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ANNUAL REPORT OF THE
SECRETARY OF THE TREASURY
oilHE STATE OF THE FINANCES
FOR FISCALYEAR ENDEDJUNE 30,1942







ANNUAL REPORT OF THE
SECRETARY OF THE TREASURY
ON

THE STATE OF THE
FINANCES
FOR THE FISCAL YEAR
ENDED JUNE 30

1942

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1943

For sale by the Superintendent of Documents, "Washington, D. C. -




-

-

- Price, $1.00 (paper cover)




TREASURY DEPARTMENT
DOCUMENT N O .

Secretary

3121

•^.^o
^

CONTENTS
Budget results:
.
,
Pas©
Receipt's and expenditures, general and special accounts
'
1
Receipts in general and special accounts
2
Expenditures from general and special accounts
_:.__
11
Receipts and expenditures in trust accounts and checking accounts of
Government corporations and credit agencies
_14
Deficit in general and special accounts
16
Financing the net deficit and other requirements.__.
•-•-:
17
The public debt
--_________;__
17
Treasury bonds, notes, and certificates of indebtedness
_-__-_
20
Treasury bills
.-_- .-1
25
United States savings bonds
25
Pay-roll savings plan
i___-_-^__
27
War savings stamps
29
Redemptions of savings bonds
.__ .-_J
30
Treasury tax savings notes.
_I__L__
31
Adjusted service bonds
'
__-.
1
32
Depositary bonds
---_L32
Cumulative sinking fund
'
-___
__
32
Public Debt Act of 1942
._--.______-______l
32
The guaranteed debt
^'-.i-S.:..
__i.l._
33
Absorption of the increase in securities issued or guaranteed 'by thie Unitied
States-38
General Fund
.
..._.__
39
Securities owned by the United States and proprietary interest in Government corporations and credit agencies:
;
Securities owned
— _
____^
40
Proprietary interest in Government corporations and credit agencies.
41
Monetary developments:
International monetary cooperation:
Stabilization agreements
42
Inter-American conferences
43
Domestic monetary events..
-.-.
'44
Revenue legislation
46
Revenue Act of 1941
:
1..
46
Public Debt Act of 1942
49
Other revenue legislation
*
50
War contributions fund:
Conditional gifts
J.
:.
51
Unconditional donations
52
Customs Service in the War
52
Special procurement activities:
"
Lend-lease
53
Strategic and critical materials
^
-_^-_-_--_
^
54
Refugee relief----55
Defense housing
55
Foreign funds control
.^_.^_
56
Changes in organization and procedure
:
57
Estimates of receipts
'-.._
58
Estimates of expenditures
80
ni




^^-^^ ^sf
*IV

V

OONTENTSv
ADMINISTRATIVE REPORTS OF BUREAUS AND DIVISIONS
Page

Fiscal Service of the Treasury Department
Accounts, Bureau of J
Commissioner of Accounts, pffice of:
Budgetary administration and financial reporting
Daily Statement of the United States Treasury
i-—
Combined statement of assets and liabilities of Government
corporations and credit agencies
Surveys under Reorganization Plan No. III_.__
Annual appraisal of assets and liabilities of the Commodity
Credit Corporation
.
Securities and funds, Philippine invasion
Advances to Federal Reserve Banks for industrial loans, etc_
Appropriations and e^enditures under the Social Security
Act
Colorado River Dam fund.
Division of Bookkeeping and Warrants
Division of Disbursement
Voluntary pay-roll allotment plan
1
Bonding of certifying officers
_-Division of Deposits
._
Depositary functions
Depositary bonds
^--__
Designation of agencies for the issuance of war savings bonds,
Series E
_'
Federal savings and loan associations
Social security
_.
Government Losses in Shipment Act
Section of Surety Bonds
:
Budget Section
Alien property trust fund
Philippine funds in the United States Treasury
Appropriation of funds to the Government of the Commonwealth of the Philippines' for national defense
._
Supplementary sinking fund for the payment of bonds of the
Philippines
__Foreign check control
Section of Investments
---i
-_
Obligations of foreign governments
-i
Receipts from Germany
_
'
..
Treasury administration of alien and mixed claims
Mixed Claims Commission and Private Law No. 509:
Claims against Germany
War Claims Arbiter
Claims of German nationals.
Claims of Hungarian nationals
L
.
German special deposit account
Tripartite Claims Commission: Claims against Hungary..
.
.
_
Claims of American nationals against Turkey
Claims of American nationals against Mexico .
.
Railroad obligations. ,
Section 204, Transportation Act, 1920, as amended
Section 207, Transportation Act, 1920, as amended
Section 210, Transportation Act, 1920, as amended
Federal control of railroads:
. Administration
Finances
.
^
Securities, etc
'-^
Clairns
_..__
Compensation payments—United States railroad employees
Canadian Workmen's Compensation Board
..
Tax refunds and other collections




85
85
85
86
86
87
87
87
' 89
89
90
90
91
92
92
92
93
94
94
94
94
94
96
97
97
^ 98
99
100
101
101
101
103
104
104
106
106
107
107
108
108
109
110
110
111
111
112
112
112
113
113
113
113

OONTE-NTS
Fiscal Service of the Treasury Department—Continued,
Accounts, Bureau of—Continued.
Section of Investments—Continued.
. Federal Farm Mortgage Corporation
Federal land banks:
Capital stock
'.
Payments con account of reductions in interest rates on
mortgages and subscriptions to paid-in surplus
..
Federal savings and loan associations
Trust and special funds invested by the Treasury Department
Emergency Relief Accounting Organization
Public Debt, Bureau of the
Division of Loans and Currency
^.
Issue and retirement of securities.
-._United States savings bonds
Individual registered accounts
-.
Claims
.
.,
...
Safekeeping of securities
Mutilated paper and redeemed currency.
Register of the Treasury
...
Division of Public Debt Accounts and Audit
Division of Savings Bonds..
^
Division of Paper Custody
Destruction Committee
Treasurer of the United States
,
Budget and Improvement Committee
,
Comptroller of the Currency, Bureau of the
Changes in the condition of active national banks
Summary of changes in the national banking system
Customs, Bureau of:
Collections
.
.
.
Volume of business
:.
Entries of merchandise
'
Vessel, airplane, and highway traffic
War activities
1
.-_
Drawback transactions
^
i-_...
Protests and appeals
Law enforcement activities:
. ' .
Seizures
.
I
Legal proceedings
!
• Fines, penalties, etc
Marine and tariff administration:
Marine "administration
.
Tariff administration
Customs Agency Service
Personnel investigations
:
Baggage investigations
Cooperation with other agencies
Miscellaneous:
Appraisement Unit
.
_.
Customs School of Instruction
Division of Engineering and Weighing-:
Division of Laboratories..
Changes in ports and stations
:
Cost of administration.
.___
Engraving and Printing, Bureau of
Foreign Funds Control
.
..
Internal Revenue, Bureau of:
General:
Internal revenue collections
Refunds, drawbacks, and stamp redemptions
Additional assessments
Cost of administration




• V

P»se
114
114
115
117
117
118
121
122
122
123
126
127
127
127
128
131
132
133
133
134
139
140
140
142
143
144
145
145
146
147
148
148
151
151
152
152
153
154
154
154
155
155
155
156
156
156
156
159
160
161
162
162

VI

CONTENTS

Internal Revenue, Bureau of—Continued.
Income Tax Unit:
Page
General functions
162
Returns
filed
.
1
•_._.-_--_
163
Examination of income and excess profits tax returns lipon
receipt by the Washington office
163
Investigation of tax returns by the field ofl&ces
.....
163
Revenue results of investigations of income and excess profits tax
returns.
.-_163
Stage at,which additional tax was assessed
._
164
Refunds, abatements, and credits
_._
164
Inventory of returns on hand in the field offices
164
Miscellaneous Tax Unit
•
:
164
Estate Tax Division
165
Tobacco Division
165
Sales Tax Division
:
165
Capital Stock Tax Division
-..
165
Miscellaneous Division
-_
166
Alcohol Tax Unit
.
....
.
166
Procedure Division..
..1
167
Enforcement Division
167
Field Inspection Division
:
168
Laboratory Division
-_-_
168
Audit Division
169
Basic Permit and Trade Practice Division
).69
Accounts and Collections Unit
170
Taxes under the Federal Insurance Contributions Act
171
Tax under the Federal Unemployment Tax Act
173
Carriers taxes
^
174
Technical Staff
...
174
Office of the Chief Counsel
.
—176
Chief Counsel's Committee
--.
176
Alcohol Tax Division
....
.
_ 176
Appeals Division
.
j_
-i, 176
Civil Division
^
.
-._.
177
Claims Division
177
Interpretative Division
.
^-178
Legislation and Regulations Division
178
Penal Division
.
._
178 .
Review Division
.
.
1
179
Intelligence Unit
179
Legal Division. ..
.
•180
Mint, Bureau of the:
Institutions of the Mint Service
-_
182
Coinage
.
183
Minor coinage alloys
_-_
183
Bullion deposit transactions......
.
183
Transfers of bullion for long-term storage
183
Gold operations
184
Silver operations
.
. 184
Refineries
.
.__
185
Stock of coin and monetary bullion in the United States
185
Domestic production of gold and silver
185
Industrial consumption of gold and silver
__^
185
Appropriations, expenses, and income
.
.186
General activities
186
Monetary Research, Division of
186
Narcotics, Bureau of
-_
._
187
Personnel, Division of..
.
.
^
190
Practice, Committee on
:.
190
Processing Tax Board of Review^
.
_..
191
Procurement Division
192
Research and Statistics, Division of
.
197
Secret Service Division.
'
198
Tax Legislative Counsel, Office of the
201
Tax Research, Division of
.
202
War Savings Staff
.
203




CONTENTS

VII

EXHIBITS \
PUBLIC DEBT

Issues and redemption of Treasury bonds and Treasury notes
Page

Exhibit 1. Offering of Treasury notes of Tax Series A-1943 and Tax Series
B-1943
L
207
Exhibit 2. Offering of 2 ^ percent Treasury bonds of 1967-72
• 212
Exhibit 3. Subscriptions and allotments, Treasury bonds of 1967-72
214
.Exhibit 4. Offering of 1 percent Treasury notes of Series A-1946
214
Exhibit 5. Allotments, Treasury notes of Series' A-1946
216
Exhibit 6. Offering of 2>^ percent Treasury bonds of 1967-72 (additional)
and 2 percent Treasury bonds of 1951-55
216
Exhibit 7. Subscriptions and allotments, Treasury bonds of 1967-72
(additional) and Treasury bonds of 1951-55
219
Exhibit 8. Offering of Treasury notes of Tax Series A-1944 and Tax Series
B-1944
.
.220
Exhibit 9. Offering of 2 percent Treasury bonds of 1949-51
224
Exhibit 10. Allotments, Treasury bonds of 1949-51
-227
Exhibit 11. Offering of 2% percent Treasury bonds of 1952-55-.
227
Exhibit 12. Subscriptions and allotments. Treasury bonds of 1952-55
229
Exhibit 13. Offering of 2 percent Treasury bonds of 1949-51 and 2J^ percent
Treasury bonds of 1962-67..
..
..._229
.Exhibit 14. Subscriptions and allotments, Treasury bonds of 1949-51 and
Treasury bonds of 1962-67
_-._
232
Exhibit 15. Offering of 1^ percent Treasury notes of Series. B-1946
232
Exhibit 16. Allotments, Treasury notes of Series B-1946
234
United States savings bonds
Exhibit 17. Offering of United States war savings bonds of Series E and
war savings stamps for installment payments
Exhibit 18. Offering of United States war savings bonds of Series F and
Series G . . . .
'
.
....
Exhibit 19. Second amendment, April 20, 1942, to Department Circular
No. 530,- Fourth Revision, prescribing regulations governing United
States savings bonds
Exhibit 20. Fifth revision, June 1, 1942, of Department- Circular No. 530,
prescribing regulations governing United States savings bonds
Exhibit 21. Amendments and supplement to Department Circular No. 657,
prescribing regulations governing agencies for the issue of United States
savings bonds of Series E
.

234
240
246
246
262

Treasury certificates of indebtedness
Exhibit 22. Offering of J^ percent Treasury certificates of indebtedness of
Series A-1942
Exhibit 23. Subscriptions and aUotments, Treasury certificates of indebtedness of Series A-1942
Exhibit 24. Offering of Y percent Treasury certificates of indebtedness of
s
Series A-1943..-Exhibit 25. Subscriptions and allotments. Treasury certificates of indebtedness of Series A-1943

263
265
265
267

Treasury bills
Exhibit 26. Inviting tenders for Treasury bills dated July 2, 1941
267
Exhibit 27. Acceptance of tenders for Treasury bills dated July 2; 1941
268
Exhibit 28. Summary of information contained in press releases issued in •
connection with Treasury bills offered during the fiscal year 1942
.
269
Miscellaneous
Exhibit 29. An act to increase the debt limit of the United States, to further
amend the Second Liberty Bond Act, and for other purposes
Exhibit 30. Title IV of the Second War Powers Act, 1942, relating to the
purchase by the Federal Reserve Banks of Government obligations




272
273

VIII

CONTENTS
Page

Exhibit 31. Payment or redemption of bonds and other transferable
securities of the United States at maturity, or before maturity pursuant
to a call for redemption in accordance with their terms
Exhibit 32. Regulations relating to full-paid interim certificates, October
: 15, 1941
Exhibit 33. Regulations governing exchanges of interim certificates of 2J^
percent Treasury bonds of 1967-72 for definitive coupon bonds, December 15, 1941
.

273
280
280

SECURITIES GUARANTEED BY THE UNITED STATES

Exhibit 34. Offering of 1 percent notes of Series W of the Reconstruction
. Finance Corporation
.
Exhibit 35. Subscriptions and allotments, Reconstrujction Finance Corporation notes of Series W
'
Exhibit 36. Offering of 1)^ percent notes of Series G of the Commodity
Credit Corporation
Exhibit 37. Subscriptions and allotments, Commodity Credit Corporation
notes of Series G
Exhibit 38. Partfal redemption, before maturity, of 2% percent mutual
mortgage insurance fund debentures, Series B (Sixth call)..
L-Exhibit 39. Partial redemption, before maturity, of 2 ^ percent mutual
mortgage insurance fund debentures, Series B (Seventh call)

282
284
284
286
287
289

MONETARY DEVELOPMENTS

Exhibit 40. Joint statement by the Secretary of the Treasury of the
United States and the Secretary of the Treasury of Mexico, November
19, 1941, announcing the signing of a stabilization agreement and a
silver purchase agreement between the United States and Mexico
Exhibit 41. Announcement, February 27, 1942, of the signing of a stabilization agreement between the United States and Ecuador
Exhibit 42. Announcement, May 5, 1942, of the signing of a stabilization
agreement between the United States and Iceland
Exhibit 43. Joint statement by the Secretary of the Treasury of the United
States and the Minister of Foreign Affairs of the Republic of China,
March 21, 1942, announcing the signing of an agreement for financial aid
to China
•.
Exhibit 44. Announcement by the Secretary of the Treasury, April 8, 1942,
regarding the lend-leasing of the Treasury's free silver stocks to be used
as bus bars in aluminum and magnesium plants
Exhibit^45. Title XII of the Second War Powers Act, 1942, relating to the
coinage of 5-cent pieces

291
291
292

292
292
293

FOREIGN FUNDS, CONTROL, ETC.

Exhibit 46. Executive orders relating to the control of foreign funds and
foreign-owned property
294
Exhibit 47. Amendment, July 26, 1941, to regulations of the Secretary of
the Treasury relative to the control of foreign funds and foreign-owned
property
.
.
295
Exhibit 48. Proclamation, July 17, 1941, authorizing a proclaimed list of
certain blocked nationals and controlling certain exports
^ . - 295
^
Exhibit 49. Executive Order No. 9193, July 6, 1942, amending Executive
Order No. 9095 estabhshing the Office of Alien Property Custodian
and defining its functions and duties and related matters
296
Exhibit 50. Sections 301, 302, and 303 of the First War Powers Act, 1941,
ratifying actions, regulations, etc., of the Secretary of the Treasury under
the Trading With the Enemy Act
300
Exhibit 51. Administration of the wartime financial and property controls
of the United States Government
-.
302
ORGANIZATION AND PROCEDURE

^

Exhibit 52. Orders relating to organization and procedure in the Treasury
Department.
---^
•
Exhibit 53. Order of the Secretary of the Treasury, September 30, 1941,
authorizing the Procurement Division to enter into contracts on behalf
of the Division of Printing
----


335
336

CONTOEOOTS

IX
Page

Exhibit 54. Executive Order No. 8929, November 1, 1941, directing the
Coast Guard to operate as a part of the Navy
Exhibit 55. An act providing for the security of United States naval
vessels, and for other purposes
Exhibit 56. Sections 1, 2, and 4 of Executive Order No. 9083, dated
February 28, 1942, relating to functions of the Bureau of Customs

336
336
337

MISCELLANEOUS

Exhibit 57. Authorization for discontinuance of functions of Treasury
accounts offices in connection with the audit and accounting for funds
under the various emergency relief appropriation a c t s . .
Exhibit' 58. Standards and conditions prescribed with respect to bonds of
certifying officers and administrative procedure relating to disbursements
by Division of Disbursements, Treasury Department
Exhibit 59. Executive Order No. 9084, March 3, 1942, amending Executive
Order No. 8512 of August 13, 1940, prescribing regulations pertaining to
budgetary administration'and financial reporting
Exhibit 60. An act to authorize the Treasurer of the United States to make
settlements with payees of lost or stolen checks, which have been paid on
forged endorsements, in advance of reclamation, and for other purposes. _
Exhibit 61. An act to increase the earnings of the United States Government life insurance fund and the national service life insurance fund by
expediting the investment of the moneys thereof, and for other purposes._
Exhibit 62. Title XI of the Second War Powers Act, relating to the war
contributions fund
Exhibit 63. Portions of the act to mobilize <the productive facilities of
small business in the interests of successful prosecution of the war
Exhibit 64. Executive Order No. 9135, April 16, 1942,-establishing the
Interdepartmental Committee for the Voluntary Pay Roll Savings Plan
for the Purchase of War Savings Bonds
.
Exhibit 65. Voluntary pay-roll savings plan for purchase of war savings
bonds by employees of the United States Government
Exhibit 66. Letter of the Postmaster General'to the Secretary of the
Treasury, dated November 14, 1942, certifying extraordinary expenditures contributing to the deficiencies, of postal revenues for the fiscal year
1942, in pursuance of Public No. ,316, approved June 9, 1930
Exhibit 67. Address and statements of the Secretary of the Treasury on
taxes, inflation, public debt limitation, etc., during 1942
TABLES
Explanation of bases used in tables
.
Description of accounts through which Treasury operations are effected-_

338
338
341
341
342
342
343
345
346

353
353
387
388

RECEIPTS AND EXPENDITURES

Summary tables on receipts and expenditures
Table 1. Summary of receipts and expenditur,es, fiscal years 1932 to 1942
and monthly July 1941 to June 1942 (daily Treasury statement, unrevised, basis)
'Table 2. Receipts and expenditures for the fiscal years 17*89 to 1942
(warrant and daily Treasury statement, unrevised, bases)

390
394

Detail tables on receipts and expenditures
Table 3. Monthly receipts, fiscal year 1942, classified by major sources
(daily Treasury statement, unrevised, basis)
:
Table 4. Monthly expenditures, fiscal year 1942, classified by accounts
(daily Treasury statement, unrevised, basis)
Table 5. Expenditures from general and special accounts, by major functions, fiscal years 1934 to 1942

400
406
428

Other receipts and expenditures tables
Table 6. Expenditures of the several activities of the Treasury Department in each of the States and Territories, fiscal year 1942
Table 7. Comparison of detailed internal revenue collections, fiscal years
1941 and 1942 (collection basis)



430
434

X

. .

'CONTENTS
Page

Table 8. Internal revenue receipts, by tax sources, fiscal years 1916 to 1942
(collection basis)
'-Table 9. Expenses of the Internal Revenue Service, fiscal year 1942 (checksissued basis)
^
Table 10. Internal revenue receipts, by States and Territories, fiscal year
1942 (collection basis)
i
Table 11. Summary of customs collections and expenditures, fiscal year^
1942....
:
_-.,
Table 12. Expenditures by States and Territories and by fiscal years from
April 8, 1935, to June 3,0, 1942, under the Emergency Rehef Appropriation Acts for the fiscal years 1935 to 1942 (checks-issued basis)
Table 13. Expenditures by organizations and by fiscal years from April 8,
1935, to June 30, 1942, under the Emergency Relief Appropriation Acts
for the fiscal years 1935 to 1942 (checks-issued basis)
Table 14. Financial status of appropriations provided in the Emergency
Relief Appropriations Acts for the fiscal years 1935 to 1942, as of June 30,
1942
.___
__•_
Table 15. Receipts and expenditures of the social security program under
the Social Security, Railroad Retirement, and Railroad Unemployment
Insurance Acts, fiscal years 1936 to 1940 combined, fiscal year 1941, and
. monthly for the fiscal year 1942
.
...
...
Table 16. Amounts appropriated and expended to June 30, 1942, under
authorizations contained in the Social Security Act
_, . . .
Table 17. Panama Canal receipts and expenditures, fiscal years 1903 to
1942 (warrant basis)
.
.
Table 18. Postal receipts and expenditures, fiscal years 1789 to 1942
Table 19. Selected receipts and expenditures of the Government, fiscal
years 1789 to 1942 (warrant and checks-issued bases)
.

437
441
446
447
448
450
452

462
471
472
474
477

WAR ACTIVITIES PROGRAM

Table 20. Appropriations and net contract authorizations for the war
activities program, as of June 30, 1942
L
Table 21. Appropriations, contract authorizations, and expenditures under
the war activities program, July 1, 1940, to June 30, 1942.
._
Table 22. Commitments, receipts, and disbursements of the Reconstruction Finance Corporation and its subsidiaries under the war activities
program, July 1, 1940, to June 30, 1942
..

479
482
485

PUBLIC DEBT

Public debt Outstanding
Table 23. Description of the public debt issues outstanding June 30, 1942
(daily Treasury statement, revised, basis).
. 486
Table 24. Principal of the public debt outstanding at the end of each fiscal
year from 1853 to 1942 (daily Treasury statement, revised, basis)
507
Table 25. Comparative statement of the pubhc debt outstanding June 30,
1935 to 1942 (daily Treasury statement, revised, basis)
\ 509
Table 26. Composition of the public debt at the end of the fiscal years 1916
to 1942, and bymonths from July 1941 to June 1942 (daily Treasury
statement, revised, basis)..
511
Public debt operations
Table 27. Pubhc debt receipts and expenditures, monthly July 1941 to June
1942, with totals for-the fiscal years 1941 and 1942 (daily Treasury statement, unrevised, basis)
Table 28. Public debt retirements chargeable against ordinary receipts
during the fiscal year 1942, and cumulative totals from July 1, 1917, to
June 30, 1941 and 1942, by sources and issues (daily Treasury statement,
revised, basis)
Table 29. Summary of transactions in interest-bearing and noninterestbearing securities, fiscal year 1942 (daily Treasury statement, revised,
basis)
.
:.
.
..
Table 30. Summary of transactions in interest-bearing securities, by form
of issue, fiscal year 1942 (daily Treasury statement, revised, basis)




512

520
522
524

CONTEONTS

XI
Page

Table 31. Changes in interest-bearing debt, by issues, fiscal year 1942 (daily
Treasury statement, revised, basis)
Table 32. Transactions in noninterest-bearing securities, by issues, fiscal
year 1942 (daily Treasury statement, revised, basis)
Table 33. Issues, maturities, and redemptions of interest-bearing securities, exclusive of t r u s t account and other special issues, July 1941
through J u n e 1942
Table 34. Sources of public d e b t increase or decrease, fiscal years 1915 t o
1942 (daily Treasury statement, unrevised, basis)
Table 35. Transactions on account of t h e cumulative sinking fund, fiscal
year 1942 (daily Treasury statement, revised, basis)
^
Table 36. Transactions on account of t h e cumulative sinking fund, fiscal
years 1921 to 1942 (daily Treasury statement, revised, basis)
Table 37. Securities retired through t h e cumulative sinking fund, par
a m o u n t and principal cost,' t o J u n e 30, 1942 (daily Treasury statement,
revised, basis)
1_
.
•

525
530
538
543
545
545
546

United States savings bonds
Table 38. Sales and redemptions of United States savings bonds, by.
m o n t h s fiscal year 1942 and cumulative total from March 1, 1935, to
June 30, 1942
-_-_
Table 39. Sales of United States savings bonds, by m o n t h s and denominations, fiscal year 1942
Table 40. S u m m a r y of sales and redemptions of United States savings
bonds, b y series, for t h e fiscal years 1935 to 1942 and monthly for t h e
fiscal year 1942
.
__-.____
Table 41. Sales of United States savings bonds reported by series, classified
by denomination, for t h e fiscal years 1941 and 1942 and monthly for t h e
. fiscal year 1942__._
Table 42. Sales of United States savings bonds reported by series, classified
by t y p e of purchaser, for t h e fiscal years 1941 and 1942 and monthly for
t h e fiscal year 1942
Table 43. Sales of United States savings bonds reported by series, classified
by ^States, for the fiscal years 1941 and 1942 and monthly for t h e fiscal
year 1942

547
548
550
553
555
556

Postal savings stamps
Table 44. S u m m a r y of sales and redemptions of postal savings stamps for
t h e fiscal years 1941 and 1942 and monthly for t h e fiscal year 1942
Table 45. Gross sales of postal savings stamps, classified by denomination,
for t h e fiscal years 1941 and 1942 and monthly for t h e fiscal year 1942
Table 46. Redemptions of postal savings stamps, classified by means of
p a y m e n t , for t h e fiscal years 1941 and 1942 and monthly for the fiscal
year 1942
Table 47.' Gross sales of postal. savings stamps, by States, for t h e fiscal
years 1941 and 1942 and monthly for t h e fiscal year 1942
.-

* 560
561
562
563

Treasury tax savings notes
Table 48. Sales and redemptions of Treasury t a x savings notes, by months,
fiscal year 1942
.
Table 49. Summary of sales and redemptions of Treasury t a x savings
notes, by series, monthly and t o t a l for t h e fiscal year 1942
Table 50. Sales of Treasury tax savings notes reported by series, classified
by denomination, monthly and t o t a l for t h e fiscal year 1942
•:
Table 51. Sales of Treasury t a x savings notes reported by series, classified
by t y p e of purchaser, monthly and t o t a l for t h e fiscal year 1942
Table 52. Redemptions of Treasury t a x savings notes by series, classified by
means of payment, monthly and total for t h e fiscal year 1942

565
566
568
570
572

Interest on the public debt
Table 53. Interest on t h e public debt, payable, paid, and outstanding unpaid, fiscal year 1942 (daily Treasury statement, revised, basis)
Table 54. Interest paid on t h e public debt, by issues, fiscal years 1940 t o
1942 (warrant basis)._
__,



574
575

Xn

CONTENTS
Page

Table 55. Amount of interest-bearing debt outstanding, the computed
annual. interest charge, and the computed rate of interest, for the fiscal
years 1916 to 1942 and by months from July 1941 to June 1942 (daily
Treasury statement, revised, basis)..^
Table 56. Interest paid on the securities issued or guaranteed by the United
States Government, classified by tax status, fiscal years 1913 to 1942
Miscellaneous
Table 57. Contingent liabilities of the United States, June 30, 1942
Table 58. Contingent liabilities of the United States as of June 30, 1935
to 1942 (daily Treasury statement, revised, basis).
Table 59. Average yield on long-term Treasury bonds, by months,
January 1919 to June 1942
Table 60. Prices and yields of public marketable securities issued or
guaranteed by the United States.
!^--.
Table 61. Summary data from Treasury survey of the ownership of securities issued or guaranteed by the United States, analyzing the ownership
of such securities by classes of holders of each issue outstanding on
June 30, 1942..
.^

577
578
580
584
585
586

588

CONDITION OF THE TREASURY EXCLUSIVE OF PUBLIC DEBT LIABILITIES

Table 62. Current assets and liabilities of the Treasury at the close of the
fiscal years 1941 and 1942 (daily Treasury statement, unrevised, basis).
Table 63. Balance in the General Fund of the Treasury at the end of each
month, fiscal year 1942 (daily Treasury statement, unrevised, basis)
Table 64. Assets and liabilities of the exchange stabilization fund as of
June 30, 1941 and 1942....
Table 65. Securities other than obligations of foreign governments owned
by the United States Government, June 30, 1942
Table 66. Principal of the funded and unfunded indebtedness of foreign
governments to the United States, the accrued and unpaid interest
thereon, and payments on account of' principal and interest, as of
November 15, 1942
Table 67. Principal of the funded and unfunded indebtedness of foreign
governments to the United States, the accrued and unpaid interest
thereon, and payments on account of principal and interest, as of
November 15 of each year from 1928 to 1942

594
595
596
598

600

601

TRUST AND SPECIAL FUNDS FOR WHICH INVESTMENTS ARE MADE BY THE
TREASURY DEPARTMENT

Table 68. Adjusted service certificate fund, June 30, 1942
602
Table 69. Ainsworth Library fund, Walter Reed General Hospital, June
30, 1942_______
-__-_
603
Table 70. Alaska Railroad retirement and disability fund, June 30, 1942_
603
Table 71. Canal Zone retirement and disabihty fund, June 30, 1942______
604
Table 72. Civil service retirement and disability fund, June 30j 1942__1__ ^ 605
Table 73. District of Columbia teachers' retirement fund—Assets held
by the Treasury Department, June 30, 1942
606
Table 74. District of Columbia water fund—Investments held by the
Treasury Department, June 30, 1942
.,
608
Table 75. District of Columbia workers' compensation fund—Assets held
by the Treasury Department, June 30, 1942
608
Table 76. Federal old-age and survivors insurance trust fund, June 30,
1942
.
-__
609
Table 77. Foreign service retirement and disability fund, June 30, 1942-_
610
Table 78. Library of Congress trust fund, June 30, 1942
611
Table 79. Longshoremen's and harbor workers' compensation fund—
Assets held by the Treasury Department, June 30, 1942
614
Table 80. National Cancer Institute gift fund, June 30, 1942___
614
Table 81.. National Institute of Health gift fund, June 30, 1942
615
Table 82. National park trust fund, June 30, 1942
617
Table 83. National service life insurance fund, June 30, 1942__-_
618
Table 84. Pershing Hall Memorial fund, June 30, 1942
.....
618
Table 85. Railroad retirement account, June 30, 1942
619
Table 86. Unemployment trust fund, June 30, 1942
620
Table 87. United States Government life insurance fund—Investments,
June 30, 1942..
:
623



CO(NTENTS

XIII

G O V E R N M E N T CORPORATIONS A N D CREDIT AGENCIES
Page

Table 88. Combined statement of asset's and liabihties of Government
corporations and credit agencies, June 30, 1942.__._ —
Table 89. Proprietary interest of the United States in Government corporations and credit agencies, June 30, 1930 to 1942
'Table 90. Sources of funds of certain Government corporations and
credit agencies from inception of organization to June 30, 1942
Table 91. Uses of funds of certain Government corporations and credit
agencies from inception of organization to June 30, 1942
.
Table 92. Sources of funds of certain Government corporations and'credit
agencies, fiscal year 1942
Table 93. Uses of funds of certain Government corporations and credit
agencies, fiscal year 1942
i
"—--•.—
STOCK

AND

CIRCULATION

OF

MONEY

IN

THB

UNITED

624
631
633
635
636
637

STATES

Table 94. Stock of money, money in the Treasury, in the Federal Reserve
Banks, and in circulation June 30, 1913 to 1942
Table 95. Stock of money, by kinds, at the end of each fiscal year from
1913 to 1942
Table 96. Money in circulation, by kinds, at the end of each fiscal year
from 1913 to 1942..
.
.
Table 97. Stock of money, money in the Treasury, in the Federal Reserve
Banks, and in circulation, by kinds, June 30, 1942

638
640
641
642

TAX-EXEMPT AND TAXABLE SECURITIES

Table 98. Estimated amount of' interest-bearing securities issued by aU
governmental units in the United States outstanding on June 30, 1942,
classified by tax status and by type of issuer
Table 99. Estimated amount of interest-bearing securities issued by all
governmental units in the United States outstanding on June 30, 1913 to
1942, classified by tax status and by type of issuer
.
Table 100. Estimated ownership of all interest-bearing Government
securities outstanding, classffied by issuer and by tax status, June 30,
1937 to 1942
:__

643
646
656

MISCELLANEOUS

Table 101. Net expenditures for Federal aid to States, individuals, etc.
(exclusive of emergency appropriations from which grants are made to
States), fiscal years 1920, 1941, and 1942, and amounts appropriated for
1943, by appropriations
•
Table 102. Expenditures made by the Government as direct payments to
States, etc., under cooperative arrangements and expenditures within
States which provided relief and other aid, fiscal year 1942
Table 103. Number and amount of awards of the Mixed Claims Commission, United States and Germany, certified to the Secretary of the
Treasury by the Secretary of State and the amount paid and balance due,
by classes, as of September 30, 1942
Table 104. Transactions in commodity stamps, fiscal years 1939 to 1942 and
by months from July 1941 to June 1942

660
' 664

672
674

ESTIMATES

Table 105. Receipts and expenditures of general and special accounts,
actual for the fiscal year 1942 and estimated for the fiscal years 1943 and
1944, in detail
-Table 106. Receipts and expenditures of trust accounts, etc., actual for the
fiscal year 1942 and estimated for the fiscal years 1943 and 1944, as
exhibited in the Budget for 1944..j
Table 107. Summary of cash operations of the United States Treasury for
the fiscal year 1942 and estimated for the fiscal years 1943 and 1944, as
exhibited in the Budget for 1944
^
Index




675
697
710
711




SECRETARIES, UNDER SECRETARIES, AND ASSISTANT SECRETARIES
OF THE TREASURY DEPARTMENT FROM MARCH 4, 1933, TO NOVEMBER 15, 1942,1 AND THE PRESIDENT UNDER WHOM THEY SERVED
Term of service.
Official
From-

Secretary ofthe Treasury

President

T O -

Secretaries ofthe Treasury
Mar. 4.1933
Jan. 1.1934

Dec. 31,1933

May 19,1933
Nov. 17,1933
May 2,1934

William H. Woodin, Nevr York....
Henry Morgenthau, Jr., New York.

Nov. 16,1933
Dec. 31,1933
Feb. 16,1936

Roosevelt.
Roosevelt.

Under Secretaries

Jan. 29,1937
Nov. 1,1938
Jan. 18,1940

Dean G. Acheson, Maryland
Henry Morgenthau, Jr., New York.
Thomas Jefferson Coolidge, Massachusetts.
Sept. 15,1938 Roswell Magill, New York
Dec. 31,1939. John W. Hanes, North Carolina....
Daniel W. Bell, Illinois

Woodin
Woodin
Morgenthau..

Roosevelt.
Roosevelt.
•Roosevelt.

Morgenthau..
Morgenthau.
Morgenthau..

Roosevelt.
Roosevelt.
Roosevelt.

Woodin, Morgenthau...
Woodin, Morgenthau...
Woodin.
Morgenthau
Morgenthau
Morgenthau
Morgenthau
i
Morgenthau

Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt.

Assistant Secretaries
Apr.
June
June
Dec.
Feb.
July
June
Jan.

18,1933
6,1933
12,1933
1,1934
19,1936
1,1938
23,1939
18,1940

Feb.
Sept.
Dec.
Nov.
Feb.
Oct.

16,1936
30,1939
12,1933
1,1937
28,1939
31,1938

Lawrence W. Robert, Jr., Georgia..
Stephen B. Gibbons, New York._.
Thomas Hewes, Connecticut
Josephine Roche, Colorado
Wayne C. Taylor, Illinois...
John W. Hanes. North Carolina
Herbert E. Gaston, New York
John L. Sullivan, New Hampshire.

J For officials since 1789 see annual report for 1932, pp. xvii to xxi, and corresponding table in annual report
for 1933.
.
1




XV

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS OF THE
TREASURY DEPARTMENT AS OF NOVEMBER 15, 1942
OFFICE OF T H E SECRETARY
Henry Morgenthau, Jr
Daniel W. Bell
Herbert E. Gaston
John L. Sullivan
(Vacant)
:
Harold N . Graves
Harry D. White
Ferdinand Kuhn, Jr
George Buffington
Theodore R. Gamble
Peter H. Odegard
_.
John W. Pehle
Henrietta S. Klotz
W. N. Thompson
Charles S. Bell
CharlesR. Schoeneman
Theodore F. Wilson
Elmer L. Irey..
Frank J. Wilson..
Stanley S. Surrey
Eugene W. Sloan
Charles Schwarz
William T; Heffelfinger...
Edward D. Batchelder..
Francis C. Rose
F. A. Birgfeld
Denzil A. Right.
Gabrielle E. Forbush

Secretary ofthe Treasury.
Under Secretary of the Treasury.
Assistant Secretary ofthe Treasury.
Assistant Secretary of the Treasury.
Fiscal Assistant Secretary of tho Treasury.
Assistant to the Secretary.
Assistant to the Secretary.
Assistant to the Secretary.
Assistant to the Secretary.
Assistant to the Secretary.
Assistant to the Secretary.
Assistant to the Secretary.
Assistant to the Secretary.
'
Administrative Assistant to the Secretary.
Technical Assistant to the Secretary.
_. Technical Assistant to the Secretary.
Director of Personnel.
. . Chief Coordinator, Treasury Enforcement Agencies.
Chief, Secret Service Division.
Tax Legislative Counsel.
Executive Director, War Savings Staff.
Director of Public Relations.
Assistant to the Under Secretary.
Executive Assistant to the Fiscal Assistant Secretary.
Executive Assistant to Assistant Secretary.
Chief Clerk.
Superintendent of Treasury Buildings.
Chief, Secretary's Correspondence Division.

.1

OFFICE OF T H E GENERAL COUNSEL
Randolph E. Paul
Hmitington Cairns
N. ~0. Tietjens...Joseph J. O'Connell, J r .
Ernest R. Feidler..:
Samuel Klaus..
John E. Shea
1
John P. Wenchel
Robert Chambers
«

General Counsel.
Assistant General Counsel.
Assistant General Counsel.
._. Assistant General Counsel.
Assistant to the General Counsel.
Special Assistant to the General Counsel.
Special Assistant to the General Counsel.
Chief Counsel, Bureau of Internal Revenue.
Chief Counsel, Bureau of Customs.

,

DIVISION OF RESEARCH AND STATISTICS

George C. Haas
Henry C. Murphy
Al-F. O'Donnell..
Russell R. Reagh
Anna M. Michener
William M. Weir
Isabella S. Diamond.

Director of Research and Statistics.
Assistant Director.
Assistant Director.
Assistant Director (Government Actuary).
Assistant to the Director.
Administrative Assistant to the Director.
...Librarian.

1

DIVISION OF MONETARY RESEARCBi
Harry D. White
_
Harold Glasser..
Edward M. Bernstein.

-

Director of.Monetary Research.
Assistant Director.
Assistant Director.

DIVISION OF TAX RESEARCH
Roy Blough
Louis Shere
L. Laszlo Ecker-Racz

Director of Tax Research.
- Assistant Director.
Assistant Director.

BUREAU OF THE PUBLIC DEBT
William S. Broughton
Edwin L. K i l b y . . . . .
Ross A. Heffelfinger
W. Spencer Thompson
Edward G. Dolan
Byrd Leaivell..
Marvin Wesley
Melvin R. Loafman
Maurice A. Emerson. _
Lemuel W. Owen

.-.

-

Commissioner of the Public Debt.
Assistant Commissioner of the Public Debt.
Deputy Commissioner of the Public Debt.
Deputy Commissioner in Charge, Chicago OfQce,
Register of the Treasury.
Assistant Register of the Treasury.
Chief, Division of Loans and Currency.
Chief, Division of Public Debt Accounts and Audit.
Chief, Division of Paper CUvStody.
Chief, Division of Savings Bo'nds.
. ,

BUREAU OF ENGRAVING AND PRINTING
Alvin W. Hall
Clark R. Long
Thomas F . Slattery




-

Director, Bureau of Engraving and Printing.
Assistant Director (Administration).
Assistant Director (Production).

PRINCIPAL ADMINISTRATIVE AND STAFF OFFTCEIRS

XVH

BUREAU OF ACCOUNTS
Edward F. Bartelt..
Robert W. Maxwell
Joseph Greenberg
Gilbert L, Cake
Stephen P. Gerardi
Guy F. Allen.-.
L. L. Collie
B.M.Mulvihill
Harry R. Schwalm.
Eugene P . O'Daniel

Commissioner of Accounts.
Assistant Commissioner of Accounts.
A^^sistant Commissioner of Accounts.
CHief Accountant.
Executive Assistant to the Commissioner.
Chief Disbursing Officer, Division of Disbursement.
Chief, Division of Bookkeeping and Warrants.
Chief, Division of Deposits.
Chief Examiner, Section of Surety Bonds.
Chief, Section of Investments.

BUREAU OF THE COMPTROLLER OF THE CURRENCY
Preston Delano
CyrilB. Upham
R. B. McCandless
L. H. Sedlacek..
W. P. Folger

Comptroller of the Currency.
Deputy Comptroller.
Deputy Comptroller.
Deputy Comptroller.
Chief National Bank Examiner.

,

OFFICE OF T H E TREASURER OF T H E U N I T E D STATES
William A. Julian..
Marion Banister
George O. Barnes
M. E. Slindee
Bernard A. Hayden__

Treasurer of the United States.
Assistant Treasurer.
. - . Assistant to the Treasurer.
Administrative Assistant to the Treasurer.
Chief, Administrative Division.
BUREAU OF NARCOTICS

Harry J. Anslinger
Will S. Wood-...
Malachi L. Harney.

-

.

Commissioner of Narcotics.
Deputy Commissioner of Narcotics.
Assistant to the Commissioner.

BUREAU OF INTERNAL REVENUE
Guy T. Helvering
Norman D. Cann..-i
J. B. McNamara
Leone Bruch..
Eldon P. King
Timothy C. Mooney __
George J. Schoeneman
D. Spencer Bliss
Stewart Berkshire
A. R. M a r r s . . .
W. H. Woolf

'

Commissioner of Internal Revenue.
Assistant to the Commissioner,
Executive Assistant to the Commissioner.
Special Assistant.
Special Deputy Commissioner.
Deputy Commissioner.
Deputy Commissioner.
Deputy Commissioner.
Deputy Commissioner.Head, Technical Staff.
Acting Chief, Intelligence Unit.
.BUREAU OF CUSTOMS
Commissioner of Customs.
Assistant Commissioner of Customs.
Deputy Commissioner.
Deputy Commissioner.
Acting Deputy Commissioner.

W. R . J o h n s o n . . .
Frank Dow.
Thomas J. Gorman
A. S.Johnson
Glenn H. Griffith

^

BUREAU OF T H E M I N T
Director of the Mint.
Assistant Director.
P R O C U R E M E N T DIVISION
Director of Procurement.
Deputy Director.
Assistant to the Director.
Assistant to the Director.
Assistant to the Director.

Nellie Tayloe Ross
Leland Howard
Clifton E. Mack
A . J . Walsh
Robert LeFevre
George Landick, Jr
W . N . Rehlaender

STANDING DEPARTMENTAL COMMITTEES
BUDGET AND I M P R O V E M E N T C O M M I T T E E
C. R. Schoeneman, Chairman.
F. A. Birgfeld, Vice Chairman.
M . E. Slindee.
Guy C. Hanna, Chairman,
W. W. Cook.

William Schwartz, Chairman.
(Vacant) Vice Chairman.
John W. Edwards.
Percy S. Crewe.
487543—43
2




Charles S. Bell.
T. F. Wilson.
George H. Jones, Secretary.
C O M M I T T E E ON PRACTICE
Hessel E.. Yntema.
E. B. Van'Veen, Attorney for the Government.
BOARD OF REVIEW
(Refunds of Processing Taxes)
Annabel Matthews.
Temple W. Seay."
Bernard D. Hathcock.

,

DEPARTMENT

OF

THE

TREASURY

November 15.1942

THE SECRETARY
OF THE
TREASURY

GENERAL

COUNSEL

I

ASSISTANT SECRETARl
I N CHARGE OF
INTERNALREVENUE

I

ASSISTANl
IN CHARGE OF CUSTOMS.
NARCOTICS AND SECRET
SERVICE
I

COORDINATOR
O F TREASURV
.
LAW ENFORCEMENT

SECRETARY

OFFICE O F T H E
C O M P T R O L L E R OF
THE CURRENCY

OFFICE OF THE
LEGISLATIVE
COUNSEL

B U R E A U OF
LEGAL

DIRECTOR

O F F I C E OF T H E
REASUHEft OF T H i
UNITED STATES




OCUREMENT

SECRET

SERVICE

BUREAU
OF T H E
PUBLIC DEBT

OF

DIVISION
REVENUE

DIVISION OF
RESEARCH
I
kNO STATISTICS

D I V I S I O N OF PUBLIC
DEBT ACCOUNTS
AND AUDIT

D I V I S I O N OF
MONETARY
RESEARCH

PAPER

CHART 1.

ADMINISTRATIVE
A S S I S T A N T T O THE
SECRETARV .

I

CUSTODY

OFFICE OF
SUPERINTENDENT OF
TREASURV BUIL0IN6S

ANNUAL REPORT ON THE FINANCES
TREASURY DEPARTMENT,

WashingtoUj D, (7., January 6, 1948.,
SIR: I have the honor to make the followmg report on the finances
of the United States for the fiscal year ended June 30, 1942. The
change from a national defense to a war basis, as the result of the
Pearl Harbor attack, has been reflected in every aspect of the fiscal
and other operations for which the Treasury Department is responsible. Government expenditures were vastly increased to cover war
requirements; financing plans had to be revised in the light of the
new scale of expenditures and new revenue legislation; other activities,
such as those in the field of international monetary matters and
foreign funds control, procurement for the lend-lease and strategic
and critical materials, and enforcement activities relating to the control of exports and the protection of vessels and harbors, likewise had
to be adjusted speedily to an all-out war basis. Detailed information
with respect to these adjustments appears throughout the report.
BUDGET RESULTS

Receipts and expenditures, general and special accounts
The following table shows the receipts and expenditures for the
fiscal years 1941 and 1942 and the increase or decrease in 1942 receipts
and expenditures as compared with the fiscal year 1941.
Receipts and expenditures, fiscal years 1941 and 1942
[In millions of dollars. On basis of daily Treasury statements (unrevised), see p. 387.1

1941 r

1942

Increase
or decrease

(--)

Receipts:
• Internal revenue:
^ Income tax._
_^._
.
Miscellaneous internal revenue
_
_
Social security taxes
Taxes upon carriers and their employees
Railroad unemployment insurance contributions
Customs
__
1
_.
Miscellaneous receiptsReturn of surplus funds from Government corporations
Other
--.
_

3,470
2,967
788
137
7
392
_.

Total receipts
_ . .
_. _ .
Deduct net appropriation for Federal old-age and survivors insurance
trust fund
__
Net receipts
Footnotes at end of table.




.

. _

- . _

7,960
3,847
1,016
170
8
389

4,490
880
228
33
1
-3

319
189
8,269

22
255

-297
66

13,668

6,399

661

869

208

7,607

12,799

5,192

R E P O R T O F T H E SEiCRETARY OF THE TREASURY
Receipts and expenditures, fiscal years 1941 and 1942—Continued
[la millions of dollars]

1941 r

1942

Increase
or decrease

(-)

Expenditures:
I. General:
Departmen tal (not otherwise classified)
_..
Agriculture Department:
Agricultural Conservation and Adjustment Administration.
Other
:
.;
Federal Security Agency:
Civilian Conservation Corps
.
National Youth Administration
'.
Social Security Board '.
Other.
Federal Works Agency:
Works Projects Administration
Other.....
Interior Department:
Reclamation projects
National Housing Agency..
Panama Canal
Post Office Department (deficiency)
Railroad Retirement Board
River and harbor work and flood control
Tennessee Valley Authority
Treasury Department:
. Interest on the public debt...
_
!
Refunds of taxes and duties
Veterans' Administration*

676

685

10

• 824
56

786
190

-38
135

257
90
423
66

163
473
75

-95
-2
50

1,285
347

-402
-105

Subtotal.

1,111
90
553

1,260
94
555

149
5
2

5, 986

-228

14,070
8, 580
152
62
297
33
929
132
200
1,556

10, 392
6,267
44
62
252
• 15
878
132
200
1,468

6,301

Subtotal..

-28
76

3,678
2,313
108

III. Revolving funds (net):
Farm Credit Administration
Federal Farm Mortgage Corporation (capital stock reduction,
act June 25, 1940)
Public Works Administration

91
17
38
18
10
191
127

6,215

Subtotal.
II. War activities:
War Department
Navy Department
'...
Federal Security Agency
..._"..
Federal Works Agency
National Housing Agency.
Selective Service (administrative expenses) I _
United States Maritime Commission
War Shipping Administration
Aid to China
Other

17
29
30
7
219
51

26,011

19, 710

<^69

67

^100
23

100
-12

^136

IV. Transfers to trust accounts, etc.:
Adjusted service certificateifund
Agricultural Marketing Administration (surplus commodity
stamps)
±..:
..
Federal contribution to District of Columbia (U, S. share)
..
Government employees' retirement funds (U. S: share)
National service life insurance fund..
Railroad retirement account
.'..._
Railroad unemployment insurance administration fund transfers
to unemployment trust fund (act Oct. 10,1940)

-10

124

126
6
103
1
141

36
10
1
17

-

Total expenditures (excluding public debt retirements).
Net deficit..
« Excess credits ( d e d u c t ) .

331

381

60

12,711

32, 397

19,686

5,103

Subtotal...

19, 598

14, 494

•' Revised.

N O T E . — F i g u r e s are r o u n d e d to nearest million a n d will n o t necessarily a d d to totals.

Receipts in general and special accounts
Federal revenues reached an unprecedented level in the fiscal year
1942. This was the second full year to be affected by the exertion



REPORT OF T H E SEiCRETARY OF T H E TRE(ASURY

6

of a national eflFort to meet the demands of a broad defense program.
The outbreak of war in December 1941 accentuated the necessity for
record production. The continuing increase in industrial, activity,
with its accompanying increase in employment, income, and national
buying power, became one of the principal factors contributing to the
, marked increase in revenues.
The Eevenue Act of 1941, approved September 20, 1941, was shaped
by the necessity for a tax program which would more nearly keep
pace with the rapid acceleration of Federal expenditures. With reference to the individual income tax;, the act lowered personal exemptions and increased surtax rates. Corporation income and excess
profits taxes were increased. Excises were increased on most of the
commodities already being taxed, new excises were imposed on many
commodities, and estate and gift taxes were inbreased.
Receipts by major sources fiscal years 1941 and 1942 ^
[Dollars in millions]

Source

Internal revenue:
Income and excess profits taxes:
Corporation:
Income tax, current *
Excess profits tax .
.
.
Declared value excess profits tax
Total corporation.
Individual, current
Back taxes:
Corporation and individual income
Unjust enrichment tax
Total back taxes .
Total income and excess profits taxes
(collection basis)
Adjustment to daily Treasury
statement basis, unrevised .
Total income and excess profits taxes
(daily Treasury statement basis,
unrevised)
Miscellaneous internal revenue:
Capital stock
Estate tax . tax
Gift tax
Liquor taxes 2 . . .
Tobacco and products taxes *
:
Stamp taxes...
_..
Manufacturers' excise taxes:
Gasoline...
..
Automobiles, trucks, tires, tubes, and
parts or accessories
..
Electrical energy
Lubricating oils
All other 2
Total manufacturers' excise taxes
Retailers* excise taxes

Footnotes at end of table.



1941

$1, 649.0
164.3
28.1

1942

Increase or decrease Percent of
( - ) , 1942 over 1941 total increase in
receipts
from
general
and
Amount Percent
special
accounts,
1942 over
1941

$2, 764.0 $1,115.0
1, 618. 2 1,453. 9
52.2
24.1

67.6
884.9
85.8

20.7
26.9
.4

1,841.4
1, 314. 3

4, 434. 4
3,108.0'

2, 593.0
1, 793. 7

140.8
136.5

48.0
33.2

306.4
9.1

460.1
4.4

153.7
-4.7

60.2
-61.6

315.4

464.5

149.1

47.3

2.9
-.1
2.8

3, 471.1

8,006.9

4,635.8

130.7

84.0

-1.5

-46. 4

-44.9

3, 469.6

7,960. 5

4, 490.9

129.4

83.2

166.7
355.2
61.9
819.9
697.7
39.1

281.9
340.3
92.2
1, 046. 9
780.8
41.7

115. 2
-14.9
40.3
227.0
83.1
2.6

69.1
-4.2.
77.6
27.7
11.9
6.6

2.1
-.3
.7
4.2
1.6
.1

343.0

369.6

26.6

7.8

.5

156.3
47.0
38.2
32.5
617.0

180. 5
50.0
46.4
121. 8
768.3
80.2

24.2
3.0
8.2
89.3
151.3
80. 2

15.5
6.4
21.6
274.8
24.5

.4
.1
.1
1.7
2.8
1.5

-.8

REPORT OF T H E SEiCRETARY

OF T H E TREASURY

Receipts by major sources, fiscal years 1941 and 1942—Continued
[Dollars in millions]

1941

Source

Internarrevenue—Continued.
Miscellaneous i n t e r n a l r e v e n u e — C o n t i n u e d .
Miscellaneous taxes:
T e l e g r a p h , telephone, cable, a n d radio
facilities, e t c . . .
Local telephone service
T r a n s p o r t a t i o n of oil b y p i p e line
Admissions
U s e of m o t o r vehicles a n d b o a t s
Sugar tax 2
__
All other, including repealed taxes ^
T o t a l miscellaneous taxes
T o t a l miscellaneous i n t e r n a l r e v e n u e
(collection basis)
_.
A d j u s t m e n t to daily T r e a s u r y
s t a t e m e n t basis, unrevised
T o t a l miscellaneous internal r e v e n u e
(daily T r e a s u r y s t a t e m e n t basis,
unrevised)
E m p l o y m e n t taxes:
E m p l o y m e n t b y other t h a n carriers:
Federal I n s u r a n c e C o n t r i b u t i o n s A c t . .
Federal Unemployment T a x Act
Total
-.
Carriers a n d t h e i r e m p l o y e e s . . .
T o t a l e m p l o y m e n t taxes
Total internal revenue
Railroad u n e m p l o y m e n t insurance c o n t r i b u t i o n s . _
.
Customs
:
T o t a l i n t e r n a l revem.ie taxes, railroad unei np l o y m e n t insurance, a n d c u s t o m s . .
Miscellaneous receipts . -

_.

.. .

T o t a l receipts, general a n d special a c c o u n t s . .
D e d u c t : N e t a p p r o p r i a t i o n for Federal old-age a n d
survivors i n s u r a n c e t r u s t fund

1942

Increase or decrease P e r c e n t of
( - ) , 1942 over 1941
t o t a l increase in
receipts
from general
a n d special
Amount Percent
accounts,
1942 over
1941

74.8
21.5

. $48. 2
26.8
13.6
115.0
72.9
68.2
60.8

$20.9
26.8
1.0
44.0
72.9
• -6.6
39.3

-8.8
182.8

.8
1.4
-.1
.7

207.2

405.4

198. 2

95.7

3.7

2,954. 6

3,837.7

883.1

29.9

16.3

12.3

9.4

-2.9

2,966.9

3,847.1

880.2

29.7

16.3

690.6
97.7

895.6
119.9

205.0
22.2

29.7
22.7

3.8
.4

788.2
136.9

1,015.6
170.0

227.4
33.1

28.9
24.2

4.2
.6

$27.3
12.5
71.0

76.6
8.0
62.0

925.2

1,185. 6

260.4

28.1

4.8

7,361. 7

12,953.1

5, 631.4

76.5

104. 3

6.8
391.9

8.5
388.9

1.7
-3.0

25.0
-.8

7, 760. 4

13,390. 5

5, 630.1

72.5

508.2

277.4

-230.8

-45.4

-4.3

8,268.5

13, 667.9

5, 399.4

65.3

100.0

661.3

868.9

207.6

12, 799.1

5,191.9

104.3

31.4

•
N e t receipts, general a n d special a c c o u n t s . . . . • 7,607.2
'

0.4
.5

68.2

1 The detail of income taxes and miscellaneous internal revenue taxes is on the basis of internal revenue
collections with totals adjusted to daily Treasury statement basis, unrevised. Employment taxes, railroad
unemployment insurance contributions, customs, and miscellaneous receipts are shown on the daily
Treasury statement basis, unrevised. General and special accounts are combined.
2 Collections for credit to trust funds are not included.
8 "All other, including repealed taxes" includes tobacco floor stocks taxes (receipts under 1940 and prior
acts); narcotics, including marihuana and special taxes; National Firearms Act; hydraulic mining tax; and
all other repealed taxes not reinstated by the Revenue Act of 1941.
NOTE.—Dollar figures are rounded to nearest tenth of a million and will not necessarily add to totals.

The effect of the above legislation was not completely reflected in
the fiscal year 1942 receipts because of statutory lags in collections.
However, the total receipts in general and special accounts, amounting to $13,667.9 millions, were $5,399.4 millions above the record
level of the preceding fiscal year.
A comparison of receipts for the fiscal years 1941 and 1942 is presented in the table above. The trend in receipts by major sources



REPORT OF T H E SEiCRETARY OF T H E TRElASURY

5

for the fiscal years 1935 to 1942 is shown in' the chart on page 6. A
more detailed comparison of internal revenue receipts appears in table
7 on page 434 of this report.'
Total receipts in general and special accounts were $13,667.9
millions, an increase of $5,399.4 millions or 65.3 percent over the total
of $8,268.5 millions received in the fiscal year 1941. The bulk of
receipts in the fiscal year 1942 was derived from relatively few sources.
Current corporation income and excess profits taxes, current individual income taxes, employment, liquor, and tobacco taxes accounted
for 76.8 percent of the total receipts.
Income and excess profits taxes, which contributed 42.0 percent of
total receipts in the fiscal year 1941, rose to 58.2 percent in the fiscal
year-1942 as the Revenue Act of 1941 drew deeply from an increasing
national income. This marked increase in receipts from income and
excess profits taxes was responsible for a decrease in the ratio of receipts from other sources to total receipts. Receipts from miscellaneous internal revenue and employment taxes, though marked by
increases in amounts, dropped in their proportions to total receipts
from 35.9 percent and 11.2 percent, respectively, in the fiscalyear 1941
to 28.2 percent and 8.7 percent in the fiscal year 1942. Miscellaneous receipts and customs receipts decreased both in amount and
in percentage.
Income and excess profits tax receipts, reflecting higher income
levels, higher tax rates, and the broader tax bases of the Revenue Act
of 1941, rose to $7,960.5 millions in 1942, an increase of $4,490.9
millions or 129.4 percent Over the receipts in 1941. Income taxes
contributed 83.2 percent of the total increment in receipts from general
and special accounts in 1942.
Current corporation income tax receipts in 1942, which include
collections from the corporation normal tax aixd surtax imposed by the
Revenue f\.ct of 1941, amounted to $2,764.0 millions. This is an
increase of $1,115.0 millions or 67.6 percent over the receipts in 1941.
The increase was attributable to higher income levels and increased
tax rates existing in the calendar year 1941 as compared with the
calendar year 193.9. Liabilities of the calendar year 1940 are reflected
to approximately the same extent in each of the fiscal years 1941 and
1942. Under the Revenue Act of 1938, operative in the calendar year
1939, the single corporation income tax in effect taxed corporations
with net incomes in excess of $25,000 at rates which varied from 16K
percent to 19 percent, depending on the percentage of net income paid
in dividends. In 1939, corporations with net incomes of $25,000 or
less were taxed at 12K percent, 14 percent, and 16 percent. Under
the Revenue Act of 1941, effective in the calendar year 1941, the
corporation normal tax rate was 24 percent for corporations with
normal-tax net incomes in excess of $25,000, and corporations with



6

REPORT OF T H E SEiCRETARY OF T H E TREASURY

normal-tax net incomes of $25,000 or less were taxed at graduated rates
of 15 percent, 17 percent, and 19 percent. In addition, in 1941, the
RECEIPTS, 1 FISCAL YEARS 1935 TO 1942. CLASSIFIED BY MAJOR SOURCES
"DOLLARS
Billions

DOLLARS"
Billions

W^

13

12

Other
Employment

Taxes

I Processing Tax.
j Farm Products
Customs
iO

10

Miscellaneous
I n t e r n a l Revenue
j Income Taxes

1935

1936

1937

1938
1939
1940
F I S C A L V E A R S

1941

1942

CHART 2.

IExcludes trust accounts and net appropriation to the Federal old-age and survivors insurance trust
fund.

corporation surtax imposed a levy of 6 percent on surtax net income
not over $25,000 and a levy of "7 percent on surtax net income over
$25,000. No such surtax was effective in the calendar year 1939.




REPORT OF THE SECRETARY OF THE TREASURY

7

The effect of much greater business activity in the calendar year
1941 compared with the calendar year 1939 was offset to some extent
by the allowance of the excess profits tax imposed by the Revenue
Act of 1941 as a deduction in computing normal tax and surtax net
income and the allowance of a 2-year operating loss carryover deduction. No such excess profits tax existed in the calendar year
1939 and no operating loss carryover was allowed in computing net
income.
Corporation excess profits tax receipts in the fiscal year 1942
amounted to $1,618.2 millions, an increase of $1,453.9 millions or
884.9 percent over collections of $164.3 millions in the fiscal year
1941. Receipts in the latter year represented the collection of only
part of the calendar year 1940 liabilities. Fiscal year 1942 receipts,
in turn, consisted of collections resulting from calendar year 1940
liabilities and, in addition, from liabilities of the calendar year 1941.
Also contributing to the increase was the fact that the excess profits
tax under the Revenue Act of 1941 was computed before the income
tax. Previously, the income tax had been allowed as a deduction
from the excess profits tax. Under the Revenue Act of 1941, corporations were taxed at rates which varied from 35 percent to 60
percent of their adjusted excess profits net income, depending on the
absolute amount of such income.
Declared value excess profits tax receipts in the fiscal year 1942
amounted to $52.2 millions as compared with $28.1 millions in 1941.
This increase of 85.8 percent may be accounted for by the substantial
rise in income levels in the calendar year 1941 as compared with 1939
and by the 10 percent higher tax rates imposed.
Receipts from back taxes on both corporate and individual income
amounted to $460.1 millions in the fiscal year 1942, an increase of
$153.7 millions or 50.2 percent over the comparable receipts in the
preceding year. ;
Current individual income tax receipts in 1942 of $3,108.0 millions
were $1,793.7 millions or 136.5 percent greater than receipts of
$1,314.3 millions in 1941.
In the comparison of the receipts from the corporation and income
and excess profits taxes, the explanation of the increase in the fiscal
year 1942 over the fiscal year 1941 was limited to a comparison of
the income levels and tax laws existing in the calendar year 1941
as compared with the calendar year 1939. I t was possible to eliminate the calendar year common to both fiscal years, in this case
calendar year 1940, because of the even distribution of receipts from
that year between the two fiscal years.
In the case of the individual income tax, the liabilities of a calendar
year are not divided evenly between the two fiscal years affected.
In discussing the relative receipts of the fiscal years 1941 and 1942,
the liability year 1940 cannot be disregarded as the greater portion



8

REPORT OF THE SECRETARY OF THE TREASURY "

of receipts from the tax liabilities of that year are received in the
fiscal year 1941. The relative income levels and tax laws of all three
calendar years 1939 through 1941 must be considered in the comparison.
The Revenue Act of 1940 lowered personal exemptions of married
persons and single heads of families from $2,500 to $2,000 and of single
persons from $1,000 to $800, increased surtax rates on income from
$6,000 to $100,000, and added a defense tax of 10 percent of the basic
tax or net income after the basic tax, whichever is less.
The Revenue Act of 1941 lowered personal exemptions further
(from $2,000 to $1,500 in the case of married persons and single heads
of families and from $800 to $750 for single persons), increased the
surtax rates bn all incomes, and eliminated the former exemption of
the first $4,000 of surtax net income. Changes in the act of lesser
importance were the elimination of a credit of $400 for the first dependent in the case of persons who are made heads of families only
because of such dependents, and the adoption of a simplified income
tax form for the optional, use of-persons with gross income of $3,000
or less derived wholly from certain specified sources. The defense
tax was eliminated by the Revenue Act of 1941 and was integrated
into the surtax rate structure.
Miscellaneous internal revenue receipts were $3,847.1 millions in
the fiscal year 1942, an increase of $880.2 millions or 29.7 percent over
1941 receipts of $2,966.9 millions. Many factors affecting the various
taxes included in this category contributed to the increase, the principal ones being higher income levels, increased tax rates, and the
enactment of new taxes. The increase in miscellaneous internal
revenue receipts accounted for 16.3 percent of the total increase in
receipts from general and special accounts in 1942.
Capital stock tax receipts in 1942 amounted to $281.9 millions, an
increase of 69.1 percent over receipts in 1941, which amounted to
$166.7 millions. Part of this difference is attributable to an increase
in the tax rate from $1.10 to $1.25 per $1,000 of capital stock valuation. Since capital stock tax valuation for the fiscal year 1942 was
expected to determine the basis for declared value excess profits
tax purposes for the calendar years 1941 through 1943, tax receipts
were affected by expectations of income for these years. Fiscal year
1941 collections were similarly dependent upon anticipated income
levels for the calendar year 1940.
Estate tax receipts of $340.3 millions in the fiscal year 1942 were
$14.9 millions or 4.2 percent less than in the preceding year. The
decrease resulted from a decline in the general level of property valuation for tax purposes during the periods in which liability was incurred
and from the fact that the 1941 receipts included the taxes on two
exceptionally large estates. The 15-month statutory lag permissible
in the filing of estate tax returns, and the fact that estates can be given
a valuation as of the date of death of the decedent or one year later



REPORT OF THE SECRETARY OF THE TREASURY

9

are important factors in the valuation of estates for tax purposes,
in addition to the ordinary trends and c^^clical fluctuations of property
values. The amount of the decline in 1942 was reduced by the 10
percent defense tax increase of the Revenue Act of 1940, which w^as
partially reflected for the first time in the 1942 receipts. However,
the rate increases of the Revenue Act of 1941 do not become substantially effective until the fiscal year 1943 because of the lag permissible
in the filing of returns.
Gift tax receipts of $92.2 millions in the fiscal year 1942 were
$40.3 millions or 77.6 percent greater than in the fiscal year 1941,
which was itself a year of unusually large receipts. The increase
reflected the special tax-saving incentives for making gifts in the
calendar year 1941 furnished by the increased estate, gift, and individual income tax rates of the Revenue Act of 1941.
Receipts from miscellaneous revenue sources other than the capital
stock, estate, anjd gift taxes rose materially during 1942. The increase
reflected not only tne enactment of a considerable number of new taxes
under the Revenue Act of 1941, but also the general increase in con-?
sumer incomes during the year.
Liquor tax collections totaled $1,046.9 millions in 1942, a gain of
27.7 percent over the 1941 aggregate of $819.9 millions. Receipts from
distilled spirits in 1942 amounted to $574.3 millions, an increase of
34.0 percent compared with the preceding year, while fermented malt
liquor taxes were $366.2 millions as against $316.7 millions in 1941,
an increase of 15.6 percent. The additional revenue in the case of
distilled spirits was partly due to the increase in the tax rates, effective
October 1, 1941, from $3 a gallon to $4 a gallon and on brandy from
$2.75 a gallon to $4 a gallon. No change in tax rates on fermented
malt liquor took place.
Total tobacco taxes aggregated $780.8 millions compared with
$697.7 millions in 1941. Receipts from small cigarettes, comprising
the major portion of tobacco taxes, amounted to $704.9 millions in
1942 compared with $616.7 millions in 1941, a gain of 14.3 percent.
The tax rate on small cigarettes remained unchanged throughout
the fiscal year.
Manufacturers^ excise taxes totaled $768.3 millions in 1942 compared with receipts of $617.0 millions in 1941. This increase of 24.5
percent took place despite the fact that most sources of revenue
within the category were affected adversely by the conversion of production to war requirements. Gasoline taxes, which produce the
largest single amount of revenue in this group, aggregated $369.6
millions as against $343.0 millions in 1941, an increase of 7.8 percent.
The tax rate was not changed by the Revenue Act of 1941. However,
the 1942 figure represents a full yearns collection at the present law
rate of IK cents per gallon, whereas, due to the lag in collections, the
1941 yield included one month's receipts at the lower rate of 1 cent



10

REPORT OF THE SECRETARY OF THE TREASURY

per gallon imposed by the Revenue Act of 1940. Receipts from
excise tax on motor vehicles, tires, tubes, and accessories increased
15.5 percent to $180.5 millions in 1942, while receipts from lubricating
oils rose 21.5 percent to $46.4 millions. In the case of the former, the
improvement, for the most part, was caused by the higher tax rates
and the more inclusive tax bases provided for by the Revenue Act of
1941. Furthermore, consumer buying in anticipation of pending
shortages.in these types of goods stimulated sales during the year.
In the fiscal year 1942 many manufacturers' excise taxes were
introduced, including sporting goods, luggage, electric, gas and oil
appliances, photographic apparatus, business and store machines,
rubber articles, optical equipment, and electric light bulbs and tubes.
These taxes, however, did not become effective until October 1, 1941.
Thus, revenues fbr only 8 months were collected in the fiscal year 1942.
Priorities on raw materials and the conversion of manufacturing
facilities to war production also affected the yield from these imposts.
Excise taxes were imposed by the Revenue Act of 1941 upon the
^sale at retail of jewelry, furs, and toilet preparations. Total revenues
from these sources in the fiscal year 1942 amounted to $80.2 millions,
but receipts comprised only 8 months' collections.
Revenues obtained from miscellaneous taxes during 1942 amounted
to $405.4 millions corripared with $207.2 millions in the preceding
year, an increase of 95.7 percent. New taxes on local telephone
service and the use of motor vehicles and boats accounted for $26.8
millions and $72.9 millions, respectively. Other new taxes, including
levies on the transportation of persons and the use of coin-operated
amusement and gaming devices, bowling alleys, billiard and pool
tables, contributed to the increase in receipts. The admissions tax,
moreover, rose 62.0 percent, from $71.0 millions in 1941 to $115.0
millions in 1942. The growth in the yield of the latter item resulted
chiefly from the elimination of certain exemptions formerly allowed in
determining the tax base and from the general improvement in economic conditions.
Total employment taxes were $1,185.6 millions in 1942, an increase
of $260.4 millions or 28.1 percent over receipts of $925.2 millions in
1941. The increase resulted from a higher level of pay rolls as there
had been no change in the rates or coverage of these taxes since the
Social Security Act Amendments which were approved August 10,
1939, and which are fully reflected in the receipts both of the fiscal
year 1941 and the fiscal year 1942.
Receipts under the Federa] Insurance Contributions Act rose from
$690.6 millions in 1941 to $895.6 millions in 1942; under the Federal
Unemployment Tax Act, from $97.7 millions to $119.9 millions; and
under the Carriers Taxing Act of 1937, from $136.9 millions to $170.0
millions.



REPORT OF T H E SEiCRETARY OF T H E TREASURY

11

Railroad unemployment insurance contributions in 1942 were $8.5
millions, an increase of 25.0 percent over the $6.8 millions received
in 1941.
Customs receipts were $388.9 millions in 1942, or $3.0 millions less
than in 1941. Compared with receipts during, the corresponding
portions of the fiscal year 1941, an increase of $45.7 millions in the
first half was offsetoby a decrease of $48.7 millions in the second half
of the fiscal year 1942. The fluctuation of receipts was controlled by
the wartime need for materials used in defense production, the availability of shipping, the freedom of sources, trade agreements, and the
control of imports.
Miscellaneous receipts amounted to $277.4 millions in 1942, a decrease of $230.8 millions or 45.4 percent from 1941. The receipts
in 1941 included repayment's of capital funds by certain Government corporations.
Expenditures Jrom general and special accounts
Total expenditures of the Federal Government from general and
special accounts amounted to $32,491 millions during the fiscal year
1942. A comparison of expenditures in this fiscal year with those of
the previous year is shown in the accompanying table, and a compari-'
son with the six previous years is shown by major categories in the
chart on page 13 and in the table on page 428. Detailed information on expenditures by agencies and accounts appears for the fiscal
year 1942 in the table on page 406.
Expenditures, fiscal years 1941 and 1942, classified by functions
[In millions of dollars. General and special accounts]
1941'
I. War activities expenditures:
War Department-.--.-Navy Department
United States Maritime Commission.
• Miscellaneous war activities
Total.
Other expenditures except debt retirements:
Veterans' pensions and benefits
Social security program.
_
Public works
..._
Aid to agriculture
Relief and work relief:
Work Projects Administration and National Youth Administration...
-.
Civilian Conservation Corps..
Interest oh the public debt
1.
Other
Total
III. Public debt retirements
IV. Total expenditures (including public debt retirements) .

1942

Net change

3,678
2,313
51
259

14,070
8,580
929
2,432

10, 392
6,267
878
2,173

6,301

26, Oil

19, 710

563
738
937

556
659
680
1,225

~7
71
-58
288

1,374
257
1,111
840

970
163
1,260
873

-404
• -94
149
32

6,410

6,386

-24

64

31

12, 775

19, 716

' Revised.
NOTE.—Figures are rounded to nearest million and will not necessarily add to totals. Expenditures from
emergency funds for the President and lend-lease funds are reflected under the agency by which the funds
were spent.




12

REPORT OF THE SECRETARY OF THE TREASURY

In 1942 expenditures increased by $19,716 millions over the previous
fiscal year. This tremendous increase resulted from the rapid expansion of the national defense program and our entry into the war.
Expenditures had risen steadily during the fiscal year 1941, but
increased at a more rapid rate during the fiscal year 1942. The
expansion of the expenditures was greatest in those activities which
related to the national defense program and to war activities. Increases were also noted in aid to agriculture and the social security
program. Expenditures for work relief and direct relief and nondefense public works continued to decline during 1942, as the war
effort increased and unemployment declined.
The rate of expenditure for war activities proceeded at an accelerated pace during the year, ds shown in the table below. In June
1942, the last month of the fiscal year, the rate was in excess of $3,800
millions, which was about four times the expenditures that had
occurred in July 1941, the first month of the fiscal year.
Monthly expenditures, fiscal year 1942
[In millions of dollars. On basis of daily Treasury statements (unrevised), see p..387. General and special
accounts]
Total
expenditures
(including
Debt retire- public
ments
debt re-,
tirements)

Debt service
Month

1941—July i.
August.-^..
Septernber.
October. _ _
November.
December.
1942—Januarys..
•February..
March. _ 1 .
April
May
June
Total....

/Other FedWar activ- eral expendiities pro- tures except
gram
debt service

Interest

1,131
1,330
1,537
1,448
1,850
2,104
2,208
2,809
3,238
3,660
3,829

604
390
375
471
394
459
492
409
407
439
375
311

25
9
169
75
15
232
32
12
205
77
19

26, Oil

6,125

1,260

1,600
1,664
1,882
2,089
1,860
2,657
2,631
2,630
3,436
3.755
3,955
4,631

390

95

32,491

NOTE.—Figures are rounded to nearest million and will not necessarily add to totals.

In the table above and chart 3, as well as in other tables in this
repbrt, the classification "war activities" includes the military expenditures of the War Department, all expenditures of the Navy
Department, disbursements made from the emergency funds of the
President by various Government departments and agencies, the administrative expenses of Selective Service, expenditures by the Maritime Commissiori^ and War Shipping Administration, aid under the
Lend-Lease Act, tvar housing, and other expenditures of various
departments and establishments. Additional expenditures attributable to war activities, payable from funds which have supple-




REPORT OF THE SECRETARY OF THE TREASURY

13

EXPENDITURES.! FISCAL YEABS 1935 TO 1942. CLASSIFIED BY MAJOR FUNCTIONS

1935

1936

1937

1938
FISCAL

1939
1940
YEARS

CHART 3.

' Excludes debt retirements and trust accounts.




1941

1942

14

REPORT OF THE SECRETARY OF THE TREASURY

mented regular appropriations of the civil estabhshment, are excluded
from the category "war activities.'^
The largest change for activities other than those connected with
the war program appears in expenditures for relief and work relief
activities. Such expenditures decreased by almost half a billion
dollars during the fi,scal year 1942. Only $1,133 millions were spent
on relief and work relief during 1942 as against $1,632 millions in 1941.
RECEIPTS AND EXPENDITURES IN TRUST ACCOUNTS AND CHECKING
ACCOUNTS OF GOVERNMENT CORPORATIONS AND CREDIT
AGENCIES

In addition to receipts and expenditures under general and special
accounts, discussed on previous pages, certain receipts and expenditures of the Government are reported on the Dai^y Statement of the
United States Treasury under the title of "Trust accounts, increment
on gold, etc.'' There are four main cljasses of receipts and expendi-'
tures reported under this title: Trust accounts, checking accounts of
Government corporations and credit agencies, incremeM on gold, and,
seigniorage on silver. Neither the receipts nor the expenditures of
these accounts affect the Federal Budget except to the extent that appropriations are made to these accounts from the General Fund.
Such appropriations appear as expenditures under general and special
accounts, and as receipts under trust accounts, increment on gold, etc.
Certain trust accounts dispose of the excess of their receipts over expenditures by investing such excess in Government securities, as provided by statute. The corporations and credit agencies maintaining
checking accounts with the Treasurer of the United States generally
apply the cash balances not needed for operations to the purchase of
Government securities for investm^ent or to debt or capital stock retirement.
Details of receipts and expenditures in "Trust accounts, increment
on gold, etc.," annually during the fiscal years 1933 to 1942 and
monthly for the fiscal year 1942 appear in the table that follows.




15

REPORT OF THE SECRETARY OF THE TRElASURY

Receipts and expenditures in trust, accounts^ increment on gold, etc., fiscal years 1933
. . . . . . . . tQ 1942 and monthly for 1942
[In millions of dollars, . On basis of daily Treasury statements (unrevised), see p. 387]
.•

. ..

.,

.

, TRUST " A C C O U N T S

:

.

.

..

...

Federal old-age a n d
survivors insurance
t r u s t fund

- R a i l r o a d r e t i r e - ' ' Other trust funds"
and'accounts^
m e n t account ,

Unemployment,
t r u s t fund

Fiscal year or m o n t h ,
Net

1933-....—...-.'..•...
1934
1935
:..
-._:-..
1936
1937-.-_l_
1938
•
1939.
^..
1940.
1941.
1942
1 9 4 1 ^ J u l y . . . . . . . . . ' J . _'-.•.'.
August
September
October
November
December
1942T-January
February.
March..
April.
._
May
June

ExExRe- pendReceipts itures N e t ' ceipts pend- N e t
itures

ExRe- pend- N e t
ceipts itures

•

1
1
3
10
9
45
159
-202
45
168
-207
37
135
-171
37
177
^215

267
402
530
580
717940
•43
157
1
44
166
2
37
179
1
37
202
70

267
401
529
577
707
931
-3
-2
203
-2
-2
209
-1
44
173

""i2'
1
1
-4

(*)

-7
•

5

n-5
3
6
-8
12
-4
1
-5
2

(*)

25
285

19
19
294
294
763
751
838
837
959
957
1,114 1.118
1,244 1,243
82
89
171
176
24
24
79
74
189
192
55
60
83
75
191
203
33
29
42
43
225
220
62
64

2
2
-2
11

(*)

2
-4
1

(*)

Fiscal yeS^ror
•^ m o n t h
^

1933'
1934-..-...
1935
. .
1936
1937
1938
1939 . .
1940-.-.-..
1941
1942
1941—July
August...
September
. O c t o b e r ..
,. N o v e m b e r
December
1942—January..
• February.
March
April
May
1- • J u n e

I n c r e m e n t on gold

T o t a l Issuall
ance of Other
trans- obliga- transactions tions 2 actions

Net

-818
(8)
(')
-734
811
(3)
637
-111
(3)
-403
108, . (3)
(3)
(3)
314
-99
(»)
201
-51
(3)
(3)
-5
768 1,106
-337
'33
288 r - 2 5 4
852 ' - 1 , 0 6 9
r-218
-3,625 -1.809 -1,815
569
.. 534
-35
:;-169
-3
-166
-93
-93
(*)
-272
-^270
-1
-659
-42
„ .-617
-140
-149
-56
-681 " -9
-625
-12
-35
-23
-92
• -75
17
-176
-189
-12
-430
-428
-2
-1,417
-296
-1,120

ExRe- p e n d i ceipts tures

2,811
2
1
2
1

•

2,000
113
404
101
52
5

r)

(*)

(*)
(*)

32

32

(*)

1'

(*)
32

31

(*)
(*)

32

C)

(*)

1

285
- 5 ,280
233
210
24
237
64
301
34 2,053 2,019
20
837
858
327
-4
323
324
24
349
51
408
358
32
659
628
96
850
753
23
165
143
6
53
47
51
• 51
(*)
61
56
5
44
41
3
42
12
53
17
56
40
49
49
(*)
83
68
15
24
72 ,
48
. 52
53
(*) 110
117
-7

2

Seigniorage on silver

Net

140
176
40
90
. 90
49
20
14
2
2

ExRe- p e n d i ceipts tures

- 140
176
40
90
90
49
20
14
2
2
2
2

(*)
(*) .
(*)
(*)
(*)
(*) .......
(*)
. 2
(*)
(*)
1
(*)
1
(*)
1
(*)
1
(*)
1
(*)
1
(*)
(*)
(*)
(*)
(*)
(*)

(*)

146
107
125
116
144
44
4

32

OTHER ACCOUNTS
Transactions in checking accounts of Governm e n t agencies, etc.

148
109
123
127
144
46 •

ExReceipts p e n d itures

Total trust and ^
o t h e r accounts

Net

-823
101
730
-85
275
255
• 884
136
-148
-3,506
599
-2
-293
-225
-484
-328
-633
114
-234
-126
-257
-1,635

: Ex-.'
Re- p.endiceipts; tures

280"
3,045
443
2,249
1,461
1,727
1,917
2,119
2,638
3,191
338
389
78
212
404
117
201
432
114
185
475
246

1,103
2,944
—287
2,334
1,186
1,472
1,033
1,984
2,786
6,696
-261
390
371
436
887

It
319
348
311
732
1,881

*Less than $500,000.
' Revised to adjust classification.
1 IncMdes Government insurance and retirement funds, P. W. A. revolving fund, special deposits (net),
and Agricultural Marketing Administration commodity stamp transactions; also includes, in-both recpipts
and expenditures, the Federal contribution to the District of Columbia (U. S. share) beginning with the
fiscal year 1941 in the amount of $6 millions. Transactions formerly shown under the caption "Miscellaneous funds and accounts" are now reflected under "Other trust funds and accounts."
2 Net receipts constitute net sales, and net expenditures constitute net redemptions of obligations. .
3 Details not available.
NOTE.—Figures are rounded to. nearest million and will not necessarily add to totals.
487543—43
3




16

REiPORT OF T H E SEeRETARY OF THE TREASURY

Because the Government corporations mentioned above and certain
other Government corporations and credit agencies maintain only
checking accounts with the Treasurer of the United States, the
transactions shown in the preceding table represent only the net balance of their operations, and, therefore, do not furnish sufficient data
for a detailed analysis of the financial transactions of these agmcies.
Arrangements have been made with these corporations, Jtiowever,
whereby certain data iare submitted to the Treasury so that the Treasury's books can refiect the operations of these corporations and agencies. These data have been combined and appear in the tables
beginning on page 633, showing sources and uses of funds from the
date of mcepitionof the various corporations to June 30, 1942, and for
the fiscal year 1942. The figures; are not-on the basis of the daily
Treasury statemient ;and,; therefore, do not agree exactly with the
figures shown in other tables in this report. A summary of these
data appears in the following table.
Sources and uses of. funds of certain Governrnent corporations and credit agencies
' which maintdiri only checking accounts with the Treasurer of the United States-,
; fiscal year 1942 and cumulative to, June 30, 1942
Fiscal year
1942

Cumulative to
June 30, 1942

SOURCES OF FUNDS

Appropriations from General Fund ofthe Treasury
".
Allocations,' rediscounts, and loans from other Government corporations
and credit agencies ( n e t ) . . . ! . . . . .
>.-;-Sale of obligations to Treasury (net)
1.1..-..
Sale ofiObligatipnsin the market (net)
.,
Sale ofistock to other agencies
, Sale'oftother property acquired.^.---;-....
...L
.:..
Repayinent of loans
......l
"..;
Interest, dividends, assessments, and property income.
...'.
Other receipts
L
.
Total, sources of funds^

^

..^

, $32,290,888
1, 652,
928, 610
002,196
3, 226,
-1,004, 058,950
8,483,400
570, 295
1, 388,
1,387, 423, 733
872, 986
385,
243, 998,448

$1,289,-437, 424 :
2,227, 162, 370
3, 470,
918, 446
6; 264,
'553, 250
610, 318,057
899, 660
1, 675,
10, 529,257, 985
2, 791,058, 632
467, 342,158

7,321, 511, 604

29, 325, 947,983

53, 208, 249
27,418, 771
2, 976, 358, 575
1, 911, 285,441
' 300, 291,050
44,736,344

506, 63i; 675
. 171, 629, 559
3, 610, 294, 957
17, 922, 890,'838
995,135, 800
,2,073, 807, 347

1,712, ,785,938
151,597,787
146, 369,100

2, 372,133, 919
1, 210,045, 740
234, 251, 599

U S E S OF FUNDS

Expenses:
, ' . . ' •
' :
Administrative
'
Nonadministrative
.
Purchaise and improvement of property owned
....
.;
. Loans
'....
...^
.
^
..}..i
^
Retirement of obligations issued in exchange for.mortgagesL.
Investments (net)
..........
...;..
J
Allocations, rediscounts, and loans to other Goyernment^ corporations
and credit agencies '(net)
:
:
..
Interest and dividends paid.^
J....,
...
Other expenditures.
.
...:......
Total, uses of funds...-.,

J..

.^....

7,324,051, 250

29,096,821,435

NOTE.—Figuires are rounded to nearest: dollar and will not necessarily add to totals.;

DEFICIT IN GENERAL AND SPECIAL ACCOUNTS

In the fiscal year 1942, expenditures exceeded receipts in general
and special accounts by $19,692 millions. Excluding public debt'itetirements, the net deficit was $19,598 miUions, The derivatidnoi the
deficit in 1941 and 1942 appears in the table following.




17

RE:PORT OF T H E SEiCRETARY OF T H E TREASURY
Deficit, i n general and special accounts, fiscal years 1941 and 1942
; > [In millions of dollars]

.

,

.
1941

Receipts...
.
1
.
-.
.
Deduct; net-.approp.riation to Federal-old-ageaanjd..sunvivors insur ance. trust
fund
-- — i - . l . - l . . - .
.
Net receipts
.....
Expenxiitures including debt retirements.

1942
13,668.:

8,269
661^
7,607
1-2, 775

12,799
42,-491

Gross deficit..-1.1
Deduct debt retirements.

19,692
95

Net deficits.

5,103

19, 598

NOTE.—Figures are rounded to nearest million and will not necessarily add to totals.

F I N A N C I N G T H E N E T D E F I C I T AND O T H E R R E Q U I R E M E N T S

The following table shows the sources which provided the funds to
finance the net deficit of $19,598 millions, the excess of expenditures
in checking accounts of Government agencies, trust accounts, etc.,
of $3,506 millions, and the increase in the General Fund balance,of
$358 niiUions. •
Net deficit, excluding debt retirements^
Excess of receipts (—) or expenditures (+) in—
(a) Checking accounts of Government agencies:
General....
J.
Sales and redemptions of obligations in market (net)
(6) Trust and other accounts.
---.
Increase in General Fund balance
Total requirements

_

Means of financing:
Public debt receipts (net) from—
(a) Public issues:
Treasury bills
, Treasury, certificates of rindebtedness
(United States savings bonds (net;)-Treasury tax savings notes (net)
1...
•••'• Other issues.:.CJ- j - U . . - -

Amount
(in millions
of dollars)
19,598

..'

_

- -|-1,815
-j-l, 809
—119
-f-358
- ^ 3,863

---

23,461
'

:

• " (6)-^special issues:
Unemployment trust fund..
•.
Federal old-age and survivors insurance trust fund
Other accounts

'-.-

.-

905
3,096'
5,874
3,015
8,'^807
-^'^-^^.21,696
841
753
171
1,765

Total
NOTE.—Figures are rounded to nearest million and will not necessarily add to totals.

T H E PUBLIC D E B T

23,461

"

The gross public debt on June 30, 1942, amounted to $72,422 millions as compared with $48,961 millions on June 30, 1941, an increase
of $23,461 millions. The following statement shows the public debt;
as of Jiine 30, 1941, and June 30, 1942, classified by character of
issues, as between regular issues >s6ld oil the market and special issues
held for account of Government trust and special funds. The table
also shows the increases in the debt from July 1 to December 31,
"1941 (for all practicable purposes; the pre-war period), and from'




18

REPORT OF T H E SEiCREflARY OF T H E TREASURY

January 1 to June 30, 1942 (first six months of war financing). I t
should be noted that of the net increase of $23,461 millions in the
amount of the public debt during the year, $21,696 millions represented an increase in the amount of outstanding .public issues and
$1,765 millions, an increase in special issues.
Statement of the outstanding public debt on J u n e 30, 1941, and Jurie 30, 1942
^

•

[In millions of dollars]
Fiscal year 1942—Increase or
decrease (^)

Issues

1941

1942
Total

Public is.sues: •
196
Postal savings bonds, etc
Treasury bonds
.._—. 30, 215
United States savings bonds.
.;.. 14,314
Depositary bonds
;
Adjusted service bonds..
Treasury notes
-J
Treasury tax savings notes
Certificates of indebtedness
1,603
Treasury bills
205
Matured debt on which interest has ceased..
Debt bearing no interest....-.
SubtotalSpecial issues:
Government life insurance fund
Federal old-age and survivors insurance
trust fund..i
.--Railroad retirement account.
Civil service retirement fund
Foreign service retirement fund
'.
~ -Canal Zone retirement fund
'.
Ala.'=ka Raihoad retirement fund
Postal Savings System..
Canal Zone Postal Savings System.
—.
National service life insurance fund
Federal Deposit Insurance Corporation
Federal Savings and Loan Insurance Corporation
Adjusted service certifica;te fund
Unemployment trust fund—
•..-.
Subtotal
Grand total.

42,841

196
38, 085
10,188
79
229
6,689
3.015
3,096
2,508
98
356
64, 538

7,869
6,874

79
-12
990
3,015
3,096
905
-107
-13

July 1, 1941, Jan. 1, 1942,
to Dec. 31,
to June 30,
1941
1942

3,152
1,826
64
-T8

298
2,471
398
-80
-7

21, 696

13.581
-24

30

763
18
137
1
1

366

397
I
41

(2)

(2)

531

537

2,381
' 74
645
5
5
1
3
90

3,133
92
783
5
7
1
55
1
39
95

-33
1
36
5

5'
19
2,273

5
18
3,114

-1
841

7,g
72,422

4, 717
4,048
15
-4692
644
3,096
507
-27
-6

17
96
1
1

0)

(')
(»)

-25
7
-25

-8
1
29
30

-1
459

•

382

(«)

1.765

862

903

23,461

8,977

14,484

• 1 Current redemption value (cash receipts plus earned accruals less redemptions).
.2.Increase less than $500,000.
; .8 Decrease.less than $500,000.
NOTE.—Figures are rounded to nearest million and will not necessarily add to totals.

" During the fiscal year the computed average rate of interest on the
interest-bearing debt outstanding decreased from 2.518 to 2.285 percent. The computed annual interest charge on the debt on which
this average rate is based increased' from $1,218 millions at the
beginning of the year to $1,644 millions at the end of the year. Chart
4 shows the computed annual interest charge and interest rate on
public debt obligations monthly from June 1934 to June 1942.
The interest due and payable on the various classes of securities
during 1942 and the amounts paid and outstanding unpaid are




19

REPORT OF T H E SE€REfTARY OF -THE. TREASURY

COMPOSITION OF THE COMPUTED INTEREST CHARGE ON AN ANNUAL BASIS.
MONTHLY, FROM JUNE 1934 TO JUNE 1942
1935

1936

1937

1938

1939

1940

1941

1942
DOLLARS

1200

800

600

400

200

1934

1935

COMPUTED INTEREST RATES ON AN ANNUAL BASIS, MONTHLY, FROM JUNE 1934i
TO JUNE 1942
1934

1935

1934

1935"

1937

1936




1937
C A L E N

1938
D A R
CHART 4.

1939
1940
Y E A R S

1941

1942

20

REPORT OF THE SE€REiTARY OF T H E

TREASURY

shown in table 53. The interest paid on the public debt, 1940 to
1942, is shown in table 54.
The major public debt operations during the year are summarized
in the following paragraphs.
Treasury bond's^ notes, and certificates, of indebtedness
The-^majoT public debt operations involving Treasury^ bondsy notes,
and certificates of indebtedness weFe^carried outr.on various-dates
from October 20, 1941, to June' 25, 1942. The issues of these three
classes of securities aggregated $12,665 millions, of which $9,841
millions were issued for cash, and $595 millions for refunding 2 series
of Treasury notes maturing during the year. The balance of $2,229
millions was issued to the holders of various securities guaranteed
by the United States who presented their maturing and redeemable
securities in payment of subscriptions to Treasury bonds and notes.
Certificates of indebtedness, which are limited by law to a maturity
. of oiie year, were used by the Treasury for the first time since 1934^
The operations concerning Treasury bonds, notes, and certificates
of indebtedness are summarized in the following table.
Bond, note, and certificate of indebtedness financing, fiscal year 1942
Date issued

Issue

Oct. 20,1941

21.12% Treasury bonds of 1967-72, due Sept. 15, 1972:
For cash
:
In exchange for 1H% Treasury notes, Series C-1941,
maturing December 15, 1941
Government investment accounts

Amount
$1, 307, 503, 200
188,971, 200
100,000,000
• $1,596,474,400

NOV; 1,1941

1% Treasury notes. Series A-1946, due Mar. 15, 1946:
From proceeds of redemption of %% Reconstruction
Finance Corporation notes. Series P, maturing Nov.
1, 1941
.
From proceeds of purchase of 1% Commodity Credit
Corporation notes, Series E,. maturing Nov. 15, 1941..

299,444, 000
'203,422,000
502,866,000

Dec. 15,1941

2H% Treasury bonds of 1967-72, due Sept. 15, 1972 (additionaLissue of,bonds dated Oct. 20, 1941):
For cash
-.•
..•
.:.•.'_•.:.
Government investment accounts..^.

Iv069r576, 750^
50,000, 000
119,-670,760

Jan. 15,1942

2% Treasury bonds of 1951-55, due Dec. 16, 1956:
For cash
2% Treasury bonds of 1949-61, due June 15, 1951:
In exchange for 1 ^ % Treasury notes, Series A-1942,
maturing Mar. 15, 1942
i
From proceeds of redemption of 3% Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption Jan. 15, 1942
,-.
From proceeds of purchase of 2%% Federal Farm Mortgage' Corporation bonds of 1942-47, called for redemption Mar. 1, 1942
From proceeds of redemption of H% Reconstruction
Finance Corporation notes. Series R, maturing Jan.
16, 1942.—
:---

532,687.950
406,387, 700
203, 251,900
95,829,300
308,550, 000
014,018,900

Feb. 25,1942
Apr. 15,1942
May ^ 5,1942

2 ^ % Treasury bonds of 1962-55, due June 15, 1955:
For cash
:
^
H% Certificates of indebtedness, Series A-1942, due Nov. 1,
1942:
For cash
2M% Treasury bonds of 1962-67, due June 15, 1967:
For cash
Government investment accounts




610,795,300
1,607,083,000
829, 510, 000
52, 688,000
882,198,000

REPORT O F - T H E ' SECRETARY OF T H E TREASURY

21

rBond, note, and certificate of indebtedness financing, fiscal year 1942-^Contiimed
,

Date issued
May 15,1942
June

5,1942

June 25,1942

Issue

Amount,

,

2% Treasury bonds of 1949-51-, due Sept. 15, 1951:
For cash
lH7o Treasury notes. Series B-1946, due Dec. 15, 1946:
In exchange for 234% Home Owners' Loan Corporation
bonds. Series G, 1942-44, called for redemption
July 1, 1942
In exchange for 1% Reconstruction Finance Corporation notes, Series S, maturing J u l y l , 1942
H% Certificates of indebtedness. Series A-1943, due Feb.
1, 1943:
For cash

$1,292,444,100

$846,114,400
272, 272,000

.

...

1

11Q q q c

Ann

1,688,495,000
12,665,019,800

RECAPITULATION
Treasury bonds Treasury notes
For cash
In exchange for:
Public debt obligations
Guaranteed obligations
From pfoioieC^s of purchase arid redeih'pt'iofi^viivsecurities guaranteed by
the Uii1le€' States
.Total.

$3, 095, 678,000

$6, 745,199, 300
59'5, 358,900

Certificates of
indebtedness

607,631, 200

502,866,000
1,621,252,400

$9,840, 777, 300
696, 358,900
1,118,386,400

$1,118,386,400

7, 948,189,400

Total

1,110,497,200
3,095, 578,000

12, 665, 019,800

All official circulars and statements relating to these transactions are
included in the exhibits beginning on page 207.
The financing on October 20, 1941, the first since the beginning of
the fiscal year, was announced on October 9, 1941, and consisted of an
offering to the public for cash, at par and accrued interest, of
$1,200,000,000, or thereabouts, of 2}^ percent Treasury bonds of
1967-72, maturing September 15, 1972. In addition to the cash
offering, the.holders of $204,425,400 outstanding l}i percent Treasury
notes of Series C-1941, maturing December 15, 1941, were offered the
privilege of exchanging such notes for the Treasury bonds mentioned
above, the notes exchanged being accepted at par with interest adjustments as of October 20, 1941. Also, in addition to the cash offering
for public subscription, $100,000,000, or thereabouts, of 2^ percent
Treasury bonds of 1967-72 were made available for allotment to
Government investment accounts against cash payment. The
amount of Treasury bonds of 1967-72 issued on cash subscriptions,
including $100,000,000 allotted to Government investment accounts,
was $1,407,503,200. Of the 1% percent Treasury notes of Series
C-1941, $188,971,200 were exchanged for Treasury bonds of 1967-72.
On October 23, 1941, there was announced ah offering of 1 percent'
Treasury notes of Series A-1946, dated November 1, 1941, and
maturing March 15, 1946. The Treasury offered to accept in payment for these notes the proceeds of redemption from the holders of




22

-REPpRT: QF' T H E . SEiGREiTARY 0;i> T H E TREASURY

,

''$299,739,000of'J^'percent Eeconstruction Finance Corporation riotes.
of Series P, maturing November 1, 1941, and also offered to purchase
at par and accrued interest $204,241,000.of 1 percent Commodity
Credit Corporation notes of Series E, maturing November 15, 1941, to
the extent to whicih the. holders thereof subscribed for Treasury
.notes of Series A-1946. Subscriptions from others were not invited.
A total of $502,866,000 of the Treasury notes of Series A-1946 was
issued, in payment for which $299,444,000 of the maturing Reconstruction Finance Corporation notes of Series P and $203,422,000 of
the Commodity Credit Corporation notes of Series E were tendered
and accepted.
'
The financing on December 15, 1941, announced December 4, 1941,
consisted of an additional offering of $1,000,000,000, or thereabouts,
.of 2K percent Treasury bonds of 1967-72, dated October 20, 1941,
maturing September 15, 1972; and, an offering of $500,000,000, or
thereabouts, of 2 percent Treasury bonds of 1951-55, dated December
15, 1941, maturing December 15, 1955; both issues being offered to the
public for cash, at par and accrued interest. In addition to' the public
offering, provision was made to.sell $50,000,000 of tbe Treasury bonds.
of 1967-72 to Government investment accounts. For the benefit of
small investors preferential allotrnent was given under each issue to
, subscriptions for $5,000 and under, where delivery in registered bonds
90 days after the issue date was specified. A face amount of
$1,119,570,750 of Treasury bonds of 1967-72, including $50,000,000 sold
to Government investment accounts and about $26,000,000 on preferred allotments, was issued. Of tbe Treasury bonds of 1951-55 the
amount issued was $532,687,9.50, which included about $13,800,000
sold oh preferred allotments. The December financing was the first
occasion on which tbe Treasury announced a definite basis* for. subscriptions from all classes of subscribers. I t is felt that this action
resulted in more equitable allotments for the legitimate investment
^ requirements of subscribers. Subscriptions were grouped broadly
into four classes, as follows:
.
Banks and trust companies for .their own account—not to
exceed 50.percent of capital and surplus.
Mutual savings and cooperative banks. Federal savings and
loan association?, trust accounts and investment corporations, .
pension funds, insurance companies, and similar institutions and
funds—not to exceed 10 percent of total resources.
Corporations organized for profit, and dealers and brokers—
. not to exceed 50 percent of net worth.
Individuals—not to exceed 50 percent of net worth or 100 percent of cash deposited with subscription. (NOTE.—No preferred
allotment was made on such full-paid subscriptions.)
'




REPORT OF T H E SEiCRETARY OF T H E TREASURY

23

The Treasury announced on January 11,-1942, an offering of 2 percent Treasury bonds of 1949-51, dated January 15, 1942, and maturing June 15, 1951, the amount of the offering being limited to the
amount of securities tendered and accepted, as follows:
1. The holders of $426,349,500 of 1% percent Treasury notes. Series
' A-1942, maturing March 15,1942, were invited to exchange such notes
for Treasury bonds of 1949-51. A total of $406,387,700 of these notes
was exchanged for a like amount of Treasury bonds of 194'9-51.
2. The Treasury offered to apply the proceeds of payment of $236,476,200 outstanding 3 percent Federal Farm Mortgage Corporation
bonds of 1942-47, called for redemption on January 15,.1942, to payment for Treasury bonds of 1949-51. A total of $203,251,900 of these
bonds was redeemed and the proceeds applied in payment for a like
amount of Treasury bonds of 1949-51.
3. The Treasury offered to purchase, at par and accrued interest,
^ $103,147,500 of outstanding 2% percent Federal Farm Mortgage
Corporation bonds of 1942-47, called for redemption on March 1,
1942, to the extent to which the holders thereof subscribed for Treasury bonds of 1949-51. A total of $95,829,300 of these bonds was
purchased and that amount was subscribed by the holders to the
purchase of Treasury bonds of 1949-51.
4. The Treasury offered to apply the proceeds of payment of
$310,090,000 outstanding % percent Reconstruction Finance Corporation notes of Series R, maturing January 15, 1942, to payment for
Treasury bonds of 1949-51. A total of $308,550,000 of these notes
was tendered for payment and the proceeds accepted in payment cfor
a like amount of Treasury bonds of 1949-51.
The total aniount of Treasury bonds of 1949^51 issued under the
above-mentioned provisions was $1,014,018,^00.
On February 13, 1942, there was announced an offering to the
public for cash, at par and accrued interest, of $1,500,000,000, or
thereabouts; of 2% percent Treasury bonds of 1952-55, dated February 25, 1942, and due-June 15, 1955. Subscriptions were entertained
from the various classes of subscribers on the basis inaugurated in the
financing of December 1941. For the benefit of small investors,
preferential allotment was given to subscriptions for $5,000 and under,
where delivery in registered bonds 90 days after the. issue date was
' specified. A face amount of $1,510,795,300 of Treasury bonds of
1952-55, including about $13,132,000 on preferred allotments, was
issued.
The financings on April 15, 1942, announced on April 6, 1942, consisted of an offering to the public for cash, at par and accrued interest,
of $1,500,000,000', or thereabouts, of ji percent Treasury certificates of
indebtedness of Series A-1942, dated April 15, 1942, due November 1,
1942. Subscriptions were entertained on the same basis as under the^



24

REPORT OF THE SE€RETARY OF THE TREASURY

December 1941 and February 1942 issues of Treasury bonds. The
face amount of Treasury certificates of indebtedness of Series A-1942
issued was $1,507,083,000, including about $66,000,000 of subscriptions in amounts up to and including $25,000, which were allotted
infull. '
On May 4, 1942, there was announced an offering for cash, at par
and accrued interest, of two series of Treasury bonds, consisting of
$1,250,000,000, or thereabouts, of 2 percent Treasury bonds>Qf 19,4951, dated May 15, 1942, due September 15, 1951; and an unspecified
amount of 2K percent Treasury bonds of 1962-67, dated May 5, 1942,
-due June 15, 1967.^
,
.
The rules inaugurated in December 1941, and followed in February
and April 1942, governing the basis of subscriptions to Government
secmities, were not made applicable and no limitation was placed upon
arnounts of subscriptions to these issues. All subscriptions up to and
including $10,000 for that issue were allotted in full. The face
amount issued of Treasury bonds of 1949-51 was $1,292,444,100,
including about $69,000,000 of subscriptions of $10,000 and under,
which were allotted in full.
The announcement provided that the. 2 ^ percent TreasuryA^nds
of 1962-67 would not be available for subscription, for their own
account, by comm.ercial banks which accept demand deposits. I t
was provided that these bonds would not.be transferable before July
6, 1942, and that they would not be transferable to commercial banks
which accept demand deposits before May 5, 1952. . However, these
bonds may be pledged as collateral for loans, including loans by commercial banks which accept demand deposits, but any such bank
acquiring such bonds before May 5, 1952, because of the failure of
such loans to be paid at maturity will be required to dispose of them
in the same manner as,they dispose of other assets not eligible>to, be
owned by banks. As the offering was not specific in amount, it remained open for a period longer than customary. The face am,Qunt
issued of Treasury bonds of 1962-67, including $52,688,000nSpld to
Government investment accounts, was $882,198,000.
The Treasury announced on May 25, 1942, an issue of IK percent
Treasury notes of Series B-1946, dated June 5, 1942, due December,
15, 1946, in payment of which there might be tendered only 2)i percent
Home Owners' Loan Corporation bonds, Series G, 1942-44, called fox
redemption on July 1, 1942, of which $875,438,625 were outstanding;
or 1 percent Reconstruction Finance, Corporation notes of Series S,
maturing July 1, 1942, ,of which $275,868,000 were outstanding.
Exchanges were made.par for par with an adjustment of accrued
interest to June 5, 1942. A face amount of $1,118,386,400 of the
Treasury notes of Series B-1946 was issued, for which there were
exchanged $846,114,400 of Home Owners' Loan Corporation bonds,




REPORT OF T H E SEICRETARY OF THE . TREASURY

25

Series G, 1942-44, and $272,272,000 of Reconstruction Finance Corporation notes. Series S.
.
The financing on June 25, 1942, announced June 18, 1942, consisted
of an offering for cash of $1,500,000,000, or thereabouts, of % percent
Treasury certificates of indebtedness of Series A-1943, dated June 25,,
1942, and maturing February 1, 1943. There were no restriction^ as
to the basis for subscribing to this issue. Subscriptions up to and
includ^in^g:$25,000'were allotted infull. A face amount of'$i;588;495,000 of the certificates of indebtedness of Series A-1943 was issued,
including about $61,000,000 of subscriptions in amounts up to $25,000,
allotted in full.
Treasury bills
Offerings of Treasury bills were made each week during the year; 45
issues were for a term of 91 days, and th6 remaining 7 issues were fbr
various terms of from 85 to 71 days. . The amounts of the weekly
offerings varied between $100 millions at the start and $300 millions
towards the close of the year. The 13 series outstanding at the beginning of the year totaled $1,603 miUions and the 11 series outstanding
at the end of the year, $2,508 millions. Of the 52 series offered
during the year, all were sold at a positive average rate, of discount,
the highest average rate computed on a bank discount basis having
been 0.368 percent for the bills dated May 13, 1942, and the lowest
average rate having been 0.001 percent for the bills dated October
15, 1941. The average rate ori all bills issued during the year was
0.236 percent.
On April 30, 1942, the Federal Open Market Committee directed
the twelve Federal Reserve Banks to purchase for the System Open
Market Account at a rate of % of 1 percent per annum all Treasury
bills ..offered to them. Prevailing rates on current issues of Treasury
bills had risen from about 0.20 percent in March to 0.34 percent during the latter part of April. The establishment of a posted rate of
% of 1 percent at the Federal Reserve Banks prevented a further
change in rate^ and in May -^nd June bill rates averaged 0.370'percent.
Further^ information concerning Treasury bills will be found in
exhibits 26 to 28, beginning on page 267, and in table 33 on page 538.
United States savings bonds
The sale of the three series of United States savings bonds, first
offered on May 1, 1941, was continued during the fiscal year 1942.
These bonds were designated defense savings bonds of Series E and
savings bonds of Defense Series F and G. However, following the
entry of the United States into the war, the designation of the bonds
was changed to war savings bonds of Series E, F, and G. The new
designation was confirmed through the issue, on June 1, 1942, of re


26

REPORT OF THE SECRETARY OF THE TREASURY

visions of Department Circulars Nos. 653 and 654, the former governing the issue and fixing the terms of bonds of Series E, and ttie latter
serving a like capacity for bonds of Series F and G. No changes
were made in the terms of the bonds except to increase from
$50,000 (issue price) to $100,000 (issue price), effective July 1,1942, the
limitation on the amount- of either Series F or Series G bonds, or a
combination of both series, of any onp yearly designation, that may
be held by any one purchaser at any one tinie. An amendnient, December 12, 1941, to Department Circular 654 made available an additional $25 denomination for Series F bonds. Copies of revised
circulars Nos.. 653 and 654 will be found on pages 234 and 240 of
this report.
Coincident with the issue of revised circulars Nos. 653 and 654, the
regulations governing savings bonds were revised and reissued, as
Departnient Circular No. 530, Fifth Revision, dated. June 1,, 1942.
A copy of this circular will be found on page 246.
The following statement summarizes the issues,and .redemptions
of United States savings bonds by fiscal years from March 1, 1935,
when the issue was inaugurated, to June 30, 1942.
..
Issues and redemptions of United States savings bonds, by years, March 1,1936,
to June 30, 1942
,
lOn basis of daily Treasury statements (revised), see p. 387J
Issued

r

Redeemed

Fiscal j^^ear
Maturity
value

• S u b t o t a l (1936-1941)

S u b t o t a l (1942).

G r a n d total

.

. . . .

1

R e d e m p t i o n •.
value

...

$83,422. 725
352, 277, 425
686, 739,175
650. 707, 500
916, 904, 200
1, 475,438, 350
1,873,811,175

$62,667,043.76
264, 208, 068. 76
515,054, 398. 80
488,030,611.85
687,678,136. 95
1,106, 578, 769. 01
1, 505,625,764.90

•

$707,850
14, 971, 200
48, 040,125
87,,732, 250
106,708,950
148, 042.850
190,087,875

$530,887 50
11, 252,714. 75
36, 327, 912 25
66,868,862. 75
82,067, 395 00
114,488,737.34
148,028, 229. 50

4,629,742,794.01

696,291,100

459,564,739.09

1, 041, 275
4,737,800,100
591,105,325
.2,037,059,300

A to D _
E
F
Q .

T o t a l (1935-1942)
Accruals to J u n e 30, 1942'

Maturity
. , value

6, 039, 300, 550

1935 ( M a r . 1 to J u n e 30)
1936
1937
1938
1939
1940
1941
-

1942—Series
Series
Series
Series

C a s h receipts

780,956.25 , 168,-034,800
3, 653,350,089. 74 . 81,276,425
437.417,940.50
3,864, 375
% 037,059,300. 00
11, 812, 300.

132,479,938 75
00. 964, 345.14
2,860.308.50
11,812,300 00

7, 367,006, 000

6,028,608. 286. 49

264,987, 900

208,116 892 39

13,406,306, 550

10,658, 351,080. 50
248,175, 347. 24

861, 279, 000

667, 681,631 48

13,406,306, 550

10, 906, 526,427. 74

861, 279, 000

667,681,631.48

. 1 Accruals represent the difference between the issue price and the current redemption value.

For the fiscal year 1942 total sales of savings bonds amounted to
approximately $6,000 millions at issue price. On the basis of reports of sales, during the first 5 months of the fiscal year—prior to
the outbreak of war—sales of Series E, F , ' a n d . G bonds aniounted
to approximately $1,300 millions, and for the 7 succeeding months
sales amounted to $4,700 millions. Average monthly sales in the 5



REiPO'PT OF T p E

27

SECRETARY OF THE, TREASURY

months from I July through November 1941 were $270 millions and
for the. 7 war months were $.670 millions, an increase to about 2K
times thp rate in the pre-Pearl. Harbor period. Sales of Series E,
F,.and'.G bonds i o r the year represented a total of about 60 million
, p i e j ^ . ...••.

-,.j.v.fr

The table following shows the number of pieces of Series E bonds
sold by denominations for the fiscal year 1942. Further information
pn ;the sales <oi savings bonds will be found in the tables beginning
on page 547.
Number of Series E savings bonds of each denomination sold monthly, fiscal year 1942
•Denomination
Month

Total
$25

$50

$100

$500

$1,000

Estimated nuinber of units—in thousands
1941—

July.
August
September.
October....
November.
December.
1942—
January...
February..
IVfarch
April
May.
Juhe

367
580
573
764
724
2,393

166
253
237
290
261
955

269
373
337
412
^ 359
. 1,153

56
67
57
70
67
194

56
67
63
163

3,799
2,961
3,094
4,533
4,852
8,883

1,460,
926'
789
1,054
1,093
1, 774

1,786
1,213
927
1, 203
1,170
i, 766

193
133
162
149
201

350
176
107
130
112
145

. Total-.-

33, 523

9, 257 '

10,967

1,705

918"
1,341
1, 260 .
1,603
1,454
4,858
7,760
5,469,
5.050
7,082
7,376
12,769
56,940

Pay-roll savings plan.—In order to carry the savings bond campaign
to the people of the Nation, and to make it easy and convenient for
them to buy savings bonds, the Treasury sponsored the installation
in the Nation's business enterprises of the pay-roll savings plan,
through which deductions from pay were made by employers directly
from the wages of their employees and accumulated for the purchase
of savings bonds. This plan was readily accepted by employers and
employees alike and by June 1942 there were some 108,000 firms,
employing approximately 21 million persons, that had installed a payroll savings plan. . Some 15 million of these persons actually participated in the plan in June 1942, that is, deductions were actually
made on their account during the month. Included in the 108,000
firms were nearly all of the large cornpanies in the Nation, and about
75 percent of all firms with 100 or more employees.
" B y Executive Order No. 9135, dated April 16, 1942, the President
established the Interdepartmental Committee for the Voluntary Payroll Savings Plaii for the purchase of war savings bonds by the civilian
employees in the executive branch of the Government. A copy of
Executive Order No. 9135 appears on page 545 of this report. Prior




28

REPORT OF ^THE SECRETARY OF THE TREASURY

to this order, the Secretary of the Navy on August 1, 1941, offered a
voluntary savings plan to the members of the Navy Department in'cluding the armed forces, and on January 15, 1942, under Department
Circular No. 677, a similar arrangement was madB.in.the Treasury
Departnient.for Treasury eniployees.... Pursuant to Executive Order
No. 9135, .a voluntary. j)ay-rolL savings..plan .w;as,:established^ for all
employees of the Goverrinent on May 13, 1942, under the provisions
of Department Circular No. 677, Revised, a copy of which wiU be
found on page 346 of this report.
. During a campaign conducted from June 1 to 15, 1942, 95.2 percent of the employees of the Treasury Department, departmental and
field services, were enrolled in the pay-roll savings plan and the employees allotted 10.8 percent of their gross compensation. A total of
60,467 Treasury employees are investing $14,898,000 of their pay
annually in war savings bonds. The Treasury's procedure and plan
were adopted, in general, by the Interdepartmental Committee at a
meeting held on May 18, 1942. Campaigns beginning at various
dates subsequent to June 30,, 1942, were ,0]rganize.d, in other, deparj:,nients and agencies.
The following table presents data with respect to the firms and
governmental agencies participating in pay-roll savings plans. In
June 1942, the aggregate amount deducted from the pay of the workers
participating in the pay-roll savings plan was $153 millions. This
amount represented a 5.8 percent average deduction from pay of the
workers participating.
Estimated monthly deductions and extent of participation in pay-roll savings plans,
December 1941 t o ' J u n e 1942
1941

1942

Decem- Janu- Febru- _ March April „ .May
ber'?;
ary.3 t . ary i
Numbers are units
I Number of firms with plans 1

9,939

II. Persons in firms and governmental agencies with plans:
3.2
a Firms
b. Federal, State, and local governmental agencies
3.2
c Total
III. Persons actually participating in payroll savings plans:
.7.
a In participating firms .
.
b. In participating Fed'eral, State,
and local governmental agencies.
—(V)—
, c. In the armed forces..
.7
d. Total

17,513

34,480

50,120

71,686

Jyine

90,418

108,099

Numbers are millions
9.9

14.2

16.7

19.2

20.5

21.3

.6
10.5

.9
15.1

1.4
18.0

1.5
20.7

1.6
22.0

1.6
22.8

3.7

7.2

9.0

10.9

13.2

16 0

.1

.4

.6

.7

.7

(•)

(*)

3.8

7.6

(*)

9,6

(*)

""H.e

(*)

13.9

1.0

(*)

16.0

In millions of dollars .
IV. Aggregate amount deducted by persons
participating..

5

-.
V. Percentage of pay deducted by persons
narticinatinE
..
.

4.-1

58

28

• 4.5

•

78 1

96

126

153

4.9

5.3

5.8

Percentage

'' i 8

4.9 1

.

1 Excludes governmental agencies,
*Not available.
NOTE.—Figures in milhons are rounded to the nearest milhon and will not necessarily add to totals.




REIPORT

OF T H E .SEiCRETARY

OF T H E

TREASURY

29

In March 1935, when savings bonds were first issued, over-thecounter sales for cash were conducted at 14,000 post offices including
those of the first, second, and third classes, and selected post offices
of the fourth class. I n 1936 this number was increased to about
15,000 post offices, and provision was made for mail order sales through
t h e Treasurer of the United States and the Federal Reserve Banks.
At the close of the fiscal year 1941 there were, in addition to about
16,000 post offices selling bonds, about 11,000 agencies which had
qualified with the Federal Reserve Banks as issuing agents, including
over 9,500 commercial and mutual savings banks, 1,300 building and
loaii and savings and loan associations, and nearly 200 credit unions
and others.
During the fiscal year 1942, the number of sales agents was further
increased to facilitate the issuance of savings bonds. On December
27,-1941, the Federal Reserve Banks were authorized to designate as
issffifig agents for Series E bonds any incorporated organization which
would be likely to issue a number, of bonds sufficiently large to justify
the designation. By June 30, 1942, there were approximately 42,000
different agencies authorized to issue United States war savings
bonds of Series E , including 19,000 post offices, 14,500 commercial
and mutual savings banks, 2,900 credit unions, and 2,500 other
corporate organizations.
Sayings bonds of Series F and G were issued only at the Federal
Reserve Banks and the Treasury Department, Washington. Commercial banks, however, generally handled applieations for their v
customers.
War savings stamps.—As a part of the savings program inaugurated
May 1, '1941, a special series of postal savings stamps, designated
defense savings'stamps, had been made available as a convenient
means for accumulating funds for the purchase of savings bonds.
At the time the designation of the defense savings bonds was (Changed
to war savings bonds, the designation of the defense savings stamps
was changed to war savings stamps. The sale of these stamps,
through the Postal Service, continued in increasing volume throughout the year, as shown by the following statement, supplied by the
Post Ofiice Department.
.
Cash receipts from sales of war savings stamps, by months, fiscal years 1941 and 1942
Month

Fiscal year
1941

July
August
.
September..
October
November..
December.January




Fiscal year
1942
$3, 520.103. 35
4, 372, 302.80
5,191, 628. 65
5, 985. 398. 40
6, 354, 295. 25
25. 657,101. 55
41,168, 755. 05

Month
February..
March
April
May
June
Total..

Fiscal year
1941

Fiscal year
1.942 _,

$3, 349,346. 90
2, 737, 678.75

$38,649,177.30
40, 598, 956. 50
40,172, 833. 25
47, 990, 254. 30
48, 960,496. 50

6,086, 925.''65

308,621,302.90

30

REPORT OF T H E . SEiGRETARY OF THE^ TREASURY

, Although the: cash receipts, from the sale of these stamps weie
deposited in the Treasury, the outstanding stamps were obligations
of the Postal Saving^-System, and the obligation was transferred to
the Treasury only through excjhange of the stamps, in appropriate
amounts, for war sayings bonds. Because of the increasing importance of the receipts from the sale, of war savings starnps it was cphcluded to replace the Postal Savings issue with a Treasury issue of
savings stamps and in order to avoid a duplication of effort it was
concluded t h a t , the Postal Savings issue should be discontinued.
The matter was presented to the Congress jointly by the Treasury
•and the Post Office Departments and, in the Public Debt Act of 1942,
approved March 28, 1942, the transfer of the liability of the outstanding stamps .from the Postal Savings System to the Treasury
Department was authorized,-the stamps thereafter to be publicdebt
obligations of- the United,States. -Preparations were in progress and
, transfer was about, to.be made at the.close of the fiscal year.'
The change in the designation of the stamps and the pending
transfer of liability from the Postal Savings System to the Treasury
will in no way affect the character of the stamps, 'and no distinction
•is to be made between any such stamps, whether issued as defense or
as war savings stamps. The stamps of either issue may be used
interchangeably to accumulate credits for the purchase of war
savings bonds.
Redemptions oj savings bonds.—The following table shows the pro-,
portion of all savings bonds redeemed from 1935 to 1942. Additional
information on the redemptions of savings bonds will be found in the
tables beginning on page 547.
Proportion of number of savings bonds of each denomination redeemed by the end of
various yearly periods to J u n e 30, 1942

:,

...,

• ^

R e d e e m e d b y t h e e n d of—
1 year
(1941
series)

Denomination

1 year
(1935-41
series)

2 years
(1935-40
series)

Series
F and G
Percent
$25..
$50...
$100
$500

...

.
:

$i,ono..
$5.000
$10,000
All d e n o m i n a t i o n s . . .

-.

3 years . 4 years
(1935-39 (1935-38
series)
series)

6 years
(1935-37
series)

6 years
(1935-36
series)

Series A to E

Percent Percent Percent . Percent
7
19
,26
32
6
16
23
29
615 1
27
215
12
23
18
4
8
16
12

'

6

14

21

26

7 years
(.1935
series)

'^"

Percent
38
35
32
27.
20

Percent
41
38
35
29
23

JPercent
40
38
35
30
25

31

34

34

. NoTE.^The yearly periods and perceiitages shown in the above table are approximate for the reason that
June 30th was taken as the average issue date of all bonds issued during each calendar year and for each
series the number of bonds which l^ad been redeemed at the end of each year from the average date of issuance
was expressed as a percentage of the total number of bonds issued. The percentages for Series A to E and for
Series F and G for similar periods were then averaged.




REPORT OF THE SECRETARY OF THE TREASURY
. .-

Treasury tax savings notes

31

'

\ Because of the greatly increased Federal taxes occasioned by the
war, the Treasury announced on July 3, 1941, a plan by which taxpayers could set aside regularly the funds which would be necessary
to pay their taxes due the following year. Beginning on August 1,
1941, two series of 2-year nontransferable Treasury notes, designated
Tax Series A-1943 and Tax Series B-1943, were offered for sale
through the Federal Reserve Banks. These notes were acceptable at
par and accrued interest in payment of Federal income taxes. The
notes of Series A, issued in denominations of $25, $50, and $100,
were designed to be attractive to the small and rno der ate. taxpayers;
while the notes of Series B, issued in denominations of $100, $500,
$1,000, $10,000 and $100,000, were intended for the larger taxpayers.
Interest on notes of Series A accrued at the rate of 16 cent3 per
month per $100, or at an annual rate of 1.92 percent; and interest on
notes of Series B accrued at the rate of 4 cents per month per $100,
or at an annual rate of 0.48 percent. The acceptability of Series A
notes was limited to $1,200 principal amount and the accrued interest
thereon on account of a taxpayer's liability for the taxable period.
Full details regarding the terms of the notes will be found in Department Circular No. 667, dated July 22, 1941, printed on page 207
of this report.
,
On December 24, 1941, announcement was made that two new
series of tax savings notes would be offered in continuation of the tax
savings plan. The sale of the early series terminated on December 31,
1941, and the sale of the new notes immediately followed on Jantiary
1, 1942. The new notes, under the designations Tax Series A-1944
and Tax Series B-1944, were dated January 1, 1942, and will mature
January 1, 1944. Their terms were identical in all respects with those
of prior Series A and B, respectively, except that their acceptability
in payment of Federal taxes was broadened to include estate and gift
as well as income taxes, and Series A notes were made available in the
additional denominations of $500 and $1,000. The prior notes also
were made acceptable in payment of estate and gift taxes.
The notes of Tax Series A-1944 and B-1944 are governed by Department Circular No. 674, dated December 15, 1941, which will be
found on page 220 of this report.
The following table shows the sales of Treasury tax savings notes
between August 1, 1941, and June 30, 1942.
Sales of Treasury tax savings notes
Aug. 1 to Dec. 31, 1941:
Tax.;Series A-1943Tax Series B-1943...1
•Jan. 1 to June 30, 1942:
Tax Series A-1944.
Tax Series B-1944
Total
487543—43




._
.
.^
1
4

Amou7it
$44,088,000
2,435,287,900
28,088.875
"... 1,631.449,700
4,138,914,476

32

REPORT OF THE SECRETARY OF THE TREASURY

Redemptions of tax savings notes during the fiscal year amounted
to $1,124 millions of which $20 millions were redeemed for cash and
$1,104 millions were received for taxes. Further details on sales and
redemptions appear in the tables beginning on page 565 of this report.
Adjust&di^iservice^homls >
^

Adjusted service bonds of 1945 amounting to $1 million were issued
during the year, making a total of $1,840 millions of such bonds issued
since June 15, 1936, in payment of amounts due on adjusted service
certificates. Redemptions of $13 millions of these bonds during the
year brought the total redemptions since June 15, 1936, to $1,612
millions, leaving $229 millions outstanding on June 30, 1942. Further
data on adjusted service bonds appear in the table on page 493. ,
De])ositary bonds
During the^^^year^ depositary ''bonds, = authorized by Department
Circular No. 660, dated May 23, 1941, were issued to various depositaries and financial agents, which had executed a depositary, financial
agency, and collateral agreement satisfactory to the Secretary of the
Treasury, in amounts not exceeding the amount for which the depositary and financial agent had qualified. The total issued during the
year amounted to approximately $78,958,000, of which $5,000 were
redeemed, leaving $78,953,000 outstanding.
•
' •

Cumulative sinking jund

Credits accruing to the cumulative sinking fund during the year
amounted to $587 millions which,- added to the unexpended balance
of ;$2,^66/ miJ/lioigs ^brought, .forward iijom^Athev^previous :year, made^
available $3,253 millions for the year. Of this amount $75 millions
were applied to the retirement of various issues of bonds and notes
which matured or were called during the fiscal years 1941 arid 1942.
The unexpended balance of $3,178 millions was carried forward to
the fiscal year 1943.
Tables presenting the transactions on account of the fund for 1942
and since its inception on July 1, 1920, will be found on pages 545 and
546 of this report.
Public Debt Act oj 19^2
The Public Debt Act of 1942, approved March 28, 1942, further
amended section 21 of the Second Liberty Bond Act so as to limit tjie
obligations issued under authority of the act to an aniount not to
exceed $125 billions in the aggregate outstanding at any one time,
the prior hmitation in siich respect having been $65 billions, as fixed
by the Public Debt Act of 1941, approved February 19, 1941. The



REPORT OF THE SECRETARY OF THE TREASURY

33

act' of March 28, 1942, further amended sections 19 and 20 of the
Second Liberty Bond Act to broaden the authority of the Secretary
of the Treasury in fixing the terms and characteristics of the obligations^ authorized to be issued and provide greater flexibility in the
management of the debt. Asy^of June 30, 1942, the unused borrowing>,
autlSuoriza^ion underJithe limitation i n effec^^t oh this date was neairly
$51 billions, as shown by the following statement.
Face amount of obligations outstanding and the face amount which can still be issued
^
under the lirnitation in effect on June 30, 1942
Total face amount that may be outstanding at any one time
$125,000,000,000
Outstanding as of June 30, 1942: .
Interest-bearing:
Bonds:
Treasury
$38,084,533,250
Savings (maturity value) L.
12,482,909,100
°
Depositary
.
78,953,000
•
Adjusted service..
728,665,857
—
$61,375,061; 207
Treasury notes...:
1.
13,955, 776,350
Certificates of indebtedness
6,228,013,000
Treasury bills (maturity value)
2, 508, 298,000
22, 692,087, 350
Matured^obligations'on which interest has ceased...

74,067,1.48,'*557
87,309,050

..
74,154,457,607

Face amount of obligations issuable under above authority
50.845,542,393
1 Approximate maturity value. Principal amount (current redemption value) according to preliminary '
public debt statement $10,188,188,461.^

Reconcilement with Daily Statement of the United States Treasury, June 30, 1942
Total face amount of outstanding public debt obligations issued under authority of the
Second Liberty Bond Act, as amended
$74,164,457,607
•Deduct unearned discount on savings bonds (difference between current redemption value
and maturity value)
..
2,294,720,639
Add other public debt obligations outstanding but not subject to the statutory limitation:
Interest-bearing (postal savings bonds, etc.)
$195,990,180
Matured obligations on which interest has ceased.
10,990,680
Bearing no interest...^
.-...
355,727,288
To^lr^^oss;debtputstaIidib^ asiaf June 30, 1942:-:-

71,859,736,968

562,708,148
72,422y 445,'116 ,

The act also authorized the transfer of the liability for Postal
Savings stamps from the Board of Trustees of the Postal Savings
System to the Treasury Department, and on such transfer established
the outstanding stairips as public debt obligations of the United
States. However, this transfer had not yet been made at the end of
the fiscal year 1942. In addition, the act carried an amendment to
section 4 of the Public Debt Act of 1941 relating to taxes on income of
obligations of the United States and the agencies or instrumentalities
thereof.
The full text of tjie Public Debt Act of 1942 appears on page 272
of this report.
THE GUARANTEED DEBT

The Treasury has made available to certain Government corporations and credit agencies, authorized to issue obligations guaranteed
as to principal and interest by the United States, all of its facilities



34

REPORT OF T H E SEIGRETARY OF T H E

TREASURY

for the issuance,- redemption, etc., of public debt obligations, so
that those corporations desiring to do so could arrange to have their
.obligations serviced through Treasury facilities.
. On October 16, 1941, the Secretary of the Treasury announced that
thereafter the Treasury would provide the funds needed by Government corporations and credit agencies and that the previous practice
whereby such agencies and corporations sold their guaranteed obligations in the market would be discontinued. Due to this policy
'there was very little activity during the year with respect to the sale
of new guaranteed issues. However, the facilities of the Treasury
were availed of, as usual, to handle the maturing and redeemable
securities. The following table shows the issues, maturities, and
redemptions of guaranteed issues during the year.
Major financing, .operations conducted by the Treasury during the fiscal year 1942
, for agencies issuing securities guaranteed by the United States
Issue

Date

N E W OFFERINGS

July

3,1941

July 21,1941

1% Reconstruction Finance Corporation notes. Series W, due
Apr. 15, 1944:
For cash
:
1
•' In exchange for ]4% Reconstruction Finance Corporation
notes. Series N, maturing July 20, 1941 .----„1H% Commodity Credit Corporation notes,. Series G, due
Feb. 15, 1945:
For cash
In exchange for %% Commodity Credit Corporation notes.
Series D, maturing Aug. 1, 1941....

$362, 695, 000
208, 668, 000

$571,363,000

210,7817 000
200,815,000
411,596,000

Total

-

—

982,(959,000

' MATURITIES AND R E D E M P T I O N S

July 20,1941
Aug. 1,1941
J^ov. 1,1941
Nov.. 1,1941
Nov. 15,1941
Jan. 16,1942
Jan. 15,1942
Mar. 1,1942
June

5,1942

June

6,1942

K% Reconstruction Finance Corporation notes, Series N,
maturing July 20, 1941
H% Commodity Credit Corporatiori notes. Series D, maturing Aug. 1, 1941
_
14% Reconstruction Finance Corporation notes. Series P,
maturing N o v . l . 1941.'..•..•..'.
•
}4% Federal Public Housing Authority • notes. Series E, maturing Nov.-1, 1941
1% Commodity Credit Corporation notes. Series E, maturing
Nov. 15, 1941..
14% Reconstruction Finance Corporation notes, Series R,
maturing Jan. 15, 1942
3% Federal Farm Mortgage Corporation bonds of 1942-47,
called for redemption Jan. 15. 1942
2M% Federal Farm Mortgage Corporation bonds of 1942-47,
called for redemption Mar. 1, 1942
2}4% Home Owners' Loan Corporation bonds. Series G, 194244, called for redemption July 1, 1942
1% Reconstruction Finance Corporation notes, Series S, maturing July 1, 1942
:
Total

.-..-..

Decrease in outstanding issues
1 Formerly U. S. Housing Authority. .

•

211,460,000
202, 553, 000
-299, 739, 000
112,099,000
204, 241, 000
. 310, 090, 000
236,476, 200
103,147, 500
.

846,114,400
272, 272.; 000
2, 798,192,100
1,815, 233,100

*

The preceding table does not include small amounts of 2% percent
mutual mortgage insurance fund debentures. Series B, called on
-March 25, 1941, and September 27, 1941, for redemption on July 1,
1941, and January 1, 1942, respectively. The instructions issued
by the Secretary of the Treasury for the redemption of the sixth-called



35

REPORT OF THE SECRETARY OF THE TREASURY

and seventh-called debentures will be found as exhibits beginning oh
page 287.
Copies of the offering circulars and announcements of subscriptions
and allotments are included in the exhibits beginning on page 282.
Of the $2,798 millions of securities which maitured or were redeemable during the year, $2;22i9 millions were presented in payment of
subscriptions to Treasury bonds and notes, the details of which are
shown in the table on page 20.
As a result of the adoption of the policy of financing Goyernment
corporations and credit agencies through the Treasury, the contingent
liabilities of the Goyernment on account of outstanding unmatured
market issues of obligations of Government corporations and credit
agencies,, guaranteed as to principal and interest, decreased froni
$6,360 millions on June 30, 1941, to $4,548 millions on June 30, 1942,
a decrease of $1,811 millions. During this period the securities-of
Government corporations and credit agencies held directly by the
Treasury increased from $302 millions to $4,079 millions, an increase
of $3,777 millions..
The net changes during the year of the various classes of securities
guaranteed by the United States are shown in the table that follows.
A detailed, statement of these obligations and of certain other contingent liabilities of the United States as of June 30, 1942, will be
found on page 580.
Comparison of obligations guaranteed by the United States outstanding June 30,
1941 and 1942, by agencies ^
[In millions of dollars]
Corporation or. agency
Unmatured market issues:
Commodity Credit Corporation
Federal Farm Mortgage Corporation.
Federal Housing Administration:
Mutual mortgage insurance fund.
Housing insurance fund
.....
Homeowners' Loan Corporation.....
. Reconstruction Finance Corporation..
Federal Public Housing Authority 2;.
Total unmatured obligationsMatured obligations, all agencies
Matured interest, all agencies.
Total, based on guarantees..

,
June 30,
1941

June 30,
1942

.

•

Increase or
decrease (—)

696
1,269

701
930

5'
-340

2, 409
1, 741
226

13
1, 563.
1, 220
114

^ 4
-846
-522
-112

3 6, 360
11
3

3 4, 548
20
3

-1,811
9

6,373

i

(*)

. •

-1,802

*Less than $500,000.
1 Does not include obligations held by the Treasury and reflected in the public debt.
2 Formerly United States Housing Authority; changed by Executive Order No. 9070, dated February
24,1942.
3 Docs not include $8 millions of obligations issued on the credit of the United States by the Tennessee
Valley Authority and held by the Reconstruction Finance Corporation.
NOTE.—Figures are rounded to nearest million and .will not necessarily add to totals.

During the, fiscal year the borrowing power of the Commodity
Credit Corporation, Federal Housing Administration, and the Eeconstruction Finance Corporation was extended by the enactrnent of
further legislation. The Commodity Credit Corporation, under the



36

REIPORT

O F T H E SEICRETARY OF T H E

TREASURY

act of July 1, 1941 (Public Law 147), was authorized to increase by
$1,250,000,000 the amount of obligations which it might issue arid
have outstanding. Under the acts of September 2, 1941, and M a y
26, 1942 (Public Laws 248 and 559), the authority of the Federal
Housing Administration to insure the principal amount of mortgages
.was increased by $200,000,000 and $500,000,000, respectively. The
aggregate amount of principal- obligations of all mortgages insured
b y ^ e ^ F e d e M Housing A:driliriist^'ation is:nowi^
except that with the approval of the President such aggregate amount
may be increased to not exceed $5,800,000,000. The borrowing
power of the Reconstruction Finance Corporation was increased
several times during the fiscal year so that the amount of obligations
which it was authorized to issue as of June 30, 1942, amounted to
$17,232,0,62,231, including amounts outstanding issued under indefinite
authorizations, or a net increase of $10,090,248,183 since June 30, 1941.
This net increase resulted from the following changes:
INCREASES

Statutory authorizations with definite limitations:
I. For .eeneral purposes:
Act of October 23. 1941—Public Law 278 (55 Stat. 744)
Act of March 27, 1942—.Public.Law 506 (56 Stat. 174)
Act^df June 5, 1942—Public Law 592 (56 Stat: 326)........

$1,500,000,000
. . 2,.500.000,000
....".'•'5;''b(30,^0O,.O0O ,

Total for general purposes..
II.

9,000,000.000

For loans, purchases of stock, securities, etc.:
Act of July 1, 1941—Public Law 144 (55 Stat. 408):
For loans in accordance with Title I of "The Bankhead-Jones Farm Tenant
Act," approved July 22, .1937 (50 Stat. 522)
50,000,000
For additional funds for the purpose of making rural rehabilitation loans to needy
farmers in accordance with Title II of "The Bankhead-Jones Farm Tenant
Act" approved July 22, 1937 (50 Stat. 524)
:
120,000,000
For loans and the purchase of property in accordance with section 7 of the Rural
Electrification Act of May 20, 1936, as amended (7 U. S. C. 901-914)
100,000,000
To provide for the financing of the War Damage Corporation-act of March 27,
1942—Public Law 506 (56 Stat. 174)
1,000,000.000
Total loans, purchases of stock, securities, etc

'. 1,270,000,000

Total statutory authorizations with definite limitations

10, 270,000,000

Statutory authorizations'with-indefinite limitations:
, ,
.
.
III. For subscriptions to preferred'stock in nationalbanking-associatidns. State banks,
or trust companies (48 Stat. 6: 12 U. S. C. .51-d).
.
IV. For loans to the Federal Housing Administrator (48 Stat. 1247; 12 U. S. C. 1705)...
Total statutory authorizations with indefinite limitations
. . ' • Total increases..

-179,331,263
5, 000,000
—174,331,263

l . . ' _ . - . : . . l . : l il0,.095^l668;737
DECREASES

V. Obligations of the Reconstruction Finance Corporation canceled by the Secretary of
the Treasury pursuant to act of February 24,1938 (52 Stat. 79), on account of expenditures
for—
Federal Housing Administrator (section 4 of National Housing Act)
Expenditures of the regional agricultural credit corporations (section 201 (e) of Emergency Relief and Construction Act of 1932; section 33 of Farm Credit Act of 1937)..
Total decreases
VI. Net increase in borrowing power

5,000,000
420, 554
6,420,554
10,090,248,183

The provisions of law authorizing agencies to issue obligations
guaranteed by the United States have placed certain limits with
respect to the total amounts that can be issued. This legislation with
respect to the limitations established may be placed in three groups
as follows:



REPORT •or,,,.THE ;SECRETAR,Y OF T H E

37

TKEASXJRY

(1) Definite limitation:—Provisions' stating a specific amount of
obligations which may be (a) issued, or (b) issued and outstanding at
any specified time. When the legislative authority provides only for
the issue of obligations, the agency may issue obligations in a definite
amount but after they have been retired may not issue new obligations
in an equal amount. Under the second provision, the agency may
reissue obligations provided the total amount outstanding does ndt
exceed,the authorizedflimit.
^
. (2) Indirect limitation.—FiOYisioiis not stating a specific amount
of obligations that may b e issued and outstanding at any time, but
the amount issued and outstanding is contingent upon other specific
limiting factors. As a result there is an indirect limit upon the
amount which may be issued and outstanding at any one time.
(3) No specific limitation.—Provisions not stating a specific amount
of obligations which may be issue,d or issued and outstanding at any
one time, but the amount is contingent upon other specific factors,
the amount of such factors also being indefinite.
The table that follows shows, by agencies, the amounts of obliga.ti0nS:.4a.'Uthorized to..be outstanding as of June 30, 1942, and the
amounts, actually outstanding on that date.
Borrowing power and outstanding issues of Government corporations and credit
. agencies whose obligations are guaranteed by the United States, J u n e 30, 1942
^

[In millions of dollars]
O u t s t a n d i n g obligations
Borrowing.
power

H e l d b y others >
Held b y
Treasury

Total

Unmatured
I. Agencies issuing obligations for cash or
in exchange for mortgages:
C o m m o d i t y Credit Corporation
Federal F a r m Mortgage C o r p o r a t i o n . .
H o m e Owners' Loan Corporation....
Reconstruction Finance Corporation. .
Termessee Valley A u t h o r i t y
',.-E^e^eril'Piiblic rB(o.iisingtAuthori;ty.. i . .
Subtotal
I I . Agencies issuing obligations only in
p a y m e n t of defaulted a n d foreclosed insured mortgages:
Fedp.ral H o n s i n ? A d m i n i s t r a t i o n
U n i t e d States M a r i t i m e C o m m i s s i o n .

Matured 2

•
2,650
2,000
3 4, 750
17, 232
70
..•• 3; 8,0.0

. 1,101
1,207
2,119
3,754
65
, v.;^388.

27, 5 0 2

8, 634

5 4,800
6 200

400
263
551
2,534
57
274,

701
930
1,563
1,220
48
. 114

4,079

4,535

21

Subtotal

• 5,000
32, 502

8,655

(*)

20

(*)

21
4,079

14
5

(*)

. 21

21

G r a n d total . .

(*)

(*)

4,557

20

* Less than $500,000.
» Excludes matured interest, all agencies, in amount of $3 millions.
2 Funds have been deposited with the Treasurer of the United States for payment of all obligations guaranteed by the United States, representing outstanding matured principal of $20 millions and interest of $3
millions. :
,
•
3 This amount may be increased only by the amount of issues for refunding purposes.
* Issued on the credit of the United States and held by the Reconstruction Finance Corporation.
6 Limit of authority to insure mortgages. This amount may be increased by $1,000 millions upon approval
by the President. Debentures may be issued and tendered only in exchange for insured property acquired
through foreclosure.
6 Limit which may be outstanding at any one time with respect to the insuring of mortgages.




3,8

REPORT OF T H E SEieREfTARY OF T H E TREASURY

ABSORPTION OF THE INCREASE IN SECURITIES ISSUED OR
GUARANTEED BY THE UNITED STATES

The total volume of direct interest-bearing public debt securities
outstanding on June,30, 1942, amounted to $72.0 billions, an increase
of $23.6 billions during the year; and the total volume of securities
guaranteed by the United States outstanding was $4.5 billions, a
decrease of $1.8 bilhons during the year. Of the net increase of $21.8
billions in the securities issued or guaranteed by the United States,
$6.2 billions, or 28 percent, was acquired by commercial banks;
$0.5 billion, or 2 percent, by mutual savings banks; $2.0 billions, or
9 percent, by insurance companies; $0.5 billion, or 2 percent by
the Federal Reserve Banks; $2.1 billions, or 10 percent, by Government agencies and trust funds; and the remaining $10.5 billions, or
48 percent, by all other investors—tax-exempt institutions other than
mutual savings banl^s; individuals,- partnerships, and personal trust
accounts; and corporations other than commercial banks and insurance companies. The absorption of almost one-half of the increase
in the debt by ''all other investors!' was due in large part to the
purchases by individuals of considerable amounts of Uhited States
savings bonds offered during the year.
The following table shows the absorption of the increase in the
debt by the principal types of investors during the fiscal year 1942.
Estimated absorption of the increase in the interest-bearing United States Government
debt ^during the fiscal year 1942 and each half of the fiscal year, classified by type
of investor .
'
A m o u n t absorbed (in billions of dollars)
Full
year
I. T o t a l debt:2
6.2
Commercial b a n k s
s.
.5
M u t u a l savings b a n k s
....
Insurance companies
...:.
. . . . . 2.0
Federal Reserve B a n k s . .
.5
Government agencies a n d t r u s t f u n d s . .
2.1
All other investors
10.5
Total
• 2L8
11.-Marketable d e b t :
6.1
Commercial b a n k s
M u t u a l savings b a n k s
"
.5
L9
Insurance companies
Federal Reserve B a n k s
.6
.4
Government agencies a n d t r u s t f u n d s . .
1.8
All other investors
11.1
Total.H I . N o n m a r k e t a b l e debt:«
Commercial b a n k s . .
_.
M u t u a l savings b a n k s
.!.--....
Insurance companies .
. .
Government agencies a n d t r u s t f u n d s . .
All other investors
Total

L8
8.8
10.7

P e r c e n t absorbed
J a n . 1,
1942J u n e 30,
1942

J a n . 1,
1942J u n e 30,
1942

J u l y 1,
1941Dec. 31,
1941

4.6
.2
.9
.4
.1.1
•5.5
12.7

1.6
.3
LO
.1
LO
6.0
9.0

28
2
9
2
10
48
100

36
2
7
3
8
43
100

17
3
11
1
12
55
100

4.6
.2
.9

L6
.3
1.0
.1
.2
.8
3.8

56
4
17
4
3
16
100

64
3
12
5
2
14
100

38
8
27
2
5,
20
100

:l
LO
7.2

.9
4.5
5.5

(*)
.(*)

Full
year

.1

.9
4.2
5.2

1

(*)
(*)

(*)
(*)
(*)

16
82
' 100'

16
82
100

J u l y 1,
1941D e c . 31,
1941

2

(*)
(*)

17
81
100

, *Less than $50 millions or 0.5 percent.
,
'
. . .
1 Includes securities issued or guaranteed by the United States.
2 Includes United States savings bonds at current redemption values, except for Series Q which is at par value.
•
NOTE.—Figures are rounded and will not necessarily add to totals.
SouiiCE.—Estimates based on Treasury Survey of Ownership of Gdvernment-Securities.




39

REPORT OP THE SECRETARY OF THE TREASURY

The distribution of the" ownership of the direct and guaranteed secu?rities at the beginning and end of the fiscal year 1942 is estimated as
follows:
Estimated distribution of the ownership of the interest-bearing United States Government debt ^ as of June 30, 1941, and June 30, 1942, classified by type of investor
J u n e 30, 1941

P e r c e n t of
. total

Amoimt held
(in bilhons
of dollars) "

'19.9
3.4
'7.0
2.2
^ , 8.-5
'13.8

36
6
13
4
15
25

26.1
3.9
8.9
2.6
10.6
•24.4

34
. 6
12
3
14
32

54.7

100

76.5

100

19.6
3.3
6.9
2.2
2.4
9.6

44
8
16
.5
5
22

25.7
3.8
8.8
2.C
2.7
11.4

47
7
16
6
6
21

44.1

100

55.1

100

' A m o u n t held
(in billions
of dollars)
I. T o t a l d e b t : 2
Commercial b a n k s
M u t u a l savings b a n k s - .
Insurance companies
Federal Reserve B a n k s .
G o v e r n m e n t agencies a n d t r u s t funds
All other investors
>
TotaL..
;II. M a r k e t a b l e d e b t :
Commercial b a n k s . . :
_
M u t u a l savings b a n k s _
Insurance companies.
Federal Reserve B a n k s . _•
G o v e r n m e n t agencies a n d t r u s t funds
All other i n v e s t o r s . .

'

Total..
III. Nonmarketable debt: 2
Commercial b a n k s .
M u t u a l savings b a n k s
I n s u r a n c e companies
G o v e r n m e n t agencies a n d t r u s t funds
All other investors
Total...

J u n e 30, 1942

,

(*)
( * )

.3
•

6.1
4.2
10.7

3

(*) •
(*)

;

(*)

P e r c e n t of
total

2

.4

57
39

.1
7.9
13.0

100

2L4

(*)
*

37
61
100

•Less than $50 millions or 0.5 percent.
. »Reyised.
.
,
»includes securities issued or guaranteed by the United States.
2 Includes United States savings b'onds at current redemption values, except for Series G which is at
par value.
, NOTE.—Figures are rounded and^will not necessarily add to totals.
SOURCE.—Estimates based on Treasury Survey of Ownership of Government Securities.

GENERAL FUND

^ The Greneral Fund includes all moneys of the Government deposited
with and held by the Treasurer of the United States, including the
moneys covered into the Treasury which can be/withdrawn only in
pursuance of an appropriation by Congress. ' Every receipt of the
Treasury, from whatever source, and every expenditure, of whatever
nature, affect either the assets or liabilities, or both, of the General
Fund shown in the daily statement of the Treasury. The total
amount of the assets over and above the total amount of the liabilities
represents the balance in the General Fund available to meet Government expenditures for general, special, and trust accounts, etc.
The assets in the General Fund consist 'of gold, silver, currency,
coin, unclassified collection items, etc., and deposits to* the credit of
the Treasurer of the United, States and other Government officers,




40

REPORT OF 'THE SEiCRETARY OF THE TREASURY

in Federal Reserve Banks, special depositaries account of sales of
Government securities, national and other bank depositaries, foreign
depositaries, and the treasury of the Philippine Islands.
The liabilities of the General Fund consist of outstanding Treasurer's checks, deposits of certain Government ofRcers composed of
balances to the credit of the Post Office Department, the Board of
Trustees of the Postal Savings System, and postmasters, clerks of
courts, disbursing officers, etc., and uncollected items, exchanges, etc.
The balance in the General Fund is classified accoiding to increment on gold, seigniorage, and working balance.
The net change in the balance of the General Fund from the beginning to the close of the fiscal year is accounted for as follows:
Analysis of the change in the General Fund balance between June 30, 194U o>nd
June 30, 1942
[On basis of daily Treasury statements (unrevised), see p. 387. For a description of accounts through
which Treasury transactions are effected, see p. 3881
Balance June 30,1941.
-.
..-.
! $2,633,174,062.11
Add:
Ordinary receipts, n e t » . .
12„799,'061,-62JL-..Q2
Trustc acGoun1;s^,'*inGr6ment on(^olid, etcr:..-...
i
.;
2 •3,''i90,88^;' 099'' 71
Net increase in gross publicdebt
^..
.'.
.:..
23, 461, O L 580.61
O
42,084,121,363.35
Deduct:
Expenditures chargeable against ordinary,
receipts:
General and special accounts.
$32,491, 307, 397.69
Less public debt retirements
.
94,722,300.00
'
$32, 396, 585, 097. 69
Trust accounts, increment on gold, etc
2 6,696,389,049.89
.
39,092,974,147. 68
Balance June 30,1942......
2,991,147,215.77.
. 1 Exclusive of employment taxes collected and deposited, as provided under sec. 201 (a) of the Social Security Act Amendments of 1939 less reimbursements to the General Fund for administrative expenses. Such
net amount is included in "Trust accounts, increment on gold, etc." on the following line.
2 On basis of classifications in eftect after June 30, 1942.

A comparative analysis of the assets and liabilities and the balance
of the General Fund is shown for the beginning and close of the fiscal
year in the table on page 594 of this report.
SECURITIES OWNED BY THE UNITED STATES AND PROPRIETARY
INTEREST IN
GOVERNMENT
CORI^ORATIONS ANI) CR:EI)lT
AGENCIES

*.

Securities owned

On Jmie 30, 1942, the United States owned securities consisting of
capital stock, bonds, etc., of Government corporations and agencies
and indebtedness to the Government by railroads, farmers, .shipowners, and others, in the face amount of $6,468 millions; and obligations of foreign governments in the principal amount of $12,661
millions. A statement of the securities owned, exclusive of foreign
obligations, at the end of the fiscal year 1942 is shown'in the table on
page 598. A summary of the holdings of securities at the end of the
last 2 fiscal years is shown in the following table.




REPORT OF THE SECRETARY OP THE TREASURY

41

Summary of securities owned by the United States Government, exclusive of foreign
obligations, June 30, 1941 and 1942
Security

June 30, 1941

June 30, 1942

Capital stock of Government corporations....
$L 296,986, 311.11 $1,368,650,580.88
Paid-in surplus of Goveriiment corpjorations and
146,861,238.02
• agencies-.r... J 1 . . . .
^
...
"..1...
145, 724, 985. 79
Bonds and notes of Government corporations and
agencies
.
301, 688, 750.00 4,078, 690, 945.91
971, 748r894.15
874; 669,*305. 25
Other^secuinties L
Tt)taii>^.

.

..

2,716,148,941.06 -6r467;:872,p7(J.0§>

Increase or de*
crease (—;
$71, 664, 269. 77
136, 252. 23
3, 777, 002,195.91
-97,079,588.90
3,751,723^129:01

' Includes loans and advances by Farm Security Administration, Rural Electrification Administration,
and Public Works Administration.
^

' A n appropriation of $150 millions was approved July 25, 1942
(Public Law 678), to effectuate the subscription to the capital stock
of the Smaller War Plants Corporation by the Secretary of the
Treasury, as authorized by an act of June 11, 1942. (See exhibit
63, page 343.)
In accordance with the acts approved February 24, 1938 (52 Stat.
79), and March 28, 1941 (55 Stat. 55), the Secretary of the Treasury
caihceled bBligatibns of the Eeconstruction Finance Corporation during
1942 amounting to $5 millions, representing expenditures previously
made by the Corporation. This brought the total of the obligations of the Reconstruction Finance Corporation canceled to $2,740
millions, as shown in the following table.
Reconstruction Finance Corporation:
Amount
Obligations canceled to June 30, 1941
...:...
$2,734,475,131.00
Obligations canceled during 1942 pursuant to the act of Feb. 24, 1938, on
account of expenditures for—
'
Federal Housing Administrator (sec. 4 of National Housing Act).. $5,000,000.00
. Expenses of regional agricultural credit corporations (sec. 201 (e) of
Emergency Relief and Construction Act of 1932; sec. 33 of Farm
Credit Act of 1937)
.
.
420,554.09
", •
5,420,654.09
Total to June 30, 1942.

.

.

2,739,895,685.09

Proprietary interest in Government corporations and credit agencies
In, order. tOr>reflect the, amount .of the Governments interest in
Government corporations and credit agencies, the Treasury compiles
from reports received from such agencies a '^Combined statement
of assets and liabilities of Government corporations and credit agencies
of the United States,'' which is published in the daily Treasury
statement at the end of each month. This statement shows the
amount and classification of the assets and liabilities of the various
agencies, the privately owned proprietary interest in' such agencies,
and the proprietary interest of the United States. The statement as
of Jime 30, 1942, appears as table 88 beginning on page 624, and a
summary table of the Government's proprietary interest in such
agencies as of June 30, 1930 to 1942, appears as table 89 on page 631
of this report.




42

REPORT GF T H E SEIGRETARY OF T H E . .TREASURY
•MONETARY D E V E L O P M E N T S

,

•.-

•-..,,.,•••.

International monetary cooperation

Stabilization agreements.—Continuing its policy of aiding friendly
foreign governments' in the stabilization of their currencies, the
Treasury, during the fiscal year. 1942, entered into stabilization agreements with the Governments of Mexico, Ecuador, and I c e l a n d . , i ^
On November 19, 1941, a stabilization agreement was entered into
by the Secretary of the Treasury, the Government of the Republic of
Mexico, and the Banco de Mexico providing that up to $40 millions
of the United States stabilization fund would be used for the purpose
of stabilizing the United States dollar-Mexican peso rate of exchange.
(See exhibit 40, p . 291.)
On February 27, 1942, the Secretary of the Treasury and the Government of the Republic of Ecuador signed a stabilization agreement
providing that up to $5 millions of the United States stabilization
fund would be used for the purpose of stabilizing the United States
dollar-Ecuadoran sucre rate of exchange. (See exhibit 41, p. 291.) '
As a further link in the closer relations between the Governments of
the. United States and Iceland, the Secretary of the Treasury, the
Government of Iceland, and the National.Bank of Iceland signed a
stabilization agreement on May by 1942. This agreement provided
that up to $2 millions of the United States stabilization fund would
be used for the purpose of stabilizing the United States dollar-Icelandic
krona rate of exchange. (See exhibit 42, p. 292.)
;; j
In the stabilization agreements described above provision was also
made for periodic conferences among representative^ of the signatories
to discuss monetary, financial, and economic problems bf mutual
interest.
. At the time the stabilization agreement between Mexico and the
United States was signed, a silver purchase agreement was also entered
into. This agreement was a month-to-month arrangement between
the United States and Mexico under wliich the UnitedStates Treasury
undertook to purchase montlily up to 6 million ounces of newly
mined Mexican silver. Actually no silver was purchased imder this
agreement during the fiscal year'1942, as all silver imported from
Mexico since the agreement was sold on the commercial market./ (See
exhibit 40, p.. 291.)
.
During the year three gold purchase agreements were made with
the Union of Soviet Socialist Republics. The agreements called for
future delivery of the gold purchased by the Treasury. The first
purchase, amounting to $10.5 millions, was made on August 15, 1941,
on a 90-day delivery basis, and delivery was completed by October 20,
1941. The second agreement, made on October 10, 1941, was for the
purchase of $31.6 millions of gold, and called for its delivery within



REPORT OF THE SECRETARY OF THE TREASURY

43

180 days, by April 8, 1942. The delivery date was extended because
of transportation difficulties, but by ,April 20, 1942, delivery had
been completed. On January 3, 1942,-a third agreement was entered
into, the Treasury purchasing an additional $21.1 milhons of gold
from the U. S. S. R., to be delivered within 180 days. By June 30,
1942, a substantial part of the gold had been delivered.
Dollar assets made available by these gold transactions were used
by the U. S. S. R. to purchase in the United States goods and services
in addition to materials being obtained under the terms of the lendlease arrangement.
One of the most important international agreements during 1942 was
that between the United States and China, on March 21, 1942, providing financial aid to China. By the terms df 'the agreement the Secretary of the Treasury established on the books of the United States
Treasury a credit in the name of the Republic of .China for $500
millions. The Secretary of tbe Treasury agreed to make transfers,
from this credit to accounts of the Government of the Republic, of
China in the Federal Reserve Bank of New York at such times and in
such amounts as the.Government of the Republic of China should
request.
This agreement was signed by the Secretary of the Treasury on behalf of the United States under the authority granted to him by Public
Law No. 442, approved February 7, 1942.
In a joint statement, Secretar}^ of the Treasury Morgenthau and
His Excellency T. V. Soong, Minister of Foreign Aft'airs of the Republic of China, said that the purpose of the agreement was to ^^contribute
substantially towards facilitating the great efforts of .the Chinese people
and their Government to meet the financial and economic burdens
which have been imposed upon them by almost 5 years of continuous
attack by Japan." (See exhibit 43, p. 292). . A significant provision
in the agreement defers the final determination of the terms upon
which the financial aid is given, including the benefits to be rendered
the United States in return, ^*until the progress of events after the war
makes clearer the final terms and benefits which will be in the mutual
interest of the United States and China and will promote the establishment of lasting world peace and security."
Inter-American conjerences.—As a further step in the cooperation of
the American Governments in the establisbment of hemispheric solidarity and in accordance with agreements adopted at previous interAmerican conferences, a conference of the Ministers of Foreign Affairs
of the American Republics was held in Rio de Janeho from January 15
to January 28, 1942. Tliree of the 41 resolutions adopted at the Rio
(3i)nference have particular significance from the point of view of interAmerican financial and monetary cooperation:




44

R E I P O R T OF T H E SEICRETARY OF T H E

TREASURY

. 1. Resolution No. V recommends the adoption of measures by the
American Republics necessary, among other things, to:
(a) Cut off all commercial and financial intercourse with the Axis
powers;
'
. >
(b) Prevent transactions within the Western Hemisphere which
might benefit the Axis;-and,
.,.
-^
.•:
.....
•:...'•
(c) Control the,operation of Axis properties within Am-ericaujjurisdictions.
In accordance with this resolution many of the American Republics
instituted measures which strengthened the United States Foreign
Funds Control regulations with respect to transactions involving the
properties of enemy nationals. Further effect to the resolution was
given by the Inter-American Conference on Systems of Economic and
Financial Control which was held in Washington, D. C , from June 30
to July 10, 1942. At this conference resolutions were adopted recommending more specific economic and financial measures against aggressor nations.
2. Resolution No. X recommended that the American Republics
which had not already adhered to the convention for the establishment of an inter-American bank study the proposal as soon as possible.
3. Resolution No. XV recommended that the American Republics
participate in a conference of Ministers of Finance to consider the
establishment of an international stabilization fund. , Among the'
purposes of the fund would be stabilization of exchange rates, encouragement of the international movement of productive capital,
correction of the maldistribution of gold and the strengthening of
monetary systems.
Domestic monetary events
The Treasury's principal, problem during the fiscal year jt9#-^^ift'ed
from that of financing the defense program to that of financing the .war
program ^of- the United .States. To finance the huge war expenditures which grew steadily during the fiscal.year the Treasury presented
to Congress a tax program and instituted a war savings bond program
which were designed to help raise necessary war funds and to combat
inflation. These programs are discussed elsewhere in this report.
(See pp. 27, 46, and 353.)
'
. .
Among other measures taken to combat inflation,, the Board of
Governors of the Federal Reserve System, after consultation with the
Secretary of the Treasury, on September 23, 1941, increased reserve
requirements of the member banks to their statutory: limits: on
demand'deposits, 26 percent fqr central reserve city banks, 20 percent
for reserve city banks, and 14 percent for other banks; on time
deposits, 6 percent for all classes of banks.




REPORT OF T H E SEiCRETARY OF T H E TREASURY

45.

In connection with this action, the Secretary of the Treasury and
the Chairman of the Board of Governors issued the following statement, in which the Board of Governors concurred:
' ' T h e Treasury and the Board of Governors will continue to watch
the economic situation and to cooperate with other agencies of the
Government in their efforts, through priorities, allocations, price
regulation, • and otherwise, to "fight iiiflation. Recomrnendations oh
the question of what additional powers, if any, over bank reserves
the Board should have during the present emergency and what form
these powers should take will be made whenever the Treasury and
the Board, after further consultation, determine that such action
is necessary to help in combating infliationary developments."
Title IV of the Second War Powers Act, approved March 27, 1942,
amended subsection (b), section 14 of the Federal Reserve Act, as
amended, by authorizing the Federal Reserve Banks to acquire
directly from the Unite,d States bonds, notes, or other obligations of
the,: United. States, direct or. guaran)beed, provided that the aggregate
amount acquired directly from the United States and held at any one
time by the twelve Federal Reserve Banks shall not exceed $5 billions.
(See exhibit 30, p. 273.)
Because of the growing scarcity of strategic metals, the Treasury
took steps to conserve copper, tin, and nickel for the war effort.
To release copper for essential war uses, the Secretary of the Treasury, entered into an agreement on May 6, 1942, with the Defense Plant
Corporation to lend-lease silver from the Treasury's free silver stocks
to be used by plants engaged in war production, particularly aluminum
and magnesium plants. The silver lend-leased under this agreement
will hot be consumed in production, and title to the silver remains
in the Treasury. Transfers under this arrangement were, begun on
June 29, 1942. The utilization of free silver in this manner will
release more than 40,000 tons of copper for urgent war purposes. (See,
exhibit44, p. 292.)
A measure designed to save annually almost a million pounds of
nickel and up to a million pounds of copper was provided for in
Title X I I of the Second War Powers Act relating to the coinage of
5-cent pieces. (See exhibit 45, p. 293.) This section of the Second
War Powers Act provided that until December 31, 1946, the metallic
content of all 5-cent pieces coined should be one-half silver and
one-half copper, but the Director of the Mint with the approval of
the Secretary of the Treasury and the Chairman of the War Production Board was authorized to vary the proportions of silver and
copper and to add other metals if such action was in the public interest.
A third of the copper and all the nickel formerly going into the 5-cent
piece would be eliminated by changing its composition to half silver
and half copper.




46

REPORT OF THE SEICRETARY OF THE TREASURY.

The Bureau of the Mint announced that it also expects to save
100,000 pounds of tin a year through a change, under existing laws,
in the content of the cent* In addition, 40,000 pounds of tin on
hand were turned over to defense industries.
'
The outbreak of war in the Pacific area and the consequent possibility that the enemy would at?tempt an invasion of Hawaii led to
action designed to prevent the enemy's seizure of United States
currency should an invasion attempt succeed. Regulations issued on
June 25, 1942, by the Governor of Hawaii provided that persons
holding ordinary United States currency in the Territory of Hawaii
exchange such currency by July 15, 1942, for United States currency
of. a special series to be used only in the Territory. The new series
for Hawaii diff'ers from other series of United States currency in that
it bears the distinctive overprint ''Hawaii" in bold-face type on each
end of the face and the word "Hawaii" across the reverse side. Since
this currency circulates in Hawaii only, it ,would not be difficult to
eliminate its value to any invaders w h c might seize it. The Hawaiian
currency replacement program resulted from the careful study of
Hawaiian currency problems by the Treasury, War, Navy, and
Interior Departments in collaboration with Hawaiian civil and military authorities.
, As the international crisis deepened, foreign funds control developed
into a very important weapon of economic warfare. A discussion of
foreign funds control developments is contained on p. 56.
y

REVENUE LEGISLATION

Revenue legislation enacted in the fiscal year 1942 included the
Revenue Act of 1941, the Public Debt Act of 1942, and other acts
enumerated below.
: . Revenue Act oj 194i
The Revenue Act of 1941, approved September 20, 1941, imposed
. the largest tax burden in the history of the United States. This was
accomplished chiefly by a general increase in^the rates of most of the
forms of taxation imposed by the Federal Government and, the
addition of new excise taxes to articles heretofore untaxed.
In the case of the individual income tax, while the normal tax
rate was not changed, surtax rates were increased, and the surtax
was applied to the first dollar of surtax net income. The 10 percent defense tax was integrated into the income tax structure,
as it was integrated into other Federal taxes. Surtax rates ranged
from 6 percent on the first $2,000 of surtax net income to 77
percent on the portion of the surtax net income in excess of $5 millions.
This increase in the rates of the individual income tax was accompanied by a reduction of the personal exemptions from $2,000 to
$1,500 in the case of married persons and heads of families, and from
$800 to $750 in the case of single persons. The credit of $400 for the



|
|:
|
1

REPORT OF THE SECRETARY OF THE TREASURY

47

first dependent was eliminated for the head of a family who claimed a
deduction as head of a family by reason of there being one or more
dependents.
The rate applicable to a nonresident alien individual not engaged
in business within the United States, and not having an office or place
of business therein, was raised from 15 percent plus the' defense tax,
or a total of 16K percent to 27K percent.
^
In the .case of domestic corporations with a normal-tax net income
of over $25,000, and in the case of resident foreign corporations, the
tax on normal-tax net income was fixed at 24 percent. Domestic
corporations with a normal-tax net income of not more than $25,OQO
were taxed at the rate of 15 percent on such income not in excess of
$5,000, plus 17 percent of any excess over $5,000 up to $20,000, and
plus 19 percent of any excess over $20,000. The act imposed on
domestic and resident foreign corporations for the first time a surtax
of 6 percent on the. first $25,000 of corporation surtax net income,
plus 7 percent ori corporation surtax n^t income over $25,000.
The rate of tax on foreign corporations not engaged in business
within the United States and not having an office or place of business
therein was increased from 16K percent to 27K percent.
Excess profits tax rates were increased by 10 percentage points in
each bracket so that the rates ranged from 35 percent on the first
$20,000 of adjusted excess profits net income to 60 percent on such
'income over $500,000. In the case of corporations using the invested
capital method, the credit was changed from 8 percent of invested
' capital to 8 percent of invested capital not in excess pf $5 millions,
and 7 percent of the invested capital in excess of that amount.
The capital stock tax rate, including the defense tax, was increased
from $1.10 to $1.25 per thousand of adjusted declared value.
Estate and gift tax rates were also increased under the 1941
act. Estate tax rates ranged from 3 percent on the portion of thp net
estate not. in excess of $5,00.0 to 77 percen.t op. the portion in excess
of $10,000,000. Under prior law, the rates (excluding the defense
tax) ranged from 2 percent on the portion pf the net estate, in excess
of $10,000 to 70 percent on the portion in ex.cess of $50,00O,Q00. The
Revenue Act of 1941 made no alteration in the estat.e tax exemption
of $40,000 for additional estate tax purposes nor in the $40,000 exemption for insurance. The new gift tax ratps ^ere in each pase, a§ under
the present law, three-fourths of the corresppncjing estate tax fate.
Defense tax rates inippseid in connection with varipus excise taxes
were made perm^inpnt. Incr.eased taxes were leyipd pn playing
card^, safe deposit boxes, dis|:illed spirits, infipprte.d perfume, wines,
tires jand tubes, radio sets and parts, mechanical refrigerators,
and telephone, telegraph, cable, and radio messages. Floor stopks
•taxes providing for a levy on stocks of goods held by persons other
487543—43——5




. __.

48

REPORT OF T H E SEICRETARY OF THE^ TREASURY

than a manufacturer, producer, or importer were imposed on tires
and tubes and alcoholic beverages. New manufacturers' excise taxes
were levied on phonographs, phonograph records, musical instruments,
matches (except fancy wooden), sporting goods, luggage, electric, gas
and oU appliances, photographic apparatus, electric signs, business and
store machines, rubber articles, washing machines, optica! equipment,,
aidd electric light bulbs. New retailers'^ excise taxes were levied on
jewelry, furs, and toilet goods. New taxes were also imposed on the
transportation of persons, on coin-operated amusement and gaming
devices, bowling alleys, billiard and pool tables, and on the use of motor
vehicles and boats.
The^ act amended the tax on admissions to provide that a tax of
1 cent should be imposed for each 10 cents or fraction thereof paid
for admission, except that no tax was payable by children under 12
where the admission charge for such children was less than 10 cents.
Exemptions previously allowed in the case of admissions to enter-*
tainments held by religious, educational, or charitable organizations
were eliminated. On the other hand) the special tax rate for certain
persons on reduced or free admissions were extended to members of
the armed forces of the United States and the Civilian Conservation
Corps when in uniform. For such persons, the tax was based upon
the amount actually paid and not upon the established price.
The cabaret tax w,as increased from 2 cents for each 10 cents of the,
admission charge, which was deemed to be 20 percent of the total
amount paid for refreshments, services, and merchandise, to 5 percent
of the to tal charge.
In addition to the increases in rates, certain changes in the manner
in which the taxes were imposed, computed, and collected should be
noted.
One of the foremost of these changes was a simplified tax schedule for
individuals with gross incomes of $3,000 or less derived solely from
salaries, wages, compensation for personahservices, dividends, interest; rent, annuities, and royalties. The schedule fixed an income tax
for each $25 of gross income from $750 to $3,000 in the case of a single
person and $1,500 to $3,000 in the case of a married person o r t h e h e a d
of a family. The use of this schedule, which was optional with the taxpayer, permitted a taxpayer to determine the amount of his income
tax merely by locating his gross income, diminished by $400 for each
dependent, on the schedule. In preparing the schedule, allowance was
made for the average amount of deductions taken by persons in the
lower-income brackets in computing their taxes in the regular manner.
The taxpayer by using the form was relieved of the necessity of determining his deductions, of computing net income, and of calculating
both normal tax and surtax. The schedule was designed tp facilitate
the filing of returns by persons with smaller incomes, particularly




REPORT OF THE SECRETARY GF THE TREASURY

49

those added to the list of taxpayers by the reduction of the personal
exemptions. Administrative problems in reviewing such returns were
likewise diminished.
For taxpayers on a cash basis, income from noninterest-bearing
securities sold at a discount was, under prior law, taxable in full upon
redemption of the bond. Taxpayers reporting on the accrual basis
were allowed to report and pay tax bn the income as it accrued. The
Revenue Act of 1941 extended to taxpayers on the cash basis the privilege of electing to report income from these securities as it accrued.
The discount on obligations of the United States, States, Territories,
political subdivisions, or the District of Columbia, issued on a discount
basis after March 1, 1941, and payable without interest at a fixed
maturity date not exceeding one year from the date of issue, was not"
deemed to accrue until such obligation was paid at maturity, sold or
otherwise disposed of. Such obligations were not to be treated as
capital assets.
Under the excess profits law, the income tax had heretofore been
allowed as a deduction ih computing the excess profits tax. The 1941
act provided instead that the excess profits tax was to be allowed as
a deduction in computing the income tsx.
To encourage the investment of new capital in corporate enterprise, a special inducement was offered in the form of a more liberal
allowance for new capital in computing the excess profits credit under
the invested capital method for new capital. New capital in the form
of money or property paid in for stock during taxable years beginning
after December 31, 1940, and of taxable stock dividends made during
the same period was counted at 125 percent of its value in computing
equity invested capital.
The Revenue Act of 1941 established a committee to study all
expenditures of the Federal Government with a view to recommending
the eliminatipn or reduction of aU such expenditures deemed to be
nonessential. The Committee is composed of three members of the
Senate Committee on Finance and three members of the Senate
Committee on Appropriations, three members of the House Committee pn Ways and Means and three members of the House Committee on Appropriations, the Secretary of the Treasury, and the
Director of'the Bureau of the Budget. Suggestions of tbe Secretary
of the Treasury for reductions in nondefense expenditures are contained in the exhibit on page 379.
Public Debt Act oj 1 H 2
Under the Public Debt Act of 1942, approved March 28, 1942, the
provisions of the Public Deb.t Act of 1941 removing the exemption
from Federal income taxation previously given to obligations of the
United States and its instrumentalities, were extended to shares,



50

\

REPORT OF T H E SEICRETARY OF T H E TREASURY

certificates of stock, and other evidences of ownership issued by
agencies and instrumentalities of the United States.
Obligations issued under the Second Liberty Loan Act and redeemable upon demand were made acceptable in payment of taxes imposed
by the United States.
Other revenue legislation
Other laws affecting the revenue are as follows:
• Public Law 187, July 22, 1941, amending sections 3341, 3351, ^nd
3361 of the Internal Revenue Code, to extend the allowance of drawback of internal revenue tax on articles exported from the United
States upon which an internal revenue tax has been paid to like
articles when shipped from the United States to the Philippine Islands,
Virgin Islands, Puerto Rico, Gpam, and American Samoa, and repealing section 2907 of the Internal Revenue Code, the qollection pf internal revenue tax if export cases of distilled spirits are tampered with.
Public Law 285, O.ctober 30, 1941, amending section 124 of the
Internal Revenue Code by extending the time fpr applications, and
changing the procedure, for certification of national defeiise facilities
and contracts for amortization purposes.
Public Law 386, December 26, 1941, amending sectiofi 3508 of
the Internal Revenue Code to fix the date of termination of the taxes
on sugar as of June 30, 1945.
Public Law 412, January 24, 1942, amending section 2883 of the
Internal Revenue Code relating tp the production of alcohol.
Public Law 436, February p, 1942, amending section 124 of the
Internal Revenue Code to simplify the procedure in connection with
the amortization of national defense facilities.
Public Law 490, March 7, 1942. Sections 13 and 14 pf this act
prpyide for the postppnement pf the filing of income tax returns
and the payment of Federal in.com..e taxes in the case of members of
the armed fprcps of the United States and also in the' case of Federal
Governhient employees who are prisoners pf war.
Public Law 497, March 13, 1942, suspending during the existing
national emergency thp tariff duties and import taxes on scrap iron,
scrap steel, and non-ferrous mptal scrap, payablp under the Tij^riff
Acf of 1930, as amended, or under .seption 3425 of the Internal ReYen^ue
Cpde.
Public Law 508, March 27, 1942, amending section 2883 of the
Internal Revenue Code relating to the production of alcohol.
Pubhc Law 519, April 8, 1942, amending section 2901 of the Internal
Revenue Code, by setting new maximum limits on allowances for
losses of distilled spirits by leakage or evaporation while in internal
revenue bonded warehouses.
Public Law 526, April'20, 1942, amending sections 2825, 3030,
3031, 3032, 3036, 3038, and 3045 of the Internal Revenue Code,



51

REPORT OF THE SECRETARY OF THE TREASURY.

relating to the withdrawal of brandy for the fortification of wines
and production of wines, brandy, and fruit spirits so as to remove
therefrom certain unnecessary restrictions.
Public Law 635, June 27, 1942, to accord privileges of free importation to members of the armed forces of other United Nations, to
enemy prisoners of war and civilian-internees and detainees.
* ,
WAR CONTRIBUTIONS FUND

Conditional gijts
Under the provisions of Title X I of the Second War Powers Act,
1942, approved March 27, 1942, the Secretary cf the Treasury is authorized to accept or reject on behalf of the United States any gift of
money or other property, real or personal, or services, made on condition that it be used for a particular war puipose. He may convert
into money, at the best terms available, any such gift of property.
The act further provides that there shall be established on the books
of the Treasury a special deposit account to be designated as the
" W a r Contributions Fund," into which shall be deposited all money
received as a result of such gifts. I n order to effectuate the purposes
for which gifts are accepted, the Secretary pf the Treasury is required
to allocate the money in the special deposit account to such appropriations available for the purchase of war material and. the/furtherance
of the war program as will best effectuate the intent of the donors.
(See exhibit 62, page 342.)
From March 27 to June 30, 1942, there were accepted 105 donations
of money aggregating $1,409,124.42, of which $985,127.19 had been
covered into the Treasury by warrants as of June 30, 1942, and $423,997.23 subsequent to that date. The latter amount represents checks
" which must be cleared through banks before the funds are available
for covering into the Treasury. These donations are, summarized as
follows:
Gifts of money to the war contributions fund, March 27 io June 30, 1942
.Accepted
through June
30, 1942

Purpose of gift

Aircraft (representing bombers, pursuit planes, balloons, etc.)
Vessels-='-(representing battleships, cruisers, destroyers,
submarines, etc.)
Guns and ammunition (representing rifles, cannon,
mortars, machine guns, bullets, torpedoes, bombs,
shells, etc.)
Welfare and recreation
Buildings and appurtenances.
,u
_.
Medical supplies
'
Vehicles (representing trucks, ambulances, tanks, tractors, etc.)
;
TotaL..1

1..




'.

;_..

Covered by
warrant
through June
30, 1942

Covered by
warrant after
Junfe 30, 1942

$1, 302, 995. 06

$886, 683. 69

20, 456. 00

20,456.00

12, 707. 65
4, 601. 00
62, 932. 85
10. 00

11,197. 65
4; 601. 00
62,188. 85

1, 510. 00

985,127.19

423, 997. 23

5, 421.;
1, 409,124. 42,

$416, 311. 37

744. 00
10.00
5, 421.86

52

REPORT lOF THE SEICRETARY OF THE TREASURY

Donations of property accepted included the following: Naval airplane, ofl&ce space for use of Office of Scientific Research and Development, band music for use of Naval Training Station, Great Lakes,
111., and Cadillac station wagon and trailer.
Unconditional donations
From December 7, 1941, the day on which Pearl Harbor was attacked, to June 30, 1942, 10,751 unconditional donations amounting
to $650,404.49 were received. The 10,751 donations do not represent
the total number of donors inasmuch as the donations of approximately 16,000 individuals were grouped and treated as single donations; for example, 7,000 employees of an aeronautical corporation
sent in individual checks which were recorded as one donation.
Checks and money orders, some of which were made payable to
Uncle Sam, My Country, Bomber Tund, United States of America,
and President of the United States, came from individuals, schools,
fraternal organizations, labor organizations, groups of citizens, and
employees in various corporations. In many cases employees donated one day's pay which was m.atched by the management. The
largest donation by an individual amounted to $25,000 and the smallest
was one cent.
' Besides checks, money orders, cash, war savings stamps and bonds,
there were donations of wedding rings, gold watches, diamonds, old
coins and medals, and other miscellaneous articles.
CUSTOMS SERVICE IN THE WAR

In addition to its normal functions, the Customs Service is charged
with the physical control of exports, vessels, vehicles, and persons to
insure that no articles are taken from the United States except under,
license or similar authorization; with the physical enforcement of
the provisions of tJie freezing order and the rulings and regulations
issued pursuant thereto insofar as they relate to the exportation and
importation of currency, negotiable instruments, securities, and other
evidences of indebtedness; with the control of American citizens
leaving the United States to insure that they hold valid passports; with
the enforcement of the Trading With the Enemy Act in the censorship
of tangible communications brought into or taken from the United
States otherwise than in the regular course of the mails; and with the
enforcement features of the import activities of the War Production
Board.
Active cooperation is given by the Customs Service to the Army and
Navy intelligence services and to the Federal Bureau of Investigation. The Customs Service is also furnishing substantial assistance to
the Coast Guard in protection of vessels, harbors, ports, and waterfront facilities from sabotage.



REPORT GF THE SECRETARY OF THE. TREASURY

53

SPECIAL PROCUREMENT ACTIVITIES

j Lend-lease
After the enactment of the Lend-Lease Act on March 11, 1941, the
Procurement Division was designated to purchase agricultural, industrial, and other commodities, automotive equipment, and miscellaneous items. This is its most important task in the present war effort,
:and is by far its largest activity at the present time. Purchases were
•comparatively small during ithe fiscal year 1941, amounting to only
$21,037,555, but have, however, greatly accelerated during the past
year, during which they totaled $1,126,438,327. I t is anticipated that
purchases under this program will be at the rate of approximately
$200,000,000 per month during the first 6 months of the fiscal year
1943.
i
Purchases during the latter part of the fiscal year 1942 were made in
^accordance with Directive No. 2 of the War Production Board, dated
March 3, 1942, and the regulations of the Secretary of the Treasury
•designating and authorizing the Director of Procurement and certain
other ofl&cers of the Procurement Division to perform and exercise
the functions and powers vested in and granted to the Treasury Department by Executive Ordeif No. 9023 of January 14, 1942, extending
the provisions of Executive Order No. 9001 of December 27, 1941, to
Treasury Departnient contracts, issued under Title I I of the First
War Powers Act, approved December 18, 1941.
During the past year the increased lend-lease activities of the
Procurement Division have required, in addition to the expansion of
the purchase groups, a field expediting and inspection force covering
all the industrial areas in the! country. The fast delivery of finished
.and raw products, called for!under contracts, has brought about the
necessity of arranging for warehouse facilities whereby materials may
be assembled for shipment preliminary^ to availability of vessels for
forwarding. Following allocation of funds by the Office of Lend-Lease
Administration for storage facilities the Procurement Division coordinated its storage requiremenj:-s with the storage program of the War
Department and will have iii operation at nine points by November
15 a total of 2/^ million square feet of covered storage space and 2
million square feet of uncovered space.
The inspection pffices throughout the coimtry have teletype installations and the same service ;will be available in storage depots to
eliminate as much delay as i possible in the transmission of orders
<jovering the niovement of materials into storage and from storage to
seaboard. .
i
In cooperation with the Office of Defense Transportation, Federal
Emergency Warehouse Associations have been set up in three cities




54

REPORT OF THE SECRETARY OF THE TREASURY

and others are in the process of being established. Agreements are in
force with these associations to make a definite amount of storage
space available to all Government activities in their operating area
and to man and operate other buildings leased by the Government
that can be quickly converted into warehouse space.
,
The movement of the many tons of material purchased under
lend-lease contracts has made it necessary to increase largely the force
handling the movement of traffic. The statistical group in the Procurement Division has been enlarged to take care of the greatly
Increased statistical work necessary to keep current records and make
reports on purchases aggregating $1,147,321,230 during the 16 months
of lend-lease purchasing.
Strategic and critical materials
Strategic and critical materials were contracted for during the
fiscal year 1942, through the medium of the Procurement Division, in
the amount of $6,544,303, under authority of the act of June 7, 1939
(Public No. 117), an act to provide for the common defense by
acquiring stocks of strategic and critical materials essential to the
needs of industry for the manufacture of supplies for the armed forces
and civilian population in time of a national emergency, and to
encourage further development of the materials within the United
States. During the .fiscal year 1942, the sum of $2,220,232 was returned to the fund due to canceled contracts and unexpended balances
of encumbrances. This brought to $46,281,051 the amount obligated
since the inception of the program. Acquisitions under the acts were
made at the direction of the Secretary of War and the Secretary, of the
Navy in accordance with specifications prepared by the Procurement
Division and approved by the Secretary of War and the Secretary of
the Navy.
The materials acquired under this program are stored by the
Division, in accordance with the act, on military and naval reservations or in other locations approved by the Secretary of War and
the Secretary of the Navy. In addition to purchasing materials, the
Division arranged for the inspection and handling of the materials.
Rotation of the materials in order to prevent deterioration, as provided for in,the act, thus far has been unnecessary.
The act of May 28, 1941 (Public Law 76), amended section 6 of the
act of June 7, 1939, to provide that ^'Any funds heretofore or hereafter
received on account of sales or other dispositions of materials under
the provisions of this act shall be deposited to the credit, and be
available for expenditure for the purposes, of any appropriation
available at the time of such deposit, for carrying out the provisions
of sections 1 to 6, inclusive, of this act." Since May 28, 1941, the sum




REPORT OF THE iSECRETARY OF ^HE TREASURY

55

of $82,797 has been re-deppsited to the credit of the strategic and
critical materials appropriation due to this amendment.
Executive Order No. 9123, dated April 7, 1942, authorized and
directed the Procurement Division of the Treasury Departinent *^to
make use of such quartz crystals suitable for piezo-electric use by sale
OT' other disposition for war production purposes to such buyers or
users and in such amounts as may be requested from time tP time by
the Chairman of the War Production Board."
In order to provide for all expenses for the acquisition, transportation, maintenance, storage, and rotation of strategic and critical
materials selected for stockpiling by the Army and Navy Munitions
Board, Congress authorized an appropriation of $100,000,000 to be
made by June 30, 1943, of which $70,000,000 has been appropriated
as of June 30, 1942. All funds are available lintil expended.
Rejugee reliej
During the fiscal year 1942, the refugee relief program was continued by the Congress a n d augmented by the ''Foreign War Relief
Program." Under this program, the Procurement Division proceeded
with the purchase of clothing, medical supplies, textiles, and hospital
app.aratus as in the past.
i
Approximately 46,000,000 units costing $17,053,849 were purchased for delivery to the American Red Cross for export shiprnpnt
.and distribution abroad. Included in this program were purchases
of 23,049,435 yards of fabricicosting $5,923,109 and 1,406,077 pounds
of worsted yarns costing $2,097,921. These textiles and yarns were
distributed to the Red Cross chapters in continental United States
and possessions for fabrication into finished garments which, on
completion, were collected b[y the American Red Cross and shipped
to refugees abroad.
Dejense housing
During the early part of the year, defense housing purchases were
made by the Procurement Division for the account of the Public
Buildings Administration and more recently purchases of similar
items have been made for thb Federal Public Housing Authority. A
total of 226 orders, amounting to $15,433,708 were placed with various contractors for kitchen, Ikundry, and bathroom fittings and other
household equipment. During the preceding year defense housing
purchases totaled $5,360,572]
This program is expanding and during the current year there is
every reason to believe the activity will be increased b y further p u r chases of similar items, plus certain items of household furniture and
furnishings, restaurant and cafeteria equipment, and textiles.




56

REPORT OF THE SECRETARY OF THE TREASURY
FOREIGN FUNDS CONTROL

During the fiscal year 1942, Foreign Funds Control extended its^
prpgram of economic warfare against the Axis. During 1940 and
1941 its efforts had been chiefly fiduciary—protecting the Americanassets of invaded peoples. But in 1942 it moved into a program of
aggressive economic attack.
Six months before the.United States entered the war. Foreign F u n d s
Control froze all Axis assets in this country and stopped trade with
the Axis countries. At the. same time, in cooperation with other
agencies, it began the/'blacklist!' program to squeeze out fascist
fronts in South America. As of Jane 30, 1942, the Control regulatedassets of $8.6 biUions owned or controlled by nationals of 36 blocked
nations.^
Licensing of transactions continued to be the main method of control over blocked assets. During the year the Control considered
330,747 applications to effect specific transactions involving amounts
of nearly $6 billions. About 18 percent of them were denied. In
addition, hundreds of thousands more transactions took place under
"general licenses" promulgated, to facilitate economic activity in safe
areas. Some of the highlights of the licensing control were as follows:
(a) MUlions of dollars worth of strategic materials owned by foreign
interests were disclosed and channeled into the war effort through a
directive license program. Directives also helped to clear congested
port and rail facilities of materials which had been stranded at the
outbreak of the war.
(b) By a rigid control of importations into this country the enemy
was prevented from realizing on securities, currency, and valuable
gems looted from invaded areas.
(c) Before the war over 500 enterprises owned pr dominated by
German, Italian, and Japanese interests were controlled under license.
They ranged in size from the General Aniline and Film Corporation
down to small stores. On the night of Pearl Harbor, Treasury agents
moved in. Since then most of the firms have been liquidated. Some
have been purged of subversive infiuence and continued under license..
Some have been vested by the Alien Property Custodian.
(d) At the request of the Office of Censorship, Foreign Funds Control has undertaken the licensing of communications with the enemy
which involve financial or commercial transactions.
Continued Axis efforts to gain and use economic resources in the
Americas required strenuous counter measures of investigation and
enforcement i o make the licensing control effective. Foreign F u n d s
Control used measures such as the following:.
1 Analyses of the amounts of blocked property and tbe licenses granted by Foreign Funds Control appear
on page 159. Copies of Executive orders, a proclamation; and an act relating to foreign funds control will
be found as exhibits beginning on page 294. The publication "Administration of the Wartime Financial!
and Property Controls of the United States Government" is reproduced as exhibit 51 on page 302,




REPGRT GF THE SECRETARY OF| THE TREASURY
i

,

57
'

•

•

•

(a) Detailed information on American holdings of foreign nationals
was secured in the census of foreign-owned property taken by the
Older of the President. The census, the first of its kind ever undertaken, laid the groundwork for effective cohtrol.
(6) The "scorched earth" program in the'"Philippines which kept
gold, currency, and securities from fallingi into Japanese hands was
carried out by the Control in cooperation with the High Commissioner's Office. To guard against a possible invasion of Hawaii,
currency and securities there were marked I to prevent conversion.
(c) When Japanese residents were evacuated from the West Coast,
F6reign Funds Control was called in by the Army to supervise the
protection and liquidation of the evacuees' property. The Control
acted through the Federal Reserve Bank o|f San Francisco.
(d) Investigations and special studies byl the Control uncovered instances of evasions and violations of the freezing order. These included secretion of alien holdings, failure tp secure licenses, violation
of the terms of licenses, trading with blacklisted firms through
"cloaks," and the like.
(e) To curb these abuses sanctions were actively applied. Some
violators were blocked on an " a d hoc" basis. Treasury men supervised or liquidated questionable firms. Prosecutions in the courts
were begun in other, cases.
,
The combination of licensing control, supervision, investigation, and
enforcement hit the enemy hard on the economic front.
CHANGES IN ORGANIZATION AND PROCEDURE
I

•

•

The United States Coast Guard was directed by Executive Order
No. 8929, November 1, 1941, to operate from the date of the Order
as a part of the United States Navy, subject to the orders of the
Secretary of the Navy.
The powers of the Secretary of the Treasury in connection with the
control of the movements of foreign and domestic vessels in United
States harbors and waters under Section 1 of Title I I of the so-called
Espionage Act, approved June 15, 1917, were transferred by Public
Law 292, 77th Congress, approved November 15, 1941, to the Secretary of the Navy to be exercised by hiin while the Coast Guard
operates as a part of the Navy.
Certain functions under the navigation laws, performed by the
field officers of the Bureau of Customs on ibehalf of the Secretary of
Commerce and the Bureau of Marine Inspection and Navigation of
the Department of Commerce, and the power with respect to the remission and mitigation of fines, penalties;, and forfeitures incurred
under these laws were transferred by Executive Order No. 9083,
February 28, 1942, to the Commissioner of Customs to be exercised




58

REPORT OF THE SECRETARY GF THE TREASURY

by him und,er the direction of the Secretary of the Treasm-y. For a
discussion of these activities s.ee page 152.
Certain functions relating to the numbering of undocumented vessels formerly performed by the Bureau of Customs were transferred
to the United States Coast Guard by the same Executive Order.
. The former Division of Printing of the Treasury Departnient b,ecgtme a part of the Procurement Division under the Secretary's Ord.er
Np. 42, of September 30, 1941.
Copies of Treasury' orders issued during the, year and of the act
and Executive orders referred to above will be found as exhibits 52
to 56 beginning on page 335.
ESTIMATES OF RECEIPTS

The Secretary of the Treasury is required each year to prepare and
submit in his annual report to Congress estimates of the public
revenue for the current fiscal year and for the fiscal year next ensuing
(Public No. ^129, February 26,1907). These estimates are now-made
in December of each year.
In its present forecast of revenues, the Treasury recognizes a situation different in many important respects from any heretofore encountered. The conversion of factories to an all-out war vcffort has
curtailed, and will further curtail, the sources of revenue from many
important excise taxes. On the other hand, industrial production,
employment, and pay rolls will continue upward to new record levels
under the huge increases in Government expenditures scheduled for the
1943 and 1944 fiscal years. This will further expand the bases for the
corporation and individual income taxes. I t is recognized that the
present revenue forecasts may need to be revised from tinae tq time as
changes occur in the general outlook.
The estimates of revenue from most sources are dependent in varying degrees upon prevailing business conditions, hence it is necessary
for the Treasury to forecast the general busmess situation, in terms of
its various components, for approximately a year and a half ahead.
These forecasts are based upon the analysis of a wide variety of
financial and other economic data. They involve forecasts of a number of important economic series which strongly affect the various
sources of Federal revenue, such as the volume of industrial production,
the trends of commodity prices, security prices, employment, pay
rolls, etc. From these, in turn, forecasts are made of corporation
incomes, individual incomes, and the volume of consumption of various
commodities upon which taxes are levied.
The fluctuations in the various indices of business activity and consumer incomes may not be reflected immediately, or ih direct proportion, in the various sources of revenue. This results to some extent
from the relative stability of certain of the tax bases. However, because of greater emphasis on taxes based on income and profits, the



REPGRT GF THE SECRETARY GF THE TREASURY

59

receipts of the Federal Government have become, except for the statutory lag in collections, more sensitive to clianges in business conditions. This is particularly true of the present period, in which the
requirements of war expenditures have resulted not only in much
higher individual income tax rate schedules but also in the reintroduction into the corpPrate income tax systenii of an excess profits tax.
The variation in the length of the interval between the creation of
the tax liability and the receipt by the Goyernment of the tax payment-based on that liability is also importajnt. The tax on the sale
of certain commodities or services is collected in advance of the sale
or use of these commodities. Tbe most important of the taxes collected in this manner are the taxes on cigarettes, distilled spirits aiid
fermented malt liquors, and the use tax on,motor vehicles. On the
other hand, the payment of an estate tax may be deferred as long as
15 months after the date of death.
Because of the magnitude of the, income | tax receipts the lag between the time income is received by the taxpayer and the time of
payment of taxes based on such incomes is of particular sigiiificance.
Thus, in general, the changes in incoiiies iii the calendar year 1942
Avill not be reflected in income tax receipts juntil the income tax returns in respect of calendar year 1942 inconies are filed on or before
March 15, 1943. Because of the privilege bf making quarterly installrnent payments of these tax liabilities, i the receipts will be received throughout the calendar year 1943, thus falling into the receipts
of the fiscal years 1943 and 1944. Hence, the estimated current income tax receipts, both corporation and indiyidual, for the fiscal year
1943 are made up partly of payments on calendar year 1941 incomes
and partly of payments on calendar year 1942 incomes. Similarly,
fiscal year 1944 estimates of income tax receipts include payments
based upon the incomes of each of the calendar years 1942 and 1943.
Receipts during the fiscal year from the collection at the source of
the 5 percent tax bn salaries and wages in excess of an annual rate of
$624, however, are derived principally from incomes during the calendar year ending 6 months before the close of the fiscal year. The tax
is to be collected by the witholding agents currently and paid over to
the Treasury quarterly at the end of the month following the close of
the quarter. Consequently 3 months' (January-March) withholdings in respect of the calendar year 1943 salaries and wages will be
received by the Government in the fiscal year 1943 but the Pther 9
months' withholdings in respect of the calendar year 1943 salaries
and wages plus 3 months' witliholdings of the calendar year 1944. will
be received in the fiscal year 1944.
,
|
The estimates are presented to show both total receipts and net
receipts. Total receipts cover all taxes and nontax revenues coming
into the Treasury which are credited to general and special accounts,



60

REPORT OF THE SECRETARY OF THE TREASURY

while net receipts represent total receipts less -a deduction for the
amount of the net appropriation to the Federal old-age and survivors
insurance trust fund. The appropriation to this fund represents an
amount equivalent to 100 percent of the taxes received under the
Federal Insurance Contributions Act less reimbursement to the General Fund for administrative expenses as provided in the law. In
this discussion of estimated receipts, the term "Total receipts"
means "Total receipts, general and special accounts, on the basis of
daily Treasury statements, unrevised." The term " N e t receipts",
which allows for the deduction for the appropriation to the Federal
old-age and survivors insurance trust fund, means " N e t receipts,
general and special accounts, on the basis of daily Treasury statements, unrevised".
Total receipts, general and special accounts, are estimated (on the
daily Treasury statement basis, unrevised) in the amounts of $24,552
millions in the fiscal year 1943 and $35,407 millions in the fiscal year
1944. The estimated total receipts in the fiscal year 1943 exceed by
$10,884 millions the actual tptal receipts of $13,668 millions in the
fiscal year 1942, while estimated total receipts in the fiscal year 1944
represent an increase of $10,854 millions over the estimated total
receipts in the fiscal year 1943.
The percentage distribution of total receipts in the fiscal years
1943 and 1944, as compared with actual receipts in the fiscal year 1942,
is shown in the following table:
Percentage distribution of total receipts in the fiscal years 1942, 1943, and 1944
Estimated, Estimated,
1944
1943

General and special accounts
Internal revenue:
Income taxes .
:
Miscellaneous internal revenue
Employment taxes .
Total internal revenue
•_..Eailroad unemployment insurance contributions
Customs
Miscellaneous receipts
Total receipts

_ __

78.08
13.94
6.57

.
:
.

- _
_

Actual,
1942

_

71.57
18.39
5.95

68 24
28 15
8 67

97.59
.03
.58
1.80

95.91
.04
1.03
3.02

95 06
06
2 85
2.03

100.00

lOO: 00

100 00

Estimated receipts in the fiscal years 1943 and 1944 and actual
receipts in the fiscal year 1942 are presented in summary form in the
table on page.61. A more detailed tabulation of receipts and estimates
is shown in table 105 beginning on page 675. AU year-to-year differences and percentages appearing in the text are based on this detailed
table.




61

REPOKT OF THE SECRETARY OF THE TREASURY

Actual receipts iri the fiscal year 1942 and estimated receipts in the fiscal years 1943
and 1944
[In millions of dollars];
General and special accounts

j •

1." Internal revenue:
(1) Income and excess profits taxes:
Corporation:
Income
Excess profits tax
_
._
Declared value excess profits tax.

Actual,
. 1942

1
|
i
!
L.
^

_._

_

• 2, 764.0
1, 618. 2
52 2

14,. 230. 0

9,505.0

4, 434. 4

'.
J

_

3, 750.0
5; 670. 0
8.5.0

'

_

3. 870.0
10, 270. 0
90.0

10, 111. 3
2, 800. 5

7,127. 5 '
534.6

3,108. 0

12.911.8

Total corporation
Individual:
Income
Victory tax

JEstimated, Estimated,
1944
1943 .

7, 662.1

3,108. 0

500.0
3.0

400.0
. 4.0

460 1
44

Total individual
Back taxes:
Corporation and individual income
Unjust enrichment tax
.
Total back taxes

_

, .
j
'

_
.

-

.

L

-—-

Total income taxes (collection basis)
'
Adjustment to daily Treasury statement
basis, unrevised
_
J...
Total income taxes (daily Treasury statement
basis, unrevised).
._"'.'

503.0

404.0

464.5

27, 644. 8

17, 571.1

8, 006. 9
—46 4

.
27, 644.8

17,571.1

. 7,960. 5

360.0
609.3
54.5
1, 486. 5
948.2
42.0
395.8
137.0
902.9

300.0
500.0
41.4
1, 376. 2
919.8
40.8
468.4
143.4
725.5

281 9
340 3
92 2
1, 046. 9
780 8
41 7
768 3
80 2
405 4

Total miscellaneous internal revenue (collection
basis)
--J
Adjustment to daily Treasury statement basis,
unrevised
'-._.

4,936. 2

4,615.5

3, 837. 7

Total miscellaneous internal revenue (daily Treasury statement basis, unrevised).
--_ '

4, 936. 2

4, 515. 5

3, 847.1

1, 555. 8
170. 6

1,105.0
147.9

895 6
119 9

1, 726.4

1, 252. 9

1,015.6

244.5

209.2

170 0

1, 970.9

1,462.1

1,186.6

34, 651. 9

23, 548. 7

12,993.1

11.3
204.3

10. 2
252.6

8.5
388 9

639.2

740.7

277.4

(2) Miscellaneous internal revenue:
Capital stock tax
Estate tax
. .. _
. _
Gift tax . . . .
Liquor taxes
. . . . . _ .
Tobacco taxes
stamp taxes
Manufacturers' excise taxes
Retailers' excise taxes
.
..
Miscellaneous taxes

_
_.
_
.- . .

(3) Employment taxes:
Taxes on employment by other than carriers:
Federal Insurance Contributions Act
• • Federal Unemployment Tax Act

'
;
_
;
..
'
.1
'
i

i
L...
i

Total
L-Taxes on carriers and their employees (Chap.' 9,
Subchap. B of Internal Revenue Code) .
I...
Total employraent taxes (daily Treaisiiry statement basis, unrevised)
_

:2.
•
•3
4.

Total internal revenue (daily Treasury state' ment basis, unrevised)
•....
Railroad unemployment insurance contributions (daily Treas• ury'statement basis." unrevised)
i...
Customs (daily Treasury statement basis, unrevised)
Miscellaneous receipts (daily Treasury statement basis, unrevised)
--

+9.4

Total receipts, general and special accounts (daily Treasury
statement basis, unrevised).
.'
'....i...

o

35,406. 7

24,552.3"

13,667.9

Deduct: Net appropriation for Federal old-age and survivors
insurance trust fund representing an amount equal to taxes
collected and deposited under the Federal Insurance Conti*ibutions Act, less reimbursement to General Fund for
administrative expenses J-...
1...

1,625.5

1,076. 2

868.9

33,881.2

23,476.1

12, 799.1

Net receipts, general and special accounts (daily Treasury
statement basis, unrevised)__
_
^

NOTE.—Figm-es are rounded to nearest tenth of a million and will not necessarily add to totals.




62

REiEORT OF T H E SEiORETARY OF T H E TREASURY

Fiscal year 194S
Total receipts in general and special accounts in the fiscal year 1943
are estimated at $24,552 millions, an increase of $10,884 millions over
the actual total receipts of $13,668 millions in the fiscal year 1942.
Net receipts—total receipts less the net appropriation for the Federal
old-age and survivors insurance trust fund—are estimated at $23,476
millioris. This is an increase of $10,677 millions or 83.4 percent over
actual net receipts in the previous fiscal year.
Tremendous expansion of business activity consequent upon the
entry of the United States into the war has raised incomes to higher
levels among practically all classes of income recipients. New tax
legislation has broadened considerably the tax base by lowering the
exemptions. The tax rates are much higher than under previous
tax laws. The combined infiuence of these factors is responsible for
the large increase of the'estimated receipts in the fiscal year 1943 over
the fiscal year 19.42. Receipts in the fiscal year 1943 are affected by
the Revenue Acts of 1941 and 1942 as well as by certain ininor tax
legislation. Because of the statutory lag in receipts, the receipts in
the fiscal year 1943 do not represent the full eff'ect of the legislation in
the calendar years 1941 and 1942. This is particularly true of income
taxes.
Income taxes.—Total incom.e and excess profits tax receipts, including back incom.e tax collections, in the fiscal year 1943 are estimated at $17,571 millions, more than double the receipts in any
previous fiscal year. This represents an increase of $9,611 m.illions
or 120.7 percent over the receipts from this source in the fiscal year
1942.
Total current income and excess profits tax receipts are estimated at
$17,167 millions, an increase of $9,625 millions or 127.6 percent over
actual receipts in the preceding fiscal year. This increase in,current,
receipts is divided almost evenly between receipts frorri corporation
taxes and receipts from individual taxes.
Total corporation current income and excess profits tax receipts are
estimated to be $9,505 millions in the fiscal year 1943. This is an
increase of $5,071 millions or 114.3 percent over actual receipts in the
fiscal year 1942. The excess profits tax receipts provide 79.9 percent
of the total increase in receipts from corporation current income and
excess profits taxes.
Current corporation income tax receipts, normal tax and surtax, are
estimated at $3,750 millions in the fiscal year 1943 and represent an
uicrease of $986 miUions or 35.7 percent over actual fiscal year 1942
receipts of $2,764 millions from this source. Receipts in the fiscal
year 1943 represent the collection of income tax liabilities iiicurred
in respect of the incomes of the calendar years 1941 aiid 1942, whereas


REPORT OF THE SECRETARY OF THE TREASURY

63

the fiscal year 1942 receipts reflect liabilities for the calendar years
1940 and 1941 incomes. While receipts of calendar year liabilities are
not divided evenly between the two fiscal years affected, the proportions are such that, for the purpose of simplifying the explanation of
results, the calendar year common to both may be eliminated in comparing receipts for two fiscal years. Thus, in comparing the fiscal
years 1943 and 1942, the calendar year 1941 may be disregarded and
theincr-ease in receipts in the fiscal year 19,43 over those in the fiscal
year 1942 may be attributed almost entirely to the change in income
levels and methods of taxation in the calendar year 1942 as compared
with the calendar year 1940. However, only part of the full calendar
year 1942 increase in liabilities, roughly 50 percent, is reflected in the
fiscal year 1943 receipts.
!
In rdspect of the calendar year 1940 incomes only one income tax,
the normal tax, was imposed on corporations. Corporations with
normal-tax net income of $25,000 or less were taxed at bracket rates
of 13K percent, 15 percent, and 17 percent. The addition of the
defense tax equal to 10 percent of the regular tax raised the effective
rates to 14.85 percent, 16.5 percent, and 18:.7 percent. Corporations
with normal-tax net income in excess of $25,000 were taxed at a rate of
22.1 percent, which was raised to 24 percent; by the defense tax. This
rate applied to total normal-tax net inqome. Corporations with
normal-tax net income in excess of $25,000 were allowed an alternative
to the above method of computing the tax.; The alternative method
was to tax the portion of normal-tax net incpome under $25,000 at the
bracket rates that are applicable to corporations with normal-tax
net income under $25,000, and to tax the portion in excess of $25,000
at a 35 perc.ent rate. This alternative method resulted in a lower tax
if normal-tax net income did not exceed $38,565.89. Above that net
income it was advantageous to the corporation to compute the normal
tax. at therfiat rate of 24 percent applicable to its entire normal-tax
net income.
°
i
These tax rates were changed only slightly by the Revenue Acts of
1941 and 1942. In 1942 corporations with normal-tax net income of
$25,000 or less were taxed at bracket rates of 15 percent, 17 percent,
and 19 percent. Those with net income in excess of $25,000 were
taxed at 24 percent. Corporations with normal-tax net income in'
excess of $25,000 but not over $50,000 w^ere allowed an alternative to
the above method of computing the norhial tax. The alternative
method was to tax the first $25,000 of normal-tax net income at the
bracket rates applicable to corporations having not more than $25,000
of normal-tax net income, and to tax the portion of normal-tax net
income in exeess^,of $25,000 ativa-rate.of 31 percent.
In addition to this normal tax, corporations were subject to a surtax on 1942 incomes. Corporations with surtax net income of $25,'000
487543—43

6




64

REIPORT OF T H E SEiORETARY OF T H E TREASURY

or less were subject to a tax of 10 percent. Those with surtax net
income in excess of $25,000 but not over $50,000 were subject to rates
of 10 percent on the first $25,000 of surtax net income and 22 percent
on the excess over $25,000. Corporations with surtax net income in
excess of $50,000 were subject to a flat rate of 16 percent applicable to
their entire surtax net income. Surtax net income is greater than
normal-tax net .income by the amount of interest received from pertain United States obligations issued prior to March 1, 1941.
The potential effect of the slight increase in normal tax rates and
the addition of the corporation surtax was reduced by the allowance in
1942 of the adjusted excess profits net. income as a deduction in
computing normal and surtax net income. In 1940 the normal tax
was computed first and allowed as a deduction in computing the excess
profits tax. The income tax base was further decreased in 1942 by the
allowance of a two-year carry-forward of operating losses. In 1940
only one year of the carry-forward was effective.
Excess profits tax receipts in the fiscal year 1943 are estimated at
$5,670 millions, an increase of $4,052 millions or 250.4 percent over
actual receipts of $1,618 millions from this tax in the fiscal year 1942.
As excess profits tax receipts are collected in the same manner as
corporation income taxes, a comparison of the calendar years 1942 and
1940 explains in the main the increase in the fiscal year 1943 over the
fiscal year 1942. In respect of the calendar year 1942 incomes the
base of the excess profits tax computation was net income before
deduction of normal tax and surtax. In computing the calendar year
1940 tax liabilities the corporation normal tax was allowed as a deduction in computing excess profits net income. In 1940 corporations
using the invested capital method in computing their excess profits
credit were allowed a credit of 8 percent of invested capital. In 1942
the credit was reduced to 8 percent on the first $5 millions of invested
capital, 7 percent on the amount in excess of $5 millions but not over
$10 millions, 6 percent on the amount in excess of $10 miUions but not
in excess of $200 millions, and 5 percent on invested capital in excess
of $200 millions. On the other hand, corporations using the average
earnings method could have a greater excess profits credit in 1942 than
in 1940. In 1940 base period net income was an average of the net
income of the years 1936 to 1939, inclusive, with an allowance of one
deficit year as zero. Under the Revenue Act of 1942, which first
applied to calendar year 1942 incomes, the net income of the lowest
year of the base period could be counted at a minimum of 75 percent
of the average net income of the remaining three years in.the base
period.
The excess, profits tax rate applicable in 1942, was substantiaUy
higher than the eff'ective rate in 1940. In 1940 excess profits rates
varied from 25 percent to 50 percent depending upon the absolute



REPORT OF THE SEORETARY OF THE TREASURY

65

size of adjusted excess profits net income. In 1942 a flat rate of 90
percent applies except where the combined income and excess profits
tax exceeds 80 percent of sm'tax net uicome before deduction of the
adjusted excess profits net income, in which case the excess profits
tax is reduced by the amount necessary t|o reduce the combined rate
to 80 percent. Corporations are allowed |a post-war credit of 10 percent of the excess profits tax in the form cif noninterest-bearing bonds
maturing at specified periods after the cessation of hostilities in the
present war. A current credit against the; excess profits tax is allowed
for debt retirement equal to 40 percent I of debt retired during the
taxable year. The debt retirement credit cannot exceed the post-war
excess profits tax credit and is deducted in computing the amount of
the post-war excess profits tax refund du^ t h e corporation.
, The Revenue Act of 1942 made many other changes in corporation
income and excess profits taxes, most of which decreased the yield
of. these taxes. The privilege of consolidated returns was extended
to permit the fUing of consolidated returns for normal tax and surtax
purposes as well as for excess profits tax calculation. If the corporation elects to file consolidated returns it must pay an additional tax
of 2 percent of surtax net income. The method of computing depletion based on a percentage of gross income was extended to fiuorspar,^
ball and sagger clay, and rock asphalt. A credit, allowed against the
corporation surtax only, equal to the aniount of dividends paid on
preferred stock is allowed to public utilities furnishing telephone
service or selling electric energy, gas, or water." Income derived from
the excess output of corporations.engaged in the extraction of certain
minerals was made nontaxable for excess profits tax purposes. The
amount of excess output is based on the relation of production in
the taxable year as compared with production in the base period
1936-1939, inclusive.
|
Certain changes were made which do not affect receipts immediately.
A two-year carry-back of net operating lolsses is allowed in computing
net income. In the calculation of the exc;ess profits credit, a two-year
carry-back of unused excess profits credit is permitted.
Both of these
are in addition to the two-year carry-forward of net operating losses
and unused excess profits credit aheady permitted. Provision is made
to alleviate the problems of corporations whose basic inventories are
depleted because of war shortages. When these inventories are replaced, the corporation may recalculate! its tax using an inventory
valuation based on replacement cost in the year of replacement.
The full effect of these changes will never be reflected in Goyernment
receipts, since part of the effect will result in an increase in Government
expenditures as refunds are made to taxpayers.
_
Receipts from the declared value excess profits tax are estimated at
$85 miUions in the fiscal year 1943 and represent an increase of $33



66

REPORT OF THE SECRETARY OF THE TREASURY

iriillions or 62.8 percent over actual receipts in the fiscal year 1942.
This increase is attributable to the substantially higher income levelsin the calendar year 1942 as compared with the calendar year 1940.
Individual income tax receipts in the fiscal year 1943 are estimated
at $7,662 millions or 146.5 percent more than actual receipts of $3,108
millions in the fiscal year 1942. Of the increase of $4,554 millions,
the amount withheld at the source on salaries and wages in excess of
an annual rate of $624 accounts for $535 millions. Apart from the withholdings, the increase is caused by the rise in income levels, the increase
in tax rates, and the broadening of the income tax base determining
fiscal year 1943 receipts as compared with fiscal year 1942 receipts.
The amounts withheld at the source on sal^aries and wages paid
during the first quarter oi the calendar year 1943, computed at 5
percent oil the excess over an exemption fixed at the annual rate of
$624 per recipient, are included in the tabular presentation of estimates
as Victory tax receipts since the amounts withheld apply first in
liquidating the Victory tax liability. The more important exemptions
from cpllecitioii at the source on salaries' and wages (but not from
ultimate liability for Victory tax) consist of the great bulk of remuneration for s'ervices iii the armed forces, for agricultural labor, for domestic
service, and for casual labor.
As is true for corporation income tax receipts, individual income
tax receipts, excluding the Victory tax, in the fiscal year 1943 are
composed of receipts from liabilities of the calendar years 1941 and
1942 while receipts in £he fiscal year 1942 are derived from liabilities
of the calendar years 1940 and 1941. Of the total individual income
tax receipts of $7,128 millions estimated for the fiscal year 1943,
$1,360 millions refiect partial collections of liabilities for the calendar
year 1941 and $5,768 millions arise from liabilities of the calendar
year 1942. Of total actual receipts of $3,108 millions in the fiscal
year 1942, $544 millions are receipts of collections based on liabilities,
of the calendar year 1940 and $2,564 millions'" refl'e'ct recei|)ts of •
liabilities of the calendar year 1941. ^ In the case of the corporation
income taxes, the explanation of relative fiscal year receipts could be
simplified by the elimination of the calendar year common to both
fiscal years, because of the equal distribution of calendar year liabilities
as receipts in fiscal years. However, as may.be seen from examination
of the ahove figures relating to the individual incipine tax, the receipts
from the liabhities of the calendar year 1941 are not distributed evenly
between the fiscal years 1942 and 1943; consequently, the simplified
discussion used for corporation taxes cannot be^ employe'd for the
individual income tax.
^
>
The 1941-act personalexenip tions of $1,500 fbr,,inarrie4, couples and
heads of faiiiilies and $750 for single persons were reduced to $1,200
arid $500, respectively, in the 1942 act. The base w4s further broad


REPORT OF THE SEORETARY OF THE TREASURY

67

cned by reducing the dependent credit from $400 to $350. However,
for members of the armed forces belo\y |the grade of commissioned
officer an additional allowance of $300 for married couples and heads of
families and $250 for single persons was granted as an exclusion from
gr.Qss income of salary received by,such personnel for active service.
Surtax rates were increased throughout the entire schedule, ranging
from an increase of more than double on the first $2,000 of surtax net
income (from 6 percent to 13 percent) to ah increase of 1/15 on surtax
net income over $5 mUlions (from 77 percent to 82 percent). The
normal tax rate was increased from 4 percent to 6 percent. On the
other hand, the base is reduced by the allowance of deductions for
certain medical expenses and certain State retail sales taxes. Snaall
reductions of tax yield result from additions of certain minerals entitled to 15 percent depletion aUowance, a;two-year carry-back of net
operating losses, a change in the computation of the tax liability of
taxpayers whose fiscal years do not coincide with the calendar year,
and an additional exclusion from gross income of pensions, annuities,
etc., for disability resulting from military service.
Collections of back corporation and individual income taxes are
estimated at $400 mUlions, a decrease of ^60 miUions or 13.1 percent
as compared, with actual receipts in the prjevious fiscal year.
Miscellaneous internal revenue.—Miscellaneous internal revenue
receipts in the fiscal year 1943 are estimated at $4,516 millions, an
increase of $6.68 mUlions or 17.4 p.ercent over actual receipts in the
fiscal year 1942. The bulk of miscellaneous internal revenue is
derived from levies incident to the sale of goods or seryices. The
exceptions to this are capital stock, estate, and gift taxes, the revenues
from which are estimated at $841 millions in the fiscal year 1943.
The basic index of variation in the excise tax receipts is consumer purchases. The impact of war on the,economy has caused an increase
in the consumption of certain commodities and a decline in that of
others. Restrictions upon production account for the latter. Increases in the tax rate are also of prime importance in the case of
receipts from certain of these taxes. The resulting estimated collections from miscellaneous internal reveriue taxes, excluding those
from capital stock," estate, and gift taxes, iare $3,674 miUions in the
fiscal year 1943, an increase of $551 millions or 17.6 percent over the
estimated receipts" in the fiscal year 1942. |
Receipts from^ the capital stock tax are estimated at $300 millions
in the fiscal year 1943 as compared with actual receipts of $282
millions in the previous fiscal year. Receipts in both years reflect a
tax rate of $1.25 per thousand dollars of j declared valuation. The
capital stock valuation reflected in receipts iri the fiscal year 1943 is the
basis for determining excess profits for declared value excess profits
tax calculation in respect of earnings in: the calendar year 1942.



68

REPORT OF T H E SEiORETARY OF T H E TREASURY

Receipts in the fiscal year 1942 would represent the valuation of capital
stock for declared value excess profits tax computation in the calendar
year 1941. However, the difference in receipts does not reflect the'
relative income levels in the two calendar years. Receipts in the
fiscal year 1942 represent a valuation which, under the law in effect at
that time, would serve as the basic valuation not only for the calendar
year 1942 but also for the succeeding two years. The Revenue Act of
1942 revised this three-year valuation method so as to allow corpora-tions a completely new valuation every year instead of every three
years.
Estate tax receipts are estimated to be $500 millions in the fiscal
year 1943. This is an increase of $160 millions or 46.9 percent over
actual receipts of $340 millions in the fiscal year 1942. The estimated
increase is a result primarily of the higher rates of the Revenue Act
of 1941 applicable to approximately 50 percent of the returns filed
in the fiscal year 1943. A lag of approximately 15 months between
the date of death and the date of filing the return is responsible for
the fact that only a part of the returns filed in the fiscal year 1943
will be subject to the higher rates of the Revenue Act of 1941.
Gift tax receipts in the fiscal year 1943 are estimated at $41 millions. This is a decrease of $51 millions or 55.1 percent, as compared with actual receipts of $92 miUions in the fiscal year 1942.
The receipts in the fiscal year 1942 were the result of a large volume
of gifts made in the calendar year 1941 caused in large measure by
the increased estate, income, and gift tax rates contained in the Revenue Act of 1941. The estimated receipts in the fiscal year 1943,.
however, represent gift taxes based on a normal year of gifts made
without comparable special incentives and following a year in which
an abnormal volume of gifts had been made. The estimated receipts
represent a large decrease from the fiscal year 1942 even though the
increased rates of the Revenue Act of 1941 are applicable to the giftsupon which the fiscal year 1943 receipts will be based.
Total receipts from the liquor taxes are estimated at $1,376 millions,,
an increase of $329 millions or 31.5 percent over receipts in the
previous .fiscal year. Receipts from taxes on distilled spirits and fermented malt liquors account for $1,238 millions of 89.9 percent of the
estimated total receipts from this group. Receipts from the excise
tax on distilled spirits are estimated to increase $228 millions or 39.7
percent, to a total of $802 millions in the current fiscal year. The
higher yield is almost entirely the result of an increase in the tax rate
from $4 to $6 a gallon imposed by the Revenue Act of 1942, effective
November 1, 1942. Receipts from the excise tax on fermented malt
liquors are estimated to increase $69 millions or 18.9 percent to a
total of $435 millions. An increase in the tax rate from $6 to $7 a
barrel imposed by the Revenue Act of 1942, effective November 1,



REPORT OF THE SEORETARY O J THE TREASURY
F

69

1942, is largely responsible for the estiniated increase in receipts.
Receipts from the excise tax on wines are :estimated at $33 millions,
an increase of 36.7 percent over ihq receipts in the previous fiscal
year. This gain is expected to be caused primarily by the higher
tax rates now in effect. Floor stocks taxes, a nonrecurring item, on
distilled spirits, wines; and fermented malt liquors are estimated to
yield $69 miUions.
I
Receipts from the tobacco taxes are expected to total $920 millions,
an increase of $139 millions or 17.8 percent over the yield of these
taxes in the previous fiscal year. Of this total, the receipts from the
tax on cigarettes will cons tribute $832 millions. This item will
represent the largest single source of reveriue from the excise taxes.
An increase of 18.1 percent in estimated receipts from the cigarette
tax is accounted for by an increase in the tax rate from $3.25 to $3.50
per thousand cigarettes, effective November 1, 1942, and by a further
uicrease in consumption. The yield from'the tax on chewing and
smoking tobacco is estimated at $51 millions, a decline of 3.1 percent.
Higher tax rates on cigars and a reclassification by tax groups, together with a growth in consumption, are expected to increase receipts
from the cigar tax to $22 millions, a gain ofi55.8 percent.
Receipts from stamp taxes on issues of securities, bond and stock
transfers, etc., and on playing cards and silver bullion sales are
estimated at $41 millions, a decrease^of 2.21 percent.. No changes in'
tax rates were made in this group by the Revenue Act of 1942.
The manufacturers' excise taxes, imposM on many consumers'
goods which have been affected by the conversion of factories to war
material production and by restrictions on civilian use of gasoline
and rubber, are expected to yield $468 milliohs in the fiscal year 1943.
This represents a decline of $300 millions or ^9.0 percent. The tax on
gasoline, with receipts estimated at $256 miUions, will continue as the
most important source of revenue in this group. However, this yield
represents a decline of $113 millions or 30.7 percent cornpared with
receipts in the preceding fiscal year. The! decrease is expected to
result from the adoption on December 1, 1942, of a program of rubber
conservation which has necessitated the Nation-wide rationing of
gasoline. Receipts from the tax on lubricating oils are estimated at
$48 millions, an increase of 2.9 percent. While the use of lubricating
oils by automobiles is* expected to be curtailed, the effect of this on
revenues will be more than offset by an increase in industrial use and
by an increase in the tax rate from 4}^ cents to '6 cents a gallon, effective
November 1, 1942. The tax on electrical energy for household and
commercial use is estimated to yield $51 millions. The increase of
2.4 percent is expected to be caused by a further moderate expansion
in consumption.
i




70

REPORT OF T H E SEIORETARY OF T H E

TREASURY

Estimated receipts from many taxes in this group show large declines
from comparable receipts of the previous fiscal year. Because of automobile rationing and the cessation of production for civilian us.e,
receipts from the tax on passenger automobiles are expected to.drop
from $77 millions to $2 millions, or 97.4 percent. The curtailment in
production of tires and inner tubes for taxable uses is respbhsible for a
decline of $40 millions (70.8 percent) in the estimated receipts from
the tax on these items. Receipts from the taxes on such articles as
autoinobile parts and accessories, electric, gas, and oil appliances,
radios, phonographs, and musical instruments, refrigerators, business
and store machines, and firearms and shells all show substantial
declines because of the conversion of these industries to the production
of war goods.
Certain taxes in this group were repealed by the Revenue Act of
1942. These include the excise taxes on articles made of rubber, on
electric signs, on commercial washing machines, arid on optical equipment. Receipts from the taxes on these items were received during
part only of the fiscal year 1942, since the taxes became effective on
October 1, 1941. The base for the tax on refrigerators and refrigerating equipment \yas changed by the Revenue Act of 1942 to cover only
household refrigerators, parts, and self-contained air-conditioning
units. Substantial increases are shown in the fiscal year 1943 in
estimated receipts from the taxes on matches, luggage, and sporting
goods because these taxes were in effect during part only of the fiscal
year 1942. Declines would he indicated in each case if comparisons
were made between receipts for two years throughout each of whiph
the taxes were in effect.
The retailers' excise taxes on jewelry, etc., on furs, and on tqilet
preparations are estimated to yield $143 millions in the fispal 3 ear
7
1943, an increase of $63 millions or 78.9 percent over the receipts in
the previous fiscal year. For each of these three taxes the relatively
large increase in estimated revenues results from the fact that the tax
was in effect during part only of the previous fiscal year. Increased
retail sales in response to higher consumer incomes also contributed
to the increase.
The miscellaneous tax group is estimated to jield $726 m.U]ioris, an
increase of $320 millions or 79.0 percent over the receipts in the fiscal
year 1942. The increase is caused principally by rate increases on
certain taxes made by the Revenue Act of 1942, and by the fact that
other important taxes were in effect during part only of the fiscal year
1942. Receipts from the tax on telephorie, telegraph, radio, and
cable facUities, etc., are estimated at $85 mUlions, an increase of $36
mUlions over receipts in the preceding year. An advance in the tax
rates, eft'ective November 1, 1942, from a differential rate plan approximating an average of 14.6 percent to a'flat rate of 20 percent on tele


REPORT OF THE SEORETARY OF! THE TREASURY

71

I .

phone messages and from 10 percent to: 15 percent on telegraph
messages, and some further expansion in the use of these facilities
account for the estimated increase in revenues. The tax on local
telephone service is estim.ated to yield $741 mallioris in the fiscal year
1943, an increase of $48 mUlions over receipts in the previous year. A
charige in the tax rate from 6 percent to lOj percent, eff'ective November 1, 1942, an expected further increase in local telephone service,
and the fact that the tax was in effect during part only of the previous
year account for the large increase in estimated revenues.
The tax rate on the transportation of persons was increased from
5 percent to 10 percent by the Revenue Act of 1942. The higher tax
rate, combined with an expected further increase in civilian travel,
raises the estimated receipts from this tax to $84 millions in the fispal
year 1943. This yield compares with receipts of $21 millions in the
previous fiscal year, during which the taxi was not in effect for the
entire period. The Revenue Act of 1942 imposed a tax of 3 percent on
the transportation of property with certain exceptions. In the Case
of coal, the act substituted a levy of 4 cents a short ton. Receipts
from the new tax are estimated at $77 millions in the fiscal year 1943.
Receipts,from the tax on admissions are Estimated at $155 milhons.,
a^ri increase of $40 millions, or 34.6 percent.!. Not only are rising consumer incomes expected to stimulate attendance at theaters, etc., but
an extension of the tax base to include admissions under 21 cents was
not in effect for the entire fiscal year 1942, the period with which
comparison is made.
i
The use tax on motor vehicles and boats is estimated to yield $150
millions, an, increase Pf $78 miUiPns over the receipts in the previous
fiscal year. The tax was in effect during 5 mionths only of the previous
fiscal year. Gasoline rationing, tire shortages, and other factors are
expected to reduce the number of motor vehicles and boats subject to
the tax in the fiscal year 1943 as compared with the preceding year.
Receipts from the tax on manufacture pf sugar are estimated at
$48 millions, a decline of $20 millions or 29.8' percent from the receipts
in the previous fiscal year. The decrease follows the expected
reduction in the quantity of sugar to be manufactured in the United
States during the fiscal year 1943.
Employment taxes.—Total employment taxes included in internal
revenue are estimated at $1,462 millions, ani increase of $277 millioris
or 23.3 percent over actual receipts of $1,186 millions in the fiscal
year 1942.
^
\
•
The estimated increase in receipts is attributable alinost entirely to
a higher level of pay rolls. The increase in the Federal Insurance
Contributions Act tax rate from 1 percent to 2 percent on employer
and employee (total 4 percent) which was to become effective ori
January 1, 1943, under the Social Security Act Amendm^ents of 1939,



72

REPORT OF T H E SEiORETARY OF T H E TREASURY

was postponed until January 1, 1944, by the provisions of the Revenue
Actof 1942.
Receipts under the Federal Insurance Contributions Act are estimated at $1,105 millions. This amount exceeds the actual receipts
of $896 miUions in the fiscafyear 1942 by $209 miUions or 23.4 percent.
Receipts under the Federal Unemployment Tax Act are estimated ~
at $148 millions. As compared with actual receipts of $120 millions
in the fiscal year 1942; this represents an increase of $28 mUlions or
23.3 percent.
Receipts under the Carriers Taxing Act of 1937 are estimated at
$209 millions. This is a 23.1 percent increase over actual receipts
of $170 millions in the fiscal year 1942. The increase is the result of
an increase in taxable compensation, reflecting the effect of an increase in work hours and a higher wage rate level resulting from the
wage rate increase for railway labor, effective in its entirety beginning
December 1, 1941, ^as-approved by the President's Emergency Board
under the Railway Labor Act. A portion of the increase is the result
of an increase in tax rate, effective in January 1943 from 3 percent to
3}^ percent on both employers and employees (total 6)2 percent).
Total internal revenue.—Total internal revenue, which is the sumniation of the estimated receipts discussed in detail above, is estimated
at $23,549 millions in the fiscal year 1943 compared with actual
receipts of $12,993 millions in the fiscal year 1942, an increase of
$10,556 millions or 81.2 percent. A detailed tabulation of the foregoing estimates is in the table on page 675.
Railroad unemployment insurance contributions.—Railroad unemploj'^ment insurance contributions are estimated at $10 millions, an
increase of $2 millions over the actual receipts of $8 millions in the
fiscal year 1942.
Customs.—Customs receipts, including import taxes collected and
paid in the same manner as duties imposed by the Tariff Act of 1930,
are estimated at $253 millions. This is a decrease of $136 millions
or 35.1 percent from the actual receipts of $389 millions in the fiscal
year 1942.
°
.
The decrease results from a decline in the volume of imports, consequent upon Government import restrictions to conserve available cargo
space, shipping difficulties, and the diversipn pf shipping space to war
needs. The free entry of strategic materials, as provided for in •
Executive Order No. 9177, will also cdntribute to a decrease in
customs receipts.
Miscellaneous receipts.—Miscellaneous receipts in the fiscal year
1943 are estimated at $741 millions, an increase of $463 millions or
167.1 percent over the receipts in the fiscal year 1942. Of this increase,
$350 millions represent estimated excessive profits from renegotiation
of contracts,, as provided in section 403 of the Sixth Supplemental



REPORT OF THE SEORETARY 'Ot THE TREASURY
National Defense Appropriation Act
April 28, 1942), as amended.

73

(Public No. 528, approved
I
. ,

Fiscal year 1944
Total receiptS'in general and special accounts in the fiscal year 1944
are estimated at $35,407 millions, an increase of $10,854 mUlions over
-estimated total receipts in the fiscal year |l943. Net receipts^total
receipts less the net appropriation for the Federal old-age and survivors
insurance trust fund—are estimated at $3;3,881 mUlions. This is an
increase of $10,405 millions or 44.3 percent over estimated net receipts of $23,476 millions for the fiscal year 1943. Each major source
of revenue contributes to the increase with the exception of manufacturers' and retailers' excise taxes and customs. Of the increase of
$10,854 millions in estimated total receipts in the fiscal year 1944,
$10,074 millions or 92.8 percent of the total increase comes from
income taxes.
j
Income taxes.—Estimated income and excess profits tax receipts
reach a new all-time high of $27,645 millions, an increase over the
fiscal year 1943 of $10,074 millions or 57.3 percent. About 52 percent
of the increase is in individual income taxes (including the net effect
of the Victory tax).
!
Total corporation income and excess profits taxes, excluding collections of back income taxes, are estimated at $14,230 millions, an
increase of $4,725 miUions or 49.7 percent'over estimated receipts in
the. fiscal year 1943. Practically all of this| increase is reflected in the
increase of $4,600 millions in collections ;of the excess proflts tax.
Current receipts of the individual income tax including the Victory
tax are estunated at $12,912 millions in the fiscal year 1944, an increase
of $5,250 mUlions or 68.5 percent over estimated receipts in the
fiscal year 1943.
Corporation income tax receipts in the fiscal year 1944 are estimated
at $3,870 Iriillions, an increase of $120 mijilions or 3.2 percent over
estimated receipts in the previous fiscal year. In the comparison of
receipts in the fiscal years 1942 and 1943, l^he difference was ascribed
to the relative income levels of the calendar years 1942 and 1940 as
collections of the liability year 1941 are distributed evenly between
the two fiscal years. In a comparison of receipts in the fiscal years
1943 and 1944, the explanation of results may be limited to a comparison of the tax liabilities in respect of the incomes for the calendar
years 1943 and 1941. This applies not only I to the corporation income
tax but to the excess profits and declared ;value excess profits taxes
as well.
In both the calendar years 1941 and 1943! corporations were subject
to a normal tax and a surtax. In both years the normal tax rates were



74

REPORT OF THE SfcORETARY OF THE TREASURY

substantially the same. For corporations with normal-tax net income
of-$25,000 or less the rates were 15 percent on the first $5,000, 17 percent on the amount in excess of $5,000 but not over $20,000,
and 19 percent on the excess over $20,000. I n 1941 and 1943, corporations with norm.al-tax net incomes in excess of $25,000 were subject
to a flat rate of 24 percent on the entire normal-tax net income. An
alternative method of computing the tax was allowed which permitted
corporations to compute the tax on the first $25,000 of normal-tax net
income at the bracket rates applicable to corporations with normaltax net income of less than $25,000. Under this alternative method
normal-tax net income in excess of $25,000 was subject to a rate of 37
percent. Corporations with normal-tax net income of less than $38,461.54 could use the alternative method with advantage. Under the
1942 Revenue Act in effect in the calendar year 1943, the rate on
norm;al-tax net incom.e in excess of $25,000 was reduced to 31 percent.
This raised to net incom.e of $50,000 the point at which the alternative
method of com.puting the tax resulted in a tax saving to the corporation. This-was the only change in normal tax rates.
In 1941 the corporation surtax rate was 6 percent on corporation
surtax net income not in excess of $25,000 and 7 percent on surtax net
income in excess of $25,000. These bracket rates of tax applied to the
surtax net income of all corporations. In 1943 corporations with
surtax net income of less than $25,000 are taxed at 10 percent. Corporations with surtax net income in excess of $25,000 but not over
$50,000 are taxed at 10 percent on the first $25,000 of surtax net income
and at 22 percent on the excess over $25,000. .Corporations with
surtax net income over $50,000 are-subject to a'flat rate of 16 percentapplicable to their: entire surtax net income.
Despite the effect of higher surtax rates and substantially increased
income levels in the calendar year 1943, as compared with those in the
calendar year 1941, estimated regular corporation income tax receipts
in. the fiscal year 1944 are not much higher than estimated receipts in
the fiscal year 1943. This situation results from the decrease in the
tax base caused by the allowance of the deduction of adjusted excess
profits net incom.e in computing incom.e tax net incom.e for the calendar year 1943, as compared with the allowance of the excess profits
tax as a deduction in com.puting liabilities on incom.es in the calendar
year 1941, when the maximum excess profits tax rate'was 60 percent.
Under existing law, and with rising corporate incom.es, the base of
the income tax will rem.ain relatively stable as a considerable portion
of increased profits is subject to excess profits tax.
CorpPration excess profits tax receipts in the fiscal year 1944 are
estimated at $10,270 millions, an increase of 81.1 percent over estimated
receipts of $5,670 millions in the fiscal year 1943. The increase results
from the substantially higher income levels and increased tax rates in



REPORT OF THE SECRETARY OF THE' TREASURY

.

75

the calendar year 1943 as compared with those in the calendar year
1941. In the calendar year 1941 corporations were subject to excess
profits tax rates varying from 35 percent to 60 percent, depending on
the absolute amount of excess profits, the highest rate applicable to
adjusted excess profits net income in excess of $500,000. With respect
to their calendar year 1943 incomes, corporations are subject to a flat
rate of 90 percent on adjusted excess profits net income. Thi^ is
reduced where the combined income and excess profits tax exceeds 80
percent of surtax net income computed without the deduction pf
adjusted excess profits net income, so that the combined income
and excess profits taxes will equal 80 percent. Corporations are
allowed a credit o f l O percent pf the excess profits tax as a ppst-war
refund. A current credit is allowed equal to 40 p.ercent of debt
retired but npt to exceed the post-war credit. In each year corporations may determine their excess profits tax liability by c'omputing
their excess prpfits credit under either the average earnings method or
the invested capital methqd. Corporations using the average earnings method receive more favorable treatment in 1943 than they did
in 1941 since in 1943 the lowest year of the base period is counted at a
minimum of 75 percent of the other three years in computing base
period net income. This 75 percent minimum was not allowed i n the
calendar year 1941. However, some corporations using the invested
capital method will have a smaller excess profits .credit in 1943. I n
1941 cprporations were allowed a credit equal to 8 percent on the first
$5 miUions of invested capital and 7 percent on the excess. The 1942
Revenue Act reduced this credit to 8 percent on the first $5 millions of
invested capital, 7 percent on the next $5 millions, 6 percent on the
next $190 millions, and 5 percent on the excess over $20.0 millions.
Other legislative changes made by the Revenue;Act of 1942 ajBFecting
the corporation income and excess profits taxes were indicated in the
explanation of comparative receipts in the fiscal years 1942 and 1943.
Declared value excess profits tax receipts in the fiscal year 1944 are
estimated at $90 millions, an increase of $5 millions or 5.9 percent over
estimated receipts in the fiscal year 1943. Estimated calendar y^ar
' 1943 income levels are substantially higher than those of the calendar
year 1941 but the effept of relative income levels is pffset to some
extent by the substantial change in economic conditions during 1941,
making it difficult for cprporations to provide against declared value
excess prpfits tax liabilities by accurate capital stock valuations. I t is
b,elieyed that this condition will not exist in the calendar year 1Q43 to
the same extent as in the calendar year 1941.
Total individual income tax receipts in th^ fi^c.al year 1944 arp
estimatgjd at $12,912 millioris, ^n increase of $5,250 millipns f)j: 68.5
percerif over estiiria^te^d total individual income tax receipts in 1.943 of




76

REPORT OF THE SECRETARY OF THE TREASURY

$7,662 millions. The income tax which is estimated to increase
$2,984 millions or 41.9 percent provides $10,111 millions of the fiscal
year 1944 total. Net Victory tax payments plus receipts from withholdings at source are estimated at $2,801 millions in the fiscal year
1944. I t is estimated that the post-war credit allowed under the Victory tax will be taken almost entirely as a current credit in the fiscal
year 1944.
The collection at the source in any calendar year is a. prepayment on
the tax liability of that calendar year which is ultim.ately due in March
of the succeeding year. If the amount collected at the source exceeds
the Victory tax liability, the excess is applied against the incom.e tax
liability. The gross Victory tax liability is computed =at 5 percent on
the Victory tax net income during the calendar year of every individual, after allowance of a fixed exemption of $624, but is limited to
the difference between 90 percent of net income for regular income tax
purposes and the regular net income tax liability. Victory tax net income is gross income in the case of wages, salaries, interest, and
dividends, but is net income after allowable deductions in the case of
rent and business, professional, and farm income. A post-war credit
is provided of 40 percent of the gross Victory tax for married couples
or heads of families not to exceed $1,000, 25 percent for single persons
not to exceed $500, and 2 percent for each dependent not to exceed
$100 each. Subject to certain limitations, the entire credit may be
absorbed currently to the extent of specified payment of premiums on
life insurance, net repayment of debts, and net purchases of eligible
United States obligations.
Collections of back income taxes are estimated at $500 mUlions in
the fiscal year 1944, an increase of $100 millions or 25.0 percent over
estimated receipts in the previous fiscal year.
Miscellaneous internal revenue.—Toteil miscellaneous internal
revenue receipts in the fiscal year 1944 are estimated at $4,936 millions.
This is an increase of $421 millions or 9.3 percent over receipts from
this spurce in the fiscal year 1943. About 70 percent of the increase
comes from miscellaneous taxes and the taxes on liquors. The estimated yield from manufacturers' excise taxes dropped $73 millions
below the fiscal year 1943 figure. This decline is due almost entirely
to the restrictions upon the manufacture of consumers' durable goods.
Capital stock tax receipts in the fiscal year 1944 are estimated at
$360 millions,"an increase of $60 millions or 20.0 percent over estimated
receipts in the preceding fiscal year. This increase results from the
estimated increase in income levels in the calendar year 1943 as compared with the calendar year 1942.
Estate tax receipts are estim.ated at $6.09 millipns in the fiscal year
1944, an increase of $109 millions or 21.9 percent over estimated
receipts in the fiscal year 1943. The increase is accounted for prin


REPORT OF THE SECRETARY OF THE TREASURY

77

cipally by the fact that for the first time the 1941 act rates will apply
to practically all returns filed. The changes made by the 1942 act
apply to part only of the returns filed in the fiscal year 1944 but will
result in some increase of revenue. Thus, it is estimated that the
change which substitutes one $60,000 specific exemption for the
former specific exemption and insurance exclusion of $40,000 each,
resulting in some loss of revenue,'will be more than offset by a gain
from certain changes in the powers of appointment and in the treatment of community property as jointly owned property.
Gift tax receipts in the fiscal year 1944 are estimated to be $55
rnillions. This represents an increase of $13 millions or 31.6 percent
over the estimated receipts in the fiscal year 1943. The increase ds
caused by the reduction of the annual exclusion from $4,000 to $3,000
for each donee and of the specific exemption from $40,000 to $30,000,
made by the 1942 act, as well as by an increase in the estimated total
value of gifts.
Receipts from the liquor taxes are estimated at $1,487 millions in
the fiscal year 1944, an increase of $110 millions or 8.0 percent over
the estimated receipts in the previous fiscal year. Of the estimated
total receipts, 62.7 percent is accounted for by the tax on distilled
spirits, which in this year supplants the cigarette tax as the largest
single source of excise tax revenue, and 31.3 percent is accounted for
by the tax on fermented malt liquors. The increase in receipts for
this group reflects a full year's collections at the higher tax rates on
distilled spirits, wines, and fermented malt liquors provided in the
Revenue Act of 1942, as compared with a partial year's collections
at these rates in the previous flscal year. Actual withdrawals of distilled spirits are expected to decline in the fiscal year 1944 because
of a reduced quantity of these products available for consumption
under the program for diversion of alcohol to war uses. Withdrawals
of wine are expected to be reduced somewhat because of reduced
production, and withdrawals of fermented malt liquors are expected
to remain unchanged.
Total tobacco tax receipts are estimated at $948 millions in the
fiscal year 1944, representing an increase of $28 mUlions or 3.1 percent
over estimated receipts in the fiscal year 1943. Of this group, the
largest single source of revenue is from the tax on cigarettes. This
tax is estimated to yield $30 millions or 3.6 percent more than in the
previous fiscal year. This increase is ascribed principaUy to increased
consumer income making possible the purchase of more cigarettes and
to some shift from the use of manufactured ^obacco to the smoking of
cigarettes. The tax showing the largest percentage increase in
receipts is that on large cigars, estimated to yield $28 millions in the
fiscal year 1944, an increase of $6 mUlions or 27.1 percent. The greatest part of this estimated increase in yield results from the fact that



78

REPORT OF THE SEORETARY OF THE TREASURY

the higher tax rates imposed by the Revenue Act of 1942 are refiected
in only 8 months of the fiscal year 1943 receipts.
Total stamp tax receipts in the fiscal year 1944 are estimated to
yield $42 millions, an increase of $1 million or 2.8 percent over the
fiscal year 1943.
The manufacturers' excise taxes are estimated to yield $396 millipns,
a decrease of $73 millions or 15.5 percent. This decline is caused by
production curtailments, shortages of materials, rationing of autp-.
mobiles, etc. The largest single source of revenue in this group is
from the tax on gasoline, which is estimated to yield $219 millions, a
decrease of $37 rnUlions or 14.4 percent from the previpus year. The
estimates assume that the Nation-wide rationing of m.otor fuel will
extend throughout the fiscal year 1944, whereas rationing on a comparable scale extended through six months only in the fiscal year 1943The orily rnanufacturers' excise taxes showing increased yiel,ds pyer
the fiscal year 1943 are those on lubricating oUs and on tires and tubes.
Receipts from the tax on lubricating oils are expected to reach $58
miUions, an increase of $10 millipns or 21.3 percent over the preyiojiis
year. This is "caused by increased consumption for industrial^ uses,
although a further decline in its use for automotive purposes is anticipated. The tax on tires and tubes is estimated to yield $23 millions,
an increase of $7 mUhons or 41.0 percent. This gain is largely attributable to some rise in tire production under the reclainied rubb.er
program, and to the necessity for maintaining truck tires for essential
uses. ..
•
.
Receipts from other taxes in the manufacturers' excise group are
expected to decrease. The tax on electrical energy is estimated to
yield $51 millions, a decrease of $1 million from estimated receip|bs
in the previous fiscal year. Receipts from the tax on parts and accessories for automobiles are estimated at $12 millions, a decrease .of $6
millions or 32.2 percent, hkewise the result of an expected purtailment
of production for civilian use. The tax on photographic apparatus is
expected to yield $4 millions, a decrease of $4 mUlions or 45.0 p.ercent
from the -previous fiscal year. The amount of decrease, in taxable
sales as compared with those of the previous fiscal year is actually
greater, inasmuch as receipts in the fiscal year 1943 reflect pnly
7 months' taxation at the increased rate.
The retaUers' excise taxes are estimated to yield $137 millions, a
decrease of $6 mUlions or 4.5 percent. This decline is claused,chiefly
by shortages of metals, etc., for jewelry, arid of alcphol, glycerin, ,etp..,
for toilet preparations.
.
The miscellaneous t.ax group is estimated to yield $903 milhons, an
increase of $177 millions or 24.5 percenjb pyer theTeceipts in the fispal
year 1943. This increase cpmps principally from the tsixes pn-telephone, telegraph, etc.. local telephnne service, and transpprtp;t=i,ori pf



REPORT OF THE SECRETARY OF THE TREASURY

79

property. The communication taxes are expected to yield $204
millions, an increase of $45 millions or 28.4 percent. This results
from some further increase in the taxable use of telephone and telegraph facilities, and to the fact that the increased rates will be in
effect for the entire year, whereas they were reflected in pnly 7 months
of receipts in the fiscal year 1943. The tax most responsible for the
increase in the miscellaneous group is that on the transportation of
property. The higher receipts are caused by an expected further
increase in business activity, and to the fact that the fiscal year 1943
estimate of receipts reflects less than a half-ye.ar's receipts, whereas
those of the fiscal year 1944 reflect a full year's receipts.
The receipts from the tax on admissions are estimated at $161 millions, an increase of $6 millions or 3.7 percent. The use tax on motor
vehicles and boats is estimated to yield $125 mUlions, a decrease of
$25 millions or 16.6 percent from the previous year. This decline is
the result of a smaller number of taxable vehicles and boats expected
to be in use because of the rationing of tires and gasohne.
Employment taxes.—Total employment taxes included in internal
revenue receipts are estimated to be $1,971 millions, an increase of
$509 millions or 34.8 percent over the estimated receipts in the flscal
year 1943. The increase results partly from a higher level of taxable compensation and partly from increased tax rates affecting contributions under the Federal Insurance Contributions Act and the
Carriers Taxing Act of 1937.
Receipts under the Federal Insurance Contributions Act are estimated at $1,556 mUlions. This is an increase of $451 millions or
40.8 percent oyer estimated receipts in the preceding fiscal year.
The change in rate, effective January 1, 1944, raises the tax on both
employees and employers from 1 percent to 2 percent (total 4 percent). The,increase in contributions will affect the receipts of only
the last three months of the fiscal year 1944 (since there is a lag of
one calendar quarter between the period of liability and the period
of receipts) but will ampunt to 71 percent of the estimated increase
in receipts under this act.
Receipts under the Federal Unemployment Tax Act are estimated at
$171 millions, an increase of $23 millions or 15.3 percent over the estimated receipts in the fiscal year 1943. The increase is the reflection of
a higher pay-roll level.
Receipts under the Carriers Taxing Act of 1937 are estimated, at
$245, millions, an increase over the estimated receipts in the fiscal
year 1943 of $35 millions or 16.9 percent. The increase is the result
of higher railroad pay rolls and an increase in the tax rate. • The higher
rate (3K percent on both employees and employers as compared with
the previous rate of 3 percent on each) will affect contributions throughout the fiscal year 1944.
487543—43—7



80

REPORT OF THE SECRETARY OF THE TREASURY

Total internal revenue.—Total internal revenue, which is the summation of the estimated receipts discussed in detail above, is estimated at
$34,552'millions,in the fiscal year 1944 compared with $23,549 millions
in the fiscal year 1943, an increase of $11,003 millions or 46.7 percent.
A detailed tabulation of the foregoing estimates is in the table on
page 675.
Railroad unemployment insurance contributions.—Railroad unemployment insurance contributions are estimated to be $11 millions, an
increase of $1 million over the estimate for the fiscal year 1943.
These receipts represent 10 percent of the 3 percent tax on covered pay
rolls, the other 90 percent being deposited to the credit of the Railroad
Unemployment Insurance Account iri the Unemployment Trust Fund.
Customs.-^Customs receipts in the fiscal year 1944 are expected to
decline to $204 millions from estimated receipts of $253 millions iri
the fiscal year 1943. Wartime activity is expected to increase the
need for concentrating all available shipping space into the movement of strategic materials and supplies. Receipts from duties on
stocks which will be withdrawn from storage are expected partially
to offset the estimated decline in receipts from duties on many current imports.
Miscellaneous recei^^s.^Miscellaneous receipts in the fiscal year
1944 are estimated at $639 millions. This is a decrease of $102 millions as compared with 1943, a declirie of 13.7 percent. Of the $639
millions, it is estimated that only $250 millions will be received in the
fiscal year 1944 from renegotiated contracts, whereas $350 millions
were estimated from this source in the fiscal year 1943.
ESTIMATES OF EXPENDITURES

Actual expenditures for the fiscal year 1942 and estimates for the
fiscal years 1943 and 1944 are summarized in the following table.
Further details willbe found in table 105, beginning on page 675. The
estimates are based upon figures submitted to the Congress in the
Budget for 1944.
Actual expenditures for the fiscal year 1942 and estirnaied expenditures for the fiscal
years 1943 and 1944} <^s exhibited in the Budget for 1944
'

[In,millions of dollars]

General and special accounts .
War activities
Interest on tbe public debt...
All other
. . .

Estimated, Estimated,
1944
1943

^

__1

-._. . .
'..

• .

Total expenditures, general and special accounts
Treasury statement basis, unrevised).

(daily

Actual,
1942

74, 000.0
97, 000. 0
• 3, 000. 0 . 1, 850. 0
4,128.9
4, 587.3
104,128. 9

80,,437.3

NOTE.—Figures are rounded to nearest tenth of a million and will not,necessarily add to totals.




26,011.1
1, 260.1
5 220.2
32, 491. 3

REPORT OF THE SECRETARY OF THE TREASURY

81

Attention is invited to the attached reports of bureaus and divisions of the Treasury Department and to the exhibits and tables
accompanying the report on the finances.^




H E N R Y MORGENTHAU,

Jr.,

Secretary oj the Treasury.




ADMINISTRATIVE REPORTS OF
BUREAUS AND DIVISIONS




83




(^

F I S C A L SERVICE OF THE TREASURY DEPARTMENT

The Fiscal Service of the Treasury Department, at the head of which
is the Fiscal Assistant Secretary, comprises the Bureau of Accounts,
the Bureau of the Public Debt, and the Office of the Treasurer of the
United States. Under an order of the Secretary of the Treasury, the
Under Secretary, in the event of a vacancy in the office of the Fiscal
Assistant Secretary, acts as Fiscal Assistant Secretary and performs
all duties and functions assigned to that office. The activities of the
Fiscal Service are discussed in the following pages.
BUREAU OF ACCOUNTS

T h e supervision of the administration of the accounting functions
and activities in the Treasury Department and all its.bureaus, divisions, and offices are exercised under the direction of the Secretary
of the Treasury by the Fiscal Assistant Secretary through the Commissioner of Accounts. The function of authorizing the installation,°
maintenance, revision, and elimination of accounting records, reports,
and procedures in the Treasury Department are exercised by the Fiscal
Assistant Secretary through the Commissioner of Accounts.
The Commissioner of Accounts, at the head of the Bureau of
Accounts, has supervision over the activities and functions of the
Division of Bookkeeping and Warrants, Division of Disbursement,
Division of Deposits, Section of Surety Bonds, Budget Section, vSection
of Investments, and the Emergency Relief Accounting Organization,
the latter to be liquidated by December 31, 1942.
- The duties and functions of the units under the Bureau of Accounts
are discussed in the following pages.
The Commissioner, in collaboration with the Bureau of the Budget
and General Accounting Office, also supervises work'in the Treasury
Department in connection with the development of standards, terminology, classifications, a system of financial reporting, and summary
accounts required by Executive Order No. 8512.
OfiUce oj Commissioner oj Accounts
Budgetary administration and jinancial reporting.—Under Executive
Order No. 8512, dated August 13, 1940, prescribing regulations for the
purpose of improving budgetary administration and financial reporting, the Secretary of the Treasury, with the approval of the Director
of the Bureau of the Budget, was directed to establish (a) uniform
accounting terminology, (b) uniform classifications of assets and
liabilities, and revenues and expenditures, and (c) uniform standards
for the valuation of assets and the determination of liabilities and the
treatment of revenues and expenditures in relation thereto; and to
maintain a complete system of summary accounts through which
the financial data of the various agencies will be cPordinated and
integrated.




85

86

REPORT OF THE SECRETARY OF THE TREASURY

On March 3, 1942, the order was amended by>Executive Order No.
9084, which provides that prior to establishing uniform terminology,
classifications, principles and standards, they be referred to the
Comptroller General of the United States for consideration and determination as to whether they are in conflict with the forms, systems,
and procedures prescribed by the Comptroller General as required by
section 309 of the Budget and Accounting Act. (See exhibit 59,
p. 341.)
I n pursuance of Budget-Treasury Regulation No. 1, agencies of the
Government are submitting requests for quarterly apportionments of
their appropriations to be made by the Director of the Bureau of the
Budget. They also are submitting monthly reports on the financial
status of their appropriations. These reports will provide the basis
for production by the Treasury Department of summary financial
statements to reflect a composite picture of the Government's appropriations, obligations, and expenditures and special statements on war
appropriations, emergency funds of the President, and similar statements. Budget-Treasury Regulation No. 2 deals with financial reporting by corporations and credit agencies of the Government and
requests annual financial statements beginning with a report covering
the fiscal years 1941 and 1942.
Daily Statement oj the United States Treasury.—During the fiscal
year 1942, there were several changes in classifications shown on the
daily Treasury statement. Beginning with the statement for September 30, 1941, receipts, transfers from the General Fund, and
expenditures in connection with the sale and redemption of surplus
commodity stamps^ formerly shown on a net basis, were shown on a
gross basis under the classification ''Trust accounts, increment on
gold, etc.'' On the statement for May 1, 1942, the classification
''National defense" was changed to "War activities" and the expenditures ihade by several agencies previously shown as "General" were
changed to "War activities." Changes in classification also arose
under Executive Order No. 8929, transferring the Coast Guard to the
Navy Department, and under Executive Orders Nos. 9054, 9069, and
9071, issued by the President under Title I of the First War Powers
Act, approved December. 18, 1941.
The tables for the Social Security, RaUroad Retirement, and Railroad Unemployment Insurance Acts, previously published in the daily
Treasury statement on the 10th of each month, were included in the
statement for the 15th of each month, beginning November 15, 1941.
The preliminary public debt statement shown on the daUy Treasury
statement for the last day of each month has been expanded, beginning
with the statement for July 1942, so as to include'the detaUs with
respect to the public debt and also the contingent liabilities of the
United States, previously published on the monthly Statement of the
Public Debt of the United States. Since this detaUed information
wUl be shown in the daily Treasury statement, the Public Debt Statement will not be published after June 30, 1942, as a separate statement.
Combined statement oj assets and liabilities oj Government corporations
and credit agencies.—The combined statement of assets and liabUities
of Government corporations and credit agencies, commenced in 1934
under the provisions of Executive Order No. 6869, dated October 10,
1934, superseded by Executive Order No. 8512, is published in the
DaUy Statement of the United States Treasury, for the last day of



REPORT OF THE SECRETARY OF THE TREASURY

87

each month. This statement as of June 30, 1942, will be found as
table 88 beginning on page 624 of this report.
Surveys under Reorganization Plan No. III.—Several important
surveys and studies were made during the fiscal year 1942 to improve
the accounting and reporting activities of the Department in connection with section 1 (b) of-Reorganization Plan No. I l l , which places the
supervision of the administration of accounting functions and activities
in the Treasury Department under the Fiscal Assistant Secretary to
be exercised through the Commissioner of Accounts. These surveys
included a study in cooperation with representatives of the General
Accounting Office of transactions affecting the settlement of the
account of the Treasurer of the United States. A joint study resulted
in a recommendation for a new procedure for the monthly settlement
of this account.
Other surveys included a stud}^ of the accounting for nonexpendable
items in the various offices of the Department, and a study of the
accounting for pay-roll allotment deductions for the purchase of war
savings bonds with the issuance of appropriate instructions thereon.
Annual appraisal oj assets and liabilities oj the Commodity Credit Corporation.—Under the act approved March 8, 1938 (52 Stat. 107), as
amended by Public Law 147, approved July 1, 1941, the Secretary of
the Treasury is required to make an appraisal as of March 31 of each
year of the assets and liabilities of the Commodity Credit Corporation for the purpose of determining the net worth of the Corporation.
In the event that any such appraisal shaU estabhsh that the net worth
of the Corporation is less than $100,000,000, the Secretary of the^
Treasury is required to restore the amount of the capital impairment,
funds for which are appropriated by the Congress. In the event any
appraisal shall establish that the net worth of the Corporation is in
excess of $100;000,000, such excess must be deposited by the Corporation in the Treasury as miscellaneous receipts. The appraisal as of
March 31, 1942, resulted in the return to the Treasury of $27,815,513.68, of which $18,000,000 was deposited in the fiscal year 1942 and
.the balance in the succeeding fiscal year.
The following statement shows the results of all such appraisals:
Appropriations for restoration of capital impairment:
Act of June 25, 1938 (appraisal as of Mar. 31, 1938, H. Doc. 670, 75th Cong.)
Act of Aug. 9, 1939 (appraisal as of Mar. 31, 1939, H. Doc. 317, 76th Cong.)
Act of July 3, 1941 (appraisal as of Max. 31,1941, H. Doc. 248, 77th Cong.)....

Amount
$94, 285, 404. 73
119,599,918.05
1, 637, 445.51

Total appropriations...
T»ess amount returned to Treasury:
Appraisal as of Mar. 31, 1940..
Appraisalas of Mar. 31, 1942..

215,522,768.29

Net payments to corporation to June 30,1942

_
_

$43, 756, 731.01
27,815, 513. 68/
__

71,572,244.69

143, 950, 523. 60

Securities and junds, Philippine invasion.—On December 19, 1941,
pursuant to directions from the President, the Secretary of the Interior
cabled the United States High Commissioner to the Philippine Islands
to safeguard the rightful ow^ners or holders of United States securities,'
checks, and currency in the Philippine Islands by accepting these
valuables for safekeeping. In the event of the destruction of the
securities, checks, and cmTency so deposited, the High Commissioner
was advised that substitute securities, checks, or currency would be
issued by the Treasury Department, provided the evidence was satis*
factory and acceptable to the Secretary of the Treasury, and subject
to all applicable law.



88,

REPORT OF THE SECRETARY OF THE TREASURY

Accordingly, the High Commissioner annouriced a safekeeping
program under which individuals or corporations depositing valuables
for safekeeping were required to execute affidavits identifying the
affiant and any other persons having an interest in the property,
describing fully the valuables deposited, requesting they be accepted
for safekeeping, and specifying the disposition to be made of substitute issues in case of destruction of the originals. Later, the safekeeping program was expanded to include gold and silver biUlion,
coins, Philippine currency, jewelry, all types of securities including
stocks, and any other valuables which might be offered for safekeeping.
The valuables"^ deposited under this safekeeping program were removed to Corregidor Island. Included among them were numerous
securities, papers, and records of Manila banks and their clients, bars
of gold bullion produced at mines in the Philippine Islands, and packages of United States and PhUippine currencies. Also included were
over 18,000 checks drawn on the Treasurer of the United States which
were deposited with the High Commissionei by the Treasurer of the
Philippine Commonwealth. These checks had been paid by the
Philippine Treasury, but the Treasurer of the United States had not
yet made reimbursement.
During February 1942, all valuables deposited with the High Commissioner for safekeeping except currencies, paid checks drawn on the
Treasurer of the United States and some miscellaneous items v(eYe
released to the custody of the U. S. Navy for transfer to the continental United States. Also, gold bullion and a portion of the coined
silver belonging to the Commonwealth of the PhUippines which had
not been deposited \vith the High Commissioner for safekeeping were
shipped to the continental United States by the U. S. Navy. Three
counterparts of affidavits, correspondence, and related documents, including a listing of the 18,000 paid checks, were similarly released for
transmission, each counterpart by separate means, to the Treasury
Department in Washington. The gold, silver, and all other valuables
were transported to the United States and are held by the Secretary
of the Treasury. All three counterparts of the related affidavits, correspondence, and other documents have been received in Washington,
and aie now being examined and catalogued in the Bureau of Accounts,
where records are being established to provide control over the valuables held in custody and to record the items due each depositor.
Numerous inquiries are being received in regard to esta,blishing
claims to assets believed to have been removed from the Philippine
Islands. Claims presented by persons in the United States who state
they are authorized to accept delivery of the gold bullion and other
valuables are being investigated. The Treasury Department is endeavoring to carry out instructions of depositors who specified the disposition to be made of outstanding United States Government checks
and securities delivered into custody.
The currencies, paid checks, and other valuables which could not
be shipped were destroyed at Corregidor by incineration or other
means, in the presence of a committee of officials who have certified
to the Secretary of the Treasury the destruction of these items.
Representatives of the Treasury Department and the General
Accounting Office are reviewing and correlating the available data
relating to the account of the Treasurer of the United States with
the Treasury of the Philippines.



REPORT OF THE SECRETARY OF THE TREASURY

89

Advances to Federal Reserve Banks jor industrial loans, etc,—Advances
to Federal Reserve Banks for industrial loans, etc., were authorized by
the act approved June 19, 1934 (48 Stat. 1105), which amended the
Federal Reserve Act, as amended, by adding section 13 (b). The provisions under which the Secretary of the Treasury makes these advances were described on pages 184 arid 185 of the annual report
for 1940.
No advances were made to the banks during the fiscal years-1939;
1940, 1941, and 1942, the last advance having been made on October
14, 1937. Payments received by the Treasury during the year aggregated $141,241.11, from the following banks: Boston, $3,133.55; Chicago, $27,214.83; Cleveland, $15,233.71; Philadelphia, $81,360.36;
Richmond, $13,808.52; and Minneapolis, $490.14.
The following statement is a summary of the transactions in connection with these advances to Federal Reserve Banks.
Advances to Federal Reserve Banks for industrial loans, and payments received by
the Treasury to June 30, 1942
Federal Reserve Bank

Advances to
Payments reMaximum
Reserve ceived
the
advances author- Federal to June Treasuryby June
to
Banks
ized
30, 1942
30, 1942

Atlanta.Boston.
Chicago
Cleveland
Dallas.
Kansas City..
Minneapolis..
New York
Philadelphia..
Richmond
St. Louis
San Francisco.

$5, 272;03i: 55
10,230, 236. 88
19,748, 616. 70
14,146, 863. 66
4, 359,338.10
4,131,276. 30
3, 509,
467. 65
42, 529,210. 65
14, 620, 1.52
5,808, 291.43
5,093, 112. 25
9, 850,
328. 30

Total.-_

139,299, 556.99

$756, 934:44
2,875,115. 98
1,417, 701. 33
1,015, 571. 33
1, 251, 788.08
1,145, 717. 73
1,007, 746. 96
7, 752,044. 63
4,198, 400. 60
3,420, 662.05
547,832.83
2,156, 795. 01

27, 646, 310. 97

1 $23; 875. 56
94, 899.03
138,317.80
67,434.12
1 74,116. 50
135,204.38
34,808.60
1 82,987.08
431,345.65
80, 522. 78
1 5,947.94
1,069,459.44

1 No payments received by the Treasury from these banks during the fiscal year 1942.

Appropriations and expenditures under the Social Security Act.—The
Social Security Act, approved August 14,1935, as amended (42 U. S. C ,
Ch. 7), provides for the establishment of a system of Federalold-age
and survivors benefits, and for grants to the several States to enable
them to make adequate provision for aged and blind persons, needy,
dependent, and crippled chUdren; rriaterrial and chUd welfare; public
health services; and the administration of State unemployment compensation laws.
Section 201 (a) of the Social Security Act Amendments of 1939,
approved August 10, 1939, makes permanent appropriations %o the
Federal old-age and survivors insurance trust fund for the fiscal year
1941 and each year thereafter equal to 100 per centum of the employment taxes received under the Federal Insurance Contributions Act
and covered into the General Fund of the Treasury.
The amounts appropriated to June 30, 1942, under the various
authorizations contained in the Social Security Act, as amended, and
total expenditures from such appropriations to Jurie 30, 1942, are
shown in table 16 on page 471, Receipts, expenditures, and investments of the Federal old-age and survivors insurance trust fund and
the unemplovment trust fund are shown in tables 76 and 86 on pages
609 and 620.



90

REPORT OF THE SECRETARY OF THE. TREASURY

Colorado River Dam fund.—The Colorado River D a m fund was
estabhshed under the act of December 21, 1928, which provided for
the construction of works commonly referred to as the Boulder Canyon
project. All revenues and expenditures pertaining to the fund are
under the direction of the Secretary of the Interior.
Under an act of Congress approved July 19, 1940 (54 Stat. 774),
the Secretary of the Interior was authorized to promulgate and to p u t
into effect charges for electrical energy generated a t the dam site.
The act further provides that the receipts from these charges be used
to meet costs of operation and maintenance; to repay to the Treasury,
with interest, the advances made to the fund for the project; to
provide $300,000 annually to each ol the States wherein the project
is located, namely, Arizona and Nevada, beginning with the year of
operation ending May 31, 1938; and to transfer $500,000 annually to
the Colorado River development fund beginning with t h e year of
operation ended M a y 31, 1938.
The act states that the first $25,000,000 of advances made by the
Treasury to the Colorado River D a m fund is an allocation for flood
control, and repayment may be deferred for 50 years after date of
receipt by the fund of such advances, that is, to June 1, 1987, and
repayments shall be made a t that time in the manner Congress shall
determine. For this reason, this sum of $25,OQO,000 is not included
under the caption ^'Advances" in the statement below.
The act further stipulates t h a t interest charges for purposes of
advances and reimbursements shall be computed at the rate of 3
percent, in lieu of the 4 percent rate specified in previous legislation.
The statement which foUows is on an operating year basis and has
taken into account the necessary revisions required under the act
approved July 19, 1940.
Status of Colorado River Dam fund as of close of each operating year, 1933 to 1942
Operating
year ending
M a y 31 .

1933
1934
1935
1936
1937
1938
1939
1940..
1941..
1942

Total...

Advances i

Interest
on advances

I n t e r e s t on
•amount
Advances
a n d interest . o u t s t a n d on a d v a n c e s ing preceding y e a r

Reimbursements 2 •

$11,890. 632.62 $101, 529. 95 $11,992,062. 67
18,424, 397; 70 249,674.11 18, 674,071. 87 $359, 761. 88
23, 607, 621. 44 399. 464. 48 24,006,985. 92 930, 776. 89
19,976, 009. 81 319, 761. 45 20, 295, 771. 26 1, 678,909. 77
7,410, 641. 30 147,073. 83 7, 557, 715.13 2, 338.160. 21
5, 685,000.00 88,848.90 5, 773,848. 90 2, 635.026.17 $i.'ioo,'6o6.'oo
5, 690, 265. 49 74,926.12 6,665,191.61 2,863, 386. 76 4, 600, 000. 00
4,050, 000.00 67, 278. 68 4,117, 278. 68 2,968,930.04 3, 600,000.00
4, 800,000.00 87, 876. 34 -4,887,875.34 3,074,824.99 7,000,000.00
3, 550, 000.00 66,182.17 3, 606,182.17 3,100, 892. 68 2,000,000. 00

Interest
on reim- T o t a l a n i o u n t
bursedue
ments

$30,'22i."9i
67,101.-35
66, 377.05
93, 780.80
41, 763. 42

$11, 992,062. 67
19,033, 833. 75
24 937 762 81
•21,974, 681. 03
9, 896, 865. 34
7, 278, 653.16
3, 851,476.02
3, 529,831. 67
868. 919. 53
4,665,321.33

104,984,368.42 1,592,616.03 106, 676, 983.45 19,940,658.29 18, 200, boo. 00 289, 234. 63 3108,028,407.21

* Excludes $25,000,000 of advances allocated to flood control, repayment of which is deferred to June 1,1987.
2 Reimbursements have been applied toward reduction of "interest on advances."
8 Includes $3,044,038.79 representing unpaid interest.

Division oj Bookkeeping and Warrants
T h e Division of Bookkeeping and Warrants, in the name of the
Secretary of the Treasury, issues all warrants on the Treasurer of the
United States, and under section 10 of the act of July 31, 1894
(5 U. S. C. 255), maintains the oflBcial accounts relating to the receipt,
appropriation, and expenditure of the public moneys, covering all



REPORT OF T H E SEICRETARY OF T H E TREASURY

91

departments and establishments of the Government. The Division
makes analyses of acts of Congress carrying appropriations and
maintains the necessary appropriation accounts on its ledgers; it
issues warrants for placing disbursing funds to the credit of disbursing
officers, for the payment by the Treasury of claims settled by the
General Accounting Office, and for covering into the Treasury the
revenues and receipts of the Government. I t handles the work
involved in coimection with the approval of the issuance of duplicate
checks (sec. 9 of the Government Losses in Shipment Act).
The Division compiles and publishes an annual digest of the
appropriations made by Congress, and also an annual combined
statement of the receipts, expenditures, and unexpended balances
under each appropriation account. The combined statement is
submitted to Congress in accordance with the act of July 31, 1894
( 5 U . S . C . 264).
In addition to the foregoing pubhcations there are prepared various
financial statements which appear in the Annual Report of the
Secretary of the Treasury, in the monthly Bulletin of the Treasury
Department, and monthly in the Congressional Record. Also numerous statements and reports covering receipts and expenditures and
other data on war activities are prepared at various intervals.
Division oj Disbursement
The Division of Disbursement exercises the disbursing functions,
in Washington and in the field, for all departments and establishments
of the Government with the exception of the Post Office Department,
United States marshals, the Panama Canal, special disbursing agents
of the War and Navy Departments, and certain Government corporations.
During the year operations in the Philippine Islands were suspended;
the 37 emergency relief offices were consolidated with regional offices,
and one additional regional office was established. On June 30, 1942,
the Division riiaintained the Central Office in Washington, D. C , 20
regional offices, and 5 territorial offices in Alaska, Puerto Rico, Hawaii,
the Virgin Islands, and Panama. The transfer of certain Federal
activities from Washington, D . C , to other locations ia the United
States has resulted in the transfer of over one million payments per
month from the Central Office of the Division of Disbursement in
Washington to regional offices of the Division. .
The total personnel of the Division on June 30, 1942, iacluding
regular, temporary, and emergency' employees, was 2,189, and in
addition there were 11 employees paid from the allotment for Foreign
Funds Control assigned to the Washington office to assist in the work
incident to the control of foreign funds.
During 1942, the Division made 81,286,289 payments by check,
issued 73,182 United States war savings bonds. Series E, and made
cash payments in 689,535 instances. These payments were supported
in the disbursing accounts by 8,790,247 vouchers. The Division also
received, deposited, and accounted for 8,955,669 collection items.
The Division has handled this fiscal year 3,541,630 items of paym.ents
and collections for agencies which have been established in connection
with the war effort. In the month of June 1942 approximately
500,000 such items were handled and this amount is increasing each
month.



92

REPORT OF THE SECRETARY. OF THE. TREASURY

Voluntary pay-roll allotment plan.—In connection with the inauguration on February 8, 1942, of the voluntary pay-roll allotm.ent plan
for the purchase of war savings bonds, the Chief Disbursing Officer
(Division of Disbursem.ent) was designated by the Secretary of the
Treasury as the Bond Issuing Officer for departments and agencies
served by the Division of Disbursement. (See exhibit 65, p. 346.)
On. the basis of 90 percent participation by the employees of these'
departments and agencies, it is estimated that the Division of Disbursement wUl issue during the ensuing fiscal year, through its central
and regional offices, approximately 3,000,000 war savings bonds.
Bonding oj certifying ofiicers.—In order more clearly to define the
respective responsibUities of disbursing officers and those officers and
employees of the various agencies who are authorized to certify vouchers for payment. Public Law 389 was enacted on December 29, 1941.
(See exhibit 58, p. 338.) This law, effective April 1,1942, provides that
disbursing officers in the Executive Branch shall disburse money only
upon vouchers certified to them by the head of a department or
agency, or by an officer or employee thereof authorized in writing by
such head to certify vouchers. Disbursing officers are required to
make only such examination of vouchers as may be necessary to
ascertain that they are in proper form, duly certified and approved,
and correctly computed on thp basis of the facts certified. However,
the provision for proof of computation' was eliminated by Public
Law 528, approved April 28, 1942, which imposed the responsibUity
for correct computation on the certifying officer.
^Public Law 389 further provided that certifying officers shall be
responsible for correctness of facts and legality of proposed payments;
shall be required to give bond with surety approved by the Secretary
of the Treasury in amounts to be fixed by the head of the department
or agency in which employed, pursuant to standards and conditions
prescribed by the Secretary of the Treasury; and-.shall be held accountable and required to make good the amount of any illegal, improper,
or incorrect payment.
The law specifically excepted disbursing functions of the War and
Navy Departments, except for departmental salaries.
Pursuant to Public Law 389, the Secretary of the Treasury, ia
Department Circular No. 680, dated February 16, 1,942, prescribed
the standards and conditions with respect to bonds of certifying officers
and also the administrative procedure relating to disbursements under
the Division of Disbursement.
To June 30, 1942, about 7,000 officers and employees have been
designated by the heads of their agencies for certifying duties, and a
bond in each case has been submitted tq the Treasury Department for
approval. The penal surds of these bonds have been determined by
the heads of their agencies, in accordance with the standards laid down
by the Secretary of the Treasury. In gerieral, $5,000 has been deemed
to be adequate, but the penal sums range froiri $1,000 to $50,000.
Division oj Deposits
The Division of Deposits is charged with the administration of
matters pertaining to the designation ai-nd supervision of Governrnent
depositaries and the deposit of Government funds in such depositaries,
as prescribed by the regulations^-incorporated in Department Circulars Nos. 92 and 176, as amended; the qualification of Federal



93

REPORT OF T H E SEiCRETARY OF THE TREASURY

savings and loan associations as fiscal agents of the United States
under Chcular No. 568; the maintenance of a record of cash collateral
pledged in lieu of securities by issuing agents designated under Circular
No. 657 for the sale and issuance of war savings bonds. Series E ;
and the execution of the duties devolving upon the Secretary of the
Treasury as a result of the enactment of the Government Losses in
Shipment Act, as amended.
Depositary junctions.—The following statement shows the number
and classes of depositaries maintained by the Treasury and the
Government deposits held by such depositaries as of June 30, 1942.
Number of depositaries and aniount of Government deposits held on J u n e 30, 1942,
by class of depositaries
Depositaries

Amount

Federal Reserve Banks (including branches) _
Federal Reserve member bank depositaries:
To credit of Treasurer of United States
To credit of other Government officers
Insular and territorial depositaries (including Philippine treasury)
To credit of Treasurer of United States..
To credit of other Government officers
Foreign depositaries:
To credit of Treasurer of United States
To credit of other Government officers.
'Special depositariies i
.
Total

-

$602,946,068.77
60, 667, 626. 88
86,133,953. 37
8,709,668.87
29, 204,469. 76
62, 640,000.00
2, 247, 403. 39
1, 678, 698, 000.00

.-

2, 621,136, 980. 03

1 Includes 1,564 national banks and 1,260 State banks and trust companies, of which 2,136 held deposits on
June 30, 1942.

During the fiscal year'1942 there were 3,168 changes and adjustments effected in the depositary system of the Treasury. These
changes and adjustments are summarized in the following table:
Adjustments
Design ated
Discontinued .
Amoun'tsfor which qualified:
Increased
Decreased
. .
Miscellariebiis changesTotal

Member bank
depositaries

.

Special
depositaries

551
474
.

.
..-.-•

672
52

607
96
237

579

1,965

1,203

The number of changes and adjustments in the depositary system
during the year greatly exceeded those of any preceding year and are
the result of the increased need for local depositary facilities by officers
of the Governinent, particularly those connected with the military
branches of the service who utilize such depositaries in obtaining payroll cash, the desire of banl^s designated as special depositaries under
Department Circular No. 92 to make payment for issues of Government securities, by credit through war loan accounts, and the continued eff'ort to modernize the depositary system.
^
Existing depositaries were utilized and numerous new depositaries
were required in the territories, insular possessions, and foreign
countries.
Prior .to the approval of Public Law 603 on June 11, 1942, pnly
banks which were members of the Federal Reserve System were
eligible for designation, as depositaries of public moneys and financial



94

REPORT OF THE SECRETARY OF THE TREASURY

agents of the Government. Under section 10 of the act, all banks
which are inembers of the Federal Deposit Insurance Corporation are
eligible for designation. (See exhibit 63, p. 343.) Tbis wUI permit the
Treasury to establish essential depositary facilities at points where
there previously were no eligible banks, and it is anticipated that thi^
and other portions of the act will have a decided effect upon the
depositary system of the Treasury.
Depositary bonds.—The details outlining the reason and purposes
covering the issuance of the 2 percent depositary bonds are contained
in the annual report of the Secretary for 1941, on page 100.
As of June 30, 1942, 2 percent depositary bonds in the face amount
of $78,958,000 had been issued, and $5,000 had been redeemed, leaving
$78,953,000 outstanding on June 30, 1942.
Designation oj agencies jor the issuance oj vjar savings bonds, Series
£'.^-All the functions performed by the Division., of Deposits in connection with the designation and qualification of issuing agents for
the sale and issuance of United States war savings bonds, Series E^
were, during February .1942, transferred to the Bureau of the Public
Debt, with the exception of the collateral record of cash pledged by
designated issuing agents in lieu of securities as specified in Department Circular No. 657, and referred to in the annual report of the Secretary for 1941. At the inception of the plan of pledging cash coUateral,
orily the twelve Federal Reserve Banks were authorized to accept
cash for this purpose. However, in order to create further outlet^
and to expedite the issuance of the war savings bonds, Series E, branch
Federal Reserve Banks, in January 1942, were authorized to furnish
unissued bond stock and accept cash collateral tendered by designated
issuing agents.
Of the total number of fiscal agents designated as of the close of
business June 30, 1942, 651 qualified by the pledge of cash collateral
in'the total amount of $3,114, 289.25.
Federal savings and loan associations .—On June 30,1942, the Federal
Home Loan Bank System reported to the Treasury that 1,464 Federal
savings and loan associations were eligible to qualify as fiscal agents
under Department Circular No. 568, dated September 15, 1936, for
the purpose of collecting delinquent accounts arising out of insurance
and loan transactions of the Federal Housing Commissioner, and of
this number 101 had qualified for this purpose either by the pledge
of collateral security or the filing of an acceptable surety bond.
Social security.—Under arrangements entered into between the
Treasury and the Social Security Board, various depositaries of public
moneySj designated by the Secretary of the Treasury, were authorized
to carry balances of Treasury funds as a basis for servicing State
unemployment compensation benefit payment accounts and clearing
accounts. As of June 30, 1942, 65 banks were designated for this
purpose with authority to maintain Treasury balances totaling
$41,690,000.
Government^ Losses in Shipment Act.—The Government Ijosses in
Shipment Act, approved eTuly 8, 1937 (50 Stat, 479), as am.e.nded by
an act approved August 10, 1939 (53 Stat. 1358), was designed to
provide within the Government an adequate means of prompt replacement of losses resulting from the shipment by the executive departments, independent establishments, agencies, wholly owned corporations, officers and employees of the United States, of certain articles,



95

REPORT OF T H E SEiCRETARY OF THE TREASURY

things,' or representatives of value, thus eliminating the necessity of
purchasing insurance from private companies for such replacements.
The articles, things, or representatives of value declared to be ''valuables'' by the Secretary of the Treasury, within the meaning of that
term in section 7a of the act, include money of the United States
and foreign countries, securities and other instruments or documents,
precious metals and stones, and works or collections of artistic, .historical, scientific, or educational value. The shipment of ''Valuables''
is governed by regulations designed to minimize the risks of loss,
destruction, or damage, and to facilitate replacement under the
provisions of the act, in the event such procedure becomes necessary.
The m^onetary value of shipments reported to have been made under
the act during 1942, of classes of valuables which were covered by
the Treasury's contracts with insurance companies prior to the enactment of the Government Losses in Shipment Act, aniounted to
$41,378,204,236. This represents an increase of approximately
$3,100,000,000 over shipments made during 1941. The table foUowing indicates the estimated premium savings in connection with
shipments for 1942 to be over $860,000, and savings since the inception of the act to be over $2,780,000, under each of the three alternate
bases upon which the estimates are made.
- .
Estimated premium savings during the fiscal years 1941 and 1942 and the total estimated
savings to J u n e 30, 1942
Fiscal year
1941

On basis of premium rates for-

Fiscal year 1938 i
Fiscal year 1937 2
Fiscal years 1936-38 3,

$798,000
1,145, 000
1,098,000

Fiscal year
1942

Aug. 15, 1937,
to June 30,
1942

$863, 000
1, 239, 000
1,188, 000

$2, 782, 000
3, 674, 000
3, 518, 000

* Lowest rates under insurance contract system.
» Rates in effect at time estimates of premium savings were presented to Congress.
« Average based on rates effective in last 3 years of Government insurance contract system.

Other classes of valuables covered under the provisions of the
Governinent Losses in Shipment Act were shipped during the year
having an aggregate value of $65,935,048,845; however, these have
not been included in the calculation of estimated premium savings
in the above, table because, as a general practice, the Government
did not insure them prior to the effective date of the act.
Following is a table of the loss experience resulting from shipments
of valuables, and other functions under the act during the fiscal
vear 1942.
Number and value of items reported lost, settled, and unadjusted, fiscal year 1942
Items reported lost
Unadjusted July 1,1941 .
Reported lost during year
Total to be settled

°...
._.




1...

$3.021.13
15, 621. 52

50

, '.

Total settled

487543—43-

Value

6
45

._

Settled by replacement out of fund
Settled without replacement or credit
Unadjusted June30,1942

Number

18, 642. 65

9
8
17

2, 874.42
3,121.13
5 995 55

33

12, 647.10

96

REPORT OF T H E SEiCRETARY OF T H E TREASURY

Section 3a of the act provides for payment of losses arising from
agency functions performed by the Post Office Department for the
Treasury, irrespective of the manner in which losses occurred. Such
losses may result from fire, theft, robbery of a post office, embezzlement, or similar contingencies. The increase in the number of
losses reported, from 8 in 1941 to 45 in 1942, may be attributed chiefly
to loss or destruction of motor-vehicle tax stamps, the sale of which
was instituted on a Nation->vide basis during the year by the Post
Office Department, acting in the capacity of agent for the Treasury.
Pursuant to section 3b of the act, as amended, there were executed
during 1942 five agreements of indemnity in the aggregate amount of
$61,003.93, in connection with which no payments have been required. The total number of agreements executed up to and including June 30, 1942, was eleven, amounting to $76,722.99.
F u n d for payment of Government losses in shipment {revolving fund), J u n e 30, 1942
I. RECEIPTS AND EXPENDITURES

Cumulative to
June 30,1941

Receipts:
Appropriations
_.^
Transferred from the securities trust fund (9/21/39)i
Recoveries of payinents for losses
Total receipts
Expenditures:
Payment of losses
Balance in fund

$602,000.00
91,803.13

Increase or
decrease ( - ) ,
fiscal year
1942

Cumulative to
June 30, 1942

$602,000.00
91,803.13
262. 50

693, 803.13

262. 60

694, 066. 63

2 1,137.29

•.

$262.50

2,874.42

2 4,011.71

-2,611.92

690, 053.92

692,665.84

._•

*
II. FUND ASSETS

June 30, 1941
Unexpended balances: s
To credit of disbursing officer
On books of the Division of Bookkeeping and Warrants
Total fund assets

Increase or
decrease (—)

June 30, 1942

$303.25

$3,125.58

$3 428 83

692,362.59

-6,737.60

686,626.09

692, 665.84

-2,611.92

690, 053.92

1 The act bf Aug. 10,1939 (53 Stat. 1358). amended the Government Losses in Shipment Act, and in section
1 the Secretary of the Treasury was authorized and directed to transfer the amount standing to the credit
of the securities trust fund to this fund.
2 Includes payment in the amount of $64.44 representing an excess recovery previously paid into the fund
from the securities trust fund.

Section oj Surety Bonds
The Secretary of the Treasury, under the act of Congress approved
August 13, 1894 (28 Stat. 279), as amended by the act approved
March 23, 1910 (36 Stat. 241), issues certificates of authority to
corporate surety companies to qualify as acceptable sureties on bonds
and other obligations in favor of the United States.
On June 30, 1942, there were 79 domestic companies holding cer^tificates of authority from the Secretary of the Treasury, qualifying
them as sole sureties on recognizances, stipulations, bonds, and undertakings permitted or required by the laws of the United States, to
be given with one or more sureties. There were also 7 branches of
foreign companies holding certificates of authority authorizing them
to act only as reinsurers on bonds in favor of the United States.



REPORT OF THB SECRETARY OF THE TREASURY

97

The Section of Surety Bonds checks the financial condition of
surety companies authorized to transact business with the United
States; determines their underwriting limitations; reviews their
quarterly financial statements; makes examinations into their financial condition at their home offices, when necessary; and performs
other duties to determine whether the companies observe the requirements of the law and the regulations of the Secretary of the Treasury
issued pursuant thereto.
The Section of Surety Bonds has custody of all fidelity bonds' in
favor of the United States, except those filed with the Post Office
Department and the Federal courts, and notifies the accounting
officers of the receipt and filing,of such bonds. I t examines and
approves as to corporate surety all fidelity and surety bonds with a
few exceptions as referred to above.
During the year 151,015 bonds and consent agreements cleared
through the Section of Surety Bonds for approval as to corporate
surety; this number is an increase of more than 44 percent over the
preceding year. Only a small part of this increase was a result of the
bonding of certifying officers under the act of December 29, 1941,
mentioned on page 92, under the Division of Disbursement. The
increase was due largely to expanded war activities. Bonds for the
War and Navy Departments increased 55 percent over the preceding
fiscal year.
"
Budget Section
The Budget Section, in part, constitutes the operating staff of the
Budget Officer of the Department, coordinating departmental estimates of appropriations, justifications, and reports and performing
related duties in accordance with the requirements of the Budget
Officer, Treasury Department. The Budget Section also performs
simUar duties for the Commissioner of Accounts and has administration of special deposit accounts of the Secretary of the Treasury,
which cover alien property trust funds in the Treasury, offers in
compromise under the provisions of section 3469 of the Revised
Statutes, Philippine trust funds held in interest-bearing accounts,
cash collateral furnished by issuing agents for the sale of war savings '
bonds. Series E, and accounts pertaining to withheld foreign check
payments.
Alien property trust jund.—Vnder the act of October 6, 1917, as
amended, and the Settlement of War Claims Act of 1928, approved
March 10, 1928 (45 Stat. 254), as amended, securities previously
held by the Secretary of the Treasury for account of the Attorney
General, Alien Property Bureau, were all sold prior to the fiscal year
1942. A statement of the alien property trust fund as of June 30,
1942, follows:
.
Alien property trust fund, June 30, 1942
Credits (net):
Trusts
:.
. Earnings on investments, etc

$38,752,906.05.
30,279,242.29

.•.

Total
'.
Assets:
Investments:
•
Participating certificates issued under sec. 25 (e) of the Trading
With the Enemy Act:
Noninterest-bearing
$20,856,446.75
5% interest-bearing
34,347,476.76
•
Cash balance with the Treasurer of the United States
Total fund assets June 30, 1942...,




'.

69,032,148.34

55,203,923.51
13,828, 224.83
69,032,148.34

98

REPORT OF THE SECRETARY OF THE TREASURY

Checks, issued by the Treasury Department during the year to the
Attorney General, Alien Property Bureau, and to the Alien Property
Custodian on account of the alien property trust fund included certain expenditures for administrative expenses of the Alien Property
Custodian appointed pursuant to the act of October 6, 1917, as
amended by the First War Powers Act, approved December 18, 1941.
The amounts of expenditures were as follows:
'
Distribution of income,.:
Administrative expenses
Total.

_

$80, 000.00
370.000.00
450,000.00

._.
._.-.'.„..-

Philippine junds in the United States Treasury.—Under the act of
March 8, 1902 (32 Stat. 54), reenacted in section 3343 (b) of the Internal Revenue Code, approved February 10, 1939, it was provided
that all duties and taxes collected m the United States upon articles
coming from the Philippine Archipelago and upon foreign vessels
coming therefrom, were to be held as a separate fund and paid into the
treasury of the Philippine Islands to be expended for the government
and benefit of the Islands.
A summary follows showing custom.s duties, tonnage taxes, and
internal revenue taxes, exclusive of taxes with respect to coconut oil,
appropriated to Philippine accounts and payments therefrom during
the fiscal years 1933 to 1942.
.
Receipts ^
appropriated

Fiscal year

1933
1934
1936
1936
1937
1938
1939
1940
1941
1942

.
:

..
. •

_
*

•
'

.

$381. 600. 46
527.426.40
491, 468. 60
645. 890. 13
755.866. 76
813.862.30
669. 468.06
703.874. 28
538.089. 63
420.293.47

P a v m e n t s to
Philippine
Government 2
$59. 67
813. 371. 78
502, 551. 53
746.967.75
891, 726. 93
934.689. 47
626.347. 68
482,106.02
2.987. 84
78.32

U n p a i d balance

3 $864. 598. 97
568, 653. 69
667, 560. 56
467, 492.94
321 632 77
200. 795. 60
143 915 98
365. 684. 24
900 7«fi 03
1. 321, OOl. 18

• Reduced by amounts carried to surplus f'md as follows: 1936, $17,640.28; 1937, $9,783.75; 1939, $15,151.70,*
1940, $957.78; 1941, .$36,822.72; and 1942, $747.68.
2 Includes certain refunds and adjustments.
3 Includes balances of $473,158.18 in Philippine accounts as of July 1, 1932.

Under the act of June 11, 1934 (48 Stat. 929; 48 U. S, C. 1157), the
Secretary of the Treasury was authorized.to accept, upon such conditions as he might prescribe, deposits of public moneys of the Philippine
Governm.ent. The act provided an indefinite appropriation for the
payment of interest on such deposits other than demand deposits at
such rates not in excess of 2 percent per annum as the Secretary might
prescribe.
Thereafter, the Secretary of the Treasury agreed to accept not to
exceed $55,000,000 of Philippine m.oneys in a tim.e deposit account,
amounts deposited with the Treasury by the Philippine Government
in excess of that sum to be maintained in a dem.and deposit account.
Since Decem.ber 10, 1934, the balance in the time deposit account has
been m.aintained at $55,000,000. The balance in the demand deposit
account as of June 30, 1942, was $88,720,214.56.
Section 602J^ of the act of May 10, 1934 (48 Stat. 763), provided
that taxes collected with respect to coconut oil wholly of Philippine
production or produced from materials wholly of PhUippine growth



REPORT OF THE SECRETARY OF THE TREASURY

99

or production should be paid to the treasury of the PhUippine Islands
subject .tp certain conditions. An agreement was consummated
between the Secretary of the Treasury and the Philippine Governmentunder which coconut oil moneys payable to the Philippine treasury
would be transferred on periodic settlements of the General Accounting Office to a special deposit account in the name of the Secretary of
the Treasury subject to withdrawal by the Philippine Government on
ninety days'^ notice in writing. Interest at the rate of 2 percent per
annum is paid on the daily balances in this account. A summary of
transactions in the account from the time of its estabhshment to date
follows.
. Fiscal year

1938.
1939
1940..
1941
1942

Deposits

.:.

....

$56,864. 779.06
20, 355, 455. 66
4, 559,016. 46
72,850.96

J

Withdrawals

Balance a t e n d
of year
$56,854,779.06
45, 210, 234. 71
32, 205. 234. 76
32,278.085. 72
27, 278.085. 72

$32,000,000.00
1 17, 564.016.41
5,000,000. 00

Includes $7,564,016.41 transferred to new account established under act of August 7,1939;

Section 6 of the act of August 7, 1939 (53 Stat. 1232), provided
t h a t collections on or after January 1, 1939, on account of the excise
taxes imposed by section 2470 of the Internal Revenue Code, and the
import taxes im.posed by sections 2490 and 2491 of the Internal
Revenue Code and any moneys hereafter appropriated in accordance
with the authorization contained in section 503 of the Sugar Act of
1937 (50 Stat. 915) shall be held as separate funds and paid into .the
treasury of the Philippines to be used for the purpose of meeting new
or additional expenditures which will be necessary m adjusting Philippine economy to a position independent of trade preferences in the
United States and in preparing the Philippines for the assumption of
the responsibilities of an independent state.
A new account was established for the deposit of the funds referred
to in section 6 of the act of August 7, 1939. Withdrawals by the
Philippine Governm.ent from this account are subject to ninety days'
notice in writing. Interest a t the rate of 1 percent is paid on the
daUy balances in this account.
A summary of transactions. in the account from the time of its
establishment to date follows.
Fiscal year

1940
1941
1942

Deposits

$17, 274,092. 01
15, 258,938.13
25, 666, 399.12

Withdrawals

$20,000,000.00
9,000,000.00

Balance at e n d
of year
$17, 274,092. 01
12, 633,030.14
29,099, 429. 26

Appropriation oj junds to the Government oj the Commonwealth oj the
Philippines jor national dejense.—Public Law 371, approved December
23, 1941, appropriated, in accordance with the provisions of section 503
of the Sugar Act of 1937 (50 Stat. 915) such moneys as had been collected prior to the passage of the act of December 23, 1941, for the
purpose of enabling the Secretary of War to meet expenses for each
and every purpose necessary to provide for public relief and civilian
defense in the Philippine Islands.



100

REPORT OF THE SECRETARY O'B! THE TREASURY

On January 1, 1942, there had been established upon the books of
the Treasury Department approxim.ately $36,609,000 which was
avaUable for appropriation to the Government of the Commonwealth
of the Philippines.
In accorclance with provisions of Public Law 371, $35,000,000 was
appropriated for this purpose.
Supplementally sinking jund jor the payment oj bonds oj the Philippines.—Under section 6 of the act of March 24, 1934; entitled ^'An
Act to provide for the complete independence of the Philippine Islands,
to provide for the adoption of a constitution and a form of government
for the PhUippine Islands, and for other purposes,'- as amended by
the act of August 7, 1939, it was provided that on and after January
1, 1941, the Philippine Government shall impose and collect an export ^
tax on every Philippine article shipped from the Philippines to the
United States,, except as otherwise specifically provided. I t was
further provided that the Philippine Government shall pay to the
Secretary of the Treasury of the United States, at the end of each
calendar quarter, all of the moneys received during such quarter from
export taxes (less refunds), imposed and collected in accordance with
the provisions of this section, and said moneys shall be deposited in
an account with the Treasurer of the United States and shall constitute a supplementary sinking fund for the payment of bonds of the
Philippines, its provinces, cities,, and municipalities, issued prior to
May 1, 1934, under authority of acts of Congress.
Accordingly, there was established with the Treasurer of the United
States a special deposit account in the name of the Secretary of the
Treasury entitled ^'The Secretary of the Treasury for Account of the
Philippine Government—Supplementary Sinking Fund for the Payment of Bonds of the Philippines, its Provinces, Cities, and Municipalities, Issued Prior to May 1, 1934, under Authority of Acts of
Congress (Symbol 891-855).''
^ *
The foUowing statement shows the cumulative transactions since
the inception of the fund and its status as of June 30, 1942.
Supplementary sinking fund for the payment of bonds, issued prior to May 1, 1934t
of the Philippines, its provinces, cities, and municipalities, June 30, 1942
I. RECEIPTS AND EXPENDITURES

Receints'
Taxes on exports.
. Interest on mvestments
Total receipts
Expenditures
Balance in fund.
Investments:..
Philippine Government bonds:
4% due Dec. 1, 1946.
4H% due Dec. 1, 1950.
5% due Feb. 1, 1952
4H%dueJuly 1, 1962
4>^% due July 15, 1952..
6% due Apr. 1, 1965
4M% due May 1, 1957.
43^%due July 1, 1967
43^% due Mar. 1, 1958
43^% due Apr. 1, 1968
4M%due Apr. 1, 1959..
4M% due Sept. 16, 1969
4M% due Oct. 1, 1969.
4M%dueOct. 15, 1959.

"

~
7.

.

$1,586,135.92
8,259.99
l, 694,395.91
l, 694, 395.91

II. FUND ASSETS

Accrued interest paid on investments
Cash balance with Treasurer of the United States
Total




>

Face amount Principal cost
$207,000
$205,242.50
33,000
36,872.46
32.000
36,437.17
258,000
272,929.81
373,000
406,463.06 ^
20,000
18,875.00
6,000
6, 894.68
64,000
76,168.01
43,000
61,113.51
36,000
42,784.42
70,000
77,511.60
41,000
49,286.04
19,000
22,822.99
6,000
6,967.66

.

....-

.

.

1,207,000.
1

$1,308,368.91.
678. 50
285,348.50
1,594, 395.91

REPORT OF THE SECRETARY OF THE TREASURY

101

Foreign check control.-^In accordance with the provisions of the
Executive Order No. 8389, of April 10, 1940, as amended, and Public
No. 828, approved October 9, 1940 (see annual report for 1941, p. 106),
disbursing officers had withheld as of June 30; 1942, from delivery to
payees residing in occupied territories 243,895 checks aggregating
$9,949,318.29, of which the proceeds of 147,821 checks aggregating
$5,956,156.57 were deposited in the special deposit account entitled,
'^Secretary of the Treasury, Proceeds of Withheld Foreign Checks";
6,749 checks aggregating $377,858.30 were released to payees; and
2,059 checks aggregating $91,974.39 were canceled on advice of
administrative agencies who authorized the issue of such checks to the
payees. On June 30, 1942, a balance of 87,266 checks aggregating
$3,523,329.03, the proceeds of which were subject to deposit in the
special deposit account, were held by disbursing officers pending
disposition. •
Of the $5,956,156.57 deposited in the special deposit account,
$14,906.16 has been paid to individual claimants; $4,379.35.has been
returned to the appropriations from which payments were made; and
$276,724.58 has been covered into the Treasury as miscellaneous
receipts on account of the $1,000 limitation on veterans' payments.
On June 30, 1942, the proceeds of 143,276 checks aggregating
$5,660,146.48 remained in the special deposit account to the credit
of approximately 17,500 individuals.
Section oj Investments
The Section of Investments supervises the collections of principal
and interest on foreign obligations and on raUroad obligations owned
by the United States and held by the Treasury; collects on other
obligations owned by the United States, which have been turned over
to the Treasury by other departments for coUection; handles matters
relating to the investments and securities held in the custody of the
Treasurer of the 'United States and the Federal Reserve Banks for
which the Secretary is responsible, other than .those related to public
debt operations; and makes payments on awards under the Settlement
of War Claims Act of 1928, under the claims agreement of October 25,
1934, between the United States and Turkey, and under the act of
April 10, 1935, covering claims against the Republic of Mexico. In
connection with these activities, accounts are kept and various related
matters are handled by the Section.
t •

Obligations of foreign governments

The United States received during the year a payment from the
Government of Hungary in the amount of $19,656.32 on account of
its indebtedness, which applied on interest due.
The following statement shows the payments due during the periods
July 1 to December 31, 1941, and January 1 to June 30, 1942.




102

REPORT OF THE SECRETARY OF THE TREASURY

Amounts due and payable, July 1 to Dec. 31, 1941, and Jan. 1 to June 30^ 1942
F u n d i n g agreements
Moratorium
agreements

Country
Principal

Total

Interest
J u l y 1 to D e c . 31.1941

Belgium
Czechoslovakia
Estonia
Finland
France
Great Britain
Greece
Hungary
Italy
--Latvia
Lithuania
^
'
Poland
-.
--Rumania
Yugoslavia . . ._
Total

$4,158,000.00
$1, 500,000.00
161, 000.00
79,000.00
.

42,000,000.00
499,000.00
16,.866.00

-

_ ..
'.

1,720,000.00

.

62, 500.00

-

46,027, 365.00

286.266.00
139,037. 50
38, 622, 865.00 .
75. 950, 000. 00
217, 920.00
33,185.08
2,490, 875.00
119, 609. 00
107, 783. 67
3, 582.810.00
907, 559.81
154,062. 50
126, 669,972. 56

$484, 453.88
182,812.78
36, 585. 29
32, 725. 56
3,046, 879. 72
9, 720, 765.05
67,137. 38
4. 225. 58
896,165.88
15, 274. 26
13, 683. 26
456, 229. 71
48, 750.08

$4, 642, 453.88
1, 682, 812. 78
473 850. 29
1 260, 763.06
41, 569, 744. 72
127, 670, 765. 05
784, 057. 38
• 53,275. 66
3, 387, 030. 88
197, 383. 26
121, 466.93
5, 759,039. 71
956, 309.89
154,062. 50

15,006, 678.43

187, 703,015.99

J a n . 1 to J u n e 30, 1942
Belgium
.
Czechoslovakia
'
Estonia
F i n l a n d -. .
France
_.
..
G e r m a n y (Austrian indebtedness)^
Great Britain .Greece
Hungary
Italy
Latvia . .
Lithuania
_
_
.
Poland
-.
.Rumania .
-._
Yugoslavia
Total

-'

$4,900,000.00
1, 500,000.00
•.

57, 763, 450.02
460,093.00

$4,158,000.00
286, 265. 00
137, 655.00
38, 522, 866.00

462. 000.00
562,000.00

75,950,000.00
217, 920.00
33,185.08
•2,490, 875.00
119, 609.00
107, 783. 67
3,682,810.00
907, 559.81
164,062. 50

83, 207,058.02

120,668,690.06

505,660.66
1.
17,000,000.00
64, 516.00

$484, 453.88
182, 812. 78
36, 585. 29
32, 726. 66
3,046,879. 72
34, 767. 23
9, 720, 765.05
67,137. 38
4, 226. 68
896,156.88
15, 274. 26
13, 683. 26
456,229. 71
48,760.08
15,040,445. 66

$9, 542,453.88
1,682,812.78
322, 850. 29
1 170, 380. 66
99, 333,194. 74
494, 860. 23
85, 670, 765.05
790,057. 38
37, 410. 66'
20, 387,030. 88
134,883. 26
175,981.93
4,039,039. 71
1, 418, 309.89
716,062. 50
224, 9i6,093.74

1 Postponed under authority of Public Law 110, approved June 12,1941.
/
2 The German Government has been notified that the Government of the United States will look to the
German Government for the discharge of this indebtedness of the Government of Austria to the Government of the United States.

A statement showing the principal of the funded and unfunded indebtedness of foreign governments to the United States, the accrued
and unpaid interest thereon, and payments on account of principal
and interest as of November 15, 1942, appears as table 66 on page 600.
The total amounts previously due from foreign governments on
account, of their indebtedness to the United States under the funding
and moratorium agreements and not paid as of November 15, 1942^
according to contract terms, are shown in the following statement.




REPORT OF THE SECRETARY OF THE TREASURY

103

Total amounts due and not paid, as of November 15, 1942
F u n d i n g agreements
Country
Interest

Principal
Belgium
Czechoslovakia
'.
Estonia
..
.
France
G e r m a n y (Austrian i n d e b t e d
ness) 1
Great Britain
Greece
Hungary 2
Italy
Latvia
•
Lithuania
-...
Poland
Rumania 3
.._.-.
Yugoslavia...

$72, 462, 000. 00
5, 684,405. 00
462, 274, 380. 00

3, 220, 651. 00
323, 000,000. 00
9,184, 000. 00
139, 250. 00
144, 600, 000. 00
526, 200. 00
471,100.00
15, 352, 000. 00
12, 537, 560.43
4, 299, 000. 00

1, 425, 549,481. 58
3, 585,187. 50
561, 025. 97
26, 645, 041. 74
2,257,040.84
1, 984, 706. 38
71,144, 370. 00
5, 445, 358.86
847, 343. 78

1,136,819, 298. 65

TotaL

$45,800,000.00
28,170, 085.83
1, 297, 000. 00
548, 222,451. 39

2, 078, 440,341. 65

Moratorium
agreements
annuities

Total

$8, 720,169. 84
3, 290, 630. 04
658, 535. 22
64,843, 834. 96

$126, 982,169.84
31, 460, 715.87
7, 639, 940. 22
1,065,340,666.35-

.243,370. 61
174, 973, 770. 90
1, 275, 610. 22
76,060.44
16,130,805.84
274,936.68
246, 298. 68
8,212,134. 78
877, 501.44

3,464,021.61.
1,923, 523, 252.48
14, 044, 797. 72
77'6, 336.41
^187,375,847.58
3,058,177.62
2, 702,105. 06
• 94, 708, 504. 78
18, 860,420. 73
5,146.343.78

269,823,659. 65

3,485,083,299.95

1 T h e G e r m a n ^ G o v e r n m e n t has been notified t h a t t h e G o v e r n m e n t o f t h e U n i t e d States will look to t h e
G e r m a n G o v e r n m e n t for t h e discharge of t h i s i n d e b t e d n e s s of t h e G o v e r n m e n t of A u s t r i a to t h e Governm e n t of t h e U n i t e d States.
2 T h e H u n g a r i a n G o v e r n m e n t has deposited w i t h t h e foreign creditors' account at t h e H u n g a r i a n N a t i o n a l
B a n k an a m o u n t of H u n g a r i a n c u r r e n c y e q u i v a l e n t to t h e interest p a y m e n t s d u e from D e c . 15, 1932, to
J u n e 15,1937. T h e d e b t f u n d i n g a n d m o r a t o r i u m a g r e e m e n t s w i t h H u n g a r y p r o v i d e for p a y m e n t in dollars
in t h e U n i t e d States.
3 E x c l u d e s t h e a m o u n t of $100,000 which t h e R u m a n i a n G o v e r n m e n t paid to t h e U n i t e d States T r e a s u r y
on J u n e 15, 1940, as " a t o k e n of its good faith a n d of its real desire to reach a n e w a g r e e m e n t " covering
R u m a n i a n i n d e b t e d n e s s to t h e . U n i t e d S t a t e s .

Receipts from Germany^

During the fiscal year 1942 the United States received no payments
from the Government of Germany under the debt funding agreement
of June'23, 1930, covering the costs of the American Army of Occupation and the awards of the Mixed Claims Commission, United States,
and Germany. The status of.the indebtedness of Germany to the
United States as of June 30, 1942, under the funding and moratorium
agreements is.summarized in the following tables.
Amount of indebtedness of Germany to the United States, June 30, 1942
Class

A r m y costs (reichsmarks)
M i x e d claims (reichsmarks)
T o t a l (reichsmarks)
T o t a l (in dollars, at 40.33 cents to
t h e reichsmark)

Indebtedness
as funded

Total indebtedness, J u n e 30,
1942

Principal

I n t e r e s t accrued a n d
unpaid

1,048,100.000
2,121, 600,000

1, 035, 543, 026. 21
2,152, 200,000. 00

3,169,700,000

2 3,187, 743, 026. 21

3,037, 500,000

150, 243,026. 21

$1, 278, 340,010

$1, 285, 616, 762.47

$1, 226,023, 750

$60, 593,012.47

997, 500.000
2, 040,000, 000

1 38,043,026. 21
112, 200,000. 00

» I n c l u d e s i n t e r e s t accrued u n d e r u n p a i d m o r a t o r i u m a g r e e m e n t a n n u i t i e s .
2 I n c l u d e s 4,027,611.95 r e i c h s m a r k s deposited b y t h e G e r m a n G o v e r n m e n t in thie Konversionskasse fiir
D e u t s c h e A u s l a n d s s c h u l d e n a n d n o t p a i d to t h e U n i t e d S t a t e s in dollars as r e q u i r e d b y t h e d e b t a n d m o r a torium agreements.
'
.
•
.




104

REPORT OF THE SECRETARY OF THE TREASURY
Payments received from Germany to June 30, 1942
Total payments
received to
June 30, 1942

Class

Payments of
principal

Payments of
interest

Army costs (reichsmarks)...
Mixed,claims (reichsmarks)

61, 466, 406. 25
87, 210,000. 00

50, 600,000. 00
81, 600,000. 00

856, 406. 25
6, 610,000.00

Total (reichsmarks)...
Total (in dollars)

138,666, 406. 25
$33, 687, 809. 69

132, 200.000.00
$31, 539, 595. 84

6.466.406.25
$2.048, 213. 85

Amounts not paid by Germany according to contract term,s, June 30, 1942
Funding agreement
' Date due
Principal
Sept. 30,1933...
Mar. 31, 1934..
Sept. 30, 1934
Mar. 31,1935-Sept. 30.1935
Mar. 31, 1936..
Sept. 30, 1936
Mar. 31, 1937
Sept. 30, 1937
Mar. 31, 1938.
Sept. 30, 1938
Mar. 31, 1939
Sept. 30, 1939
Mar. 31. 1940
Sept. 30, 1940
Mar. 31, 1941...
Sept. 30, 1941
Mar. 31, 1942

.reichsmarks..
do....
do....
do....
:..-do....
do....
.....do....
do....
do....
do....
do....
do....
do....
...do....
.do....
do....
.do....
...do....

:

. 2,498, 662. 50

122,400,000
20.400,000
82, 900,000
29, 700.000
29, 700,000
29, 700,000
29, 700, 000
28. 600,000
28,600,000
28, 600,000
28,600.000
29, 700,000
29, 700,000
29, 700,000
29, 700,000
33, 050, 000
33, 050,000

Total..... . . . d o . . . . 643, 800,000
Total (in dollars, at 40.33 cents to the
reichsmark)
$259, 644, 540

Moratorium
agreement

Total

Interest

3, 855.687. 50
4, 634,250.00
6,212. 812. 60
5, 891,375.00
6, 569;
937.60
7, 248,500.00
7, 927.062. 60
8, 685.687. 50
9, 244.312. 50
9,902, 937. 50
10. 561,562. 50
11. 240,125.00
11.918, 687. 60
12. 697.250. 00
13; 276,812. 50
14,015. 093. 75

145,079, 666. 26
$58, 610, 626. 37

1 4.027,
1, 629,0.49.46
611.95
1, 629,049. 45 123, 929.049. 45
25, 784,736. 95
1, 529.049. 45
1, 529,049. 45'. 88,963, 299. 45
1. 529,049. 45
36. 441.861. 95
1, 529,049. 45
37.120, 424. 45
1, 629.049. 45
37. 798,986..95
1, 529,049. 45
38. 477,649. 45
1, 529, 049. 45
38,0.56, 111.95
1, 529.049.-45
38. 714,736. 95
1. .529.049.45
39,373, 361. 95
1, 629,049. 45
40.031, 986. 96
1, 529,049. 45
41.790. 611. 95
1, 529,049. 46
42, 469,174. 45
1, 629.049. 45
43,147, 736. 95
1, 529. 049. 45
43, 826.299. 45
1, 629,049. 45
47, 854,861. 95
1, 529. 049. 45
48, 594.143. 20

27, 522. 890.10

816,402, 646. 35

$11,099,981. 68 $329. 265,146. 94

1 Includes 4,027,611.95 reichsmarks deposited by the German Government in the Konversionskasse fur
Deutsche Auslandsschulden and not paid to the United States in dollars as required by the debt and moratorium agreements.

Treasury ad,ministration fif alien and mixed 'claims

The Settlement o t War Claims Act of 1928 (45 Stat. 254) authorized
the Secretary of the Treasury to make payments on account of (1)
awards of the Mixed Claims Commission, United States and Germany,
for claims of American nationals against the Government of Germany,
(2) awards of the War Claims Arbiter for claims of German, Austrian,
and Hungarian nationals against the Government of the United States,
and (3) awards of the Tripartite Claims Commission for claims of
American nationals against the Governments pf Austria and Hungary.
For a more detailed discussion of these awards and payments see
pages 123 to 128 of the annual report for 1941.
Mixed Claims Commission and Private Law No. 509: Claims against
Germany.—During the fiscal year 1942 additional payments aggregating $1,553.28 were made on account of the Class 2 awards on the
so-called sabotage claims against Germany. One Class 2 award,has
not yet been paid, as satisfactory evidence as to the persons entitled
to receive payment has no,t yet been received. This award plus
interest to January 1, 1928, amounts to $3,850.68. The Class 3
claimants received payments aggregating $21,763,576.77, placing them
on the same basis as the Class 3 claimants who received awards
prior to October 31, 1939.



105

REPORT OF T H E SECRETARY OF THE TREASURY

Total payments made on the additional sabotage awards to September 30, 1942, are as follows:
Payments
Class

1
2
3

Awards (plus
interest to
Jan. 1, 1928)

..

Awards (plus Interest from
interest to
Jan. 1, 1928, to
Jan. 1, 1928) date of payment

Total

$72,501.37
1,058,005. 23
30, 598,657. 59

$47,394.01
688, 239.04

1 $119,895.38
1, 742, 393. 59
3 21, 763, 576. 77

31,729,164.19

Total

$72, 501.37
2 1,054,154. 55
21, 763, 576.77
22,890, 232.69

735, 633.05

23, 625,865.74

1 Payments completed prior to Sept. 30,1941.
2 One award (plus interest to Jan. 1, 1928), amounting to $3,850.( , not yet paid.
3 Payments completed during 1942.

After the Class 3 additional sabotage claims were satisfied by payment of the same percentage payments made on this class of awards
certified for payment prior to October 31, 1939, they shared in the
distributions of 5 percent and 4.4358855 percent authorized on March
19, 1941, and September 17, 1941, respectively, to be paid to all
Class 3 claimants. No segregation of these payments has been
made as the sabotage claimants and the claimants whose awards were
certified prior to October 31, 1939, are receiving payments on an
equal basis.
The payments to American and German nationals on account of the
awards of the Mixed Claims Commission and the War Claims Arbiter
are made put of the German special deposit account established under
the provisions of section 4 of the Settlement of War Claims Act of
1928. The priorities established iii the act and the status as of September 30, 1942, of such priorities up to the seventh priority are jis
follows:
Priority
No.
l.._
2
3
4
5
6
7

On account of—

Nationals '

Administrative expenses
American
Class 1 awards .
.
do
Class 2 awards
do
Payment $100,000 a/c Class 3 awards
do
Payment of 80 percent of (2), (3), and (4) and
interest to Jan. 1, 1928.
German
Tentative awards. War Claims Arbiter
. . . do ..
50 percent of ship and patent claims

Amount due Sept.
. 30, 1942
Held in reserve.
Completed.
$49,520.47.'
Completed.
$57,793.64.1

.

Completed.
Do.

1 Applications for payment of these amounts to claimants were not received or approved as of Mar. 11,
1940, or Sept. 30, 1942.

Up to September 30, 1942, the Treasury has made payments in the
aggregate amount of $163,536,276.22 on account of awards of the
Mixed Claims Commission, from which there has been deducted
$817,879.69 representing one-half of 1 percent authorized by the
Settlement of War Claims Act of 1928, making net payments to
claimants of $162,718,396.53. Of the deductions $770,233.47 has
been covered into the Treasury as miscellaneous receipts in accordance
with the provisions of the act as reimbursement to the United States
for expenses incurred, and $9,029.18 of the deductions have been
withheld and not yet covered; and the balance of $38,617.04 is payable




106

REPORT OF T H E SEiCRETARY OF T H E TREASURY

to the German Governrnxcnt for defraying such expenses as may be
incurred by that government for the adjudication of claims.
The following summary shows the number and amount of awardscertified to the Treasury by the Secretary of State, the amount, paid
^on account, and the balance due thereon as of September 30, 1942.
Further details by classes of awards may be found in table 103, page 672.
Mixed Claims Commission, United States and Germany—Number and amount of
awards, amounts paid, and balance due, certified to the Secretary of the Treasury
by the Secretary of State, as of September 30, 1942 ^
Total number of
awards

Awards certified

Total amount

$181, 698, 235.30
187, 226.85

7,026

1. Amount due on account: Principal of awards . . . . .
Less amounts paid by Alien Property Custodian and others

181,511,008.45
81,466,086.36

Interest to Jan. 1, 1928. at rates specified in awards .
Interest thereon to date of payment or, if unpaid Sept. 30, 1942, at 5
percent per annum as specified in the Settlement of War Claims
Act of 1928
- ...
..
Total due claimants.

_

102,583, 293.69
365, 569,388. 50

__

2. Payment made on account to Sept. 30, 1942:
Principal bf awards.
:..
Interest to Jan. 1,1928, at rates specified in awards
Interest at 5 percent per annum from Jan. 1, 1928, to date of payment as directed by the Settlement of War Claims Act of 1928 . . .
Total payments to Sept. 30,1942....
Less one-half of 1 percent deduction from each payment

-

2. 278, 521.14
163, 536, 276.22
817,879.69

_.

,

162,718,396.63

Net payments made to claimants to Sept. 30,1942
8. Balance due on account;
Principal of awards
___
Interest to Jan. 1,1928, at rates specified in awards
Accrued interest at 5 percent per annum from Jan. 1, 1928, on total
amount payable as of Jan. 1, 1928, to Sept. 30, 1942
Balance due claimants as of Sept. 30,1942

2152.320.280.79
8,937, 474. 29

6,670

._

356

101,709,444.91
8,894.82
100, 304,772.65
202,023,112.28

1 Includes payments on account of Private Law No. 609, approved July 19,1940.
2 Includes payments on account of interest to Jan. 1, 1928, on Class 3 awards and Private Law No. 609.
Payments on this class of awards are first applied on account ofthe total amount payable as of Jan. 1, 1928
(which is treated as a principal payment for this purpose), as directed by the Settlement of War Claims Act
of 1928 until total of all payments on the three classes equals 80 percent of the amount payable Jan. 1,1928.
Payment of accrued interest since Jan. 1,1928, on this class of claims has been deferred in accordance with
the act.

War Claims Arbiter.—Under the Settlement of War Claims Act of
1928, it was the duty of the War Claims Arbiter, within certain limitations, to hear the claims of German, Austrian, and Hungarian
nationals and to determine the fair compensation to be paid by the
United States for ships seized, patents sold or used by the Uhited
States, and a radio station sold tP the United States.
War Claims Arbiter: Claims oj German nationals.—The Treasury
completed up to June 30, 1935, paynient of 50 percent of the amount
of all awards made by the War Claims Arbiter in favor of German
nationals as required by paragraph 7 of section 4 (c) of the Settlement
of War Claims Act of 1928. No payments were made on these
awards subsequent to that date.
<
The following summary shows the number and amount of awards
in favor of German nationals certified to the Treasury for payment,
the payments made on account, and the balance due thereon as of
September 30, 1942.



REPORT O P THB SECRETARY OF THE TREASURY
'

107

War Claims Arbiter—Number of awards, amounts paid, and balance due, on account
of claims of German nationals for ships, patents, and a radio station, as of September 30, 1942
Total
(315 awards)

Awards certified

Ships
(27 awards)

]. Amount due on account:.
Principal of awards including interest to Jan. 1,
$86,738,320.83 1 $74, 262,933.00
1929
Interest at 6 percent per annum from Jan. 1.1929,
on total amount payable as of Jan. 1, 1929, or
on the principal amount remaining unpaid to
Sept. 30,1942
34, 500, 217.83 29,384,345. 08
Total due claimants

Patents and
radio station
(288 awards)

$12,485,387.83

5,115 872.76

121,238,638.66

Balance due claimants

43,368,899.24

37,126, 205. 21

6.242. 694 03

37,126, 205. 21

6, 242,694.03

43,369,421.59

37,126, 727. 79

6 242,693 80

34, 500, 217.83

29,384,345.08

5,115,872.75

77,869,639.42

Total payments to Sept. 30,1942
3. Balance due on account:
Principal of awards
..
Interest accrued at 5 percent per annum from
Jan. 1, 1929, on total amount payable as of
Jan. 1, 1929, or on the principal amount remaining unpaid to Sept. 30, 1942

17, 601, 260.58

43,368,899. 24

2 . Payments made on account to Sept. 30, 1942:
Principal of awards
. Interest at 5 percent per annum from Jan. 1,1929,
on total amount payable as of Jan. 1, 1929, or
. on the principal amount remaining unpaid to
Sept. 30, 1942
1

103, 637. 278. 08

66,511,072.87

11, 358,566 55

vl Includes awards amounting to $622.58 to members of the former ruling family of Germany (sec. 3 (j),
Settlement of War Claims Act of 1928, as amended).

War Claims Arbiter: Claims oj Hungarian nationals.—The awards
made by the Arbiter to Hungarian nationals in the sum of $39,125,
,with interest at the rate of 5 percent per annum from July 2, 1921,
to December 31, 1928, amounting to $14,675, have been paid with
the exception of one award amounting to $137.51, together with interest thereouvat the rate of 5 percent per annum from December 31,
1928. No payments were made during the year on these awards.
German special deposit account.—The following statement shows the
total amounts deposited in the German special deposit account, the
amounts paid therefrom up to September 30, 1942, and the balance
held in the account.
Funds deposited in the German special deposit account and payments made therefrom
to September 30, 1942
RECEIPTS

From investments by Alien Property Custodian under
Trading With the Enemy Act, as amended:
Unallocated interest fund
__
Less refunds
20 percent German property retained. _ _
Earnings on 20 percent German property retained

$25,000,000.00
4,143,663.25
20,856,446.75
^ 34,347,476.76
6,564,469.10

From Germany:
2H percent of Dawes' annuities available for reparations
(Paris agreement of Jan. 14; 1925)
32,183,060.87
Under German-American debt agreement, June 23,1930. 19,469,964.00
Interest on payments postponed under terms of debt
agreement dated June 23,1930.
1,743,738.70




$60,768,392.61

53,396,763.57

108

REPORT OF THE SECRETARY OF THE TREASURY

Funds deposited in the German special deposit account and payments 'made therefrom
to September 30, i^4^—Continued
RECEIPTS—C ontinued
Appropriation for ships, patents, and radio station
$86,738,320.83
Expenses of administration. War Claims Arbiter, on
account German nationals
'
113,624.20
$86,861,945.03

Deposits by Attorney General of the United States (Alien
Property Bureau) under section 25 (d) of Trading With the
Enemy Act, as amended:
German Government
German nationals
_
...-.

137,268.13
435,847.69

Earnings and profits on investments by Secretary of the Treasury
Total receipts

'

"

573,115.82.
5,632,094. 28

.'..

$207,222,311.31

PAYMENTS ON ACCOXJNT

Awards of the Mixed Claims Comndssion:
Under agreement of Aug. 10, 1922
Under agreement of Dec. 31, 1928.Private Law No. 609.

:

Awards of War Claims Arbiter:
For ships
For patents and one radio station.

._

.

$154,914,854.31
7,684,835.94
118,706.28
:
$162,718,396.63
.

37,126,205.21
6, 242,694.03

One-half of 1 percent deducted from Mixed Claims payments covered into
Treasury ($9,029'. 18 withheld but not paid)
.
One-half of 1 percent deducted from Mixed Claims payments on account of
awards entered under agreement of Dec. 31, 1928 (act of June 21, 1930),
and paid to Germany ($14,466.95 withheld but not paid)
One-half of 1 percent deducted on account of Private Law No. 509 withheld
and covered into the Treasury
Advances to special fund, expenses of administration of the Settlement of
War Claims Act of 1928 (Office of the Secretary ofthe Treasury)
Expenses of administration. War Claims Arbiter account of German nationals
Total payments.

43, 368,899. 24
769,438.12
24,150.09
795.35
65,175.00
113^624.20

.-.-

Cash balance in German special deposit account..

.._

207,050,478.53
171,832.78

Tripartite Claims Commission: Claims against Hungary.—The
awards entered by the Tripartite Claims Commission against Hungary,
in favor of American nationals, amounted to $199,975.57. During
the fiscal year 1942 nP payments were made on account of such awards.
As of June 30, 1942, awards aggregating $7,257.35 had not been paid
because claimants had not filed applications as required by law.
Claims of American nationals against Turkey

The Special Claims Commission, United States and Turkey, established under the agreement of December 24, 1923 (see page 196 of the
annual report for 1940 for further details of this agreement), made
awards in 33 cases aggregating $899,338.09, which were reduced by
$70,891.06 on account of expenses incurred by the United States,
leaving net awards amounting to $828,447.03 payable frpm funds
received from the Republic of Turkey. Under the provisions of the
act of February 27, 1896 (29 Stat. 32), these awards were certified on
August 19, 1937, by the Secretary of State to the Secretary of the
Treasury for payment. During the fiscal year 1942 a pro rata payment was authorized to be made to the claimants by the Treasury
from funds amounting to $100,000, available for that purpose. An
additional sum of $100,000 was received June 22, 1942, but too late
to enable the Treasury to make payments to claimants in the fiscal
year 1942. .




REPORT OF THE SECRETARY OF THE TREASURY

109

Statements of awards made by Special' Claims Commission, United States and Turkey,
as of June 30, 1942

Amount awarded to claimants"
Amount of claims
Interest allowed.

-.

.

_

- $539,844.13
359,493.96

.

Total

899,338.09

Less deductions on account of expenses incurred by the United States

70,891.06

Amount of awards

$828,447.03

Amount received from Republic of Turkey:
To June 30, 1941.
During fiscal year 1942
.
Total
Less reimbursement for expenses by the United States
Available for payment to claimants
Amount oaid to claimants:
To June30, 1941...
During fiscal year 1942
Total

i

-

...-.

^...

600,000.00
100,000.00.
700,000.00
_. 70,891.06

,

629,108.94

428,557.26
90,895.84

1..J

_..- 519,453.10

Balance due claimants for which vouchers have not been received.

^

109,655.84

Claims of American nationals against Mexico .

Under the convention between the United States and Mexico
dated AprU 24, 1934, covering the settlement of the claim.s presented
by the Government of the United States to the Commission established by the Special Claims Convention concluded September 10,
1923, the amount to be ^aid by the Government of Mexico to the
Government of the United States was fixed at $5,448,020.14. (See
page 129 of the annual report for 1941 for further details.)
On June 20', 1938, the Secretary of State certified to the Secretary
of the Treasury for payment a list of awards entered by the Special
Mexican Claim.s Commission aggregating $9,137,341.79, subsequently
adjusted to $9,140,541.89, which were subject to reduction on a
percentage basis as provided in section 4 of the act approved April
10, 1935. The final awards as adjusted aggregated $5,210,108.92.
The expenses of the Com.mission were determ.ined to be $241,549.31,
and this am.ount was transferred to miscellaneous receipts on December 4, 1940.
As of June 30, 1942, there had been received and m.ade available
for distribution to claimants the sum of $3,930,591.79. Amounts
aggregating 75.44 percent of the final aw'ards of $5,210,108.92 have
been authorized to be distributed to the claimants.
Statement of awards mfide by Special Mexican Claims Commission, United States
and Mexico, as of June 30, 1942
Amount of final awards to claimants after application of sec. 4 of the act approved Apr. 10,
1935
,
$5,210,108.92
Amount received from Government of Mexico:
To .Tune 30, 1941, .$3,500,000 principal and $152,660.90 interest
. . $3,652,660.90
Jan. 3, 1942, $500,000 principal and $19,480.20 interest
.'
519,480. 20
Totabto June 30, 1942.
...'.
4,172,141.10
Less amount transferred to miscellaneous receipts to cover the expenses of the Commission
241,549.31
Available for payment to claimants
Amount paid to claimants:
Fiscal year 1939
. Fiscalyear 1940
Fiscal year 1941
.
Fiscalyear 1942

_

-._.

3,930,691.79

.........

Total to June 30, 1942.
Balance due claimants:
For which vouchers have not been received
For subsequent distribution




2,087,193.47.
678,717.90
537,124.56 •
616,380.29
-

,

-._.
•

-..
111,089.96
85.61

3,819,416.22

111,175.57

no

REPORT OF THE SECRETARY OF THE TREASURY
Railroad obligations

Total receipts during the fiscal year on account of realization on
railroad securities acquired under section 210 of the Transportation
Act, 1920, as amended, were $368,287.28.
The following statement shows,the total amount of railroad obligations, by classes, originally held by.the United States Government
(exclusive of certain miscellaneous obligations acquired by the Director
General of Railroads), the amount held on June 30, 1942, and payments received on account.
Summary of railroad obligations held by the Government as of June 30,1942, by classes
Class

T r a n s p o r t a t i o n Act:
Sec. 207
Sec. 210
Federal Control Act:
Equipment trust notes. .
Sec. 7
Sec. 12
Total...

Principal
amount
originally held

Principal
amount
held on J u n e
30, 1942

Principal

$282, 712,837. 36
290,800,667.00

$6,007,000. 00
2 24,691,177.88

1 $277, 695,167. 90
3 265,673,986.03

$54,360,339. 70
91,-537, 272 47

346, 656,750. 00
98,401, 756. 00
62,103,453. 28

45,338, 918. 25
' 23,100, 662. 27
4,248,171 96

1,050,431,112.21-

218, 585, 264.65

346, 566,750. 00
98,401,756. 00
62,103,453.28
1, 080, 575,462. 64

29, 698,177.88

T o t a l pa^'-ments received
Interest

1 Stock of the Kansas, Oklahoma & Gulf Ry. Co. in the face ainount of $212,500 was sold on the market
for $201,830.54, resulting in a difference of $10,669.46 between the receipts and the principal originally held.
2 Includes loans aggregating $4,485,600 to four carriers, the assets of which have been completely liquidated
and were insufficient to meet such claims.
,
3 Notes of Wichita Northwestern Ry. Co. and Virginia Blue Ridge Ry. were sold pursuant to the provisions of act of Aug. 13, 1940, for $52,246.91, resulting in a difference of $436,603.09 between the receipts and
the principal originally held.

Section 204, Transportation Act, 1920, as amended.—On January 7,
1941,. section 204 was amended by Public No. 893, to permit the reopening by certain short-line rail carriers of claims against the United
States before the Interstate Commerce Commission. Under the act
the Commission is authorized to ascertain and certify to the Secretary
oi the Treasury the amounts payable to carriers under this section as
amended. The act provides that no claim certified shall be for an
amount in excess of $150,000. No payments were made during the
fiscalyear as no appropriation was available for payment of any
amounts certified for payment.
Under section 204 (g) of the Transportation Act, 1920 (approved
February 28, 1920), an indefinite appropriation was made to pay
claims of this character. The amount previously paid under section
204 was $10,967,801.80, as reported in the Secretary's annual report
for the fiscal year 1937, page 83. The Permanent Appropriation
Repeal Act of 1934 repealed the indefinite appropriation made for
the payment of this class of claims. However, a specific appropriation of $800,000, available for the fiscal year 1942, was made in
the Second Deficiency Appropriation^ Act, 1941, approved'July 3,
1941 (Public Law 150). The Interstate Commerce Commission
certified to the Secretary of the Treasury for payment claims aggregating $184,602.58, of which claims aggregating $167,529.85 were paid
during the fiscal year, leaving an unexpended balance of $632,470.15
at the end of the fiscal year. In the Treasury and Post Office Departments Appropriation Act, 1943, approved March 10, 1942 (Public
Law 495), $600,000 of the unexpended balance was made available
uiitil June 30, 1943. The total payments under this section aggregate
$11,135,331.65.as of the end of the fiscal year. One claim amounting



REPORT OF THB SECRETARY OF THE TREASURY

111

to $17,072.73 has not been paid because satisfactory evidence as to
who is entitled to receive payment has not been received.
Section 207, Transportation Act, 1920, as amende^.—The following
statement shows the amount of obligations of carriers acquired under
section 207 and held on June 30, 1942.
Obligations acquired under the provisions of section 207 of the Transportation Act,
1920, and held as of June 30, 1942
Principal
amount of
promissory Collateral,
note or of
face
directly
amount
held
security

Carrier

Class of collateral or of • Principal
directly held security
in default

Interest in
default

Chicago. Milwaukee, St. $3, 207,000
(0
Paul k Pacific R. R. Co.
Minneapolis •& St. Louis 1,250, boo $1, 500,000
R. R. Co.
Washington, Brandywine
Si Point Lookout R. R.
Co.
M^aterloo. Cedar Falls &
Northern Ry. Co:

50,000
. 600, 000

5, 007, 000
Total...1.
1 Securities directly held.

6% noncumulative preferred
• stock of carrier.
Refunding and extension $1,250,-000 $1, 350,000.00
mortgage, 5% bonds of
carrier.
76, 000 First mortgage, 6% bonds
60,000
28,408.98
of carrier.

625, 000 •Temporary general mort" gage, 7% bonds of carrier. -

•

500,000

604,931.50

1, 800,000

1.983.340>48

Section 210, Transportation Act, 1920, as amended.-—This section
established a revolving fund of $300,000,000 to be used for loans to
railroads under the conditions set forth in a certificate of the Interstate Commerce Commission authorizing each loan, and also for
paying judgments, decrees, and awards rendered against the Director
General of Railroads. No new loans are being made as the time for
making application has expired. No expenditures under this section
were made during the fiscal year. The net expenditures on this
account amounted to $33,640,740.24^ to June 30, 1942.
Total loans (including renewal loans and repayments thereof
aggregating $59,800,000). to June 30, .1942, amounted to $350,600,667;
repayments amounted to $325,473,986.03; and losses on sales under
t h e act of August 13, 1940, aggregating $435,503.09'reduced the loans
outstanding as.of that date to $24,691,177.88.The following statement shows the amount of obligations held on
June 30V 1942, on account of loans to carriers under section 210, and
the amount of principal and interest in default.
Obligations held on June,30, 1942, on account of loans to carriers under sec. 210 of
the Transportation Act, 1920, as amended, andj. the amount of principal and interest m default
Carrier

Loans outstanding

Alabama, Tennessee & Northern R. R. Corporation
— * $151, 500.00
Des Moine,s„&..Central Iowa R. R.. Co. (formerly the Inter633, 500.00
Urban Ry." Co.)'-.^--.-...:
........
..
200, 000.00
Fort Dodge, Des Moines & Southern R. R. Co
'.
1 75,000.00
Oainesville & Northwestern R. R. Co
792, 000.00
Georgia & Florida Ry. (receiver)....
.
1, 382,000.00
Minneapolis & St. Louis R. R. Co
13, 500, 000. 00
Mis.souri & North Arkansas Ry. Co
1872, 600. 00
Salt Lake & Utah R. R. Co...
14, 440, 577.88
Seaboard Air Line R^''. Co
1, 256, 000.00
Seaboard-Bay Line Co. '.
138, 000. 00
Virginia Southern R. R. Co
1, 260,000.00
Waterloo, Cedar Falls & Northern Ry. Co
90, 000. 00
Wilmington, Brunswick & Southern R. R. Co
:.

Principal in
t default

Interest in .
default

$151,500.00

$77, 265. 00

•633,\500.'00'
200, 000. 00

520,651.34
133,164.91

792, 000. 00
1, 382, 000. 00

594, 000. 00
1, 538,129. 73

14,440, 577.88
1, 256,000. 00

9, 498, 349. 09
291, 746. 96

1, 260, 000. 00
90. 000. 00

1, 496, 983. 29
64, 800.00

Total
1
.
.:..|24.691,177.
20. 205. 577. SR- 14.21.5.090.32
I Assets of these carriers have been completely liquidated, and were insufficient to meet these clainis.
487543—43

9




,

112

REPORT OF THE SECRETARY OF THE TREASURY
Federal control of railroads

Administration.—The Treasury continued during the fiscal year
1942 the liquidation of matters growing out of the control of the
American transportation system, which was exercised through the
United States Railroad Administration during the period from December 28, 1917, to February 29, 1920. ,
i^^?^a7^ces.—"Total receipts-on account of the Federal control of railroads for the fiscal year 1942 were $292,786.30, and expenditures
were $2,671.03, resulting in net receipts of $290,115.27, as compared
withnetreceipts.of $180,616.02 for 1941.
. .
At the close of business on June 30, 1942, the cash and appropriation balance aggregated $415,377.98 as compared with $525,262.71 at
the close of 1941.
;
A statement of receipts and expenditures follows.
'
'
Receipts and ^expenditures in connection with Federal control of railroads, fiscal years
. ,'
1941 and 1942 .
• - •

Balances a t beginning of year:
Secretarj^ of t h e T r e a s u r y , special deposit a c c o u n t :
U n r e q u i s i t i o n e d a p p r o p r i a t i o n balances:
• Federal control of t r a n s p o r t a t i o n s y s t e m s
:
L o a n s to railroads after tei-mination of Federal
control
.1......
'--.
Total balances.
.
Receipts:
Collections of principal on- obligations of c a r r i e r s . .
Collections of interest on obligations of c a r r i e r s . . .
I n c o m e taxes of Federal carriers repaid b y T r e a s m-y
1
......
Collection oi miscellaneous claims referred to
W a s h i n g t o n J r o m field, including t r a n s p o r t a tion charges, undercharges, etc
'
T o t a l receipts.'
.

'

$72, 849. 47

268,413,68

452, 413. 24

$344,646^69

Total expenditures.
..i
..
Transfers from a p p r o p r i a t i o n a c c o u n t to s u r p l u s fund.
Balances a t end of year:
Secretary of t h e T r e a s u r y , special deposit.account.
F e d e r a l control of t r a n s p o r t a t i o n s y s t e m s . . . ' .
1

Total expenditures and balances....'

.-...

287, 986. 34

181, 373. 37
1. 475. 54
_
•

Expenditures:
E m p l o y e e s ' compensation liability a w a r d s
.,...
Deposit) w i t h t h e W o r k m e n ' s C o m p e n s a t i o n
B o a r d of Ontario, account of compensation liability.......
..
:
C l a i m s for u n p a i d w a g e s , ' b a c k - p a y a w a r d s , a n d
L i b e r t y b o n d subscription r e f u n d s . . .
Admini'strative expenses (pay r o l l s ) . .

$525,262.71

253.09 '
1, 023. 67

..

T o t a l balances a n d receipts

T o t a l balances.

$76, 233.01

....

I
184,125. 67

4, 799.96 •
...

528,772.36

292,786.30
!, 049. 01

767.13

215. 75
1, 747,50

138. 90
1, 765. 00
3, 509. 65

72, 849. 47
452, 413. 24
..

2.671.03
400, 000. 00
30. 236. 44
385,141^54

525,262.71

415, 377. 98

528, 772. 36

818,049. 01

Pursuant to the provisicns of section 12 of the Federal Control-Act
and with the approval of the President $40,000 derived from operating
revenues of railroads was transferred from the special deposit account
to the appropriation account ^^Federal Control of Railroads,'^ and
$400,000 of the appropriation balance was transferred to the surplus
fund.
.'
Securities, etc.—'^o collections were made since November 24, 1936,
on account of the obligations of carriers acquired under section 207



REPORT OF THE SEiCRETARY OF THE TREASURY

113

of the Transportation Act, 1920, as amended, which are listed on
page 111.
The miscella.neous securities acquired under section 202 of the
Transportation Act, 1920, as amended, were obtained ' from nonFederal controlled railroads and others for indebtedness, such as interline balances, freight charges, undercharges, etc. No collections were
made from this source during the fiscal year. A statement of the
amounts carried on June 30, 1941, and June 30, 1942, follows.
Indebtedness
June 30, 1941.

Carrier

Indebtedness
June 30, 1942

$4, 065. 00
16, 592. 36

$4,065.00
16, 692. 36

20, 657. 36

E. F. Drew and Co., Inc. (stock).-.
Virginia Blue Ridge Ry. Co. (loans and bills receivable).
'Total
...^

20, 657. 36

Ciams.—The principal claims'presented during the period were on
account of refunds of installments paid on subscriptions for Liberty
Loan bonds by employees of carriers during Federal control. Total
payments on account of allowed claims of this character amounted to
$138.90 during the year.
Compensation payments—TJnited States railroad employees.—Expenditures on account of the compensation award of a railroad employee residing in the United States, amoimted to $767.13 during the
year.
<
Canadian Workmen^s Compensation Board.,—The Canadian Workmen's Compensation. Board, located at Toronto, Canada, has jurisdiction over certain cases of disability resulting from accidents during
the period of Federal control on those railroads having lines extending
into Canada. Payments under Canadian conipensation awards, made
from funds so deposited with the Board, amounted to $2,706.00 during
the calendar year 1941. Interest amoimting to $1,352.25 was added
to the fund, leaving a balance of $25,928.91 to cover awards as of
December 31, 1941. The figures showing the balance as of June 30,
1942, are not available inasmuch as the Board's reports are on a
calendar year basis. However, the status of the fund as of December
3.1, 1941, was as follows:
Balance Dec. 31, 1940
Payments from Treasury
Interest Jan. 1,1941, through Dec. 31, 1941
Total
Payments of awards by Board during 1941
Balance Dec. 31, 1941

$26,518.39
764. 27
1,352.25 .

.'...
.....
:...

....'.

.
•

28,634:91
2, 706.00
25,928.91

Tax rejunds and other collections.—XJndei the terms of the Federal
Control Act and the standard contract with the carriers, the Director
General paid 2 percent of all Federal income taxes assessed against
carriers formerly under Federal control. Subsequently, the United
States Board of Tax Appeals held that such taxes should not have been
assessed against either the carriers or the Director General. As a
result of further tax adjustments, there was received during the year
$287,986.34 on account cf these items. Further clainis for such paid
taxes arnounting to $438,770:84 are.still pending before the.Board of
Tax Appeals and it is anticipated that substantial sums will be received when such cases are finally adjusted by the Bureau of Internal
Revenue.



114

REPORT OF THE SECRETARY OF THE TREASURY

' '

All unpaid judgments which have not .expired by reason of t h e
statute of limitations, and other claims are being reviewed from time
to time to determine whether any amounts can be collected thereon.
Collections from this source amounted to $14 during 1941 and $58
during 1942.
Federal Farm Mortgage Corporation

Under section 32 of the Emergency Farm Mortgage Act of 1933,
approved May 12, 1933 (49 Stat. 43), as amended, the Secretary of
the Treasury is authorized to pay to the Federal Farm Mortgage Corporation such amount as the Governor of the Farm Credit Administration certifies to the Secretary of the Treasury is equal to the amount
by which interest payments on mortgages held by such Corporation
have been reduced. Public Law 629, approved June 27, 1942 „ (56
Stat. 391), extended to June 30, 1944, the period for which payments
are to be made to the Federal Farm Mortgage Corporation on account
of reductions in interest,, and made this provision applicable to interest
on purchase-money mortgages and on real estate sales contracts
taken by the Federal Farm Mortgage Corporation which is payable on
installment dates on or after July 1, 1942, and prior to July 1, 1944.
A statement ,of the amoimts appropriated and payments to t h e
Federal Farm Mortgage Corporation follows.
Appropriations on account of reductions in interest rate on mortgages, and payments
to the Federal Farm Mortgage Corporation for this purpose, fiscal years
1938 to 1942
1. Amounts appropriated:
'
To Oct. 9. 1940
1
:
Treasury Department Appropriation Act, 1942, May 31, 1941
Total to June 30, 1942
2. Pa^-ments to Federal Farm Mortgage Corporation: i
To June 30, 1941....
.Fiscal year 1942
Total to June 30, 1942

1

3. Unexpended appropriations, June 30, 1942
1 On basis of daily Treasury statements (unrevised).

'.

_

.'

Amount
$33,125,000.00
9,600,000.00
42,725,000.00

$30,010,422.22
i.
9,607,575.24
39,617,997.46
3,107,002.64

Federal land banks'

Capital stock.—ViideT the act of January 23, 1932 (12 U. S. C. 698),
amending the Federal Farm Loan Act, it is the duty of the Secretary
of the Treasury on behalf of the United States, upon the request of
t h e board of directors of any Federal land bank made with, the approval of the Farm Credit Administration, to subscribe from time to
time for capital stock of such bank. The act further provides that
such stock may at any time, in the discretion of the directors and
with the approval of this Farm Credit Administration, be paid off at
par and retired in whole or in part and t h a t the Farm Creciit Administration may at any time require such stock to be paid off at par
and retired in whole or m part if m its opinion the bank has resources
avaUable for. such purpose. The proceeds of all repayments on account
of stock subscribed for by the Secretary of the Treasury are held in
the Treasury and are avaUable for the purpose of paying for other
stock thereafter issued pursuant to said act. .




REPORT OF T H E

SEiCRETARY OF T H E

TREASURY

115

To enable the Secretary of the Treasury to pay for said stock,
$125,000,000 was appropriated under the ac:fc approved February 2,
1932. The following statements show the transactions in connection
with subscriptions to stock of Federal land banks during 1942.
Subscriptions by the Secretary of the Treasury to stock of Federal land banks and
repayments thereon, fiscal year 194-2
[Par value of shares]
Shares held
June 30, 1941

Federal land bank

Baltimore
Columbia
St. Paul..
Wichita
Omaha
Spokane
Total

Shares subscribed fiscal
year 1942 i

Shares repaid
fiscal year
1942 1

Shares held
June 30,1942«

-

-

$3,182,165
4,949,430
40,061,040
5, 504, 620
5, 693,030
8,126,400

$208,800 •

$24,230
30, 225
49, 320
65, 680
141,085
42, 980

$3,157,935
4, 919, 205
40, 220, 520
5,438, 940
5, 551,945
- 8,083,420

-

67,516,685

208,800

353, 520

67, 371,965

.
-

1 On basis of daily Treasury statements (unrevised).
« The Federal land banks of Springfield, Louisville, New Orleans, St. Louis, Houston, and Berkeley had
no outstanding capital stock held by the Secretary of the Treasury as of June 30,1942.

Payments ori account oj reductions in interest rates on mortgages and
subscriptions to paid-in surplus.—The Secretary of the Treasury is
directed, under certain conditions, to make payments to Federal land
banks equal to the amount by which interest payments on mortgages
held by such banks have been reduced pursuant to the Federal Farm
Loan Act, as amended, and he also subscribes, under specified con-'
ditions and in the manner prescribed by the Federal Farm Loan Act, as
amended, to the paid-in surplus of each Federal land bank an amount
equal to the amount of all extensions and deferments of any obligation
that may be or may beconie unpaid under the terms of any mortgage.
Amendments to the law under which subscriptions are made to the
paid-in surplus of the Federal land banks are contained in the Farm
Credit Act of 1937, approved August 19, 1937. The period for which
payments to Federal land banks on account of reductions in interest
rates may be made was extended to June 30, 1944, pursuant to Public
Law 629, approved June 27, 1942 (56 Stat. 391). ' This law also made
the provisions relating to the reduction of interest applicable to interest on real estate sales contracts taken by Federal land banks which
is payable on installment dates after June 30, 1942.
^
A statement as of June 30, 1942, of the amounts appropriated on
account of reductions in interest rates on mortgages and of payH]i.ents
to Federal land banks for this purpose is here set forth.




116

REPORT

OF T H E

SEiCRETARY

OF T H E

TRiEASURY

A p p r o p r i a t i o n s on account of reductions i n interest rates on mortgages a n d - p a y ments
to Federal land'banks-for this purpose to J u n e 30, 1942
1. Amounts appropriated:
To June 30, 1942
Treasury Department Appropriation Act, 1942, May 31, 1941

$209,267,000
26,800,000

• Total to June 30, 1942
2. Payments to Federal land banks:

.:

A m o u n t paid
A n i o u n t paid
A m o u n t paid
to J u n e 30,1941 fiscal year 19421 to J u n e 30,1942

Federal land b a n k

Springfield
Baltimore
Columbia
Louisville
N e w Orleans
S t . Louis
St. P a u l
Wichita...".
Houston.
Berkeley , ^
Omaha
Spokane

_.

.
,.

Total*.

_

$7, 389, 515. 22
•8,'862, 617. 69
8, 307, 455. 53
20, 357, 972. 37
10, 690, 879. 49
17, 715, 857. 43
28,807, 656. 29
16, 309, 089. 91
22, 977, 860. 37
11,873,990.80
35, 066, 496. 31
12,426,008. 33

$973, 751. 34
1,104, 503. 66
1, 063, 268. 45
2, 582, 209. 47
1, 335, 844. 96
2, 421, 372. 41
3, 934, 001. 70
2,108,876. 20
• 2,950,122.19
1, 615, 217. 45
4, 845, 620. 46
1, 566, 714:82

$8, 363, 266. 56
9, 967,121. 35
9, 370, 723. 98
22, 940,181. 84
12, 026, 724. 45
20,137, 229.84
32, 741, 657. 99
18,417,966.11
25,927, 982. 56
13, 489,208 25
39, 912,116. 77
13, 992, 723.15

200, 785, 399. 74

'.
.......
...

.

236,067,000

26, 501, 503.11

227, 286,902. 85

3. Unexpended appropriations, June 30, 1942

1,780,097.15

1 On basis of daily Treasury statements (unrevised).

Appropriations for subscriptions to paid-in surplus to June 30, 1937,
amounted to $189,000,000. No appropriation .for this purpose has
been made since that date.. A statement as of June 30, 1942, of the
amounts appropriated for subscriptions to the paid-in surplus of
Federal land banks on account of extensions and deferments, and net
repayments by the Federal land banks follows.
A p p r o p r i a t i o n s for subscriptions to the p a i d - i n s u r p l u s of Federal land banks on
account of extensions and deferments, and payments for this purpose to J u n e 30,
1942
1. Amounts appropriated:
To June 30, 1941

•

Total to June 30, 1942

.1

v
.

'
$189,000,000.00
189,-000,000.00

2. Payments to Federal land banks:
A m o u n t pai<i t o
J u n e 30, 1941

Federal l a n d b a n k

.

Springfield
Baltimore
Columbia
N e w Orleans
S t . Louis
St. P a u l . .
Wichita
Berkeley
Omaha
Spokane
Total

N e t a m o u n t p a i d A m o u n t paid t o
fiscal year 1942 i
J u n e 30, 1942

$8, 317," 138. 66
' 4,190,251.29
9, 386, 953. 42
11, 675, 585. 41
11, 413, 256. 57
33,128,017.71
16,850,213.90
4, 550, 946. 55
30, 740, 238. 50
15,472,384.78

2 1, 250, 000. 00

....

146, 724, 986. 79

136, 252. 23

.
.
:
_.
.
,

.
...

•

3. Unexpended appropriations, June 30, 1942.
1 Onvbasis of dajiy Treasury statements (unrevised).
2 Excess of repa;yments'(deduct) :"'-'^
•'"•",




2 $250,000.00
1, 636, 252. 23

$8, 317,138. 66
4,190, 251. 29
9,136, 953. 42
11, 675, 585. 41
11,413,256.57
, 34,764,269.94
16, 850, 213. 90
4, 550, 945. 55
30, 740, 238. 50
14, 222, 384. 78
145,861,238.02
$43,138, 761. €

.

REPORT O'F T H E SEiCRETARY OF T H E TREASURY
.

117

Federal savings and loan associations .

Under the act of June 13, 1933 (48 Stat. 133), as amended April 27,
1934 (48 Stat. 645), the Secretary of the Treasury was authorized oh
behalf of the United States to subscribe for preferred shares aiid" fullpaid income shares in Federal savings and loan associations upon
request of the Federal Home Loan Bank Board. Ah appropriation
of $50,000,000 to enable the Secretary of the Treasury to purchase
such shares was reduced by an allocation of $700,000 to the Federal
Home Loan Bank Board. The details concerning the provisions of
law under which these subscriptions were made and the appropriations
are contained in the annual report for 1940, pages 176 and 177..
The Home Owners' Loan Corporation also was authorized to purchase full-paid income shares of Federal savings and loan associations
after the funds available to the Secretary of the Treasury for. the
purchase of such shares had been exhausted. The funds available
to the Secretary of the Treasury were exhausted on October 25, 1935.
During the fiscal year. 1942 the sum of $i,228,300 was received on'
account of shares repaid, making the total shares repaid to June 30/
1942, $29,857,400.
. •
The following statement shows the transactions in connection with
the subscriptions by the Secretary of the Treasury to preferred and
full-paid income shares in these associations during the fiscal year
1942.
'
Preferred and full-paid income shares of Federal savings and loan associations .subscribed by the Secretary of the Treasury to J u n e 30, 1942, and dividends received
[Par value of shares] •
Preferred
shai-es
$637,800

T o t a l shares subscribed and paid
S h a r e s held on J u n e 30, 1 9 4 1 . . . 1
Less shares repaid during 1942.
Shai-es held on J u n e 30, 1942

....-.•.
. .
.i

Full-paid income shares $48, 662; 200

$49,300,000.00

'.-23,670,900
4, 228, 300

23,670,900.00
4,228,300.00

19, 442, 600

19,442,600.00

D i v i d e n d s received on preferred a n d full-paid income
shares:
T o J u n e 30, 1941
:
D u r i n g 1942
T o J u n e 30, 1942

. Total

8, 883, 741.01
697, 205. 86

-.

9, 680, 946.87

Trust and special funds invested by the Treasury Department

Under various provisions of law creating trust and special funds,'
the Secretary of the Treasury or the Treasurer of the United States,
is authorized to invest such portions of the funds as are not required
to meet cuTrent withdrawals. The following statement shows the
amount of Government and other securities held in these funds at
the clo^evof the fiscal year. Further details on each of these fuiids.
are shown in the tables beginning on page 602..




118

REPORT OF T H E SECRETARY OF THE TREASURY

Securities held as investrnents in trust arid special funds, at par value, June 30, 1942
.

[000 omitted]

Fund

Adjusted service certificate fund...
Ainsworth Library fund, Walter Reed General Hospital.
Alaska Railroad retirement and disability fund
....
Canal Zone retirement and disability fund.
Civil service retirement and disability fund.
District of Columbia teachers' retirement fund
District of Columbia water fund
."
.
District of Columbia workers' compensation fund
Federal old-age and survivors insurance trust fund.
Foreign service retirement and disability fund...
Library of Congress trust fund:
Longshoremen's and harbor workers' compensation
fund.
National Cancer Institute gift fund
National Institute of Health gift fund.
Nation al park trust fund
'National service life insurance fund
, Pershing Hall Memorial fund
Railroad retirement account
Unemployment trust fund
U. S. Government life insurance fund.
Total

__

1

Government
securities

Government
Other
guaranteed secmities

$18,435
10
1,300
6,678
782, 650
8,264
1,773
32
, 201, 634
5,442
4

Total

$18,435 ,

$95

10
1,300
6, 678
782,650
9.615
$1, 257
1, 773:
43
11
3, 201, 634
5,442
191
"i87"

199

251

79
17
38, 775
191
91, 500
3,139,000
905, 468
8, 201, 449

70
17
38,775
191
91, 50O .
3,139, 000
947,467
43, 497

;, 246, 051

NOTE.—Figures have been rounded to nearest thousand dollars and will'not necessarily add to totals.

During the fiscal year 1942, a change was made in the investment
procedure for t h e national service life insurance fund and the United
States Government life insurance fund. In order to expedite the
investment of monies in these two funds, there was established with
the Treasurer of the United States, pursuant to Public Law 448,
approved February 10, 1942, a special deposit account in the name
of the Chief Disbursing Officer, Division of Disbursement, for each
of these trustfunds. (See Exhibit 61, p. 342.) Into these special deposit
accounts were deposited the cash balances to the credit of these two
funds on the books of the Division of Bookkeeping and Warrants and
also balances with disbursing offices. Under this arrangement, investments can be made by means of a voucher paid by the Chief Disbursing Officer, thereby permitting investments to be completed more
rapidly than under the prior warrant procedure.
Emergency Reliej Accounting Organization

\

Under authority of section I I (a) of Executive Order No. 7034,
dated May 6, 1935, and Department Circular No. 543, approved by
the President, the Commissioner of Accounts continued during the
year to maintain accounting and disbursing facilities for handling
appropriations made by the Congress for the emergency relief program. The provisions of this Executive Order w-ere extended by
Executive Orders Nos. 7396 and 7649 and the provisions of Department Circular No. 543 were extended by Department Circulars Nos.
592 and 616, approved by the President to apply to funds Appropriated in the Emergency Kelief Appropriation Acts for the fiscal years
1935 to 1942. ,
During the yeay the 52 Treasury State accounts oflBlces were regionalized and the number reduced to 19 Treasury regional accounts offices;
and the 37 Treasury State disbursing ofiices were consolidated with



REPORT OF THE SEiCRETARY OF THE TREASURY

119.

t h e Treasury regional ofiices handling disbursement of other than
. emergency relief funds. The Treasury accounts and disbursing ofl&ces
had 853 employees on June 30, 1942, which was a reduction of 1,609
employees, or 65 percent, since June 30, 1941.
^^"
In a letter to the President dated April 9, 1942,. the Secretary of
the Treasury recommended that, effective July 1, 1942, the emergency
Treasury accounts offices discontinue (1) the maintenance of accounts,
(2) the preparation of financial reports (except for a final financial
report similar to those previously transmitted annually to the Congress), (3) the examination of disbursing officers' accounts, and (4) all
other functions performed by the emergency Treasury accounts offices
pursuant to Executive Order No. 7034 as recommended and extended.
The letter further proposed that a small staff of employees be maintained during the fiscal year 1943 to wind up the affairs of these offices.
(See exhibit 57, p. 338.)
These recommendations, which were approved by the President on
April 14, 1942,-were in line with the policy of reducing nondefense
expenditm'es and making available the maximum trained personnel
for war activities. Appropriation was made by the Congress to cover
the liquidation expenses of the emergency Treasury accounts offices
to December 31, 1942.
I n view of the provisions of Public Law 389, approved December
29, 1941, providing for the bonding of officers and employees authorized
to certify vouchers for payment by disbursing officers in the executive
branch of the Government, the Secretary of the Treasury also recommended:in his letter dated April 9, 1942, that the executive preaudit
by the emergency Treasury accounts oflBces of all vouchers and pay
rolls relating to the emergency work-relief program be discontinued
effective May 1, 1942. This recommendation was also approved by
the President. Prior to this date, all pay rolls and vouchers were
. examined before payment tb insure that the expenditure was made
within the purview of Federal laws and regulations. The Treasury
emergency organization from April 8, 1935, to June 30*, 1942, transmitted to the General Accounting Office accounts covering expenditures totaling $13,586,817,322.07. Against this amount, the General
Accoimting Office has issued formal certificates of settlement of account
for approximately $11,213,661,937.00, or 82.5 percent of the expenditures.
.
.
The Treasury State and regional accounts offices have handled since
their inception more than 300,000 emergency relief project accounts
for approximately 80 administrative agencies. There were about
13,000 accounts, including project accounts, which, were active on
June 30, 1942. The disbursing offices during the fiscal year 1942
issued approximately 30,000,000 checks payable from emergency
relief funds, which were verified for accuracy in the accounts offices.
Reports of operations, obligations,, and expenditures, as required
by law, were submitted by the President to the Congress before
January 30 of each calendar year, Such repoits set forth the status
of funds as of the close of the previous calendar year. The foUowing
comparative financial statement shows summary information relative
to expenditures under the emergency relief and work relief program
from its inception to June 30, 1942. Additional tables showing the
status of emergency relief appropriation funds by organizations and
by States may be found on pages 448 to 461 of this report. ;



120

REPORT OF T H E SEiCRETARY OF T H E TREASURY

Expenditures {checks issued) under the emergency relief program, April 8, 1935, to
.. • ^
J u n e '30, 1 9 4 2 y
I. B Y T Y P E OF W O R K

Fiscal years
1935tol938 2

T y p e of w o r k

Fiscal year
1940

Fiscal year
1939 .

. •

Fiscal year
1941

Fiscal year
1942

Cumulative
to J u n e 30,
^ 1942

Highways, roads,
$1, 988, 741, 711 $916, 225,-557 $580.101,448 $466,811,644 $251, 778,987 $4, 203, 659, 347
streets, etc
631, 771,129 218, 240, 793 145, 967, 559 . .140,097,604 96,086, 535 1, 232,163, 620
Public buildings:.
111, 708, 332 . 7,590,536
1,691,082
2,146, 721
808,697
H o u s i n g projects
123,945,368
Public recreational
. 633,194, 739 189, 937,965
64,016, 769 30, 535, 528 1; 014,657,491
96,972, 490
facilities.. - . . .
1,005,424, 721 128.194,981
C o n s e r v a t i o n work
80,107, 267 . 45," 258,840 20, 276, 491 1, 279, 262, 300
Electric utilities, \vater
a n d sewage systems,
501,767, 475 200, 612,028 144, 277, 531 126,653,385 80, 806, 563 1,054,016, 982
etc
'.T r a n s p o r t a t i o n facili221, 819, 347
61, 245,093 . 27,530,131
59,453,113 70, 707, 342
430, 755,026
ties .'.
E d u c a t i o n a l , profes. sional, a n d clerical
projects
..•- .785,'783,130 359,680,885 • 336, 503, 098 261, 241, 547 219, 631, 890 1,962, 840, 550
631, 086, 722 259,144,153 176,225,420 140,134, 677 92,605,982 1, 299,196,954
Miscellaneous. . . . . . . . .
A d m i n i s t r a t i v e ex441,606,407 129,336,701 110,909, 466 -98,788,525 45, 593,071
826, 234,170
penses.. .
Rural
rehabilitation,
s u b u r b a n projects,
27,114, 43.1
4, 544,106
loans, relief
. . . . • 411,066,915 157,766, 679 134, 546, 636
735,038,766
G r a n t s t o States for
2, 732
922, 343,199
,99,397
31, 869
.
1.693
continuing relief
922,478,890
8, 286, 313, 827 2, 617,974,768 1,836, 290,498 1,431, 293, 486 913, 376, 885 15,084, 249, 464

Total...'.

II.

Object of
expenditure

Fiscal years
1935 to 1.938 2

B Y OBJECT OF E X P E N D I T U R E

Fiscal y e a r
1939

Fiscal year
1940

Personal services
(Federal p a y roll
$4, 921, 064, 257 $2.. 139,113,369 $1,
only)
Supplies a n d m a t e 599,472,024
140, 568, 540
rials
...
65, 354, 382
251, 820,064
. Rent
Construction, maintenance, a n d re16, 858,149
236, 408, 910
pair c o n t r a c t s :
1, 709, 693,915
68, 739, 705
Grants
C o n t r a c t u a l . ' services:
12, 760,859
3,190,964
Communications.
T r a v e l , including
17,275,359
70, 536, 5681
subsistence
Printing
and
8, 525, 473
2, 468,47i
binding
Other contractual
54, 481, 3781
6,973, 287
services
..
E q u i p m e n t pur16,659,697
80, 943, 248
chased
...
75, 208,181
10, 738, 782|
L a n d acquisition
253, 245, 6621 122,401,135
Loans
Employees'
(accid e n t ) compensa7, 632,9381
12,153, 288
tion.
Total......

Fiscal year
1941

Fiscal year
1942

Cunmlative
to J u n e 30,
1942

523,498, 795 $1, 240, 561, 617 $770,642,706 $10,594,880,744
87,149, 310
29, 753, 511

84, 691, 313
31, 435, 217

7, 570, (
43, 506, 5921

5, 744, 518
28, 424, 676

76, 040, 730
31,174,837

987,921,917
409,538, Oil

1, 698, 440
268,280;v6§B:'
5,181, 796 1,855, 546, 684

2, 405, 266

1,982,181

1,478,005

21,817, 266

16, 669, 538

16, 235,148

9,158,020

129,864,633

1,830,181

1, 576,988

936, 637

15, 336, 750

•5,640,843

4, 249,137

5, 679,946

76,924, 591

11,123,309
284, 366
97, 528, 234

7,022, 647

476, 519
1, 719, 300

5, 088, 570
147,150
1, 323, 823

i'20,837, 371
86,- 854,998
' 476, 218,154

8, 339,884

7,175, 325

4, 926, 225

40, 227, 660

;, 286, 313, 827 2, 617, 974, 768 1,835, 290, 498 1,431, 293, 486 913, 376, 885 15,084, 249,464

F o o t n o t e s at end of t a b l e .




121

REPORT OP THE SECRETARY OF THE TREASURY

Expenditures (checks issued) under the ernergency relief program, April 8, 1935, to
June.30, iP4:^—Continued
III.

A M O U N T OF E X P E N D I T U R E S A N D N U M B E R OF P A Y M E N T S , B Y M O N T H S

Fiscal years
1935 to. 1938 2

Month

Fiscal year
1939

Fiscal year
1940

Fiscal year
1941

Fiscal year
1942

.Amoimt of expenditures
July
August
September
October
November
December
January
February
March
April
May
June

$544, 985, 212
574, 304,485
576, 206, 518
599, 016, 423
606, 733, 661
709, 952, 659
643, 384, 835
• 589,005,343
743, 431, 577
847, 065, 722
857, 486, 677
994, 740, 715

....
...

^
.1..

$200, 501, 723
224, 398,400
228, 548, 380
229, 881, 972
218, 820, 722
243, 806, 203
211, 720, 732
194, 921, 450
252, 689, 052
207,154, 675
199,075,346
206,456.113

8, 286, 313, 827 2,617,974,768

T o t a l expenditm-es

$155, 842, 701
156, 267, 880
123, 634,080
135, 993, 389
142, 722, 271
157, 752, 654
148, 328, 283
150, 327, 963
. 183,834,339
173, 854, 722
161, 474,123
145, 258, 093

$122, 728,121
$94, 454,105
80,102,115
127, 327, 366
79, 967, 505
113,447, 400
84, 382, 823
124,488,081
78, 782, 251
116,279,017
81,450, 770
122, 745, 254
79,514,436
124, 912, 524
69,823,149
114, 523, 585
71, 612, 563
121, 403, 855
69, 847, 929
119, 742, 482
. 114, 350, 853 63,858,199
59, 601, 040
109, 344, 948

1, 835, 290,498 1, 431, 293, 486

913, 376, 885

N u m b e r of p a y m e n t s .
July:
.
August
September...
October
November
December
January.
February..
March
April
May
June
-

....:.....

i.

T o t a l n u m b e r of p a y m e n t s .
C u m u l a t i v e total n u m b e r of payments

12,033, 710
12, 248, 514
12, 920, 967
14, 986, 613
15, 840, 922
20, 560, 450
19, 736, 407
19,032,436
23, 537,029
21, 548,145
20,926,449
21, 499, 806

6, 976, 666
7, 687, 508
7, 601, 271
8, 214, 831
8,195, 920
8, 934,048
7, 810, 869
6, 915, 252
8, 663, 956
7, 080, 200
6,792,201
6, 665, 297

5, 751, 752
5, 378, 951
4, 480, 420
4, 913, 273
5,112, 827
5, 870, 892
5, 843,135
5, 710, 956
6, 521, 372
5, 990, 224
5, 719,132
5,171, 977

4, 446, 437
4, 351, 894
3, 960, 436
4, 358, 831
4,198, 533
4, 451, 373
4, 694, 416
4,168, 851
4, 451, 626
4,121, 959
3, 870, 648
3, 582, 690

214,871,448

91, 538, 019

66, 464, 911

50,657,694

214, 871, 448

306, 409, 467

372, 874, 378

423, 532, 072

3,095, 376
2, 522, 706
2, 523, 915
2, 630,137
2, 419, 013
• 2, 668,156
2, 660, 364
2, 301, 528
2, 440,'562
2,252,354.
2, 021, 451
1, 866, 802
29, 402, 364
452,934,436

1 Does n o t reflect items in transit as of J u n e 30, 1942, a m o u n t i n g to $170.
2 Includes $525,848,046 for fiscal year 1935 (Apr. 8 to J u n e 30, 1935), $2,898,716,470 for 1936, $2,860,508,932
for 1937, a n d $2,001,240,379 for 1938.
N O T E . — O n t h e basis of a m o u n t s r e p o r t e d on t h e daily T r e a s u r y s t a t e m e n t of J u l y 15, 1942.

BUREAU OF THE PUBLIC D E B T

The Bureau of, the Public Debt, in the Fiscal Service, is charged
with the conduct of transactions in the public debt securities of the
United States, and in securities of the insular governments and of
Government-owned corporations, for which the Treasury Department
acts as agent. The Bureau is also' charged with the verification of
United States currency redeemed by the Treasurer of the United
States and of imperfect securities deliveied by the Bureau of Engraving
and Printing, the destruction of redeemed currency and other securities
authorized to be destroyed, and the procurement of distinctive paper
for cmTency and public debt securities. In January 1942, all matters
relating'to the designation and qualification of agents for the sale and
issue of United States war savings bonds of Series E were transferred
from the Bureau of Accounts and have since been administered by the
Bureau of the Public Debt.
The Bureau organization includes the Office of the Commissioner
of the Public Debt, the Division of Loans and Currency, the Ofiice of
the Register of the Treasury, the Division of Public Debt Accounts and
Audit, the Division of Savings Bonds, and the Division of Paper



122

REPORT OF THE SECRETARY OF THE TREASURY

Custody. Transactions in public debt issues are conducted by the
Federal Reserve Banks as fiscal agents of the United States. The
Postal Service acts as agent for the sale of United States savings
bonds and stamps, and other branches of the Government service
have been designated as agencies for the sale of war savings bonds.
In order to provide for the greatly expanded organization requhed
for the savings bond program., for which =an appreciable amount of
additional space was required which it was not possible to obtain in
Washington, all the activities of the Bureau of the Public Debt
concerned with war savings bonds, after their issue, were moved to
Chicago late in the fiscal year. The Chicago office of the Bureau of
the Public Debt was established, and includes the Division of Savings
Bonds in its entirety and branches of the Office of the Commissioner,
of the Division of Loans and Currency, of the Office of the Register
of the Treasury, and of the Division of Public Debt Accounts and
Audit.
The following statements, subrnitted by units of the Bureau,
generally indicate their functions and summarize the transactions
conducted during the year.
Division oj Loans and Currency
The Division of Loans and Currency is the active agent of the
Secretary of the Treasury for the issue of alP public debt obligations
of the United States and for conducting transactions, in such obligations after issue. I t is also responsible for the issue of bonds or other
obligations of Puerto Rico and the. Philippine Islands, for which the
Treasury Department acts as agent, and of the securities of various
Government corporations and credit agencies. The Division undertakes the safekeeping of these securities for certain Government
offices. I t also counts and delivers to the Destruction Committee
the United States currency canceled as unfit and mutilated paper
(spoilage, etc) received from the.Division of Paper Custody and the
Bureau of Engraving and Printing.
/
Issue and retirement' oj securities.—The following is a summary of
the issue and retirement of securities conducted through this Division
during the fiscal ^Tiear 1942, Detailed accounts of all transactions in
public debt securities of the United States are presented in formal
statements elsewhere in the report.




EEPORT OF THE SECRETARY. OF THE TREAStTRY

123

Transactions in United States and insular securities and in securities of various
• Government corporations' and credit agencies, fiscal year 1942
[Principal amount]
Transaction

Bearer

P u b l i c d e b t securities: i
O n h a n d J u n e 30,1941
U n i s s u e d stock r e t u r n e d to Division
Spoiled u n i s s u e d stock r e t u r n e d to D i v i s i o n .
R e c e i v e d from B u r e a u of E n g r a v i n g a n d P r i n t i n g .
T o t a l to be accounted f o r . . _

i...

Stock s h i p m e n t s to F e d e r a l Reserve B a n k s a n d p o s t
offices^
.'Issued b y Division'
—
U n i s s u e d stock delivered to Register o f t h e T r e a s u r y .
Spoiled unissued stock delivered t o Register of t h e
Treasury
T o t a l disposals
O n h a n d J u n e 30,1942..
Retired and redeemed..
I n s u l a r securities a n d securities of G o v e r n m e n t corporations a n d credit agencies:
On h a n d J u n e 30,1941
i
Received from B u r e a u of E n g r a v i n g a n d P r i n t i n g . .
T o t a l to b e a c c o u n t e d for._
Stock s h i p m e n t s to Federal Reserve B a n k s and post
oflices
Issued b y D i v i s i o n . . .
U n i s s u e d stock delivered to Register of t h e T r e a s u r y .
T o t a l disposals
•On h a n d J u n e 30,1942..
Retired and redeemed..

Registered

$29,035,044,800
31,798,440, 000

$6,081,169, 550
226,473,100
308, 255,855
33, 307, 209, 640

$36,116, 204,350
226,473,100
308, 255,855
65,105,649, 540

60, 833,484, 800

39, 923,098,045

100, 756,582,845

30,964,324, 200
174,029,450
832,964,450

17,102, 527, 250
8,012;449,115
644,381,675

48,066, 851,450
8,186; 478, 565
1,377,346,125

252,846,130

252,846,130

31,971, 318,100

25,912,204,170

67,883, 522, 270

28, 862,166, 700
862, 423,490

14,010,893,875
2 6, 015,040,330

42,873,060, 675
2 6, 877, 463,820

6, 763, 815,800
1,084,068. 999

1, 256,014,650
838,022, 500

7,019,830,450
1,922,091,499

6,847,884,799

2,094,037,150

8,941,921,94S

665, 260, 900
369,027,450

863,068, 000
667,348. 075
1,152, 769, U50

1, 748, 886, 775

934,288,350

2,683,175,125

5,098, 998, 024
6, 398, 575

1,159,748,800
163, 426, 850

863,068,000'
102, 087,175
783, 731, 600

1 I n c l u d e s adjusted service b o n d s a n d U n i t e d States savings b o n d s .
» I n c l u d e s $251,991,000 ( m a t u r i t y value) U n i t e d States savings b o n d s .
p e n d i n g completion of a u d i t .

Total

6,.258, 746, 824
169, 825, 425,

Figures subject to verification

United States savings 6onc?s.—Original registration stubs from United
States savings bonds sold which were received and audited, savings
bonds redeemed prior to maturity which were received and registration discharged before payment, and savings bonds redeemed prior to
maturity which were received and registration discharged after payment, during the fiscal year 1942, are shown in the following table.




Transactions concerning United States savings bonds; fiscal year 1942

to
i4^

N u m b e r of pieces
Series

Sales price
$50

$25

$100

$500 ,

$1,000

$5,000

$10,000

Total

M a t u r i t y .value

•

Original registration s t u b s from savings b o n d s sold—received a n d a u d i t e d i
C-1937
C-1938
D-1939
D-1940
D-1941
E-1941
E-.1942
F-1941 . . .
F-1942
G-1941.
G-1942

.

..

24
6
14
76,905
. . .
6,866, 311
. . . . : . . . - 17,350, 664
16
52,360
.......
'.

4
^ 1
1
58, 610
2, 767, 575
4,376, 543

24, 346, 300

7,202, 734

. . .

T o t a l registration s t u b s . .

^
A-1935
B-1936
C-1937
C-1938
D-1939
D-1940
D-1941
E-1941
E-1942
r-1941
F-1942
G-1941
G-1942

.

Total




...

.

..

5
3
11
24, 013
646, 275
885, 933
25, 945
41,894
85, 802
122,908

9, 875,633

1,832, 789

2,192. 275

10, 323
12, 753
39, 692
38,487
101, 25'5

o

4
47
22
67
291,032
14, 603,186
28,821.074
10,185 •
188, 224
12,461370,856
44, 549
618, 762
44, 521
769,428

$3,000
7, 576
• 5,560
26, 400
50, 391,093
1, 216, 712, 344
1, 846,159,162
178, 581, 610
232,420, 310
968,961,100
1.013,019,400

$4;.000
10 100
7,400
35, 200
67,188; 125
1,622, 283^; 125
2, 461, 545, 550
241,326,500
314,081, 500
968,961,100
1.013,019.400

45, 662,702

5, 506,287, 545

6,688,462,000

111,716

,

o

o
S3

Savings b o n d s redeemed prior to m a t u r i t y — r e c e i v e d a n d registration discharged before p a y m e n t

-

.

8
7
13
90,195
3. 704, 351
5, 379, 943
74, 296
164,375
185,121
277,324

4
6
6
28
41, 309
618, 674
827, 991
67,459
87,013
263, 698
286,188.

...

......
.

559
777
1,001
1,401
2,316
2,162
509
4,576
1, 930

/

• 521
742
849
1,177
2,301
1,766
457
2, 230
742

3

.
._.._

15,234

10, 785

1,672
2, 219
2,609
3,178
6,782
5,378
1.218
5,152
1.441
561
27
2,054
38

655
805
844
,1,003
1,503
- 1,702
381
1,518
406
243
14
914
14

816
. '1,396
1,801
2,367
7,002
12, 597
• 1, 369
2,441
616
839
•28
2, 870
59

113
9
471
19^

207
12
547
31

4, 223
5,939
7,104
o 9,126
18,904
23, 605
3,934
15,917
5,135
1,963
" 93
6,856
161

. 31,329

10,002

34, 201

612

797

102, 960

•

^

$1, 360, 725
2,076, 925
2, 651, 375
3, 280,175
8,504 650
14,128,150
1, 716, 875
3, 941,100
1,048,450
3, 651. 600
202, 775
11,357,400
474, 800
54, 285, 000

o

>

d

SI
Ki

Savings bonds redeemed prior to maturity—received and registration discharged after payment
A-1935'
B-1936
C-1937
C-1938
D-1939
D-1940
D-1941 "
^
E-1941

.

.

......:..
. - . - . . -

.

3,434
7, 284
14, 591
24, 529
45, 932
. 67,796
38, 772
74,157

2,684
7,114
11, 797
17, 533
28,460
38, 260
, 17,716
23,040

6, 370
12, 643.
19,148
25, 806
• 44,198
60, 624
28,013
36,429

2,162
3,839
5,149
6,393
10, 329
14,039
7,344
6,946

2,072
5,284
7,361
10„492
• 18, 698
24, 946
12, 531
6,228

Total

276,495

146,604

233, 231

66, 201

87, 612

Grand total savings bo'nds

291, 729

157,389

264, 560

66,203

121,813

16, 722
36,164
58, 046
^ 84, 753
147, 617
205, 665
104,376
146,800
800,143
612

797

903,103

$4, 010,050
9,005, 600
12,804,925
17, 758, 975
30, 853, 600
41, 635, 800
20, 859, 400
16,349, 825
'

O
S3

153,278,175
207, 563,175

O

1 Includes an aggregate of 1,425,168 pieces, $209,762,700 maturity value, representing sales of United States savings bonds made prior to June 30,1941, and adjustments of amounts
previously reported.
.
.
.




m
Q

S3.

SI
Kl

o

S)

>
d
S3

to
Ol

126

REPORT OF. THE SECRETARY OF THE TREASURY

Individual registered accounts.—Individual accounts are maintained
in connection with registered issues of the United States and of securities oi various Government corporations and credit agencies; and
interest is paid periodically in the form of checks on the interestbearing debt. The accounts open on June 30, 1942, were as foUows:
Registered issues

Number of
accounts

Public debt:
Interest-bearing loans i
-^
...
Matured loans (Liberty, Victory, Treasury bonds, e t c ) .
Total public debt issues

.-

Others:
^
Interest-bearing loans:
Home Owners' Loan Corporation bonds!
Federal Farm Maftgage Corporation bonds.Consolidated Federal farm loan b o n d s . . . . . . . .
F,ederal Housing Administration debentures..
Matured loans:
Home Owners' Loan Corporation bonds
Federal Farm Mortgage Corporation bonds..
Federal Housing Administration debentures..
Total other issues
Grand total.

Principal

401,977 $12,252,061,116.40
11,142
6,476,810.00
413,119

12, 258, 537,926.40

2,836
11, 239
6,561
720

631, 827,000.00
, 124i703,300.00
. 34, 791„900.'00
21, 463,605.28

37
361
4

128,000.00
737,900.00
12, 700.00

21, 738
434,867

813, 664; 405. 28
13,072,202,331.1

* Does not include United States savings bonds and adjusted service bonds.

There were 42,628 individual accounts closed for registered Liberty
bonds. Victory notes, special Treasury notes, postal savings issues.
Treasury bonds, etc.; and 6,597 accounts were decreased, representing
retirements of securi^ties in the amount of $3,700,643,630 par value.
I n connection with the same loans, 39,234 new accounts, involving
$6,004,878,090 of principal, were opened. During the year 18,930
changes of address for mailing of interest checks were made.
Interest on registered Treasury bonds was paid on due dates in
the form of 733,835 checks amounting to $86,778,939.44; on registered securities of the postal'savings loans, etc., 61,600 checks for
$4,227,510.75 were issued; and on registered Treasury notes and
certificates of indebtedness, interest payable by 11 checks amounting
to $34,570,019.40 were issued. Also 1 check was issued in payment
of interest amounting to $22,507,108.04 on the 4)^ percent adjusted
service bonds—United States Government life insurance fund series,
.and 960 checks were issued in payment of interest amounting to'
$1,115,498.64 on the 2 percent depositary bonds. There were received from the Bureau of Engraving and Printing 867,600 checks
as stock.




127

REPORT OF T H E SEICRETARY OF T H E TREASURY

Claims.—Claims for relief on account of lost, stolen, destroyed, and
mutilated securities handled by the Division of Loans and Ctirrency
within the fiscal year were as follows:
Number Number Par amount
of
of
of
claims securities
securities

Claims

-

Public debt issues i

On hand June 30, 1941
Received

.'

11, 221
• 9,035

-

35,913 $6,' 148, 316. 50
• 16,523 ..•2, 379,145. 75

..

52, 436

8, 527, 462. 25

^..

1,953
1,642
176
89

4,945
3,829
1,315
, 247

1, 047, 942. 50
•742, 050. 00
192, 990. 00
969. 00

10, 336

1, 983, 951. 50

16, 396

_

Settled by:
Reissue or redemption of securities
Recovery of securities
.
Disallowance of claims and credit allowed
Other disjpositions
. ..
Total disposals

20, 256

--.

Total to be accounted for •

3,860

.

On hand June 30, 1942

42,100 , 6,543,510.75

Home Owners' Loan Corporation,
Federal Farm Mortgage Corporation, and consolidated Federal farrn loan bonds
275
42

1, 216
150

$434, 650; 00
57, 252. 50

Total to be accounted for
Settled by reissue, redemption, recovery, or no relief

317
35

1,366
132

491, 902. 50
45, 052. 50

On hand June 30, 1942"

282

1, 234

446 850 00

On hand June 30,1941
Received

-

1 Includes adjusted service bonds.

Sajekeeping oj securities.—During the fiscal year transactions in
securities held in safekeeping were as follows:
On hand
June 30, 1941

Issues

Received and
receipts issued

Released

. Onhand
June 30, 1942

$5,986, 958, 206. 40 $6, 242,850, 700. 00 $4,321,734,000.00 $7, 908, 074, 906. 40
•Public debt issues
2, 050. 00
750. 00
Adjusted service bonds ..'.
2,800. 00
Insular securities.'
6, 601, 500. 00
403, 000. 00
550,000.00
6, 454, 500. 00
Home Owners' Loan Corpora551, 000,100. 00
50.00
551, 000, 050. 00
tion bonds
Total

5, 993, 561, 756.40

1

6, 794, 254, 550. 00 4, 322, 284, 050. 00 8.465, 532, 256. 40

Mutilated paper and redeemed currency.—MMiW^teA. paper verified
and delivered to the Destruction Committee consisted of 65,877,197
sheets and coupons, of which 64,245,029 sheets and coupons were received fi-om the Bureau of Engraving and Printing and 1,632,168
sheets from the Division of Paper Custody.

487543—43-

-10




128

REPORT OF THE SECRETARY OF THE TREASURY .

Redeemed currency, unfit for circulation, counted and delivered to
the Destruction Committee during the year amounted to 992,593,281
pieces, representing $1,728,725,657.83, detailed .as follows:
•
U n i t e d States notes
.
Silver certificates
'-...^.^
Gold certificates
T r e a s u r y notes
T r a c t i o i i a l currency . . .

Currency

*

,

._•.

......
.

Pieces

Face V a l u e

.
......

...

'

Total

50; 087, 629
942, 337, 833
162, 904
492
^
4,423

' $199,692,830.00
1,525,122, 622. 00
3,^906, 310. 00
2, 900. 00
.995. 83

' 992, 593, 281

'
:..

1, 728, 725, 657. 83

In addition to the securities which were delivered to the Register of
the'Treasury, the ;Division. canceled ,arid delivered to the/Register
l,92r;463 coupons amounting to'$270,181,345^;82:''^'t)f these, •i;b&i;057
were public debt coupons amounting to $229,089,269.87 and 290,406
amounting to $41,092,075.95 were coupons from securities* of Government corporations and credit agencies.
Register oj the Treasury
The Register of the Treasury conducts the final audit and. has
custody of all retired, public debt securities, including interest coupons
and checks, and performs a like function with respect to the securities
of the Home Owners' Loan Corporation, Federal Farm Mortgage
' Corporation, Federal Housing..Administration, Reconstruction Finance
^Corporation, Federal ^ National Mortgage Association,"" .Commodity
Credit Corporation, Federal Public Housing Authority, and the consolidated obligations of the Federal^ home loan banks and the Federal
• land banks. The Register also retires bonds of the insular possessions
which are exchanged for other securities.
The-Register renders monthly certification to the Comptroller
General of all public debt securities redeemed by the Treasurer of the
United. States, and establishes credits due the Federal Reserve Banks
and the Division of Loans and Currency for securities forwarded, by
them on account of exchanges, replacements, transfers of registration, etc.
'.
The following statement sets forth, by class of security, the total
number and^ face value of documents which were received by the
Register's Office on account of trans;actions during the fiscalyear 1942.




129

REPORT O'P T H E SECRETARY OF THE TREAStJRY

of the Treasury on account of transact
year. 1942

S u m m a r y of securities received by-the
'-•

tions,

Bearer

Security
Pieces

Registered

Amount

Pieces

Amount

Redeemed
Public debt securities:
$5, 900. 00
Postal savings bonds, etc
^
11,322
2, 954, 900. 00
Liberty loans...
-•
..
64,051
89,900, 750. 00
Treasury bonds
•44, 821
644, 293, 950. 00
Treasury notes
°....
Treasury notes—tax series
United States savings bonds
Depositary bonds...
Adjusted service bonds
- 128
961,050.00
Certificates of indebtedne'ss
119,-519 7,183,891,000.00
Treasurj^- bills..:....
......
74, .995
71»; 601. 00
Treasury .(war) savings securities;
11, 282, 986
853, 669, 668. 88
Interest coupons
Other securities:
Home Owners' Loan Corporation:
74, 5,62
843,324, 300. 00
Bonds
—
1, 363,024
51, 749, 573.,65
Interest coupons
Interest checks
Federal Farm Mortgage Corporation:
317, 623,400. 00
120,937
Bonds
'.
1, 227, 496
32, 697, 286. 07
Interest coupons
Interest checks
..
Consolidated Federal farm loans of the
Federal land banks:
Interest coupons
,.
913,985
31,144,!
Interest checks
.
Federal Housing Administration:
Debentures
Interest checks
Federal home loan banks:
67, 329,000. 00
6,263
" Consolidated debentures
30,319
860,419.60
Interest coupons
1
. Reconstruction Finance Corporation:
45, 459 1,093, 260,000. 00
Notes
16,777,650.41
227,459
Interest coupons
'
Commodity Credit Corporation:
21,171
406,752,000.00
Notes
.
.
74, 694
4, 815, 287. 25
'
Interest coupons
..
Federal National Mortgage Association
1,495,710.82
24, 615
interest coupons
Federal Public Housing Authority:«
112,094,000. 00
8,396
Notes
—
41, 766
1, 710, 359. 21
Interest coupons
Total.

16, 777,996 11, 757, 382, 699. 77

140
$287, 280.00
1,633
764,100.00
6,689
7, 492, 600. 00
303
887, 362,000. 00
314,486 1,124, 833,125., 00
538, 079
I 88,561,618.50
1
6,000.00
269, 386
13, 469, 300.00
177 3,526,965^000.00
1,948

329

25,235.00

7, 935,000. 00 •
'2,'687,'850.'66

11, 249

8,196,-100.00

'26,'493'

'3,'963,'658,'98

14, 324

1,156, 389. 48

4,637
3,101

3, 221,150.00 •
704, 544. 99

1,198,881

5, 677, 629, 951. 95.

Retired on account of exchanges for other securities, etc.3
Public debt securities:
Postal savings bonds, etc
Liberty-loans .•-.
Treasury bonds
.
• Treasury notes
' Treasury notes—tax series
.... ^
United States savings bonds
......
Depositary bonds
Adjusted service bonds
Certificates of indebtedness
. Treasury bills
.'
-.
First 3H% Liberty loan interirh certificates.'
Other securities:
Insular possessions loans
...'.
Home Owners' Loan Corporation bonds.
Federal Farm Mortgage Corporation
bonds
.
Consolidated Federal farm loans of' the
Federal land banks, b o n d s . . . . .
Federal Housing Administration debentm-es
Footnotes a t end of table.




1,159
$354, 640.00
. 1,234
. 97,200.00
. 910, 512 4,717,828,850.00
91,192 1,283,534,300.00

7,-085
12,982

209,257,000.00
1,106,857,000.00

8, 674

$4, 794, 700.00

83, 054
26
4, 473
115, 003
3
670
3

258, 319,000.00
363,,:357,000.00
150,094,025.00
46, 606, 325.00
20,000.00
33, 500.00
2,060,000.00

1,000.00
61, 545

103,849,000.00

302.
2,151

: 739,000.00
130,994, 000.00

36, 550

32,128, 400.00

4,902

• 6,828,900.00

21, 273

51,895, 400.00

4,727

4, 393, 600.00

1,182

896,100.00

130

REiPORT OF THE SEiCRETARY OF THE TREASURY

Summary of securities received by the, Register of the Treasury on account oftransac-tions, fiscat year 1942—Continued
Bearer

Registered

Security
Pieces

Amount

Pieces

Amount
•

R e t i r e d on account of exchanges for o t h e r securities, etc.—Con.
O t h e r securities—Continued.
Federal h o m e loan b a n k s , consolidated
debentures
R e c o n s t r u c t i o n F i n a n c e Corporation
oUotes
.
. . .
C o m m o d i t y Credit Corporation n o t e s . .
' F e d e r a l N a t i o n a l M o r t g a g e Association
notes
- -.-F e d e r a l P u b l i c Housing Authority jiotes ^

$2,605, dOO. 00
111,469,000.00
42,146,000.00

675
1,187

3, 490,000.00
4, 679,000. 00

1,167,281

Total

.614
14,083
7,383.

7,670,191, 790.00

225,170

$969.126,150.00

U n i s s u e d stock retired
P u b l i c d e b t securities:
Postal savings bonds, etc.
_
Treasury bonds
. .
T r e a s u r y notes
^ T r e a s u r y notes—tax s e r i e s . . .
U n i t e d s t a t e s savings b o n d s
A d j u s t e d service b o n d s
Certificates of i n d e b t e d n e s s
.
T r e a s u r y bills.
.
S t a n d a r d full-paid i n t e r i m certificates .
Interest coupons.
^
O t h e r securities:
H o m e O w n e r s ' L o a n Corporation:
Bonds
.
Interest c o u p o n s :
F e d e r a l F a r m M o r t g a g e Corporation:
Bonds
...
Interest c o u p o n s . .
^ Consolidated Federal farm loans of t h e
Federal land b a n k s :
Bonds
-I n t e r e s t coupons
Federal Housing A d m i n i s t r a t i o n debentures
Federal h o m e loan b a n k s :
Consolidated debentm'es
Interest coupons
Reconstruction F i n a n c e C o r p o r a t i o n :
Notes .
Interest coupons
C o m m o d i t y C r e d i t Corporation:
Notes
.
.
Interest coupons
F e d e r a l N a t i o n a l M o r t g a g e Association:
Notes
Interest coupons
Federal Public Housing Authority: 2
Notes
Interest coupons
.
Total

-

$722,857,060.00
781, 669,800.00

3
40, 509

$2,000. oa
183, 218 650.00

17,022
3,117, 452
14
81

145,642
90, 510

78,096, 725.00
1,135, 514,000.00
700.00
No value

11, 354
. 24,488
2, 966, 546

780, 436,000. 00
N o . value
335, 297, 521. 78

32,354
229,679

148, 576,300.00
35, 721, 945.89

3

21,000.00

208,170
170,480

362,937. 000. 00
8,616, 997. 98

10, 922

.368, 947,000.00

1
143, 702

5,000.00
7,158, 438.24

2

600.00

66

58,850.00

6,117v
14, 542

34, 920,000.00
749,498. 75

31,213
63, 521

599,884,000.00
3,260, 766.19

11,133
24,843

107, 961.000.00
.- 1,460,271. 54

9,930
79,197

39,151,000. 00
2,469, 457. 27

4,228
9,167

32, 965,000.00
811, 957. 20

4, 276, 817

4,006, 909,004.84

3,186,074

1,765,859.525.00

Recapitulation ,
P u b l i c d e b t securities:
. 1,187
Postal savings b o n d s , e t c .
12,556,
L i b e r t y loans
..•1,120,205
• TreasmT bonds
226, 523
T r e a s u r y notes
T r e a s u r y notes—tax series
United Statessavings bonds
Depositary bonds
. .
Adjusted service b o n d s
7, 213
Certificates of i n d e b t e d n e s s
143, 855
T r e a s u r y bills
^.1
F i r s t S H % L i b e r t y loan i n t e r i m certifi7
cates
24, 488
S t a n d a r d full-paid i n t e r i m certificates...
74, 995
T r e a s u r y (war) savings securities
14, 249,632
Interest c o u p o n s . . .

Footnotes at .end of table;



$360, 640.00
3,052,100.00
5, 530, 586, 650. 00
2, 709, 498, 050. 00

210, 218,050. 00
9,071,184, 000. 00
1,000.00
N o value
71,601.00
1,188,967,190.66

8,817
1,633
130, 252
329
335, 981
3, 770, 534
4
270,070
261

1,948

$5,083,980.00
764,100.00
449 030 250 00
1, 250, 719,000.00
1 353 023 875 00
1,270, 681, 943. 50
25 000 0013, 503! 500. 00
3, 529,015,000.00

25,235.00

131

REPORT OF T H E SEiCRETARY OP T H E TREASURY

Summary of securities received by the Register of the Treasury on account of transactions, fiscal year i ^4^—Continued
Bearer

Registered

Security
Pieces

Amount

Pieces

Amount

Recapitulation—Continued
Other securities:
Insular possessions loans
Home Owners' Loan Corporation:
, Bonds..
Interest coupons
...
Interest checks
.
Federal Farm Mortgage Corporation:
Bonds
Interest coupons
Interest checks
Consolidated Federal farm loans of the
Federal land banks:
, Bond s
.
.
Interest coupons
....
Interest checks
Federal Housing Administration:
Debentures
Interest checks . .
Federal home loan banks:
Consolidated debentures
Interest coupons
Reconstruction Finance Coirporation:
Notes
•
. . . .
Interest coupons
Commodity Credit Corporation:
Notes
Interest coupons
Federal National Mortgage Association:
.
Notes
Interest coupons
..
Federal Public Housing Authority: 2
Notes . .
'
Interest coupons

302
168,461 $1,095, 749, 600.00
1,592,703
87,471, 519. 54
365,657
1,397,976

712,688,800.00
41, 314, 284. 05

21, 274
1,057,687

51, 900,400.00
38, 303, 331.12

138,950,000.00

5,906

2,687,856. m

27,073

383, 972,000.00

26, 493

3, 963, 658.98

4, 729

4,394,200.00

12,894
44, 861

14,324

1,156, 389.48

5,885
3,101

4,176,100.00
704, 544.99

104,854,000.00
1, 609, 918. 35

90, 755 1,804, 613,000. 00
290, 980
20, 038,416.60
39,687
99,537

,

556,859, 000.00
6, 275, 558. 79

^ .10,605
103,812

42, 641,000.00
3, 965,168.09

13,811
50, 933

149, 738,000.00
2; 522, 316.41

21,222,094 23,434,483,494.61

Total.. I

"

$739,000.00

2,483

^
4, 610,125

8,412,615, 626.95

' Represents audited figures through December 1941 settlement. Receipts for January through June .
1942 settlements incomplete.,
2 Formerly U. S. Housing Authority.
• 3 Figures on United States savings bonds are incomplete.

Division of Public Debt Accounts and Audit
This Division maintains administrative control accounts for all
official transactions in the public debt conducted by the various
Treasury offices and the Federal Reserve Banks as fiscal agents of the
United States, and also for transactions involving paper used for
printing public debt and other securities, United States currency,
stamps, etc., and miscellaneous securities and documents in the
Bureau of Engraving and Printing. Also included in the administrative control accounts of the Division are transactions in bonds of
the Home Owners' Loan Corporation and the Federal Farm Mortgage
Corporation, in consolidated Federal farm loan bonds of the Federal
land banks, in notes of the Commodity Credit Corporation, Reconstruction Finance Corporation, and the Federal Pubhc Housing
Authority, and in debentures of the Federal home loan banks and
the Federal Housing Administration, conducted by the Treasury and
Federal Reserve Banks, similar to those in public debt securities.
Numerous administrative audit functions are performed in connection
with the foregoing. The Division maintains control accounts for
various classes of unissued currency in reserve stocks of the Treasurer




132

REPORT. OF. THE SECRETARY OF THE TREASURY

of the United States, and conducts administrative examinations and
physical audits of such unissuecl stocks of ourrency and of cash
balances in custody, and of collateral securities held in trust in the
offices of the Treasurer of the United States.
During the fiscal year, 98 audits were conducted, involving physical
counts of securities, currency, distinctive and nondistinctive paper,,
interest checks, etc., amounting to about $1,017,000,000 in face value
and 104,538,000 in number of pieces; an examination and audit of
17,200,000 individual accounts of holders of registered bonds;:and an
audit of the numerical registers involving an examination of 48,000'
spaces representing bonds retired or outstanding. Other special
audits un^er instructions of the Secretary of the Treasury were also
conducted. The increase in the number of individual accounts of
holders of registered bonds from 5,500,000 in 1941 to 17,200,0,00 in
1942 was due to greater activity in transactions involving United
States savings bonds and resulted in a corresponding decrease in other
audits usually made.
The Division determined and.certified credits to the cumulative
sinking fund and aniounts in the'sinking fund available for expenditure
from time to time, interest on all classes of public debt securities and
securities of, various Government corporations and credit agencies
which became due and payable on their respective interest-payment
dates, and the amount of each form of such securities and unpaid
interest outstanding each month: I t prepared estimates of interest
to become payable on public debt securities in future fiscal years, and of
expenditures to be made on account of retirements for the sinking
fund and other special accounts, and prepared statements showing the
accountability of Federal Reserve Banks for public debt and other
securities for the use of Federal Reserve Board examiners in their
periodical examinations of those banks. Numerous data pertaining
to public debt and other transactions for various interested offices and
individuals were also com.piled.
Division of Savings Bonds
The Division of Saving Bonds is charged with the distribution of
publicity literature in connection with the sale of United Statessavings bonds. During the year the Division maintained a plate
file of about 12,500,000 active and prospective purchasers to whom
savings bond literature was sent at given intervals. The Division
also maintained a file of purchasers under the Regular Purchase
Plan, consisting of approximately 110,000 names of those to whom
memorandum statements were sent in advance of the purchase
periods designated by the purchasers, and approximately 8,000 names
of persons in the Navy, Coast Guard, Marine Corps, etc., whose
purchases were made from salary allotments. , Approximately 600,000,000 pieces of mail were handled during 1942.
A large volume of correspondence was carried on in reply.to requests
for information concerning savings bonds and the regular purchase
plan.




REPORT OF T H E

.

'

SEICRETARY OF T H E

133

TREASURY

Division of Paper Custody

The Division of Paper Custody receives from the contractors.'all
distinctive paper used in printing public debt obligations and paper
currency of the United States, Cuba, and the Philippine Islands; and
issues such paper to the Bureau of Engraving and Printing against
orders to print. The Division also maintains records of all receipts
and issues of Federal Reserve notes stored in the FederalReserve
vault.
The following tables summarize the operations of this Division
during the fiscal year 1942.
Receipts and issues of distinctive and nondistinctive paper, fiscal year 1942
[In sheets]
On h a n d
Julyl,
1941

Kind

Received

Issued

On h a n d
J u n e 30p •
1942

DISTINCTIVE

United States currency and Federal Reserve notes
United States bonds
...:.
Cuban currency
'
..
Philippine currency
,

19,438,687 124,042,036 130,300,020
2, 766,159 39, 214,634 34, 300,902
22,203
2,168,051
1,100,016
655, 393
471, 300
22,882, 442 165,424, 721 166,172, 238

Total

13,180,703
7,679, 891
1,090, 238
184,093
22,134, 925

NONDISTINCTIVE

Parchment; artificial parchment, and parchment deed..
Philippine Islands postal card. . .
Miscellaneous.
..
Total

471,151
49,611
1, 842,155

286, 336
9,195
1, 688, 480

392,335
49, 605
2, 003, 561

2,066, 595

_

207, 520
• 9,189
1,.849, 886

2, 362, 917

1, 984, Oil

2,445, 501

Federal Reserve notes, series 1934, received and issued, fiscal year 1942
Onhand July 1, 1941
Received....

.•...'.

Total..
Issued
On hand June 30, 1942

...."...._...
•.
•.
-

$2,414,600,000
.•_... 4,088,420,000
6,503,020,000
4,31'4,320,000
2,188,700,000

During the year 163,420,026 sheets of paper were counted prior
to issue to the Bureau of Engraving and Printing for authorized
work.
There were no transactions during the yea<r in Federal Reserve
notes, Series 1928, or in Federal Reserve Bank notes. Series 1929,
Of which $2,813,100,000 and $450,800,000, respectively, were on hand.
Destruction Committee

.

The following table surnmarizes the securities (including redeemed
canceled currency) and miscellaneous items received from^the various
offices and destroyed -by the Destruction Committee during the
year.




134

EEPORT OF THE SECRETARY OF THE TRJEASURY

Number and face amount of securities and miscellaneous items destroyed by the
Destruction Committee, fiscal year 1942 >
Ofltice making delivery, and items

N u m b e r of
pieces

Division of Loans and Currency and Treasurer of the United States:
, United States notes
..
^
__.....
Silver certificates/
.
'_
Gold certificates
Treasury notes
. . __
Fractional currency
^

60,195,599
944, 466, 583
162, 904
492.
4,423

$200,232,230.00
1, 529, 665, 472. 00
3,906,310. 00
2,900. 00
995.83

994,830,001

1,733,807,907.83

828,016
621,055
107,884,421

11,-582,632.00
8,948,160.00
1,373,982, 210.00

109, 333,492

1,394, 513, 002. 00

8,032, 504
2, 648,492

4,089,153, 537. 42
325, 734, 934. 36

10, 680,996

4,414,888 471.78

44,903
3,742,071

46,889,100.00
98 060 301.67

Total

___

_

Comptroller of the Currency, national banks, and Federal Reserve Bank
agents: " '
National bank notes.
_
Federal Reserve Bank notes
_.
Federal Reserve notes.__
Total- •

_.'

Register of the Treasury:
Principal pieces
Coupons

-

.__

_

._._

_..

Total
Farm Credit Administration:
Principal pieces
Coupons.
-

-

_

- --

.

Total

'3, 786,974

Bureau of Internal Revenue, miscellaneous stamps
Grand total...!

.

__ _

_._

Bureau of Engraving and Printing, registered proof sheets
Division of Loans and Currency:
For Bureau of Engraving and Printing—mutilated work (sheets)...
'For Division of Paper Custody—paper (sheets)
Void coupons.
I
. . . .
Nondistinctive coupons --Checks...
Treasury Archivist—Forms T. F. E. L. 2
Total
,

„

:

^ Face value

144,949,401. 57
780,906,413. 43

1,118, 631,463

8,469,065,196. 61

20, 281
36,027,823^
1, 632,168
28, 217,050
N 156
32,799
10, 240
66,940, 517%

TREASURER OF THE UNITED STATES

Public moneys are received and disbursed through the accounts of
the Treasurer of the United States. Depositary accounts are carried
with several hundred designated Goverimaent depositaries. Checking
accounts with, disbursing officers of the Government are maintained
on the books of the Treasurer. Funds appropriated by Congress for
the use of the various [departments and establishments of the Government are advanced to disbursing officers as required through credits
to their accounts with the Treasurer, and disbursements are made by
checks drawn by disbursing officers against such accounts. The
Tre'asurer is the official custodian of the public rhoney; he is also
fiscal agent for the payment of the principal of and interest on the
public 'debt^, for the issue and redemption of United States paper
currency, for the redemption of Federal Reserve notes, Federal
Reserve Bank notes, and national banli notes,* and is treasurer of the
Board of Trustees of the Postah Savings wSystem and trustee and
custodian of miscellaneous securities and trust funds. He acts as
special agent for the payment of the principal of and interest on bonds
and other obligations of the insular governments and of Governrnent
corporations and agencies.
» Funds for the retirement of Federal Reserve Bank notes and national bank notes have been deposited '
in the Treasury.




REPORT OF T H E SEICRETARY OF T H E TREASURY

135

The figures in tliis report of the Treasurer (pp. 135 to 139) are.on
the basis of daily Treasury statements (unrevised).^
; A comparison of the receipts and expenditures of the Government
for the fiscal years 1941 and 1942, exclusive of postal revenues and
payments payable therefrom, is shown in the following tables:
Summary of receipts and expenditures, general and special accounts, fiscal years
1941 and 1942
1941

Receipts
Deduct:
N e t a p p r o p r i a t i o n s to F e d e r a l old-age
a n d survivors insurance t r u s t fund

$8, 268, 512, 585. 50

1942

$13, 667,914, 823. 84

Increase or decrease (—)
$5, 399, 402, 238. 34

Expenditures:
.
.
General
i
W a r activities
R e v o l v i n g funds (net)
.Transfers to t r u s t accounts, e t c . .

661, 300, 733. 42

868, 853, 202. 82

207, 552, 469. 40

7, 607, 211, 852. 08

N e t receipts

12, 799, 061, 621.02

5,191, 849, 768. 94

1 6, 214, 698, 804. 75 1 5, 986, 225, 630. 43
6, 301, 043,165. 91 126,011,065,089.39
21S6,286,108. H
18, 394, 391. 22
1 331,173, 957. 25
1 380, 899, 986. 65
12, 710, 629, 823. 97
64, 260, 500. 00

32, 491, 307, 397. 69

19, 716, 417, 073. 72

19, 692, 245, 776. 67
94, 722, 300. 00

14, 524, 567, 304. 78
30, 461, 800.00

5,103, 417, 971. 89

N e t deficit

19, 685, 955,. 273. 72
30, 461, 800. 00

5,167, 678, 471. 89
64, 260, 500. 00

Total
Gross deficit.
Deduct: Public debt retirements

32, 396, 585, 097. 69
94, 722, 300. 00

12, 774, 890, 323. 97

Subtotal
Public debt retirements

-228,473,174.32
19, 710, 021, 923. 48
154. 680, 495.16
49, 726, 029. 40

19, 597, 523, 476.. 67

14, 494,105, 604. 78

1 Reyised to basis of classifications in effect after June 30,1942.
2 Excess credits (deduct).
. "
^

Summary of receipts and expenditures, trust accounts , etc., fiscal years 1941 and 1942
1941

•

Receipts:
F e d e r a l old-age a n d survivors insurance
t r u s t fund:
Appropriations
'
i
Less: R e i m b u r s e m e n t s
t o General
Fund

1942

I n c r e a s e or
decrease (—)

$688,140,728.28-

$895,6.18,838.82

26, 839, 994. 86

26, 765, 636. 00

- 7 4 , 358.86

_-.

661, 300, 733. 42
55, 958, 278.12

868, 853, 202. 82
71, 006, 562. 23

• 207, 552,, 469. 40
15, 048, 284. 11

Net
'
Agricultural M a r k e t i n g A d m i n i s t r a t i o n . .
Unemplo3''ment t r u s t fund . . . .
Railroad retirement account.._
Another
.

717,259,011.54
244,024,414.25
1,113, 922, 996. 42
126, 883, 857. 53
1 435, 754, 981. 59

939, 859. 765. 05
. 331,448,633.75
1, 243, 587, 217.14
143, 993, 058. 91
1 531, 995, 424. 86

222, 600, 753. 51
87, 424. 219. 50
129, 664, 220. 72
17,109,201.38
. 96, 240, 443. 27

2, 637, 845, 261. 33

3,190, 884, 099. 71

653, 038, 838. 3a

706, 841, 884. 66
217, 001, 988. 25
1,118,127,110.94
115, 773,514. 47
628,164, 368. 38

931, 314, 952. 20 '
336, 759, 089. 20
1, 243,142, 328.20
143, 743, 910. 67
4, 041, 428, 769. 62 •

224, 473, 067. 54
119,757,100.95
125, 015, 217. "26
27, 970, 396. 20'
3, 413, 264. 401. 24

2, 785, 908. 866. 70

6, 696, 389, 049. 89

3, 910, 480, 183.1&

148, 063, 605. 37

3, 505, 504, 950.18

3, 357, 441, 344. 81

N e t appropriations
_
I n t e r e s t on i n v e s t m e n t s

Total
Expenditures:^
Federal old-age a n d survivors insurance
t r u s t fund
Agricultural M a r k e t i n g A d m i n i s t r a t i o n . .
1
Unemploj'^ment t r u s t fund
i
R a i l r o a d retii'ement account
Allotheri3
_
.___
Total

-

Excess of expenditures

$207, 47.8,110. 54

1 Revised to basis of classifications in effect after June 30, 1942.
2 Includes investments.
3 Includes net transactions in checking accounts of Government agencies, etc.

The total public del^t obligations outstanding on June 30, 1941,
were $48,961,443,535.71, and the receipts and retirements during
b For a description of the bases used in the tables in this.report and of the accounts through which Treasury
transactions-are effected, see pp.-387 and 388.




136

RE'PORT OF T H E SEiCRETARY OF THE TREASURY

the fiscal year 1942 were $37,164,349,683.56 and $13,703,348,103.05,
respectively, making $72,422,445,116.22 of obligations outstanding
on June 30, 1942, an increase for the year of $23,461,001,580.51.
The public debt retirem^ents chargeable against ordinary receipts
during the year am.ounted to $94,722,300.00 and are included in the
total fetirem.ents shown above. Public debt retirements chargeable
against ordinary receipts are classified as follows:
Cumulative" sinking fund_____Forfeitures, gifts, etc

_ _ : _ _ : _ _ _ _ . : _ $75, 341, 600. 00
19,380, 700.00

Total

__.

94,722,300.00

The amount of interest paid on the public debt during the year is
classified as follows:
Class of interest p a y m e n t

Amount

I n t e r e s t coupons p a i d
i
1..:
..
Registered interest checks paid
Accrued interest paid in cash OUT obligations at r e d e m p t i o n . .
'.
D i s c o u n t .on T r e a s u r y bills sold
. '.
D i s c o u n t accrued on U n i t e d States savings b o n d s
..
I n t e r e s t paid on obligations, special series (transfer-counter w a r r a n t transactions)
Total paid
Less r e p a y m e n t s

,

:

'....

J

.

Net payments..

...

'.

$853,562,112.84
170, 869, 713. 05
46. 500, 216.14
4, 657, 069. 51
87, 535, 400. 15
104; 939, 397. 02
1, 268, 063, 908. 71
7, 978, 572. 25
1, 260, 085, 336. 46

The number of pieces of piiblic debt principal obligatioris exam.in.ed,
verified, and redeem.ed during the year was 2,550,245 as cbmpared with
1,914,738 pieces foi" the previous year. Checks in paym.ent of interest
on the registered obligations of the United States verified and paid
totaled 1,108,712 pieces, and the matured interest,coupons of Government obligations examined, verified, and paid totaled 11,284,699
pieces.
, •
The gold holdings of the Treasury as of June 30, 1942, were 649,614,376 ounces amounting to $22,736,503,160.69, valued at $35 an
ounce, an increase of 3,212,000 ounces and $112,419,993.51 over the
previous year. The details of these gold holdings are shown in the
table on page 594 of this report. The increase in gold -holdings was
made up as follows: Net acquisitions by mints and assay oflS.ces on
account of imports, etc. (valued at $35 an ounce), $111,690,689.79.;
received under the order of the Secretaiy of the Treasury of December
28, .1933 (paid for at $20.67+ an ounce), $430,744.03;,and increment
resulting from reduction in the weight of the gold dollar, $298,559.69.
Paper currency of each class issued and redeemed during the year
and the amounts outstanding, including Treasury and Federal Reserve
Banlv holdings on June 30, 1941 and 1942, were as follows:
O u t s t a n d i n g J u n e 30,1942
:

Outstanding
J u n e 30.1941

Class

Issued

Redeemed
I n Treasury

G o l d certificates
Silver certificates.
United Statesnotes
T r e a s u r y n o t e s of 1890
F e d e r a l Reserve notes
-Federal Reserve B a n k notes
National bank notes
Total

.

.




Outside
Treasury

$3,919,680
$2,879, 505,809
1, 928, 233,028 $1,448,084,000 1, 395, 458, 800
185, 276,000
346,681,016
185,276,000
2,900
1,162,048
7,001,520, 625 4, 303,470,000 1, 514, 263, 760
. 1,727,740
20, 703, 704
11, 672,068
151,909,100

$712, 240 $2,874,873,889
12, 738,163 1,968,120,065
2,096, 305
344,584,711
1,157,822
' 1, 326
42,678,543 9,748,048, 322
18,822,932
163,032
383,502
139,953,540

6,936,830,000 3,112, 220, 938

58, 763, 111 15,095,561,281

12, 329,716, 330

REPORT OF T H E SEiCRETARY OF . THE TREASURY

137

United States paper currency shipped during the year from the
Treasury in Washington to Treasury ofiices, Federal Reserve Banks
and branches, and others amounted to $1,611,771,570, a decrease of
$272,534,189 over the previous year. The Treasurer's Ofl[ice directed
shipments of current silver and minor coins -between the United
States Treasury, the United States mints, and the Federal Reserve
Banks and branches for use in public disbursements, etc., as follows:
Shipments
from Treasury to Federal Reserve
Banks and
brarrches

Silver:
standard dollars
Half dollars
:
Quarter dollars
Dimes
.
Minor:
Nickels..
Cents
Total . .

...

-

Shipments
between.
Federal Reserve Banks •
and branches

$179,998

Kind

Shipments,
from' mints to
Treasury and
Federal Reserve Banks
and branches

$19,455,340
.. .25,455,301
27, 644,349
23, 241,199

$655,000
310,000
50,000
275, 000

280,000

10, 809,450
10,503, 250

15,000

459,998

117,408,889

1, 305,000

Shipments and transfers of gold coin and bullion and of uncurrent
silver and minor coins to the mints from the Treasury'and the Federal
Reserve Banks and branches were authorized in the amounts of
$770,143.17 and $3,376,012.01, respectively.,
The proceeds of currency received into the Treasurer's cash by the
Currencv Redemption Division during the year amounted to $307,275,.082, of which $209,731,840 was in Federal-Reserve notes, $1,531,258
in Federal Reserve Bank notes, $11,512,635 in national bank notes,
and $84,499,349 in United States currency.
Canceled Federal Reserve notes amounting to $1,295,367,000 were
received from Federal Reserve Banks and branches for credit of'.
Federal Reserve agents. These notes are not taken into the Treasurer's cash because settlem.ent therefor is made between the Federal
Reserve Banks and the Federal Reserve agents.
Public m.oneys on deposit in designated Government depositaries on
June 30, 1942, to the credit of the Treasurer and to the credit of other
Governm.ent officers amounted to $2,403,551,164 and $117,585,817,
respectively, including item.s in transit. The table on page 594 shows
the amounts, in the various depositaries on June 30 of the last two
years.
Principal obligations of Government corporations and agencies and
insular governments rede.em.ed by the Treasurer during the year
amounted to $2,865,115,300; checks issued by the Treasurer in payment of interest on such registered obligations "paid during the year
amounted to $9,056,637; interest coupons on such obligations paid
amounted to $142,248,759; and interest paid iri cash when such obligations were redeemed amounted to $12,821,708.
Funds were advanced to United States disbursing officers by
accountable warrants issued in an aggregate amount pf $42,200,581,622. Warrants aggregating $19,151,508,895 were also issued covering public debt transactions. Treasurer's checks aggregating
$536,651,598 were issued on settlement warrants in payment of claims
settled by the Comptroller General.



138

REPORT OF THE SECRETARY OF THE TREASURY .

Checks drawn on the Treasurer of the United States by disbursmg
ofl&cers and agencies were paid during the year to an estimated number of 131,600,000, of which 28,300,00q for emergency relief paym.ents
were paid for the Treasurer by Federal Reserve Banks acting as his
agents. The total number of checks paid during the previous year
was 131,851,141, including 49,183,138 checks for em.ergency relief
ayments paid through the Federal Reserve Banks. Thus, the num.er of regular checks increased during the fiscal year by 25 percent,
while the number of emergency relief payments decreased by 42
percent.
Balances to the credit of disbursing officers and Government
agencies in 5,725> accounts on June 30, 1942, amounted to $10,087,.282,582, an increase of $7,372,495,506, as compared with the total of
such balances in 3,900 accounts on June 30, 1941.
Payments to correct irregularities in negotiation of checks were
made in 194'2 to the number of 5,734, amounting to $207,637, while in
the previous year the number was 8,665 amounting to $248,721.
Under the Check Forgery Insurance Act of November 21, 1941
(55 Stat. 777), the Treasurer of the United States is authorized tomake prompt settlements with pa3''ees of lost or stolen checks, which
have been paid on forged endorsements, in advance of reclamation.
The act authorizes an appropriation of $50,000 to constitute a revolving fund for this purpose. (See exhibit 60 bn p. 341.) From February
21, 1942, when the act became effective, to June 30, 1942, there were
31 instances in which early settlements were made with payees, the
amount involved being $1,164.88. Until this legislation became
effective, the pa37-ee could not receive payment from the Treasurer
until that officer had recovered from the enciorsers the funds improperly paid to other than the payee of the check.
Duplicate checks to the number of 18,245 were requested by
payees or endorsees during 1942, as compared with 15,937 during the
-previous year, the original check in each case having been lost, stolen,
wholly or partly destroyed, or so mutilated or defaced as to impair
its value to the owner or holder.
Drafts in 34 dift'erent kinds of foreign currencies", aggregating
1,949 in number, were purchased during the year by the Treasurer
for various agencies of the Government at a cost of $666,419.
Comm.ercial checks, drafts, and postal and express money orders,
aggregating 2,429,898 items and amounting to $603,240,624, were .
deposited by Government officers with the Treasurer of the United
States for collection.
The Treasurer is custodian of securities pledged for the safekeeping
and prompt payment of Governm.ent deposits in bank depositaries, of
postal savings funds in depositaries designated to receive such funds,
and, under provisions of law or by direction of the Secretary of the
Treasury, of various trust funds comprised of bonds and other obligations and of securities placed in safekeeping by various Governm.ent
executive departments and bureaus. The' face value of such securities
held on June 30, 1941, and June 30, 1942, classified according to the
purpose for which held, is shown in the following table:

P




REPORT OF THB SEICRETARY OF THE TREASURY
Purpose for which held

June 30, 1941

To secure deposits of public moneys in depositary banks
'To secure deposits of postal s'avings funds
For District of Columbia:
Teachers'retirement fund.Water fund
i
Other
.:
United States savings bonds held for various depositors.
JFor the Board of Trustees, Postal Savings System
For the Secretary of War
_
For the Secretary of the Treasury:
Foreign obligations
Obligationsonaccouhtof sales of surplus property
Capital stock and obligations of Government corporations and agen^
cies
_
.-.Other..
:
^...
For Federal Deposit Insurance Corporation
_
For Federal Savings and Loan Insurance Corporation..
For Federal Farm Mortgage Corporation
.
_
For AliengProperty investment account,
Miscellaneous. J
.•_
:
Total:

......-—.

-

_.

139
June 30, 1942

$34,539,376
28,529,600

$107,106, 050
24,061, 750

9,064,750
1,773,000
370,620
10,618,400
1,138,555,840
9, 320,330

9,615,250
1,773,000
398,620
16,561.800
1,134,004,640
10, 370,330

,

12,072,484, 767 12,072,484,757
. 46,737,095 / 46,737,095
r 1,496,678,292
r 2,623,720
178, 746, 350
100,034, 500
716, 229,840
19,832, 056
116,475,107

4, 733.763,451
2,499,288
213,746,350
98,034,500
689,116,820
20,856,447
122,484,907

15,981, 513,632 19,302,615,055

' Revised.

BUDGET AND IMPROVEMENT COMMITTEE

The Budget and Improvement Committee is responsible, under the
direction of the Budget Officer, for the preparation and review of estimates submitted by Treasury bureaus and divisions for annual or
deficiency appropriations. I t is also responsible, under the direction
of the Budget Officer, for the investigation of administrative methods
and procedure in their relation to appropriation estimates and for
other investigations upon assignment by the Administrative Assistant
' to the Secretary. To facilitate the investigations, a Subcommittee
on Investigations is assigned the responsibility for determining,
through the inspection of field'as well as departmental activities, the
justification for proposed increases in appropriations and makes other
surveys upon assignment.
The review of appropriation estimates includes a thorough examination of the items by the individual, committee members to whom
respective bureaus or divisions are assigned. The entire committee
then conducts formal hearings at which the bureau or division heads, or
their representatives, present oral testimony in further support of the
estimates. The committee, after deliberation, submits its recommendations to the Budget Officer for his guidance in determining the items
which should be approved for transmittal to the Bureau of the Budget.
In addition to the regular estimates of appropriations for the fiscal
year 1943, supplemental and deficiency estimates aggregating
$747,355,125 were received during the fiscal year.
Reserves amounting to $5,824,455 were set aside from the ordinary
appropriations for the fiscal year 1942 by the bureaus and offices of
t h e Department. During the year, reserves amounting to $3,420
were released by the Director of the Bureau of the Budget after approval of the committee, leaving a reserve of $5,821,035 at the end of
t h e year. Of the appropriations made to the Treasury Department
for the fiscal year 1943, $5,782,844 has been set aside as reserves for
savings and contingencies.




140

REPORT OF THE SEiCRETARY OF THE TREASURY

For the fiscal year 1944, estimates aggregating $7,133,940,312 were
approved by the Departmental Budget Officer and submitted to the
Director of the Bureau of the Budget. Such estimates included
$188,745,805 for annual a,ppropriations; $340,352,750 for permanent
and indefinite appropriations and special funds; $3,010,934,206 for
trust funds; $3,000,000,000 for interest on the public debt; and
$593,907,551 for public debt retirements chargeable against ordinary
receipts.
BUREAU OF THE COMPTROLLER OF THE CURRENCY i

The Bureau of the Comptroller of the Currency is responsible for
the execution of all laws relating to the supervision of national banls:ing associations and all banks and building and loan associations in
the District of Columbia. The Bureau is also responsible for the
liquidation of suspended national banks placed in charge of receivers.
Under the Emergency Banking Act of March 9, 1933, approval of the
Comptroller of the Currency is required for the issuance and retirement of preferred stock of national banking associations. Other
duties include those incident to the formation and chartering of new
national banking associations, the establishment of branch banks,
the consolidation of banks, and the conversion of State banks into
national banks.
.,
*
Changes in the, cpndition oj active national banks
The total assets of the 5,107 active national banks on June 30, 1942,
amounted to $44,719 millions, an increase of $3,404 millions since
June 30, 1941, when 5,136 banks reported. The deposits of the
active banks in 1942 totaled $40,659 millions, which was $3,308
millions more than in 1941. Since the.current figures exclude $439
millions in reciprocal interbank demand deposits, reported gross on
previous call dates, the increase in both deposits and in total assets
on a comparable basis would be greater by that amount. The loans
and investments totaled $29,545 millions, representing an increase
of $3,668 millions during the year.
The assets and liabilities of active national banks on the date of
each report from June 30, 1941, to June 30, 1942, are shown in the
following statement.
1 More detailed information concerning the Bureau of the Comptroller of the Currency is contained in the
annual report of the Comptroller.




REPORT OF THE SECRETARY OF THE TREASURY

141

Abstract of reports of condition of active national banks on the date of each report
from J u n e 30, 1941, to J u n e 30, 1942 .
[In t h o u s a n d s of dollars]
J u n e 30,
W41 (5,136
banks)

Sept. 24,
1941 (5,131
banks)

D e c . 31,
1941 (5,123
banks)

A p r . 4,
1942 (5,115
banks)

J u n e 30,
1942 (5,107
banks)

L o a n s an.d idiscounts, including o v e r d r a f t s . . . 10,922,^483
U.
S.- ( G o v e r n m e n t i securities,
direct
obligations
'-'... 8, ,856, 499
Obligations g u a r a n t e e d b y , - U . - S . Govern2, 279, 453
ment
'i...........
Obligations of States a n d political s u b 2,020, 242
divisions
.
O t h e r b o n d s , notes, a n d d e b e n t u r e s
. 1, 590,191
. C o r p o r a t e stocks, including stock of Federal
208, 409
Reserve Banks
.
J

11,470,256

11, 751, 792

11, 569, 311

10,901,-796

8, 593, 247

9, 786, 743

2, 534, 541

2, 286,309

2,116, 310

1, 629, 269

2, 068,091
1, 606,133

2,024, 715
1, 588,006

2,082,182
1,563,719

1, 960, 534
1, 558, 910

201,735

197,688

194, 952,

25,877,277
Total loans and investments
C a s h , balances with other b a n k s including
reserve balances, a n d cash i t e m s in process
14, 521, 658
of collection.
.
B a n k premises owned, furniture
and
592, 897
fixtures
.
-. -..
, 96, 568
R e a l e s t a t e o w n e d other t h a n b a n k premises.
I n v e s t m e n t s a n d other assets indirectly
representing b a n k premises or other real
estate
61, 764
C u s t o m e r s ' liability on acceptances out49, 977
standing
Interest, commissions, r e n t , a n d other
61,469
income earned or aiccrued b u t n o t collected.
53,025
O t h e r assets
.

', 476,2U

27, 689, SOO. 28,194,979

29, 645,183

ASSETS

203, 946

15,142,138

15, 001, 930

591, 544
91, 620

590, 579
81,697

10, 665/'769 ''13-,:299, 723

14, 410, 735 1 14,316, 563
591,922
76, 910

588, 690
72,494

54,036

63,445

52, 526

39, 492

40,139

34, 950

32, 316

65, 759
53, 710

64, 346
66, 207

74,141
59,455

63, 594
47, 599

41, 314, 635

T o t a l assets

60, 629

42, 521,106

•43, 538, 234

43,496, 537 1 44,718, 965

19,194, 051

19, 944,103

20,480, 952

20, 287, 746

21, 945, 397

8, 042, 313

8,044, 337

7, 964, 912

7, 721,120

7, 841, 032

540, 937
2, 529,179
6, 591, 645

603, 581
2, 578, 267
6, 957, 718

1,142, 734
2; 590, 940
6, 789, 685

1, 493, 858
2, 735, 059
6, 843, 042

1,189, 410
2, 741, 720
1 6, 498, 697

585, 549

LIABILITIES

D e m a n d deposits of individuals, p a r t n e r ships, a n d corporations
T i m e deposits of i n d i v i d u a l s , p a r t n e r ships, a n d corporations
, D e p o s i t s of U . S. G o v e r n m e n t , a n d postal
savings
Deposits of States a n d political subdivisions.
Deposits of b a n k s
• Other deposits (certified a n d cashiers'
checks, etc.)
'

8, 514, 979

80, 041, 996
8, 496,324

31,103,009
8, 451, 763

31; 309,194
8,168,299

32,367,109
8,292, 008

2,005

9,275

3, 778"

12, 270

2,014

59

59,

67

59, 379

45, 931

47,558

41, 277

37, 232

55, 644

59,998

62, 613

48, 508

42, 042

56, 215
191, 889

68,168
171, 034

62, 570
167, 777

. 74; 779
169:629

73,'567
225, 425

38, 892, 785

39,889,135

1, 523, 383
1, 336,090
498, 376
240, 292

T o t a l liabilities

410, 314
38, 538, 320

37, 716, 494

D e m a n d deposits
«
.^.
Time deposits..
Bills p a y a b l e , rediscounts, a n d other liabilities for b o r r o w e d m o n e y
M o r t g a g e s or other liens on b a n k premises
a n d other real estate
Acceptances executed b y or for a c c o u n t of
reporting b a n k s and outstanding
'.
I n t e r e s t , discount, rent, a n d other income
collected b u t n o t earned
...
I n t e r e s t , taxes, a n d other expenses accrued
and unpaid
....
Other liabilities...

453,178
37, 351, 303

T o t a l deposits..

1, 514, 706
1, 350, 710
521, 283
241, 622

1, 515, 794
1, 388, 672
499,081
245, 552

1, 511,895
1, 396,118
515,127
249, 442

3,e

3, 672, 582

442, 861
40,659,117

76

1 41,039,473

CAPITAL ACCOUNTS

C a p i t a l stock (see m e m o r a n d a b e l o w ) .
Surplus
-..'.
Undivided profits...
Reserves (see m e m o r a n d a b e l o w ) .
._

3, 598,141

3, 628, 321

T o t a l liabilities a n d capital a c c o u n t s .

41, 314, 635

42, 521,106

Total capital.accounts...

43, 538, 234

1 E x c l u d e s reciprocal b a n k balances of $439,310 t h o u s a n d s , r e p o r t e d gross on prior call d a t e s .




1, 507, 670
1,411, 407
515,949
244,466
3, 679,492
1 44,718,965

142

REPORT OF THB SECRETARY OF THE TREASURY

Abstract of reports of condition of active national banks on the date of each report
from June 30, 1941, to June 30, 1942—Continued
[In thousands of dollars]
June 30,
1941 (6,136
banks)

Sept. 24,
Apr. 4,
Dec. 31,
June 30,
1941 (5,131 1941 (5,123 1942 (5,115 1942 (5,107
banks)
banks)
banks)
baiiks)

MEMOKANDA

Par value of capital stock:
Class A preferred stock
Class B preferred stock
Common stock
Total

-

Retirable value of preferred capital stock:
Class A preferred stock
Class B preferred stock...J
Total

--^.--

.-

Reserves:
Reserves for dividends payable in common stock.
•
Reserves for Other undeclared dividends.
Retirement account for preferred stock..
Reserves for contingencies, etc
^otal

. - '-

-L...

Pledged assets and securities loaned:
U. S. Government obligations, direct
and guaranteed, pledged to secure
deposits and other liabilities
Other assets pledged to secure deposits
and other liabilities, including notes
and bills rediscounted and secmities
sold under repurchase agreement
Assets pledged to qualify for exercise of
fiduciary or corporate powers, and for
purposes other than to secure liabilities
.
Securities loaned
,.

165,647
12,983
1, 348,834

147, 254
12,745
1,353,386

139,928
12,451
1,356,521

1, 516, 368

1, 517,364

1,513, 385

1, 508,900

207,724
15,046

202,908
14,948

1.91,862
14,693

184 343
14; 399

235,037

222,770

217,856

206,556

198,742

6,667
• 8,494 I
20, 503
204, 628

f
6,187
f
1
8,155
1
241,622 1
19,312 \ • 249,442 )
I . 211,898
I

8,612
4,418
18,658
212,778

240, 292^

241,622

246, 652

249, 442

•244,466

2,787,388

3,374,484

3,801,844

3,801,926

'

•
2, 673,112

•

_
•

601,405

680, 382

635,813

595,492

642, 287

100,882
19, 344

101,866
27,152

94,481
17, 518

94,116
23,733

92 981
20,942

3, 394, 743

Total
Secured liabilities:
Deposits secured by pledged assets
pursuant to requirements of law
Borrowings secured by pledged assets,
including rediscounts and repurchase
agreements
Other liabilities secured by pledged
assets
_
-TotaL

159, 527
13,098
1,343, 743

219,908
16,129

•

171,260
13,181
1,340,705
1, 526,146

..

3,496,788

4,122, 296

4, 515,185

4, 458,136

2, 746, 217-

2,802,808

3,462,951

3,840,469

3, 629,848

•1,984

"8,613

3,096

10,006

1,965

621

549

612

424

517

2, 748,722

2,811,970

3,466, 659 - 3,850,889

3, 632, 330

Summary oj changes in the national banking system
The authorized capital stock of the 5,109 national banks in existence
on June 30, 1942 (including 2 banks that had discontinued business,
although not in formal liquidation), consisted of common capital stock
aggregating $1,357 millions, an increase during the year of $16 millions,
and preferred capital stock aggregating $153 millions, a decrease
during the year of $33 millions. . The total net decrease of capital
stock was $17 millions. During the year charters were issued to
6 national banking associations^which had common capital stock
aggregating over half a million dollars. There was a net decrease of
32 in the number of national banks iii the system duririg the year by
reason of voluntary liquidations and 2 receiverships.




143

REPORT OF T H E SECRETARY OF THE TREASURY.

Changes in the number and capital stock of national banks during
the fiscal year 1942 are shown in the following summary.
•Organization, capital stock changes, and liquidations of national banks, fiscal year
1942
Capital stock
Number
of b a n k s
Common
'Charters granted
.
I n c r e a s e of preferred capital stock: ;
4 b a n k s , b y issues of n e w preferred capital stock
I n c r e a s e of common capital stock:
29 .banks, b y regular increases
.'
638 b a n k s , b y c o m m o n capital stock d i v i d e n d s
3 b a n k s , b y conversion of preferred capital stock
2 b a n k s , b y consolidation u n d e r act N o v . 7,1918, as a m e n d e d .
T o t a l increases

Preferred

$542,089
$425,000
5, 886, 775
15, 305,485
180,200
125, 000
22, 039, 549

425,000

4, 954, 000
90,000

.-...

V o l u n t a r y liquidations
R ecei verships
Decreases of capital stock:
10 b a n k s , b y reduction of c o m m o n capital stock
^....
922 b a n k s , b y retirement of preferred capital stock
1 b a n k , b y decrease of par v a l u e of preferred capital s t o c k .

1, 691, 500
70,000

•622, 500
31, 708,825
111, 375
38

5,666,500

33, 581, 700

-32
6,141

+16, 373,049
1, 340,140,866

- 3 3 , 1 5 6 , 700
186,043,967

1 5,109

1, 356, 513, 915

152, 887, 267

T o t a l decreases
N e t changes during t h e y e a r . . .
C h a r t e r s in force J u n e 30,1941.
C h a r t e r s in force J u n e 30,1942..

1 T h i s figure differs from t h a t s h o w n in t h e table on p . 141. B a n k s t h a t h a v e discontinued business altthough n o t in formal liquidation do not s u b m i t reports of condition b u t are included in this t a b l e .

BUREAU OF CUSTOMS

Collections

'

After 2 years of successive increases, customs collections of
:$390,059,109 in 1942 were six-tenths of 1 percent less than those in 1941.
Monthly collections in 1942 fluctuated within narrow limits, but for
each of the first 7 months of the fiscal year they were larger than
for the corresponding months of the previous year, so that at the end
'Of January 1942 collections amounted to $239,654,659, and were 24.8
percent greater than for the first 7 months of the fiscal year 1941.
During the last 5 months of 1941, however, customs collections had
risen very sharply due to largely increased importations of unmanufactured wool and of certain metals. During the last 5 months of
1942, on the other hand, collections averaged $4,000,000 per month
less than during the first 7 months of the year which resulted in
collections of only $150,404,564 from February to June 1942, inclusive,
.as compared with $200,270,039 during the corresponding months of
1941. The types of collections during each of the past 2 years are
shown in the following table.

487543—43-

-11




144

REPORT OF T H E SEiCRETARY OF THE TREASURY

Customs collections ^ and refunds, fiscal years 1941 and 194
[On basis of accounts of Bureau of Customs]
Type

1942

Collections:
. Dul;ies:
^Consumption entries..
Warehouse withdrawals
Mail entries
Baggage entries
Informal entries. Appraisement entries
Increased and additional duties..
Otherduties
Total duties-

$210,724,762 $195, 296,996
173, 976, 473 186,298, 749
1, 260,477
889,800
310,343
252, 672
692,847
• 655,448
82,-636
118,237
4, 089, 543
5, 084, 673
183, 522
204, 258

Percentage
increase or
decrease (—)

-7.3
7.1
-29.4
-18.6
-5.4
43.3
24.3
11.3

391,320, 502

,388, 800,833

-.6

612,044
106,997
30,182

524,602
110, 567
13, 235

-14.3
3.3
-56.2

60, 211

128,986
370, 759
110,127

"-2"7

Miscellaneous:
Fines and forfeitures.
Liquidated damages
Sale of seizures
Sale of Government property, unclaimed and abandoned
merchandise
.
.
Tonnage tax and navigation fees
_
Another customs receipts..

113, 217

Total miscellaneous

156.9

912, 651

1, 258, 276

37.9

392, 233,153

390, 059,109

-.6

Refunds:
Excessive duties
Drawback payments.
Other

8,503,960
16, 932, 341
20, 047

4,900,037
16, 295,119
44,460

-42.4
-3.'8
121. 8

Total refunds..

25, 456, 348

21, 239, 616

Total customs collections.

J Excludes customs duties of Puerto Rico, which are deposited to the credit of the government'of Puerto
Rico, but includes fines and other minor collections of Puerto Rico.

Duties on warehouse withdrawals increased substantially over the
previous year but this increase was more than offset by the decline in
duties on consumption entries. The increase in duties collected on
warehouse mthdrawals was due chiefly to the greater quantity of
imports of w^ool and sugar, commodities which are usuall}^ placed in
customs bonded warehouse upon arrival in the United States and are
withdrawn only as needed for use in manufacturing or for direct consumption. Importations of those commodities which are not usually
warehoused,, on the other hand, were considerably curtailed as a result
of the further spread of hostilities.
Almost four-fifths of the duties collected during 1942 were reported
by nine customs districts, two of these. New York and Boston, collecting 55 percent. Collections in three Pacific seacoast districts, Los
Angeles, San Francisco, and Oregon, declined from the previous year.
Diminished collections were also reported in all of the Gulf coast districts except Mobile and in all the South Atlantic districts except South
Carolina. Collections increased in all of the North Atlantic districts
except New York and in all of the Canadian border districts except
Rochester and Montana. Among the interior districts, only Minnesota, Indiana, and Tennessee reported increased collections.
Volume oj business
In order to present statistics of the volume of customs business
which are analogous to collections, the data which follow are limited



REPORT OF THE SECRETARY OF THE TREASURY

145

, to the area in which all collections are turned into the Treasury of the
United States. Since all customs receipts in the Virgin Islands and
all except fines and other minor collections in Puerto Rico are deposited
to the credit of those respective governments, none of the data for the
former district and none except those on seizures for the latter district
are included below.
Entries oj merchandise.—There was a decline in the number of
all types of entries of merchandise, except informal entries, during
1942, thus continuing the trend begun in 1939. The increase in the
number of informal entries was particularly noticeable in the customs
district of Maine and New Hampshire and in the three eastern districts along the Mexican border. The number of entries of merchandise during the past 2 years is shown in the following table.
Number of entries of merchandise, fiscal years 1941 and 1942
Type

Consumption entries
Warehouse and rewarehouse entries
Warehouse withdrawals
.. —
Mail entries
—
Baggage entries
Informal entries
.-.
Appraisement entries
All other
Total

Percentage
increase or
decrease ( - )

1941

389,125
62,914
327, 707
294, 513
465, Oil
179, 328
12,177
644,192

365,216
51, 059
249, 995
258, 482
391,161
202, 600
9,925
603,101

2, 374,967

-.-

-6.1
-18.8
-23.7
-12.2
-15.9
13.0
-18.5
-6.4
-10.2

Vessel, airplane, and highway traffic.—Contrary to the tendency
during the previous fisca-l year, traflic crossing the border increased in
1942. The only traffic declines appeared in the number of ferries and
passenger trains entering the United States and in the passengers
arriving by vessel from abroad. The following statement covers the
leading classes of traffic for the last 2 years.
Number of vehicles and persons entering the United States froin abroad, fiscal years
1941 and 1942
1941

K i n d of e n t r a n t

Vehicles:
A u t o m o b i l e s a n d busses
D o c u m e n t e d vessels
U n d o c u m e n t e d vessels , - .
Ferries
Passenger t r a i n s . . J .
Aircraft
J
O t h e r vehicles .

.

T o t a l passengers a n d p e d e s t r i a n s . _




Percentage
increase or
decrease (—)

.. .

9,446, 396
.33,981
25,279
81, 544
31,945
13,867
419,612

6.0
1 6
21.4
-6 1
—.7
31.3
6.0

23, 625, 373
443, 238
73,804
1,475,719
852,416
93,969
1,611,237
7,933,828

25,706,441
305,190
81,182
1,754,037
1,111,863
133, 716
1,848,867
9,320,250

9.3
-31.1
' 10.0
18.9
30.4
42. a
14.7
17.5

—

36,009, 584

40, 261,535

11. &

...

. . .

i

8,910,950
33,461
.20,821
86,818
32,156
10, 665
395,761

--

...

Passengers b y :
A u t o m o b i l e s a n d busses
D o c u m e n t e d vessels
:
U n d o c u m e n t e d vessels
...1
Ferries
Passenger t r a i n s
'.
Aircraft
0 t h e r vehicles
Pedestrians

1942

.

_.

.
.

.

-

146

REPORT OF T H E SECRETARY OF T H E TREASURY

Airplane traffic on international lines continued its expansion, showing for the eleventh consecutive year an increase in the number of airplanes used. The number of passengers arriving by air from abroad
was 42 percent larger than during the preceding year. Almost twofifths of the airplane passengers who reached the United States on the
international lines arrived in the Florida customs district, mbst of these
at the port of Miami. Large gains over the previous year were also
recorded at Detroit, Mich., Buffalo, N. Y., Great Falls, Mont.,
Bangor, Maine, and Fairbanks, Alaska. Airplane traffic at Miami,
Fla., Brownsville, .Tex., Los Angeles, Calif., Juneau, Alaska, and
Seattle, Wash., also increased substantially. The following table
shows the number of airplanes and airplane passengers entering the
United States during the past 2 fiscal years.
Number of airplanes and airplane passengers entering the United States, fiscal years
1941 and 1942
A i r p lanes

A i r p l a n e passengers

Percentage increase
or decrease ( - )

District
1941
N o r t h e r n border:

Total

-

'

-

S a u t h e r n border:
Sa^n Dieco
Arizona
E l Paso
Laredo

-

.

.

Total
Alaska

-

Airplanes

Passenger ,

659
1,525
1,639
26
30
1,122
641
775
1,349
361
128

481
11,089
11, 204
575
57
621
305
3,573
4,428
353
210

1,990
• 13,654
19, 692
552
92
4,436
5,399
3,958
7,224
1,996
413

109.9
-8.5
92.1
-36.6
30.4
414.7
330. 2
8.8
-11.8
473.0
82.9

313. 7
22.2
75.8'
—4 0
61. 4
614. 3
1, 670. 2
10.8
63.1
465.4
96 7

5,640

8,265

32,896

"'59, 306

46.3

80.3

208
35
. 14
25
917

287
10
13
21
1,024

2,036
57
33
42
9, 483,

38.0
-71.4
-7.1
-16.0
11.7

32.1
-93.0
-5r. 5
-16.7
42.2

2,690
4
16
35 •
13,487

1,199

1, 355

11,651

16, 232

13.0

39.3

1,048
76
2,602

1,286
38
2,933

3,781
965
44, 676

6,197
673
51, 307

22. 7
-50.0
12.7

63.9
-30.3
14.8

3, 726

4,255

49, 422

68,177

14.2

17.7

-

10, 565

13,867

93,969

133,715

31.3

42.3

Total
Grand total

1942

'

-

Florida
'

1941

314
1,667
853
41
23
218
149
712
1, 530
. 63
70

Vermont
New York
IVfarvland
Rochester
Bufi'alo
Michigan
Dakota
.
Montana
Othor districts

1942

War activities.—Prior to Decem.ber 7, 1941, num.erous problem.s
arose regarding the interpretation and enforcem.ent of the Neutrality
Act of 1939 and other laws relating to neutrality and national defense.
Subsequent to that tim.e, m.ost of the special problem.s confronting the
customs service were those in connection with the prosecution of the
war. Among these were the handlhig of com.m.unications or correspondence coming into or going out of this country by courier or
otherwise than m the regular course of the mails, the seizure of Italian
and Germ.an vessels for violation of the so-called Espionage Act of
June 15, 1917, and the changed procedure due tb im.portation and




REPORT OF THE SECRETARY OF-THE TREASURY

147

exportation of m.erchandise by various governmental agfencies for use
in national defense or belligerent operations.
Movements of the arm.ed forces which caused United States personnel to be stationed abroad resulted in legislation for the purpose of
relieving such individuals from certam liabilities for custom.s duties.
The authority vested in the Secretary of the Navy to make em.ergency
purchases of war material abroad without paym.ent of duty on im.portation into the United States was extended by Executive order of the
President to the Secretary of War, Secretary of ^Agriculture, Secretary
of the Treasury, and the Board of Directors of the Reconstruction
Finance Corporation, and the procedure for facilitating the custom.s
clearance for shipm.ents m.ade under this authority was set up.
Supervision continued over exports to enforce export licensmg
requirements for strategic materials, and to control shipments to
blocked nationals. The volum.e of work connected with exports Is
partially indicated by the 4,444,801 export declarations which were
filed in 1942 com.pared with 4,397,350 in 1941. An exam.ination of
each of these m.ore than 4 m.illion docum.ent's as well as the actual
shipments was required to enforce the Export Control Act.
Drawback transactions.—A larger num.ber of drawback entries was
received in 1942 than in the preceding year but the am.ount of drawback allowed decreased by $2,109,930. The actual payments were
considerably in excess of the total allowed under the various provisions of the Tariff' Act of 1930 due to the paym.ent during the.current year of vouchers certified during the previous year. More than
99 percent of the drawback allowed consisted of drawback on merchandise manufactured from im.ported m.aterials, the m.ost important of which were copper, sugar, lead, and zinc. The num.ber of
notices of in.tent to export with benefit of drawback during 1942 were
50,515 fewer than during the previous year. A comparison of these
transactions during the past 2 years is presented in the followmg
table.
Drawback transactions, fiscal years 1941 and 1942
Transaction

1941

1942

Percentage
increase or
decrease ( - )

Number
19, 573

. Number
22,112

13.0

251,978
143,474
135, 507
12, 409
23,106
6,073

201,464
121, 670
114,437
14,839
17,286
6,446

-20.0
-15.2
'-15. 6
19 6
-25.2
6 1

D r a w b a c k allowed:
M a n u f a c t u r e s from i m p o r t e d m e r c h a n d i s e
D u t y p a i d on m e r c h a n d i s e exported from c o n t i n u o u s
customs custody
M e r c h a n d i s e which d i d . n o t conform to s a m p l e or
specifications a n d r e t u r n e d to c u s t o m s c u s t o d y a n d
exported .
. .
Import'ed materials used in construction a n d e q u i p m e n t of vessels b u i l t for foreigners
Salt used in curing fish

Amount
$16,790,804.02

Amount
$14, 739,192. 73

— 12.2

353. 77
3, 287. 63

3, 207. 83

-2.4

Total drawback allowed.. .
I n t e r n a l r e v e n u e refund on account of domestic a l c o h o l . , JI.

16,881,032. 26
217, 230.98

14, 771,101. 89
285, 733. 26

-12. 5
31.5

17,098, 263. 24 '

15,056,835.15

-11.9

D r a w b a c k entries received
D r a w b a c k notices of i n t e n t :
Originating in t h e d i s t r i c t . .
:
Received from other districts
F o r w a r d e d to other districts for disposition
Certificates of m a n u f a c t u r e received
I m p o r t entries used in d r a w b a c k l i q u i d a t i o n
Certificates of i m p o r t a t i o n issued

Total




.

..

61,109.'96
35, 476. 88

11, 404. 62
17, 296. 71

-77.'7
— 51.2

148

REPORT OF T H E SEiCRETARY OF T H E TREASURY

The following table shows the principal commodities on which
drawback was paid.
Principal commodities on which drawback was paid, fiscal years 1941 and 1942
Commodity

1941

1942

$2,449, 215.16
6, 673, 168. 36
683, 466. 33
666, 797. 65
693, 976.91
883, 653. 60
240, 899.90
286, 921. 49
1,893, 899.80
587, 931.04
237, 122.12
37, 426. 49
262, 376. 75
238, 020. 62
831, ^033. 28
146, 930.89

Copper
Sugar.
L e a d ore, m a t t e , pigs
.
Zinc ore a n d blocks
P e t r o l e u m , crude
A l u m i n u m , crude
NickelManganese
R a w wool a n d m o h a i r
T u n g s t e n ore
Tobacco, u n m a n u f a c t u r e d
B a u x i t e ore
Burlap
M o t i o n p i c t u r e films
Flaxseed...
Soybean oil

Percentage
increase or
decrease (—)

$5, 725.623. 23
2, 667,673.87
1,033, 201. 36
855, 04.7. 21
465, 993.14
446, 148.10
445, 628.00
399, 253.96
377, 923. 66
324, 229.70
202, 301. 68
170, 358. 24
151, 367. 91
141, 914. 51
134, 359.19
105, 750. 78

133.8
-53.0
51.2
28.2
-21.6
-49.6
84.9
39.2
-80.0
-44.9
-14.7^
355.2
-42.3
-40.4
-83.8-28.0

Protests and appeals.—A smaller number of protests were filed during
1942 than during the previous year, due, in part, to the decline in
imports of those types of goods which involved difficulties" in classification and, in part, to closer supervision by the Bureau over the classification of merchandise. The number of appeals for reappraisement, on
the other hand, more than doubled, a condition due to fluctuating market values and to the difficulties encountered by appraising officers in
ascertaining the correct foreign value of imported merchandise. . The
following statement shows the progress of this work during the past
2 years.
Number of protests and appeals, fiscal years 1941 and 1942} •
Status

Protests:
Filed with collectors by importers
Allowed by collectors
Denied by collectors and forwarded to customs court
Appeals for reappraisement filed with collectors
'

1941

--

-

35, 589
1,002
31, 479
3,266

1942

23, 481
1,342
21, 202
7,783

Percentage
increase or
decrease ( - )

—34.0
33.9
—32 6
138.3

Law enjorcement activities
Seizures.—There was a larger number of seizures durmg 1942 than
in the preceding year, every type of seizure except narcotic seizures
being more numerous. The value of goods seized by customs officers
was also very much larger than in 1941. Much of this increase in
value was due to the inclusion as customs seizures of the value of
certain foreign boats and cargoes some of which, prior to March 1,
1942, would have been classed as seizures under Department .of Commerce laws. However, merchandise and vehicles seized showed a
decided increase in value. Two seizures of precious stones alone in
1942 were valued at $831,273. ^
Narcotic seizures, although fewer in number, were valued at almost
twice as much as in 1941. This was the second successive year to
show a decline in the number of narcotic seizures accompanied by a



149

REPORT OF T H E SEiCRETARY OF T H E TREASURY

pronounced increase in their value. The quantity of seized narcotics
during 1942, however, was considerably sm.aller than during the previous year, 3,161 ounces of marihuana and 920 ounces of other narcotic
drugs being seized in 1942 as com.pared with 8,589 ounces of marihuana
and 4,011 ^ ounces of other narcotic drugs during the previous year.
Customs seizures in the Southwest districts indicated that there was
a continued trickle of marihuana into the United States although most
of the seizures"were of no great importance.
Liquor seizures, although increasing numerically, showed only a
small increase in quantity and an actual decrease in value.
The nutnber and principal types of seizures made by the Customs
Service and other governm.ental agencies during the past 2 years are
shown in the following table. .
Seizures for violations of the customs laws, fiscal years 1941 ctnd 1942
Seizure
Merchandise:
Number
Value:
Jewelry, precious metals and stones, watches and
parts
Wearing apparel and luggage..
(
Toilet articles and medicine
Textiles and raw wool
Furs—skins and manufactured
:
Edibles and farm produce
House furnishings, including rugs
Guns and ammunition
Hardware
Cameras and other sport gbods
_.
Books and stationer's supplies
Cigars, cigarettes, and tobacco
Prohibited articles^
Livestock, etc. (excluding horses)
Colors, dyes, etc
Lubricating oil
Cargo of seized vessels
Miscellaneous
_
Total valuei of merchandise.
Prohibited articles:
'
Obscene, number.,
Lottery, number
Narcotics:
Number._
Value
Liquors:
Number
Quantity (gallons)...
Value
^.
Boats, automobiles, airplanes, and horses, value.
Grand total:
Number.
Value

Percentage
increase or
decrease (—)

1941

4,619

9.4
190.2
-47.0
34.7
-20.4
24.1
22L4
88.3
.8
7.6
71.7
-6.8
-1.2
-36.9
-65.9
2,177.9

8,621

$1, 340,759
25,145
6.747
182.365
29, 588
28,024
61,187
607
2,798
9,177
2,222
4,766
7,473
4,429
20, 569
61,210
2,980,901
19,439

863,860

4,777,406

459.-6

433
150

558
361

28.9
134.0

789
$43,821

• 693
$84,162

-24.8
92.1

2,778
3,793
$38,154
$246, 232

3,174
3,862
$37,826
$13,364,566

14.3
L8

8, 373
$1,182,067

9,295
$18,263,960

$462,029
47,432
6,009
229,130
23,849
8,719
27,179
602
3,027
5,346
2,358
4,825
11,849
12, 982
903

125.5

6, 327. 6

n.o
1,445.1

In addition to the goods that were seized, claims aggregating
$12,485,911 were initiated by the customs service against importers
in connection with various irregularities and frauds which did not
necessitate a seizure or were discovered after the goods had gone
into consumption.
The following table presents the record of customs seizures classified according to the various agencies which were instrumental in
apprehending violators of customs laws..
1 Revised.




150

REPORT OF T H E SECRETARY GF THE TREASURY

Seizures and arrests for violations of customs laws, classified, according to agencies
participating, fiscal year ,1942
Seizures

Total

1

Customs .A.gency Service:
Investigative Unit
Enforcement Unit
Customs Service, exclusive
of Agency Service
:..
Total Custbms Service
Immigration
Customs Service assisted by
other services
Other Federal and local
officers
Grand total
•

Number 1

Liquor

Narcotics

Number

Value

Number

Value

.330 $1, 755, 407
74, 537
349

11
35

$576
26, 022

3
76

. $210
6,130

8,480 16, 414, 911

526

56, 578

9,159 18, 244, 855
3,520
.74
4,989
27
10, 596
35
. 9,295 18, 233, 960

572
9

83,176
213

9

770

9

3

3

4

593

84,162

Lottery
Merch an dise
and
obscene,
num- NumValue
ber
ber

Value

7

309 $1, 328,065
238
. 9,266

3, 048 28, 965

902

4, 004 • 3,437,512'

3,127 35, 305
34 1,800

909

4, 551
.31

4, 774, 843
491

659
.

9

62

28

1, 902-

4,619

4, 777, 406-

3,174 37, 826

909

170

'

Seizures—Continued
Total
value
boats,
automobiles,
airplanes,
and •
horses
C u s t o m s Agency Service:
$426, 556
Investigative U n i t
33,119
Enforcement U n i t
C u s t o m s Service, exclusive
12,891,856
of A g e n c y Service.

Automobiles

Boats

Number

5
12

Number

Value

$409,431
898

Value

44 $17, 075
90 28, 994

Airplanes

Horses

NumiSI u m ber Value ber • Value

1

$500

1
$50
71 2,727

Number
of
aj-rests:

33"
159-

42 12, 840, 250

113

47, 781

1 2,300

14 1, 525 •

180^

,.
Total Customs Service. 13, 351, 531
1,016
Immigration
C u s t o m s Service assisted
3,390
b y other services
O t h e r Federal a n d local
8,629
'officers

59 13, 250, 579
31
7

247
6

93, 850
980

2 2,800

86" 4, 302
1
5

37254

13, 364, 666

67 13. 250. 615

G r a n d total

5*

9

3, 365

19

1

' 8, 629

280 106, 824

20

47

88 4,^27

486-

1

13'
2 2,800

1 Excludes number of boats, automobiles, airplanes, and horses, as they were seized in connection with
narcotics, etc., seizures.

Fewer autom.obiles were seized in 1942 than for any other year for
which a record was kept. . During the course of the year 19 autom.obiles valued at $7,970 were seized by the Secret Service ofiicers and
delivered to the Custom.s Service for forfeiture, as com.pared with
41 autom.obiles valued at $12,391 during the previous year.
The following table sum.m.arizes the num.ber of boats, autom.obiles,.
etc., seized for customs violations during the past 2 years.




REPORT OF THE SECRETARY OF THE TREASURY

151

Boats, automobiles, airplanes, and horses seized, fiscal years 1 9 4 f o,^d 1942
F o r liquor violations

F o r narcotic violations

Total

F o r other violations

Seizure
1942

1941

3
$103

4
$15, 814

1
$9, 500

53
$9,106

43
$9,057

37
$10, 730

1941
Boats:
Number
Value .
Automobiles:
Number
Value..
Airplanes:
Number
Value
Horses:
Number
Value
T o t a l value

.

1942

1941

1942

1941

1942"

49
$120, 025

2
$26

1
$20

$9,235

$24, 891

$20, 230

$13, 669

200
$84,098

324
$104, 774

280
$106, 824

2
$2,800

3
$8,000

2
$2, 800

159
$3, 804

•

234
$84,938
3
$8,000

35
$13,-669

63
$13, 234,801

87
$4, 307

161
$3,830

88
$4,327

$216, 767

$13, 326,006

67
53
$129,628 $13,250, 615

•$246,232 $13,364,566

During the year 168 seized automobiles and trucks were returned
to petitioners because the violations were not sufiiciently fiagrant to
warrant forfeiture. Of the 79 automobiles forfeited, 23 were.assigned
for official use either to the Customs Service or to some other governmental agenc}^, and 56 were sold at public auction.
In the course of their regular duties ofiicers often apprehend violators
of other than customs laws. During the year, 879 seizures were made
for other departments and agencies, of which 730 were made for the
Department of Agriculture and 127 for the Post Office Department.
There were 194 persons apprehended of whom 136 were for the
Immigration Service. In addition, 6,284 violations of the Department
of Agriculture laws were detected.
Legal proceedings.—As the result of narcotic seizures, 228 persons
were presented for prosecution. Including cases pending froih the
previous year, those which were concluded resulted in 111 convictions
and only 29 acquittals. Prison sentences aggregating over 105 years
and fines amounting to $13,750 were imposed by the court on convicted
oft'enders. In addition, penalties aggregating $21,480 were assessed
against the masters of 33 vessels on which narcotic drugs were found
concealed; many of these cases have not been concluded, but, including
cases initiated prior to 1942, $17,552 was collected from the masters
of vessels.
In connection with all seizures there were 486 arrests, a decrease of
40 during the year. The high ratio of convictions in the number of
cases disposed of continued: Of the 460 cases disposed of in 1942, 298
convictions were secured, or '65 percent; of the 587 cases disposed of in
1941, 403 convictions were secured, or 69 percent. Prison terms to
which customs violators were sentenced aggregated more than 189
years in 1942 as compared with 308 years in 1941, while the total
.amount of fines imposed by the courts was $27,206 in 1942 and
$37,660 m 1941. .
. ^
"
.°
Fines, penalties, etc.—Collections from fines, penalties, and, liquidated damages and sales of seizures aggregated $648,404 in 1942, a
decrease of $100,819 from the previous year. Of this total only $13,235
in 1942 consisted of the net proceeds from the sale of seized and
forfeited articles compared with $30,182 in the previous year. - ^_




152

REPORT OF T H E SEiCRETARY OF T H E TREASURY

Marine and t a r i f administration.
Marine administration.—For many years custom.s field officers performed duties over which the Bureau of Marine Inspection and
Navigation, Department of Com.m.erce, exercised administrative
control. This anom.alous situation was finally corrected h y Executive
Order No. 9083 of February 28, 1942, which transferred, as of March
1, 1942, to the Com.m.issioner of Custom.s, under the direction and
supervision of the Secretary of the Treasury, those functions of the
Bureau of Marine Inspection and Navigation and of the Secretary of
Com.m.erce pertaining to registry, enrollment, and licensing of vessels
including the issuance of commissions to yachts, the assignm.ent of
signal letters, and the preparation of all reports and publications in
connection therewith; the adm.easurem.ent of vessels, administration
of tonnage duties, and collection of tolls; the entrance and clearance
of vessels and aircraft, regulation of vessels in the coasting and
fishing trades, and limitation of the use of foreign yessels in waters
under the jurisdiction of the United States; the recording of sales,
conveyances, and m.ortgages of vessels; the protection of steerage
passengers; and all other functions of the Bureau of Marine Inspection
and Navigation and of the Secretary of Conim.erce which were perform.ed by the Bureau of Gustom.s on .their behalf. The power to remit
and mitigate fines, penalties, and forfeitures incurred under the laws
governing these functions was also transferred to the Bureau of
Custom.s.
To supervise these additional duties, ^ the Division of Tariff and
Marine Adm.inistration was created, formerly designated as the Division of Tariff Adm.inistration, with an additional assistant deputy
com.missioner who has direct supervision over the Section of Admeasurement, the-Section of Marine Adm.inistration, and the Section
of Marine Publications. These sections administer the laws and
regulations covering those functions transferred to the Bureau of
Custom.s by Executive Order No. 9083 insofar as they apply to
vessels.
The entrance of the United States into the war affected to a great
degree the maritime comm.erce of the United States and the administration of the laws under the jurisdiction of the Bureau. Orders
were issued by the Secretary of the Treasury waiving compliance
with the navigation laws in several instances where such action was
deemed necessary in the conduct of the war, pursuant to the authority
contained in the Second War Powers Act of 1942. The m.ajority of
these orders, due to their close relation to the war effort, was given a
confidential status and related to a waiver of the coastwise laws.
The orders waiving com.pliance with the navigation laws in effect on
April 1, 1942, whether issued by the Secretary of Commerce under
authority of Executive Order No. 8976, dated December 12, 1941, or
by the Secretary of the Treasury under authority of Executive Order
No. 8976, as modified by Executive Order No. 9083, were confirmed
and continued by the Secretary of the Treasury under this act.
Tarif administration.—Although considerable attention was devoted
to cases involving the possible application of countervailing duties
under section 303 of the Tariff Act of 1930, the facts developed were not
sufficient to warrant the issuance of any new countervailing-duty
orders, or to change any outstanding orders. No findings of dumping
were issued or revoked during the year.



153

REPORT OF T H E SECRETARY OF THE TREASURY

No new quotas were established during the fiscal year 1942. One
quota, that on cotton established by the President's proclamation bf
December 9, 1940, was further modified by a proclamation of June
29, 1942, which, in effect, made a global quota of the quota on cotton
having a staple length lYs inches or more but less than l^jU inches.'
Under the authority contained in section 318 of the Tariff Act of
1930, the President issued during the year three proclamations declaring the existence of an emergency and authorizing the Secretary of the
Treasury to permit the importation of certain commodities free of
duty. Proclamation No. 2498, dated July 25, 1941,, permitted until
June 30, 1942, the importation free of duty of forage for livestock
in drought-affected areas to be designated by the Secretary of Agriculture. Proclamation No'. 2542, dated April 1, 1942, permitted until
the termination of the emergency the importation free of duty in
Puerto Rico of jerked beef as a substitute low-cost food to replace
codfish which had been previously imported from Canada, Newfoundland, and Labrador. Proclamation No. 2553, dated April 27, 1942,
permitted until the termination of the emergency the importation free'
of duty of food, clothing, and medical, surgical and other supplies by
or directly for the account of the American National Red Gross for
its use in relief work. Appropriate regulations were issued by the.
Acting Secretary of the Treasury in connection with such free importations and were published in the case of forage for livestock as T. D.
50449; jerked beef in Puerto Rico as T. D. 50599; and supplies for the
Red Cross as T. D. 50626.
Cu§toms Agency Service
The Division of Investigations and Patrol, better known as the
Customs Agency Service, is the investigative unit of the Customs
Service. Its customary work, although continued throughout the
year, was greatly curtailed as is revealed by the following partial
summary of its activities during the past 2 fiscal years.
Activities of the Customs Agency Service, fiscal years 1941 and 1942
Number
1941

Investigations of violations of customs laws:
Undervaluation.
_
Marking violations
.
Baggage violations....",
Diamond and jewelry smuggling
Narcotic smuggling
^
Other smuggling
Touring permits
Other investigations:
Alleged erroneous customs procedure
Drawback
Classification and market value
Customs bonds to determine solvency and sufficiency.
Applications for customhouse brokers' licenses
Applications for bonded truckmen's licenses
Petitions for relief from additional duty
Personnel
Navigation violations
Pilferage of merchandise
Foreign, by members of domestic service
Miscellaneous
Examinations of customhouse broker's records.
Oases of cooperation with pther agencies




1942

Percentage
increase or
decrease (—)

586
85l
716
366
819
727
269

-39.3
-34.6
19.5
-4.7
-22.3
-34.7
-51.1

150

110

1, 209
1, 273

1,083

-26.7
-10.4
-50.4
-41.8
12.11
6.0
-18.&
288. ,6
-81.8
-18.1
-17.7
-L8
-47.3
443.6

965
130
599
384
1,0541,113

650

170
62
84
376
360
1, 289

221
641
3,067

631
99
70
89
• 306
1,399

234
181
445
3,011

205

108

2,201

11,965

154

REPORT OF T H E SEiCRETARY OF T H E TREASURY

Only four of the types of investigations listed above showed any
increased activity—investigations of applications for custom.house
brokers' and bonded truckm.en's licenses, baggage investigations, and
personnel investigations.
.
'
Personnel investigations.—These mvestigations include com.plaints
by individuals returnmg from, abroad of treatment accorded them, by
customs inspectors, collisions involving official autom.obiles, thefts of
Government property, em.ployees under consideration for prom.otion,
derelictions ar].d alleged political activity by custom.s e.m.ployees, and
/Character investigations of employees probationally appointed to
positions in the Custom.s Service, the latter accounting largely, if not
entirely, for the great increase in 1942. By arrangement with the
Civil Service Comm.ission, Customs Agents in 1942 m.ade the character investigations of the large num.ber of probational appointees. .
Baggage investigations.—Violations included under this category
covered several types of false declarations, newly purchased merchandise claimed to be used and therefore entitled to free entry as
^personal effects, merchandise undervalued, false claims by returning
tourists that they had been in Canada 48 hours or more, false claims
that no exemption had been granted during the preceding 30 days,
assertions that purchases were incidental to the trip when they had
actually been ordered previously, and claims to the ownership of
merchandise which was actually the property of others. As a result
of these investigations, substantial recoveries were effected.o
The number of investigations conducted by the Agency Service
under the provisions of the Export Control Act, although rather large
prior to the declaration of war, progressively and substantially increased during the last 7 months of the fiscal year. Numerous attempts to export critical, strategic, or other prohibited materials in
violation of export control provisions were discovered, seizures made,
and offenders prosecuted. Among these were attempts to export
platinum, prohibited merchandise under, the guise of ship's stores,
and goods to prohibited nationals by listing a fictitious consignee
in a neutral or allied country.
.
In addition to the detailiug of several customs agents to Foreign
Funds Control, many investigations were directly conducted by the
Customs Agency Service under the Foreign Funds Control provisions.
Prior to the entrance of the United States into the war, many Japanese
nationals who were returning to Japan were prevented from taking
with them money or other articles, the export of which was forbidden.
An even more rigid supervision was exercised during the last 7 m.onths
of this fiscal year.
°
,
The Supervising Customs Agent at Seattle' participated in and
subsequently supervised the plans for insuring the security of the
Seattle waterfront. After actively aiding in organizing the same
system in Tacoma, Wash., and- Portland, Oreg., he served in an
advisory capacity in the promotion of similar plans at seaports in
California and elsewhere.
Investigations in connection with alien property control, trading
with the enemy, and other measures connected with the war and
with national defense required the services of many members of
the Customs Agency Service.
Cooperation with other agencies.—The coordination plan established
in 1934, under which customs investigative officers* cooperated with



REPORT OF THE SECRETARY OF THE TREASURY

155

investigative officers of the Coast Guard and of other agencies of
the Treasury, was effectively continued^ but cooperation! in law
enforcement efforts was not confined either to this field or to the war
activities enumerated above. A total of 11,965 instances''of joint
eft'orts was recorded during 1942, more than five times as many as
in the previous year. These included almost every agency of this
Governm en t^and of our neighbors to the north and south, who availed
themselves whenever possible of the technical skill, experience, and
specialized knowledge of customs agents and patrolmen.
Miscellaneous
Appraisement Unit.—The widespread wartime disturbance of foreign markets, which are the source of many commodities subject
to ad valorem rates of duty, caused fluctuations in the foreign value
of imported merchandise accompanied by a generally upward trend
in world prices. Appraising officers, in consequence, found it increasingly difB.cult to determine correctly the value of imported merchandise, and this difficulty was aggravated by the final withdrawal
during 1942 of Treasury representatives from Europe and the Orient.
Information regarding values was, therefore, necessarily obtained
locally through the cooperation of importers and was interchanged
among appraising officers through the medium of the Customs Information Exchange. Differences in appraised values thus discovered'
at the various ports were adjusted through correspondence, supplemented by investigations in the countries in the Western Hemisphere.
Of the 15,339 reports of value or classification, 3,229 dift'erences were
discovered, slightly more than in the previous year and more than
twice as many as in 1940; differences in classification between the
various field offi.ces amounted to 991 in 1942 and 1,169 in 1941, but
differences in value were 2,238 in 1942 and 1,950 in the previous year.
The activities of the Customs Information Exchange, which serves
as a clearing house for the dissemination of information for the Customs
Service, are summarized as follows:
Appraisers' reports of value or classification received
Difierences in classification reported
Differences in value reported
Appraisement appeals reports received
Changes in value circulated
Reports and price lists affecting values circulated
Req uests for foreign'investigation

'.

'.

:
:.

'.

Number
15,339
991
2,238
2,341
635
. . . 1,146
448

Customs School oj Instruction.—Continued emphasis was placed by
the customs school of instruction during the year on the promotion
and organization of local training classes and discussion groups to
supplement the correspondence course of instruction by a discussion
of lesson papers and the application of them to local problems. Instruction classes were conducted at 37 ports of entry with an. average of
30 customs officers and employees in attendance at each class. Discussion classes were conducted at 28 additional ports of entry and customs stations where the number of regularly assigned personnel was
too^sm.all to \varrant formal classes.* A total of 1,598 classes and 400
discussion groups were conducted during the year, an aggregate, of
1,998 meetings. '
•
"
.
Division oj Engineering and> Weighing.—Extraordinary measures
were required in 1942 to provide weighing, gauging, and measuring




156

REPORT OF THE SECRETARY OF THE TREASURY

facilities so as to avoid delay in the handling of imports at new locations and in unusual quantities as a result of the dislocation of commerce due to World War conditions. The increasing use of larger
trucks to move from the piers critical materials, especiahy wool, for
which there was an urgent need in industry and which was imported
in much larger quantities than formerly, necessitated the increase in
the capacity of many customs scales and the relocation of others.
Both of these accomplishments were performed without delay or
serious interference with the movement of merchandise and without
detriment to the revenue.
I n addition, this Division assisted, as in the past, in the preparation
of data and plans for customs houses, appraiser's stores, and border
stations as well as the selection of sites for new buildings necessitated
by the relocation or new construction of highways crossing the border.
Division oj Laboratories.—During the fiscal year 1942, the ten customs laboratories tested.^ a total of 100,562 samples of merchandise,
only 2.8 percent fewer than in the previous year. The number of
samples of sugar, ores, petroleum products, and most other types
tested constituted about the same ratio of the total as in 1941. The
number of wool samples tested, however, greatly increased from 1,318
in 1941 to 8,000 in 1942 as a result of the inception of the wool testing
program on October 1, 1941. The increase in revenue derived from
importations of wool directly attributable to the increased accuracy
of the sampling and testing procedure is estiinated to be approximately
$5,000,000 annually.
The Division of Laboratories also made available to the Army,
Navy, Lend-Lease Administration, Office of Price Administration,
Postal Censors, and other Federal agencies the services of the customs
laboratories. These agencies utilized to a considerable extent the
diversified experience, technical skill, and equipment available in
customs laboratories to satisfy some of their technical needs.
Changes in ports and stations.—During the year two ports of entry
were established and three were abolished. The ports of entry
established were at GuayaniUa and at Jobos, Puerto Rico, and those
abolished were at Lancaster, iClinn., Grand Forks, Mich., and Peskan,
Mont. No stations were established during the year, but the one at
Fargo, N. Dak., was abohshed.
Cost oj administration.—The total revenues collected by the Customs Service, including collections for other departments and Puerto
Rican cohections other thun duties, amounted to $428,596,660 as
compared with $429,544,621 in 1941, a decrease of two-tenths of 1
percent during the year. The expenses, however, were $21,194,075,
an increase of $570,650 over 1941, due to increases in salaries provided under the Mead-Ramspeck Act and to the employment during
the last months of the year of 600 additional temporary guards.
The cost to collect $100 was $4.94 in 1942 as compared with $4.80 in
1941.
BUREAU OF ENGRAVING AND PRINTING

The deliveries of currency, securities, stamps, and miscellaneous
printings by the Bureau during 1942 amounted to 613,538,841 sheets,
an increase of 152,924,283 sheets over the previous year, or 33 percent.




157

REPORT OF THE SECRETARY OF THE TREASURY-

A comparative statement of deliveries of finished work in the fiscal
years 1941 and 1942 follows:
Deliveries of finished work, fiscal years 1941 and
Sheets

Face value

Class
1941
Currency:
United States notes
Silver certificates
Overprinted "Hawaii".
Federal Reserve n o t e s . . i . . .
Overprinted "Hawaii"..
Specimens.
Total.
Bonds, notes, bills, certificates, etc.:
Bonds:
Panama Canal
._
Postal savings
Treasury
United States savings
United States war savings
Consolidated Federal farm loan for the Federal land
banks
Depositary
Farm loan
_
Federal Farm Mortgage Corporation
Home Owners' Loan Corporation
Insular:
Philippine.
Puerto Rican
Notes:
Treasury
Commodity Credit Corporation
Reconstruction Finance Corporation....
United vStates Housing Authority
.'
Treasury bills
Certificates:
Indebtedness
Cuban silver
Philippine treasury
Debentures:
Consolidated collateral trust for the Federal intermediate credit banks.
Consolidated for Federal home loan banks
Federal Housing Administration:
D efense housing insurance fund
Housing insurance fund
Mutual mortgage insurance fund. _
:
interim certificates:
Treasury bonds
Puerto Rican bonds.
Interim transfer certificates for postal savings bonds
Interim.receipts:
Federal home loan banks..*.
Federal Savings and Loan Insurance Corporation...
Specimens:
Bonds
-,
Notes and bills
Certificates
^
—
Debentures
Interim certificates. —
Total.

1942

3, 650,000
76, 775,000

$216,180,000
1, 633,080,000
3, 000, 000
4,066, 420,000
22,000,000

'33"

4, 515,000
89, 370,000
250,000
24,165,867
179,167
3

91, 787, 983

118. 480, 037

5, 940, 680,000

881
985,056
11, 852,000

500
1, 545
1, 595, 505
65, 554, 500
15,187,000

600,000
946, 900
14, 886, 389, 500
9, 756, 075,000
. 636,850,000

11, 362,950

. 9,800
2,000
17,383
4,500
1,055

500

50,000

2,476
1,000
2,668

3, 427,000
750,000
800,000,000

1,550,900
64,000
12, 000

16, 577, 200,000
870,000,000
65,000,000

33, 900

7, 595,000,000

32,000

69,300
15,000
2, 664, 400

5, 705,000,000
6,000,000
16, 770,000

39,000
23,860

37, 500
8,305

485,000, 000
104,000,000

500
;,200

3,375
2,575
17,100

4,975,000
26,947, 500
30, 350,000

7, 850
13,856
138, 900
38,750
136, 900
27, 800
82,030

217, 500

250
1,000

2,000

13
100
279
24

13, 424, 214

87,043,852

Sheets

Stamps:
Customs
Internal Revenue..
District of Columbia..
Federal migrafory-bird hunting.
Philippine...
Puerto Rican




101,876
149, 712,063
139, 340
23,489
250, 300
1,164, 300

67, 571, 230, 900
Number of
stamps, etc.,
1942

175,000
157,305,191
200,883
25,000

3, 950,000
15, 644, 720, 394
40,176, 650
2,800,000

2,300, 270

139, 055, 700

158

REPORT OF THE SECRETARY OF THE TREASURY
Deliveries of finished work, fiscal years 1941 and 1942—Continued
Sheets

N u m b e r of
s t a m p s , etc.,
1942

Class
1942
Stamps—Continued.
Specimens:
U n i t e d States.
F o r experimental purposes. U n i t e d S t a t e s . .
District of C o l u m b i a
Postage:
U n i t e d States
.,
C a n a l Zone
•
Philippine
Specimens, U n i t e d States
Postal savings
Specimens

4,322

145
2

...

Total

186, 579,088
220, 468
187, 589
35
.17,154, 946

19, 752, 724,833'
20, 298,800'
11,020,760
' 1,770'
•1, 926,176, 290

314, 295, 611

Total.
Miscellaneous:
Checks
Warrants
Commissions
Cert ificates
Drafts
T r a n s p o r t a t i o n requests
'.
Nontransferable food order a n d nontransferable surplusfood order s t a m p s
^
Nontransferable ,cotton order a n d nontransferable surplus-cotton order s t a m p s
0 th er miscellaneous
.
^
Specim ens
.
Blank paper.

160, 508,890
150, 239
895, 661
113
• 1, 349,189
5

364,148, 574

37, 540, 930,119

27, 386,154
62, 377
521,075
4, 936, 972
25, 775
1, 316, 751

29,086,821
85, 414
462, 670
5, 727, 213
13,313
1,256,442

145, 481, 915
287, 507
. 275,956
19,801,03326,625'
6, 282, 210

5, 906, 963

6,201,300

1 1, 239, 589,000^

299, 085
587, 369
2,324
61,905

455, 220
503, 894
3,451
70, 640

2 91^ 044, 0002, 276, 290'
17, 235'

41,106,750

43,866,'378

460, 614, 568

Grand total.

613, 538,841

1,505,081,770^

1 Excludes 64,370 blank fillers.
2 Excludes 6,270 blank fillers.

Dies were engraved for the following new issues of postage stamps:.
r--.,.
^^^^^^

Sesquicentennial of the Statehood of Kentucky, series 1942
'Win the War/' series 1942
:
''Free China/' series 1942

.

Denomination
(cents)

...

3'
3
5-

New dies and plates were prepared for various classes of bonds,
notes, revenue stamps, and other printed work. The principal items,
comprised Treasury bonds. United States w^ar savings bonds and
stamps, Treasury notes including four series of tax notes, revenue
stamps for distilled spirits, special tax stamps, and Federal use tax
stamps for motor vehicles and pleasure boats.
The most outstanding task was the production of United States:
savings bonds. The printing of these bonds, designated as defense
savings bonds, series E, F, and G, was begun in the pievious year and
continued until April!942. In the latter m.onth the designation waschanged to United States war savings bonds, the same series classifications being maintained. Production was increased from 100,000"
bonds per day at the beginning of the year .to 1,000,000 per day in
January 1942. Total deliveries for the year amounted to 80,741,500*
bonds, with a face value of $10,392,925,000.
.
The number of employees on the.pa}^ roll at the beg.inning of the
fiscal year was 6,345. The increased requirements for United States
and Federal Reserve currency, bonds, postal savings stam.ps, and
postage and revenue stamps made it necessary to secure additional



REPORT OF T H E SECRETARY OF THE TREASURY

159

personnel, and at the end of the year the number of employees was
7,803, an increase of 1,458 persons, or 23 percent.
Expenditures for the year amounted to $17,348,492.43, an increase
of $4,144,580.90 over the previous year, or 31.39 percent. The following statement shows the appropriations, reimbursements, and expenditures for the fiscal years 1941 and 1942, respectively.
1942
Appropriations:
Salaries and expenses
Deficiency
Reimbursements to appropriation from other bureaus for work completed i
Total
Expenditures, salaries and expenses 2
Unexpended balance

8,450,000.00 $10, 050, 000. 00
260,000. 00

Increase or
decrease (—)

;i, 600, 000. 00
-260,000.00

—

4, 562,477. 23

7, 753, 724.13

3,191, 246. 90

13, 272, 477. 23
13, 203, 911. 53

17,803, 724.13
17, 348,492. 43

4, 531, 246. 90
4,144, 580. 90

S, 565. 70

455, 231. 70

386, 666. 00

1 An additional amount of $227.50, received from employees for lost identification cards, locker keys,
package-booth checks, and badges, was deposited to the credit of the Treasurer of the United States as
miscellaneous receipts; and $62.50, received from reimbursement for jury service by employees, was deposited
to the general fund receipt account.
2 Includes $11,300 transferred to the Bureau of Standards for research work in each of the fiscal years 1941
and 1942; $40,000 in the fiscal year 1941 and $80,000 in the fiscal year 1942 transferred to salaries and expenses,,
guard force. Treasury Department, for service rendered in connection with the protection of currency,
bonds, stamps, and other papers of value; and $1,776 transferred to United States official mail and messenger
service. Post Office Department, in the fiscal year 1941. The amounts of $377,132.19 and $430,965.84 were
transferred to the retirement fund in the fiscal years 1941 and 1942, respectively.

FOREIGN FUNDS CONTROL

'

'

By virtue of the authority given the Secretary of the Treasury by
Executive Order No. 8389, as amended, and by Executive Order
No. 9095, as amended, under the Trading with the Enemy Act
(U. S. C , 1940 ed., title 50, App., Sec. 3; Supp. I, Sec. 5 (b)). Foreign
Funds Control has blocked the holdings subject to the jurisdiction
of the United States of 36 countries and their nationals.
The total volume of property now frozen and subject to regulation
by Foreign Funds Control is about $8.5 billions. By principal type
this property is divided as follows:
Short-term funds, including earmarked gold
Secmities
Direct investments and miscellaneous
Holdings of blocked nationals resident in United States

.

(In millions)
$4,000.0
2,000.0
2,000.0
500.0

The distribution of blocked property by nationality of the owner is
as follows:
(In miilions)
Netherlands, including Netherlands (East) Indies
,
$1,800.0
Switzerland
.
.
..:
1,500.0
France and Monaco
1,400.0
Belgium
.
400.0
Sweden
•.
600.0
China
.
300.0
Norway
J
.-100.0
Japan
.•
150.0
Germany
150.0
Italy
.
100.0
All others
,750.0
Blocked "nationals resident in the United States (other than business enterprises owned abroad).. • 500.0
Holdings of American citizens in blocked enterprises
..
750. 0
Total

.

8,500.0

During the fiscal year 1942, Foreign Funds Control considered
330,747 applications for hcenses to effect specific transactions involv487543—43

12




160

REPORT OF T H E SEiCRETARY OF T H E TREASURY

ing total values of about $5.8 billions. This total was distributed by
types of transactions approximately as follows:
Operating licenses for blocked business enterprises
Securities (exclusive of release of imported securities)
Ships and shipping
Foreign trade
Diamonds, pictures, etc
Remittances from the United States.
Checks and drafts from abroad
Foreign exchange
Patents, royalties, etc
Miscellaneous

.
--^--

--.

Total

(In millions)
$2,563.8
889.6
360.6
. 308.1
232.5
139.6
.
87.2
29.1
6.8
1,197.6

.---

6,813.6

BUREAU OF INTERNAL REVENUE «

General
Internal revenue collections.—During the fiscal year 1942 internal
revenue collections, including trust fund collections, totaled $13,048
millions, an increase of $5,678 millions over collections for 1941. The
total amount collected included back income taxes of $460 millions,
which is approximately $154 millions more than back income tax
collections for 1941.
Miscellaneous internal revenue collections amounted to $3,856 millions, which is an increase of $883 millions over collections for 1941.
The largest increases were as follows: Capital stock tax, $115 millions;
gift taxes, $40 millions; liquor taxes, $228 millions; tobacco taxes, $83
millions; manufacturers' excise taxes, $155 millions; and misceUaneous
taxes, $193 millions.
Employment tax collections totaled $1,185 millions, an increase of
$260 millions over the preceding year. Total collections under the
Federal Insurance Contributions Act were $895 millions; collections
under the Federal Unemployment Tax Act, $120 millions; and collections of carriers taxes, $170 miUions.
Total collections of internal revenue during the fiscal years 1941 and
1942 are shown in the foUowing summary, classified according to the
administrative organization responsible for the tax. A detailed statement of collections appears in table 7, page 434 of this report.
Summary of internal revenue collections, fiscal years 1941 ctnd 1942 ,
[On basis of reports of collections, see p . 388]

1941

Administrative unit

Income Tax Unit ^
Alcohol T a x U n i t
Miscellaneous T a x U n i t .
A c c o u n t s a n d Collections U n i t
tax activities)
T o t a l collections

•,

$3,471,123, 930. 57
820, 056,178. 33
2,153,071, 808. 38

1942

Increase

$8,006,883, 543.68 • $4, 535, 759, 613.11
1, 048, 516, 706. 56
228 460 528. 23
2,807,106,423.79
654,034,615. 41

(employment
925, 856,460. 38

1,185, 361,843. 69

259,605,383.-31

7, 370,108, 377. 66

13,047, 868, 517. 72

6, 677, 760,140. 06

1 Includes collections from the tax on unjust enrichment.
a More detailed information concerning the activities of the Bureau of Internal Revenue will "be found
in the annual report of the Commissioner of Internal Revenue.




REPORT OF T H E SEICRETARY OF T H E TREASURY

161

Rejunds, drawbacks, and stamp redemptions.—During the year refunds of tax collections, together with interest, were made from the
following appropriations:
Refunding internal revenue collections, 1941 and prior years
Refunding internal revenue collections, 1942'and prior years
Refunds and payments of processing and related taxes, 1939-1942..

:

_._•

Total, interest included

$5,199, 328.19
49, 259, 680. 34
22,073,066.12
76, 532,074.65

The following is a summary of the refunds, showing the number of
schedules and claims, the amount of refunds and repayments allowed;
and the total amount refunded, including interest, on each class of
tax during the fiscal year 1942, with comparison of the totals for 1941.
Number of schedules and claims, amount of refunds and repayments, and total
refunds, repayments, and interest, by class of tax, fiscal year 1942 and totals for
1941
Class of tax

Bituminous coal
Capital stock.
....
Carriers' taxes.'
Distilledspirits
Distilled spirits- stamps redeemed
Distilled spirits drawbacks (420 certificates).
Estate
GiftIncome
Miscellaneous..
Miscellaneous stamps redeemed
Narcotics
Narcotic stamps redeemed
Sales
Federal Insm-ance Contributions Act..
Federal Unemployment Tax Act
Sugar
Tobacco
.
Tobacco stamps redeemed
Tobacco drawbacks
_
Total income and miscellaneous internal
revenue
Agricultural adj ustment
.
Grand total, fiscal year 1942.
Fiscal year 1941:
Income and miscellaneous internal revenue..
Agricultural adjustment
Grand total, fiscal year 1941.

Number
of
schedules

Number
of
claims

Amount of refunds and
repayments

79
2,803
61
8,439
1, 620
992
3,565
432
196, 969
1,714
6,880
150
47
' 719
41, 253
16, 392
525
117
1,997
35

$6, 140.18
364, 979.19
19, 336. 64
457, 538. 65
80, 787. 69
. 413, 076.80
11, 759, 938. 52
418, 938. 29
24, 843, 127. 68
610, 429.84
562, 241. 69
237. 33
278. 77
1, 496, 985'. 73
1, 211, 867. 47
2,113, 653. 88
938, 451. 28
1, 986. 55
1,687, 035.19
7, 062. 79

$5, 338. 46
408, 135. 80
22, 035. 24
464, 153. 83
81, 180. 68
413, 075. 80
13,144, 514. 25
505, 530. 75
30, 304,259.18
655, 513. 95
668, 056.18
237.33
278. 77
863.14
1, 798,
1, 262,411.01
2,190, 546.14
729. 92
060.12
036.19
062. 79

17,023
270

284, 789
458

46, 982, .093. 06
19, 838, 530.41

64,459, 008. 63
22,073,066.12

17, 293

286,247

66, 820, 623. 47

1 76, 632,074. 65

13, 564
1,329

167,393
12, 864

45, 727,315. 92
6, 871,008. 69

54,006,883.18
8,126, 017. 63

14,893

180,257

52, 598,324.61

1 62,131,900.81

17
95
58
316
83
1,865
380
7,021
111
126
27
27
80
3,606
3,224
34
20
26

Total refunds,
repayments,
and interest

1 Excludes refunds from trust funds set up for Philippine coconut oil, Philippine trust fund, and Puerto
Rico trust fund. The amounts refunded from these accounts were for 1941, $985,008.34, $1,457.49, and $1,.933.48, respectively; and for 1942, $234,145.39 (coconut oil) and $225.13 (Puerto Rico).
NOTE.—The figm'es in this table will not agree with those given in later sections of this report for the
reason that the amounts shown in the later sections relate to claims disposed of by the units, whereas this
table shows the actual payments made.

If the tax refunds made during the fiscal year 1942 on account of
erroneous or iUegal collections of internal revenue and agricultural
adjustment taxes and payments for export drawbacks, redemption
of stamps, and refunds from trust funds, amounting to $76,766,445,
were deducted from the gross collections of $13,047,868,518, the net
coUections for the fiscal year 1942 would be $12,971,102,073. The
gross collections, however, are used for comparative purposes in these
reports.




162

REPORT OF T H E SECRETARY 0F THE TREASURY

Additional assessments.—The additional assessments resulting from,
office audits and field investigations made during the fiscal years 1941
and 1942 were as follows:
Additional assessments, fiscal years 1941 and 1942, by class of tax
Class of tax
Income '

!, 725,157.00

$300, 539, 626.00^

55, 539, 688. 33
9, 263, 764. 22
994, 812. 55
3, 003, 389. 26
5, 476, 957.12
6, 591, 263. 80
82, 428.18
659, 393.18

.

Miscellaneous internal revenue:
Estate
Gift
C a p i t a l stock
.•
Sales
Liquors
Miscellaneous
T(5bacco
Coal
Silver
Sugar...

71, 390, 182. 91
5,990, 702.88;
1,177, 930. 8&
4, 491, 257. 97
' 3, 609, 027.11
12,381, 042. 79'
185, 098. 44
401, 147.15
4.76
208. 52-

239, 077. 24

T o t a l miscellaneous i n t e r n a l r e v e n u e .

99, 627, 603. 38:
38, 273, 869.01

383, 320, 684. 70

.

81,850, 773.88
31, 744, 653. 82

E m p l o y m e n t taxes
G r a n d total

1942

438,441,098.39'

1 I n c l u d e s assessments of $23,049,262 for 1941 a n d $31,854,839 for 1942 m a d e u n d e r t h e jeopardy pirovisions
of section 279 of t h e R e v e n u e Act of 1926 a n d section 273 of s u b s e q u e n t r e v e n u e acts.

Cost oj administration.—The amount of $77,725,421 was appropriated for the fiscal year 1942 for salaries and expenses in connection
with the assessment and collection of internal revenue taxes and the
administration of the internal revenue law. The Bureau transferred
the sum of $1,300,000 to the Post Office Department for expenses in
connection with the sale of motor vehicle use stamps. The expenditures and obligations against the Bureau appropriation, were ,$73,805,704, leaving an unexpended balance of $2,619,717. The expenditures
do not include amounts expended for refunding taxes iUegally or
erroneouslv collected and for redeeming stamps. The cost of collecting $12,976,589,177 (excluding $71,279,340 collected by post offices)
during the year was $0.57 per $100, compared with $0.89 per $100
for 1941.
The amount of $1,100,000 was appropriated for the fiscal year 1942
for salaries and administrative expenses in connection with making
refunds authorized by Titles IV and VII of the Revenue Act of 1936.
The amount expended and obligated from this fund amounted to
$853,021, leaving an. unexpended balance of $246,979.
Income Tax Unit
General junctions.—The Income Tax Unit is charged with the
adm.inistration of the internal revenue laws with reference to taxes
on income, excess profits of corporations, and refunds of certain
processing taxes, and the laws lim.iting profits on certain Arm.y and
Navy contracts. The administration includes the preparation of
regulations and interpretative and procedural rulings and instructions
regarding such laws and the examination and adjustm.ent of returns
filed thereunder, through office audits and field investigations, for
the purpose of determ.ining the correct tax liability as required by law.




REPORT OF THE SECRETARY OF THE TREASURY

163

Returns jiled.—The number of all types of incom.e and excess profits
tax returns filed during the fiscal year 1942 on which tax was reported
a.nd assessed was 18,164,900, as compared with 7,867,319 returns filed
in the fiscal year 1941,^ an increase of 10,297,581. In addition,
9,608,179 taxpayers filed returns during the fiscal year 1942 showing
no income subject to tax, compared with 8,283,177 such returns for'
the preceding fiscal year. The total number of income tax returns
filed by individuals was 26,369,044, which is nearly double the number
received in the preceding year.
Examination oj income and excess projits tax returns upon receipt by
the Washington office.—Of the 27,773,079 incom.e and excess profits
tax returns filed during the fiscal year 1942, 4,111,734, consisting
prim.arily of the m.ore important returns, were forwarded to the
Washington office of the Income Tax Unit. Upon initial review of
the returns forwarded to Washington (including thos^ on hand in
Washington on July 1, 1941,' relating to previous taxable years),
4,212,556 were closed and 1,139,605 were transmitted, with related
information returns and other documents," to the field offices of the
Income Tax Unit for further consideration and investigation during
the fiscal year 1943.
Investigation ojtax returns by the jield offices.—The number of income
tax returns, including partnerships and fiduciaries, investigated during
the fiscalyear 1942 was 525,384, as compared with 470,876 for the
previous year, an increase of 11.6 percent. In addition, 2.6,477
excess profits tax returns were investigated during 1942. These
figures include all returns for which the examiners^ reports have been
•submitted, whether or not the cases have been finally released by
reviewing officers.
Estate and gift tax returns investigated by field offices during the
fiscal year numbered 18,044, as compared with 17,355 for the previous
year, an increase of 4.0 percent.
The total number of individual, taxable fiduciary, and corporation
income tax returns on which action was com.pleted by the field ofiices
•during the year was 939,398, including those investigated as well asthose for which investigations were deemed unnecessary. In addition,
the field offices completed action on 432,329 partnership and nontaxable fiduciary income tax returns, 36,460 excess profits tax returns, ^
•and 21,701 estate and gift tax returns.
Of the 939,398 income tax returns on which action was completed by
the field offices, deficiency adjustments were recommended in 272,255
cases. This compares with a total of 924,358 income tax returns i o r
the preceding year with deficiency adjustments numbering 230,806.
Out of 21,701 estate and gift tax returns on which action was completed during the fiscal year, deficiency adjustments were recommended in 11,415 cases, as compared with 10,708 deficiency adjustments out of a total of 20,579 returns for the preceding year.
Petitions to the Board of Tax Appeals filed during 1942 involved •
5,159 returns and proposed tax deficiencies of $79,435,744. This
compares with 5,891 returns and tax deficiencies of $117,927,968 for
1941.
Revenue results oj investigations oj income and excess projits tax
returns.—The total amount of additional tax, interest, and penalty
1 Including in each fiscal year the delinquent returns filed during that year relating to prior years.




164

REPORT OF THE SECRETARY OF THE TREASURY

assessed during 1942 was $288,566,028, of which $280,728,657 applied
to income tax returns and $7,837,371 to excess profits tax returns.
Excluding jeopardy and duplicate items, the amounts for these two
classes of taxes were $248,389,459'and $7,184,260, respectively.
Stage at which additional tax was assessed.—Further progress was
made in settling cases of proposed additional tax liability by agreements, with taxpayers without issuing formal notices of deficiency,
which are otherwise required by law, and from which taxpayers may
appeal to the Board of Tax Appeals. Of the total number of 271,709'
income tax returns on which regular additional. assessments (including duplicate-regular) were made, 258,766 additional assessments,
or 95.2 percent, were made by agreement with the taxpayers without
the necessity of a statutory notice. Of the total regular additional
tax assessed (including duplicate-regular) aggregating $209,004,867/
the amount assessed by agreement was $169,447,676, or 81.1 percent.
Rejunds, abatements, and credits.—The number of income and excess,
profits tax cases involving refunds or credits of tax or interest to taxpayers or abatement of tax audited and closed by the Income Tax
Unit during 1942 was 77,405, as compared with 73,627 such cases,
closed during 1941, an increase of 3;778, or 5'.1 percent. Of the total
of 77,405 overassessments for 1942, 42,361 were made to taxpayers
without the necessit}^ for filing claims. This compares with 39,730
in the previous year.
Of the overassessments settled in the fiscal year 1942 by the Income
Tax Unit, 60,149 represented refunds or credits of tax or interest
involving $37,907,010, as compared with 57,511 involving $50,438,931
in 1941.
The amount involved in overassessments of all types for 1942
represented by refunds, credits, interest, and abatements for income
and excess profits tax cases audited in the collectors' offices as well as
by the Income Tax Unit was $99,526,248, as compared with $113,600,916 the previous year.
There were also allowed 30,469 collectors' claims, of which 12,908
recommended abatements or credits and 17,561 recommended refunds. These claims were largely multiple-item clauns, i. e., claims
in behalf of a number of taxpayers, and involved 33,793 items for
abatement or credit and 142,156 items for refund.
Inventory oj returns on hand in the field offices.—The number of open
income tax returns on hand in the field offices as of June 30, 1942, wa&
407,934, compared with 373,889 on the same date last year. The net
increase between the two dates was 34,045, or 9.1 percent. < The net
•
increase in number of returns of prior-year work was 7,187, or 13.2
percent. The percent of open prior-year work to open current-year
work at the end of 1942 was 17.8, as compared with 17.1 percent
fpr 1941.
Miscellaneous Tax Unit
The Miscellaneous Tax Unit is concerned with the administration
of all internal revenue taxes except the income and excess profits
taxes, the taxes applicable to alcohohc beverages, and those relating
to employment.
The collections of miscellaneous taxes for the fiscal year 1942 were
$2,807,106,424, an increase of $654,034,615 as compared with coUections from these sources for the preceding year.



REPORT OF THE SECRETARY OF THE TREASURY

165

Estate Tax Division.—There were 19,633 estate tax returns and
30,048 gift tax returns received during the year. Collections of
estate tax for the year amounted to $340,322,905, representing a
decrease of $14,871,128 as compared with the collections for the preceding year. CoUections of gift tax amounted to $92,217,383, which
exceeded the collections for the preceding year.by $40,353,669.
Assessment and collection of proposed deficiencies in estate tax and
gift tax cases aggregating $51,981,606, asserted in 338 cases, were
withheld pending the adjudication of appeals filed with the United
States Board of Tax Appeals.
As a result of field investigations and Bureaii audits, assessments
of $64,239,168 were made in estate tax cases and $5,243,927 in gift
tax cases.
Tobacco Division.—The coUections of tobacco taxes for the year
amounted to $780,982,216, the largest annual /collection from this
source since these taxes were first imposed, and represented an increase
of $82,905,325 .over the collections for the previous year. Of this
amount, $704,933,505 was collected from the tax on small cigarettes.
A detailed comparison of the tobacco taxes collected during the
fiscal years 1941 and 1942 is shown in table 7, page 434 of this report.
Sales Tax Division.—On October 1, 1941, the administration of
various taxes was transferred from the Sales Tax Division to the
Miscellaneous Division. The Sales Tax Division was assigned the
administration of the manufacturers', excise taxes and the retail dealers'
excise taxes on the sale of jewelry, furs, and toilet preparations.
Collections from these taxes during 1942 amounted to $852,069,383,
an increase of $234,696,860 as compared with collections from similar
taxes in the preceding year. A summary of these collections during
the last 2 years follows; and a more detailed comparison of the collections is shown in table 7, page 434.
Summary of taxes collected by the Sales Tax Division, fiscal years 1941 ctnd 1942
Increase or
decrease ( - )

Source

1941

1942

Manufacturers'excise taxes (Title IV, Revenue Act
of 1932, as amended, and Subtitle C,.Chapter 29,
Internal Revenue Code, as amended)
Electrical energy
Pistols and revolvers
Repealed manufacturers'excise taxes
_.

$663,600,164.42
47,021,015. 62
85,301.13
6, 766,041.76

$718, 200, 329.76
49,977, 581.17
84,494.06
3, 639,853.64

$164, 700,165.33
2,956, 665. 65
-807.08
—3,126,188. 22

617,372,522.93

771,902,258.61

164,629,735.68

Total manufacturers'excise taxes
. .
Retailers' excise taxes (Chapter 19, Internal Revenue Code)
Total

80,167,124.46
617,372,622.93

80,167,124.46

852,069,382.97'

234,696,860.04

Capital Stock Tax Division.—The collections of capital stock tax
during the year amounted to $281,900,135, compared with
$166,652,640 for the preceding year, an increase of $115,247,495, or
69.2 percent. The collections in 1942 were the largest from this
source since the tax was first imposed.
Domestic and foreign corporations filed a total of 523,436 returns,
of which 27,630 were submitted by corporations organized since
June 30, 1940. There were 38,395 delinquent returns filed for the
years 1933 to 1940, inclusive.




166

REPORT OF T H E SECRETARY OF THE TREASURY

As a result of the review and audit of returns, 17,874 assessments
were made, involving tax,. penalty, and interest in the amount of
$1,177,931, compared with 19,921 assessments totaling $994,813
made (luring the previous year.
Miscellaneous Division.—The Miscellaneous Division was created on
October 1, 1941, and is concerned with the administration of the
documentary stamp taxes, taxes on oleomargarine, etc., narcotics
and marihuana, bituminous coal, silver, hydraulic mining, transportation of oil by pipe line, admissions, dues, safe deposit boxes,
telephone, telegraph, radio and cable facilities, processing of coconut
oil and other vegetable oils, and the administration of the National
Firearms Act and the Federal Firearms Act. The administration of
these taxes was transferred fro.m the Sales Tax Division. The Miscellaneous Division is likewise concerned with the duties formerly
performed by the Processing Tax Division, including the administration of the tax on manufactured sugar, as well as certain taxes imposed under the Revenue Act of 1941 on the transportation of persons,
the use of motor vehicles and boats, and the special taxes on maintaining coin-operated and gaining devices for use, and the operation
pf bowling alleys and billiard and pool tables. The Processing Tax
t)ivision was abolished at the time of the creation of the Miscellaneous
Division.
The collections of the taxes administered in the Miscellaneous
Division are shown in the following table:
Summary of taxes collected by the Miscellaneous Division, fiscal years 1941 and 1942
Increase or
decrease (—)

Source of taxes

Stamps:
Use of motor v e h i c l e s . .
Documentary
Coin-operated devices..
Playing cards.
All others

4, 756, 586. 50
2, 908,900. 83

T o t a l miscellaneous t a x e s .

G r a n d total

$72, 625, 488.49
1, 654, 806. 85
6, 484, 999. 54
1,001, 371. 08
2, 098,667.10

41, 914, 487. 65

125, 779, 820. 71

83,865,333.06

70, 963, 094. 06
6, 582, 649. 28
27, 331,113. 61
74, 834, 839. 60
23,185, 936. 03
12,480, 585. 65
6, 601, 704. 54

115, 032, 268. 75
6, 791, 899. 71
75, 022, 771. 58
68, 229, 803.06
24, 572, 187. 79
21, 378. 895. 32
13, 474, 822.61
9,159, 450. 34

44,069,174.69
209, 250.43
47, 691, 657. 97
-6,605,036.54
1, 386, 251. 76
21, 378, 895. 32
994, 236.96
2, 557, 745: 80

221, 979,922. 77

333, 662, 099.16

111, 682,176. 39

14,154.11

170, 379. 54

156,225.43

-8, 564. 53

T o t a l s t a m p taxes..
Miscellaneous:
>
Admission to theaters, concerts, cabarets, e t c . .
C l u b dues a n d initiation fees
...
Telegraph, telephone, cable, a n d radio
Sugar
C o c o n u t oils, etc., processed
T r a n s p o r t a t i o n of persons
T r a n s p o r t a t i o n of oil
All others
.
...

O t h e r miscellaneous receipts

$72,625,488. 49
35, 903, 807.17
6, 484,999. 54
5, 757, 957. 58
5, 007, 567. 93

459, 612, 299. 41

195, 703, 734. 88

$34, 249, 000. 32

Alcohol Tax Unit
For the first time Federal liquor tax receipts exceeded a billion
dollars during a fiscal year. The collection of $1,048,516,707 during
the fiscal year 1942, compared with $820,056,178 in the preceding
year, represented an increase of $228,460,529, or 27.9 percent. Details
of these collections will be found in table 7 on p'age 434.
Because of war requirements, the demand for industrial alcohol
greatly increased during the year. Amendment of the statutes



REPORT OF THE SECRETARY OF THE TREASURY

167

governing alcohol production was necessary and was accomplished by
the acts of January,24, 1942, and March 27, 1942. These statutes
made it possible for beverage distillers^ legally to engage in the production of industrial alcohol and where necessary to transfer spirits
of low proof to ether plants equipped to raise the spirits to the necessary degree of proof. The Alcohol Tax Unit operated in close coordination with the various war agencies in bringing about the production
of increased supplies of alcohol.
1
.
On June 30, 1942, the following premises and proprietors, qualified
under internal revenue laws and engaged in the production, distribution, or use of alcohol and alcc)holic liquors, were under the supervision
of the Alcohol Tax Unit.
Under permit requirements of the Federal Alcohol Admini.stration Act: ^
Number
Importers 2
.
^..^.968
Distilleries:
Alcohol 3.
•
46
Brandy.
_..
127
Registered
: . 127
Warehousing and bottling:
Bonded warehouses: ^
Alcohol
62Internal revenue
.
1
.
• 268
Tax-paid bottling houses
.
!
113
Wine producers and blenders:
Wineries
957
Bonded wine storerooms
108
Rectifying plants
229^
Wholesalers: ^
AVholesale liquor dealers.
.
5, 635
Wholesale malt liquor dealers
9, 650
•Not under permit requirements of the Federal Alcohol Administration Act:
Breweries
1'.. 492
Denaturing plants <
5
,....
63
Bordel dealers in specially denatured alcohol..:
52'
Bonded manufacturers using specially denatured alcohol
4,158
Hospitals, laboratories, and educational institutions using tax-free alcohol
6, 709
Vinegar.plants using vaporizing process
'
15
Bottle manufacturers
;
61
Retail liquor dealers
260, 53&
Retail malt hquor dealers
142,868
Carriers
437
1 Separate permits are required for lessee operations. In addition to the number of premises shown, the
lessees are as follows: Registered distilleries, 58; tax-paid bottling houses, 7; rectifying plants, 9. A lessee
authorized to operate two or more premises is counted once for each premise.
2 An importer is required to hold only one permit regardless of the number of his premises.
3 Permits are required only where-alcohol is produced for nonindustrial use.
< Permits are required only if the proprietor conducts bottling operations.
«Total number of premises. Permits are required for tho.^e making sales to trade buyers. A wholesaler is required to hold only one permit regardless of the number of his premises.
6 Includes ten denaturing plants established in connection with registered distilleries and three distillery
denaturing bonded warehouses.

Procedure Division.—This Division is responsible for planning and
developing procedure fbr the headquarters and field offices of the
Alcohol Tax Unit; assists in drafting regulations. Treasury decisions,
mimeographs, and circulars; reviews for revision all forms prescribed
by the Alcohol Tax Unit; and is charged with the administration of
regulations relating to traffic in containers of distilled spirits and the
supervision of the Statistical Section. Special procedure was developed during the year to enable the Unit to furnish to war,agencies current statistical data concerning production and uses of industrial
alcohol and other liquors. Historical statistics covering such items
were also prepared for the information of such agencies.
Enjorcement Division.—The activities of the Enforcement Division
include the investigation, detection, and prevention of willful and
fraudulent violations of the internal revenue laws relating to distilled
spirits, wines, and .fermented mal^ liquors.
During the fiscal year, 11,372 stills having an aggregate cubic




168

REPORT OF THE SECRETARY OF THE TREASURY

capacity of 2,170,612 gallons^ were seized, and in connection therewith 5,471,993 gallons of mash were seized and destroyed. Investigators also seized 185,741 gallons of spirits and 3,501 automobiles
and trucks. The total apprS^ised value of the property seized was
$1,971,618. A total of 20,183 persons were arrested for Federal
liquor law violations.
In carrying out the Liquor Enforcement Act of 1936, relating to the
introduction of tax-paid spirits to dry States, 216 cars and 13,380
gallons of tax-paid liquor were seized, and 312 persons were arrested.
Indictments totaling 316 were returned and 357 persons were convicted in cases under the act.
The preventive and enforcement program under Regulations No.
17 and Regulations No. 92 continued to ,be an important factor in
reducing-the number and size of illicit distilleries. The shortage of
cane and beet sugar and the promulgation of the sugar rationing
regulations by the Office of Price Administration were of material
aid in preventing sugar from getting into illicit channels. In the meantime, moonshiners have experimented with many substitutes for
refined sugar, but the preventive raw materials work continues to be
effective notwithstanding the frequent changes in the type of materials
used and the sources of supply developed.
Field Inspection Division.—This Division plans, coordinates, and
supervises the permissive functions in the field offices of the 15 field
districts. A group of technically trained field inspectors, who serve
as representatives of the Alcohol Tax Unit in maintaining an efficient
permissive organization in the field offices, are assigned and directed
by this Division. They make frequent examinations, by actual inspection of records, documents, and otherwise, to determine whether law,
regulations, established policy, and procedure are being followed, and
devise and recommend plans .and methods for greater efficiency and
economy in the conduct of the work.
As a result of new legislation, many more changes in the premises,
construction, and equipment of established plants-were macle-during
the fiscal year than are normally necessary. Administrative examination of applications, notices, bonds, consents of surety, plats, plans, and
other documents submitted in connection with such changes are necessary to insure compliance with the requirements of the law and regulations for the proper protection of the revenue. The total number of
such examinations, including those covering 174 new plants and 227
discontinued plants, was 23,396.
Laboratory Division.—The Laboratory Division comprises a central
laboratory in Washington, D. C , with 13 branch laboratories located
throughout the country, and one in San Juan, Puerto Rico.
The Laboratory Division performs all the chemical work for the
Bureau of Internal Revenue, and its branch laboratories analyze
samples of suspected narcotics submitted by officers of the Bureau of
Narcotics.
The activities of the Washington laboratory include the examination
of formulae, samples, and processes in which denatured alcohol is used
before permits are issued by the district supervisors for the withdrawal
of alcohol. Preparations made with tax-paid alcohol and wine are
1 Represents the cubic capacity of still pots and cookers. Column stills which operate without a still pot
or cooker are not reflected in this total. The size of illicit stills is reflected more properly by the mash facilities. The cubic measurement of the mash fermenters of all the illicit stills seized during the fiscal year
was 8,387,371 gallons.




REPORT OF THE SECRETARY OF THE TREASURY

169

•examined for the purpose of determining whether they are fit for beverage use and, therefore, subject to the rectification tax. Processes used
in distilleries, industrial alcohol plants, wineries, breweries, and rectifying plants are reviewed in the laboratory.
The laboratory examines samples of oleomargarine, mixed flour,
filled cheese, butter, lubricating oil, and soaps for the Miscellaneous
Tax Unit. The Washington laboratory also frequently assists the
Bureau of Customs, Secret Service, Post Office Department, State
Alcoholic Beverage Control Boards, and Police Departments. Odors
simulating war gases were furnished instructors in air raid defense.
Audit Division.—The Audit Division has general supervision over
the work relating to the operation of registered distilleries, internal
revenue bonded warehouses, rectifying plants, industrial alcohol
plants, industrial alcohol bonded warehouses, denaturing plants,
breweries, wineries, bonded wine storerooms, dealers in specially denatured alcohol, and users of tax-free alcohol. I t also conducts the
tax accounting, assessment, claim, and compromise functions of the
Unit.^
This Division also determines and lists assessments against persons
engaging in illicit liquor traffic. I t also examines for allowance or rejection all claims for abatement or refund of taxes, and for the redemption of tax stamps and strip stamps, and reviews and recommends acceptance or rejection of offers in compromise of tax, forfeiture of seized
property, or criminal liability.
At the beginning of the fiscal year there were on hand 742 offers in
compromise aggregating $49,420 submitted in settlement of liabilities
incurred in connection with the internal revenue laws. During the
year, 5,781 offers amounting to $309,063 were received. Of the
number to be disposed of, 278 were forwarded to the Department of
Justice, 552 were returned to the field offices for further investigation,
4,799 offers aggregating $266,060 were accepted, and 629 offers
totaling $31,620 were rejected, leaving 265 offers on hand at the end
of the fiscal year.
There were on hand at the beginning of the year 3 offers in compromise aggregating $160 submitted in settlement of liabilities incurred in connection with the Federal Alcohol Administration Act.
During the year, 64 offers amounting to $20,795 were received, 58
offers aggregating $19,505 were accepted, and 9 offers totaling $1,450
were rejected, leaving none on hand.
Basic Permit and Trade Practice Division.—This Division is charged
with administering the provisions of the Federal Alcohol Administration Act and regulations which have been issued thereunder. The
Federal Alcohol Administration Act requires that all producers (other
than brewers), importers, and wholesale distributors of alcoholic
beverages secure basic permits, which are conditioned upon compliance
with the provisions of the act, the Twenty-first Amendment and its
enabling statutes, and all other Federal alcohol beverage laws. The
broad purpose of the statute is the regulation of the conduct of the
legitimate liquor industry.
War conditions, which prevailed during most of the fiscal year,
caused permits in effect to decline from 15,481 on July 1, 1941, to
14,695 on June 30, 1942.




170

REPORT OF THE SECRETARY OF THE TREASURY

' The following table refiects the permit activities under the Federal
Alcohol Administration Act during the year and the number of permitsof each class in effect on June 30, 1942.
Permit activities, fiscal year 1942
I n effect at
beginning
of year

Total

.. . .

12,042
1,130
354
314
627
1,014

1,310
70
31
23
50
83

1,382
. 103
69
45
86
109

1,963
. 148
89
78
174
128

11,461
1,085"=
334'
281
539'
995-

15,481

Wholesalers
W i n e producers and blenders.. .
Distillers
Rectifiers
W a r e h o u s i n g a n d bottling
Importers

Amended

1, 567

1,794

2,580

14, 695^

Issued

In
T e r m i n a t e d endeffect a t
of year-

The Federal Alcohol Administration Act provides that ho bottler
or importer shall bottle or remove from customs custody for consumption distilled spirits, wine, or malt beverages, unless the bottler
or importer, upon application, has obtained and has in his possession
a certificate of label approval or a certificate of exemption from label
approval covering such products. The number of label applications,
submitted during the year declined from 78,989 for 1941 to 56,064.
In the enforcement of the advertisitaig regulations promulgated
under the Federal Alcohol Administration Act, the Division reviewe,d
82,830 advertisements appearing in 19,867 periodicals, representing
a substantial increase over similar activities for the preceding year,.
and took appropriate regulatory action in 1,023 cases involving various t3^pes of irregularities. Radio continuities numbering 14,147 and
5,120 pieces of point-of-sale advertising were also reviewed.
Accounts and Collections Unit
The Accounts and Collections Unit is the central administrative
organization for the 64 internal revenue collection districts and makes
the administrative audit of all expenditures for the Internal Revenue
Service. The Unit also administers the employment taxes imposed
under Chapter 9 of the Internal Revenue Code, the taxes under Subchapter A (Federal Insurance Contributions Act) with respect to employment by others than carriers. Subchapter B withrespect to em.ployment by carriers, and Subchapter C (Federal Unemployment Tax Act)
with respect to the tax on employers of eight or more.
There were 44,751,746 tax returns filed in collectors' offices during
the fiscal year 1942, an increase of 16,674,509 over the previous year.
Of the total returns filed, 27,773,079 were income tax returns, an
increase of 11,622,583 during the year.
During the fiscal year, 70,420 income tax, 41,781 miscellaneous tax,
and 531,250 empldyhient tax returns were investigated by field deputy
collectors, and 2,646,645 information returns were verified. At the
close of business June 30, 1942, there were outstanding in the 64
collection districts 12,^190 income tax returns, and 1,231,400 inform.ation returns were on hand.




REPORT OF T H E ^SECRETARY OF T H E TREASURY

171

Deputy collectors of internal revenue served 476,240 warrants for
distraint, which resulted in the coUection of $62,572,099. An average
'C)f 4,720 deputy collectors made 2,873,404 revenue-producing investigations, including the serving of warrants for distraint, compared with
2,220,467 revenue-producing investigations made by an average of
3,732 deputy collectors in the preceding year. The total amount
collected and reported for assessment by deputy collectors was
$113,794,106, compared with $90,285,877 in the previous year. The
average number of investigations made per deputy and the average
amount of tax collected and reported for assessment were 609 and
$24,109, respectively, compared with 595 and $24,192, respectively,
in 1941. There were 174,840 warrants for distraint in custody in the
collectors' field forces on June 30, 1942, as compared with 183,594 on
hand June 30, 1941.
A total of 15,642,869,033 revenue stamps, valued at $3,107,143,869,
was issued to collectors of internal revenue and the Postmaster General
during the year, compared with 13,878,586,593 stamps valued at
$1,455,156,314 issued during 1941. Revenue stamps returned by'
collectors of internal revenue and by the Postmaster General, and
credited to their accounts, amounted to $652,233,280. There were
231 applications allowed for restamping packages from which the
original stamps had been lost, mutilated, or destroyed, compared
with 318 applications in the preceding 3^ear.
The Disbursement Accounting Division administratively examined
and recorded 1,539 monthly accounts, comprising 143,158 vouchers,
of collectors of internal revenue, internal revenue agents in charge,
heads of staff' divisions, and district supervisors, including t h e ' S a n
Juan, Puerto Rico, branch of the District of Maryland, and the
Honolulu, Hawaii, branch of the San Francisco Alcohol Tax District
No. 14. In addition, 6,042 expense vouchers of employees and
19,346 vouchers covering passenger and freight transportation and^
miscellaneous expenses were audited and passed to the Chief Disbursing Officer, Treasury Department, or the General Accounting
Office for payment.
Taxes under the Federal Insurance Contributions Act.—Collections of
taxes imposed under the Federal Insurance Contributions Act
amounted to $895,335,861 for 1942, as compared with $687,327,551
for 1941, an increase of $208,008,310. These amounts include both
the employees' tax and the employers' tax, each of which was imposed
at the rate of 1 percent of taxable wages paid. Returns under the
act are required on a quarterly basis, 9,470,856 being filed during
the fiscal year 1942, as compared with 8,684,639 filed in the preceding
year.
The following table sets forth information relative to claims disposed
of under the Federal Insurance Contributions Act and/or Title V I I I of
the Social Security Act.




172

REPORT OF THE SECRETARY OF THE TREASURY

Claims under the Federal I n s u r a n c e Contributions Act and/or Title V I I I
Social Security Act received a n d disposed of, fiscal year 1942

of the

U n d e r section
1401 (d) of t h e
Federal I n s u r - All o t h e r
ance C o n t r i b u tions A c t

Claims

Number
8,542
32,997

12, 644
3,506
103

35,076

16, 253

i;463

T o t a l disposed of..

20, 412

34,894
156
26

T o t a l t o b e disposed of.
Allowed in full or in p a r t . .
Rejected!
Canceled

5,045
15, 367

41, 539

P e n d i n g J u l y 1, 1941...
Received d u r i n g y e a r . .

4, .159
4,711

P e n d i n g J u n e 30, 1942
.
Certificates of allowance issued w h e n n o claims were filed..

Amount
Overassessments settled b y Abatement
Credit
Refund
Total
Interest

-

-$784,900

-

----

$889,044
298,197
386, 060
1, 672, 301
47, 665

-

-.

Grand total

784,900

1, 619, 966

Under the provisions of section 1401 (d) of the Federal Insurance
Contributions Act, effective with the calendar year 1940, an employee
performing services for more than one employer during a calendar
year niay obtain a refund of the amount of employee's tax deducted
from his wages and paid to the collector which is in excess of the tax
on the first $3,000 of such wages. To obtain such a refund, the
employee must file a claim after the calendar year in which the services w^ere performed and within 2 years after the calendar year in
which the wages involved are paid. Refunds in the total amount of
$784,900 were recommended and the claims rejected involved $3,565.
The following table shows the status of the offers in compromise
submitted in settlement of liabilities incurred, under the Federal
Insurance Contributions Act and/or Title VIII of the Social Security
Act.
Offers i n compromise under the Federal I n s u r a n c e Contributions Act and/or
V I I I of the Social Security Act received a n d disposed of, fiscal year 1942

Offers i n compromise

P e n d i n g J u l y 1, 1941

N u m b e r of
offers

Amount
offered

Title

Liability
involved

253
1,319

$51, 363
178, 748

$172, 322
662,445

1,572

230, 111

734,767

Accepted
Rejected
Withdrawn
T e r m i n a t e d b y default
T o t a l disposed of

173
26
11

86, 495
28,088
1,797
537

254, 331
133, 438
13, 553
3,623

116, 917

404, 945

P e n d i n g J u n e 30, 1942

664

113,194

329,822

Received d u r i n g year
T o t a l t o be disposed of.




REPORT OF THE SECRETARY OF THE TREASURY

173

Tax under the Federal Unemployment Tax Act.—^The tax under the
Federal Unemployment Tax Act is imposed on employers of eight
or more. The rate is 3 percent on taxable wages paid during 1941
with respect to employment. Collections during 1942 amounted to
$119,616,968, an increase of $18,959,246 over 1941. Returns are
required on an annual basis, 417,647«being filed during 1942, as compared with 368,639 filed during the preceding year.
D a t a on the returns, revenue agents' reports, claims, and oft'ers
in compromise in connection with the tax under the Federal Unemployment Tax Act are shown in the following tables.
Number of Federal unemployment tax returns received, reopened, and disposed of,
fiscal year 1942
Returns:
Number
Pending July 1,1941
:
369,038
Received during year
_
_
417,647
Reopened during year
45,132
Total to be disposed of..
Closed
Pending June 30,1942

...'

831,817
420,684
411,133

Number of revenue agents' reports received and disposed of, fiscal year 1942
Reports:
Pending July 1,1941
Received during year

.^

Total to be disposed of

"

Number
1,238
5,379

^
_

6,617

Closed:
No change in tax liability
Deficiencies in tax
Overassessments.Total

863
4,301
758

_

•

•

...5,922

Pending June 30, 1942

695

Claims under the Federal Unemployment Tax Act and/or Title I X of the Social
Security Act received and disposed of, fiscal year 1942
Claims:
j
Number
Pending July 1, 1941
9,569
Received during year..
.27,081
Total to be disposed of

...1

36,650

Allowed in full or in part
Rejected.
«.
Canceled-.

20,694
5,645
120

Total

26,459

Pending June 30, 1942....
•Certificates of overassessment and certificates of allowance issued when no claims were
Overassessments settled by—
Abatement
Credit.
_
Refund
'
Total.:
Interest
Grand total.




-

•.

-..

filed

10,191
8,300
Amount
$3,799,468
90,829
1,989,611
5,879,808
73,269
6,953,067

174

REPORT OF T H E SECRETARY OF THE TREASURY

Offers in compromise under the Federal Unemployment Tax Act und/or Title I X of
the Social Security Act received and disposed of, fiscal year 1942
Number
of off'ers

Offers in compromise

T o t a l to b e disposed of

Liability
involved

207
983

$29, 294
133, 708

$240, 910
1,008, 752

•.

1,190

163, 002

1, 249; 662

.

467
204
21

48,138
39, 927
2, 555

320, 627
334, 724
17, 360

692

90, 620

672, 711

498

72, 382

576, 951

P e n d i n g J u l y 1, 1941
Received d u r i n g year

Accepted
Rejected
Withdrawn

Amount
offered'

T o t a l disposed of
P e n d i n g J u n e 30, 1942 . .

Carriers taxes.—Collections of carriers taxes under Chapter 9, Subchapter B, of the Internal Revenue Code aggregated $170,409,014 for
the fiscal year 1942, an increase of $32,537,827 over 1941. ^The
amount for 1942 includes $170,395,247 of coUections from the employers' tax and the employees' tax, both of which were imposed at
the rate of 3 percent of the taxable compensation; coUectiori of the
employee representatives' tax for 1942, which was imposed at the rate
of 6 percent of the taxable compensation, amounted to $13,767, as
compared with $20-,637 ^ for the previous year, a decrease of $6,870.
Returns are required on a quarterly basis, 30,954 being filed by employers, a decrease of 40, and 1,583 being filed by employee representatives, an increase of 43 over the previous year.
The following table sets forth information relative to claims disposed
of under Chapter 9, Subchapter B, Internal Revenue Code, and/or
the Carriers Taxing Act of 1937.
Claims under Chapter 9, Subchapter B , Internal Revenue Code, and/or the Carriers
Taxing Act of 1937 received and disposed of, fiscal year 1942
Claims:
Number
Pending July 1, 1941
.:
60
Received during year

.'

.

Total to be disposed of

.

Allowed in full or in part
Rejected

•
.

Canceled

.•

195
255
133
72
1

Total disposed of

^ 206

Pending June 30, 1942...
Certificates of allowance issued when no claims were
Overassessments settled by—
Abatement
Credit...
^
Refund
.
TotaL......
Interest.
.
.
Grand total
....J

filed...'

.'

49
5
Amount
$89,106
. . . 20,782
: 18,736
128,623
2,640
131,263

Technical Staff
The Technical Staff is the appellate agency within the Bureau of
Internal Revenue for the determination of tax liability in contested
income, profits, esfate, and gift tax cases. The Staff organization
consists of an administrative office in Washington and 10 field divisions
with 37 local offices. The heads of the Staff* field divisions exclusively
represent the Commissioner of Internal Revenue within their terri1 Revised.




-

REPORT OF T H E SECRETARY OF THE TREASURY

175

torial jurisdiction (a) in the determination of tax in disputed cases not
before the Board of Tax Appeals, and (b) in the settlement by stipulation of cases docketed by the Board, subject to concurrence of division
-counsel in all such stipulations. The Staff considers certain offers
in compromise and applications for extensions of time for payment of
income taxes, and also reviews final, closing agreements under section
3760 of the Internal Revenue Code.
A brief analysis of the work of the Staff field divisions is shown in
the following table.
Analysis of the work of all field divisions of the Technical Staff, fiscal year 1942
Docketed
cases

Cases
«0n hand July 1, 1941
Received (transfers, etc., deducted) during year
Total to be disposed of

..

'.

4,253
3, 793

9,348

2,474
175
1,269

_

1 3,324
6,024

8,046

i

d o s e d by stipulation or agreement
Dismissals and defaults....
Unagreed cases submitted to Board
Cases appealed to Board
.
Unagreed action on overassessment and claims cases
Total disposed of

Nondocketed
cases

3,494
646
1,658
430

3, 918

6,128

4,128

•On hand June 30, 1942

2 3, 220

1 Includes 678 cases awaiting taxpayers' action on statutory notices directed or sustained.
2 Includes 620 cases awaiting taxpayers' action on statutory notices directed or sustained.

/ The nondocketed cases disposed of by agreement, by default, and
by unagreed action on claims involved proposed deficiencies in tax
:and penalties aggregating $72,720,048 and tentatively determined
•overassessments of $2,811,827. The deficiencies and penalties agreed
to amounted to $23,915,900 ahd overassessments of $1,697,305 were
allowed. Defaults totaled $2,706,001 in tax and penalties with
:$78,875 in overassessments. In addition, overassessments were
allowed in unagreed claims cases amounting to $502,444.
The docketed cases closed by stipulation involved asserted defici-encies in tax and penalties amounting to $92,675,986 and overassessments of $799,946 shown for other years or in associated cases. The
:amount agreed to consisted of $25,463,101 in tax and penalties and
•$1,503,495 in overassessments.
An analysis of the work of the Staff on compromise, extension of,
' time, and closing agreement cases is shown in the following table.
Analysis of the work of the Technical Staff on compromise, extension of time, and
final closing agreement cases, fiscal year 1942 .
Compromise Extension of Final closing
agreement
time cases
cases
cases

Cases

645
1, 277

Total disposed of....

487543—43

100

681"

5
92

602
53

1,354

97

655

668

3

26

1

_

'On hand June 30,1942

79
602

683
458
177
36

Total to be disposed of
Accepted, granted, .or approved
:RejQcted
Withdrawn
'Transferred

2
98

1,922

•On hand July 1, 1941
Received (net) during year

._
-

13




^

176

REPORT OF THE SECRETARY OF THE TREASURY
Office oj the Chiej Counsel ^

The activities of the Office of the Chief Counsel for the Bureau of
Internal Revenue include the defense of all Federal tax cases appealed
to the United States Board of Tax Appeals; the review of refunds,
credits, and abatements in excess of $20,000; consideration of various
administrative and internal revenue tax matters referred to t h a t
office by the Secretary, the Under Secretary, an Assistant Secretary
of the Treasury, the General Counsel for the Department of the
Treasury, the Commissioner, the assistant to the Commissioner, the
heads of units of the Bureau, collectors of internal revenue, and other
branches of the Department. They include also the preparation, at
the request bf the Department of Justice or of the United States
attorneys, of data for use in the prosecution or defense of tax cases
(civil and criminal) in suit, and compliance with requests for assistance in such cases; and the preparation, revision, and review of
regulations. Treasury decisions, mimeographs, and rulings for the
guidance of the officers and employees of the Bureau of Internal
Revenue and others concerned. The office is made up of the Chief
Counsel's Committee, and eight divisions, viz: Alcohol Tax, Appeals,
Civil, Claims, Interpretative, Legislation and Regulations, Penal,and
Review.
Chiej CounseVs Committee:—The Committee, consisting of three
members, serves in an advisory capacity to the. Chief Counsel and
the immediate members of his staff, who refer to the Committee
cases from all divisions of the office. The Committee considers these
ca^es and makes written recommendations as to their proper disposi-'
tion. The Committee is also charged with the final review of casesinvolving compromises and closing, agreements, previous to^ their
being sent to the Secretary of the Treasury for his approval.
Alcohol Tax Division.,—This Division performs the legal work
arising in' connection with the administiation and enforcement of the
internal revenue liquor laws. The work includes the preparation of
opinions and briefs relating to assessment, collection, abatement, and
refund of liquor taxes and penalties; compromise of civil and criminal
liabilities; and the remission or mitigation of forfeitures. ThisDivision prepares citations to revoke industrial and denatured alcohol
permits, conducts permit hearings, and reviews revocation records.
I t performs similar work in connection with the issuance, suspension,
and revocation of permits under the Federal Alcohol Administration.
Act. It assists the Department of Justice in connection with civil
and criminal cases arising under the internal revenue laws and the
Federal Alcohol Administration Act; gives legal advice to the Deputy
Commissioner of Internal Revenue i n charge of the Alcohol Tax
Unit, district supervisors, and other officials on questions involving
interpretation or construction of said laws; and reviews aU correspondence prepared in the Alcohol Tax Unit involving legal questions.
Appeals Division.—This Division has charge of all cases involving
income, excess-profits, unjust enrichment, estate, and gift taxes
pending before the United States Board of Tax Appeals. Counsel
assigned to the ^various field offices, which were created under the
decentrahzation program of the Bureau of Internal Revenue, prepare
1 For a more detailed statement concerning, and statistical tables showing, the work performed by the
Chief Counsel's .Committee and the respective divisions of the Chief Counsel's Office, reference is madeto "the Annual Report of the Commissioner of Internal Revenue for the fiscal year 1942.




REPORT OF THE SECRETARY OF THE TREASURY

177

answers to petitions filed with the Board of Tax Appeals and advise
the various Staff divisions upon legal questions arising in the determination of income, profits, estate, and gift tax liability. All proposed
settlements are concurred in by counsel. Counsel also have exclusive
authority to represent the Commissioner of Internal Revenue in the
defense of all cases set for hearing before the Board of Tax Appeals.
This Division also has a general supervision of the preparation of
the contents of the records on review in all cases wherein are filed
petitions for review^ by the United States Circuit Courts of Appeals of
final decisions of the United States Board of Tax Appeals. In such
proceedings, where the Commissioner of Internal Revenue is petitioner, this duty is performed in the Division subject to approval by
the Department of Justice; in cases where a taxpayer is petitioner,
the Division has sole charge of the preparation of the record.
Civil Division.—The work of this Division includes the preparation
of statements" of fact for the Department of. Justice in all actions
brought by taxpayers to recover taxes and for injunctions in the Federal courts, which statements set forth the position of the Bureau on
the issues involved and contain references to applicable sections of
the revenue acts, regulations, arid decisions of the courts. The Division also assembles the evidence, obtains witnesses, and assists at the
trial of cases when requested by the Department of Justice; prepares
recommendations for or against the institution of suits in connection
with claims ofthe Government against, taxpayers, transferees, bonding companies, and others; and, when suits are recommended, prepares statements for the Department of Justice similar to those in
actions brought by taxpayers. Stipulations of facts for the use of the
Department of Justice and for vsubmission to the courts m actions in
the district courts and in the Court of Claims are examined and approved, modified, disapproved, or new stipulations prepared; and the
Division makes recommendations for or against an appeal frcrn adverse judgments of district courts-and for or against applications to
the Supreme Court for writs of certiora.ri in cases of adverse decisions
rendered by the circuit courts of appeal and the Court of Claims.
The Division makes recommendations for or against acceptance of
offers submitted for settlement or ccmpromise of cases pending in
court. I t also handles all cases in which liens for taxes are involved
in mortgage foreclosure actions pending in Federal and State courts,
and considers all applications for the release of Federal tax liens and
the .discharge of property from such liens which is permissible under
sections 3673, 3674, 3675, 3676, and 3677 of the Internal Revenue
Code.
Claims Division.—This Division is comprised of four sections, viz:
Processing Tax, Reorganization, Bankruptcy and Receivership, and
Compromise.
The Processing Tax Section has jurisdiction over all matters involving processing, floor stocks, compensating, and custom processing
taxes, as well as over unjust enrichment tax matters not within the
jurisdiction of any,decentralized office. I t represents'the Commissioner of Internal Revenue in all cases before the United States Processing Tax Board ol Review involving refunds of amounts collected
under the Agricultural Adjustment Act. The Section has the same
jurisdiction and duties in matters involving Titles I I I , IV, and V I I
of the Revenue Act of 1936 as have the Civil, Interpretative, Legis


178

REPORT OF THE SECRETARY OF THE TREASURY

lation and Regulations, and Review Divisions with respect to questions involving income, excess-profits, capital stock, estate, and
-miscellaneous taxes. The section prepares records on review in all
cases wherein the Commissioner files petitions for review by the
United States Circuit Courts ol Appeals of final decisions .of thp
United States Processing Tax Board of Review. In cases in which
petitions for'review are filed by taxpayers, the records are subject to
the approval of this Section.
The Reorganizati,on Section is charged with the duty of protecting
the interests ahd claims of the United States in proceedings instituted under sections 77, 77B, Chapters X and XV of the National
Bankruptcy Act, and arrangement proceedings under Chapters X I ,
X I I , and X I I I of the act.
The Bankruptcy and Receivership Section performs all legal work
incident t o ' t h e protection of the interests and claims of the United
States in bankruptcy and receivership proceedings.
The Com.promise Section is charged with the prosecution of claims
filed by collectors against the estates of deceased taxpayers, against
insolvent banks, and in liquidation proceedings, including assignments for the benefit of creditors. At the request of the Departm.ent
of Justice, the Section assists in trials involving the aforementioned
types of claims.
Interpretative Division.—The functions of this Division consist of
the preparation of letters and m.em.oranda- for the signature of the
Head of the Division, the Chief Counsel, the Comm.issioner, or the
Secretary, interpreting internal revenue statutes, and the review of all
correspondence, for the signature of the Com.m.issioner or of the
Secretary or of an official of his office, containing a ruling or opinion
regarding internal revenue laws prepared in the adm.inistrative units
of the Bureau and routed through the Chief Counsel's office for approval; assisting in the preparation and review of briefs to be filed
with the United States Board of Tax Appeals in key cases; reviewing
actions on decisions in special cases; reviewing closing agreem.ents
covering proposed transactions; editing the m.aterial submitted for
publication in the Internal Revenue Bulletin; and t h e preparation of
opinions and rulings in special cases assigned by the Chief Counsel.
Included in this Division is the Digest Section, the functions of
which are to preserve, digest, and m.ake readUy available to the
m.em.bers of the Chief Counsel's staff all opinions, rulings, and other
docum.ents which have been prepared or reviewed by the Chief
Counsel's office.
'"'^^
^^
te
• '^
Legislation and Regulations Division.—The regulations issued under
the internal revenue laws, including tax conventions with foreign
countries, and the reports on legislation introduced in the Congress
affecting the internal revenue, exciept such as relate l^o taxes on alcoholic beverages, are prepared or reviewed in this Division. In
addition, the Division considers suggestions for am.endments of and
additions td the various internal revenue laws, and prepares reports
thereon for the consideration of the Com.m.issioner and the General
Counsel. I t participates in the preparation of income tax form.s and
assists in the drafting of tax conventions.
Penal Division.—This Division deals with practically all classes of
internal revenue tax cases when criminal liability is alleged, including
income and profits, miscellaneous, and social security tax cases; con


REPORT OF THE SECRETARY OF THE TREASURY

179

siders offers in com.promise of liability where crim.inal proceedings
have been instituted or recomm.endations for prosecution have been
made to the Bureau or by the Bureau to the Departm'ent of Justice;
and prepares opinions construing the criminal and percentage penalty
statutes. It also considers claims for reward under section 3463
of the Revised Statutes or section 3792 of the Internal Revenue Code,
and whether cases closed by agreement under section 606 of the
Revenue Act of 1928, and sim.ilar provisions of other revenue acts and
the Internal Revenue Cocfe, should be reopened because of ^'fraud or
malfeasance, or misrepresentation of a material fact." Whenever
requested by the Department of Justice, attorneys from this division
assist in the prosecution of criminal cases.
Review Division.—This Division reviews overassessments of income,
excess profits, war profits, estate, gift, and miscellaneous taxes proposed for allowance (also deficiencies when coupled with overassessments) , where the amount of the overassessments in any case exceeds
$20,000, and proposed refund of any tax in excess of $20,000. I t
prepares reports to the Joint Comm.ittee on Internal Revenue Taxation required by section 3777 of the Internal Revenue Code, where the
overpayments of income, excess profits, war profits, estate, or gift
taxes exceed $75,000; and prepares public decisions where the overassessments exceed $20,000. I t also examines and reviews special
cases referred to it by the Chief Counsel.
Intelligence Unit
The Intelligence Unit is principally concerned with the investigation
of tax fraud cases in cooperation with internal revenue agents and
deputy collectors. During the year, 863 investigations were made
of alleged evasion of income and miscellaneous taxes, and of this
number, 223 cases, involving 364 individuals, were recommended for
prosecution. On this charge there were convictions of 119 individuals,
and 2 acquittals. Recommendation was made in these cases for
assessment of additional taxes and penalties amounting to $37,766,629.
In addition to collections by the Bureau of Internal Revenue of
taxes, penalties, and interest, amounts are covered into the Treasury
as a result of fines imposed in criminal cases. In some jurisdictions
the courts have imposed an additional penalty by requiring the
defendants to pay the costs of the investigations, that is, the salaries
and expenses of the agents while employed on the cases.
There were 2,696 investigations of applications of attorneys and
agents to practice before the Treasury Department and 76 investigations of charges against enrolled agents and attorneys, resulting in
the disbarment of 11, the suspension of 1, the reprimand of 3, and the
rejection of applications of 6. There were 5 names stricken from
the rolls during the course of disbarment proceedings, and 2 resignations were accepted ^ V i t h prejudice."
The investigation of charges against employees of the Bureau of
Internal Revenue in 114 cases resulted in the separation from the
Service of 63 employees, and the prosecution of 36 of whom 30 were
convicted.
'
There were 13,581 cases of miscellaneous character investigated,
including a number for the Bureau of Narcotics and the Customs
Service, and of persons under consideration for appointment to various ,
positions in the Treasury Department.



180

'

: REJPORT OF T H E SECRETARY OF T H E TREASURY

LEGAL DIVISION

The General Counsel, chief law officer of the Department and in
charge of all legal activities thereof, heads a Legal Division composed
of the Office of the General Counsel and the legal staffs in all branches
of the Department.
Since the entrance of- the United States into the war, the work of
the Division has been greatly expanded. In connection with the duty
of the Bureau of Customs under T. D. 505:36 to enforce section 3 (c)
of^ the Trading With the Enemy Act and under delegation from the
Director of Censorship to censor tangible communications, outside
the maUs, from and to foreign countries, the Division aided in drafting
orders, regulations, instructions, and licenses, and made numerous
legal interpretations. Under the lend-lease program, the Division
has passed upon the legality of lend-lease contracts involving the purchase of more than one and one-half billion dollars of supplies for
the Allies and has drafted more than 17,000 such contracts.
The difficulty, resulting from the war, of securing supplies of opium
•for medicinal and scientific uses has necessitated provision for a stock
pile of opium by the Bureau of Narcotics to guard against the contingency of future closing out of sources of supply. In that connection,
the Division has assisted in the formation of plans for the possible
growing of opium poppies under Government supervision and in the
furtherance of other proposals to augment and conserve the supply of
narcotics.
'
The development and expansion of the foreign funds freezing control program has expanded the work of the Division. The Division
has collaborated with the Department of State and the Board of
Economic Warfare in the development of economic and financial controls over transactions deemed inimical to the defense of the'Western
Hemisphere. The General Counsel represented the United States
at the Inter-American Conference on Economic and Financial Controls. The Division also performed the legal work involved in connection with the interpretation of the laws and regulations applicable
to monetary and industrial transactions in gold and silver, the acquisition by the United States of monetary metals, transactions in gold
and foreign exchange with foreign governments and foreign central
banks, and the stabilization of the exchange value of the dollar, including the drafting of stabilization agreements and other international monetary arrangements.
In relation to the activities of the Coast Guard, the Division performed numerous services, until it was transferred to the Navy Department by Executive Order No. 8929. As it is the maritime police
force of the United States and also a branch of the armed forces, the
activities of the Coast Guard gave rise to numerous legal problems.
The Division aided in the drafting of the act of July 11, 1941, 55 Stat.
584, providing for the making of contracts, the deposit of daniage
payments, and other matters concerning the Coast Guard. The Division also assisted in drafting the various orders transferring Coast
Gu'ard equipment and personnel to the Navy.
The Division assisted in drafting the Public Debt Act of 1942, did
work in the preparation and issuance of war savings bonds, and cooperated in revising regulations governing savings bonds.
Problems relating to the acceptance, under Title X I of the Second
War Powers Act, 1942, of conditional gifts to the United States for



REPORT OF THE SECRETARY OF THE TREASURY

181

the furtherance of the war program and to the handling of securities
:arid gold bullion taken from the Philippine Islands were also of importance in the Division's activities.
The war has also resulted in an increase in the various ordinary and
routine duties of the Division.
The Division prepared 54 formal opinions and many informal
opinions, studies, and memoranda for the guidance of the administrative officers of the Department. Thirty-five' legislative proposals
•considered desirable for the efficient functioning of the Department
v^ere drafted. Representatives of the Division frequently appeared
before Congressional committees to furnish technical assistance and
to explain the purpose, effect, and legality of legislation affecting the
Department and furnished other technical assistance to such committees. Assistance was rendered in the preparation of 414 legislative reports and in drafting numerous executive orders and proclamations. Action was taken on offers to compromise claims of the United
States and in suits filed against officers of the Department and the
UnitedStates.
The Division passed upon the legal sufficiency of 350 assignments
•executed under the Assign.nient of Claims Act of 1940 involving contracts entered into by the Department, examined 13,467 indemnity or
official bonds, drafted legislation concerning payment of claims of
Airierican nationals agaiast Mexico, performed legal functions in connection with the Coriiptroller of the Currency's supervision of national
banking associations, aiding in litigation involving receivership banks
in liquidation, and did other legal work relating to monetary, fiscal,
:and public debt matters.
The Division approved a large number of cases, for settlement witho u t administration arising under the Adjusted Compensation Payment
Act of 1936, as amended, and under certain regulations, and handled
a number of escheat cases. Assistance w^as rendered to the Department of Justice in numerous cases involving matters affecting the
Treasuiy Department. In connection with the liquidation of indebtedness «of certain carriers under the Transportation Act of 1920, representatives of the Division participated in the equity receivership proceedings of one of the country's major carriers and continued participation in the reorganization proceedings of three other carriers under
section 77 of the Bankruptcy Act.
The Division furnished advice concerning the award, execution, and
performance of procurement contracts; examined surety bonds in connectioD therewith; and rendered services in connection with the
revision of, and approval of deviations from, various standard contract
forms.
The Division considered questions concerning Federal narcotic drug
and marihuana laws, prepared drafts of legislation relating to traffic in
narcotic drugs, and assisted States in the adoption or amendment and
enforcement of the Uniform State Narcotic Drug Act.
I n addition to furnishing legal advice to the Bureau of Customs, the
Division maintained liaison with the Assistant Attorney General in
charge of customs litigation and made numerous studies in connection
with pending litigation. Assista.nce was given to that Assistant
Attorney General in the drafting of briefs and the preparation of certain cases for trial. Drafts of trade agreements aft'ecting the collection
of revenue were studied, and consideration was given to proposed legis


182

REPORT OF THE SECRETARY OF THE TREASURY

• lation revising and clarifying customs laws. - Drafting and review work
was done on a new edition of the customs regulations. The work of t h e
Division has been expanded considerably as a result of the transfer tothe Bureau oi Customs, under Executive Order No. 9083, of jurisdiction over many of the functions formerly performed by the Customs,
field service on behalf of the foimer Bureau of Marine Inspection and
Navigation of the Departm.ent of Commerce.
In the field of taxation, the Division handled 4,724 incoirie; excessprofits, unjust eririchment, estate, and gift tax appeals involving
$176,849,521 and recoveries of $73,844,595; closed 71 appeals to thc'
Processing Tax Board of Review involving $26,726,491, of which
$3,113,988 was recovered by claimants; handled 2,169 claims against,
estates of deceased taxpayers, insolvent banks, and in liquidation proceedings, the total payments received being $5,505,013; disposed of
3,033 civU and 962 criminal cases; handled 299 claim.s for reward under
section 3792 of the Internal Reveriue Code; reviewed 503 claimed
overassessments of income, excess-profits, war-profits, gift, and other
taxes,, approving'reminds in the amount of $36,907,231, and reviewed
333 claims, involving $215,109,036, representing amounts paid asprocessing and floor stocks taxes; and disposed of 3,387 cases involving
compromises and closing agreements. In 1,468 coiporate reorganization cases closed under sections 77 and 77B and Chapters X, X I , XII^
X I I I , and XV of the Bankruptcy Act, claims in. the amount of $6,258,459 were settled for $941,267; and 407 cases under that act were closed
in which no tax claims were filed. In 5,44!6 bankruptcy and receivership cases disposed of during the yeiar the sum of $1,688,299 was collected on claims amounting to $11,818,072. In connection with the
administration and.enforcement of the internal revenue liquor laws,,
the Division prepared or reviewed 6,631 memoranda, 349 briefs,
5,518 opinions, 246 libels, 29 indictments, 8,262 case reports, 80 claims,
of over $5,000 each, 5,031 compromise cases, 3 revocations, and 785
petitions for remission and mitigation ol forfeiture. The Division
drafted num.erous regulations under the internal revenue laws, and
assisted in drafting tax conventions with foreign countries and a large
number of reports on legislation introduced in the' Congress affecting
the internal revenue. Legal opinions on interpretative questions aris-'
ing under the internal revenue laws were rendered.
;
BUREAU OF THE MINT 1

Institutions oj the Mint Service
During the fiscal year 1942, seven mint institutions were in operation: Coinage mints at Philadelphia, San Francisco, and Denver;
assay office at New York, which handles the major portion of the
gold imported and exported, and its auxiliary sUver bullion depository
at West Point; gold bullion depository at Fort Knox, Ky.; mint at
New Orleans, conducted as an assay office; and assay office at Seattle.
The two last-named institutions are, in effect, bullion-purchasing
agencies but also serve the public by making assays of ores and
bullion. Electrolytic refineries are maintained at the New York,
Denver, and San Francisco institutions.
.
1 More detailed information concerning the activities of the Bureau of the Mint is contained in the annual
report of the Director of the Mint.
'




R|:PORT OF T H E SECRETARY OF T H E TREASURY

183

The mint at New Orleans, originally established in 1835, was discontinued as of June 30, 1942. The appropriation granted for operation of the mints and assay offices during the fiscal year 1943 did not
provide funds for operation of the New Orleans Mint.
Coinage
Domestic coin manufactured during the fiscal year 1942, amounting
to 2,114,890,662 pieces, exceeded the production pf any previous fiscal
year in the history of the Government. The nearest approach to
this production was 1,599,349,007 pieces in 1941, and768,090,830 in
1940. As in previous years, the coin most largely produced was the
1-cent piece. . The total production in 1942, in amount $111,006,180,
consisted of 449,336,162 subsidiary sUver coins, $85,307,259; 226,084,400 nickel coins, $11,304,220; and 1,439,470,100 bronze coins, $14,^
394,701.
Coinage for foreign governments amounted to 281,050,000 pieces,
compared with 170,672,500 pieces during the prior year. The
foreign coinage consisted of silver and bronze coins for Australia,
the Netherlands Government, and Peru.
The grand total of domestic and foreign coins made in 1942
amounted to 2,395,940,662 pieces, an increase of 625,919,155 over
the prior year.
Minor coinage alloys
Manufacture of the nickel-copper 5-cent coin was discontinued in
May 1942 by reason of the need of those metals for other uses in
connection with the war effort. The Second War Powers Act,
approved March 27, 1942, contained provision for a 5-cent coin of
half silver and half copper, with authority to vary those proportions
and to add other metals if in the public interest. (See exhibit 45,
page 293.) An effect of this law would be to save for war use all the
nickel and up to one-third of the copper contained in the alloy previously used—25 percent nickel and 75 percent copper. A satisfactory
alloy for the 5-cent coin^—one that would produce a coin acceptable for
operating the many vending and slot machines in use, as well as for
other purposes—had not been determined upon at the end of the
fiscal year.
At the end of the year consideration was also being given the subject
of substitutes for the alloy in the 1-cent coin—95 percent copper,
5 percent tin and zinc—and to other measures for conserving, for war
use, metals heretofore used in manufacture of coin.
.' •
\
Bullion deposit transactions
^
The number of bullion deposit transactions during the year totaled
35,521, including 83 inter-mint-service transactions, as compared
with 48,147 and 75, respectively, during the prior year. The deposit
transactions required 52,406 assay determinations, which compares
with 74,716 assay determinations in 1941.
. Transjers oj bullion J o r long-term storage
. Refined gold bullion having a value of approximately $1,004,500,000was transferred during the fiscal year 1942 from the New York Assay
Office to the bullion depository at Fort Knox, and approximately



184

REPORT OF THE SECRETARY OF T H E TREASURY

$1,189,900,000 in refined, and unrefined, gold bullion was transferred
from the mint at San Francisco to the mint at Denver for long-term
storage.
The balance of silver bullion in the bullion depository at West
Point remained unchanged at 1,542,697,791^ fine ounces, all of w^hich
was transferred from Government buildings and rented quarters in
New York City since completion of the depository in 1938.
Silver bullion, in quantity 4,817,828 fine ounces, was delivered inJune 1942 to the Defense Plant Corporation under the terms of a
contract dated May 6, 1942, providing, in effect, for the loan of about
one billion ounces of silver to be used as a substitute for copper or
other strategic materials'in plants that are engaged in or essential to
the war effort. Its principal use is understood to be in bus bars, for
transmission of electric current. This, silver is to be returned to
Treasury custody under the terms of the contract, after it has performed its function.
Gold operations
Gold acquisitions by the mints and assay offices during the year,
stated on the usual ba.sis of classified melted receipts, amounted to
$664,440,587; receipts from other Treasury offices of domestic coin
melted during the year amounted to $470,600; and transfers between
mint-service institutions amounted to $2,226,584,768.' These transactions total $2,891,495,955, compared with $12,938,276,121 for the
prior year.
The acquisitions include $10,854 of gold received at $20.67+ per
fine ounce, which had not been previously surrendered under the
nationalization orders. The increment on this gold amounted to
$7,523. '
Silver operations
;

The Government's acquisitions of silver during the year totaled
122,712,671 fine ounces, at an average cost of 57.2 cents per fine ounce
and a total cost of $70,230,843. The acquisitions consist of the
following:
Amount
(fine ounces)

Item
Newly mined domestic silver.
Pm'chase Act silver Silver contained in gold bullion deposits, etc
.
Silver received in exchange for Government-stamped bars
TotaL.

..

..

. .

_

Cost

68, 512, 907. 50 $48, 681, 543. 77'
53, 414,124.16 21, 282,146. 90
'257,495.27
87, 582. 83'
528,144. 23
179, 569. 09
122,712,671.16

70,230,842.59'

' United, States coin received for recoinage totaled 1,828,660 fine
ounces, with a recoinage value of $2,527,955. Silver deposited by
other governments, for foreign coinage, totaled 7,345,556 fine ounces.
SUver transfers between mint-service institutions totaled 4,625,656
fine ounces. These items plus the silver acquired during the year
brought the total transactions in silver to 136,512,543 fine ounces,
compared with the prior year's total of 273,974,554.
During the year $69,934,545 of sUver certificates were issued
against 54,090,000 fine ounces of silver bullion valued at $1.29+ per
1 Revised.




REPORT OF THE SECRETARY OF THE TREASURY

185

fine ounce, the statutory monetary value of silver. Such silver had
been acquired at an average price of 6 3 + cents per ounce. The
difference between the cost of the silver held to secure such certificates and the monetary value of such silver is $35,458,194, and this
amount constitutes seigniorage.
The open-market price of silver in New York (mean of bid and
asked) during the fiscal year 1942 averaged $0.35284. The price
remained unchanged at $0.35062 from July 1, 1941, to November
28, 1941, when it advanced to $0.35437, which price prevaUed,
without change, through June 30, 1942.
For newly mined domestic silver a return to the depositor of
$0.7111+ per fine ounce, established by the act of, July 6, 1939,'
prevailed during the fiscal year 1942.
^

•

Rejineries

The electrolytic refineries produced during the fiscal year 7,749,270
fine ounces (265.7 tons) of electrolytically refined gold bullion and
6,272,610 fine ounces (215.1 tons) of silver bullion. During the prior
year the quantities produced were 7,508,837 fine ounces (257.4 tons)
of gold and 5,073,331 fine ounces (173.9 tons) of silver.
Stocks of unrefined gold and silver bullion in mint institutions
decreased during the year by approximately 99.5 tons, leaving a total
of 2,051.6 tons. There was an increase in the fiscal year 1941 of about
78.1 tons.
Stock^of coin and monetary bullion in the United States
On June 30, 1942, the estimated stock of domestic coin in the United
States was $1,301,639,122, of which $547,077,254 was standard silver
doUars, $529,814,276 subsidiary silver coin, and $224,747,592 minor
coin.
The stoQk of gold bullion, including coin, held iiivthe Treasury on
the same date was valued at $22,736,704,552, an increase of $112,506,840, and the stock of silver bullion was 2,524,328,815 fine ounces,
an increase of 33,194,358.
Domestic production of gold and silver
Domestic gold production during the calendar year 1941 was 5,976,419 fine ounces, with a monetary value of $209,174,600, comparedwith 6,003,105 fine ounces, with a monetary value of $210,108,700
in 1940, which was the previous year of largest production.
Domestic silver production during the calendar year 1941 totaled
72,336,029 dunces. This compares with 69,585,734 ounces for 1940
and with the record production of 74,961,075 fine ounces for 1915.
Industrial consumption oj gold and silver
Gold consumption in the industrial arts during the calendar year
1941 is ^estimated at $67,977,110. Gold returned from industrial use
amounted to $30,975,490. These items give a net industrial consumption of new gold during the year of $37,001,620, compared with
$13,306,032 during the calendar year 1940.
SUver used in the arts is estimated at 92,793,574 fine ounces, of
which 72,432,318 fine ounces were new material.




186

,REPORT OF THE SECRETARY'OF THE. TREASURY

Compared with the prior year, there was an increase in gold consumption of approximately 765,700 ounces and an increase in silver
consumption in industry of about 25,700,000 ounces.
Appropriations, expenses, and income
Regular appropriations available for the Mint Service during the
fiscal year 1942 totaled $3,512,840; the First Deficiency Appropriation
Act of February 21, 1942, .provided $1,895,900, $500,000 of which
was for special movements of bullion during the fiscal year 1942, to
remain available until June 30, 1943; the Third Supplemental National
Defense Appropriation Act, approved December 17, 1941, provided
$6,335; and reimbursements to appropriations fbr services rendered
amounted to $1,107,534, making a total of $6,522,609.
Expenses amounted to $6,294,712,,of which $5,847,733 was chargeable to appropriations and $446,979 chargeable to income.
The regular income realized by the Treasury from the Mint Service
aggregated $69,025,597, of which $65,583,203 was seigniorage. The
seigniorage on subsidiary silver coin was $42,354,043, and on minor
coin, $23,229,160. Extraordinary income aggregated $35,465,717,
of which $35,458,194 w^as seigniorage on silver bullion revalued to
$1.29+ per'ounce, and $7,523 was the increment to $35 per ounce on
revalued gold.
General activities
The number and value of deposits, transfers, gross income, and
expenses for the fiscal year 1942, and the number of employees on
June 30, 1942, at each institution are shown in the following table-.
Deposits of gold and silver, income, expenses, and employees, by institutionis, fiscal
year. 19 42 .

Institution

Number
of bullion
deposit
transactions!

Number
Monetary
of assay value of gold
determin- and silver
ations on
receipts,
bullion
including
deposits
transfers!

Excess of
Gross .
Gross income or Employregular
expenses of expenses ees, "June
30, 1942
income i

(-)

Philadelphia
San Francisco
Denver-New York _
New Orleans
Seattle
Fort Knox

4,258
14.742
4,115
8, 359
866
3,181

5,702
$18,445,203 $42, 676, 525$2,784, 974 $39,891, 551
16,413
223,177, 687 12, 300,971 1. 399, 562 10,901,409
6,686 1, 260,128, 693 12, 710, 772 1,079,466 11, 631, 306
615, 275
18, 971 623,163. 950 1, 249, 344 734,069
417,157
38, 926 -34, 550
866
4,376
36,152
26, 315, 672
47, 457
3,768
83, 609
1, 004, 487,044
76, 356 -76, 356

Total
Bureau ofthe Mint

35, 521 ^

62,406 3,056,135,406 69,025, 597 6,160, 810 62, 864, 787
133,903 -133,903

2,062
50

35, 521

52.406 3, 056,135, 406 69,025, 597 6, 294, 713 62,730, 884

2,112

48,147

74, 716 13,153, 340,866 51, 653, 974 6,871, 717 44, 782, 257

2,428

Grand total
Prior fiscal year

"

958
438
396
220
14
36

1 Includes 83 inter-institution transactions amounting to $2,232,565,414.

. DIVISION OF MONETARY RESEARCH

The Division of Monetary Research in the Office of the Secretary
provides information, economic analyses, and recommendations for
t h e use of the Secretary of the Treasury and other Treasury officials
to assist in the formulation and execution of the monetary policies of
the Department in connection with the stabilization fund, other




REPORT OF THE SECRETARY OF THE. TREASURY-

187

operations under the Gold Reserve Act, and operations under the
Silver Purchase Act.
Analyses are made pertaining to gold and silver, the flow of capital
funds into and out of the United States, the position of the dollar in
relation to foreign currencies, monetary, banking, and fiscal policies
of foreign countries, exchange and trade restrictions abroad, and
simUar problems. Analyses are also prepared relating'to the customs
activities of the Department and to the duties of the Secretary of
the Treasury under the Tariff Act and on other matters pertaining to
international trade, including the trade agreement program.
In addition, the Division provides economic analyses in connection
with the Treasury's Foreign Funds Control, and supervises the collection and use of data obtained in the census of foreigh-owned assets
in the United States. Economic analyses and reports are also prepared in connection with the Treasury's participation in the Board
of Economic Warfare.
The Division also is responsible for the economic and financial work
in connection with the negotiation of exchange stabUization agreements, made by. the United States with foreign governments and
central banks for the purpose of promoting international exchange
stability. The Treasuiy's operations under these agreements are
performed under the stabilization fund, which is administered by the
Division. Stabilization fund gold transactions with foreign governments and central banks constitute fmother responsibilities of the
Division.
BUREAU OF NARCOTICS 1

The Bureau of Narcotics, foUowing its established policy, continued
to direct its principal enforcement activities against major narcotic
law violators and toward the elimination of the primary sources of
• supply of illicit narcotic drugs. These activities, together with the
reduced smuggling from abroad, resulted in a further decrease in the
quantities of such drugs available in the illicit market. Prices
remained high and adulteration increased.
The number of thefts of drugs from wholesalers and retailers during
the year showed an increase over 1941, but, due to the policy of the
Bureau in urging a reduction in the size of such stocks, the quantities
of drugs lost by these thefts were somewhat less than during the
previous year. .The forgery and false execution of prescriptions and
the improper prescribing and dispensing of narcotics remain significant
enforcement problems.
The activities of the Bureau resulted in 1,777 arrests for violations
of the Federal narcotic laws and the seizure of 1,614 ounces of narcotic drugs and 171 vehicles during the year, as compared with 1,809
arrests and seizures of 1,852 ounces of narcotic drugs and 185 vehicles
during 1941. There was an increase in the total number of violations reported under the narcotic laws, a total of 2,617 violations
having been reported for 1942 compared with a total of 2,424 during
the previous year.
There were 1,090 arrests under the Federal marihuana laws and
seizures of 723 pounds of bulk marihuana, 13 pounds marihuana
seeds, 31,123 marihuana cigarettes, and 1,693 growing plants, as
1 Further information concerning narcotics is available in the separate report of the Commissioner of
Narcotics.




188

REPORT OF THE SECRETARY OF THE TREASURY

compared with 1,010 arrests and seizures of 699 pounds bulk marihuana, 3 pounds marihuana seeds, 16,509 marihuana cigarettes, and
569 growing plants during 1941.
I n addition to these seizures of marihuana in connection with prosecutions under the law, the Bureau of Narcotics, in cooperation with
State and local authorities, conducted a campaign of marihuana
eradication in which the Alcohol Tax Unit of the Bureau of Internal
Revenue participated. I t involved growths of varying density found
on 9,742 acres. A total of 1,159 violations under the Federal marihuana law was reported as compared with 1,111 violations reported
during 1941. None of those reported was against persons registered
under the law.
The tables following show the number of violations, by registered
and nonregistered persons, of the narcotic and marihuana laws and
the number dispos^ed of during the fiscal year as reported by Federal
narcotic enforcement officers.
Violations of the narcotic laws and the cases disposed of, fiscal year 1942
Registered persons
Federal court
Pending July 1, 1941...
Reported during 1942:
Federal
Joint

State court

Nonregistered persons
Federal court

State court

1,061
1,378
398

781
60

Total to be disposed of..

1,320

Convicted:
Federal
Joint
Acquitted:
Federal-.-.
Joint
Dropped:
Federal
Joint
Compromised:
FederaL--.
Joint—

133
10

202
145

765
151
16
7
312

312
16

34
28

297
7

Total disposed of-.

799

1,738

Pending June 30, 1942...

521

1,099

Sentences imposed
. Federal
i
Joint
Total

1,534
317

--.

Fines irnposed:
Federal
...
Joint-—
-.
Total

$73, 902. 47
950. 00

145
132

17
12

1,851

247
15

278

29

$350.00
750. 00

$44,448.00
651.00

1,100. 00

$888. 21
871. 00

45, 099.00

1 Represents 4 cases involving tax liability which were closed on payment of taxes and penalties in the
sum of $9.80; and 304 cases which were compromised in the sum of $36,448.50.
NOTE,—Federal cases are made by Federal officers working independently, while joint cases are made by
Federal and State officers working in cooperation with each other.
, .




REPORT

OF T H E

SECRETARY

OF T H E

TREASURY

189

Violations of the m a r i h u a n a laios and the cases disposed of, fiscal year 1942

Nonregistered persons

Registered persons

\
P e n d i n g . J u l y . l , 1941
R e p o r t e d during 1942:
' Federal Joint

S t a t e court

F e d e r a l court

322

3

780
379
1,481

3

T o t a l to be'disposed of
Convicted:
Federal
Joint
Acquitted:
Federal
~ Joint
Dropped:
Federal
Joint

S t a t e court

F e d e r a l court

570
264

2

._

-

9
8

2

23

1

S e n t e n c e s imposed:
Federal
Joint

a
o

1,134

1

T o t a l disposed of
P e n d i n g J u n e 30, 1942

347

1

q

• o

P

893
349

Total
F i n e s imposed:
Federal _ - - .
-" Joint
i

5

145
55

"

28
27

14
9

. .

--

p
o

"Y

^

fl
o

•1

s

23
10

52
43

6
5

15

3

95

11

15

1, 242 , 10
$4, 062.00
1, 452. 00

_
'

Total.-

$132.70
• 478. 00

5, .'lU.nn

6in 7n

NoTj:.—Federal cases are made by Federal officers working independently, while joint cases are made by
Federal and State officers working in cooperation with each other.
Registrations under the Federal narcotic a n d m a r i h u a n a laius, J u n e 30, 1942

Narcotic
law

Registrants

I m p o r t e r s , manufacturers, p r o d u c e r s , a n d c o m p o u n d e r s
Importers, manufacturers, a n d compounders.
P r o d u c e r s (growers)
Dealers
Wholesale
Retail
.
- .
Practitioners
•Dealers i n a n d m a n u f a c t u r e r s of u n t a x e d p r e p a r a t i o n s
Users for p u r p o s e s of research, instruction, or analysis
' Total-

Marihuana
law

152
11
8 929
228
.
:
_ _.

1, 248
51, 025
158,765
1 150, 355
106
361, 651

685
172
10, 025

1 Includes registrations for which payment of occupational tax is not required under the act, because also
Tegistered in some other class.

Opium supplies continued to be available for import and additional
quantities were imported during the year. I n addition to the considerable reserve stocks imported by manufacturers and stored for
normal domestic consum.ption and export, provision was made for a
large Government-owned stock of this strategic material to be held
as a further emergency reserve.




190

REPORT i F THE SECRETARY OF THE TREASURY
O

Coca leaves continued to be im.ported both for medicinal purposes
and the m.anufacture of nonnarcotic flavoring extracts.
Exports of narcotic drugs of all kinds amounted to 22,642 ounces in
1942, a decrease of 515 ounces under the previous year. The drugsexported during 1942 involved 188,823 taxable ounces of products.
• The net quantity of pure drugs of all kinds sold by m.anufacturers todom.estic purchasers for civilian use am.ounted to 488,902 ounces, a.
decrease of 13,588 ounces under the previous year.
'DIVISION OF PERSONNEL

The Division of Personnel is charged with the supervision of thepersonnel activities of the entire Department, and itS/general functions include initiating, planning, and formulating personnel policies,
procedures, practices, and programs, and coordinating and exercising
control over the Department's personnel operations so that they will
conform to approved policies and procedures. The functions of theDivision are principally in the nature of advisory and control activities,
with the personnel operations of the Department being actually
carried out in the personnel units of the several branches, bureaus,,
and offices. This decentralization of personnel work, with control
being retained in the central personnel office, is in line with theDepartment's policy of facilitating and strengthening the functioningof the operating organizations.
The Division, headed by the Director pf Personnel for the Treasury
Department, has been organized to include activities relating to position-classification, salary administration, recruitment, appointment,
placement, promotion, separation, retirement, discipline, investiga^ tion, efficiency rating, employee relations, leave, forms and records,,
and civil service rules and regulations.
. On June 30, 1942, there weie 24,610 employees in the departmental
service and 43,586 employees in the field service of the- Treasurjr
Department, as compared with 20,483 employees in the departmental
service and 64,501 employees in the field service on June 30, 1941.
The 1941 figures include the mUitary and civilian personnel of "theUnited States Coast Guard which has since been transferred to theNavy Department. During the year the Division considered and
acted upon 115,596 personnel recommendations relating to the^
appointment, promotion, reassignment, retirement, suspension, and
separation of employees; reviewed and processed 21,373 classification
actions for departmental positions, as compared with 10,275 classification actions for the same service in the fiscal year 1941." The Division of Personnel was also engaged in fostering, developing, and maintaining a comprehensive program of personnel nianagement, in the^
interests of bettering employee-employer relations, attaining higher
standards of performance, and incieasing the efficiency and effectiveness of administration.
COMMITTEE ON PRACTICE

' ^The Committee on Practice, formerly the Committee on •Enrollment and Disbarment, is an administrative and judicial body. ' It.
has charge of the enrollment of attorneys and agents for practice*




REPORT OF THE SECRETARY OF THE TREASURY '

191

bef01 e the Treasury Department and conducts hearings in disbarment
proceedings. An attorney, not a member of the committee, represents the Government before the committee. All complaints are
filed with the attorney for the Government, who institutes proceedings
in disbarment or suspension if the charges warrant such action. The
committee also issues licenses to customhouse brokers and makes
findings of fact and recommendations to the Secretary in proceedings
for the revocation or suspension of such licenses.
The following statement sumimarizes the work of the committee for
the fiscal year 1942.
Attorneys and agents:
Applications for enrollment approved
Applications for enrollment disapproved
Ap])lications withdrawn on advice of committee
Formal hearings on apphcations

_

.

-

::

Number
2,582:
6121
a

-

__

Complaints against enrolled persons:
Pending July 1, 1941..
Filed during the year
...'.

33
24
—

Disposed of:
Disbarred
'.
Stricken from the rolls in the course of disbarment proceedings...
Suspensions..
Reprimands
Dismissed
-

11
._... 5
1
3
4
—

Pending June 30,1942-^
Charges made, names strickenfrom-the rolls...::...,..- — - - . . - . . . . . : . - : . . . - . . . . . - . - .
Cases of minor infractions of the regulations in which enrollees were given an opportunity to show
cause why proceedings should not be instituted..
Customhouse brokers:
Applications for licenses approved
Applications withdrawn
-.Licenses canceled
Licenses revoked
Suspensions..
Reprimands

-

_
•

_..

-

1.

._:

57

2^
33^
2
13.
45
• 4
2&
1
0'
o
»

Since the organization in 1921 of the Committee, 61,761 applications
for enrollment have been approved and 757 disapproved. Two
hundred and thirty-seven practitioners have been disbarred from
further practice before the Treasury Department, ]37 have been
suspended from practice for various periods, and 179 have been
reprimanded.
PROCESSING TAX BOARD OF REVIEW

The Processing Tax Board of Review has jurisdiction to review the
allowance or disallowance by the Commissioner of Internal Revenue
of claims for refund of processing tax paid under the Agricultural
Adjustment Act and to determine the amount of refund due any
claimant with respect to such claim. The decisions of the Board
are reviewable by the Circuit Courts of Appeals of the United States.
and the United States Court of Appeals for the District of Columbia
and subject to further review by the Supreme Court of the United
States, upon certification or certiorari as provided in the Judicial
Code, as amended. The Secretary of the Treasury designates the
members of the Board and assigns to it such personnel in the Treasury
Department as may be necessary to perform its functions.
487543—43

14




192

REPORT OF THE SECRETARY OF T H E TREASURY

The following table summarizes the work of the Board during the
fiscal years 1941 and 1942.
1941

1942

Cases
Number Refund claimed Number Refund claimed
Before the Board of Review:
On hand atbeginning of year
Filed during year
Reconsidered during year

59
103
3

On hand at end of year.

Total to be reviewed
Decided by Circuit Courts
On hand at end of year.

32, 010 132 16
23,395,483 24

11, 952,147. 07

52

8,614 648 92

981, 081.16
1,113, 633. 23

9
9

338, 661. 59
1,474,132. 41

29
20

2, 094, 714. 39
1,756,052.80

9

338,661.59

2
2

Before the Supreme Court:
Filed during year for writ of certiorari
Certiorari denied

105
53

12
17

'

30, 628, 372. 09
18, 676, 225. 02

62

.

Decisions appealed to Circuit Courts of Appeals:
On hand at beginning of year
Filed during year
.
I

62
36
7

165
103

Total to be reviewed
Decided

$6, 993. 216. 08
23, 472, 557. 76
162,598.25

262, 229. 66
262, 229. 66

18
1 12
6

$11,952 147 07
19,638,819 99
419 165 10

1, 812, 794. 00
1, 077, 278. 23
735,515 77

Pending|in Supreme Court
13 reversed, 4 affirmed, and 5 dismissed.

PROCUREMENT DIVISION

Augmented by the assignment of important tasks in the prosecution
of the war and the greater utilization of its facilities by other agencies
of the Government, the functions and activities of the Procurement
Division, as assigned under Executive Order No. 6166 and expanded
under Executive orders and regulations issued under the First and
Second War Powers Acts, have increased in both scope and volume.
The following table summarizes the purchases by the Division under
its various activities during the fiscal years 1941 and 1942.
mi
im
Regular activities
Printing and binding
.
Ernergency relief...
Strategic and-critical materials
Lend-lease activities
Defense housing projects
Refugee relief program
Total purchases.

-

--

.

$15,430,464
2,380,148
219,287,390
29,378,252
21,037,555
5,360, 572
18,452,198

$21,648,545
6,061,395
171,711,188
6,544,303
1,126,438,327
. 15, 4.33, 708
17,053,849

311,326,579

1,364,891,315

Purchases made under General Schedule of Supply contracts by the
various governmental departments and agencies during 1942 amounted
to $273,522,472. This was a record high and was $154,497,711 more
than the total during 1941 of $119,024,761.
.
Purchasing under the lend-lease program, which started during
AprU 1941, gained momentum and during 1942 totaled $1,126,438,327.
The First War Powers Act, approved December 18, 1941, afforded the
greatest possible latitude in the making of wartime purchases, emphasis being placed upon speed, and, in accordance with the authority,
formal processes of purchasing were set aside for prompt purchase
through direct negotiation.
The normal process of public bid openings and award to the lowest bidder of the entire quantity required was found to be ineft'ective



REPORT OF THE SECRETARY OF THE TREASURY

193

in the procurement of supplies under war conditions, which necessitate
the utmost speed and the consideration of special economic aspects.
During the year considerable progress was made in placing the
contracting and pm*chasing of commercial items in common use by
Government agencies on a planned basis. The primary aim has been
to provide for the procurement of essential nonmilitary requirements
promptly and economically with due regard for the demands of the
war program. Emphasis was placed on the conservation of critical
materials by ehminating nonessential items and by modifying specifications and on broadening the sources of supply by means of zoning
and the making of negotiated contracts.
Requhements of nonwar agencies for a number of essential classes
of commodities have been channeled through the Division, which
effects purchases on a centralized basis, providing opportunities for
consolidated purchases. Consolidated purchase plans were put in operation with respect to motor vehicles, wood office desks and file
cases, typewriters, paper products, lumber, electrical equipment, and
machinery. The details of the individual plans vary somewhat depending upon the extent of central control required. In the case
of items of limited supply subject to rationing, such as motor vehicles
and typewriters, requisitioning agencies are required to submit formal
justifications of need on standard forms prescribed for the purpose,
and formal approval by the rationing authorities is secured in advance
of making the purchase.
Limitation and Conservation Orders issued by the War Production
Board for the conservation of. critical materials in connection with
the war effort has brought about changes in the design and details of
construction in a number of items of office furniture. The-need for a
less expensive type of desk was recognized, and a table type of desk
for clerical and typewriter use was designed. Contracts were let with
a number of manufacturers all over the country to provide fbr immediate delivery to widely separated offices. The entire program since
January first approximates 250,000 desks of all types.
For the first time contracts were executed for the standard types of
maple household furniture. Prior to the adoption of a standard, a
number of agencies in the Government were making separate contracts
covering a variety of types and qualities.
Contracts covering the purchase of gasoline, based on estimated
requirements, indicated an approximate increase of 160 percent over
that for 1941. The increase in the purchase of fuel oil was approximately 78 percent. This increase was due in part to the increased
military activity; for example, during the first quarter of the fiscal
year onl}'^ 35 ordnance plants were supplied as against 71 during the
last quarter.
Among the special activities of the Division was an arrangem.ent
made with the Office Machinery and Equipm.ent Procurem.ent Committee of the War Production Board whereby the Division undertook
the purchase of some 600,000 used standard typewriters required by
the armed forces and other vital war agencies during the next two
years. Plans were made to purchase machines held" in stock by
dealers, and to locate and procure excess typewriters in the hands of
business firms, the general public, and Federal agencies. At the close
of the year bid invitations had been sent to dealers all over the country
to secure offerings from their stocks of serviceable typewriters; type


194

REPORT OF T H E SEiCRETARY OF T H E TREASURY

writer m.anufacturers had supplied nam.es of firm.3 which had purchased machines in substantial volume over the past few years, and
steps were being taken to solicit offerings from these holders; and a
survey questionnaire had been circulated among Federal agencies.
Later plans call for an organized appeal to the general public to turn
in all typewriters which can possibly be spared.
Working in collaboration with the War Production Board and other
war agencies the Division took active steps to conserve critical supplies
and materials used by the Government. Early in the year Federal
agencies were requested to survey imm.ediately existing supplies and
equipment to insure their full utilization, and to make available for use
elsewhere all material not required for current use.
Specifications were also revised to provide for the various types of
wood vertical files. These changes and revisions have resulted in a
saving of thousands of dollars and many tons of critical materials.
I n order to conserve strategic and critical materials and apply them
to war purposes, 347 Emergency Alternate Federal Specifications and
95 revisions to these specifications were issued. The principal purpose
of these specifications, which were prepared in conjunction with the
War Production Board, has been to develop comm.odities made of
substitute materials such as electric cable having only a small amount
of rubber insulation and no rubber in the jacket; wood or plastic
substitutes for metals; and the elimination of alum.inum, brass, tin, •
and chromium. In addition, 334 revisions and amendments were
made to existing Federal Specifications, and 86 new specifications were
promulgated, bringing the number of Federal Specifications in effect
as of June 30, 1942, to- a total of 1,437.
During .the year, 102 new Procurement Division Specifications
were issued, and 75 were revised. . There were 305 Procurement
Division Specifications in effect as of June 30, 1942. Procurement
Division Specifications are used when there are no existing Federal
Specifications for the com.modities and are frequently the basis for the
preparation of Federal Specifications.
The-Procurem.ent Division continued to coordinate purchases by the .
Federal Governm.ent of blind-m.ade products of 55 institutions.
Purchases m.ade by the Government departments and agencies increased during 1942 and amounted to $3,502,510.64, com.pared with
$2,157,000 recorded in 1941.
The Defense Housing Unit purchased plumbing equipment for
kitchen, laundry, and bath, water and oil tanks, medicine cabinets,
heating and cooking units, lighting fixtures and refrigerators for
defense housing to the extent of $15,433,708 during 1942. For a discussion of the Division's activities in this connection, see page 55.
The Warehouse, in which are stocked commodities in common use in
the Government, filled requisitions received from the various activities,
both in the District of Columbia and the field, amounting to $7,937,490
for 1942, compared with $5,017,224 for 1941. This represented 19,824
tons of material delivered by Warehouse trucks in the District of
Columbia and vicinity and the shipment of 10,692 tons to field activities, or a total of 30,516 tons for 1942 as compared with 14,648 tons in^
the District of Columbia and 7,819 tons to field activities, or a total of
22,467 tons for 1941.
In order to handle expeditiously the increased volume of business,
the General Supply Fund, which is used as a revolving fund to finance



REPORT OF THE SECRETARY OF THE TREASURY

195

the Warehouse, Fuel Yard, and simUar activities, was increased during
the year by $2,000,000, making a total fund of $5,020,196. ^ This increase permitted an appreciation in the average Warehouse inventory
m 1942 to $2,056,231, as compared with $1,119,676 for 1941. Similarly, the Warehouse storage, shipping, and delivery space used in the
Procurem.ent Division building was increased in 1942 from 271,470
square feet to 321,470 square feet. In. addition to the use of electric
platform trucks, the Warehouse Division acquired 10 gasoline tiering
trucks in order that the maximum vertical space could be used in the
building.
As a residt of the rigid inspections and tests given to dehveries,
improvement in the quality of commodities supplied on Government
order continued. Of the total of 3,308 inspections and tests during
1942, only 409 were performed at the Bureau of Standards and 37 at
other departments, the balance being performed in the laboratory of
the Inspection Division. Rejections of material were only 4.58 percent, which is an indication that the vendors supplying material are
familiar with tho standards required by the applicable specifications.
Fuel deliveries to the departments and agencies in and adjacent to
the District of Columbia during the year amounted to 385,443 tons of
coal and 15,991,128 gaUons of fuel oU. Because of the expansion of the
Government activities in the District of Columbia, 418 additional
locations were served during the year. This represents a total of
1,413, as compared with only 995 locations during the previous year.
Negotiations are under way for the purchase of fuel oil and gasoline
either in railroad cars jor tank wagons for the purpose of conserving
transportation and the elimination of railroad crosshauling. Arrangements have been made for the standby storage of 500,000 gallons of fuel
oil for the use of Government activities in the District of Columbia.
Storage facUities have also been provided for approximately 90,000
tons of coal in addition to the storage facilities at the Procm'ement
Division Fuel Yard.
During 1942 a total of 373,478 gallons of gasoline and 7,729 gallons of
oU were issued to the automobiles of Federal agencies in the District
of Columbia which utilized the facilities of the Garage. The number
of service transactions amounted to 38,603, and 5,223 repair orders
were completed for the fiscal year 1942.
Overhauls and adjustments of typewriters for various agencies
totaled 32,575 during 1942. Savings on this work indicated an
economy of approximately $20,000 to the using offices.
In the disposition of surplus and forfeited personal .property during
the year, this Division arranged for the transfer between Government
agencies of approximately 29,000 items valued at $4,070,000. The
sales of surplus and waste material in the District of Columbia and
vicinity, determined to be of no further use, totaled $250,076. The
Division also participated in the collection and sale of s,crap aluminum
collected in the national scrap aluminum campaign, and acted as
receiving agent in collecting rubber and unserviceable paint brushes
donated for salvage purposes by Government agencies.
,
Under the Federal Alcohol Administration Act, the Division distributed by gift among charitable institutions 24,000 gallons of alcohol, wines, and m;alt beverages, with an appraised value of $98,757.
Surplus chairs, desks, and other equipment were reconditioned in
the Furniture Repair Shop and transferred for re-use to Government



196

REPORT OF THE SECRETARY OF THE TREASURY

agencies in the District of Columbia. In addition, the Furniture
Repair Shop manufactured new furniture to meet the need of specific
requirements of the various war agencies. The total value of this
material was in excess of $60,000 during 1942.
The duties of the Central Traffic Service (formerly the Federal
Traffic Division) were extended in accordance with Bureau of the
Budget Circular No. 387, dated February 12, 1942, to provide a
central transportation rate information service for all Government
agencies in Washington, D. C., to pohduct surveys of Government
traffic practices, to negotiate with carriers and their agents for special
rates, and to prepare and file complaints before the Interstate Com-'
merce Commission and other public regulatory bodies.
On October 1, 1941, the Division of Printing was transferred to and
consolidated with the Procurement Division. The procurement of
the stationer}^ requirements for the various bureaus and offices of the
Treasury Department was thereafter performed by the regiUar purchasing units of the Division. The functions of requisitioning of the
printing and binding requirements of the Treasury Department, including the maintenance of control over field printing, the authorizingof engraving work to be performed by the Bureau of Engraving and
Printing, and the ^supervision of newspaper and periodical advertising for the Treasury Department were established in a new section
known as the Printing and Binding Section.
During the year $580,361 was made available specifically for printing and binding by appropriations to the Treasury Department, and
there were also transfers from other funds to the regular printing and.
binding fund. Of the total appropriated, $575,289 was expended,
leaving an unobligated balance of $5,072.
There were 5,562 requisitions placed with the Public Printer at a
cost of $6,061,395. Of these, 1,629 requisitions, in the amount of
$4,292^028, submitted b}^ the Bureau of the Public Debt, were chargeable to funds other than the printing and binding appropriation. Approximately 86 percent of the 1,629 requisitions were for the War
Savings Staff' for the promotion and sale of war savings bonds and
stamps.
During the year there were 5,627 requisitions placed with the
Bureau of Engraving and Printing, calling for a total of 172,155,245
disbursing officers' checks, commissions, certificates, drafts, transportation requests, and warrants, as compared with 4,526 requisitions calling for 163,187,605 checks, drafts, com.missions, etc., for 1941. This
work was ordered at the instance of the Government service at large,
and the increase is attributable to the prevailing war conditions.
The Division continued during the year the purchasing of clothing,
medical supphes, textiles, and hospital apparatus for the American
Red Cross under the refugee relief program, as augmented by the foreign war relief program. A more detailed discussion appears on page
55.
During the year contracts and purchases of strategic and critical
materials under the act of June 7, 1939-(Public No. 117), totaled
$6,544,303. For a discussion of the activities of the Division in this
connection see page 54.
On page 53 appears a summary of the Procurement Division's activities under the Lend-Lease Act. This is its most important task in
the present war effort, and is by far its largest activity at the present



REPORT OF THE SECRETARY OF THE TREASURY

197

time. Purchases during the past year totaled $1,126,438,327, and
have required the establishment of warehousing facilities for assembly,
of shipments.
There were issued b}^ the field procurement offices during the year
466,352 purchase orders covering purchases valued at $171,711,188,
of which a m o u n t m o r e t h a n $100,000,000 was for projects directly connected with the war program, such as airports, military highways,
water supply systems and repairs, and alterations on military reservations. Included in the purchases also were 14,034,000 yards of textiles
for the Work Projects Administration at a cost of $2,630,500 and more
than $1,000,000 in new and used machine shop equipment for the
National Youth Administration for use in its defense training program.
. There were executed for field offices of agencies engaged in emergency relief work approximately 3,000 new leases and 1,975 renewals
of leases; also, several thousand agreements for space on a $1 per
annum basis were executed.
In the interest of efficiency and economy, the Emergency Relief
Branch at the close of the fiscal year had formulated plans to consolidate its field offices into eight regional offices with purchasing officers
in each of the several States.
Federal Business Associations, acting under the direction of the
Director of Procurement, continued their activities of promoting
economy and efficiency in the conduct of Federal business within the
particular localities of the 107 associations. The associations cooperated with the Post Office Department in the solicitation by t h a t
Agency for the loan from various Government establishments of trucks
for handling Christmas mail for the 1941 season, which project resulted
in a saving of $166,147 in vehicle rental for the Postal Service. The
associations also conducted patriotic rallies in the larger cities, organized banquets and obtained prominent speakers, promoted and
assisted in the promotion of military and civic parades and celebrations for the purpose of stimulating the war effort. They also organized committees to further campaigns for the sale of war savings bonds
and stamps, for contributions to the Blood Bank, to fight inflation, to
prevent freight congestion, to finance the Red Cross, to further
civilian defense activities and to participate generally in such national
movements.
DIVISION OF RESEARCH AND STATISTICS

The Division of Research and Statistics in the Office of the Secretary
serves as a research staff for the Secretary and other Treasury officials
on matters relating to fiscal operations and policies, the estimated volume and source of future revenues, actuarial considerations involved
in certain Treasury functions, and various general economic problems
arising in connecticn with Treasury activities.
In connection with Treasury borrowing operations, the Division
prepares reports for the use of officials concerned with the management
of the public debt. Current a.nd prospective conditions in the money
and capital markets are studied in relation to both longer-term
programs of Federal financing and to the types of securities, the
coupon rates, and the maturities to be employed in particular financing
operations. The effects of actual and proposed fiscal operations on the
credit structure and g;en eral economv of the countrv are analvzed




198

REPORT OF THE SECRETARY OF THE TREASURY

and long-range trends are appraised. Studies are made of existing
laws and of legislative proposals in their relation to Treasury financing
a,nd Federal fiscal policies. Estimates of Federal receipts from internal revenue taxes and from
customs duties under existing laws are prepared for use in forecasting
the Treasury's cash position for financing purposes and in all regular
and interim Budget reports, and for such other purposes as may be required. Special revenue estimates are prepared for Treasury officials
and for congressional committees working on tax legislation.
Reports are prepared on the actuarial status of pension and trust
funds for which the Treasury is responsible. In connection with retirement legislation, estimates are made of probable cost of existing
and proposed plans. Other actuarial analyses are made as required.
The Government Actuary, who is on.the staff of the Division, is a
member of the Board of Actuaries, established under the Civil Service
Retirement Act, and is the Treasury Department's representative on
the Actuarial Advisory Committee of the Railroad Retirement Board.
SECRET SERVICE DIVISION

An outstanding accomplishment of the Secret Service Division during the year was the smashing of a conspiracy to flood the country
with counterfeit 25f!S war savings stamps. In New York City on May
12, 1942, Secret Service Agents and Post Office Inspectors arrested
six men comprising the engravers, printers, financial backers and
distributors of these stamps, and captured 200,692_^bogus stamps with
a representative value of $50,173, together with a 25-design plate
from which the counterfeits were printed. This venture was suppressed before anyone was defrauded, as none of the stamps were
placed in circulation. Five defendants were sentenced in New York
on June 11 to serve 10 years each, and one was sentenced to serve
8 years.
,
Cooperating with the Royal Canadian Mounted Police, agents of
the Secret Service and the United States Customs Service on October
4, 1941, arrested two men at Buffalo, N. Y., and seized $10,000 in
gold which they attempted to smuggle from Canada into the United
States. Investigation disclosed that these men and their Canadian
accoiriplices had stolen almost $3,000,000 ih gold from niines in Ontario
and Quebec and were smuggling it into the United States for sale.
The accomplices also were arrested, and all were convicted in the
courts of both countries.
Following the appearance in Tacoma, Wash., in. December 1941 of
a deceptive bogus $20 note. Secret Service Agents identified it as the
work of a counterfeiter who, up to 1939, had served 20 years in United
States prisons for counterfeiting. This man was arrested by cooperate
ing Mexican police in Mexico City on March 26, 1942, with a complete
plant for the manufacture of $50 and. $100 notes and Mexican currency.
As a result of the Secretary's directive-of January 1, 1937, t h a t
.more intensive efforts be extended by the Secret Service towards the
suppression of counterfeiting, losses suffered by victims of counterfeit notes totalled $47,882, a drop of 93 percent from the yearly average during the period 1933 to 1936, prior to the Secret Service program
of Crime Prevention Through Education. In this program, the Secret
Service received hearty cooperation from publishers of school text-




REPORT OF THE SECRETARY OF THE TREASURY

199

books, who are: incorporating in many such books information about
.counterfeit money and how to detect it. I t is expected that the texts
will bef widely aidopted by schools and will be supplemented by the
Secret Service motion picture '^Know Your Money," which has already been seen by some 4,500,000 students and more than 3,000,000
merchants j bankers,' and other adult groups. The Secret Service
^^Know Your Money" booklet, already in use in schools, was formally,
endorsed by the National Education Association in October 1941.
Educational Secret Service displays are on view in many parts of
the country and the program of Crime Prevention Through Education has even been carried to the comic strips.
As a part of the crime prevention program and as a service to the
banks of the country, the Secret Service early in 1942, in cooperation
with the Board of Governors of the Federal Reserve System, distributed to all banks a card index describing all counterfeit bUls
which appeared in circulation since the size of United States currency
was changed in 1929. The index is kept current and makes it possible
for every bank in the country to identify quickly any bogus biU. An
order issued January 29, 1942, authorizes all banks and banking institutions of any nature whatsoever, organized under general or special
Federal or State statutes, to take possession of and deliver to the
Secret ^ Service all counterfeit money presented at their places of
business.
Following the attack on Pearl Harbor, the Secret Service and other
Treasury agencies cooperated with the Foreign Funds Control Unit
of the Treasury Department in impounding and freezing the assets
of the enemy and organized a force of guards to insure the safety of
the seized property.
The White House DetaU of Secret Service Agents assigned to protect
the President has necessarUy been augmented since the declaration of
war, and the agents have received special instruction in the use and
effect of war gases and bombs. Members of the White House Police
and of the Secret Service Uniformed Force have also had simUar
training.
There were. 22 new counterfeit note issues detected during the
year, 9 of which warranted the distribution of descriptive warning
circulars.
" Agents captured 34 metal plates for the printing of counterfeit
obligations, including one brass plate bearing 25 impressions for
bogus war savings stamps; 23 plates with impressions of the Treasury
Seal, serial numbers, and portraits from paper money; 23 film negatives for counterfeit obligations, and 4 film negatives for the Treasury
Seal, serial numbers, and portraits; 12 steel dies, 252}^ plaster molds,
.and 26.K metal molds for the manufacture of counterfeit coins; and
other counterfeiting paraphernalia.
Agents seized counterfeit and altered notes with a total representative value of $72,950. Of this amount, $10,441 was seized before
it reached chculation, and of the balance only $47,882 represented
losses suffered by victims of passers of counterfeit notes.
Counterfeit coin seizures had a representative value of $39,807,
of which $5,289 was captured before it reached circulation. Of the
balance, only $28,768 represented losses to the public.
During the year there were 26,821 cases disposed of. In the 1,898
cases brought to trial, convictions were obtained in 97.6 percent of



200

RE-PORT d F T H E SECRETARY OF THEi TREASURY

the cases, as compared to 97.1 percent in convictions during the
previous year. Fines in criminal cases totaled $32,988 and imprisonments totaled 1,692 years, 3 months, 3 days, and 5 hours. Additional sentences totaling 2,260 years and 7 days were suspended or
probated.
The Secret Service investigated 11,985 cases relating to forged
Government checks.
•
The following tables present data relating to the seizure of counterfeit money and other work of the Secret Service during the fiscal
year.
•
Counterfeit money seized, fiscal years 1941 and 1942
Increase or
decrease (—)

Percentage
increase or
decrease ( - )

$62, 510
10, 441

- $ 2 8 , 587
-7,873

-31.38
-42.99

109, 411

72, 951

- 3 6 , 460

-33.32

49, 866
2, 427

34, 518
5,289

-15,348
2, 862

- 3 0 . 78
117.92

52, 293

39,807

-12,4.86

-23.88

161, 704

112, 758

- 4 8 , 946

-30.27

1941

$91,097
18, 314

Counterfeit and altered notes seized:
After being circulated
Before being circulated
Total
Counterfeit coins seized:
After being circulated
Before being circulated
Total

-

- -

._

...

G r a n d total •

1942

Number of investigations of criminal and noncriminal activities, fiscal years 1941
and 1942
1941

C r i m i n a l cases:
M a k i n g or passing: .
Counterfeit notes
Counterfeit coins
'.
Altered currency . .
Forgery of G o v e r n m e n t checks
stolen or altered b o n d s . . - .
Violation of Gold Reserye A c t
Violation of F a r m L o a n Act
Miscellaneous offenses

. .
-




-

- - -

-130
-137
26
-2,176
-17
-20
-13
3,612

-17.29
-18.00
17.69
-15.37
- 1 9 32
— 13.16
—40 63
180. 42

19, 240

1,145

6.33

2,987
548

..

Total

G r a n d total

Percentage
increase or
decrease (—)

622
624
173
11, 985
71
132
19
5,614

5,785
1, 796

2,798
1,248

93. 67
227 74

752
761
147
14,161
88
152
32
2,002

'

Increase or
decrease ( - )

18, 095

...."
.

N o n c r i m i n a l cases:
Personnel (applicants) . . Miscellaneous
. . .
Total

1942

.

3,535

7,581

4,046

114 46

21, 630

26, 821

5,191

24 00

REPORT OF THE SECRETARY OF THE TREASURY

201

Number of arrests and cases disposed of, fiscal years 1941 and 1942
1941

.Arrests for:
• M a k i n g or passing: •' •
Counterfeit n o t e s :
Counterfeit coins
Altered obligations
F o r g e r y of G o v e r n m e n t checks
Violation of Gold Reserve Act
Violation of F a r m L o a n Act
Miscellaneous' offenses

.-

-..
.

-81
-354
-9
-688
2
66

27.27

1,885

-1,064

- 3 6 . 08

119
211
46
1,173
11
4
289

-70
-185
-16
-563
-5
-2
122

-37.04
- 4 6 . 72
-25.81
-32.43
- 3 1 25
-33.33
73.05

-719
-31
-43.

-27.95
- 4 0 . 79
- 1 8 86

-793

- 2 7 57

.

2,572
76
228

T o t a l convictions
-Acquittals
Dismissed, not indicted, or died before trial
T o t a l cases disposed of

117
200
55
1,171
27
7
308

189
396
62
1,736
16
6
167

_

C a s e s disposed of:
Convictions in connection w i t h :
Counterfeit notes
Counterfeit coins
Altered obligations
Forgery of G o v e r n m e n t checks
Violation of Gold Reserve Act
Violation of F a r m Loan Act
Miscellaneous offenses

Percentage
• increase or
decrease ( - )

2,949

. - -

..-

Increase or
decrease ( - )

198
554
64
1,859
25
7
242

. .

Total arrests..-

1942

•

1,853
45
185

2,876

2,083

.

-40.91
-63.90
— 14.06
-37.01
8.00

OFFICE OF THE TAX LEGISLATIVE COUNSEL

The Office of the Tax Legislative Counsel assists the Secretary and
those persons designated by him to supervise the tax program of the
Treasury in planning and coordinating the legislative recommendations of the Treasury Department with respect to internal revenue and
in drafting internal revenue legislation. This Office represents the
Department before the congressional committees in matters involving
internal revenue legislation.
During the fiscal year 1942, the efforts of the Office of the Tax Legislative Counsel have been directed toward the formulation of a war
tax program which will provide sufficient revenue for the successful
prosecution of the war and will distribute the burden equitably among
all portions of the population and upon the various types of business
enterprise. The principal revenue legislation in the fiscal year 1942
was the Revenue Act of 1941, which increased substantially the rates
of most of the various Federal taxes. The Office also began an extensive study of the administration of the internal revenue laws in
order to be of assistance to the Congress in the preparation of the
current revenue revision to be enacted as the Revenue Act of 1942.
The act postponing income tax payments of persons in the military
or naval forces, and the act extending the time for applications, and
•changing the procedure, for certification of national defense facilities
and contracts for amortization purposes, exemplify the legislation
affecting internal revenue which was drafted with the assistance of the
Office of the Tax Legislative Counsel.
The Tax Legislative Counsel participated in numerous conferences
with representatives of the War Production Board, the War Department, the Navy Department, and the Maritime Commission upon the
question of excessive profits derived from war contracts and renegotiation of contracts. The Office supervised the preparation of reports



202

REPORT OF THE SECRETARY OF THE TREASURY

by the Treasury upon bills pending before congressional committees
and represented the Departm.ent in committee hearings on m.any of
the bills. Other duties included assistance in the preparation of regulations interpreting the Internal Revenue Code, review of Treasury
decisions amending existing regulations, and handling of a large
volum.e of correspondence consisting of suggestions for improvement
of the tax structure knd inquiries concerning existing provisions of
the tax law.
DIVISION OF TAX RESEABCH

The Division of Tax Research in the Office of the Secretary conducts research in the economic aspects of taxation essential to the
formulation of Treasury tax policy. In this connection the Division
prepares reports and studies and conducts surveys for the use of the
Secretary of the Treasury and other designated officials of the Treasury
Department. When requested, it also provides information on
various aspects of taxation and tax policy for the use of the Committee on Ways and Means of the House of Representatives, the Committee on Finance of the Senate, the Joint Committee on Internal
Revenue Taxation, and the several Federal executive and administrative agencies'.
The research functions consist primarily of making basic surveys of
the tax problems of the Federal Government and devising alternative
methods of meeting the Government's revenue requirements. Comprehensive analyses are made of the relationship of revenue yields to
prospective revenue requirements, the desired economic objectives
of the tax system, and the economic effects of taxation. Individual
taxes are studied with relation to their effects on the particular groups
of taxpayers involved, the equitable treatment of taxpayers within a
particular group, the administrative aiid compliance problems inherent
in the tax, and the integration of the particular tax with the tax system
as a whole. Studies are made of the distribution of the tax burden of
specific taxes, the total Federal tax load, and the combined Federal,
State, and local burden. The inter-relationships of-Federal, State,
and local taxes are studied from the broader view of intergovernmental fiscal relations. Specific State and local taxes are also studied
to determine the joint eft'ect of such taxes and Federal taxes and also
with a view to giving the Federal Government the benefit of State and
local tax expeiience. Similar studies are made of foreign tax systems
and selected taxes in foreign countries for the purpose of comparing
tax policies and obtaining the benefit of foreign experience. In a
limited number of cases field surveys are made for the purpose of supplementing office research.
After Pearl Harbor the need of transforming our economy to an
all-out war basis required drastic steps in the field of taxation. The
existing tax svstem would have provided revenue sufficient to meet
only a small fraction of the necessary expenditures. Moreover, the
growing pressure on prices of rising money incomes in the face of a
declining volume of civilian goods and services pointed to the necessity of fiscal measures to maintain the stability of the economy. The
development of the tax system to meet the needs of wartime fiscal
policy thus became a major problem.
Against this background of requirements of the tax system, the
Division of Tax Research has had to expand greatly the scope of its



REPORT OF THE SECRETARY OF THE TREASURY

203

studies. Changes in economic conditions, shifts in the distribution
of income, and the need for increasing production have presented new
problems and rendered tax problems more difficult. Additional
research has been necessary in two principal directions: First, the
development of new taxes to meet special war revenue needs in such
a manner as to facilitate the conversion of industry to war production
and to contribute to the control of inflation; and second, the adjustment of existing taxes to meet the requirements of'a nation at war.
Increases in tax rates have intensified the problems of equitable
.treatment of taxpayers and of maintaining incentives for production.
Equity considerations have required that attention be given to the
elimination of provisions affording unduly favorable treatment to
certain classes of taxpayers as well as to the provision of relief for
undue hardship in other cases. The imposition of higher taxes on
corporation incomes, particularly very high excess profits tax rates,
have made it necessary to reexamine many provisions of the law
relating to the definition of taxable income and to devise special
provisions to prevent the taxation of fictitious income. The need of
providing special relief for the purpose of avoiding undue hardship
or providing incentives needed for war production has greatly complicated the problems of business taxation. In the case of individuals,
it has been necessary to give greatly increased attention to the fixed
commitments of taxpayers and to variations in individual expenditure
patterns.
The Director and members of the Division assist in the presentation
of the Treasury's tax programs to the congressional committees and
confer with members of these committees and the staff of the Joint
Committee on Internal Revenue Taxation for the purpose of explaining and developing research on various tax matters. Members of the
Division also participate in conferences with taxpayers who desire to
call special problems to the attention of the Treasury Department.
The Division also is responsible for the assembly and publication of
aU statistical information pertaining to Federal taxation, and in this
connection exercises general supervision over the work of the
Statistical Section of the Income Tax Unit in the Bureau of Internal
Revenue, Correspondence relating to taxation is handled by the
Division.
WAR SAVINGS STAFF

On April 15, 1942, by Treasury Department Order No. 45, the
name of the Defense Savings Staff was changed to War Savings Staff.
Throughout the year, the organization continued its work of promoting the sale of United States savings bonds 'and stamps. Sales
of bonds amounted to slightly more than $6 billions. Stamp sales
amounted to $308 mUlions.










EXHIBITS

205




PUBLIC DEBT
Issues and redemptions of Treasury bonds and Treasury notes
Exhibit 1
Offering of Treasury notes of Tax Series A-1943 and Tax Series B-1943
On July 22, 1941, Secretary of the Treasury Morgenthau offered for sale two
issues of nontransferable Treasury notes of Tax Series A-1943 and Tax Series
B-1943, both acceptable at par and accrued interest in payment'of Federal income taxes. These notes were on sale from August 1 to December 31, 1941.
[Department Circular No. 667. Public Debt]
TREASUKY DEPARTMENT,

-

Washington, July 22,• 1941.
I. OFFERING OF NOTES

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, offers for sale, to the people of the United States,
through the Federal Reserve Banks, at par and accrued interest, two issues of
nontransferable notes of the United States, designated Treasury notes of Tax
Series A-1943 and Treasury notes of Tax Series B-1943. As hereinafter provided, the notes of both series will be acceptable at par and accrued interest in
payment of Federal income taxes: Provided, however, that not exceeding $1,200
principal amount of notes of Tax Series A-1943, and the accrued interest thereon,
will be accepted from any one owner in any period of twelve consecutive months
in payment of taxes due from such owner. If not presented in payment of
taxes, the notes will be redeemable at the purchase price as hereinafter provided.
2. Descriptions of the notes of both series and their terms are hereinafter fully
set forth. The notes will be placed on sale beginning August 1, 1941, and the
sale will continue until December 31, 1941, unless earlier terminated, as to either
or both series, by the Secretary of the Treasury.
II. DESCRIPTION OF NOTES

1. General.^—The notes of both series will be dated August 1, 1941, and will
mature August 1, 1943. The owner's name and address and the date of issue
will be entered on each note at the time of its issue by a Federal Reserve Bank.
The month in which payment is received by a Federal.Reserve Bank pr branch,
or by the Treasurer of the United States, will determine the purchase price and issue
date of each note., The notes may not be transferred. No hypothecation of the
notes on any account will be recognized by the Treasur}^ Department, and they
will not be accepted to secure deposits of public money. Except as herein provided, the notes will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing bonds and notes of the United
States.
2, Denominations and interest.^—The notes of Tax Series A-1943 will be issued
in denominations of $25, $50, and $100, and interest thereon will accrue during
each month after August 1941 in the amount of 16 cents on each $100 principal
amount, that is, 4 cents on each $25, 8 cents on each $50, and 16 cents on each
$100 denomination of note. The notes of Tax Series B-1943 will be issued in
denominations of $100, $500, $1,000, $10,000, and $100,000, and interest thereon
will accrue each month after August 1941 in the amount of 4 cents on each $100
principal amount, that is, 4 cents on each $100, 20 cents on each $500, 40 cents on
each $1,000, $4 on each $10,000, and $40 o-n each $100,000 denomination of
note. In no case, however, shall interest accrue beyond the month in which the
note is presented in payment of taxes, or beyond its maturity. Exchanges of
1 Amended, see p. 212.
2 Amended, see p. 211.
207
487543—43

15




208

REPOiRT OF T H E SEGRETARY OF T H E TREASURY

authorized denominations of each series from higher t o lower, b u t n o t from lower
t o higher, m a y be arranged a t t h e Federal Reserve Bank of issue.
3. Purchase price, and tax-payment value.—The notes of both series will be sold
a t p a r during August 1941, a n d will be sold a t par a n d accrued interest during
each subsequent m o n t h while they remain on sale, t h e purchase price for a note
of any denomination of either series advancing each m o n t h after August 1941 in
the' a m o u n t of one month's, interest on t h a t note. Tables, showing for each
m o n t h from August 1941 to August 1943, for each denomination of each series,
t h e principal a m o u n t of t h e notes with accrued interest added, are appended to
this circular. T h e t o t a l shown for any denomination for a n y m o n t h — A u g u s t
t h r o u g h December 1941—while t h e notes remain on sale, is t h e purchase price,
or cost, of t h e note, during t h a t m o n t h . Also, the t o t a l shown for any denomination for any m o n t h thereafter is t h e t a x - p a y m e n t value, or t h e a m o u n t a t
which t h e note will be acceptable during t h a t m o n t h in p a y m e n t of Federal
income taxes as herein provided.
4. Acceptability i n payinent of taxes.—The notes of both.series (but not more
t h a n $1,200 principal a m o u n t of notes of Tax Series A-1943 from any one owner
•in any period of twelve consecutive months) will be acceptable, a t par and accrued interest, in p a y m e n t of Federal income taxes (current a n d back personal
a n d corporation taxes, and excess-profits taxes). T h e conditions of presentation,
surrender and acceptance of t h e notes in p a y m e n t of such taxes are set forth in
section IV of this circular.
5. Payment or redemption for cash.—The notes of either series m a y not be
called by the Secretary of t h e Treasury for redemption prior to m a t u r i t y . If
such notes are not presented in p a y m e n t of t a x e s : (1) t h e y will be payable a t
m a t u r i t y , or '(2) they will be redeemable prior to m a t u r i t y , a t t h e owner's option
a n d request, as hereinafter provided in section V a n d in either case p a y m e n t will
be m a d e only at t h e price paid for t h e notes.
.
6. Taxation.—Income derived from t h e notes shall be subject t o all Federal
taxes, now or hereafter imposed. T h e notes shall be subject to estate, inheritance,
gift, or other excise taxes, whether Federal or State, b u t shall be exempt from all
taxation now or hereafter imposed on t h e principal or interest thereof by any
State, or any of t h e possessions of t h e United States, or by any local taxing
authority.
III. PURCHASE OF NOTES

1. Applications and paii/?neni.—Applications will be received by t h e Federal
Reserve Banks and branches, a n d by t h e Treasurer of t h e United States, Washington, D . C. Banking institutions generally m a y submit applications for account of customers, b u t only t h e Federal Reserve Banks and t h e Treasurer of
t h e United States are authorized to act as official agencies. Every application
m u s t be accompanied by p a y m e n t in' full, a t p a r and accrued interest to the
m o n t h in which p a y m e n t is received b y a Federal Reserve Bank or branch, or
t h e Treasurer of t h e United States. Any form of exchange, including personal
checks, will be accepted subject to collection, and should be drawn to the order
of t h e Federal Reserve Bank or of the Treasurer of t h e United States, as t h e case
m a y be. Any depositary, qualified p u r s u a n t to t h e provisions of Treasury D e p a r t m e n t Circular No. 92 (revised F e b r u a r y 23, 1932, as supplemented) will be
permitted to make p a y m e n t by credit for notes applied for on behalf of itself or
its customers up to any a m o u n t for which it shall be qualified in excess of existing
deposits.
'
2." Reservations.—The Secretary- of t h e Treasury reserves t h e right to reject
any application in whole or in part, a n d to refuse to issue or permit to be issued
hereunder any notes in any case or in any class or classes of cases if he deems
such action to be in t h e public interest, and his action in any such respect shall
be final. If an application is rejected, in whole or in part, any p a y m e n t received
therefor will be refunded. T h e Secretary of t h e Treasury, in his discretion, m a y
designate agencies other t h a n those herein provided for t h e sale of, or for t h e
handling of applications for. Treasury notes to be issued hereunder.
3. Delivery of notes.—Upon acceptance of full-paid applications, notes will be
duly issued and, unless delivered in person, will be delivered, by registered mail
within t h e . Continental United States, t h e Territories and Insular Possessions of
t h e United States, the Canal Zone, and t h e Philippine Islands. No deliveries
elsewhere will be made.
4. Form of application.—In applying for notes under this circular, -care should
be exercised to specify whether those of Tax Series A-1943 or Tax Series B-1943
are desired, and there m u s t be furnished t h e n a m e and address of the individual.




REPORT OF T H E SEiCRETARY OF T H E TREASURY

209

corporation, or other entity in which t h e notes are to be issued; and if address for
t h e delivery of t h e notes is different, appropriate instructions should be given.
T h e n a m e should be in t h e same form as t h a t used in t h e Federal income tax
r e t u r n of t h e purchaser. T h e use of an official application form is desirable, b u t
not necessary. Appropriate forms m a y be obtained on application to any Federal
Reserve Bank or branch, and banking institutions generally will supply such forms.
IV. PRESENTATION IN P A Y M E N T OF TAXES

1. After three m o n t h s from m o n t h of purchase (as shown by t h e date of issue
on each note), b u t n o t before J a n u a r y 1, 1942, during such time, and under such
rules a n d regulations as the Commissioner of I n t e r n a l Revenue, with the approval
of.the Secretary of t h e Treasury, shall prescribe, notes issued hereunder in t h e
n a m e of a taxpayer (individual, corporation, or other entity) m a y be presented
a n d surrendered by such taxpayer, his agent, or his estate, to t h e Collector of
I n t e r n a l Revenue to whom t h e tax return is made, and will be receivable by t h e
Collector a t par and accrued interest from August 1941 to the month, inclusive
(but no accrual beyond August 1943), in which presented in p a y m e n t of any Federal income taxes (current and back personal and corporation taxes, and excessprofit taxes) assessed against t h e original purchaser or his estate, b u t not more
t h a n $1,200 principal a m o u n t of notes of Tax Series A-1943, and t h e accrued
interest thereon, m a y be accepted by t h e Collector in any period of twelve ,consecutive m o n t h s in p a y m e n t of Federal income taxes due from such owner. ' T h e
notes m u s t be forwarded to t h e Collector a t t h e risk and expense of t h e owner,
and, for his protection, should be forwarded by registered mail, if not presented
in person.
V. CASH R E D E M P T I O N A T OR P R I O R TO

MATURITY

1. General.—Any Treasury note of Tax Series A-1943 or Tax Series B-1943
will be redeemed for cash a t t h e purchase price a t or before m a t u r i t y . Notes of
Tax Series A-1943 m a y be redeemed before m a t u r i t y without advance notice,
b u t notes of Tax Series B-1943 m a y be redeemed before m a t u r i t y only after
60 days from date of issue and on 30 days' advance notice. T h e timely surrender
of a note of Tax Series B-1943, bearing a properly executed request for p a y m e n t ,
will be accepted as constituting t h e advance notice required hereunder.
2. Execution of request for payment.—The owner in; whose n a m e t h e note is
inscribed m u s t appear before one of t h e officers authorized by t h e Secretary of
t h e Treasury to witness and certify requests for payment, establish his identity,
a n d in t h e presence of such officer sign t h e request for paj^ment appearing on t h e •
back of t h e note, adding t h e address to which check- is to be mailed. After t h e ,
request for p a y m e n t has been so signed, t h e witnessing officer should complete
a n d sign t h e certificate provided for his use.
. 3. Officers authorized to witness and certify requests for payment.—Any officers
authorized to witness and certify requests for p a y m e n t of United States savings
bonds, as set forth in Treasury D e p a r t m e n t Circular No. 530, F o u r t h Revision,
as amended, are hereby authorized to witness a n d certify requests for cash redemption of Treasury! notes issued under this circular. Such officers include United
States postmasters, certain other post office officials, a n d t h e executive officers ofall banks and t r u s t companies incorporated in t h e United States or its organized
territories, including officers a t branches thereof who are certified to the Treasury
D e p a r t m e n t as executive officers.
4. Presentation and surrender.—Notes bearing properly executed requests for
p a y m e n t m u s t be presented a n d surrendered t o t h e Federal Reserve Bank of issue,
a t t h e expense and risk of t h e owner. For»the owner's protection, notes should
be forwarded by registered mail, if not presented in person.
5. Disability or death.—In case of t h e disability or death of t h e pwner, and t h e
notes are not to be presented in p a y m e n t of Federal income taxes due from his
estate, instructions should be obtained from t h e Federal Reserve Bank of issue
before t h e request for p a y m e n t is executed, or t h e notes presented.
6. Partial redemption.—Partial cash redemption of notes of either series, corresponding to an authorized denomination, m a y be m a d e in t h e same manner, appropriate changes being m a d e in t h e request 'for p a y m e n t . I n case of partial r e d e m p tion of a note, the remainder will b e reissued with t h e same date of issue as t h e
note surrendered.
7. Payment.—Payment of any note, either a t m a t u r i t y or on redemption before
m a t u r i t y , will be made only by t h e Federal Reserve Bank t h a t issued t h e note,
and will be made by check drawn to t h e order of t h e owner, and mailed to t h e




210

REPORT OF THE SECRETARY OF THE TREASURY

address given in his request for p a y m e n t . I n any case, p a y m e n t will be made a t
t h e purchase price of t h e "note, t h a t is, a t p a r a n d accrued interest (if any) paid
a t t h e time of purchase.
VI. G E N E R A L PROVISIONS

1. Federal Reserve Banks, as fiscal agents of t h e United States, are authorized
to perform such services or acts as m a y be appropriate a n d necessary under t h e
provisiohs of this circular, a n d under a n y instructions given by t h e Secretary of
t h e Treasury.
2. T h e Secretary of t h e Treasury m a y a t any time or from time t o time supplem e n t or amend t h e terms of this circular, or of any a m e n d m e n t s or supplements
thereto, a n d m a y a t a n y t i m e or from time t o time prescribe a m e n d a t o r y rules
and regulations governing t h e offering of t h e notes, information as t o which will
promptly be furnished t o t h e Federal Reserve Banks.
HENRY

MORGENTHAU,

Jr.,

Secretary of the Treasury.
TREASURY

NOTES

TAX S E R I E S

A-1943

Purchase price and t a x - p a y m e n t value during successive m o n t h s
Table, showing for each month.from August 1941 to August 1943, for. notes of each
denomination, the principal amount with accrued interest added. The total shown
for any denomination, for any month—August through December 1941—while the
notes remain on sale, is the purchase price, or cost, of the note during that month.
Also, the total shown for ^any denomination for any month thereafter is the tax-payment
value, or the amount at which the note will be acceptable during that month i n payment
of Federal income taxes.
PURCHASE PRICE

$25
A u g u s t 1941 . S e p t e m b e r 1941
October 1941

$50

$100

$25.00
25.04
25.08

$50. 00
50. 08
50.16

$100.00
100.16
100. 32

>

$25
N o v e m b e r 1941..
D e c e m b e r 1941

$50

$100

$25.12
25.16

$50. 24
50.32

$100 48
100 64

$25. 60
25.64
25.68
25.72
25.76
25.80
25.84
25.88
25.92
25.96

$51. 20
51.28
51. 36
51.44
51.52
51.60
51.68
51.76
51.84
51.92

$102.40
102. 56
102. 72
102. 88
103.04
103. 20
103.86
103. 52
103.68
103.84

TAX-PAYMENT VALUE

J a n u a r y 1942...
F e b r u a r y 1942..
M a r c h 1942
April 1942
M a y 1942
J u n e 1942
J u l y 1942..
A u g u s t 1942....
S e p t e m b e r 1942.
October 1942_.-




$25. 20
25.24
25.28
25.32
25.36
25.40
25.44
25.48
25.52
25.56

$50. 40
50.48
50.56
50.64
50.72
50. 80
50.88
50.96
51.04
51.12

$100.80
100.96
101.12
101.28
101. 44
101. 60
101. 76
101.92
102. 08
102. 24

N o v e m b e r 1942
D e c e m b e r 1942.
J a n u a r y 1943...
F e b r u a r y 1943.
M a r c h 1943
April 1943
M a y 1943
J u n e 1943
J u l y 1943
A u g u s t 1943

REPORT OF T H E SEiCKEfTARY OF T H E TREASTJRY
TREASURY NOTES

211

TAX SERIES B-1943

Purchase price a n d t a x - p a y m e n t value during successive m o n t h s
Table, showing for each month from August 1941 to August 1943, for notes of each
denomination, the principal amount with accrued interest added. The total shown
for any denomination, for any month—August through December 1941—while the
notes remain on sale, is the purchase price, or cost, of the note during that month. .
Also, the total shown for any denomination for any month thereafter is the tax-payment
value, or the amount at which the note will be acceptable during that month in payment
of Federal income taxes.
PURCHASE PRICE
$500

$100
August 1941
September 1941
October 1941..
N o v e m b e r 1941
D e c e m b e r 1941

..

$100.00
100.04
100.08
100.12
100.16

$500.00
500. 20
500.40
500.60
500.80

$1,000

$10,000

$100,000

$1,000.00
1, 000.40
1,000.80
1,001.20
1,001.60

$10,000
10,004
10,008
10,012
10,016

$100,000
100,040
100,080
100,120
100,160

$1, 002.00
1,002.40
1,002.80
1, 003. 20
1,003. 60
1,004.00
1,004.40
1,004.80
1,005. 20
1,005. 60
1,006.00
1,006.40
1,006.80
1,007.20
1,007. 60
1, 008.00
1, 008. 40
1, 008.80
1, 009. 20
1,009. 60

$10,020
10,024
10,028
10, 032
10.036
10,040
10,044
10,048
10,052
10,056
10, 060
10,064
10,068
10,072
10, 076
• 10,080
10,084
10, 088
10,092
10, 096

$100, 200
100, 240
100, 280
100, 320
100, 360
100, 400
100, 440
100, 480
100,520
100.560
100, 600
100,640
100, 680
100.720
100, 760
100, 800
100,840
100,880
100, 920
100,960

TAX-PAYMENT VALUE

January 1942...
February 1942..
March 1942
April 1942
May 1942.......
June 1942
July 194^
August 1942
September 1942.
October 1942....
November 1942.
December 1942.
January 1943...
February 1943..
March 1943
April 1943
May 1943
Jmie 1943
Julym3
August 1943

$100. 20
100. 24
100.28
100. 32
100. 36
100.40
100. 44
100. 48
100. 52
100. 56
100. 60
100. 64
100. 68
100.72
100. 76
100.80
100.84
100.88
100.92
100.96

$501.00
501.20
501.40
501. 60
501.80
502.00
502. 20
502. 40
502. 60
502.80
503,00
503. 20
503.40
503.60
503.80
504. 00
504. 20
504.40
504.60
504.80

[First amendment to Department Circular No. 667]
TREASURY

DEPARTMENT,

Washington, August 7, 19411. Section I I (2) of D e p a r t m e n t Circular N o . 667, dated July 22, 1941, is
hereby amended t o read as follows:
2. Denominations and interest.—The notes of T a x Series A-1943 will be issued
in denominations of $25, $50, a n d $100, a n d interest thereon will accrue during
each m o n t h after August 1941 in t h e a m o u n t of 16 eents on each $100 principal
a m o u n t , t h a t is, 4 cents on each $25, 8 cents on each $50, a n d 16 cents on each
$100 denomination of note. T h e notes of T a x Series B-1943 will be issued in
denominations of $100, $500, $1,000, $10,000, $100,000, $500,000, and $1,000,000,
a n d interest thereon will accrue each m o n t h after August 1941 in t h e a m o u n t of
4 cents on each $100 principal amount, t h a t is, 4 cents on each $100, 20 cents on
each $500, 40 cents on each $1,000, $4 on each $10,000, $40 on each $100,000,
$200 on each $500,000, a n d $400 on each $1,000,000 denomination of note. I n
no case, however, shall interest accrue beyond t h e m o n t h in which t h e note is
presented in p a y m e n t of taxes, or beyond its m a t u r i t y . Exchanges of authorized
denominations of each series from higher t o lower, b u t not from lower t o higher,
m a y be arranged a t t h e Federal Reserve Bank of issue.




H E N R Y MORGENTHAU,

Jr.,

Secretary of the Treasury.

212

REPOiRJT OF T H E SEiCRETARY OF T H E TREASURY
[Second amendment to Department Circular No. 667]
TREASURY DEPARTMENT,

Washington, October 21, 1941..
1. Section I I (1) of D e p a r t m e n t Circular N o . 667, dated July 22, 1941, is
hereby amended t o read as follows:
1. General.—Tlie notes of both series will be dated August 1, 1941, a n d will
m a t u r e August 1, 1943. T h e owner's name and address a n d t h e date of issue
w i l l b e entered on each note a t t h e time of its issue by a Federal Reserve Bank.
T h e m o n t h in which p a y m e n t is received by a Federal Reserve B a n k or-branch,
or b y t h e Treasurer of t h e United States, will determine t h e purchase price a n d
issue date of each note. T h e notes m a y not be transferred except in the case
of notes issued in t h e name of a parent corporation, in which case t h e y m a y be
reissued in t h e name of a subsidiary of t h a t corporation with t h e same dating as
t h e notes surrendered, upon presentation t o t h e Federal Reserve B a n k of issue;
for t h e purposes of this p a r a g r a p h a subsidiary corporation is defined as one
more t h a n 50 percent of whose stock with voting power is held by another corporation. No hypothecation of t h e notes on a n y account will be recognized by
t h e Treasury D e p a r t m e n t , and they will not be accepted t o secure deposits of
public money. Except as herein provided, t h e notes will be subject t o t h e general regulations of t h e Treasury D e p a r t m e n t , now or hereafter prescribed, governing bonds and notes of t h e United States.
H E N R Y IVIORGENTHAU, Jr.,

, Secretary of the Treasury.
Exhibit 2
Offering of 2% percent Treasury bonds of 1967-72

Q

On October 9, 1941, Secretary of t h e Treasury Morgenthau offered for cash,
subscription $1,200,000,000, or thereabouts, of 2}^ percent • Treasury bonds of
1967-72, and at t h e same time offered t h e holders of 1}^ percent Treasury notes
of Series C-1941, matiiring December 15, 1941, t h e privilege of exchanging
their m a t u r i n g notes for additional a m o u n t s of t h e Treasury^ bonds of 1967-72.
A further additional a m o u n t of $100,000,000 could be sold t o Governrrient inv e s t m e n t accounts. I n t h e related press release it was s t a t e d t h a t $204,425,400
of Treasury notes of Series C - 1 9 4 i were t h e n outstanding.
. <
[Department Circular No. 670. Public Debt]
TREASURY DEPARTMENT,

Washington, October 9, 1941.
I. OFFERING OF BONDS

1. T h e Secretary of t h e Treasury, p u r s u a n t t o t h e a u t h o r i t y of t h e Second
Liberty Bond Act, as amended, invites subscriptions, a t p a r and accrued interest,
from t h e people of t h e United States for 2>^ percent bonds of t h e United States,
designated Treasury bonds of 1967-72. T h e a m o u n t of t h e public offering is
$1,200,000,000, or thereabouts, with t h e right reserved t o t h e Secretary of t h e
Treasury to increase t h e offering by an a m o u n t sufficient t o accept all subscriptions
for which Treasury notes of Series C-1941, m a t u r i n g December 15, 1941, are
tendered in p a y m e n t and accepted. I n addition t o t h e a m o u n t offered for public
subscription, $100,000,000, or ^thereabouts, of these bonds m a y be allotted t o
Government investment accounts against cash p a y m e n t .
II. DESCRIPTION OF BONDS

1. T h e bonds will be dated October 20, 1941, and will bear interest from t h a t
d a t e a t t h e r a t e of 2J^ percent per annum, payable on a semiannual basis on March
15 and September 15 in each year until t h e principal a m o u n t becomes payable.
T h e y will m a t u r e September 15, 1972, b u t m a y be redeemed a t t h e option of t h e
United States on and after September 15, 1967, in whole or in part, a t p a r and
accrued interest, on any interest day or daj^s, on 4 m o n t h s ' notice of redemption
given in such m a n n e r as t h e Secretary of t h e Treasury shall prescribe. I n case
of partial redemption t h e bonds t o be redeemed will be determined by such
method as m a y be prescribed by t h e Secretary of t h e Treasury. F r o m t h e d a t e
of redemption designated in any such notice, interest on t h e bonds called for
redemption shall cease.



REPORT OF THE SECRETARY OF THE TREASURY

213

2. The income derived from the bonds shall be subject to all Federal taxes, now
or hereafter imposed. The bonds shall be subject to estate, inheritance, gift, or
other excise taxes, whether Federal or State, but shall be exempt from.all taxation
now or hereafter imposed on the principal or interest thereof by any State, or
. any of the possessions of the United States, or by any local taxing authority.
3. The bonds will be acceptable to secure deposits of public moneys, but will
not bear the circulation privilege and will not be entitled to any privilege of
conversion.
4. Bearer bonds with interest ^coupons attached, and bonds registered as to
principal and interest, will be issued in denominations of $50, $100, $500,
$1,000, $5,000, $10,000, and $100,000. Provision will be made for the interchange of iDonds of different denominations and of coupon and registered bonds,
and for the transfer of registered bonds, under rules and regulations prescribed
by the Secretary of the Treasury.
5. The bonds will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing IJnited States bonds.
III. SUBSCRIPTION AND ALLOTMENT.

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. Subscribers must agree not to
sell or otherwise dispose of their subscriptions, or of the securities which may be
allotted thereon, prior to the closing of the subscription books. Banking institutions generally may submit subscriptions for account of customers, but only the
Federal Reserve Banks and the Treasury Department are authorized to act.as
official agencies. Others than banking institutions will not be permitted to enter
subscriptions except for their own account. Cash subscriptions from banks and
trust companies for their own account will be received without deposit but will be
restricted in each case to an amount not exceeding one-half of the combined capital
and- surplus of the subscribing bank or trust company. Cash subscriptions from
all others must be accompanied by payment of 10 percent of the amount of bonds
applied for.
,
.
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part, to allot less than the amount of bonds applied for, and to close
the books as to any or all subscriptions at any time without notice; and any.
action he may take in these respects shall be final. Subject to these reservations,
subscriptions in payment of which Treasury notes of Series C-1941 are tendered
will be allotted in full. Allotment notices will be sent out promptly upon allotment, and the basis of the allotment will be publicly announced.
IV. PAYMENT

1. Payment at par and accrued interest, if any, for bonds allotted on cash
subscrip^tions hereunder must be made or completed on or before October 20,
1941, or on later allotment. In every case where payment is not so completed,
the payment with application up to 10 percent of the amount of bonds applied
for shall, upon declaration made by the Secretary of the Treasury in his discretion,'
be forfeited to the United States. Any qualified depositary will be permitted to
make payment by credit for bonds allotted to it for itself and its customers up
to any amount for which it shall be ciualified in excess of existing deposits, when
so notified by the Federal Reserve Bank of its district. Treasury notes of Series
C-1941, maturing December 15, 1941, with coupon dated December 15, 1941,
attached, will be accepted at par in payment for any bonds subscribed for and
allotted, and should accompany the subscription. Accrued interest from June
15, 1941, to October 20, 1941 ($4.33743 per $1,000), will be paid following acceptance of the notes.
v . GENERAL PROVISIONS

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




HENRY MORGENTHAU,

Jr.,

Secretary of the Treasury.-

214

REPORT OF T H E SEiCRETARY OF T H E TREASURY.
Exhibits

Subscriptions and allotments, -Treasury bonds of 1967-72 (from press releases,
October 10, Id, and 22, 1941 0
On October 9, 1941, Secretary of the Treasury Morgenthau announced t h a t the
subscription books for t h e cash offering of 2J^ percent Treasury bonds of 1967-72
closed a t t h e close of business October 9. Cash subscriptions aggregated $10,445,341,100, of which $1,407,503,200 was allotted. - Cash subscriptions were allotted
12J^ percent, on a straight percentage basis, .with adjustments, where necessary,
to t h e $100 denomination.
The subscription books for t h e receipt of subscriptions in p a y m e n t of which
Treasury notes of Series C-1941, m a t u r i n g December 15, 1941, were tendered
closed a t t h e close of business October 10. Exchange subscriptions aggregated
$188,971,200, all of which were allotted in full.
Subscriptions a n d allotments were divided among the Federal Reserve districts
and the Treasury as follows:
'
; .
Cash subscriptions
Federal Reserve district
Received
Boston
New York
Philadelphia
Cleveland
Richmond
A tlan ta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury

..:..
-

$951, 726, 650
4, 921,587, 550
616, 842, 550
691, 193, 300
418, 370, 400
535, 350, 350
686, 900
1, 091,
255, 191, 450
163, 917, 350
137, 529, 200
193, 407, 050
446, 072, 050
22, 466, 300

Government investment accounts10, 445, 341,100

Total

Allotted
$119, 071,100
615, 575, 950
77, 328, 350
86, 556, 300
52, 392, 900
67, 069, 950
136, 678, 450
32,104, 000
20, 541, 900
17, 277, 700
24, 267, 600
55,826, 900
2,812,100
100, 000,000
1,407, 503, 200

Exchange
subscriptions
received (allotted in full)
$12, 907, 700
127, 640,100
7, 763, 300
3, 294, 700
2, 562, 900
509, 200
13, 634, 300
3, 334,800
9,114, 600
1, 347, 000
2, 351. 500
3, 997, 500
613, 600
188, 971, 200

Total subscriptions
allotted
$131, 978, 800
743, 216, 050
85, 091, 650
89, 851, 000
54, 955, 800
67, 579,150
150, 312, 750
35, 438, 800
29, 656, 500
18, 624, 700
26, 619,100
59.824,400
3.325, 700
100,000, 000
1, 596, 474, 400

Exhibit 4
Offering of 1 percent Treasury notes of Series A-1946
On October 23, 1941, Secretary of t h e Treasury Morgenthau invited subscriptions for 1 percent Treasury notes of Series A-1946 from t h e holders of % percent
Reconstruction Finance Corporation notes of Series P, m a t u r i n g November 1,
1941, and 1 percent Commodity Credit Corporation notes of Series E, m a t u r i n g
.November 15, 1941. T h e a m o u n t of the offering was limited to the aggregate
proceeds of p a y m e n t of t h e two m a t u r i n g corporate issues applied to t h e purchase of the new Treasury notes. In t h e related press release it was stated t h a t
there were t h e n outstanding $299,839,000 of Reconstruction Finance Corporation
notes of Series P and $204,241,000 of Commodity Credit Corporation notes of
Series E. I t was also stated t h a t all of t h e Government guaranteed issues in t h e
hands of the public would eventually be converted into TTreasury issues so t h a t
the*' m a r k e t would ultimately be dealing with b u t one class of Government
obligation.
[Department Circular No. 671. Public Debt]
TREASURY

DEPARTMENT,

Washington, October 23, 1941.
1. OFFERING OF NOTES AND INVITATION FOR TENDERS

1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e a u t h o r i t y of t h e Second
Liberty Bond Act, as amended, invites subscriptions, a t par, from t h e people of t h e
United States for 1 percent notes of the United States, designated Treasury notes
of Series A-1946, t h e offering to be limited to t h e a m o u n t of subscriptions entered
as provided in t h e two. next succeeding paragraphs.
2. T h e Secretary of t h e Treasury offers to apply t h e proceeds of p a y m e n t of
Reconstruction Finance Corporation notes of Series P, m a t u r i n g November 1,
I'RevisedNov. 27, 1941.




REPORT OF T H E SEICRETARY OF T H E TREASURY

215

1941, tendered for p a y m e n t in accordance with sections I I I and IV of this circular,
to p a y m e n t for Treasury notes subscribed for hereunder. Tenders of Series P
notes for t h a t purpose are invited.
3. T h e Secretary of t h e Treasury, on behalf of Commodity Credit Corporation,
offers to purchase on November 1, 1941, a t p a r a n d accrued interest, Commodity
Credit Corporation notes of Series E, m a t u r i n g November 15, 1941, to t h e extent
to which the holders thereof subscribe for Treasury notes hereunder. Tenders of
Series E notes for t h a t purpose are invited.
II. DESCRIPTION OF NOTES

1. T h e notes will be dated November 1, 1941, and will bear interest from t h a t
d a t e a t the r a t e of 1 percent per annum, payable on a semiannual basis on March
15 a n d September 15 in each year until t h e principal a m o u n t becomes payable.
T h e y will m a t u r e March 15,1946, and will not be subject to call for redemption
prior to m a t u r i t y .
2. T h e income derived from t h e notes shall be subject to all Federal taxes, now
or hereafter imposed. T h e notes shall be subject to estate, inheritance, gift, or other
excise taxes, whether Federal or State, b u t shall be exempt from all taxation now or
hereafter imposed on t h e principal or interest thereof by any State, or any of t h e
possessions of t h e United States, or by any local taxing authority.
3. T h e notes will be accepted a t par during such time and under such rules a n d
regulations as shall be prescribed or approved by ,the Secretary of the Treasury in
p a y m e n t of, income and profits taxes payable a t the m a t u r i t y of the notes.
4. T h e notes will be. acceptable to secure deposits of public moneys, b u t will not
bear t h e circulation privilege.
5. Bearer notes with interest coupons attached will be issued in denominations
of $100, $500, $1,000, $5,000, $10,000, a n d $100,000. T h e notes will not be issued
in registered form.
6. T h e notes will be subject to the general regulations of the Treasury D e p a r t ment, now or hereafter prescribed, governing United States notes.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received a t the Federal Reserve^ Banks and branches
a n d a t t h e Treasury^ D e p a r t m e n t , Washington, and should be accompanied by
Reconstruction Finance Corporation notes of Series P tendered for p a y m e n t , or
C o m m o d i t y Credit Corporation notes of Series E tendered for purchase, t o a
p a r a m o u n t equal to t h e par a m o u n t of Treasury notes of Series A-1946 subscribed for. Banking institutions generally m a y submit subscriptions for account
of customers, b u t only t h e Federal Reserve Banks and t h e Treasury D e p a r t m e n t
are authorized to act as official agencies.
^ 2. T h e Secretary of t h e Treasury reserves the right to reject any subscription, in
whole or in part, to allot less t h a n the a m o u n t of notes applied for, and. to close t h e
books as to any or all subscriptions a t any time without notice; and any action he
m a y t a k e in these respects shall be final. Subject to these reservations, all subscriptions will be allotted in full.' Allotment notices will be sent out p r o m p t l y
upon allotment.
IV. PAYMENT

1. P a y m e n t a t p a r for notes allotted hereunder m u s t be m a d e on or before
N o v e m b e r 1,1941, or on later allotment, and m a y be m a d e only through application of t h e principal proceeds of p a y m e n t of a like p a r a m o u n t of Reconstruction
Finance Corporation notes of Series P, m a t u r i n g November 1, 1941, or of Commodity Credit Corporation notes of Series E, m a t u r i n g November 15, 1941.
Commodity Credit Corporation notes of Series E tendered for purchase m u s t
have coupons dated November 15, 1941, attached, and p a y m e n t will be m a d e a t
p a r a n d accrued interest to November 1, 1941. Accrued interest from M a y 1 5 , '
1941, to November 1, 1941, on Series E notes ($4.619565 per $1,000) will be paid
following acceptance of the notes.
V. GENERAL PROVISIONS

i . As fiscal agents of t h e United States, Federal Reserve Banks are authorized
a n d requested to receive subscriptions, to m a k e allotments on t h e basis and up t o
t h e a m o u n t s indicated by t h e Secretary of t h e Treasury to t h e Federal Reserve
IBanks of t h e respective districts, to issue allotment notices, to receive payment, for
notes allotted, to m a k e delivery of notes on full-paid subscriptions allotted, a n d
t h e y m a y issue interim receipts pending delivery of t h e definitive notes.



216

REPORT OF T H E SECRETARY OF T H E TREASURY

.. 2. T h e Secretary of the Treasury m a y a t any time, or from time to time, prescribe
suppli3mental or a m e n d a t o r y rules and regulations governing t h e offering, which
will be communicated p r o m p t l y to t h e Federal Reserve Banks.
H E N R Y M O R G E N T H A U , Jr.,

Secretary of the Treasury.
Exhibit 5
Allotments, Treasury notes of Series A-1946 {from press releases, October 23 and 30,
1941 0
On October 23, 1941, Secretar}^ of t h e Treasury Morgenthau announced t h a t
t h e subscription books for t h e offering of 1 percent Treasury notes of Series
A-1946—open to t h e holders of Reconstruction Finance Corporation notes of
Series P , m a t u r i n g November 1, 1941, and of Commodity Credit Corporation
notes of Series E, m a t u r i n g November 15, 1941—would close a t t h e close of
business October 24. T h e principal proceeds of the pa3^ment of $502,866,000 of
m a t u r i n g corporate notes were applied to p a y m e n t for a like a m o u n t of new
Treasury notes. -Allotments were divided among t h e Federal Reserve districts
a n d t h e Treasury as follows: .

Federal Reserve district

Subscriptions
Subscriptions
from holders of from holders of Total subscripCommodity
Reconstruction
tions received
Credit CorFinance Corporation notes poration notes (allotted in full)
of Series E
of Series P

Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco
Treasury

020, 000
^ $1,
227, 076, 000
1,512,000
4, 712, 000
3,848,000
250, 000
61, 695, 000
2, 010, 000
2, 170, 000
2, 731, 000
1,820, 000
590, 000
10,000

$5, 887, 000
132, 088, 000
5,741, 000
267, 000
8,647, 000
^2, 450, 000
1,091, 000
29, 755, 000
3, 250, 000
3,401,000
'3, 041, 000
6, 504, 000
1,300,000

$6, 907, 000
359,164, 000
7, 253,000
• 12, 979, 000
6, 495,000
1, 700, 000
80, 786, 000 •
5, 765, 000
5, 420,000
6,132, 000
7, 861, 000
2, 094,000
310, 000

Total...

299, 444, 000

203, 422, 000

502, 866, 000

Exhibit 6
Offering of 2}^ percent Treasury bonds of 1967-72 {additional) and 2 percent Treasury
bonds vf 1951-55
'
•On December 4, 1941, Secretary of t h e Treasury Morgenthau offered for cash
subscription $1,000,000,000 of 2^2 percent Treasury bonds of 1967-72 and $500,000,000 of 2 percent Treasury bonds of 1951-55! An additional a m o u n t of
$50,000,000, or thereabouts, of Treasury bonds of 1967-72 could be sold t o
Government investment accounts. T h e Treasury bonds of 1967-72 were an
. addition to t h e series issued p u r s u a n t to D e p a r t m e n t Circular N o . 670, dated
October 9, 1941. In t h e related press release of December 4, 1941, it was stated
t h a t , for t h e benefit of small investors, preferential allotments would be given t o
cash subscribers u p to $5,000 of t h e bonds of either or both series, where delivery
in registered bonds 90 days after issue d a t e was specified; those who entered such
subscription for preferential allotment were not permitted t o e n t e r a n y other
subscription for the same issue.
[Department Circular No. 672. Public Debt]
TREASURY

DEPARTMENT,

Washington, December 4, 1941I. OFFERING OF BONDS ;

1. T h e Secretary of t h e Treasury, p u r s u a n t to the a u t h o r i t y of the Second
Liberty Bond Act, as amended, invites subscriptions, a t p a r a n d accrued interest,
1 Revised Nov. 27, 1941.




REPORT OF THE SECRETARY OF THE TREASURY

217

from the people of the United States for 2% percent bonds of the United States,
designated Treasury bonds of 1967-72. The amount of the public offering is
$1,000,000,000, or thereabouts. In addition to the amount offered for public
subscription, $50,000,000,. or thereabputs, of these bonds may be allotted to
Government investment accounts.
II. DESCRIPTION OF BONDS

1. The bonds now offered will be an* addition to and will form a part of the
series of 2>^ percent Treasury bonds of 1967-72 issued pursuant to Department
Circular No. 670, dated October 9, 1941, will be freely interchangeable therewith,
are identical in all respects therewith, and are described in the following quotation
from Department Circular No. 670: [Description omitted here, see p. 212.]
, III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. Subscribers must agree not to
sell or otherwise dispose of their subscriptions, or of the securities which may be
allotted thereon, prior to the closing of the subscription books. Banking institutions generally may submit subscriptions for account of customers, but only
the Federal Reserve Banks and the Treasury Department are authorized to act
as official agencies. Others than banking institutions will not be permitted to
enter subscriptions except for their own account. Subscriptions from banks and
trust companies for their own account will be received without deposit. Subscriptions from all others must be accompanied by payment of 10 percent of
the amount of bonds applied for. The" bases on w^hich subscriptions will be
entertained from the various classes of subscribers are contained in Treasury
press statement of December 3, 1941, a copy of which is attached (see p. 218))
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part, to allot less than the amount of bonds applied for, and to
close the books as to any or all subscriptions at any time without notice; and
any action he may take in these respects shall be final. Subscriptions for amounts
up to and including $5,000 where the subscribers specify that delivery be made in
registered bonds 90 days after the issue date will be given preferred allotment.
In each such case a subscriber may not enter any other subscription, and payment must be made as provided in section IV of this circular. Allotment notices
will be sent out promptly upon allotment, and the basis of the allotment will be
publicly announced.
IV. PAYMENT

1. Payment at par and accrued interest from October 20, 1941, for bonds
allotted hereunder must be made or completed on or before December 15, 1941,
or on later allotment. In every case where payment is not so completed, the
payment with application up to 10 percent of the amount of bonds applied for
shall, upon declaration made by the Secretary of the Treasury in his discretion,
be forfeited to the United States. Any qualified depositary will be permitted to
make payment by credit for bonds allotted to it for itself and its customers up
to any amount for which it shall be qualified in excess of existing deposits, when
30 notified by the Federal Reserve Bank of its district. Accrued interest at 2}i
oercent from October 20, 1941, to December 15, 1941, on $1,000 face amount
is $3.8674.
V. GENERAL

PROVISIONS

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




HENRY MORGENTHAU,

Jr.,

Secretary of the Treasury,

218

REPOiRJT OF T H E SEiORETARY OF T H E TREASURY
[Treasury press statement, Dec. 3,1941]
'

TREASURY DEPARTMENT,

Washington, December 3, 1941.
I n advance of t h e cash offering of Treasury securities to be announced tomorrow,
t h e Treasury t o d a y announced the basis on which subscriptions will be entertained from t h e various classes of subscribers who will participate in t h a t offering.
T h e primary purpose is, so far as possible, to meet t h e legitimate investment
requirements of t h e public, a n d . t o accomplish t h a t purpose subscriptions will be
grouped broadly into four classes, as follows:
Banks and t r u s t companies for their own account—not to exceed 50 percent of capital and surplus.
M u t u a l savings and cooperative banks. Federal savings and loan associations, t r u s t accounts and investment corporations, pension funds, insurance
companies, and similar institutions and funds—not to exceed ten percent
of total resources.
Corporations organized for profit, and dealers and brokers—^not to exceed
50 percent of n e t worth.
Individuals—not to exceed 50 percent of net worth or 100 percent of cash
deposited with subscription. ( N O T E . — N o preferred allotment will be made
on such full-paid subscriptions.)
Notwithstanding t h e general limitations outlined above, t h e Federal Reserve
Banks are authorized and instructed to continue to examine applications for cash
offerings of securities issued by t h e Treasury, and to report to t h e Secretary of
t h e Treasury any which, in their judgment, require special t r e a t m e n t , or,which
appear to be excessive from t h e standpoint of t h e resources or investment practices
of t h e subscribers, or for other reasons, with recommendation as to t h e acceptance,
reduction, or rejection of any such applications, which recommendations will be
p r o m p t l y acted upon by t h e Secretary.
o
T?he cooperation of banking institutions, and of t h e subscribing public generally,
is' earnestly solicited so t h a t subscriptions forwarded to t h e Federal Reserve
Banks and t h e Treasury will in each instance be for a m o u n t s not in excess of t h e
limitation set forth above. Attention is again invited to t h e requirement t h a t
subscribers agree not to sell or otherwise dispose of their subscriptions, or of t h e
securities which m a y be allotted thereon, prior to the closing of t h e subscription
books.
I t is also requested t h a t banks and others refrain from making any unsecured
loans, or loans collateralized in whole or in p a r t by t h e securities subscribed for,
to coyer t h e initial deposits which are required to be paid when subscriptions
are entered.
[Department Circular No. 673. Public Debt]
TREASURY

DEPARTMENT,

Washington, December 4) 1941I. OFFERING OF BONDS

1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e a u t h o r i t y of t h e Second
Liberty Bond Act, as amended, invites subscriptions, a t p a r and accrued interest,
from t h e people of t h e United States for 2 percent bonds of t h e United States,
designated Treasury bonds of 1951-55. T h e a m o u n t of t h e offering is $500,000,000,
or thereabouts.
II. DESCRIPTION OF BONDS

1. T h e bonds will be dated December 15, 1941, a n d will bear interest from t h a t
date at t h e r a t e of 2 percent per a n n u m , payable semiannually on J u n e 15 ahd
December 15 in each year until t h e principal a m o u n t becomes payable. T h e y
will m a t u r e December 15, 1955, b u t m a y be redeemed a t t h e option of t h e United
States on a n d after December 15, 1951, in whole or in part, a t p a r a n d accrued
interest, on any interest day or days, 'on 4 m o n t h s ' notice of redemption given
in such manner as t h e Secretary of t h e Treasury shall prescribe.^ * * *
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at t h e Federal Reserve Banks and branches
and a t t h e Treasury Department., Washington.^ * * *
i Omitted portion similar to corresponding section of Department Circular No. 670. p. 212.
2 Omitted portion similar to corresponding section of Department Circular No. 672, p. 216.




219

REPORT OF THB SECRETARY OF THB TREASURY
IV. PAYMENT

1. P a y m e n t at par and accrued interest, if any, for bonds allotted hereunder
m u s t be m a d e or completed on or before Deicember 15, 1941, or on later allotment.
I n every case where p a y m e n t is not so completed, t h e paynient with application
up to 10 percent of t h e a m o u n t of bonds applied for shall, upon declaration m a d e
by t h e Secretary of t h e Treasury in his discretion, be forfeited to t h e United
States. Any qualified depositary will be permitted t o m a k e p a y m e n t by credit
for bonds allotted to it for itself and its customers up to any a m o u n t for which
it shall be. qualified, in excess of existing deposits, when so notified by t h e Federal
Reserve Bank of its district.
V. G E N E R A L P R O V I S I O N S

1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized
a n d requested to receive subscriptions i * * *.
H E N R Y MORGENTHAU,

Jr.,

Secretary of the Treasury.
Exhibit 7
Subscriptions and allotments, Treasury bonds of 1967-72 {additional) and Treasury
bonds of 1951-55 {from press releases, December 5, 8, and 16, 194P)
On December 4, 1941, Secretary of t h e Treasury Morgenthau announced t h a t
the subscription books for t h e offering of 2>^ percent Treasury bonds of 1967-72
a n d 2 percent Treasury bonds of 1951-55 closed at t h e close of business December
4, except for the receipt of subscriptions for a m o u n t s up to and including $5,000,
where t h e subscribers specified that" delivery might be made in registered bonds
90 days after t h e issue date. T h e subscription iDooks for t h e receipt of subscriptions of t h a t class closed at the close of business December 6.
For t h e 2}i percent Treasury bonds of 1967-72 subscriptions totaled $6,979,193,950, of which $1,119,570,750 was allotted. Subscriptions for $5,000 or less,
where t h e subscribers specified t h a t delivery be made in registered bonds 90 days
after t h e issue date, were allotted in full, $26,043,450 having been allotted. All
other subscriptions were allotted 15 percent on a straight percentage basis, with
adjustments, where necessary, to t h e $100 denomination.
For t h e 2 percent Treasury bonds of 1951-55 subscriptions totaled $4,727,898,150, of which $532,687,950 was allotted. Subscriptions for $5,000 or less,
where t h e subscribers specified t h a t delivery be m a d e in registered bon-ds 90 days
after t h e issue date, were allotted in full, $13,800,850 having been allotted. All
other subscriptions were allotted 11 percent on a straight percentage basis, with
adjustments, where necessary, to t h e $100 denomination.
Subscriptions and allotments were divided among t h e Federal Reserve districts
and t h e Treasury as follows:
T r e a s u r y b o n d s of 1967-72

T r e a s u r y b o n d s of 1951-55

F e d e r a l Reserve district
Subscriptions
received
Boston..
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. L o u i s
.Minneapolis
Kansas City
Dallas
.
San Francisco
Treasury
Government investment accounts.

Total

....

$637,834,450
3,433,309, 300
441, 752, 800
400,009, 850
252,414, 250
255,674, 400
672, 230, 950
153, 192, 050
122, 166,450
118, 588,100
148,225, 550
336,961, 400
6,834, 400
6, 979,193, 950

Subscriptions
allotted

Subscriptions
received

Subscriptions
allotted

$96, 686, 700 $343, 340, 850
520, 857, 900 2, 242, 647, 450
.69,108,850
272, 261, 950
61, 204, 550 •319, 816, 050
39, 397, 700
164, 714, 650
39,173, 300
182, 288, 250
103, 871, 700
537, 042, 950
24, 658, 850
114, 617, 300
19, 642, 450
64, 802, 350
19, 475, 400
84, 841, 550
22, 989,850
107, 621, 250
51, 467, 900
280, 768, 550
1, 035, 600
13, 135, 000
50, 000,000
1,119, 570, 750

4, 727, 898,150

1 O m i t t e d portion similar to corresponding section of D e p a r t m e n t Circular N o . 672, p . 216.
2 R e v i s e d M a r . 21 a n d M a y 20,1942.




$38, 273, 800
248, 713, 950
30,840,900
35,804,450
19, 054,100
20, 680, 300
61,476,150
13, 824, 000
8, 332, 900
10, 603,150
12, 257, 750
31, 365,100
1, 461,400
532, 687, 950

220

REPORT OF THE SECRETARY OF THE TREASURY
Exhibit 8
Offering of Treasury notes of Tax Series A-1944 di^d Tax Series B-1944

• On December 15, 1941, Secretary of the Treasury Morgenthau offered for sale
two issues of nontransferable Treasury notes of Tax Series A-1944 and Tax
Series B-1944, both receivable, at par and accrued.interest, in pa3^ment of Federal
income, estate, and gift taxes. These notes were placed on sale on January 1, 1942.
[Department Circular No. 674. Public Debt]
T R E A S U R Y DEPAR';rMENT,

Washington, December 15, 1941.
I. OFFERING OF NOTES

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, offers for sale, to the people of the United States,
at par and accrued interest, two issues of nontransferable notes of the United States,
designated Treasury notes of Tax Series A-1944 and Treasury notes of Tax
Series B-1944, which notes, under authority of section 3657 of the Internal
Revenue Code, and subject to the limitations and conditions hereinafter set
forth, will be receivable, at par and accrued interest, in payment of Federal
income, estate, and gift taxes.
2. The notes will be placed on sale January 1, 1942, and the sale will continue
until December 31, 1942, unless earlier terminated, as to either or both series, by
the Secretary of the Treasury.
II. DESCRIPTION OF NOTES

1. General.—The notes of both series will be dated January 1, 1942; they will
mature January 1, 1944, and may not be called by the Secretary of the Treasury
.for redemption before maturity. Subject to the limitations and conditions set
forth in section IV of this circular, the notes of both series will be receivable, at
par and accrued interest, in payment of Federal income, estate, and gift taxes,
if the notes are not presented in payment of taxes, they will be payable at maturity, or, at the owner's option and request, they will be redeemable before maturity,
as provided in section V of this circular, but in either case payment will be nm'de
only at the price paid for the notes.
2. Form, inscription, dating.—The owner's name and address will be entered on
each note.at the time of its issue by an authorized issuing agent, and the date of
issue will be shown by an imprint of the agent's dating stamp. The month in
which payment is received and credited by a Federal Reserve Bank or branch, or
by the Treasurer of the United States, will determine the purchase price and issue
date of each note. The notes may not be transferred, except that, if notes, are
held b};^ a corporation owning more than 50 percent of the stock, with voting power,
of another corporation, such notes may be transferred to the subsidiary upon
request of the corporation and surrender of the notes to the agent that issued them.
No hypothecation of the notes on any account will be recognized by the Treasury
Department, and they will not be accepted to secure deposits of public money.
3. Denominations and interest.—The notes of Tax Series A-1944 will be issued in
denominations of $25, $50, $100, $500, and $1,000, and interest tliereon will accrue
from January 1942 in the amount of 16 cents each month on each $100 principal
amount, that is, 4 cents on each $25, 8 cents on each $50, 16 cents on each $100,
80 cents on each $500, and $1.60 on each $1,000 denomination of note. The notes
of Tax Series B-1944 will be issued in denominations of $100, $500, $1,000,
$10,000, $100,000, $500,000, and $1,000,000, and. interest thereon will accrue
from January 1942 in the amount of 4 cents each month on each $100 principal
ainount, that is, 4 cents on each $100, 20 cents on each $500, 40 cents on each
$1,000, $4 on each $10,000, $40 on each $100,000, $200 on each $500,000, aind
$400 on each $1,000,000 denomination of note. In no case, however, shall interest
accrue beyond the month in which the note is presented in payment of taxes, or
beyond its maturity. Exchanges of authorized denominations of each series from
higher to lower, but not from" lower to higher, may be arranged at the office of
the agent that issued the note.
4. Purchase price and tax-payment value.—Tables are appended to this circular
showing the principal amount with accrued interest added, for notes of each




REPORT OF T H E S E I O R E T A R Y ' OF T H E TREASURY

221

denomination of each series, for each m o n t h from J a n u a r y 1942 to Januar}^ 1944,
inclusive. T h e t o t a l shown for any denomination for any month-—January
t h r o u g h December 1942—while t h e notes remain on sale, is t h e purchase price, or
cost, of t h e note during t h a t m o n t h . Also, t h e total shown for any denomination
for any m o n t h — J a n u a r y 1942 through J a n u a r y "1944—is t h e t a x - p a y m e n t value
of t h e note if receivable during t h a t inonth in p a y m e n t of taxes, subject to the
provisions of section IV of this circular.
5. Taxation.—Income derived from t h e notes shall be subject to all Federal
taxes, now or hereafter imposed. T h e notes shall be subject to estate, inheritance,
gift, or other excise taxes, whether Federal or State, b u t shall be exempt from all
taxation now or hereafter imposed on t h e principal or interest thereof by any
State, or any of t h e possessions of t h e United States, or by any local taxing
authority.
III. PURCHASE OF NQTES

1. Applications and payment.—Applications will be received by t h e Federa
-Reserve Banks and branches, and by t h e Treasurer of the United States, Wash"
ington, D. C. ' Banking institutions generally m a y submit applications for ac".
count of customers, b u t only t h e Federal Reserve Banks and the Treasury Departm e n t are authorized to act as official agencies.^ Every application m u s t be accompanied by p a y m e n t in full, at p a r and accrued interest from J a n u a r y 1942 t o t h e
m o n t h in which p a y m e n t in immediately available funds is received by a Federal
Reserve Bank or branch, or t h e Treasurer, of t h e United States. Any form of
exchange, including personal checks, will be accepted subject to collection, a n d
should be drawn to t h e order of t h e Federal Reserve Bank or of t h e Treasurer of
t h e United States, as payee, as t h e case m a y be; defense savings stamps will be
accepted a t their face value in lieu of cash. T h e date funds are m a d e available
on collection of exchange will govern t h e issue price and issue date of t h e notes.
Any depositary, qualified p u r s u a n t to t h e provisions of Treasury D e p a r t m e n t
• Circular No. 92 (revised February 23, 1932, as supplemented) will be permitted
to m a k e p a y m e n t by credit'for notes applied for on behalf of itself or its customers
up to any a m o u n t for which it shall be qualified in excess of existing deposits.
2. Reservations.—The Secretary of t h e Treasury reserves t h e right to reject any
application in whole or in part, and to refuse to issue or permit to be issued hereunder
any notes of either or both series in any case or in any class or classes of cases if
he deems such action to be in t h e public interest, and his action ih any such
respect shall be final. If an application is rejected, in whole or in part, any paym e n t received therefor will be refunded. T h e Secretary of t h e Treasury, in his
discretion, m a y designate agencies other t h a n those herein provided for t h e sale
of, or for t h e handling of applications for. Treasury notes to be issued hereunder.
3. Delivery of notes.—Upon acceptance of full-paid applications, notes will be
duly issued and, unless delivered in person, will be delivered by registered mail
within t h e Continental United States, t h e Territories and Insular Possessions
of t h e United States, t h e Canal Zone and t h e Philippine Islands. No deliveries
elsewhere will be made.
4. Form of application.—In applying for notes uiider this circular, care should
be exercised to specify whether those of Tax Series A-1944 or Tax Series B-1944
are desired, and there m u s t be furnished t h e n a m e and address of t h e individual,
corporation, or other entity in which t h e notes are to be issue<i; a n d if address
for t h e delivery of t h e notes is different, appropriate instructions should be given.
T h e n a m e should be in t h e same form as t h a t used in t h e Federal" t a x return of
t h e purchaser, except t h a t in t h e case of joint tax returns of individuals the* notes
should be inscribed individually—the notes-will'riot be issued in t h e names of
two or more persons jointly. T h e application should be accompanied by remittance to cover t h e purchase price—that is, par—together with accrued interest
from J a n u a r y 1942 to t h e m o n t h in which t h e application will be received and
t h e remittance collected by an authorized issuing agent. T h e use of an official
application form is desirable, b u t not necessary. Appropriate forms m a y be
obtained on application to any Federal Reserve Bank or branch, or t h e Treasurer
of t h e United States", Washington,' D . C.; banking institutions generally have
Ibeen supplied with forms for t h e use of their customers.
IV. PRESENTATION IN PAYMENT OF TAXES

1. During and after t h e t h i r d calendar m o n t h from m o n t h of purchase (as
"shown by t h e issuing agent's dating s t a m p on each note), during such time, a n d
under such rules and regulations as t h e Commissioner of Internal Revenue, with




222

R E P O I R T OF T H E SECRETARY OF T H E TREASURY

the approval of t h e Secretary of t h e Treasury, shall prescribe, notes issued hereunder in t h e n a m e of a t a x p a y e r (individual, corporation, or other entity) m a y be
presented and surrendered by such taxpayer, his agent, or his estate, to t h e
Collector of I n t e r n a l Revenue to whom t h e tax return is made, and will be receivable by t h e Collector a t p a r and accrued interest from J a n u a r y 1942 to the
m o n t h , inclusive (but no accrual beyond J a n u a r y 1944), in which presented, in
p a y m e n t of any Federal income taxes (current and back personal and corporation
taxes, and excess-profits tax'es), or any Federal estate or gift taxes (current and
back), assessed against t h e original purchaser or his estate, b u t t h e Collector will
accept (a) not more t h a n $1,200 principal a m o u n t of notes of T a x Series A-1944,
or of T a x Series A-1943, or pf t h e two in combination, and (b) t h e a m o u n t of t h e
accrued interest thereon, on account of any one taxpayer's liability for each class
of taxes (income, estate, or gift) for each taxable period: Provided, T h a t this
limitation shall apply separately to husband and wife on a joint return, and shall
apply separately to an owner before death and to his estate for t h e balance of the
same year. T h e notes m u s t be forwarded to t h e Collector a t t h e risk and expense»
of t h e owner, and, for t h e owner's protection, should be forwarded by registered
mail, if not presented in person.
V. CASH R E D E M P T I O N A T OR P R I O R TO M A T U R I T Y

1. General.—Any Treasury note of TTax Series A-1944 or Tax Series B-1944
will be redeemed for cash a t t h e purchase price a t or before m a t u r i t y . Notes of
T a x Series A-1944 m a y -be redeemed before m a t u r i t y without advance notice,
b u t notes of Tax Series B-1944 m a y be redeemed before m a t u r i t y only after
60 days from date of issue (as shown by the dating s t a m p of t h e issuing agent)
and on 30 d a y s ' advance notice. T h e timely surrender of a note of Tax. Series
B-1944, bearing a properly executed request for payment, will be accepted as
constituting t h e advance notice required hereunder.
2. Execution of request for payment.—-The owner in whose n a m e t h e note is
inscribed m u s t appear before one of t h e officers authorized b y t h e Secretary of
t h e Treasury to witness and certify requests for p a y m e n t , establish his identity,
and in t h e presence of such officer sign t h e request for p a y m e n t appearing on
t h e back of t h e note, adding t h e address to which check is to be mailed. After
t h e request for p a y m e n t has been so signed, the witnessing officer should complete
and sign t h e certificate provided for his use.
3. Officers authorized to witness and certify requests for payment.—All ofRcers
authorized to witness and certify requests for p a y m e n t of United States savings
bonds, as set forth in Treasury D e p a r t m e n t Circular No. 530, F o u r t h Revision,
as amended, are hereby authorized to witness and certify requests for cash
redernption of Treasury notes issued under this circular. Such officers include
United States postmasters, certain other post office officials, and t h e executive
officers of all banks and t r u s t companies incorporated in t h e United States or its
organized territories, including officers a t branches thereof who are certified to
t h e Treasury D e p a r t m e n t as executive officers.
4. Presentation and surrender.—Notes bearing properly executed requests for
p a y m e n t m u s t be presented and surrendered to t h e agent t h a t issued the notes
(as shown by t h e agent's dating s t a m p ) , a t the expense and risk of the owner.
For t h e owner's, protection, notes should be forwarded by registered mail, if not
presented in person.
5. Disability or death.—In case of t h e disabilitj^ or d e a t h of t h e owner, and
t h e notes are not to be presented in p a y m e n t of Federal income, estate, or gift
taxes due from him or from his estate, instructions should be obtained from t h e
issuing; agent before t h e request for p a y m e n t is executed, or t h e notes presented.
6. P a r t i a l redemption.—^Partial cash redemption of notes of either series,
corresponding to an authorized denomination, m a y be m a d e in t h e same m a n n e r
as for full cash redemption, appropriate changes being m a d e in t h e request for
p a y m e n t . I n case of partial redemption of a note, t h e remainder will be reissued
in t h e same n a m e and with t h e same date of issue as t h e note surrendered.
7. P a y m e n t . — P a y m e n t of any note, either a t m a t u r i t y or on redemption
before m a t u r i t y , Tvill be m a d e only by t h e Federal Reserve Bank or t h e Treasury
D e p a r t m e n t , as t h e case m a y be, t h a t issued t h e note, and will be m a d e by check
drawn to t h e order of t h e owner, and mailed to t h e address given in his request
. for p a y m e n t . In any case, p a y m e n t will be m a d e a t t h e purchase price of t h e
note, t h a t is, a t p a r and accrued interest (if any) paid a t t h e time of purchase.




223

EE.PORT OF T H E SECRETARY OF T H B TREASfURY'
VI.

GENERAL PROVISIONS

1. Except as provided in this circular, t h e notes issued hereunder will be
subject to t h e general regulations of t h e Treasury D e p a r t m e n t , ndw or hereafter
prescribed, governing bonds and notes of the United States.
2. Federal Reserve Banks and their branches, as fiscal agents of t h e United
States, are authorized to perform such services or acts as m a y be appropriate
a n d necessary under t h e provisions of this circular, and uhder any instructions
given by t h e Secretary of t h e Treasury.
/
3. T h e Secretary of t h e Treasury m a y a t any time or from time to time supplem e n t or amend t h e terms of this circular, or of any a m e n d m e n t s or supplements
thereto, and m a y a t any time or from time to time prescribe a m e n d a t o r y rules
a n d regulations governing t h e offering of t h e notes, information as to which will
p r o m p t l y be furnished to t h e Federal Reserve Banlis.
HENRY

MORGENTHAU,

Jr.,

Secretary of the Treasury.
TREASURY NOTES

T A X S E R I E S A-1944

Purchase price and t a x - p a y m e n t value during successive m o n t h s
The table below shows the principal amount with accrued interest added, for notes
of each denomination, for each month from J a n u a r y 1942 io J a n u a r y 1944, inclusive.
The total shown for any denomination for any month—January through December
1942—while the notes remain on sale, is the purchase price, or cost of the note during
that month. Also the total shown for any denomination for any month—January
1942 through J a n u a r y 1944—i^ the tax-payment value of the note if receivable during
that month in payment of taxes.
$25

$25. 00
25.04
25.08
25.12
25.16
25.20
25.24
25.28
25.32
25.36
25.40
25.44

487543—43-




$100. 00
100.16
100. 32
100.48
100. 64
100. 80"
100. 96
101.12
101. 28
101. 44
101. 60
.101. 76

50.96
51.04
51.12
51.20
51.28
51.36
51.44
51.52
51. 60
51.68
51.76
51.84

102. 08
102. 24
102. 40
102. 56
102. 72
102. 88
103.04
103. 20
103.36
103. 52
103. 68

509.60
510.40
511. 20
512. 00
512. 80
513. 60
514. 40
515. 20
516. 00
516.80
517. 60
518. 40

1,019. 20
1, 020. 80
1, 022.40
1, 024. 00
1, 025. 60
1, 027. 20
1, 028. 80
1, 030.40
1, 032.00
1, 033. 60
1, 035. 20
1, 036.80

25.96

-16

$50. 00
50.08
50.16
50.24
50.32
50.40
50.48
50.56
50.64
50.72
50.80
50.88

25. 48
25.52
25.56
25.60
25.64
25.68
25.72
25. 76
25.80
25.84
25.88
25.92

1942:
Januai'y--February..
March
April
May
June..
July
August
September.
October...
November.
December.
1943:
January...
February..
March
April
May
June
July
August
September.
October...
November.
December.
1944:
January..-

$50

51.92

103.84

519. 20

1, 038. 40

$100

iOl. 92

$500

$1,000

$500.00 $1,000.00
500. 80
1,001. 60
501. 60
1,003. 20
502. 40
1, 004. 80
503. 20
1, 006. 40
504. 00
1, 008. 00
504.80
1, 009. 60
505. 60
1, Oil. 20
506. 40
1, 012.80
507. 20
1, 014. 40
508. 00 1, 016. 00
1,017. 60
508.80

224

REPORT OF T H E SECRETARY OF T H E TREASURY
TREASURY NOTES—^TAX SERIES B-1944

Purchase price and tax-payment value during successive months
The table below shows the principal amount ivith accrued interest added, for- notes
of each denomination, for each month from January 1942 to January 1944, inclusive.
The total shown for any denomination for any month—January through December
1942—while the notes remain on sale, is the purchase price, or cost of the note during
that month. Also the total shown for any denomination for any month—January
1942 through January 1944—i^ l^^ tax-payment value of the note if receivable during
that month in payment of taxes.
$100
1942:
January...
February..
March
April
May
June
• July
August
September
October..November.
December.
1943:
January...
February..
March
April
May
June
July
..
August
September.
October
November.
December.
1944:
January....

$100. 00
100. 04
100.08
100.12
100.16
• 100.20
100.24
100. 28
• 100.32
100. 36
100.40
100.44

$500

$1,000

$10,000

$100,000

$500,000

$500. 00 $1, 000. 00 $10, 000 $100, 000 $500, 000
500. 20 1, 000. 40
10,004
100, 040
500, 200
500. 40 1,000. 80
10, 008
100,080
500, 400
500. 60 1,001. 20
10,012
100,120
500, OCO
10, 016
100,160
500. 80 1, 001. 60
500,803
10,020
100, 200
501. 00 1, 002. 00
501, 000
501.20 1, 002.40
10, 024
100, 240
501, 200
501. 40 1, 002. 80 • 10, 028
100, 280
501,400.
501. 60 1, 003. 20
10, 032 . 100, 320 501,603
501. 80 1,003. 60
10,036
100,360
501, 800
502. 00 1,004.00
10,040. 100, 400
502, 000
502. 20 1,004. 40
•10,044 .100,440
502, 200

100. 48
100.52
100. 56
100.60
100. 64
100. 68
100. 72
100.76
100.80
100.84
100.88
100.92

502. 40
502. 60
502.80
503. 00
503. 20
503. 40
503. 60
503. 80
504. 00
504. 20
604.40
604. 60

1, 004. 80
1, 005. 20
1, 005. 60
1, 006. 00
1, 006. 40
1,006.80'
1, 007. 20
1, 007. 60
1, 008. 00
1, 008. 40
1,008. 80
1, 009. 20

100, 480
10, 048
10,052
100, 520
10, 056
100,560
10, 060
100,600
10, 064 . 100,640
10, 068
100,680
10,072
100,720
10, 076
100, 760
10, 080
100, 800
10, 084
100, 840
10, 088
100, 880
10, 092
100,920.

100.96

§04. 80

1,009. 60

10,096

100, 960

$1,000,000

$1, 000, 000
1, 000,400
1.000, 800
1.001, 200
1,001,600
. 1,002,000
1.002, 400
1, 002,800
1, 003, 200
1, 003, 600
1, 004, 000
1, 004,400

502,400
1, 004, 800
502,600
1, 005, 200
502,800
1, 005, 600
503, 000
1, 006, 000
503, 200 1 1, 006, 400
1,006, 800
503,400
1, 007, 200
503,600
1, 007, 600
503,800
1,008, 000
504,000
504,200
1.008, 400
504,400
1, 008,800
504,600
1, 009, 200
504,800

1.009, 600

Exhibit 9

Offering of 2 percent Treasury bonds of 1949-51
On January 12, 1942, Secretary of the Treasury Morgenthau invited subscriptions for 2 percent Treasury bonds of 1949-51 from the holders of (1) 1% percent Treasury notes of Series A-1942, maturing March 15, 1942, (2) 3 percent
Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption on
January 15, 1942, (3) 2% percent Federal Farm Mortgage Corporation bonds of
1942-47, called for redemption on March 1, 1942, and (4) % percent Reconstruction Finance Corporation notes of Series R, maturing January 15, 1942. The
amount of the offering was limited to the amount of these securities tendered and
accepted. In the related press release it was stated that the amounts of the four
issues then outstanding were approximately as follows: Treasury notes of Series.
A-1942, $426,000,000; 3 percent Federal Farm Mortgage Corporation bonds of
1942-47, $236,000,000; 2% percent Federal Farm Mortgage Corporation bonds of
1942-47, $103,000,000; and Reconstruction Finance Corporation notes of Series
R, $310,000,000.
[Department Circular No. 676. Public Debt]
TREASURY

DEPARTMENT,

Washington, January 12, 1942.
1.

OFFERING OF BONDS AND INVITATION FOR TENDERS

1. The Secretary of-the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par, from the people of
the United States for 2 percent bonds of the United States, designated Treasury
bonds of 1949-51, the amount of the offering to be limited to the amount of
securities tendered and accepted as provided in the following subparagraphs:



REPORT OF THE SEICRETARY OF THE TREASURY

225

(a) Treasury notes of Series A-1942.—Treasury notes of Series A-1942, maturing
March 15, 1942, will be accepted in payment for Treasury bonds subscribed for
hereunder.
(6) 3 Percent Federal Farm Mortgage Corporation bonds of 1942-47.—The Secretary of the Treasury offers to apply the proceeds of payment of 3 percent Federal
Farm Mortgage Corporation bonds of 1942-47, called for redemption on January
15, 1942, tendered for payment in accordance with sections III and IV of this
circular, to payment for Treasury b.onds subscribed for hereunder. Tenders of
3 percent Federal Farm Mortgage Corporation bonds of 1942-47 for that purpose
are invited.
(c) ;8% Percent Federal Farm Mortgage Corporation bonds of 1942-47.—The
Secretary of the Treasury, on behalf of the Federa] Farm Mortgage Corporation,
offers to purchase on January 15, 1942, at par and accrued interest, 2% percent
Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption on
March 1, 1942, to the extent to which the holders thereof subscribe for Treasury
bonds hereunder. Tenders of 2)^ percent Federal Farm Mortgage Corporation
bonds of 1942-47 for that purpose are invited.
{d) Reconstruction Finance Corporation notes of Series R.—The Secretary of the
Treasury offers to apply the proceeds of payment of Reconstruction Finance
Corporation notes of Series R, maturing January 15, 1942, tendered for payment
in accordance with sections III and IV of this circular, to payment for Treasury
bonds subscribed for hereunder. Tenders of Series R notes for that purpose
are invited.
II. DESCRIPTION OF BONDS

1. The bonds will be dated January 15, 1942, and will bear interest from that
date at the'rate of 2 percent per annum, payable on a semiannual basis on June 15
and December 15 in each year until the principal amount becomes payable.
They will mature June 15, 1951, but may be redeemed at the option of the United
States on and after June 15, 1949, in whole or in part, at par and accrued interest,
on any interest day or days, on 4 months' notice of redemption given in such
manner as the Secretary of the Treasury shall prescribe. In case of partial
redemption the bonds to be redeemed will be determined.by such method as may
be prescribed by the Secretary of the Treasury. From the date of redemption
designated in any such notice, interest on the bonds called for redemption shall
cease.
2. The income derived from the bonds shall be subject to all Federal taxes, now
or hereafter imposed. The bonds shall be subject to estate, inheritance, gift, or
other excise taxes, whether Federal or State, but shall be exempt from, all taxation
now or hereafter imposed on the principal or interest thereof by any State, or any
of the possessions of the United States, or by any local taxing authority.,
3. The bonds will be acceptable to secure deposits of public moneys, but will not
bear the circulation privilege and will not be entitled to any privilege of conversion.
4. Bearer bonds with interest coupons attached, and bonds registered as to
principal and interest, will be issued in denominations of $50, $100, $500, $1,000,
$5,000, $10,000, and $100,000. Provision will be made for the interchange .of
bonds of different denominations and of coupon and registered bonds, and for
the transfer of registered bonds, under rules and regulations prescribed by the
Secretary of the Treasury.
5. The bonds will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United^States bonds.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington, and should be accompanied by
" securities of one or more of the issues enumerated in section 1 hereof, tendered for
payment or purchase as the case may be, to an aggregate par amount equal to the
par amount of .Treasury bonds of 1949-51 subscribed for hereunder. Banking
institutions generally may submit" subscriptions for account of customers, .but
only the Federal Reserve Banks and the Treasury Department are authorized to
act as official agencies.
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part, to allot less than the amount of bonds applied for, and to close
/the books as to any or all subscriptions at any time without notice; andany action
he may take in these respects shall be final. Subject to these reservations, all
subscriptions will be allotted in full. Allotment notices will be sent out promptly
upon allotment.



226

REPORT OF THE SECRETARY OF THE TREASURY
IV. PAYMENT

1. P a y m e n t a t par for bonds allotted hereunder m u s t be m a d e on or before
J a n u a r y 15, 1942, or on later allotment a n d m a y be m a d e only in Treasury notes
of Series A-1942 or through application of t h e principal proceeds of p a y m e n t of
3 percent Federal F a r m Mortgage Corporation bonds of 1942-47, 2% percent
Federal F a r m Mortgage Corporation bonds of 1942-47, or Reconstruction
Finance Corporation notes of Series R, in an aggregate par a m o u n t equal to t h e
a m o u n t of bonds allotted hereunder. Coupons dated March 15, 1942, must be
a t t a c h e d to Treasury notes of Series A-1942 when surrendered, a n d accrued
interest from September 15,'1941, to J a n u a r y 15, 1942 ($5.89779 per $1,000) will
be paid following acceptance of the notes. • Coupons dated March 1, 1942, m u s t
be a t t a c h e d to 2% percent Federal F a r m Mortgage Corporation bonds of 1942-47
in coupon form a n d accrued interest from September 1, 1941, to J a n u a r y 15, 1942
($10.33149 per $1,000), will be paid following acceptance of t h e bonds. In t h e
case of registered bonds of either issue, checks in p a y m e n t of final interest will be
drawn in accordance with the assignments on t h e bonds surrendered.
V. SURRENDER OF CALLED BONDS

1. Coupon bonds.—3 percent a n d 2% percent Federal F a r m Mortgage Corporation bonds of 1942-47 in coupon form tendered hereunder should be presented and
surrendered with t h e subscription to a Federal Reserve Bank or branch or to t h e
Treasurer of t h e United States, Washington, D . C. Coupons dated July. 15, 1942,
a n d IVfarchl, 1942, respectively, ^ n d all coupon^ bearing subsequent dates, should
be a t t a c h e d to such bonds when surrendered, a n d if any such coupons are missing,
t h e subscription m u s t be accompanied by cash p a y m e n t equal to the face a m o u n t
of t h e missing coupons. T h e bonds m u s t be delivered a t t h e expense a n d risk
of t h e holder. Facilities for transportation of bonds by registered mail insured
m a y be arranged between incorporated banks a n d t r u s t companies a n a t h e Federal
Reserve Banks, a n d holders m a y t a k e a d v a n t a g e of such arrangements when
available, utilizing such incorporated banks a n d t r u s t companies as their agents.
2. Registered bonds.—3 percent a n d 2% percent Federal F a r m Mortgage Corporation bonds of 1942-47 in registered form tendered hereunder should be assigned
by t h e registered payees or assignees thereof in one of t h e forms hereafter set forth,
a n d thereafter should be presented a n d surrendered with t h e subscription to a
Federal Reserve Bank or branch or to t h e Treasury D e p a r t m e n t , Division of
Loans a n d Currency, Washington, D . C. T h e bonds m u s t be delivered a t t h e
expense a n d risk of t h e holder. T h e proper forms of assignment a r e :
(a) Where 3 percent bonds are surrendered.—If t h e new bonds are desired
registered in t h e same n a m e as t h e ' b o n d s surrendered, ' T e d e r a l F a r m Mortgage
Corporation for p a y m e n t , - t h e proceeds to be applied to p a y m e n t for Treasury
bonds of 1 9 4 9 - 5 1 " ; if t h e new bonds are desired registered in another name,
''Federal F a r m Mortgage Corporation for p a y m e n t , t h e proceeds to be applied to
p a y m e n t for Treasury bonds of 1949-51 in t h e n a m e of
_";
if t h e new bonds are desired in coupon form, ''Federal F a r m Mortgage Corporation for p a y m e n t , t h e proceeds to be applied to p a y m e n t for Treasury bonds of
1949-51 in coupon form to be delivered to
"
(5) Where 2% percent bonds are surrendered.—If t h e new bonds are desired
registered in t h e same n a m e as t h e bonds surrendered, "Federal F a r m Mortgage
Corporation for purchase, t h e principal proceeds to be applied to p a y m e n t for
Treasury bonds of 1 9 4 9 - 5 1 " ; if t h e new bonds are desired registered in another
name, "Federal F a r m Mortgaoje Corporation for purchase, t h e principal proceeds
to be applied to p a y m e n t for Treasury bonds of 1949-51 in t h e name of
" ; if t h e new bonds-are desired in coupon form, "Federal F a r m Mortgage
Corporation for purchase, t h e principal proceeds to be applied to p a y m e n t for
Treasury bonds of 1949-51 in coupon form to be delivered to
"
VI. GENERAL PROVISIONS

1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized
a n d requested to receive subscriptions, to m a k e allotments on t h e basis a n d up t o
t h e a m o u n t s indicated by t h e Secretary of t h e Treasury to t h e Federal Reserve
Banks of t h e respective districts, to issue allotment notices, to receive p a y m e n t
for bonds allotted, to m a k e delivery of bonds on full-paid subscriptions allotted,
a n d they m a y issue interim receipts pending delivery of t h e definitive bonds.




227

REPORT OF T H E SE'CRETARY OF T H E TREASUR.Y

2. T h e Secretary of t h e Treasury m a y a t any time, or from time to time, prescribe supplemental or a m e n d a t o r y rules a n d regulations governing t h e offering,
which will be communicated p r o m p t l y to t h e Federal Reserve Banks.
H E N R Y MORGENTHAU,

Jr.,

Secretary of the Treasury.
Exhibit 10
Allotments, Treasury bonds of 1949-51 {from press releases, J a n u a r y 13 and 19,
1942^)
On J a n u a r y 12, 1942, Secretary of t h e Treasury Morgenthau announced t h a t
t h e subscription books for t h e offering of 2 percent Treasury bonds of 1949-51—
open t o the holders of Treasury notes of Series A-1942, maturing March 15,
1942, 3 percent Federal F a r m Mortgage Corporation bonds of 1942-47, called
for redemption J a n u a r y 15, 1942, 2% percent Federal F^,rm Mortgage Corporation bonds of 1942-47, called for redemption March 1, 1942, and Reconstruction
Finance Corporation notes of Series R, m a t u r i n g J a n u a r y 15, 1 9 4 2 ^ w o u l d close
a t t h e close of business J a n u a r y 13, except for t h e receipt of subscriptions from
holders of $15,000 or less of t h e two issues of Federal F a r m Mortgage Corporation bonds. For t h e latter class t h e subscription books closed at the close of
business J a n u a r y 14.
• .
Subscriptions to t h e Treasury bonds of 1949-51 aggregated $1,014,018,900, all
of which were allotted in full. T h e allotments were divided among t h e Federal
Reserve districts and t h e Treasury as follows:
Treasury
notes
of Series
A-1942

Federal Farm Mortgage
Corporation bonds

San Francisco
Treasury

$29,451, 500
272, 205, 600
10, 500, 500
14, 234, 400
7,121, 500
1, 585, 300
38, 595, 300
7, 917, 200
1, 341, 500
11, 532, 500
2, 079, 900
9, 038, 600
783, 900

$6,159, 900
106, 326, 700
21, 766, 600
7,170, 900
6, 952, 800
510,100
31, 331,000
3, 556, 500
4,106, 500
6, 222, 200
922, 800
7, 754, 700
471, 200

$2,135, 800
64, 023, 800
6, 417, 700
1, 450, 700
2,863,400
733, 400
6, 372, 800
1, 293,100
2, 027, 200
2, 399, 200
524,100
5, 429, 600
158,600

$3,410, 000
241, 549, 000
5,189, 000
7, 856, 000
2,425, 000
2,130,000
33, 823,000
2, 534,000
2, 806,000
4, 640, 000
751, 000
1, 422, 000
15, 000

Total...

406, 387, 700

203, 251, 900

95,829,300

308, 550, 000 1, 014,018, 900

Federal Reserve district

Boston
New York
PhiladelphiaCleveland
Richmond...Atlanta.
Chicago.
St. Louis
Minneapolis..
Kansas City..
Dallas

Reconstruction Finance
Corporation
notes of
Series R

2 ^ percent

3 percent

Total subscriptions
received
(allotted
in full)
$41,157, 200
684,105,100
43, 873, 800
30, 712,000
19, 362, 700
4, 958,800
110,122,100
15, 300, 800
10, 281, 200
24, 793, 900
4, 277, 800
23, 644,900
1, 428, 600

Exhibit 11
Off'ering of 2)i percent Treasury bonds of 1952-55
On F e b r u a r y 13, 1942, Secretary of t h e Treasury Morgenthau invited cash
subscriptions for 2]4 percent Treasury bonds of 1952-55, in the a m o u n t of
$1,500,000,000, or thereabouts.
[Department Circular No. 681. Public Debt]
TREASURY

DEPARTMENT,

Washington, February 13, 1942.
I.

O F F E R I N G OF BONDS

1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e authority of t h e Second
Liberty Bond Act, as amended, invites subscriptions, a t p a r and accrued interest,
from t h e people of t h e United States for 2}4 percent bonds of t h e United States,
designated Treasury bonds of 1952-55. The a m o u n t of the offering is $1,500,000,000, or thereabouts.
J Revised Mar. 21,1942.




228

REPOIRT OF T H E SECRETARY OF THE , TREASURY
II. DESCRIPTION

OF BONDS

1. T h e bonds will be dated F e b r u a r y 25, 1942, and will bear interest from t h a t
date a t t h e r a t e of 23^ percent per annum, payable on a semiannual basis on J u n e
15 a n d December 15 in each year until t h e principal a m o u n t becomes payable.
T h e y will m a t u r e J u n e 15, 1955, b u t iriay be redeemed a t t h e option of t h e United
States on and after J u n e 15, 1952, in whole or in part, a t p a r and accrued interest,
on any interest day or days, on 4 m o n t h s ' notice of redemption given in such
m a n n e r as t h e Secretary of t h e Treasury shall prescribe.^ * 5 *
i
«
III. SUBSCRIPTION

AND

ALLOTMENT

1. Subscriptions will be received a t t h e Federal Reserve Banks and .branches
and a t t h e Treasury D e p a r t m e n t , Washington. Subscribers m u s t agree not to
sell or otherwise dispose of their subscriptions, or of t h e securities which m a y be
allotted thereon, prior to t h e closing of the subscription books. Banking institutions generally m a y submit subscriptions for account of customers, b u t only the
Federal Reserve Banks and t h e Treasury D e p a r t m e n t are authorized to act as
official agencies. Others t h a n banking institutions will not be permitted to enter
subscriptions except for their own account. Subscriptions from b a n k s and t r u s t
companies for their own account will be received without deposit. Subscriptions
from all others m u s t be accompanied by p a y m e n t of 10 percent of t h e a m o u n t of
bonds applied for. . Subscriptions will be entertained from t h e various classes of
subscribers on t h e following bases:
1. Banks and t r u s t companies for their own account—not to exceed 50 percent
of capital and surplus.
2. M u t u a l savings and cooperative banks. Federal savings and loan associations,
t r u s t accounts and investment corporations, pension funds, insurance
companies, and similar institutions and funds—not to exceed 10 percent
of t o t a l resources.
3. Corporations organized for profit, and" dealers and brokers—not to exceed
50 percent of net worth.
4.' Individuals—not to exceed 50 percent of net worth or 100 percent of cash
deposited with subscription. (Note: No preferred allotment will be m a d e
on such full-paid subscriptions.)
2. The Secretary of t h e Treasury reserves t h e right to reject any subscription,
in -whole or in part, to allot less t h a n the a m o u n t of bonds applied for, and to close
t h e books as to any or all subscriptions a t any time without notice; and any action
he m a y t a k e in these respects shall be final. Subscriptions for a m o u n t s up to and
including $5,000, where the subscribers specify t h a t delivery be m a d e in registered
bonds 90 days after t h e issue date, will be given preferred allotment. I n each
such case a subscriber m a y not enter any other subscription, and p a y m e n t m u s t
be m a d e as provided in section IV of this circular. Allotment notices will be sent
out p r o m p t l y upon allotment, and t h e basis of t h e allotment will be publicly
announced. •
'

IV.

PAYMENT

1. P a y m e n t a t p a r and accrued interest, if any, for bonds allotted hereunder
m u s t be made or completed on or before F e b r u a r y 25, 1942, or on later allotment.
I n every case where paj^ment is not so completed, t h e p a y m e n t with application
u p to 10 percent of t h e a m o u n t of bonds applied for shall, upon declaration m a d e
by the Secretary of t h e Treasury in his discretion, be forfeited to the United
States. Any qualified depositary will be permitted to m a k e p a y m e n t by credit
for bonds aliotted to it for itself and its customers up to any a m o u n t for which it
shall be qualified in excess of existing deposits, when so notified by t h e Federal
Reserve Bank of its district.
V. GENERAL

PROVISIONS

1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized
and requested to receive subscriptions 1 * * *. "
H E N R Y MORGENTHAU,

Jr.,

Secretary of the Treasury.
1 Omitted portion similar to corresponding section of Department Circular No. 670, p. 212,




229

REPORT OF T H E SECRETARY OF T H E TREASURY
Exhibit 12

Subscriptions and allotments. Treasury bonds of 1952-55 {from press releases,
February 14, 18, and 24, 1942 i)
On February 13, 1942, Secretary of the Treasury Morgenthau announced that
the subscription books for the cash offering of 2}^ percent Treasury bonds of
1952-55 closed at the close of business February 13, except for the receipt of
subscriptions for amounts up to and including $5,000 where the subscribers specified that delivery be made in registered bonds 90 days after issue date. For the
latter subscriptions the books closed at the close of business on February 14, 1942.
Subscriptions aggregated $4,696,698,550, of which $1,510,795,300 was allotted.
Subscriptions in amounts up to and including $5,000, totaling about $13,132,000,
where the subscribers specified the 90-day delivery, were allotted in full. All
other subscriptions were allotted 32 percent on a straight percentage basis, with
adjustments, where necessary, to the $100 denomination. Subscriptions and
allotments were divided among the Federal Reserve districts and the Treasury
as follows:
Federal Reserve
district
Boston..
New York
Philadelphia.
Cleveland
Richmond
Af-lantfl
Chicago
St. Louis.

Subscriptions Subscriptions
received
allotted
$421, 663, 350
2,132, 610, 450
306, 370. 700
312, 431, 500
205, 568,150
178, 212, 050
499, 427, 950
130,102, 400

$135,224,800
684,174,100
98,824,400
100. 649, 250
66; 374, 400
57,371,000
160, 284, 450
42, 210, 950

Federal Reserve
district
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
Total - _ . _

Subscriptions Subscriptions
received
allotted
$68,152, 600
87, 987, 050
101,830,600
251,120, 850
1, 220, 900

$22, 677, 800
29,101, 450
32, 855, 300
80, 655, 800
391,600

4, 696, 698, 550 1, 510, 795, 300

Exhibit 13
Offering of 2 percent Treasury bonds of 1949-51 and 2)^ percent Treasury bonds of
1962-67
On May 4, 1942, Secretary of the Treasury Morgenthau invited cash subscriptions for $1,250,000,000, or thereabouts, of 2 percent Treasury bonds of 1949-51
and for an unspecified amount of 2% percent Treasury bonds of 196?-67.
[Department Circular No. 684. Public Debt]
TREASURY

DEPARTMENT,

Washington, May 4, 1942
I. OFFERING OP BONDS

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par and accrued interest,
from the people of, the United States for bonds of the" United States, designated
2 percent Treasury bonds of 1949-51. The amount of the offering is $1,250,000,000, or thereabouts.
II. DESCRIPTION OF BONDS

1. The bonds will be dated May 15, 1942, and will bear interest from that date
at the rate of 2 percent per annum, payable on a semiannual basis on September 15,
1942, and thereafter on March 15 and September 15 in each j^ear until the principal
amount becomes payable. , They will mature September 15, 1951, but may b e '
redeemed at the option of the United States on and after September 15, 1949, in
whole or in part, at par and accrued interest, on any interest day or days, on 4
months' notice of redemption given in such manner as the Secretary of the Treasury shall prescribe. In case of partial redemption the bonds to be redeemed will
be determined by such method as may be prescribed by the Secretary of the
Treasury. From the date of redemption designated in anj'- such notice, interest
on the bonds called for redemption shall cease.
2. The income derived from the bonds shall be subject to all Federal taxes, now
or hereafter imposed. The bonds shall be subject to estate, inheritance, gift, or
other excise taxes, whether Federal or State, but shall be exempt from all taxation
1 Revised July 25,1942.




230

REPORT OF T H E SEiCRETARY OF T H E TREASURY

now or hereafter imposed on t h e principal or interest thereof b y a n y State, or any
of t h e possessions of t h e United States, or by a n y local taxing authority.
3. T h e bonds will be acceptable t o secure deposits of public moneys, b u t will not
bear t h e circulation privilege a n d will n o t be entitled t o any privilege of conversion.
4. Bearer bonds with interest coupons attached, a n d bonds registered as t o
principal a n d interest, will be issued in denominations of $100, $500, $1,000,
$5,000, $10,000 a n d $100,000. Provision will be made for t h e interchange of
bonds of different denominations a n d of coupon a n d registered bonds, a n d for t h e
transfer of registered bonds, under rules a n d regulations prescribed b y t h e Secret a r y of t h e Treasury.
5. T h e bonds will be subject t o t h e general regulations of t h e Treasury Department, now or hereafter prescribed, governing United States bonds.
III. SUBSCRIPTION

AND ALLOTMENT

1. Subscriptions will be received a t t h e Federal Reserve Banks a n d branches
a n d a t t h e Treasury D e p a r t m e n t , Washington. Subscribers m u s t agree not t o
sell or otherwise dispose of their subscriptions, or of t h e securities which m a y be
allotted thereon, prior t o t h e closing of t h e subscription books. Banking institutions generally m a y submit subscriptions for account of customers^ b u t only t h e
Federal Reserve Banks a n d t h e Treasury D e p a r t m e n t are authorized t o act as
official agencies. Others t h a n banking institutions will n o t be permitted t o enter
subscriptions except for their own account. Subscriptions from banks a n d t r u s t
companies for-their own account will be received without deposit. Subscriptions
from all others m u s t be accompanied by p a y m e n t of 10 percent of t h e a m o u n t of
bonds applied for.
2. T h e Secretary of t h e Treasury reserves t h e right t o reject any subscription,
in whole or in p a r t , t o allot less t h a n t h e amount of bonds applied for, a n d t o close
t h e books as t o a n y or all subscriptions a t a n y time without notice; a n d a n y action
he m a y t a k e in these respects shall be final. Subject t o these reservations, subscriptions for a m o u n t s u p t o a n d including $10,000 will be allotted in full. T h e '
basis of t h e allotment on all other subscriptions will be publicly announced, a n d
allotment notices will be sent o u t p r o m p t l y upon allotment.
IV.

PAYMENT

1. P a y m e n t a t p a r a n d accrued interest, if a n y , for bonds allotted hereunder
m u s t be m a d e or completed on or before M a y 15, 1942, or on later allotment. I n
every case where p a y m e n t is n o t so completed, t h e p a y m e n t with application up t o
10 percent of t h e a m o u n t of bonds applied for shall, upon declaration made b y t h e
Secretary of t h e Treasury in his discretion, be forfeited t o t h e United States.
Any qualified depositary will be permitted t o make p a y m e n t by credit for bonds
allotted to it for itself a n d its customers u p t o any a m o u n t for which it shall be
qualified in excess of existing deposits, when so notified by t h e Federal Reserve
Bank of its district.
V. GENERAL

PROVISIONS

1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized
and requested t o receive subscriptions i * * *.
HENRY

MORGENTHAU,

Jr.,

Secretary of the Treasury.
[Department Circular No. 685. Public Debt]
TREASURY

DEPARTMENT,

Washington, M a y 4, 1942.
I. O F F E R I N G O F B O N D S

1. T h e Secretary of t h e Treasury, p u r s u a n t t o t h e authority of t h e Second
Liberty Bond Act, as amended, invites subscriptions, a t p a r a n d accrued interest,
from t h e peoplie of t h e United States for bonds of t h e United States, designated
2y2 percent Treasury bonds of 1962-67. These bonds will n o t be available for
subscription, for their own account, by commercial b a n k s which accept demand
deposits. T h e a m o u n t of t h e offering is n o t specifically limited.
II. DESCRIPTION sOF BONDS

1. T h e bonds will be dated M a y 5, 1942, a n d will bear interest from t h a t date a t
t h e rate of 2)4 percent per a n n u m , payable on a semiannual basis on J u n e 15 a n d
1 Omitted portion similar to corresponding section of Department Circular No. "670, p. 212.




REPORT OF T H E SEICRETARY OF T H E TREASURY

231

December 15 in each year until t h e principal a m o u n t becomes payable, t h e first
p a y m e n t being m a d e December 15, 1942. They will m a t u r e J u n e 15, 1967, b u t
m a y be redeemed a t t h e option of t h e United States on and after J u n e 15, 1962,
in whole or in part, a t - p a r and accrued interest, on any interest day or days, on
4 m o n t h s ' notice of redemption given in such m a n n e r as t h e Secretary of t h e Treasury shall prescribe. In case of p a r t i a l redemption t h e bonds to be redeemed will
be determined by such m e t h o d as m a y be prescribed by t h e Secretary of- t h e
Treasury. F r o m t h e date of redemption designated in any such notice, interest
on t h e bonds called for redemption shall cease.
2. T h e income derived from t h e bonds shall be subject to all Federal taxes, now
or hereafter imposed. T h e bonds shall be subject to estate, inheritance, gift, or
other excise taxes, whether Federal or State, b u t shall be exempt from all taxation
now or hereafter imposed on t h e principal or interest thereof by any State, or any
of t h e possessions of t h e United States, or by any local taxing authority.
3. T h e bonds will not be acceptable to secure deposits of public moneys before
M a y 5, 1952, they will not bear the circulation privilege, and they will not be entitled to any privilege of conversion.
4. Bonds registered as to principal and interest will be issued in denominations
of $100, $500, $1,000, $5,000, $10,000 and $100,000. T h e bonds will not be issued
in coupon form prior to M a y 5, 1952, b u t will be available in coupon form after
^that d a t e , J n t h e same denominations as, and,freely interchangeable with the registered bonds of this issue. Under rules and regulations prescribed by t h e Secret a r y of the Treasury, provision will be m a d e for t h e transfer of t h e bonds, other
t h a n to commercial banks which accept demand deposits, and for exchanges of
denominations, on and after July 6, 1942. They will not be eligible for transfer
to commercial banks which accept demand deposits before M a y 5, 1952. However, t h e bonds m a y be.pledged as collateral for loans, including loans by commercial banks which accept demand deposits, b u t any such bank acquiring such
bonds before May 5, 1952, because of t h e failure of such loans to be paid a t m a t u rity will be required to dispose of t h e m in t h e same m a n n e r as they dispose of other
assets not eligible to be owned by banks.
5. Except as provided in the preceding paragraphs, t h e bonds will be subject
to t h e general regulations of t h e Treasury D e p a r t m e n t , now or hereafter prescribed,
governing United States bonds.
Iir. SUBSCRIPTION A N D ALLOTMENT

1. Subscriptions will be received a t t h e Fedei;al Reserve Banks and branches and
a t t h e Treasury D e p a r t m e n t , Washington. Banking institutions and security
dealers generally m a y submit subscriptions for account of customers, b u t only t h e
Federal Reserve Banks and t h e Treasury D e p a r t m e n t are authorized to act as
official agencies. Subscriptions m u s t be accompanied by p a y m e n t in full for t h e
a m o u n t of bonds applied for.
2. T h e Secretary of t h e Treasury reserves t h e right to reject any subscription,
in whole or in part, to allot less t h a n t h e ainount of bonds applied for, and to close
t h e books as to any or all subscriptions a t any time without notice; and any action
he m a y t a k e in these respects shall be final. Subject to these reservations, all
subscriptions will be allotted in full. Allotment notices will be sent out promptly
upon allotment.
IV. PAYMENT

1. P a y m e n t a t par and accrued interest, if any, for bonds allotted hereunder
m u s t be m a d e on or before May 5, 1942, or on later allotment. One day's accrued
interest is $0.06868 per $1,000. Any qualified depositary will.be p e r m i t t e d , t o
m a k e p a y m e n t by credit for bonds allotted to its customers up to any a m o u n t
for which it shall be qualified in excess of existing deposits, when so notified by
t h e Federal Reserve Bank of its district.
V. GENERAL PROVISIONS

1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized
a n d requested to receive subscriptions i * * *.
H E N R Y MORGENTHAU,

. '

> Omitted portion similar to corresponding section of Department Circular No. 670, p. 212.




Jr.,

Secretary of the Treasury.

232

REPORT OF. T H E SEiCRETARY OF T H E TREASURY
Exhibit 14

Subscriptions and allotments. Treasury bonds of 1949-51 and Treasury bonds
of 1962-67 {from press releases. May 4, 8, 12, and^ 18, 1942 i)
On M a y 4, 1942, Secretary of t h e Treasury Morgenthau announced t h a t t h e
subscription books for t h e cash offering of $1,250,000,000, or thereabouts, of 2
percent Treasury bonds of 1949-51 closed a t t h e close of business M a y 4. Subscriptions aggregated $3,283,343,400, of which $1,292,444,100 was allotted. Subscriptions up to and including $10,000 were allotted in full; a n d subscriptions in
a m o u n t s over $10,000 were allotted 38 percent, on a straight percentage basis,
b u t n o t less t h a n $10,000 on any one subscription, with adjustments, where
necessary, to t h e $100 denomination.
For t h e 2>^ percent Treasury bonds of 1962-67 t h e subscription books closed a t
t h e close of business M a y 14, 1942. Subscriptions aggregated $882,198,000, all of
which were allotted in full.
T h e subscriptions and allotments were divided among t h e Federal Reserve
districts a n d t h e Treasury as follows:
T r e a s u r y b o n d s of 1949-51
F e d e r a l Reserve district
Subscriptions

Allotments

Treasury
b o n d s of
1962-67 (allotted in full)

T o t a l allotments

• $174,935,000
1, 289, 326, 300
136,489, 900
170,332,400
_ _ .
118,470, 900
163,858,800
. .
719,358, 500
83,653, 400
53,172, 900
66,997, 200
84, 668,600
216,329, 500
5, 750,000

$67,734, 500
493,606, 700
53,614,700
67, 555, 600
47,175,700
72,399, 400
280, 228, 400
37,002, 900
23,189, 000
28, 982, 900
35, 329, 800
83, 439, 500
2,185,000

$55,689,400
587, Oil, 100
27, 274, 900
28,928,100
14,958,300
• 6, 717, 700
48,432,600
6, 826,100
8, 570, 200
5,187, 400
19,339, 700
18, 069, 700
55,192, 800

$123,423,900
1,080,617,800
80,889,600
96,483,700
62,134,000
79,117,100
328, 661, 000
43, 829, 000
31, 759, 200
34,170,300
54,669, 500
101, 509, 200
57, 377,800

3, 283, 343,400

Boston
N e w York
.Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o . - "
Treasury

1, "292,444,100

882,198,000

2,174,642,100

- -

.

....

.
-

. --

Total.-..

Exhibit 15
Offering of I j i percent Treasury notes of Series B-1946 ,
On M a y 25, 1942, Secretary of t h e Treasury Morgenthau invited subscriptions
for 13^ percent Treasury [notes of Series :B-1946, in p a y m e n t of which only
H o m e Owners' Loan Corporation 2)4 percent bonds of Series G 1942-44, called .
for redemption on July 1, 1942, or Reconstruction Finance Corporation 1 percent
notes of Series S, m a t u r i n g July 1, 1942, might be tendered. T h e a m o u n t of t h e
offering was limited to t h e a m o u n t of Series G bonds and Series S notes tendered
a n d accepted. In t h e related press release it was s t a t e d t h a t there were then,
o u t s t a n d i n g $875,438,625 of Series G bonds a n d $275,868,000 of Series S notes.
[Department Circular No. 686. Public Debt]
TREASURY

DEPARTMENT,

Washington, M a y 25,'1942.
I. OFFERING OF NOTES

1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e a u t h o r i t y of t h e Second
Liberty Bond Act, as amended, invites subscriptions, a t par, frqm t h e people of
t h e United Sta,,tes for notes of t h e United States, designated 1}^ percent Treasury
notes of Series B-1946, in p a y m e n t of which only H o m e Owners' Loan Corporation
2]4 percent bonds, Series G 1942-44, called for redemption on July 1, 1942, or
Reconstruction Finance Corporation 1 percent notes of Series S, m a t u r i n g July
1, 1942, m a y be tendered. T h e a m o u n t of t h e offering under this circular will
be liihited to t h e a m o u n t of such Series G bonds a n d Series S notes tendered a n d
accepted.
1 Revised July 25, 1942, and Aug. 21, 1942.




REPORT OF THE SEiCRETARY OF THE TREASURY

233

II. DESCRIPTION OF NOTES

1. The notes will be dated June 5, 1942, and will bear interest from that date
at the rate of IH percent per annum, payable on a semiannual basis on December
15, 1942, and thereafter on June 15 and December 15 in each year until the principal amount becomes payable. They will mature December 15, 1946, and will
not be subject to call for redemption prior to maturity.
2. The income derived from the notes shall be subject to all Federal taxes, now
or hereafter imposed. The notes shall be subject to estate, inheritance, gift, or
other excise taxes, whether Federal or State, but shall be exempt from all taxation
now or hereafter imposed on the principal or interest thereof by any State,'or
any of the possessions of the United States, or by any local taxing authority.
3. The notes will be accepted at par 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 notes.
4. The notes will be acceptable to secure deposits of public moneys, but will
not bear the circulation privilege.
5. Bearer notes with interest coupons attached will be issued in denominations
of $100, $500, $1,000, $5,000, $10,000, and $100,000. The notes will not be issued
in registered form.
6. The notes will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States notes.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and -at the Treasury Department, Washington. Banking institutions generally
may submit subscriptions for account of customers, but only the Federal Reserve
Banks and the Treasury Department are authorized to act as official agencies.
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part, to allot less than the amount of notes applied for, and to close
the books as to any or all subscriptions at any time without notice; and any action
he may take in these respects shall be final. Subject to these reservations, all
subscriptions will be allotted in full. Allotment notices will be sent out promptly
upon allotment.
IV. PAYMENT

1. Payment at par for notes allotted hereunder must be made on or before June
5, 1942, or on later allotment, and may be made only in Home Owners' Loan
Corporation bonds of Series G 1942-44, called for redemption on July 1, 1942, or
in Reconstruction Finance Corporation notes of Series S, maturing July 1, 1942,
which will be accepted at pai, and should accompany the subscription. Coupons
dated July 1, 1942, must be attached to bearer securities of either issue when
surrendered, and accrued interest from January 1, 1942, to June 5, 1942 ($9.63398
per $1,000 in the case of Series G bonds and $4.28177 per $1,000 in the case of
Series S notes) will be paid following acceptance of the securities. In the case,
of the Series G registered bonds, checks, in payment of accrued interest will be
drawn in accordance with the assignments on the bonds surrendered.
v . SURRENDER OF CALLED BONDS

1. Coupon bonds.—Home Owners' Loan Corporation bonds of Series G 1942-44
in coupon form tendered hereunder should be presented and surrendered with the
subscription to a Federal Reserve Bank or branch or to the Treasurer of the United
States, Washington, D. C. Coupons dated July 1, 1942, and all coupons bearing
subsequent dates, should be attached to such bonds when surrendered, and if
any such coupons are missing, the subscription must be accompanied by cash
payment equal to the face amount of the missing coupons. The bonds must be
delivered at the expense and risk of the holder. Facilities for transportation of
bonds by registered mail insured may be arranged between incorporated banks
and trust companies and the Federal Reserve Banks, and holders may take
advantage of such arrangements when available, utilizing such incorporated
banks and trust companies as their agents.
2. Registered bonds.—Home Owners' Loan Corporation bonds of Series G 194244 in registered form tendered hereunder should be assigned by the registered
payees or assignees thereof to "The Secretary of the Treasury for exchange for
Treasury notes of Series B-1946 to be delivered to
," and thereafter should be presented and surrendered with the subscription to a Federal
Reserve Bank or branch or to the Treasury Department, Division of Loans and



234

REPORT OF T H E SEORETARY OF T H E TREASURY

Currency, Washington, D . C.
risk of t h e holder.

T h e bonds m u s t be delivered a t t h e expense a n d

VI. GENERAL PROVISIONS

1. As fiscal agents of t h e United States, Federal Reserye Banks a r e authorized'
a n d requested t o receive subscriptions, t o m a k e allotments on t h e basis a n d u p
to t h e a m o u n t s indicated b y t h e Secretary of t h e Treasury t o t h e Federal Reserve
Banks of t h e respective districts, t o issue allotment notices, to.receive p a y m e n t
for notes allotted, t o m a k e delivery of notes on full-paid subscriptions allotted,,
a n d t h e y m a y issue interim receipts pending delivery of t h e definitive notes.
'2. T h e Secretary of t h e Treasury m a y a t a n y time, or from time t o time, p r e scribe supplemental or a m e n d a t o r y rules a n d regulations governing t h e offering,,
which will be communicated p r o m p t l y t o t h e Federal Reserve B a n k s .
HENRY

MORGENTHAU,

Jr.,

Secretary of the Treasury. ;
Exhibit 16
Allotments, Treasury notes of Series B-1946 {from press releases. M a y 26 a n d J u n e 1, 1942 0
On M a y 25, 1942, Secretary of t h e Treasury Morgenthau announced t h a t t h e
subscription books for t h e offering of l>i percent Treasury notes of Series B-1946—
open t o t h e holders of H o m e Owners' Loan Corporation 2J4 percent bonds of
Series G 1942-44, called for redemption on July 1, 1942, a n d Reconstruction
Finance Corporation 1 percent notes of Series S, m a t u r i n g July 1, 1942—would
close a t t h e close of business M a y 26, 1942, except for t h e receipt of subscriptions
from holders of $25,000 or less of t h e H o m e Owners' Loan Corporation b o n d s .
For t h e latter class t h e subscription books closed a t t h e close of business M a y 27.
Subscriptions t o t h e Treasury notes of Series B-1946 aggregated $1,118,386,400,
all of which were allotted in full. T h e allotments were divided ^among t h e Federal
Reserve districts a n d t h e Treasury as follows:
Home Owners'
Loan Corporation b o n d s
exchanged

Boston
.
N e w York
Philadelphia
Cleveland
Richmond
-Atlanta
Chicago
: -.
St. Louis
.
Minneapolis
Kansas City
Dallas....
San F r a n c i s c o . . . . .
Treasury

Reconstruction
F i n a n c e Corporation notes
exchanged

$18,139,100
551,060,500
. 44, 378,100
20, 647, 300
38, 380, 400
10, 674, 600
75, 262,100
13, 342, 400
10,190, 000
17, 283,100
5, 794, 700
36,443,100
4, 519,000

$7,839,000
198,042,000
6,398,000
5, 765,000
5,813,000
3, 612,000
29, 524, 000
2,459,000
4, 799, 000
2, 665,000
995, 000
4,196,000
165,000

$25,978,100
749,102, 500
50, 776,100
26,412, 300
44,193,400
14, 286, 600
104, 786,100
15,801,400
14,989,000
19, 948,100
6, 789, 700
40,639,100
4,684,000

846,114,400

Federal Reserve district

272, 272,000

1,118, 386, 400

..
.-

Total

T o t a l allotments

United States savings bond.s
Exhibit 17
Offering of United States war savings bonds of Series E and war savings stamps for
installment payments
[Department Circular No. 653, Revised.

Public Debt]

TREASURY

DEPARTMENT,

Washington, J u n e 1, 1942.
1. OFFERING OF UNITED STATES WAR SAVINGS BONDS OF SERIES E

1. T h e Secretary of t h e Treasury, p u r s u a n t t o t h e a u t h o r i t y of t h e Second
Liberty Bond Act, as amended, offers for sale, t o t h e people of t h e United States,
1 Revised July 16, 1942.




REPORT OF T H E SEICRETARY OF T H E TREASURY

235

t h r o u g h t h e Postal Service a n d other designated agencies, United States savings
bonds of Series E, which bonds are hereby designated United States war savings
bonds,1 and m a y hereinafter be referred to as bonds of Series E. A description of
t h e bonds, their terms, and t h e conditions of their issue and redemption are
hereinafter fully set forth.
2. United States savings bonds of Series E include bonds issued as defense savings bonds under this circular as originally published, and those issued as war
savings bonds under this circular as revised. T h e former bonds will be withdrawn
from sale when existing stocks are exhausted, and t h e new bonds will t h e n be
placed on sale without further notice, and their sale will continue until terminated
b y t h e Secretary of t h e Treasury. As their terms and t h e conditions of their issue
are identical, no distinction is to be m a d e between any bonds of Series E, whether
issued as defense or as war savings bonds.
^

I I . DESCRIPTION AND TERMS OF BONDS

1. T h e bonds of Series E will be issued only in registered form, in denominations
of $25, $50, $100, $500, and $1,000 (maturity values), a t prices hereinafter set forth.
E a c h bond will bear t h e facsimile signature of t h e Secretary of the Treasury, and
will bear b o t h an imprint (in red) and an impression of t h e Seal of the Treasury.
At t h e time of issue, t h e issuing agent will inscribe the name and address of t h e
owner on each bond, will enter t h e date as of which t h e bond is issued in t h e upper
Tight corner, and will imprint his dating s t a m p (with current date) in t h e circle
in t h e lower left corner. Bonds of Series E shall be valid only if duly inscribed
a n d dated, as above provided, a n d delivered by an authorized agent following
receipt of p a y m e n t therefor.
2. T h e bonds will, in each instance, be dated as of the first day of the m o n t h in
which p a y m e n t of the issue price is received by an agent authorized to issue t h e
b o n d s ; t h e bonds will m a t u r e and be payable a t face value 10 years from such issue
d a t e . T h e .bonds m a y not be called for redemption by t h e Secretary of t h e
T r e a s u r y prior to m a t u r i t y , b u t they m a y be redeemed prior to m a t u r i t y , a f t e r '
'60 days from t h e issue date, a t t h e owner's option, a t fixed redemption values. N o
interest as such will be paid on t h e bonds, b u t they will increase in redemption
value a t t h e end of t h e first year from issue date, and a t t h e end of each successive
"half-year period thereafter until their m a t u r i t y , when t h e face a m o u n t becomes
payable. T h e increment in value will be payable only upon redemption of t h e
bonds. A table of redemption values for each bond appears on its face. T h e
purchase price of bonds of Series E has been fixed so as to afford an investment
yield of a b o u t 2.9 percent per annuni compounded semiannually if t h e bonds are
held to i n a t u r i t y ; if t h e owner exercises his option to redeem a bond prior to m a t u r i t y t h e investment yield will be less. T h e table a t t h e end of this circular
•shows: (1) H o w bonds of Series E, by denominations, increase in redemption value
•during t h e successive half-year periods following issue, and (2) the computed
investment yields (a) on t h e issue price from issue date t o t h e iDeginning of each
lialf-year period, and {b) on t h e current redemption value from the beginning of
each half-year period to m a t u r i t y a t t h e end of t h e 10-year period.
3. T h e bonds will not be transferable, and will be payable only to t h e owner n a m e d
thereon, except in case of death or disability of t h e owner or as otherwise specifically provided in t h e regulations governing savings bonds, and in any event only
in accordance with such regulations.. Accordingly they m a y not be sold, and
m a y not be hypothecated as collateral for a loan.
4. T A X A T I O N . — F o r t h e purpose of determining taxes and tax exemptions, t h e
increment in value represented by t h e difference between t h e price paid for United
States savings bonds issued on a discount basis, and t h e redemption value received
therefor (whether a t or before maturity) shall be considered as interest, and such
interest on bonds of Series E is not exempt from income, or profits taxes now or
liereafter imposed by t h e United States.^ T h e bonds s h a l l b e subject to estate,
inheritance, gift, or other excise taxes, whether Federal or State, b u t shall be
exempt from all taxation now or hereafter imposed on t h e principal or interest
thereof by any State, or any of t h e possessions of t h e United States, or by any
local taxing authority.
1 United States savings bonds of Series F and G, issued pursuant to Department Circular No. 654, Revised, dated .Tune 1, 1942, are also included in the designation United States war savings bonds.
2 For information concerning the taxable and exempt status under Federal tax laws of the interest (increment in value) on United States savings bonds issued on a discount basis (including bonds of Series E),
.and alternate methods of reporting such interest, see Internal Revenue Mimeograph, Coll. No. 5299,
JR. A. No. 1177, dated December 17,1941.




236

REPORT OF T H E SEiCRETARY OF T H E

TREASURY

III. PURCHASE OF BONDS.

1. A G E N C I E S . — B o n d s of Series E m a y be purchased, while this offer is in effectas follows:
(a) Over-the-counter for cash:
(1) At United ^States post offices of t h e first, second, and third classes, a n d a t
selected post offices of t h e fourth class, and generally a t classified stations a n d
branches.
(2) At t h e Treasury D e p a r t m e n t , Washington, D . . C , a t Federal Reserve B a n k s
a n d branches, a n d a t such incorporated banks, t r u s t companies, m u t u a l savings
, b a n k s and other agencies as are duly designated a n d have duly qualified as sales
agents p u r s u a n t t o t h e provisions of Treasury D e p a r t m e n t Circular No. 657,
d a t e d April 15, 1941, as amended a n d supplemented.
(5) On mail order.—Bonds of Series E maj^ be purchased by mail upon application t o the Treasurer of t h e United States, Washington, D . C , or to any Federal Reserve Bank or branch, accompanied by a remittance to cover t h e is^ie price.
Any form of exchange, including personal checks, will be accepted, subject, to
collection. Checks, or other forms of exchange, should be drawn to t h e order of
t h e Treasurer of t h e United States or t h e Federal Reserve Bank, as t h e case m a y be.
(c) Other agencies.—The Secretary of t h e Treasury, in his discretion, m a y
designdite other agencies for t h e sale of or for t h e handling of applications for
bonds of Series E, which shall operate under such t e r m s a n d conditions as t h e
Secretary of t h e Treasury m a y prescribe or approve.
2. POSTAL SAVINGS.—Subject to regulations prescribed by t h e Board of Trustees
of t h e Postal Savings System, t h e withdrawal of postal savings deposits will be
p e r m i t t e d for t h e purpose of acquiring savings bonds.
3. U N I T E D

STATES

W A R SAVINGS

STAMPS FOR INSTALLMENT

PAYMENTS.—

W a r savings stamps, in denominations of 10, 25, and 50 cents, a n d $1 a n d $5,
m a y be purchased a t any post office where bonds of Series E are on sale a n d a t
such other agencies as m a y be designated from time to time. These s t a m p s m a y
be used t o accumulate credits^for t h e purchase of war saivings bonds. Albums,
for affixing t h e stamps, will be available without charge, and such albums will be
receivable, in t h e a m o u n t of t h e affixed stamps, on t h e purchase price of war
savings bonds. A Treasury issue of war savings stamps will hereafter be m a d e
available to replace t h e Postal Savings issue of defense stamps. T h e latter s t a m p s
will be withdrawn from sale when existing stocks are exhausted a n d t h e new s t a m p s
will be placed on sale without further notice, and their sale will continue until
terminated by t h e Secretary of t h e Treasury. Defense postal savings s t a m p s will
hereafter be included in t h e t e r m war savings s t a m p s a n d no distinction is t o be
m a d e between any such s t a m p s whether issued as defense postal savings s t a m p s
or as war savings stamps, a n d t h e s t a m p s .of either issue m a y be used interchangeably t o accumulate credits for t h e purchase of war savings bonds.
4. I S S U E P R I C E S . — T h e issue prices of t h e various denominations of bonds of
Series E follow: .
D E N O M I N A T I O N ( m a t u r i t y v a l u e ) . $25.00 $50.00 $100.00 $500.00 $1,000.00
I S S U E (purchase) P R I C E
$18.75 $37.50
$75.00 $375.00
$750.00
IV. LIMITATION ON HOLDINGS

1. T h e a m o u n t of United States savings bond of Series E of a n y designation
originally issued during a n y one calendar year to a n y one person, including those
registered in t h e n a m e of t h a t person alone, a n d those registered in t h e n a m e of
t h a t person with a n o t h e r n a m e d as coowner, t h a t m a y be held by t h a t person a t
a n y one time shall not exceed $5,000 ( m a t u r i t y value). Any bonds acquired on
original issue which create an excess m u s t immediately be surrendered for refund
of t h e issue price, as provided in t h e regulations governing savings bonds.
V. AUTHORIZED FORMS OF REGISTRATION

1. Bonds of Series E m a y be registered only in t h e names of n a t u r a l persons
( t h a t is, individuals) whether adults or minors, in their own right, who are residents of t h e continental United States, t h e Territories a n d Insular Possessions of
t h e United States, t h e Canal Zone, t h e Philippine Islands, or citizens of t h e
United States temporarily residing abroad, as follows: (a) I n t h e n a m e of one
person, {b) in t h e names of two (but not more t h a n two) persons as coowners, a n d
(c) in t h e n a m e of one person payable on d e a t h to one (but not more t h a n one)
other designated person. Full information as to authorized forms of registration
will be found in t h e regulations governing savings bonds (see sec. I X , par. 1).




REPORT OF THE SECRETARY OF THE TREASURY

237.

VI. DELIVERY AND SAFEKEEPING OF BONDS OF SERIES E

1. Postmasters a n d other authorized sales agents from whom bonds of Series E
m a y be purchased are authorized to deliver such bonds duly inscribed and dated upon
receipt of t h e issue price. Bonds issued upon mail order applications m a d e t o a
F e d e r a l Reserve Bank or branch, or t o t h e Treasurer of t h e United States will be
delivered within t h e continental United States, t h e Territories a n d Insular
Possessions of t h e United States, t h e Canal Zone a n d t h e Philippine Islands.^ N o
deliveries elsewhere will be made. • If purchased b y citizens, of t h e United States
temporarily residing abroad, bonds will be delivered in t h e United States, or held
in safekeeping, as t h e purchaser m a y direct. Delivery should n o t be accepted b y
any purchaser until he h a s verified that, t h e correct name a n d address are duly
inscribed on t h e face of t h e bond, t h a t t h e bond is duly dated as of t h e first d a y
of t h e m o n t h in which p a y m e n t of t h e issue price was received by t h e agent, a n d
t h a t t h e dating s t a m p (with current date) of t h e postmaster or other issuing agent
is imprinted in t h e circle in t h e lower left corner of t h e bond.
2. A savings bond will be held in safekeeping without charge by t h e Secretary
of t h e Treasury if t h e holder so desires, a n d in such connection t h e facilities of t h e
Federal Reserve Banks, as fiscal agents of t h e United States, a n d those, of t h e
Treasurer of t h e United States, will be utilized. Arrangements m a y be m a d e
for such safekeeping a t t h e time of purchase, or subsequently. Postmasters
generally, and branches of Federal Reserve Banks,^ will assist holders in arranging
for safekeeping, b u t will n o t act as safekeeping agents.
•

VII.- P A Y M E N T AT MATURITY OR REDEMPTION PRIOR TO MATURITY

1. G E N E R A L ; — A n y bond of Series E will be paid in full a t m a t u r i t y , or, a t t h e
option of t h e owner, after 60 days from t h e issue date, will be redeemed in whole
or in p a r t a t t h e appropriate redemption value prior t o m a t u r i t y , following pres-i
entation a n d surrender of t h e bond, with t h e request for p a y m e n t properly exe-:
cubed, all in accordance with t h e regulations governing savings bonds.
2. E X E C U T I O N OF R E Q U E S T FOR P A Y M E N T . — T h e registered owner, or other per-

son entitled t o p a y m e n t under t h e regulations governing savings bonds, m u s t
appear before one of t h e officers authorized b y t h e Secretary of t h e Treasury t o
witness a n d certify requests for payment, establish his identity, a n d in t h e presence
of such officer sign t h e request for p a y m e n t , adding t h e address to which t h e check
is t o be rnailed. After t h e request for p a y m e n t has been so signed, t h e witnessing
officer should complete a n d sign t h e certificate provided for his use.- Unless
otherwise authorized in a particular case, t h e form of request appearing on t h e
back of t h e bond m u s t be used.
•
" 3. O F F I C E R S AUTHORIZED TO W I T N E S S AND C E R T I F Y

REQUESTS

FOR P A Y -

M E N T . — T h e officers-authorized t o witness a n d certify requests for p a y m e n t of
savings bonds are fully set forth in t h e regulations governing savings bonds,
such officers including United States postmasters a n d certain oLher post
office officials, a n d t h e executive officers of all banks or t r u s t companies incorporated in t h e United States or its organized Territories, including officers a t
domestic and foreign branches who are certified t o t h e Treasury Department, as
executive officers.
^
.
.
4. PRESENTATION AND SURRENDER.—After t h e request for p a y m e n t h a s been
duly executed by. t h e person entitled a n d b y t h e certifying officer, t h e bond m u s t
be presented a n d surrendered t o t h e Treasury D e p a r t m e n t , Washington, or t o a
Federal Reserve Bank or branch, a t t h e expense a n d risk of t h e owner. F o r t h e
owner's protection, t h e bond should be forwarded by registered mail, if n o t presented in person.
5. DISABILITY OR D E A T H . — I n case of t h e disability of t h e registered owner, or
the death of t h e registered owner n o t survived b y a coowner or a-designated beneficiary, instructions should be obtained from t h e Treasury D e p a r t m e n t , Division
of Loans a n d Currency, Washington, D . C , before t h e request for p a y m e n t is
executed.
6. M E T H O D OF P A Y M E N T . — T h e only agencies authorized t o p a y or redeem
savings bonds are t h e Treasury D e p a r t m e n t a n d t h e Federal Reserve Banks, b u t
bonds t o be redeemed m a y be presented to branches of Federal Reserve Banks.
Postmasters are n o t authorized t o m a k e p a y m e n t , b u t generally they will assist
3 If bonds are issued within the United States, deliveries thereof outside the Continental United States,
at the risk and expense of the United States, mav be susDended during the war emergency, but in any
such case bonds will be delivered to addresses within the United States, or will be held in safekeeping as
the purchaser may direct.
4 Safekeeping facilities may be offered at some branches of Federal Reserve Banks, and in such connection
an inquiry may be addressed to the branch.




238

REPORT OF T H E SEiCRETARY OF T H E TREASURY

owners in securing p a y m e n t , at or before m a t u r i t y . P a y m e n t in all cases will be
m a d e b y check drawn to t h e order of t h e registered owner or other person entitled
to p a y m e n t , and mailed to t h e address given in t h e request for p a y m e n t .
7. PARTIAL R E D E M P T I O N . — P a r t i a l redemption a t current redemption value of a
savings bond of Series E of a" denomination higher t h a n $25 ( m a t u r i t y value) is
permitted, b u t m u s t accord to an authorized denomination. In case of partial
redemption the remainder will be reissued in authorized denominations bearing the
same issue date as t h e bond surrendered.
VIII. SERIES

DESIGNATION

1. United States savings bonds of Series E, issued during t h e calendar year
1942 (either as defense or war savings bonds) will be designated Series E-1942,
a n d those which m a y be issued in subsequent calendar years will be similarly
designated by t h e series letter E followed by t h e year of issue.
IX. GENERAL

PROVISIONS

1. All bonds of Series E, issued p u r s u a n t t o this circular, shall be subject to t h e
regulations prescribed from time to time by t h e Secretary of the Treasury to govern
United Stales savings bonds. Such regulations m a y require, among other things,
. reasonable notice in case of presentation of bonds of Series E for redemption prior
t o m a t u r i t y . T h e present regulations governing savings bonds are set forth in
Treasury D e p a r t m e n t Circular No. 530, Fifth Revision, dated J u n e 1, 1942,
copies of which m a y be obtained on application to the Treasury D e p a r t m e n t , or to
a n y Federal Reserve Bank.
2. The Secretary of the Treasury reserves the right to reject any application
for bonds of Series E, in whole or in p a r t , and to refuse to issue or permit to be
issued hereunder any such bonds in any case or any class or classes of cases if he
deems such action to be in t h e public interest, and his action in any such respect
shall be final.
3. Postmasters in charge of post offices where bonds of Series E are on sale, under
regulations promulgated by t h e Posltmaster General, and Federal Reserve Banks,
as fiscal agents of t h e United States, are authorized to perform such fiscal agency
services as m a y be requested of t h e m by the Secretary of t h e Treasury in connection with t h e issue, delivery, safekeeping, redemption, and p a y m e n t of bonds of
Series E. Other sales agencies will be subject to t h e provisions of Treasury
D e p a r t m e n t Circular No. 657, dated April 15, 1941, as amended or supplemented.
• 4. T h e Secretary of t h e Treasury m a y a t any time or from time to time supplem e n t or amend t h e t e r m s of this circular, or of any a m e n d m e n t s or supplements
t h e r e t o , information as to which will be p r o m p t l y furnished to t h e P o s t m a s t e r
General, the Federal Reserve Banks and other sales agencies.
5. T h e offering of United States savings bonds of Series E, p u r s u a n t to this
circular, revised, is separate and distinct from t h e concurrent offerings of United
States savings bonds of Series F and of Series G, p u r s u a n t to Treasury Depart:ment Circular No. 654, Revised, dated J u n e 1, 1942. T h e bonds of Series E, F ,
and G so offered and issued constitute issues of United States war savings bonds,
.and are so designated.




H E N R Y MORGENTHAU,

Jr.,

Secretary of the Treasury,

REPORT OF THE SECRETARY OF THE TREASURY
UNITED STATES SAVINGS BONDS

230

SERIES E

Table of redemption values and investment yields
Table showing: {1) How bonds of Series E, by denominations, increase in redemp- .
Hon value during successive half-year periods following issue; {2) the approximate
investment yield on the purchase price from issue date to ihe beginning of each halfyear period; and {3) the approximate investment yield on the current redemption
value from the beginning of each half-year period to maturity. Yields are expressed
in terms of rate percent per annum, compounded semiannually.
Maturity value.
Issue price

Period after issue date

First H year
K t o 1 year
1 to IM years.-'...
IH to 2 years
:..
•2 to 2H years....'
'2H^to 3 years
3 to 3H years
••3H to 4 years.
.......
4 to 4M years
4>^ to 5 years
.:.
'5 to 53^ years
b}4. to 6 years
6 to 6H years
.•
(6M to 7 years
7 to 7M years..
—
7M to 8 years
8 to 8M years
'8M to 9 years
—
'9 to 9H years
•^}/2 to 10 years
Maturity value (10 years
from issue d ate)

$25.00
18.75

$50. O $100. 00 $500. 00 $1, 000. 00
O
375. 00
37.50
75.00
750.00

(3) Approxi(2) Approximate investmate invest- ment yield on
ment yield on current redemppurchase price
tion value
from issue date from begin(1) Redemption values during each half-year ' to beginning
ning of each •
pei;iod
of each halfhalf-year
, year period
period to
maturity

$75. 00 $375.00 1
$18. 75 $37.50
18.75 .37.50
75.00
375.00 1
18. 87 37. 75
75.50
377. 50
38.00
76.00
380. 00
19.-00
19.12
38.25
76. 50
382.50
19. 25 38.50
385.00
77.00
19.50
39.03
78.03 k 390. 0)
19.75
39.50
79.00
395.00
20.00
40.00
80.00
400. 00
405. 00
20. 25 "40.50
81.00
41.00
82.00
410.0)
20.50
20.75 4L50 . 83.00 415.00
42.00
84.00
420.00
21.00
43.00
86.00
430.03
21.50
44.00
88.00
440.03
22.00
45.03
90.00
450.00
22.50
46.03
92.00
460.03
23.00
47. 00
94.00
470. 00
23.50
48.00
96.00
480. 00
24.00
49.00
98.00
490.00
24.50
25.00

50.00

100.00

500.00

$750. 00
750. 00
755. 00
760.00
765.00
770. 00
780. 00
790. 00
.800. 00
810. 00
820.00
830. 00
840. 00
860.00
880. 00
900. 00
920. 00
940. 00
960. 00
980. 00

1,000.00

Percent
0.00
.67
.88
.99
1.06
1.31
1.49
1.62
•1.72
1.79
1.85
1.90
2.12
2.30
2.45
2.57
2.67
2.76
2.84

Percent
12.90
'
3.05
3.15
3.25
3.38
' 3.52
3.58
3.66
3.75
3.87
4.01
4.18
4.41
4.36
4.31
4.26
4.21
4.17
4.12
4.08

2.90

1 Approximate investment yield for entire period from issuance to maturity.
OTHER SERIES

United States savings bonds of Series F and of Series G are also offered for
sale concurrently with Bonds of Series E. The bonds of Series F will be issued on
.a discount basis, with a 12-year maturity, at 74 percent of their maturity value;
if held to maturity the yield will approximate 2.53 percent per annum. The
bonds of Series G, likewise with a 12-year maturity, will be issued at par, and will
bear interest at the rate of 2)^ percent per annum payable semiannually. The
bonds of both series will be redeemable before maturity, at the option of owners, ,
at fixed redemption values, in which case the investment yields will be less than
if held to maturity. These bonds are intended to provide facilities for the larger
investors, and registration will not be restricted to individuals. The aggregate
amount of bonds of either series, or of the two series combined, originally issued
to any one person during any one calendar year that may be held by that person
•at any one time may not exceed $100,000 (issue price). Full particulars regarding
these bonds are set forth in Treasury Department .Circular No. 654, Revised,
dated June 1, 1942, copies of which may be obtained from the Treasury Department, Washington, or from any Federal Reserve Bank.

487543—43-

-17




240

REPORT OF T H E SEiCRETARY OF THiE TREASURY
Exhibit 18
Offering of United States war savings bonds of Series F and Series G
[Department Circular No. 654, Revised. Public Debt]
TREASURY

DEPARTMENT,

Washington, J u n e 1, 1942.
I. O F F E R I N G

OP UNITED

STATES W A R SAVINGS BONDS O F SERIES

F A N D SERIES G

1. T h e Secretary of t h e Treasury, p u r s u a n t t o t h e a u t h o r i t y of t h e Second
Liberty Bond Act, as amended, offers for sale, t o t h e people of t h e United
States, through t h e Federal Reserve Banks, United States savings bonds of Series
F a n d Series G, which bonds a r e hereby designated United States w a r savings
bonds,^ a n d m a y hereinafter be referred t o as bonds of Series F a n d Series G.
Descriptions of t h e bonds of b o t h series, their terms, a n d t h e conditions of their
issue a n d redemption are hereinafter fully set forth.
2. United States savings bonds of Series F and G include bonds issued as bonds
of defense Series F a n d G under this circular as originally published a n d amended,
a n d those issued as war savings bonds under this circular as revised. T h e former
bonds will b e withdrawn from sale when existing stocks.are exhausted, a n d t h e
new bonds will then be placed on sale without further notice, a n d their sale will
continue until terminated b y t h e Secretary of t h e Treasury. As their terms and
t h e conditions of their issue are identical, no distinction is t o be m a d e between any
bonds of Series F or G, whether issued as bonds of defense Series F or G or as war
savings, bonds.
II.

D E S C R I P T I O N A N D TERMS OF B O N D S

^

1. T h e bonds of Series F a n d Series G will be issued only in registered form,
in denominations of $25 2 (for Series F only), $100, $500, $1,000, $5,000 a n d
$10,000 (maturity values), a t prices hereinafter set forth. E a c h bond will bear
t h e facsimile signature of t h e Secretary of t h e Treasury, a n d will bear both a n
imprint in color (brown for Series F and blue for Series G) a n d an impression of
t h e Seal of t h e Treasury. A t t h e time of issue, t h e issuing agent will inscribe
t h e n a m e and address of t h e owner on each bond, will enter t h e d a t e as of which
t h e bond is issued in t h e upper right corner, a n d will imprint his dating s t a m p
(with current date) in t h e circle in t h e lower left corner. T h e bonds shall b e
valid only if duly inscribed a n d dated, as above provided, a n d delivered b y a n
authorized agent following receipt of p a y m e n t therefor.
2. T h e bonds of each series will, in each instance, be dated as of the first d a y
of t h e m o n t h in which p a y m e n t of t h e issue price is received b y a n agent authorized t o issue t h e bonds (see sec. HI)'; t h e bonds will m a t u r e a n d b e payable a t
face value 12 years from such issue date. T h e bonds of either series m a y not be
called for redemption b y t h e Secretary of t h e Treasury prior t o m a t u r i t y , b u t
t h e y m a y b e redeemed prior t o m a t u r i t y , after six m o n t h s from t h e issue date, at
t h e owner's option, a t fixed redemption values, as hereinafter provided.
3. Bonds of Series F will be issued on a discount basis a t 74 percent of their
m a t u r i t y value. No interest as such will be paid on t h e bonds, b u t they will
increase in redemption value a t t h e end of t h e first year from issue date, a n d at
t h e end of each successive half-year period thereafter until their m a t u r i t y , when
t h e face a m o u n t becomes paj^able. T h e increment in value will be payable only
upon redemption of t h e bonds. A table of redemption values for each bond
a p p e a r s on i t s face. T h e purchase price of bonds of Series F has been fixed so as
t o afford a n i n v e s t m e n t yield of a b o u t 2.53 percent p e r a n n u m compounded
semiannually if t h e bonds are held t o m a t u r i t y ; if t h e owner exercises his optior
to redeem a bond pi ior t o m a t u r i t y t h e investment yield will be less.
4:. Bonds of Series G will be issued a t par, and will bear interest a t t h e r a t e oi
2>^ percent per a n n u m , payable semiannually from d a t e of issue. Interest will be
paid by check drawn t o t h e order of t h e registered owner and mailed to his address
I n t e r e s t will cease a t m a t u r i t y , or, in case of redemption before m a t u r i t y , a t the
end of t h e interest period next preceding t h e d a t e of redemption. A table oj
redemption values for each bond appears on i t s face, and t h e difference betweer
t h e face a m o u n t of t h e bond and t h e redemption value fixed for any period repre
sents a n a d j u s t m e n t (or refund) of interest. Accordingly, if t h e owner exerciser
his option t o redeem a bond prior t o m a t u r i t y , t h e investment yield will b e less
t h a n t h e interest r a t e on t h e bonds. Bonds of Series G m a y b e redeemed ai
1 United States savings bonds of Series E, issued pursuant to Department Circulai- No. 653, Revised
dated June 1,1942. are also included in the designation United States war savings bonds.
2 Department Circular No. 654. dated Anr. 15,1941, was amended Dec. 12,1941, to.provide the additiona
denomination of $25 for United States savings bonds of defense Series F, effective Jan. 1, 1942.




REPORT O F - T H E SEGRETARY O F . T H E TREASURY

241

p a r ( l ) ' u p o n t h e d e a t h of t h e owner, or a coowner, if a n a t u r a l person, or (2),.
as to bonds held by a trustee or other fiduciary, upon t h e d e a t h of any person
which results in termination of t h e t r u s t , in whole or in p a r t . If t h e t r u s t is^
t e r m i n a t e d only in p a r t , rede;niption a<t p a r will be m a d e only to the extent of t h e
pro r a t a portion of t h e t r u s t so terminated, to t h e next lower multiple of $100.
I n any case request for redemption a t p a r m u s t be m a d e within ^4 m o n t h s after
t h e date of d e a t h and in accordance with t h e regulations governing savings bonds.
5. Tables a t t h e end of this circular show separately, for bonds"of Series F a n d
those of Series G: (1) T h e redemption values, by denominations, during t h e
successive half-year periods Nfollowwig issue, and (2) t h e computed i n v e s t m e n t
yields (a) on t h e issue price from issue d a t e tb t h e beginning of each half-year
period, and (6) on the current redemption value from the beginning of each
half-year period to m a t u r i t y a t the end of t h e 12-year period.
6. T h e bonds will not be transferable, and will be payable only to t h e o w n e r
n a m e d thereon, except in case of d e a t h or disability of t h e owner or as otherwise
specifically provided in t h e regulations governing savings bonds, a n d in any e v e n t
only in accordance with such regulations. Accordingly they m a y not be sold, a n d
m a y n o t be h y p o t h e c a t e d as collateral for a loan.
7. Taxation.—For t h e purpose of determining taxes and tax exemptions, t h e
increment in value of savings bonds of Series F represented by the^ difference
between t h e price paid and t h e redemption value received therefor (whether a t
or before m a t u r i t y ) shall b e considered as interest, and such interest on such bondsof Series F, and ipterest on bonds of Series G, is not exempt from income or profits
taxes now or hereafter imposed by t h e United States.^ The bonds shall be subject
to estate, inheritance, gift, or other excise taxes, whether Federal or State, b u t
shall be exempt from all taxation now or hereafter imposed on t h e principal or
interest thereof by any State, or any of t h e possessions of t h e United States, o r
b}^ any local taxing a u t h o r i t y .
III. PURCHASE OF BONDS

1. Agenxies.—Bonds of Series F and .Series G m a y be purchased, while thisoffer is in effect, upon application to any Federal Reserve Bank or. branch, or tot h e Treasurer of t h e United States, Washington, D . C: Sales agencies, duly
quahfied under t h e provisions of Treasury D e p a r t m e n t Circular No. 657, dated'
April 15, 1941, as amended and supplemented, and banking institutions geneia-lly,.
m a y submit applications for account of customers, but' only the Federal R e s e r v e
Banks (and. branches) and t h e Treasury D e p a r t m e n t are authorized to act as
official agencies, and t h e receipt of application and p a y m e n t at an official agency
will govern t h e dating of t h e bonds issued.
2. Payment for bonds.—Every application must be accompanied by p a y m e n t
in full of the issue price.. Any form of exchange, including personal checks, will
be accepted, subject to collection. Checks, or other forms of exchange, should
be drawn to t h e order of the Federal Reserve Bank, or the Treasurer of t h e
United States, as t h e case m a y be. Any qualified depositary, p u r s u a n t to t h e
provisions of Treasury D e p a r t m e n t Circular No. 92 (revised F e b r u a r y 23, 1932,.
as supplemented), will be permitted to make p a y m e n t by credit for bonds applied
for on behalf of its customers up to any a m o u n t for which it shall be qualified
in excess of existing deposits, when so notified by t h e Federal Reserve B a n k - o f
its district;
./ 3. Postal savings.—Subject to regulations prescribed by the Board of Trusteesof j:he Postal Savings System, the withdrawal of postal savings deposits will b e
permitted for t h e purpose of acquiring savings bonds..
4. Other agencies.—The Secretary of the Treasury, in his discretion, may
designate agencies other t h a n those herein designated for t h e sale of, or for t h e
handling of applications for, savings bonds of Series F and Series G.
5. For7n of application.—In applying for bonds under this circular, care should
be exercised to specify whether those of Series F or Series G are desired, a n d
there m u s t be furnished: (1) Instructions for registration of the bonds to be issued,
which m u s t be in one of t h e authorized forms (see.sec. V); (2) t h e post officeaddress of each person (or other entity) whose name appears in t h e registration;(3) address for dehvery of t h e bonds; and (4), in case of bonds of Series G, address^
for mailing interest checks. The use of an official application form is desirable,
b u t not necessary. The application should be forwar.ded to t h e Federal Reserve
Bank, or branch, of the district, accompanied by remittance to COiver t h e p u r s For information concerning the taxable and exempt status under Federal tax. laws of the interest (or
increment in value of.those issued on a discount basis, including bonds of Series F), and themethods of
reporting such interest, see Internal Revenue Mimeograph, Coll. No. 5299, R. A. No. 1177, dated'December17,1941.
"'




242

REPORT OF THE SEiCRETARY OF THE TREASURY

chase price ($74 for each $100 face amount of bonds of Series F, or $100 for each
. $100 face amount of bonds of Series G).
6. Issue prices.—The issue prices of the various denominations of bonds of
Series F and Series G follow:
SERIES F

DENOMINATION, (maturity value)
ISSUE (purchase) Price

.$25.00
$18.50

-

$100
$74

$500
$370

$1,000
$740

$5,000
$3,700

$10 000
$7^400

. . . . . . . $100
$100

$500
$500

$1,000
$1,000

$5,000
$5,000

$10 000
$10,000

SERIES G

DENOMINATION (maturity value)
ISSUE (purchase) Price.

IV. LIMITATION ON HOLDINGS

1. The amount of United States savings bonds of Series F or of Series G, or
the combined aggregate amount of both series, originally issued-during any one
calendar year to any one person, including those registered in the name of that
person alone, and those registered in the name of that person with another named
as coowner, that may be held by that person at any one time shall not exceed
$100,000 (issue price), effective for the calendar year 1942, and thereafter. Any
bonds acquired on original issue which create an excess must immediiately be
surrendered for refund of the issue price, as provided in the regulations governing
.savings bonds.
V. AUTHORIZED FORMS OF REGISTRATION

1. United States savings bonds of Series F and Series G may be registered as
Mlows:
(1) In the names of natural persons (that is, individuals) whether adults or
minors, in their own right, as follows:
(a) In the name of one person,
(b) In the names of two (but not more than two) persons as coowners, and
(c) In the name of one person payable on death to one (but not more than
one) other designated person; (2) In the name of an incorporated or unincorporated body, in its own right
(except a commercial bank, which, for this purpose, is defined as a bank that
accepts demand deposits);
(3) In the name of a fiduciary; and
(4) In the name of the owner or custodian of public funds.
2. Restrictions.—Registration is restricted,' in the case of individuals, to those
who are residents of the continental United States, the Territories and Insular
Possessions of the United States, the Canal Zone, the Philippine Islands, or citizens of the tfnited States temporarily residing abroad. The same restrictions
will/apply to the registration of bonds in any other authorized form.
3. Full information regarding authorized forms of registration will be found in
the ..regulations governing savings bonds (see sec. IX, par. 1). . In every form of
registration, the post office address must be given, and if more than one name
appears the post office address of each must be furnished.
VI. DELIVERY AND SAFEKEEPING OF BONDS

1. Federal Reserve Banks (and branches) are authorized to deliver bonds of
"Series F and .Series G duly inscribed and dated upon receipt of the issue price.
Unless delivered in person, bonds issued will be delivered within the continental.
United States, the Territories and Insular Possessions of the United States, the
Canal Zone and the Philippine Islands.^ No deliveries elsewhere will be made.
If purchased by citizens of the United States temporarily residing abroad, bonds
will be delivered in the United States, or held in safekeeping, as the purchaser may
•direct. Delivery should not be accepted by any purchaser until he has verified
that the correct name and address are duly inscribed on the face of the bond, that
the bond' is duly dated as of the first day of the month in which payment of the
issue price was received by the agent, and that the dating stamp (with current
date) of the issuing agent is imprinted in the circle in the lower left corner of the
bond.

•

'

•

2. Savings bonds of Series F or Series G will be held in safekeeping without
•charge ;^vfthe Secretary of the Treasury if the holder so desires, and in such con-nection#he facihties of the Federal Reserve Banks, as fiscal agents of the United
* If bonds are issued within the United States, deliveries thereof outside the continental United States, at
-the risk and expense of the United States, may be susoended during the war emergency, but in any such
, -case bonds will be delivered to addresses within the United States, or will be held in safekeeping, as the
^purchaser may direct.




REPORT OF THE' SECRETARY OF THE TREASURY

243

States, and those of the Treasurer of the United States, will be utilized.^ Arranger
ments may be made for such safekeeping at the time of purchase, or subsequently.
VII. P A Y M E N T AT MATURITY OR REDEMPTION BEFORE MATURITY

1. General.—^Any savings bond of Series F or Series G will be paid in full at
maturity, or, at the option of the owner, after 6 months from the issue date, will be
redeemed in whole or in part at the appropriate redemption value prior to maturity, on the first day of any calendar month, • on one month's notice in writing,
following presentation and surrender of the bond, with the request for payment
properly executed, all in accordance with the regulations governing savings bonds.
2. Notice of redemption.—When a savings bond of Series F or Series G is to be
redeemed prior to maturity, a notice in writing of the owner's intention must be
given to and be received by a Federal Reserve Bank or branch, or the Treasury
Department not less than one calendar month in advance. A duly executed
request for payment will be accepted as constituting the required notice.
3. Execution of request for payment.—The registered owner, or other person
entitled to payment under the regulations governing savings bonds, must appear
before one of the officers authorized by the Secretary of the Treasury to witness
and certify requests for payment, establish his identity, and in the presence of
such officer sign the request for payment, adding the address to which the check
is to be mailed. After the request for payinent has been so signed, the witnessing
officer should complete and sign the certificate provided for his use. Unless
otherwise authorized in a particular case, the form of request appearing on the
back of the bond must be used.
4. Officers authorized to witness and certify requests for payment.—The officers
authorized to witness and certify requests for payment of savings bonds are fully
set forth in the regulations governing savings bonds, such officers including United
States postmasters and certain other post office officials, and the executive officers
of all banksand trust companies incorporated in th,e United States or'its organized
Territories, including officers at domestic and forejgn branches who are certified to
the Treasury Department as executive officers. 5. Presentation and surrender.—After the request for payment has been duly
executed by the person entitled and by the certifying officer, the bond must be
presented and surrendered to a Federal Reserve Bank or branch, or to the Treasury
Depalrtment, Washington, at the expense and risk of the owner. For the owner's
protection, the bond should be forwarded by registered mail, if not presented in
person.
6. Disability or death.—In case of the disability of the registered owner, or the
death of the registered owner not survived by a coowner or a designated beneficiary,
instructions should be obtained from the Treasury Depiartment, Division of
Loans and Currency, Washington, D. C , before the request for payment ;is
executed.
7. Method of payment.—The only agencies authorized to pay or redeem savings
bonds are the Federal Reserve Banks and the Treasury Department. Payment
in all cases will be made by check ,drawn to the order of the registered owner or
other person entitled to payment, and mailed to the address given in the request
for payment.
/
8. Partial redemption.—Partial redemption at current redemption value of a
bond of Series F, of a denomination higher than $25 (maturity value), or of a bond
of Series G, of a denomination higher than $100, is permitted, but must correspond
to an authorized,denomination. In case of partial redemption the remainder will
be reissued in authorized_denominations bearing the same issue date as the bond
surrendered.
VIII. SERIES DESIGNATION

1. Bonds of Series-F, issued during the calendar year T942 (either as defense
series or as war savings bonds) will be designated Series F-1942, and those of
Series G will be similarly designated Series G-1942, Bonds of either series which
may be issued in subsequent calendar years will be similarly designated by the
series letter, F or G, followed by the year of issue.
IX. GENERAL PROVISIONS

1. All bonds of Series F and Series G, issued pursuant to this circular, shall be
subject to the regulations prescribed from .time to time by the Secretary of the
Treasury to govern United States savings bonds. The present regulations
« Safekeeping facilities may be offered at some branches of Federal Reserve Banks, and in such connection
an inquiry may be addressed to the branch.




244

REPORT OF T H E SEiCRETARY OF T H E TREASURY

governing savings bonds are set forth in Treasury Department Circular No.
530,"Fifth Revision, dated June 1, 1942, copies of which may be obtained on
application to the Treasury Department, or to any,Federal Reserve Bank.
2. The Secretary of the Treasury reserves the right to reject any application
for savings bonds of either Series "F or Series G, in whole or in part, and to refuse
to issue or permit to be issued hereunder any such savings bonds in any case or
any class or classes of cases if he deems ^uch action to be in the public interest,
and his action in any such respect shall be final.
3. Federal Reserve Banks, as €scal agents of the United States, are authorized '
to perform such services as may be requested of them by the Secretary of the
Treasury in connection with the issue, delivery, safekeeping, redemption, and
payment of savings bonds of Series F and Series G.
4. The Secretary of the Treasury may at any time or from time to time supplement or amend the terms of this circular, or of any amendments or supplements
thereto, information as to which will be promptly furnished the Federal Reserve
Banks.
'
' 5.' The offerings of United States savings bonds of Series F and Series G,
pursuant to this circular, revised, are separate and distinct from the concurrent
offering of United States savings bonds of Series E pursuant to Department
Circular No. 653, Revised, dated June 1, 1942. The bonds of Series E, F, and G
fio offered and issued constitute issues of United States war savings bonds, and are
so designated.
.

HENRY MORGENTHAU,

Jr.,

Secretary of the Treasury.
UNITED S T A T E S SAVINGS BONDS

SERIES

F

Table of redemption values and investment yields
Table showing: {1) How United States savings bonds of Series F, by denominations,
increase in redemption value during successive half-year periods following issue;
{2) the approximate investment yield- on the purchase price from issue date to the
beginning of each half-year period; and {3) the approximate investment yield on the
current redemption value from the beginning of each half-year period to maturity.
Yields are expressed in terms of rate percent per annum, compounded semiannually.
M a t u r i t y value
Issue price

"Period after issue
date

$25.00
$18. 50

$100.' 00
$74. 00

$500.00
$370. 00

$1, 000
$740

$5,000
$3, 700

$10,000
$7,400

(1) R e d e m p t i o n values d iu-ing eac ll half-ye ar period

(3) Approxi(2) Approxim a t e investm a t e invest- m e n t yield on
m e n t yield on
c u r r e n t rep u r c h a s e price
demption
from issue d a t e value from b e to beginning ginning of each
of each halfhalf-year p e y e a r period
riod t o m a tm'ity
Percent •

F i r s t H year
H t o 1 year
1 t o I H years
I H t o 2 years
2 t o 2 H years
2 H t o 3 years
3 t o 3 H years
3 H to 4 years
4 t o 4 H years
4 H t o 5 years
5 t o 5 H years
S H to 6 years.
6 t o GH years
• 6 ^ to 7 years
7 t o 7 H years
7 H to 8 years.
S to 8 H years
S H t o 9 years
•9 t o 9 H y e a r s . .
9 H t o 10 years
10 t o lOH years
lOH t o 11 years
11 t o I I H years
l l H t o 12 y e a r s
M a t u r i t y value (12
y e a r s from issue
date)

N o t rec ieemable
$74.00
$370.00
$18.50
371. 00
74.20
18. 55
372. 50
18.62
74.50
374. 50
18.72
74.90
377. 00
18. 85
75.40
380. 00
19.00
76.00
383. 50
19.17
76.70
388. 00
19. 40
77.60
393. 00
19.65
78.60
398. 50
19.92
79.70
404. 50
20.22
80.90
411.00
20.55
82.20
417. 50
20.87
83.50
424. 00
21.20
84.80
430. 50
21.52
86.10
437. 00
21.85
87.40
443. 50
22.17
88.70
450. 00
22.50
90.00
457. 00
22.85
91.40
464. 50
23.22
92.90
472. 50
23.62
94.50
481. 00
24.05
96.20
24.50
98. 00
490.00
$25. 00 $1D.0.00 • $500.00
•

$740
742
745
749
754
760
767
776
786
797
.809
822835
848
861
874
887
900
914
929
.945
962
980
$1,000

$3,700
3,710
3,725
3,745
3,770
3.800
3, 835
3,880
3,930
3,985
4.045
4,110
•4,175
4,240
4,305
4,370
4,435
4,500
4,570
4,645
4,725
4,810
4,900

$7,400
7,420
7,450
7,490
7,540
7, 600
7, 670
7,760
7,860
7,970
8,090
8,220
8, 350
8,480
. 8, 610
8.740
8, 870
9,000
9,140
9,290
9,450
9,620
9,800

$5,000

$10,000

« Approximate investment yield for entire period from issuance to maturity.




"

0.00
.27
.45
.61
.75
.89
1.03
1.19
1.34
1.49
1.63
1.76
1.87
1.96
2.03
2.09
2.14
2.19
2.24
2.29
2.34
2.40
2.46
2.53

Percent
1 2.53
2.64
2.73
2.82
2.91
2.99
.3.07
3.15
3.20
3.24
3.27
3.29
3.29
3.31
3.32
3.35
3.40
3.46
3.54
3.63
3.72
3.81
3.91
4.08

RE'PORT OF THE' SECRETARY OF T H E TREASTJRY
UNITED STATES SAVINGS BONDS

245

SERIES G

Table of redemption values and investment yields
Table showing: (1) How"^ United States savings bonds of Series G (paying a current
return at the rate of 21/2 percent per annum on the purchase price, payable semiannually)
change i n redemption value, by denominations, during successive half-year periods
following issue; (2) the approximate investment yield on the purchase price from
issue date to the beginning of each half-year period; and-(3) the approximate investment yield on the current, redemption value from the beginning of each half-year
period to, maturity. Yields are expressed in terms of rate percent per annum, compounded semiriaHriually, and take into account the current return. ^
•
Maturity value.
Issue price

Period after issue d a t e

(2) Approximate
investment
yield .on p u r chase price
from issue d a t e
(1) R e d e m p t i o n values d u r i n g each half-year
to beginning
period
of each halfyear, period
$100.00
$100.00

$.500.00
$500.00

.$1,000
$1,000

$5,000
$5,000

$10,000
$10,000

Percent
Fii-st H year
H to 1 y e a r . .
1 to I H years.-.
I H to 2 y e a r s . .
2 to 2 H years
2 H to 3 years
3 to 3 H years
.
33/2 to 4 years---^
4 to 4 H years
4H to 5 y e a r s . . J . :
5 to 5V^ years
5 H to 6 years
6 to 6 H years
6 H to 7 years
7 to 7 H years
7 H to 8 years
8 to 8 H years
8V2 to 9 years
9 to 93/2 years
.
9 H to 10 years
10 to 103/2 years
IOV2 to 11 years
11 to IIV2 years
l l H to 12 years
M a t u r i t y • value (12 years
from issue date)

N o t redeemable..
$98. 80 $494. 00
489.00
97.80
484. 50
96. 90
96.20
481.00
478.00
95.60
95.10
475. 50
94. 80
474.00
94.70
473. 50
94.70
473. 50
94.90
474. 50
95.20
476.00
95.50
477. 50
95.80
479.00
96.10
480. 50
96.40
482.00
96.70
483. 50
- 97.00
485.00
97.30
486. 50
97.60
488. 00
97.90
489. 50
98.20
491. 00
493.^00
98. 60
99.20
496. 00
$100.00

$500.00

$988- $4, 940
9,780
978 4,890
.9, 690
969 4,845
9,620
962 4,810
9,560
956 4,780
9,510
951 4, 755
9,480
948 4,740
9,470
947 4,735
9,470
947 4,735
9,490
949 4,745
9,520
952 4,760
9, 550
955 4, 775
9,580
^ 958 4,790
9,610
4,805
961
964 4,820 • 9, 640
9,670
4,835
967
9,700
970 4,850
9,730
973 4,865
976 4,880 i 9,760
9,790
979 4,895
9,820
982 4,910
9,860
986 4,9.30
9,920
992 4,960

0.10
.30
.44
.61
..75
-.88
1.04
1.20
1.35
1.51
1.66
1.79
1.89
1.98
2.05
2.12
2.1.8
2.23
2.27
2.31
2.35
2.39
2.44

$10,000

(3) Approximate
investment
yield on current
redemption
value from beginning of each
hall-year period
to m a t m ' i t y
Percent
12.50
2.62
2.73
-2.84
2.94
3.04
3.13
3.20
3.26
3.30
3.32
3.33
3.33
3.34
3.35
3.37
3.39
3.42
3.46
3.51
3.60
3.75
3.94
4.13

2.50

$1,000

$5,000

' A p p r o x i m a t e iiiyestment yield for entire period from issuance to m a t u r i t y .
OTHER SERIES

United States savings bonds of Series E are also offered for sale concurrently
with those of Series F and Series G. T h e y are intended primarily for t h e investm e n t of small or m o d e r a t e a m o u n t s saved from current income b y individuals,
a n d their issue is restricted to individuals in their own right, with t h e a m o u n t
originally issued to any one person during any one calendar year t h a t t h a t person
m a y hold limited to $5,000 (maturity value). Full particulars regarding savings
bonds of Series E are set forth in Treasury D e p a r t m e n t Circular No. 653,. Revised,
d a t e d J u n e 1, 1942, copies of which m a y be obtained from t h e Treasury
D e p a r t m e n t , Washington, or from any Federal Reserve Bank.




246

REPORT OF T H E SECRETARY OF T H E TREASURY
Exhibit 19

Second amendment, April 20, 1942, to Department Circidar No. 530, Fourth Revision,,
prescribing regulations governing United States savings bonds
TREASURY DEPARTMENT,

Washington, April 20, 1942.
To_Owners of United States savings bonds, and Others Concerned:
r. Section 315.11 (a) of D e p a r t m e n t Circular No." 530, F o u r t h Revision, dated'
April 15, 1941, is hereby amended by adding thereto a subparagraph numbered 4,
reading as follows:
''(4) Reissue to add coowner.—A savings bond registered in t h e n a m e of one
person alone in his own right, or t o which one" person is shown to be entitled in
his own right, under these regulations, upon appropriate request (Form P D 1762)
by such person m a y be reissued in whole or in p a r t (but only in authorized, denominations) in t h e n a m e of t h e owner together with t h a t of another individual as
coowner: Provided, however, t h a t if a bond is so reissued in t h e names of twO'
individuals as coowners, t h e registration m a y not thereafter be changed so long
as both coowners are living, a n d Provided further, t h a t no. such" reissue will be
effective which results in a n y one person holding bonds in excess of t h e limitation
set forth in Section 315.4 hereof, and t h a t bonds reissued in accordance with this
subparagraph will be considered for t h e purposes of computation of holdings as
originally issued in both names. Reissues under t h e provisions of this s u b pars graph m a y be made only at a Federrl Reserve Bank or a t t h e Treasury
D e p a r t m e n t , Washington, T>. C . "
2. Section 315.12 (b) of D e p a r t m e n t Circular No. 530, F o u r t h Revision, dated
April 15, 1941, is hereby amended t o read as follows:
(b) Reissue during lifetime of registered owner.—A savings bond registered in
t h e name of one person payable on death t o a designated beneficiary m a y not be
reissued during t h e lifetime of such beneficiary so as to eliminate lais name. If
such beneficiary should predecease t h e registered owner, t h e bond m a y , upon
appropriate request by t h e registered owner, a n d proof of t h e death of t h e beneficiary, be reissued in t h e name of t h e registered owner alone, or in his name
payable on death t o a new beneficiary. A bond registered in t h e beneficiary
form m a y be reissued upon appropriate request (Foim P D 1762) by t h e registered
owner with t h e name of t h e designated beneficiary as coowner, with t h e same
restrictions a n d provisions set forth in section 315.11 (a) (4) of this circular as
amended; such reissue m a y be made only a t a Federal Reserve Bank or a t t h e
Treasury D e p a r t m e n t .
D . W. B E L L ,

Acting Secretary of the Treasury.

Exhibit 20
Fifth revision, J u n e 1, 1942, of Department Circidar No. 530, prescribing regulations
governing United States savings bonds
TREASURY DEPARTMENT,

^

Washington, J u n e 1, 1942.

To Owners of United States savings bonds, and Others Concerned:
D e p a r t m e n t Circular No. 530, F o u r t h Revision, dated April 15, 1941 (6 F . R.
2191),.as amended, is hereby further amended a n d issued as a Fifth Revision t o
read as follows:
T h e following regulations governing United States savings bonds are published
for t h e information a n d guidance of all concerned:
SUBPART A

APPLICABILITY

SEC. 315.1. Applicability of regulations.—These regulations apply generally t o
all United States savings bonds of all series of whatever designation and bearing
any issue dates whatever except as otherwise specifically provided herein.
SUBPART B

REGISTRATION

SEC. 315.2. General.—United .States savings bonds will be issued only in
• registered form. T h e n a m e a n d complete post office address of t h e owner, as



REPORT OF THE SECRETARY OF THE TREASURY

247

well as t h e name of t h e coowner or designated beneficiary, if any, a n d t h e date as
of which t h e bond is issued will be inscribed thereon a t t h e tirne of issue b y a n
authorized issuing agent.^ T h e form of registration used m u s t express t h e actual
ownership of a n d interest in t h e bond and, except as otherwise specifically provided
in these regulations, will be considered a^ conclusive of such ownership and interest.
No designation of a-n attorney, agent or other representative t o request or receive p a y m e n t on behalf of t h e owner, nor a n y restriction on t h e right of such owner t o
receive p a y m e n t of t h e bond, other t h a n as provided in these regulations, m a y be
m a d e in t h e registration or otherwise.
SEC. 315.3. Restrictions.—Only residents (whether individuals or others) of t h e
United States, including its Territories arid Insular Possessions, t h e Canal Zone
a n d t h e Philippine Islands, a n d American citizens temporarily residing abroad,
m a y be named as owners, coowners or designated beneficiaries, on borids originally
issued on or after April 1, 1940, or authorized reissues thereof.^
SEC. 315.4. Authorized forms of registration, Series E.—Bonds of Series E m a y
be registered only in t h e names of individuals (natural persons), whether adults
or minors, in their own right in one of t h e following forms of registration:
(a) O N E P E R S O N : I n t h e name of one person, for example:
''John A. Jones."
(6) T w o P E R S O N S — C O O W N E R S H I P F O R M : I n t h e n a m e s df t w o (but n o t m o r e

t h a n two) persons in t h e alternative as coowners, for example:
''John A. Jones O R Mrs. Ella S. Jones."
No other form of registration establishing coownership is authorized,
(c) T w o P E R S O N S — B E N E F I C I A R Y F O R M : I n t h e n a m e of one (but n o t m o r e

t h a n one) person, payable on death t o one (biit n o t more t h a n one)
other person,Jor example:
" J o h n A. Jones, payable on .death t o Miss M a r y E . Jones."
" P a y a b l e on death t o " m a y be abbreviated as " p . o. d." T h e first person
named is hereinafter referred t o as t h e owner or registered owner, a n d
t h e second person named as t h e beneficiary or designated.beneficiary.
If it is desired t h a t a bond revert t o t h e United States uppn t h e death of
the owner as a donation, it m a y be registered in t h e name of t h e owner
with t h e Treasurer of t h e United States named as beneficiary.
T h e full name of t h e owner a n d t h a t of t h e coowner or beneficiary, if any, should
be used and should be t h e n a m e b y which t h e person is ordinarily known and under
which he does business; if there are two given names t h e initial of one iriay be used,
a n d if a person is habitually known a n d does business b y initial only of his given
names, registration m a y be in such form. T h e n a m e m a y be preceded b y a n y
applicable title such as " D r . , " " R e v . , " etc., a n d in t h e case of women should be
preceded b y " M r s . " or " M i s s . " A married woman's own n a m e should be used,
n o t t h a t of her husband, for example,- " M r s . M a r y A. J o n e s , " n o t " M r s . F r a n k B .
J o n e s . " A minor, whether or n o t under legal guardianship, m a y be named as
owner or coowner if t h e bonds are purchased as a gift t o him a n d a minor m a y
n a m e a coowner or beneficiary on bonds purchased by him from his wages, earnings
or other money in his possession; b u t bonds purchased b y a parent or guardian
with funds already belonging t o a minor m u s t be registered in t h e minor's n a m e
alone without t h e addition of a coowner or beneficiary. If a person named in t h e
registration of t h e bond is under legal disability a n d a guardian or similar representative of his estate h a s been appointed b y a court or is otherwise legally qualified, t h e registration should indicate such facts b y t h e addition of appropriate
words, for example, " F r a n k Jones, a minor under legal guardianship of H e n r y
S m i t h . " Bonds should n o t be registered in t h e n a m e of a person under disability
for reasons other t h a n minority unless a legal representative of his estate has been
appointed.
SEC. 315.5. Authorized forms of registration, Series F and 6^.^Bonds of Series
F or G m a y be registered in t h e names of individuals in their own right as set
forth in sec. 315.4 above, a n d subject t o t h e same conditions as therein set forth.
Bonds of these t w o series m a y also be registered in t h e names of fiduciaries, corporations, associations or partnerships, except t h a t they m a y n o t be registered in
t h e names of commercial banks, t h a t is, banks accepting demand deposits in t h e
1 The date of maturity is also inscribed on savings bonds of Series A, Series B, and Series D.
2 Under the terms of Executive Order No. 8389, as amended, and the regulations issued thereunder, bonds
may not be issued to nationals (as defined in said order) of blocked countries or to nationals of enemy countries, whether or not residing in the United States, unless such nationals are generally or specially licensed
under the terms of the order.




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REPOiRT OF T H E SECRETARY OF THGE TREASURY

usual and general course of business. T h e following forms are authorized for such
registration:
(a) Executors, administrators, guardians, etc.—In t h e n a m e of one or more executors, administrators, guardians, conservators pr other representatives of a
single estate appointed by a court of competent jurisdiction or otherwise
legally qualified, all of whose names m u s t be included in t h e registration,
followed by adequate identifying reference to t h e estate, for example:
' ' J o h n Smith, executor of t h e will (or administrator of t h e estate)
of H e n r y J. Smith, deceased," or "William C. Jones, guardian (or
... • conservator, etc.) of t h e estate of J a m e s D . Brown, a minor (or an
incompetent)."
If a guardian or other legal representative holds a common fund for t h e
account of two or more estates or wards, bonds should be registered in the
n a m e of the representative for each such estate or ward separately, even
t h o u g h t h e representative was appointed in a single proceeding. A father
or mother, as such, or as n a t u r a l guardian, is not considered a fiduciary
for purposes of registration.
^
_,,..,
(6) Trustees.^-In t h e name or names of one or more trustees or other fiduciaries
of a single duly constituted t r u s t estate, which will be considered as an
entity-, followed by a d e q u a t e identifying reference to t h e t r u s t instrument
or other a u t h o r i t y creating t h e t r u s t , for example:
" J o h n C. Brown a n d t h e First National Bank, trustees undei t h e
will of H e n r y C. Brown, deceased," or " T h e Second National Bank,
trustee under an agreement with George E. White, d a t e d F e b r u a r y
1, 1935."
T h e names of all trustees m u s t be given, unless t h e y are too numerous,
act as a board, or hold office for a limited period of time. Registration
m a y be in t h e title without t h e names of t h e trustees in t h e case of unincorporated lodges, churches, societies or similar organizations, title t o
whose property is held by trustees, and in t h e case of public officers,
corporations or bodies acting as trustees under express authority of law,
for example:
\
" T r u s t e e s of t h e First Baptist Church,. Akron, Ohio, an unincorporated association," or "Treasurer of t h e State of Nebraska, in
t r u s t for t h e policyholders of X Corporation, under Section
_ _ of
Nebraska Statutes."
If t h e instrument or other a u t h o r i t y creating t h e t r u s t establishes a board
of trustees acting as a board and not as individuals, registration m a y be
in t h e n a m e of t h e board as such, for example:
" B o a r d of Trustees for t h e State Hospital for t h e Insane, under Section
of N e b r a s k a S t a t u t e s . ' '
Registration m a y n o t be m a d e in t h e names of trustees under an agreem e n t or other i n s t r u m e n t purporting t o create a t r u s t where t h e funds
used represent merely security for t h e performance of an obligation, except
under a s t a t u t e t h e terms of which expressly create an actual t r u s t relationship.
'
.
.
•(c) Pension or retirement funds, etc.—Registration m a y be m a d e in t h e names
a n d title, or title alone, of trustees ^of a pension or retirement fund or of
an investment, savings, insurance, annuity, or similar fund or trust, b u t
in all such cases t h e fund will be regarded as an entity regardless of t h e
n u m b e r of beneficiaries or t h e m a n n e r in which their respective interests
are established or determined. Segregation of individual shares as a
m a t t e r of bookkeeping or as a result of individual agreements with
beneficiaries will not operate to constitute separate t r u s t s under these
regulations.
{d) Private corporations and associations.—In t h e name of any private organization, whether incorporated or unincorporated (except commercial banks
as hereinbefore defined), using in each case the full legal name of t h e
organization without mention of any officer or member b u t making
reference, if desired, to a particular bookkeeping account or fund (not a
trust), as follows:
(1) A private corporation, followed by the words "a corporation," for
example: "Smith Manufacturing Company, a corporation;"



REPORT OF THE SECRETARY OF THE TREASUR.Y

249

(2) An unincorporated association, lodge, church or society, or similar
body, followed by t h e words " a n unincorporated association,"
for example: " T h e Lotus Club, an unincorporated asso>ciation."
T h e t e r m " a n unincorporatsod association" should not be used t o
describe a t r u s t fund, a partnership or a business conducted
under a trade n a m e ;
(3) A partnership, considered as an entity, followed, by t h e words " a
p a r t n e r s h i p , " for example: "Smith and Brow^n, a partnership."
(e) States and public corporations.—In t h e full legal name or title of the owner
or custodian of public funds, other t h a n t r u s t funds, as follows:
(1) Any sovereignty, as a State, or any public corporation, as a county,
citv, town or school district, for example: "State of M a i n e , "
or "Town of Rye, New Y o r k " .
(2) Any board, commission or other public body duly constituted b y
law, for example: " M a r y l a n d State Highway Commission."
(3) Any public officer designated by title only, for example: "Treasurer,
City of Chicago."
Registration m a y include reference to a particular bookkeeping account, if
desired.
(/) *Sc/ioo/.s.—^Registration is not authorized in t h e name of an unincorporated
oV public school, or class or activity thereof. Bonds held for the benefit
of such school, class or activity should be registered in the name of a
school principal or other school officer, as trustee, by title only, for
example: "Principal, Western High School, in t r u s t for Class of 1940
Library F u n d ; " a written agreeihent of t r u s t will not be required in cases
of small amounts.
SEC. 315.6. Unauthorized registration.—Savings bonds inscribed in a form n o t
substantially in agreement with those authorized by this subpart, will not be
considered as validly issued and will be accepted only for a refund of t h e purchase
price, except in those cases in which reissue can be made under the provisions of
these regulations.
SEC. 315.7. Forms of registration on reissue.—Bonds reissued under t h e provisions of these regulations m a y be reissued in any form of registration p e r m i t t e d
by t h e regulations in effect on t h e date of original issue.
. . -•
SUBPART C — L I M I T A T I O N ON TRANSFER

SEC. 315.8.- Not transferable.—United States savings bonds are not transferable
a n d are payable only to t h e owners named thereon except in case of the disability
or d e a t h of t h e owner or as otherwise specifically provided herein, b u t in any event
only in accordance with the provisions of these regulations. Accordingly, savings
bonds m a y not be sold or hypothecated as collateral .for a loan and m a y not be
used as security for t h e performance of an obligation except as expressly provided
in these regulations.
SUBPART D

L I M I T A T I O N ON HOLDINGS

SEC. 315.9. Amount which may be held.—As provided by section 22 of t h e Second
Liberty Bond Act, as added February 4, 1935 (U. S. C. 1940 Ed., title 31, section
757c), and by regulations prescribed by t h e Secretary of t h e Treasury p u r s u a n t
to t h e authority of t h a t section, as amended by t h e Public Debt Act of J.941, 55
Stat. 7, t h e amounts of savings bonds of t h e several series issued during any one
calendar year t h a t m a y be held by any one person, at any one time are limited a s
follows:
(a) Series A, B, C, and D—$10,000 (maturity value) of each series.
(6) Series E—$5,000 (maturity value).
(c) Series F and G—$50,000 (issue price) for t h e calendar year 1941, a n d
$100,000 (issue price) for each calendar .year thereafter, of either series
or of t h e combined aggregate, of both.
The term "person" shall mean any legal entity, including b u t not limited to^
an individual, a partnership, a corporation (public or private), an unincorporated
association or a t r u s t estate.
SEC. 315.10. Calculation of amount.—in computing t h e a m o u n t of savings
bonds of any one series issued during any one calendar year held by any one
person a t any one time for the purpose of determining whether the ainount is in




250

REPORT OF THE, SECRETARY OF THE TREASURY

excess of the authorized lirriit as set forth in the next preceding section, the following rules shall govern:
(a) The holdings of each person, as defined in the next preceding section, iridividually and in a fiduciary capacity, shall be computed separately.
(b) In the case of bonds of Series A, B, C, D, and E, the computation shall be
based upon maturity values. In the case of bonds of Series F and G,
the computation shall be based upon issue prices.
(c) There'must be taken into account (1) all bonds originally issued to and
registered in the name of that person alone or in his name with another
as coowner, and (2) all .bonds reissued to add his name as coowner under
the provisions of sec. 315.29 (a) hereof, or to designate him as a coowner
instead of as a beneficiary, under the provisions of sec. 315.35 hereof.
{d) There must be taken into account all bonds of Series A, B,C, and D acquired
before March 1, 1941, on the death of another or the happening of any
other event, but not those of which such person is merely the designated
beneficiary upon the death of the registered owner, or those held for his
benefit by a fiduciary, unless he became entitled to such bonds absolutely before March 1, 1941, as the result of the death of the registered
owner or the termination of the trust, as the case may be.
(e) Nothing herein contained shall be construed to invalidate any holdings
within, or to validate any holdings in excess of, the authorized limits,
as computed under the regulations in force at the time such holdings
were acquired.
SEC. 315.11. Disposition of excess.—li any person at any time acquires savings
bonds issued during any one calendar year in excess of the prescribed amount
the excess must be immediately surrendered for refund of the purchase price.
SUBPART E

LOST, STOLEN, MUTILATED, DEFACED, OR DESTROYED BONDS

SEC. 315.12. Relief in case of loss, etc.—Under the provisions of the Government
Losses in Shipment Act, relief either by the issue of a substitute bond or by payment may be given in case of the loss, theft, destruction, mutilation, or defacement of a savings bond. In any such case immediate notice of the facts, together
with a complete description of the bond (including series, year of issue, serial
number and name and address of the registered owner) should be given to the
Treasury Department, Division of Loans and Currency, Merchandise Mart,
Chicago, Illinois. The Department will thereupon furnish an appropriate form
:and full instructions for presenting the evidence necessary to secure relief under
the law and the regulations as contained in Department Circular No. 300, as
amended. If such bond is subsequently recovered immediate notice of such recovery should be given to the Division of Loans and Currency (at the address
above), in.order that delay may be avoided upon a later presentation of the bond
for payment.
SUBPART F—SAFEKEEPING FACILITIES

SEC. 315.13. Safekeeping of bonds.—Arrangements may be made for the safekeeping of a savings bond by the Treasury or by a Federal Reserve Bank as fiscal
agent of the United States. Application forms for safekeeping may be secured
from postmasters, Federal Reserve Banks, or the Treasury Department.
SUBPART G—INTEREST

SEC. 315.14. General.—United States savings bonds are issued in two forms:
(1) appreciation bonds, issued on a discount basis and redeemable before maturity
at increasing fixed redemption values; and (2) current income bonds, bearing interest payable semiannually and redeemable before maturity at fixed redemption
values less than the face amount of the bond. At present Series G constitutes the
•only issue of current income savings bonds. '
SEC. 315.15. Appreciation bonds.—No interest as such is paid on savings bonds
issued on a discount basis. Such bon4s increase in redemption value at the end
of the first year from issue date and at the end of each successive half-year period
thereafter until their maturity, when the full amount becomes payable. The
increment in value represents interest and is payable only on redemption of the
bonds, whether at or before maturity.
SEC. 315.16. Current income bonds.—Each such bond bears interest at a specified
rate computed on the face amount of the bond and payable semiannually, beginning six months from issue date. Except for redemption at par as provided in
sec. 315.18 (c) of Subpart H hereof, full advantage of interest at the rate specified



REPORT OF THE SECRETARY OF THE TREASURY

251

m a y be secured onlyif t h e bonds are held to m a t u r i t y ; if bonds are redeemed before
i n a t u r i t y at current redemption values t h e difference between t h e face or full
m a t u r i t y value and t h e current redemption value then payable in accordance with
t h e table printed on t h e face of each bond, will represent an adjustment of interest for t h e rate appropriate for t h e shorter term, as set forth in the tables
a t t a c h e d to the circular announcing t h e issue of such bonds.
(a) Method of interest payments.—Interest due on current income bonds will be
paid on each interest p a y m e n t date by check drawn t o the order of t h e person or persons in whose name t h e bond is inscribed in the same form' as
their names appear in t h e inscription on t h e bond, except t h a t in the case
of a bond registered in t h e form " A , " payable on death to " B , " t h e check
will be drawn to t h e order of A alone until t h e Treasury receives notice
of A's death, from w^hich date t h e p a y m e n t of interest will be suspended
until such time as t h e bond is presented for p a y m e n t or reissue. " Interest
so withheld will be paid to t h e person entitled to p a y m e n t of the bond,
or in case of reissue to the person in whose name the bond is reissued.
Interest checks on bonds registered in t h e names of coowners will be mailed
to the payee first n a m e d a t his address of record unless otherwise specifically directed.
,
(6) Reissue during interest period.—If a current income bond is reissued for SLny
reason between interest p a y m e n t dates, interest for the entire period will,
be paid, on t h e next interest p a y m e n t date, by check drawn to the person,
in whose name t h e bond is reissued. Ordinarily, if a bond is received
for reissue less t h a n a m o n t h prior to an interest p a y m e n t date, reissue' cannot be effected until after such interest p a y m e n t date.
(c) Change of address.—Prompt notice should be giyen to the Treasury D e p a r t ment, Division of Loans and Currency, Merchandise Mart, Chicago,.
)
Illinois, of any change of address by the owner of current income bonds.
The notice should refer to all bonds for which it is desired t h a t the address
be changed and should describe each bond by date, serial number, series
(including year of issue) and inscription appearing on the face of the bond.
{d) Termination of interest.—In case of redemption prior to m a t u r i t y of current
^
income bonds interest will cease on the last day of the interest period next
preceding the date of redemption. In case of partial redemption interest
on the amount redeemed will cease on the last day of the interest period
next preceding t h e date of partial redemption, and interest due thereafter
will be paid only on t h e lower amount remaining after partial redemption,
(e) Consolidation of checks.—Whenever possible a single check will be issued
on each p a y m e n t date for interest on all current income bonds of a single
series due to any owner on t h a t date.
(/) Endorsement of checks.—Interest checks m u s t be endorsed in accordance
with the requirements of the Treasurer bf t h e United States, by t h e
payees, either personally or by an attorney in fact, or in case of t h e d e a t h
of t h e payee, by his executor or administrator. Forms for t h e a p p o i n t m e n t of such a t t o r n e y m a y be obtained from t h e Treasurer of the U n i t e d
States or from any Federal Reserve Bank.
SUBPART H—GENERAL PAYMENT AND REDEMPTION PROVISIONS

S E C . 315.17. Payment at maturity.—Pursuant to its t e r m s / a savings bond of
a n y series will be paid a t or after m a t u r i t y a t its full face or m a t u r i t y value, b u t
only following presentation and surrender of t h e bond for t h a t purpose with a >
request for p a y m e n t properly signed and certified as herein provided.
SEC. 315.18. Redemption before maturity.—Pursuant to its terms, a savings
bond m a y not be called for redemption by t h e Secretary of t^he Treasury prior
to m a t u r i t y , b u t m a y be redeemed in whole or in p a r t a t t h e option of t h e owner,
prior to m a t u r i t y under t h e terms and conditions set forth in t h e offering circular
of each series and in accordance with t h e provisions of these regulations, b u t only
following presentation and surrender for t h a t purpose with a request for p a y m e n t
duly signed and certified as provided herein.
(a) Series A, B,. C, D and E.—A bond of Series A, B, C, D or E will be re-^
deemed in whole or in p a r t a t any time after 60 days from t h e issue
date without advance notice, a t t h e appropriate redemption value a s
shown on the face of t h e bond.
(6) Series F and G.—A bond of Series F or G will be redeemed, in whole or in.
part, on one m o n t h ' s notice in writing, on t h e first day of any m o n t h n o t
less t h a n six m o n t h s from t h e issue date, a t the appropriate redemption



252

REPORT OF T H E SECRETARY OF T H E TREASURY

value as shown on t h e face of t h e bond. T h e owner's option t o redeem
m a y be shown b y a signed request for p a y m e n t or b y express written
notice, and p a y m e n t will be m a d e as of t h e first day of t h e first m o n t h
following by a t least one full m o n t h t h e d a t e of receipt of notice b y t h e
Treasury D e p a r t m e n t or a Federal Reserve Bank. For example, if t h e
request or notice is received on J u n e 15, t h e effective redemption d a t e
will be August 1. If express notice is given, t h e b o n d . n i u s t be surrendered to t h e same agency to which t h e notice is given n o t less t h a n
fifteen days before t h e effective redemption date. (See sec. 315.16 {d)
for provisions as to interest in case current income bonds are redeemed'^'
prior to maturity.)
,.v
'
'^^'
(c) Series G—Redemption ai par before maturity.—Subject to t h e provisions of
t h e pr;eceding subsection a bond of Series G (but not of Series F) will
be redeemed a t p a r before m a t u r i t y , in whole or in p a r t : (1) upon t h e
d e a t h of t h e owner or a coowner if a n a t u r a l person; or (2) if held by a
trustee or other fiduciary upon t h e termination of t h e trust, in whole or
in part, by reason of t h e d e a t h of any person. If t h e t r u s t is terminated
only in p a r t , redemption a t p a r will be m a d e to t h e extent of n o t m o r e ,
t h a n t h e pro r a t a portion of t h e t r u s t so t e r m i n a t e d and only in a m o u n t s
corresponding to authorized denominations. Proof of d e a t h m u s t be
furnished and notice of intention t o redeem a t p a r before m a t u r i t y
m u s t be received by t h e Treasury D e p a r t m e n t or a Federal Reserve
Ba'nk within four m o n t h s after t h e d a t e of death. P a y m e n t will ordinarily be m a d e on t h e first available d a t e : Provided, however. T h a t payiment will be postponed until t h e next interest p a y m e n t date, upon
r e q u e s t of t h e persons presenting t h e bond.
S E C . 315.19. Form and execution of requests for payment.—Requests for p a y m e n t of savings bonds, unless otherwise authorized in a particular case, m u s t
be executed, on t h e form appearing on t h e back of t h e bond t o be surrendered
a n d unless otherwise specifically requested p a y m e n t will be m a d e p u r s u a n t t o a
duly executed request on t h e earliest day consistent with these regulations.
(a) Date of request.—Ordinarily requests executed more t h a n six m o n t h s before
.the d a t e of receipt of.a bond by a Federal Reserve B a n k or t h e Treasury
D e p a r t m e n t will not be accepted.
(5) Identification and signature of owner.—The registered owner in whose n a m e
t h e bond is inscribed, or such other person as m a y be entitled to p a y m e n t under t h e provisions of these regulations, m u s t appear before one
of t h e officers authorized t o certify requests for p a y m e n t (see sec. 315.20'
hereof), establish his identity a n d in t h e presence of such officer sign
t h e request for p a y m e n t in ink, adding in t h e space provided t h e address
to which t h e check issued in p a y m e n t is t o be mailed. A signaturem a d e by m a r k (X) m u s t be witnessed by a t leasfe- one p e r s o n in addition
to t h e ceitifying officer a n d m u s t be a t t e s t e d b y endorsement in t h e
blank space substantially as follows: "Witness to t h e above signature
by m a r k " , folloAved b y t h e signature a n d address of t h e witness. If
t h e n a m e of t h e registered owner or other person entitled to p a y m e n t ,
as it appears in t h e registration or in evidence on file a t t h e Treasury
D e p a r t m e n t , Division of Loans a n d Currency, has been changed b y
* marriage or in any other legal manner, t h e signature t o t h e request for
p a y m e n t should show b o t h names and t h e m a n n e r in which t h e change
was made, for example, "Miss M a r y T. Jones, now b y marriage Mrs.
M a r y T . S m i t h " , or " J u n g Smelt, now b y court order John S m i t h " .
I n case of a change of n a m e other t h a n b y marriage t h e request should
be supported by satisfactory proof of such change, unless already on file.N o request signed in behalf of t h e owner or person entitled to p a y m e n t
b y an agent or a person acting-under a power,of a t t o r n e y will be recognized b y t h e Treasury D e p a r t m e n t except in those cases arising under
S u b p a r t R hereof.
(c) Certification of xequesi.—After t h e request for p a y m e n t has been signed b y
t h e owner t h e certifying officer should complete a n d sign t h e ceitificate
appearing a t t h e end of t h e form for request for p a y m e n t , an^d t h e bond
should t h e n be presented a n d surrendered as provided in sec. 315.23
hereof.
S E C . 315.20. Certifying officers.—The following officers are authorized to certify
requests for p a y m e n t :
(a) At United States post offices.—Any postmaster, acting postmaster or in


REPORT OF THE SECRETARY OF THE. TREASURY

253

epector in charge, or other post office official or clerk heretofore or hereafter designated for t h e purpose. . One 'or. more of these officials will be
found a t every United States post office, classified branch or station. A
post office official or clerk other t h a n a postmaster, acting postmaster or
inspector in charge, should certify in.the n a m e of t h e postmaster or acting
postmaster, followed by his own signature a n d official title, for example,
" J o h n Doe, postmaster, by Richard Roe, postal cashier". . Signatures
of these officers should be authenticated by a legible imprint of t h e post
office dating s t a m p .
• •
{b) Banks, trust companies and branches.—Any officer of any incorporated b a n k .
or t r u s t company or b r a n c h thereof, domestic or foreign, including
b a n k s or t r u s t companies incorporated in t h e United States or its orga-..
nized Territories, those doing business in t h e organized Territories o r .
Insular Possessions of t h e United States and t h e Commonwealth of thePhilippines under Federal charter or organized under Federal law. Federal
Reserye Banks, Federal land banks, a n d Federal home loan b a n k s ; a n d .
Federal Reserve agents a n d Assistant Federal Reserve agents, located a t t h e seyeral Federal Reserve Banks. Certifications by any of these offi-.
cers should be authenticated by either a legible impression of t h e corpor a t e seal of t h e b a n k or t r u s t company or, in t h e case of banks or t r u s t
companies a n d their branches which are authorized a n d duly qualified i
issuing agents for bonds pf Series E, b y a legible imprint of t h e issuing
agent's daliing s t a m p .
(c) Issuing agents not banks or trust companies.—Any officers of corporations notbanks or t r u s t companies, and of all other organizations, which are duly
qualified issuing agents for bonds of Series E. All certifications by suchofficers m u s t be a u t h e n t i c a t e d by a legible imprint of t h e issuing agent's
dating stahap.
-'
; id) United States officials.—Judges, clerks a n d deptuty clerks of United Statescourts, including United States courts for t h e organized Territories,
Insular Possessions a n d t h e Canal Zone; United States Commissioners;.
United States a t t o r n e y s ; United States collectors of customs a n d their• deputies; United States collectors of .internal [revenue a n d their deputies;,
commissioned officers of t h e United States Army, N a v y , Marine Corps,
a n d C o a s t . G u a r d , b u t only for members of their respective services,
members of their families. and civilian emploj^ees a t Posts or Bases o r
Stations (such certifying officer should indicate his rank and s t a t e thatt h e person signing t h e request is one. of t h e class whose requests he is
authorized t p certify); t h e officer in charge of any home, hospital or other
facility of t h e Veterans' Administration, b u t only for patients a n d m e m bers of such facilities; certain officers of Federal penal institutions design a t e d for t h a t purpose b y t h e Secretary of t h e Treasury and certainofficers of t h e United States Public H e a l t h Service Hospitals a t Lexington,
Kentucky, and a t F o r t Worth, Texas, and of United States Marine Hospitals a t F o r t Stanton, New Mexico, and Carville, Louisiana, designated for
t h a t purpose by t h e Secretary of t h e Treasury (in each case, however,
only for inmates or employees of t h e institution involved).
'(e) Officers authorized i n particular localities.—Certain officers in the Treasury
D e p a r t m e n t ; t h e Governors a n d Treasurers of Hawaii, Puerto Rico, a n d
Alaska; t h e Governor and Commissioner of Finance of t h e Virgin Islands;
t h e Governors a n d Administrative N a v a l and Marine officers of G u a m
a n d American Samoa; t h e Governor, p a y m a s t e r or acting paymaster, and
collector or acting collector of t h e P a n a m a Canal; postmasters a n d acting
postmasters in t h e Bureau of Posts of t h e Canal Zone; t h e United States
High Commissioner t o t h e Commonwealth of t h e Philippines, his Executive Assistant, a n d t h e Chief Clerk in .his office, t h e Treasurer 'of t h e
Commonwealth a n d t h e city treasurers of Manila a n d Baguio, and judges
and clerks of courts of record of t h e Commonwealth whose signatures
and official positions are certified b y t h e Secretary of Justice.
(/) I n foreign countries.—In a foreign .country requests for paynient m a y be
signed in t h e presence of and be certified b y anj^ United States diplomatic
or consular representative, or manager or other officer of a foreign b r a n c h
of a b a n k or t r u s t company incorporated in t h e United States, whose
• • signature is a t t e s t e d by an impression of t h e corporate seal or is certified
to t h e T r e a s u r y . D e p a r t m e n t . . If such an officer is not available, requests
for p a y m e n t m a y be signed in t h e presence of and be certified by a
n o t a r y .ox o t h e r officer authorized t o administer oaths, b u t his official




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REPORT OF T H E SECRETARY OF" THE TREASURY

•
character and jurisdiction m u s t be certified by a tJnited States diplomatic
'
or consular officer under seal of his office.
N. .
• {g) Special provision:—In t h e event none of t h e officers' authorized to certify
requests for p a y m e n t of savings bonds is readily accessible, t h e Commissioner of t h e Public D e b t is authorized to m a k e special provision for any
particular case.
, S E C . . 3 1 5 . 2 1 . General instructions to certifying officers.-.—Certifjang officers should
require positive identification of t h e person signing requests for p a y m e n t and will
be held fully responsible therefor. I n all cases a certifying officer m u s t affix to t h e
certification his official signature, title, address and seal, or dating s t a m p , and t h e
d a t e of execution. Officers of Veterans Facilities, Public H e a l t h Service Hospitals,
Marine Hospitals, and Federal penal institutions, should use t h e seal of the p a r t i c ular institution or service, where such seal is available. If a certifying officer,
other t h a n a post office official, officer of la bank or t r u s t company, or officer of an
issuing agent,, does not possess an official seal, t h a t fact should be m a d e known
and attested.
.
•
SEC. 315.22. Interested person not to certify.—No person authorized to certify
requests for p a y m e n t m a y certify a request for p a y m e n t of a bond of which he i.s
t h e owner, or in which he has an interest, either in his own right or in a n y
representative capacity.
SEC. 315.23. Presentation and surrender.—After t h e request for p a y m e n t has
been duly signed by the owner and certified as above"provided, t h e bond should be
presented and surrendered, if a bond of Series F or G to a Federal Reserve Bank o r
branch or to t h e Division of Loans and Currency, Merchandise M a r t , Chicago,
Illinois, or, if a bond of any other series, to a Federal Reserve Bank or branch o r
t o the Treasurer of t h e United States, Washington, D. C. Usually p a y m e n t will
be expedited by surrender to a FederaFReserve Bank. In all cases presentation
will be a t the expense and risk of t h e owner, and, for his protection, the bond
should be forwarded by registered mail if not presented in person. P a y m e n t will'
be m a d e by check drawn to t h e order of t h e registered owner or other personentitled and mailed to him a t t h e address given in his request for p a y m e n t .
SEC. 315.24. Partial redeinption.—A savings bond of an}^ series in a denomination
other t h a n the lowest authorized for tliat series m a y be redeemed in p a r t a t c u r r e n t
redemption value, b u t only in a m o u n t s corresponding to authorized denominations,,
upon presentation and surrender of t h e bond in accordance with this subpart.
I n any such case, before t h e request for p a y m e n t is signed there should be added
to the first sentence of t h e request t h e words " t o t h e extent of $
(maturity
value), and reissue of t h e remainder." Upon partial.redemption of a savings b o n d
t h e remainder will be reissued as of t h e original issue date as provided in Subpart S
hereof. F6r p a y m e n t of interest on bonds of Series G in case of partial redemption
see Subpart G hereof.
SUBPART I

MINORS AND PERSONS UNDER OTHER LEGAL DISABILITY

SEC. 315.25. Payment to legal guardians.—If t h e Treasury D e p a r t m e n t , Division of Loans and Currency, has been properly notified,^by t h e form of registration
or otherwise, t h a t t h e owner of a savings bond is a minor or a person judically
declared incompetent to manage his estate and t h a t a guardian or similar legal
representative has been appointed for t h e estate of such minor or incompetent by
a court having jurisdiction or is otherwise legally qualified, p a y m e n t will be madeonly to such guardian or similar legal representative. In such case t h e request for
p a y m e n t appearing on. t h e back of t h e bond should be signed by t h e guardian or
other legal representative as such, for example, " J o h n A. Jones, guardian (committee) of t h e estate of H e n r y W. Smith, a minor (an i n c o m p e t e n t ) . " Unless theform of registration gives t h e name of t h e representative, there m u s t be submitted
in support of t h e request a certificate or a certified copy of t h e letters of appointm e n t from t h e court making t h e a p p o i n t m e n t under t h e seal of the court, establishing t h a t t h e a p p o i n t m e n t is in full force. Such certificate or certification
(except in the case of corporate fiduciaries) should be dated not more t h a n six
m o n t h s prior to t h e date of presentation of t h e bond for p a y m e n t . See Subpart M
hereof for p a y m e n t provisions applicable to bonds registered in the names of"
guardians and similar fiduciaries.
SEC. 315.26. Payment to minors.—If t h e Treasury D e p a r t m e n t , Division /of
Loans and Currency, has not received proper notice t h a t a guardian or similar
representative of t h e estate of a minor has been appointed or is otherwise duly
qualified, p a y m e n t w i l l b e m a d e direct to such minor, provided h e i s , ' a t the time
p a y m e n t is requested, of sufficient competency and understanding to sign hisn a m e to the request and t o comprehend t h e nature of such act. I n general the


REPORT OF THE SECRETARY OF THE-TREASURY

255

fact that the request for payment has been signed by a minor-and duly certified in
accordance with Subpart H hereof will be accepted as sufficient proof of such
competency and understanding.
SEC. 315.27. Payment to parents of minors.—If the Treasury Department has not
been properly notified that a guardian or similar legal representative of the estate
of a minor owner of a savings bond has been appointed or is otherwise legally
qualified, and if such minor owner is not of sufficient competency and understanding to execute the request for payment, payment will be made to either parent of
the minor with whom he resides, or if the minor does not reside with eithef parent,
then to the person who furnishes his chief support. The parent or such other
person should sign the request for payment in his own name, on behalf of the
minor, in the form "Mrs. Mary Jones, on behalf of John C. Jones,".and should
sign a certificate, in substantially the following form, w,hich may be typed on the
back of the bond:
"I certify that I am the
(relationship) of John C. Jones
and the person with w^hom he resides. He is
years of age and is not of
sufficient competency and understanding to sign this request."
If a person other than a parent signs the request on behalf of the minor he should
also certify that the minor does not reside with either parent and that he furnishes
his chief support. The Treasury Department may in any particular case require
further proof that the minor is not of sufficient competency and understanding
to execute the request for payment and of the right- of the person executing the
request to act on behalf of the minor.
SEC. 315.28. Payment to voluntary guardian of person under disability.—In any
case where the adult owner of a bond has been judicially declared incompetent or
such incompetency, in the opinion of the Secretary of the Treasury, is otherwise
established, and no duly qualified legal representative of his estate is acting, and
the<" entire gross-value of his personal estate'does not-exceed'$500, payment-will
be made to a member of his family or other person acting as voluntary guardian,
upon presentation of proof satisfactory to the Secretary of the Treasury that the
proceeds of the bond are necessary for the purchase of necessaries for the incompetent or for his wife or minor children or other persons dependent upon him for
support. Applications for such payment should be made only on appropriate
forms, which may be obtained from the Treasury Department, Division of Loans
and Currency, Merchandise Mart, Chicago, Illinois, or any Federal Reserve Bank.
The request for payment should not be executed, nor the bond presented, until
the application has been approved and instructions have been given by the
Treasury Department.
SUBPART J

S I N G L E NAME

ADDITION OF COOWNER, ETC.

SEC. 315.29. Reissue for certain purposes.—A savings bond of any series registered in the name of one person in his own right, or to which one person is shown
to be entitled in his own right under these regulations, may be. reissued upon
appropriate request for the following purposes:
(a) Addition of coowner.—Reissue in the name of the owner with that of another
natural person as coowner, provided that bonds reissued in accordance
• with this subsection will be considered for the purposes of computation'
of holdings under Subpart D of these regulations as originally issued in
both names and no reissue will be effective which results in any one person holding bonds in excess of the established limitation for the series to
which the bonds belong. Requests for reissue under this subsection
should be made on Form PD 1762.
{b) Addition of a beneficiary .—Reissue in the name of the owner with thename
of another natural person as designated beneficiary. Applications for
. reissue under the provisions of this subsection.should be made on Form
PD 1077.
SEC. 315.30. Reissue upon request of a minor.—Reissues under the provisions
of this subpart will be made upon request Of owners, notwithstanding the fact
that they are minors, provided they are of sufficient competency and understanding, and are under no legal disability other than minority.
SEC. 315.31. Reissue only ai Federal Reserve Banks and Treasury.—Reissues in
accordance with the provisions of this subpart may be made only at Federal
Reserve Banks or at the Treasury Department. A coowner may be added only
by reissue of the bond. Federal Reserve Banks, however, may, in appropriate
487543—43

18




256

REPORT OF THE SECRETARY O ' THE'T^
F^

cases, a d d t h e n a m e of a beneficiary to, bonds already-outstanding w^ithout reissue,
providing such addition is properly certified b y t h e Federal Reserve Bank.
SUBPART K

TWO NAMES—COOWNERSHIP FORM

SEC. 315.32. Payment or reissue.—A. savings bond registered in t h e names of
two persons as coowners in t h e form " J o h n A. Jones O R Mrs. M a r y C. . J o n e s " , '
will be paid or reissued as follows:
..
(a) During the lives, of both ycoowners.-^Duving the lives of b o t h coowners t h e
bond will be paid t o either coowner upon his separate request without
requiring t h e signature of t h e other coowner; a n d upon p a y m e n t to either
coowner t h e other person shall cease to have any interest in t h e bond.
T h e bond will also be paid t o b o t h coowners upon their joint request,
in which case p a y m e n t will be m a d e b y check drawn t o t h e order of b o t h
coowners in t h e form, for example, " J o h n A. Jones a n d Mrs. M a r y C.
Jones", a n d t h e check m u s t be endorsed b y b o t h payees. T h e bond will
n o t be reissued in any form during t h e lives of b o t h coowners except as
specifically provided in these regulations.
(b) After the death of one coowner,—If either coowner dies without having presented and surrendered t h e bond for p a y m e n t to a FederaL Reserve
Bank or,the Treasury D e p a r t m e n t , the surviving poowrieir "will be recognized as t h e sole and absolute.owner" of t h e bond, and p a y m e n t will be
m a d e only-to him: Provided, however, T h a t if a coowner dies after he has
properly executed t h e request for p a y m e n t and after t h e bond has
actually been received by a Federal Reserve Bank or t h e Treasury
D e p a r t m e n t , p a y m e n t of t h e bond, or check if one has been issued, will
be m a d e to his estate (see Subpart P hereof). Upon proof of t h e death
of one coowner and appropriate request by t h e surviving coowner t h e
bond will be reissued in t h e name of such survivor alone, or in his n a m e
with another individual as coowner, or in his name payable on death";
to a designated beneficiary.
, - ' ._
(c) On death of both coowners in com,mon disaster.—If both coowners die in a common disaster under such'conditions t h a t it cannot be established, either
by presumption of law or otherwise, which coowner died first, t h e bond
will be eonsidered as belonging t o t h e estates of both coowners..
{d) After the deaih of a surviving coowner.-^-li a surviving coowner who became
• solely entitled to t h e bond under t h e provisions of subsection (b) of this
• section" dies without havin.g submitted t h e bond for p a y m e n t or reissue,
t h e bond will be paid or reissued as though it were registered in the name
of such last deceased coowner alone. In this case proof of t h e death of
both coowners and of t h e order in which they died will be required.
SEC. 315.33. Place of reissuc^^Reissues 2iuthov\zed in this subpart,will be made
in accordance Avith t h e provisions of Subpart S hereof, but-only^" at a Federal Reserve Bank or t h e Treasury D e p a r t m e n t , and applications for such reissues should
be made on form's provided, for t h a t purpose.
SUBPART L

TWO NAMES

BENEFICIARY FORM

• SEC. 315.34. Payment to registered oiuner.—A bond registered in t h e name of
one person payable on death to another, for example, " H e n r y W.. Ash, payable
on death to John C. Black", will be paid to t h e registered owner'during his lifetime upon his properly executed request as though no beneficiary h a d been named
in the re.scistration.
SEC. 315.35. Reissue during the lifetime of registered owner.—A bond registered
in t h e name of one person paya.ble on death to another m a y n o t be reissued during t h e latter's lifetime to elimina.te his name, b u t m a y be reissued, on request
of t h e registered owner on F o r m P D 1762, t o name t h e beneficiarv as coowner,
subject t o t h e same restrictions and conditions contained in sec. 315.29 -{a). If
the.beneficiary should predecease t h e registered owner, upon proof of such death
and upon request of t h e registered owner, t h e bond m a y be reissued in his name
alone, or in his name with another individual as coowner, or in his name paj^able
on death to a designated beneficiary.
. SEC. 315.36. Payment or reissue to beneficiary.—If t h e registered owner dies
.without having presented and surrendered t h e bond for p a y m e n t or authorized
reissue to a Federal Reserve Bank or t h e Treasury D e p a r t m e n t , and is survived
b y . t h e beneficiary, upon proof of such d e a t h and survivorship, t h e beneficiary
will be recognized as t h e sole and absolute owner of t h e bond, and it will be paid



REPORT OF T H E SEIORETARY OF T H E TREASURY

257

only to him, or m a y be reissued in his name alone, or otherwise reissued in accordance with Subpart J as though it were registered in his name alone: Provided,
however, T h a t if t h e bond with a properly executed request by t h e registered owner
for p a y m e n t or authorized reissue has actually been received by a Federal Reserve
Bank or t h e Treasury D e p a r t m e n t , p a y m e n t of t h e bond, or check, if one has
been issued, will be made to the.estate of ^the deceased owner in accordance with
:sec. 315.49. ^
.
SEC. '315.^7. Payment or reissue after death of the surviving beneficiary.—After
t h e death of a surviving beneficiary who became entitled under t h e provisions
•of this subpart, the boiid will be paid or reissued in accordance with Subpart J
as t h o u g h it were registered in tl\e name of t h e surviving beneficiary alone. I n
this case proof of the d e a t h of b o t h t h e registered owner and t h e beneficiary
a n d of t h e order in which t h e y died will be required.
SEC. 315.38. Conditions of reissue.—Vveissne'MwdeT this subpart will be made in
accordance with Subpart S hereof, b u t only at ai Federal Reserve Bank or t h e
Treasury Departnient and applications for such reissue should be made on forms
provided for t h a t purpose.
SUBPART M

FIDUCIARIES

SEC. 315.39. Payment to fiduciaries.—A savings bond registered in the name of,
or otherwise belonging to, a fiduciary estate, w i l l b e paid to t h e fiduciaries of such
e s t a t e upon their request. T h e request for p a y m e n t m u s t be signed by all acting
fiduciaries, except for p a y m e n t a t m a t u r i t y , when a request by any one or more
acting fiduciaries will be accepted, b u t p a y m e n t will be m a d e to all. If t h e bond
is registered in the names of individual fiduciaries of the estate who are still acting,
no further evidence of a u t h o r i t y will be required. I n other cases t h e request for
p a y m e n t m u s t be supported by evidence as spepified;below:
(a) Fiduciaries—By title only.—If the bond is registered in t h e titles without
t h e narhes of the fiduciaries, satisfactory proof of the incumbency of t h e
fiduciaries m u s t be furnished, except in t h e case of public officers.
{b) Succeeding fiduciaries.—If the fiduciaries in whose names t h e bonds were
registered have been succeeded by other fiduciaries, satisfactory proof of
successorship m u s t be furnished.
(c) Boards, committees, etc., as fiduciaries.—If t h e fiduciaries consist of a board,
committee, commission, or public body, or are otherwise empowered t o
act as a unit, a request for p a y m e n t before m a t u r i t y mus,t be supported
b y a duly certified copy of a resolutior^ of t h e board or other body authorizing such action, e x c e p t t h a t in t h e case of a public board or commission a
request signed in its name by a duly authorized officer thereof wall ordinarily be accepted without further proof of the officer's aujbhority. I n any
case t h e request m u s t be signed in t h e n a m e of t h e board or other body
by an authorized officer or agent thereof.
{d) Corporate fiduciaries.—If a public or p r i v a t e corporation or a political body,
such as a State or county, is acting as a fiduciary, a request for p a y m e n t
m u s t be signed in the n a m e of t h e corporation or other body, in t h e
fiduciary capacity in which it is acting, by an authorized offjcer thereof.
(e) Registration not disclosing trust..—If the form in which the bond is registered
does not show t h a t it belongs to a fiduciary estate or does not identify t h e
estate to which it belongs, satisfactory proof of ownership m u s t be furnished.
. SEC. 315.40. Reissue in the name of a succeeding fiduciary.—If a'person in whose
n a m e a savings bond is registered as a fiduciary has been succeeded as such
fiduciary by another person, the bond will be reissued in the name of the succeeding
fiduciary upon appropriate request and satisfactory proof of successorship.
• SEC. 315.41. Reissue ih the name of, or payment to, the person entitled.—
(a) Distribution of trust estate in kind.—A savings bond to w^hich a beneficiary
of a t r u s t has become lawfully entitled, in whole or in part, under t h e
terms of t h e trust, will be reissued in his name to the extent of his interest,
as a distribution in kind, upon t h e request of the trustee or trustees and
their certification t h a t such person is entitled arid has agreed to reissue
in his name: Provided, T h a t if a trustee himself is so entitled in his own
right, his request for reissue in his n a m e m u s t be supported by an order
of court or other satisfactory proof t h a t he is so entitled, unless a co- '
fiduciary joins in the request: .Provided further, T h a t if the form in whic^h
the bond is registered .does not show t h a t it belongs to a t r u s t estate, t h e
request for reissue m u s t be supported by satisfactory proof of ownership.



258

, REPORT OF THE SECRETARY OF -THE TREASURY

{b) After termination of trust estate.—If the person who would be lawfully entitled to a savings bond upon the termination of a t r u s t does not desire
to have such distribution to him in kind, as provided in t h e next preceding
subsection, t h e trustee or trustees should redeem t h e bond in accordance
with the provisions of sec. 315.39 hereof before the estate is terminated.
If, however, the estate is terminated without such p a y m e n t or reissue
having been made, the bond will thereafter be paid t o or reissued in t h e
n a m e of t h e person lawfully entitled upon his request and satisfactory
proof of ownership, supplemented, if there are two or more persons
having any a p p a r e n t interest in the bond, by an agreement executed b}^
all such persons.
(c) Upon termination of guardianship estate.—A savings bond registered in t h e
n a m e of a guardian or similar legal representative of the estate of a minor
or incompetent, if the estate is terminated during the ward's lifetiriie, will
be reissued in t h e name of the former ward upon the representative's
request and certification t h a t the former ward is entitled and has agreed
to reissue in his name, or will be paid to or reissued in the name of t h e
former ward upon his own request, supported in either case by satisfactory
proof t h a t his disability has been removed. Certification by t h e representative t h a t a former minor has attained his majority, or t h a t the legal
disability of a female ward has been removed by marriage, if t h e S t a t e
law so provides, will ordinarily be accepted as sufficient, b u t if t h e disability is removed by court order a duly certified cop}^ of the order will be
necessary. Upon the death of the ward a bond registered in the name of
his guardian or similar representative will be reissued in accordance with
the provisions of S u b p a r t P as though it were registered in the name of
the ward alone.
SEC. 315:42. Bonds held by trustee where reissue not'authorized.—Savings-bonds
which by their terms or under the regulations in force a t the time of their issue
m a y not be registered in t h e name of a fiduciary m a y be held without change of
registration by a trustee pr other fiduciary under t h e will of a deceased owner of
the bonds, b u t will not be reissued in the name of the fiduciary. Upon proof of
the appointment and authority of the fiduciary bonds so held will be paid to the
fidiiciary, or upon termination of the t r u s t will be reissued in t h e . n a m e s of t h e
persons entitled in their own right in accordance with the provisions of this
subpart.
SUBPART N

PRIVATE CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, ETC.

SEC. 315.43. Payment^to corporations or unincorporated associations.—A savings
bond registered in the name of a private corporation or an unincorporated association will be p a i d to such corporation or unincorporated association upon request
for pa3anent on its behalf by a duly authorized officer thereof. T h e signature t o
the request should be in t h e form, for example, " T h e Jones Coal Company, a
corporation, by William A. Smith, president," or " T h e Lotus Club, an unincorporated association, by John Jones, treasurer." A request^for pa3anent so
.signed and duly certified will ordinarily be accepted without further proof of the
officer's authority.
SEC. 315.44. Payment to partnerships.—A savings bond registered in the name
of a partnership will be paid upon a request for p a y m e n t signed by a general
partner. T h e signature to the request should be in the form " S m i t h and Jones,
a partnership, by John Jones, a general p a r t n e r . " A request for p a y m e n t so
signed and duly certified will ordinarily be accepted as sufficient proof t h a t t h e
person signing t h e request is duly authorized.
SEC. 315.45. Reissue or payinent to successors of corporations, unincorporated
associations or partnerships.—A savings bond registered in t h e name of a p'rivate
corporation, an unincorporated association or partnership, which has been succeeded by another corporation, unincorporated association or partnership as t h e
result of merger, consolidation, reincorporation, conversion, reorganization, or
otherwise by operation of law or in any m a n n e r whereby t h e ownership of the succeeding organization is substantially identical with t h a t of its predecessor, will be
paid to, or reissued in t h e ' n a m e of, t h e succeeding corporation, unincorporated
association or partnership upon appropriate request on its behalf supported h j
satisfactory proof of lawful successorship.
SEC. 315.46. Reissue or payment on dissolution.—
(a) Corporations.—A savings bond registered in t h e name of a private corporation which is in process of dissolution will be paid to t h e authorized repre


REPORT OF THE ^ SECRETARY OF • THE. ^TREASURY

259

sentative of the-corporation .upon a- duly executed request for payment
supported by satisfactory evidence of the. representative's authority.
Upon the termination of dissolution proceedings such bonds may be
reissued in the names of those persons, other than the creditors, entitled
to the assets of the corporation to the extent of their respective interests
upon the duly executed request of the authorized representative of the
corporation and upon proof of compliance with all statutory provisions
governing the voluntary dissolution of such corporation, and that the
persons in whose names reissue is requested are entitled and have agreed
to such reissue: Provided, That if the dissolution proceedings are had under
the direction of a court, proof of the authority of the representative and
of the persons entitled to distribution must consist of certified copies of
orders of the court.
<b) Partnerships.—A savings bond registered in the name of a partnership which
has been dissolved by death or withdrawal of a partner, or in-any other
manner, will be paid to or reissued in the names of the persons entitled
thereto as the result of such dissolution to the extent of their respective
interests, upon their request supported by satisfactory evidence of their
title, including proof that the debts of the partnership have been paid
or properly provided for.
SUBPART O

STATES, PUBLIC CORPORATIONS, AND PUBLIC BOARDS, COMMISSIONS,
AND OFFICERS

SEC. 3i5.47. In names of Stales, public corporations, and public boards.—k. savings bond registered in the name of a State or of a county, city, towri, village or
other public corporation, or in the name of a public board or commission, will be
paid upon a request signed in the name of such State, corporation, board or commission by a duly authorized officer thereof. A request for payment so signed
-and duly certified will ordinarily be accepted without further proof of the officer's
-•authority.
SEC. 315.48. In names of public officers.—^^A savings bond registered in the title,
without the name, of an officer of a State or public corporation, such as a county,
•city, town or viUage, will be paid upon request for payment signed by the desig;nated officer. The fact that the request for payment is signed and duly certified
will ordinarily be accepted as sufficient proof that the person signing is the
incumbent of the designated office.
SUBPART P—DECEASED OWNERS

SEC. 315.49. Payment or reissue on death of owner.-^U^on the death of the owner
of a savings bond, who. was not survived by a coowner or designated beneficiary
and who had not during his lifetime presented and surrendered the bond to a Federal
Reserve Bank or the Treasury Department with a duly executed and proper
request-for an authorized reissue, the bond will be paid or reissued as hereinafter
provided. The provisions of this section shaU also apply td savings bonds regis"tered in the names of executors or administrators, except that proof of their appointment and qualification may not be required. Established forms for use in such
-cases and for requests for payment or reissue may be obtained from any. Federal
Reserve Bank or from the Treasury Department, Division of Loans and Currency,
Merchandise Mart, Chicago, Illinois, and should be used in every instance.
(o) In course of administration.—If the estate of the decedent is being administered in a court of competent jurisdiction, the bond will be paid to the
duly qualified representative of the estate or will be reissued in the names
of the persons entitled to share in the estate upon the request of the duly
appointed and qualified representative of the estate, who should certify
that the persons named are entitled to. the extent specified for each and
have consented to such reissue. The request for payment or reissue should
be signed in thie form, for example, "John A. Jones, administrator of the
estate (or executor of the will) of Henry W. Jones, deceased." Reissue
will be made to the persons entitled in their names alone, or with a coowner (provided no excess holdings will be created) or beneficiary upon
appropriate request by such persons. A request for payment or reissue
must be supported by proof of the representative's authority. Such
proof may consist of a court certificate or a certified copy of the representative's letters of appointment issued by the court having jurisdiction;
/ the certificate, or the certification to the letters, must be under the seal
of the court, must contain a statement that the appointment is in full



260

REPORT OF T H E SECRETARY OF T H E TREASURY

force, a n d should be dated within six m o n t h s of t h e date of presentation
of t h e bond for p a y m e n t or reissue. If t h e representative is himself
the person entitled and desires reissue in his own name, t h e request for
reissue m u s t be supported by an order of court, unlesss a coadminist r a t o r or coexecutor joins in t h e request.
(6). After settlement through court proceedings.—If t h e estate of t h e decedent has
been settled in a court of competent jurisdiction, the bond will be paid to,^^
or reissued, in the name of, t h e persons entitled thereto as• determined^
by t h e court: Provided, TYiBbt if.there a r e ' t w o or more persons having an
apparent interest,in t h e bond, aii agreement should be executed by t h e m .
T h e request for p a y m e n t or reissue, and t h e agreement, if necessary^
m u s t be supported by duly certified copies of t h e pertinent court records.
(c) -Without administration.—If no legal representative of t h e decedent's estate
has been or is to be appointed, a n d if it is established to the satisfaction
of t h e Secretary of t h e Treasury either t h a t t h e gross value of t h e personal
estate does not exceed $500, or t h a t administration of the estate is
not required in t h e State of the decedent's last domicile, the bond will
be paid to, or reissued in t h e name of, t h e persons entitled t o share in
t h e 3State, without requiring administration, p u r s u a n t to an agreement
and request by t h e m on the form prescribed by the Treasury D e p a r t m e n t
and supported by t h e evidence called for by t h a t form: Proviaed, however.
T h a t reissue will not be m a d e in t h e name of a creditor of t h e estate.
No p a y m e n t or reissue will be permitted without administration if .any of the persons entitled are minors or incompetents,rexc'e^t to t h e m or in
their names, in whole or .to t h e extent of'their interests in t h e decedent's
entire personal estate, or upon compliance with t h e provisions of Subp a r t I hereof governing p a y m e n t of savings bonds registered i n the names
of such persons.
SEC. 315.50. Forms of registration on reissue.—In no case will bonds be reissued
hereunder except i n . a form authorized upon original issue b y t h e regulations^in
force jat the time bonds surrendered were issued.
SUBPART Q

C R E D I T O R ' S BIGHTS AND JUDICIAL PROCEEDINGS

SEC, 315.51. Creditor's rights.—A creditor of the owner of a savings bond m a y
secure p a y m e n t thereof to t h e extent of the owner's interest, or to t h e extent of
the creditor's claim, whichever is smaller, through valid judicial proceedings:
Provided, however, T h a t no such proceedings will be recognized if they would give
effect to an a t t e m p t e d voluntary transfer inter vivos of t h e bond or would defeat
or impair the rights of survivorship conferred by these regulations, upon coowners
a n d beneficiaries. P a y m e n t , or partial p a y m e n t in a n ' a m o u n t not in excess of
t h a t to which the creditor is entitled, will be made upon presentation a n d surrender
of t h e bond with t h e request for p a y m e n t duly executed, a t t h e redemption value
current 30 days after t h e proceedings have become final, or current a t the time
t h e bond is presented for payment, whichever is earlier. No reissue of the bond
"will be made to t h e creditor under t h e provisions of this section.
SEC. 315.52. Determination of interest as between owner and coowner or beneficiary.—
Conflicting claims as to ownership of or interest in a savings bond, as between
t h e registered owner a n d t h e coowner, or t h e registered owner a n d a designated
beneficiary m a y be determined by valid judicial proceedings", in which case t h e
bond m a y be reissued in t h e names of t h e respective coowners or t h e owner and t h e
beneficiary to the extent of their respective interests as determined by such proceedings, b u t only in authorized denominations.
SEC. 315.53. Evidence necessary.—To establish the validity of judicial proceedings
there m u s t be submitted a certified copy of t h e judgment or decree of court and
of any necessary supplementary proceedings, as well as a certificate from t h e clerk
of t h e court under t h e court seal, showing t h a t t h e j u d g m e n t or decree is in full
force and effoct and has become final under the laws of the jurisdiction. T h e
Secretary of t h e Treasurj^ m a y in any case require such further information, docum e n t s and security as he m a y deem necessary.
SEC. 315.54. Bankruptcy and insolvency.—Payment (but not reissue) of a sav-~
ings bond will be made to a duly qualified trustee in b a n k r u p t c y or receiver of
t h e estate of t h e registered owrier, adjudicated b a n k r u p t or insolvent, upon request
for p a y m e n t duly executed.by such trustee or receiver and supported by satisfactory proof of his a p p o i n t m e n t and qualifications.




REPORT OF THE; SECRETARY OF THE TREASURY
SUBPART R

261

PLEDGE WITH SECRETARY OF TREASURY OR FEDERAL RESERVE B A N K S

SEC. 315.55. Deposit under Department Circulars No. 154 o,nd No. 657.—Notwithstanding any other provisions of this or any other circular, a savings bond
m a y be pledged by the registered owner in lieu of surety under the provisions of
D e p a r t m e n t . Circular No. 154, amended: Provided, T h a t t h e bond approving
officer is t h e Secretary of t h e Treasury. I n such cases an irrevocable power of
a t t o r n e y shall be executed authorizing t h e Secretary t o request p a y m e n t , a n d paym e n t of the bond will, if it becomes necessary, be made upon such request a t t h e
then appropriate redemption value. No pledge to a bond approving officer other
t h a n t h e Secretary of the Treasury will be perrnitted. A savings borid m a y also
be deposited as security with a Federal Reserve Bank under t h e provisions of Dep a r t m e n t Circular No. 657 by an institution certified under t h a t circular as an
issuing agent for savings bonds of Series E. I n no other cases are .savings ;.bonds
suitable for use as collateral, nor will a power,of .-attorney fo" request p a y m e n t be
recognized in any other case.--; • „ '
• "
^

SUBPART S—^^REISSUE AND DENOMINATIONAL EXCHANGE

SEC. 315.56. General.—Reissue of savings bonds in different names or in a
different form of registration will be m a d e only in t h e following instances and only
in denominations a n d forms of registration authorized for t h e bonds surrendered:
(a) To correct an error in the original issue, upon request of the owner or
coowner, supported by satisfactory proof of such error unless t h e error
was m a d e by t h e issuing agent;
{b) T o show a change in t h e n a m e of an owner, coowner, or beneficiary upon
his request, supported by satisfactory proof of t h e change if for any other
reason t h a n marriage;
.
(c) As otherwise specifically provided in these regulations.
SEC. 315.57. Requests for reissue.—Requests for reissue should be sighed by t h e
person authorized under these regulations to-make such requests, on appropriate
forms which m a y be obtained froiri any Federal Reserve Bank or from t h e Treasury
D e p a r t m e n t , Division of Loans and Currency. If t h e request is by reason of a
change of n a m e t h e signature should show both names, and t h e manner in which
t h e change took place. A request for reissue m u s t be signed in "the presence of
a n d be certified by an officer authorized under Subpart H hereof to certify requests
for p a y m e n t . A request m a y not be signed by a person under any legal disability
other t h a n minority. I t m a y be signed by a minor who is of sufficient competericy
a n d understanding t o sign his name to t h e request and to comprehend t h e nature
of such act. I n general t h e fact t h a t a request foi reissue has been signed b}''
a minor.and duly certified will be accepted as sufficient proof of such competency
a n d understanding.
SEC. 315.58. Agencies authorized to make reissue.—Reissues under (6) and (c)
hereof m a y be m a d e only a t a Federal Reserve Bank or t h e Treasury D e p a r t m e n t .
SEC. 315.59. Date of bonds on reissue.—The new bonds will be of t h e same series,
will bear t h e same issue date, a n d will have t h e same rights and privileges as t h e
bonds surrendered.
S E C . 315.60. Effective; d a i e : — I n a n y case of authorized reissue t h e Treasury Dep a r t m e n t reseryes the"'right to t r e a t t h e receipt by a Federal Reserve Bank or t h e
T r e a s u r y D e p a r t m e n t of a bond and appropriate request for reissue thereof as
determining t h e date upon which reissue is Effective.
SEC. 315.61. Denominational exchange.—Exchange as between authorized d e nominations will not be p e r m i t t e d except in cases of partial redemption or
authorized reissue.
SUBPART T ^ F U R T H E R PROVISIONS

S E C . 315.62. Regulations prescribed.—These regulations are prescribed by t h e
Secretary of t h e Treasury as governing United States savings bonds issued under
t h e authority of section 22 of t h e Second Liberty Bond Act, as amended, and
p u r s u a n t to t h e various d e p a r t m e n t circulars offering such bonds for sale. T h e
provisions of Treasury D e p a r t m e n t Circular No. 300, as amended, have no
application to such savings bonds except as to cases arising under S u b p a r t E
hereof.
•
SEC. 315.63. Preservation of rights.—Nothing in these regulations contained
shall be construed to limit or restrict any existing rights which holders of savings
bonds heretofore issued m a y have acquired under t h e circulars offering such bonds
for sale, or under t h e regulations in force a t t h e time of purchase.



262

REPORT OF T H E SECRETARY OF THE TREASURY

S E C . 315.64. Additional proof; bond of indemnity.-^TYie Secretary of the Treasury, in a-ny case arising under these regulations, m a y require such additional
proof as he m a y consider necessary or advisable in t h e premises; and m a y require
a bond of indemnity with satisfactory sureties, or. an agreement of indemnity, in
a n y case where he m a y consider such a bond or agreement necessary for t h e
protection of t h e interests of t h e United States.
SEC. 315.65. Correspondence ahd forms.—Correspondence in regard to any t r a n s actions-in United States savings b o n d s ' u n d e r t h e provisions of these regulations
should t)e addressed to a Federal Reserve Bank or to t h e Treasury D e p a r t m e n t ,
Division of Loans and Currency, Merchandise M a r t , Chicago, Illinois. Appropriate forms for use in connection with such transactions m a y be secured from
any Federal Reserve Bank or from t h e Division of Loans a n d Currency.
S E C . 315.66. Supplements, amendments or revisions.—The Secretary bf t h e
Treasury m a y a t any time, or from time to time, prescribe, additional, supplemental, a m e n d a t o r y or revised rules a n d regulations governing United States
savings bonds.
'

H E N R Y MORGENTHAU,

Jr.,

Secretary of the Treasury.
Exhibit 21
Amendments and^s^jLup/plj^meht to,Depo,rtmenUCircular No. .657, prescribing>j:eguI/ati.ons f
governing agencies for the issue of Uriited States savings bonds of Series E
F I R S T A M E N D M E N T , O C T O B E R 2,

1941

TREASURY DEPARTMENT,

Washington, October 2, 1941*
Treasury D e p a r t m e n t Circular No. 657, dated April 15, 1941, is hereby amended
by deleting t h e last p a r a g r a p h of section 3 of t h e circular a n d inserting iri lieu
thereof the following:
QUALIFICATION OF ISSUING AGENT

"(c) Notwithstanding, t h e provisions of subsections (a) and (b) hereof any
designated issuing agent which is, and continues to be, insured by the Federal
Deposit Insurance Corporation and which files an application-trust agreement on
Form 384-A with the,Federal Reserve Bank of its district m a y apply for defense
savings bond stock. Series E, sufficient to meet its requirements without the pledge
of collateral security therefor. T h e aggregate a m o u n t of stock to be maintained
a t any one time, t a k e n a t m a t u r i t y values, shall not exceed 50% of t h e issuing
agents' capital a n d surplus or g u a r a n t y fund or reserve for capital purposes or
$500,'000f^whichev.er4s t h e smaller a m o u n t ; however,^the Secretary of t h e Treasury,
directly or through t h e Federal Reserve Bank of t h e district as fiscal agent,
reserves t h e right to regulate t h e a m o u n t of stock which m a y be obtained or
maintained b y a n y issuing agent without t h e pledge of collateral security, including
temporary increases over t h e limits expressed in this subsection, whenever circumstances m a k e such action necessary or desirable.
"(d) Notwithstanding t h e provisions of subsections (a) and (b) hereof, any
designated issuing agent which is, and continues to be, insured by t h e Federal
Savings & Loan Insurance Corporation, or any other acceptable State insurance
corporation, sys.tem or fund, t h e members of which are subject t o Federal or State
supervision, examination and liquidation, which files an application-trust" agreem e n t on F o r m 384-A with t h e Federal Reserve Bank of the district in which it is
located m a y apply for defense savings bond stock. Series E, sufficient to meet its
requirements without t h e pledge of collateral security therefor. T h e aggregate
a m o u n t of stock to be maintained a t any one time, t a k e n a t m a t u r i t y values, shall (
not exceed 50% of t h e issuing agents' capital and surplus or g u a r a n t y fund or
reserve for capital purposes, or other similar fund or funds, or $50,000, whichever
is t h e smaller a m o u n t ; however, t h e Secretary of t h e Treasury, directly or through
t h e Federal Reserve Bank of t h e district as fiscal agent, reserves t h e right t o regulate t h e a m o u n t of stock which m a y be obtained or maintained by any issuing
agent without t h e pledge of collateral security, including temporary'increase over
t h e limits expressed in this subsection, whenever circumstances m a k e such action
necessary or desirable.
"(e) Upon approval of t h e application and pledge agreement. Form 384, or t h e
application-trust agreement. F o r m 384-A, t h e Federal Reserve Bank will issue a



REPORT OF THE SECRETARY OF THE TREASURY

263

certificate of qualification t o t h e issuing agent on F o r m N o . 385 or 385-A. T h e
Federal Reserve Bank, as fiscal agent of the United States, m a y certify, in whole
or in p a r t , t h e qualification applied for. If the' qualification applied for is not
certified, appropriate notice thereof will be t r a n s m i t t e d t o t h e issuing agent making
application."
. H . MORGEISJTHAU, J r . ,

Secretary of the Treasury,
SECOND A M E N D M E N T ; N O V E M B E R 29,

"1941

TREASURY DEPARTMENT,

Washington, November 29, 1941Treasury D e p a r t m e n t Circular No. 657, dated April 15, 1941, as amended, is
hereby further amended by- inserting immediately preceding t h e concluding
sentence of t h e last p a r a g r a p h thereof t h e following new sentence:
" T h e Secretary of t h e Treasury m a y waive or modify a n y of t h e requirements
of this circular whenever he deems such action t o be in t h e public interest."
D.

W.

BELL,

Acting Secretary of the Treasury.
F I R S T S U P P L E M E N T , J U N E 1,

1942
TREASURY

DEPARTMENT,

Washington, J u n e 1,1942.
D e p a r t m e n t Circular N o . 657, dated April 15, 1941, as amended, is hereby supplemented b y adding t h e following new p a r a g r a p h before t h e last p a r a g r a p h of
section 6 (Miscellaneous) o f t h e circular:
" W h e r e v e r t h e word 'Defense' is used in this circular or a n y agreement entered
into p u r s u a n t thereto, or wherever t h e word 'Defense' is used in a n y form used or
required to be used in connection with such circular or agreement, t h e word
*War' shall be used in lieu of or interchangeably with t h e word 'Defense', as-the
circumstances m a y require, on a n d after t h e d a t e of this supplernent. Issuing
agents designated under t h e teriris of this circular, t h e qualifica.tion of which has
been a p p r o v e d . a n d now is in full force and effect will not be required to file new
formal application-pledge or t r u s t agreements a n d t h e y y^^ill be conclusively
presumed to have assented to continue to act as issuing agents under t h e terms of
such agreements and this circular, as amended and supplemented, by t h e receipt
for sale of war savings bonds of Series E. Likewise, by such receipt, collateral
security now or hereafter pledged under t h e t e r m s of such agreements shall be
conclusively deemed t o be pledged as collateral security in connection with either
or both, defense or war savings bonds of Series E . "
H E N R Y M O R G E N T H A U , Jr.,

Secretary of the Treasury.
Treasury certificates of i n d e b t e d n e s s
Exhibit 22
Offering of }i percent Treasury certificates of indebtedness of Series A-1942',
On April 6, 1942, Secretary of t h e Treasury Morgenthau invited subscriptions
for yi percent Treasury certificates of indebtedness of Series A-1942, in t h e
a m o u n t of $1,500,000,000, or thereabouts.
[Department Circular No. 683. Public Debtl
TREASURY

DEPARTMENT,

. Washington, April 6, 1942.
I. OFFERING OF CERTIFICATES

1. The.;Secretary of t h e Treasury, p u r s u a n t t o t h e authority of t h e Second
Liberty Bond Act, as amended, invites subscriptions, a t p a r a n d accrued interest,
from t h e people of t h e United States for ^2.percent certificates of indebtedness of
t h e United States, designated Treasury certificates of indebtedness of Series
A-1942. T h e a m o u n t of t h e offering is $1,500,000,000, or thereabouts.



2.64

REPORT OF THE SECRETARY OF THE TREASURY II. DESCRIPTION OF CERTIFICATES

1. The certificates will be dated April 15, 1942, and will bear interest from
that date at the'rate of 3^ percent per annum, payable on an annual basis at the
maturity of the certificates. They will mature November 1, 1942, and will not
be subject to call for redemption prior to maturity.
2. The incoine derived from the certificates shall be subject to all Federal
taxes, .now or hereafter imposed. The certificates shall be subject to estate,
inheritance, gift, or other excise taxes, whether Federal or State, but shall be
exempt from all taxation now or hereafter imposed on the principal or interest
thereof by any State, or any of the possessions of the United States, or by any
local taxing authority.
3. The certificates will be acceptable to secure deposits of public moneys.
They will not be acceptable in payment of taxes and will not bear the circulation
privilege.
4. Bearer certificates with one interest coupon attached will be issued in
denominations of $1,000, $5,000, $10,000, and $100,000. The certificates will
not be issued in registered form.
^•
5. The certificates will 'be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States certificates.
.• III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. Subscribers must agree not to
sell or otherwise dispose of their subscriptions, or of the securities which may
be allotted thereon, prior to the closing of the subscription books. Banking
institutions generally may submit subscriptions for account of customers, but
only the Federal Reserve Banks and the Treasury Department are authorized
to act as official agencies. Others than banking institutions will not be permitted to enter subscriptions except for their own account. Subscriptions from
banks and trust companies for their own account will be received without deposit.
Subscriptions from all others must be accompanied by payment of 10 percent of
the amount of certificates applied for. Subscriptions will be entertained from
the various classes of subscribers on the following bases:
1. Banks and trust companies for their own account—not to exceed 50 percent
of capital and surplus.
2. Mutual savings and Cooperative banks, Federal savings and loan associai ions, trust accounts and investment corporations, pension funds, insurance companies,^ and similar institutions and funds—not to exceed 10
percent of total resources.
3. Corporations organized for profit, and dealers and brokers—not to exceed
50 percent of net worth.
4. Individuals—not to exceed 50 percent of net worth or 100 percent of cash
deposited with subscription.
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part, to allot less than the amount of certificates applied for, and
to close the books as to any or all subscriptions at any time without notice; and
any action he may take in these respects shall be final. Subject to these reservations, subscriptions for amounts up to and including $25,000 will be allotted
in full, and subscriptions for amounts over $25,000 wih be allotted on an equal
percentap^e basis, but not less than $25,000 on.any. one subscription. The basis
of the allotment will be publicly annouriced, and allotment notices will be sent
out promptly upon allotment'.
IV. PAYMENT

1. Payment at par and accrued interest, if any, for certificaties allotted hereunder must be made or completed on or before April 15, 1942,'or on later allotment. In every case where payment is not so completed, the payment with
application up to 10 percent of the amount of certificates applied for shall, upon
declaration made by the Secretary of the Treasury in his discretion, be forfeited
to the United States. Any qualified depositary will be permitted to make payment by credit for 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.
V.° GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, to make allotments on the basis and up



265

REPORT O'F T H E SECREITARY OF T H B TREASURY

t o t h e a m o u n t s indicated by t h e Secretary of t h e Treasury t o t h e Federal Reserve
B a n k s of t h e respective districts, t o issue allotment notices, t o receive p a y m e n t
for certificates allotted, t o m a k e delivery of certificates on full-paid subscriptions
a,llotted, a n d they m a y issue interim receipts pending delivery of t h e definitive
certificates.
2. T h e Secretary of t h e Treasury m a y a t any time, or from time t o time,
prescribe supplemental or a m e n d a t o r y rules a n d regulations governing t h e
offering, which will be communicated p r o m p t l y t o t h e Federal Reserve Banks.
HENRY

MORGENTHAU,

Jr.,

Secretary of the Treasury.
Exhibit 23
Subscriptions and allotments, Treasury certificates of indebtedness of Series A—1942
{from press releases, April 6, 10, and 16, 1942 0
On April 6, 1942, Secretary of t h e Treasury Morgenthau announced t h a t t h e
subscription books for t h e offering of }^ percent Treasury certificates of indebtedness of Series A-1942 closed a t t h e close of business April 6. Subscriptions
aggregated $3,062,250,000, of which $1,507,083,000 was allotted. Subscriptions
in a m o u n t s u p t o a n d including $25,000, totaling about $66,000,000, were allotted
in full. Subscriptions in a m o u n t s over $25,000 were allotted 48 percent, on a
s t r a i g h t percentage basis, b u t n o t less.than $25,000 on a n y one subscription, with
adjustments, where necessary, t o t h e $1,000 denomination. Subscriptions a n d
allotments were divided among t h e Federal Reserve districts a n d t h e Treasury
as follows:
redei:al Reserve
district
Boston
NewYork.
Philadelphia
Cleveland
Richmond
A florifq
Chicago
St. Louis.

Subscriptions
received

Subscriptions
allotted

$212,414,000
1, 724, 584,000
111, 799,000
150, 548 000
77, 737 000
73, 532,000
368, 055, 000
71,103,000

$104,289,000
832,804,000
55,613,000
75, 369 000
39, 828 000
37, 200 000
185,568,000
37,386,000

Federal Reserve
district
Minneapolis
Kansas City . . .
Dallas
San Francisco
Treasury
Total

.

Subscriptions Subscriptions
received
allotted
$50,052,000
44,.835,000
47, 634, 000
129, 772, 000
185, 000

$27,087,000
23, 541,000
24. 526,000
63, 774, 000
98,000

3,062, 250, 000

1, 507,083, 000

Exhibit 24
Off^ering of y percent Treasury certificates of indebtedness of Series A-1943
%
On J u n e 18, 1942, Secretary of t h e Treasury Morgenthau invited subscriptions
for y percent Treasury certi|icates of indebtedriess of Series A-1943, in t h e
%
a m o u n t of $1,500,000,000, or thereabouts.
[Department Circular No. 688. Public Debt]
TREASURY

DEPARTMENT,

Washington, J u n e 18, 1942.
I. OFFERING OF CERTIFICATES

1. T h e Secretary of t h e Treasury, p u r s u a n t t o t h e authority of t h e Second
L i b e r t y Bond Act, as amended, invites subscriptions, a t p a r and accrued interest,
from t h e people of t h e United States for Y . percent certificates of indebtedness of
^
t h e United States, designated Treasury certificates of indebtedness of Series A 1943. T h e a m o u n t of t h e off'ering is $1,500,000,000, or thereabouts.
,

r»

I I . DESCRIPTION OF CERTIFICATES

1. T h e certificates will be dated J u n e 25, 1942, a n d will bear interest from t h a t
d a t e a t t h e rate of y percent per annum, payable on an annual basis at t h e m a t u %
rity of t h e certificates. T h e y will m a t u r e Februar}^ 1, 1943, a n d will n o t be s u b ject t o call for redemption prior t o m a t u r i t y .
1 Revised June 2,1942.




266

REPORT OF THE SECRETARY OF THE TREASURY

2. The income derived from the certificates shall be subject to all Federal taxes,,
now or hereafter imposed. The certificates shall be subject to estate, inheritance,,
gift, or other excise taxes, whether Federal or State, but shall be exempt from all
taxation now or liereafter imposed on the principal or interest thereof by any
State, or any of the possessions of the United St'ates, or by any local .taxing^
authority.
3. The certificates will be acceptable to secure deposits of public moneys..
They will not be acceptable in payment of taxes and willnot bear the circulation
privilege.
•
^
4.- Bearer-certificates witlvone coupon attached .will be issued in denominatioris:
of $1,000, $5,000, $10,000 and $100,000. The certificates will not be issued in
registered form.
5. The certificates will be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States certificates.
IIL SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. Subscribers must agree not tosell or otherwise dispose of their subscriptions, or of the securities which may be
allotted thereon, prior to the closing of the subscription books. Banking institutions generally may submit subscriptions for account of customers, but only the
Federal Reserve Banks and the Treasury Departm'ent are authorized to act as
official agencies. Others than banking institutions will not be permitted to enter
subscriptions except for their own account. Subscriptions from banks arid trust
companies for their own account will be received without deposit. Subscriptions
from'all others must be accompanied by payment of 5 percent of the amount of
certificates applied for.
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part, to allot less than the amount of certificates applied for, and toclose the books as to any or all subscriptions at any time without notice; and any
action he may take in these respects shall be final. Subject to these reservations,
subscriptions for amounts up to and including $25,000 will be allotted in fulL
The basis of the allot,ment on all other subscriptions will be publicly announced,
and allotment notices will be sent out promptly upon allotment.
IV. PAYMENT

1. Pa3anent at par and accrued interest, if any, for certificates allotted hereunder must be made or completed on or before June 25, 1942, or on later allotment. In every case where payment is not so completed, the payment with
application up to 5 percent of the amount of certificates applied for shall, upon,
declaration made by the Secretary of the Treasury in his discretion, be forfeited
to the United States. An}^ 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.
V. GENERAL PROVISIONS

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




HENRY MORGENTHAU, Jr., .

Secretary of the Treasury. '

267

REPORT OF T H E SECRETAR'Y OF THE TREASURY

Exhibit 25
Subscriptions and allotments, Treasury certificates of indebtedness of Series A-1943
{from press releases, June 19, 22, and 29, 1942^)
On June 18, 1942, Secretary of the Treasury Morgenthau announced that the
subscription books for the ofl'ering of Y percent Treasury certificates of indebteds
ness of Series A-1943 would close at the close, of business June 19. Subscriptions
aggregated $3,114,479,000, of which $1,588,495,000 was allotted. Subscriptions
in amounts up to and including $25,000, totaling.about $61,000,000, were allotted
in full. Subscriptions in amounts over $25,000 were allotted 50 percent, on a
straight percentage basis, but not less than $25,000 on any one subscription, with
adjustments, where necessary, to the $1,000 denomination. Subscriptions and
allotments were divided among the Federal Reserve districts and the Treasury
as follows:
F e d e r a l Reserve district

Subscriptions received

Boston
.
. $176,940,000
New York.
1, 456, 264, 000
120, 489, 000
Philadelphia _ . . _ _
168, 022, 000
Cleveland
82, 255, 000
Richmond
^.
111,939.000
Atlanta
'477,261,000
Chicago
.
96, 925, 000
St. L o u i s . - -

Subscriptions allotted

$90,177,000
731,525,000
61, 832, 000)
86,448,000
43,124, 000
57,601,000
246,067,000
51,435,000

F e d e r a l Reserve ^district
--^

Subscriptions received

Minneapolis.
Kansas City
Dallas
San F r a n c i s c o . . .
Treasury

$49,819,000
$27,992,000
81,697,000
43, 218,000
89, 884, 000
46, 612,000
202, 434,000 o 102,189, 000
550,000
275, 000

Total

3,114, 479,000

Subscriptions allotted

1, 588,495, 000

Treasury bills
Exhibit 26
Inviting tenders for Treasury bills dated July 2, 1941 {press release, June 27, 1941)
TREASURY

DEPARTMENT,

Washington, June 27, 1941.
The Secretary of the Treasury, by this.public notice, invites tenders for
$100,000,000,- or thereabouts, of 91-day Treasury bills, to be issued on a discount
basis under competitive bidding. The bills of this series will be dated July 2,
1941, and will mature October 1, 1941, when the face amount will be payable
without interest. They will be issued in'bearer form only, and in denominations
of $1,000, $5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and branches up to the
closing hour, two o'clock p. m., eastern standard time, Monday, June 30, 1941.
Tenders will not be received at the Treasury Department, Washington. Each
tender must be for an even multiple of $1,000, .and the price offered must be expressed on the basis of 100, with not more than three decimals, e. g.,. 99.925.
Fractions may not be used. It is urged that tenders be made on the printed forms
and forwarded in the special envelopes which will be supplied by Federal Reserve
Banks or branches on application therefor.
Tenders will be received without deposit from incorporated banks and trust
companies and from responsible and recognized dealers in investment securities.
Tenders from others must be accompanied by payment of 10 percent of the face
amount of Treasury bills applied for, unless the tenders are accompanied by an
express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and branches, following which public announcement will be made by
the Secretary of the Treasury of the amount and price rarige of accepted bids.
Those submitting tenders will be advised of the acceptance or rejection thereof.
The Secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be final.
Payment of accepted tenders at the pi ices offered must be made or completed at
the Federal Reserve Bank in cash or other immediately available funds on July
2, 1941.
The income derived from Treasury bills, whether interest or gain from the sale
or other disposition of the bills, shall not have any exemptions, as such, and loss
from the sale or other disposition of Treasury bills shall not have any special treat« Revised .Tuly 25, 1942.




268

REPORT OF THE SECRETARY OF THE TREASURY

m e n t , as such, under Federal t a x acts now or hereafter enacted. T h e bills shall be
subject to estate, inheritance, gift, or other excise taxes, whether Federal or State,
b u t shall be exempt from all taxation now or hereafter imposed on t h e principal or
interest thereof by any State, or any of the possessiojis of t h e United States, or by
a n y local taxing authority. For purposes of taxation t h e a m o u n t of discount a t
which Treasury bills are originally sold by t h e United States shall be. considered
to be interest.
Treasury D e p a r t m e n t Circular No. 418, as amended, a n d this notice, prescribe
t h e terms of t h e Treasury bills a n d govern t h e conditions of their issue. Copies
of the circular m a y be obtained from any Federal Reserve .Bank or branch.

Exhibit 27
Acceptance of tenders for Treasury bills dated J u l y 2,1941 {press release, J u l y 1, 1941)
TREASURY DEPARTMENT,

Washington, J u l y 1, 1941.
T h e Secretary of t h e Treasury announced last evening t h a t t h e tenders for
$100,000,000, or thereabouts, of 91-day Treasury bills, to be dated July 2 and t o
m a t u r e OctoJoer 1, 1941, which were offered on J u n e 27, were opened a t t h e Federal Reserve Banks on J u n e 30.
T h e details of this issue are as follows:
T o t a l applied for
$281, 145,000
T o t a l accepted
.
100,.880, 000..
Range of accepted bids:
, _y ... -• -^-^
Percent
High, 99.990, equivalent r a t e approximately
!*_
0. 040
Low, 99.975, equivalent r a t e approximately
L
. 099
Average price, 99.978, equivalent rate approximately
._ . 087
(35 percent of the a m o u n t bid for a t t h e low price was accepted.)

Exhibit 28
Press releases pertaining to Treasury bill issues during the fiscal year 1942 were
similar in form to the foregoing a n d are, therefore, n o t here reproduced. T h e
essential details regarding each issue are summarized in the following table.




Summary of information contained in press releases issued in connection with Treasury bills offered during the fiscal year 1942
B i d s accepted

1941

D a y s to
maturity

D a t e of
; maturity

D a t e of ..
issue

•-

Total
amount. "
applied for (in
thousands)

H i g best
Price
(per
hundred)

>

Lowest

Equivalent
rate 1
(percent)

Price
(per
hundred)

V Average
D a t e of press releases

Amount
(in
Equivalent
thousands)
rate 1
(percent)

Price
(per
hundred)

$100,880
100, 048
100, 337
100,127
100,015
100,232
100,118
100, 227
100, 799
100,369
100, 957
100, 043
100, 742
100, 045

99.978
99.976
99. 975
99. 975
- 99.976
99.973
99. 971
99. 971
99.971
99. 977
99.982
99. 987
99. 991
99. 984

0.086
.097
.097
.098
. 094
.106
.114
.116
.114
.090
.071
.050
.037
.062

1941

:.

...

91
91
91
91
91
91
91
91
91
91
91
91
91
91

$281,145
281, 732
306, 089
292, 758
266, 617
293, 242
288,823
297,444
327, 055
383, 608
439, 541
493,411
404. 215
182, 005

99. 990
99.990
99.990
2 99. 982
100.000
100. 000
100.000
99.980
3 99. 977
. " 99. 986
5 99.990
6 100. 000
100.000
100.001

0.040
.040
.040
.071

99.975
99.-972
99.972
99.974
99. 972
99. 970
99. 969
99.969
99. 970
99. 975
99. 981
99. 985
99.989
99. 975

. 079
.091
.055
.040
•

0.099
.111
.111
.103
.111
.119
.123.
.123
:ii9
.099
.075
.059
.044
.099

Jan.7
Jan.14
J a n . 21
J a n . 28
Feb. 4
F e b . 11
F e b . 18
Feb. 2 5 . . . . . . . .
Mar. 4 . . . : . . . ' .
"Mar. 11
M a r . 18
M a r . 16
Mai'. 17

Footnotes at end of table.




J u n e 27 a n d J u l y 1
J u l y '4 and 8
J u l y 11 a n d 15
J u l y 18 and 22
.
J u l y 25 a n d 29
. .
Aug. 1 and 5
A u g . 8 a n d 12
A u g . 15 a n d 19
Aug. 22 and 26
...
Aug. 27 a n d 30
Sept. 5 a h d 9
Sept. 12 and 16
Sept. 19 a n d 23
Sept. 28 a n d 30

1941
June
July
July
July
July
Aug.
Aug.
Aug.
Aug.
Aug.
Sept.
Sept.
Sept.
Sept.

30
7
14
21
28
4
11
18
25
29
8
15
22
29

•

91
91
91
91
91
91
91
91
91
91
91
82
76

100.'003
368, 817
100. 000
217, 616
100. 000
303, 8.52
269, 407
7 100. 000
199, 998
100. 000
313, 335 ' 8 99. 980
439, 350
9 99.980
466, 603
10 99. 977
468,160
100. 000
403,171
100. 000
382, 650
12:99. 950
352, 938
13 99. 966
317, 107
12 99. 961

.
.079
.079
.091

-. -

.198
.149
.185

99. 999
99.999
99. 989
99.97,3
99.944
99. 938
99. 922
99.926
99.930
99. 917
99. 919
99. 927
99.927

.004
.004
.044
.107
.222
.245
.309
.293
.277
.328
.320
.320
.346

100,433
100, 207
1.50,185
150, 010
150,098
150, 018
200,167
200; 026
200,156
11 149,987
150,040
150,174
150, 004

100. 0 0 0 100. 0 0 0 99. 994
99. 983
99. 962
99. 950
99. 935
99.932
99. 939
99. 926
99. 925
99.933
99. 935

O

CO

O

•

•1942
Oct. 8
Oct. 15
Oct. 22
Oct. 29
Nov. 5
N o v . 12
N o v . 19.
Nov. 2 6 . . \ . . Dec. 3
... .
D e c . 10
D e c . 17
D e c . 24
..
D e c . 31

o •

1941

'•Oct. 1
.Tuly 2
Oct. 8 . .Tuly 9
Oct. 15
J u l y 16
Oct. 22
J u l y 23
J u l y 3 0 . . . : . . . Oct. 29
Nov. 5
Aug. 6
N o v . 12
Aug. 13
N o v . 19
A u g . 20
N o v . 26
A u g . 27
Dec. 3
Sept. 3
Dec.lO
Sept. 10
Sept. 1 7 . . . . . D e c . 17
Dec. 24
Sept. 24
D e c . 31
Oct. 1

D a t e of.
closing

Equivalent
rate 1
(percent)

•

.002 Oct. 3 a n d 7..'^
.001 Oct. 8 and 11
.024 Oct. 17.and 21 - . .
.087 Oct. 24 a n d 28
.151 Oct. 29 a n d N o v . 1
.200 N o v . 5 a n d 8
.258 N o v . 14 and 18
.267 N o v . 21 a n d 25
.242 N o v . 28 a n d D e c . 2
.293. D e c . 5 a n d 9 . . . . .
.295 D e c . 12 a n d 16
.295 Dec. 19 a n d 23
.310 D e c . 26 a n d 30...£'.

Oct.
Oct
Oct.
Oct.
Oct
Nov.
Nov.
Nov.
Dec
Dec
Dec.
Dec.
Dec.

6
10
20
27
31
7
17
24
1
8
15
22
29

1-9

W

>
Ul

d
K!

Summary of information contained in press releases issued in connection wiih Treasury bills offered during the fi.scal year 1942—Con.
B i d s accepted

E>ate of

' D a t e of '
maturity

1942

M a r . 19
.
A p r . 15
A p r . 22
A p r . 29
May 6
M a y 13
M a y 20
M a y 27
June 3
J u n e 10.
J u n e 17
.-J u n e 16
-•-..
J u n e 18..
J u n e 19
J u l y 15.
J u l y 22
J u l y 29
Aug. 5
Aug. 12
A u g . 19.
Aug. 26
Sept. 2
Sept. 9
Sept. 16
Sept. 1 7 . .

Highest

Average

Lowest

" •
D a t e of press releases

Amount
Price
(per
hundred)

Price
Equivalent
.
(per
ratei
(percent)
hundre.d)

(in
•
Equivalent
thousands)
rate i
(percent)

Price
(per ^
hundred)

99.940
99.970
99. 950
99.942
99. 944
99. 937
99.933
99. 933
99. 944
99. 942
99. 951
99. 953
99. 952
99.947
99. 929
99. 920
99.915
99.910
99. 907
99.908
99. 908
99. 908
99. 907
99. 908
99. 914

0.304
.119
.196
.231
.220
.250
.263
.266
.222
.229
.195
.203
.221
.264
.281
.317
.335
.358
.368
.365
.365
.365
.366
.365
. .362




o
1942

.

71
91
91
91
91
91
91
91
91
91
91
83
78
72
91
91
91
91
91
91
91
91
91
91
85

$351, 600
384, 694
35i, 585
371, 501
410, 057
399,966
342. 087
385, 802
510, 228
471, 349
535, 476
51'2, 778
356, 653
333, 669
311, 219
332, 677
375, 372
354, 590
546, 350
567,190
461, 283
496, 574
689, 653
801, 271
709, 632

H 99.952
15 100. O C
O
3 99.930
18 99. 975
100. 000
19 99. 950
20 99. 950
: 99.950
22 99. 962
100. 000
23 99. 975
. 24 99. 981
28 99. 967
27 99. 970
29 99. 960
99. 960
30 99. 950
99. 938
32 99. 938
33 99.940
15 99. 940
35 99. 925
99. 925
7 99. 930
99.935

0.243
.079
.099
.198
.198
.198
.150
.099
.082
.152
.150
.158
.158
.198
.245
.245
.237
.237
.297
.297
.277
.275

99. 934
99. 963
99. 942
99. 934
99. 937
99. 932
99. 929
99. 929
99.941
99. 938
99. 947
99.949
99.948
99. 944
99. 922
99.914
99. 910
99.908
99. 905
99. 906
99. 906
99.906
99. 908
. 99. 907
99. 913

0.335
.148
.229
.261
.249
.269
.281
.281
.233
.245
.210
.221
.240
.280
.309
.340
.356
.372
.376
.372
.372
.372
.372
.368
.368

$150, 230
150,047
,150, 330
17 150,174
IS 150, 094
150, 049
150, 012
21 150, 446
. 150, 477
150,194
150, 273
25 150, 263
150, 435
28 150, 854
150, 073
150, 058
31 150,126
150,400
250, 692
34 251, 735
250, 988
251, 301
36 300, 772
37 301, 048
35 301,109

D a t e of
closing

Equivalent
ratei
(percent)

1942

Jan. 7
...
Jan.14
Jan. 2 1 . .
Jan. 28.--'..-.
Feb. 4
F e b . 11
F e b . 18
F e b . 25 . . . . . .
Mar. 4
M a r . 11
M a r . 18
M a r . 25
Apr. 1
Apr. 8
A p r . 15 '
A p r . 22
Apr. 29
....
May 6
M a y 13
M a y 20
M a y 27
June 3
J u n e 10
J u n e 17
J u n e 24

Total
amount
D a y s to
applied
maturity
for (in
thousands)

to

o

1942

J a n . 2 and 6
Jan.
5
J a n . 12
J a n . 9 a n d 13
J a n . 19
J a n . 16 a n d 20
J a n . 26
J a n . 23 a n d 27
Feb. 2
J a n . 30 a n d F e b . 3
F e b . 6 a n d 10
. Feb. 9
F e b . 13 a n d 17
F e b . 16
F e b . 20
F e b . 18 a n d 21
M a r . "2
F e b . 27 a n d M a r . 3
Mar. 9
M a r . 6 a n d 10
M a r . 10
M a r . 13 a n d 17
M a r . 20 aud 24
M a r 23
M a r . 27 a n d 31
•.
.
M a r . 30
Apr. 3 a n d 7
Apr. 6
A p r . 10 a n d 14
A p r . 13
A p r . 17 a n d 21
A p r . 20
A n r . 27
Apr. 24 a n d 28
M a y 1 and 5 - . -. _
May 4
M a y 8 a n d 12
. M a y 11
M a y 15 a n d 19 •_M a y 13
M a y 22 a n d 28
M a y 25
M a y 29 a n d J u n e 2
June 1
June 8
June 5 and 9
J u n e 12 and 16 . . - .
J u n e 15
J u n e 19 and 23
J u n e 22

.o

w

a
>
O

w>
d

1 Bank discount basis.
2 Except for 2 tenders aggregating $250,000..
3 Except for 1 tender of $200,000.
4 Except for 1 tender of $25,000.
5 Except for 1 tender of $26,000.
6 Except for 2 tenders aggregating $260,000.
'Except for 1 tender of $10,000.
8 Except for 2 tenders aggregating $110,000.
9 Except for 3 tenders aggregating $385,000.
1 Except for 2 tenders aggregating $30,000.
0
11 Revised Dec. .10, 1941.
1 Except for 2 tenders aggregating $80,000.
2
1 Except for 2 tenders aggregating $220.000.
3
1 Except for 2 tenders aggregating $640,000.
4
1 Except for 1 tender of $300,000.
5
1 Except for 2 tenders aggregating $105,000.
6
1 Revised Jan. 28, 1942.
7
,- •.
1 Revised Feb. 4,1942.
8
1 Except for 2 tenders aggregating $230,000.
9




20 Except for 1 tender of $65,000.
21 Revised Feb. 25, 1942.
22 Except for 1 tender of $210,000.
23 Except for 2 tenders aggregating $90,000.
24 Except for 2 tenders aggregating $135,000.
25 Revised Mar. 25, 1942.
26 Except for 2 tenders aggregating $17,000.
27 Except for 1 tender of $20,000.
28 Revised Apr. 8, 194.2.
29 Except for 2 tenders aggregating $150,000.
30 Except for 2 tenders aggregating $55, 000.
31 Revised Apr. 29, 1942.
32 Except for 2 tenders aggregating $15,000.
33 Except for 4 tenders aggregating $98, 000.
34 .Revised May 20, 1942.
35 ExceiDt for 2 tenders aggregating $12,000.
36 Revised June 10, 1942.
37 Revised June 17, 1942.
, 33 Revised June 24, 1942.

hi
O

CQ

O

>

U2

to

•

272

REPORT OF :THE SECRETARY OF THE TREASURY
Miscellaneous
Exhibit 29

An act to increase the debt limit of the United States, to further amend the Second
Liberty Bond Act, and for other purposes
[Public Law 610, 77th Cong., H. R. 6691]

Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled. T h a t this Act m a y be cited as t h e Public D e b t
Act of 1942.
SEC. 2. Section 21 of t h e Second Liberty Bond Act, as amended, is further
amended to read as foliows:' ' S E C . 21. T h e face a m o u n t of obligations issued under the authority of this
Act shall not exceed in t h e aggregate $125,000,000,000 outstanding at' any one
time."
SEC. 3. Section 20 of t h e Second Liberty Bond Act, as amended, is further
amended to read as follows:
' ' S E C . 20. (a) Any obligations authorized by sections 1, 5, and 18 of this Act,
may be issued on an interest-bearing basis, on a discount basis, or on a combination interest-bearing and discount basis, a t such price or prices and with interest
computed in such manner and payable a t such time or times as t h e Secretary of t h e
Treasury m a y prescribe; and any such obligations m a y be offered for sale o n . a c o m petitive or other basis under such regulations and upon such terms and conditions
as t h e Secretary of t h e Treasury m a y prescribe; and his decision with respect t o
any such issue shall be final.
"(b) Any obligations authorized b y this Act and redeemable upon d e m a n d
of t h e owner or holder may, under such regulations and upon such terms and •
conditions as t-he Commissioner of Internal Revenue with the approval of t h e
Secretary of t h e Treasury m a y prescribe, be receivable by the United States in
p a y m e n t of any taxes imposed by t h e United States.
" ( c ) Any obligations authorized by this Act may, under such regulations a n d
upon such t e r m s as t h e Secretary of t h e Treasury m a y prescribe, be issu'ed in
exchange for any obligations of any agency or instrumentality of the United States
which are unconditionally guaranteed b o t h as to principal and interest by t h e
United.States, a t or before their m a t u r i t y . "
SEC. 4. Section 19 of t h e Second Liberty Bond Act, as amended, is further
amended to read as follows:
" S E C . 19. Any obligations authorized by^this Act m a y be issued for t h e purchase,
redemption, or refunding, a t or before maturity, of any outstanding bonds, notes,
certificates of indebtedness. Treasury bills, or savings certificates of t h e United
States, and any money received from t h e sale of such obligations or any other
money in t h e general fund of t h e Treasury may, under such rules, regulations,
terms, and conditions as t h e Secretary of t h e Treasury m a y prescribe, be used
• for such purchase, redemption, or refunding."
SEC. 5. T h e authority of t h e Postmaster General contained in sectiom 6 of t h e
Act of June 25, 19.10, as amended (U. S. C , 1940 edition, title 39, sec. 756), a n d
section 22 (c) of t h e Second Liberty Bond Act, as amended, to prepare and issue
postal-savings cards arid postal-savings stamps shall terminate on such da.te as
stamps issued by t h e Secretary of t h e Treasury p u r s u a n t to t h e authority contained
:in section 22 (c) of t h e Second Liberty Bond Act, as amended, are made available
for sale to t h e public; and, as soon as practicable thereafter, the Board of Trustees
of the Postal Savings System shall pay to t h e Secretary of the Treasury a sum equal
to the redemption value of all postal-savings stamps outstanding, and after such
p a y m e n t has been m a d e t h e obligation to redeem such stamps shall cease to be a
lialDility of t h e Board of Trustees of t h e Postal Savings System but shall constitute
a public debt obligation of t h e United States.
SEC. 6. Section 4 of t h e P u b h c D e b t Act of 1941 (PubHc, Numbered 7, Seventyseventh Congress, first session), is hereby amended to read as follows:
" S E C . 4. (a) Interest upon obligations, and dividends, earnings, or other income
from shares, certificates, stock, or other evidences of ownership, and gain froiii .the ^
sale Or other disposition of such obligations and evidences of ownership.issues^ o^ o^
after t h e effective date cf the Public D e b t Act of 1942 by t h e United States or anj^
agency or instrumentality thereof shall not have any exemption, as such, and loss
from t h e sale o r other disposition of such obligations or evidences of ownership
shall not have any special treatment, as such, under Federal tax Acts now or '
hereafter enacted; except t h a t any such obligations which the United States Maritime Commission or the Federal Housing Administration had, prior t o March 1,



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REPORT OF T H E SEICRETARY OF THE. TREASURY

273

1941, contracted to issue a t a future date, shall when issued bear such tax-exemption privileges as were, a t t h e time of such contract, provided in t h e law authorizing
their issuance. For t h e purposes of this subsection a Territory, a possession of t h e
ICFnited States, and t h e District of Columbia, and any political subdivision thereof,
and any agency or instrumentality of any one or more of t h e foregoing, shall
not be considered as an agency or instrumentality of t h e United States!
"(b) T h e provisions of this section shall, with respect to such obligations and
evidences of ownership, be considered as amendatory of and supplementary to t h e
respective Acts or p a r t s of Acts authorizing t h e issuance of such obhgations and
evidences of ownership, as amended and supplemented.
"(c) Nothing contained herein shall be construed to amend or repeal sections
114 and llS.of t h e Revenue Act of 1941."
Approved, March 28, 1942.
'

Exhibit 30
Title I V of the Second War Powers Act, 1942 {Public Law 507, March 27, 1942),
relating to the purchase by the Federal Reserve Banks of Government obligations
T I T L E I V — P U R C H A S E BY F E D E R A L R E S E R V E B A N K S OF G O V E R N M E N T
OBLIGATIONS

/ SEC. 401. Subsection (b) of section 14 of the Act of December 23, 1913 (38
Stat. 265), otherwi.se known as t h e Federal Reserve Act, as amended, is hereby
amended by striking out t h e proviso therein a n d inserting in lieu thereof t h e
following: ^^Provided, T h a t a n y bonds, notes, or other obligations which are direct
obligations of the United States or which are fully guaranteed by t h e United States
as to principal and interest m a y be bought and sold without regard to maturities
either in the open m a r k e t or directly from or to the United States; but all such
purchases and sales shall be made in accordance with t h e provisions of section
12A of this Act and t h e aggregate a m o u n t of such obligations acquired directly
from t h e United States which is held a t a n y one time by t h e twelve Federal Reserve
banks shall not exceed $5,000,000,000."

Exhibit 31
Payment or redemption of bonds and other transferable securities of the Uhited
States at maturity, or before maturity pursuant to a call for redemption in accordance with their terms
[Department Circular No. 666. Public Debt]
I M P O R T A N T NOTE.—The provisions of this circular are of general application, and will specifically
apply only with respect to any transferable public debt securities of the United States that may mature in
regular coarse, or that may bc included in an official call for redemption before maturity in accordance with
their terms.
TREASURY

DEPARTMENT,

Washington, J u l y 2 1 , 1941.
307:"0.. Scope of regulations.
T h e following rules a n d regulations are hereby prescribed to govern t h e p a y m e n t
or redemption of transferable securities of t h e United States, as hereinafter defined. Any provisions of D e p a r t m e n t Circular N o . 300, dated July 31, 1923, as
supplemented and amended (31 C F R 306), in confiict with the. provisions of these
regulations are hereby superseded.^
SUBPART A. GENERAL PROVISIONS

307.1. Definitions.
(a) Securities.-^The t e r m "securities" shall include all bonds, notes, certificates
of indebtedness, and. Treasury bills of t h e United States, and similar i n s t r u m e n t s
heretofore, or hereafter issued by t h e Secretary of t h e Treasury as evidence of t h e
public debt of t h e United States, a n d include those bearing interest a n d those
1 Sees. 307.0 tO;307.22, inclusive, issued under the authority contained in: R. S. 161; 5 U. S. C. 22. Sec. 1,40
Stat. 502, Sec. i; 40 Stat. 844, 46 Stat. 1506, Sec. I4f(a) (1), 48 Stat. 343, Sec. 1, 49 Stat. 20,*'S«;. 1, 52 Stat.
447; 31 U. S. C. 752. Sec. 5 (a) Second Liberty Bond Act as added by 46 Stat. 19; Secs.^:2;and 3,49 Statist?;
31 U. S. C. 754 and Supp. V, 754 (a). Sec. 10, 36 Stat. 817; 39 U. S. C. 760. Sec. 1, 40 Stat. 1309, Sec.-1401,
42 Stat. 321. Sec. (a) (3), 48 Stat. 343, Sec. 4, 49 Stat. 20; 31 U. S. C. 753 (a) and Supp. V, 753 (a). Sec. 14 (a)i
(4), 48 Stat. 343; 31 XT. S. C. 754 (a).
'
.
, • '•




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REPORT OF THE SECRETARY OF THE TREASURY

issued on a discount basis. The word "transferable" shall apply only to securities
which are transferable by delivery, or by assignment and delivery, as distinguished
from those which by their terms are not transferable, or are transferable only by
operation of law, such as United States savings bonds 2 and adjusted service bonds,^
which are not subject to the provisions of these regulations. The word "securities"
will hereinafter be used to refer to transferable securities as defined above, unless
otherwise indicated by the context.
•
{b) Payment.—As ordinarily used by the Treasury Department, the term ^'payment" refers to the payment of securities at maturity, while the term "redemption" refers to payment before maturity pursuant to a call for redemption in accordance with the terms of the securities. For the purposes of these regulations,
however, the terms are interchangeable, and the term "redemption" may refer
to the discharge of a security -by payment either at maturity, or before maturity
pursuant to a call for redemption.*
307.2. Other securities affected.
.
These regulations so far as appropriate also apply to securities of the general
governments and various municipal governments of Puerto Rico and the Philippine Islands, and to those securities issued by wholly-owned corporations and
other agencies of the Government for which the Treasury Department acts as
transfer agency.*
307.3. Payment or redemption.
Securities become due for payment at their maturity date, or at such earlier
date as they rnay be called for redemption in accordance with their terms, and
the owrier thereof, on presentation and surrender of the securities on and after
any such date in accordance with the provisions of these regulations, is entitled
to receive payment of the principal amount, as hereinafter provided, except as
<otherwis,e provided by law or regulations prescribed pursuant to law.*
307.4. Interest.
' Bonds and other, interest-bearing securities will cease to bear interest on the date
of their maturity, unless they have been called for redemption before their maturity in accordance yvith their ternis, in which case they will cease to bear interest
on the date fixed for redemption in the call. No interest can accrue afte^ a security
has become due and payable, whether at maturity or by virtue of a call for redemption before maturity.*
'
'
SUBPART B.

BEARER SECURITIES

307.5. Presentation and surrender; payment.
Coupon bonds, notes, certificates of indebtedriess, Treasury bills, and other
bearer securities which have become due and payable, whether at maturity or by
virtue of a call for redemption before maturity, are payable in due course to the
person presenting and surrendering them for redemption, or to such person as
he may designate. Such securities should be presented and surrendered, at the
risk and expense of the owner, to any Federal Reserve Bank or branch thereof, or
to the'Treasurer ofthe United States, Washington, D. C , accompanied by appror
priate written advice. All interest coupons due and payable on or before the date
of maturity or date fixed in the call for earlier redemption, as the case may be,
should be detached from the securities and collected in regular course.* All
coupons bearing dates subsequent to a redemption date should be left attached
to the securities. Payment of the principal will be made by check drawn to the
order of the person presenting and surrendering the securities and, in the ab.sence
of other instructions, mailed to him at his address,, as given in the accompanying
advice. Upon appropriate instruction, the check will be drawn to the order of
any other person, and mailed to any other address. A Federal Reserve Bank,upon appropriate request, may make payment to a member bank from which bearer
securities are received by crediting the amount in the member bank's account.
The Secretary of the Treasury may require satisfactory proof of ownership of
any bearer security, or any registered security assigned in bla.nk, or otherwise
so as to become, in effect, payable to bearer, which is presented and surrendered
for redemption after the lapse of more than a reasonable period of time from-the
date on which it became due arid payable, whether at maturity or earlier redemption
date. In any case in which proof of ownership may be required the Secretary
2 Redemption of United States savings bonds is governed by Department Circular No. £30, Fourth
Revision, as amended (31 CFR 31.5).
3 Redemption of 3 percent adiusted service bonds of 1945 is governed by Department Circular No. 560,
Revised, as amended (31 CFR 313).
< For statutory citations, see note to sec. 307.0.




\

REPORT OF THE SECRETARY OF THE TREAStJRY'

275

of the Treasury, in his discretion, may also require a bond of indemnity or such
other security as he may deem necessary.*
,
,.•
'•
307.6. Missirig coupons.
If ariy coupons bearing date subsequent to the redemption date of the securities
are missing from bearer securities presented for redemption, the securities nevertheless will be redeemed, but the full face amount of any such missing coupons^
will be deducted ,from the payment to be made on account of such redemption,
and any amounts so deducted will be held in the Treasury to provide for adjustments or refunds on account of such missing coupons as may subsequently be
presented: Provided, however. That if it is proved to the satisfaction of the Secretary of the Treasury that any such missing coupons (bearing dates after the redemption date) have been in fact destroyed the amount of such destroyed coupons
will not be deducted from the payment on account of redemption, but in any such
case the Secretary of the Treasury may require a bond of indemnity or a guarantee
by an incorporated bank or trust company.*
SUBPART C.

REGISTERED SECURITIES

307.7. Presentation and surrender; payment.
Registered securities which have become due and payable, whether at maturity
or by virtue of a call for redemption before maturity, are payable in due course
upon proper assignment by the registered payees or assignees thereof, or b}'- their
duly constituted representatives as hereinafter provided. After such assignment,
the securities should be presented and surrendered, at the risk and expense of the
owner, to any Federal Reserve Bank or branch, or to the Treasury Department,
Division of Loans and Currency, Washington, D. C , accompanied by appropriate
written advice. In all cases payment will be made, by check drawn to the order
of the person entitled, and, unless otherwise directed, the check will be mailed to
the address given in the form of advice accompanying the securities surrendered.
The transfer books for registered.securities will close at the close of business one
month prior to the date of inaturity of such securities, or the date fixed in the call N
for redemption before maturity in accordance with their terms, and such securities
when received after the close of the transfer books will be accepted foi; cash redemption only. Final interest due will be covered by payments to be made simultaneously with the payments on account of principal, in accordance with the
assignments on the securities surrendered, irrespective of the dates of such assignments: Provided, however. That in the case of a partial call of an outstanding series,
for redemption before maturity, final interest will be paid with principal only with
respect to those securities included in the last portion called or which mature
according to their terms.*
307.8. Assignments in general.
A registered security presented for redemption must be duly assigned by or in
behalf of the registered payee, and, if assigned to a specified person, it should be.
reassigned by such assignee and any subsequent assignees. Except as otherwise
provided herein, all assignments must conform with the general regulations of the
Treasury Department governing assignments as set forth in Department Circular
No. 300, as supplemented and amended. (31 CFR 306.)*
307.9. Witnessing officers.
In addition to the officers generally authorized to witness assignments of regis- '
tered securities (including the executive officers of banks and trust companies
(and their branches) incorporated under Federal, State, or Territorial laws),
assignments of registered securities by registered payees or assignees thereof for
redemption fbr their own account may be witnessed by any of the following officers:
(1) United States or Canal Zone postmasters or acting postmasters; (2) assistant
postmasters, postal cashiers, and money-order cashiers at United States post
offices designated to receive Postal Savings deposits; and (3) notaries public in
the United States, its organized Territories, or Puerto Rico; provided that the
certificates of acknowledgment of any post-office official must bear a legible imprint
of his office stamp, and that of a notary public must bear a'legible impression of
his official seal and should show the date on which his commission will expire.*
307.10. Form of assignment.
If payment is to be made to the registered payee, or to an assignee holding under
proper assignment from the registered payee, the securities should be assigned by
such payee or assignee, or by a duly constituted representative, to ''The Secretary
< For statutory citations, see note to sec. 307.0.




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REPORT' OF THE SECRETARY OF THE TREASURY

of the Treasury for redemption." ^ If it is desired, for any reason, that paymerit
be made to some other person, without intermediate assignment, the securities
should be assigned to-"The Secretary of the Treasury "for redemption for the
account df_
_". (inserting the name and address of the person to
whom payment is to be made), but assignments in this form must be completed
, before acknowledgment, and not left in blank. A representative or fiduciary may
not assign for paymerit to himself individually, unless expressly authorized to do
so by court .Qrderuor by the instrument under which he is aqting, but he may assign
for payment to himself in his representative or fiduciary capacity. An assignment
by-a represeritative or fiduciary tb"The Secretary of the Treasury for redemption"
will be deemed to be an assignment for redeinption for his account in his representative or fiduciary capacity.*
307.11., Assignments in blank.
Assignments iri blank, or other assignments having similar effect, will be recog^
nized in appropriate cases, but securities bearing such assignments will be paid to
the person surrendering the securities or to such person as he may designate, since
under such assignment the securities become in effect payable to bearer. Assignments in blank or other assignments having similar effect should be avoided, if;
possible, in order not to lose the protection afforded by registration.*
307.12. Detached assignments.
Unless otherwise directed by the Treasury Department or a Federal Reserve
Bank in any particular case, all assignments should be made on the securities
themselves. If the form or forms on the back of a security have been used or
spoiled, and an additional assignment.is necessary, a similar form may be written
or typed.in any, convenient space on the back of'the security, or such form will
be stamped thereon by the Treasury Department or any Federal Reserve Bank,
upon presentation for that purpose. If a detached assignment is authorized in
any particulair case, an appropriate form will be supplied by the Treasury Department or a Federal Reserve Bank.*
307,13; Assignments by corporations, associations, etc.
A security registered in the name of, or assigned to, a corporation or unincorr
porated association will ordinarily be redeemed for the account of such corporation
or unincorporated association upon an appropriate assignment for that purpose
executed on behalf of .the corporation or unincorporated association by a duly
authorized officer thereof, without proof of the officer's authority. In all such
cases the assigriment should be to "The Secretary of the Treasury for redemption," and payment will be made only by check drawn to the order of the corporation or unincorporated association. If redemption for any other account is
desired, the assignment should be for redemption for account of the person or
corporation desired and must be supported by appropriate resolution or other
authority.* .
307.14. Coowners.
A security registered in the names of two or more persons in their own right in
any authorized form of registration will be redeemed without assignment by or
iri behalf, of all tlie coowners, under the following circumstances and conditions:
(a) If the security is registered in the alternative, as, for example, "John Smith
or Mrs. Mary Smith," "John Smith or Mrs. Mary Smith or the survivor," or
"John Smith and Mrs. Mary Smith, or either of them," it may be assigned by
any one of the coowners for redemption for the account of any person or persons ^
desired, and payment will be made accordingly, irrespective of whether or not
the Treasury Department has received notice of the death of any coowner who
did nbt join in the assignment,, and irrespective of whether or not the form of
registration is one in which the right of survivorship is recognized. In any case
coming under the provisions of this subsection an assignment to "The Secretary
of the Treasury for redemption" will be deemed to be an assignment for redemption for the account of the coowner or coowners executing the assignment.
• (b) If the security'is registered jointly, that is, if the names of the coowners are
not connected by the word "or," or are not followed by the words "or either of
them," or words to that effect, as, for example, "John Smith and Mrs. Mary
Smith," " J o h n Srnith, William Smith, and Mrs. Mary Smith, or the survivors
< For statutory citations, see note to sec. 307.0. •
•
^
5 In the case of securities other than United States securities, the name of the issuing agency, or the name
of the proper ofBcer thereof, should be substituted for the words, "The Secretary of the Treasury" in assignments for.redemption, as, for example, "The Federal Farm Mortgage Corporation", "The Twelve Federal
Land Banks," or "The Treasurer of Puerto Rico."




REPORT OF THE' SECRETARY OF: THE' TREASURY

277

or survivor," or "O^ohn Smith and.Mary Smith as tenants in common," it may,
in the absence of notice of the death of any one of the coowners, be assigned by
any one or more of them for redemption for the account of all, and payment
will be made accordingly, hy check drawn substantially as the security is inscribed.
In any case coming under the provisions of this subsection an assignment to
"The Secretary of the Treasury for redemption" will be deemed-to be an assignment for redemption for the account of all the coowners.
(c) If the security is registered in any form of registration in which the right
of survivorship is recognized, as, for example, "John Smith and Mrs. Mary
Smith," or "John Smith and Mrs. Mary Smith or the survivor," and one of the
coowners is deceased, it will be redeemed upon assignments by the survivor or
survivors for the account of any person or persons desired. The assignment
m u s t be supported by satisfactory proof of death and slirvivorship. In any case
coming under the provisions of this-subsection an assignment to "The Secretary
of the Treasury for redemption" will be deemed to be an assigriment for redemption for the account of the surviving coowner or coowners.
In all other cases assignments for redemption must be executed by or on behalf
of all the coowners.*
307.15. Minors.
(a) A security registered in the name of a guardian, curator, or other duly
appointed or qualified representative for a minor, or in the name of a minor for
whom such representative has been duly appointed or is otherwise duly qualified,
must be assigned by such representative, proof of whose appointment, qualification and incumbency must be furnished. Such proof may consist of a certificate
under seal from the court in. which the appointment is made, dated not more
than six months prior to the date of the assignment and containing a statement
that at the date of certification the appointment is still in full force and effect.
{b) A security registered in the name of a natural guardian for a minor mustbe assigned by such natural guardian in the same manner as the security is
inscribed unless the minor has attained his majority, in which case proof of that
fact must be submitted and the assignment made by the minor himself.
(c) A- security registered in the name of a minor for whose estate no representative has been appointed by a court of competent jurisdiction or is otherwise
duly quahfied; or a security registered in the name of a minor followed by that
of his natural guardian, will be redeemed without assig.nment by a guardian or
other duly constituted representative under the following circumstances and
conditions:
(1) If the' minor's total holdings of registered securities of the issue to be
redeemed do ndt exceed $250, the security will be redeemed upon assignment by
the minor himself if he is of sufficient competency and understanding to sign his
name to the assignment and comprehend the nature of the instrument: Provided,
That, where the security is registered in the name of a minor followed by that of
his natural guardian, such natural guardian must join in the assignment, if living
and competent: Provided further, That, if the mjnor is not of sufficient competency
and understanding to sign his name to the" assignment and comprehend the
nature of the instrument and the Treasury Department is furnished with satisfactory proof of that fact and of the. identity of his natural guardian, the security
may be redeemed upon assignment by his natural guardian alone. If the assignment is executed by the minor himself j the certificate of acknowledgment by the
witnessing officer will be taken to be sufficient proof of the minor's competency
and understanding. Appropriate forms for execution by the natural guardian
and the witnessing officer for the purpose of establishing the necessary facts in
connection with an assignment b}^ the natural guardian alone will be furnished
on request. In all cases arising under this paragraph, the assigriment should be
in favor of "The Secretary of the Treasury for redemption," and payment will
be made by check drawn to the order of the minor registered owner. If the
assignment is executed by the natural guardian alone, the name of the minor will
be followed by the words, "under natural guardianship of
"
(inserting the name of the natural guardian).
(2) If it is established to the satisfaction of the Secretary of the Treasury
that the entire personal estate of the minor does not exceed $500 in value and
that the proceeds of the security are necessary and are to be used for the support
or education of the minor, the security may be redeemed upon assignment in the
name of the minor by his natural guardian for the account of any person or
persons desired. In any case coming under the provisions of this paragraph an
assignmer>t to "The Secretary of the Treasury for redemption" will be deemed
^ For statutory citations, see note to sec. 307.0.




278

REPORT OF THE SEiCRETARY OF THE TREASURY

to be an assignment'for redemption for the account of the minor under natural
guardianship of his recognized natural guardian. Appropriate forms for the use
of the natural guardian in making application for redemption and submitting
evidence in support'thereof will be'furnished on request. (If the minor's total
holdings of registered securities of the issue to be redeemed do not exceed $250,
the security may be redeemed in accordance with the provisions of paragraph (1)
above, without complying with the requirements of this paragraph.)' ;
. . ••:
(3) If the minor's total holdings of registered securities presented for redemption exceed $250, but do not exceed $2,500, and the proceeds are not necessary
for his support or education, redemption will be made for the purpose of'having
•the proceeds reinvested in other United States transferable securities, or securities guaranteed as to both principal and interest by the United States, in an
equal face amount, to be-^registered in the name of the minor in a form of registration showing also the name of his natural guardian: Provided, That iri the
event the proceeds of redemption of the matured securities, together with accrued
interest thereof, if any, are insufficient to purchase an equal face amount of other
securities, there will be collected from the natural guardian any additional amount
which may be necessary for the purchase of the securities designated in the
application, or if the proceeds, including the final installment of interest and any
uncollected interest on the securities presented for redemption, are sufficient to
purchase additional securities in any authorized denominations, such purchase
will be required. In either case the securities must be assigned by the natural
guardian supported by an application on Form PD 1365, and the minor should
join in the assignment and application if he is of sufficient competency and understanding to comprehend the nature of the transaction, in which case the certificate
of acknowledgment by the witnessing officer will be accepted as proof of the
minor's competency and understanding; otherwise the Treasury .Department
will require satisfactory proof that the minor was not of sufficient competency
' and understanding for such purpose. The application on Form PD 1365 should
be submitted with the securities to be redeemed through the Federal Reserve
Bank of the district in which the minor resides, which bank will effectuate the
redemption of the matured securities and the purchase of new ones.
(4) Tn all other cases appointment of a representative by a court of competerit
jurisdiction will be required.*
307.16. Incompetents.
A security registered in the name of a person who is under any legal disability
other than minority, and for whose estate a guardian, conservator or other representative has been appointed by a court of competent jurisdiction, or a security
registered in the name of such representative, must be assigned by the representative, proof of whose appointment and qualification must be furnished unless such
representative is named in the registration of the bond. If a security is registered
in the name of an incompetent for whose estate no representative has been appointed or is otherwise legally qualified, redemption may, in the discretion of the
Secretary of the Treasury, be made upon assignment by a person standing in
the position of voluntary guardian for the purpose of having the proceeds invested
in other transferable United States securities, or securities guaranteed both as to
principal and interest by the United States in an equal face amount to be registered
in the name of the person under disability: Provided, however, That redemption
upon request of a voluntary guardian will not be made if the incompetent's total
holdings of the issue to be redeemed exceed $2,-500, in which case a legal representative will be required. Appropriate forms for use in making application for
redemption under these circumstances and conditions will be furnished upon
request.*
307.17. Joint fiduciaries.
A security registered in the names of, or assignable by, two or more persons acting
as joint fiduciaries, such as administrators, executors, trustees, or guardians, may
be assigned by any one or more of the joint fiduciaries for redemption for the
account of all, without the remainder joining in the assignment. The assignment
should be to "The.Secretary of the Treasury for redemption," and payment will
< For statutory citations, see note to sec. 307.0.




.

REPORT OF: THE' SECRETARY OF THE TREASURY

279

be made through a check drawn to .the order of all the ^fiduciaries as such (substituting the names of fiduciaries who are now acting for the names of any fiduciaries
who are no longer acting), followed by appropriate reference to the trust instrument or estate. If redemption is to be made for the account of any other person,
the assignment should be for redemption for the account of such person and must be
executed by all the fiduciaries then acting. Proof of the appointment and qualification of the fiduciaries will be required except in the case of securities registered
in the names of those fiduciaries who execute the assignment.*
SUBPART D.—MISCELLANEOUS

307.18. Transportation of securities.
Securities presented for payment or redemption under these regulations must
be delivered to a Federal Reserve Bank or branch, or to the Treasury Department,
Washington, D. C , at the expense and risk of the holder. Bearer securities and
registered securities bearing assignments in blank, or other assignments having
similar effect, should be forwarded by registered mail insured, or by express
prepaid. Facihties for transportation of .securities by registered mail insured may
be arranged between incorporated banks and trust companies and the Federal
Reserve Banks, and holders may take advantage of such arrangements when
available, utilizing such incorporated banks and trust companies as their agents.
Incorporated banks and trust companies are hot agents of the United States under
these regulations., Registered securities bearing assignments to "The Secretary
of the Treasury for redemption" or to "The Secretary bf the Treasury for redemption for the account of
" (the name and address of the person to whom
payment is to be made being inserted), may be forwarded by registered'mail
uninsured.*
307.19. Time"and place of presentation.
In order to facilitate the redemption of securities when due, they should be
presented and surrendered in the manner herein prescribed well in advance of
(but not exceeding 30 days prior to) the date they will become due and payable.
This is particularly \important with respect to registered securities, payment of
which cannot be made until registration shall have been discharged at the Treasury ,
Department. Redemption will be expedited if the securities are presented to
Federal Reserve Banks or branches, and not direct to the Treasury Department.
Banking institutions generaUy will assist holders in securing the redemption of,
their securities when due.*
,
'
307.20. Optional exchange offering.
If and when other interest-bearing securities are offered, on an optional exchange
basis, to the holders of securities which may become due and payable either at maturity or before maturity by virtue of a'^call for redemption, owners of such securi- ^
ties desiring to take advantage of the offering should act promptly and should
follow the instructions then given rather than the instructions in these regulations,
which apply only to securities presented for payment or redemption, and not to
those presented for exchange.*
307.21. Bond of indemnity.
. . \ ..
'.., In any case arising under the provisions of these regulations the Secretary of the
Treasury may require a bond of indemnity, if he considers such a bond of indemnity necessary for the protection of the United States. Such b'ond of indemnity
shall be in such form and amount and with siich surety, sureties, or security as the
'Secretary of the Treasury shall require.*
307.22. ReservationSc
'
The Secretary of the Treasury reserves the right at any time, or from time to
time, to amend, supplement, revise, or withdraw any or all bf the provisions of
these regulations.*
•
:
HENRY MORGENTHAU,

'
• For statutory citations, see note to sec. 307.0.
*




Jr.

Secretary of the Treasury.
.

..

..'.

,

280,

"REPOiRT O F . T H E
'

SECRETARY OF THE TREASURY
Exhibit 32

Regulations relating to full-paid interim certificates, October 15, 1941
[Department Circular No. 368, Revised.

Public Debtl

TREASURY

'

'

DEPARTMENT,

^ Washington, October 15, 1941.

D e p a r t m e n t Circular No. 368, dated August 16, 1926, as amended by First
Amendment, dated August 18, 1937 (Part- 308, Title 31, Chapter I I I , Code of
Federal Regulations), is hereby further amended, a n d revised to read as follows:
T h e following regulations relating to full-paid interim certificates are hereby
prescribed and published for t h e information and guidance of all concerned:
308.1. Issue.—Federal Reserve Banks, as fiscal agents of t h e United States,
a n d the Treasury D e p a r t m e n t m a y issue full-paid interim certificates in lieu .of
definitive securities, against full-paid allotrrients of subscriptions, when specifically
authorized by t h e Secretary of t h e Treasury in connection with t h e issue, hereafter, to the public, of United States securities. I n t e r i m certificates shall be in
such form, and in such denominations, as t h e Secretarj^ of t h e Treasury niay determine when an issue is authorized.
308.2. Excharpge for definitive securities.—Upon surrender of a full-paid interim
certificate to a Federal Reserve Bank, or to t h e Treasury D e p a r t m e n t , Washington, D. C., the definitive securities described therein, when prepared, will be delivered. Exchanges shall be m a d e on like par a m o u n t basis.
308.3. Exchanges of denominations.—Pending availability of definitive securities, exchanges of authorized denominations of interim certificates, from higher t o
lower will be permitted-.
308.4. Applicable regulations.—Except as m a y otherwise be provided, and insofar as applicable, t h e general regulations of t h e Treasury D e p a r t m e n t , as contained
in D e p a r t m e n t Circular No. 300, as amended or revised, shall apply to full-paid
interim certificates.
"
„
308.5. Reservations.—The Secretary of t h e Treasury reserves t h e right to withdraw or amend a t any time or from time to time any or all of t h e provisions of this
circular.
D . W. B E L L ,

Acting Secretary of the Treasury.
Exhibit 33
Regulations governing exchanges gf interim, certificates of 2y2 percent Treasury bonds
of 1967-72 for definitive coupon bonds, December 15, 1941
[Department Circular No. 675. Public Debtl
TREASURY

DEPARTMENT,

Washington, Deceinber 15, 1941.
To Holders of full-paid interim certificates of 2y2 percent Treasury Bonds of 1967-72,
Banks and Trust Companies incorporated in the United States under Federal or
State law, and Any Others Concerned:
SEC. 310.0. Scope of regulations.-^T]ie provisions of this circular are hereby
prescribed as the regulations t o govern t h e exchange of full-paid interim certificates,
issued pursuant to Treasury D e p a r t m e n t Circulars No. 368, Revised, dated October
15,T941 (6 F R 5289), No. 670, dated October 9, 1941 (6 F R 5150), and No. 672,
d a t e d December 4, 1941 (6 F R 6257), for definitive 2}^ percent Treasury bonds of
1967-72, dated October-20, 1941, in bearer form with coupons covering interest
t o m a t u r i t y attached (which m a y hereinafter be referred to as definitive coupon
bonds, definitive bonds, or definitives).^
•
SEC. 310.1. .Official agencies.—The official agencies for the exchange hereunder
of interim certificates for definitive coupon bonds are t h e Federal Reserve Banks
a n d their branches, and t h e Treasury Departrnent; Divisibn of Loans and
Currency, Washington, D . C .
SEC. 310.2. Exchanges at ofiicial agencies.—Exchanges m a y be effected beginning J a n u a r y 19, 1942. Interim certificates to be exchanged m u s t be presented
» The regulations prescribed in this circular apply to full-paid interim certificates the issue of which was
incident to the issue of 2}^% Treasury bonds of 1967-72 pursuant to the authority of the Second Liberty
Bond Act, as amended.




REiPORT OF T H E SECRETARY OF T H E TREASURY

281

a n d surrendered t o an official agency, a t t h e risk and expense of t h e holders, and,
unless delivered in person, should be forwarded b y registered mail or prepaid
express. E a c h delivery of interim certificates m u s t be accompanied by apprbpriate
w r i t t e n advice t r a n s m i t t i n g t h e certificates and giving instructions for t h e delivery
of t h e definitives issued in exchange. Exchanges will be m a d e on a like p a r aniount
basis, and unless other instructions are given in t h e advice, definitives of t h e
highest possible denominations will be delivered. N o charge for the exchange will
be m a d e b y t h e United States, a n d deliveries of definitives will be m a d e within t h e
United States, its Territories and possessions a t t h e expense and risk of t h e United
States. N o deliveries elsewhere will be made, nor will delivery of definitives be
m a d e other t h a n t o t h e p a r t y presenting t h e interim certificates. I M P O R T A N T :
SEE T H E N E X T FOLLOWING SECTION FOR SPECIAL ARRANGEM E N T S FOR P R E S E N T A T I O N OF I N T E R I M C E R T I F I C A T E S TO
F E D E R A L RESERVE BANKS BY BANKS AND TRUST COMPANIES.
S E C . 310.3.2 Special arrangements for banks and trust companies.—It is expected
t h a t incorporated, banks and t r u s t companies within t h e United States, generally
will offer their services t o their customers in eff'ecting exchanges of interim
certificates for definitive bonds without expense to t h e holders, and, accordingly,
any holders of interim certificates who avail themselves of a n y such offer should,
of course, present and surrender their interim certificates through such institutions.
Any such bank or t r u s t company m a y arrange with t h e Federal Reserve B a n k
of its district for t h e t r a n s p o r t a t i o n of interim certificates t o t h e Federal Reserve
Bank by registered mail a t t h e expense a n d risk of t h e United States. Full
information concerning such arrangements will be furnished by Federal Reserve
B a n k s to incorporated banks and t r u s t companies upon application. T h e interim
certificates forwarded b y incorporated b a n k s a n d t r u s t companies t o t h e Federal
Reserve Banks for exchange p u r s u a n t to such arrangements must b e , plearly
s t a m p e d on t h e face, in indelible ink, with a legend reading as follows: " P r e s e n t e d
for exchange for definitive coupon bonds b y
" All
(Name of bank or trust company)

such interim certificates so stamped shall thenceforth be deemed nonnegotiable
and will be accepted by t h e Federal Reserve Bank only when presented for exchange by or for account of t h e b a n k or t r u s t company named thereon. S u c h
arrangements m a y not be m a d e with^the Treasury D e p a r t m e n t , nor m a y t h e y
be m a d e by individuals or institutions except as herein provided. Deliveries of
definitive bonds issued upon such exchanges will be m a d e to t h e incorporated b a n k
or t r u s t company presenting t h e interim certificates for exchange, and will be m a d e
a t t h e expense and risk of t h e United States. Incorporated banks a n d trust,
companies, in effecting exchanges p u r s u a n t t o this paragraph, act as agents of
the holders of t h e interim certificates and not as agents of t h e United States, and
t h e United States will not be responsible for t h e receipt or custody of t h e interim
, certificates or for t h e custody or delivery of t h e definitive bonds by t h e b a n k s or
t r u s t companies. T h e provisions of this section-niay be extended to private b a n k s
doing a recognized banking business and approved by t h e Federal Reserye Bank
of t h e district in which located. •
, S E C . 310.4. Authority of Federal Reseiye Banks.—Federal Reserve Banks, as
fiscal agents of t h e United States, and their branches are authorized t o perform
all necessary acts within t h e purview of this circular, and t o carry out such instructions in connection therewith as m a y , from time t o time, be given b y t h e
Secretary of t h e Treasury.
.
,
^
S E C . 310.5. Reservations.—The Secretary of t h e Treasury reserves t h e right
a t a n y time or from time t o time-to amend, supplement, or withdraw a n y or all
of4^the provisions of this circular.
D.

W.

BELL,

Acting Secretary of the Treasury.
F I R S T A M E N D M E N T , J A N U A R Y 2, 1942, TO D E P A R T M E N T , C I R C U L A R N O .

675

TREASURY DEPARTMENT,

>
Washington, J a n u a r y 2, 1942.
To Holders of full-paid interim certificates of 2Y2 percent Treasury Bonds of 1967-72,
Banks and Trust Companies incorporated in the United States under Federal or
State law, .and Any.Others Concerned:
Sec.'310.3 of D e p a r t m e n t Circular N o . 675, dated December 15, 1941; is herieby
amended to read as follows:
^
, , ..
" S E C . 310.3. Special arrangements for banks and trust companies.-—It is expected
t h a t iricorporated banks and t r u s t companies within t h e Upited States,' generally
2 Amended, see below.




.'

.

282

REPORT. OF THE SECRETARY OF THE TREASURY

will offer their services to their customers in effecting exchanges of interim certificates for definitive bonds without expense to the holders, and, accordingly, any
holders of interim certificates who avail themselves of any such offer should, of.
eourse, present and surrender their interim certificates through such institutions.
Any such bank or.trust company may arrange with the Federal Reserve Bank of
its district for the transportation of interim certificates to the Federal Reserve
Bank by registered iriail at the expense and risk of the United States. Full information concerning such arrangements will be furnished by Federal Reserve Banks
to incorporated banks and trust companies upon application. The interim certificates forwarded by incorporated banks and trust companies to the Federal Reserve
'Banks fbr exchange pursuant to such arrangements must be clearly stamped on the
face, iri indelible ink, with a legend reading as follows: 'Presented for exchange
for definitive coupon bonds by
,' or in lieu of
(Name of bank or trust company)

-such stamp, the^legend may be typed or written in which case it must be signed
.by an officer of the remitting bank or trust company. All such interim certificates so stamped or endorsed shall thenceforth be deemed nonnegotiable and will
be accepted by the Federal Reserve Bank only when presented for exchange by or
for account of the bank or trust company named thereon. Such arrangements =
may not be made with the Treasury Department, nor may they be made by
individuals or institutions except as herein provided. Deliveries of definitive
bonds issued upon such exchanges will be made to the incorporated bank or trust
company presenting the interim certificates for exchange, and will be made at the
expense and risk of the United States. Incorporated banks and trust companies,
in effecting exchanges pursuant to this paragraph, act as agents of the holders of
the interim certificates and not as agents of the United States, and the United
States will not be responsible for the receipt or custody of the interim certificates
or for the custody or delivery of the definitive bonds by the banks or trust companies. The provisions of this section may be extended to private banks doing a
recognized banking business and apprbved by the Federal Reserve Bank of the
district in which located."
.
• D. W. BELL,

'

^

. Acting Secretary of the Treasury.

^.•--SECURITIES GUARANTEED BY THE UNITED^STATES
Exhibit 34
Offering of 1 percent notes of iSeries W of the Reconstruction Finance Corporation
. On June 24, 1941, Secretary of the Treasury Morgenthau, on behalf of the
Reconstruction Finance Corporation, invited subscriptions for 1 percent notes of
Series W of the Corporation, in the amount of $500,000,000, or thereabouts, and
at the same time offered to purchase on July 3, 1941, the outstanding notes of
Series N of the Corporation, maturing July 20, 1941, to the extent to which the
holders of these notes subscribed to the new issue. In the related press release it
.was;stated that approximately $211,000,000 of Series N notes were then out.standing. .
.
.
. ^
[Department Circular No. 664. Public Debtl
.

'

TREASURY DEPARTMENT,

Washington, June 24, 1941.
I. OFFERING OF NOTES AND INVITATION FOR TENDERS

1. The Secretary of the Treasury, on behalf of the Reconstruction Finance
Corporation, invites subscriptions, at par and accrued interest, from the people
of the United States for notes of the Reconstruction.Finance Corporation, designated 1 percent notes of Series W. The amount of the offering is $500,000,000, or
thereabouts.
2. The Secretary of the Treasury, on behalf of the Reconstruction Finance Corporation, offers to purchase on July 3, 1941, at par and accrued interest, the outstianding notes pf the Corporation designated Series N, maturing July 20, 1941, to
the extent to which the holders thereof subscribe to the issue of Series W notes
hereunder. Tenders of Series N notes for that purpose ^re invited.




REPORT OF THE- SECRETARY OF THE TREASURY • ' 283II.

DESCRIPTION OF NOTES

. 1. T h e notes will be dated July 3, 1941, and will bear interest from t h a t d a t e
a t t h e r a t e of 1 percent per a n n u m , payable on a semiannual basis on October 15,^
1941, and-thereafter on April 15 and October 15 in each year until the principal
a m o u n t becomes payable. They will m a t u r e April 15, 1944, and will n o t be
subject to cah for redemption prior to m a t u r i t y .
2. T h e notes will be issued under authority of an act of Congress (known as
"Reconstruction Finance Corporation Act") approved J a n u a r y 22, 1932, as
amended and supplemented. T h e income derived from the notes shall be subject
to all Federal taxes, now or hereafter imposed. T h e notes shall be subject to»
estate, inheritance, gift, or other excise taxes, whether Federal or State, but shall
be exempt from all taxation now or hereafter imposed on the principal or interest
thereof by any Territory, dependency, or possession of the United States, or by
any State, county, municipality, or local taxing authority. These notes shall be
lawful investments, and m a y be accepted as security, for all fiduciary, trust, and
p u b h c funds the investment or deposit of which shall be under the a u t h o r i t y or
control of t h e United States or any officer or officers thereof.
3. T h e authorizing act provides t h a t in the event t h e Reconstruction F i n a n c e
Corporation shall be unable to p a y upon demand, when due, the principal of o r
interest on notes issued by it, the Secretary of t h e Treasury shall pay t h e a m o u n t
thereof, which is authorized to be appropriated, out of any moneys in the Treasury
not otherwise appropriated, and thereupon to t h e extent of t h e amounts so p a i d
t h e Secretary of t h e Treasury shall succeed to aJl t h e rights of the holders of such'
notes.
4. Bearer notes with interest coupons a t t a c h e d will be issued in denominations
of $1,000, $5,000, $10,000 and $100,000. T h e notes will n o t be issued in registered
form.
'

III.

SUBSCRIPTION AND ALLOTMENT

1, Subscriptions will be received a t t h e Federal Reserve Banks and branches
and a t t h e Treasury D e p a r t m e n t , Washington. Subscribers m u s t agree n o t to sell
or otherwise dispose of their subscriptions, or t h e securities which m a y be allotted
thereon, prior to t h e closing of t h e subscription books. Banking institutions
generahy m a y submit subscriptions for account of customers, b u t only t h e Federal
Reserve Banks and t h e Treasury D e p a r t m e n t are authorized to act as oflficial
agencies. Others t h a n banking institutions, will n o t be permitted to enter s u b scriptions except for their own account. Subscriptions, from holders of Series N
notes tendered for purchase should be accompanied by such notes to a p a r amount^
equal to the p a r a m o u n t of notes of Series W subscribed for. Other subscriptions"
from banks and t r u s t companies for their own account will be received without
deposit b u t will be restricted in each case to an a m o u n t not exceeding one-half of
t h e combined capital a n d surplus of t h e subscribing bank or t r u s t company.
Other subscriptions from all others inust be accompanied by p a y m e n t of 10 percent
of t h e a m o u n t of notes apphed for.
2. T h e Secretary of t h e Treasury reserves t h e right to reject any subscription, in
whole or in part, to allot less t h a n the a m o u n t of notes applied for, and to close t h e
books as to any or all subscriptions aD any t i m e without notice; and any action he
m a y t a k e in these respects shall be final. Subject to these reservations, subscriptions from holders of Series N notes who tender t h e m for purchase hereunder will
be allotted in full. Allotment notices wih be sent out p r o m p t l y upon allotment,
a n d the-basis of t h e allotment will be publicly.announced.
IV..

PAYMENT

1.. P a y m e n t a t par a n d accrued interest, if any, for notes allotted hereunder
m u s t be m a d e or completed on or before July 3, 194!, or on later allotment.
I n every case where p a y m e n t is not so completed, t h e p a y m e n t with application
up to 10 percent of t h e a m o u n t of notes applied for: shall, upon declaration m a d e
by t h e Secretary of the Treasury in his discretion, be forfeited to* the- UnitedStates. • Notes of Series N tendered for purchase m u s t have coupons dated July
20, 1941, attached, a n d p a y m e n t will be m a d e a t p a r and. accrued'interest to-July^
3, 1941. T h e principal proceeds of t h e Series N notes will be applied in payment.:
of t h e Series W notes, a n d accrued interest from J a n u a r y 20, 1941, to July 3, 1941,.;
on Series N notes ($3.96409 per $1,000) will be paid following a,cceptance of t.her
notes.
.
, . .. :^




284

REPO>RT OF T H E SECRETARY OF T H E TREASURY
V. GENERAL PROVISIONS

,

.

=

•

'

. 1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized
a n d requested to receive subscriptions, to m a k e allotments on the basis and up to
t h e amounts indicated by the Secretary of t h e Treasury to t h e Federal Reserve
Banks of t h e respective districts, to issue allotment notices, to receive p a y m e n t
for notes allotted, to m a k e delivery of notes on full-paid subscriptions aliotted,
and-they may issue interim receipts pending delivery of t h e definitive notes.
2. T h e Secretary of t h e Treasury m a y a t any time, or from time to time, prescribe supplemental or a m e n d a t o r y rules and regulations governing the offering,
which will be communicated promptly to t h e Federal Reserve Banks.
H E N R Y MORGENTHAU,

,

. •

^

Jr.,

Secretary of the Treasury.
^ Exhibit 35

Subscriptions and allotments. Reconstruction Finance Corporation notes of Series W
{from press releases, J u n e 25 and 27 and J u l y 2, 1941 ')
On J u n e 24, 1941, Secretary of t h e Treasury Morgenthau announced t h a t t h e
subscription books for t h e ofl'ering of 1 percent notes of Series W of t h e Reconstruction Finance Corporation closed a t the close of business J u n e 24, 1941, except
for t h e receipt of subscriptions from holders of Series N notes of the Corporation
who tendered t h e m for purchase by the Secretary in a par a m o u n t equal to t h e
p a r a m o u n t of notes of Series W subscribed for. T h e subscription books for t h e
l a t t e r class closed a t t h e close of business J u n e 25. Subscriptions aggregated
.•$5,273,618,000, of which $208,668,000 were received from holders of Series N
motes. Subscriptions from t h e holders of Series N notes were allotted in full;
•and all other subscriptions were allotted 7 percent, b u t not less t h a n $1,000 on
.any one subscription.
•
•Subscriptions and allotments were divided among the Federal Reserve districts
a n d t h e Treasury a s follows:
Subscriptions
received Crom
holders of Series
N notes (allotted in full)

. Federal Reserve district

Boston
N e w York
.
Pbiladelnhia
Cleveland
Richmond
Atlanta"
Chicaejo
St Louis
'
Minneapolis' '
Kansas City . .-Dallas
S a n Francisco
Treasurv
Total--.——

-•

---•
-

---

O t h e r subscriptions

Received

Allotted

Total subscriptions
allotted

$394, 566, 000
$8,444.000
147.127.000
2,315,704.000
4. 224,000
297,375,000
8, 270,000
342,518,000
1,451,000
156, 694,000
1,372.000
241,502,000
24. 349,000
686,377,000
1,405,000
110,921,000
1,053,000
97, 043,000
4. 741.000
73,002,.000
1,199,000
83.971,000
^2,386.000
256, 027,000
2, 647.000 *
9, 250.000

$27,839,000
162, 605.000
21,010,000
24, 295,000
11.376.000
21,024.000
48,794,000
8, 584.000
6, 973,000
5, 299,000
6, 249,000
17,999,000
618.000

$36,283,000
309. 732,000
25. 234,000
32, .565,000
12,827,000
22,396,000
. 73,143,000
9, 989,000
8:026;^000
10,040,000
7. 448,000
20,385. 000
3, 295, 000

5,06-4, 950,000

362,695,000

571,363,000

208,668,000

Exhibit 36
Offering of ly^ percent notes of Series G of the Commodity Credit Corporation
On July 10, 1941, Secretary of t h e Treasury-Morgenthau, on behalf of the Commodity Credit Corporation, invited subscriptions for 1)^ percent notes of Series
G of the Corporation, in the' a m o u n t of $400,000,000, dr thereabouts, and a t t h e
same time offered to purchase on July 21, 1941, t h e , o u t s t a n d i n g notes of Series
D of.the Corporation, m a t u r i n g August 1, 1941, to t h e extent to which t h e holders
of these notes subscribed t o t h e new issue. I n t h e related press release it w a s
s t a t e d t h a t $202,553,000 of Series .D notes were t h e n outstanding.
1 Revised July 19,1941. •




REPORT OF THE- SECRETARY OF THE TREASURY

285

[Department Circular No. 66.5. Public Debt!
TREASURY .DEPARTMENT,

Washington, July 10, 1941.
I. OFFERING OF NOTES AND INVITATION FOR TENDERS

1. The Secretary of the Tr'easury, on behalf of the Commodity Credit Corporation, invites subscriptions, at par and accrued interest, from the people of the
United States for notes of the Commodity Credit Corporation, designated lYs
percent notes of Series G. The amount of the offering is $400,000,000,° or there.abouts.
2. The Secretary of the TreasuiT, on behalf of the Commodity Credit Corporation, offers to purchase on July 21, 1941, at par and accrued interest, the outstanding notesvof the Corporation designated Series D, maturing August F, 1941,
to the extent to which the holders thereof subscribe to the issue of Series-G notes
hereunder. Tenders of Series- D notes for that purpose are invited.
II. DESCRIPTION OF NOTES

1. The notes will be dated July 21, 1941, and will bear interest from that date
at the rate of IJ^ percent per annum, payable on a semiannual basis on February 15
and August 15 in each year until .the principal amount becomes payable, the first
coupon being dated February 15, 1942. They wiU mature February 15, 1945,
and will not be subject to call for redemption prior to maturity.
2. The notes will be issued under authority of the act approved March 8, 1938
(52 Stat. 107), as amended. The income derived from the notes shall be subject
to all Federal taxes, now or hereafter imposed. The notes shall be subject to
surtaxes, estate, inheritance, gift, or other excise taxes, whether Federal or State,
but shall be exempt from all taxation now or hereafter imposed on the principal
or interest thereof by any State, municipality, or local taxing authority. These
notes shall be lawful investments and may be accepted as security for all fiduciary,,
trust,.and public funds the investment or deposit of which shall be under the
authority or control of the United States or any ^officer or oflficers thereof.
3. The authorizing act provides that in the event the Commodity Credit Corporation shall be unable to pay upon demand, when due, the principal of, or
interest on, notes issued by it, the Secretary of the Treasury shall pay to the
holder the amount thereof which is authorized to be appropriated, out of any
money in the Treasury not otherwise appropriated, and thereupon to the extent of
the amount so paid the Secretary of the Treasury shall succeed to all the rights
of the holders of such notes.
4. Bearer notes with interest coupons attached will be issued in denominations
of $1,000, $5,000, $10,000 and $100,000. The notes wiU not be issued in registered
form.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
.and at the Treasury Department, Washington. Subscribers must agree not to
sell or otherwise dispose of their subscriptions, or the securities which may be
allotted thereon, prior to the closing of the subscription books. Banking institutions generally may submit subscriptions for account of customers,- but only the
Federal Reserve Banks and the Treasury Department are authorized to act as
official-agencies. Others than banking institutions will not be permitted to enter ,
subscriptions except for their own account. Subscriptions from holders of Series
D notes tendered for purchase should be accompanied by such notes to a par
amount equal to the par amount of notes of Series G subscribed for. Other
subscriptions from banks and trust companies for their own account will be received without deposit but will be restricted in each case to an amount not exceeding one-half of the combined capital and surplus of the subscribing bank or trust
company. Other subscriptions from all others must be accompanied by-payment
of 10 percent of the amount of notes applied for.
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part, to allot less than the amount of notes applied for, and to close
the books as to any or all subscriptions at any time without notice; and any
action he may take in these respects shall be final. Subject to these reservations,
subscriptions from holders of Series D notes who tender them for purchase hereunder will be allotted in full. Allotment notices will be sent out promptly upon
allotment, and the basis of the allotment will be publicly announced.




286^

REPORT, .OF THE SEiCRETARY OF THE TREASURY
.IV. P A Y M E N T

r. Payment at par and accrued interest, if any, for notes allotted hereunder
must be made or completed on or before July 21, 1941, or on later allotment. In
every case where payment is not so completed, the payment with apphcation up to
10 percent of the amount of notes applied for shall, upon declaration made by the
Secretary of the Treasury in his discretion, be forfeited to the United States,
Notes of Series D tendered for purchase must have coupons dated August 1, 1941.
attached, and payment will be made at par and accrued interest to July 21, 1941.
The principal proceeds of the Series D notes will be applied in payment of the Series
G notes, and accrued interest from February 1, 1941, to July 21, 1941, on Series
D notes ($2.93508 per $1,000) will be paid following acceptance of the notes.
^

V. G E N E R A L P R O V I S I O N S

1. As fiscail agents of the United States, Fedei^al Reserve Banks are authorized
and requested tp receive subscriptions, to make allo'tments on the basis and up to
the amounts indicated by the Secretary of the Treasury to the Federal Reserve
Banks of the respective districts, to issue allotment notices, to receive payment
for notes allotted, to make delivery of notes on "full-paid subscriptions allotted,
and they may issue interim receipts pending delivery of the definitive notes.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering,
which will be communicated promptly to the Federal Reserve Banks.
HENRY MORGENTHAU, Jr.,

Secretary of the Treasury.
Exhibit 37
Subscriptions and allotments. Commodity Credit Corporation notes of Series G (from
press releases, July 11, 15, and 18, 1941 ^)
.•On July 10, 1941, Secretary of the Treasury Morgenthau announced that the
subscription books for the offering of 1^ percent notes of Series G of the Commodity Credit Corporation closed at the close of business July 10, except for the
receipt of subscriptions from holders of Series D notes of the Corporation who
tendered them for purchase by the Secretary in a par amount equal to the par
amount of Series G subscribed for. Subscriptions aggregated $5,357,351,000, of
which $200,815,000 were received from holders of Series D notes. Subscriptions
froni th e holders of Series D notes were allotted in full; and all other subscriptions
were allotted 4 percent, but not less than $1,000 on any one subscription.
Subscriptions and allotments were divided among the Federal Reserve districts
and the Treasury as follows:

Federal Reserve district

Subscriptions
received from
holders of
Series D
notes (allotted
• infull)

O t h e r subscriptions

Received

Allotted

Boston..
New York
P.hiladelphia.Cleveland.
Richmond
Atlanta
...
Chicago..-.
St. Louis
Minneapolis.'.
Kansas C i t y . .
Dallas...
San Francisco.
Treasury

$7,883,000
120, 796,'000
5, 433, 000
10, 262, 000
4,612, 000
4, 058, 000
24,321, 000
2, 228, 000
1, 029, 000
12,884, 000
1, 891, 000
5,328, 000
90, 000

$438, 500,000
2,374, 014, 000
282, 515, 000
347, 533, 000
158, 612,000
226, 291, 000
686, 296, 000
124, 770, 000
99, 129,000
76, 930, 000
84, 783, 000
252, 358, 000
4, 805, 000

$17, 688,000
95,250,000
11, 417, 000
14,189, 000
6,690, 000
.9,919; 000
28, 086, 000
5, 915, 000
4,1'23, 000
3,235,000
3,941, 000
10,135,000
193,000

TotaL. ^

200,815, 000'

5,156, 536, 000

210,781, 000

.' Revised Aug. 14, 1941.




Total subscriptions
allotted

$25,571,000
r216, 046, 000
^ 16,850,000
24,451, 000'
11, 302, 000'
13,977,000
52,407, 0008,143,000
• 6,152.000:
16,119,000
5,832, 000
15,463, 000
283, 000'
411,596, OOO-.

REOPORT OF THE SECRETARY OF THE TREASURY

'

287

Exhibit 38
Partial redemption, before maturity, of 2y^ percent mutual mortgage insurance fund
debentures. Series B (Sixth call)_
[Department Circular No. 669. Public Debtl
TREASURY

DEPARTMENT,

Washington, September 27, 1941.
To Holders of 2y4 Percent Mutual Mortgage Insurance Fund Debentures, Series B: •
I. NOTICE OF SIXTH CALL FOR PARTIAL REDEMPTION, BEFORE MATURITY, OF 2%
PERCENT MUTUAL MORTGAGE INSURANCE FUND DEBENTURES, SERIES B

The Federal Housing Administrator, with the approval of the Secretary of the
Treasury, has issued the following notice of call for partial redemption and offer to
purchase with respect to 2^4 percent mutual mortgage'insurance fund debentures.
Series B:
"Pursuant to the authority conferred by the National Housing Act (48 Stat.
1246; U. S. C , title 12, sec. 1701 et seq.) as amended, public notice is hereby
given that 2% percent mutual mortage insurance fund debentures, Series B, of
the denominations and serial numbers designated below, are hereby called for
redemption, at par and accrued interest, on January 1, 1942, on which date
interest on such debentures shall cease:
Denomination

$50
$100
$500
$1,000
$5,000
$10,000

Serial numbers
{All numbers inclusive)

.

1

_-_
:

___.

.--

839 to 1, 160
3, 113 to 4, 048
1, 191 to 1,403
4, 000 to 4, 999
248 to 328
31 to
39

"The debentures first issued, as determined by the^serial numbers, were selected
for redemption by the Federal Housing Administrator, with the approval of the
Secretary of the Treasury.
. -"No transfers or denominational exchanges in debentures covered by the foregoing call will be made on the books maintained by the Treasury Department on
' or after October 1', 1941." This does not affect the right of the holder of a debenture
to sell and assign the debenture on or .after October 1, 1941, and provision will be
made for the payment of final interest due,January 1, 1942, with the principal
thereof to the actual owner, as shown by the assignments thereon.
"The Federal Housing Administrator hereby offers to purchase any debentures
included in this call at any time from October 1 to December 31, 1941, inclusive,
at par and accrued interest, to date of purchase.
"Instructions for the presentation and surrender of debentures for redemption
oil or after January 1, 1942, or for purchase prior to that date will be given by the
Secretary of the Treasury."
, II. TRANSACTIONS IN SIXTH-CALLED DEBENTURES

1. The debentures included in the foregoing notice of call for partial redemption
on January 1, 1942, are hereby designated sixth-called 2Ji percent mutual mortgage insurance fund debentures. Series B, and are hereinafter referred to as sixthcalled debentures.
2. Tra-nsfers and denominational exchanges in sixth-called debentures will
terminate at the close of business on September 30, 1941.,
III. REDEMPTION OR PURCHASE

. 1. Holders of sixth-called debentures will be entitled to have such debentures
redeemed and paid at par on January 1, 1942, with interest in full to that date,,
at the rate of $13.75 per $1,000. ' Interest on sixth-called debentures will cease
on January 1, 1942.
2. Holders of sixth-called debentures have the privilege of presenting such
debentures at ariy time from October 1 to December 31, 1941, inclusive, for purchase at par and accrued interest, at the rate of $0.074728 per $1,000 per day fromv
July 1, 1941, to date of purchase.
IV. RULES A N D REGULATIONS GOVERNING REDEMPTION A N D PURCHASE

. 1. The United States Treasury Departnient is the agent of the Federal Housing
Administrator for the redemption and purchase of sixth-called debentures. In
487543—43

20




288

REPORT OF T H E SECRETARY OF THE TREASURY.

accordance with regulations adopted by t h e Federal Housing Administrator and
approved by the Secretary of the Treasury, t h e assignment, redemption, a n d
purchase of sixth-ca,lleci debentures will be governed by the general regulations of
the Treasury D e p a r t m e n t . w i t h respect to United States bonds and notes, so far as
applicable,, except as otherwise provided Jierein.
2. Sixth-called debentures presented for redemption On J a n u a r y 1, 1942, or for
purchase from October 1 to December 31, 1941, inclusive, m u s t be assigned by
t h e registered payee or assignee thereof or by their duly constituted representatives
in t h e form indicated in p a r a g r a p h 3 hereof, and should thereafter be presented
and surrendered to any Federal Reserve Bank or to the Division of Loans and
Currency, Treasury D e p a r t m e n t , Washington, D. C , accompanied by appropriate
written advice. (Use Form P D 1717.) T h e debentures m u s t be delivered a t the
expense and risk of t h e holders. (See paragraph 8 of this section.) In all cases
checks in p a y m e n t of principal and final interest will be mailed to the address
given in the form, of advice accompanying the debentures when surrendered.
3. If the registered payee or an assignee holding under proper assignment from
t h e registered payee desires t h a t p a y m e n t be made to him, the debentures should
be assigned by such payee or assignee or by a duly constituted representative to
" T h e Federal Housing Administrator for r e d e m p t i o n " or to " T h e Federal Housing
Administrator for purchase," according to whether the debentures are to be presented for redemption on J a n u a r y 1, 1942, or for purchase prior to t h a t date. If
it is desired for any reason t h a t p a y m e n t be made to some other person without
intermediate assignment, the debentures should be assigned to " T h e Federal
Housing Administrator for redeinption (or purchase) for the account of
_/_," inserting the name and address of the person to whom paym e n t is to be made.
4. An assignment in blank or other assignment having similar effect will be
recognized, but in t h a t event payment will be made to t h e person surrendeMng t h e
debenture for redemption or purchase since, under such an assignment, the
debenture becomes in effect payable to bearer. Assignments in blank or assignm e n t s having similar effect should be avoided, if possible, in order not to lose the
protection afforded by registration.
5. Final interest on any sixth-called debentures, whether purchased prior to, or
redeemed on or after J a n u a r y 1, 1942, will be paid with t h e principal in accordance with the assignments on t h e debentures surrendered.
6. All assi2;nments m u s t be made on the debentures themselves unless otherwise directed by t h e Treasury D e p a r t m e n t . Detached assignments will be
recognized and accepted in any particular case in which the use of detached assigrm e n t s is specifically authorized by t h e Treasury D e p a r t m e n t . Any assignment
not made upon the debenture is considered a detached assignment.
7. A sixth-called debenture registered in the name of, or assigned to, a corporation, will be paid to such corporation on or after Janua.rv 1, 1942, upon dn appropriate assignment fbr t h a t purpose executed on behalf of the corporation by a
duly authorized ofPcer thereof. An assignment so executed and dulv attested in
accordance, with Treasury D e p a r t m e n t regulations will ordinarily be accepted
without proof of the officer's authoritv. I n ' a l l cases coming under this provision
p a v m e n t will be made onlv by check drawn to t h e order o,f the corporation. Proof
of t h e authority of t h e officer assigning on behalf of a corporation will .be reouired,
in accordance with t h e general regulations of .the Trea.sury Department, in t h e
case of assignments for purchase prior to Janua.rv 1, 1942, and in case of assignm e n t s for redemption on or after J a n u a r y 1, 1942, for the account of any person
other t h a n the corporation.
8. Debentures presented for redemption or purchase under this circidar m u s t
be delivered to a Federal Peserve Bank or to the Division of Loans and Currency,
T r e a s u r y . D e p a r t m e n t , Washington, D . C , at the expense and risk of the holder.
Debentures bearing restricted assignments m a y be forwarded by registered mail,
b u t . debentures bearing unrestricted assignm;ferits should be forwarded by registere.d-.mail insured or bv express prepaid.
9; In order to facilitate the redemption of sixth-called debentures on Januat-y
1, 1942, any such" debenture m a y be presented and surrendered in the manner
herein prescribed in advance of t h a t date b u t not before December 1, 1941.. Such
early presentation by holders will insure p r o m p t p a y m e n t of principal and interest
when due.
v . GENERAL PROVISIONS

1. Anv further information which m a y be desired regarding the redemption of
sixth-called debentures under t h i s circular m a y be obtained from any Federal
Reserve Bank or from t h e Division of Loans and Currency, Treasury D e p a r t m e n t ,



REPORT OF THE' SECRETARY OF. THE TREASURY

289

Washington, D. C , where copies of the Treasury Department's regulations governing assignments may be obtained.
2. As fiscal agents of the United States, Federal Reserve Banks are authorized
' and requested to perform any necessary acts under this circular. The Secretary
of the Treasury may at any time or from time to time prescribe supplemental
and amendatory rules and regulations goyerning the matters covered by this
circular, which will be communicated" prohiptly to the registered owners of sixthcalled debentures.
D. W. BELL,

Acting Secretary of the Treasury.

Exhibit 39
Partial redemption, before maturity, of 2y4 percent mutual mortgage insurance fund
debentures. Series B {Seventh call)
[Department Circular No. 682. Public Debtl
TREASURY

DEPARTMENT,

Washington, March 27, 1942.
To Holders of ^% percent Miitual Mortgage Insurance Fund Debentures, Series B:
I. N O T I C E O F S E V E N T H C A L L FOR PARTIAL REDEMPTION, BEFORE MATURITY, OF
2y4 PERCENT MUTUAL MORTGAGE INSURANCE FUND DEBENTURES, SERIES B

The Federal Housing Commissioner, with the approval of the Secretary of the
Treasury, has issued the following notice of call for partial redemption and offer
to purchase with respect to 2% percent mutual mortgage insurance fund debentures. Series B,:
"Pursuant to the authority conferred by the National Housing Act (48 Stat.
1246; U. S. C , title 12, sec. 1701 et seq.) as amended, public notice is hereby
given that 2^^ percent mutual mortg,age insurance fund debentures. Series B,
of the denominations arid serial numbers designated below, are hereby called
for redemption, at par and accrued interest, on July 1, 1942, on which date interest on such debentures shall cease:
Serial numbers
{All numbers inclusive) •

Denomination

$50
$100
$500_-__
$1,000
$5,000
$10,000..-_

---

-

_..__.:

-_--'

__-

-

1,161 to 1,342
4,049 to 4,786
1,404 to 1,592
5,000 to 5,922
_: 329 to 411
40 to
44.

"The debentures'first issued, ais'determined by the serial nunibers, wer^selected
for redemption by the Commissioner,-Federal Housing Administration, with the
approval of the Secretary of the Treasury.
.
. .
"No transfers or denominational exchanges in debentures covered by the foregoing call will be made on the books maintained by the Treasury Department
on or after April 1, 1942. This does not affect the right of the holder of a debenture to sell and assign the debenture on or after April 1, 1942, and provision will
be made for the payment of final interest due July 1,1942, with the principal thereof
to the actual owner, as shown by the assignments thereon.
"The Commissioner of the Federal Housing Administration hereby offers to
, purchase any debentures included in this call at any time from April 1 to June
30, 1942, 'inclusive, at par and accrued interest, to date of purchase.
"Instructions for the presentation and S;i4i:ren,der of debenture$ for redemption
on or after; July 1, 1942,:]or for .purchase jprior to that date wilhbe given by. the
Secretary of the Treasury."
J I I . TRANSACTIONS IN SEVENTH-CALLED DEBENTURES

1. The debentures included in the foregoing notice of call for partial redemption on July 1, 1942, are hereby designated seventh-called 2% percent mutual
mortgage insurance fund debentures. Series Bi, and are hereinafter referred to as
seventh-called debentures.
2. Transfers and denominational exchanges in seventh-called debentures will
terminate at the close of business on March 31, 1942.



290 /
.

REPO'RT OF THE, SECRETARY OF THE TREASURY
.^

III. REDEMPTION OR PURCHASE

1. Holders of seventh-called debentures will be entitled to have such'debentures redeemed and paid at par on July 1, 1942, with interest in full to that date^
at the rate of $13.75 per $1,000. Interest on seventh-called debentures will
cease on July 1, 1942.
2. Holders of seventh-called debentures have the privilege of presenting such
debentures at any time from April 1 to June 30, 1942, inclusive, for purchase at
par and accrued interest, at the rate of $0.075967 per $1,000 per day from January 1, 1942, to date of purchase.
IV. RULES AND REGULATIONS GOVERNING REDEMPTION AND PURCHASE

1. The United States Treasury Department is the agent ,of the Federal Housing Commissioner for the redemption and purchase of seventh-called debentures.
In accordance with regulations adopted by the Federal Housing Commissioner
and approved by the Secretary of the Treasury, the assignment, redemption, and
purchase of seventh-called debentures will be governed by the general regulations
of the Treasury Department with respect to United States bonds and notes, so
far as apphcable, except as otherwise provided herein. .
2. Seventh-called debentures presented for redemption on July 1, 1942, or for
purchase from April 1 to June 30, 1942, inclusive,' must be assigned by the registered payee or assignee thereof or by their duly constituted representatives in
the form indicated in paragraph 3 hereof, and should thereafter be presented and
surrendered to any Federal Reserve Bank or to the Division of Loans and Currency, Treasury Department, Washington,^D. C , accompanied by appropriate
written advice. (Use Form PD 1759.) TJfie debentures must be delivered at the
expense and risk of the holders. (See paragraph 8 of this section.) In all cases
checks in payment of principal and final interest will be mailed to the address'
given in the form of advice accompanying the debentures when surrendered.
3. If the regLstered payee or an assignee holding under proper assignment
from the registered payee desires that payment be made to him, the debentures
should be assigned by such payee or assignee or by a duly constituted representative to "The Federal liousing Commissioner for redemption" or to "The Federal
Housing Commissioner for purchase," according to whether the debentures are
to be presented for redemption on July 1, 1942, or for purchase prior to that date..
If it is desired for any reason that payment be made to some other person without
intermediate assignment, the debentures should be assigned to "The Federal
Housing Commissioner for redemption (or purchase). for the account of-_-_-^-_
," inserting the name and address of the person to
whorn payment is to be made.
4. An assignment in blank or other assignment having similar effect will be
recognized, but in that event payment will be made to the person surrendering
the debenture for redemption or purchase since, under such an assignment, the
debenture becomes in effect payable to bearer. Assignments in blank or assignments having similar effect should be avoided, if possible, in order not to lose
the protection afforded by registration, '
5. Final interest on any seventh-called debentures, whether purchased prior
to or redeemed on or after July 1, 1942,^111 be paid with the principal in accordance with the assignments on the debentures surrendered.
6. All assignments must be made on the debentures themselves unless otherwise
directed by the Treasury Department. Detached a.ssignments will be recognized
and accepted in any particular case in which the use of detached assignments isspecifically authorized bj^ the Treasury Department. Any assignment not made
upon the debenture is considered a detgiched assignment.
7. A seventh-called debenture registered in the name of, or assigned to, a corporation, will be paid to such corporation on or after J u l y l , 1942, upon an appropriate
assignment for that purpose executed on behalf of the corporation by a duly
authorized officer thereof. An assignment so executed and duh^ attested, in
accordance with 'Treasury Department regulations will ordinarily be accepted;
without proof of the officer's authority. In all cases coming under this provision
payment will be made only by check drawn to the order of the corporation. Proof
of the authority of the officer assigning on behalf of a corporation will be required,
in accordance with the general regulations of the Treasury Department, in the case
of assignments for purchase prior to July 1, 1942, and in case of assignments for
redemption on'-or after July 1, 1942, for the account of any person other than the
corporation.
^ '8. Debentures presented for redemption or purchase under this circular must be
delivered to a Federal ReserVe Bank or to the Division of Loans and Gurrencyy



REPORT OF THE' SECRETARY OF T H E TREASURY.

291

T r e a s u r y D e p a r t m e n t , Washington, D . C , a t t h e expense a n d risk of t h e holder.
D e b e n t u r e s bearing restricted assignments m a y be forwarded by registered mail,
b u t debentures bearing unrestricted assignments should be forwarded by registered
mail insured or by express prepaid. .
9. In order t o facilitate t h e redemption of seventh-called debentures on July 1,
1942, any such debenture msbj be presented and surrendered in t h e manner herein
prescribed in advance bf t h a t date b u t not before J u n e 1, 1942. Such early
presentation by holders will insure- p r o m p t p a y m e n t of principal and interest
when due.
V. GENERAL PROVISIONS

1. Any further information which m a y be desired regarding the. redemption of
seventh-called debentures under this circular m a y be obtained from any Federal
Reserve Bank or from t h e Division of Loans and (5urrency, Treasury D e p a r t m e n t ,
Washington, D . C , where copies of t h e Treasury D e p a r t m e n t ' s regulations
governing assignments m a y be obtained.
2. As fiscal agents of t h e United States, Federal Reserve Banks are authorized
a n d requested to perform any necessary acts under this circular. The Secretary
of t h e Treasury m a y a t any time or from time to t i m e prescribe supplemental a n d
a m e n d a t o r y rules and regulations governing t h e m a t t e r s covered by this circular,
which will be communicated promptly to t h e registered owners of seventh-called
debentures.
D.W.BELL,

Acting Secretary of the Treasury.
MONETARY .DEVELOPMENTS
Exhibit 40
J o i n t statement by ihe Secretary of the Treasury of the United States a h d the Secretary of
. t h e Treasury.of Mexico, November 19,1941, announcing the signing of a stabilization
agreement and a silver purchase agreement between the United States and Mexico
T h e following joint s t a t e m e n t is made b}'' t h e Secretary of t h e Treasury of t h e
United States, Mr. Henry Morgenthau, Jr., and by t h e Secretary of t h e Treasury
of Mexico, Mr. E d u a r d o Suarez:
. " T h e two Governments, as a p a r t of t h e over-all arrangements between Mexico
a n d t h e United States, have today entered into a stabilization agreement a n d a
silver purchase agreement. These arrangements are practicalevidence of the goodneighbor policy. These agreements are iDased upon the principle t h a t t h e welfare
of the two countries is m u t u a l and t h a t common monetary and economic problems
can be settled in a spirit of friendly cooperation. T h e two Treasuries are h a p p y
t o affirm by these agreements their belief in neighborly cooperatiqn, a t a t i m e
when fbrce,rules so large a p a r t of the world's,economy.
.1 '
" T h e stabilization agreement, signed t o d a y by t h e Secretary of t h e Treasury
of t h e United States, t h e Secretary of t h e Treasury of Mexico, and Mr. Antonio
Espinosa de los Monteros, t h e representative of t h e Bank of Mexico, proposes to
stabilize t h e United States dollar-Mexican peso rate of exchange. T h e agreement
provides t h a t up to $40 millions of t h e United Staties stabilization fund will be used
for this purpose. T h e agreement also pl-ovides for-periodic conferences among
representatives of t h e two Treasuries and the Bank of Mexico t o discuss monetary,
"financial, and economic problems of m u t u a l interest. •
. .
" T h e silver purchase agreement is a m o n t h to m o n t h arrangement between t h e
United States and Mexico, whereby the United States Treasury undertakes to
purchase monthly up to six million ounces of newly mined Mexican silver. T h e
silver will be purchased directly from the Bank of Mexico on a basis similar to t h e
a r r a n g e m e n t s which were in effect prior to 1938. T h e silver purchases are m a d e
p u r s u a n t to t h e provisions of t h e Silver Purchase Act of 1934."

Exhibit 41
Announcement, February 27, 1942,' of the signing of a stabilization agreement
. .
between the United States and Ecuador
.• Another step was taken t o d a y in'promoting closer relations between t h e United
States and, the sister Republics of t h e Hemisphere when Secretary of t h e Treasury
H e n r y Morgenthau, Jr., Ecuadoran Ambassador Colon Eloy Alfaro, and Ecuadoran Minister-Counselor E d u a r d o S.alazar signed an exchange. stabilization
agreement.



292

REPORT OF TFIE SECRETARY OF T H E TREASURY

This agreement between t h e two Governments provides t h a t up to $5 millions
of t h e United States stabilization fund will be used for the purpose of stabilizing
the United States dollar-Ecuadoran sucre l a t e of exchange.
T h e agreement also provides for periodic conferences among representatives of
the Secretary of t h e Treasury and of t h e Government of Ecuador to discuss m o n etary, financial, and economic problems of m u t u a l interest. -

Exhibit 42
Announcement, M a y 5, 19'42, of the signing of a stabilization agreement between
^
,
the United States and Iceland
As a further link in t h e closer relations-which have developed between t h e
Governments of the United States and of Iceland during the last year. Secretary
of t h e Treasury H e n r y Morgenthau; Jr., and Icelandic Minister T h o r T h o r s
signed an exchange stabilization agreement today.
This agreement between the Government of t h e United States, the Government
of Iceland, and t h e National Bank of Iceland, provides t h a t up to $2,000,000 of
the United States stabilization fund will be used for t h e purpose of stabilizing t h e
United States dollar-Icelandic krona r a t e of exchange.
The agreement also provides for periodic conferences among representatives of
the parties to t h e agreement to discuss monetary, financial, and economic p r o b . lems of m u t u a l interest.
Exhibit 43
Joint statement by the Secretary of the Treasury of the United States and the Minister
of Foreign Affairs of the Republic of China, March 21, 1942, announcing the
signing of an agreement for financial aid to China
The following is a joint s t a t e m e n t m a d e by t h e Secretary of t h e Treasury, Mr.
H e n r y Morgenthau, Jr., and His Excellency T. V. Soong, Minister for Foreign
Affairs of t h e Republic of China:
/ " T h e United States and China have today entered into an agreement giving
effect to t h e act of Congress unanimously passed by t h e Senate and House of
Representatives authorizing.$500,000,000 of financial aid to China. The agreement, approved by t h e President and by Generalissimo Chiang Kai-shek, was
signed by Secretary Morgenthau on behalf of t h e United S t a t e s a n d by Dr. Soong
^ on behalf of China.
"This financial aid will contribute substantially towards facilitating t h e great
efforts of t h e Chinese people and t h e i r g o v e r n m e n t to meet t h e financial a n d
economic burdens which have been imposed upon t h e m by almost five years of
continuous a t t a c k by J a p a n .
"This agreement is a concrete manifestation of t h e desire and determination of
t h e United States, without stint, to aid China in our common b a t t l e for freedom.
" T h e final determination of t h e terms upon which this $500,000,000 financial
aid is given to China, including, t h e benefits t o be rendered t h e United States in
return, is deferred until the progress of events after t h e war makes clearer t h e
finahterms and benefits which will be in t h e m u t u a l interest of t h e United States
a n d China a n d will promote t h e establishment of lasting world peace and s e c u r i t y . "

Exhibit 44
Announcement by the Secretary of the Treasury, April 8, 1942, regarding the l e n d leasing of the Treasury's free silver stocks to be used as bus bars in aluminum and
magnesium plants
The Secretary of t h e Treasury, H e n r y Morgenthau, Jr., announced t o d a y t h a t
t h e Treasury D e p a r t m e n t had been asked to work out some means for making t h e
-free ^silver^sfocks^ of^.the Treasurp^a^vailabie -for • lilse in connection i#ith^:.W;ar prb'duction and thereby release substantial a m o u n t s of vitally needed' copper. - T h e
General Counsel of t h e Treasury^ after study of t h e problem, has concluded t h a t
there is legal authority t o lend-lease the free silver stocks of t h e Treasury for this
purpose.; T h e Attorney General concurs in this view.



REPORT OF THE' SECRETARY OF THE TREASURY

293

Under t h e plan which has been approved by t h e President, t h e silver would be
' m a d e available to Government-owned a n d privately owned plants, engaged in war
production, particularly aluminum a n d magnesium plants. Title to the silver
would remain in the Treasury. T h e silver would n o t become a p a r t of the products,
of the'-war production plants, nor would t h e silver be used up.- T h e silver wouldbe used in the plants (where such articles as bus bars are now m a d e of copper) so
as to permit substantially all of t h e silver to be returned to t h e Treasury after t h e
terinination of t h e war.
- There are a t present over 1,360,000,000 ounces of free silver in t h e Treasury
which can be used for this purpose. I t s use will release more t h a n 40,000 tons of
.copper for other war production requirements.

Exhibit 45
^Title X I I of the Second War Powers Act, 1942 (Public Law 507, March 27, 1942),
relating to the coinage of 5-cent pieces
T I T L E X I I — C O I N A G E OF 5 - C E N T

PIECES

SEC. 1201. Notwithstanding any other provision of law, t h e Director of t h e
M i n t shall cause the metallic content of all 5-cent pieces coined after the effective
date of this title and prior to December 31, 1946, to be one-half silver and one-half
copper: Provided, T h a t t h e .Director of t h e Mint, with t h e approval of the Secret a r y of t h e Treasury and the Chairman of t h e War Production Board, is authorized
to vary t h e proportions of silver and copper and to a d d other metals if such action
would be in the public interest. Such 5-cent pieces shall be deemed to be minor
coins or coinage and not silver coins, subsidiary silver coins, silver coinage, or
subsidiary silver coinage within t h e meaning of t h e monetary laws of the United
States.
,
^SEC. 1202. For t h e coinage of-such 5-cent pieces t h e Secretary of t h e Treasury
is hereby authorized to allocate to t h e .Director of t h e Mint, a t such times a n d in
such a m o u n t s as t h e Secretary deems necessary, any silver bullion in t h e m o n e t a r y
stocks of the United States not then held for redemption of ariy outstanding silver
certificates. Silver so allocated shall be accounted for by entries in the fund established for the purchase of metal for minor coinage: Provided, T h a t t h e value of any
silver bullion accounted for in said fund shall not be considered for t h e purpose of
determining t h e s t a t u t o r y limit of said fund: Provided further, T h a t t h e gain from
t h e minor coinage provided for by this title shall be accounted for by entries in t h e
minor coinage profit fund.
SEC. 1203. No silver-copper ingots shall be used for t h e minor coinage provided
for by this title which differ from t h e legal standard by more t h a n ten-thousandths.
I n adjusting t h e weight of such minor coins there shall be no greater deviation
allowed t h a n four grains for each piece.
SEC. 1204. For the purpose of section 3529 of t h e Revised, Statutes,.(U. S . . C ,
title 31, sec. 341), t h e 5-cent pieces provided for by this title shall be deemed to be
copper.
•SEC. 1205. Upon redemption any 5-cent pieces coined in accordance with t h e
provisions of this title shall after December 31, 1946, be allocated to t h e Director
of t h e M i n t for melting arid for subsidiary silver coinage. Any 5-cent pieces coined
in accordance with t h e provisions of this title b u t not issued by t h e Mint m a y after
December 31, 1946, be allocated, in such a m o u n t s and a t such times as t h e Secret a r y of t h e Treasury in his discretion m a y determine, to t h e Director of t h e M i n t
for melting and for subsidiary silver coinage. All 5-cent pieces allocated to t h e
Director of t h e Mint in accordance with this section shall be accounted for by
entries in t h e fund established for t h e purchase of silver bullion for subsidiary
silver coinage. Upon coinage irito subsidiary silver coins of t h e metal contained
in t h e 5-cent pieces so allocated, t h e gain shall be accounted for by entries in t h e
silver-profit fund.
S E C . T206. This title shall become effective sixty days after approval.




294

REPO!RT OF THE SEICRETARY OF: THE .TREASURf
^ -FOREIGN FUNDS CONTROL, E T C i' "
Exhibit 46

Executive orders relating to the control of foreign funds ^and foreign-owned property
EXECUTIVJJ ORDER N O . 8832, JULY 26, 1941 ^
A M E N D M E N T O F E X E C U T I V E O R D E R N O . 8389 OF APRIL 10, 1940, AS AMENDED

By virtue of the authority vested in me by section 5 (b) of the act of October 6,
1917 (40 Stat. 415), as amended, and by virtue of all other authority vestedan me,
I, Franklin D. Roosevelt, President of the United States of America, do hereby
amend Executive Order No. 8389"of April'10, 1940, as amended, by changing
the period at the end of subdivision (j) of section 3 of such order to a semi-colon
and adding the following new subdivision thereafter:
(k) June 14, 1.941—
China,' and
,
Japan.
FRANKLIN D . ROOSEVELT.
T H E WHITE HOUSE, JwZ?/^<?,'^^4^EXECUTIVE ORDER No. 8963, DECEMBER 9, 1941
AMENDMENT OF EXECUTIVE ORDER NO. 8389 OF APiRIL 10, i940, AS AMENDED

By virtue of the authority vested in me by section 5 (b) of the act of October 6,
1917 (40 Stat. 415), as amended, g,nd by virtue of all other authority vested in me,
I, Franklin D. Roosevelt, President of the United States of Arrierica, do hereby
amend Executive Order No. 8389 of April 10, 1940, as amended, by changing the
period at the end of subdivision (k) of. section 3 of such order to a semi-colon and
adding the following new subdivision thereafter:
(1) June 14, 1941—
,
'
'
Thailand.
FRANKLIN D . ROOSEVELT.
T H E WHITE HOUSE, Deceniber 9, 1941. '.

EXECUTIVE ORDER N O . 8998, DECEMBER 26, 1941
,

. . A M E N D M E N T O F E X E C U T I V E O R D E R N O * 8389 O F A P R I L 10, 1940, A S A M E N D E D

. Bv virtue of the authority vested in me by sections 3 (a) and 5 (b) of the Tradng With the Enemy Act of October 6, 1917 (40 Stat. 415), as amended by Title
I I I ofthe First War Powers Act, 1941,(Public No. 354, 77th Congress), and by
virtue of all other authority vested in me, I, Franklin D. Roosevelt, President of
the United States of America, do hereby amend Executive Order No. 8389 of
April 10, 1940, as amended, in the following respects:
' o
; (1) By changing the period at the end of subdivision (1) of section 3 of such
order to a semi-colon and adding the following new subdivision thereafter:
(m) June 14, 1941—.
; ,
. Hong Kong.
(2) By amending paragraph B of section 5 of such order to read as follows:
"B. The term 'United States' means the United States and any, place
subject to the jurisdiction thereof, and the term 'continental United [States'
means the States of the^ United States, the District of Columbia, and the
Territory of Alaska; provided, however, that, for the purposes of this order
the term 'United States' shall not be deemed to include any territory included within the term Toreign country' as defined in paragraph D of this
section."
(3) By substituting the following in lieu of subdivision (iii) of paragraph D of
section 5t
"(iii) Any territory which on or since the effective date of this order is
controlled or occupied by the military, naval or police forces or other authority of such foreign country; ,
'
"(iv). Any person to the extent that such person is, or has been, or to the
extent that there is reasonable cause to believe that such person is, or has



REPORT OF THE' SECRETARY OF i?HE TREASURY

295

• been, since such effective date, acting or purporting t o act directly or indirectly for t h e benefit or on behalf of any of the foregoing."
H o n g Kong shall be deemed to be a foreign country within t h e meaning of this
subdivision.
.

'

FRANKLIN D .

ROOSEVELT.

T H ^ WHITIS B.OVSB, December 26, 1941.

Exhibit 47
Amendment, J u l y 26, I 9 4 I , to regulations of the Secretary of the Treasury relative to
the cohtrol of foreign funds and foreign-owned property TREASURY DEPARTMENT,

.
.
^
Washington, J u l y 26, 1941.
T h e Regulations of April 10, 1940, as amended (sections 130.1 to 130.7), are
hereby amended so t h a t reports on Form T F R - 3 0 0 shall be filed with respect t o
all property subject to the jurisdiction of the United States on the opening of
business on July 26, 1941, as well as with respect to all property subject to t h e
jurisdiction of the United States on the opening of business on J u n e 1, 1940, a n d
with respect to all property subject to the jurisdiction of the United States on t h e
opening of business on J u n e 14, 1941, in which on the respective dates China or
J a p a n or any national thereof had any interest of any n a t u r e whatsoever, direct or
indirect. Such reports shall be filed by the persons specified in section 130.4 of
t h e regulations and in t h e mianner prescribed in the regulations.
E.

H.

FOLEY,

Jr.,

Acting Secretary of the Treasury.
Approved: J u l y 26, 1941.
FRANKLIN D .

ROOSEVELT

*

1

Exhibit 48
Proclamation, J u l y 17, 1941, authorizing a proclaimed lisf of certain blocked nationals
and controlling certain exports
I, Franklin D . Roosevelt, President of the United States of America, acting
under and by virtue of the authority vested in me by section 5 (b) of the act of
October 6, 1917 (40 Stat. 415) as amended and section 6 of t h e act of July 2, 1940
(54 Stat. 714) as amended and by virtue of all other authority vested in me, a n d
by virtue of the existence of a period of unlimited national emergency and finding
t h a t this proclamation is necessary in t h e interest of national defense, do hereby
order and proclaim t h e following:
^
SECTION 1. T h e Secretary of State, acting in conjunction with t h e Secretary of
t h e Treasury, t h e Attorney General, t h e Secretary of Commerce, the Administ r a t o r of Export Control, and the.Coordinator of Commercial and Cultural Relat i o n s between t h e American Republics, shall from time t o time cause to be prepared an appropriate list of
•
.
'
(a) certain persons deenaed to be, or to have been acting or purporting t o
act, directly or indirectly, for t h e benefit of, or under t h e direction of, or under
t h e jurisdiction of, or on behalf of, or in collaboration with Germany or I t a l y ^
or a national thereof; and
' ,
'
,(b) certain persons to whom, or on whose behalf, or for whose account, t h e
exportatiori directly or indirectly of any article or material exported from t h e
United States, is deemed to be detrimental t o t h e interest of national defense.
I n similar m a n n e r and in t h e interest of national defense, additions to a n d
deletions from such list shall be made from time to time. Such l i s t a n d any additions thereto or deletions therefrom shall be filed p u r s u a n t to t h e provisions of t h e
•Federal Register Act and such list shall be known as " T h e Proclaimed List of
Certain Blocked Nationals."
SECTION 2. Any person, as long as his name appears in such list, shall, for t h e
purpose of section 5 (b) of the act of October 6, 1917, as amended, arid for t h e
purpose of this proclamation, be deemed to be a national of a foreign country, a n d
shall be treated for all purposes under Executive Order No., 8389, as ametfded, as
though he were a national of Germany or Italy. All t h e terms and provisions of
Executive Order No. 8389, as amended, shall be applicable to any such person s a




296

REPORT OF THE SECRETARY OF THE TREASURY

long as his name appears in such list, and to any property in which any such person
has or has had an interest, to t h e same extent t h a t such terms and provisions are
applicable to nationals of Germany or Italy, and to property in which nationals
of Germany or Italy have or have had an interest.
SECTION 3. The exportation from t h e United States directly or indirectly to, or
on behalf of, or for t h e account of any person so long as his name appears on such
list of any article or material t h e exportation of which is prohibited or curtailed by
a n y proclamation heretofore or hereafter issued under the authority of section 6 of
t h e act of-July 2, 1940, .as amended, or of any other military equipment orvinunitions, or component 'parts thereof, or machinery tools, or material, or supplies
necessary for the manufacture, servicing, or operation thereof, is hereby prohibited
. under section 6 of t h e act of July 2, 1940, as amended, except (1) when authorized
in each case by a license as provided for in Proclamation No. 2413 of July 2, 1940,
or in Proclamation No. 2465 of March 4, 1941, as t h e case may be, and (2) when
t h e Administrator of Export Control under m y direction has determined t h a t such
prohibition of exportation would work an unusual hardship on American interests.
SECTION 4.. T h e t e r m " p e r s o n " as used herein means, an individual, p a r t n e r ship, association, corporation or other organization.
T h e term " U n i t e d S t a t e s " as used herein means the United States a n d a n y
place subject to the jurisdiction thereof, including t h e Philippine Islands, t h e
Canal Zone, a n d t h e District of Columbia a n d any other Territory, dependency
. or possession of t h e United States.
SECTION 5. Nothing herein contained shall be deemed in any m a n n e r to
limit or restrict the provisions of the said Executive Order No. 8389, as amended-,
or the authority vested thereby in t h e Secretary of the Treasury and the Attorney
General. So far as the said Executive Order No. 8389, as amended, is concerned,
" T h e Proclaimed List of Certain Blocked N a t i o n a l s , " authorized by this JDroclamation, is merely a list of certain persons with respect to whom and with respect
to whose property interests the public is specifically p u t on notice t h a t the provisions of such Executive order are applicable; a n d t h e fact t h a t any person is
not named in,such list shall in no wise be deemed to mean t h a t such person is not
a national of a foreign country designated in such order, within the meaning
thereof, or to affect in a n y m a n n e r t h e application of such order to such person
or to the property interests of such person.
,/
In witness whereof, I have hereunto set my h a n d and caused the seal of t h e
United States of America to be affixed.
.^
'
Done a t tlie city of Washington this 17th day of July, in the year of our Lord
nineteen hundred and forty-one, a n d of t h e independence of the United States of
America t h e one hundred a n d sixty-sixth.
,

FRANKLIN D . ROOSEVELT.

. By the President:
SUMNER

WELLES,

Acting Secretary of State.

, •

Exhibit 49
Executive OT-der No.-9193, J i d y 6, 1942, amending Executive Order No.-909:5 establishing the Office of Alien Property Custodian and defining its functions and
duties and related matters
By virtue of the a u t h o r i t y vested in me by the Constitution, by the First W a r
^Powers Act,, 1941, by t h e Trading With t h e E n e m y Act of October 6, 1917, as
• amended, and as President of t h e United States, it is hereby ordered as follows:
Executive Order No. 9095 of March 11, 1942, is amended to read as follows:
" 1 . There is hereby established in t h e Ofl&ce for Emergency Management of
t h e Executive Office of t h e President t h e Office of Alien Property Custodian, at
t h e head of which shall be an Alien Property Custodian appointed by the President. The Alien Prope