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ANNUAL REPORT OE THE
SECRETARY OF T H £ TREASURY
m m STATE OF THE FINANCES
IFORFISGAL YEAR ENDED JUNE30,I944




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i iL J' ^'

' ANNUAL REPORT OF THE
SECRETARY OF THE TREASURY
ON,

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

1944

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON: 1945

For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C.
Price $1.25 (paper cover)







TREASURY DEPARTMENT
DOCUMENT N O .

Secretary

3132

CONTENTS
Page

Introduction
.
_-_
,
1,
Factors in the stabilization p r o g r a m . . .
__1
:
.
3
Tax policy
l-^
:
.
5
Debt management
.,
6
International monetary and financial cooperation
9
Receipts in general and special accounts...
10
Receipts from income and excess profits taxes.
12
Receipts from all other sources
^
17
Expenditures from general and special accounts:
23
War expenditures
::\i____
. 26
General expenditures
— -^_
___•
32
Deficit in general and special accounts
^.--^---..
33
Receipts and expenditures in trust accounts and checking accounts- of
Government corporations and credit agencies
---r
34
Financing the net budgetary deficit anc} other requirements
____:__
35
The pubhc debt:
Summary of financing operations
.'
'.
36
Third War Loan
^___
.-.
39
Fourth War Loan
42
Fifth War Loan
45
United States savings bonds
.,
48
War savings stamps
.___
_,
60
Treasury notes: tax series and savings series
, 60
Treasury bills
'..
60
Market financing outside of war loan drives
___._•
61
Adjusted service bonds-___
,
65
Depositary bonds
^^:__;:-__l
65
Excess profits tax refund bonds-_
._
___:_'_
66
Special issues
67
Special short-term certificates of indebtedness
'--...'
67
Cumulative sinking fund.
.
:____
67
Composition of the public debt.__L__
67
Interest on the public debt
71
Debt limit.
'_
_.._.
73
Securities issued by Government corporations and credit agencies^
..
74
Sources of funds for Federal borrowing
...
----79
Analysis of gross income
flow
...
79
Liquid savings and investment in Federal securities
..___
83
Ownership of Federal securities by investor classes_
:__
90
..General Fund__93
Securities owned by the United States and proprietary interest in Government corporations and credit agencies:
Securities owned
i
,__
94
Proprietary interest in Government corporations and credit agencies.
95
Monetary developments:
International monetary cooperation
'_
_ _ . 95
Domestic monetary events_^
. 97
Taxation developments__-_:
^
99
Development of the 1943 revenue program
i
. 99
Major features of the Revenue Act of 1 9 4 3 . . .
'...
110
Development of simplification plans
118
Major features of the Individual Income Tax Act of 1944
119
Other revenue legislation
'
_v_^
121
Customs Service in the war.
,_
_^
122
Special procurement activities:
Lend-lease
^ ,_
...1..
123
. Surplus property disposal
._. . ^ ^ . . . . ,123
^%.

'
""""•••
•-•



'

r-^
B m

111
s

•

•

•

\ j

IV

CONTENTS

Special procurement activities—Continued'-^ '
Renegotiation of war contracts
__!_
Strategic and critical materials
_J_I
Foreign Funds Control activities..J.
War contributions:
Conditional gifts
Unconditional donations
_
"
Salary stabilization
.
_
Estimates of receipts
^
Total and net receipts
..
Fiscalyear 1945
,' Fiscalyear 1946.
Estimates of expenditures

1

Page
-125
125
126

.

^

,
.
__._.
^....1

127
128
129
131
131
132
136
139

ADMINISTRATIVE REPORTS OF BUREAUS AND DIVISIONS
Fiscal Service of the Treasury Department..
:
143
Accounts, Bureau of
.
. . 1 . 143
Commissioner of Accounts, Office of. .
1
143
Division of Bookkeeping and Warrants
---^-148
Division of Disbursement
149
^Division of Deposits
150
'Section of Surety Bonds.
155
Treasury Budgetary Section
156
Section of Investments_ _ _ _:
160
Public Debt, Bureau of the
181
Washington Office
.____
181
^ Chicago Office
.
.
_
:__
191
Treasurer of the United States
_
'
^_
195
Budget and Improvement Committee
L
__.
199
Comptroller of the Currency, Bureau of the
200
Changes in the condition of active national banks
_
•
200
Summary of changes in the National Banking System.
202
Customs, Bureau of
'._'
.
1
_.
202
Collections.....
203
Volume of business
_____^204
Law enforcement activities
r
^___
210
Miscellaneous
J
216
Engraving arid Printing, Bureau of
°
219
Foreign Funds Control..
...
..
.
222
Internal Revenue, Bureau of
222
General
^.j.
222
Income Tax Unit
1
225
Miscellaneous Tax Unit
' 227
Alcohol Tax Unit
.___
229
Accounts and Collections Unit.
233
Technical Staff
1
237
Office of the Chief Counsel
239
Intelhgence Unit
.____^
241
Salary Stabilization Unit
.___
l
241
Legal Division.^.
1
242
Mint, Bureau of t h e . .
243
Institutions of the Mint Service
.
244
Coinage
...
244
Minor coinage alloys
244
Bullion deposit transactions
^
245
Long-term storage of bullion^
.
245
Gold operations
245
Silver operations
._.__
.
246
Refineries
.
246
Medals
.
_-___
_.
246
Stock of coin and^monetary bullion in the United S t a t e s . . . .
247
Production of gold and silver in the United States
247
Industrial consumption of gold and silver in the United States
248
General activities
...
_..
248
Monetary Research, Division of
^
.
248
Narcotics, Bureau of
.-.^
249
Personnel, Division of
_,
J
_._
'251



CONTENTS

V
Page

Practice, Committee on
•__!
:.._____.._.
251
Procurement Division
.__
252
General supply fund
._
.
__;
^.:_
253
Storage and warehousing
'.
^-_
....
253
Surplus property disposal..
.
254
Pubhc utilities.
- 254
Renegotiation of contracts
i
255
Contract termination._..__.
:
___
255
Specifications
..
.
-.
255
S t a n d a r d s Division.
:
255
Printing and binding
.'
:
...
..'.
256
Conservation of supplies a n d material
'.'.
'
256
Blind-made p r o d u c t s _ _ _ _ . . .
'..
256
. Research and Statistics, Division of
_L
.
._
256
Secret Service Division.
•
_-J
257
Crime prevention prograrh._.
1
257
Enforcement activities
257
Protective activities
260
Tax Legislative Counsel, OflSce of t h e
._
^._
260
Tax Research, Division of
=
.
^_______
._
261
War Finance Division
.
262
Interdepartmental W a r Savings' Bond. C o m m i t t e e .
264
EXHIBITS
PUBLIC D E B T

. -

Issues and redemptions of Treasury bonds. Treasury notes, and Treasury
certificates of indebtedness
.
,;
Exhibit 1. Subscriptions a n d allotments. Treasury notes of Series A-1947_
Exhibit 2. Offering of. % percent Treasury certifi cates. of indebtedness of
Series D - 1 9 4 4 _ _ . . .
....__.
......^il...........
Exhibit 3. Subscriptions a n d allotments, Treasury certificates of indebtedness of Series D-1944
Exhibit 4. Offering of 2}^ percent Treasury bonds of 1964r-69, 2 percent
Treasury bonds of 1951-53, and % percent Treasury certificates of indebtedness of Series E-1944 (Third War Loan)
Exhibit 5. Subscriptions a n d allotments, Treasury bonds of 1964-69,
Treasury bonds of 1951-53, ahd Treasury Certificates of indebtedness
of Series E-1944 (Third W a r L o a n ) . . - .
...
Exhibit 6. Offering of 2H percent Treasury bends of 1964r-69 (additional),
2 percent Treasury bonds of 1951-53 (additional), and % percent Treasury certificates of indebtedness of Series F - 1 9 4 4 _ . - . J . .
'.
Exhibit 7- Subscriptions and allotments, Treasury bonds of 1964-69
(additional), Treasury 'bonds of 1951-53 (additional), and Treasury
certificates of indebtedness of Series F - 1 9 4 4 _ _ . . . .
_J
J
..
Exhibit 8. Offering of %.percent Treasury certificates of indebtedness of
Series G-1944_
...._
.__._._____._
.
Exhibit 9. Allotments, Treasury certificates of indebtedness of Series
G-1944_____
..
..
1_._.___......
Exhibit 10. Call for redemption on April 15, 1944, of 3>4 percent Treasury
bonds of 1 9 4 4 - 4 6 . .
_.
.......
.
.
Exhibit 11. Offering of 2% percent Treasury bonds of 1965-70, 2% percent
Treasury bonds of 1956-59, a n d % percent Treasury certificates of indebtedness of Series A-1945 (Fourth War Loan)
Exhibit 12. Subscriptions and allotments. Treasury bonds of 1965-70,
Treasury bonds of 1956-59, and Treasury certificates of indebtedness of
Series A-1945 (Fourth War Loan)
__..._..._
i
.:...
Exhibit 13. Offering of 0.90 percent Treasury notes of Series D-1945__-__
Exhibit 14. Allotments, Treasury notes of Series D-1945
.^
•
Exhibit 15. Offering of 2% percent Treasury bonds of 1965-70 (additional),
2J4 percent Treasury bonds of 1956-59 (additional), and 1)4 percent
Treasury notes of Series A-1948
o
Exhibit 16. Allotments, Treasury bonds of 1965-70 (additional), Treasury bonds of 1956-59 (additional), and Treasury notes of Series A-1948_



269
269
271
271
276
277
281
283
284
284
284
289
290
291
291
300

VI

CONTENTS
Page

Exhibit 17. Offering of K percent Treasury certificates of indebtedness of
Series B-1945
.
.._.
_._.
Exhibit 18. Allotments, Treasury certificates of indebtedness of Series
B-1945
..
'-._:
_.__Exhibit 19. Offering of Ys percent Treasury certificates of indebtedness of
Series D-1945
.
............
Exhibit 20. Allotments, Treasury certificates of indebtedness of Series
D-19^5
--1
:___
Exhibit 21. Offering of 2 ^ percent Treasury bonds of 1965-70 (additional),
.2 percent Treasury bonds of 1952-54, 1% percent T r e a s u r y , notes of
Series B-1947, and % percent Treasury certificates of indebtedness of
Series C-1945 (Fifth W a r Loan)
.
.
Exhibit 22. Allotments, Treasury bonds of 1965-70 (additional), Treasury
bonds of 1952-54, Treasury notes of Series B-1947, and Treasury certificates of indebtedness of Series C-1945 (Fifth W a r L o a n ) . . . .

301
302
303
304

304
311

Treasury hills
Exhibit 23. Inviting tenders for Treasury bills dated July 7, 1 9 4 3 . . . _ _ . _
Exhibit 24. Acceptance of tenders for Treasury bills d a t e d July 7, 1 9 4 3 . .
Exhibit 25. S u m m a r y of information contained in press releases issued in
connection with Treasury bills offered during t h e fiscal year 1944

311
312
313

United States savings bonds
Exhibit 26. Second Revision, August 31, 1943, to D e p a r t m e n t Circular No.
653, relative t o United States war savings bonds of Series E, a n d first'
supplement, J u n e 7, 1944
...
.^
_._
'
Exhibit 27. Second Revision a n d a m e n d m e n t . D e p a r t m e n t Circular No.
' 654, relative t o United States savings bonds of Series F a n d Series G___
Exhibit 28. Amendments to D e p a r t m e n t Circular No. 530, Fifth Revision,
prescribing regulations governing United States savings b o n d s .
r_
Exhibit 29. Announcement^ July 27, 1943, of a reduction in the size of Series
E war savings bonds
.
,
.
i..
-.

316
322
329
336

Treasury notes, tax series and savings series
Exhibit 30. Amendments to circulars governing t h e issue a n d redemption
of Treasury notes, t a x series a n d savings series.
..
. . . . 336
Miscellaneous
Exhibit 31. Portion of t h e act' to increase t h e debt limit of t h e United
States...--.-'_
....
.-._•_.___
Exhibit 32. Second a m e n d m e n t , September 15, 1943, to D e p a r t m e n t Cir0 cular No. 660, relating t o depositary bonds
'...^.......
Exhibit 33. Regulations, December 31, 1943, governing issue of a n d t r a n s actions in United States excess profits tax refund bonds
:._
Exhibit 34. F o u r t h supplement, April 29, 1944, to D e p a r t m e n t Circular .
No. 300, prescribing regulations governing United States bonds a n d
notes
.
:
^.-^._,__..
_.. ;

343
343
343
.
344

SECTJBITIES G U A R A N T E E D BY T H E U N I T E D S T A T E S

Exhibit 35.
mortgage
Exhibit 36.
mortgage
Exhibit 37.
mortgage
Exhibit 38.
mortgage

P a r t i a l redemption, before m a t u r i t y , of 2% percent
insurance fund debentures, Series B (tenth call)
P a r t i a l redemption, before m a t u r i t y , of 2% percent
insurance fund debentures. Series B (eleventh c a l l ) . .
P a r t i a l redemption, before m a t u r i t y , of 2% percent
insurance fund debentures. Series E (first call)__.
P a r t i a l redemption, before m a t u r i t y , of 2 ^ percent
insurance fund debentures. Series E (second c a l l ) . .




mutual
.
mutual

345
347

mutual
350
mutual
.

352

CONTENTS
MONETARY

VII

DEVELOPMENTS

^ '
Page
Exhibit 39. Revised draft, dated July 10, 1943, of the.Treasury's t e n t a t i v e
proposal for an international stabilization fund of t h e United a n d Associated N a t i o n s . :
^.
^
.
.
354
Exhibit 40. T e n t a t i v e proposal for a b a n k for reconstruction a n d developm e n t of t h e Uiiited a n d Associated Nations
.
.^
365
Exhibit 4 1 . Statements on, a n d s u m m a r y of recohamendations f or, a n international monetary fund of t h e United a n d Associated Nations
.
372.
Exhibit 42. Press release, J u n e . 2 3 , 1944, containing t h e text of t h e Presi- ,
dent's letter, J u n e 9, 1944, t o t h e Secretary of t h e Treasury relative t o
t h e United Nations M o n e t a r y a n d Financial Conference a t B r e t t o n .
Woods
.
379
Exhibit 43. Joint statement, J u n e 15, 1944, by t h e Secretary of t h e Treasury a n d t h e Foreign Economic Administrator relative to t h e lend-lease
>
of silver to India
380
Exhibit 44. Joint statements, August 2 a n d 17, 1943, by t h e Treasury a n d
War D e p a r t m e n t s relative t o t h e aUied military currency used in liberated Sicily
.
^
..
380
Exhibit 45. Joint statement, F e b r u a r y 9, 1944, by t h e Treasury, War, a n d
N a v y D e p a r t m e n t s relative t o t h e special Hawaiian series of United
States currency
.:
i.
^
^'_
383
TAXATION

DEVELOPMENTS

Exhibit 46. S t a t e m e n t of Secretary Morgenthau before t h e House W a y s
a n d Means. Committee, October 4, 1943, in support of t h e Treasury's
program for additional revenue
:
Exhibit 47. S t a t e m e n t of Secretary Morgenthau before t h e Senate Finance
Committee, November 29, 1943, in further support of t h e Treasury's
program for additional revenue
:
Exhibit 48. S t a t e m e n t of Randolph E. Paul, General Counsel for t h e Treas«ury D e p a r t m e n t , before t h e Senate Finance Committee, November 29J
1943, discussing Treasury t a x proposals in detail a n d comparing t h e m
with provisions of t h e House bill
Exhibit 49. ST^atement of Randolph E . Paul, General Counsel for t h e Treasury D e p a r t m e n t , before t h e House W a y s a n d Means Committee, Sept e m b e r 10, 1943, relative to t h e revenue implications of changes in t h e
renegotiation s t a t u t e
.
Exhibit 50. S t a t e m e n t of R a n d o l p h E. Paul, General Counsel for t h e Treasury D e p a r t m e n t , before t h e Subcommittee on W a r Contract Termination of t h e Senate Committee-on Military Affairs on termination of war
contracts, October 27, 1943, discussing t h e relation of t a x policy to corporate reconversion problems
Exhibit 51. Message from t h e President of t h e United States returning
without approval t h e biU (H. R. 3687) entitled ' ' A n act to provide revenue, a n d for other purposes," F e b r u a r y 22, 1944
Exhibit 52. Letter to Chairman Walter F . George, Senate Finance Committee, a n d Chairman Robert L. Doughton, House Committee on Ways
and Means, from Secretary Morgenthau, March 10, 1944, relative to
individual income t a x simplification
.
.
Exhibit 53. Federal taxes of t h e U n i t e d States, 1939 through 1 9 4 4 . . .
ORGANIZATION AND

384
416

420

446

449
455

457
458

PROCEDURE

Exhibit 54. Supervision of bureaus, offices, a n d divisions of t h e Treasury
Department
...
Exhibit 55. Orders relating to organization a n d procedure in t h e Treasury
Department
Exhibit 56. Tiine a n d leave regulations, d e p a r t m e n t a l a n d field services,
F e b r u a r y 12, 1 9 4 4 - . .
-

487
488
489

MISCELLANEOUS

Exhibit 57. Address by Under Secretary Bell before t h e Worcester Economic Club, December 16, 1943, on financing t h e war a n d post-war
readjustment
.
^
— -.




496

VIII

CONTENTS
Page

Exhibit 58. Letters from t h e Secretary of t h e Treasury to commercial
banks, insurance companies, a n d corporations in connection with t h e
F o u r t h and Fifth War Loans
......
.
Exhibit 59. Regulations governing the issuance of duplicate checks
Exhibit 60. Amendmerits to D e p a r t m e n t Circular No. 714, prescribing
regulations governing t h e p a y m e n t t h r o u g h .depositary banks of funds
withheld as taxes in accordance with t h e provisions of the Current Tax
P a y m e n t Act of 1943
_._._.
._.__.....
Exhibit 61. An act to amend the act approved March 2, 1895, as amended,
relating to surety bonds
...
Exhibit 62. Agreement for p a y m e n t b y Finland of postponed p a y m e n t s of
. a m o u n t s payable during t h e period from J a n u a r y 1, 1941, through December 31, 1942
_.
....
.
Exhibit 63. L e t t e r of t h e Postmaster General t o t h e Secretary of t h e .
Treasury, dated December 5, 1944, certifying extraordinary expenditures
contributing to the deficiencies of postal revenues for the fiscal year 1944.

504
507

509
514
514
516

TABLES
Explanation of bases used in tables
.
Description of accounts through which Treasury operations are effected. .

519
520

R E C E I P T S AND E X P E N D I T U R E S

Summary tables on receipts and expendiiures
Table 1. S u m m a r y of receipts a n d expenditures, fiscal years 1932 t h r o u g h
1944 and monthly July 1943 through J u n e 1944
....___.
Table 2. Receipts a n d expenditures for the fiscal years 1789 through 1944.
Detailed tables on receipts and expendiiures

522
526

Table 3. Classification of monthly and total receipts, fiscal year 1944, a n d
comparative totals, fiscal year 1943
Table 4. Classification of monthly expenditures, fiscal year 1944
Table 5. Expenditures from general a n d special accounts, by major functions, fiscal years 1932 through 1944.
1
1.

532
538

^

Other receipts and expenditures tables

Table 6. Receipts by major sources, fiscal years 1943 and 1944
1
Table 7. Comparison of detailed internal revenue collections, fiscal years
1943. a n d 1 9 4 4 . . . . .
.__.
._.
Table 8. Internal revenue collections, by tax sources, fiscal years 1-916
through 1944
._
.
......
Table 9. Internal revenue collections, by States, fiscal year 1944
...
Table 10, Summary of customs collections a n d expenditures, fiscal year
1944
.
.
_.
Table 11. Expenditures by organizations and by fiscal years from April 8,
1935, t h r o u g h J u n e 30, 1944, under t h e Emergency Relief Appropriation
Acts for t h e fiscal years 1935 through 1 9 4 3 _ . _ . . . '
.__-___-.
Table 12. Receipts and expenditures of the social security program under
the Social Security, Railroad Retire-inent, and Railroad Unemployment
Insurance Acts, fiscal years 1936 through 1942 combined, fiscal year
1943, a n d monthly for t h e fiscal year,1944_.L
Table 13. Aniounts appropriated and expended under authorizations contained in the Social Security Act, as a m e n d e d . . _
Table 14. P a n a m a Canal receipts a n d expenditures, fiscal years 1903
t h r o u g h 1944
,...
Table 15.' Postal receipts and expenditures, fiscal years 1789 through 1944.
Table 16. Selected receipts and expenditures of the Government, fiscal
. years 1789 through 1944
_'
.
^
.
Table 17. E ^ e n s e s of t h e Internal Revenue Service, fiscal year 1944




560

561
563
565
570
572
573

576
584
585
587
590
591

CONTENTS

IX

W A R A C T I V I T I E S PROGRAM
-

^

Page

Table 18. Appropriations a n d net contract authorizations for war activities, as of J u n e 30, 1944
596
Table 19. Appropriations, contract authorizations, and expenditures under
t h e war activities program, July 1, 1940, through June 30, 1 9 4 4 . . . .
600
Table 20. Expenditures for war activities, by d e p a r t m e n t s and agencies and
by fiscal years 1933 t h r o u g h 1944 a n d m o n t h s from July 1940 through
J u n e 1944
. 602
Table 2 1 . Commitments, receipts, a n d disbursements of t h e Reconstruction
Finance Corporation a n d its affiliates under t h e war activities program,
July 1, 1940, through J u n e 30, 1944
..
604
PUBLIC

DEBT

Public debt outstanding
Table 22. Description of t h e public debt issues outstanding J u n e 30, 1944. .
Table 23. Principal of t h e public debt outstanding a t t h e end of each fiscal
year from 1853 t h r o u g h . 1944
.
Table 24. Comparative s t a t e m e n t of t h e public d e b t outstanding J u n e 30,
1932 through 1944
...
,...._
Table 25. Composition of t h e public debt a t t h e end of t h e fiscal years
1916 through 1944 and by m o n t h s from July 1943 through J u n e 1 9 4 4 . .

605
626
—
62^
"^
630.

Public debt operations
Table 26. Public d e b t receipts a n d expenditures, monthly July 1943
through J u n e 1944, with totals for the fiscal years 1943 a n d 1944
632
Table 27. Changes in t h e p u b h c debt by issues, fiscal year- 1944
^640
Table 28. Issues, maturities, and redemptions of interest-bearing securities,
exclusive of t r u s t account a n d other special issues, July 1943 through J u n e
1944
_!..
.
._ . 655
Table 29. Sources of public debt increase or decrease, fiscal years 1916
through 1944
•
663
Table 30. Transactions on account of t h e cumulative sinking fund, fiscal
year 1944
.
665
Table 3 1 . Transactions on account of t h e cumulative sinking fund, fiscal
years 1921 through 1944
.......
665
Table 32. Securities retired through t h e cumulative sinking fund, par
a m o u n t a n d principal cost, through J u n e 30, 1 9 4 4 . .
.
666
War loan statistics
T a b l e 33. Dates a n d goals relating to t h e five war loans
.:
Table 34. Comparison of sales of securities during t h e five war loans, by
classes of investors and by issues
.
.
Table 35. Sales of Series E war savings bonds of each denomination during
t h e five war loans
Table 36. Sales of securities in t h e Third War Loan, by States and by
classes of investors
:
.
"
Table 37. Goals a n d sales of securities in t h e Third War Loan, by S t a t e s . .
Table 38. Sales of securities in t h e F o u r t h War Loan, by States and by
classes of investors
......
Table 39. Goals a n d sales of securities in t h e F o u r t h War Loan, by S t a t e s .
Table 40. Sales of securities in the Fifth War Loan, by States a n d by classes
of investors
^
...
--.
Table 4 1 . Goals a n d sales of securities in t h e Fifth War Loan, by S t a t e s . .

667
668
670
671
674
676.
678
680
682

United States savings bonds
Table 42. Analysis of sales and redemptions of United
bonds, by series, by fiscal years 1935 through 1944 arid
thefiscal year 1 9 4 4 . . . "
.
...
....
Table 43. S u m m a r y of sales a n d redemptions of United
bonds, by series, by fiscal years 1935 through 1944, and
t h e f i s c a l year 1 9 4 4 . .




States savings
by months for
.
States savings
by months for
........

.
684
685

X

. CONTENTS ,
Page

Table 44. Sales of United States savings bonds of Series E, Series F, and
Series G, by denominations,, by fiscal years 1941 through -1944, and by
m o n t h s for t h e fiscal year 1944_ ..
.
Table 45. Sales of United States savings bonds of Series E a n d Series F
and G, by States, by calendar years and fiscal years from 1941, and by
months for t h e fiscal year 1944
_._•
Table 46. E x t e n t of participation in payroll savings plan for purchase of
United States savings bonds, by fiscal years 1942 through 1944 and by
m o n t h s for t h e fiscal year 1944
.
..

688
690
698

United States war savings stamps
Table 47. S u m m a r y of sales a n d redemptions of United States war savings
stamps, b y fiscal years 1941 t h r o u g h 1944, a n d by m o n t h s for t h e fiscal
year 1944
._
^
.._
Table 48. Sales of United States war savings starnps, by denominations..
by fiscal years 1941 through 1944, and by m o n t h s for t h e fiscal year 1944.
Table 49. Sales of United States war savings stamps, by States, by calendar
years a n d fiscal years from 1941, a n d by m o n t h s for t h e fiscal year 1944. _

699
700
701

Treasury notes—tax series and savings series
Table 50. Analysis-of sales a n d redemptions of Treasury notes, tax series
a n d savings series, b y series, b y fiscal years 1942 through 1944, a n d by
m o n t h s July 1943 through J u n e 1944
..
1.
Table 51. S u m m a r y of sales a n d redemptions of Treasury notes, tax series
a n d savings series, by series, by fiscal years 1942 through 1944, a n d by
m o n t h s for t h e fiscal.year 1944
...
.
Table 52. Sales of Treasury savings notes of Series C, by denominations,
by fiscal years 1943 a n d 1944, a n d by m o n t h s for t h e fiscal year 1944
Table 53. Sales of Treasury savings notes of Series C, by t y p e of purchasers, by fiscal years 1943 a n d 1944, a n d by nionths for t h e fiscal year
1944.
.
....
......
......

705
706
708
709

Interest on the public debt
Table 54. Interest on t h e public debt, payable, paid, a n d outstanding
unpaid, fiscal year 1944
.:
Table 55. Interest paid on t h e public debt, b y issues, fiscal years 1942
through 1 9 4 4 . . . . . . . . . . . . . . . . . .
....
Table 56. A m o u n t of interest-bearing debt outstanding, t h e computed
a n n u a l interest charge, a n d t h e computed r a t e of interest, a t t h e end
of t h e fiscal years 1916 through 1944 a n d a t t h e end of each m o n t h from
July 1943 to June'1944
.'..___.__.
Table 57. Interest paid on t h e securities issued or guaranteed by t h e
United States Government, classified b y t a x status, fiscal years 1913,
through 1944
.
...
..

710
710

713
714

Miscellaneous
Table 58. Contingent habilities of t h e United States, J u n e 30, 1944
Table 59. Contingent liabilities of t h e United States as of June- 30, 1935
through 1944
.
Table 60.. Amounts of guaranteed obhgations m a t u r e d or cahed, a n d
a m o u n t s redeemed, fiscal year. 1944
Table 6 1 . Average yield on long-term Treasury bonds, by months, J a n u a r y 1930 through J u n e 1944
Table 62. Prices and yields of public marketable securities issued or
guaranteed by t h e United States, J u n e 30, 1943, and J u n e 30, 1944, and
price ranges since dates of issue
.
C O N D I T I O N OF T H E T R E A S U R Y E X C L U S I V E OF P U B L I C
LIABILITIES

720
722
723
724

DEBT

Table 63. ' C u r r e n t assets a n d liabilities of t h e Treasury a t t h e close of t h e
fiscal years 1943 a n d 1 9 4 4 . . : . . . .
....
<
.._..__.?._




716

728

CONTENTS

XI
Page

Table 64. Balance in the General Fund of the Treasury at the end of each
month, fiscal year 1944
....
„.____
Table 65. Assets and liabilities of the exchange stabilization fund as of
June 30, 1943 and 1944.^__-.'..._
.
.
.
Table 66. Securities other than obligations of foreign governments owned
by the United States Government, June 30, 1944
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, 1 9 4 4 . . . . . : .
Table 68. Principal of the funded and unfunded indebtedness of foreign
governments to the United States, the accrued and unpaid interest
thereon, arid payments on account of principal and interest, as of
November 15 of each year from 1928 through 1944
._.•

729
730
732

734

735

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

Table 69! Adjusted service certificate fund, June 30, 1944. . . . .
Table 70. Ainsworth Library fund, Walter Reed General Hospital, June .
30, 1944
..
.
..
Table 71. Alaska Railroad retirement and disability fund, June 30, 1944.
Table 72. Canal Zone retirement and disability fund, June 30, 1944
Table 73. Civil service retirement and disabihty fund, June 30, 1944..
Table 74. District of Columbia teachers* retirement fund—Assets held
by the Treasury Department, June 30, 1944
. . . . . . v..
Table 75. District of Columbia water fund—Investments held by the
Treasury Department, June 30, 1944...
..
_.
Table 76. District of Columbia workmen's compensation fund:—Assets
held by the Treasury Department, June 30, 1944
..
....
Table 77. Federal old-age and survivors insurance trust fund, June 30,
1944.......
_......._...__
.
Table 78. Railroad retirement account, June 30, 1944.
.
. Table 79. Unemployment trust fund, June 30, 1944..
...
....
Table 80. Foreign service retirement and disability fund, June 30, 1944. .
Table 81. Library of Congress trust fund, June 30, 1944
i._...
Table 82. Longshoremen's and harbor workers' compensation fund—
Assets held by the Treasury Department, June 30, 1944
.
Table 83. National Archives gift fund, June 30, 1944
.
Table 84. National Cancer Institute gift fund, June 30, 1944
.
Table 85. National Institute of Health gift fund, June 30, 1 9 4 4 . . . .
Table 86. National park trust fund, June 30, 1944...
...1
Table 87. National service life insurance fund, June 30, 1944
..
Table 88. Pershing Hah Memorial fund, June 30, 1944
.........
Table 89. United States Government life insurance fund—Investments,
June 30, 1944......
.
_._.
.
.
Table 90. United States Naval Academy general gift fund
.-

736
737
737
738
739
740
742
742
743
744
745
747
748
751
751
752
753
754
755
756
757
757

GOVERNMENT CORPORATIONS AND CREDIT AGENCIES

Table 91. Combined statement of assets and liabilities of Government
corporations and credit agencies, June 30, 1944
Table 92. Proprietary interest of the United States in Government corporations and credit agencies, June 30, 1933 through 1944
Table 93. Sources of funds of certain Government corporations and credit
agencies, fiscal year 1944 and cumulative through June 30, 1944
..
Table 94. Uses of funds of certain Governmeiit corporations and credit
agencies, fiscal year 1944 and cumulative through June 30, 1944




758
768
770
772

XII

CONTENTS
-

STOCK AND C I R C U L A T I O N OF M O N E Y I N T H E U N I T E D S T A T E S
.
.

P^age

Table 95. Stock of money, money in t h e Treasury, in t h e Federal Reserve
Banks, and in circulation, by kinds, J u n e 30, 1944.
Table 96. Stock of money, money in t h e Treasury, in t h e Federal Reserve
Banks, and in circulation, June 30, 1913 through 1944
Table 97. Stock of money, by kinds, J u n e 30, 1913 through 1944.
Table 98. Money in circulation, by kinds, J u n e 30> 1913 through 1944

774
775
776
777

O W N E R S H I P OF G O V E R N M E N T A L S E C U R I T I E S

Table 99. Summary d a t a from Treasury survey of the ownership of securities issued or.guarariteed by t h e United S t a t e s . . _ . . . . _ . _ . _ . .
1_.
, Table 100. E s t i m a t e d ownership of all interest-bearing governmental
securities outstanding, classified by issuer, J u n e 30,- 1937. through 1944_
Table 101. E s t i m a t e d a m o u n t of interest-bearing securities issued by ah
governmental units in t h e United States outstanding on J u n e 30, 1944,
classified by tax status and by t y p e of issuer
.
Table 102. Estimated a m o u n t of interest-bearing securities issued by all
governmental units in the United States outstanding on June 30, 1913
through 1944, classified by tax status and by t y p e of issuer.
.
•

CUSTOMS STATISTICS

778
798
800
802

<

Table 103. Values of dutiable and taxable imports for consumption and
estimated duties and taxes collected by tariff schedules, fiscal years
,1942 and 1943.
.:
__.__
____.
_.._._..__
812
Table 104. Estimated, customs duties, value of'imports entered for consumption, and ratio of duties to value of dutiable imports and to value of
all imports, calendar years 1934 through 1943 a n d by months from J a n - •
uary 1941 through December 1943___
-___
813
Table 105. Estimated ciistoms duties, value Of dutiable imports, and ratio
of estimated duties to value of dutiable imports, by tariff schedules, for
the calendar years 1934 through 1943 and by m o n t h s frqm J a n u a r y 1941
.- through December 1943. — . i
. 814
Table 106. Value of dutiable imports for consumption a n d estimated
duties collected, by countries, fiscal years 1942, 1943, a n d 1944
820
.

.

MISCELLANEOUS

Table 107. N e t expenditures for Federal aid to States, individuals, etc.
(exclusive of emergency appropriations from which grants are made to
\ States), fiscalyears 1920, 1930, 1940, and 1 9 4 4 _ _ . . _ _ _ : .
_._
- T a b l e 108. Expenditures m a d e by t h e Government as direct p a y m e n t s to
States under cooperative arrangements and expenditures w i t h i n
States which provided relief and other aid, fiscal year 1 9 4 4 . . . .
..
Table 109. N u m b e r and a m o u n t of awards of the Mixed Claims Commission, United States and Germany, certified t o t h e Secretary of t h e Treasury by t h e Secretary of State a n d t h e a m o u n t paid and balance.due, by
classes, as of September 30, 1944
.
Table 110. Transactions in commodity stamps, fiscal years 1939 through
1944 a n d monthly from J u l y 1943 through June 1944
..__.._____

821
825

833
836

BUDGET ESTIMATES

Table 111. Detailed receipts a n d expenditures of general a n d special accounts, actual for the fiscal year 1944 and estimated for the fiscal years
1945 a n d 1946
..
.
...___.
.....___
Table 112. Detailed receipts and expenditures of t r u s t accounts, a c t u a l fort h e fiscal year 1944 and estimated for t h e fiscal years 1945 and 1946
Table 113. Summary of cash operations of t h e United States Treasury,
actual for t h e fiscal year 1944 and estimated for the fiscal years 1945
and 1946
.
Index
.




837
861
877
879

SECRETARIES, UNDER SECRETARIES, AND ASSISTANT SECRETARIES
OF THE TREASURY DEPARTMENT FROM MARCH 4, 1933, TO NOVEMBER 15, 1944 1 AND THE PRESIDENT UNDER WHOM THEY SERVED
Term of service
• Official
. From—

Mar. 4,1933
Jan. 1,1934

Dec. 31,1933

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

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

Nov. 16,1933
Dec. 31,1933
Feb. 15,1936

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

Sept. 15,1938
Dec. 31,1939

Dean G. Acheson, Maryland
Henry Morgenthau, Jr., New York.
Thomas Jefferson Coolidge, Massachusetts.
Roswell Magill, New York '
John W. Hanes, North Carolina. _
Daniel W. Bell, Illinois

Apr.
June
June
Dec.
Feb.
July
June
Jan.

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

Secretary of the Treasury

President

ToSecretary of the Treasury
•

Roosevelt.
Roosevelt.

Under Secretaries
Woodin
Woodin
Morgenthau
Morgenthau
Morgenthau
Morgenthau _

.

. . Roosevelt.
• Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt.
. . Roosevelt.

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

15,1936
30,1939
12,1933
1,1937
28,1939
31,1938

Lawrence W. Robert, Jr., Georgia. .
Stephen B. Gibbons,.New Y o r k . . .
Thomas Hewes, Connecticut
Josephine Roche, Colorado
Wayne C. Taylor, Illinois
John W. Hanes, North Carolina. _Herbert E. Gaston, New York
John L. Sullivan, New Hanipshire..

Woodin, Moigenthau...
Woodin, Morgenthau..Woodin
Morgenthau
Morgenthau
Morgenthau
Morgenthau. _...
..
Morgenthau. _ . . . .

1

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

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




PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS OF- THE
TREASURY DEPARTMENT AS^OF NOVEMBER 15, 1944
OFFICE OF T H E SECRETARY
Henry Morgenthau, Jr
Daniel W. Bell
Herbert E. Gaston
John L. Sullivan
:
(Vacant)
.___'
Harry D. White
Ted R. Gamble.
.._
Ernest L. Olrich..
J o h n W . Pehle..

_

_

_

_..

Henrietta S. Klotz
Charles S. BelL
Charles R. Schoeneman
Paul McDonald..
Theodore F. Wilson
* Elmer L. Irey
Chas. P. Shaeffer
William T. Heffelfinger
Edward D. Batchelder.. J:
Frank F. Dietrich
Walter F. Frese
Francis C. Rose.
F. A. Birgfeld
Denzil A. Right
Gabrielle E. Forbush

Secretary of the Treasury.
Under Secretary of the Treasury.
Assistant Secretary ofthe Treasury.
Assistant Secretary of the Treasury.
Fiscal Assistant Secretary of the Treasury.
Assistant to the Secretary.
• Assistant to the Secretary.
_
Assistant to the Secretary.
Assistant to the Secretary (and Executive Director, War Refugee Board).
Special Assistant to the Secretary.
Administrative Assistant to the Secretary.
Technical Assistant to the Secretary and Budget Officer.
Assistant Administrative Assistant to the Secretary.
Director of Personnel.
Chief Coordinator, Treasury Enforcement Agencies.
Director of Public Relations.
Assistant to the Under Secretary.
.__ Executive Assistant to the Fiscal Assistant Secretary.
Executive Assistant to the Fiscal Assistant Secretary.
Executive Assistant to the Fiscal Assistant Secretary.
Executive Assistant to Assistant Secretary.
Chief Clerk.
Superintendent of Treasury Buildings.
Chief, Secretary's Correspondence Division.

OFFICE OF T H E ' G E N E R A L COUNSEL
Joseph J. O'Connell, Jr
N. (5. Tietjens.
Thornas J. Lynch
Ansel F. Luxford
Charles Oliphant.
Josiah E. Du Bois
Lehman C. Aarons...
David J. Speck.
_.
Lawrence S. Lesser
John P. Wenchel
_.
Robert Chambers.
Theodore W. Cunningham
Isadore G. Alk
Alfred L.> Tennyson.

=

'.

General Counsel.
Assistant General Counsel.
Assistant 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.
Chief Counsel, Bureau ofthe Public Debt.
Acting Chief (Jounsel, Foreign Funds Control.
. . Chief Counsel, Bureau of Narcotics.

'

DIVISION OF RESEARCH AND STATISTICS
George C. Haas..
K>Henry C. Murphy
, Al F. O'Donnell
Russell R. Reagh
Anna M. Michener
Eldon B. Smith
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.
DIVISION OF MONETARY RESEARCH

Harry D. White
Harold Glasser
Edward M. Bernstein...
Norman T. Nessl
William H. Taylor

."

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

DIVISION OE TAX RESEARCH
Roy Blough

Director of Tax Research.

Louis Shere

Assistant Director.
OFFICE OF T H E TAX LEGISLATIVE COUNSEL

Robert W. Wales
Frederick C. LuskI
XIV
'*'




Tax Legislative Counsel.
Assistant Tax Legislative Counsel.

^

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS

XV

FOREIGN FUNDS CONTROL
Orvis A. Schmidt
Jack Bennett

.._ Acting Director, Foreign Funds Control.
Chief of Licensing Division and Chief of Statistics and Reporting Division.
Chief of Enforcement Division.
Acting Executive Officer (Administrative Services).

_..'..

Rella R. Shwartz.
Robert R. Evans

WAR FINANCE DIVISION
Ted R. Gamble...
Robert W. Coyne.:
Charles W. Adams
Thomas H. Lane
.
James L. Houghteling..'.
Mabelle B. Blake

.-

. . . 1 National Director.
Assistant National Director.
Assistant to the National Director.
. Director, Radio, Press, and Advertising Division.
Director, National Organizations Division.
Associate Field Director, Women's Activities.

BUREAU OF ACCOUNTS (IN T H E FISCAL SERVICE)
. Edward.F. B a r t e l t . . . . :
Robert W. Maxwell
Joseph Greenberg
Gilbert L. Cake
Stephen P. Gerardi
Guy F. Allen
Joseph A. Woodson
B.M.Mulvihill..
Harry R. Schwalm
Eugene P. O'Daniel

.
.
.-.
•.

• Commissioner of Accounts.
_
. . . . Assistant Commissioner of Accounts.
Assistant Commissioner of Accounts.
Chief Accountant.
'
" .
^
1 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 T H E PUBLIC D E B T (IN T H E FISCAL SERVICE)
William S. Broughton
Edwin L. Kilby
Ross A. Heffelfinger
H. F. Ziegenfus.
Eugene W. Sloan...
Edward G. Dolan...
Byrd Leavell
Marvin Wesley
Melvin R. Loafman
Maurice A. Emerson
Lemuel W. Owen

.

.
..i

.
.

Commissioner of the Public Debt.
Associate Commissioner of the Public Debt.
Deputy Commissioner of the Public Debt.
Technical Assistant to the Commissioner.
"
^
Deputy Commissioner in Charge, Chicago Offi'ce.
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 Custody.
Chief, Division of Savings Bonds.

OFFICE OF T H E TREASURER OF T H E U N I T E D STATES (IN T H E FISCAL SERVICE)
William A. Julian..
Marion Banister...
Michael E. Slindee.
Frederick L. Church
Grover C. Emerson
Bernard A. Hayden

Treasurer of the United States.
Assistant Treasurer.
Assistant to the Treasurer.
Administrative Assistant to the Treasurer.
Staff Assistant to the Treasurer.
Chief, Administrative Division.

"

BUREAU OF ENGRAVING AND P R I N T I N G
Alvin W. Hall
Clark R. Long
Thomas F. Slattery

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

.

BUREAU OF THE COMPTROLLER OF THE CURRENCY
Preston Delano
Cyril B. Upham
R. B. McCandless
J. L. Robertson
W. P. Folger

:.:

..i

.1.
•
_

.
-

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

Comptroller of the Currency.
Deputy Comptroller.
Deputy Comptroller. s«^ "
Deputy Comptroller.
Chief National Bank Examiner.
BUREAU OF NARCOTICS
Commissioner of Narcotics.
Deputy Commissioner of Narcotics.
Assistant to the Commissioner.

. BUREAU OF INTERNAL REVENUE
Joseph D. Nunan, J r . . . ,
Harold N . Graves
George J. Schoeneman
Eldon P. King.
Norman D. Cann
Victor H. Self
D. Spencer Bliss..
Stewart Berkshire
Archie D. Burford
A. R. Marrs
W. H. Woolf
:




Commissioner of Internal Revenue.
. . . Assistant Commissioner.
Assistant Commissioner.
Special Deputy Commissioner.
Deputy Commissioner.
Deputy Commissioner.
. . . Deputy Commissioner.
Deputy Commissioner.
Deputy Commissioner.
Head, Technical Staff.
Chief, Intelligence Unit.

.

'

XVI

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
BUREAU OF CUSTOMS

W. R.Johnson
Frank Dow
E. J. Shamhart
A.S.Johnson
• Glenn H. Griffith

Commissioner of Customs. .
Assistant Commissioner of (Customs.
Deputy Commissioner.
Deputy Commissioner.
Acting Deputy Commissioner.
BUREAU OF T H E MINT

Nellie Tayloe Ross....
Leland Howard

.•

Director of the Mint.
Assistant Director.
P R O C U R E M E N T DIVISION
OFFICE OF SURPLUS PROPERTY

Ernest L. Olrich....
R.C.Duncan..-.
F. W. Atcheson...
A. W. Frey

Assistant to the Secretary (Director of Surplus Property).
Deputy Director, Sales and Merchandising.
Deputy Director, Operations.
Deputy Director, Trade Relations, Research, and Publicity.
OFFICE OF PROCUREMENT

Clifton E. Mack
Aloysius J. Walsh.
Paul King...
George Landick, Jr
Robert LeFewe
S. A. Snyder
Norman F. Harriman

i...

Director of Procurement.
Deputy Director, Operations.
Acting Deputy Director, Management.
Assistant to the Director.
Assistant to the Director.
Assistant to the Director.
Technical Assistant to the Director.
U N I T E D STATES SECRET SERVICE

Frank J. Wilson
James J. Maloney
Laurence E. Albert
.•
Walter S. B o w e n . . . . . .
Michael F. Reilly
.

Chief, United States Secret Service.
Assistant Chief.
Assistant to the Chief.
Chief Clerk.
Supervising Agent (White House Detail).
STANDING D E P A R T M E N T A L 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 (Budget Officer) Chairman.
F. A. Birgfeld, Vice Chairman.

Charles S. Bell.
T. F. Wilson.

M. E. Slindee.

Gieorge H. Jones.
• .

Guy C. Hanna, Chairman.
Hessel E. Yntema.
Huntington Cairns.
T.F.Wilson
CharlesR. Schoeneman....
Elmer L. Irey




C O M M I T T E E ON. PRACTICE
George E. Cleary.
Allison Rupert, Attorney for the Government
WAGE BOARD
. . . . . . . . . . . . Chairman.
Member.
.-..Member.

.

•
.

ANNUAL REPORT ON THE FINANCES
TREASURY

DEPARTMENT,

Washington, D. C , January 3, WJfd.
SIR: I have the honor to make the following report on the finances
of the Federal Government for the fiscal year ended June 30, 1944.
From the commencement of the national defense program in 1940
to the end of the fiscal year 1943, the Federal Government's expenditures for war purposes and its reiceipts each advanced steadily and
rapidly. Expenditures for peacetime purposes declined substantially,
expressed as a percentage of their former level; but this contraction
-was small in amount compared with the huge totals of wartime outlays
and taxation.
By the begmning of the fiscal year.i944, ithe annual rate of warexpenditures had nearly stabilized, as the Nation approached its
effective production potential and this stability" is likely to continue
at least through the fiscal year 1945.
The annual rate of Federal receipts during the fiscal year 1944
covered somewhat less than half of total expenditures, and it appears
that approximately the same relationship will obtain during the fiscal
year 1945.
I said in my report last year, and I still believe, that it would be
better for the econoniy of the United States and fairer to the men in
the armed forces if a larger portion of the current cost of the war
were paid for by taxation. Congress has decided otherwise, however;
and there appears to be little likelihood of a substantial upward revision in our tax system during the continuance of the present conflict.
I believe that the time is opportune, therefore, to review the impact of
the wartime fiscal operations of the Federal Government on the national economy, and to consider, in broad outline, some of the steps
which should be taken to adjust these operations to the new conditions
which will prevail when victory is finally achieved.
The following table summarizes the receipts and expenditures of
the Federal Government for the fiscal- years 1940 through 1945. .
fi

•

613185—45-




.

•

•

1

..

.••

REPORT OF T H E SECRETARY. OF T H E TREASURY
Summary of Federal finances, fiscal years 1940 through 1945 *
[In billions of dollars]
1940

1941

1942

1943

1944

1945

Item
Actual
.\. E.xpenditures:
1. W a r :
a. B u d g e t a r y
b. Government corporations'

1.7

88.0
1.0

.6.3
.4

26.0
2.3

72.1
3.2

87.0

1.7

6.7

,28.3

75.3

89.7

89.0

1.0

1.1

1.3

1.8

2.6

3.8

.1
.6
5.7
.3

.1
.6
4.6
.7

.1
.6
4.5
-.4

.1
.6
3.6
-1.7

' .3

2.2
1.3
3.7
-.2

_

c. T o t a l
2. O th e r :
a. I n t e r e s t on t h e p u b l i c d e b t
b . Refunds of taxes a n d customs, including excess profits tax refund
bonds
c. V e t e r a n s ' pensions a n d b e n e f i t s . . .
d. O t h e r b u d g e t a r y expenditures
e. G o v e r n m e n t corporations ^
f T o t a l •.

2.7 I

3.1
-1.2

7.6

.

7.1

5.9

4.4

5.6

10.7

9.3
5.4

3. T o t a l e x p e n d i t u r e s . ."
B . Receipts*
C . Excess of e x p e n d i t u r e s . .

Estimated

13.8
7.6

34.2
12.8

79.7^
22.3

95.3
44.1

99 7
45.7

3.9

6.2

21.4

57.4

51.1

54.0

NOTE.—Figures are rounded and will not necessarily add to totals.
,.
> Figures are on the basis of classifications appearing in the 1946 Budget Message. They include net expenditures of Government corporations and the totals are not, therefore, the same as the figures in certain
; other tables in this report. They exclude statutory debt retirements and trust funds.
2 Includes only Treasury outlays for the war activities of the Reconstruction Finance Corporation and its
affiliates. Figures are excess of expenditures over receipts.
3 Comprises principally Treasury outlays for Commodity Credit Corporation, Home Owners' Loan
Corporation, and nonwar activities of Reconstruction Finance Corporation arid its affiliates. Figures are
excess of expenditures over receipts. Negative figures indicate excess of receipts.
* Net budgetary receipts, i. e., total receipts less net appropriation to Federal old-age and survivors insurance trust fund.
^
^

The figures on expenditures shown in the table include both budgetary expenditures and net outlays made by the Treasury for the
operation of Government corporations. The figures for the fiscal
years 1940 through 1944 reflect actual results. Those for the fiscal
year 1945 are the estimates presented in the Budget Message of the
President.
The table shows that Federal. Government expenditures for war
purposes rose rapidly from $1.7 billions in the fiscal year 1940, the
last fiscal year before the beginning of the national defense program,
to $89.7 billions in the fiscal year 1944. For the fiscal year 1945,
war expenditures are estimated to remain almost unchanged at $89.0
billions.
\
Net receipts advanced from $5.4 billions in the fiscal year 1940 to
$44.1 billions in the fiscal year 1944, and are estimated to remain
almost unchanged at $45.7 billions for the fiscal year ,1945.
The excess of expenditures over receipts amounted to $51.1 billions
for the fiscal year 1944, and* is estimated at $54.0 billions for the
fiscal year 1945. This excess of expenditures had been as high as
$57.4 billions in the fiscal year 1943, however.
"
A rough measure of the impact of Federal fiscal operations on the
national economy may be made by relating expenditures and receipts



REPORT OF THE' SECRETARY OF THE TREASURY
to the total production of goods and services, known as the gross
national product.^ This is done in the following table.
Proportion of gross national product represented by expenditures, receipts, and excess
of expenditures of the Federal Government, fiscal years 1940 through 1945
Proportion represented b y Gross national
product (in
Federal
Excess of exbillions)
Federal expenditures
penditures
receipts

Fiscal year

1940
1941
1942
1943
1944
1945

L-.-i

:
-

..-_

$93
106
134
172
194
, 198

Percent

10
13
26
, 46
49
60

Percent

6
7
10
13
23
23

Percent
4
6
16
33
26
27

The gross national product has tended to stabilize at about $200
billions, apparently reflecting the approach to our effective wartime
productive capacity. I t is estimated- that Federal expenditures
during the fiscal year 1945 will be about 50 percent of the gross national
product. Federal receipts will amount to about 23 percent of the
product; and the excess of expenditures, to about 27 percent. These
proportions are approximately the sahae as in the fiscal year 1944.
An excess of Federal Government expenditures over Federal Government receipts, amounting to 27 percent of the gross national product,
means that an amount of income corresponding to that proportion of
the gross product is paid out, which the recipients may spend or save
as they choose; but that the earning of this income gives rise to no
corresponding flow of civilian goods and 'services upon which it can be
spent. A corresponding proportion of the total income flow created
by the gross national product must, therefore, be saved by the people
if a rise in prices is to be averted.
The experience of the past three years has shown us that, with the
aid of appropriate controls, and thanks to the common sense of the
American people, this higher rate ©f savings can be attained in fact,
and economic stabilization thereby achieved. I believe that, with
suitable controls, and with the continued cooperation of the people
with the stabilization program, inflation can and will be avoided
throughout the rest of the war period and during the post-war
adjustment.
Factors in the stabilization'program
Federal receipts from taxation have increased eightfold since 1940.
The major proportion of the reruaining excess money incomes that
might otherwise have exerted an inflationary pressure has been invested in war bonds, or retained unspent as liquid savings. And the
1 Federal Governinent receipts and expenditures are not strictly comparable with gross national product
estimates without certain technical adjustments. These adjustments, however, are sufficiently small,
for the period covered, to permit them to be omitted in this discussion. See section on Sources of Funds
for Federal Borrowing, which begins on p. 79, for further discussion of the relationship of Federal fiscal.^
operations to the rest of the economy.




REPORT QF T H E SECRETARY OF T H E TREASURY

direct controls over consumption and prices—rationing, allocations,
price ceilings, etc.—have prevented the cumulation of cost and price^
increases. While the removal of purchasing power from the market
by wartime taxes and savings campaigns has contributed greatly to
the success of the direct controls, the direct controls/at the same time
have facilitated and strengthened the effectiveness of the taxation and
savings programs. In short, the wartime level of taxes, the war loans
and other savings campaigns and the direct controls have formed an
interrelated program, each part of which has been essential to the
whole.
^
The following table shows the increase in the gross public debt
and guaranteed obligations during each of the fiscal years 1940 through
1944, the amount of this increase held unspent in the General Fund of
the Treasury, and the amount absorbed by nonbank investors, respectively. The remainder of the debt increase, after making the deductions just referred to, represents funds borrowed directly or indirectly
from the banking system and actually spent by the Government
during the period. This includes the entire portion of the expenditures
of the Federal Government which resulted in the creation of currency,
and deposits in commercial banks (including time deposits) during
each period. As shown in the table. Federal expenditures resulting
in an increase in currency and deposits amounted to 7 percent of the
gross national product in the fiscal year 1944, as compared with 14
percent in the preceding year. This sharp fall was caused in part,
however,'by the fact that two complete war loan drives and the major
portion of a third fell within the fiscal year 1944, with the result that
the proportion of nonbank absorption of the debt in that year was
higher than it would have beencOtherwise.
Comparison, with the gross national product, of the portion of the increase in the
Federal debt which resulted in the creation of bank deposits and currency in the
hands of ihe public
[Dollars in billions]
Fiscal year
1940
Gross national product .

.

• 1941

$93

$106

1942
$134

1943

1944

$172 •

$194

Increase in gross public debt and guaranteed obligations...-...
Less increase in General Fund balance . . . '

2.6
-.9

6.8
.7

21.7
.4

63.8
6.5

61.8
10.7

Expended portion of increase in public debt and guaranteed
obligations
Less net absorption of debt by nonbank investors ».

3.6
1.9

6.1
3.6

21.3
14.8

57.3
3.2.5

51.2
38.0

Debt which resulted in an increase in commercial bank deposits or currency in the hands of the public ^

1.7

2.5

6.5

24.8

13.2

Percent of gross national product

2%

2%

5%

14%

7%

NOTE.—Figures are rounded and will not necessarily add to totals.
1 Interest-bearing debt absorbed by nonbank investors, as shown by the table on page 91, plus the entire increase in United States savings stamps, excess profits tax refund bonds, and matured debt.
»Interest-bearing debt absorbed by commercial and Federal Reserve Banks, as shown in the table on
page 91, plus the increase in dep<psits in the Treasury for the retirement of Federal Reserve Bank notes
and national bank notes, less the increase in the (General Fund balance in the Treasury.




REPORT OF THE SECRETARY .OF THE TREASURY

5

By no means all of the increase in the debt absorbed by the banking
system has contributed to net inflationary pressure. A large increase in currency and bank deposits was required by the doubling of
the gross national product which tooj^ place during the period; and
this necessary increase in money supply could be furnished, under
existing statutes, only by a' substantial absorption of debt by the
banking system. Also, individuals'and corporations paid back substantial amounts of debt, including debt held by the banking system,
oft'setting in part the increase in commercial bank holdings of Government securities; and increased their savings deposits in commercial
banks substantially during the period. In the case of many business
enterprises, the proceeds of inventory liquidation and depreciation are
held in the form of deposits to facilitate reinvestment in the post-war
period. Furthermore, experience has shown that a large proportion
of the demand deposits and currency accumulated by individuals and
corporations during this period has been regarded by its owners as
part of their permanent savings and has not entered into active circulation for the purchase of goods, and services.
Tax^'policy
Our wartime tax policy has been to adapt the tax structure to
achieve important wartime objectives.
Through heavy wartime taxes a large part of the financial cost of
the war is being paid currently by wartiriie civilians instead of being
deferred to be met by returning service men and women. The large
revenue c()llections during the war are restricting the growth of the
debt, thereby moderating post-war fiscal and economic problems. By
channeling billions of dollars of spending^ power into the Treasury,
wartime taxes are strongly buttressing the program of economic
stabilization. Civilian demands are thereby made more controllable
and the strain is eased on direct controls, such as priorities, rationing,
wage ceilings, and price ceilings. High taxes on war profits and on
large incomes, moreover, have helped to gain popular acceptance of
'the stabilization program.
The eightfold increase in tax yields has been accomplished in successive stages, thus minimizing shock to the economic system. Moreover, standards of equity in taxation have not been sacrificed. The
test of taxation according to ability to pay has been met through
heavy reliance on progressive taxes, through special relief provisions
to alleviate hardships, and through continued efforts to close avenues
of escape' from just taxation. The budgeting and payment of taxes
have been made more convenient through the introduction of withholding and current payment methods. Individual income tax returns and compliance have been greatly simplified.




6

REPORT OF THE SECRETARY OF THE TREASURY

Wartime taxes must continue as long as war conditions require.
For the post-war period, however, the tax system must be readjusted
to the then existing fiscal and economic needs. A strong tax system
must, be maintained, for post-war expenditures will be far higher than
pre-war expenditures and we should plan to reduce the debt as rapidly
as economic considerations permit. But selective .tax reductions and
adjustments will be needed to encourage private expenditures for
consumption and investment. Such measures are essential to the
realization of full employment in a peacetime economy of free enterprise and competition.
Timing the changes from the wartime tax structure to the post-war
tax structure will present an important and difficalt problem. Little,
if any, reduction in tax rates should be anticipated until after the
cessation of major hostilities on all fronts. An important factor affecting timing of downward adjustments is whether the transition and
immediate post-war periods will involve continued inflationary pressures and, if so, at what point of time these will disappear. The
premature relaxation of our efforts on the tax front might jeopardize
the continuing success of the economic stabihzation program. On the
other hand, too great delay in adjusting the tax structure and rates
might jeopardize the post-war maintenance of high levels of employment and business activity.
The problem of adjusting taxes to match the shift of emphasis from
wartime objectives to post-war objectives will require foresight and
coordinated action. The Treasury has been cooperating with other
executive departments and agencies and with the Congressional Joint
Committee on Internal Revenue Taxation in the study of tax adjustments for the transition and post-war periods.
^

Debt management

.. I t is certain that the present war will leave the United States with a
large public debt. There is no question of the ability of the country to
service this debt. As the tables on pages 2 and 3 indicate, estimated
expenditures on account of interest on the debt, for the fiscal year
ending June 30, 1945, amount to less than 2 percent of the anticipated
gross national product for the same period: Production will probably
be at a lower level, and the debt will certainly be somewhat larger after
the war than now. The interest charge will thus represent a larger
proportion of the national product; but it will still be a relatively small
proportion. The payment of interest on the debt, furthermore, does
not decrease the amount of the gross national product available for
consumption or capital expansion. I t is a transfer operation by which
the amount of the interest is collected from taxpayers and paid to th^
holders of the debt, who are also numbered among the taxpayers,.




REPORT OF THE SECRETARY OF THE TREASURIT

7

The burden of the debt, therefore, consists of the necessity of collecting a large amount of money from some persons and repaying it to
others, and of the possible adverse economic effects of the resulting
redistribution of income upon the amount of the national product.
This burden is a real one, however, and it should be a major object of
fiscal policy in the post-war period to reduce the amount of the debt
in so far as this is compatible with the maintenance of full employment.
All borrowing during the wartime period has been by the issuance of
securities, the interest on which is subject to the Federal income tax.
The exclusive issuance of such securities, which is now a permanent
part of our public debt policy, has been achieved without any substantial increase in the interest rates on Federal securities above the
rates which it would have been necessary to pay on tax-exempt securities. The taxability of the interest on the wartime debt will both
ease the problem of public debt management in the post-war period
and make possible a more equitable and better balanced Federal
tax system.
The low level of interest rates on the public debt (the computed interest rate on June 30, 1944, /was 1.93 percent) lightens the burden
of the debt and will tend to simplify debt management in the post-war
period. Moreover, the fundamental factors underlying interest rates
on Government securities, which apply also to interest rates in other
fields, give/no indication of a change in the direction of a higher level
of rates in the foreseeable future. Continued low interest rates will
be a major contribution to economic stability and the maintenance of
full employment after the war, for low, interest rates stimulate business
and encourage new enterprise.
Borrowing during the war period has been carried on with a constant
eye to the transitional and post-war effects of the types of securities
offered and the classes of investors appealed to. The Treasury has so
diversified its offerings of securities as to provide a security aciapted
to the requirements of each major class of investors. Long-term
marketable bonds have been sold principally to insurance companies
and savings banks. Commercial banks have been offered more hquid
marketable obligations having terms of 10 years or less. One-year
certificates of indebtedness, and Treasury savings notes having a
maturity of three years, but redeemable at the owners' option after
six inonths, have been especially attractive for the investment of
temporary accumulations of business concerns. The principal emphasis in sales of securities to individuals has been upon Series E
savings bonds, which have a maturity of ten years, but which are
redeemable at the owners' demand after 60 days.
In offering securities to different classes of investors, the Treasury
has always borne in mind the fact that the time which the original
purchaser of a security will hold it will depend, principally, upon his



8

/REPORT OF THE SECRETARY OF THE TREASURY

own future needs and convenience, and to a very minor extent upon
the nominal maturity of the security. The indiscriminate issuance
of long-term securities to all classes of investors would not insure
their being held to maturity by their original purchasers, but would
result merely in premature market liquidation. The adaptation of
the securities offered to the particular needs of different classes of
investors, taken in conjunction with appropriate open market policy,
obviates the possibility of a disorderly liquidation of securities through
the market, such as might have occurred had a single type of marketable security been issued to all. Such liquidation as is inevitable.in
the post-war period will take the form principally of the redemption
of securities by the Treasury, either at maturity or at the owners'
demand, rather than by sale in the open market. The refinancing of
these obligations, to the extent that a net reduction in the outstanding debt is not possible, can be conducted in an orderly manner by
the sale of new Treasury securities adapted to market conditions at
the time. Thus one factor of economic instability, the demoralization of the security markets, will be eliminated.
Smooth transition to a peacetime economy will be promoted by
the distribution of public debt securities of different types among
various classes of investors. Corporations which have invested their
reserves for reconversion and post-war. expansion in certificates of
indebtedness and Treasury savings-notes suffer no impairment in the
liquidity of their reserves by such investment. After the war they
may sell or allow their holdings of certificates to run off and may
present their savings notes for redemption without loss of principal.
The composition of the public debt will also contribute to economic
stability by releasing purchasing power when the stimulus of increased
spending is needed. - Although individuals will probably not liquidate
their savings bond investments on a large scale in the post-war period,
they are likely to spend more freely of their current incomes because
of the sense of security afforded by their savings bond holdings.
.The distribution of savings bonds among many individuals in the
relatively* low income groups will enhance the contribution of such
spending to the maintenance of economic stability.
The same circumstances which have made it advisable to concentrate a large proportion of the wartime debt in securities of short
maturity will continue in time of peace. The contribution which such
a structure of the' public debt furnishes to the liquidity of the whole
economy will be an important factor in the maintenance of full employment in the post-war period. The funding of a major portion of the
short-term debt into longer-term securities, on the other hand, would
serve merely to increase the interest cost to the Government and to
shift the risk of future changes in interest rates (and corresponding
movements, in the opposite direction, of bond prices) from the



REPORT OF THE SECRETARY OF THE TREASURY

9

Government to private investors. Such a policy would increase,
rather than reduce,, the factors maldng for.instability in the post-war
economy, as the Government is in a better position to bear the risk
of changes in interest rates than most classes of investors, and—unlike,
any class of investors—is also in a position to minimize it. I see no
need, therefore, for any largcrscale refunding of short-term Government securities into long-term ones during the transition or post-war
periods.
International monetary and jinancial cooperation
iDuring the past year further steps have been taken to assure cooperation among the United Nations in dealing with international monetary and financial problems after the war.
For more than a decade we have tried to secure currency stabilization through cooperation with friendly governments. In 1936 we
joined with England and France in the Tri-Partite Declaration, td
which Belgium, the Netherlands, and Switzerland adhered, to maintain stable exchange arrangements and to consult on important exchange problems. The Treasury also entered into bilateral stabilization agreements with a number of American Republics and other
friendly countries. These measures, while helpful, were not adequate
to assure stable exchanges in a world of restriction and economic
aggression.
.:
On the basis of this experience the Treasury came to the conclusion
that international monetary and financial problems could be dealt
with only by broad cooperation among all countries. After extended
study by the Treasury, with the cooperation of other departments of
this Government, tentative proposals were formulated for an international stabilization fund and an international bank. In 1943,
drafts of these proposals were sent to the Ministers of Finance of the
United Nations for consideration by their technical experts. After
a year of discussion among the technical representatives of some thirty
countries, a joint statement was published recomniending an internatic)nal monetary fund. In May 1944, President Roosevelt called
the United Nations Monetary and Financial Conference which was
held at Bretton Woods, N. H., in July. The Conference prepared
articles of agreement for an international monetary fund and an
international bank for reconstruction and development for submission
to the participating governments.
World prosperity and world peace will depend in large measure upon
the existence of a high level of.balanced international trade in the
post-war pejiod. All nations are economically dependent upon one
another, both as consumers and as producers. With stable and
orderly exchanges world trade can be increased. Productive foreign
investments will make possible reconstruction of the war-torn areas



10

REPORT OF THE SECRETARY OF THE TREASURY

of Europe and Asia, and the development of new countries. As one
of the leading foreign trading countries of the world, we have a special
interest in these measures for international monetary and financial
cooperation which will facilitate the revival and growth of world trade.
The United Nations have shown that they regard international
monetary and financial problems as an international responsibility
that cah be dealt with by cooperation through the fund and the bank.
'By providing stable and orderly exchange arrangements and encouraging productive international investment, the fund and the bank will
make possible the balanced growth of international trade. Together,
they can help provide a sound foundation for a prosperous and
peaceful world.
There follows a detailed discussion of receipts and expenditures,
public debt operations, taxation and monetary developments, and
other Treasury operations during the fiscal year.
RECEIPTS IN GENERAL AND SPECIAL ACCOUNTS

Total receipts of the Federal Government in general and special
accounts amounted to $„45.4 billions during the fiscal yea;r 1944. Niet
receipts, which consist of total receipts less the net appropriation for
the Federal old-age and survivors insurance trust fund, amounted to
$44.1 billions. Total receipts were nearly twice the amount received
in 1943, nearly three and one-half times those in 1942, and five and
one-half times those in 1941. A comparison of annual total and net
receipts, beginning with 1941, is shown in the following table.
Receipts, fiscal years 1941 through 1944
[Dollars in billions.

Income and excess
profits taxes

Year

On basis of daily Treasury statements, see p. 519]

All other

Total receipts

Net appropriation iX)
Federal oldNetreage and survivors insur- - ceipts
ance trust
fund 1

Aimount

Total

Amount

Percent

Amount

Percent

'...

1941
1942
1943
1944

Percent

., $3.5
8.0
16.1
34.7

42.0
58.2
68.8
76.3

$4.8
• 5.7
7.3
10.8

58.0
41.8
31.2
23.7

$8'. 3
13.7
23.4
45.4

100.0
100.0
100.0
100.0

$0.7
.9
1.1
1.3

.

62.2

68.5

28.6

31.5

90.7

100.0

3.9

Amount

Amount

'

$7.6
12.8
22.3
44.1
'86.8

NOTE.—Figures are rounded ahd will not necessarily add to totals.
1 Represents appropriations equal to "Social security taxes—Federal Insurance Contributions Act"
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.




REPORT OF THE SECRETARY OF THE TREASURY

11

RECEIPTS.^ CLASSIFIED BY MAJOR SOURCES
FISCALYEARS 1938 THROUGH 1944

FISCAL

YEARS

C H A R T 1.

' Excludes trust account receipts and net appropriation to the Federal old-age and survivors insurance
trust fund.
.
.
"




12

REPORT OF THE SECRETARY OF THE TREASURY

A war-stimulated economy and the new tax legislation enacted in
response to the need for increased revenue have combined to lift
receipts sharply in each of the war years. The rapid expansion of'
industrial production in consequence of Federal war expenditures was
accompanied by a similar expansion in business profits, in pay^
ments to individuals as a factor in the cost of production, and in the
production of civilian goods a n d ' services, thus increasing taxable
income. By a series of legislative acts, new taxes were imposed, rates
were, increased, exemptions were lowered, and radical changes in
collection procedures were instituted tending to make tax payments
more current. The acts involved were the Revenue Acts of 1942 and
1943, the Current Tax Payment Act of 1943, and the Individual Income Tax Act of 1944. The increase°in total receipts in 1944 over 1943
amounted to $22.0 billions.
The rising trend of total receipts in the fiscal years 1938 through
1944 is pictured by major sources in Chart 1 on page 11.
Income and excess profits taxes produced more than three-fourths
of the total receipts in 1944. The remaining fourth was derived from
the capital stock tax, estate and gift taxes, employment taxes, customs
duties, deposits resulting from renegotiation of war contracts, proceeds
of Government-owned securities, excise taxes, and miscellaneous taxes
and receipts. Detailed data are contained in the tables beginning on
page 561.
, Receipts jrom income and excess projits taxes
Receipts from income and excess profits taxes more than doubled
in 1944, and the iucrease represented 84.3 percent of the aggregate
increase from all sources of revenue. The receipts of $34.7 billions
from income and excess profits taxes were 76.3 percent of total receipts,
as compared with 68.8 percent in 1943 and 42.0 percent in 1941.
Four years' receipts from income and excess profits taxes on corporations and individuals are shown in the table which follows.
Receipts from income and excess profits taxes,^ fiscal years 1941 through 1944
[Dollars in billions. On basis of internal revenue collections, see p. 6201
Corporation
Year
Income

1941.„
1942
1943
1944..r.-

:....:

..-

Total

Footnote at end of table.



.....

Excess
profits

Declared
value ^
excess '
profits

Unjust
enrichment

Total
^ Amount ^ Percent

$1,852.0
3,069.3
4, 520.9
5, 284.1

$164.3
1,618.2
5,063.9
9, 345. 2

$28.1
52.2
82.4
137.0

$9.1 .' $2,053.5
4.4 . 4, 744.1
1.8
9,669.0
.4'
14, 766.8

69.2
59.3
59.3
44.7

14, 726. 3

•16,191. 6

299.7

15.7

31, 233. 3

51.4

REPORT OF THE SECRETARY OF THE TREASURY,

13

Receipts from income and excess profits taxes,^ fiscal years 1941 through 1944—Con.
[Dollars in billions]
Individual

Total
adjusted
- to daily
Treasury
statement
basis

Total
Year
Withheld

Not
withheld-

Total

Amount
1941
1942
1943
1944

$686.0
7,823:4
Total- -

8,509.4

' $1,417.7
3, 262.8
"5, 943. 9
10,437.6
21,061.9

Percent

Amount • Percent

Amount

$1, 417. "7
3,262.8
6, 629. 9
18, 261.0

40.8
40.7
40.7
55.3

$3,47i: 1
8,006.9
16, 298. 9
33,027. 8

100.0
100.0
100.0^
100.0

$3,469 6
7,960. 5
16,093.7
34,654. 9

29,571.4

48. 6 .

60, 804. 7

100.0

62,178 6

NOTE;—Figures are rounded and will not necessarily add to totals.
I Includes current taxes and back taxes.

Individual income taxes.—'
The fiscal year 1944 was the first since 1937 in which collections of
the individual income tax exceeded those from the corporation income
and excess profits taxes. Individual income tax collections of $18.3
billions in the fiscal year 1944 were $11.6 billions greater than the
collections of $6.6 billions in the fiscal year 1943. The increase
resulted not only from higher levels of income but also from (a) in^
creased tax liabilities under the Current Tax Payment Act of 1943
and the Revenue Acts of 1942 and 1943; and (b) an abnormal concentration of payments in 1944 resulting from the new legislation.
During the fiscal year 1944 the Treasury speeded up its receipts of
withholdings from salaries and wages by employers. Most employers
who had withheld more than $100 per mdnth deposited these amounts
with Federal depositaries during the ensuing month, rather than wait
until the month following the end of the quarter to make payments
into the Bureau of Internal Revenue. Where such payments were^
made the depositary paid them to the Treasury immediately and they
were included in the individual income tax receipts on the daily Treasury statement basis. Receipts for these withholdings given to the
employers were then forwarded to the Bureau of Internal Revenue
which at that time considered these amounts to be collections. It
also collected cash from employers who had not paid through depositaries. The adjustment to the daily Treasury statement basis in the
fiscal year 1944 is abnormaJly large since it includes, for the first time,
the withholdings made to depositaries but not yet received by the
Bureau of Internal Revenue as collections. Receipts (on the daily
Treasury statement basis) from the individual income tax totaled
$19.8 billions.and receipts of amounts withheld totaled $9.2 billions
as compared with corresponding amounts of $18.3 billions and $7.8
billions reported as collections by the Bureau of Internal Revenue.
The Current Tax Payment Act of 1943 approved June 9, 1943, and
effective July 1, 1943, greatly increased the receipts in the fiscal year



14

REPORT OF THE SECRETARY OF THE TREASURY

1944 by placing the individual income tax on an appreciably current
payment basis. The act • remitted 1942 income tax liabilities of
individuals but provided for a greater proportion of current payment
of liabilities incurred ori the incomes of 1943 and 1944, partly through
withholding at source, and imposed large additional nonrecurring
liabilities ori 1943 incomes in partial offset of the complete remission
of the tax liabilities upon calendar year 1942 incomes. In the fiscal
year 1944 the amourit received from withholding was $9.2 billions, or
46.8 percent of the current individuaL income tax receipts, as compared with $0.7 billions, or 10.8 percent, in 1943.
As a result of placing collections of the individual income tax on a
partly current basis as of July 1, 1943, the receipts in the fiscal year
1944 reflected the levels of income of the calendar years'1943 and
1944. On the other hand, the receipts in the fiscal year 1943 reflected
mainly the levels of income in the calendar years 1941 and 1942:
Since the period,was one of sharply rising income, the shift to a current basis, aside from other legislative changes, served to accentuate
the increase in receipts between the two fiscal years.
.Provisions of the Revenue Act of 1942 contributed substaritially to
the increase of the fiscal year 1944 receipts. The higher rates,
together with the lower personal exemptions and credits for dependents, of the Revenue Act of 1942 were reflected iri the receipts for
tiie entire fiscal year 1944. The receipts in the fiscal year 1943, on
the other hand, refiected the lower rates and higher exemptions of
the Revenue Act of 1941.
The Revenue Act oif 1943, together with the Individual Income
Tax Act of 1944, in the process of simplifying' the payment of the
individual ^ income tax effected numerous changes in the law and
jmposed some additional liability upon 1944 incomes. This additional
liability, principally from elimination of the earned-income credit,
was partially reflected in the fiscal year 1944 receipts.
The abnormal concentration of payments in the first year of the
transition to a current payment basis,^ the fiscal year 1944, was the
result of three factors. Fhst, under the Current Tax Payment
Act of 1943, liabilities of 1943 were defined in effect as the higher of
1942 or i943 liabilities under the Revenue Act of 1942 plus additional nonrecurring liabilities imposed as offsets of complete remission
of 1942 liabilities; and payments of 1942 tax liabilities already made
in the calendar year 1943 prior to July 1, 1943, were applied against
1943 liabilities due in the fiscal year 1944. Individuals whose incomes in 1942 were less than in 1943 had paid prior to July 1, 1943,
considerably less than half of their aggregate 1943 liabilities, exclusive
of nonrecurring liabilities, so that an abnormally large proportion of
1943 liabilities was liquidated in the'fiscal year 1944, Second, the
larger part of the nonrecurring liabilities on 1943 incomes was paid in



REPORT OF THE SECRETARY OF THE TREASURY

15

the fiscal year 1944, the remainder being due in the fiscal year 1945.
Third, normally a small amount of June payments spills over into
July collections figures, but the unusually large number of part payments made in June 1943 resulted in the official recording of an
unusually large portion of payments as collected in the fisc'al year 1944.
Receipts from back taxes from individuals amounted to $183.7
miUions in the fiscal year 1944, an^increase of $10.8 millions, or 6.2
percent, over such receipts of $172.9 millions in the fiscal year 1943.
This increase is associated with the large. individual income tax
liabilities incurred in recent years.
Corporation income and excess projits taxes.—
Collection of total corporation income and excess profits taxes
amounted to $14.8 billions in the fiscal year 1944, an increase of $5.1
billions, or 52.7 percent, over collections of $9.7 billions the year
before. The increase of $5.2 bilhons, on a receipts basis, represented
24.0 percent of the increase in total receipts from all sources and was
second in importance only to the increase in collections of the individual
income tax.
The increase in. corporation tax receipts in 1944 resulted from a
combination of changes occurring in the war period, principally
economic changes affecting corporate income and statutory changes
affecting the corporate ,tax structure. Of primary significance was
the sharp rise in corporate income between the calendar years 1941
and 1943. This increase jn corporate income was not, however,
reflected fully in the increase in tax receipts of 1944 over those of^
1943, since only about half of the collections on the 1941 tax liabilities
entered into the receipts of the fiscal year 1943 and likewise only
about ^half of the collections on the 1943 tax liabilities entered into
the receipts of the fiscal year 1944. (Collections on 1942 tax liabilities
are divided about evenly between the fiscal years 1943 and 1944.)
Corporate tax liabilities were increased also by provisions of the
Revenue Act of 1942, details of which are set forth on pages 99 and
100 of the annual report of the Secretary for the year 1943. A
considerable part of the fiscal year 1943 receipts reflected payments
incurred at the rates imposed by the Revenue Act of 1941, while most
of the fiscal year 1944 receipts were payments of taxes on income
subject to rates enacted by the Revenue Act of 1942.
Among the changes contained in the Revenue Act of 1942 was one
which provided that, in computing the base for normal tax and surtax,
the income subject to the excess profits tax be deducted from net
income, instead of the excess profits tax itself being deducted from
net income, as was the case under the Revenue Act of 1941. This
change offset somewhat the potential revenue effect of the increased
combined normal and surtax effective rate and reduced the importance
of the corporation income tax relative to the excess profits tax.



16

REPORT OF THE SECRETARY OF THE TREASURY

Thus an increased proportion of corporate income became subject
to the excess profits tax rather than to normal tax and surtax, and
as corporate income increased, the base for the normal tax and surtax
did not increase proportionately so much as the base for the excess
profits tax. * This accounts in part for the relatively greater increase
in excess profits tax current collections fronx.j$4.8 billions in the fiscal
year 1943 to $8.5 billions in the fiscal year 1944, as contrasted with
comparable income tax current collections of $4.1 billions and $4.8
billions in the two fiscal years.^
Some increases in the yield from the excess profits tax resulted
also from changes in the methods of computing the excess profits
credit. These changes are described on pages 100 and 101 of the
annual report of the Secretary for 1943.
Many other provisions of the Revenue Act of 1942 affected to
some extent the tax revenue received from certain corporations.
These included, for. example: (1) the extension of the priyilege of
filing consolidated returns for normal tax and surtax purposes as
well as for the excess profits tax, in >vhich case, however, an additional 2 percent of surtax net income was imposed, and (2) a credit,
allowed against the corporation surtax only, equal to the amount of
dividends paid on preferred stock, was allowed to certain public
utilities.
The provisions of the 1942 Revenue Act for a 2-year carry-back of
net operating losses in computing net ii^come and a 2-ydar carry-back
of unused excess profits credit, in addition to the allowance for a 2year carry-forward of net operating losses anH unused excess profits
credit are potentially of importance but have not appreciably affected
current receipts through the fiscal year 1944.
The Revenue Act of 1943, effective January 1, 1944, increased the
1944 fiscal year receipts by a negligible amount since only those
corporations with fiscal years ending in January, February, and
March 1944 made payments on liabilities incurred under the provisions
of the 1943 act. These liabilities were limited to that part of their
total fiscal year falling in 1944.
No changes were made in the declared value excess profits tax
rates in either the 1942 or 1943 Revenue Act. The increase in current
collections from this tax, from $61.1 millions in the fiscal year 1943
to $109.9 millions in the fiscal year 1944, was largely attributable to
the increase in corporate income occurring over the period 1941-1943
and to the erratic nature of the tax. Since the declared value excess
profits tax applies only if a corporation fails tp declare its capital
stock at a value equal to 10 times the earnings taxable under the
declared value excess profits tax, the amount received under this
tax depends upon the accuracy with which corporations predict their
earnings.



17

REPORT OF T H E SECRETARY OF T H E TREASURY

Back income tax receipts increased from $3§3.9 millions in the
fiscal year 1943 to $521.4 millions in the fiscal year 1944, while the
increase in the excess profits back tax receipts was both absolutely
and proportionately greater, from $219.9 millions to $865.8 millions.
Back taxes are affected by the level of corporate liabilities but with
a longer lag than holds in the case of current collections. Thus, the
fiscal year 1944 receipts of back taxes included payments on" tax
liabilities-incurred by corporations with taxable years ending in the
calendar year 1942 or earlier, whereas current receipts in the fiscal
year 1944,were limited to liabilities incurred in the calendar years
1943 and 1942.
Receipts jrom all other sources
Receipts from sources other than income and excess profits taxes
in the fiscal year 1944 amounted.to $10.8 billions, or 23.7 percent of
the total. Receipts from this group increased nearly $3.5 billions
over those in 1943. About two-thirds of this rise, $2.4 billions,
occurred in miscellaneous receipts and $738.4 millions in miscellaneous
internal revenue. There were substantial increases in the other major
categories also. The table following outlines the principal sources
of such receipts m the past four years.
Receipts from sources other than income and excess profits taxes,^ fiscal years 1941
through 1944
"
[In millions of d Dllars]
1941

Source
Miscellaneous internal revenue:
Capital stock tax
_
.
Estate and gift tax
,
Liquor'
_
Tobacco 2
"
All other, including repealed taxes .

_.

281.9
166.7
432. 5
407.1
818.6 1,046.9
693. 2
780.8
869.2 1, 295. 5

.

.

1942"

~

1943

1944

328.8'
447.-5
1, 423. 6
915.3
1, 466.1

380.7
511.2
1, 618.0
988.4
1, 855.0

Total miscellaneous internal revenue (collections
basis)
. . .
Adjustment to daily Treasury statement..

2, 954. 6
12.3

3, 837. 7 4, 671.1
9.4
-18.5

Total miscellaneous internal revenue (daily Treasury statement basis).

2, 966. 9

3,847; 1 4, 552. 6 6,291.0

Miscellaneous receipts:
Renegotiation of war contracts
Another

508. 2

1,158.0
1,798.3
4, 906. 9
3,. 377. 7
6, 475. 7

6,353. 3 16,716. 7
-62.3
-59.1

' 558. 2 32,235.4
347.9 1,044.7

16,657.6
3 2,793. 6
2,178.1

508.2

277.4

906.-1

3,280.1

391.9

388.9

324.3

431.3

1, 536. 4

932.0

1,194.0

1,507.9

1,761.2

5, 386. 2

4,798.9

Total miscellaneous receipts

5,707.4

7, 291.0 10, 753. 6

28, 550. 9

....:

Customs
:
Employment taxes and railroad unemployment insurance
contributions... .
Total

277.4

Total

•

4,971. 7

NOTE.—Figures are rounded and will not necessarily add to totals.
^ Revised.
1 The detail of miscellaneous internal revenue taxes is on the basis of internal revenue collections with totals
adjusted to the basis of the daily Treasury statement. Miscellaneous receipts (but not the components),
customs, and employment taxes and railroad unemploymeijt insurance contributions are shown on the
daily Treasury statement basis. Information regarding the amounts of deposits resulting from the renegotiation of war contracts is on the basis of covering warrants.
2 Collections for credit to trust funds are not included.
3 includes $112,784,469.99 representing voluntary return of excessive profits on renegotiated war contracts.
613185—45

3 "




,

18

REPORT OF THE SECRETARY OF THE TREASURY

Miscellaneous internal revenue:—
Miscellaneous internal revenue increased primarily because of
' greater consumer demand for the products taxed, higher tax rates, and
new taxes provided by the Revenue Act of 1942 (effective in only part
of the fiscal year 1943) arid the Revenue Act of 1943.
(1)

CAPITAL STOCK T A X .

Collections from the capital stock tax in the fiscal year 1944 were
$380.7 millions, or 0.8 percent of total receipts. They represented an
increase of 15.8 percent over the amount of $328.8 millions collected in
the fiscal year 1943. The increase is attributable to a higher income
level and valuation of capital stock for declared value excess profits tax
computation in the calendar year 1943 than in the calendar year 1942.
(2) ESTATE AND G I F T T A X E S !

,

\

-

Estate and gift tax collections together amounted to $511.2 millions
in 1944, or 1.1 percent of total receipts. Their yield in 1944 increased
^$63.7 miUions over that in 1943.
Primarily responsible for the increase in revenue from the estate tax
were the higher rates instituted by the Revenue Act of 1941 effective
for a full fiscal year for the first time in 1944. I n the fiscal year 1943
the higher rates under the 1941 act were applicable to only approximately 50 percent of the returns filed because of the 15-month lag
permissible under the law between the date of death and the date of
filing the return. Increased values of estates for which returns were
filed in the fiscal year 1944 also contributed to the increase. The
.Revenue Act of 1942, applicable to some of the returns filed in the
fiscal year 1944, reduced the tax liabilities somewhat but not sufficiently to offset the factors tending to increase the yield.
' Increases in gift tax collections in 1944 resulted from the greater
value of property transferred by gifts during the calendar year 1943,
and from changes instituted by the Revenue Act of 1942 which
reduced the exclusion and specific exemptions allowed by law.
(3) LIQUOR T A X E S .

Liquor tax collections in the fiscal year 1944 amounted to $1.6
billions, or 3.6 percent of total receipts. These collections increased
$ 194.5„millions over those in 1943. Collections from taxes on distilled
spirits, $898.7 inillions, and on fermented malt liquors, $559.2 millions,
accounted for 90.1 percent of the total of the g^roup,- and represented
increases of $117.0 millions and $103.5 millions, respectively. The
increase as a whole, in the face of a considerable decline in tax-paid
.withdrawals of distilled spirits, reflected a full yearns collection at the
higher tax rates on distilled spirits, wines, and fermented malt liquors '
provided in the Revenue Act of 1942 as compared with only 8 inonths'
collections at these rates in the preceding year. These rates were




REPORT OF THE SECRETARY OF THE TREASURY

19

further increased by the Revenue Act of 1943, effective during the
last three months of the fiscal year 1944.
(4)

TOBACCO AND PRODUCTS T A X E S .

Tobacco and products tax collections amounted to $988.4 millions,
or 2.2 percent of all receipts, in the fiscal year 1944. These collections
constituted an increase of $73.1 millions over 1943. This increase
reflected the first full year of collections at the higher rates imposed
by the Revenue Act of 1942, greater consumer purchasing power, and
some shift from the use of manufactured chewing and smoking tobacco
to the sinoking of cigarettes and cigars. The tax on small cigarettes
yielded $904 millions and accounted for $68.7 millions or 94.1 percent
of the total increase for the group. The yield from the tax on large
cigars, $30.2 millions, increased by $7.1 millions, resulting principally
from a shift in sales to a more expensive type of cigar subject to a
higher rate of tax. The revenue derived from chewing and smoking
tobacco, which amounted to $45.3 millions for the fiscal year 1944,
showed a slight decline from $47.8 millions in 1943.
(5) A L L OTHER.

All other miscellaneous internal revenue amourited to $1.9 billions
in 1944, or 4.1 percent of total receipts. Three main groups of taxes
produced the receipts under this classification: (a) a group of miscellaneous taxes which brought in $1.1 billions; (b) manufacturers*
excise taxes which brought in $502.7 millions; and (c) retailers' excise
taxes which brought in $225.2 millions.
(a) Miscellaneous taxes.
Receipts from this tax group increased $318.9 millions over those
in 1943. The yield from the tax on transportation of property was
$215.5 millions, an increase of $132.9 millions over that in 1943, and
the yield from the tax on transportation of persons was $153.7 millions, representing an increase of $66.6 millions over that of 1943,
The increase id receipts from the taxes on the transportation of persons and property was the result of increased|volume of both freight
and passenger travel. In addition, the high rates imposed by the
Revenue Act of 1942 were effective for a full year for the first time in
the fiscal year 1944. Receipts from the taxes on telephone, telegraph,
and allied services also increased substantially as a result of increased
use of these facilities and of a full year of operation of the increased
rates imposed by the Revenue Act of 1942. The admissions tax
produced $205.3 millions, an increase of $50.8 niillions over 1943.
(b) Manufacturers' excise taxes.
Both the Revenue Act of 1942 and the Revenue Act of 1943 imposed higher excise ttees and levied new excise taxes on a number




20

REPORT OF THE SECRETARY OF THE TREASURY

of commodities and services. The principal manufacturers' excise
taxes for four years are shown in the table which follows.
MarbUfacturers' excise tax receipts, fiscal years 1941 through 1944
[In millions of dollars.

Year

1941
1942.....
1943
1944...

On basis of.internal revenue collections, see p. 520]
Automobiles,
trucks, tires,
tubes, parts,
and accessories

Lubricating oils

Electrical
energy

All other

343.0
369.6
288.8
271.2

156.3
180.5
44.4
76.3

38.2
46.4
43.3
52.6

47.0
50.0
48.7
51.2

32.5
121.8
63.1
51.4

617.0
768.3
488.4
502.7

1, 272. 6

467.5

180.4

196.9

268.8

2, 376.4

Gasoline

..

Total

Total

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

While the aggregate yield of these taxes was practically imchanged
in 1944, the $502.7 millions in that year representing an increase of
only 2.9 percent over 1943, some individual items decreased and
others increased. The decreases which occurred resulted from curtailment in civilian supply resulting from rationing, reduced production
for. civilians, and lowered stocks of goods on hand. Receipts from the
tax on gasoline declined by $17.6 inillions, but they still constituted
more than half the total for the group. Other manufacturers' excise
taxes showing a decline in yield were taxes on automobiles and trucks;
electric, gas, and oil appliances; radio sets and musical instruments;
refrigerators; business and store machines; matches; luggage; sporting
goods; and firearms. A retailers' tax on luggage replaced the manufacturers' tax under the Revenue Act of 1943.
Among the manufacturers' excise taxes showing increases in 1944,
the high yield from the tax on lubricating oils, $52.5 millions as compared with $43.3 millions in 1943, is explained by the existence of
higher tax rates effective throughout all the fiscal year 1944 as compared with seven months of the fiscal year 1943. T h ^ t a x on parts and
accessories for automobiles produced $31.6 millions, an iijcrease of
$11.1 millions, reflecting a greater need for replacement parts. The
yield of the tax on tires and inner tubes increased from $18.3 millions
to $40.3 millions, resulting from improved production for essential
civilian requirements following the drastic curtailment in the fiscal
year 1943. Nominal increases occurred in the yield of the tax on
electrical energy and in the tax on photographic apparatus. The
only tax in the group for which rates were increased by the Revenue
Act of 1943, that on electric light bulbs, is relatively unimportant.
Receipts of $5.4 millions in 1944, however, represented an increase of
45.9 percent over 1943.




21

REPORT OF THE SECRETARY OF THE TREASURY

(c) Retailers' excise taxes.
Collections of these taxes amounted to a total of $225.2 millions
in t h e fiscal year 1944, an increase of $59.9 millions, or 36.3 percent
over 1943 collections of $165.3 millions. The table below shows
retailers' excise tax receipts by type of tax beginning with the fiscal
year 1942 when such taxes were first imposed as a war measure.
I t will be noted that the tax on jewelry has produced more than half
of all retailers' excise tax receipts.
Retailers' excise tax receipts; fiscal years 1942 through 1944 ^
[In millions of dollars.

Year

1942
1943
1944

. .

On basis of internal revenue collections, see p. 620]

Jewelry

...

Furs

Toilet
preparations

Luggage

Total

Total

41.6
88.4
113.4

19.7
44.2
68.7

18.9
32:7
44.8

8.3

80.2
166.3
226.2

243.2

.

122.7

96.4

8.3

470.7

NOTE.—Figures are rounded andjv^ill not necessarily add to totals.
1 No retailers' excise taxes were in effect in the fiscal year 1941.
'

^

Miscellaneous receipts.—
Miscellaneous receipts in the fiscal year 1944 amounted to $3.3
billions, an increase of $2.4 billions over such receipts in 1943.
(1)

RENEGOTIATION OF WAR CONTRACTS.

Of the revenue derived from sources other than income and excess
profits taxes, recoveries of excessive ^ profits on renegotiated war
contracts constituted the largest single source in the fiscal year 1944.
These amounted to more than $2.2 billions, or 4.9 percent of total
receipts, and included $112.8 millions representing voluntary return
of excessive profits on renegotiated contracts. The contracts were
entered into by the War and Navy Departments, the United.States
Maritime Commission, the War Shipping Administration, and the
Treasury Department. The share of the Treasury Department
amounted to about $0.9 millions. Total recoveries in 1944 included
an increase of more than $1.5 billions over those in 1943.
Customs.—
Customs receipts amounted to $431.3 millions in the fiscal year
1944 and were 0.9 percent of the total. They exceeded by 33.0
percent the receipts of $324.3 millions in the fiscal year 1943. By far
the greater portion of the increase resulted from increased imports of
wool and of alcoholic beverages. Duties on imports of these two
commodities accounted for approximately one-half of total customs
receipts in the fiscal year 1944.




22

REPORT OF THE SECRETARY OF THE TREASURY

Employment taxes and railroad, unemployment ^ insurance contributions.—
Employment tax receipts in the fiscal year 1944 amounted to
$1.7 billions, or 3.8 percent of total receipts. This included an increase
of $241.4 millions, or 16.1 percent, over the amount of nearly $1.5
billions receiyed in 1943. The greater portion of the increase came
from a rise in both industrial and railroad pay rolls associated wdth
the continuing expansion of wartime production. In addition,
increases in hourly wage rates awarded to railroad employees, together
with an increase in the tax rate, augmented the yield of the tax on
carriers and their employees.
Employment tax receipts for the war ^period by kin d of tax are
shown in the following table.
t
Employment tax receipts, fiscal years 1941 through 1944
[In millions of dollars.

. Year

Federal In- Federal UnTotal
surance Con- employment Total other Carriers and ernployment
their
tributions
than carriers employees
Tax Act
taxes
Act

•

1941
1942.
1943
1944

....
Total-

On basis of daily Treasury statements, see p. 519]

690.6
895.6
1,130. 6
1,292.1

97.7
119.9
158.4 •
179.9

788.2
1,015.6
1,288.9
1,472.0

136.9
170.0
208.8
267.1

925.2
1,185.6
1,497. 7
1, 739.1

4,008; 8

565.9

4, 564. 7

782.8

5, 347. 6

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

Receipts from the tax imposed by the Federal Insurance Contributions Act amounted to $1.3 billions in the fiscal year 1944, exceeding
receipts of $1.1 biUions in 1943. Receipts under the Federal Unemployment Tax Act increased from $158.4 millions in 1943 to $179.9
millions in 1944. In both cases, the tax rates and coverage were the
same in the two years, and the increases are attributable to increases in
taxable pay rolls in the period affecting receipts in 1944.^
The rise of $58.3 millions in receipts from the tax on carriers and
their employees in 1944 as compared with 1943 resulted in part from
the increase in the tax rate from 3 percent to 3)^ percent on both
employers and employees, effective on wages paid beginning January
1, 1943. The increase was fully reflected in the 1944 receipts. The
higher rate affected receipts in only one-quarter of the year 1943
because of a three-months' lag in collections.
Railroad unemployment insurance contributions in 1944 rose to
$12.1 millions from the 1943 contributions of $10.3 millions.
1 Postponement of the automatic increase in the 1944 tax rate under the Federal Insurance Contributions
' Act until March 1,1944, by Public Law 221, approved by the President December 22,1943, and until January
1, 1946, by the Revenue Act of 1943, does not affect net receipts since the amounts collected in excess of
administrative expenses are appropriated for the Federal old-age and survivors insurance trust fund.




23

REPORT OF THE SECRETARY OF THE TREASURY
EXPENDITURES FROM GENERAL AND SPECIAL ACCOUNTS

Total expenditures of the Federal Government from general and
special accounts amounted to $93.7 billions during the flscal year 1944,
which was $15.6 billions more than the amount expended in the year
before. A comparison of expenditures in the fiscal year 1944 with
those in 1943 and in 1941 and 1942 combined, classified to show war
and other expenditures separately, appears in the table that follows.
Expenditures in 1941, the fiscal year designated as tha.t in which our
expanded defense and war activities began, and expenditures in 1942
are shown separately in the annual report for 1943.
Expenditures, fiscal years 1941 through 1944
[Dollars in billions.

On basis of daily. Treasury statements, see p. 519]
Other

War

Percent Amount

Percent Amount

$32.3
72.1
87.0

71.4
92.2
92.8

$10.4
4.3
4.1

23.0
5.6
4.4

$2.4
1.8
2.6

6.2
2.3
2.8

191.5

88.2

18.8

8.6

. 6.8

3.1

Amount
1941 and 1942.......
1943
1944
...
Total

Interest on the
public debt

General

Fiscal year

Statutory debt
retirements

Percent Amount

NOTE.—Figures are rounded and will not necessarily add to totals.
* Less than $60 millions or 0.06 percent. "

$0.2

(*)
(*)

.2

Total

Percent

Percent Amount
0.4

(*)
(*)

.1

$45.3 100.0
78.2 ' 100.0
93.7 100.0
217.2

100.0

'

War expenditures, it will be noted from the table above, accounted
for most of the increase in 1944, and the rise in the amount of interest
on the public debt for the remainder. Other expenditures of the
Federal Government declined to 4.4 percent of the total. War
expenditures, as in 1943, constituted niore than 92 percent of all
expenditures in the fiscal year 1944. In the four fiscal years during
which the country has been engaged in defense and war activities,
war expenditures have totaled $191.5 billions, or 88.2 percent of the
total of $217.2 billions.
Experiditures in the past four fiscal years are summarized by general
functions in the table following. The course of expenditures for- the
past seven years is shown in Chart 2 on page 25.




24

REPORT OF T H E SECRETARY OF T H E TREASURY
Expenditures, fiscal years 1941 through 1944, ^V functions and organizations
[In millions of dollars. On basis of daily Treasury statements, see p. 519]
Function and organization

War:
War Department
Navy Department
United States Maritime Commission..
War Shipping Administration
Agriculture 1
Treasury >
Other
....
SubtotalGeneral:
Veterans' pensions and benefits...
•^Social security program...'.
Public works..
Aid to agriculture
. Relief and work relief
Refunds of taxes and duties:
(a) Excess profits tax (bonds).
- (b) Other
Other...

1941 and
1942

1943

1944

17,748.
10,893
981
132
699
643
1,317

42,265
20,888
2,776
1,106
2,011
1,201
1,863

49,242
26,638
3,812
1,922
2,143
1,432
1,950

109,255
58,319
7,568
3,169
4,853
3,176
6,130

32, 312

72,109

87,039

191,460

1,119
1,248
1,418
2 2,162
2,765

602
736
643
1,163
317

184
1,629

79
822

Subtotal
Total expenditures..

2,451
2,786
2,395
4,234
3,099

134
133
937

134
396
3,288
18,782

2,609

2,371
169

730
803
433
909'
17

4,096

Subtotal.
Public debt:
Interest
. Statutory retirements.

Total

6,788
162-

2,630

1,812

2,609

6,960

46, 266

78,182

93,744

217,192

NOTE.—Figures are rounded and will not necessarily add to totals.
1 Principally for the lend-lease program.
2 Reduced in 1941 by $316 millions, representing payments into the Treasury of capital and surplus of
certain agricultural corporations, of which $70 millions were resubscribed in 1942 and $69 millions were resubscribed in 1943. Details are shown in the annual report for 1941, page 50.
•Less than $500,000.

Total monthly expenditures rose from $4.5 billions in June 1942
to $8.6 billions in June'1944. Summaries of monthly expenditures for
war purposes and for other purposes exclusive of statutory debt
retirements, appear in Chart 3 on page 27 and in the following table.
I t will be noted that the significant development in the trend of
monthly expenditures during the fiscal year 1944 was their tendency
to fiatten out. This was in sharp contrast to the continuous rising
trend in the three years preceding. The monthly figures for the fiscal
year 1941 may be found in the annual report for 1943 on page 24.




REPORT OF THE SECRETARY OF THE TREASURY

25

EXPENDITURES^ CLASSIFIED BY MAJOR FUNCTIONS
FISCALYEARS 1938 THROUGH 1944

1938

1939

1940
1941
1942
FISCAL
YEARS

1943

1944

C H A R T 2.
NOTE.—Expenditures forinonwar activities shown in this chart includcvsome outlays which had the
furtherance of defense or of the prosecution of the war as an objective. The expenditures for such activities
were made from general appropriations and accordingly could not be classified as part of the war program,
1 Excludes statutory debt retirements and trust account expenditures.




26

REPORT OF THE SECRETARY OF THE TREASURY
Monthly expenditures, fiscal years 194^ through 1944
[In millions of dollars. On basis of daily Treasury statements, see p. 619]

Month and fiscal year

969
1,131
1,330
1,537
1,448
1,850
2,104
2,208
2,809
3,238
3,560
3,829

1941~July
Aiigust
September
October.._r
November.
December
1942—January.
.
February
March
April
May..-.
June
Fiscal year 1942.
July.....
August.:
September.
October.^.
November..!
December
1943—January
February
March
ApriL...
May.
June

-

Fiscal year 1943.
July
August
September.
October
November
December
1944—January
February....
March...
April
May
'.
June
:

Other FedPublic debt
War
eral exTotal
expendi- penditures
expenditures
Statutory
except
tures
public debt Interest retirements

.

Fiscal year 1944.

604
390
375
471
394
469
492
409
407
439
376
311

25
9
169
75
15
232
32
12
,205
77
19
390

26, Oil

5.125

1,260

4,498
4,884
5,384
6,481
6,042
6,825
5,947
6,770
6,744
6,974
7,092
7,469

628
324
322
386
293
322
372
314
348
404
301
248

72,109

4,262

6.432
7,232
6,952
6,989
7,541
6,718
7,138
7, .518
7y726
7,346
7,879
7,667

613
339
271
336
260
237
346
287
360
396
360
311

87,039

36
7
224
70
28
363
54
35
262
89
42
609,

1,600
1,664
1,882
2,089
1,860
2, 567
2,631
2,630
3,436
3,765
3,956
4,631

95

()
*
()
*
(*)

•

()
*
()
*

32,491
6,162
5,215
6,931
5,937
6,363
6,501
6,372
6,119
7,354
7, 466
7,436
8,327
78,182

68
46
311
131
47
497
87
56
449
117
52
747

()
*
()
*

7,112
7,617
7,536
7,456
7,839
7,462
7,570
7,862
8,526
7,869
8,292
8,626

2,609

()
*

93, 744

(•)

()
*

NOTE.—Figures are rounded and will not necessarily add to totals.
•Less than $600,000.
1 Includes revolving funds and transfers to trust accounts.

War expenditures
War expenditures of $87.0 billions in the fiscal year 1944 again
were unprecedented. Their increase of $14.9 billions over those of
the preceding year compared with an increase of $46.1 billions in the
fiscal year 1943 over those of 1942. The figures on war expenditures,
however, are exclusive of disbursements of the Reconstruction Finance
Corporation and its affliates, which are shown separately in the
section on page 32.
The less rapid rise of war expenditures during 1944 was due to
several developments. The initial equipment of the Army was practically completed during the year and some components of the war
production program had reached a replacement basis. Morepver,



27

REPORT OF THE SECRETARY OF THE TREASURY
MONTHLY EXPENDITURES,' BY CLASSES
JULY 1940 THROUGH JUNE 1944
DOLLA RS
Billion s

DOL
Bi
TOTAL EXPENDITURES

9

•y
.

8

/

1^ B
i8^B B

7

i^^^^S 8
••

^^B
^^^B B
^ m ^^^H B
^S ^^^H H
j ^ H ^^^B •
^B^^^B
^^^B^^^H B
^^^H
^//c...,.^

6

•

5

4
i' •

»

MiW^A Expend/fun9

3

5 , ^ ^ ^

m

2

^^^^B ^^^^B B

^

1

n

^^W>OC^V\W5Q88888$8S

^

^^^B^^^B H

^H^H

J S N J MM J S N J M M J S N J M M J S N J M M J S N
1940
1941
1942
1943
1944

1.2 ,

'-n

^—•

r-^-

r-

1-

•

\\-2 .

^ ^ 0
J S N J M M J S N J M ' M J S N J M M J S N J M M J S N
1940
1941
1942
1943
1944

C H A R T °3.

1 Excludes statutory debt retiriements.*



28

REPORT OF THE SECRETARY OF THE TREASURY

because mass production was being applied certain contract prices
of materiel acquired by the Army and Navy had been reduced.
Renegotiation of contracts also continued to lower costs. Offsetting
these factors were greater expenditures for larger production of certain
munitions, for shifts in design and type, for new products, and for
subsistence and pay of the full strength of the Army attained on April
1, 1944. Expenses of training, communications, and the transportation of troops continued high.
Expenditures in the fiscal year 1944 reflected the climax of the
great task of prodticing and assembling supplies for the invasions of
Italy and France. War Department expenditures increased 16.5
percent over those of 1943. At the same time the Navy Department
expended 27.0 percent more than in the year before and the Maritime
Commission 37.3 percent more. These disbursements financed not
only transportation and support given the European invasion forces
but also the accelerated pace of the war in the Pacific.
The figures under the caption "War expenditures" in the preceding
summary tables and in most of the other tables in this report include
the entire expenditures of the following departments and agencies:
War Department (except for rivers and harbors and for flood control),
Navy Department, United States Maritime Commission, War Shipping Administration, Office for Emergency Management, and certain
other agencies in the Executive Office of the President, and Smaller
War Plants Corporation (to extent of capital stock). They include
also certain expenditures of the following departments and agencies
which have, in addition to the expenditures for their regular activities,
some expenditures classified under, the head of war activities: Department of Labor, Department of the Interior, Department of Agriculture (principally lend-lease). Treasury Department (principally lendlease). Department of State, Commerce Department, Department of
Justice, National Housing Agency, Federsil Works-Agency, Federal
Security Agency, certain other independent offices, and the Panama
Canal.
Expenditures of the agencies above include amounts disbursed for
materials and goods transferred and services rendered to other countries in accordance wdth the provisions of the Defense Aid Act of,
1941 and the Military Establishment Appropriation Acts and Naval
Appropriation Acts as amended. No comprehensive analysis of the
figures in these tables to show the amount expended for lend-lease
items is available in the Treasury records. Data on lend-lease aid
are published in the President's periodic reports on the lend-lease
operations. .
The figures on war expenditures embrace expenses of all operations
including training of personnel of the armed forces, transportation,
comjnunication, travel, pay, subsistence, maintenance, production of



29

REPORT OF T H E SECRETARY OF T H E TREASURY

munitions, and many other categories. Excluded are some outlays
which had the prosecution of the war as an objective but which were
made from funds which had supplemented the regular appropriations
of such civil departments and agencies as the Tennessee Valley Authority, the Panama Canal, the Federal Security Agency, and the
Federal Works Agency. Excluded also are expenditures of other
agencies whose activities have been greatly expanded as a direct result
of the war. The expenditures for such activities are made from general
appropriations and, accordingly, they cannot be classified as a part
; of the war program.
'
The progress of war production in relation to the rise of total war
expenditures is shown roughly by the comparison in Chart 4 of exWAR EXPENDITURES COMPARED MONTHLY WITH MUNITIONS
PRODUCTION, JULY 1940 THROUGH JUNE 1944
DOLLARS "
Billions

"PERCENT
(Munitions

(Expenditures)

160

^

/ V/

V

140

A./V
120

War Expenditures
(War. Navy, and
^
Maritime Commission)
(Billions of Dollars)

" ^ J S N J M M J S N J M M J S N J M M J S N J M M J
S N
1940
1941
1942
1943
1944
C H A R T 4.
NOTE.—War Production Board munitions production index includes airplanes, ships, tanks, guns,
ammunition, and all industrial equipment, but not construction of industrial facilities.
1 Only six-month averages are available for the latter half of 1940 and for 1941.




30

REPORT OF THE SECRETARY OF THE TREASURY

penditures/by the three agencies listed above whose activities include
the procurement of the principal weapons of war (War and Navy
Departments and the Maritime Commission) with the War Production Board^s index of production of airplanes, ships, tanks, guns,
ammunition, and all industrial equipment (excluding construction
of industrial facilities). A monthly summary of war expenditures
appears in the following table. The monthly figures for the fiscal
year 1941 may be found in the annual report for 1943 on page 26.
Monthly expenditures for war activities hy specified agencies, fiscal years 194^
^
through 1944
[In millions of dollars. On basis of daily Treasury statements, see p. 519]
U.S.
Maritime
Commis. sion

War
Department

Navy
Department

_.
—

516
598
746
834
771
1,072
1,282
1,369
1,432
1,594
1,850
2,007

362
441
424
497
493
545
' 575
581
946
1,101
1,307
1,309

95
121
98
130
150

Fiscal year 1942.

14, 070
2,861
2,875
3,519
3,417
3,538
3,770
4,053
3,239
3,985
3,727
3,857
3,424

1.103
1,376
1, 294
1,596
1,478
1,380
1,274
2,002
2,053
2,102
2,251
2,980

184
211
141
46
274
275
331
223
285
248
243
315

42,265

20,888

3,808
4,219
4,036
4,142
4,173
3,841
4,170
3.792
4,461
4,160
4, 334
.4,106

1,898
2,037
1,909
1,955
2,134
2,050
2,082
2,757
2,281
2.262
2,536
2,636

49, 242

26, 538

Month and fiscal year-

1941—July
August
September
October
November.
December
1942—January
February....
March
April
May
June

July
August
September
October
November
December
1943-January
February
March
April
Ma'y..
Jurie
"

._.

-.
—

Fiscal year 1943.

July
August
September
October
November
December
1944—January
February
March
April
May
June
.

-.

Fiscal year 1944.

Subtotal

Other
agencies

919
1,032
1,216
1,375
1,320
1,686
1,942
2,045
2,499
2,793
3.287
3,465

50
99
114
162
128
165
162
163
309
445
272
363

23, 579

2,432

26, Oil

4,148
4,462
4,953
5,060
5,290
5,424
5,658
5,465
6,324
6,076
6,350
6,719

350
423
431
421
751
401
289
305
420
898
741
750

4.498
4,884
5,384
5,481
6,042
5,825
5,947
5,770,
6,744
6,974
7,092
7,469

2,776

65,929

6,180

72,109

319
361
366
294
402
356
308
331
386
273
364
51

6,025
6,617
6,311
6,391
6,709
6,247
6,561
6,880
7,128
6.695
7,234
6,794

407
615
641
598
832
471
578
638
598
651
645
774

6,432
7,232
6,952
6,989
7, 541
6,718
7,138
7,518
7,726
7,346
7,879
7,567

3,812

79,592

7,447

87,039

Total

1,131
1,330
1,537
1,448
1,850
2,104 *
2,208
2,809
3,238
3,560
3,829

NOTE.—Figures are rounded and will not necessarily add to totals.
• Excessof credits (deduct). .

The expenditures for war purposes shown iu the preceding tables are
compared with the appropriations and contract authorizations for
war purposes in the table on page 31. The lag between appropriations and contract authorizations on the one handJand expenditures
on the other is due to the necessity for advance planning to insure



REPORT OF THE SECRETARY OF THE TREASURY

31

procurement of supplies and the execution of production operations.
The magnitude of the war program as of June 30, 1944, is indicated
by the figure of more than $375 billions of war appropriations together
with net contract authorizations for which appropriations, had not
yet been made. This is an increase of about $115 billions in the
program over that of a year eiarlier. Appropriations for the War
Department accounted for $74.3 billions of the increase, and appropriations and contract authorizations for the Navy Department for an
increase of $25.5 billions. The tJnited States Maritime Commission
and the War Shipping Administration combined received an increase
in appropriations and contract authorizations of $9.8 billions.
War expenditures, appropriations, 'and contract authorizations, July 1, 1940,
through June 80, 1944
[In billions of dollars]

Organization

War ap- War contract
War expropriapenditures
authoriza(July 1, tions (fiscal tions (net)»
years
1940(fiscal years
1941June 30,
1941-1945)
1945)
1944)

Total war
appropriations and
contract
authorizations (net)

War Department..
Navy Department
U. S. Maritime Commission...
War Shipping Administration..
Other

109.3
58.3
7.6
3.2
13.2

206.9
105; 1
16.5
7.0
24.3

2 13.9
8 1.2
0.7

206.9
119.1
17.7
7.0
25.0

Subtotal
Liquidation of 1940 and prior contract authorizations

191.6

359.5

16.9

375.6

15.9

376,2

TotaL

-.5

-.5
3 359.3

NOTE.—Figures are rounded and will not necessarily add to totals.
•'For which appropriations have not yet been made.
2 Unappropriated contract authorizations differ from amounts shown in the daily Treasury statement for
July 15,1944, in order to reflect the latest revised estimates of the Navy Department and the United States
Maritime Commission, as of June 30, 1944.
3 Total appropriations differ from amount shown in the daily Treasury statement for July 15, 1944, in,
order to include $88,299,000 appropriated in Public Law 382, approved June 30,1944, but not shown in daily
Treasury statements until August 15, 1944.,

The foregoing expenditures do not include disbursements by the
Reconstruction Finance Corporation and its afiiliates. Total war
disbursements by the Reconstruction Finance Corporation and its
affiliates from July 1, 1940, through June 30, 1944, amounted to
nearly $15.1 billions, and gross receipts, in the form of rents, repayments andsales, amounted to more than $6.6 billions. A significant
development in the fiscal year 1944 was the increase in gross receipts,
which amounted to 54.2 percent of gross disbursements. This
percentage compared with 47.8 percent in 1943. The Corporation
reported that its commitments amounted to $28.8 billions between
July 1, 1940, and June 30, 1944, of which $4.6 billions had been withdrawn and canceled.
During the fiscal year 1944, gross disbursements by the Defense
Supplies Corporation amounted to $2,324 millions, the largest amount



32

REPORT OF THE SECRETAIiY OF THE TREASURY

by any of the affiliates, and nearly two and one-half tinies the gross
a;mount disbursed the year before. Gross disbursements by the
Defense Plant Corporation declined from $3,431 millions in 1943 to
$2,305 millions in 1944, an indication that the peak of construction
of war plants has passed.
The following summary shows, by fiscal years, disbursements and
receipts of the Reconstruction Finance Corporation and its affiliates
in connection with the war program.
War disbursements and receipts of the Reconstruction Finance Corporation and its
affiliates
[In millions of dollars.

On basis of reports received by the Treasury]

1941 a n d 1942
Disbursements
Recoristructii^n F i n a n c e C o r p o r a t i o n
a n d its affiliates:
Defense P l a n t Corporation
Defense Supplies C o r p o r a t i o n . . .
M e t a l s Reserve C o m p a n y
R u b b e r D e v e l o p m e n t Corporation
.
R u b b e r Reserve C o m p a n y
U . S. Commercial C o m p a n y
T h e R F C Mortgage C o m p a n y
Reconstruction F i n a n c e Corpor- ation (direct):
L o a n to G r e a t B r i t a i n a n d
Northern Ireland..
Loan—Defense H o m e s . C o r poration 2
_
__
•
L o a n — P e t r o l e u m Reserves
Corporation
Stock—War D a m a g e Corporation
1
A u t o m o b i l e financing l o a n s .
All other l o a n s . . 1
.

1,358
365
496
309

(*)

390

DisReburseceipts > m e n t s

146
43
193
83

(*)

3,431
^ 956
644
194
71
34

14

11

DisReburseceipts 1 m e n t s

Receipts '

Disbursements

Receiptsi'

1, 366
522
386

2,305
2,324
617

688
1,459
570

7,094
3,645
1,757

2,200
2,024
1,149

. 220
11
3

158
539
348
48

82
520
206
10

(*)

158
• 1,042
420
82

82
822
• 217
13

.44

.25
33

Total

1944

1943

19

390

83

2

63

2

(*)

(*)

1

1
230

70

340

195

218

•. 151

788

416

3,159

550

5,704

2, 728

6,577

3,731

15, 440
3 376

7,009
3 369

< 3,159

<550

5,704

2, 728

• 6,577

3, 731

15,063

6,640

Less i n t e r - c o m p a n y eliminations
Tbt'aL. :

NOTE.—Figures are rounded and will not necessarily add to totals.
• Less than $500,000.
' Rents, repayments and sales. Does not include proflt on sales.
2 Transferred to the National Housing Agency on Sept. 1,1942.
3 Figures shown are cumulative as of June 30, 1944. Distribution by fiscal years not available.
• For details by fiscal years, see the Secretary's annual report for the fiscal year 1943, p. 28.
*

General expenditures
General expenditures in the fiscal year 1944 constituted an even
smaller part of the total than in 1943. At $4.1 billions they were 4.4
percent of the total, compared with 5.5 percent the year before. Sharp
reductions in expenditures for several nonwar functions were partially
offset, however, by some increases in certain additional departmental
activities resulting from the war. (See table on page 24.) The net
decrease was $166 millions.
Curtailment of relief and work relief, as in 1943, accounted for the
most substantial reduction, approximately $300 millions. This re-.



REPORT OF THE SECRETARY OF THE TREASURY

33

suited from the nearly completed liquidation of the < Work Projects
Administration and the virtual elimination of expenditures for the
Civilian Conservation Corps. Public works expenditures declined by
$110 millions. The largest decrease.in this category was $46 milhons
for the Tennessee Valley Authority. Retrenchments were made also in
public works expenditures for river and harbor work and flood control,
for reclamation projects, and for grants to State and local governments
under the act of June 21, 1938. Expenditures of the Public Roads
Administration declined by $21 millions.
Aid to agriculture was reduced in 1944 for the second consecutive
year, the reduction totaling $254 niillions. In the Department of
Agriculture alone, expenditures were $40 millions less than in the
preceding year. Expenditures under the Soil Conservation and Domestic Allotment Act declined $45 millions, under the Farm Security
Administration $10 millio'ns, and subscriptions to capital stock of the
Federal Crop Insurance Corporation were $10 millions less. Expenditures under the Agricultural Adjustment Act of 1938, which included
parity payments, declined by $39 millions. The net decrease of $74
millions in expenditures by the Farm Credit Administration revolving
fund was due to a net repayment of $33 millions as compared with a
net expenditure of $41 millions in the fiscal year 1943. A net decrease
of $44 millions under the Post Office Department reflected a net
repayment of. $29 millions during the fiscal year 1944 on account of
grants made in prior years as compared with a net expenditure of $15
millions for the fiscal year 1943.
Among the increases in general expenditures in the fiscal year 1944,
was a rise in veterans^ pensions and benefits of $127 millions. An
increase in disbursements for the social security program of $68
millioris was due mainly to transfers to trust accounts by the railroad
retirement account and the Railroad Unemployment Insurance Administration.
.
^^Other" expenditures accounted for a total increase of $302 millions. An increase of nearly $200 millions in refunds of taxes and
duties by the Treasury Department constituted the largest item in
this group. These payments refiected the effects of the provisions of
the new tax: law under which individuals who overestimated their
income tax payments receive cash refunds. The payments also
included refunds of $134 millions in the form of excess profits tax
refund bonds, which are not redeemable until after the war.
DEFICIT IN GENERAL AND SPECIAL ACCOUNTS

In the fiscal year 1944, expenditures exceeded receipts in general
and special accpunts by $49,595 millions. This sum represented the
net deficit exclusive of statutory- debt retirements. The derivation
of the deficit m 1943 and 1944 follows.
61318.5—45'

4




34

REPORT OF THE SECRETARY OF THE TREASURY
Deficit in general and special accounts, fiscal years 1943 and 1944
[In millions of dollars. On basis of dally Treasury statements, see p. 519]
1943

Receipts, total
Deduct net appropriation to Federal old-age and survivors insurance trust fund
Netreceipts
l......
Expenditures excluding statutory debt retirements.
Net budgetary deficit

23,385
1,103

45,408
1,260

22,282
78,179

44,149
93, 744

55,897

49, 595

NoTE.r-Figures are rpunded and will not necessarily add to totals.

RECEIPTS AND EXPENDITURES IN TRUST ACCOUNTS AND CHECKING
ACCOUNTS OF GOVERNIMENT CORPORATIONS ANE> CREDIT
AGENCIES

In addition to receipts and expenditures Tinder general and special
accounts, discussed above, certain receipts and expenditures of the
Government are reported in the Daily Statement of the United States
Treasury under the title of '^Trust accounts, etc.'' Neither the
receipts nor the expenditures of these accounts affect the Federal
Budget except to the extent that appropriations (e. g., the Government's share of the civil service retirement fund) are made from the
General Fund for credit to these accounts. Such appropriations
appear as expenditures under general and special accounts, and as
receipts under trust accounts, etc., with the exception of net appropriations to the Federal old-age and survivors insurance trust fund
which are shown as deductions from receipts under general and special ,
accounts. Moneys in trust accounts not needed for current expenditure are in a number of instances invested in Government securities,
as provided by statute. The larger corporations and credit agencies
maintaining checldng accounts with the Treasurer of the United
. States generally apply the cash balances not needed for operations to
the purchase of Government securities for investments, or to debt or
capital stock retirement. A summary of receipts and expenditures
in trust accounts, etc., for the fiscal years 1943 and 1944 follows.




35

REPORT OF THE SECRETARY OF THE TREASURY

Summary oj receipts and expenditures in trust accounts, etc., fiscal years 1943 and
1944
[In millions of dollars.

On basis of daily Treaisury statements, see p. 519]
1943

Receipts:
Fe'deral old-age and survivors insurance trust fund, unemployment trust fund, and railroad retirement account
Other trust funds and accounts ^
Increment resulting from reduction in weight of gold dollar...

2,810
1,117

(')

1944

3,202
1,850

(*)

Increase or
decrease ( - )

393
734

(*)
1,126

3,926

5,053

2,806
788

3,195 ,
1,605

3,594

4, 700

1,107

2,194

4,403

2,209

Total expenditures

5,787

9,103

3,316

Excess of expenditures.--

1,861

4,051

2,190

Total receipts..
Expenditures:
Federal old-age and survivors insurance trust fund, unemployment trust fund, and railroad retirement account
Other trust funds and accounts
Charges against increment on gold
-..

SubtotaL...
• .
Transactions in checking accounts of Government agencies,
etc., (net)i....

(*)

390
717

. (*)

NOTE.—Figures are rounded and^will not necessarily add to totals.
• Less than $500,000. '
°
I Includes sales and redemptions of market obligations.

A summary of receipts and expenditures in trust accounts, increment on gold, checking accounts of Government corporations and
credit agencies, etc., for the fiscal years 1932 through 1944 will be
found in table 1 on page 524, and details by months for the fiscal year
1944 ia tables 3 and 4 on pages 534 and 554.
Certain Govermnent corporations and credit agencies maintain
only checking accounts with the Treasurer of the United States and
the transactions shown in the preceding table and in other tables
in this report represent their net operations. The tables, therefore,
do not furnish sufficient data for an analysis of the financial transactions of thbse agencies. Arrangements have been made with these
corporations and agencies, whereby certain data are submitted to
the Treasury so that the Treasury's records can reflect their operations. These data have been combined and appear in the tables
beginning on page 770 showing sources and uses of funds for the fiscal
year 1944, and from the date of inception of the various corporations
and agencies to June 30, 1944. The figures are not on the basis of
the daily Treasury statement and, therefore, do not agree exactly
with the figures shown in other tables in this report.
FINANCING THE NET BUDGETARY DEFICIT AND
OTHER REQUIREMENTS

The Treasury's financing program during the fiscal year had to
provide for the net budgetary deficit shown on page 34 and for the
funds needed to meet the requirements of Government corporations



36

REPORT OF T H E

SECRETARY OF T H E

TREASURY

and credit agencies and to provide for an increase in the General
Fund balance. The table that .follows summarizes the total cash
requirements, including the General Fund balance increase, and the
net amount of new money raised during the year.
Amount (in
millions of
dollars) '
49,695

Requirements:
Net budgetary deficit, excluding statutory debt retirements.'.
Excess of expenditures in—
(o) Checking accounts of Government corporations and credit agencies:
General
Sales and redemptions of obligations in the market (net)
(6) Trust and other accounts
Subtotal
Increase in General Fund balance

I

1

1,629
. 2,874
•352
,

4,051
10,662

^ Total requirements-

14,713
64,307

Meians of financing:
Public debt receipts (net) f r o m (a) Public issues:
Treasury bills:
Treasury certificates of indebtedness
Treasury notes
Treasury notes, tax series and savings series
Treasury bonds
United States savings bonds
Otherissues

2,862
12,268
8,225
2,087
21,774
13,350
325
•60,891
3,416

i...

(6) Special issues to trust fundsTetc.
Total net borrowing.
1....
NOTE.—Figures are rounded to nearest million and will not necessarily add to totals.
» Excess of receipts (deduct).

64,307

A distribution of the $64,307 milhons net borrowing during the
fiscal year by months and a comparison with the amounts raised in
corresponding months of the previous fiscal year appear in tbe table that follows.
N e t a m o u n t s borrowed, fiscal y e a r s 1 9 4 S a n d 1 9 4 4
[In millions of dollars. On basis of daily Treasury statements, see p. 519]
Month
July
August
September..
October
November..
December..
January. :.-

1943
4, 714
4,549
4, 798
6,420
3,212
12,054
2,899

'4,828
2,534
14,291
6,697
1,112
• -281
4,781

Month

1944

February..
March
April
May
June.

1943
2,964
' 1,483
14,342
6,064

1944
12,448
1,608

252

784

1,399
14,637

64,274

64,307

THE PUBLIC DEBT

Summary oj jinancing operations
-•
The Treasury borrowed a net amount of $64,307 millions in the
fiscal year 1944. This sum was approximately equal to the net
amount of $64,274 millions 4)orrowed in the fiscal year 1943. In
general the pattern and the mechanics of the financing operations in
1944 were similar to those adopted in 1943, but increasing emphasis
was placed on the sale of securities to investors other than commercial banks.



37

REPORT OF THE SECRETARY OF THE TREAStJRY

Gross receipts from the sale of public debt obligations during the
fiscal year, gross expenditures for the redemption and retirement of
public debt items, and the net amount of new money obtained are
shown by types of public debt securities in the table that follows.
Public debt receipts and expenditures during the fiscal year 1944
[In billions of dollars.

On basis of daily Treasury statements, see p. 519]

-Receipts

Issues

Public issues:
Cash:
Treasury bills
..Certificates of indebtedness
Certificates of indebtedness, special series
Treasury notes
Treasury notes, tax series and savings series
Treasury bonds
United States savings bonds (including accrued discount).
All other
^
"^Exchanges
Special issues to trust fimds, etc
_
Total...I

—

54.0
15.3
.5
»5.9
9.0

Expenditures

61.1
.9
.5

15.7
3.9
18.8
10.4

.5
2.4
.5
18.8
7.0

153.8

19.5

8 23.4

Net receipts

2.9
14.4
5.0
2.1
22.9
13.3
.3
3.4

64.3

NOTE.—Figures are rounded and will not necessarily add to totals.
1 Includes $1.9 billions issued in exchange for guaranteed securities.
2 Includes $0.1 billion issued in exchange for guaranteed securities.
8 Includes $0.1 billion of excess profits tax refund bonds.

Financing operations during the year included two complete war
loan drives (the Third and the Fourth War Loans) and the major
portion of another (the Fifth War Loan), two offerings of securities to
commercial banks for cash in periods between drives, and one cash
offering not restricted as to class of subscriber; and, in addition to
these, limited, cash subscriptions were accepted from commercial
banks for securities offered in the Fourth and Fifth War Loans but
were not accounted as parts of the drives. Weekly issues of Treasury
bills were awarded on the basis of competitive bidding, and, to a
limited amount, by fixed price tenders; and sales of United States
savings bonds and Treasury savings notes were continuous throughout
the year. Four maturing Treasury or guaranteed marketable bond
or note issues were redeemed for cash, and exchange offers were made
with respect to 14 called or maturing issues of marketable bonds,
notes, and certificates. These transactions, together with gross issues
and redemptions of savings bonds and savings notes, are summarized
in the following tables. Sales of securities in the three war loans conducted during the fiscal year 1944, as well as salies in the first two
war loans conducted in 1943, are shown in Chart 5 on page 41. All
official circulars and statements relating to the transactions in securities issued during the year are incluided in the exhibits beginning on
page 269.
,
*
. • ^ " ""




38

REPORT OF THE SECRETARY OF THE TREASURY

Public offerings of Treasury bonds, notes, and certificates of indebtedness,^ fiscal
year 1944
[In millions of dollars]
Cash
Date issued

Issue

War
loans

ExTotal
changes issues
Other

1H% Treasury notes, Series A-I947,'due Sept.
2,707
15,1947
-.-..
Aug. 2,1943 • %% Certificates of indebtedness, Series D-1944,
due Aug. 1,1944
Sept. 15,1943 %% Certificates of indebtedness. Series E-1944,
4,122
due Sept. 1,1944...
5,257
Sept. 15,1943 2% Treasury-bonds of Sept. 15, 1951-53
3,779
Sept. 15,1943 2H% Treasury bonds of Dec. 15, 1964-69
Oct. 15,1943 %% Certificates of indebtedness. Series F-1944,
due Oct. 1,1944.
2'1,580
Oct. 15,1943 2% Treasury bonds of Sept. 15, 1951-53 (additional issue)
J
2 1,627
Oct. 15,1943 2K% Treasury bonds of Dec. 15, 1964-69 (additional issue)
Dec. 1,1943 }i% Certificates of indebtedness. Series G-1944,
due Dec. 1,1944
Feb. 1,1944 %% Certificates of indebtedriess, Series A-1945,
3 11
due Feb. 1,1945
,
5,036
<396
3,331
Feb. 1,1944 23^% Treasury bonds of Sept. If, 1956-59
1,920
<292
Feb. 1,1944 2H% Treasury bonds of Mar. 15, 1965-70
Feb. 1,1944 0.90% Treasury notes. Series D-1945, due Mar.
1, 1945...
Mar. 15,1944 1H% Treasury notes. Series A-1948, due Sept.
15, 1948
.
--.-.
Mar. 15,1944 23^% Treasury bonds of Sept. 15,1956-59 (additional issue)
.
,Mar. 15,1944 2H% Treasury bonds of Mar. 15,1965-70 (additional issue)
Apr. 1,1944 %% Certificates of indebtedness. Series B-1945,
due Apr. 1, 1945
May 1,1944 14% Certificates of indebtedness. Series D-x945,
due May 1, 1945
June 26,1944 %% Certificates of indebtedness. Series C-1945,
due June 1, 1945
:
June 26,1944 1K% Treasury notes. Series B-1947, due Mar.
61, 286
15, 1947
June 26,1944 2% Treasury bonds of June 15, 1952-54
8 3, 704 <503
June 26,1944 2H% Treasury bonds of Mar. 15,1965-70 (additional issue)
<637
«1,1

July 12,1943

Various
Various
Various

Totalmarketable issues...
Savings bonds. Series E
Savings bonds. Series F and G..
Savings notes, Series C
Total.

Total

2,707

2,707

989

2, 545

4,122
5,257
3,779

4,122
5, 257
3,779

1,580

1,939

3,519

1,627

1,102

2,729

59

59

3,540

.3,540
5,048
3,728
2,212

5,048
3,728
2,212
2,127

2,127

3,748

3,748

95

95

77
4,877
1,616

77 .
4,877
1,615
3,557
1,286
4,207

1,286
4,207

2,501

2,501

33,858
5 7,009
« 2, 270
6 6, 638

8,742
4,8n
1,408
2,315

42,600
11,820
3,678
8,954

20,734

63,333
11,820
3,678
8,954

49,775

17,276

67,051

20, 734

87, 785

1 Excludescdepositary bonds and adjusted service bonds.
3 Offering restricted to commercial banks.
3 Securities sold to Treasury investment accounts concurrently with war loan, but not included in war
loan quotas.
< Securities sold to commercial banks and Treasury investment accounts concurrently with war loan,
but not included in war loan quotas.
• Excludes Fifth War Loan sales occurring in fiscal year 1945.




39

REPORT OF THE SECRETARY OF THE TREASURY

Disposition of maturing or redeemable public issues of Treasury bonds, notes, and
certificates., of indebtedness and securities guaranteed by ihe United States,^ fiscal
year 1944
'• [Dollars in millions]
Date of re. funding or
redemption

Issue

Redeemed
for

July 15,1943
Aug. 2,1943

1K% RFC notes due July l5, 1943
l i % Certificates of indebtedness, Series B-1943,
due Aug. 1, 1943
Sept. 16,1943 1% Treasury notes, Series C-1943, due Sept. 15,
1943
.
Oct. 16,1943 3H% Treasury bonds of Oct. 16,1943-45
Oct. 15,1943. W o Certificates of indebtedness, Series D-1943,
due Nov. 1,1943....
........
Dec. 1.1943 Ji% Certificates of indebtedness, Series E-1943,
due Dec. 1,1943
Dec. 15,1943 1H% Treasury notes, Series B-1943, due Dec. 15,
1943...
.....-_
Feb. 1.1944 1 WYo FPHA notes, due Feb. 1,1944
Feb. 1,1944 %% Certificates of indebtedness. Series A-1944,
due Feb. 1,1944
Mar. 16,1944 1%. Treasury notes. Series B-1944, due March 15,
1944..
Mar. 15,1944 3H% F F M C bonds of Mar. 16, 1944-64........
Mar. 15,1944 3J4% Treasury bonds of April 16, 1944-46
Mar. 15,1944 1% RFC notes. Series W, due April 15,1944....
Mar. 15,1944 3% HOLC bonds of May 1, 1944-52
Mar. 15,1944 3% F F M C bonds of May 15,1944-49
......
Mar. 15,1944 ^4% Treasury notes, Series A-1944, due Jurie 15,
1944.:..
Apr. 1,1944 l i % Certificates of indebtedness. Series B-1944,
due April 1, 1944
.'...J
May 1,1944 Ji% Certificates of indebtedness. Series C-1944,
due May 1,1944
Various
Various
Various

Ex-changed
for new
securities!

$324

Total

$324
$1, 556

1, 609

97

279
239

1,161

279
1,401

83

96

1,939

2, 035,

95

260.

3,540

3,800

93

53

421
114

421
114

2,127
32
19
296
12
175
130

2,211

96

483
76
1,223
559
604
705

515
95
1,519
571
779
835

94
80
81
98
78
84
65

146

270

416

374

4,877

5,251

93

40

1,615.

1,655

98

Total, all issues

3, 096
2,179
192
3 6, 867

20, 734

23, 830
2,179
192
3 6, 867

12, 334

Total marketable issues..
Savings bonds. Series A-E
Savings bonds. Series F and G
Tax and savings notes. Series A, B, and C

Percent
exchanged

20, 734

33,068

1 Excludes depositary bonds and adjusted service bonds.
^ .
»Includes amounts transferred to matured debt.
3 Includes tax and savings notes surrendered in,pay ment of taxes in the amount of $6,365 millions.

'

•

Third War Loan

ThejjThird War Loan was conducted from September 9 through
October 2,- 1943. For the first time commercial banks were excluded
from the drive and the loan was directed wholly to the sale of United
States Government securities to nohbaiik investors. The organization
of the drive also was a departure from the First and Second War Loans
(conducted in the fiscal year 1943 and described in the Annual Keport
of the Secretary of the Treasury for 1943) in that it was organized on
a State pattern under the direction of State and local war finance
committees, with a chairman in each State reporting to the War Finance Division of the Treasury Department.




40

REPORT OF THE SECRETARY OF THE TREASURY

The goal for the Third War Loan was $15,000 millions, of which
$5,000 millions was the goal for individuals. Sales to investors included in the goal amounted to $18,314 millions, an oversubscription
of $3,314 millions. Individuals exceeded their quota by $377 millions.
Sales of $630 millions to Treasury investment accounts, which were not
counted toward the goal of the drive, brought the total sum raised to
$18,944 millions. This figure is to be compared with sales to nonbank
investors of $7,860 millions in the First War Loan and of $13,476 millions in the Second War Loan.
The ^seven securities offered were similar to those offered in the
Second War Loan. They consisted of:
Marketable issues, all dated September 15, 1943:
% percent certificates of indebtedness due September 1, 1944;
2 percent Treasury bonds callable September 15, 1951, due
September 15, 1953; and
2K percent Treasury bonds callable December 15, 1964, due
December 15, 1969.
Nonmarketable issues:
Savings bonds:
Series E, F, and. G; and
Savings notes:
'
Series C.
In accordance with the policy adopted in 1942, commercial banks
are not permitted to hold the 2)^ percent bonds until ten years from
their issue date.""
Although the three marketable securities were available only in the
formal period of the drive (September 9 through October 2), sales of
the four nonmarketable securities reported from September 1 through
October 16 were counted toward the goal. This, extended period
allowed campaign workers more time for person-to-persbn solicitation
at the beginning of the drive, and also recognized the necessity for
additional time for the reporting and accounting of the great number
of indiyidual sales.
In order to give life insurance companies an opportunity to enter
subscriptions in anticipation of regular receipts, payment against
subscriptions by such companies to the 2 percent and 2^ percent bonds
was permitted to be deferred to November 1, 1943.
- Sales by investor classes, compared with the goals, and sales of each
issue to each investor class are shown in the tables which follow.
Sales of securities during the Third War Loan by classes of investors,
by issues, and by States are shown in the tables beginning on page 671.




REPORT OF THE SECRETARY OF THE TREASURY
SALES

IN EACH WAR

By Investor Classes
DOLLARS"




LOAN

41

42

REPORT OF THE SECRETARY OF THE TREASURY

Sales of securities during the Third War Loan compared with goals hy classes of
investors
[Dollars in millions. On basis of reports of sales]

Class of investor

Individuals, partnerships, and personal trust accounts.
Corporations and other, investors:
Insurance companies
Savings banks
_
Dealers and brokers
State and local governments i
Corporationsand associations'

Percent
of goal
attained

Goal

$5,000

Subtotal.

108

3,000
600
6,400

,

$6, 377
2,620
1,608
894
795
7,121

138
149
124

10,000

12.937

129

15,000

Total sales included in goal.
Treasury investment accounts ' . i .

18,314
630

122

Total all investors.

18,944

NOTE.—Figures are rpunded and will not necessarily add to totals.
»Includes their agencies and their trust, sinking, and Investment funds.
' Includes eleemosynary institutions and certain United States Government corporations and credit
agencies which handlCitheir investments themselves rather than through the facilities of theTreasury Department, and whose purchases in the Third War Loan amounted to $82 millions.
» Treasury investment accounts represent those United States Government agencies and trust funds whose
investments are handled through the facilities of the Treasury Department.

Sales of securities during the Third War Loan hy classes of investors and by issues
[In millions of dollars. On basis of reports of sales]
l i % cer2H%
tificates 2%
Saving of indebt- ury Treas- Treasury
bonds bonds
notes
edness Sept. 15,. Dec. 15,
Series C Sept 1,
1951-53
Series E SeriesGF
1964-69
1944
and
Savings bonds'

Class of investor

Individuals, partnerships, and personal
trust accounts
...j

2,472

Corporations and other investors:
Insurance companies
Savings banks .
Dealers and brokers.
State and local govei^nments 2
Corporations and associations 3..

Total sales

. . . . .

4
1

193

366

1,220

561

5,377

1

894
1,032
480
123
1,357

1,585
354
92
236
473

X 2,620
1,508
894
795
7,121

30
231

26
2,262

136
119
322
376
2,803

(*)

Total corporations and other investors
•
Total sales included in goal
Treasury investment accounts * . . . .

565

Total -

(*)
(*)

266

2,289

3,756

3,886

2,739

12,937

2,472

831

2,483

4,122

5,106
151

3,300
479

18, 314
630

2,472

• 831

2,483

4,122

5,257

3,779

18,944

NOTE.—Figures are roiinded and will not necessarily add to totals. .
•Less than $500,000.
J Savings bonds are shown at issue price.
' Includes their agencies and their trust, sinking, and investment funds.
«Includes eleemosynary institutions and certain United States Government corporations and credit
agencies Which handle their investments themselves rather than through the facilities of the Treasury
Department.
. * Treasury investment accounts represent those United States Government agencies and trust funds
whose investments are handled through the facilities of the Treasury Department.

• Fourth War Loan
^
The Fourth War Loan was conducted from January 18 through
February 15, 1944. Its organization was essentially similar to that
of the Third War Loan. Again the drive was directed exclusively to



REPORT OF THE SECRETARY OF THE TREASURY

43

nonbank subscribers. The goal of $14,000 millions was exceeded by
$2,730 millions. However, sales to individuals amounted to only
$5,309 millions, as against a goal of $5,500 millions.
The seyeral securities offered in this loan differed significantly in
only one instance from those offered in the Third Loan in that there
was offered a 12-15-year bond at 2)^ percent instead of an 8-10-year
bond at 2 percent. The three marketable and the four nonmarketable
securities offered' were as follows:
Marketable issues, all dated February 1, 1944:
% percent certificates of indebtedness due February 1, 1945;
2}i percent Treasury bonds callable September 15, 1956, due
September 15, 1959; and
2K percent Treasury bonds callable March 15, 1965, due
.
March 15, 1970.
Nonmarketable issues:
Savings bonds:
Series E, F, and G; and .
Savings notes:
Series C.
All subscriptions for savings bonds. Series E, F, and G, and for savings
notes reported between January 1 and February 29 were credited to
the loan, to give more time to canvass individuals and to clear the
funds from issuing agents through the Federal Reserve Banks.
Sales by investor classes, compared with the goals, and sales of each
issue to each investor class are shown in the tables which follow.
Sales of securities during ihe Fourth War Loan compared with goals by classes of
investors
[Dollars in millions.

On basis of reports of sales]

Class of investor

Individuals, partnerships, and personal trust accounts..
Corporations and other investors:
Insurance companies
Savings banks
Dealers and brokers:
State and local governments L..
Corporationsand associations 2
Subtotal
Total all investors.

Percent
of goal
attained

Goal

$5, 500
I

...J

}

$6,309

2,600
300'
5,700

2,141
1,262
433
789
6,796

136
144
133

8, 500

11,421

134

14, O O
Q

16,730

"720

NOTE.—Figures are rounded and will not necessarily add to totals.
1 Includes their agencies and their trust, sinking, and investment funds.
3 Includes eleemosynary institutions, and certain United States Government corporations and credit
agencies which handle their investments themselves rather than through the facilities of the Treasury Department, and whose purchases in the Fourth War Loan amounted to $49 millions.




44

REPORT OF THE SECRETARY OF THE TREASURY

Sales of securities during the Fourth War Loan hy classes of investors and by issues
[In millions of dollars.

On basis of reports of sales]

Savings b o n d s i
Class of I n v e s t o r

^ % cer2U%
2H%
Savings tificates
easu
notes i n d eof t e d - T r e a s u r y T rb o n d sr y
b
bonds
Series
ness
S e p t . 15, M a r . 15,
C
F e b . 1,
1956-59
1965-70
1945

Total

Series
E

Series
Fand
Q

I n d i v i d u a l s , p a r t n e r s h i p s , a n d personal
t r u s t accounts . . . __ _ . 3,187

573

183

496

517

352

5,309

35
35

3
2

207
136
266
452
^ 3,479

801
1,028
158
104
722

1,095
61
8
147
256

2,141
1, 262
433
789
6,796

C o r p o r a t i o n s a n d other investors:
Insurance companies.
Savings b a n k s , » .
Dealers a n d brokers
S t a t e a n d local g o v e r n m e n t s ^
Corporations a n d associations 3

(•)

39
341

. T o t a l for corporations a n d other
investors
. .
T o t a l sales

.

..

(*)
47
.1»997

460
3,187

2,049

4, 540

2,813

1,567

11, 421

1,024

2,232

6,036

3,331

1,920

16,730

NOTE.—Figures are iipunded and will not necessarily add to totals.
*Less than $600,000.
1 Savings bonds are shown at issue price.
3 Includes their agencies and their trust, sinking, and investment funds.
3 Includes eleemosynary institutions and certain United States Government corporations and credit
agencies which handle their investments themselves rather than through the facilities of the Treasury
Departrnent.

Further details oh sales of. securities during the Fourth War Loan,
by classes of investors, by issues, and by States' are shown in the
tables beginning o'n page 676.
At the time the Fourth War Loan was being conducted, commercial
banks holding savings deposits (as defined in Regulation Q of.the Board
of Governors of the Federal Reserve System) were permitted to make
limited subscriptions to the 2):4 percent and the 2^ percent marketable
Treasury bonds. Except as indicated below, commercial banks are
not permitted to hold the 2}^ percent bonds until September 15, 1946,
or to hold the 2% percent bonds until February 1, 1954. Such banks
were also permitted to subscribe to Series F and Series G savings,
bonds on and after January I, 1944. Subscriptions for any or all
of the four issues were restricted to an amount not to exceed, in the
aggregate, 10 percent of a bank's savings deposits as shown on its
books as of the date of the most recent call statement required by the
supervising authorities prior to the date of subscribing for such bonds,
or $200,000, whichever was less. However, no bank may hold more
than $100,000 (issue price) of Series F and Series G savings bonds
(Series 1944), combined. This latter restriction is the same as that
to which other purchasers of Series F and Series G bonds are subject.
Purchases of these four securities' by commercial banks holding
savings deposits totaled $623 millions during the Fourth War Loan.
Such purchases were not included in Fourth War Loan quotas or
credited tp Fourth War Loan sales. Treasury investment accounts
also purchased some of the securities offered as part of the loan, and



45

REPORT OF T H E . SECRETARY OF T H E TREASURY

these too were not included in the Fourth War Loan quotas or credited
to Fourth War Loan sales. The details of the securities and amounts
purchased by commercial banks and by Treasury investment accounts
were as follows:
.
Commercial
banks holding Treasury investment
savings deaccounts
posits

Security

Total

In millions of dollars
^^% Certificates of indebtedness, Feb. 1,1946
2H% Treasury bonds, Sept. 15, 1956-59.. .
2yi% Treasury bonds, March 16,1966-70
Series F savings bonds
•
Series G savings bonds
1
Total

-.

,
.

314
36
83
191
623

11
82
257

11
396
292
83
191

349

972

Copies of letters of the Secretary of the Treasury sent to commercial
banks, large corporations, and insurance companies in connection with
arrangements for the Fourth War Loan are shown beginning on
page 504.
Fijth War Loan
In the final month of the fiscal year 1944, the Fifth War Loan was
opened.. The goal was $16,000 millions. Total sales amounted to
$20,639 millions. Marketable securities^ were on sale during, the
formal period of the drive, from June 12 through July 8, 1944. Sales
of savings bonds and savings notes through June and July were
counted in total subscriptions to the loan. I n this summary and in
all tables referring to the Fifth War Loan, the subscriptions credited
to the loan in July are included, but they are excluded from all general
tables referring to public debt operations for the fiscal year. Major
emphasis throughout the drive was placed on the quota of $6,000
millions for individuals, which was oversubscribed by $351 miUions.
Eight securities were offered in the Fifth War Loan. Seven issues
were similar to those sold in the first four drives, and a new one, an
issue of l)i percent Treasury notes, due March 15, 1947, was offered.
The securities offered were as follows:
Marketable securities, aU of which were dated June 26, 1944,
except the 2K percent bonds:
% percent certificates of indebtedness due June 1, 1945;
\){ percent Treasury notes due March 15, 1947;
2 percent Treasury bonds callable June 15, 1952, due June
15, 1954; and
- 2)^' percent Treasury bonds callable March 15, 1965, due
March 15, 1970, and dated February 1, 1944. (This was
a reopening of the issue sold in the Fourth War Loan.)




46

REPORT OF THE SECRETARY OF THE TREASURY
Nonmarketable securities:
Savings bonds:
Series E, F, and G; and
Savings notes:
Series C.

During the drive, a deferred payment plan of somewhat wider scope
than that offered in the Third War Loan was made available whereby
life insurance companies, as well as savings institutions; State and
local governmental units, and similar public corporations and agencies
could have until September 30, 1944, to complete payments for sub-,
scriptions to the two issues of Treasury b(jnds. Subscriptions entered
under these arrangements aggregated $340 millions. These were
included in the total sales of $20,639 millions.
Sales by securities, by investor classes, and by States are shown in
detail in the tables beginning on page 680. Sales by investor groups,
compared with the goals, and sales of each issue to each investor
class are shown in the following tables.
Sales of securities during the Fifth War Loan compared with goals hy classes of
investors
[Dollars in millions. " On basis of reports of sales]

Class of investor

.

:

]

Sales

$6,000

Individuals, partnerships, and personal trust accounts..
Corporations and other investors:
Insurance companies.
Savings b a n k s . . . . . .
Dealers and brokers
State andiocal governments i
Corporations and associations 2

Percent of
goal attained

Goal

$6, 351

106

2,600
400
7,100

2, 769
1,626
533
1.260
8,201

172
133
133

Subtotal....

10,000

14,288

143

Total all investors.

16,000

20, 639

129

NOTE.—Figures are rounded and will not necessarily add to totals.
> Includes their agencies and their trust, sinking, and investment funds.
' 2 Includes eleemosynary institutions, and certain United States Government corporations and credit
agencies which handle their investments themselves rather than through the facilities of the Treasury
Department and whose purchases in the Fifth War Loan amounted to $32 raillions.




47

REPORT OF THE SECRETARY OF THE TREASURY

Sales of securities during the Fifth War Loan hy classes of investors and hy issues
[In millions of dollars.

On basis of reports of sales]

Savings
bonds 1

K% Cer2%
tificates
TreasTreasSayings of inury
ury
notes debtedbonds
notes
Series
ness
Series F a n d Series C June 1, Mar. 15, June 16,
1962-54
E
1947
1945
G

Class of investor

Individuals, partnerships, and personal trust accounts
-. . . . 3,036

181

468

353

1,322

2

1
120
2,271

170
84
148
582
3,318

309
121
133
119
913

924 .
1,250
242249
1,242

244

2,394

4,302

1,595

3,907

1,846

14,288

818

2,576

4,770

1,948

5,229

2,263

20,639

7
2

and
1

Total sales

574

2^%
Treasury
bonds Total
Mar. 15,
1965-70

28
207

Corporations and other investors:
Insurance companies
Savings banks..
.
Dealers and brokers
..State and local governments 2
Corporations and associations 3.
Total for corporations
other investors

m%

3,036

(*)

417

6,361

1,367
68
9
163
249

2,769
1,625
633
1,260
8,201

NOTE.—Figures are rounded and will not necessarily add to totals.
*Less than $500,000.
1 Savings bonds are shown at issue price.
2 Includes their, agencies and their trust, sinking, and investment funds.
3 Includes eleemosynary institutions and certain United States Government corporations and credit
agencies which handle their investments themselves rather than through the facilities of the Treasury
Department.
•
', •

As was the practice in the Fourth War Loan, purchases by Treasury investment accounts and the limited purchases aUowed commercial banks concurrently with the drive were excluded from, both goals
and sales attributable to the Fifth War Loan. Commercial banks were
permitted to ^subscribe to the 2 percent and 2K percent bonds offered in
the drive, as well as to Series F and G savings bonds, up to 20percent
of the cqmbined amount of savings deposits and time certificates of
deposit of individuals and nonprofit corporations or associations (as
of the most recent call statement prior to the date of subscribing for
the bonds) but not more than $400,000 for any ono bank. ^ This limit,
however, was cumulative, and included any previous subscriptions a
bank might have entered, for its own account, for Series F or G savings
bonds since January 1, 1944, or for 2 ^ percent and 2}^ percent Treasury bonds offered during the Fourth War Loan. Purchases of Series F
and Series G bonds remained subject-to the $100,000 annual limit referred to in connection with the Fourth War Loan. Except for the
limited investment of time and savings deposits as defined above, commercial banks may not hold the 2)^ percent bonds until February 1,
1954.




48

REPORT OF T H E SECRETARY OF T H E TREASURY

The securities and amounts purchased by commercial banks and by
Treasury investment accounts were as follows:
Commercial
b a n k s holding
savings deposits a n d issuing
time certificates

Security

Treasury
investment
accounts

Total

I n millions of dollars
2% T r e a s u r y b o n d s , J u n e 15, 1952-54
2 ^ % T r e a s u r y b o n d s , M a r c h 15, 1965-70
Series F savings b o n d s
Series G savings b o n d s
Total

593

599
646
39
74

593

599
53

.....

1,358

39 •
, 74

......

766

_

A copy of the letter of the Secretary of the Treasury sent to commercial banks in connection with arrangements for th-e Fifth War
Loan is shown on page 506.
United States savings bonds
Savings bond sales.—Total sales of savings bonds during the fiscal
year 1944 amounted to $15,498 millions, issue price. This reflected
an increase of $3,709 millions over sales in 1943. As of June 30, 1944,
the current redemption value of United States savings bonds outstanding, including those sold before 1944, amounted to $34,606
millions. This amount was 17.2 percent of the public debt outstanding, as compared with 15.5 percent a year earlier. Savings bonds
were sold in 1944 in greater volume than in any earlier year, continuing
to absorb funds which otherwise might have contributed to the
inflationary pressure on price levels and made the tasfe of economic
stabilization more diflScult. More information on savings bonds, by
series, from March 1935, the month when savings bonds (S'eries A)
were first sold, through June 30, 1944, is contained in the tables
beginning on page 684. Sales of savings bonds. Series E, ,F, and G,
those issued throughout the war period, are shown by series in the
following table and in Chart 6 on page 49.
Sales of Series E, F, and G savings bonds, fiscal years 1941 through 1944 o,nd by
•
.
months for the fiscal year 1944
, .
'

|In millions of dollars.
.

B y fiscal years:
1941 ( M a y a n d .Tune)
1942 .
..:.__..
1943
1944
.
By months:
1943—July
August
September
October..
November
December
1944—January .
February
March
April
May
June

On basis of daily Treasury.statements, see p. 519]
Series E

Period

1..1
..;
.*

.... •

- ..

.•

•.

. .
. .

.
1
.

Series G .

Total

203
3,526
8,271
11,820

67'
.435
758
802 -

396
2,032
2,769 •
2,876

664
6,993
11,789
15,498

683
661
1,400
1,340
665
728
1,085
2,102
576
606
624
1,350

38
28
139
93
23
24
127
157
23
19
15
115

169
112
387
276
109
101
487
522
110
114
111
377

890
802
1,927
1,708
798
863
1,698
2,781
709
739
751
1,842

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




Series F

49

REPORT OF THE SECRETARY OF THE TREASURY
SALES, REDEMPTIONS AND AMOUNTS OUTSTANDING
OF UNITED STATES SAVINGS BONDS
MONTHLY JULY 1942 THROUGH JUNE 1944

J A S O N D J F M A M J

J ..
.A

S O N D J F M A M J J A S

-REDEMPTIONS, Series A to G "

• •BHlEiililifiltl
J A S O N D J F M A M J
J A S O N D J F M A M J J A S
1942
1943
1944

J A S O N D J
1942

F M A M J

J A S O N D J
1943 .
C H A R T 6.

613185—45-




F M A M J J
1944

A S

50.

REPORT OF THE SECRETARY OF THE TREASURY

Most of the increase in sales of savings bonds is accounted for by
Series E. The dollar volume of sales and the number of units sold of
Series E bonds of each denomination in the fiscal years 1941 through
1944 and by months for 1944 are shown in the following table. Chart
7 shows this information by months from July 1942 through June
1944.
Sales of Series E war savings bonds of each denomination, fiscal years 1941 through
1944 and by months for the fiscal year 1944
[Sales by denominations estimated on basis of total deposits as reported by Treasurer of the United States]
Denomination
Period
$25

$50

$100

$500

$1,000

Total

Issue price of bonds sold (in millions)
B y fiscal years:
1941 (May and June)
1942
1943...
1944.
By months:
1943—July
August
September.....
October.
November..!..
December.
1944—January
February
March
. . April
May
June...
....

$14
616

$13
342

$41
813

$41
637

2,988
4,149

1,081
1,-642

1,714
2,684

1,007
1,397

290
291
377
394
303
329
343
549
274
291
306
402

99
102
159
174
108
117
141
247
103
107
111
174

129
126
340
335
127
140
225
509
125
108
111
309

67
60
221
190-

54
60
135
312
30
40
40
187

1,119
1,481
2,048

$203
3,626
8,271
•11,820

97
83
304
247
72
81
241
485
44
60
66
278

683
661
1,400
1,340
665
728
1,085
2,102
576
606
624
1,350

$93

Number of bonds sold (in thousands)
By fiscal years:
1941.
1942
.
1943...
1944
By months:
1943—July
August-....
September.
October....
November.
December.
1944—January...
February..
March
April
May...
June

767
. 32,832
159,369
221,284

353

552

108

125

9,107
28,828
43,800

10,837
22.851
34, 447

1,698
2,686
3,725

1,493
1,975
2,730

1,905
.66,967
215,709
305,986

15,484
15,508
20,081
21,029
16,162
17, 530
18,291
29, 272
14,-629
15,534
16, 314
21,450

2, 646
2,722
4, 236
4,633
2,888
3,132
3, 756
6.600
2,744
2,845
2,955
4,645

1,722
1,675
4,535
4,466
1,698
1,867
2,995
6,782
1, 670
1,434
.1,483
4,120

179
160
688
507
145
161
361
832
79
108
106
498

129
110
406
329
97
108
321
647
68
80
76
370

20,161
20,175
29,845
30,964
20,989
22, 798
25,723
44,133
19,180
20,001
20,933
31,083

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

Continued advancement of the payroll sayings plan contributed
substantially to the aggregate increase in sales of war savings bonds.
Sales of Series E bonds under this plan during the fiscal year amounted
to more than $5.5 billions, or about 47 percent of the total amount of
all Series E bonds sold during the year.




51

REPORT OF THE SECRETARY OF THE TREASURY
SALES OF SERIES E SAVINGS BONDS BY DENOMINATIONS
MONTHLY JULY 1942 THROUGH JUNE 1944

A. NUMBER OF PIECES
MILLIONS'

MILLIONS

\

1

•1

28

' '

.

24

A

20

J,Jv V

/

'

16

A/ V^^$25 Denom/nc mrt

12

8

1

.

/

4

1942

1943

1944

1942

1943

1944

B. DOLLAR VALUE AT ISSUE PRICE

1942

1943




1944

^
CHART 7.

1942

1943

1944

52

REPORT OF T H E SECRETARY OF T H E TREASURY

Chart 8 on page 53 summarizes the growth of the plan since its
beginning in the latter part of the calendar year 1941. The following
table shows the extent of participation in the plan monthly during
the fiscal year 1944. A tendency will be''noted for the amount of
payroll deductions to be somewhat higher during war loan months
than the average of monthly deductions during the year, as, -for example, in January and June 1944. This reflects the authorization by
employees of supplementary deductions during drives. Further data
may be found in the table on page 698 of this report.
Extent of participation in payroll savings plan, monthly, fiscal year 1944
[Estimated on basis of reports from companies and governmental agencies] •
Month"

1943—July
August
September
October...
No vember
December.
1944—January...
February..
Maitch
April
May.
June

Number of
persons participating 1

Total
pay of
participants

Total
amount
deducted

Millions
26.6
26.4
26.4
26.4
26.6
26.8
27.1
27.3
27.5
27.3
27.2
27.6

Millions of
dollars
4,615
4,589
4,628
4,892
4,783
4, 947
4,847
4,844
5,082
4,897
4,842
6,094

Millions of
doUars
420
413
. 435
466
440
470
476
466
498
476
460
. 540

Percent of
participants'
pay deducted

9.1
'9.0
9.4
9.3
9.2
9.5
9.8
9.6
9.8
9.7
9.5
10.6

1 Includies employees of Federal, State, and local governments, and members of the armed forces.,

Included among the firms having the payroll savings plan in operation at the end of the fiscal year were 99 percent of the firms with 500
or more employees and 94'percent of those with 100 to 500 employees.
The persons employed by these firms represented about 85.4 percent of
the total employees of business and industry in the country at the end
of the fiscal year.
-Sales of Series F and G savings bonds increased at a more moderate
rate than sales of Series E bonds during the year. On June 30, 1944,
Series F bonds outstanding amounted to $1,996 millions, at current
redemption values, and Series G bonds amounted to $7,861 millions,
at issue price. This was a net increase, for the two series combined,
of $3,495 millions over the amount outstanding on June 30, 1943.
As noted, previously, beginning January 1, 1944, commercial banks
were permitted to purchase Series F and G bonds in a limited amount
determined by their savings deposits, subject also to the annual purchase limit of $100,000 of ths two series combined, to which all subscribers are subject. Purchases of Series F savings bonds under this
authorization amounted to $111 millions through June 30, 1944, and
purchases of Series G bonds to $247 millions.
Savings bond redemptions.—United States savings bonds are the keystone of the Treasury's program to absorb the small savings of in-




53

REPORT OF THE SECRETARY OF THE TREASURY
PARTICIPATION IN PAYROLL SAVINGS PLAN
MONTHLY DECEMBER 1941 THROUGH JUNE 1944

J F M A M J
J A S O N
1942
DOLLARS
Millions .

F M A M J J A S O N D J F M A - M J J A S
1943
1944

f—
Aggregate Amount Deducted

DOLLARS
Millions

D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
1942
1943
. 1944
PERCENTDeduction os a Percentage of Pay
of Workers Actually Participating

"PERCENT

10

•iraiiiPf 1
D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
1942
1943
'
1944




C H A K T 8.

II

54

REPORT OF THE SECRETARY OF THE TREASURY

dividuals, which is part of the broader program of economic stabilization. The success of this program requires, at the present time, that
savings bonds be retained by their purchasers. There is every reason
to believe that, on the whole, this has been done, and that most of those
redemptions which have occurred were the result of personal emergencies which would have required the liquidation of savings in whatever forms they might have been held.
Redemptions of all'series of savings bonds during the fiscal year
amounted to $2,371 millions,.including accrued discount. The table
following shows redemptions for all series annually from 1941 through
1944, and for 1944 by months.
Redemptions of savings bonds, fiscal years 1941 through 1944, (^rid hy months
for the fiscal year 1944
[In millions of dollSirs at current redemption value.
Period
By fiscal years:
1941 . . .
1942
1943
1944
By months:
1943_july.._ .
August
September . .
October
November
December
i
1944—January..^..:
February
March
April
May
June

On basis of daily Treasury statements, see p. 519J

Series A-D

148
133
88
79

L

^

J.

•

Series E

Votal

Series F

Series G

- 60
689
2,100

/*>3
. 17
68

1
12
65
134

148
207
848
2,371

120
134
137
126
150
186
164
161
241
213
250
220

3
4
3
3
6
5
5
6
7
5
6
6

8
7
9
9
10
10
13
11
14
13
16
15

138
152
155
144
170
207
188
185
268
237
279
248

(*)

7
7
7
6
6
6
7
7
7
7
7
6

'

NOTE.—Figures are rounded and will not necessarily add to totals.
•Less than $500,000.
''

Cumulative sales of savings bonds. Series E, F, and G, including
accruals, and redemptions, at current redemption values, are compared in Chart 9 on page 55.. Between May 1, 1941, when Series E, F ,
and G bonds were first issued, and June 30, 1944, sales of these series
amounted to $34,108 millions, including accrued discount of $164
millions. Redemptions in the same period amounted to $3,127 millions, or about 9.2 percent of sales. Thus, nearly 91 percent of Series
E, F, and G bonds sold were still outstanding on June 3.0, 1944.
Sales of Series E war savings bonds between May 1, 1941, and June
30, 1944, amounted to $23,973 millions, including accrued discount of
$153 millions. Redemptions in the same period amounted to $2,849
millions, or L1.9 percent. Therefore, 88.1 percent of the original sales
of this series were-still held by the original purchasers. This compares with 93.8 percent so held a year earlier.




55

REPORT OF THE SECRETARY OF THE TREASURY
SALES OF SAVINGS BONDS COMPARED WITH REDEMPTIONS
MONTHLY JANUARY 1942 THROUGH JUNE 1944
Dollar.Amounts
DOLLARS
Billions

]
[
TOTAL-E.F AND G BONDS

1943

1943

Percent Stiir Outstanding
PERCENT"

1942

1943




1944

C H A R T 9.

1942

1943

1944

56

REPORT OF THE SECRETARY OF THE TREASURY

Cumulative sales of Series F bonds between May 1, 1941 and June
30, 1944, amounted to $2,073 milhons, including $12 millions of accrued
discount, while cumulative redemptions were $78 millions. Comparable figures for Series G savings bonds are sales of $8,062 millions
and redemptions of $201 millions. Thus, about 96.3 percent of Series
F bonds and 97.5 percent of Series G bonds remained outstanding at
the end of the fiscal year.
Detailed information on cumulative sales and redemptions of Series
E bonds, by denomination, and of Series F and G bonds, without
regard to denomination, is contained in the table following.
Cumulative sales of Series E, F, and G savings bonds compared with cumulative
redemptions, selected months from December 1941 to June 1944
Sales includmg accruals and redemptions at current'redemption value, in millions of dollars. Denominations estimated on basis of total deposits and ledemptions, respectively, as reported by Treasurer of the
UnitedStates]
1941
December

1942
June

1944

1943

December

June

December

June

SERIES E

$25 denomination:
Cumulative sales
Cumulative redemptions
Percent outstanding
$50 denomination:
Cumulative sales
Cumulative redemptions
Percent outstanding
$100 denomination:
Cumulative sales
Cumulative redemptions
Percent outstanding
$500 denomination:
. Cumulative sales
Cumulative redemptions
Percjent outstanding
$1,000 denomination:
Cuinulative sales,
, Cumulative redemptions
Percent outstanding.

113.9
1.1
99.0%

4
>

5,632.4
938.4 .
83.3%.

7,826. 2
1,649.8
78.9%

93.2
0.7
99.2% .

365.0
5.2
98.5%

807.0
22.2
97.3%

1,440.4
91.9
93.6%

2, 206. 6
210.6
90. 5%

3.100.6
399.0
87.1%

864.6
13.1
98.6%

1, 598. 8
36.7
97.7%

2, 576.0
97.0
96. 2%

3, 781. 6
196.1
94.8%

5,183.0
362. 4
93. 0%

677.8
11.0
98.4%

1,086.3
26.0
97.6%

1,689.0
63.6
96.8%

2, 346. 6
99.6
95.8%

3,097.9
174.0
94. 4%

449.7
.4.6
99. 0%.

1,213. 2
20.1
98.3%

1,764.9
44.9
97.6%

2, 700.1
86.6
96.8%

3, 590. 6
155.8
96. 7%

4, 765. 7
263.0
94. 5%

1,144.7
n.i
99.0%

3, 730.8
60.0
98.4%

7,143.6
220.3
96.9%

12,036.3
748.6
93.8%

17, 557. 7
1,600. 5
90.9%

23,973. 4
2,848. 5
' 88.1%

207.7
0.4
99. 8%

All denominations:
Cuinulative sales
:
Cumulative redemptions...:
Percent outstanding..
_.

3,630.7
419.6
88.4%

229. 4
2.4
99. 0%
.

1,886.6
90.5
95. 2%

268.4
2.4
99.1%

..

630.4
10.7
98.3%

501.8
2.9
99.4%

861.3
7.4
99.1%

1, 262. 2
19.9
98.4%

1,610.9
42.2
97.4%

2,073. 3
77.6
96.3%

1,184. 9
2,426. 6
2.1
12.4
99.8% . 99.5%

3,700.9
31.5
99.1%

5,186.1
66.9
98. 7%

6, 340.8
120.3
98.1%

8,061.7
200.9
97. 5%

SERIES F

All denominations:
Cumulative sales
_
Cumulative redemptions
Percent outstanding
SERIES Q

All denominations:
Cdmulafive sales
Cumulative redemptions
Percent outstanding

-..

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

Redemptions of the smaller denominations of Series E bonds constitute a larger proportion of.accumulated sales of these denominations
than do redemptions of the larger denominations. As of June 30,1944,
about 21 percent of the $25 Series E bonds had been redeemed, as
compared with about 12 percent of all Series E bonds. Redemptions



REPORT OF T H E

SECRETARY OF T H E

TREASURY

57

of $50 Series E bonds in relation to sales, amountmg to about 13 percent, were not greatly different ^from redemptions of all denominations of Series E bonds combined. Redemptions of bonds of $100,
0 $500, and $1,000 denominations were a smaller proportion of the
cumulative sales than redemptions of all denominations, and exhibited very little variation as between these denominations. A
relatively larger volume of redemptions in the small denominations
is, of course, to be expected. Individuals with sniall incomes who
purchase bonds in small units are less likely than individuals with
large incomes who purchase bonds in large units to have other liquid
savings on which they can draw in emergencies. There is also the
possibihty, although it is not capable of statistical demonstration,
that individuals w^ho find it necessary to liquidate their holdings of
savings bonds cash their smaller denomination bonds before cashing
/bonds of larger denominations,' and there is the probability that the
majority of personal financial emergencies involve relatively small sums.
The table which follows compares redemptions of all series of United
States savings bonds with the amounts outstanding, annually for the
last four fiscal years, and monthly during the fiscal year 1944. '
Redemptions of all series of savings bonds as percent of amount outstanding, fiscal
years 1941 through 1944 o^^/ hy months for the fiscal year 1944
fDojlars in millions. On ba.sis of daily Treasury statements, see p. 519]
'
ou
R e d e m p t i o n s > Atmn d in t outs a
ng ' at
d u r i n g year or e n d of year or
month
month

Period

B y fiscal y e a r s :
1941
1942
...
1943
1944
. .
By months:
1943—July
August- September... . . . .
October
November
.
.
December
1944—January
February
March
April
May
June
.-

..

.
.._....

_.

$148
207
848
2,371

-

138
152
156
144
170
207
188
185
268
237
279
248

.
..'.-

.

.

. . _._.
..-.:....

'

Redemptions
as percent of
amount outstanding

. $4,314
10.188
21, 256
34, 606

3.43
2.04
3.99
6.85

22,030
22,694
. 24,478
26,056
26,697
27,363
28,901
31,515
31,974
32,497
32,987
34,606

.63
.67
.63
.55
.64
.76
.65
.69
.84
.73
.85
.72

NOTE.—Dollar figures are rounded and will not necessarily add to totals.
* At current redemption values, except Series G bonds which are valued at par.

In view of the predominance of Series E savings bonds and of the
special importance of their redemption for the problem' of economic
stabilization, it may be of interest also to note particularly the monthly
trend of Series E bond redemptions. While the percentage of redemptions to total amounts outstanding increased during the fiscal year
1944, in no month did the rate reach the peak of 1.31 percent reached
in March 1943. The following table shows the ratio of Series E
savings bond redemptions to the amount of E bonds outstanding by
months in the past three fiscal years.



58

REPORT OF THE SECRETARY OF THE TREASURY

Percentage of Series E war savings bond redemptions to total amount outstanding
hy months in the fiscal years 194^, 194S, and 1944
Fiscal year Fiscal year Fiscal year
1942
1944
1943

Month

Percent
July.
August
September.
October....
November.
DecemberJanuary...,
February..
March
April
May
June..

The table following shows the cumulative redemption experience of
savings bonds, by years from issue date, for bonds of Series A through
Series E issued before our entry into the war, which were purchased
mainly for their investment characteristics, and for Series E bonds
issued in 1942 and 1943, which were purchased for patriotic motives as
well. Redemption experience of Series F and G bonds combined is
also shown.
,
,
Percent of sales of savings bonds of each denomination redeemed by the end of various
yearly periods through June SO, 1944
[On basis of Public Debt accounts, see p. 519]
Percent of bonds issued through Dec. 31, 1941, Series A to E, redeemed by end of—
Denomination

1 year
(1935-41
Series)

2 years 3 years 4 years
(1936-41 (1935-41 1936-40)
Series)
Series)
Series)

5 years
(1935-39
Series)

6 years
(1935-38
Series)

7 years
(1935-37
Series)

8 years
(1935-36
Series)

38
35
33
28
21
24

41
39
36
31
24
27

43
41
38
33
25
29

9 years
(1935
Series)

Percent
. $25......
$50
$100
$500
$1,000
....
All denominations.-

18
15
14
-12
-8
10

24
20
19, >
16
12
14

•30
26
24
21
15
. 18

Percent of Series E
bonds issued from
Jan. 1,1942, redeemed
by the end of—

43
40
38
33
27
31

Percent of Series F and G bonds issued from May 1, 1941, redeemed
by the end of—

Denomination
1 year
(1942-43
Series)

2 years
(1942 Series)

1 year
(1941-43
Series)

2 years
(1941-42
Series)

3 years
(1941 Series)

Percent
$25
$50
r
$100.-—
6
$500----.
6
$1,000—.
6
$6,000
5
$10,000
-.
5
All denominations5
NOTE.—The percentages shown in this table are the proportions of the value of the bonds sold in'any
calendar year which are redeemed before July 1 of the next calendar year, and before July 1 of succeeding
calendar years. The percentages for each annual series have been calculated separately; the composite percentages shown above are simple averages of the percentages for each annual series.
'This denomination offered in Series F only. Sales and redemptions of the 1941 series in this denomination
have been excluded from the computation of the percentages of $25 bonds redeemed because such bonds
were available for less than a month in 1941.
3 These denominations not offered. •




8

59

REPORT OF THE SECRETARY OF THE TREASURY

The table shows a gradual increase in the cumula,tive proportion
of bonds redeemed with the increase in the number of years that a
particular annual series has been outstanding. Thirty-one percent of
the 1935 series had been redeemed at the end of 9 years. The table
also shows that redemptions of Series E bonds issued from January 1,
1942, have been considerably higher during the first two years of their
currency than in the case 'of the pre-war issues of Series A - E bonds—
cumulative redemptions at the end of two years amounting to 15
percent as compared with 10 percent for the average of the pre-war
issues. This increase has been entirely accounted for by redemptions
of $25 and $50 bonds, as redemptions of bonds of $100 and higher
denominations have been slightly lower in the case of bonds issued
since our entry into the war than in the case of those issued previously.
Redemptions of Series F and G bonds have been much lower than
those of Series A - E bonds irrespective of date of issuance.
Issuing agents jor war savings bonds.—At the end of the fiscal year
there were 54,454 agents qualified to issue Series E war savings bonds,
an increase of over 3,000 since June 1943. These figures include a
small number of subagents and branches of issuing agencies.
/ An increasing number of nonfinancial corporations have qualified
as issuing agents in order that bond deliveries may be made more
rapidly to their employees. Postoffice issuing agents continued to
increase during the year, in part as a result of changes in classifications
of post offices from a lower to a higher class, and partly in response
to the demand for a larger number of readily available outlets for
sales to small investors.
The following table shows the number and types of issuing agents
in June 1944, and quarterly for the preceding year.
Number of agents qualified to issue Series E savings bonds, on quarterly dates from
June 194s through June 1944, classified '
1943

1944

Classification
June
Commercial and savings banks i
Building and loan associations
Credit nnions
_
_
Other corporations *.
_ _ .

_ _
_
. . . . .

Total other than post oflQ.ces. _. . . . . . . .
Post offices
_
Grand total

^September December

March

June

15,342
3,684
2,753
9,240

15,336
3,674
2,719
9,472

15,298
3,648
2,685
9,679

16,304
3,640
2,645
9,929

15,244
3,587
2,347
10, 266

31,019
20,140

31, 201
21,040

31,310
22, 702

31, 618
22,955

31, 444
• 23.mft

51,159

52, 241

54, 012

64, 473

54,454

1 Includes a number of subagents and branches of issuing agencies.

New denomination oj E bonds.—On June 7, 1944, the issuance of a
$10 maturity value. Series E United States savings bond was authorized for sale exclusively to members of the. armed forces through such
agencies'as t^ie Secretary of War and the Secretary of the Navy provide within their respective agencies.



60

REPORT OF THE SECRETARY OF THE TREASURY
War savings stamps

Sales of war savings stamps for the fiscal year totaled $409 millions,
while redemptions amounted to $426 millions. Of the amount
- redeemed, $353 millions, or 83 percent, were exchanged for United
States savings bonds. A balance of $197 millions was outstanding
at the end of the fiscal year. D a t a on sales and redemptions of
savings stamps from May 1, 1941, through June 30, 1944, are shown
in the tables beginning on page 699.
Treasury notes: tax series and savings series
Sales of Series C Treasury savings notes during the fiscal year ended
June 30, 1944, amounted to $8,954 millions. Redemptions of Series
C notes during the year amounted to $5,970 millions. Maturities and
redemptions of Series A and B tax savings notes brought the total
redemptions of tax series and savings series Treasury notes to
$6,867 millions, of which $6,365 millions, or 93 percent, were applied
to the payment of taxes. Tax savings notes of Series A-1943, A-1944,
' B-rl943, and B-1944, matured during the fiscal year. There remained outstanding at the end of the fiscal year unmatured tax notes
of Series A-1945 in the amount of $109 millions. No Series A tax
savings notes were offered during the fiscal year, the occasion for
their issuance having ceased when the Current Tax Payment Act
became effective. Series B notes were supierseded during the previous
year by Series C notes.
On July 27, 1943, the requirement of 30 days' notice for the redemption for cash of Series C Treasury savings notes was eliminated by
Department Circular No. 696. An amendment, dated October 4,
1943, to Department Circular No. 695 removed the maximum limitation .of $5,000 par value on the amount of Series A tax savings notes
which could be used by each taxpayer in payment of each class of tax
(income, estate, or gift) during a single taxable year. By the first of
these changes. Series C notes were converted into a more liquid shortterm investment instrument, suitable for accumulation either of corporation tax reserves, or of other liquid reserves including reserves
set aside for post-war reconversion. The second of these two changes
was designed to facilitate the final hquidation of Series A notes and
to avoid imposing unnecessary inconvenience upon holders of such
notes who might have acquired them in anticipation ol tax liabilities
which are now discharged by withholding. Amendments to the circulars referred to above are shown beginning on page 336 of this report.
.•

Treasury bills
Offerings of Treasury bills were made each 'week during the year;
43 issues.were for a term of 91 days, 7 issues were for a term of 92




REPORT OF THE SECRETARY OF THE TREASURY

61

days, and 2 issues were for a term of 90 days. The amount of the
weekly offerings was $1,000 millions at the start of the year, but was
increased to $1,200 millions for the last 8 issues of the year. The 13
issues outstanding at the beginning of the year totaled $11,864 millions; the 13 issues outstanding at the end of the year totaled $14,734
miUions. Of the 52 issues offered during the year, all were sold at a
positive average rate of discount, the average rate on aU bills issued
during the year being 0.375 percent. ' Owing to the continuing infiuence of a posted buying rate of % of 1 percent established at the Federal Reserve Banks, pursuant to directions of the Federal Open Market Committee on April 30, 1942, there was little fluctuation in the
rate from week to week.
As mentioned in last year's annual report, announcement was
made on May 6, 1943, that in the interest of a wider distribution of
Treasury bills, offerings, beginning with the issue dated May 12, 1943,
and thereafter imtil further notice, would include provision for the
receipt of tenders for $100,000 or less from any one bidder at a fixed
price of $99,905 per $100 face value, in addition to the conventional
bidding on a competitive basis. This provision was contained in all
offerings of Treasury bills during the fiscal"year 1944. Bids on a
fixqd price basis averaged about $62 millions a week during the year
ended Juno 30, 1944, and amounted in the aggregate to ^bout 6 percent of all bids accepted.
'
Further information concerning Treasury bills will be found in the
exhibits beginning on page 311, and in the table on page 655.
Market jinancing outside oj war loan drives
Three market offerings of Treasury securities other than bills were
made for cash during the year, independently of the war loan drives
discussed above. The first of these was an issue of Iji percent Treasury notes dated July 12, 1943, and maturing September 15, 1947.'
Subscription books for this offering were opened on June 28, 1943, and
remained open for 2 days. Of cash subscriptions totaling $19,544
millions, $2,707 millions were allotted and issued.
In connection with the refunding of an issue of certificates of indebtedness, due August 1, 1943, and outstanding in the amount of
$1,609 millions, cash subscriptions were accepted, from commercial
banks only, for an additional $900 millions, or thereabouts, of the securities offered in exchange—% percent 1-year certificates of indebtedness, due August 1, 1944. Books for the cash portion of this offering
were opened on July 22, 1943, and closed the same day. Of cash subscriptions from banks amounting to $5,484 millions, $989 millions were
allotted and issued.
Following the Third War Loan, and in accordance with an announcement made at the time the terms of the Third War Loan securities



62

REPORT OF THE SECRETARY OF THE TREAStJRY

were made public, there were offered, on October 6, 1943, for the
exclusive subscription of commercial banks, an issue of about $1,500
millions of % percent certificates of indebtedness dated October 15,
1943, and maturing October 1, 1944, which were also offered at the
same time ih exchange for % percent certificates of indebtedness
maturing November 1, 1943;;^and a like amount of the 2 percent
Treasury bonds of 1951-53 which were originally issued in connection
with the Third War Loan. Cash subscriptions to t h e certificates of
indebtedness amounted to $5,386 millions, of which $1,580 millions
were allotted. Cash subscriptions to the 2 percent bonds amounted
to $5,531 millions, of which $1,627 millions were allotted.
No other cash offerings of marketable securities, other than bills,
were made during the year except those made contemporaneously
with, but not as part of, the Fourth and Fifth War Loan drives, for the
limited investment of time deposits of commercial banks and for the
convenience of Treasury investment accounts. The results of these
offerings have been described already in thp discussion of the Fourth
and Fifth War Loans.
Two issues of Treasury notes, an issue of Reconstruction Finance
Corporation notes, and an issue of Federal Public Housing Authority
notes matured duririg the year and were paid off in cash. The essential
details of tlfese transactions are.shown in the following table.
Maturing issue
In millions
of dollars
324
279
421
114

1H% Reconstruction Finance Corporation notes due July 15,1943..
1% Treasury notes due Sept. 15, 1943
1H% Treasury notes due Dec. 15, 1943
1 ^ % Federal Public Housing Authority notes due Feb. 1,1944....
TotaL.
NOTE.—Figures are rounded and will not necessarily add to totals.

1,139

Six issues of certificates of indebtedness matured during the fiscal
year ended June 30, 1944, and were refunded into new issues of certificates of indebtedness or, in one case, into a short note. These
transactions are summarized in the table below.
i

Disposition of maturing certificates of indebtedness during the fiscal year 1944
[Dollars in millions]
Description of new
security

Certificates
exchanged

ReEx-'
deemed
changes
for
Total
cash 1

Percent
exchanged

o

K%dueAug. 1,1943-- . 14% Certificates of indebtedness, due Aug.
1, 1944.
K% due Nov. 1,1943-- }i% Certificates of indebtedness, due Oct.
1,
J^%dueDec. 1,1943-- }i% 1944.
Certificates of indebtedness, due Dec.
1, 1944.
J^%dueFeb. 1,1944.-.
0.90% Treasury notes due Mar. 1, 1945.-..
^ % due Apr. 1,1944... %% Certificates of indebtedness, due Apr.
1, 1945..
7^% due May 1,1944... }i% Certificates of indebtedness, due May
1, 1945.
1 Includes amounts transferred to matured debt.




97

1,656

63

1,609

1,939

96

, 2,035

95

3,540

260

3,800

93

2,127
4,877

84
374

2, 211
6,251

96
93

1,615

40

1,666

98

REPORT OF THE SECRETARY OF THE TREASURY

63

Announcement was made on June 7, 1943, that the 3K percent
-Treasury bonds of 1943-45, originally issued in 1933 in part for cash
and in part in exchange for bonds of the Fourth Liberty Loan, were
called for redemption on October 15, 1943. Holders of these bonds
were offered in exchange additional issues of the 2 percent Treasury
bonds of 1951-53 and the 2)^ percent Treasury bonds of 1964-69,
which had been offered in the Third War Loan, subject to the restriction upon commercial bank holdings of the 2){ percent bonds. Of the
$1,401 millions of 3}{ percent bonds outstanding, $1,102 millions were
exchanged for .2 percent Treasury bonds of 1951-53, and $59 millions
were exchanged for 2)'^ percent Treasury bonds of 1964-69. A balance
of $239 millions remained for repayment in cash.
In a single large-scale operation, the Treasury refunded, on March
15, 1944, securities which were outstanding in the amount of $4,729
millions. These securities consisted of all notes and bonds becoming
due or callable between March 15 and June 15; 1944. There were
seven separate Treasury and guaranteed issues involved in the refunding and three issues were offered in exchange.
Descriptions of the seven maturing securities are shown in the
following table.
•
Maturity or
call date'

Description of security

Treasury securities:
1% Treasury notes, Series B—1944
33^% Treasury bonds, 1944-46.^
y^% Treasury notes. Series A—1944

-

-

,

Total Treasury securities-.
-.
.Guaranteed securities:
3 ^ % Federal Farm Mortgage Corporation bonds, 1944-64
3% Federal Farm Mortgage Corporation bonds, 1944-49._1% Reconstruction Finance Corporation notes. Series W
3% Home Owners' Loan Corporation bonds. Series A 1944-62-

Mar. 15,1944
Apr.,15,1944 i
June 16.1944

Amount outstanding
Feb. 29, 1944
In millions of
doUars
515
1, 519
416

2,449

Mar. 16,19441
May 15,19441
Apr. 15,1944
May 1,19441

95
835
571
779

Total guaranteed securities

2,280

Total Treasury and guaranteed securities..

4,729

NOTE.—Figures are rounded and will not necessarily add to totals.
1 Called for redemption on date indicated.

The three issues offered in exchange consisted of reopen ings of the
two marketable Fourth War Loan bonds—the 2}i percent Treasury
bonds of 1956-59 and the 2}^ percent Treasury bonds of 1965-70—
and a new IK percent Treasury note due September 15, 1948. Holders
other than commercial banks were permitted to exchange into any of
the three securities available; commercial banks, however, were permitted to exchange only into the notes.




64

REPORT OF THE SECRETARY OF THE TREASURY

The two bond issues offered in exchange were both dated February
1, 1944, whereas the note issue was dated March 15, 1944. The r e - '
funded securities carried various maturity and call dates from March
15, 1944, through June 15, 1944. In most cases the maturity date of
the old security and the issue date of the new security did not coincide,
thereby necessitating interest adjustments.
In general, the adjustment was made by allowing intsrest on the
old issue to its maturity date (call date in the case.of securities called
for redemption) and then deducting accrued interest on the new issue
for the period of the overlap. There were some exceptions to this
general rule. In the case of the 1 percent Reconstruction Finance
Corporation notes due April 15, 1944, the interest was adjusted as of
March 15. Holders of the ^{ parcent Treasury notes due June 15,
1944, were permitted to elect whether interest would be adjusted as of
March 15 or June 15.
The foregoing interest adjustments were desirable in view of the
diversity of interest rates and tax-exemption provisions of the maturing issues. Many holders of the .partially or wholly tax-exempt
issues called for redemption after March 15 would have had a strong
incentive not to accept an exchange offer which did not permit them
to receive, in effect, the benefit of the interest rate and tax-exemption
status of their old seciuities up to their respective call dates. In the
case of the Reconstruction Finance Corporation notes, on the other
hanid, holders were given the benefit of the higher coupon rates on
the new issues as an inducement to accept the exchange. The question of tax exemption did not arise because these maturing notes were
taxable. Holders of the % percent wholly tax-exempt Treasury notes
were given the opportunity of deciding which security they would, in
effect, receive interest on during the overlap period because the
holder's income tax position would determine which alternative would
be the more advantageous.
The subscription books were opened on March 2. They were
closed on March 8 for subscriptions in payment of. which maturing
notes were tendered, and on March 11 for subscriptions in pa3anent
of which called bonds were tendered. In the case, however, of investors whose total holdings of the refunded securities were $100,000
or less, the subscription books were kept open through March 15. •'
The volume of old securities exchanged for new securities totaled
$3,919 millions, or 83 percent of the old securities outstanding. The
following table shows the amount and the percentage of each maturing security which was exchanged for new securities.




/

•

,'

65

REPORT OF T H E SECRETARY OF T H E TREASURY
Details of market refunding of March 15, 1944
[In millions of dollars]
Means of retirementExchanged for—
Maturing security

Re11/2% Treas- 21^% Treas- 21/2% Treas- deemed
for
ury notes ury bonds, ury bonds. cash 2
Sept. 16,
Sept. 15,
Mar. 15,
1948
1956-59 1
1965-70 I

1% Treasury notes, Mar. 15, 1944 (W).
3M% Federal Farm Mortgage Corporation
bonds. Mar. 15, 1944-64 (P)..
3M% Treasury bonds, Apr. 15, 1944-46 (P)
1% Reconstruction Finance Corporation notes,
Apr. 16, 1944 (T)
3% Home Owners' Loan Corporation bonds.
May 1, 1944-52 (P) 3% Federal Farm Mortgage Corporation
bonds, May 15, 1944-49 ('P)
J
%% Treasury notes, June 15, 1944 (W)—

Total

473

7

3

3,2

515

70
1,151.

2

4
37

19
•296

95
1, 519
571

35

555
572

3

662
266

16
30
2

3,748

Total .

.

95

NOTE.—Figures are rounded and will not necessarily add to totals.
1 Additional issue of securities offered in Fourth War Loan.
2 Includes a.mounts transferred to matured debt.
W Wholly tax-exempt.
P Partially tax-exempt. ,
T Taxable.

1

12

16

175

779

13
'2
77

130
146

835
416

810

4,729

'

.

Adjusted service bonds
Adjusted service bonds of 1945, amounting to $1.4 millions, were
issued during the year, making a total of $1,843 millions of such bonds
issued since June 15, 1936, in payment of amounts due on adjusted
service certificates. Redemptions of $6.0 millions of these bonds
during the year brought the total redemptions since June 15, 1936,
to $1,625 millions, and left $217 millions outstanding on June 30,
1944. Further data on adjusted service bonds appear in the table
on page 612.
Depositary bonds
'
.
Issuance of the First Series of depositary bonds, as authorized by
Department Circular No. 660, dated May 23, 1941, was continued
during the year to the various qualified depositaries and financial
agents in amounts not exceeding the amount for which each depositary
and financial agency had qualified. The total issued during the year
amounted to $186 millions, and redemptions for the year amounted
to $27 millions, leaving $385 millions outstanding on June 30, 1944.
Under date of June 29, 1943, the Secretary gave notice of the issuance of 2 percent depositary bonds. Second Series, at par, to depositaries for withheld taxes qualifying under Department Circular No.
714, dated June 25, 1943. All transactions in connection with the
issue, redemption, and payment of interest on these bonds are conducted by Federal Reserve Banks, as fiscal agents of the United States
acting for the Secretary of the Treasury. The bonds of the Second
613185—45

-6 '




66
.

REPORT OF THE SECRETARY OF THE TREASURY

Series are dated on ,the actual date of issuance on and after July 1,
1943. They bear interest at 2 percent from the date payment therefpr
is received, on a semiannual basis on January 1 and July 1, and mature
12 years from such date, but may be redeemed at the option of the
United States or of the depositary for withheld taxes upon not less
than 30 nor more than 60 days' notice in writing by either party to the
other. The bonds are issued only in the name of the Federal Reserve
Bank, in the district in which the depositary is located, as fiscal agent
of the United States in trust for such depositary and are not transferable. ^ The total issues during the year amounted to $100 millions
and redemptions amounted to $11 millions, leaving a balance of $89
millions outstanding at the end of the year.
Excess projits tax rejund bonds

,

Treasury Department Circular No. 728, dated December 31, 1943,
prescribed regulations governing the issuance of excess profits tax
refund bonds under the provisions of the Second Liberty Bond Act,
as amended, and pursuant to sections 780 through 783 of the Internal
Revenue Code, as amended. Section 780 creates-a credit of an amount
equal to 10 percent of the excess profits tax, imposed by Subchapter E
of Chapter 2 of the Internal Revenue Code, for each taxable year
ending after December 31, 1941 (except in the case of a taxable year
beginning in 1941 and ending before July 1, 1942), and not beginning
after the date of cessation of hostilities in the present war. Section
780 also provides for the issue by the Secretary of the Treasury of
bonds of the United States in an aggregate amount equal to the 10
percent excess profits tax credit.
The bonds are issued in series according to the calendar year in which
the credit used to purchase the bonds arose. Those purchased with
the credits for any taxable years beginning in 1941 and 1942 are combined and are designated 'Tirst Series'^; those purchased with 1943 and
1944 credits constitute the ^'Second Series'' and the ''Third Series",
respectively. Those purchased with credits for taxable years beginning after December 31, 1944, will be designated ''Fourth Series."
Bonds of the First, Second, Third, and Fourth Series will mature,
respectively, on the last day of the second, third, fourth, and fifth
calendar years beginning after-the cessation of^hostilities in the present
war, but will be redeemable after the cessation of hostilities (at the
option of the United States), in whole or in part, upon 3 months'
notice.
The bonds are issued following certification by the Commissioner
of Internal Revenue of the iamount of bonds to which a taxpayer is
entitled, and are issued only in registered form in the name so certified; ;each bond is dated.as of the day the credit available for its purchase is transferred to the Public Debt account.




. REPORT OF THE SECRETAEY OF THE TREASURY

67

The bonds bear no interest, are nonnegotiable, and may not be
transferred by sale, exchange, assignment, pledge, hypothecation, or
otherwise, on or before the date of the cessation of hostilities. After
such date the bonds will be fully negotiable and may be exchanged or
transferred without restriction.
The total issues of these bonds during the fiscal year 1944 amounted
to $134 millions. A copy of Department Circular No. 728 appears
on page 343 of this report.
Special issues'
During the fiscal year the Treasury continued to issue special
series of interest-bearing securities for the investment of trust or other
funds deposited in the Treasury. The amount of such obligations
increased by $3,416 millions during the year. Details will be found .
in the table on page 615^ of this report.
Special short-term, certijicates oj indebtedness
Special short-term certificates of indebtedness were sold in September 1943, directly and solely to the Federal Reserve Banks. These
certificates were issued prior to the Third War Loan when the Treasury
permitted its balances with the Federal Reserve Banks to become
exhausted in anticipation of the sale of securities during the drive.
The certificates were issued only to the extent of the overdraft thus
incurred. The details of the issue will be found in the table on page
655 of this report.
Cumulative sinking jund
Credits accruing to the cumulative sinking fund during the year
amounted to $588 millions which, added to the unexpended balance
of $3,762 millions brought forward from the previous year, made
available $4,350 millions for the year. None of the funds w^ere used
for the retirement of bonds and notes which matured or which were
called during the fiscal year 1944. The unexpended balance of $4,350
millions was carried forward to the fiscal year 1945.
Tables presenting the transactions on account of the fund for 1944
and since its inception on July 1, 1920, will be found on pages 665
and -666 of this report.
Composition oj the public debt
The gross public debt on June 30, 1944, amounted to $201,003
millions, an increase of $64,307 millions during the fiscal year. Chart
10 on page 69 shows the composition of the interest-bearing debt
and the guaranteed debt outstanding at the end of each month from



68

REPORT OF THE SECRETARY OF THE TREASURY

June.30, 1937 through June 30, 1944. The following table shows
the amount of the public debt outstanding on June 30, 1943, and
June 30,' 1944, classified by character of issues, the percent increase
during the year, and the percent distribution among the various
classes of issues.
Public debt outstanding on June 80, 194S, and June 30, 1944, ^y classes of issues ^
[Dollars in millions.

On basis of daily Treasury statements, see p. 519]

J u n e 30,
1943

Class of issue

Interest-bearing:
P u b l i c issues:
M a r k e t a b l e issues:
Postal savings b o n d s , etc., authorized b y
acts prior t o A p r . 6, 1917
Treasury bonds.
T r e a s u r y notes
Certificates of i n d e b t e d n e s s
_
T r e a s u r y bills

P e r c e n t distribution of
amounts
1943

'1944

196
79, 244
17,405
28,822
14,734

% , 8
89.8
74.0
24.2

0.1
42.1
6.7
12.1
8.7

0.1
39.4
8.7
14.3
7.3

140, 401

47.3

69.7

69.9

21, 256
226
222

34, 606
474
217

62.8
109. 7
-2.1

16.6
.2
.2

17.2
.2
.1

196
57, 620
9,168 '
16, 561
11,864

1

27.5

6.5

4.8

63.6

21.4

22.3

186. 256
L4, 287

48.8
31.4

91.1
8.0

92.2
7.1

135, 380
141
1,175

T o t a l interest-bearing d e b t . . .
M a t u r e d d e b t on which interest h a s ceased
D e b t bearing n o interest
:

9,557
44, 855

124, 509
10,871

T o t a l p u b l i c issues
Special issues to t r u s t funds, e t c

7,495
29, 200

T o t a l n o n m a r k e t a b l e issues

.

Percent
increase
or decrease
( - ) , 1944
over 1943

96, 310

T o t a l m a r k e t a b l e issues
N o n m a r k e t a b l e issues:
U n i t e d States savings b o n d s
Depositary bonds
•.
Adjusted service b o n d s
T r e a s u r y notes, t a x series a n d savings
series

T o t a l gross d e b t .

J u n e 30,
1944

199, 543
201
1,259

47.4
43.0
7.1

99.0
.1
.9

99.3
.1
.6

136,696

201, 003

47.0

100.0

100.0

NOTE.—Figures are rounded and will not necessarily add to totals.
* Less than 0.05 percent.
1 A'table covering obligations guaranteed by the United States for these dates appears on p. 75.

The largest percentage increases in outstanding marketable issues
were in Treasury notes and certificates of indebtedness. Despite
these large increases during the year, these two classes of marketable
securities together still represent less than one-fourth of the gross
public debt. Treasury bills increased by 24.2 percent during the year.
As this increase was less than the average increase for the entire debt,
bills declined during the year in their relative importance as a component of the debt. United States savings bonds outstanding increased, from 15.5 percent to 17.2 percent of the gross debt during the
fiscal year 1944.
The table on page 70 shows the maturity distribution of the public
debt on the basis of time to final maturity, and also on the basis of
time to the earliest date at which it may be repaid, either at the option
of the Government or at that of the holder, on June 30, 1943, and
June 30, 1944. There has been little change during the fiscal year



69

REPORT OF THE SECRETARY OF THE TREASURY
COMPOSITION OF THE PUBLIC DEBT,! BY TYPES OF ISSUES
MONTHLY JUNE 1937 THROUGH JUNE 1944
1937

1938

1939

1940

1941 .

1942

1943

1944
DOLLARS
Billions
1

DOLLA RS
Billior IS
200

i
m

180

.

i

160

tf

Special Issues
100

w /^ M

/if
- ^

J

20

0

h?//,-7,V^y/d

H
1937

TlliLLliiLLLiLLLLL

Public
Note Issues

^^m.

1938

1939

1941

120

IOO

80

60

tsondlssues^^

•
•

HH
1940

140

W^Putlic^^^

ii^Sfl^

^^H

H
•,
B
RAXXXXX,

^'\

Guaranteed Ob/igaf/pns^^m^^^^,.f^^^j^^^

nrrtfitfrt

^^§

f m

80

60

160

i.

J/

120

ISO

H

yMi

140

40

r
1

Public Issues o f . . . J P
Bills and Certificate s j j p -

200

1942

1943

1944

40

20

0

C H A.RT 1 0 .

1 Includes guaranteed issues.

in the proportionate distribution of maturities. About 47.8 percent
of the outstanding public debt and guaranteed obligations mature
or may be paid within one year. Almost the same percentage relationship prevailed on June 30, 1943. About 60.3 percent of outstanding interest-bearing obligations mature or may be paid within
five years. This, too, is approximately the same proportion.as on
June 30, 1943.
When the classification is in terms of final maturities rather than
of the earliest' possible payment dates, the proportion due within one
year falls to about half of the proportion redeemable, at the option of
either the Government or the holder, within the same period. The
proportion maturing within five years is about 40.5 percent, as compared with about 60.3 percent redeemable within that period.




70

REPORT OF THE SECRETARY OF THE TREASURY

Estimated distribution, by earliest optional redemption classes and by maturity
classes, of interest-bearing securities issued or guaranteed by ihe. United States,
J u n e 30, 1943 and 1944

Call or maturity class

Amounts (billions of
dollars)

Percent of total

June 30, 1943 June 30, 1944 June 30, 1943 June 30, 1944
Classified by years to earliest optional redemption date^
1 year or less ^.
1-5 years
5-10 years.....
10-15 years....
15-20 years
Over 20 years.
Special issues''

65.0
20.7
23.1
6.6
3.7
9.3
11.1

96.1
25.1
33.9
9.8
10.2
11.3
14.6

Total...

139. 5

201.1

47.8
12.5
16.9
4.9
5.1
5.6
7.3
100. 0

100.0

Classified by years to maturity
l y e a r or less..
1-5 years
, 5-10 years
10-15 years...:
15-20 years
Over 20 yearsSpecial issues'

33.3
24.8
33.8
18.9
4.6
13.0
11.1

49.6
31.9
60.4
14.6
8.4
21.5
14.6

23.8
17.8
24.3
13.6
3.3
9.3
7.9

24.7
15.8
30.0
7.3
4.2
10.7
7.3

Total...

139.5

20L1

100.0

100.0

NOTE.—Figures are rounded and will not necessarily add to totals.'
* Whether optional with the Treasury or with the holder.
. Securities redeemable at the owner's demand (United States savings bonds, Treasury savings notes,
2
adjusted service bonds, and depositary bonds) have been classified as redeemable in 1 yearor less,
s Held by United States Government agencies and trust funds.

The concen bra tion of the public marketable issues in short maturities has been predominantly the result of the issuance during the
war period of large volumes of Treasury bills and. certificates of
indebtedness. I t has been only secondarily the result of the a p proach to maturity of long-term securities previously issued, xis has
been indicated in the incroduction to this report, issuance of these
securities has served both to maintain the liquidity of the banking
system and of business in general and to keep low^ the interest cost
of wartime borrowing. Securities of longer term could have been
issue'd at higher interest rates, but it is improbable that such action
would haye altered significantly the proportions of borrowed funds
which the Treasury obtained from various sources. Banks and business corporations would now hold more long-term securities than they
do and would have suffered a loss of liquidity in consequence of the
change. At the same time the Treasury, would have been under the
necessity of paying higher interest rates for funds which were available to the Treasury very largely because restrictions on peacetime
production entailed restricted alternative investment opportunities.
United States savings bonds constitute about 17 percent of the
gross debt; Treasury notes, tax series and savings series, constitute
about 5 percent. These securities, although issued for fi^ed terms of




REPORT OF THE SECRETARY OF THE TREASURY'

71

years, are redeemable at the owner's demand (in which case they pay
interest at-rates appropriate to the length of time they have been
held rather than at the higher rates which are earned if they are held
to maturity). They may be considered, therefore, as in fact shortterm secfurities under certain circumstances. The preeminent position of short-term and demand'securities in the structure of the debt
will make for greater ^ease and effectiveness in debt management in
the years to come. The flexibility which is thus imparted to the
economy is likely,: moreover, to contribute to a greater degree of
economic stability than would otherwise have existed.
Interest on the public debt
Expenditures. —Totsl expenditures during the year for interest on
the public debt amounted to $2,609 millions, an increase of $801
millions over expenditures of the previous year. As shown in table
57 on page 715, $1,450 millions consisted of interest subject to the
Federal income tax, $825 millions of interest subject, with minor
exceptions, to the surtax only, and $27 millions of interest wholly
exempt from the Federal income tax. In addition, interest paid on
special securities issued to Federal Government agencies and trust
funds which are not taxable amounted to $308 millions. These
amounts compare with expenditures in the previous year of $676
millions of taxable, $857 millions of partially tax-exempt, and $38
millions of wholly tax-exempt interest, and $241 millions of interest
on special issues.
Interest rate structure.—Chart 11 on page 72 compares the term
structure of interest rates on United States Government securities on
June 30, 1944, and on June 30, 1943. I t will be noted that the
yields of taxable Treasury securities rose to somewhat higher levels
during the fiscal year 1944, and that the yields of partially tax-exempt
Treiasury securities underwent little net change for the year.
Interest rate structure.—Chart 11 compares the term structure of
interest rates on United States Government securities on June 30,
1944, and on June^ 30, 1943. I t will be noted that the yields of
taxable Treasury securities rose to somewhat higher levels during the
fiscal year 1944, and that the yields of partially tax-exempt Treasury
securities underwent little net change for the year.
Computed interest ratd—For the fifth consecutive year the computed
average interest rate on the interest-bearing debt has been lowered.
From 2.600 percent on June 30, 1939, the rate declined to 1.979
percent on June 30, .1943, and to 1.929 percent, the lowest it has
ever been, on June 30, 1944. The computed annual interest charge
on the debt, on which this average rate is based, increased from
$2,679 millions, at the end of the fiscal year 1943, to $3,849 millions
on June 30, 1944. The reduction in the computed rate during the
year again resulted in part from the refunding of securities issued at



72

REPORT OF THE SECRETARY OF THE TREASURY
YIELDS OF OBLIGATIONS OF THE UNITED STATE?
BASED ON CLOSING PRICES

PERCENT

PERCENT

\
TAXABLE SECURITIES

10
15
YEARS TO MATURITY OR CALL

2.6

1

2.6

1

T A X - E X E M P T SECURITIES'

.2.4

2.4
2.2

2.2

2.0

2.0
J u n e y3 0 , 1 9 4 4 ^

>^.....-

1.8

^

1.6

y ^

^

1.4

y ^

^

1-8

riJune 30.1943

1.6
1.4

-

1.2

1.2

J

^

Callable ssues

1.0

,

/
/

/

"
^

>/ '

/
l

l

l

l

_..

1 .

J . . . , . , 1,

„

1

.1,.,_L

1

1

— 1 — 1 — t — 1 —

10
15
YEARS TO MATURITY OR CALL

1

20

1

L_, „.,i..;....

25

C H A R T 11.

1 All wholly tax-exempt securities and partially tax-exempt securities with fixed maturities are omitted
because they are too few in number and tod small in outstanding amount to permit drawing a significant
curve.




73

REPORT OF THE SECRETARY OF THE TREASURY

higher rates in earlier years and in part from the predominance,
among securities issued during the year of short-term securities bearing
interest rates below the average rate on the securities which remained
outstanding during the- year.
Chart 12 below shows the computed interest rates for each type of public debt issue for each month
from July 1936 through June 1944.
COMPUTED ANNUAL INTEREST RATES ON THE PUBLIC DEBT
MONTHLY JULY 1936 THROUGH JUNE 1944

By Types of Issue
PERCENT

PERCENT

4.0

1936

1937

1938

1939

1940

|94l

1942

1943

1944

C H A R T 12.

Debt limit
The Pubhc Debt Act of 1944, approved June 9, 1944 (see exhibit 31
on p. 343), further amended section 21 of the Second Liberty Bond
Act so as to limit the obligations issued under authority of the act
to an amount not to exceed in the aggregate $260 billions outstanding
at any one time. The prior limitation in such respect was $210'
billions, as fixed by the Public Debt Act of 1943. As of June 30,
1944, the unused borrowing authorization under the limitation in
effect on this date was nearly $52 billions, as shown^by the following
statement.




74

REPORT OF THE SECRETARY OF THE TREASURY

Face amount of obligations outstanding and the face amount which can still he issued
under the limitation in effect on June 30, 1944
Total face amount that may be outstanding at any one t i m e . A . . .
Outstanding as of June 30,1944:
Interest-bearing:
Bonds:
Treasury
$79,244,104,350
Savings (maturity value) 1.
42,812,097.850
Depositary
474,321,750
Adjusted service
717,441,006
Treasury notes...
Certificates of indebtedness-_.
Treasury bills (maturity value)

:...

34,742,010,150
34,829,306,000
14,734,104,000

Matured obligations on which inte'rest has ceased
Debt bearing no interest:
United States war savings stamps...
Excess profits tax refund bonds.-

. . . . ^ . $260,000,000,000

$123,247,964, y&

84,305,420,150
207,553,385,106
193,319,400

196.618,370
134,032,175

330,550,545 •
208,077,255,051

Face amount of obligations issuable under above authority

-.

.'

51,922,744,949

Reconcilement wiih Daily Statement of the United States Treasury, June 30, 1944
Total face amount of outstanding public debt obligations issued under authority of the
Second Liberty Bond Act,"as amended
$208,077,255,051
Deduct: Unearned discount on savings bonds (difference between current redemption
value and maturity value)..1
.
8,205,956,665
-Add: Other public debt .obligations outstanding but not subject to the
statutory limitation:
Interest-bearing (postal savings bonds, etc.)
-- $195,926,860
Matured obligations on which interest has ceased
-7; 531,760
Debt bearing no interest
928,630,215
:

199,871,298,386

1,132,088,835

Total gross debt outstanding as.of June 30,1944...
.
201,003,387,221
' Approximate maturity value. Principal amount (current redemption value) according to daily
Treasury statement, $34,606,141,185.
,
• '

SECURITIES ISSUED BY GOVERNMENT CORPORATIONS AND
CREDIT AGENCIES

During the fiscal year 1944 the Treasury continued the policy
announced in October 1941 under which funds needed by Government
corporations and credit agencies are provided by the Treasury instead
of by the sale of guaranteed securities in the open market. In addition. Treasury facilities continued to be extended ^for servicing their
obligations. The provisions of law .authorizing agencies to issue
securities guaranteed by the United States have placed certain limits
with respect to the total amounts that can be issued. During the
year, however, legislation was enacted which extended the power of
both the Federal Housing Administration and the Reconstruction
Finance Corporation to issue guaranteed obligations.
As a result of the Treasury's policy of providing funds required
by certain Government corporations and credit agencies, there was a
considerable decrease in the contingent liabilities of the Government
on account of outstanding market issues of their obligations which are
. guaranteed as to principal and. interest, and an appreciable increase
in the amount of securities of such corporations and agencies held
directly by the Treasury. No issues of guaranteed obligations were
sold^in the open market during the year. The Commodity Credit




75

REPORT OF THE SECRETARY OF THE TREASURY

Corporation, however, following approval by the Treasury, borrowed
from commercial banks to finance certain commodity purchase programs which are handled by such banks for account of the Corporation.
The Federal Housing Administration also continued to issue debentures in accordance with the terms of its insurance contracts. Further,
the ownership of certain obligations issued by ^ the Reconstruction
Finance Corporation was transferred from the Treasury to various
other Government corporations in order to provide those corporations
with a temporary medium for investing their idle balances.
Securities of Government corporations and credit agencies held
directly by the Treasury and reflected in the public debt increased
from $7,535 millions as .of June 30, 1943, to $10,717 millions as of
June 30, 1944. The contingent liabilities of the Government on
account of outstanding unmatured obligations in the hands of the
public decreased from $4,092 millions on June 30, 1943, to $1,659
millions on June-30, 1944. A detailed statement of the securities
held by the public and those held by the Treasury as of June 30,1944,
will be found in table 58 and footnote 1 on page 718. The net changes
during the year are shown in the table that follows.
Comparison of obligations guaranteed by ihe United States outstanding June 30,
1943 and 1944) ^V agencies
[In millions of dollars. On basis of daily Treasury statements, see p. 519]
June 30,
1943

'
Issues held by the Treasury and reflected in the public debt:
Commodity Credit Corporation
Federal Farm Mortgage Corporation .
Federal Public Housing Authority
:
.
._
Home Owners' Loan Corporation . . .
... .
Reconstruction Finance Corporation
Tp,nnp.ssp.p VflUfy Authority

1,950

Increase or
decrease (—)

283
212
5,033
57

.

. -

Grand total..

-.-

1704

224
-930

9
13
2

114
1,533
1,011
.

3,182

9
15
.

10, 717

755
176

-2
2
-114
-779
-835

2 1,659
107
2

-2,433
99
-1

4,103

Subtotal, unmatured obligations
Matured obligations, all agencies
Matured interest, all agencies

__...

-1,050
366
115
368
3,383

480
. 930

i_

900
366
398
580
8,416
57

7, 535

Total
Public issues:
Unmatured obligations:
Commodity Credit Corporation
Federal Farm Mortgage orporation
Federal Housing Administration:
Mutual mortgage insurance fund
Housing insurance fund ,.
War housing insurance fund...
Federal Public Housing Authority ..Home Owners' Loan Corporation
Reconstruction Finance Corporation

Total

June 30,
1944

1,769

-2-, 334

11,638

12,486

848

2 4, 092
8
3

(*)

NOTE.—Figures are rounded and will not necessarily add to totals.
* Less than $500,000.
^
1 Daily Treasury statement figures revised in the amount of $143 millions to include increase in demand
obligations outstanding June 30. ^
2 Exclusive of $8 millions as of June 30,1943. and $6 millions as of June 30,1944, of obligations issued on the
credit of the United States by tlje Tennessee Valley Authority and held by the Reconstruction Finance
Corporation.
C'




76

REPORT OF THE SECRETARY OF THE TREASURY^

Redemptionsof guaranteed obligations were accomplished through
Treasury facilities as follows: Federal Public Housing Authority
1% percent Series B notes and Reconstruction Finance Corporation
1% percent Series V notes were redeemed in cash.by the issuing agencies
which obtained the necessary funds by selling other issues to the
Treasury. Federal Farm Mortgage Corpora:tion bonds and Home
Owners' Loan Corporation bonds called for redemption during the
year. Reconstruction Finance Corporationd percent notes of Series W,
and' three Treasury issues which were due or callable between March
15 and June 15, 1944, were refunded on March 15, 1944, in a single
large-scale operation in which three Treasury issues were offered in
exchange. Details of this operation are given on pages 63-65.
Federal Housing Administration debentures of all types outstanding
on June 30, 1943, amounted to $23,474,886, issues during the year
totalled $2,678,150, and redemptions aggregated $2,603,000, making
$23,550,036 outstanding at the end of the fiscal 1944, or a net increase
of $75,150. The debentures were redeemed pursuant to calls of the
Federal Housing Commissioner, and instructions issued by the
Secretary of the Treasury on September 28, 1942, March 27, 1943, and
September 30, 1943.
In addition, pursuant to call of the Federal Housing Commissioner,
the Secretary of the Treasury issued instructions on March 30, 1.944,
for the partial redemption of mutual mortgage insurance fund debentures,. payable July 1, 1944. These covered debentures of mutual
mortgage insurance fund Series B, eleventh call, and housing insurance
fund Series E, second call, in amounts of $138,750 and $27,000,
respectively.
Copies of the instructions issued during the fiscal year 1944 may be
found as exhibits beginning on page 345, and those issued in the fiscal
year 1943 in the annual report for that year. The transactions for
which Treasury facilities were used to service maturities and redemptions of guaranteed market securities during the year are shown in
the table on page 722.
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:
(1) Dejinite' 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 to replace them. Examples of this limitation on the issuance of obligations are those of such agencies as the Home Owners'




REPORT OF THE SECRETARY OF THE TREASURY

77

Loan Corporation and the Federal Public Housing Authority. Under
the second provision, the agency may reissue obligations provided the
tptal amount outstanding does not exceed the authorized limit.
Such limitation is imposed on the issuance of obligations by the
Federal Farm Mortgage Corporation.
(2) Indirect limitation.—Provisions not stating a specific amount
of obligations that may be issued and outstanding at any time, but
the amount issued and outstanding is contingent upon specific limiting
factors. As a result there is an indirect limit upon the amount which
may be issued and outstanding at any one time. The issuance of
obligations by the Reconstruction Finance Corporation, in connection
with advances to the Federal Housing Commissioner for the payment
of losses on renovation and modernization loans, comes within this
category.
(3) No specific limitation.—Provisions not stating a specific amount
of obligations which may be issued 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 authority
granted the Reconstruction Finance Corporation to subscribe to
preferred stock in national banks. State banks, or trust companies is
in this class.
Provisions of two laws enacted during the year extended the power
of the Federal Housing Administration to issue guaranteed obligations.
Under the act of October 15, 1943 (Public Law 159), and the act of
June 30, 1944 (Public Law 392), the authority of the Federal Housing
Administration to insure the principal amount of mortgages under
Title VI of the National Housing Act, as amended, was increased
by $400 millions and $100 millions, respectively. The aggregate
amount of principal obligations of all mortgages insured by the
Federal Housing Administration is now limited to $5,700 millions,
which may be increased by an amount not exceeding $1,000 millions
with the approvalof the President. In addition, the Commissioner
is authorized to incur total liabilities not exceeding $165 millions
under Title I of the National Housing Act, as amended, for insured
renovation and modernization loans.
The legislation increasing the power of the Reconstruction Finance
Corporation to issue guaranteed obligations during the year included
the acts of July 12, 1943 (Public Law 129), and December 23, 1943
(Public Law 216). As a result of this legislation and transactions
under previously enacted legislation, the borrowing power of the'
Corporation was changed. The amount of obligations which it was
authorized to issue as of June 30, 1944, amounted to $17,003 millions,
including the amounts outstanding under indefinite authorizations,
a net decrease of $105 millions since June 30, 1943. The net decrease
resulted from the changes shown in the table which follows. In this
connection, it may be pointed out that in the table the only items



78

REPORT OF THE SECRETARY OF THE TREASURY

actually reflecting changes in borrowing power in other than an
accounting sense are the two listed under loans to the Secretary of
Agriculture, the others are a matter of presentation and reflect
transactions under existing authorizations.
INCREASES

For loans to Secretary of Agriculture, acts of July 12, 1943 (Public Law 129), and Dec. 23, 1943
(Public Law 216):
•
For loans in accordance with Title I of the Bankhead-Jones Farm Tenant Act
For additional funds for rural rehabilitation loans
......
For advances to Federal Housing Coinmissioner (48 Stat. 1247; 12 U. S. C. 1705)
._..
Total increases
'

•

^
Amount
$30,000,000
67, 500,000
175,000
97,675,000

DECREASES

Subscriptions to preferred stock in national banks, State banks, or trust companies (48 Stat. 6;'
12 U. S. C. 51-d)
•
.
40,274,191
Obligations df the Reconstruction Finance Corporation canceled bj^ the Secretary of the Treasury pursuant to act of Feb. 24,1938, on account of expenditures for:
•
Federal Housing Commissioner.:
175,000
Regional agricultural credit corporations—expenses
•
_
2, 710,000
Repayment of loans to Secretary of Agriculture for farm tenancy and rural rehabilitation
159,695,178
Total decreases
1
. 202,854,369
Net decrease

.

....:

105,179,369

The table that follows shows, by agencies, the amounts of obligations authorized to be outstanding as of June 30,|;1944, and the
amounts actually outstanding on that date.
Outstanding issues of Governw.eni corporations and credit agencies whose obligations
are guaranteed by ihe United States, J u n e 30, 1944
fin millions of dollars]

.'
Outstanding obligations

Borrowing
power

Agency

I. Agencies issuing obligations for cash or
in exchange for mortgages:
Commodity Credit Corporation . .
Federal Farm Mortgage Corporation
Federal Public Housing Authority
Home Owners* Loan Corporation..
Reconstruction Finance Corporation
:..
Tennessee Valley Authority
Subtotal

Held by others i
Unmatured Matured 2

3,000

1,604

900

3 704

(*)

2,000
4 800
4 4, 7'50

409
398
1,399

366
398
580

• 755

(*)

17,003
5 62

8,593
8 57

8,416
.57

176

(*)

27, 615

-

II. Agencies issuing obligations only m
payment of defaulted and foreclosed
insured mortgages:
Federal Housing Administration
U. S. Maritime Commission

12, 460

10, 717

1,635

6 5, 865
7 200

24

6,065

SubtotaL
Total

Held by
Treasury

Total

-

33, 680

(*)

24
10, 717

64

107

24

24
12,483

43

(*)

1,659

107

NOTE.—Figures are rounded and will not necessarily add to totals.
•Less than $500,000.
1 Excludes matured interest, all agencies, in amount of $2 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 $107 millions and interest of
$2 millions.
- 3 Daily Treasury statement figures revised in the amount of $143 millions to include increase in demand
obligations outstanding June 30, 1944.
4 This is a limitation on issues and the amount may be increased only by the amount of issues for refunding
purposes. .
8 Exclusive of $6 millions issued on the credit of the United States and held by the Reconstruction Finance
Corporation.
N P Limit of authority to insure mortgages. This amount may be increased by $1,000 millions upon approval
by the President. Debentures may be.tendered and issued only in exchange for insured property acquired
through foreclosure.
7 Limit which may be outstaiiding at any one time with respect to the insuring of mortgages.




REPORT OF THE SECRETARY OF THE TREASURY

79

SOURCES OF FUNDS FOR FEDERAL BORROWING i

An analysis of the funds which the Federal Government may tap
in financing the war rests primarily on an analysis of production,
income, and savings in the economy. At the same time that production is turning out physical goods and services income is being created.
When a tank is built and sold to the Army, for example, the producer
pays wages to his workers and dividends to stockholders; he pays
other producers for the raw materials that, they provide and he sets
aside part of the income to coyer depreciation and to pay his taxes.
All of the dollars of income, regardless of how they are distributed,
are equal in,the aggregate to the value of total production in the
economy as a whole.
Under present wartime conditions, the Federal Government is buying a larger share of this production than it is receiving in taxes from
the income generated. On the other hand, the rest of the economy—
individuals and corporations (and State and local governments)—
has more income left after Federal taxes than the value of the goods
and services aivailable for purchase-at tlie present price level. I t
is this surplus of income which the Government must try to reach
through its borrowing program.
The first of three sections which follow presents an analysis of the
distribution and uses of the gross income generated by production
during the fiscal, years 1943 and 1944. In the second section new
liquid savings during these two years are studied with particular
reference to the amounts invested in Federal securities.^ This incorporates an analysis of the gross purchases of Federal securities by
investor classes, net liquidations through redemptions, cash maturities,
and market sales, and the resulting net absorption of Federal securities.
In this analysis net new investments in Federal securities are compared with net new liquid savings available. Of course, securities
are absorbed by investing old accumulations of funds as well as by
drawing on new liquid savings, but it is obviously impossible to make
this distinction statistically.
The third section compares the, estimates of ownership of Federal
securities by investor classes as of June 30, 1940-1944, and discusses
the changes in ownership for each of the four years.
•

\

•

Analysis oj gross income jlow
Since 1940 the annual value of goods and services produced in thi^
country has more than doubled, with increased war production ac1 The statistics available for the present analysis are taken from various sources and are subject to certain
technical qualifications as noted in footnotes. The Department of Commerce, the Securities and Exchange
Commission, and the Federal Reserve System have conducted studies which, together with available
Treasury Department data, fill in the broad outlines even though certain details are lacking. In the present analysis, figures are given for the two fiscal years 1943 and 1944. The 1943 figures have been revised
from those presented in this report last year.
2 The term "Federal secm-ities" as used here comprises all interest-bearing public debt and guaranteed
securities of the United States Government.




80

REPORT OF THE SECRETARY OF THE TREASURY

counting for most of the gain. The production of this unprecedented
amount of goods and services, plus minor governmental payments for
relief and pensions, has, of course, resulted in the creation of an equally
unprecedented amount of income. This gross income fiow amounted
to $197 billions in the fiscal year 1944.
' As the gross income flow is distributed it is received initially either
by individuals or corporations. The term 'individuals'' is used
throughout this section to include unincorporated business, partnerships, and personal trust accounts. Individuals received $156 billions,
or over three-quarters of the total gross income flow in the fiscal year
1944. Of this total, wages and salaries amounted to $111 billions, or
over two-thirds of individual income.
The remaindeir of the gross income flow is accounted for by corporation items, comprising (1) current net earnings before direct taxes
on corporations, but after dividends paid to individuals, (2). current
allowances for business reserves for depreciation, depletion, etc., and
(3) the amount of indirect taxes, such as sales taxes, which are included
because corporations are presumed to be acting as collectors on behalf of
the Government. The sum of these three corporate i t e m s ^ a m o u n t ing to $41 billions in the fiscal year 1944—represents that pa'rt of the
gross income flow assigned to corporations rather than to individuals.
' Figures for the gross income flow are summarized imthe following
table.
Distribution of gross income flow between individuals and corporations fiscal years
1943 and 1944
[In billions of dollars]
1943
1. Individuals:
a. Wages and salaries i.
,
...•
b. Entrepreneurial net income and allowances for reserves for depreciation, depletion, etc.2...1
.^..'.
_•_..
c. Rents, interest, and dividends
'.
d. Governmental payments for relief and pensions
......
e. Total 3
_
,
,
2. Corporations:
a. Net earnings before direct taxes on corporations but after dividends paid to individuals
•
b. Allowances for reserves for depreciation, depletion, etc.2._
c. Indirect taxes *-'
.
—

1944

25
13
2

28
•14
3

137

156

19
7
12

20
8
13

38

41

174

d. Total
3. Total gross income flow '

197

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

•

•

•

1 Includes contributions by employers and employees to social insurance funds.
2 Total business allowances for reserves for depreciation, depletion, etc., as estimated by the Department,
of Commerce have been classifled as between unincorporated business and corporations. Capital outlay
charged to current expense, inventory revaluation, adjustment, and adjustment for discrepancies are also
included with such allowances."
3 Income payments to individuals ($131 billions in 1943 and $150 billions in 1944) plus net increment in
social insurance reserves and allowances for reserves for depreciation, depletion, etc., by unincorporated business.
,.
•
.
. • Indirect taxes—such as sales taxes—are collected through business and are here all assigned to corpora*
tions since no breakdown is feasible between corporations and unincorporated business.
. » Gross national product ($172 billions in 1943 and $194 billions in 1944) plus governmental payments for
. relief and pensions.




81

REPORT OF THE SECRETARY OF THE TREASURY

P a r t of the gross income flow distributed to individuals and corporations is transferred to government in the form of taxes, as shown in
the table below. I n the fiscal year 1944, individuals paid $22 billions
in direct taxes (principally net income taxes) while corporations paid
$15 billions in direct taxes (largely net income and excess profits taxes),
and $13 billions of indirect taxes were collected through business.
Transfer of gross income flow through tax payments, fiscal years 1943 and 1944
[In billions of dollars]
1944

1943

Federal J

1. Individuals:
a. Direct taxes dn individuals 2
2. Corporations:
a. Direct taxes on corporations
- b. Indirect taxes 3,

14
--

23 .

Total

2

9
10
4

c. Total
3. Total

State
and
local

Federal 1

State
and
local

Total

11

20

7
8

10
12

15
6

22

21

8

29

10

33

41

10

51

(*)

2

22
15
13

" 7

NOTE.—Figures'are rounded and will not necessarily add to totals.
*Less than $500 millions.
1 These figures differ from figures shown elsewhere in this report on Federal net budgetary receipts ($22
billions in 1943 and $44 billions in 1944) by excluding those receipts which do not represent taxes paid from
the current flow of income, such as miscellaneous receipts arising from the renegotiation of war contracts for
prior years, and by including amounts of Federal individual income taxes.withheld by employers which
have not yet been paid to the Government.
2 Includes minor amounts of employment taxes received by the Federal Goverhment which are not transferred to social insurance trust funds.
.3 Indirect taxes—such as sales taxes—are collected through business and are here all assigned to corporations since no breakdown is feasible between corporations and unincorporated business.

Taxes, of course, represent merely a transfer of part of the gross
income flow from one segment of the economy to another. The gross
income flow before taxes is divided only between individuals and corporations, while after taxes are aUowed for it is divided between
individuals, corporations. State and local governments, and the
Federal Government.^
For each of the four categories of income recipients, a separate
analysis may be made of spendings and savings. Under wartime
conditions . one recipient group—the Federal Government—spends
considerably more than its income from taxes, while the other three.
recipient groups spend less than the amount of their disposable income
and thus have liquid savings accumulating. The sum of these liquid
savings is equal t o the amount of the excess spendings, or deficit, of
the Federal Government, as "will be noted in the foUowing table.
1 For convenience, income after taxes is referred to as "disposable income"; this term should not be con^
fused with "disposable income of individuals" as used in a narrower sense by the Department of Commerce
as income payments to individuals less personal taxes and nontax payments.

613185—45-




82

REPORT OF T H E SECRETARY OF T H E TREASURY
Uses of gross income fiow, fiscal years 1943 and 1944
[In billions of dollars]
Gross
income
flow

Income,
transferred
by. taxes

Disposable
income *

Less:
Spendings 2

Equals.:..
Liquid
savings

Fiscal year 1943
1. Individuals
2. Corporations
3. State and local governments..

137
38

. .
-

174

4 Total', excluding Federal Gnvemment
5. Federal Government
._
6. Total

.

-

--

-11
-22
10

126
16
10

-23
23

152
23

174

-.

174

88
1
•

8

38
15
2

96
3 78
174

55
- " 65

Fiscal year 1944
1. Individuals
2. Corporations 1
.
3. State and local governments

156
41

-22
-29
10

134
12
10

95
1
8

39
11
2

4 Total excluding Federal Government
5 Federal Government

197

-41
41

156
41

104
3 93

52
-"52

197

197

6. Total

--

.

197

NOTE.—Figures are rounded and will not necessarily add to totals.
1 For convenience, income after taxes is referred to as "disposable income"; this term should not be confused with "disposable income of individuals" as used in a narrower sense by the Department of Commerce as income payments to individuals less personal taxes and nontax payments.
2 Comprises spendings for purchases of goods and services and for governmental relief and pensions.
3 The figures used for Federal spendings difler slightly from those used elsewhere in this report for Federal
budgetary expenditures ($78 bfllions in 1943 and $94 billions in 1944). As used here, they include the n'et
outlays of Government corporations and exclude expenditures, such as for purchases of existing assets, which
do not enter into the flow of current income.
.
•
4 Differs from Federal net budgetary deficit as used elsewhere in this report ($56 billions in 1943 and $50
billions in 1944) by the net adjustments made to place Federal expenditures and receipts on the basis of flow
of current income and production.

It will be noted that in the fiscal year 1944 individualsv spent $95
billions and saved $39 billions^ out of disposable incoihe of $134
billions. Almost all of the expenditures consisted of purchases of
consumers^ goods and services, but there were minor amounts of
purchases of plant and equipment and inventones by anincorporated
business and small amounts of residential housing also purchased by
individuals. In the fiscal year 1943 individuals spent $88 billions
and saved $38 billions from $126 billions of disposable income.
Corporations had $12 biUions of disposable income in the fiscal
year 1944. Corporate spendings for capital assets amounted to only
$1 billion of this because of the difficulty of undertaking new private
construction, purchases of new equipment, or replenishment of declining inventories. Accordingly, corporate liquid savings including,
of course, unspent reserves aggregated $11 billions. In the fiscal
year 1943 corporate disposable income was somewhat higher, and
also liquid savings, because in a-period of rising income, tax payments
lag behind the incurrence of tax liabilities.
State and local governments are currently collecting more revenue than they need to cover their current expendiiures. As a
result, in each of the last two fiscal years they had current surpluses



REPORT OF THE SECRETARY OF THE TREASURY

83

of $2 bUlions. In each year income aggregated $10 billions for these
governmental units while spendings amounted to $8 billions. The
surpluses resulted from the fact that tax collections, have been at unusually high levels due to the extraordinary expansion of business
activity while spendings have been curtailed by the reduction in construction programs, particularly for new highwaj^s.
Individuals, corporations, and State and local governments—constituting all of the economy except the Federal Government—had
disposable.income in the fiscal year 1944 aggregating $156 billions;
they spent only $104 billions, leaving liquid savings of $52 bUlions.
The Federal Government, on the other hand, had only $41 bUlions
of disposable income whereas its spendings amounted to $93 bUlions.
This left a deficit of $52 billions, exactly balancing the liquid savings
of the rest of the economy.
A major objective of war financing is to draw on these liquid savings
as far as possible to cover the Federal deficit. To the extent that
this is not done, individuals, corporations, and State and local governments as a group will be saving in the form of currency and checking accounts and the Federal Government will be borrowing equivalent
amounts from banks. A large increase in'the supply of money, both ^
circulating media and checking accounts, was undoubtedly necessary
in connection with the huge increase in business which has occurred
during the war period. Every effort should be made to keep the
expansion in the.monetar}^ supply at the lowest possible level, however, in order to lessen inflationary pressures. The following paragraphs analyze the progress made in absorbing funcis tlirough the sale
of Federal securities in the last two fiscal years.
Liquid savings and investment in Federal securities
First of all, it should be noted that a part of the liquid savings of
any given recipient group may be transferred in effect to another
group which undertakes the actual investment of the funds thus
received. For exaniple, individuals' savings in the form of life insurance are invested by the life insurance companies. Similarly, the
process of debt repayment transfers funds from one group of investors
to another. Also, the placing of funds in a mutual savings bank or
in a savings account in a commercial bank means that these institutions, rather than the original savers, are responsible for the ultimate
decisions relating to the investment of such funds.
I t is necessary to make allowances for such transfers of funds in
analyzing liquid savings available for net investment in Federal
securities and the progress made in absorbing these funds. In the
present analysis all of the transfers are followed through, and available
savings are classified as between net investment in Federal securities




84

REPORT OF T H E SECRETARY OF T H E TREASURY

and amounts placed in currency and checking accounts.- Besides
individuals, corporations, and State and local governments, three
financial groups are analyzed, namel}^. Federal agencies and trust
funds, insurance companies, and mutual savings banks. Following
this, data are presented for commercial banks and Federal Reserve
Banks.
1; Individuals.—Liquid savings of individuals amounted to $39
biUions in the fiscal year 1944, as was pointed out previously. The
table below shows that $15 billions of these savings were transferred to
other recipient groups in the form of private insurance, social insurance, savings accounts, and other items, including debt repayment.
This left $24 biUions of net savings available. Of this tot'al, individuals invested $15 billions in Federal securities during the fiscal year
and increased their holdings of currency and checking accounts by
about $9 bUlions.
Individuals: ^ Liquid savings and investment in Federal securities, fiscal years
1943 and 1944
fin bfllions of dollars]
1943
A. Relation of liquid savings to fiivestment in Federal securities:
1. Liquid savings of individuals._......
2. Less: Transfers to other investors:
a. Private insurance
b. Social insurance
-.
_.
c. Savings accounts 2
_
d. Other, including debt repayment 3
e. Total transfers

38

_•._.

3
4
6
2.

12

_.

3. Equals: Net savings available...
4. Less: Amounts placed in currency and checking accounts

3
3
4
3

39

,

5. Equals: Net investment in Federal securities
B. Analysis of investment in Federal securities:
1. Purchases from the Treasury:
a. During war loans
_
• ,
b. Other
....L..c. Total
.
2.. Less: Liquidations through redemptions, cash maturities, and market sales.
3. Equals: Net investment in Federal securities..
_

15

26
13

24
9

12

15

4.7
9.1

14.2
6.4

13.9
L7

20.7
5.9

12.2

14.8

NOTE.—Figures are rounded and will not necessarily add to totals.
1 Includes unincorporated business, partnerships, and personal trust accounts.
2 Includes savings deposits in commercial and mutual savings banks, postal savings accounts, and savings
and loan association shares.
3 Includes net repayment of consumer debt, mortgage debt, farm and other unincorporated business debt,
and debt incurred to purchase securities; also includes purchases of non-Federal securities, and an adjustment for discrepancies in reconciling detail.
1 Technically, savings made in the form of currency and checking accounts also represent a transfer of
funds from one investor group to another. Savings in the form of checking accounts require the corollary
purchase of Federal securities by commercial banks, while savings in currency require,^ with minor exceptions, the purchase of Federal securities by Federal Reserve Banks. These items are not treated here as
transfers between investor groups, because they, represent the particular kinds of savings which the war
financing program is intended to minimize. Treating them as transfers would eliminate them from the base
in measuring the progress made in war financing.




REPORT OF THE SECRETARY OF THE TREASURY

85

The table indicates that individuals' net absorption of Federal
securities was equivalent to more than 60 percent of net savings
available from the current income flow in the fiscal year 1944. This
compares with slightly less than 50 percent in the preceding fiscal year.
It should be borne in mind, however, that there were two complete war
loans and a major part of a third in the fiscal year 1944, as compared
with two loans in the preceding year.
How should these ratios be interpreted as a measure of success in
absorbing the funds of individuals and unincorporated business? A
number of reasons make it clear that the ratio should be expected to be
less than 100 percent, but it is virtually impossible to set any precise
figure as an optimum. First of all, as has already been noted briefly,
the increase in business activity brought about by the war has required
a much higher level of money in the form of currency and checking
accounts than previously. The gross income flow has more than
doubled over the period, and more money for current operations^is
needed all along the line. Second, many small unincorporated businesses have experienced unprecedented prosperity during the war
and have accumulated large funds out of current operations. Apparently, a large volume of these funds has been placed in checking
accounts and probably also a significant amount in currency. Finally,
many individuals and unincorporated businesses are undoubtedly,
accumulating large amounts -in checking accounts and currency
simply because they feel that they are already doing their share in
buying Federal securities.
All of these factors behind savings in currency and checking accounts appear to be matters of savings preference or business practice
rather than a temporary buUding up of cash for potential spendmg
at the first opportunity. To the extent that these factors are operative, the need for immobilizing excess funds is lessened. On the
other hand, some of the increase in currency represents undesirable
tendencies insofar as it is being held for spending opportunities or
because of illegal transactions. I t is obviously impossible to make
statistical allowances for these various factors.
The lower part of the table on individuals analyzes the amounts
they are estimated to have invested in Federal securities. Gross
purchases of securities from the Treasury are listed first, divided
between purchases made in war loans and other purchases .from the
Treasury.^ Allowance is then made for liquidations of securities
through redemptions, cash maturities, and sales in the market to other
investors. The major part of individuals' purchases from the
, Treasury in the fiscal year 1944 occurred during war loans.
1 Throughout this series of tables, Treasury bills and special issues to Federal agencies and trust funds are
.included as part of gross purchases from the Treasury on the basis of net increases in amounts outstanding.




86

REPORT OF THE SECRETARY OF THE TREASURY

2. Corporations.—This category includes all corporations other than
banks and insurance companies, and also includes associations and
eleemosynary institutions. The table below shows the liquid savings
of corporations and their net investment in Federal securities. I t is
estimated that new liquid savings of corporations decreased from $15
billions in the fiscal year 1943 to $11 billions in the fiscal year 1944.
In the former year corporations invested about two-thirds of their net
savings available in Federal securities but in the fiscal year 1944
practically all of these savings were so invested.
Corporations: ^ Liquid savings and investment in Federal securities, fiscal years
1943 and 1944
[In billions of dollars]
1944
A. Relation of liquidvsavings to investment in Federal securities:
1.-Liquid savings of corporations
. 2. Plus: Transfers from other investors..
3. Less: Transfers to other investors..
^
4. Equals: Net savings available..
.5. Less: Amounts placed in currency and checking accounts.
6. Equals: Net investment in Federal securities..
B. Analysis of investment in Federal securities:
1. Purchases from Treasury:
a. During war loans
b. Other
c. Total
.....
1
....
2. Less:. Liquidations through redemptions, cash maturities, and market sales.
3. Equals: Net investment in Federal securities

15

11

(*)

....

15
6

(*)

10

9.3

21.8
2.8

18.2
7.9

24.6
14.6

NOTE.—Figures are rounded and wfll not necessarily add to totals.
*Less than $500 mUlions.
1 Includes associations, dealers and brokers, and foreign balances in this country.

3. State and local governments.—It has previously been noted that
liquid savings of State and local governments have been significant
during the war period as the result of a surplus of current revenues
over expenditures. As shown in the table below, these savings aggregated $2 billions in 6ach of the fiscal years 1943 and 1944. Part of
these liquid savings was used each year to reduce the amount of
outstanding State and local debt. Table 102 of this report shows
that State and local securities outstanding (other than in State and
local sinking, trust, and investment funds) declined by about a
billion and a half dollars during the two years ended June 30, 1944.
Practically all of the remaining savings was invested in Federal
securities;




87

REPORT OP THE SECRETARY OF THE TREASTJRY

State and local governments: Liquid savings and investment 4n Federal securities,
fiscal years 1943 and 1944
[In billions of dollars]
1943

2
1

A. Relation of liquid savings to investment in Federal securities:
1. Liquid savings of State and local governments
2. Less: Transfers to other investors.
3. Equals: Net savings available.
4. Less: Amounts placed in currency and checking accounts.
5. Equals: Net investment in Federal securities

1944

(*)

2
2

1

(*)
1

B. Analysis of investment in Federal securities:
1. Purchases from Treasury:
a. During war loans
...:...
b. Other

(*)
2

0.7

(**)

2.5
.4

c. Total
2. Less: Liquidations through redemptions, cash maturities, and market sales....
?.. Equals: Net investment in Federal securities..
NOTE.—Figures are rounded and wih not necessarily add to totals.
*Less than $500 millions.
** Less than $50 mfllions.

2.5 .

(**)

.7

.

•

4. Federal agencies and trust junds.—Federal agencies and trust
funds receive liquid savings as transf ers from other investors, particularly individuals, through increases in postal savings deposits and in
social insurance reserves, and through repayment of loans to Government corporations. Transfers of this kind .provided Federal agencies
and trust funds with $4 billions in the fiscal 3^ear 1943 and $5 billions
in the fiscal year 1944. As shown in the table below the funds received by Federal agencies and trust funds are fully absorbed by their
net investment in Federal securities, except for insignificant variations in their currency and checking accounts.
Federal agencies and trust funds: Liquid savings and investment in Federal
securities, fiscal years 1943 and 1944
[In bfllions of dollars]

'

.
1943

1944

A. Relation of liquid savings to investment in Federal securities:
Iv Liquid savings of Federal agencies and trust funds
2. Plus: Transfers from other investors
3. Equals: Net savings available
4. Less: Amounts placed in currency and checking accounts.
5. Equals: Net investment in Federal securities
B. Analysis of investment in Federal securities:
1. Purchases from Treasury:
a. During war loans
b. Other
c. Total
2. Less: Liquidations through redemptions, cash maturities, and mai-ket sales
3. Equals: Net investment in Federal securities.!

4

(*)

(•)

0.7
3.5

0.8
5.1

4.1
.4

5.9
1.1

3.7

NOTE.—Figures are rounded and will not necessarfly add to totals.
* Less than $500 mfllions.

5. Insurance companies.—It is estimated that insurance companies
received $4 bUlions in current savings transferred from other investors



88

REPORT OF THE SECRETARY OF THE TREASURY

in each of the fiscal years 1943 and 1944. This includes the net increase in individual equity in life insurance (through policy payments
and loan repayments, less benefits received), and includes also net
available, funds of fire, marine, casualty, and other insurance companies. As the following table indicates, all of these funds have been
invested in Federal securities.
Insurance companies: Liquid savings and investment in Federal securities,
fiscal years 1943 and 1944
[In biflions of dollars]
1943
A. Relation of liquid savings to investment in Federal securities:
1. Liquid savings of insurance companies
2. Plus: Transfers from other investors..:
,
3. Equals: Net savings avaflable
4. Less: Amounts placed in currency and checking accounts.
5. Equals: Net investment in Federal securities

4

(*)

(*)

.

B. Analysis of investment in Federal securities:
]. Purchases from Treasury:
a. During war loans
b. Other..

4.1
L4

c. Total
'...
2. Less: Liquidations through redemptions, cash maturities, and.market sales. _.
3. Equals: Net investment in Federal securities
NOTE.—Figures are rounded and will not necessarily add to totals.
•Less than $500 miflions.

5.5
1.6

2.7

3.9

^

6. Mutual savings banks.—Mutual savings banks received approxi^mately $1 billion of savings from individuals in the fiscal year 1943
and $2 billions in the fiscal year. 1944. This comprises mostly increases in savings accounts of individuals but includes also some repayment of loans. As in the case of insurance companies, mutual
savings banks have been investing all of their new funds in Federal
securities.
Mutual savings banks: Liquid savings and investment in Federal securities,
fiscal years 1943 and 194%
[In billions of dollars]
1943
A. Relation of liquid savings to investment in Federal securities:
1. Liquid savings of mutual savings banks.,
"2. Plus: Transfers from other investors
3. Equals: Net savings available
^
...
4. Less: Amounts placed in currency and checking accounts.
5. Equals: Net investment in Federal securities
B. Analysis of investment in Federal securities:
1. Purchases from Treasury:
a. Dm-ing war loans
b. Other
c. Total
2. Less: Liquidations through redemptions, cash maturities, and market sales.
3. Equals: Net investment in Federalsecurities
NOTE.—Figures are rounded and will not necessarily add to totals.
*Less than $500 millions.




1

(*)'

.7

(*)

3.8
.1

2.6
1.1

3.9

1.4

2.0

1.8

89

REPORT OF THE SECRETARY OF THE TREASURY

7. Summary oj investment in Federal securities by banks and nonbank
investors.—The following table shows the gross purchases and net
absorption of Federal securities in the fiscal years 1943 and 1944 for
commercial banks and Federal Reserve Banks together and for aU
nonbank investors combined.
Investment in Federal securities by banks and nonbank investors, fiscal
years 194-3 and 1944
[In biflions oJf dollars]
Nonbank
investors

Banks '

Total

Fiscal year 1943 . •
1. Purchases from Treasury:
a. During war loans 2..
b. Other
c. Total
2. Less: Liquidations
market sales

.
. . : . . . -.
through redemptions,

_

. :

8.4
20.4

21.3
23.7

29.8
44.0
73.8

28.8
maturities,
.. ..

45.0

-3L9

12.8

10.9

30.7

cash
..

32.2

63.0

and

3. Equals: Net investment in Federal securities

Fiscal year 1944
1. Purchases from Treasury:
a. During war loans 2
b. O t h e r . . . :

10.3

c. Total...
2. Less: Liquidations through redemptions, cash maturities, and market
sales
3. Equals: Net investment in Federal securities

14.6

49.9
24.8

10.3

64.4

74.7

0

..

-

49.9

- 3 13. 6

26.7

13.1

23.9

37.7

6L6

. NOTE.—Figures are rounded and will not necessarfly add to totals.
' Comprises commercial banks and Federal Reserve Banks. , .
.
2 Excludes net purchases of Treasuiy bills during war loan periods, which are shown as part of other
purchases.
3 Negative figure signifies excess of market purchases over liquidations through redemptions and cash
maturities.

The table shows that nonbank investors as a group absorbed
billions of Federal securities in the fiscal year 1944, over $5 billions
more than in the preceding year. Gross purchases from the Treasury
by nonbank investors in the fiscal year 1944 consisted of $50 billions
of purchases in war loans, and $15 billions of other purchases, or $64
bUlions in all. Liquidations of Federal securities by nonbank investors aggregated $27 billions, including cash maturities of marketable issues, redemptions of savings bonds and savings notes, and sales ^
in the market. Commercial banks and Federal Reserve Banks absorbed $24 billions of Federal securities during the fiscal year 1944, •
partly purchased directly from the Treasury and partly acquired in
•the market. This bank absorption of $24 billions was 39 percent
of net Federal borrowing as compared with 49 percent in the fiscal
year 1943. A further analysis of net absorption of Federal securities
is shown in the following section.




90

REPORT OF THE SECRETARY OF THE TREASURY
Ownership oj Federal securities by investor classes

The following table shows the estimated ownership of interestbearing securities issued or guaranteed by the United States Government for the end of each fiscal year, 1940 through 1944.
Ownership of Federal securities ^ by investor classes as of June 30, 1940 through
1944
J u n e 30
Class of investor
1940

1941

1942

1943

1944

I n billions of dollars
A Ownership:
1. N o n b a n k investors:
a. I n d i v i d u a l s *
,..
b . Corporations 3
. . . .
c. S t a t e a n d local g o v e r n m e n t s
d. Federal agencies a n d t r u s t funds .
e. I n s u r a n c e companies
*
f. M u t u a l savings b a n k s

9.7
2.6
.3
7.1
6.5
3.1

:

45.1
25.7
3.2
19.1
17.3
7.3

32.9

47.8

80.0

117.7

19.7
2.2

26.0
2.6

62.2
• 7.2

68.4
14.9

21.8

28.7

59.4

83.3

47.9

c. T o t a l b a n k s
3. T o t a l interest-bearing d e b t o u t s t a n d i n g

30.3
15.7
1.3
14.3
13.1
5.3

16.1
2.5

.

18.2
5.4
.6
10.6
9.2
3.9

18.6

.

2.4
.4
8.5
7.1
3.4

29.3

g. T o t a l n o n b a n k i n v e s t o r s . .
2. B a n k s :
a. Commercial b a n k s . . .
b . Federal Reserve B a n k s .

n.i

54.7 .

76.5

139.5

201.1

P e r c e n t of t o t a l
B P e r c e n t owned b y :
1. N o n b a n k investors:
a. I n d i v i d u a l s 2 _
b . Corporations 3.
c, S t a t e a n d local govfrnment-'?
d. F e d e r a l agencies a n d t r u s t funds
e. I n s u r a n c e c o m p a n i e s . . . ,
f. M u t u a l savings b a n k s . .
g. T o t a l n o n b a n k investors
2. B a n k s :
a. Commercial b a n k s
b . Federal Preserve B a n k s .

.
. . .

c. T o t a l b a n k s
3. T o t a l interest-bearing d e b t o u t s t a n d i n g

_ .

20
5
1
15
14
6

20
4
1
16
13
6

24
7
1
14
12
5

22
11
1
10
9
4

22
13
2
' 9
9
4

61

_ ....

60

62

57

59

34
5

36
4

34
3

37
5

34
7

39

40

38

43

41

. 100

100

100

100

100

NOTE.—Figures are rounded and wfll not necessarfly add to totals.
1 Comprises interest-bearing public debt and guaranteed obligations of the "United States Government.
2 Includes unincorporated business, partnerships, and personal trust accounts.
3 Includes associations, dealers and brokers, and investment of foreign balances in this country.

During the period covered in the table the amount of Federal securities outstanding increased from $48 billions to $201 billions. Of the
$201 billions, nonbank investor classes owned an estimated $118
bUlions and commercial and Federal Reserve Banks accounted for $83
bUlions. Cornmercial banks were the largest holders of Federal
securities in June 1944, accounting for $68 billions of the total amount
outstanding. Individuals were second with $45 billions and corporations (including associations, etc.) accounted for $26 billions. The
latter figure excludes $17 billions of securities held by insurance
companies and $7 bUlions held by mutual savings banks.




91

REPORT OF THE SECRETARY OF THE TREASURY

Total securities outstanding on June 30, 1944, were four times as
great as four years previously. Corporations^ holdings were ten times
as large and individuals' holdings almost five times as large at the end
of the fiscal year 1944 as they were June 30, 1940. Despite the large
increase in securities outstanding, nonbank investors continued to
hold about 60 percent of the total.
The net absorption of Federal securities by the various investor
classes during the last four fiscal years is summarized in the following
table.
Net absorption jof Federal securities ^ by investor classes, fiscal years 1941 through
1944
Class of investor

1941

1942

1943

1944

I n biflions of dollars
A . E s t i m a t e d absorption b y :
1. N o n b a n k investors:
a. I n d i v i d u a l s 2
_
'
b . Corporations 3 ._•
c. S t a t e a n d local g o v e r n m e n t s . . °
^ •
d. Federal agencies a n d t r u s t f u n d s .
° e . I n s u r a n c e companies .
f. M u t u a l savings b a n k s

-

...

g. T o t a l n o n b a n k i n v e s t o r s .
2. B a n k s :
a. Commercial b a n k s .
b . Federal Reserve B a n k s
c. T o t a l b a n k s

7.1
3.0
.2
2.1
2.0
.5

3.6
-.3

-

1.4
-.2
.1
L4
.6
.3
3.6

°

12.2
10.3
.7
3.7
3.9
L4

14.8
10.0
1.9
4.8
4.1
2.0

14.9

32.2

37.7

6.4
.5

26.2
4.6

16.2
7.7

.

3.2

3. T o t a l increase in interest-bearing d e b t o u t s t a n d i n g

6.8

30.7

23.9

6.9

.....

2L8

63.0

61.6

P e r c e n t of total
B . Percent absorbed b y :
1. N o n b a n k investors:
a. I n d i v i d u a l s 2 _
b . Corporations 3
c. S t a t e a n d local g o v e r n m e n t s
d. .Federal agencies and. t r u s t funds
e. I n s u r a n c e companies
.•
f. M u t u a l savings b a n k s . - . - . . .

• 20
-3
1
20
9
4

33
14
1
10
9
2

19
16
1
6
6
2

24
16
3
8
7
3

52

69

51

61

L

52
-4

29
2

. 42
7

26
13

48

31

49

39

3. T o t a l increase i n interest-bearing d e b t o u t s t a n d i n g

100

100

100

100

g. T o t a l n o n b a n k investors

.-.

2. B a n k s :
a. Commercial b a n k s .
b . F e d e r a l Reserve B a n k s
c. T o t a l b a n k s

.
.._:

NOTE.—Figures are rounded and will not necessarfly add to totals.
1 Comprises interest-bearing public debt and guaranteed obligations of the United States Government.
2 Includes unincorporated business, partnerships, and personal trust accounts.
3 Includes associations, dealers and brokers, and investments of foreign balances in this country.

As indicated in the table, in the fiscal year 1944 nonbank investors
increased their absorption of Federal securities by more than $5^billions over the preceding year although total borrowing actually declined slightly. Accordingly, net borrowing from banks decreased
significantly during the fiscal year. As noted previously, banks
provided for 39 percent of total borrowing in the fiscal year 1944 as
compared with 49 percent in the fiscal year 1943.




92

REPORT OF T H E SECRETARY OF T H E TREASURY

The improvement in the effectiveness of the borrowing program
with respect to sales to nonbank investors is even more striking when
allowance is made for the fact that a significant portion of the borrowing from banks represented funds used to build up-the Federal General
-Fund balance rather than to cover Federal expenditures. This is
particularly important from the point of view of infiation control,
since funds borrowed from the banking system to increase the General
Fund balance are immobilized until such time as they may be drawn
on for expenditures. In the last four fiscal years total borrowing
from banks aggregated $65 billions, but during the same period the
General Fund balance increased by $18 bUlions. < Thus, funds borrowed from banks and expended aggregated $46 billions during the
period. Federal expenditures which were financed by increases in
the interest-bearing debt during these four years amounted to $135
billions. Nonbank investors purchased enough Federal securities to
cover almost two-thirds of these expenditures, with bank investors
accounting for the remaining one-third. As indicated previously,
a large part of this bank borrowing was necessary to provide extra
money (currency and checking accounts) to accompany the targe
increase in business activity. The table below presents the figures
for each of the last four fiscal years.
Analysis of Federal expenditures financed by increases i n interest-hearing debt, fiscal
years 1941 through 1944 .
[Dollars m bfllions]

1941

A. Federal expenditures financed by increases in interestbearing debt:
1. Total Federal expenditures i
..

Total
4
fiscal
years

1942

1944

$34.2

$13.8

1943 •

$79. 7

$95.3

$222.9

(*)

12.8

22.3
LO

44.1
.2

86.8
L2

0

2. Less: Expenditures financed by:
a. Net budgetary receipts .
..
b. Miscellaneous sources 2

7.6

(*)-

3. Equals: Expenditures financed by mcreases in interestbearing debt

6.1

21.4

56.4

50.9

134.9

B. Distribution of increases in interest-bearing debt used to
finance expenditures:
1. Borrowing from nonbank investors

3.6

ill. 9

32.2

37.7

88.4

3.2
.7

6.8
.4

30.7
6.5

23.9
10.7

64.7
18.3

2.5

6.5

' 24.2

13.2

46.4

6.1

21.4

56.4

50.9

134.9

, 59%

70%"

57%

74%

66%

2. Plus: Remainder covered by borrowing from banks: 3
a. Total borrowing from banks
b. Less: Increase in General Futfd balance
\ •

c. Equals: Remainder covered by borrowing from
banks

3. Equals: Total incrsases in interest-bearing debt used to
finance fixpenditurp.!^
Percent covered by nonbank borrowing

NOTE.—Figures are rounded and wfll not necessarily add to totals.
•Less than $50 miflions.
1 Includes net outlays of Government corporations andcredit agencies, other than for net sales and redemptions of obligations in the market.
2 Increases in noninterest-bearing debt plus net receipts of trust and miscellaneous funds, less net outlays
of Government corporations and credit agencies for net sales and redemptions of obligations in the market.
' Commercial banks and Federal Reserve Banks.




REPORT OF THE SECRETARY OF THE TREASURY
GENERAL FUND •

93

"

The General Fund includes all moneys of the Government deposited
with and held by the Treasurer of the Unijbed 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 bf gold, silver, currency,
coin, unclassified collection items, etc., and deposits, to the credit of
the Treasurer of the United States and other Government officers, in
Federal Reserve Banks, special depositaries account of sales of Government securities, national and other bank depositaries, foreign depositaries, and the treasury of the PhUippine IsJands..
The liabilities of the General Fund consist of outstanding Treasurer's
checks, deposits of certain_Government officers composed of balances
to the credit of the Post Office Department, the Board of Trustees of
the Postal Savings System, and postmaster's, clerks of courts, disbursing officers, etc., and uncollected items, exchanges, etc.
The balance in the General Fund is classified according 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, 1943, and
June 30, 1944 •
[On basis of dafly Treasury statements, see p. 519. For a description of accounts through which Treasury
transactions are effected, see p. 520]
Balance June 30, 1943.
..•
$9,506,565,926.06
Add:
Receipts, net,i general and special accounts
44,148.926,968.07
Receipts, trust accounts, etc.i
5,052,721,588.47
Net increase in gross public debt
._.•
64,307, 296,89L 23
Deduct:
Expenditures- general and special accounts
Less statutory debt retirements (sinking fund, etc.)
Expenditures, trust accounts, etc.-

123,015,511,373.83
$93,743,514,863.84
1,660.00
93,743,513,213.84
9,103,446,537.69

102,846,959,751.53

Balance June 30, 1944
20,168,551,622.30
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, etc." on the following line.
/

•

"

. A comparative analysis of the assets and liabUities and the balance
of the General Fund is shown for the beginning and close of the fiscal
year in the table on page 728 of this report.




94

REPORT OF THE SECRETARY OF THE TREASUiRY

SECURITIES OWNED BY THE UNITED STATES AND PROPRIETARY INTEREST IN GOVERNIMENT CORPORATIONS AND CREDIT AGENCIES

Securities owned
On June 30, 1944, 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 net face amount of $13,321 miUions; and obligations
of foreign governments in the principal amount of $12,660 millions.
A statement of the securities owned, exclusive of foreign obligations,
at the end of the fiscal year 1944 is shown in the table on page 732.
A summary of the holdings of securities at the end of the last two fiscal
years is shown in the following table.
Summary of securities owned by the United States Government, exclusive of foreign
'obligations, June 30, 1943 and 1944
Security

June 30, 1943

Capital stock of Government corporations.
Paid-in surplus of Government corporations
Bonds and notes of Government corporations
Other securities L
.
.
...
Total all securities

Increase or
decrease (—)

$2.106. 371,183. 31 $2,099,634,942.52
-$6,736,240. 79
136, 096, 791.06
142,617,869.23
-6.521,078.17
7, 535,144, 623. 79 10. 717, 259, 623. 79. 3,182,115,000.00
1, 271, 491, 781. 96 1, 237, 280, 877. 24 —34, 210,904. 72
11,055,625,458.29

Total interagency ownership
^...

14,190, 272, 234.61

3,134, 646, 776. 32

459, 841,000.00
1.000,000.00
473,492, 576.84

Less interagency Ownership:
Capital stock.
Paid-in surplus..
..:.
Other securities

Net securities owned

June 30, 1944

461,091,000.00
1.000.000.00
407. 547,146.16

- 6 5 945,430.68

934, 333, 576.84

869, 638,146.16

—64 695 430.68

10,121, 291, 881.45

13, 320, 634,088.45

3,199, 342, 207.00

1, 250.000.00

1 Includes loans and advances by Farm Security Administration, Rural Electrification Administration,
Federal Works Agency, etc.

In accordance with the acts approved February 24, 1938 (52 Stat.
79), and March 28, 1941 (55 Stat. 55), the Secretary of the Treasury
canceled during the year obligations of the Reconstruction Finance
Corporation amounting to nearly $3 millions, representing expenditures previously made by the Corporation. This brought the total
of the obligations of the Reconstruction Finance Corporation canceled
to $2,784 mUlions, as shown in the following table.
Reconstruction Fmance Corporation:
. •
Amount
Obligations canceled to June 30,1943
.
i $2, 781,442,007.21
Obligations canceled during 1944 pursuant to the act of Feb. 24, 1938,
on account of expenditm'es forr—
•
Federal Housing Administrator (sec. 4 of National Housing Act).. $175,000.00
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)
2,710,000.00
'
:
2,885,000.00
Total to June 30, 1944.:
.....'.
2,784,327,007.21
I For detafl of cancelations, see annual reports for fiscal years 1943 p. 113; 1942 p. 41; 1941 p. 51; and 1940
pp. 114-115.




REPORT OF THE SECRETARY OF THE TREASURY

95

Proprietary interest in Government corporations and credit agencies
In order to refiect the amount of the Government's interest in
Government corporations and credit agencies, the.Treasury compUes
from reports received from such agencies a '^Combined Statement of
Assets and Liabihties of Government Corporations and Credit Agencies of the United States,'' which is published in the daily Treasury
statement. (See page'148.) 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 June 30,
1944, appears as table 91 beginning on page 758, and. a summary
table of the Government's proprietary interest in such agencies as
of June 30, 1933 through 1944, appears as table 92 on page 768 of
this report.
MONETARY DEVELOPMENTS

International monetary cooperation
Stabilization agreements.—Through the renewal of expiring stabUization agreements and through operations conducted under the existing
stabUization and monetary agreements, the Treasury continued, during
the fiscal year 1944, its established policy of cooperation with friendly
foreign governments in the stabUization of their currencies.
On July 1, 1943, the stabUization agreement between the United
States and Ecuador, originally entered into on February 27, 1942, was
extended for one year through June 30, 1944. Under this agreement,
the United States stabUization fund undertook to purchase Ecuadoran
sucres up to an amount of $5 mUlions for the purpose of stabUizing the
United States dollar-Ecuadoran sucre exchange rate. At the close of
the fiscal year, discussions looking to the further extension of this
agreement had been initiated.
The stabUization agreement between the United States and Iceland,
signed May 5, 1942, under which the United States stabUization fund
undertook to purchase Icelandic kronur up to the amount of $2
mUlions for the purpose of stabilizing the United States dollar-Icelandic krona exchange rate was extended for one year from July-1, 1943,
through June 30, 1944.
The agreement of September 26, 1942, between the United States
and Liberia was intended to facUitate the conversion of the Liberian
currency system from a British coin basis to a United States dollar
basis. Prior to the end of the fiscal year 1944 the purpose of the operations under this agreement had been achieved and by mutual consent
the-^agreement was allowed to lapse on June 30, 1944. At that date,
under an arrangement with the British Government, the British coins




96

REPORT OF THE SECRETARY OF THE TREASURY

acquired by the United States stabilization fund in accordance with
the Liberian agreement were in process of being sold to the British
Government for dollars as expeditiously as transport facUities permitted the delivery of the British coins.
The stabUization agreement.between the United States and Brazil,
originally entered into on July 15, 1937, for a five-year period and
subsequently amended and extended to terminate July 15, 1947, was
amended on November 24, 1943, to increase the amount of gold made
available for sale to Brazil from $200 millions to $300 mUlions.
The assets and liabilities of the exchange stabilization fund as of
June 30, 1943 and 1944, with supporting schedules, are shown in the
table beginning on p. 730.
Proposals jor international currency and jinancial cooperation.—The
Secretary of the Treasury made public on August 20, 1943, ai revised
draft, dated July 10, 1943, of the Treasury's tentative proposal for an
international stabUization fund of the United and Associated Nations.
The revised draft was prepared by the technical experts of the Treasury in cooperation with the experts of other departments of the Government after extended discussions with the technical experts of nearly
thirty countries. These technical, exploratory discussions w^ere held
in response to an invitation sent in March 1943 by the Secretary of the
Treasury to the finance ministers of the United Nations and the
countries associated with them, requesting them to send their experts
to Washington to discuss the feasibUity of international monetary
cooperation along the lines suggested in the preliminary draft of the
Treasury's tentative proposal, which was submitted concurrently
for their study. While suggestions of the foreign technical experts
were included in the revised version, the Secretary pointed out that
the revised draft did not necessarily reflect the views of the experts
of those countries, that it was in every sense stUl a preliminary document, and that it had not received the official approval of the Treasury
or of the United States Government. (See exhibit 39, p . 354.)
A tentative proposal for a bank for reconstruction and development
of the United and Associated Nations, prepared by the technical
staffs,of the Treasury and of other departments of the Government,
was macie public on November 23, 1943. This proposal was sent by
the'^Secretary of the Treasury to the finance ministers of the United
Nations and the coimtries associated with those nations with the
request that it be studied by their technical experts. In his foreword,
the Secretary stated that the primary aim of such an international
bank should be to encourage private capital to go abroad for productive investment by sharing the risks of private investors and by participating with private investors in large ventures, and that the bank
should perform only that part of the task which private capital
could not do alone. The proposal outlined a plan for the establish-,




REPORT OF THE SECRETARY OF THE TREASURY

97

ment of a bank with a capital of about $10 bUlions to be subscribed
by all countries which become m^embers. (See exhibit 40, p. 365.)
On April 21, 1944, the Secretary appeared before the Senate Committees on Foreign Relations and Banking and Currency, and the
Special Senate Committee on Post-War Economic Policy and Planning,
and before the House of Representatives Committees on Foreign
Affairs, Ways and Means, Banking and Currency, and Coinage,
Weights and Measures, and the Special House Committee on Post-War
Economic Policy and Planning to report the progress of the discussions
on the fund and bank proposals. He stated that technical experts
of the United Nations had agreed upon a set of basic principles for an
international monetary fund and that progress was being made in
the discussion of the propo~sal for a world bank. He expressed the
hope that after studying the recommendations of the technical
experts the governments of the United Nations would come -to the
conclusion that there was sufficient basis of agreement at a technical
level to warrant the convening of a formal conference. The Secretary
made public the joint statement by experts on the establishment of an
international monetary fund of the United and Associated Nations.
(See exhibit 41, p. 372.).
After further consultation among the representatives of the interested governments, the desirability of convening a formal conference
became apparent and the President invited the United Nations and
the nations associated with them to send delegates to the United
Nations Monetary and Financial Conference to be held at Bretton
Woods, N. H.,, beginning July 1, 1944. The President designated
the Secretary of the Treasury as head of the American delegation to
the Conference and in a letter to the Secretary, dated June 9, 1944, the
President stated that it was his hope that the Conference would
formulate for presentation to the participating governments definite
proposals for an international monetary fund and possibly a bank for
reconstruction and. development. (See exhibit 42, p. 379.) At the
close of the fiscal year, acceptances of the President's invitation had
been received from 44 nations.
Domestic monetary events
One-cent piece.—The coinage of the zinc-coated steel one-cent piece,
which had been instituted in February 1943 as a war measure in order
to conserve vital war metal, was discontinued on December 31, 1943,
after the passing of the acute phase of the copper stringency. The
coinage of copper-zinc one-cent pieces was resumed on January 1,
1944.
Silver policy.—Throughout the fiscal year 1944 the Treasury, continued the policy inaugurated in April 1942 of putting all available
silver into urgent war uses.
613185—45^^—8




98

REPORT OF THE SECRETARY OF THE TREASURY

No new purchases of foreign silver were made during the year, thus
permitting such silver to go into industrial and other uses. Similarly,
the greater part of the silver produced in the United States during the
fiscal year was left available for important war uses, since the Treasury's p'^urchases of newly mined domestic silver under the act of July 6,
1939, amounted to only 861,294 ounces, i. e., about 2 percent of the
total domestic production estimated at 42.8 million ounces.
Nearly 41 miUion ounces of silver were sold for war purposes
under the provisions of the act of July, 12 1943, which authorized
the President, through the Secretary of the Treasury, upon the
recommendation of the Chairman of the War Production Board,
to lease domestically or to sell, at a price of not less than 71.11
cents per fine ounce, silver held or owned by the United States.
Lend-leasing oj silver.^—1]^ to June 15, 1944, approximately 4,000
short tons of silver had been shipped by the United States to allied
and friendly foreign countries under lend-lease arrangements for
industrial and coinage purposes essential to the conduct of the war.
On that date, the Secretary announced that the United States Government had agreed to lend-lease to the government of India 100
million ounces (approximately 3,429 tons) of silver to be used to
maintain an adequate supply of coinage for the large number of United
Nations forces in India and for India's expanded war production, and
to help to keep prices stable in this important United Nations supply
base and war theater. (See exhibit 43, p. 380.) All lend-leased silver
is to be returned to the United States Treasury on an ounce-for-ounce
basis after the end of the war as specified in the respective agreements.
Military currencies.—On August 2, 1943, it was announced that the
allied expeditionary forces in Sicily were introducing in the liberated
regions an '^Allied Military Currency," designated in terms of the
local monetary unit, the lira. The currency was prepared in the
Bureau of Engraving and Printing, to be used by the allied forces for
the payment of troops and for expenditures for local supplies and
services and also to be used, if necessary, to supplement the regular
lira currency in providing an adequate circulating medium.
The issuance and use of military currency is carefully controlled to
insure that it is employed only for purposes essential to military operations or for the continued operation of essential trade and commerce
and for Government administration. When the United States Army
obtains allied military lire for expenditures for pay of troops and for
the purchases of supplies and services in the area, the relevant appropriation of the War Department is charged with the dollar equivalent
of such expenditures. In connection with all expenditures complete
records are being kept and a detailed accounting procedure has been
set up covering the issuance and use of this currency. These records
also will facilitate the adjustment of other financial matters, such as




, REPORT OF THE SECRETARY OF THE TREASURY

'

99

those for civil aft'airs, growing out of the military operations of the
allied forces in the occupied area. (See exhibit' 44, p. 380.)
When the allied troops landed in Normandy on June 6, 1944,
they carried with them a supply of a new French franc currency to
insure that adequate supplies of currency would be available for the
pay of allied troops and for the purchase of local supplies and services. This currency is freely interchangeable with and is supplementary to the franc currency of the Bank of France.
On February 9, 1944, it was announced that the special Hawaiian
series of United States currency had been taken by American marines,^
sailors, and soldiers into Central Pacific strongholds from which the
Japanese had been driven. This currency, originally introduced in
Hawaii in July 1942, consists of United States silver certificates and
Federal Reserve notes bearing the distinctive overprint '^Hawaii" on
each end of the face and across the reverse side of the bills. This
step was taken to facilitate identification of the currency being used
in combat areas" and" to make easier the isolation of this particular
currency should it fall into enemy hands. (See exhibit 45, p. 383.)
A discussion of developments in foreign funds control will be found
on page 126.
'
TAXATION DEVELOPMENTS

During the fiscal year 1944 two majoi; tax measures became law: the
Revenue Act of 1943 on February 25, 1944, and the Individual Income
Tax Act of 1944 on May 29, 1944. The evolution of these acts and
their provisions are summarized under the following headings: I. Development of the 1943 revenue program; I I . Major features of the
Revenue Act of 1943; I I I . Development of simplification plans; and
IV. Major features of the Individual Income Tax Act of 1944. A
summary of other revenue laws enacted during the fiscal year 1944^is
presented under a fifth heading: V. Other revenue legislation.
I. Development ojthe 194-3 revenue program
Initially, in January 1943, the Administration's goal for additional
revenue was stated in the President's Budget Message as ^^not less than
$16 billions of additional funds by taxation, savings, or both, during
the fiscal year 1944." After passage in June of the Current Tax Payment Act of 1943, which served to postpone Congressional consideration of the 1943 general revenue program, a revenue go \l of $12 bUlions
was adopted.^ As presented to the House Ways and Means Com' mittee in October 1943, the Administration's program called for $10.5
billions of added revenue in a full year of operation. The Revenue
Act of 1943, as passed over t t e President's veto in February 1944,
provided added revenues estiinated at $2.2 billions per year (without
1 For a discussion of developments relative to the Current Tax Payment Act of 1943, see the Annual Report.
of the Secretary of the Treasury for 1943, pp. 106-111.




loo

REPORT OF THE SECRETARY OF THE TREASURY

taking into account the postponement of automatic increases in social
security payroll taxes and the potential cost pf the special relief provisions in the act).
A. Budgetary developments.—
With the rapid approach to full mobilization during 1942 and 19^3
came correspondingly rapid expansion of Government expenditures.
Estimates of expenditures for the fiscal year 1943 rose from $59 billions
in the Budget Message for 1943 to $80 billions in the Budget Message
^for 1944; estimates of net receipts under then-existing revenue laws
rose from $16.5 bUlions to $23 bUlions.
Expenditures for the fiscal year 1944 in the Budget Message for
that year were estimated at $104 billions and net receipts at $33 billions; in other words, net receipts were estimated at 32 percent of
expected expenditures. In calling for at least $16 billions of additional funds by taxation, savings, or both, for 1944, the President in
the Message stated that this goaPwas set with the view to checking
infiationary spending and raising current - revenues to 50 percent of
expenditures. By reducing the volume of additional borrowing and
by supporting the stabilization program, the $16 bUlion program would
also aid in making post-war problems manageable.
Revised estimates of receipts and expenditures for the fiscal year
1944, taking into account the provisions of the Current Tax Payment
Act of 1943 (approved June 9, 1943), and other developments, were
issued in the Statement by the President on the Summation of the
1944 Budget on August 1, 1943. Although expenditures estimates
remained at $104 billions, net receipts estimates were revised upward
$5 bUlions to $38 billions, or 37 percent of expected expenditures.
I n the .Statement, the President reiterated the need for ' ' a truly stiffprogram of additional'taxes, savings, or both," pointing out that such
a program was urgently needed further to absorb purchasing power
/^as a deterrent to bidding up prices and resorting to the black market."
Budget figures were revised again in November 1943, when the
Budget Director announced estimates placing net receipts at $41
bUlions and total expenditures at $98 billions, a ratio of net receipts
to expenditures of 42 percent.
B. Development and presentation oj Treasury proposals.—
\Alternative plans for raising $16 biUions of additional annual revenue
were developed by the Treasury and discussed with other executive
agencies late in 1942, but were tabled pending the settlement of the
pay-as-you-go issue. Discussions of the general revenue program
were formally resumed in June 1943. The Congressional committees
decided at that time to postpone hearings on general revenue legislation until late summer or early fall. Discussions throughout the
summer of 1943 centered around a goal of $12 billions, the reduction




REPORT OF THE SECRETARY OF THE TREASURY

101

from $16 billions having been made on the basis of revisions in revenue
estimates taking account of the Current Tax.Payment Act.
The Treasury sought the views of other executive departments on
taxation in a series of conferences during August and September 1943.
I n these and other conferences during September, Treasury revenue
proposals were discussed and the Administration program calling for
$10.5 billions in additional revenue annually was developed. The reduction from the $12 billions goal took effect entirely in the individual
income tax proposals, the consensus being that inequalities in abUity
to pay ruled out the tax rates necessary to reach the higher goal.
The $10.5 billions reyenue program was presented to the House
Ways and Means Committee in a statement by the Secretary of the
Treasury on October 4, 1943. (See exhibit 46, p. 384.) Judge Vinson,
Director of Economic StabUization, appeared before the committee
October 6 and 7 ^4n support of the program recommended by the
Secretary." The Treasury's revenue proposals, for the most part,
were not adopted by the Ways and Means Committee of the Honse of
Representatives or the House; the House biU (H. R. 3687) provided
for about $2 billions in additional annual revenues. I n a statement
to the Senate. Finance Committee, November 29, 1943, the Secretary
of the Treasury reiterated the need for at least $10.5 bUlions in added
revenue. (See exhibit 47, p. 416.) Action by the Senate Finance
Committee and the Senate did not increase materially the yield of the
House bill.
In addition to its statements on the general revenue program the
Treasury expressed its position on several other revenue matters.
With respect to individual income tax simplification, the Treasury in
September 1943 suggested to the Ways and Means Committee several
alternative methods of simplifying the 1943 Victory tax; made additional recommendations in the Secretary's statement of October 4; and
on November 29 and December 15, 1943, presented further views on
alternative methods of integrating the Victory tax with the regular
income tax structure. (For the November 29 statement, see exhibit
48, p. 420.)
On the subject of renegotiation of war contracts a statement of the
Treasury position was made to the Ways and Means Committee on
September 10, .1943 (see exhibit 49, p. 446), and the attitude of the
Treasury on the amendments to the renegotiation statute proposed by
the Senate Finance Committee was expressed in a press release of
December 20, 1943.
The Secretary of the Treasury made a statement favoring expanded
social security benefits and increased payroll taxes as a part of his
general statement of October 4 to the Ways and Means Committee*
He also reiterated the Treasury's opposition to the sales tax in a sup-




102

REPORT OF THE SECRETARY OF THE TREASURY

plementary statement before the Senate Finance Committee on
November 29. (See exhibit 47, Supplemental Statement I, p. 418.)
The Treasury also, submitted several analytical studies for the use of
the congressional committees. Of these studies the following are published in the Hearings on Revenue Revision of 1943 before the Committee on Ways and Means: (1) ^'The Need for More Taxes," pages
23-52; (2) '^Taxation of Increases in Individual Incomes," pages 90107; (3) '^Post-war Expenses Related to Wartime Income," pages 135169; and (4) '^Considerations Respecting a Federal Retail Sales Tax,"
pages 1-095-1272.
C. Treasury proposals.—
* 1. GENERAL STATEMENT.

The program recommended by the Treasury to raise an additional
$10.5 billions annually was made up asfollows:
.

Individual income tax
Corporation taxes
Estajie and gift taxes
Excise taxes _

Increase over yield
of existing law
{in millions)

'

'
..

Total

'

$6,529
1,138,
402
2, 492
10, 561

. The Secretary of the Treasury stated that if payroU taxes -were
increased (as he recommended in a supplementary statement), the
proposed $6.5 billions schedule of income taxes would have to be
reduced to avert the burden of excessive taxation on lower income
groups. In addition, to the revenue recommendations, the Secretary
made other suggestions to reduce the complications in our tax laws.
The Secretary of the Treasury pointed out that the tax proposals he
was presenting had been measured igainst (1) the ability of the proposals to raise money and to combat inflation, (2) the degree to which
they might interfere with w^ar production, (3) their impact on people
with fixed incomes or fixed obligations and on people with inadequate
incomes, and (4) their practicability and cost from the standpoint of
administration.
2. INDIVIDUAL INCOME T A X .

The chief reliance for additional revenue, to the extent of almost
two-thirds of the Treasury's 1943 program, was placed on the individual income tax. To lessen the ultimate impact of the increased
tax on the lower income groups and to provide equitable current relief
for, persons with fixed incomes, the Treasury developed suggestions
for a post-war credit or refund of part of the tax, the credit to be taken
currently where income had not increased substantially. Moreover,,
with the more-than-tenfold expansion of the number of taxpayers and
the introduction of current collection, it became urgently necessary to
simplify the tax.




REPORT OF THE SECRETARY OF THE TREASURY

103

Accordingly, the Treasury proposed (1) repeal of the Victory tax,
(2) repeal of the earned income credit, (3) reduction of exemptions for
married persons and dependents, (4) increased surtax rates throughout
the scale, and (5) withholding at graduated rates from salaries and
wages. Two different suggestions for post-war refund of part of the
income tax were also submitted.
a. CHANGES I N RATES, EXEMPTIONS, AND CREDITS.

No increase in the normaPtax rate of 6 percent was proposed, but
increases in surtax rates were proposed for all brackets. As in 1942,
it was again recommended that, to make the progression more gradual
in the lower end of the income scale, the first bracket of surtax income,
0 to $2,000, be divided into $500 brackets. Surtax rates on the first
$500 bracket were to be increased from 13 to 21 percent, and on the
fourth $500 from 13 to 30 percent. In the range from $2,000 to
$60,000, surtax rate increases of approximately 20 percentage points
were proposed. In the top bracket ($200,000 and over) the proposed
rate change was from 82 to 90 percent. At the same time, repeal of
the Victory tax (levied at net rates of approximately 3 percent) was
recommended.
I t was further recommended that the exemption for married persons
be lowered from $1,200 to $1,100 and the dependent credit from $350
to $300, the single person's exemption to remain unchanged at $500
Repeal of the 10 percent earned-income credit w^as also urged.
b . VICTORY TAX.

The Treasury felt that the complicated Victory tax offered the
major opportunity for prompt simplification of compliance operations
for millions of income taxpayers. In-September 1943, the Treasury
laid before the Ways and Means Committee several alternative
methods of simplifying the 1943 Victory tax without materially
affecting burdens. The suggestion adopted by the Ways and Means
Committee (and later enacted) was to change the 1943 Victory tax to
accord with the assumption that all post-war credits could be taken
currently. This action reduced the complexity of the Victory tax
computation on 1943 returns. The further Treasury suggestion that
the 1943 Victory tax be changed to a flat 3 percent was not adopted
at that time, but was later incorporated for 1944 in the ^Revenue
Act of 1943.
In his statemxcnt of October 4, 1943,.the Secretary of the Treasury
urged the repeal of the Victory tax as the foremost step toward tax
simplificati(m. I t was pointed out that repeal would--also relieve
9 million lower income families from the income tax. The $300
millions previously payable by these famUies was to be absorbed in



104

REPORT OF THE SECRETARY OF THE TREASURY

the proposed schedule of surtax rates combined with the proposed
lowering of exemptions. The proposal was n o t accepted by the
Congress.
As passed by the House, the revenue bill (H. R. 3687) substituted
for the Victory tax a new minimum tax designed to retain on the tax
rolls the 9 mUlion taxpayers who would have been dropped under the
Treasury proposals. I n its statement to the Senate Finance Committee on November 29, 1943 (see exhibit 48, p. 420), the Treasury
opposed the minimum tax provisions because of their complexity and
urged again that the Victory tax be dropped and that the income tax
be adjusted to absorb the Victory tax burden. I t was urged that this
step be taken whether or not more far-reaching changes in the surtax
scale were made. A further analysis of the - complications of the
minimum tax was submitted to the Senate Finance Committee on
December 15, 1943. The Committee accepted neither the minimum
tax nor the Treasury's integration plan. However, it changed the
Victory tax to a flat 3 percent rate for all persons regardless of marital
or dependency status, a step which the Treasury considered preferable
to adoption of the minimum tax.
C. OTHER SIMPLIFICATION PROPOSALS.

The Treasury again, as it had in 1942, urged the Congress to
eliminate the earned-income credit and thus permit the consolidation
of the normal tax and surtax into a single tax schedule. Since the
law designated the first $3,000 of net income as earned net income
regardless of its source, the credit was deprived of its chief significance,
yet it continued to complicate tax returns and computations.
A further change recommended to simplify compliance was the
withholding of taxes from wages and salaries at graduated rates.
This move would have increased by several mUlions the number of
taxpayers kept onfa strictly current basis by withholding and would
have correspondingly reduced the number of persons required to file
declarations of estimated tax.
d . POST-WAR CREDITS.

To lighten the ultimate burden of the proposed tax increases on
the lower income groups, the Treasury suggested two alternative
post-war credit plans as possibUities for the Committee's consideration. One suggestion would have granted post-war credits of $2.3
billions by refunding after the war 50 percent of the first $50 of tax,
plus 25 percent of the next $50, plus 5 percent of the balance, with
a maximum credit of $250. The other suggestion would have granted
post-war credits of $3.5 billions by refunding 50 percent of the first
$50 of tax, plus 25 percent of the next $150 of tax, plus 10 percent
of the balance, with a maximum credit of $400.




REPORT OF THE SECRETARY OF THE TREASURY

105

I t was further suggested that if a post-war credit were adopted
special provision should be made to allow immediate use of the postwar credit for tax payment where the taxpayer's income had not
increased substantially.
e. TAXATION OF INCREASES IN INCOME.

The Ways and Means Committee on July 6, 1943, directed the tax
staffs of the Joint Committee on Internal Revenue Taxation and of
the Treasury Department to study the problem of taxing increases
in individual income. In a series of conferences in July, August,
and September, the staffs were unable to find a satisfactory method
of isolating and taxing such increases. The Treasury submitted a
study to the Ways and Means Committee on October 4, 1943, entitled '^Taxation of Increases in Individual Income." The study
pointed out the advantages and disadvantages and especially the
technical difficulties of such a tax, reaching the conclusion that -Hhe
tax on wartime income increases is, on balance, undesirable." However, the suggestion of the Secretary of the Treasury that persons
with fixed incomes should be allowed to use currently any post-war
credit that might be provided was designed to prevent proposed rate
increases from bearing too harshly on persons' whose incomes had
not risen during the war.
f. OTHER CHANGES.

'

Disallowance of the deduction for Federal excise taxes paid except
where incurred as a trade or business expense or in the production
of income was recommended by the Treasury. This was incorporated
in the tax bill by the House.
The Treasury approved of several changes made by the Senate in
the penalties relating to the declaration. and payment of estimated
tax. - The most important of these permitted the taxpayer to use
without penalty his preceding year's income as the basis for his
current-year declaration of estimated tax. Persons with unpredictable incomes were thus given a means of estimating their tax without
incurring the risk of a penalty.
The Treasury approved of a provision inserted in the revenue bill
of 1943 granting special treatment for back pay exceeding 15 percent
of an individual's gross income. The provision limited the tax attrib. utable to such back pay to an amount computed as if the back pay
had been included in the. gross income of the taxable years to which
such pay is attributable.
3. CORPORATION T A X E S .

In his statement of October 4, 1943, the Secretary of the Treasury
recommended that corporation taxes be increased. He pointed out
that despite increases in taxes, net corporation income after taxes
had risen greatly since 1939 and that additions to capital out of



106

REPORT OF THE SECRETARY OF THE TREASURY

earnings would amount to an estimated $11 br $12 billions for the 3
years, 1941, 1942, and 1943. He, therefore, recommended increases
in corporation taxes designed to raise an additional $1.1 billion, but
at the same time urged that small corporations be given special
favorable treatment,
a. RATES, EXEMPTIONS, AND CREDITS.

The Treasury recommended that the surtax on larger corporations
(those with net income in excess of $25,000) be increased by 10
percentage points to raise the combined normal and surtax rate from
40 to 50 percent. On smaller corporations the increase suggested was
4 percentage points. No change in excess-profits tax rates was
recommended.
The bill passed by the House made no change in the surtax rates
but raised the excess-profits tax rate from 90 to 95 percent. The
House also reduced, by one percentage point, the excess-profits credit
aUowed on invested capital for corporations with more than $5 millions
b u t no more than $200 millions of invested capital, and raised the
specific exemption for excess-profits taxes from $5,000 to $10,000.
In its statement before the Senate Finance Committee on November
29, 1943, the Treasury endorsed the increase in the specific exemption
(which had been recommended by the Treasury in 1942) and also the
reductions in the invested-capital credit. However, the action of the
House in increasing excess-profits taxes rather than surtaxes was
opposcji on the grounds: (1) That ohe change would increase tax
liabilities for comparatively few corporations, (2) that excess-profits
tax increases would not strike corporate profits generally but only a
restricted segment of such profits, (3) that the corporate surtax, because of its broad coverage and the fact that it reaches war profits
that are not designated as excess profits in the tax law, offered greater
assurance that all corporations which had benefited, from the war
would :make an additional tax contributon, and (4) that an increase
in thc; already, high excess-profits tax rate would be more likely to
impair incentives to efficient management than an increase in the
substantially lower surtax rates.
b . CARRY-BACK OF LOSSES AND^ UNUSED

EXCESS-PROFITS

CREDITS.

In the Revenue Act of 1942 the Congress had adopted provisions
allowihg a 2-year carry-back of losses and unused excess-profits
credits, under which many corporations would become eligible for tax
refunds during the reconversion period. After studying these provisions the Treasury concluded that the benefits which the carrybacks were intended to give corporations with difficult reconversion
, problems would not be fully realized unless measures were adopted
for speeding up the refunds. The proposed method for accelerating




REPORT OF THE SECRETARY OF THE TREASURY

107

refunds so as to make cash ^available at the time when it would be"
most needed, was outlined in the Treasury's statement jof October
27, 1943, to the Subcommittee oh War Contract Termination of the
Senate Committee on MUitary Affairs. (See exhibit 50,* p. 449.) I t
was proposed that a corporate taxpayer anticipating carry-back
refunds by reason of a current decline in earnings should be permitted
to postpone the payment of taxes currently due (on the income
earned in the preceding year) in an amount equal to the estimated
refund. The acceleration proposal was discussed by Treasury
representatives before the House Ways and Means Committee and
the Senate Finance Committee but was not incorporated in the
revenue bUl.
C. TECHNICAL AND RELIEF PROVISIONS.'

Both the House and the Senate inserted in the tax bUl provisions
designed to grant tax rehef to certain types of corporations. A
number of these measures were opposed by the Treasury.; Several
which were incorporated in the act as passed were also cit^ed as objectionable by the President in his Message vetoing H. jR. 3687.
(See exhibit 51, p. 455.)
,^
The Treasury pointed out that adjustments to provide itax relief
are desirable in some cases to alleviate hardship and promote equity,
but that reliefs improperly granted simply result in loss of revenue
and inequitable distribution of tax burdens among business enterprises. I t opposed the following proposals as unnecessary or
unjustified:
(1) The extension of percentage depletion and excess-prbfits tax
exemption to minerals not designated as '^strategic" by the War
Production Board.
(2) The granting of special excess-profits tax treatment, originally
designed to take account of accelerated depletion of certain natural
resources, to pipe-line companies transporting natural gas.
(3) The tre'atment of income from cutting of timber as a capital
gain taxable at a maximum rate of only 25 percent.
(4) A provision prolonging excess-profits tax exemption for certain
air lines holding Government contracts for maU transportation.
(5) A provision permitting reorganized corporations to use the
adjusted cost basis of the predecessor corporation as the basis for
computing depreciation and excess-profits credit.
(6) The allowance to raUroads of full deduction against current
income of capital losses on investments in securities of .other raUroads.
(7) The Senate amendment broadening greatly the excess-profits
tax relief for new coal and iron properties and new timber tracts.
The Treasury indicated its approval of a technical provision in the
House bUl designed to discourage corporate acquisitions made for
the purpose of avoiding income and excess-profits taxes. This provi


108

REPORT OF THE SECRETARY OF THE TREASURY

" sion disallowed benefits from an acquisition when its principal purpose
was found to be tax avoidance.
4. ESTATE AND G I F T T A X E S .

The Treasury recommended that the estate tax exemption be
reduced from $60,000 to $40,000 and that estate and gift tax rates be
increased throughout the scale. The lowest rate, applicable to the
first $5,000 of net estate, would have been increased from 3 to 5 percent. 'Modest rate increases were proposed in the remaining lower
brackets, e. g., on the portion of net estate from $10,000 ,to $15,000,
from 11 to 12 percent. Sharper rate increases were proposed in the
middle and higher brackets, e. g., $70,000 to $100,000, 28 to 37,percent; $450,000 to $500,000, 32 to 60 percent; $900,000 to $1,000,000,
37 to 75 percent; and $2,000,000 to $2,500,000, 49 to 80 percent..
The maximum rate would have been increased from 77 to 80 percent,
and would have applied to the portion of net estate over $1,500,000
instead of over $10,000,000, as under the law then in effect. I t was
further proposed that the differential between estate and gift tax rates
be retained, i. e., that gift tax rates be set at three-quarters of the
proposed estate tax rates.
5. E X C I S E AND SALES T A X E S .

After making detailed analyses of different industries and considering the manner in which producers and consumers would be affected,
the Treasury recommended that an additional $2.5 bUlions b e raised
from excise taxes (a) by increasing rates and changing the bases of
several existing excises and (&) by enacting new excises on soft drinks
and on candy and chewing gum.
The Treasury regarded selective excises as a desirable source of
additional war revenue for, several reasons: (1) They involved only
modest increases in administrative costs for the Government and in
compliance costs for taxpayers, (2) their net effect would be to reduce
rather than increase infiationary pressures, and (3) being*levied on only
a few nonessentials and thus giving consumers a real choice between
paying higher taxes and decreasing their purchases, they would not
cause hardship for consumers.
^ The sales tax was opposed by the Treasury because, in contrast to
selective excises, it would (1) involve much greater administrative
and compliance effort, (2) sharply increase the cost-of-living index
(both directly and indirectly through increasing the farm parity index
and through the impact on business costs) and would thus interfere
with, rather than support, the Government's wartime stabUization
program, and (3) impose hardship on lower income groups by forcing
them to reduce their consumption of the necessities of life.
In selecting commodities and services for proposed excise taxation,
the Treasury tried to avoid levies which would interfere with the




REPORT OF THE SECRETARY OF THE TREASURY

109

stabUization program. The Treasury recommended the repeal of the
tax on the transportation of property, which had been enacted in 1942,
on the ground that it disturbed existing price and competitive relationships and conflicted with the Government's efforts to stabUize prices.
The termination of numerous excise tax exemptions on sales of
goods and services to the Federal Government was requested by the
President in a letter dated August 11,.1943, to the Chairman of the
Committee on Ways and Means. In order to save manpower used
by the Federal Government and private business in administering
these exemptions, it was recommended that the exemption of sales to
Federal agencies from manufacturers' and retailers' excise taxes and
from taxes on transportation and communications be ended.
6. SOCIAL SECURITY T A X E S .

In his October 4, 1943, statement to the Ways and Means Committee, the Secretary of the Treasury strongly urged that the social
security system be amplified and extended and that payroll taxes be
increased. On the ground that expansion of the system would contribute to the future security of American working men and farmers,
and that it would also serve a useful purpose in combating inflation,
the Treasury endorsed proposals for higher payroll taxes. At the
same time, however, it was noted that, in order to avoid undue burdens on the low-income groups; the individual income tax increases
proposed by the Treasury would have to be scaled down if payroll
taxes were increased.
. The increase in social security payroll taxes scheduled by statute
for January 1, 1944, was postponed until March 1, 1944, by a joint
resolution signed by the President December 22, 1943. Previously,
on December 20, in a statement to the press the Secretary of the
Treasury urged that Congress allow the scheduled increase to become
effective. In the Senate, a provision further postponing these increases untU January 1, 1945, was inserted into the tax bill and became
part of the Revenue Act of 1943. In his message of January 10, 1944,
transmitting the 1945 Budget to the Congress, the President strongly
urged the retention of the social security rate increases scheduled
by law.
7. RENEGOTIATION OF W A R CONTRACTS.

At hearings on the renegotiation of war contracts before the Ways
and Means Committee (held from September 9 to 21, 1943), the
Treasury presented a statement of its views. Its recommendations
relatecl primarily to changes which had been proposed in the basic
structure of renegotiation, namely, that renegotiation should be based
on profits after {a) deducting all taxes and (6) allowing for reserves
for post-war reconversion and contingencies. The Treasury opposed
the proposal to deduct taxes on the grounds that (1) the Government



110

REPORT OF THE SECRETARY OF THE TREASURY

would in effect be paying the taxes of firms w^ith excessive profits.
(2) renegotiation would cease to be a procurement procedure and
would encrbach directly on the tax field, and (3) the Government
would find/it impossible to pursue sound pricing prqceduTes on war
contracts. On the subject of reconversion and contingency reserves,
the Treasury pointed out that the eft'ective consideration of allowances
for these reserves required a broader setting than renegotiation and
urged thati the tax implications of this^ move be studied before final
disposition of the problem was made.
At the hearings before the Senate Finance Committee on the
Revenue Act of 1943, the Treasury suggested that the provision in
the House]bill resting the jurisdiction for contractors' appeals on
renegotiation in The Tax Court of the United States was unwise and
might endanger the prompt collection of revenue by overburdening
that court.: I t was urged instead that jurisdiction over appeals be
granted to the Court of Claims. The Treasury also, concurred in the
revisions recommended to the Finance Committee by the Joint Price
Adjustment Board on which it was represented.
In a staitement to the press on December 20, 1943, the Secretary
of the Treasury characterized as "unworkable and inequitable the
extensive revisions in thie renegotiation statute proposed by the
Senate Finance Committee. Specific reference was made to (1) proposed adjustments which would reopen already settled cases'and
postpone final settlement on contracts for a number of years, (2)
exemptions, to makers of standard commercial articles, and (3)
exemptions to subcontractors whose goods did not enter into the
final product.
J I . Major features oj the Eevenue Act oj 194S ^
'

A, General statement.-—
The Revenue Act of 1943, which became law on February 25, 1944,
over the Presidential veto, provided an estimated $2.2 billions in ,
additional revenue annually (not taking into account the revenue
effects of its changes in payroll taxes and its special relief provisions).
Approximately half of this increase took effect in the excise taxes,
the other half consisting principally of income and excess-profits
taxes and to a lesser extent of increased postal rates. The act froze
the social security payroll taxes for old-age and survivors' benefits at
existing levels for the calendar year 1944; amended the statute providing for renegotiation of war contracts; and made a number of
technicaP amendments, including several designed to provide relief
to certain corporate tax payers.
1 The changes in rates, exemptions, and credits made by the 1943 act are shown in tabular form in exhibit
63, beginning on p. 458.




REPORT OF THE SECRETARY OF THE TREASURY

111

B . Individual income tax.—
1. RATES,' EXEMPTIONS, AND CREDITS.

No changes were made in the normal and surtax rates on the income
of individuals. The tax withholding rate on the wages of nonresident aliens brought
. into the United States under authority of the War Manpower Commission was.reduced from 30 to 10 percent on the gross amount of
wages.
The personal exemptions and the dependent credit were left unchanged: $500 for single persons, $1,200 for married persons and
heads of families, and $350 for each dependent.
The date for determination of marital and dependency status was
set at July 1 of the taxable year for purposes of all returns. Formerly
taxpayers other than those filing on the simplified form (Form 1040A)
were required to prorate the exemptions and credits if their status
changed during the taxable year.
2. VICTORY T A X .

The Victory tax rate was reduced from 5 to 3 percent of Victory tax
^ net income in excess of $624, regardless of family status. The Victory
tax base was not changed, but the current credits allowed against the
Victory tax were repealed.
3. DEDUCTIONS.

The 1943 act introduced several new deductions from taxable
income of certain groups of individuals. I t provided a special deduction of $500 from gross income for all blind persons. The amoimts
received as mustering-out payments for service in the mUitary or
naval forces of the United States were excluded from gross income.
Also excluded were amounts received as cost-of-living allowances or
"post allowances by (1) clerks or employees in the Foreign Service of
the United States, (2) ambassadors, ministers, diplomatic, consular or
Foreign Service officers; and (3) other civUian officers or employees of
the Government of the United States stationed outside the continental
United States. .,
Under prior law Federal excise taxes paid were allowed as a deduc^ tion for income tax purposes to taxpayers upon whom they were
legally imposed. The 1943 act repealed this deduction, except where
the tax paid is a trade or business expense or is incurred in the production of income.
In the case of sole proprietors and partners, deductions (other than
taxes''and interest) attributable to a business operated at a loss of
more than $50,000 for each of five consecutive years are limited to a
net loss of $50,000 in any such year; and the net operating loss deduction under section 122 of the Internal Revenue Code, to the extent
attributable to such business, is disallowed.



112

REPORT OF THE SECRETARY OF THE TREASURY
4. OTHER CHANGES.

^

Another provision of the Revenue Act of 1943 limits the tax attributable to back pay received or accrued by an individual during the
taxable year. If the back pay exceeds 15 percent of the gross income
for the taxable year, the maximum tax attributable to such back pay
shall be the tax resulting from the inclusion of such amounts in the
gross income for the taxable years to which the back pay is attributable.
Back pay is defined to include (a) remuneration deferred for a variety
of caiiises such as bankruptcy or receivership of the employer, litigation, or, where the employer is a government, for lack of funds, (6)
retroactive pay increases ordered, recommended, or approved by a
government agency, and (c) payments attributable to prior years
arising, out of violation of laws pertaining to fair labor standards or
practices.
/
The penalties' connected with the filing and payment of estimated
tax under the Current Tax Payment Act of 1943 were revised. The
penalty for substantial understatement of the tax was retained, but
was made inapplicable where the tax is computed on the preceding
year's income at current year's rates and exemptions, and is paid on
time in equal quarterly installments, or is paid in advance. The
penalties for faUure to file a declaration and for faUure to pay an installment of estimated tax were made more liberal by graduating them
according to the length of time the failure continues, and by making
them inapplicable where there is a reasonable cause for the delay.
The so-caUed second antiwindfall provision of the Current Tax
Payment Act of 1943, relating to additional increase in 1943 tax where
income was substantially increased in comparison with income for the
base year, was repealed.
C. Corporation taxes.—-

'

1. R A T E S , EXEMPTIONS, AND CREDITS.

No changes in corporate normal and surtax rates were made by the
act. However, several changes were made in the excess-profits tax
rates, exemption, and credits. The excess-profits tax rate was raised
from 90 to 95 percent, thus increasing the net rate (after the 10 percent'
post-war credit) from 81 percent to 85.5 percent. The specific exemption was increased from $5,000 to $10,000. The act retained the
80 percent maximum effective rate limitation on combined corporate
income and excess-profits taxes. The invested capital credit with
respect to invested capital in excess of $5,000,000 was reyised as
foUows:
."
*




REPOBT OP THE SECRETARY OF THE TREASURY
Invested capital

First
Next
Next
Over

113
Revenue
Act of 1943
Percent

$5,000,000 __
$5,000,000-$190,000,000
$200,000,000
2. R E L I E F PROVISIONS.
a. EXCESS-PROFITS TAX.

A number of extensions were made in the relief afforded by the 1942
act to owners of gas, mineral, ahd timber properties. (1) Natural gas
companies were permitted to exclude from the tax base nontaxable
income from exempt excess output in the same manner as owners of
coal and iron mines. (2) The owners of new coal and iron properties
and of timber tracts (those not in operation for at least 6 months during
the base period) were granted the same treatment as the owners of old
properties and tracts. In the case of such new properties one-third
of the current output was to be treated as excess output. (3) Lessors
of any mineral properties or timber tracts were granted the same relief
as had formerly been extended only to the operators of such properties
or tracts. (4) To the list of strategic minerals, the producers of which
are granted full excess-profits tax exeniption, were added fluorspar,
flake graphite, and vermiculite.
Under prior law, corporations subject to Title IV of the Civil Aeronautics Act were exempt from excess-profits tax if their income subject
to excess-profits tax was equal to or less than compensation received
. from the Uhited States for the transportation of mail by plane. This
provision was extended by permitting such corporations to deduct the
excess of mail compensation over income subject to excess-profits tax
of 1 year from income subject to excess-profits tax of another year
through the device of a carry-over or carry-back of unused excessprofits tax credit, but only for the purpose of determining whether the
corporation is exempt froni excess-profits tax in such other year.
b. OTHER RELIEF.

Other relief provisions in the 1943 act broadened the statute permitting the use of the predecessor's basis of property for purposes of
computing depreciation, capital gains and losses, etc., in the case of
certain corporate reorganizations. The applicabUity of the statute
granting this privUege to insolvent railroad corporations was extended
back to include the taxable year beginning January 1, 1939. A
statute was passed involving simUar treatment for insolvency reorganizations other than of raUroads, but this amendment was made
applicable only to taxable years beginning in 1943 and thereafter.
In the case of corporations reorganizing under section 77B of the
613185—45

9




114

REPORT OF THE SECRETARY OF THE TREASURY

National Bankruptcy Act, an amendment permitted the reorganized
taxpayer to retain the old basis of property without reduction for cancelation of debt, if the reorganization involved adjustment of the
capital structure or debt structure without transfer of the assets td.
another corporation and ^was consummated prior to September 22,
1938.,
In the case of gains from the sale, or exchange of property pursuant
to Federal Communications Commission order, it was provided that
at the election of the taxpayer no gain should be recognized if the
property disposed of were exchanged for other siniUar properties, or if
the proceeds were either used to acquire other similar property or held
in a replacement fund, or if the basis of other depreciable assets of the
taxpayer were reduced to the extent of the money whicli was not so
expended.
Relief was also extended to the owners of certain mineral properties
under a provision extending percentage depletion for the duration of
the war to producers of flake graphite, vermiculite, beryl, feldspar,
mica, lepidolite, spodumene, talc, barite, and potash. Under another
provision the furnacing of quicksUver and the cyanidation of gold
were recognized as ordinary treatment processes for the purpose of
determiuing gross income from such mineral properties.
Finally, taxpayers owning timber, or having the contract right to
cut timber from the property of another,, were permitted to elect to
treat income from the cutting of timber in any taxable year as a capital
gain rather than as ordinary income. The same treatment was
granted to. timber owners who disposed of standing timber under leasing contracts.
3. PREVENTION OF T A X AvoiDANfcE.

With a view to discouraging corporate acquisitions made for the
purpose of avoiding income and excess-profits taxes, it was specifically
provided that the tax benefits from such acquisitions should be disallowed wholly or partially in cases where {a) control of a corporation
has been acquired, and (6) the principal purpose of such acquisition
is found to be tax avoidance.
4. OTHER CHANGES.

Other minor changes ih the tax laws afl'ecting corporations were:
a provision permitting mutual fire insurance companies issuing
perpetual premiura policies to be taxed in the same manner as stock
insurance companies other than life; the allowance of a deduction to
corporations for gifts and contributions, whether or not for charitable
purposes, to organizations of war veterans; and the disallowance of the ,
credit for dividends paid on the preferred stock of public utUities with
respect to arrearages dating back to taxable years ending prior to
October 1, 1942.




REPORT OF THE SECRETARY OF THE TREASURY

115

D. Estate and gijt taxes.—
No changes were made in the exeinptions and rates of estate and
gift taxes. However, two technical amendments were made to the
estate and gift laws. An amendment to the estate tax law provided
that in the case of unlisted stock and securities the value of which
cannot be determined with reference to bid and asked prices or sales
prices by reason of their not being listed on an exchange and of the
absence of sales, the value thereof shall be determined by taking into
consideration, in addition to other factors, the value of listed stock or
securities of corporations engaged in the same or a similar line of
business.
The gift tax was amended to provide that in the case of a trust
created prior to January 1, 1939, if on and after January 1, 1939, no
power to revest title to the property could be exercised either by the
grantor alone, or in conjunction with any other person not haying a
substantial adverse interest in the disposition of the property or the
income therefrom, then a relinquishment by the grantor on or after
January 1, 1939, and prior to January 1, 1945, of power or control
with respect to the distribution of such property or the income therefrom, shall not be deemed to constitute a transf er of property for gift.
tax purposes: Provided that if the trust was created or the power to
revest the property in the grantor was relinquished whUe a gift tax
law was in effect, the amendment is inapplicable unless (1) a gift tax
was paid with respect to such creation or relinquishment which has
not been credited or refunded, or a gift tax return was filed and the
value reported did not exceed the specific exemption and exclusion
claimed on that return, and (2) the grantor consents, in accordance
with regulations prescribed, to treat the original transfer as having
been a transfer of property subject to gift tax.
E. Excise taxes.—
•
Liquor taxes were increased to the following rates: Distilled spirits,
$9 per proof gallon; stiU wines, not more than 14 percent alcohol, 15
cents per wine gallon; still wines, hiore than 14 percent and not over
21 percent alcohol, 60 cents per wine gallon; still wines, more than 21
percent and not over 24 percent alcohol, $2 per wine gallon; champagne
or sparkling wine, 15 cents per half pint; artificially carbonated wine,
10 cents per half pint; liqueurs, cordials, and the like, 10 cents per
half pint; fermented malt liquors, $8 per barrel.
The rate on imported perfumes containing distilled spnits was
increased to $9 per wine gallon.
Floor stocks taxes on distilled spirits, wines, and fermented malt
liquors were imposed-at rates equal to the tax rate increases on these
. commodities. "
The tax on admissions was increased to 1 cent for each 5 cents or
major fraction thereof paid. The taxes on permanent use or lease



116

REPORT OF THE SECRETARY OF THE TREASURY

of boxes or seats ia any place of amusement, and the sales of tickets
outside of box offices were increased to 20 percent.
The 1943 act increased the cabaret tax to 30 percent of t h e total
charge. This rate was later reduced to 20 percent, effective July 1,
1944, under a provision of the Public Debt Act of 1944.
Taxes on club dues and initiation fees were increased to 20 percent.
The tax on bowling alleys was increased to $20 per alley, and the
tax on biUiard and pool tajbles to $20 per table, except that the tax
was made inapplicable to a billiard or pool table in a hospital if no
charge was made for the use of such table.
Excise taxes on furs, toilet preparations, electric light bulbs and
tubes, and jewelry, except on watches retailing at nor more than $65
and alarm clocks retailing at not more than $5, were increased to 20
percent.
The manufacturers' excise tax on luggage was suspended; in lieu
thereof a 20 percent petailers' excise tax was imposed.
Taxes on telegraph, telephone, radio, and cable facUities were increased as follows: Telephone or radiotelephone message or conversation for which the toll charge is more than 24 cents, domestic telegraph, cable or radio dispatches, and leased wire, teletypewriter, or
talking circuit special service, to 25 percent; wire and equipment
service, to 8 percent; local teilephone service, to 15 percent.
The excise tax on transportation of persons was increased to 15
percent.
The manufacturers' excise tax on vacuum cleaners was repealed.
The increases in the excise taxes under the 1943 act are to end on
the first day of the first month which begins 6 months or more after
the termination of hostilities in the present war.
The 1943 act also terminated the exemption of sales to the Federal
Government from manufacturers' and retailers' excises, import taxes,
and taxes on pistols and revolvers, communications services, transportation of persons, and transportation of property, except,in the
case of articles sold under a contract entered into prior to the time
such sales became taxable, or under any agreement supplementalto
such contract bearing the same Government contract number. I t
further provided that the Secretary of the Treasury may authorize
exemption if he deterniines that the imposition of the taxes will cause
substantial burden or expense which can be avoided by granting tax
exemption and that the fiill benefit of such exemption will accrue to
the United States.
F. Social security taxes.—
The automatic 1 percent increase in social security payroll taxes
scheduled for the calendar year 1944 by the Federal Insurance Contributions Act was further postponed until January 1, 1945.




REPORT OF THE SECRETARY OF THE TREASURY

117

G. Renegotiation oj war contracts.—
Title V I I of the Revenue Act of 1943 amended section 403 of the
Sixth Supplemental National Defense Appropriations Act, 1942 (the
Renegotiation Act), and Title V I I I added a new section entitled
'^Repricing of War Contracts."
The act created a joint War Contracts Price Adjustment Board.
I t also established certain factors which should be taken into consideration in determining excessive profits. I t exempted (a) contractors-whose aggregate annual sales under war contracts were not
in excess of $500,000, replacing the figure of $100,000 urider prior
law, (6) agricultural commodities up to the first stage where they
have an established market, (c) contractors who are exempt under
the Federal income tax law, and (d) construction contracts awarded
under competitive bidding. Provision was made for the deduction
of the amortization of emergency facilities as recomputed if the facUity
ceases to be necessary for national defense, or if hostilities cease prior
to the end of the 5-year emergency period for that facUity.
The act further provided for allowance in computing excessive
profits of items ^'estimated to be allowable" as deductions for tax
purposes (except the carry-backs of unused losses and excess-profits,
credits).
Procedural changes were also made which provided for appeal by
an aggrieved contractor to The Tax Court of the United States (after
discretionary review b}^ the War Contracts Price Adjustment Board
created by this act). Renegotiation was to be terminated on December 31, 1944, with the President being given the power to terminate
renegotiation 6 months earlier or to extend its application for 6 months
after this date; but the termination date was not to be later than the
date of termination of hostilities. In addition to the major changes
just listed. Title VII of the act made numerous minor changes in the
renegotiation statute.
i
Title VIII, Repricing of War Contracts, provided that the Secretary
of a department or other head of a Government procurement agency
could reprice any contract or' subcontract when excessive profits
were being earned under it. An aggrieved contractor could sue for
damages in the appropriate court. This title was to terminate upon
cessation of hostilities. ' Further discussion of war contracts renegotiation appears on pages 21 and 125.




118

REPORT OF THE SECRETARY OF THE TREASURY

. H. Postal rates.—r
Rates of postage on mail and special services were increased to the
following levels: First-class mail for local delivery, 3 cents per ounce;
air mail, 8 cents per ounce ^ ; money orders, 10 to 37 cents per order;
registered mail, 20 cents to $1.35 per article; insured mail, 10 to 70
cents per article; collect-on-delivery service, 24 to 90 cents per article.
On fourth-class maU the rates in each class were increased by 3 percent of present rates or 1 cent, whichever was greater. The increases
in the postal rates, fees and charges shall cease to be in eff'ect ori the
•first day of the first month which begins at least 6 months after
termination of hostUities in the present war.
I I I . Development oj simplijication plans
By providing a system of withholding and current quarterly payments, the Current Tax Payment Act of 1943 removed the 1-year lag
in income tax payment and provided a system of easy budgeting of
taxes for wage earners. However, the need for tax simplification remained and was in fact intensified. Action was therefore taken early
in 1944 to simplify income tax compliance.
Some simplification had been achieved in 1941 when, on the recommendation of the Treasury, a short form embodying a tax table
. (Supplement T) was provided by the Congress for persons with small
incomes. In the interest of further simplification the Treasury
proposed, both in 1942 and 1943, that the earned-income credit be
eliminated. This was done by the Revenue Act of 1943. In the
faUof 1943 the Treasury also recommended the adoption of graduated
withholding and the absorption of the Victory tax into the regular
income tax. The 1943 act incorporated neither of these proposals,
although it somewhat simplified the Victory tax.
- The Secretary of the Treasury, in introducing suggestions for
simplification in October 1943, stated that it was vitally important
to take every possible step to remove the complications in the tax
laws making necessary the filling out of long and difficult tax forms
by the taxpayer. In his Budget. Message of January 10, 1944, the
President urged '^Tax simplification to reduce the burdens of compliance of the many mUlions of taxpayers by elimination of returns
where feasible and by other measures * * *." The urgency was
widely recognized in the Congress, and a number of bills embodying
simplification plans were introduced for consideration.
During the latter part of 1,943, the Treasury tax staffs, including
the Bureau of Internal Revenue, the Division of Tax Research, and
the Office of the Tax Legislative Counsel, had explored alternative
1 Administrative order P M 16604 (Postal Bulletin, December 26,1941) issued by the Postinaster General
under the authority of 48 Stat. 943 (5 U. S. C. 372), established the rate of 6 cents for each half ounce or
fraction thereof for air.inail sent to or by the armed forces of the United States overseas served through
Army and Navy post oflices. This rate was continued by instructions of the Third Assistant Postmaster
General, February 28,1944.




^

REPORT OF T H E SECRETARY OF T H E TREASURY

119

methods of simplifying the individual income tax. During the early
months of 1944, at the instance of the congressional committees on
taxation, the tax staffs of the Joint Committee on Internal Revenue
Taxation, and of the Treasury Department continued this work as a
joint effort. On March 10, 1944, the Secretary of the Treasury wrote
to the Honorable Robert L. Doughton, Chairman of the Comrriittee
on Ways and Means of the House, and to the Honorable Walter F .
George,, Chairman of the Senate Finance Committee, assuring them
of the complete cooperation of the Treasury Department in the
simplification endeavor and urging speedy enactment of the proposed
legislation. (See exhibit 52, p. 457.)
The plans developed by the.congressional and Treasury tax staffs
were discussed in a series of meetings with the Ways and Means Commmittee in February and March. No public hearings were held.
On March 17 the Coramittee announced its tentative approval of-a
simplification plan.. Agreement on this plan, modified only slightly
by changes in the House Ways and Means and Senate Finance Committees, was ,so widespread that no dissenting vote was recorded in
either house of Congress during its passage. The bill was signed by
the President on M a y 29, 1944.
IV. Major jeatures oj the Individual Income Tax Act oj 1944 ^
The 1944 act drastically revised filing procedures. I t made the
following major changes:
1. I t broadened the scope of the simplified table (Supplement T)
method of tax computation {a) by raising the upper limit of the table
from $3,000 to $5,000, (6)'by extending its use to all types of income,
and (c) by raising the standard allowance for deductions incorporated
in the table from 6 to 10 percent.
2. I t revised the wage-bracket withholding tables to place them on
substantially the same basis as the Supplement T final-liability table
and thus to increase the exactness of withholding {a) by narrowing the
wage brackets, (6) by incorporating the 10 percent standard deductions allowance, and (c) by graduating tax withholding to cover both
the first and second brackets of surtax.
3. I t provided that persons with gross incomes of less than $5,000
derived entirely from wages, interest, and dividends and including not
more than $100 from sources not subject to withholding should be
given the option of having the collectors of internal revenue compute
their tax.
'
4. I I provided an optional $500 standard allowance for deductions
for persons with gross incomes of $5,000 or more.
' The changes in rates, exemptions, and credits made by the 1944 act are shown m tabular form in exhibit 53, p. 458.
'
..
' .




120

REPORT OF THE SECRETARY OF THE TREASURY

5. I t repealed the Victory tax and substituted for it a new 3 percent
norriaal tax on the net income of each person in excess of a flat exemption of $500 (husband and wife filing a joint return being allowed an
exemption of $500, plus an additional $500 or the amount of the smaller
of their two incoiries, whichever is less).
6. I t combined the levies previously known as the normal tax'and
the surtax into a new surtax with rates ranging from 20 percent on the
first $2,000 of surtax: net income to 91 percent on the portion of'surtax
net income over $200,000 (the new rates in the higher brackets incorporatirig adjustments to absorb the previous differential burden of the
Victory tax in those brackets).
7. I t changed the personal exemption for surtax purposes to a uniform $500 for the taxpayer, for his spouse, and for each of his dependents.
In effect, these changes, together with the regulations issued pursuant to the 1944 act, divided taxpayers into three groups:
Group

Filing procedure

Taxpayers with gross incomes of less
than $5,000 derived entirely from
wages, interest, and dividends and
including not more than $100 from
sources not subject to withholding,
and whose actual deductions are less
than 10 percent of gross income.

The estimated 30 million taxpayers in
this group will file withholding receipts instead of the longer return and
will have their tax liability determined
by the collectors of internal revetiue
on the basis of the revised Supplement T table (which allows them a
10 percent standard allowance for
deductions).

Taxpayers with gross incomes of less
than $5,000 who receive any income
from sources other than wages, interest, and dividends or more than $100
from sources not subject to withholding or who elect the 10 percent
standard, deduction.

The estimated 10 million taxpayers in
this group will file the regular return
(Form 1040) but will determine their
liability from the expanded Supplement T table.

Taxpayers who (a) receive gross incomes' of $5,000 or more or (6)
claim actual deductions instead of
the 10 percent allowance, regardless
of size of income.

The estimated 10 million taxpayers in
this" group will file the regular return
and compute their tax directly. However, those with gross incomes of
$5,000 or more are given the option
of taking a $500 standard deduction
in lieu of listing and claiming actual
deductions.

The 1944 act made several other changes in the individual income
tax. I t simplified the definition of a dependent and the treatment of
a dependent's income. A dependent was redefined as any closely
related person for whom the taxpayer furnishes over half of tlie support,
provided that such person does not receive an annual gross income of
$500 or more, and is a citizen of the United States or a resident of the
United States or a contiguous country. The act further provided that
the earnings of a minor are to be included in his own income and ex-




REPORT OF THE SECRETARY OF THE TREASURY

121

eluded from the gross income of the parent, thus establishing uniformity among the various States with reference to Federal income taxation of the compensation for services performed by a minor child.
The act simplified declaration procedure and reduced by an estimated 4 millions the number of persons required to file declarations of
estimated tax. Under prior law, persons with less than $100 of income
from sources not subject to withholding were required to file declarations whenever their anticipated wages and salaries exceeded $2,700 if
single or $3,500 if married. Under the 1944 act, the requirement was
raised to $5,000 plus an additional $500 for the taxpayer's spouse and
each of his dependents. The new requirement was made eff'ective for
1945 and subsequent years.
•
The date for the filing of the final declaraition and for payment of
the final installment of estimated tax was changed, effective in 1944,
from December 15 to January 15 of the following year, with the additional provision that, on or before January 15, taxpayers may fUe their
final return in lieu of a declaration (or an amendment thereof) required
on that date.
The act altered the definition of a farmer for purposes of the declaration requirements. Under prior law, a farmer was defined as a taxpayer who derives 80 percent or more of his gross income from farming.
The act lowered the requirement to 66% percent of the gross income,
effective in 1944. The date for the filing of declarations by farmers
was extended from December 15 to January 15, and, as in the case of
other taxpayers, it was provided that a final return might be filed in
lieu of a declaration.
Finally, the act changed the date for determination of marital
status to the last day of the taxable year and simplified filing requirements to provide for the filing of a return by every person with a gross
income of $500 or more.
V. Other revenue legislation

•

Other laws affecting the revenue were as follows:
Public Law 172, October 26, 1943, amending sections 735 and 711 of
the Internal Revenue Code to exempt from the excess-profits tax the
bonus payments received for mineral products recovered from mine
tailings.
Public Law 178, October 28, 1943, amending sections 435 and 453 of
the Internal,Revenue Code and to provide that the credits under the
Victory tax shaU be taken currently.
Public Law 180, November 4, 1943, amending section 3475 of the
Internal Revenue Code to make minor revisions in the Government
exemption from the tax on transportation of property.
Public Law 201, December 17, 1943, amending sectiori 722 of the
Internal Revenue Code to extend the time within which applications



122

REPORT OF THE SECRETARY OF THE, TREASURY

for general relief under the.excess-profits tax must be made; amending
sections 292 and 3711 of. the Internal Revenue Code to prevent payment of interest on deficiencies and overpayments resulting from or
based upon relief'under section 722 of the Internal Revenue Code; and
amending section > 162 of the Internal Revenue Code to. extend the
time for establishing a pension trust exempt under section 165 of the
Internal Revenue Code to December 31, 1944.
Public Law 211, December 22, 1943, amending sections 1400 and
1410 of the Internal Revenue Code to freeze the taxes imposed on employers and employees under the Federal Insurance Contributions Act
to 1 percent for the first two calendar months of 1944.
Public Law 225, February 3, 1944, providing for .mustering-out
payments to members of the armed forces and exempting such payments from tax'a tion. ,
,
•. •
: Public Law 229, February 14, 1944, exempting certain alien farm
labor from tax withholding under section 143 (b) of the Internal
Revenue Code.
, ,
'
..
Public Law 274, March 31, 1944, authorizing the Secretary of the
Navy to accept gifts or bequests for the United States Naval Academy
and providing that such gifts or bequests shall be deemed to be a gift
or bequest to or for the use of the United States for the purpose of
Federal income,.estate, and gift taxes.
/
/.
•
Public Law 333, June 20, 1944, amending, section 21 of the.Secpnd
Liberty Bond Act to increase the debt limit of the United States; and
amending section 1650 of the Internal Revenue Code.to reduce the
cabaret tax from 30 to 20 percent.
.,
Public Law 345, June 20, 1944, amending section 3508 of the Internal
Revenue Code to extend through June 30, 1947, an additional 2 years,
the provisions of the Sugar Act of 1937 arid the taxes with respect, to
sugar.
- ^
, Public Law 390, June 30, 1944, amending the act of September 16,
1942, to extend through June 30, 1946, an additional 2 years, the suspension in part of the processing tax on coconut oil; amending section
400 of the Internal Revenue Code, to correct a clerical error in the
Supplement T tax table.
.
,
. \
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 siniilar authorization; with the physical enforcement of the
provisions of the Foreign Funds-Control Act and the Tegulations pro-,
mulgated thereunder as they relate to the exportation and importation
of currency, negotiable instruments, securities, and other evidences of
indebtedness; with the^cpntrol of American citizens leaving the United




REPORT OF THE SECRETARY OF THE TREASURY

123

States to insure that they hold valid passports; and with the enforcement of the Trading with the Eriemy Act iri the censorship, of tangible
coihmunications brought into or taken from the Uriited States otherwise than in the regular course of the maUs.
Active cooperatiori is given by the Customs Service to the Army and
Navy inteUigence services and to the Federal Bureau of Investigation.
The Customs Service is also furnishing substantial assistance to the
Coast Guard in the protection from sabotage of vessels, harbors, ports,
and waterfront facilities.
Customs officers cooperate m t h the Wiar Production Board and the
Office of Price Administration iri the enforcement of certain regulations
of those organizations. ' In the case of the War Production Board the
Customs Service assists in controlling the importation of restricted
materials. I t assists the Office of Price Administration in the rationing
of ships' supplies, arid imports of sugar, processed foods, meats, fats,
fish, cheeses, tires, shoes, and rubber.
,
A further discussiori of the war activities of the Customs Service wUl
be found oh page 216.
,
SPECIAL PROCUREMENT ACTIVITIES

Lend-lease'
The. Procurement Division's share in the lend-lease program continued to constitute its most important task in connection with the
war in terms of volume of goods involved. An.increased diversification of requirements and sources necessitated the making of a greater
number of contracts under this program during the fiscal year 1944
than in either of the preceding years. A total of 26,788 contracts
were entered into, which was an increase of 2,534 " over 1943. Ex*
penditures for the purchases included in these contracts" during the
year totaled $1,086,587,324.* Aggregate expenditures since receipt of
the first requisition for lend-lease purchases on AprU 3, 1941, have
been $3,676,101,926 T, representing 63,009^ contracts.
The Procurement Division is continuing to administer space totaling
3 million square feet of open space and 3K million square feet of closed
space at seven lend-lease storage depots located in Army instaUations
in addition to the extensive use of commercial-storage facilities
throughout the country. These depots and facilities are also being
used for the storage and distribution of material for civilian use and
consumption in the liberated areas.
Surplus property disposal
Changes in military requirements contiriued to result in availability ^of increasing quantities of materiel and other supplies for
' Includes revisions for earlier years.




124

REPORT OF THE SECRETARY OF THE TREASURY

redistribution. For the first time during this war the various mUitary
services were the principal sources of surplus property turned over to
the Procurement Divisiori for disposal. Surplus property disposals
in 1944 amounted to $88,260,017, which was almost 10 times that of
the previous year. About 73 percent of this total, consisting of proceeds of $64,383,426, was sold in private commercial channels and to
lend-lease. The remainder constituted transfers to Government
agencies. In 1943, on the other hand, the principal sources of property turned over to the Division were Government nonwar agencies.
Most of the property in that year was of such a type that it could be
disposed of by transfer to some Government agencies, and only about
5 percent ($521,000) of total disposals of $9,076,000 • were made to
•
private commercial channels.
.
The increase in surplus property handled by the Procurement
Division refiected a general increase in all surplus property growing
out of the war program. Since an organization developed chiefly for i
the task of insuring proper utilization of Government property within
Federal agencieJs was obviously inadequate in size and experience for
the responsibility of disposing of huge quantities of goods to commercial firms, comprehensive plans were formulated and steps were
taken looking to the building of an organization which could assume
this responsibility., Impetus was giveri to this move by Executive
Order No. 9425, dated February 19, 1944, which established the
Surplus War Property Administration and named the Procurement
Division as the disposal agency for surplus war property in the consumer-goods category, as well as certain other types of property in
the disposal of which it had previous experience. The Division'
continued to handle all negotiations for sale of surplus materials to
other lerid-lease countries.
During the last few months of the fiscal year, the initial steps were
taken in the direction of buUding an organization adequate to assume
the increased responsibUities assigned to the Procurement Division.
The Office of Surplus Property was established within the Division
to take the place of the Federal Property Utilization Branch. In
the Washington central office, the services of a' number of business
men were engaged for the purpose of determining policies to be followed in the disposal of surplus property. Much revamping and
expanding of the surplus property organization in the regional offices
were also carried on.
.
In order to insure adequate facilities for handling the disposal of
consumer goods, attention was focused first on installing in each of
the eleven regional offices of the Procurement Division a system of
inventory accounting to provide the complete and detailed information prerequisite to efficient disposal of property. By the end of the
F JlevisecJ,




REPORT OP THE SECRETARY OF THE TREASURY

125

year the Office of Surplus Property was in position to account for and
dispose of the increasingly larger quantities of property being turned
over to it. I t had laid a solid foundation on which to build the
organization necessary to handle the still larger inventories which,
it was anticipated, would become its responsibUity in the future.
National Youth Administration.—AU equipment, material, and
supplies of the National Youth Adniinistration were placed in the
custody of the Procurement Division during the year, in accordance
with an act approved July 12, 1943 (57 Stat. 539). The act permitted any non-Federal vocational education authority which was
using any of it on June 30, 1943, to continue to do so during the war
and for a period not to exceed 6 months thereafter. ° The act further
.provided that the Director of Procurement could lend any of the
remaining property not required by a Federal agency to any nonFederal vocational education authority which applied for it prior to
October 12, 1943, upon certification by the United States Commissioner of Education that the property was to be used for vocational
education purposes.
Under regulations issued to carry out the provisions of the act,
approximately 2,000 loans were made to non-Federal vocational
education authorities. About 200 completed facilities consisting of
residence centers, shops, and shop equipment were transferred to
Federal agencies. Another act of Congress approved June 28, 1944
(58 Stat. 547), provided that any personal property belonging to the
National Youth Administration and lent to any public school system
or institution of higher learning within any State should become the
property of such school system or institution. Plans were initiated,
accordingly to confirm title to this property.
Renegotiation oj war contracts
By authority of the law directing the renegotiation of contracts,
the Procurement Division continued to renegotiate war contracts consummated by the Division, and cooperated with the War and Navy
Departments and the United States Maritime Commission, and when
the predominate interests were those of the Procurement Division
renegotiated contracts for those agencies. (See also pages 21 and
117 of this report.)
Strategic and critical materials
Acquisitions of strategic and critical materials during the year were
represented by purchases in the amount of $7,024,540, bringing to
$55,775,716 ^ the total purchases from the inception of the program.
These purchases were authorized by the act of June 7, 1939 (Public
No. 117), and consist of those materials for which dependence must
'Includes revisions for earlier years.




126

REPORT OF THE SECRETARY OF THE. TREASURY

be .placed on sources outside the United States, ^ or of which the
domestic supply is inadequate to meet wap demands. The purchases
of strategic and critical materials iri. 1944 were $2,142,867 more than
in 1943.
,
: /
A discussion of the other activities of the Procurenient Division
will be found beginning on page 252.
FOREIGN FUNDS CONTROL ACTIVITIES

The Treasury Department, through Foreign Funds Control, has
been primarily responsible for planning and executing this Government's program of financial warfare against our enemies. I n carrying
out this prograin Foreign Funds Control has vigorously pursued the
vital.objectives of weakening the enemy's financial resources, preventing financial operations contrary to our war effort, and facUitating
financial operations supporting the war effort of the United Nations.
During the fiscal year 1944 Foreign Funds Control continued activities previously begun and expanded others. The Control continued
to freeze the $8.5 billions in assets held within the Uriited States by
persons in enemy, enemy-occupied, and European neutral countries
and to regulate the use to. which such assets may be put; and to
investigate and regulate international financial transactioris. Maintenance of import controls,over securities and currency was continued,
thus» closing United States markets to Axis loot. Cooperatiori was
given through the State Department to the other American Republics
to secure the adoption by them.of effective controls over enemy
property and transactions. The Control continued also to pairticipate in the admiriistration of the Proclaimed List of Certain Blocked
•Nationals by which persons in foreign countries who are assisting the
enemy are designated enemy '^nationals", and, pursuant to which,
measures are taken to destroy their firiaricial and economic power and
ability to contribute to the ienemy's;war effort. .Administration of
this Government's controls over financial and comnaercial communis
cations with enemy nationals was continued; and other appropriate
measures were adopted which were designed to .interfere with enemy
operations in European neutra.1 countries and tp prevent the enemy
from obtaining foreign exchange through the sale in neutral .countries
of gold, securities, currency, or other assets.
During the fiscal year 1944, the import controls were expanded to
cover the importation and exportation of checks, drafts, etc. (GeneralRuling No. 5-A). In cooperation with the Ariierican Commission
for the Protection and Salvage of Artistic and Historic Moriuments
in War Areas, steps were taken to make certain that the Axis would
not be able to dispose of its looted art objects in the LTnited States
market (Treasury Decision No! 51072). Steps were taken to bring
additional funds under control through requiring the disclosure of




REPORT OF THE SECRETAIIY' OF THE TREASURY

127

beneficial owners before transactions in certain omnibus accounts
were licensed (General Ruling No. 17). Following the establishment
of civU administrations in SicUy and Italy arrangements were made
to permit living expenses remittances to those areas coriipletely liberated (General License No. 32-A and amendments).
During the year the Control and the Federal Reserve Banks, acting
as field agents, acted upon nearly 98,000 applications, 14 percent of
which were denied. In addition, hundreds of thousands of relatively
'^safe" -transactions were permitted to be effected under various
general and blanket licenses which have been issued to avoid placing
any unnecessary burdens on legitimate business activities. One
such General License, for instance, authorizes all transactions, incident to trading with persons in the''Generally Licensed trade area"
which consists ofthe American Republics; the British Commonwealth
of Nations; the Union of Soviet Socialist Republics; the Faroe Islands;
the Netherlands West Indies; the Belgian Congo and Ruanda-Urundi;
Greenland; Iceland; Syria and Lebanon; New Hebrides; and French
Equatorial Africa (General License No. 53). • Also during the year
there was taken a census of American-owned Property Abroad which
has shown the existence of such property valued at more than $14.4
bUlions.
,
In addition, in connection with the liberation of territory formerly
under enemy doriiination, the Treasury Department discharges broad
responsibilities with respect to the financial aspects of the overseas
operations of our military and naval forces. The Department par-,
ticipates in the planning and preparation of fiscil, financial, banking,
ahd property control measures which must be applied in the various
theaters of war and also integrates this Government's financial and
economic control measures with those established by the military
authorities or by post-liberation governments. In this connection
detailed research in this country is carried on with respect to the
important financial interests in the countries involved.
WAR CONTRIBUTIONS

;

. Conditional gijts

Under the Second War PoWers Act, approved March 27, 1942j the
Secretary of the Treasury, through June 30, 1944, accepted 1,320
donations of money, in the amount of $4,673,601.87, for specific purposes in furtherance of the war program. Of this amount, $4,641,480.05 was covered into the Treasury by warrants as of June 30, 1944.
The balance, $32,121.82, represents checks which must be cleared
throngh hanking channels before the funds are available for covering
into the Treasury. The donations in most instances were made by
groups of individuals. A summarization follows.




128

REPORT OF THE SECRETARY OF THE TREASURY

Donations of money accepted under the Second War Powers Act, 194^, and covered
into the Treasury hy warrants
M a r . 27,1942, J u l y 1, 1943,
through
through
J u n e 30,1943 J u n e 30,1944

P u r p o s e for w h i c h c o n t r i b u t e d

.

$2, 445, 371.80
92, 390.09
75,808. 35
67,660. 95
. ...
69,475.35
4, 720.00
479,123.42
1, 733.25
31,747.42
80,000.00

$330,841. 34
7,399.86
52, 554. 57
192,493.36
72, 219.44
29,366.06
567, 314.il
30, 585.'^8
20,375.00
300.00

$2,776, 213.14
99, 789.95
128, 362. 92
250,154.31
141,694. 79
34,086.06
1,046,437.83
32, 318.63
52,122.42
80,300.00

3, 338,030.63

Aircraft
Vessels.
-..
O n n s and a m m u n i t i o n
Welfare a n d recreation . Buildings a n d a p p u r t e n a n c e s
Medical supplies
Vehicles
Miscellaneous e q u i p m e n t
Foreign relief a n d rehabilitation
War
financing
.
. ..
Total.:

Total

1,303,449.42

4, 641,480.05

In addition, donations of property accepted during the fiscal year
1944 for use in connection with the various war activities included
automobiles, boats, small firearms, medical equipment and supplies,
training equipment and films, radio equipment, patent rights, industrial machinery, raw silk and fabricated textile products, recreation
facilities and equipment, musical instruments, phonograph records,
cigarettes, and various other items. The property accepted had a
total estimated valuation of $333,554.70, and in practically all instances was received directly by the war agency concerned.
Unconditional donations
. From December 7, 1941, the day on which Pearl Harbor was attacked, through June 30, 1944, unconditional donations numbering
17,054 and amounting to $1,079,015.99 were received and covered
into the Treasury by warrants. The 17,054 donations do not represent the total number of donors inasmuch as the donations of approximately 25;500 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. Also
numerous donations of war savings stamps from hidividuals in groups
have been received and recorded as single contributions. These gifts
of stamps were received from groups ranging from ten to more than
a thousand individuals in number, and from $5 to $600 in ainount.
Group donations of stamps and money came from students of elementary and high schools, members of labor and fraternal organizations,
employees of private concerns. Army and Navy personnel, war
plants, etc.
.
In addition, from December 7, 1941, through June 30, 1944, a total
of $464,140.44 was realized and covered from the sale of scrap aluminum donated to the United States for war purposes.




REPORT OF THE SECRETARY OF THE TREASURY

129

SALARY STABILIZATION

Provision for stabilization of salaries was included by Congress in
the general wartime program to stabUize the cost of living. The
Treasury Department through the Salary StabUization Unit of the
Bureau of Internal Revenue continued during the fiscal year 1944 to
stabUize salaries through action taken upon requests received from
employers for adjustments in compensation of their employees. Requests for salary and bonus adjustments on hand July 1, 1943, numbered 19,383; during the year 251,608 requests were received and
257j491 rulings were issued, leaving 13,500 requests on hand June 30,
1944. Certain details of these cases and other types handled are
covered in the adrninistrative report of the Salary Stabilization Unit
beginning on page 241.
During the year the regulations were clari&ed and amended. T h e
authorizing legislation, together with major Executive orders and regulations subsequently published are summarized in the paragraphs
which foUow.
Congress by act of October 2, 1942, amending the Emergency Price
Control Act of 1942, authorized and directed the President to issue
a general order stabilizing prices, wages, salaries, and other factors
affecting the cost of living and to provide for making such adjustments therein as he found necessary to aid in the effective prosecution of the war or to correct gross inequities.
Pursuant to this authority, the President on October 3,. 1942, issued Executive Order No. 9250 outlining the policies to be followed
in the administration of the act, arid delegating to various agencies
his authority thereunder. By that order he created the Office of
Economic StabUization and appointed a Director thereof. The Director, by regulations dated October 27, 1942, approved by the
President, delegated the National War Labor Board and the Commissioner of Internal Revenue as his agents to administer the wage
and salary policies. By an amendment to his regulations, approved
by the President on November 30, 1942, the Director also delegated
the Secretary of Agriculture as one of his agents. Regulations,
Treasury Decision 5186, outlining the policies and procedure to be
followed with respect to employees under the jurisdiction of the
Commissioner were promulgated on December 2, 1942.
On AprU 8, 1943, the President issued Executive Order No. 9328
which provided for certain changes in policies and procedure. As a
result of this Executive order, the Director, on May 12, 1943, issued
a clarifying statement, and on August 28, 1943, completely revised
the amended regulations, formulating the program more specifically
and outlining the policies and procedures- to be followed with respect
to salary and wage adjustments. The primary prerequisites to approval of salary and wage adjustments are that the increases shall
613185—45

10




130

REPORT OF THE SECRETARY OF THE TRPJASURY

not raise salary levels which existed on September 15, 1942, and shall
not increase the level of production costs appreciably, or furnish the
basis either to increase prices or to resist otherwise justifiable reductions in such prices.
.
Authority over wage adjustments 'by the National War Labor
Board, as expressed in Executive Order No. 9250, was reaffirmed by
these regulations. Jurisdiction over salary adjustments is divided
between the Board, the Commissioner of Internal Revenue, and the
War Food Administrator, jurisdiction under the latter having been
transferred from the Secretary of Agriculture. The Commissioner of
Internal Revenue was given authority over all adjustments to salaries
in excess of $5,000 per annum, and adjustments to salaries of executive, administrative, and professional employees under $5,000 per
annum .who are not represented in their relations with their employer
by duly recognized or certified labor organizations, and who do not
come within the classification of ^^agricultural labor." Wages arid
salaries of employees engaged in '^agricultural labor" were placed
under the jurisdiction of the War Food Administrator.
Subsequently, the Commissioner promulgated amended regulations.
Treasury Decision 5295, which were approved on September 4, 1943.
Under the regulations as amended certain salary increases may be
granted without approval of the Commissioner of Internal Revenue,
provided they are made in accordance with a salary agreement or
salary rate schedule in effect prior to October 3, 1942, or approved
by the Commissioner thereafter, and as a result of (a) individual promotions, or reclassifications, (6) merit increases within established
salary rate ranges, (c) operation of an established plan of salary,increases based on length of service, (d) increased productivity under,
incentive plans, (e) operation of a trainee system, and (/) such other
reasons as may be prescribed in rulings or regulations promulgated by
the Commissioner from time to time. Decreases in salary rates below
$5,000. cannot be made without prior approval of the Commissioner
unless the employee is demoted to a position carrying a lower rate of
pay. Adjustments which may be made with approval of the Commissioner are those necessary (a) to qorrect substandards of living,
(6) to compensate in accordance with the Little Steel Formula, (c) to
adjust salaries up to the minimum of the tested and going rates paid
for t h e same work in the most nearly comparable plants or establishments in the same labor market, and (d) to permit individual promotions to higher positionsy reclassification of jobs, to recognize increased
duties and responsibilities, individual merit increases, length of service
increases, incentive payments and the like, provided the adjustnaents
do not increase the level of-production costs appreciably or furnish
the basis for increased prices or resistance to justifiable reductions in
prices. Adjustments may be made also to maintain proper differen-




REPORT OF THE SECRETARY OF THE TREASURY

131

tials in pay rates of einployees in. iinmediately interrelated job classifications arid, in rare and unusual cases, where the critical needs of
war production so require.
An act of Congress, approved June 30, 1944 (Public Law 383),
extending the act of October 2, 1942, stipulated that its provisions
should terminate on June 30, 1945, and contained one amendment
affecting salary stabUization. Section 4 as amended now provides
that the findings and certification of any agency provided for by the
act shaU be final with respect to changes affecting wages or salaries
in any dispute case between employees and carriers subject to the
RaUway Labor Act, as amended.
ESTIMATESJOF RECEIPTS

The Secretary of the Treasury is required each year to prepare and
submit i n ' h i s annual report to Congress estimates of the public
revenue for the current fiscal year and for the fiscal year next ensuing
(Publie No. 129, February 26, 1907). These estimates are now
made in December of each year on the basis of legislation existing
at the time of making the estimates. The estimates here presented
are consistent with the prograin of Government expenditures outlined in the Budget of the United States Government for the fiscal
year ending June 30, 1946.
:The detaUs of estimated and actual receipts are shown in table
111 beginnhig on page 837. Throughout the tables shown in this
exposition the figures are rounded and will not. necessarily add to
totals.
.
•
Total and net receipts
Total, receipts, ^general and special accounts, are estimated (on the
daily Treasury statement basis) in the amounts of $47,022.8 millions
in the fiscal year 1945 and $42,854.8 mUlions in the fiscal year 1946.
The estimated total receipts in the fiscal year 1945 exceed by $1,614.3
mUlions the actuaP total receipts of $45,408.4 millions in the fiscal
year 1944, whUe estimated total receipts of $42,854.8 millions in the
fiscal year 1946-represent a decrease of $4,168.0 millions from the
estimated total receipts in the fiscal year 1945.
. Net receipts; general and special accounts, are estimated (on the
daily Treasury statement basis) in the amounts of $45,729.7 millions
in the fiscal year 1945 and $41,254.9 millions in the fiscal year 1946.
The estimated net receipts in the fiscal year 1945 exceed by $1,580.8
mUlions the actual net receipts of $44,148.9 mUlions in the fiscal
year 1944, whUe estimated net receipts of $41,254.9 millions in the
fiscal year 1946 represent a decrease of $4,474.8 millions from the.
estimated net receipts in the fiscal year 1945.




132

REPORT OF T H E

SECRETARY OF T H E

TREASURY

The percentage distribution, by sources, of estimated total receipts
in the fiscal years 1945 and 1946, as compared with actual receipts
in the fiscal years 1943 and 1944, is shown in the following table.
Percentage distribution of total receipts
General and special accounts receipts
Individual income tax __
Corporation income and excess profits t a x e s . - l . : . . .
Miscellaneous interhal revenue
..
Employment taxes i. _
Customs
Miscellaneous receipts
*
Total receipts

..

_..

Actual,
1943
27.8
41.0
19.5
6:4
1.4
3.9
100.0

Actual,
1944

Estimated,
1945

Estimated,
1946

43.6
32.8
11.6
3.9
.9
7.2

39.1
35.5
13.9
3.8,
.7
7.0

35. 3
37.1
15.2
4.8
.8
6.8

100.0

100. 0

100.0

•

1 Includes railroad unemployment insurance contributions.

Several shifts in the relative importance of the major tax sources
in the period from the fiscal year 1943 through the fiscal year 1946
are shown in the above table: (1) The individual income tax shifts
to the position of greatest importance in the fiscal year 1944 because
of the nonrecurring increases arising from the transition to a current
payment basis; (2) by the fiscal year 1946, however, corporation
income and excess profits taxes represent the largest percentage since
the lower level of incomes reflected in individual income tax receipts
does not affect the corporate tax receipts until a year later; (3) the
relative stability of excise tax receipts, included under miscellaneous
internal revenue, . and employment tax receipts causes them, in
spite of steady absolute increases over the period, to appear percentagewise of less importance in the two years of larger aggregate tax
receipts, namely, the fiscal years 1944 and 1945; (4) miscellaneous
receipts are of greater significance, both absolutely and relatively,
in the fiscal year 1944 than in other years of the period because of.
the recoveries of excessive profits on renegotiated war contracts,
included in this, item, which are expected to be at their peak in this
fiscal year; (5) customs receipts continue to decline in relative
importance.
Fiscal year 1945
The estimated receipts in the fiscal year 1945 and actual receipts in
the fiscal year 1944 are compared by major sources in the following
table.
I




133

REPORT OF T H E SECRETARY OF T H E TREASURY
Total and net receipts hy sources
In millions of dollars
Actual,
1944

General and specia accounts receipts

Estimated,
1945

Increase or
decrease (—),
1945 over 1944

19,779.2
14,875.7
5,291.0
1,751.2
431.3
3,280.1

18,385.6
16,670. 2
6, 651.0
1,806.8
326.1
3, 283.1

-1,393.6
i;794.5
1,260.0:
55.6
-105.2
3.0

Total receipts
Deduct: Net appropriation for Federal old-age and
survivors insurance trust fund.-..--

45,408.4

47,022. 8

1,614.3

1,259. 5

1,293.1

Net receipts

44,148.9

45, 729. 7

Individual income tax
Corporation income and excess profits taxes.
Miscellaneous internal revenue.Employment taxes i
Customs
^
Miscellaneous receipts

-

33.5
1, 580. 8

Includes railroad unemployment insurance contributions.

WhUe the fiscal year 1945 receipts are estimated to be larger than
the actual receipts in the fiscal year 1944, there is a divergence of
trend by tax sources. The major items of increase include the excise
taxes, where rate increases and the elimination of Government
exemptions increase receipts, and corporation taxes, which arestUl
collected a year later than the incurrence of the liabUity. The increase in tax receipts from larger corporation incomes more than offsets the decrease in the amounts estunated to be received as recoveries
from renegotiation of war contracts, which decline as experience with
war purchases makes for more efficient procurement. A partially
offsetting decrease occurred in the case of the individual income tax
where the fiscal year 1944 receipts were more affected than those of
the fiscal year 1945 by the abnormal bunching of receipts due to the
transition to a pay-as-you-go basis.
Individual income tax.—The yield of the individual income tax in
the fiscal years 1944 and 1945 is shown in the following table.
Actual,
1944

General and special accounts receipts

\

Withheld
Not withheld...
Back taxes..

"

•

._

.

.

.

Total individual income tax

°

Estimated,
1945

Increase or
decrease (—),
1945 over 1944

In millions of dollars
9,177.8
10,417.6
183.7

.

9,970.1
8,284.3
131.2

792.3
-2,133.3
—52.5

19,779.2

18,385.6

-1,393.6

Individual income tax receipts of $18,385.6 millions are again the
most important tax source although smaller in absolute amount by
$1,393.6 mUlions than those of the preceding jesiT. The abnormal
bunching of receipts in the fiscal year 1944 in connection with going
on a pay-as-you-go basis arose chiefly from the following circumstances:




134

REPORT OF THE SECRETARY OF THE TREASURY

(1) The portion of the nonrecurring offset to the remitted 1942
liabilities (i. e., payment on ^^unforgiven tax''), estimated at $900
millions in the fiscal year 1945, is $400 millions less than the amount
estimated to have been received in the fiscal year 1944.
(2) The payments in the first half of the calendar year 1943 in
settlement of part of the calendar year 1942 liabilities, together with
amounts withheld on 1943 salaries and wages at Victory tax withholding rates, were much smaller than would have been received if
the current law had been in effect during that time interval. These
low payments in partial liquidation of 1943 liabilities were received
in the fiscal year 1943. Fiscal year 1944 collections were therefore
large in a nonrecurring way because they included the balance of
the calendar year 1943 liability payments which were abnormally
large.
Corporation income and excess projits taxes.—An. increase of $1,794.5
millions is shown from this source, the details of which are given in
the following table.
^
Increase" or
Actual, . Estimated, decrease ( ^ ) ,
1945
1944 .
1945 over 1944

,. General and special accounts receipts

\
Income tax and excess profits tax....
Declared value excess profits tax..
._
Back taxes
..--_
Adjustment to daily Treas'ury statement basis.i
Total corporation incoine, and excess profits taxes

In millions of dollars

•

. .

13, 242.1
109.9
1,414.8^
+108.9

15,192.3
123.5
1,354.4

1,950.2
13.6
T-60.4
-108.9

.— , 14,875.7

16, 670. 2

1,794.5

Receipts in the fiscal year 1945 from corporation taxes are estimated to provide the wartime peak from this tax source. Following
the conversion of plant frona peacetime to war uses in the calendar
year 1942, and as a consequence of growing wartime Government
expenditures, corporate profits continued to expand rapidly during
the calendar year 1943 and. are estimated to have nearly maintained
the peak level in the calendar year 1944. Government expenditures
increased markets for products and lowered unit costs as production,
facilities were used to a larger extent of capacity and as more experiTence was gained both by corporations and by labor in the production
of new and unfamiliar lines.
,
Miscellaneous internal revenue.—The yields of the riiajor groups
under miscellaneous internal revenue are compared in the following
table,
'
' • • ' • • r^y • y
\n




REPORT OF T H E SECRETARY OF T H E

Actual,
1944

General a n d special accounts receipts

135

TREASURY

' Estimated,
1945

Increase or
decrease (—),
1945 over 1944

I n millions of dollars
C a p i t a l stock t a x
.
E s t a t e a n d gift taxes
_
L i q u o r taxes
Tobacco'taxes
S t a m p taxes
M a n u f a c t u r e r s ' excise taxes
R e t a i l e r s ' excise taxes
Miscellaneous taxes
--..
A d j u s t m e n t t o daily T r e a s u r y s t a t e m e n t basis

.:.

_-^.-

T o t a l miscellaneous i n t e r n a l r e v e n u e . „ _

380.7
511.2
1,618.0
988.4
50.8
'502. 7
225.2
i, 076. 2
-62.3

372.5
514. 5
2, 063. 5
921.2
.62.8
800.2
420. 0
1, 396. 3

-'8.2
3.3
445. 5
-67.2
12.0
297.5
194.8
320.1
62.3

5, 291. 0

.--.

6, 551.0

1, 260. 0

With the exception of the receipts from the tobacco taxes which are
adversely affected by the increased amount of tax-free withdrawals of
cigarettes going to the armed forces, the receipts from every major
grouping of excise taxes show an uicrease in the fiscal year 1945 over
those of the preceding year.
The receipts from liquor taxes are at a new. peak in the fiscal year
1945. Supplies of distilled spirits are more ample as a result of the
resumption of the distUling of beverage alcohol during the so-called
^4iquor holidays.'' Increased wartime tax rates on liquors also contribute to the record receipts.
Following the passage of the Revenue Act of 1943, and as old contracts for delivery expire, the Federal Government is paying a tax
on its purchase of taxable items. This amount which the Federal
Government pays to itself, and which therefore does not improve its
fiscal position, is estimated at $243.2 mUlions in the fiscal year 1945.
The effect of the repeal of these Federal exemptions is shown almost
entirely in the receipts from the manufacturers' excise tax group, and
reflects principally the purchases of war materials.
In general, increases in the receipts from other excise taxes are
due to higher tax rates together with a rising volume of spending by
individuals.
•
Employment taxes.—'Receipts from the employment taxes are distributed as follows:
General a n d special accounts receipts

Actual,
1944

.

Estimated,
1945

Increase,
1945 over 1944

I n millions of dollars
Federal Insurance Contributions Act
Federal Unemployment T a x Act
T a x e s o n carriers a n d thftir employees
-. .
R a i l r o a d 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 i j

.

' T o t a l e m p l o y m e n t taxes
'..
...
. . D e d u c t : .Net a p p r o p r i a t i o n for F e d e r a l old-age a n d
survivors insurance t r u s t fund
N e t e m p l o y m e n t taxes

1,292.1
179.9
. 267.1
12.1

1,259.5
491.7

.

30.5
10.8
13.4
.9

1,806.8

1, 751. 2

1 Not classified as an employment tax under the Internal Revenue Code.




1,322.6
190. 7
280. 5
13.0

55.6

1,293.1

33.6

513. 7

22! 0

136

REPORT OF THE SECRETARY OF THE TREASURY

The tax rates and the statutory coverage of the employment taxes
are the same in the two fiscal years so that larger amounts of covered
salaries and wages cause the increased tax yields. The receipts
from the Federal Insurance Contributions Act are appropriated- to
the Federal old-age and survivors insurance trust fund except for
administrative expenses.
Customs.—Customs receipts decrease to $326.1 millions in the
fiscal year 1945 from receipts of $431.3 millions in the fiscal year
1944. The dominating causes of changes in customs receipts are
exigencies of shipping space, increased duty-free imports of strategic
materials (particularly sugar) under Executive Order No. 9177,
dated May 30, 1942, and the improving domestic supply situation
in connection with liquors, wool, and metals.
Miscellaneous receipts.-—^Miscellaneous receipts in the fiscal year
1945 amount to $3,283.1 millions, an increase of $3.0 millions over
comparable receipts in the preceding year. This small iucrease occurs
despite smaller recoveries from the renegotiation of war contracts as
the Government acquires more experience in procurement pricing.
Fiscal year 1946
The estimates of receipts in the fiscal years 1945 and 1946 are compared by major tax sources in the following table. .
Total and net receipts by sources
[In millions of dollars]
Estimated,
1946

General arid special accounts receipts

I n d i v i d u a l income t a x
,
C o r p o r a t i o n itfcome a n d excess profits taxes
Miscellaneous i n t e r n a l r e v e n u e
E m p l o y m e n t taxes 1 '.
Customs
Miscellaneous receipts
.

Estimated,
1946

Increase or
decrease ( - ) ,
1946 over 1945

18,385.6
16, 670. 2
6, 551.0
1,806.8
326.1
3, 283.1

15,109.0
15,913. 2
6, 519. 9
2, 066; 9
326.3
2,919.4

-3,276.6
-757.0
-31.1
260.1
.2
-363. 7

T o t a l receipts^..
. I
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
s u r v i v o r s insurance t r u s t fund

47,022.8

42,854.8

-4,168.0

1, 293.1

1,599.9

306.8

Netreceipts.

45,729.7

41,254.9

—4,474-8

.

.

.

L

»Includes railroad unemployment insurance contributions.

Receipts are expected to be smaller in the fi^scal year 1946 than in
the fiscal year 1945. Major sources of revenue contributing to the
decrease are (1) the individual income tax receipts which are smaller
because of estimated lower incomes and because of the nonrecurring
payments in the fiscal year 1945, (2) the corporation tax receipts
which are less because of lower corporate incomes, and (3) miscel-.
laneous receipts which are lower because of the decreasing recoveries
from renegotiation of war contracts.




137

REPORT OF THE SECRETARY OF THE TREASURY

Partly offsettiug these declines are increases in receipts from employment taxes as a result of higher tax rates for certain of these taxes
aft'ecting receipts in three months of the fiscal year.
Individual income tax.—^The yield of the individual income tax in
the fiscal years 1945 and 1946 is shown in the following table.
Estimated,
1945

General a n d special accounts receipts

'

'-

.

Estimated,
1946

Increase or
decrease (—),
1946 over 1945

I n millions of dollars

•

9,970.1
8, 284. 3
131.2

W i t h h e l d '......
Not withheld
B a c k taxes
T o t a l i n d i v i d u a l income tax

.'.

._

8, 243.0
6, 734.0
132.0

-1,727.1
—1, 550.3
.8

18,385. 6

15,109.0

- 3 , 276.6

Individual income tax receipts decrease to $15,109.0 millions in the
fiscal year 1946. The last of the nonrecurring offsets to the remitted
1942 liabilities (i. e., payment'on '^unforgiven tax") will be paid in t h e
fiscal year 1945 in an amount estimated at $900 millions. No corresponding amount is collectible in the fiscal year 1946. This fact,
together with a reduction in the level of incomes on which receipts are
based, accounts for the lower yield in the fiscal year 1946.
Corporation income and excess projits taxes.^-Tlie details of the
yield of taxes on corporation incomes are shown below.

General a n d special accounts receipts

Estimated,
1945

Estimated,
1946

Increase or
decrease (—),
1946 over 1945

I n millions of dollars
I n c o m e tax a n d excess profits tax
Declared v a l u e excess profits tax
B a c k taxes
...1...

'

-

T o t a l corporation income a n d excess profits t a x e s .

15,192.3
123.5
1,354.4

14,312.9
112.6
1,487. 7

-879.4
-10.9
133.3

16, 670. 2

15,913.2

-757^0

Receipts in the fiscal year 1946 from the corporation taxes on income
are estimated at $15,913.2 milhons, somewhat below the $16,670.2
millions expected in the fiscal year 1945. The high level of corporate
income attained in 1943 is not expected to increase even with the
continued high level of Government war expenditures. Costs catch
up and cut into corporate profits as mihtary services create manpower
shortages (leading to the employment of less efficient labor, frequently
at higher hourly rates and with much overtime), as machines under
wartime exigencies are not adequately maintained or replaced, and as
ceilings prevent selling prices from rising correspondingly. Hence
the fiscal year 1946 estimated corporation tax receipts reflecting 1944
and 1945 corporate incomes are slightly less than the receipts arising



138

REPORT OF THE SECRETARY OF THE TREASURY

from the peak 1943 and 1944 corporate profits, but nevertheless they
are larger than the .fiscal year 1944 receipts arising from 1942 and
1943 income experience.
Miscellaneous ijiternal revenue.^-The estimates of yields from the
more important groups included under miscellaneous internal revenue
are shown in the following table.

General and special accounts receipts

Estimated,
1945

Estimated,
1946

Increase or
decrease (—),
1946 over 1945

In millions of dollars
Capital stock tax
.•.
Estate and gift taxes
Liquor taxesl
Tobacco taxes
Stamp taxes
Manufacturers' excise taxes.
Retailers' excise taxes
Miscellaneous taxes...
Total miscellaneous internal revenue..

372. 5
51-^.5
2,063. 5
921. 2
62.8
800.2
420.0.
1,396. 3
6,551.0

.

350.0
522.7
2,023.8
886.1
. 59. 2 •
997.4
392.2
1, 288.6
6,519.9

-22.5
8.2
' -39. 7
-35.2
-3.6
' 197.2
-27.8
-107.7
-31.1

In general, a decline in the volume of Government expenditures is
expected to result in some reduction in individual incomes, which will
be refiected in reduced buying of various taxable items. This will be
offset in part, however, by some increase in the production and sale
of other taxable civilian goods, the supplies of which have been
restricted by war requirements.
Estimated revenues in the fiscal year 1946 include an increased
amount of tax payments by the Government on taxable items purchased largely for war uses, owing to a greater tax coverage of
Government purchases during this first fulLj^ear under the new provision of the tax laws. Collections from this source, which represent
no improvement in the Federal fiscal position, are estimated at $301.0
millions in the fiscal year 1946, as compared with $243.2 millions in
the previous fiscal year. Including this item of increase, there is a
fairly large increase in revenues from the manufacturers' excise tax
group, which increase is more than offset by decreases in other sources
of excise taxes, so that the excise tax receipts as a whole show a
decrease.




139

REPORT OF THE SECRETARY OF THE TREASURY

Employment taxes.—The relative magnitudes and changes in yield
from employment'taxes are as follows:
Estimated,
1945

General a n d special accounts receipts

Estimated,
1946

Increase or
decrease
( - ) , 1946
over 1945

I n millions of dollars
Federal Insurance Contributions Act
Federal Unemployment Tax Act
^
T a x e s on carriers a n d their employees . J - .
Railroad unemployment insurance contributions 1

.1

T o t a l e m p l o y m e n t taxes
D e d u c t : N e t a p p r o p r i a t i o n for F e d e r a l old-age a n d
survivors insurance trust fund
..
N e t e m p l o y m e n t taxes

..-

1,322.6
190.7
280.5
13.0

1,629. 7
182.8
243.4
11.0

307.1
—7.9
-37.1
—2.0

1,806.8

2,066. 9

260.1

1, 293.1

1, 599.9

306.8

513.7

467.0

-46.7

1 Not classified as an employment tax under the Internal Revenue Code.

The estimates of receipts under the Federal Insurance Contributions Act assume existiag law, that is, that the freeze in tax rates will
not be continued in the calendar year 1946 but that the rates will advance to 2}^ percent on employer and 2}^ percent on employee., If
this increase were not effective the fiscal year 1946 receipts would be
reduced by $434.0 millions.
Customs.—While numerous items of customs receipts are expected
to vary between the fiscal years 1945 and 1946, total receipts frdm this
source in each of these years are estimated at approximately $326
millions.
Miscellaneous receipts.—Miscellaneous receipts in the. fiscal year
1946 are expected to be $2,919.4 millions, a decrease of $363.7 millions
, from the previous year. Smaller recoveries from the renegotiation of
war contracts account for the decrease since other items included in
miscellaneous receipts increase in the aggregate.
ESTIMATES OF EXPENDITURES

Actual expenditures for, the fiscal year 1944 and estimates for the
fiscal years 1945 and 1946 are summarized in the following table.
Further details will be found in table 111, beginning on page 849. The
estimates are based upon figures submitted to the Congress in the
Budget for 1946.




140

REPORT OF THE SECRETARY OF THE TREASURY

Actual exvenditures'for ihe fiscal year 1944 Ci'^d estimated expenditures for the fiscal
years 1945 and 1946
[In millions of dollars.

On basis of 1946 Budget document] •

Federal expenditures > (excluding t r u s t account a n d d e b t
transactions)

Actual,
1944

W a r activities:
General a n d special a c c o u n t s . . - . ,
G o v e r n m e n t corporations (net)

Estimated,
1946

87, 038. 7
2, 681. 6

T o t a l , including corporations
Other activities:
General a n d special accounts:
Interest on t h e p u b l i c d e b t
.Refunds
V e t e r a n s ' p e n s i o n s a n d benefits 2
Other
...-

Estimated,
1945

.

.
..

....
'.

Subtotal
G o v e r n m e n t corporations a n d credit agencies (net)
T o t a l , including corporations a n d credit agencies
G r a n d total, including corporations a n d credit agencies..

69, 400. 0
600.0

89, 720. 3

.

88.000.0
1,000.0
89,000.0

70, 000. 0

2, 609. 0
266.7
729.9
3, 099. 3

3, 750. 0
2,172. 0
1, 290. 5
3,099.9

6, 704.-8
a 1,152.1

10,912.3
8 224. 2

-

4,
2,
2.
3,

500. b
724. 8
704. 7
201. 0

13,130. 4
a 27. 0

5,552.7

10, 688. 2

13, 103. 4

95, 273. 0

99, 688. 2

83,103. 4

NOTE.—Figures are rounded and will not necessarily add to totals,
a Excess of receipts over expenditures (deduct).
1 Amounts shown for Government corporations and credit agencies represent net expenditures from
checking accounts maintained with the Treasurer of the United States.
2 Includes amounts classified under general public works program in the Budget.

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.
HENRY

MORGENTHAU,

JR.,

Secretary oj the Treasury,
To

the

SPEAKER




OF THE

HOUSE

OF R E P R E S E N T A T I V E S .

ADMINISTRATIVE REPORTS




141




FISCAL 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. A discussion
of the activities of the Fiscal Service follows.
BUREAU OF ACCOUNTS

The supervision of the administration of the accounting functions
and activities in the Treasury Department and all its bureaus, divisions, and offices is 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 is 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,
Divisibn of Deposits, Section of Surety Bonds, Treasury Budgetary
Section, and Section of Investments.
The duties and functions of the units undep the Bureau of Accounts
are discussed in the following pages.
The Commissioner, iu collaboration with the Bureau of the Budget
and General Accounting Office, also supervises work in the Treasury
Department in coimection with the development of standards, terminology, classifications, a system of financial reporting, and summary
accounts required by Executive Order No. 8512.
Office 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) imiform standards
for the valuation of assets and the determination of liabilities and the
treatment of revenues and expenditures in relation thereto; and to
rnaintain a complete system of summary accounts through which
the financial data of the various agencies wiih be coordinated and
integrated.
,




143

144

'ORT 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 Bndget and Accounting Act.
The President, in a letter dated April 7, 1944, requested the Administrator of the Foreign Economic Administration to establish a
clearing house which would obtain information on foreign transactions—including transactions on account of international aid,, relief
in liberated areas, procurement abroad, loans and financial aid, inventories, information concerning military and nonmilitary. installations, improvements, and stock piles abroad, and all other governmental outlays and disbursements abroad as well as receipts from
abroad. The President's letter further directed that the facilities
established by Executive Order No. 8512, as amended, should be
utilized whenever appropriate in collecting information on cash disbursements, receipts, and other related financial transactions abroad.
Pursuant to the above request, the Bureau of Accoimts collaborated
with the Foreign Economic Administration in the development of a
Budget-Treasury regulation relating to reports of cash transactions
abroad.
Activities under Reorganization Plan No. III.—Several additional
surveys have been made during the fiscal year, including a study to
revise the procedure for depositing into the Treasury funds collected
by other departments and agencies and a study of recording and reporting lend-lease purchases and classification of purchases in the Procurement Division, Treasury Department.
*
In lieu of depositing. funds with the Chief Disbursing Officer by
Government agencies in Washington, D. C , the revised prociedure
provides for the deposit of collections directly with the, Office of the
Treasurer of the United States and for the transmission of copies of
documents to the Chief Disbursing/Officer. This arrangement will
meet the accounting requirements of the General Accounting Office.
A test of several departments and agencies shows that the extension
of the revised procedure will save manpower and reduce the number
of certificates of deposit to be handled.
The lend-lease procedure was modified so that each requisition
with all its supporting contracts, invoices, and transfers constitutes a
separate account. This reduced considerably the amount of tabulating work necessary to the preparation of the lend-lease reports "and
reduced the time necessary to prepare such reports by approximately
-65 percent.
. Other studies were also made such as (a) the establishment of a
uniform individual earnings record so that at present the entire
Treasury Department maintains the employee's earnings account
on the same basis, and (b) the collaboration with the General Accounting Office in formulating plans to establish a branch office of the General Accounting Office in New York for the purpose of effecting a
current audit of the accounts df the disbursing officer of the War
Department issuing Army dependency benefit checks.
Daily Statement oj the United States Treasury.—Beginnmg with the
month of July 1943, receipts from income taxes withheld under the




REPORT OF THE SECRETARY OF THE TREASURY

145

Current Tax Payment Act of 1943, approved Jmie 9, 1943, were
classified separately in the daily Treasury statement. During the
fiscal year 1944 there were several changes in classffications and presentation of the daily Treasury statement. Executive Order No.
9280 as amended by Executive Orders Nos. 9322, 9334, and 9392 provided for the reorganization and consolidation of certain bureaus
within the Department of Agriculture and accordingly there were
changes and a rearrangement in the classification of expenditures of
that Department. Other changes in classifications were made as a
result of transfer of functions under Executive Orders Nos. 9385, 9406,
and 9423, which transferred functions to the Foreign Economic
Administration, the War Production Board, and the Department of
the Interior, respectively.
Annual appraisal oj assets and liabilities oj the Commodity Credit
Corporation.—Under the act approved March 8, 1938 (52 Stat. 107),
as amended by the act approved July 1, 1941 (55 Stat. 498), 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 shall establish 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. I n the act
approved February 28, 1944 (58 Stat. 105), the Comptroller General
is required to make an annual audit of the financial transactions of
the Corporation beginning with the fiscal year 1945, and to furnish
a copy of each such audit report to the Secretary of the Treasury for
his consideration in appraising the assets and liabUities for determining the net worth of the Corporation under the act of March 8,1938,
as amended. The following statement shows the results of 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 Mar. 31, 1941, H. Doc. 248, 77th Cong.)....
Total appropriations—
Less amoimt returned to Treasury:
Appraisal as of Mar. 31, 1940
Appraisal as of Mar. 31, 1942

-

-

-

•--

:

-.

-

Amount
$94, 285, 404.73
119, 599; 918.05
1,637, 445.51
_ 215,622,768. 29

$43, 756, 731.01
27,815, 613.68

71,672,244.69

Net payments to Corporation...
_._
_
1143,950,523.60
» Exclusive of impairment as of Mar. 31,1943, in the sum of $39,436,884.93, for which no appropriation was
made. The appraisal of Mar. 31, 1944, has not been completed.

Securities and junds, Philippine invasion.—During the fiscal year
1944 the Departnient continued to receive inquiries relating to valuables salvaged from the Philippine Islands at the time of the Japanese
invasion. However, none of the item^s held in custody had been
released during the past year. Records, securities, and other valuables deposited for safekeeping remain in the custody of the Federal
Reserve Bank of San Francisco, subject to the order of the Secretary
of the Treasury.
613185—4.5

-11




146

REPORT OF THE SECRETARY OF THE TREASURY

RebuUding the account of the Treasurer ofi^the United States with
the Treasury of the Philippine Islands for the month of December
1941 has continued as additional information'-has|:become available.
' Advances to Federal Reserve Banks jor industrial loans.—Advances to
Federal Reserve Banks for industrial loans 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 and 185 of the annual report for
1940.
No advances were made to the banks during the fiscal years 1939
through 1944, the latest advance having been made on October 14,
1937. Amounts received by the Treasury during the year aggregated
$245,236.85. The following statement summarizes the transactions
in connection with these advances to Federal Reserve Banks.
Advances to Federal Reserve Banks for industrial loans, and payments by such banks
io ihe Treasury, through June 30, 1944
Advances by Treasury
F e d e r a l Reserve B a n k
Maximum
authorized

Total advances
through J u n e
30, 1944

P a y m e n t s received b y T r e a s u r y

D u r i n g fiscal
year 1944

Total through
J u n e 30,1944

Atlanta
Boston __-:...
, Chicago C l e v e l a n d —.
Dallas
Kansas C i t y . .
Minneapolis..
New York . . .
Philadelphia..
Richmond
St. Louis
San Francisco

$5, 272,031. 55
10, 23J3, 236.88
19,748,516.70
14,146,863. 66
4, 359,338.10
4,131,276.30^
3,309,467.65
42,'529,210.65
14,62'0, 883. 52
5, 808,291. 43
5, 093,112.25
9.850,328.30

$756, 934.44
2,875, 115.98
1,417, 701. 33
1,015, 571.33
1,261, 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

$15,138.69
55,807. 86
631. 80
599.31
738.20
1,841. 63
75.13
17,878.16
83,968.01
24,307. 34
1,114. 92
43,135.90

$54,152. 94
163,688.92
142,389. 07
7 i 881.19
99,890.46
45,366.01
34,959.90
135,14^. 38
647, 411:12
163, 789. 03
7,062.86
43,135". 90

Total.-.

139, 299, 556.99

27, 546,310. 97

245,236.86

1,611,868, 78

Appropriations and expenditures under the Social Security ^c^.—The
Social Security Act, approved August 14,1935, as amended (42 U. S. C ,
Ch. 7), provides for the establishment of a system of Federal old-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; maternal 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 to 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 through June 30, 1944, under the various
authorizations contained in the Social Security, Act, as, amended, and
total expenditures from such appropriations through June 30, 1944, are
shown in table 13 on page. 584. Receipts, expenditures, and investments of the Federal old-age and survivors insurance trust fund and




REPORT OF T H E SECRETARY OF T H E TREASURY

147

the unemployment trust fund are shown in tables 77 and 79 on pages
743 and 745.
Colorado River Dam jund.—The Colorado River D a m fund was
established under the act of December 21, 1928, which provided for
the construction of w^orks 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 ari 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 at the dam site.
T h e 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 of the States wherein the project
is located, namely, Arizona and Nevada, beginning with the year of
operation ended M a y 31, 1938; and to transfer $500,000 annually to
the Colorado River development fund beginning with the 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 at that time in the manner Congress shall
determine. For this reason, this sum of $25,000,000 is not included
under the caption ^^Advances'^ in the statement below.
The act further stipulates that 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 follows" is on an operating year basis and reflects
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 through
1944 •
Credits 2

Charges i
Operating
year
ended
M a y 31

1933
1934..
1935- . ,
1936
1937.---1938
1939- — .
1940......
1941
19421943
1944

Advances

I n t e r e s t on
I n t e r e s t on
amount
advances outstanding

Total

Reimbursements

Interest
on reimbursements

Balance d u e

$11,992,062. 57
$11,992, 062. 57
$11,890, 532. 62 $101, 529.95
18,424, 397. 76 249, 674.11 $359, 761. 88 19, 033,833. 76
19, 033,833. 75
23, 607, 521.44 399,-464.48
930,776.89 24, 937, 762. 81
• 24,937,762.81
21,974,681.03
19, 976, 009.81 319, 761.45 1, 678, 909. 77 21,974,681. 03
9,895,866. 34
7,410,641.30 147, 073.83 2, 338,150. 21 9,895,865.34
7,278, 663.16
6, 685, 000. 00
88,848.90 2, 635, 026.17 8,408,875.07 $1,100,000.00 $30, 221.91
3,851,-476. 02
5, 590, 265.49
74, 926.12 2,853,385. 76 8, 618, 577. 37 4,600,000.00 67,101.'36
3, 529,831. 67
4, 050, 000. 00
67, 278.68 2, 968,930.04 7, 086, 208. 72 3, 600, 000.00 66, 377. 05
868,919. 63
4,800,000.00
87,875.34 3, 074,824. 99 7,962, 700. 33 7, 000, 000. 00 93,780.80
4, 661,877. 76
3, 546, 585.62
56,152. 98 3,100,892. 58 6, 703, 631.18 2, 000,000. 00 41, 753.42
6,029, 039. 27
4, 700, 000. 00
99,139. 68 3, 240, 748. 91 8,039,888. 59 2, 000, 000. 00 10,849. 32
1,143,187. 71
2, 725,000. 00
46, 625. 00 3,421, 620. 09 6,192,245.09 5, 000, 000. 00 49, 067. 38

T o t a l - - 112,405,954. 04 1, 737, 350. 52 26,603, 027. 29 140,746,33i. 85 25,200,000.00 349,141. 23 3116,197,190. 62
1 Excludes $25,000,000 of advances allocated to flood control, repayment of which is deferred to June 1,198*^
2 Reimbursements have been applied toward reduction of "interest on advances."
3 Includes $2,791,236.68 representing unpaid interest.




148

REPORT OF THE SECRETARY OF THE TREASURY
Division oj Bookkeeping and Warrants

The 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
departments and establishments bf the Government. The Division
makes analyses of acts of Congress carrying appropriations and maintains the necessary appropriation accounts in its ledgers; it issues
warrants for placing funds to the credit of disbursing oflBcers, 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. The Division also compiles and publishes an annual
digest of the appropriations m a d e by Congress. The volume of work
performed in the Division during the fiscal year 1944 was increased
by war activities.
Donations accepted by the Secretary of the Treasury under the
Second War Powers Act, 1942, are shown in the table on page 128.
Financial reports.—There is compiled and published, in accordance
with U. S. C. title 5, section 264, an annual Combined Statement of^
Receipts, Expenditures, and Balances of.the United States Government, designating the amoimts of receipts, whenever practicable, by
ports, districts, and States, and the expenditures by each separate
head of appropriation. This report is required to be submitted to
the Congress on the first day of the regular session in each year.
Other financial statements pertaining to the receipts, appropriations, and expenditures of the Government and its various agencies
are prepared periodically during the year for inclusion in the daily
Treasury statement, the monthly Treasury Bulletin, and the Annual
Report of the Secretary of the Treasury.
During the fiscal year 1944 a monthly combined statement covering
information with respect to the financial condition of Government
corporations and credit agencies was prepared and published in the
daily Treasury statement on the last day of each month. Beginning
with the fiscal year 1945 this statement is published in the daily
Treasury statement on a quarterly basis. The statement for the first
quarter, ended September 30, appeared in the daily Treasury statement of November 15, 1944. Subsequent quarterly statements will
be published in the daily Treasury statements of February 15, M a y 15,
and August 15. Also,. a statement of contingent liabilities of the
United States is published in the daily Treasury statement on the
first day of each month. These statements, as of Juiie 30, 1944, will
be found as tables 91 and 58, beginning on pages 758 and 716 of this
report.
*
A complete annual financial report from information submitted by
Government corporations and credit agencies under Budget-Treasury
Regulation No. 2 (Executive Order No. 8512) is. also compiled.
A summary report is compiled monthly from financial data submitted by the departments and agencies under Budget-Treasury Regulation No. 1 (Executive Order No. 8512). This summary report
consists of a series of tables showing the current status of the appropriations and contract authorizations avaUable to each agency of the
Government during the fiscal year in progress. A section of the report



REPORT OF TI-IE SECRETARY OF TPIE TREASURY

149

is devoted to war activities in order to give a complete picture of that
prograin since July 1, 1940.
Division oj Disbursement
The Division of Disbursement exercises the disbursing functions, m.
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, the War and Navy ^
Departments, and certain Government corporations.
On June 30, 1944, the Division maintained the Central Office in
Washington, D . C , 20 regional offices in the United States, and 5
regional offices in Alaska, Puerto Rico, Hawaii, the Virgin Islands,
and Panama. Disbursing functions were also maintained at 25 points
in foreign countries and 1 point in Alaska on account of war activities.
During the year the Division made 61,009,197 payments, of which
60,031,420 were by check and 977,777 in cash. These payments were
supported in the disbursing accounts by 7,378,940 vouchers. The
Division also received, deposited, and accounted for 10,898,153 collection items. Included in the foregoing are 13,310,770 items of payments and collections for agencies which have been established in
connection with the war.
Voluntary payroll savings plan.—In connection with the voluntary
payroll allotment plan for the purchase of war savings bonds, the
Chief Disbursing Officer serves as the Bond Issuing Officer for departments and agencies served by the Division of Disbursement.
.During the year there was collected by the Division of Disbursement, through withholdings from salaries of Federal employees, the
sum of $123,119,305.44 on account of bond allotments, against which
4,343,544 war savings bonds were issued by the Division at the purchase price of $118,248,351.61, this amount having been covered into
the Treasury as public debt receipts. The difference wUl be applied
to the purchase of bonds to be issued when withheld amounts to the
credit of the individual employee equal the purchase price of a bond
of the denomination specified by the employee.
Victory and income tax withheld.—-In accordance with Public Law
753, approved October 21, 1942, and Public Law 68, approved June
9,o 1943, there was withheld by the Division of Disbursement from
salaries of Federal employees on account of the Victory and income
tax an aggregate of $146,983,100.59. These funds were currently
deposited into a special deposit account in the Treasury to the credit
of the Chief Disbursing Officer, and were paid over to collectors of
internal reyenue quarterly, as provided by regulations, on the basis
of vouchers submitted by the administrative agencies concerned.
Bonding oj certijying officers.—Under 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, there were
approximately 9,000 such bonded certifying officers at the cl6se of the
fiscal year 1944.
labulating card checks.—The Division of Disbursement is cooperating in the Treasury Department's program providing for the pay1 Except civilian pay rolls.




150

REPORT OF THE SECRETARY OF TPIE TREASURY

ment by the Federal Reserve Banks of checks drawn on the Treasurer
of the United States, and for the use of tabulating card checks, in lieu
of the former style of paper checks, in that operation. In May 1943
in the regional disbursing office at Chicago, 111., the Diyision of
Disbursement made the first'conversion from paper checks to tabulating card checks for its regular disbursements. At the close of the
fiscal year 1944 all checks issued by the 20 regional offices in the
continental United States were on card checks, except for a small
number issued under disbursing symbols which it has not been deemed
feasible to convert. The program for conversion in the Washington
office was started in May 1944 and will be completed during the early
part of the fiscal year 1945. This change wUl result in transferring
from the Treasurer's office at Washington to the Federal Reserye
Banks, the payment of approximately 68,700,000 checks during tlie
fiscal year 1945, leaying approximately 16,000,000 checks to be paid
by the Treasurer's office at Washington.
Agent cashiers.—There are approximately 1,800 employees of other
Government agencies who are bonded and designated as agent cashiers
to the Chief Disbursing Officer of the Treasury Department. The
majority of these agent cashiers are located in the United States and
make emergency payments which it has been found impracticable to
make through the regional disbursing offices of the Division of
Disbursement because of the need for immediate cash payments.
The other agent cashiers are appointed for duty in various parts of the
world in connection ^ with war operations.
Staggered pay days and cash payments to employees.—^The execution
of the plans for staggered pay days for Government employees in the
District of Columbia and for paying those in lower grades'in cash
rather than by check, adopted during 1942, has materially eased the
strain on local check cashing facilities and has been generally helpful
to the employees. However, the practice of paying employees on the
last day of the pay period continues to be a serious administrative
problem, which the Treasury, Bureau of the Budget, and General
Accounting Office are undertakiag to work out.
Changes in and simplification oj duplicate check procedure.—Because
of the increased number of duplicates of lost checks which had to be
issued the regulations and procedure were greatly simplified by a
revision of Treasury Department Circular No. 327, on April 29, 1944,
and Treasury Department Forms 2244 and 2244a (Bond of Indemnity
and Application for Duplicate Check)., A copy of the revised circular
is shown on page 507 of this report.
Division oj Deposits
The Division of Deposits is charged with the administration of
matters pertaining to the designation and supervision of Government
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
savirigs and loan associations as fiscal agents of the United States
under Circular 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




REPORT OF THE SECRETARY OF THE TREASURY

151

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 30,1944.
Number of depositaries and amount of Government deposits held on June 30, 1944)
by classes of depositaries
Depositaries

Amount

Number

Federal Reserve Banks (including branches)
Insured 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
j
Special depositaries
_.
'
Total

1.2

$1,441,880,141.76

}

1,812 \r

196,823,679.49
80, 669, 607.06

}

33 \f

48,617,867. 24
83, 226,133. 34

1
•

1-

12, 221, 722. 04
90 \r 62, 241, 961.88
10, 519 18,006, 530, 000. 00
12,466 119,922,110,902.79

1 Does not include $9,072,500 time deposits with depositaries for withheld taxes.,

During the year there were 6,838 changes and adjustments effected
in the depositary system of the Treasury. These changes and adjustments are summarized in the following table.
Insured bank
depositaries

Adjustments
Designated
Discontinued
Amount for which qualified:
Increased
Decreased...
Miscellaneous changes
Total

- .

'.
,

.-_...

397
164

767
49

1,244
284
370

j.
.

- .

- . -

-

Special depositaries

3, 565
8

2,449

4, 389

The number of changes and adjustments in insured banli depositaries indicates a substantial increase over those which occurred
during the fiscal year 1943. This is the result of continued requests
for the' designation of new depositaries and for authority to use
existing depositaries by the War and Navy Departments.
Regulations of the Treasury covering special depositaries of public
moneys were amended December 15, 1943. Department Circular
No. 92, revised as of that date, designates all incorporated banks
and trust companies in the United States, Alaska, Hawaii, Puerto
Rico, Virgin Islands, and the Panama Canal Zone as special depositaries, subject to qualification in accordance with the provisions of
the circular. The determination as to the maximum amount of
deposits for which a special depositary is qualified is committed to
the several Federal Reserve Banks acting under the direction of the
Secretary of-the Treasury.
Designation oj banks as depositaries jor withheld taxes.—The Current
Tax Payment Act of 1943 became effective July 1, 1943, introducing
several changes relating to the collection and payment of income taxes.
The act provides for the collection at the source of income taxes on




152

.

REPORT OF THE SECRETARY OF THE TREASURY

salai^ies and wages. Under regulations issued by the Treasury the
major proportion of the accumulated funds are deposited monthly by
employers in certain designated depositary banks, against which the
depositaries issue their receipts to the employers. These receipts are
transmitted with quarterly tax returns filed with collectors of internal
revenue. Amounts deposited in the depositaries are promptly remitted to the Federal Reserve Banks for credit in the Treasurer's
account. This procedure has made these funds available to the Treasury on a more current basis, as compared with the previous method
of quarterly tax payments.
Department Circular No. 714, as amended, prescribes regulations
governing the payment through depositary banks of funds withheld
as taxes in accordance with the provisions of the act. This circular
and the aimendment dated July 22, 1943, appeared as exhibits 66 and
67 in the annual report for 1943. The circular was further amended
on November 30, 1943, arid AprU 4, 1944 (see exhibit 60 on page 509),
to provide for a modification of the requirements in connection with
the signing of depositary receipts by officers of depositaries, and to
provide for a change in the basis to be used by Federal Reserve
Banks and branches in computing allotments of 2 percent depositary
bonds. Second Series, to depositaries for withheld taxes. As of June
30, 1944', 9,192 banks were qualified as depositaries for withheld taxes,
and 2 percent depositary bonds. Second Series, in the net amount of
$89,261,000 have been allotted to these depositaries. Of this amount,
. $80,188,500 of bonds were purchased by the depositaries with their
own funds and $J9.,072,500 were invested from a lik^ ainount of Treasiny_^£ash^balancesjnamt^^Q^mTT^sucl^I^^^i TDuring tEe~"yea3'
remittahces totaling $6,336,149,070.43 were received by Federal Reserve Banks and branches from depositaries for withheld taxes.
Depositary bonds.—Department Circular No. 660, dated M a y 23,
1941, as amended, prescribes the regulations of the Treasury governing the issuance of 2 percent depositary bonds. These bonds are
allotted to banks designated as depositaries and financial agents of
the Government and provide an income which offsets the costs
incurred by depositaries in handling the Government's business.
As of June 30, 1944, 2 percent depositary bonds. First Series, in
the face amount of $411,938,750 had been issued and $26,878,000
had been redeemed. The amount outstanding on that date was
$385,060,750, which does not include bonds issued to depositaries for
withheld taxes.
Designation oj agencies jor the issuance oj war savings bonds, Series
E.—The Division maintains a record of cash collateral pledged, in
lieu of securities, by designated agents for the sale and issuance of
war savings bonds of Series E, as specified in Department Circular
No. 657, as amended. As provided in the third amendment, dated
July 17, 1942, to Departnient Circular No. 657, these agents are no
longer required to pledge collateral security for consignments of war
savings bond stock. As a result of this provision the number of
issuing agents which have deposited cash collateral has continued to
decrease. As of June 30, 1944, there were 160 issuing agents qualified
by the pledging of cash collateral aggregating $595,963.75.
Federal savings and loan associations.—On. June 30,1944, the Federal
Home Loan Bank System reported to the Treasury that 1,465 Federal
savings and loan associations were eligible to qualify as fiscabl agents



REPORT OF THE SECRETARY OF TPIE TREASURY

153

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. Of this
number S5 had-qualified for this purpose either by the pledge of collateral security or the filing of an acceptable surety bond.
' Social security.—Under existing arrangements between the Treasury
and the Social Security Board, various depositaries of public moneys,
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, 1944, 65 banks were designated for this purpose with
authority to maintain Treasury balances totaling $15,100,000.
. Banking jacilities at Army posts and naval stations.—The Treasury,
through the use of its depositary system, continued to provide banking facUities at Army posts and naval stations where it was determined that such facilities would aid in the prosecution of the war.
As of June 30, 1944, 227 depositaries and financial agents of the
Government were providing banking facUities at 269 Army posts and
naval stations. During the fiscal year 1944, 15 facUities were terminated. The following statement shows the character and approximate
monthly volume of such business handled by all banking facUities in
the United States during the fiscal year 1944.
Checks cashed:
Drawn on Treasurer of the United States (850,000 checks)
Other checks'cashed (1,626,000 checks).Deposits accepted:
For credit to the Treasurer of the United States
Other deposits
—
-Cash furnished finance and disbursing officers
War bonds and stamps sold
Sales of travelers' checks, cashiers' checks, bank money orders, etc. (160,000 sales)
Total monthly dollar volume...

Amount
$70,600,000
86,300,000
-

83,000,000
184, 200,000
61,700,000
.-._ 9, 500,000
-. 17, 600,000
611, 700,000

Government Losses in Shipment Act.—The Government Losses in
Shipment Act, approved July 8, 1937 (50 Stat. 479), as amended
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 Uniteci States of certain
articles, 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 7 (a) 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 facUitate
replacement under the provisions of the act, in the event such procedure becomes necessary.
Under the provisions of section 3 (i) of the Public Debt Act of 1943
(Public Law 34), the fund for payment of Government losses in
shipment was macle avaUable for replacement of any losses resulting
from payments rnade in connection with the redemption of savings
bonds, under regulations to be prescribed by the Secretary of the



154

REPORT OF THE SECRETARY OF THE TREASURY

Treasury. N o payments have been made out of the fund for this
purpose.
The monetary value of shipments, reported to have been made
during the fiscal year 1944 under the Government Losses in Shipment
Act, as amended, of the classes of valuables which were covered by
the Treasury's contracts with insurance companies prior to the
enactment of the act amounted to $171,256,772,313. » This represents
an increase of $20,391,345,995 over shipments made duriog the fiscal
year 1943. The estimated premium savings in connection with
shipments for 1944 were more than $3,500,000, and the premium
savings since the inception of the act have been more than $9,500,000,
by using any one of the three basds on which the estimates are made,
as shown in the following table.
Estimated premium savings during the fiscat years 1943 and 1944 Cirid the iota
estimated savings through June 30, 1944
On the basis of premium rates for—

Fiscal year 1938 L..
Fiscal year 1937 2._.
Fiscal years 1936-38

Fiscal year
1943
$3,166,000
3, 947, 000
3,800,000

Fiscal year
1944

August 16,1937,
through June
30, 1944

$3,583,000
4,470,000
4,303,000

$9,630,000
12,092,000
11,621,000

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

Other classes of valuables covered under the provisions of the
Government Losses in Shipment Act and having an aggregate value
of $222,225,070,944 were shipped during the year; 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.
The following table shows the loss experience resulting from shipments of valuables under the act during the fiscal year 1944.
Number and value of items reported lost, settled, and unadjusted, fiscal year 1944
Items reported lost
Unadjusted July 1, 1943
Reported lost during year

...

Total to be settled

^.l...

Settled by replacement out of f u n d . . .
Settled by credit in accounts
Settled without replacement or credit.
Total settled
Unadjusted June 30,.1944

Number
64
169

Value
$649,237.15
698,958. 47
1,348,195.62

167
1
24

84,889.66
671,000.00
6, 246.71
661,136.37
687,059.25

.'
-..._.

Section 3 (a) of the act provides for payment.of losses arisingr 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 contiugencies. The increase in the number of losses
reported, from 123 in 1943 to 169 in 1944, may be attributed chiefly




REPORT OF THE SECRETARY OF THE TREASURY

155

to the loss or destruction of-motor vehicle tax stamps and funds,
war savings stamps and funds, arid war savings bonds and funds,
while in the custody of the Post Office Department acting in the
capacity of agent for the Treasury in the sale of such stamps and
bonds.
Pursuant to section 3 (b) of the act, as amended, there were executed
during the year 39 agreements of indemnity, in the aggregate amount
of $463,448.55, in connection with which no pa3rments have been
required. The total number of agreements executed' through June
'30, 1944, was 5S, amounting to $543,508.22.
Fund for the payment of Government losses in shipment (revolving fund); June 30,1944
I. RECEIPTS AND EXPENDITUEES

Cumulative
through June
30,1943
Receipts:
Appropriations
.
.^
Transferred from the securities trust fund. (Sept.
21, 1939)1
_.__
__.
Recoveries of payments for losses
1
Total receipts
._
Expenditures:
Payment for losses
Balance in fund.

Increase or
decrease (—),
fiscal year 1944

$602, 000. 00

$602,000.00
91,803.13
262.60

$222.09

91,803.13
484.59

222. 09

694, 287. 72

«12,889.16

84,889.66

3 97, 778.81

681,176. 48

-.

694, 066. 63

Cumulative
through June
30,1944

-84,667. 57-

596, 508. 91

II. FUND ASSETS

Juno 30,1943
Unexpended balances:
To credit of disbursing officer
On books of the Division of Bookkeeping and
Warrants, _.
Total fund assets

Increase or
decrease (—)

June 30, 1944

$2, 561.39

$35,110.34

$37,661.73

678,626.09

-119,777.91

558,847,18

681,176.48

-84,667.57

596, 508.91

1 The act of Aug. 10,1939 (53 Stat. 1358), amended the Government Losses ixi Shipment Act, and in section
1 the Secretary of the Treasury was authorized and directed to transfer to this fund the amount standing
. to the credit of the securities trust fund.
»Includes payment in the amount of $64.44 representing an excess recovery previously paid into the
fund from the securities trust fund.
'Includes approximately $8,000 in settlement of losses which do not represent aqtual monetary loss to
the Government.

Section oj Surety Bonds
The Secretary of the Treasury, under the act of Congress approved
August 13, lg94 (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, 1944, there were 83 domestic companies holding certificates of authority, qualifying them as sole sureties on recognizances,
stipulations, bonds, and undertakings permitted or required by the
laws of the United States, to be given with one or more sureties.
During the year 3 certificates of authority were issued to domestic
companies qualifying them as sole sureties on bonds in favor of the
United States. 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.



156

REPORT OF THE SECRETARY OF THE TREASURY

The Section of Surety Bonds reviews the financial statements of
surety companies authorized to transact business with the United
States; determines their underwriting limitations; 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 Federal 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. It examines and
approves as to corporate surety all fidelity and surety bonds with a
few exceptions as referred to above.
During the year 81,328 bonds and consent agreements cleared
through the Section for approval as to corporate surety. This number
includes official bonds and consent agreements totaling 48,349, which
is an increase in these classes of more than 22 percent over the preceding year. This total increase was largely due to the continued
expansion of the Army and the Navy.
A further amendment to the act of Congress approved March 2,
1895, was approved under date of March 31, 1944 and provides that
the payment and acceptance of the annual premium on corporate
surety bonds furnished by officers and employees of civilian agencies
of the United States shall be a compliance with the requirement for
the renewal of such bonds. A copy of this amendment (Public Law
275) appears as exhibit 61 on page 514 of this report.
Treasury Budgetary Section
This Section, which is in the Bureau of Accounts, constitutes in pa.r<t
the operatiug 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 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, PhUippine 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.—A statement of the alien^property trust
fund as of Jime 30, 1944, follows.
Alien property trust fund, June 30, 1944

Credits (net):
Trusts
.:
.
Earnings on investments, etc
.
Total-.-

-

--.

-•-.-.
--..--..

.

.

.

-

$38,742,098.15
26,462,259.98
..---

65,204,358.13

Assets:
Investments:
Participating certificates issued under sec. 25 (e) of the Trading with
the Enemy Act:
Noninterest-bearing
$20,861,206.97
5% interest-bearing..-..
34,347,-476.76
•
55,208,683.73
Cash balance with the Treasurer ofthe United States
9,996,674.40
Total fund assets June 30.1944-




-

—

„ „ . _ . . _ . _ . . 65,204,358.13

RiEPORT OF TPIE SECRETARY OF T H E TREASURY

157

Checks issued by the Treasury Department during the year to the
Ahen Property Custodian on account of the alien property trust fund
amounted to $50,000, on account of distribution of income.
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 iri 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 customs 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 1934 through 1944.
Receipts i
appropriated

Fiscal y e a r

1934....
1935
1936
1937
...:
1938
1939
1940
1941
1942
1943
1944

'
-

.

_..

$527, 426. 40
491,458.60
645,890.13
766,865. 76
813,852.30
569, 468.06
703, 874. 28
538,089.63
420, 293. 47
36,192.34
4,909.08

P a y m e n t s to
Philippine
Government 2
$813, 371. 78
502, 551.53
746,957. 76
891. 726.93
934, 689. 47
626,347.68
482,106.02
2,987.84
78. 32 •
• 426. 77
37. 76

U n p a i d balance

$668, 653. 59
657, 560. 56
467, 492.94
321,632. 77
200, 795.60
143,916.98
365, 684. 24
900, 786. 03
1, 321, 001.18
1,352,975. 72
1,357,847. 04

1 Reduced by amounts carried to surplus fund as follows: 1936, $17,640.28; 1937, $9,783.75; 1939, $15,151.70;
1940, $957.78; 1941, $36,822.72: 1942, $747.58; and 1943, $2,791.03.
2 Includes certain refunds and adjustments.

^ 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
Government. 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 moneys in a time deposit account,
amounts deposited with the Treasury by the Philippine Government
in excess of that sum to be maintained in a demand deposit account.
Since Deceniber 10, 1934, the balance in the time deposit account has
been maintained at $55,000,000. The balance in the demand deposit
account as of June 30, 1944, was $90,896,425.52.
Section 602}^ of the act of M a y 10, 1934 (48 Stat. 763), pr()vided
that taxes collected with respect to coconut oil wholly of Philippine
production or produced from materials wholly of. PhUippine growth
or production should be paid to the treasury of the PhUippine Islands
subject to certain conditions. An agreement was consummated
between the Secretary of the Treasury and the Philippine Governnient
under which coconut oil moneys payable to the Philippine treasury
would be transferred on periodic settlements of the General Accounting Office tp a special deposit account in the name of the Secretary of




158

REPORT OF THE SECRETARY OF THE TREASURY

the Treasury subject to withdrawal by trie Philippine Government on
ninety days' notice in writing. Interest at the rate of 2 percent per
annum is paid on the daily balances m this account. A summary of
transactions in the account from the time of its establishment to date
follows.
Deposits

Fiscal year

1938
1939
'-..--.
1940...
1941 .
1942
:.
1943
1944

..

..:....

$66,864,779. 06
20,355,455.65
4,569,016.46
72,860. 96
-

Withdrawals

$32,000,000.00
• 1 17, 664, 016. 41
5,000,000.00

....L
-

2 611,159. 24

Balance a t end
of y e a r
$56, 864, 779. 06
45,210, 234. 71
32, 205,234. 76
32,278, 086. 72
27,278,085. 72
27, 278,086. 72
26,766, 926.48

' Includes $7,564,016.41 transferred to account established under act of August 7,1939.
2. Transferred to account established under act of August 7,1939.

Section 6 of the act of August 7, 1939 (53 Stat. 1232), provided
that 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 imposed 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 meetiag new
or additional expenditures which will be necessary in adjusting Philippine economy to a position independent of trade preferences in the
United States and in preparing the PhUippines for the assumption of
the responsibilities of an independent state.
An account was established in the fiscal year 1940 for the deposit,of
the funds referred to in section 6 of the act of August 7, 1939. Withdrawals by the Philippine Government from this account are subject
to ninety days' notice in writing. Interest at the rate of 1 percent
is paid on the daily balances in this account.
A summary of transactions in the account from the time of its
establishment to date follows.
.
Fiscalyear

1940 .1941
1942 1943
1944—

--... L
-

Deposits

$17,274,092. 01
15, 258,938.13
26, 666,399.12
3,617,267.87
2,976,071.64

Withdrawals

$25,000,000.00
9,000,000.00

Balance at end
of y e a r
$17, 274,092. 01
12,633,030.14
29,099,429.26
32,616,697.13
36,592,768. 77

Appropriation oj junds to the Government oj the Commonwealth oj the
Philippines jor national dejense.—Fnblie 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 PhUippine Islands.
On June 30, 1944, there had been established upon the books of
the Treasury Department approximately. $39,000,000 which was




REPORT OF THE SECRETARY OF THE TREASURY

159

available for appropriation to the Government of the Commonwealth
of the Philippines.
I n accordance with provisions of Pubhc Law 371, $35,000,000 was
appropriated for this purpose.
Supplementary sinking j u n d 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,
t o provide for the adoption of a constitution and a form of go vernment
for the PhUippine Islands, and for other purposes,'' as amended by
the act of August 7, 1939, it was provided that on and after Jahuary
1, 1941, the Philippine Government shall impose and collect an export
tax on every PhUippine article shipped from the PhUippines to the
United States, except as otherwise specifically provided. It, 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
M a y 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 ' ' T h e Secretary of the Treasury for Account of the
PhUippine Govermnent—Supplementary Sinking Fund for the Payment of Bonds of the Philippines, its Provinces, Cities, and Municipalities, Issued Prior to M a y 1, 1934, under Authority of Acts of
Congress (Symbol 891-855)."
The following statement shows the cumulative transactions since
the inception of the fund and its status as of June 30, 1944.
Supplementary sinking fund for ihe payment of bonds, issued prior to May 1, 1934
of the Philippines, its provinces, cities, and municipalities, June 30, 1944
I. RECEIPTS AND EXPENDITURES

Receipts:
Taxes on exports.
Interest on investments

^
1....

$1,586,135.92
98,469.06

.

Total receiptsExpenditures
Balance in fund

.

1,684,604.98
.
1,684,604.98

II. FUND ASSETS

Investments:
Philippine Government bonds:
4%dueDec. 1,1946...°4H%dueDec. 1,1960-..--.-.
5% due Feb. 1,1952
m % due July 1, 1952
- 4H% due July 16, 1962
6% due Apr. 1, 19554 ^ % due May 1, 1957
4H% due July 1, 1967
41^% due Mar. 1,1968
. 41^% due Apr. 1, 1958
4H% due Apr. 1, 1959
4J^% due Sept. 16, 1969
41^% due Oct. 1, 1959
43^% due Oct: 16, 1969

^

'.

.. —
---.
-...

Face amount Principal cost
$207,000
$205,242.60
33,000
35,961.30
32,000
36,649.73
258,000
270,623.81
373,000
400,089.14
21,000
19,877.50
.'.
5,000
5,775.40
64,000
73,726.97 .
'43,000
60,099.35
i
36,000
41,936.38
70.000
76,627.88
41,000
48,339.08
19,000
22,386.07
6,000
6,857.06.
1,208,000

Cash balance with Treasurer of the United States.
Total.




.-

1,293,092. ] 7
391,512,81
1,684,604.98.

160

REPORT OF THE SECRETARY OF THE TREASURY

Foreign check control.—In accordance with the provisions of
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, 1944, from delivery
to payees residing in occupied territories 520,737 checks aggregating
$24,375,168.98, of which the proceeds of 414,019 checks aggregating
$17,221,111.41 were deposited in the special deposit account entitled,
"Secretary of the Treasury, Proceeds Withheld Foreign Checks";
10,857 checks aggregating $836,033.10 were released to payees; and
3,550 checks aggregating $194,975.20 were canceled on advice of adriiinistr.ative agencies which authorized the issue of such checks to the
payees. On June 30, 1944, a balance of 92,311 checks aggregating
$6,123,049.27, the proceeds of which were subject to deposit in the
special deposit account, were held by disbursing officers pending
disposition.
Oi the $17,221,111.41 deposited in the special deposit account,
$104,065.40 has been paid to individual claimants; $11,073.52 has
been returned to the appropriations from which payments were
made; and $4,317,400.22 has been covered into the Treasury as miscellaneous receipts on account of the $1,000 limitation on veterans'
payments. On June 30, 1944, the proceeds of 332,165 checks aggregating $12,788,572.27 remained in the special deposit account to the
credit of approximately 19,211. individuals.
Section oj Investments
The Section of Investments supervises the collections of principal
and interest on foreign obligations and on railroad 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 collection; 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 acts of
April 10, 1935, and December 18, 1942, covering claims against the
Republic of Mexico, payment of claims under the Settlement of
Mexican Claims Act of 1942, and clainis of American Nationals
against Mexico—Expropriation of Petroleum Properties^—agreement
of November 19, 1941. In connection with these activities, accounts
are kept and various related matters are handled by the Section.
Obligations of foreign governments

Finland exercised its option to postpone payment of amounts
aggregating $845,287.24, payable during the period from June 15,
1941, through December 15, 1942, as provided|under Public Resolution No. 110, approved June 12, 1941. T h e postponed amounts do
not bear interest beyond the dates on which they were originally
payable'. Under date of October 14, 1943, an agreement was executed
between the Minister of Finland and the Secretary of the Treasury
under which the Republic of Finland would undertake to pay to the




REPORT OF THE SECRETARY OF THE TREASURY

161

United States the postponed amounts in twenty equal annuities of
$42,264.36 each, payable in United States dollars in equal semi-annual
installments on. June 15 and December 15 of each calendar year
beginning January 1, 1945, and concluding with the calendar year
beginning January 1, 1964. (See copy of agreement on page 514.)
The United States received during the year payments from the
Government of Finland amounting to $382,360.12 on account of its
indebtedness, $91,353.05 of which applied on principal due and
$291,007.07 on interest due.
The following statement shows the payments due from foreign
governments during the periods July 1 through December 31, 1943,
and January 1 through June 30, 1944.
Amounts due and payable, July 1 through December 31, 1943, and January 1
through June 30, 1944
F u n d i n g agreements
Supplemental
agreements

Country
Principal

Total

Interest
J u l y 1 t h r o u g h D e c e m b e r 31, 1943

B elgium
Czechoslovakia
Estonia
Finland
-- . .
France.
•
G e r m a n y (Austrian indebtednepis).
Great Britain
Greece
..
Hungary
Italy...
-.Latvia...
._
Lithuania..
Poland
.. ..
Rumania
Yugoslavia
..
Total

..

-

.

$161,000.00
84.000:00
42,000,000.00
525,000.00
17,370.00
66,400.00
1, 842, 000. 00

. 44,695, 770.00

$4,158,000.00
2, 293, 742.91
286, 265.00
136, 220.00
38, 522,864.99
'

$13,695.06

117,950,000.00
742,920.00
50, 555.07
2,490,875.00
186,009.00
107, 783. 67
5,424,810.00
907, 559.81
154, 062. 60

75,950,000.00
217, 920.00
33,185.07
2,490,875.00
119, 609.00
107, 783. 67
3, 582, 810. 00
907, 559. 81
154, 062. 50

128, 960,897. 95

$4,168,000.00
2,293, 742:91
447, 266.00
233, 915.06
38,522,864.99

13, 695.06

173,670, 363.01

J a n u a r y 1 throu gh J u n e 30, 1944
Belgium.:
...
. ._
Czechoslovakia..:
Estonia
.. ..
Finland
France.
G e r m a n v ( A u s t r i a n indebtedness) i
Great Britain
Greece
z
Hungary
.,
Italy
-.
Latvia
Lithuania
.
Poland..
Rumania
...
Yugoslavia
Total

1.

$5,000.000.00 • $4,168,000.00
1,296,023.07
2, 293, 742. 90
286. 266.00
134. 750. 00
60,097,093.41
38, 522,865.00
882, 626. 31
75, 950,000.00
533,000.00
217,920.00
33,185.09
2,490,875.00
18,300,000.00
119,609.00
107, 783.69,
58, 740.00
3, 582,810.00
907, 559.81
494,000.00
164,062.60
648,000.00
87, 309,482. 79

128,959,427.99

$13,696.06

$9,168,000.00
3, 689, 765.97
286, 265. 00
148,445.06
98,619, 958.41
882, 626. 31
75,960, 000.00
760, 920.00
33,186.09
20,790 876 00
119, 609.00
166, 523. 69
3, 682,810.00
1,401, 659.81
802,062. 50

13,695.06 1 216,282,606.84

i 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 tp the United States, the accrued
and unpaid interest thereon, and payments on account of principal
^nd interest as of November 15, 1944, appears as table 67 on page 734.
The total amounts previously due from foreign governments on
(»X3.185^45.——12




162

REPORT OF THE SECRETARY OF THE TREASURY

account of their indebtedness to the United States under the funding
and moratorium agreements and not paid as of November 15, 1944,
according to contract terms, are shown in the following statement.
Total aniounts.due and not paid as of November 15, 1944
Funding agreements
Country
Principal
Belgium..
Czechoslovakia
Estonia
...i
France
:
Germany (Austrian indebtedness) »
Great Britain
Greece
Hungary 2.
Italy-.-.
Latvia.
Lithuania
Poland.
Rumania 3
.
Yugoslavia
Total

Interest

Moratorium
agreements
aimuities

Total

$89,094,000.00
4,587,485. 81
6,829,465.00
616,366,839.98

$9, 689,077. 60
3, 666, 255.60
731,705.80
60,937, 694.40

$164,583,077. 60
40, 709,860. 31
9,175,170.81
1, 344,641,698. 21

4, 563,370. 31
407,000,000.00 1,729,349,481.58
4,456,867. 60
11,301,000. 00
693, 766. 29
172,985.00
36,608, 541. 74
180,500,000.00
2, 735, 476. 85
666,600.00
2,415,841. 08
686,445.00
86,476, 610.00
18,975,000.00
9,075, 698.10
13, 609,660. 43
5,551,000.00
1,463,593.78

278,137.84
194,415,301.00
1, 342,747. 60
84, 511. 60
17,923,117. 60
305,486. 20
273,666. 20
9,124,594. 20
975,001.60

4,841, 508.16
2,330,764, 782. 58
17,100, 615.10
961, 262.89
235,031, 659. 34
3,697, 462.05
3, 275, 951. 28
113, 575, 204. 20
•23,560, 160.13
7,014, 593.78

299, 737,195. 24

4, 288,822,996.43

$55,800,000.00
32,466,108.90
1,614,000.01
667, 238, 263.83

1,399,934,233.48

2,689,161, 667. 71

» 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.
2 The Hungarian Government has deposited with the foreign creditors' account at the Hungarian National Bank an a,mount of Hungarian currency equivalent to the interest payments due from December 16,
1932, to June 15,1937. The debt funding and moratorium agreements with Hungary provide for payment
in dollars in the United States.
3 Excludes the amoimt of $100,000 which the Rumam'an Government paid to the United States Treasury
on June 15, 1940, as "a token of its good faith and of its real desire to reach a new agreement" covering
Rumanian indebtedness to the United States.
•.

Receipts from Germany ^

The status of the indebtedness of Germany to the United States as
of June 30, 1944, under the debt funding agreement of June 23, 1930,
covering the costs of the American Army of Occupaition and the
awards of the Mixed Clauns Commission, United States and Germany, is summarized in the following tables.
Amount of indebtedness of Germany to the United States, June 30, 1944
•

Class
Army costs (reichsmarks)
Mixed claims (reichsmarks)

Indebtedness . Total indebtedas funded
ness, June 30,1944
1,048,100,000
2,121,600,000

1,051,173,832. 76
2,200,140,000.00

Principal
997,600,000
2,040,000,000

Total (reichsmarks)
3,169,700,000 2 3,251,313,832.75 3,037,500,000
Total (in dollars, at 40.33 cents to the
reichsmark)
^^
$1,278,340,010 $1,311,254,868.75 $1,225,023,760

Interest accrued
and unpaid
1 53, 673,832. 75
160,140,000.00
213,813,832. 75
$86,231,118. 75

1 Includes interest accrued under unpaid moratorium agreement aimuities.
> •
2 Includes 4,027,611.95 reichsmarks deposited by the German Governnient in the Konversionskasse fiir
Deutsche Auslandsschulden and not paid to the United States in dollars as required by the debt and moratorium agreements.




REPORT OF THE SECRETARY OF TPIE TREASURY

163

Payments received from Germany through June 30, 1944
.

Total payments
received t o
J u n e 30,1944

Class .

A r m y costs (reichsmarks) . --_M i x e d claims (reichsmarks)

P a y m e n t s of
interest

61,456,406. 25
87,210,000.00

-...
-..
•

T o t a l (reichsmarks)
T o t a l (in dollars)

P a y m e n t s of
principal

50,600,000.00
81,600,000.00

866,406. 25
5,610,000.00

138, 666,406. 25
$33,587,809.69

132,200,000.00
$31,639,595.84'

6,466,406. 25
$2,048,213.85

Amounts not paid by Germany according to contract terms, June 30, 1944
F u n d i n g agreement
Moratorium
agreement

Date due
Principal
Sept. 30,1933-----reichsmarks..
122,400,000
M a r . 31, 1934.
do
S e p t . 30,1934
do....
20,400,000
M a r . 31, 1936
.do....
82,900,000
S e p t . 30, 1936-.do....
29,700, 000
29,700,000
M a r . 31, 1936
do....
29,700,000
S e p t . 30, 1936
do.-.29,700,000
M a r . 31, 1937
..do....
28,600,000
S e p t . 30, 1937
•
do..-.
28, 600,000
M a r . 31, 1938
....do.—
Sept. 30, 1938..
..do....
28, 600,000
Mar. 31,1939.......
..do....
28,600,000
Sept. 30, 1939
do....
29,700,000
29,700,000
M a r . 31, 1940.'
do....
Sept. 30, 194.0
.-.do....
29, 700,000
M a r . 31, 1941
:
do....
, 29,700,000
Sept..30,1941
do
33, 060,000
M a r . 31, 1942.
-..do.-'.
33, 050,000
S e p t . 30, 1942
.
do.-..
33, 050,000
M a r . 31, 1943
:
do....
33,050,000
S e p t . 30, 1943. . . . .
do
.
33,060,000
M a r . 31,1944.
do....
33,050,000
Total
do
T o t a l (in dollars, at 40.33 cents to t h e
reichsmark)
l._

Total

Interest
2,498,562. 50
3,855,687. 60
4, 534, 250.00
5, 212,812. 50
6,891, 375. 00
6, 569,937.50
7,248,500.00
7,927,062.60
8,685,687.60
9, 244,312. 60
9,902,937.50
10, 661, 662. 50
11,240,125.00
11,918,687. 50
12, 697,260. 00
13, 275,812. 60
14,015,093.75
14,764,375.00
15, 493, 666. 25
16, 232,937. 50
16,972, 218. 76

1,529,049. 46
1.529.049.45
1.529.049.46
1,529,049. 46
1, 629,049.46
1,629,049. 45
1,529,049. 45
1,629,049.45
1, 629,049. 46
1,629, 049.45
1,529,049.46
1, 529,049.45
1, 629,049.46
1, 629,049.45
1,529,049. 45
1, 629,049. 45
1,529, 049. 45
1,629, 049. 45
1,629,049.45
1,529,049.45

1.4,027,611.95
123,929,049.45
25,784, 736. 95
88,963, 299. 45
36,441,861. 95
37,120,424. 45
37,798,986. 95
38,477,649. 45
38,056,111.96
38, 714,736.95
39, 373,361. 95
40,031,986.95
41,790,611. 95
42, 469,174. 45
43,147, 736. 95
43,826, 299. 45
47,854,861. 95
48, 594,143. 20
49, 333, 424. 45
50,072, 706. 70
49, 282, 937. 60
60,022, 218. 75

776,000, 000

208,532,843. 76

30,680,989.00

1,015,113,832.76

$312,960,800

$84,101,295.88

$12, 333, 312.86

$409, 395, 408. 74

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

Treasury administration of alien and mixed claims

The Settlement of 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 Clainis 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 of 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 1944 an additional payment of
$6,905.38 was made on account of the Class 2 awards of the so-caUed
sabotage claims against Germany. This award plus interest to January 1, 1928, amounts to $3,850.68. This paynient completed the
sabotage payments. The Class 3 claimants received payments aggre-




164

REPORT OF TPIE SECRETARY OF THE TREASURY

gating $21,763,576.77, placing them on the same basis as the Class 3
claimants who received awards prior to October 31, 1939.
Total payments made on the additional sabotage awards through
September 30, 1944, are as follows:
Payments
Awards (plus
interest to
Jan. 1, 1928)

Class

1.— 2_...._

.

3,.-.i

.

.

Total.

Awards (plus
interest to
Jan. 1, 1928)

Interest from
Jan. 1, 1928,
to date of
payment

Total

$72,501. 37
• $72, 501. 37
1, 058, 005. 23 21, 058, 005. 23
30, 598, 657. 59 21, 763, 576. 77

$47,394. 01
691, 293. 74

1 $] 19,895. 38
1, 749, 298. 97
3 21, 763, 576. 77

22,894, 083. 37

738, 687. 76

23,632, 771 12

,31, 729,164.19

J Payments completed prior to Sept. 30, 1941.
2 One award (plus interest to Jan. 1, 1928), amounting to $3,850.68, paid during the fiscal j^ear.
3 Payments completed during 1942.

After the Class 3 additional sabotage claims were satisfied by pay(ment 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 out 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 in the act and the status as of September 30, 1944, of such priorities up to the seventh priority are as
follows:
Priority
No.
1.
2.
3
4
5
6
7

. - .

On account of—

Amount due Sept..
30, 1944

Nationals

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

Held in reserve.
Completed.
$42,830.84.1 •
Completed.
$16,222.48.1
.

--

Completed;.
Do.

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

Up to September 30, 1944, the Treasury has made payments in t h e
aggregate amount of $163,624,321.52 on account of awards of the
Mixed Claims Commission, from which there has been deducted
$818,122.09 representing one-half of 1 percent authorized by the
Settlement of War Claims Act of 1928, making net payments to




REPORT OF T H E SECRETARY OF T H E TREASURY

165

claimants of $162,806,199.43. Of the deductions, $779,505.05 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. The balance of $38,617.04 is payable
to the German Government for defraying such expenses as may be
incurred by that government for the adjudication of claims. On
February 16, 1931, $24,150.09 of this amount was paid to the German
Government.
The following summary shows the number and amount of awards
certified to the Treasury by the Secretary of State, the amount paid
on account, and the balance due thereon as of September 30, 1944.
Further detaUs by classes of awards may be found in table 109, page 833.
Mixed Claims Commission, United States and Germany—Number and amount of
awards, amounts paid, and balance due, certified io ihe Secretary of the Treasury hy
ihe Secretary of State, as of September 30, 1944 ^
Total number of
awards

Awards certified

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

--_

Total amount

7,026

$181, 698, 236.30
187, 226.85
181, 511,008.45
81,465,086.36

Interest to Jan. 1,1928, at rates-specified in awards
Interest thereon to date of payment or, if unpaid Sept. 30, 1944, at 5
percent per annum as specified in the Settlement of War Claims
Act of 1928
Total due claimants

-

112,748,819.62
375, 724,914. 43

.

2. Payment made on account to Sept. 30, 1944:
Principal of awards.
-_
._
Interest to Jan. 1, 1928, at rates specified in awards..
Interest at 6 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, 1944
-_
Less one-half of 1 percent deduction from each payment

6,-67i

2 152, 403,920. 71
8,938,824.97
2, 281, 675.84

/

163,624,321. 62
818,122.09

Net payments made to claimants to Sept. 30,1944 .
3. 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. 30,1944__
Balance due claimants as of Sept. 30, 1944.

162,806,199.43
101,625,804.99
7, 644.14

355

110,467,243.78
'

212,100, 502.91

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. 509.
Payments on this class of awards are first applied on account of the 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 ClUims Arbiter.—Under the Settlement of War Claims Act of
1928, it was the duty of the War Claims Arbiter, within c^rtaui limitations, to hear the clauns 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 useci by the United
States, and a radio station sold to the United States,




166

REPORT OF THE SECRETARY OF THE TREASURY

War Claims Arbiter: Claims of German nationals.—The Treasury
completed up to June 30, 1935, payment of 50 percent of the amount
of all awards made by the War Claims Arbiter hi 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 fa:vor of German nationals certified to the Treas.ury for payment,
the payments made on account, and the balance due thereon as of
September 30, 1944.
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 SO, 1944Total
(315 awards)

Awards certified

1. Amount due on account:
Principal of awards including interest to Jan. 1,
1929
.
.
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. 30,1944

Ships
(27 awards)

m , 738, 320.83 1 $74, 262,933.00

38,837,107. 75

33,096,965.60

125, 676, 428. 68 107, 349,898. 60

Total d|7fi nlfiiTTiftnts,

J*ayments made on account to Sept. 30, 1944:
• 43, 368, 899. 24 37,126, 206. 21
Principal of awards..:
1--.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, 1944---.
Total paymeiits to Sept. 30,1944

-...

3. Balance due on account:
Principal of awards..
.
Interest accrued at 5 percent per aimum from
Jan. 1, 1929, on total amount payable as of Jan.
1, 1929, or on the principal amount remaining
unpaid to Sept. 30,1944
Ralanne due claimants

Patents and
radio station
(288 awards)

$12, 485, 387.83

5, 740,142.16
18,226,629.98
6,242,694.03

43, 368, 899. 24

37,126, 205. 21

6, 242, 694. 03

43,369,421.69

37,126, 727.79

6, 242, 693.80

38,837,107.75

33, 096,965.60

5,740,142.15

82, 206,629.34

70, 223, 693. 39

11,982,835.95

1 Includes awards amounting to $622.58 to members of the former ruling family of Germany (sec. 3 (j),
Settlement of War Claims A ct 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
thereon at 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, 1944, and the balance
held in the account.




REPORT OF THE SECRETARY OF THE TREASURY

167

Funds deposited in the German special deposit account and payments made therefrom
through September 30, 1944
RECEIPTS

From investments by Alien Property Custodian under
Trading With the Enemy Act, as amended:
Unallocated interest fund.$25,000,000.00
Less refunds..-.
.
4,138,793.03
, 20 percent German property retained
Earnings on 20 percent German property retained -

20,861,206.97
34,347,476.76
6, 722,003.96

From Germany:
2]4. 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.L
1,743, 738.70

$60,930,687.69
.

,

53,396,763.57
Appropriation for ships, patents, and radio station
86,738,320.83
Expenses of administration, War Claims Arbiter, on
account of German nationals
113,624.20
^
86,851,945.03
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.:
137,268.13
German nationals
440,059.92
577,328.05
E amings and profits on investments by Secretary of the Treasury
5,632,094.28
Total receipts

$207,388,818.62
PAYMENTS ON ACCOUNT

Awards ofthe Mixed Claims Commission:
Under agreement of Aug. 10,1922
Under agreement of Dec. 31,1928...
Private Law No. 509

-.

J

154,957,135.69
7,684,835.94
164,227.80

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

162,806,199.43

37,126,205.21
^
6,242,694.03
-—:
43,368,899.24
One-half,of 1 percent deducted from Mixed Claims payments covered into
Treasury
1
•
778,679.79
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 ($14,466.96 withheld but not paid)
24,150.09
One-half of 1 percent deducted on account Of Private Law No. 509 withheld
and covered into the Treasury..
825.26
Advances to special fund, expenses of administration of the Settlement of
War Claims Act of 1928 (Office of the Secretary of the Treasury)
64,176.00
Expenses of administration, War Claims Arbiter account of (German nationals...,.
-...
-..
113,624. 20.
Total payments....
Cash balance in German special deposit account

207,166,663.01
,

232,265.61

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 1944 no payments were made on account of such awards.
As of June 30, 1944, awards aggregatiug $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 from funds




168

REPORT OF THE SECRETARY OF THE TREASURY

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 1944 a pro rata payinent
was authorized to be made to the ^ claimants by the Treasury from
funds amounting to $100,000 available for that purpose. The
check covering the final payment of $99,338.09 due June 20, 1944,
was received on July 1, 1944, and is available for distribution to
claimants.
Statements of awards made hy Special Claims Commission, United States and
Turkey, as of June 30, 1944
Amount awarded to claimants:
Amount of claims..
Interest allowed

.— - - .

$539,844.13
359,493. 96

.'
I

.

Total
.
Less deductions on account of expenses incurred by the United States
Amount of awards

899,338.09
70,891.06
. . . $828,447.03

. Amount received from Republic of Turkey through June 30,1943
Amount due from Republic of Turkey: Final installment due June 20, 1944, received by Treasury J u l y l , 1944
.
Total
Less reimbursement for expenses by the United States
Available for payment to claimants.
Amount paid to claimants:
Through June 30, 1943
.
During fiscal year 1944
Total--

800,000.00
99,338.09
899,338.09
70,891.06

J.

828,447.03

.---.

.---

_

Balance due claimants for which vouchers have not been received

--

612,974.60
92,208.67
-.-_-

- 705,183.27
.

123,263. 76

Claims of American nationals against Mexico

Under the convention between the United States and Mexico
dated AprU 24, 1934, covering the settlement of the claims presented
by the Government of the United States to the Commission established by the Special Claims Convention concluded September 10,
1923, the^ aniount to be paid 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 Claims 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 a,ggregated $5,210,108.92.
The expenses of the Commission were determined to be $241,549.31,
and° this amount was transferred to miscellaneous receipts on December 4, 1940.
As of June 30, 1944, there had been received and made available
for distribution to claimants the sum of $4,954,552.19, Amounts
aggregating 95.09 percent of the final awards of $5,210,108.92 have
been authorized to be distributed to the claimants.




REPORT OF THE . SECRETARY OF THE TREASURY

169

Statement of awards made by Special Mexican Claims • Commission, United States
and Mexico, as of June 30, 1944
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:
• Through June 30, 1943, $4,500,000 principal and $186,621.30 interest
•
Jan. 6, 1944, $500,000 principal and $9,480.20 interest.

$4,686,621.30
509,480.20

Total through .Tune 30, 1944.-1
.-.-..
6,196,101.50
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
Fiscal year 1940Fiscal year 1941.
Fiscal year 1942
Fiscal year 1943
...-Fiscalyear 1944
,

-

-..-

:

:

Total to June 30, 1944.....
Balance due claimants:
For which vouchers have not been received..'
For subsequent distribution
.

...,

4,954,552.19

2,087,193.47
678,717.90
537,124.66
516,380.29
505,672.15
484,399.06
4,809,487.43
144,805.15
259.61
:

146j.064.76

Settlement of Mexican Claims Act of 194^

Under the convention between the United States and Mexico dated
November 19, 1941, the Government of the United Mexican States
agreed to pay, and the Government of the United States agreed to
accept, the sum of $40,000,000 in United States currency as the balance
due from the Government of the United Mexican States in full settlement, liquidation, and satisfaction of the following claims:
(a) All claims filed by the Governments of the United States and the
United Mexican States with the General Claims Commission, established by the two countries, pursuant to the convention signed
September 8, 1923;
(b) All agrarian claims of nationals of the United States of America
against the Government of the United Mexican States, which arose
subsequent to August 30, 1927, and prior to October 7, 1940, including
those referred to in the agreement effected by the exchange of notes
signed by the Government of the United States and the Government of
the United Mexican States on November 9 and 12, 1938, respectively;
iand
(c) All other claims of nationals of either country, which arose
subsequent to January 1,1927, and prior to October 7, 1940, and
involving international responsibility of either Government toward
the other Government as a consequence of damage to or loss oi*
destruction of or wrongful interference with the property of the
nationals of either country.
Under Article IV of the agreement it is provided that there is
credited against the sum of $40,000,000 the sum of $3,000,000 representing the aggregate payments made, prior to the signing of the
agreement, pursuant to the agreement in relation to agrarian claims,
effected by the exchange of notes signed November 9 and 12, 1938.
There shall also be credited the additional sum c)f $3,000,000 which
will be paid on the date of the exchange of ratification of the agreement
signed November 19, 1941.
The balance of $34,000,000 is to be paid in annual installments of
$2,500,000 beginning one year after the date 'of the signing of the
agreement, until the complete liquidation of the debt. The Govern


I

170

REPORT OF THE SECRETARY OF THE TREASURY

ment of the United Mexican States may, in its discretion, for the purpose of reducing the period for complete liquidation of the balance due,
increase the amount of any of the annual installments, or pay any such
installment or installments in advance.
The agreement was ratified by the Senate of the United States on o January 29, 1942, signed by the President of the United States on
February 10, 1942, and ratified by the Mexican Government on
February 12, 1942; ratifications were exchanged, at Washington
on April 2, 1942, and the agreement was proclaimed by the President
of the United States on AprU 9, 1942.
To provide for the settlement of the claims covered by the agreement of November 19, 1941, Congress passed the ^'Settlement of
Mexican Claims Act of 1942,'' approved December 18, 1942. Under
section 8 of this act there was created in the Treasury a special fund
known as the Mexican claims fund. The Secretary of the Treasury
is authorized and directed to cover into the fund (1) the sum of
$3,000,000 representing the total amount of payments heretofore
made by the Government of Mexico under the agrarian claims agreement of 1938, (2) the sum of $3,000,000 which was paid by the Government of Mexico upon exchange of ratifications of the agreement of
November 19, 1941, (3) such other sums as are paid by the Government of Mexico pursuant to the agreement of November 19, 1941,
and (4) the sum of $533,658.95 representing the total amount of
awards and appraisals, plus interest, made with respect to the claims
on behalf of Mexican nationals against the Government of the United
States which were filed with the General Claims Commission.
The amounts covered into the Mexican claims fund as of June 30,
1944, are as follows:
Amount
Under the agrarian claims agreement of 1938
-...
:
$3,000,000.00
Paid on exchange of ratifications ofthe agreement
3,000,000.00
Annual installments due from Government of Mexico through November 1943
-6,000,000.00
Appropriated by the Government of the United States coyering amount of awards and
appraisals made on behalf of Mexican nationals
---633,668.95
Total..---.--.

-

-

-

. - 11,533,668.95

The Settlement of Mexican Claims Act of 1942 makes no provisions
for payment to Mexican nationals out of the Mexican claims fund
as the Government of Mexico agreed to pay its own nationals the
amount of $533,658.95 on account of awards or appraisals made on
their behalf.
Under date of December 28, 1942, the Secretary of State certified
to the Secretary of the Treasury for payment under section 6 (b) the
awards and appraisals made in favor of American nationals and during
the, fiscal year the American Mexican Claims Commission certified
for payment decisions made under the provisions of sections 4 (b) and
4 (c) of the act, as follows:
Secretary of state:
Amount
Decisions rendered b y t h e General Claims Commission
$201,461.08
Appraisals agreed upon by the Commissioners designated by Governments of the United '
States and Mexico, respectively, pursuant to the general claims protocol between the
United States and Mexico signed April 24', 1934
2,699,166.10 ,
Total
-„---„LAmerican Mexican Claims Commission:
Decisions under the provisions of sections 4 (b) and4 (c) of the act

-..

Grand total




2,800,627.18
24,536,086.51
27,336.712.69

I

REPORT OF TPIE SECRETARY OF THE TREASURY

171

In accordance with the provisions of section 8 (c) of the Settlement
of Mexican Claims Act of 1942 the Secretary of the Treasury authorized a distribution of 30 percent of the above awards and appraisals
certified for payment.
The following statement shows the status of the Mexican claims
fund as of June 30, 1944.
Credits:
• Amount'
Payments received from Government of Mexico under agreement of November 19,1941.. $11,000,000.00
Appropriation made by Government of the United States on account of awards and
appraisals made on behalf of Mexican nationals
.
633, 658.95
Total
^
Amount paid to American claimants during the fiscal year 1943
Amount paid to American claimants during the fiscal year 1944
, .
Balance in fund June 30, 1944

'

Assets—unexpended balances June 30,1944:
To credit ofdisbursing oflacer-On books of Division of Bookkeeping and Warrants
Total fund assets'June 30,1944----

.

_

-

$637,036. 24
6,333,636.13
'..

11,633,658.95
6,970,672.37
4,562,986.68

-

-.

—-

2,062,654.00
2,500,332.68

,

--

4,562,986.58

The priorities established in the act and the status as of June 30,
1944, are as follows:
Priority No. 1—Section 8 (c) of act:
30 percent of awards and appraisals certified pursuant to sections 4 (b), 4 (c), and 6 (b) of
act'
Certified as of June 30,1944, $27,336,712.69
'.
.
_-...-Certified subsequent to June 30, 1944, $1,170,959.82
.
Total required to pay Priority No. 1..
.Less payments through June 30,1944__.^
Balance payable on Priority No. 1
Priority No. 2—Section 8 (d) of act:
Amount available as of June 30, 1944, for payment on awards which American Mexican
Claims Commission may certify pursuant to section 5 (d) of act
-_'..
Unexpended balance June 30,1944---'

-

Amount
$8,201,013.81
361,287.95
8, 552, 30L 76
6,970,672.37
1, 581, 629. 39
2,981, 357.19
4,562,986.68

Claims of American nationals against Mexico-^Expropriation of petroleum
properties

'

Under date of November 19, 1941, the Governments of the United
States and Mexico entered into an agreement making provision for
determining the amount due to the American companies and interests
whose properties and rights had been affected to their detriment by
acts of the Mexican Government through acts of expropriation or
otherwise on March 18, 1938, and subsequent thereto excepting those
which had already made separate arrangements w;ith the Mexican
Government. Under this agreement the two Governments each
appointed an expert whose duty it was to determine the just compensation to be paid the American owners for their properties and rights
and interests. The compensation found to be due to the affected
United States nationals was tc) be completed within a period of not
more than 7 years. A deposit of $9,000,000 was made and held in a
suspense account to be applied on account of the compensation
determined to be due.
In accordance with the joint report submitted by the experts
designated by the respective Governments, the Government of
Mexico entered into a further agreement under which it agreed to
pay to the Government of the United States the sum of $23,995,991,




172

REPORT OF THiE SECRJETARY OF T H E TREASURY

United States currency, plus interest at 3 percent from March 18,
1938. The total amount due as of September 30, 1943, was as follows:
Principal
-..
.
.
Interest at 3 percent from Mar. 18, 1938, through Sept. 30,1943
Less deposit dated Feb. 10, 1942

$23,995,991.00
3,985,964.20
27,981,955.20
9,000,000.00

Balance due Sept. 30, 1943

18,981,955.20

The application to principal and interest, of the payments made
through September 30, 1943, and of the payments to be made thereafter is shown in the following table.
Applied on
Balance of
principal v

Amount paid
Interest

Principal
$23, 995,991.00

F e b . 10, 1942
S e p t . 30, 1943
Sept.
Sept.
Sept.
Sept.

30,
30,
30,
30,

'

1944
1945 1946
1947-

Total

.

-

$9,000,000.00
3,796,391.04
12, 796, 391.04
4, 085, 327.45
4,086, 327.45
4, 085, 327.45
4,085, 327.45

$3,985,964.20
455, 566.92
346, 674.10
234, 514. 50
118, 990.12

$8,810,426. 84
3, 629, 760. 53
3, 738, 653. 35
3,850, 812.95
3,966,337. 33

29,137,700.84

5,141, 709.84

15,185, 564.16
11, 555, 803. 63
7, 817,150. 28
3, 966, 337. 33

23,995,991.00

Under the provisions of the act of February 27, 1896 (29 Stat. 32),
the Secretary of State has certified to the Secretary of the Treasury
for payment the claims of eleven companies aggregating $23,104,731,
The claims of two companies aggregating $891,260 have not yet been
certified for payment.
The status of the account of the Mexican Government as of June
30, 1944, was as"follows:
-\mount payable
Less amount paid to June 30, 1944
Balance.due

:
-

Principal
$23,996,991.00
8,810,426.84

Interest
$5,141,709.84
3,985,964.20

Total
$29,137,700.84
12,796,391.04

16,186,564.16

1,156,745.64

16,341,319.80

The following statement shows the amounts paid to the claimants
as of June 30, 1944:
Amount received from G overnment of Mexico Amount paid claimants
Balance due claimants

$8, 810,426.84
8,483,189.64
327,237.20

$3,985,964.20
3,837,917.37
148,046.83

$12,796,391.04
12,321,107.01
475,284.03

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 $1,334,091.68.
The following statement shows the total amount of raUroad obligations, by classes, originally held by the United States Governinent
(exclusive of certain miscellaneous obligations acquired by the Director
General of RaUroads), the amount held .on June 30, 1944, and payments received on account.




REPORT OP THE SECRETARY OF THE TREASTJRY

173

Summary of railroad ohligatio'ns held by the Government as of June 80, 1944, by
classes
Principal
Principal amount amount held
originally held
June 30, 1944

Class

Transportation Act:
Sec. 207
-.
-Sec. 210..
Federal Control Act:
E quipment trust notes.
Sec. 7
Sec. 12
._.
Total— -

. .

Total payments received
Principal

Interest

$282, 712, 837. 36 $6,007,000.00 1 $277, 695,167. 90 $54, 373,134.70
290,800, 667. 00 2 23, 690, 977. 23 2 266, 599,186. 68 93, 829, 939. 96
346, 556, 750.00
98,401,766.00
62,103, 453. 28
1, 080, 675, 462. 64

346, 656, 750. 00 45, 338, 918. 26
98, 401, 766.00
23,100, 662. 27
62,103, 453. 28 . 4,248,171.96
28, 697, 977. 23 . 1, 051, 366, 312. 86 220, 890,727.14

* stock of the Kansas, Oklahoma & Gulf Ry. Co. in the face amount of $212,500 was sold on the market
for $201,830.64, 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 ofwhich have been completely liquidated
and were insufficient to meet such claims.
^
3 Notes of Wichita Northwestern Ry. Co., Virginia Blue Ridge Ry., and Wilmington, Brunswick &
Southern R. R. Co. were sold pursuant to the provisions of act of Aug. 13,1940, for $67,246.91, resulting in a
difference of $510,503.09 between the receipt's 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
of 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
fiscal year as no appropriation was avaUable for payment of any
amounts certified for payment. Since June 30, 1944, qne claim has
been received amounting to $21,296.92, for which there is no appropriation.
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
Kepeal Act of 1934 repealed the indefinite appropriation made fpr
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 clainis aggregating $167,529.85 were paid during the fiscal
year 1942. Claims certified to the Secretary of the Treasury during
the fiscal year 1943 aggregating $22,139.11 and one claim amounting to
$17,072.73 which was outstanding in the fiscal year 1942 were paid
during the fiscal year 1943. In the Treasury and Post Office Departnients Appropriation Act, 1943, approved March 10, 1942 (Public
Law 495), $600,000 of the unexpended balance was made available
until June 30, 1943. The total payments under this section aggregated $11,174,543.49 as of the end of the fiscal year.
Section 207, Transportation Act, 1920, as amended.—The following
statement shows the amount of obligations of carriers acquired under
section 207 and held on June 30^ 1944.




' 174

REPORT OF THE SECRETARY OF THE TREASURY

Obligations acquired under the provisions of section 207 of the Transportation Act,
1920, and held as of June 30, 1944

Carrier

Principal
amount of
promissory Collateral,
note or of
face
directly
amount
held
security

Chicago, Milwaukee, St. $3, 207,000
(0
Paul & Pacific R. R. Co.
Minneapolis & St. Louis 1, 260,000 $1, 500,000
R. R. Co.
60,000

Total .

75,000

•500,000

Washington, Brandywine
& Pomt Lookout R. R.
Co.
Waterloo, Ceddr Falls &
Northern Ry. Co.

626,000

Principal
in default

Class of collateral or of
directly held security

Interest in
default

5% noncumulative preferred
stock of carrier.
Refunding and extension $1, 250,000 $1, 350, 000.00
mortgage, 6% bonds of
carrier.
First mortgage, 6% bonds of
2 50, 000 2 28, 408.98
carrier.

5,007,000

500,000

604, 931. 50

1,800,000

Temporary general mortgage, 7% bonds of caiTier.

1, 983, 340. 48

J Securities directly held.
2 Pursuant to Private Law 162, approved Dec. 17, 1943, the Secretary of the Treasury is authorized and
directed to accept the sum of $50,000 in full settlement and discharge of the indebtedness, including interest.

Section 210, Transportation Act, 1920, as amended.—This section
established a revolving fund of $300,0.00,000 to be used for loans to
raUroads 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 RaUroads. 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, 1944.
Total loans (including renewal loans and repayments thereof
aggregating $59,800,000) to June 30, 1944, amounted to $350,600,667;
repayments amounted to $326,399,186.68, and losses on sales under
the act of August 13, 1940, aggregating $510,503.09 reduced the loans
outstanding as of that date to $23,690,977.23.
The following statement shows the amount of obligations held on
June 30, 1944, on account of loans to carriers under section 210, and
the amount of principal and interest in default.
Obligations held on June 30, 1944, on account of loans to carriers under section 210
of the Transportation Act, 1920, as amended, and the amount of principal and
interest in default
Carrier

Loans outstanding

Alabama, Tennessee & Northern R, R. Corporation
Des Moines & Central Iowa R. R. Co. (formerly the InterUrban Ry. Co.)
----.,
Fort Dodge, Des Moines & Southern R. R. Co
Gainesville & Northwestern R.,R. C o - - .
Georgia & Florida Ry. (receiver)
-Minneapolis & St. Louis R. R. Co
Missouri & North Arkansas Ry. Co
.---._..
Salt Lake & Utah R. R. Co
_
Seaboard Air Line Ry. Co
J
Seaboard-Bay Line Co
Virginia Southern R. R. Co
Waterloo, Cedar Falls. & Northern Ry. Co--

$151, 500.00

Total

—-

-

Principal in
default
$151, 500. 00

Interest in
default
$95,445. 00

633, 500. 00
633, 500.00
596, 661. 34
200, 000.00
200, 000. 00
175, 000. 00
792, 000. 00
792, 000.00
689,040. 00
1, 382, 000.00 1, 382,000. 00
13,500, 000. 00
1872, 600.00
14, 438,^27.01 14,438,827.01
9,427, 003.45
347, 560.22
347, 650. 22
000.00
1, 260, 000. 00 1, 260, 000. 00 'i,'648,'466."7i

-23,

977.23 19,205,377.23

12,456,605.60

* Assets of these carriers have been completely liquidated, and were insufficient to meet these claims.




175

REPORT OF THE SECRETARY OF THE TREASURY
Federal control of railroads

Administration.^—The Treasury continued during the fiscal year
1944 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.
Finances.-—Total receipts on account of the Federal, control of railroads for the fiscal year 1944 were $13,188.30, and expenditures were
$7,970.40, resulting in netreceipts of $5,217.90, as compared with net
receipts, of $753.82 for 1943.
At the close of business on June 30, 1944, the cash and appropriation balance aggregated $41,349.70 as compared with $36,131.80 at
th^e close of 1943.
A statement of receipts and expenditures follows.
Receipts and expenditures in connection with Federal control of railroads, fiscal years
1943 and 1944

(

1943

1944

Balances at beginning of year:
Secretary of the Treasury, special deposit account... $30,236.44
Unrequisitioned appropriation balances:
Federal control of transportation systems
385,141.64
Total balances

Receipts:
Collections of intere.st on obligations of carriers
Victory tax withheld from Federal employees,
Treasury Department
'--.Federal tax withheld from salaries of Federal employees,^ Treasury Department
Collection of miscellaneous claims referred to Washington from field, including transportation
charges, undercharges, etc - -

6,145. 70
$415,377.98

$36,131.80
12,795.00

38.48

3.20
38.00
352.10

3,790.31
3,828. 79

Total balances and receipts
Expenditures:
Employees' compensation liability awards..
Deposit with the Workmen's Compensation Board
of Ontario, account of compensation liability
Claims for unpaid wages, back-pay awards, and
Liberty bond subscription refunds.- .
Payments to collector of internal revenue of Victory
tax withheld from Federal employees. Treasury
Department
..
Payments to collector of internal revenue of Federal
tax withheld from salaries of Federal employees.
Treasury Department
Administrative expenses (pay rolls)
.._
Total expenditures
.-Transfers from appropriation account to surplus fund .
Balances at end of year: '
Secretary of the Treasury, special deposit account-Federal control of transportation systems
....
:._.

.

Total expenditures and balances

13,188.30

419, 206.77

Total receipts

Total balances

$30,986.10

49, 320.10
784. 27

786.42

5,117.84
212. 65

33.50

19. 28

22.40
32.30,
1, 980. 09

2, 056. 72
3, 074.97
380,000.00
30,986.10
6,145.70

7, 970. 40
23,409.00'
17,940.70

36,13L80

41, 349.70

419, 206.77

49,320.10

Securities, etc.—No collections were made since November 24, 1936,
on account of the obligations of carriers acquired under section 207 of
the Transportation Act, 1920, as amended, which are listed on page 174.
Claims.—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




176

REPORT OF TI-IE SECRETARY OF TPIE TREASURY

payments on account of allowed claims of this character amounted to
$33.50 during the year.
Compensation payments—United States railroad employees.—^Ex-,
penditures on account of the compensation award of a raUroad employee residing in the United States amounted to $784.27 during the
year.
Canadian Wo7'kmen^s Compensation Board.—The Canadian Workmen's Compensation Board, located at Toronto, Canada, has jurisdiction over certain cases of disabUity resulting from accidents during
the period of Federal control on those railroads having lines extending
into Canada. Payments under Canadian compensation awards, made
from funds so deposited with the Board, amounted to $2,605.00 during
the calendar year 1943. Interest amounting to $1,360.36 was added
to the fund, leaving a balance of $28,928.87 to cover awards as of
December 31, 1943. The figures showing the balance-as of June 30,
1944, are not available inasmuch as the Board's reports are on a
calendar year basis. However, the status of the fund (in Canadian
-dollars) as of December 31, 1943, was as follows:
Balance Dec. 31, 1942
.Payments from Treasury
:
Interest Jan. 1, 1943, through Dec. 31, 1943
Total
Payments of awards by Board during 1943
Balance Dec. 31,1943

-

.L

1

-

'
^

-_

:..

$27,319.70 '
2,853.81
1,360.36

.-

.—.--._

-

. 31,533.87
2,605.00
28,928.87

Tax rejunds and other collections.—Under 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. No adjustments of these claims were made during the fiscal year. Further
claims for such paid taxes amounting to $438,770.84 are still pending
before the Board of Tax Appeals (now The Tax Court of the United
States).
'
.
All unpaid judgments which have not expired by reason of the
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 $49 during 1943 and $100
during 1944.
Federal Farm Mortgage Corporation

Under section 32 of the Emergency Farm Mortgage Act of 1933,
approved M a y 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.




REPORT OP THE SECRETARY OF THE TREASURY

177

A statement of the amounts appropriated and payments to the
Federal Farm Mortgage Corporation follows.
Appropriations on account of reductions i n interest rate on mortgages, and payments
io the Federal F a r m Mortgage Corporation for this purpose, fiscal years 1938
through 1944
Amounts appropriated:
Through June 30, 1943
,
Treasury Department Appropriation Act, 1944, approved June 30, 1943
Total through June 30, 1944
.
Payments to Federal Farm Mortgage Corporation: i
Through June 30, 1943
.1
Fiscal year 1944
.

_

:

$51,725,000.00
7,400,000.00
.59,125, 000.00

— $48,433,786.26
7, 215,126. 54

Total through June 30, 1944
Transfers from appropriation account to surplus fund

56, 648,912.80
1,142,888.06

Unexpended appropriations, June 30, 1944
1 On basis of daily Treasury statements.

-_-.

56,791,800.86
2,333,199.14

Federal land'banks

Capital Stock.—IJndeT 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
the 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 the Farm Credit Adininistration, be paid off at par
and retired in whole or in part and that the Farm Credit Administration may at any time rec[uire such stock to be paid off at par
and retired in whole or in part if, in 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 available for the purpose of paying for other
stock thereafter issued pursuant to said act.
To enable the Secretary of the Treasury to pay for said stock,
$125,000,000 was appropriated under the act approved February 2,
1932. During the year no stock was subscribed for by the Secretary.
The following statement shows the shares that were repaid during the
year and the amount held by the Secretary on June 30, 1944.
Subscriptions to stock of Federal land banks held hy the Secretary of ihe Treasury and
repayments thereon during the fiscal year 1944
[Par value of shares]
Shares held
J u n e 30,
1943

Federal l a n d b a n k

B altimore
Columbia
St. P a u l .
Wichita
Omaha . -.
Spokane
Total

- •

."
-

.
.

-

-

.
-

.-

-

....
-.-

Shares repaid
fiscal year
1944 1

Shares held
J u n e 30,
19442

$1,637, 380
1, 487, 355
115,176,055
1, 085,095
1,038, 850
1, 054,150

$23, 900.00
34 135.00
42, 555.00
53 110.00
139, 985.00
1,054,150.00

$1, 613, '180.00
1,453, 220.00
115,133, 500. 00
1,031,985.00
898,865.00

121,478,885

1, 347 835. 00

120,131,050.00

•' On basis of daily Treasury statements.
2 The Federal land banks of Springfield, Louisville, New Orleans, St. Louis, Houston, Spokane, and
Berkeley had no outstanding capital stock held by the Secretary of the.Treasury as of June 30, 1944.
613185—4.5

13




178

REPORT OF THE SECRETARY OF THE TREASURY

Payments on 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 banlis have been reduced pursuant to the Federal Farm
Loan Act, as amended, and he also subscribes, under' specified condition's and in the manner prescribed by the Federal Farm Loan Act, as
amended, to the paid-in sm^plus of each Federal land bank an amount
equal to the amount of all extensions and deferments of any obligation
that may be or may become 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 banlvs 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 niay 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 Jto 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, 1944, of the amounts appropriated on
account of reductions.in interest rates on mortgages ,and of payments
to Federal land banks for this purpose is here set forth.
Appropriations on account of reductions in interest rates on mortgages and payments
to Federal land banks for this purpose through June 30, 1944
1. Amounts appropriated:
'
•
Through June 30, 1943..
•
_
Treasury Department Appropriation Act, 194.4, approved June30,1943..
. Total through June 30, 1944
2. Payments to Federal land banks:

-.-....:

A m o u n t paid.
t h r o u g h J u n e 30,
1943

Fe.deral land b a n k

Springfield
Baltimore.Columbia
Louisville
N e w Orleans
St. L o u i s . — i .
St. P a u l
Wichita
Houston.
Berkelej''.
Oinaha
Spokane

... . . . .
..

.

. 1 .

.'.

i
- _

•
.
'

_---

Toial

..'.

-

282,667,000.00

A m o u n t paid
fiscal year 1944 i

A m o u n t paid
t h r o u g h J u n e 30.
1944

$9, 289, 322. 53
10, 957, 728. 69
10. 318, 870.11
25, 208, 631. 86
13,183, 052. 39
22, 284, 582.63
36, 454, 974. 25
20, 367, 547. 32
28, 623,115. 54
14, 974, 273. 74
44, 476, 826. 01
15.504,031.41

. $852, 440. 50889, 861. 91
800, 425. 95
1. 846, 867. 73
976, 809. 24
1,809,583.30
3,492, 341.45
1, 652, 416. 47
2, 315, 936. 23
1, 258, 892.17
4, 089, 802. 68
1, 250. 999. 20

$10,141, 763. 03
11, 847, 590. 60
11,119,296.06
27,056, 499. 59
14,1.59,861.63
24, 094.165. 93
39, 947, 315. 70
22, 019, 963. 79
30, 939, 051. 77
16, 233,165. 91
48, 566, 628. 69
16, 755, 030; 61

251, 642, 966. 48

21, 236, 376.83

272, 879, 333. 31

3. Transfers from appropriation account to surplus fund.
4. Unexpended appropriations, June 30, 1944..
1 On basis of daily Treasury statements.




.-- $260,867,000.00
. 21,800,000.00

$3,016,755.22
, 6,770,911.47

REPORT OF THE SECRETARY OF THE TREASURY.

179

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, 1944, 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.
Appropriations for subscriptions to ihe paid-in surplus of Federal land banks on
accouni of extensions and deferments, and payments for this purpose to June 30,
1944
1. Amountsapp'ropriat'ed through June 30,1944.2. Payments to Federal land banks:
Federal land bank
Springfield
Baltimore
Columbia
New OrleansSt. Louis
St. Paul
Wichita
Berkeley.'
Omaha.
Spokane

- $189,000,000.00
^
Amount paid
through
June 30, 1943.
$7,317, 138.66
4,190, 251. 29
9,136, 953. 42
8,175, 685. 41
10,813, 256. 67
36, 220, 901.16
16, 850, 213.90
3, 950, 945. 65
30,740, 238. 50
14, 222, 384: 78

Total.

141, 617,869. 23

Net amount paid
fiscal year 1944 i

Amount paid
through
June 30, 1944

2 6, 000, 000. 00

317,138.66
190, 261. 29
136, 953. 42
961, 000. 00
813, 256. 67
924, 408. 39
850, 213.90
950, 945. 65
740, 238. 50
222, 384. 78

2 6, 521, 078.17

136, 096, 791.06

« $2, 224, 585.41
'703," 507.'24'

3. Unexpended appropriations, June 30, 1944
1 On basis of daily Treasury statements.
2 Excess of repayments (deduct).

$53,903,208.94

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 on
behalf of the United States to subscribe for preferred shares and fuUpaid income shares in Federal savings and loan associations upon
request of the Federal Home Loan Bank Board. An 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 1944 the sum of $6,757,200 was received on
account of shares repaid, making the total shares repaid to June 30^
1944, $44,573,200.
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
1944.




180

REPORT OF T H E SECRETARY OF T H E TREASURY

Preferred and full-paid income shares of Federal savings and loan associations subscribed by the Secretary of the . Treasury through J u n e 30, 1944, (^'^d dividends
received
[Par value of shares]
Preferred
shares
T o t a l shares subscribed and p a i d

Full-paid income shares

$637,800

Total

$48, 662, 200'

11,484,000.00
6, 757. 200. 00

4, 726, 800

Shares held on J u n e 30, 1944.
D i v i d e n d s received on preferred a n d full-paid
shares:
T h r o u g h J u n e 30, 1943 .
D u r i n g 1944
.--.

$49, 300. 000. 00

11, 484, 000
6, 757, 200

Shares held on J u n e 30, 1943
Less shares repaid d u r i n g 1944

4, 726, 800. 00

income
10, 121, 257. 47
234, 512. 98

T h r o u g h J u n e 30, 1944

10, 355, 770. 45

Undelivered war savings bonds and cash received from war contractors

In connection with the operation of the payroll savings system for
the purchase of war savings bonds by employees of private contractors
performing work for the Government under cost-plus-a-fixed-fee contracts, arrangements have been made for the safekeeping by the
Treasury Department of undelivered bonds and unclaimed payroll
deductions. These bonds and funds, which belong to persons whose
whereabouts are unknown, are received by the Treasury through the
various departments and establishments having jurisdiction over
the contracts. The bonds and funds are held subject to reclaim by
employees upon proper identification. These arrangements have
been made with the War Department, Navy Department, United
States Maritime Commission, Defense Plant Corporation, and the
Federal Public Housing Authority. The unclaimed bonds and funds
received and returned as of June 30, 1944, are set forth in the table
following.
Cash
Number
Received
Returned

Amount

Bonds
Number

Amount

..
.-

B alance

14,064
407

$56, 288. 84
4, 741. 33

966
86

$28, 402. 00
2, 200. 35

13,657

.

51. 547. 51

880

26, 201. 65

• Trust and special funds invested by the Treasury Department

Under various provisions of law creating trust and special furids,
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 current withdrawals. The following statement shows the
amount of Government and other securities held in these funds at
the close of the fiscal year. Further details on each of these funds
are shown in the tables beginning on page 736.




REPORT OF THE SECRETARY OF TPIE TREASURY

181

Securities held as investments in trust and special funds, at par value, J u n e 30, 1944
[In t h o u s a n d s of dollars]
Government
securities

Fund
Ad.iusted service certificate f u n d .
A i n s w o r t h L i b r a r y fund, W a l t e r R e e d General H o s p i t a l . .
Alaska R a i l r o a d r e t i r e m e n t a n d disability f u n d . C a n a l Zone r e t i r e m e n t a n d disability fund
1
_.
Civil service r e t i r e m e n t a n d disability fund
D i s t r i c t of C o l u m b i a teachers' r e t i r e m e n t fund
D i s t r i c t of C o l u m b i a w a t e r fund
D i s t r i c t of C o l u m b i a w o r k m e n ' s c o m p e n s a t i o n fund
•Federal old-age a n d survivors i n s u r a n c e t r u s t fund
'..
Foreign service r e t i r e m e n t a n d disability fund
L i b r a r y of Congress t r u s t fund
L o n g s h o r e m e n ' s a n d h a r b o r w o r k e r s ' c o m p e n s a t i o n fund-.
N a t i o n a l I n s t i t u t e of H e a l t h gift fund
N a t i o n a l p a r l ^ t r u s t fund
.-..
N a t i o n a l service life i n s u r a n c e fund
P e r s h i n g H a l l M e m o r i a l fund
Railroad retirement a c c o u n t . - .
U n e m p l o y m e n t t r u s t fund
U . S. G o v e r n m e n t life insurance fund
U . S. N a v a l A c a d e m y general gift fund
Total-

16,890
10
1,755
9,187
, 450, 913
10, 480
1,773
44
I, 408,834
7,012
254
79
18
213, 425
191
318, 500
870, 000
054, 093
85
15, 363, 543

Other
securities

253

13, 880
14, 313

Total
16,890
10
1,755
9,187
1,4150,913
10, 733
1,773
44
5, 408,834
7,012
180
254
79
18
1, 213, 425
191
318, 500
6,870,000
1,067, 973
• 85
16, 377, 856

BUREAU OF THE PUBLIC D E B T

The Bureau of the Public Debt, under the Commissioner of the
Public Debt, is a branch of the Fiscal Service of the Treasury Department. The Bureau is charged with the conduct of transactions in the
public debt issues of the United States. As agent, the Bureau also
conducts transactions in the interest-bearing issues of the insular governments and of Government corporations and credit agencies. . The
Bureau is also charged with the procurement of distinctive paper for
the currency and public debt issues, with the verification of United
States currency redeemed by the Treasurer of the United States and of
imperfect securities delivered by the Bureau of Engraving and Printing, and with the destruction of redeemed currency and other securities
authorized to be destroyed.
Two offices are maintained—one in Washington, the other in
Chicago. The Washington Office is charged with all functions assigned
to the Bureau except those relating to pavings bonds after their issue,
which functions are assigned to the Chi(5ago Office.
Washington Office
The Washington Office of the Bureau comprises five major offices.
A summary of their duties and activities during 1944 follows.
Office of ihe Commissioner

The Office of the Commissioner exercises general control over the
activities of the Bureau, both in Washington and Chicago. When a
new issue of public debt securities is to be offered, the Office prepares
the necessary documents incident to the offering and directs the
handling of subscriptions for and allotments of the securities to be
issued. General supervision is exercised over the conduct of transactions in securities after their issue, either by the divisions of the




182

REPORT OF THE SECRETARY OF THE TREASURY

Bureau in Washington, by other branches of the Government service,
or by the Federal'Reserve Banks and branches, fiscal agents of the
United States. The Office directs the production of securities and
prepares regulations governing transactions in public debt obligations
after their issue. During the fiscal year 1944, the new security issues
included 10 offerings of Treasury bonds, 4 of Treasury notes, 8 of
certificates of indebtedness, and 52 of Treasury bills, a total of 74
offerings. Excluding Treasmy bills, these issues amounted to
$63-,335 millions in the aggregate, of which $42,601 milliohs were for
cash and $20,734'millions for refunding of other securities. A net
increase of $2,862 millions resulted from the weekly Treasury bill
operations. During the year receipts from continuing sales of United
States savings bonds amounted to $15,498 millions, and of Treasury
savings notes, $8,954 millions.
\

•

^

•

.

'

'

'

•

Division of Loans, and Currency (Washington)

This office is the agency through which public debt obligations of
the United States are issued. I t is also responsible for the issue^of the
securities of various Government corporations and credit agencies and
for the issue of obligations of the insular governments, for which the
Treasury Department acts as agent. I t conducts transactions in
such obligations after their issue (except in savings bonds, which are
conducted at its Chicago branch), and maintains the acicbunts of the
registered issues of transferable securities, and issues checks in payment of interest thereon. The office undertakes the safekeeping of
securities for certain Governnient offices. I t verifies and delivers to
the Destruction Committee canceled currency redeemed by the
Treasurer of the United States and mutilated paper (spoUage, 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 the Division
of Loans and Currency in Washington during the fiscal year 1944.
Transactions in publicdebt and insular securities and in securities of various Government corporations and credit agencies, fiscal year 1944
[Principal amount]
Transaction
Public debt securities:
On»hand July 1, 1943
Unissued stock returned to Division
Received from Bureau of Engraving and
Printing
-- _
Total to be accounted for
Stock shipments to Federal Reserve
Banks and branches, Post Oflace Department, and issuing agents for
United States savings bonds
Issued by Division
_. . . . .
Unissued stock delivered to the Register
of the Treasury
--.....
Total disposals
On hand June 30, 1944
Retired and redeemed




Bearer

$104, 233, 415, 400
1, 533, 007,000

<
;
Registered

$33,167, 529,895
2,975, 425

Total
$137. 400,945. 295
1, 535,982, 425

263,104, 300, 000

58, 812, 963:240

321,917,263,240

368. 870, 722, 400

91, 983,468, 660

460,854,190,960

166, 663, 202, 450
223,859,600

33,159, 598, 475
14, 900, 381,065

199,822, 800, 925
15,124, 240, 665

9, 453,172. 700

^ 984,073,170

10, 437, 245, 870

176, 340, 234, 750

49, 044. 052, 710

225, 384, 287, 460

192, 530, 487, 650
759, 210,010

42, 939. 415,850
8, 534,367,830

236,469, 903, 500
9, 293, 577,840

183

REPORT OF THE SECRETARY OF THE TREASTJRY

Transactions in public debt and insular securities and in securities of various Government corporations and credit agencies, fiscal, year 1944—Con.
Bearer

Transaction
Insular securities and securities of Government corporations and credit agencies:
On hand July 1, 1943 -..Received from Bureau of Engraving
• and Printing
Total to be accounted for

--

Stock shipments to Federal Reserve
Banks and branches
Issued by Division
. .
' ..
Unissued stock delivered to the Register of the Treasury

Registered

Total

$4,184,416, 319

$892,888,050

416,018,000

803,170,000

$5,077, 304,369
1,219.188,000

4,600, 434, 319

1,696,058,050

6, 296,492,369

460,193, 500
444, 000

739,797,660

460,193,500
740,241,650

On hand Juhe 30j 1944
Retired and redeemed

.

-..

666, 789,850

3,087,904,950

2, 881, 752, 600

Total disposals

1,406, 587, 600

4,288,340,100

1, 718, 681, 719
2, 449, 225

289, 470,"550
415, 363, 300

2,008,152, 269
417,802, 625

2, 421,115,100

Individual registered accounts.—Individual accounts are maintained in the.Washington office in connection with registered issues
of the United States (excluding savings bonds) and of securities of
various Government corporations and credit agencies; and interest is
paid periodically in the form of checks on the iuterest-bearing debt..
The accounts open June 30, 1944, were as follows:
Number of
accounts

Registered issues
Publicdebt:
Interest-bearing loans i
•
Matured loans (Liberty, Victory, Treasury, postal savings
bonds, etc.)

419,086

Pruicipal

$25,455,238,876.40

21,013

16,169,320.00

440,099

25,471,408,196. 40

183
6,814
612

• 15,338,000.00
31,038,800. 00
23, 532,936. 23

-

6,509

69,909, 736.23

Matured loans:
Home Owners* Loan Corporation bonds-.
Federal Farm Mortgage Corporation bonds
Federal Housing-Administration debentures

428
2,118
2

1,198,000. 00
3,693,000.00
17,100.00

Total public debt issues

_-

Others:
Interest-bearing loans:
Home Owners' Loan Corporation bonds
Consolidated Federal farm loan bonds
Federal Housing Administration debentures
Total interest-bearing loans

_

. '

2,648

Total matured loans
Total other issues

:

-

4,808,100.00

9,057

74,717,836. 23

1 Excludes savings bonds and adjusted service bonds.

There were 155,697 individual accounts closed for registered
Liberty bonds. Victory notes, special Treasury notes, certificates of
indebtedness, postal savings issues, depositary bonds, and Treasury
bonds, etc.; and 9,371 accounts were decreased, representing retirements of securities in the amount of $7,575,051,360 par value. In
connection with the same loans, 134,621 new accounts, involving
$13,071,729,690 of principal, were opened. During the year 21,932
changes of address for maUing of interest checks were made.




184

REPORT OF T H E SECRETARY OF T H E TREASURY

Interest on registered Treasury bonds was paid on due dates in the
form of 736,099 checks amounting to $222,344,163.91; on registered
securities of the postal savings loans, etc., 58,785 checks for $4,234,233.25 were issued; and on registered issues of special Treasury notes
and certificates of indebtedness, interest payable by 12 checks amounting to $69,986,518.58 was paid. Also 1 check was issued in payment of
interest amounting to $22,507,108.04 on the 4K percent adjusted
service bonds—United States Government life insurance fund series;
and,2,716 checks were issued in pa3anent of interest amounting to
$5,902,809.43 on the 2 percent depositary bonds. There were received from the Bureau of Engraving and Printing 883,500 checks as
stock.
^
Claims.—Claims for relief, on account of lost, stolen, destroyed, or
mutilated securities, handled by the Division of Loans and Currency
in Washington during the year were as follows:
N u m b e r of
securities

N u m b e r of
claims

Claims

P a r a m o u n t of
securities

P u b l i c debt issues i

T o t a l disposals
O n h a n d .Tune 30, 1944-

...

$6,011,556.30
3, 817, 052. 20

69,457

9, 828,608. 50

1,523
3,867
7,288
918

554, 816. 50
733, 375.00
625,079. 55
57, 237. 00

6,331

T o t a l to be accounted for
Settled b y :
Reissue or r e d e m p t i o n of securities
-.
R e c o v e r y of securities •
Disallowance of claims a n d credit allowed
o t h e r dispositions

37,517
31,»940

593
2, 542
2,701
495

...

12,335
17,151
29,486

On h a n d J u l y 1, 1943
Received - - .

13, 596

1,970.508.05

23,155

55, 861

7,858,100.45

H o m e O w n e r s ' Loan Corporation, F e d e r a l
F a r m jMortgage Corporation, a n d consolidated
Federal farm loan bonds
275
.50

1, 267
256

$457, 800. 00
152, 925. 00

T o t a l to be accounted f o r . . .
.
Settled b y reissue, r e d e m p t i o n , recovery or no relief

325
33

1, 523
116

610, 725. 00
49, 703. 75

On h a n d J u n e 30, 1944

292

1, 407

561,021.25

O n h a n d J u l y 1, 1943
Received

.

.

.'....

1 Includes adjusted service bonds.

Sajekeeping oj securities.—During the year transactions in securities
held in safekeeping were as foUows:
Issues

On h a n d J u l y 1,
1943

Received a n d receipts issued

Released

On h a n d J u n e 30,
1944 ^

P u b l i c d e b t issues
$10,910,685,906.40 $10, 401, 044, 000. 00 $6, 754,822.000. 00 $14. 556, 907,906. 40
2, 300. 00
2, 300. 00
A d j u s t e d service b o n d s
I n s u l a r securities
.
6,454,500.00
. . 6, 454, 500.00
H o m e O w n e r s ' L o a n Corporation bonds
196, 000,000. 00
732, 000, 700. 00
348, 000, 700.00'
580, 000, 000. 00
' ' Total




11,113,142, 706. 40

11,133,044, 700. 00

7,102, 822, 700. 00

15,143,364,706.40

REPORT OF THE SECRETARY OF THE TREASURY

185

Mutilated paper and redeemed currency.—Mutilated paper verified
and delivered to the Destruction Committee consisted of 82,927,216
sheets and coupons, of which 82,918,914 sheets and coupons were
received from the Bureau of Engraving and Printing and 8,302 sheets
from the Division of Paper Custody.
Redeemed currency, unfit for circulation, counted and delivered to
the Destruction Committee during the year amounted to 849,262,097
pieces, representing $1,189,170,886.77, detailed as follows:
Pieces

Currency
_.

. .
._-

i

- .

-.

.-•

39,382, Oil
809, 773, 337
105. 306
172
1,271

$147, 096, 336.00
1,038,965, 730.00
3,106, 630.00
2, 000. 00
290. 77

849, 262, 097

United States notes
Silver certificates
Gold certificates- .-•.
Treasury notes
Fractional cm'rency
Total

Face value

1,189,170,886.77

I n addition to the securities which were delivered to the Register
of the Treasury, the Division canceled and delivered to the Register
1,764,532 coupons amounting to $339,805,139.92. Of these, 1,663,529
were public debt coupons amounting to $322,992,275.21 and 101,003
amounting to $16,812,864.71 were coupons from securities of Government corporations and credit agencies.
Reports.—Various periodical and special statements, charts, etc.,
were prepared by the Washington Office for use in planning financing
operations. During the year there was incorporated in these statements information obtained from 90,491 reports covering holdings of
Government and Government-guaranteed securities submitted by
banks arid insurance companies and from 243,215 reports reflecting
sales of United States savings bonds submitted by corporations gen- .
eraUy and by other agencies.
/
Office of the Register of ihe Treasury {Washington)

This Office is charged with the receipt, from any source, of all redeemed, exchanged, or unissued public debt securities, including interest coupons and war savings stamps, canceled and retired on a n y
account, and with their final audit and subsequent custody. The
Office performs similar functions with,respect to the securities issued
by various Government corporations and agencies, and retires bonds
of the insular possessions which are exchanged for other securities.
The Register renders monthly certifications to the Comptroller General of all public debt securities redeemed by the Treasurer of the
United States, and establishes credits due the Division of Loans and
-Currency and the Federal Reserve Banks for securities canceled by
them on account of exchanges, etc.
The following statement shows the number of pieces and face value
of the various classes of securities which were received by the Washing*
ton office during the fiscal year 1944.




186

REPORT OF THE 'SECRETARY OF TPIE TREASURY

Summary of securities receivedby the Washington Office ofthe Register of the Treasury
on account of transactions, fiscal year 1944
Bearer

Registered

Security
Amount

Pieces

Pieces

Amount

Redeemed
Public debt securities:
50'
$12, 510.00
$34,430.00
36
Postal savings bonds, etc
926
Liberty loans--.
1, 626, 700.00
4,693
388, 350. 00
Treasury bonds
. -.
220, 091, 600. 00
717, 667 2, 649, 302, 200.00 231, 236
315 1, 305, 628,000.00
1, 643,044, 800. 00
Treasury notes
87,693
Treasury notes—tax series and savings
1, 325,186 6, 872. 876, 300. 00
series
—United States savings bonds
.3,080. 00
439
Depositary bonds
37, 440. 000.00
122,102
Adjusted service bonds
6,105,100. 00
225 5, 688, 778,000.00Certificates of indebtedness
415,224 17, 045,971, 000.00
344, 604 51,146,938, 000.00
Treasury bills.
Treasury (war) savings securitiesL .._
22,462
773
33, 699. 00
7,130.00
14,842,777
1,-596,285,713.60
Interest coupons
Other securities:
Home Owners' Loan Corporation:
4, 784
Bonds . -.-• --272,916
710, 734, 200.00
274,419, 000. 00
25,456,468.94
Interest coupons.
933, 063
Interest checks. .
433, 698.75
.2,8ii,
Federal Farm Mortgage Corporation:
Bonds 869, 238, 400. 00
336,805
30, 363,900.00
31,425
Interest coupons
1
729, 720
16,942,015.71
Interest checks.
--- _
11, 508
594, 463 00
Consolidated Federal farm loans of the
Federal land banks:
870,461
Interest coupons
29, 208,863. 92
Interest checks
12, 042
1, 030, 772. 76
Federal Housing Administration:
1,453
2,603,000. 00
Debentures
...^
1,463
Interest checks.-672, 610.60
Federal home loan banks:
• Consolidated debentures- __ ' -- _165, 310, 000. O O
5,310
29
Interest coupons
--.
_O O 00
O.
Reconstruction Finance Corporation:
Notes
57, 351
895, 628, 000. 00
Interest coupons
60, 708
4, 748, 967.93
Commodity Credit Corporation:
Notes - -_
-_ _
34
129,000. 00
Interest coupons
—
4, 632,169. 21
64,677
Federal National Mortgage Association:
5,901
Notes—--- -55,563,000.00
Interest coupons...--"-.---• 453, 685. 31
5,996
' Federal Public Housing Authority:
14, 938
114, 091, 000.00
Notes—
- -Interest coupons
1,570,673.16
30,804
Total

--

19, 823, 769 76,966,920, 646.78 1. 746, 734 14,441,462, 276.11
Retired on account of exchanges for other securities, etc.

Public debt securities:
Postal savings bonds, etc
Liberty loansTreasury bonds
Treasury notes
Treasury notes—tax series and savings
series
..
United States savings bonds _.Depositary bonds
Adjusted service bonds
Certificates of indebtedness _
Treasury bills...
First 3H% Liberty loan interim certificates -Other securities:
Insular possessions loans
_
Home Owners' Loan Corporation bondsFederal Farm Mortgage Corporation
bonds -Consolidated Federal farm loans of the
Federal land banks, bonds-.
Federal Housing Administration debentures




403
$144, 740. 00
59,850.00
716
480,297 "3,570,413,200.00
123,971 3,946, 796, 600. 00

184, 043
4, 758

$3, 326, 600. 00
808,236, 900. 00'
419, 257,000. 00

12,658
3
312
492
1

265,680,000. 00
76.00
66,973,000. 00
24, 600. 00
17,240,000.00

18,000.00
57, 583, 600. 00

110
1,002

200,000.00
109,955,000. 00

17,871,600.00

2,054

6, 924, 400. 00

22, 495, 900. 00

2,839

5,197, 600.00

9,312,180,000. 00
1, 408, 236,000.00

1

50.00

. 18
34, 007
23, 247
18, 653

6,065
78, 635
14

•

297

359. 300. 00

187

REPORT OF T H E SECRETARY OP T H E TREASURY

Summary of securities received by ihe Washington Office of the Register of the Treasury
on account of transactions, fiscal year 1944—Continued
Bearer
.

Registered

Security
Pieces

Amount

Pieces

Amount

Retired on account of exchanges for other securities,
etc.—Continued
Other securities—Continued.
Federal home loan 'banks, consolidated
debentures
Reconstruction Finance Corporation
notes
Commodity Credit Corporation notes
Federal Public Housing Authority notes.
Total

4

$120,000.00

848
1,320
^ 925

5,122,000. 00
5,870,000. 00
2,005, 000. 00

873,211

18,348,916,440. 00

.
104, 476 $1, 693,274, 325. 00

Unissued stock retired
Public debt securities:
Postal savings bonds, etc
Treasury bonds Treasury notes
Treasury notes—tax series and savings
series
United States savings bonds-_ . . . . . _ Depositary bonds
Excess profits tax refund bonds . . . . .
Adjusted service bonds.-.
Certificates of indebtedness _ _
Treasury bills
Interest coupons
Other securities:
Insular possessions loans
Home Owners' Loan Corporation:
Bonds-Interest coupons
Federal Farm Mortgage Corporation:
Bonds _
Interest coupons
Consolidated Federal farm loans of the
Federal land banks:
Bonds.
Interest coupons
Federal Housing Administration debentures
Federal home loan banks, consolidated
debentures
Reconstruction Finance Corporation:
Notes
Interest coupons
•
Commodity Credit Corporation:
Notes. '
.
Interest coupons
Federal National Mortgage Association:
Notes
Interest coupons
Federal Public Housing Authority:
Notes
Interest coupons
Total-

283,647
182,917

$995, 218, 350. 00
1, 440, 613, 600.00

4,183
175, 901
1

$922,320.00
660, 341,850. 00
No value

610,948
78,917
228
205
14
1

1,034,4^2, 500. 00
395, 563, 600.00
No value
No value
700.00
No value

366,179
23, 717
4, 072, 209

9,970, 639, 000. 00
3,188, 446,000. 00
606, 464, 440. 91

883, 227
87,368

660, 614, 700. 00
12,489,891,88

104, 715

•434, 598, 000. 00

101, 679
37,310

117,160, 900. 00
1, 239,813.12

16, 454

218, 484,100. 00

8,866, 380. 76

8

2, 600. 00

141,127

789

430, 250. 00

1

5,000. 00

• 96,119
10, 335

1, 612,977,000. 00
576, 910.00

6, 205
15, 348

182,874,000.00.
1,467, 780. 24

1,757
14, 237

16,887,000.00
472, 750. 95

18, 798
4,016

146,850,000.00
, 242, 734. 68

3,561

6,346,096

18, 964,084,152, 64

13,275,000.00

.^
995, 925 2,658,100,820.00

.Recapitulation
Public debt securities:
Postal savings bonds, etc
" . -- .1
Liberty loans....
Treasury bonds - •
Treasury notes
Treasury notes—tax series and savings series..
United States savings bonds
Depositary bonds .
Excess profits tax refund bonds
Adjusted service bonds .
Certificates of indebtedness
Treasury bills
First 3H% Liberty loan interim certiflTreasury (war) savings securities _.
Interest coupons
-




439
5,409
1,481,611
394,581

$157, 250. 00
1, 686, 650. 00
7, 214,933, 750. 00
7, 030, 464,800.00

10, 298
926
485, 772
330
1. 948. 792
78, 910
979
205
122,608
227
965, 446 36, 328, 790, 000.00
373, 079 55,743, 619,000.00

1
22, 462
18,914, 986

50.00
33,699. 00
2, 202,740,164.61

773

$4, 283, 350. 00
388, 350. 00
1, 588, 670,350. 00
1. 724, 885.000. 00
8,172,937, 800. 00
395, 560, 445.00
94, 413,000. 00
No value
, 6,130, 400.00
6,706,018, ooo: 00
7,130.00

188

REPORT OF T H E SECRETARY OF T H E TREASURY

Summary of securities received by ihe Washington Office of the Register of the Treasury
on account of transactions, fiscal year 1944—Continued
Bearer-

Registered

Security
Pieces ^

-

Amount

Pieces

Amount

Recapitulation—Continued
O t h e r securities:
I n s u l a r possessions loans
H o m e Owners' L o a n Corporation:
Bonds
Interest coupons
I n t e r e s t checks
.Federal F a r m ' M o r t g a g e Corporation:
Bonds
I n t e r e s t coupons
I n t e r e s t checks
Consolidated Federal farm loans of t h e
Federal l a n d b a n k s :
Bonds
-- •
I n t e r e s t couponsI n t e r e s t checks
-.
..
Federal H o u s i n g A d m i n i s t r a t i o n : '
Debentures
.- .
"
I n t e r e s t checks
F.ederal h o m e loan b a n k s : .
Consolidated d e b e n t u r e s
I n t e r e s t coupons
..
Reconstruction F i n a n c e Corporation:
Notes .
.
I n t e r e s t coupons
C o m m o d i t y C r e d i t Corporation:
Notes
I n t e r e s t 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 ^
I n t e r e s t couponsFederal P u b l i c H o u s i n g A u t h o r i t y :
Notes
I n t e r e s t coupons
Total

--

18

$18,000.00

3, 671

$13, 475, 000. 00

1,190,150
1,020,431

1,428,932,500.00
37, 946, 360. 82

110,501

818,972,000.00

2,811

433, 698. 75

461, 631
767,030

994, 270,900.00
18,181, 828.83

49,933

255,772,400.00

11, 508

594, 463. 00

• 2,847

5,200,100.00

12, 042

1,030,772.76

2, 539
. 1,463

3, 392, 550. 00
672, 610.60

18.-653
• 1,011,588

-

22, 495,900.00
38,075. 234. 68

5, 315
29

165, 435,000.00
690.00

154, 318
71, 043

2,513,727,000.00
5, 324, 877.93

7,559
79,925

188,873. 000. 00
6, 089,949. 45

7, 658
20, 233

72,450.000.00
926. 336. 26

34. 661
34,820

262,946, 000. 00
1,813, 407.84

- 27,043,076 114, 279,921, 239. 32 2,847,135 18, 792, 837, 420.11

NOTE.—Redeemed securities are audited through March 1944 settlement.

Division of Public Debt Accounts and Audit {Washington)

This Division maintains administrative control accounts for all security transactions in the public debt which are conducted by the
various Treasury offices and by the Federal Reserve Banks and
branches as fiscal agents of the United States, and for savings bond
transactions conducted by the post offices. Division of Disbursement
of the Treasury Department, Government Printing Office, Library
of Congress, and War and Navy Departments as issuing agents; and
for transactions involving distinctive and nondistinctive paper used
in printing public debt and other securities, currency, stamps, etc.,
in the Bureau of Engraving and Printing; conducts administrative
examinations and audits of such transactions and of the securities
involved; maintains control accounts for various classes of unissued,
currency in reserve, and conducts administrative examinations and
physical audits of such unissued stocks and cash balances in custody,
and of collateral securities held in trust in the Office of the Treasurer




REPORT OF THE SECRETARY OF THE TREASURY

189

of the United. States. Included in the administrative control accounts are transactions m securities of various, Go vernment corporations and agencies.
The control accounts of transactions in the public debt maintained
by the Washington office with other branches of the Bureau of the
Public Debt, with the Office of the Treasurer of the United States
and various other branches of the Government, and with the Federal
Reserve Banks as fiscal agents of the United States greatly increased
during the past year in consequence of the war financing and the
more extencled participation of l^ranches of Federal Reserve Banks
in such transactions.
In addition to maintaining the administrative debt accounts, the
Washington office conducted 129 audits involving physical counts of
securities, currency, distinctive and nondistinctive paper, interest
checks, etc., amoimting to about $13,285 millions in face value and
105,164,830 in number of pieces; an examination and audit of 2,141
individual accounts of holders of registered bonds; and an audit of
the numerical registers involving an examination of 51,885,257 spaces
representing bonds retired or outstanding. Other special audits
under instructions of the Secretary of the Treasury were also conducted.
The Division determined and certified credits to the cumulative
sinking fund and amounts 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 sinldng
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 compiled.
Division of Paper Custody {Washington)

This Division receives from the contractors all distinctive paper
used in printing public debt obligations and paper currency of the
United States and issues such paper to the Bureau of Engraving and.
Printing against orders to print; it also maintains records of receipts,
and issues of Federal Reserve notes stored in the Federal Reserve
vault. In connection with the manufacture of paper, a field force is
maintained at the mill of the contractors.
The following tables summarize the operations of the Division
during the year.




190

REPORT OF THE SECRETARY OF THE TREASURY

Receipts and issues of distinctive and nondistinctive paper, fiscal year 1944
[In sheets]
On hand
July 1, 1943

Kind

Received

On hand
June 30,1944

Issued

DISTINCTIVE

United States currency and Federal Reserve notes. 22,893, 276 142,206,069
73, 269,123
4,660,487
United States bonds
-.250,000
Cuban currency
:
--- 1,029, 638 •
184, 093
Philippine currency
.---

Total

.j.

-

-

142, 979, 652
68,749,847
1, 279, 638
10, 351

22,119, 693.
9,179, 763
173, 742

28, 767, 494

215, 725,192

213, 019,488

31, 473,198

743,162
49, 605
2, 268,447

383,896

393,960

1, 486, 742

1, 489, 418

733, 098
49, 605
2, 265, 771

3, 061, 214

1, 870, 638

1,883, 378

3, 048, 474

NONDISTINCTIVE

Parchment, artificial parchment, and parchment
deed...
Philippine Islands postal card
. Miscellaneous
_
Total--

:..

Receipts and issues of Federal Reserve notes, fiscal year 1944
[In thousands of dollars].
On hand
July 1, 1943

Fed'eral Reserve notes
Series 1928
Series 1934..-

2,812,100
3, 515, 640

On hand
June 30, 1944

Issued

Received

9, 797, 240

8,139,160

2,812,100
5,173, 720

During the year 214,657,071 sheets of paper were counted prior to
issue to the Bureau of Engraving and Printing for authorized work.
Destruction Corhmiitee {Washington)

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.
Number and face amount of securities and miscellaneous items destroyed by the
Destruction Committee, fiscal year 1944
Number of
pieces

OfQce making delivery, and items
Division of Loans and Currency and Treasurer of the United States:
United States notes
.
Silver certificates!Gold certificates
•
----' Treasury notes
•.
Fractional currency
--

Face value

39,221,361
806, 540,967
105,306
172
1,271

$146:575,936.00
1,035,191,130.00
3,106, 630.00
2,000.00
290. 77

-

846,869,067

. 1,184,876,886. 77

Comptroller of the Currency, national banks, and Federal Reserve
Bank agents:
Federal Reserve notes
-.--J.
Federal Reserve Bank notes
National bank notes
' __ .

231,619,095
7, 593,893
450,179

2,154, 523, 365. 00
63,648,933.00
6,139,408. 00

239,563,167

2,224,311,706.00

7.493,662
23,570,942

33,864,413,775.34
350,660, 269.91-

31,064,604

34,215,074,045.26

Total

Total

-

.

'

Register of the Treasury:
Principal pieces._
.-,
Coupons
A
' • Total-.

_




,

.:
--

REPORT OF THE SECRETARY OF THE TREASTJRY

191

Number and face amount of securities and miscellaneous items destroyed by the
Destruction Committee, fiscal year 1944—Continued
^
Number of
pieces

Office making delivery, and items
Bureau of the Public Debt, Chicago Office:
Redeemed savings stamps, post offices
Redeemed savings stamps. Federal Reserve Banks and branches.
Unissiied savings stamps
.
...-

$725, 614, 565. 55
22,990,071. 65
244, 855.05
748, 749,492.25

Total.
Farm Credit Administration—principal pieces
Bureau of Internal Revenue—miscellaneous stamps.
Foreign Funds Control—forms 'T. F. E. L. 2
Bureau of Engraving and Printing—registered proof sheets
Total

-

.--.

572,580
1,048
22, 296
^

595,924

Division of Loans and Currency:
For Bureau of Engraving and Printing—mutilated work (sheets)
For Division of Paper Custody (sheets)
Void coupons
Checks, Securities Section..-.
Total
Grand total

Face value

717,604,112.25

49, 742,894
8,302
33,176,020
112, 669
.

--.

17, 597,118. 42
700,006,993.83

83,039,885

1.200,132,647

39,090,616, 242. 52

Chicago Office
The functions assigned to the Bureau of the Public Debt in connection with United States savings bonds and stamps which have been
issued are performed in the Chicago Office under the administration of
.a-Deputy Commissioner. The Chicago Office comprises the Administrative Office, Division of Loans and Currency, Office of the Register
of the Treasury, Division of Public Debt.Accounts and Audit, and
the Division of Savings Bonds. The first four units are branches of
offices in Washington. A resume of the duties and of the activities
during 1944 of each of these units follows.
Administrative Office {Chicago)

The Administrative Office exercises general supervision over the
entire Chicago office and handles all administrative matters relating
to Budget accounts, supplies, equipment, personnel, procedure, and
office space.'
The total number of employees of the Chicago office increased from
6,820 at the beginning of the year to 8,285 on June 30, 1944, a net
increase of 1,465. In order to secure additional employees and at the
same time replace 5,140 separations from the service during the year,
about 14,500 persons were interviewed and 6,605 were appointed.
The average monthly turnover during the year was 5.8 percent.
Recruitment continues to present one of the most serious problems confronting the office.
The Destruction Committee in Chicago supervised the destruction
of 1,447,260 pounds of canceled war savings stamps. The material
from these and other miscellaneous items was sold for $26,702.




192

REPORT OF T H E SECRETARY OF T H E TREASURY
Division of Loans and Currency {Chicago)

i

This' office, under an Assistant Chief in Charge, handles (1) the
registration of savings bonds that have been sold, (2) the maintenance
of interest accounts for Series G bondholders, and (3) transactions
with savings bond owners in connection with redemptions, reissues,
etc.
Every savings bond issued is registered in two ways: (1) By serial
number and (2) by name of owner. Registration is accomplished
through the medium of stubs from the savings bonds sold. These
stubs are in the form of standard punch cards, each of, which'carries
a fuU description of the bond issued. Sorting and other processing
of the stubs are done largely by mechanical means.
Registration oj Series E bonds.—The stubs received from all bonds
issued during each month are first sorted by denominations and serial
numbers. The stubs are then microfilmed, estabhshing a numerical
record of every bond issued. The name of the owner is then key
punched in the stub, after which the stubs are sorted alphabetically
by names of owners and interfiled with the stubs of prior months of
the same calendar year, thus establishing a file of each person's ownership of bonds issued during that year. A summary of the operations
during 1944 follows.
Number of
stubs

Series E bond stubs
Mechanical processing:
On hand July 1, 1943 (processing incomplete)
Received during year from bonds issued
'•' Total to be processed

-

-.

.--

415, 917, 901

Processed during year:
Numerically sorted
Microfilmed
.'i
Keypunched
Alphabetically sorted
Alphabetical sort ready for manual processing:
For
filing
For manual sort
.:.
Total-_

Number of stubs
261,504,629
265,665,307
-— 216,547,759
.: 170,800,280

-._-"
.-.-

-.
.

'
•

Total to be processed-,
Inserted in
files
On hand June 30, 1944

1

225,050,469

-

-.
_--

----

169,957, 780.
20, 909, 652
190, 867, 432

,

On hand June 30, 1944, in various stages of processing
Manual processing:
Onhand July 1,1943--Received for filing
Received from manual sort

113,179,129
302,738,772 '

42, 756, 621'
169, 957, 780
20,909,652
233, 624,053
182, 481, 093
51,142, 960

The alphabetical punching and machine sorting of Series E stub's
were increased from 14 letters to 16 letters, thereby eliminating much
of the manual sorting preparatory to inserting the stubs in the files.
In addition to .microfilming 265,565,307 Series E stubs in numerical
sequence, microfilming of vSeries A through Series E stubs in alphabetical order was started in January 1944. By the end of the year
106,163,550 alphabetically sorted stubs of Series A through D, E-1941,
and E-1942 were filmed. At the close of the year 76,302,186 Series
E stubs were available for alphabetical filming.




193

REPORT OF T H E SECRETARY OF T H E TREASURY

Registration oj Series F and G bonds.—The stubs received from Series
F and G issued bonds are processed in the same manner as those from
Series E bonds. A summary of the operations during the year follows.
'

N u m b e r of
Series F
stubs

M e c h a n i c a l processing:
O n h a n d J u l y 1, 1943 (processing i n c o m p l e t e ) - - - . . .
Received d u r i n g year from b o n d s issued

N u m b e r of
Series Q

stubs

762,053
1,139, 589

O n h a n d J u n e 30,1944, i n various stages of processing

199,114
2, 644,258

1,891, 642
1,462, 421

T o t a l to be processed
.._
---Processed d u r i n g year a n d r e a d y for filing.

M a n u a l processing:
O n h a n d J u l y 1, 1943
Received for filing

•

2, 843, 372
2, 227, 639

429,221^

'

615,733

' 752,053
1,139, 589
-

-

O n h a n d J u n e 30,1944

2,843, 372
2, 825, 946

1, 035,946

T o t a l to be processed
I n s e r t e d in files -

199,114
2, 644, 258

1, 891, 642
855, 696

..

17, 426

Series G bond, interest accounts.—During the year 846,912 new
accounts were opened for Series G bondholders. Interest on these
bonds is paid semiannually in the form of checks. Since Series G
bonds are dated as of the 'first of the month in which payment for
the bonds is received and since these bonds are on continuous sale
there are interest payments to be made in every month of the year.
During the year 4,033,385 interest checks were prepared and interest
was paid in the amount of $167,460,098.75, as compared with
1,675,584 interest checks for $77,498,228.75 in the previous year.
In connection with Series G bond accoimts, the following operations
were performed during the year:
^^^^^^^
Series G stubs punched and verified
Control cards punched
Statistical cards reproduced
Coowner cards reproduced—
Stubs tabulated for interest sum..mary cards...
Interest summary cards cut
-.-Check issue cards reproduced-.1
.
Checks written
Stencils cut and verified

.

:

..:
.
.^...

_

—
-..

_

----1
_
'

2,690,958
36,956
1, 851, 854
415,816
2,850,113
1, 302, 762
3,752, 561
3, 752, 561
713,189

Important revisions of the Series G bond interest payment procedures were accomplished during the year.
Statistical work.—There were processed during the year 15,585,981
stubs of savings bonds to provide sales data, 107,614 advices of shipment of redeemed savings bonds to provide redemption data, and
1,090,000 statistical report forms for postmasters. About 60,000
cards were punched and processed in reporting Treasury sales data
and 500,000 cards were punched and processed in preparing pay rolls
and statistics for the annual budget.
,
Bond transactions.—During the year 656,446 bonds were received
which required transactions with the owners in connection with
redemption, reissue, and other transactions. Of this number 626,550
were examined and retired. This involved searching of 1,076,419
items.
Authorities jor bond redemptions in estate cases, etc.—During the
year 44,430 bond cases and 47,239 legal papers were received for
determination of authorities for bond redemptions chiefly in connec^13185—45

14




194

REPORT OF THE SECRETARY OF THE TREASURY

tion with the settlement of estates. About 254,245 bonds were
examined. The work is approximately, current notwithstanding
large increases over the previous year in bond cases and legal papers
received.
Claims.—Claims for lost, stolen, and destroyed savings bonds
handled during the year are shown in the following table.
Fiscal year Fiscal y e a r
1943
1944

Claims

2,500
46,106

T o t a l disposals
O n h a n d a t e n d of year

84, 368
22, 047
45,668

24, 660

.--

48,606

67, 715

2 24,109

:

T o t a l t o b e accounted for
Disposals:
Recovery of securities
' Sent to W a s h i n g t o n - - .

24,109
1 60, 259

10, 630
14,030

O n h a n d a t beginning of y e a r — - Received d u r i n g y e a r - . . .

16,663

)

. 1 Excludes 14,978 cases involving stock credits, which cases were forwarded to Washington for settlement.
2 Includes 163 cases on which caveats had not been placed.

Office of the Register of the Treasury {Chicago)

This Office, under an Assistant to the Register of the Treasury, is
charged with the receipt, audit, clearance, and certification for credit
of canceled United States savings bonds and stamps which have been
redeemed or retired on any account, and with the subsequent storage
of the savings bonds.
The following table shows the number of canceled savings bonds
audited and filed during the year.
Pieces
Redeemed
Exchanged
Unissued...
'

-._

Total

- -.
'

,

71,189,938
2,198,721
9,198,977

. Amount
.$2,163,188,182.47
341,000, 550.00
1, 626,128, 625.00

82, 587, 636 < 4,130,317,357.47

A new procedure was instituted during the year which eliminated
the'necessity of sorting canceled bonds in numerical order for purposes of posting to the numerical registers. The sorting of bonds in
numerical order has been eliminated by preparation of a punch card
for each bond, by the transmitting agencies from which is tabulated
a numerically arranged list of bonds for posting to the numerical
registers.
During the year 31,594,826 albums containing redeemed war savings
stamps in the amount of $423,234,827.80 ahd 479,173 unissued stamps
in the amount of $90,630.70 were audited and filed. This work is
on a substantially current basis. There were, 54,698,560 canceled
albums and 1,090,918 unissued stamps assembled from the files and
delivered to the Destruction Committee (Chicago).




REPORT OF THE SECRETARY OF THE TREASURY

195

Division of Public Debt Accounts and Audit {Chicago) •

This Division, under an Assistant Chief of Division, is charged with
'the verification of the issues and retirements of United States savings
bonds through appropriate accounts and audits. A verification of
the cash received by the Treasurer of the United States from the sales
of savings bonds and the establishment'of the monthly series are
accomplished by this Division through audit of the original registration stubs appertaining to the bonds sold by issuing agents. The
stubs are submitted by the Post Office Department on account of
sales by postmasters; by the Federal Reserve Banks and branches on
account of their own sales and those of their agents; and by the War
and Navy Departments, the Library of Congress, the Government
Printing Office, and the Treasury Disbursing Office and its 25 regional
offices, representing their respective sales. During the year 309,123,020 original registration stubs, representing cash receipts of
$d9,542,967,850, were audited on these accounts.
I n addition, 11,392,222 canceled and unissued savings bonds were
audited of which 2,129,551 were on reissues, 68,876 on claims issues,
and 9,193,795 spoiled in issue, including 332,829 excess stock.
Division of Savings Bonds {Chicago)

The Division during the year functioned chiefly as a promotional
adjunct of the War Finance Division of the Treasury, and in such
connection was responsible for distribution of advertising material
for the promotion and sale of savings bonds and stamps. The special
mailing lists consisted of 218 groups with a total of about one and onequarter million plates.
The Division conducted correspondence with owners and prospective purchasers of war bonds and. sent reminder purchases notices
at regular intervals to approximately 68,000 participants in the
Regular Purchase Plan.
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 Government 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
Treasurer is the official custodian of the public money; 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 bank notes, and is treasurer of the Board of
Trustees of the Postal Savings System 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 government^ and of Government corporations and agencies.




196

REPORT OF THE SECRETARY OF THE TREASURY

The program to decentralize the payment of certain classes of
checks by arranging with the Federal Reserve Banks to act as fiscal
agents for the Treasurer in payment of such checks was further,
extended during the fiscal year to include substantially all payments'
made by the twenty regional offices of the Division of Disbursement
Ideated in the continental United States.
.
A comparison of the receipts and expenditures of the Government
for the fiscal years 1943 and 1944, exclusive of postal revenues and
payments payable therefrom, is shown in the foUowing table.
Summary of receipts and expendiiures, fiscal years 1943 and, 1944
[On basis of daily Treasury statements, .see p. 519]
1944

1943

Increase or
decrease (—)

General and special accounts:
* 6
Net receipts
. . . $22, 281, 642, 709. 24 $44,148, 926, 968. 07 $21, 867,284, 258- 83
Expenditures, excluding statutory debt
retirements (sinkingfund, etc.).._93, 743, 513, 213. 84 1.5, 564, 627, 972. 97
78,178,885,240.87
Excess of expenditures, excluding
statutory debt retirements
Trust accounts, etc:
Receints

49, 594, 586. 245. 77 - 6 . 302, 656, 285. 86

3 926 252 842 21

.

3, 593, 551, 348.14

4,700,377,863.19 •

1,106, 826, 515.05

2,193, 685, 465. 83

4. 403,068, 674. 50

2, 209, 383, 208. 67

5. 787, 236.. 813. 97

-

Excess of expenditures- . .

5, 052. 721, .588. 47

9,103, 446, 537. 69

3,316,209,723.72

1.860, 983, 971. 76

Expenditures:
Trust accounts, etc
Transactions in checking accounts of
Government agencies, etc. (net)...
Total expenditures

55,897,242,531.63

4,050,724,949.22

2,189. 740,977. 46

1,126, 468, 746. 26

The total public debt obligations outstanding on Juue 30, 1943,
were $136,696,090,329.90 and the receipts and retirements during
the fiscal year 1944 were $153,785,399,539.98 and $89,478,102,648.75,
respectively, making $201,003,387,221.13 of obligations outstanding
on June 30, 1944, an increase for the year of $64,307,296,891.23.
The public debt retirements chargeable against ordinary receipts
during the year amounted to $1,650 and are included in the total
retirerdents showu in the preceding paragraph.
The amount of interest paid on the public debt during the year is
classified as follows:
Class of interest payment
Interest coupons paid
i.
Registered interest checks paid..
Accrued interest paid in cash on obligations at redemption
.
Discount on Treasury bills sold
.
Discount accrued on United States savings bonds
Interest paid on obligations, special series (transfer-counter warrant transactions)
Total paid
•
Less repayments
Net payments

1

:

-.

$1, 595, 684, 364. 42
467. 661, 284. 40
125, 812, 287.09
51,018,753.92
223,189, 953. 71
161. 51/, 692. 31
2, 624, 884, 335. 85
15,904,530.23
2, 608, 979, 805. 62

The number of pieces of public debt principal obligations examined,
verified, and redeemed during the year was 121,784,837 as compared
with 56,433,991 pieces for the previous year. Checks in payment of




197

REPORT OF T H E SECRETARY OF T H E TREASURY

interest on the registered obligations of the United States verffied a.Qd
paid totaled 4,270,326 pieces, and the matured iuterest coupons of
Government obligations examined, verified, and paid totaled 14,845,579
pieces.
The gold holdings of the Treasuiy as of June 30, 1944, were 604,954,335.5 ounces amountmg to $21,173,401,741.86, valued at $35
an ounce, a decrease of 34,687,257.4 ounces and $1,214,054,009.19
from the previous year. The details of these holdings are shown in
the table on page 728 of this report. The decrease in gold holdings
was due principally to a net reduction of $1,214,473,161.81 in holdings
by mints and assay offices on account of transfers to foreign accounts
for earmark, exports, etc. (valued at $35 an ounce); receipts of gold
(paid for at $20.67+ an ounce) under the order of December 28, 1933,
of the Secretary of the Treasury amounted to $247,561.52; and the
increment resulting from, reduction in the weight of the gold dollar
amounted to $171,591.10.
Paper currency of each class issued and redeemed during the yesLV
and the amounts outstanding, including Treasury and Federal Reserve Bank holdings on June 30, 1943 and 1944, were as follows:
O u t s t a n d i n g J u n e 30, 1944
Outstanding
J u n e 30, 1943

Cla^s

Issued

Redeemed
In Treasury

$2,873, 222,179
Gold certificates
. 1, 965,154, 828
Silver certificates
U n i t e d States n o t e s . . .
346, 681, 016
T r e a s u r y notes of 1890
1,156, 048
14,404,174,100
F e d e r a l Reserve notes
632, 971, 232
F e d e r a l Reserve B a n k n o t e s . . .
-133,357,652
N a t i o n a l b a n k notes
Total

20, 356, 717, 055

$977, 628, 000
155,196,000
7, 334, 605, 000
35, 920, 000
8, 503, 349, 000

Outside
Treasury

$3,126,260
1,104,830, 232
155,196,000
700
2, 210, 805, 510
63,880,433
. 6,139,408

$659,710 $2, 869,436, 209
25, 216, 321 1,812, 736, 275
344, 509,670
2,171, 346
1,676
1,153, 672
78, 788,148 19,449,185,442
659, 509
604, 351, 290
472, 298
126,746,946

3, 543, 978. 543

107, 969, 008 25, 208,118, 504

United States paper currency shipped durmg the year from the
Treasury in Washington to Federal Reserve Banks and branches and
others amounted to $1,175,514,690, an increase of $50,628,910 over
the previous year.
The Treasurer's Office 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:
S h i p m e n t s from
T r e a s u r y to
F e d e r a l Reserve B a n k s
and branches

Kind

Silver:
Standard dollars.. - . .
Half dollars
Q u a r t e r dollars
. Dimes
Minor:
-Five-cent coins

CentsTotal




S h i p m e n t s bet w e e n Federal
Reserve B a n k s
a n d branches

$19,340, 997. 00
27,073,400. 00
32, 575,000. 00
31,102,400. 00

$290,000.00

155,000. 00

11,812, 649. 35
15, 302, 316. 93

85, 000.00

. 450,000. 00

137, 206, 763. 28

1, 200, 000. 00

•
$295,000.00

-.

S h i p m e n t s from
m i n t s to Treasury and Federal Reserve
Banks and
branches

275,000. 00
550, 000. 00

198

REPORT OF THE SECRETARY OF THE TREASURY

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
$429,690 and $1,946,410, respectively.
The proceeds of currency received into the Treasurer's cash by the
Currency Redemption Division during the year amounted to
$490,674,891, of which $335,743,818 was in Federal Reserve notes,
$63,440,779 in Federal Reserve Banl^ notes, $5,967,525 in national
bank notes, and $85,522,769 in United, States currency.
Canceled Federal Reserve notes amounting to $2,004,175,335 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 settlement therefor is made between the Federal
Reserve Banks and the Federal Reserve agents.'
Public moneys on deposit in designated Government depositaries
on June 30, 1944, to the credit of the Treasurer and to the credit of
other Government officers amounted to $19,715,145,810.52 and
$216,037,592.27, respectively, including items in transit. The table
on page 728 shows the amounts in the various depositaries on June 30
of the last two years.
>
Transfers to establish, to increase, and to restore the Treasurer's
balance with depositary banks during the fiscal year 1944 numbered
2,296 and aggregated $902,337,319.
Principal obligations of Government corporations and agencies and
insular goyernments redeemed by the Treasurer during the year
amounted to $2,795,379,650; checks issued by the'Treasurer in payment of interest on such registered obligations paid during the year
amounted to $3,215,909; interest coupons on such obligations paid
amounted to $84,727,998; and interest paid in cash when such obligations were redeemed amounted to $23,362,128.
Funds were advanced to United States disbursing officers by accountable warrants issued in an aggregate amount of $126,311,085,988.
Treasurer's checks aggregating $9,677,624 were issued on settlement
warrants in payment of claims settlecl by the Comptroller General.
Checks drawn on the Treasurer of the United States by Government, disbursing officers and agencies were paid during the fiscal
year 1944 to the estimated number of 290,025,490, of which 123,227,357
were paid for the Treasurer by Federal Reserve Banks acting as his
agents. The total nuniber of checks, paid during the previous fiscal
year was 201,676,720, of which number 15,290,259 \^ere paid through
the Federal Reserve Banks. Thus, the number of all checks increased during the fiscal year by 44 percent, and the number of paym.ents at Federal Reserve Banks increased by 706 percent.
'Balances to the credit of disbursing officers and Government agencies in 10,112 accounts on June 30, 1944, amounted to $19,432,921,597,
an increase.of $465,434,880, as compared with the total of such balances in 7,545 accounts on June 30, 1943.
'
Payments to correct irregularities in negotiation of checks were
made during the year to the number of 12,322 amounting to
$828,178.10, while in the previous year the number was 4,906 amounting to $281,072.69.
V
Duplicate checks to the number of 52,414 were requested by payees
or endorsees during the year as compared with 27,578 during the
previous year, the original check in each case having been lost,



REPORT OF THE SECRETARY OF THE TREASURY

199

stolen, wholly or partly destroyed, or so mutilated or defaced as to
impair its value to its owner or holder.
,
Drafts in 33 different kinds of foreign currencies, aggregating 1,620
in number, were purchased by the Treasurer for various agencies of
the Government at a cost of $225,868.44.
Payments aggregating $1,026,872,555.66 were made to Government officers located in 25 different foreign countries by means of
371 cable transfers.
Commercial checks, drafts, and postal express money orders, etc.,
aggregating 2,467,899 items and amounting to $2,569,997,803.31 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 Government 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 Government executive departments and bureaus. The face value
of such securities held on June 30, 1943, and June 30, 1944, classified
according to the purpose for which held, is shown in the followingtable.
~
Purpose for which held

June 30,1943

To secure deposits of public moneys in depositary banks
$252, 466,000
To secure deposits of postal savings funds.
.- -.
14,092,000
For District of Columbia:
10, 264, 250
Teachers'retirement fund
.. .
Water fund . .
1, 773,000
Other
-. • - 398, 670
United States savings bonds held for various depositors- 35, 731, 600
For the Board of Trustees, Postal Savings System
1, 357, 942, 760
For the Secretary of War
12,420, 33.0
For the Secretary of the Treasury:
12,072, 484, 757
Foreign obligations. —
Obligations on account of sales of surplus property
46. 737, 095
Capital, stock and obligations of Government corporations and
agencies
--....
. . . 8, 589, 598, 352
Other---4, 894, 269
For Farm Credit Administration
._•
- .
For Federal Deposit Insurance Corporation
3i6, 738, 400
For Federal Savings and Loan Insurance Corporation
34, 500
For Federal Farm Mortgage Corporation
.
115,000, 000
For Alien Property investment account
20,861, 207
Miscellaneous
..•
129, 367,382
Total -

.

22, 980,804, 472

June 30,1944
$424,822, 025
10, 697,050
10, 708, 050
1, 773, 000'
402,170
60, 706,026
1, 759, 425, 730
11, 365, 230
12,072, 400, 757
46, 737,095
11, 237, 797, 565
6, 361, 325
176, 000, 000
468, 725, 300
20,861, 207
117, 736, 567
26,426,419, 086

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.



200

REPORT OF THE

SECRETAHY

OF THE TREASURY

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 conimittee
then conducts formal hearings at which the bureau or division heads,
or their representatives, present oral testimony in further support of
the estimates. The conimittee, 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 1945, supplemental and deficiency. estimates aggregating $59,732,700 were received during the fiscal year 1944.
Reserves amounting to $10,936,827 were set aside from the ordinary appropriations for the fiscal year 1944 by the bureaus and offices
of the Department. During the year reserves amounting to $4,510,000 were released by the Director of the Bureau of the Budget after
approval of the committee, leaving a reserve of $6,426,827 at the
end of the year. Of the appropriations made to the Treasury Department for the fiscal year 1945, $26,111,643 has been set aside as
reserves for savings and contingencies.
For the fiscal year 1946 estimates aggregating $11,240,637,327 were
approved by the -Departmental Budget Officer and submitted to the
Director of the Bureau of the Budget. Such estimates included
$303,732,079 for annual appropriations; $2,727,541,843 for permanent
andindefinite appropriations and special funds;$3,116,647,175 for trust
funds; $4,500,000,000 for interest on the public debt; and $592,716,230
for public debt retirements chargeable against ordinary receipts.
BUREAU OF THE COMPTROLLER OF THE CURRENCY!

The Bureau of the Comptroller of the Currency is responsible for
the execution of all laws relating to the supervision of national banking associations and all banks and building and loan associations in
the District of Columbia. The Bureau is also responsible fbr the
liquidation of suspended national banks placed in charge of receivers.
Under the Emergency Banldng 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 condition oj active national banks
. The total assets of the 5,042 active national banks on June 30, 1944,
amounted to $70,401 millions, an increase of $11,429 millions since
June 30, 1943, when 5,066 banks reported. The deposits of the active
banks in 1944, excluding reciprocal interbank demand balances,
totaled $65,833 millions, which was $11,064 millions more than in
1943. The loans and securities totaled $53,518 millions, representing
an increase of $10,599 millions during the year. Capital funds of
$4,111 millions were $285 mUlions more than in the preceding year.
The assets and liabilities of active national banks on the date of
each report from June 30, 1943, to June 30, 1944, are shown in the
following statement.
1 More detailed inforniation concerning the Bureau of the Comptroller of the Currency is contained in
the annual report of the Comptroller.




201

REPORT OE T H E SECRETARY OF T H E TREASTJRY

Abstract of reports of condition of active national banks on the date of each report
from J u n e 30, 1943, to J u n e 30, 1944'
[In t h o u s a n d s of dollars]
Dec. 31,
1943 (5,046
banks)

A p r . J3,
1944 (5,048
banks)

L o a n s a n d discounts, including overdrafts. 9,190,143 10, 775, 316 10.133, 532
U . S. G o v e r n m e n t securities, direct obli28, 614, 634
'32, 552, 251
gations.
•35, 709,814
Obligations g u a r a n t e e d b y U . S. Govern' 1, 675, 768
1, 626, 304
ment
1
.Obligations of States and political s u b d i 1, 984,169
1,933,187
2, 026,333
visions. _..
1, 243,450
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, 340, 099 . 1, 266, 527
C o r p o r a t e stocks, including stocks of F e d 171, 744
145, 811
149,061
eral R e s e r v e B a n k s
-

950, 486

J u n e 30,
1943 (5,066
banks)

Oct. 18,
1943 (5,058
banks)

J u n e 30,
1944 (5,042
banks)

ASSETS

11,229,680
38,156,365

•36, 732, 082
634,504
1, 996,461
1, 291,048

2,032, 998
1, 318, 488
146,168

49,881,687

47,637,786

50,116,263

53,518,203

15,423, 238

16, 080, 664

15, 399, 509

16,059, 734

564, 415

547,470

542,465

632, 377

40, 748

33,990

30, 764

25, 582

47, 769

47, 275

49,374

49, 356

34,411

26,207

32, 582

34,003

107,788
56,978

101, 664
56, 862

103,024
59,153

116,883
64,807

58, 972,352

66,156, 984

64, 531,917

66,333,134

70,400,945

30, 518,146

30,901,323

33, 254,837

33, 557,069

32, 745, 584

8,971,178

9, 501,379

9, 926,259

10,494,797

11, 056, 548

4, 589,354

10,853,187

6,951,128

7, 201, 664

10,825,128

2, 900, 361
7,156,360

2, 603,884
7, 313, 763

2,934, 654
7,160,133

2, 947, 639
6,985, 579

2,998, 352
7, 403, 551

42,918, 721
Total loans and securities
Cash, balances w i t h o t h e r b a n k s , including
reserve balances, a n d cash i t e m s in process of collection 1
15, 227, 391
B a n k premises owned, f u r n i t u r e a n d fix566, 697
tures
R e a l estate o w n e d other, t h a n b a n k p r e m 47, 530
ises
.--r
'.
I n v e s t m e n t s a n d other assets m d i r e c t l y
r e p r e s e n t i n g b a n k premises or o t h e r real
49, 285
estate
C u s t o m e r s ' l i a b i l i t y on acceptances outstanding
30, 509
I n t e r e s t , commissions, rent, a n d o t h e r income e a r n e d or accrued b u t n o t collected.
86,079
O t h e r assets..-:
4.6,14.0
T o t a l assets L
LUBILITIES
D e m a n d 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
.
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.-.
...
D e p o s i t s of States a n d political s u b d i v i s i o n s . _.
D e p o s i t s of b a n k s i
O t h e r deposits (certified a n d cashiers'
checks, etc.)
.

633,962

613, 519

929,170

623, 232

804, 090

54, 769, 361

61, 787, 055

60,156,181

1,980

65,833, 253

D e m a n d .deposits i
45,429,851
Time deposits
9,339,510
Bills p a y a b l e , rediscounts, a n d o t h e r
liabilities for b o r r o w e d m o n e y
4,231
M o r t g a g e s or o t h e r liens on b a n k premises
a n d o t h e r real estate
67
Acceptances executed b y or for account of
reporting banks and outstanding
34, 390
I n t e r e s t , discount, rent, a n d other income
25, 622
collected b u t n o t earned
-•
...
I n t e r e s t , taxes, a n d o t h e r expenses accrued
98, 816
and unpaid
i...
.
214, 460
O t h e r liabilities.

51,918,952
9, 868,103

49,847,504
10,308,677

50,927,316
10,882,664

54,408,676
11,4U,577

36, 718

8,155

56, 600

6,205

66

61

61

60

37,836

31,642

37, 838

37, 869

T o t a l deposits i

•

23, 881

24, 472

23, 867

118,469
234, 086

138, 829
199, 550

147, 566
241, 516

55,146,947

T o t a l liabilities >

26,442
111, 884
238, 413
62, 238,414

I, 572, 475

62, 267, 330

66, 290, 336

1, 498, 008
1,474,673
584,169

1, 496,455
1,510,737
635, 839

1, 531, 515
1, 619, 769
541, 595

1, 547, 780
1,628,622
613,174

1, 553, 578
1,692,172
604,198

CAPITAL ACCOUNTS

C a p i t a l stock
...-Surplus
U n d i v i d e d profits
Reserves a n d r e t i r e m e n t account for p r e ferred stock
.

T o t a l liabilities
counts 1

and
-

capital

268, 555

275, 539

266, 563

276, 228

260, 661

3,825,405

T o t a l capital accounts

3, 918-, 670

3, 959,442

4,065, 804

4,110, 609

58, 972, 352

66,156,984

64, 531,917

66, 333,134

70,400, 945

ac-

I E x c l u d e s reciprocal i n t e r b a n k d e m a n d balances w i t h b a n k s i n t h e U n i t e d S t a t e s .




202

REPORT or, THE SECRETARY OF THE TREASURY
Summary oj changes in the National Banking System

The authorized capital stock of the 5,049 national banks in existence
on June 30, 1944 (including 4 banks that, had discontinued business
although not in formal liquidation and 3 banks chartered during the
year but not open for business as of that date) consisted of common
capital stock aggregating $1,442 millions, an increase of $82 millions,
and preferred capital stock aggregating $115 millions, a decrease during the year of $23 millions. The total net increase of capital stock
was %b^ millions. During the year charters were issued to 20 national
banking associations which had common capital stock aggregating
over $4 millions. There was a net decrease of 18 in the number of
national banks in the system during the year by reason of voluntary
liquidations, one receivership, and two consolidations under the act of
November 7, 1918, as amended.
Changes in the number and capital stock of national banks during
the fiscal year 1944 are shown in the following summary.
Organization, capital stock changes, and liquidations of national banks, fiscal year
1944

^
Charters granted—
_ .
Increases of capital stock:
3 banks, bv new issues
136 banks, by regular increases
482 banks, by stock dividends
11 banks, by conversion of preferred capital stock
3 banks, by consolidation (act Nov 7,1918 as amended)
Total increases

Capital stock

Number
of banks

--

.

.

•

87,092, 313

155,870

35

2, 594, 800
600, 000

778,430

1

2, 380, 200

22, 785, 246

2
5, 575, 000

23, 563; 676

--

- 1 8 -f 81, 517. 313
5, 067 1, 360, 656.916

-23, 407,806
138, 418,848

--

1 5, 049 1, 442,174, 229

• 115,011,042

--._.

Charters in force June 30,1944

$155,870

18,985,057
61,961, 366
1,015,890
400,000'

20

- -----

Total decreases

Preferred

$4, 730,000

20

Voluntary liquidations
-- Receiverships—.
Decreases of capital stock:
13 banks, by reduction
644 banks, by retirement
Closed under consolidation (act Nov. 7,1918, as amended)

Net changes during the year
Charters in force June 30, 1943

Common

--

---

38

1 This figure differs from that shown in the preceding table. Banks that have discontinued business
although not in formal liquidation do not submit reports of condition but are included in this table. Included also are 3 banks chartered during the period that had not opened for business as of June 30, 1944.

BUREAU OF CUSTOMS

" , ,

The principal functions of the Bureau of Customs are to enter and
clear vessels; supervise the discharge of cargo; ascertain the quantities
oi imported merchandise, appraise and classify such merchandise,
and assess and collect the duties thereon; control the customs warehousing of imported merchandise; enforce customs and other laws
by patrolling the international borders and inspecting international
traffic by vessel,, highway, raUway, and air; review protests against
the payment of duties; determine and certify for payment the amount
of drawback due upon the exportation of articles manufactured or




REPORT OF T H E SECRETARY OF T H E TREASURY

203

produced from duty-paid or tax-paid imports; prevent the smuggling
of contraband merchandise and^ the release of prohibited articles;
prevent aod detect undervaluations and frauds on the customs revenue; apprehend violators of the customs laws; enforce the Antidumping Act and perform certain duties under the Foreign Trade
,Zones Act.
Collections
After two successive years of diminishing revenue, customs collections in 1944 increased greatly over the preceding year and attained
a level which was exceeded only once during the past decade. With
a total- of $434,259,038 in 1944, collections were 32 percent greater
than in 1943, and only 11 .percent smaller than in 1937. The upward
trend in collections which prevailed during the last five months of
the preceding fiscal year continued at a less rapid rate during the first
nine months of the current year, attaining a peak of $42,998,953 in
March, an amount larger than for any single month since June 1937During the last three months of the fiscal year 1944, however, collections declined sharply, the total in June ($30,163,209) being lower
than for any other month of the fiscal year. An extension of the
scope of Executive Order No. 9177, which authorized the free entry
b}'- certain governmental agencies of emergency purchases of war
materials abroad, became effective during this period and partially
accounted for the decreased revenues. The types of collections during the past two years are shown in the following table.
Customs collections ^ and refunds, fiscal years 1943 and 1944
[On basis of accounts of Bureau of Customs]

1943

Type

Collections:
Duties:
'
C o n s u m p t i o n entries
Warehouse withdrawals
...^.......
M a i l entries
Baggage e n t r i e s - .
--,
Informal entries 2 _ _
A p p r a i s e m e n t entries
.Increased a n d a d d i t i o n a l d u t i e s Otherduties
-Total duties-

-

$228, 716,830
192,644,820
580, 640
402, 775
1,086,413
86, 519
7,051,058
741, 565

36.7
28.9
1.6
75.4
20.3
-9.2
1.6
60.9

325, 957,912

431, 310, 620

32.3

r 499, 679
•• 99, 836
20,987

669, 325
100, 641
32,971

34.0
.8
67.1

r 123, 718
1, 316, 685
« 104,966
•

164, 730
1,827,552
153, 289

33.1
38.8
46.0

-

r 2,165,871

2. 948, 418

36.1

- - r 328,123, 783

434, 269, 038

32.3

3, 957,401
10, 344, 298
19, 318

3, 910,845
10, 451, 478
89,156

-1.2
1.0
361.6

• 14,321,017.

14,451, 479

.9

T o t a l miscellaneous
T o t a l customs collections

T o t a l refunds

-

---

--

Percentage
increase or
decrease (—)

- . - $167, 310,457
149,417,688
571, 506
229, 662
903, 406
95, 336
6,938,492
491, 366
---

Miscellaneous:
'
F i n e s , penalties, a n d forfeitures
Liquidated damages.Sale of seizures
.
Sale of G o v e r n m e n t p r o p e r t y , u n c l a i m e d a n d abandoned merchandise.
--—
T o n n a g e t a x a n d n a v i g a t i o n fees All oth^r customs receipts
.--

Refunds:
Excessive duties
Drawback payments
Other

1944

'-

' Revised.
•
1 Excludes customs duties of Puerto Rico, which are deposited to the credit ofthe Government of Puerto
Rico, but includes fines and other minor collections of Puerto Rico.
2 Entries of less than $100 in value..




204

REPORT OF THE SECRETARY OF THE TREASURY

All the important t-ypes of duties showed greater revenue in 1944
than in the .previous year, duties on appraisement entries being the
only type to show a decrease. The largest relative increase app,eared
hi duties collected on baggage entries, owing partly to increased tourist
travel and partly to dtitiable articles brought in the baggage of members of the armed forces returning from overseas. Duties bn mail
entries were very little larger than during the preceding year although
the number of such entries was considerably greater, a condition due
to the great number of free mail entries which arrived from members
of the armed forces stationed abroad.
Wool continued tp be the most important source'' of customs revenue
during 1944, almost one-third of the total custoins receipts being
derived from importations of raw wool and manufactures thereof.
Second in absolute importance and of far greater relative importance
than ever before were imports of alcoholic beverages which yielded
over two and one-half times more revenue during the past year than
in 1943. Sugar was also a more important source of customs revenue,
both relatively and absolutely, than during the previous year. Increased revenues were also recorded for commodities covered by all
but four of the remaining schedules, of the Tariff Act.
Statistics on the value of commodities included in the tariff' schedules, on estimated duties and import taxes, and on the value of and
duties on merchandise imported from countries in the Western
Hemisphere are shown in the. tables beginning on page 812.
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
to the area in which all collections are turned in to the Treasury of
the United'States. Since all customs receipts in the Vhgin Islands
and all except fines and other ininor collections in Puerto Rico are
deposited to the credit of those respective governments, none of the
data for the Virgin Islands and none except those on seizures for
Puerto Rico are included below.
Entries oj merchandise.—The number of entries of merchandise
increased sharply in 1944, ending a five year period of successive
decreases. The downward trend began when the European War
started and was largely due to the changes in kinds and channels of
trade. Imports from Europe and the Orient prior to World War
No. 2 consisted generally of package goods of comparatively smaU
size and great variety. There were few bulk cargo shipments. The
closing of these markets as the war progressed reduced the number of
entries more rapidly than it affected coUections. The demand for
war materials and the limited shipping facilities during the period of
submarine activity necessitated a continuance and even a pronounced
increase in importations of those commodities usually shipped in
bulk, ahd for which a single entry might cover the enthe cargo of a
vessel. As the submarine menace passed, a considerable variety of
articles similar to those previously brought from Europe or the Orient




REPORT OF THE SECRETARY OF THE TREASURY

205

began to flow in from countries in the VVestern Hemisphere. In
most instances these were shipped as a part of general cargo to
various consignees and necessitated many entries for each shipload
of merchandise.
The only type of entry to show a pronounced numerical decline in
1944 was the warehouse withdrawals, the number of such transactions
being only about two-thirds that of 1943, although there was a considerable increase in the collections made under this type of entry.
This reflected not only the further depletion of the stocks of package
goods remaining in customs bonded warehouses but also increased
importations of such commodities as raw wpol, sugar, and alcoholic
beverages which are handled in large quantities and yield large revenues per entry. The number of entries of merchandise during the
past two years is shown in the following table.
Number of entries of merchandise, fiscal years 1943 and 1944
1943

Type
Consumption entries
Warehouse and rewarehouse entries
Warehouse withdrawals
- -_
Mail entries-Baggage entries
i
Informal entries -Appraisement entries.- . .
J
All others... '.
Total

-

- . -.

.

"

1944

Percentage
increase or
decrease ( - )

389,962
30, 834
111, 402
332, 027
624, 375
264, 755
9,962
485, 957

'23.5
.1
-31.7
10.4
68.6
16.4
15.5
-3.8

• 1, 921, 917 2,249,274
•

17.0

315, 632
30, 816
163,163
300, 728
370, 322
227, 499
8,626
'505,131

> Revised.
•

Vessel, airplane, and highioay traffic.—For the third consecutive year
border traffic increased. The only declines occurred in the number of
undocumented vessels which were required to report to customs officers
and in the number of passengers carried thereon and this was the least
important means used for crossing international boundaries. The
growth of the United States merchant marine during the year, the acceleration in vessel movements by reason of the operation of the lend' lease program, and the transportation of military personnel and supplies caused a larger number of documented vessels to be entered than
for more than, a decade; and thejiumber of passengers arriving on such
vessels also increased sharply over the previous year. Although there
was only a small increase in the number of automobUes and passenger
trains crossing the border, the number of passengers arriving by automobiles and busses and by passenger train increased by 13 percent and
49 percent, respectively. For the first time in seven years the number
of ferry.trips increased and the number of ferry passengers was also
greater.^than in 1943. The following statement covers the leading
classes of traffic for the last two years.




206

REPORT O F . T H E SECRETARY OF T H E TREASURY

Number of vehicles and persons entering the United States from abroad] fiscal years
1943 and 1944
K i n d of e n t r a n t

Vehicles:
Automobiles a n d b u s s e s .
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 trains
Aircraft
-•
O t h e r vehicles
-

1943

.-.

1944

Percentage
increase or
decrease (—)

7, 789, 628
> 29, 931
•
» 25, 937
•
»• 58,840
33, 680
17, 216
422,247

26, 742, 425
676, 312
67, 900
1, 721, 506
3,101, 303
338,992
2, 886, 262
14, 566, 267

-57.9
• 21.5
48.7
71.2
^ 28.0
21.7

42, 099, 302

T o t a l passengers a n d pedestrians

• 1.6
32.0
-16.3
8.4
1.2
50.2
3.0

23, 622, 645
-• 388, 962
-• 161, 305
> 1, 416, 910
•
2, 085, 463
197, 993
2, 254, 539
11, 971, 485

Passengers b y :
Automobiles 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
.
Aircraft
-.
O t h e r vehicles
..J
.
Pedestrians

7, 915, 026
39, 529
21, 713
63, 780
34, 079
25,865
434, 994

50,100,967

19.1

13.2
73. 9

"•Revised.

Airplane traffic on international lines continued its expansion for
the thirteenth consecutive year. The number of airplanes arriving
from abroad was 50 percent larger and airplane passengers were 71
percent more numerous than during the preceding year. More than
one-third of the planes and more than two-fifths of the passengers
arrived at the port of Miami, Fla. Large increases in airplane traffic
were also recorded at Fort Fairfield, Maine; Baltimore, Md.; Washington, D. C ; Seattle, Wash.; and Great Falls, Mont.; while smaller
increases took place at Bangor, Maine; Burlington, Vt.; Buffalo and
New York, N. Y.; BrownsvUle, Tex.; Bellingham, Wash.; Pembina,
N. Dak.; Detroit, Mich.; and Fairbanks and Juneau, Alaska. International traffic into San Antonio, Tex., on the other hand, which had
been substantial during the previous year was of little importance
during 1944.. The following table shows the number of airplanes
and airplane passengers entering the United States during the past
twO' fiscal years.
Number of airplanes and airplane passengers entering the United States, fiscal years
1943 and 1944
Airplanes

A i r p l a n e passengers

Percentage increase or
decrease ( - )

District
1943
N o r t h e r n border:
Maine
•
Vermont
New York-.Buffalo
Maryland
Michigan
Dakota
Montana
-..Washington
Other

'
-

Total




.-.

1944

1944

1943

1,143
899
1,088
568
84
784
608
345
. 730
148

2,806
1, 041
1, 291
614
805
953
• 688
718
1, 247
131

9,895
10, 588
14, 593
2,648
1, 985
8,097
5, 562
3,397
4,200
480

6, 397

10, 294

61,445

-

Airplanes

Passengers

22, 714
16,155
16,145
4,775
9,627
11, 696
9,441
9,968
10,996
'
1,303

14.5. 5
15.8
18.7
8.1
858. 3
21.6
13.2
108.1 .
70.8
-11. 5

129.6
52.6
10.6
80.3
385.0
43.2
69.7
193.4
161.8
171. 5

112,719

60.9

83.4

EEPORT OF THE SECRETARY OF THE TREASURY

207

Number of airplanes and airplane passengers entering the United States, fiscal years
1943 and 1944—Contmued
Airplanes^

.

Percentage increase or
decrease ( - )

A i r p l a n e passengers

District
1943

S o u t h e r n border:
Los Angeles
El Paso
Laredo.
Galveston . N e w Orleans
Arizona.--

1944

1944

1943

348
403
1, 586
371
11
93

' 362
360
1,505
361
218
1

2,812

2, 807
9,553
1,146
2,065

-

8,007

12, 764

17,216

25,865,

197, 993

-.2

42.8

43.9
24.3
362.0

55.1
29.5
414.7

180, 744

104, 659

G r a n d total

Total

--

29.1
135.1
12.3
60.0
2, 611. 2
-99.5

59.4

72.7

338, 992

94,181
4,992
5,486

.

4.0
-10.7
-5.1
-2.7
1,881.8
-98.9

45, 529

31,889

6,638
922
447

Total

Passengers

146,044
6,463'
28, 237

• 4,151
2,299
20, 972
4,096
187
184

Florida
Alaska
Hawaii

Airplanes

50.2

7L2

6,360
5,404
23, 548
6,146
5,070
1

Drawback transactions.—All types of drawback^ transactions continued to decline for the second successive year, the total drawback
allowed amounting to $10,424,184 or $1,590,625 less than in 1943.
More than 99 percent of the drawback allowed was drawback on
merchandise manufactured from imported materials, of which the
most important during 1944 were copper, raw wool, cane, sugar,
tungsten, lead, zinc, and aluminum. The number of drawback
notices of intent and the number of drawback entries decreased by
33 and 41 percent, respectively. A comparison of these transactions
during the past two years is presented in the following table.
Drawback transactions, fiscal years 1943 and 1944
1943

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 district
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 liquidation
Certificates of i m p o r t a t i o n issued

l
--

1944

Number'
16,946

Transaction

• Number
9,334

120, 983
96, 593
'89.706
7,376
13, 206
4, 270

.

80,762
64, 334
61, 382
• 4,779
11,011
3,113

Amount
Amount
D r a w b a c k allowed:
$11,954, 454.18 $10, 402, 553.88
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 continuous
22, 763.42
customs c u s t o d y
10,403.42M e r c h a n d i s e which did 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 customs c u s t o d y a n d ex'
ported- --.
- '.
35,929.85
• 11,227.16
Salt used i n curing fish
1,662. 46
T o t a l d r a w b a c k allowed
I n t e r n a l r e v e n u e refund on account of domestic alcohol
Total -




12,014. 809. 91
257,982.12
12, 272, 792.03

"
10,424,184.46

Percentage
increase or
decrease ( - )

-41.6
-33.3
' -33.4
-31.6
-35.2
-16.6
—27.1

-13.0
—54.3
-68.8

434, 771. 67

. —13.2
68.6

10, 858, 956.13

—11 5

208

REPORT OF THE SECRETARY OF THE TREASURY

The following table shows the principal commodities on which
drawback was paid during the past two years.
Principal commodities on which drawback wai' paid, fiscal years 19 43^ and 1944
Commodity

Copper
Wool....
Sugar..
-_
Tungsten ore
Lead ore, matte, pigs
Zinc ore and blocks
Aluminum, crude
Tobacco, unmanufactured
Butter
Bauxite ore
Petroleum, crude
Machinery and parts
Manganese Carpets an d rugs
Coal-tar products
-.
Flaxseed
iVickel.
- Raw cot ton
Iron and steel manufactures
Tallow, inedible

---

-

..-

. - $2, 397, 794. 38 $2, 492, 519. 32

-

-

-

.

_-

,:

Percentage
increase or
decrease ( - )

1944

1943

-- _.-

656, 360.83
3, 221, 663.16
331, 605. 95
865,333.88
371, 615. 98
479,006. 25
150, 242. 57
122, 708. 21
134, 280. 85
416, 924. 39
,

264, 490.14
50, 316 03
649,003 66
163,358 42
218,027 20
196, 412'42
143, 312 63
102, 470 81

2, 266, 309. 61
1, 034, 269. 56
852,843.13
607, 223. 47
598, 229. 08
559, 462. 84
137,444. 54
127, 420. 55
124,179. 87
. 118, 058. 68
108, 224 57
91, 951 97
89,957 29
. 85, 825 98
85,447 15
65,080 94
93,197 08
33, 400. 06
69,135. 09

4.0
245.3
- —67.9
167.2
—29 8
61.0
16.8
-8.5
3 8
—7. 5
—71.7
-65. 2
78.8
—86. 8
—47. 7
-70.2
— 52. 6
—76. 7
—32.'5

Protests and appeals.—A much smaller number of protests were
filed during 1944 than during the previous 3^ear, continuing the decline
evidenced since the start of the Vv^ar. -The number of appeals for
reappraisement also declined rather sharply as some of the difficulties
encountered during preceding years by appraising officers in ascertaining the correct foreign value of imported merchandise were overcome. The following statement shows the progress of this work
during the past two years.
Number of protests and appeals, fiscal years 1943 and 1944
Status
Protests:
Filed with collectors by importers ^
Allowed by,collectors--.;.-Denied by collectors and forwarded to customs court.
Appeals for reappraisement filed with collectors

1943

^ 10,882
666
•• 14, 072
• 4,548

1944

6,762'
404
7,644
2,944

Percentage
decrease
37.9
39.3
45.7
35.3

» Revised.
•

Appraisement.—The importation of new classes or types of merchandise from countries of the Western Hemisphere increased during
the past year even more than during the earlier war years. Prior to
the war comparatively few classes of manufactured articles were
brought from Mexico and South American countries, merchandise
received from these countries being largely raw or unmanufactured.
During 1944 manufactured articles arrived from these countries in
increasing quantities so that the value of merchandise dutiable at ad
valorem rates amounted to $201,303,824 and ad valorem duties of
$35,687,613 were collected thereon, representing increases of 16 and
27 percent, respectively, over the totals for the preceding year.
Owing, no doubt, to the demands of the American market, the




REPORT OF T H E SECRETARY OF T H E TREASURY

209

manufactured articles imported from Mexico and South America
improved to such an extent in quality that they compared favorably
with the same or similar articles previously imported from Europe.
Many problems arose during the past year as to the correct valuation
of commodities imported for the first time as well as of articles which
were improved in construction or finish. This was complicated both
by difficulty in obtaining satisfactory information relative to market
conditions in foreign countries and by the rather wide use of multiple
currencies. As a result, merchandise covered by over 15,000 invoices
remained unappraised at the end of the year. Legislation which will
help solve this problem has been recommended.
Prices and values of imported merchandise have, exhibited an upward trend for the past several years and^this, moreover, was accompanied by price fluctuations as improvements or refinements in the
construction of manufactured articles were made. Appraising officers,
therefore, had an unusual amount of work to perform in order to keep
posted as to the foreign and export values of imported merchandise.
Not only were commodities received from countries which did not
previously export them to the United States, but because of war conditions certain classes of merchandise, which previously were imported
at a liinited number of ports, were received at many additional ports.
These conditions necessitated the transfer of appraising personnel or
the detail of trained personnel to meet the temporary diversion of
cargo.
Differences in opinion as to the classification and value of imported
merchandise, when not settled by the appraising officers, were referred
to the Bureau for instructions. The Customs Information Exchange,
which is a clearing house for customs information, played a large part
in adjusting these differences.
The activities of the Customs Information Exchange are reflected
by the following statistics.
Activity

Appraisers' reports of value or classification received
Differences in classification reported
Dift'erences in value reported
_
Appraisement appeals reports received
.
Changes in value circulated
1
Reports and price lists afl'ecting values circulated
Requests for foreign investigations
Copies of foreign reports and price lists forwarded to interested
.appraising officers

1943

1944

Number

Number

Percentage
increase or
decrease ( - )

11,261
854
1, 637
946
321
667
419

15, 304
1,457
2,542
618
224
7,026
373

35.9
70.6
55.3
-34.7
-30.2
953.4
-11.0

11, 508

15, 253

32.6

Laboratories.—During the fiscal year 1944 the work load of the
nine customs laboratories was significantly increased, the result not
only of an increase in the number of samples tested but also of a
change in the character of work performed. The number of samples
tested in 1944 was 110,236 compared with 91,955'" in the previous
fiscal year and 100,652' in 1942.
In previous years approximately 50 percent of the samples received
represented importations of sugar, the polariscopic tests of which
lend themselves to routine analytic procedures. During the fiscal
» Revised.
•
613185—4.0-

-15




210

REPORT OF THE SECRETARY OF THE TREASURY

year 1944 tlie sampling and testing of sugar importations were discontinued so that only about half as many sugar samples were analyzed as in the previous year. On the other hand, six times as many
samples of alcoholic beverages were tested in 1944 as during the
previous year. In 1943 liquor samples comprised only 8 percent
of the total samples tested whUe during the past fiscal year they
represented 40 percent of the total. Since alcoholic beverage tests
require considerably more attention by the analyst, this change
significantly increased the actual work load of the laboratories.
In addition to their regular customs work the customs laboratories
undertook, as in the previous year, to test large numbers of samples
for various war agencies, including the United States Maritime Commission, Lend-Lease Administration, Panama Canal, Army, Navy,
Marine Corps, Metals Reserve Company, War Food Administration,
Office of Price Administration, and others. The war agencies, in
using customs laboratories for testing and other work, avaUed themselves of technically trained personnel to conduct their tests. In
addition, both the United States Maritime Commission and the War
Food Administration during the past year placed in customs laboratories 16 technically trained employees from their own rolls to conduct
their tests under the supervision of customs chemists.
As a Result of major research investigations designed to improve
,the analytic work of the laboratories, as well as customs' sampling
of merchandise, new methods for sampling alcoholic J^everages and
sugar were developed. The special investigative section of the Baltimore laboratory also developed new and improved fingerprinting
powders and devices for assisting investigators in surveillance work.
Laio enjorcement activities
Seizures.—For the third successive year more seizures for violations of the customs laws were made than during the preceding year.
Every type of seizure except seizures of prohibited articles was more
numerous than in 1943. The total value of goods seized in 1944 by
customs officers, moreover, was more than three times as great as in
the previous year. This increase was accounted for by the seizures
of distilled liquor. A s t h e result of the depletion in stocks of domestic
distilled liquors, owing to the diyersion of all domestic alcohol for the
production of synthetic rubber and for other war purposes, tliere was
a,heavy demand for imported distilled liquors, much of which was
sent to the United States by shippers who never previously entered
the American market and were not familiar with the requirements as
to the marking of such shipments to indicate the names of the consignee and the net content of the container. As a result, huge seizures
had to be made for noncompliance with the customs laws and regulations of the United States. In most instances the violation was
unintentional and the accrued forfeiture was remitted. I t was impossible, however, to consider these cases as other than seizures. The
quantity of liquor seized for such technical violations amounted to
2,398,982 gallons, valued at $24,255,239.
A somewhat similar situation existed in the case of the cargo of
vessels seized for a violation of the law which provided that no vessel
of under 30* net tons burden may bring into the United States dutiable
merchandise without a special license issued by the Secretary of the




211

REPORT OF THE SECRETARY OF THE TREASURY

Treasury, and that every vessel not exceeding 500 net tons from a
foreign port with spirits, wines, or other alcoholic liquors on board
have a certificate issued by a United States consular officer or other
authorized person for the importation of such merchandise. The
value of the cargo seized'for such violations amounted to $3,984,380
in 1944 and $6,300,582 in the previous year. In most instances, these
violations were due to shipping shortages occasioned by the war, which
caused persons to engage in a trade with which they were unfamiliar,
and although the seizures were actually made, the violation wias not
sufficiently flagrant to justify the actual forfeiture of the goods which
was remitted either unconditionally or upon payment of a comparatively small sum. Exclusive of this type of seized goods, the value
of merchandise seizures during the past year was $1,178,644 compared
with $931,997 during the previous year. Increases in value were also
recorded for colors, dyes, etc., textiles and textUe materials, rubber
manufactures, guns and ammunition, cigars, hardware, machinery
parts, and livestock.
Excluding the technical seizures of distilled liquor, mentioned above,
there were 6,505 seizures of distilled liquors in 1944, an increase of
67.1 percent over the previous year. These liquors aggregated 5,324
gallons and were valued at $96,044; they represented increases of
120.6 and 211.6 percent, respectively, over 1943.
Narcotics seizures were more numerous than in 1943 but declined
sharply in quantity and value. No seizures of major importance
were made during the entire year. The largest seizure of smoking
opium (140 ounces) was made at Douglas, Ariz.; the largest seizure
of crude opium (128 ounces) was made at New Orleans, La.; and the"
largest seizure of marihuana (553 ounces) was made at Hidalgo, Tex.
The quantity of seized narcotics during 1944 was 2,627 ounces of
marihuana and 5,990 ounces of all other drugs as compared with
4,131 ounces of marihuana and 7,507 ounces of other drugs in the
previous year. The number and principal types of seizures made
for the violation of customs laws by the Customs Service and other
governmental agencies during the past two years are shown in the
following table.
Seizures for violations of the customs laws, fiscal years 1943 and 1944
Percentage
increase or
decrease (—)

Seizure

Merchandise:
Number-.-.
:
Value:
Jewelry, etc
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 goods...
Stationery supplies and books
' •
Cigars, etc
Prohibited articles
Livestock (except horses)
Colors, dyes, etc
Lubricating and fuel oil
J^
Cargo of seized vessels




5,816
$175,163
101. 296
176, 754
16, 224
16,946
63, 637
107,864
2,065
12, 703
17, 644
7, 422
4,446
4,810
2. 363
3, 884
8,723
6,300,582

9,449
$227,301
70, 238
• 61,976
, 97, 5.05
, 33, 851
. 66, 730
; 27,568
6, 851
28, 836
3,289
8.302
11, 574
13, 261
4.945
449, 998
982
3,984, 380

62.5
29.8
-30.7
-70.6
501.0
99.8
-10.9
-74.4
233.4
127.0
-81.4
11.9
160.3
175.7
109.3
11, 485.9
-88.7
-36.8

212

REPORT OF THE SECRETARY OF THE TREASURY

Seizures for violations of the customs laws, fiscal years 1943 and 1944—Continued
Seizure

1943

Merchandise—Gontinued.
Value—C on tinued.
Gasoline
:
Chemicals...
.
Vehicle accessories
.
Lumber
Brick and granite
.,--Metal
'---Machinery parts
Rubber, excluding tires
Medical and scientific instruments
Miscellaneous
.
Total value

---^

-

Percentage
increase or
decrease (—)

$12
3,912
10,712
7,341
356
10, 381
31,048
14, 953
2,239
4,483

$100,150
44,114
18,896
9,991
6,543
9,404
13, 898
^ 2,892
1, 569
°2, 606

-99.9
-91.1
-43.3
-26.5
-94.6
10.4
123.4
417.0
42.7
72.0

7, 232, 579

129

729
$137, 587

878
$75,546

-42.0
-53.8
20.4
-45.1

7,020
3.894
2. 404, 306
2,413
$30,823 $24,351, 283
$662, 758
$2, 378, 611

.
'--..-'

6,163,024

584
279

Prohibited articles:
Obscene, number
• Lottery, number
Narcotics:
• Number--Value
Liquors:
Number.:
Quantity (gallons)
Value
Boats, automobiles, airplanes, and horses: Value.
Grand total:
Number
Value

1944

80.3
99, 539. 7
78, 903.6
-72.1

-28.6

17. 815
11. 302
$9, 779,600 $30, 252, 611

57.6
209.3

In addition to the goods that were seized, claims aggregating
$11,247,736 were initiated by the Customs, Service against importers
in connection with various irregularities and frauds which did not
necessitate a seizure or which 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.
For the second successive year the number of automobUes seized
was greater than during the previous year. This increase was due to
Seizures for violations of customs laws, classiHed according to agencies participating,
fiscal year 1944
Total

Number!

Value

Customs Agency Service:
757 $1,920^ 940
Investigative Unit
196,995
555
Enforcement Unit
Customs Service, exclusive of
16,180 28,096, 678
Agency Service

Liquor

Narcotics 2

Num- Value Number
ber

18 $1,845
60 6,155

Value

53 $1,616,871
112
30,007

Lot- Merchandise
tery
and
obscene, Num- Value
num- ber
ber

-------

686 • $253,874
382
70.094

777 67, 074 6,697 22,691, 292

457 8,249 4,827,656

Total Customs Service-. 17. 492 30, 214, 613
24,433
Immigration - .
119
Customs Service 'assisted by
' 10, 697
115
other services
Other Federal and local offi2,968
89
cers

855 75. 074 6,862 24, 338,170
16
344
52
7,583

458 9,317 5,151, 624
51
7,318

: . . 17, 815 30. 252, 611

878 75, 546 7,020 24, 351, 283

Grand total
Footnotes at'end of table.




6
1

128

63
43

.

3,878

2

44

2,816

1, 65 2

8

37

1,266

468 9.449 6,163,024

REPORT OF THE SECRETARY OF THE TREASURY

213

Seizures for violations of customs laws, classified according to agencies participating,
fiscal year 1944—Continued
Total
Boats
value
boats,
automobiles, air- N u m planes,
Value
ber
and
ho -ses
C u s t o m s Agency Service:
Investigative Unit
Enforcement U n i t
.- --C u s t o m s Service, exclusive of
Agency Service -__•T o t a l C u s t o m s Service
Immigration
C u s t o m s Service assisted b y other
servicesO t h e r Federal a n d local ofRcers

Horses

Airplanes

Value

NumNumber
ber • Value

39" $24, 685
141 88,101

4.
68

Number

Value'

$1,090
1,657

$48, 350
90,739

4 $22, 575
981
16

510, 556

. 28 377, 736

224 129,415

2

$3, 300

5

105

649, 645
9,188

48 401, 292
12
3

404 242, 201
9,145
18

2

3,300

67
3

2,852
31

1

25

71

2,908

3,875
50

1

50 ^

52 401, 354

662, 758

G r a n d total

Automobiles

4
1

3,800
50

427 256,196

2

3,300

1 Excludes number of boats, automobiles, and horses, as they were seized in connection with narcotics,
etc., seizures.
.
2 Other types of seizures of narcotics are described in the section under the Bureau of Narcotics.

the seizure of 160 cars, and trucks for liquor and narcotic violations in
1944 compared with only 34 such seizures during the previous year.
Fewer automobiles were seized for other than liquor and narcotic
violations than during the previous year. The 1944 total includes
only one automobile valued at $50 seized by Secret, Service oflB.cers
and delivered to the Customs Service for forfeiture as compared with
8 automobUes valued at $2,125 during the previous year.
The following table summarizes the number of boats, automobUes,
etc., seized for customs violations during the past two years.
Boats, automobiles, airplanes, and horses seized, fiscal years 1943 and 1944
F o r liquor violations

F o r narcotic violations

F o r other viola- '
tions

Total

Seiziii'e
1943
Boats:
Number--„-..
Value
Automobiles:
Number
Value
Airplanes:
Number
ValueHorses:
Number
' Value - _
Total value-

.1944

1943

1944

7
$46, 017
4
$1,670

104
$53, 653

1943

50
$2,223,078
•30
$13,150

66
$30,660

300
$139,806

1944

1943

60
45
$356, 337 $2, 223, 078

52
$401, 354

334
$164, 626

427
$256,196

267
$170,883
2
$3,300

29
, $907
$1,670

$99, 670

$13,160

$30,660 $2, 363,791

,1944

2
$3,300
29
$907

71
$2, 908

$532, 428 $2, 378, 611

$662, 758

7i
$2, 908

During the year 234 seized automobiles and trucks were returned to<
petitioners because the violations were not sufiiciently flagrant to warrant forfeiture. Of the 103 automobiles and trucks forfeited, 36 were
assigned for official use either to the Customs Service or to some other
governmental agency and 67 were sold at public auction.
In the course of their regular duties officers often apprehend violators of other than customs laws. During the year^ 3,084 seizures



214

REPORT OF T H E SECRETARY OF T H E TREASURY

were made for other departments and agencies, of which 2,500 were
made for the Department of Agriculture. There were 438 persons
apprehended, of whom 408 were for the Immigration Service.
Legal proceedings.—As the result of narcotic seizures, 389 persons
were presented for prosecution. Including cases pending from the preyious year, those which were concluded resulted in 182 convictions and
73 acquittals. Prison sentences aggregating over 168 years and fines
amounting to $8,477 were imposed by the court on convicted offenders.
In addition penalties aggregating $36,480 were assessed against.themasters of 133 vessels on which narcotic drugs were found concealed;
many of these cases have not been concluded, but, including cases initiated prior to July 1, 1943, $28,327 was collected from the masters of
vessels.
Fines, penalties, etc.—Collections from fines, penalties, forfeitures,
liquidated damages, and sale'of seizures aggregated $802,937 in 1944,
an increase of $182,436 over the previous year. The collections in 1944
werfe larger than during any of the 3 preceding years. False invoicing
including undervaluation was the largest source of this type of collection for the past 4 years. Considerably greater collections were made
in 1944 in connection with the attempted smuggling of distilled liquors
than in either of the two previous years; the shortage in the supply of
alcoholic beverages in this country was responsible for the larger
number of cases of attempted liquor smuggling.
There have been substantial collections during each of the past three
years for violations of. the navigation laws. Such collections were formerly deposited to the credit of the Department of Commerce but with
the transfer of the enforcement of niany of the navigation functions to
the Bureau of Customs on March 1, 1942, these became customs collections. During 1944, for the first time, customs collections were.made
for attempted violations of the Export Control Act. A number of
these collections represent either fines imposed as a result of court
action or the net proceeds of sale of seized property by the order of the
court.
The following table presents the record of collections for violations, of
the customs laws for the fiscalyears 1941 through 1944.
Collections for violations of the customs laws, fiscal years 1941 through 1944

Violation

1941

1942 r

1943'

1944

Fines, penalties and forfeitures:
Undeclared articles in baggage of
passengers arriving from abroad
$71,897.46 $62, 094. 02 $64, 397. 30 $128, 389. 44
False invoicing, including undervaluation.
...-.
403,900. 48 257, 840.10 250, 999. 28 273, 665.«39
45; 188. 42
46, 493. 33 . 8, 693. 36 10,297.27
Liquor..
-.
Smuggling (including conspiracy) - - - 12, 827. 77 98, 092.41 ,49, 900. 86 . 44,409.69
Failure of masters of vessels to make
complete manifest of imported
JO, 927. 22 11, 609. 35 .11, 237. 26 26,100. 61
merchandise
1
Unlading foreign merchandise with8, 241. 90
8,917. 67 10,172. 82 23,068. 84
out customs supervision
Narcotic:
By masters of vessels on which
9, 009. 94 24,732.55,
violations occur
- 38,169. 94 16,092. 28
13, 624. 86
2, 804. 39
8, 023. 88 • 7,088.64
Other offenders
2, 482. 50
4,181. 25
3, 284.11
4,095.16
Irregularities in mail importations-—
. Failure to report arrival in United
6,957. 86 • 4,724.61
8,061. 60
3, 626.85
States
f Revised.




Percentage
increase or
decrease (—)
between 1943
and 1944 '

99.4
9. 0
338.8
-11.0.
132.3
126.8
174. 5
92.2
-39.4
122.0

REPORT OF THE SECRETARY OF THE TREASURY

215

Collections for violations ofthe customs laws, fiscal years 1941 through 1944—Con.

Violation

F i n e s , penalties and forfeitures—Con.
Navigation.
..
E x p o r t Control Act
T r a n s p o r t a t i o n of smuggled merchandise
Miscellaneous
T o t a l fines, penalties, a n d forfeitures
Irregularities in b o n d e d i m p o r t a t i o n s
(liquidated damages)
.'
N e t proceeds from sale of goods seized
. a n d forfeited for all violations . .
Total

1941

• 1942 r

1943 '

1944

Percentage
increase or
decrease (—)
between 1943
and 1944

22.3

$12, 650.15

$22,863. 94

$27, 955. 00
10, 576. 36 •

$2, 615. 00
3, 027. 84

2, 297. 24
21, 968. 01

9, 753.12
46,236. 31

12,213.25
28,866.67

25.2
-37.6

612, 044. 44

516, 287.19

499, 678. 75

669,325.18

34.0

106, 997.11

110, 916. 76

30,182. 06

16.178. 04

20,987. 21

32, 970. 69

57.1

749, 223. 60

643, 381. 99

620, 501. 49

802, 937. 21

29.4

99, 835. 53. 100,641.34

.8

' Revised.

Investigative and patrol activities.—Despite the shortage of experienced personnel all types of investigations of alleged violations of
customs laws were more numerous during 1944 than during the previous year with the single exception of touring permit investigations.
Investigations of narcotic smuggling produced evidence of well
organized conspiracy along the Mexican border to smuggle substantial
quantities of opium and heroin into border ports for transportation to
New York via San Francisco and Los Angeles. Joint investigations
by customs and narcotic officers resulted in a number of important
arrests and seizures and many of these investigations are still being
conducted. Investigations of fraudulent undervaluation and false or
erroneous invoicing and entry also increased substantially despite the
paucity of European and Oriental information regarding market values,
owing to the removal of foreign investigative officers from those areas
as the result of the war. Most of the seizures or apprehensions resulting from attempts to undervalue imported merchandise were
originated and developed by investigative officers.
.
Most of the types of investigations in matters not involving the
violation of customs laws were also more numerous in 1944 than in
1943. An exception to this general trend appeared in the case of
personnel investigations, either those involving derelictions or those
of the mere routine character type. Many of the personnel investigations d^uring 1943 would ordinarily have ,been performed by Civil
Service investigators but were delegated to customs investigative
officers in order to expedite the completion of the reports.
During recent years in addition to their regular customs duties
investigative officers have participated in investigations for other
agencies engaged in the war effort. Included in such investigations
during 1944 were 3,105 investigations for Export Control and 43 for
Foreign Funds Control.
A partial summary of the activity of the investigative officers of the
Customs Service during the past two years is presented in the
following table.




216

REPORT OF THE SECRETARY OF THE TREASURY '
Inve'si'igative and patrol activities, fiscal years 1943 and 1944
Activity

1943

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
-.
--.
Applications for customhouse brokers' licenses
Applications for bonded truckmen's licenses ..
Petitions for relief from additional duty
Personnel
Navigation violations.
:
Pilferage of merchandise
---Miscellaneous
Examinations of customhouse brokers'.records
Cases of cooperation with other agencies

1944

Number

Number

674
104
1,104
636
752
1,726
241
159
863
481
85
45
354
1,712
253
202
2,725
193
7,258

.

Percentage
increase or

(-)

997
198
2,578
732
1, 001
2,096
239

47.9
90.4
133.5
15.1
33.1
21.4

150
1,075
897
75
• 49
828
762
466
360
2,157
618
. 6,425

-5.7 .
24.6
86.5
-11.8
8.9
133.9
-55.5
84.2
78.2
-20.8
220.2
-25.3

Miscellaneous
War activities.—The special activities of customs officers, growing
out of the prosecution of the war, continued throughout the past
year. These activities include the handling of communications or
correspondence coming into or going out of this country by courier
or otherwise than in the regular course of the mails; the regulation of
imports and exports of merchandise by various governmental agencies
for use in national defense or belligerent operations; the disposition
of property salvaged from torpedoed or wrecked vessels; the admission
into the United States free of duty during the war of such special
categories of merchandise as effects of persons in the Government
service or persons evacuated to this country by Government order,
articles for members of the armed forces of the United Nations or for
enemy prisoners of war, and articles sent home as gifts by our soldiers
and sailors abroad; the enforcement of export licensing requirements
for strategic materials; the control of shipments to blocked nationals;
and collaboration in the enforcement of export control, alien property
control, trading with the enemy, foreign funds control, and other war
measures.
Customs officers continued to give assistance to yarious military
and civUian governmental agencies in cases involving war problems
touching upon the field of customs jurisdiction and maintained close
cooperation with the Office of Price Administration in'Connection
with the importation of rationed articles, and the lading of rationed
ships' stores on outgoing vessels. Special procedures were continued
for granting vessel clearances in the offices of collectors of customs to
guard against the leakage of ship-movement information to unauthorized persons.
Among the new war problems which confronted the Customs
Service in 1944 were the extension by Presidential proclamation of
certain statutory time limits regarding importations; the customs
status of enemy aliens and their property; and the application of the
Soldiers' and Sailors' Civil Kelief Act to imported merchandise in
customs custody owned by members of the armed forces.



REPORT OF THE SECRETARY OF THE TREASURY

217

The Secretary of the Treasury, pursuant to the authority contained in the Second War Powers Act, 1942, issued a number of orders
waiving compliance with certain provisions of the navigation laws.
The majority of these orders were given a confidential status because
of their close relation to the war eff'ort and the special nature of their
contents, but some, of more general applicability, have been published.
Among the more important orders in the latter class were those (1)
permitting Canadian halibut fishing vessels to land their catches of
halibut in Alaska for a limited time in 1944, as was permitted during
the previous year and (2) permitting the omission of the tonnage of
enclosed shelter-deckspace from the gross tonnage of certain yessels.
The simplified procedure for the admeasurement of vessels of the
so-called Liberty Ship class by the use of standardized figures for
vessels of this class, all of which are nearly identical in design and
arrangement, was continued during 1944 and was extended to certain
other classes of vessels. A tolerance of three-tenths of one percent
in the gross and net tonnages continued to be allowed in order that
small and unimportant variations in the use of spaces.on individual
vessels might be disregarded in the interest of speed and economy in
measurement.
Publications.—The increase in the number of vessels of the United
States, by building or otherwise, is reported in the annual pubhcation
of the Bureau of Customs entitled Merchant Marine Statistics. A
list of such vessels, describing each one in detaU, was prepared and
published in the annual Merchant Vessels of the United States.
However, because of the nature of the information contained therein,
the distribution of these publications has been carefully restricted.
Overtime.—A change in the law regarding reimbursable overtime
services, which wUl increase considerably the cost of operation,of the
customs service, became eft'ective through the enactment of Public
Law 328 on June 3, 1944. This law was the result of the decision of
the Supreme Court on January 3, 1944, in the case of tlnited States vs.
Howard C. Myers, in which it was ruled that extra compensation under
the Customs Overtime Act as amended (19 U. S.^C. 26'7) is payable to
customs employees for work on Sundays and holidays even though
such services are performed within the employees' regular tour of
dut}^, and that toll bridges and toll tunnels are subject to the provisions of the Customs Overtime Act.
The Myers case originated in suits filed in the United States Court
of Claims in September and October 1937 by Howard C. Myers and
several other customs inspectors at Detroit for overtime compensation
for work performed on Sundays, holidays, and at night during the preceding six years even though compensatory time oft' had been allowed
for Sunday and holiday work. At Detroit, as at many other places
along the land border, regular tours of duty were long ago established
as a convenience to the traveling public and jDrotection to the revenue,
so that customs officers would be present to perform their duties at
any hours when there was traffic) over highways, across bridges, through
tunnels, by ferries, or on passenger trains. The establishment of such
tours of duty provided that customs officers be on duty only the specified number of hours per day and per week but required that many of
them be on duty at other times than between 8 a. m. and 5 p. m. on
week days.




218

REPORT OF THE SECRETARY OF THE TREASURY

The decision of the Supreme Court denied to the employees any
extra compensation for service''performed on regular tours of duty
between 5 p. m. and 8 a. m. on week days but held that extra compensation was payable for services performed during any part of the 24
hours on Sundays and holidays even though such services were performed within the employees' regular tours of duty. The Supreme
Court also held that operators of toll bridges and toll tunnels came
under the Customs Overtime Act, a broadening of the previous interpretation of this act, the reimbursable provisions of which had been
considered applicable only to the owners of vehicles, vessels, or other
conveyances and only when a special permit was issued by the collector calling for work to be performed by a customs officer in excess
of his regular days' work.
Rather than repay to the Government the overtime compensation,
some of the operators of bridges along the border closed, their facUities
on Sundays and holidays causing considerable hardship to the traveling
public, until the passage of Public Law 328 relieved them of the liability, for this .extra expense. Under the provisions of this act, customs officers and employees performing inspectional services on
Sundays and holidays in connection with traffic over, on, or through
an international highway, tunnel, bridge, or ferry (as defined in the
act) shall-be paid by. the United States in accordance with existing
law as interpreted by the Supreme Court in the Myers case without
claiming reimbursement from any source.
Foreign Trade Zone.—Most of the operations of the Foreign Trade
Zone in New York City were removed on July 23, 1943, from the
warehouses at Stapleton to four North River piers, because of the
need of the War Department for the Staten Island facUities. Although many^of the commodities handled in the zone never enter the
commerce of the United States, the zone facUities being used to a large
extent for the storage and manipulation of merchandise during the
process of its transportation from one foreign country to another,
considerable revenue has been collected from goods removed from the
zone and brought into customs territory during each fiscal year since
1937 when the zone was opened. With the single exception of 1942,
each successive year has seen increased customs collections as the
result of the zone operations. Duties and internal revenue collections
in 1944 aggregated almost $18,500,000, owing to the large quantities
of bulk liquors entered from the zone into customs territory, an increase of 246.8 percent over the collections in the previous year.
Training oj employees.—^Training through correspondence courses
was maintained although the number of ports of entry holding local
classes and discussion groups continued to decrease, because of reduction of personnel, difficulty in trahsportation, overtime work, etc.,
resulting from war-time conditions. Instruction classes were conducted at twenty-four ports of entry with an average of fifteen customs
officers and employees in attendance at each class. Discussion groups
were conducted at twenty-five additional ports of entry and customs
stations where the number of regularly assigned personnel was too
small to warrant formal classes. A total of 430 instruction classes and
341 discussion groups were conducted during the year.
Changes in ports and stations.—The port of entry, at Westby,
Mont., and the customs station at Kelley Island, Ohio, were discon-




REPORT OF THE SECRETARY OF THE TREASURY

219

tinned during the year. No new port of entry was established, but
one new station was designated at Marblehead-Lakeside, Ohio.
Cost oj administration.—^The total revenues collected-by the Customs Service, including collections for other departments and Puerto
Rican collections other than duties, amounted to $727,251,316 as compared with $414,191,247 in 1943, an increase of 75.6 percent. Collections in 1944 were the largest in customs history, because of the greatly
augmented internal revenue taxes collected by customs officers on
imported liquor. Such coUections amounted to $292,019,928 in 1944
and $85,019,387 in 1943, an increase of 243.5 percent.
The expenses during the year were $25,044,572, an increase of
$1,662,932 over 1943, due to the payment of war overtime for the
entire 12 months of the past fiscal year, whereas theise payments were
made during only 6 months of the previous year. The cost to collect
$100 was $3.44 in 1944 and $5.74 in 1943.
'
'
BUREAU .OF ENGRAVING AND PRINTING

The Bureau of Engraving and Printing designs, engraves, and prints
currency, securities, stamps, and various other official documents and
forms. During the fiscal year 1944 the deliveries of finished work
amounted to 919,918,823 sheets, an increase of 65,378,303 sheets over
1943 or 7.65 percent.
A comparative statement of deliveries of finished work in the
fiscal years 1943 and 1944 foUows.
Sheets
Face value.
1944

Class
1944

1943
Currency:
U n i t e d States n o t e s :
Silver certificates
Overprinted " H a w a i i "
F e d e r a l R e s e r v e notes - Overprinted "Hawaii"
SpecimensTotal.-

.

-

.--

B o n d s , n o t e s , bills, certificates, etc.: •
Bonds:
P o s t a l savings
.. : _
Treasury
---"
.
U n i t e d States savin g s . U n i t e d States w a r s a v m g s
-.Depositary
Excess profits tax refund
—-- Consolidated F e d e r a l farm loan for t h e F e d e r a l
. land banks..'
Farmloan
Federal F a r m Mortgage Corporation
H o m e O w n e r s ' L o a n Corporation
Insular—Puerto Rican
Notes—Treasury
-,- ,
T r e a s u r y bills
• Certificates:
Indebtedness
C u b a n silver—Philippine treasury--- . Debentures:
Consolidated collateral t r u s t for t h e F e d e r a l
i n t e r m e d i a t e credit b a n k s
Consolidated for F e d e r a l h o m e loan b a n k s
W a r housing insurance fund. N a t i o n a l H o u s i n g
Agency, Federal Housing Administration
I n t e r i m transfer certificates for postal savings b o n d s .




3,870,000
96,464,000
751, 000
• 49,668,700
543. 333

4, 630, 000
64, 646, 000
1, 920, 000
68, 018, 250
1, 409, 667
1

$169,080,000
853, 740, 000
23, 040, 000
9, 610, 200, 000
187, 040, 000

151, 297, 033

130, 622, 918

10, 843,100, 000

800
2, 492, 622
2, 765, 000
269,179, 000

1.050
4, 466, 754
6, 280, 000
376, 212, 000
101, OOO
54, O O
O
'

762, 000
68,152.123, 400
8, 070, 500, 000
20, 052, 775, 000

1, 360
J, 700
10, 650
80
5,314
3, 686, 325
141, 850

350
45
4, 000
1, 400
43
2,123, 050
171, 000

1, 520, 000
330, 000
40, 000, 000
795, 000, 000
18, 000
49. 021, 500, 000
96, 239, 000, 000

248, 650
992, 333

432, 300
1, 097,133
18, 000

69, 271, 800,000
• 44 375, 600
500, 000

33, 550
6, 700

35. 000
7,800

625, 000, 000
365, 000,000

8,100

8,000
1,000

17,650, 000

220

REPORT OF THE SECRETARY OF. THE TREASTJRY
Sheets .
Face value,
1944

Class
1943
Bonds, notes, bills, certificates, etc.—Continued.
Specimens:
Bonds---'.
Notes
Certificates.Debentures
Interim receipts

1944

39
3
2
1

88
3
6
3
4

Total

279, 574,128

391,013,970 $312, 697,854,000

Sheets
1943
Stamps:Customs
Internal revenueDistrict of Columbia beverage tax paid Federal migratory-bird hunting
Puerto Rican revenue
Virgin Islands revenue
-- .- .Specimens—internal revenue
Postage:
United States
United States, surcharged "Canal Zone'
-_Canal Zone
Philippine
-.
Specimens, United States
..i--.
Postal savings
War savings
..
Specimens
Total

..

.

-

Total
Grand total

-

331, 473
140, 994,212
160, 615
25, 046
1,261, 200
168

2 216

189, 706, 364 ;

195,511,971
7,350
50, 300

19,306,839, 697
735, 000
2,825,000

85
94,966
16,695,883

4,248
2, 374,150
1,810, 037,750

355,133,169

37, 680,002, 371

43, 510
9, 763
26
8, 391,168
18,670,714
52

.

-.

4,097, 300
16; 325,937,858
32,103 000
2, 805,152
92,241 000

42. 453, 208
. 52,084
260, 503
4, 791, 271
o 27, 250
2, 294,077

33,846,497
53,806
431,883
5, 769, 534
5,284
2,844,405

169. 206, 485
250,103
228, 791
• 22, 005, 947
11,818
14, 222; 025

1, 779, 500
556, 268
15,071
21.184

197,278
15

1, 751, 769
-75

62, 250, 41.6

-

.

108,000
152, 638, 615
230, 576
25,850
1, 693, 585
620
111

371,418, 943

- -

Miscellaneous:
Checks .
Warrants
Commissions ._ - ^-Certificates---.Drafts
Transportation requests
Nontransferable food order and nontransferable surplus-food order stamps
Other miscellaneous
Specimens
-----' Blank paper, including experimental.. .
1

Number of
stamps, etc.
1944

1944

854, 640, 520

64 1

43,148,766 |

207, 677,013

919,918.823

, Dies were engraved for the following new issues bf postage stamps.
Issue
Centenary of the Telegraph, Series 1944
-One-hundred-twenty-fifth Anniversary of the First Steamship to Cross the Atlantic, Series 1944.
Seventy-fifth Anniversary of the Completion of the First Transcontinental Railroad, Series 1944.
Air Mail, Series 1944
-




Denomination
(cents)

REPORT OF THE SECRETARY OF THE TREASURY

221

New dies and plates were prepared for various classes of bonds,
notes, revenue stamps, and other printed work. In August 1943,
changes were made in the size and design of Series E war savings bonds.
These bonds were reduced to one-half their former size which permitted the engraved plates to carry eight subjects instead of four,
and were identified as 1943 design. Subsequently, similar modifications were made with respect to Series F and Series G savings bonds.
Printing was begun the latter part of the year on Series E $10 bonds,
a new denomination which was made available to the armed forces.
T h e production of war savings bonds was increased from 1,035,000
bonds per day at the beginning of the year to 1,600,000 per day in
October 1943, the highest peak since the introduction of this type of
security. Total deliveries for the year for Series E, F, and G combined
amounted to 382,492,000 bonds, with a face value of $28,123,275,000.
The production for the War Department of allied military lira currency and Italian postage stamps, the printing of which was begun in
the previous fiscal year, was continued. Additional orders were received, for the lira notes and to meet the delivery requirements it was
necessary to solicit the services of a commercial firm to assist in the
printing of this work. A contract was negotiated with the Forbes
Lithograph Manufacturing Company, Boston, Mass., to do the preliminary printing. The oftset-printed stock was shipped to the Bureau
for overprinting the denomination, series, name of country, and serial
numbers. Representatives of the Bureau were stationed at the Forbes
plant to observe the progress of the work and to maintain appropriate
accounting controls with respect to the stock in process. A complete
survey of the plant was made by the United States Secret Service,
and agents of the Service were detaUed for the duration of the contract
to insure adequate protection facUities.
Other special types of currencies produced by the oftset process
under simUar arrangements with the Forbes Lithograph Manufacturing Company included supplemental French franc currency and
allied rnilitary mark currency ordered by the War Department, and
Committee French franc currency ordered by the French Committee
of National Liberation. The designs and original engravings for
these special issues were prepared by the Bureau. All of the printing
operations on the.two classes of franc notes were accomplished by the
Forbes Company, and likewise for the mark notes except that the latter
currency was shipped to the Bureau for numbering, separating into
single notes, and packing. Supplemental French postage stamps were
also produced by the Bureau for the War Department.
The number of employees on the pay roll at the beginning of the
fiscal year was 7,818. During the year, 1,933 employees were separated from the service and 1,436 were appointed, making a total of
7,321 on June 30, 1944.
Expenditures amounted to $27,882,504.23 an increase of $6,274,052.07 over the previous year, or 29.04 percent. The following statement shows the appropriations, reimbursements, and expenditures for
the fiscal years 1943 and 1944.




222

REPORT OF THE SECRETARY OF THE TREASURY
1943

Appropriations:
Salaries a n d expenses
Printing and binding
_._"
R e i m b u r s e m e n t s to a p p r o p r i a t i o n s from other
b u r e a u s for w o r k completed:
Salaries a n d expenses i
-Printing and binding _

Increase or
decrease (—)

$10,327,168.00
6, 500. 00

$9, 852, 000. 00
5, 500. 00

-$476,168.00

12, 271,312.16
. 3,444.07

19, 229, 773. 04
5, 500. 00

6, 958,460. 88
2, 065. 93

22, 607, 424. 23

29,092, 773.04

6,485,348.81

_

21, 599, 660. 70
8, 791. 46

27, 873, 494. .88,
9, 009. 35

6, 273, 834.18
217.89

-

21, 608, 462.16

27,882, 504. 23

6,-274,052.07

998,972. 07

1, 210, 268.81

211, 296. 74

Total
Expenditures:
Salaries a n d expenses 2.
Printing and binding
Total..

1944

._

—--'.- —

U n e x p e n d e d balance

:

1 Additional amounts of .$174 in 1943 and $74.50 in 1944 received from employees for lost locker keys, locks,
package booth checks, and badges; -$43.44 received in 1944 from The Standard Surety and Casualty Company of New York for damages to Government property and $60 received from various firms in 1944 for
empty drums returned.by the Bureau of Engraving and Printing were deposited to the credit of the Treasurer of the United States as miscellaneous' receipts; and amounts received from reimbursements for jury
service by employees—$100.22 for 1943 and $116 for 1944—were deposited in the general fund receipt account.
2 Includes $11,300 transferred to the Bureau of Standards for research work in each of the fiscal years 1943
and 1944, and $80,000 and $100,000 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
in the fiscal years 1943 and 1944, respectively. The amounts of $719,361.97 and $706,483.75 were deducted
from the salaries of employees for retirement and disability fund; and the amounts of $1,343,619.75 and
$1,620,244.75 were deducted through the pay-roll allotment plan for the purchase of war savings bonds in
1943 and 1944, respectively. The amounts of $360,690 for Victory tax withheld in 1943 (Jan. 1,1943, through
June 30, 1943) and $2,082,210.48 for Federal tax withheld in 1944 (including $434.40 for adjustments made in
the fiscal year 1944 for Victory tax withheld in the period prior to July 1,1943) were deposited with the Collector of Internal Revenue, Baltimore, Md.

FOREIGN FUNDS CONTROL

Under section 5 (b) of the Trading with the Enemy Act, as amended,
and Executive Orders Nos. 8389, as amended, and 9193, the Treasury
Department, through Foreign Funds Control, formulates and administers controls over foreign-owned property and regulates foreign
exchange and international financial transactions. In . addition it
administers the wartime restrictions on trade with the enemy under
section 3 (a) of the act. A discussion of Foreign Funds Control
activities during the year will be found on page 126 of this report. .
BUREAU OF INTERNAL REVENUE The Bureau of Internal Revenue is responsible for the assessment
and collection of all internal revenue taxes and other miscellaneous
taxes and for the enforcement of the internal revenue laws.
General
Internal revenue collections.—During the fiscal year 1944 internal
revenue collections, including trust fund collections, totaled $40,122
mUlions, an increase of $17,750 millions over collections for 1943.The total amount collected included back income taxes of $705
millions, which is approximately $148 millions more than back
income tax collections for 1943.
Miscellaneous internal revenue collections amounted to^ $5,356
mUlions, which is an increase of $782 millipns over collections for
1943. The largest increases were as follows: Capital stock tax,
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.




223

REPORT OF T H E SECRETARY OF T H E TREASURY

$52 millions; estate tax, $59 millions; liquor taxes, $195 millions;
tobacco taxes, $64 millions; and retailers' excise taxes, $60 mUlions.
Other misceUaneous internal revenue tax collections increased $351
millions.
Employment tax collections totaled $1,738 mUlions, an increase of
$240 mUlions over the preceding year. Total collections under the
Federal Insurance Contributions Act were $1,290 mUlions; collections
under the Federal Unemployment Tax Act, $183 millions; and collections of carriers taxes, $265 millions.
Total collections of internal revenue during the fiscal years 1943
and 1944 are shown in the following summary, classified according to
the administrative organization responsible for' the tax. A detailed
statement of collections appears in table 7, page 563 of this report.
Summary of internal revenue collections, fiscal years 1943 and 1944
[On basis of reports of collections, see p. 520]

Income Tax Unit ^
,
Alcohol Tax Unit
-.-1
Miscellaneous Tax Unit
Accounts and Collections Unit (employment
tax activities)
Total collections

.

1944

1943

Administrative unit

. . .

Increase

$16, 298,888, 091. 56 $33,027,801,888.19 $16, 728, 913, 796. 63
1, 618, 776,155. 93
195,128,699.49
1,423, 646, 456.44
3,736,810,762.76
3,160,146, 914. 96
686, 663,837. 80
1,498,706,033.59

1, 738,372,435. 89

239, 667,402. 30

22, 371, 386,496. 56

40,121, 760. 232. 77

17, 750,373,736. 22

1 Includes collections from the tax on unjust enrichment, and amounts withheld by employers.

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, 1944 and prior years
Refunds and payments of processing and related taxes, 1939-44J.
Total, interest included
..-

..----

-

$150,822,691. 71
428,220.92
--_ 161,250,912.63

The following is a summary of the refunds, showing the number of
schedules and claims, the amounts of refunds and repayments allowed,
and the total amount refunded, including interest, on each class of tax
during the fiscal year 1944, with comparison of the totals for 1943.
Number of schedules and claims, amount of refunds and repayments, and total refunds,
repayments, and interest^ by class of tax, fiscal year 1944 o^V'd totals for 1943
Class of tax
TBituminous coal
Capital stock
.^..
Carriers taxes
Distilled spirits
Distilled spirits stamps redeemed .
; Distilled spirits drawbacks..
Estate.---1
Gift-.
Income
Miscellaneous
.,.
Miscellaneous stamps redeemed
Narcotics
Narcotic stamps redeemed
Sales
J
,
.
Federal Insurance Contributions Act..
Federal Unemployment Tax Act
Sugar.-.
J
_Tobacco
i




Number of Number of
schedules
claims
21
63
32
601
1, 239
339
25, 962
164
181
29
44
84
1,886
2,718
20
24

140
1,389
104
17, 076
1,350
1,198
1,883
417
1,993, 016
3,889
9,156
217
786
1, 642
69,865
13,603
439
618

Amount of
refunds and
repayments
$17, 387. 57
518, 021. 09
45, 619. 30
13,317, 781:92
259, 881.44
564, 178. 28
4, 012, 734.10
507. 651. 02
111,807, 308. 49
906, 007. 35
333, 554. 34
331. 35

1, 607.10
2, 065, 657.43
1,880, 592. 93
. 2,142, 178.12
563, 683. 63
29, 717.10

Total refunds,
repayments,
and interest
$18, 943.10
614, 425. 48
50, 795. 83
13, 338,960. 74
260, 688.83
564, 178.28
590. 82
• 4, 554,
563, 373. 50
120,154, 109.14
270. 21
1, 032,
345, 215. 99
331. 35
1,507.10
2, 222,897. 64
194.12
1, 969,
446. 97
2, 205,
663, 712. 99
30, 831. 73

224

REPORT OF T H E SECRETARY OF T H E TREASURY

Number of schedules and claims, amount of refunds and repayments, and total refunds,
repaym,ents, and interest, by class of tax, fiscal year 1944 and totals for 1943—Con. .
N u m b e r of N u m b e r of
schedules
claims ,

Class of t a x

Tobacco s t a m p s r e d e e m e d
Tobacco d r a w b a c k s . - -

A m o u n t of
refunds a n d
repayments

T o t a l refunds,
repayroents,
a n d interest

13
9

1,894
23

$2,328, Oil. 14
3, 206. 75

$2, 328, Oil. 14
3,206.75

33,495
37

2,118,604
44

141, 305, 010. 35
333, 734. 77

160,822, 691. 71
428, 220. 92

-

^ 33, 532

2,118, 648

141,638, 745.12

151,r250, 912.63

Fiscal y e a r 1943:
I n c o m e a n d miscellaneous i n t e r n a l r e v e n u e Agricultural a d j u s t m e n t

13, 420
163

263,993
220

48, 754, 550. 05
6, 061, 292. 99

56,965,127.05
• 6, 762, 955. 69

13, 573

254, 213

64,815,843. 04

163, 718, 082. 74

---

T o t a l income a n d miscellaneous i n t e r n a l
revenue
Agricultural a d j u s t m e n t
G r a n d total, fiscal year 1944

G r a n d total,- fiscal year 1943 -

NOTE.—The figures 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 actual payments made.
1 Excluding 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 1943, $135,581.12 (coconut oil), $394.67
(Philippine), and $1,004.24 (Puerto Rico); and for 1944, $36,731.79 (coconut oil), $37.76 (Philippine), and
$35,282.24 (Puerto Rico).

If the tax refunds made during the fiscal year 1944 on account of
erroneous or illegal collections of internal revenue and agricultural
adjustment taxes and payments for export drawbacks, redemption of
stamps, and refunds from trust funds, amounting to $151,322,964,
were deducted from the gross collections of $40,121,760,233, the net
coUections for the fiscal year 1944 would be $39,970,437,269. The
gross collections, however, are used for comparative purposes in these
reports.
Additional assessments.—The additional assessments resulting from
office audits and field investigations made during the fiscal years 1943
and 1944 were as follows:
Additional assessments, fiscal years 1943 and 1944, by class of tax
Class of t a x

'

1944

1943

•
Income '

.,

-

-_

. -

.--

•..

.- —-_

1

--- --- --- --- --

T o t a l miscellaneous.internal revenue
E m p l o y m e n t taxes '
G r a n d total

$563,237,111.00

$422, 438, 293.00

-.-__

Miscellaneous i n t e r h a l r e v e n u e :
Estate
Gift
.
-.
C a p i t a l stock
:
Sales
LiQuors
Miscellaneous.-^
Miscellaneous excise.Tobacco.
Coal
Sugar—:
.-

-

-_
....
- - -

64,516,795.73
7, 790,308.76
804, 500.44
3,747,350.11
3, 513, 785.98
21,098. 275.99
1,669,334.07
1,111,399.51
351,761.99
7,811.38

94, 844,631. 86
7, 539, 976.18
710,949. 41
3,327,701.03
3,020,730.09
25,850,078.20
1, 585; 384.80
683,817.45
59,574.62
74. 82

104,611,323. 96
39, 008,864. 59

137, 522, 918. 36
30, 214,028. 82

566,058,481.55

•

730,974,058.18

• 1 Includes assessments of $15,999,136 for 1943 and $17,531,144 for 1944 made under the jeopardy provisions of
sec. 279 of the Revenue Act of 1926 and sec. 273 of subsequent revenue acts.

Cost oj administration.—The amount of $133,821,735 was appropriated for the fiscal year 1944 for salaries and expenses in connection
with the assessment and collection of internal revenue taxes and the




REPORT OF T H E SECRETARY OF T H E TilEASURY

225

administration of the internal revenue laws. The Bureau transferred
the sum of $525,000 tp the Post Office Department for expenses in
connection with the sale of motor vehicle use stamps; and the expenditures and obligations against the -Bureau appropriation were
$129,416,848, leaving an unobligated balance of $3,879,887. The ex-"
penditures do not include amounts expended for refunding taxes Ulegally or erroneously collected and for redeeming stamps. ' The cost
of collecting $39,991,717,001 (excluding $130,043,232 collected by
post offices) during the year was $0.32 per $100, compared with $0.44
per $100 for 1943.
Income Tax Unit
General junctions.—The "Income Tax Unit is charged with the admiaistration of the internal revenue laws with reference to taxes on
income, excess profits of corporations, and refunds of certain processing
taxes, and the laws limiting profits on. certain Army and Navy contracts. The administration includes the preparation of regulations
and interpretative and procedural rulings and instructions regarding
such laws and the .examination and adjustment of returns filed thereunder, through office audits and field investigations, for the purpose
of determining the correct tax liabUity as recjuired by law.
Returns filed.—The number of all types of income and excess profits
tax returns filed during the fiscal year 1944 on which tax was reported
and assessed was 48,200,952 as compared with 30,439,764 returns
filed in the fiscal year 1943,^ an increase of 17,761,188. In addition,
:4,412,470 ^ returns were filed during the fiscal year 1944 showing no
income subject to tax, compared with 10,067,550 such returns for the
preceding fiscal year. The .total number of income tax returns filed
by individuals.was 43,069,031, which represents an increase of 16.2
percent over the number received in the preceding year.
Examination oj income and excess profits tax returns upon receipt by
the Washington office.—Of the 52,613,422 ^ income and excess profits
tax returns filed during the fiscal year -1944, 2,451,638 returns having
the largest tax liabUities were forwarded to the Washington office of
the Income Tax Unit. Upon initial review of the returns forwarded
to Washington (including those on hand in Washington on July 1,
1943, relating to previous taxable years), 1,415,446 were closed and
473,166 were found to require further consideration and investigation by the fi.eld offices of the Income Tax Unit. By reason of
the forgiveness features contained in the Current Tax Payment
Act of 1943, it was deemed advisable to make a joint audit of individual income tax returns for the 1942 and 1943 tax years in cases
where an investigation of one of these years is found necessary.
However, the 1942 returns on which the liability was discharged under
such act are excluded from the field production figures shown herein.
Investigation oj tax returns by the field offices.—The number of income
and excess profits tax returns investigated during the year was
466,900 as compared with 585,243 for the previous year. 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.
J Included in the 1944 figures are returns forwarded to the Processing Division which are estimated to
consist of 16,125,952 taxable (nonassessable) returns and 3,160,998 nontaxable returns. Included for each
fiscal year are also the delinquent returns filed during the respective year relating to prior years.
613185—45
-16,




226

REPORT OF THE SECRETARY OF THE TREASURY

Estate and gift tax returns investigated by field offices during the
year numbered 17,338 as compared with 18,10l for the previous year.
In the course of the excess profits tax iavestigations conducted
during the year, consideration was given to a substantialnumber of
applications for excess profits tax relief, Fqrm 991, filed by corporations
claiming the benefits of section 722 of the Internal Revenue Code.
As of June 30, 1944, a total of 29,507 applications involving tax
reduction claims of $2,575,499,587 had been received in the'field
offices for investigation. Action was completed during the year oii
3,203 applications wherein the tax reduction sought, amounted to
$83,828,685.
The total number of income and excess profits tax returns on which
action was completed by the field offices during the year was 1,137,257,
including retunis which required investigation as well as returns for
which investigations were deemed unnecessary. The total consisted
of 602,769 corporation, individual, and taxable fiduciary income tax
returns, 455,919 partnership and nontaxable fiduciary returns, and
78,569 ex:cess profits tax returns.
Of the 602,769 income tax returns on which action was completed,.
deficiency adjustments were recommended in 214,410 returns. This
compares with a total of 1,182,595 income tax returns for the preceding
fiscal year with deficiency adjustments numbering 278,106. Deficiencies were recommended in 18,878 of the excess profits tax
returns acted upon in 1944 as against 14,019 in 1943.
In addition, the field offices completed their work on 20,350 estate
and gift tax returns during 1944, recommending deficiency acijustments
for 11,518 of this number, which compares with 22,255 such returns
involving 11,622 deficiency adjustments acted upon in the preceding
year.
Petitions to The Tax Court of the United States filed during 1944
involved 5,127 income and excess profits tax returns with proposed tax
deficiencies of $72,599,451, as compared with 5,283 returns and tax
deficiencies of $92,887,169 for 1943.
Revenue results oj investigations oj. income and excess profits tax
returns.—The total amount of additional tax, interest, and penalty
assessed during 1944 was $449,230,715, the largest" amount of any
fiscal year on record, of which $298,806,579 applied to income tax
returns and $150,424,136 to excess profits tax returns. Excluding
jeopardy and duplicate items,^ the amounts for these two classes of
taxes were $282,442,243 and $145,261,457, respectively.
• Stage at which additional tax was assessed.—The effectiveness of the
settlement authority vested in field officers is evidenced by the high
proportion of cases closed by agreements with taxpayers, without the
issuance of formal deficiency notices which are otherwise required by
law and from which taxpayers may appeal to The Tax Court of the
United States. Of the total number of 251,695 income and excess
profits tax returns on which regular additional assessments (including
duplicate-regular) were made, 237,413 additional assessments, or
94.3 percent, were made by agreement with the taxpayers without
the necessity of a statutory notice, as compared with 95.6 percent in ,
the fiscal j^ear 1943. Of the total regular additional tax assessed
2 Jeopardy as.sessments include all immediate assessments made under provisions of sections 146, 273,
and 274 of the Internal Revenue Code. Duplicate assessments occur in cases involving transferred asse.ts, where the liabihty of the transferor is assessed against both transferor and transferee in accordance
with section 311 of the Code.




REPORT OF THE SECRETARY OF THE TREASURY

227

(including duplicate-regular), aggregating $374,815,600, the amount
assessed by agreement was $327,592,718, or 87.4 percent as compared
with 86.3 percent for last year.
Rejunds, abatements, and credits.—The number of income and excess
profits tax cases which involved refunds or credits of tax or interest
to taxpayers or abatement of tax audited and closed by the Income
T a x U n i t during 1944 was 94,332 as compared with 93,093 such cases
closed during 1943. Of the total of 94,332 overassessments for 1944,
50,076 were made to taxpayers without the necessity of filing claims.
This compares with 49,195 in the previous year. Of the overassessments settled in 1944 by the Income Tax Unit, 79,714 represented
refunds or credits of tax or interest involving $73,188,705 as compared
with 64,297 involving $49,511,101 in 1943.
There were also allowed 26,662 collectors' claims, of which 7,101recommended abatements or credits and 19,561 recommended refunds.
These claims were largely multiple-item claims, i'. e., claims in behalf
of a number of taxpayers, and involved 19,442 items for abatement
or credit and 56,578 items for refund.
The amount involved in overassessments of all types for 1944 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 $171,264,083 as compared with $113,777,043
the previous year.
Inventory oj returns on hand in the field^ offices.—The number of
open income and excess profits tax returns on hand in the field offices
as of June 30, 1944, was 507,104 compared with 538,982 on the same
date last year (excluding in each year returns tentatively accepted
without investigation). The net decrease between the two dates
was 31,878, or 5.9 percent. Returns for 1941 and prior tax years on
hand as of June 30, 1944, numbered 182,543, as compared with 102,010
returns for 1940 and prior tax years on hand a year ago; thus the
prior-year returns constituted 36 percent of the total number on
hand at the close of the fiscal year 1944, as cbmpared with 19 percent
for 1943.
.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 alcoholic beverages, and those relating
to employment.
The collections of misceUaneous taxes for the fiscal year 1944
amounted to $3,736,810,753, an increase of $586,663,838 as compared
with collections from these sources for the preceding year.
Estate l a x Division.—There were 17,205 estate tax returns and
20,772 gift tax returns received during the year. Collections ol^
estate tax amounted to $473,465,605, representing an increase of
$58,935,006 over the collections for the preceding year. Collections
of gift tax amounted .to $37,744,732, an increase of $4,779,653 as
compared with collections for the preceding year.
Assessment and collection pf additional taxes amounting to
$51,436,506, proposed in 361 estate, tax and gift tax cases, were postponed pending the adjudication of appeals filed with The Tax Court
of the IJnited States.




228

REPORT OF T H E SECRETARY OF T H E TREASURY

As a result of Bureau and field investigations and audits, deficiencies
were assessed amounting to $84,828,823 in estate tax and $6,611,182
in gift tax cases.
Tobacco Division.:r-The collections of tobacco taxes amounted to
$988,483,237, as condpared with coUections of $923,857,284 during the
preceding year. The receipts from the tax on small cigarettes comprise the major portion of the tobacco taxes and during the fiscal year
1944 amounted to $903,957,883.
A detaUed comparison of the tobacco taxes collected during the
fiscal years 1943 and 1944 is shown in.table 7, page 563 of this report.
Sales Tax Division.—Collections of manufacturers' excise taxes and
retail dealers' excise taxes amounted to $728,694,435, an increase of
$58,679,462 as compared with collections for the preceding year. A
summary of these collections during the last two years follows; and a
more detailed comparison of the collections is shown in table 7, page 563.
Summary- of taxes collected by the Sales Tax Division, fiscal years 1943 and 1944
1944

Increase or
decrease (—)

Source

1943

Manufacturers' excise taxes (Title IV, RevenueAct
of 1932, asamended.. and Subtitle C, Ch. 29,Internal Revenue Code, as amended)
.
Electricalenergy
...
.
Pistols and revolvers
Repealed manufacturers' excise taxes

$455, 501, 054. 64
48, 705,138. 94
61, 513. 26
481, 396. 46

$452, 088, 623.83
51, 238, 653. 30
37, 218. 92
97, 674. 31

-$3,412] 430. 81
2. 533, 514. 36
-24, 294. 34
-383, 722.15

504, 749,103. 30

503, 462,170. 36

-1,286,932.94

165, 265, 869. 35

225, 232, 264.46

59,966,395.11

670, 014, 972. 65

728, 694, 434.82

, 58,679,462.17

Total manufacturers' excise taxes
Retailers' excise taxes (Ch. ]9, Interhal Revenue
Code)
Total

:

-

Capital Stock Tax Division.—The collections of capital stock tax
durins: the year amounted to $380,702,006, as compared with
$328, 794,971 for the preceding year, an increase of $51,907,035.
Domestic and foreign corporations filed a total of 509,935 returns.
As a result of the review and audit of capital stock tax returns, 9,116
assessments were made, involving tax, penalties, and interest in the
amount of $710,949.,
MisceUaneous Division.—The Miscellaneous Division is concerned
with the administration of the taxes on admissions, dues, telephone,
telegraph, and cable facilities, safe deposit boxes, transportation of
persons, transportation of property, the use of motor vehicles and
boats, the processing of coconut and other vegetable oils, manufactured sugar, bituminous coal, silver, hydraulic mining, and the
transportation of oil by pipe line; the special taxes on the maintenance of coin-operated amusement and gaming devices for use and on
the operation of bowling alleys and billiard and pool tables; the
documentary stamp taxes, and the taxes on oleomargarine, etc.,
narcotics, and marihuana, and with the administration of the National
Firearms Act and the Federal Firearms Act. This Division is also
concerned with the adjustment of claims for refund of taxes paid
under the Agricultural Adjustment Act and related legislation.
The collectipns of the taxes administered in the Miscellaneous
Division amounted to $1,127,720,738 in 1944, an increase of
$347,736,728 over the previous year. Details of these collections for
1943 and 1944 are shown in table 7, page 563.



. REPORT OF T H E SECRETARY OF T H E TREASURY

229

Alcohol Tax Unit
Collections of liquor taxes, representing receipts from excise taxes,
rectification tax, floor stocks taxes, bottle or container stamps, and
special or occupational taxes, amounted to $1,618,775,156 during the
fiscal year 1944, compared with $1,423,646,456 in the preceding year,
an increase of $195,128,700, or 13.7 percent. This increase was due
, largely to. changes in tax rates, to increased withdrawals of fermented
malt liquors, and to the fact that the collections on imported distilled
spirits more than offset the decrease in collections on domestic distilled spirits. Details of these collections will be found in table
7, page 563.
Because of war requirements, the demand for industrial alcohol
continued to increase during the year.. Under statutory amendments
effected by the acts of January 24, 1942, and March 27, 1942, beverage
distillers engaged in the production of high-proof spirits for industrial
purposes and, where necessary, transferred spirits of low proof to
other 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.
On June 30, 1944, the following premises and proprietors were
quahfied to engage in the production, distribution, or use of alcohol
and alcoholic liquors:
Industrial alcohol:
"
Number
Industrial alcohol plants.--i
71
, , Industrial alcohol denaturing plants L--.
83
*
Industrial alcohol bonded warehouses
89
Bonded dealers in specially denatured alcohol
37
Bonded manufacturers using specially denatured alcohol
4,076
Hospitals, laboratories, and educational institutions using tax-free alcohol
6,848
Distilled spirits: 2
'
-Registered distilleries..---.--.133
Fruit distilleries •
124
Internal revenue bonded warehouses
250
Distillery denaturing bonded warehouses
--2
Rectifying plants
i--'-_--226
Tax-paid bottling houses
----..--1-.
85
Wines:
Wineries
859
. Bonded wine storerooms—
73
Bonded field warehouses
25
Fermented malt liquors: Breweries
..-'-463
Beverage dealers:
Retail malt liquor dealers
-112,350
Retail liquor dealers
---„—.
—
'229,317
Wholesale malt liquor dealers
8,462
Wholesale liquor dealers
:
.
----. 6,512
Importers
^
-_. 1,298
Others:
Users of distilled spirits in the manufacture of nonbeverage products..
_. 1,108
Bottle manufacturers
--.
67
Vinegar plants usuig vaporizing process
--.
15
Carriers
-1
418
1 Includes 15 denaturing plants established in connection with registered distilleries.
2 Lessees were as follows: Registered distilleries, 4; tax-paid bottling houses, 4; rectifying plants, 8.

Procedure Division.—This Division is responsible for planning and
developing procedure for the headquarters and field offices of the
Alcohol Tax Unit; assists in drafting regulations. Treasury decisions,
mimeographs and circulars; reviews 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 with the
supervision of the Statistical Section. In. addition to the preparation
of procedure and statistics concerned directly with the Alcohol Tax




230,

REPORT OF THE SECRETARY OF THE TREASURY

Unit, the Unit furnished war agencies current statistical data concerning industrial alcohol and other li(]|^uors. Special reports covering
such items were also prepared for the information of such agencies.
Field Lnspection Division.—This Division was organized to inspect
and make recommendations for the coordination and improvement of
the various permissive and administrative activities in the 15 supervisory districts. The Division devises and recommends plans and
methods for increased efficiency and economy; supervises the installation of new procedures and the conduct of educational programs;
determines the adequacy and suitability of office space and equipment; makes recommendations relative to the judicious expenditure of
public funds; and assists district supervisors in problems of organization, management, and proper utilization of the services of personnel.
A group of specially trained field examiners, operating directly from
the Washington office, make frequent inspections of the field offices
for the purpose of improving efficiency in the determination and
collection of the liquor taxes.
During the year, schools of instruction for storekeeper-gangers and
junior inspectors were organized and the systematic and regular
training of these officers was begun.
In the fiscal year 1944 a total of 335,771 inspections were made by
field offices, an increase of 66,754 inspections, or 24.8 percent over
the previous year.
'
The Division is responsible for approval or disapproval of applications, notices, bonds, and other qualifying documents filed in connection with the establishment and operation of industrial alcohol plants,
bonded warehouses and denaturing plants, distUleries, fruit distilleries, distillery denaturing bonded warehouses, internal revenue
bonded warehouses, rectifying plants, taxrpaid bottling houses, and
vinegar factories using the vaporizing process. Final review and
acceptance are made of qualifying documents submitted in connection with the establishment anci operation of bonded field warehouses,
bonded storerooms, bonded wineries, and breweries.
Administrative examination of applications,, notices, bonds, consents of surety, plats, plans, and other documents required by law
and regulations filed in connection with new establishments, changes
in premises and equipment, and discontinuances totaled 22,191. During the year 160 new establishments were approved and 287 were
discontinued.
Laboratory Division.—This Division is comprised of a central laboratory in Washington, D . C , with 13 branch laboratories located
throughout the country, and 1 branch in San Juan, P. R.
The Division performs all of the chemical work for the Bureau of
Internal Revenue and analyzes samples of narcotics submitted by
officers of the Bureau of Narcotics. -^The Washington laboratory also
assists State alcoholic beverage control boards and police departments. I t collaborates with the Department of Agriculture relative
to the official adoption of methods, of analysis for alcoholic beverages.
The War Production Board, Office of Price Administration, Defense
Supplies Corporation, and Rubber Reserve Corporation frequently
confer with members of the Division relative to production, use, storage, and transportation of alcohol and products derived therefrom.
The activities of the Washington laboratory include the examination
of formulae, samples, and processes in which denatured alcohol is




REPORT OF THE SECRETARY OF THE TREASURY

231

used. Processes used in distilleries, industrial alcohol plants, wineries,
breweries, and rectifying plants are reviewed in the laboratory and
samples of oleomargarine, cheese, butter, spreads, lubricants, soap, and
cosmetics are examined for the Miscellaneous Tax Unit.
The branch laboratories receive most of the samples taken by Bureau
and narcotic officers for enforcement purposes. They also analyze
high wines shipped for redistUlation and alciohol stored for the Defense
Supplies Corporation.
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 speciaUy
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 examines for allowance or rejection
all claims for abatement or refund of taxes, and for the redemption of
tax stamps and strip stamps, 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 685 offers in
compromise in the amount of $73,205. There were received 7,268
oft'ers aggregatmg $413,195; 6,944 offers totaling $386,127 were accepted, 488 offers totaling $46,472 were rejected, 251 offers totaling
$42,570'were returned to the district supervisors for further investigation, leaving 270 offers aggregating $11,231 on hand at the end of
the year.
'.There were 14 offers in compromise in the amount of $16,550 on
hand at the beginning of the year submitted in settlement of liabilities
incurred in connection with the Federal Alcohol Administration Act.
During the year, 141 offers amounting to $48,000 were received, 147
> offers totaling $60,350 w^ere accepted, and 6 offers aggregating $3,500
were rejected, leaving 2 offers in the amount of $700 on hand at the
end of the iircal year.
Basic Permit ind 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
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 alcoholic beverage laws. The broad purpose of the
statute is the regulation of the conduct of the legitimate liquor
industry.
^
The number of outstanding basic permits of all classes has again
shown a decrease, dropping from 13,547, the number in effect on
July 1, 1943, to 12,913 on June 30, 1944.
The following table reflects permit activities under the Federal
Alcohol Administration Act during the year and the number of permits of each class in effect on June 30, 1944.




232

REPORT OP THE SECEETARY OF THE TREASURY
Permit activities, fiscal year 1944
Wine
Whole- producers
salers
and
blenders

10, 247
I n efi'ect J u l y 1, 1943
Issued d u r i n g year
1, 693
Terminated:
Canceled
2,085
Automatically terminated .-333
Revoked.. .3
2
Annulled
Suspended
8
In effect J u n e 30. 1944
9,409
' A m e n d e d d u r i n g year
_ 788

Wine
blenders

Distillers

Rectifiers

Warehousing
and
bottluag

Importers

1,053
160

97
20

345
93

277
82

619
127

1,009
542

13, 547
2,617

242
7
4

41

36
17

35
7

131
26

229
33
4

76

385
16

1
316
22

1
488
24

2, 799
423
11
2
16
12,913
1,027

4
956
44

•8

'

2
1,283
125

Total

Because of war conditions and increasing merchandise shortages,
the volume of label applications received during the year declined
somewhat from the volume received during the preceding year. However, an increased amount of work was necessitated owing to the fact
that, in an eft'ort to relieve the shortages, members of the industry
have undertaken to bring in all kinds of products from foreign countries. Specific labeling problems were presented in connection with
a great many of these products and extensive correspondence, as well
as a large volume of analytical work on the part of the Laboratory,
was necessary before the proper labeling of such merchandise could
be achieved.
In the enforcement of the advertising regulations promulgated unaer
the Federal Alcohol Administration Act the Division reviewed 84,320
advertisements appearing in 22,148 publications and took appropriate regulatory action in 1,685 cases involving various types of irregularities. Six cases involving violations of the advertising provisions
of the statute were closed upon the acceptance of appropriate offers
in compromise. There were also 20,650 radio continuities and 3,034
pieces of point-of-sale advertising material reviewed.
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 malt liquors.
During the fiscal year 6,801 illicit stills, 2,427,649 gallons of mash,
1,553 automobiles and trucks, 78,840 gallons of illicit liquors, and
135,791 gallons of tax-paid liquors w^ere seized. The appraised value
of the property seized was $2,819,851. The number of persons
arrested for liquor law violations totaled 11,525.
During the year 11,585 persons were recommended for prosecution
in Federal courts in Alcohol Tax Unit cases, an increase of 1,437 as
compared with the fiscal year 1943; 7,462 persons were indicted,
6,023 defendants were convicted, and on June 30, 1944, 6,709 persons,
were awaiting grand jury or trial action for internal revenue liquor
law violations, an increase of 307 from June 30, 1943.
During the year 82 applications for pardon and 993 applications for
parole were examined and reports submitted.
Transportation oj liquor into dry territory.—As a result of the enforcement of the Liquor Enforcement Act of 1936 relating to the introduction of tax-paid liquors into dry States, 69 vehicles and 1,688
gallons of tax-paid liquors valued at $69,289 were seized, 97 persons
were arrested, and 76 were indicted and convicted. "
"



REPORT OF THE SECRETARY OF THE TREASURY

233

Floor stocks tax violations.—Theie were 2,681 floor stocks tax cases
perfected during the fiscal year which involved the seizure of 61,705
gallons of tax-paid liquor valued at $717,457. Taxes and penalties
amounting to $1,049,456 were recommended for assessment in these
cases. Offers in compromise in the amount of $1,255,378 in lieu of
criminal and/or civU liabilities were accepted by the Department of
Justice.
Federal Alcohol Administration Act violations.—Offers in compromise
totaling $1,700,850 in lieu of criminal and civU liabUities were accepted
by the Department of J.ustice from 45 breweries for subsidizing retail
outlets in violation of the Federal Alcohol Administration Act.
Violations oj internal revenue laws and Federal Alcohol Administration
Act resulting jrom shortage oj distilled spirits.—The War Production
Board order which prohibited the production of distUled spirits for
beverage purposes on and after October 8, 1942, the self-imposed
industry rationing system,, and hoarding by dealers gradually brought
about a shortage of beverage spirits available for public consumption.
The shortage began to be acute about September 1943, and by January 1944 it was practically impossible for consumers to find whiskey
on the shelves of retaUers. This shortage of distUled spirits resulted
in large scale violations of the internal revenue laws and the Federal
Alcohol Administration Act. In this connection investigations of
3,804 taxpayers and perihittees were undertaken during the fiscal
year. These investigations related largely to the falsification of
Record 52 by wholesalers and to violations of the terms and conditions
of permits under the Federal Alcohol Administration Act.
There were 548 cases submi^tted to United States attorneys with
recommendations for the prosecution of 1,174 persons. Federal grand
juries returned 216 indictments involving 485 persons, 175 defendants
were convicted, and 55,712 gallons of tax-paid, spirits valued at
$691,038 were seized.
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) being with respect
to employment by others than carriers. Subchapter B with respect to
employment by carriers, and Subchapter C (Federal Unemployment
Tax Act) with respect to the tax on employers of eight or more.
There were 79,359,029 tax returns filed in collectors' offices during
the fiscal year 1944, an increase of 22,060,035 over the previous year.
Of the total returns filed, 62,795,006 were income and excess profits
tax returns and declarations, an increase of 22,287,692 during the year.
During the fiscal year, 268,884 income tax, 112,238 miscellaneous
tax, and 564,068 emplo3"ment tax returns were investigated by field
deputy collectors, and 5,073,679 information returns were verified.
At the close of business June 30, 1944, there were outstanding in the
64 collection districts 45,500 income tax returns, and 7,330,793 information returns were on hand.




234

REPORT OF THE SEGRETARY OF THE TREASURY

Deputy collectors of internal revenue served 491,078. warrants for
distraint, which resulted in the collection of $83,338,767. An average
of 9,057 deputy collectors made 3,792,416 revenue-producing investigations, including the serving of warrants for distraint, compared with
3,301,745 revenue-producing investigations made by an average of
6,395 deputy collectors in the preceding year. The total amount
collected and reported for assessment by deputy coUectors was
$245,317,947, compared with $150,643,949 in the previous year. The
average number of investigations made per deputy and the average
amount of tax collected and reported for assessment were 420 and
$27,086, respectively, compared with 516 and $23,557, respectively,
in 1943. There were 245,089 warriants for distraint in custody in the
collectors' field forces on June 30, 1944, as compared with 250,477 on
hand June 30, 1943.
.
A total of 16,257,204,444 revenue stamps, valued at $3,303,693,383,
was issued to collectors oi internal revenue and the Postmaster General
during the year, compared, with 16,529,206,905 stamps valued at
$3,122,024,388 issued in 1943. Revenue stamps returned by collectors
of internal revenue and by the Postmaster General, and credited to
their account, amounted to $592,355,269. There were 109 applications allowed for restamping packages from which the original stamps
had been lost, mutilated, or destroyed, compared with 191 applications in the preceding year.
The Disbursement Accounting Division adniinistratively examined
and recorded 1,552 monthly accounts, comprising 182,454 vouchers, of
collectors of internal revenue, internal revenue agents in charge,
technical staff divisions, and district supervisors, including the San
Juan, P. R., branch of the District of Maryland, and the Honolulu,
T. H., branch of the San Francisco Alcohol Tax District No. 14. In
addition, 4,568 expense vouchers of employees and 29,296 vouchers
covering passenger and freight transportation and miscellaneous expenses were audited and passed to the Chief Disbursing OjEficer,
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 $1,290,024,857 for 1944, an increase of $158,478,729 over
1943. 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 requir9d on a quarterly
basis, 8,587,017 being filed during the fiscal year 1944, as compared
with 8,939,225 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
VIII of the Social Security Act.




235

REPORT OF THE SECRETARY OF THE TREASURY

Claims under the Federal Insurance Contributions Act andj or Title V I I I of the-Social
Security Act received and disposed of, fiscal year 1944
U n d e r sec.
1401 (d) of t h e
Federal Insurance Contrib u t i o n s Act

Claims

All other

Number
. -. .---.

102, 246

18,280

65, 223
853
169

• 10,916
2, 386
, 165

66, 245

13, 466

36,001

- .

17,411
84,835

.

P e n d i n g J u l y l , 1943
Received d u r i n g y e a r . . . .

4,814
2,251

. T o t a l to be disposed of
Allowed i n f u l l or in p a r t . . .
Rejected
Canceled

.
•

...

l:

T o t a l disposed of.

-.-:

P e n d i n g J u n e 30, 1944
.
Certificates of allowance issued w h e n no claims were filed.

-

.-:

4,198
14,082

Amount
Overassessments settled b y Abatement Credit
R e f u n d - ._

$1,248,872

$1, 546, 789
129, 946
641, 731

1, 248,872

Total.—
Interest..
G r a n d total

---"

.-_.-

. ..

-

2,318,466
88,889

1, 248,872

2, 407, 355

. .

... ...

_

-

Under the provisions of section 1401 (d) of the Federal Insurance
Contributions Act and subject to the conditions therein specified,
an employee performing services for more than one employer during
a calendar year may 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.
The following table shows the status of the offers in compromise
submitted in settlement of liabUities incurred under the Federal Insurance Contributions Act and/or Title VIII of the Social Security Act.
Offers in compromise under the Federal Insurance Contributions Act andj or Title VIII
of the Social Security Act received and disposed of, fiscal year 1944
N u m b e r of
offers

Offers in c o m p r o m i s e

P e n d i n g J u l y 1,1943
Received d u r i n g year

_

-

--

--.

T o t a l to be disposed of
Accepted
--Rejected
1
Withdrawn.
T e r m i n a t e d b y default
T o t a l disposed of
P e n d i n g J u n e 30,1944




. -- -..

-..

Amount
offered

Liability
involved

694
887

$154, 925
180, 084

$427,934
615, 312

• 1, 581

335,009

1,043, 246

776
173
45
24

152,155
43. 910
,8; 601
3,203

342, 944
124. 577
23, 036
15, 424

1,017

207,869

505,981

664

-127,140

637, 265

236

REPORT OF THE SECRETARY OF THE TREASURY '

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 1943 with
respect to employment. Collections during 1944 amounted to
$183,336,565, an increase of $27,328,903 over 1943. Returns are
required on an annual basis, 418,757 being filed during 1944, as
compared with 397,595 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 and disposed of, fiscal year
1944 •
Returns:
Number
Pending July 1, 1943
•
419,000
Received during year
.--.
418,757
Total to be disposed of....
...--- 837,757
Closed
--..
453,595
Pending June 30, 1944
384,162
Number of revenue agents^ reports received and disposed of, fiscal year 1944
Reports:
Pending July 1, 1943
Received during year

.,

.

:

Total to be disposed of..

.,.

.

Closed:
No change in tax liability...
Deficiencies in tax
0 verassessments
Total

Number
• 285
1,861

.

.

.<..-.
.

.
--

--- 2,146
•

'

'.

.

434
1,359
216

._...-.

_
•

2,009

Pending June 30, 1944.

137

Claims under ihe Federal Unemployment Tax A.ct andj or Title I X of ihe Social
Security Act received and disposed of, fiscal year 1944
Claims:
"
Number
Pending July 1, 1943
6,681
Received during year

1

Total to be disposed of

.

Allowed in full or in part
Rejected
Canceled

-

Total

18,397

.

.
.

.

12,599
3,956
.

-

-.-

229
-

Pending June 30, 1944.
I
Certificates of overassessment and certificates of allowance issued when no claims were
Overassessments settled by—
Abatement
.:
.
.
Credit
i
.
Refund
.
:
Total
----Interest
.
.
Grand total..




25,078

16,784
8,294
5,683
Amount
$3,236,418
^
39,599
2,162,319
5,438,336
:..
64,013
5,502,349

filed

REPORT OF T H E SECRETARY OF T H E

237

TREASURY

Offers i n compromise under the Federal Unemployment Tax Act and/or Title
of the Social Security Act received and disposed of, fiscal year 1944
Number of
offers

Offers in compromise

IX

Liability
involved

Amount
offered
$105, 533
306,110

$818,026
1,738, 714

2,072

411, 643

2, 666, 740

723
533
81
19

112, 619
122,843
23, 500
3,095

633,892
742, 719
114, 200
21,021

1,356

262,057

1, 511, 832

703

Pending July 1, 1943-.

1,3

Received during year
Total to be disposed of.
Accepted
Rejected
Withdrawn
Terminated by default
Total disposed of
Pending June 30, 1944

1,044, 908

716

Carriers taxes.—Collections of carriers taxes under Chapter 9, Subchapter B, of the Internal Revenue Code aggregated $265,011,013 for
the fiscal year 1944, an increase of $53,859,770 over 1943. The
amount for 1944 includes $264,997,305 of collections from the employers' tax and the employees' tax, both of which were imposed at
the rate of 3% percent of the taxable compensation; collection of the
.employee representatives' tax for 1944, which was imposed at the rate
of 6'K percent of the taxable compensation, amounted to $13,708, as
compared with $47,721 for the previous year, a decrease of $34,013.
Returns are required on a quarterly basis, 31,005 being filed by employers, a decrease of 256, and 1,293 being filed by employee representatives, a decrease of 480 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 Ch. 9, Subchapter B , I n t e r n a l Revenue Code, and/or the Carriers Taxing
Act of 1937 received and disposed of, fiscal year 1944
Claims:
Number
Pending July 1. 1943
--:
_
.
94
Received, during year
216
Total to be disposed of
Allowed infull or in. part

1

310

.--

224

.-

271

Rejected

47

Total disposed of
, Pending June 30,1944
, Certificates of aliov/ance issued when no claims were
Overassessments settled by—
Abatement
Credit
Refund
Total
. Interest—Grand total
.---

'.
filed

•-

l--'!:

•

39
8
-.Amount
- $21,884
38,596
45,370
105,850
5,180
- 111,030

Technical Staffi
The Technical Staff is the appellate agency in the Bureau of Internal
Revenue for the determination of income, profits, estate, and gift tax
liability in disputed cases. The Staff consists of an administrative
office in Washington and 10 field divisions with 35 local offices. The
heads of these divisions exclusively represent the Commissioner of



238

REPORT OF THE SECRETARY OF THE TREASURY

Internal Revenue within their territorial jurisdiction (a) in the
determination of tax liability in contested cases not docketed before
The Tax Court of the United States, and (h) in the stipulated settlement, with concurrence of division counsel, of cases docketed by The
Tax Court. The Staff handles certain offers in compromise and
applications for extensions of time for the payment of income taxes, and
also reviews final closing agreements under section 3760 of the Internal
Revenue Code.
,
A brief summary 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 1944
•

Cases ^

T o t a l disposed of.

*

3,479
3,278

1 4,020
6,845

-

-

Closed b y s t i p u l a t i o n or a g r e e m e n t
Dismissals a n d defaults
U n a g r e e d cases s u b m i t t e d t o T h e T a x C o u r t
Cases appealed t o T h e T a x C o u r t
•
U n a g r e e d action on overassessment a n d claims cases-

On h a n d J u n e 30, 1944

Nondocketed
cases

.

On h a n d J u l y 1, 1943
Received (transfers, etc., d e d u c t e d ) d u r i n g year
T o t a l t o be disposed of

Docketed
cases

6, 757

10, 865

1, 912
180
927

3, 953
751
1,461
315

.-

.;..

3, 019 .
"3, 738

6, 480
1 4 385

1 Includes 588 cases awaiting taxpayers' action on statutory notices directed or sustained on July 1, 1943,
and 597 on June 30, 1944.

The nondocketed cases disposed of by agreement, by default, and
by unagreed action on claims, involved proposed deficiencies in tax
and penalties totaling $56,668,556, and overassessments tentatively
determined of $7,010,312. The deficiencies and penalties agreed to
amounted to $23,853,835, and overassessments of $5,429,570 were
allowed. Defaults totaled $4,160,978 in tax and penalties, with
$163,055 in overassessments. I n addition, overassessments aggregating $850,394 were allowed in unagreed claims cases.
The docketed cases closed by stipulation involved asserted deficiencies in tax and penalties aggregating $62,313,494 and overassessments
of $1,483,744 for other years and in associated cases. The amount
agreed to consisted of $23,796,634 in tax and penalties and $1,287,529
in overassessments.
The filing of applications for general relief under section 722 of the
InternalRevenue Code, made^applicable retroactively to taxable years
beginning after December 31, 1939, has materially slowed down the
closing of corporate cases for such years. I t is probable that this
phase of the work, together with the volume of difficult excess profits
tax cases, will cause some increases in Staff inventories for several
years to come'. Striking results of the decentrahzed procedure are
that for over five years of full operation approximately one-third of
all statutory notices directed or sustained by the Staff field divisions
are defaulted in that no petition is filed with The Tax Court; in cases
handled by the Staff in nondocketed status, only 1 in 8 is tried before
The Tax Court; and litigating results show that over half of the tax
in controversy in the dockets which are tried is upheld by The Tax
Court.



239

REPORT OF THE SECRETARY OF THE TREASURY

The work of the Staff on compromise, extension of time, and closing
agreement cases is analyzed in the following table.
A n a l y s i s of the work of the Technical Staff on compromise, extension of time, and
final closing agreement cases, fiscal year 1944

Compromise
cases

Cases

On h a h d J u l y 1, 1943
Received (net) during year

-

-

- .
......

.
. . ^.
,...•..•

.

.

.

6
232
238

392
288
118
19

71
, 162
1

170
24

817

.

T o t a l disposed of
On h a n d J u n e 30, 1944

5
204

453
783
1,236

T o t a l t o be disposed of
Accepted, g r a n t e d , or a p p r o v e d
Rejected
Withdrawn
Transferred

Final closing
agreement
cases

Extension
of t i m e
cases

234

194

419

4

16

^

209

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 Tax Court of the United States; the review of refunds, credits,
and abatements in excess of $20,000; consideration of various administrative and internal revenue tax matters referred to that office by the
Secretary and other officers of the Treasury Department, or by the
Commissioner and other officers of the Bureau of Internal Revenue.
They include also the preparation, at the request of 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, the Engineers and
Auditors Section, and eight divisions, viz: Alcohol Tax, Appeals,
Civil, Claims, Int,erpretative, Legislation and Regulations, Penal, and
Review.
During the year, 3,633 cases appealed to The Tax Court were closed.
In 3,622 cases involving income, excess profits, unjust enrichment,
estate, and gift taxes the appellants recovered $73,187,202 on claims
aggregating $150,625,788; and in 11 cases involving processing taxes
the appellants recovered $90,884 on claims aggregating $812,274.
In cooperation with the Department of Justice, 781 civU cases in
State and Federal courts were closed, in which the amount claimed
was $15,461,358; refunds aggregating $4,441,521 and collections
amounting to $624,278 were made. There were also closed 1,131
cases involving Jiens, in which $678,523 v/as collected.
The Government was represented in 1,064 corporate reorganization
and arrangement proceedings in which Government claims amounting
to $12,353,850 were settled for $4,878,908. I n 3,948 bankruptcy and
receivership cases disposed of, $3,399,726 was collected on Government
claims aggregating $9,895,218.
1 More detailed information concerning the functions and activities of the Office of the Chief Counsel
will be found in the annual report of the Commissioner of Internal Revenue.




240

REPORT OF THE SECRETARY OF TPIE TREASURY

In claims filed by collectors against the estates of deceased taxpayers
and insolvent banks and in liquidation proceedings, including assignments for the benefit of creditors, 2,259 cases involving claims amounting to $8,187,810 were settled and $2,849,356 was collected.
The Office reviewed 715 cases involving proposed allowances for
• overpayment or overassessment of income, excess profits, estate, gift,
and miscellaneous taxes, as well as deficiencies when coupled with, tax
reductions under review, where the amount of tax reduction in a particular case exceeded $20,000. Payment of $31,203,282 was recommended upon claims amounting to $57,183,582.- Included in these'
figures are income, excess profits, estate, and gift^tax cases involving
overpayments exceeding $75,000, on which reports were prepared for
the Joint Committee on Internal Revenue Taxation. Cases were reviewed involving claims for refund of amounts paid as processing and
floor stocks taxes and unjust enrichment tax deficiencies aggregating
$24,312,939. Final review of 3,275 cases involving compromise and
closing agreements was made.
'
Claims for reward for inforniation relative to violations of the internal revenue laws were considered and payments of $77,209 were
recommended in 62 of the 212 cases disposed of.
In connection with the administration and enforcement of the internal revenue, liquor laws and the laws relating to firearms, 5,669
memoranda, 181 briefs, 6,570 opinions, 252 libels, and 32 indictments
were prepared. With respect to alcohol and Federal Alcohol Administration permits, .45 denials of applicatiqiis for permits, 71 notices of
contemplated denials of applications, 154 citations for revocation and
suspension, ^ n d 52 orders in suspension and revocation proceedings
were prepared. Reviews were made of 1,838 case reports, 480 claims
of over $5,000 each, 7,447 compromise cases, and 135 petitions for remission or mitigation of forfeitures. Ln addition, 187 hearings were
participated in.
During the year 528 internal revenue tax cases involving criminal
liability were closed. Much of this penal work was performed in close
cooperation with the Department of Justice and included consideration
of offers in. compromise and the preparation of opinions construing the
criminal and percentage penalty statutes and whether certain cases
should be reopened because of fraud or malfeasance, or misrepresentation of a material fact.
Work involving interpretation of internal revenue laws was performed in 2,592 cases, iiicluding the preparation or review of memoranda, correspondence, briefs to be filed with The Tax Court in key
cases, actions on decisions in.special cases, and closing agreements
covering proposed transactions. , Material submitted for publication
in the Internal Revenue Bulletin was edited.
The Office prepared or reviewed regulations issued under, the internal revenue laws and tax conventions with foreign countries and reports
on legislation introduced in Congress afl'ecting the internal revenue.
Consideration was given to suggestions for amendments of, and additions to, the various internal revenue laws, and reports thereon were'
prepared. The Office participated in the preparation of income tax
and other forms and in the drafting of internal revenue laws and tax
conventions.
In 159 cases, technical engineering, and auditing advice and assistance were furnished revenue officials and the Department of Justice,




REPORT OF THE ^SECRETARY OF THE TREASURY

241

principaUy in the fields of valuation and depreciation. Legal advice
and assistance were rendered officials concerned with the salary
stabilization regulations in 2,359 cases.
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, 1,082 investigations were made of
alleged evasion of income and miscellaneous taxes, and of this number
280 cases, involving 512 individuals, were recommended for prosecution. On this charge there were convictions of 85 individuals and 2
acquittals. Investigations of these cases resulted in recommendation
for assessment of additional taxes and penalties amounting" to
$45,718,776.
, 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 during investigations.
There were 2,684 investigations of applications of attorneys and
agents to practice before the Treasury Department and 42 investigations of charges against enrolled agents and attorneys, resulting in
the disbarment of 6, the suspension of 2, the reprimand of 3, and the
rejection of applications of 10.
The investigations in 84 cases of charges against employees of the
Bureau of Internal Revenue resulted in the separation from the Service
of 53 employees. Criminal proceedings were instituted against 14, and
of the 11 brought to trial during the year all were convicted. There
were also 133 cases of a ihiscellaneous character investigated, resulting
in the prosecution of 9. Six were tried and all were convicted.
Salary Stabilization Unit
The Salary StabUization Unit, under the supervision of a deputy
commissioner, was created by Treasury Decision 5176, dated October
29, 1942, to administer the provisions of the regulations prescrihed
by the Dhector of Economic StabUization under the act of October
2, 1942 (Public Law 729), and Executive Order No. 9250, dated
October 3, 1942, for stabUizing all salaries in excess of $5,000 per
annum, and of executive, administrative, and professional salaries
where the rates were in excess of $30 a week and $200 a month,
respectively, and the positions were not represented by a certified
labor organization. The regulations dhected that, in general, levels
of compensation were to be stabUized as of the level existing on
September 15, 1942. Regulations, Treasury Decision 5186, outlining
the policies and procedure to be followed with respect to salaries of
employees under the jurisdiction of the Commissioner, were promulgated on December 2, 1942.
On AprU 8, 1943, the President issued Executive Order No. 9328,
which provided for certain changes in policies and procedure. As a
result of this order, the statement of the Director of Economic StabUization, dated May 12, 1943, and the revised regulations issued by
613185—i5

17




242

REPORT OF T H E SECRETARY OF T H E TREASURY

the Director on August 28, 1943, the Commissioner promulgated
aihended regulations. Treasury Decision 5295, which were approved
on September 4, 1943.
,
In addition to the regulations, the Commissioner of Internal Revenue has from time to time issued special rulings covering specific
types of adjustments common to industry generally. These special
•rulings cover such subjects as overtime compensation, vacation pay,
pension benefits and profit-sharing trusts, insurance, salary rate
schedules, bonuses, commissions, and others.
Thirteen regional offices process employers' applications for approval of increases in compensation, which generally are salary adjustments or bonus or commission payments. The head of each
regional office is authorized to make rulings subject only to review
by the deputy commissioner.
An act of Congress approved June 30, 1944 (Public 383), extending
the act of October 2, 1942, stipulated that its provisions should
terminate on June 30, 1945.
' During the fiscal year 1944, rulings on compensation adjustments
issued by the Salary Stabilization Unit trebled those issued in 1943,
the fiscal year in which the Unit was established:
The types and number of requests for decisions and the actions
taken for the fiscal year 1944 were as follows:

Types

Requests
Requests
Requests
Rulings
on hand
on hand
received
issued
July 1,1943 during year during year June 30,
1944
Regional offices

Salary adjustments..
.
Bonus payments
Salary ahd bonus combined
Salary rate schedules.
Profit-sharing trusts-J
Insurance benefits and pension trusts.
Appeal cases, all classes
_-

16,481
1,416
1,486
925

193, 616
31, 334
26, 659
4,853

5,617

24, 851

629
77

200, 248
31, 375
25, 868
6,649

544
. 55
27,191

1,375
2, 277
229
85
22
3,277

Washington office
2,662

Appeal cases, all classes.

2,194

629

A detailed discussion of the stabilization and limitation of salaries
appears on pages 129 to 131 of this report.
LEGAL DIVISION

The General,Counsel is by statute the chief law officer of the Treasury Department, and is directly responsible to the Secretary for the
work of the Legal Division. The Legal Division is composed of the
legal staff in the Office of the General Counsel and the legal staffs in
the Bureau of Internal Revenue, Bureau of Customs, Bureau of
Narcotics, Bureau of the Public Debt, Procurement Division, Bureau
of the Comptroller of the Currency, and the Foreign Funds Control.
The General Counsel, with the assistance of his legal staff, gives advice
on legal problems to the Secretary, the Under Secretary, Assistant
Secretaries and the adniinistrative officers of the Department; exer->




REPORT OF THE SECRETARY OF THE TREASURY

243

cises general supervision over the work of the legal staffs in the foregoing bureaus; and serves as legal adviser to the branches of the
Department not having legal staffs, such as the Bureau of Accounts,
Bureau of Engraving and Printing, Bureau of the Mint, the Secret
Service Division, Treasurer's Office, and the War Finance Division.
The activities of the Legal. Division embrace all legal questions
arising in connection with the administration, of the duties and functions of the various bureaus, divisions,' and other branches of the
Department. These activities also include consideration of legal
problems relating to broad financial, economic, and social programs,
problems with respect to international cooperation in the monetary
and financial fields, and problems relating to war activities. A more
complete description of the scope of the activities of the Legal Division
is to be found in the various administijative reports of bureaus and
divisions of the Department contained elsewhere in this report.
In addition, the legal staff in the Office of the General Counsel
handles legal matters relating to legislation, including the drafting of
legislation and preparation of reports to committees of Congress and
the Bureau of the Budget; appears before congressional committees;
prepares and reviews Executive orders and proclamations; prepares
formal and informal opinions and memoranda for the guidance of
the administrative officers of the Department; performs the necessary
pre-trial work in litigation involving Treasury officials; makes recommendations to the Secretary in matters relating to compromise settlement of general claims of the United States; supervises legal matters
relative to inventions and patent rights of Treasury employees, negligence clainis, and disclosure of official information; serves as legal
adviser in proceedings involving complaints against enrollees licensed
to practice before the Treasury Department; handles legal problems
pertaining to gold and silver transactions and the administration of
the stabilization fund; passes upon legal questions arising in the
adjudication of Mexican claims; and handles the legal work in connection with railroad liquidations, receiverships, and reorganization
proceedings under the Transportation Act.
. During the fiscal year 1944, among the many special problems
handled by the Legal Division were those relating to the collection of
the revenues and related problems, the issuance of public debt obligations, the renegotiation of war contracts, the formulation of policies
and procedures to govern the settlement of terminated war contracts,
the establishment of policies and procedures to cover the disposition
of surplus property, the formulation of proposals for an international
monetary fund and an international bank for reconstruction and
development, and cooperation with the military authorities on financial and monetary problems arising in liberated areas.
BUREAU OF THE MINT

The principal functions of the Mint Service include the acquisition
of gold and sUver bullion, payments for which are made on the basis
of Mint assays; the manufacture of domestic silver and minor coins;
and the safeguarding of the Grovernriient's holdings of the monetary
metals, including coins, until required for distribution through the
banks. Incidental activities include the refining of gold and sUver,
coinage for foreign governments, manufacture of gold, sUver, and




244

REPORT OF THE SECRETARY OF THE TREASURY

bronze medals, coinage dies, platinum assay utensUs, and other
materials. Iri addition, the Mint Service performs special assays of
bullion and ores submitted by the public for analysis and return.
The Mint Service as now constituted was, created over a period of
years beginning with the Philadelphia Mint in 1792. Its newest
institution is the West Point Depository which was completed in
1938. The Bureau of the Mint was established in 1873 as a central
supervisory agency.
Institutions oj the Mint Service ^
During the fiscal year 1944, six 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 silver bullion depository at
West Point; gold bullion depository at Fort Knox, Ky.; and assay
office at Seattle. Electrolytic refineries are maintained.at the New
York, Denver, and San Francisco institutions.
Coinage
Domestic coin manufactured during the fiscal year 1944 amounted
to the record production of 2,578,640,270- pieces, compared with
1,472,098,762 pieces during the preceding year. As in previous years,
the denomination most largely produced was the 1-cent piece. Production in 1944, in amount $109,464,836.70, consisted of 406,356,600
subsidiary sUyer coins With a value of $77,596,800.00, 253,630,000
5-cent coins with a value of $12,681,500.00, and 1,918,653,670 1-cent
coins with a value of $19,186,536.70. Of the^ 1-cent coins, 898,686,670
were of zinc-coated sjbeel and 1,019,967,000 were of copper-zinc.
Coinage for foreign governments totaled 487,847,000 pieces, compared with 173,023,000 during the preceding ]^ear.
The grand total of domestic and foreign coinage in 1944 amounted
to 3,066,487,270 pieces, which was an increase in domestic coinage
over the prior fiscal year of 1,106,541,508 pieces, or 75 percent, and
an increase in foreign coinage of 314,824,000 pieces, or 182 percent.
The weight of.the finished coins was 12,354.31 tons, or an average
production of 35 tons per day.
Minor coinage alloys
Five-cent com.—The 5-cent piece issued under authority of the
Second War Powers Act, approved March 27, 1942, was coined during
the fiscal year 1944. The composition is an alloy of 56 percent copper,
35 percent silver, and 9 percent manganese, and its standard weight
is 77.16 grains. No 5-cent pieces containing 75 percent copper and
25 percent nickel have been coined since M a y 1942.
One-cent coin.—Production of the zinc-coated steel cent was discontinued December 31, 1943. The ..total number of zinc-coated steel
coins struck from the beginning of production in February 1943 to
their discontinuance December 31, 1943, was 1,093,838,670 pieces.
On January 1,; 1944, production was commenced of a copper-zinc
coin containing .95 percent copper and 5 percent zinc. . This was done
under authority of the order of the Acting Secretary of the Treasury,




REPORT OF THE SECRETARY OF THE TREASURY

245

December 10, 1943, issued pursuant to Public Law 8J5, approved
December 18, 1942. The change was made as a result of the availabUity of fired brass cartridge cases, to which copper is added to
produce the alloy. The standard weight of the coin is 48 grains, the
same as the former bronze 1-cent coin, production of which was
discontinued in December 1942.
Metal savings.—The production of the copper-sUver-manganese 5cent piece and the zinc-coated steel 1-cent piece during the fiscal year
1944 freed 3,194 tons of copper, 350 tons of nickel, and 120 tons of
zinc for use in furtherance of the war eft'ort.
Bullion deposit transactions
Bullion deposit transactions during the year numbered 7,492, including 53 inter-mint service transactions, compared with 15,406 and
99, respectively, during the prior year. The deposit transactions
required 14,022 assay determinations, compared with 23,019 assay
determinations last year.
Long-term storage oj bullion
There were no transfers of bullion for long-term storage during the
fiscal year 1944. Because of increased sales of gold bars for industrial
consumption and the large amounts of gold used for ear-marking
purposes, it became necessary to transfer 29,625,700 fine ounces of
gold with a value of $1,036,899,495 from the Bullion Depository at
Fort Knox to the New York Assay Office.
The balance of silver in the Bullion Depository at West Point was
also decreased by removal of silver for sales under the terms of the
Green Act (Public Law 137, approved July 12, 1943) and for lendlease transactions. During the year 40,791,567 ounces of silver were
sold under the Green Act and 211,359,650 ounces were lend-leased.
The New York Assay Office manufactured coinage ingots containing
11,063,000 fine ounces of silver which were transferred to the Philadelphia Mint for use in domestic subsidiary silver coinage.
Additional amounts of silver were removed from West Point for use
in defense plants.. The total amount of sUver loaned for that purpose
to the Defense Plant Corporation, etc., amounted to 891,792,971 fine
ounces on June 30, 1944, as compared with 699,819,332 fine ounces on
June 30, 1943. This silver, is to be returned to Treasury custody
after it has performed its function.
The balance of silver in the Bullion Depository at West Point
amounted to 513,706,973 fine ounces at the end of the year.
Gold operations

'

Gold acquisitions by the mints and assay offices during the year,
on the basis of classified melted receipts, amounted to $58,524,200.77
a n d transfers between m i n t - s e r v i c e i n s t i t u t i o n s amounted to
$1,040,831,947.20. These transat^tioris totaled $1,099,356,147.97,
compared with $208,006,481.87 for the prior year which included
$19,871,516.21 in inter-mint transfers.
Acquisitions m 1944 included $10,764.13 of gold received at $20.67 +
per fine ounce. Increment on this gold amounted to $7,459.44.




246

REPORT OF T H E SECRETARY OF T H E TREASURY

Silver operations
Treasury silver acquisitions during the year/totaled 12,042,027.25
fine ounces. The total value, at an average of $0,478 per fine ounce,
equalled $5,757,512.53. Acquisitions were as follows:
Amount (fine
ounces)

Item
Newly mined domestic silver
Silver contained in gold bullion deposits, etc
.
Silver received in exchange for Government stamped-bars
Redeposits
Total

-

Value
$550, 312. 71
. 51, 773. 04
101, 749.96
6, 053, 676. 82

12, 042, 027. 25

L

861,293.90
120,175. 74
231, 250.14
10, 829, 307. 47

6, 757, 512. 53

United States coin received for recoinage during the year amounted
to 1,127,651.70 fine ounces, with a recoinage value of $J,558,875.67.
Unfit silver dollars w i t h a face value of $44,658,194.00 were melted,
yielding 33,152,082.31 fine ounces of silver.
Transfers of silver between mint institutions amounted to
9,109,409.72 fine ounces, and foreign governments deposited 58,581,355.97 ounces of silver for foreign coinage, making a grand total of
114,012,526.95 fine ounces of silver handled.
During the fiscal year $387,878 of sUver certificates were issued
against 300,000 fine ounces of silver bullion valued at $1.29+ per
fine ounce, the statutory monetary value of silver. This silver had
been acquired at an average price of $0.7111+ per fine ounce. The
difference between the cost of the silver held to secure these certificates and the monetary value of such silver is $174,545.00, and this
amount constitutes seigniorage.
The open-market price of silver in New York (mean of bid and
asked) remained at $0.45062 throughout the fiscal year.
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 year.
Rejineries
The three electrolytic refineries produced 4,031,631 fine ounces
(138 tons) of. electrolytically refined gold bullion and 4,385,482 fine
.ounces (150 tons) of sUver bullion in 1944. During the prior year
the quantities produced were 6,225,508 fine ounces (213 tons) of gold
and 6,679,864 fine ounces (229 tons) of silver.
Stocks of unrefined gold ajad sUver bullion in mint institutions decreased during the fiscal year 1944 by approximately 282.6 tons,
leaving a total of 1,474.4 tons.
Medals
• Production records of Mint history were broken in this fiscal year.
The Mint Service through the facilities of the medal- department of
the Philadelphia Mint customarily makes all medals required by the
Navy, Coast Guard, and Marines and many of those required by the




REPORT OF THE SECRETARY OF THE TREASURY

247

Army. Owing to the pressure of war work no medals are being produced by the Mint except those especially authorized by the Congress
or for the armed forces.
Approximately 133,000 Navy service medals were struck during
the year, an increase of about 57,000 medals over the previous year.
There were 50,000 small bronze stars and 15,000 small gold stars
struck for the Navy also, for use on service bars in lieu of additional
medals or to depict participation in major engagements in the war.
The Navy service medals struck during the year included the Navy
Cross, Distinguished Service medal. Silver Star, Bronze Star, Distinguished Flying Cross, Navy and Marine Corps medal. Air medal,
Purple Heart, Legion of Merit, and the China Service medal.
Medals awarded for service in various campaigns of the past were
struck also. In addition. United States Treasury Gold Life Saving
medals were made for presentation by the State Department, and
Life Saying medals of the Second Degree, in sUver, were ordered by
the Coast Guard. Expert Rifleman and expert Pistol Shot medals
were made also for the armed forces.
In addition, various commemorative medals out of stock sold to the
public during the year were as follows:
Item
Gold medals - -. Silver medals _
Bronze medals

Number

.

Value

--

.

- - _

- -

.

. 27
390
2,470

$4, 216.01
786. 95
2, 385.10

. 2,887

Total

. -

7,388.06

Stock oj coin and monetary bullion in the United States
On June 30, 1944, the estimated stock of domestic coin in the
United States totaled $1,505,218,196 consisting'^ of $494,337,395
standard silver dollars, $734,488,137 subsidiary silver coin, and
$276,392,664 ininor coin.
The stock of gold bullion, including coin, held by the Treasury on
the same date was valued at $21,173,065,544, a decrease of
$1,214,456,564 from June 30, 1943. The stock of silver bullion was
2,139,693,743 fine ounces, a decrease of 290,576,279.
Production oj gold and silver in the United States
Domestic gold production (refinery product) during the calendar
year 1943 totaled 1,394,522 fine ounces, with a monetary value of
$48,808,270, compared with 3,741,806 fine ounces, with a monetary
value of $130,963,210 in 1942. The largest annual gold production—
6,003,105 fine ounces with a monetary value of $210,108,700—occurred
in 1940.
Domestic sUver production (refinery product) during the calendar
year 1943 totaled 40,820,639 fine ounces, a decrease of 15,270,216
ounces from the 1942 production of 56,090,855.. The record silver,
production of 74,961,075 ounces was in 1915.




248

REPORT OF THE SECRETARY OF THE TREASURY

. . Industrial consumption oj gold and silver-in the United States
Gold consumption in arts and industries during the calendar year
1943 is estimated at $96,864,353. Gold returned from industrial use
amounted to $10,521,000, giving a net industrial consumption-of new
gold during the year of $86,343,353. Silver used in arts and industries totaled 162,112,863 fine ounces, of
which 129,940,686 fine ounces were of new material.
Compared with the calendar year 1942, there was an- increase in
the amount of gold and silver used in industry amounting to 603,482
and 30,693,639 fine ounces, respectively.
General activities
The regular income realized by the Treasury from the Mint Service
during the fiscal year 1944 aggregated $108,100,541, of which $45,796,210 was seigniorage. The seigniorage on subsidiarv silver coin was
$22,688,274 and on minor coin, $23,107,936. Extraordinary income
was $61,705,178, representing profits on sale of silver bullion, and
$7,459 was increment to $35 per ounce on revalued gold.
The number and value of deposits, transfers, gross income, and
expenses for the fiscal year 1944, and the number of employees on
June 30, 1944, at each institution are shown in the following table.
Gold and silver deposits, income, expenses, and employees, by institutions,
fiscal year 1944 , •
Num- Number
Monetary
ber
value of
of assay
of
gold and
determibullion nations
silver
deposit
' receipts,
on
trans- bulhon
including
actions deposits
transfers i

Institution

Gross
regular
income

Gross
expenses

Number
Excess
of
of
emincome
or of ex- ployees
penses ( - ) June 30,
1944

1,702
1,840
700
2,812
. 438

3,386
6,043
1,023
4,084
487

$16,269,211 $33, 751,941 $4, 694,678 $29,057,263
14,627, 504
7,424, 663 1,484,398
5,940, 265
5, 773; 134
4,830, 645 1,185, 674 , 3, 645,071
1,089,690, 300 62, 077,118
607, 394 61,469,724
2,904, 698
22,129
-6,956
16,173
85, 661
-85,661

1,891
406
390
164
6
35

Total--.
Bureau of the Mint

• 7,492

14,022

1,128, 264, 7,47 108,100, 640 8,079,834 100,020, 706
159,961
-159,951

2,892
49

Grand total-Prior fiscal year-

7,492
16,406

14,022
23,019

1,128, 264, 747 108,100, 640 8,239,786
284,975,697
74, 278,461 6,631,434

2,941
2,188

Philadelphia.-

.

San Fra.Tinisco

Denver-.NewYork .
Seattle
.Fort Knox

•

99,860, 755
67,647,027

1 Includes mter-institution transfers, $1,062,612,180.

DIVISION OF MONETARY RESEARCH

The Division of Monetary Research in the Office of the Secretary
provides information, economic analyses, and recommendations for the
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 exchange stabilization fund, gold
and sUver, the fiow of capital funds into and out of the United States,
the position of the dollar in relation to foreign currencies, international
monet'ary cooperation, monetary, banking, and fiscal policies of foreign




249

REPORT OF THE SECRETARY OF THE TREASURY.

countries, exchange and trade restrictions abroad, ahd simUar problems. In addition, the Division provides economic analyses in
connection with the Treasury's Foreign Funds Control, and monetary
and financial problems in occupied areas.
Analyses are also prepared relating to the customs activities of the
Department and 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.
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
stabUity. The Treasury's operations under these agreements are
performed under the stabilization fund, which is administered by the
Division.
BUREAU OF NARCOTICS i

The activities of the Bureau of Narcotics are directed toward the
suppression and elimination of the Ulicit traffic in narcotic drugs and
toward an effective control of the legitimate manufacture and distribution of such drugs for necessary medical uses.
During the fiscal year the activities of the Bureau resulted in an
increased number of marihuana law violations reported and of arrests
for violations of the marihuana laws. There were reductions in the
number of narcotic law violations reported and in the number of
arrests for violations of the narcotic laws, in the number of vehicles
seized for violations of these laws., and in the quantities of narcotic
drugs and marihuana seized and eradicated.
A: comparison of these statistics for the years 1943 and 1944 is shown
in the following table.
;
1943
Units
Narcotic
laws
Violations reported.
Arrests .
•
>
Drugs confiscated:
Narcotics
Marihuana: ^
Bulk-.
Seeds --..-'.---.
Cigarettes
Growing plants.
Wild marihuana growth eradicated..
Vehicles seized.-

2,431
1,794

Number
Number
Oil noes
Pounds
Pounds
Number
Number
Acres
Number-.

1944

Marihuana
laws
796
,777

r84

2,168
1,711

Marihuana
laws
902
918

1,431

2, 289

-

Narcotic
laws

638
18
24,903
108
. 4,747
. '•48

60

267
11
21,484
271
160
46

» Revised.
•

The table foUowing shows in detaU the number of violations reported
under the narcotic and marihuana laws during the fiscal year, their
disposition, and the penalties, as reported by Federal narcotic enforcement officers.
» Further information concerning narcotics is available in the separate report of the Commissioner of
Narcotics.
*




250

REPORT OF THE SECRETARY OF THE TREASURY

Number of violations of ihe narcotic and marihuana laws reported and their disposition,
and penalties, fiscal year 1944
N a r c o t i c laws
N^on registered
persons

Registered persons

Federal
Court

M a r i h u a n a laws

Federal
Court

State
Court •

Nonregistered
persons
Federal
Court

State
Court

State
Court

610

T o t a l t o b e disposed of

--

Convicted:
Federal
Joint.
Acquitted:
Federal
Joint
- Dropped:
Federal
Joint
Compromised: 2
Federal
Joint
.-'-

300

1, 292
396

518
384

990

-.

1,007

428
52

P e n d i n g J u l y 1,1943
R e p o r t e d d u r i n g 1944:
Federal *
.... ^
Jointi

2,695

1,202

100
16

6 •
10

712
136

272
23
178
11

. . - .-

T o t a l disposed of

. 22
31

16
2

16
14

5
1

242
38

5
1

368
241

21
4

4

247
121

47
51

127
64

5
9

1

625

1,638

903

365

P e n d i n g J u n e 30, 1944...

1,057

299

— "a
0

Sentences i m p o s e d :
Federal.
Joint -

.a"a

10

211
29

Total
Fines imposed:
Federal. . .
Joint

6
3

'"ie'

240

:

9

17

6 1,414
6
298

--..

§
><

{
S

1,712

.

Total

CO

0

4)

2.

0

OS

173
105

6
3

553
433

I

11
30

?
4

4

278

9

987

2

41

6

$800.00 $33,304.00
1, 309. 25
466. 00

34, 050.00

"

2

2
2

$23,-850.00
10,200. 00

.-.

0

2,109. 25 33, 770- 00

$5, 540. 90 $5,139.00
1, 638. 25 2, 599. 31
7,179.15

7, 738- 31

.$857. 50
1, 955. 00
2,812.50

1 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.
• 2 Represents 190 cases which were compromised in the sum of $32,248.

Registrations under the narcotic and marihuana laws during the
year are shown by classes in the following table.
. Registrations under the Federal narcotic and marihuana laws, June 30.1944
Narcotic
law
Importers, manufacturers, producers and compounders
Importers, manufacturers and compounders
P r o d u c e r s (growers).
..Dealers
Wholesale
RetailPractitioners-.'.
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, i n s t r u c t i o n or a n a l y s i s . .
Total

.

-

.-

Marihuana
law

. 152
7
22,031
140
-

1,161
47,940
134,934
1 130, 746
139

„:
.-.1.

.

315,062

488
'

71
22, 737

1 Includes registrations for which payment of occupational tax is not required under the law, because also
registered in some other class.




REPORT OF THE SECRETARY OF THE TREASURY

.

251

Opium supplies continued to be avaUable for im port and additional
quantities were imported during the year. Coca leaf supplies similarly
continued to be ample, both for m-edicinal purposes and for the manufacture of nonnarcotic flavoring extracts.
The importation, manufacture, and distribution of both opium and
coca leaves and their derivatives are subject to a system of quotas and
allocations designed to secure their proper distribution for medical
needs.
Exports of narcotic drugs decreased during the year as compared
with 1943 but remained considerably above the pre-war level. Manufacture of oi)ium. derivatives continued high due to export requhements, the needs for military and naval operations, and the increased
medical use of codeine b}^ the civilian population.
The shortage of addiction drugs in the illicit markets was reflected in
a marked increase in the number of thefts of narcotics from the stocks
of wholesalers, retailers, and practitioners entitled to have them for
medicinal n,eeds. There was also a sharp increase in the quantity of
drugs reported stolen.
DIVISION OF^PERSONNEL

The Division of Personnel is charged with the supervision of the
personnel 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 the
Division are principaUy 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 the Departs
ment's policy of facilitating and strengthening the functioning of the
operating organizations.
'
.
The activities of the Division include those relating to positionclassification, salary administration, recruitment, placement, appointment, promotion, separation, retirement, discipline, investigation,,
efficiency rating, employee relations, leave, forms and records, training, and civil service rules and regulations.
Throughout the fiscal year 1944, the Division was engaged in fostering, deyeloping, and maintaining a comprehensive program of
personnel management, in the interests of bettering employeeemployer relations, attaining higher .standards of performance, and
increasing the over-all efficiency and effectiveness of administration
for the entire Department.
During the year the Division considered and acted upon 161,635
personnel recommendations relating to the appointment, promotion,
reassignment, retirement, suspension, and separation of employees.
COMMITTEE ON PRACTICE

The Committee on Practice is an administrative and judicial body.
I t has charge of the enrollment-of attorneys and agents for practice
before the^Treasury Department and conducts hearings in disbarment
proceedings. An attorney, not a member of the committee, repre


252

REPORT OF THE SECRETARY OF THE TREASURY

sents the Government before the committee. All complaints are fUed
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 summarizes the work of the committee for
the fiscal year 1944.
Attorneys and agents:
Applications for enrollment approved
Applications for enrollment disapproved
Applications withdrawn on advice of committee
Formal hearings on applications
.--Complaints against enrolled persons:
Pending July 1, 1943.Filed during the year
---

.
_

-

-

:..-

-

-1--;---

-

Disposed of:
Disbarred
-..---Stricken from the rolls in the course of disbarment proceedings
Suspensions
--^
Reprimands
Dismissed
--.

,

Number.
2,613
11
Ill
0

-

--.

-

27
- 19

-

r--.---

:
----

6
4
2
3
6

46

21

Pending June 30, 1944
^
---25
Charges made, names stricken from the rolls
^
_
4
Cases of minor infractions of the regulations in which enrollees were given an opportunity to show
cause why proceedings should not be instituted
-10
Customhouse brokers:
• ^
Apphcations for licenses approved
•-_
--35
Applications withdrawn
------..
3
Licenses canceled1-----29
Licenses revoked
0
Suspensions
-----_
0
Reprimands
.
--0

Since the organization in 1921 of the Committee on Practice,
66,650 applications for enrollment have been approved and 773
disapproved. Two hundred and fifty-two practitioners have,been
disbarred from further practice before the Treasury Department,
139 have "been suspended from practice for various periods, and 183
have been reprknanded.
PROCUREMENT DIVISION

.

The main functions of the Procurement Division are the determination of policies and methods of procurement, warehousing, and distribution of property, facilities, improvements, machinery, equipment,
stores, and supplies, and the procurement of materials, supplies, and
equipment for all Federal establishments and their field offices, except
the Army, the Navy, and the United States Maritime Commission.
The' following table summarizing the e:?tpenditures for purchases
made by the Procurement Division during the fiscal years 1943 and
1944 indicates the breadth of its various purchasing activities.
1943

Object
Regular activities »
:
-.Defense aid (lend-lease)
Strategic and critical materials..*
Foreign war relief (American Red Cross) .
Emergency relief _
Defense housing

. -

'....•
.
-

•

-

..-'

Total purchases
--Purchases by other agencies from the General Schedule of Supplies---.--

$39, 259, 734
' 1, 470, 111, 263
r 4,881, 673
2, 568,832
41, 096,883
15,905, 289

$24, 746, 636
1,086,687, 324
7, 024, 640
4,347, 557
82, 478
14, 602

1, 573,823, 674
234,673, 727

1,122,803, 037
296,977, 584

••.Revised.
.
.•
^ Purchases of supplies procured for other agencies or for stock for issue to other agencies.




1944

REPORT OF THE SECRETARY OF THE TRE.ASURY

,253

Purchases of supplies for other agencies declined during the year
by $14,513,198 to $24,746,536. On the other hand, purchases by other
agencies from the General Schedule of Supplies of articles and .equipment under contract increased by $62,303,857, reaching an all time
high of $296,977,584., Included in the latter amount was $118,082,123
of purchases.of aeroplane tires.
A discussion of purchases of lend-lease material and of strategic
and critical materials appears on pages 123 and 125.
Purchases for foreign war relief increased by $1,778,725 during the
year to $4,347,557. These purchases included clothing and medical
supplies obtained for distribution through the American Red Cross to
nationals of countries suffering from the hardships of war.
The emergency relief and defense housing programs were drastically
reduced because they were under liquidation.
General supply jund.—This special fund was established pursuant
to the act of February 27, 1929 (45 Stat. 1341), and is avaUable to
finance the stock, consolidated purchases, and services authorized
under Executive Order No. 6166, dated June 10, 1933. I t is a revolving fund from which payments are made for commodities purchased
and services performed for other agencies and to which collections
made direct from the applicable appropriations are credited by transfer
and counter-warrant.
A statement of the assets and liabilities of the general supply fund
as of June 30, 1944, follows.
Assets
Current assets:
Cash.-Accounts receivable
Total:

Amount

----

-

7, 225, 283. 28

Inventories and deferred charges: .
Inventories (at cost)
Deferred charges..
-Total

3, 571, 212. 47
.84, 318. 59

.—-..--

Totalassets

$3, 921, 638. 47
3,303,644.81

3,655,631.06
1

10,880,814.34

Liabilities and capital
Current liabilities:
Accounts payable-Unearned income.
Total . - .

\
-..

$2, 542, 242. 01
72,071.12
2, 614„313.13

Appropriations and capital:
Capital
Donated capital
Surplus
Total

Amount

-

8, 020, 196. 07
192,899.17
53, 406. 97
8, 266, 501. 21

Total liabilities and capital.. 10,880,814. 34

Storage and warehousing.—Procurement Division Regional Warehouse and Supply Centers have been established in New York, N . Y.,
Fort Worth, Tex., and San Francisco, Calif., and as a result of a survey
of Federal civil establishment warehouses which maintain stores for
use, consumption, or issue, the Procurement Division has undertaken
a Federal warehousing program in which it is consolidating these
agency warehouses into its Regional Warehouse and Supply Centers or
"coordinating them with its Centers. I n addition to providing warehouse service to the agencies whose warehouses are consolidated or
coordinated, each Regional Warehouse and Supply Center is organized
to render complete purchasing, contract, and stores service to the
field offices of all Government agencies. Stores are issued direct to
the using office-, eliminating rehancUing by intermediary facUities.
The District of Columbia warehouse operates to meet the common
supply needs of Government agencies in the greater Washington area
and within the territory delineated by economical shipping distances




254

REPORT OF I'HE SJ&CRETA.RY 05" THE TREASURY

from Washington in relation to the established Regional Warehouse
and Supply Centers in other locations. I n addition it serves as a
national warehouse to distribute articles which, by their nature,
source of supply, or quantities required can be more economically
supplied to the regional supply centers in that manner.
The Inspection Division is equipped to inspect materials, supplies,
and equipment received for stock by the Procurement Division warehouse. , Inspections are also conducted upon the request of any Government agency for materials that are purchased by. the Procurement
Division and delivered direct to the ordering agency. In many cases
bidders are required to submit samples of their merchandise. These
samples are received, checked, and tagged with proper identification
and are placed on exhibit so that they may be examined by representatives of all Governnient agencies.
The Fuel Yard is the distributing agency for coal, fuel oils, wood,
charcoal, and coke used by the Federal and District Governments
at office buildings, housing units, institutions, hospitals, schools,
police stations, fire houses, and Army and Navy posts in the District
of Columbia and vicinity.
•Surplus property disposal.—T>uring the year the Procurement Division disposed of $88,260,017 of surplus property as compared with
$9,076,000 • in 1943. A discussion of the activities in this connection
•
will be found on page 123 of this report.
Public utilities.—The Procurement Division performs the technical
work required to achieve the most efficient and economical use and
. procurement of utility services for the various agencies of the Federal
Government. Such services include wire communication by telephone and telegraph, as well as electric power and gas.
Research and analysis were carried on during the year to develop
bases for negotiating consolidated contracts, and other arrangenients
whereby the cost of the above services could be minimized. The
program of negotiating such contracts, covering the Government's use~
of particular utility services in the larger metropolitan areas, was
vigorously prosecuted. This program should result not only in
decreased cash outlays for utility services, but also in considerable
savings in administrative time and effort in contracting for those
services. Supervision was maintained over the existing consolidated
contracts covering electric, telephone, and gas service taken by
Federal agencies in Baltimore, New York, Philadelphia, and the
District of Columbia.
The Division's efforts have resulted in considerable total savings.
Certain of those, mentioned in the last report, are recurring savings.
Thus, again this year telephone service- in the District cost $200,000
per year less than it would have prior to the negotiation in June 1943
of a more equitable schedule of charges for certain items of telephone,
service.
As a result of further study of electric costs in the District, and
after an extensive hearing before the Public Utilities Commission, in
which hearing the Division actively participated, electric rates were
reduced by over $1,000,000. per year. The Federal Government's
share of the reduction will be in the neighborhood of $350,000 per year.
The. above benefits were obtained through the general efforts of the
' Revised.




REPORT OF THE SECRETARY OF THE TREASURY

255

Division, with no special staff whose direct and sole responsibility was
the economical procurement of utility services. As a result of such a
limitation little was or could have been done in other centers of great
governmental a;ctivity. ; The potentialities of this work were so large
that the necessary approval and appropriation were obtained for the
formal organization, as of July 1, 1944, of a Public Utilities Division
within the Procurement Division. Certain key personnel were
recruited, and it is expected that even greater savings and administrative simplicity than heretofore will be achieved. •
Renegotiation oj contracts.—Under existing law dhecting the renegotiation of contracts the Procurement Division has completed work
with 234 contractors. Of this number, it was determined that fortysix contractors had realized excessive profits totaling $9,224,000. In
addition to these, a review of other contracts resulted in reductions in
contract value amounting to $298,569, the total of excessive profits
and reductions determined being $9,522,569.
Contract termination.—Frequently Procurement Division contracts
have to be (Canceled before completion, because, for a variety of reasons,
there is no further need for the particular materials involved. The
^ Procurement Division has effected 86 such terminations, 50 of which
involved no additional costs to the Government. Of the remaining
36 on which termination claims have been received, 17 were settled as
of June 30, 1944, Under,directive orders of the Director of War
MobUization and prior authorizations there has been established in the
Procurement Division a Contract Termination Settlement Review
Board consisting of five members all of whom with the exception of the
chairman serve in an ex officio capacity.
Specifications.—A continuing survey of the changes in the avaUabUity of materials, made in collaboration with the War Production
Board, resulted in the issuance of 223 amendments to existing Federal
Specifications and the cancelation of 192 Emergency Alternate Federal
Specifications, which were originally issued during the most critical
period of shortages of materials. A total of 74 new and 97 revised
Federal Specifications were promulgated, bringing the number of
Fed'eral Specifications in effect as of June 30, 1944, to 1,577.
During the year, 52 new and revised Procurement Division Specifications were issued for materials and supplies being currently procured
under the General Schedule of Supplies. A Procurement Division
Specification prepared for duplicating process liquid has resulted in
savings of many thousands of dollars by the development and inclusion of a broadened range of satisfactory commercial materials.
There were 327 Procurement Division Specifications in effect as of
June 30, 1944.
Standards Division.—The duties of the Staudards Division concern
the preparation and revision of. publications listing and classifying
supplies procured, stored, and issued by the various departments and
* establishments of the Federal Government. Considerable work has
been done for the Army Service Forces in the developm'ent and preparation of catalogs, indexes, and cross reference tables to meet Army
needs. Material has been prepared to enable accurate classification
of property to be iuventoried for-disposal in connection with the surplus
property program. This is vital to the identification and classification of the multitude of articles which wUl be avaUable for disposition.




256 .

REPORT OF THE SECRETARY OF THE TREASURY

Printing and binding.-—Procurement of printing and binding for the
various bureaus and ciivisions of the Treasury Department and other
agencies totaled $6,922,840. Of this amount $5,684,731 represents
printing obtained from the Government Printing Office and $1,238,109
that was authorized to be obtained from other sources.
. Conservation oj supplies and material.-^A plan to stimulate interest
in the conservation of supplies and equipment was inaugurated and
presented to all departments and agencies of the Government, including the Governmentr of the District of Columbia. The plan was
adopted and has been instrumental in reducing the quantities of supplies used, the salvage of usable material, and in encouraging better
care of equipment, especially typewriting machines. Coordination
and encouragement of the work is maintained by the Procurement
Division through its general conservation liaison officer. .
Blind-made products.—During the fiscal year purchases of products
made by blind persons under the Wagner-0'Day Act amounted to
$7,314,303. Participating in the program are fifty-two institutions
in which employment was given to 2,452 blind persons.
DIVISION OF RESEARCH AND STATISTICS

The Division of Research and Statistics, in the Office of the Secretary, serves as a technical staff for the Secretary, the Under Secretary,
and other Treasury officials on matters relating to the economic aspects
.of fiscal operations and policies, particularly as they concern borrowing, and on the estimated volunie and source of future revenues,
actuarial analyses involved in certain Treasury functions, and various
general economic problems arising in connection with Treasury
activities. .
The sources of funds avaUable for Federal borrowing are analyzed
so as to show where and in what volume income is being generated and
savings are being accumulated. . These, findings are interpreted for
use in setting goals for borrowing and in planning the programs to
^reach these goals, and for the use of the bond sales organization in
connection with war loan drives and other sales activities.
The suitability of various types of securities for different classes of
investors and for specific operations and programs are analyzed and
recommendations are made with respect thereto, taking into account
both the adaptabUity of the securities for attaining the goals set for
each particular operation and the long-run effects of the issuance of
each type of security on the economy and on the cost of financing the
war. Studies are made of the level and structure of interest rates
and of the factors affecting them. Analyses and recommendations
are prepared with respect to legislation having a present pr prospective
effect upon the market for Government securities.
• Detailed information on sales of Government securities, received
through a statistical reporting system set up in the Federal Reserve*
Banks and in-the Bureau of the Public Debt in the Treasury Department, are analyzed in the Division so that the Secretary and other
Treasury officials can have at all times a complete picture of the volume
and distribution of sales; can measure progress towards the long-range
goals set for Government borrowing; can gauge the suitability of
various kinds of securities for the classes of investors for which they
were designed; and can determine the effectiveness of various methods
of offering.



REPORT OF THE SECRETARY OF THE TREASURY

257

Estimates of tax revenues under existing tax laws are prepared in
the Division for use in planning financing operations in the Treasury
and for incorporation in the President's Budget messages to Congress.
I n connection with proposals for ne;w tax legislation, estimates are
prepared by the Division at the request of Treasury officials and committees of Congress, to show what increases or decreases in revenue
may be expected to result from various suggestions for changes in or
additions to the existing tax structure.
The Government Actuary, who is on the staff of the Division, is
a member of the Board of Actuaries estabhshed under the CivU Service^
Retirement Act, and is the Treasury Department's representative on
the Actuarial Advisory Committee of the RaUroad Retirement Board.
He is responsible for the estimates which have to be prepared each
year, in accordance with statutory provisions, to show the amount of
the annual appropriations reciuired to be made to the foreign service
retirement and disability fund and to the District of Columbia
teachers' retirement fund, and makes various other actuarial analyses.
SECRET SERVICE DIVISION

The Secret Service Division is charged principally with the suppression of counterfeiting, forging, or alteration of obligations and
securities of the United States and foreign countries., and of counterfeiting of coins; investigations of the forgery of endorsements on, or
the fraudulent negotiation of, United States Treasury checks, of
violations of certain other Federal statutes, of thefts of Government
property under the,control of the Treasury Department, of loss of
valuables in shipments by Government agencies, and of applicants
for positions in the Treasury Department; and the protection of the
President of the United States and his immediate family, of the Treasury BuUding and other buUdings housing Treasury Department
activities, of the production, transportation, and storage of obligations
and securities of the Uniteci States, and of valuable papers stored in
Treasury Department vaults and buildings.
Crime prevention program.—The Secret Service crime prevention
program continues to be an effective method for combatting the
activities of forgers and counterfeiters. With mustering-out payments to soldiers and sailors added to the approximately 300 million
Government checks issued to dependents of soldiers and saUors, to
Social Security beneficiaries, to farmers and others, the need for this
program is greater than ever and the Secret Service is stressing the
value of preventive methods in its ''Know Your Endorser" campaign
against check thieves and forgers.
Newspapers, magazines, radio stations, book publishers, and organizations including the American Bankers Association have rendered
valuable help in the Nation-wide effort to show the public the tricks
of check thieves and forgers.
''Know Your Money" study has become a part of the curricula of
some 12,000 high schools in all parts of the United States including
those of New York City. In New England thousands of high school
students participated in 34 essay contests on the same subject for
which local bankers offered cash or war bonds as prizes!
Enjorcement ac^mi-ies.—Forgers arrested during the fiscal year 1944
totaled 1,691 as compared with 1,004 in 1943. Convictions for check
613185—45

18




258

REPORT OF T H E SECRETARY OF T H E TREASURY

forgery were 1,480 in 1944 and 881 in the previous year. - In Memphis,
Tenn., an employee of the Memphis District U. S. Engineers was
arrested for forging checks totaling $7,500. His operations were
discovered by the Secret Service when fellow employees received
notifications of their 1943 incomes for tax purposes and complained
•that the amounts reported were far in excess of their actual earnings.
In Atlanta, Ga., Secret Service agents arrested a check thief for
stealing anci. forging nine $100 checks issued to soldiers as musteringout pay. Many of the forgers arrested during the year were juveniles.
In LouisvUle, Ky., six boys ranging in age from 12 to 14 years were
arrested for stealing and forging a number of Government and commercial checks. In Altoona, Pa., two 19-year-old girls were arrested
for the theft and fraudulent negotiation of quantities of Treasury
checks, post office money orders, and commercial checks.
Counterfeiters arrested during the year totaled 55 as compared
with .159 in 1943. Convictions for counterfeiting were 54 in 1944
and 123 in the previous year. There were four new counterfeit note
issues during 1944. In two of these cases only one counterfeit note
each appeared. Makers of the third issue were captured in Seattle.
The fourth issue originated in Barcelona, Spain, and did not circulate
in the United States. In Bremerton, Wash., a counterfeiting plant
for the manufacture of very deceptive $10 and $20 notes was captured
and its three operators were^ arrested and sentenced to five, six, and
ten years. Agents also seized 5 plates for counterfeit notes, 2 zinc
plates for "rubber money," simulating currency, 5 zinc plates for
aeroplane ration stamp No. 2, 14 genuine electrotypes for war ration
book No. 1 and shoe ration stamp No. 18, stolen from the Go vernment
Printing Office, 1 zinc plate with 72 impressions of sugar ration
stamps Nos. 29 to 40, 3 printer's chases holding cuts for inscription
on gas ration stamps, 5 plates for the eagle design on gas ration
, stamps, 7,628 counterfeit 12-pfennig German postage stamps, and 2 cuts
used in their manufacture, 11 film negatives for gasoline ration stamps,
50 film negatives for faces and backs of counterfeit bills, 1 glass
negative, 5 metal molds for counterfeit coins, 31 plaster molds for
counterfeit coins, Iji steel dies, 4 plates for old series Canadian
^ bottled-in-bond liquor stamps, 15 counterfeit bottled-in-bond liquor
stamps, 155 counterfeit tax-paid' strip stamps, 21 sheets of genuine
war ration book paper stolen from the Government Printing Office,
1 power press, 4 cameras, and 29 reproductions of faces of United
States paper money, the reverse sides bearing Axis propaganda in
various languages. In cooperation with the Office of Price Administration, the Secret Service also seized thousands of counterfeit ration
stamps for gasoline and ojbher commodities. Such stamps were held
by the Office of Price Administration for proper disposition.
Secret Service agents arrested five employees of the Government
Printing Office for making counterfeit war ration shoe stamps No. 18
from genuine electrotypes on genuine paper, both stolen from the
Government Printing Office by the" offenders. The five are under
indictment awaiting trial.
In cooperation with investigators of the Office of Price Administration, Secret Service agents arrested 192 persons for the manufacture,
use, or distribution of counterfeit war ration stamps and convicted
149 offenders.
The public losses through acceptance of counterfeit bills were
reduced from $22,079 in 1943 to $18,456 in 1944, a decrease of 16.4



REPORT OF THE SECRETARY OF THE TREASURY

259

percent. Losses from counterfeit coins dropped more than 45.4
percent from $16,310 in 1943 to $8^906 in 1944. The total representative value of false bills and coins seized and circulated in 1943 was
$65,693 and for the current year this total aggregated only $47,061,
a drop of 28.4 percent. This was the seventh successive year showing
a reduction in counterfeit violations.
During the year 29,713 investigations were completed and 2,415
offenders were arrestecl. Cpnvictions were obtained in 97.9 percent
of the 2,121 criminal cases brought to trial as compared with 98.0
percent of the 1,515 cases in the previous year. The 1944 record of
convictions was achieved despite the fact that 41 percent of the male
employees of the Secret Service were in the armed services.
Fines in criminal cases in 1944 totaled $47,968 and imprisonments
totaled about 1,829 years. Additional sentences totaling about 1,984
years were suspended or probated.
The following tables present data relating to the activities of the
Secret Service.
. Counterfeit money seized, fiscal years 1943 and 1944
1944

• 1943

Counterfeit and altered notes seized:
After being circulated
.
Before being circulated.--Total
Counterfeit coins seized:
After being circulated
Before being circulated - . -.
Total

---

--

$31, 337
13, 672

------ --

44,909
19, 443
1,340

--

Grand total

Increase Percentage
increase
or deof decrease ( - ) crease ( -.)

$26, 611
5, 376
.

-4,726
-8,196

, -15.08
-60. 39

31,987

-12,922

—28. 77

14, 607
466

- 4 , 836
-874

-24. 87
-66. 22

20, 783

15, 073

- 5 , 710

—27. 47

65, 692

-

47, 060

-18,632

-28. 36

Number of investigations of criminal and noncriminal activities, fiscal years 1943'and
1944
•

1943

Criminal cases:
Making or passing:
Counterfeit notes,.
Counterfeit coins - Altered obligations
•
Forgery of Government checks.
-Stolen or altered bonds
Violation of Gold Reserve Act
--- -_
Violation of Farm Loan Act
1..
Protective research
_.
".
Stamp and strip stamps
Theft of Treasury Department property
_
False claims
_--_
War ration stamps--Miscellaneous.
_-Total

..'.:.

-

258
234
183
10,364
146
112
14
9,122
37
10
15
28
447

136
87
166
18,168
441
69
6
6,907
16
21
33
132
288

-122
-147
-17
.7,804
296 '
-43
-8
- 2 , 215
-21
11
18
104
-159

--

20,969

26, 470

6, 501

5,531
79
73
" 240

2; 897
42
117
187

-2,634
-37
44
-63

-47. 62
-46. 84
• 60. 27
-22. 08

5,923

-

Total




Percentage
increase
or decrease (—)

--

--.-

Noncriminal cases:
Personnel (applicants)
' Surveys..
Government losses in shipment.
Miscellaneous

Grand total

1944

Increase
or decrease ( - )

3,243

-2,680

—45. 25

26,892

29, 713

2,821

10.49

-47. 29
-62. 82
-9.29
76.30
204.14
-38. 39
-57.14
-24. 28
-56. 76
, 110.00
120.00
371. 43
-35. 57
26.23

260

REPORT OF THE SECRETARY OF THE TREASURY
Number of arrests and cases disposed of, fiscal years 1943 and 1944
Increase Percentage
increase
or deor decrease ( - ) crease (—)

1943

Arrests for:
Making or passing:
Counterfeit notes
-Counterfeit coins
-Altered obligations
1
'...
Forgery of Government checks
Violation of Gold Reserve Act
.
Violation of Farm Loan ActStolen, altered, or forged bonds
Protective research
Stamp and strip stamps..
False claims
Theft of Treasury Department property.
War ration stamps
-".
Miscellaneous.--

46
114
72
1,004
27
3
32
318
13
4

1,789

Total-.
Cases disposed of:
\Convictions'in connection with:
Counterfeit notes
Counterfeit coins
.-Altered obligations
Forgery of .(lo vernment checks
Violation of Gold Reserve Act
Violation of Farm Loan ActStolen, altered, or forged bonds
Protective research
Stamp and strip stamps
False claims
Theft of Treasury Department
War ration stamps
Miscellaneous
-

.-

30
'93

-.- -. --

--property-

, Total
:.
Acquittals
------Dismissed, not indicted, or died before trial.
Total cases disposed of.-

:.

98
1.691
1
3
93
233
4

....

74
881
43
5
21
300
12

1,484
31
169

11
192
29

-20
-84
26
687
-26
0
61
-85
-9
1
11
106
-42

-44.44
-73.68
36.11
68.43
-96. 30
0
190. 62
-26. 73
-69. 23
25.00
100. 00
123. 26
-69.16

2,415

626

34.99

19

-11
-58
0
599
-39
-2
47
-76
-10
3
7
144
-11

-36. 67
-62. 37
0
67.99
-90. 70
' -40. 00
223:81

26
30

6

36
74

1,480
4
3
68
224
2
3
7
149

- 2 6 . 33

- 8 3 . 33
100.00
100.00
2,880.00
-66.00

2,077
44
206

693
13
37

39.96
41.94
2L89

2,327

643

38.18

Protective activities.—In the protection of the President of the United
States, Secret Service agents encountered and solved many new
security problems incident to his historic trips to Canada, Cairo,
and Teheran.
The Uniformed Force of the Secret Service protected a total of
$492,500 millions in money, stamps, bonds, and other Government
securities in production and storage and over $204,367 millions in
transit. Other security duties of the Uniformed Force involved protection of the Bureau of Engraving and Printing, the Treasury Building, and other buildings housing Treasury Department activities,
including the Merchandise Mart in Chicago, 111., where a branch of
the Bureau of the Public Debt is in operation.
OFFICE OF THE TAX LEGISLATIVE COUNSEL

The Office of the Tax Legislative Counsel provides the legal and
technical assistance necessary in connection with planning and coordinating the recommendations of the Treasury Department for
internal revenue legislation. I t represents the Department before
congressional committees considering tax legislation and assists in
drafting such legislation.
During the fiscal year 1944, the efforts of the Office were directed
primarily to the Revenue Act of 1943 and the Individual Income Tax
Act of 1944. In addition to advice as to the content of the Individual




REPORT OF THE SECRETARY OF THE TREASURY

261

Income Tax Act of 1944 and assistance in drafting its provisions, the
Office also took part in the work begun on forms and regulations
necessary to the administration of the simplffied individual income
tax system.'
The Office reviews all internal revenue regulations and advises the
Secretary with respect thereto; in the fiscal year it reviewed over one
hundred Treasury decisions revising such regulations. I t also supervised the preparation of Department reports upon 79 bills concerning
internal revenue laws; participated in numerous conferences with
individuals, private organizations, and other governmental agencies
on taxation; began extensive studies, in collaboration with committees
of tax experts outside the Government; assisted in the preparation of
Regulations 111, 112, and 115 relating to the income tax, excess profits
tax, and collection of income tax at source on wages; and handled a
large volume of correspondence containing recommendations for
revenue legislation and inquiries about existing legislation.
DIVISION OF TAX RESEARCH

The Division of Tax Research deals with the economic and technical aspects of taxation. Its function is to assemble the facts and
prepare the analyses (other than legal). necessary (a) to formulate
Treasury tax policy and (b) to meet requests from such sources as the
congressional committees clealing with taxation. In this connection
the Division conducts surveys and prepares reports and studies for
the use of the Secretary of the Treasury, the Under Secretary, and
other (designated officials of the Treasury Department. Upon request,
the Division also provides information on various tax matters for the
use of the President, the Ways and Means Committee of the House of
Representatives, the Finance Committee of the Senate, the Joint
Committee on Internal Revenue Taxation, and several Federal
agencies.
To carry out its functions, the Division is required to make basic
surveys of the tax problems of the Federal Government, to devise
alternative methods of meeting revenue requirements', and to develop
methods of adjusting the tax system to changing economic conditions.
The tax system as a whole is analyzed with a view to obtaining
revenue'yields large enough to meet prospective revenue requirements
and to making adjustments in a manner which wUl be fair to taxpayers and will avoid undeshable economic effects. Individual taxes
are studied (1) to determine their effects on the particular groups of
taxpayers involved, (2) to avoid inequity among taxpayers within a
given group, (3) to ascertain and develop methods of meeting the
administrative and compliance problems of the tax,, and (4) tb devise
ways of integrating the particular tax with the tax system as a whole.
These studies requhe economic analyses of the effects of each tax;
technical analyses of the more complicated problems inherent in various tax measures; and statistical analyses of the distribution of the
burden of specific taxes, of the total Federal tax load, and of the combined Federal, State, and local burden.
The interrelationships of Federal, State, and local taxes are studied
with a view to possible improvements in intergovernmental fiscal
relations. Specffic State and local taxes are also examined not only
to determine the combined effect of such taxes and Federal taxes b u t



262

REPORT

OF T H E SECRETARY OF T H E TREASURY

also to assure the Federal Government of the benefit of State and
local tax experience. Likewise, to gain the benefit of foreign experience and to compare tax policies, studies are made of foreign tax
systems and selected taxes in foreign countries.
The Director and members of the Division assist in the presentation of the Treasury's tax program to the congressional committees,
and are frequently called upon for technical assistance to those committees. Conferences are held with members of the committees and
with the staff of the Joint Committee,on Internal Revenue Taxation
for the purpose of explaining various, aspects of Treasury tax proposals and assisting in the analysis of tax measures -under congressional consideration. 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 is also responsible for the assembling and publication
of all statistical information pertaining to Federal taxation and, in
this connection, exercises general supervision over the statistical work
of the Bureau of Internal Revenue. The Division handles Treasury
correspondence relating to matters of taxation not involving legal
questions.
During the fiscal year 1944 the major efforts of the Division.were
applied to the Revenue Act of 1943 and the Individual Income Tax
Act, of 1944. Work on the Revenue Act of 194.3 dealt primarily with
additional means of raising revenue to financie the war and help combat infiation, but considerable attention was also directed to the
problem of simplifying the individual income tax. The Reyenue Act
of 1943 became law on February 25, 1944, over the President's veto.
Extensive work on individual inconie tax simplffication culminated
in,legislative action during the first half of 1944. The Division of
Tax Research, cooperating with the staffs of the Bureau of Internal
Revenue, the Office of the Tax Legislative Counsel, and the Joint
Committee on Internal Revenue Taxation, aided the congressional
committees in developing simplification plans. The bill embodying
these plans became law on May 29, 1944.
WAR

FINANCE D I V I S I O N .

The War Finance Division of the Office of the Secretary is charged
with the responsibility of promoting the sale of all securities offered
to the public by the Treasury Department during war loan drives
and of United States savings bonds between drives.
^ This Division during, the fiscal year devoted the major part of its
efforts to an educational and informational program: aimed at three
main objectives:. (1) To augment public participation in the war
financing program, (2) to draw off into savings the increased earnings
of the public, and thereby (3) to provide the people with a reserve of
personal savings for the post-war period.
The country-wide bond selhng organization of the War Finance
Division consists almost entirely of volunteers. A War Finance
Committee is in operation in each State and also in the District
of Columbia, Alaska, Hawaii, and Puerto Rico, under the direction
of a State Chairman. Working with the State Chairman are county
and local volunteer committees. The national office in Washington
provides the basic promotion material—pamphlets, posters, and
Other publicity media.



REPORT OF THE SECRETARY"OF THE TREASURY

263

The War Finance Division is divided into three major parts, working under the National Director, who is an Assistant to the Secretary,
and who is responsible for promoiing the war financing program.
The Field Division operates under the supervision of the Assistant
National Director (Field Director) who is responsible for the organization and supervision of the operation of the various field offices in
the States, as well as for the formulation of policiies and the preparation of instructions for the guidance of the State offices in promoting
the sale of Government securities. In this Division are a number of
sections with more or less specialized spheres of activity. The
National Organizations Section is responsible for contacting national
labor organizations, patriotic and civic groups, and business and
fraternal organizations. The Payroll Savings Section is concerned
with the important task of promoting at the national level, and
assisting State organizations to promote, the payroll savings plan for
the instaUment purchase of war savings bonds. The Women's Section
is concerned with the integration of women's organizations in aU
phases of sales promotion. , Other sections of the Field Division deal
with schools, motion pictures and special events, retail stores, agricultural organizations, and other activities.
The Publicity and Promotion Division formulates publicity and
promotion campaigns for recommendation to the State committees
and for use at the national level. This Division is responsible for
securing the cooperation of all publicity sources; for stimulating
national advertising' by radio, newspapers, magazines, bill boards,
and other media; and for the designing of posters, albums, pamphlets,
etc., used in promoting the sale of Government securities.
The Administrative Division, under an Assistant to the National
Director, is charged with all administrative functions of the War
Finance program.
During the fiscal year there were three war loans, during which the
sales of securities were confined to nonbank investors. The Third
War Loan drive in September 1943 had a goal of $15 billions, and
actual sales were $18.9 billions; the Fourth War Loan in January 1944
had a goal of $14 billions, while actual sales were $16.7 billions; and
the Fifth War Loan in June 1944 had a goal of $16 billions, with sales
of $20.6 billions.
Sales of savings bonds of Series E, F , and G during the fiscal year
amounted to $15,498 millions, an increase of $3,709 millions over the
previous year. Sales of war savings stamps during the year aggregated
$409 millions, a decrease of $181 millions as compared with the previous
year.
The number of persons participating in payroll savings plans increased'from 26.8 millions on June 30, 1943, to 27.6 millions on June
30, 1944, and the deductions from pay envelopes increased from $415
millions in June 1943 to $540 millions in June 1944. The deductions"
in June 1943 were 9.0 percent of the total pay of those participating,
whUe in June 1944 the deductions were 10.6. percent.
, At the beginning of the Fifth War Loan it was estimated that 81
million persons, representing almost 60 percent of the population of
the entire country, had bought 600 million separate Series E bonds.
Further detaUs on savings bonds and stamps and the payroll savings
plans will be found on pages 48 to 60.




264

REPORT OF THE SECRETARY OF THE TREASURY
INTERDEPARTMENTAL WAR SAVINGS BOND COMMITTEE

The Interdepartmental Committee for the Voluntary Payroll
Savings Plan, estabhshed by Executive Order No. 9135, dated April
16, 1942, continued its work during the year in promoting the plan for
the purchase of savings bonds by the civilian employees of the Government, and cooperated further with the War and Navy Departments in
extending the plan to the armed forces.. , The Comnuttee also took an
active part in the war loan drives by soliciting the employees for
extra purchases of bonds for cash.
Federal civihan employees increased their monthly payroll allotments from $40,463,000 in June 1943 to $52,912,000 in June 1944.
At the close of the fiscal year 2,220,000 civilian employees were investing 11.6 percent of their current gross pay each pay day. The popularity of this systematic method of saving is growing among the Federal
employees, the number of Federal civilian participants having increased by 266,000 over the previous year.
During the year, with the approval of the Postmaster General, the
plan was inaugurated in the Baltimore, Md., and Washington, JD. C ,
post offices with notable success, and it is hoped that the benefits of
the plan will be made available to the employees in other post offices
at an early date.
The following table shows the number of Federal civilian employees'
participating in the payroll savings plan, the amounts of their
monthly allotments for war savings bonds, and the average montlUy
investment per employee.

Month

Average
Monthly inNumber of
monthly
Federal civilian! vestments
investment
employees par- through payper emroll allotments
ticipatmg
ployee

1943—January..February..
March
.- April
May
June

1, 527,168
1, 604,069
1, 669. 866
1,794,080
1,880,071
1,953,333

$28, 981, 367
29,405,153
' 32,181, 640
36, 608,175
37, 211, 859
40, 463, 370

$18.98
18.33
19.27
20.40
19.79
20.63

July
August---.
• ' September.
October
November.
December.

1,957,907
1,966,746
1,954,100
2,002,158
2,025,172
2,051,856

41,121, 383
41, 296, 613
41,391,423
44,869, 647
44,316,386
46,150,841

21.00
2L10
21.18
22.41
21.88
22.00

2,044,346
2,081, 240
2,145, 345
2,152,924
2,148,182
2, 219, 559

45,492,984
47, 295,991
60,842,113
49, 629, 445
49,905,968
62,911, 784

22.25
22.72
23.70
23.01
23.23
23.84 ,

1944—January.-..
February..
March
April
May
-.
, June
-.




265

REPORT OF THE SECRETARY OF THE TREASURY

In addition to the regular monthly purchases of savings bonds
through payroll savings. Federal civilian and militar]^ personnel have
given full support to the war loan drives by purchasing extra bondg
for cash. The following table shows the purchases through payroU
allotments and for cash during the Third, Fourth, and Fifth War Loan
drives. .
[Millions of dollar.s]
Civilian
personnel

War Loan

------..-

Total

$115.9
197.7
234.6

•-.--

$70.2
156.6
218.2

$186:1
364.3
462.8

648.2

T h i r d (Sept. 1 t h r o u g h Oct. 16, 1943).
F o u r t h ( J a n u a r y a n d F e b r u a r y 1944)
Fifth ( J u n e a n d J u l y 1 9 4 4 ) . . . . . Total

Military
personnel

445.0

993.2

, Over 4,856,000 members of the armed forces in June 1944 purchased
$72,020,000 of savings bonds through the payroll savings plan. This
was an increase during the year of 2,525,000 in the number of participants and $45,709,000 in the amount of monthly investments.
Total purchases of savings bonds by civUian and military personnel
during the. fiscal year, through payroll allotments and for cash,
amounted to $1,555,992,000, an increase of $900,259,000 over the
accumulated purchases through June 30, 1943.
The following table shows the payroll allotments and cash purchases
of bonds by civUian and mUitary personnel by months during 1944
and the total purchases from the beginning of the payroll savings
program.
Payroll allotments
Period
Civilian
personnel
A c c u m u l a t e d t h r o u g h J u n e 30, 1943

$326.441, 214

Military
personnel

Cash p u r chases b y
civilian a n d
military
personnel

$189,189, 703 '$140,101,395

Total

r $656, 732, 312

1943
July
August:
September
October
November
December

83,996,884
81,671,406
186,007,400
95,983,978
91,315, 589
127,837.208

..

41,121,383
41,296,613
41,391,423
44,869,647
44,316,386
46,150,841

28,667,170
30,407,485
35,986, 378
36,104.020
37,118, 274
48, 071,404

14, 208, 331
9,867, 308
108,629, 599
16,010,311
9,880,929
34,614,963

45,492,984
47, 296,991
50,842,113
49,529,445
49,905,968
62,911,784

----

41,106, 296
42,625,869
61,067,166
47,900,804
49,928,500
72, 019,578

46,728,862
131,020,436
13,891,019
12,068, 681
11, 217,322
63,727,484

664.124, 678

630,001,943

471,866.134

1,665.991,665

880,666,792

719,191,646

611,966,629

2,211,723,967

-

1944
January
February
M a r c h -.
April—May
June
Fiscal year 1944
Grand total-.

'Revised.




..

133,327,131
220,942, 295
125.800, 298
109.498,830
111,051,790
188,658,846

266

REPORT OF T H E SECRETARY OF T H E TREASURY

Purchases of savings bonds, through payroll allotments and for cash,
by civihan and military personnel during June 1944 and accumulated
purchases from the beginning of the program through June 1944 are
shown in the following table at issue price.
•
.

June 1944
Number
participating

Payroll allotments:
Civilian personnel:
War Department
Navy Department
Other

-i...

. >.

:

-

-

Subtotal
• Total payroll allotments
Cash purchases:
War Department (civilian and military)
Navy Department (civilian and military)
Postoffice employees outside of Baltimore and Washington, D. C
Other
Total cash purchases
Grand total
1 Included under payi'oll allotments.




-

1,096,695
630. 839
493, 026

$22, 378, 703
18. 265, 268
12, 267, 813

$328, 956,128
329,821, 667
221.788,007

2, 219, 659

-.-

Subtotal
Military personnel:
Army
Navy -

Amount of
purchases

Accumulated
purchases
from beginning
of program
through
June 30, 1944

62, 911, 784

880, 566, 792

3, 202.627
1,663,809

41, 333, 884
30, 686,694

661, 863, 341
157, 328, 305

4, 856. 436

72,019, 678

719,191,646

7,075. 995

124.931,362

1, 699, 767,438

48.282,935
3,001, 238

268, 935, 894
122, 393, 764

12, 272, 947
170, 364

137, 703,856
82.933,025

. 0)
(0
276, 665

(0

276,665

63, 727, 484

611, 966, 629

7. 352, 660

188, 658, 846

2, 211, 723, 967




EXHIBITS

• 267




PUBLIC DEBT
Issues and redemptions of Treasury bonds, Treasury notes, and Treasury
certificates of indebtedness
Exhibit 1
Subscriptions and allotments. Treasury notes of Series A-1947 ^ (from press releases
June 29, July 6, and July 12, 1943 2)
On June 28, 1943, Secretary of the Treasurv Morgenthau announced that the
subscription books for the cash offering of 1^^ percent Treasury notes of Series
A-1947 would close at the close of business June 29. Subscriptions aggregated
$19,543,543,500, of which $2,707,289,000 were allotted. Subscriptions in amounts
up to and including $100,000, totaling about $1,347,000,000, were allotted in full.
Subscriptions in amounts over $100,000 were allotted 7 percent, on a straight
percentage basis, but not less than $100,000 on any one subscription, with adjustments, where necessary, to the $1,000 denomination.
Subscriptions and allotments were divided among the several Federal, Reserve
districts and the Treasury as follows:
Subscriptions
received

Federal Reserve district

Subscriptions
allotted

Boston
New York
Philadelphia-.
Cleveland
Richmond-—AtlantaChicago
St. Louis----.
Minneapolis-Kaiasas City-Dallas
San Francisco
Treasury

$1,022, 210,000
7,301, 921,000
1,160, 805,000
1,040, 092,000
906, 249,500
1,139, 315, 600
2,728, 261,000
686, 168,000
422, 874, 600
670, 095, 500
700, 083,500
1,866, 178,000
300,000

$133, 463,000
696, 267, 600
135, 409,000
181, 616,000
173, 076, 600
378, 140,500
366, 196,000
143, 659,000
86, 000,500
116, 637,600
114, 048,500
183, 585,000
300,000

Total—

19,643,543,500

2,707, 289,000

Exhibit 2
Offering of % percent Treasury certificates of indebtedness of Series D-1944 •
On July 22, 1943, Secretary of the Treasury Morgenthau invited subscriptions
for % percent Treasury certificates of indebtedness of Series D-1944 in exchange
for Treasury certificates of indebtedness of Series B-1943, maturing August 1,
1943. In addition, $900 millions, or thereabouts, of the new certificates were
offered for. cash subscriptions for their own account by commercial banks, defined
for this purpos^e as banks accepting demand deposits.
' .
[Department Circular No. 717.' Public Debt]
TREASURY

DEPARTMENT,

'Washington, J u l y 22, 1943.
I. OFFERING OF CERTIFICATES

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, froin
the people of the United States for certificates of indebtedness of the United States,
designated % percent Treasury certificates of iiidebtedness of Series D-1944, in
1 The text ofthe offering circular. No. 716, dated June 28,1943, appears in the annual report for 1943, p. 327.
2 Revised September 1,1943.




269

270

REPORT OF THE SECRETARY OF THE TREASURY
'

)

'

.

'

•

.

exchange for Treasury certificates of indebtedness of Series B-1943, maturing
August 1, 1943. In addition, $900,000,000, or thereabouts, of the new certificates
are offered for subscription for their own account by commercial banks, which are
defined for this purpose as banks accepting demand deposits.
II. DESCRIPTION OF CERTIF'ICATES

1. The certificates will be dated August 2, 1943, and will bear interest from that
date at the rate of % percent per annum, payable on a semiannual basis on February 1 and August 1, 1944. They will mature August 1, 1944, and will not be subject to call for redemption prior to maturity.
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 hereafter imposed on the principal or interest thereof by any
State, or any Of the possessions of the United States, or by any local taxing
authority.
3. The certificates will be acceptable to secure deposits of public moneys.
They will not be acceptable in payment of taxes.
4. ^Bearer certificates with interest coupons attached will be issued in denominations of $1,000, $5,000, $10,000, $100,000 and $1,000,000. The certificates will
not be issued in registered form.
5. The certificates will be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States certificates.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. Subscribers must agree not to
sell or otherwise dispose of their subscriptions, of of the securities which may be
allotted thereon, prior to the closing of the subscription books. Banking institutions generally may submit exchange 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
commercia,l banks for their own account will be received without deposit but will
be restricted in each case to an amount not exceeding the combined capital, surplus
and undivided profits, or 5 percent of the total deposits, whichever is greater, of
the subscribing bank.
«
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part j 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 in payment of which Treasury certificates of iiidebtedness of Series
B-1943 are tendered will be allotted in full. All cash subscriptions will be allotted
on an equal percentage basis, to be publicly announced. Allotment notices will
b,e sent out promptly upon allotment.
IV. PAYMENT

1. Payment at par and accrued interest, if any, for certificates allotted on
cash subscriptions hereunder must be made or completed on or before August
2, 1943, or on later allotment. Any qualified depositary will be permitted to
make payment by credit for certificates allotted to it up to any amount for which
it shall be qualified in excess of existing deposits, when so notified by the Federal
Reserve Bank of its district. Treasury certificates of indebtedness of Series
B-1943, maturing August 1, 1943, will be accepted at par in payment for any
certificates subscribed for and allotted, and should accompany t h e subscription.
V GENERAL PROVISIONS
V

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




,

271

REPORT OF THE SECRETARY OF THE TREASURY

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 ihe Treasury.
Exhibit 3
Subscriptions and allotments, Treasury certificates of indebtedness of Series D—1944
(from press releases July 23 and 27 and August 8, 1943 0
On July 22, 1943, Secretary of the Treasury Morgenthau announced that the
subscription books for the receipt of cash subscriptions to the offering of Y percent
s
Treasury certificates of indebtedness of Series D-1944 closed at the close of business
July 22. Cash subscriptions, restricted to commercial banks for their own
account, aggregated $5,484,167,000, of which $989,099,000 were .allotted. These
subscriptions were allotted 18 percent, on a. straight percentage basis, with
adjustments, where necessary, to the $1,000 denomination.
The subscription books for the receipt of subscriptions in payment of which
Treasury certificates of indebtedness of Series B-1943, maturing August 1, 1943,
were tendered closed at the close of business July 23. Exchange subscriptions
aggregated $1,556,293,000, all of which were allotted in full.
Subscriptions and 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
Atlanta
Chicago
St. Louis
Minneapolis-_.
Kansas C i t y . . .
Dallas
San Francisco-.
Treasury
Total-

Allotted

Exchange
subcriptions
received and
allotted

$317,526, 000
2,116,920,000
313,751,000
426,567,000
199,315,000
208,839,000
726,464,000
185,541,000
123,449,000
199,379,000
146,224,000
520,192,000

$57,201,000
381,186,000
56, 559,000
76,894,000
35, 964, 000
37, 690,000
131, 259,000
33,584,000
22, 478,000
36,178,000
26,394,000
93,712,000

$77, 733,000
878,806,000
34,011,000
53,585,000
34,480,000
26,813,000
252,427,000
27,181,000
26,346,000
28,258,000
32,118,000
81,891,000
2,644,000

5,484,167,000

989,099,000

1, 566,293,000

Total subscriptions
allotted

$134, 934,000'
1, 259, 992,000
90, 570,000
130, 479,000
70, 444,000
64, 503,000
383, 686,000
60, 765,000
48, 824.000
64, 436,000
58, 512,000
175, 603,000
2, 644,000
2,645,392,000

Exhibit 4
Offering of 2y2 percent Treasury bonds of 1964~69, 2 percent Treasury borids of
1951-53, and }i percent Treasury certificates of indebtedness of Series E-1944
(Third War Loan)
On September 9, 1943, Secretary of the Treasury Morgenthau invited cash
subscriptions for unspecified amounts of 2^/^ percent Treasury bonds of 1964-69,
2 percent Treasury bonds of 1951-53, and % percent Treasury certificates of
. indebtedness of Series E-1944.
These securities were not available for subscription, for their own account,
by commercial banks, defined for this purpose as banks accepting demand deposits.
Offerings of securities of identical or similar tenor to the 2 percent bonds and ]i
percent certificates were made after the Third War Loan for the exclusive sub»Revised September 1,1943




272

REPORT OF THE SECRETARY OF THE TREASURY

scription of these banks. The, 2)1 percent bonds may not be held by these
commercial"banks before September 15, 1953.
[Trieasury bonds bf 1964-69. Department Circular No. 719. Public Debt]
TREASURY

DEPARTMENT,

Washington, September 9, 1943.
I. OFFERING OF 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)'i percent Treasury bonds of 1964-69. These bonds will not be available for
subscription, for their own account, by commercial banks, which are defined for
this purpose as banks accepting demand deposits. The amount of the offering
is not specifically limited.
II. DESCRIPTION OF BONDS

1. The bonds will be dated September 15, 1943, and will bear interest from
that date at the rate of 2J;^ percent per annum,-payable on a semiannual basis on
December 15, 1943, and thereafter on June 15 and December 15 in each year
_ until the. principal amount becomes payable. They will mature December 15,
1969, biit may be redeemed at.the option of the United States on and after
December 15, 1964, in whole or in part, ait 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 red'emption 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 not be acceptable to secure deposits of public moneys before
September 15, 1953. They will not be entitled to any privilege of conversion.
. 4. Bearer bonds with interest coupons attached, and bonds registered as to
>
principal'and linterest, will be issued in denominations of $500, $1,000, $5,000,
$10,000, $100,000 and $1,000,000. Provision will be made for the interchange
of bon-ds 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, except that they may not, before September 15, 1953,.
be transferred to or be held by commercial banks, which are defined for this purpose as banks accepting demand deposits... However, the bonds may be pledged
as collateral for loans, including loans by commercial banks, but any such bank
acquiring such bonds before September 15, 1953, 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.
5. Any bonds issued hereunder which upon the deat-h of the owrier constitute
part of his estate, will be redeemed at the option of the duly constituted representatives of the deceased owner's estate, at par and accrued interest to date of
payment,^ Provided:
(a) that the bonds weie actually owned by the decedent at the time of his
death; and
' .(b) that the Secretary of the Treasury be authorized to apply the entire proceeds of redemption to the payment of Federal estate taxes.
Registered bonds submitted for redemption hereunder must be duly assigned
to "The Secretary of the Treasury for redemption, the proceeds to be paid to the
Collector of Internal Revenue a t _
for credit on Federal estate
taxes due from-estate of -^ ^ "
_
" Owing to the periodic closing of
the transfer books.and the impossibility of stopping payment of interest to the
1 An exact half-year's interest is computed for each full half-year period irrespective of the actual number
of days in the half year. For a fractional part of any half year, computation is on the basis of the actual
number of days in such half year..




REPORT OF THE SECRETARY OF THE TREASURY

273

registered owner during the closed period, registered bonds received after the
closing of the books for payment during such closed period will be paid orily at
par with a deduction of interest from the date of payment to the next interest
payment date 2; bonds received during the closed period for payment at a date
after the books reopen will be paid at par plus accrued interest from the reopening
of the books to the date of payment. In either case checks for the full six months'
interest due on the last day of the closed period will be forwarded to the owner
in due course. All bonds submitted must be accompanied by Form PD 1782 ^,
properly completed, signed and sworn to, and by a certificate of the appointment
.of the personal representatives, under seal of the court, dated not more than six
months prior to the submission of the bonds, which shall show that at the date'
thereof the appointment was still in force and effect. Upon payment of the
bonds appropriate memorandum receipt will be forwarded to the representatives,
which will be followed in due course by formal receipt from the Collector of
Internal Revenue.
6. Except as provided in the preceding paragraphs, the bonds will be subject
to the general regulations of the Treasury Department, now or hereafter prescribed,
governing United States bonds.
^
III.

SUBSCRIPTION^'ANDJALLOTMENT

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.
Subscriptions must be accompanied by payment in full for the amount of bonds
applied for.
2. The Secretar}^ 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,
all subscriptions will be allotted in full. Allotment notices will be sent out promptly upon allotment.
IV. PAYMENT

1. Payment at par and accrued interest, if a'ny, for bonds allotted hereunder
must be made on or before September 15, 1943, or on later allotment; provided,
however, that bonds allotted to life insurance companies may be paid for, in whole
or in part, at par and accrued interest, at any time or times not latei than November 1, 1943. One day's accrued interest is $0,068 per $1,000. Any qualified
depositary will be permitted to make payment by credit for bonds allotted to
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. G E N E R A L P R O V I S I O N S

»

1. As fiscal agents of the United States, Federal Reserve Banks .are authorized
and requested to receive subscriptions, to make allotments on the basis arid, 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 Bainks.
HENRY MORGENTHAU,

Jr.,

Secretary of the Treasury.
2 The transfer books are closed from May 16 to June 15, and from November 16 to December 15 (both
dates inclusive) in each year.
3 Copies of Form PD 1782 may be obtained from any Federal Reserve Bank or from the Treasury Department, Washington, D. C.

613185—45

19




274

REPORT OF THE SECRETARY OF THE TREASURY
[Treasury bonds of 1951-53. Department Circular No.^ 720. Public Debtl
TREASURY DEPARTMENT,

^

I

-

Washington, September 9, 1943.

I. OFFERING OF 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 1951-53. These bonds will not be available for
subscription, for their own account, bj^ commercial banks, which are defined for
this purpose as banks accepting demand deposits. The amount of the offering
is not specifically liraited.
,

II. DESCRIPTION OF BONDS

1. The bonds will be dated September 15, 1943, and will bear interest from that
date at the rate of 2 percent per annum, payable semiannually on March 15 and
September 15 in each year until the principal amount becomes payable. They
will mature September 15, 1953, but may be redeemed at the option of the United
States on and after September 15, 1951, 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 Treasuiy 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. They
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 $500, $1,000, $5,000,
$10,000, $100,000 and $1,000,000. 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 Treasurj^
5. The bonds will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States bonds.
i n . SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. An offering of securities of identical or similar tenor to those offered by this circular will be niade for the exclusive
subscription of commercial banks shortly after the conclusion of this 'offering.
Until such offering has been made and the books thereon closed, or until ten days
after the subscription books close on this offering, whichever is ^earlier, commercial
banks are requested not to purchase and subscribers are requested not to trade in
the securities offered by this circular. Banking institutions generally may submit
subscriptions for account of customers, but only the Federal Reserve Banks arid
the Treasury Department are authorized to act as official agencies.. Subscriptions
must be accompanied by payment in full for 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, all
subscriptions will be allotted in full. Allotment notices will be sent out promptly
upon allotment.
IV. PAYMENT

1. Payment at par and accrued interest, if any, for bonds allotted hereunder
must be made on or before September 15, 1943, or on later allotment; provided,




REPORT OF THE SECRETARY OF THE TREASURY

275

however, that bonds allotted to life insurance companies may be paid for, in whole
or in part, at par and accrued interest, at any time or times not later than November 1, 194.3. One day's accrued interest is $0,055 per $1,000. Any qualified
depositary will be permitted to make payment by credit for bonds allotted to its
customers up to any amount for which it shall be qualified in excess of existing
deposits, when so notified b}^ the Federal Reserve Bank of its district.
V. GENERAL PROVISIONS

''

1. As fiscal agents of the United States, Federal-Reserve Banks are authorized
and requested to receive subscriptions, to make allotments on the basis and up to
the amounts indicated by the Secretary of the Treasury to the Federal Reserve
Banks of the respective districts, to issue allotment notices, to receive payment
for 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 pie 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 ihe Treasury.
[Certificates of indebtedness. Departinent Circular No. .721. Public Debt]
TREASURY

DEPARTMENT,

Washington, September 9, 1943.
I. OFFERING OF CERTIFICATES

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 certificates of indebtedness of the.United
States, designated % percent Treasury certificates of indebtedness of Series
E-1944. These certificates will not be available for subscription, for their own
account, by commercial banks, which are defined for this purpose as banks
accepting demand deposits. The amount of the offering is not specifically
limited.
.
.
II. DESCRIPTION OF CERTIFICATES

1. The certificates will be dated September 15, 1943, and will bear interest
from that date at the rate of % percent per annum, payable on a semiannual
basis on March 1 and September 1, 1944. They will mature September 1, 1944,
and will not be subject to call for redemption prior to maturity.
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 hereafter imposed on the principal or interest
thereof by any State,"or any of the possessions of the United States, or by any
local taxing authority.
3. The certificates will be acceptable to secure deposits of public moneys.
They will not be acceptable in payment of taxes.
4. Bearer certificates with interest coupons attached will be issued in denomina-.
tions of $1,000, $5,000, $10,000, $100,000 and $1,000,000. The certificates will
not be issued in registered form.
5. The certificates will be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States certificates.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. An offering of securities of
identical or similar tenor to those offered by this circular will be made for the
exclusive subscription 'of commercial banks shortly after the conclusion of this
offering. Until such offering has been made and the books thereon closed, or
until ten days after the subscription books close on this offering, whichever is
earlier, commercial banks are requested not to purchase and subscribers are
requested not to trade in the securities offered by this circular. 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




276

REPORT OF THE SECRETARY OF THE TREASURY

official agencies. Subscriptions • must be accompanied by payment in full for
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
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 and accrued interest, if any, for certificates allotted hereunder
must be made on or before September 15, 1943, or on later allotment. One day's
accrued interest is $0,024 per $1,000. Any qualified depositary will be permitted
to make payment by credit for certificates allotted to 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.
1

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 foi*
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.
Exhibits
Subscriptions and allotments, Treasury bonds of 1964~69, Treasury bonds of 1951-53,
and Treasury ceriificaies of indebtedness of Series E-1944 (from press releases
September 25 and October 19, 1943 i) (Third War Loan)
On September 25, 1943, Under Secretary of the Treasury D. W. Bell announced
that the subscription books would close at the close of business October 2 for the
offerings to nonbank investors of 2?^ percent Treasury bonds of 1964-69, 2 percent Treasury bonds of 1951-53, and % percent Treasury certificates of indebtedness. Subscriptions aggregated $13,157,789,500, all of which were allotted in
full.
Allotments were divided among the Federal Reserve districts and the Treasury
as follows:
Federal Reserve district

Boston
.. .
New York
Philadelphia
Cleveland
Richmond
!__
Atlanta..
Chicago
St. Louis
MinneapolisKansas City
._
Dallas.San Francisco
_
Treasury _.
.
Government investment accounts
Total
. 1 Revised January 21. 1944.




2\Wo Treasury
bonds of
1964-69 .

2% Treasury
bonds of
1961-63

li7o Treasury
certificates of
indebtedness
of Series
E-1944

Total allotments

$386,526,500
1, 826, 499, 500
207, 415,000
165,288,600
125,022,000
40, 3a6, 500
222,810, 500
42,162,000
46, 574, 500
55, 794,000
48, 223, 600
131, 349. 000
1,642, 600
479,141, 000

$404,069,000
2, 391,832,000
213, 221, 000
370, 840,000
262, 368, 500
303,727,000
408, 211, 000
123,493,000
76, 709, C O
O
115, 597, 000
138, 730,000
296, 513,000
452,000
161, 500,000

$236,050,000
1, 669,927, 000
171, 428, 000
299, 248,000
168,821, 000
92,099.000
- 789,245,000
110,879,000
84,186, 000
121, 228,000
82, 379,000
296,188,000
105, 000

$1, 026,645, 500
5 888, 268, 500
592,064,000
835, 376, 500
556, 201, 500
436,131, 600
1, 420, 266,-600
276, 534,000
207, 469, 500
292.619,000
269, 332, 500
. 724,050,000
2,199, 500
630,641,000

3,778,764,000

6,257, 262,500

4,121,783,000

13,167,789,500

REPORT OF THE SECRETARY OF THE TREASURY

277

. Exhibit 6
Offering of 2% percent Treasury bonds of 1964-69 (additional), 2 percent Treasury
bonds of 1951-53 (additional), and % percent Treasury certificates of indebtedness
of Series F-1944
On October 6, 1943, Secreta,ry of the Treasury Morgenthau invited subscriptions for 2J4 percent Treasury bonds of 1964-69, 2 percent Treasury bonds of
1951-53, and % percent Treasury certificates of indebtedness of Series F-1944.
The 2J^ percent and 2 percent Treasury bonds were additions to the two series
issued during the Third War Loan, pursuant to Department Circulars Nos. 719
and 720, dated September 9, 1943.
Holders, other than commercial banks, of 3J4 percent Treasury bonds of 194345, called for redemjDtion on October 15, 1943, were iafforded an opportunity to
exchange their holdings either for the 2)^ percent Treasury bonds or for the 2 percent Treasury bonds. Commercial banks could exchange their holdings of the
called bonds for the 2 percent Treasury bonds only. The Treasury certificates
of indebtedness of Series F-1944 were open on an exchange basis to all holders of
Treasury certificates of indebtedness of Series D-1943, maturing November 1,1943.
At.the same time the Secretary offered an additional $1,500,000,000, or thereabouts, of the 2 percent Treasury bonds of 1951-53 and also $1,500,000,000, or
thereabouts, of the % percent Treasury certificates of indebtedness of Series
F-1944 f9r cash subscription by commercial banks for their own account. This
offering afforded commercial banks, which were excluded from participation in
the Third War Loan Drive, an opportunity to obtain additional quantities of
Treasury securities at par directly from the Treasury.
,
In this related press release it was stated that there were outstanding $1,400,528,250 of the called Treasury bonds of 1943-45 and $2,035,254,000 of the maturing Series D-1943 certificates.
[Treasury bonds of 1964-69 (additional). Department Circular No. 724. Public Debll
TREASURY DEPARTMENT,

Washington, October 6, 1943.
I. EXCHANGE O F F E R I N G OF BONDS

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par with an adjustment
of accrued interest as of October 15. 1943, from the people of the United States
for bonds of the United States, designated 2}^ percent Treasury bonds of 1964-69,
in payment of which only Treasury bonds of 1943-45, called for redemption on
October 15,. 1943, may be tendered. These bonds will not be available for subscription, for their own account, by commercial banks, which are defined for this
purpose as banks accepting demand deposits. The amount of the offering under
this circular will be limited to the amount of Treasury bonds of 1943-45 tendered
and accepted.
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 1964-69 issued pursuant to Department
Circular No. 719, dated September 9, 1943, will be freely interchangeable therewith, are. identical in all respects therewith, and are described in the following
quotation from Department Circular No. 719. [Description omitted here, see
p. 272.]
III. SUBSCRIPTION AND ALLOTMENT

.

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Departnient, 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, and to close the books as to any or alF 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.




278

REPORT OF THE SECRETARY OF THE TREASURY
IV. PAYMENT

1 . , P a y m e n t a t p a r and accrued interest from September 15, 1943, to October
• 15, 1943 ($2.04918 per $1,000), for bonds allotted hereunder m u s t be made or
o
completed on or before October 15, 1943, or on later allotment. P a y m e n t of t h e
principial a m o u n t m a y be m a d e only in Treasury bonds of 1943-45 called for
redemption on October 15, 1943, which will be accepted a t par and should accomp a n y t h e subscription. I n t h e case of coupon bonds, p a y m e n t of accrued interest
. on t h e new bonds should be m a d e when t h e subscription is tendered a n d in t h e
case of registered bonds, t h e accrued interest will be deducted from t h e a m o u n t
of t h e check which will be issued in p a y m e n t of final interest on t h e bonds surrendered. Final interest due October 15 on bonds surrendered will be paid, in
t h e case of coupon bonds, by p a y m e n t of October 15, 1943, covipons, which should
be detached by holders before presentation of t h e bonds, and in t h e case of registered bonds, by checks drawn in accordance with t h e assignments on t h e bonds
surrendered.
"
o
..
V. SURRENDER OF CALLED BONDS

I(^

" 1. Coupon bonds.—Treasury bonds of 1943-45 in coupon form tendered in
.payment for bonds offered hereunder should be presented and surrendered with
the subscription to a Federal Reserve Bank or branch or to the Treasurer of the
United States, AVashington, D . C. Cpupons dated April 15, 1944, and all coupons
bearing subsequent dates, should be attached to such bonds when surrendered^
and if any such coupons are missing, the subscription m u s t be accompanied by
cash p a y m e n t equal to t h e face a m o u n t of the missing coupons. T h e bonds
m u s t be delivered a t the expense and risk of t h e holder. Facilities for t r a n s portation of bonds by registered mail insured may be arranged between incorporated banks a n d t r u s t companies and t h e Federa] Reserve Banks, and 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 and t r u s t companies as their agents.
2. Registered bonds.'—Treasury bonds of 1943-45 in registered form tendered
in p a y m e n t for bonds offered hereunder should be ^assigned by t h e registered
payees or assignees thereof, in accordance with the general regulations of the
Treasury D e p a r t m e n t governing assignments for transfer or exchange, in one of
the forms hereafter set forth, and thereafter should*be presented and surrendered
with the subscription to a Federal Reserve Bank or branch or to the Treasury
D e p a r t m e n t , Division of Loans a n d Currency, Washington, D . C. The bonds
must be delivered a t t h e expense and risk of t h e holder. If, the new bonds are
desired registered in t h e same n a m e as the bonds surrendered, t h e assignment
should be to ' ' T h e Secretary of the ^Treasury for exchange for Treasury bonds of
1964-69 (dated September 15, 1943)"; if the new bonds are desired registered in
another n a m e , t h e assignment should be to " T h e Secretary of t h e Treasury for
exchange for Treasury bonds of 1964-69 (dated September 15, 1943) in the name
of
" ; if new bonds in coupon form are desired, the assignment
should be to " T h e Secretary of the Treasury for exchange for Treasury bonds of
1964-69 (dated September 15, 1943) in coupon form to be delivered to
VI. 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 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 F e d e r a l Reserve
Banks of the respective districts, to issue allotment notices, to receive p a y m e n t
for bonds allotted, to make delivery of bonds on full-paid subscriptions allotted,
and they maj^ issue interim receipts pending delivery of the definitive bonds.
2. T h e Secretary of t h e Treasury may 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 the Federal Reserve Banks.




'

'

H E N R Y M O R G E N T H A U , Jr.,

. Secretary of the Treasury.

REPORT OF THE SECRETARY OF THE TREASTJRY

279

[Treasury bonds of 1951-53 (additional). Department Circular No. 725. Public Debtl
TREASURY

DEPARTMENT,

Washington, October 6, 1943.
I. OFFERING OF BONDS

'

,.

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par with an adjustment
of accrued interest as of October 15, 1943, from the people of the United States
for bonds of the United States, designated 2 percent Treasury bonds of 1951-53,
in exchange for Treasury bonds' of 1943-45, called for redemption on October 15,
1943. In addition, $1,500,000,000, or thereabouts, of the new bonds are offered
for cash subscription, at par and accrued interest, for their own account by
commercial banks, which are defined for this purpose as banks accepting demand
deposits.
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 1951-53 issued pursuant to Department Circular
No. 720, dated September 9, 1943, will be freely interchangeable therewith, are
identical in all respects therewith, and are described in the following quotation
from Department Circular No. 720. [Description omitted here, see p. 274.]
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. Commercial banks are requested
not to purchase in the market and subscribers are requested not to trade in the
securities offered hereunder prior to the closing of the books for cash subscriptions.
Banking institutions generally may submit exchange 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 commercial. banks for their own account^ will be received
without deposit but will be restricted in each case to an ampunt not exceeding
the combined capital, surplus and undivided profits, or 5 percent of the total
deposits, whichever is greater, of the subscribing bank.
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 bonds of 1943-45 are tendered, and
cash subscriptions from commercial banks for their own account for amounts up
to and including $50,000, will be allotted in full. All other cash subscriptions
will be allotted on an equal percentage basis, to be publicly announced. Allotment notic es will be sent out promptly upon allotment.
IV. PAYMENT

1. Exchange subscriptions.—Payment at par and accrued interest from September 15, 1943, to October 15, 1943 ($1.64835 per $1,000), for bonds allotted hereunder must be made or completed on or before October 15, 1943, or on later
allotment. Payment of the principal amount may be made only in Treasury
bonds of 1943-45 called for redemption on October 15, 4943, which \^ill be accepted at par and should accompany the subscription. In the case of coupon
bonds, payment of accrued interest on the new bonds should be made when the
subscription is tendered and in the case of registered bonds, the accrued interest
willbe deducted from the amount of the check which will be issued in payment
of final interest on the bonds surrendered. Final interest due October 15 on
bonds surrendered will be paid, in the case of coupon bonds, by payment of
October 15, 1943, coupons, which should be detached by holders before presentation of the bonds, and in the case of registered bonds, by checks drawn in accordance with the assignments on the bonds surrendered.
2. Cash subscriptions.—Payment at par and accrued interest from September~
15, 1943, for bonds allotted on cash subscriptions hereunder must be made or
completed on or before October 15, 1943, or on later allotment. Any qualified
depositary will be permitted to make payment by credit for bonds aUotted to it




280

REP'ORT OF T H E SECRETARY OF T H E TREASURY

u p to any a m o u n t for which it
when so notified by t h e Federal
interest is $0.05495 per $1,000,
to October 15, 1943, is $1.64835

shall be qualified in excess of existing deposits,
Reserve Bank of its district. One day's accrued
and accrued interest from September 15, 1943,
per $1,000.

V. SURRENDER OF CALLED BONDS

1. Coupon bonds.—-Treasury bonds of 1943-45 in coupon form tendered in
p a y m e n t for bonds offered 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 April 15, 1944, and all coupons
bearing subsequent dates, should be attached to such bonds when surrendered,
and if any such coupons are missing, the 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 the missing coupons. T h e bonds m u s t
be delivered a t t h e expense and risk of the holder. Facilities for transportation
of bonds by registered mail insured m a y be arranged between incorporated banks
and t r u s t companies and the Federal Reserve Banks, and holders m a y take
advantage of such arrangements when available, utilizing such incorporated
banks and t r u s t companies as their agents.
2. Registered bonds.—Treasury bonds of 1943-45 in registered form t e n d e r e d
in p a y m e n t for bonds offered hereunder should be assigned by t h e registered
payees or assignees thereof, in accordance with the general regulations of the
Treasury D e p a r t m e n t governing assignments for transfer or exchange, in one of
t h e forms hereafter set forth, and thereafter should be presented and surrendered
with the 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 and Currency, Washington, D . C. T h e bonds
m u s t be delivered a t t h e expense and risk of the holder. If t h e new bonds are
desired" registered in t h e same name as the bonds surrendered, t h e assignment
should be to " T h e Secretary of t h e Treasury for exchange for 2 percent Treasury
bonds of 1951-53"; if t h e new bonds are desired registered in another name, t h e
assignment should be to ' ' T h e Secretary of t h e Treasury for exchange for 2 percent Treasury bonds of 1951-53 in the name of
" ; i f new bonds
in coupon form are desired, the.assignment should be to ' ' T h e Secretary of the
Treasury for exchange for 2 percent Treasury bonds of 1951-53 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
and requested, to receive subscriptions, to make allotments on the basis and up
to t h e a m o u n t s indicated by the Secretary of the 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 make delivery of bonds on full-paid subscriptions allotted,
and they m a y issue interim receipts pending delivery of t h e definitive bonds.
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 t h e offering,
which \viil be communicated promptly to t h e Federal Reserve Banks.
H E N R Y MORGENTHAU,

Jr.,

Secretary of ihe Treasury.

[Certificates of indebtedness. Department Circular No. 726. Public Debt]
TREASURY DEPARTMENT,^ "

Washington, October 6, 1943.
I. O F F E R I N G OF CERTIFICATES •

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 certificates of indebtedness of the United States, designated
% percent Treasury certificates of indebtedness of Series F-1944, in exchange for
Treasury certificates of indebtedness of Series D-1943, m a t u r i n g November 1,
1943,. with an a d j u s t m e n t of accrued interest as of October 15. I n addition,
$1^500,000,000, or thereabouts^ of t h e new certificates are offered for cash subscription, a t p a r a n d accrued interest, for their own account by commercial banks,
which are defined for this purpose as banks accepting demand deposits.




REPORT OF THE SECRETARY OF THE TREASURY

281

II. DESCRIPTION OF CERTIFICATES

1. The certificates
that date at the rate
April 1 and October
be subject to call for

will be dated October 15, 1943, and will bear interest from
of % percent per annum, payable on a semiannual basis on
1, 1944. They will mature October 1, 1944, and will not
redemption prior to maturity.^ * * *
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received.at t h e Federal Reserve Banks and branches
and at the Treasury Departnient, Washington. Commercial banks are requested
not to purchase in the market and subscribers are requested not to trade in the
securities offered hereunder prior to the closing of the books for cash subscriptions.^ * * *
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 in payment of which Treasury certificates of indebtedness of
Series D-1943 are tendered, and cash subscriptions from commercial banks for
their own account for amounts up to and including $50,000, will be allotted in
full. All other cash subscriptions will be allotted on an equal percentage basis,
to be publicly announced. Allotment notices will be sent out promptly upon
allotment.
IV. PAYMENT

1. Payment at par and accrued interest, if any, for certificates allotted on cash
subscriptions hereunder must be made or completed on or before October 15,
1943, or on later allotment. Any qualified depositary will be permitted to make
payment by credit for certificates allotted to it up to an'}^ amount for which it
shall be qualified in excess of existing deposits, when so notified by the Federal
Reserve Bank of its district. Treasury certificates of indebtedness of Series
D-1943, maturing November 1, 1943, must be presented with November 1, 1943,
coupons attached and should accompany the subscription. Such certificates will
be accepted at par in payment for any certificates subscribed for and allotted,
and accrued interest from May 1, 1943, to October 15, 1943 ($3.97079 per $1,000),
will be paid following acceptance of the certificates. If any certificates are presented with November 1, 1943, coupon missing, the subscription must be accompanied bj^ remittance of $0.39921 per $1,000, representing unearned interest from
October 15, 1943, to November 1, 1943.
v. GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions i * * *.
HENRY MORGENTHAU,

Jr.,

Secretary of the Treasury.
Exhibit 7
Subscriptions and allotments. Treasury bonds of 1964-69 (additional), Treasury
bonds of, 1951-53 (additional), and Treasury certificates of indebtedness of Series
F-1944 (from press releases October 8, 11, and 15, 1943 ^)
On October 7, 194^3, Secretary of the Treasury Morgenthau announced that the
subscription books would close at the close of business October 8 for the receipt of
(a) cash subscriptions to the 2 percent Treasury bonds of 1951-53 (additional) and
% percent Treasury certificates of indebtedness of Series F-1944, restricted to commercial banks for their own account, (b) exchange subscriptions to the certificates
of Series F-1944 in payment of which certificates of indebtedness of Series D-1943,
-maturing November 1, 1943, were tendered, and (c) exchange subscriptions to the
2% percent Treasury bonds of 1964-69 (additional) and the 2 percent Treasury
bonds of 1951-53 (additional) in payment of which Treasury bonds of 1943-45,
called for redemption on October 15, 1943, were tendered, except for the receipt of
1 Omitted portion similar to corresponding section of Department Circular No. 717, p. 269.
2 Revised January 21, 1944.




282

REPORT OF THE SECRETARY OF THE TREASURY

subscriptions from holders of $25,000 or less of the called bonds. For the latter
class the subscription books closed at the close of business October 11.
Cash subscriptions to the 2 percent Treasury bonds totaled $5,530,856,500, of
which $1,627,106,500 were aillotted. Subscriptions in amounts up to and including.
$50,000, totahng about $252,000,000, were allotted in full. , Subscriptions over
$50,005 were allotted 25 percent, on a straight percentage basis, but not less than
$50,000 to any one subscriber, with adjustments, where necessary, to the $1,000
denomination.
^
Cash subscriptions to the J^ percent certificates of indebtedness totaled $5,386,065,000, of which $1,580,067,000 were allotted. Subscriptions in amounts up to
and including $50,000, totaling about $190,000,000,'were allotted in full. Subscriptions in amounts over $50,000 were allotted 26 percent, on a straight percentage basis, but not less than $50,000 to any one subscriber, with adjustments,
where necessary, to the $1,000 denomination.
All exchange subscriptions were allotted in full.
Subscriptions and allotments were divided among the Federal Reserve.districts
and the Treasury as follows:
;
2H% Treasury bonds of
1964-69 (additional)

Exchanged
Cash subscriptions
for called
3K% Treasury bonds of
1943-45—
subscripiions] . Received
Allotted
received and
allotted

Federal Reserve district

Boston
New York
Philadelphia. _
Cleveland
Richmond
Atlanta. _
Chicago..
.
St. Louis
..
Minneapolis...
Kansas City...
Dallas
..-".
San Francisco.
Treasury
Total

2% Treasury bonds of 1951-63 (additional)

$5,982,500 $305, 127, 500
12, 737,000 2, 027,2S9,500
388, 932. 600
2,201,500
9, 362,000 394, 517, 500
3, 502, 000 252, 969.000
2, 312. 000 223, 874. 000
7, 683, 500 728, 096, 500
186, 945, 000
4,751, 500
145, 250, 500
1,217,000
192, 462.000
4,076, 500
2, 496, 500 155, 602. 500
2, 061,000 629, 790,000
1,061,000

Exchanged
for called
334% TreasTotal subury bonds of
scriptions
1943-45—
allotted
subscriptions!
received and
allotted

$84,038, 500
520,945. 500
112.376.500
118,950.000
80,144, 000
73,865. 600
233. 366, 500
70,994,000
60,147,000
77,414, 500
63, 656, 500
141, 208, 000

59,444,000 5, 630,866, 500 1,627,106,500

'
.

$21,825,000
$105; 863, 500
847,171. 500 1,368, 117,000
24,974.500
137. 351, 000
35. 967, 000
164, 917,000
95. 498, 500
15, 354, 500
80. 051, 500
6,186.000
301, 711,500
68.345". 000
82, 264, 500
11,270.500
76. 440,000
16, 293,000
89, 142. 500
11,728,000
60, 692. 000
7.035, 600
174. 102. 500
32.894. 500
2, 858,500
2,868.500
1,101,903,500 2,729.010,000

H % certificates of i n d e b t e d n e s s of Series F-1944

/

Cash subscriptions

F e d e r a l R e s e r v e district
Received

Boston
N e w York
Philadelphia
Cleveland . .
Richmond
Atlanta
Chicago..
St. Louis
Minneapolis..
Kansas City
Dallas
San F r a n cisco
Treasury . . . . . .
Total




...i
_....•

:

.

$283, 230, 000
2,080. 806,000
316.426,000
382, 723,000 '
234, 742. 000
214,794,000
698, 571,000
165, 744, 000
135, 432, 000
188, 956, 000
130,593,000
554, 048, 000

Allotted

$78, 627,000
650, 958, 000
91, 346.000
114,791.000
71,943. 000«
69, 489. 000
219, 643, 000
58, 956, 000
53,882. 000
71, 702. 000
47,211.000
151, 619,000

.
5, 386, 065, 000

1, 580, 067, 000

E x c h a n g e d for
maturing
certificates of
i n d e b t e d n e s s of
Series D-1943—
subscriptions
received a n d
allotted

Total
subscriptions
aUotted

$106. 513.000
1,191,124,000
46, 515.000
68.818,000
35,929, 000
29. 360.000
256, 645,000
23, 947, 000
26, 548.000
41, 201.000
17.434.000
92. 688.000
2,258.000

$186,140,000
1, 742,082. 000
. 137,861.000
183. 609.000
107,872, 000
98,849,000
476. 288,000
82.903, 000
80, 430. 000
112.903,000
64. 645. 000
244. 207,000
2. 258.000

1,938,980,000

3, 619, 047,000

REPORT OF THE SECRETARY OF THE TREASURY

283

Exhibit 8
Offering of }i percent Treasury ceriificaies of indebtedness of Series G-1944
On November 22, 1943, Secretary of the Treasury Morgenthau invited subscriptions for J^ percent Treasury certificates of indebtedness of Series G-^1944 in
exchange for Treasury certificates of indebtedness of Series E-1943, maturing
December 1, 1943. In the related press release it was stated that $3,799,736,000
of Series E-1943 certificates were outstanding.
[Department Circular No. 727. Public Debtl
• TREASURY

DEPARTMENT,

Washington, November 22, 1943.
I. OFFERING OF , C E R T I F I C A T E S

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 certificates of indebtedness of the United States, designated
% percent Treasury certificates of indebtedness of Series G-1944, in exchange for
Treasury certificates of indebtedness of Series E-1943, maturing December 1, 1943.
II. DESCRIPTION OF CERTIFICATES

1. The certificates will be dated December 1, 1943, and will bear interest from
that date at the rate of % percent per-annum, payable semiannually on June 1 and
December 1, 1944. They will mature December 1, 1944, and will not be subject
to call for redemption prior to inaturity. ^ * * *.
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.
Others than banking institutions will not be permitted to enter subscriptions
except for their own account.
'
"
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,
all subscriptions will be allotted in full. Allotment^ notices will be sent out
promptly upon allotment.
IV.

PAYMENT

1. Payment at par for certificates allotted hereunder must be made on or before
December 1, 1943, or on later allotment, and may be made only in Treasury
certificates of indebtedness of Series E-1943, maturing December 1, 1943, which
will be accepted at par, and should accompany the subscription.
V. GENERAL PROVISIONS

1.. As fiscal agents of the United States,^Federal Reserve Banks are authorized
and requested to receive subscriptions i * * *.
HENRY'MORGENTHAU,

^

J Omitted portion similar to corresponding section of Department Circular No. 717, p. 269.




Jr.,

Secretary of the Treasury.

284

REPORT OF T H E SECRETARY OF T H E TREASURY
Exhibit 9

Allotments, Treasury certificates of indebtedness of Series G-1944 (from press releases
>,
November 23 and December 1, 1943 V
On November 23, 1943, Secretary of the 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 G-1944, offered, in exchange for Treasury certificates of indebtedness of Series E-1943, maturing December 1, 1943, would close at t h e close of
business November 24. Subscriptions aggregating $3,539,755,000 were received
a n d all were allotted.
.
^
Allotments were divided among t h e Federal Reserve districts and the Treasury
as follows:

Federal Reserve district.

Boston
New York
Philadelphia.
Cleveland
Richmond
Atlanta
Chicago
St. Louis

.

i

Subscriptions
received and
allotted
$184,829,000
1,918,558,000
138,438,000
140,957,000
. 79,571.000
96,005,000
433,340,000
86,189,000

Subscriptions
received and
allotted

Federal Reserve district.

Mirmeapolis- . .
Kansas City
Dallas
San Francisco
Treasury
Total

-

...

_

$82, 577,000
78, 638.000
76,300,000
223,117, 000
1,236,000
3, 539, 765,000

Exhibit 10
Call for redemption on April 15, 1944, of 3}^ percent Treasury bonds of 1944-46
TREASURY

DRPARTMENT,

Washington, December 13, 1943.
Secretary of t h e Treasury Morgenthau announced t o d a y t h a t all outstanding
3 ^ percent Treasury bonds of 1944-46 are called for redemption on April 15, 1944.
Approximately $1,519,000,000 of these bonds are now outstanding.
T h e text of the_formal notice of call is as follows:
THREE A N D O N E - Q U A R T E R PERCENT TREASURY BONDS OF 1944-^6 NOTICE OF CALL
FOR REDEMPTION
To Holders of 3}i Percent Treasury Bonds of 1944-46, and Others Concerned:
1. Public notice is hereby given t h a t all outstanding 3J4 percent Treasury
bonds of 1944-46, dated April 16, 1934, are hereby called for redemption on April
15, 1944, on which date interest on such bonds will cease.
2. Holders of these bonds may, in .advance of t h e redemption date, be offered
t h e privilege of*exchanging all or any p a r t of their called bonds for other interest- .
bearing obligations of t h e United States, in which eyent public notice will hereafter
be given and an official circular governing t h e exchange offering will be issued.
3. Full information regarding t h e presentation and surrender of t h e bonds for
cash redemption under this call will be found in D e p a r t m e n t Circular No. 666,
dated July 21, 1941.
H E N R Y M O R G E N T H A U , Jr.,

Secretary of the Treasufy.
Exhibit 11
Offering of ;^H percent Treasury bonds of 1965-70, 2'% percent Treasury bonds of
1956-59, and % percent Treasury ceriificaies .of indebtedness of Series A-1945
' (Fourth War Loan)
On J a n u a r y 18, 1944, Secretary of t h e Treasury Morgenthau invited cash
subscriptions for unspecified a m o u n t s of 2}^ percent Treasury bonds of 1965-70,
2 ^ percent Treasury bonds of 1956-59, and 78 percent Treasury certificates of
indebtedness of Series A-1945.
' Revised January 21, 1944.



REPORT OF THE SECRETARY OF THE TREASURY

285

The 2 ^ percent and 2}^ percent' Treasury bonds were not available for subscription, for their own account, by commercial banks, defined as banks accepting
demand deposits, except that a commercial bank holding savings deposits as
defined in Regulation Q of the Board of Governors of the Federal Reserve System
might subscribe to the 2 ^ percent and 2}4 percent bonds and (beginning January
1, 1944) to Series F and G savings bonds, but the amount of such subscriptions was
limited in the aggregate to 10 percent of the savings deposits as shown on the
bank's books as of the date of the ,most recent call statement required by the
supervising authorities prior to the date of subscription for such bonds, or $200,000,
whichever was less. No such bank shall hold more than $100,000 (issue price)
of Series F and G savings bonds (Series 1944) or a combination of the two.
Commercial banks accepting demand deposits may not hold the 2J^ percent
Treasury bonds before February 1, 1954, or the 2)4 percent Treasury bonds before
September 15, 1946.
The % percent Treasury certificates of indebtedness were not available for
subscription for their own account by commercial banks accepting demand
deposits.
[Treasury bonds of 1965-70. Department Circular No. 729. Public Debtl
TREASURY DEPARTMENT,

Washington, January 18, 1944'.
I. OFFERING OF 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
2Y2 percent Treasury bonds of 1965-70. The amount of the offering is not specifically limited. 2. These bonds will not be available for subscription, for their own account, by
commercial banks, which are defined for this purpose as banks accepting demand
deposits, except as follows: a commercial bank holding savings deposits as defined
in Regulation Q of the Board of Governors of the Federal Reserve System may
subscribe to the bonds offered hereunder, to the 2]4 percent Treasury bonds of
1956-59 offered simultaneously herewith under Treasury Department Circular
No. 730, and to Series F-1944 and Series G-1944 United States savings bonds
under Treasury Department Circular No. 654, Second Revision, but the amount
of such subscriptions shall not exceed, in the aggregate, 10 percent of the savings
deposits as shown on the bank's books as of the date of the most recent-call statement required by the supervising authorities prior to the date pf subscription for
such bonds, or $200,000, whichever is less. No such bank shall hold more than
$100,000 (issue price) of Series F and Series^ G savings bonds (Series 1944)
combined.
II. DESCRIPTION OF BONDS

1. The bonds will be dated February 1, 1944, and will bear interest from that
date at the rate of 2)4 percent per annum, payable on a semiannual basis on
September 15, 1944, and thereafter on March 15 and September 15 in each year
until the principal amount becomes payable. They will mature March 15, 1970,
but may be redeemed at the option of the United States on and after March 15,
1965, 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
dn 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. They
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 $500, $1,000, $5,000,
$10,000, $100,000 and $1,000,000. Provision will be made for the interchange of



286^

REPORT OF THE . SECRETARY OF THE TREASURY

bonds of different denominations and of coupon and registered bonds, and for the
transfer of registered bonds, under rules and jegulations prescribed by the Secretary of the Treasury. Except as provided in section I of this circular, these bonds
may not, before February 1, 1954, be transferred to or be held by commercial
banks, which are defined for this purpose as banks accepting demand deposits;
however, the bonds may be pledged as collateral for loans, including loans by
commercial banks, but any such bank acquiring such bonds before February 1,
1954, 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.
5. Any bonds issued hereunder which upon the death of the owner constitute
part of his estate, will be redeemed at the option of the duly constituted representatives of the deceased owner's estate, at par and accrued interest to date of
payment,! Provided:
(a) that the bonds were actually owned by the decedent at the time of his death;
and
(b) that the Secretary of the Treasury be authorized to apply the entire proceeds of redemption to the payment of Federal estate taxes.
Registered bonds submitted for redemption hereunder must be duly assigned to
''The Secretary of the Treasury for redemption, the proceeds to be paid to the
Collector of Internal Revenue at
for credit on Federal estate
taxes due from estate of
" Owing to the periodic closing of
the transfer books and the impossibility of stopping payment of interest to the
registered owner during the closed period, registered bonds received after the
closing of the books for payment during such closed period will be paid only at
par with a deduction of interest from the date of payment to the next interest
payment date;^ bonds received during the closed period for payment at a date
after the books reopen will be paid at par plus accrued interest from the reopening
of the books to the date of payment. In either case checks for the full six months'
interest due on the last day of the closed period will be forwarded t o the owner in
due course. All bonds submitted must be accompanied by Form PD 1782,3
properly completed, signed and sworn to, and by a certificate of the appointment
of the personal representatives, under seal of the court, dated not more than six
months prior to the submission of the bonds, which shall show that at the date
thereof the appointment was still in force and effect. Upon payment of the
bonds appropriate memorandum receipt will be forwarded to the representatives,
which will be followed in due course by formal receipt from the Collector of
Interna] Reyenue.
6. Except as provided in the preceding paragraphs, 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. Subscribers are requested not to
trade in the securities allotted hereunder until after February 15, 1944. Banking
institutions generally may submit subscriptions for account of customers, butonly 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 must be accompanied by payment in full for 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^han 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, and
to the limitations on commercial bank subscriptions prescribed in section I of this
circular, all subscriptions will be allotted in full. Allotment notices will be sent
out promptly upon allotment.
1 An exact half-year's interest is computed for each full half-year period irrespective ofthe actual number of.
days in the half year. For a fractional part of any half year, computation is on the basis of the actual number
of days in such half year.
2 The transfer books are closed from Feb. 16 to Mar. 16, and from Aug. 16 to Sept. 15 (both dates inclusive)
in each year.
. 3 Copies of Form PD 1782 may be obtained from any Federal Reserve Bank or from the Treasury Department, Washington, D . C .




REPORT OF THE SECRETARY OF THE TREASURY

• 287

IV. PAYMENT

1. Payment at par and accrued interest, if any, for bonds allotted hereunder
must be made on or before February 1, 1944, or on later allotment. One day's
accrued interest is $0,069 per $1,000. Any qiialified depositary will be permitted
to make payment by credit for bonds allotted to it for itself and its customers up
to any amount for which it shall be qualified in excess of existing deposits, when
so notified by the Federal Reserve B.ank of its district.
V.' GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, to make allotments on the basis and up
to the amounts indicated by the Secretary of the Treasury to the Federal Reserve
Banks of the respective districts, to issue allotment notices, to receive payment
for bonds allotjbed, to make dehvery 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.
[Treasury bonds of 1966-59. Department Circular No. 730. Public Debtl
s

TREASURY

DEPARTMENT,

Washington, January 18, 1944I. OFFERING OF 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 1956-59. . The amount of the offering is not
specifically limited.
^
*
2. These bonds will not be available for subscription, for their own account,
by commercial banks, which are defined for this purpose as banks accepting demand deposits, except as follows: a commercial bank holding savings deposits
as defined in Regulation Q of the Board of Governors of the Federal Reserve
System may subscribe to the bonds offered hereunder, to the 2J4 percent Treasury
bonds of 1965-70 offered simultaneously herewith under Treasury Department
Circular No. 729, and to Series F-1944 and Series G-1944 United States savings
bonds under Treasury Department Circular No. 654, Second Revision, but the
amount of such subscriptions shall not exceed, in the aggregate, 10 percent of
the savings deposits as shown on the bank's books as of the date of the most
recent call statement required by the supervising authorities prior to the date
of subscription for such bonds, or $200,000, whichever is less. No such bank
shall.hold more than $100,000 (issue price) of Series F and Series G savings
bonds (Series 1944), combined.
II. DESCRIPTION OF BONDS

. 1. The bonds will be dated February 1, 1944, and will bear interest from that
date at the rate of 2)^ percent per annum, payalDle on a semiannual basis on September 15, 1944, and thereafter on March l 5 and September 15 in each year
until the principal amount becomes payable. They will mature September 15,,
1959, but may be redeemed at the option of the United States on and after
September 15, 1956, 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




288

REPORT OF THE SECRETARY OF THE TREASURY

State, or any of the possessions of the United States, or by any local taxing
authority.
'
r 3. The bonds will be acceptable to secure deposits of public moneys. They
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 $500, $1,000, $5,000,
$10,000, $100,000, and $1,000,000. Provision will be made for the interchange
of bonds of different denominations and of coupon and registered bonds, and fpr
the transfer of registered bonds, under rules and regulations prescribed by the
Secretary of the Treasury. .Except as provided in section I of this circular, these bonds.may not, before September 15, 1946, be transferred to or be held by Commercial banks, which are defined for this purpose as banks accepting demand
deposits; however, the bonds may be pledged as collateral for loans, including
loans by commercial banks, but any such bank acquiring such bonds before'
September 15, 1946, 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.
5.. Any bonds issued hereunder which upon the death of the owner constitute
part of his estate, will be redeemed at the option of the duly constituted representatives of the deceased owner's estate, at par and accrued interest to date of
payment i * * *.
III. SUBSCRIPTION A N D ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. Subscribers.are requested not to
trade in the securities allotted her^eunder until after February 15, 1944. 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 owri account. Subscriptions must be
accompanied by payment in full for 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,
and to the limitations on commercial bank subscriptions prescribed in section I
of this circular, all subscriptions will be allotted in full. Allotment notices will
. be sent out promptly upon allotment.
IV. PAYMENT

1.^ Payment at par and accrued interest, if any, for bonds allotted hereunder
must be made on or before February 1, 1944, or on later allotment. One day's
' accrued interest is $0,062 per $1,000. Any qualified depositary will be permitted
to make payment by credit for bonds allotted to it for itself and its customers
up to any amount for which it shall be qualified in excess of existing deposits,
when so notified by the Federal Reserve Bank of its district.
V. GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions i * * *.
HENRY MORGENTHAU,

Jr.,

Secretary of the Treasury.
[Certificates of indebtedness. Department Circular No. 731. Public Debtl
TREASURY

DEPARTMENT,

Washington, January 18, 1944'
I. OFFERING OF CERTIFICATES

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.
1 Omitt ed portion similar to corresponding section of Department Circular No. 729, p. 285.




REPORT OF THE SECRETARY OF THE TREASURY

289

from the people of the United States for certificates of indebtedness of the United
States, designated % percent Treasury certificates of indebtedness of Series
A-1945. These certificates will not be available for subscription, for their own
account, by commercial banks, which are defined for this purpose as banks accepting demand deposits. The amount of the offering is not specifically hmited.
II. DESCRIPTION OF CERTIFICATES

4 . The certificates will be dated February 1, 1944, and will bear interest from
that date at the rate of % percent per annum, payable semiannually on August
1, 1944, and February 1, 1945. They will mature February 1, 1945, and will
not be subject to call for redemption prior to maturity.^ * * *
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. Commercial banks are requested
not to purchase and subscribers are requested not to trade in the securities allotted
hereunder until after February 15, 1944. 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 must be accompanied by payment
in full for 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
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 and accrued interest, if any, for certificates allotted hereunder must be made on or before February 1, 1944, or on later allotment. One
day's accrued interest is $0,024 per $1,000. Any qualified depositary will be
permitted to make payment by credit for certificates allotted to 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 1 * * *^
HENRY MORGENTHAU,

Jr.,

Secretary of ihe Treasury.
Exhibit 12
Subscriptions and allotments. Treasury bonds of 1965-70, Treasury bonds of
1956-59, and Treasury certificates of indebtedness of Series A-1945 (from press
releases February 12 and March 5, 1944 ^) (Fourth War Loan)
On February 12, 1944, Secretary of the Treasury Morgenthau called attention
to the fact that the subscription books would close at the close of business February 15 for the offering of 2% percent Treasury bonds of 1965-70, 2 ^ percent
Treasury bonds of 1956-59, and % percent Treasury certificates of indebtedness
of Series A-1945. Subscriptions aggregated $10,988,039,500, all of which were
allotted in full.
1 Omitted portion similar to corresponding section of Department Circular No. 717, p. 269.
2 Revised June 15 and Oct. 3, 1944.

613185—45

20




290

REPORT OF T H E

SECRETARY OF T H E

TREASURY

Allotments were divided among the Federal Reserve districts and the Treasury
as follows:
.t
J^%
23^^% Treasury 2H% Treasury cates ofcertiflindebtbonds of ' edness of Series
bonds of
1956-59
1965-70
A-1945

Federal Reserve district

Boston...
New York
Philadelphia..
Cleveland.Rich
raond
•
_
Atlanta
Chicago
.
^
St. Louis
Minneapolis
Kansas City
.
Dallas
.>.
San Francisco.
Treasury
Government investment accounts.

$269. 790. 000
$446. 404. 000
1. 769.482. 000
1,979, 840.000
271. 671.000
164. 673.000
190. 524,000
327. 936. 000
199, 765. 500 , 218.137.000
131. 523.000
17i: 021; 000
253, 122,500
1,008. 236. 000
59, 586, 000
136. 733.000
737. 600
107. 686.000
664,000
149. 493.000
107. 994.000
65, 596, 500'
150, 796. .500
395, 674.000
214.500
166.000
10. 800. 000
81, 600, 000

2, 212,173, 600

Total

$185, 210, 500
1,184. 166.000
92, 413,500
87, 283, 500
45. 236.000
30, 407,500
129, 495. 000
29, 318, 000
32, 692, 000
30. 856. 500
28, 109.000
79, 758.000
395,600
256, 833, 500

3,727, 687,000

5,048,179, 000

Total subscriptions received and
allotted
$901. 404. 500
4,933. 487, 000 '
528, 757. ,500
605, 743. 500
463, 138, 500
332, 951.500
1, 390.853,500
225. 637,000
189. 115;500
239. 013,500
201. 699. 500
626, 228. 500
776.000
349, 233.500
10, 988, 039,500

Exhibit 13
Offering of 0.90 percent Treasury notes of Series D'1945
On January 24, 1944, Secretary of the Treasury Morgenthau invited subscriptions for 0.90 percent Treasury notes of Series D-1945 in exchange for Treasury
certificates of indebtedness of Series A-1944, maturing Februarj^ 1, 1944. In the
related press release it was stated that $2,211,161,000 of Series A-1944 certificates
were outstanding.
[Department Circular No. 732. Public Debt]
TREASURY

DEPARTMENT,

Washington, January 24, 19441. OFFERING OF NOTES

1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended, invites subscriptions, at par, from the people of the
United States for notes of the United States, designated 0.90 percent Treasury
notes of Series D-1945, in exchange for Treasury certificates of indebtedness of
Series A-1944, maturing February 1, 1944. The amount of the offering will be
limited to the amount of such maturing certificates tendered and accepted.
^
"II. DESCRIPTION OF NOTES

i. The notes will be dated February 1, 1944, and will bear interest from that
date at the rate of 0.90 percent per annum, payable on a semiannual basis on Sep- .
tember 1,1944, and March 1, 1945. They will mature March 1, 1945, 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 acceptable to secure deposits of public moneys. They will
not be acceptable'in payment of taxes.
'4. Bearer notes with interest coupons attached will be issued in denominations
of $1,000, $5,000, $10,000, $100,000, and $1,000,000. The notes wih not be issued
in registered form.
. .
5. The notes will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States notes.
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




291

REPORT OF THE SECRETARY OF THE TREASURY

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.
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 SLUJ or all subscriptions at any time without notice; and any action
he may take in these respects shall be final. Subject to these reservations, aU subascriptions will be allotted in full. Allotment notices will be sent out promptly upon
allotment.
IV. PAYMENT

1. Payment at par for riotes allotted hereunder must be made on or before February 1,1944, or on later allotment, and may be made only in Treasury certificates
of indebtedness of Series A-1944, maturing February 1,1944, which will be accepted
at par, and should accompany, the subscription.
V. GENER.\L PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, to make allotments on the basis and up to
the amounts indicated by the Secretary of the Treasury to the Federal Reserve
Banks of the respective districts, to issue allotment notices, to receive payment for
notes allotted, to make delivery of notes on full-paid subscriptions allotted, and
they may issue interim receipts pending delivery of the definitive notes.
2. The Secretary of the Treasury may a t 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.
D.

W.

BELL,

Acting Secretary of the Treasury,

Exhibit 14
Allotments, Treasury notes of Series D-1945 (from press releases January 26 and
February 1, 1944 0
On January 25, 1944, Secretary of the Treasury Morgenthau announced that
the subscription books for the offering of 0.90 percent Treasury notes of Series
D-1945, offered in exchange for maturing certificates of indebtedness of Series
A-1944, would close at the close of business January 26. Subscriptions aggregating $2,126,896^000 were received, all of which were allotted.
Allotments were divided among the Federal Reserve districts and the Treasury
as follows:
Federal Reserve district
Boston
New York..,
, Philadelphia
Cleveland...
Richmond..,
Atlanta
Chicago
St. Louis

Subscriptions
received and
allotted
$134. 699,000
1,029, 319,000
56. 431, 000
91, 271. 000
37. 618, 000
68, 865. 000
294. 822. 000
72, 640, 000

Federal Reserve district
Minneapolis..
Kansas City..
Dallas
San Francisco.
Treasury
Total...

Subscriptions
received and
allotted
$53.462,000
65,910,000
46. 701, 000'
174, 6 5,000
520, 000
2,126,896,000

Exhibit 15
Offering of 2y2 percent Treasury bonds of 1965-70 (additional), 2% percent
Treasury bonds of 1956-59 (additional), and 1)^ percent Treasury notes of
Series A-1948
On March 2, 1944, Secretary of the Treasury Morgenthau invited exchange
subscriptions for 2^^ percent Treasury bonds of 1965-70, 2 ^ percent Treasury
bonds of 1956-59, and 1}^ percent Treasury notes of Series A-1948. The 2)^
» Revised June 15,1944.




292

REPORT OF THE SECRETARY OF THE TREASURY

percent and 2% percent Treasury bonds were additions to the two series issued
during the Fourth War Loan, pursuant to Department Circulars Nos. 729 and
730, dated January 18, 1944. This exchange offering was open to holders of the
following securities:
Amount
Maturity or outstanding
(millions
call date
of dollars)

Description and title

Treasm-y issues:
1% Treasury notes of Series B-1944...
3H%Treasury bonds of 1944-46
%% Treasury notes of Series A-1944
Federal Farm Mortgage Corporation issues:
. 334% F F M C bonds of 1944-64..
.
3% F F M C bonds of 1944-49
Reconstruction Finance Corporation issue: 1% RFC notes of Series W
'..
Home Owners' Loan Corporation issue: 3% HOLC bonds, Series A 1944-52..

Mar. 15,1944
Apr. 15,1944
June 15,1944
Mar.
May
Apr.
May

515
1,519
416^

15,1944
"15,1944
15,1944
1,1944

Total

95
835
571
779
4,729

Holders, other than commercial banks, could.exchange their called or maturing
securities for the two new issues of Treasury bonds or for the new Treasury notes.
Commercial .banks were permitted to exchange their own holdings for the new
notes only.
[Treasury bonds of 1965-70 (additional). Department Circular No. 734. Public Debtl
TREASURY

DEPARTMENT,

Washington, March 2, 1944I. EXCHANGE OFFERING OF BONDS

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par with adjustments of
accrued interest as shown in the table at the end of this circular, from the people
of the United States for bonds of the United States, designated 2>^ percent
Treasury bonds of 1965-70, in payment of which any of the following listed
securities, singly or in combinations aggregating $500 or multiples thereof, may
be tendered:
. ^
Treasury issues:
1% Treasury notes of Series B-1944, maturing March 15, 1944.
S}i% Treasury bonds of 1944-46, called for redemption on April 15, 1944.
%% Treasury notes of Series A-1944, maturing June 15, 1944'.
Federal Farm Mortgage Corporation issues:
3%% FFMC bonds of 1944-6^, caUed for redemption on March 15, 1944.
3% FFMC bonds of 1944-49, called for redemption on May 15, 1944.
Reconstruction Finance Corporation issue: 1% RFC notes of Series W,
maturing April 15, 1944.
.
Home Owners' Loan Corporation issue: 3% HOLC bonds. Series A 1944-52;
called for redemption on May 1, 1944.
These bonds will not be available for subscription, for their own account, by
commercial bariks, which are defined for this purpose as banks accepting demand
deposits. The amount of the offering under this circular will be hmited to the
amount of the above-listed bonds and notes tendered and accepted. In addition
to the offering under this circular, holders of any of the securities listed, other
than commercial banks, are offered the privilege of exchanging all or any part
of such, securities for 2}^ percent Treasury bonds of 1956-59, and all holders,
including commercial banks, may exchange for IJ^ percent Treasury notes of
Series A-1948, which offerings are set forth in Department Circulars Nos^. 735
and 736, issued simultaneously with this circular.
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 1965-70 issued pursuant to Department
Circular No. 729, dated January 18, 1944, will be freely interchangeable therewith, and are identical in all respects therewith. They are dated February 1,
1944, and bear interest from that date at the rate of 2J4 percent per annum,



REPORT OF THE SECRETARY OF THE TREASURY

293

payable on a semiannual basis on September 15, 1944, and thereafter on March 15
and September 15 in each j^ear until the principal amount becomes payable.
They will mature March 15, 1970, but may be redeemed at the option of the
United States on and after March 15, 1965, 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 redernption 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. They
will not be entitled to any privilege of conversion.
° 4. Bearer bonds with interest coupons attached, and bonds registered as to
priricipal and interest, will be issued in denominations of $500, $1,000, $5,000,
$10,000, $100,000, and $1,000,000. 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 legulations prescribed by the
Secretary of the Treasury. Except as provided in sebtion I of Department Circular No. 729, these bonds may not, before February 1, 1954, be transferred to
or be held by commercial banks, which are defined for this purpose as banks accepting demand deposits; however, the bonds may be pledged as collateral for loans,
including loans by commercial banks, but any such bank acquiring such bonds
before February 1, 1954, 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.
5. Any bonds issued hereunder which upon the death of the owner constitute
part of his estate, will be redeemed at the option of the duly constituted representatives of the deceased owner's estate, at par and accrued interest to date of
payment, 1 Provided:
(a) that the bonds were actually owned by the decedent at the time of his
death; and
(b) that the Secretary of the Treasury be authorized to apply the entire proceeds of redemption to the payment of Federal estate taxes.
Registered bonds submitted for redemption hereunder must be duly assigned
to ''The Secretary of the Treasury for redemption, the proceeds to be paidto the
Collector of Internal Revenue at
for credit on Federal estate
taxes due from estate of
" Owing to the periodic closing of
the transfer book"s and the impossibility of stopping payment of interest to the
registered owner during the closed period, registered bonds received after the
closing of the books, for payment during such closed period will be paid only at
par with a deduction of interest from the date of payment to the next interest
payment date; ^ bonds received during the closed period for payment at a date
after the books reopen will be paid at par plus accrued interest from the reopening
of the books to the date of payment. In either case checks for the full six months'
interest due on the last day of the closed period will be forwarded to the owner in
due course. All bonds submitted must be accompanied by Form PD 1782,3
properly completed, signed and sworn to, and by a certificate of the appointment
of the personal representatives, under seal of the court, dated not more than,six
months prior to the submission of the bonds, which shall show, that at the date
thereof the appointment was still in force and effect. Upon payment of the bonds
appropriate memorandum receipt will be forwarded to the representatives, which
will be followed in due course by formal receipt from the Collector of Internal
Revenue.
6. Except as provided in the preceding paragraphs, the bonds will be subject
to the general regulations of the Treasury Department, now or hereafter prescribed,'
governing United States bonds.
1 An exact.half-year's interest is computed for each full half-year period irrespective of the actual number
of days in the half year. For a fractional part of any half year, computation is on- the basis of the actual
number of days in siich half year.
2 The transfer books are closed from Feb. 16 to Mar. 15, and from Aug. 16 to Sept. 15 (both dates inclusive)
in each year.
•
'
"^
"
^
3 Copies of Form P D 1782 may be obtained from any Federal Reserve Bank or from the Treasury Depart,
ment, Washington, D. C.




294

REPORT OF THE SECRETARY OF THE TREASURY
III. SUBSCRIPTION AND ALLOTMENT

^

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Tieasury 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, 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, a,ll subscriptions will be allotted in full. Allotment
notices will be sent out promptly upon allotment.
IV. PAYMENT

1. Payment at par and accrued interest from February T, 1944, for bonds
allotted hereunder must be made or completed on or before March 15, 1944; or
on later allotment. Payment of the principal amount may be made only in the
bonds or notes to be exchanged, which will be accepted at par, and should accompany the subscription. Accrued interest on the securities surrendered will^ be
credited, and accrued interest on the new bonds from February 1, 1944, wilf be
charged, as shown in the table at the end of this circular. Where the table shows
that an amount will be collected from the subscriber, the remittance should
accompany the securities and subscription. Where an amount is to be paid
to the subscriber, it will be paid, in the case of coupon bonds and notes, following
their acceptance, and in the case of registered bonds, following discharge of
registration. Interest accrued on the securities to be exchanged, and on the new
bonds to be issued; will be adjusted as of various dates as follows:
Securities to be exchanged
Treasury notes of Series B-1944
FFMC bonds of 1944-64
RFC notes of Series W
Treasury bonds of 1944-46
HOLC bonds. Series A 1944-52
FFMC bonds of 1944-49_
Treasury notes of Series A-1944

Dote of adjustment
Mar. 15, 1944.
Mar. 15, 1944.
.
Mar., 15, 1944.
Apr. 15, 1944.
.
May 1, 1944.
May 15, 1944.
Mar. 15 or June 15, 1944, as
the holder may elect and
specify in his subscription.
2. Holders of Treasury notes of Series B-1944 and FFMC bonds of 1944-64
will detach coupons dated March 15, 1944, and cash them when due. With
respect to the other five issues, all unmatured coupons, including ihe one next due,
must be attached to the securities to be exchanged when they are surrendered,
and final interest on these securities, and on registered bonds in all cases, will be
paid or credited in,a net amount.
'^
V. SURRENDER OF CALLED BONDS

1. Coupon bonds.—Treasury bonds of 1944-46, HOLC bonds of Series A
1944-52, FFMC bonds of 1944-49 and FFMC bonds of 1944-64 in coupon form
tendered in payment for bonds offered 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 April 15,
1944, May 1, 1944, May 15, 1944, and September 15, 1944, respectively, 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 coupon^.
The bonds must be delivered at the expense and risk of the holder. Facilities
for transportatiori 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.—TresLSury bonds of 1944-46, HOLC bonds of Series A
1944-52, FFMC bonds of 1944-49 and FFMC bonds of 1944-64 in registered
form tendered in payment for bonds offered hereunder should be assigned by the
registered payees or assignees thereof, in accordance with the general regulations
of the Treasury Department governing assignments for redemption, in one of the
forms hereafter set forth, and thereafter should be presented and surrendered




REPORT OF THE SECRETARY OF THE TREASURY

295

with the subscription to a Federal Reserve Bank or branch or to the Treasury
Department, Division of Loans and Currency, Washington, D. C. The bonds
must be delivered at the expense and risk of the holder. If the new bonds are
desired registered in the same name as the bonds surrendered, the assigriment
should be to ^'The Secretary of the Treasury for, exchange for Treasury bonds
of 1965-70"; if the riew bonds are desired registered in. another name, the assignment should be to "The Secretary of the Treasury for exchange for Treasury
bonds of 1965-70 in the name of_i___
";if new bonds in coupon form
are desired, the assignment should be to'''The Secretary of the Treasury for
exchange for Treasury bonds of 1965-70 in coupon form to be delivered to
VI. 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 allotteji,
and they may issue interim receipts pending delivery of the definitive borids.
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 wiU be communicated promptly to the Federal Reserve Banks.
HENRY

MORGENTHAU,"Jr.,

Secretary of the Treasury,
Table of interest adjustments per $1,000 in connection with exchange of various bonds
and notes for 2Yi% Treasury bonds of 1965-70, dated Feb. 1, 1944, under Department Circular No. 734

Securities surrendered

Exchange as of Mar. 15,1944:
1% Treasury notes. Series B-1944
'..
3k% FFMC bonds of 1944-64 in coupon form.
3 ^ % F F M C bonds of 1944-64 in registered form....
1% RFC notes. Series W . . .
:..
%% Treasury notes. Series A-1944
Exchange as of Apr. 15, 1944: 3H% Treasury bonds of
. 1944-46.
.
Exchange as of May 1, 1944: 3% HOLC bonds, Series
A 1944-52...
....
Exchange as of May 16, 1944: 3% F F M C bonds of
1944-49
...
Exchange as of June 15, 1944: ^4% Treasury notes,
Series A-1944..

Accrued
Accrued
interest to interest to I Net amountNetamount *
be paid • to be colbe credited be charged toto sublected from
on securities on bonds
scriber
subscriber
surrendered
issued

$16. 25
4.15301
1.86476

16.25

9533
9533
9533
9533
9533

$2.9533
2.9533
$13. 2967
1.19971.
1. 08855

05927

11.19073

15.00

14623

8.85377

15.00

09732

7.90268

3.76

2033

5,4633

It. will be noted that the holder of the securities to be exchanged will be paid
or credited with interest at the rate borne by those securities to their respective
maturity or redemption dates, except in the case of the RFC notes and, at the
holder's option, the Treasury notes of Series A-1944.

Treasury bonds of 1956-69 (additional). Department Circular No. 735. Public Debt]
TREASURY

DEPARTMENT,

Washington, March 2, 1944'
I. EXCHANGE OFFERING OF BONDS

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par with adjustments
of accrued interest as shown in the table at the erid of this circular, from the
people of the United States for bonds of the United States,, desigi^ated 2}4 percent




296

REPORT OF THE SECRETARY OF THE TREASURY

Treasury bonds of 1956-59, in payment of which any of the following listed
securities, singly or in combinations aggregating $500 or multiples thereof, may
be tendered:
'
•
Treasury issues:
•
1% Treasury notes of Series B-1944, maturing March 15, 1944.
33^% Treasury bonds of 1944-46, called for redemption on April 15, 1944.
%% Treasury notes of Series A-1944, maturing June 15, 1944.
Federal Farm Mortgage Corporation issues:
3%% FFMC bonds of 1944-64, called for redemption on March 15, 1944.
3 % FFMC bonds of 1944-49, called-for redemption on May 15, 1944.
Reconstruction Finance Corporation issue: 1% RFC notes of Series W,
maturing April 15, 1944.
Home Owners' Loan Corporation issue: 3 % HOLC bonds, Series A 194452, called for redemption on May 1, 1944.
These bonds will not be available for subscription, for their own account, by
coiniriercial banks, which are defined for this purpose as banks accepting dem.and
deposits. The amount of the offering under this circular will be limited to the
amount of the above-listed bonds and notes tendered and accepted. In addition
to t h e offering under this circular, holders of any of the securities listed, other
than commercial banks, are offered the privilege of exchanging all or any part
of such securities for 2J^ percent Treasury bonds of 1965-70, and all holders,
including commercial banks, may exchange for Iji percent Treasury notes of
Series A-1948, which offerings are set forth im Department Circulars Nos. 734
and 736, issued simultaneously with this circular.
II. DESCRIPTION OF BONDS

1. The bonds now offered will be an addition to and will form a part of the
series of 234 percent Treasury bonds of 1956-59. issued pursuant to Department
Circular No. 730, dated January 18, 1944, will be freely interchangeable therewith, and are identical in all respects therewith. They are dated February 1,
1944, and bear interest from that date at the rate of 2% percent per annum,
payable on a semiannual basis on September 15, 1944, and thereafter on March
15 and September 15 in each year until the principal amount becomes payable.
They will mature September 15, 1959, but may be redeemed at the option of
the United'States on and after September 15, 1956, in whole or in part, at par
and accrued interest, on any interest day or days, ori 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 ealled 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. . They
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 $500, $1,000, $5,000,
$10,000, $100,000, and $1,000,000. 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. Except a-s provided in section I of Department
Circular No. 730,xthese bonds may not, before September 15, 1946, be transferred
to or be held by commercial banks, which are defined for this purpose as banks
accepting demand deposits; however, the bonds may be pledged as collateral for
loans, iricluding loans by commercial banks, but any such bank acquiring such
bonds before September 15, 1946, 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.




REPORT OF THE SECRETARY OF THE TREASURY

. 297

5. Any bonds issued hereunder which upon the death of the owner constitute
part of his estate, will be redeemed at the option of the duly constituted representatives of the deceased owner's estate, at par and accrued interest to date of
payment 1 * * *
• ,
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington.^ * * *
^

IV. PAYMENT

1. Payment at par and accrued interest from February 1, 1944, for bonds
allotted hereunder must be made or completed on or before March 15, 1944,.or
on later allotment. Payment of the principal amount may be made only in the
bonds or notes to be exchanged, which will be accepted at par, and should accompany the subscription. Accrued interest on the securities surrendered will be
credited, and accrued interest on the new bonds from February 1, 1944, will be
charged, as shown in the table at the end of this circular. Where the table shows
that, an amount will be ^collected from the subscriber, the remittance should
accompany the securities and subscription. Where, an amount is to be paid to
the subscriber, it will be paid, in the case of coupon bonds and notes, following
their acceptance, .and in the case of registered bonds, following discharge of registration.i * * *
.
V. SURRENDER OF CALLED BONDS

1. Coupon bonds.—Treasury bonds of 1944-46, HOLC bonds of Series A
1944-52, FFMC bonds of 1944-49 and FFMC bonds of 1944-64 in coupon form
tendered in payment for bonds offered 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.^ * * *
2. Registered bonds.—^^Treasury bonds of 1944-46, HOLC bonds of Series A
1944-52, FFMC bonds of 1944-49 and.FFMC bonds of 1944-64 in registered
form tendered in payment for bonds offered hereunder should be assigned by
the registered payees or assignees thereof, ih accordance with the general regulations of the Treasury Department governing assignments for redemption, in
one of the forms hereafter set forth, 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 Currency, Washington, D. C.
The bonds must be delivered at the expense and risk of the holder. If the new
bonds are desired registered in the same name-as the bonds surrendered, the
assignment should be to ''The Secretary of the Treasury for exchange for Treasury
bonds of 1956-59"; if the new bonds are desired registered in another name, the
assignment should be to "The Secretary of the Treasury for exchange for Treasury bonds of 1956-59 in the name of
"; if new bonds in coupon
form are desired, the assignmerit should^be to *'The Secretary of the Treasury
for exchange for Treasury bonds of 1956-59 in coupon form to be delivered
to
"
VI. GENERAL PROVISIONS

1. As fiscal ^agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions i * * *^
HENRY MORGENTHAU,

Jr.,

Secretary of the Treasury.
I Omitted portion similar to corresponding section of Department Circular No. 734, p . 292.




298

REPORT OF THE SECRETARY OF THE TREASURY

Table of inlerest adjustments per $1,000 in connection with exchange of various bonds
and notes for ^M% Treasury bonds of 1956-59, date<i Feb. 1, 1944, under Department Circular No. 735
Accrued
Accrued
Net
Net
interest to interest to
to amount to
be credited be charged amount to be collected
be paid
on securities on bonds subscriber
from
surrendered
subscriber
issued

Securities surrendered

Exchange as of Mar. 16, 1944:
1% Treasury notes. Series B-1944
3K% FFM C bonds of 1944-64 iri-coupor; form
- 31-4% FFMC bonds of 1944-64 in registered form....
' 1% RFC notes. Series W
H% Treasury notes. Series A-1944
Exchange as of Apr. 15, 1944: 3}4% Treasury bonds of
- 1944-46
-. -. -.
Exchange as of May 1,1944: 3% HOLC bonds. Series A
1944-52
Exchange as of May 16, 1944: 3% F F M C bonds of
1944-49
Exchange as of June. 16, 1944: %% Treasury notes,
• Series A-1944

$16. 25
4.15301
1.86475

16.25

$2. 66797.
2. 65797
2. 65797
2.65797
2. 65797

$2. 65797
2.65797
$13.59203
1.49504
. 79322

4.56336

11. 69665

16.00

6. 53161

9. 46839

16.00

6. 38769

8. 61241

3.75

8. 28297

4.63297

It will be noted that the holder of the securities to be exchanged will be paid or
credited with interest at the rate borne by those securities to their respective
maturity or redemption dates, except in the case of the RFC notes and, at the
holder's option/ the Treasury notes of Series A-1944.'

[Treasury notes. Department Circular No. 736. Public Debt]
•"

,

TREASURY DEPARTMENT,

'

Washington, March 2, 1944I.

EXCHANGE

OFFERING

OF

NOTES

1. The Secretary of the Treasury, pursuant, to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par with adjustments
of accrued interest as shown in the table at the end of this circular, from, the
people of the United States for notes of the United States, designated IJ^ percent
Treasury notes of Series A-1948, in payment of which any of the following listed
securities, singly or in combinations aggregating $1,000 or multiples thereof,
may be tendered.
Treasury issues:
1% Treasury notes of Series B-1944, maturing March 15, 1944.
3%% Treasury bonds of 1944-46, called for redemption on April 15,
i 1944.
%% Treasury notes of Series A-1944, maturing June 15, 1944.
Federal Farm Mortgage Corporation issues:
3K% FFMC bonds of 1944-64, called for redemption on March 15,
1944.
.
"
3 % FFMC.bonds of 1944-49, called for redemption on May 15, 1944.
Reconstruction Finance Corporatiori issue: 1% RFC notes of Series W,
(^# maturing April 15, 1944.
Home Owners' Loan Corporation issue: 3 % HOLC bonds. Series A1944-52,
called for redemption on May 1, 1944.
The amount of the offering under this circular will be limited to the amount of the
above-listed bonds and notes tendered and accepted. In addition to the offering
under this circular, holders of any of the securities listed, other than comniercial
banks, which are defined for this purpose as banks accepting demand deposits,
are offered the privilege of exchanging all or any part of such securities for 2]^
percent Treasury bonds of 1965-70 or for 2% percent Treasury bonds of 1956-59,
which offerings are set forth in Department, Circulars Nos. 734 and 735, issued
simultaneously with this circular.




REPORT OF THE SECRETARY OF THE TREASURY

299

n . DESCRIPTION OF NOTES

1. The notes will be dated March 15, 1944, and will bear interest from that
date at the rate of Ij^ percent per annum, payable semiannually on September
15, 1944, and thereafter on March 15 and September 15 in each year until the
principal amount becomes payable. They will mature September 15, 1948, 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 ndtes.
4. The notes will be acceptable to secure deposits of public moneys.
5. Bearer notes with interest coupons attached will be issued in denominations
of $1,000, $5,000, $10,000, $100,000 and $1,000,000. 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.^ * * *
\

IV. PAYMENT

1. Payment at par and accrued interest, if any, for notes allotted hereunder
must be made or completed on or before March 15, 1944, or on later allotment.
Pa5^ment of the principal amount may be made only in the bonds or notes to be
exchanged, which will be accepted at par, and should accompany the subsWiption.
Accrued interest on the securities surrendered will be credited, and accrued interest on the new notes from March 15, 1944, will be charged, as shown in the
table at the end of this circular. Where an amount is to be paid to the subscriber,
it will be paid, in the case of coupon bonds and notes, following their acceptance,
and in the case of registered bonds, following discharge of registration. Interest
accrued on the securities to be exchanged, and on the new notes to be issued, will
be adjusted as of yarious dates as follows: i * * *
V. SURRENDER OF CALLED BONDS

1. Coupon bonds.—Treasury bonds of 1944-46, HOLC bonds of Series A
1944-52, FFMC bonds of 1944-49 and FFMC bonds of 1944-64 in coupon form
tendered in payment for notes offered 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. ^ * * *
2. Registered bonds.—Treasury bonds of 1944-46, HOLC bonds of Series A
1944-52, FFMC bonds of, 1944-49 and FFMC bonds of 1944-64 in registered
form tendered in payment for notes offered hereunder should be assigned by the
registered payees or assignees thereof, in accordance with the general regulations
of the Treasury Department governing assignments for redemption, to "The
Secretary of the Treasury for exchange for Treasury notes of Series A-1948 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 Currency, Washington, D. C.
The bonds must be delivered at the expense and risk of the holder.
VI. 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
1 Omitted portion similar to corresponding section of Department Circular No. 734, p. 292.




300

REPORT OF THE SECRETARY OF THE TREASURY

for notes allotted, to m a k e delivery of notes on full-paid subscriptions allotted,
a n d they 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 any time, or from time to time, prescribe supplemental or a m e n d a t o r y rules and regulations governing t h e offeririg,
which will be communicated p r o m p t l y to the Federal Reserve Banks.
H E N R Y MORGENTHAU,

-

'

.

Jr.,

Secretary of the Treasury.

Table of interest adjustments per $1,000 i n connection wiih exchange of various
bonds and notes for i H % Treasury notes of Series A-1948, dated M a r . 15, 1944,
under Department Circular No. 736
Accrued in- Accrued interest to be' terest to be Net amount
credited on charged on to be paid to
subscriber
securities
surrendered notes issued

Securities surrendered

Exchange as of Mar. 16, 1944:
1% Treasury notes, Series B-1944...
3K% F F M C bonds of 1944-64 in coupon form
3)1% F F M C bonds of 1944-64 in registered form....
1% RFC notes, Series W . .
%% Treasury notes, Series A-1944
Exchange as of Apr. 15, 1944: 3 ^ % Treasury bonds of
1944-46
Exchange as of May 1,1944; 3% HOLC bonds, Series A
1944-52...
:
Exchange as of May 15, 1944: 3% F F M C bonds of
1944-49
Exchange as of June 16,1944: %% Treasury notes, Series
A-1944.....
:...
'....

Net amount
to be collected from
. subscriber

$16. 25
4.15301
1. 86475

$16. 26
4.15301
1.86475
16. 25

$1. 26359

14. 98641

16.00

1. 91576

13.08424

2. 48641

12. 51359

15.00
3.75

3.76

I t will be noted t h a t t h e holder of the securities to be exchanged will be paid or
credited with interest a t t h e r a t e borne by those securities, tp their,respective
m a t u r i t y or redemption dates, except in t h e case of t h e R F C notes and, a t t h e
holder's option, t h e Treasury notes of Series A-1944.

Exhibit 16
Allotments, Treasury bonds of 1965-70 (additional). Treasury bonds of 1956-59
(additional), and Treasury notes of Series A-1948 (from press releases March 7
and 20i 1944 0
On M a r c h 7, 1944, Secretary of t h e Treasury Morgenthau announced t h e closing
time of t h e subscription books for t h e offering of 2Y2 percent Treasury bonds of
1965-70 (additional), 2 ^ percent Treasury bonds of 1956-59 (additional), and
IY2 percent Treasury notes,of Series A-1948, offered in exchange for t h e 7 called
or m a t u r i n g issues enumerated below. Except for t h e receipt of subscriptions
from holders of $100,000 or less, in t h e aggregate, t h e books closed a t t h e close
of business M a r c h 8 for t h e receipt of subscriptions in p a y m e n t of T^hich notes of
a n y of t h e three maturirig issues were tendered, and a t t h e close of business M a r c h
11 for t h e receipt of subscriptions in p a y m e n t of which bonds of a n y of t h e four
called issues were tendered. T h e subscription books closed a t t h e close of business March 15 for t h e receipt of subscriptions from holders of $100,000 or less,
in t h e aggregate, of t h e securities eligible for exchange.
Of t h e $4,729,000,000 of t h e called or m a t u r i n g issues t h a t were outstanding,
$3,919,106,500 were exchanged as follows:
^
1 Revised July 17, 1944.




301

REPORT OF THE SECRETARY OF THE TREASURY

Amount
exchanged

Description and title
Treasury issues:
1% Treasury notes of Series B-1944
_...".
3H% Treasury bonds of 1944-46
._
H% Treasury notes of Series A-1944..
Federal Farm Mortgage Corporation issues:
3K% F F M C bonds of 1944-64
3% FFMC bonds of 1944-49
^......
Reconstruction Finance Corporation issue: 1% RFC notes of Series W
Home Owners' Loan Corporation issue: 3% HOLC bonds of Series A 1944-52.

$482,988, 900
1, 222,906, 950
269,628, 200
75.800.700
704, 924, 700
669,124,000
603,733.050

Total

3,919,106, 500

All subscriptions were allotted in full. Allotments of the new securities were
divid^ed among the Federal Reserve districts and the Treasury as follows:

Federal Reserve district

21.^% Treasury 2H% Treasury 1H% Treasury
bonds of 1965- bonds-of 1956- notes of Series
70 (additional) 69 (additional)
A-1948

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

$3,866,000
18,926, 500
3, 453, 000
9, 811. 000
6, 766, 000
2, 285, 000
11, 583, 500
6, 937, 500
1, 964, 000
7, 237, 000
1,897,500
2, 500, 500
1, 305, 600

$10, 415,000
24, 803, 500
3, 730, 500
4, 897, 500
23, 982, 600
1,116, 000
11, 776, 000
2, 360, 000
2, 704, 500
3, 276, 500
1, 698, 500
3,167, 000
L 044, 000

Total...

76, 533, 000

94,'871, 600

$71, 234, 000
2, 824, 694, 000
129, 294,000
83, 411, 000
26. 587, 000
35, 637, 000
319, 997, 000
36. 867, 000
40, 538,000
77, 933, 000
27, 066, 000
66, 565, 000
7, 879,000

Total subscriptions
received and
allotted
$85, 515, 000
2, 868, 424, 000
136, 477, 500
98.119, 500
- 56,335,500
39,038, 000
343, 356, 500
46,164, 600
45, 206, 600
88, 446, 600
30,662,000
72, 232, 600
10,228,500

3, 747, 702, 000 - 3,919,106,600

Exhibit 17
Offering of % percent Treasury certificates of indebtedness of Series B-1945
On March 22,1944, Secretary of the Treasury Morgenthau invited subscriptions
for Y percent Treasury certificates of indebtedness of Series B-1945 in exchange for
s
Treasury certificates of indebtedness of Series B-1944, maturing April L, 1944. In
the related press release it was stated that $5,251 millions of Series B-1944 certificates were outstanding.
[Department Circular No. 737. Public Debtl
'

TREASURY

DEPARTMENT,

Washington, March 22, 1944.
I. OFFERING OF CERTIFICATES

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 certificates of indebtedness of the United States, designated Y
s
percent Treasury certificates of indebtedness of Series B-1945, in exchange for
Treasury certificates of indebtedness of Series B-1944, maturing April 1, 1944.
II. DESCRIPTION OF CERTIFICATES

1. The certificates will be dated April 1, 1944, and will bear interest from that
date at the rate of % percent per annum, payable semiannually on October 1, 1944,
and April 1,-1945. They will mature April 1, 1945, and will not be subject to call
for redemption prior to maturity. .
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




302

REPORT OF THE SECRETARY OF THE TREASURY

taxation now or hereafter imposed on t h e principal or^interest thereof by any S t a t e ,
or a n y of the possessions of the United States, or by any local taxing authority^
3. T h e certificates will be acceptable to secure deposits ot public moneys. They
will not be acceptable in p a y m e n t of taxes.
4. Bearer Certificates with interest coupons a t t a c h e d will be issued in denominations of $1,000, $5,000, $10,000, $100,000 a n d $1,000,000. T h e certificates will
not be issued in registered form.
5. T h e certificates 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 certificates.
I I I . S U B S C R I P T I O N AND ALLOTMENT

1. Subscriptions will be received a t t h e 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.
Banking institutions generally may
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'oflncial 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 t h e a m o u n t of certificates applied for, and to
close t h e books as to a n y 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 p a r for certificates allotted hereunder m u s t be m a d e on or before
April 1, 1944, or on later allotment, and m a y be made only in Treasury certificates
of indebtedness of Series B-1944, m a t u r i n g April 1, 1944, which will be accepted a t
par, and should accompany t h e subscription.
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
and requested to receive subscriptions, to make allotments on t h e basis and up to
t h e a m o u n t s indicated by the Secretary of t h e Treasury to t h e Federal Reserve
Banks of t h e respective district?, to issue allotment notices, to receive p a y m e n t for
certificates iallotted, tp make delivery of certificates on full-paid subscriptions
allotted, and 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 to time, prescribe supplemental or a m e n d a t o r y rules and regulations goverriing t h e offering,
which will be communicated promptly 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 18
Allotments, Treasurv certificates of indebtedness of Series B-1945 (from press releases
March 24 and 31, 1944 0
On M a r c h 24, 1944, 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 B-1945, offered in exchange for m a t u r i n g Treasury certificates of
indebtedness of Series B-1944, would close a t t h e close of business March 25.
Subscriptions totaling $4,876,729,000 were received, all of which were allotted.
Allotments were divided among t h e Federal Reserve districts and t h e Treasury
as follows:
Federal Reserve district

Boston
_.
New York
Philadelphia-.
Cleveland..
Richmond
Atlanta
Chicago
St. L o u i s .
1 Revised J u n e 15,1944.




Subscriptions
received a n d
allotted
$229, 607,000
2, 547,493,000
154, 535,000
247, 558,000
98,363, 000
141,112,000
686,428, 000
142,949,000

Federal Reserve district

Min'neapolis
Kansas City
Dallas
" Ran Francisco
Treasury
Total

,.

Subscriptions
received a n d
allotted
$111,331,000
144,054,000
101,406,000
368,935, 000
2, 958,000
4,876,729, 000

REPORT OF THE SECRETARY OF THE TREASURY

303

Exhibit 19
Offering of Y percent Treasury certificates of indebtedness of Series D-1945
s
On April 24, 1944, Secretary of the Treasury Morgenthau invited subscriptions
for % percent Treasury certificates of indebtedness of Series D-1945 in exchange
for Treasury certificates of indebtedness of Series C-1944, maturing May 1, 1944.
In the related press release it was stated that $1,655,203,000 of Series C-1944
certificates were outstanding.
. [Department Circular No. 744.' Pubhc Debtl •
TREASURY DEPARTMENT,

Washington, April 24, 1944'
I. OFFERING OF CERTIFICATES

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 eertificates of indebtedness of the United States, designated
Y percent Treasury certificates of indebtedness of Series D-1945, in exchange for
s
Treasury certificates of indebtedness of Series C-1944, maturing May 1, 1944.
II. DESCRIPTION OF CERTIFICATES

1. The certificates will be dated May 1, 1944, and will bear interest from that
date at the rate of % percent per annum, .payable semiannually on November 1,
1944, and May 1, 1945.. They will mature May 1, 1945, and will not be subject
to call for redemption prior to maturity.
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 hereafter imposed on the principal or interest thereof by
any State, or any of the possessions of the United States, or by any local taxing
authority.
3. The certificates will be acceptable to secure deposits of public moneys.
They will not be acceptable in payment of taxes.
4. Bearer certificates with interest coupons attached will be issued in denominations of $1,000, $5,000, $10,000, $100,000, and $1,000,000. The certificates will
not be issued in registered form.
5. The ceitificates will be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States certificates.
IU. 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 righ^t 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,
air subscriptions will be allotted in full. Allotment notices will be sent out
promptly upon allotment.
IV. PAYMENT

1. Payment at par for certificates allotted hereunder must be made on or before
May 1, 1944, or on later allotment, and may be made only in Treasury certificates
of,indebtedness of Series C-1944, maturing May 1, 1944, which will be accepted
at par, and should accompany.the subscription.
V. GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receiv§ 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 t h e respective districts, to issue allotment notices, to receive payment
for certificates allotted, to make delivery of certificates on full-paid subscriptions




304

REPORT OF THE SECRETARY OF THE TREASURY

allotted, and t h e y 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 to time, prescribe supplemental 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 MORGENTHAU,

Jr.,

Secretary of the Treasury,

Exhibit 20
Allotments, Treasury certificates of indebtedness of Series D-1945 (from press releases^
April 25 and May. 4, 1944 ^)
On April 25, Secretary of t h e Treasury M o r g e n t h a u announced t h a t the s u b scription books for t h e offering of % percent Treasury certificates of indebtedness
of Series D - 1 9 4 5 , offered in exchange f o r ' m a t u r i n g Treasury certificates of;,indebtedriess of Series C-1944, would close a t t h e close of business April 2 6 . ^ Subscriptions aggregated $1,614,741,000, all of which were allotted in full.
T h e allotments were divided a m o n g t h e Federal Reserve districts a n d t h e
T r e a s u r y as follows: .
Federal Reserve district

Boston
New York..
Philadelphia
Cleveland...
Richmond.Atlanta
Chicago
St. Louis....

Subscriptions
received and
allotted
$79,926,000
863, 384, 000
27, 442, 000
74, 890, 000
23, 658, 000
31, 992, 000
268, 997, 000
33,183, 000

Federal Reserve district

Minneapolis..
Kansas City..
Dallas
San Francisco.
Treasury
Total...

Subscriptions
received and
allotted
$36,487,000
46, 442, 000
27,340,000
97, 875, 000
3,125, 000
1, 614, 741, 000

Exhibit 21
Offering of 2Y2 percent Treasury bonds of 1965-70 (additional), 2 percent Treasury
bonds of 1952-54, l } i percent Treasury notes of Series B~1947, and Ys percent
Treasury certificates of indebtedness of Series C-1945 (Fifth War Loan)
On June 12, 1944, Secretary of t h e Treasury Morgenthau invited subscriptions
for unspecified a m o u n t s of 2)4 percent Treasury bonds of 1965-70, 2 percent
Treasury bonds of 1952-54, 1% percent T r e a s u r y notes of Series .B-1947, a n d Ys
percent Treasury certificates of indebtedness of Series C^1945. T h e 2Y2 percent
Treasur}^ bonds were an addition t o t h e series issued p u r s u a n t t o D e p a r t m e n t
Circular No. 729, dated J a n u a r y 18, 1944, arid p u r s u a n t to D e p a r t m e n t Circular
No. 734, dated M a r c h 2, 1944.
^ T h e 2Y2 percent a n d 2 percent Treasury bonds were not available for subscription, for their own account, by commercial banks defined as banks accepting
demand deposits, except t h a t a commercial bank holding savings deposits or
issuing time certificates of deposit (as each is defined in Regulation Q of t h e
Board of Governors of t h e FederaL Reserve System) might subso-ribe t o t h e 2J^
percent a n d 2 percent Treasury bonds, b u t t h e a m o u n t of such subscriptions,
together with t h e a m o u n t of subscriptions such b a n k might have entered for its
own account for Series F ' o r G savings bonds since J a n u a r y 1, 1944,.and for 2J^
percerit T r e a s u r y bonds of 1956-59 OT 2% percent Treasury bonds of 1965-70
between J a n u a r y 18 and F e b r u a r y 15, 1944, was limited in the aggregate to 20
percent of t h e combined a m o u n t of time certificates of deposit (those issued in
t h e names of individuals) a n d of savings deposits, as shown on the b a n k ' s books
as of the date of t h e most recent call s t a t e m e n t required by the supervising authorities prior t o t h e date of subscription for such bonds, or $400,000,. whichever
is less. T h e limitation of $100,000 on t h e a m o u n t of Series F a n d G savings
bonds (Series 1944), or a combination of t h e two, held 4)y a n y one institution
remained unchanged.
T h e IJ^ percent T r e a s u r y notes of Series B-1947 a n d t h e % percent certificates
of indebtedness of Series C-:-1945 were n o t available t b commercial-banks.
1 Revised June 21,1944.




REPORT OF THE SECRETARY OF THE TREASURY

305

[Treasury bonds of 1965-70 (additional). Department Circular No. 740. Public Debt]
TREASURY DEPARTMENT,

Washington, June 12, 1944I. OFFERING OF 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
2y2 percent Treasury.bonds of 1965-70. The amount of the offering under this
circular is not specifically limited.
2. These bonds will not be available for subscription, for their own account, by
commercial banks, which are defined for this purpose as banks accepting demand
deposits, except as follows: a commercial bank holding savings deposits or issuing
time certificates of deposit (as each is defined in Regulation Q of the Board of
Governors of the Federal Reserve System) may subscribe to the bonds offered
hereunder and to the 2 percent Treasury bonds of 1952-54 offered simultaneously
herewith under Treasury Department Circular No. 741, but the amount of such
subscriptions, together with that of any other subscriptions such bank may have
entered for its own account for Series F or Series. G savings bonds since January
1, 1944, and for 2}^ percent Treasury bonds of 1956-59 or 2}^ percent Treasury
, bonds of 1965-70 between January 18 and February 15, 1944, shall not exceed,
in the aggregate, 20 percent of the combined amount of time certificates of deposit (but only those issued in the names of individuals, and of corporations,
associations and other organizations not operated for profit), and of savings
deposits, as shown on the bank's books as of the date of the most recent call
statement required by the supervising authorities prior to the date of subscription for such bonds, or $400,000, whichever is less. No such bank shall hold more
than $100,000 (issue price) of Series F and Series G savings bonds (Series 1944),
combined.
II. DESCRIPTION OF BONDS

1. The bonds now offered will be an addition to arid will form a "part of the
series of 2)4 percent Treasury bonds of 1965-70 issued pursuant to Department
Circular No. 729, dated January 18, 1944, an additional amount of which was
issued pursuant to Department Circular No. 734, dated March 2, 1944;!'after
the first interest payment date, September 15, 1944, the bonds now offered will
be freely interchangeable with the bonds of this series previously issued, and are
identical in all respects therewith except that interest on the bonds to be issued
under this circular will accrue from June 26, 1944. The provisions of section I
of Department Circular No. 729 are hereby modified to accord with section I
of this circular and, subject to such modification, and to the provision for accrual
of interest from June 26, 1944, on the bonds now offered, the bonds are described
in the following quotation from Department Circular No. 729. [Description
omitted here, see p. 285.]
IIL SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and brainches
and at the Treasury Department, Washington. It is requested that there be
no trading in the securities, allotted hereunder and no purchases of such securities
other than on direct subscription until after July 8, 1944. Banking institutions
generally may submit subscriptions for account of customers, but only the Federal
Reser\5e Banks and the Treasury Department are authorized to act as official
agericies. Others than banking institutions will not be permitted to enter subscriptions except for their own account. Subscriptions must be accompanied by
payment in full for 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,
and to the hmitations on commercial bank subscriptions prescribed in section I
of this circular, all subscriptions will be allotted in full. Allotment notices will
be sent out promptly upon allotment.

613185—45-

21




306

REPORT OF THE SECRETARY OF THE TREASURY
IV. PAYMENT

. 1 . Payment at par .and accrued interest, if any, for bonds allotted hereunder
must be made on or before June 26, 1944, or on later- allotment.^ One day's
accrued interest is $0,068 per $1,000. Any qualified depositary will be permitted
. to make payment by credit for bonds allotted to it for itself and its customers up
to any amount for which it shall be qualified in excess of existing deposits, when
so notified by the Federal Reserve Bank of its district.
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. ^

[First amendment, July 6,1944, to Department Circular No. 740]
TREASURY

..

'

DEPARTMENT,

Washington, July 5, 1944-

Section IV, PAYMENT, of Department Circular No. 740, dated June 12, 1944,
is hereby amended to read as follows:
^
lY. PAYMENT

1. Payment at par and accrued interest, if any, for bonds allotted hereunder
must be made on or before June 26, 1944, or on later allotment; provided, however, that bonds allotted to life irisurance companies, to savings institutions, and
to States, municipalities, political subdivisions and similar public corporations,
and. agencies thereof, may be paid for, in whole or in part, at par and accrued
interest, at any time or times, with paj^ihent to be completed not later than September 30, 1944. One day's accrued interest is $0,068 per $1,000. Any quali. fied depositary will be permitted to make payment by credit for bonds allotted
to it for itself and its customers up to any amount for which it shall be qualified
in excess of existing deposits, when so notified by the Federal Reserve Bank of its
district.
.'
HENRY MORGENTHAU,

Jr.,

Secretary of the Treasury.
' [Treasury bonds of 1952-54. Department Circular No. 741. Public Debt]
-

TREASURY

DEPARTMENT,

Washington, June 12,^944'
I. OFFERING OF 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 ofthe United States for bonds of the United States, designated
2:percent Treasury bonds of 1952-54. The amount of the offering is not specifically hmited.
.
. • 2. These borids will riot be availa,JDle for subscription, for their own account, by
commercial banks, which are defined for this purpose as banks accepting demand
deposits, except as follows: a commercial bank holding savings deposits or issuing time certificates of deposit (as each is defined in Regulation Q of the Board
» Amendment of July 6,1944, follows.




, REPORT OF THE SECRETARY OF THE TREASURY

307

of Governors of the Federal Reserve System) may subscribe to the bonds offered
hereunder and to the 2J^ percerit. Treasury borids of. 1965-70 offered simultaneously herewith under Treasury Department Circular No. 740, but the amount of
. such subscriptions, together with that df anj'- other subscriptions such bank may
have entered for its own account for Series F or. Series G savings bonds since
January 1, 1944, and for 2]4 percent Treasury bonds of 1956-59 or 2% percent
Treasury bonds of 1965^70 between January 18 and February 15, 1944, shall not
exceed, in the aggregate, 20 percent of the combined iamount of time certificates
of deposit (but only those issued in the names of individuals, and of corporations,
associations and other organizations not operated for profit), and of savings deposits, as sliown on the bank's books as of the date of the most recent call statement required by the supervising authorities prior to the date of subscription for
such bonds, or $400,000, whichever is less. No such bank shall hold more thari
$100,000 (issue price) of Series F and Series G savings bonds (Series 1944),
combined.
II. DESCRIPTION OF BONDS

1. The bonds will be dated June 26, 1944, and will bear interest from that date
at the rate of 2 percent per annum', payable on a semiannual basis on December
15, 1944, and thereafter on June 15 and December 15 in each year until the principal amount becomes paya,ble. They will mature June 15, 1954, but may be
redeemed at the option of the United States on and after June 15, 1952, 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. J n 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.
o
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 Stat^, 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. They
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 $500, $1,000, $5,000>
$10,000, $100,000 and $1,000,000. Provision will be made for the interchange of
bonds of different denominations and of coupori 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, W^ashington. It is requested that there be
no trading in the securities allotted hereunder and no purchases of such securities
other than on direct subscription until after July 8, 1944. 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 must be accompanied by payment in full for 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 apphed 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, and to the lirnitations on commercial bank subscriptions prescribed in
section I of this circular, all subscriptions will be allotted in full. Allotment
notices will be sent out promptly upon ahotment.
IV. PAYMENT

1. Payment at par and accrued interest, if any, for bonds allotted hereunder
must be made on or before June 26, 1944, or on later allotment.^ One day's
1 Amended July 6,1944, see p. 308.




308

REPORT OF THE SECRETARY OF THE TREASURY .

accrued interest is $0,055 per $1,000. Any qualified depositary will be permitted
,to make payment by credit for bonds allotted to it for itself and its customers
• up to any amount for which it shall be qualified in excess of existing deposits,
! when so notified by the Federal Reserve Bank of its district.
V. GENERAL

PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
: and requested to receive subscriptions, to make ahotments 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
V 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 Baiiks.
HENRY MORGENTHAU,

.

,

Jr.,

Secretary of the Treasury.

[First amendment, July 6,1944, to Department Circular No. 741] ,
TREASURY

DEPARTMENT,

Washington, July 5, 1944!

Section IV, PAYMENT, of Department Circular No. 741, dated June 12, 1944,
is hereby amended to read as follows:
IV. PAYMENT

-1. Payment at par and accrued interest, if any, for bonds allotted hereunder
must be made on or before June 26, 1944, or on later allotment; provided, how: ever, that bonds allotted to life insurance companies, to savings institutions, and
: to States, municipalities, political subdivisions and similar pubhc corporations,
and agencies thereof, may be paid for, in whole or in part, at par and accrued
interest, at any time or times, with payment to be completed not later than
September-30, 1944. One day's accrued interest is $0,055 per $1,000. Any
\ qualified depositary will be permitted to make payment by credit for bonds allotted
I to it for itself and its customers up to any amount for which it shall be qualified
\ in excess of existing deposits, wheri so. notified by the Federal Reserve Bank of
its district.
,^

-

.

. "

HENRY MORGENTHAU, Jr.,

. . .

Secretary of the Treasury.

[Treasury notes. Department Circular No. 742. Public Debt]
,

.

TREASURY

'

DEPARTMENT,

Washington, June 12, 1944^-.
I. OFFERING OF NOTES

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Borid Act, as amended, invites subscriptions, at par and accrued interest,
frorii the people of the United States for notes of the United States, designated
- 1}^ percent Treasury notes of Series B-1947. These notes will not be available
for subscription, for their own account, by commercial banks, which are defined
for this purpose a^ banks accepting demand deposits. The amount of the offering
is not specifically limited.
II. DESCRIPTION OF NOTES

1. The notes will be dated June 26, 1944, and will bear interest from that date
I at the rate oi IYA percent per annum, payable on a serniannual basis on September
15, 1944, and thereafter on March 15 and September 15 in each year until the
principal amount becomes payable. They will mature March 15, 1947, 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,




REPORT OF THE SECRETARY OF THE TREASURY

309

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 anyState, 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.
5. Bearer notes with interest coupons attached will be issued in denominations
of $1,000, $5,0^00, $10,000, $100,000, and $1,000,000. The notes wih 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 A!ND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and.branches
and at the Treasury Department, Washington. It is requested that there be
no trading in the securities allotted hereunder and no purchases of such securities
other than on direct subscription until after July 8, 1944. 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]
agericies. Others than banking institutions will not be perriiitted to enter sub-;
scriptions except for their, own account. Subscriptions must be accompanied by'
payment in full for 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,*
all subscriptions will be allotted in full. Allotment notices will be sent out*
promptly upon allotment.
IV. PAYMENT

1. Payment at par and accrued interest, if any, for notes allotted hereunder ^
must be made on or before June 26, 1944, or on later allotment. One day's ^
'
accrued interest is $0,034 per $1,000. Any qualified depositary will be permitted'
to make payment by credit for notes ahotted to its customers up to any amount'
for which it shall be qualified in excess of existing deposits, when so notified by «
'
the Federal Reserve Bank of its district.
V. GENERAL

PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
and requested to receive subscriptions, to make allotments on the basis and up
to the amounts indicated by the Secretary of the Treasury to the Federal 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 deliverj'^ 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.
fCertii3cates of indebtedness. Department Circular No. 743. Public Debt]
TREASURY DEPARTMENT,

Washington, June 12, 1944'
i: OFFERING OF CERTIFICATES

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 certificates of indebtedness of the United
States,' designated % percent Treasury certificates of indebtedness of Series
C-1945. These certificates will not'be available for subscription, for their own




310

REPORT OF THE SECRETARY OF THE TREASURY

account, by commercial banks, which are defined for this purpose as banks
accenting demand deposits. The amount of the offering is not specifically limited.
II. DESCRIPTION OF CERTIFICATES

1. The certificates will be'dated June 26, 1944, and will bear interest from that
date at the rate of Y percent per annum, payable on a semiannual basis on Decems
ber, 1, 1944, and June 1, 1945. They will mature June 1, 1945, and wih not be
subject to call for redemption prior to maturity.
2. The income derived froih the certificates shall be subject to all Federal
taxes, now or hereafter. imposed. The certificates shall be subject to estate,
inheritance, gift dr 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.
4.. Bearer certificates with interest coupons attached will be issued in denominations of $1,000, $5,000, $10,000, $100,000, and $1,000,000. The certificates
will not be issued in registered form.
5. The certificates will be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States certificates.
III. SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. It is requested that there be no
trading in the securities allotted hereunder and no purchases of such securities
other than on direct subscription until after July 8, 1944. 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 must be accompanied
by payment in full for 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
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 besent out
promptly upon allotment.
•

l y - PAYMENT

1. Payment at par and accrued interest, if any, for certificates allotted hereunder must be made on or before June 26, 1944, or on later allotment. One day's
accrued interest is $0,024 per $1,000. Any qualified depositary will be permitted
to make payment by credit for certificates allotted to its customers up to any
arnount 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 requestedto receive subscriptions, tomake allotments on the basis and iip 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.

311

REPORT OF T H E SECRETARY OF T H E TREASURY
Exhibit 22

Allotments, Treasury bonds of 1965-70 (additional). Treasury bonds of 1952-54,
Treasury notes of Series B-1947, and Treasury certificates of indebtedness of
Series C-1945 (from-press release J u l y 7 ^) (Fifth War Loan)
On July 7, 1944, Secretary of t h e Treasury Morgenthau called a t t e n t i o n to
t h e fact t h a t t h e subscription books would close a t t h e close of business July 8.
for t h e offering of 2}^ percent Treasury bonds of 1965-70, 2 percent Treasury
bonds of 1952-54, 1% percent Treasury notes of Series B-1947, a n d % percent
Treasury certificates of indebtedness of Series C-1945. Subscriptions aggregated
$15,452,270,000, a h of which were allotted in fuh.
Allotments were divided among t h e Federal Reserve districts a n d t h e Treasury
as follows:
Federal
Reserve
district

• 2%
Treasury
bonds of
1952-64

, 2W7o
Treasury
bonds of
1965-70

Boston
New York
Philadelphia
Cleveland,.
Richmond....
Atlanta . .
Chicago.St. Louis
Minneapolis
. .
Kansas City
Dallas..-.San Francisco
•
Treasury
Government inv e s t m e n t accounts

$230,147, 500
1,319,016,000
88, 383, 500
145. 945, 500
70, 478, 000
39, 024. 000
168,110,000
40, 900. 000
60. 460, 600
43, 453, 500
33, 617, 000
96, 230, O O
O
782, 000

Total -

2, 908, 688,000

.

1H%
Treasury
notes of
Series B-1947

Total
subscriptions
received and
allotted

^ i % certificates of
indebtedness of
Series C-1946

.$464,160, 500
2,384.411,600
325, 94.0, 600
363, 095. 000
314, 292. 600
444, 655, 000
677, 938, 500
168.682,000
123, 934, 500
154,166, 000
170, 452. 000
343,459,600
305, 600

$129,425,000
872, lio, 000
58. 603, 000
131, 039, 000
130, 423, 000
74,126, 000
201,641,000
65,864,000
61,191, 000
58, 075, 000
58, 951, 000
116, 442, 000
169,000

$235, 284, 000
1,783,786.000
238. 959. 000
269, 632, 000
287, 346, 000
111,933,000
1, 007. 858, 000
132,883,000
100,004.000
124, 640. 000
'99,369,000.
378, 333,000
119,000

$1,059,007.000
6, 359, 328, 600
711, 886, 000
899,611,500
802. 639, 600
669. 738,000
1, 945, 647, 500
408,329,000
325, 690.000
380, 333, 500
362, 389,000
933, 464, 600
1, 365, 500

5, 825,482, 000

1, 948, 054, 000

4, 770,046, 000

15, 452, 270, 000

693,140, 500

'593,140, 600

Treasury bills
Exhibit 23
Inviting tenders for Treasury bills dated J i d y 7, 1943 (press release J u n e 30, 1943)
'

>

TREASURY DEPARTMENT,

Washington, J u n e 30, 1943. .
T h e Secretary of t h e Treasury, b y this public notice, invites tenders for $1,000,000,000, or thereabouts, of 92-day Treasury bills, to be issued on a discount basis
under competitive and fixed-price bidding as hereinafter provided. T h e bills of
this series will be dated July 7, 1943, a n d will m a t u r e October 7, 1943, when t h e
face a m o u n t will be payable without interest. T h e y will be issued in bearer form
only, a n d in denominations of $1,000, $5,000, $10,000, $100,000, $500,000, a n d
$1,000,000 (maturity value).^
Tenders will be received a t Federal Reserve Banks and.branches u p t o t h e closing hour, two o'clock p..m., eastern war time, Friday, July 2, 1943. Tenders will
not be received a t t h e Treasury D e p a r t m e n t , Washington. E a c h t e n d e r m u s t be
for an even multiple of $1,000, and t h e price offered m u s t be expressed on t h e basis
of 100, with not more t h a n three decimals, e. g., 99.925. Fractions m a y n o t be
used. I t is urged t h a t tenders be m a d e on t h e printed forms and forwarded in t h e
special envelopes which will be supplied by F e d e r a l Reserve Banks or branches on
application therefor.
.
. '
' J Revised Dec. 27, 1944, and Jan. 16, 1945.




.

'

'

312

REiPORT OF T H E SECRETARY OF T H E TREASURY

Tenders will be rieceived without deposit from incorporated banks a n d t r u s t
companies and from responsible and recognized dealers in investment securities.
Tenders from others m u s t be' accompanied by p a y m e n t of .2 percent of t h e face
ainount of Treasury bills applied for, unless t h e tenders are accompanied by an
express g u a r a n t y of p a y m e n t by an incorporated b a n k or t r u s t company.
Immediately after t h e closing hour, tenders will be opened a t t h e Federal Reserve Banks a n d branches, following which public announcement will be m a d e by
t h e Secretary of the Treasury of t h e a m o u n t and price range of accepted bids.
Those submitting tenders will be advised of t h e acceptance or rejection thereof.
T h e Secretary of the Treasury expressly reserves t h e right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be final.
Subject to these,reservations, tenders for $100,000 or less from any one bidder a t
99.905 entered on a fixed-price basis will be accepted in full. P a y m e n t of accepted
t.enders a t t h e prices offered m u s t be m a d e or completed a t t h e Federal Reserve
Bank in cash or other immediately available funds on July 7, 1943.
T h e income derived from Treasury bills, whether interest or gain from the sale
or other disposition of the bills, shall not have any exemption, as such, and loss
from the sale or other disposition of Treasury bills shall not have any special
t r e a t m e n t , as such, under Federal t a x acts now or hereafter enacted. The 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 iniposed on t h e
principal or interest thereof by any State, or any of t h e possessions of the 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 at which Treasury bills are originally sold by t h e United States.shall be ^
considered to be interest. Under sections 42 and 117 (a) (1) of t h e Internal^
Revenue Code, as amended by section 115 of t h e Revenue Act of 1941, t h e a m o u n t
of discount a t which bills issued hereunder are sold shall not be considered to
accrue until such bills shall be sold, redeemed or otherwise .disposed of, and
such bills are excluded from consideration as capital assets. Accordingly, t h e
-owner of Treasury bills (other t h a n life insurance companies) issued hereunder
need include in his income tax return on]y the difference between t h e price paid
•for such bills, whether on original issue or on subsequent purchase, and the a m o u n t
•actually received either upon sale or redemption a t maturit}^ during t h e t a x a b l e
•year for which t h e return is made, as ordinary gain or loss.
Treasury D e p a r t m e n t Circular No. 418, as amended, and this notice, prescribe
t h e terms of t h e Treasury bills and govern the conditions of their issue. Copies of
the, circular m a y be obtained from any Federal Reserve Bank or branch.

Exhibit 24
Acceptance of tenders for Treasury bills dated J u l y 7,194S (press release J u l y 3,1943)
TREASURY DEPARTMENT,

Washington, J u l y 3, 1943.
T h e Secretary of t h e T r e a s u r y announced last evening t h a t t h e t e n d e r s for ,
$1,000,000,000, o r . t h e r e a b o u t s , of 92-day T r e a s u r y bills t o be dated July 7 and
t o m a t u r e October 7,1943, which were offered on J u n e 30, 1943, were opened a t t h e
Federal Reserve Banks on July 2.
T h e details of this issue are as. follows:
T o t a l applied for—$1,175,078,000.
Total accepted—$1,001,757,000 (includes $39,993,000 entered on a fixedpiice basis a t 99.905 a n d accepted in full).
Range of accepted bids:
..
High—99.910. Equivalent r a t e of discount approximately 0.352% per
annum.
Low—99.904. Equivalent r a t e of discount approximately 0.376% per
annum.
Average price—99.904. Equivalent r a t e of discount approximately 0.375%
per a n n u m .
(93 percent of t h e a m o u n t bid for a t t h e low price was accepted.)




KEPORT OF T.HE SECRETARY OF THK TREASURY
Federal Reserve Bank
Boston
New York
Philadelphia.
Cleveland....
Richmond...
Atlanta
_.
Chirapo-_....
St. Louis
Minneapolis-.
Kansas City.Dallas
San Francisco

Total applied
' for
$23, 750,000
808, 900. 000
• 26,985.000
15, 793^000
12, 885,000
3, 250,000
155, 705.000
29, 657, 000
5. 240. OOO19. 688.000
13, 465. 000
59, 760, 000'

Total—

1.175,078,000

313
Total accepted
$22,856,000
661. 783. 000
25, 389, noo
15,618,000
• 12.630.000
3,000,000
146. 344. 000
18, 579,000
6,240, noo
19, 445,000
13,4.37.000
57, 436,000
1 1,001, 767,000

1 P r e l i m i n a r y ; final a m o u n t as a n n o u n c e d on J u l y 7,1943, $1,003,063,000, including $40,593,000 accepted on
a fixed-price basis.
'
-. • .
,

Exhibit 25
Press releases pertaining to Treasury bill issues during the fiscalyear 1944
were similar in forni to eixhibits 23 and 24 and. are, therefore, not here reproduced. The essential' details regarding each issue are summarized in the
following table.




Summary of information contained in press releases issued in conriection with Treasury hills offered during the fiscal year 1944

CO

T e n d e r s accepted
On competitive bidding
D a t e of issue i

Total
D a y s t o a m o u n t apTotal
m a t u r i t y plied for2 (in a m o u n t act h o u s a n d s ) cepted 2 (in
thousands)

D a t e of m a t u r i t y

Price (per
hundred)

1943
July 7
J u l y 14
July 21.J u l y 28
Aug. 41-A u g . 12
Aug. 19-.
Aug. 26.Sept. 2
Sept. 9.
S e p t . 16
S e p t . 23
.
S e p t . 30 . . . : -

1943
Oct. 7 - - .
Oct. 14
. - Oct. 21
Oct. 2 8 . . . .
Nov. 4.--N o v . 12
Nov. 18-.. . N o v . 26
D e c . 2D e c . 9—
D e c . 16
D e c . 23
D e c . 30

92
92
92
92
^
92
92
91
92
91
91
91
' 91
91

$1,176,378
1,345, 536
1, 520,329
1,373, 776
-1,408,919
1,419,028
1,420,607
1, 277,910
1,177, 631
1,281,212
1, 535,624
1,498,846
1,337, 748
1,239,489
1,184, 792
1,413,861
1,286, 629
1,142, 651
1, 247,105
1,221,597
1,621,646
1,543,982
1,694,320
1,814,964
1, 791,697
1,771, 769

1.006, 933
1,004,706
1,000,766
1,008,065
1,002,630
1,004, 665
1,001,299
1,008, 667
1,006, 365
1,011,374
1,000,180
1,005,549
1,010,983

Equivalent
r a t e 3 (percent)




.

.....
-

Price (per
hundred)

Equivalent
r a t e 3 (percent)

0.352
.293
.352
.362
.366
.344
.360
.348
.297
.360
.352
.301
.293

99.904
99. 904
99.904
99.904
99. 904
99.904
99.906
99.904
99.905
99.905
99.905
99.905
99.905

0.376
.376
;376
. 376
.376
.376
.376
.376
.376
.376
.376
.376
. .37.6

$962,470
932,795
932,971
954.048
948, 465
932.207
929,424
934,006
942,292
. 950,446
932,245
940,466
943,200

99.904+
99.904+
99.906
99. 904+
99.904+
99.904+
99.905+
99. 904+
99.906+
99.905+
99.905+
99.906
99.905+

0.375
.374
.374
.374
.374
.374
.375
.374
.375
.375
.374
.374
.375

$40,593
68,364
70,738
48, 769
67,367
62,451
75,920
68,329
69,548
.54,471
76,394
77,261
69,778

99.926
99.926 •
99. 926
99.915
99. 915
99. 915
99.925
99.910
< 99. 925
99.910
99.925
99.909
99.910

.293
.293
.293
.336
.336
.340
.297
.360
.297
.366
.297
.360
.366

99.905
99.905
99.906
99.905
99.905
99.906
99.905
99.906
99.905
99.905
99.905
99.905
99.905

.376
.376
.376
.376
.376
.376
.376
.376
.376
.376
.376
.376
.376

955,064
951,319
928,921
940, 294
935,171
929,078
927,301
930, 625
942, 497
947,667
934, 413
944,848
969,034

99.906+
99.906+
99.905+
99.905+
99. 906+
99.906+
99.905+
99.906+
99.905+
99.906+
99.906+
99.905+
99.906+

.375
.375
.375
.375
.375
.376
.375
.376
.375
.375
.375
.375
.375

61,869
53,387
71,845
67,771
~ 67,459
75,587
73,998
78,142
63,868
63,807
' 65,767
,60.701
•41,949

1944
Jan. 6
Oct. 7 1
Oct. 14
. - J a n . 13
Oct. 2 1 .
J a n . 20
J a n . 27
.
Oct. 2 8 . Feb. 3 Nov. 4. .Feb.10
N o v . 12
Feb.17
N o v . 18
F e b . 24—
N o v . 26
Mar. 2
Dec 2
Dec. 9 . : . . . Mar. 9 - . . .
M a r . 16
D e c 16
M a r . 23
D e c . 23
Mar. 30...
D e c . 30
-

O n fixedprice basis
at 99.905
a n d acAmount ^
cepted i n
(in t h o u Equivalent
full2 ( i n .
Price (peisands)
' h u n d r e d ) r a t e 3 (per- t h o u s a n d s )
cent)
Average

Lowest

99.910
99.925
99.910
99.910
99.909
99.912
99.909
99. 911
99.925
99.909
99.911
99. 924
99. 926

$1,003,063
1,001,159
1,003,709
1,002,817
1,006,832
994, 658
1.005, 344
1,002,335
1,001,840
1,004, 917
1,008,639
1,017,717
1,002, 978

91
. 91
91
91
91
90
~
91
90
91
91
91
9i
91

•
^

Highest

'

'

.

o
o

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O

O

>

Ul.

I

1944
Jan.6Jan.13.Jan.20._
Jan. 27._.
Feb. 3—
Feb. 10Feb. 1 7 Feb. 2 4 Mar. 2 - .
Mar.9.Mar. 16Mar. 23Mar. 30.
Apr. 6—
Apr. 13.Apr. 20-.
Apr. 27.May 4-Mayll.
May 18.
May 25..
June 1-JuneS-June 15Juhe22.
June 29-

Apr. 6
Apr. 13—
Apr. 20—
Apr. 27—
May 4 - . May 11-.
May 1 8 May.25.June 1 - . .
June 8
June 15—
June 2 2 June 29-July 6--..
July 1 3 - .
July 2 0 - .
July 27...
Aug. 3 . - .
Aug. 10..
Aug. 17..
Aug. 24-.
Aug. 31..
Sept. 7-.
Sept. 14.
Sept. 21.
Sept. 28.

2,265,546 ' 1,014,806
91
91
2,173,694
1,000,234
91
2,273,537
1,017,182
91
2,291,540
1,016,925
91
2,459,243
1,002,280
91
2,561,603
1,005,662
91
2,314,927
1,012,743
91
1,979,179
1,007,677
91
2,151,539 . 1,007,386
91
2,450,663
1,035,494
91
2,095,059
1,016,136
91
2,116,716
1,001,087
91
1,976,692
1,009,650
91
1,997,811
1,007,677
91
1,927, 741
1,014,623
91
2,028,440
1,013,435
91
2,131,121
1,016,902
91
2,149,729
1,017,106
91 1 2,172.670
1,206,949
91 1 2,170,235
1,206,312
91
1,958,360 . 1,214,114
91
1,887.125
1,215.335
91
1,990,081
1,202,620
91
2,193,852
1,200,955
91
2,173,813
1,211, 682
91
2.308,882
1,207,844

"

99.915
99.925
99.925
,-99.925
99.920
99.910
99.910
99.910
99.910
.99.910
99:910
99.910
99.910
99.910
99,910
99.910
99.910
99.910
99.910
99.910
99.910
99.910
99.908
99.909
99.909
99.910

336
297
297
297
316
366
356
356
356
366
356
366
356
356
356
,356 356
356
356
356
366
366
364
360
360
356

99.905
99.905
' 99.906 ~
99.905
99.905
99.905
99.906
99.905
99.905
99.906
99.905
99.905
99.905
99.905
99.905
99.905
99. 905
99.905
99.905
99,905
99.906
99.905
99.905
99.905
99.905
99.905

376
376
37)
376
37)
375
37)
376
376
376
376
376
376
376
376
376
376
376
376
376
376
376
376
376
376
376

966, 749
942, 788
957,719
950,048
930,653
927,82 J
941,332
932, 524
936,306
969,450
951,085
937,141
964,483
960,703
968,989
959,460
961,309
966,643
1,147, 969
1,147,013
1,167,092
. 1,164,590
1,149,972
1,148,658
1,166,491
1,154,932

.

99.906
99.905+
99.905+
99.905+
99.906
99.905+
99.905+
99.905+
99. 905+
99.905+
99.905+
99. 905+
99.905+
99.906+
99.905+
99.905+
99.905+
99.905+
99.905+
99.905+
99.905+
99.905+
99.905+
99.905+
99.906+
99.905+

.373
.374
.374
.374
.374
.374
.376
.376
.375
.374
.375
.375
.376
.375
•.375
.375
.375
.374
.375
.375
.375
.375
.375
.375
.375
.375

48,057
57,446
.59, 463
66,877
71,627
77,834
71, 411
75,153
71,080
66,044
65,060
63,946
66,167
46,977
65, 534
53,985
54, 693
50,463
58,980
59,299
57,022
50,745
52,648
62,297
65,091
52,912

1 The press release inviting tenders for a Treasury bill issue is dated 5 days before the date of the issue. The press release announcing the acceptance of tenders is dated 1 day .
before the date of the issue. The closing date on which tenders for an issue are accepted is 2 days before the date of the issue.
2 Figures are final and differ in most cases from those shown in the last press release annoimcing the details of the particular issue.
8 Bank discount basis. .
* Except for 1 tender of $10,000.




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316 '

REPORT OF THE SECRETARY OF THE TREASURY
United States savings bonds

"

Exhibit 26
Second Revision, August 31, 1943, to Department Circular No. 653, relative to United
States war savings bonds ojf Series E, and first supplement, June 7, 1944
SECOND REVISION, AUGUST 31, 1943,

TO DEPARTMENT CIRCULAR N O .
TREASURY

653

DEPARTMENT,

Washington, August 31, 1943.
I. OFFERING OF UNITED STATES SAVINGS BONDS OF SERIES E

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,
United States savings bonds of Series E, currently designated war savings bonds,
which may hereinafter be referred to as bonds of Series-E, and their sale wilt continue until terminated by the Secretary of the Treasury. Bonds of a new design,
without change in terras, will be provided for issue hereunder in regular course
without further notice as stocks of the prior bonds of Series E become exhausted.
2. United States savings bonds of Series E include all borids issued as defense
savings bonds under this circular as originally published, and all those issued as
war savings bonds under this circular^ as previously or as now revised. As their
terms are identical, no distinction is to be made between any bonds of Series E
so issued.
'
. ] '
II. DESCRIPTION AND TERMS OF BONDS

1. Bonds of Series E will.be issued onlv in registered form, in denominations i
of $25, $50, $100, $500, and $1,000 (maturity values), at prices hereinafter set
forth.. Each bond will bear the facsimile signature of the Secretary of the Treasury, and will bear an imprint (in red) of the Seal of the Treasury. At the time of
issue, on the face of each bond the issuing agent will inscribe the name and address
of the owner, and the name of the coowner or beneficiary,.if any, will enter the
issue date (which is the first day of the month in which paymerit of the issue
price is receiyed by the Treasury or an authorized issuirig agent), and will imprint
his dating stamp (to show date the bond is actually inscribed). Bonds of Series
E shall be vahd orily if duly inscribed and dated, as above provided, and delivered
by the Treasury or an authorized issuing agent following receipt of payment
therefor.
2. The bonds will, in each instance, be dated as of the first day of the month
in which payment of the issue price is received by an agent authorized to issue the
bonds, which date is hereinafter referred to as the issue date; the bonds will
' mature and be paj^able at face value 10 years from such issue date. The. issue
date is the basis for determining the redemption or maturity period of the borid,
and the date appearing in the issuing agent's stamp should not be confused therewith. The bonds may not be called for redemption by the Secretary of the
Treasury prior to maturity, but they may be redeemed prior to maturity, after
60 days from the issue date, .at the owner's option, at fixed redemption values.
No interest as such will be paid on the bonds, but they will 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 face amount
becomes payable. The increment in value will be payable only upon redemption of the bonds. A table of redemjjtion values appears on each bond. The
purchase price of bonds of Series E has been fixed so as to afford an investment
yield of about 2.9 percent per annum compounded semiannually if the bonds
are held to maturity; if the owner exercises his option to redeem a bond prior to
maturity the investment yield will be less. The table at the end of this circular
shows: (1) How bonds of Series E, by denominations, increase in redemption
value during the successive half-year periods following issue; (2) the approximate
investment yield on the issue price from issue date to the 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 at the end of the
10-year period.
3. Bonds of Series E will not be transferable, and will be payable only to the
owner named thereon, except in case of death or disability of the owner or as other1 Additional denomination of $10, see supplement on p. 321.




REPORT OF THE SECRETARY OF THE TREASURY

317

wise specifically provided in the regulations governing savings bonds, and in
any eyent only in accordance with said regulations. Accordingly, after they
are duly issued, they may not be sold, discounted, hypothecated as collateral for
a loan or the performance of a service, or disposed of in any manner other than
as provided in the regulations governing savings bonds, and, except as provided
in.said regulations, the Treasury Department will recognize only the inscribed
ownen during his lifetime,- and thereafter his estate or heirs.
4. TAXATION.—For the'purpose of determining taxes and tax exemptions,
the increment in value represented by the difference between the price paid fur
bonds of Series E (which are issued on a discount basis), and the redemption
value received therefor (whether at or before maturity) shall be considered as
interest, and such interest is not exempt from income or profits taxes now or
hereafter imposed by the United States.^ 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'in erest
thereof by any State, or any of the possessions of the United States, or by any
local taxirig authority.
• '
III. PURCHASE OF BONDS

1. AGENCIES.—Bonds of Series E may be purchased, while this offer is in effect,
as follows:,
,
(a) Over-the-counter for cash: .
(1) .At United States post oflfices of the first, second, and third classes, and at
selected post offices of the fourth class, and generally at classified stations.and
branches.
(2). At such incorporated banks^ trust companies, and mutual savings banks,
Federal savings and loan associations, and other organizations as are duly designated and have duly qualified as issuing agents pursuant to the provisions of
Treasury Department Circular No. 657, as amended and supplemented, and at
the Treasury Department, Washington, D . C , and at Federal Reserve Banks
and branches.
(6) On mail order.—Bonds of Series E may be purchased by mail upon application to the Treasurer of the United States, Washington 25, D. C , or to any
Federal Reserve Bank or branch, accompanied by a remittance to cover the issue
price. Any forni of exchange, including-personal checks, will be accepied, subject to collection. Checks, or other forms of exchange, should be.drawn to the
order of ;the Treasurer of the United States or the Federal Reserve Bank, as the
case may be. Checks payable by endorsement are not acceptable.
.(c) Other agencies.—The.Secretary of the Treasury, in his discretion, may designate other agencies for the issue of, or for the handling of applications for, bonas
of SeriesE, which shall operate under such terms and conditions as the Secretary
of the Treasury may prescribe or approve.
2. POSTAL SAVINGS.^—Subject to regulations prescribed by the Board of Trustees of the Postal Savings System, the withdrawal of postal savings deposits will
be.permitted for the purpose of acquiring savings bonds.
3. UNITED STATES WAR SAVINGS STAMPS FOR INSTALLMENT PAYMENTS,—War

savings stamps, in denominations pf 10, 25, and 50 cents, and $1 and $5, may be
purchased at any post office where bonds of Series E are on sale and at such other
agencies .as may be designated from time to time. These stamps may. be used to
•^accumulate credits for the purchase of war savings borids. Albums, for affixing
the stamps, will be available without charge, and such albums will be receivable,
in theamount of the affixed stamps,-on the. purchase price of war savings bonds.
Defense Postal Savings stamps heretofore issued are included in the term war
savings stanips and no distinction is to be made between any such stamps whether
issued as .d.efense Postal Savirigs stamps or as war savings stamps, and the stamps
pf either issue may be. used interchangeably as credits for the purchase of war
sa.y.ings bonds.
^
. . ,.
4. ISSUE PRICES.—The issue prices of the various denominations of bonds of
Series E follow:
,
•
Denomination ^ (maturity.
value)_„-_--_
_.. $25.00 $50.00 $100.00 $500.00 $1,000.00
Issue (purchase) price_-_.
18. 75 37. 50
75. 00 375. 00
750. 00
1 Additional denomination of $10. see supplement on p. 321.
2 For information concerning the taxable and exempt status under FederaKtax 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, R. A.
No. 1177, dated December 17, 1941. For credits on account of Victory tax, see Internal Revenue Regulation 103, sees. 19.463 and 19.454, as amended by Treasury Decision 6249.




3is

REPORT OF THE SECRETARY OF THE TRlEAStJRY ,
'

\ IV. LIMITATION ON HOLDINGS .

1. The amount of bonds of Series E originally issued during any one calendar
year to any one person that may be held by that person at any one time shall not
exceed $5,000 (maturity value), computed in accordance with the provisions of
the regulations- governing United States saYings bonds. If any person at any
time acquires savings bonds issued during any one calendar year in excess of the
pres'cribed amount, the amount of such excess should immediately be surrendered
for refund of the issue price.
- v . AUTHORIZED

FORMSj^OF^REGISTRATION

, 1. Bonds of Series E may be registered only in the names of natural persons
(that is, individuals), whether adults or minors, in their own right, as follows:
(1) in the name of one person; (2) in the names of two (but not more than two)
persons as coowners; and (3) in the name of one person payable on death to one
(but not more than one) other designated .person. Registration on original issues
and on authorized reissues, whether as owners, coowners, or designated beneficiaries, is restricted to residents of the United States (which for the purposes of
this section shall include the territories, insular possessions, and the Canal Zone),
citizens of the United States temporarily residing abroad, and to nonresident aliens
employed in the United States by the Federal Government br an agency thereof:
Provided, however. That on original issues of bonds, but not on reissues, a nonresident alien (not a citizen of an enemy nation) may be named as coowner or
designated, beneficiary, and Provided further, Th&t a nonresident alien, whether
owner, coowner, or beneficiary, succeeding to title on death of the owner, or succeeding, tp title upon the death of the surviving coowner or beneficiary will be
entitled only to request and receive payment either at or before maturity.
.2. Full information regarding authorized forms of registration and rights thereunder will be found in the regulations currently in force governing United States
savings bonds.
' VI. DELIVERY AND SAFEKEEPING OF BONDS OF SERIES E

1. Postmasters and other authorized issuing agents from whom bonds of Series
E may be purchased are authorized to deliver such bonds, duly inscribed and
dated, upon receipt of the issue price. Bonds not delivered in person and bonds
iss.ued against mail order applications will be delivered by mail at the risk and
expense of the United States, at the address given by the purchaser, but only
within the United States, its territories and insular possessions and the Canal
Zone.3 No mail deliveries elsewhere will be made. If purchased by citizens of
the United States temporarily residing abroad, bonds will be delivered at an
address in the United States, or held in safekeeping, as the purchaser naay direct.
Personail delivery should not be accepted by any purchaser until he has verified
that the correct name, or names, and address are duly inscribed, that the issue
date (the first day of the month in which payment of the issue price was received
by the agent) is duly entered, and that the dating stamp of the issuing agent is
duly imprinted with current date—all on the face of the bond. If received by
mail, the same verification should be made, and if any error in inscription or
dating appears, such fact should immediately be reported to the issuing agent,'
and instructions requested.
2. Savings bonds of Series E will be held in safekeeping without charge by the
Secretary of the Treasury if the holder so desires, and in such connection the
facilities of the Federal Reserve Banks,* as fiscal agents of the United States,
and those of the Treasurer of the United States, will be utilized. Arrangements
inay be made for such safekeeping at the time of purchase, or subsequently.
Postmasters generally will assist holders in arranging for safekeeping, but will
not act as safekeeping agents.
8 During the war emergency the Treasury may suspend deliveries to be made at its risk and expense from
or to the continental United States and its territories, insular possessions and the Canal Zone, or between
any of such places. Bonds will be delivered to any address within the place in which they are issued or, if
issued within the continental United States, will be held in safekeeping by the Federal Reserve Banks or
the Treasury, as the purchaser may direct.
,
< Safekeeping facilities may be offered at some branches of Federal Reserve Banks, and in such connection
an inquiry may be addressed to the branch.




REPORT OF THE SECRETARY OF THE TREASURY

319

VII. PAYMENT A T MATURITY OR REDEMPTION PRIOR TO MATURITY

1. GENERAL.—Any bond of Series E will be paid in full at maturity, or, at the
option of the pv^^ner, after 60 days from the issue date, will be redeemed in whole
or in part at the appropriate redemption value prior to maturity, following
presentation and surrender of the bond, with the request for payment properly
executed, all in accordance with the regulations governing savings bonds.
2. 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 paymerit 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.
3. OFFICERS AUTHORIZED TO WITNESS AND CERTIFY REQUESTS FOR PAY-

MENT.—The officers authorized to witness and certify requests for payment of
savings bonds are fully set forth in the regulations governing savings.bonds, and
include but are not limited to (1) United States postmasters and certain other
post office oflftcials or designated employees; (2) officers (or designated employees)
of all banks or trust companies incorporated in the United States or its organized
territories, including oflficers at domestic branches (within the United States or its
territories or insular possessions and the Canal Zone), or at foreign branches; (3)
officers of corporations and other organizations which are duly qualified as issuing
agents; and (4) in those cases specified in the regulations, commissioned oflficers
of the Army, Navy, Marine Corps, and Coast Guard. All certificates must be
authenticated by official seal, if there is orie, or, if by an issuing agent, by an
imprint of his dating stamp.
4. 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
Treasurer of the United States, Washington 25, D. C , 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.
5. DISABILITY OR DEATH.—In case of the disability of the registered ow^ner,
or the death of the registered owner not survived by a coowner or a designated
beneficiary i instructions should be obtained from a Federal Reserve Bank or
branch, or the Treasury Department, Division of Loans and Currency, Merchandise Mart, Chicago 54, Illinois, before the request for payment is executed.
6. METHOD OP PAYMENT.—The only agencies authorized to pay or redeem
savings bonds of Series E are the Treasiirer of the United States and the Federal
Reserve Banks and branches. Postmasters are not authorized to make payment, but generally they will assist owners in securing payment, at or before
maturity. 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.
7. PARTIAL REDEMPTION.—Partial redemption at current redemption value of
a savings bond of Series E of a denomination higher than $25 (maturity value) is
permitted, but must accord to an authorized lower 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. United States savings bonds of Series E, issued during the calendar year
1943 are designated Series E-1943, and those which may be issued in subsequent
calendar years will be similarly designated by the series letter E followed by the
year of issue.




320 /

REPORT OF THE SECRETARY OF THE TREASURY
IX. LOST, STOLEN, OR DESTROYED BONDS

1. If a bond of Series, E is. lost, stolen, or destroyed, a duplicate may be issued
on the owner furnishing a description of the bond and esta.blishirig its loss, theft,
or destruction. ,
' ,
2. In any case of the loss, theft, or destruction of a bond of Series E^the owner
should .give immediate notice to the Treasury. Department, Division of Loans
and Currency, Merchandise Mart, Chicago 54, Illinois, briefly stating the facts
and giving a description of the bond. On receipt of such nptice, full instructions
for procedure will be ^iven the owner.
,
-^
3. A descriptive, record of each bond.of Series E held should be .kept by the
owner,.apart from the bonds, so that a full description of the b'onds will be available, if they are lost, stolen, or destro3^ed. .The.recprd for each bond-should
show: (1) the denomination; (2) the serial, number (with its prefix and suffix
letter); (3) the inscription (name or names, and addres.s, pn the face of the bond);
and!(4). the issue date (month and year of issue).
.
- ;
•.
X. GENERAL PROVISIONS ,

'

1. All bonds of Series E, issued pursuant to this ciicular, shall be subject'to,
the regulations prescribed from time to time by the Secretary of the Treasury to
gafern United'States savings borids. Such reguratir)ris'may requireV .among
other things, reasonable notice in case of presentation of bonds of Seiies E. for
, redemption prior to maturity. The present regulations goverriing savings bonds
are set forth* in Treasury 'Department Circular No. 530, Fifth' Revision, as
amended, Copies of which may be obtairied on application to the Treasury Depiartment,.oi to any Federal Reserve Bank or branch.
2. The Secretary of the Treasury reserves the right to reject any application
for bonds of Series E,.in whole or in part, and to refuse to issue or ^erniit to be
issued hereunder any such bonds in any case or anyclass'or classes of cases if .he
deems such action to be in the public interest, and his action in any such respect
shall be
final.
' ..
'' •
3. Postmasters in charge pf post offices where.bonds of Series E are on sale,
under regulations promulgated by the Postmaster General, and Federal Reserve
Banks and branches, as fiscaL agents pf the United States, are authorized to perform such fiscal agency services'as may be requested of them by the Secretary pf
the Treasury in connection with the issue, delivery, safekeeping, redemption, and
payrhent of bonds of Series E. Issuing agencies qualified pursuant to Treasiiry
Department Circular No. 657, as amended or supplemented, will be subject to
the provisions of that circular.
•
4. The Secretary of the Treasuiy may at any time or from time to time supplement or amend the terms df this circular, or'Of any amendments or,supplerrients
thereto, iriformatiori as to which will be promptly furnished to the Postmaster
General and the Federal Reserve Banks and branches.
HENRY MORGENTHAU,

.

'




,

Jr.,

. I Secretary of the Treasury..

321

REPORT OF THE SECRETARY OF THE TREASURY
UNITED STATES SAVINGS BONDS

SERIES

E

Table of redemption values a n d investment yields ^
Table showing (1) How bonds of Scrips E, hy 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 halfyear period; and (3) the approximate investment yield on the current redemption value
from ihe beginning of each half-year period to maturity. Yields are expressed in
terms of rate percent per annum, compounded semiannually.
Maturity value
Issue price

$25.00
18.75

$50.00
37.50

$100.00
75.00

$500.00 $1.000.00
375. 00
750.00

(1) Redemption values during each half-year
period

Period after issue
date

(2)
Approximate
investment
yield on purchase price
from issue
date to beginning of
each halfyear period

$18.75
18. 75
18.87
19.00
19.12
19.25
19.50
19.75
20. 00
20.25
20. 50
20.75
21.00
21.50
22. 00
22.50
23.00
23.50
24.00
24.50

$37. 50
37.c50
37.75
38.00
38.25
38. 50
39. 00
39. 50
40.00
40.50
41.00
41.50
42.00
. 43. 00
44. 00
45.00
46.00
47.00
48.00
49.00

$75.00
75.00
75.50
76.00
76. 50
77.00
78.00
79.00
80.00
81.00
82.00
83.00
84. 00
86. 00
88.00
90.00
92.00
94.00
96.00
98. 00,

$375. 00
375. 00
377. 50
380. 00
.382.50
385.00
390. 00
395. 00
400. 00
405. 00
410. 00
415.00
420.00
430. 00
440. 00
450. 00
460. 00
470. 00
480. 00
490. 00

$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

Bercent
0.00
.00
.67
.88
.99
1.06
L31
L49
1.62
L72
/ L79
1.85
1.90
2.12
2.30
2.45
2.57
2. 67
2.76
. 2.84

' 25.00

First H year
H to 1 year...
I to IJ^ years
IH to 2 years
2 to 2H years
.
2H to 3 years
•
3 to 3H yearsi
3H to 4 years
4 to 4H years
4H to 5 years
5 to 5H years
1 .
5M to 6'vears
6 to 6H years
6H to 7 years .
7 to 7H years'7H to 8 years .
8 to 8H years
8H to 9 yearsi.
9 to 9H years
.._.
9}4 to 10 years.-.
Maturity , value (10
years from issue date).

50.00

100. 00

600. 00

1,000. 00

(3)
Approximate
investment
yield on current redemption value
from beginning of each
half-year
period to
maturity
Percent
2 2.90
3.05
3.15
3.25
3.38
3.62
3.68
3.66
3.75
3.87
4.01
4.18
4.41
4.36
4.31
• 4.26
4.21
4.17
4.12
4.08

2.90

> Additional denomination of $10. see supplement following.
2 Approximate investment yield for entire period from issuance to maturity. •
F I R S T S U P P L E M E N T , . J U N E 7, 1944, TO D E P A R T M E N T CIRCULAR N O . 653
TREASURY

DEPARTMENT,'

Washington, J u n e 7, 1944D e p a r t m e n t Circular No. 653, Second Revision, dated August 3 1 , 1943, fixing
t h e t e r m s and governing t h e issiie of United States savings bonds of Series E,
currently designated war savings bonds, is hereby supplemented, as follows:
' 1. An additional denomination of $10 (maturity value) is hereby authorized,
t h e issue price of which will be $7.50: Provided, t h e bonds of this denomination
m a y be purchased only by persons in t h e military a n d naval forces of t h e United
States, under such conditions as m a y be prescribed and through such agencies as
m a y be provided within their respective establishinerits by t h e Secretary of War
a n d t h e Secretary of t h e N a v y , a n d Prdvided further, t h a t on original issue t h e
bonds of this denomination shall be registered only in t h e n a m e of any such
person either alone or with any other person added as coowner or designated
beneficiary as provided by regulation.
2. The bonds of this denomination m a y not be obtained on partial redemption
of bonds of a higher denomination; and except for restrictions on purchase and
issue, t h e terms of bonds in t h e denomination of $10 now authorized and t h e conditions of their issue and provisions for their redemption shall conform t o those
of bonds of Series E of other denominations authorized by said Circular No. 653,
Second Revision.
H E N R Y MORGENTHAU,

Jr.,

Secretary of the Treasury.
618185—45-

-22




322

REPORT OF THE SECRETARY OF THE TREASURY

Table of redemption values showing how bonds of Series E in the denomination of
$10 (maturity value) increase in redemption value during successive half-year
^periods following issue:
Issue price, $7.50
Period after issue date:
F i r s t s year
>^ to 1 year
1 to 13^ years
.IH to 2years
2 to 2M years2K to 3 years3 to 31^ years..
, 33^ to 4 years
4 to 4H years
' 4K to 5 years

Redemption
value during
. . period
Period after issue date:
$7.50
5to5>^years
7. 50
6M to 6 years
7.55
6 to 6M years
: 7.60
63^ to 7 years
7.65
7 to 73^ years

_.
-.-..-1

7.70
7.80
7.90
8.00
8.10

7H to 8 years
8 to 8M years
8H to 9 years
9 to 93^ years
93^ to 10 years

Redemption.
value during
period
$8.20
8.30
8.40
8.60.
8.80

-

-

-

-..-

9.00
9.20
9.40
9.60
-..'.. 9.80

At maturity (10 years from issue date), $10

Exhibit 27
Second Revision and amendment. Department Circular No. 654, relative to United
States savings bonds of Series F and Series G .
SECOND REVISION, JANUARY 1, 1944,

TO DEPARTMENT CIRCULAR N O . 654
TREASURY

DEPARTMENT,

Washington, January 1, 19441. OFFERING OF UNITED STATES SAVINGS BONDS OF SERIES F AND SERIES G.

• 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, United States savings bonds of Series F
and Series G, which may hereinafter be referred to as bonds of Series F and
Series G. Bonds of a new design, without change in terms, will be provided
for issue hereunder in regular course without further notice as stocks of the prior
bonds of Series F and Series G become exhausted. The sale of bonds of Series F
and Series G will continue until terminated by the Secretary of the Treasury.
2. United States savings bonds of Series F a n d Series G,include bonds of any
designation issued under this circular as originally published and amended, and
those issued under this circular as previously or as now revised. As their terms
are identical, no distinction is to be made between any bonds of Series F or Series
G so issued.
II. DESCRIPTION AND TERMS OF BONDS

1. Bonds of Series F and Series G will be issued only in registered form, in
denominations of $25 (for Series F only), $100, $500, $1,000, $5,000, and $10,000
(maturity -values), at prices hereinafter set forth. Each bond will bear the facsimile signature of the Secretary of the Treasury, and will bear an imprint in
color (brown for Series F and blue for Series G) of the Seal of the Treasury.
At-the time of issue, on the face of each bond, the issuing agent will inscribe the
name and address of the owner and the name of the, coowner or beneficiary, if
any, will enter the issue date (which is the first day of the month in which payment of the issue price is received by the Treasury or an authorized issuing agent),
and will imprint his dating stamp (to show the date the bond is actually inscribed).
Bonds of Series F and G shall be.valid only if duly inscribed and dated, as above
provided, and delivered by an authorized agent following receipt of payment
therefor.
2. The bonds of each series will, in each instance, be dated as of the first day
of the month in which payment of the issue price is received by an agent authorized to issue the bonds, which date is herein referred to as the issue date; the
bonds will mature and be payable at face value 12 yearS'from such issue date.
The issue date is the basis for determining the redemption or inaturity period
of the bond, and the date appearing in the issuirig agent's stamp should not be
confused therewith. The bonds of either series may not be called for redemption




REPORT OF THE SECRETARY OF THE TREASURY

. 323

by the Secretary of the Treasury prior to maturity, but they may be redeemed
prior to maturity, after 6 months from the issue date, at the owner's option, at
fixed redemption values.
3. Bonds of Series F will be issued on a discount basis at 74 percent pf their
maturity value. No interest as such will be paid on the bonds, but they will
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 face amount becomes payable. The increment in value will be payable only
upon redemption of the bonds. A table of redemption values appear on each'
bond. The purchase price of bonds of Series F has been fixed so as to afford
an investment yield of about 2.53 percent per annum compoundeil semiannually
if the bonds are held to maturity; if the owner exercises his option to redeem a
bond prior to maturity the investment yield will be less.
4. Bonds of Series G will be issued at par, and will bear interest at the rate of
2 2 percent per annum, payable semiannually from issue date. Interest will be
Y^
paid by check drawn to the order of the registered owner. Interest will cease at
maturity, or, in case of redemption before maturity, at the end of the interest
period next preceding the date of redemption. A table of redemption values
appears on each bond, and the difference between the face amount of the bond and
the redemption value fixed for any period represents an adjustment (or refund) of
interest. Accordingly, if the owner exercises his option td redeem a bond prior
to maturity, the investment yield, will be less than the interest rate on the bond.
Bonds of Series G may be redeemed at par, in whole or inpart, (1) upon the death
of the owner, or a coowner, if a natural person, or-(2) as to bonds held by a trustee
or other fiduciary, upon the death of any person which results in termination of the
trust. If the trust is terminated only in part, redemption at par will be made only
to the extent of the pro rata portion of the trust so terminated, to the next lower
multiple of $100. In any case request for redemption at par must be received by
the Treasury Department, Division of Loans and Currency, Merchandise Mart,
Chicago 54, 111., or by a Federal Reserve Bank or branch within 4 months after
the date of death and in accordance with the regulations governing savings bonds.
5. Tables at the end of this circular show separately for bonds of Series F and
those of Series G: (1) The redemption values, by denominations, during the successive half-year periods following issue, (2) the approximate investment yield
on the issue 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 at the end of the 12-year period.
6. Bonds of Series F and Series G will not be transferable, and will be payable
only to the owner named thereon, except in case of death or disability of the
owner or as otherwise specifically provided in the regulations governing savings
bonds, and in any event only in accordance with said regulations. Accordingly
they may not be sold, discounted, hypothecated as collateral for a loan or the performance of a service, or disposed of in any manner other than as provided in the
regulations governing pavings bonds, and, except as provided in said regulations,
the Treasury Department will recognize only the inscribed owner, during his lifetiriae and competency, and thereafter his estate or heirs.
7. Taxation.—For the purpose of determining taxes and tax exemptions, the
increment in value represented by the difference between the price paid for bonds
of Series F (which are issued on a discount basis), and the rejlemption value received therefor (whether at or before maturity) shall be considered as interest, and
that interest and interest on bonds of Series Gy are not exempt from income or
profits taxes now or hereafter iniposed by the United States.^ 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 iniposed on the principal
or interest thereof by any State, or any of the possessions of the United States,
or by any local taxing authority.
i n . PURCHASE OF BONDS

^. 1. Agencies.—^on&B. of Series F and Series G may be purchased, while this offer
is in effect, upon application to any Federal Reserve Bank or branch, pr to the
Treasurer of the United States, Washington 25, D. C. Sales agencies, duly qualified under the provisions of Treasury Department Circular No. 657, as amended
^ 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 F), and
alternate methods of reporting such interest, see Internal Revenue Mimeograph, Coll. No. 6299, R. A. No,.
1177, dated'December 17,1941. For credits on account of Victory tax, see Internal Revenue Regulations 103,
sees. 19.453 and 19.454, as amended by Treasury Decision 5249.
o




324

REPORT OF THE SECRETARY OF THE TREASURY

.and supplemented, and banking institutions generally, may submit applications
for account of customers, but only the Federal Reserve Banks and branches and
the Treasury Department are authorized to act as official agencies, and the receipt
of application a,nd payment at an official agency will govern the dating of the bonds
issued.
2. Payment for bonds.—Every application must be accompanied by payment
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 the order of the Federal Reserve Bank or the Treasurer of the United
States, as the case may be. Checks payable by endorsement are not acceptable.
Any depositary qualified pursuant to the provisions of Treasury Department
Circular No.. 92 (Revised) with be permitted to make payment by,,credit for bonds
applied for on behalf of 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.
3. Postal savings.—Subject to regulations,prescribed by the Board of Trustees
of the Postal Savings System, the withdrawal of postal savings deposits will be
permitted for the purpose of acquiring savings bonds.
. 4. Form 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, and there
must be furnished: (1) Instructions for registration of the bonds to be issued,
which must be in orie of the authorized forms (see sec. V); (2) the post office
address of the owner; (3) address for delivery of the bonds; and (4), in case of
bonds of Series G, address for mailing interest checks. The use of an official
application form is desirable, but not necessary. The application should be
forwarded to the Federal Reserve Bank, or branch, of the district, or to the Treasurer of the United States, accompanied by remittance to cover the purchase price
($74 for each $100 face amount of bonds of Series F, or $100 for each $100 face
amount of bonds of Series G).
5. Issue prices —The issue prices of the various denominations of bonds of
Series F and Series G follpw:
SEBIES

Denomination (maturity value) - _
Issue (purchase) price

$25.00
18.50

$100
74

$500
370

$1,000
740

$5,000
3,700

$in,000
7,400

$100
100

$500
600

$1,000
1,000

$6,000
6,000

$10,000
10,000

SERIES Q

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): Provided, however, That as to bonds of these series originally issued
on or after January 1, 1944, the amount held by a commercial bank having savings
deposits as defined in Regulation Q of the Board of Governors of the Federal
Reserve System shall not in any case exceed $100,000 (issue price) or 10 percent
of such savings deposits as shown on the bank's books as of the date of the most
recent call statement required by the supervising authorities prior to the date of
acquisition of such savings bonds, whichever is less; and Provided further. That
the amount of savings bonds of Series F and Series G originally issued on or after
January 1, 1944, held by a commercial bank together with 2}^ percent Treasury
bonds of 1965-70, to be issued under Treasury Department Circular No. 729, and
2YA percent Treasury bonds of 1956-59, to be issued under Treasury Department
Circular No. 730, shall not exceed in the aggregate $200,000 or 10 percent of the
savings deposits of such bank as above defined, whichever is less.^
2. Any bonds acquired on original issue which create an excess must immediately
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 only
in one of the following forms:
» Amended" June 12,1944, see p. 329.




REPORT OF THE SECRETARY OF THE TREASURY

325

(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;. (6) 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 that they may not be registered in the names of commercial banks which
are defined for this purpose as those accepting demand deposits: Provided, however, That bonds originally issued on or after January 1, 1944, may be registered
in the name of a commercial bank having savings deposits to the extent and under
the coriditions set forth in section IV hereof.2
^
(3) In the name of a fiduciary (except where the fiduciary would hold the bonds
merely Or principally as security for the performance of a duty or obligation).
(4) In the name of the owner or custodian of public funds.
2. Restrictions.—Registration on original issues and authorized reissues, whether
as owners, coowners, or designated beneficiaries, is restricted to residents (whether
individuals or others) of the United States (which for the purposes of this section
shall include the territories, insular possessions and the Canal Zone), citizens of the
United States temporarily residing abroad, and to nonresident aliens employed in
the United States by the Federal Government or an agency thereof: Provided,
how ever, Thdii on original issues but not on reissues, a nonresident alien (not a
citizen of an enemy nation) may be named as coowner or designated beneficiary;
and Provided further, That a nonresident alien, whether owner, coowner or beneficiary, succeeding to title on death of the owner, or succeeding to title upon the
death of the surviving coowner or beneficiary will be entitled only to request and
receive payment either at or before rnaturity and will not be entitled to reissue.
3. Full information regarding authorized forms of registration will be found in
the regulations currently in force governing United States savings bonds.
VI. DELIVERY AND SAFEKEEPING-OF BONDS

'

1. Federal Reserve Banks and branches and the Treasurer of the United States
are authorized to deliver bonds of Series F and Series G, duly inscribed and dated,
upon receipt of the issue price. Bonds not dehvered in person will be delivered
by mail at the risk and expense of the United States, at the address given by the
purchaser, but only within the United States, its territories and insular possessions
and the Canal Zone.^ No mail dehveries elsewhere will be made. If purchased
by citizens of the United States temporarily residing abroad, bonds will be de^
livered at an address in the United States, or held in safekeeping, as the purchaser
may direct. Personal delivery should not be accepted by any purchaser until he
has verified that the correct name, or names, and address are duly inscribed, that
the issue date (the first day of the month in which payment of the issue price was
received by the agent) is,duly entered, and that-^the dating stamp of the issuing
agent is duly imprinted with current date—all on the face of the bond. If received by mail, the same verification shpuld be made, and if any error in inscriptiori
or dating appears, such fact should immediately be reported to the issuing agent,
and instructions requested.
2. Savings bonds of Series F and Series G will be held in safekeeping without
charge by the Secretary of the Treasury if the holder so desires, and in such connection the facilities of the Federal Reserve Banks,^ as fiscal agents of the United '
States, and those of the Treasurer of the United States, will be utilized. Arrangements may be made for such safekeeping at the time of purchase, or subsequently.
VII. PAYMENT AT MATURITY OR REDEMPTION PRIOR TO MATURITY

..

1. General.—kny 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 1 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
2 Amended June 12,1944, see p. 329.
.
. 3 During the war emergency the Treasury may suspend deliveries to be made at its risk and expense from
br to the continental United States and its territories, insular possessions and the Canal Zone, or between
any of such places.
* Safekeeping facilities may be offered at some branches of Federal Reserve Banks, and in such connection
an inquiry may be addressed to the branch.




326

REPORT OF THE SECRETARY OF THE TREASURY

Department, Division of Loans and Currency, Merchandise Mart, Chicago 54,
111., not less than 1 calendar month in advance. A duly executed request for payment vyill 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 oflScers authorized by the Secretary of the Treasury to witness
and certify requests for payment, establish his identity, and in the presence of such
officef sign, the request for payment, adding the address to which the check is to be mailed. After the request for payment has been so signed, the witnessing oflScer
should complete and sign the certificate provided for his use. Unless otherwise
authorized iri 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.—Th6 ofiicers
authorized to witness and certify requests for payment of savings bonds are fully
set forth in the regulations governing savings bonds, and include but, are not
limited to (1) United States postmasters and certain other post office officials or
designated employees; and (2) officers (or designated employees) of all banks Or
trust companies incorporated in the United States or its Organized territories,
including officers at domestic branches (within the United States or ii-s territories
or insular possessions and the Canal Zone) ,.or at foreign branches. All certificates
should be authenticated by official seal, if there is one, or by an imprint of an
issuing agent's dating stamp.
.,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
Department, Division of Loans and Currency, Merchandise Mart, Chicago 54,
UL, 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 a Federal Reserve Bank or branch,
or the Treasury Department, Division of Loans and Currency, Merchandise
Mart, Chicago 54, 111., 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 branches, and the Treasurer of the
United States. 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 red..m.ption.— 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.
- V I I I . SERIES DESIGNATION

1. Bonds of Series F, issued during the calendar year 1944 are designated
Series F-1944, and those of, Series G are similarly designated Series .G-1944,
and those of either series which may be issued in subsequent calendar years will
be siriailarly designated by the series letter, F or G, fpllowed by the yeQ,T of issue.
IX. LOST, STOLEN, OR DESTROYED BONDS

1. If a bond of Series F or Series G is lost, stolen, or destroyed, a duplicate .
may be issued on the owner furnishing a desciiption of the bond and establishing
its loss, theft, or destruction.
2. In any case of the loss, theft, or destruction of a bond of Series F or Series
G, the owner should give immediate notice to the Treasury Department, Division
of Loans and Currency, Merchandise Man, Chicago 54, 111., briefly stating the
facts arid giving a description of the bond. On receipt of such notice, full instructions for procedure will be given the owner.
3.. A descriptive record of each bond of Series F or Seiies G held should be
kept by the owner, apart from the bonds, so that a full description of the bonds
will be available if they are lost, stolen, or destroyed. The record for each bond
should show: (1) the. denomination; (2) the serial number (with its prefix and
suffix letters); (3) the inscription (name pr names, and address, on the face bf
the bond); and (4) the issue date (month and year of issue).




327

EEPORT OF THE SECRETARY OF THE TREASURY
X. 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 gov^
erning savings bonds are set forth in Treasury Department Circular No. 530,
Fifth Revision, as amended, copies of which may be obtained on application to
the Treasury Department or to any Federal Reserve Bank or branch.
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 aiiy such savings bonds in any case or
any class or classes of cases if he deems such action to be in the public interest,
and his action in any such respect shall be final.
3. Federal Reserve Banks and branches, as fiscal 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 and branches.
•

.

. HENRY MORGENTHAU,

Jr.,

Secretary of ihe Treasury,
UNITED STATES 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.
Maturity value..
Issueprice

Period after issue date

$5,000 $10, 000 (2) Approxi- (3) Approxi7,400 mate invest- mate invest3,700
ment yield on ment yield on
purchase ' current redemption
price from
value from
issue date to beginning of
(1) Redemption values during each half-year period beginning of each half-year
each half-year period to
period
maturity
$25.00 $100.00 $500.00
74.00 370. 00
18.60

Not redeemable.
First H year
$18. 50 $74.00 $370. 00
H to 1 year
18.66
74.20 371.00
1 to IH y e a r s . . . . . . .
18.62 74.50 372. 50
IH to 2 years
18.72 74.90 374. 60
2 to 2H years..
18.86
76.40 377.00
2H to 3 years
76.00- 380.00
19.00
3 to 3H years
76.70 383. 50
19.17
3H to 4 years
19.40 77.60 388.00
4 to 4H years
78.60 393.00
19.66
i}4 to 6 years....
79.70 398. 50
19.92
5 to 6H years
20.22 80.90 404. 50
5H to 6 years
6 to 6H years
.
. . . . 20.66 82.20 411.00
20.87 83.50 417. 50
6H to 7 years
.
7 to 73^ years
'....... 21. 20 84.80 424.00
1)4 to 8 years
^.... 21.62 86.10 430. 50
2L86 • 87. 40 437.00
8 to 8H years
22.17 88.70 443. 50
8H to 9 years
90.00 450. 00
22.60
9 to 9H years.
22.85 91.40 457.00
9H to 10 years
23.22 92.90 464. 50
10 to lOM years
lOH to 11 years.'....!
23.62 94.50 472. 50
11 to l l H years
24.05 96.20 481.00
l l H t o 12 y e a r s . - . . . . . . . . 24.50 98.00 490.00
Maturity value (12 years
25.00 100.00 500.00
from issue date)

$1,000
740

$740

$3, 700
742 • 3,710
745 3,726
749 3,745
764 3, 770
760 3,800
767 3,836
776 3,880
786 3, 930.
797 3,986
809 .4,046
822 4,110
836 = 4,176
848 4,240
861 4,305
874 4,370
887 4,435
900 4,500
914 4,570
929 4,645
946 4,726
962 4,810
980 , 4,900

1,000

6,000

$7,400
7,420
7,460
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

0.00
.27
.46
.61
.76
.89
L03
1.19
L34
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

10,000

2.53

' Approximate investment yield for entire period from issuance to maturity.




Percent
12.53
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
3.64
3.63
3.72
3.81
3.91
4.08

328

REPORT OF THE SECRETARY OF THE TREASURY
UNITED STATES SAVINGS BONDS—SERIES G

Table of redemption values and investment yields
Table showing: (1) How UnitedStates savings bonds of Series G (paying a current
return at the rate of 2}i percent per annum on ihe purchase price, payable semiannually) change in redemption value, by denominations, during successive half'
year periods following issue; (2) ihe approximMe investment yield on ihe purchase
price from issue date to ihe beginning of each half-year period; and (3) the approxi-^
mate investment yield-on the current redemption value from, ihe beginning of each
half-year period io maturity. Yields are expressed iri terms of rate percent per
annum, compounded semiannually, and take into account ihe current return. ,
Maturity value:.
Issueprice-

Period after issue date

$10, 000
(3) Approxi10,000 (2) Approxi- mate invest
mate invest- ment yield
ment yield
on current
on purchase redemption
price from
value from
issue date to beginning of
(1) Redemption values during each half-year
beginning of
each halfperiod
each halfyear period
year period to maturity

$100. 00
100. 00

$600. 00
600. 00

Not redeemable-.
First H year:
$98.80 1 $494.00
^-2 to 1 year
97.80
489. 00
1 to IH years
....
96.90
484.50
IH to 2 years.w
96.20
481. 00
2 to 2yi years
95.60
478. 00
23^ to 3 years...95.10
476. 60
•3 to 33^ years..
94.80
474. 00
33^ to 4 years.
94.70
473.60
. 4 to 43^ years
.......
94.70
473. 60
43^ to 5 years
"...
' 94. 90
474. 50
6 to 53^ years
96.20
476. 00
63^ to 6 years
95. 60 , A l l . 50
6 to 63^ years.95.80
479.00
63^ to 7 years
96.10
480. 50
7 to 7H years
'
96.40
482. 00
73^ to 8 years
96.70
483. 60
8 to 83^ years
97. 00
485. 00
83^ to 9 years
97.30
486. 50
9 to 93^ y e a r s . . . . . . . . . . .
97.60
488. 00
93^ to 10 years
97.90
489..50
10 to lOH years491. 00
, 98.20
lOH to 11 years
493. 00
98. 60
11 to 1134 years
...
99.20
496. 00
113^ to 12 years.
Maturity value (12
500.00 '
100.00
years from issue date),.

$1, 000
1,000

$5, 000
5,000

$988

$4, 940
4.890
4,845
4,810
4, 780
4.766
4,740
4,736
4. 736
4,746
4,760
4,775
4,790
4,805
4,820
4, 835
4,850
4,865
4,880
4,895
4, 910
4, 930
4,960

$9.880
9.780
9,690
9.620
9,560
9. 510
9.480
9,'470
9.470
9,490
9.520
9, 650
9,580
9,610
9,640
9.670
9,700
9, 730
9,760
9,790
9,820
9,860
9,920

1.79
L89
1.98
2.05
2.12
2. 18
2.23
2.27
2.31
2.36
2.39
2.44

6,000

10, 000

2.50

Percent
978
969
962
956
951
948
947
947
949
962
965
958
961
964
967
970
973
976
979
982
986
992
1,000

0.10
.30
.44
.61
.76
.88
1.04
1.20
1.36
L61
1.66

Percent
12.60
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
3.36
3.37
3.39
3.42
3.46
3.61
3.60
3.76
3.94
4.13

^ Approximate investment yield for entire period from issuance to maturity.
^

OTHER SERIES

United States savings bonds of Series E are also offered for sale concurrently
with those of Series F and Series G. They are intended primarily for the investment of small or moderate amounts saved from current income by individuals,
and their issue is restricted to individuals in their own right, with the amoimt
originally issued to any one person during any pne calendar year that that person
may hold limited to $5,000 (maturity value). Full particulars regarding savings
bonds of Series E are set forth in Treasury Department Circular No. 653, Second
Revision,^ dated August 31, 1943, copies of which may be obtained from the
Treasury Department, Washington, or from any Federal Reserve Bank or branch.
8 Department Circular No. 653, Second Revision, appears on p. 316.




REPORT OF T H E SECRETARY OF T H E TREASURY
F I R S T A M E N D M E N T , J U N E 12, 1944,

329

TO D E P A R T M E N T C I R C U L A R N O . 654,
REVISION

SECOND

TREASURY DEPARTMENT,

^
Washington, J u n e 12, 1944Section IV, p a r a g r a p h 1, a n d section V, palragraph 1 (2), of D e p a r t m e n t Circular Np. 654, Second Revision, dated J a n u a r y 1, 1944, are hereby amended to
read as follows:
/
IV. LIMITATION ON HOLDINGS

1. T h e a m o u n t of United States savings bonds of Series F , or of Series G, or
the combined aggregate a m o u n t of both series, originally issued during any one
calendar year to any one .person, including those registered in t h e . n a m e of t h a t
person alone, and those registered in the name of t h a t person with another named ,
as,coowner, t h a t m a y be held by t h a t person at any one time shall n o t exceed
$100,000 (issue price): Provided, however, T h a t as to bonds of these series originally issued pn or after J a n u a r y 1, 1944, the a m o u n t held by a commercial b a n k
holding savings deposits or issuing time certificates of deposit (as each is defined
in Regulation Q of the Board of Governors of the Federal Reserve System) shall
not in any case exceed $100,000 (issue price) or 20 percent of the combined a m o u n t
of such time certificates of deposit (but only those issued in the riames of individuals and of corporations, associations, and other organizations not operated for
profit) a n d savings deposits as shown on the bank's books as of the date of the
most recent call statemerit required by the supervising authorities prior to the
date of subscription for such savings bonds, whichever is less; and Previewed
further, T h a t the a m o u n t of savings bonds of Series F and Series G, issued on or
after J a n u a r y 1, 1944, held by a commercial bank, together with 2H percent
Treasury bonds of 1965-70 subscribed for under D e p a r t m e n t Circulars Nos. 729
a n d 740, 2)4 percent Treasury bonds of 1956-59, subscribed for under D e p a r t m e n t Circular No. 730, and 2 percent Treasury bonds of 1952-54, subscribed for
u n d e r T r e a s u i y D e p a r t m e n t Circular No. 741, shall not exceed in the aggregate
20 percent of the combined a m o u n t of such savings deposits and time certificates
of deposits of such bank or $400,000, whichever is less. No such bank shall hold
more t h a n $100,000 (issue price) of Series F and Series G savings bonds (Series
1944) combined.
V. AUTHORIZED FORMS OF REGISTRATION

1. United States savings bonds of Series F and Series G m a y be registered only
in one of t h e following forms:
. •
(2) In the name of an incorporated or unincorporated body, in its own right,
except t h a t they m a y not be registered in the names of commercial banks which
are defined for this purpose as those accepting demand deposits: Provided, how^
ever, Thsbt bonds originally issued on or after J a n u a r y 1, 1944, m a y be registered
in the n a m e of a commercial bank holding savings deposits or issuing time cer
tificates of deposit to the extent a n d conditions set forth in section IV hereof.
D.

W.

BELL,

Acting Secretary of ihe Treasury.

Exhibit 28
Amendments to Department Circidar No. 530, Fifth Revision, prescribing regula-'
tions governing United States savings bonds
SECOND A M E N D M E N T , J U N E 17, 1943 ( I N C L U D E S F I R S T A M E N D M E N T , N o v .
1942) TO D E P A R T M E N T C I R C U L A R N O . 530, F I F T H R E V I S I O N
'

.

^

23,

TREASURY DEPARTMENT,

Washington, J u n e 17, 1943.
NOTE.—This is a cumulative amendment to Department Circular No. 530, Fifth Revision. It includes
all amendments now or heretofore made to that revision. Section 315.10,,as amended by the First Amendment, which is now in force unchanged, is printed herein in order that this cumulative amendment may
be complete.

To d o n e r s of United States Savings Bonds, and Others Concerned:
Sections 315.2, 315.'3, 315.20 (b), 3,15.25, 315.26, 315.27, 315.32, 315.36, 315.37,
315.52, and 315.65 of D e p a r t m e n t Circular.No. 530, Fifth Revision, d a t e d J u n e
1, 1942 (7 F . R. 5158), are hereby revised to read as hereinafter set forth; sections



330

REPORT OF THE SECRETARY OF THE TREASURY

315.29 and 315.35 of said circular, as amended by the First Amendment dated
November 23, 1942 (7 F. R. 9772), are hereby further amended to read as hereinafter, set forth:
"SEC. 315.2. General.—United States savings bonds will be issued only in
registered form. The name and comolete post oflftce address of the owner, as
. well as the name of the coowner or designated beneficiary, if any, and the date
as of which, the bond is issued will be inscribed thereon at the time of issue by an
authorized issuing agent.^ The form of registration used must express the actual
ownership of and interest ih the bond and, except as otherwise specifically provided/in these regulations, will be considered as conclusive of such ownership
and interest. The Treasury Department can recognize no notices of adverse
claims to savings bonds and will enter no stoppages or caveats against payment
in accordance with the registration of the bonds, No designation of an attornej^
agent or other representative to request or receive payment on behalf of the
owner, nor any restriction on the right of such owner to receive payment of the
bond, other than as provided in these regulations, may be made in the registration or otherwise."
,
**SEC. 315.3. Restrictions.—Only residents (whether individuals or others) of
the United States (which for the purposes of this section shall include the territories, insular possessions and Canal Zone), citizens of the United States temporarily residing abroad, and nonresident aliens employed in the United States by
the Federal Government or ari agenc}^ thereof, may be named as owners, coowners or designated beneficiaries on bonds originally issued on or after April 1,
1940, or on authorized reissues thereof: Provided, however. That on original
issues of bonds, but not on reissues, a nonresident alien (not a citizen of an enemy
nation) may be named as coowner or designated beneficiary, and Provided further,
That a nonresident alien, whether owner,. coowner or beneficiary succeeding to
title on the death of the owner, or succeeding to title upon the death of a surviving
coowner or beneficiary, will be entitled only to request and receive payment
either at or before maturity." ^
"SEC. 315.10. Calculation of, amount.—In computing the amount of savings
bonds of any one series issued during any one calendar year held by any one
person at any one time for the purpose of determining whether the amount is in
excess of the^ authorized limit 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,
individually and in a fiduciary capacity, shall be computed separately.
"(6) 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, thecomputation shall be based uppn issue prices.
"(c) There must be taken intp account: (1) all bonds originally issued tp and
registered in the name of that person alone; (2) all bonds originally issued to and
registered in the name pf that person as a coowner or reissued to add his name
as coowner under thejprovisions of section 315.29 (a), or to designate him as
coowner instead of as a beneficiary under the provisions of section 315.35 hereof:
Provided, however. That with respect to bonds of Series E held in coownership
form, the amount thereof may be applied to the holdings of either of the coowners,
• but will not be applied to both, or the arnount may b