent office, I am doubtful. On t h e whole, I am inclined to t h e view t h a t t h e best interests of efficiency and economy require t h a t the auditlbe conducted under the supervision of t h e finance minister of t h e Government, t h e ruan upon whose shoulders will fall the consequences of extravagance and waste. . The act of March 4, 1909, provides: Immediately upon the receipt of t h e regular annual estimates of appropriations needed for t h e various branches of t h e Government it shalll be the d u t y of the Secretary • of t h e Treasury to estimate as nearly as may be t h e revenues of the Government for the ensuing fiscal year, and if the estimates for appropriations, including t h e estimated amount necessary to meet all continuing and permanent appropriations, shall exceed t h e estimated revenues the Secretary of the Treasury shall transmit t h e estimates to Congress as heretofore required b y law and at once-transinit a detailed statement of all of said estimates to t h e President, to t h e end t h a t he I may, in giving Congress information of t h e state of t h e Union and in recommending to their consideration such measures as he may judge necessary, advise the Congress how in his judgment t h e estimated appropriations could with least injury to t h e public service be rediiced so as to bring the,appropriations within the.estimated revenues, or, if such reduction be not in his judgment practicable without undue injury to tile public service, t h a t he may recommend to Congress such loans or new taxes as may be necessary to cover t h e deficiency. SECRETARY OF THE TREASURY. 125 I t has been stated t h a t this section of law contemplates the preparation of an adequate book of estimates along budgetarj^ lines. Such, in m y judgment, is not t h e case. I n t h e first place the act states t h a t in case t h e estimates for appropriations exceed t h e estimated revenues, a detailed statement shall be made to t h e President b y t h e Secretary of the Treasury in order t h a t he may advise the Congress how in his judgment t h e estimated appropriations could with least injury to t h e public service be reduced, or, if t h e y can not be reduced, in order t h a t he may recommend such loans or new taxes as may be necessary to cover t h e deficiency. I call your particular attention to the fact t h a t the act states t h a t in t h e contingency mentioned t h e President may recommend how t h e appropriations may be reduced. T h a t is an implicit sanction b y law of t h e present situation, or at least a recognition in t h e statute t h a t the estimates as now submitted are compiled without regard to t h e Nation's income. When the estimates go to Congress under any proper system, t h e y should represent in the first instance t h e minimum requirements of t h e Government as related to its prospective receipts. I n the second place I invite attention to the fact that this law applies only to the . regular annual estimates of appropriations, that is to say, the appropriations which are submitted for the ensuing fiscal year. I t does not apply to estimates for deficiencies and supplemental appropriations. When the Secretary of the Treasury sends the Book of Estimates to the Congress, less than one-half of the current fiscal year has expired, b u t there is no requirement in law for any action whatever on the part of the executive in case of an estimated deficit in the Treasury at the end of that current fiscal year as a result of deficiency and supplemental estimates. I n the third place I should point out that this law compares estimated receipts and estimates of appropriations, whereas it should compare estimated receipts and estimated expenditures. At the time it was drawn, however, it was not customary for. the Secretary of the Treasury to estimate the expenditure for the ensuing fiscal year. I t has been stated that no.attention has been paid to the statute. The facts are these: The estimates for the fiscal year 1911 were transmitted to Congress December 6,1909, and therefore were the first regular annual estimates of appropriations to be transmitted after the passage of the law. The 1911 estimates showed an estimated excess of ordinary receipts over ordinary appropriations of $35,931,327.49, but with the Panama Canal appropriations added instead of a surplus there would be shown a deficit of $12,132,197.21. As authority existed for the issue of Panama Canal bonds, undoubtedly it was held that the act of March 4, 1909, did not apply, there being more than sufficient revenue to meet the estimated ordinary appropriations for 1911. This assumption is confirmed b y the fact that the annual report of Secretary MacVeagh for 1909 refers to the sale of bonds or certificates of indebtedness to meet anticipated deficit shown in the estimates. For the year 1912 the same condition was presented, it being estimated that the ordinary receipts would exceed the ordinary appropriations by approximately $49,500,000, b u t taking the Panama Canal appropriation into account there would be a deficit of more than $7,000,000. A similar condition existed for 1913. The estimates for 1914, sent to Congress on December 2, 1912, were $732,556,023.03 and estimated receipts $710,000,000, showing an estimated deficit of $22,556,023.03, exclusive of Panama Canal appropriations. President Taft reported this deficiency i n his message to the Congress December 6, 1912, and in his annual report submitted to the Congress in December, 1912, Secretary MacVeagh made the following observation : These estimates of appropriations, of course, are based upon conditions that how exist and upon the laws which now prevail; and between now.and the end of the fiscal year 1914 much may occur through legislative action to change the basis upon which they are made. There are also included in these estimates items for projected public works the payments for which will not be concluded during the fiscal year in question. 126 REPORT ON T H E FINANCES. Estimates for 1915, transmitted to Congress December 1, 1913, showed estimated ordinary*receipts of $728,000,000 and estimated ordinary appropriations of $714,684,'675.02, the. estimated surplus of ordinary receipts being $13,315,000, exclusive of Panama Canal appropriations. When the Government's revenue was largely decreased h y reason of the European war. President Wilson delivered a special message to Congress on September 4, 1914, urging that additional revenue of 100j000,000 be raised through internal taxation. For 1916, the estimated excess of ordinary receipts over ordinary appropriations was $21,234,895.20. The annual report of the Secretary of the Treasury of December 6, 1915, pages 48 to 52, deals with receipts and disbursements for 1916 and 1917, and recommended the means of obtaining the additional revenue required for the fiscal year 1917. In conformity with the statute. President Wilson similarly dealt with the situation in liis message to Congress December 7. The annual report of the Secretary of the Treasury, sent to Congress in December, 1916, referred to the estimates for the fiscal year ending June 30, 1918. The estimates indicated that there would be a deficit on account of the program of preparedness. The Secretary pointed out that on account of the untried new revenue laws relating to taxation of inheritances and war munitions, and- the uncertainties as to the actual •expenditure that might be made on account of the large program for preparedness, i t was very difficult to estimate with accuracy the receipts and expenditures for the fiscal year 1917 and particularly for the fiscal year 1918." He urged upon the attention of Congress the necessity of passing such measures as would provide additional revenue t o meet the preparedness program. This was only a few months before the declaration of war. After war was declared, the Secretary of the Treasury was in constant ouch with the Committee on Ways and Means of the House and the Finance Committee of the Senate, advising them periodically of the^ needs of the Government. As a result of these ad^dces the Congress levied taxes and authorized issues of securities as the needs of the Government developed. REVOLVING FUNDS AND REIMBURSEMENTS OF APPROPRIATIONS. The necessity during the period of war emergency. of providing •greater freedom of administrative action involving the use of public moneys has been recognized by the Congress in various ways. The •expedient of appropriating for so-called '^revolving funds^' has co'me into existence and from time to time there has been repeated the practice which finds ample precedent in the past of authorizing ^specific appropriations to be reimbursed by moneys received from the sales of Government property and supplies, or otherwise, so as to renew or increase the amounts originally appropriated. The device of appropriating for revolving funds developed during the war, while that of providing for the reimbursement of appropriations is of. long standing. They are essentially the same in principleSuch measures doubtless were necessary in the cases iii which they were employed during the crisis of war, when it was desirable to grant wide discretion and extensive powers an order to permit the largest effort to be devoted to the supreme task of defeating the enemy. SECRETARY OF THE TREASURY. 127 Now that, the war emergency has passed, the Treasury desires to invite the attention of the Congress to the grave menace to the control of appropriations and to the finances of the Government involved in any extension of appropriations of this character, or even of their continuance, unless in clearly exceptional cases. By such appropriations the revenues of the Government affected never become unconditionally available to meet general expenditures, but are appropriated atitomatically for special purposes, without further control by the Congress and without any new consideration of the merits of the additional expenditure. These appropriations by their very nature tend to produce expenditures which, if considered anew, might not be authorized by the Congress, and I believe that their discontinuance, to the utmost limit possible, is an essential condition of any program for rigid economy in Government expenditure. To appropriate receipts accruing to the Government in this manner for special purposes takes the money just as truly out of the Treasury as if directly appropriated in specific sums, but at the same time conceals the real extent of the appropriation involved. I feel very strongly that, in general, the receipts of the Government should be covered into the Treasury unconditionally without being affected h y any special trust or purpose, and that, so far as may be, expenditures of the Government should be made pursuant to direct appropriation of the Congress. While revolving funds and the like may be regarded as emergency measures growing out of war needs and not likely of repetition under ordinary conditions, it is thought advisable to bring the subject to the attention- of the Congress at this time because of the tendency to seek administrative liberty of action with relation to public moneys, without the usual Treasury supervision. The disposition of administrative officers is to acquire as wide discretionary control over appropriations for their departments or establishments as the Congress will permit, and every recognition by the Congress of the need of such administrative control in specific cases is accepted as an argument for further and similar grants of authority. The discretionary power allowed over expenditures from specific or annual appropriations, in ordinary circumstances, is not a matter which concerns the Treasury except in the routine discharge of the statutory duties of its officers. But the grant from the Treasury of a revolving fund with or without qualifications or limitations as to its use, or the increase of appropriations by so-called reimbursements, creates a situation that is indefinite and uncertain both from the viewpoint of the Congress and of the Treasury. In addition, it is pertinent to point out that appropriations of this character present large and important accounting difficulties in that they bring into Government affairs features somewhat unfamiliar in J28 REPORT ON THE FINANCES. the accepted scheme of accountability to the Treasury, and which, furthermore, are not wholly in keeping with the permanent statutory requirements from which the intent of the Congress with reference to appropriations and accounting for public moneys has hitherto been drawn. The general intent of the Congress with reference to the use of appropriations and the accountability of responsible officers to the Treasury for all moneys received by them for the use of the United States from any sources whatever are well settled. Moreover, the. appropriation acts themselves usually contain a statement of intent by means of limiting clauses or provisos wliich serve as guides to Treasury administration. The intent of the words '^revolving fund'' in appropriation acts, however, is not always apparent, and resort is necessarily had to construction in the light of acknowledged principles as applied to the objects to be accomplished. The difficulties are not all of interpretation from an accounting viewpoint. There remains a large field of transactions based upon the revolving-fund principle over which the Treasury has no opportunity of exercising supervision. This loophole in fiscal control permits large expenditures without adequate accountability and makes difficult the application of proper administrative measures in relation to the basic specific appropriation itself. The provisions for an accounting and the disposition of revenues, for example, appear to relate solely to final balances and not to the transactions leading up to them. The whole revolving-fund principle is out of harmony with the permanent legislation that has heretofore safeguarded the use of public moneys, and makes difficult the fulfiUment o^ the statutory duties imposed upon the Treasury. I t was justifiable only in the emergency of war. Mention also should be made of the statistical difficulties encountered in connection with such appropriations. Under the law and in accordance with long-established custom, receipts which are covered into the Treasury as reimbursements of appropriations, and likewise receipts that are credited to revolving funds, do not appear as receipts on the daily and other financial statements of the Government, but they are deducted from the expenditures. This is an . undesirable procedure. The law should require that such moneys be deposited in the Treasury as receipts of the Government. These manifestations of present-day tendencies show a serious departure from the orderly procedure with respect to appropriations, and the subject is commended in its relation to the Treasury as one worthy of careful consideration with the hope that, with the passing of the war emergency, the Congress wiU not permit the extension of these principles but wiU meet the needs of all Government agencies, as far as possible, by definite appropriations with the requirement that SECRETARY OF THE TREASURY. • 129 all receipts accruing to the United States from whatever source shaU be covered into the Treasury for the general purposes of the Government. INCORPORATED GOVERNMENT AGENCIES. The subject of incorporated Government agencies is closely related in its importance to the Treasury to that of appropriation for revolving funds and reimbursable appropriations. This means of' handling some large and unusual activities of the Governinent was necessary during the war, but, now that the emergency has passed, there can be no justification, generaUy speaking, for the creation of new Government-owned corporations or the continuation of those in existence except in unusual cases or for the purpose of winding up their affairs. At the least, such agencies should not be exempted from amenability in future to the accounting laws of the United States and the regulations of the Treasury made in pursuance to the statutes unless good and controUing reasons are given therefor. The particular advantage (which I should rather call menace in time of peace) accruing to Government functions so organized, is the freedom which they enjoy in the expenditure of public money without thelegal restrictions that the Congress has imposed withrespect to the usual transactions of the Government. If these activities were sustained by specific appropriations and were required to withdraw their funds from the Treasury in the manner prescribed for other Government estabhshments with the same accountability both as to disbursements and receipts, there would be httle or no ground for the corporate form of organization. Attention has been called particularly to this recent innovation among the instrumentalities of Government by reason of the requirement of the Congress by act of J u l y l , 1918, long after operations had been undertaken along commercial lines without regard to Treasury accountability, that the Secretary of the Treasury should assume the responsibility of an audit of the financial transactions of the United vStates Shipping Board Emergency Fleet Corporation, under such rules and regulations as he should prescribe. I t is almost needless to say that a task of that nature imposed at so late a day is well-nigh impossible of fulfillment with any marked degree of satisfaction. Authorization given by the Congress empowered the corporation to control certain specific appropriations and account for them to its own board of management and in such reports as are required to be made to the Congress. The congressional appropriations were not disbursed, therefore, through a disbursing officer and charged to him on the books of the Treasury as in ordinary circumstances, but were given to the corporation on settlements made by a Treasury 140325—ril919 9 130 REPORT ON THE FINANCES. auditor as moneys due and paid on settlement warrants, for which there is no accounting to the Treasury. The action of the Treasury in this respect was in accord with law and with the evident purpose of the Congress in having the specific appropriations made from, public funds spent as the money of any corporation would be spent, without reference to the laws. limiting and restricting the use of m.oneys by the regular departments and establishments of the Governnient. Under such conditions vast sums have been handled . as earnings and as expenditures without regard to their character as public moneys and without the restraining application of the Treasury regulations which have been brought into being by reason of the legal requirements and restrictions surrounding the Government's financial transactions in ordinary circumstances. A mere glance at the situation occupied by these incorporated agencies under private control and at their manifest weaknesses when compared with government-controlled agencies or with business corporations not connected with the Government will bring conviction that the device is not a happy, one for the Government's finances or a satisfactory one to the managers charged with responsibility for their economical administration. This is due not alone to the inherent difference of men and methods, trained under different systems and evolved from different schools of efficiency, but also to a difference in the view taken of the objects to be accomplished. Government officers charged with administrative achievement are charged at the same time with obedience to restrictions placed upon the use of appropriated funds, and the object of their endeavors is thus made twofold. A proper regard for the interests of the public treasury is not the least of their duties. The ofRcers of a private corporation seeking its own ends find the object of their efforts in the accumulation of business profits, unrestrained by any other law, as a rule, than is to be found in penal legislation. But the objective of business profits is in itself a restraint and a guide to their actions and, above all, a check on extravagant expenditures and on inefficiency. The corporation created and utihzed as a Government agency, however, operating on a capital for which it has no accountability and which has been drawn from the public treasury with a prospect of further access to public funds in time of need, whether the need shall arise from successful expansion or wasteful expenditure, has none of these restraints; and its objective may depart ever so far from congressional intent without a test or any standard by which its full accomphshment or failure may be measured. These concerns become, primarily, spending agencies without the restrictions and obligations imposed by law upon Government establishments or those imposed by invested capital upon private corporations which are to be tested SECRETARY OF THE TREASURY. 131 by profits earned. They stand alone, therefore, without tests or standards; without regulations or responsibihty imposed by Government authority or by individual holders of their securities; and without other guaranty of integrity and efficiency than may be derived from the selection of their officers, who may be given an arbitrary power over their affairs. Other cases than the Emergency Fleet Corporation could be cited as typical of the anomalous position of such incorporated agencies with respect to the Treasury; but it is thought that the difficulties of safeguarding the public interests and carrying out the statutory intent with respect to the public funds must be obvious from a mere statement of their character. But for the somewhat prevailing tendency to make commercial methods applicable to Government transactions there is little or no excuse for excepting such agencies, now that the war emergency has passed, from the usual requirements and restrictions built up on the experience of many years and preserved by legislative enactment for general application to the financial transactions of the Government. I t is. undeniable t h a t government has come to mean very largely a scientific busmess organization operating for the benefit of the public. I t s operations must be based on efficient handling of public finances for the benefit of those in whose interest the machine is run or else it is a failure with respect to those irfterests. In this sense its operations have a direct bearing on the living cost and the material wcilfare of the individual. In no respect is this direct connection between the public treasury and the welfare of the individual more advantageously manifested than in the economies and safe; guards and efficiencies which should surround the business activities of the Government. There are very substantial grounds to be found in experience for the view that strictly governmental establishments are oftener than not administered more efficiently than many business concerns that are frequently pointed out as models for the business of government, and that government methods are more effectiye for the purposes of government than are the methods employed by private corporations. Certainly it would seem that the time has come when the use of revolving funds and the employment as governmental agencies of chartered corporations operating under individual personal control, and all similar devices, are no longer justified by emergency needs; They inherently contain possibilities of extravagant methods of accomplishing results which might be accomplished better and more economically by means of the tried and tested machinery distinctively governmental in character and operation. 132 REPORT ON T H E FINANCES. The experience of the Treasury confirms the view that the so-called red tape of government in accounting can be shown upon fair analysis to be but an orderly.procedure^of safeguards and checks, easily followed by one who has a proper regard for the interests of the public, and presenting no obstacles to business efficiency except to those who have an interest to serve by promoting a certain laxity of administration. And nothing promotes so rapidly an atmosphere of laxity as a removal of the legislative restraints long and zealously imposed by the Congress with respect to appropriations from the public funds or a weakening of the established requhement that public moneys shall be deposited in the public treasury and withdrawn only in consequence of legislative authorization. With reference to the public funds, the consideration by the Congress of the use of incorporated agencies as instrumentalities of government is urged. CHECKING ACCOUNTS OF GOVERNMENT CORPORATIONS AND THE RAILROAD ADMINISTRATION CARRIED BY THE TREASURER. The United States Shipping Board Emergency Fleet Corporation, the United States Housing Corporation, the War Finance Corporation, and the United States Food Administration Grain Corporation have continued to maintain checking balances with the Treasurer of the United States, as outlined in the previous annual report of the Secretary of the Treasury. The total amount of the checks drawn on the Treasurer by the United States Shipping Board Emergency Fleet Corporation which have been paid from February ,28, 1918, when the balances of that corporation were transferred to the Treasurer, to October 31, 1919, was $4,331,872,379.71. The total balances on deposit with the Treasurer on October 31, held for credit of the disbursing agents of the corporation, amounted to $208,332,821.86. The total amount of the checks drawn on the Treasurer by the United States Housing Corporation which have been paid from July 27, 1918, when the checking credit was established on the books of the Treasurer for the. corporation, to October 31, 1919, was $123,696,668.98. The total balances, on deposit with the Treasurer on October 31, held for credit of disbursing agents of^ the corporation, amounted to $4,557,892.25. The total "amount of checks drawn on the Treasurer by the War Finance Corporation which have been paid from June 2, 1918, when the checking credit was established on the books of the Treasurer . for the corporation, to October 31, 1919, was $1,454,988,813.34. The -total amount of balances on deposit with the Treasurer on October 31, held for credit of the War Finance Corporation, was $28,165,824.59. SECRETARY OF THE TREASURY. 133 The United States Food Administration Grain Corporation has not used the Treasurer's office to the same extent as the other Government-owned corporations enumerated above. The total checks paid by the Treasurer from October 31, 1918, when the first credit was established for the Grain Corporation, to October 31, 1919, was $436,200,000. The total amount of balances, on deposit with the Treasurer on October 31, held for credit of the corporatiori, was $177,290,209.70. In addition to the above, the Russian bureau of the War Trade Board arid the Raikoad Administration maintained checking accounts with the Treasurer of the United States. The total amount of checks drawn on the Treasurer by the Russian bureau of the War Trade Board which have°been paid from November 30, 1918, when the checking account was established on the books of the Treasurer for the corporation, to October 31, 1919, was $11,639,807.69. The total amount of balances on deposit with the Treasurer on October 31, held for the credit of the Russian Bureau of the War Trade Board, was $1,048,987.03. The total amount of checks drawn on the Treasurer by the Railroad Administration, which have been paid from April 13,1918, when the first checking account was established on the books of the Treasurer for the Raihoad Administration, to October 31, 1919, was $1,313,977,605.60. The total amount of balances on deposit with the Treasurer on October 31, held for the credit of disbursing agents of the Railroad Administration, was $17,373,159.60. Pursuant to the request of the Director General of Railroads, the Treasurer of the United States was designated as his agency for the payment of the principal and interest of the certificates of indebtedness issued by the Director General of Railroads on account of compensation for the possession, use, control, and operation of raihoads and systems of transportation under Federal control; for motive power, cars, or other necessary equipment, or parts thereof^ or material or supplies therefor, furnished to the director general for use on or in connection with the operation or utilization of the property of raihoads and systems of transportation under Federal control; and for the purchase or construction of boats, barges, tugs, and other transportation facilities furnished to the director general for use on or in connection with the operation or utilization of the property of raihoads and systems pf transportation and of inland, canal, and coastwise waterways" under Federal control. The Treasurer has paid these certificates of indebtedness directly and through the Federal reserve banks. The holders of the certificates were notified that payment of principal and interest, to July 15, 1919, inclusive, would be made at the Treasury in Washing- 134 REPORT ON T H E FINANCES. ton, or, at the option of the holders of the certificates, at the Federal reserve banks. To make payment of these certificates the treasurer of the Railroad Administration established a credit of $288,526,150.13 with the Treasurer of the United States. The payments made by the Treasurer of the United States from July 15, 1919, to September 30, 1919, amounted to $288,399,222.46. The total amount of payments which have been made by the Treasurer for the above-named Government-owned corporations and the Railroad Administration up to and including October 31, 1919, were $7,960,774,497.78. The plans evolved by the Treasury for handling the accounts and disbursements of these agencies cf the Government have been operated to the entire satisfaction of all concerned. The funds have been assured absolute security and appropriated moneys running into large amounts have not been withdrawn from the Treasury until needed to pay obligations of the Government, thus reducing the amount of Government borrowings with the consequent saving in interest charges. SALARIES OF GOVERNMENT OFFICERS AND EMPLOYEES. I t is earnestly to be hoped that the Congress wUl give careful consideration to the question of salaries in the public service. WhUe in , the light of experience I can speak only for the Treasury, undoubtedly the same problem respecting personnel t h a t . confronts this department obtains in the other great Government establishments in Washington. The largely multiplied business of the Government can not be conducted with efficiency and economy unless there be attracted to and retained in the public service a group of highly trained, weU paid, and permanent officials of supervisory grades. Uncertainty of tenure in some instances and inadequacy of compensation have closed the public service to many men of the best type or forced them out of Government employ at the moment of their greatest usefulness. The war has increased the public debt more than twenty-fiveofold and has augmented the functions and activities of the Government in many ways. The duties are greater and the responsibUities are larger than those of other days, to the standards of which it is not to be expected that the Government wUl ever return. The conditions are such that faUure to take the necessary action to invite and hold in the public service men of exceptional ability and of real distinction in their fields can result only in grave burdens to the taxpayers of the country and in possible disaster. > SECRETARY OF THE TREASURY. 135 Already the transaction of the business of the Government is hampered by deficiencies of personnel due to the return to private life of many men of large capacity who, during the period of active warfare, were willing and glad to serve their , country at great personal sacrifice. I have come to learn that there are heroes in the civU establishments as well as in the mUitary services, selfsacrificing patriots who toU year in and year out for a bare pittance when they could command salaries double or treble the amounts they receive from the Government, b u t who for the love of their country and for the love of their work have rejected alluring offers in the field of private enterprise. They were too fine and too patriotic to leave their posts at a time when their services were indispensable. Under the compeUing force of patriotism they made wiUing sacrifices during the war, b u t with the return of peace, the Government can not expect to retain these employees indefinitely, because in justice to themselves and their families they wiU sooner or later accept the larger opportunities that are open to them in the world of business and industry unless the Government proposes to pay them salaries t h a t at least reasonably approach the value of their services. Only prompt action by the Congress to buUd up a permanent and dignified civil service which wiU include men of great ability and high attainments \5an prevent mistakes and faUures in the transaction of the public business, the consequences of which may be • calamitous. This does riot raean a wholesale increase in the Government pay roU but such reclassification, new positions and increased salaries as may be necessary to obtain and hold employees of. the character so imperatively needed in the interest of economy, efficiency and safety. The Congress has already taken a step in this direction by the creation of the Joint Commission on the Reclassification of Salaries, and it is to be hoped that that body wUl .find the solution of the pressing problem of compensation in a plan that wUl grant a living wage to all employees commensurate with their relative value to the Government and afford salaries that are comparable with those paid to men and women in private enterpriseRETIREMENT OF CIVIL-SERVICE EMPLOYEES. The logical corollary of the necessity for adequate salaries for the personnel of the Government is the imperative need of an equitable retirement law for civil-service employees. Economy and efficiency in the public service and justice to faithful employees who have toiled through the best years of their lives in the interest of the Government require that provision be made for the retirement of those who are superannuated or disabled. Previous Secretaries of 136 REPORT ON T H E FINANCES. the Treasury have urged the passage of such an effective retirement law, and to their recommendations I give my hearty indorsement. I n this connection attention is invited to the proposal, of Secretary McAdoo that the "Congress, in framing a retirement measure, consider the possibilities of an expansion of the principles underlying war-risk insurance. I agree with my predecessor t h a t the solution of the problem lies along the lines of insurance with both the Government and the civil employees contributing to a scientific plan that will provide for retirement as well as insurance against death. FEDERAL FARM-LOAN SYSTEM. The Federal farm-loan system has operated effectively and successfully during the past year, amply justifying the great purpose for which it was created and meeting the expectations of its advocates. The Federal land banks have continued to make loans to farmers at 5J per cent per annum, and the joint stock land banks at 6 per cent. All loans, as provided by the act, have been made on the amortization plan, the borrower making a fixed payment, annually or semiannually, which is at least 1 per cent in excess of the interest charge, such excess being applied on the principal. As the balance of the principal due decreases the proportion of this level payment absorbed by the interest charge correspondingly decreases and a constantly increasing balance is applicable to the extinguishment of the debt. This principle, while familiar.to actuaries and statisticians, had not been applied in this country to individual mortgages to any appreciable extent prior to the enactment of the Federal farm-loan act in July, 1916. The great isuccess of the farmloan system has called attention to the advantages of this method of paying debts, and the application of the amortization plan to all mortgages, urban and rural, is now being actively urged by influential private organizations. During the 12 moriths ended September 30, 1919, loans were made by the Federal land banks to the farmers of the United States to the aggregate amount of $129,271,662, an increase of $10,742,839 over the corresponding period a year ago, and making a total of loans by the Federal land banks from the inception of the system in March, 1917, of $261,175,346. The subjoined table indicates the amount of the loans made by each of the banks in the years referred to and in the aggregate: 137 SECRETARY OF T H E TREASTJRY. District. Federal land bank. Springfield, Mass Baltimore, Md... Columbia, S. C... Louisville, K y . . . New Orleans, La. St. Louis, M o . . . . St. Paul, Minn... Omaha, Nebr Wichita, K a n s . . . Houston, Tex Berkeley, Calif..Spokane, Wash.. Total Aggregate of loans made Loans made Loans made date offrom orOct. I, 1917, Oct. 1, 1918, ganization to Sept. 30, to Sept. 30, in March, 1918. 1919. 1917, to Sept. 30, 1919. S4,999,630 4,323,150 6,198,905 7,490,700 8,800,135 8,166,065 17,380,500 14,418,050 10,292,922 11,264,287 7,315,800 17,878,679 738,200 277,550 361,150 460,700 722,715 149,270 886,100 267,450 045,000 885,787 019,400 14,458,340 19,913,545 10,401,600 13,891,045 17,959,900 18,192,505 20,895,940 33,605,900 35,390,290 23,311,800 28,666,561 14,065,400 34,880,860 118,528,823 129,271,662 261,175,346 There have been 27 joint stock land banks incorporated by private capital under the terms of the act, with aggregate capital of $8,500,000. Nineteen of these banks were incorporated during the past year, and therefore can not be said to be, as yet, in full and active operation. The loans made by the joint stock land banks aggregate $41,787,359, which added to the loans of the Federal land banks makes a total of $302,962,705 lent to farmers by all of the banks composing the system. The banks of this chairacter have grown ver}^-strikingly in number and in volume of business during the past year. Owing to, the fact that they were not established until after the Federal land banks, and that for some time there were only a few in operation, their loans represent only 14 per cent of the total, but during one or more recent months they have transacted as high as 30 per cent of the whole volume of business of the system. Notwithstanding this division of the field, the Federal, land banks have done ,.a larger volume of more desirable business than in the previous year, the membership of existing farm-loan associations has grown, and over 600 new associations have been organized. A very gratifying feature of the year is the remarkable improvement in the financial position of the Federal land banks. During the first year of their existence, and part of the second year, they necessarily operated at a loss. This was inevitable, and was anticipated by the proponents of the system and those who were famUiar with the business. The 12 banks opened in the spring of 1917 with an aggregate capital of $9,000,000, of which $8,892,130 was subscribed by the Government and $107,870 by individuals., Before the close of the first year over $600,000 of this original capital had been absorbed by the excess of organization and current expenses over the scanty receipts of that period. By January 31, 1919, this amount had been 138 REPORT ON THE FINANCES. made good out of earnings. Under the provision of the Federal farmloan act that after subscriptions to capital stock by farm-loan associations shall amount to $750,000 in any Federal land bank, onefourth of all sums thereafter subscribed shall be applied to the payment and retirement of the stock originally subscribed, eight of the banks had, up to November 15, 1919, paid and retired $1,198,890 of the stock originally subscribed by the Government, thereby reducing the amount of stock held by the Government on that date to $7,693,240. Notwithstanding such retirement of stock originally subscribed, the aggregate capital stock of the 12 banks increased from $9,000,000 at the start to $21,321,687 on November 15, 1919. Up to October 31, 1919, the net earnings of the 12 banks amounted to $1,278,394.41, of which $202,175 had been carried to reserve account, $332,923.98 distributed in dividends paid by five banks upon stock owned by farm-loan associations and individuals, and $743,295.43 is still carried as undivided profits. , Another gratifying feature, testifying alike to the security of the loans made, the ability and wiUingness of borrowers to make payment, and the efficiency of the collection machinery of the banks, is the unusually small total of delinquencies. To Septeniber 30, 1919, payments due by borrowers to the banks had accrued to the amount of $12,666,313.61. Of this sum the amount remaining unpaid on that date was only $172,456.72, or 1.4 per cent of the total. Of that amount $86,816.60 was 30 days or less overdue, $25,182.05 from 30 to 60 days, $14,872.85 from 60 to 90 days, and only $45,585.22 over 90 days overdue. This record has been made notwithstanding widespread disaster to crops in several sections of the country. The Federal farm-loan act provides t h a t ' ' the salaries and expenses of the Federal farm loan board and the farm loan registrars and examiners * * * shall be paid by the United States." The system is now so well established and is in such fi^nancial condition that this assistance from the Government, in the judgment of the Federal farm loan board, concurred in by officers of the banks, is no longer necessary or desirable. The board accordingly has recommended that beginning with the fiscal year 1921 its expenses be provided for by assessments against the Federal land banks and the joint stock land banks in proportion to their gross assets. Measures for this purpose have been introduced in both houses of the Congress and, should the plan be adopted, the Government will be relieved entirely from the payment of the expenses involved. To have put the system on such a basis in three years is a very gratifying and satisfactory result. The primary purpose of the Federal farm-loan system, as expressed in the title of the act creating it, was ^Ho provide capital for agricul- SECRETARY OF THE TREASURY. 139 tural development." The accomplishment of that purpose necessarily involved the possibility of an enhancement of farm-land values. In so far as such enhancement was based upon increased production or added attraction to farm life, it was legitimate and desirable. Indeed, there were many sections of the country where, owing either to the exodus of young men from the farms to industrial pursuits in the towns, or to local and peculiar conditions, farm lands were selling at prices much below their intrinsic value as measured by productive capacity. Any enhancement in land values in these sections which might incidentally result from the operation of the Federal farm-loan system was a general public benefit, as tending to check the urban drift of population and stimulate the local production of foodstuffs. The Federal Farm Loan Board has had in view from the start, however, the importance of guarding the system from complicity in , anything approaching speculation in farm lands or such enhancement in their value as would either make them more difficult for men of small means to acquire or add to the overhead cost of producing foodstuffs. The high prices realized by growers for their crops during the war period were naturally reflected in a general increase in land values, but the flrst indication of any rapid or speculative rise did not manifest itself until a few months ago, when it appeared in some sections of the Middle West. It was claimed, perhaps correctly, in a recent convention of private loaning agencies, that the advances in this section were justified and will be permanent. The Federal Farm Loan Board, however, has thought that in the public interest, and in pursuance of the policy of conservatism which they have always followed, it would be better to follow this movement at a safe distance than to be part of it. They, therefore, issued instructions under date of May 3, 1919, to the banks under their supervision that where sales had taken place within a year at prices materially in excess of previous values such sales were not to be taken into account in, the appraisement of the land, and under date of July 7, 1919, that no loans in excess of $100 an acre were to be made on land used for general agricultural purposes, even where the appraisement was $300 or $400 an. acre. SEED-GRAIN LOANS TO FARMERS. The administration of the seed-grain loans made to farmers iri drouth-stricken areas from the sum of $5,000,000 placed at the joint disposal of the Treasury Department and the Department of Agriculture by the President from the fund appropriated for the national security and defense has progressed steadily during the past year. The nature-and scope of this plan as announced in Joint Circular No. 1, dated August 2, 1918, of the Treasury Department and the 140 REPORT ON THE FINANCES. Department of Agriculture is outlined in the Annual Report of the Secretary of the Treasury for 1918, pages 107-109. • Joint Circular No. 1 made provision for loans to farmers for the fall planting in 1918 only, but subsequently further advances were authorized, while several modifications in the administration of the loans became necessary to meet new and changed conditions. In the autumn of 1918 a scourge of grasshoppers occurred in certain sections of Kansas shortly after the fall planting in those sections had been completed. The crops of many of the farmers who had received advances from the Government were entirely destroyed by this scourge, and these farmers would havebeen unable to replant their land that fall had not the Government again extended relief to them. In department telegram dated November 20, 1918, to the president of the Federal land bank of Wichita (Exhibit 73, page 443), the Treasury Department, with the concurrence of the Department of Agriculture, authorized the Federal land bank of Wichita to make additional seed-grain loans for fall planting. These second fall planting loans were-made upon substantially similar terms as the first fall planting loans; They were limited, however, to those farmers whose acreage had been planted by means of the first loans and whose crops had been completely destroyed by grasshoppers, a fact to be evidenced by a certificate of an agent of the Department of Agriculture. The maximum loan to any farmer was limited to an amount not to exceed $150, nor greater than $1.50 per acre, and a separate guaranty fund (Exhibit 74, page 444) was created distinct from the first fall planting guaranty fund. I t was provided, however, that any surplus in the second fall plantiag guaranty fund after the payment of losses should be paid into the first fall planting guaranty fund. These second fall planting loans were not made to farmers in the St. Paul and Spokane districts, as the grasshopper scourge appeared only in certain sections of Kansas. At about the same time that these second fall planting loans were authorized, a circular entitled ^'Joint Circular No. 2," dated November 1, 1918, prescribing ^'Regulations relative to farmers' seed-grain loans for spring wheat planting in 1919 in drouth-stricken areas'- (Exhibit 75, page 447) was issued by the Treasury Department and the Department of Agriculture. This circular authorized loans for spring wheat planting to farmers who had suffered two successive crop failures through drouth or winter-killing, and in other respects created a plan substantially simUar to the plan under which the fall planting loans were made. No farmer who had received loans for the purpose of fall planting could take advantage of these spring planting loans unless the acreage sown by means of the fall planting advances was less than 100 acres, and then only upon an acreage not to SECRETARY OF THE TREASURY. 141 exceed the difference between the acreage which the farmer had planted by means of a former loan and 100 acres. The maximum loan to any farmer was limited to an amount not to exceed $500 nor greater than $5 per acre. A guaranty fund was created distinct from the first and second fall planting guaranty funds and it was provided that any balance in such fund remaining after payments had been made on the notes of the farmers whose crops had proved a faUure should be applied to reimburse any deficiency existing in the first and second fall planting guaranty funds. Loans for spring wheat planting were made only in the Spokane and St. Paul districts. In the ^spring of 1919 representations were made to the Treasury Department and to the Department of Agriculture that in some instances the crops planted in the fall of 1918 by means of Government advances had been totally destroyed by winter-killing or other causes, or so nearly so as to render the crops failures under the provisions of Joint Circular No. 1. In order that such land might not lie idle, and to assist the farmers concerned in obtaining funds for their support, as well as for the liquidation of their indebtedness to the Government, a circular entitled .''Joint Circular No. 3," dated March 20, 1919, prescribing "Regulations relative to farmers' seedgrain loans in drouth-stricken areas in the matter of determining crop faUure for the purpose of replanting" (Exhibit 76, page 455) was issued by the Treasury Department and the Department of Agriculture. Under this circular a farmer whose crop had been destroyed could apply for permission to plow up his land and plant other crops. Before this permission was given, however, and to prevent the destruction of a crop which might justify harvesting, an agent of the Department of Agriculture must make investigation and render to the land bank a certificate of failure. This certificate must show that the stand remaining would not produce 5 bushels or more per acre under good conditions, and that the land would be immediately planted to other crops. Upon receipt and approval by the bank of this certificate of failure the farmer was allowed to plow up his land. I t being customary in certain sections of the Southwest to insure growing crops against hail, the Federal land bank of Wichita in March, 1919,.suggested the advisability of insuring the crops of farmers who had received advances from the Government. After a conference of the representatives of the Treasury Department and the Department of Agriculture, the Federal Farm Loan Board was instructed to advise the Federal land bank of Wichita to tal^e the necessary steps to insure the crops in that section, with the understanding, however, that the lien of an insurance company on such a crop would be subject to the lien of the Government. Following this advice, the Federal land bank of Wichita took out a blanket policy of insurance against hail of $4 per acre on crops planted by means of Government ad- 142 REPORT ON THE FINANCES. vances. I t was agreed, however, that if a farmer preferred to take out insurance of his own accord, he might do so, provided the policy was made payable to the Federal land bank - or was deposited with that institution.. Losses by hail having occurred, a circular entitled " J o i n t Circular No. 4," dated September 2, 1919, prescribing " S u p plemental regulations relative to farmers' seed grain loans in drouthstricken areas covering the matter of insurance of crops "( Exhibit 77, page 457) was issued by the.Treasury Department and the Department of Agriculture. This circular prescribed the rules and regulations governing the rights and liabilities of farmers whose crops were insured against hail or other casualty, and subsequently destroyed through such causes. I t provided that the Federal land bank as financial agent of the United States should apply whatever insurance money it might receive to the payment of the farmer's indebtedness. The balance, if any, must then be returned to the farmer, who would not be required to contribute to the guaranty fund, and who would not be entitled to receive the benefits thereof unless the insurance money was insufficient to cover his indebtedness. I t is still too early < to determine the exact amount which the Government will realize through these insurance policies, but it is safe to say that by securing this insurance the respective guaranty funds will be relieved to a considerable extent, for the indebtedness of many farmers whose crops were destroyed by hail will be satisfied out of the insurance money instead of by payments from the guaranty funds, thus making the pro rata payments applied on the indebtedness of farmers whose crops have failed through other causes materially greater. During the summer of 1919 it developed that where a crop would probably not yield more than 4 bushels per acre, an amount which would barely pay the reasonable cost of harvesting, thrashing, and marketing, the farmer would leave his land and go elsewhere to labor for wages unless he were permitted to receive the proceeds of his crop for the immediate sustenance of. himself and family. By letters dated August 13, 1919, to the Federal land bank of Spokane, and September 10, 1919, to the Federal land banks of St. Paul and Wichita, signed by the Secretary of the Treasury and the Secretary of Agriculture (Exhibit 78, page 459), the Federal land banks were authorized to release the Government's lien a on crop on the receipt of a certificate from an agent of the Department of Agriculture that the crop had not yielded more than 4 bushels per acre, that the yield was not more than sufficient to pay the reasonable expense of harvesting, thrashing, and marketing, and that the proceeds were necessary to the immediate support of the farmer and his family. The release of this lien, of course, did not cancel the borrower's obligation on his note. SECRETARY OF THE TREASURY. 143 By virtue of loans actually made and completed under the seedgrain plan, a total of 1,137,810 acres were planted according to reports from the Federal land banks. As these loans were made only to farmers who had exhausted their resources and were without commercial basis for credit, this acreage would otherwise have remained uncultivated in large part if not entirely. The total acreage sown as reported by the several Federal land banks is as follows: state. Kansas .....^ Oklahoma Texas New Mexico North Dakota Montana Washington Acres. ., Total , r - - - -, : 312,594 229, 589 84, 230 4, 947 81,893 421, 617 2, 940 1,137,810 The loans were made to 15,688 farmers, the amount aggregating $4,200,838. Of this sum the Federal land bank of Wichita made loans for first fall planting to 8,198 farmers, amounting to $1,873,749; and for second fall planting to 204 farmers, amounting to $18,596. The Federal larid bank of Spokane made loans for fall plantuig to 1,287 farmers, amounting to $259,285; and for spring planting to 4,862 farmers, amounting to $1,690,649. The Federal land bank of St. Paul made loans for fall planting to 271 farmers, amounting to $51,982; and for spring planting to 866 farmers, amounting to $306,577. This general plan enabled more than 15,000 farmers to carry on their farming operations which otherwise would have been abandoned. Without some such agency as the Federal land banks through which these loans were administered as fniancial agents of the Government, the work could never have been done; and the prompt and satisfactory manner in which this large volume of extraneous business was carried on without disturbing the daily routine of these banks is a substantial testimonial to the efficiency of their organization. The Federal land bank of Spokane was charged with the service in Washington and Montana; that of St. Paul with North Dakota; and that of Wichita with Kansas, New Mexico, Oklahoma, and Texas. In Oklahoma and Texas and a portion of the Kansas district farmers who have received loans have been favored with abundant harvests and will be able not only to pay their individual indebtedness but also to make substantial contributions to the respective guaranty funds. In portions of Kansas unfavorable weather conditions and the devastation by grasshoppers resulted in a greatly reduced yield—in most cases amounting to a tbtal failure as defined 144 REPORT ON T H E FINANCES. i in the plan; while unprecedented droughts in the plateau region of Montana, and North Dakota resulted in almost complete failure in those sections. Receipts in payment of these seed-grain loans are now coming in, b u t it is impossible definitely to forecast the result. The success or failure of the plan does not, however, rest upon the financial result, but upon the efficiency of the method employed in extending aid to farmers to tide them over a period of unprecedented agricultural conditions, and with a view to> increasing the food supply of the Nation during an emergency and to add to the national security and defense. In view of the acreage sown under this general plan, which otherwise would have been abandoned in large part at least, it may properly be said that the purpose of the seed-grain loans has been well and fully accomplished. BUREAU OF INTERNAL REVENUE.^ For nearly eight months of the fiscal year 1919 the Bureau of Internal Reveriue was under the necessity of operatiag in accordance with the provisions of the act of 1917, although during the greater part of that time there was pending in the Congress a bill intended to produce greatly increased revenues and providing for material alterations in the existing system of taxation. While the collection of the various monthly taxes and the work of auditing and adjusting income and other taxes arising under previous legislation was carried forward energetically, the bureau was chiefly occupied during this time with the expansion and improvement of its organization and with other preparations for the administration of the war-revenue act of 1918, which became effective flnally on February 24, 1919 Less than three weeks in advance of March 15, the date set for the flling of income and proflts tax returns and the payment of the flrst quarterly installment of these taxes under the new law, the bureau was under the necessity of promulgating regulations and distributing forms for the use of millions of taxpayers throughout the United States. This emergent undertaking was satisfactorily performed through the expedient of issuing and authorizing the use of tentative forms of return on which the liability to tax, if not deflnitely ascertainable by March 15, might be estimated to the best of the knowledge and belief of the taxpayer. The flling on March 15 of more than 4,000,000 returns and the payment on that date of more than $1,000,000,00.0 demonstrated the willingness of virtually all citizens 1 The figures concerning internal-revenue receipts as given in this chapter difler from such figures carried i n other statements showing the financial condition of the Government because the former represent collections, by internal-revenue ofiScers throughout the country, whereas the latter represent the deposit of these collections in the Treasury or depositaries during the fiscal year concerned, the differences being diie to the fact that some of the collections in the latter part of the fiscal year can not be deposited, or are not reported to the Treasury as deposited, until after June 30, thus carrying them into the following fiscal, year as recorded in the statements showing the condition of the Treasury. SECRETARY OF THE TREASURY. 145 to respond promptly, even under the most adverse conditions of administration, to the obligations imposed on them on account of the war-revenue requirements of the Government. I t was estimated that the Revenue Actof 1918 would produce, in the flrst 12 months, about $6,000,000,000 of revenue. I t appears from the assessments made on the basis of income and proflts tax returns flled on March 15, 1919, for the taxable year 1918 that the amount of the estimate will be realized. As a result of the statutory provision authorizing the payment of income and proflts taxes in four quarterly installments falling due March 15, June 15, September 15, and December 15, approximately one-half of such taxes assessed in the flscal year 1919 will be paid in the fiscal year 1920. The actual collections for the fiscal year ended June 30, 1919, including only two of the four installments of income and profits tax payments, amounted to $3,839,950,612.05, as compared with $3,694,619,638.72 collected in the fiscal year 1918^ including the payment in full of income and profits taxes under the Revenue Act of 1917—an increase of $145,330,973.33. Reports already received of payments of the third installment of income and profits taxes indicate that with the fourth installment due December 15, receipts from all other sources of revenue provided by the act of 1918, and delinquent and additional income and profits taxes, the aggregate collections during the first 12 months of operation under the new act will closely approach the original estimate of $6,000,000,000. Although the delay in the passage of the Revenue Actof 1918 appears not to have resulted in any serious diminution of the revenue, delay in the adjustment of difficult cases of tax liability has been unavoidable, and the audit and verification of taxpayers' returns and claims are not as far advanced at this time as would have been the case had the provisions of the law been available for the information and study of taxpayers and administrative officers at an earlier date. In many thousands of cases it has been necessary, in fairness to taxpayers, to permit extensions of time for the filing of final returns. This in turn has delayed consideration by the Bureau of Internal Revenue of the cases concerned, although the installments due on the estimated amount of tax had in each case been paid. The benefits accruing to the Government and the taxpayer through the organization of a group of representative business and professional men and a special unit of expert accountants, auditors, etc., for service in the administration of the first war revenue act led to the creation of an Advisory Tax Board by the Revenue Act of 1918. This board was organized" March 13, 1919, ahd was composed of five highly trained and experienced men, including an economist, an accountant, a lawyer, a manufacturer, and a former deputy commissioner of internal revenue. During the first few 140325—FI 1919 10 146 REPORT ON T H E FINANCES. months of operation under the new law the board rendered invaluable service in the formulation of regulations and in hearing appeals of taxpayers as well as in advising the income-tax unit of the Bureau of Internal Revenue in the disposition of involved technical cases. By October 1, 1919, fundamental and controlling questions had been determined and regulations and decisions had been constructed to the point of permittiag the discontinuance of the board, the duties of which have since been assumed by a special group of tax experts, lawyers, and accountants who have had wide experience and training in the bureau, especially iri connection with the operations of the Advisory Tax Board. Material changes in the statutory bases of internal taxation made it necessary in the administration of the first war-revenue -act to effect important changes in the organization of the bureau at Washington. ^ The development of this policy has led to a similar reorganization of the field force. The 64 collection districts have been readjusted so that each State in the Union, with the exception of Nevada, which for the present is embraced in the northern district of California, constitutes at least one collection district, and, with the exception noted, the boundaries of all collection districts now follow State lines. Two or more separate districts have been continued in States where the service seemed to require such arrangement for the time being without necessitating undue duplication of supervisory work, although it is probable that the number of districts eventually will be reduced. In this readjustment 10 new collection districts were established for the States of Maine, Vermont, Rhode Island, Delaware, Mississippi, North Dakota, Wyoming, Idaho, Utah, arid Arizona, and the following 10 districts were discontinued: The second, sixth, seventh, and eighth of Kentucky; the seventh of Indiana; the fifth and thirteenth of Illinois; the first of Wisconsin; the ninth of Pennsylvania; and the fifth of North Carolina. The territory formerly embraced within the abolished districts has been added to the jurisdiction of other established districts of the same States. The reorganization of the field service was accomplished through Executive orders signed by the President on June 27, July 19, and July 29, 1919, and the changes became effective August 1, 1919. As an important part of the reorganization of the field service, branch offices for the transaction of the various forms of internalrevenue business and for furnishing advice and ' assistance to taxpayers have been established at important points throughout several of the collection districts, and it will be the policy to develop this plan so as to place the tax-service facilities of the Government within convenient reach of every taxpayer. Eventually, it is intended SECRETARY OF THE TREASURY. 147 that every principal city and town will have a branch office operated under the direction of the several collectors of internal revenue. The special methods of selecting and training employees in the technical work of the Internal Revenue Service which were worked out in considerable detail in the bureau at Washington during the preceding year have been carried into the field. The consequent mprovement in th'e field personnel has permitted the bureau to take an important step toward the decentralization of a large amount of work which in the first year under the new tax laws was handled entirely at Washington. Income-tax returns of less than $5,000 filed in the fiscal year 1919 were left in the offi.ces of collectors to be audited and adjusted through conferences with taxpayers. As rapidly as is consistent with uniform and accurate disposition of cases, the handling of additional classes of claims and cases will be assigned to the field officers to relieve the congestion of work at Washington and to expedite the collection of additional taxes' due, as well as the payment of refunds to taxpayers. A special effort has been made to impress on field officers the importance of uniform courtesy and impartiality in dealing with all taxpayers, so that the transactions of the bureau with the public may be maintained on a businesslike and equitable basis. The legal and accounting force engaged in the administration of the income and profits tax laws and the audit and verification of nearly 7,000,000 returns received under the acts of 1917 and 1918 has been built up rapidly during the past year. Relatively large additions also have been made to the personnel of those units of the Bureau of Internal Revenue which have immediate supervision of the administration of the laws relating to taxes on estates, commodities, luxuries, and .child labor. The force at Washington now numbers' 4,088 as compared with 1,367 at the beginning of the year. The income-tax unit, which handles the most important subject matter in the bureau, has been successful in increasing materially the rate of finished cases, both those involving the assessment of additional taxes and those involving the refund of amounts erroneously collected as taxes. Employers of labor throughout the country have cooperated gen-, erally with the Bureau of Internal Revenue in the enforcement of the provisions of the new revenue law imposing a tax of 10 per cent on the net income of certain kinds of business employing child labor. The disposition of employers has been to observe the standard set up in the law by which tax liability may not be incurred and the revenue officers have met with little difficulty in securing the evidences of age which are required by the law to establish exemption from tax. This tax became effective only on April 25, 1919, and ;no employers have as • 148 REPORT ON THE FINANCES. yet been found to have subjected themselves to the assessment and collection of the tax provided. Under the provisions of the Harrison antinarcotic law, providing for the registration and taxability of persons authorized to dispense or sell certain habit-forming narcotic drugs, vigorous efforts have been continued to apprehend and bring to justice persons guilty of engaging in the illicit traffic in these drugs. The number of revenue agents and inspectors specially trained in this line of work has been increased and a considerable number of convictions have been secured. During the year final report was made by the committee appointed to investigate this subject for the department. The wide prevalence of narcotic drug addiction in many parts of the country, as well as the inadequacy of the facilities provided for the rescue and rehabilitation of addicts, is shown by the report. The Revenue Act of 1918 amended the Harrison antinarcotic law in several important respects. Provision was included for the separate classification and registration of persons handling narcotic drugs in the various stages of importation, manufacture, prescription, and distribution, making possible more effective measures for securing dnformation from those persons and enforcing the observance of the law. A tax of 1 cent per ounce is also imposed on the commodity itself, the payment of which is to be evidenced by the affixing of a stamp in such manner as to seal the stopper or covering. The result of this measure is to identify drugs which have passed through the legitimate trade and those which have been procured through the widespread illicit traffic in narcotic drugs. On the authority of Supreme Court decisions rendered during the year, a Treasury decision was issued defining the responsibility of physicians and druggists in dispensing and distributing narcotic drugs. The result of the issuance of this decision, which makes clear the iUegality of prescribing or dispensing to habitual users any quantity of narcotic drugs except in the course of legitimate treatment to cure the habit, has been to cut off from thousands of addicts their accustomed sources of supply. Many of these persons are without funds to enter private institutions for the cure of narcotic drug habits and have been reduced to a pitiable condition in which they constitute a serious menace to many coinmunities. Accordingly, to meet this situation the department has recommended to the Congress the enactment of legislation which wiU put the Public Health Service in a position to undertake the care and treatment of these unfortunates and restore them to a normal condition. Such a measure is now pending and its early enactment is urgently recommended. The comparative ease with which narcotic drugs may be concealed and smuggled into this country from abroad makes highly desirable some international agreement by which the narcotic SECRETARY OF THE TREASURY. 149 drug trade of the world may be regulated and controUed. Such an agreement is provided in the proposed constitution of the League of Nations, which sets up authority to perfect the ratification of the Hague Opium Convention. Such police functions as have hitherto been assigned for execution to the Bureau of Internal Revenue have been, in form at least, taxation measures, and it was the judgment of the department t h a t the enforcement of prohibition, which is essentially unrelated both in form and substance to taxation, should not be added to the already onerous responsibilities of this bureau. The Congress, however, having regard to the activities of revenue officers leading to the apprehension and conviction of violators of the laws imposing taxes on the manufacture and sale of alcoholic beverages, has provided by . recent enactment for the enforcement of prohibition through the agency of the Bureau of Internal Revenue. To avoid confusion,and inefficiency in the administration of the tax laws and of the prohibition measure, it is proposed to organize separately within the bureau a special unit to carry on the prohibition work. Revenue officers of experience in this line of work and no longer needed for the performance of duties in connection with taxes on the prohibited commodities, if qualified for the new work, will be transferred to the supervision of this unit, and sufficient additional force will be provided to carry on a vigorous program in every State. With the expected cooperation of all law-abiding citizens and of State and municipal peace officers, the observance of this law will be energetically sought through both the dissemination of information and prosecution of offenders. Synthetic glycerin formula. The terinination of military operations in November 1918, made it unnecessary to continue the special project of the chemical laboratory of the Bureau of Internal Revenue for the promotion of the synthetic manufacture of glycerin from the fermentation of molasses according to the formula which had been worked out by the laboratory, as stated in the preceding annual report of the Secretary of the Treasury. This formula, however, which had engaged the attention of a considerable staff of chemists for a period of three months, may have considerable commercial value, as it permits the complete recovery of the raw material in the form of alcohol and potash, as well as glycerin. The formula has therefore been made available to any manufacturers who may be interested. WAR RISK INSURANCE. The Bureau of War Risk Insurance, created barely five years ago, has developed from a small beginning into the largest single unit in the Government service, conducting within itself four separate 150 REPORT ON THE FINANCES. businesses, each of which is comparable with the greatest of their kind in the field of private enterprise.^ The records on September 30, 1919, show: 1. A marine and seamen's insurance department— Haying done a total business of . . . $2, 390, 080, 236. 54 With premiums collected amounting to. 47, 592. 510. 61 ' Having issued 33,384 policies and paid claims to the extent of 28,737,146. 47 With a surplus over expenses and refunds of 17,124, 903. 84 2. A stupendous banking business for the dependents of men in the service making monthly payments of allotments and family allowances by the Government on 2,057,842 awards during the period of a year and a half exceeding 531,000,000. 00 3. An employers' liability department— Now making payments each month on claims for military and naval compensation to the extent of 2,754, 836.13 • Having paid burial expenses amounting to^ 1,834, 763. 33 4. A life insurance department— Haviiig written during the period of one year and a half 4,561,974 individual policies representing a total amount of insurance of - -.. 39, 817, 391, 500. 00 With premiums between Oct. 6,1917, and Sept. 30,1919, of approximately. :.. 315,000,000. 00 . With claims, payable to the extent of ,-. 1,042,457,673.48 During the fiscal year 1919 the character of the bureau's functions was vastly changed from that of the previous year. On June 30, 1918, the United States was engaged in active warfare and the bureau was receiving daily thousands of applications for insurance, was issuing inonthly over a million checks for allotments and family allowances to the dependents of men in the service, and was conducting a vast war-risk insurance business on American vessels, their cargoes, and the lives of their crews. I n the fiscal year 1918 the bureau had received comparatively few insurance claims and very few men had been discharged from the military service, so that the investigation of claims for payment of military and naval compensation was not extensive. During the first four months of the fiscal year 1919 the bureau had practically the same conditions to face as during the previous flscal year with the exception that, as the casualties in the service had become heavier, it became necessary to make plans for the prompt payment of claims for insurance and for inilitary and naval compensation. But with the signing of the armistice on November I I , 1918, the whole machinery of operation had to be reversed. The bureau ceased to issue marine and seamen's insurance as the risks of war disappeared. Men were discharged from inilitary service and allotments and family allowances which theretofore had gone to their dependents had to be stopped, and the insurance which had been issued on the lives of men in the Army and Navy had to be treated SECRETARY OF THE TREASURY. 151 in an individual way rather than in group. During the war, insurance premiums were deducted from the pay of soldiers, sailors, and marines, but. after discharge the men were required to pay their premiums direct to the bureau; therefore it was necessary to set up all the accounting records, notify the men of the date premiums were,due, and keep them-informed of their privileges under the warrisk insurance act. As the disabled men were discharged from the military service and flled claims for compensation, the bureau had to make investigations to determine whether they were eligible for the payment of compensation as deflned in the act, and make arrangements for their medical treatment and hospitalization, if necessary. These changes somewhat revolutionized the work of the bureau and constituted a task of very great magnitude. Organization. The bureau is now organized in 13 divisions, viz. Insurance Division, Compensation and Claims Division, Actuarial Division, Legal Division, Finance Division, Medical Division, Allotment and Allowance Division, Receipts and Disbursements Division, Liaison,Division, Marine and Seamen's Division, Personnel Division, Chief Clerk, and Administration Division. The Insurance Division controls all the records pertaining to military and naval insurance, including the administration of the work of converting the term insurance policies into the permanent forms of United States Government life insurance. This division keeps a record of the date of discharge of every insured man and of all premium paynients made after discharge. I t also administers the insurance feature of the soldiers' and saUors' civil relief act. The Compensation and Claims Division receives both death and disability claims for compensation and insurance, obtains the necessary proofs, and makes awards thereon. The Actuarial Division perf orms the actuarial work of the bureau, prepares statistical reports on insurance and on compensation and insurance claims, and has established work report units in other divisions of the bureau. The Legal Division is the law office of the bureau, and in this division there is also a section which controls the licensing of foreign insurance companies in accordance with the ''trading with the enemy act." The Finance Division has charge of the bookkeeping and flnancial matters of the bureau. The Medical Division is advisory to the Compensation and Claims Division, and through it the Public Health Service pro vides treatment for disabled men entitled thereto. The Allotment and AUowance Division attends to all matters pertaining to allotments and family allowances. The Receipts and Disbursements Division 152 REPORT ON THE FINANCES. sends out all checks for compensation and insurance claims as well as allotments and family allowances. The Liaison Division is the contact division of the bureau and has charge of the publication of all official rulings and buUetins of information and instruction. The Marine and Seamen's Diyision has charge of insurance on vessels and cargoes and on the'lives of seamen * in the merchant marine. The Personnel Division makes all appointments and keeps' the personnel records of the bureau. The Chief Clerk and the Administration Division have charge of mails, supplies, messengers, and general office work. The personnel of the bureau increased from 6,703 on July 1, 1918, to 13,771 on July 1, 1919. To obtain this net increase of 7,068 employees it was necessary to make 11,796 appointments. wSuch a labor turnover means a tremendous expenditure of time and money, due to the period of training which every new employee must undergo. With the reestablishment of more settled conditions in Washington and throughout the country as a whole, it is expected that the rate of turnover will be lessened, the service of the bureau correspondingly improved, and the expenses decreased. The large increase in personnel has been necessary because of the temporary increase in the work due to the demobilization of the military and naval forces, despite the fact that many installations of labor-saving mechanical devices have been made. Of the men at present employed in the bureau, 47 per cent are ex-service men. I n February the flrst units moved into the new 11-story War Risk Building. By the end of September the number of buUdings occupied by the bureau was reduced from 16 to 4. The new building is not large enough, and it is necessary to keep certain divisions in other buUdings, At the present time it is planned to consolida.te the Insurance Division in the War Risk BuUding and to place in outlying buUdings divisions which are not so large as to prevent lodgement in a single building. The Insurance Division is now housed in four different buildings in widely scattered sections of the city. Marine and seamen^s, insurance. Under the act of September 2, 1914, insurance against war risk was provided for vessels and their cargoes, and under the amendment of June 12, 1917, protection was granted to masters and. crews against loss of life, injury, and detention. The writing of marine insurance dates from September 28, 1914, whUe the flrst seamen's insurance policy was issued July 3, 1917. The rates for both types of policies were withdrawn on January 4, 1919. There remains only the settlement of unadjusted claims. I t was possible to terminate the business of this insurance so soon after the signing of the armistice because protection was provided against the war hazard only. SECRETARY OF THE TREASURY. 153 Marine insurance—Insurance of hulls, cargoes, and freights, Sept. 2, 1914, to Sept. 30, 1919. Total policies written 27,227 Net insurance widtten. $2,067,406,428. 00 Net premium's received.*. $46, 749,925. 71 Total losses, including estimated unpresented claims $29,915,643. 71 Seamen^s insurance.—Insurance written on masters and seamen, July 3, 1917, to Sept. 30, 1919. Total policies w r i t t e n — 6,157 Net insurarice written.." , $322, 673,808. 54 Net premiums received^ $842,584. 90 Total losses, including estimated unpresented claims $307,077. 81 Military and naval aUotments and family aUowances. Article I I of the war-risk insurance act authorizes the bureau to award aUowances to the famUies and to the dependents of enlisted men in the MUitary and Naval establishments of the United States, provided a monthly allotment of $15 is made from the pay of the men. All enlisted men in the service were required either to make application for an allowance, which was compulsory for a man having a wife, chUdren, or a former wife divorced and not remarried to whom alimony had been decreed; or to flle a statement requesting that no aUowance be awarded, which was optional with a man having only dependent parents, brothers, sisters, grandchUdren or grandparents. A great many* requests for exemption from the compulsory aUotment were flled and were granted by the bureau when proper cause was shown. The aUotment and allowance problem during the past year was completely reversed with the signing of the armistice. The Army and Navy sent discharge notices which furnished data enabluig the bureau to terminate the allotments and aUowances. However, instead of the entire case being closed when a man was discharged, many cases required more attentiori than if the men had remained in the service. A very large percentage of the men discharged, who had made allotments to their famUies and who were entitled to aUowances, began immediately to correspond with the bureau, making protests regarding the amounts of money received by their dependent relatives and advising the bureau as to what amounts, in their opinions, should have been paid. As a result there has been an enormous amount of correspondence in adjusting and terminating these cases. Applications and awards for family allowances for the period Oct. 6, 1917, to June 30, 1919. Applications received • 4, 391,094 . Number of awards made for men having dependents 2,045,.890 Number of exemption cases submitted , • 100,156 Amount of allotiuents paid $267,955,981 Amount of allowances p a i d . . $233,167,009 154 REPORT ON THE FINANCES. Military and naval compensation. Compensation for death or for disability incurred whUe in the military or naval service is payable to a man or his dependents upon the presentation and approval of proofs, provided disability or death was the result of the man's performance of duty and not the result of his own misconduct. Article I I I of the war-risk insurance act specifles the amounts of the military and naval compensation beneflts. For example, a widow alone receives $25 per month; a widow with one child, $35; a totally disabled man with neither wife nor child, $30; a totally disabled man with wife alone, $45; and a man losing both feet, both hands, both eyes, or who becomes totally blind, or helpless and permanently bedridden, $100 per month. When-the disability is other than total, the degree of disability is determined and the award made on a percentage basis; for example, a man 50 per cent disabled having a wife, would receive $22.50 per month. The basis for permanent, partial disability at the present time is $30 per month for a single man. Thus a man who has lost a leg is entitled to from 40 to 70 per cent of $30 per month. I t is'hoped that the proposal changing the basis to $100 per month will beconie a law. During the fiscal year 1919 the bureau practically completed the work arising from claims for military and naval compensation because of death. After the armistice and the discharge from the service of the wounded and sick, the number of disability claims increased very rapidly. The law requires that the disabled man submit to a physical examination by a medical officer chosen by the bureau. The Public Health Service has made the majority of these examinations. While the disabled man is receiving compensation he must submit to reexamination as of ten as requested. To all persons entitled the bureau provides such medical, surgical, and hospital services and prosthetic apparatus as are reasonably necessary. The following table shows the number of men treated in hospitals, discharged from hospitals, and the number of artificial. limbs furnished by the bureau between October 6, 1917, and September 30, 1919: Cases admitted to hospitals Cases discharged from hospitals Artificial arms supplied Artificial legs supplied 15, 078 ' 8, 943 979 1,103 The medical treatment and hospitalization is done through the Public Health Service. The bureau is notified by the Army and Navy of deaths and disabilities incurred in the service. These notifications are in the nature SECRETARY OF THE TREASURY. 155 of claims and are so carried on the records of the bureau. Investigation, however, of ten.reveals the fact that there is in reality no dependency and that there is, therefore, no claim. At times men are erroneously reported as dead, relatives frequently can not be found, and communications are occasionally received definitely stating that no claim will be made. The principal reason for disallowing corapensation claims on account of the death of men in the service is that the parents are not dependent, the deceased being single men. Frequently there are no dependents entitled to compensation. A few claims have been disaUowed because death was not incurred in line of duty or was caused by the willful misconduct of the deceased. The principal reason for disaU owing compensation disability claims is that disabUity is less than 10 per cent of a total disabUity. There have been a few cases disallowed because disability was not the result of service or because it was the result of willful misconduct. When the status of parents changes so that they would not be dependent upon the deceased, had he been alive, the payment of compensation is terminated. Widows who remarry and children who attain 18 years of age are not entitled to the continuation of compensation payments. In the majority of cases military and naval compensation awards for disability are terminated either because of recovery from disability, or because of death of the disabled man. Compensation is payable whether the dependency of the father or mother, or both, arises before or after the death .of the person in the service, provided that dependency arises and claim is made within five years of the date of death. Compensation for disability is payable prbvided a medical certificate is secured within one year after discharge stating that the person at the time of his discharge or release was suffering from injury likely to result in death or disability and provided claim is made within five years after discharge or resignation. Frequently claims which may become compensable in the near future are allowed to remain pending. Similarly any disallowed claim may be reopened when parents become dependent or when the extent of the disability "increases. The delay in the settlement of claims for inilitary and nayal compensation because of death is due principally to the necessity of ascertaining from the War and Navy-Departments information as to whether death occurred inline of duty, to the time requisite to obtain the return of claim papers properly filled out, or to the inability of the bureau to communicate with the claimants due to their'failure to give notice of their change of address. Disability claims are delayed in settlement because of the necessity of securing medical examination and reexamination or because of the lack of completed claim papers. ' . 156 REPORT ON THE FINANCES. Table showing number of military and naval compensation cases awarded for death and disability in the period from Oct. 6, 1917, to Sept. 30, 1919. Claims awarded for death Claims awarded for disability. '. 32,831 71,757 , Total claims awarded for death and disability 104,588 Table showing the amount of monthly payments awarded for military and naval compensation for death dnd disability in the period from Oct. 6, 1917,%o Sept. 30, 1919. Claims awarded for death Claims awarded for disability Total claims awarded for death and disability $867,495.92 2, 230, 561. 60 3,098, 057. 52 Table showing number of military and naval compensation cases disallowed for death and disability during the period from Oct. 6, 1917, to Sept. 30, 1919. Claims disallowed for death ..... r Claims disallowed for disability 56,193 11, 896 Total claims disallowed for death and disability 68,089 Military and.naval insurance. The war-risk insurance act provides for the issuance by the United States of insurance against death and total permanent disability to every officer and enlisted man, to every member of the Army Nurse Corps, and to every member of the Navy Nurse Corps when employed in active service under the War or Navy Departments, upon written application to the bureau and the payment of premiums. The following table shows the number of applications, the amount of insurance, and the estimated premium income from date of passage of the war-risk insurance act to June 30, 1919: Number of applicants for war-risk insurance to June 30, 1919 4, 334,141 Number of applications for war-risk insurance to June 30, 1919 4, 520,178 Total amount of insurance applied for to June 30, 1919. $39,046,202,000 Average amount of insurance per application $8, 638 Average amount of insurance per applicant $9,009 Estimated premium income to June 30, 1919. $295,000,0,00 The following tables give the number and amount of insurance claims actually awarded to September 30, 1919: Contract and automatic insurance—Number of cases awarded for death and for permanen total disability for the period Oct. 6, 1917, to Sept. 30, 1919. Contract insurance awards for death Automatic insurance award's for death Total insurance awards for death Contract insurance awards for permanent total disability Automatic insurance awards for permanent total disability Total insurance awards for permanent total disability 110,446 5,012 115,458 708 133 841 Total insurance awards for death and for permanent, total disability.. 116,299 SECRETARY OF THE TREASURY. 157 Contract and automatic insurance-^Amouni of insurance upon which.awards have .been ; made for death and for permanent total disability for the period Oct. 6, 1917, to Sept. 30, 1919. Contract insurance awards for death. Automatic insurance awards for death Total insurance awards for death Contract insurance awards for permanent total disability. Automatic insurance awards for p,ermanent, total disability $1,013,100, 633.48 22, 554,000.00 $1,035, 654, 633.48 6, 204, 540.00 . 598,500.00 Total insurance awards for permanent total disability Total insurance awards for death and for permanent total disability..... .\ 6,803, 040.00 1, 042,457, 673.48 The signing of the armistice on November 11, 1918, was quickly followed, as is well known, by the demobilization of the Students' Army Training Corps and other units. I t immediately became apparent that the bureau must be informed at once as to every individual discharged to enable it to mark up its insurance records accordingly and get in touch with the ex-service man to inform him of the amount of his insurance premium, the date it became due, and such other facts as were deemed expedient. A form of notice of discharge was agreed upon by the War and Navy Departments and the bureau, and arrangements were made that when a man was discharged from the service this form would be prepared and sent to the bureau direct and not through inilitary channels. From this information the bureau was in a position to stop the payment of allotments and family allowances to the dependents of discharged men and to prepare the way for ex-service men to pay their premiums direct to the bureau. On the promptness with which these discharge notices were received depended to a large extent the proper functioning of the bureau, and it is to be regretted that in spite of every precaution taken considerable delay occurred in the receipt of these discharge notices from the military services. ' Beginning in December, 19l8, notices of insurance premiums due were issued, and in January and February hundreds of thousands were sent out. Of these, thousands were returned because of faulty addresses, and the bureau still has to contend with this problem of lack of proper address. However, by cooperation with the Post Offi.ce Department this situation constantly is being improved. Coupled with the difficulty of sending out notices which would reach the discharged men was that resulting from the flood of correspondence from these men, asking about their privileges under the warrisk insurance act and their rights to converted insurance Nearly all the men were unsettled for a month or two after the termination 158 REPORT ON THE FINANCES. of military service, and many of them neglected their insurance. Many could not secure employment at once or did not earn chough to allow them to maintain their insurance. Thousands of others never received the premium notices mailed by the bureau. Much insurance was lapsed because the men had taken i t out only on account of the danger incident to military service. There was for a time a lack of information about the methods of paying premiums, the possibility of reducing the amount of policies, and the advantages of war-risk insurance. Many men allowed their insurance to lapse and it was necessary to reach them by an extensive campaign of conservation. The bureau has made every effort to point out to each individual the beneflts of Government insurance and to acquaint him with the simple requirements necessary for the reinstatement of lapsed policies. From time to time reinstatement provisions have been liberalized, until now all that is necessary to reinstate insurance within 18 months after discharge is to remit to the bureau two months' premiums to cover, respectively, the grace period of one month during which protection was had, and one month in advance, with the statement that the insured is in as good health as at the time of discharge. I t is thought that this recent regulation relative to reinstatement will be the means of saving to the insured and their beneflciaries the protection of millions of dollars of war-risk insurance. . . . United States Government life insurance. Section 404 of the war-risk insurance act provides that not later than flve years after the date of the termination of the war, as declared by proclamation ofthe President, the term insurance shall be converted, without medical examination, into such form or forms of insurance as may be prescribed by regulations and as the insured may request. The insurance offered under the provisions of this section of the act is known as United States Government life insurance and protects agiainst death and permanent total disability. Six forms of insurance are being offered: Ordinary life, 20-payment life, 30-payment life, 20-year endowment, 30-year endowment, and endowment at age 62. The rates of premium are attached to this report as Exhibit 79, page 460. Government insurance is very liberal in that the insured is. protected against permanent disability, no matter at what age disability is incurred. Premiums may be paid monthly, quarterly, semiannually, or annually at the election of the insured. The insured will piarticipate in and receive such dividends as may be determined and apportioned by the director, with the approval of the Secretary of the Treasury. These dividends may be taken in cash or left on deposit to accumulate at interest at a rate to be determined by the Secretary of the Treasury. SECRETARY OF THE TREASURY. 159 The new policies provide for most liberal nonforfeiture and loan provisions, including cash surrender value of the full reserve calculated on the American Table of Mortality and 3^ per cent interest at the end of any policy year, or a participating paid-up policy for a less amount, or participating extended term insurance. The irisured may borrow from the Government at any time after his policy has been in force one year, and provided his policy is in force, up to 94 per cent of the then cash value on the sole security of his policy. There are no restrictions as to travel, residence, occupation, or military or naval service.. Claims are payable in 240 monthly installments of $5.75 for each. $1,000 of.insurance. The proceeds from this insurance are exempt from all taxation and are not assignable or subject to the claims of creditors of the insured or any beneficiary except claims of the United States arising under the war-risk insurance act. The beneficiary may be changed at any time without the consent of the beneficiary, provided the new beneficiary is a member of the permitted class. Provision is made for payment of a life annuity to the beneficiary with payments for 240 months guaranteed, in lieu of the regular form of settlement. Without any great effort being made to secure applications for conversion, 36,061 applications for converted insurance were received to September 30, 1919, of which 12,068 applications for $42,435,500 of insurance have been approved, the average policy being for $3,516. Amendments. Under the war-risk insurance act an enlisted man was compelled to make allotment from his pay in favor of his wife, if any, and might make allotments in favor of certain other dependent persons. In the case of a wife the Government added an allowaTice,«and in certain other cases where a man made an allotment to persons dependent on him for support the Government also made an allowance, but the question of allowance in the latter instances was controlled by the question of dependency upon the enlisted man. When the war-risk insurance act was passed on October 6, 1917, and allotments were deducted from the pay of soldiers and saUors beginning in November, 1917, it became quite apparent that the bureau could not undertake detaUed investigations in every instance before checks were sent to dependents of the men in the mUitary and naval service if the payments were to go out promptly. So in a great many cases the bureau issued the checks to the parents of soldiers and saUors in advance of investigation. In the summer of 1918 many investigations of these cases were made, and it was found that in some cases parents were receiving aUowances to which they were not entitled under the war-risk insurance act, because they were not dependent. The bureau, therefore, discontmued allowances and, under the law, was compeUed to 160 REPORT ON THE FINANCES. deduct the previous .payments from future remittances. This condition resulted in the amendment to the war-risk insurance act (Exhibit 80, page 463) of February 25, 1919, which relieved the bureau of the requirement to seek reimbursement in cases of this khid, except where it is conclusively shown that the person receiving the allowance did not bear the relationship to the enlisted man which is necessary under the act and except in cases of manifest fraud. . An amendment to the Federal vocational rehabilitatiori act, approved July 11,1919 (Exhibit 81,page 464), authorized the Federal • Board for Vocational Education to place disabled.persons discharged from the mUitary and naval forces in training without awaiting action by the Bureau of War Risk Insurance on the question of their eligibUity to compensation under the provisions of the war-risk insurarice act. This eliminated the delay involved in the previous practice requiring the submission of such cases to the Bureau of War Risk Insurance for determination of the question of compensation before undertaking training. A man who has lost both hands, or both feet, or both eyes, or has been helpless or permanently bedridden, as the result of mUitary or naval service, is entitled to the payment of $100 per month as coriipensation for total permanent disabUity. For cases involving the loss of both hands and both eyes, or both feet and both eyes, or both hands and both feet^ the Congress passed an amendment to the act approved August 6,1919 (Exhibit 82, page 466,) providing another aUowance of $100 per month for a nurse or attendarit, in addition to the $100 aUowed for total permanent disabUity. ENEMY OR ALLY OF ENEMY INSURANCE COMPANIES AND OTHER FOREIGN INSURANCE COMPANIES. The jurisdiction of the Federal Government over foreign insurance compariies doing business in the United States has continued during the past year, the Treasury administering the provisions of the trading-with-the-enemy act dealing with the question. From time to time insurance companies already established in foreign countries are applyuig for licenses to do business in this country. Since October 6, 1917, or the date when the trading-with-the-enemy act went into effect, the Treasury has licensed 12 insurance^ companies which never before did business in the United States. S O L D I E R S ' AND SAILORS' CIVIL R E L I E F ACT A N D B O N D S I S S U E D THERE- UNDER. Article IV of the act approved March 8, 1918, entitled '^An act to extend protection to the civU rights of members of the-Military and Naval Establishments of the United States, engaged in the present war," otherwise known as the soldiers' and sailors' civil relief act w*!^^:;- SECRETARY OF THE TREASURY. 161 (Exhibit §3, page 468), provides that the Governmerit will protectpayments of .insurance premiums in commercial companies on certain policies on^the lives of men in the military and naval services to the extent of $5,000 insurance on any one life. The law stipulates that the premiums due life insurance companies in such instances shall be certified by the Bureau of War Risk Insurance to the Secretary of the Treasury, and directs that, to secure the payment of such premiums, bonds of the United States shall be issued by the Secretary and registered in the names of the respective insurers. To June 30, 1919, the Bureau of War Risk Insurance approved 7,074 applications for benefits under this law. These approved applications protected $11,266,633 of insurance in private companies and societies on the lives of men in the military and naval services. The amount of premiums guaranteed was $326,747.69. Some of the premiums were paid by the insured, and to the extent of such aggregate payments i t was unnecessary to issue bonds as a guaranty. v To June 30, 1919, $179,500 of bonds had been issued to guarantee the payment of such premiums, of which $100 had been canceled and $179,400 were outstanding on that date. The issue of bonds by the Secretary of the Treasury upon the certification of the Bureau of War Risk Insurance is covered by Treasury Department Circular No. 115, dated July 1, 1918, which is attached to this report as Exhibit 84, page 473. CUSTOMS. During the fiscal year ended June 30, 1919, the effect of the war on international trade made itself felt, and, as in the preceding year, the customs revenues were far below normal. As compared with the fiscal year ended June 30, 1918, however, there was an increase of $1,390,079 and a decrease of over $112,000,000 as compared with the fiscal year ended June 30, 1914, immediately prior to the outbreak of the war in Europe. The aggregate receipts collected by the customs service during the fiscal year 1919 amounted to $186,241,436. Since the sighing of the armistice, however, a considerable increase in customs revenue, as compared with the corresponding period in the preceding fiscal year, is apparent, and it is confidently expected that with the formal restoration of peace the customs dues collected under existing laws will increase to their former proportions, i. e., in the neighborhood of $300,000,000. The value of imports for 1919 amounted to $3,091,369,329, an increase of $146,309,926. over those in 1918, while the exports during the same period amounted to $7,224,867,829, an increase of $1,296,582,188 over the exports of 1918, and nearly $5,000,000,000 greater than the exports reported for the fiscal year 1914. 140325—FI 1919 11 162 .REPORT ON. .THE FINANCES. .The expenditures of .the customs service during the past fiscal year amounted to $10,147,576, or an increaseof $138,652 over the fiscal year 1918. . Although $500,000 was added to the regular customs appropriation to defray expenses incident to the enforcement, by the custom's authorities, of. certain of the provisions of the espionage and-trading-with-the-enemy acts, the economical expenditure of this special fund made it possible to return to the treasury an unexpended balance of over $400,000. During th^ past fiscal year, up to the signing of the armistice, the customs service was required to exercise extraordinary vigilance ih order to insure' the enforcement of the restrictive^measures adopted by the Government with. respect to the arrival and departure of persons and the importation and exportation of merchandise from and to foreign couritries. In fact, during the war period the customs service became a kind of '^clearing house" in the enforcement of war-time regulations of.. several departments and governmental agencies other than the Treasury, notably the State Department, the War Trade Board, and, to a,more limited extent, the War Department. That all of these duties werp expeditiously and efficiently performed is a tribute to the loyalty and devotion of the field force, of the customs service worthy of the recognition'and generous consideration of the Government.' * During the past fiscal year it has been possible to resume the anriual conferences of collectors of customs and appraisers of mercharidise which were suspended during the.; war period. These conferences serve a most useful purpose because of the opportunity which they afford.to discuss problems of common interest and to devise plans for the improvement of.the service. They serve to strengthen the esprit de corps of the customs service as well as to standardize the methods of administration.. Under a new accounting, procedure put into operation throughout the service during the past fiscal year it was possible to abolish the use of 194 forms, used under the former system. The new procedure is, furthermore, expected to result in the saving of about half the time and labor formerly riecessary at the large naval office ports in recording the ' transactions and rendering financial reports to the Auditor, for the Treasury. During the past fiscal year considerable work devolved upon customs officers by reason of the enforcement by them of the act of June 7, 1918, commonly known as the motor-boat act. Under that law, collectors of. customs are required to see that every motor boat in their districts, except those owned by the Government, is numbered. Not only is it necessary to keep a record of the numbers assigned to.every motor boat and the names and addresses of the owners thereof, but subsequent changes of ownership must likewise be recorded and violations reported to the Secretary of Commerce. SECRETARY OF THE TREASURY. 163 The enactment of the recent Federal prohibition law also imposed increased duties.on customs officers during the past fiscal year. As soon as the manufacture and sale of liquor in this country was prohibited there was noticeable increased activity along the Mexican and Canadian frontiers in the smuggling of liquors. The special measures adopted to meet the situation, coupled with the severe penr alties which have been imposed, will result iii a steady decline in violations of this character. . In view of the continued demand for space in Federal buildings, reorganization bf the force employed at the various large ports has been made during the past year whereby space formerly devoted to customs purposes has been made available for other Government agencies. Every effort has been made during the past fiscal year to simplify, within the-limits permitted by law, the customs practice and procedure. Furthermore, a number of improvements in the organization of t h a customs forces were effected with a view to expediting the conduct of public business. PUBLIC HEALTH. . . The period following the termination of hostilities with Germany, no less than during the war, ushered.in additional respoiisibilities of a medical and public health nature which it became the duty of the Federal Government to discharge. By far the most responsible of these duties is the important work; with which the Public Health Service is charged, of affording medical relief to the discharged heroes of the late war. After the signing of the armistice, with resultant rapid demobilization, the lack of facilities for providing for the hospital care and treatment of discharged soldiers, sailors, and marines, who were beneficiaries of the War Risk Insurance Bureau became so acute t h a t Congress found it necessary to pass-legislation to meet the situation. I n the act of March 3, 1919, entitled ^^An act to authorize the Secretary of the Treasury to provide hospital and sanatorium facUities for discharged sick and disabled soldiers, sailors, and marines,',' pror vision was made for the acquiring by the Public Health Service of various properties, including hospitals and hospital sites, with equipment, etc., by transfer from the War Department and otherwise. By the end of the fiscal year, therefore, the Public Health Service had opened nine hospitals for this class of beneficiaries. Additional institutions were opened, after the expiration of the fiscal year and further facilities will be provided for the future. At the present time virtually all of the beneficiaries of the war risk act are being cared for through the agencies of the Public Health Service. 164 REPORT ON THE FINANCES. In addition to caring for our soldiers, sailors, and marines, it was found desirable shortly after the passage of the above-mentioned act to enter into reciprocal arrangements with the Canadian Government whereby discharged soldiers of Canada in the United States are given necessary medical attention at our institutions and American soldiers in Canada are accorded the same privilege in that country. The better coordination of the medical activities of the Government, so far as they related to the care of the discharged soldier, sailor, and marine, was effected during the past year by the conclusion of arrangements with the Federal Board for Vocational Education whereby medical officers of the Public Health Service are now making physical examinations, upon request of the District vocational officer of that board, of disabled men discharged from the service desiring to enter upon a course of vocational training. The organization of the forces of the Public Health Service engaged in this relief work is practically completed. With its coinpletion it is hoped to have built a machine of the highest efficiency and having first regard for the welfare of the soldier, sailor, and marine, and to have afforded facilities generally for carrying on what the Public Health Service recognizes to be a tremendously important function. I t might be well to mention in connection with the obtaining of personnel for this work that the reserve corps, created by the act of Congress approved October 27, 1918, was of great assistance. Without the flexibility which it permitted in the corps, the service would have been unable to obtain sufficient and competent assistants for this work. Af^er-the-war program. Upon the cessation of hostilities, the Public Health Service turned its attention toward the development of a comprehensive program to meet the urgent after-the-war health needs. The record of rejec-tions during the draft showed that over 34 per cent of all draft registrants were rejected by examining boards on account of physical defects and,diseases. Studies previously conducted by the service, had indicated unmistakably that in large measure these defects and diseases could have been prevented had proper attention been given to them, especially in childhood. Therefore, this unsatisfactory condition of the public health is by no means necessary. Its persistence in the face of the energetic work of many departments and voluntary organizations shows primarily tl^at health work has not been sufficiently organized and coordinated and has not received from governmental authorities the attention that it merits and must have if the country is to make rapid recovery fromoWar losses and to render safe the development of new agricultural and industrial processes. I t is true that preventable disease rates have been lowered in many instances, and significant success has followed campaigns against SECRETARY.OF T H E TREASURY. 165 isolated diseases and insanitary conditions. The tuberculosis rate has steadily fallen. ' Typhoid fever has been made a negligible factor, and wherever active intelligent efforts have been made to combat it yellow fever has been kept out of the country. Nevertheless the pub^lic at large remains in ignorance of those main principles of health which investigations and practical experience have shown to be necessary for the prevention of disease. I t is pitiably evident that such primary facts as the means of spread of typhoid fever and malaria, the effectiveness of smallpox vaccination, and the elementary principles of personal hygiene, such as the care of the teeth, are not known to the public generally. No national, comprehensive campaign, dealing with all phases of the public health, has been conducted. Until that is undertaken the information which the public wUl have in regard to disease prevention will be fragmentary. The problem is daily being aggravated by the fact that the population of the cities and of the country generally is increasing rapidly, making insanitary conditions more menacing. In developing a program which will meet urgent national needs in public health, leadership must be assumed by some central authority. The Public Health Service is the natural agency to do so. In the past, under authority of Congress, it has built a sound foundation for the conduct of a national campaign for health by determining minimum standards of health and adequate measures for diminishing the annual toll of lives taken by preventable diseases and insanitary conditions. The program which the Public Health Service has prepared to meet these urgent needs is comprehensive, dealing particularly with problems of industrial hygiene, rural hygiene, prevention of the diseases of infancy and childhood, water supplies, milk supplies, sewage disposal, malaria, tuberculosis, railway sanitation, municipal sanitation, health standard, health education, collection of morbidity reports, and the organization and training for duty in emergency of the reserve of the Public Health Service. I t is evident that the success of such a program will depend upon the active cooperation of Federal, State, and local health authorities and voluntary organizations to a degree not previously recognized. Experience has shown that this cooperation can best be secured on the Federal-aid extension principle. The service has already been authorized by Congress to^ carry on rural sanitation demonstrations under that plan, but the appropriations have been wholly inadequate. Additional authority is needed if this principle is to be extended to the entire fleld of public health. Experience has shown that this is the most feasible plan for obtaining the proper coordination of the activities of Federal, State, and local governments. While there is grave necessity for strict economy in Government expenditures, it is fruitless and unwise to deny requisite funds for the -166 . REPORT ON T H E FINANCES. important work of the Public Health Service when human lives and the national.welfare may depend upon the judicious use of Federal money. ' Influenza.. In addition to activities relative to the controhof the influenza epidemic, the Public Health Service concentrated efforts on the study of the disease. In view of known epidemiological facts, it is selfevident that the disease is highly communicable. There is a growing feeling that it may be communicable only in its earliest, stages,.particularly. during the period of incubation. A large amount of work was done to determine the prophylactic value of vaccines made from the influenza bacillus and of vaccines containing this organism together with various organisms which were regarded as secondary invaders and probably as the cause of the pneum.onia which so often complicates influenza. The only experiments along these lines on which conclusions may be safely .based are those iri which a portion of the personnel in a group or in an institution was inoculated a number of days prior to the entrance of infection to the group or to the institution. Under these controlled coriditions the vaccines which were tried failed to influence either the morbidity or the mortality of the disease. PUBLIC BUILDINGS. After the signing of the armistice, bids were invited for the construction of authorized Federal buildings and extensions, contracts for which had been deferred, on account of the imperative needs for labor, material, transportation, and money in the prosecution of the war. I t was found impossible, however, to resume building operations to any considerable extent because prices which had been gradually increasing for many months; had reiached a point where, expept in a few isolated instances, the limits of cost fixed by law were insufficient. . This condition, affecting more than 100 buildings, has been brought to the attention of the Congress and estimates have been submitted of the amounts severally heeded to be provided by way of increases in limits of cost to enable the department to proceed with the work of construction. The restriction placed upon the letting of new contracts for the construction of Federal buildings during the war did not involve the suspension of the work of preparing drawings and speciflcations for buildings already authorized and n o t . under contract, nor did it involve the suspension of construction work on buildings already under contract, and which at the time were in various stages of completion. Construction work, notwithstanding abnormal conditions of the most discouraging sort, was carried forward as rapidly as, pos.si- SECRETARY OF THE TREASURY. ISt ble, with the result that 73 buildings iand extensions were completed and made ready for occupancy during the year, . On a production basis, and as a continuation of the buildi:ig'program of the'preceding three or four years, this represented a rate of progress of a new building or extension every flve caleridar days. The Postmaster General having reported to the.Treasury that the Postal Service' had outgrown iriany of the Federal buildings, the condition was brought to the attention of the Congress and a l i s t of the buildings, together with estimates of the cost of extending a considerable number of them, has been submittedi Similar estimates for the remaining buildings will be transmitted in the near future. ' ' i ; Contractors^ relief act. When the United States entered the war with Germany on April 6, 1917, there were a large number of buildings under construction, the contracts for which had been awarded on bids prepared before that date. The demands which .the war made upon the resources of the country for skilled workmen and materials variously affected these contracts.. Priorities given for iriunitions displaced orders already giveri for building materials or postponed their, being placed, and the.commandeering of |)lants where vbuildirig materials were being manufactured, together with transportation difficulties and increases in cost of freight,: materials, and labor j caused unforeseen delays and expense tocontractorSi With a view to reimbursing these contractors, their subcontractors, and material men (including sureties who furnished means to enable failirig; contractors to complete-their contracts; or who completed, same as sureties), an act e n t i t l e d / / A n act for the relief of contractors and subcontractors for. the post.offices and other buildings and work under the supervision of the Treasury Department, * and for other purposes," was passed by the Congress and approved August 25, 1919. That act provides for the reimbursement of such contractors, subcontractors, material men, and sureties for their increased costs due to war conditions for work performed after April 6, 1917, under Government contracts made or proposals submitted (and afterwards accepted without change in price) prior to that date. Claims must be submitted within three months from the passage of the act, Reimbursement is conflned to the actual increased cost, exclusive of proflts. .. : . • Already a number of claims have been flled, but as the act carried no appropriation for their payment'the Treasury has submitted an estimate for an appropriation in an amount believed, to be;sufficient to care for the claims likely to be perfected: soon; and. further estimates will be submitted from time to time as fundsarerequiredi to. pay claims, as audited. ? • • i A - '. i ': v :. > ; ;; :: 16.8 REPORT ON T H E FINANCES. National Archives Building. Many of the priceless archives of the Government are exposed to destruction and loss for the want of safe and appropriate storage facilities. The necessity for a building specially designed for the preservation of these valuable records has long been recognized. Under authority conferred by the act of March 4, 1913, an examination has been made of the plans of a number of archives buildings of Europe, outline plans have been prepared and approved, a site selected, and estimates submitted fbr an appropriation for the land and the construction of the stack portion of the building. If the appropriation is made, work on the National Archives Building will be begun at the earliest practicable moment. The attention of the Congress is respectfully drawn to the very great and urgent need of providing funds for the construction of a building for this important purpose. COAST GUARD. Throughout the entire flscal year 1919 the "Cpast Guard, in accordance with the provisions of the act of January 28, 1915, continued to operate as a part of the naval forces, and engaged in the prosecution of the war under the direction of the Secretary of the Navy. The vessels of the Coast Guard rendered most useful service in the carrying out of war operations, and the service personnel were utilized to great advai^age in various and important war activities under the direction of the Navj^, Department. .Bea|des serving on Coast Guard cutteif, officers of the service were attached to naval vosisels in foreign and domestic waters, were on transport duty, and were assigned to training stations, aviation stations, navy yards,. and naval districts. The Coast Guard during ...the World ., War maintained its high traditions and performed its war-time duties as part of the military forces of the country with marked credit an4 distinction. On September 26, 191^8, while escorting a convoy in European waters, the Coast Gfuard cutter Tampa was sunk with all hands in the Bristol Chaimel by a torpedo from an eneijay submarine. Diligent search was made by destroyers in the vicinity of the disaster, but nothing was found but two unrecognizable bodies in sailor's uniform and some small pieces of wreckage. There if^re on board ^ officers, 4 warrant officers, and 100 enhsted men, all of whom, except the medical officer, belonged to the Coast Guard. Thus, in the performance of their duty, did 112 gallant officers and men give up their lives for their country. Wit^ the exeeption/of the loss of the U. S. S. Cyclops, with her complement, this is the largest • individual loss of life sustained by our naval forces during the war. SECRETARY OF THE TREASURY. 169 The Coast Guard was returned to the jurisdiction of theTreasury on August 28, 1919, by the following Executive order: EXECUTIVE ORDER. By virtue of the authority conferred by "An act authorizing the President to coordinate or consolidate executive bureaus, agencies, and offices, and for other purposes, in the interest of economy and the more efficient concentration of the (rovemment," approved May 20, 1918, I do hereby make and publish the following order: The important purposes for which the operation of the Coast Guard was temporarily trauMe^rM to the Navy'underthe act apprbved January 28, 1915, entitled **An act to create the Coast Guard by combining therein the existing Life-Saving Service and Revenue-Cutter Service" having been accomplished, and, it being for the best in. terests of the Government and for the efficient service of the Coast Guard in connection with the collection of the revenue that the Coast Guard be under the supervision of the Treasury Department, it is hereby directed that the Coast Guard shall on and after this date operate under the Treasury Department. WooDROW WILSON. THE WHITE HOUSE, August 28, 1919. In accordance with the terms of the above order, the Coast Guard has ^resumed the perf ormance 'of its peace-time functions under the Treasury. ANCHORAGE CONTROL. Under Title 2 of the espionage act, approved June 15, 1917, the Secretary of the Treasury was authorized, subject to the approval of the President, to make and enforce rules and regulations governing the anchorage and movement of vessels, foreign and domestic, in the territorial waters of the United States, and to exercise full control over such vessels while in ports of the United States. Under authority of this act, there was formed a board knol^i as the bqferd on the anchorage and movement of vessels. This board consisted of three members, representing the Treasury, War, tod Navy Departments. An officer, of the-Coast Guardwas^designated-asa representative of the Treasury on this board and also was made chairman. The board designated anchorage grounds at the ports of New York; Philadelphia, Norfolk, San Francisco, and the St. Mary River, and also prescribed regulations governing the movement of vessels in. those ports as well as regulations governing the lading and unlading of explosives. The board did not deem it necei^sary to establish anchorage grounds and regulations governing the lading of explosives at other ports! The office of captain of the port was created at each of the ports mentioned, except at San Franoisco, and a United States Coast Guard officer was designated as captain of the port to enfiprofe the regulations. Many of the enlisted men and officers of the Coast Guard were engaged in this work and also assisted very materially in the enforcement of other laws and regulations pertairiing to the entrance and 1-7;Q . REPORT ON THE FINANCES. departure of persons into and from the United Sta-tes, and in thv search of vessels for contraband goods. , • .' . : ' The Coast Guard officers and men also assisted materially inthe enforcement of war-time regulations issued by this department pertaining to the operatiori, licensing, etc., of coastwise and harbor, craft. These special regulations have now been revoked and; all of the activities above mentioned have practically ceased except those under the rules and regulations governing the anchorage and movement of vessels and the handling of explosives, which regulations are still in full effect and are being enforced by the officers and men of the Coast Guard. BUREAU OF ENGRAVING AND PRINTING. The demands of the Governmerit upon the Bureau of Engraving and Printing during the flscal year 1919 were the greatest in history. All previous records were broken by the. engraving, printing, and delivery,of 447,464,105 sheets of flnished work,,including Liberty bonds. Victory notes, war-savings stamps, thrift stamps, certiflcates of indebtedness, farm-loan bonds, stamps, and currency. The task was carefully and cheerfully performed by the employees of the bureau, who worked uncomplainingly in day and night shifts. There is no institution in the Governinent where greater care is necessary than in the Bureau of Engraving and Printing. ;^:;Prior to the war the law required the printing of the face of all money, on harid plate-printing presses. To meet the emergency needs of the Government the statute was modifled so as to authorize the Secretary of the Treasury to plate print currency and securities in whatever riaanner and by whatever process he deemed necessary. Under this authority, together with the installation.of modern machinery and the application of .up-to-date methods, the bureau has been, equipped to meet the requirements and the necessities of the Government with respect to currency, stamps, and securities. .The bureau's cost-accounting system was improved during the year, and valuable information is now readily available as to the various operations to enable the director to determine deflnitely the costs of the.output; This.information is of particular value in connection; w;ith the product for which the bureau is reimbursed. CONTRACTING AND PURCHASING. ^ ;As the business of the Government expands, there is an increasing need of centralization under some one authority of the great problem of: contracting for and purchasing Government supplies. An initial step in this direction, with respect to contracting for supplies for use primarily by the Government services in, Washington, was made by the establishment of the General Supply Committee, but the scope of its work is narrow at best. Within its limited fleld of SECRETARY OF THE TREASURY. 171 operations it has accomplished something in. the reduction of purchase prices, but has left untouched the disadvantages to the public service at large which arise from a diversiflcation of administrative views as to general and special needs and from a similar diversification iri the form of the contract obligations assumed under the different branches of the service. Similarly the establishment of Government fuel yards as authorized by the act of July 1, 1918, was a step in the general direction of centralized control to the advantage of the public service. But again the field of operations was made a limited one and its benefits confined to the branches of the Federal service and the municipal government in the District of Columbia and immediate vichiity. These measures would seem to cover but a fraction of the general requirements for central control over contracting and purchasing. There is no good reason why the field of operations of a centralized authority of this character should be .confined to a lesser territory than that marked by national boundaries, or why the benefits of organization, business judgment, and efficient methods should be employed only locally when the need for them is as widespread as the public service itself. I t is thought t h a t the whole needs of the Goverririient in matters of contracting and purchasing, without regard -to geographical points at which such needs may arise within the continental limits, could be as well, or better, served.by the establishmerit of a central machinery as can the needs at any given point, Nuchas the District of Columbia. I t cari riot be questioned that procuring supplies, including contracting for supplies for works of construction and manufactured airticles or fabricated materials, is a task single in its nature, and one which would lend itself to central organization properly planned and equipped for its purposes, with a permanent chain of depots and warehouses lor supplying expeditiously the requirements of all headquarters and field services. Of nearly equal importance in the advantages to be gained are the two questions of improved efficiency at a lower operiating cost and the securing of supplies at lower prices. A t present, without previous cooperation, the various branches of the public service are competitors among themselves in the markets which they seek, arid their similar needs often operate to increase prices for each other under the general rule of supply and demand. This is ari administrative problem of great importance in the interests of economy and efficiency, and I am sure that it will require but a cursory examination of the waste and duplication that inevitably must accompany the present system to make manifest the desirability for some-drastic reform along the lines suggested. The view has been advanced from some quartiers that certain branches of service, whose requirements are specialized or highly 172 REPORT ON THE FINANCES. technical in character, would not obtain 'satisfactory results except through their own personnel. I t is not seen that this view is tenable upon an analysis of the situation. If technical or expert services are available, now in the various establishments of the Government, the same services could be utilized by a central control. The more or less centralized machinery brought into operation by the necessities of the world war may be cited as an answer tb objections of this character. I n practically all branches of the public service dealing with war activities the business control of technical equipment and its procm'oment was placed in the hands of others than the technical experts whose knowledge was essential to the design and choice of the equipment itself. Similarly, and more effectively perhaps, a central business control of procm-ement and distribution in time of peace can avaU itself of expert services and technical, knowledge wherever found within the Government. The fact that business men from civil life were called upon in a period of urgent haste to undertake the procurement through, commercial chan|tfels of highly specialized articles of fabrication or manufactilre and that their efforts were successfully applied with the cooperation of the technical experts within the service, is a sufficient indication that a central business control of procurement is not incompatible with the control by the appropriate branches of the character and choice of their technical supplies. Aside from the economies to be derived from the application of good business judgment to purchasing, storing, and distributing, the establishment of a central control would have an influence of the utmost value ogi the contractual relations of the Government. Under the present divided control these are lacking in the uniformity which should obtain, and for that reason occasion many adjustments by the Treasury in the settlement of legal claims which might be avoided under a proper system of standardization of contract forms and manageriient. The prevaUing deflciencies in this respect came into view to an unprecedented degree as a result of recent war activities and have served to bring the subject into fresh and serious consideration. I t will be recalled that a condition existed in contract affairs which necessitated legislative action for their adjustment not wholly within the strictly legal obligations of the Government. I t will require a trained and skillful organization, with all the facilities necessary for expansions in periods of emergency, if like experiences are to be avoided in the future. Under the urgency of the moment contract forms were disregarded in features essential to the interests of the Government and in many cases were entirely supplanted by informal agreements, written and oral. Form and procedure imposed by present laws were quite generaUy disregarded, and often were unknown to the officials drawn from civil life and SECRETARY OF THE TREASURY. 173 charged with the procurement of supplies because of their knowledge of industrial conditions. I t is obvious that an established and effective, central control, capable of expanding its facilities as circumstances require, would meet emergencies with greater security to the interests of the Government and contractors alike. In the Government's everyday affairs, however, the need is just as urgent, arid a lack of uniformity in the written instruments of contract is not alone responsible for the numerous claims against the Treasury. Faulty form and lack of standardization are supplemented to the disadvantage of the Government and contractors by the uncertainty and differences of construction rendered by administrative officers during the period of fulflllment, by unwarranted administrative acts in contravention of explicit terms of contract, both for and against the interests of contracting parties, and by all the many, omissions and commissions which are dua to the absence of a single supervision. I t is thought that these and a host of evils not touched upon can best be eradicated by combining in one establishment the adequate authority for contracting and purchasing, 4nih all needed facilities, and unlimited as to its fleld of operations within the United States. To state it in its simplest form, it is a mere, matter of combining in one establishment the classes of business common to all, with proper provision for specialized needs. I t is not open to doubt that such action would redound iirimeasurably to the benefit of the public treasury and relieve all branches of the public service of a burden of duties not now administered satisfactorily to the disbursing and accounting authorities. Nor is it open to doubt that it can be effectively accomplished. Something might be said of the advantages which would accrue to the public interests from measures which might be designed to cure specific evils alone, such as requiring as separate considerations greater uniformity in contract forms and methods of contracting, a revision of the statutory requirements as to advertising and proposals, and kindred reforms, each desirable in itself. But these would leave unsolved the really big problem presented by the situation as a whole. As has been pointed out in the annual report of the Comptroller of the Treasury, the sums involved are large, the public interests concerned are vital and far-reaching, the administrative and accounting duties are complex and burdensome, and the private interests concerned are equally important, often involving the business success or failure of contractors. The contract requirements of the Government standing alone constitute almost a department of Government in themselves, with their own legal and equitable considerations, and a mass of laws and court decisions surrounding their fulfillment, adjustment, and settlement. The present moment, with the experi- 174 . REPORT ON T H E FINANCES.:". ences of the war fresh in mind and much data available for consideration, would seem to be a propitious one for the study ,6f all purchasing and contracting needs and the proper establishment of machinery necessary to an efficient, expeditious, and economical fulfillment of those needs for the purposes of both ordinary periods and periods of crisis. I t has been considered whether some action might be taken by executive authority, in the absence of legislative enactment, to bring purchasing and contracting operations as found in the various depart-. ments: and independent establishments into some sort of correlation for the entire executive branch of the Government, but it is thought that the magnitude of the task and its intimate contact with all agencies of that branch argue for a completeriess of control and such legal authority for the step as can be granted by the Congress aloneA proper regard for economical and efficient administration, its bearings on the public treasury, and the judgment of competent critics all combine, to urge the establishment of such an agency as the one proposed. Unlike many projects for which consideration is.so often asked, it would unify and tend to contract rather than expand the administration of present activities. .; GENERAL SUPPLY COMMITTEE. In advance of provision for the centralized control of all contracting for and purchasing of supplies for Washington and the^field, as recommended above, it is urgently suggested that prompt measures be taken at least to remodel and expand the functions of the General Supply Committee, which at the present time is only an agency of contracting for Government supplies. I n the absence of the suggested gerieral legislation, a plan should be evolved under which common supplies required for use by two or more of the executive departments or independent establishments of the Government in Washington would be contracted for, purchased, stored, and distributed through a single bureau. In lieu of the General Supply Committee there should be created a bureau of supplies consisting of three divisions, one of which should include the present general functions of the General Supply Committee, to be known as the division of contracts, the second to be known as the division of purchases, and the third to include the present Division of Property Transfer of tbe committee and to be known as the division of stores. This would require the inaintenance of a suitable warehouse adequately stocked with all articles in common use for distribution to the Government service. The ability to carry in stock various classes of supplies, commonly required by the departments would permit the prompt filling of all requests and obviate the necessity for open-ma,rket purchases which, to a great extent, exists at the present time. Such a! SECRETARY OF THE TREASURY. 175 bureau would.be able to buy supplies at opportune seasons and in quantities that undoubtedly would greatly reduce the cost. With respect to the operations of the General Supply Committee during the fiscal year 1919, the records show that reported purchases by the various Government offices under contracts negotiated by the Secretary of, the Treasury through the committee amounted to $10,321,438.18. As certain establishments are not required by law to report purchases and others failed to report fully, the total amount of purchases during the year probably exceeded $15,000,000. After the signing of the armistice, it became apparent that large quantities of office material, supplies, and equipment would become surplus because of the cessation of war activities, and on December 3, 1918, the President, on the recommendation of this department, issued an Executive order directing that surplus material, supplies, and equipment, falling into disuse because of the cessation of war activities, or for other reasons, be transferred to the Secretary of the Treasury for reissue to other Government establishments through the Gerieral Supply Committee. Under that order the General Supply Committee functions as a clearing house for the executive departments' and independent establishments of the Government in the District of Columbia, in that it takes over all the surplus material, supplies, and equipment, classifies, warehouses, repairs, and reissues it from time to time to other governmental establishments as their' needs arise. In making purchases from available funds for needed office material, supplies, and equipment the order required the several executive departments and independent establishments and the municipal government of the District of Columbia to buy from the stores,of the General Supply Committee if the articles were obtainable from that source. To carry the order into effect, the Congress granted an appropriation of $100,000 for the remainder of the fiscal year 1919 and for the fiscal year 1920, and stipulated that the Executive order shall continue in eff.ect until June 30, 1920, without modification, except that proceeds from the transfer of appropriations thereunder shall be coyered into the Treasury as,miscellaneous receipts. From December 10, 1918, to June 30, 1919, there was transferred to the General Supply Committee $1,031,948.54 worth of material, of which $555,195.34 worth was issued. That amount includes discounts aUowed on account of deterioration from use which equaled 15f per cent. ./The balance chargeable to stores account was, therefore, $476,753.20. The total expense of operation; that is, overhead charges, for the period mentioned was $24,297.30, or 4-A- per cent of gross sales . Section 5 of the act approved July 11, 1919, provided that the heads of the several executive departments arid other.responsible 176 REPORT ON T H E FINANCES. officials, in expending appropriations contained in t h a t or any other act, so far as possible, should purchase material, supplies, and equipment, when needed and funds were available, from other services of the Government possessing material, supplies, and equipment no longer required because of the cessation of war activities. To carry out that provision of the law, the duties of the General Supply Committee were further increased by the Executive order of August 27, 1919, by which the committee was designated as a central body of information with respect to supplies, and, as such, to receive reports of aU surplus material, supplies, and equipment available by reason of the cessation of war activities in Government services throughout the United States. Record of material reported as surplus is maintained in the committee for the information of all Government departments and establishments. There has been transferred to the General Supply Committee, under the Executive order of December 3, 1918, certain motor equipment, which it is unable to sell to other services of the Government. This consists of a number of old and badly worn trucks, automobile bodies, and motor cycles, which it would appear to be to the interest of the Government to sell at public auction. I t is, therefore, recommended th^t the necessary authority be granted to permit the sale of equipment now or hereafter transferred to the General Supply Committee, for which there is no demand, and the sale Of which would be in the interest of the Government, and further that, in the case of articles purchased at high prices during the war, the committee be allowed to transfer them to governmental services at a fair market value. THE INTERNATIONAL HIGH COMMISSION. The work of t l ^ International High Commission has gone on steadily through the fiscal year 1919 with a constantly growing record of accomplishment. With the signing of the armistice and the conclusion of hostilities, it was felt that the time was opportune and appropriate for the holding of a second Pan-American financial conference. Accordingly, at the suggestion of the cominission which was established to carry out the recommendations of the first PanAmerican conference, the President, through the Secretary of State, has invited the governments of Central and South America again to send their ministers of finance and other appropriate representatives to confer with the Secretary of the Treasury at Washington in January, 1920, on the financial and commercial problems of the American Republics. This second conference will open on January 12 and close on January 17. Acting under the direction and coordination of the central executive council, the various national sections of the cominission are now SECRETARY OF THE TREASURY. 177 engaged in studying a tentative program for the second conference which has been formulated by the council and in assembling data for consideration at that meeting. Careful studies of the public debt, currency system, banking laws and practices, and principal'economic requirements of each Republic of Central and South America and the West Indies have been undertaken. The council also is giving particular attention to questions of communication and transportation and has set on foot a detailed investigation of the requirements for the rehabilitation and extension ^of maritime and land transportation facilities in Latin America. In this connection the council is receiving the hearty cooperation of the Department of Commerce and the United States Shipping Board, which have undertaken special surveys of transportation necessities in order to make the information available for the conference. Data also is being obtained with respect to the cable and wireless situation in Latin America. The International Trade-Mark Registratiori Bureau at Habana has advanced still further toward effective operation, and the last obstacles to its actual receipt and registration of trade-marks from the countries of the Northern Group were being cleared up as the fiscal year ended. I t is now actively functioning. Our own enjoyment of all the benefits of the trade-mark convention of 1910, so far as it is in effect, was somewhat handicapped during the fiscal year 1919 by the lack of enabling legislation to permit the Commissioner of Patents to open a register for marks communicated to him from the international bureau'or bureaus. That difficulty, it is hoped, will be overcome during the present fiscal year. This convention will serve as a practical device for the better security of the industrial property and good will of manufacturers and exporters not only in the United States, but in all the American Republics. I t seeks to make the process of registration simultaneous, expeditious, and inexpensive; it does not affect the substance of domestic trade-mark regulations in any manner. I t merely provides that the registrant in any one of the signatory countries may secure through the international bureaus registration in all the other signatory countries, provided there is no inherent obstacle in the nature of his trade-mark or in the technical provisions of the domestic trade-mark law. The rights acquired are not everywhere the same. The registrant is p u t on an equal footing with the domestic applicant for trade-mark registration in each of the countries to which the international trade-mark bureaus communicate the fact of its international registration. He acquires no greater rights than citizens of those countries, nor any less. He gets as much protection in those countries as their laws afford, just as citizens of those countries acquire as much protection in his country as his domestic law will 140325—FI 1919^ 12 178 RJEPORT ON THE FINANCES. grant. I t is a notable achievement of the Ihternational High Com^ mission to have assisted in removing a cause of uncertainty, delay, and loss in the protection of our foreign commerce, and to have stimulated the commerce of-other countries by encouraging .the distribution among them of all articles wherein proprietary right and good wiU constitute important assets. Associated with the preparation for the financial conference is the study that has been undertaken by the commission of the laws under which corporations and branches of foreign companies may organize or operate in the Republics of Central and South America., This inquiry is in line with the purpose of the commission to study the commercial law of the American Republics in the hope of removing the chief obstacles to closer commercial intercourse and gradually bringing about an approximation to the scientific standards of international commercial law and practice. With that serious object in view, the, commission has not ceased to labor for uniformity of the law relating to bills of exchange and checks, bills of lading, warehouse receipts, and conditional sales. The careful consideration of the models proposed for legislation on any of these topics will require, on the part of the national legislatures of Latin America, a by no means inconsiderable period of time, as it has required and still requires in the legislatures of bur several States in this country. The council is satisfied, however, with the progress made in this most important field and looks for the gradual acceptance of the rules and standards of practice submitted. During the year special attention was given by all of the national sections to the two important conventions proposed by the council several years ago, the first relating to an international gold clearance fund and the second having to do with the simplification of regulations governing commercial travelers and their samples (Exhibits 85 and 86, f)ages 475 and 477). The commercial traveler convention has been signed by the United States and Uruguay, Guatemala, Salvador, Panama, Venezuela and Paraguay. Negotiations with a dozen other countries are now under way. The gold clearance fund convention is also in process of negotiation, although it was not formally signed with any country before the end of the fiscal year. . The commission is endeavoring to popularize the use of the Brussels classffication of merchandise for statistical purposes, and to that end has issued a series of bulletins presenting the annual import and export statistics of each of the Republics, arranged in accordance with the Brussels classification and with values expressed in national currencies as well as in the international money of account agreed upon by the commission for this purpose and known as the Panamericano. The Department of Commerce publishes in English the material relating to the United States, while the commission publishes in Spanish and English alike the material relating to the othei* republics. SECRETARY OF THE TREASURY. 179 • At the beginning of the fiscal year 1919, the expenses of the-'commissiori'were still being defrayed from an appropriation of $40,000 made in the act apprbved February 7; 1916. The Sixty-fifth Congress appropriated $25,000 for thefiscal year 1919. The use of that appropriation, however, did not begin until October, 1918, when the appro, priation of 1916 was exhausted. At the close of the fiscal year a balance of $11,000 reverted to the general fund. For the fiscal year 1920 the Congress has appropriated the sum of $25,000 for the expenses of the commission. The sum of $50,000 also has been appro. priated for the second Pan American Financial Conference, to remain available until expended. In order properly to carry on the work of the United States section of the International High Commission during the fiscal year 1921, with due regard for its record of accomplishment and the important matters it has undertaken', it is my conviction that the appropriation made by the Congress should be increased to $30,000. During the year 1919 the membership of the United States section of the commission was as follows: The Secretary of the Treasury, chairman; John Bassett Moore, vice chairman; Duncan U. Fletcher, Andrew J. Peters, Paul M. Warburg, Samuel Untermyer, John H. Fahey, and John H. Wigmore. L. S. Rowe, secretary general. The vacant place on the commission has since been filled by Herbert Fleishhacker, of San Francisco, formerly a member of the Federal Advisory Council and president of the Anglo and London Paris National Bank. The staff of the commission consists of an assistant secretary general, six technical assistants, and a corresponding number of clerical assistants. SURETY BONDS FOR GOVERNMENT OFFICERS. The attention of the Corigress is directed to the increasing number of bonds required by the Government from its employees. I t is estimated that approximately 200,000 employees, including the Postal Service, give fidelity bonds in varying penalties ranging from $500 for a rural letter carrier to $500,000 for an assistant treasurer of the United States. Most of these bonds are executed by bonding companies, and the premiums, which are paid by the employees themselves, are fixed within the limitation of the act approved August 5, 1909. The growth and extent of the business suggest the desirability of considering the establishment of apian whereby the Government would bond its own employees, who would pay premiums into a mutual fidelity fund to be used for the payment of losses arising under the bonds. This would be a wholly safe and satisfactory way of affording protection to the Government and at the same time undoubtedly reducing the premium charge to employees. In this connection i t 180 REPORT ON THE FINANCES. should be pointed out that the joint commission of Congress created by the act of August 5, 1909, recommended the creation of a,mutual bonding fund as the solution of the Government's bonding problem. If such a plan be not adopted at this time, attention is caUed to the work now being done by the Treasury through the supervision exercised over bonding companies writing bonds for Government officers in all departments. The act of March 23, 1910, amending the act.of August 13, 1894, merely transferred from the Attorney General to the Secretary of the Treasury the limited supervision provided for under the last-mentioned act, b u t did not give the Treasury Depart-, ment any additional supervisory authority over these bonding companies. Reasonable funds should be provided to permit the effective enforcement of the statute by affording facUities for making periodical examinations of the financial condition of bonding companies, thereby securing a larger measure of protection for the Government. A large sum would not be required for this purpose. Under regulations approved by the Secretary of the Treasury, bonding companies doing business with the Government are not permitted to assume a liability on account of any single risk or bond, with the exception of certain customs and internal-revenue bonds, in excess of 10 per cent of their capital and surplus as fixed by the Treasury Department. WhUe the bonding companies have acquiesced in the rigid enforcement of this 10 per cent limitation, it is believed that the best interests of the Government would be served if appropriate legislation were enacted by the Congress definitely fixing the limit of liability. I t is respectfuUy recommended that the act of March 23, 1910, be amended accordingly. REPRESENTATION OF TREASURY ON W A R TRADE BOARD. The Secretary of the Treasury continued during the current year to be represented on the War Trade Board, thus keeping t h a t board in touch with the financial policies of the Treasury Department and securing for the Treasury Department the benefit of full information in regard to the trade and blockade policies of the War Trade Board. Following the signing of the armistice, the War Trade Board undertook to remove restrictions on trade as rapidly as conditions warranted such removal, and by June 30, 1919, all b u t a few remnants of those restrictions had been removed. By order of the President, the functions of the War Trade Board were on that date transferred to the Department of State to be administered by the War Trade Board section of the Department of State, and the existence of the. War Trade Board came to an end. I take this occasion to record my judgment of the valuable service performed by that board and my appreciation of its cordial cooperation with this department. SECRETARY OF T H E TREASURY. „• • ,/ P A N A M A CANAL., 181 '- '• The general fand bf the Treasury was charged during the fiscal year 1919 with $12,265,775.08 on account of the Panama Canal, including $1,726,857.87 for construction work and $10,538,917.21 for fortifications, maintenance, and miscellaneous expenditures. The general fund was credited during the year with $6,777,046.55 receipts from tolls, etc., making a net expenditure for the year of $5,488,728.53. The total amount expended for canal construction, fortifications, maintenance, etc., from the general fund to June 30, 1919, exclusive 'of reimbursements from sales of bonds, was $313,474,507.02, whUe the amounts received from Panama Canal bonds, including premiums thereon, issued in. 1907, 1908, 1909, 1911, and 1912 was $138,600,869.02, making the total expenditures on account of th© Panama Canal to the close of the fiscal year 1919 $452,075,376.04, CONTINGENT FUND. I respectfuUy request that the Congress appropriate for the fiscal year 1921 the sum of $15,000 as a contingent fund for the Secretary of the Treasury. This amount was asked for the fiscal year 1920, but was not granted. Out of this fund in previous years improved methods and economies have been effected and duplication of work eliminated. FINANCES. The foUovdng statements showing receipts, disbursements, estimates, and the condition of the Treasury are submitted: R E C E I P T S AND DISBURSEMENTS.^ Fiscal year 1919. The receipts and disbursements of the Government during the fiscal year ended eJune 30, 1919, were as follows: ' (See details on pages 188 to 198.) GENERAL F U N D . Receipts into the general fund, including trust-fund receipts, but excluding postal revenues: Customs Internal revenue— Income and excess-profits taxe.s $2, 600, 762, 734. 84 Miscellaneous 1, 239, 468, 260. 0 ! Sales of public lands Miscellaneous Total ordinary receipts.. $183, 428, 624. 78 3,840,230,994.85 1, 404, 705.12 622, 539, 52?. 71 4, 647, 603, 852. 46 1 "Disbursements," as used in this statement, in addition to actual expenditures, include unexpended balances to the credit of disbursing oflQcers. 182 . REPORT ON THE FINANCES. Disbursements,^ from the general fund for cur- • rent expenses and capital outlays, including trust-fund disbursements, but excluding postal service paid from postal revenues and ^ Panama Canal disbursements: For civil establishment— Legislative establishment $16, 605, 836.15 ; Executive proper, including Tariff Commission, .War Trade Board, War Industries Board, Alien Prop- « erty Custodian, and Committee on Public Information 21,497, 674. 97 State Department.. 20,248,594.49 Treasury Department proper.... 171, 319, 616. 58 Bureau of War Risk Insurance '^ 101, 943, 693." 27 Public buildings, construction, sites, equipment, and maintenance 16, 651, 372. 40 War Department proper 20,162,504.50 Department of Justice 15,216,025. 43 Post Office Department proper " 2,062,433. 96 Postal deficiencies for prior years . . 343, 511.15 Navy Department proper 9, 773, 378. 04 Interior Department . p r o p e r . . . . . . . . . 29,120, 861. 52 Department of Agriculture.... ... 36, 888, 371. 28 Department of Commerce 15, 668, 534.14 . Department of Labor 13, 290, ^90. 61 United States Shipping Board......... 1,871, 201, 577. 51 Federal control of transportation sys'' tems -.. - , 349, 238,385: 21 War Finance Corporation...'. 295,000,000. 00 Food and Fuel Administrations 117, 644,584. 08 Council of National Defense 554,039. 43 Bureau of Industrial Housing. 70,483, 879. 32 Interstate Commerce Commission... . 5,688,651.38 Federal Trade Commission.. 1,595,737.29 Federal Board for Vocational Education 3, 549,442. 64 Employees' Compensation Commission 1, 536,434. 80 Smithsonian Institution and National V . Museum ' 668,668.06 Other independent offices 6, 370, 516. 00 . District of Columbia ' 16, 565,433. 74 $3, 230, 890, 247. 95 For War Department— For Military . Establishment, as foi- , lows— Support of the Army, 17,304,078,826.17;. Military Academy, . . . $2,434,088.16; -fortifications, ,^ $1,863,133,573.18; a r s e n a l s , . / $13,060,745.32; civilian military training camps, $1,104,902.84; registration . and selection/for ' 'i • \ military service, $15,037,579.62; . , \ military posts and miscella'neous, $9,674,564..............'9,208, 524, 279.29 1 "Disbursements," as used in this statement, in addition to actual expenditures, include unexpended balances to the credit of disbursing officers. , , ' . , : 2 Exclusive of allotments of pay. SECRETARY OF THE TREASURY. Disbursements^ from the general fund for cur= ^ rent expenses and capital outlays, including trust-fund disbursements, b u t excluding postal service paid from postal revenues and Panama Canal disbursements—Continued. For War Department—Continued. For rivers and harbors For war miscellaneous^ civil, including national homes, $4,461,122.80; soldiers' deposit fund, $755,658.91; cemeteries, parks, claims, etc., $6,240,017.13 183 ^ ^, $33,078, 306. 32 11,456,798.84 ^$ 9, 253, 059, 384. 45 For Naval Establishment, including construction of new vessels, machinery, armament, equipment, improvement at navy yards, and miscellaneous ^2, 009, 272, 388. 53 For Indian Service .34, 593, 256. 69 Forpensions , 221, 614, 78L 44 For interest on the public debt.'. 615, 867, 337. 32 15,365,297,396.38 Add difference arising in adjustment of miscellaneous accounts..........!... Total ordinary disbursements 65,345.38 15, 365, 362, 741. 76 Excess of ordinary disbursements. 10, 717, 758, 889. 30 Special disbursements: Purchase of obligations of foreign governments $3,477,850,265.56 Purchase of farm-loan bonds 96, 662, 398. 59 Total special disbursements Panama Canal: Receipts from tolls, e t c . . . . . . . . . . . . . . . . . . . . Disbursements for canal 3,574j 512, 664.15 6, 777, 046. 55 l2, 265, 775. 08 Excess of canal disbursements 5,488, 728. 53 Excess of disbursements over receipts, exclusive, of public debt.. 14, 297, 760, 28L 98 Public debt—receipts and deposits: First Liberty loan '. . $8,485. 38 Second Liberty loan 2,404.00. Third Liberty loan. 932,106,419. 03 Fourth Liberty loan. 6, 959", 504,587. 00 Victory Liberty loan 3,467, 844, 971. 77 War-savings certificates 738, 247, 741. 07 Certificates of indebtedness 16, 955, 327, 890. 00 Deposits to retire Federal reserve bank notes and national bank notes 22, 644, 757. 50 Deposits for postal-savings bonds 289, 260. 00 Total public-debt receipts 29,075, 976,515. 75 1" Disbursements," as used in this statement, in addition to actual expenditures, include unexpended balances to the credit of disbursing officers. 2 Includes allotments of pay. 184 REPORT ON T H E FINANCES. Publicdebt—redemptions and purchases: First Liberty loan, converted at 4^ per cent $4,003,050. 00 Second Liberty loan. 8,000,000. 00 Second Liberty loan, converted at 4J per cent- , 172, 357, 600. 00 Third Liberty loan 201, 660, 500. 00 Fourth Liberty loan ' 165,000, 000. 00 Loan of 1908-1918 63, 009,460. 00 War-savings certificates..: 134,047, 603. 63 Certificates of indebtedness 15, 046, 532, 900. 00 . One-year Treasury notes 19,150,000. 00 . Federal reserve bank notes and national bank notes retired 23, 717, 892. 50 Miscellaneous redemptions, public d e b t . . . . 87,003. 00 Total public debt disbursements 15, 837, 566, 009.13 Excess of public-debt receipts over public-debt disbursements ; $13, 238,410, 506. 62 Excess of total disbursements over total receipts 1, 059, 349, 775. 36 SUMMARY OF G E N E R A L F U N D - TRANSACTIONS, Fiscal year ended June 30, 1919. Receipts. Disbursements. Ordinary receipts, including trust-fund receipts, b u t excluding postal revenues $4, 647, 603,852. 46 Disbursements^ for current expenses and capital outlays, including trust-fund disburse-. ments, b u t excluding postaL service paid from postal revenues and Panama Canal disbursements.: $15, 365, 362, 741. 76 Special disbursements '. 3,574,512, 664.15 Panama Canal receipts, tolls, etc 6, 777, 046. 55 Panama Canal disbursements •. 12, 265, 775. 08 Public debt—receipts and deposits. 29, 075, 976,515. 75 Public debt—redemptions and purchases 15,837,566,009.13 Total receipts into the general fund Excess of disbursements over receipts 33, 730, 357,414. 76 1, 059, 349, 775. 36 Grand totals 34, 789, 707,190. 12 34, 789, 707,190.12 General-fund balances: Balance free of current obligations, June 30, 1918 1, 319, 347, 364.14 Pay warrants issued in excess of receipts, as above, fiscal year 1919 $1, 059, 349, 775. 36 . Deduct increase in disbursing oflScers' credits, June 30, 1919, over disbursing officers' credits, June 30, 1918 794, 069, 792.42 265, 279, 982. 94 1, 054, 067, 381. 20 Deduct increase in matured interest obligations outstanding June 30, 1919, over such obligations outstanding June.30, 1918.T: : 51, 335, 339. 20 Balance free of current obligations, June 30, 1919 1,002, 732,042. 00 1 "Disbursements," as used in this statement, in addition to actual expenditures, include unexpended balances to the credit of disbursing officers. 185 SECRETARY OF THE TREASURY. POSTAL SERVICE. ^' "' [Exclusive of Post Office Department proper, which is included in " civil establishment."] Postal-revenue r e c e i p t s . . . . . : Postal service paid from postal revenues $364,847,126. 20 362,50'4, 274. 24 2, 342, 851. 96 Excess of receipts U N I T E D STATES N O T E S ( G R E E N B A C K S ) . Issues to replace worn and mutilated notes 243,184, 000. 00 Worn and mutilated notes retired 243,184, 000. 00 The redemptions during the year of the notes unfit for circulation necessitated the issue of a like amount thereof to maintain the outstanding aggregate of the notes as required b y law. GOLD R E S E R V E F U N D . Balance in reserve fund June 30, 1918 $152, 979, 025. 63 Balance in reserve fund June 30,' 19l9 152, 979, 025.63 The redemptions of notes for gold from the reserve fund during t h e year were: United States notes, $1, 506, 000. As the redeemed notes were exchanged each day for gold in the general fund, the reserve was maintained at the fixed sum required b y law, including $2,979,025.63 tax on additional circulation received under act of May 30, 1908. TRUST FUNDS. (Held for the redemption of the notes and certificates for which they are respectively pledged.) Gold coin and bullion Silver dollars. Silver dollars, 1890 $735, 779, 491 Gold certificates out169,148, 295 standing. $1, 550, 259, 669 1, 745,161 Less amount i n the Treasury .... 814, 480,178 Net. 735,779, 491 Silver certificates outstanding....... Less amount i n the Treasury Net 203, 943, 000 34, 794, 705 169,148, 295 Treasury notes (1890) outstanding Less amount in the Treasury. Net 1, 754, 000 8, 839 1,745,161 906, 672, 947 906,672,947 GOLD SETTLEMENT FUND, FEDERAL RESERVE BOARD. Gold coin. .-. $1,416,086, 099.10 186 REPORT ON T H E FINANCES. SINKING FUND. The securities redeemed on account of the sinking fund, included in general-fund disbursements, were as foUows: Fractional c u r r e n c y . . . . . . . . . . , One-year notes of 1863 Funded loan of 1 8 9 1 . . . . : . . . . . . . . . . Refunding certificates Funded loan of 1907 Compound-interest notes Consols of 1867 - -. -. ... - : , '. Total---. $1, 823 30 4,050 360 80,550 90 100 87,003 CONDITION OF THE TREASURY J U N E 30, 1919. The public debt of the United States at the close of the fiscal year 1919 is set forth in detail, as follows: Interest-bearing debt: Loan of 1925, 4 per cent Consols of 1930, 2 per cent Panama Canal loan, 2 per cent. Panama Canal loan, 3 per c e n t . . . . . . . . . . . . Postal savings bonds, 2^ per cent Conversion bonds, 3 per cent Certificates of i n d e b t e d n e s s . . . : War savijigs certiii cates First Liberty loan, 3J per cent First Liberty loan converted, 4 per c e n t . . First Liberty loan converted, 4 i per cent. First Liberty loan" "second converted, 4 i percent......... '..'. Second Liberty loan, 4 per cent '.-... Second Liberty loan converted, 4 i per cent Third Liberty loan, 4 i per cent Fourth Liberty loan, 4J per cent Victory Liberty loan^ 3|, and 4f per cent.. $118,489, 900. 00 599, 724,050.00 74,901,580. 00 50,000, 000^ 00 11, 349, 960. 00 28,894, 500. 00 3, 624,983,490. 00 953, 997,434. 77 1,410, 071, 600. 00 167, 792, 750. 00 403,440,100: 00 ' 3,492,050.00 704,204, 350. 00 2, 862-, 252, 250. 00 3, 958,552, 700. 00 6, 794, 504, 587. 00 3,467, 844, 971. 77 $25, 234,496, 273. 54 Debt on which inter;est has ceased: Funded loan of 1891.. . Loanofl904 Funded loan of 1907 Loan of 1908-1918 Refunding certificates Old d e b t . . . . Certificates of indebtedness, matured 20,800.00 13,050.00 407; 350. 00 936,000. 00 10, 840. 00 900, 330. 26 8, 821,000. 00 11,109, 370. 26 Debt bearing no interest: United States notes (greenbacks) Bank notes, redemption account Old demand n o t e s . . . . . . . , Fractional currency , 346, 681, 016. 00 35, 830,457. 00 , 53,:012, 50 .6, 843, 314. 82 . 389, 407, 800: 3^ Total interest and noninterest bearing debt, exclusive of certificates and notes offset by coin and silver bullion 25, 635,013,444.12 SECRETARY OF THE TREASURY. CASH IN THE TREASURY,, J U ^ E 30, 487 1919. [From revised statements.] Reserve fund: Gold coin and bullion...'. Trustpunds: Gold coin and bullion Silver dollars Silver dollars of 1890 $152, 979, 025. 63 " ., 735, 779,491. 00 169,148,295.00 I, 745,161, 00 906,672,947.00 Gold settlement fund. Federal Reserve Board: Gold coin and bullion •General fund: In Treasury oflaces— Gold coin Standard silver dollars ,. United States notes Federal reserve notes.. -• Federal reserve bank notesNational-bank notes,. Certified checks on banks Subsidiary silver coin : Minor coin... , Silver bullion (af cost) Unclassified (unassorted currency, etc.) Public debt paid, awaiting reimbursement In Federal land banks In Federal reserve banks •.'. Intransit • In special depositaries— , Account of sales of certificates of indebtedness................... I n national-bank depositaries— To credit of Treasurer of the United States-.:--....:-:...."...... To credit of other Government officers . . ..Intransit In treasury of Philippine Islands— To credit of Treasurer of the United States ,. To credit of other Government officers. : ' -• I n foreign depositaries— To credit of Treasurer of the.United ': States Deduct current liabilities— National-bank note 5 per cent f u n d . . . . . . $22,473,804.75 Less, notes in process . of redemption 22,473,. 804. 75 1,416,086,099.10 $211, 596, 388. 87 56,497, 779. 00 13,818,465.00 44, 227, 987. 50 24,421, 249. 50 47,161,186. 43 155, 953. 84' 10,983,939.20 892,802.67 16,423,918.22 3,490,532.19 425,940.50 430,096,142.92 500,000.00 55,300,485.16 30,172,896:09 • •— 85,473,38L25 .905,411,514.76 ^ 41,123,406.30 11, 276,533. 88 9,148,927.09 • , 61,548,867.27 7,758,105.57 1,555, 333. 91 9,313,439.48 22, 885,165. 93 1,515,228,51161 188 REPORT O N T H E FINANClES. General fund—Continued. Treasurer's checks outstanding <i.. Post Office Department balance Board of trustees. Postal Savings System balance : Balance to credit of postmasters, clerks ^ of court, etc Undistributed assets of insolvent national banks Deposits for— Redemption of Federal reserve notes (5 per cent fund) ' Redemption of Federal reserve bank notes (5 per cent f u n d ) . . . - : Retirement of additional circulating notes, act of May 30, 1908 Miscellaneous redemption a c c o u n t s . . . $605, 856. 76 17,051, 943.10 7, 743, 397. 88 21,482, OOL 63 1, 236, 360. 25 205, 230, 742. 20 9,534, 850. 00 275,100. 00 25, 903, 324. 53 $289, 063, 576. 35 Balance in t h e Treasury, J u n e 30, 1919, as per Financial Statement of t h e United States Government ' Settlement w a n ants, coupons, and checks outstanding— Treasury w a r r a n t s . . . . - . . . - - . 7,199, 695. 03 Matured interest obligations • '80,145,012. 72 Disbursing officers' checks. 136,088,185. 51 ^ Balance in t h e Treasury, J u n e 30, 1919, free of current obligations: - 1, 226,164, 935. 26 223,432, 893. 26 1,002, 732,042. 00 Comparison of receipts, fiscal years 1919 and t918. 1919 Customs Internalrevenue: . Incbme and excess profits taxes Miscellaneous Sales of public 1 ands Consular fees..: Chinese indemnity Profits on coinage, bullion deposits, etc Payment of interest by Pacific railways Tax on circulation of national banks. Interest on obligations of foreign Governments Principal payments on foreign loans Interest on public deposits... Premium on war-risk insurance Night services.custom service. Customs fees, nnes, penalties, etc Interest on loans to railroad companies Sale of war suppUes, War Department Payment by German Government under terms of Increase, 1919. 1918 $183,428,624.78 2,600,762,734.84 1,239,468,260.01 1,404,705.12 1,159,144.69 $182,768,988.71 857, 1, 1. 894.28 590.53 455.31 574.21 679.76 11,963, 244.27 686.35 • $669,636.07 $238,237,159. <: 4 382,424,669.48 564,750.11) 90,429.52 269,679.7ii 10,521,442.08 5,310. 60 148.03 458.63 3,806, 646.42 3; 075.78 249,570.64 322,162, 228.04 107, 016. 83 214,666,211.21 7,570,000.00 12,192,928.64 7,570, 000. 00 23,709, 714.84 4,225,398.48 286,929.93 312.25 428.10 1,345, 687.89 702,067.48 15,501.83 643,620.41 2,871, 584.86 2,871,584. 86 13,802, 217.12 13,802,217.12 18,123,929.81 8>riiiisf^iC6 18,123,929.8i 3,910,175.75 3,910,175.75 Sale of German war supplies. Emergency shipping fund, 3,860,000.00 3,860,000.00 construction of barges, etc.. Interest on advance pay1,973,541.14 1,973,541.14 ments to contractors Donation of royalty on ma716,884.75 716,884.75 chine guns ' Estimated where complete reports are not available. Decrease, 1919. 30,122,913.7/ 189 SECRETARY OF T H E TREASURY. Comparison of receipts, fiscal years 1919 and 1918—Continued. Proceeds pf mihtia property lost or destroyed Earnings of radio service Navy hospital and clothing funds, fines, forfeitures,etc. Sales of ordnance materials,etc Land fees Revenues of national parks... Fees on letters patent Depredations on public lands. Deposits for surveying public ^ lands '.. Oregon and Caliiomia land grant fund Proceeds of townsites. Reclamation Service Forest reserve fund Immigrant fund Naturalization fees Proceeds of seal and fox skins. Alaska fund Judicial fees, fines, penalties, etc S u r p l u s postal revenues, prior vears Estimated increased postage. Sales of Government property. Rent of public buildings, rroimds, etc Sales of lands and buildings.. Sales to Indians Franchise tax District of Columbia, general reeceipts '. Funds contributed for river , and harbor improvements . Reimbursements on account of expenditures made for Indian tribes Assessments on Federal rereserve banks, for salaries, etc , Assessments On n a t i o n a l banks for expensesof examiners Liquidation of capital stock, Federal land banks Discount on bonds purchased. Sale of farm loan bonds ,Interest on farm loan bonds.. MisGellaneous 1919 1918 $28,917.69 221,131.19 $17, 291, 741,465.47 4,162,016.20 1,196,570.93 133,815.41 2,022,770.99 57,061.77 41,092.16 155,217.64 Increase, 1919. 47 812, 249, , 191, 168, 1,100, 36, $11,096.22 $70,771. 89 70,799.76 3,912,099.54 5,461.65 34,297.73 78,176.41 20,766.69 97,068; 43 55,976.27 320,033.22 164,815.58 5,628.07 55,362.49 4,512,173.93 1,175,293.49 387,795.50 309,803.35 247,943.63 1,731,360.05 Decrease, 1919. 976,934.53 158,077.06 181,696.00 205,608.84 "58,'684 86 1,146,228.14 585,131.91 18,000,000.00 71,906,000.00 15,477,857.80 8,442,299.25 32,833,000.00 13,372,942.48 3,639,063.52 238,935.00 241,577.85 3,159,997.82 36,147.40 65," 378.'37" "i,'i34,'234 48 10,.661,-285.44 722,210.51 2,282,588.00 1,033,463. 00 303,624.07 46,988.85 256,635.22 2,614,778.42 1,496,306.98 1,118,471.44 1/065,121.65 1,018,392.13 626,321.00 22,878,516.48 6,345,000.00 3,619,992.25 4,775,111.21 2,478,943.65 6,545,000.00 289,201.84 2,187,583.21 46,729.52 626,321.00 20,399,572.83 200,000.00 3,330,790.41 2,587,528.00 TRUST F U N D S . Department of State: Miscellaneous trust funds. War Department: Army deposit funds Soldiers' Home permanent fund . Miscellaneous trust funds. Navy Department: Navy deposit fund Marine Corps deposit fund. Interior Department: Proceeds of Indian lands. Indian moneys, proceeds of labor Miscellaneous trust funds. Personal fimds of patients, St. Elizabeths Hospital , Pension money, St. Elizabeths Hospital Navy pension fund District ofColumbia: Miscellaneous trust-fund deposits Washington redemption fund Police and firemen's relieffund Other trust funds Total. 16,239.94 493,416.13 839,641.16 847,170.61 714,009.89 577,948.44 1,020.00 47,029.60 80,409.00 477,176.19 7, 529.,45 136,061.45 1,020.00 33,379.40 • 99,696.77 228,344.06 128,647.29 2,275,347.37 2,549,723.76 272,376.39 13,972,533.67 56,280.92 13,696,842.00 492,258.36 275,691.67 435,977.44 77, 917. 51 56,052.01 21,865. 50 75,824.80 2,009.09 69,077.74 2,261.86 6,747.06 545,242.44 437,882. 93 107,359.51 196,231.95 195,099.44 1,132.51 165,533.49 7,241.93 141,172.15 8,858.81 24,361.34 4,172;-635,828.46 758,134,207.04 4,647,507,145.88' 252.77 1,616.88 283;'262r889.62 no REPORT ON T H E FINANCES. Comparison of receipts, fiscal years 1919 and 1918—Continued. 1919 1918 Increase, 1919. Decrease, 1919. TBUST FUNDS—continued. District of Columbia—Contd. Deduct— Moneys covered by warrant in year subsequent to the deposit thereof AddMoneys received in fiscal year but not •• covered by warrant. Ordinary receipts. J .. $1,638,786.71 $264,029.43 $1,374,757. 28 4,645,868,359.17 4,172,371,799.03 756,759,449. 76 1, 735,493.29 4,647,603,852.46 Panama Canal: 6,777,046.55 Receipts from tolls, etc... Publicdebt: 8,485.38 First Liberty loan.... Second Liberty loan 2,404.00 Third Liberty loan 932,106,419.03 Fourth Liberty loan 6,959,504,587.00 Victory Liberty loan 3,467,844,971.77 Certificates of indebtedness 16,955,327,890.00 War-savings certificates 738,247,741.07 One-vear Treasury notes Postal savings bonds. . . . 289,260.00 .Bank-note fund 22,644,757.50 Public debt receipts Total receipts, exclusive of postal.. Postal revenues Total receipts, including postal . 1,638, 786. 71 96,706. 58 4,174,010,585.74 756,856,156.34 6,414,570.25 362,476.30 523,112,200.01 3,807,863,516.00 3,243,045,138.47 $283,262,889.62' 283,262,889.62 523,103,714. 65 3,807,861,112.OC 2,310,938,719.44 6,959, 504. 587.00 3,467,844,971.77 9,017,648, 500.00 352,769,265.13 19,150,000.00 1,020, 940.00 10,279, 650.00 7,937,679,390.00 385,478,475.94 16,974,889,209.61 18,762,872, 532.21 6,661,785,226.07 33,730,357,414. 76 21,155,314,365.60 364,847,126. 20 344,475,962.24 19,520,091,164.85 20,371,163.96 6,945,048,115.69' 21,499,790,327.84 19,540,462,328.81 6,945,048,115.69- 29,075,976,515.75 34,095,204.540.96 19,150,000.00" 731,680.00- 12,365,107.50 Comparison of disbursements,^ fiscal years 1919 and 1918. 1919 1918 Increase, 1919. Decrease, 1919. CIVIL ESTABLISHMENT. Legislative: Senate , House of Representatives. Legislative, miscellaneous Public Printer Library of Congress Botanic Garden Total legislative Executive proper: Salaries and expenses Relief, etc., American citizens in Europe European food relief United States --Tariff C0TnTTli,<5910T1 Temporary govermnentf or W^est Indian Islands National security and deBureau of Efficiency:.... $2,034,463.06 5,303,885.99 232,614.23 8,232,838.68 742,153.31 59,880.88 $1,944,762.48 5,331,470.93 338,291.10 7,682,847.65 692,345.73 52,334.80 $89,700.58 16,605,836.15 16,042,052.69 697,045.27 . 220,053.26 245,848.07 79,581.58 47,697.37 102,760.66 199,578.35 191,872.83 $27,584.94 105,676.87 133,261.81 25,794.81 47,697.37 23,179.08 7,705.52 200,000.00 200,000.00 7,703,083.69 104,555.04 715,954.04 549,991.03 49,807.58 7,546.08 7,283,577.84 101,105.80 617,550.42 419,505.85 3,389.24 98,403.62 Expenses, trading with 360,000.00 360,000.00 the enemy act 960,487.99 218,530.30 • 1,179,018.29 Alien Property Custodian 5,668:381.76 701,289.59 6,369,671.35 War Trade Board 1 ."Disbursements." as used in these tables;in additionto actual expenditures, include unexpended balances to the credit of disbursing officers. SECRETARY OF THE TREASURY. 19'! Comparison of disbursements,^ fiscal years 1919 and 1918—Continued. 1919 1918 Increase, 1919. Decrease, 1919. CIVIL ESTABLISHMENT—con. Executive proper—Con. War Industries Board Committee on Public Information Total executive proper. Department of State: Salaries and expenses Foreign intercourseDiplomatic salaries... Consular salaries . Contingent expenses of foreign missions.. Post allowances Contingencies of consulates Emergencies arising in the Diplomatic and Consular Service Relief of American citizens in Mexico and Germany Representation of interests of foreign governmeTits Relief of American seamen... Payment to Panama Payment to Republic of Nicaragua . National security and defense Miscellaneous items Trustfunds Total Department of State $1,939,141.37 $1,939,141.37 2,739,340.63 2,739,340.63 21,497,674.97 $9,822,595.51 12,084,053.35 1,036,168.73 .637,097.75 399,070.98 1^282,029.96 2,196,842.98 920,935.47 1,632,835.25 361,094.49 564,007.73 1,170,698.47 772,388.27 1,089,306.39 233,051.66 81,392.08 539,336.61 1,099,458.45 662,641.46 436,816.99 272,439.34 223,739.64 48,699.70 113,437.51 56,149.73 57,287.78 19,218.84 . 2,141.87 17,076.97 11.3,470.11 250,000.00 117,177.45 250,000.00 . $408,973.89 I... ' 3,707.34 2,750,000.00 2,750,000.00 11,358,857.. 41 550,337.31 1.3,247.11 942,026.77 438,803.95 75.3,371.19 10,416,830.64 111,533.36 20,248,594.49 10,709,278.58 13,033,147.33 740,124.08 3,493,831.42 Treasury Department: Salaries, Secretary's office 269,911.54 658,187.44 and divisions thereof 928,099.08 Contingent fund for Secretary 3,933.61 7,608.26 3,674.75 InternationaL:aigh Com9,372.63 Tnission..,, 17,992.16 8,619.53 Contingent expenses of 497,215.19 331,026.86 166,188.33 department Customs ServiceCollecting customs 394,348.86 10,174,397.04 9,780,048.18 revenues National security and defense 131,305.31 131,305.31 Refunding, excess of 448,314.50 3,610,706.96 4,059,021.46 deposits Debentures or draw4,109,970.93 12,063,204.34 7,953,233.41 backs Compensation in lieu 3,586.58 6,355.00 9,941.58 of moieties 1 11,439.41 3,102.65 8,336.76 Miscellaneous refunds Internal Revenue Service8,058,231.84 12,091,679.99 20,149,911.83 Expenses of collecting. 3,526,742.89 6,470,392.02 9,997.134.91 Refunds and reliefs- 288,435.98 587,851.16 299,415.18 Miscellaneous. Suppressing counterfeit292,381.11 232,835.99 59,545.12 ing and other crimes... 2,908,621.96 840,715.45 ' 2,067,906.51 Accounting offices 1,249,764.27 147,408.41 1,102,355.86 Miscellaneous offices 6,286,720.75 3,103,682.13 Public Health Service .. 3,183,038.62 84,204.15 183,554.30 Epidemic diseases 267,758.45 ' Promotinghealth of mili402,948.69 450,102.12 tary forces 47,153.43 1" Disbursements," as used in these tables, in addition to actual expenditures, include unexpended balances to the credit of the disbursing officers. 192 REPORT ON THE FINANCES. Comparison of disbursements,^ fiscal years 1919 and 1918—Continued. 1919 1918 Increase, 1919. Decrease, 1919. CIVIL ESTABLISHMENT—con. Treasury Department—Con. W a r R i s k I n s u r a n c e 2— Salaries a n d expenses. Losses Military a n d n a v a l compensation Military a n d n a v a l family a l l o w a n c e . -. Military a n d n a v a l insurance N a t i o n a l security a n d defense Federal Farm Loan BoardSalaries a n d e x p e n s e s . Engraving and printing-. P a p e r , etc., for U n i t e d s t a t e s securities P r e p a r a t i o n a n d issue of F e d e r a l reserve n o t e s . . . E x p e n s e s of loans Charges on bullion s o l d . . . Loss on silver dollars m e l t e d or b r o k e n u p . . . Coast G u a r d : R e v e n u e vessels Independent Treasury.. Mints a n d assay offices... P u b l i c buildings— Sites, c o n s t r u c t i o n , and equipment Current maintenance. Expositions Salaries a n d expenses, n a tional bank examiners.. N a t i o n a l security a n d d e fense Increase of c o m p e n s a t i o n . . Miscellaneous i t e m s Special f u n d s P h i l i p p i n e special funds N i g h t services, Cust o m s Service P o r t o Rico special funds Total Treasury Department War Department: Salaries a n d expenses ' A d d i t i o n a l eniployees — T e m p o r a r y omce buildings PubUc buildings and grounds Increase of compensation. Total War Department. Navy Department: Salaries a n d expenses — A d d i t i o n a l einployees T e m p o r a r y office b u i l d ings Increase of compensation. Total Navy ment $12,872,729.78 7,499,346.96 $1,768,393.56 22,771,326.05 $11,104,336.22 11,493,837.10 545,012.91 10,948,824.19 151,194,525.42 $15,271,979.09 193,444,460.92 42,249,935.50 3 126,430,622.28 3 329,757.54 3,063,940.79 1,198,137.84 1,865,802.95 212,673.00 5,326,285.79 200,654.05 4,188,670.41 12,018.95 1,137,615.38 662,659.53 126,760,379182 508,284.20 154,375.33 291,522.71 28,594,377.10 497,290.09 19,481.02 9,716,951.78 272,041.69 18,877,425.32 497,290.09 43,850,645.28 11,207,131.15 289,023.95 636,253.40 1,552,793.67 15,465,585.18 6,819,392.04 42,931.88 640,607.22 1,769,947.82 28,385,060.10 4,387,739.11 246,092.07 10,184)242.67 6,672,167.18 12,206,527.03 6,180,498.99 6,971.65 491,668.19 1,031,356.85 1,006,208.37 25,148.48 5,259,195.75 3,747,009.01 638,010.58 160,535.57 1,717,754.78 263,202.11 5,098,660.18 2,029,254.23 374,808.47 1,016,861.61 637,262.16 379,599.45 284,986.04 271,178.24 13,807.80 953,521.03 1,039,685.40 289,914,682.25 181,848,005.86 257,463,451.45 • 3,481,678.48 14,951,889.70 4,}43,499.72 8,865,434.70 6,086,455.00 4,353.82 217,154.15 2,022,284;36 6,'97i."65 6,164.37 149,396,775.06 661,821.24 4,475,484.11 4,475,484.11 682,674.03 1,046,262.29 638,115.63 . 110,932.59 44,558.40 935,329.70 20,162,504.50 18,233,466.75 7,066,343.10 1,682,031.80 1,102,402.48 1,351,812.67 433,381.10 330,219.13 669,021.38 6,844,007.03 144,936.73 49,420.00 6,844,007.03 95,516.73 9,773,378.04 1,834,613.77 7,938,764.27 5,137,305.35 Depart- » " D i s b u r s e m e n t s , " as used i n t h e s e t a b l e s , i n a d d i t i o n t o a c t u a l e x p e n d i t u r e , i n c l u d e u n e x p e n d e d balances t o t h e credit of t h e d i s b u r s i n g officers. « E x c l u s i v e of a l l o t m e n t s of p a y . , 3 E x c e s s of r e p a y m e n t s . SECRETARY OF THE TREASURY. 193 Comparison of disbursements,^ fiscal years 1919 and 1918—Continued. 1918 Increase, 1919. Decrease, 1919. CIVIL ESTABLISHMENT—con. Interior D e p a r t m e n t : Salaries a n d expenses, office of Secretary General L a n d Office P u b l i c L a n d s Service P a y m e n t of u n p a i d t a x e s on lands inA^olved in Oregon & California R . R . forfeiture s u i t N a t i o n a l security a n d defense I n d i a n Office. P e n s i o n Office P a t e n t Office B u r e a u of E d u c a t i o n Colleges for agriculture and the mechanic a r t s . . Geological S u r v e y Rureau.of Mines F u e l yards. D i s t r i c t of Columbia • Office of S u p e r i n t e n d e n t of Capitol B u i l d i n g a n d Grounds National parks Territorial governments. St. E l i z a b e t h ' s H o s p i t a l . . O t h e r beneficiaries C o n s t r u c t i o n , etc., of railroads i n A l a s k a . . . : Increase of compensation. Miscellaneous i t e m s Special f u n d s Reclamation fund Five, t l u e e , a n d two per cent funds, sales of lands Proceeds, tovm sites, Alaska R e v e n u e s of n a t i o n a l - parks and Hot Springs, A r k Deposits for sm-veying p u b l i c lands P u b l i c schools, Alask a fund Miscellaneous t r u s t funds. Total Interior Department rPost Office D e p a r t m e n t : Salaries a n d expenses Deficiency i n postal revenues Increase of compensation. Miscellaneous i t e m s Total Post partment $1,139,707.02 676,455.17 2,421,560.86 $1,012,079.75 642,801.57 2,391,607.12 25,234.81 1,504,841.60 396,921.80 297,068.98 1,302,962.94 1,505,618.40 383,648.83 184,195.72 305,394.77 1,411,407.17 1,511,044.01 333,133.78 2,500,000.00 1,292,711.19 1,582,573.27 2,500,000.00 1,700,150.66 1,259,650.84 $1,479,606.79 212,726.08 8,325.79 108,444.23 5,425.61 50,515.05 407,439.47 322,922.43 1,077,409.22 1,077,409.22 1,042,117.89 765,481.46 103,568. 75 694,351.38 292,227.71 899,155:16 575,017.01 23,767.63 412,058.92 381,926.64 5,284,698.43 1,046,571.90 652,798.91 11,535,605.26 742,253.68 168,402.70 4,209,530.59 5,205,480.25 85,073.42 77,642.01 24,008.87 142,962.73 190,464.45 79,801.12 282,292.46 89,698.93 ,250,906.83 304,318.22 484,396.21 995,949.66 7,431.41 24,008.87 83,985.67 264,195.66 63,064.24 70,195.66 49,667.14 121,842.67 45,989.57 113,823.38 3,677.57 8,019.29 29,120,861.52 35,271,820.52 3,382,179.^72 1,763,754.67 1,657,353.33 106,401.34 343,511.15 151,718.46 146,960.83 2,221,094.54 88,500.00 188,467.11 63,218.46 2,405,945.11 4,155,414.9 169,619.80 6,643,142.93 6,428,449.,68 214,693.25 3,164,127.56 2,693,854.94 470,272.62. 3,470,027.85 894,971.74 367,990.17 1,619,599.58 2,165,105.26 ^ 235,991.89 3,491,549.92 747,828.39 378,276.00 1,-287,733.52 2,099,749.88 245,270.98 501,639.72 222,944.42 544,512. 37 206,818.09 210,834,614.49 435,522.06 6,828,000.00 467,323.41 Office-De- D e p a r t m e n t of Agriculture: Salaries a n d miscellaneous :..: A n i m a l I n d u s t r y , expenses." Meat inspection, A n i m a l Industry Entomology, e x p e n s e s . . . Soils, expenses M a r k e t s , expenses iPlant I n d u s t r y , expenses P u r c h a s e of seeds Biological S u r v e y , expenses Crop .Estimates, e x p e n s e s . P r o c u r i n g , etc., n i t r a t e of soda. -: Public Roads, expenses.. $127,627.27 33,653.60 29,953.74 180,209.99 7,131.42 9,533,138.72 1,877,583.39 *""4i,*566.'28 1,919,089.67 21,522.07 147,143.35 *i6,'285."83 331,866.06 65,355.38 9,279.09 42,872.65 16,126.33 17,662,614.49 31,801.35 1 " D i s b u r s e m e n t s , " as used in those t a b l e s , in a d d i t i o n t o a c t u a l e x p e n d i t u r e , i n c l i i d e u n e x p e n d e d tb alances to t h e credit of t h e di'^bursing officers. . "IS Excess of r e p a y m e n t s . 140325—FI 1919 13 194 REPORT OIT T H E FIITAlSrCES. Comparison of disbursements,^ fiscal years 1919 and 1918.—Continued. .1919 1918 Increase, 1919. Decrease, 1919. CIVIL ESTABLISHMENT—con. Department of AgricultureContinued. Stimulating agriculture and facihtating distribution of products Forest Service Acquisition of lands for protection of waters h e d s , n a v i g a b le streams. Cooperative construction, rural post roads, etc National security and defense Bureau of Chemistry States Relation Service, expenses N Cooperative extension work. . Weather Bureau, expenses ..,. Increase of compensation Cooperative work. Forest Service. . " Special f u n d s Payments to States and T e r r i t o r i e s from National Forests fund. Roads and trails for States.. • Miscellaneous special funds $8,377,361.94 3,296,563. 89 $6,349,055.19 4,203,841.76 $2,028,306.75 1,151,169.40 867,636.14 283,533. 26 3,665,693.92 843,474.49 2,822,219.43 872,868.68 818,474.74 806,745.21 872,868.68 11,729.53 2,916,336.05 2,820,355.06 95,980.99 2,568,066.29 2,075,054.37 493,011.92 1,523,035.18 1,164,160.68 1,461,985.17 686,156.00 61,050.01 478,004.68 421,269.86 88,917.96 332,351.90 876,334.39 848,874.01 27,460.38 280,459.13 226,127.99 54,331.14 70,128.44 61,870.93 8,257.51 Total Department of Agriculture— 36,888,371.28 46,759,461.46 8,814,563.17 Department of Commerce: Salaries and expenses Bureau of Standards Census Office Foreign and Domestic 370,786.74 1,593,100.15 1,121,351.36 359,176.20 1,378,390.93 1,184,192.61 11,610.54 214,709.22 504,902.58 456,749.15 48,153.43 Commp.rp.ft Coast and Geodetic Survey Lighthouse Establishment . Bureau of Fisheries Bureau of Navigation.. National security and defense.. Increase of compensation Fish hatcheries.... Steamboat - Inspection Service Miscellaneous items 1,002,802.93 1,116,029.77 6,662,179.05 1,029,189.00 216,820.83 1,734,705.08 635,372.69 10,412.97 5,588,181.29 1,105,703.54 226,053.92 755,696.73 449,871.15 32,598.10 1,073,997.76 782,795.45 4,115.31 647,143.89 1,369.21 135,651.56 2,746.10 Total Department of Commerce 15,668,534.14 13,301,156.49 2,651,378.50 225,838.78 200,842.96 24,995.82 419,242.89 720,243.45 132,984.13 2,550,117.13 231,918.03 318,435.87 388,475.89 382,566.97 857,525. 45 2,647,574.86 212,104.88 312,757.23 30,767.00 337,676.48 1,384,674.68 Department of Labor: Salaries and expenses Bureau of Labor Statistics Bureau of Naturalization Bureau of Immigration... Regulating immigration.. Immigrant stations ChUdren's Bureau ^ National Security, and Defense War Emergency Employment Service war Labor Administration Increase of compensation. Miscellaneous. . . . Total Department of Labor $967,277.87 18.685,653.35 62,841.25 113,226.84 979,008.35 .185,501.54 19,813.15 5,678.64 1,968,708.53 584,033.85 5,480,201.23 189,947.37 . o 5,290,253.86 1,022,474.06 220,020.26 306.25 140,786. 24 265. 75 1,022,474.06 79,234.02 40.50 13,290,490.61 5,916,881.45 8,195,608.21 76,514.54 9,233.09 22;185.13 284,000.85 724, .541.32 • 97,457.73 • 821,999.05 * " Disbursements," as used in these tables, in addition to actual expenditures, include unexpended balances to the credit of disbursing officers. 195 SECEETABY OF THE TBEASUEY. Comparison of disbursements,^ fiscal years 1919 and 1918—Continued. 1919 1918 Increase, 1919. Decrease, 1919. CIVIL ESTABLISHMENT—con. Department of Justice: Salaries and expenses Salaries of justices, assistant attorneys, etc . Court of Claims National security and defense... , Salaries, fees, etc., of marshals Fees of witnesses Salaries and fees, district attorneys Fees of jurors. Fees of clerks. Fees of commissioners Support of prisoners Pay of bailiffs ;... Miscellaneous expenses, United States courts... Detection and prosecution of crimes Penitentiaries Increase of compensation. Miscellaneous items .. Total Department of Justice...... Independent bureaus and offices: Interstate Commerce Commission. Federal control of transportation systems Smithsonian Institution.. National Museum Zoological Park Salaries^tc, Federal Reserve Board Council of National Defense War Finance Corporation. Capital Issues Committee. Advisory Coramittee for Aeronautics U n i t e d Statt^s E m ployees' Compensation Commission Board for Vocational Education United States Shipping BoardSalaries and expenses. -Permanent fund Emergency shipping fund " National security and defense '. Food and Fuel AdministrationsSalaries and expenses. Control of food and iuel National security and defense. Bureau of Industnal Hou.sing and Transportation •Interdepartmental Social Hygiene Board Exports Administrative Board Federal Trade Commission State, War, and Navy Departraent Builciings. Special fund, Alaskan relief Other independent offices. Total independent bureaus and offices $905,910.27 81,852. 20 $987,762. 47 1,896,459.41 71,555. 70 1,795,055.26 72,390.67 $101,404.15 1,435,210.38 1,413,090.19 22,120.19 1,728,280.20 1,160,475.50 1,586,523.10 1,134,651.08 141,761.10 25,824. 42 690,227.42 1,191,395.76 315,112.37 284,435. 85 706,970.56 244,127. 65 659,531. 68 1,109,066.94 226,400.10 267,764. 51 728,797.17 224,624.69 30,695. 74 82,328.82 88,712.27 16,671.34 467,801.94 """S34.'97 21,826.61 19,502. 96 46,607. 38 421,194. 56 2,000,836.07 1,520,697.93 309,423. 65 287,100. 77 1,180,428.89 982,631.29 177,372.17 265,096.02 820,407.18 538,066.64 132,051.48 22,004.75 15,216,025.43 13,232,380.79 2,088,158.42 5,688,651.38 5,399,618.66 289,032. 72 349,238,385.21 197,419.22 359,233.70 112,015.14 150,000,000.00 185,560.78 384,362.03 95,806.00 199,238,385. 21 11,858.44 2,331,760.03 1,532,015.17 799,744.86 554,039.43 295,000,000.00 142,402.31 1,093,858. 55 55,000,000.00 10,000.00 228,497. 80 1,536,434. 80 25,128.33 16,209.14 539,819.12 240,000,000.00. 132,402.31 80,900.65 719, 936.26 104,513. 78 147,597.15 • 316,498.54 3,549,442.64 1,412, 882. 74 2,136,55Q. PO 797,280.67 391,535.18 44,000,000.00 405, 745.49 1,865,715,419.34 807,575,773.73 1,058,139,645.61 4,688, 877.50 ^ 10,059,580.43 44,000,000.00 5,370, 702.93 7,133,467.03 2,643,026.36 4,490,440.67 100,000,000.00 50,000,000.00 50,000,000.00 10,511.117,05 2,687,649.39 7,823,467.66 70,483,879.32 25,000.00 70,458,879.32 1,720,122. 93 1,720,122.93 250, COO. 00> 250,000.00 1,595,737.29 1,466,423.65 129.313.64 1,662,668.93 451,004.40 1,211,664.53 18, 753.95 266,310.05 24,801.80 344,205.91 2,723,531,915.72 1,135,833,941.69 6,047. 85i 77,895. 86 1,637,967,568.12 50,269,594.09' ' "Disbursements," as used in these tables, in addition to actual expenditures, include unexpended balances to the credit of disbursing officers. 196 REPORT OJST T H E FINANCES. Comparison of disbursements,^ fiscal years 1919 and 1918—Continued. 1919 1918 Increase, 1919. • Decrease, 1919. CIVIL ESTABLISHMENT—con. D i s t r i c t of Columbi'a: Salaries a n d e x p e n s e s . . . . Special f u n d s Water department... . Washington Aqueduct .. Miscellaneous special funds Trust f u n d s Miscellaneous trustfund deposits Washington redempt i o n fund .Police a n d firemen s relief f u n d . . O t h e r t r u s t funds $14,745,056.78 $12,921,524.51 558,680.17 537,996.75 20,6a3.42 233,028.IS 188,605.28 44,422.90 _ 53,471.15 3,443.14 50,028.01 601,673.35 414,493.43 187,179. 92 201,473.05 186,251.17 15,221.88 -164,736.57 7,314.49 135,238.11 18,858.36 29, 498.46 T o t a l D i s t r i c t of . Columbia 16,565,433. 74 14,406,410.75 2,170,566.80 11„543.S7 T o t a l civil e s t a b lishment 3,230,890,247. 95 1,507,367,481.29 1,963,722,447.57 240,199.680.91 4,217,681,223.60 1,487,081,171.25 187,503,697.17 2,390,296,943.61 355,260,488.11 67,138,834. 66 479,281,370.08 2,434,088.16 3,337,820.41 2 3,980,711. 08 2,336,259,761.87 797,460,465.13 110,390,044.08 1,663,199,383.09 264,243,520. 89 67,210,410.36 336,331,468.60 1,211,737.93 7,025,599.01 39,609,063.34 1,881,421,461.73 689,620,706.12 77,113,653.09 . 727,097,560. 52 91,016,967.22 $1,823, 532.27 $11,543.87 WAR DEPARTMENT.. Military Establishment. Q u a r t e r m a s t e r Corps. . . . P a y , e t c . , of t h e A r m y 1 Medical D e p a r t m e n t Ordnance Department Engineer Department Signal Service Aviation Military Academy M i l i t a r y posts National Guard Civilian m i l i t a r y t r a i n i n g camps R e g i s t r a t i o n a n d selection for m i l i t a r y service I n c r e a s e of c o m p e n s a t i o n . . . Miscellaneous i t e m s Special fund; o r d n a n c e m a terial powder e t c Total Military Establishment. . . 71,575. 70 142,949,901.48 1,222,350.23 3,687,778. 60 43,589,774.42 1,104,902.84 5,290,124. 59 15,037,579.62 3,828,656.97 2,542,109. 76 13,517,308.77 " 1,764,005. 29 2,024,814. 40 3 23,895. 87 47,224. 58 9,208,524,279. 29 , 5,645,584,931.93 3,614,544,818. 28 3,074,749.07 203,910.09 781,568. 78 , 411,517.16 2,293,180.29 4,185,221. 75 1,520,270. 85 2,064,651. 68 . 517, 295. 36 71,120.45 51,605,470.92 War, miscellaneous, civil. N a t i o n a l cemeteries National parks N a t i o n a l h o m e s for disabled soldiers S t a t e h o m e s for disabled soldiers . Soldiers' H o m e i n t e r e s t account . Monuments B r i d g e across P o t o m a c R i v e r , Georgetown, D . C J u d g m e n t s of courts . . W a r claims a n d relief acts Miscellaneous i t e m s . . . I n c r e a s e of c o m p e n s a t i o n Special funds: Wagon roads, etc., A l a s k a fund Miscallaneous s p e c i a l funds 3,870,724. 52 • 207,607. 07 4,537,882.99 667,158.47 590,398.28 928,719. 21 101,274.66 23,300.00 98,163. 75 28,000.00 3,110.91 467,000.00 1,021,486.51 60,782.31 346,765.38 341,032.36 255,000.00 72,839.39 44,027.65 494,336.32 177,780.44 212,000.00 948,647.12 16,754.66 32,506.42 740.97 1 • 338,320.93 4,700. 00 147,570.94 163,251.92 256,230.31 223,723. 89 7,172. 56 6.431.59 1 *• Disbursements," as used in these tables, in addition to actual expenditures, include unexpended balances to the credit of disbursing officers. 2 Includes payments of Army allotments by the Bureau of War Risk Insurance. 3 Excess of repayments. SECRETARY OF THE TREASURY. 197 Comparison of disbursements, ^fiscalyears 1919 and 1918—Continued. Increase, 1919. 1919 1918 S755,658.91 $479,803.14 566,160.96 308.40 597,068.16 11,456,798.84 9,170,109. 86 3,913,109.07 25,451,14L49 5,765,018f33 24,209,554.99 4,464,393.81 1,241,586. 50 1,300,624.52 1,862,146. 50 919,633.09 942,513. 41 Decrease, 1919. "WAR D E P A R T M E N T — c o n . War, miscellaneous, civil— Continued. T r u s t funds: P a y o f t h e A r m y , deposit fund Soldiers' H o m e p e r m a n e n t fund T o t a l W a r , miscellaneous, civil $275,855. 77 $30,907.20 308.40 1,626,420.09 Rivers a n d harbors. I m p r o v i n g rivers Improving harbors Special funds for rivers a n d harbors Total rivers a n d harbors Total War Department. ' 33,078,306.3^ 29,593,581.89 3,484,724. 43 9,253,059,384.45 5,684,348,623.68 3,621,942,651.78 463,584,589. 89 96,239,138.34 20,863,626.52 353,532,156.03 58,148,850.00 17,224,199.71 110,052,433. 86 38,090,288.34 3,639,426.81 68,374,542.27 221,043,017.51 59,575,005. 92 55,693,350.54 189,677,881.54 42,039,835.30 12,681,191.73 31,365,135.97 17,535,170.62 194,594,135.00 70,400,690.01 124,187,444.99 53,231,891. 01 NAVY D E P A R T M E N T . Naval Establishm.ent. Increase of t h e N a v y B u r e a u of Yard*? a n d Dnok^ B u r e a u of N a v i g a t i o n B u r e a u of Construction a n d Repair B u r e a u of O r d n a n c e B u r e a u of S t e a m E n g i n e e r i n g . B u r e a u of Supplies a n d A c counts B u r e a u of Medicine a n d S u r - ' gery M a r m e Corps Naval Academv P a v of t h e N a v y Aviation. J u d g m e n t s , Court of C l a i m s . . . General a c c o u n t of a d v a n c e s Miscellaneous i t e m s N a t i o n a l security a n d defense I n c r e a s e of c o m p e n s a t i o n Special funds: N a v a l h o s p i t a l fund F i n e s a n d forfeitures Clothing fund Miscellaneous snecial funds Trustfunds: P a y , Marine Corps, deposit f u n d . . . . P a y o f t h e N a v y , deposit fund Prize m o n e y . Total Naval Establishment 15,859,690.25 2 73,018, 960.12 4,553,839. 87 2 297,601,541.65 101,655,645.78 125. 815. 57 363,623,257.42 301,528.61 7. 784,602.09 2 46,544,483.34 2,379,052.34 2130,726,660.36 27,212,201.42 12,578.31 • 354, 980,660.02 201,291.06 626,275.44 644,731.53 658,477.15 3,520,658.11 31,159, 746.99 171,118.58 27,836,529.17 208,127.77 766,843.10 6,609,011.042 5,450.33 8,075,088.16 26,474,476.78 2,174,787.53 166,874,881.29 74,443,444.36 113.237'. 26 8,642,597.40 100, 237.55 32,201.71 2, 875,926. 58 1,367,874.76 595,724. 52 21,227,518.13 5,450.33 83,817. 87 196,243.73 112,425.86 55,317.00 11.21 • 124,267.76 123.44 68,960.76 112.23 2,"009,272,388. 53 1,368,642,793.84 645,682,811.11 1,131,820.36 630,110.83 758,574.20 1,029,350.40 552,580.01 707, 776.85 102,469.96 77,530.82 . 50, 797.35 1,272,809.45 4,105,871.56 4,269,161.52 22,424,908. 77 1,579,540.96 4,365,788.40 4,066,848.74 18,586,514.67 202,312.78 3,838,394.10 34,593,256.69 30,888,400.03 4,271,505.01 5,053,216.42 INDIAN SERVICE. C u r r e n t a n d c o n t i n g e n t expenses Fulfilling t r e a t y s t i p u l a t i o n s . . Miscellaneous s u p p o r t s I n t e r e s t on I n d i a n trust-fund accounts S u p p o r t of I n d i a n schools Miscellaneous expenses T r u s t funds . . . Total Indian Service... • 306,731.51 259,916.84 566,648.35 1" Disbursements," as used in these tables, in addition to actual expenditures, include unexpended balances to the credit of disbursing officers. 2 Includes payments of allotments by the Bureau of War Risk Insurance. ^ 8 Excess of repayments. 198 REPORT ON T H E FINANCES. Comparison of disbursements, ^ fiscal years 1919 and 1918—Continued. 1919 Pensions. Interest on the public debt.... Deduct repayments received in fiscal year but not covered by w a r r a n t . . . . . . 1918 Increase, 1919. $221,614,781.44 615,867,337.32 $181,137,754.12 197,526,608.36 $40,477,027.32 418,340,728. 96 15,365/297,396.38 8,069,911,661.32 6,694,437,171.75 $299,051,436.60 298,986,091.31 3,446,110.82 3,511,456.20 15,361,851, 285.56 8,966,400, 205.12 6,694,437,171.75 3,511,456.20 132,060.91 3,379,395. 29 15,365,362,741.76 8,966,532,266.03 6,697,816,567.04 Special disbursements: Purchase of obligations of foreign governments Purchase of farm loan bonds 3,477,850,265.56 4,739,434,750.00 96,662,398.59 65,153,254.15 31,509,144.44 Total special disbursements 3,574,512,664.15 4,804,588,004.15 31,509,144.44 Panama Canal disbursements 12,265,775.08 20,787,624.92 Add-repayments covered by warrant in year subsequent to the deposit thereof Total ordinary ments 2 disburse- Decrease, 1919. Public debt: First Liberty loan, con-verted at 4J per cent 4,003,050.00 ' Second Liberty loan 8,000,000.00 Second Liberty loan, converted at 4^ per c e n t . . . 172,357,600.00 Third Liberty loan 201,660,500.00 Fourth Liberty loan 165,000,000.00 Loan of 1908-1918 63,009,460.00 Certificates of indebtedness, various rates 15,046,532,900.00 War Savings certificates.. 134,047,603.63 1-year Treasury notes, 3 per cent. 19,150,000.00 Bank-note fund 23,717,892.50 Funded loan of 1907 80,550.00 Miscellaneous redemp6,453.00 tions 65 345 38 298,986,091.31 1,261,584,484.44 1,261,584,484.44 8,521,849.84 656,000.00 61,050,000.00 3,347,050.00 14,935,500.00 172,357,600.00 186,725,000.00 165,000,000.00 63,009,460.00 7,578,271,732.00 2,971,967.80 7,468,261,168.00 131,075,635.83 27,362,000.00 21,611,225.00 18,200.00 2,106,667.50 62,3.50.00 53, a50,000.00 8,212,000.00 2,450.33 .4,002.67 ' Total public debt disburse15,837,566,009.13 ments. 7,706,879,075.13 8,191,948,934.00 61,262,000.00 Total disbursements, exclusive of postal.... 34,789,707,190.12 Postal Service, payable from 362,504,274.24 postal revenues 3 21,498,786,970.23 14,921,274,645.48 1,630,354,425.59 324,849,188.16 37,655,086.08 21,823,636,158.39 14,958,929,731.56 Total disbursements, including postal 35,152,211,464.36 1,630,354,42,5.59 1 " Disbursements/' as used in these tables, in addition to actual expenditure, include unexpended balances to the credit of the disbursing officers. 2 Exclusive of Panama Canal, public debt, special disbursements, and Postal Service. 8 Exclusive of grants from the Treasury for deficiencies in postal revenues included in expenses of civil establishment, p. 193. ESTIMATES FOR THE FISCAL YEARS 1920 AND 1921. The estimates of receipts and expenditures for the fiscal years ending June 30, 1920; and June 30, 1921, are given in the subjoined tables. The estimates of receipts are based upon existing laws. The estimates of expenditures were made by the respective Government departments and independent establishments. SECRETARY OF THE TREASURY. 199 The following tabulation summarizes the estimated receipts and expenditures for the fiscal year 1920 and, on the basis of the latest information received from the various departments, shows the estimated results at the close of the year: FISCAL Y E A R 1920. Balance in the Treasury June 30, 1919, free of current obligations.... $1, 002, 732, 042 Estimated receipts: Ordinary $6,100, 250, 000 PanamaCanal... , 7,200,000 Publicdebt 1,210,556,634 .Total $7, 318, 006, 634 Estimated expenditures: Ordinary (exclusive of expenditures from such additional appropriations as may be made for the Railroad Administration) 6,097, 237, 892 Special and Panama Canal 715, 284, 837 Public debt (including $3,633,804,490 certificates of indebtedness outstanding June 30, 1919) 4,664,104,490 . Total (incomplete) 11, 476, 627, 219 Excess of estimated expenditures (incomplete) over estimated receipts 4,158, 620, 585 Estimated deficit in the general fund June 30,1920:: Estimated amount necessary for balance in the general fund June 30, 1920 3,155, 888, 543 Estimated gross deficiency June 30, 1920 3, 905, 888, 543 750, 000, 000 There are many uncertainties in connection with the above figures which must be taken into consideration in attempting to forecast the condition of the Treasury at the close of .the current fiscal year, and, of course, this department is not in possession of information that would enable it to form an opinion as to the deficiency estimates which may be presented to the Congress nor as to the additional appropriations the Congress may make. On July 25, 1919, in a letter to the banks and trust companies of the country, which is quoted in full elsewhere in this report, it was roughly estimated that the expenditures would exceed the receipts for the fiscal year 1920 by not more than $1,032,000,000, the amount of the deferred installments of the Victory loan. That estimate was made upon the assumption that the amount of certificates of indebtedness outstanding on June 30, 1919, would be taken care of through funding operations or otherwise. The estimate of receipts now presented exceeds that shown in the letter referred to by $783,006,634. 200 REPORT ON T H E FINANCES. The difference is largely in the item ^'Miscellaneous receipts," and for the most part represents salvage of war materials and supplies. Such receipts as these should clearly be applied to the reduction of the floating debt, represented by certificates of indebtedness.. I t is important to point out that the estimated expenditures for the Railroad Administration for the fiscal year 1920 are based entirely upon appropriations already made, and do not include any expenditures that may result from such additional appropriations as may be granted for the current year. The Railroad Administration on the date of this report was unable to estimate what' additional sums would be expended during the fiscal 3^ear 1920, inasmuch as the amounts that will be required are almost entirely dependent upon congressional action in connection with the return of the railroads to private control and the settlement of accounts between the carriers and the Government. The follo^ying is a summary of the estimated receipts and expenditures for the fiscal year 1921 and, on the basis of incomplete information, shows the estimated results at the close of the year: FISCAL Y E A R 1921. Estimated deficit in general fund June 30, 1920 (as above) Estimated receipts: Ordinary . | 5 , 412, 000, 000 PanamaCanaL ' 8,000,000 Public debt 200, 350, 000 |3,155, 888, 543 TotaL:.......: 15, 620, 350, 000 Estimated expenditures: Ordinary (exclusive of expenditures by the Railroad Administration, of expenditures from appropriation of $280, 000,000 included by the Shipping Board in the Book of Estimates, of expenditures oil account of increased compensation of Government employees, of expenditures on account of increased compensation in the Postal Service, of expenditures on account of new construction in the Navy) 3, 517, 752, 594 . Panama Canal 18, 245, 391 Publicdebt 437,800,000 Total (incomplete) 3, 973, 797, 985 Excess of estimated receipts over estimated expenditures-(incomplete). 1, 646, 552, 015 Estimated deficit in the general fund June 30, 1921 1, 509, 336, 528 Estimated amount necessary for balance in the general fund June 30, 1921. 500, 000, 000 Estimated gross deficiency June 30, 1921 2, 009, 336, 528 SECRETARY OF THE TREASURY. 201 There are even more uncertainties in the estimates for the fiscal year 1921, as stated in the above table, than in the estimates for the current fiscal year. For instance, the estimated receipts include $500,000,000, representing the capital stock of the Uriited States Grain Corporation, which the Wheat Director hopes to return during the first half of the fiscal 3^ear 1921. I t is not possible for the director to state positively at this time that the amount will be returned. With respect to estimated expenditures for the fiscal year 1921, it should be pointed out that the Railroad Administration is unable to make an estimate of expenditures during that fiscal year, for the same reason that it is unable to make an estimate of additional expenditures for the current fiscal year. The Chairman of the United States ^ Shipping Board did not include in the estimate of expenditures for the Shipping Board and the Emergency Fleet Corporation any part of the $280,000,000 for additional ship construction which has been incorporated in the estimate of appropriations for 1921, because, he states, that the matter is dependent upon the action of the President and the Congress in connection with future policy. As it is not known whether the Congress will continue the present increased compensation of Government employees or revise the salaries on the basis of the report of the Joint Congressional Commission on Reclassification of Salaries, no estimate of expenditures in this connection could be included. The above figures likewise do not include any estimate on account of increased compensation in the Postal Service, an'd the Postmaster General states that if the legislation in this respect enacted this year is repeated next year it will require an additional expenditure of $40,000,000., The figures submitted by the Secretary of the Navy include no estimate for new construction, as, it was necessary for him to study the question further and consequently defer his recommendations until the Congress shall have assembled in regular session. The above figures show that the estimated expenditures for both of the fiscal years 1920 and 1921 are incomplete. This is particularly true with respect to the latter. Even in their incomplete form, the figures indicate that there will be a deficit in the Treasury at the close of the two-year period ending June 30, 1921, of $1,509,336,528, if the floating debt is decreased by the amount of certificates of indebtedness outstanding on June 30, 1919. The amount of such debt should be reduced as rapidly as possible, and certainly to the extent of receipts on account of salvage from war materials and supplies, the repayment of stock of Government-owned corporations, and the like. In connection with the receipts of both fiscal years referred to above, it should be borne in mind that the word '^ordinary" in the tables has purely a technical meaning, and that in '^ ordinary receipts" 202 REPORT ON T H E FINANCES. are included such exceptional items as repayment of foreign loans, salvage of war materials and supplies by the War and Navy Departments, and repayments of appropriations by .the Shipping Board, Wheat Director, etc. The estimates of receipts and expenditures for the two fiscal years are given in further detail in the following tables: Fiscal year 1920. RECEIPTS. Ordinary receipts: From customs From internal revenue— Income and profits t a x . : Miscellaneous $275, 000, 000 $3, 750, 000, 000 1, 240, 000, 000 ^ From sales of public lands From miscellaneous sources 4,990,000,000 1, 250, 000 834, 000, 000 Total estimated ordinary receipts Panama Canal: Estimated receipts from tolls, etc 6,100, 250, 000 Total estimated receipts, exclusive of public debt Publicdebt: Third Liberty loan $1, 365, 293 ^ Fourth Liberty loan. 33,568,663 Victory Liberty loan 1, 030, 372, 678 War-savings certificates 125, 000, 000 Deposits to retire Federal reserve bank notes and national bank notes 20, 000, 000 Postal-sayings bonds 250,000 6,107, 450, 000 Total estimated public debt receipts 7, 200, 000 '. Grand total estimated receipts 1, 210, 556, 634 7, 318, 006, 634 EXPENDITURES. For civil establishment: Legislative establishment Executive proper, including Tariff Commission and Alien Property Custodian •. State Department. .' Treasury Department proper. .^ Public buildings, construction, sites, and equipment War-risk insurance, $176,325,140, less premium credits . $136,500,000 \.: War Department proper Department of Justice Post Office Department proper. Navy Department proper 1 Interior Department proper Department of Agriculture. : Department of Commerce Department of Labor Shipping Board Wheat guarantee fund European food relief $18, 518,085 , 2,139, 017 11, 662, 595 113,120, 000 9, 000, 000 39, 825,140 7, 350,000 16, 800,000 1, 950,000 2,125,000 38, 385, 277 51, 647, 400 33, 454,034 5, 406, 322 371,016, 521 350,000,000 99,000.000 SECRETARY OF THE' TREASURY. For civil establishment—^^Continued. Council of National Defense Federal control of transportation s^^stems ^ War Finance Corporation Housing Corporation . State, War, and Navy Department buildings. . Federal Board for Vocational Education. .• .' Interdepartmental Social Hygiene 'Board.., ' Federal Trade Commission . Employees' Compensation Commission Interstate Commerce Commission Other independent offices Expenses of loans Increase of compensation, all departments. Additional compensation, Postal Service. District of Columbia Total civil establishment For War Department: Military Establishment Rivers and harbors Miscellaneous—War, Civil. For Navy Department: Naval Establishment, exclusive of build- ing program Navy building program 203 .^.. - 2, 234, 375, 892 | l j 650, 000, 000 38, 000, 000 16, 657, 000 • 689, 875, 000 158, 000, 000 • For Indian Service For pensions... For interest on the public debt Total estimated ordinary expenditures Special expenditures: Purchase of obligations of foreign governments Panama Canal: Expenditures for the canal •. Total estimated expenditures, exclusive of public d e b t . . . Publicdebt: War saving certificates $175, 000,000 Certificates of indebtedness outstanding June 30,1919 3, 633, 804, 490 Retirement of bank notes 25,000,000 Bond purchase fund.. 740, 000, 000 Bonds purchased from payments on foreign . . obligations I -. 90,000,000 Miscellaneous redemptions of the d e b t . . . 300, 000 Total estimated public debt expenditures Grand total estimated expenditures $250, 000 750, 770, 855 150, 000, 000 4,600,000 2, 279,854 34, 258, 244 2, 459, 772 1,045, 000 2, 317, 500 4, 593, 267 1,149, 540 24,337, 500 30, 760, 000 35, 698, 400 18, 456, 569 1,704^657,000 847,875,000 38,000, 000 220,030,000 1, 052, 300,000 6,097, 237, 892 700,000, 000 15, 284, 837 6, 812,522, 729 4, 664,104, 490 11,476, 627, 219 • .1 The. estimated expenditures for Federal control of transportation systems for the fiscal year 1920 are based entirely upon appropriations already made and do not include any expenditm-es that may result > from such additional appropriations as may be granted for 1920. The United States Railroad Administration on the date of this report was unable to estimate what additional sums would be expended during the fiscal year 1920, inasmuch as the amounts that will be required are almost entirely dependent upon congressional action in connection with the return of the railroads to private control. 204 REPORT ON T H E FINANCES. Estimated excess'of;expenditures over receipts exclusive of public • debt, fiscal year 3 920 : Estimated excess of total expenditures over total receipts, fiscal year 1920 $705, 072, 729 4,158, 620,585 Postal Service. The Post Office Department estimates that the postal revenues for the fiscal year 1920 will be $386,600,000, with expenditures for the Postal Service for the same period of $387,800,000, exclusive of additional compensation to be paid from the general fund of the Treasury. Fiscal year 1921. .' ' RECEIPTS. Ordinary receipts: From customs From internal revenue— • Income and profits taxes Miscellaneous ...'.. '..: $3, 000, 000, 000 1,190, 000, 000 — • From sales of public lands From miscellaneous sources Total estimated ordinary receipts Panama Canal: Estimated receipts from tolls, etc $325,000,000 4,190, 000,000 1, 000,000 896,000,000 5,412,000,000 • Total estimated receipts, exclusive of public debt Publicdebt: War-savings certificates $175, 000, 000 Deposits to retire Federal reserve bank notes and national-bank notes 25, 000, 000 ' Postal sa^dngs bonds 350, 000 Total estimated public-debt receipts Grand total estimated receipts $8,000,000 5, 420, 000,000 200, 350,000 5, 620, 350,000 EXPENDITURES.^ ^ For civil establishment: Legislative establishment Executive proper, including Tarifi Commission and Alien Property Custodian State Department Treasury Department proper Public buildings, .construction, sites, and equipment War-risk insurance, $297,649,600, less premium credits, $100,000,000 War Department proper Department of Justice Post Office Department proper ....'. 19,. 727, 016 2,145, 644 13, 005,961 ' 130, 880, 000 12, 000, 000 197,649,600 8,115,000 17, 800,000 2,050,000 1 Do not include any estimated expenditure on accdunt of increased compensation of Government employees, nor on account of increased compensation in the Postal Service. 2 No estimate of expenditures by the United States Railroad Adininistration for the fiscal year 1921 is included, because on the date of this report the Railroad Administration was unable to make an estimate for that fiscal year, inasmuch as the sums that will be required are almost entirely dependent upon con. gressional action in connection with the return of the railroads to private control. SECRETARY OF T H E TREASURY. For civil establishment—Continued. Navy Department proper. .Interior Department proper. Department of Agriculture Department of Commerce Department of Labor Shipping Board ^ Council of National Defense Housing Corporation > Federal Board for Vocational Education.. Interdepartmental Social Hygiene Board. Federal Trade Commission Employees Compensation Commission Interstate Commerce Commission State, War, and Navy buildings Other independent offices District of Columbia ,. Expense of loans , Total civil establishment ^ ^ For War Department: Military Establishment Rivers and.harbors Miscellaneous—War, Civil... 205 $3,000,000 53,856, 092 77,206, 650 25, 767, 645 9, 564, 624 34, 590,100 320, 000 . 1,203,028 38,750,000 2, 500, 000 1,283,130 2, 960, 000 3,971,000 2, 264, 505 2, 289,000 20,320,599 12, 456, QOO '695, 675, 594 $921,000,000 40,000,000 19, 772, 000 980,772, 000 For Navy Department:^ . Naval Establishment, exclusive of building program Navy building program • 386, 752, 000 185,248, 000 For Indian Service For pensions ' For interest on the public debt 572,000, 000 36,775,000 215,030,000 1,017,500,000. Total estimated ordinary expenditures (incomplete). Panama Canal: Expenditures for the canal •. 3,517,752,594 Total estimated expenditures, exclusive of public debt Public debt :S Sinking fund > $287, 500, 000 War-savings certificates 125,000,000 Retirement of Federal reserve bank notes and national-bank notes 25,000,000- 3,535,997, 985 18,245,391 1 The United States Shipping Board states that this estimate does not take into consideration any ex penditure from the appropriation of S280,000,000, which it is estimated mil be required for the flscal year 1921, "if the President and the Congress shall decide that the Shipping Board should go forward and build additional passenger ships and such cargo and tank steamers as may be necessary to make a well-balanced program for a permanent merchant marine." , . 2Do not include any estimated expenditure on account of increased compensation of Government employees, nor on account of increased compensation in the Postal Service. 3 No estimate of expenditures by the United States Railroad Administration for the fiscal year 1921 is included, because on the date of this report the Railroad Administration was unable to make an estimate for that fiscal year, inasmuch as the sums that will be required are almost entirely dependent upon congressional action in connection with the returh of the railroads to private control. < The Secretary of the Navy states that this estimate does not include any estim.ated expenditures for new construction. 6 Purchases of bonds under authority of sec. 6 of the act of Apr. 4, 1918 (bond purchase fund),-are net included as an item of estiinated cxnenditure; this authority expires one year after the termijiation of the war, and the Secretary reserves decision with respect to such pmchases after July 1, 1920. 206 REPORT ON T H E FINANCES. Public debt—Continued.. . Miscellaneous redemptions of the debt $300, 000 Total estimated public debt expenditures '. $437,800,000 Grand total estimated expenditures Estimated excess of receipts over expenditures, exclusive of public debt, fiscal year 1921 Estimated excess of total receipts over total expenditures (incomplete), fiscal year 1921 : , 3, 973, 797, 985 1,884,002,015 1, 646, 552,015 Postal Service. The Post Office Department estimates that the postal revenues for the fiscal year 1921 will amount to $415,500,000, with expenditures for the Postal Service for the same period of $407,680,000, exclusive of any increased compensation in the Postal Service. Estimates of ctppropriations,^ fiscal year 1921. The estimates of appropriations for the fiscal year 1921, as submitted by the Go^'ernment departments and offices, are as follows: liegislative establishment ^. Executive establishment: ExecutiA^e proper Department of State. TreasuryDepartment-... War Department proper State, War, and Navy Department Building, expenses. Navy Department proper. Department of Interior Post Office Department Department of Agriculture Department of Commerce Department of Labor Department of Justice Judicial establishment Foreign intercourse. Military Establishment: Suppoit of the Army Military Academy." National Guard $9, 025, 297. 25 $999, 880. 00 1, 571, 350. 00 73,405,101.36 6, 615, 248. 01 2, 329, 550. 00 '3, 097, 870. OO' 6, 287,185. 00 2, 093, 870. 00 37, 528,102. 00 12, 778, 337. 40 1, 700, 430. 00 704. 540. 00 149, 111, 463. 77 1, 634,190. 00 11, 243, 250. 91 ' 897, 392, 020. 00 6, 778, 637. 20 85, 408, 000. 00 989, 578, 657. 20 Naval Establishment, including increase of the Navy, $185, 248, 000 , Indian affairs. Pensions Public works: Legislative Treasury Department, public buildings and works 542, 031, 804. SP 12, 994, 494. 27 215, 030, 000. 00 48,546. 50 9, 449, 796. 00 1 These estimates of appropriations do not include any estimates for the following: The Railroad Administrati on;'increased compensation of Government employees; increased compensation for the postal service' new construction program in the Navy. 207 SECKETABY OF THE TREASURY. Public works—Continued. War Department— Military— Fortifications... $117, 793, 330. 00 Arsenals 7, 278, 259. 00 Military p o s t s . . 14, 225, 251. 67 Rivers and harbors.. 53, 659, 265. 00 Other civil public 1, 622, 05L 00 works Panama Canal : Navy Department Department of Interior, including reclamation fund , Department of Commerce Department of Labor Department of Justice Postal Service, payable from postal revenues. . Miscellaneous: Legislative Executive Treasury Department War Department Department of Interior Department of Commerce Department of Labor Department of Justice District of Columbia United States Shipping Board United States Employees' Compensation Commission Council of National Defense National Ad\T.sory Committee for Aeronautics. Smithsonian Institution and National Museum Interstate Commerce Commission Board of Mediation and Conciliation. Federal Trade Commission Interdepartmental Social Hygiene Board. Federal Board for Vocational Education... United States Housing Corporation. Arlington M^emorial Bridge Commission... Rock Creek and Potomac Parkway Commission $194, 578,156. 67 18, 245, 391. 00 31, 099, 450. 00 22, 347, 070. 00 6, 759, 900. 00 | 1,198, 500. 00 195, 000. 00 $283, 921, 810.17 391,713,673.00 10, 770, 291. 20 1,221, 344. 00 247, 396, 025. 50 8,306, 844. 04 10, 876, 83L 25 14,163, 801. 00 6, 075, 644. 00 15, 237, 241.35 19,179, 716. 03 447, 755, 061. 59 2, 953, 660. 00 320, 000. 00 437, 000. 00 842, 020. 00 3,971,000.00 50, 000. 00 1,283,130.00 i 2,500,000.00 ! 38,750,000.00 i 1,203,028.00 I 25,000.00 I I 400,000.00 ! 833, 717, 637. 96 Permanent annual appropriations: Interest on the public debt Refunds— Customs and internal revenue. Other refunds Sinking fund Miscellaneous Total estimated appropriations for 1921 1,017,500,000.00 I 25,207,000.00 j 22,840,600.00 | 287,500,000.00 i 72,360,152.29 11,425,407, 752. 29 I4, 865,410, 031. 62 i 208 REPORT ON T H E FINANCES. Deduct: Postal Service payable from postal revenues, $391,713,673; sinking fund $287,500,000; Panama Canal, $18,245,391; an aggregate of...., Total estimates for ordinary appropriations for 1921 Add estimates for Panama Canal appropriation Add sinking fund requirement $697, 459, 064. 00 4,167, 950, 967. 62 18, 245, 391. 00 287, 500, 000. 00 Total estimated appropriations for 1921, to become a charge upon the general fund. ' 4, 473, 696, 358. 62 ESTIMATES FOR 1921 AND APPROPRIATIONS FOR 1920. Comparison of the estimates for 1921 with the appropriations for 1920 shows a decrease in the 1921 estimates of $1,155,790,000.80, including the Panama Canal and sinking fund,, as exhibited in the table following: Statement of estimates of appropriations for 1921 compared with appropriations for 1920. [ E x c l u d i n g p o s t a l service p a y a b l e from t h e p o s t a l r e v e n u e , a n d p u b l i c d e b t . l D e p a r t m e n t s , etc. Legislative Executive: Executive proper. Alien P r o p e r t y Custodian W h e a t g u a r a n t e e fund E u r o p e a n food relief Tariff Commission Civil Service Commission , D e p a r t m e n t of S t a t e : D e p a r t m e n t of S t a t e p r o p e r Foreign intercourse Treasury Department: Treasurj^ D e p a r t m e n t exclusive of public buildings P u b l i c buildings War-risk i n s u r a n c e -. War Department: War Department proper Military E s t a b l i s h m e n t — ( E s t i m a t e s for Military E s t a b l i s h m e n t for 1921, .11,128,950,497.87; appropriat i o n s for 1920, $787,889,950.70.) Army Military A c a d e m y . National' G u a r d . • Fortifications Arsenals., Military posts a n d miscellaneous Rivers and harbors Miscellaneous war, civil i t e m s Navy Department: N a v y D e p a r t m e n t proper Naval Establishment— ( E s t i m a t e s for N a v a l E s t a b l i s h m e n t for 1921, $577,576,260.80; a p p r o p r i a t i o n s for 1920, $622,374,718.88.) ^ N a v a l E s t a b l i s h m e n t , exclusive of building program N a v y building p r o g r a m D e p a r t m e n t of t h e I n t e r i o r : D e p a r t m e n t of t h e Interior, exclusive of I n d i a n s a n d pensions Pensions Indians P o s t Office D e p a r t m e n t : P o s t Ofiice D e p a r t m e n t , exclusive of Postal Service Increase, 1921 estimates over 1920 appropriations ( + ) ; decrease (—). 1921 e s t i m a t e s , including permanent amiual. 1920 a p p r o p r i a tions, i n c l u d i n g permanent annual. $19,844,934. 95 $16,524,132.61 394,130.00 785,094.00 400,000'. 00 042,000.00 556,580.00 800,000.00 1,000,000, GOO. 00 100,000,000.00 300,000.00 • 466,200.00 162,450.00 14,906.00 -1,000,000,000.00 •- 100,000,000.00 -f 100,000.00 -1175,800.00 1, 571,350.00 11,349,250.91 1,283,460.00 10,304,135.27 287,890.00 1,045,115.64 133,298, 526. 86 9.449.796.00 213,999,600.00 117,310,319.58 9,378,850.00 113,862,806.00 -1- 15,988,207.28 -h 70,946.00 -i- 100,136,794.00 6.615.248.01 7, 573,550.12 897,467, 020.00 6,778, 637.20 85,408, 000.00 117,793, 330. 00 7,278, 259.00 14,225, 251.67 60,403, 865.00 12,931, 895.04 759,222,127.50 2,277,932.20 13,177,750.00 11,214,291.00 1,970,000.00 27,850.00 43,192,964.00 17,925,730.00 138,244,892.50 4,500,705.00 72,230,250.07 106,579,039.00 5,308,259.00 14,197,401.60 17.210.901.00 4,993,834.96 3,097,870.00 2,223,010.00 874,860. 00 392,328,260.80 185,248,000.00 489,374,718.88 133,000,000.00 -f- 42,571,332.54 215,030,000.00 36,769,494.27 34,788,791.68 215,030,000.00 18,327,397.03 -H 7,782,540.86 4- 18,442.097.24 2,093,870.00 1,986,662.97 -f 107.207.03 -\- - $3,320,802.34 958,302.11 97,046,458.08 52,248,000.00 209 SECRETARY OE THE TREASURY. Statement of estimates of appropriations for 1921 • compared with appropriations for 79^^?—Continued. 1920 appropria^ 1921 estimates, mcluding including perma- tions, permanent i nent annual. annual. Departments, etc. $72,568,102.00 $143,171,270.00 Department of Agriculture 33,705,038.40 Department of Commerce 30,570,400.03 8,974,574.00 Department of Labor 4,747,782.46 17,946,47L35 Department of Justice 16,402,450.34 Independent offices: Smithsonian , Institution and National M;useum 902,020.00 698,715.00 Interstate Commerce Commission 3,971,000.00 4,596,600.00 Federal Trade Commission 1,283,130.00 1,205,000.00 United States Shipping Board. 356,772,986.00 447,755,061.59 Federal Control of Transportation Systems.. 750, ooo; 000.00 Housing Corporation 2,068,970.00 1,203,028.00 1,400,000.00 2,500,000.00 Interdepartmental Social Hygiene Board... Council of National Defense , 320.000.00 Federal Board for Vocational Education 42,586,000.00 22,182,000.00 National Advisory Committee for Aero437,000.00 nautics 175,000.00 Board of Mediation and Conciliation .-.. 50,000.00 44,540.00 Arlington Memorial Bridge Commission 25,000.00 Employees Compensation Commission 2,953,660.00 1,119,290. ()0 Rock Creek and Potomac Parkway Com400,000.00 250,000.00 mission State, War, and Navy Department Buildings. 2,329,550.00 2,408,038.75 Indigent in Alaska relief fund 25,000.00 25,000.00 • Arlington Memorial Amphitheater Commission • 77,000.00 16,396.321. ()0 District of (Columbia. .'. 20,285,316.03 1,017,500,000.00 1,052,300,000.00 Interest on the public debt 12.456,000.00 24.337,500.00 Expenses of loans ' 30,760,000.00 Increase of compensation 35,698,400.00 Additional compensation, Postal Service Increase, 1921 estimates over 1920 appropriations (4-); decrease (—). - $70,603,168.00 -f3,134,638.37 + 4,226,791.54 -f 1,544,021.01 203,305.00 625,600,00 78,130.00 90,982,075.59 750,000,000.00 865,942.00 1,100,000.00 320,000.00 20,404,000.00 262,000.00 5,460.00 25.000.00 1,834,370.00 150,000.00 78,488.75 77,000.00 3,888,995.03 34,800,000.00 11,881,500.00 30,760,000.00 35,698,40().00 Ordinary... PanamaCanal.. 4,167,950,967.62 18,245,39L00 5,619,506,522.42 9,979,837.00 -1,451,555,554.80 -f 8,265,554.00 Ordinary and Panama Canal. Sinking fund 4,186,196,358.62 287,500,000.00 5,629,486,359.42 -1,443,290,000.80 + 287,500,000.00 4,473,696,358.62 5,629,486,359.42 -1,155,790,000.80 Total ordinary, Panama Canal, and sinking fund Exhibit of appropriations for 1920. Appropriations made for the fiscal year 1920 I and for prior years during t h e third session i of the Sixty-fifth Congress and the first ses.1 . sion of the .Sixty-sixth Congress, including ^ ^ j . revised estimated permanent and indefinite | appropriations, and appropriations for the ; Postal Service payable from postal revenues ;$6, 453, 984, 749. 56 Deduct: ' | Postal Service for 1920 payable from the ' postal revenues. $401, 216,149. 00 | • Postal deficiencies of prior years payable I from postal revenues. 7,150,000. 00 j Deficiencies and supplementals for prior. . j years ..'. 416,132, 241.14 | -—:~ ! 824, 498, 390.14 Total appropriations for 1920, exclusive of deficiencies and | Postal Service payable-fromrpostal revenues i 5, 629,486,359. 42 Agreeing with the appropriations for 1920 shown in the preceding table, against which t h e estimates of appropriations submitted for 1921 show a decrease of $1,451,555,554.80 in the ordinary and $1,443,290,000.80, including the Panama Canal. • 140325—FI 1919 14 I 210 REPORT ON THE FINANCES. Attention is respectfully called to further divisions of this report, to wit, the condensed annual reports of the various bureaus and divisions of the Treasury Department, and the tables accompanying the report on the finances. ' CARTER GLASS, Secretary. To the SPEAKER OF THE H O U S E OF REPRESENTATIVES. EXHIBITSrACCOMPANYraG THE REPORT OK THE FINANCES. 211 EXHIBITS. E X H I B I T 1. A. Preliminary financial statement of the United States Govermnent for the period frorn Apr. 6, 1917, to Jime 30, 1919. [On the basis of daily Treasury statements.! R E C E I P T S A N D DISBURSEMENTS. Net balance in the general fund Apr. 5, 1917 $92,317,710:27 Disbursements, exclusive of principal of public debt, Apr. 6, 1917, to Receipts, exclusive of principal of pubhc debt, Apr. 6, 1917, to June June 30, 1919 : -. $32,427,469,054. 72 24,183,034,599.7© 30, 1919 : 9,384, 278, 70S. 22 PubUc-debt disbursements, Apr. 6, 1917, to .Time 30, 1919 Public-debt receipts, Apr. 6, 1917, to June 30, 1919 48,385,572,053.47 Net balance in the general fund June 30, 1919 1,251,664,827.54 Total 57,852,168,481. Total O 57,862,168,481. 96 O PUBLIC DEBT AND EXPENDITURES. Total disbursements for war period, exclusive of principal of pubhc debt S32,427,4.69,054.72 Total receipts for war period, exclusive of principal of public debt. .. 9,384,278,708.22 Total .gross debt June 30, 1919 Total gross debt Apr. 5, 1917 Gross debt increase for war period Net balance in the general fund June 30, 1919 Net balance in the general fund Apr. 5, 1917 Net increase in balance in general fund Excess of disbursements over receipts, for war period 23,.043,190,346.50 Net debt increase for war period SI, 251,664,827.54 92,317,710r27 S25,484,506,160.05 1,281,968,696.28 24,202,537,463.77 > Ul 1,159,347,117.27 23,043,190,346.50 M CO B. tvo Preliminary statement ofthe public debt of the United States Government, June 30, 1919. [On the basis of daily Treasury statements.] Bonds; Consols of 1930 Loan of 1925 Panama's of 1916-36 Panama'sof 1918-38 Panama's of 1961 Conversion bonds Postalsavings bonds • : .- First Liberty loan Second Liberty loan Third Liberty loan Fourth Liberty loan Total bonds. 1 Notes: Victory Liberty loan Treasury certificates: Loan and tax Pittman Act Special issues : - §88.3,359,990.00 1,984,796,730.00 • ' 3,566,464,969.00 E 3/958,560,357.50 S 6,794,504,557.00 >^ —• 16,304,320,613.50 M ' 17,187,685,603.50 3,467,840,956.77 : S3,273,000,000.00 178,723,000.00 182,494,490.00 • War savings certificates (net cash receipts) Old debt on which interest has ceased Noninterest-bearing debt Total gross debt $599,724,050.00 118,489,900.00 48,954,180.00 25,947,400.00 , 50,000,000.00 28,894,500.00 11,349,960.00 : : : 3,634,217,490.00 956,023,121.45 2,355,250.26 236,382,738.07 25,484,506,160.05 O ^^ H td H ^ S fe Statement slwwing classified receipts of the United States Government, exclusive of the principal of the public debt, by months, from Apr. 6, 1917, to Jwie-30, 1919, as published in daily Treasury statements. Customs. A pr. 6 to 30, 1917 May, 1917 . 3 Line, 1917, revised T o t a ' Apr. 6 to J u n e 30, 1917 J u l y , 1917 A u g u s t , 1917 S e p t e m b e r , 1917 October, 1M7 N o v e m b e r , 1917 December, 1917 J a n u a r y , 1918 F e b r u a r v . 1918 March, 1918 April, 1918 May, 1.-M ; J u n e , 191S : '.. T o t a . for fiscal year 1918 J u l y , 191S : A u g u s t , 1918.. f S e p t e m b e r , ldl8 : . October. 191S N o v e m b e r , 191S D e c e m b e r , 1918 '. J a n u a r y , 1919 : F e b r u a r y , 1919 March, 1919 A p r i l , 1919 May, 1919 ^Jl'ne,.J1919^.^.. . ^ . ^ . . . . --,-.. -^. .^^^...^^...... T o t a l for fiscal year 1919 Income and profits t a x . Miscellaneous internal revenue. Miscellaneous revenue. P a n a m a Canal. Total. S17,863,547.22 28,660,148.60 IS,686,805.14 S21,075,386.24 107,601,090.34 195,230,281.19 $35,387,512.86 50,009,778. 45 56,993,915.16 S5,801,920.33 •11,361,950.32 14,120,100.17 S314,793.31 634,421.46 694,056.30 §83,446,159.96 198; 267; 389.17 285,725,157.96 65,210,500.96 323,906,757.77 142,391,206.47 31,286,970.82 1,643,271.07 567,438,707.09 15,805, 129.91 15,902, 255.99 15,201, 388.70 13,647, 946. 24 11,935,'•389. 41 11,247, 214.10 12,163, 216.06 12,019, 441.74 18,106; 373.13 16,445; 531.99 19,925; 706.94 17, 598, 789. 28 9, 478, 4, 248;091.69 6,026; 475.01 5, 9S7,901.91 6, 720,898.26 13, 725,534. 51 11,428, 560.88 13, 200,936.38 31,424, 027.09 83,012, 299.95 342,101, 796.75 1, 786,647,885.43 50, S95,-•959. 22 43,922; 598.77 41,265; 393.95 50,318; 414.27 81,536; 702. 42 61, 425; 075.62 61,665; 347.96 59,115, 478.32 89,635: 237:66 93, l i s ; 711.68 135,081 929.01 101,052 171.39 7, 575,979.09 9,839 107.31 12,967!317.09 20,226;866.64 39,175,579.26 18,034,677.89 17,796 189.59 14,177 234.29 16,536,309.47 16,111,894.79 97,254,972. 78 22,817,686. 62 171,687.08 584,477.10 648,787. 75 277,158. 50 122,208.09 626,568.30 302,895.38 585,348. 96 1,047,330. 70 635,705.85 378, 705. 51 655,481.06 83,927 636.28 74,496;530.86 76,109,362.50 90,458,290.56 139,490,777.44 105,059,070.42 103,356 209.87 99,09S: 439.69 156,749;278.05 209,319,144.26 594,746,110.99 1,931,772,013.78 2,314,006,291.; 872,028,020. 27 292,513,814.82 6,036,354.28 3,664,582,864.70 72 15,837. 105,948. 066.11 497,490, 376.62 83, 736;123.50 14,175; 802. 76 30, 795;666.13 89,005, 937. 44 36,308, 166. 21 12, 719,024.43 93,327, 251.94 30,136, 620.58 11,453 096.69 99, 743,394.83 28,820, 184.49 12, 583;861.29 117,65S, 483.35 61,916: 648.37 9,681,907. 59 112,281, 675.18 43,141, 373. 49' 12, 732,514. 54 94,310, 163.04 30,341: 312.50 14,979, 078.02 118,240, 897.00 17,876, 270.46 1,129,82i;269.04 054.46 135,059, 034.35 107,696, 20,14i; 4S6.97 115,265, 091.71 50,614, 139.20 20,896: 644.65 143..11 . 131,-919, _21,3S0: 290.27. _'971,695 , S66._31_ 21,974, 810.55 22,645: 000.23 13, 757;134.67 16,058, 975.73 169,112, 403.43 93 14,213, 82 27,054: 22,36i: 050.46 31,555,382.12 159,228, 529.45 92,026, 548.47 _56,_151,.439.19 179,998,383.49 619.994.14 899,439.10 94,391.05 604,815.02 734.419.15 431,587.99 626,489.31 767,529.81 355,127.60 427,185.33 459, 786. 65 353,824.88^ 641, 877,137.14 152: 252,031.72 15i; 884,653.80 151 580,759.96 310; 994,263.19 203 902,264.23 842,841.34 . 195; 162 759,163.83 1,297 848,946.22 422, 552,300.56 279, 262,210.68 -1,181,.500,-563.76 - 184,457,857.39 3,018,783,687.29 1,296,501,291.67 646,139,700.05 6,374,590.03 5,152,257,136.43 65,210,500.96 179,998,383.49 184,457,867.39 326,906,757.77 2,314,006,291.84 3,018,783,687.29 142,391,206.47 872,028,020. 27 1,296,501,291.67 31,286,970.82 292,513,814.82 646,139, 700.05 1,643,271.07 6,036,354.28 6,374,590.03 567,438,707.09 3,664,582,864.70 5,152,257,136. 43 429,566,751.84 5,659,696,736.90 2,310,920,518.41 969,940,485.69 14,054,215.38 9,384,278,708.22 O K! O H W H > Ul KECAPITULATION A p r . 6 t o J u n e 30, 1917 Fiscal year 1918 Fiscal year 1919 Grand totals ^. - to D. Statement showing classified disbursements of the United States Government, exclusive ofthe principal of the public debt, by months, from Apr. 6, 1917 " -. to June-SO, 1.919, as published in daily Treasury statements. Ordinary. A p r . 6 t o 30, 1917 M a y , 1917 J i m e , 1917 (revised) T o t a l A p r . 6, 1917, t o J i m e 30, 1917 July, 1917....: A u g u s t , 1917 S e p t e m b e r , 1917 October, 1917 N o v e m b e r , 1917 D e c e m b e r , 1917 J a n u a r y , 1918 F e b r u a r y , 1918 M a r c h , 1918 A p r i l , 1918 M a y , 1918 J u n e , 1918 ; — , t O t h e r special. Total. S200,000,000.00 407,500,000.00 277,500,000.00 S7,885) 770. 50 4,962, 746. 28 919,445.78 S279,213,777.20 526,565,555.96 410,107,295.39 317,118,655.99 885,000,000.00 13,757,962.56 1,215,886,628.55 299,031.05 277, 438,000.54 349: 013,305.34 452: 015,359.94 512: 952,035.17 511; 297,425.62 715, 302,039.83 675: 209,068.43 SI9; 955,357. 25 910; 755,758. 95 1,068; 203,026.82 1,203; 914,905.85 452, 500,000.00 478,000: 000.00 396,000: 000.00 480, 700:000.00 471,929: 750.00 492,000; 000.00 370,200, 000.00 325,000, 000.00 317, .500:000.00 287, .500:000.00 424,000; 000.00 242, 700,000.00 1,511 814.92 2,019; 353.50 1,354, 980.35 1,623, 392. 58 1,200; 022.36 1,914, 433.70 4,854, 005.85 12,477, 917.31 18,338, 441.98 17,031, 020.28 15,992, 206.83 5,958 796. 56 662, 310,845.97 757: 457,364.14 746: 378,285.69 944: 368,752. 52 986: 081,807.-53 1,10.5;211,859.32 1,090, 356,045.69 1,012: 686,985.74 1,155; 793,809.241,215, 287,779. 23 1,508, 195,233.65 1,512, .573,702.42 7,874, .386,324. 91 4,738,029,750.00 ;4,286,395. 23 12,696,702,471.14 1,2.59, 782,599.23 1,524, 901,777.74 1,274, 505,845.05 1,174, 522,406.40 1,655, 0.51,004.19 1,570, 890,396.88 1,6.59,580,520. 24 1,0.3.5,130,805.19 1,042, 182, .523. 55 1,003, 852,122.73 907, 492,923.94 727, 845,814.48 343,485, 000.00 279,250; 000.00 2S2,150,000.00 489,100, 000.00 278,949: 597.70 . 389,052;000.00 290,250, SOO.00 145,397: 302.30 322,350: 000.00 409,608; 608.27 194,911, 857. 29 54, 750,000.00 5,015 055.21 1,351 445.28 608; 440. 22 1,139, 854.59 1,218, 607.04 1,033, 4.58. 60 12,519, 629.59 9,385 796.13 15,279; 251.96 15,457, 575.38 9,932, 690. .50 26,794, 135.35 1,608, 282,654.44 1,805: 513,223.02 1,5.57: 264,285.27 1,664: 862,260.99 1,935: 249,308.93 975,855.48 2,oeo: 350,949.83 1,962: 913.903.62 1,189: 8II; 785. 51 1,379: 928,306.38 1,428; 337,471.73 1,112, 389,949.83 14,93.5,848,739.62 3,479, 255,265.56 9,775,949.85 18,514,879,955.03 317,118,665.99 7,874,386,324.91 14,935,848,739.62 885,000,000.00 4,738,029,750.00 3,479,255,265. 56 13, 767,962. 56 84,286,396.23 99,775,949.85 1,215,886,628.55 12,696,702,471.14 18,514,879,955.03 23,127,3.53,730. 52 9,102,285,015.55 197,830,308.64 32,427,459,0.54.72 S71,328,006.70 114,102,809. 68 131,587,849.61 • - Foreign loans. to hjO H O H T o t a l for fiscal year 1918 J u l y , 1918 A u g u s t , 1918 S e p t e m b e r , 1918 October, 1918 N o v e m b e r , 1918 D e c e m b e r , 1918 J a n u a r y , 1919 F e b r u a r y , 1919 M a r c h , 1919 A p r i l , 1919 M a y , 1919 J u n e , 1919 • .' : " T o t a l for fiscal year 1919 RECAPITULATION. Apr. 6, 1917, to J u n e 30, 1917 Fiscal year 1918 Fiscal year 1919 Grand totals o - ._, > a U) SECRETARY OF T H E TREASURY. EXHIBIT 217 2. [REVOKING PROCLAMATIONS, O R D E R S , ETC., PROHIBITING EXP O R T S 0 : F COIN, B U L L I O N A N D C U R R E N C Y — E X C E P T I N G P A R T OF RUSSIA.] PROCLAMATION. Whereas, by ^drtue of the authority vestecJ. in the President by the Act approved June 15, 1917, known as the Espionage Act, the President issued a proclamation dated August 27, 1917, which was amended by a subsequent proclamation dated September 7, 1917, prohibiting the export of coin, buUion and currency from the Uniteci States or its territorial possessions to certain specified countries except at such time or time^ and under such regulations and orders, and subject to such limitations and exceptions as the President shall prescribe; and Whereas, by virtue of the authority vested in the President by the above mentioned Act of Congress, the President by Executive order dated September 7, 1917, directed that the regulations, orders, limitations and exceptions prescribed by him in relation to the export of coin, bullion and currency should be administered by the Secretary of the Treasury, and upon his recommendation prescribed certain regulations in relation thereto; and Whereas, by Executive order, dated October 12, 1917, made under authority of the act aforesaid and of the act approved October 6, 1917, known as the Trading-with-thcrEnemy Act, the President vested in the Secretary of the Treasury the executiye administration of any investigation, regulation or prohibition of any transactions in foreign exchange, export, or earmarking of gold or silver coin, bullion or currency, transfers of credit in any form (other than credits relating solely to transactions to be executed wholly within.the United States) and transfers of evidences of indebtedness or of the ownership of property between the United States and any foreign country or between residents of one or more foreign countries by any person within the United States, and further vested in the Secretary of the Treasury the authority and power to require any person engaged in any such transaction to furnish, under oath, complete information relative thereto, including the production of any books of account, contracts, letters, or other papers in connection therewith in. the custody or control of such person, either before or after such transaction is co:Qipleted; and Whereas, by said Executive order, dated October 12, 1917, the President authorized and directed the Secretary of the Treasury for the purpose of such executive admiiiistration to take such measures, adopt such administrative procedure, and use such agency or agencies as he may from time to time deem necessary and proper for that purpose; and Whereas, the Secretary of the Treasury, with the approval of the President, by order dated November 23, 1917, adopted certain administrative procedure for the executive administration, authority and jpower vested in the Secretary of the Treasury by said Executive order, dated October 12, 1917, and designated the Federal Reserve Board to act as the agency of the Secretary of the Treasury, subject to the approval of the Secretary of the Treasury, to carry out such 218 REPORT OJST T H E FINANCES. executive administration, authority and power vested in the Secretary of the Treasuiy as hereinbefore recited; and Whereas, upon the recommendation of the Secretary of the Treasury and in order to vest all necessary authority in the Federal Reserve Board to act as the agency of the Secretary of the Treasury in the performance of certain duties therein imposed, the President did by Executive order, dated January 26, 1918, prescribe certain orders, rules and regulations in respect of such executive administration, authority and power amending the regulations theretofore prescribed by Executive order dated September 7, 1917; and Whereas, in the judgment of the President, except as hereinafter stated, the public safety of the United States does not now require the prohibition of the exportation of coin, bullion and currency from the. United States or its territorial 'possessions, nor the investigation, regulation or prohibition of any transaction in foreign exchange or the enforcement of any of the orders, rules, regulations and administrative procedure hereinbefore mentioned. Now, therefore, I, Woodrow Wilson, President of the United States of America, under and by virtue of the authority vested in me by the acts aforesaid, do hereby proclaim to all whom it may concern that, except as hereinafter specified, the aforementioned proclamations in so far as they prohibit the exportation of coin, bullion or currency, and the aforementioned power and authority vested in the Secretary of the Treasury and in the Federal Reserve Board, and all orders, rules and regulations issued or prescribed in connection therewith are hereby revoked and cancelled. In so far as the proclamations, orders, rules and regulations hereinbefore mentioned may be necessary to enable the Secretary of the Treasury and the Federal Reserve Board effectively to control in the manner therein provided, and to the extent deemed advisable by the Secretary of the Treasury and the Fed'eral Reserve Board, all exportations of coin, bullion and currency to that part of Russia now under the control of the so-called Bolshevik Government, and any and all dealings or exchange transactions in Russian rubles or transfer of credit or exchange transactions with that, part of Russia now under the control of the so-called Bolshevik Government, and any and all transfers of credit or exchange transactions with territories in respect of which such transactions are at present permitted only through the American Relief Administration, they are hereby continued in force and effect. In testimony whereof I have hereunto set my hand and caused the seal of the United States to be aflSxed. Done in the City of Paris this 26th day of June in the year of our Lord one thousand nine hundred and nineteen, and of the Independence of the United States of America the one hundred and forty third. [SEAL.] WOODROW WILSON. By the President: ROBERT LANSING, Secretary of State. (No. 1528-A.) SECRETARY OF T H E TREASURY. 219 E X H I B I T 3. The following table shows the cash expenditures of the Government for the fiscal years ended June 30, 1917, June 30,1918, and June 30, 1919, as published in the daily Treasury statements and classified according to departments and establishments: EXPENDITURES. Fiscal year 1917. Legislative E x e c u t i v e proper State Department Treasury Department War Department D e p a r t m e n t of Justice Post Office D e p a r t m e n t Navy Pepartment Interior D e p a r t m e n t D e p a r t m e n t of Agriculture D e p a r t m e n t of Commerce D e p a r t m e n t of L a b o r U n i t e d States Shipping Board Federal control of t r a n s p o r t a t i o n s y s t e m s . . . . W a r F i n a n c e Corporation ' Food a n d F u e l A d m i n i s t r a t i o n s Other i n d e p e n d e n t offices a n d commissions. District of Columbia .• I n t e r e s t on p u b l i c d e b t Unclassified Total ordinary e x p e n d i t u r e s Fiscal y e a r 1918. Fiscal year 1919. $15, 092,373.97 S15,825,506. 72 S17,090,106. 24 17,467,352.03 1,280,484.85 9, 662,847.53 20,766,400.14 6. 159,316.41 9, 892,898. 09 500,426.53 227,277,657.81 84, 294,313. 65 152, 358, 158,351.12 4,850, 687,186. 88 8,995,880,266.18 964,628.18 15,717,022.36 10, 555,401. 25 12, 173,103. 28 2,412,250.05 1,895,578. 21 4, 840,485.80 2,002,310,785.02 239, 632,756.53 288,285,627.61 216, 415,516.48 1,278, 556,893.96 244, 870,188. 28 39,246,454.41 29, 547,234. 01 42, 833,808.82 15,589, 514. 30 11; 589, 792. 94 12,469,268.09 12,942,558.75 3,8.52, 111. 34 5,681,550. 83 1,820,606,870.90 14, 291,282. 96 770, 263,996.17 358,795,274.60 120, 929,168. 38 302,521,846. 92 44, 859,896.40 87,338,207.08 54,714,740.06 558,829.88 75,375,809.41 12, 446,832.46 681, 595. 39 16,014,105.80 14 743,277.14 232,376. 66 619,215, 569.17 189; 469,620.31 314,285.49 895,050.-84 26 1,041,672,611.24 7,874,.38e,324.91 14,935,848,739.62 SPECIAL. P a n a m a Canal P a y m e n t for W e s t I n d i a n Islands P u r c h a s e of obligations of foreign G o v e r n m e n t s . . . P u r c h a s e of fann-loan b o n d s Subscription t o stock. Federal l a n d b a n k s Total special e x p e n d i t u r e s T o t a l ordinary a n d special e x p e n d i t u r e s . 19,745,015.02 25,000,000. 00 885,000,000.00 19,268,099.30 13,195,522.37 4,738,029,750.00 65,018,296.93 3,479,255,255.56 86,580,427.48 4,822,316,146.23 3,579,031,215.41 1.980,297,941.26 12,696,702,471.14 18,514,879,955.03 0,315.00 938,625, .330. 02 PUBLIC D E B T . Certificates of indebtedness redeemed War-savings certificates redeemed Bonds, interest-bearing notes, a n d certificates retired :.One-year T r e a s u r y notes r e d e e m e d (sec. 18, Federal reserve act, a p p r o v e d Dec. 23,1913) N a t i o n a l - b a n k notes a n d Federal reserve b a n k notes retired (acts of J u l y 14, 1890, a n d D e c . 23, 1913) First L i b e r t y b o n d s retired , Second L i b e r t y b o n d s retired , T h i r d L i b e r t y b o n d s retired F o u r t h L i b e r t y b o n d s retired 626,196,844. 66 7,086,312,732.00 2,727,345. 96 15,538,078,900.00 131,519,529.91 18,398. 75 20,550. 33 63,029,583.00 4,390,000. 00'^ 27,352,000.00 19,150,000. 00 40,574,115. 50 21,625,225. 00 656,000.00 61,050,000.00 14,935,500. 00 23,718,797. 5C 4,003,050.00 180,351,000.00 201,555,700.00 165,000,000.00 671,179,358.91 7,214,689,453.29 16,326,506,550.41 Grand total e x p e n d i t u r e s , as per daily Treasu r y s t a t e m e n t , J u n e 30,1917 .' 2,651,477,300.17 Grand t o t a l e x p e n d i t u r e s , as per daily Treasu r y s t a t e m e n t , J u n e 30, 1918 19,911,391,924.43 Grand t o t a l e x p e n d i t u r e s , as per daily Treasu r y s t a t e m e n t , J u n e 30, 1919 34,841,386,515.44 Total p u b l i c d e b t e x p e n d i t u r e s to to EXHIBIT 4. FINANCIAL STATEMENT OF THE UNITED STATES GOVERNMENT, J U N E o ao, I9i9, [Formerly issued as '^ Statement ofthe Public Debt."l CASH AVAILABLE TO PAY MATURING OBLIGATIONS. Amount. Amount. Balance held by the Treasurer of the United States as per daily Treasury statement fo.r June 30,1919 %l, 251,664,827.54 Deduct— Net excess of disbursements over receipts in June reports subsequently received 25,499,892.28 Settlement warrants, matured interest obligations, and checls outstanding: Treasury warrants. . Matured interest obligations' Disbursing officers' checks Balance free of current obligations.-i-^-^rrrriiT^.^ 1,226,164,935.26 S7,199,695. 03 80,145,012. 72 136,088,185. 51 1,002,732,042.00 1,226,164,935.26 O H O 1 The unpaid interest due on Liberty loans is estimated in cases where complete reports have not been received. PUBLIC DEBT. Amount. DEBT ON WHICH. INTEREST HAS CEASED SINCE MATURITY ON P R E S E N T A T I O N ) . DEBT BEARING NO I N T E R E S T (PAYABLE ON P R E S E N T A T I O N ) . Obligations required to be reissued when redeemed: United States notes Less gold reserve T Excess of notes over reserve ' . Obligations that will be retired on presentation: Old demand notes National-bank notes and Federal reserve bank notes assumed by the United States on deposit of lawful money for their retirement. Fractional currency Total Amount. S346,681,015.00 152,979, 025.63 193,701, 990.37 53, 012.50 35,830,457. 00 6,843,314.82 236,428,774.69 (PAYABLE Funded loan of 1891, continued at 2 per cent, called for redemption May 18, 1900; interest ceased Aug. IS, 1900 -. Funded loan of 1891, matured Sept 2 1891 Loan of 1904 matured Feb 2 190^ Funded loan of 1907, matm'ed July 2 1907 . . Refunding certificates, matured July 1, 1907 Old debt matured at various dates prior to Jan. 1,1891, and other items of debt matured at various rates subsequent to Jan 1, 1861 Certificates of indebtedness, at various interest rates, matured Loan of 1903-19IS Total > o w Ui SI, 000. 00 19,800. 00 13,050.00 •407,350.00 10,840.00 900,330.26 8,821,000.00 936,000. 00 11,109,370.26 Financial statement ofthe United States Government, June SO, 1919—Continued. PUBLIC DEBT—Continued. I N T E R E S T - B E A R I N G DEBT (PAYABLE ON OR AFTER SPECIFIED F U T U R E D A T E S ) . Outstanding June 3.0, 1919. , Detail. Authorizing act. Title of loan. Rate. When issued. When redeemable or payable. Interest payable. Payable after Apr. 1, 1930. Payable after Feb. 1, 1925. Redeemable after Aug. 1, 1916. Payable Aug. 1, 1936. (Redeemable after Nov. 1, 1918. PayableNov. 1,1938. Payable June 1,1961.. Jan., Apr., July, Oct. Feb., May, Aug., Nov. Consols of 1930 Mar. 14, 1900. 2 per cent. 1900 Loan of 1925 Jan. 14, 1875.. 4 per cent. 1895-96 Panama Canal loan of 1916-1936. June 28,1902, and Dec. |2 per cent. 21, 1905. 1906 do.... 1908 1911 Panama Canal loan of 1918-1938. Panama Canal loan of 1961. • do Conversion bonds Aug. 5, 1909, Feb. 4, 3 per cent. 1910, and Mar. 2, 1911. Dec. 23, 1913 ....do.-. Certificates of indebtedness (various). Sept. 24, 1917, amended. Certificates of indebtedness. Sept. 24, 1917, as amended; Apr. 23, 1918. 2 per cent.. First Liberty loan Apr.24, 1917 3.> per cent. 1917 First Liberty loan converted. Apr.24,1917; Sept. 24, \ i per cent.. 1917. 1917 fApr. 24,1917; Sept. 24, Mi percent. t 1917, as amended. 1918 Do First Liberty loan second converted. Second Liberty loan. .do.. Sept. 24, 1917. as Various. ..do.' 4 per cent.. 1916-17 1918-19 1918 1917 { Amomit issued. Registered.. Coupon. Total. $646,250,150. 00 $598,031,100.00 $1,692,950.00 $599,724,050.00 162,315,400.00 105,036, 50.00 13,4.53,650-. 00 118,489,900.00 48,948,080.00 6,100.00 48,9.54,180.00 ....do H pi ....do. 30,000,000.00 25,835,520.00 111,880.00 • 25,947,400.00 Mar., June, Sept., Dec. 50,000,000.00 43,389,600.00 6,61.0,400.00 50,000,000.00 28,894,500.00 28,894,500. 00 6,705,000.00 22,189,500.00 Payable 30 years from Jan., Apr., July, Oct. date of issue. 3,446,260,490. 00 3,446,260,490.00 Various, not exceed- At maturitj"^ 4,719,582,490.00 ing 1 year from or earlier date of issue. 178,723,000.00 178,723,000.00 178,723,000.00 1 year from date of Jan., July. issue. Redeemable on or after June 15, 1932. Payable June 15,1947. Redeemable on or after June 15,1932. Payable June 15,1947. Redeemable on or after June 15, 1932. Payable June 15,1947. Redeemable on or after June 15, 1932. Payable .June 15,1947. Redeemable on or after Nov. 15, 1927. Payable Nov. 15,1942. o •June, Dec. 1,989,45.5,5.50.00 288,862,500.00 1,121,209,100.00 1,410,071,600.00 •....do..... 568,318,4.50.00 21,062,950.00 146,729,800.00 167,792,750. 00 •June, Dec. 405,443,150.00 86,588., 100.00 316,852,000.00 403,440,100.00 3,492,0.50.00 1,112,700.00 2,379,350.00 3,492,050.00 3,807,864,200.00 85;942,950.00 618,261,400.00 704,204,350.00 •-...do >May, Nov. o W H > Ui a to to to to Financial statement of the United States Government, June 30, 1919—Continued. PUBLIC D E B T - C o n t i n u e d . INTEREST-BEARING DEBT (PAYABLE ON OR AFTER SPECIFIED FUTURi: DATES)—Continued. Detail. O u t s t a n d i n g J u n e 30,1919. A i n o u n t issued. T i t l e of l o a n . Authorizing act. Rate. do Victory L i b e r t y l o a n . . do War-savings and thrift s t a m p s , series 1918-19. do 4 per ceiit •3.. 1^ OS t a l savings b o n d s >Junc25, 1910 (first t o s i x t e e n t h series). 1918 Interest payable. [•May, N o v Registered. Coupon. Total. §3,0.34,609,850.00 1444,421,.3.50.00 S2,4I7,830,900. 00 $2,852,2.52,2.50.00 Mar., S e p t . . . .4,175,148,700.00 5.30,720,350.00 3,427,832, .350. 00 3,958,552,700.00 [•A.pr., Oct '6,959,504,587.00 6,794,504,587. 00 [•June, Dec 2 3,467,844,971.77 3,467,844,971.77 ) Atmaturity3. [ R e d e e m a b l e after 1 3''ear' from d a t e of [•Jan., J u l y , . . . issue. Payable 20 years from [ d a t e of issue. 1911-1919 < 21 per c e n t . . A ggrcgate of interest-bearing debt. ^ T i e n r e d e e m a b l e or payable. ( R e d e e m a b l e on or af< t e r N o v . 15, 1927. [ P a y a b l e N o v . 15,1942. 1918 P a v a b l e Sent. 15,1928( R e d e e m a b l e on or afdo \ t e r Oct. 15, 1933. :...;...... 1918 [ P a y a b l e Oct. 15,1938. ( R e d e e m a b l e J u n e 15, f3^ a n d 4f } 1919 \ or Dec. 15, 1922. \ p e r cent. [ P a y a b l e M a y 20,1923. 1917-1919 P a y a b l e J a n . 1, 1923, • a n d J a n . 1,1924. Second L i b e r t y loan, S e p t . 24, 1917, as >i} p e r c e n t . . converted. amended. Third Libertv l o a n . . . ......do do F o u r t h Libert)'^ l o a n . . When issued.. 41,091,017,006.20 11,349,960.OC 10,576,000.00 953,.997,4.34.77 953,997,4.34.77 573,960. 00 11,.349,960. 00 o o > 25;234,496,273. 54 31,384,445,994.97 • 1 This amount represents receipts of the Treasurer of the United States on account of principal of bonds of the Fourth I.yiberty loan to June 30. 2 This amoimt represents receipts of the Treasurer of the United Stales on account of principal of notes of the Victory Liberty loan to .J une 30. . 3 The average issue price of war-savmgs stamps for the years 1918 and 1919 with interest at 4 per cent per annum compounded quarterly for the average period to maturity will ainount to $5 on Jan. 1, 1923, and Jan. 1, 1924, respectively. . Thrift stamps do not bear interest. •» This amoimt represents receipts of the Treasurer of the United States on account of proceeds of sales of war-sayings certificate stamps and United States thrift stamps. w o w Financial statement of the United Slates Government, June 9, 1919~Gontinned. PUB L i e D EB T—Continued, RECAPITULATION. • Amoimt. . Amount. GROSS D E B T . Debt bearing no interest . . .Debt on which interest has ceased..: Tn teres t-b earing debt Gross debt i N E T "DEBT. . . . $2:36,428,774.69 11,109,370.26 2.5,2:34,496,273.54 25,482,0-34,418.49 Gross debt .• . . J Deduct— Balance free of current oblic'ations . . . : Net debt 2 1 Total gross debt June 30,1919, on the basis of daily Treasm'y statements Net amount of public debt payments in transit, etc., June 30,1919 . $25,482,034,418.49 1,002,732,042.00 U> 24,479,302,376.49 $25,484,506,160.05 2,471,741.56 25,482,034,418.49 2 No deduction is made on account of obligations of foreign governments or other investments. The, amount of $9,102,285,015.56 has been expended to above date in this and preceding fiscal years for purchase of the obligations of foreign governments and $7,570,000 of such obligations have been repaid. ; PAY WARRANTS DRAWN (NET). Month of June, 1919. O H Month of June, 1918. Fiscal year 1919 to Fiscal year 1918 to corresponding date. date. Ordinary: . • $1,122,867.56 $16,042,052.69 Legislative estabhshment $643, 024.34 $16,605,&36.15 611,390.08 1 6,597,070.31 9,822,595.51 Executive proper 21,497,674.97 6,852, 128.05 718,503.01 10,709,278.58 State Department 20,248,594.49 Treasury Department»,2 9,6.32,970.84 2 273,263,309.85 2 163,677,075.70 2 33,246,873.95 Excluding public buildings :. 1,050, 400.08 1,256,439.66 16,651,372.40 18,170,930.16 Public buildings War Department3 258,512,829.92 3 797,117,057.16 3 9, 208,524,279.29 5 5,645,.584,931.93 Military establisliment. 18,2.33,466.75 2,403,905.16 20,162,504.50 Civil estabhshment—War Department proper., 1,478, 849.86 9,170,109.86 423,935.39 11,456,798.84 Miscellaneous war, civil 273, 581.40 29,593,581.89 2,910,177.67 3.3,078,306.32Rivers and harbors , 3,938,080.89 13,232,380.79 15,216,025.43 638,676.24 357, 368.21 Department of Justice , Post Office Department1,934,320.44 150,519.94 2,062,433.96 186, 106.25 Excluding Postal Service , 2,221,094.54 2,221,094.54 343,511.15 Postal deficiencies 1 Excess of repayments. 2 Includes all warrants drawn for payments by the Bureau of War Risk Insurance except for Army, Navy^ and Marine Corps allotments of pay. 8 Includes warrants for allotments of Army pay paid by the Treasury Department under the War Risk Insurance act. O w H w w to to CO to to Financial statement of the United States Government, June 30, 1919—Continued. PAY WARRANTS DRAWN (NET)—Continued. Month of June, 1919. Ordinary—Continued. Navy DepartmentNaval establishment Civil establishment Interior DepartmentExcluding pensions and Indians Pensions Indians .-. Department of Agriculture Department of Commerce Departmient of Labor Federal'control of transportation systems... War Finance Corporation United States Shipping Board Other independent offices and commissions. District of Columbia . Interest on the- public debt Total ordinary Panama Canal: Pay warrants for construction, etc. Special: Purchase of obhgations of foreign governments. Purchase of farm loan bonds Total warrants drawn on general fund, exclusive of public debt. Month of June, 1918. Fiscal year 1919 to Fiscal year 1918 to corresponding date. to date. 1 $144,889,870.41 1 $2,009,272,388.53 199,897.69 9,773,378.04 1 $1,3-68,642,793.84 , 1,834,613.77 83,734,319.48 2,018,897.32 1,044,890.19 84,550,010.48 1,373,654.28 17,247,4:35.92 2,237,964.75 4,009,299.38 • 1,124,677.44 681,937.02 30,000,000.00 50,000,000.00 • 135,900,815.07 2 4,187,031.29 985,882.51 65,445,074.72 29,120, 861.52 221,614, 781.44 34,593; 256.69 36,888, 371.28 15,668, 534.14 13,290, 490.61 349,238, 385.21 295,000, 000.00 1,871,201, 577.51 208,091, 953.00 16,565 433.74 615,867; 337.32 35,271, 820.52 181,137, 754.12 30,888, 400.03 46,759,461.46 13,301, 156.49 5,916,881.45 150,000,000.00 55,000,000.30 862,026, 889.34 68,807,052.35 14,406,410.75 197,526, 608.36 539,058,959.16 2 510,103.58 1,292,7.30,918.26 1,559,869.63 15,365,297,396.38 12,265,775.08 8,959,9115661.32 • 20,787,624.92 54,750,000.00 34,999,938.37 243,105,000.00 3,153,254.15 3,477,850,265.56 96,662,398.59 4,739,434,750.00 65,153,254.15 628,298,793.95 1,540,549,042.04 18,952,075,8.35.61 13,795,287,290.39 1 .$87,731,959.71 2,086,848.94 1,211,425.21 18,871,017.23 2,170,708.47 2 3,264,014.46 1,365,599.22 655,641.18 2 180,771.66 1 Includes warrants for allotments of Navy and Marine Corps pay paid by the Treasury Department under the War Risk Insurance act. 2 Excess of repayments. MEMORANDA. Amount. Amount due the United States from the Central Branch ofthe Union Pacific R. R. on account of bonds issued: Principal Interest Total : $1,600,0(30.00 1,975,161.19 3,-575,161.19 O n o m o 225 SECRETARY OF THE TREASURY. EXHIBIT 5. BESULTS OF EOUKTH LIBERTY LOAN, ACCOBDING TO STATISTICS COMPILED BY THE WAil LOAN OH'GANIZATION ON THE BASIS OF SUBSCBIPTIONS OBIGINALLY BEPOBTED. Results according to Federal reserve districts. Quota. District. Subscriptions received. PercentPer cent age of quota sub- Subscribers. population subscribed. scribed. Boston New York Philadelphia... Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Pallas San Francisco. $500,000,000 1,800,000,000 500,000,000 600,000,000 280,000,000 192,000,000 870,000,000 260,000,000 210,000,000 260,000,000 126,000,000 402,000,000 $632, 124,850 2,044, 931,750 598, 763,650 701, 909,800 352, 685,200 217, 885,200 969, 209,000 295, 340,250 242, 046,050 295, 951,450 146, 090,500 462, 250,000 120.60 113. 60 119. 75 116.98 125.95 113.48 111.40 113. 59 115.30 113. 82 115. 94 114.98 Total :... United States Treasury.. Grand total.. 6,000,000,000 6,959,187,700 1 33,885,550 115.98 1,000,000,000 6,993,073,250 1,647,634 3, 604,101 1,771,151 2,409,659 1,211,972 947,0474,300,312 1,395,299 1,301,856 1,311,626 753,960 2,123,063 22,777,1 23.6 27.4 26.6 25.8 . 13.0 9.4 30.3 15.0 21.1 17.1 13.3 21.1 2L9 1 Includes Army subscriptions, subject to change. The percentage of population subscribed is based on the estimated population of the United States on July 1, 1917, namely, 103,620,273. Results according to classifications. Number of subscribers. Amount of subscriptions received. $50 $100 $150 to $950 $1,000 to $4,950 $5,000 to $9,950 $10,000 and over 13,468,440 5,850,147 2,558,513 723,823 89,634 87,123 $673,422,000 585,014,700 862,566,900 999,253,950 481,794,700 3,357,135,450 59.13 25.69 n.23 3.18 .39 .38 9.8 8.4 12.4 14.3 6.9 48.2 Total Treasury subscriptions 22,777, 680 6,959,187,700 133,885,550 100.00 100.0 Class. Grand total 6,993,073,250 1 Includes Army subscriptions, subject to change. 140325—FI1919 -15 Per cent of Per cent of total sub- total subscribers. scriptions. 226 R E P O R T O N T H E mSTAlSTCES. Subscriptions, by States. Quota. Subscriptions received. Alabama Arizona Arkansas California Colorado Connecticut Delaware District of Columbia. Florida Georgia Idaho .'. Illinois .... Indiana Iowa Kansas Kentucky... Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New' H a m p s h i r e . . . . . New Jersey New Mexico New York North Carolina....... North Dakota .... Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah :...., Vermont , Virginia , Washington '. West Virginia , Wisconsin Wyoming ; $30,230,000 11,096,200 25,411,000 257,556,400 37,204,900 84,882,700 13,513,000 27,608,000 23,931,000 54,319,000 14,549,400 401,677,000 125,843,000 147,900,000 66,576,450 54,260,050 47,160,000 20,524,600 82,180,000 328, 637,700 156,400,000 123,000,000 23,803,000 157,585,450 16,000,000 68,665,200 5,033,850 20,372,800 180,044,000 3,242,400 1,637,929,900 39,900,000 19,000,000 327,407,750 40,917,400 33,708,100 691,757,000 50,600,000 32,452,000 31,000,000 50,013,000 107,784,000 18,570,800 13,202,300 63,980,000 58,215,800 45,748,200 112,550,000 7,922,200 $36,216,500 14,533,700 26,657,650 291,134,950 42,007,550 124,558,750 22,621,300 1 51,262,100 27,538,350 62,814,550 16,895,150 467,291,200 136,753, SOO 158,155,400 73,914,550 64, 217,800 50,438,350 27,694,150 88,064,800 405,257,500 177,349,000 133,315,250 27,708,150 177,244,300 22,489,050 75,583,200 5,996,150 21,979,050 236,816,600 5,898,150 1,826,448,250 - 48,185,850 21,657,450 384,864,300 48,724,300 38,362,550 812,217,400 61,350,300 38,580,550 36,815,850 55,867,250 124,651,500 19,878,600 15,315,450 86,079,500 70,189,650 54,748,900 122,397,300 10,183,150 Alaska.. Hawaii.. 5,991,865,550 1,369,400 6,765,050 6,948,926,100 3,180,950 7,080,650 Total Treasury subscriptions. 1,000,000,000 6,959,187,700 2 33,885,550 State. Grand total. 6,000,000,000 6,993,073,250 Per cent Number of Percentage quota subPopulation. population subscribers. subscribed. scribed. 119.1 122.05 104.9 113.0 112.9 146.7 167.4 1 185.7 115.1 115.6 116.1 116.5 108.6 106.9 111.0 118.2 107.2 133.9 107.16 124.1 113.3 108.4 116.4 112.5 140.6 110.0 119.1 107.8 131.5 181.3 111.6 120.8 113.9 117.5 119.0 116.4 117.4 121.2 118.9 118.7 111.1 115.5 100.7 116.0 134.5 120.5 119.6 108.7 126.2 101-6 232.2 104. 6 2,363,939 203,230 81,976 263,588 152, 111 1,766,343 1,150,565 3,029,032 193,965 988,320 439,830 1,245,373 58,647 215,160 1241,076 369,282 113,051 916,185 251,951 2,895,841 111,465 445,176 2,124,346 6,234,995 2,835,492 • 686,640 2,224,771 • 587,773 1,851,870 331,824 2,394,093 268,083 1,856,954 141,410 777,340 118,270 1,373,672 257,776 3,775,973 910,228 3,094,266 892,209 2,312,445 , 642,948 1,976,570 179,115 • 3,429,595 761,295 472,936 129,099 1,284,126 271,532 29,282 110,738 103,905 444,429 813,605 3,014,194 35,077 423,649 lO; 460,182 2,882,274 151,551 2,434,381 169,091 765,319 1,424,711 5,212,085 285, Oil 2,289,855 213,854 861,992 2,349,195 8,660,042 128,101 625.865 151,633 1,643,205 188,973 716,972 230, 812 2,304,629 632,026 4,515,423 125,767 443.866 62,038 364,946 253,834 2,213,025 407,511 1,597,400 206,549 1,412,602 537,817 2,527,167 63,645 184,970 8.06 31.1 8.6 37.9 19.5 35.3 27.7 165.8 12.3 8.7 25.0 34.0 24.2 26.4 17.9 11.2 7.7 15.2 18.8 24.1 25.6 27.8 9.1 22.2 27.3 21.1 26.3 23.4 26.9 8.5 27.6 6.2 22.1 27.3 12.5 , 25.8 27.1 20.4 9.2 26.3 10.0 13.9 28.3 16.9 11.5 25.5 14.6 21.3 38.7 103,620,273 22,746,677 12,080 18,923 2L95 103,620,273 22,777,6 21.98 103,620, 273 1 Includes numerous Navy subscriptions. 2 Includes Army subscriptions, subject to change. 21.98 22,7 SECRETARY OF THE TREASURY. Subscriptions in cities having a population of 25,000 or over. I Quota. City. A k r o n , Ohio Albany, N . Y Allentown, P a ! Altoona, P a Amsterdam, N . Y Asheville, N . C A t l a n t a , Ga A t l a n t i c City, N . J Auburn, N. Y A u g u s t a , Ga , A u r o r a , 111. '. Austin, Tex B a l t i m o r e , Md B a t t l e Creek, Mich B a y City, Mich Bayonne, N . J Beaumont, Tex Bethlehem and South Bethlehem, Pa. Binghamton, N . Y , B i r m i n g h a m , Ala , B l o o m i n g t o n , 111 ' B o s t o n , Mass B r i d g e p o r t , Conn B r o c k t o n , Mass Brookline, Mass Buffalo, N . Y . . . . . Burlington, Iowa C a m b r i d g e , Mass : Camden, N. J C a n t o n , Ohio '. Cedar Rapids, Iowa Charleston, S.C Charleston, W . Va Charlotte, N . C Chattanooga, T e m i Chelsea, Mass Chester, P a Chicago, 111 Chicopee, Mass C i n c i n n a t i , Ohio Clarksburg, W . Va Cleveland, Ohio Clinton, Iowa Cohoes, N . Y Colorado Springs, Colo C o l u m b i a , S. C C o l u m b u s , Ohio Council "iilufiis, Iov7a Covington, K y C u m b e r l a n d , Md Dallas. T e x D a n v i l l e , 111 Danville, Va Davenport, Iowa T D a y t o n , Ohio , D e c a t u r , III D e n v e r , Colo D e s Moines, I o w a . . D e t r o i t , Mich D u b u q u e , Iowa D u l u t h , Minn Durham, N . C E a s t Chicago, I n d Easton, P a . . . E a s t Orange, N . J E a s t S t . L o u i s , 111 E l g i n , III Elizabeth, N. J Elmira,N.Y E l Paso, Tex Erie, Pa E v a n s t o n , 111 Evans-\dlle, I n d . . . E v e r e t t , Mass .-. Fall R i v e r , Mass F i t c h b u r g , Mass F l i n t , Mich Fort Smith, Ark Fort Wayne, Ind Fort Worth, Tex $9,954,600 15,889,700 5,480,900 2,290,350 2,019,200 1,365,500 14,204,150 4,907,200 2,652,800 3,117,350 1,241,300 60,525,500 2,250,000 2,356,200 2,428,300 4,374,150 • 3,947,400 8,332,650 1,500,000 120,470,000 8,84J.,800 3,580,000 6,340,000 61,648,000 7,540,000 7,704,900 6,217,000 2,289,500 6,164,100 4,265,900 3,306,900 6,361,350 1,506,000 3,886,550 252,000,000 1,280,000 38,372,750 2,669,100 112,100,950 1,533,200 2,574,000 3,825,600 12,351,100 1,945,400 2,079,500 9,300,000 1,382,100 3,164,150 6,577,050 17,911,750 1,539,144 7,300,000 1,563,300 3,671,450 2,061,800 3,303,350 4,288,400 3,566,400 2,665,600 6,270,300 6,338,000 1,402,000 7,368,000 3,378,200 3,144,361 1,600,000 stimated P e r cent Subscriptions E n u m b e r of Population. p o p u l a t i o n received subscribed. subscribers. $11,024,650 15,937,350 5,510,900 3,645,950 3,362,500 1,986,100 17,342,000 4,429,000 3,440,350 . 3,635,650 1,998,700 1,607,050 63,238,400 3,430,200 3,226,900 4,052,200 2,607,450 4,996,550 4,396,800 9,698,000 1„539,850 138,911,150 11,479,150 4,817,400 7,949,950 65,765,650 1,364,700 8,800,850 8,989,000 6,261,300 3,224,4.00 6,170,700 5,244,450 3,906,200 6,761,550 1,747,650 5,563,900 288,211,750 1,563,700 47,107,600 2,974,900 125,303,850 1,031,850 2,115,400 2,854,650 3,950,600 16,181,850 1,835,400 2,170,100 2,206,900 12,718,500 1,700,150 1,544,950 4,876,600 8,560,100 2,637,250 18,797,350 7,610,200 73,842,050 2,258,100 8,448,300 1,660,550 2,101,700 4,028,350 4,500,250 3,988,050 1,636,850 4,959,350 3,847,300 2,830,450 7,734,900 2,344,000 6,458,800 1,522,600 8,931,650 3,979,200 4,733,350 1,583,550 7,028,700 5,939,600 4,442,100 1 P o p u l a t i o n t a k e n from 1910 census„ 97,341 37,258 30,361 32,530 9,883 7,506 39,031 ' 16,598 12,436 11,645 10,199 5,461 159,650 12,488 12,930 7;071 11,840 25,551 13,724 47,515 6,591 250,000 62,738 14,315 7,^6 184,588 5,451 239,266 36,305 21,066 19,137 19,845 12,463 10,938 26,105 4,490 18,427 1,000,711 9,006 154,620 10,685 285,295 3,890 7,495 24,779 53,170 5,528 10,876 8,140 35,838 6,611 5,412 23,307 • 47,134 8,829 22,321 209,632 10,063 33,100 2,618 13,073 10,513 17,585 31,024 7,553 20,166 20,321 9,962 39,474 12,896 23,486 9,021 16,967 118,60 34,955 6,906 33,650 18,142 160,000 104,199 70,000 60,000 37,103 30,000 1154,839 60,000 37,385 41,040 34,204 34,814 600,000 29,480 47,942 50,000 27,711 54,142 53,973 1 132,685 27,25,8686,092 121,579 156,878 127,792 468,558 25,030 1104,839 110,000 1 50,217 37,308 65,000 35,000 45,000 144,604 132,452 75,000 2,497,722 125,401 1364,463 30,000 1560,663 27,386 25,211 60.83 35.76 43.37 54.22 26.64 25.02 25.21 27.66 33.00 28.37 29.82 15. 69' 26.61 42.36 26.97 14.14 42.73 47.19 25.43 35.81 24.18 36.44 5L60 25.17 26.29 39.39 21.78 37.45 33.00 4L95 51.29 30.53 35.61 24.31 58.53 13.84 24.57 40.06 35.46 42.42 35.62 50.89 14.20 29.73 40,000 1181,548 31,484 1 53,270 26,000 124,527 32,261 25,000 48,811 1116,577 39,631 245,523 101,598 571,784 39,873 100,000 30,000 28,743 35,000 42,458 158,547 28,203 100,000 38,120 63,705 1 66,525 28,591 71,284 133,484 1119,295 137,826 80,000 25,000 76,183 I 104,562 I 61.95 29.29 17.56 20.42 3L 31 28.78 20.49 21.65 47.75 40.43 22.28 21.97 ' 36.66 25.24 33.10 8.73 45.48 30.04 41.42 52.99 26.78 20.17 53.31 15.64^ 59.34 45.11 32.95 26.94 14.22 3L35 43.69 •27.62 44.17 17.35 228 REPORT oisr T H E FUSTANCES. Subscriptions in cities having a population of 25,000 or over—Continued. City. Galveston, T e x Gary, I n d Grand Rapids, Mich.. Green B a y , W i s Greensboro, N . C Greenville, S. C Hagerstown, Md H a m i l t o n , Ohio Hammond, Ind Hamtramck, M i c h — Harrisburg, P a Hartford, C o r m . . . . ; . . H a v e r h i l l , Mass Hazletown, P a H i g h l a n d P a r k , Mich. Hoboken, N. J ., H o l y o k e , Mass , Hopewell, V a Houston, Tex Huntington, W . V a . . . Indianapohs, I n d — . . Jackson, Mich Jacksonville, F l a ., Jamestown, N . Y Jersey City, N . J Johnstown, Pa Joliet, III J o p h n , Mo K a l a m a z o o , Mich K a n s a s City, K a n s . . . . K a n s a s City, Mo , Kenosha, Wis Kingston, N . Y Knoxville, Tenn Lancaster, P a L a n s i n g , Mich •. L a w r e n c e , Mass Lebanon, Pa -. Lexington, K y L i m a , Ohio Lincoln, N e b r Little Rock, Ark .. L o r a i n , Ohio Los Angeles, Calif Louisvihe, i t y Lowell, Mass Lynchburg, Va L y n n , Mass Macon, G a Madison, W i s Maiden, Mass Manchester. N . H McKeesporr, P a Memphis, Tenn Meriden, Conn Milwaukee, Wis Miimeapohs, M i n n . . . . . Mobile, Ala Moline,, 111 M o n t g o m e r y , Ala .. Montclair, N . J . . . ; . . . . Mount Vernon, N . Y . . Muncie, I n d . . , Muskegon, Mich Muskogee, O k l a . . . . . . . . Nanticoke, P a Nashua.N. H Nashville, T e n n Newark, N. J . . . . .. Newark, O h i o . . . .. N e w Bedford, M a s s . . ; . : New Britain, C o n n . . : . New Brunswick, N . J . Newburgh, N . Y .. N e w Castle, P a New Haven, Conn..... N e w Orleans, L a .;. Newport, K y Newport, R . I Quota. $2,365,500 9,137,000 1,214,750 1,366,400 1,533,300 1,976,000 1,997,150 6,133,650 16,346,000. 3,379,800 3,264,200 8,389,300 4,459,000 600,000 10,185,000 2,277,200 2,048,450 6,704,800 2,897,100 21,524,400 5,224,650 2,203,270 1,477,500 ' 2,400,000 1,802,750 22,361,500 1,903,922 2,212,000 3,685,550 7,499,100 .1,789,450 5,583,000 2,208,050 2,613,250 1,691,050 1,934,250 2,650,000 1,261,200 41,366,900 15,714,000 6,982,200 3,306,200 6,060,000 2,872,050 2,601,000 4,665,000 2,938,250 11,940,000 1,960,000 28,440,970 27,600,000 3,225,950 2,455,950 2,374,600 1,816,600 1,269,000 1,010,800 1,677,850 1,060,050 1,167,000 9,532,850 38,198,200 1,230,450 7,558,000 3,178,000 3,Oil, 600 3,197,600 2,854,050 12,297,000 28,904,500 688,900 3,000,000 timated P e r cent Subscriptions nEus m b e r of Population, p o p u l a t i o n received subscribers. subscribed. $2,849,400 2,918,100 11,943,050 1,672,550 2,418,600 1,974,300 2,097,250 2,460,050 1,524,250 278,300 6,891,100 36,422,600 3,507,800 3,728,300 4,755,350 11,607,200 5,836,850 794,300 ,12,624,450 2,821,550 23,811,850 2,207,850 8,678,450 3,136,450 18,235,700 6,576,300 3,147,100 1,589,800 2,425,100 2,128,400 23,475,900 3,446,550 2,499,200 4,397,200 7,979,500 2,111,200 7,402,200 2,823,300 3,438,200 2,037,550 2,819,300 4,673,300 2,237,650 48,686,350 16,000,000 8,354,350 3,952,800 7,122,950 3,070,150 3,168,200 3,045,250 7,386,350 3,538,550 11,932,750 2,325,900 34,139,950 28,346,000 3,516,100 2,552,000 2,514,100 4,149,750 2,389,000 2,015,550 2,118,650 1,748,100 1,064,350 1,425,900 11,949,150 59,840,250 1,134,300 8,707,550 5,733,400 3,419,150 3,229,350 3,790,550 15,507,600 28,373,900 1,836,000 3,204,650 6,840 28,882 47,913 9,146 8,108 5,910 9,133 10,846 12,582 3,737 36,149 72,286 15,299 7,145 7,023 48,534 20,000 2,425 33,185 11,884 94,368 18,729 27,131 15,800 54,572 14,212 .18,127 11.' 15,094 5,328 15,420 21,510 15,390 28,442 15,504 7,879 11,719 17,971 12,731 246,001 65,000 31,266 7,231 39,458 9,672 13,780 15,854 11,879 15,371 28,828 11,719 69,047 93,468 10,565 16,704 10,302 9,156 10,714 10,979 15,306 5,245 7,355 38,856 79,360 6,057 17,292 18,624 7,435 8,122 12,846 64,102 67,031 10,472 10,232 I P o p u l a t i o n t a k e n from 1910 c e n s u s . 16.34 44.43 37.35 3L16 27.03 23.64 36.53 30.74 48; 08 14.95 50.20 73.08 34.68 18.80 28.09 69.00 34.64 8.08 29.55 23.77 34.73 52.96 47.02 43.19 20.38 18.95 47.69 41,863 65,000 128,291 29,353 30,000 25,000 25,000 135,279 26,171 25,000 72,015 198,915 1 44,115 38,000 25,000 170,324 157,730 30,000 112,307 50,000 271,708 35,363 1 57,699 36,580 1267,7.79 75,000 38,010 32,848 48,886 91,658 281,911 31,576 26,771 136,346 50,853 40,498 1 85,892 30,000 135,099 130,508 46,515 53,811 1 28,883 1319,198 235,114 1106,294 35,000 189,336 140,665 30,699 144,404 170,063 42,694 ^143,231 32,066 436,535 380,000 151,521 27,451 138,136 25,000 37,008 35,085 26,100 33.40 44.08 77.07 27.65 29.41. 20.66 44.17 23.78 44.89 35.70 16.95 36.00 20.13 36.55 16.82 24.60 20.51 60.85 27.01 36.62 28.95 31.29 58.64 28,126 126,005 1110,364 500,000 125,404 196,652 143,916 25,000 29,603 136,280 1133,605 1339,075 130,309 127,149 18.65 28.28 35.21 15.87 23.84 17.89 42.41 29.74 27.44 35.41 47.98 19.77 34.55 37.69 24.52 47.80 19.90 42.43 42.30 38.00 33.11 5L68 22.45 38.41 SECRETARY OF T H E TREASURY. 229 Subscriptions in cities having a population of 25,000 or over—Continued. City. Newport News, Va N e w Rochelle, N . Y . . . N e w t o n , Mass New York City.. Niagara Falls, N . Y . . , Norfolk, V a Norristown, Pa North Hudson, N . J . . . N o r w a l k , Conn.. Norwich, Conn O a k l a n d , Calif. O a k P a r k , 111...... O k l a h o m a City, O k l a . . Omaha, Nebr Orange, N . J . Oshkosh, W i s .• Passaic, N . J Paterson, N . J Pawtucket, R. I. Peoria, 111 P e r t h Amboy," N . J Petersburg. Va Philadelphia, Pa Pittsburgh, Pa Pittsfield. Mass. Plainfield, N . J . . . „ . . . . P o r t l a n d , Me P o r t l a n d , Oreg Portsmouth. Va Pottsville, P a Poughkeepsie, N . Y . . . Providence, R . I P u e b l o , Colo Q u i n c y , 111 Q u i n c y , Mass Racine, Wis Raleigh,N. C Reading, Pa Richmond, Va Roanoke, Va Rochester, N . Y Rockford, 111 R o c k I s l a n d , 111 Saginaw, Mich Salem, M a s s . Salt L a k e City, U t a h . San Antonio, Tex S a n Francisco, Calif.. S a v a n n a h , Ga Schenectady) N . Y . . . Scranton, Pa Seattle, Wash Shamoldn,'Pa Sheboygan, W i s Shenandoah, P a Shreveport, L a Sioux C i t y , I o w a Somerville, M a s s . . . . . South Bend, Ind Spaitanburg, S.C Spokane, W a s h . . Springfield, 111...: Springfield, Mass Springfield, Mo Springfield, Ohio S t . Joseph, Mo S t . Louis, Mo..^ St. P a u l , M i n n Stamford, C o n n Syracuse^. Y Tacoma, W a s h Tampa, Fla T a u n t o n , Mass Terre Haute, Ind Toledo, Ohio Topeka, K a n s Trenton, N. J Troy, N . Y Tulsa, Okla :.... Utica, N Y . . . . Quota. $1,483,800 1,941,400 5,778,000 1,334,082,400 3,596,300 8,415,200 3,240,700 5,976,900 1,828,600 • 2,260,000 13,320,350 4,123,000 9,921,750 1,573,400 1,557,899 4,515,900 8,544,300 6,000,.000 4,917,100 1,672,200 2,757,600 259,198,000 144,988,800 3,500,000 3„488,900 4,401,800 18,188,600 974,600 2,976,200 4,258,000 30,000,000 1,787,050 2,843,157 3,000,000 2,434,500 8,538,300 19,782,900 2,762,300 31,100,200 2,700,000 3,-190,000 10,212,700 4,725,000 107,876,500 6,282,200 3,892,000 14,868,600 25,959,675 1,578,900 1,164,700 1,171,600 3,775,000 2,800,000 1,610,400 5,6.42,600 3,404,600 14,000,000 2,743,000 2,978,450 3,824,000 75,856,900 18,000,000 3,046,600 20,706,800 5,690,000 3,416,000 2,015,000 18,519,800 2,313,650 10,048,750 7,334,600 6,905,450 10,814,900 stimated Per cent Subscriptions E n u m b e r of Population. p o p u l a t i o n .received. subscribers. subscribed. $2,399,400 3,641,000 8,734,000 1,482,081,800 4,054,750 10,579,650 2,995,600 5,473,800 2,272,800 2,827,900 13,629,550 1,672,350 4,984,950 10,388,400 2,275,200 2,088,200 ' 6,219,800 10,377,450 7,841,900 5,423,900 1,798,-300 3,672,700 306,870,950 151,833,400 4,236,350 4,102,550 6,325,450 19,586,250 2,005,350 2,837,750 4,110,100 38,103,300 2,028,800 2,250,000 3,348,850 3,663,800 2,573,100 9,692,900 24,674,750 3,834,850 32,024,350 5,423,900 2,622,350 4,896,000 3,667,000 11,227,000 5,316,450 110,836,150 6,364,400 5,303,200 15,808,150 29,536,050 1,609,750 1,635,950 1,151,700 4,255,950 3,931,300 3,076,000 4,259,900 2,286,000 6,958,651 4,851,100 16,147,350 2,569,600 3,415,600 4,072,800 79,009,800 19,311,550 3,458,600 20,499,150 6,139,850 3,440,750 2,370,550 5,230,800 19,748,400 3,127,800 9,595,550 7,306,050 7,607,700 11,752,900 • 17,085 10,024 12,775 1,657,787 14,305 36,753 10,035 30,968 8,498 11,848 80,525 9,395 30,000 37,759 139,806 5,602,841 37,353 125,000 31,401 100,000 26,899 28,219 1150,174 26,654 56.95 26.55 32.09 29.59 38.30 29.40 3L96 30.97 31.59 41.99 53.62 35.25 8,673 7,008 27,817 47,085 12,902 31,228 9,636 4,951 502,700 236,565 13,201 11,643 16,713 90,125 15,494 5,957 9,621 73,029 129,630 36,065 154,773 1125,600 151,622 71,458 50,000 35,000 1,800,000 1533,905 132,121 25,000 158,571 1207,214 40,000 25,000 30,390 1224,326 29.27 19.43 50.78 37.48 24.99 43.70 19.27 14.15 27.93 44.31 41.10 46.57 28.56 43.49 38.74 23.83 31.66 32.55 7,800 26,256 19,514 5,087 42,752 29,064 15,574 126,709 31,228 13,616 15,310 11,796 51,322 25,704 241,266 23,579 10,681 62,375 132,652 2,810 7,151 2,933 10,-883 16,057 18,516 20,092 6,195 35,721 . 13,408 44,197 12,775 10,001 36,730 132,642 46,486 25,000 130,000 160,000 45,000 256,417 71,458 28,926 55,642 143,697 192,777 123,831 1416,912 165,064 99,517 146,811 1237,194 40,000 28,559 30,000 40,000 57,078 177,236 68,946 25,000 1 104,402 61,120 188,926 38,685 46,921 21.24 80.44 41.98 20.35 32.89 18.17 34.61 49.42 43.70 47.07 27.52 26.99 55.32 20.76 • 57.87 36.25 10.73 42.49 55.93 7.03 25.04 9.78 27.21 28.13 23.97 29.14 24.78 34.21 21.94 49.70 33.02 21.31 287,654 65,808 18,644 50,356 38,226 11,601 7,247 18,951 82,303 1687,029 300,000 30,884 155,624 83,743 138,524 134,259 66,083 1168,497 41.87 21.94 60.37 32.36 45.65 30.11 21.15 28.68 48.85 53,061 20,145 110,000 77,916 48.24 25.85 40,917 85,692 47.75 J P o p u l a t i o n t a k e n from 1910 c e n s u s . 230 REPORT oisr T H E FUSTANCES. Subscriptions in cities having a population of 25,000 or over—Continued. City. Waco, Tex Waltham, Mass Washington, D . C . . . Waterbury, Conn Waterloo, Iowa Watertown. N. Y . . . Wheeling, W . V a . . . . Wichita, Kans Wilkes-Barre, Pa Wilhamsport, Pa Wilmington, Del Wilmington, N . C Wihston-Salem, N. C Woonsocket, R. I Worcester, Mass Yonkers, N . Y York, Pa , Youngstown, O h i o . . Zanesville, Ohio , Quota. $2,030,400 1,962,000 27,608,000 6,221,800 1,550,000 4,167,400 7,754,450 2,981,000 9,438,300 4,495,700 11,294,750 3,681,000 2,468,100 3,000,000 15,043,600 3,452,400 4,535,250 10,137,200 2,449,550 I Population taken from 1910 census. Subscriptions received. $2,246,200 2,340,350 2 49,619,450 8,977,200 2,145,000 4,383,250 8,865,900 4,532,200 9,552,900 4,555,350 18,126,450 2,031,850 2,873,950 3,918,200 19,239,150 5,236,350 5,047,100 14,083,800 2^470,250 Estimated P e r cent n u m b e r of Population. p o p u l a t i o n subscribers. subscribed. 9,177 10,497 . 2 241,076 53,000 9,789 10,268 20,620 33,385 127,834 400,000 173,141 35,569 29,894 141,641 27.49 37.71 2 60.27 72.46 27.63 34.35 49.28 41,844 13,039 39,800 6,654 8,579 9,639 62,934 24,092 14,516 49,763 10,785 80,000 35,000 100,000 30,(00 36,000 138,125 1145,986 99,838 66,000 179,066 128,026 52.3i 37.25 39.80 21.85 23.83 ,26.28 43.11 24.13 26.39 62.94 38.48 2 Includes numerous Navy subscriptions. NOTE.—Seven cities of 25,000 population or over in the Ninth Federal Reserve District are not reported, inasmucn as figures were unobtainable. / 1 i 1 , 1 \ . 1 SECRETARY OF THE TREASURY. EXHIBIT 231, 6. DBAFT O F F I F T H L I B E B T Y BOND BILL PBOPOSED BY THE TBEASUBY TO THE HOUSE WAYS AND MEANS COMMITTEE, FEBBUABY 10, 1919. Be it enacted hy the Senate and House of Representatives ofthe United States of America in Congress assemlled. That section one of the second Liberty bond act, as amended, is hereby further amended by striking out the figures $20,000,000,000 and inserting in Heu thereof the figures $25,000,000,000, and by adding the following clause: ^^Any bonds maturing npt later than ten years from the date thereof may bear interest at such rate or rates, notwithstanding the limitation hereinbefore contained, and may be made payable at or before maturity at such premium or premiums as the Secretary of the Treasury may prescribe.'^ S E C 2. That the Second Liberty Bond Act is hereby amended by adding thereto a new section to read as follows: ^'SEC. 18. That in addition to the bonds and certificates of indebtedness and war savings certificates authorized by the Second L i b e r t j Bond Act and. amendments thereto, the Secretary of the Treasury is authorized to borrow from time to time on the credit of the United States for the purposes of said Act and amendments thereto and to meet public expenditures authorized by law, such sum or sums as in his judgment may be necessary, and to issue therefor notes of the United States at not less than par in such form or forms and subject to such terms and conditions and at such rate or rates of interest as he may prescribe, and each note so issued shall be payable at such time not less than one year or more than five years from the date of its issue, and may be redeemable before maturity upon such terms and conditions, and may be payable at or before maturity at such , premium, and the interest accruing thereon shall be payable at such time or times as the Secretary of the Treasury may prescribe. The sum of such notes outstanding hereunder shall not at any onetime exceed in the aggregate $10,000,000,000. None of such notesshall bear the circulation privilege. The principal and interest thereof shall be payable in United States gold coin of the present standard of value. The word 'bond' where it appears in Sections eight, nine, ten, fourteen and fifteen of this Act and Section five thousand two hundred of the Revised Statutes, b u t in said sections only, shall be deemed to include notes issued hereunder.'' . SEC. 3. That notwithstanding the provisions of the Second Liberty Bond Act and of any other act, (a) War savings certificates of the United States heretofore or hereafter issued shall be exempt from taxation as fully and to the same extent as bonds of the United States issued under Section 1 of the First Liberty Bond Act. (b) Bonds, notes, and certificates of indebtedness of the United States of any series hereafter issued shall be exempt from taxation if, as and to the extent prescribed by the Secretary of the Treasury in connection with the issue thereof. (c) Subscribers for any subsequent series of bonds or any series of notes of the United States shall be entitled to additional exemptions from taxation in respect to bonds of the First Liberty Loan converted, 232 REPORT OK THE FINANCES. the Second Liberty Loan converted and unconverted, the Third Liberty Loan, and the Fourth Liberty Loan owned by them if, as and to the extent prescribed by the Secretar}^ of the Treasury in connection with the issue of such subsequent series of bonds or of such series of notes. Section 3 of the Fourth Liberty Bond Act is hereby amended to read as follows: « '^SEC. 3. That, notwithstanding the provisions of the Second Liberty Bond Act and of the War Finance Corporation Act and of any other Act, bonds, notes, and certificates of indebtedness of the United States and bonds of the War Finance Corporation shall, while beneficially owned by a nonresident alien individual, or by a foreign corporation, partnership, or association, not engaged in business in the United States, be exempt both as to principal and interest from any and all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States or by any local taxing authority.'' SEC. 4. That the privilege of converting four per centum bonds of the First Liberty Loan converted and four per centum bonds of the Second Liberty Loan into four and one-fourth per centum bonds, which privilege arose on May ninth, nineteen hundred and eighteen, and expired on November ninth, nineteen hundred and eighteen, may be extended by the Secretary of the Treasury for such period, upon such terms and conditions and subject to such rules and regulations as he may prescribe: Provided, however, That for the purpose of computing the amount of interest payable, bonds presented for conversion under any such extension shall be deemed to be converted on the dates for the payment of the semiannual interest on the respective bonds so presented for conversion, next succeeding the date of such presentation. ^ ' SEC. 5. That at the expiration of one year after the termination of the war, and annually thereafter until all bonds and note;s hereinafter referred to shall be retired, the Secretary of the Treasury shall set aside, as a cumulative sinking fund for the retirement of the war debt, such amount as he shall deem necessary under the provisions of this section, and the amount so set aside by the Secretary of the Treasury in each such'year is hereby appropriated for the purposes of this section to be available until all such bonds and notes are retired. Bonds and notes purchased, redeemed, or paid out of the sinking fund shall be canceled and retired and shall not be reissued. The Secretary of the Treasury shall from time to time, beginning one year after the termination of the war and continuing until the war debt is retired, piirchase for the sinking fund bonds and notes issued under authority of the First Liberty Bond Act, the Second Liberty Bond Act, the Third Liberty Bond Act, the Fourth Liberty Bond Act, and this Act, including converted bonds, at such prices and upon such terms and conditions as he may prescribe. The aggregate par amount of all such bonds and notes purchased in any sinking-fund' year shall equal as nearly as may be but shall not exceed two and one-half per centum of the aggregate amount of such bonds and iiotes outstanding at the expiration of one year after the termination of the war plus (in the case of any sinking-fund year after the first) any amount herein authorized to be expended for such purchases not expended in any previous year or years and an amount equal to the SECRETARY OF THE TREASURY.- 233 interest on all bonds and notes retired by means of the sinking fund. The sinking fund may be applied to the payment of bonds or notes at maturity or ,to the redemption thereof before maturity as well as to the purchase thereof. The average cost of the bonds and notes purchased shall not exceed par and accrued interest. SEC. 6. That the proviso at the end of. section two of the Second Liberty Bond Act as amended by the Third Liberty Bond Act and the Fourth Liberty Bond Act is hereby amended to read as follows: ^^ Provided, That the authority granted by this section to the Secretary of the Treasury to establish credits for foreign governments, as aforesaid, shall cease one year after the termination of the war between the United States and the Imperial German Government: And provided further. That for the purpose of promoting commerce with foreign nations such credits may, after February fifteenth, nineteen hundred and nineteen, be established by the Secretary of theTreasury, with the approval of the President, to provide for purchases in the United States for export therefrom and for expenditures in the United States in connection with such purchases and for the payment of interest to the United States: J.7i(Z provided further. That after the termination of the war such credits may, with the approval of the President, be established in favor of the governments of such foreign countries as were previously engaged in war with enemies of the United States." SEC. 7. That the obligations of foreign governments acquired by the Secretary of the Treasury by virtue of the provisions of the First Liberty Bond Act and the Second Liberty Bond Act, and amendments and supplements thereto, shall mature at such dates as shall be determined by the Secretary of the Treasury: Provided^ That such obligations acquired by virtue of the provisions of the First Liberty Bond Act, or through the conversion of short-time obligations acquired under said Act, shall mature not later than June fifteenth, nineteen hundred and forty-seven, and all other such obligations of foreign governments shall mature not later than October fifteenth, nineteen hundred and thirty-eight. SEC. 8. That the War Finance Corporation Act is hereby amended by adding to Title I thereof a new section, to read as follows: ' ' S E C . 21. That the corporation shall be empowered and authorized, in order to promote commerce with foreign nations through the extension of credits, to make advances upon such terms, not inconsistent with the provisions of this section, for periods not exceeding five years from the respective dates of such advances to any person, . firm, corporation, or association engaged in the business in the United States of exporting therefrom domestic raw materials, agricultural products, manufactured articles, and other commodities to foreign countries, or to make advances to any bank, banker, or trust company conducting business in the United States which shall have made advances to any such person, firm, corporation, or association after this Act shall have taken effect. "Such advances shall be limited in amount to not more than the market value of the goods to be exported at the port of shipment and at the time of shipment (as estimated and determined by the corporation), plus insurarice and carrying or transportation charges to the foreign point of destination if and to the extent that such insurance and carrying or transportation charges are payable in the United 234 REPORT ON THE FINANCES. States to domestic insurers and carriers: Provided, That any sucn advances to a bank, banker, or trust company shall not exceed the amount remaining unpaid of the advances made by any such bank, banker, or trust company to any such person, firm, corporation, or association :v47i(i provided further, That the aggregate of the advances made by the corporation under this section remaining unpaid shall never at any time exceed the sum of $1,000,000,000. "Notwithstanding the limitation of Section 1 of this Act, the advances provided for by this section may be made until the expiration of one year after the termination of the war, the date of such termination to be fixed by proclamation of the President of the United States. All such advances shall be made upon the promissory note or notes of the borrower, secured in each instance by endorsement, guarantee or otherwise as the Corporation shall deem adequate. The Corporation in its discretion may extend the time of repayment of any such advance tlirough renewals, the substitution of new obligations or otherwise, provided that the time for the repayment of any advance shall not be extended beyond five years from the date on which the same was originally made." SEC. 9. That the last sentence but one of section 15 of the War Finance Cor])oration. Act be, and is hereby, amended to read as follows: '^Beginning twelve months after the termination of the war, the date of such termination to. be fixed by a proclamation of the President of the United States, the directors of the Corporation shall proceed to liquidate its assets and to wind up its affairs, but the directors of the Corporation in their discretion, may, from time to time, prior to such date, sell and dispose of any securities or othei property acquired by the Corporation." SEC. 10. That the short title of this Act shall be "Fifth Liberty Bond Act." SECRETARY OF T H E TREASURY. 235 E X H I B I T 7. VICTOBY LIBEBTY LOAN ACT. [PUBLIC—No. 328—65TH CONGRESS.] [H. R. 16136.] An Act To amend the Liberty Bond Acts and the War Finance Corporation Act, and for other purposes. Be it enacted hy the Senate and Rouse of Representatives of the TJnited States of America in Congress assembled. That the Second Liberty Bond Act is hereby amended by adding thereto a new section to read as follows: " S E C . 18. (a) That in addition to the bonds and certificates of indebtedness and war-savings certificates authorized by this Act and amendments thereto, the Secretary of the Treasury, with the approval of the President, is authorized to borrow from time to time on the credit of the United States for the purposes of this Act, and to meet public expenditures authorized by law, not exceeding, in the aggregate $7,000,000,000, and to issue therefor notes of the United States at not less than par in such form or forms and denomination or denominations, containing such terms and conditions, and at such rate or rates of interest, as the Secretary of the Treasury may prescribe, and each series of notes so issued shall be payable at such time not less than, one year nor more than five years from the date of its issue as he may prescribe, and may be redeemable before maturity (at the option of the United States) in whole or in part, upon not more than one year's nor less than four months' notice, and under such rules and regulations and during such period as he may prescribe. '' (b) The notes herein authorized may be issued in any one or more o f t h e following series as the Secretary of the Treasury may prescribe in connection with the issue thereof: "(1) Exempt, both as to principal and interest, from all taxation (except estate or inheritance taxes) now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority; " (2) Exempt, both as to principal and interest, from all taxation now or hereaiter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes, and excessprofits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations; "(3) Exempt, both as to principal and interest, as provided in paragraph (2); and with an additional exemption from the taxes referred *to in clause yh) of such paragraph, of the interest on an amount of such .notes the principal of which does not exceed $30,000, owned by any individual, partnership, association, or corporation; or "(4) Exempt, both as to principal and interest, from all taxation now or hereaiter imposed by the United States, any State, or any of the possessions oi the United States, or by any local taxing authorit}^, exceipt (a) estate or inheritance taxes, and (b) all income, 236 R E P O R T O N THE FINANCES. excess-profits, and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. ' '' (c) If the notes authorized under this section are offered in more than one series bearing the same date of issue, the holder of notes of any such series shall (under such rules and regulations' as may be prescribed b y the Secretary of the Treasury) have the option of having such notes held by him converted at par intp notes of any other such series offered bearing the same date of issue. (d) None of the notes authorized by this section shall bear the circulation privilege. The principal and interest thereof shall be payable in United States gold coin of the present standard of value. The word 'bond', or 'bonds' where it appears in sections 8, 9, 10, 14, and 15 of this Act as amended, and sections 3702, 3703, 3704, and 3705 of the Revised Statutes, and section 5200 of the Revised Statutes as amended, but in such sections only, shall be deemed to include notes issued under this section." SEC. 2. (a) That until the expiration of five years after the date of the termination of the war between the United States and the German Government, as fixed by proclamation of the President, in addition to the exemptions provided in section 7 of the Second Liberty Bond Act in respect to the interest on an amount of -bonds and certificates, authorized by such Act and amendments thereto, the principal of which does not exceed in the aggregate $5,000, and in addition to all other exemptions provided in the Second Liberty Bond Act or the Supplement to Second Liberty Bond Act, the interest received on and after January 1, 1919, on an amount of bonds of the First Liberty Loan Converted, dated November 15, 1917, May 9, 1918, or October 24,1918, the Second Liberty Loan converted and unconverted, the Third Liberty Loan, and the Fourth Liberty Loan, the principal of which does not exceed $30,000 in the aggregate, owned by any individual, partnership, association, or corporation, shall be exempt from graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. (b) In addition to the exemption provided in subdivision (a), and in addition to the other exemptions therein referred tb, the interest received on and after January 1, 1919, on an amount of the bonds therein specified the principal of which does not exceed $20,000 in the aggregate, owned by an}^ individual, partnership, association, or corporation, shall be exempt from the taxes therein specified: Provided, That no owner of such bonds shall be entitled to such exemption in respect to the interest on an aggregate principal amount ofv such bonds exceeding three times the principal amount of notes of the Victory Liberty Loan originally subscribed for by such owner and still owned by him at the date of his tax return. SEC. 3. That section 5 of the Second Liberty Bond Act, as amended by section 4 of the Third Liberty Bond Act, is hereby fiirther amended by striking out i\iQ figures "$8,000,000,000" and inserting in lieu thereof the figures "$10,000,000,000." SEC. 4. That section 3 of the Fourth Liberty Bond Act is hereby amended to read as follows: SECRETARY OF THE TREASURY. 237 " S E C . 3. That, notwithstanding the provisions of the Second Liberty Bond Act or of the War Finance Corporation Act or of any other Act, bonds, notes, and certificates of indebtedness of the United States and bonds of the War Finance Corporation shall, while beneficially owned by a nonresident alien individual, or a foreign corporation, partnership, or association, not engaged in business in the United States, be exempt both as to principal and interest from any and all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States or by any local taxing authority." SEC. 5. That the privilege of converting 4 per centum bonds of the First Liberty Loan converted and 4 per centum bonds of the Second Liberty Loan into 4J per centum bonds, which privilege arose on May 9, 1918, and expired on November 9, 1918, may be extended by the Secretary of the Treasury for such period, upon such terms and conditions and subject to such rules and regulations, as he may prescribe. For the purpose of computing the amount of interest payable, bonds presented for conversion under any such extension shall be deemed to be converted on the dates for-the payment of the semiannual interest on the respective bonds so presented for conversion next succeeding the date of such presentation. SEC. 6. (a) That there is hereby created in the Treasury a cumulative sinking fund for the retirement of bonds and notes issued under the First Liberty Bond Act, the Second Liberty Bond Act, the Third Liberty Bond Act, the Fourth Liberty Bond Act, or under this Act, and outstanding on July 1, 1920. The siaking fund and all additions thereto are hereby appropriated for the payment of such bonds and notes at maturity, or for the redemption or purchase thereof before maturity by the Secretary of the Treasury at such prices and upon such terms and conditions as he shall prescribe, and shall be available until air such bonds and notes are retired. The average cost qf the bonds and notes purchased shall not exceed par and accrued interest. Bonds and notes purchased, redeemed, or paid out of the sinking fund shall be canceled and retired and shall not be reissued. For the fiscal year begiQning July 1, 1920, and for each fiscal year thereafter, until all such Don ds and notes are retired-there is hereby appropriated, out of any money in the Treasury not otherwise appropriated, for the p'arposes of such sinking fund, an amount eq^aal to the sum of (1) 2 i per centum of the aggregate amount of sucn bonds and notes outstanding on July 1, 1920, less an amount equal to the par amount of any obligations of foreign Governments held by the United States on July 1, 1920, and (2) the interest which would have been payable duruig the fiscal year for which the appropriation is made on the bonds and, notes purchased, redeemed, or paid out of the sinking fund during such year or in previous years. The Secretary of the Treasury shall submit to Congress at the begianiag of each regular session a separate annual report of the action taken under the authority contained in this section. (b) Sections 3688, 3694, 3695, and 3696 of the Revised Statutes, and so much of section 3689 of the Revised Statutes as provides a permanent annual appropriation of 1 per centum of the entire debt of the United States to be set apart as a sinking fund, are hereby repealed. 238 REPORT ON THE FINANCES. SEC. 7. (a) That until thp expiration of eighteen months after the termination of the war between the United States and the German Government, as fixed by proclamation of the President, the Secretary of the Treasury, with the approval of the President, is hereby authorized on behalf of the-United States to establish, in addition to the credits authorized by section 2 of the Second Liberty Bond Act, as amended, credits with the United States for any foreign government now engaged ia war with the enemies of the United States, for the purpose only of providing for purchases of any property owned directly or indirectly by the United States, not needed by the United States, or of any wheat the price of which has been or may be guaranteed by the United.States. To the extent of the credits so established from time to time the Secretary of the Treasury is hereby authorized to make advances to or for the account of any such foreign government and to receive at par from such foreign government for the amount of any such advances its obligations hereafter issued beariag such rate or rates of interest, not less than ^ per centum per annum, maturiag at such date or dates, not later than October 15, 1938, and contaiaing such terms and conditions, as the Secretary of the Treasury may from time to time prescribe. The Secretary, with the approval of the President, is hereby authorized to enter into such arrangements from time to time with any such foreign government as may be necessary or desirable for establishing such credits and for the payment of such obligations before maturity. (b) The Secretary of the Treasury is hereby authorized from time to time to convert any short-time obligations of foreign governments which may be received under the authority of this section into longtime obligations of such foreign governments, respectively, maturing not later than October 15, 1938, and in such form and terms as the Secretary of the Treasury may prescribe; but the rate or rates of interest borne by any such long-time obligations at the time of their acquisition shall not be less than the rate borne by the short-time obligations so converted into such long-time obligations; and, under such terms and conditions as he may from time to time prescribe, to receive payment, on or before maturity, of any obligations .of such foreign governments acquired on behalf of the United States under authority of this section, and, with the approval of the President, to sell any of such obligations (but not at less than par with accrued interest unless otherwise hereafter provided by law), and to apply the proceeds thereof, and any payments so received from foreign governments on account of the priacipal of such obligations, to the redemption or purchase, at not more than par and accrued interest, of any bonds oi the United States issued under the authority of the First Liberty Bond Act or Second Liberty Bond Act as amended and supplemented, and if such bonds can not be so redeemed or purchased, the Secretary of the Treasury shall redeem or purchase any other outstandiag iaterest-bearing obligations of the United States which may at such time be subject to redemption or which can be purchased at not more than par and accrued interest. (c) For the purposes of this section there is appropriated the unex• pended balance of the appropriations made by section 2 of the First Liberty Bond Act and by section 2 of the Second Liberty Bond Act as amended by the Third Liberty Bond Act and the Fourth Liberty Bond Act, but nothing in this section shall be deemed to prohibit the SECRETARY OF THE TREASURY. 239 use of such unexpended balance or any part thereof for the purposes of section 2 of the Second Liberty Bond Act, as so amended, suoject to the limitations therein contained. SEC. 8. That the obligations of foreign governments acquired by the Secretary of the Treasury by virtue of the provisions of the First Liberty Bond Act and the Second Liberty Bond Act, and amendments and supplements thereto, shall mature at such dates as shall be determined by the Secretary of the TresiSMrj: Provided, That such obligations acquired by virtue of the provisions of the First Liberty Bond Act, or through the conversion of short-time obligations acquired under such Act, shall mature not later than June 15, 1947, and all other such obligations of foreign governments shall mature not later than October 15, 1938. SEC. 9. That the War Finance Corporation Act is hereby amended by adding to Title I thereof a new section, to read as follows: '^SEC. 21. (a) That the Corporation shall be empowered and authorized, in order to promote commerce with foreign nations through the extension of credits, to make advances upon such terms, not inconsistent with the provisions of this section, as it may prescribe, for periods not exceeding five years from the respective ,dates of such advances: "(1) To any person, firm, corporation, or association engaged in the busiaess in the United States of exporting therefrom domestic products to foreign countries, if such person, firm, corporation, or association is, in the opinion of the board of directors of the Corporation, unable' to obtain funds upon reasonable terms through banking channels. Any such advance shall be made only for the purpose of assisting in the exportation of such products, and shall be limited in amount to not more than the contract price therefor, including insurance and carrying or transportation charges to the foreign point of destination if and to the extent that such iasurance and carrying or transportation charges are payable in the United States by such exporter to domestic insurers and carriers. The rate of interest charged on any such advance shall not be less than 1 per centum per annum in excess of the rate of discount for ninety-day commercial paper prevailing at the time of such advance at the Federal reserve bank of the district in which the borrower is located; and " (2) To SLiij^ bank, banker, or trust company in the United States which after this section takes effect makes an advance to any such person, firm, corporation, or association for the purpose of assisting in the exportation of such products. Any such advance shall not exceed the amount remaining unpaid of the advances made by such bank, banker, or trust company to such person, firm, corporation, or association for, such purpose. " (b) The aggregate of the advances made by the Corporation under this section remaining unpaid shall never at any time exceed the sum of $1,000,000,000. ' ' "(c) Notwithstandiag the hmitation of section 1 the advances provided for by this section may be made until the expiration of one year after the termination of the war between the United States and the German Government as fixed by proclamation of the President. Any such advance made by the Corporation shaU be made upon the promissory note or notes of. the borrower, with full and adequate security in each instance by indorsement, guaranty, or otherwise. 240 ' REPORT ON THE FINANCES. . The Corporation shall retaia power to require additional security at any time.- The Corporation in its discretion may upon like security extend the time of payment of any such advance through renewals, the substitution of new obligations, or otherwise, but the time for the payment of any such advance shall not be extended beyond five years from the date on which it was originally made." SEC. 10. That section 15 of the War Finance Corporation Act is hereby amended to read as follows: "SEC. 15. That all net earnings of the Corporation not required for its operations shall be accumulated as a reserve fund until such time as the Corporation liquidates under the terms of this title. Such reserve fund shall, upon the direction of the board of directors, with the approval of the Secretary of the Treasury, be invested in bonds and obligations of the United States, issued or converted after September 24, 1917, or upon like direction and approval may be deposited in member banks of the Federal Reserve System, or in any of the Federal reserve banks, or be used from time to time, as well as any other fiinds of the Corporation, in the purchase or redemption of any bonds issued by the Corporation. The Federal reserve banks are hereby authorized to act as depositaries for and as fiscal agents of the Corporation in the general performance of the powers conferred by this title. Beginning twelve months after the termination of the war, the date of such termination to be fixed by a proclamation of the President of the United States, the directors of the Corporation shall proceed to liquidate its assets and to wind up its affairs, but the directors of the Corporation, in their discretion, may, from time to time, prior to such date, sell and dispose of any securities or other property acquired by the Corporation. Any balance remaining after the pa3mient of all its debts shall be paid into the Treasury of the United States as miscellaneous receipts, and thereupon the Corporation shall be dissolved." SEC. 11. That the short title of this Act shall be "Victory Liberty Loan Act." Approved March 3, 1919. SECRETARY OF THE TREASURY. 241 E X H I B I T 8. FOBMAL OFFEBING OF T H E VICTOBY DEPABTMENT $4,500,000,000 U N I T E D STATES L I B E B T Y LOAN UNDEB C I B C U L A B NO. 1 3 8 . OF AMERICA CONVERTIBLE GOLD NOTES OF 1922-1923. VICTORY LIBERTY LOAN. Dated and bearing interest from May 20, 1919. Due May 20, 1923. Redeemable at the option of the United States at par and accrued interest on June 15 and December 15, 1922. Interest payable December 15, 1919, and thereafter semiannually on June 15 and December 15, and on May 20, 1923. Authorized b y an act of Congress approved September 24, 1917, as amended and supplemented by the acts of Congress approved April 4, July 9, and September 24, 1918, and March 3, 1919 (Victory Liberty loan a c t ) . Offered for subscription in Treasury Department Circular No. 138, dated April 21, 1919, to which reference is made for full information concerning the notes and this offering, and from which the statements on this page are summarized and to which they are subject. Description of notes.—The notes are offered in two series, the 4 | per cent series, and the 3f per cent series, which are described in said Treasury Department Circular No. 138. The notes of the two series are interconvertible upon the terms and conditions stated in said circular. Denominations: Coupon and registered notes. $50, $100, $500, $1,000, $5,000, $10,000: and registered notes, $50,000 and $100,000. Applications must reach the Treasury Department, Washmgton, a Federal reserve bank, or branch thereof, or some incorporated bank or trust company within the United States (not including outlyiag territories aad possessions) on or before the close of business May 10, 1919, the right being reserved by the Secretary of the Treasury to close the subscription on any earlier date. Applications will be deemed to be for notes of the 4 | per cent series except applications specifying notes of the 3f per cent series; b u t the subscriber may, nevertheless, at any time before completion of payment, by notice in writing, elect to receive notes of either series in the first instance. Allotment.—The issue will be limited to $4,500,000,000 except as provided in said circular. Applications from any one subscriber for an aggregate amount of notes not in excess of $10,000 will be allotted in full. Applications for aggregate amounts of notes in excess of $10,000 will be received subject to allotment. Terms, of payment.—Ten per cent with application on or before May 10, 1919; 10 per cent on July 15, 1919; 20 per cent on August 12, 1919; 20 per cent on September 9, 1919; 20 per cent on October 7, 1919; 20 per cent on November 11, 1919 (with accrued interest from May 20, 1919, on the five deferred installments). Payment in full of any subscription for an aggregate amount of notes not in excess of $10,000 may, if the subscriber so elects, be made, without rebate of interest, with the application on or before May 10, 1919. Payment for notes allotted may also be completed so as to reach a Feaeral reserve bank, or branch thereof, on May 20, 140325—FI 1919 16 242 REPORT ON T H E FINANCES. 1919, or with accrued interest on July 15, August 12, September 9, or October 7, 1919, previous installments having been duly paid. Completion of payment upon applications subject to allotment can not be made on May 20, 1919, but may be made after allotment on a date or dates named in the announcement of allotments, not earlier than June 3 nor later than June 17, 1919, or on any later installment date. Delivery.—Notes will be delivered promptly after due completion of payment therefor. Notes of the 4 | per cent series may be delivered prior to May 20, 1919, to subscribers for aggregate amounts of notes not in excess of $10,000, who make payment in full in cash upon application on or before May 10, 1919. In making such deliveries before May 20, the right is reserved to deliver notes of the largest denomination or denominations, not exceeding $1,000, contained in the respective amounts of notes subscribed for. Notes will be delivered by the several Federal reserve banks as fiscal agents of the United States as far as practicable in accordance with written instructions given by the subscribers, and, within the continental United States^ at the expense of the United States. Price 100 per cent and accrued interest: TREASURY DEPARTMENT, Washington, April 21, 1919. L and C 192. [1919. Department Circular No. 138. Loans and Currency.] VICTORY L I B E R T Y LOAN. TREASURY DEPARTMENT, O F F I C E OF THE SECRETARY, Washington, April 21, 1919. The Secretary of the Treasury invites subscriptions, at par and accrued interest, from the people of the United States, for $4,500,000,000 of United States of America Convertible Gold Notes of 1922-1923 of the Victory liberty loan, authorized by an act of Congress approved September 24, 1917, as amended and supplemented by the acts of Congress approved April 4, July 9, and September 24, 1918, and March 3, 1919 (Victory Liberty loan act). The notes are offered in two series. DESCRIPTION O F NOTES. Four and three-quarters per cent series.—The 4f per cent convertible gold notes of 1922-1923 shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (5) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The notes of said series shall bear interest at the rate of 4 | per cent per annum. SECRETARY OF THE TREASURY. 243 Three and three-quarters per cent series.—The 3f per cent convertible gold notes of 1922-1923 shall be exempt, both as to principal and interest, from all taxation (except estate or inheritance taxes) now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority. The notes of said series shall bear interest at the rate of 3 | per cent per annum. Denominations; hoth series.—Bearer notes with interest coupons attached will be issued in denominations of $50, $100, $500, $1,000, $5,000, and $10,000. Notes registered as to principal, and as to interest payable after December 15, 1919, will be issued in denominations of $50, $100, $500, $1,000, $5,000, $10,000, $50,000, and $100,000. Such registered notes will have coupons attached thereto for interest payable December 15, 1919. Provision will be made for the interchange of notes of different denominations and of coupon and registered notes and for the transfer of registered notes, without charge by the United States, under rules and regulations prescribed by the Secretary of the Treasury. Date of notes, interest dates, maturity, and redemption; hoth series.— The notes will be dated and bear interest from May 20, 1919, and will mature on May 20, 1923. Interest will be payable on December 15, 1919, and thereafter semiannually on June 15 and December 15, and on May 20, 1923. The principal and interest of the notes are payable in United States gold com of the present standard of value. The riotes may be redeemed at the option of the United States, under such rules and regulations as the Secretary of the Treasury may prescribe, on June 15 or December 15, 1922, in whole or in part, as to either or both series, at par and accrued interest, on four months notice of redemption given in such manner as the Secretary of the Treasury shall prescribe. In case of partial redemption of either or both series, the notes to be redeemed will be deterniined by such method as may be prescribed by the Secretary of the Treasury. For convenience in case of any partial redemption, the notes will be issued in several blocks of approximately equal face amount and bearing distinguishiag letters. From the date of redemption designated in any such notice of redemption interest on notes called for redemption shall cease. Conversion privilege.—Any holder of notes of either series shall have the option of haviag the.notes held by him converted at par into notes of the other series, with adjustment in respect to accrued interest b u t otherwise without charge by the United States, under such rules and regulations as may be prescribed by the Secretary of the Treasury. Such rules and regulations may provide for the suspension of such privilege of conversion from time to time, in respect to all or any part of the notes of either or both series, (a) to and iacluding July 15, 1919, to facilitate deliveries upon the original issue, (&) for a period not exceeding one month before any interest payment date, and (c) for the period, or any portion thereof, from the date of any notice of redemption (but not more than four months and one week prior to the date of redemption) to and iacluding the date of redemption designated in such notice. In any event, on the date of redemption designated in any such notice of redemption the privilege of conversion of all notes thereby called for redemption shall cease, and if all the notes of either series be called for redemption, the privilege of conversion of notes of the other series shall cease. 244 REPORT ON THE FINANCES. The notes are interconvertible, the privilege of conversion extending to notes issued upon conversion as well as notes issued upon origingd subscription. The privilege of conversion continues throughout the life of tne notes subject to the provisions hereof and of such rules and regulations. MISCELLANEOUS PROVISIONS OF LAW AND REGULATIONS. Additional tax exemption for Liherty honds.—-In addition to,all other exemptions provided by law, the interest received on and after January 1, 1919, on an amount of bonds of the first Liberty loan converted, dated November 15, 1917, May 9, 1918, or October 24, 1918, the second Liberty loan, converted and unconverted, the third Liberty loan, and the fourth Liberty loan, the principal of which does not exceed $20,000 in the aggregate, owned by any individual, partnership, association, or corporation, shall be exempt from graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations: Provided, That no owner of such bonds shall be entitled to such additional exemption in respect to the interest on an aggregate priacipal amount of such bonds exceeding three times the principal amount of notes of the Victory Liberty loan originally subscribed for by such owner and still owned by him at t h e ^ a t e of,his tax return. Note purchase fund.—The Secretary of the Treasury is authorized from time to time, until the expiration of one year after the terniination of the war (as fixed by proclamation of the President), to purchase notes of this issue at such prices arid upon such terms and conditions as he may prescribe. The par amount of notes of this issue which may be purchased, in the twelve months' period beginning on the date of issue shall not exceed one-twentieth of the par amount of such notes originally issued, and in each twelve months' period thereafter shall not exceed one-twentieth of the amount of the notes of such issue outstanding at the beginning of such twelve months' period. The average cost of the notes of this issue purchased in any such twelve months' period shall not exceed par and accrued interest. Cumulative sinMng fund.—The Victory Liberty loan act provides ia section 6 (a) as follows: " T h a t there is hereby created in the Treasury a cumulative sinking fund for the retirement of bonds and notes issued under the first Liberty bond act, the second Liberty bond act, the third Liberty borid act, the fourth Liberty bond act, or under this act, and outstanding on July 1, 1920. The sinking fund and all additions thereto are hereby appropriated for the payment of such bonds and notes at maturity, or for the redemption or purchase thereof before maturity by the Secretary of the Treasury at such prices and upon such terms and conditions as he shall prescribe, and shall be available until all such bonds and notes are retired. The average cost of the bonds and notes purchased shall not exceed par and accrued interest. Bonds and notes purchased, redeemed, or paid out of the sinking fund shall be canceled and retired and shall not be reissued. For the fiscal year beginning July 1, 1920, and for each fiscal year thereafter, until all such bonds and notes are retired SECRETARY OF THE TREASURY. 245 there is hereby appropriated, out of any money in the Treasury not otherwise appropriated, for the purposes of such siaking fund, an amount equal to the sum of (1) 2^ per centum of the aggregate amount of such bonds and notes outstanding on July 1, 1920, less an amount equal to the par amount of any obligations of foreign Governments held by the United States on July 1, 1920, and (2) the interest which would have been payable during the fiscal year for which the appropriation is made on the bonds and notes purchased, redeemed, or paid out of the sinking fund during such year or in previous years." Further privileges.—The notes will be receivable as security for deposits of public moneys, b u t will not bear the circulation privilege. APPLICATION, ALLOTMENT, PAYMENT, AND DELIVERY. Official agencies.—The agencies designated by the Secretary of the Treasury to receive applications for the notes now offered are the Treasury Department in Washington, and the Federal reserve banks in Boston, New York, Philadelphia, Cleveland (with branches at Cincinnati and Pittsburgh), Richmond (with branch at Baltimore), Atlanta (with branches at New Orleans, Birmingham, and Jacksonville), Chicago (with branch at Detroit), St. Louis (with branches at Little Rock, Louisville, and Memphis), Minneapolis, Kansas City (with branches at Omaha and Denver), Dallas (with branch at El Paso), and San Francisco, (with branches at Salt Lake City, Portland, Seattle, and Spokane). The Federal reserve banks have been designated as fiscal agents of the United States, to receive applications, to give notices of allotments, to receive payments, and to make delivery of the notes allotted. Subscribers may send their applications, accompanied by the required payment, direct to any of said banks or branches. Suhscrihers' agencies.—h^rge numbers of national banks. State banks, and trust companies., investment bankers, express companies, newspapers, department stores, and other corporations, firms, and organizations have patriotically offered to receive and transmit applications for the notes without expense to the applicants. The Secretary of the Treasury appreciates the value of these offers, and will have application blanks widely distributed, through the Federal reserve banks, to these institutions throughout the country. Subscribers' agencies must transmit or cover by their own subscriptions all applications received by them; in the latter case they must specify the number of subscribers and the aggregate amount of notes subscribed for by each and furnish such further iriformation as may be prescribed by the Secretary of the Treasury; and allotment may be based upon such information. No commissions will be paid upon subscriptions, and those who receive and transmit applications are therefore rendering the service to subscribers as a patriotic duty. Only the Federal reserve banks are authorized to act as fiscal agents of the United States in connection with the operations of selling and delivering notes of the Victory Liberty loan. Terms of application.—^Appli^cations must be accompanied by payment of 10 per cent of the amount of notes applied for. No payment other than the 10 per cent required upon application should accompany any application for an aggregate amount of notes in excess of 246 REPORT ON THE FINANCES. $10,000. Applications for an aggregate amount of notes not in excess of $10,000 may, at the option of the subscriber, be accompanied by payment in full, at face value without interest, for the note or notes applied for. Applications must be for notes to an amount of $50 or some multiple thereof. The subscriber should indicate on the application blank whether coupon or registered notes are desired; if no Ereference is indicated, either coupon notes or registered notes may e delivered. All applications will be deemed to be for notes of the 4f per cent series, except applications specif3dng notes of the 3f per cent series; but the subscriber may, nevertheless, at any time before completion of payment, by notice in writing, elect to receive notes of either series in the first instance. Time of closing application hooks.—Applications accompanied by payment as aforesaid must reach the Treasury Department or^a Federal reserve bank, or one of said branches, or some incorporated bank or trust company within the United States (not including outlyiag territories and possessions), not later than the close of business on May 10, 1919. Applications received b}^' any incorporated bank or trust company on or before May 10, 1919, must, by such bank or trust company, be transmitted to, or covered by its own subscription to, the Federal reserve bank of the district in which it is located, reaching such Federal reserve bank not later than the close of business on May 20, 1919, accompanied by pa3nnent as aforesaid. The right is reserved by the Secretary of the Treasury to close the subscription on any earlier date, to reject any applications, and to waive delay in making application and payment. AUotment.—Applications from any one subscriber for an aggregate amount of notes not in excess of $10,000 wUl be allotted in full. Applications for an aggregate amount of notes in excess of $10,000 will be received subject to allotment. The issue will be limited to $4,500,000,000, except as it may be necessary to increase the amount of the issue in order to make allotment in full on applications from subscribers for aggregate amounts of notes not in excess of $10,000, and except as it may be necessary to increase or decrease the amount of the issue in order to facilitate allotment, and the Secretary of the Treasury reserves the right to reject any application for an aggregate amount of notes in excess of $10,000, to make allotment of part of the amount of notes applied for, to make allotment in full upon applications for smaller amounts, and to make reduced allotments upon, or to reject, applications for larger amounts, and to make classified allotments and allotments upon a graduated scale; and his action in these respects will be final. The Secretary of the Treasury can not undertake to collate applications with a view to the precise ascertainment of the aggregate amount of notes applied for by each subscriber and, while reserving the right to reject any application or to reduce the amount of notes applied for in any case where it appears that the aggregate amount oi notes applied for by any one subscriber is not truly shown on the face of any one application, the allotment may be based upon the several applications and reports filed with the severaf Federal reserve banks and the Treasury Department and without collation within or as between the said banks and the Treasury Department; and his action in these respects shall be final. Allotments will be made before June 3, 1919, and the basis SECRETARY OF THE TREASURY. 247 of allotment will be publicly announced. Notices of allotment will be mailed promptly thereafter by the several Federal reserve banks. Terms of payment.—Payment for notes allotted, in addition to the 10 per cent paid on application, must be made so as to reach a Federal reserve bank or a branch thereof as follows: 10 per cent on July 15, 20 per cent on August 12, 20 per cent on September 9, 20 per cent on October 7, and 20 per cent on November 11, 1919, with accrued interest from May 20, 1919, on the five deferred installments. Receipt of installment payments made to official agencies prior to payment in full will be acknowledged by the several Federal reserve banks. Payments must be made when and as herein provided under penalty of forfeiture of any and all installments previously paid, and of all right and interest in the notes allotted. Payment for notes allotted may be sooner completed, b u t only so as to reach a Federal reserve bank or a branch thereof on May 20, 1919, or, with accrued interest from May 20, 1919 (the previous installment or installments having been duly paid), on July 15, August 12, September 9, or October 7, 1919. Payment for notes allotted to subscribers for aggregate amounts of notes in excess of $10,000 can not be completed on May 20, but may be completed, with accrued interest irom May 20, 1919, after public announcement of the basis of allotment, on a date or dates, not earlier than June 3, nor later than June 17, 1919, named in the announcement of allotments, or on any later installment date. Upon applications for aggregate amounts of notes in excess of $10,000, no payment other than the 10 per cent required will be received with the application, and in case oi partial allotments upon such applications the excess of the 10 per cent payment will be applied upon the next installment or installments and no accrued interest will be charged on that part of any installment covered by the amount so applied; and in case of the allotment of less than 10 per cent of the amount applied for, the balance of the 10 per cent payment made with the application will be returned as promptly as possible without interest. In case of the rejection of any application, the 10 per cent payment made with the application will be returned as promptly as possible without interest. Payment in United States Treasury certificates oiindehtedness.—Pay-, ment of (1) the first installment of 10 per cent upon application, or (2) completion of payment upon application, or^on May 20, 1919, when and as permitted hereunder, or (3) completion of payment on the date or dates, not earlier than June 3 nor later than June 17, 1919, named in the announcement of allotments, when and as permitted hereunder, may be made in Treasury certificates of indebtedness of Series V of any issue not previously matured. Payment on July 15, 1919, and subsequent installment dates, may be made in Treasury certificates of the issues, if any, maturing or called for redemption on the said installment dates, respectively. Treasury certificates will be received at their face value. The accrued interest on Treasury certificates (which, in the case of payment of the first installment, or payment in full, when and as permitted hereunder, on or before May 20,1919, will be computed to May 20, 1919, or earlier maturity) will be paid to the subscriber. Treasury certificates thus presented must not be of a larger face value than the amount then to be paid on the subscription, and subscribers should obtain certifi- 248 REPORT ON THE FINANCES. cates in appropriate denominations in advance. Treasury certificates of any series acceptable in payment of taxes will not be accepted in payment on subscriptions for notes. How to malce payments.—It is strongly recommended that subscribers avail themselves of the assistance of their own banks and trust companies, in which case they will, of course, make payments through such institutions. In cases where they do not do so, subscribers should raake payment either to the Treasury Department in Washington or to a Federal reserve bank, or branch thereof, in cash, or by barik draft, certified check, post-office money order, or express company money order, made payable to the order of the Secretary of the Treasury, if the application is filed with the Treasury Department in Washington (thus: "The Secretary of the Treasury, Victory Liberty loan account"), or, if the application is filed elsewhere,, made payable to the order of the Federal reserve bank of the district in which the application is filed (thus: "Federal Reserve Bank of , Victory Liberty loan account"). Incorporated banks and trust companies in the United States, duly qualified as special depositaries of public moneys under Department Circular No. 92 as amended and supplemented April 17, 1919, may, up to the amount for which such depositaries respectively shall be qualified in excess of then existing deposits, when so notified by Federal reserve banks, make payment by credit of amounts payable hereunder on or before May 20, and on the date or dates not earlier than June 3 nor later than June 17, 1919, named in the announcement of allotments, and, if and to.the extent from time to time authorized by the Secretary of the Treasury, on later installment dates. Delivery.—^Notes will be delivered promptly after due completion of payment therefor. Notes of the 4 | per cent series may be delivered prior to May 20, 1919, to subscribers for aggregate amounts of notes not in excess of $10,000, who make payment in full in cash upon application on or before May 10, 1919. In making deliveries before May 20, 1919, the right is reserved to deliver notes of the largest denomination or denominations, not exceeding $1,000, contained in the respective amounts of notes subscribed for. A limited amount of notes of the 4 | per cent series will be made available to incorporated banks and trust companies within the United States prior to May 10, 1919, for delivery to subscribers for aggregatie amounts of notes not in excess of $10,000, but only upon the terms and conditions set out in the official application blank (Form L and C 182) provided for that purpose. Notes will be delivered by the several Federal reserve banks as fiscal agents of the United States, as far as practicable in accordance with written instructions given by the subscribers, and, within the continental United States, at the expense of the United States. Interest.—^As the notes are dated May 20, 1919, no accrued interest will be due on subscriptions for aggregate amounts of notes.not in excess of $10,000 paid for in full on or before that date, when and as permitted hereunder. No rebate of interest will be allowed either on account of full payment in advarice of May 20, 1919, or on account of the first installment of 10 per cent. Upon completion of payment when and as permitted hereunder on the date or dates, not earlier than June 3 nor later than June 17, 1919, named in the announcement of allotments, or upon completion of payment on SECRETARY OF THE TREASURY. 249 July 15, August 12, September 9, October 7, or November 11, 1919, the subscriber will be required to pay accrued interest from May 20, 1919, on the deferred installment or installments at the respective rate or rates borne by the notes to be delivered. Further details.—The Secretary of the Treasury reserves the right to make special arrangements for subscriptions for the notes at not less than par from persons in the military or naval forces, of the United States. Further details may be announced by the Secretary of the Treasury from time to time, information as to which, as well as forms for application, may be obtained from the Treasury Department or through any Federal reserve bank. CARTER GLASS, ' Secretary ofthe Treasury. 250 REPORT ON T H E FINANCES. EXHIBIT 9. [Treasury Department, Victory Liberty Loan. Form L & C 181. Loans and Currency.1 FOBM OF APPLICATION FOB NOTES. OF THE VICTOBY LIBEBTY LOAN. U N I T E D STATES OF AMERICA CONVERTIBLE GOLD N O T E S OF 1923, VICTORY LIBERTY LOAN. 1922- APPLICATION FOR NOTES. Dated,To THE SECRETARY OF THE . . , 1919. TREASURY: The undersigned hereby applies for $_ par amount of United States of America convertible gold notes of 1922-1923,^ and agrees to pay par for all notes allotted on this application and accrued interest from May 20, 1919, on any deferred iastaUments, in accordance with the terms of Treasury Department Circular No. 138, dated April 21, 191^9. The sum of $ ^ is inclosed herewith. The undersigned desires (registered ^) (coupon ^) notes of the denominations indicated below.^ Signature of subscriber in full: (Mr. Mrs. Miss.) (First name infull.) (Middle name or initial.) (Last name.) (Or complete legal name of corporation, partnersbip, or other subscriber.) Address: Number and street City or town County .._._ State This application should be transmitted through the subscriber's bank, trust company, or other agency acting on his behalf, or it may be filed direct with the Federal reserve bank of his district or a branch thereof, or the Treasury Department, Washington. It must reach some incorporated bank or trust company in the United States (not including outlying territories and possessions), or a Federal reserve bank or a branch thereof, or the Treasury Department, on or before the close of business May 10, 1919. 1 Notes ofthe 4f per cent series will be delivered upon this application, unless otherwise indicated over the signature ofthe subscriber below. Please deliver 3f per cent notes upon this application. (Signature of subscriber.) 2 Applications must be accompanied by payment of 10 per cent of the amount of notes applied for. Applications for an aggregate amount of notes not in excess of $10,000 may be accotnpanied by payment in full. 3 Strike out the word "registered" or the word "coupon," which ever form of note is not desired. If no preference is indicated, either, coupon notes or registered notes may be delivered. Unless otherwise directed in writing, notes will be delivered to the name and address written above, and if registered, will be registered in such name and address. * Indicate below denominations of notes desired. If no indication is given, notes of any denomination may be delivered. No. of notes. Denomination. Amount. 150 $100 $500 $1,000 $5,000 . $10,000 * $50,000 * $100, 000 * Registered notes only. TOTAL, $. (which must agree with amount of notes applied for.) SECRETARY OF T H E TREASURY. EXHIBIT 251 10. [Treasury Department, Loans and Currency. Form L & C 182.] FOBM OF APPLICATION BY AN INCOBPOBATED BANK OB T B U S T COMPANY F O B COUPON NOTES O F T H E VICTOBY L I B E B T Y LOAN FOB ADVANCE DELIVEBY. VICTORY LIBERTY LOAN FOUR AND THREE-QUARTERS CONVERTIBLE GOLD NOTES OF 1922-1923. PER CENT APPLICATION B Y A N INCORPORATED B A N K O R T R U S T COMPANY FOR COUPON NOTES FOR ADVANCE DELIVERY. Dated, To THE FEDERAL R E S E R V E B A N K OF AS FISCAL A G E N T OF THE U N I T E D STATES: .., 1919.° , The undersigned hereby applies for $ par amount of United States of America four and three-quarters per cent convertible gold notes of 1922-1923 in coupon form described,in Treasury Department Circular No. 138, dated AprU 21, 1919, which the undersigned expects to be able to sell to subscribers for cash for advance delivery upon the terms set forth in said circular and in this application. Please deliver such notes to the undersigned as soon as triey are avaUable. The undersigned hereby agrees to use its best efforts to obtain subscriptions for said nates at par, and that it wUl not sell, nor offer . for sale, nor enter into any agreement for the sale of, nor deliver, any of the notes obtained upon this application before June 17, 1919, except against payment in full in cash of the par amount thereof upon application on or before May 10, 1919, by subscribers for aggregate amounts of such notes not in excess of $10,000 for any one subscriber. In making deliveries to such subscribers, the undersigned hereby agrees to deliver, in so far as practicable, notes of the largest denomination or denominations, not exceeding $1,000, contained in the respective amounts of notes subscribed for. The undersigned hereby agrees to hold any notes obtained upon this application remaining unsold at the close of business on May 10, 1919, and at the direction of the above-named Federal reserve bank, as fiscal agent of the United States, either (1) to redeliver such notes to such Federal reserve bank on demand against repayment of the face amount thereof without interest, or (2) to retain such of said notes as may be covered by any aUotment made to the undersigned for itself or its customers upon subscriptions filed with such Federal reserve baiik. In payments at par for the amount of notes hereby applied for— A. Please charge our account with $.. B. We inclose check for : $ C. We inclose certificate of advice showing that there has been deposited with the undersigned for your account, as fiscal agent of the United States, in accordance with Treasury Depart- , ment Circular No. 92, as amended and supple• . mented, the sum of (see note 1 ) . $ D. We iaclose (or you may apply for our account) Treasury certificates of indebtedness. Series V (seenote2) $ 252 R E P O R T ON THE FINANCES. The undersigned desires to receive upon this application coupon notes in the following denominations: ._ of $50 each, $ . . . . . . . ' of $100 each, .. . of $500 each, of $1,000 each, of $5,000 each, . J . . . . of $10,000 each, . . . . . . . Total, Signature in full of applicant incorporated bank or trust company: .By Official title Address in fuU NOTE 1.—If the applicant bank or trust company is duly qualified as a special depositary of public moneys to a sufficient amount in excess of then existing deposits, payment may be made upon this application by credit upon notification by a Federal reserve bank. If the applicant is not so qualified as a depositary, payment must be made by cash, certified check, bank draft, or charge against its account with a Federal reserve bank, br in Treasury certificates as pro^dded in note 2 below. A qualified depositary making payment by credit for note's delivered on this application will not be required to pay interest on the resulting deposit for the period prior to May 20, 1919, except upon the amounts and from the dates of payments to it by subscribers for notes delivered upon this application. The depositary will be required to render separate sworn reports to the Federal reserve bank of its district to date of May 19, inclusive, on Form L (revised), public moneys, showing the daily amounts remaining unsold of the notes so paid for by credit. NOTE 2.—Treasury certificates of indebtedness of Series V A and V B, but of no other series, will be accepted at their face value in payment for notes applied for, interest thereon to cease at maturity on May 6,1919, and May 20,1919, respectively, or earlier if and to the extent that the notes delivered in exchange therefor are earlier sold to subscribers for cash. Accrued interest on Treasury certificates so accepted to maturity, or td such earlier date of sale of the notes delivered in exchange therefor, will be paid by the Federal reserve bank after May 6,1919, or May 20, 3919, as the case may be, upon receipt of a separate sworn report from the applicant bank or trust company giving the amounts and dates of cash payments to it by subscribers for notes so delivered. The applicant bank or trust company will be required to render such reports to the above-named Federal reserve bank on Treasurer's Form 5780 (revised), showing the daily amounts of such notes sold, to date of May 5, inclusive, in case of payment in Treasury certificates of. Series V A, and to date of May 19, inclusive, in case of payment in Treasury certificates of Series V B. 253 SECRETARY OF THE TREASURY. EXHIBIT 11. B E S U L T S OF VICTOBY L I B E B T Y LOAN SUBSCBIPTIONS, ACCOBDI N G TO S T A T I S T I C S C O M P I L E D B Y T H E W A B L O A N O B G A N I Z A T I O N ON T H E B A S I S O F S U B S C B I P T I O N S A S O B I G I N A L L Y B E P O B T E D . Results by Federal Reserve Districts. Quota. Subscriptions received. Percentage of quota subscribed. Boston New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. $375,000,000 1,350,000,000 375,000,000 450,000,000 210,000,000 144,000,000 652,500,000 195,000,000 157,500,000 195,000,000 94,500,000 . 301,500,000 $425,159,950 1,762,684,900 422,756,100 496,750,650 225,146,850 143,062,050 772,046,550 210,431,950 • 176,114,850 197,989,100 87,504,250 319,120,800 113.38 130.57 112.73 110.39 107.21 99.34 118.32 107.91 111.82 101.53 92.60 105.84 817,822 2,484:, 532 984,975 1,253,334 500,000 320,699 2,267,411 367,444 931,767 680,967 200,000 994,944 11.7 18.9 14.8 13.4 5.3 3.1 16.0 3.9 18.0 9.1 3.5 15.0 Total :... United States Treasury.. Grand total. 4,500,000,000 5,238,768,000 111,140,300 116.41 11,803,895 11.3 4,500,000,000 5,249,908,300 District. Percentage of Subscrib- populaers. tion subscribed. 1 Includes Army and Nasry subscriptions subject to change. The percentage of population subscribed is based on the estimated population of t h e United States on J u l y 1, 1917, namely, 103,620,273. Results by States. state. Alabama Arizona Arkansas California Colorado :. Connecticut. , Delaware , District of Columbia Florida ., Georgia , Idaho , Illinois Indiana Iowa Kansas Kentucky Louisiana Maine.... Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico .'... New York North Carolina North Dakota Ohio Quota. $23,482,000 7,756,800 20,541,150 191,427,300 28,385,350 63,665,100 12,889,600 20,307,000 17,288,000 41,154,000 11,039,650 306,416,650 96,328,200 110,•925,000 49,442,750 41,640,750 35,411,600 17;348,800 58, 653,000 245,356,600 118,425,000 92,000,000 22,632,800 •70,531,250 11 000,000 5i; 907,900 3,611,700 15,279,600 140,737,000 3,050,700 ,228,447,400 31,101,000 500,000 • 18, 249' 678,400 Subscriptions received. $21,742,1.50 6,679,900 20,488,600 203,025,300 30,051,250 9.5,466,2.50 13,807,650 28,362,250 18,884,150 39,443,100 11,669,900 371,873,002 105,102,950 111,787,450 51,657,200 49,075,350 34,333,350 19,027,700 62,688,750 252,767,.450 155,787,450 96, 677,250 18,951,750 73,578,"050 12,527,100 44,019,150 3,668,700 16,937,050 178,645,050 1,130,850 ,607,199,250. 27,164,250 „ 18,890,700 281,908,250 Percentage of quota Population. subscribed. 92.59 86.11 99.74 106. 58 105. 86 149. 95 107.12 139. 66 109.23 95.84 105. 71 121.3 109.1 100.77 104.52 117.8 96.95 109.67 106.8 103.02 135.7 105.08 105. 8 104.3 113.88 84.71 101.5 110.7 126.9 37.06 130.84 87.34 102.11 112.98 Number subscribers. 60,598 2,363,939 30,665 263, .588 .50,989 1,766,343 519,178 3,029,032 118,716 988,320 200,931 1,245,373 25,979 215,160 141,582 369,282 3.3,432 916,185 97,568 2,895,841 52,404 445,176 1,174,348 6,234,665 320,333 2,835,000 307,195 2,224,771 153,164 1,851,870 . 92,509 2,394,000 79,892 1,856,954 53,476 777,340 126,987 1,373,672 466,173 3,775,973 402,130 3,094,000 490,594 2,312,445 41,433 1,976,000 193,793 3,429,016 75,985 472,936 1,284,126 137,229 9,221 110,738 444,429 50,117 3,014,194 446,713 423,649 15,444 10,460,182 2,029,910 2,434,381 50,834 765,319 101,064 5,212,085 771,329 Percentage of population subscribed. 2.5 11.6 2.8 17.14 12.01 16.1 12.07 38.3 3.6 3.3 11.8 • 18.8 11.3 13.3 8.2 3.8 4.3 6.8 9.2 12.3 13 21.26 2.09 5.6 16.06 10.67 8.3 11.2 14.8 3.6 19.4 2.08 13.2 14.7 254 REPORT ON T H E FINANCES. Results by States—Continued. State. Oklahoma. Oregon Pennsylvania.. Rhodelsland... South Carolina. South Dakota.. Termessee Texas Utah Vermont , Virginia Washington West Virginia.. Wisconsin Wyoming Alaska Hawaii U . S. T r e a s u r y . , Total..... Subscriptions received. Quota. Percentage of quota subscribed. Population. Number subscribers. Percentage of population s u b scribed. $30,693,850 26,798,400 509,646,900 37,500,000 24,948,000 22,500,000 40,344, 900 80,605,500 13,851, 900 9,515,000 51,366,000 44,365,250 34,160,850 105,183, 950 . 6,414,550 954,900 4, 788,000 $33,331,300 28,409,350 564,173,200 45,446,050 22,994,300 24,589,400 44,343,800 75,254,400 13,720,400 11,648,300 60,016,250 47, 975,350 39,866,150 94,296,100 7,198,450 1,428,850 5,005,650 11,140,300 108.66 106.01 110.69 121.18 92.17 109.28 109.9 93.36 99.05 122.42 116.82 108.13 116.4 89.6 112.04 140.96 104.54 2,289/855 861,992 8,660,042 625.865 1,643,205 716.972 2,304,629 4,515,423 443.866 364, 946 2,213,025 1,597,400 1,412,602 2,527,167 184,970 64^ 356 191,909 84,128 73,004 1,289,764 66,443 38,27P 121,49 66,61 288, 97 52,78 29,31 144,84/ 173,42, 56,16 i 355,625 28,331 5,431 9,676 3.6 8.4 14.8 10.6 2.3 16.9 2.8 6.9 11.6 8.02 6.5 10.8 3.9 14 15.3 8.4 5.04 4,500,000,000 5,249,908,300 116.66 103,907,256 11,803, 895 11.3 Subscriptions in cities having a population of 25,000 or over. City. A k r o n , Ohio Albany, N . Y . . . , Allentown, P a Altoona, P a Amsterdam, N. Y Asheville, N . C A t l a n t a , Ga A t l a n t i c City, N . J Auburn, N. Y A u g u s t a . Ga A u r o r a , 111 Austin, Tex B a l t i m o r e , Md B a n g o r , Me B a t t l e Creek, Mich B a y City, M i c h . Bayonne, N . J Beaumont, Tex Bethlehem and South Bethlehem, Pa. Binghamton, N. Y Birmingham, Ala B l o o m i n g t o n , 111 Boston, Mass. B r i d g e p o r t , Conn B r o c k t o n , Mass : B r o o k l i n e , Mass , Buffalo, N . Y . . . . . . Burlington, Iowa Butte, Mont C a l u m e t , Mich Cambridge, M a s s . . . ; Camden, N. J C a n t o n . Ohio Cedar R a p i d s , Iowa Charleston, S.C Charlotte, N . C Charleston, W . Va Chattanooga, Tenn Chelsea, Mass Chester, P a Chicago a n d Cook C o u n t y , 111 Chicopee, Mass Cincinnati, Ohio Clarksburg, W . V a '.. Quota. $8,225,550 11,917,300 3,806,100 1,841,850 1,814,400 926,600 10,772,500 3,086,300 2,162,200 2,299,200 1,519,600 42,403,400 1,236,000 1,767,100 1,765,200 3,718,450 2,960,500 6,911,500 96,567,000 6,631,300 2,813,000 4,755,000 46,236,300 3,000,000 571,000 5,655,000 6,659,600 5,031,900 4,886,700 2,658,400 3,209,200 5,029,100 1,128,700 3,492,350 189,225,000 860,000 28,812,400 1,754,300 stimated Subscriptions E n u m b e r of received. subscribers. $8,710,200 13,505,400 4,196,000 • 1,941,200 2,338,000 1,105,600 11,833,500 3,312,700 2,413,950 2,327,900 1,558,450 1,435,100 45,231,850 1,498,100 2,200,000 4,000,000 2,766,800 1,814,750 4,113,100 3,125,500 6,043,950 1,429,900 126,582,250 6,925,400 3,208,700 1,425,200 61,283,950 1,301,000 2, 907,750 626,350 4,198,900 7, 834,500 5,127, 750 2,323,750 5,292,6.50 2,999, 800 3,307,45.0 5,083,100 927,450 4,733,950 235,000,000 201,050 38,052,850 1,541,400 57,893 29,805 16,591 • 5,905 4,617 2,285 16,173 6,836 9,901 5,281 6,17.8 2,825 86,581 2,799 7,500 5,000 16,357 5,999 8,800 7,961 12,793 3,213 151,574 22,702 11,407 2,781 147,682 1,641 8,519 718 2,781 24,448 14,749 9,506 8,212 2,896 7,367 8,088 2,782 19,801 800,000 472 88,598 . 2,662 Population. 160,000 104,199 70,000 60,000 37,103 30,000 154,839 60,000 37,385 41,040 34,204 34,814 600,000 26,000 29,480 47,942 50,000 27,711 54,142 53,973 132,685 27,258 686,092 121,579 56,878 27,792 468,558 25,030 39,165 35,000 104,839 110,000 50,217 37,308 65,000 45,000 35,000 44,604 32,452 . 75,000 2,497,722 25,401 364,463 30,000 Percentage of population s u b scribed. 36.2 28.6 23.7 9.8 12.4 7.61 10.5 11.4 26.5 12.9 18.1 8.1 14.43 10.8 25.4 10.4 32.7 21.6 16.3 14.7 9.6 11.8 22.1 18.7 20.1 10.0 31.5 6.6 21.8 2.1 2.7 22.2 29.4 25.5 12.63 6.4 21.05 18.1 8.6 26.4 32.0 1.9 24.3 8.87 SECRETARY OF THE TREASURY. 255 Subscriptions in cities having a populateon of .25,000 or oveir—Continued. City. Cleveland, Ohio Clinton, Iowa Cohoes, N . Y Colorado Springs, Colo.. Columbia, S . C . . . Columbus. Ohio Council Bluffs, Iowa.... Covington, Ky Cumberland, Md Dallas. Tex Danville, 111 Dayton, Ohio Davenport, Iowa Decatur, 111 Denver, Colo Des Moines, Iowa Detroit, Mich Dubuque, Iowa Duluth, Miim Durham, N . C East Chicago, Md East Orange, N . J : Easton, Pa East St. Louis, 111 Elgin, 111 Elizabeth, N. J Elmira, N . Y El Paso, T e x . . . . . Erie, P a . . . Evansville, Ind . Everett, Mass Fall River, Mass Fitchburg, Mass Flint, Mich Fort Smith, Ark Fort Wayne, Ind Fort Worth, Tex Galveston, Tex Gary, Ind Grand Rapids, Mich.... Great Falls, M:ont.. Green Bay, Wis Greensboro, N. C Greenville, S.C Hagerstown, Md Hamilton, Ohio Hammond, Ind Hamtramck, Mich Harrisburg, Pa Hartford, Conn Haverhill, Mass Hazelton, Pa Highland Park, Mich... Hoboken, N . J Holyoke, Mass Houston,. Tex Huntington, W. Va Indianapolis, Ind Jackson, Mich Jacksonville, Fla Jamestown, N . Y Jersey City, N. J Johnstown, Pa Joliet, 111 Joplin, Mo Kalamazoo, Mich Kansas City, Kans Kansas City, Mo Kenosha, Wis Kingston, N . Y Knoxville, Term La Crosse, Wis Lancaster, Pa Lansing, Mich Lawrence, Mass Lebanon, Pa Lewiston, Me Lexington, Ky Lima, Ohio Quota. $80,658,900 1,149,900 1,772,350 3,494,800 9,723,050 1,408,750 1,562,650 7,000,000 5,907,800 13,433,800 5,500,000 1,420,200 1,686,200 2,650,20O 2,600,000 3,216,200 - 2,674,800 2,156,900 5,105,100 4,612,250 1,051,500 5,551,350 2,533,500 1,241,900 4,100,000 1,516,350 9,000,000 1,001,550 1,367,600 1,516,700 1,419,550 4,420,400 12,353,000 2,534,000 2,379,450 5,751,100 3,445,000 7,479,250 1,568,900 5,094,B50 2,172,800 14,156,100 4,476,100 898,700 1,643,100 18,000,000 1,734,100 2,840,000 1,060,000 4,736,100 4,187,000 1,586,950 840,000 1,987,850 1,351,900 Subscriptions received. Estimated number of subscribers. 186,751 2,340 2,492 4,985 8,489 34,259 3,133 5,828 2,292 16,266 •2,718 15,782 12,700 3,638 39,013 10,313 131,000 3,500 27,117 1,507 6,385 8,674 7,697 14,332 4,120 11,676 10,369 9,611 15,173 8,410 2,651 6,763 4,603 20,217 3,100 14,340 16,330 8,663 17,667 22,359 4,218 5,320 2,205 2,187 5,286 3,592 7,683 475 21,521 37,848,150 45,5172,678,850 5,095 3,445,450 9,053 3,856,050 1,965 6,586,850 21,396 4,162,450 9,259 8,019,250 32,797 1,494,850 3,235 17,961,350 68,000 1,651,550 8,839 5,233,800 8,036 2,314,150 7,739 14,186,850 18,813 4,434,950 17,478 3,000,000 13,000 979,950 2,143 1,829,350 6,363 2,066,350 11,173 21,588,600 • 52,832 3,202,450 9,180 2,081,900 2,744 2,288,850 6,057 1,289,950 2,684 4,860,250 8,880 1,588,000 8,981 3,750,000 7,851 1,699,450 3,612 864,250 2,121 2,553,850 I 3,120 1,409,300 I 2,964 $84,380,950 1,253,500 1,250,250 1,865,500 5,430,700 12,164,550 1,154,150 1,679,300 1,529,800 7,308,100 1,311,000 6,239,850 3,510,000 2,041,400 13,795,650 6,225,250 86,236,000 1,622,900 6,576,250 1,418,100 931,950 2,666,950 3,178,250 2,772,600 1,376,150 4,480,800 2,704,600 2,112,750 5,047,500 4,612,550 522,600 5,656,800 2,719,900 3,503,650 1,361,000 5,750,000 4,765,900 • 2,417,350 1,887,000 7,467,550 1,075,100 1,161,900 1,070,950 1,427,300 1,605,700 1,909,200 1,134,900 150,200 4,753,650 Population. 560,663 27,386 25,211 32,971 40,000 181,548 31,484 53,270 26,000 124,527 32,261 116,577 48,811 39,631 245,523 101,598 571,748 39,873 100,000 30,000 28,743 42,458 35,000 58,547 28,203 100,000 38,120 63,705 66,525 69,647 33,484 119,295 37,826 80,000 25,000 76,183 104,562 41,86365,000 128,291 40,000 29,353 30,000 25,000 25,000 35,279 26;171 25,000 72,015 98,915 44,115 38,000 25,000 70,324 57,730 112,307 50,000 271,708 i 35,363 57,699 36,580 267,779 75,000 38,010 32,848 48,886 91,658 281,911 31,576 26,771 36,346 30,417 50,853 40,498 85,892 30,000 26,247 35,099 30,508 Percentage of population subscribed. 33.3 8.5 9.9 15.1 21.22 18.9 10.0 10.9 8.8 13.1 8.4 13.5 26.0 9.2 15.9 10.2 22.9 8.8 27.1 5.02 22.2 20.4 22.0 24.5 14.6 11.7 27.2 15.1 22.8 12.1 7.9 5.7 12.2 25.3 12.4 18.8 15.6 20.7 27.2 17.4 10.5 18.1 7.35 8.74 21.14 10.2 29.4 1.9 29.9 46.0 11.5 .23.8 7.9 30.4 16.0 29.2 6.47 25.0 25.0 13.9 21.2 7.0 23.3 34.2 6.5 13.0 12.2 18.7 29.1 10.2 16.7 8.8 17.5 22.2 9.1 12.0 8.1 8.9 9.7 256 REPORT ON THE FINANCES. Subscriptions in cities having a population or 25,000 or over—Continued. City. Lincoln, Nebr L i t t l e Rock, A r k L o r a i n , Ohio L o s Angeles, Calif Louisville, K y L o w e l l , Mass Lynchburg, Va L y n n , Mass Macon, Ga Madison, W i s M a i d e n , Mass Manchester, N . H McKeesport, Pa Memphis, T e n n Meriden, Conn Milwaukee, W i s . . Minneapolis, Minn Mobile, Ala Moline, 111 M o n t g o m e r y , Ala Montclair, N ' . J Mt. Vernon, N . Y Muncie, Tnd Muskegon Mich Muskogee, Okla Nashua, N. H . . . ^ Nashville, T e n n . . _ , , N e w a r k , 1^. J Newark, Ohio.. N e w Bedford, Mass N e w "Britain, Conn . N e w Brunswick, N . J Newburgh, N . Y N e w Castle, P a N e w Haven, Conn N e w Orleans, L a Newport, K y Newport, R . I Newport News, Va N e w Rochelle, N . Y N e w t o n , Mass NewYork, N . Y Niagara Falls, N . Y Norfolk, V a Norristo^wn, P a North Hudson,N. J Norwalk, Conn O a k l a n d , Calif O k l a h o m a City, Okla " O m a h a , N e b r '..'..'. Orange, N . J .. . . . . . Oswego, N . Y Oshkosh, W i s . . Paducah," K y PassaicN.J Paterson, N . J Pawtucket, R . I Peoria, 111 Perth Amboy, N . J Petersburg, Va Philadelphia, Pa Pittsbmgh, Pa Pittsfield, Mass : Plainfip.lrl, "NT. T. Portland, Me. 1 P o r t l a n d , Oreg Portsmouth. Va Pottsville, P a Poughkeepsie, N . Y Providence, R . I P u e b l o , Colo Qninp.y, m .. _ Q u i n c y , Mass Racine, W i s . : Raleigh, N . C Reading, Pa. Richmond, V a . . . Roanoke, Va...! Quota. $1,289,550 4,025,600 1,170,800 31,848,900 10,663,150 5,275,000 2,376,400 4,545,000 2,120,350 1,950,000 3,502,000 2,383,900 9,570,950 1,470,000 20,700,000 2,536,150 1,783,550 1,942,200 1,362,400 5,136,050 880,300 6,318,800 31,245,900 952,150 5,700,000 . . . . 2,385,000 2,218,200 2,398,100 2,251,950 9,224,000 20,235,050 610,100 2,100,000 1,677,400 1,456,100 4,335,000 1,000,561,600 2,697,200 7,535,100 :... 2,,254,950 3,874,500 1,371,500 9,974,925 3,057,300 8,889,100 1,286,700 1,214,500 , . . . 937,600 3,386,900 6,408,200 4,500,000 , ,, , 1,254,100 2,368,300 187,374,500 102,083,450 2,638,000 2,573,500 3,705,200 14,786,325 937,200 2,137,550 2,893,700 22,500,000 ' 1,297,650 1,317,600 . 2,250,000 1,733,000 5,884,350 15,563,650 2,101,000 Subscriptions received. Estimated n u m b e r of subscribers. $1,564,000 4,615,500 1,439,100 33,078,250 11,434,300 5,098,900 3,018,650 5,159,950 2,201,350 2,191,350 1,832,000 4,306,100 1,847,550 9,610,200 1,790,200 35,847,000' 18,578,800 2,491,700 2,281,350 1,460,150 3,054,350 2,758,200 1,703,200 1,325,400 5,909,900 986,650 6,275,850 41,383,450 1,043,100 6,518,000 3,217,4002,641,450 3,109,050 2,443,900 10,935,800 20,567,450 1,019,500 1,621,000 2,272,500 2,252,650 2,149,700 1,326,301,600 3,217,000 8,644,400 2,095,000 4,563,200 1,844,150 10,695,200 3,375,000 9,524,850 1,760,600 1,857,950 1,454,800 970,400 4,216,100 9,708,850 4,338,450 3,909,550 1,340,150 2,323,550 208,450,500 103,727,300 3,940,700 3,035,950 5,575,350 . 15,690,550 1,384,550 2,137,200 3,414,050 36,640,250 1,559,000 1,586,000 1,520,450 2,278,150 1,379,950 6,077,750 17,283,200 2,535,650 6,557 5,941 2,200 108,558 29,525 8,160 4,630 21,696 2,864 6,631 5,926 4,151 3,681 9,000 6,684 57,410 69,548 7,337 10,038 2,494 6,380 5,767 3,784 8,160 2,427 3,666 5,714 52,518 3,964 10,873 7,704 9,375 6,277 6,555 2i;796 36,005 3,441 3,930 11,654 5,538 619 1,404,299 13,140 • 20,260 4,868 5,787 3,814 48,591 8,640 25,948 5,000 5,301 3,836 4,553 10,523 30,922 5,847 20,000 6,445 2,084 350,903 ' 131,544 7,460 6,345 14,630 32,906 8,586 2,571 7,256 49,459 8,909 5,500 4,788 15,572 2,234 10,147 18,892 13,907 . Population. 46,515 53,811 28,883 319,998 235,114 106,294 35,000 89,336 40,665 30,699 44,404 70,063 42,694 143,231 32,066 436,535 380,000 51,521 27,451 38,136 25,000 37,008 35,085 26,100 44,218 26,005 110,364 500,000 25,404 96,652 43,916 25,000 29,603 36,280 133,605 339,075 30,309 27,149 30,000 37,759 39,806 5,602,841 37,353 125,000 31,401 100,000 26,899 150,174 92,943 165,470 29,630 26,435 36,065 30,000 54,773 125,600' 51,622 71,458 50,000 35,000 1,800,000 533,905 32,121 25,000 58,571 207,214 40,000 25,000 30,390 224,326 54,492 36,730 32,642 46,486 25,000 130,000 160,000 45,000 Percentage of population subscribed. 14.1 n.o 7.6 33.9 12.6 7.7 13.22 24.3 7.0 2L6 13.3 5.9 8.6 6.3 20.8 13.2 18.3 14.2 36.6 6.5 25.5 15.6 10.8 31.3 5.5 14.1 5.2 10.5 15.6 n.2 17.5 37.5 2L2 18.1 16.3 10.6 11.4 14.5 38.84 14.7 L6 25.1 35.2 . 16.2 15.5 5.8 14.2 32.4 9.3 15.7 17.2 20.1 10.6 15.2 19.2 24.6 n.3 28.0 12.9 5.9 19.5 24.6 23.2 25.4 25.0 15.9 2L46 10.3 23.9 22.0 > 16.3 15.0 14.7 33.5 8.93 7.8 11.8 30.9 SECRETARY OF THE TREASURY. 257 Subscriptions in cities having a population of 25,000 or o-yer—Continued. Quota. City. Rochester, N. Y Rockford, 111 Rock Island, 111 Saginaw, Mich Salem, Mass Salt Lake City, Utah. San Antonio, Tex San Francisco, Calif.. Savannah, Ga Schenectady, N . Y . . . Scranton, Pa Seattle, Wash Shamokin, Pa Sheyboygan, W i s . . . . Shenandoah, Pa Shreveport, La Sioux City, Iowa Somerville, Mass South Bend, Ind Spartanburg, S.C Spokane, Wash Springfield, 111 Springfield, Mass Springfield, Mo* Springfield, Ohio St. Joseph, Mo St. Louis, Mo . St. Paul, Minn Stamford, Conn Superior, Wis Syracuse, N . Y Tacoma, Wash Tampa, .Fla Taunton,. Mass Terre Haute, Ind Toledo, Ohio... Topeka, Kans Trenton, N . J Troy, N . Y Tulsa, Okla Utica, N . Y Waco, Tex Waltham, Mass Washington, D. C Waterburv, Conn Waterloo, Iowa Watertown, N . Y . . . . Wheeling, W. Va Wichita, Kans Wilkes-Barre, P a . . . . . Williamsport, Pa Wilmington, Del Wilmmgton, N. C WinstOn-Salem, N. C. Woonsocket, R. I Worcester, Mass Yonkers, N . Y . York, Pa Youngstown, Ohio. .. Zanesville, O h i o . . . . . . 140325—FI 1919- $23,440,300 2,393,000 7,494,950 3,657,300 79,318,150 4,266,150 3,-519,000 10,350,400 18,301,400 1,148,550 852,750 2,246,000 2,100,000 1,094,350 5,248,350 9,000,000 1,936,500 2,340,000 3,204,700 51,342,800 13,500,000 2,285,000 1,010,000 15,530,100 4,234,000 2,706,100 1,511,250 14,651,950 1,963,100 7,331,100 4,900,500 5,136,050 . 8,111,200 1,125,000 1,471,500 20,307,000 4,667,000 3,125,500 .5,631,200 3,319,300 6,823,550 2,921,950 10,035,950 2,464,150 1,692,200 2,250,000 11,283,000 2,559,300 3,102,300 8,219,050 1,721,100 -17 Subscriptions Estimated number of received. subscribers. $25,688,150 3,393,000 1,474,250 3,313,300 3,344,150 7,646,800 3,649,950 ' 79,691,550 4,615,900 4,506,650 10,881,400 19,331,250 1,314,400 1,529,050 828,000 2,850,000 2,913,750 669,600 3,267,950 1,209,700 5,517,850 3,362,350 10,245,250 2,006,000 2,453,050 3,353,450 51,795,850 13,412,100 2,520,500 1,737,600 15,615,250 4,488,500 2,336,100 1,395,950 .3,044,850 15,561,000 2,242,600 7,859,650 5,843,400 5,909,900 8,292,650 1,233,500 1,236,^:000 28,384,150 6,217,800 1,237,700 5,095,450 5,735,300 3,419,200 7,233,950 3,148,450 10,332,500 1,990,800 1,763,450 1,471,050 12,651,700 3,335,350 4,184,250 8,792,550 1,824,800 4 22, 12, 143 11 19; 41 71 2; 2, 1 5i 8, 3i 6 2; 15: 2 21 4: 2 11 135: 52: , 10: 6 22: 15: 2; 3 3; 39; 8, 26, 10, 7, 16! 4; 3: 141 18, 5 4 8 1: 23; 10; 18, 7; 1 3: 28, 9, 14 36 • 4 Population. 256,417 71,458 28,926 55,642 43,697 92,777 123,831 416,912 65,064 99,517 146,811 237,194 40,000 28,559 30,000 40,000 57,078 77,236 68,946 25,000 104,402 61,120 88,926 38,685 46,921 85,236 687,029 300,000 30,884 40,384 155,624 83,743 38,524 34,259 66,083 168,497 48,726 110,000 77,916 30,575 85,692 33,385 27,834 400,000 73,141 35,559 29,894 41,641 70,772 80,000 35,000 100,000 30,000 36,000 38,125 145,986 99,838 55,000 79,066 . 28,026 Percentage of population subscribed. 27.7 11.1 28.2 IB.l 9.7 24.7 10.4 34.5 17.5 19.2 28.1 30.1 6.0 9.7 ^6.2 13.0 14.7 4.7 9.8 8.04 14.6 4.6 24.5 10.3 4.5 13.1 19.7 17.4 32.7 14.9 14.7 18.1 7.4 9.3 5.2 23.7 .17.8 24.1 13.8 24.4 19.5 12.5 14.2 35.3 25.0 15.7 13.9 21.5 9.9 29.3. 29.7 18.2 24.85 5.2 8.6 19.8 10.0 26.5 46.6 16.5 EXHIBIT 12, cn 00 ISSUES OF CEBTIFICATES OF INDEBTEDNESS FBOM A P B . 6, 1917, TO OCT. 3 1 , 1919. F e d e r a l reserve district. A u t h o r i z i n g act. Issued in a n t i c i p a t i o n of t h e L i b e r t y loan: A p r 24 1917 Do Do Do Total D a t e of issue. R a t e per cent. A p r . 25,1917 J u n o 30,1917 M a y 10,1917 J u l y 17,1917 M a y 25,1917 J u l y 30,1917 J u n e 8,1917 . . . . . d o ' 3 3 3f 3i ' Aug. Aug. Sept. Sept. Oct. Oct. 9,1917 N o v . 15,1917 28,1917 N o v . 30,1917 17,1917 Dec. 15,1917 26,1917 . . . . . d o . . . . . . . 18,1917 N o v . 22.1917 ^ , 1 9 1 7 Dec. 15,1917 3| 4 4 4 New York. Philadelphia. $268,20.5,000 200,000,000 200,000,000 200,000,000 $15,800,000 12,167,000 11,200,000 18,200,000 $136,150,000 98,512,000 125,300,000 100,500,000 $14,000,000 10,000,000 9,000,000 10,400,000 868,205,000 57,367,000 460,462,000 43,400,000 58,900,000 13,703,000 13,305,000 300,000,000 250,000,000 300,000,000 400,000,000 385,197,000 685,296,000 19,400,000 15,140,000 12,171,000 .22,174,000 30,149,000 33,010,000 175,000,000 152,938,000 204,347,000 212,100,000 179,475,000 543,683,000 12,800,000 9,882,000 8,850,000 20,000,000 24,000,000 13,600,000 33,700,000 24,157,000 25,113,000 34,209,000 38,863,000 26,471,000 2,800,000 7,235,000 3,180,000 7,004,000 '8,323,000 11,472,000 4,300,000 4,848,000 2,280,000 8,289,000 6,535,000 . 5,883,000 132,044,000 1,467,543,000 89,132,000 182,513,000 40,014,000 32,135,000 Cleveland. Richmond. Atlanta. $5,350,000$14,000,000 2,753,000 15,000,000 2,000,000 10,800,000 19,100,000 -• 3,600,000 $8,000,000 2,605,000 1,700,000 1,000,000 o H O > • ^ • O Jan. Feb. Feb. Mar. Apr. 22,1918 8,1918 27,1918 20,1918 10,1918 A p r . -22,1918 • . Issued in anticipation of t h e fourth L i b e r t y loan: Sept. 24,1917, as a m e n d e d A p r . 4,1918SeriesIV> A Series I V , B Boston. 2,320,493,000 - Issued in a n t i c i p a t i o n of t h e t h i r d L i b e r t y loan: S e p t 24,1917 Do Do Do Do Sept. 24,1917, as a m e n d e d A p r 4,1918 Total Total amount. first Issued in a n t i c i p a t i o n of t h e second L i b e r t y loan: A p r 24 1917 1: DoDo . . . . Sept. 24,1917 Do Do : Total D a t e of maturity. A p r . 22,1918 May. 9,1918 M a y 28,1918 J i m e 18,1918 J u l y 9,1918 July 4 4 t 41 517,826,500 18,1918 3,012,085,-500 • J u n e 25,1918 J u l y 9,1918 Oct 24,1918 N o v . 7,1918 400,000,000 500,000,000 500,000,000 543,032,500 .551,226,500 4h 839,.646,500 753,938,000 20,025,000 29,134,000 35,369,000 53,690,000 39,731,000 209,685,000 241,322,000 172,666,500 193,700,500 21-5,448,000 36,468,000 222,486,000 214,417,000 1,255,308,000 53,000,000 53,100,000 64;:590,000 56,273,500 312,844,500 273,219,500 22,500,000 30,000,000 33,000,000 38,000,000 38,000,000 26,000,000 34,000,000 44,500,000 48,400,000 46,000.000 7,000,000 12,131,000 18,148,000 16,234,500 11,219,000 9,507,000 12,391,000 14,814,000. 14,557,000 17,095,000 35,000,000 39,133,500 . 11,097,000 11,209,000 196,500,000 238,0.33,500 75,829,500 79,573,000 80,000,000 66,550,000 19,013,000 15,073,-500 17,233,500 16,021,500 U2 Series IV, Series IV, Series IV, Series IV, Series IV, C. D. E.. F.. G.. July Aug. Sept. Sept. Oct. 23,1918 6,1918 3,1918 17,1918 1,1918 Nov 21,1918 Dec. 5,1918 Jan. 2,1919 Jan. 16,1919 Jan. 30,1919 Total. Issued iji anticipation of the Victory Liberty loan: Sept'. 24,1917, as amended Apr. 4,1918— Series V, A , SeriesV, B , SeriesV, C , SeriesV, D SeriesV, E , Series V, F :..., SeriesV, G Sept. 24,1917, as amended Apr. 4,1918, and Mar. 3,1919— SeriesV, H ' Series V, J '.. SeriesV, K 4,659,820,000 Dec. Dec. Jan. Jan. Jan. Feb. Feb. 5,1918 19,1918 2,1919 16,1919 30,1919 13,1919 .27,1919 Mar. 13,1919 Apr. 10,1919 May 1,1919 Mav May June June July July July Total. 13,168,500 14,968,500 16,205,500 15,872,000 21,387,500 36,872,500 38,400,000 42,061,000 45, 778,000 46,808,500 55,927,000 52,500,000 74,088,000 59,321,500 52,182,500 381,152,500 1,680,989,000 316,020,000 440,569,000 117,983,500 114,857,000 47,901,000 45,010,500 60,154,500 49,090,500 48,800,000 48,421,500 41,909,000 222.830,000 199; 117,000 300,977,500 203,609,500 265,844,500 217,497,500 174,501,500 44,128,000 40,409,500 53,-300,000 43,533,500 46,173,000 43,323,500 38,247,000 .50,700,000 52,000,000 66,250,000 „ 50,400,000 . 60,786,500 59,100,000 51,225,000 17,963,500 20,552,000 19,571,000 18,753,500 20,836,500 18,977,500 17,501,000 11,600,000 16,349,500 15.26.5,500 12; 288,000 16,262,500 15,482,000 14,977,500 Aug. 12,1919 Sept. 9,1919 Oct. 7,1919 542,197,000 646,025,000 591,308,000 48,454,000 4.3,705,000 42, .346,500 183,111,500 275.355,000 212;301,000 36,758,000 39,160,500 35,301,500 53,300,000 62,000,000 49,000,000 15,764,500 18,843,500 18,734,000 13,175,500 13,274,500 14, 636,500 475,792,500 2,255,145,000 420,334,500 554,761,500 187,497,000 143,311,500 Jan. 2,1920 •Tan. 15,1920 Feb. 2,1920 Total. Issued in anticipation of income and proflts taxes. 1918: Sept. 24,1917 Do-.-. Do - Do ..Sept. 24,1917, as amended Apr. 4,1918...." :. Do 16,886,000 . 14,397,000 18,957,000 18,449,000 15,208,000 211,714,000 207,287,000 210,068,500 216,264,500 249,591,000 613,438,000 572,494,000 751,684,500 600,101,500 687,381,500 620,578,500 532,381,500 6,157,589,500 Aug. 1,1919 Aug. 15,1919 Sept. 2,1919 48,267,500 49,509,000 57,424,000 54,710,000 50,378,500 6,1919 20,1919 3,1919 17,1919 1,1919 15,1919 29,1919 Total. Loan certificates of 1920: Sept. 24,1917, as amended Apr. 4,1918, and Mar. 3,1919— Series A, 1920 Series B, 1920 Series C, 1920 584,750,500 575,706,500 639,493,000 625,216,500 611,069,000 , 9,790,500 8,951,000 10,493,500 14,858,000 15,427,500 19,312,000 129,737,500 29,235,000 49,597,500 533,801,500 532,152,000 573,841,500 41,935,500 43,855,500 45,765,500 192,326,000 201,904,500 252,679,000 36,264,500 36,276,000 27,155,000 45,330,000 45,319,000 39,088,500 1,639,795,000 131,556,500 646,909,500 99,695,500 Nov. 30,1917 Jan. 2,1918 Feb. 15,1918 Mar. 15,1918 June 25,1918 do .-.-do ..--do. 691,872,000 491,822,500 74.100,000 n o ; 962,000 20,921,000 16,163,500 8,790,500 6,735,590 494,070,500 239,954,000 14,007,500 10,252,500 11,492,000 34,796,000 4,680,000 10,474,500 115,230,500 70,069,500 15,402,500 55,615,500 2,415,000 8,948,500 1,917,000 2,725,500 1,555,000 5,551,000 1,269,000 826,000 Apr. 15,1918 May 15,1918 ....do... .-..do... 71,880,000 183,767,000 6,071,500 24,578,000 12,000,500 61,188,000 14,-511,500 19,583,000 10,587,500 18,547,000 2,049,000 2,767,000 2,749,500 1,05-5,500 1,624,403,500 83,260,000 831,473,000 95,537,006 285,452,500 20,822,000 13,006,000 U2 a O i ci to CO Issues of Certificates of indebtedness from Apr. 6., 1917, to Oct. 31, 1919—Continued. to o F e d e r a l reserve district. A u t h o r i z i n g act. Issued i n a n t i c i p a t i o n of income a n d profits t a x e s , 1919: S e p t . 24,1917, a s a m e n d e d A p r . 4.1918T a x series of 1919 Series T Series T - 2 S e p t . 24,1917, a s a m e n d e d A p r . 4,1918, a n d Mar. 3,1919— Series T - 3 Series T - 4 . . Series T - 5 Series T - 6 Series T - 7 D a t e of issue. D a t e of maturity. R a t e per cent. Philadelphia. Cleveland. Richmond. Atlanta. 4 4h $157,552,500 794,172,500 392,-381,000 $12,025,500 88,728,000 36,276,500 $44,766,000 350,847,500 165,622,000 $10,523,500 29,283,500 19,744,000 $29,968,500 112,500,000 78,641,500 $4,205,000 12,458,000 10,652,000 $3,412,000 11,487,000 6,533,500 Mar. 15,1919 J u n e 3,1919 do J u l y 1,1919 do June Sept. Dec. Sept. Dec. 4i 4J 407,918,500 526,139,500 238,711,500 326,468,000 511,444,000 29,015,000 32,215,500 8,924,500 14,188,000 35,538,500 227,964,000 212,337,000 78,557,500 129,254,000 242,504,000 18,874,000 18,686,500 8,031,000 14,730,000 21,129,000 46,187,000 62,280,000 33,894,000 30,551,000 41,418,500 8,831,500 23,208,000 8,264,000 10,753,000 14,147,500 3,920,000 13,228,000 6,984,000 15,152,000 10,697,500 256,911,500 1,451,852,000 141,001,500 435,440,500 92,519,000 71,414,000 16,1919 15,1919 15,1919 15,1919 15,1919 ^ ^ 4| 4* o n o tei J u l y 15,1919 Sept. 15,1919 do Mar. 15,1920 do S e p t . 15,1920 4^ 4i 4i 323,074,500 101,131,500 657,469,000 1,081,675,000 Total Special issues t o secure F e d e r a l reserve b a n k n o t e s : S e p t . 24, 1917, as a m e n d e d A p r . 4,1918, a n d A p r . 23, 1 9 1 8 . . . . . . Special issues p a y a b l e i n foreign currency: Sept. 24,1917, a s a m e n d e d A p r . 4,1918, J u l y 9,1918, a n d S e p t . 24 1918 Special s'hort-term issues: Sept. 24, 1917; Sept. 24, 1917, asl a m e n d e d A p r . 4, .1918, a n d Mar 3 1919 J New York. J u l y 15,1919 Mar. 15,1919 J u n e 17,1919 3,354,787,-500 Issued i n a n t i c i p a t i o n of income a n d profits t a x e s , 1920: Sept. 24,1917, a s a m e n d e d — Series T - 8 Series T - 9 Series T-10 Bcston. Aug. 20,1918 N o v . 7,1918 J a n . 16,1919 Total Total amount. 0) • 0) 0) (6) 1 Various, beginning Aug. 20, 1918. 2 One year from date of issue." 2 255,475,000.00 13,446,000 5,704,000 31,752,000 12,369,500 .5,563,000 .54,586,500 29,070,000 8,788,000 53,802,000 7,394,000 2,999,500 10,339,500 12,441,500 3,706,000 5,618,000 50,902,000 " 554,352,000- 72,519,000 . 91,660,000 20,733,000 21,765,500 21,436,000 58,576,000 29,180,000 23,299,000 11,660,000 14,564,000 103,000,000 5,467,500,000 83,000,000 238,000,000 60,000,000 21,000,000 116,450,500 25,582,500 412,319,000 5 105,165,000.00 { 1:1}7,627,470^903.34 3 Various, begiiming Nov^ 27, 1918. < Various, beginning Feb. 25, 1919. 5 510,000,000 pesetas. 6 Various, > Issues of certificates of indebtedness from Apr. 6, 1917, to Oct. SI, 1919—Continued. Federal reserve district. Authorized. Issued in. anticipation of the first Liberty loan: Apr. 24,1917 Do.. Do Do Total. Issued in anticipation of the second Liberty loan: Apr.'24,1917 ... Do : Do Sept. 24, 1917 Do Do....-.--.. Total Issued in anticipation of the third Liberty loan: Sept. 24, 1917 -. Do Do Do... Do : Sept. 24, 1917, as amended Apr. • 4,1918 Total Issued iu anticipation of the fourth Liberty loan: Sept'. 24, 1917, as amended Apr. 4,1918— Series IV, A Series IV, B Series IV,C Series IV, D Series IV, E Series IV, F SeriesIV, G--.Total. Date of issue. Apr. May May June Aug. Aug. Sept. Sept. Oct. Oct. Date of. maturity. 25,1917 June 30,1917 10,1917 July 17,1917 25,19,17 July 30,1917, 8,1917 ...'.do 9,1917 Nov. 15,1917 28,1917 Nov. 30,1917 17,1917 Dec. 15,1917 26,1917 .-.-do. 18,1917 N o v . 22,1917 24,1917 Dec. 15,1917 Rate per cent. Minneapolis. Kansas City. San Francisco. Treasury Department. Chicago. St. Louis. $16,400,000 24; 893,000 16,600,000 19,800,000 $10,400,000 • 7,045,000 7,200,000 8,100,000 $2,500,000 4,500,000 2,400,000 5,200,000 $8,000,000 9,500,000 7,200,000 5,600,000 $7,000,000 5,525,000 2^400,000 3,300,000 77,693,000 32,745,000 14,600,000 30,300,000 18,225,000 36,900,000 15,600,000 15,095,000 21,169,000 35,629,000 32,963,000 18,141,000 7,900000 4,188,000 4,874,000 11,000,000 12,710,000 5,028,000 3,700,000 2,025,000 2,000,000 7,000,000 9,541,000 5,205,000 7,100,000 4,542,000 4,619,000 9,000,000 10,600,000 2,178,000 4,700,000 2,430,000 2,367,000 10,595,000 12,038,000 7,217,000 13,000,000 7,520,000 9,030,000 23,000,000 20,000,000 la, 408,000 138,597,000 45,700,000 29,471,000 38,039,000 39,347,000 85,958,000 30,359,000 42,352,000 59,168,000 64,414,000 65,850,000 18,090,000 20,064,000 25,709,000 22,842,000 21,181,000 10,750,000 15,000,000 17,000,000 16,000,000 15,600,000 12,000,000 21,411,000 23,736,500 26,116,500 25,000,000 13,084,000 14,076,000 19,000,000 15,000,000 16,602,500 21,000,000 25,000,000 33,500,000 30,250,000 39,500,000 63,212,000 25,698,500 15,000,000 20,260,500 13,162,500 23,540,500 325,355,000 133,584,500 89,350,000 128,524,500 90,925,000 172,790,500 131,481,500 101,203,000 83,310,500 87,292,500 88,279,000 88,878,500 82,759,000 34,654,000 31,260,500 25,952,500 24,056,000 25,501,500 24,178,500 21,360,000 20,000,000 22,100,000 16,8i00,000 12,260,000 17,200,000 17,700,000 21,500,000 28,410,500 30,031,500 23,369,000 25,126,000 25,913,000 22,816,000 21,200,000 18,481,500 14,452,000 10,156,000 7,579,500 11,295,500 11,898,500 9,457,000 48,000,000 11,938,000.00 39,000,000 35,653,000.00 4,327,000.00 38,000,000 4,581,000.00 37,750,000 3,000,000.00 49,500,000 3,000,000.00 46,350,000 2,817,000.00 46,420,000 663,204,000 186,963,000 127,560,000 ^176,866,000 83,320,000 305,020,000 65,316,000.00 Dallas. .$20,000,000 $10,605,000.00 7,500,000 4,200,000 5,200,000 10,605,000.00 t?^ H ::::::::;::::" fe Kj ;;;; o hrj H Jan. Feb. Feb. Mar. Apr. 22,1918 Apr. 22,1918 8,1918 May 9,1918 27,1918 May 28,1918 20,1918 June 18,1918 10,1918 July 9,1918 Apr. 22,1918 June July July Aug. Sept. Sept. Oct. 25,1918 9,1918 23,19,18 6,1918 3,1918 17,1918 1,1918 July 18,1918 Oct. 24,1918 Nov. 7,1918 Nov. 21,1918 Dec. 5,1918 Jan. 2,1919 Jan. 16,1919 Jan. '30,1919 •"3,'ii9,"666.'66 3,389,000.00 3,828,000.00 1,559,000.00 ' w H g K ^ S -^—^— S 11,895,000.00 .^ to Issue of certificates of indebtedness from Apr. 6, 1917, to Oct. 31, 1975^—Coritinued. to to F e d e r a l reserve district. Authorizing act. Issued i n a n t i c i p a t i o n of t h e V i c t o r y L i b e r t y loan: Sept. 24, 1917, as a m e n d e d A p r . 4, 1918— Series V. A SeriesV B . . . Series V, C Series V, D Series V , E Seiies V , F Series V, G Sept: 24,1917. as a m e n d e d A p r . 4, 1918, a n d Mar. 3, 1919— Series V, H SeriesV, J Series V, K . . . D a t e of issue. Dec. Dec. Jan. Jan. Jan. Feb. Feb. 5,1918 19,1918 2,1919 16,1919 30,1919 13,1919 27,1919 D a t e of maturity. May May June June July July July 6,1919 20,1919 3,1919 17,1919 1.1919 15,1919 29,1919 R a t e per cent. ' Total Minneapolis. K a n s a s City. $97,235,500 as, 189,500 108,647,000 97,774.500 103.048; 500 91,677,500 . 82,044,000 $24,2-31.500 21,319;500 30,927,000 26.445,500 29;678,500 . 27,405,000 21,225,500 $24.500,000 22,265 000 26,500,000 27,760,000 24,600,000 23,610,000 18,720,000 $21,115,000 20,778,500 19,050,500 18,403,500 20,000,000 • 18,500,000 20,040,000 82, 656,500 • 99,886,000 107,256,-500 22,219,000 21,761, .500 20,07.5,000 18,000,000 18,310,000 14,615,500 9.53,415,500 245,288,000 79,723,000 70,582,000 63,193,500 Dallas. $42,400,000 40,000,000 45,000,000 40,000,000 45,400,000 40,000,000 35, SOO, 000 16,750.000 13,ooo; 000 , 20,107,500 14,358,000 12,879,000 14,3.59,000 35,450,000 ^27,850,000 ' 38,575.000 4,000,000 00 218,880,500 187,745,000 101,540,000 390,475,000 23,397,500. 00 21,700,000 .20,569,000 17,975,500 • 17,514.000 17,300,000 16,000,000 20,000,000 20. 238,500 16,000,000 16,185,000 14,429,000 23,179,000 38,175,000 37,300,000 43,000,000 213,498,500 60,244,500 '50,814,000 56,238,500 53,793,000 118,475,000 4 4 4 4 30,139,500 48,054,500 15,709,000 13,286,500 .3,833,000 11,168,500 1,661,500 2,063,500 1,743,000 5,230,000 1,25.5,000 720,000 1,072,000 17,075,000 498.500 . 824,500 5,388,-500 15,180,000 1,505,-500 1,022,000 4 4 15,742,000 40,002,500 901,500 3,075,000 .850,000 1,600; 000 1,028,000 .538,500 1,092,000 4,762,500 4,297,500 6,069,-500 162,934,000 22,703,000 11,398,000 21,036,500 28,950,500 47,831,090 41 4i 4^4J $4,140,000.00 327,500.00 4,000,000. 00 o 5,645.000. 00 3,085; 000.00 O Mar. 13,1919 Apr. 10,1919 May 1,1919 Aug. 12,1919 S e p t . 9,1919 Oct. 7,1919 % 4| 2,200,000. 00 > Aug. 1,1919 Auc. 1-5,1919 Sept. 2,1919 .Ian. 2,1920 .Ian. 15,1920 F e b . 2,1920 4J Total Issued i n a n t i c i p a t i o n of i n c o m e a n d profits taxes, 1918: Sept. 24, 1917 Do Do Do :.... Sept. 24, 1917, as a m e n d e d Apr. 4. 1918 Do St. L o u i s . Treasury Department. $8,833,500 7; 363,000 5.714,000 8,043,000 5,951,500 10,939,000 13,106,000 4:.- ^ Total I'Oan certiflcates of 1920: Sept. 24, 1917, as a m e n d e d Apr. 4, 1918, a n d Mar. 3, 1919— Series A. 1920 Series "B; 1920 Series C. 1920 • Chicago. San Francisco. N o v . 30,1917 Jan. 2,1918 F e b . 15,1918 Mar. 15,1918 J u n e 25,1918 do do do A p r . 15,1918 . - - - . d o May 15,1918 . . - . - d o - 4,012,000 19,632,000 7,404,000 6,416,000 o Ul I s s u e d i n a n t i c i p a t i o n of i n c o m e a n d profits t a x e s , 1919: S e p t . 24,1917, as a m e n d e d A p r . 4,1918— T a x series of 1919 Series T Series T - 2 S e p t . 24,1917, as a m e n d e d A p r . 4,1918, a n d Mar. 3,1919— Series T - 3 . Series T-4 : Series T - 5 . . Series T - 6 '. Series T - 7 . Total A u g . 20,1918 N o v . 7,1918 J a n . 16,1919 J u l y 15,1919 M a r . 15,1919 J u n e 17,1919 4 4^ 4i 22,003,000 103,828,000 42,045,000- 4,712,000 17,109,500 4,335,500 1,829,000 10,220,500 3,030,000 3,662,500 7,443,500 4,101,000 4,173,000 12,103,000 4,350,000 16,272,500 38,164,000 17,050,000 M a r . 15,1919 J u n e 3,1919 do J u l y 1,1919 do June Sept. Dec. Sept. Dec. H 48,301,500 79,163,000 63,326,500 46,516,000 58,624,000 6,437,000 12,854,500 6,906,500 11,203,500 11,963,500 3,502,000 10,468,500 2,600,500 10,000,000 10,000,000 1,820,000 7,681,500 2,502,500 8,222,000 6,551,500- 3,417,500 15,815,500 3,036,000 6,221,500 12,823,500 9,649,000 30,201,500 15,684,500 12,134,000 27,001,000 17,543,000.00 19,045,500.00 463,807,000 75,522,000 51,650,500 41,984,500 61,940,000 166,156,500 44,588,500.00 16,1919 15,1919 15,1919 15,1919 15,1919 tl il : I s s u e d i n a n t i c i p a t i o n of i n c o m e a n d profits t a x e s , 1920: S e p t . 24,1917, as a m e n d e d — Series T - 8 Series T-9 Series T-10 Total . o • J u l y 15,1919 S e p t . 15,1919 ...do M a r . 15,1920 do S e p t . 15,1920 ^ 41 4^ . . Special issues t o secure F e d e r a l reserve b a n k n o t e s : S e p t . 24, 1917, as a m e n d e d A p r . 4, 1918, a n d A p r . 23,1918 Special issues p a y a b l e i n foreign currency: Sept. 24, 1917, as a m e n d e d A p r . 4,1918, J u l y 9,1918, a n d S e p t . 24,1918 Special s h o r t - t e r m issues: S e p t . 24, 1917; S e p t . 24, 1917, as a m e n d e d A p r . 4, 1918, a n d Mar. 3,1919 65,290,500 24,097,500 35,172,000 11,198,500 .3,614,500 12,232,500 8,866,500 4,750-, 000 7,750,000 7,670,000 2,835,000 4,165,000 8,681,000 3,491,500 8,232,500 24,551,500 10,000,000 21,500,000 5,645,000.00 124,560,000 27,045,500 21,366,500 14,670,000 20,405,000 56,051,500 5,645,000.00 39,6^12,000 17,068,000 8,380,000 12,820,000 8,200,000 ' 10,680,000 > pi Kl O hrj W 0) 5105,165,000.00 1 '•' 1 Various, besrinning Aug. 20, 1918. - One vear rom date o* issue. 8,000,000.00 { I'M 806,000,000 34,000,000 51,500,000 3 Various, beginning Nov. 27, 1918. • Various, beginning Feb. 25, 1919. 8,000,000 20,000,000 121,000,000 614,470,903.34 5 "8007000,000 pesetas. 6 Various. to CO Issues of certificates of indebtedness from Apr. 6, 1917, to Oct. 31, 1919—Continued. to RECAPITULATION. Federal reserve district. Issued— Loan certificates: In anticipation In anticipation In anticipation In anticipation In anticipation Series of 1920 of the first Liberty loan of the second Liberty loan of the third Liberty loan of thefourth Liberty loan.-. of the Victory Liberty loan...- Total loan certificates . Tax certificates: In anticipation of income and profits taxes 1918 In anticipation of income and profits taxes 1919. In anticipation of income and profits taxes 1920 . . . Total tax certificates . . Special issues to secure Federal reserve bank notes. Special issues payable in foreign currency Special short-term issues.. . . . Grand total, all issues ^ Total amount. .^. Boston. New York. $868,205,000.00 2,320,493,000.00 3,012,085,500.00 4,659,820,000.00 6,157,589,500.00 1,639,795,000.00 $57,367,000 132,044,000 214,417,000 381,152,500 475,792,500 131,556,500 $460,462,0001,467,543,000 1,255,308,000 1,680,989,000 2,255,145,000 646,909,500 18,657,988,000.00 1,392,329,500 7,766,356,500 1,624,403,500.00 3,354,787,500.00 1,081,675,000.00 83,260,000 256,911,500 50,902,000 6,060,866,000.00 255,475,000.00 105,165., 000.00 7,627,470,903.34 32,706,964,903.34 Philadelphia. Cleveland. Richmond. Atlanta. $58,900,000 182,513,000 238,033,500 440,569,000 554,761,500 129,737,500 $13,703,000 40,014,000 75,829,500 117,983,500 187,497,000 29,235,000 $13,305,000 32,135,000 79,573,000 114,857,000 143,311,500 49,597,500 1,165,082,000 1,604,514,500 464,262,000 432,779,000 831,473,000 1,451,852,000 554,352,000 95,537,000 141,001,500 72,519,000 285,452,500 435,440,500 91,660,.000 20,822,000 92,519,000 20,733,000 13,006,000 71,414,000 21,765,500 H 391,073,500 2,837,677,000 309,057,500 812,553,000 134,074,000 106,185,500 w 21,436,000 58,576,000 29,180,000 23,299,000 11,660,000 14,564,000 M 103,000,000 5,467,500,000 83,000,000 238,000,000 60,000,000 21,000,000 1,907,839,000 16,130,109,500 1,586,319,500 2,678,366,500 669,996,000 574,528,500 > o $43,400,000. 89,132,000 196,500,000 316,020,000 420,334,500 • 99,695,500 o o Ui RECAPITULATION-Continued. Federal reserve district. Issued— Chicago. Loan certificates: In anticipation In anticipation In anticipation In anticipation In anticipation Series of 1920 of the first Liberty loan . of the second Liberty loan of the third Liberty loan.. of the fourth Liberty loan of the Victory Liberty loan .' St. Louis. MinneapoUs. Kansas City. Dallas. San Francisco. Treasury Department. $77,693,000 138,597,000 325,355,000 663,204,000 953.415,500 213;498,500 $32,745,000 45,700,000 -= 133,584,500 186,963,000 245,288,000 60,244,500 $14,600,000 29,471,000 89,350,000 127,560,000 218,880,500 50,814,000 $30,300,000 38,039,000 128,524,500 176,866,000 187,745,000 56,238,500 $18,225,000 39,347,000 90,925,000 83,320,000 101,546,000 53,793,000 $36,900,000 85,958,000 172,-790,500 305,020,000 390,475,000 118,475,000 $10,605,000.00 .2,371,763,000 704,525,000 530,675,500 617,713,000 387,156,000 1,109,618; 500 111,213,500.00 162,934,000 463,807,000 124,560,000 22,703,000 75,522,000 27,045,500 11,398,000 51,650,500 21,366,500 • 21,036,500 41,984,500 14,670,000 47,831,000 166,156,500 56,051,500 44,588,500.00 5,645,000.00 751,301,000 125,270,500 84,415,000 77,691,000 111,295,500 270,039,000 50,233,500.00 39,612,000 17,068,000 8,380,000 12,820,000 8,200,000 10,680,000 806,000,000 34,000,000 51,500,000 8,000,000 20,000,000 3,968,676,000 880,863,500 674,970i500 716,224,000 526,651,500 11,895,000.00 65,316,000.00 23,397,500.00 • Ui Q Total loan certificates Tax certificates: In anticipation of income and profits taxes 1918. In anticipation of income aiid proflts taxes 1919 . In anticipation of income and profits taxes 1920 Total tax certificates . Special issues to secure Federal reserve bank notes Special issues payable in foreign currency Special short-term issues Grand total, all issues..,. - 28,950,500 61,940,000 . 20,405,000 > K{ O ^^ H 121,000,000 105,165,000.00 614,470,903.34 1,511,337,500 881,082,903.34 H W W > d pi to Oi Or 266 REPORT ON T H E EUsTAiNCES. EXHIBIT 13. T B E A S U B Y C E B T I F I C A T E S O F I N D E B T E D N E S S , S E B I E S V A, F O U B A N D O N E - H A L F F E B C E N T , D A T E D D E C E M B E B 6, 1 9 1 8 , D U E M A Y 6, 1 9 1 9 . WASHINGTON, Novemher 27, 1918. The Secretary of the Treasury under the authority of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers for subscription, at par and accrued interest, through the Federal reserve banks, $600,000,000 or more Treasury certificates of indebtedness. Series V A, dated and bearing interest from December 5, 1918, payable May 6, 1919, with interest at the rate of 4^ per cent per annum. Applications will be received at the Federal reserve banks. Subscription books will close at the close of business December 10, 1918. Certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates, shall, be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except ia) estate or inheritance taxes, and (Jb) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (6) above. Upon 10 days' public notice, given in such manner as may be determined by the Secretary of the Treasury, the certificates of this series may be redeemed as a whole at par and accrued iriterest on or after any date, occurring before the maturity of such certificates, set for the payment of the first installment of the subscription price of any bonds offered for subscription by the United States after the offering and before the maturity of such certificates. The certificates oi this series, whether or not called for redemption, will be accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price then payable of any such bonds subscribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and will not be accepted in payment of taxes. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be made on and after December 5, 1918, and on or before December 10, 1918. After allotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customer J up to an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. SECRETARY OF THE TREASURY. EXHIBIT 267 14. T B E A S U B Y CEBTIFICATES OF I N D E B T E D N E S S . S E B I E S V B, F O U B AISTD O N E - H A L F F E B C E N T , D A T E D D E C E M B E B 1 9 , 1 9 1 8 , D U E M A Y 20, 1919. WAsumoTOJ^, Decemher 12, 1918. The Secretary of the Treasury under the authority of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers for subscription, at par and accrued interest, through the Federal reserve banks, $500,000,000 or more Treasury certifioates of indebtedness, Series V B, dated aud bearing interest from December 19, 1918, payable May 20,1919, with interest at the rate of 4 i per oent per annum. Applications will be receiyed at the Federal reserve banks. Subscription books will close at the close of business December 26, 1918. Certifioates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation now or \ hiereafter im.posed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (h) graduated additional income taxes, commonly known as surtaxes, and excess-profits and warprofits taxes, now or hereafter imposed by the United States, upon the inconie or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (h) above. Upon 10 days' public notice, given in such manner as may be determined by the Secretary of the Treasury, the certificates of this series may be redeemed as a whole at par and accrued interest on or after any date, occurring before the maturity of such certificates, set for the payment of the first installment of the subscription price of any bonds offered for subscription by the United States after the offering and before the maturity of such certificates. The certificates of this series, whether or not called for redemption, will be accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price then payable of any such, bonds subscribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and will not be accepted in payment of taxes. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be made on and after December 19, 1918, and on or before Deceniber 26, 1918. After allotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the definitive certificates. Qualified deppsitaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customers up to an ainount for which ^ach shall have qualified in excess of existing deposits when so notified by Federal reserve banks. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the .Federal reserve banks of the respective districts. 268 REPORT ON T H E PINANCES. EXHIBIT 15. TBEASUBY "CEBTIFICATES OF INDEBTEDNESS, SEBIES V C, FOUB AND ONE-HALF F E B CENT, DATED JANUABY 2, 1919, DUE JUNE 3, 1919. WASHINGTON, December 28, 1918. The Secretary of the Treasury under the authority of the act approved Septeinber 24, 1917, as amended by the act approved April 4? 1918, offers for subscription at par and accrued interest, through the Federal reserve banks, $750,000,000 or more Treasury certificates of indebtedness. Series V C dated and bearing interest from January 2, 1919, payable June 3, 1919, with interest at the rate of 4^ per cent per annum. Applications will be received at the Federal reserve banks. Subscription books will close at the close of business January 7, 1919. Certificates will be issued in denominations of $500, $1,000, $5,000, $10,000 and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation riow or hereaiter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except {a) estate or inheritance taxes, and (Jb) graduated additional income taxes, commonly known as surtaxes, and excess profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal oi which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause Qf) above. Upon 10 days' public notice, given in such manner as may be determined by the Secretary of the Treasury, the certificates of this series may be redeemed as a whole at par and accrued interest on or after any date, occurring before the maturity of such certificates, set for the payment of the first installment of the subscription price of any bonds offered for subscription by the United States after the offering and before the maturity of such certificates.. The certificates of this series, whether or not called f ors redemption, will be accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price then payable of any such bonds subscribed for by and aUotted to holders of such certificates. The certificates of this series do not bear th'e circulation privilege and will not be accepted in payment of taxes. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be made on and after January 2, 1919, and on or before January 7, 1919. After allotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the definitive certificates. Quahfied depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customers up to an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury, to the Federal reserve banks of the respective districts. SECRETARY OP THE TREASURY. 269 E X H I B I T 16. TBEASUBY CEBTIFICATES OF INDEBTEDNESS, SEBIES V D, FOUB AND ONE-HALF F E B CENT, DATED JANUABY 16, 1919, DUE JUNE 17,1919. WASHINGTON, J a n u a r y 8, 1919. The Secretary of the i?reasury under the authority, of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers for subscription, at par and accrued interest through the Federal reserve banks $600,000,000 or more Treasury certificates of indebtedness. Series V D, dated and bearing interest from January 16, 1919, payable June 17, 1919, with interest at the rate of ^4^ per cent per annum. Applications will be received at the Federal reserve banks. Subscription books will close at the close of business January 21, 1919. Certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except {a) estate or inheritance taxes, and (&) graduated additional income taxes, commonly known as surtaxes, and excess profits and war-profits taxes, now or hereafter in>posed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (Jb) above. Upon 10 days' public notice, given in such manner as may be determined by the Secretary of the Treasury, the certificates of this series, may be redeemed as a whole at par and accrued interest on or after any date, occurring before the maturity of such certificates, set for the payment of the first installment of the subscription price of any bonds offered for subscription by the United States after the offering and before the maturity of such certificates. The certificates of this series whether or not called for redemption, will be accepted at par, with adjustment of accrued interest, if tendered on such installment date iri payment on the subscription price then payable of any such bonds subscribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and will not be accepted in payriaent of taxes. ' The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice, r a y m e n t at par and accrued interest for certificates allotted must be made on and after January 16, 1919, and on or before January 21, 1919. After allotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customers up to an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. Treasury Certificates of Indebtedness of Series IV F, dated September 17, 1918, and maturing January 16, 1919, will be accepted at par with an adjustment of accrued interest in payment for any 270 REPORT ON T H E PINANCES. certificates of the Series V D now offered which shall be subscribed for and allotted. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. EXHIBIT 17. T B E A S U B Y CEBTIFICATES OF INDEBTEDNESS, S E B I E S V E, F O U B AND ONE-HALF F E B CENT, DATED J A N U A B Y 30, 1919, DUE JULY 1,1919. WASHINGTON, J a n u a r y 21^., 1919. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers for subscription, at par and accrued interest, through the Federal reserve banks, $600,000,000 or more Treasury certificates of indebtedness. Series V E, dated and bearing interest from January 30, 1919, payable July 1, 1919, with interest at the rate of ^.\ pep ceint per annum. Applications WTU be received at the Federal reserve banks. Subscription books will close at the close of business February 6, 1919. Certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest,, from all taxation now or hereafter imposed by the United States, any State, or any of ,the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (6) graduated additional income taxes, commonly known as surtaxes, and excessprofits and war-profits taxes, now or hereafter imposed by the United States upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of w^hich does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation shall be exempt from the taxes provided for in clause Qf) above. Upon 10 days' public notice, given in such manner as may be determined by the Secretary of the Treasury, the certificates of this series riiay be redeemed as a whole at par and accrued interest on or after any date occurring before the maturity of such certificates set for the payment of the first installment of the subscription price of any bonds offered for subscription by the United States after the offering and before the maturity of such certificates. The certificates of this series, whether or not called for redemption, will be accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price then payable of any such bonds subscribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and will not be accepted in payment of taxes. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates aUotted must be made on and after Jan.uary 30, 1919, and on or before February 6, 1919. After aUotment and upon payment Federal reserve banks will issue SECRETARY OP THE TREASURY. 271 interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates aUotted to them for themselves and their customers up to an amount for which each shaU have qualified in excess of existing deposits when so notified by Federal reserve banks. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Feaeral reserve banks of the respective districts. EXHIBIT 18. TBEASUBY CEBTIFICATES OF INDEBTEDNESS, SEBIES V F, FOUB AND ONE-HALF F E B CENT, DATED FEBBUABY 13, 1919, DUE JULY 16, 1919. WASHINGTON, February 7, 1919. The Secretary of the Treasury under the authority of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers for subscription, at par and accrued interest, through the Federal reserve banks, $600,000,000 or more Treasury certificates of indebtedness, Series V F, dated and bearing interest, from February 13, 1919, payable July 15, 1919, with interest at the rate of 4J per cent per annum. Applications will be received at the Federal reserve banks. Subscription books will close at the close of business February 20, 1919. Certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except {a) estate or inheritance taxes, and (Jb) graduated additional income taxes;, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved Septeniber 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided, for in clause (&) above. Upon 10 days' public notice, given in such manner as may be. determined by the Secretary of the Treasury, the certificates of this series may be redeemed as a whole at par and accrued interest on or after any date, occurring before the maturity of such certificates, set for the payment of the first installment of the subscription price of any bonds offered for subscription by the United States after the offering and before the maturity of such certificates. The certificates of this series, whether or not called for redemption, will be. accepted at par with adjustment of accrued interest, ii tendered on such installment date in payment on the subscription price then payable of any such bonds subscribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and will not be accepted in payment of taxes. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time 272 REPORT ON T H E PINANCES. without notice. Payment at par and accrued interest for certificates allotted must be made on and after February 13, 1919, and on or before February 20, 1919. After aUotment and upon payment Federal reserve banks will, issue, interiin receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customers up to an amount for which each shall have qualified in excess of the .existing deposits when so notified by Federal reserve banks. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve bariks of the respective districts. EXHIBIT 19. T B E A S U B Y C E B T I F I C A T E S O F I N D E B T E D N E S S , S E B I E S V G, F O U B AND ONE-HALF F E B CENT, DATED F E B B U A B Y 27, 1919, DUE JULY 29, 1919. WASHINGTON, February 21, 1919. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers for subscription, at par and accrued interest through the Federal reserve banks, $500,000,000 or more Treasury certificates of indebtedness. Series V G, dated and bearing interest from February 27, 1919, payable July 29, 1919, with interest at the rate of 4^ per cent per annum. Applications will be received at the Federal reserve banks. Subscription books wiU close at the close of business March 6, 1919. Certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate'^or inheritance taxes, and (&) graduated additional income taxes, commonly known as surtaxes, and excessprofits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, asssociation, or corporation, shaU be exempt from the taxes provided for in clause (Jb) above. Upon 10 days' public notice, given in such manner as may be determined by the Secretary of the Treasury, the certificates of this series may be' redeemed as a whole at par and accrued interest on or after any date, occurring before the maturity of such certificates, set for the payment of the first installment of the subscription price of any bonds or notes offered for subscription by the United States after the offering and before the maturity of such certificates. The certificates of this series, whether or not called for redemption, wiU be accepted at par, with adjustment of accrued interest, if tendered on such installrnent date in payment on the subscription price then payable of any such bonds or notes subscribed for, by, and allotted to holders of such certificates. The SECRETARY OF THE TREASURY. 273 certificates of these series do not bear the circulation privilege and will not be accepted in payment of taxes. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be ,made on and after February 27, 1919, and on or before March 6, '1919. After allotment and upori payment, Federal reserve banks will issue interim receipts pendmg delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customers up to an ainount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. As: fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and t o m a k e allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. EXHIBIT 20. TBEASUBY CEBTIFICATES OF INDEBTEDNESS, SEBIES V H, FOUB AND ONE-HALF F E B CENT, DATED MABCH 13, 1919, DUE AUGUST 12,1919. WASHINGTON, ]\Iarch 7, 1919. The Secretary of the Treasury under the authority of the act approved September 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal reserve banks, $500,000,000 or more Treasury certificates of indebtedness, Series V H, dated and t>earing interest from March 13, 1919, payable August 12, 1919, with interest at the rate of 4^ per cent per annum. Applications will be received at the Federal reserve banks. Subscription books will close at the close of business March 20, 1919. Certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (&) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount oJf bonds and certificates autnorized by said act approved September 24, 1917, and amendments thereto, the principal ofwhich does not exceed in the aggregate $5,000, owned by any individual, partnership, assbpiation, or corporation, shall be exempt from the taxes provided for in clause (6) above. Upon 10 days' public notice, given in such manner as may be determined by the Secretary of the Treasury, the certificates of this series may be redeemed as a whole at par and accrued interest on or after any date, occurring before the maturity of such certi£.cates., set for the payment of the first installment of the subscription price of any bonds or notes offered for subscription by the United States after the offering and before the maturity of such certificates. The certificates of this series, whether or not called for redemption, will be accepted at par, with adjustment of accrued 140325—FI 1919 18 274 REPORT ON T H E FINANCES. interest, if tendered on such installment date in payment on the subscription price then payable of any such bonds or notes subscribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and will not be accepted in payment of taxes. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice, r a y m e n t at par and accrued interest for certificates allotted must be made on and after March 13, 1919, and on or before March 20, 1919. After allotment and upon payment Federal reserve banks will issue interim receipts pending dmivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customers up to an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. Treasury certificates of indebtedness of Series V A maturing May 6, 1919, will be accepted at par with an adjustment of accrued interest in payment for not exceeding 50 per cent of the amount of any certificates of Series V H now offered which shall be subscribed for and allotted to any subscriber. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. EXHIBIT 21. T B E A S U B Y CEBTIFICATES OF I N D E B T E D N E S S , S E B I E S V J, F O U B A N D O N E - H A L F F E B C E N T , D A T E D A F B I L 10, 1 9 1 9 , D U E S E P T E M B E B 9, 1919. I WASHINGTON, April 7, 1919. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription, a t par and accrued, interest, through the Federal reserve banks, $500,000,000 or more Treasury certificates of indebtedness. Series V J, dated and bearing interest from April 10, 1919, payable September 9, 1919, with interest at the rate of 4^ per cent per annum. Applications will be received at the Federal reserve banks. Subscription books wiU close at the close of business AprU 17, 1919. Certificates wiU be issued in denominations of °$500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from aU taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an^ amount of bonds and-certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal ofwhich does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (&) above. Upon 10 days' public notice, given in. such manner as may be determined by the Secretary of the Treasury, the certificate of this series may be redeemed as a whole SECRETARY OP THE TREASURY. 275 at par and accrued interest on or after any date, occurring before the maturity of such certificates, set for the payment of the fii'st installment of the subscription price of any bonds or notes offered for subscription by the United States after the offering and before the maturity of such certificates. The certificates of this series, whether or not called for redemption, wUl be accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price then payable of any such bonds or notes subscribed for by and aUotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and wUl not be accepted in payment of taxes. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be made on and after April 10, 1919, and on or before AprU 17, 1919. After aUotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payinent by credit for certificates allotted to them for themselves and their customers up to an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. Treasury certificates of indebtedness of Series V A maturing May 6, 1919, wUl be accepted at par with an adjustment of accrued interest in payment for any certificates of Series V J now offered which shaU be subscribed for and allotted to any subscriber. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make aUotment in fuU in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. EXHIBIT 22. T B E A S U B Y C E B T I F I C A T E S O F I N D E B T E D N E S S , S E B I E S V K, F O U B A N D O N E - H A L F F E B C E N T , D A T E D M A Y 1, 1 9 1 9 , D U E O C T O B E B 7 , 1919. WASHINGTON, April 22, 1919. , The Secretary of the Treasury, under the authority of the act approved September 24^ 1917, as amended, offers for subscription, at par and accrued interest,- through the Federal reserve banks, $500,000,000, or more, Treasury certificates of indebtedness, Series V K, dated and bearing interest from May 1, 1919, payable October 7, 1919, with interest at the rate of 4 i per cent per annum. Applications will be received at the Federal reserve banks Subscription books will close at the close of business May 8, 1919. Certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation now or hereafter'imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (6) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes^ now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on ah amount of bonds and certificates authorized by said 276 REPORT ON T H E PINANCES. act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (&) above. Upon 10 days' public notice, given iri such manner as may be determined by the Secretary of the Treasury, the certificates of this series may be redeemed as a whole at par and accrued interest on or after the date set for the payment of the first installment of the subscription price of the notes of the Victory Liberty loan. The certificates of this series, whether or not called for redemption, will be accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price then playable of any such notes subscribed for by and- allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and will not be accepted in payment of taxes. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be made on and after May 1, 1919, and on or before May 8, 1919. After allotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customers up to an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. Treasury certificates of indebtedness of Series V A maturing May 6, 1919, will be accepted at par with an adjustment of accrued interest in pa3nnerit for any certificates of Series V K now offered which shall be subscribed for and allotted to ariy subscriber. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. EXHIBIT 23. [Department Circular No. 159. Loans and Currency.] F O U B AND ONE-HALF F E B CENT T B E A S U B Y CEBTIFICATES OF I N D E B T E D N E S S , S E B I E S A 1 9 2 0 . D A T E D A U G U S T 1, 1 9 1 9 . D U E J A N U A B Y 2, 1920. The Secretary of the Treasury, urider the authority of the act approved September 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal reserve banks. Treasury certificates of indebtedness, Series A 1920, dated and bearing interest from August 1, 1919, payable January 2, 1920, with interest at the rate of four and' one-half per cent per annum. Applications will be received at the Federal reserve banks. Bearer certificates, without coupons, will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shaU be exempt, both as to principal and interest, from all taxation now or hereaiter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and SECRETARY OP THE TREASURY. 277 (6) graduated additional incoirie taxes, commonly known as surtaxes, a^nd excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (6) above. If any notes should be offered for subscription by the United States after the off'ering and before the maturity of such certificates, and the subscription price of such notes be payable on or before the maturity of such certificates, then such certificates will be accepted a t par, with adjustment of accrued interest, in payment on the subscription price when payable of any such notes subscribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege, and will not be accepted in payment of taxes or on Victory loan subscriptions. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be made on or before August 1, 1919, or on later allotment. After allotment and upon payment Federal reserve banks may issue interim receipts pending delivery of the definitive certificates. Any qualified depositary will be permitted to make payment by credit for certificates allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits, when so notified by Federal reserve banks. Treasury certificates of indebtedness of Series V H, maturing August 12, V J, maturing September 9, and V K, maturing October 7, 1919, will be accepted at par with an adjustment of accrued interest in payment for any certificates of the Series A 1920, now offered which shaU be subscribed for and aUotted. . As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. CARTER GLASS, Secretary of the Treasury. TREASURY DEPARTMENT, O F F I C E OP THE SECRETARY, July 25, 1919. To THE INVESTOR: Almost any banking institution in the United States will handle your subscription for you, or you may make subscription direct to the Federal reserve bank of your district. 278 REPORT ON T H E PINANCES. EXHIBIT 24. [Department Circular No. 160. Loans and Currency.] F O U B AND ONE-HALF F E B CENT T B E A S U B Y CEBTIFICATES OF I N D E B T E D N E S S , S E B I E S B 1920. DATED AUGUST 16, 1919. DUE JANUABY" 15, 1920. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal reserve banks. Treasury certificates of indebtedness. Series B 1920, dated and bearing interest from August 15, 1919, payable January 15, 1920, with interest at the rate of four and one-half per cent per annum. Applications will be received at the Federal reserve banks. Bearer certificates, without coupons, will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and Q)) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any ^individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (&) above. If any notes should be offered for subscription by the United States \^after the offering and before the maturity of such certificates, and the subscription price of such notes be payable on or before the maturity of such certificates, then such certificates will be accepted at par, with adjustment of accrued interest, in paymerit on the subscription price when payable of any such notes subscribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege, and will not be accepted in payment of taxes or on Victory loan subscriptions. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be made on or before August 15, 1919, or on later allotment. After allotment and upon payment Federal reserve banks may issue interim receipts pending delivery of the definitive certificates. Any qualified depositary will be permitted to make payment by credit for certificates allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits, when so notified by the Federal reserve bank of its district. Treasury certificates of indebtedness of Series V J, maturing September 9, and V K, maturing October 7, 1919, will be accepted at par with an adjustment of accrued interest in payment for any certificates of the Series B 1920 now offered which shall be .subscribed for and allotted. As fiscal agents of the United States Federal reserve banks are authorized and requested to receive subscriptions and to make allot- SECRETARY OP THE TREASURY. 279 riaent in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. CARTER GLASS, Secretary of ihe Treasury. TREASURY DEPARTMENT, O F F I C E OP THE SECRETARY, August 8, 1919. To THE INVESTOR: Almost any banking institution in the United States will handle your subscription for you, or you may make subscription direct to the Federal reserve bank of your district. E X H I B I T 25. [Department Circular No. 161. Loans and Currency.] F O U B AND ONE-HALF F E B CENT T B E A S U B Y CEBTIFICATES OF I N D E B T E D N E S S , S E B I E S C 1920. DATED S E P T E M B E B 2, 1919. DUE F E B B U A B Y 2, 1920. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription a t par and accrued interest, through the Federal reserve banks, Treasury certificates of indebtedness. Series C 1920, dated and bearing interest from September 2, 1919, payable February 2, 1920, with interest at the rate of four and one-half per cent per annum. Applications wUl be received at the Federal reserve banks. Bearer certificates, without coupons, wUl be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from aU taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (Jb) graduated additiorial income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporatioris. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal ofwhich does not exceed in the aggregate $5,000, owned by ariy individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (6) above. If any notes should be offered for subscription by the United States after the offering and before the maturity of such certificates, «and the subscription price of such notes or the first instaUment thereof be payable on a date occurring at or before the maturity of such certificates, then on and after such date {a) such certificates will be accepted at par with an adjustment of accrued interest in payment on the subscription price, when payable, at or before the maturity or redemption of such certificates, of any such notes subscribed for by arid aUotted to holders of such certificates; and (Jb) upon ten days' public notice given in such manner as may be determined by the Secretary of the Treasury the certificates of this series may be redeemed as a whole at par and accrued interest. The certificates of this series do not bear the circulation privUege, and wiU not be accepted in payment of taxes or on Victory loan subscriptions. 280 REPORT ON T H E FINANCES. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the sub^ scriptions at any time without notice. Payinent at par and accrued interest for certificates allotted must be made on or before September 2, 1919, or on later allotment. After allotment and upon payment Federal reserve banks may issue interim receipts pending delivery of the definitive certificates. Any qualified depositary will be permitted to make payment by credit for certificates allotted to i t for itself and its customers up to any amount for which it shall bequalified in excess of existing deposits, when so notified by the Federal reserve bank of its district. Treasury certificates of indebtedness of Series VJ, maturing September 9, and VK, maturing October 7, 1919, and of Series T4 and T6, maturing September 15, 1919 (with any unmatured interest coupons attached), will be accepted at p a r with an adjustment of accrued interest in payment for any certificates of the Series C 1920 now offered which shall be subscribed for and allotted. As fiscal agents of the United States, Federal reserve banks areauthorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. , TREASURY DEPARTMENT, O P P I C E OP THE SECRETARY, CARTER GLASS, Secretary ofthe Treasury. . August 25, 1919. To THE INVESTOR: Almost any banking institution in the United States will handle your subscription for you, or you may make subscription direct to the Federal Reserve bank of your district. E X H I B I T 26. [Department Circular No. 133. Loans and Currency.] F O U B A N D O N E - H A L F F E B CENT. T B E A S U B Y C E B T I F I C A T E S O F I N D E B T E D N E S S , S E B I E S T 2. D A T E D J A N U A B Y 1 6 , 1 9 1 9 . DUE; JUNE 17, 1919. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers for subscription, at par and accrued mterest,. through the Federal reserve banks, a limited amount of Treasury certificates of indebtedness, series T 2, dated' and bearing interest frpm January 16, 1919, payable June 17, 1919, with interest at the rate of 43^ per cent per annum. Applications wiU be received at the Federal reserve banks. Certificates will be issued in denominations of $500, $1,000, $5,000,. $10,000, and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation now* or hereaiter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except {a) estate.or inheritance taxes, and (Jf) graduated additional income taxes, commonly known as surtaxes,, and excess-profits and war-profit^ taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount oi bonds and certificates authorized by said act approved SECRETARY OP THE TREASURY. 281 September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (6) above. Certificates of this series will be accepted at par, with an adjustment of accrued interest, during such time and under such rules and regulations as shall be prescribed or approved by the Secretary of the Treasury, in payment of income and profits taxes when payable at or within 60 days before the maturity of the certificates. The certificates of this series do not bear the circulation privilege, and will not be accepted in payment on bond subscriptions. . The right is reserved to reject any subscription and to aUot less than the araount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be made on January 16, 1919, or later allotment. After aUotment and upon pajrment Federal reserve banks wUl issue interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to theiri for themselves and their customers up to an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. Treasury certificates of indebtedness of Series IV F and IV G, maturing January 16 ahd January 30, respectively, and certificates of the tax series of 1919 (maturing July 15), with aU unmatured interest coupons attached, wUf be accepted at par, with an adjustment of accrued interest, in paynient for any certificates of the series T 2 now offered which shaU be subscribed for and allotted. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in fuU in the order of the receipt of applicatioris up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. CARTER GLASS, Secretary of the Treasury.. TREASURY DEPARTMENT, OFFICE OF THE SECRETARY, January 8, 1919. E X H I B I T 27. [Department Circular No. 136. Loans and Currency.] FOUB AND ONE-HALF F E B CENT TBEASUBY CEBTIFICATES OF INDEBTEDNESS, SEBIES T 3. DATED MABCH 15, 1919, DUE JUNE 16, 1919. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal reserve banks, a limited amount of Treasury certificates of indebtedness, Series T 3, dated and bearing interest from March 15 1919, payable June 16, 1919, with interest at the rate of four and one-half per cent per annum. Applications will be received at the Federal reserve banks. Bearer certificates with one interest coupon attached will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. 282 REPORT ON T H E FINANCES. Said certificates shall be exempt, both as to principal and interest, from aU taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritarice taxes, and (6) graduated additional income taxes, commonly known as surtaxes, and excess profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and ameridments thereto, the principal ofwhich does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shaU be exempt from the taxes provided for in clause (6) above. Certificates of this series will be accepted at par, with an adjustment of accrued interest, during such time and under such rules and regulations as shaU be prescribed or approved by the Secretary of the Treasury, in payment of income ahd profits taxes when payable at OT within sixty days before the maturity of the certificates. The certificates of this series do not bear the circulation privilege, and will not be accepted in payment on Liberty loan subscriptions. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates aUotted must be made on or before March 15, 1919, or on later aUotment. After aUotment and upon payment Federal reserve banks wUl issue interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates aUotted to them for themselves and their customers up to. an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. Treasury certificates of indebtedness of Series T, maturing March 15, Series T 2, maturing June 17, and tax series of 1919, maturing July 15 (with interest coupons maturing May 15 and July 15 attached), wiU be accepted at par with an adj;ustment of accrued interest in payment for any certificates of the Series T 3 now offered which shall be subscribed for and allotted. I n case of payment before M-Bxch 15, 1919, in Treasury certificates of any of said three series, interest will nevertheless be paid to March 15, 1919, in the case of certificates of Series T 2, to the holders of such certificates, and, in the case of certificates of Series T and of the tax series of 1919, to the holders of the coupons for such interest, which should be detached and presented for payment in the ordinary course when due. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. CARTER GLASS, Secretary of the Treasury. TREASURY DEPARTMENT. OPPICE OF THE SECRETARY, February 24, 1919. SECRETARY OP T H E TREASURY. 283 E X H I B I T 28. [Department Circular No. 146. Loans and Currency.] FOUB AND ONE-HALF F E B CENT TBEASUBY CEBTIFICATES OF INDEBTEDNESS. DATED JUNE 3^ 1919. SEBIES T 4, DUE SEPTEMBEB 15, 1919. SEBIES T 5, DUE DECEMBEB 15, 1919. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal reserve banks, a limited amount of Treasury certificates of indebtedness, in two series, both dated and bearing interest from June 3, 1919, at the rate of four and one-half per cent per annum, the certificates of Series T 4 being payable on September 15, 1919, and the certificates of Series T 5 on December 15, 1919. Applications will be received at the Federal reserve banks. Bearer certificates 'with one interest coupon attached, payable at the maturity of the certificates, respectively, will be issued in denominations of $500, $1,000, $5,000, $10,000 and $100,000. Said certificates shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes, and excess profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amourit of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (&) above. Certificates of these series will be accepted at par, with an adjustment of accrued interest, during such time and under such rules and regulations as shall be prescribed or approved by the Secretary of the Treasury, in payment of income and profits taxes payable at the maturity of the certificates, respectively. The certificates of these series do not bear the circulation privilege, and will not be accepted in payment on Victory loan subscriptions. The right is reserevd to reject any subscription and to allot less than the amount of certificates of either or both series applied for and to close the subscriptions as to either or both series at any "time. without notice. Payment at par and accrued interest for certificates allotted must be made on or before June 3, 1919, or on later allotment. After allotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to rnake payment by credit for certificates allotted to them for themselves and their customers up to an amount' for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. Treasury certificates of indebtedness of any and all series maturing on or before July 1, 1919, and not overdue (with any unmatured interest coupons attached), will be accepted at par with an adjustment of accrued interest in payment for any certificates of the Series T 4 and T 5 now offered which shall be subscribed for and allotted. 284 REPORT ON THE PINANCES. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. ' -; CARTER GLASS, V Secretary of the Treasury. TREASURY DEPARTMENT, O F F I C E OF THE S E C R E T A R Y , .. " ..» . . ^"^ May 17, 1919. EXHIBIT J^Jj' 29. [Department Circular No. 152. Loans and Currency.] FOUB AND ONE-HALF F E B CENT TBEASUBY CEBTIFICATES OF INDEBTEDNESS. DATED JULY 1, 1919. SEBIES T 6, DUE SEPTEMBEB 15, 1919. SEBIES T 7, DUE DECEMBEB 15, 1919. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal reserve banks, a limited amount of Treasury certincates of indebtedness, in two series, both dated and bearing interest from July 1, 1919, at the rate of 4^ per cent per annum, the certificates of Series T 6 being payable on September 15, 1919, and the certificates of Series T 7 on December 15, 1919. Applications will be received at the Federal reserve banks. Bearer certificates with one interest coupon attached, payable at the maturity of the certificates, respiectively, wiU be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates,shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except {a) estate or inheritance taxes, and (&) graduated additional income taxes, commonly known as surtaxes, and excess profits and war-profits taxes, now or hereafter imposed by the United vStates, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24,1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership,, association, or corporation, shaU be exempt from the taxes provided for in clause (6) above. Certificates of these series wiU be accepted at par, with an adjustmerit of accrued interest, during such time and under such rules and regulations as shaU be prescribed or approved by the Secretary of the Treasury, in payment of income and profits taxes payable at the maturity of the certificates, respectively. The certificates of these series do not bear the circulation privilege, and will not be accepted in payment on Victory loan subscriptions. The right is reserved to reject any subscription and to allot less than the amount of certificates of either or both series applied for and to close the subscriptions as to either or both series at any time without notice. Payment at par and accrued interest for certificates allotted must be made on or before July 1, 1919, or on later allot- SECRETARY OF THE TREASURY. 285 ment. After allotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the definitive certificates. Qualified depositaries wiU be permitted to. make payment by credit for certificates allotted to them for themselves and their customers up to an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. Treasury certificates of indebtedness of any and all series maturing on or before September 9, 1919, and not overdue (with ariy unmatured interest coupons attached), wiU be accepted at par with an adjustment of accrued interest in payment for any certificates of the Series T 6 and T 7 now offered which shall be subscribed for and aUotted. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make aUotment in full in the order of the receipt of applications up to aniounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. CARTER GLASS, Secretary of the Treasury. TREASURY DEPARTMENT, OFFICE OP THE SECRETARY, June 21^, 1919. EXHIBIT 30. [Department Circular No. 155. Loans and Currency.] FOUB AND ONE-HALF F E B CENT TBEASUBY CEBTIFICATES OF INDEBTEDNESS, S E B I E S T 8. DATED JULY 15, 1919. DUE MABCH 15, 1920. The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal reserve banks, a limited amount of Treasury certificates of indebtedriess, Series T 8, dated and bearing interest from July 15, 1919, payable March 15, 1920, with interest at the rate of 4^ per cent per annum. Applications wiU be received at the Federal reserve banks. Bearer certificates with one interest coupon attached will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Said certificates shaU be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except {a) estate or inheritance taxes, and (&) graduated additional income taxes, commonly known as surtaxes, and excess profits and war-profits taxes, now or hereafter imposed by. the United States, upon the income or pi:ofits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual partnership, association, or corporation shall be exeinpt from the taxes provided for in clause (6) above. Certificates of this series wUl be accepted at par, with an adjustment of accrued interest, during such time and under such rules and 286 REPORT ON T H E FINANCES. regulations as shall be prescribed or approved by the Secretary of the Treasury, in payment of income and profits taxes payable at the maturity of the certificates. The certificates of this series do not bear the circulation priyilege, and will not be accepted in payment on Victory loan subscriptions. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payinent at par and accrued interest for certificates allotted must be made on or before July l 5 , 1919, or on later aUotment. After allotment and upon payment Federal reserve banks wiU issue interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customers up to an amount for which each shall have qualified in excess of existing deposits.when so notified by Federal reserve banks. Treasury certificates of indebtedness of any and all series maturing on or before October 7, 1919, and not overdue; except Series T 4, dated June 3, f919, maturing September 15, 1919, and Series T 6, dated July 1, 1919, inaturing September 15, 1919, will be iaccepted at par with an adjustment of accrued interest in payment for any certificates of the Series T 8 now offered which shall be subscribed for and allotted. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make aUotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve bariks of the respective districts. CARTER GLASS, Secretary ofthe Treasury. TREASURY DEPARTMENT, O F F I C E OP THE SECRETARY, July 10, 1919. E X H I B I T 31. [Department Circular No. 162. Loans and Currency.] T B E A S U B Y C E B T I F I C A T E S OF I N D E B T E D N E S S . D A T E D S E P T E M B E B 1 5 , 1 9 1 9 . S E B I E S T 9, F O U B A N D O N E - F O U B T H F E B C E N T , D U E MABCH 15, 1920. S E B I E S T 10, F O U B AND ONE-HALF F E B CENT, DUE S E P T E M B E B 15, 1920. The Secretary of the Treasury, under the authority of the act approved September 24, ,1917, as amended, offers for subscription, at par and accrued interest, through the Federal reserve banks. Treasury certificates of indebtedness, in two series, both dated and bearing interest from September 15, 1919, the certificates of Series T 9 being payable on March 15, 1920, and bearing interest at the rate of 4^ per cent per annum, and the certificates of Series T 10 being payable on September 15, 1920, and bearing interest at the rate of 4^ per cent per annum payable semiannually. Applications will be received at the Federal reserve banks. Bearer certificates will be issued in denominations of $500, $1,000, $5,000, $10,000, and $100,000. The certificates of Series T 9 wiUhave one interest coupon attached, payable March 15, 1920, and the certificates of Series T 10 two interest coupons attached, payable March 15 and September 15, 1920. SECRETARY OF THE TREASURY. 287 Said certificates shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by a;riy local taxing authority, except (a) estate or inheritance taxes, arid (h) graduated additional income taxes, commonly known as surtaxes, and excess profits and war-profits taxes, now or hereafter imposed by the United States upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exeinpt from the taxes provided for in.clause ' (b) above. Certificates of these series will be accepted a t par, with an adjustment of accrued interest during such times and under sucli rules and regulations as shall be prescribed or approved by the Secretary of the Treasury, in. paym ent of income and profits taxes payable at the maturity of the certificates, respectively. The certificates of these series do not bear the circulation privilege. The right is reserved to reject any subscription and to allot less than the amount of certificates of either or both series applied for and to close the subscriptions as to either or both series at any time without notice. Payment at par and accrued interest for certificates allotted must be made on or before September 15, 1919, or on later allotment. After allotment and upon payment Federal reserve banks may issue interim receipts pending delivery of the definitive certificates. Any qualified depositary will be permitted to make payment by credit for certificates allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits when so notified by the Federal reserve bank of its district. Treasury certificates ^of indebtedness of any issue maturing on or after September 15, 1919, and now outstanding (with any unmatured coupons attached), will be accepted at par with an adjustment of accrued interest in pa5maent for any certificates of the Series T 9 and T 10 now offered which shall be subscribed for and allotted. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective districts. CARTER GLASS, Secretary ofthe Treasury. TREASURY DEPARTMENT, OFFICE OF THE SECRETARY, September 8, 1919. To THE INVESTOR: Almost any banking institution in the United States will handle your subscription for you,, or you may make subscription direct to the Federal reserve bank of your district. 288 REPORT ON T H E FINANCES. EXHIBIT 32. CALL F O B B E D E M P T I O N B E F O B E M A T U B I T Y OF T B E A S U B Y CEBTIFICATES OF I N D E B T E D N E S S , S E B I E S IV D. ' Notice to holders oj United States Treasury certificates of indebtedness of Series I V D, dated August 6, 1918, and maturing December 5, 1918. All United States Treasury certificates of indebtedness of Series IV D, dated August 6, 1918, and maturing Deceniber 5, 1918, are hereby called for redemption on November 21, 1918, at par and accrued interest, pursuant to the provision for such redemption contained in the certificates. On November 21, 1918, interest on all certificates of said series will cease to accrue. W. G. MCADOO, Secretary qf the Treasury. NOVEMBER 8, 1918. EXHIBIT 33. CALL F O B B E D E M P T I O N B E F O B E MATUBITY OF T B E A S U B Y CEBTIFICATES OF I N D E B T E D N E S S , S E B I E S IV E. Notice to holders of United States Treasury certificates of indebtedness qf Series IV E, dated September 3, 1918, and maturing January 2, 1919. All United States Treasury certificates of indebtedness of Series IV E, dated Septeriaber 3, 1918, and maturing January 2, 1919, -are hereby called for redemption on December 19,1918, at par and accrued interest, pursuant to the provision for such redemption contained in the certificates. On December 19, 1918, interest on all certificates of said series will cease to accrue. W. G. MCADOO, Secretary ofthe Treasury. DECEMBER 4, 1918. EXHIBIT 34. O F F E B TO B E D E E M B E F O B E M A T U B I T Y , AT H O L D E B ' S O P T I O N , T B E A S U B Y C E B T I F I C A T E S O F I N D E B T E D N E S S , S E B I E S V A. WAsnmGTOi^, March 21, 1919. Treasury certificates of indebtedness of Series V A mature May 6, 1919. In view of the determination to open the Victory Liberty loan campaign April 21, it is apparent that this issue must be refunded before the proceeds of the loan can reach the Treasury. Accordingly, the Secretary of theTreasury has authorized theFederal reserve banks, until further notice, to redeem, in cash, before maturity at par and accrued interest to date of redemption. Treasury certificates of indebtedness of Series V A, dated December 5, 1918, at the holder's option, the right being reserved, "however, to make such redemption, only after 10 days' notice, from the holder to the Federal reserve bank of the district, of the intention to exercise such option. SECRETARY OF THE TREASURY. EXHIBIT 289 35. O F F E B TO B E D E E M B E F O B E M A T U B I T Y , A T T H E H O L D E B ' S O P T I O N , T B E A S U B Y CEBTIFICATES OF I N D E B T E D N E S S OF ALL S E B I E S M A T U B I N G ON O B B E F O B E J U L Y 1, 1 9 1 9 . WASHINGTON, June 9, 1919. S T A T E M E N T B Y SECRETARY GLASS. The Secretary of the Treasury has authorized the Federal reserve banks on and after Tuesday, June 10, and until further notice, to redeem in cash before maturity, at par and accrued interest to the date of redemption. Treasury certificates of indebtedness of any and all series maturing on or before July 1, 1919, and not overdue, at the = holder's option. This action is made possible by the very large payments, approximately $3,500,000,000, received to date on account of subscriptions to the Victoiy Liberty loan. I take this occasion to repeat that there has been no change whatever in the Treasury's plans for future Government financing which were stated on April 14 in the official announcement of the amount and terms of the Victory Liberty loan.. EXHIBIT 36. CALL F O B B E D E M P T I O N B E F O B E MATUBITY OF CEBTIFICATES OF I N D E B T E D N E S S , S E B I E S V G. Notice to holders of United States Treasury certificates of indebtedness of Series V G, dated February 27, 1919, and maturing July 29, 1919. • All United States Treasury certificates of indebtedness of Series V G, dated February 27, 1919, and maturing July 29, 1919, are hereby called for redemption on July 1, 1919, at par and accrued interest pursuant to the provision for such redemption contained in the certificates. On July 1, 1919, interest on all certificates of said series will cease to accrue. Holders of certificates of said series shall, nevertheless, have the privilege of exchanging such certificates ori or before July 1, 1919, at par with an adjustment of accrued interest, for Treasury certificates of indebtedness of series T 4, dated June 3, 1919, maturing September 15, 1919. CARTER GLASS, Secretary of the Treasury. J U N E 20, 1919. EXHIBIT 37. O F F E B TO B E D E E M AT T H E H O L D E B ' S O P T I O N , T B E A S U B Y C E B T I F I C A T E S O F I N D E B T E D N E S S O F S E B I E S V G, P B I O B TO T H E D A T E ON \^nHICH S U C H C E B T I F I C A T E S H A D B E E N C A L L E D F O B BEDEMPTION. WASHINGTON, June 21, 1919. STATEMENT BY SECRETARY GLASS. The Secretary of the Treasury has authorized the Federal reserve ])anks on and after Monday, June 23, and until further notice, to redeem in cash before July 1, 1919, at the holder's option, at par and accrued interest to the date of such optional redemption, Treasury certificates of indebtedness of Series V G, dated February 27, 1919, maturing July 29, 1919, which have been called for redemption on July 1, 1919. 140325—FI 1919 19 290 REPORT ON T H E FINANCES. EXHIBIT 38. O F F E B TO B E D E E M B E F O B E M A T U B I T Y , AT T H E H O L D E B ' S O P T I O N , T B E A S U B Y CEBTIFICATES OF I N D E B T E D N E S S , S E B I E S V F. WASHINGTON, , STATEMENT BY SECRETARY GLASS. July 4, 1919. \ The Se.cretary of the Treasury has authorized the Federal reserve banks on and after Tuesday, July 8, and until further notice to redeem in cash before July 15, 1919, at the holder's option, at par and accrued interest to the date of such optional redemntion. Treasury certificates of indebtedness, of Series V F, dated February 13,. 1919, and maturing July 15, 1919. EXHIBIT 39. O F F E B TO B E D E E M B E F O B E M A T U I t l T Y , A T T H E H O L D E B ' S O P T I O N , T B E A S U B Y C E B T I F I C A T E S OF I N D E B T E D N E S S , S E B I E S V J. y^x^-Km(^TO^, August 25, 1919. STATEMENT BY SECRETARY GLASS. The Secretary of the Treasury has authorized the Federal reserve bariks on and after Tuesday, September 2, to redeem in cash before maturity at the holder's option, at par and accrued interest to the date of such optional redemption, Treasury certificates of indebtedness of Series V J, dated April 10, 1919, and maturing September 9, 1919. EXHIBIT 40. CALL F O B B E D E M P T I O N , B E F O B E MATUBITY, OF T B E A S U B Y C E B T I F I C A T E S O F I N D E B T E D N E S S , S E B I E S V K. - Notice to holders of United States Treasury certificates of indebtedness qf Series V K, dated. May 1, 1919, and maturing October 7, 1919. All United States Treasury certificates of indebtedness of Series V K, dated May 1, 1919, and maturing October 7, 1919, are hereby called for redemption on Septeniber 15, 1919, at par and accrued interest, pursuant to the provision for such redemption contained in t h e certificates. On September 15, 1919, interest on all certificates of said series will cease to accrue. . CARTER GLASS, Secretary of the Treasury. SEPTEMBER 4, 1919. v EXHIBIT 41. V O F F E B TO B E D E E M B E F O B E M A T U B I T Y , AT T H E H O L D E B ' S O P T I O N ^ T B E A S U B Y C E B T I F I C A T E S O F I N D E B T E D N E S S , S E B I E S MATUB-^ I N G S E P T . 1 5 , 1 9 1 9 , A N D A L S O S E B I E S V K, P B I O B TO D A T E O N WHICH CALLED F O B BEDEMPTION. WABumGTOi^i, September 8, 1919. STATEMENT BY SECRETARY GLASS. The Secretary of the Treasury has authorized the Federal reserve banks, ori and after Tuesday, September 9, and until further notice,, to redeem in cash before September 15, 1919, at the holder's option,, at par and accrued interest to the date of such optional redemption, Treasury certificates of indebtedness of both the series which m a t u r e on September 15, 1919 (with the coupons maturing September 15,. 1919, attached), and of Series V K, whicli have been called for redemp tion on said date. EXHIBIT 42. [1918. Department Circular No. 128. Loans and Currency.! UNITED STATES OF AMEBICA WAB-SAVINGS S E B I E S OF 1919. CEBTIFICATES,, TREASURY DEPARTMENT, OFFICE OF THE SECRETARY,. Washington, D. C, December 18, 1918J The Secretary of the Treasury offers for sale to the people of the^ United States an issue of United States war-savings certificates, series of 1919, authorized by act of Congress, approved September 24, 1917,. as amended and supplemented. Payments for or on account of suck war-savings certificates must be evidenced by United States war-savings certificate stamps, series of 1919, which are to be affixed thereto;. The sum of war-savings certificates of.all issues outstanding shall n o t at any one time exceed in the aggregate $4,000,000,000 (maturity^ value). I t shall not be lawful for any one person at any one time tohold war-savings certificates of any one series to an aggregate amount exceeding $1,000 (maturity). War-savings certificates, series of 1919, war-savings certificatestamps, series of 1919, and United States thrift stamps (described below) may be purchased, on and after Januar}^ 1, 1919, at the priceshereinafter mentioned, at post offices, and at numerous banks and other agencies appointed by the Secretary of the Treasury. 1. DESCRIPTION OF WAR-SAVINGS CERTIFICATES, SERIES OF 1919. A United States war-savings certificate, series of 1919, will be an obligation of the United States when, and only when, one or more United States war-savings certificate stamps, series of 1919, shall be affixed thereto. Each of such war-savings certificates will have spaces for 20 war-savings certificate stamps, series of 1919, and each of such stamps thereto affixed will have a maturity value of $5 OB January 1, 1924, which will accordingly give each such certificate^, when bearing its full complement of such stamps, a maturity value of $100 on said date. No war-savings certificate will be issued unless a t the same time one or more war-savings certificate stamps shall be purchased and affixed thereto, but no additional charge will be made for the war-savings certificate itself. The name of the owner of each war-savings certificate must be written upon such certificate at the time of the issue thereof. War-savings certificate stamps, series of 1919, will be issued in 1919* at the following prices: January February March April ; May June " |4.12 4.13 , . . . . 4.14 4.15 4.16 4.17 July August September October November December -..• ''. 4. I g 4.1^ 4. 20 4.21 4. 22 4. 2S : 291 292 REPORT ON T H E . FINANCES. The average issue price above fixed for the year 1919 with interest at 4 per cent per annum coriapounded quarterly for the average period to maturity will amount to $5 on January 1, 1924.' War-savings certificate stamps, series of 1919, shall not be affixed to war-savings certificates, series of 1918, nor shall war-savings cer-^ tificate stamps, series of 1918, be affixed to war-savings certificates, series of 1919. Such stamps affixed to war-savings certificates of another .series will not add to the value thereof. 2. PAYMENT AT MATURITY. Owners of war-savings certificates, series of 1919, will be entitled to receive, on January 1, 1924, at the Treasury Department in Washington, or at a money-order post office (the office where registered in the case of a registered certificate), upon surrender of such certificates and upon compliance with all other provisions thereof, $5 in respect of each war-savings certificate stamp, series of 1919, then affixed thereto, but no post office shall be required to make any such payment until 10 days after receiving written demand therefor. 3. PAYMENT PRIOR TO MATURITY. Any owner of a war-savings certificate, series of 1919, at his option, will be entitled to receive, at any tirrie after January 10, 1919, and prior to January 1, 1924, at a money-order post office (the office where registered in the case of a registered certificate), upon surrender of his certificate and upon compliance with all other provisions thereof, in respect of each war-savings certificate stamp,> series of 1919, then affixed to such certificate, the amount indicated in the foUowuig table, but no nost office shall make any such payment until 10 days after receiving written demand therefor, and such certificate must be surrendered for payment within 60 days after such demand, otherwise the demand wUl be deemed.to be waived and a new deriiand will be required before payment. Month. January... February.. . March April May June July August — September .October... November. December. 1919 $4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 1920 S4.24 4.25' 4.26 4.27 4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 S4.36 4.37 4.38 4.39 4.40 4.41 4.42 4.43 4.44 4.45 4.46 4.47 $4.48 4.49 4.50 4.51 4.52 4.53 4.54 4.55 4.56 4.57 4.58 4.59 $4.60 4.61 4.62 4.63 4.64 4.65 4.66 4.67 4.68 4.69 4.70 4.71 January 1, 1924, 4. REGISTRATION. War-savings certificates, series of 1919, ijiay be registered without cost to the owners at any post ofl&ce of the first, second, or third class, or at certain specially authorized post offices of the fourth class, subject to such regulations as the Postmaster General may from time 293 SECRETARY OF THE TREASURY. to time prescribe, and payment in respect of any certificate so registered will be made only at the post office where registered. Unless registered, the United States will n o t be liable if payment in respect of any certificate or certificates be made to a person not the rightful owner thereof. The Postmaster General may, by regulation, provide for the transmission of registered certificates by mail to the post office of registration for payment, and return of proceeds by money order, in cases in which it appears that the owner is unable to secure payment personaUy, or by a representative, pursuant to regulations therefor. War-saving certificates, series of 1919, are not transferable and will be pay'able only to the respective owners named thereon, except in the case of the death of disability of any such owner. 5. TAX EXEMPTION. War-saving certificates, series of 1919, shall be exempt, both as to principal and interest from all taxation now or hereafter imposed b y the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (Jb) graduated additional iricome taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates, authorized by said act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, o^med by any individual,, partnership, association, or corporation, shall be exempt frqm the taxes provided for in clause (b) above. 6. THRIFT CARDS AND THRIFT STAMPS. Payments on account of war-savings certificates, series of 1919 may also be evidenced by United States thrift stamps, issued at any time on or after December 3,1917, having a face value of 25 cents each but bearing no interest. United States thrift stamps, however, must not be afl&xed to war-savings certificates but only to thrift cards, which may be obtained without cost. Thrift stamps as such are not directly redeemable in cash, but each thrift card will have spaces for 16 such thrift stamps, and a thrift card, when bearing its full complement of such stamps, may be exchanged at a post office, dr other authorized agency, after December 31, 1918, and on or before December 31, 1919, for a war-savings certificate stamp, series of 1919, and upon such exchange the owner of such thrift card must pay the difference between $4 and the current issue price of war-savings certificate stamps, series of 1919, during the month in which such exchange is made, as shown by the following table: January February March April. May. June : 1 |4.12 4.13 4.14 4.15 4.16 4. 17 July August September October November December • °. 1 $4.18 4. ] 9 4. 20 4. 21 4. 22 4. 23 294 REPORT ON THE FINANCES. 7 . RIGHTS OF HOLDERS OF WAR-SAVINGS CERTIFICATES, SERIES OF 1919. All the provisions of Treasury Department Circular No. 108 (WarSavings Circular No. 8), dated January 21, .1918, further defining rights, of holders of war-savings certificates, apply to and govern rights, of holders of war-savings certificates, series of 1919, except as herein expressly modified with respect to war-savings certificates, series of 1919, to wit: (a) In paragraph I thereof, the maturity, date specified shall read / ^ J a n u a r y 1, 1924.'^ (6) In paragraph VI thereof, the $1,000 limitation o n t h e holdings of a single person will refer to a maturity value of $1,000 of certificates . of the series of .1919, without reference to any holdings of certificates of any other series. (c) In paragraph.XI there shalfbe inserted in the receipt thereby required to be signed after the words ^^War-savings certificates'^ the words''of any one series." . (d) In paragraph X I V the aggregate , amount of certificates received and held as therein provided will refer to the aggregate amount of certificates of the series of 1919 without reference to any holdings of certificates of any other series. . 8 . OTHER DETAILS. War-savings certificates, series of 1919, will not be receivable as security for deposits of public money, and will not bear the circulation privilege. The Secretary of the Treasury reserves the right at any time to withdraw this circular as a whole, or to amend from time to time any of the provisions thereof, to withdraw war-savings certificates, series of 1919, war-savings certificate stamps, series of 1919, or United States thrift stamps from sale, to refuse to issue or to permit t o be issued any war-savings certificates, series of 1919, or thrift oards, and to refuse to sell or to permit to be sold any war-savings oertificates, series of 1919, or war-savings certificates stamps, series of 1919, or United States thrift stainps to any person, firm, corporation, or association. The right is also reserved to make from time to time any supplemental or amendatory regulations which shall not modify or impair the terms and conditions of war-savings certificates issued or to be issued in pursuance of said act of September 24, 1917, as aniended and supplemented. Further details may be announced by the Secretary of the Treasury from time to time, information as to which will be promptly furnished to postmasters at money-order post offices and to other agents. CARTER GLASS, Secretary. EXHIBIT 43. [1919. Department Circular No. 143. Loans and Current y.i TREASURY SAVINGS CERTIFICATES. TREASURY DEPARTMENT, OFFICE OF THE SECRETARY, Washington, July 1, 1919. 1. Under authority of an act of Congress approved Septeraber 24,* 1917, as amended and supplemented, the Secretary of the Treasury offers for sale to the people of the United States an issue of United States war-savings certificates, series of 1919, in registered form, in denoininations of $100 and $1,000 (maturity value), hereinafter called Treasury savings certificates. This issue of Treasury savings certificates is in addition ,to the issue of war-savings certificates, series of 1919, offered pursuant-to Department Circular No. 128, dated December 18, 1918, but both issues of certificates are included within the series of 1919 of United States war-savings certificates. I t shall not be lawful for any one person at any one time to hold war-savings certificates of the series of 1919 (of whatever issue or denomination) to an aggregate amount exceeding $1,000 (rnaturity value). The sum of war-savings certificates of all issues outstanding shall not at any one time exceed in the aggregate $4,000,000,000 (maturity value). 2. Treasury savings^ certificates in the denomination of $100 (maturity value) may be purchased at post offices of the first and second class, and such other post offices as the Postmaster General may from time to time designate for that purpose; and Treasury savings certificates in denominations of $100 and $1,000 (maturity value) may be purchased at incorporated banks and trust companies which are agents of the second class for the sale of war-savings certificates, series of 1919, and qualified to obtain certificates to the amount of $1,000 (maturity value) or more. iDESCRIPTION OF TREASURY SAVINGS CERTIFICATES. 3. Treasury savings certificates will be issued only in registered form, and shall bear the name of the owner thereof, which shall be inscribed thereon by the issuing agent at the time of the issue thereof. At the time of issue of each such certificate the registration stub attached thereto shall be inscribed in the same manner by the issuing agent, and shall be detached and forwarded in the manner hereinafter directed for transmission to the Treasury Department at Washington. The registration stubs shall remain at the Treasury Department at Washington and shall constitute the basis for the Department's record of the registered ownership of the certificates, i n addition to the registration stub above described, the certificates will be 295 296 REPORT ON T H E FINANCES. provided with an additional stub, designed for execution b y impression from the original registration stub, which additional stub shall be retained by issuing agent banks and trust companies subject uo the order of the Secretary of the Treasury, and by issuing post offices in such manner as the Postmaster General shall direct. The certificates will not be transferable, and will be payable only to the owner named thereon except in case of death or disability of the owner and in such case will be payable as provided in regulations prescribed by the Secretary of the Treasury. The certificates will ngt be valid unless the owner's name is duly inscribed thereon by an authorized agent at the time of issue thereof. TAX EXEMPTION. 4. Treasury savings certificates shall be exeinpt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (h) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest ori an amount of bonds and certificates authorized by said act approved September 24, 1917, and amendmerits thereto, the principal ofwhich does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt frorii the taxes provided for in clause (&) above. ISSUE PRICES. 5.. Treasury savings certificates will be issued, in 1919 at the following prices: ^ DENOMINATION OF $100. January February March April.-. May June July August September October November December : $82. 40 82. 60 82. 80 83.00 .•.. 83. 20 83.40 83.60 -. 83. 80 84. 00 84. 20 • 84. 40 84.-60 DENOMINATION UF $1,000. January February March..'. April... May June July August September October November December : $824. 00 826. 00 828. 00 830.. 00 832.00 834.00 836.00 838. 00 840. 00 842. 00 844. 00 846. 00 6. The average issue prices above fixed for the year 1919, with interest at 4 per cent per annum compounded quarterly for the average period to maturity, will amount to $100 and $1,000, respectively, on January 1, 1924. PAYMENT AT MATURITY. 7. Owners of Treasury savings certificates will be entitled to receive on January 1, 1924, the face amounts as stated thereon. On and after January 1, 1924, payment of the certificates wUl be made 297 SECRETARY OF THE TREASURY. upon presentation and surrender thereof by maU or otherwise at the Office of the ^Secretary of theTreasur}^, Division of Loans arid Currency, Washington, and upon compliance with all other provisions thereof, provided the form of demand for payment appearing on the back thereof shall be- properly signed by the owner in the presence of, and duly certified by, a United States postmaster, an executive officer of an incorporated bank or trust company, or any other person duly designated by the Secretary of the Treasury fo"r the purpose. Iri case of the death or disabUity of the owner a special lorm of. demand for payment prescribed by the Secretary of the Treasur}^ must be duly executed. • PAYMENT PRIOR TO MATURITY. 8. The owner of a Treasury savings certificate, at his option, will be entitled to receive prior to January 1, 1924, the amount indicated in the foUowing tables (and in the table appearing on the back of the certificate) with respect to certificates of the denomination concerned. Payment prior to January 1, 1924, of the amount payable in respect of any such certificate will only be made 10 days after presentation, surrender, and demand, iriade as aforesaid at the Office of the Secretary of the Treasury, Division of Loans and Currency, Washington, and upon compliance with all other provisions thereof; but in no event shall such demand be made prior to the second calendar month following the calendar month in which the certificate is issued to the owner. Tables shoiuing. how Treasury savings certificates increase in value. DENOMINATION OF $100. 1919 Montb. Januarv February March April May June July . August September.. October November... IDecember J a n . 1, 1924 . . . •-. $82.40 82.60 82.80 83.00 83.20 83.40 83.60 • 83.80 84.00 84.20 84.40 84.60 1920 1921 1922 1923 $84. 80 85.00 85. 20 85.40 85.60 85.80 86.00 86.20 86.40 86.60 86.80 87.00 $87. 20 87.40 87.60 87.80 88.00 88.20 88.40 88.60 88.80 89.00 89. 20 89.40 $89.60 89.80 90.00 90.20 90.40 90.60 90.80 91.00 91.20 • 91.40 91.60 9L80 $92.00 92.2a 92.4a . 92. ea 92.8a 93.00 .93.20 93.4a 93.60 93.8a 94. oa 94.20 100. oa DENOMINATION OF $1,000. January February... March April May June July August September.. October November.. December.. Jan. 1,1924. $824.00 826.00 828. 00 830.00 832. 00 834.00 836.00 838. 00 840.00 842. 00 844.00 846.00 $872. 00 $848.00 874.00 850.00 876. 00 852.00 878.00 854.00 856.00 • 880.00 882.00 858.00 884.00 860.00 886.00 8S2. 00 888. 00 864.00 890. 00 866.00 892.00 868. 00 894.00 870. 00 $920. oa $898.00 922.00 898. 00 924.00 900.00 928.00 902.00 928.00 904.00 930.00' 906.00 932.00' 908.00 910.00 934. oa 912.00 936.00^ 914. 00 . 938.00' 916.00 940.00 918. 00 942, 00 i,ooaoa :298 REPORT ON T H E FINANCES. ISSUE ON SURRENDER OF OTHER WAR-SAVINGS CERTIFICATES. 9. A United States war-savings certificate, series of 1919, issued pursuant to Department Circular No. 128, dated December 18, 1918, which has not been registered and which bears the full complement of 20 war-savings certificate stamps, series of 1919, may be received i n exchange for a Treasury savings certificate in the denomination of $100 (maturity value) inscribed in the same name as the certificate tendered in eixchange, upon presentation and surrender to any post office authorized to issue and sell Treasury savings certificates in the •denomination of $100 (maturity value), or to any other agent for the sale of Treasury savings certificates in either denomiation, and 10 such war-savings certificates may in like manner be received in exchange for a Treasury savings certificate in the denomination of'$1,000 (maturity value) inscribed in the same name as the certificate tendered in exchange, upon presentation and surrender to any agent for the sale of Treasury savings certificates in the denomination of $1,000 (maturity value). No previous demand for payment of certificates so surrendered will be required, and the exchange will be made in •each case without payment to or by the United States. 10. A United States war-savings certificate, series of 1919, issued pursuant to Department Circular No. 128, dated December 18, 1918, which has been registered and which bears the full complement of 20 war-savings certificate stamps, series of 1919, may in like manner be , Teceived in exchange for a Treasury sayings certificate in the denomination of $100 (maturity value) inscribed in the same name as such Tegistered certificate, when tendered therefor by the registered owner to the post office of registration, provided that such post office is authorized to issue and sell Treasury savings certificates. 11. War-savings certificates, series of 19I87 detached wai savings certificate stamps, war-savmgs certificates bearing less than 20 warsavings certificate stamps, thrift cards with thrift stamps affixed, and thrift stamps will not be received in exchange or payment for Treasu r y savings certificates. METHODS OF DISTRIBUTION AND SALE. 12. Treasury savings certificates in the denomination of $100 (maturity value) may be purchased from post offices of the first and •second class, and from such other post offices as the Postmaster Gen•eral may, from time to time, designate for that purpose, and from incorporated banks and trust companies which are duly qualified as agents of the second class, for the sale of war-savings certificates, series of 1919, to the amount of $1,000 or more, pursuant to Department Circular No. 130, as heretofore or hereafter amended and supplemented. Such post offices and incorporated banks and trust companies are hereby designated as agents for the sale of Treasury rsavings certificates in the denomination of $100 (maturity value) subject to the provisions hereof. 13. Treasury savings certificates in the denomination of $1,000 (maturity value) may be purchased only at incorporated banks and trust companies which are duly qualified as agents of the second olass for the sale of war-savings certificates, series of 1919, to the amount of $1,000 or more, pursuant to Department Circular No. 130, SECRETARY OF THE TREASURY. 299 .as heretofore or hereafter amended and supplemented. Such incorporated banks and trust companies are hereby designated as agents for the sale of such certificates in the denomiriation of $1,000 (maturity value) subject to the piovisions hereof. 14. In reporting sales of Treasury savings certificates and in •accounting for the proceeds thereof. Federal reserve banks and incorporated banks and trust companies acting as agents will enter in their accounts the serial numbers of such certificates covered by rsuch accounts. 15. Every incorporated bank or trust company which is a cash agent of the second class and qualified hereunder will transmit to the Federal reserve bank from which it receives war-savings certificates for sale, the original registration stub detached from each Treasury savings certificate sold by it immediately upon the issue of such certificate or not later than.the close of the month in which sold. Such Federal reserve bank will note the serial number appearing on the stub (for comparison with the next report rendered by such agent), and will forward the stub to the Secretary of the Treasury, Divisiori of Loans and Currency, Washington, so as to reach*the Treasury Department not later than the month succeeding the month in which the certificate is sold. 16. Every incorporated bank or trust cornpany,which is a collateral agent of the second class and qualified hereunder will attach to its monthly account to the Federal reserve bank with which such agent shall have deposited the collateral security required under Department Circular No. 130, as heretofore or hereafter amended and supplemented, the original registration stubs detached frorii all Treasury savings certificates ,sold by it within such month. The Federal reserve bank receiving such stubs will see that a registration stub is a t hand for each such certificate reported sold, and will forward all registration stubs to the Secretary of the Treasur}^, Division of Loans and Currency, Washington, so as to reach the Treasury Department not later than the morith succeeding the month in which the certificate is sold. ' ^ 17. Original registration stubs detached from Treasury savings •certificates sold by post offices will be attached to the accounts of sales of such certificates rendered to the Third Assistant Postmaster General, Division of Stamps, and will be forwarded by the Post Office Department to the Secretary of the Treasury, Division of Loans and Currency, Washington, so as to reach the Treasury Department not later than the month succeeding the month in which the certificate is sold. 18. Agents of the second class may qualify for the sale of Treasury savings certificates by deposit of cash or pledge of coUateral, as the oase may be, in the manner prescribed by Department Circular No. 130, as heretofore or hereafter amended and supplemented, the amount of such cash or collateral to be determined by the issue prices of Treasury savings certificates delivered to such agents for sale, in the same manner as provided in said circular with respect to war-savings certificate stamps delivered to agents appointed thereunder. 19. The duties and obligations of such agents of the second class, as provided in said Department Circular No. 130, as heretofore or hereafter amended and supplemented, with reference to the receipt 300 REPORT ON T H E PINANCES. and sale of war-savings certificate stamps, and the payment of the proceeds thereof, and accounting therefor, and redelivery thereof, are hereby extended to, and shall govern, the transactions of such agents, respectively, with respect to Treasury savings certificates, and such agents will by the receipt or sale of Treasury savings certificates be conclusively presumed to have assented to all the terms and provisions hereof, and to the retention of any collateral security pledged pursuant to said circular as collateral secuiity thereunder and hereunder. Each collateral agent of the. second class in accounting for the proceeds of sales of Treasury savings certificates shall be entitled to receive appropriate credit for each United States war-savings certificate, series of 1919, issued pursuant to Department Circular No. 128, dated December 18, 1918, and bearing the full complement of 20 war-savings certificate stamps, series of 1919, which is received in exchange for Treasury savings certificates and transmitted to the Federal reserve bank with its account. . 20. An incorporated bank or trust company acting as a cash agent of the second class for the sale of Treasury savings certificates which receives in exchange for such certificates war-savings certificates, series of 1919, issued pursuant to Department Circular No. 128, dated December 18, 1918, and bearing the full complement of 20 United States war-savings certificate stamps, seiies of 1919, may secure cash reimbursement for the war-savings certificates so received in exchange, from the Federal reserve bank from which it receives war-savings certificates for sale, upon the surrender of the warsavings certificates so received to such Federal reserve bank, at the time of forwarding the registration stubs for the Treasury savings certificates in exchange for which they were received. The Federal reserve bank will thereupon pay to such agents the value of such certificate stated in said Circular No. 128 as the surrender value of such certificates on the date of their receipt in exchange for Treasury savings certificates, and no previous demand for payment shall be required. OTHER DETAILS. 21. Treasury savings certificates will not be receivable as security for deposits of public - moneys and will not bear the circulation privilege. 22. The provisions of Treasury Department Circular No. 108 (War-Savings Circular No. 8), dated January 21, 1918, further defining rights of holders of war-savings certificates, do not apply to' or govern the rights, of holders of Treasury savings certificates. The Secretary of the Treasury will shortly issue a new Treasury Department circular further defining the rights of holders of Treasury savings certificates and prescribing regulations under which Treasury savings certificates will be payable in case of the death oi disability of the owner. 23. The Secretary of the Treasury reserves the right at any time to withdraw this circular as a whole, or to amend from time to time any of the provisions thereof, to revoke any or all appointments of agents, to withdraw Treasury savings certificates from sale, to refuse to issue or to permit to be issued any such certificates, and to SECRETARY OP THE TREASURY. 301 refuse to sell or to permit to be sold any such certificates to any person, firm, corporation, or association. 24. The right is also reserved to make from time to time any supplemental or amendatory regulations which shall not modify or impair the terms and conditions of Treasury savings certificates issued in pursuance of said act of September 24, 1917, as amended and supplemented. 25. JFurther details may be announced by the Secretary of the Treasury from time to time; information as to which will be promptly furnished to postmasters and to other agents. CARTER GLASS, Secretary ofthe Treasury. E X H I B I T 44. [1919. Department Circular No. 149. Loans and Currency-. UNITED STATES OF AMERICA—TREASURY CATES. SAVINGS CERTIFI- TREASURY DEPARTMENT, O F F I C E OF THE SECRETARY, Washington, July 31, 1919. To holders of Treasury savings certificates, and others concerned: The following Treasury Department regulations are hereby prescribed further defining the rights of holders of Treasury saving certificates issued pursuant to Treasury Department Circular No. 143, dated July 1, 1919, and determining the terms and conditions upon which Treasury saving certificates will be payable i n case of the death or disability of the owner: I. CERTIFICATES NOT PRESENTED AT MATURITY. ' -- c . Treasury saving certificates shall not bear interest after maturity j. January 1, 1924. II. LOST, STOLEN, OR DESTROYED CERTIFipATES. In the event of the loss, theft, or destruction of a Treasury savings certificate duly issued and registered in accordance with the regulations and instructions governing issue and registratiori, the registered owner may apply to the Secretary of the Treasury, Division of Loans and Currency, Washington, on forms prescribed by the Secretary of the Treasury, either for the issuance of a duplicate certificate or for the payment of the original certificate. On being satisfied of the facts as to loss dr destruction., the Secretary of the Treasury will, after not less than three months have elapsed from the time of application, issue to the registered owner a duplicate certificate or make payment of the original certificate, but no duplicate certificate will be issued after maturity of the original. Any duplicate certificate so issued shall be marked '^duplicate,'' but shall receive a new number and bear a notation of the number of the original certifiate. Appropriate notation of the issue of the duplicate certificate or payment of the original certificate will be made on the registration records of the Treasury. Department. The Secretary of the Treasury may, in special cases where he deems the facts warrant such action, require the claimant to give a bond of indemnity, with approved sureties, against any claim that may thereafter be made on the original certificate. The duplicate certificate, when issued, shall stand for all purposes in the place and stead of the original lost, stolen, or destroyed certificate. After the issuance of a duplicate certificate, or the payment of the original certificate, the original shall cease td 302 • • ' . SECRETARY OF THE TREASURY. 303 have validity for any purpose, and if recovered shall be returned to the Secretary of the Treasury, Division of Loans and Currency, Washington, for cancellation. III. CREDITORS^ RIGHTS. Payment of Treasury savings certificates will be made to the owner named thereon notwithstanding any lien, attachment, trustee process,, garnishment, judgment, receivership, levy, execution, order, decree, or similar process of law, equity, or in bankruptcy directed against the owner thereof, but nothing herein contained shall excuse the owner from full compliance with, or performance of, any lawful judgment, order," or decree of a court of competent jurisdiction with reference to disposition of the proceeds of the certificate. Collection of the certificate by the owner pursuant to such judgment, order, or decree, will be deemed a payment received on behalf of the owner and not for any other person within the language of the demand printed on the certificate, notwithstanding that the owner is, by such judgment, order, or decree, required to pay the proceeds to another person. Neither the United States of America nor any officer or employee thereof shall be a proper or necessary party to an}^ suit or action with reference tO' such certificate or the proceeds thereof nor be bound by any judgment,, order, or decree rendered,or entered therein. IV. HOLDING OF TREASURY SAVINGS CERTIFICATES BY CORPORATIONS^ PARTNERSHIPS, AND OTHERS. 1. Treasury savings certificates may be issued and registered in the name of and held by corporations, partnerships, associations, or joint stock companies. 2. Payment of a certificate registered in the name of a corporation, partnership, association, or joint-stock company will be made to any officer or agent presenting proof satisfactory to the Secretary of the Treasury of his authority to receive payment. No designation may be made on the certificate or registration stub of an officer or agent to receive payment on behalf of a corporation, partnership, association, or joint-stock company. , y . FIDUCIARIES, Treasury savings certificates may be issued and registered in the names of fiduciaries in their representative capacities. Payment of any such certificate will be made to the fiduciary or fiduciaries, except that in the event of the death or disqualification of the fiduciary or fiduciaries payment may be made in the discretion of the Secretary of the Treasury, to. the person or persons in his opinion beneficially entitled thereto. VI. TREASURY SAVINGS CERTIFICATES ISSUED TO TWO PERSONS. Treasury savings certificates may be issued and registered in the names of two persons (but not more than two) in the alternative, as, for instance, '^ John Jones or Mary Jones.'' Such certificates will be payable to either person named thereon without requiring thesignature 304 REPORT ON THE FINANCES. of the other person and to the survivor of them without proof of the other person's death, and upon payment to either person the other shall cease to have any interest therein. No other form of certificate in the names of two persons is authorized, except to the extent permitted by paragraphs V and I X of this circular. When certificates are issued in the alternative, the names and addresses of both persons shall be inscribed on the certificates and on the registration stubs. In determining whether the $1,000 limitation on the holdings of a single person has been e'xceeded, the full maturity value of war-savings certificates of any one series, of whatever issue or denomination, held with any other person shall be added to the full maturity value of such certificates held individually, and the sum must not exceed $1,000 (maturity value). . VII. -INFANT HOLDERS OF TREASURY SAVINGS CERTIFICATES. 1. A Treasury savings certificate may be issued and registered in the name of an infant. 2. If a guardian of the property has, to the knowledge of the Secretary of the Treasury, been appointed for an infant owner of a Treasury savings certificate, payment of the certificate will be made only to such guardian, upon presentation of proof satisfactory to the Secretary of the Treasury of his appointment and qualification. 3. If an infant holder of a Treasury savings certificate for whom no such guardian has been appointed, to the knowledge of the Secretary of the Treasury, is at the time payment of such certificate is demanded, of sufficient competency and understanding, in the opinion of the Secretary of the Treasury, to sign his name to the demand and to comprehend the nature thereof, payment will be made directly to such infant owner. In the event that such idfant is not, in the opinion of the Secretary of the Treasury, of such competency and understanding, payment will be made to either parent of the infant with whom the infant resides, or in the event that such infant resides with neither parent, then to the person with whom such infant resides. In making demand for payment, the representative shall sign the infant's name as well as the name of such representative. 4. Issuance of a duplicate for, or payment oi, a lost, stolen, or destroyed certificate which has been registered in the name of an infant will be to the infant or to a representative, as hereinbefore provided, upon compliance with the regulations respecting lost, stolen, or destroyed certificates. ^ v m . DISABILITY OF HOLDERS OF TREASURY SAVINGS CERTIFICATES. 1. Treasury savings certificates held by persons legally declared to be incompetent to manage their affairs, and for whose estate a conservator or other legally constituted representative has been appointed by a court of competent jurisdiction, to the knowledge of the Secretary of the Treasury, will be paid to such conservator or legal representative, upon presentation of proof satisfactory to the Secretary of the Treasury of his appointment and qualification. 2. Certificates held by persons under any other disability will be paid only to the registered owners of the certificates, except as herein othei-wise provided. SECRETARY OF THE TREASURY. 305 I X . REGISTRATION OF TREASURY SAVINGS CERTIFICATES IN FAVOR OF BENEFICIARY. 1. Treasury savings certificates may be issued and registered payable to a single designated beneficiary in case of death of the registered owner, as, for instance, ^^John Smith, payable on death to Mary Smith." I n ' t h a t event the issuing agent shall at the time of issue inscribe on the certificate and on the registratiori stub the words ^ P a y a b l e on death to ," inserting the name and address of the beneficiary. Such certificates will be payable to the registered owner during his or her lifetime, and to the beneficiary upon death of the owner, provided the beneficiary be then living. If the beneficiary shall predecease the registered owner, the certificate will be ayable to the owner as though such beneficial registration had not een made. Second registration in favor of another benefiLciary, or change of beneficiary, will not be permitted. 2. Should the beneficiary die after the death of the'registered owner, but before payment of the cer tificate, the regulations covering payment of certificates Held by a deceased owner shall govern the payment of the certfficate as though the beneficiary were such a deceased owner. E X. PAYMENT OF TREASURY SAVINGS CERTIFICATES HELD BY DECEASED OWNER. I n case of the death of the owner of a Treasury savings certificate (other than a certificate registered payable to a beneficiary), payment will be made to the persons and in the manner hereinafter provided: 1. If the decedent leave a will which is duly admitted to probate, or die intestate and the estate of such decedent is administered in a court of competent jurisdiction, payment of such certificate will be made only to the duly appointed representative of .the estate. Administration will be required before payment of a Treasur}^ savings certificate will be made in all cases where the gross personal estate of the deceased owner exceeds $500 in value, unless the estate of such decedent is exempt from administration under the laws of the State of the decedent's domicile. 2. In case no legal representative of the decedent's estate is appointed and either the gross personal estate amounts to $500 or less in value or the law of the State of decedent's domicile specifically exempts the estate from administration, the certificate will be paid to arid on the demand of persons equitably entitled thereto in the opinion of the Secretary of the Treasury, in the following order of classes: First. Husband, wife, next of kin, or other person, who pays the reasonable funeral expenses, expenses of the last illness, or other preferred claims against the decedent's estate. Second. Creditor for funeral expenses, expenses of last illness, or other preferred claims. , Third. Husband, wife, or next of kin of the deceased, in the following order of preference: (1) Husband or wife; (2) child or children; (3) father; (4) mother; (5) any other of the next of kin of the deceased; provided, however, that nothing herein contained shall require the payment of a single certificate to more than one person. 140325—n 1919 20 306 REPORT ON T H E FINANCES. XI. SIGNING DEMAND FOR PAYMENT. Whenever, pursuant to these regulations, payment of a Treasury savings certificate is demanded by a person not the original owner thereof, the form of demand for payment appearing oh the certificate need not be signed, but such person shall sign in the prescribed manner a form of demand for paymerit which may be obtained on application to the Secretary of the Treasury, Division of Loans and Currency, Washington, and which shall be pasted on the certificate over the form of demand appearing thereon, as follows: FORM OF DEMAND FOR PAYMENT. The undersigned is the person entitled to payment of this certificate, Serial No under the regulations prescribed by the Secretary of the Treasury, in place of , the original owner whose name is inscribed hereon, and hereby demarids payment hereof. Said original owner (or his estate) does.not hold War-Savings Certificates of any one series, of whatever issue or denomination, to an aggregate amount exceeding $1,000, maturity value. (Date.) (Signature of payee.) No. and street. T o w n or c i t y state Personally appeared before me . -. , known or proved to me to be (Name of payee.) -. of the original owner whose name is inscribed on said (State connecrion with original owner.) certificate, and signed the above demand for payment, acknowledging the same to be his free act and deed. Witness my hand and official designation: [SEAL.] • (Signature of attesting officer.) (Official designation.) Dated a t . . . ,19 XII. INHERITANCE TAXES. Payment of Treasury savings" certificates will be made without any deduction for inheritance, estate, or transfer taxes on death of a deceased owner, either State or Federal, and no claim shall lie ^against the United States or any officer or employee thereof for failure to deduct or withhold any such tax. The person to whom payment of the certificate is made shall be liable for all such taxes, if any shall be due, and the lien thereof shall attach to the proceeds of the certificate iri his hands. - . XIII. CHANGE OF NAME. In case the name of the owner of a Treasury savings certificate has since the issuance of the certificate been changed by marriage or by order or decree of court, the Secretary of the Treasury will accept the owner's demand for payment signed in the new name, as well as in the original name, upon being satisfied of the identity of the person. XIV. LIMITATION IN AMOUNT. Treasury savings certificates issued pursuant to Treasury Department Circular No. 143, dated July 1, 1919, are included within the series of 1919 of war-savings certificates. If it shall appear that SECRETARY OF THE TREASURY. 307 any person has received Treasury savings certificates issued to such person by way of gift, bonus, dividend, or in any other^lawful manner except the purchase thereof by such person, whereby he holds war-savings certificates of any one series, of whatever issue or denomination, in excess of an aggregate of. $1,000 (maturity value), the excess amount of Treasury savings certificates shall be immediately surrendered to the Secretary of the Treasury, Diyision of Loans and Currency, Washington, and will be paid at their then value. In any other case if it shall appear at the time a certificate is presented for payment that the person presenting the same holds war-savings certificates of any one series, of whatever issue or denomination, to an aggregate amount exceeding $1,000 (maturity value), the Secretary of the Treasury may refuse payment of all certificates in excess of $1,000 (maturity value) and demand surrender of certificates held by such owner until such holdings of such owner are reduced to $1,000 (maturity value). The Secretary of the Treasury will make appropriate notation on certificates so surrendered, and such certificates shall have no validity for any purpose. Nothing herein contained shall prevent the payment of. a certificate of a deceased owner to the person entitled thereto under these regulations, without regard to the amount of certificates already owned by such payee, unless i t shall appear that such deceased owner held war-savings certificates, of any one series, of whatever issue or denomination, to an aggregate amount exceeding $1,000 (maturity value), in which case only $1,000 (maturity value) will be paid, and the excess taken up in accordance with the forgoing provisions. XV. ADMINISTRATION. The administration of the foregoing regulations shall be in accordance with such forms and administrative regulations and instructions as the Secretary of the Treasury shall from time to time prescribe. The Secretary of the Treasury may in any case accept as sufficient proof of the identity or of the competency and understanding of the person making demand for payinent, the fact that the form of demand for payment has been signed in the presence .of, and duly certified by, a United States postmaster, an executive officer of an incorporated bank or trust company, or an}^ other person duly designated by the Secretary of the Treasury for the purpose. The Secretary of the Treasury may make, from time to time, any further or supplemental or amendatory regulations which shall n o t modify or impair the terms and conditions of Treasury savings certificates issued in pursuance of the act of Congress approved S e p tember 24, 1917, as amended and supplemented. CARTER GLASS, Secretary ofthe Treasury^ EXHIBIT 45. [1918. Department Circular No. 126. Loans and Currency.1 S U R R E N D E R OF WAR-SAVINGS CERTIFICATE STAMPS, S E R I E S OF 1918, H E L D BY AGENTS OF THE F I R S T CLASS. TREASURY DEPARTMENT, OFFICE OF THE SECRETARY, Washington, December 10, 1918. From January 1 to 10, 1919, inclusive, each Federal reserve bank and branch thereof and any incorporated bank or trust company is authoiized to receive from any authorized agent of the first class war-savings certificate stamps, series of 1918, for collection, or for exchange for war-savings certificate stamps, seriesof 1919, and United States thrift stamps, with cash adjustment, in the following manner: The aggregate value of war-savings certificate stamps, series of 1918, received from such authorized agent of the first class for exchange shall be computed at the price of $4.24 for each such warsaving certificate stamp. The bank or trust company making the exchange shall then deliver in exchange therefor, to such authoiized agent of the first class war-savings certificate stamps, seiies of 1919, computed at the price of $4.12 each, to the extent that the same may be delivered without exceeding the aggregate value of the war-savings certificate stamps, series of 1918, received for exchange and computed as above required. Any balance remaining of such aggregate value shall be paid by delivery of United States thrift stamps, at 25 cents each, to the extent that may be done without exceeding such balance, and any balance remaining shall be paid in cash. Such exchange may be made only on presentation by the authorized agent of the first class of his certificate of appointment for sale of warsayings certificate stamps, series of 1918, bearing the facsimile signature of the Secretary of the Treasury. An incorporated bank or trust company receiving war-savings certificate stamps, series of 1918, for collection or exchange, is authoiized to deliver, on or before January 20, 1919, such war-savings certificate stamps, series of 1918, so received, to the Federal reserve bank of its district, together with a statement setting forth the name of the authorizeci agent of the first class from whom the same have been received and the number of stamps received from such agent. On receipt thereof the Federal reserve bank, as fiscal agent of the United States, will pay such bank or trust company $4.24 in respect of each war-savings certificate stamp, series of 1918, so delivered; or, at the option oi such bank or trust company, will, in lieu of paying cash, deliver war-savings certificate stamps, series of 1919, computed at $4.12 each, and United - States thrift stamps, computed at 25 cents each, and cash, to an aggregate not exceeding the aggregate value of ,the war-savings certificate stamps, series of 1918, computed at $4.24, so received. The foregoing provisions apply only to war-savings certificate stamps, series of 1918, not affixed to war-savings certificates, and apply only to collection or exchange of stamps held by authorized agents of the first class. Banks and trust companies shall not make such collection or exchange except for persons who are duly authorized agents of the first class, and in the manner above set forth. W. G. MCADOO, Secretary. 308 EXHIBIT 46. „ [1918. Department Circular No. 130. Loans and Currency.] DISTRIBUTION AND SALE OF WAR-SAVINGS CERTIFICATES AND STAMPS, S E R I E S OF 1919. TREASURY DEPARTMENT, O F F I C E OF THE SECRETARY, December 23,' 1918. To Federal reserve banlcs, all agents for the sale of war-savings certificates and stam^ps, and others concerned: The provisions of Department Circular No. 94 (War-Savings Circular No. 1), dated November 15, 1917, under the title ''Method of distribution and sale," of Department Circular No. 95 (War-Savings Circular No. 2), dated November 30, 1917, Department Circular No. 96 (War-Sayings Circular No. 3), dated January 2, 1918, and Department Circular No. 101 (War-Sa\ings Circular No. 5), dated February 19, 1918, are hereby extended, subject to the provisions hereof arid of Department Circular No. 128, dated December 18, 1918, to the distribution and sale of United States war-savings certificates and war-savings certificate stamps, series of 1919, and to the distribution and sale of United States thrift stamps after December 31, 1918. . . . .• All provisions of said circulars with reference to war-savings certificates and war-savings certificate stamps, seiies of 1918, issued under Department Circular No. 94, as heretofore and hereby modified, shall, mutatis mutandis, apply with equal force and effect to warsavings certificates and war-savings certificate stamps, series of 1919, issued under Departinent Circular No. 128, dated December 18, 1918. War-savings certificate stamps, series of 1919, and United States thrift stamps (together with thrift cards and war-savings certificates, series of 191^), will be furnished (1) to post offices for sale to the public and to agents of the first class, and (2) to Federal reserve banks, as fiscal agents of the United States, for distribution to agents of the second class and alsc) for sale to agents of the first class, such agents being classified as provided in the above-described circulars. Post offices and Federal reserve banks will maintain available supplies of stamps, certificateSj and cards in amounts sufficient to meet the requirements for such distribution and sale. Agents of the first class and cash agents of the second class duly appointed for the sale of war-savings certificates and war-savings certificate stamps, series of 1918, may act as such, agents, respectively, for the sale of such certificates and stamps, series of 1919, without further application; and they will by the receipt or sale of warsavings certificates or war-savings certificate stamps, series of 1919, or by the receipt or sale of United States thrift stamps after December 31, 1918, be conclusively presumed to have assented to all the terms arid provisions hereof. 309 310 REPORT ON THE FINANCES. Collateral agents of the second" class already qualified to a sufficient amount pursuant to Department Circulars Nos. 95 and 101 for the sale of war-savings certificates' and war-savings certificate stamps, series of 1918, wiU not be required to file anew formal apphoations for appointment as agents, nor resolutions and pledge agreements, and they will, by the receipt'or sale of war-savings certificates or war-savings certificate stamps, series of 1919, or by the receipt or sale of United States thrift stamps after December 31, 1918, be conclusively presumed to have assented to aU the terms and provisiohs hereof. CoUateral security pledged or to be pledged under any of the circulars above mentioned will be conclusively deemed to be pledged as coUateral security thereunder and hereunder. Forms of applications for riew appointments as agents hereunder will be furnished on application. The provision that the amount of war-savings certificates sold t o any one person at any one time should not exceed $100 has been" repealed by the act approved September 24, 1918, and is no longer in force. CoUateral agents of the second class may obtain from a Federal Teserve bank war-savings certificate stanips, seiies of 1919, in amounts of $1,000 (maturity value) or less, as well as in amounts in excess of $1,000 (maturity value). In determining the collateral security to be deposited and pledged by such agents, war-savings certificate stamps, series of 1919, shaU be taken at the December, 1919, issue price. Any such sagent desiring to obtain war-savings certificate stamps, series of 1919, at such December, 1919, issue price, and thrift stamps, to the aggregate amount of $50,000 or more, may deposit and pledge as collateral secuiity, subject to the provisions hereof, any securities of the classes described in Treasury Department Circular No. 92, of September 21, 1918, as heretofore or here;after amended and supplemented. The Secretary of the Treasury will make provision for the exchange of thrift stamps after December 31, 1919, into war-savings certificates, series of 1919, upon payment of the additional amount then required, or into some other series, or will otherwise protect the interest of holders of thrift stamps. No agent shall seU any United States war-savings certificate stamp, series of 1919, at any price other than the current issue price of such stamp during the month in which sold, as specified in Department Circular No. 128. I t is not lawful for any one person at any one time to hold warsavings certificates, series of 1919 (and war-savings certificates stamp, series of 1919), to an aggregate amount exceeding $1,000 (maturity value). I t is lawful to hold war-savings certificates, series of 1919 (and war-savings certificate stamps, series of 1919), up to an aggregate maturity value of $1,000, regardless of the amount ot war-savings certificates and war-savings certificate stamps of the series of 1918 that may already be held. The Secretary of the Treasury reserves the right to withdraw this circular or to amend, from time to time, any- of the provisions hereof, and to terminate any.agency created or existing hereunder. CARTER GLASS, Secretary. E X H I B I T 47. [1918. Department Circular No. 131. Loans and Currency.1 SURRENDER OF WAR-SAVINGS CERTIFICATE STAMPS, SERIES OF 1918, HELD BY AGENTS OF THE SECOND CLASS. TREASURY DEPARTMENT, OFFICE OF THE SECRETARY, . Washington, D. C, December 23, 1918. Each coUateral agent of the second class appointed pursuant to Department Circular No. 95 (War-Savings Circular No. 2), dated November 30, 1917, is req[uired to deliver to the Federal reserve bank to which such, agent is required to account, on or before January .10, 1919, all war-savings certificates and war-savings icertificate stamps, series of 1918, held by such agent at the close of business December 31, 1918, and shall receive credit for such stamps (at the December, 1918, issue price) on its account with such Federal reserve bank. All cash agents of the second class appointed pursuant to Department Circular No. 96 (War-Savings Circular No. 3), dated January 2, 1918, are required to deliver on or before January 10, 1919, to the Federal reserve bank from which the same wer^ received, all warsavings certificates and war-savings certificate stamps, series of 1918, held by them at the close of business December 31, 1918. The provisions of said Circular No. 96, requiring such delivery on or before December 31, 1918, are hereby superseded. Upon such redelivery, each such cash agent wiU be entitled to return of the deposit made against the stamps so redelivered, computed in the manner prescribed in said Circular No. 96; or, at the option of such agent, such Federal reserve bank will deliver to such agent, in lieu of returning. such deposit, war-savings certificate stamps, series of 1919, computed at $4.12 each, and United States thrift stamps, computed at 25 cents each, and cash, to an aggregate value so computed not exceeding the amount of the deposit to be refunded. CARTER GLASS, Secretary. 311 CO . E X H I B I T 48. to S T A T E M E N T S H O W I N G D A T E S A N D AMOUNTS OF CREDITS ESTABLISHED TO NOV. 15, 1919, IN FAVOR OF FOREIGN G O V E R N M E N T S , U N D E R T H E ACTS OF APIt. 2 4 , 1917, SEPT. 24, 1917, APR. 4, 1918, AND JULY 9, 1918. Dates. Belgium. Cuba. Czechoslovakia. France. 1917. A p r . 25 May 3 Great B r i t a i n . • Greece. Italy. Liberia. Roumania. Russia. Serbia. S200,000,000.00 S25,000,000.00 50,000,000.00 8 14 16 S45,000,000.00 25 June 2 9 14 19 26 ^ 30 July 5 17 23 25 27 Aug. 2 2,500,000.OU 10' 11 5,900,000.00 21 23 Sept. 5 ^ 8 11 15 19 24 26 27 Oct. 2 2,000,000.004 6 8 9 12 3,000,000.00 15 le SlOO,000,000.00 75,000,000.00 o S100,000,000.00 75,000,000.00 75,000,000.00 100,000,000.00 10,000,000.00 100,000,000.00 S3,000,000.00 • 75,000,000.00 25,000,000.00 35,000,000.00 15,000,000 00 35,000,000.00 100,000,000.00 85,000,000.00 O 60,000,000.00 75,000,000.00 "" W 60,000,000.00 185,000,000.00 166,666,666.00 40,000,000.00 • 5O3 000,000.00 100,000,000.00 100,000,000.00 40,000,000 00 10,000,000.00 50,000,000.00 50,000,000.00 20,000,000.00 40,000,000.00 40,000,000.00 35,666,666.66 50,000,000.00 15,000,000.00 40,000,000.00 15,000,000.00 15,000,000.00 50,000,000.00 20,000,000.00 25,000,000.00 25,000.000.00 Ui 20,000,000.00 "'25,'666,* 666.'66' 20,000,000.00 30,000,000.00 20,000,000.00 25,000,000.00 10,000,000.00 25,000,000.00 435,000,000.00 Nov. Dec. 245,000,000.00 280,000,000.00 30,000,000.00 7,500,000.00 2,000,000.00 2,000,000.00 S6,666,666.00 1,000,000.00 155,000,000.00 Ui 185,000,000.00 7,500,000.00 1918 10 Jan. 25 29 30 2 Feb. 4 13 Mar 9 11 14 15 Apr. 1 6 24 May 6 13 14 31 J u n e 13 20 22 27 Julv 3 6 12 15 18 19 27 29 A u g . 14, 29 Sept. 9 O 2,000,000.00 9,000,000.00 3,500,000.00 275,000,000.00 3,500,000.00 O 155,000,000.00' , S15,000,000.00 >^ 50,000,000.00 H 200,000 000.00 9,000,000.00 2,200,000.00 w 200,000,000.00 125,000,000.00 3,250,000.00 • 100,000,000.00 75,000,000.00 200,000,000.00 > I.,, 100,000,000.00 3,000,000.00 Ui 0 . 3,700,000.00 9,000,000.00 175,000,000.00 K! $15,790,000.00 2,250,000.00 9,000,000.00 * " 100,000,000.00 10,000,000.00 175,000,000.00 1,680,000.00 2,770,000.00, 9,000,000.00 9,000,000.00 100,000,000.00 100,000,000.00 3,000,000.00 200,000,000.00 400,000,000.00 $5,000,000.00 :;:::;:;:;:::: ; : ; : ; ; : : : ; : ; : : : i CO h-l 05 Statements showing dates and amounts of credits established to Nov. 15, 1919, in favor of foreign governments, under the acts of Apr. 24, 1917, Sept. 24, 1917, Apr. 4, 1918, and July 9, 1918—Gonimued. Dates. Belgium. 1918. S e p t . 17 18 S2,770,000.00 9,000,000.00 30 5,000,000.00 Oct. 7 16 17 19 9,000,000.00 23 28^ 3,500,000.00 31 Nov. 6 12 13 9,m,m.ob 15 20 5,600,000.00 29 12,000,000.00 Dec. 3 9 3,200,000.00 12 18 19 1425,000.00 23 24 27 40,000,000.00 30 31 1919. Jan. 8 13 21 28 Feb. 4 6 8 11 18 21 25 Mar. 3 5 Czechoslovakia. Cuba. France. Great B r i t a i n . Italy. Greece. Liberia. Roumania. Russia. SlOO, 000,000.00 200,000,000.00 $100,000,000.00 100,000,000.00 100,000,000.00 80,000,000.00 pi 0 O ' 100,000,000.00 50,000,000.00 $200,000,000.00 O $7,000,000.00 > H $23,764,036.00 M . . .0 18,573,000.00 250,000,000.00 19,666.66 , 19,000,000.00 100,000,000.00 ' 110,010,000.00 10,000,000.00 118,949,200.00 110,000,000.00 110,000,000. OO- V 75,000,000.00 . 40,000,000.00 \ /$5,000,000.00 \ 11,666,666.00 J IIO, 000,000.00 110,500,000.00 2,000,000.00 S15 666 666 66 1 11,000,000.00 h-l Serbia. 3,250,000.00 40,000,000.00 Co 18,000,000.00 100,000,000.00 , 20,000,000.00 > o Ui Apr. 8 11 12 13 18 25 31 3 8 9 10 11 14 21 •24 May 6 13 14 21 22 June 5 23 27 28 July 1 3 9 23 24 31 A u g . 18 25 27 29 S e p t . 10 17 Oct. 16 5,000,000.00 '"'1*5,'666,'666.'66' 16,500,000.00 11,000,000.00 1 2,157,175.25 2,410,000.00 100,000,000.00 85,000,000.00 100,000,000.00 3,858,930.00 11137,270,250.00 900,000.00 6,330,000.00 ' 12,345,000.00 " 20.000,000.00 268,608. 27 5,000,000.00 / 100,000,000.00 \ 1323,824.75 50,000,000.00 1 $5,000,000.00 /1 5,000,000.00 Ui 50,000,000.00 o 50,000,000.00 ** 1,390,000.00 80,000,000.00 H 1,000,000.00 9,000,000.00 '"i6,'666,"666.'66' 50,666,666.66 1205,000.00 10,000,000.00 5,000,000.00 O 5,000,000.00 1 488,142. 71 H W teJ 2,150,000.00 : 13,824,054.01 157,549,000.00 37,947,977.24 "^ 4,823,663.05 5,000,000.00 4,550,000.00 4,550;000.00 17,000,000.00 1,146,927.00 i 15,000,000.00 o 139,000,000.00 1,000,000.00 346,420,000.00 15,000,000.00 55,330,000.00 3,075,496,977.24 4,395,000,000.00 48,236,629.05 1,624,746,927.00 $5,000,000.00 31,666,666.00 325,000,000.00 1 3,824,054.01 16,666,666.00 1137,270,250.00 1 27,522,200. 00 . 1118,000,000.00 12,975,000.00 15,000,000.00 27,268,608.27 1488,142.71 343,445,000.00 40,000,000.00 55,330,000.00 3,047,974,777.24 4,277,000,000.00 48,236,629.05 1,620,922,872.99 5,000,000.00 25,000,000.00 187,729,750.00 26,780,465.56 1 Credits withdrawn. Total credits established in favor of foreign governments, $9,647,419,494.84. , NOTE.—A conditional credit of $125,000,000 was established in favor of Russia on Nov. 1, 1917, but in view of the conditions to which the credit was subject and of subsequent developments in Russia, the credit was never regarded by the Treasury as effective and book entries showing its withdrawal were made on Dec. 28, 1917. CO h-l cn EXHIBIT CO h-l 49. S T A T E M E N T S H O W I N G D A T E S A N D A M O U N T S O F C A S H A D V A N C E S TO N O V . 1 6 , 1 9 1 9 , TO F O R E I G N G O V E R N M E N T S , U N D E R T H E ACTS OF A P R . 24, 1917, S E P T . 24, 1917, A P R . 4, 1 9 1 8 , AND J U L Y 9, 1918. Dates. Belgium. Czechoslovakia. Cuba. « France. 1917. A p r . 25 May 3 7 8 14 16 19 25 June 2 9 14 16 19 26 30 July. 2 5 6 9 13 20 23 28 Aug. 1 2 3 6 9 13 16 20 21 22 23 24 27 30 31 Great B r i t a i n . Italy. Liberia. Serbia. Russia. Roumania. • $200,000,000.00 $25,000,000.00 25,000,000.00 25,000,000.00 . $50,000,000.00 75,000,000.00 o . 75,000,000.00 H O $7,500,000.00 50,000,000.00 • 75,000,000.00 50,000,000.00^ 75-, 000,000. 00 25,000,000. 00 50,000,000.00 1, 500,000.00 e 10,000,000.00 30,000, .000. 00 35,000,000.00 • 15,000,000.00 10,000,000.00 25,000,000.00 100,000,000.00 M tei 20,000,000.00 $35,000,000.00 > 70,000,000. 00 10,000,000.00 o teJ 85,000,000.00 60,000,000.00 7,500,000. 00 Ui 10,000, OOO.'OO \ 1,000,000. 00 50,000,000.00 8,000,000. 00 32, 000,000. 00 2,500,000.00 $1 000 000. 00 10,000,000. 00 ' 50,000,000.00 » 40,000,000. 00 50,000,000. 00 40,000,000.00 1,000,000.00 7,500,000.00 2, 500, 000.00 50,000,000.00 10, 000,000.00 37, 500,000.00 40, 000, 000.00 35,000,000.00 - 16,666,666.66 10,000, 000.00 ., Sept. 5 40,000,000.00 8 11 12 40,000,000.00 10,000,000.00 50,000,000.00 • 13 • 19 2,000,000.00 21 24 25 26 27 28 1,000,000.00 Oct. 1 2 3 4 6 8 9 11 15 16 18 19 22 24 '25 27 29 31 40,000,000.00 40,000,000.00 50, ooq, 000.00 15,000,000.00 35,000,000.00 15,000,000.00 , 40,000,000.00 7,500,000.00 • 15, 000,000.00 , 500, 000.00 2,000,000. 00 50,000,000.00 22,200,000.00 10,000,000.00 15,000,000.00 . 40,000,000.00 Dec. "15,000,000.00 .20,000,000.00 2, 000,000.00 20,000,000.00 >. 25,000, 000.00 25,000,000.00 20,000,000.00 25,000,000.00 7,500, OOt). 00' 20,000,000.00 o • 15,000,000.00 30,000, 000.00 20,000,000. 00 1, 500,000. 00 25,000,000.00 10,000,000.00 10,000,000. 00 30,000,000.00 10,000,000.00 H teJ 25,000,000.00 31,700,000.00 50,000,000.00 400,000.00 H Ui 50,000,000.00 40,000,000.00 15,000,000.00 :::::::::::::::::::::::::::::::::: 55,000,000.00 1,000,000.00 40,666,666.66 1,329, 750.00 Kl 15,000,000. 00 60,000.000.00 7,500,000.00 1 30,000,000.00 40,000,000.00 3 5 . 7 8 10 12 Ui teJ o w tei H 15, 000,000.00 -40,000,000.00 Nov. 1 2 5 7 9 12 13 15 16 19 2023 26 500,000.00 2,000,000.00 65,000,000.00 5,000,000.00 55,000,000.00 ' 40,000,000.00 '"566," 666.66" 25,666,666.66 1 Refunded. CO Statement showing dates and amounts of cash advances to. Nov. 15, 1919, to foreign governments, under the acts of Apr. 24, 1917, Sept. 24, 1917, Apr. 4, 1918, and July 9, 19.?5—Continued. Dates. 1917. D e c . 14 17 19 21 24 26 28 1918. Jan. 3 48 11 15 19 22 25 31 Feb. 1 5 8 15 19 26 Mar. 5 7 12 14 19 21 23 26 27 28 29 Apr. 2 8 9 11 i6 Belgium. Cuba. Czechoslovakia. France. Great B r i t a i n . Italy. Liberia. Roumania. Russia, Co 0'"' 0 Serbia. $50,000,000.00 $40,000,000.00 $2,000,000.00 45,000,000.00 40,000,000.00 ' 7,500,000.00 $80,000,000.00 35,000,000.00 $200,000.00 o 65,oro,ocn.00 30,000,000.00 50,000,000.00 60,000,000.00 ~ • 1,000,000.00 _'_ 30,000,000.00 30.oro.000.00 30,000,000.00 9,000,000.00 . 30,000,000.00 65,000.000.00 30,000,000.00 ^ 500,000.00 60,000,000.00 30.000,000.00 30;000,000.00 30,000.000.00 20,000.000.00 20,000,000.00 25,000,000.00 25,000;900.00 .50, ooo; 000.00 35,000,000.00 20,000,000.00 15,000,000 00 35; 000,000.00 1,000.. OOC 00 20,000.000.00 > O tei Ul 10,000,000 00 $5,000,000. 00 20,000,000 00 15,000,000.00 5,000,000.00 30.000,000.00 2ij;000,000.00 15,000,000.00 41.; 000,000.00 20,000,000.00 30.000,000.00 35,000,'100.00 1.500,000.00 W 35,000,000.00 25,000,000.00 35,000,000.00 i, 666,666.66 _ o fei 10,000,000.00 18 20 25 29 .30 May 2 7 9 14 15 16 18 21 23 28 31 June 4 6 11 13 15 18 20 21 25 26 27 July 3 5 9 11 12 16 18 19 23 24 25 30 Aug. 1 10,000,000.00 • i, 665,666.66 10,000,000. OO15,000,000.00 20,000,000.00 15,000,000.00 40,000,000.00 25,000,000.00 40,000,000.00 40,000,000.00 20,000,000.00 35,000,000.00 30,000,000.00 15,000,000.00 i, 666, m . 6b 20,000,000.00 30,000,000.00 10,000,000.00 15,000,000.00 20,000,000.00 30,000,000.00 3,666,666.66 40,000,000.00 1,000,000.00 3,666,666.66 8,000,000.00 1,000, 000.00 2,000,000.00 1,700,000.00 2,666,666.66 20,000,000.00 40,000,000.00 20,000,000.00 • Q IO, 000,000.00 10,000,000.00 1,000,000.00 10,000,000.00 2,000,000.00 5,200,000.00 3,680,000.00 2,000,000.00 .3,000,'000.00 teJ 10,000,000.00 tei H 10,000,000.00 pi Kl > O 10,000,000.00 1,405,000.00 10,000,000.00 20,000,000.00 15,000,000.00 20,000,000.00 10,000,000.00 30,000,000.00 20,000,000.00 30,000,000.00 26,666,666.66 15,000,000.00 20,000,000.00 40,000,000.00 200,000.00 > d Ui Pi 1,000,000.00 10,000,000.00 500,000.00 -1,000,000.00 H pi tei 50,000,000.00 15,000,000.00 1,050,000.00 , te3 10,000,000.00 20,000,000.00 3,000,000.00 8,000,000.00 500,000.00 Ui o ••\' 2,000,000.00 20,000,000.00 15 20 22 27 29 30 31 Sept. 3 5 1,000,000.00 10,000,000.00 45,000,000.00 .......:.:..,..'... 10,000,000.00 30,000,000.00 30,000,000:00 10,000,000.00 30,000,000.00 20,000.000.00 20,000,000.00 40,000,000.00 35,000.000.00 92,000,000.00 30,000,000.00 ^ 10,000,000.00 200,000.00 16, m , 666.66 10,000,000.00 CO h- Statement'shou/ing dates and amounts of cash advances to Nov. 15, 1919, to foreign go'Oernments, under] the acts of Apt. 24, 1917, Sept. ^4, 1^17, Apr. 4, 1918, and July 9, 1918—Gontinued. Dates. 1918. S e p t . 12 17 19 24 26 Oct. 1 2 3 8 10 15 17 22 24 29 31 Nov. 4 6 7 11 12 14 . 15 19 21 26 27 29 Dec. 3 4 5 10 11 12 17 19 23 24 26 Belgium. Cuba. Czechoslovakia. France. $700,000.00 1,850,000.00 2,600,000.00 $10,000,000.00 15,000,000.00 3,300,000.00 * 20,000,000.00 • Italy. Great B r i t a i n . $30,000,000.00 5,000,000.00 20,000,000.00 10,000^000.00 20,000,000.00 10,000,000.00 Liberia. Roumania. Russia. Serbia. $10,000,000.00 25,000,000.00 $1,200,000.00 10,000,000.00 1,500,000.00 3,000,000.00 5,000,000.00 10,000,000. 00 30,000,000. 00 15,000,000.00 .75,000,000.00 $5,000,000.00 10,000,000.00 25,000,000.00 O 40,000,000.00 20,000,000.00 101,000,000. 00 20,000,000.00 34,000,000.00 10,000,000.00 H tei .4,700,000..00 10,000,000. 00 400,000.00 .. 1,600,000.00 3,400,000. 00 8,215,000.00 $5,000,000.00 40,000,000. 00 500,000.00 26, m , 666.66 30,000,000. 00 20,000„000. 00 71,427,000. 00 30,000,000. 00 25,000,000. 00 1,500,000. 00 7,450,000. 00 10,000,000.00 15,000,000. 00 ib, 666, bbb. bb 30,000,000. 00 20,000,000. 00 30,000,000. 00 10,000,000.00 •^-25,000,000.00 1,000,000. 00 30,000) 000. 00 25,666,666.60 5,000,000.00 5,500,000.00 tei •H-l 209,697. 70 20,000,000. 00 2,000,000. 00 1,100,000. 00 10,000,000.00 10,000,000. 00 50,000,000. 00 10,000,000. 00 10,000,000. 00 31 1 14,666,666.661 tei hj O Pi H 15, m , m . 66 20,000,000.00 10,000,000.00 20,000,000.00 10,000,000.00 3,800,000.00 5,000,000.00 1,300,000.00 to o o tei Ui 1919. Jan. 2 7 9 13 14 O 16 CO 21 23 25 28 30 Feb. 4 20,000,000.00 ib, bbb, 666.66 6, ibb, bbb. 66 2,666, bbb. bb 20,000,000.00 20,000,000.00 4,866, bbb. bb 10,000,000.00 60,000,000.00 15,000,000.00 1,000,000. 00 10,000,000. 00 81,050,800. 00 4,466,666.66. 25,000.000.00 6,666, bbb. bb 1,500,000.00 10 11 13 18 20 21 25 27 4 Mar. 6 11 13 14 18 19 20 22 24 25 27 31 Apr. 1 3 4 8 10 15 17 22 24 29 May 1 6 . 8 13 15 20 .. 20,000,000. 00 .. 666, bbb. bb 10,000, 000. 00 7,766,666.66 4,300,000. 00 11,266,666.66 5,566,666.66 8,650, bbb. bb 15,000,000.00 5,000,000.00 5,000,000.00 6,185,302.30 ib, 666,666.66 10,000,000.00 20,000,000.00 30,000,000.00 10,000,000.00 10,000,000.00 20,000,000.00 10,000,000.00 10,000,000. 00 10,000,000.00 10,000,000. 00 10,000,000.00 10,000,000. 00 15,000,000. 00 lOi 000,000. 00 85,000,000.00 15,000,000. 00 10,000,000.00 5,660,666.00 8,800,000.00 1,300,000.00 3,500,000.00 Pi tei H 19,000,000. 00 o 20,000,000. 00 16,500,000.00 tei 5,000,000.00 5,000,000.00 H .8,250,000.00 3,966, bbb. bb 1,750,000.00 2,000,000.00 5,000,000.00 Ui o 25,000,000.00 - '- 5,900,000.00 300,000.00 4,000,000.00 $5,000,000.00 tei 3,900,000.00 5,366,666. bb $12,000.00 190,000.00 10,000,000.00 10,000,000.00 40,000,000.00 26,666,666.66 20,000,000.00 10,000,000.00 i6,666,666.66 10,000,000.00 1 Ui 20,000,000.00 Kl 16,666,666.66 10,000,000. 00 ^4,000,000,00 20,000,000. 00 65,000,000.00 9,000,000. 00 . 16,006,606.00 10,000,000.00 is, 666,666.66 12,000,000.00 10,000,000. 00 10,000,000.00 36,666,666.66 5,666,666.66 25,000,000. 00 • 16,666,666.66 5,066,666.66 12,666,666.66 . 15,666,666.66 5,666,666.66 4,718,608.27 '61,857.29 CO to Statement showing dates and amounts of cash advances to Nov, 15, 1919, to foreign governments, under the acts of Apr. 24, 1917, Sept. 24, 1917, Apr. 4, 1918, and July 9, 1918—Gontinued. Dates. 1919. M a y 22 27 29 Jime 3 4 5 12 16 17 18 19 24 25 July r 8 9 10 11 17 22 24 29 31 Aug. 5 14 19 21 25 28 Sept. 2 4 10 11 18 25 26 Oct 1 2 7 14 Belgium. Cuba. Czechoslovakia. France. $11,850,000.00 310,000,000.00 $2,400,000.00 SIO, 000,000.00 Italy. Great B r i t a i n . 10,000,000.00 4,000,000.00 ^ . Roumania. Liberia. to to Serbia. Russia. $5,000,000.00 $5,000,000.00 5,666,666.66 4,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 900,000.00 10,000,000.00 3,250,000.00 600,000.00 o 7,000,000.00 10,000,000.00 20,000,000.00 5,000,000.00 2,000,000.00 5,000,000.00 i 5,650,000.00 15,000,000.00 teJ 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 1 • 5,000,000.00 1,000,000.00 .! 5,000,000.00 10,000,000.00 5,000,000.00 15,000,000.00 5,000,000.00 Ui j 1 4,175,945.99 5,000,000.00 9,100,000.00 • 17,000,000.00 $6,000.00 10,000,000.00 15,000,000.00 10,000,000.00 30,000,000.00 10,000,000.00 . 1,140,927.00 10,000,000.00 8,000,000.00 1 i 16 17 1,000,000. 00 '"'i6," 666 .'666.'66' 21 24 10, ooo; 000. 00 - Nov. 11 3,38; 74.5,000.00 $10,000,000.00 8,000. 00 10,000,000. 00 52,690,000.00 2,887,477,800.00 4, 277,000,000.00 1,610,922,872.99 • 26,000.00 25,000,000.00 $192,729,750.00 - 15,000,00.0.00 $26,780,465.56 • 187, 729,750.00 1 Conditional advance not availed of and returned. Total cash advanced to foreign Governments, $9,416,371,888.55. Repayments: ^" 'gium. Belgii France : Great Britain Total repayments. • $10,000.00 12,147,000.00 57,164,007.99 9,321,007.99 I I O I CO to CO,. EXHIBIT CO 50. to S T A T E M E N T OF D E N O M I N A T I O N A L E X C H A N G E S , B Y F E D E R A L R E S E R V E D I S T R I C T S , OF $ 5 0 COUPON L I B E R T Y BONDS AND VICTORY NOTES, AS OF S E P T . 30, 1919. F i r s t 3^ per F i r s t 4 per F i r s t 4 i p e r oFni dr s 4t i secper cent. cent. Cent. cent. Origmal deliveries: Boston New York Philadelphia... Cleveland Richmond Atlanta Chicago S t . Louis Minneapolis K a n s a s City Dallas San Francisco.. Treasury Second 4 per cent. Second 4i ^ per c e n t . Third 4i per c e n t . F o u r t h 4i per c e n t . V i c t o r y 4^ per cent. ,307,750 ,662,650 ,827,750 ,831,250 ,330,800 ,739,900 ,835,200 ,521,450 543,200 898,100 882,800 202,500 351,650 $6,062,600 5,778,300 2,691,900 4,158,550 1,645,300 1,091,600 5,717,150 1,727,300 546,050 1,283,650 398,750 1,965,300 438,900 $41,100 $36,412,750 !$15,259,000 $54,539,900 103,050 81,398,350 ' 28,868,100 116,249,950 9,300 30,188,150 10,882,500 63,249,700 4,750 39,298,350 14,719,100 76,269,300 5,598,350 32,158,700 6,350 18,499,050 3,797,050 23,351,150 51,250 10,395,500 38,900 68,247,150 27,269,850 120,265,600 7,394,050 42,862,000 4,300 18.665,450 3,783,500 40,208,800 20,300 23,173,850 5,156,000 44,282,100 6,950 18,367,650 9,713,900 1,750,750 25,517,100 5,750 7,763,650 60,568,400 3,700 29,428,850 2,133,350 14,954,000 1,500 99,853,300 98,935,000 33,505.350 297,200 1383,789,000 147,195,900 701,656,050 !864,586,200 1331,077,600 S u r r e n d e r e d for d e n o m i n a t i o n a l e x c h a n g e : 3,022,150 Boston ". 27,313,900 New York : 1,424,050 Philadelphia 1,194,300 Cleveland 56,300 Richmond 277.300 Atlaata 3,055,150 Chic ago "... 154,000 S t . Louis 238,950 Minneapolis 450,750 K a n s a s City 175,850 Dallas 985,350 San Francisco 427,450 Treasury.... 663,700 106,150 475,550 801,600 17,900 77,550 556,850 116,900 126,100 185,550 41,750 521,900 281,300 . 452,100 2,867,600 229,750 341,850 28,400 64,150 636,250 • 54,650 21,900 66,500 12,350 107,650 9,200 17,972,800 4,892,350 .Total. Total. |$15,504,250 ' 24,353,400 8,600,450 7,491,150 4,477,350 3,632,000 13,692,150 2,211,050 3,660,150 4,248,700 2,631,350 9,351,300 38,775,500 [$68,703,050 $24,069,650 150,150,000 58,359,450 60,350,000 28,915,250 103,608,200 46,908,750 47,021,700 15,992,800 29,102,950 7.9S0,400 153.377,450 62,797,850 51,857,100 16,143,200 43,069,650 17,514,200 42,274,650 13,317,850 29,747,100 8,016,600 82,035,500 30,033,250 3,288,850 1,028,350 3,382,800 58,397,050 4,269,600 3,895,450 356,900 348,300 9,191,750 919,3.50 1,421,050 944,250 384,650 2,110,300 •492,7.50 2,148,300 11,943,200 10,766,750 23,212,650 152,772,500 |144,939,650 1,509,900 14,452,150 11,364,950 2,787,050 15,875,400 24,966,050 184,400 1,207,150 1,176,650 401,150 3,169,000 3,920,050 5,346,250 34,118,250 39,514,950 409,950 3,138,750 5,124,250 351,-700 4,105,250 4,643,100 586,000 4,804,000 5,107,000 154,800 1,793,000 1,843,850 782,350 5,913,000 10,124,400 122,150 762,000 1,038,050 799,250 17,381,100 1,362,600 3,974,400 74,250 317,600 5,651,350 442,300 1,046,100 . 741,850 333,750 1,167,600 37,200 17,800 I 86,114,200 37,996,650 |254,053,650 |264,529,700 33,329,350 16,600 1,200 Victory 3^ per cent. Total. $9,150 $237,909,200 45,700 ' 485,968,950 6,700 211,721,700 22,850 304,312,250 19,250 130,749,650 82,151,000 9,200 197,050 466,438,350 2,200 145,388,100 72,650 134,592,350 33,750 132,869,400 43,400 79,707,500 28,650 227,381,100 22,196,600 490,550 2,661,386,150 20,100 41,800 9,200 300 400 46,000 5,400 400 500 500 34,198,350 439,049,000 35,097,750 53,836,400 3,101,950 8,575,500 99,116,800 10,360,150 11,959,550 12,885,900 4,740,400 21,713,050 3,171,800 737,806,600 O o H W tei ^ o Issued on d e n o m i n a t i o n a l e x c h a n g e : Boston New York Philadelphia .• Cleveland Richmond Atlanta Ohicago S t . Louis Minneapolis K a n s a s City .' Dallas San. F r a n c i s c o Treasury ..' 500 2,266,500 12,296,750 4,908,000 2,373,450 513,400 167.100 1,633,850 519,250 814,450 383,250 183,750 1,380,800 476,150 Total 10,661,300 3,837,600 500 27,916,700 N e t decrease on d e n o m i n a t i o n a l ex change...- 28,114,200 14,135,200 17.300 58,197.500 , , , , , , 784,150 6,711,900 1,434,550 287,200 105,800 146,700 581,050 16,900 26,050 65,850 11,050 217,350 272,750 469,500 294,850, 582,250 471,900 155,700 57,750 259,150 55,200 16,500 44,550 8,450 137,100 284,700 40,700 527,600 61,450 21,350 7,300 39,350 53,250 8,150 6,800 15,300 250 6,750 9,200 707,300 4,324,050 819,500 361,450 138,200 32,650 948,650 122,950 82,900 86,900 57,000 54,150 4,099,950 3,169,100 32,528,400 11,024,650 3,842,700 1,178,050 1,013,800 5,626,750 1,791,650 857,950 544,000 290,800 2,128,200 1,194,700 4,i07,250 19,801,950 10,362,850 8,474,950 1,531,750 1,471,450 7,814,850 1,776,750 404,900 371,800 588,550 5,040,800 3,233,350 118,650 1,358,500 819,600 455,800 68,750 49,800 930,150 79,600 66,700 134,350 97,550 214,700 42,600 20,100 5,200 11,835,650 65,190,750 65,281,200 4,436,750 29,100 189,987,000 188.862,900 199,248,500 28,892.600 95,500 547,819,600 100 3,700 11,983,250 78,849,200 30,012,850 16,288,800 3,698,950 2,978,700 17,851,400 4,370,450 2,276,250 1,646,000 1,237,400 9,179,850 9,613,900 8 I tei K| O tei CO to STATEMENT OF DENOMINATIONAL EXCHANGES, SY FEDERALHESEB-VE DISTRICTS, OF $100 COUPON LIBERTY BONDS AND VICTORY NOTES, AS OF SEPT. 30, 1919. First 3^ per cent. Original deliveries: Boston New York Philadelphia.. Cleveland.:... Richmond Atlanta Chicago-. St. Louis .. Minneapolis... Kansas City... Dallas San Francisco. Treasury. Total. $15,2.52, 30,300, 11,399 8,255; 5,656', 3,972, 17,603, 3,174, 4,925, 5,740, 3,272, 12,518, First 4 per cent. First 4i percent. 790,000 $8,326,900 403,700 10,215,700 4,177,100 229,300 8,171,300 339,900 2,747,500 441,500 820, 100 1,594,600 733,700 11,093,100 3,505:100 956,800 1,092,100 302,100 2,468,100 854,100 770,900 434,900 4,003,500 352,800 1,112,500 445,800 122,071,600 59,278,400 First second 4^ per cent. Second 4 . per cent. Second 4^ per cent. Tliird 4 J per cent. $32,900 $34,578,900 $18,504,100 $40,941,200 136,300 82,172,700 37,616,800 112,265,400 8,200 30,664,500 13,953,900 53,451,100 11,600 44,891,800 21,583,400 69,926,900 14,300 23,197,700 8,779,900 34,237,100 60,800 10,362,700 5,222,200 27,-399,400 54,900 89,700,500 42,874,900 140,212,200 25,346,000 11,848,900 45,120,300 4,200 7,075,600 56,430; 000 34,500 28,157,900 8,802,400 51,165,-90011,200 23,91.3,700 5,700 12,961,900 3,073,400 27,521,500 7,200 38,275,500 14,463,900 59,610,000 2,021,000 17,400 26,704,800 Victory 4f per cent. Victory 3^ per cent. $57,066,400 $28,046,000 145,001,600 74,125,500 •63,079,400 37,312,300 129,430,500 57,982,500 54,860,800 22,301,700 35;642,600 13,437,000 209,520,500 101,716,-500 55,894,600 25,650,800 78,176,200 38,867,500 63,001,600 24,283,600 36,334,700 10,825,500 95,512,400 42,860,600 2,245,400 734,000 $44,300 234,800 73,900 63,700 30, 900 . 47,200 406,900 20,800 122,100 93,400154,400 80,300 Fomth 4i per cent. 399,200 444,223,800 220,504,200 720,302,000 1,02-5,766,700 478,143,500 1,372,700 Total. ;to •a Total. $218,583,400 515,473,000 222,349,600 - 356,656,80U 159,267,400 100,558,800 634,916,700 177,522,000 218,183,700 185,334,300 97,35.5,100 276,685,100 33,280,900 3,196,166,800 o :^ H .m S u r r e n d e r e d for d e n o m i n a t i o n a l exBoston New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. L o u i s , . . . . . . MiimeapoUs... Kansas C i t y . . . Dallas San F r a n c i s c o . Treasury •.CO 2,108,100 25,041,200 888.700 921; 200 58,300 295,700 3,278,700 183,300 288,200 . 465,700 . 171,000 1,330,000 678,000 635,300 7,820,500 380,600 •476,400 19,800 71,000 1,247,500 113,700 88,600 • 206,300 40,100 492,300 211,600 336,100 3,006,800 187,000 355,500 31,700 84,900 782,500 64,700 35,300 80,900 23,600 171,900 9,500 35,708,100 11,803,700 5,170,400 4,286,600 1,404,800 2,080,400 49,656,200 22,278,300 97,740,400 1,135,300 1,469,000 6,484,100 2,091,100 8,605,200 2,697,400 170,900 661,800 246,800 509,300 2,864,900 382,400 4,901,900 25,769,600 7,589,500 743,700 • 442,100 2,087,400 4,713,200 1,323,900 603,400 3,592,700 1,044,800 701,300 • 498,400 1,695,100 244,500 2,523,400 4,523,200 1,281,500 285,500 135,900 584,700 600 28,100 70,541,400 35,900,300. 163,608,900 -5,434,200 115,184,000 7,031,600 22,181,100 1,004,000 3,846,600 38,973,000 2,727,300 6,833,500 4,769,000 1,881,200 9,150,100 1,146,400 558,300 16,297,300 830,200 2,781,500 137,300 -.538,800 7,189,900 286,600 2,027,400 739,900 432,600 1,117,400 22,600 11,400 • 170,900 10,800 1,200 220,162,000 32,959,800 246,800 2,100 31,700 500 9,600 • 1,500 5,100 2,000 16,855,200 337,223,100 18,417,300 40,110,600 2,330.600 8,595,700 89,764,300 6,649,300 15,923, IOO 11,602,100 4,991,600 20,591,800 -',3,074,800 576,129,500 % Issued on denominational exchange: Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury Total N e t decrease on d e n o m i n a t i o n a l exchange 259,600 3,615,700 346,700 115,800 30,300 .45,800 306,300 11,400 18,600 34,100 8,800 190,000 216,700 254,500 1,360,800 161,400 148,100 140,500 50,800 210,700 27,400 14,700 48,300 11,900 117,600 391,200 62,000 641,300 52,300 43,500 11,300 37,200 137,000 10,700 7,900 8,600 200 15,300 4,500 5,199,800 2,837,900 1,031,800 30,508,300 8,965,800 4,138,600 509,800 3,800,400 507,700 272,700 84,100 40,800 603,500 85,100 .105,200 79,900 42,800 103,200 3,838,600 1,210,700 16,182,000 3,258,100 1,936,400 849,900 650,600 2,386,100 593,500 457,000 402,700 225,300 1,268,500 583,500 3,083,200 16,964,700 6,671,200 6,623,700 1,715,900 1,334,700 4,977,100 1,264,300 317,200 366,700 496,000 5,129,700 2,037,100 168,400 1,511,900 890,200 270,100 128,300 79,100 323,600 68,800 129,800 95,400 25,800 315,800 13,700 10,400 28,500 500 400 5,500 300 1,045,200 21,444,000 930,100 X, 031,900 228,800 211,100 1,359,400 222,800 260,000 277,300 168,800 1,100,900 372,100 6,603,800 65,549,400 12,818,200 10,442,200 3,089,100 2,450,500 10,309,200 2,284,000 1,310,400 1,313,000 979,600 8,241,000 7,4.57,700 400 28,652,400 10,073,800 30,004,300 50,981,500 4,020,900 45,300 132,848,100 100 27,700 41,889,000 25,826,500 133,604,600 169,180,500 28,938,900 201,500 443,281,400 Ui tei O Pi tei pi O ^, W H H pi CO. STATEMENT OF DENOMINATIONAL EXCHANGES, BY FEDERAL RESERVE DISTRICTS, OF $600 COUPON LIBERTY BONDS AND VICTORY NOTES, AS OF SEPT. 30, 1919. F i r s t 3i per cent. O r i g i n a l deliveries: Boston New York Philadelphia... Cleveland . Richmond Atlanta Chicago St. L o u i s Minneapolis K a n s a s City Dallas...-. San Francisco.. Treasm-y Total. S u r r e n d e r e d for d e n o m i n a t i o n a l e x change: Boston ;.. New York Philadelphia Cleveland Richmond Atlanta • Chicago St. L o u i s . . Mirmeapolis '. Kansas City...: , Dallas S a n Francisco T r e a s u r y . .• ,... Total- First 4 per cent. F i r s t 4J per cent. F i r s t second 4i percent. Second 4 p e r cent. H Second _ p e r cent. Third 4i per cent. F o u r t h 4J V i c t o r y 41 . Victory 3f per cent per cent per cent. Total. 147,000 149,000 213,000 805,000 077,000 067,500 759,000 260,000 687,500 967,500 206,500 618,000 250,000 $5,800,500 8,286,000 3,522,000 10,463,500 2,688,500 1,271,500 10,795,500 4,429,500 855,500 3,228,000 602,500 3,501,000 931,500 $9,500 $22,144,000 $15,075,500 $21,141,000 $28,267,000 $15,878,500 74,000 55,423,500 33,682,000 60,505,000 80,001,000 43,668,000 12,000 23,134,000 14,428,000 30,156,000 38,442,000 30,341,500 1.5,500 42,275,500 29,669,500 43,676,000 58,953,000 38,432,500 15,500 18,557,000 9,984,500 20,265,000 34,520,500 16,369,000 9,491,000 41,500 5,937,500 16,550,000 21,339,500 11,166,000 45,000 68,829,000 44,945,000 74,385,500 104,143,000 64,595,000 5,500 22,456,000 14,436,500 26,432,000 32,274,500 23,750,500 6,070,000 18,210,500 26,147,500 14,257,000 12,000 12,897,000 8,500 18,750,500 11,283,500 26,511,500 34,385,500 18,311,000 6,340,500 7,057,500 2,802,500 12,077,000 16,646,000 1,500 1.3,500 28,197,000 15,057,500 29,961,500 44,050,500 26,134,500 66,500 125,500 10,500 4,184,000 5,500 $153,000 555,000 70,000 131,000 62,000 73,500 831,000 90,000 119,000 224,500 134,500 170,500 97,642,500 84,207,000 56,375,500 259,500 329,212,000 207,556,000 379,996,500 519,180,500 309,310,500 2,614,000 1,986,354,000 1,361,500 8,201,000 640,000 1,075,500 36,000 179,500 1,419,000 121,500 140,500 145,000 37,000 709,500 416,500 124,500 551,500 101,500 310,500 15,500 53,500 272,000 17,500 23,000 23,500 7,500 115,000 139,000 142,000 936,000 122,500 131,500 26,500 25,500 200,500 25,000 21,000 45,000 12,000 54,000 7,000 14,482,500 1,754,500 1,748,500 $10,618,500 22,410,000 9,649,500 8,860,500 4,699,000 3,684,000 14,200,000 3,035,000 3,320,500 4,975,500 1,705,000 10,485,000 CO to oo $127,234,500 317,753,500 154,968,000 247,282,000 112,238,000 71,622,000 398,528,000 •133,169,500 83,576,500 122,646,000 48,573,500 163,189,000 5,371,000 Pi H O K 408,500 4,347,500 617,500 752,000 56,000 135,500 1,295,500 161,500 247,500 249,000 ^86,500 285,000 397,500 951,500 14,664,000 1,676,500 2,788,500 327,000 1,142,000 4,341,000 518,500 751,500 793,000 488,500 945,000 875,500 1,327,500 18,065,000 2,311,000 3,429,500 479,000 830,000 6,233,500 556,000 1,306,500 ~ 744,000 . 495,000 1,748,000 878,500 143,000 3,543,000 802,500 658,000 60,000 215,000 1,489,000 69,500 620,000 145,500 213,000 235,000 5,000 21,500 113,000 14,500 8,500 500 553,000 14,376,500 855,000 1,054,000 107,500 210,000 2,565,500 109,000 456,000 195,000 229,500 1,218,000 192,500 500 50,500 3,500 1,500 6,500 5,000 9,000 500 5,033,000 64,800,500 7,141,000 10,208,000 1,107,500 2,791,500 17,866,500 1,582,000 3,567,500 2,346,500 1,574,000 5,318,50O 2,912,500 3,500 22,121,500 9,039,500 30,262,500 38,403,500 8,198,500 234,500 126,249,000 3,000 tei Ur I s s u e d on d e n o m i n a t i o n a l e x c h a n g e : Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St.Louis Minneapolis K a n s a s City Dallas -• San Francisco Treasury , Total -.. Decrease on d e n o m i n a t i o n a l exchange I n c r e a s e o n d e n o m i n a t i o n a l exchange N e t decrease.. 178,000 4,748,500 325,500 466,000 16,500 46,000 935,500 37,500 61,000 117,500 -30,000 729,500 50,500 207,500 1,748,500. 103,000 401,500 15,000 14,500 298,500 44,500 42,500 122,500 16,000 210,500 254,000 7,742,000 3,478,500 54,500 889,500 81,500 144,000 19,000 106,000 242,000 .38,500 13,500 50,500 . 7,500 95,500 10,000 1,7-52,000 364,500 4,231,000 513,500 772,000 133,000 77, 500 1,291,500 227,500 107,500 251,500 79,000 446,500 112,000 660,500 10,350,500 2,177,000 2,534,000 502,000 563,500 4,219,000 744,500 447,000 908,000 431,500 1,533,500 139,000 1,253,000 14,935,000 3,365,500 3,372,000 850,000 647,500 .5,645,500 953,500 441.000 683,500 .439,500 2,126, OOO 227,500 100,500 1,791,000 1,166,500 432,000 106,500 311,500 774,500 147,000 203,000 145,500 56,000 379,500 9,500 5,500 61,000 14,000 500 379,500 17,745,000 598,500 1,085,500 155,000 106,500 2,154,500 269,000 309,500 298,500 164,000 . 1,655,000 249,500 500 500 6,000 3,203,500 56,510,000 8,345,000 9,207.000 1,797; 000 1,874,500 15,567,000 2,463,000 1,625,500 2,577,500 1,224,000 7,176,500 1,058,500 10,500 25,170,000 8,607,000 25,210,000 34,939,500 5,623,000 96,500 112,629,000 10,000 1,500 6,000 1,000 500 • ^ = 432,500 6,740,500 1,724,000 3,500 7.000 3,048,500 5,052,500 3,464,000 2,575,500 138,000 ^ O pi 18,403,000 4,783,000 g > 13,620,000 O > Ui pi Ki CO to CD S T A T E M E N T OF D E N O M I N A T I O N A L E X C H A N G E S , BY F E D E R A L R E S E R V E D I S T R I C T S , OF $ 1 , 0 0 0 COUPON L I B E R T Y BONDS AND VICTORY NOTES, AS OF S E P T E M B E R 30, 1919. Firsts^ per c e n t . Original deliveries: Boston New York . Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San F r a n c i s c o . . Treasury Total. S u r r e n d e r e d on d e n o m i n a t i o n a l exchange: Boston New York Philadelphia Cleveland.... Richmond Atlanta Chicago St. Louis Mirmeapolis Kansas City : Dallas SanFrancisco Treasury Total. First 4 per cent. F i r s t 4i per c e n t . $102,535,000 ^9,205,000 $17,519,000 462,505,000 40,408,000 44,105,000 9,974,000 74,353,000 12,627,000 75,517,000 23,330,000 19,377,000 6,781,000 24,129,000 10,229,000 3,981,000 15,829,000 4,763,000 81,014,000 21,988,000 19,274,000 8,243,000 22,218,000 10,347,000 1,985,000 13,577,000 2,473,000 4,179,000 18,951,000 5,720,000 1,348,000 7,807,000 2,260,000 8,418,000 50,290,000 10,814,000 2,083,000 705,000 F i r s t seco n d 4^ per cent. $65,000 586,000 53,000 128,000 49,000 113,000 135,000 11,000 27,000 21,000 2,000 15,000 17,000 Second 4 per cent. Second 4^ per c e n t . T h i r d 4i per c e n t . F o m t h 4i per c e n t . $194,005,000 612,459,000 119,307,000 138,009,000 67,302,000 34,217,000 172,184,000 57,974,000 33,263,000 33,111,000 21,731,000 108,308,000 $146,407,000 598,768,000 90,881,000 113,831,000 45,247,000 24,926,000 138,996,000 44,687,000 17,961,000 24,280,000 . 9,394,000 66,317,000 11,015,000 $131,732,000 555,000,000 115,938,000 104,980,000 54,082,000 42,396,000 143,435,000 53,820,000 27,722,000 36,371,000 25,477,000 93,416,000 21,000 $237,586,000 991,639,000 187,095,000 183,376,000 107,936,000 79,199,000 236,925,000 91,214,000 35,824,000 55,134,000 34,982,000 143,254,000 50,000 Victory 4f per cent. $91,164,000 384,227,000 97,069,000 105,351,000 52,795,00043,912,000 142,914,000 68,356,000 20,842,000 35,622,000 15,914,000 79,736,000 7,000 Victory 3^ per cent. 948,725, oop 164,509,000 147,267,000 1,222,000 1,591,870,000 1,332,710,000 1,384,390,000 2,384,214,000 1,137,909,000 324,411,000 9,417,227,000 759,000 3,865,000 1,574,000 355,000 127,000 151,000 621,000 21,000 28,000 56,000 48,000 419,000 477,000 523,000 1,28.5,000 400,000 373,000 66,000 . 70,000 379,000 71,000 16,000 65,000 13,000 135,000 528,000 174, 1,794, 248, 164, 32, 43, 341, 26, 18, 16, 5 17i 64, 4,711,000 16,202,000 1,709,000 2,752,000. • 554,000 202,000 3,121,000 923,000 886,000 550,000 351,000 3,523,000 3,524,000 3,505,000 20,269,0000 5,939,000 1,207,000 1,925,000 93,000 2,068,000 567,000 343,000 444,000 390,000 390,000 5,867,000 6,656,000 79,115,000 6,659,000 4,481,000 998,000 978,000 6,824,000 1,264,000 925,000 971,000 493,,000 3,706,000 13,226,000 16,852,000 108,201,000 15,990,000 12,761,000 3,194,000 3,239,000 14,790,000 2,105,000' 655,000 913,000 527,000 4,750,000 2,329,000 1,039,000 13,087,000 1,850,000 731,'000 238,000 221,000 2,162,000 178,000 503,000 157,000 155,000 617,000 17,000 280,000 10,732,000 300,000 245,000 807,000 5,000 34,499,000 254,550,000 34,669,000 23,069,000 7,134,000 5,012,000 31,913,000 5,251,000 3,374,000 3,185,000 1,98^,000 14,364,000 26,037,000 8,501,000 3,924,000 2,942,000 39,008,000 43,007,000 126,296,000 186,306,000 20,955,000 14,100,000 445,039,000 13,000 o Total. $22,270,000 1962^ 488,000 239,818,000 3,929,155,000 718,229,000 10,932,000 773,062,000 9,163,000 372, 541,000 3,991,000 251, 412,000 2,076,000 23,034,000" 979, 899,000 359, 182,000 2,312,000 1.55,274,000 1,600,000 216, 741,000 3,352,000 119,940,000 1,025,000 565, 406,000 4,838,000 13,898,000 15,000 1,607,000 96,000 CO CO O o I s s u e d on d e n o m i n a t i o n a l exchange: Boston New York Philadelphia Cleveland : Richmond Atlanta : Chicago St. Louis Minneapolis '. Kansas City Dallas..: San Francisco Treasury Total. Decrease on d e n o m i n a t i o n a l exchange I n c r e a s e on d e n o m i n a t i o n a l exchange Netincrease. 8,466, 000 116,796, 000 4,916, 000 6,443, 000 793. 000 858, 000 16,650, 000 1,119, 000 2,723, 000 1,740, 000 997, 000 5,703, 000 1,272, 000 i 6,029,000 49,345,000 2,420,000 2,677,000 125,000 665,000 6,551,000 414,000 590,000 900,000 382,000 2,307,000 1,459,000 2,165,000 18,344,000 711,000 1,080,000 43,000 159,000 2,742,000 202,000 190,000 305,000 66,000 824,000 460,000 802,000 6,791,000 447,000 714,000 61,000 120,000 1,463,000 133,000 68,000 144,000 . 45,000 248,000 11,000 73,864,000 27,291,000 11,047,000 38,000. 168,476,000 65,363,000 23,367,000 8,105,000 '38,000 129,468,000 37,000 1,000 5,065,000 88,132,000 4,751,000 4,951,000 1,106,000 1,013,000 13,648,000 870,000 1,085,000 1,257,000 452,000 2,075,000 312,000 16,107,000 303,056,000 18,162,000 22,862,000 2,104,000 5,971,000 56,191,000 3,974,000 6,753,000 6,641,000 3,322,000 9,382,000 1,026,000 19,877,000 356,493,000 27,47/8,000 47,772,000 3,016.000 8,177,000 71,664,000 6,063,000 9,375,000 7,791,000 2,948,000 13,621,000 1,689,000 60,040,000 42,000 1,487,000 53,652,000 10,408,000 1,003,054,000 ' 64,759,000 750,000 5,124,000 94,041.000 7,202,000 340,000 8,129,000 881,000 . 807,000 16,000 17,786,000 14,179,000 '920,000 184,008,000 4,000 13,705,000 926,000 2,347,000 26,000 23,157,000 999,000 6,000 19,783,000 860,000 10,000 9,082,000 2,272,000 48,000 36,480,000 111,000 180,000 6,521,000 124,717,000 455,551,000 575,964,000 90,847,000 329,255,000 389,658,000 69,892,000 12,750,000 1,540,545,000 1,350,000 81,710,000' IS 1,350,000 H 1,096,856,000 W 1,095,506,000 »*1 CO CO S T A T E M E N T O F D E N O M I N A T I O N A L E X C H A N G E S , B Y F E D E R A L R E S E R V E D I S T R I C T S , O F $ 6 , 0 0 0 COUPON BONDS A N D VICTORY NOTES, AS OF S E P T E M B E R 30, 1919. Original deliveries: Boston New York Philadelphia... Cleveland Richmond..:.. Atlanta Chicago St. Louis Minneapolis— Kansas C i t y — Dallas San Francisco. Treasury Total. Surrendered lor denominational exchange: B oston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis. Kansas City Dallas : — San Francisco Treasury Total. First second 4^ per cent. First 4 per cent. First 4^ per cent. Second 4 per cent. $1,240,000 1,980.000 755,000 2,750,000 1,320,000 255,000 2,615,000 . 705,000 195,000 300, 000 300,000 .550,000 85,000 $1,66-5,000 2,955,000 1,450,000 3,140,000 1,455,000 515,000 2,510,000 920, 000 265,000 510, 000 155,000 .580,000 615,000 $40,000 $29,915,000 $29,410,000 10,000 63,910,000 64,745,000 18, .580,000 18,425,000 30,000 34,900,000 29,570,000 14,850,000 11.315.000 3; 395; 000 3,915,000 15,000 34,775,000 32,725,000 6, -535,000 8,605,000 10,000 8, 240, 000 5,200, 000 6,920, 000 6,620.000 4,025,000 7,380,000 '9,665,000 11,5.50,000 2,680,000 13,0-50,000 16,735,000 105,000 239,585,000 228,265,000 Second 4J per cent Thira4|per cent. Fomth 41 •per cent. $26,030, 000 50,000, 000 21,740, 000 25,415,000 10.110,000 5^750,000 29,195,000 5,225, 000 6,995, 000 6,250, 000 7,105,000 12,310,000 $56,275,000 109,385,000 60, 060,000 60,300,000 27,585, 000 12,900,000 58,465;000 12,125, 000 .9,580, 000 11,460,000 8.200,000 23,31-5,000 Victory ^ per cent. LIBERTY Victory 3 | per cent. $19,440,000 $5,245,000 43,330,000 14,505, 000 26,800, 000 8,000,000 28,680,000 5,335.000 13,505,000 1,.390; 000 8,265,000 670,000 38,150, 000 7,625,000 8, 070, 000 605,000 3,810,000 865,000' 7,375,000 955,000 3,450,000 395,000 12,31-5,000 - 2,045,000 CO CO to Total. $169,260,000 3-50,820,000 155,810,000 190,120,000 81, -530, 000 35,665,000 206,075,000 42,800,000 35,150,000 40,390,000 31,010,000 72,330,000 3,380,000 449,650. 000 213,190, 000 47,635,000 1,414,340,000 O Pi o' H: W tei. SO, 000 1,850,000 125,000 15,000 1.5,000 10,000 265,000 5,000 30,000 650,000 65,000 35,000 80,000 60, 000 10, 000 10,000 5, 000 .55, 000 135,000 15,000 2,555,000 960, 000 1,290,000 41,820,000 1,550,000 1,-330,000 455,000 115,000 1,295,000 65,000 135,000 90,000 160,000 385,000 365,000 2,945, 000 815,000 1,440,000 12,865,000 34,840,000 38,190, 000 1,670,000 3,245, 000 8,465,000 4,950,000 665,000 1,985,000 1,160,000 740,000 180,000 790,000 825,000 50,000 3,255,000 4,355,000 1,400,000 370,000 965,000 160, 000 105, 000 255,000 75,000 200, 000 365,000 225,000 330, 000 340, 000 120,000 385,000 775,000 170,000 575,000 740,000 195,000 49,055,000 18,590,000 48,260, 000 64, .340,000 150, 000 S,045,000 1,725,000 775,000 335,000 90,000 i,06o;ooo 120, 000 45,000 110,000 90,000 160,000 25,000 12,730,000 6,760,000 10, 000 1,660,000 139,920,000 230, 000 17.075,000 9,855,000 90,000 2,885,000 2,005,000 45,000. 120, 000 11,810,000 1.690,000 '635,000 10,000 1, 000,000 1,040,000 2,020,000 75,000 2,095,000 60,000 2,300,000 198,79,0, 000 ^• tei Ui Issued on denominational exchange: Boston New York Philadelphia Cleveland. . . Richmond ...' Atlanta Chicago St L o u i s . . Minneapolis .; Kansas City... Dallas San Francisco. Treasury. Total Decrease On d e n o m i n a t i o n a l e x c h a n g e Increase o n d e n o m i n a t i o n a l exchange N e t decrease 50,000 1,485,000 75,000 15,000 40,000 125,000 475,000 190,000 55,000 5,000 25,000 105, 000 10,000 10,000 5,000 40,000 25,000 10, 000 55,000 1,945,000 1,065,000 210,000 , 610,000 105,000 ^, 1,560,000 29,330,000 760,000 1,155,000 160,000 55,000 1,805, 000 250,000 145,000 115,000 200,000 380,000 230,000 1,305,000 7,035,000 1,640,000 1,005, 000 235,000 45,000 1,210,000 115, 000 •250,000 210,000 105, 000 150,000 95,000 1,760,000 25,685,000 1,555,000 2,130,000 470,000 675,000 4,915,000 405,000 845,000 955,000 -530,000 1,140,000 360,000 3,655,000 27,205,000. 7,185,000 5,245,000 970,000 950,000 7,945,000 1,060,000 1,385,000 1,535, 000 565,000 2,210,000 565,000 36,145,000 13,400,000 41,425-, 000 12,-910,000 5,190,000 6,83.5,000- 455,000 "2,500,000 1,040,000 870,000 150,000 105,000 1,185,000 35,000 645,000 320,000 " 145,000 445,000 10,000 175,000 745,000 210,000 245,000 25,000 280,000 5,000 60,475,000 7,905, 000 1,715,000 164,075,000 3,865,000 4,825,000 585,000 34,820,000 105,000 5,000 25,000 9,085,000 94,460,000 12,655,000 10,720,000 2,025, 000 1,880,000 17,655,000 1,880,000 3,280,000 3,150,000 1,545,000 4,400,000 1,340,000 34,715,000 Ui tei O % O w tei > Ui Cl pi K3 S T A T E M E N T OF D E N O M I N A T I O N A L E X C H A N G E S , BY F E D E R A L R E S E R V E D I S T R I C T S , OF $ 1 0 , 0 0 0 COUPON BONDS AND VICTORY NOTES, AS OF S E P T E M B E R 30, 1919. Second Third First First First second Second 4 per cent. 4i per cent. 4i per cent. 4 per cent. 4^ percent. 44'percent. Original deliveries: Boston New York Philadelphia... Cleveland T? i c h m o n d . . . . . Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco.. • Treasury Total. Trea.sury Total.... ;: 7 Victory Victory :f percent. 3f percent. 2,730,000 760,000 130,000 110,000 200,000 800,000 140,000 $30,000 $58,160,000 .$61,3-30,000 130,000 177,620,000 229,660,000 38,140,000 42,310,000 60,050,000 64,060,000 19,860,000 12, 730,000 5,790,000 4,-370,000 45,020,000 42,430,000 5,200,000 7,040,000 8,580,000 7,490,000 11,480,000 5,370,000 4,920,000 3,310,000 25, 770,000 16,070,000 10,120,000 $59,650,000 $15,020,000 151,670,000 107,840,000 57,610,000 26,660,000 39,410,000 17,010,000 3,660,000 20,620,000 2,740,000 8,160,000 44,140,000 24,480,000 1,420,000 6,730,000 1,650,000 5,-300,000 2,470,000 4,970,000 1,110,000 3,670,000 7,190,000 24,910,000 .$377,430,000 1,242,790,000 393, 030,000 327, 010,000 118; 490