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Annual Report
of th«

Secretary of the Treasury
on the

State of the Finances
For the Fiscal Year Ended June 30, 1952

Digitized
%> for FRASER

TREASURY DEPARTMENT
DOCUMENT NO. 3180
Secretary

UNITED

STATES G O V E R N M E N T

PRINTING

O F F I C E , WASHINGTON

: 1953

For sale by Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C*
Price $2.00 (Paper)

CONTENTS
Page

Statement by the Secretary of the Treasury summarizing Treasury activities since June 25, 1946

SUMMARY OF FISCAL OPERATIONS..
Summary for 1952
Budget receipts and expenditures
^
Budget receipts in 1952
.
Estimates of receipts in 1953 and 1954
.
Budget expenditures in 1952
_.-_--Estimates of expenditures in 1953 and 1954
Trust account and other transactions
.-General fund
1
Public debt operations and ownership of Federal securities
.
Public debt operations
Ownership of Federal securities
Corporations and certain other business-type activities of he Government
.
Securities owned by the United States Government

45
47
47
52
59
6263
63
64
66
79
84
86

INTERNATIONAL FINANCIAL AND MONJETARY DEVELOPMENTS
Summary for 1952

89
ADMINISTRATIVE REPORTS

Comptroller of the Currency, Bureau of the
Customs, Bureau of.
Engraving and Printing, Bureau of
Fiscal Service
Internal Revenue, Bureau of
International Finance, Office of
.
Legal Division
1
Mint, Bureau ofthe
Narcotics, Bureau of
Practice, Committee on
Tax Advisory Staff of the Secretary
Technical Staff, Office of the.._.•._._
United States Coast Guard.'.
United States Savings Bonds Division
United States Secret Service

.
...

._.._
.

.
.
.
.

.
.
.

.
.

' 99
101
114
126
153
162
164
164
170
172.
174
175
176
190
192

EXHIBITS
SUMMARY OF TREASURY ACTIVITIES SINCE JUNE 25, 1946

1. Appendixes A through D
A. Management of the public debt-.:
.
B. Report to the taxpayers on improvements and reorganization of
• the Bureau of Internal Revenue
.
C. Objectives of United States foreign financial policy and programs.
undertaken in carrying out such policies..
D. Improvements and changes in working operations of the Treasury
Department
,..

. . . . .

199
199
200
218
236

JJJ . . .

CONTENTS
PUBLIC DEBT OPERATIONS

Treasury certificates of indebtedness and Treasury bonds
Page

2. Offering of 1% percent certificates of Series B-1952
3. Details of certificate issues and allotments
..
4. Call, August 14, 1951, for redemption on December 15, 1951, of 2}^
percent Treasury bonds of 1951-53, dated December 22, 1939
(press release of August 14, 1951)
.
.-.
5. Cah, November 14, 1951, for redemption on March 15, 1952, of 2}^
percent Treasury bonds of 1952-54, dated March 31, 1941 (press
release of November 14, 1951)
6. Offering of 2% percent Treasury bonds of 1957-59 and allotments
7. Offering of 2% percent Treasury bonds of 1958

255
256
258
258
259
261

Treasury bills
8. Inviting tenders for Treasury bills dated September 13, 1951 (press
release of September 6, 1951)
9. Acceptance of tenders for Treasury bills dated September 13, 1951
(press release of September 11, 1951)
10. Inviting tenders for the Tax Anticipation Series of Treasury bills
dated October 23, 1951 (press release of October 11, 1951)
11. Acceptance of tenders for the Tax Anticipation Series of Treasury
bills dated October 23, 1951 (press release of October 18, 1951)__..
12. Summary of Treasury bill information contained in press releases-.
13. Sixth amendment, May 13, 1952, to Department Circular No. 418,
relating to the issue and sale of Treasury bills
.

262
263
264
265
265
268

Treasury bonds, investment series
14. Offering of additional issue of 2% percent Treasury Bonds, Investment
Series B-1975-80, and allotments

268

United States savings bonds
15. First amendment, January 9, 19h2, to Department Circular No. 885,
clarifying the extended maturity value of Series E United States
. savings b o n d s . .
16. Ninth amendment, January 18, 1952, to Department Circular No.
530, broadening the conditions under which savings bonds registered
in the names of two individuals as coowners may be reissued
17. Tenth amendment, April 29, 1952, to Department Circular No. 530,
regulations governing United States savings bonds
18. Third revision, Aprh 29, 1952, of Department Circular No. 653,
offering of Series E United Stabes savings bonds
19. Offering of Series J and Series K United States savings bonds
20. Seventh revision, May 21, 1952, of Department Circular No. 530,
regulations governing United States savings bonds
._
21. Offering of Series H United States savings bonds

272
273
274
275
283
290
310

OBLIGATIONS GUARANTEED BY THE UNITED STATES

22. Partial redemption, before maturity, of 2)4 percent war housing insurance fund debentures (ninth call)
23. Summary of information contained in circulars pertaining to calls
for partial redemption, before maturity, of insurance fund debentures.
1

315
317

PUBLIC DEBT MANAGEMENT

24. Statement by Secretary of the Treasury Snyder before the Subcommittee on General Credit Control and Debt Management of the Joint
Committee on the Economic Report, March 10, 1952.

319

TAXATION DEVELOPMENTS

25. MisceUaneous revenue legislation enacted during the Eighty-second
Congress
_
.

323

CONTENTS

•

INTERNATIONAL FINANCIAL AND MONETARY DEVELOPMENTS
Page

26. Report of activities of the National Advisory Council on International
Monetary and Financial Problems, April 1, 1951, to September 30,
1951....
27. Third Special Report on the operations and policies of the International Monetary Fund and the International Bank for Reconstruction and Development
28. Report of activities of the National Advisory Council on International
Monetary and Financial Problems, October 1, 1951, to March 31,
1952
.
29. Announcement, July 26, 1951, by Secretary of the Treasury. Snyder,
the Ambassador from Mexico, and the Subdirector of the Bank of
Mexico of the execution of a new Stabilization Agreement between
the United States and Mexico
.:
30. Statement, September 7, 1951, by the Treasury Department following
Secretary of the Treasury Snyder's meeting with the Chancellor of"
the Exchequer of the United Kingdom
.
31. Statement, September 20, 1951, by Secretary of the Treasury Snyder
at the conclusion of the Seventh Session of the North Atlantic
Treaty Council in Ottawa
32. Statement, November 28, 1951, by Secretary of the Treasury Snyder
upon adjournment of the Eighth Session of the North Atlantic •
(Jouncil in Rome
33. Stateinent, February 25, 1952, by Secretary of the Treasury Snyder
upon adjournment of the Ninth Session of the North Atlantic Council
in Lisbon
34. Address, April 4, 1952, by Secretary of the Treasury Snyder at ceremonies marking the third anniversary of the signing of the North
Atlantic T r e a t y . . . .
..
35. Remarks by Secretary of the Treasury Snyder in connection with the
presentation of the Annual Report of the International Fund,
September 4, 1952, in Mexico City
36. Statements relating to foreign assets control and Communist China..

327
362
381

454
454
454
455
455
456
457
460

SELECTED STATEMENTS BY THE SECRETARY OF THE TREASURY

37. Address by Secretary of the Treasury Snyder before the Army War
College Class, Carlisle Barracks, Pa., September 21, 1951
'
38. Address by Secretary of the Treasury Snyder before the National
Association of Supervisors of State Banks, St. Louis, Mo., September 27, 1951
39. Address by Secretary of the Treasury Snyder before a meeting of banking correspondents of the First National Exchange Bank, Roanoke,
Va., May 3, 1952
..
40. Address by Secretary of the Treasury Snyder before the Tennessee
State Exchange Clubs, Memphis, Tenn., June 13, 1952
41. Address by Secretary of the Treasury Snyder before a conference of
l^ew Jersey employers at Spring Lake, N. J., August 20, 1952

462
466
469
472
476

ORGANIZATION AND PROCEDURE

42. Treasury Department orders relating to organization and procedure..

478

MISCELLANEOUS

43. Treasury Department and General Accounting Office amendment,
December 21, 1951, to Joint Regulation No. 3 issued under the
Budget Accounting and Procedures Act of 1950
.
44. Joint regulation and departmental circulars pertaining to small purchases utilizing imprest funds
.
45. Letter of the Postrriaster General to the Secretary of the Treasury
certifying extraordinary expenditures contributing to the deficiencies
of postal revenues for the fiscal year 1952

488
489
498

TABLES
Explanation of bases used in t a b l e s . . . - - . .
Description of accounts through which Treasury operations are effected.-

501
503

CONTENTS
FISCAL OPERATIONS
Page

1. Summary of fiscal operatioris, 1932-52 and monthly 1952

506

RECEIPTS AND EXPENDITURES

2. Receipts and expenditures, 1789-1952
3. Budget receipts and expenditures, in detail, monthly for 1952 and
totals for 1951 and 1952
4. Trust account and other transactions, in detail, monthly for 1952 and
totals for 1951 and 1952
.
5. Budget receipts and expenditures by major classifications, 1944-52
6. Trust account and other transactions by major classifications, 1944-527. Internal revenue collections by tax sources, 1929-52
8. Customs collections and refunds, 1951 and 1952
^
9. Amounts deposited by the Federal Reserve Banks in the Treasury as
miscellaneous receipts representing interest charges on Federal Reserve notes, 1950-521
10. Postal receipts and expenditures, 1911-52

508
514
536
546
548
550
555
555
556

PUBLIC DEBT, GUARANTEED OBLIGATIONS, ETC.

Outstanding public debt, guaranteed obligations, etc.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.

Principal of the public debt, 1790-1952
...
Public debt and guaranteed obligations, June 30, 1934-52
Public debt, by security classes, June 30, 1942-52
....
Guaranteed obligations held outside the Treasury, classified by issuing Government corporations and other business-type activities,
June 30, 1942-52
.
.
Contingent liabilities, June 30, 1942-52
Maturity distribution of marketable, interest-bearing public debt and
guaranteed obligations, June 30, 1942-52
..
Summary of public debt and guaranteed obligations, by security
classes, June 30, 1952
'
Description of public debt issues outstanding June 30, 1952
•.
Description of guaranteed obligations held outside the Treasury, June
30, 1952
Description of contingent liabilities outstanding June 30, 1952
Statutory limitation on the public debt and guaranteed obligations,
June 30, 1952---

.55J.
"559'
560
562
563
563
564
566
580
582
583

Operations in the public debt, etc.
22. Public debt receipts and expenditures, by security classes, monthly for
1952 and totals for 1951 and 1952
23. Changes in public debt issues, 1952
^
24. Issues, maturities, and redemptioris of interest-bearing public debt securities, excluding special issues, July 1951-June 1952
25. Certificates of indebtedness, special series, issues and redemptions,
1952
26. Public debt increases and decreases, and balances in the general fund,
1916-52
27. Statutory debt retirements, 1918-52
28. Cumulative sinking fund, 1921-52
29. Transactions on account of the cumulative sinking fund, 1952

584
592
607
623
624
625
626
626

United States savings bonds and Treasury savings notes
30. Summary of sales and-redemptions of savings bonds by series, 1935-52
and monthly 1952
31. Sales and redemptions of Series E through K savings bonds by series,
1941-52 and monthly 1952
32. Sales of Series E through K savings bonds by denominations, 1941-52
and monthly 1952
•
33. Redemptions of Series E, F, and G savings bonds by denominations,
1941-52 and monthly 1952
34. Sales of Series E through K savings bonds by States, 1952 and cumulative

627
628
631
633
634

CONTENTS

VII
Page

35. Percent of savings bonds sold in each year redeemed through each
yearly period thereafter, by denominations. .
36. Sales and redemptions of Treasury savings notes, August 1941-June
1952
1
.
.

635
640

Interest on public debt and guaranteed obligations
37. Amount of interest-bearing public debt outstanding, the computed
annual interest charge, and the computed rate of interest, June 30,
1916-52, and at end of each month during 1952
.
38. Computed annual interest charge and computed annual interest rate
on the public debt by security classes, June 30, 1939-52
39. Interest on the pubhc debt becoming due and payable, by security
classes, 1949-52
.
.
.
.
40. Interest paid on the public debt and guaranteed obligations, by tax
status, 1934-52
.

641
642
644
645

Prices and yields of securities
41. Average yields of long-term Treasury bonds, by months, January 1930June 1952
*.
._
42. Prices and yields of marketable public debt issues, June 30, 1951 and
1952, and price ranges since first traded
,

646
647

GOLD, SILVER, AND GENERAL FUND ASSETS AND LIABILITIES

43. Assets andiiabilities ofthe Treasury, June 30, 1951 and 1952

6.49

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

44. Holdings of Federal securities by Government agencies and accounts,
June 30, 1942-52
.
45. Adjusted service certificate fund
46. Ainsworth Library fund, Walter Reed General Hospital
47. Alien property trust fund.48. Civil service retirement and disabihty fund--_
49. District of Columbia teachers' retirement and annuity fund—Assets
held by the Treasury Department
50. District of Columbia water fund^-Investments held, by the Treasury
Department
: ...
51. Assets held by the Treasury Department under relief and rehabilitation. Workmen's Compensation Act within the District of Columbia.
52. Federal old-age and survivors insurance trust fund
53. Foreign service retirement and disability fund
.
54. Library of Congress trust fund
^
...
55. Relief and rehabilitation. Longshoremen's and Harbor Workers' Compensation Act, as amended—Assets held by the Treasury Department
.
56. National Archives gift fund
:
57. National park trust fund
58. National service life insurance fund
59. Pershing Hah Memorial fund
....
.60. Public Health Service gift funds—Investments held by the Treasury
Department
.
'.
61. Railroad retirement account
62. Unemployment trust fund
63. U . S . Government life insurance fund—Investments
:
64. U. S. Nayal Academy general gift fund

650
652
653
653
654
656
656
657
657
659
660
662
662
663
664
665
665
666
667
670
670

CORPORATIONS AND CERTAIN OTHER BUSINESS-TYPE ACTIVITIES OF
THE GOVERNMENT

65. Borrowing power and outstanding issues of Government corporations
and certain other business-type activities whose obligations are
guaranteed by the United States or issued to the Secretary of the
Treasury, June 30, 1 9 5 2 - - . .
66. Treasury holdings of bonds and notes issued by Government corporations and other business-type activities, June 30, 1942-52 .

671
673

VIII

CONTENTS
Page

67. Description of Treasury holdings of bonds and notes issued by Government corporations and other business-type activities, June 30, 1952.
68. Transactions relating to Treasury holdings of bonds and notes issued
by Government corporations and other business-type activities,
1952.
69. Comparative statement of the combined net investment of the United
States with respect to Government corporations and certain other
assets and liabilities pertaining to business-type activities, June 30,
1943-52
-70. Balance sheets of Government corporations and certain other businesstype activities, June 30, 1952
71. Income and expense of Government corporations and certain other
business-type activities, 1952 .
72. Source and application of funds of Government corporations arid certain other business-type activities, 1952
73. Restoration of capital impairment of the Commodity Credit Corporation as of June 30, 1952
74. Reconstruction Finance Corporation notes canceled through June 30,
1951, and recoveries during 1952
75. Securities owned by the Government (other than World War I and
World War II foreign government obligations), June 30, 1952, and
changes during 1952
76. Capital stock of Federal home loan banks held on June 30, 1951, and
repayments on capital stock and dividends earned by the Treasury
during 1952-..*
.
.
77. Securities acquired under the Transportation Act of 192,0, or in exchange for securities so acquired by reason of subsequent railroad
reorganizations, and held by the Treasury and the Reconstruction
Finance Corporation, June 30, 1952
^
78. Dividends, interest, etc., received by the Treasury from Government
corporations and other enterprises, 1952
:

674
676

678
680
686
692
698
698
699
704

704
705

STOCK AND CIRCULATION OF MONEY IN THE UNITED STATES

79. Stock of money, money in the Treasury, in the Federal Reserve Banks,
and in circulation, by kinds, June 30, 1952
80. Stock of money, money in the Treasury, in the Federal Reserve Banks,
and in circulation, June 30, 1913-52
...I..
81. Stock of money, by kinds, June 30, 1913-52
82. Money in circulation, by kinds, June 30, 1913-52
.,
83. Paper currency issued and redeemed during 1952, and outstanding
June 30, 1952, by classes and denominations
.

706
708
709
710
711

CUSTOMS STATISTICS

84. Summary of customs collections and expenditures, 1952
.
85. Customs collections and payments, by districts, 1952
86. Values of dutiable and taxable imports for consumption and estimated
duties and taxes collected by tariff schedules, fiscal years 1951 and
1952
87. Value of dutiable imports and amounts of duties cohected at specific,
ad valorem, and compound rates, fiscal years 1938-52
88. Estimated customs duties, value of imports entered for consumption,
and ratio of duties to value of imports, calendar years 1942-51 and
monthly January 1951-June 1952
89. Estimated customs duties, value of dutiable imports, and ratio of
duties to value of imports, by tariff schedules, calendar years 1942-51
and monthly January 1951-June 1952
90. Value of dutiable imports and estimated duties collected, by
countries, 1951 and 1952
91. Number of entries of merchandise, 1951 and 1952
92. Vehicles and persons entering the United States, 1951 and 1952
93. Airplanes and airplane passengers entering the United States, 1951
and 1952
...
94. Drawback transactions, 1951 and 1952
95. Principal commodities on which drawback was paid, 1951 and 1952..
96. Seizures for violations of customs laws, 1951 and 1952

711
712
714
714
715
716
720
721
722
722
723
723
724

CONTENTS

IX
Page

97. Seizures for violations of customs laws, by agencies participating,
1952
.
....
98. Investigative and patrol activities, 1951 and 1952

725
725

FEDERAL AID TO STATES

99. Expenditures for Federal aid to States, individuals, etc., 1930, 1940,
1950, and 1952
' 726
100. Expenditures made by the Government as|direct payments|to States
under cooperative arrangements and expenditures within States ^
which provided relief and other aid, 1952
, 732
GOVERNMENT LOSSES IN SHIPMENT

101. Status June 30, 1952, of the revolving fund established under authority
of the Government Losses in Shipment Act
102. Reported value of shipments made by or for the account of Government departments and agencies under coverage of the Government
Losses in Shipment Act, as amended, 1938-52
_.
103. Estimated amounts of insurance premium savings to the Government
on shipments made by or for the account of Government departments and agencies under coverage of the Government Losses in
Shipment Act, as amended, 1938-52
104. Agreements of indemnity issued by the Treasury under authority of
the Government Losses in Shipment Act, as amended, August 10,
1939-June 30, 1952
_1.„._
105. Number and amount of claims made and settled under authority of
the Government Losses in Shipment Act, as amended, August 15,
1937-June 30, 1952____
.
.
...

745
745

746
746
747

INTERNATIONAL CLAIMS

106. Status of the Mexican claims fund, June 30, 1952
:..._
...
107. Number and amount of awards of the Mixed Claims Commission,
United States and Germany, certified to the Secretary of the
Treasury by the Secretary of State, the amount paid, and balance
due, through June 30, 1952
.

747

748

MISCELLANEOUS

108. Treasury cash income and outgo, 1943-52
109. Federal fiscal operations and the Nation's financial structure, 19.43-52.
110. Status June 30, 1952, of the special trust account for the payment of
bonds of the Philippines, its provinces, cities, and municipalities,
issued prior to May 1, 1934, under authority of acts of Congress
111. Assets and liabilities of the exchange stabilization fund, June 30, 1951
and 1952
.
112. Foreign currency transactions in the accounts of the. Treasurer during
1952 and balances June 30, 1951 and 1.952
113. Indebtedness of foreign governments to the United States arising
from World War I, and payments thereon as of July 1, 1952
114. World War I indebtedness of Germany to the United States and
amounts paid and not paid, June 30, 1952
:
115. Accounts receivable under active agreements with foreign governments involving lend-lease articles and surplus property, June 30,
1952 (World War II)

750
754
756
757
759
760
762
763

OWNERSHIP OF GOVERNMENTAL SECURITIES

116. Estimated ownership of all interest-bearing governmental securities
outstanding, classified by type of issuer, June 30, 1937-52
^
117. Estimated distribution of interest-bearing governmental securities
outstanding June 30, 1939-52, classified by tax status and type of
issuer
.
.
1
118. Summary of Treasury survey of ownership of interest-bearing public
debt and guaranteed obligations, June 30, 1951 and 1952
;

764
766
768

CONTENTS
BUDGET ESTIMATES

119. Budget receipts and expenditures, actual for 1952 and estimated for
1953 and 1954
.
T20. Trust account and other transactions, actual for 1952 and estimated
for 1953 and 1954
.
121. Effect of financial operations on the public debt, actual for 1952 and
estimated for 1953 and 1954
:
....
INDEX
.
•
.

Page

770
774
775
777

NOTE

In tables where figures, have been rounded to a specified unit, all calculations
(including percentages) have been made from unrounded figures. Consequently
the details may not check to the totals shown.

SECRETARIES, UNDER SECRETARIES, AND ASSISTANT SECRETARIES
OF THE TREASURY DEPARTMENT FROM MARCH 4, 1933, TO NOVEMBER 15, 1952.» AND THE PRESIDENTS UNDER WHOM THEY SERVED
Term of service

Served UnderOfficial

From—

Secretary of the Treasury

To-

President

Secretary ofthe Treasury
Mar. 4,1933 Dec. 31,1933
Jan. . 1,1934 July 22,1945

William H. Woodin, New York
Henry Morgenthau, Jr., New York.
Fred M. Vinson, Kentucky.
John W. Snyder, Missouri...

Roosevelt.
Roosevelt,
Truman.
Truman.
Truman.

July 23,1945
June 25,1946

June 23,1946

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. 16,1938
Dec. 31,1939
Dec. 31,1946

Mar. 4,1946
Jan. 23,1947
July 15,1948

Jan. 14,1947
July 14,1948

0 . Max Gardner, North Carolina.. Vinson, Snyder
A. L. M. Wiggins, South Carolina- Snyder
Edward H. Foley, New York
Snyder

Apr.
June
June
Dec.
Feb.
July
June

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

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

Under Secretary
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

Woodin
Woodin
Morgenthau

Roosevelt.
Roosevelt.
Roosevelt.

Morgenthau __
Morgenthau __
Morgenthau, Vinson

Roosevelt.
Roosevelt.
Roosevelt,
Truman.
Truman.
Truman.
Truman.

Assistant Secretaries
18,1933
6,1933
12,1933
1,1934
19,1936
1,1938
23.1939

15,1936
30,1939
12,1933
1,1937
28,1939
31,1938
2,1946

Jan. 18,1940 Nov. 30,1944
Jan. 24.1945 May 1,1946
Apr. 16.1946 July 14,1948
July 16,1948
Feb. 8,1949 "Mar.'3i,*i95i"
Jan. 24,1952

Woodin, Morgenthau
Woodin, Morgenthau
Woodin
Morgenthau. _
Morgenthau. _
Morgenthau
...
Morgenthau, Vinson.

John L. Sullivan, New Hampshire. Morgenthau _ _
Harry D. White, Maryland
Morgenthau, Vinson.
Vinson, Snyder
..
Edward H. Foley, New York
John S. Graham, North Carolina... Snyder
William McChesney Martin, Jr., Snyder
New York.
.._
Andrew N. Overby, District of Snyder
Columbia.

Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt,
Truman.
Roosevelt.
Roosevelt,
Truman.
Truman.
Truman.
Truman.
Truman.

Fiscal Assistant Secretary
Mar. 16,1946

Edward F. Bartelt, Illinois

Aug. 2,1950

William W. Parsons. California...

Morgenthau,
Snyder.

Vinson,

Roosevelt,
Truman.

Administrative Assistant Secretary
Snyder..

Truman.

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

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS OF THE TREASURY
DEPARTMENT AS OF NOVEMBER 15, 1952
SECRETARY
JOHN W. SNYDER
Under Secretary of the Treasury.
Assistant Secretary of the Treasury.
Assistant Secretary of the Treasury.
Fiscal Assistant Secretary of the Treasury. •
Administrative Assistant Secretary.
GeneralCounsel.
Assistant to the Secretary.
Special Assistant to the Secretary.
Director of Information.
.:
Technical Assistant to the Secretary, Enforcement.

Edward H. Foley
John S. Graham..:
Andrew N. Overby
Edward F. Bartelt
William W. Parsons..
Thomas J. Lynch
•.
A. L. M. Wiggins.-Frank A. Southard, Jr
Leon M. Siler
M. L. Harney

OFFICE OF T H E UNDER SECRETARY E D W A R D . H . FOLEY i
Captain Ernest R. Feidler, U. S. C. G
Aide and Assistant to the Undersecretary.
Elmer T. Acken
Assistant to the Under Secretary.
OFFICE OF ASSISTANT SECRETARY JOHN S. GRAHAM i
Kennedy C. Watkins
Assistant to Assistant Secretary.
OFFICE OF T H E FISCAL ASSISTANT SECRETARY EDWARD F. BARTELT i
William T. Heffelfinger..
Assistant to the Fiscal Assistant Secretary.
Hampton A. Rabon, Jr
Technical Assistant to the Fiscal Assistant Secretary.
Martin L. Moore
Technical Assistant to the Fiscal Assistant Secretary.
Frank F. Dietrich
Technical Assistant to the Fiscal Assistant Secretary.
Maurace E. Roebuck
Administrative Assistant to the Fiscal Assistant Secretary.
George F. Stickney
Head, Fiscal Service Operations and Methods Staff.
OFFICE OF ADMINISTRATIVE ASSISTANT SECRETARY WILLIAM W. PARSONS i
William L. Lynch
Assistant to the Administrative Assistant Secretary.
Willard L. Johnson.....
Budget Officer.
Howard M. Nelson
AvSsistant Budget Officer.
James H. Hard, II
Director of Personnel.
Joseph A. Jordan
Assistant Director of Personnel.
Paul McDonald
.Director of Administrative Services.
Elvus W. Proud
,..
Superintendent, Division of Treasury Buildings.
Edward E. Berney
Chief, Division of Buildings Surveys.
Henry L. Merricks
•
Chief, Division of Office Services.

OFFICE OF THE GENERAL COUNSEL THOMAS J. LYNCH
Elting Arnold
John K. Carlock
Charles W. Davis
Charles R. McNeill
Vance N. Kirby
Raphael Sherfy.
Robert F, Magill
Frederick C. Lusk
Hugo A. Ranta
George Bronz
Lawrence Linville
Kenneth S. Harrison
John F. Anderson
Robert Chambers
Charles W. Davis
Elting Arnold
.
Edwin F. Rains
Alfred L. Tennyson
Wiley M. Fuller
George F. Reeves
George C.Haas
Sidney Q. Tickton
Edmund M. Daggit
Thomas F. Leahey
Robert P . Mayo
Cedric W. Kroll
Anna M. Michener
William M. Weir
Isabella S. Diamond
' See organization chart.
XII

Assistant GeneralCounsel.
Assistant General Counsel.
Assistant General Counsel.
Assistant General Counsel.
Tax Legislative Counsel.
Associate Tax Legislative Counsel.
Assistant Tax Legislative Counsel.
Assistant Tax Legislative Counsel.
Assistant to the General Counsel.
Special Assistant to the General Counsel.
Special Assistant to the General Counsel.
Chief Counsel, U. S..Coast Guard.
Chief Counsel, Office of the Comptroller of the Currency.
Chief Counsel, Bureauof Customs.
Chief Counsel, Bureau of Internal Revenue.
Chief Counsel, Office of International Finance.
Chief Counsel, Foreign Assets Control.
Chief Counsel, Bureau of Narcotics.
Chief Counsel, Bureau of the Pubiic Debt.
Chief Counsel to the Fiscal Assistant Secretary.

OFFICE OF T H E TECHNICAL STAFF
. Director of the Technical Staff.
Assistant Director.
•
Assistant Director.
Assistant Director.
Assistant Director;
Acting Government Actuary.
.
Assistant to the Director.
Administrative Assistant to the Director.
^...,...,
,
Librarian.

'
/

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS

XIII

OFFICE OF INTERNATIONAL FINANCE
George H. Willis
Charles Dillon Glendinning

Director.
Deputy Director and Secretary, National Advisory
Council.
Assistant Director.
Acting Director, Foreign Assets Control.
Chief, British Commonwealth and Middle East Division.
.
Chief, Commercial Policy and United Nations Division.
Chief, European Division.
Chief, Far Eastern Division.
._.-.__ Acting Chief, International Statistics Division.
Chief, Latin American Division.
Chief, Stabihzation Fund, Gold and Silver Division.
Secretary, National Advisory Council Staff Committee.
Admmistrative Assistant to the Director.
Budget Officer.
,

William L. Hebbard...
Elting Arnold
Judd Polk
Morris J. Fields
James E, Wood
Arthur W. Stuart....
Robert J. Schwartz..!
John S. deBeers..
George A. Eddy
Chester L. Callander...
Mary C. Hall.
Walter F. White
L. L. Ecker-Racz
F. Newell Campbell
Richard E. Slitor
Joseph A. Pechman
George E. Lent
John Copeland

TAX ADVISORY STAFF OF T H E SECRETARY
Director.
Associate Director.
._
_
•_
Taxation Specialist.
:.__j>
Taxation Specialist.
Economist.
__
Economist.

OFFICE OF THE COMPTROLLER OF THE CURRENCY
Preston Delano
L. A. Jennings
W. M. Taylor
G. W. Garwood
W. P. Folger

Comptroller of the Currency.
First Deputy Comptroller of the Currency.
Second Deputy Comptroller of the Currency.
Third Deputy Comptroller of the Currency.
Chief National Bank Examiner.
BUREAU OF CUSTOMS
Cominissioner of Customs.
Assistant Commissioner of Customs.
Special Assistant to the Commissioner.
.
Administrative Officer.
_
Deputy Commissioner of Appraisement Administration.
Deputy Commissioner of Investigations.
.
-. Deputy Commissioner of Management and Controls.
Chief, Division of Drawbacks, Enforcement, and
Quotas.
Chief, Division of Classification, Entry, and Value.
Chief, Division of Marine Administration.
_._ Chief, Division of Laboratories.

Frank Dow
D. B. Strubinger._
W. R. Johnson
Burke H. Flinn
Walter G. Roy
C. A. Emerick.-_
Lawton M. King
G.H.Griffith
W. E. Higman
H. E. Sweet
J. F. Williams

Alvin W. Hall
Henry J. Holtzclaw
Thomas F. Slattery...

BUREAU OF ENGRAVING AND P R I N T I N G
Director, Bureau of Engraving and Printiag.
Associate Director.
Assistant Director.

BUREAU OF ACCOUNTS (IN T H E FISCAL SERVICE)
Robert W. Maxwell
Commissioner of Accounts.
Gilbert L. Cake
Associate Commissioner.
Harold R. Gearhart
Deputy Commissioner.
Edmund C. Nussear
Assistant Deputy Commissioner.
Wallace E. Barker, Jr
Assistant Commissioner for Admiaistration.
Stephen P. Gerardi
Executive Assistant to the Commissioner.
Paul D . Banning.
._
Chief Disbursing Officer.
Julian F. Cannon
Assistant Chief Disbursing Officer.
Charles O. Bryant
Assistant Chief Disbursing Officer.
George Friedman...
Technical Assistant to the Commissioner.
Boyd A. Evans
_.
Assistant to the Associate Commissioner.
BUREAU OF T H E PUBLIC D E B T (IN T H E FISCAL SERVICE)
Edwin L. Kilby
.
Commissioner of the Public Debt.
Donald M. Merritt
Assistant Commissioner.
Ross A. Heffelfinger, Jr
Deputy Commissioner in Charge, Washington Office.
Charles D. Peyton
_
•.
Deputy Commissioner in Charge, Chicago Office. •
OFFICE OF T H E TREASURER OF T H E U N I T E D STATES (IN T H E FISCAL SERVICE)
Georgia Neese Clark
i
Treasurer of the United States.
Mabelle Kennedy
._.
Assistant Treasurer.
Frederick L. Church
.
Deputy and Acting Treasurer.
Edmund Doolan
Assistant Deputy Treasurer.
Grover C. Emerson
Staff Assistant.

BUREAU OF INTERNAL REVENUE
John B. Dunlap
Norman A. Sugarman
Justin F . Winkle

._ Commissioner of Internal Revenue.
Assistant Commissioner (Technical).
Assistant Commissioner (Operations).

XIV

PRINCIPAL ADMINISTRATIVE AND STAFF O F F I C E R S

Edgar E. Hoppe.l
Thomas C. Atkeson.
Emmett E. Cook, Jr
Leo Speer
:

Assistant Commissioner (Inspection).
Assistant to the Commissioner.
Administrative Assistant to the Commissioner.
Technical Advisor to the Commissioner.

• BUREAU OF T H E M I N T
Director of the Mint.
. . . . Assistant Director.
BUREAU OF NARCOTICS
Commissioner of Narcotics.
i
Deputy Commissioner.
Assistant to the Commissioner.

Nelhe Tayloe Ross...
Leland Howard.
Harry J. Anslinger...
George W. Cunningham
Benjamin T. Mitchell

U N I T E D STATES COAST GUARD
Vice Admiral Merlin O'Neill
Commandant, U. S. Coast Guard.
Rear Admiral Alfred C. Richmond
.
Assistant Commandant and Chief of Staff.
Captain Ira E. Eskridge
Deputy Chief of Staff.
Rear Admiral Kenneth K. Cowart...
Engineer in Chief.
Rear Admiral Halert C. Shepheard
Chief, Office of Merchant Marine Safety.
Rear Admiral Raj'-mond J. Mauerman
Chief, Office of Operations.
Rear Admiral James A. Hirshfield
.
Chief, Office of Personnel.
Captain Charles B. Arrington
Comptroller.
Vernon L. Clark
Merrill L. Predmore
U. E. Baughman
Carl Dickson
Harry E. Neal..
George W, Taylor

U N I T E D STATES SAVINGS BONDS DIVISION
•_
National Chairman, U. S. Defense Bond Program.
:
Acting National Director.
U N I T E D STATES SECRET SERVICE
Chief, U. S. Secret Service.
Assistant Chief.
Executive Aide to the Chief.
Administrative Officer.
STANDING DEPARTMENTAL COMMITTEES

C O M M I T T E E ON PRACTICE
John L. Graves
Chairman.
Hessel E. Yntema
Member.
Captain Ernest R. Feidler, U. S. C. G
Member.
TREASURY D E P A R T M E N T M A N A G E M E N T C O M M I T T E E
William W. Parsons
. Chairman.
Thomas C. Atkeson
Member.
John K. Carlock
Member.
William T. Heffelfinger
Member.
Henry J. Holtzclaw
.
Member.
Leland Howard
Member.
Rear Admiral Alfred C. Richmond, U. S. C. G_._ Member.
D. B. Strubinger
Member.
M.L.Harney
_ Member.
TREASURY AWARDS C O M M I T T E E
William L. Lynch
Chairman.
James H. Stover
Vice Chairman.
John K. Carlock
Member.
James H. Hard II
.
Member.
William T. Heffelfinger
Member.
Henry J. Holtzclaw
_
Member.
Leland Howard
Member.
Willard L'. Johnson
1
Member.
Richard W. Nelson
Member.
Captain Ira Eskridge, U. S. C. G
Member.
Lawton M.,King
.
Member.
M.L.Harney..
•
Member.
LOYALTY BOARD
Chairman.
Member.
Member.

James H. Hard II
Hugo A. Ranta
William T. Heffelfinger
James H. Hard II
Willard L. Johnson
:
William T. Heffelfinger..
Edward F. Bartelt

WAGE BOARD
Chairman.
Member.
Member.

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

FAIR E M P L O Y M E N T OFFICER
Maurace E. Roebuck.

•ORGANIZATION OF THE DEPARTMENT OF THE TREASURY-

November 15,1952

THE SECRETARY
OF THE
TREASURY

FISCAL
ASSISTANT
SECRETARY

GENERAL
COUNSEL

Leqol
Division

Office of
Tox Legislotive Counsel

ASSISTANT
SECRETARY

Officeof the
Technicol Staff

THE UNDER SECRETARY
OF THE TREASURY

SPEC. ASST.
TOTHE
SECRETARY

Office of
Internotionol
Finance

Tox Advisory
Sfoff

Tecti. Asst
to the Secretary
for Enforcement

Committee
on Practice

ADMINISTRATIVE
ASSISTANT
SECRETARY

ASSISTANT
SECRETARY

ASSISTANTS
TO THE SECY
(5 Voconcies)

Office of
Administrative
Services

Informotion
Service

Office of
Budget

x".^ " v r - .

JZl
Bureau of
the Public Debt

Bureau of
Accounts

U.S. Savings
Bonds Division

Office of the
Treasurer
of the U.S.

33U.S. Secret
Service

Bureau of
Internal Revenue

Office of the
Comptroller of
the Currency

Bureau of
. Narcotics

CHART

Bureau of
Customs

Bureau of
Engraving and
Printing

u.s.
Coast Guard

Bureau of
the Mint

Officeof
Personnel

ANNUAL REPORT ON THE FINANCES
TREASURY DEPARTMENT.

Washington, D . C , January Uf., 1953
S I R S : I have the honor to report to you on the finances of the
Federal Governnient for the fiscal year ended June 30, 1952.
During this year, the Nation successfully completed a critical phase
of the expansion of the defense program. This w^as achieved with
comparatively little economic dislocation. The Nation's underlying
economic strength continued to grow and expand along with accelerating defense activities. The Treasury's fiscal policies have played
an important role in the attainment of these objectives, within the
framework of a stable, expanding economy.
The six fiscal years since the close of World War II, ending with
the fiscal year 1952, represent a period of important developments in
fiscal policies and operations. I am taking this occasion, therefore,
to review the functioning of the Nation's finances during this 6-year
period, which coincides with my term of ofiice as Secretary of the
Treasury.
During this 6-year period, the Government first had to adjust to
the problems arising from the aftermath of the war and subsequently
to the task of rearming to meet the Communist challenge. Accordingly, my report describes the various measures taken to finance the
Government's activities, and deals with the whole range of Treasury
policies in the fields of debt management, taxation, international
financial relations, and improvement in operating activities, against
the background of national economic developments.
One of the major problems facing the Treasury when I took the
oath of ofiice on June 25, 1946, was the achievement of a balance
between revenues and expenditures which would provide for a surplus
of revenues to be applied to debt reduction. On the day that I took
office, I said: '^It is the responsibility of the Government to reduce
its expenditures in every possible way, to maintain adequate tax
rates . . . and to achieve a balanced budget—or better . . ."
I t was recognized that the problems of Treasury and general Government policy involved in changing over from a deficit situation to
a balanced budget or better were extremely complex. There was
widespread public agitation for across-the-board reductions in taxes
and for the abolition of various special taxes which had been put into
1
- 221052—53

1952 REPORT OF THE SECRETARY OF THE TREASURY

effect during the war. While many improvements in the structure of
our wartime tax system were clearly called for, the size of our large
wartime debt made it imperative that we give consideration to the
need for debt reduction, along with the need for improvements and
revisions in the wartime tax structure. By the middle of 1946, it was
already evident that fulfilling these requirements would be a task of
major proportions.
Our public debt had increased five-fold during World War II, and
on June 30, 1946, amounted to $270 billion. The Government's
obligations represented 60 percent of all outstanding debt, public and
private, as compared with less than one-fourth in 1939, before the
United States started its World War I I defense and war finance
program.
Of the $270 billion total public debt in June 1946, commercial banks
held $84^ billion, representing 71 percent of their earning assets, and
the Federal Reserve Banks held $23K billion. I t was recognized that
this bank-held debt had an inflationary potential; and that every effort
would have to be made in the interests of a sound peacetime economy
to reduce the volume of securities held by the commercial banking
system.
The Government security holdings of individuals represented
another type of problem. As a result of the intensive sales programs
of the World War I I period,' and the response of the people to these
drives. Government security holdings of individuals, including marketable as well as nonmarketable issues, had jumped from $10 biUion.
before the war to $64 billion on June 30, 1946. Widespread ownership
of the securities of the Government was essential to sound public debt
management in the years ahead. I t was of the gTeatest importance
that individuals retain their holdings of Government obligations and,
if possible, increase them. But could this be achieved if widespread
unemployment developed, and the funds invested in savings bonds
were required to tide people over an emergency period? A depression
had occurred after every other major war in our history. There were
many who felt that it would occur again; and that it would inevitably
be accompanied by a wholesale liquidation of savings bonds.
Still another area of uncertainty was represented by the large volume
of Government securities held by nonbank .financial institutions such
as insurance companies and mutual savings banks. In June 1946, the
$11K billion of Government obligations held by mutual savings banks
constituted about 64 percent of their total assets. The corresponding
percentage for life insurance companies was 46 percent. Other insurance companies were in a similar situation. In addition, other
nonbank investors—business corporations. State and local governments, and others—^had substantial amounts of funds invested in

REPORT ON THE FINANCES

Government issues. I t could-be foreseen that all of these institutions
and organizations would need to draw upon at least a part of their
Government security investments in order to finance reconversion and
expansion programs of private business and of State and local governmental units, once the peacetime economy got fully under way.
I n view of these circumstances, it was clear that the Treasury had
a double task. I t would have to promote fiscal programs and conduct
financing and debt management operations in such a way as to safeguard at all times the high credit position of the Government and it
would have to shape these policies in such a way as to encourage
rather than hinder the adjustments which individuals, financial
institutions, and business concerns of all kinds would have to make in
the course of returning to more normal conditions.
These were some of the problems which were clearly apparent in
1946 on the domestic front. At the same time, the United States
faced a whole range of new problems in international finance. These
arose from the war and the position which the United States had
attained at its close as the leading financial power of the world. Some
of these problems related to various financial settlements growing out
of the war. Others were the problems of organizing a postwar world
based on sound economic principles which would assure an improvement in world economic conditions and standards of living. In June
1946 no one could have foreseen the precise nature of many of the
issues confronting the United States Government, particularly in the
light of the rapidly changing world political and economic scene. The
United States Governinent, as well as the other nations of the Western
World, had to feel its way toward programs and policies which would
bring about the desired result.
I t was apparent then that the stability and progress of the postwar
world would have to be based on improving standards of living in all
countries, the maintenance of a high level of production and employment, and expansion of world trade, and the attainment of internal
financial stability as a condition to sound international financial
policies. These conditions of progress were interrelated. Without
sound finance, the dangers of wide swings in the levels of prices and
consequently of production and employment and maladjustment of
international payments and capital movements were great.
The countries of the world had to make efforts to check the war and
postwar inflations by appropriate fiscal and monetary measures.
There were problems of how and under what conditions the United
States could assist them in restoring production and international
trade. There were questions of the desirable levels of exchange rates
for international transactions "and the ways and means of reducing
barriers to international payments and trade. These were among the
questions to which we in the Treasury had to give earnest attention.

1952 REPORT OF THE SECRETARY OF THE TREASURY

It has been my objective to do my part in bringing about sound
financial conditions in the international sphere. This task is not one
which any Secretary of the Treasury alone can perform, nor is it one
which the United States Government alone can guarantee. It implies
the developraent of consistent policies on the part of the principal nations and the reconciliation of their divergent interests in the light of
the benefits to the world as a whole. Nevertheless, the Treasury Department is ill a position to exert a steady and continuous influence on
the direction of the policy of the United States Government, and indirectly on the policies of other governments. The Congress established the National Advisory Council on International Monetary and
Financial Problems, with the Secretary of the Treasury as chairman,
as the coordinating agency for United States international financial
policy and as a mechanism for bringing that policy to bear in the international financial organizations which had been projected as the
mechanisms for international financial cooperation. We had to deal
with the settlement of lend-lease and other wartime arrangements,
with the terms of loans extended abroad, the forms and terms of assistance programs, and, of course, the evolution of their policies by
the International Monetary Fund and the International Bank for
Reconstruction and Development. As appropriate occasions have
arisen, our policies in international finance have been stated in congressional hearings, through the United States representatives on the
Fund and the International Bank, and through less formal conversations occurring at various times and under differing circumstances
between the Treasury and the finance ministers and other representatives of foreign governments.
The main lines of United States Government policies with respect to
international financial matters have remained clear through this difficult period, though the means of implementing those policies necessarily have varied with time and circumstance. The maintenance of
the international stability of the dollar has been the keystone of
United States policy, and the Treasury has sought to maintain this
stability through gold and exchange policy and through its internal
financial policies. Secondly, it has been our objective to strive for
sound policies on the part of other countries, both by assisting them
directly or indirectly, and by cooperating with them in international
bodies. In each of these spheres, it has been our aim to contribute to
the greatest extent possible toward the building of a world of free and
strong nations able to maintain their economies on a sound economic
basis, while working with other countries to create the conditions
under which all could prosper more.
In addition to matters of broad national policy, there was another

REPORT ON THE FINANCES

area in which the problems of the Treasury were particularly pressing
in June 1946. This was the area of operating activities.
The Treasury Department is a vast operating organization. Most
of its activities are large scale. They involve hundreds of millions
of items. They represent tens of billions of dollars. They affect
many millions of people. The magnitudes are far greater than any
comparable transactions elsewhere, either within this country or
within any other country in the world. With activities of such great
size and complexity, the problems of management are difficult and
complicated.
During World War II, the growth in our economy and in governmental operations greatly increased the volume of financial operations which flowed through the Treasury Department. Savings bonds
alone, each one requiring separate registration, rose from something
• over 5 million pieces issued and redeemed in 1940 to over 346 millioh
pieces in 1946. The number of tax returns increased from over 19
million to more than 81 million. Printing of currency, stamps, and
other documents increased from over 446 million sheets in 1940 to
more than 684 million in 1946. The number of Government checks
processed by the Treasury showed a large increase. In almost every
area of Treasury operations, in fact, there was an enormous expansion
in the volume of routine business.
While the war was going on, it had not been possible to modernize
operations on the basis of new mechanical procedures. Recruitment
of competent personnel, likewise, was severely restricted.
The
tremendous increase in Treasury operations, consequently, had to be
handled by the restricted facilities of a Department geared to a
prewar volume of operations.
I n 1946, although the war was over, a great part of the expanded
volume of Treasury operations remained. I t was of the greatest importance to modernize and streamline the services of the Department
in order to enable it to meet the increased responsibilities and needs
of the Federal Government.
This brief review of the scope and complexity of the Treasury's
responsibilities as the postwar period began gives some perspective
for evaluating the record of accomplishment from the vantage point of
1952. This record is discussed below. The major problems of the
Treasury during my term of office and the ways in which these problems were worked out have been grouped under ten major headings.
(1) Maintenance of confidence in the credit of the United States Government.

I n the broadest sense, maintenance of confidence in the credit of
the Government depends on our ability as a Nation to keep our free
enterprise economy healthy and growing, and to use our governmental

1952 REPORT OF THE SECRETARY OF THE TREASURY

instruments wisely in promoting this end. Ever since the establishment of the Treasury Department in 1789, the Secretary of the Treasury has been charged with particular responsibilities in this area.
Of the list of duties which the Congress prescribed in the act of 1789
setting up the Department, the most significant historically was
to ". . . prepare plans for the improvement and management of the
revenue, and for the support of the public credit . . ." Each
Secretary of the Treasury since that time has recognized that, in peace
or war, any substantial impairment of the credit of the Federal Government would be a major blow to the maintenance of high production
and employment and to the orderly operation of our private enterprise
system. Every effort has been made, therefore, to maintain confidence
in the Government's credit.
Our success in achieving this goal has enabled the Treasury to play
atoost important part in the remarkable upsurge of American business
which has characterized the post World War I I period. Partly as the
result of sound debt management and the maintenance of full confidence in the Government's credit, it has been found possible to achieve
and maintain in this country an economic climate favorable not only
to a high level of current activity but also to a very large yolume of
long-term investment.
I t is axiomatic that investment programs looking far into the future
will not be made-in a financial climate characterized by doubt and
uncertainty. Confidence is essential. And in an economy where the
public debt, constitutes the single most important factor in the financial
life of the Nation, the cornerstone of confidence in the future is confidence in the credit of the Government. This confidence has been
maintained, and the economy has enjoyed an unprecedented period of
soundly based prosperity.
All sections of our economy in varying degrees have participated in
the forward movement of recent years. Probably no single measure
of the strength and potential power of the American economy, however,
is as revealing as the figures on investment in plant and equipment
during this period. Before the new defense program made necessary
by the invasion of Korea got under way, private business had taken
a long look at the future and invested a record $100 billion in modernization and expansion. The figure for the entire period since the
end of World War I I has now risen to the phenomenal total of approximately $170 billion, only a part of which is the result of our new defense programs.
While these developments have been going on, the Treasury has
found it possible to keep substantial amounts of Government obligations in.the hands of nonbank owners. The holdings of the commercial
banking system have been cut back sharply. Nonbank financial in-

REPORT ON THE FINANCES

stitutions have retained a considerable volume of Government securities, even though they have participated to a very large extent in financing the forward movement of American business. Savings bond
holdings of individuals have increased rather than decreased, and the
savings bond program has been an important factor in stimulating
thrift in all forms.
All of these matters are covered in more detail under the headings
below. A detailed review of debt management programs and policies
between the close of World War I I and March 4, 1951, will also be
found in exhibit 22 on pp. 198 to 403 of the Annual Report of the
Secretary of the Treasury for the Fiscal Year 1951, entitled, '^Reply
by the Secretary of the Treasury to Inquiries by the General ^Credit
Control and Debt Management Subcommittee of the Joint Committee
on the Economic Report, February 12, 1952." This review is brought
up-to-date in Appendix A to this statement, on pp. 199 and 200 of
the present report.
Taken together, our debt management policies add up to an achievement which is of the greatest significance in the period of new international tension which we have been experiencing since the invasion of
Korea in June 1950. Before the country was called upon at that time
to face the burdens of increasing rearmament and security programs,
it had been demonstrated that a debt of a magnitude of more than
$250 billion could be managed successfully. I t had been demonstrated
that debt management operations of vast proportions could be conducted without setting off harmful repercussions in the economy. The
savings bond program and thrift habits in general had taken firm
hold in the financial life of the Nation. There was no doubt
that the financial structure and the financial operations of.the Government were capable of meeting the strains placed upon them by the
continuing threat of further Communist aggression.
(2) Reduction of the public debt by $10% billion and achievement of a budget
surplus of about $3^4 billion in the 6 years ending June 30,1952; improvement
in the structure and ownership composition of the public debtj and provision
of securities suitable to changing investor requirements.

During the 6 years ending June 30, 1952, the United States Government had a cumulative budget surplus of approximately $3%
billion. This surplus, together with funds over and above normal
needs available in the cash balance at the end of wartime financing,
made it possible to reduce the public debt from approximately $270
billion on June 30, 1946, to $259 billion at the close of the fiscal year
1952. Since that date, our mounting expenditures for defense and
security have increased the net total of the debt, bringing it up to
about $267K billion at the close of 1952.

1952 REPORT OF THE SECRETARY OF THE TREASURY

The table below shows the surplus or deficit of receipts as compared
with expenditures for each of the past six fiscal years ending with the
fiscal year 1952.
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal

year
year
year
year
year
year

1947
1948
1949
1950
1951
1952

Six-year period

surplus___
surplus
deficit
deficit
surplus
deficit
surplus

(In
millions)
$754
8,419
1, 811
3, 122
3, 510
._
4, 017
3,733

The achievement of a budget surplus of about $3% biUion in the 6
years ending June 30, 1952, is the more remarkable in view of the
serious problems which our economy faced during this period. After
World War II, we undertook a rapid shift from war to peace. Readjustment to a peacetime economy was still in process when it became
clear that our help was^needed^to'^'turn^back^the threat of Communism
in Europe. The program to aid European recovery succeeded in
putting Communism oii|the defensive throughout Western Europe,
and in Greece and Turkey. No sooner had the success of this program become evident, however, than the dictator countries struck in
a new area. The attack on Korea gave notice that the Communist
plans for world domination were being relentlessly pursued. It was
necessary to begin a new security program, here at home and in alliance with other friendly nations, adapted to the requirements of a
strong and lasting defense against Communist aggression.
It is signfficant that we have been able to do these things and still
achieve a substantial budget surplus for the 6-year period which could
be applied to the reduction of our wartime debt. Moreover, it has
been found possible during this period to improve greatly and strengthen the ownership structure of the public debt.
Between June 30, 1946, and June 30, 1952, Government security
holdings of the commercial banking system were reduced by $24 billion. These are the holdings which are potentiaUy inflationary; and
the sharp cut-back in their amount which was accomplished during
this period made a signfficant contribution to the financial health of
the economy.
The reduction in bank holdings of Federal securities by a substantially larger amount than the reduction in the total debt outstanding
was made possible by the Treasury's program for the widest possible
distribution of Government securities outside of the commercial
banking system. Ever since the close of World War II the goal of
our debt management program has been to place the maximum

REPORT ON THE FINANCES

amount of securities vnth nonbank investors. Such a program requires, of course, that the Treasury provide these investors with
securities suitable to their requirements.
A good example of this policy is found in the securities placed with
financial institutions other than commercial banks, such as savings
banks and insurance companies. I t is generally recognized that the
Treasury's longest-term bonds are particularly suitable for the investment of funds of institutions of this type. But in a growing dynamic
economy the investment market represented by these funds is constantly changing.
The Treasury, therefore, has kept constant watch on the accruing
funds of nonbank financial institutions. I n connection with each
major financing operation in which institutional investors might participate, I have consulted with representatives of these groups. At
meetings held in the Treasury Department, all of the facts available
through the studies of the Treasury have been placed before them by
members of my staff; and we have in turn sought and received their
counsel as to the procedures for refunding or new financing which
should be adopted at any particular time.
The result is that the Treasury has maintained a considerable investment of long-term institutional funds in Government securities,
despite the great outfiow of such funds into mortgages and other
private obligations which has accompanied the postwar resurgence of
private business. This reflects not only our joint efforts with various
investor groups to fit Government securities into a changing investment situation, b u t also the maintenance of a basically sound position
in the public market for United States Government securities. With
a debt of over $250 billion, an orderly situation in the Government
bond market at all times is one of the vital requirements of a policy
which safeguards the Government's credit and fosters an environment favorable to long-term investment.
In addition to the efforts which have been made to provide a satisfactory outlet for the funds of nonbank financial institutions, the
Treasury also has maintained an active program for attracting and
holding the short-term funds of business corporations. The issuance
of tax anticipation bills, which represents a new departure in Government financing, might be mentioned in this connection. These bills
were designed as an investment medium for funds accrued by corporations to meet the heavy tax payments due on March 15 and June 15
of each year.
Tax anticipation bills, together with savings notes and regular bills,
fulfill the purpose of providing an outlet for short-term business funds
of all kinds. Approximately $6 billion of savings notes, largely held
by corporations, were outstanding on December 31, 1952. Tax

1952 REPORT OF THE SECRETARY OF THE TREASURY

anticipation bills were outstanding in the amoimt of $4K billion, as a
result of the offerings in October and November of 1952. About
$2K billion of tax anticipation bills were sold in October and November
of 1951 and were used, mainly by corporations, in payment of taxes
due in March and June of 1952. (See exhibits 10, 11, and 12.)
This brief review of our experience with securities, particularly
suited to business needs indicates that the Treasury has had considerable success in providing investment outlets both for corporation tax
reserves and for the large volume of other short-term funds which
business organizations must keep on hand during periods of high
business activity.
The Treasury's savings bond program, which is shaped primarily
with the requirements of individual investors in mind, is undoubtedly
the best known of all our activities to meet investor needs and to
encourage widespread ownership of Government securities. This
program and its results during the postwar period are fully discussed
in section (3), immediately below.
(3) Stimulation of thrift and individual savings through active promotion of United
States savings bonds.

The importance of the Government's achievement in holding and
increasing the wartime investments of the American people in savings
bonds can best be appreciated when we recall the doubts and fears
which were widely expressed on this matter during the early postwar
period.
On June 30, 1946, there were $49 billion of savings bonds outstanding, of which approximately $43 K billion were in the hands of individuals. A large number of these securities were owned by people
with limited financial resources whose Government bond holdings
represented their only liquid savings.
No olie could predict what would happen to thbse investments as
the business situation developed. After every other major war in our
history, we had experienced severe depression and widespread unemployment. The reconversion from wartime to peacetime business
which was in progress in 1946 represented the most rapid and farreaching business adjustment which had ever taken place in this
country. At the same time, it was reahzed that the size of the Government debt would bring problems of debt management more
difficult and complex than any we had faced before.
Savings bond holdings represented one of the imponderables in this
situation. Many thought that a wholesale liquidation of savings
bonds at some time in the future would be unavoidable. If business
fell off sharply, it was argued, ready cash would be needed to tide
people over the hardships of unemployment—and savings bonds
represented the chief source of ready cash for milhons of families. If

REPORT ON THE FINANCES

business and employment held up, people would cash bonds to finance
purchases of goods which they had been unable to buy during the war.
At best, the outlook was clouded with uncertainty.
The Treasury believed at this juncture that a Nation-wide thrift
campaign was needed which would enlist not only the savings bond
promotion activities but also the assistance of all the savings groups of
the country, including the commercial banks. The purpose of this campaign was to make people aware of the desirability of holding on to
their bonds and increasing their savings generally. When it became
clear that the widely heralded prospective depression in the early postwar period was not occurring, and when consumer goods became available in quantity, consumer buying reached and maintained a volume
far beyond the business experience of any previous period. Many savings bonds were cashed to pay for new houses, new cars, educational
programs, family emergencies, and so on. But other bonds were
bought; thus demonstrating that the Treasury's thrift program had
taken hold. In addition, substantial amounts of wartime bond
purchases were retained as permanent investments.
Clearly, the thrift habits which the Government continually emphasized during the war and postwar years in connection with the savings
bond program have become strongly entrenched. There have been no
problems of refinancing the Government debt held in savings bonds.
Instead, the Treasury has been enabled to use its available funds for
reducing the Government security holdings of the commercial banking
system. The ability of the Government to hold and increase the
amount of the people's savings represented in savings bonds has thus
been a most important factor enabling the Treasury to improve the
basic soundness of the Government debt structure.
In figures, savings bond ownership increased $8?4 billion during the
6 years ending last June 30, from approximately $49 billion on June 30,
1946, to more than $57?^ billion on June 30, 1952. Individual holdings
alone, which were approximately $43K billion in June 1946, were $49
billion on June 30, 1952, an increase of $5K billion. The increases in
interest rates obtainable on savings bonds and the other improvements affecting these issues which were made in 1951 and 1952 have
played a part in the continued investment interest which these
securities have held for the American people.
An important feature of the savings bond program during the war
and postwar years has been the emphasis, placed on thrift. Our goal in
the Treasury has been not solely to sell Government securities, but
rather to encourage savings habits in general.
The figures on changes in various types of savings during recent
years are, therefore, of considerable interest in this connection. Between the end of December 1945 and June 30, 1952, savings accounts

19 52 REPORT OF THE SECRETARY OF THE TREASURY

in commercial banks increased 28 percent; in mutual savings banks, 42
percent; in savings and loan associations, 144 percent; and individual
holdings of Series E savings bonds, 14 percent.
There is no doubt that the Treasury's promotion program for savings
bonds has succeeded in stimulating savings of all kinds. This is particularly true in the case of the many families whose savings bond
purchases tlirough the payroll deduction plan represented their first
experience with regular saving.
(4) Use of debt policy cooperatively with monetary-credit policy to contribute
toward healthy economic growth of the country.

Maintenance of stable credit conditions has long been recognized
as an important influencing factor in the maintenance of high activity
and employment. Important responsibilities in this area have been
assigned by the Congress to the Federal Reserve System; and these
responsibilities involve keeping fluctuations in the total supply of
credit from becoming so excessive as to endanger healthy economic
growth and the maintenance of sustained high activity.
The Treasury has the responsibility for debt management policies.
The public debt at the close of the fiscal year 1952 amounted to over
40 percent of all debt, pubhc and private; and among the important
holdings of Government securities were those of the banking system.
It is clear, therefore, that the Federal Reserve's responsibilities for
sound credit policy and the Treasury's responsibilities for sound public
debt policy are intermingled and must.be discharged cooperatively.
The broad objectives of the two agencies are the same. The problem
is to balance the many difficult considerations that enter into policy
formation on each particular matter involving both debt management
and credit policy.
Throughout the period since the close of World War II the Treasury
and the Federal Reserve System were agreed upon the fundamental
objective of maintaining a high level of production, employment, and
income with as great price stability as possible under the varying conditions which existed in the economy. The related objectives which
were involved as the postwar period proceeded were also a matter of
agreement between the two agencies. These included: (1) maintenance of confidence in the credit of the Government; (2) maintenance
of a sound market for the securities of the United States Government;
(3) restraint, during much of the period, of over-all credit expansion;
(4) increasein the ownership of Government securities by nonbank
investors and reduction in the holdings of the banking system; and
(5) adjustment from time to time in the wartime pattern of interest
rates, as this became appropriate.
There were differences of opinion on various occasions as to the
techniques which should be employed in reaching these objectives.

REPORT ON THE FINANCES

But there was never any disagreement as to the fundamental goal—to
promote stable economic growth through credit and debt policy while
meeting the fiscal requirements of the Govemment.
During these years, the Treasury and the Federal Reserve worked
together on the several programs which were undertaken to achieve
their joint objectives. The two agencies cooperated in a debt
reduction program concentrated' on the holdings of the commercial
banking system. Both agencies were also in favor of encouraging
.savings throughout the economy. They were in agreement that,
when the occasion called for them, selective credit controls and other
selective restraints were useful in dealing with inflationary pressures.
In the process of carrying out these programs, the views of the two
agencies often differed as to matters of emphasis, selection of instruments and methods to be employed, and timing. AU of these nuatters,
however, were the subject of continuing consultation between members of my staff and myself, on the one hand, and representatives of
the Federal Reserve System on the other. Following such consultations, actions were taken by the responsible agency which in its
judgment provided the best solution of the problems under consideration, on the basis of all available evidence and views.
The outbreak of hostilities in Korea presented new problems of
monetary and debt management which increased the need for cooperative planning and consultation between the Treasury and the
Federal Reserve System. The situation which we faced at that time
differed from any in our previous experience. The attack on Korea
and the response of our country and the United Nations to it did not
precipitate an all-out war; yet the defense program of the United States
and of the free world had to take into account the fact that further
Communist aggression might at any time be attempted.
The new strains which these developments placed on our economy
and on the finances of the Government were recognized by the Treasury and the Federal Reserve. On March 4, 1951, the two agencies
made a joint announcement emphasizing their common purpose in
assuring the successful financing of the Government's requirements
and maintaining soundness in the public debt structure. As the
result of the continuing joint efforts of the two agencies, the financing
of the Government's requirements, including its requirements for new
money during the period of the Korean emergency, has been successfully conducted with a minimum strain on the financial structure of
the Nation.
(5) Tax policies and tax legislation to finance Government since June 1946.

Tax policies advocated by the Treasury since June 1946 have been
directed, toward meeting the changing needs of the Nation. This

1952 REPORT OF THE SECRETARY OF THE TREASURY .

momentous period of history presented distinct economic problems
to which tax policy had to be adapted.
During this period, the Treasury consistently advocated fiscal policies designed to safeguard the credit of the Government. I t actively
sought structural improvements to enhance the equity of the tax
laws. The outbreak of hostilities in Korea in mid-1950 imposed
severe strains on the economy and sharply increased revenue requirements. Since that time tax policy has borne the responsibility of
financing defense as nearly as possible on a pay-as-we-go basis, while
retaining the incentives to work and invest which are basic to our
free enterprise system.
During the six fiscal years ending with the fiscal year 1952, as a
whole, the Treasury operated with a net budget surplus of approximately $3% billion. Since tax increases passed by the Congress were
less than those recommended, the fiscal year 1952 ended with a $4
billion deficit and another deficit is anticipated for the fiscal year 1953.
The policy of covering governmental expenditures out of current
tax revenues during these years served to reduce the strains and dislocations due to inflation. During most of this period, the economy
was enjoying an unprecedented prosperity, and strong inflationary
pressures prevaUed. This situation called for tax policy aimed at
both balancing the budget and reducing the public debt. Such a
policy, was put into effect, and contributed in a positive way to the
maintenance of the credit of the Government and the soundness of
the country's currency.
In the fiscal year which saw the transition from war to peace^—the
fiscal year ending June 30, 1946—Federal Government expenditures
fell off by about $40 billion from the wartime peak of just under $100
billion reached in the fiscal year 1945. In the fiscal year 1947, the
first fiscal year here under review, expenditures were again reduced
by more than one-third and the Federal Government operated at a
surplus of about three-fourths of a bUlion dollars. This desirable
transition from a period of war deficits to peacetime surpluses was
accomplished without serious unemployment or economic dislocation.
In view of our large wartime debt, maintenance of the Nation's
finances in a sound condition required keeping our tax revenues at a
high level during the prosperous postwar period ia order not only to
meet expenditures, but also to provide for the orderly retirement of
the debt. I t required also the utilization of tax reduction opportunities for the improvement of the structure of the revenue system rather
than for indiscriminate across-the-board reductions. For these reasons
the Treasury opposed premature tax reduction legislation in 1947
and 1948.
The Treasury opposed tax-cutting legislation in 1947, believing that

REPORT ON THE FINANCES

under the prosperous conditions then prevailing, taxes could be paid
with less hardship and adverse economic effect than would be possible
under less favorable circumstances. The Secretary outlined the
desirable features of a sound tax system and urged the need for
advance planning to lay the foundation for future legislation. The
untimely tax reduction legislation passed by the Congress on June 3,
1947, was postponed by the President's. veto and simUar legislation
passed July 13, 1947, was also vetoed.
When similar tax reduction proposals were renewed in 1948, the
Treasury reiterated the view that there was need for restraint; that
sound fiscal policies were required to cope with inflationary pressures
and to reduce the public debt. The Revenue Act of 1948, passed over
dministration opposition, reduced revenues by approximately $5
billion annually.
In 1949, the President recommended tax increases to,recoup some
of the revenue lost in 1948. This program recognized that a Government surplus under the then existing conditions was essential to
provide a margin for contingencies, to permit reduction of the public
debt, to provide an adequate basis for future financing of existing
commitments, and to restrain inflationary trends.
Throughout these developments it was the Treasury's position that
tax reduction, when feasible, should be utilized for the improvement
of the fairness of the tax structure and for the elimination of inequities
and loopholes. Intensive study was given to methods of ridding the
revenue structure of accumulated inequities and technical defects.
In 1948, the Treasury advanced specific proposals for improving
the tax system and its administration without substantial revenue
cost. A number of these were incorporated in a 1948 bill adopted by
the House, but were not considered by the Senate. In 1949, a further
attempt was made to achieve greater equity and revenue strength by
closing loopholes. Opposition to premature tax cuts was based on the
view that they were inappropriate under prevailing economic conditions and would hinder desirable structural revision at a later date.
In 1950, the. President recommended in a special tax message a
program to eliminate loopholes in the tax laws, remove onerous excise
taxes, and at the same time restore the revenue strength of the tax
system through additional taxes on corporate profits and revised
estate and gift taxes. The Congress was engaged in consideration of
this program in June 1950, when hostUities broke out in Korea.
This development swept aside immediate prospects of excise tax
reduction and confronted the United States with the problem of
financing a defense program of major magnitude. The Treasury
sought to obtain added revenue to meet this emergency and at the
same time to promote long-run objectives. Its policies were directed

1952 REPORT OF THE SECRETARY OF THE TREASURY

toward financing the defense effort on a sound and equitable basis,
with minimum additions to the public debt. Adequacy of revenue
was giyen primary emphasis in order to preserve confidence in the
integrity of the Government's finances, to distribute the heavy
defense costs fairly, and to restrain inflationary pressures.
Within 16 months after the outbreak of hostilities in Korea, three
major revenue acts were enacted. These measures increased the
annual revenue producing strength of the tax system by approximately $15 billion at 1951 income levels. Of this total, the Revenue
Act of 1950 accounted for nearly $6 bUlion, the Excess Profits Tax
Act of 1950 for about $4 bUlion, and the Revenue Act of 1951 for over
$5 billion. Over 90 percent of the increased revenues under the three
measures was obtained from increased taxes on individual and corporate incomes and profits. Minimum reliance was placed on consumption taxes.
The three major tax measures enacted since mid-1950 are of sufficient importance to merit separate discussion. I n the paragraphs
below, therefore, each of the three measures is reviewed in turn.
This discussion is followed by brief statements of certain other specffic
developments in tax policies and programs since June 1946.
A. Revenue legislation enacted since June 1950
The Interim Revenue Program.-—At the time hostUities suddenly
broke out in Korea in mid-1950. Congress was considering tax revision
legislation. The bill under consideration was directed primarUy
toward excise tax reduction. I t provided reductions in war excise
taxes aggregating approximately $1 billion. Most of the revenue loss
was to have been recouped through closing tax loopholes and from an
increase in the corporation income tax.
Although it followed the general pattern of the President's recommendations, the House bUl fell short of his revenue objectives. The
President had proposed (1) that excise taxes be reduced to the extent,
and only to the extent, th^it the resulting loss in revenue could be
replaced by closing loopholes in the present law, and (2) that $1 bUlion
of additional revenue be provided by revising and improving the corporation, income, estate, and gift taxes.
When the Korean crisis occurred, the fiscal year 1950 was drawing
to a close with a deficit of more than $3 bUlion. The Korean situation
evolved rapidly and the Treasury advised the congressional tax committees that it would not be prudent to proceed with further considerations of the tax bill then under consideration. The public was warned
to prepare for higher taxes. The President announced that at an
appropriate time he would propose tax legislation to the Congress and
suggested that such legislation be guided by two fundamental prin

REPORT ON THE FINANCES

ciples: (1) '* We must make every effort to finance the greatest possible
amount of needed expenditures by taxation. The increase of taxes
is our basic weapon in offsetting the infiationary pressures exerted by
enlarged Government expenditures. Heavier taxes wUl make general
controls less necessary. (2) We miist provide for a balanced system
of taxation which makes a fair distribution of the tax burden among
the different groups of individuals and business concerns in the Nation.
A balanced tax program should also have as a major aim the elimination of profiteering."
The situation called for speedy enactment of tax increases. Even
before Korea, most economic indicators were pushing towards or exceeding record peacetime levels. Gross national product, personal
incomes, and corporate profits were very close to the peak levels
reached late in 1948. Economic projections indicated the beginnings
of substantial infiationary pressures. The whole economy appeared
to be surging forward at an accelerated pace.
To meet the emergency expeditiously, the President proposed that
the pending tax reduction bUl be converted into an interim taxincreasing measure to provide more time for the consideration and
imposition of direct controls as well as the formulation of a revenue
program for defense. Speed was of the essence because if taxes were
not increased promptly inflation would become an accomplished fact.
Accordingly, the Treasury recommended that the House bill be
revised (1) to eliminate excise tax reductions and other revenue-lowering provisions, (2) to retain the loophole closing, dividends withholding, and life insurance company taxation provisions, and (3) to
embody increases in corporation and individual income taxes. To
avoid serious delay, it advocated deferring excess profits tax legislation
pending the completion of the interim revenue measure.
The revenue legislation received expeditious congressional handling.
I t was enacted on September 22 and signed by the President on
September 23, 1950.
The Revenue Act of 1950 increased individual and corporation income tax rates along the lines recommended by the Treasury. However, the corporation income tax increases were made applicable to
only about half of calendar year 1950 income instead of the full year,
as had been recommended. The act also provided for gradual acceleration of corporation tax payments over a transition period of 5
years.
The Revenue Act of 1950 was the first general stabUization measure
to be adopted and put into effect after Korea. I t carried forward the
policy of the Administration to pay for the defense program out of
current taxes and thus to offset the inflationary pressure resulting
from increased Government expenditures.
221052—53

1952 REPORT OF THE SECRETARY OF THE TREASURY

The 1950 revenue legislation was facUitated by the fact that the
tax structure which had been developed during the preceding years
permitted the increased rates to become effective almost immediately
by virtue of the current-payment system and the system of withholding income taxes as salary and wage income is received. The
tax structure permitted tax rates to be increased, expanded, and made
promptly effective without major structural revision. This made it
possible for the Government to rely upon the individual income tax
for a large part of the additional revenue required for the defense
effort.
Taxation oj dejense profits.—In his message to the Congress on
July 19, 1950, the President urged that ^'a balanced tax program
should also have as a major aim the elimination of proflteering."
The Revenue Act of 1950 did not include an excess profits tax because
of the time required to draft such complex legislation. I t did, however, contain a directive to the Joint Committee on Internal Revenue
Taxation to make a complete study of the problems of excess profits
taxation and instructed congressional tax committees to report out
an excess profits tax bill, retroactive either to July 1 or October 1,
1950, as soon as practicable after November 15, 1950.
In November 1950, the President urged immediate adoption of an
excess profits tax effective as of July 1, 195.0, to raise $4 billion annual
revenue. He pointed out that business profits had increased since
that date and that such profits '^should obviously be taxed as part of a
sound program of defense taxation."
The Treasury's suggestions on the principal provisions of a profits
tax to raise approximately $4 billion in revenue were presented to the
Committee on Ways and Means on November 15, 1950. These suggestions took full account of the fact that Congress had given extensive
support to the principles of excess profits taxation during its consideration of the interim tax bUl.
As enacted, the Excess Profits Tax Act of 1950 imposed a tax of 30
percent on corporation profits in excess of 85 percent of the average
three highest base-period years 1946-1949, to be effective for a period
of 3 years, July 1950 to June 30, 1953. Provisions were also made for
alternative credits based on invested capital and growth. So-caUed
automatic relief provisions based on industry rates of return were
provided.
The President approved the Excess Profits Tax Act on January 3,
1951. He commended the Congress for its speed in completing this
complex legislation.
Revenue Act oj 1951.—Although the Revenue Act of 1950 and the
excess profits tax had increased revenues substantially, the task ahead

REPORT ON THE FINANCES

required more and heavier taxes to finance additional expenditures for
national defense.
In his tax message to the Congress February 2, 1951, the President
pointed out that '^inflationary pressures will be strong even after taxes
are increased enough to balance the budget. We will still need direct
controls over prices and wages. But it may not be possible to make
these controls effective- unless we tax ourselves enough. Certainly
those controls wUl be far more effective if we pay for expenditures
through taxes as we go along."
To meet the problem the President recommended that the tax
program be enacted in two parts. This two-phase program was suggested because of the difficulty of estimating the speed with which
military production and expenditure would get under way. He suggested that the first part provide additional revenue of at least $10
billion and that such remaining amounts as would be needed to keep
the Government on a pay-as-we-go basis be provided at a later date.
On February 5, 1951, the Treasury outlined to the Committee on
Ways and Means of the House of Representatives a tax program to
yield approximately the $10 billion the President requested. The
largest portion of the additional revenue, $4 billion, was to be provided
by raising all income tax brackets by 4 percentage points and by
increasing the capital gains tax rate from 25 to 37K percent. Increases
were also proposed in the corporate income tax and in a number of
excise taxes.
Improvements were also urged in the tax structure and in enforcement provisions since higher rates accentuated existing inequities.
Previous legislation had been successful in closing several important
loopholes but further action was needed along these lines. Improvements in the tax structure in those areas which enabled favored taxpayers to escape their fair share of the burden were also recommended.
Revenue increases adopted under the Revenue Act of 1951 were
only about half the amounts recommended. The bulk of the increase
came from taxes on individual and corporate incomes. The force of
this legislation was partially dissipated by the fact that it contained a
number of provisions which acted as tax havens. These included
excessively liberal capital gains and family partnership provisions,
and additional depletion and related allowances for certain nlineral
properties.
Because of these features, the President approved the bill only with
reluctance, indicatiag that he would have disapproved the legislation
if the need for revenue had not been so pressing.

19 52 REPORT OF THE SECRETARY OF THE TREASURY
B. Other specific developments in tax policies and programs
since June 1946

Social security taxes.—During the period since June 1946 the
Treasury gave continuiag attention to the developmeat of eft'ective
methods for extending and expanding the coverage of the old-age and
survivors insurance program,, drawing upon its experience with wartime and postwar taxation of lower income groups. The efforts to
extend coverage culminated in the enactment of the Social Security
Act Amendments of 1950, which brought within the framework of the
retirement program mUlions of self-employed persons, agricultural and
domestic workers, and employees of State and local governments and
nonprofit institutions. At the same time the general level of social
security benefits and taxes was increased. The 1950 legislation also
reversed the action of the preceding Congress which had excluded some
workers from coverage.
During the six full fiscal years under review, the Secretary, as managing trustee of the old-age and survivors insurance trust fund, was
responsible for the management of an ever-increasing reserve fund.
At the end of the fiscal year 1952 the assets of the fund stood at $16.6
billion compared with $7.6 billion 6 years earlier.
Federal-State-local tax coordination.—Throughout the postwar period
the Treasury has sought to advance Federal-State-local tax coordination. State and local governments emerged from World War I I with
substantial surpluses. Tax revenues expanded during the. war while
the limited availability of materials and manpower held down expenditures. The postwar years were characterized by rapidly iacreasing
needs for State and local services which exhausted wartime reserves of
State and local governments and pressed heavily against the expanding
revenues. This coincided with the continuing need for high level
Federal revenues. I n the process, the problems of intergovernmental
tax coordination were intensified.
In recognition of this situation, the Secretary of the Treasury
invited State and local representatives to meet with Federal officials
in Washington in AprU 1949 to explore intergovernmental fiscal
problems, including methods of reducing overlapping taxes and
administrative duplication. Among other proposals, the conference
considered the suggestion that, the Federal Government relinquish
certain excise revenues to State and local governments either^ through
rate reduction or tax repeal. I t agreed that Federal budgetary
conditions at the time precluded abandonment of excise revenues,
and recommended that the interest of the States and municipalities
be kept in view when circumstances permitted a general Federal
excise tax revision.

REPORT ON THE' FINANCES

Administrative cooperation between Federal and State fiscal
authorities has been extensively developed since the war. Federal
income tax returns have been opened to inspection by State, tax
officials, and in recent years, thousands of transcripts of individual
and corporation income tax returns have been supplied to the States.
Beginning with 1950, Federal-State cooperation entered a new phase,
with the exchange between Federal authorities and a number of States
of information uncovered through tax audits. This program is
proving successful and several States have expressed a desire to
participate in it. Legislation proposed by the Treasury and enacted
in 1952 wUl enable Federal agencies to withhold State income taxes
from their employees where States make general use of income
tax withholding.
Extensive administrative cooperation has been developed in the
enforcement of alcohol and other excise taxes. Federal, State, and
local enforcement officers work closely together in the detection of
illicit alcohol production. Treasury records on alcohol shipments and
on alcoholic beverage distributors are made avaUable to the States as
an enforcement measure. The States have had a special problem of
enforcement of tobacco taxes because interstate parcel post shipments
provide a means of tax avoidance. Federal legislation in 1949 relieved
this situation by requiring that monthly reports be made to State
administrators by persons who sell cigarettes in interstate commerce
and ship them to other than licensed distributors in a State which
taxes cigarettes.
The problems associated with payments to State and local governments on federaUy owned real property have long been a troublesome
factor in intergovernmental relations. The 1949 Treasury conference
on intergovernmental fiscal relations revealed more interest in this
problem than in any of the others discussed. As a result, plans were
formulated with Treasury participation for a uniform system of
payments to State and local governments on account of federally
owned real estate. Legislation along these lines is pending in the
Congress.
International tax relations.—In the immediate postwar period,
private investment abroad could play only a minor role in the restoration of war-torn economies. In subsequent years, as United States
policy turned increasingly to private capital to promote the economic
growth of the free world through Point IV and other programs, the
Treasury developed a number of tax proposals to further foreign
economic policy. Recommendations were made to the Congress (a)
to liberalize the tax treatment accorded income from personal services
rendered abroad, (b) to liberalize the credit allowed for foreign income
taxes, (c) to permit postponement of tax on income earned abroad

1952 REPORT OF THE SECRETARY OF THE TREASURY

through branches of domestic corporations untU such income is
remitted to the United States, and (d) to grant a credit under the
Federal estate tax for death duties imposed abroad. Except for the
postponement of tax on branch income. Congress adopted legislation
along each of these lines. Legislation on tax postponement has been
introduced and is under consideration by the Ways and Means
Committee.
The Treasury conducted an active tax treaty program to eliminate
international double taxation, thus further promoting the Nation's
economic interests and its foreign policy. Income tax treaties were
concluded with 7 countries, bringing the total number of such agreements now in effect to 11. Treaties with three other countries have
been signed but await exchange of ratffication. In addition, a number
of estate tax treaties were also negotiated.
The Treasury actively participated in a number of international
meetings dealing with tax policy. In 1948, it helped to launch the
United Nations Fiscal Commission. The Fiscal Assistant Secretary
of the Treasury, who represents the United States on the Commission,
has played a leading role in its deliberations.
Viewing the events of the period since June 1946 in retrospect,
there are grounds for genuine satisfaction that, on the whole and
despite imperfections, the tax structure has served the purposes of the
American people well. Despite the additional burdens which they
have been called upon to bear, the people of this Nation have enjoyed
a higher standard of living than ever before.. Production has gone
forward and future productive capacity has been expanded.
This experience demonstrates in a gratifying manner the capacity
of a democratic Nation to use the self-discipline of taxation wisely.
I t affords confidence that a courageous and constructive approach to
tax policy can help buUd a sound and enduring prosperity.
(6)

The formulation, expression, and coordination of United States foreign
financial policies.

The 6K years since Jmie 1946 have been years of rapid evolution
in United States foreign financial policies to meet rapidly changing
developments in the world political and economic situation. We
have passed through the immediate postwar adjustment to the termination of lend-lease arrangements, and through the period of
emphasis on the physical recovery of industrial and agricultural
production. In 1949 and 1950, we were increasingly devoting attention to financial, monetar}^ and exchange policies which were making
it possible to approach the kind of international monetary system
and level of international trade, with reduced reliance on United

REPORT ON THE FINANCES

States assistance, which we had been seeking. Then in 1950 the
attack on the Republic of Korea posed for us the necessity of new
emphasis on defense throughout the free world, and presented new
problems in the financial relationships of the United States with
other countries.
Throughout this period, while dealing with the iinmediate and
urgent problems which continuously arose, I have sought to keep
before the world our broad objective of a high level of world trade and
investment, which would improve the standard of living of the free
peoples and attain higher levels of useful production, employment,
and trade. Conscious of the financial costs of our foreign assistance
programs, I have sought to encourage greater reliance on trade and
investment and a better balance in international accounts through
realistic exchange rates, backed up by vigorous and sound internal
financial policies among the countries participating in om^ assistance
programs. Our hope is to achieve a goal of expanding multilateral
trade and a greater degree of convertibility of currencies, which will
open the world to an increasing extent to the stimulating and constructive forces brought into play by the competitive price system
operating internationally as well as domestically. Accordingly, we
have sought the removal of hampering restrictions whether they take
the form of restrictive tariffs, quotas, prohibitions, exchange restrictions, or other artificial supports or devices.
In the United States itself, we have been able to contribute decidedly
to these objectives. We have maintained a strong currency and
through our free convertibility of dollars into gold for international
transactions have provided the foundation upon which the world
monetary system may be' rebuilt. We have made substantial progress
in reducing our barriers to the free flow of international commerce,
through our tariff reductions and in the improvement of our customs
administration. I have been pleased to see our imports grow significantly, and I hope that our friends abroad will be in a position to
pay their way to an increasing extent by trading freely in world
markets.
Since much of the progress which we can make toward this goal
depends upon the actions of other governments, I have taken an
active part in our efforts to obtain their cooperation in promoting
these objectives. Opportunities have been provided through personal
contacts, through expressions of this Government's views, and through
constant contacts between the Treasury and foreign finance ministers.
Representatives of foreign, governments have frequently come to
Washington to discuss problems of mutual interest. Also, I have
visited foreign countries for conversations with their financial officers
on several occasions, such as trips to Latin America in 1946, 1947,

19 52 REPORT OF THE SECRETARY OF THE TREASURY

and 1952; to the Middle East, and the Far East in 1949; and to
Europe in 1949, 1950, and 1952. Ultimate decisions in exchange,
fiscal, and other major financial matters are taken by the countries
concerned, but we are in a position to seek their cooperation and to
express our views. In addition to the normal relations between governments, we possess in the International Monetary Fund an international organization which devotes special attention to the promotion of consultation and cooperation in exchange policies, with a
view to avoiding confiicting courses of action by the nations of the
world. Throughout my term as Secretary of the Treasury, I have
served as Governor for the United States in this institution, and have
appreciated the opportunity to take an active part in its early formative stages and in its subsequent development.
In addition to this broad concern, a number of problems have arisen
in the coordination of grants and credits being undertaken by a variety
of administering agencies. I have been Chairman of the National
Advisory Council on International and Monetary Problems, which
has been charged by Congress with responsibilities for such coordination. The Council has reviewed the financial policy issues arising in
the series of annual assistance programs, as well as those presented by
the continuing operations of national and international lending
agencies.
In the latter part of the period and particularly after the aggression
in Korea, the Treasury has been concerned with the financial aspects of
our mutual security programs. As the mutual defense programs developed under the aegis of the North Atlantic Treaty Organization, it
became apparent that many of the major decisions in foreign countries
could be taken only with the active participation and approval of the
finance ministers. Frequently the critical questions concerned the
financial effort required of NATO members relative to the contributions being made by other members and to the form aud amount of
United States assistance. At the same time, our contribution to the
common effort was a matter of major concern to the United States
taxpayer. Accordingly, at the designation of the President, I became
a member of the CouncU of the North Atlantic Treaty Organization,
serving in this capacity with the Secretary of State and the Secretary
of Defense.
A special responsibUity has arisen from the Korean conflict. In
support of our efforts in Korea, I took action on December 17, 1950,
to block financial transactions involving Communist China or North
Korea. This measure not only immobilized existing dollar assets of
Communist China and North Korea and their nationals, but prevented
these areas from selling their goods to the markets of this country

REPORT ON T H E FINANCES

for foreign exchange which could be used to aid their attack upon our
forces.
Many of these international financial problems have required
fairly constant attention throughout the period under review. In
each of the postwar years, however, circumstances have required
that special attention be given to one or more particular aspects
of the broader international financial problem, as indicated in the
following paragraphs.
When I began my term of office in June 1946, we were faced with
the problem of immediate postwar relief and reconstruction, and
the task of building a stronger international monetary system. AD
initial part of the latter task was the carrying forward of the organization and functions of the financial institutions which had originated
in the Bretton Woods Conference in 1944. One of these institutions
was the International Monetary Fund, which was designed to improve
the standard of living of its members and to. promote production and
trade through internatioriai cooperation in exchange policy. I t was
directed to wOrk toward a world of free exchange and convertible
currencies, and to this end was provided with funds available for
short-term financial assistance, to be associated with its consultations
and review of the exchange, monetary, and financial policies of its
members. The second new institution, the International Bank for
Reconstruction and Development, was designed to make or guarantee
international loans for productive purposes.
I have participated in the formulation of policies for the two
organizations, through the National Advisory Council which advises
the representatives of the United States on the boards of the two
institutions. As United States Governor, I have represented the
United States at the seven annual meetings which have been held
since the establishment of these organizations.
The year 1947 was marked by increasing evidence that many foreign
countries, particularly in Europe, were unable to effect the conversion
to peacetime conditions, and carry out the needed reconstruction,
without serious internal inflationary stresses and a critical strain
upon their balance of payments. The immediate postwar program of
relief on an international basis began to be replaced by United States
foreign relief programs. Our efforts to rebuild the world monetary
system also were set back by the faUure of the British attempt to
make sterling convertible and the rapid exhaustion of the funds provided by the Anglo-American Financial Agreement. As administrator
of the Anglo-American Financial Agreement, in consultation with
the National Advisory CouncU, I conferred with the representatives
of the British Government on the situation arising out of the 1947
crisis.

1952 REPORT OF THE SECRETARY OF THE TREASURY '

Recognizing the economic stresses under which the European
countries were laboring, the executive branch developed and presented
to the Congress in the winter of 1947-48 proposals for a European
recovery program. As Chairman of the National Advisory Council,
I guided the deliberations of the Council on the major financial
policy questions raised by a program of this magnitude and character.
I n presenting the views of the Council to the Congress, I pointed to
the large outstanding obligations of the European countries and
recommended that the bulk of the assistance be provided in the form
of grants, rather than loans, in order that we might avoid so large an
increase in debt as to operate to the disadvantage of future trade and
private investment. The importance of efforts by the participating
countries to increase production, expand trade, and seek financial
stability was stressed. Particular emphasis was given to the vital
importance of the control of infiation through appropriate fiscal and
monetary policies, taxation, and improved fiscal administration, curtaUment of postponable expenses, sound credit and debt policies,
and appropriate exchange rates.
Also in 1948, it became apparent that financial reforms were
necessary in Germany and Japan. In both countries the early
postwar period was characterized by acute infiation which impeded
economic recovery internally and kept them in a weak international
position, supported by large appropriations administered by the
United States mUitary forces. The Treasury cooperated actively
with the State and Defense Departments in planning and carrying
out the currency reform in Germany. This reform was highly successful and gave impulse to a striking recovery in the balance of payments
and in the intemal prosperity of Western Germany. Through the
National Advisory CouncU, attention was focused on the Japanese
situation in the same year, and recommendations were made which
eventuated in special missions to Japan, who advised the Supreme
Commander and the Japanese officials on exchange policy and intemal
measures. The stabUization program resulting from these efforts
provided an impressive stimulus to Japanese recovery.
In 1949, progress was being made in a number of continental
European countries in controlling inflation and strengthening their
currencies. However, in my presentation to the Congress of the
recommendations of the National Advisory CouncU in the spring of
that year, I suggested that the problem of exchange rates should be
reviewed with a number of European countries during that year,
with a view to exploring the extent to which they might improve
their position by an adjustment of their overvalued currencies. In
the autumn of 1949, shortly after the conclusion of the annual'meeting
of the International Monetary Fund and the International Bank, the

REPORT ON THE FINANCES

British Government decided to adjust thC' par value of the pound
sterling, and this was quickly followed by a number of adjustments
in other exchange rates. Following this world-wide adjustment,
the current deficit of the rest of the world with the United States,
which had been more than $7 billion per annum early in 1949, dropped
to about a third of this figure. At the current level of United States
assistance, this permitted some ioiprovement in foreign reserves.
While the exchange adjustments did not account for all of this favorable turn in the world payments situation, it seems clear that they
contributed substantially to this result.
The invasion of Korea set off a new series of disturbances throughout the world. Prices rose and increased military preparations added
to the generally infiationary pressures in many countries. Large
imports by the United States resulted in considerable additions to the
gold and dollar reserves of the sterling area and other raw material
producing countries, but the high prices of raw materials adversely
affected the European manufacturing centers.
There were suggestions that some of the raw material producing
areas appreciate their currencies with respect to the dollar. The
National Advisory Council opposed any general revision of exchange
rates by countries maintaining exchange restrictions or receiving
special United States assistance; and I stated the view of the United
States that such action was not justified in view of our armament
effort and our mutual assistance program, and would merely give
a trade advantage to particular countries.
New evidence of inflationary strain and external pressure on the
balance of payments developed abroad in the latter part of 1951, and
has continued into 1952. These developments emphasized the close
relationship of internal financial policy to a sound balance-of-payments position. This theme was developed during the consultations
and discussions of the International Monetary Fund during the
summer of 1952. Efforts were undertaken, particularly by the United
Kingdom and certain other countries, to arrest inflationary trends.
In the annual meeting of the International Monetary Fund and the
International Bank in Mexico in September 1952,1 noted an increasing
realization of the vital importance of controlling internal inflation
through sound fiscal and financial policies. Expressing the views
of this Government, I emphasized the essential but frequently
unpopular role of the finance minister in urging the dUficult road
of fiscal and monetary measures which minimize inflationary pressures,
as against the easy and frequently popular road of inflation and
exchange and trade restrictions, which leads in reality to instabUity
and w:eakness. (See exhibit 35.)
A more detaUed review of the problems of these years in relation

19 52 REPORT OF THE SECRETARY OF THE TREASURY

to the responsibilities of the Treasury and the objectives of the
United States in the area of international financial relations will be
found in a later section of this report (pp. 218 to 235). In this section
also, details of programs and actions which have been instituted with
respect to United States gold and exchange policies, international
monetary cooperation, and United States economic assistance programs are given at greater length.
(7) Reorganization and management improvement in the Bureau of Internal
Revenue in order that the Bureau might more adequately fulfill its increased
responsibilities.

At the time that I took office ia June 1946, there was urgent need
for adapting the operations of the Bureau of Internal Revenue to its
greatly expanded responsibUities. Between 1940 and 1946, the Bureau had grown from a $5 bUlion to more than a $40 bUlion busiaess.
Its collection job had multiplied eight times in dollar volume from 1940
to 1946. Its customers had quadrupled from nearly 20 mUlion to
more than 80 million in tax returns filed during the same period.
In addition to increases ia the sheer volume of the workload, the
nature of the tax collecting job had undergone major changes duriag
the war years. Before the war, tax collection was concerned largely
with taxpayers having fairly substantial iacomes. These taxpayers
generally kept accurate records, utUized the services of accountants or
lawyers, maintained bank accounts, and possessed a general knowledge
of tax requirements. Practically overnight, the income tax was
extended to cover mUlions of modest-iacome people whose records
were scanty^ who were untrained in tax requirements, who often had
no bank accounts, and who changed jobs frequently. The Bureau
was thus called upon to administer and collect a very broadly based
mass tax, with all of the problems of education, administration, supervision, and enforcement which this created.
At the same time, major changes in the methods of tax collection,
notably the withholding tax, had occurred. The withholding tax
represented an important step forward in convenience and effectiveness of tax paying and tax collection. Nevertheless, the new current
tax payment system called for basic changes in tax collection practices.
In addition, many new and complex taxes were imposed and superimposed during the war, iacluding a large number of excise taxes, each
one with separate problems of admiaistration, collection, and enforcement. Finally, the severe shortage of manpower and mechanical
equipment during the war iacreased all of these difficulties, making it
necessary for the Bureau to meet its magnffied tasks with a prewar
machiaery which was neither designed nor equipped to handle them.
WhUe the war was goiag on, the Bureau solved these problems as
best it could, using its limited facUities where they were needed most.

REPORT ON THE FINANCES

B u t by June 1946, the iavestigation of individual income tax returns
had fallen about 1 year behind schedule and the investigation of corporate income and profits taxes nearly 2 years behind. Furthermore,
only limited manpower could be spared from the Bureau's most essential functions to obtaia better enforcement and collection.
During the past 6 years, a thorough, drastic, and far-reaching
revision of the tax collecting mechanism and of the entire operations,
of the Bureau has taken place. These developments have grown out
of the management improvement program which was started in
October 1946. At that time, I called to Washington all the k e y
revenue officials. The goal which I placed before these officials was
the transformation of the Bureau as it existed on that date.—with
a basic structure dating back to the 1860's—into a modern, streamlined organization carrying on its operations according to the latest
practices of modern business.
The October meeting was the first of a continuing series of actions
through the ensuing months and years. The program as it progressed
has resulted in a large number of major changes and in innumerable
lesser improvements in the Bureau's methods and administration.
One of the iaiportant changes is the President's Reorganization
Plan No. 1 for 1952, which President Truman sent to the Congress
in January 1952 and which became effective 2 months later with
congressional assent. The essential features embodied in this plan
are: (1) The elimination of political appointment of all Bureau personnel except the Commissioner, and the placing of such personnel
under civil service and the merit system; (2) abolition of the collectors'
offices and the establishment in their stead of not more than 70 local
area offices under the direction and supervision of not more than 25
district offices which are to have fuU administrative responsibility
for all Internal Revenue Bureau activities within a designated area,
regardless of function or kind of task; (3) provision in the district
offices of a one-stop service to the taxpayer with respect to revenue
problems of any kind; (4) the achievement as the result of these and
other changes of an efficient, streamlined organization having the
advantages of (a) the consolidation of mass operations in the district
offices, (b) the greater use of modern mechanized processes of operations, (c) the delegation of more operating functions to the taxpayer
level, and (d) greatly broadened auditing and enforcement activities
through the use of personnel and funds released by improvements
elsewhere.
On December 1, 1952, the major features of the reorganization of
the Bureau of Internal Revenue were completed. All of the collectors'
offices had beeri abolished and replaced by 64 directors' offices under
the direction of 17 district offices, providing every section of the

1952 REPORT OF THE SECRETARY OF THE TREASUHY

country with greatly improved facilities for conducting business
relating to tax obligations and tax payments.
The Reorganization Plan No. 1 of 1952 developed from the management studies and surveys which were put into operation in the early
months of my tenure of office. In the period since then, the management improvement program for the Bureau of Internal Revenue has
brought experience and management skill from every source inside
and outside the Government to bear on the Bureau's organization
and operations. An audit control program was formulated for the
purpose of achieving maximum effectiveness in audit and investigative techniques and maximum enforcement coverage with the available personnel. A work simplification program was initiated at the
grass roots level and some 2,200 improvements in operations and
procedures have resulted. Employee incentive awards have been
established and have been immensely productive of new ideas and
suggestions which have paid oft\ A management staff was set up as
part of the Commissioner's Office, and a ''Special Committee. to
Direct the Management Studies of the Bureau of Internal Revenue"
was created. This committee was composed of qualified people from
inside and outside the Government and headed by an experienced
businessman.
One of the outstanding management firms in the country was
engaged to make comprehensive analyses of procedures in the collectors' offices and of Bureau operations in general. Improvements of
far-reaching consequence have resulted and are resulting from these
reports.
One of the most tangible evidences of change which has occurred
during recent years has been the extensive conversion of manual
operations to labor saving and mechanical devices. The Bureau has
tried out and installed as rapidly as possible electronic computers,
punch card recording machines, high-speed posting machines, mechanical validators for tax stamps, and many similar devices for speeding
up operations.
The most striking transformations, however, are not those which
can be seen by a visit to the Bureau's offices. They are found in the
much greater efficiency of service rendered the taxpayer and the
public in general. The Bureau has substantially reduced its backlog
and absorbed a 13 percent increase in income tax returns filed (including a 144 percent increase in the number of iadividual income tax
returns over $10,000, which require more work and attention). Yet
the cost of collecting the taxpayer's dollar has fallen to ^Koo of a cent,
one of the lowest on record in modern tioies, arid services of all kinds
have been greatly iaiproved.
For example, refunds on overpayments to some 30 million taxpayers

REPORT ON THE FINANCES

as a result of the withholding tax—running annually close to $2
billion—^have been speeded up through modern methods to the point
where most of them are now mailed out in approximately two months
after the March 15 tax payment date. Such refunds have formerly
required as long as 12 months. This single improvement is resulting
in a saving in interest payments on tax refunds amounting to as much
as $3 million in a single year.
The saviag ia time to both the taxpayer and the Bureau represented
by the great simplification of income tax forms put into effect in
recent years is an example of another achievement of great importance.
The more intensive enforcement program made possible by the
streamlining of other Bureau operations is stUl another result, and a
most important one of the improvement program.' Additional tax
assessments and collections on unpaid taxes, many of which the
Government would not otherwise have collected, were approximately
$800 mUlion, or 55 percent, greater in 1952 than in 1946. I t has been
possible, also, to step up investigations and prosecutions of tax frauds.
In the fiscal year 1952 alone, additional taxes and penalties recommended in the cases investigated by the Bureau's special agents having
to do with tax frauds totaled more than $250 million, approximately
the amount required to run the Bureau for an entire year.
The record of improvements since 1946 in the Nation's largest
business, the Bureau of Internal Revenue, is given in some detail in
a later section of this report (pp. 200 to 213), and is discussed also in the
chronological review of management improvement during the past
six fiscal years which appears on pp. 213 to 218. The record confirms
my belief that the program which we have been able to put into effect
in the Bureau of Internal Revenue since 1946 represents an achievement of outstanding importance in the history of governmental
operations. The irregularities of which some employees have been
guilty and which the Department has made every effort to eliminate
should not detract attention from the essential over-all honesty and
competence of the personnel of the Bureau of Internal Revenue.
The American people can well be proud of the integrity of the Bureau's
employees and of the success with whicii the Bureau has sustained
their fidelity and devotion to duty.
(8) Improvement in services and operating procedures of the United States Coast
Guard.

One of the most difficult and pressing administrative problems
which the Treasury Department faced when I took office was the readjustment of the Coast Guard, and its successful adaptation to the
many new responsibilities which had developed during the war years.
On January 1, 1946, the United States Coast Guard had been returned

19 52 REPORT OF THE SECRETARY OF THE TREASURY

to the jurisdiction of the Treasury Department, after having operated
as part of the Navy duriag World War II.
The peacetime duties for which this branch of the service was
responsible had undergone a radical change duriag the war years.
The extensive developments during World War I I of such navigational aids as loran (electronic long-range aids to navigation) and
weather reporting devices made necessary extensive changes in the
facilities relating to weather reporting and to air and sea safety which
are the responsibility of the Coast Guard. At the same time, the
tremendous increase in transoceanic air travel placed serious new
burdens on the personnel and equipment of the service.
For example, in August 1946, on the basis of an act approved by
the Congress and signed by the President, the United States became
an official member of the International Civil Aviation Organization.
This is an authoritative international group for the promotion of air
safety and other aviation matters. The United States Coast Guard
has the primary responsibUity for carryiag out the recommendations
of this organization for rescue at sea, and has been meeting its obligations with respect to these matters as rapidly as funds and personnel
would permit.
With respect to all its navigational and sea rescue activities, it has
been necessary for the Coast Guard to modernize operations in order
to bring them in line with the requirements of present-day air and
marine transportation. At the present time, for example, the Coast
Guard maintains 37,838 aids to navigation in the navigable waters
of the United States, its Territories and possessions, the Trust Territory of the Pacffic Islands, and at overseas mUitary bases. These
aids consist of many different devices ranging from simple unlighted
wooden spar buoys to light stations, lightships, and complex loran
networks. The 36 loran stations, located both in the United States
and in Avidely separated and isolated localities (Greenland, Labrador,
Newfoundland, Alaska, the Philippines, and the islands of the Pacific)
provide navigators traversing the mUitary and civU air and sea routes
of the North Atlantic and Pacffic Oceans with means for accurate
and quick determination of their positions at all times, regardless of
weather conditions.
In addition to these duties, the Coast Guard participates in the
International Ice Patrol, maintains the Bering Sea Patrol, maintains
ocean weather stations in the North Atlantic and in the North Pacific
in fulfillment of international agreements, and performs a large number
of duties with respect to maritime law enforcement, inspection, and
safety.
When I took office in June 1946, the future peacetime mission of the
Coast Guard with respect to all these needs and functions was uncer-

REPORT ON THE FINANCES

tain and obscure. During the 10-month period after VJ Day, the
Coast Guard demobilized from 172,000 to 22,000 officers and men.
This had caused a disruption in the orderly procedure of its operations;
yet the host of new duties which had evolved upon the Service during
the war years remained as a continuing responsibility of grave proportions.
Recognizing the critical nature of the problems in the summer of
1947, provision was made through the cooperation of Congress for a
major business study of the Service to be conducted by a private firm
of consultants. The firm submitted its report in January 1948 and
advanced a large number of recommendations aimed at furthering
improvements in Coast Guard operation. These proposals became
an integral part of a broad improvement program. Since that time,
other outside surveys have been made on specific aspects of Coast
Guard operations.
The details of the Coast Guard improvement program as it pror
gressed year by year are given in another section of this report (pp. 237
to 251). I should like to note at this point, however, the following
major accomplishments.
(1) Further work has been done in integrating the duties of the
former Bureau of Lighthouses and the former Bureau of Marine
Inspection and Navigation into Coast Guard operations. These two
Services were transferred from the Department of Commerce. The
first was on July 1, 1939; the second, by Executive Order of February
28, 1942, which became permanent with Reorganization Plan No. 3
of 1946. Increased economy and efficiency have been attained through
consolidation of facilities, reduction of operating expenses, and better
use of personnel assigned to marine inspection and aids to navigation
functions.
(2) Important savings in expenditure and a more efficient use of
personnel were effected by consolidating districts and facilities whenever careful study indicated that this action was practicable.
(3) Extensive improvements in accounting organization and procedures were carried out.
(4) A study of ^existing supply procedures initiated in 1949 resulted
in more efficient methods of procurement, better inventory control
with reduced costs, and improved distribution of stocks.
(5) Installation and more effective use of new devices, particularly
in the field of electronics, have enabled the Coast Guard to meet its
increased obligations and to carry out its traditional duties more
efficiently than ever before, even with a minimum of personnel.
(6) A central management group has been established to review
regularly methods and procedures to assure constant improvement in
management practices.
221052—53

19 52 REPORT OF THE SECRETARY OF THE TREASURY

In addition to these improvements, a strong organization for the
Coast Guard has been facilitated by an act of Congress which became
law in August 1949 (Public Law 207). In this law the Coast Guard
received from the Congress, for the first time, a concise mandate as
to its peacetime functions and responsibilities. Other developments
which have strongly affected Coast Guard operations during my
tenure have been the new responsibUities for port security, and the
revitalization of the Coast Guard Reserve—^both of which resulted
from congressional action following the outbreak of hostUities in Korea.
The Coast Guard is today a compact, highly efficient organization
which is enabled by the improvements of the past 6J^ years to carry
out its far-flung responsibilities by means of only a relatively small
increase in personnel and funds allotted to the Service since the middle
of 1946.
(9) The improvement of Federal accounting and financial procedures of the
Federal Government.

In view of the changes which have been brought about in the
accounting system of the Government during my term of office, it
seems desirable to include in my final annual report to the Congress a
brief review of the system since its inception in 1789, particularly as
it concerns the responsibility of the Treasury Department in maintaining the central revenue and appropriation accounts of the Government.
The keystone of the system is the provision in Article I, Section 9
of the Constitution which provides:
''No money shall be drawn from the Treasury, but in consequence
of appropriations made by law; and a regular statement and account
of the receipts and expenditures of all public money shall be published
from tiirie to time."
In the act creating the Treasury Department it was unquestionably
the intention of the Congress to center in this Department the accounting control over the public money. In addition to the positions of
Secretary of the Treasury and Treasurer of the United States, the act
of September 2, 1789, created in the Treasury Department the positions of Comptroller, Auditor, and Register.
No acloiowledgment of the receipt of money into the public Treasury was valid unless endorsed on a warrant of the Secretary of the
Treasury. Likewise, the Treasurer was authorized to make disbursements only upon warrants of the Secretary, countersigned by the
Comptroller, and recorded by the Register.
The basic principles established in 1789 are part of the laws of today,
although the passage of timie has brought about changes in organization as well as procedure. Between 1789 and 1894, certain accounting functions had been imposed upon other agencies; but in .the

REPORT ON THE FINANCES

Dockery Act of July 31, 1894, the Congress reorganized the system
by„ restoring it more completely to the original Treasury system.
This law established in the Treasury Department the office of Comptroller of the Treasury, who was the principal accounting officer of
the Government, six auditing officers, and a Division of Bookkeeping
and Warrants, which became the central bookkeeping and reporting
organization of the Government.
For many years, beginning in 1908 and 1909, the Treasury Department had recommended the adoption of a budget system as a means
of providing better control over the receipts and expenditures of the
Government. In the Budget and Accounting Act of 1921, the
Congress created a budget system, and at the same time made important changes in the Government's accounting and auditing structure.
The 1921 law created the General Accounting Office as an independent agency of the Government, under the control and jurisdiction
of a Comptroller General of the United States. The office of the
Comptroller of the Treasury and the six auditing offices of the Treasury
were consolidated in the newly created Generar Accounting Office.
Authority to issue warrants on the Treasury, however, was retained
in the Secretary of the Treasury, subject to counter-signature of the
Comptroller General of the United States. Also, the functions of
maintaining the central accounts of the Government and of preparing
an annual report relating to receipts, appropriations, and expenditures,
were left in the Division of Bookkeeping and Warrants of the Treasury
Department.
Section 255 of Title 5 of the United States Code provides:
"There shaU be in the Bureau of Accounts of the Fiscal Service,
Treasury Department, a division of Bookkeepiag and Warrants.
Upon the books of this division shall be kept all account of receipts
and expenditures of public money except those relatiag to the postal
revenues and expenditures therefrom." And Section 264 of the same
title provides:
" I t shall be the duty of the Secretary of the Treasury annually to
lay before Congress, on the first day of the regular session thereof, an
accurate combined statement of the receipts and expenditures duriag
the last preceding fiscal year of all public moneys, including those of
the Post Office Departmerit, designating the amount of the receipts,
whenever practicable, by ports, districts, and states, and the expenditures, by each separate head of appropriation."
Until recent years the accountiag procedures of the Government
were designed largely for the purpose of controlliag appropriation
allotments and enforcing accountability of public officers with respect
to the receipt and disbursement of public funds. On December 23,
1947, the Secretary of the Treasury, the Comptroller General of the

19 52 REPORT OF THE SECRETARY OF THE TREASURY

United States, and the Director of the Bureau of the Budget met for
the purpose of considering the feasibility of improving the system by
making it more responsive to the needs of management. The result
of this meeting was the adoption of a joint accounting improvement
program in which the General Accounting Office, Treasury Department, and the Bureau of the Budget took the leading roles, assisted by
the various administrative agencies of the Government.
An important outgrowth of this program was the enactment of the
Budget and Accounting Procedures Act of 1950. I n approving this
act President Truman said:
". . . This is the most important legislation enacted by the Congress
in the budget and accounting field sirice the Budget and Accountiag
Act, 1921, was passed almost thirty years ago."
Space does not permit a complete description of all the changes
made; however, the more important procedural changes which were
made in the Treasury's central system of accountiag may be noted.
These changes were made possible by a provision in the Budget and
Accounting Procedures Act of 1950, section 115 (a), which reads:
"When the Secretary of the Treasury and the Comptroller General
determine that existing procedures can be modffied in the interest
of simplification, improvement, or economy, with sufficient safeguards
over the control and accounting for the public funds, they may issue
joint regulatioris providing for the waiving, in whole or in part, of the
requirements of existing law that—
(1) warrants be issued and countersigned in connection with the
receipt, retention, and disbursement of public moneys and
trust funds; and
(2) funds be requisitioned, and advanced to accountable officers
under each separate appropriation head or otherwise."
Under this legislative authority the Secretary of the Treasury and
the Comptroller General of the United States, jointly, have issued three
regulations whicii have simplffied the covering of receipts into the
Treasury and the subsequent requisitioning of appropriations for
purposes of disbursement.
Under Joint Regulation No. 1, issued on September 22, 1950,
collections representing repayments to appropriations may be deposited directly into the accounts of the disbursing officers where they
are immediately available for disbursement without formal covering
into the Treasury and subsequent withdrawal on warrants. These
transactions are subsequently refiected in the central accounts of the
Treasury. Prior to this regulation, the law required that such collections be deposited iato the Treasury, covered, and requisitioned by
disbursing officers before they were available for disbursement. As

REPORT ON T H E FINANCES

there are approximately 140,000 items of repayments each year, this
change in procedure represented a major improvement in simplifying
the handling of such collections.
Under Joint Regulation No. 2, issued on April 16, 1951, provision
was made for the advance of appropriated funds to disbursing officers
under various appropriation heads simultaneously with the setting up
of appropriation accounts on the central books of the Treasury. This
obviates the need for the agencies to requisition such funds on a piecemeal basis and for the Treasury to issue separate accountable warrants.
The change in procedure resulted'in the strearolining and simplification
of procedures by eliminating many thousands of separate requisitions
and warrants.
Under Joint Regulation No. 3, issued on June 12, 1951, it is provided
that all special fund and trust fund receipts which are available under
law for disbursement may be credited directly to the checking accounts
of disbursing officers. As in the case of repayments to appropriations,
this change in procedure has eliminated the necessity for the issuance
of covering warrants and the advancing of funds to disbursing officers
in connection with such receipts. The regulation provided fm-ther,
however, that such collections will continue to be accounted for as
receipts and also as amounts appropriated for disbursement. This
change in procedure, in addition to making funds available for disbursement sooner, resulted in the elimination of approximately 4,700
warrants annually. In addition to the specific changes in accounting
required by the regulations cited, a number of other improved procedures were installed in the Bureau of Accounts, concurrently with
changes under the Joint Accounting Improvement Program.
Under the Budget and Accounting Procedures Act of 1950, the
Comptroller General, in consultation with the Secretary of the Treasury and the Director of the Bureau of the Budget, is required to
establish principles and standards for accounting to be observed in the
various departments and establishments; and this act further provides that the accounting in the various agencies of the Government
shall be integrated with the central accounting of the Treasury.
Several steps have been taken toward integrating the accounts of
the various Departments with those of the Treasury. Coincident
with the change in the warrant procedures covered by Regulations
Nos. 1, 2, and 3 mentioned above, arrangements were made with the
various Departments whereby disbursing officers furnish the Bureau
of Accounts with copies of their monthly accounts current, showing
receipts which are available for disbursement and expenditures under
each appropriation or fund account. These accounts, together with
other data avaUable to the Treasury, are used as posting media to the
Treasury's central accounts. Previously, expenditures reported an-

1952 REPORT OF THE SECRETARY OF THE TREASURY

nually in the annual Combined Statement of Receipts, Expenditures a n d
Balances under the act of 1894, were based upon warrants issued
by the Treasury, after adjustments for unexpended balances in the
hands or to the credit of disbursing officers at the beginning and end of
the fiscal year, as explained in ih.^ Annual Report of the Secretary of the
Treasury for the jiscal year ended June SO, 1927, page 89. Thus,
under the former procedure the figures in this report were not taken
directly from the central accounts of the Treasury.
Under the new procedure the expenditures included in the annual
Combined Statement are derived directly from the Treasury's central
accounts, which, in turn, are based upon the same accounts which are
rendered to the General Accounting Office for audit and settlement.
As previously mentioned, under the act of July 31, 1894, the central
accounts of the Government have been maintained in the Division of
Bookkeeping and Warrants, where the warrants authorizing the withdrawal of money from the Treasury are prepared. The Accounting
and^ Bookkeeping Division of the General Accounting Office, where
warrants were reviewed before counter-signature of the Comptroller
General, maintained a similar set of appropriation accounts until that
Division was abolished on December 31, 1950, pursuant to authority
contained in the.Budget and Accounting Procedures Act of 1950.
The result of this action was to eliminate certain duplications of
account keeping between the General Accounting Office and the
Treasury at a saviag of nearly a mUlion dollars a year.
As a further step to integrate account keeping, active consideration
is being given to the consolidation in a Division of Central Accounts
of the Treasury's Bureau of Accounts, of the appropriation accountkeeping functions of the Division of Disbursement with those of the
Division of Bookkeeping and Warrants.
In connection with the foregoing it is of interest to note that the
Comptroller General of the United States has inaugurated a system
of site audits in a number of activities of the Treasury Department.
The Treasury has long favored this method of auditing govemment
accounts and records because it believes that a more effective audit
can be made at the sites of operations than on the basis of accounts
current submitted by disbursiag officers to the General Accounting
Office for audit and settlement. On my invitation the General
Accounting Office now has auditors stationed in the Bureau of Accounts of the Treasury for the purpose of maintaining a continuous
audit of the accounting operations of that bureau. Similar arrangements have been made for a continuous site audit of the account of
the Treasurer of the United States and other administrative activities
of the Treasury Department, including payrolls.
Several outstanding accountiag improvements have been made in

REPORT ON THE FINANCES

other activities of the Treasury Department, notably the Bureau of
the Mint, the Bureau of Engraving and Printing, and the United
States Coast Guard. The Bureau of the Mint has instaUed a general
accounting system wherein appropriation allotment accountiag, based
upon obligations incurred, has been successfully integrated with accrual accounting. Accrual accounting, as utUized in the Mint Service,
provides a realistic determination of the cost of operations based upon,
actual application of resources rather than upon the basis of purchase
orders or contracts placed. Appropriate distinction is made between
capital outlays and operatiag expenses; stores items are taken up as
assets when acquired and applied as costs when used; full consideration
is given to changes in the value of stores and work-in-process inventories in determining costs; and annual leave is charged as cost as the
leave is earned, being carried as a liabUity until paid in order to insure
consistent statements of costs as between fiscal periods. General
ledger accounts have been established for all assets and liabUities,
e. g., accounts receivable, stores, equipment, work-in-process inventories, accounts payable, accrued annual leave cost, as well as the
usual budgetary accounts. Underl3dng the summary accounts in the
general ledger are the detailed cost, property, and appropriationallotment accounts.
The new accounting systems of the Bureau of Engraving and Printing and the United States Coast Guard, while varying in detaU according to the differences in the lines of activity performed and the types
of information needed, are based upon the same general principles.
In the Bureau of Engraving and Printing there has been installed a
complete new industrial type budget and accounting system, including
a cost system integrated with the general accourits and embodying
also a comprehensive internal audit program.
In the United States Coast Guard the accounting system has been
completely redesigned. This system is geared to operating needs so as
to provide better information and control over the expenditure of funds
through comprehensive cost finding and reporting. Other bureaus of
the Treasury Department are also committed to an improvement of
their accounting procedures in line with the Joint Accounting Improvement Program and the policy declared by the Congress in the Budget
and Accounting Procedures Act of 1950.
Before leaving the subject of accounting improvement, I should like
to say a word about the need for competent accounting personnel.
Proper performance of accounting duties requires a high degree of
professional skill. I t is my hope that a comprehensive program of job
evaluation wUl be undertaken in order to provide adequate incentives
for young men and women to enter this field and follow it as a career
in the Federal Govemment,

19 52 REPORT OF THE SECRETARY OF THE TREASURY

(10) Increased efl&ciency of the working operations of the Treasury Department
and improved service to the public through management improvement
programs based on (a) management eflftciency studies within the Department, (b) management surveys by private management engineering firms,
and (c) participation of all employees through a system of cash awards for
efliciency, superior accomplishment, and management improvement suggestions.

As I have already noted, the problems of management improvement
were particularly pressing in June 1946, when my term of office began.
Since that time, the Treasury has introduced iaiportant and farreaching changes, both ia organization and in the volume and direction
of operating activities. These changes have been the result in large
part of the Treasury's management improvement programs. The
Treasury Department has been particularly active and aggressive in
establishiag them and in putting their provisions into effect in the
period since the close of World War II.
Management studies have been made both within the Depart»ment
and by contract with private management engineering firms. A
number of the detaUs of these programs and the results of their
application have already been discussed under headings (7), (8), and
(9) above, dealing respectively with the Bureau of Internal Revenue,
the United States Coast Guard, and the joint accounting project conducted by the three central fiscal agencies of the Federal Government.
Throughout the Treasur}^, the goal of the management improvement programs has been to cut costs, to improve efficiency, and to
render better service to the public. The record shows that the
Treasury has made most satisfactory progress toward this, goal. As
the direct result of these programs since June 1946, there have been
monetary savings of many millions of dollars. Other saviags, the
value of which cannot readUy be measured in terms of dollars, have
also been effected. These savings have been einployed in meeting
iacreased workloads, reducing appropriation requests, strengthening
the enforcement work of some of the bureaus, and covering the costs
of installing mechanized and other improved procedures.
While details on all of these matters wUl be found in another section
of this report (pp. 236 to 252), one Ulustration of the improvements
made during recent years in departmental operations might be
mentioned at this point. I t relates to the coordination of the inspection activities of Customs and Immigration. The principal objective
of this improvement was to have one officer of either Service perform
the duties for both Services in the preliminary "screening" of passengers and vehicles at border ports and stations. After a series of
successful pilot test studies of procedures to carry out this objective,
the Secretary of the Treasury and the Attorney General ordered that
these procedures, commonly referred to as "dual screening," should be

REPORT ON THE FINANCES

permanently installed wherever feasible at border ports. The installations were accomplished between May and October 1949. The
recurring annual savings to the Bureau of Customs alone from this
change in procedure amounted to approximately $308,000.
Iinprovements in procedure of this type represent, of.course, only
one among many thousands of changes in procedure which have been
examined, tried out on a pUot basis, and then installed in the operating
offices and bureaus of the Departnient as rapidly as funds would
permit. In addition to the examples already discussed under this and
previous headings, programs of management improvement have been
carried on in the Fiscal Service, the Bureau of Customs, the Bureau of
Engraving and Printing, the Bureau of the Mint, the Secret Service,
the Bureau of Narcotics, and the Office of Administrative Services.
As already noted, a detaUed discussion of the progress made under
these programs wUl be found in a later section of this report (pp. 236 to
252).
The progress realized under the Treasury's management improvement programs would not have been possible without the continued
and enthusiastic cooperation of the employees of the Department.
In August 1946, Congress passed a law enabling Government agencies
to pay cash awards for suggestions relating to improvements in
operation. The incentive and efficiency awards programs put into
effect in the Treasury Diepartment as the result of this and later
legislation have been immensely productive of results. I t is estimated
that dollar savings of over $2 million have resulted from employees'
suggestions and efficiency awards programs. The rnost important
results of these programs, however, cannot be measured in dollars.
They result from the improved morale and greater efficiency of
day-to-day operations which come from enlisting every employee in
the Departriient in the program for a better Government service at
lower cost.
Another important feature of the Treasury's broad program for
improving operating activities has been the institution of management
studies with respect to all major phases of the Department's operations.
As already noted in the cases of the Bureau of Internal Revenue and
the U. S. Coast Guard surveys by outside organizations have been
authorized in certain instances by Congress. These surveys, together
with our own studies, have been immensely fruitful of ideas for
operating improvements which have been profitable in practice.
A survey of the Bureau of Customs was completed by a private
management engineering firm in January 1948, for example, and was
made the nucleus of this Bureau's management improvement program.
As a result of these and other studies of operations in the Bureau of
Customs, a complete reorganization plan was worked out. Many

19 52 REPORT OF THE SECRETARY OF THE TREASURY

features of this plan require congressional approval, and proposals
authorizing extensive changes in the Customs Service were introduced
in Congress. One proposal, the Customs Simplification BUl, was
passed by the House in 1951. Hearings were held by the Senate
Fiaance Committee in AprU 1952, but no final action had been taken
by the time that Congress adjourned. Another proposal. Reorganization Plan No. 3 of 1952, placing collectors of customs under civU
service, was sent to the Congress by the President in April 1952. ' It,
however, was rejected by the Senate in June 1952.
Improvements in service and savings in operating costs already
initiated in the Bureau of Customs as a result of the intensive studies
of operations are substantial. Fm-ther substantial progress can be
made when congressional approval is given to the Customs Simplification BUl previously mentioned.
I t can be seen from this review of Treasury policies and programs
since June 1946 that the extraordinary conditions in the postwar period
have required extraordinary efforts to deal with them. Revenues in
the six fiscal years ending June 30, 1952, more than paid for Government expenditures. Confidence in the credit of the Government has
been maintained. Within the Treasury Department, and in cooperation with other units of the Government, a great many forward steps
have been taken to iniprove operating practices and to provide better
service to the public at minimum cost. In the international area,
although our position as a leader iri world affairs is relatively new, our
Government has successfully met the challenge of effective leadership
in new international financial organizations, effective aid to our allies
in their struggle to rebuild their economies and their international
trade, and effective cooperation with other free nations in a program of
mutual defense against aggressions.
Many problems still remain, the major one being the continuing
threat represented by the Communist program for world domination.
The progress already made, however, provides a strong basis for our
future endeavors to promote the conditions which will make for lasting
peace.
JOHN W .

SNYDER,

Secretary oj the Treasury.
To the President of the Senate.
To the Speaker of the House of Representatives.

SUMMARY OF FISCAL OPERATIONS

Summary of Fiscal Operations
SUMMARY FOR 1952

Budget expenditures of the Federal Government were $4.0 billion
in excess of net budget receipts in the fiscal year 1952. This deficit
compared with a budget surplus in 1951 of $3.5 bUlion.
The $4.0 billion deficit, together with a net excess of $0.3 billion of
expenditures as shown in the clearing account and in trust account and
other transactions, was met by an increase in the public debt of
$3.9 billion and by a reduction in the general fund balance of $0.4
biUion. The cash balance in the general fund on June 30, 1952, stood
at $7.0 billion. On the same date the public debt amounted to $259.1
billion.
Net budget receipts reached a new high of $62.1 billion in 1952 compared with the previous record total of $48.1 billion in 1951. Budget
expenditures in 19'52 amounted to $66.1 billion, compared with $44.6
billion in 1951, but were still considerably below the all-time peak of
$98.7 billion reached in 1945.
Federal fiscal operations in the past two years, on the basis of daily
Treasury statements, are summarized in the table following. Chart
2 shows receipts, expenditures, and the surplus or deficit in each year
from 1945 through 1952. Annual figures for 1932-52 and monthly
for 1952 are contained in table 1 in the tables section of this report.

Budget results:
Net receipts...
Expenditures..
Surplus, or deficit (—).
Less:
Generalfund balance, increase, or decrease (—)
_..
Trust account and other transactions, excess of expenditures, or of net
receipts (—) i
j

Equals: Public debt net decrease, or increase ( - ) .
1 Includes trust accounts, etc.; iavestments of Govemment agencies in public debt securities (net); sales
and redemptions of obligations of Govemment agencies in the market (net); and clearing account for outstanding checks and interest coupons, and telegraphic reports from Federal Reserve Banks.

1952 EEPORT OF THE SECRETARY OF THE TREASURY

BUDGET TRENDS, FISCAL l945-'52

CHART

NOTE.—Figures are rounded in order to add to totals.

In 1951 and 1952 both budget receipts and budget expenditures were
greater in the second half of the fiscal year than in the first six months.
Larger second-half expenditures came as a result of the increase in
disbursements as the defense mobilization proceeded. Larger secondhalf receipts principally were due both to a general rise in tax liabilities
and to the methods prescribed for payment of income and excess profits
tax liabUities. Rising incomes and the timing of tax increases in these
years accentuated the usual January-June concentration. The acceleration of corporate tax payments ^ added significantly to J a n u a r y June receipts in the two fiscal years and augmented the seasonality
of receipts, which before 1951 had been due primarily to the method of
paying individual income tax liabilities.
The distribution of net receipts and expenditures and the surplus or
deficit in the halves of the past two fiscal years is shown in the folloAving
table.
J By a provision of the Revenue Act of 1950 a corporation payiag taxes on a calendar year basis paid 60
percent of its 1950 liability in the period January-June 1951, instead of 50 percent as ia previous years. The
percentage paid within 6 months after the end of the taxable year iacreased to 70 percent for 1951, and will
increase to 80 percent for 1952, 90 percent for 1953, and 100 percent for 1954 and subsequent (calendar) years.

SUMMARY OF FISCAL OPERATIONS
Fiscal year

N e t receipts

Expenditures

S u r p l u s , or
deficit ( - )

I n billions of dollars
1950-51:
July-December
January-June..
Total
:
1951-52:
July-December
January-June
Total

._ _ .

^
-

„..
-

-0.6
4.1

18.5
29.7

19.1
25.6

48.1

44.6

3.5

23.8
38.3

31.3
34.9

—7.5
3.5

62.1

66.1

—4.0

BUDGET RECEIPTS AND EXPENDITURES
BUDGET RECEIPTS IN 1952

Net budget receipts (total receipts less the appropriation to the
Federa] old-age and survivors insurance trust fund and refunds of
receipts) amountecJ to $62.1 billion in the fisca] 3^ear 1952 and were
$14.0 billion higher than the previous record of $48.1 bUhon received
in 1951. As a result of the accelerated rate of increase in tax receipts
after the invasion of Korea, net budget receipts in 1952 were 58
percent larger than the average of $39.4 bUlion during the interim
between World War I I and the Korean hostUities, represented by
the 4 years ended June 30, 1950.
The table following compares, on the daily Treasury statement
basis, receipts by major sources in the fiscal year 1952 with receipts
for the preceding year, and with the averages for the fiscal years 1947
through 1950.
Average
1947-50

1952 increase, or decrease
( - ) over 1951
1951

1952

Source

Amount
I n billions of dollars

I n d i v i d u a l income t a x 12
_
_
Corporation income a n d excess profits t a x e s . . - . .

19.0
10.6

23.4
14.4

29.9
21.5

6.5
7.1

27.9
49.2

T o t a l income a n d excess profits taxes
Miscellaneous internal r e v e n u e .
E m p l o y m e n t taxes 2 3._/
__
Customs
Miscellaneous receipts

29.6
8.3
2.5
.4
3.0

37.8
9.4
3.9
.6
1.6

51.3
9.7
4.6
.6
1.8

13.6
.3
.6
-.1
.2

36.0
3,2
16.0
-11.7
10.7

Total receipts-Deduct:
A p p r o p r i a t i o n t o F e d e r a l old-age a n d survivors insm-ance t r u s t f u n d .
_
R e f u n d s of receipts

43.7

53.4

68.0

14.6

27.4

1.7
2.6

3.1
2.1

3.6
' 2.3

.4
.2

14.4
9.3

39.4

48.1

• 62.1

14.0

29.1

N e t budget receipts. _

1 See table 119, footnote 1.
2 Beginning in January 1951, receipts from individual income taxes and the Federal Insurance Contributions Act, a component part of employment taxes, were combined. For purposes of historical comparison,
estimated amounts are shown for the two components.
* Includes Eailroad Unemployment Insurance Act receipts.

19 52 REPORT OF T H E SECRETARY OF T H E TREASURY

Receipts in 1952 from all major tax categories except customs were
affected by tax legislation or revised collection regulations which
added significantly to revenues. Individual and corporation income
and excess profits taxes, which amounted to more than $51 bUlion in
1952, provided most of the revenue increase. These tax sources not
only showed great percentage increases in 1952 over 1951 but also over
the 1947-50 average. All other sources combined produced $17
billion or nearly one-fourth of total receipts in the fiscal year 1952, but
were only about $2)^ billion larger in the aggregate than the 1947-50
average. On the one .hand, misceUaneous receipts, which had been
large during the postwar period from the disposal of surplus material,
declined by about $1 biUion. On the other hand, miscellaneous internal revenue increased by about $1}^ bUlion, and employment taxes
increased by $2 bUlion. Only the employment taxes showed a large
percentage increase—86 percent.
Receipts from income and excess profits taxes

Receipts from income and excess profits taxes were $51,347 million
in the fiscal year 1952, an increase of $13,594 million over receipts of
$37,753 million in 1951. The 1952 receipts were $21,791 million
greater than the average from these taxes in 1947-50, with the increase
almost evenly divided between individual income taxes and corporation and excess profits taxes. The corporation income and excess
profits tax yield of $21,467 million in 1952 represented a rise of slightly
more than 100 percent over the pre-Korean invasion average. Individual income taxes, which have provided about one-half of the total
budget receipts in every year since World War I I and whicb increased
in 1952 by about the same amount as corporate taxes, increased by a
smaller percentage than the corporate taxes. The receipts of nearly
$30 billion from this source in the fiscal 3^ear 1952 were almost 60
percent larger than the average in the 1947-50 period.
Individual income taxes.—The details of the yield of the individual
income tax are shown in the followino* table.
Increase
1952

1951
Source

Amount
Percent
In millions of dollars

Withheld (daily Treasury statement basis)
Not withheld (collection basis) . . . .
Adjustment to daily Treasury statement basis 2
Not withheld (daily Treasury statement basis) .
Total individual income taxes

113, 535
9,908
-77
9,830

» 18, 521
1 11, 345
+14'
11,359

4,986
1,438
+91
1,529

36.8
14.5

23, 365

29, 880

6, 515

27.9

15.6

1 Beginning in January 1951, receipts from individual income taxes and the Federal Insurance Contributions Act were combined. For purposes of historical comparison, estimated amounts are shown.
2 Seetablell9, footnote3.

SUMMARY OF FISCAL

OPERATIONS

Receipts from withheld taxes (an estimated figure, as this item has
been combined with Federal Insurance Contributions Act receipts
since January 1951) increased in the fiscal year 1952 as a result of
higher levels of salaries and wages, the full-year effect of the Revenue
Act of 1950 (which aff'ected receipts from current withholding only in
the'last 8 moriths of the fiscal year 1951), and the initial part-year
effect of the Revenue Act of 1951. Receipts froxn taxes not withheld
similarly increased, though by a smaller proportion, as a result of
higher levels of personal income and because of increases in tax rates
provided in the Revenue Acts of 1950 and 1951.
Corporation income and excess profits taxes.—Receipts from this
source were $21,467 million, an increase of almost 50 percent over the
$14,388 million received in the fiscal year 1951. These higher recieipts
resulted from the continued increase in the level of corporatiori profits,
from increases in normal tax and surtax rates under the Revenue Acts
of 1950 and 1951, from the Excess Profits Tax Act of 1950, from the
continued acceleration of quarterly payments under the Revenue Act
of 1950, and from the fact that- excess profits tax payments in the
fiscal year 1952 approximated much more closely, a full year's liability than did payments in the precedirig fiscal year.
Receipts from all other sources

Miscellaneous internal revenue'.—Receipts from the major groups
of taxes included in this category are shown in the following table.
Increase, or decrease (—)
1952

1951
Source

Araount
Percent
I n n lillions of do]lars

E s t a t e a n d gift taxes
Excise 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 ^
Retailers'excise taxes
_
-.
Miscellaneous excise taxes (including repealed)2 3 . . .

730

833

103

14.2

2, 547
1,380
93
2,364
457
1,843

2,549
1,565
85
2, 335
476
1, 947

2
185
-8
-28
19
105

.1
13 4
-8.7
-1.2
4.1
5.7

T o t a l excise taxes i ^
A d j u s t m e n t to daily T r e a s u r y s t a t e m e n t basis ^

8,684
+10

8,957
-65

274
-74

3.2

8,693

8,893

200

2.3

9,423

9, 726

303

3.2

T o t a l excise t a x e s ' 3

T o t a l miscellaneous internal r e v e n u e 1 '

. ._

' Excludes taxes collected on firearms, shells, and cartridges; fishing rods, creels, etc., which are included
in ".Miscellaneous receipts." (See table 7, "Note.")
2 See table 119, footnote 6.
3 Excludes collections of the hydraulic raining tax, which are iacluded in "Miscellaneous receipts." (See
table 7, "Note.")
* Sec table 7, "Note."

. Estate and gift taxes produced $833 million in. the fiscal year 1952,
an increase of $103 million, or 14.2 percent over the fiscal 3^ear 1951.
Receipts from the excise taxes aggregated $8,893 million in the fiscal
221052—53—5

19 52 REPORT OF THE SECRETARY OF THE TREASURY

year 1952, exceeding those in the fiscal year 1951 by $200 million, or
2.3 percent. This small increase represented the net effect of several
counterbalancing factors. Tax rates, for the most part, were higher
in 1952 than in 1951. Personal income was also higher in 1952.
However, the substantial inventory accumulation by business and
advance buying by consumers whicii occurred in the period just after
the outbreak of hostilities in Korea, brought about abnormally high
purchases of taxable commodities in the fiscal year 1951. This advance buying had an adverse effect on purchases in 1952 in those
areas where anticipated shortages did not occur. Where shortages
did appear, the materials allocation program reduced the production
of taxable commodities.
The relative importance of these factors varied considerably among
major tax groups and individual taxes within groups with the result
that there was a considerable diff'erence in receipts in the excise tax
categor}^^ in 1952 as compared with 1951. Tobacco taxes increased
substantially from $1,380 million in 1951 to $1,565 million in the fiscal
year 1952. The receipts from the tax on cigarettes amounted to
$1,474 million in 1952. This was an increase of 13.9 percent and
reflected a higher tax rate and greater consumption. The miscellaneous tax group for the most part is composed of taxes on services.
Receipts from this group amounted to^$l,947 million, and were $105
million greater than receipts in 1951. This increase reflected greater
business activity and higher consumption income since the relatively
minor tax changes operated to reduce revenues.
Collections from liquor taxes remained almost unchanged. Receipts
were $2,549 million in the fiscal year 1952 and $2,547 million in 1951.
Tax rates were higher in 1952 on distilled spirits, fermented malt
liquors, and mnes, and taxes on fioor stocks were imposed on all three.
Collections from fermented malt liquors and wines, because of the tax
increase, rose in 1952 as compared with 1951 and combined with floor
stocks taxes to offset the decrease in receipts from the tax on distilled
spirits which is the most important excise tax as far as revenue is concerned. Collections from the tax on distilled spirits decreased $157
million, or 9.0 percent, from the 1951 level of $1,747 million despite
the increase in tax rate because heavy inventory accumulations occurred in 1951 in anticipation of possible curtailment of supplies.
Collections from the manufacturers' excise taxes in 1952 amounted
to $2,335 million, and were $28 million less than receipts in 1951.
Because collections from several of the taxes in this group were higher
in 1952, it will be noted that the decrease in collections from the tax on
electrical energy, which was repealed in the second quarter of the
fiscal year 1952, was slightly greater than the net over-all decrease for
the manufacturers' excise tax group. Collections from the tax on

SUMMARY OF FISCAL OPERATIONS

passenger automobiles decreased in 1952 despite higher tax rates, since
production of automobiles in 1952 was limited by material allocations.
Although the tax base was broadened, collections from electric, gas,
and oil appliances also decreased, principally because abnormal
advance buying in 1951 iacreased receipts in that year and affected
1952 adversely. For the same reason, decreases occurred in collections
from the taxes on tires and tubes, radio sets, etc., and mechanical
refrigerators which were not affected by any significant tax rate
change. Tax receipts on photographic apparatus declined, principally
because of a narrowing of the tax base.
Collections from the tax on gasoline amounted to $713 miUion in'
1952, and were $144 million, or 25.3 percent, greater than in 1951.
The increase reflected a higher tax rate and increased consumption.
Higher tax rates and increased purchases were also responsible for the
increases of 21.5 percent in collections from the tax on automobile
trucks and 37.4 percent in collections from the tax on automobile
parts and accessories.
Employment taxes.—The yields of the various employment taxes, on
the daily Treasury statement basis, are shown in the following table.
•
1951

Increase

1952

Source

Amount
Percent
In millions of dollars

Federal Insurance Contributions A c t '
Federal Unemployment Tax Act
Railroad Retirement Tax Act...
Railroad Unemployment Insurance Act 2

3,120
234
578
10

Total employment taxes
Deduct: Appropriation to Federal old-age and surNet employment taxes

3,569
259
735
10

449
25
157

14.4
10.9
27.3
5.1

3,940

4,573

632

16.0

3,120

3,569

449

14 4

821

1,004

183

22.3

•Less than $500,000.
1 Beginning in January 1951, receipts from the Federal Insurance Contributions Act and individual
income taxes were combined. For purposes of historical comparison, an estimated amouut is shown for
the Federal Insurance Contributions Act.
2 Not classified as an employment tax under the Internal Revenue Code.

Total receipts from the employment taxes were $4,573 million in
the fiscal year 1952, an increase of $632 mUlion, or 16.0 percent, above
receipts collected in the fiscal year 1951. As a consequence of generally higher taxable wages, each employment tax has contributed
to the increase which brings this year's total to the highest ever
collected.
The Federa] Insurance Contributions Act receipts registered the
greatest gain reflecting, in addition to larger wage levels, the full-year
effect of the increase in the tax base from $3,000 to $3,600 and the
extended coverage, effective January 1, 1951. The receipts collected

19 52 REPORT OF THE SECRETARY OF THE TREASURY

from this tax also include for the flrst time collections from the selfemployed category of the new coverage.
Receipts from the RaUroad Retirement Tax Act increased substantially following a changed collection procedure effective July 1,
1951, which resulted in the collection of approximately an extra 2
months' liability in the flscal year 1952.
Customs.—Custoins receipts declined to $551 million in the flscal.
year 1952. The decrease of $73 million from the total in the flscal
year 1951 resulted from a general decrease in imports of dutiable
commodities.
Miscellaneous receipts.—MisceUaneous receipts amounted to $1,803
miUion in the flscal year 1952, an increase of $175 million over the
preceding year.
Rejunds oj receipts.—Refimds of receipts amounted to $2,302
miUion in the flscal year 1952, an increase of $196 million over the
flscal year 1951.
ESTIMATES OF KECEIPTS IN 1953 AND 1954

The Secretary of the Treasury is requifed each year to prepare and
submit in his annual report to the Congress estimates of the public
revenue for the current flscal 3^ear and for the flscal- year next ensuing
(act of February 26, 1907 (34 Stat. 949)). The estimates of receipts
from taxes and customs are made by the Treasury Department each
year on the basis of legislation existing at the time of making the
estimates. The estimates of miscellaneous receipts are prepared in
general by the agency depositing the receipts in the Treasury.
The details of estimated and actual receipts,are shown in table 119.
The term ^^net budget receipts" as used in this report has the same
significance as the term ^'budget receipts" used in the Budget document. Net budget receipts are estimated to be $68,696.9 million in
the fiscal year 1953 and $68,664.7 million in. the fiscal year 1954.
Receipts of $62,128.6 million in the fiscal year 1952 exceeded the previous all-time high established in the fiscal year 1951, and in both,
the fiscal years 1953 and 1954 are expected to exceed those in the
fiscal year 1952 by substantial amounts. Receipts in the fiscal year
1954 would show a further increase over the fiscal year 1953 except
for the scheduled tax reductions taking eff'ect under present law during the fiscal year 1954. Increases in corporation and iridividual in-

SUMMARY OF FISCAL OPERA'i^IONS

come and excess profits tax receipts account for the major portion of
the increase in receipts in the fiscal year 1953 and the scheduled tax
reductions in these sources accoimt for the slight decline in net budget
receipts in the fiscal year 1954.
Total receipts (daily Treasury statement basis) before deductions
for refimds of receipts and appropriations to the Federal old-age and
survivors insurance trust fund are estimated to be $75,207.7 million
in the fiscal year 1953 and $75,521.6 million in the fiscal year 1954.
Both estimates are substantially in excess of the actual receipts of
$67,999.4 miUion in the fiscal year 1952.
As is shown in the following table of percentage distribution, all
major sources of receipts in 1953 and 1954 are estimated to remain
relatively constant as compared with those of 1952. Individual income tax varies through an exceedingly narrow range while corporation income and excess profits taxes, after a substantial rise in the
fiscal year 1952, are estimated to remain relatively coristant at the
higher level. Miscellaneous internal revenue, after a decline in the
fiscal ^^^ear 1952, is estimated to remain at practica;lly the same lower
figure through the fiscal year 1954. Employment taxes, after a decline in the fiscal 3^ear 1952, are estimated to remain the same iri the
fiscal year 1953 and increase in the fiscal 3^ear 1954. The pattern of
miscellaneous receipts differs from the trends of other major sources
since it is relatively independent of changes in income levels and tax
revisions;
Percentage distrihution of total receipts, by sources
Actual,
1951

Source
Individual income tax i
.
CorpOT-ation income and excess proflts taxes
Miscellaneous internal revenue.
.
Eraployraent taxes ^Custoras
Miscellaneous receipts
Total receipts

•-.

43.7
26.9
17.7
7.4
1.2
3.1
100.0

Actaal,
1952
43. 9 l\
31. 6J
14.3
6.7
.8
2.7.
100.0

Estimated, Estimated,
1954
1953
44.6
31.5
14.2
6.6
.8
2^3

44.2
30.8
14.3
7.0
.8
2.9

100.0

100. 0

• I Beginning in January 1951 receipts from individual income tax withheld, a component part of the individual incorae tax, and Federal Insurance Contributions Act receipts, a coraponent part of eraployraent
taxes, were corabined. Beginning in January 1952 receipts frora the self-eraployment tax, a coraponent
part of the Federal Insurance Contributions Act, were combined with the individual income tax not withheld. The araounts shown for the individual coraponents of these corabined receipts are estiraated.
2 Includes Railroad Uneraployment Insurance Act receipts.

19 52 REPORT OF THE SECRETARY OF THE TREASURY
Fiscal Year 1953

Actual receipts in the fiscal year 1952 and estimated receipts in the
fiscal year 1953 are compared by major sources in the following table.
Source

Actual, 1952

Estiraated,
1953

Increase, or
decrease (—)

In millions of dollars
Individual income tax ' . . .
Corporation incorae and-excess profits taxes
Miscellaneous internal revenue
.
Eraployment taxes 12
Customs...
Miscellaneousreccipts
Total receipts
Deduct:
Appropriation to Federal old-age and survivors insurance
trust fund
Refunds of receipts
.,
.
Net budget receipts

29,879.6
21, 466. 9
9, 725. 9
4, 572.8
550. 7
1,803. 5|

33, 551. 0
23, 700. 0
10, 690. 0
4, 932.0
590.0
1,744.7

3, 671. 4
2, 233.1
964.1
359.2
39.3
-58.8

67, 999. 4

75, 207. 7

7, 208.4

3, 508. 6
2, 302. 2

4, 000. 0
2, 510.8

431.4
208.6

62,128. 6

68, 696. 9

6, .568.3

1 Beginning in January 1951 receipts from individual income tax withheld, a component part of the individual income tax, and Federal Insurance Contributions Act receipts, a coraponent part of employment
taxes, were combined. Beginning in January 1952 receipts frora the self-employment tax, a component
part of the Federal Insurance Contributions Act, were combined with the individual income tax not withheld. The araounts shown for the individual components of these corabined receipts are estiraated.)
2 Includes Railroad Unemployraent Insurance Act receipts.

Net budget receipts in the fiscalyear 1953 are estimated to be
$68,696.9 million, an increase of $6,568.3 million, or 10.6 percent over
the previous all-time high of $62,128.6 million in the fiscal year 1952.
All major sources of tax receipts contribute to the increase. Only
miscellaneous receipts, a nontax source, shows a decrease.
Individual income tax.—The yield of the individual income tax is
shown in the following table.
Actual, 1952

Source

Estimated,
1953

Increase

In millions of dollars
Individual income tax: i
Withheld
Not withheld
Total individual income tax

_•

•_

18. 520. 6
11, 359.0

20, 948.0
12, 603.0

2, 427. 4
1, 244 0

29,879. 6

33, 551.0

3, 671.4

1 Beginning in January 1951 receipts from individual income tax withheld, a component part of the individual income tax, and Federal Insurance Contributions Act receipts, a component part of employment taxes,
were corabined. Begimiing in January 1952 receipts frora the self-employment tax, a coraponent part of the
Federal Insurance Contributions Act, were corabined with the individual incorae tax not withheld. The
amounts shown for the individual components of these combined receipts are estimated.

Receipts from income tax withheld are estimated to increase principally as a result of higher levels of salaries and wages and the full-year
effect of the higher withholding rates under the Revenue Act of 1951,
effective for only about two-thirds of the fiscal year 1952. Similarly,

SUMMARY OF FISCAL OPERATIONS

income taxes not withheld are estimated to increase as a result of the
full-year effect of the Revenue Act of 1951 and higher levels of income.
Corporation income and excess profits taxes.—Corporation tax receipts
in the fiscal year 1952 reflect incomes of the calendar years 1950 and
1951, while receipts in the flscal year 1953 reflect incomes in the
calendar years 1951 and 1952. Of the two calendar years' tax liabilities making up the flscal year receipts, the second calendar year is
the more important in determining receipts in the fiscal year because
of the acceleration of corporation tax payments.
Estiinated receipts of $23,700.0 million in the fiscal year 1953 are
$2,233.1 million more than the $21,466.9 million collected from this
source durmg the fiscal year 1952. A portion of this increase is due
to the slightly higher profits estimated in the calendar year 1952 as
compared with the level existing in 1950.
Other factors contributing to the increase were provisions of the
Revenue Act of 1951, which reduced the excess profits credit under the
income method from 85 percent of base period earnings in the calendar
year 1950 to 83 percent in 1952, raised the maximum effective rate
limitation on the excess profits tax, and increased the total income
tax rate from 42 percent for the calendar year 1950 to 52 percent for
1952. Another provision of this act resulted in a temporary shifting
of the due dates of the quarterly payments of many corporations with
a tax year other than the calendar year, with the result that some payments normally due in the fiscal year 1952 were not payable until the
following fiscal year.
Miscellaneous internal revenue.—Receipts from this source by groups
are listed in the table which foliovvs:
Actual, 1952

Source

Estiraated,
1953

Increase

In millions of dollars
Estate and gift taxes
Excise taxes:
Liquor taxes
Tobacco taxes
S tamp taxes
Manufacturers* excise taxes
Retailers' excise taxes
Miscellaneous excise taxes.

Total excise taxes
Adjustment to daily Treasury statement basis .
Total excise taxes

. .

Total miscellaneous internal revenue . . _

833.1

895.0

61.9

2, 549.1
1, 565. 2
85.0
2, 335.4
475. 5
1,947.3

2, 745. 0
1, 704. 0
93.0
2, 718. 0
494. 0
2,041.0

195.9
138.8
8.0
382.6
18.5
93.7'

8, 957.4
-64.7

9, 795. 0

837.6
64.7

8, 892. 7

9, 795. 0

902.3

9, 725.9

10, 690. 0

964.1

The large inventory accumulation by business and advance buying
by consumers in the fiscal year 1951, following the attack on Korea,
depressed receipts in the fiscal year 1952. Because the fiscal year 1952

19 52 REPORT OF T H E SECRETARY OF T H E TREASURY

receipts were thus adversely aff'ected, total excise tax receipts are
estimated to increase in the fiscal year 1953 by more than wc>iild
normally be attributed to higher levels of income and the higher tax
rates. Also, the materials allocation program reduced the production
of taxable commodities in 1952 somewhat more than is expected in the
fiscal year 1953.
All major sources of revenue contribute to the increase in the fiscal
year 1953.
Employ7iient taxes.—The yields of the various employment taxes are
shown in the following table.
Actual, 1952

Source

Estimated,
1953

. Increase, or
decrease (—)

I n millions of dollars
Federal I n s u r a n c e C o n t r i b u t i o n s A c t '
Federal U n e r a p l o y r a e n t T a x A c t
Railroad R e t i r e r a e n t T a x Act
Railroad U n e r a p l o y r a e n t I n s u r a n c e A c t 2

3, 568. 6
258.9
735.0
10.3

4, 000. 0
271.0
650.0
11.0

431.4
12.1
-85.0
. .7

T o t a l e r a p l o y m e n t taxes
. _
D e d u c t : A p p r o p r i a t i o n to Federal old-age a n d survivors insurance t r u s t f u n d . .
. . .

4, 572.8

4, 932. 0

359. 2

3, 508. 6

4, 000. 0

431.4

1,004.2

• 932. 0

-72.2

N e t e r a p l o y m e n t taxes.

. _

1 Beginning in January 1951 receipts from individual income tax withheld, a component part of the
individual incorae tax,<aMd Federal Insurance Contributions .Act receipts, a coraponent partof employment
taxes, were coinbined. Beginning in January 1952 receipts from the self-eraployraent tax. a coraponent
part of the Federal Insurance Contributions Act, were corabined with the individual income tax not withheld. The araounts shown for the individual coraponents of these combined receipts are estimated.
3 Not classified as au employment ta.x under tbe Internal Revenue Code.

Total ejiiployment tax receipts in the fiscal yQnr 1953 are estimated
to increase over those in the fiscal year 1952 as a residt of higher levels
of taxable salaries and wages. The increase occurs in all major categories except the Railroad Retirement Tax Act. This source reveals
a declme in the fiscal year 1953 despite increasing wages because the
receipts in the fiscal year 1952 reflected liabilities of approximately
fourteen months as a result of changed collection procedure eff'ective
July 1, 1951.
Customs.—Customs receipts are estimated, to be $590.0 million in
, the fiscal year 1953, an increase of $39.3 million over actual receipts
of $550.7 million in the fiscal 3^ear 1952.
Miscellaneous receipts.—Miscellaneous, receipts are estimated to
amourit to $1,744.7 million in the fiscal year 1953, a decrease of $58.8
million from the fiscal year 1952.
Rejunds oj receipts.—Refunds of receipts are estimated to increase
to $2,510.8 million in the fiscal ^^^ear 1953.

SUMMARY OF FISCAL

•. ,

OPERATIONS

Fiscal year 1954

Estimated receipts in the fiscal years 1953 and 1954 are compared
by major sources in the following table.
Estiraated,
1953

Source

Estiraated,
1954

Increase, or
decrease (—)

I n millions of dollars
Individualincome tax.
•_.....
C o r p o r a t i o n income a n d excess profits taxes
Miscellaneous internal r e v e n u e
_...,_.
E m p l o y m e n t taxes i
Customs
._
Miscellaneousreccipts

_.:

T o t a l receipts...'_
Deduct:
A p p r o p r i a t i o n to Federal old-age a n d s u r v i v o r s insurance
t r u s t fund
R e f u n d s of receipts
_
N e t b u d g e t receipts

33, 551. 0
23, 700. 0
10, 690. 0
4,932.0
590.0
1, 744. 7

33. 394. 0
23, 300. 0
10,809.0.
5, 249. 0
590. 0
2,179. 6

-157. 0
-400.0
119. 0
317.0

75, 207. 7

75, 521. 6

313.8

. 4.000.0
2, 510. 8

4, 298. 0
2, 558. 9

298.0
48.1

68, 69G. 9

68, 664'. 7

434.8

1 I n c l u d e s Railroad U n e r a p l o y m e n t I n s u r a n c e Act receipts.

Net budget receipts in the fiscal year 1954 are estimated to amount
to $68,664.7 million, a decrease of $32.2 million below the fiscal year
1953. As a result of the tax reductions due to take effect in the fiscal
year 1954 under present law, both corporation income and excess
profits taxes and the individual income tax are estimated to show
decreases below the fiscal year 1953. Miscellaneous internal revenue
increases in the fiscal year 1954 despite the effect of the excise tax
reductions effective April 1, 1954.
Individual income tax.—The yield of the individual income tax is
shown in the following table.
Estiraated,
1953

Source

Estimated,
1954

Increase, or
decrease (—)

I n rnillions of dollars
I n d i v i d u a l income tax:
Withheld
N o t withheld
T o t a l i n d i v i d u a l income t a x .

20, 948.0
12, 603.0

20,681.0
12,713.0

-267.0
110.0

33, 551.0

33,394. 0

-157.0

Receipts from, income tax withheld are estimated to decline in the
fiscal year 1954 as a result of the decrease in withholding rates scheduled for January 1, 1954. . Income taxes not withheld are estimated
to increase slightly in the fiscal year 1954 reflecting higher levels of
income. The decrease in income tax rates will reduce the flrst
declaration pajanents on 1954 incomies but not the flnal payments on
1953 incomes.

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Corporation income and excess profits taxes.—Corporation income and
excess profits taxes are estimated to ainount to $23,300.0 million
in the fiscal year 1954, a decrease of $400.0 million from 1953. Corporation income tax liabilities are estimated to be higher in the
calendar year 1953 than in the calendar year 1951 because of higher
effective tax rates but this increase in income tax collections is expected to be more than offset by decreased excess profits tax collections. Under existing law the excess profits tax is due to expire
June 30, 1953. Corporations will prorate their excess profits tax
liability for a full year on the basis of the number of days in their
taxable years which precede June 30, 1953. This will cut total
excess profits tax liability in 1953 to roughly half what it otherwise
would have been.
Miscellaneous internal revenue.—Receipts from this source by major
groups are listed in the table which follows.
Source

Estimated,
1953

Estimated,
1954

Increase, or
decrease ( - )

I n millions of dollars
E s t a t e a n d gift taxes
Excise taxes:
L i q u o r taxes
T o b a c c o taxes
S t a m p taxes
_
M a n u f a c t u r e r s ' excise t a x e s . .
R e t a i l e r s ' excise taxes
Miscellaneous excise taxes
T o t a l excise taxes
T o t a l miscellaneous i n t e r n a l r e v e n u e

895.0

940.0

45.0

2, 745. 0
1, 704.0
93.0
2,718.0
494.0
2,041.0

2,700.0
1,689.0
93.0
2, 826. 0
504.0
2,057.0

—45.0
—15.0
108.0
10.0
16.0

9, 795. 0

9,869.0

74.0

10,690. 0

10, 809.0

119.0

Although the rates of certain excise taxes are scheduled to be reduced
as of April 1, 1954, miscellaneous internal revenue is estimated to
increase in 1954, reflecting higher income levels and greater durable
goods production than in the flscal year 1953.
Collections from the liquor and tobacco excise taxes are expected to
decline because of the scheduled termination of the tax increases made
by the Revenue Act of 1951. The liquor and tobacco taxes affected
by the scheduled rate decreases are paid by stamp, and collections
will immediately reflect the April 1,1954, reduction. Collections from
the manufacturers' excise taxes and miscellaneous excise taxes are estimated to iacrease although certain of the tax rates in these categories
will also be reduced. Because of the timing of payment of the tax
liabilities for these taxes the effect on collections will lag behind the
April 1 eff'ective date of the tax reduction.

SUMMARY OF FISCAL

OPERATIONS

Employment taxes.—The yields of the various employment taxes
under existing legislation are shown in the following table.
Source

Estimated,
1953

Estimated,
1954

Increase

In millions of dollars
Federal Insurance Contributions A c t . . .
Federal Unemployment Tax Act
Railroad Retirement Tax Act
Railroad Unemployment Insurance A c t '

4,000.0
271.0
650.0
11.0

Total eraployment taxes
Deduct: Appropriation to Federal old-age and survivors
insurance trustfund
.-.
Net employment taxes..

4,298.0
280.0
660.0
11.0

298.0
9.0
10.0

4, 932.0

5, 249.0

317.0

4,000.0

4,298.0

298.0

932.0

951.0

19.0

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

The combined receipts from the employment taxes are estimated to
increase in the flscal year 1954 as a consequence of higher levels of
taxable salaries and wages and the part-year efl'ect of a tax rate
increase on wages and salaries under the Federal Insurance Contributions Act, effective January 1, 1954.
All the major sources of receipts included in employment taxes
contribute to the increase except the Railroad Unemployment Insurance Act.
Customs.—Custoins receipts are estimated to be $590.0 million in
the flscal year 1954, the same as the preceding year.
Miscellaneous receipts.—Miscellaneous receipts are estimated to be
$2,179.6 million, an increase of $434.8 million over the flscal year 1953.
The estimate for the flscal year 1954 includes collections of foreign
credits and currencies in amounts equal to the estimated expenditure
of such credits by the various agencies. In prior years, these credits
and currencies were used largely by certain agencies operating abroad,
without being deposited into Treasury receipts and without being
appropriated. Total budget expenditures and net budget receipts
will therefore be increased by the same amount, with no eff ect.on the
budget deficit.
Rejunds oj receipts.-—Refunds of receipts are. estimated to amount
to $2,558.9 million in the fiscal year 1954, a slight increase over the
fiscal year 1953.
BUDGET EXPENDITURES IN 1952

Federal expenditures of $66.1 billion during the fiscal year 1952
were larger than in any other year since the war, and nearly all the'
$21.5 billion increase over 1951 expenditures was due to the rising
tempo of the defense mobilization. Although the 1952 total was
substantially less than the annual totals during the war, it was sub-

1952 REPORT OF THE SECRETARY OF THE TREASURY

stantially more than the average of $38.3 billion in the 4 years
between the war and the Korean outbreak.
Expenditures in 1952 and 1951, and the postwar averages of 194750 are given, on the daily Treasury statement basis, in the table
which follows. Related details for these and earlier years are shown
in tables 2, 3, and 5 of the tables section of this report.

Year

. National
defense
and
related
activities

Inter. Interest
national '
on the
finance
public
debt
and aid

Veterans'
- Administration

Other

Total

In billions of dollars
1947-50,'average
1951
1952
-

13.2
20.0
39.1

4.9
4.4
4.8

5.3
5.6
5.9

6.8
'•5.2
4.9

8.1
9.4
11.5

38.3
44.6
66.1

'Revised.

War and war related expenditures (for national defense, international finance and aid, interest on the public debt, and veterans'
benefits) amounted to $54.7 billion, and accounted for 83 percent of
all expenditures in 1952.
National defense expenditures of $39.1 billion were nearly twice
those of 1951 and three times those of the 1947-50 average. In the
first quarter of the fiscal year 1952, monthly defense expenditures
averaged less than $2.9 bUlion; in the fourth quarter, nearly $3.8
billion. The increase reflected the sharply rising military expansion
througliout 1952, the largest part consisting of major procm-ement and
construction. The rate of the value of deliveries in the fourth quarter
of the fiscal year was more than six times the rate of all military
procurement and construction at the time of the attack on Korea.
Expenditures for maintenance and operation also increased, as did
expenditures for military personnel, whose numbers were expanding.
In addition to the primary increases in national defense disbursements by the Department of Defense, there were increases in supporting programs. The largest of these was for strategic and critical
materials. Expenditures classified as national defense, however,
actually did not include all outlays for defense purposes. Among
these was the atomic energy, program. Many other Government
operations were expanded for defense purposes.
After national defense, interest on the public debt was the next
largest war related expenditure, exceeding, as it had since 1949, the
outlay for international finance and aid, and, as in 1951, also exceeding
veterans' services and benefits. The 1952 interest total of nearly $5.9
billion was almost 8.9 percent of the budget. The total compared with
$1.1 billion in 1941. The increase during 1952 amounted to $247 million.

SUMMARY OF FISCAL

OPERATIONS

International finance and aid expenditures of $4.8 bUlion were
$0.4 bUlion more than in 1951 and slightly less than the average in
1947-50. Of the 1952 total, $2.2 billion was spent for military assistance, compared with $0.9 billion in 1951, and $2.2 billion was spent,
for economic and technical assistance, compared with $3.0 billion in
1951. Both of these, which are authorized by the Alutual vSecurity
Act, were substantially less than had been estimated. There was also
a decrease of $237 million in expenditures for civil functions of the
Army in occupied areas. A new expenditure item in 1952 was $160
million for emergency food aid for India.
As a whole, expenditures for veterans' services and benefits have
declined sharply from the average of nearly $6.8 billion in 1947-50
even though pension and compensation payments in 1952 were slightly
above the level of 1947-50. Total aid to veterans of $4.9 billion in
1952 represented a decline of one-third from the total of nearly $7.3
billion in 1947, the year when .educational and other readjustment
benefits were drawn upon most widely. In 1952, there was a decline
. of $610 million in readjustment benefits:
The remaiaing expenditures, shown in the table below, included
those for domestic programs, for the running expenses of the Government, and for those defense programs for which the statistics cannot
readily be extracted. The total of $11.5 billion in 1952 compared
with an average of $8.1 bUlion ia 1947-50, and with $9.4 billion in
1951. Practically all the increases in these expenditures in 1951 and
1952, except those for aid to agriculture, social security, and the postal
deficiency, resulted from requirements for defense. The largest
increase in 1952, $740 million, was for atomic energy, expenditures
for which are not separated for defense and nondefense purposes. The
increase of $584 million expended for aid to agriculture was due mainly
to the smaller net receipts of the Commodity Credit Corporation in
1952. Other increases were for housing and community development
in critical defense areas, for improving public roads, public works,
and other programs contributing or incidental to the defense.
All other expenditures of $3.5 billion in 1952 compared with $3.2
biUion in 1951. They iricluded the expenses of the Government for
both executive departnients and agencies not classified elsewhere
under special programs, and also for legislative and judicial functions.

Year

Aid to
agriculture

Housing
a n d horae
finance

Social
security

Public
works

Atomic
Postal
All other
energy deficiency

Total

I n raillions of dollars
1947-50, average
1951
1952

1,913
635
1,219

-66
460
614

1,228
1,541
1,565

1,587
2,027
2,203

446
908
1,648

417
624
740

2.557
3,167
3,480

8,083
9,363
11, 469

1952 REPORT OF THE SECRETARY OF THE TREASURY
ESTIMATES OF EXPENDITURES IN 1953 AND 1954

Actual expenditures for the fiscal year 1952 and estimates for the
fiscal years 1953 and 1954 are summarized in the following table.
Further details yill be found in table 119. The estimates are based
upon figures subraitted to the Congress in the Budget for 19514.
Actual budget expenditures for the fiscal year 1952 and estimated expenditures for
;
1953 and 195k ^
[In millions of dollars. On basis of 1954 Budget document]
Actual,
Estimated, Estimated,
fiscal year fiscal year fiscal year
1952
1953
1954
Agriculture Department' (including Commodity Credit Corporation)
_!
Atomic Energy Commission
Civil Service Commission
Commerce Department.]
Defense Departraent: i
Military functions...!
Civil functions
;
Economic Stabilization Agency..
.'.
Export-Import Bank ofWashington (net)
:.-.
Feaeral Civil Defense Administration.
Federal Security Agency}
'....
General Services Administration
Housing and Home Finance Agency
Interior Department
J
...:
Labor Department
Mutual security and other funds appropriated to the President....
Post Office Department (general fund)
Railroad Retireraent Board
Reconstruction Finance Corporation (net)
State Departraent
J
Tennessee Valley Authority
Treasury Departraent:
Interest on the public debt.
Other
...\
Veterans' Adrainistratiori
-..
Reserve for contingencies'
_
All other.
.j._
Adjustraent to daily Treasury stateraent basis
Total budget expenditures..

1,242.1
1, 669. 9
332.2
979.1

2,143. 4
2,000.0
344.9
1,097.3

2.031.0
2, 700.0
450.6
1, 031. 3

38,967. 0
709.9
91.0
29.4
33.3
1, 671.0
1, 070.1
584.8
584.8
252.5
4, 982. 6
740.0
777.5
-220. 2
258.2
185.2

43, 400.0
658.8
70.9
82.5
81.0
1, 940. 9
1, 261.2
539.4
616.3
292.4
5, 864. 9
666.0
694.3
-55.9
275.3
231.5

45, 500. 0
639.9
1.9
45.1
70.0
1, 903. 8
1,126. 2
379.7
659.1
321.0
7, 655.8
668.8
705.9
-119.8
316.3
242.9

5, 853.0
774.4
4,922. 6

6, 450.0
820.7
4, 584.1
25.0
508.1

6,350.0
827.9
4.494.1
40.0
545.3

74, 592. 8

78,586.6

509.4
-854. 5
66,145.2

J These figures are derived from the 1954 Budget document. The actual figures for the fiscal year 1952
are based upon the Treasury's Combined Statement of Receipts, Expenditures anfl Balances, and therefore
may differ from figures published in the daily Treasury stateraent.

SUMMARY OF FISCAL OPERATIONS

TRUST ACCOUNT AND OTHER TRANSACTIONS

Financial transactions of Federal agencies other than those affecting
the budget receipts and expenditures of the Government and those
relating to the public debt are classified in the daily Treasury statement in three constituent groups: (1) Trust accounts, etc., (2) investments of Government agencies in public debt securities (net), and (3)
sales and redemptions of obligations of Government agencies in the
market (net).
The first group includes the trust accounts maintained in the
Treasury, pursuant to law, for the benefit of individuals or classes of
individuals. The Government's payments from general fund appropriations to the various trust accounts are included as receipts-under
the respective accounts. Also included in this group are deposit.fund
accounts covering principally moneys placed with the United States
Treasury which may be withdrawn by the depositor and unidentified
receipts held untU appropriate disposition can be made thereof. The
net receipts in these accounts for the fiscal year 1952 amounted to
$3,855 million. The second group includes the purchases and sales of
public debt securities by Government agencies and funds, which clear
through the accounts of the Treasurer of the United States. The net
purchases in the fiscal year 1952 amounted to $3,636 million. In the
third group are included the market sales and redemptions of securities
issued by Government corporations and agencies. In the fiscal year
1952, net redemptions amounted to $72 mUlion.
Monthly detaUs of trust account and other transactions for the
fiscal year 1952 will be found in table 4, and table 6 shows the major
classifications from 1944 through 1952.
GENERAL FUND

Moneys of the Government deposited with and held by the Treasurer of the United States are maintained in one general fund. Assets in
the general fund consist of certain gold, silver, currency, coins; unclassified collection items, and balances to the credit of the Treasurer of the
United States in Federal Reserve Banks and other depositary banks.
The-liabilities consist of outstanding Treasurer's checks; balances to
the credit of the Post Office Department, the Board of Trustees of the
Postal Savings System, and postmasters' disbursing accounts, etc.;
and uncollected items, exchanges, etc. The general fund balance,
representing the difference between assets and liabilities, at the close of
the fiscal year 1952, on the basis of the daily Treasury statement,
amounted to $6,9,69 mUlion, a decrease of $388 niillion during the
fiscal year.

19 52 REPORT OF TPIE SECRETARY OF THE TREASURY

The net change in the balance of the general fund during the fiscal
year was accoimted for as follows:
Balance June 30, 1951
Add:
Budget receipts, net
Trust accounts, etc., receipts
Net increase in gross public debt—

.
.

$7,356,578,123.19
62,128,606,579.52
8,806,815,681.85
3,883,201,970.50

Total...
•.
.:- 82,175,202,355.06
Deduct:
Budget expenditures, including those of wholly owned Govraent corporations
1
$66,145,246,957.62"
Trust accounts, etc., expenditures....
4,951,571,632.46
Investments of Government agencies in public debt securities,
net........
.3,636,132,200.67
Clearing account for outstanding checks and interest coupons,
and telegraphic reports from Federal Reserve Banks: Excess
of expenditures.
401,389,312.15
Total
-...:
75,134,340,102.90
Sales and redemptions of obligations of Government agencies
inmarket, net
72,034,647.85
:
—75,206,374,750.75
Balance June 30, 1952

6,968,827,604.31

A comparative analysis of the assets and liabilities of the general
fund is shown, as of June 30, 1951 and 1952, in table 43.
The balance in the general fund as of the end of the month ranged
during the fiscal year from a low of $3,879 million on January 31 to a
high of $6,969 million on June 30. As in the past three years, the
largest item in general fund assets was the amount on deposit in
Treasury accounts with the commercial banlcs designated as special
depositaries, termed Treasury tax and loan accounts since January 1,
1950. Tax and loan account balances, as of the close of the month,
were lowest on January 31 with $2,048 million, and were highest on
March 31 with $5,228 million. On June 30, they totaled $5,106
million.
Funds deposited in tax and loan accounts in 1952 consisted of the
proceeds of the majority of the sales of savings bonds.and savings
notes and other public debt obligations issued for cash (except regular
issues of Treasury bills), a large part of the proceeds of withheld
individual income and payroll taxes, and also, most quarterly tax
payments of $10,000 and over of individuals and corporations.
PUBLIC DEBT OPERATIONS AND OWNERSHIP OF FEDERAL
SECURITIES

The net increase of $3.9 billion during the year brought the total
public debt and guaranteed obligations outstanding on June.30, 1952,

SUMMARY OF FISCAL OPERATIONS

to $259.2 billion. The total Avas somewhat above the amoimts outstanding on June 30 in any other year since 1946 but it was substantially less than the peak of $279.8 biUion in February 1946 and the total
of $269.9 billion outstanding on June 30, 1946.
The increase in the debt during the fiscal year 1952 was brought
about by special issues of $3.1 biUion to Government investnient accounts and a net increase in public issues of $0.9 billion. The rise in
public issues was the result of new marketable issues of $2.5 billion
and a (iecline in nonmarketable securities of $1.6 biUion. The total
interest-bearing public issues of $219.1 billion on June 30, 1952, was
close to the average outstanding as of June 30, 1948-1951. During
the past four years, however, there was a substantial change in the
composition of these issues. Marketable securities decreased and
nonmarketable increased, respectively, by approxiniately $20 billion.
On June 30, 1952, marketable issues constituted approximately 64
percent of the interest-bearing public issues, and nonmarketable,
approximately 36 percent.
The total Federal debt outstanding since January 1946 is shown in
chart 3. Detailed information on the debt outstanding, operations,
and ownership is given in the tables section of the report. Changes
in the debt during 1952 are summarized in the accompanying table.
June 3),
1951 .

June 30,
1952

Class of debt

Increase, or
decrease (—)

In billions of dollars
•

Publicdebt:
.Interest-bearing:
Public issues:
Marketable Nonraarketable:

Total public issues
. .
Special issues to Governraent investnient accounts
Total interest-bearing public debt
..
M atured debt on which interest has ceased
Debt bearing no interest
.
Total public d e b t l . . :
'
Guaranteed obligations not held by the Treasury _
Total public debt and guaranteed obligations

*Less than $50 million.

221052—53-

.-.
..

137. 9
80.3
218. 2
34.7

140. 4
78.7
219.1
37.7

252. 9
.5
i;9

256. 9'
, .4
1.8

255.2

(*)

255.3

•259.1

(*)

259. 2-

2. 5
-1.6
.9
3.1

(*)
(*) .

4.0
— 1
3.9
39

1952 REPORT OF THE SECRETARY OF THE TREASURY

^TRENDS IN THE FEDERAL DEBT l946-'52.

CHART 3

Operations in the public debt and changes in its ownership during
the fiscal year 1952 are outlined in the two sections which follow.
PUBLIC DEBT OPERATIONS

Summary

The Treasury borrowed ^^new money" tln^ough marketable issues
during the year by increasing the offerings of 91-day Treasury bills and
by two offerings of the new Treasury tax anticipation bUls. Since all
of the new money borrowed by issuing tax anticipation bUls was
repaid before the end of the fiscal year, these issues did not increase
the debt. Eefunding of marketable securities (other than Treasury
bills) was accomplished by six issues of certificates of indebtedness and
by an issue of intermediate bonds, the first marketable Treasury bond
offering since 1945. In addition, portions of four long-term Treasury
bond issues were refimded into Treasmy nonmarketable bonds of the
investment series. In connection with this refunding the Treasury

SUMMARY OF FISCAL OPERATIONS

also raised $318 million of ''new money," most of which was paid
during fiscal 1952. In May 1952, the yields of United States savings
bonds were raised and in June 1952 a new current income bond, the
H bond, was added to the series. Treasury savings notes continued
on. sale at the yields which had been adjusted upward in May 1951.
The results of the public offerings of bonds, notes, and certificates
of indebtedness are shown in the following tables. The results of bill
offerings are summarized in later text.
Public offerings of bonds, notes, and certificates of indebtedness, fiscal year 1952 ^
[In millions of dollars]

Description of security

Date of issue

Issued in
Issued exchange
Total
for
for other issued
cash securities

Marketable issues
Aug. 1, 1951..
Sept. 15, 1951
Oct. 1, 1951...
Oct. 15, 1951.
Dec. 15, 1951.
Mar. 1, 1952..
Do
Apr. 1, 1951-.
Oct. 1, 1951.1
Apr. 1, 1952-.

m % certificates of indebtedness:
Series B-1952, due July 1, 1952
1
Series C-1952, due Aug. 15, 1952
Series D-1952, due Sept. 1, 1952
Series E-1952, due Oct. 1, 1952
Series F-1952, due Dec. 1, 1952
Series A-1953, due Feb. 15, 1953
2%% Treasury bonds of 1957-59, due Mar. 15, 1959..
IJ'^% Treasury notes:
Series EA-1956, due Apr. 1, 1956
Series E0-1956, due Oct. 1, 1956
Series EA-1957, due Apr. 1, 1957
. Total Treasury certificates of inclebtedness, bonds,
and notes.

5,216
583
1,832
10, 861
1,063
8,868
927

5,216
^ 583
1,832
10,861
• 1,063
8,868
927

1,007
550
512

31, 418

2 1,307

2 1, 758

Nonmarketable issues
May 19, 1952.
Various
Do

2^4% Treasury Bonds, Investment Series B-1975-80 (additional issue), due Apr. 1, 1980.
Treasury savings notes, Series A
United States savings bonds:
Series E
.-.
Series F and G
.
SeriesH
Series J and K

2 450
4,905

4,965

3 4,377
3 607

3 4,377
3 616
30
110

30
110

(*)

Subtotal savings bonds

> 5,124

Total Treasury bonds, investraent series, savings
bonds, and savings notes.
Total issues.

10, 539

1,316

11,855

10, 539

32, 734

43, 273

3 5,132

*Less than $500,000.
» Exclusive of special series of certificates of indebtedness; armed forces leave bonds; depositary bonds;
special notes of the United States: International Monetary Fund series; United States savings stamps;
and guaranteed obligations.
2 From press release of June 5, 1952, (see exhibit 14, page 268).
2 Includes accruals.

1952 REPORT OF THE SECRETARY OF THE TREASURY

Disposition of maturing or redeemable public issues of bonds, notes, and certificates of
indebtedness, fiscal year 1952 ^
[Dollars in millionsl

Date of
refunding

Description of security ,

Redeemed
Exfor cash changed
or car- for new . Total
ried to securmatured
ity
debt

Date nf issue

Percent
exchanged

Marketable issues
1951
Aug. 1

1K% Treasury notes. Series,
E-1951, maturing Aug. 1, 1951.
3%
Treasury bonds of 1951-55,
Sept. 1 5 . called Sept. 15, 1951.
lH7o
Treasury notes. Series
Oct. 1
A-1951, maturing Oct. 1, 1951.
Oct. 1 5 - . . lH7n Treasury notes:
Series F-1951, maturing Oct.
15, 1951.
Series G-1951, maturing Nov.
1, 1951.
Subtotal, Oct. 15..

July 1,1950

135

5,216

5,351

97.5

Sept. 15, 1931

172

583

755

77.2

1,832

1,918

95.5

Feb. 1, 1950
Sept. 15, 1950
Oct. 1, 1950

Dec. 1 5 . . . 23^% Treasury bonds of 1951-53,
called Dec. 15, 1951.
1952
Mar. 1..-. 2K% Treasury bonds of 1952-54,
called Mar. 15, 1952.
VA% certificates. Series A-1952,
Do
maturing Apr. 1, 1952.

Dec: 22, 1939

214% Treasury bonds:
Exchanged during fiscal 1952:
1965-70 due Mar. 15, 1970-.
1966-71 due Mar. 15, 1971..
1967-72 due June 15, 1972..
1907-72dueDec. 15,1972...
Reraainder.

5,873

5,941

98.9

4,988

5, 253

94.9

333

10,861

11,194

97.0

1,063

1,118

95.0

Mar, 31, 1941

927

1,024

90.5

June 15, 1951

656

8,868

9, 524

93.1

753

9,795

10, 548

92.9

Subtotal, Mar. 1
June 4

-•

67
265

Feb.
Dec
June
Nov

2 418
2 479
. 2 85
2192
133

1. 1944
1, 1944
1 1945
15, 1945

418
479
85
192
133

1,307

1,534

30, 657

32,192

M a r . 1935-Apr,
90
1941.
May 1941 on con3,999
tinuous sale. ,
M a y 1941-Apr. . 1,012
1952.

4,008

Subtotal, June 4
Total Treasury bonds.
notes, and certificates
of indebtedness.
Nonmarketable issues
Various.-- United States savines bonds:
Series A-D
Series E
Series F and G
Do
Do

Subtotal savings bonds.
Treasury tax and savings notes
2M% Treasury bonds, investment
series:
Series A-1965
Series B-1975-80. .

5,101
Aug. 1, 1941, on 3 6,174
continuous sale.
Oct. 1, 1947
Apr. 1, 1951

1,012
9

5,109
6,174

2,068

1
2, 068 •

Subtotal Treasury bonds,
investment series.

2,068

2,070

Total savings bonds, tax
and savings notes, and
Treasury bonds, investment series.

11, 276

2,077

13, 354

12, 811 32, 734 45, 545
Total issues
1 Marketable issues in this table are exclusive of special series of certificates of indebtedness, postal savings
bonds, and other debt items. Nonmarketable issues are exclusive of armed forces leave bonds; depositary
bonds; excess profits tax refund bonds; special notes of the United States: International Monetary Fund
series; United States savings stamps; and guaranteed obligations.
2 Exchanges through June 30, 1952. Payment of the balance has been deferred under the option to pay
in four equal installments on June 4, August 1, October 1, and December 1,1952.
3. Includes tax and savings notes in the amount of $2,737 million surrendered in payment of taxes.

SUMMARY OF FISCAL OPERATIONS
Marketable issues

Bonds, notes, and certiiicates oj indebtedness.—Bank restricted bonds
(the marketable issues which commercial banks may not acquire before
specified dates) decreased $8.6 billion in 1952 to a total of $27.5 billion.
Two issues of bank restricted bonds, the 2K percent bonds of June
15, 1962-67, and the 2]i percent bonds of June 15,1959-62, outstanding
in the total of $7.4 billion, became bank eligible on May 5 and June 15,
respectively. The issues were two of the eleven so restricted by their
terms in order to minimize their infiation potential during World War
I I . They were the second and third issues to become eligible for
bank purchase; the first became eligible on September 15, 1946.
Bank restricted issues were further reduced by the reopening in May
of the nonmarketable 25^ percent Treasury Bonds, Investment Series
B-1975-80, which were offered, under a formula, for cash and in
exchange for four of the longest-term bank restricted Treasury bonds.
The amounts of the security classes of marketable issues outstanding
on June 30, 1951 and 1952, with changes during the year, are shown in
the following taUe.
Increase, or
June 30, 1951. June 30,1952 decrease
(—)

Class of security

In billions of dollars
Treasury bills
Certificates of indebtedness
Treasury notes
Treasury bonds:
Bank eligible
Bank restricted
—1
Other bonds (postal savings, etc.)

'
•-.

Total interest-bearing marketable securities.

13.6
9.5
35.8

17.2
28.4'
19.0

3.6
18.9-16.8

42.8
36.1
.2

48.2
27.5
.1

5.4
-8.6

140.4

(*)

2.5.

*Less than $50 raillion.

Four issues of Treasury bonds were not called for redemption when
they reached their first and subsequent call dates which occurred
during the fiscal year. These were the 2 percent bonds of September
15, 1951-53, the 2 percent bonds of December 15, 1951-55, the 2
percent bonds of June 15, .1952-54, and the 2)i percent bonds of
June 15, 1952-55.
Marketable securities, other than Treasury bills, matured or were
called for redemption in the aniount of $30.9 biUion. Of this total,
$29.3 billion were exchanged for new issues; the remaining $1.5 billion
consisted of balances of the matured or called issues which were
presented for cash redemption rather than exchange or which were
transferred to matured debt. These totals do not include $1.3 billion
of exchange subscriptions of four issues of Treasury bonds which were
refunded in part into an additional issue of Treasury Bonds, Investment Series B-1975-80.

19 52 REPORT OF THE SECRETARY OF THE TREASURY

The eight wholly refunded securities consisted of three issues of
Treasury bonds, four issues of 1% percent Treasury notes—three
13-month maturities, and one 20-month maturity—and one issue
of 9}^-month 1% percent certificates of indebtedness. The partially
refunded securities were four of the longest-term bond issues. In
addition to the investment series bonds, the new securit}^ issues consisted of six issues of 11- or l l ^ - m o n t h 1% percent certificates of
indebtedness, and an issue of 5-year and ji month—7-year and K
month 2% percent bonds designated Treasury bonds of 1957-59.
The refunding operations of the year were opened with the offering
on July 16, 1951, in accordance m t h an announcement by the Secretary of the Treasury on July 12, of a new issue of 11-month V/s percent
certificates of indebtedness. The certificates. Series B-1952, dated
August 1, 1951, were offered to holders of the 1% percent Treasury
notes. Series E-1951, outstanding in the amount of $5,351 million.
Subscriptions to the new certificates. Series B-1952, totaled $5,216
million, leaving $135 million of the maturing notes to be paid in cash.
On August 27, offerings were announced of two issues of ll^month
1% percent certificates of indebtedness to be made on September 4
and September 18, in exchange, respectively, for the 3 percent Treasury
bonds of 1951-55 which previously had been called for redemption on
September 15, 1951, and in exchange for the Iji percent Treasury
notes. Series A-1951 which matured October 1, 1951. The new
certificates. Series C-1952 and Series D-1952 were dated September
15 and October 1, respectively. Exchanges of the bonds for the new
certificate issue. Series C-1952, dated September 15, amounted to
$583 million, leaving $172 million of the maturing bonds to be paid
in cash. Exchanges of the notes for the new certificate issue. Series
D-1952, dated October 1, amounted to $1,832 million, leaving $86
million of the maturing notes to be paid in cash.
An offering of llK-month 1% percent certificates of indebtedness on
October 1 was announced on September 25 to holders of two issues of
lYi percent Treasury notes which matured in the total of $11,194
million. Exchanges for the new certificate. Series E-1952, dated
October 15, 1951, totaled $10,861 million. Exchanges of the notes.
Series F-1951, which matured October 15 in the amount of $5,941
million, were $5,873 million. Exchanges of the notes. Series G-1951,
which matured November 1 in the amount of $5,253 million, were
$4,988 million.
On November 26, an offering on December 3 was announced of an
issue of llK-month 1% percent certificates of indebtedness for exchange
of the 23^ percent Treasury bonds of 1951-53, which earlier had been
called for redeniption on December 15. The called bonds were outstanding in the amount of $1,118 million. Subscriptions to the new

SUMMARY OF FISCAL OPERATIONS

certificates, Series F-1952, dated December 15, 1951, amounted to
$1,063 million.
The next refunding, announced on February 13, 1952, consisted of
the offering on February 18 of two securities. The first, an issue of
2% percent Treasury bonds of March 15, 1957-59, was made to refund
the 2K percent Treasury bonds of 1952-54 which had been called for
redemption on March 15, 1952. This was the first marketable Treasury bond offered since October 1945. The second security, an llKmonth 1% percent certificate of indebtedness, was offered to holders
of the 9K-month 1% percent certificate. Series A-1952, maturing
April 1. Subscriptions to the 2% percent Treasury bonds of 1957-59
amounted to $922 million, leaving $97 million of the maturing bonds
to be paid in cash. Subscriptions to the new 1% percent certificates,
Series A-1953, dated March 1, 1952, amounted to $8,868 million,
leaving $656 million of the maturing certificates to be paid in cash.
Finally, a portion of the four longest-term bank restricted bonds
was shifted into nonmarketable bonds. In accordance with an
announcement on April 30, the nonmarketable issue of 2% percent
Treasury Bonds, Investment Series B-1975-80, was reopened on
M a y 19 for cash or not less than one-fourth for cash and the remainder
for exchange of any of the four bonds. The subscription books were
closed on May 29. Exchange subscriptions amounted to $1,307
million and cash subscriptions to $450 million. These figures included
exchange subscriptions of $392 million and cash subscriptions of $132
million of Government investment accounts.
Bonds of Investment Series B-1975-80, which were originally issued
AprU 1, 1951, are not transferable, but at the option of the owner may
be exchanged for Iji percent five-year marketable notes. During 1952
three series of these notes. Series EA, due April 1, 1956, Series EO, due
October 1, 1956, and Series EA, due April 1, 1957, were issued in the
total of $2,068 mUlion in exchange for bonds of this investment series.
Of these exchanges, $2,000 million were made for the Federal Reserve
System Open Market Account.
Treasury 91-day bills.—Offerings of 91-day bUls were made in each
week of the fiscal year. In the first quarter of the year the issues
exceeded the amount of the maturities by $2.0 bUlion; the issues in
the second and third quarters refunded in equivalent amounts the
bUls maturing; and the issues in the last quarter exceeded the maturities by $1.6 bUlion. The issues consisted of 50 with 91-day maturities, one, on November 23, of a 90-day term, and one, on August 23,
of a 92-day terna. The 13 issues outstanding at the end of the fiscal
year 1951 totaled $13,614 mUlion and the 13 issues outstanding at
the close of the fiscal year 1952 totaled $17,219 mUlion.
The average rates of discount on new issues ranged moderately

1952 REPORT OF THE SECRETARY OF THE TREASURY

during July through November between 1.562 percent and 1.660
percent. In December the rate increased, rising to the year's high
of 1.883 percent on January 3. A rapid decline then carried the rate
to the year's low of 1.507 percent on Februar}^ 21. The rate then
increased graduall}^ through the remainder of the fiscal year, interrupted onl}^ by declines in March,and in. mid-June. The average
rates On weekly bill oft'eriugs during the .year are shown in exhibit 12.
Noncompetitive bids for $200,000 or less from any one bidder were
accepted in full at. the average, price for competitive bids. These
bids averaged about $171 million a week and amoimted to 13.9 percent
of all bids accepted.
Treasury bills, Tax Anticipation Series.—There were two issues of
bills of the new Tax Anticipation Series in October and November
1951. These new issues were offered to provide the Treasury with
funds in periods when tax collections were seasonally low; to provide
the Treasury with appropriate maturities when large amounts of
funds were flowing into the Treasury; and to provide an investment
medium for corporations accumulating funds to pay their taxes in
March and elune, the two months when the heaviest tax payments
are due. The October series was accepted in payment of income
taxes due on March 15, 1952, and the November series in payment
of income taxes d u e o n June 15, 1952.
The oft'eriugs were for cash, with payment on the date of issue,
except that any qualified depositary could make payment for the bUls
by credit in its tax and loan, account up to any amount for which it
was qualified in excess of existing (ieposits. . The bUls were issued on
a discount basis, as in the case of 91>day bUls. Bills of the first series
had a 144-day term, were dated October 23, 1951, and matured on
March 15, 1952. Tenders were accepted for $1,234 million. BUls
of the second series had a term of 201 days, were dated November
27, 1951, and matured on June 157T^52. Tenders were accepted
for $1,249 million. The average rates of discount were 1.550 percent
for the October series and 1.497 percent for the November series.
To the extent the bills were not presented in payment of income taxes,
in accordance with the oft'ering terms the face amount was payable
without interest at maturity.
Tax anticipation bills are like Treasury savings notes in that one
of the purposes of their issuance is also their use iii dii^ect payment of
taxes. In other respects, however, the bUls are unlike, the savings
notes, as the savings notes are 3-year nonmarketable issues on continuous sale, bearing interest on a graduated rising scale pa^^able on
redemption, and redeemable before maturity.

SUMMARY OF FISCAL OPERATIONS

Nonmarketable issues

Toward the end of the fiscal year a number of changes were made
inUnited States savings bonds as described in the following paragraphs.
Treasury savings notes continued on sale in 1952 and corporations
used a larger volume for tax payments than in any other year since
1946. Treasury Bonds, Investment Series B-1975-80, outstanding
declined somewhat as a result of exchanges (largety b}^ the Federal
Reserve Banks), under the owners' option, for marketable 5-year Iji
percent Treasury notes, Series EA and EO. These exchanges were
substantially offset by the issues of the Investment Series in the refunding of long-term bank restricted bonds and also by the cash
subscriptions in the offering of May 19-29. The changes in the
amounts of nonmarketable interest-bearing security classes during
the year are shown in the following table.
Increase, or
June 30, 1951 June 30, 1952 decrease
(—)

Class of security

In billions of dollars
United States savings bonds:
Series E
Series F and G
Series H . . .
Series J and K . . .

34.5
•. 23.1

.
.

. .

TotaJ
Treasury savings notes (unmatured).
Treasury bonds, investinent series..
Other
.

Total interest-bearing nonraarketable issues .
*Less than $50 million.

(*)

34.9
22.7

57.6

.1
• 57.7

. -

7.8
14.5
.4

6.6
14.0
.4

80.3

78.7

- -

0.4
-.4

(*)

.1
.1
-1.2
-.5

(•*)

-1.6

United States savings bonds.—The changes in savings bonds were
announced on April 29. Effective Ma}^ 1 the yields on new issues were
raised, both for the intermediate period before maturity and for the
entire period to maturity. The yield of Series E bonds maturing
on or after May 1, 1952, also Avas imj^roved if the bonds were held for
an additional period after maturit}^ Sales of Series F and G savings
bonds were discontinued on May 1, and in their place two series of
sayings bonds to be laiown as Series J and Series K were placed on sale.
The wholly new current income bond. Series H, was placed on sale on
June 1 as a companion to the discount Series E bond and is being
promoted along with the E bond.
Several changes were made in the terms of E bonds issued on and
after M a y 1, 1952. The intermediate redemption schedule was
revised upward to give higher yields in the earlier years. Interest

19 52 REPORT OF THE SECRETARY OF THE TREASURY

IMPROVED E BOND YIELDS^
For Selected Periods Held

CHART 4

Approxiraate yield per amiura, compounded semiannually.

IMPROVED E BOND EXTENSION YIELDS\
For Selected Periods Held During Extension

3.00

r^.90;

0/cf£\
^; 2.432

3 Yrs.

;;2.322;

7 Yrs.
Extended Period Held-

10 Yrs.
(Extended Moturityy

CHART 5

1 Approximate yield per annum, compoundedIscmiamuially,7or period after original maturity.
2 Equivalent to 2>i2 percent simple interest.

SUMMARY OF FISCAL OPERATIONS

accruals start at the end of six months instead of at the end of one year
as formerly. The over-all interest rate on E bonds also was raised,
from approximately 2.9 percent to approximately 3 percent compounded semiannually, the maximum allowed by the law. The
$18.75 issue price on a $25 bond was retained (a $4 return for a $3
investment). The change in the over-all return was eff'ected by
shortening the length of the E bond from 10 ^^-ears to 9 years, 8 months.
The new interest rate schedule applies only to bonds sold on May 1,
1952, and thereafter.
The interest rate on the E bond during the additional 10 3^ears of
an E bond's life under the extension privilege also was raised, so that
the return is approximately 3 percent, compounded semiannually for a
period of holding be3^ond the original maturity. The new rates for
the extension period apply only to bonds maturing on or after May 1,
1952.
Charts 4 and 5 show the improved E bond yields and extended
yields for selected periods held.
In* addition to these changes in terms, the limit on E bond holdings
by one person, at any one time, of purchases during the calendar year
1952 and each year thereafter was fixed at $20,000, maturity value.
This was twice the limit in effect in 1948 through 1951.
The new current income Series H bond is issued and is redeemable
at par. Interest is paid by check semiannually on a graduated scale
of rates whicii was put as close as possible to the E bond scale in terms
of its investment yield. Like the E series, the bond is issued only to
individuals, has the same 9 3^ear, 8 month, term as E bonds, and has a
similar annual purchase limit of $20,000 maturity value. Unlike E
bonds, it must be held six months rather than two months, before it
can be redeemed and it is redeemable only on one calendar month's
notice; it is issued and redeemable only at Federal Reserve Banks and
branches and at the Treasury; and it is offered with a minimum
denomination of $500.
Series J is a revised Series F bond and Series K is a revised Series G
bond. The two new series differ from the old primarily in their
higher interest rate schedules. They pay 2.76 percent if held 12 years
to maturity, and pay much higher intermediate yields than F and G
bonds. The limit on the combined holdings of J and K bonds by one
person, at any one time, of purchases during the calendar year 1952
and each subsequent year was fixed at $200,000, issue price. This
was twice the amount which had been effective beginning with 1942
for Series F and G bonds combined. Chart 6 compares yields of
Series G and Series K bonds for selected periods held.

19 52 REPORT OF THE SECRETARY OF THE TREASURY

YIELDS^ ON SERIES G AND K BONDSL
For Selected Periods Held

Series K ^ ^
Series G'^xx^^^^

lYr.

5Yrs.

3 Yrs.

- Period Held —
CHART

12 Yrs.
(Maturity),

' Approximate investraent yield per annura, corapounded seraiannually.
2 F and J yield comparison is similar.

Sales of Series E through K during the year totaled $3.9 billion,
issue jorice. Sales plus accrued discount of these issues exceeded
redemptions b}^ $113 million. Since the first series was issued in 1935,
sales of all series (A-K), plus accrued discoimt, have totaled $105.1
billion and redemptions, including matured bonds, have totaled $47.3
bilhon. As of June 30,1952, savings bonds were 22.5 percent of the
outstanding interest-bearing public debt and guaranteed obligations.
Sales of Series E and Series H bonds combined during 1952 amounted
to $3,296 million, issue price, $24 million more than E bond sales in
1951.
In the one month of the year H bonds were on sale, $30
million were sold. Redemptions of E bonds in 1952 amounted to
$4,008 million, a decline of $287 million from those in 1951.
Sales of Series F, G, J, and K bonds, issue price, totaled $629 million
in 1952 compared with $1,871 million in 1951. In the two months of
the existence of J and K bonds, their sales together were $110 million.
Redemptions of F and G bonds in 1952 totaled $1,012 mUlion compared with $1,042 million in the preceding year.
The redemptions of savings bonds as a percent of the total sold,
b}^ yeaii}^ series, are summarized in the following table.

SUMMARY

FISCAL

OPERATIONS

Percent of savings honds sold i n each year redeemed through each yearly period
thereafter'^
[On basis of Public Debt accounts, see p. 501]

R e d e e m e d b y e n d of.. Series a n d calendar year i n
which issued

1
year

5
7..
8
9
2
4
10
3
6
years years years years years years years years years

11
years

Series A t h r o u g h E
A-1935
B-1936
C-1937.
C-1938
D-1939.
D-1940
D-1941
E-1941
E-1942
E-1943
E-1944
E-1945..
E-1946
E-1947...
E-1948
E-1949
E-1950
E-1951

•

.
-

5
6
• 7
•

4
4
4
3
8
15
19
28
23
21
20
22
26
29

11
12
12
10
9
8
7
6
15
24
33
38
34
30
30
34
36

lb
17
17
15
13
11
9
10
21
34
41
45
40
37
39
40

20
23
21
24
20
23
18
19
15
17
13
15
12
15
14
18
29
35
41
47
47
52
50 • 54
45
51
43
47
44

26
26
25
21
18
18
17
23
40
51
56
58
54

28
28
26
22
20
20
20
27
44
55
00
61

Series F a n d G
F-1941
F-1942
F-1943
F-1944
F-1945
F-1946
F-1947
F-1948
F-1949
F-1950
F-1951

a n d G-1941.
a n d G-1942.
a n d G-1943
a n d G-1944.
a n d G-1945a n d G-1946
a n d G-1947
a n d G-1948..
a h d G-1949.
a n d G-1950
a n d G-1951

'..

1
1
2
2
2
3
3
2
3.
3
4

3 '
4
6
6
7
7
8
5
9
.9

5
7
10
10
11
12
12
9
13

10
14
19
18
18
20
21

11
14
14
14
15
17
11

13
18
22
21
21
23

15
21
26
25
24

29
29
27
24
23
22
22
30
48
58
62

31
30
29
26
25
25
25
34
52
61

5655
62
58
57
67
84
40
58

93
94
94
94
96
96
92
62

18
24
29
28

20
28
33

24
31

NOTE.—The percentages shown in this table are the proportions of the value of the bonds sold in any
calendar year which are redeeraed before July 1 of the next calendar year, and before July 1 of succeeding
calendar years. Both sales and redemptions are taken at maturity value.
1 Percentages by denominations may be found in table 35.

Statistics on savings bonds, from the date of issue, March 1935
through June 1952, are published in tables 30 through 35.
Treasury savings notes.—Sales of Treasury savings notes in 1952
amounted to $5.0 billion (face amount), slightly less than the sales of
$5.1 bUlion in 1951. Redemptions in 1952 amounted to $6.2 bUlion,
consisting of $2.7 bUlion applied to tax payments and $3.4 bUlion
redeemed for cash. I n 1951 redemptions for tax payments amounted
to $1.2 billion and redemptions for cash to $4.6 billion. Savings notes
unmatured on June 30, 1952, totaled $6.6 billion compared with $7.8
billion on June 30, 1951.
Special short-term certijicates oj indebtedness.—Seven issues of special
short-term certificates of indebtedness, in the total of nearly $1.9
bUlion, were sold to the Federal Reserve Banks during the year to
cover temporaiy overdrafts on Treasury balances a t the Banks made

1952 REPORT OF THE SECRETARY OF THE TREASURY

in anticipation of the receipts of the quarterly tax payments. In 1952,
the sales were made in December, January, March, and June, and in
each instance the issues were retired within a few days. Interest on
the issues was paid to the Banks at the rate of ji percent per annum.
Treasury issues and retirements of these certificates during the year
are shown in table 25.
Special issues to Government investment accounts.—The increase of
$3.1 bUlion in interest-bearing securities issued by the Treasury during
the year for the investment of trust and other funds deposited in the
Treasury brought the total outstanding from $34.7 billion on June 30,
1951, to $37.7 biUion at the year's close. The increase of $2.0 biUion
in the certificates issued for the Federal old-age and survivors insurance
trust fund accounted for nearly two-thirds of the change. Other
significant increases were credited to the civU service retirement fund,,
the railroad retirement account, and the unemployment trust fund.
DetaUs of the changes in the special issues may be found in table 23.
Interest on the public debt

Interest paid on the debt during the year totaled $5,859 million
compared with $5,613 inillion in 1951, daily Treasury statement basis.
The increase was accounted for both by the rise in the total debt
outstanding and by the rise in the average annual interest rate.
Sinking fund

Credits accruing to the cumulative sinking fund in 1952 amounted
to $620 million, which, added to the unexpended balance of $7,818
million brought forward from 1951, made available $8,438 million.
The unexpended balance of $8,438 million was carried forward to the
fiscal year 1953.
Tables 28 and 29 show the transactions on account of this fund
since it was established on July 1, 1920.
Statutory limitation

Section 21 of the Second Liberty Bond Act, as amended (31 U. S. C.
757b), limits the amount of obligations issued under authority of the
act to $275 bUlion outstanding at any one time. The limitation
applies to the public debt and to those obligations of Government
corporations and agencies which are fully guaranteed by the United
States (except such obligations held by the Treasury). As of June
30, 1952, the unused borrowing authorization was $16.5 billion. A
statement of the public debt security classes and guaranteed obligations outstanding as affected by the debt limitation is contained in
table 21.

SUMMARY OF FISCAL OPERATIONS'
OWNERSHIP OF FEDERAL SECURITIES i

Ownership of the gross Federal debt by private nonbank investors on
June 30, 1952, amounted to $130.8 billion, and accounted for 51 percent of the total debt outstanding. The decline of $2.2 billion in the
holdings of debt by private nonbank investors during the fiscal year
.1952 was somewhat smaller than the decline during the preceding
year. There was still no net demand for Federal securities on the
part of long-term investors as a group during the year, as the supply
of new mortgages and corporate securities continued at high levels.
There was a $1 bUlion increase in the holdings of shorter-term investors, however, one-half of it in the investment of foreign balances.
Holdings of gross Federal debt by the banking system, that is,
commercial banks and the Federal Reserve Banks, increased by $2.7
bUIion during the year, although holdings by the Federal Reserve
Banks alone actually declined. Despite these increases, bank holdings of the debt on June 30, 1952, still accounted for only 32 percent
of the total debt outstanding, as compared with 42 percent, at the
end of World War II financing (Feb. 28, 1946) and 39 percent on
June 30, 1941. WhUe there was a decline of approximately $4.4
bUlion in the holdings of securities by private nonbank investors since
the end of World War II financing, there was a decline of $32.6 biUion
in debt holdings by the commercial banking system as a whole.
The following table presents figures on bank and nonbank ownership
together with pertinent detaU on the holdings of Federal securities
by the various investor classes.
Ownership of Federal securities, by investor classes, for selected dates, 1941-52 ^
J u n e 30,
.1941

F e b . 28,
1946 2

J u n e 30,
1951

durJ u n e 30, Change
ing fiscal
1952
year 1952

A m o u n t s in billion 3 of dollars
E s t i m a t e d o^\^lership b y :
P r i v a t e n o n b a n k investors:
Individuals ^
Insurance companies.
_
M u t u a l savings b a n k s . . .
Corporations *
..
S t a t e a n d local g o v e r n m e n t s
Miscellaneous investors ' . -

11.2
7.1
3.4
2.0
.6
.7

64.1
24.4
11.1
19.9
6.7
8.9

64.4
17.1
10.2
21.1
9.4
10.8

63.5
15.7
9.6
20.0
10.4
11.7

+1.0

T o t a l p r i v a t e n o n b a n k investors
Federal Government investment accounts

25.0
8.5

135.1
28.0

132.9
41.0

130.8
44.3

-2.2
+3.4

Banks;
Commercial b a n k s
F e d e r a l Reserve B a n k s

19.7
2.2

93.8
22.9

58.4
23.0

61.1
22.9

+2.

21.8

116.7

81.4

84.0

+2.7

55.3

279.8

255.3

259.2

+3.9

Totalbanks

, . ^ _ . -

T o t a l gross d e b t o u t s t a n d i n g
F o o t n o t e s a t e n d of table.

._
.-._
.

—.9
—1.4
-.6
—1.1

+.9

—.1

19 52 REPORT OF T H E SECRETARY OF T H E TREASURY

Ownership of Federal securities, hy investor classes, for selected dates, 194^-52 ^—Con.
June 30,
1941

Feb. 28,
1946 2

June 30,
1951

durJune 30, Change
ing fiscal
1952
year 1952

Percent of total
Percent owned by:
Private nonbank investors:
Individuals.
Other. -.
Total
Federal Government investment accounts
Banks
--.Total gross debt outstanding

20
26

23
25

46
15
39
100

25
27

25,
26

48
10
42

52
16
32

51
17
32

100

1 Gross public debt and guaranteed obligations of Federal Government held outside of the Treasury.
2 Peak of debt.
3 Includes partnerships and personal trust accounts. Nonjirofit institutions and corporate pension trust
funds are included under "Miscellaneous investors."
< Exclusive of banks and insurance companies.
6 Includes savings and loan associations, nonprofit institutions, corporate pension trust funds, dealers and
brokers, and investments of foreign balances and internatiohal accounts in this country.

During the fiscal year 1952, individuals decreased their ownership
of Federal securities by approximately $0.9 billion, as compared with
a decline of $2.5 bUlion m the preceding year and with, virtually no
change in the fiscal year 1950. There was no decline in individuals'
holdings of savings bonds during the year, since an increase of about
$0.4 biUion in holdings of SeriesE and H savings bonds was offset by
reductions in the holdings of other series of savings bonds of approximately the same amount. Some continued reduction in the holdings
of marketable securities by individuals took place during the year,
although the decline was only about one-half as great as during the
preceding year. Despite a decline of $3.4 bUlion in individuals' ownership in the last 2 years, individuals' holdings of Federal securities
amoimted to $63.5 biUion on June 30, 1952, only half a billion dollars
below the total held by individuals at the end of World War I I financing. Individuals hold the largest single segment of the Federal debt
at the present time, an indication of the continued widespread distribution of the debt throughout the country. Their present share of the
total public debt (25 percent) is slightly larger than it was on February
28, 1946, and considerably above the prewar share.
Holdings of Federal securities by insurance companies on June 30,
1952, amounted to about $15.7 billion. Two-thirds of this total was
held by life insurance companies, with investments predominantly in
long-term securities. Life insurance companies continued to reduce
their holdings of Federal securities during 1952, followmg the trend

SUMMARY. OF FISCAL OPERATIONS:

which has characterized the postwar period as new private investment
opportunities appeared in the form of an increased supply of mortgages
and corporate securities. In large part, this trend was maintained
during 1952 by the capital;demands of business growing out of the
defense program. The reduction in life insurance company holdings
of Federal securities of $1)^ billion, during the fiscal 3^ear 1952 was
only half as large as the reduction in the preceding year, however,
as savings flowing to life insurance companies continued to grow and
the trend toward private investments slackened somewhat. Approximately 75 percent of the life insurance expansion of private investments during the fiscal year 1952 was financed through an increased
volume of new savings flowing into insurance companies, as compared
with onty 60 percent the year before.
Mutual savings banks' holdings of Federal securities on June 30,
1952, totaled $9.6 billion, over one-half of whicii was invested in bank
restricted bonds. Like the life insurance companies, mutual savings
banks also have been actively engaged in increasing their mortgage
and corporate security portfolios since the end of World War I I ,
although the activity has been on a smaUer scale. ^ Again, like the
life insurance companies, their expansion of mortgages and corporate
security holdings during 1952 was accomplished with less liquidation
of Federal securities than had been true during earlier years. Mutual
savings barik holdings declined by $0.6 billion in 1952, as compared
with a decline of $1.3 billion in the preceding year.
Although the long-term trend of holdings of Federal securities by
corporations other than banks and insurance companies appears to
be continuing slightly upward, there was a decline of about $1. billion
in their holdings of Federal securities during the fiscal year 1952.
The Revenue Act of 1950 has the effect of increasing the proportion
of corporate income (and excess profits) taxes to be paid during the
first half of each calendar year. The increasing burden of corporate
tax payments in March and June in comparison with the rest of the
year has a direct effect on corporations' Government security portfolios, which are tending more and more to be drawn down during
these months and,then built up again during the period from Jul}^
through February. Corporation holdings of F e d e r a l s e c u r i t i e s
amounted to $20.0 billion on June 30, 1952, about $2.6 billion short
of the seasonal peak reached in February 1952 which was, incidentally,
very near the all-time peak for corporation holdings of Government
securities reached in 1945.
221052—53

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Miscellaneous investors held approximately $11.7 billion of Federal
securities on June 30, 1952. Private pension trusts accounted for a
little over $2 billion of the total, but their holdings were virtually unchanged during the. year. About one-half of the increase of approximately one billion dollars in the holdings of miscellaneous investors
during the 3^ear came about as a result of expanded investment of
foreign balances in the United States in Federal securities. These
investment balances, together with securities held by various international organizations, made up about $4^ bUlion of the miscellaneous
investors' total on June 30, 1952. The remaining investor classes in
the miscellaneous category include savings and loan associations,
nonprofit institutions, dealers and brokers, and certain smaller institutional groups.
Holdings of Federal securities by State and local governments as of
June 30,° 1952, amoimted to $10.4 billion, a $1 billion increase during
the year. One-third of these investments is in State and local pension
funds, which accounted for almost one-half the entire net growth during the year. The remainder wag accounted for by State and local
sinking funds, operating funds, and various special funds.
Government investment accoimts expanded their holdings of Government securities by $3.4 billion during the fiscal year 1952, continuing their net growth which has characterized each year during the
last two decades with the exception of 1950. On June 30, 1952, Government investment accounts held $44.3 billion of Federal securities,
or one-sixth of the entire debt. Special issues to these Government
investment accounts amounted to $37.7 billion on June 30, 1952, or
approximately 85 percent of the total. DetaUs of the ownership of
securities by these Government investment accounts, mostly social
security, veterans' life insurance, and Government employees' retirement funds, are shown in table 44 (page 650).
'
Commercial banks held $61.1 bUlion of Federal securities at the end
of the fiscal year 1952, an increase of $2.8 billion over June 30, 1951.
A little over half of this total was invested in bank eligible bonds,
most of which were due or callable within 5 years. Commercial banks
also held a little over $25 bUlion in bills, certificates, and notes.
An analysis of the estimated changes in bank versus nonbank ownership of Federal securities during the fiscal year 1952 is shown by type
of issue in the following table.

SUMMARY

FISCAL

OPERATIONS

Estimated changes i n ownership of Federal securities hy iype ofissue, fiscal year 1952 *
[In billions of dollars]
C h a n g e accounted for b y Total
changes

M a r k e t a b l e securities:
Treasury bills.Certificates of i n d e b t e d n e s s

Treasury bonds.
Total marketable
N o n m a r k e t a b l e securities, e t c . :
U n i t e d States savings b o n d s
T r e a s u r y savings n o t e s . .
Special issues t o G o v e r n m e n t investm e n t accounts
_.
T r e a s u r y b o n d s , i n v e s t m e n t series
Other
-

Private
nonbank
investors

3.6
18.9
-16.8
-3.2

1.4
5.6
-6.3
-2.7

2.5

-1.9

.1
-1.2
3.1
-.5
-.1

Government
investment
accounts

(*)
(*)
(*)

Banks

Total

Commercial

Federal
Reserve

-0.3

2.2
13.2
-10.6
-.2

2.3
4.6
-3.7
-.5

—0.1
86
—6 9
.3

-.2

4.7

2.8

1 9

.1
-1.1

-.1

. -.1

1.0
-.2

-2.0
.1

Total nonmarketable, etc

1-4,

-.2

3.6

-2.0

T o t a l change

3.9

-2.2

3.4

2.7

(*)

-2.0
.1
—2.0

(•)

2.8

—.1

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

As discussed in the preceding section on public debt operations,
marketable securities as a whole increased by $2.5 bUlion during the
year. About 40 percent of the $3.6 bUlion increase in Treasury bills
during the year was taken by private nonbank investors. The rest
was absorbed by commercial banks and accounted for most of the
increase in commercial bank portfolios during the year. The nonbank proportion presumably would have been considerably higher
had it not been for the acceleration of corporate income-tax payments
which had the effect of reducing corporate holdings of Treasury bills
and other short-term securities to a greater extent during March and
June 1952 than a year earlier. Private nonbank investors as a whole
reduced their holdings of marketable securities, other than bills, by
approximately $2)2 bUlion during the year as a result of unexchanged
maturities and net sales by long-term investors in the market. The
decline in private nonbank holdings of marketable securities during
the previous year because of these same factors amounted to approximately $5 bUlion. The movement from notes into certificates during
the year in each of the major investor classes largely refiected the refunding of maturing short-note issues into certificates.

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Private nonbank investors, principally corporations, redeemed approximately $1.1 billion of savings notes (net) during the fiscal year.
The other principal change in the aggregate private nonbank portfolio in the nonmarketable securities reflected the exchange of $1
billion of long-term restricted marketable bonds into Treasury investment series bonds in June 1952. Government investment accounts
also acquired investment bonds in exchange for marketable bonds at
the same time. Meanwhile, Federal Reserve Banks exchanged $2.0
billion of their holdings of investment bonds for 5-year Treasury notes
during the year.
CORPORATIONS AND CERTAIN OTHER BUSINESS-TYPE ACTIVITIES
OF THE GOVERNMENT

During the fiscal year 1952, the Treasury continued to adjust the
interest rates on advances to Government corporations and certain
agencies to keep such rates closely in line with the interest cost to the
Treasury on itsborrowings. In nearly all cases, the rates of interest
now in eft'ect are based upon the average rate on outstanding market. able obligations of the United States. In actual practice the rates of
interest charged the corporations and agencies are stated in terms of
the nearest orie-eighth of 1 percent below such average rate when the
average rate is not a multiple of one-eighth of T percent. On June
30, 1952, the computed average interest rate on outstanding marketable obligations was 2.051 percent, resulting in a rate of 2 percent for
the corporations and agencies involved.
Various legislative changes were made during the fiscal year which
affected tlie borrowing authority of Government corporations and
agencies.
Public Law 96, Eighty-second Congress, approved eTuly 31, 1951,
increased the amount that could be borrowed by certairi Government
agencies authorized to issue obligations for purchase by the Secretary
of the Treasury pursuant to the Defense Production Act of 1950 (64
Stat. 802). The agencies authorized to: borrow were designated by
the President in Executive Order No! 10161, dated Septeniber 9, 1950,
and Executive Order No. 10281, dated August 28, 1951.
Under the provisions of Section 304 (b) of the original Defense
Production Act, the amount of obligations authorized to be issued
could not exceed $600 million outstanding at any one time, but by
Public Law 45 (65 Stat. 61) approved June 2, 1951, the iamount of
obligations that could be purchased by the Secretary of the Treasury
was increased to $1,600 million. Public Law 96 further increased the
amoimt that could, be borrowed by the agencies from $1,600 million
to $2,100 million.

SUMMARY OF FISCAL

OPERATIONS

Public Law 158, Eighty-second Congress, approved October 3, 1951,
increased the borrowing authority of the Export-Import Bank of
Washington from 2ji times the authorized capital stock of $1,000
million to 3ji times the authorized capital stock.
The amount of mortgages that could be insured under the National
Housing Act, as amended (12 U. S. C. 1701-1748g),.was increased by
$1,600 million during the fiscal year 1952 under new legislation or
by action of the Presiderit as follows:
Title

• •

National Housing Act, as amended:
Title II:
Insurance of mortgages on 1- to .4-faraily
dwellings, and multifamily housing projects, including cooperative housing.
Title VIII:
Insurance of mortgages for construction df
rental housing for civilian and military
personnel of the armed services and for
. personnel at atomic energy plants.. ;
Title IX:
Insurance of national defense housing, mortgages. Housing must be within limits of
housing needs in defease areas designated
by the President.

Acts of Congress

Increase
(in
millions)

Public Law 139, 82d Cong., approved
Sept. 1,1951, and letters of the President
dated Oct. 16, 1951, Mar. 19, 1952, and
June 24, 1952.
Actof Aug.8,1949 (63 Stat. 571), and letter
of the President dated Oct. 16, 1951.

$1,000

Public Law 139, 82d Cong., approved
Sept.l, 1951, and letter of the President
dated Oct. 16, 1951.

400

200

1,600
NOTE.—The amount of insured mortgages under Title VIII m a y b e increased by. $300 million, upon
. approval of the President. The amount of mortgages that may be insured under Title IX or other titles,
except Title VI, pursuant to Public Law 139, may be increased by $100 raillion, upon approval of the President.

Public Law 139 added Title I X under whicii mortgages found to
be acceptable risks in view bf needs of national defense may be insured.
This act also provided for increases in mortgage insurance authorizations by $1,500 million to be used as prescribed by the President for
insurance under each title except Title VI. As of June 30, 1952,,
insurance authorizations under Title I X plus increases in mortgage
insurance authorizations under Title I I made in accordance with this
law amounted to $1,400 million, as shown in the preceding table.
The unused insurance authorizations of all titles at the end of the
fiscal year amounted to $2,620 million.
The authorized borrowing power of Government corporations and
business-type activities, and the total amounts of obligations actually
outstanding, separated as to Treasury holdings and securities held by
others, as of June 30, 1952, are shown in table 65 of this report.
Quarterly statements showing the combined balance sheets of
Governnient corporations and certain business-type activities are
published regularly in the daily Treasury statement. The amount
and classification of assets, liabilities, and capital of the various
corporations and activities are shown on these balance sheets. The
capital is divided between that owned by the United States Govern-

19 52 REPORT OF THE SECRETARY OF THE TREASURY

ment and that owned by private sources. An analysis of the investment of the United States is also included. The balance sheets as of
June 30, 1952, are shown in table 70.
Table 69 shows the combined net investment of the United States
in Government corporations and certain business-type activities as of
June 30, 1943-52. A statement showing the income, expense, and
changes in unreserved surplus or deficit of the corporations or activities
for the fiscal year 1952 appears in table 71. The source and application of funds during the fiscal year 1952 are shown in table 72.
During the fiscal year 1952, Government.corporations made repayments to the Treasury of $21,716,000 on holdings of capital stock.
In addition, repayment of $3,000,000 on capital stock was made through
the Department of Agriculture to the Treasury. A statement showing
capital stock repayments appears in table 75.
, Payments of dividends, interest, and simUar payments deposited
into the Treasury by Goverriment corporations and other enterprises in which the Government has a financial interest amounted to
$230,030,556 during the fiscal year 1952. Detailed information on
such payments appears in table 78.
SECURITIES OWNED BY THE UNITED STATES GOVERNMENT

The United States owned securities in the net face amount of
$19,556 million as of June 30, 1952. The securi ties, consisted principally of capital stock, bonds, and notes of Government corporations
. and business-type activities; securities representing loans made to
farmers, foreign governments, home owners, railroads, and others;
and receipts showing paymerit of United States subscriptions to the
International Bank for Reconstruction and Development and to the
Internatioriai Monetary Fund. A statement showing the securities
owned as of June 30, 1952, other than foreign governnient obligations
of World War I and World War I I , appears in table'75 with an explanation of each increase or decrease during the year. Tables 113
and 114 show the principal amount of World War I foreign government
obligations owned b}^^ the United States at the close of the fiscal year,
which amounted to $12,660 mUlion.

INTERNATIONAL FINANCIAL AND MONETARY
DEVELOPMENTS

International Financial and Monetary Developments
SUMMARY FOR 1952

In the 12-month period under review, one of the outstanding
developments was the extent to which the. rises in prices, characteristic of the preceding year, were arrested in many of the countries in
Europe and in other areas. This greater stability arose in part from
the deliberate policies which governments adopted looking toward
internal financial stability, and in part from the decline in the prices
of internationally traded commodities following reduced purchasing
for inventory accumulation and speculation. The easing of the international price factor facilitated programs for more efl'ective internal
measures for controlling inflation.
•
The authorities of many countries recognized that more vigorous
measures were required to restrain the inflationary tendencies of their
economies. While the programs differed from country to country,
the measures adopted were fiscal and monetary, supplemented to
some extent by direct controls or other policies for increasing production and stabilizing costs. In the field of fiscal policy, several countries took significant steps to improve the administration of tax
systems or to increase revenues by imposition of new taxes or increases
in rates. Less essential governmental expenditures were also curtailed, or projects of national investment postponed or reduced to
assist in balancing budgets. Balanced budgets or surpluses were
achieved in various countries, while in others the reduction of budgetary deficits permitted less resort to inflationary methods of financing
public expenditure. The discoimt rates of the central banks were
increased in some areas, and these rates in turn were reflected in
higher rates for commercial and business borrowing. J n other countries credit rationing and selective qualitative controls on the extension
of new credits by the banks supplemented rate changes or were used
as substitutes therefor.
These measures, along with increased levels of production, brought
about more stable prices with relatively small increases or decreases
in the average levels. This greater stability in turn was reflected in
reduced pressm^e on the official exchange markets, and in some cases
resulted in declines in the free m a r k e t r a t e for the dollar and for gold.
While greater internal stability appeared in many countries, there
was, however, considerable pressure on their international accounts.

1952 REPORT OF THE SECRETARY OF THE TREASURY

Balance-of-payments deficits with the dollar area increased in many
instances, and there was a considerable shift in the balance-of-payments positions of the European countries in their trade with each
other.
United States balance of payments and gold movements

Total exports of goods and services from the United States aniounted
to $21.1 billion in the course of the fiscal year, while total imports
of goods and services amounted to $15.0 billion. In fiscal 1952,
United States imports and exports were both higher than in the
preceding period. The surplus in the United States balance of payments of $6.1 billion compared with a surplus of $2.6 billion in the
preceding fiscal year. The surplus was financed in part by United
States grants for defense and economic assistance purposes, loans
from United States agencies, and other forms of governmental payments to the net amoimt of $4.6 billion. Foreign countries sold gold
to the United States or reduced their dollar assets in the course of
the fiscal year by $607 million. The remainder of the surplus was
financed largely by private capital investments, outflow of short-term
capital, remittances, and dollar disbursements by the International
Bank and the International Monetary Fund.
In the course of the year, foreign govermnents sold (net) $1.7
billion in gold to the United States. On June 30, 1952, the total
oflicial gold holdings of foreign countries (exclusive of the U. S. S. R.
and international organizations) were estimated at $10.7 billion compared with $12.4 billion at the close of the preceding year. Shortterm dollar holdings (official and private) of foreign countries in June
1952 were $8.3 billion compared with $7.4 billion at the end of the
preceding fiscal year. The United States gold holdings on June 30,
1952, amounted to $23.5 billion compared with $21.9 billion on June
30, 1951. There was no change in Treasury gold policy. (See
pages 23 and 220.)
United States foreign assistance

In the fiscal year foreign countries utilized $5.0 billion (gross) in
United States assistance compared with $4.8 billion in the preceding
year. In fiscal 1952 a total of $659 million was in the form of loans
or credits and the balance in grants. The Export-Import Bank made
loans amounting to $245 million under its usual conditions, ari.d disbursed loans of $373 million under the provisions of the Mutual
Security Act of 1951 (22 U, S. C. 1651), and amendatory legislation.
The United States grant assistance to foreign coimtries was given
principally under the terms of the Mutual Security Act of 1951, which
provided for direct military assistance as well as raw materials and
supplies necessary to enable the participating countries to carry
forward their programs of rearmament. A program of technical

INTERNATIONAL FINANCIAL AND MONETARY DEVELOPMENTS

assistance for foreign countries was expanded in the course of the
year, but the total of economic and technical assistance grants utilized
declined slightly to $2.2 billion compared with $2.5 billion in fiscal
1951. MUitary aid, however, rose from $1.2 billion in the preceding
year to $1.9 billion. Total grants utihzed ($4.3 billion) included
minor amounts for special programs previously authorized by the
Congress. As in the preceding years, the principal recipients of
United States extraordinary assistance were the countries of Europe.
In fiscal 1952, 73 percent of the total grants and credits went to
Em'opean countries for military and economic aid. Technical assistance activities and the loans of the Export-Import Bank were relatively more important in the underdeveloped countries in Latin
America, Asia, and Africa.
In the course of the year, the United States Government received
payments of $334 million in principal on credits and loans previously
given to foreigii governments. The Government of the United Kingdom, in accordance with the terms of the Anglo-American Financial
Agreement, paid to the Treasury the first installment of principal
($44 million) on its loan and $75 million in interest; the ExportImport Bank received payments of principal of $169 mUlion; and the
balance represented payments on credits for surplus property, lendlease, and minor credit arrangements principally derived from the
war period.
The International Monetary Fund and the International Bank for Reconstruction
and Developnient

The National Advisory Council, in accordance with the Bretton
Woods Agreements Act, continued its function of coordinating the
activities of the United States representatives on these international
bodies with those of the financial agencies of the United States Government. The CouncU submitted two semiannual reports and a special biennial report to the President and to the Congress. (See
exhibits 26, 28, and 27.)
There were relatively few changes in Fund par values and official
exchange rates in the course of the year. There was, however, increased resort to retention quotas and other multiple currency devices
in Europe and some Far Eastern countries as ways of dealing with
balance-of-payments problems. Several countries continued to operate exchange systems without agreed Fund par values.
In March 1952 the Fund, as required by the Articles of Agreement,
began consultations with the members retaining exchange restrictions
under the transitional provisions of the Agreement, as announced in
the Fund's Third Annual Reporc on Exchange Restrictions. The consultations with the member countries have included review of. the
existing restrictions, on current exchange transactions by the Fund's

.1952 REPORT OF THE SECRETARY OF THE TREASURY

staff with representatives of the member country. These reviews
form the basis of decisions subsequently taken by the executive board.
Under present circumstances, with the diflficulties arising from rearmament and the dislocations of trade and balances of payments of
the last 2 years superposed upon the practices of preceding periods,
it is evident that the relaxation of exchange restrictions will be somewhat slower than originally had been anticipated. The Fund consultations, however, have provided an important occasion for discussion and for the exertion of the Fund's influence in the direction of
simplification and relaxation of discriminatory barriers to trade and
payments.
.
In the period under review, the Fund's sales of currencies to members
amounted to $47.1 million, and in this period niembers repurchased
$37.8 million of their currencies from the Fund. The Fund has given
continual attention in the course of the year to policies and procedures
regarding the use of its resources by members. These resources were
constituted to assist members in meeting short-term deficits in their
current balances of payments. To maintain the revolving character
of the Fund, it is essential that the Fund's resources be used for relativel}^ short periods of, say, 3 to 5 years, and that members repurchase
their currencies as soon as they are able so to do. Two significant
steps were takeri by the Fund in relation to the use of its resources.
A new schedule of charges on the Fund's holdings of member currencies in excess of quota was adopted in the latter part of 1951. The
effect of this change is to reduce the cost for meinbers using the Fund's
resources for relatively short periods, while increasing them relatively
for longer periods. The new schedule of charges, put into effect for
an experimental period of a year, will, it is expected, discourage use
of the Fund for longer jDeriods, while at the same time advance the
period after which consultation with the Fund about repurchase becomes obhgatory under the articles. In February 1952 the Fund
reached a decision which more clearly set forth the policies regarding
the use of its resources. .These changes were summarized in the reports of the Natidnal Advisory Council (exhibits 26 and 28).
In the course of the fiscal year the International Bank made 19
loans in 16 coimtries, aggregating $289.6 million. These loans were
principally for economic development of countries in Latin America,
Asia, and Africa. The rate of disbursement on previous loan commitments increased in the course of the year, so that total disbursements
on loans amoimted to $184.8 million compared with $77.6 million in
the preceding year. At the end of the year the Bank's total loan commitments reached $1.4 billion. The Bank finances its loans through
the use of its members' subscriptions and the sale of securities. The
entire United States subscription has been loaned, and the National

INTERNATIONAL FINANCIAL AND MONETARY DEVELOPMENTS

Advisory Council has authorized the Bank to relend the amounts thus
far received in repayment of loans originally made from the United
States subscrii3tion. In the course of the year the Bank floated two
bond issues in the United States totaling $150 million in principal,
another in Canada amounting to Canadian $15 million, and one in
Switzerland equivalent to $11.6 million.
North Atlantic Treaty Council conferences

In view of the importance of economic and financial matters in the
operations of the North Atlantic Treaty Organization, the Finance
Ministers of the member countries were included in the country delegations to the North Atlantic Council conferences. Secretar}^ Snyder
was a member of the United States delegations to the North Atlantic
Council conferences which were held in Ottawa in September 1951, in
Rome in November 1951, and in Lisbon in February 1952.
At the Ottawa conference the Council considered reports submitted
b,y the military and civilian agencies of the treat3^organization, including a report of the Financial and Economic Board anal^^zing the
financial and economic impact of the NATO defense efi'ort. In this
connection, a Temporaiy Committee of the Council was established
to surve3^ the requirements of external militar}^ security and. the
realistic political-economic capabilities of member countries with a
view to reconciling the two so as to achieve the most effective use of.
the resources of the member countries. . At the Rome conference the
Temporary Council Committee stated that its final report would be
presented earty in December. Also, various military committees
made their reports, statements were made regarding the status of
negotiations for the establishment of an European Defense Communityj and a resolution was adopted requesting the NAT agencies,
to give attention to the problenis of correlating the obligations and
relationships of the European Defense Communitv with those of
NATO.
At the Lisbon conference, the Council approved force targets for
1952, 1953, and 1954, reached an agreement for providing facilities
for these forces, laid the basis for including German forces in the
defense of Western Europe through the EDC, largei}^ cleared the way
for restoring to Western Germany a substantial measure of sovereign
equality and responsibility in the European community through contractual agreements terminating the occupation, and simplified and
strengthened the NATO for the task of implementing the defense
buildup. A specific agreement was reached with France to help t h a t
countiy c a n y on its militaiy eft'ort in Indochina, and at the same
time build up its European forces. Throughout the conference the
Secretaiy of the Treasury emphasized that primary responsibility for
the econoniic adjustments required for an adequate European defense

1952 REPORT OF THE SECRETARY OF THE TREASURY

effort must remain with the European countries, and that the extent
of United States assistarice in the future wUl be determined by the
Congress, taking into account developments in the American economy.
Foreign Assets Control

The Division of Foreign Assets Control admmisters the Foreign
Assets Control Regulations, which were issued on December 17, 1950,
by the Secretar}^ of the Treasuiy. These regulations prohibit all
unlicensed financial and trade transactions in which there is, or has
been since December 17, 1950, a Communist Chinese or North
Korean interest The regulations also block all property in the
United States in whicii there is a Communist Chinese or North
Korean interest. The principal objective of the Foreign Assets
Control is to deprive Communist China and North Korea of foreign.
exchange which could be used to carry on Communist aggression
in Korea.
The Control includes an Enforcement Section, a Licensing Section,.
a Census Section, and a Legal Section. As of June 30, 1952, final
action had been taken on 11,531 applications for licenses which had
been filed with the ^Control.
One of the principal aspects of the Control, aimed at reducing
foreign exchange earnings by Communist China and North Korea,
has been the prohibition of the unlicensed importation into the United
States of merchandise of Chinese or North Korean origin. This bar
to importations applies to such goods whether offered for importation
directly from China or North Korea, or from third countries, such as
Hong Kong. Goods of a type traditionally imported from China
have been subjected to these controls to prevent shipments to this
countiy of Chinese goods falsely described as of non-Chinese origin.
In September 1951 the Control learned that letters and cables were
arriving in the United States from Hong Kong demanding payment
from. Chinese in the United States of sums of money ranging from
$200 to $10,000. These letters and cables were in most cases written
by persons in Hong Kong, apparently upon the request of Chinese
in China. The Chinese Communist authorities threatened to torture
or incarcerate the Chinese nationals if the money were not paid.'
The Control enlisted the cooperation of Chinese communities in the
United States and succeeded in halting the flow of extortion remittances which had begim after the letters and cables were first received.
The investigation of this situation eventually resulted m four indictments of firms in San Francisco and one in New York..

INTERNATIONAL FINANCIAL AND MONETARY DEVELOPMENTS

During the year the Control received reports that accounts in the
United States of foreign banks were being utUized from time to time
for dollar transactions in which there was a prohibited Chinese
interest. I t was decided therefore that as a matter of policy the
accounts in the United States of such banks would be blocked to the
extent of the transactions which the Treasury concluded, from the
evidence in its possession, represented the dollar cover of the transactions. This action proved to be a serious impediment to Western
European firms which were attempting to use the facilities of these
banks to effect dollar transactions intended to further undesirable
trade with Communist China.

ADMINISTRATIVE

221052—53

REPORTS

Bureau of the Comptroller of the Currency ^
The Bureau of the Comptroller of the Currency is responsible for
the execution of laws relating to the superv^ision of national banking
associations. Duties of the ofl&ce include those incident to the formation and chartering of new national banking associations, the
examination twice yearly of all national banks, the establishment of
branch banks, the consolidation of banks, the conv^ersion of State
banks into national banks, recapitalization programs, and the issuance
of Federal Reser\re notes.
•
Changes in the condition of active national banks

The total assets of the 4,932 active national banks in the United
States and possessions on June 30, 1952, amounted to $101,542
miUion, as compared with the total assets of 4,953 banks amounting to
$94,659 million on June 30, 1951, an increase of $6,883 mUlion during
the year. The deposits of the banks in 1952 totaled $92,990 mUlion,
which was $6,153 million more than in 1951. The loans in 1952 were
$33,170 mUlion, an aU time high, exceeding the 1951 figure by $2,586
million. Securities held totaled $43,086 million, an increase of $2,450
million during the year. Capital funds of $6,896 million were $376
million more than in the preceding year.
The assets and liabilities of the. active national banks are shown in
the following statement.
Abstract of reports of condition of active national banks on the dates of each report
from June 30, 1951, to June 30, 1952
. [In thousands of dollars]
June 30,1951 Oct. 10,1951 Dec. 31,1951 Mar. 31,1952 June 30,1952
(4,953 banks) (4,947 banks) (4,946 banks) (4,933 banks) (4,932 banks)
ASSETS

Loans and discounts, including overdrafts. 30, 584, 236 31,361,151 32,423,777
U. S. Government securities, direct obligations
33,051,114 33,847, 660 35,146,687
Obligations guaranteed by U. S. Government
9,656
2,660
Obligations of States and political sub4,968, 271
5,333,-230
divisions...
•
5,168,196
2, 434, 656 2,380,837
Other bonds, notes, ahd debentures.
2, 373,149
Corporate stocks, including stocks of
178, 597
179, 671
180,895
Federal Reserve Banks
Total loans and securities..
Cash, balances with other banks, including
reserve balances, and cash items in process of collection
_.
Bank premises owned, furniture and
fixtures
Real estate owned other than bank premises.
Investments and other assets indirectly
representing bank premises or other real
estate
Customers' liability on acceptances..
Income accrued but not yet collected
Otherassets
Total assets-

32,352,742

33,170,408

33,948,307

34, 678,113
16, 427

9,670

5, 607, 202
2, 284,860

5,810,343
2,393, 571

185, 284

187, 240

71, S19,5U

7^, 91^6,413 76,467,394

74,388,066

76,266,102

22, 253,141

23,420,448

26,012,158

23,317,178

23,991,629

661, 211

678,864

•683,826

700,962

717,394

15. 348

16,405

16,796

19, 579

19,986

61,958
122, 207
163, 111
162, 251

64,328
122, 297
148,419
132,142

64, 642
172,708
172, 489
148,547

59,383
186,823
171,331
171,646

58,036
141, 522
196,424
160, 571

94, 658,761

97, 529, 316 102,738, 560 99,014, 967 101, 541, 564

J More detailed information concerning the Bureau of the Comptroller.of the Currency is contained in
the amiual report of the Comptroller.

100

19 52 REPORT OF T H E SECRETARY OF T H E TREASURY

Abstract of reports of condition of active naiional banks on the dates of each report
from June 30, 1951, io June 30, 1952—Contmued.
[In thousands of dollars]
June 30,1951 Oct. 10,1951 Dec. 31,1951 Mar. 31,1952 June 30,1952
(4,953 banks) (4,947 banks) (4,946 banks) (4,933 banks) I (4,932 banks)
LIABILITIES

Demand deposits of individuals, partnerships, and corporations
Time deposits of.individuals, partnerships,
and corporations
Deposits of U. S. Government and postal
savings
Deposits of States and political subdivisions
Deposits ofbanks
Other deposits (certified and cashiers'
checks, etc.)
Total deposits

.:.

Demand deposits
Time deposits

Bills payable, rediscounts, and other
liabilities for borrowed money
.
Mortgages or other liens on bank premises
and otherreal estate
.
:
A cceptances outstanding
Income collected but not yet earned
Expenses accrued and unpaid
Other liabilities
Total liabilities

48, 785, 259 51, 578, 292

54/855,841

50,006,189

62,234, 586

19, 212, 936

19, 571,450

19, 825, 659

20,162, 908

20, 720,190

3, 916, 515

2, 738, 544

2, 243, 626

3, 690, 330

3, 681,910

6, 040, 298
7, 626, 529

°5, 413, 462
8,859,019

5,924, 592
9, 789, 974

6, 059, 489
8, 471, 774

6, 231, 989
8, 587, 305

1, 255, 277

1,115,190

1,791,869

86,836,814

89, 275, 957

94, 431, 561

90,317,141

1, 326, 451

92,989, 690

66,254,189
20,682,626

68,292,877
20,988,680

78,166,288
21,275,273

68,634,850
21,682,791

70,742,199
22,247,491

1, 533, 710

32,890

148, 910

15, 484

247, 937

42,046

335
137,765
168,112
308, 512
654,307

321
133, 467
180, 351
393,871
739, 501

366
187, 650
180,894
375, 326
877,161

236
198,021
186, 664
381, 650
892,116

230
147,053
219,212.
359, 499.
887, 771

88,138, 735 90,872, 378 96,068, 442 92, 223, 765

94, 645, 501

CAPITAL ACCOUNTS.

Capital stock...
.
.
Suj-plus
Undivided profits
..
Reserves and retirement account for prefei-red stock
Total capital accounts...

2,007,155
2, 994, 486
1,193,499

2, 082, 017
3,017,550
1, 286, 764

264,886

270,007

6, 520, 026

6, 656, 938

2,105, 345
3,083, 495
1, 212, 538
268, 740
6,670,118

2,180,751
3,123, 766
1,226,047
260, 648
6, 791, 202

Total liabilities and capital accounts. 94, 658, 761 97, 529, 316 102, 738, 560 99,014,967

2, 203, 266
3,175,879
1, 252, 744
264,174
6,896, 063
101, 541, 564

Summary of changes in number and capital stock of national banks

The authorized capital stock of the 4,934 national banks in existence
on June 30, 1952 (including 1 bank in process of going into voluhtary
liquidation, and 1 bank in process of merging or consolidating with a
State bank under the provisions of the act of August 17, 1950 (64
Stat. 455)), consisted of common stock aggregating $2,197 million,
an increase during the year of $143 million^ and preferred stock
aggregating $7 million, a decrease during the year of $6 million. The
total net increase of capital stock was $137 million. During the year
charters were issued to 15 national banks having an aggregate of $2
million of common stock. There was a net decrease of 20 in the
number of national banks in the system by reason of voluntary
liquidations, statutory consolidations, and conversions to and mergers
or consolidations with State banks under the provisions of the act of
August 17, 1950.^
More detailed information regarding the changes in the number and
capital stock of national banks in the fiscal 3^ear 1952 is given in the
following table.

ADlVril^^ISTRATIVE

REPORTS

101

Organizations, capital stock changes, and liquidations of national banks,
fiscal year 1952
C a p i t a l stock
Number
of b a n k s

C h a r t e r s in force J u n e 30,1951, a n d authorized capital stock i
Increases:
C h a r t e r s issued . - .
. ' .
Capitalstock:
193 cases b y s t a t u t o r y s a l e . -._
..
272 cases b y s t a t u t o r y stock d i v i d e n d
26 cases b y stock d i v i d e n d u n d e r articles of association
14 cases b y s t a t u t o r y consolidation
T o t a l increases
Decreases: .
V o l u n t a r y liquidations
S t a t u t o r y consolidations '
Conversions into State b a n k s
M e r g e d or consolidated w i t h S t a t e b a n k s
C a p i t a l stock:
3 cases b y s t a t u t o r y reduction
3 cases b y s t a t u t o r y consolidation
48 cases b y r e t i r e m e n t

.
'

4,954
15

Comraon

Preferred

$2, 054, 866, 502

$12,452,315

2, 322, oob
54, 356, 733
91, 218, 450
1, 760, 560
5, 650, 000

155, 307, 743

18
7
4
6

8,050,000

25,000

1,110,000
1,062,870

64, 630

1, 802, 400
650, 000
.

5, 849, 855
12, 675, 270

5, 939, 485

-20

142, 632, 473

— 5; 939, 485

4,934

2,197, 498, 975

T o t a l decreases
N e t change
C h a r t e r s in force J u n e 30,1952, a n d authorized capital stock i

6, 512,830

1 These figures differ from those shown in the preceding table. June 30, 1951, figures include 1 bank in
process of merging or consolidating with a State bank under provisions of the act of Aug. 17,1950. June 30,
1952, figures include 1 bank in process of going into voluntary liquidation and 1 bank in process of merging
or consolidating with a State bank under provisions of the act of Aug. 17, 1950.

Bureau of Customs
The principal functions of the Bureau of Customs are to assess and
collect duties and taxes on imported merchandise and baggage; prevent
smuggling, undervaluations, and frauds on the customs revenue;
apprehend violators of the customs and navigation laws; enter and
clear vessels and aircraft; issue documents and signal letters to vessels
of the United States; admeasure vessels; collect tonnage taxes on
vessels engaged in foreign commerce; supervise the discharge of
imported cargoes; inspect international traffic; control the customs
warehousing of imports; determine and certify for payment the amount
of drawback due upon the exportation of articles produced from
duty-paid or tax-paid imports; enforce the antidumping and export
control acts; regulate the movement of merchandise into and out of
foreign trade zones; and enforce the laws and regulations of other
Government agencies affecting imports and exports.
Collections by C u s t o m s S e r v i c e

The total revenue collected by custoins in the fiscal year 1952 was
$748 million, as compared with $809 million in 1951, a decrease of
slightly under 8 percent. The totals include items collected for
other governmental agencies such as iaternal revenue taxes for the
Bureau of Internal Revenue and head taxes for the Immigration
Service.
Customs collections amounted to $555 million in 1952, a decrease of
12 percent from the previous year's total of $630 million when col-

102

1952 REPORT OF THE SECRETARY.OF THE TREASURY

lections were the highest ever recorded in customs history. They
consisted of collections of duties, tonnage taxes, and fines and penalties
for violation of the customs and navigation laws, etc.
Of these customs collections, all but $5 mUlion was derived from
duties • (including import taxes) levied on imported merchandise.
The source of these collections by type of entry is shown ui table 8
and by tariff schedule in table 86. Since the latter table is restricted
to commercial importations, the totals shown are. somewhat smaller
than the duties collected on all kinds of dutiable merchandise.
I n 1952 more than one-half of all imports into the United States
was duty-free and included some commodities authorized by special
acts of Congress for free entry although dutiable under the Tariff
Act of 1930 (19 U. S. C. 1001) or taxable under the Internal Revenue
Code, such as copjier, bauxite, zinc, lead, etc. The 43 percent which
was dutiable constituted the basis of customs duties on imports.
Customs duties, after reaching a peak of $57 million in March 1951
and declining steadily from that month to the end of fiscalyear 1951,
fluctuated rather widely during the first six months of the fiscal year
1952, exceeding the $50 million mark twice during this period. During
the last 6 months of fiscal 1952, however, collections remained almost
stationary, ranging only a little above or a little below $44 mUlion
during each of the months from January to June.
Collections by customs districts.—Despite the over-all decline in
customs collections, 18 individual districts showed larger collections
in 1952 than during the previous year. Only three of these, however.
New Orleans, Galveston, and Buffalo, were among the districts
having more than $10 million of customs collections. The remainder
of the districts which showed larger collections than in 1951 were those
in which customs receipts were comparatively small. Tennessee with
a 210 percent increase, El Paso with 111 percent, and Kentucky with
93 percent showed the largest relative increases among this group.
Collections in the New York district, which amounted to $222 million
or 40 percent of the total customs collections, were 20 percent less than
in the previous year. Massachusetts with more than $66 million and
Philadelphia with more than $45 million showed decreases of 17 and
1 percent, respectively, from the fiscal year 1951.
Collections by commodities.—Almost all of the chief classes of commodities showed the same slight recessive trend in value and duty
yield as that exhibited by the total dutiable imports. The earths,
earthenware, and glassware schedule was the only group which showed
an increase both in value and in duty yield. The group of free-list
commodities taxable under the Revenue Act of 1932 and subsequent
acts, consisting mostly of petroleum products in 1952, yielded larger
revenues than during the preceding year but showed a smaller dutiable
value. Goods included in the three schedules, sugar, tobacco, and
flax, lienap, jute, and manufactures thereof, were slightly greater in
value than in 1951 but yielded less revenue in duties. Imports dutiable
under the metals schedule constituted the largest single source of
revenue in 1952 and exceeded the collections on wool and wool manufacitures for the first time since the beginning of World War I I . Goods
dutiable under the agricultural schedule continued as the third most
important source of customs revenue.

ADIVIINISTRATIVE REPORTS

103

The four individual commodities—unmanufactured wool, sugar,
distilled liquors, and tobacco—^which are the chief sources of customs
revenue, were in each case imported in smaller quantities than in 1951
and yielded correspondingly smaller revenues.
Table 86 shows the value of dutiable and taxable imports for consumption and the duties collected thereon for the fiscal years 1951
and 1952. Tables 88 and 89 show the value of imports for consumption and the duties collected thereon for the calendar years 1942 tp
1951 and monthly from January 1951 to June 1952.
The trends in value and duty yield for goods dutiable at specific
rates, at ad valorem rates, and at compound rates are shown in
table 87.
Collections by countries of origin.—The lower value and the smaller
duty yield noted in the case of commodity groups was also exhibited
for most of the leading countries sending imports to the United States,
Canada, from which imports for the past several years were the largest
source of customs revenue, was replaced in 1952 by the United
Kingdom, although collections on imports from both coimtries were
considerably smaller than in the previous year. Cuba, Japan, Switzerland, and Australia in the order named followed the two leading
countries as sources of customs revenue. Despite a decrease in the
value of dutiable imports from Mexico, there was an increase in duties
from Mexican products in the fiscal 3''ear 1952, the first full year after the
termination of the trade agreement with Mexico on January 1, 1951,
and of the restoration of the higher rates prescribed by the tariff act
on many commodities.
The higher rates of duty in effect after the filling of the quota on petroleum resulted in an.increased duty yield on imports from Venezuela,
Colombia, and the Arabia Peninsula States. Australia, New Zealand,
and the Uiiion of South Africa, the three countries from which much of
our imported wool is received, paid increased duties on imports; while
the duty yield on imports from Argentina and Uruguay, the chief
exporters of South American wools, was considerably smaller than in
1951.
Table 90 shows the value of imports for consumption and the duties
collected thereon by the principal countries for the fiscal years 1951
and 1952.
Extent of operations

. Movement oj persons.—More persons crossed the land borders of- the
United States or entered this country by sea or air in 1952 than at any
time in previous customs history, continuing the upward trend which
has followed World War I I . The total number of persons entering the
country by all methods of travel was in excess of 105 million, an increase over 1951 of 13 million persons. Almost two-thirds of those entering the country crossed the borders in automobUes and busses and more
than a million arrived by air, both groups setting a new record for the
use of these methods of transportation. Despite the extensive use
made of motor vehicles and airplanes, the number of passengers
arriving by vessels and by passenger trains also showed substantial
increases.
The use of airplanes in international travel again set a new record.
For the second time in airplane history, the number of passengers

104

19 52 REPORT OF THE SECRETARY OF THE TREASURY

arriving from abroad exceeded the million mark, and for the third successive year the number of passengers arriving at the New York City
international airports exceeded those arriving at the Miami airports.
Table 92 shows the various types of vehicles and their passengers
arriving in the .United States during the past two fiscal years, and
table 93 the number of airplanes and their passengers arriving in each
of the customs districts in which this type of travel was important.
Entries oj merchandise.—The volume of entries handled by customs
officers continued at a high level in 1952, as shown in table 91. The
decline in commercial importations, which was reflected in the smaller
customs collections, appears in the case of consumption entries and
warehouse and rewarehouse entries, while the number of warehouse
withdrawals was greater.than during the previous year. The increase
in tourist travel was reflected by the increased volume of baggage and
informal entries, and the number of mail entries also exceeded that of
the previous year.
Drawback transactions.—Drawback, usually amoimting to 99 percent of the customs duties paid at the time the goods were entered, is
allowed on the exportation of merchandise manufactured from imported materials and for certain other specified export transactions.
The total drawback allowed in 1952 was only $5,924 thousand as compared with $7,035 thousand in 1951, a decrease of 16 percent. Approximately 96 percent of the drawback allowed in 1952 was due to the export of products manufactured from imported raw materials. The
principal raw materials used in the manufactured exports in 1952 were
aluminum, tobacco, sugar, petroleum, synthetic textile fibers, wool,
and lead.
Tables 94 and 95 show the drawback transactions for the fiscal years
1951 and 1952.
^ Appraisement oj merchandise.—In 1952, 628 thousand packages
were examined at appraisers' stores and 1,409 thousand invoices were
received, as compared with 689 ^' thousand packages and 1,489 ^ thousand invoices in 1951. This slight decrease in volume was more than
offset by a marked increase in the number and complexity of appraisement problems, the result in part of rapid fiuctuations in world market
prices. Imports from Japan were received in greater volume than in
any year since before World War I I and the problems normaUy encountered with respect to such importations were further complicated
by the floor price system established by the Japanese authorities.
New classification and value problems arose as a result of the suspension of trade agreem_ent rates on m.erchandise originating in ^'Iron
Curtain" countries. These developments are graphically illustrated
by the fact that appraising officers found it necessary to request
1,093 foreign and local inquiries as to value or classification, as compared with only 503 in 1951. The number of invoices on hand more
than 90 days increased from 74 thousand on June 30, 1951, to 100
thousand on eTune 30, 1952.
Customs Information Exchange:—The Customs Information Exchange received a total of 54 thousand reports of appraising officers as
to value and classification in 1952, approximately the same number as
in 1951. • The processing of these reports revealed 6,496 differences in
»• Revised.

ADMINISTRATIVE REPORTS

105

value and 4,299. differences in classification, a substantial increase over
the number in 1951, resulting largely from the new types of irierchandise being imported and the rapid price changes. Most of the differences were resolved between the appraising officers concerned, as
evidenced by the fact that only 13 differences in value and 30 differences in classification were reported to the headquarters office in
Washington.
The Customs Information Exchange also received and distributed
684 reports of foreign or local value inquiries and issued 663 notices
that no differences of opinion existed between appraising officers as to
the conclusions derived from such reports. There were only 13 cases
in which such differences of opinion were found to exist, and the
balance had not yet been determined.
Customs laboratories.—The eleven customs laboratories located at
the principal ports are staffed by chemists and other specialists who
have been trained in customs laboratory procedures and practices and
who have become expert in the analysis of samples of merchandise
imported into the United States. Some of the chemists have specialized
in the micro-analytical, spectrographic, metallurgic, textile analysis,
and other fields of analytical chemistr}^ The fimctions of customs
laboratories include the chemical analysis and certain other tests of
samples of dutiable imported merchandise in order to develop and
report facts upon which tariff classification and rates of duty are based.
Such analyses and tests are also used to establish admissibility or
inadmissibility into the United States of certain narcotic drugs; to
establish, rates of drawback on articles to be exported; and to provide
assistance to Treasury enforcement officers in their activities.
The laboratories analyzed more than 94 thousand samples during
the year, only 4 thousand less than in 1951, of which more than half
consisted of ores and metals, sugar, and wool. Most of the samples
analyzed were ^'import" samples. Among the other.categories of
samples analyzed during the year were 3,033 taken from various
customs seizures, mostly narcotic drugs and other prohibited articles;
212 from merchandise to be exported from the United States upon
which claims for drawback are compared or verified; 586 from preshipment merchandise, that is, new types of merchandise, analyzed in
the customs laboratory to assist importers or foreign shippers to
estimate the rate of duty and tariff classificatioii of new goods intended
for'shipment to the United States; and 5,868 tested on behalf of other
United States Government agencies of which 5,552 were samples of
critical and strategical materials representing Government purchases
for stockpile purposes to determine if the materials purchased met the
contract specifications therefor.
During the fiscal year 1952, chief chemists provided the required
statistical quality control on sample weighing operations by making
complicated analyses of the cargo sample weighing data to assure t h a t
the limits of accuracy and precision established by the Bureau were not
exceeded. There were 1,156 such weighing operations, consisting of
663 cargoes of raw sugar, 105 of refined sugar, 12 of wool, 154 of rayon,
146 of cigarette tobacco, 44 of burlap, and 32 of tannin extract. Pilot
plant operatioiis during the year proved the feasibility of extending
this method to the last two types of cargo.

106

1952 REPORT OF THE SECRETARY OF THE TREASURY

Protests and appeals.T-There was a considerable increase iri 1952 in
the number of protests filed by importers against the rate and amount
of duty assessed and other actions by the collectors, a reversal of the
trend of the previous year. Appeals for reappraisement filed by importers who did not agree with the appraisers as to the value of the
merchandise continued the previous year's trend with a further decline.
The following table shows the number of protests and appeals filed
and acted upon in the fiscal years 1951 and 1952.

Protests and appeals

1951

1952

Percentage
increase, or
decrease

(-)
Protests:
Filed with collectors by importers
_
Allowed by collectors
Denied by collectors and forwarded to customs court
Appeals for reappraisement filed with collectors

12,268
596
10.989
15, 644

19, 534
1,060
14,259
14,129

59.2
77 9
29.8
—9.7

Marine documentation activities.—United States vessels engaged in
trade with foreign countries are required to have a maritime document
which is valid until surrendered. Vessels engaged in coastwise trade or
fishing are licensed and such licenses must be renewed each year.
In addition, the mortgaging or change of ownership of vessels requires
the certification and issuance of various documents by customs officers.
The decrease in the number of abstracts of title and certificates of
ownership issued in 1952 as compared with 1951 is attributed in part to
the decline in the number of vessels sold after the termination, on
January 15, 1951, of the program for disposal of surplus war-built
vessels administered by the Maritime Administration of the Department of Commerce.
The following table shows the volume of marine documentation
activities for the fiscal years 1951 and 1952.

Activity

1951

1952

Percentage
increase, or
decrease

(-)

Numberof documents issuedNumber of licenses renewed
Number of mortgages, bills of sale, and abstracts of title recorded.
Number of abstracts of title issued
J
Number of certificates of ownership i.ssued
Number of navigation fines imposed..
-..

13, 417
24, 541
10, 430
2, 417
812
2,521

13,756
24,835
10,134
2,063
686
.2,847

2.5
1.2
-2:8
-14.6
-15.5
• 12.9

Other marine activities.—At the request of the Department of Defense, the navigation laws were waived under the act of December 27,
1950 (64 Stat. 1120), to permit the operation of vessels requisitioned
by the United States for purposes of emergency evacuation. Permanent arrangements were worked out to furnish the Mutual Security
Agency with immediate data on the export of coal in order that the
agency could determine allocation to various European countries.
Regulations governing the use of foreign fishing vessels in waters of
the United States were revised, to give effect to the North Pacific
Halibut Convention between the United States and Canada and to

ADMINISTRATIVE REPORTS

107

implement legislation protecting American fishing vessels from foreign
competition.
Enforcement pf the navigation laws was high lighted by a decision
drawing a clear distinction between the use of shippers' export declarations for purposes of export control and. the presentation of those
papers as a part of the outward foreign manifest in connection with
the clearance of vessels under navigation laws.
Admeasurement activities were marked by several significant
developments. The work of translating foreign admeasurement laws
and regulations was commenced and will continue during the next
fiscal year. The translations are needed to determine what foreign
admeasurement systems are substantially simUar to the United
States rules so as to warrant the acceptance of the tonnage figures
expressed in the marine documents of vessels measured under those
systems as authorized by law. As they become, avaUable, they will
also be used as sources of information for future studies looking to the
development of an acceptable tonnage admeasurement system.
Following the policy of decentralization, collectors of customs were
delegated authority to pass upon the eligibility of certain spaces on
vessels lor exemption or deduction from tonnage, a function formerly
exercised by the headquarters office in Washington. Regulatory
requirements covering the marking and certification of crew and
navigation spaces were revised in the interest of uniformity and
practicability.
As in previous years, special acts authorized the use of Canadian
vessels for a limited period in certain portions of the coastwise trade in
Alaska and in the transportation of iron ore between United States
ports on the Great Lakes.
Many changes in the status of vessels were noted during the year,
largely resulting from changes in the components of the laid-up fleet
of the United States under the control of the Department of Commerce acting through its Maritime Administration. During the year
that agency continued to remove vessels from the laid-up fleet for use
in connection with the various programs of aid to coimtries abroad and
in connection with the military program in Korea. At the same time
other vessels were being returned to the reserve fleet upon completion
of the service to whicii they had been assigned. A large program of
building small vessels also resulted in the addition of a number of such
vessels to the fleet, including fishing vessels and new shrimp trawlers.
During the year the new passenger vessel United States was first
documented as a vessel of the United States and her tonnage added to
the total of the tonnage of the United States merchant marine.
Of the 41,075 vessels documented as vessels of the United States on
January 1, 1952, 1,822 were owned by the United States as represented
by the Maritime Administration. The estimated figures for June 30,
1952, showed a total of 41,503 vessels of 30,599,017 gross tons, an
increase of 428 vessels and 45,881 tons during the six months' period.
In the month of June 1952 alone there was an increase of 191 vessels
and 90,837 tons over the previous month.
The following tabulation shows the status of the merchant fleet of
the United States as of January 1, 1951, and January 1,1952, classified

108

19 52 REPORT OF T H E SECRETARY OF T H E TREASURY

according to vessels engaged in foreign trade, vessels by major rigs, and
vessels by the five major services.
1951

1952

Vessels
Number
Total documented vessels (including yachts)
Vessels engaged in foreign trade
Vessels by major rigs:
Steam
:
•Motor
.. Sail
:
Unrigged
Vessels by 5 major services:
Freight.Fishing
.."...:
^
P a s sen g e r
. Tanker
:
Towing..
.•
:

Gross tons

Number

Gross tons

40, 474
6, 777

30, 481, 513
18, 885, 924

•41,075
6, 289

553,138
289. 052

4,551
24, 878
268
7,048

25, 390. 038
2, 033, 477
71, 306
2,845,880

4, 432
25. 757
6,951

356,002
103, 461
66,150
890, 720

10,177
13,816
4, 078
1, 734
4,177

22, 507, 59S
482, 473
821,487
5, 354,189
500,712

9.994
14,211
4,300
1,784
4.302

556, 448
498,618
828, 034
451,223
504. 476

249

A7uidumping.—'During 1952, accelerated activity continued under
the Antidumping Act, 1921 (42 Stat. 11) and the countervaUing duty
statute (Section 303, Tariff Act of 1930) owing to the competitive
factors resulting from increased trade.
Classijication, valuation, and marking oj imported merchandise.—In
view of the'continued high volume of importations, many new problems arose with respect to the tariff' classification, valuation, and
marking of imported merchandise with the country of origin. Con-^
siderable activity occurred in the program established in 1951 to fix
promptly and on a firm basis rates of duty on whicii importers can
rely in the importation of their merchandise. Requirements for the
marking of imported merchandise were published in greater detail
and in. a form designed to obtain a fuller understanding of the requirements and greater uniformity in their application.
The provisions of Sections 5 and 11 of the Trade Agreements
Extension Act of 1951 (65 Stat. 72) raised man^^ difficult problems
in respect of the establishment of the country of origin of imported
merchandise necessary to determine if such merchandise is entitled
to the benefit of trade agreement rates or to admission into the commerce of the United States.
Law enjorcement and investigative activities.—The law enforcement
activities of the Customs Service consist of the seizures of merchandise whicii has been fraudulently declared or illegally introduced
into this country, the arrest of the off'enders when such action is
warranted, and investigations involving smuggling and other violations of the Tariff Act. Considerable attention has also been given
to the program to protect the United States against subversive acr
tivity. .Fewer seizures were made in 1952 than in either of the three
preceding years but the value of such seizures was larger than in 1950
and 1951 and almost as large as in 1949. Two more boats and
thirty-eight more automobiles and trucks were seized in 1952 than
in the preceding year while the number of aircraft remained the
same. The total value of seizures of vessels, vehicles,, and aircraft
was considerably greater than in 1951. Liquor seizures declined
from the previous year in number, gallonage, and value. There
were also fewer seizures of prohibited articles.

ADMINISTRATIVE REPORTS

109

Seizures of ordinary merchandise although fewer in number showed
a slightly larger value than in 1951. Diamond smuggling continued,
but the seizures in 1952 were smaller both iri quantity and value than
in the previous fiscal year when three seizures alone Avere valued at
more than $900,000. Gold seizures amounted to over $200,000 in
1952 as compared with $330,000 in the previous year. As in 1951,
the largest single gold seizure, appraised at $110,000, was concealed
in an automobile presented for export; in this instance the gas tank
had been built with false compartments. Most of the other seizures
involved the age-old attempts by returning tourists to bring in foreign
purchases of furs, wearing apparel, cameras, and similar articles
without declaring them or paying duty.
Narcotic seizures were more numerous and were slightly greater in
value than in 1951, although for some kinds of narcotics smaller quantities were seized than iri the previous year. Seizures of raw opium
amounted to 471 oimces in 1952 as compared with only 260 ounces
ill the previous year and these seizures were made almost exclusively
at the Atlantic and Gulf Coast ports from seamen arriving from Near
Eastern and Mediterranean ports. Seizures of smoking opium were
almost the same as the previous .year, 495 ounces in 1952 and 513
ounces in 1951. Practically all of these seizures were made along the
Mexican border. Owing to the continued efforts of the Mexican
authorities to eradicate the plantations of opium-producing poppies
in Mexico, most of the seizures of smoking opium were in small
quantities. Marihuana seizures on the Mexican border continued
heavy although the total quantity seized was much less than in
1951, i. e., 17,374 ounces in the past year and 32,062 in the previous
year. Seizures of heroin were larger in 1952 with a yield of 148
ounces as compared with 101 ounces seized in 1951.
In addition to the seizures made for customs violations, 15,801
seizures were made for other agencies, of which 13,406 were for the
Department of Agriculture. In addition 53 persons were apprehended and delivered to Immigration, Secret Service, mUitary, or
mimicipal authorities.
Seizures for violation of customs laws are shown in tables 96 and 97.
The Customs Agency vService is employed generally to investigate
all civU and criminal matters coming to its attention, including
violations of the customs, navigation, and export control laws.
Treasury attaches and representatives in foreign countries also
conduct inquiries as to market value for the use of appraisers in
determining the value of imported merchandise.
Almost every important type of investigation was more numerous
in 1952 than in 1951. For a wliUe there was an increase in investigations of shipments from Hong Kong, arising from efforts to bring
ill products of China falsely described as products of Hong Kong
in order to circumvent the restrictions upon imports of merchandise
from China.
Table 98 summarizes the investigative activities during the past
two years.
Foreign trade zones.—'Dwving the fifteenth year of its existence.
Foreign Trade Zone No. 1 on Staten Island continued its successful
operation, which was at a slightly lower level than during the previous
3^ear. The tonnage and volume of goods entering and leavirig the

110

1952 REPORT OF THE SECRETARY OF THE TREASURY

zone, the number of entries of merchandise into customs territory, and
the duties and taxes collected thereon were less than in 1951. Fortyone vessels used the facilities provided by the zone as compared with
54 during the previous year. The erection of a proper fence to secure
adequate segregation of the zone from customs territory and the
installation of night lights for the fence made possible a considerable
reduction in the number of customs personnel necessary to protect,
the revenue.
Operations at Foreign Trade Zone No. 2 at New Orleans showed
an increase of almost 50 percent in the tonnage and value of goods
handled by the zone. A great deal of the work at this zone involves
the handling of goods for ultimate export. A comparatively small
portion of the total volume of goods enters customs territory for
consumption in the United States. Collections of duties and taxes,
however, were approximately 15 percent larger than in 1951.
Foreign Trade Zone No. 3 at San Francisco also had a substantial
increase in the tonnage and value of goods entering and leaving the
zone, although collections of duties and taxes on goods brought into
customs territory were only 40 percent as great as during the previous
year.
Operations at Foregin Trade Zone No. 4 at Los Angeles and Foreign
Trade Zone No. 5 at Seattle were at a much lower level than in 1951.
During the first full year of its operation. Foreign Trade Zone No. 6
at San Antonio, which opened for business on September 1, 1950,
continued to show a satisfactory volume. Foreign merchandise
was received from 15 different countries, although the largest portion
of it came from Mexico.
The following table contains a brief summary of foreign trade zone
operations.
Received in zone
Number
of entries

T r a d e zone

New York...
N e w Orleans
San Francisco
LosAngeles
Seattle..
San A n t o n i o

8,158
579
^ 4,187
571
720
206

Long
tons
82,648
38, 681
14,811
938
4,694
1,730

Value

$94, 913, 462
15,390, 561
6,006,426
683, 968
2, 624, 728
1,164, 992

D e l i v e r e d from zone
Long
tons
84,188
37,008
13,856
2, 399
6,002
1,649

Value

$76, 887, 677
13, 708,194
5, 861, 793
1,128, 965
2, 812,422
1,100,813

Duties and
Internal
revenue
taxes
collected
$3, 728,738
204,263
261,120
. 140,472
1, 201,851
77,963

Changes in customs ports and stations.—The limits of the port of
Los Angeles, Calif., were enlarged to include the city of El Segundo,
Calif.; the port of Portland, Oreg., to include the Portland International Airport and certain other territory; and the port of Minneapolis, Minn., to include the Minneapolis-St. Paul International
Airport. The name of the port of entry of Fernandina in the Florida
district was changed to Fernandina Beach..
A port of documentation was established in Guam, to be under the
' supervision of the collector of customs at Honolulu. The ports of
Mayaguez and Ponce, in the district of Puerto Rico, were designated
ports of documentation.
Customs stations at St. Francis, Maine, and Heart Island and

111

ADMINISTRATIVE REPORTS

Louisville Landing, N. Y., were discontinued, and new stations
established at Raeford, N. C , and Marathon, Tex.
Legal problems and proceedings.—An unusual variety of problems
and questions arose in 1952 in the enforcement of customs, navigation,
and other laws administered by the Bureau of Customs. In addition
to the complicated problems involved in the classification and appraisement of merchandise, resulting from the importation of new products
and the continued high level of imports in general, new problems
occurred in the enforcement of the export control laws.
Revised regulations governing foreign-trade zones operations were
issued to implement the changes in the Foreign Trade Zones Act
made by Public Law 566, Eighty-first Congress, approved June 17,1950.
Many reports were submitted to committees of Congress on pending bills, and considerable assistance was given to the Congress in its
consideration of the bill (S. 354) to pay overtime to Federal employees.
Cost of administration

Despite the continued high level of customs transactions in 1952,
the level of personnel employment on exclusively customs operations
was slightly lower than during the previous year. However, greater
emphasis was placed on the enforcement of the export control laws
and the increase in employment for this purpose made the total
personnel supervised by the Customs Service.slightly larger than in
1951. The following • table shows the average eriiployment in the
Customs Service for the past two fiscal years.
Average number of employees

1951

Regular customs operations:
Nonreimbursable.
Reimbursable ^
_
Total regular customs employment..
Export control _.
.
Total employment

1952

Percentage
increase, or
decrease (—)

7,977
371

7,937
373

—0,5
.5

8, 348
213

8, 310
299

—.5
40.4

8,561

8,609

1 Salaries reimbursed to the Government by those who receive the exclusive services of these employees.

The expense of operating the Customs Service in 1952 was $40,428,.923, excluding the expense of enforcing the export control regulations,
or $3,665,732 more than for the previous year. The increase was due
to the regular within-grade raises under the Mead-Ramspeck law and
to Public Law 201, 82d Congress, effective July 8, 1951, which provided for approximately a 10 percent increase ia all salaries of Government employees. These expenses, moreover, do not include salaries
paid to customs personnel for ovejtime and other services authorized
by law for which reimbursement was made to the appropriation by
those for whom the services were rendered. The decreased collections
together with the increased expenditures caused the cost of collecting
$100 of revenue to rise from $4.54 in 1951 to $5.40 in 1952. A summary of the collections and expenditures will be found in table 84.
Management program

New emphasis was given in 1952 to the program for the inspection
of field offices in the Bureau of Customs. WhUe this activity has been

112

19 52 REPORT OF TPIE SECRETARY OF THE TREASURY

an important part of the customs management jirogram for many
years, the scope and frequency of these inspections were broadened
and intensified. During the year, thirty offices of collectors of customs, appraisers of merchandise, and customs laboratories were inspected. During the course of these inspections, policies and programs
were reviewed with top level officials, improved procedures were
installed, manpower savings eff'ected in specific operations, and better
utilization of manpower achieved through personnel reassignments.
Other efi'orts of the management program resulted in several major
changes in operating procedures affecting practically every area of
customs activity. These were instrumental in increasing efficiency,
simplifying methods, expediting service, and improving public relations. They also produced some monetaiy and. manpower savings
which were used to expand, on a limited scale, the enforcement activities conducted in foreign countries, and partially to meet the demands
for additional personnel arising from the continued significant increase
in numbers of persons and carriers of merchandise arriving from foreign
countries.
Legislative proposals.—The Customs Simplification Act (H. R. 5505)
which would simplify customs procedures and permit substantial improvements in service to the public, was passed by the House of Representatives on October 15, 1951. Hearings on this bill were concluded
in the Senate Finance Committee but no final action was taken b}^ the
Senate. Another bill introduced in the 82d Congress (H. R. 2641) for
the recodification of the navigation laws to discontinue obsolete requirements and permit simplihcation of procedures in marine activities
did not receive congressional approval. Reorganization Plan No. 3 of
1952 was submitted to the Congress on April 10, 1952, and disapproved
on June 18.
Administrative action.—An innovation in the examination of baggage
of air passengers occurred with the inauguration in Toronto, Canada,
of a special arrangement applicable to passengers going to the United
States. Under this arrangement, the examination of passengers' baggage, and all requirements to permit the baggage to be released by
customs immediately upon arrival in the United States, are completed
before the plane departs from Canada. Hundreds of passengers have
praised the improved servicewhich eliniinates the normal delay experienced in baggage examination at the port of first arrival in the Uriited
States. I t is expected that negotiations with Mexico will be renewed
in an effort to provide similar service to passengers traveling on through
planes from Mexico City to the United States.
Another improvement in public relations resulted from the elimination of penalties, under certain conditions, for technical violations of
law by faUure of the plane's operator to give advance notice of arrival
in the United States. This change" benefited operators of civilian ahcraft not equipped with the proper radio apparatus to give the notice
normall}^ required.

ADMINISTRATIVE REPORTS

113

Attention was also given to problems arising in connection with militaiy aircraft. With the cooperation of the Air Force, simplified methods were adopted for customs clearance of personal effects of mUitary
personnel and military equipment arriving on interceptor training
flights of United States and Canadian Air Defense Commands departing from Canada and landing at certain United States air fields.
Significant changes were made in the procedures for exporting merchandise with benefit of drawback, and filing of drawback claims,
including: (1) The elimiaation of the necessity for customs inspection
and supervision of lading of such merchandise, which made it necessary
for exporters to pa}^ for such service when rendered on an Overtime
basis; (2) the allowance of three 3^ears instead of two years for the filing of drawback claims; and (3) the simplification of requirements for
filing such claims.
The customs clearance of certain noncommercial automobUes exported to foreign countries and accompanying passengers returning to
the United States was facilitated b}^ the establishment of a schedule of
estimated duties to be deposited on entry. Previous to this change it
was necessaiy for the passenger to ascertain the amount' of drawback
allowed when the car was exported and to deposit this amount, which
frequently involved considerable inconvenience and some expense.
New regulations and instructions were issued pursuant to the Foreign Trade Zones Act of 1934, as amended in 1950 (19 U. S. C. 81c),
providing, am.ong * other things, for a number of im.provements in
procedures relating to the movement of merchandise into and out of
foreign trade zones.
Several changes in requirements applying to vessel movements and
related activities were made to remove unnecessary burdens on vessel operators. These included the simplification of requirements for
(1) the manifesting of residue cargo, (2) the entrance and clearance
of vessels with prematurel^y landed or over-carried cargo, (3) the
.manifesting of export cargo laden in the United States, and (4) the
transfer of supplies or stores from one vessel to another. Intercoastal
vessels were relieved of the necessity of filing m'anifests of coastwise
cargo which formerly were required when business was transacted at
the Panama Canal Zone.
A new procedure for the customs treatment of certain military
(APO) mail, designed to reduce postal handling and transportation
charges, was instituted on a test basis at San Francisco, Calif. If
successful, this procedure will be made permanent and extended to
the ports of Seattle and New York where similar m^ail is received.
The application of scientific control weighing methods to. imported
merchandise was productive of further benefits to importers and
customs in reduced weighing activities. Since 1949 these methods
have been successfully used in weighing seven major commodities imported at many ports in the United States, as well as in overcoming
certain weighing problems at specific ports. Pilot studies were also
begun on six additional commodities.
A noteworthy improvement in sampling procedures eliminated the
taking and storing of duplicate or reserve samples of certain distilled
spirits for laboratory test purposes.
22,1052—53-.

114

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Several administrative decisions effected changes in practice resulting in the reduction of overtime charges paid by vessel operators,
importers, and others who obtain customs service on a reimbursable
basis. Another change eliminated numerous petty refunds of overtime charges collected in one customs district from yacht owners and
operators by an arrangement permitting a flat fee to be paid for
overtime services.
Other management improvements.—A comprehensive program for the
conservation and better utUization of manpower was promulgated for
the guidance of supervisors at all levels of operation in the Customs
Service. Although this program was in effect for onlj^^ a portion of
the year, substantial progress was made in achieving the objective of
manpower savings, particularly in the larger offices.
The Cash Awards Program and Work Sim-plification Program, which
again were productive of several valuable employee suggestions, were
merged into one program so as to eliminate. the duplication which
occurred when identical suggestions were submitted under both
programs.
Several additional delegations of authority were made to field
officers for the purpose of improving the effectiveness of administration at the field level. These delegations primarily affected the fiscal
activities.
An intensive campaign to dispose of inactive and useless records
resulted in the sale, destruction, or transfer to the Federal Records
Centers of 25 thousand cubic feet of records.
Bureau of Engraving and Printing
The Bureau of Engraving and Printing designs, engraves, and prints
currency, securities, postage and revenue stamps. Government checks,
military commissions and certificates, and other engraved work
for the various Government agencies, the Board of Governors of.
the Federal Reserve System, and insular possessions of the United
States.
The fiscal year 1952 was a period of great improvement in both
operations and procedures, the groundwork for some of which had
been prepared in prior years. In 1952, for the first time in the Bureau's histor}^, all operations were placed on a completely reimbursable
basis. This was in accordance with the act of August 4, 1950 (64
Stat. 408), which provided, effective July 1, 1951, for a working
capital fund method of financing the operations of the Bureau and
for business-type accounting and budgetary procedures. I n addition,
dming 1952, the Bureau developed and introduced improvements
which netted savings of over a million dollars in operating expenses.
Toward the end of the year, there was a large-scale revision of operating methods from which substantial savings are anticipated.

ADMINISTRATIVE; REPORTS

115

Budgetary changes

The installation of the revised system of budgeting and accounting
in the Bureau, pursuant to the act of August 4, 1950, was brought
about through the joint efforts of representatives of the General
Accounting Office, the Treasury Department, and the Bureau of the
Budget. The year's operation of the new system has unproved
appreciably the budgetary and fiscal management of Bureau operations.
An appropriation of $3,250,000 was granted by the 82d Congress to
be used as working capital. The requisitioning agencies reimburse the
Bureau for the cost of work produced and the amounts thus realized
are placed in the working capital fund. Expenditures for operations are
paid out of the fund. Thus the Bureau is completely self-supporting.
One of the major advantages which has accrued to the Bureau as a
result of the new method of financing has been that the working capital
fund has provided greater fiexibility in the purchase of machinery and
equipment. The unique and highly specialized processes used in the
production of currency, bonds, and stamps are such that suitable
design and development work are required preparatory to the procurement of the necessary equipment. Under the former system, funds
were available for obligation only during the fiscal year for which they
were appropriated. This did not permit sufficient time for intelligent
long-range planning for the development and procurement of such
specialized equipment.
Under the working capital fund method of financing, depreciation
on machinery and equipment is charged to the cost of the various
classes of work produced. Accordingly, the funds recovered through
depreciation will be available toward the replacement of obsolete and
worn-out machinery and equipment.
This arrangement has enabled the Bureau to anticipate the amoimt
of funds that will be available in the current as well as the succeeding
years, thereby permitting long-range planning for technological improvements. In scheduling action ori any major technical work program it is the intent of the Bureau to utilize the funds accruing through
depreciation on the development of specialized equipment which will
effect recurring annual savings in both manpower and cost of operations. For example, the purchase of automatic take-off devices for
the plate printing presses, which resulted in savings amounting to over
$500,000 in the fiscal year 1952, was made possible by the recovery of
funds acquired through depreciation charges under the new method
of financing.
I t is also possible under the new system to solicit invitations to bid
and award contracts at the most favorable time. More comprehensive tests can be made and the needed amount of time can be taken
to locate new sources of supply so as to realize the greatest benefits.
Heretofore, it has been necessary to perform these operations within a
short time prior to July 1 of each year in order to obtain supplies and
materials for the new fiscal year.

116

1952 REPORT OF THE SECRETARY OF THE TREASURY

On February 18, 1952, an internal audit program was established
in the Bureau in conformance with the requirements of Section 113
(a) (3) of the Budget and Accounting Procedures Act of 1950 (64 Stat.
832) which provides that the head of each executive agency shaU
establish and maintain S3'^stems of accounting and internal control
designed to provide effective control over the accountability for all
funds, property, and other assets for which the agency is responsible,
including appropriate internal audit. The over-all objective of this
program is to assist management in achieving the most efficient administration of the operations of the Bureau. To accomplish this
objective it is essential that an independent, S3^stematic, and continuous review be made of the various aspects of Bureau operations to
ascertain adherence to desired standards of performance.
An accounting manual was prepared, setting forth policies and
procedures for fiscal operations under the revised system of accounting
which was inaugurated on July 1, 1951. The contents of this manual
were endorsed by the General Accoimting Office.
A statement of income and expense for the fiscal year 1952 and
comparative balance sheets as of July 1, 1951 and 1952 follow:
Stateinent of income and expense for the fiscol year 1952
Engraving and printing delivered:
Income
Cost:
Finished goods inventory at July 1, 1951
Add: Cost of goods completed during fiscal year 1952

$33,303,500.85
$1,009,194.44
33,184,051.75

Total cost of goods available.
Less: Finished goods inventory at June 30, 1952
Cost of goods delivered
Incinerating mutilated currency:
Income
Cost

34,193, 246.19
735, 741.92
33,457,504.27
10,688.14
10,688.14

Maintenance of space occupied by other Treasury activities:
Income
Cost
---.
Other direct charges to governmental agencies:
Income
Cost...:
...

282,402.47
282,402.4.7
•-

84,178.92
84,178.92

Card checks:
Income
Cost
Net loss on operations

689,383.97 .
689,383.97
-

1154,003.42

1 By law, the Bureau of Engraving and Printing cannot operate at a profit. During the fiscal year 1952,
various products were billed to requisitioning agencies at estimated rates. It was later determined that
these rates were less than actual cost. This resulted in a loss of $154,003.42. The accounts participating in
this loss could not have been adjusted before commencement of fiscal 1953, nor was such adjustment necessary by reason of the statute. The loss will be recovered in fiscal 1953 by adjusting the billing rates in that
year for the products Involved.

ADMINISTRATIVE

117

REPORTS

Comparative halance sheets, J u l y 1, 1951 and 1952
As of opening of business
J u l y 1, 1951 (adjusted
t h r o u g h J u n e 30, 1952)

Assets

C u r r e n t assets:
Cash:
W n r k i n g capital firnrl
Snecial deposits

As of close of business
J u n e 30, 1952

$3, 290, 298. 26
$56,129.05
$56,129.05

A c c o u n t s receivable:
Governmental
Unbilled
Other
.

. . .
.
_ . . . . .

$3, 290, 298. 26
3, 462, 799. 51
380.103. 43
13, 632. 94

1, 807,023. 69
5, 868. 57
1. 812, 892. 26

Inventories:
Finished goods. . . . .
W o r k in process
Stores

3, 856, 535. 88
735, 741. 92
2, 726. 439. 60
2, 453, 028.15

1, 009,194.44
3, 267, 505. 64
2,370,401. 54
6, 647,101. 62

P r e p a i d expenses:
A d v a n c e s to g o v e r n m e n t a l a g e n c i e s . .
Perforator servicing
.__
Total current assets.

.-.

46, 453. 78

Fixed assets:
P l a n t m a c h i n e r y and e q u i p m e n t . .
Less: Reserve for depreciation

5, 915, 209. 67
8,700.00
66, 555.44

46,453. 78

75, 255.44

8, 562, 576. 71

13,137, 299. 25
13, 068,332.46
1, 037,989. 44

12, 260, 226. 51
12, 260, 226. 51

M o t o r vehicles
L e s s : R e s e r v e for d e p r e c i a t i o n . . .

12,030,343.02
57, 031. 97
4. 536.16

29, 417. 66
...
29, 417. 66
90, 941. 09

Officemachines .
Less: Reserve for depreciation

52,495. 81
100, 578. 70
11,979.59

90,941.09
F u r n i t u r e and
fixtures
.
Less: Reserve for depreciation

394, 034. 69
106. 065. 04
287, 969. 65
3, 955, 901. 25

Dies, rolls, and plates. ._
__
Building appurtenances
Less: Reserve for depreciation __
Fixed assets—work in progress
T o t a l fixed assets

Total assets.

292, 878. 83
3, 955, 961. 25
59,494. 25
1, 409. 08

...

58. 085.17
252. 548. 52

68,132. 60

Deferred charges:
P l a n t alterations e x p e n d i t u r e s
E x p e r i m e n t a l e q u i p m e n t costs . . . . . . . _
T o t a l deferred charges

88, 599.11
433, 977. 67
141, 098. 84

16. 692, 648. 76

=
179.14

179.14
179.14
25, 255, 404. 61

16, 730. 911. 71
21, 413. 88
45, 597.32
67, Oil. 20

= 29, 935; 222.16

118

1952 REPORT OF THE SECRETARY OF THE TREASURY
Comparative halance sheets, July 1, 1951 and 1952-—Continued
Liabilities and investment of the
United States

Current liabilities:
Accounts payable:
Audited—governmental
Audited—nongovernmental
Unaudited-Accrued liabilities:
Payroll
Leave __ Other. _

As of opening of business
July 1, 1951 (adjusted
through June 30, 1962)

$51,355. 20
.

$51,355. 20

1, 547. 504.13
1, 733. 261.35
21,096. 26

Special deposit liabilities:
Suspense
,..
Federal taxes withheld
Savings bond deductions withheld _ _

3, 907.01
126. 50
52,095. 64

Other liabilities: •
Due to estates of deceased employees.
Due to U. &. Treasury and others

1, 757. 86
5. 658.17

3,301,86L74

56.129.05

7,416.03

Total current liabilities
Investment of the United States:
Capital:
Appropriated
Donated

3.416, 762.02

21,838, 642. 59

Surplus:
Operating deficit
Nonoperating surplus
Less: Transferred to Treasury
Net deficit
Net investment of the United
States . . . . . . .
Total liabilities and investment
of the United States

As of close of business
June 30, 1952

$1.153.79
79, 550. 64
506, 716. 69
1,892, 383. 90
1, 565,062. 76
54, 937.41

857.479. 78
42, 403.32
435. 99
458. 72

3,250,000.00
21. 838, 642. 59

10, 537.81
10, 537. 81

$587,421.12

3, 612,384.06

899. 883.10

894. 71
5,000. 582. 99

25,088. 642. 59
164,003.42

164.003.42

21.838, 642. 59
25, 255, 404. 61

24.934,639 17

;

29,935, 222.16

Operational improvements

Printing.—The decision to study the feasibility of printing eighteen
currency subjects to the sheet instead of twelve was announced in
the Bureau on April 28, 1952. The research and development efforts
of the Bureau were centered immediately on this change which would
affect every operation associated with the printing of currency. By
the end of the fiscal year, this new procedure had been introduced
and printing was being performed on one back and one face press.
The operation was carried as far as overprinting, since the present
numbering equipment cannot be adapted readily to the size of the
eighteen-subject sheet. However, it is planned to accomplish the
overprinting through the acquisition and use of suitable flatbed cylinder presses. The basic developmental work has been completed and
the conversion to the revised procedure is under way in the operating
divisions. This proj ect is but one phase in the comprehensive modernization program of the Bureau. I t is being introduced as an interim
measure to realize immediate savings until such time as developmental work can be completed on new types of printing equipment.
Preliminary studies suggest that savings from this program may be
well over a million dollars.
The use of a nonoffsetting green inl^ to print currency backs made

ADMINISTRATIVE REPORTS

119

possible the elimination of five operations formerly required in the
printing of currency: (1) The inserting of tissues between the sheets
of printed backs, (2) the wet-counting of the backs, (3) the spreading
and drying of the backs, (4) the separating of tissues from the back
printings, (5) the rewetting of the paper preparatory to face printing
and the related counting and handling operations. A significant reduction in mutilation and a marked increase in the quality of the
product resulted from the new procedures, as well as savuigs due to
reductions in force or reassignments of over 300 employees. Estimated savings realized during the fiscal year 1952 amounted to
$888,692. If extended on an annual basis the savings are estimated to
total $1,056,802, or $93,802 more than the amount forecast in the 1951
annual report.
The installation of automatic take-off and delivery devices on the
plate printing presses used to print currency backs eliminated the
need for one printer's assistant at each press. A total of 239 positions
were made surplus as a result of this improvement. Estimated
savings realized during fiscal year 1952 amounted to $582,496. If
extended on an annual basis the savings are estimated to total
$756,246, or $61,246 more than the amount forecast in the 1951
annual report.
The advantage gained from installation of semiautomatic feedboards on currency presses suggested additional savings which could
be made by adapting these devices to presses used to print other
classes of work. Accordingly, since July 1951, certain modifications
made in the feedboards have made possible their use in the printing
of savings bonds. Estimated savings realized during the fiscal year
1952 amounted to $41,400, an amount which is expected to be saved
annually.
Currency.—The introduction of nonoffset green inl^ to print currency
backs made possible the examination of both sides of the currency in
one operation. This was a major change in that it eliminated one
operation which had been required before, and made it possible to
eliminate an entire examining section, thereby making surplus 8.0
positions. The savings resulting from this action are in addition to
those reported for the nonoffset program. Estimated savings realized
during the fiscal year 1952 amounted to $287,366 and this amount is
expected to recur annually.
Re-examination of sheets of currency on which some but not all of
the notes were mutUated has made possible the salvaging of many
good notes which would have been destroyed under former procedures.
Estimated savings realized during the year 1952 amounted to $229,276.
These savuigs, whicii are expected to recur annually, represent $79,276
more than the amount estimated last year. '
Mechanical innovations.—Although no monetary savings are attributed to improvements made on the sizing machines during the fiscal
year 1952, the following changes have reduced spoUage of sheets and
increased the speed and efficiency of the work.
I n November 1951 new teflon-coated glass fabric tapes were installed
on the sizing machines, replacing the cotton tapes or bands formerly
in use. This change reduced the nonoperating time previously required for changing tapes on these machines. In addition, the new

120

19 52 REPORT OF THE SECRETARY OF THE TREASURY

tapes wear more than three times as long as the old ones, and are
fireproof.
Spoilage of currency has been reduced by the installation of automatic temperature controls which maintain a temperature inside the
drying compartment sufficient to permit proper drying of the work
without overheating. A signal light to warn operators of overheating
in the drying compartment was installed on one machine and tested
during February 1952. This was later adopted for all fifteen
machines.
Other improvements were the installation of a control roller to curb
creasing, and the chrome plating of various machine parts to minimize maintenance work.
Overprinting.—The number of finished notes processed per day by
examiners in the currency overprinting section was increased through
the formation of a unit of lower level employees to perform the counting of sheet work in that section, and by the discontinuance of the
count of unexamined notes at the close of the work day. Estimated
savings realized during the fiscal year 1952 amounted to $110,630,
and recurring annual savings of this amount are anticipated.
The rearrangement of space so as to accommodate more workers in
the currency overprinting section of the Surface Printing Division
made possible the transfer of 225 employees from the night shift to
the day shift during January 1951. The consequent elimination of
fifteen percent night differential pay to these employees resulted in
savings of $38,436 last year and $69,666 during 1952.
Packaging jor shipment.^A new package wrapping machine, installed in the currency overprinting section, made possible the elimination of the services of six employees. Formerly these employees
wrapped the packages of currency for shipment by hand. Savings
from the use of this machine amoimted to $2,974 in 1951 and to
$14,874 in 1952.
Cartons have replaced the kraft paper wrappers.formerly used to
package postage and revenue stamps for shipment. The new procedure expedites the packing operation, saves materials, affords
greater protection to the contents of the packages while in transit,
and requires fewer employees than the former method. Estimated
savings realized during the fiscal year 1952 amounted to $43,617. On an
annual basis the savings are estimated to total $71,543, which is
$46,697 more than the amount forecast last year.
Procedural improvements

A new conveyor system in the bindery resulted in the release of two
employees, and the better utilization of space and equipment in the
unit which processes cigarette stamps. The conveyor replaced the
hand trucks which were used for the transportation of paper trimmings
from guillotine cutting machines, and for moving finished cartons of
stamps. Savings realized during the fiscal year 1952 amoimted to
$4,680. If extended on an annual basis, the savings would amount to
$5,616.
The following examples of work accomplished by management
improvement committees saved $10,635 during the fiscal year 1952
and are expected to result in annual savings of over $18,000: Streamlining the processing of paper checks; combining certain activities in

ADMINISTRATIVE REPORTS

121

the tissue section of the Examining Division; improving the handling
of work in the distinctive paper unit; and rearranging the trimming
and separating of disbursing officers' checks.
Personnel programs and activities

The total number of emplo3^ees at the beginning of the fiscal 3^ear
was 6,602. There were 391 appointments and 817 separations, leaving
a total of 6,176" employees on the rolls as of June 30, 1952.
Bureau turnover rate for the fiscal year 1952 was 12.5 percent;
Government-wide it was approximately 27.53 percent. I t is estimated that 915 additional emplo3^ees would have been needed during
the fiscal year 1952 if the Bureau turnover were as high as the average
throughout the Government. Recruitment and training of 915 employees would have cost the Government an estimated $366,000.
The Bureau of Engraving and Printing, like manufacturing establishments in private industry, is faced with loss of production when
there is more than a normal amount of absenteeism due to sickness,
accidents, or personal reasons of the •emplo3^ees. During 1952, the
Bureau made a stud37^ of the personal reasons for absenteeism. I n
those individual cases which were chronic, and in which no improvement was made, the services of the employees were terminated. A
monthly report of absenteeism from each major production division
is now being prepared and will be continued for a 6-month trial period
to determine its usefulness. This report indicates the type and rate
of absences that occur and the areas where improvement is needed.
Wage adjustments affecting some 5,219 unclassified employees, and
amounting to approximately $659,664.98 were made to meet the^
increases in wage rates granted b3^ the American Bank Note Company
or the Government Printing Office for job classifications which have
been determined to be comparable to jobs in this Bureau. Wage
adjustments for 936 classified employees were made in accordance
with provisions of the Classification Act of 1949 as amended by the
act of October 24, 1951 (65 Stat. 612).
The review of Office Chiefs' and Superintendents' positions and the
positions of their principal assistants was completed in September
1951. The revised position descriptions refiect organizational changes,
current duties, responsibilities, delegations of authority, and technological improvements.
Surveys of clerical posititions in the Examining Division and
Surface Printing Division were conducted in order to develop current
job descriptions and to call attention of supervisors to overlapping
activities and obsolete records. Other studies included the preparation
of statistical computations of wage data to meet the requirements of
the Wage Stabilization Board, the study of wage differentials between
workers and their foremen in order to explore the uniformity and .
variety of such dift'erentials, and the adjustment of wage rates to
meet the requirements of Personnel Circular Number 126 in paying
prevailing rates at all times.
I n accordance with Treasury Department Circular Number 164,
and applicable provisions of the Whitten Amendment, a review was
made of all jobs in the Bureau. Upon completion of this review each
division superintendent submitted: (1) A certification that current
assignments of employees in his division had been compared with the

122

19 52 REPORT OF THE SECRETARY OF THE TREASURY

descriptions of the positions, so as to determine the unnecessary jobs
which could be abolished; (2) current descriptions for those jobs
which had changed, together with recommendations for revisions;
and (3) a list of positions, by title and grade, which were found to
be necessary and which were accurately described.
An examination for apprentice plate printers was given during the
fiscal year 1952. The thirty-five highest ranl^ing employees were
offered plate printer apprentice jobs and their training began on
March 17, 1952. The Plate Printing Division now has seventy
apprentices.
A new program for the selection of supervisory personnel was established to reflect recent delegations of authority to operating division
superintendents to select their own supervisors, to discover supervisory
talent among Bureau employees, and to utilize this talent most
effectively. The new procedure provides for the posting of all supervisory vacancies, and the use of psychological tests as an aid in the
selection. Tests used so far in this program have included standard
aptitude and intelligence tests, and special tests developed by Bureau
personnel technicians to evaluate the applicants' suitability for special
kinds of jobs. To date, five such special tests have been developed
and administered along with standard tests in the filling of supervisory vacancies in five operating divisions.
In order to utilize the specialized experience, of the Bureau's noncraft personnel more effectively than possible under the general promotion provisions, it was determined that promotions to thirty-two
' nonsupervisory jobs would be made on the basis of specific qualifications for work in the area concerned. Also, after consultation with the
employee groups concerned, the written policy for ungraded noncraft employees was amended twice during the year in order to
announce the title of the jobs which were removed from coverage by
the promotion policy. This policy affects only fifty-seven of approximately 3,900 noncraft employees in the Bureau.
Durmg the fiscal year 1951 a study was under way to examine the
existing policy relating to the practice of collecting from employees
for shortages of security instruments in both complete and incomplete
stages. Following a comprehensible study by the Bureau, the General Counsel, and the Director of Personnel, a new policy was appro v^ed
by the Under Secretary of the Treasury on October 4, 1951, and was
outhned in a Bureau bulletin dated October 19, 1951.
The re\^ised policy abolishes the practice of collecting for items which
are not complete. I t continues the practice of collecting from employees for completed items which the Government may be required
to redeem when individual responsibUity can be determined. In
addition, disciplinary action wUl be taken. . The new procedure
provides that when individual responsibility cannot be determined,
the face value of the lost security wUl be. charged to an expense
account entitled, ^'Completed Securities Unaccounted For," and a
credit wUl be made to an account entitled, ^^Reserve for Completed
Securities Unaccounted For." In the event a claim for a shortage
in a delivery of completed securities is substantiated, payment wUl be
made from Bureau funds.

ADMINISTRATIVE REPORTS

123

Differences which may occur from time to time in the paper stocks
for either completed or incompleted securities will be reported currently by the Bureau to the Secret Service for investigation in conformity with existing practice. The Bureau is authorized to adjust
the paper stock accounts by writing off any sheets or portions of
sheets not located within thirty days.
The Bureau Safety CouncU conducts a continuous program of traiaing with emphasis on weekly classes for supervisory personnel, and
emplo3^ees engaged in occupations where the severity and frequency
rates for accidents are high. An indication of the continuing improvement in the safety records of the Bureau was the reduction ia the
accident frequency rate ^ from 17.66 in the fiscal year 1951 to 14.82
in the fiscal year 1952.
Two series of training sessions were conducted, one for supervisors
and foremen, and one for members of the Transportation Division.
Procedures in connection with accidents were simplified by placing
the responsibUity for preparing accident reports on the supervisors
and eliminating unnecessary reports.
Long-range improvement program

Over a period of years the research and development activities in
the Bureau have made possible immense savings, thus bringing to
fruition long-range plans for modernization of existing equipment and
operations. Projects on which the research staff has worked, which
resulted in savings during the fiscal year 1952, were described in the
preceding part of this report. However, research activities also included long-range projects which are expected to yield further savings
in years to come. In connection with a number of such studies the
cooperation of outside manufacturing and research concerns has been
sought. A good deal of help has been secured in this wa3^, supplementing the work of the small staff in the Bureau, and infusing new
ideas and techniques into the work. Foreseeable annual savings from
projects now upder way amount to over $5 million. The areas of
study which are expected to bring about these savings are outlined
as follows:
Development of nonoffset black intaglio ink would eliminate slipsheeting between printed currency face impressions, and would make
it practical to install automatic take-off devices on the presses printing
this work. The speed in the priating of currency faces would be so
increased that it is possible that an assistant could be released from
each currencyrface'^press.
Improved methods, techniques, materials, and devices for printiag
postage stamps are being developed on an experimental press in the
engineering, and development section. Results produced from this
activity may be applicable also to the experimental printing of currency
on a sheet-fed rotary press, which is expected to be delivered to the
Bureau next year.
Experiments on new methods of trimming printed sheets of work
are being conducted so as to speed the process and produce more
accurate results.
1 The number of disabling injuries per 1,000,000 man-hours worked.

124

19 52 REPORT OF T H E SECRETARY OF T H E TREASURY.

Wholl37^ automatic feeders are in process of development for use on
currency printing presses. Wlien perfected the installation of these
devices would probabl3^ eliminate the need of a considerable number
of positions of printers' assistants.
The possible use of automatic collating equipment to assemble
postage stamps in book form is being explored at the present time.
If practicable, such a device would eliminate the need fdr the services
of a number of people, and would increase the amoimt of work produced at less expense and in less time.
Other refinements in postage stamp processing include development
of improved types of cartons for shippiag the stamps, and the installation of a conveyor S3^stem to bring several operations related to preparing the work for shipment into a continuous flow of work.
New issues of s t a m p s

Orders were received and dies were engraved for new issues of
postage stamj)s as follows:
Issue

Denomination
(cents) •

75th Anniversary of the American Chemical Society Commemorative, Series 1951
175th Anniversary ofthe Battle of Brooklyn Commemorative, Series 1951
200th Anniversary of the Birth of Betsy Ross Commemorative, Series 1952
50th Anniversary of the 4-H Club Movement Commemorative, Series 1952
125th Anniversary of the Baltimore and Ohio Railroad Company Commemorative,
Series 1952
.
50th Anniversary of the Founding of the American Automobile Association Commemorative, Series 1952
North Atlantic Treaty Organization Commemorative, Series 1952
i...^
Grand Coulee Dam Commemorative, Series 1952
175th Anniversary of the Arrival of Marquis de .Lafayette in America Commemorative,
Series 1952
^
Mount Rushmore National Memorial Commemorative, Series 1952
United States Postage, Air Mail, Series 195-2

Other new issues of stamps produced during the year included
the $2.00 Federal migratory bird hunting stamp. Series 1952-53;
$50.00 special tax-wagering tax stamp; six denominations of documentary stamps, new design; and three denominations of documentary stamps, modified new design. In. June 1952, orders were
received from the Bureau of the Public Debt for new United States
savings bonds, 1952 design, for Series E, Series H, Series J, and
Series K. New models and la3^outs were prepared and considerable
original engraving and plate making were required because of changes
in the face and back of the bonds. By the end of June, 1,500,000 of
the new Series E bonds had been delivered.
Production

Deliveries of finished work during the fiscal 3^ear 1952 totaled
834,899,736 sheets, an increase of 30,979,938 sheets or approximately
4 percent, as compared with the quantity delivered during the previous fiscal year. A comparative statement of deliveries of finished
work in the fiscal years 1951 and 1952 follow^:

ADMINISTRATIVE

125

EEPORTS
Sheets

F a c e value,
1952

Class

Currency:
U n i t e d States notes
Silver certificates
Federal Reserve notes
Specimens:
U n i t e d States c u r r e n c y .
Federal Reserve n o t e s . .
TotaL
B o n d s , notes, bills, certificates, a n d d e b e n t u r e s :
Bonds:
Postal savings.
.
•
Treasury
.
U n i t e d States savings
Depositary
'
Consolidated Federal farm loan for t h e 12 Federal
i n t e r m ediate credit b a n k s
H o m e O w n e r ' s L o a n Corporation: Obsolete engraved stock delivered to destruction c o m r a i t t e e
a n d destroyed
Puerto Rican
.....
Notes:
Treasury
•...
Consolidated, Federal h o m e loan b a n k s
Special, U n i t e d States L i t e r n a t i o n a l M o n e t a r y F u n d
series
-Special, foreign service r e t i r e m e n t a n d disability
fund series
..
Special, civil service r e t i r e m e n t a n d disability
fund series...
Special, n a t i o n a l service life i n s u r a n c e fund series. _.
T r e a s u r y bills
Certificates:
Indebtedness
.
Military
P o s t a l savings
I n t e r i m transfer, postal savings b o n d
Debentures:
Collateral t r u s t o f t h e C e n t r a l B a n k for Cooperatives
Consolidated collateral t r u s t for t h e Federal interm e d i a t e credit banks..^
W a r housing insuran ce fund
M u t u a l m o r t g a g e in surance fund
Specimens:
Bonds
Notes
Certificates-•
..
Debentures
1
Total.

4, OSO, 000
125. 920,000
52, 427, 000

4.126, 000
129, 204, 000
63, 043, 000

$202,140, 000
2,181, 648, 000
8, 939, 600, 000

182, 427.1.33

196, 372. 000

11,323,388,000

815
629, 078
72, 877. 000
525

2, 070
678, 458
SO, 545, 000

933.000
25, 539. 977. 400
5, 296, 625, 000

100, 900

466, 480, 000

66, 775
59, 000

10, 629, 000, 000
1, 325, 000, 000

165

5, 075, 000, 000

17
116

1,107,162
242
1, 516, 690
64, 550

140

595, 400

140
535
1, 072, 400

379, 000
94, 667
2,121. 300
1,000

946,100
1,232,000
1, 029, .500
1, 000

130,270,000,000 .
63, 709, 000, 000
497,662,000
S54, 912, 250

9,650

108, 000, 000

63, 000
7,710
1, 475

1.100,000,000
62, 925, 000
2, 547, 500

', 449,149

85,816,122

244, 938, 062,150
Number of
stamps, etc.,
1952

Stamps:
Customs
Internal revenue:
T o offices of issue
Obsolete stock delivered to Commissioner of I n t e r n a l
R e v e n u e for destruction
Specimens
.
P u e r t o Rican r e v e n u e
Obsolete stocK delivered for destruction
Virgin Islands r e v e n u e
.
U n i t e d States w a r savings
Postage:
U n i t e d States
.
Specimens, U n i t e d States
C a n a l Zone
A d h e s i v e postal n o t e
.
.._
D i s t r i c t of C o l u m b i a beverage tax-paid
Federal m i g r a t o r y bird h u n t i n g
Foreign service fee
Passenger baggage
..
Slaight lock seals
,
Total-

373, 700

562, 000

5, 620, 000

312, 428, 048

302, 719, 827

22, 552, 926. 985

293.398
176
2, 461, OOS
270, 952
550
641,960

10, 552, 040

285, 311, 372

180
246, 077

18, 000
95,859,800

200, 032, 947
36.
89, 697
587.821
919, 300
24, 075
15.995

210,456,621
18
17.-250

22, 367, 455, 730
3, 630
6, 900, 000

1, 022, 400
21, 325
15, 904
840, 000
3,704

51,120, 000
2. 388, 400
1, 590, 400
4, 200, 000
200, 016

518,139, 663

527, 920, 957

45, 463, 592,108

1, 463, 611

I, 997, 775

126

1952 REPORT OF THE SECRETARY OF THE TREASURY
Sheets
• Face value.
1952

Class
1961

1952
N u m b e r of
s t a m p s , etc.,
1962

Miscellaneous:
Checks
.
Certificates
_
.
_
.
Commissions
"
Diplomas
_-.
Drafts
G o v e r n m e n t r e q u e s t s for t r a n s p o r t a t i o n
Warrants
O t h e r miscellaneous
Specimens
_.
..
M i l i t a r y p a y m e n t orders
Total
G r a n d total

:.
_ _

12,805,709
1,840, 990
218. 736
963
250
785, 320

64,012, 730
1,840, 990
218,736
963
250
3,926, 600

9,134,809
589
3,300

9,134,809
7,074
16. 500

23, 903,853

24, 790,656

79,158, 642

803, 919, 798

834, 899, 735

11.182, 980
1, 585,143
230,954
6,000
1, 063, 668
24, 430
9,810, 511
167

Fiscal Service—BUREAU OF^ACCOUNTS 1
The Bureau of Accounts is responsible for numerous fiscal activities
or operations, most of which are Government-wide in scope, and which
are required pursuant to acts of Congress or executive orders. These
include the establishment of amounts of appropriations made by Congress to the various departments and agencies through the issuance of
appropriation warrants; the. maintenance of the central accounts of the
Government relating to revenues, appropriations, and expenditures for
the departments and establishments; and the covering of moneys
into the Treasury and authorizing their withdrawal therefrom.
An annual report to the Congress entitled The Combined Statement
of Receipts, Expenditures and Balances of the United States Government
is prepared by the Bureau; in this report receipts are classified whenever
practicable by districts. States, and ports of collections, and expenditures are classified under each separate head of appropriation. Other
financial reports are prepared for the information of the President, the
Congress, and the public with regard to the results of the financial
operations of the Government.
The Bureau participates in the Joint Accounting Program of the
Comptroller General, the Secretary of the Treasury, and the Director
of the Bureau of the Budget for the improvement of over-all Government accounting and financial reporting. The Bureau is responsible
for the technical supervision of accounting systems and procedures and
the coordination of matters relating to accounting and financial
reporting within the Treasury Department.
Other responsibilities are: Disbursing functions including certain
collections, with a few exceptions, for the civil establishments of the
executive branch of the Government; the handling of investments of
various trust and other funds for the Secretary of the Treasury; the
maintenance of records relating to authority of Government corporations and agencies to borrow from the Treasury and loans made to
such agencies; the negotiation of loan agreements with the various
corporations and agencies; the supervision of the Federal depositary
system including deposit of withheld income, social security, and railroad retirement taxes; approval of surety bonds and determination of
underwriting qualifications of surety companies authorized to do

ADMINISTRATIVE REPORTS

127

business with the United States; the accounting, billing, and collecting
for lend-lease articles transferred and surplus property sold to foreign
governments; and the handling of a variety of claims under various
acts of Congress including payment of international claims.
Accounting, reporting, and related fiscal matters

The accounting staff of the Bureau was engaged during the year in
the development of improvements in accounting and reporting
within the framework of the Budget and Accounting Procedures Act
of 1950 (31 U. S. C. l-66c). The most important are described in
the following paragraphs.
Accounting systems oj the Treasiiry Department.—Technical assistance was given in improving the accounting systems or in solving
problems in the following areas.
The work with respect to the formalization of procedures and solution of problems under the new accounting system, installed on July 1,
1951, in the Bureau of Engraving and Printing, was completed during
the year.
A survey was made of the accounting system and procedures in
the Bureau of Narcotics, and recommendations for improvements
were placed in effect.
A joint project was commenced by representatives pf the Treasury,
the General Accounting Office, and the Bureau of Internal Kevenue,
involving a comprehensive study and appraisal of all internal revenue
accounting operations, with the long-range objective of finding the
most economical and effective system.
A project was started looking toward simplification of the processing of Government deposits and checks through general depositaries. If successful this will eliminate the handling of numerous
documents each day in the Office of the Treasurer of the United States.
Representatives of the Bureau collaborated with departmental
representatives in giving assistance to the various bureaus and offices
of the Treasury in the program for integration of the budgeting and
accounting systems and in the formulation of procedures for administrative control over the expending of appropriations required by
regulations set forth in Treasury Department Circular No. 880, of
January 2, 1951. (See exhibit 54, page 661 of the 1951 annual report.)
Government-wide accounting and related fiscal matters.—Representatives of the Bureau collaborated in the Joint Accounting Program of
the Comptroller General, the Secretary of the Treasury, and the
Director of the Bureau of the Budget for improving accounting generally in the following principal areas.
Joint Regulation No. 3, issued by the General Accounting Office
and the Treasury Department, was amended December 21, 1951, to
extend the procedure therein for making certain deposits immediately
available for expenditure without warrant action, to civil service
retirement deductions on payrolls paid by disbursing officers of the
Division of Disbursement, Treasury Department. (See exhibit 43.)
There was developed for application by all executive agencies whose
operations would be benefited and simplified, a procurement and payment procedure for small purchases utilizing imprest funds. The
procedure was issued under a joint regulation of the General Services
Administration, the Treasury bepartment, and the General Account-

128

19 52 REPORT OF THE SECRETARY OF THE TREASURY

ing Office on March 10, 1952, simultaneously with the issuance of
Treasury Department Circular No. 900 relating to the form of bond
to be used by imprest-fund cashiers. (See exhibit 44.) These
regulations were promulgated in the Treasury Department by
Treasury Department Circular No. 908 of May 14, 1952. (See
exhibit 44.)
A study was inaugurated to analyze and appraise the entire civilian
payroll S3^stem of the Government with the view of determining the
most economical and efficient methods for general application.
The savings and improvements in the issuance, clearance, pa3^ment,
and reconciliation of checks, made possible through the use of punched
card checks, resulted in the establishment of a project for the development of plans and recommendations for the maximum use of this form
of check.
A procedure was developed with the General Accoimting Office
whereby the aiithorit3^ of Treasuiy disbursing officers to effect cancellation of checks directly in their accounts has ]feen considerabty broadened. This has eliminated certain overlapping and duplication, has
strengthened interual controls in the payment and related checkclaim processes, and has increased efficiency in check processes and
accounting.
In line with the improvements in accounting already made and
going forward on a broad front, a long-range program has been
instituted with the Bureau of the Budget to examine and appraise
such changes in relation to the Budget Document, the Combined Statement oj Receipts, Expenditures and Balances , oj the United States
Government, £in.d the Daily Statement o'f the United States Treasury.
Daily Statemient of the United States Treasui-y.—Effective November
30, 1951, classifications in the daity Treasury statement were revised
to show expenditures by titles under the major activities relating to
the Mutual Securit3^ Act of 1951 (65 Stat. 373). These classifications
in the statement issued daily.show expenditures by major activity only.
In the mid-month issues, expenditures contain additional components
by areas and names of principal spending agencies under each activity.
Further revisions of classifications were put into effect July 1, 1952,
principall37^ to show expenditures under certain organizations not
previous^ reported. Basically, neither the methods of reporting
transactions nor the format of the daily Treasury statement changed
during the fiscal 3^ear.
General pperations and management improvement

During the fiscal year the operations of the Bureau were continued
by the same organizational units as in 1951, as described in the following paragraphs.
Disbursement operations.—The Division of Disbursement provides
disbursing, collection, and savings bond issuance facilities for all
executive departmxents and agencies except the Post Office Department, United States Marshals, the Panama Canal, the Department of
Defense, and certain Government corporations. The Division provided these services through 27 regional disbursing offices located in
the continental United States; Juneau, Alaska; Honolulu, Hawaii;
San Juan, Puerto Rico; Manila, PhUippine Islands. The number of
regional disbursing offices was reduced to 26 on June 30, 1952, when

ADMINISTRATIVE

129

REPORTS

the regional office at Columbus, Ohio, was discontinued. Additional
assistant disbursing officers and agent cashiers were designated at
strategic points in foreign countries throughout the world to provide
expanded facilities and improved methods for making disbursements in
foreign countries, and more rapid and satisfactory transaction of
Government business. The number of pa3^ments, collections, and
savings bonds issued by the Division of Disbursement in its central
and regional offices during the fiscal years 1951 and 1952 are as follows:
Number
Classification .

. Fiscal year
1951

Payments (checks and cash) :
Social securitv
Veterans' ben efi ts
Special dividend program
Tax refunds
Other
_
Collection items
.
Savings bonds issued to Federal employees in payroll savings plan
Total

Fiscal year
1952

42,988,376
74,055, 585
2,227, 541
31,189,245
29,411,723
5, 728, 583
2,426, .348

53,841,576
68, 731, 512
7,613,719
28,935,941
30,420, 622
6,136, 741
2,440,387

188,027,401

198,120,498

Federal depositary system.—The Division of Deposits is responsible
for the administrative work relating to the designation and supervision
of depositaries throughout the United States and in foreign countries.
A large volum.e of requests was received by thb Treasury from the
Department of Defense during the fiscal year 1952 for the establishment of depositar3^ facilities at locations in the United States, its
Territories and possessions, and in other parts of the vvorld (1) to
furnish payroll cash to disbursing officers, (2) accept deposits to the
credit of the Treasurer of the United States; (3) maintain military
organizational accoimts, and (4) provide limited, banking facilities at
military posts and reservations.
.During 1952 the bank draft depositary system was extended to a
number of collection districts of the Bureau of Internal Revenue.
Under this system arrangements were made for approximately 100
division offices of the Bureaii of Internal Revenue to use bank drafts
in remitting collections for subsequent deposit to the credit of the
Treasurer of the United States. The bank draft system was also
placed in use for the Bureau of Prisons, Department of Justice, at
several locations.
During each of the quarterly tax collection periods in 1952 the
Treasury followed a special arrangement adopted in. March 1951 as
an aid. in alleviating strain on bank reserves. Under this new procedure special depositaries of public moneys (designated under the provisions of Treasury Circular No. 92) were permitted to accept for
deposit in their Treasuiy tax and loan accounts funds representing
checks of $10,000 or rrore received by collectors of internal revenue
on account of income taxes, excess profits taxes, and interest or penalties, including deficiencies and payments of estimated taxes. As a
result, there is no immediate impact on bank reserves resulting from
the heavy payment of taxes, since the commercial banks involved
simply transfer funds from the taxpa3^ers' accounts to their accounts
221052—53

130

19 52 REPORT OF THE SECRETARY OF THE TREASURY

with the Treasury and the Treasury withdraws such moneys as it may
need for current disbursement over a period of time.
Government losses in shipment.—The reported value of shipments
made by Government departments and agencies under coverage of the
Government Losses in Shipment Act, as amended (5 U. S. C. 134134h), amounted to $516,192,569,299 in the fiscal year 1952 as compared with $467,215,212,742 in the fiscal year 1951. Payments
from the fund during the year, including $35,106 on account of
redemption cases of United States savings bonds and armed forces
leave bonds, amounted to $36,615. Recoveries amounting to $7,902
were deposited to the credit of the fund during the fiscal year 1952,
leaving the net expenditure of $28,714 for losses. The cumulative
amount of estimated insurance premium savings to the Government
from the inception of the act in 1937, based on rates in effect at that
time, totaled $39,730,760. Further information concerning the
operation of this self-insurance plan by the Government will be
found in tables 101 to 105.
Investments oj trust and other junds.—The Secretary of the Treasur3^
is responsible under various provisions of law for the investment of
certain trust and other funds. The Division of Investments handles
the administrative work relatirig to such investments. Table 44
shows the various accounts for which the investments are made.
Withheld joreign checks.—As of June 30, 1952, delivery of Government checks to payees residing in certain foreign areas has been
prohibited for the following locations: Albania; Bulgaria; Communist-controlled China; Czechoslovakia; Estonia; Hungary; Latvia;
Lithuania; Poland; Rumania; the Union of Soviet Socialist Republics;
Germany, Soviet Zone of Occupation; and Germany, Soviet Sector of
Berlin. Copies of amendments dated February 19, 1951, and April
17, 1951, to Treasury • Department Circular Nb. 655, appear as exhibit 55, page 669, in the 1951 annual report.
In addition, delivery of checks to Nationals of Communist China
and North Korea is prohibited by foreign assets control regulations
issued by the Secretary of the Treasury under date of December 17,
1950, except to the extent that delivery has been authorized by
appropriate license.
Surety companies.—Under the act of Congress, approved July 30,
1947 (6 U. S. C. 8), the Secretary of the Treasury issues certificates
of authority to corporate surety companies to qualify them as sureties
on bonds and other obligations in favor of the United States. A list
,of the companies which are acceptable as sureties with information
as to the extent and with respect to their localities is published
annually on or about May 1 by the Treasury.
As of June 30, 1952, there were 136 companies holding certificates
of authority, qualifying them as sole sureties on recognizances, stipulations, bonds, and undertakings permitted or required by the laws of
the United States, to be given with one or more sureties. There were
also 8 companies holding certificates of authority authorizing them to
act only as reinsurers on bonds in favor of the United States. During
the year certificates of authority were issued to 10 companies qualifying them as sole sureties on Federal bonds and other obligations.
A total of 74,955'^of bonds and consent agreements was approved
as to corporate surety by the Treasury during the year, which is an

ADMINISTRATIVE REPORTS

131

increase of 18 percent over 1951. This increase was due primarily to
contract bonds occasioned by the defense program.
Deposits by Federal Reserve Banks under Section 16 oj the Federal
Reserve Act,^ as amended.—The amounts deposited into the Treasury
by the various Federal Reserve Banks representing interest levied
by the Federal Reserve Board under Section 16 of the Federal Reserve
Act, as amended (12 U. S. C. 414), on the basis of Federal Reserve
notes in circulation during the fiscal year 1952 totaled $277,651,923.
This included deposits for the second, third, and fourth quarters,
calendar year 1951, and the first quarter, calendar year 1952. Table
9 gives information with respect to comparative figures for prior years.
Management improvement.—Improvements in methods, procedures,
and use of labor-saving equipment resulted in dollar savings estimated
at $473,000 for the fiscal year 1952, or over 3 percent of the total
appropriations provided by Congress for administrative expenses of
the Bureau.
A portion of the savings was the result of improvements initiated in
earlier years, including extension of the use of mechanical equipment in
the preparation of checks and the maintenance of accounts mentioned
on page 91 of the 1951 annual report. New developments contributing to savings included, among others, a revised procedure for examination of the accoimts of regional disbursing officers, elimination or
revision of certain accounting forms and reports, improvement in the
procedure of issuing United States savings bonds purchased through
the payroll saving plan, and adoption of electric equipment for accounting for general fund revenues. Management projects to improve the
accounting and reporting of appropriations for administrative expenses
and investment activities of the Bureau were also undertaken.
Employee suggestions . for which awards were made under the
awards for suggestions program produced savings of approximately
$5,000. I n order to stimulate interest in the employee suggestions
program, publicity is being given outstanding awards.
A plan was put into effect early in the fiscal year under which some
area of management such as organization, procedures, reports, space,
safety, incentive programs, personnel utilizatioQ, and the like is given
particular attention each month according to a schedule worked out
in advance. In carrying out this activity, the Bureau has used as a
reference the Treasury Department Guide jor Appraisal oj Operations.
Savings from management improvement were used in meeting
increased workloads, a part of pay increases, and the cost of periodic
within-grade promotions. A total of $230,083 . returned to the
Treasury from appropriations for administrative expenses of the
Bureau is also attributed to management improvements.
Treasury loans, capital subscriptions, donations, contributions, interest, and
dividends

The Treasuiy made cash advances of $5,194,482,049 in 1952 to
Government corporations and agencies that are authorized to borrow
money for operations. Repayments and refundings to the Treasury
of $4,201,102,814 and cancellations of indebtedness amounting to
$454,162,507, as authorized by law, resulted in net advances by the
Treasury of $539,216,728. The Treasury held $9,635,881,038 of
bonds and notes issued by Government corporations and agencies as

132

1952 REPORT OF THE SECRETARY OF THE TREASURY

of June 30, 1952. Information relating to obligations held b3^ the
Treasury and transactions during the year are shown in tables 66, 67,
and 68.
Capital stock of Government corporations held by the Treasuiy
decreased by $20,716,000 during the fiscal 3''ear 1952 as a result of cash
payments in the amount of $21,716,000 and additional subscription
of $1,000,000. Cash pa3^ments of $3,000,000 were made also on
capital stock owned b3^ tlie Government but held b3^ the Department
of Agriculture.
During the fiscal year 1952, dividends, interest, andjike pa3^ments
received from Government corporations and other enterprises in
which the Government has a financial interest amounted to
$230,030,556. DetaUed information concerning these pa3^ments is
shown in table 78. The following paragraphs describe certain transactions of general interest relating to capital subscriptions, loans, and
similar items.
The Dehnse Production Act o'f 1950.—Section 304(b) of the Defense
Production Act of 1950, as amended (50 U. S. C. Supp. IV War App.
2094), authorizes the President to utilize the facilities of certain
governmental agencies in carrying out the defense fimctions assigned
pursuant to Sections 302 and 303 of the act. Under Executive Orders
Nos. 10161, 10200, and 10281 various.allocations were made against
the authorization contained in the act to borrow from the Treasuiy
not to exceed in the aggregate $2,100,000,000, an increase during 1952
of $500,000,000. During the fiscal JQ^T the Treasur3^ accepted
$617,764,855 face amount of notes and made advances to authorized
agencies in the amount of $242,660,935. Repayments totaling
$5,100,000 were received resulting in total net advances made b3^ the
Treasuiy to agencies of $237,560,935. As of June 30, 1952, the
Treasury had accepted $955,164,855 face amount of notes against
which there was due $395,460,935 representing net advances.
Mutual Security Agency.—The functions and responsibilities of the
Administrator for Economic Cooperation Administration were
transferred to the Director for Mutual Security by Section 502, subsection (b-2) of the act approved October 10, 195i (65 Stat. 378).
Pursuant to the act of June 15, 1951 (65 Stat. 70), the Treasury
accepted an additional note of the Director for Mutual Security in the
amount of $27,254,316. As of June 30, 1952, the Treasuiy had accepted $200,000,000 face amount of guaranty notes and $1,212,054,316
face amount of loan notes.
The terms of the agreement between the Mutual Security Agency
and the Treasury Department provide that the notes constitute allocations against which the Export-Import Bank of Washington may
draw as funds are required. As of June 30, 1952, the Banlv had
drawn $2,522,389 against the guaranty notes and $1,147,531,371
against the loan notes, and repaid $12,389 of the amount drawn
against the guaranty notes, and repaid $78,455 against the loan notes,
leaving $2,510,000 of guaranty notes and $1,147,452,916 of loan notes
held by the Treasuiy as of that date. Balances of $197,477,611 of
guaranty notes and $64,522,945 of loan notes on June 30, 1952, were
available to the Export-Import Bank.
Housing and Home Finance Agency.—Since the Federal Nationa]

ADMINISTRATIVE REPORTS

133

Mortgage Association and the function of making loans for prefabricated housing were transferred in September 1950 from the
Reconstruction Finance Corporation to the Housing and Home
Finance Agency, the operations of the Federal National Mortgage
Association have been financed by notes of the Housing and Home
Finance Administrator accepted by the Secretaiy of the Treasury. As
of June 30, 1952, the Treasury held notes of the Administrator of the
Housing and Home Finance Agenc3'^ in the amoimt of $2,075,779,115
for subsequent advances to the Federal National Mortgage Association, of which there were loans outstanding in the amount of $2,037,893,115. On August 8, 1951, the Board of Directors of the Federal
National Mortgage Association declared a dividend of $29,000,000 out
of the retained earnings as of June 30, 1951, payable on August 31,
1951, to the Housing and Home Finance Administrator. On August
31, 1951, the Administrator deposited this dividend of $29,000,000
into the United States Treasury.
Notes of the Administrator of the Housing and Home Finance
Agency for ^^i^refabricated housing'^ in the amoimt of $40,170,297 were
accepted by the Secretary of the Treasury through June 30, 1952,
agamst which there were loans outstanding in the amount of $32,170,297.
Pursuant to the provisions of the act approved July 15, 1949 (42
U. S. C. 1452(e)), notes of the Administrator of the Housing and Home
Finance Agency for ^^slum clearance'' in the amount of $25,000,000
were accepted by the Secretaiy of the Treasury through June 30, 1952,
against which there were loans outstanding in the amount of $10,OOOOOO (not including $2,000,000 repaid durmg the fiscal year).
^ Pursuant to the provisions of the act approved April 20, 1950 (64
Stat. 78), notes of the Administrator of the Housing and Home Finance
Agenc37^ for ^'housing loans for educational institutions" in the amount
of $5,000,000 were accepted by the Secretaiy of the Treasuiy through
June 30, 1952, against which there were loans outstanding in the
amount of $2,000,000.
Federal home loan banks.—Repayments in the amount of $10,000,000
were received in Jiih^ of 1951, which completed the retirement of all
capital stock held b3^ the Treasury. Dividends amounting to $62,500
on capital stock holdings of the Treasuiy in Federal home loan banlcs
were deposited in the Treasury during the fiscal year 1952 as miscellaneous receipts. A statement showing dividends and stock repayments b3^ banks appears as table 76..
Federal Savings and Loan Insurance Corporation.—In accordance
with Section 402 of the National Housing Act, as amended (12 U. S. C.
1725 (h)), the Corporation on July 24, 1951, retired capital stock held
b3^ the Treasur3^ in the amount of $6,716,000, leaving a balance of
$93,284,000. The Corporation also paid to the Treasury $1,875,000
representing interest on its capital stock at 1% percent on $100,000,000
par value capital stock held by the Treasury during the year ending
June 30, 1951.
Home Owners' Loan Corporation.—During the fiscal year 1952, the
liquidation of the Home Owners' Loan Corporation was completed.
Pursuant to Public Law 137, 82d Congress, approved August 31, 1951,
the Corporation transferred $75,000 of its surplus funds to the Home
Loan Banlc Board to take care of matters that may arise following the

134

1952 REPORT OF THE SECRETARY OF THE TREASURY

close of the Corporation's operations. On December 26, 1951, the
Corporation deposited the balance of its cumulative surplus funds,
which amounted to $193,589, into the United States Treasury.
The cumulative income reported by the Home Owners' Loan
Corporation from beginning of operations totaled $1,417,135,195,
while its operating and other expenses before losses were $1,065,049,900,
which resulted in a net operating income of $352,085,296. Losses of
$338,016,707, of which $336,548,216 represented losses on property
sales, produced a net profit of $14,068,589, after all acquired properties
had been sold, all mortgage loan and vendee accounts had been paid
in full or realized upon by sale or assignment, all investments and other
assets had been realized on, and all liabilities had been liquidated.
Of the net profit of $14,068,589, aU but the $75,000 retained by the
Home Loan Bank Board for final liquidation expenses has been
deposited into the Treasury.
.
Commodity Credit Corporation.—Under the act of March 8, 1938, as
amended (15 U. S. C. 713a-l), the Secretary of the Treasury is required
to make an appraisal as of June 30 of each year of the assets and
liabilities of the Commodity Credit Corporation to determine 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 to submit an estimate
and recommend that the Congress appropriate the funds necessary
to restore the capital impairment. In the event that any appraisal
shall establish that the net worth of the Corporation is in excess of
$100,000,000 such excess shall be deposited by the Corporation in the
Treasury as miscellaneous receipts. The act approved December 6,
1945 (59 Stat. 599), requires the Comptroller General to make an
annual audit of the financial transactions of the Corporation and to
furnish a copy of the audit report to the Secretary of the Treasury for
consideration in appraising the assets and liabUities for determining
the net worth of the Corporation in accordance with the provisions of
the act of March 8, 1938, as amended.
A statement showing restorations of capital impairment by appropriations or by cancellation of obligations of the Corporation
covering those years for which the appraisal determined that the net
worth of the Corporation was less than $100,000,000, together with the
appraisal dates and amounts of deposits into the Treasury for those
years when the appraisal established that the net worth of the Corporation was in excess of $100,000,000 appears in table 73.
The liabilities and capital of the Corporation on June 30, 1951,
exceeded the value of assets as determined by the Secretary of the
Treasury by $109,391,154. The Department of Agriculture Appropriation Act of 1953, approved July 5, 1952, appropriated that amount
to enable the Secretary of the Treasury to restore to the Corporation
the amount of its impaired capital as determined by appraisal of June
30, 1951.
The net charge against the Treasury for capital impairment from the
inception of the Corporation, including $109,391,154 under the act of
1953 covering the appraisal as of June 30, 1951, amounted to
$2,494,919,662.
The 1953 act also directs the Secretary of the Treasury to cancel
notes issued by the Corporation to the Secretary of the Treasury in the

ADMINISTRATIVE: REPORTS

135

amount of $182,162,250. This amount represents net costs to the
Corporation during the fiscal year 1951 for operations conducted under
the International Wheat Agreement Act of 1949 (7 U. S. C. 1641).
The 1953 act also directs the Secretary of the Treasury to discharge
indebtedness of the Corporation to the Secretary of the Treasury by
canceling notes of the Corporation to the Secretary of the Treasury in
the amount of $11,240,532 for funds transferred and expenses incurred
under the Agricultural Research Administration through the fiscal
year 1951 pursuant to authority granted in the Department of Agriculture Appropriation Act, 1951 (64 Stat. 661), relating to the Eradication of Foot-and-Mouth Disease program.
The Corporation paid into the Treasury during the fiscal year 1952
$1,875,000 as interest on its capital stock.
Production credit corporations.—During the fiscal year 1952 the
production credit corporations returned $3,000,000 to the Treasury
Department through the Department of Agriculture. This repayment, together with repayments made in previous years, reduced
the amount of capital stocked owned by the Government as of June
30, 1952, to $36,235,000.
Federal intermediate credit banks.—Pursuant to the requirements
contained in the Agricultural Credits Act of 1923, as amended (12
U. S. C. 1072), the Federal intermediate credit banks deposited
$299,524 in the Treasury during the fiscal year 1952. The act
requires each credit bank at the end of each fiscal year, after all
necessary expenses and costs of operation for the 3rear have been paid
or provided for, to apply its remaining net earnings to (1) making
up any losses in excess of reserves, (2) eliminating capital impairment, (3) creating reserves against unforeseen losses, and (4) paying
25 percent of the amount then remaining to the United States as a
franchise tax.
Federal Farm Mortgage Corporation.—Pursuant to Public Law 135,
82d Congress, approved August 31, 1951, the Federal Farm Mortgage
Corporation paid dividends of $14,000,000 into the Treasury during
the fiscal year 1952. This sum was credited as miscellaneous receipts
in the general fund.
Reconstruction Finance Corporation.—The act of May 25, 1948 (62
Stat. 261), requires an annual payment, within six months after the
end of each fiscal year, of the amount by which its accumulated net
income exceeds $250,000,000. Under this provision, the Corporation
paid into the Treasury on December 29, 1951, as miscellaneous receipts, a dividend on its capital stock amounting to $16,345,812.
Under the act of June 30, 1948 (62 Stat. 1187), the Secretary of
the Treasury was authorized to cancel notes of the Reconstruction
Finance Corporation in an amount equal to costs incurred by the
Corporation subsequent to June 30, 1947, for handling, storing, processing, and transporting critical materials to stockpiles. No notes
were canceled during 1952. Recoveries less related expenses of
national defense, war, and reconversion costs in the amount of
$113,609,841 were deposited in the Treasury as miscellaneous receipts
during the fiscal year 1952, as required by the act.
A statement showing all cancellations and recoveries by the Treasury on notes of the Reconstruction Finance Corporation is shown in
table 74.

136

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Export-Import Bank oj Washington.—On July 31, 1951, the ExportImport Bank of Washington paid a dividend of 2 percent on its
outstanding capital stock pursuant to a resolution of its Board of
Directors. This dividend, amounting to $20,000,000, was paid out of
net earnings of the Bank for the fiscal year ending June 30, 1951.
The payment was credited to miscellaneous receipts in the general
fund.
Smaller War Plants Corporation.—The Reconstruction Finance
Corporation, as the liquidation agency, paid $5,000,000 into the
Treasury for retirement of capital stock of the Smaller War Plants
Corporation. This payment reduced the amount of such stock held
by the Treasuiy as of June 30, 1952, to $39,400,000.
Donations and contributions.—Included in donations received during
the fiscal year there were received from a taxpayer amounts of
$22,413, $25,051, and $34,179 representing a voluntary return of
tax refunds for the fiscal years 1943, 1944, and 1945, respectively.
The total amoimt of donations credited to the general fund of the
Treasury in the fiscal year was $124,683. ^'Conscience F u n d "
contributions to the general fund in the fiscal year amounted to
$39,501. Among conditional donations to trust funds, specifically
authorized by law, a donation of $50,000 to the Library of Congress
was deposited in the Library of Congress Permanent Loan Trust
Account. This donation was for the purpose of sponsoring presentations of great literature.
Liguidation oj railroad obligations.—During the year the Treasury
received $11,385,555 representing proceeds from the sale of securities
of the Seaboard Air Line Railway Company which were acquired
under Section 210 of the Transportation Act of 1920 (41 Stat. 462 and
468). The Treasuiy also received during the fiscal year 1952 four
payments totaling $202,326 representing interest and dividends on
securities acquired by the United States in connection with loans which
were made to raUroads. A statement concerning the liquidation of
raUroad obligations appears as table 77.
International obligations

Credit to the United Kingdom.—Under the terms of the financial
agreement, dated December 6, 1945, between the United States and
the United Kingdom, loans were made by the United States to the
United Kingdom amounting to $3,750,000,000. Repayments on
the loans, together with interest at the rate of 2 percent, are to be made
annually beginning December 31, 1951. The first repayment of the
Government of the United Kingdom was made on December 31, 1951,
in the amount of $119,336,250, of which $44,336,250 applied to principal and $75,000,000 to interest on the loan.
Payments by Finland on World War I indebtedness.—The act of
August 24, 1949 (63 Stat. 630), provides that amounts paid by Finland
under the funding agreement of May 1, 1923, and the moratorium
agreements of May 1, 1941, and October 14, 1943, shall be placed in a
special deposit account which shall be available to the Department of
State to finance educational and technical instruction and training
in the United States for citizens of Finland, American books and
technical equipment for institutions of higher education in Finland,
and participation of United States citizens, in academic and scientific

ADMINISTRATIVE REPORTS

137

enterprises in Finland. During the fiscal year 1952 the Treasury
made available to the Department of State $396,179 received in payment of Finland's indebtedness.
Indebtedness oj World M^ars I and II.—As of July 1, 1952, the indebtedness to the United States from foreign governments accruing
from World War I amoimted to $16.7 billion, principal, and interest,
and the amoimts receivable under active agreements with foreign
governments in connection with World War I I amounted to $2.4
biUion.
The indebtedness of foreign governments to the United States, as
of July 1, 1952, arising from World War I amounted to $11,434,554,559 on account of principal and $5,279,247,730 on account of interest.
These amounts do not include the World War I indebtedness of
Germany, the principal of which amounts to $1,225,023,750 on the
basis of the par value of the reichsmark as of June 23, 1930. Tables
113 and 114 show the status of World War I indebtedness.
Foreign governments' inclebtedness t o ' t h e United States arising
from World War I I represents amounts receivable on lend-lease settlement agreements (collections on which are being handled b3^ the
Treasury), other lend-lease accounts, and surplus property sales
agreements. As of June 30, 1952, this indebtedness totaled $2,393,920,356 and includes $291,215,173 due the United States for the value
of silver transferred to foreign governments under the lend-lease
program which is to be repaid in kind. Details of this indebtedness
by countries are shown in table 115. Final settlement agreements
have not been reached with all foreign governments.
United States dollar collections made b37^ the Treasuiy from foreign
governments for reimbursable supphes and services furnished under
lend-lease and reciprocal aid agreements and surplus property sales
agreements negotiated by the Department of State during the fiscal
year 1952 amounted to $64,099,338, bringing the total collections to
$656,071,461.
The accounts of foreign governments under lend-lease and surplus
property were credited with foreign currency payments having a
United States doUar equivalent of $33,436,361.'
After making adjustments for credits reported by procuring agencies
during 1952, articles and services furnished under agreements as.
authorized by the Lend-Lease Act, as amended (22 U. S. C. 412),
amounted to $50,232,453,376 between March 11, 1941, and June 30,
1952.
Articles and services furnished by foreign governments to the
United States up to September 2, 1945, under reverse lend-lease
aniounted to $7,819,322,791. Between March 11, 1941, and June 30,
1952, funds received from foreign governments amounted to $1,876,973,792. Of this amount $1,391,182,635 has been covered into the
Treasury as miscellaneous receipts; $221,482,357 net has been allocated to the procuring agencies under the cash reimbursement program
after taking into account a decrease in allocations of $35,347; $174,201,233 has been returned to foreign governments; $88,299,000 was
reappropriated to the President by the act of June 30, 1944 (58 Stat.
627); $1,578,333 was reimbursed to other agencies; and the remainder
of $230,235 is being held in the Treasury pending final settlement of
certain accounts.

138

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Foreign currencies.—The Treasury provides central facUities for the
custody and disposition of excess foreign currencies that have been
acquired by certain agencies of the United States in connection with
sales of surplus property, lend-lease goods, Mutual Security. Agency
counterpart and guarantee funds, and other operations in foreign
countries. These currencies are sold to various other Government
agencies for United States dollar equivalent which is deposited as
miscellaneous receipts. During the fiscal year 1952, the deposits
amounted to $47,081,936. Section 32 (b) of the Surplus Property
Act of 1934, as amended (50 U. S. C. 1641 (2)), and the act approved
September 27, 1950 (64 Stat. 1059), provided for the use of such
foreign currencies for educational exchange programs and for international information and educational activities conducted between
the United States and certain foreign countries. The currencies in the
following statement were delivered in the fiscal year 1952 to the
Department of State without receipt of the equivalent amoimt in
Uniteid States dollars.
Country

Australia
Austria
:.-Belgium
-..
Denmark..
_._
E g y p t (bulk sales)
F r a n c e (account N o . 3 ) . .
G r e a t B r i t a i n (account N o . 2 ) .
Greece
India
Iran
Iraq
ItalyJapan
__
.__
Netherlands
New Zealand...
Norway
Pakistan
__,
Philippines
Thailand
_____
Turkey
_.
Total

.__.

Foreign currency

32,000 p o u n d s
82,476,000 schillings
7,500,000 francs
759,678 k r o n e r
138,864,000 p o u n d s
349,976,000 francs
357,301 p o u n d s
6,000,000,000 d r a c h m a s . .
1,903,920 rupees.__:
5,850,000 rials
23,141,966 d i n a r s
889,062,600 lire
136,261,720 y e n
950,000 guilders
41,053 p o u n d s
1,607,142 kroner'_
825,000 rupees
803,000 p e s o s . .
4,255,760 b a h t s
594,384 p o u n d s

Equivalent
dollar v a l u e
$103,296.00
3,172,116. 39
150,000.00
109,970. 00
400,000.00
1,000,000.00
1,000,000.00
400,000.00
399,725. 71
119,677. 51
65,000.00
1,422, 500. 00
376, 727.00
260,000.00
115,000. 00
225,000.00
250,000. 00
400,000.00
200,000.00
212,280. 00
10,370,291.61

. The amounts of foreign currencies held by the Treasury on June 30,
1951, transactions during the fiscal year, and balances on June 30,
1952, in foreign currencies and approximate United States dollar
values are shown in table 112.
Bonds oj the Republic oj the Philippines.—The Republic of the Philippines made a payment, on October 23, 1951, of $4,051,000 to the
United States Government. This represented the final payment by
the PhUippines to the Special Trust Account established in the
Treasury under the Philippine Independence Act, approved August 7,
1939 (53 Stat 1229), for the purpose of paying principal and interest
on pre-1934 Philippine Government bonds. The amounts of cash
and investments in the special trust account as of June 30, 1952, are
shown in table 110.
Under date of November 26, 1951, the Philippine Government
exercised its option to call for redemption all outstanding bonds of
the following issues: PhUippine Islands'^K percent Collateral Loan of

ADMINISTRATIVE REPORTS

139

1926 (1936-1956)—$151,500—called for redemption on January 1,
1952; PhUippine Islands 4K percent Collateral Loan of 1927 (19371957) Camarines Sur—$1,000—called for redemption on February 1,
1952; and PhUippine Islands 5 percent Gold Loan of 1925 (19351955)—$1,840,000—called for redemption on AprU 1, 1952.
American-Mexican Claims Commission.—Under the Convention
between the United States and Mexico, dated November 19, 1941,
the Government of the United States of Mexico agreed to pay, and
the Government of the United States agreed to accept, the sum of
$40,000,000 in United States currency, payable in annual installments
of $2,500,000, as the balance due from the Government of the United
States of Mexico in full settlement of the claims of American nationals
as adjudicated'^'by the American-Mexican Claims Commission. On
November 19, 1951, the Treasury received from the Government of
the United States of Mexico a further installment of $2,500,000, which
enabled' a further distribution of 6 percent on the principal amount
of each award, making a total distribution of 77.2 percent. A statement of the Mexican claims fund appears as table 106.
Mixed Claims Commission, United States and Germany.—The Settlement of War Claims Act of 1928 (50 App. U. S. C. 9), as amended,
provides for deposit into the German Special Deposit Account of
certain funds upon certification by the Department of Justice to the
Secretary of the Treasury of the amounts to be so deposited. During
the year, a further certification of $843,569 was made to the Secretary
of the Treasury for deposit into the German Special Deposit Account
which made these funds avaUable for distribution on the awards of the
Mixed Claims Commission. The number arid amount of awards-of
the Mixed Claims Commission certified to the Secretary of the
Treasury, the amount paid, and balance due through June 30, 1952,
appear in table 107.
International Claims Settlement Act oj 194-9.—The International
Claims Commission which was established in accordance with the
provisions of the act approved March 10, 1950 (64 Stat. 13), has been
conducting hearings and adjudicating certain, claims of the Government of the United States on its own behalf and on behalf of American
nationals against foreign governments, arising out of World War I I .
At the present time, the Commission is considering claims against the
Government of Panama and the Government of Yugoslavia. The
Treasury Department has been designated as the paying agent for
awards of the Commission. As of June 30, no awards had been
certified for payment.
Litvinof assignments.—In February 1952, there was received from
the Department of Justice the amount of $,1^023,732 representing a
compromise settlement of a number of civU actions brought by the
Department of Justice in behalf of the United States against an American bank to recover surplus deposit accounts of various nationalized
Russian banks and commercial institutions. This action arose out
of the assignments to the United States in 1933 by Serge Ughst,
Financial Attache and Custodian of Russian Property in the United
States, and by Maxim Litvinoff, Peoples' Commissar for Foreign
Affairs. The receipt of this amount brings the total of such collections
under the assignments to $8,815,744.

140

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Liquidation of war agencies

Except for the PhUippine War Damage Commission, there were
only a few transactions pertaining to the liquidation by the Bureau
of Accounts of the resiciual fiscal affairs of certain terminated war
agencies.
The Philippine War Damage Commission, which was created bythe Philippine Rehabilitation Act of 1946 (60 Stat. 128), ceased to
function Alarch 31, 1951. Pursuant to a letter from the President of
the United States to the Secretaiy of the Treasury, dated March 29,
1951, the Treasury Department assumed responsibility, effective
April 1, 1951, for completion of the liquidation of the fiscal affairs of
the Commission. The final liquidation of these residual affairs
involves payment of outstanding obligations, closing accounts, handling inquiries relative to private and public claims for property loss
in the Philippines during World War II, processing claims for the
proceeds of PhUippine war damage checks which were paid bearing
forged or unauthorized endorsements or for substitute checks to
replace those alleged to have been lost, destroyed, etc., and finally,
disposition of records. The inquiries and other correspondence
relating to these matters averaged 235 each month in the fiscal year
1952.
Fiscal Service—BUREAU OF THE PUBLIC DEBT
The Bureau of the Public Debt performs the administrative work
in connection with the managem.ent of the public debt, which, includes
the preparation of oft'ering circulars, instructions, and regulations
pertaining to each issue, the issuance of securities and the conduct or
direction of transactions in outstanding issues, the final audit and
custod37^ of retired securities, the maintenance of the control accounts
covering all public debt issues, and the keeping of individual accounts
with owners of registered securities and the issue of checks in pa.3^m.ent
of interest thereon. The Bureau of the Public Debt also audits the
redeemed United States paper currenc3^ and supervises its destruc-.
tion.
Two principal offices are m.aintained—one in Washington, D. C ,
for all functions relating to the issuing, servicing, and retiring of
public debt securities except those relating to savings bonds following
their issue to the public; the other in Chicago, 111., where the functions
consist of transactions relating to savings bonds after their issue to
the public. In addition to the two principal offices, three field regional
offices, located in. New York, Chicago, and Cincinnati, are maintained
for the purpose of decentralizing the auditing of redeemed savings
bonds.
Bureau admimstration

Management improvement.—During the fiscal year 1952 the Bureau
continued to extend the use of m^echanical labor-saving equipment
and to improve the operating m.ethods. Noteworthy attainm_ents
were the consolidation of the duties and fimctions of several operating
units; increased use of mechanical accounting equipment in maintaining control accounts; the further improvement of certain operating
procedures; and the revision or elimination, of many form.s.
In collaboration with the Office of the Treasurer of the United

ADMINISTRATIVE REPORTS

141

States, the procedure involving the receipt and processing of redeemed securities from Federal Reserve Banks was revised. The
securities are now forwarded directly to the Register of the Treasury
'rather than through the Office of the Treasurer of the United States.
In a continuing program, to discard those forms which have ceased
to be effective or fallen into disuse, 204 public debt form.s were declared
obsolete during the fiscal year 1952. Onl3^ 85 new public debt forms
were adopted, including those form.s which have been revised.
Several other management projects of major importance progressed
during the year to near completion and should be installed early in
fiscal 3^ear 1953. StUl others are in the planning stage with action to
be initiated in the near future.
Personnel.—On June 30, 1952, there were 3,888 employees on the
rolls of the Bureau of the Public Debt, as compared with 4,494 on
June 30, 1951. Effective November 30, 1951, the fimctions and the
117 employees of the Division of Savings Bonds charged with the
distribution of informational literature on savings bonds, the maintenance of mailing lists, and the conduct of the regular purchase program for savings bonds were transferred to the United States Savings
Bonds Division. Eff'ective December 31, 1951, all functions connected
with the examination and audit of distinctive paper mutilated in
process of printing were transferred from, the Division of Loans and
Currency of ^ this Bureau to the Bureau of Engraving and Printing,
and the Public Debt unit of 7 emplo3^ees which had handled this work
was abolished. Other principal changes because of reduced work
and improved operating procedures were decreases of: 94 em.ployees
in the Division of Loans and Currency and 34 emplo3^ees in the Office of
the Register, in Washington; 207 employees in the Division of Loans
and Currency and 81 employees in the Office of. the Register, in the
Chicago office; and 31 employees in the regional audit offices.
Bureau operations

The public debt.—A summary of public debt operations handled by
the Bureau appears on pages 66 to 78 of this report, and a series of
statistical tables dealing with, the public debt will be found in tables
11 to 29, and 37 to 42.
The public debt of the United States falls into two broad categories:
(1) public issues, and (2) special issues. The public issues are classified
as to marketable obligations, consisting chiefly of Treasur3'' bills,
certificates of indebtedness, Treasury notes, and Treasury bonds; and
nonmarketable obligations, consisting chiefly of United States savings
bonds. Treasury bonds of the investment series, and Treasury savings
notes.
During the fiscal year 1952 the gross public debt increased by
$3,883,201,970 and the guaranteed obligations held outside the Treasury increased by $16,338,177. An im.portant change in the composition of the outstanding debt during the year was the exchange of
$1,174,000,000 involving four issues of bank restricted, marketable
Treasury bonds for a like am.ount of nonmarketable Treasury bonds,
investment series. Total public debt issues, including issues in
exchange for other securities, amounted to $142,212,081,325 during
1952, and retirements amounted to $138,328,879,355. The following

142

1952 REPORT OF THE SECRETARY OF THE TREASURY

statement gives a comparison of the changes during the fiscal years
1951 and 1952 in the various classes of public debt issues.
Increase, or decrease

(-)

Classification
Fiscal
Fiscal
year 1951 year 1952
I n millions of dollars
Interest-bearing d e b t :
T r e a s u r y b o n d s , i n v e s t m e n t series.
T r e a s u r y savings notes
U . S. savings b o n d s . . .
M a r k e t a b l e obligations. _
Special issues
Other

13, 672
-655
36
-17,393
2,297
-216

-480
-1,206
113
2,490
3,086
7

T o t a l interest-bearing d e b t
M a t u r e d a n d d e b t bearing n o i a t e r e s t .

-2, 358
222

4,011
-128

-2,135

3,883

Total

._.

United States savings bonds.—These bonds are in registered form and
their issue and redemption represent by far the largest volume of
work for this Bureau. Maintaining both alphabetical and numerical
records of nearly 1.5 billion of these bonds, replacing lost or stolen
bonds, and handling and recording retired bonds involves a considerable administrative task.
Receipts from the sales of savings bonds during the year were
$3,925,352,925 and accrued discount charged to the interest account
and credited to the savings bond principal account amounted to
$1,207,020,499, a total of $5,132,373,424. Expenditures for redeeming
savings bonds, including matured bonds, aniounted to $5,109,304,753.
The amount of savings bonds of all series outstanding on June 30,
1952, including accrued discount and matured bonds, was $57,806,934,148, an increase of $23,068,671 over the amount outstanding on
June 30, 1951. Detailed information regarding savings bonds, will
be found in tables 30 to 35, inclusive, of this report.
During the fiscal year 1952, 76.0 million stubs representing issued
bonds of Series E were received for registration, making a total of
1,456.3 million, including reissues, received through June 30, 1952.
These stubs are sorted alphabetically by name of owner and microfilmed, and then are sorted in numerical sequence of their bond serial
numbers and microfilmed, after which the original stubs are destroyed.
The microfilms serve as permanent registration records. Of the
1,456.3 mUlion Series E bond stubs received as of June 30, 1952,
1,286.7 million have been completely processed and destroyed, leaving
a balance of 169.6 million stubs in process at various stages of completion. The following table shows the processing, at various stages, of
the registration stubs of Series E savings bonds..

ADMINISTRATIVE

143

REPORTS

S t u b s of issued Series E savings b o n d s u i Chicago oflace (in
millions of pieces)
Alphabetically
sorted

Period

Stubs
received Restricted F i n e sort
prior to
basis
filmmg 2
sort 1
C u m u l a t i v e t h r o u g h J u n e 30,1946.
Fiscal year:
1947 .
1948
1949
1960
-- - 1951
1952

Numerically
filmed

Destroyed
after
filming

1,042.3

958.9

536.4

317.9

1,022.1

265.6

76.8
61.7
66.2
67.8
66.6
76.0

120.4
72.4
68.6
91.1
60.5
72.2

37.9
323.1
290.6
88.1
66.2
67.3

120.1
318.4
382.8
115.3
63.8
57.1

76.1
66.2
68.9
.5
41.7
27.5

152.3
196.2
447.4
156.6
36.4
32.2

1,376.4

1, 293.0

1, 286. 7

1,456. 3 •

Total.

Alphabetically
filmed

1,434. 0

1,408. 5 .

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

The audit of retired savings bonds is conducted in the regional
offices of the Register of the Treasury. There were 82.4 million
retired savings bonds of all series received in the regional offices
during the year. Retired bonds are audited and then microfilmed,
after which the bonds may be destroyed. The bonds of all series
received in these offices have been audited, microfilmed, and destroyed
to the extent indicated in the following table.
R e t i r e d savings b o n d s of all series in regional oflSces (in millions of
pieces)
Period
Bonds
received
C u m u l a t i v e t h r o u g h J u n e 30, 1946
Fiscal year:
1947
__.
1948
1949
- 1950
_
1951
1952
TotaL

-_-_

Audited

Micro-.
filmed

Balance
unaudited

Balance
unfilmed

Destroyed

27.9

19.2

8.7

27.9

113.3
95.1
85.7
84.4
92.1
82.4

118.4
94.6
86.8
83.0
94.2
82.8

61.7
171.4
153.3
101.7
85.2

3.6
4.1
3.0
4.4
2.3
1.9

141.2
184.6
98.9
30.0
20.4
17.6

4.6
312.7
79.2
88.6

1 580. 9

579.0

663.3

1.9

17.6

• 485. 0

1 Includes 4.6 million F and G bonds, 11.0 million pieces of reissues, 6.0 million pieces of spoils, and 1.6
million pieces of unissued stock.

After the retired bonds have been audited in the regional offices, a
listing of the serial numbers is transmitted to the Chicago departmental office where the serial numbers are posted to numerical registers, and the postings are verified. The following statement sho,ws
the status of the posting of aU series of retired savings bonds.

144

1952 REPORT OF THE SECRETARY OF THE TREASURY
R e t i r e d savings b o n d s of all series in Chicago ofl&ce (in millions
of pieces)
Period

N u m b e r of
retii-ed
bonds
reported

C u m u l a t i v e t h r o u g h .Tune 30, 1946
Fiscal year:
1947
1948
1949
1950
'
.-•
...
1951
1952
Total

S t a t u s of posting
Posted

Verified

Unverified

Unposted

454. 2

384. 0

313.5

70.2

70.5

137. 9
99.5
. 92.5
82.6
89.8
85.5

195.7
105.2
96.8
81.2
90.7
88.1

256.5
110.8
94.9
82.2
93.4
88.2

12.4
6.7
2.4
3.8
2.9
.3

9.7
4 1
6.0
'5 0
2 3
2.2

1,042. 0

1, 041. 7

1, 039. 5

2 2

Of the 76.9 million Series A-E savings bonds redeemed prior to
release of registration and received in the regional offices during the
year, 75.5 million, or 98 percent, were redeemed by over 17,000 paying
agents, who were reimbursed for this service, in each quarter year, at
the rate of 15 cents for the first 1,000 bonds paid and 10 cents each for
all over the first 1,000. The total amount paid to agents on this
account during the year was $9,410,464, which was at an average rate
of 12.46 cents per bond.
The following table shows the number of issuing and paying agents
for Series A-E savings bonds, by classes.
Post
offices

J u n e 30

.Banks

Building
a n d savings a n d
loan

Credit
unions

Companies
operating All others
payroll
' plans

Total

Issuing agents
1947
1948
1949
1950
1951
1952

...

._
._

25, 420
25,179
24,944
25,060
24,720
24,434

15,178
15,178
15, 205
15, 225
15, 276
15, 333

1,856
1,706
1,621
1,557
1,551
1,559

719
615
565
522
511
503

2,910
3,289
3,192
3,052
3, 071
3,090

1,320
605
595
550
640
594

47,403
46 572
46,122
45, 966
45, 769
45, 513

53
50
64
67
59
57

16, 052
16, 508
16, 624
16, 691
16, 866
17, 023

P a y i n g agents
1947
1948
1949
1950
1951
1952

- . ...

15,176
15, 527
15, 559
15, 623
15, 747
15, 851

683
786
863
874
922
976

140
145
138
137
138
139

During the fiscal year 1952, 8,550,528 Series G bond interest checks
were issued with a value of $473,812,501. This is a decrease of 161,969
checks from the number issued during 1951, but an increase of $4,713,114 in dollar value.
There were 40,799 applications during the year for the issue of
duplicates of lost, stolen, or destroyed savings bonds, in addition to
1,906 cases on hand at the beginning of the year, making a total of

ADMINISTRATIVE

145

REPORTS

42,705 cases, of which 10,022 were credit cases referred to Washington
for settlement. In 11,900 cases the bonds were recovered, and in
18,971 cases the issuance of duplicate securities was authorized. On
June 30, 1952, 1,812 cases remained unsettled.
Registered accounts other than savings bonds.—During the year 23,000
individual accounts covering publicly held registered securities other
than savings bonds were opened and 49,000 were closed, making a
total of 317,000 such accounts open on June 30, 1952, covering registered securities in the principal amount of $21.8 billion. A total of
621,000 interest checks was issued to owners of record during the
year, which was a decrease of 29,000 from 1951.
Armed jorces leave bonds.—Through June 30, 1952, armed forces
leave bonds aggregating $2,089,465,000 in face value had been issued
and $2,012,105,000 had been retired, leaving a balance of $77,360,000,
all matured, outstanding on that date. The issues and retirements of
armed forces leave bonds montlJy during 1952, on the daily Treasury
statement basis, are shown in table 22. The following statement
shows the issues, retirements, and outstanding for selected periods.
Period

In thousands of dollars
Oct. 1, 1946, to Apr. 30, 1947..
May 1, 1947, to Aug. 31, 1947.
Sept. 1, 1947, to Oct. 31, 1947.
Nov. 1, 1947, to June 30, 1948
July 1, 1948, to June 30, 1949.
July 1, 1949, to June 30, 1952.
Total

1. 721, 046
205, 667
90, 568
63, 866
7,490
940

38,151
23, 457
1 1, 047, 022
408, 252
171,^054
324,170

2, 089, 465

2, 012,105

1, 682, 893
1,864,993 ,
908, 540
564,153
400, 589
2 77, 360

1 Redemption on and after Sept. 1,1947, at owner's option, was provided in amendment to Armed Forces
Leave Act, approved July 26, 1947.
2 Matured.

The total number of armed forces leave bonds issued, including
reissues, through June 30, 1952, was 10,118,677 and the number retired was 9,744,730. Ofthe total bonds issued, 6,927,881 were issued
by the Army, 2,611,757 by the Navy, 415,354 h j the Marine Corps,
157,540 by the Coast Guard, and 6,145 by the Division of Loans and
Currency which now makes all further issues.
Redeemed currency.—On July 1, 1951, the Division of Loans and
Currency (Washington) had on hand 26,086'' unaudited bundles
(4,000 half-notes each) of United States currency that had been retired
from circulation as unfit. During 1952, 321,108 bundles were received,
an increase of 45,582 bundles from 1951, and 327,574 bundles were
audited, leaving a balance of 19,620 unaudited bundles on hand on
June 30, 1952.
•• Revised.

221052—53-

-11

146

1952 REPORT OF THE SECRETARY OF THE TREASURY

The Destruction Committee supervised the incineration of redeemed
canceled currency during the fiscal year as follows:
Class of currency

Pieces

Gold certificates
Silver certificates
United States notes
Federal Reserve notes
Federal Reserve Bank notes
National bank notes
Fractional currency
Total

_:.

Value

60,126
1, 254, 456, 641
45,106, 604
362, 529, 776
1, 012, 708
265, 214
1,038

$1, 431, 580
1, 757, 705, 828
186, 446, 895
4, 276, 473, 775
22, 989, 656
4, 014, 269
211

1, 653, 420, 906

6, 249, 061, 213

Fiscal Service—OFFICE OF THE TREASURER OF THE UNITED STATES

The Office of the Treasurer of the United States is essentially a
banking facility of the Government. The responsibilities of the
Treasurer include the receipt of all public moneys; custody, issue, and
redemption of United States currency and coin; payment of Government checks; custody of securities deposited in the Treasury as
collateral or for safekeeping; and payinent of principal and interest
on the public debt. The Office of the Treasurer of the United States
prepares the Daily Statement oj the United States Treasury, which
recapitulates all transactions in the accounts of the Treasurer, and
issues a monthly statement of the public debt and the circulation
statement of United States money.
Management improvement.—In keeping with the Secretary's policy,
the Office of the Treasurer actively pursued its management improvement program during 1952. Definite progress was made toward
improving management practices, programs, organization, operations,
and methods which resulted in more efficient operations, better service
to the public, and substantial monetary savings. Savings from these
sources enabled this office to absorb in excess of $70,000 of increased
pay requirements not included in the appropriation for 1952, and will
result in a reduction in future budgetary requirements estimated at
$200,000 annually.
Among the most noteworthy improvements were changes involving
expansion of the use of punch card checks to be processed mechanically
in lieu of paper checks which require manual processings^ a change in
method of shipping card checks from Federal Reserve JBanks, and a
transfer of security audit functions which resulted in a reorganization
within the Division of Securities.
Money received and disbursed by the Treasurer.—Moneys collected
by Government officers are deposited with the Treasurer at Washington, and in Federal Reserve Banks and designated Government
depositaries for credit of the account of the Treasurer of the United
States, and all payments are charged against this account. Total
receipts and payments for 1951 and 1952 are shown in the following
table on the basis of the daily Treasury statement.

ADMINISTRATIVE

147

REPORTS
1951

Receipts:
Budgetary (net)i.
T r u s t accounts, etc.2
Public debt 3

._.
,
._.,

Subtotal
_
B a l a n c e i n g e n e r a l f u n d beginning of year
TotaL._

__..

1952

$48,142, 604, 532.62
7, 796, 270,893. 06
138,484,702,166. 36

$62,128, 606, 579. 62
8,806,816, 681.86
142, 212,081, 326.16

194, 423, 577, 692.03
6, 617,087, 691. 66-

213,147, 603, 686. 63
7, 356, 678,123.19

199, 940, 666, 283. 68

220, 604,081, 709.72

44,632,821, 908. 37
3, 944, 619, 506. 63

66,146, 246, 957. 62
4, 961, 571, 632. 46

Expenditures:
Budgetary*.
T r u s t accounts, etc.2
-.
.
I n v e s t m e n t s of G o v e r m n e n t agencies in p u b h c d e b t securities (net)
'-...
Sales a n d r e d e m p t i o n s of obligations of G o v e r n m e n t agencies
in m a r k e t (net)
_.
._.
Clearing a c c o u n t for o u t s t a n d i n g checks, e t c .
Public debt 3
....i

3, 656, 542, 292. 99

3, 636,132, 200. 67

5 384,114, 384. 92
214,140, 134. 96
140,620, 077, 702. 46

72,034, 647.85
401,389, 312.15
138, 328,879, 354. 66

Subtotal
B a l a n c e i n general fund a t close of year

192, 584,087, 160. 49
7,366,678, 123.19

213, 636, 254, 105. 41
6, 968,827, 604. 31

199,940,665,283. 68

220, 504,081,709.72

Total._

.........
-J

1 T o t a l b u d g e t receipts less a m o u n t s a p p r o p r i a t e d to F e d e r a l old-age a n d s u r v i v o r s i n s u r a n c e t r u s t fund
a n d refunds of receipts. See t a b l e 1, footnote 3. F o r details of receipts for 1952, see t a b l e 3.
2 F o r details for 1962, see t a b l e 4.
3 F o r details for 1952, see t a b l e 22.
4 See t a b l e 1, footnotes 3 a n d 4. F o r details for 1962, see t a b l e 3.
5 Excess of credits ( d e d u c t ) .

Assets and liabilities of Treasurer's account.—The assets of the
Treasurer consist of gold and silver bullion, coin and paper currency,
and deposits in Federah Reserve Banks anci commercial banks designated as Government depositaries.
A summary of the assets and liabilities in the Treasurer's account
at the close of the fiscal years 1951 and 1952 is shown in table 43.
Gold.—Gold receipts during 1952 amounted to $1,736 million and
disbursements totaled $145.4 million, a net increase of $1,590.6
million. This increase brought the total gold assets to $23,346.3
million on June 30, 1952. Liabilities against these assets were
$22,181.2 million of gold certificates and credits payable in gold
certificates and $156.0 million for gold reserve against currency.
The balance, $1,009.1 mUlion, was in the general fund on June 30, 1952.
Credits during the year to the gold increment account, as a result
of the revaluation of gold in relation to the dollar, amounted to
$43,568.71. This makes a total dollar increment from 1934 through
the fiscal year 1952 of $2,819,345,691.62. '
Silver.—During the year 27.7 million ounces of silver bullion,
which had been carried in the general fund at a cost value of $25.1
million, ^yas monetized at a monetary value of $35.8 million. This
$35.8 million increase,in silver assets was offset by a decrease of
$11.9 mUlion in holdings of sUver dollars, making a net increase of
$23.9 million in assets during the year. As of June 30, 1952, the
sUver assets of the Treasurer (exclusive of subsidiary coin and bullion
held in the general fund at cost and recoinage value) amounted to
$2,391.0 mUlion.
LiabUities against silver at the end of the year amounted to $2,344.2
million for silver certificates outstanding and $1.1 million for Treasury
notes of 1890 outstanding, leaving a net balance of $45.7 mUlion in
the general fund.

148

19 52 REPORT OF THE SECRETARY OF THE TREASURY

The sUver bullion held in the general fund at cost value (exclusive
of the $45.7 million at monetary value) decreased from $93.1 million
on June 30, 1951, to $68.0 mUlion: on June 30, 1952. This decrease
of $25.1 million is accounted for as follows: $35.1 million net purchases
of silver less $25.1 million of sUver monetized and less $35.1 million
of sUver used for coinage.
Subsidiary silver and minor coins.—Shipments of subsidiary sUver
and minor coins from United States mints during the year for circulation usageamounted to $88,106,083.43 ascompared with $67,217,312.83
the year before. The following table shows the shipments by denominations.
Denomination
Half dollars
Quarters..
Dimes
Nickels.
Cents
Total

1-.

1951
..

.._
_.
_-

1952

$14,301,022.00
19,116,191. 25
• 17,6.30.971.80
4,818.127. 75'
11, 351,000.03

$26, 542,895.60
23, 715, 260.50
24, 739, 728. 30
4, 424, 789.75
8. 683,409.38

67, 217, 312.83

88,106,083.43

Uncirculated coins.—Prior to the year 1951 it had been the practice
of the Treasurer to furnish sets of uncirculated coins, consisting of each
of the different kinds of coins produced at each mint during the preceding calendar year, to coin collectors at the cost of the face value of
the coins plus the cost of postage. In the interest of economy, this
practice was discontinued for the jesn beginning January 1, 1951.
However, because the public expressed the desire that this service
be continued, the Acting Secretary of the Treasury issued regulations
on November 26, 1951, governing the distribution of uncirculated
coins effective January 1, 1952, under which the Treasurer now furnishes sets of uncirculated coins for collection purposes, with a limitation of one set to each purchaser. There is- a charge, which in
addition to the.cost of the face value of the coins in a set includes the
cost of postage plus a fee which is fixed annually based upon the
estimated direct and indirect cost to the Government of the special
work involved in furnishing this service. The action of the Treasury
imposing a fee for this special service was taken pursuant to the authority contained in Title ^V of Public Law 137, approved August 31,
1951. Each set consists ordinarily of two of each of the coins other
than commemorative and proof coins, struck at each of the coinage
mints during the preceding year and is available from January 1 to
March 31 of each year, if a sufficient supply of coins is available to fill
the requests received,
Paper currency.—Under the laws of the United States the Treasurer
is the agent for the issue and redemption of United States currency
and coin.
Table 83 shows by class and denomination the value of paper currency issued and redeemed during 1952, and the amounts outstanding
at end of the fiscal year.
The Treasurer's Office employs a smaU group of women who have
developed a rare facility for identifying any type of United States
currency by engraving designs alone and who must have infinite

ADMINISTRATIVE

149

REPORTS

patience in piecing together fragments of burned and mutUated currency. These employees identify currency that has been mutilated
in any manner. Identification must be by kind, genuineness, denomination, and amount represented. For this work the only tools
provided are pins, needles, electric lights, and magnifying glasses.
This unit annually gives service to approximately 45,000 individuals
whose currency has suffered mutilation of one form or another.
Many interesting facts are associated with the redemption of mutilated
currency of which the following cases, with fictitious names, are
representative examples.
In the year 1941 Mrs. John Brown died and was survived by her
80-year-old husband and by her son. Sometime after the death of
Mrs. Brown, her husband suffered a stroke and was unable to move,
write, or talk before he died. Mr. and Mrs. Brown had been known
to have financial resources but after Mr. Brown's death his son could
not locate any assets, or records of any, although a thorough search
was made. On Memorial Day 1951, the son went to the cemetery
where liis mother iiad been buried. In arranging the grave the son
unearthed a metal container which held a number of paper bUls,
currency of the United States. Further investigation disclosed additional containers of United States paper currency. The currency was
believed to have been put there for safekeeping by the son's father
who because of his illness could not disclose its whereabouts. The
currency had deteriorated and had been partially destroyed, as only
a light covering of earth protected it. The son had no knowledge as
to the amount involved since the currency was in such a state of
deterioration. The Treasurer's Office received and examined the
currency, and paid the son $23,622.
Early in March 1952, Mr. William Black who lived alone in a small
house in North Carolina decided to go on a trip. Mr. Black had
approximately $600 in cash which he did not want to take along and
thought that he had a safe place to conceal the money at home.
He placed the currency in a small glass bottle which he then put in
the fiue of a heater. When Mr. Black had completed his trip and
returned home, he started a fire in the heater. Sometime later he
remembered the currency and hurriedly put out the fire. Upon
extracting the bottle he found the currency was severely charred and
encased in molten glass. This currency was received and examined
by the Treasurer's Office and Mr. Black received a check for $570.
A comparison of the amounts of paper currency of all classes issued,
redeemed, and outstanding, follows:
Fiscal year 1952

Fiscal year 1951
Pieces
O u t s t a n d i n g a t beginning of
year
...
Issues d u r i n g year
R e d e n i p t i o n s d u r i n g ^^^ear
O u t s t a n d i n g a t e n d of year

2, 762,363,086
1, 924, 832, 957
1, 696, 213, 548
2, 990. 982, 495

Amount

$29, 506,148, 063
8, 502,179,000
7, 548, 778, 760
30,459, 548,303

Pieces

2, 990, 982,495
1, 905, 670, 522
1, 778, 671,397
3,117, 981, 620

Amount

$30,459, 548,303
9, 035, 267,000
7,873,163,479
31,621,651,824

For further details on stock and circulation of money in the United
States, see tables. 79 to 83.

150

19 52 REPORT OF T H E SECRETARY OF T H E TREASURY

Depositaries.—The following table shows the number of each class
of depositaries and balances at the end of the year.
Number
of depositaries 1

Class

Deposits to the
credit of the
Treasurer, U, S.,
June 30, 1962

Federal Reserve Banks and branches
:
Other banks in continental United States:
General depositaries
Special depositaries. Treasury tax and loan accounts
Insular and territorial depositaries
Foi-eign depositaries

$687,489, 399. 02
364, 466,340. 56
5,106,126,343.30
42, 724,134.46
52,395,553.60

Total

6, 243, 201, 770. 94

12, 618

1 Does nof include limited depositaries which have been designated for the sole purpose of recei ving deposits made by Government oflicers fbr credit in their oflicial checking accounts with such depositaries and
which are not authorized to accept deposits for credit of the Treasurer of the United States.

For details on the administrative work relating to designation of
depositaries, see page 129.
Checking accounts oj disbursing officers and agencies.—As of June 30,
1952, the Treasurer maintained 4,523 checking accounts of disbursing officers and Federal agencies, including those maintained at the
Federal Reserve Banks as fiscal agents of the United States. The
number of disbursing officers' accounts by classes as of June 30, 1951
and 1952, and the number of checks paid during the fiscal years 1951
and 1952 were as follows:
1951
Number of
disbursing
oflicers'
accounts

Disbursing officers

Treasury.- .
Army
Navy
__
Air Force
Other ._ .

Total .

. . .
•.

1952

Number of
checks paid

Number of •
disbursing
officers'
accounts

Number of
checks paid

1,383
555
1,639
242
858

178, 837, 722
28, 976, 621
26, 250, 702
8, 559,103
25, 219,190

623
491
1,784
330
1,295

189 555 121
37, 527,368
35 303 987
17, 536, 980
25,402 121

4,577

267, 843, 238

4,523

305 325 577

Of the 305,325,577 checks paid in the fiscal year 1952, 246,938,239
were in the form of card checks. There were 227,197,514 checks
paid by the Federal Reserve Banks acting as fiscal agents of the
Treasurer and the remaining 78,128,063 were paid by the Treasurer
in Washington.
The amount to the credit of checking accounts of disbursing officers
and agencies on the books of the Treasurer of the United States on
June 30, 1952, was $80,426,656,555.69 as compared with $54,814,638,470.16 on June 30, 1951.
Check claims.—During the year the Treasurer of the United States
issued 25,419 checks totaling $2,382,126.29 in settlement of claims
for the proceeds of checks which had been paid bearing forged or un-

ADMINISTRATIVE

151

REPORTS

authorized endorsements. The Chief Disbursing Officer issued 45,047
substitute checks totaling $9,404,940.31 to replace unpaid checks
which, it was claimed, had not been received, or were lost, destroyed,
etc. Many additional claims were received but not honored because
they were not well founded. Cases involving forgeries are investigated by the United States Secret Service. For information on check
forgeries see the report of the United States Secret Service.
Treasurer's Cash Room.—The commercial checks, drafts, postal
express money orders, etc., deposited by Government officers with
the Treasurer's Cash Room in Washington for collection aggregated
3,872,558 items for the fiscal year 1952, as compared with 3,364,607
items for the fiscal 3^ear 1951.
Treasurer's Securities Division.—The public debt securities and
interest coupons examined by the Division of Securities of the Treasurer's Offi.ce were as follows:
Pieces
1951
Marketable securities:
Principal
Interest coupons
Nonmarketable securities:
Armed forces leave bonds
United States savings bonds..
United States savings stamps.
Other
Total

1952

, 483,879
187,099

816, 785
377,004

3,462

56,468
4,598
182, 808

4,114
46, 218
5,060
114, 218

1,917,304

1,362,399

NOTE.—Interest coupons and securities paid by Federal Reserve Banks are sent directly to the Register
of the Treasury by the Federal Reserve Banks.

The Treasurer issued and redeemed the following savings bonds
during the fiscal years 1951 and 1952.
.
1952

1951
Number
Issues: i
E..F
G

-..___
._..

Total

Amount

Number

Amount

59. 644
679
1,481

$3,420,018. 75
361, 989. 50
2,727,400.00

54,844
213
1,167

$2,832, 900. 00
146, 205.60
1, 634, 500. 00

61, 604

6, 509,408.25

56,224

4, 513, 605. 50

8,719
37, 964
2, 501
6, 284

1,968,491.75
2, 609,126.66
2, 676, 664.42
6, 718, 300.00

1, 601
36, 274
2,066
6,209

385,050. 00
2, 967, 111. 99
1, 974, 492.29
6, 287,488.00

56, 468

13, 971, 672.82

46,150

11, 614,142.28

Redemptions: i
E
F
G.._
. Total

_
-

1 For the most part United States savings bonds are issued and redeemed by issuing and paying agents
throughout the country (see p. 144).

152

1952 REPORT OF T H E SECRETARY OF T H E TREASURY

Savings bonds placed in safekeeping with the Treasurer and then
withdrawn were as follows:
Number
1951

•

1952

673.639
58; 603

622,495
53,930

W i t h d r a w n frorn safekeeping

732, 242
109, 747

676, 425
81, 629

I n safekeepmg a t end of year

622,495

594, 796

I n safekeeping a t beginning of year
P l a c e d i n safekeeping-.-

Securities held in sajekeeping.—The face vialue of securities held by
the Treasurer in safekeeping on June 30, 1951, and June 30, 1952, is
shown in the following table.
June 30, 1961

Purpose for which held
To secure deposits of public moneys in depositary banks
To secure depo.sits of postal savings funds
For District of Columbia:
Teachers' retirement and annuity fund
Waterfund
:
Other
:
United States savings bonds held for various depositors
For the Board of Trustees, Postal Savings System
For the Secretary ofthe Army
For the Secretary of the Treasury:
Foreign obligations (World War I)
Obligations on account of sales of surplus property
Capital stock and obligations of Government corporations and
agencies
Other
. For Federal Deposit Insurance Corporatiou
For Attorney General L
-.
Miscellaneous
.
.
i
.
Total

June 30, 1952

$346,895,000
21, 736, 000

$406, 778,400
32, 307,100

18, 444, 000
1,773,000
757, 270
48,883, 64.0
2,168,019, 900
6,895,480

20,260, 000
1,773,000
5, 849, 270
46, 735, 600
1, 674, 977,160
6, 595,480

12,071,724,757
46, 737, 095

12,071, 614, 757
46, 737, 095

9,661,911,937
1, 872, 418,836
1, 221,175, 000
21,151,134
103. 765, 687

9, 685,473,064
2. 766,474, 216
1,253,407,000
21,151,134
106, 369, 589

27, 612, 288, 736

28,146, 502, 865

1 Noninterest-bearing participating certificate for funds deposited in German special deposit account.

Servicing oj securities jor other Federal agencies.—In accordance with
agreements between the Secretaiy of the Treasury and the ses^eral
Government corporations, agencies, and insular possessions the
Treasurer of the United States acts as special agent fo'r the payment
of principal and interest on their securities (including pre-1934 bonds
of the PhUippine Government). The amounts of such pa3^ments
during the fiscal year 1952, on the basis of the daUy Treasury statement, were as follows:

Federal home loan banks
Federal farm loan bonds
Federal Farm Mortgage Corporation...
Federal Housing Administration
Home Owners' Loan Corporation
Philippine Islands
.. .. .. .. ..
Puerto Rico
Total.

Coupon
interest

Principal

Interest paid
in cash

Registered
interest

$838. 915, 000
197,884, 800
115, 200
18, 507, 250
288, 225
3,164, 500
262, 000

$10, 595, 203. 36
2,165. 75
304.40
202, 729.14
260. 00
3,408.75
2, 345. 00

1, 557, 269. 33
9, Oil. 25
88, 585.00

27, 443.46
913, 326. 00
332, 797. 50

1, 059,136, 975

10; 806, 416.40

1, 690, 548. 58

13,853, 203.81

$35, 683.00

$12, 569,116. 28
10,521.58

ADMINISTRATIVE

153

REPORTS

Bureau of Internal Revenue
The Bureau of Internal Revenue is responsible for the collection of
the internal revenue and for the enforcement of the internal revenue
laws and certain other statutes. These other laws include the Federal
Alcohol Administration Act (49 Stat. 977), as amended (27 U. S. C.
and Sup. 201-212); the Liquor Enforcement Act of 1936 (49 Stat.,
1928, 27 U. S. C , 211-228); and the Federal Fhearms Act (52 Stat.,
1250, 15 U. S. C , 901-909).
Some of the major aspects of the Bureau's operations are discussed
herein. A more detaUed account will be found in the Annual Report
oj the Commissioner oj Internal Revenue jor 1952.
Collections

Internal revenue collections for the fiscal year 1952 totaled $65,009,392,617, an increase of 28.9 percent over the total for the preceding year, and the largest amount of internal revenue ever collected
during any year. Collections of all income and employment taxes
were substantially above last year, while miscellaneous internal
revenue collections increased in all categories except stamp taxes and
manufacturers' excise taxes.
Collections by tax sources for the fiscal years 1929-52 are shown in
table 7 in the tables section of this report. A comparison of collections from the principal sources of tax revenue for the fiscal years
1951 and 1952 follows:
Fiscal year
1961

Fiscal year
1952

Source

P e r c e n t increase, or decrease (—)

I n t h o u s a n d s of dollars
I n c o m e a n d e m p l o y m e n t taxes:
Corporation income a n d profits
I n d i v i d u a l income a n d e m p l o y m e n t :
I n c o m e a n d self-employment tax n o t w i t h h e l d
Withheld taxes!._.
U n e m p l o y m e n t insurance
T o t a l income a n d e m p l o y m e n t
Miscellaneous internal r e v e n u e :
E s t a t e a n d gift taxes
L i q u o r taxes i
Tobacco taxes
S t a m p taxes
M a n u f a c t u r e r s ' excise taxes
Retailers' excise taxes
Miscellaneous taxes 12___
T o t a l collections J

14, 387, 569

21,466,910

9, 907, 539
16, 480, 297
236, 952

11, 545,060
21, 933,694
259,616

lo. 5
33.1
9.6

41,012,357

55,,205,280

34.6

729, 730
2, 546,808
1,380,396
93,107
2,383, 677
457,013
1,842, 598

833,147
2, 549. 088
1, 566,162
84,996
2, 348,914
476, 530
1, 947, 276

14.2
.1
13:4
-8.7
-1.6
4.1
5.7-

50, 445, 686

65,009,393

28.9

1 Excludes collections for credit to t r u s t accounts.
2 I n c l u d e s repealed taxes.

Workload

The Bureau's worldoad continued its steady climb of the past few
years as 55 million taxpayers filed nearly 90 million tax returns of all
types during the fiscal year 1952, in addition to 200 million directly
related information documents. The taxes reported on these returns
were assessed and accounting operations were performed in connection with the amounts paid in. In addition, the income tax liability
was computed for more than 14 million taxpayers ffiing returns on

154

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Form 1040A, and income tax refunds and credits were scheduled for
thefnearly 30 million individuals whose prepayments exceeded their
liabilities.
During the fiscal year 1952 a preliminary inspection of 74 million
returns was made to select those to be examined. Since it is neither
necessary nor possible to make a thorough examination of all returns
ffied, the selective process is intended to channel to the investigative
forces the returns which are believed to be most in need of correction
from the standpoint of noncompliance with internal revenue laws.
Of the returns considered, 4,564,673 were selected for thorough examination, including those returns requiring investigation because of
taxpayers' claims, offers in compromise, or other mandatory adjustments. A more comprehensive discussion of the audit activities appears in the ''Enforcement Activities" section of this report.
In addition to the processing of the enormous quantity of returns
and related information documents, the Bureau's workload includes
the disposition of large numbers of claims for adjustments based on
Section 722 and the various ''carry-back" provisions of the Internal
Revenue Code. Under the provisions of Section 722, which allows
relief from excess profits tax for corporations under certain circumstances, there had been filed as of the close of the year a cumulative
total for World War I I excess profits tax years of 54,642 applications
for excess profits tax reductions amounting to more than $6 bUlion.
There were 5,354 such claims totaling $3 billion stiU pending on June
30, 1952. ''Carry-back" allowances of approximately $90 mUlion
were made during the year under the "quick refund" provisions of
the Tax Adjustment Act of 1945.
Although much less numerous than the returns to be processed,
these "Section 722 claims" and applications for "carry-back" adjustments are of such complexity and importance that they require the
full-time attention of a large number of the best-qualified technicians
in the Bureau. However, the work of adjusting Section 722 claims
is nearing completion. As of June 30, 1952, there were only 102
applications on which examination or conference work was not
completed. The remaining 5,252 cases were awaiting final review,
pending before the Tax Court, or awaiting some administrative
action.
Enforcement activities

The most significant achievement during the fiscal year 1952 in the
Bureau's enforcement activities was the further development of the
program to insure that special attention is given the tax returns of
persons allegedly engaged in illegal activities. About 2,100 of the
Bureau's best qualified investigative personnel were assigned to
"racket squads" for this purpose. Master lists compiled from all
available sources contained on July 1, 1951, the names of 27,734
individuals allegedly engaged in illegal activities and therefore scheduled for investigation. Although 19,489 cases were closed during the
fiscal year many additional cases were added to the lists and there
were stiU 20,723 cases awaiting final investigative action as of June
30, 1952. Indictments returned against alleged "racketeers" numbered 392, and 229 individuals were convicted.

155

ADMINISTRATIVE REPORTS

The total number of fraud investigations completed during the
fiscal year 1952 was 3,872, including those racketeer cases in which
fraud was suspected. Prosecution was recommended in 1,247 cases,
while cash penalties of a civil nature without prosecution were recommended in 1,597 cases. During the year indictments were returned
against 1,063 defendants but indictments against 27 were refused by
the grand juries. In the cases reaching trial stage 74 defendants
were convicted while 489 entered pleas of guilty or nolo contendere.
The effectiveness of enforcement efforts is further indicated by
the increasing number of persons convicted on tax evasion charges
or entering pleas of guilty or nolo contendere. The following table
presents the record of convictions, including pleas of guilty or nolo
contendere, for the fiscal years 1945 through 1952.
Individuals
convicted

Fiscal year
1946
1946
1947
1948
1949
1950
1951 .-1952

._._:
- . _

•_._

65
149
182
315
346
386
324
663

Audits and investigations of all classes of returns, including the
previously discussed fraud and racketeer investigations, numbered
4,054,526 during the fiscal year 1952. Of this total, 1,950,580 returns
were found to be correct as filed or to have overstated the tax. Additional taxes were found to be due on 2,103,946 returns, primarily as
a result of taxpayer errors in reporting income, claiming exemptions
or deductions, or computing the tax. The amount of additional tax,
penalties, and interest assessed against the taxpayers as a result of
their errors totaled $1,840,162,452.
During the fiscal year 1952, collections on warrants for distraint
amounted to $455,752,213. This amount represents primarily collections of undisputed amounts of original tax assessed on returns as
filed, wliich.taxpayers have failed to pay when due and on which it
was necessary to issue warrants for distraint to enforce collection.
The following table shows the number of returns examined, fraud
investigations completed, additional tax assessed, and coUections on
warrants for distraint during the fiscal years 1948 through 1952. |
Returns
examined

Fiscal year

1948
1949
1960
1951_-__
1952___

' Revised.

___

2,971,113
3,073,301
3, 646,169
4,382, 564
4,054, 526

Fraud investigations

3,800
2,955
3,112
3,195
" 3,872

Additional
tax assessed
Thousands
of dollars
1,897,016
1,891, 679
1, 747, 692
1,866, 603
1, 840,162

Collections
on warrants
fdr distraint
Thousands
of dollars
280,184
346, 609
r 368,385
376, 606
465, 752

156

19 52 REPORT OF T H E SECRETARY OF T H E TREASURY

Violations of the internal revenue liquor laws, as reflected by
enforcement statistics for the number of stills and gallons of masJh.
seized, continued to increase.- D.uring the fiscal 3^ear 1952, there
were 10,269 illicit stills seized, together with 5,700,600 gallons of
mash, 160,738 gallons of illicit liquors, and 2,181 automobUes and
trucks. There were 9,851 persons arrested for violations of the
internal revenue liquor laws; indictments were obtained against
6,109 persons; and 5,122 persons were convicted. The following
table shows for the fiscal years 1948 through 1952 the number of
stills and gallons of mash seized and the number of arrests made.
Fiscal year
1948
1949
1950
1951
1952

Stills seized

6, 757
8,008
10, 030
10,177
10, 269

Mash seized
(wine gallons)
2, 716,800
3, 661,400
4, 892, 600
6, 545, 400
5, 700, 600

Arrests made
7,640
8,915
10, 236
10,384
9,851

Refunds

Refunds of internal revenue taxes and the interest thereon, as
required by law, are paid out of an appropriation separate from that
covering the Bureau's administrative expenses. The total amount of
• these payments for the fiscal year 1952 was $2,333,457,945 as compared with $2,208,291,812 in the preceding year. The increase was
due principally to a rise in the amoimt of overpayments refunded
under the provisions of the Current Tax Payment Act of 1943 (26
U. S. C. 1622). Interest payments on refunds (included in the above
totals) decreased from $92,669,917 in 1951 to $75,350,923 in 1952.
Settlement of dispirtes

In a large proportion of the tax disputes arising from the Bureau's
investigative operations, settlements are reached through conferences
with taxpayers, thereby avoiding expensive and time-consuming litigation. Of 46,988 income, profits, estate, and gift tax returns with
respect to which the examiners' findings had been protested by the
taxpayers, 37,820 were settled by the Bureau and 9,168 were appealed
to the Tax Court. As a result of further hearings conducted by the
Bureau in cases pending before the Tax Court, settlement by stipulation was effected with respect to an additional 6,207 returns, thereby
reducing substantially the number of cases to be tried.
Personnel

The number of emplo37^ees on Bureau rolls at the close of the year
was 55,371 consisting of 3,842 emplo^^ees in the departmental.service
and 51,529 in the field service. At the close of the preceding year,
the number of persons emplo37^ed totaled 57,795, comprising 4,030
departmental employees and 53,765 field emplo3^ees.
Changes dining the year in the number of employees in the various
branches of the InternalRevenue Service are shown in the following
table.

157

ADMINISTRATIVE REPORTS

Summary of personnel, Bureau of Internal Revenue, June 30, 1951, as compared
with June SO, 1952
Number on payroll as ofBranch of service
June 30,1951 June 30, 1952
Departmental service
Field service:
Ofl3ces of collectors of internal revenue
Supervisors of accounts and collections
Internal revenue agents' forces:
Income, profits, estate, and gift taxes..
Excise taxes
:.-Alcohol and Tobacco Tax Division:
Oflices of district supervisors
Field inspection force
Intelligence .Division
Appellate Staff
Excess Profits Tax Council
Oflice of the Chief Counsel
Processing Division
Budget and Finance Office
Inspection Service
:
Personnel Division

4,030

3,842

34, 793
118

33,076
16

10, 442

Increase, or
decrease (—)

-1,717
-112

9,975
(2)

4,019
16
1,610
636

125
411
1,463
45

Total field service.

53, 765

Grand total..

67, 795

448
1,379
150
196
4

76.

-82
-7
37
-8
-50
37
-84
105
196
4

61, 529

-2, 236

3,937
9
1,647
627

-2,424

1 Majority of personnel transferred to Inspection Service.
2 Included with income, profits, estate, and gift taxes forces.

Cost of administration

The entire cost of the Bureau's operations during the year, including all items of expense except amounts refunded to taxpayers, was
$271,872,192. The amount available for administrative expenses was
$273,000,000; thus, there was an unobligated balance of $1,127,808.
The cost of collecting $65,009,585,560 during the year was approximately 42 cents per $100 of revenue, compared with 49 cents per
$100 in 1951, when collections were considerably lower.
D a t a on the annual cost of administration, although of interest
and value for certain purposes, cannot be relied upon either as a
guide to the proper scale of administrative activity or as a measure
of relative efficiency of operation from year to year. An annual
ratio of cost to collections is determined by many factors, most of
which have no relationship to these objectives. To illustrate, the
higher the level of tax rates and the more numerous the levies that
are inherently economical to collect, the lower will be the average
cost ratio. The prevailing level of salaries paid to Bureau personnel
and the volume of essential services performed for taxpayers are other
examples of these determinative factors.
Management improvement

Reorganization Plan No. 1 oj 1952.—The most far reaching management improvement project ever undertaken by the Bureau began on
March 13, 1952, when the Congress approved the President's Reorganization Plan No. 1 of 1952. This plan stemmed from the intensive
management studies and research which have been an integral part
of the Bureau's efforts to improve and modernize its operations during the past six years. The plan has four principal purposes: (1) To
make the Bureau an outstanding career service in which all positions

158

1952 REPORT OF THE SECRETARY OF THE TREASURY

under the Commissioner will be filled solely in accordance with the
civil-service merit system based upon the highest standard of competence, integrity, and loyalty; (2) to provide a continuing and thorough check on the performance of offices and employees through a
broadened Inspection Service which will function independently of
the rest of the Bureau; (3) to streamline the immense operations of
the Bureau by placing full responsibility for all field activities in a
given geographical district under a District Commissioner who wUl
have a clear and direct line of authority and accountabUity to the
Commissioner in Washington; and (4) to assure improved service
and greater convenience to the taxpayer by making it possible for
him to look to the Director of Internal Revenue or his local representative as the official in complete charge of all Federal tax matters
in the taxpayer's locality.
The plan itself, as approved by the Congress, is fairly simple. I t
abolished the appointive offices of Assistant Commissioner, Special
Deputy Commissioner, Assistant General Counsel for the Bureau of
Internal Revenue, Collector of Internal Revenue, and Deputy Collector. New offices established by the plan were Assistant General
Counsel, three Assistant Commissioners, not to exceed 25 District
Commissioners of Internal Revenue, and not to exceed 70 other
offices with such title or titles as the Secretary may determine. All
of these new offices are to be staft'ed entirely by personnel appointed
under the classffied civU service.
Heading the reorganized Service is the Commissioner of Internal
Revenue who, under the direction of the Secretary of the Treasury,
will have general superintendence of the assessment and collection
of all taxes. He will continue to be appointed by the President with
the advice and consent of the Senate. He will be the only officer
so appointed in the Internal Revenue Service; all others will be subject
strictly to civil service rules.
The Commissioner's responsibility of superintending the assessment
and collection of the revenue will be carried out through three Assistant
Commissioners designated, respectively, Technical, Operations, and
Inspection.
The Assistant Commissioner (Technical) wUl superintend the
drafting of all rulings, and other interpretative material which is
needed by the taxpayers to comply with pbligations under the law,
and superintend the formation of the Commissioner's policy in
respect to all so-called technical responsibilities in tax administration,
such as proposed legislation, tax treaties, and appellate procedures
and practices.
The Assistant Commissioner (Operations) will superintend the
actual assessment and collection of taxes, the audit and investigation
of returns, and all operational functions incident to such responsibilities.
The Assistant Commissioner (Inspection) wUl be charged with the
responsibility for attainment and subsequent maintenance of three
major over-all objectives which are: (1) The audit of all internal fiscal
and accounting aspects of all offices with particular reference to the
examination of tax and revenue accounts maintained, in order to
prevent or detect defalcations and thefts; (2) the coordination and

ADMINISTRATIVE: REPORTS

159

intensification of internal inspection and investigative effort throughout the Internal Revenue Service to assure scrupulous adherence to
proper ethics and standards of conduct by all personnel; and (3) the
continuing appraisal of applied management improvements, operating
techniques, and administrative procedures to facilitate realistic
evaluation from the standpoint of economy and efficiency as a means
of keeping the Commissioner currently informed concerning these
matters.
The Assistant Commissioner (Technical) will carry out his duties
with the aid of a staff of tax technicians at the Washington headquarters office who are specialists in the various classes of taxes. He
will not exercise any line-officer control over field offices.
The Assistant Commissioner (Operations) will carry out his duties
through direct line-officer control of each of the District Commissioners strategically located throughout the United States.
The District Commissioners will have complete jurisdiction within
their respective areas of the following duties incident to the assessment
and collection of taxes: (a) Distribution of all tax forms and notices;
(b) receipt, audit, and investigation of all classes of tax returns; (c) tax
fraud work; (d) canvass for delinquent returns; (e) assessment and
collection of taxes; (f) inspection of the production of distilled spirits
and tobacco; and (g) the hearing of all appeals from proposed assessment. In effect, the District Commissioner will supervise the widely
scattered functions formerly performed by the collectors, the revenue
agents, the special agents, the alcohol tax inspectors and investigators,
and members of the Appellate Staff plus certain functions of the Chief
Counsel. This represents a complete coordination of all tax collection functions at the local level.
The District Commissioners wUl carry out their responsibUities
through direct line-officer control over Directors of Internal Revenue,
with at least one such officer for each State, and in the more populous
States more than one. Actually there wUl be a Director of Internal
Revenue located in each city in which a collector was formerly
located.
The Assistant Commissioner (Inspection) will carry out his responsibUities through line-officer control over chief inspectors numbering
not more than 25. Each chief inspector wUl have assigned a small
staff of top-fiight investigators.
Through June 30, 1952, two field districts had been established,. at
Chicago and New York, under the reorganization plan.
The District Commissioner, Chicago, was installed on May 20, 1952,
with general responsibUity for Internal Revenue activities in the
State of Illinois. Directors of Internal Revenue for Springfield and
Chicago replaced the former collectors in those cities.
The New York City District, comprised of the former First, Second,
and Third New York collection districts, was organized June 30, 1952,
with the installation of the District Commissioner, New York, and
Directors of Internal Revenue for Brooklyn, Lower Manhattan, and
Upper Manhattan. These directors replaced the former collectors of
the three collection districts in this area.
Plans were completed for the Washington headquarters office reorganization on August 11, 1952. Tentative plans were made for^com-

160

1952 REPORT OF THE SECRETARY OF THE TREASURY

pleting reorganization of the field by the installation of 15 more district
offices.
Other improvements.—While the planning and placing in effect of the
reorganization plan necessarily was the focal point of management
interest during the past fiscal year, the improvement program which
has highlighted the Bureau's entire range of activities during the last
several years continued to show substantial results in eliminating
unnecessar}^ operations and in accomplishing more efficiently and
economically the necessary tasks.
Revision of tax forms was one of the more important potential
work-elimLnating steps taken during the 3^ear. Tax returns for individuals. Forms 1040 and 1040A, were redesigned to require more
inf ormation with respect to exemptions claimed for dependents outside
the immediate family (a major source of taxpayer error); to simplify
the tax computation; and to assist in eliminating some assessment and
refunding operations. Other tax forms improved so as to facilitate
both preparation and processing included Form W-2, Withholding
Statement; Form W - 3 , Reconciliation of Income Tax Withheld from
Wages; Form CT^l, Employers Tax Return Under Railroad Retirement Act; Forms SS-8 and SS-14, social-security tax forms; Form 514,
Tax Transfer Voucher; Form 940, annual iinemplo3?^ment tax return
of employers of eight or more individuals; and the depositaiy receipt
forms.
During the 1952 filing period a ^'package" mailing unit for the mass
distribution of the individual income tax return. Form 1040, was
tested, resulting in its approval for Nation-wide use in the 1953 filing
period. The package plan involves the assembling of instruction
materials and the tax returns in book form, to facilitate assembly and
mailing operations.
The program for the exchange of income tax audit information
between Federal and State Governments which was inaugurated
during 1950, was extended to include the States of Colorado, Montana,
and Ke.ntuck3^
In an effort to locate persons for whom undeliverable tax-refund
checks were being held, collectors' offices cooperated with the press
to publish names and last known addresses of such persons. A total
of 210,098 of these checks were delivered from January 1 to April 30,
1952.
Work procedures were changed through the following shifts in organization. Reorganization of the headquarters office of the Income
Tax Division resulted primarily in the reduction of its organizational
units from 13 to 5 and the elimination of 113 positions. Excise tax
investigative personnel were transferred from the Excise Tax Division
to the offices of internal revenue agents in charge. Appellate procedure was extended to excise tax cases through the medium of the Appellate Staff. Tobacco tax and alcohol tax work were combined and the
tobacco tax field work was transferred to alcohol tax district supervisors. The audit of unemployment tax returns was transferred from
the Employment Tax Division to collectors' offices. Merger of the
processing and audit work of the Employment Tax Division resulted
in the elimination of the Control Branch of that Division.
Strengthened and improved fraud procedures installed during the
year proved to be of considerable value in expediting the processing

ADMINISTRATIVE REPORTS

161

of criminal tax-fraud cases. The discontinuance of voluntary disclosure of intentional tax evasion as a basis for not recommending
criminal prosecution made unnecessary the difficult determination of
whether disclosures were in fact voluntary. Consideration of the
health of the taxpayer was eliminated in recommendations by the
Bureau for criminal prosecution. Initiation of direct referral of criminal tax-evasion cases to the Department of Justice by the Bureau's
District Penal Offices eliminated review of these cases by the Washington headquarters.
A review of all policies and procedures relating to offers in compromise was initiated with the appointment of a special task force to
examine the procedure for processing such oft'ers.
A Committee on Information Policy was established to review the
Bureau's policies regarding disclosure of information on tax cases,
hearings, and operating procedures. This is a continuing committee
which, from time to time, will make recommendations designed to
increase the amount of information pertaining to Federal tax administration that may be m.ade public without invading taxpayers' rights
to privacy of financial and personal arrangements disclosed for tax
purposes.
As a step toward its planned and orderly liquidation, the Excess
Profits Tax Council was placed under the executive direction of the
Appellate Staft' and the offices of Chairman and Vice Chairman were
abolished.
Executive management officials were relieved of considerable administrative paper work by use of powers of delegation under Reorganization Plan No. 26 of 1950.
The mail-opening operation in collectors' offices was improved and
standardized to provide a more rapid and efficient handling of mail
and remittances with a marked saving in labor.
Continued progress was made in the use of time-saving operating
equipment. The use of electronic accounting and calculating machinery was extended to include the maintenance and billing of
revenue accounts, the addressing of wage and excise tax returns, and
the checking of records to indicate delinquent taxpa^^ers for enforcement purposes. A punched control card accompanied approximately
39 percent of the blank individual income tax returns maUed to taxpayers, and its use eliminated from some collectors' offi.ces the yearly
repetitive ''listing" operation.
Further mechanization of work during the 3''ear was accomplished
by the installation of electric t3^pe^mters, automatic posting machines,
and mechanical dictating and transcribing equipment. Specially developed window-teller machines were ordered for pilot installation in
10 collection districts.
As part of the continuing program to obtain more effective accounting controls for operating and budget purposes, eight additional
regional finance offices were established during the 3^ear, bringing the
total number of such offi.ces to 11. Other regional offices will be
established coincident with the installation of District Commissioners'
offi.ces.
Inspection Service.—The Inspection Service which, was instituted on
October 1, 1951, to provide a continuing check on efficiency of operations and integrity of employees, has had a steady record of develop221052—53

-12

162

19 52 REPORT OF THE SECRETARY OF THE TREASURY

ment and accomplishment. Originally established to intensify and
coordinate the activities of existing staffs of each operating unit and
to appraise management improvements and techniques, the Inspection
Service was strengthened on March 15, 1952, by the consolidation of
these staffs into the Inspection Service proper. Full authority to
exercise general superintendence over, all inspection activities was
delegated to the Director of the Inspection Service. The field organization is comprised of 13 offices of Chief Inspector responsible to
the Director who, in turn, reports directly to the Commissioner.
(Pursuant to Reorganization Plan No. 1 of 1952, the Inspection
Service will be brought under the Assistant Commissioner (Inspection), whose duties will include those of the former Director of the
Inspection Service.)
The Inspection Service conducts frequent and thoroughgoing examinations and inspections of all departmental and field offices for the
purposes of: (1) Auditing all internal fiscal and accounting aspects of
such offices with particular reference to the examination of tax and
revenue accounts maintained, in order to prevent or detect defalcations and thefts; (2) evaluating the efficiency and effectiveness of the
administrative management and operating aspects of said offices; and
(3) ascertaining whether the conduct and comportment of all employees is in accord with the statutes, regulations, and rules. The reports
of such examinations and inspections disclose the manner in which the
affairs of the Bureau are conducted and whether there is strict and
scrupulous-compliance with all applicable laws, policies, regulations,
practices, and procedures prescribed by appropriate authority. ^Copies
of the reports are furnished to the Assistant Commissioner '(Operations) with a covering memorandum directing his attention to any
unauthorized deviationsjfrom established fundamental procedures and
the corrective or remedial action taken at the instigation of the
inspector during the course of the examination, and suggesting changes
deemed meritorious by the Chief Inspector or the Director upon
their review of said report. Any evidence of a criminal nature disclosed by an examination is made the basis for a full investigation
by the Inspection Service, with a resultant recommendation to the
Commissioner as to the action to be taken. Ih addition, the Inspection Service makes thorough and impartial investigations of character and ability of all applicants for employment with the Bureau
of Internal Revenue.
During 1952 the Inspection Service installed a system for control
and follow-up on all complaints received, required more frequent
and intensive inspection of field offices, inaugurated rotation and
interchange of inspection personnel, completed plans for establishing
a training school for inspection personnel, and took many other steps
to strengthen and improve the Internal Revenue Service.
Office of International Finance
The Office of International Finance advises and assists the Secretary
of the Treasury and other officers of the Department in the formulation and execution of policies and programs in international financial
and monetary matters. The Director of the Office is assisted by
advisers on financial policy and by a staff organized into divisions
corresponding to geographic areas or to the functional activities of the

ADMINISTRATIVE REPORTS

163

Office. These divisions are: National Advisory Council Secretariat;
Stabilization Fund, Gold and Silver Division; International Sitatistics
Division; Commercial Policy and United Nations Division; European
Division; British Commonwealth and Middle East Division; Latin
American Division; and Far Eastern Division. The Office also maintains Treasury representatives in several foreign countries.
By direction of the Secretary, the Office of International Finance is
responsible for the Treasury's activities in matters of international
financial and monetary policy, including international monetary and
exchange problems, and gold and silver policy; the Bretton Woods
Agreements Act and the operations of the International Monetary
Fund and the International Bank for Reconstruction and Development; foreign lending and assistance; the North Atlantic Treaty
Organization; the activities of the National Advisory Council on
International Monetary and Financial Problems; the Anglo-American
Financial Agreement; the United States Exchange StabUization Fund;
and the Foreign Assets ControL
Continuing studies are made of the fiow of capital funds into and out
of the United States and of the international accounts of foreign
countries with special attention to transactions in gold and dollars.
In carrying out its functions, the Office also studies the legislation and
policy of foreign countries relating to finance, gold and silver, exchange
rates and exchange controls, and other relevant matters.
The Office also provides economic analyses of the customs activities
of the Department and advises the Secretary on international financial
aspects of matters arising in connection with his responsibilities under
the Tariff Act. The Office acts for the Treasury on the financial
aspects of international treaties, agreements, and organizations in •
which the United States participates. I t also participates in negotiations with foreign governments with regard to matters included within
its responsibUities.
The Treasury is represented by the Office of International Finance
in the work of the National Advisory CouncU on International Monetary and Financial Problems (of which the Secretary of the Treasury
is chairman) and its subordinate organs. Professional personnel of
the Office perform staff and secretariat functions of the CouncU.
(See exhibits 26 and 28.)
The Office of International Finance advises Treasury officials and
other departments and agencies of the Government concerning exchange rates and other financial problems encountered in operations
involving foreign currencies. In particular, it advises the State
Department and the Department of Defense on financial matters
related to their normal operations in foreign countries and on the
special financial problems arising from defense preparation and military operations. The Treasur37- representatives in foreign countries
act as financial advisers to the diplomatic missions and to the missions
of the Mutual Security Administration.
The Foreign Assets Control exercises the authority conferred upon
the Secretary of the Treasury by Section 5 (b) of the Trading with the
Enemy Act. Under the Foreign Assets Control Regulations the assets
in the United States of Comraunist China and North Korea and their
nationals are blocked. The Division of Foreign Assets Control carries
on licensing activities in connection with transactions otherwise pro-

164

19 52 REPORT OF THE SECRETARY OF THE TREASURY

liibited; takes action to enforce the regulations; and has taken a census
of Chinese and Korean assets located in the United States.
Legal Division
The General Counsel is by statute the chief law officer of the Treasury
Department, responsible to the Secretary for the legal advice upon
which he acts and for all legal work in the Department. In carrying
out this responsibUity the General Counsel is assisted b37- the Legal
Division, over which he has supervision. The Legal Division is made
up of the General Counsel's immediate staff in the Office of the General
Counsel, which includes the Tax Legislative Counsel, and the offices
of the Chief Counsels in the major bureaus.
As legal adviser to the Secretary the activities of the General Counsel
and his staff include consideration of legal problems relating to the
broadest aspects of management of the public debt, the administration
of the internal revenue laws, international cooperation in the monetary
and financial fields, and similar matters with which the Secretary is
concerned as chief financial officer of the Government. Other activities of the Legal Division embrace legal matters arising in connection
with the duties and functions of every branch of the Department, the
scope of whicii is described in the separate administrative report of
each organization.
One of the major responsibilities of the General Counsel is the handling and coordination of legislative workin the Department, including
appearances before congressional committees, drafting proposed legislation, and preparation of reports on legislative proposals. The most
important work in this field during the fiscal year 1952 was in connection with the preparation and presentation of Reorganization Plan No.
1 of 1952, the President's plan for reorganizing the Bureau of Internal
Revenue. The work also included preparation and presentation of
the President's plan for reorganizing the Bureau of Customs, Reor2:anization Plan No. 3 of 1952.
In the field of international finance and aid, the Legal Division
assisted in formulating financial and economic aspects of the programs
relating to European recovery, military assistance, and teclinical
cooperation, and served as counsel to the National Advisory CouncU.
I t also dealt with problems arising in connection with international
gold and stabilization operations of the Department, and performed
legal services in connection with the administration of the Foreign
Assets Control which was made necessary by the Korean conflict.
Other signfficant work performed by the Legal Division arose in
connection with the study made by the Subcommittee on General
Credit Control and Debt Management of the Joint Committee on the
Economic Report.
Bureau of the Mint
The Bureau of the Mint is charged primaril3^ with responsibility
for the manufacture of domestic coins as well as the acquisition of
monetar37^ metals for coinage purposes. I t has direct responsibility
for receiving deposits of gold and silver, for assaying, for refining, and
for the sale and custod3^ of gold and silver bullion. I t administers
and, with the Secret Service and Customs Bureau, enforces regulations

^ ADMINISTRATIVE REPORTS

165

pertaining to gold and silver. With respect to gold, it issues licenses
relative to the^acc[uisition, ownersSp, possession, use, and exportation'
for industrial, professional,_^nd artistic purposesToales of goITHars
for such purposes^amounted to $577868,845 during the fiscal year.
In addition, the Bureau of the Mint produces medals as well as other
decorations and, b37^ contract with foreign countries, manufactures
coins for other governments.
The Office of the Director of the Mint exercises supervisory control
over all the activities of the Bureau. I t is a headquarters establishment located in Washington, D. C , which establishes general policies
and directs as well as coordinates the activities of the entire organization throughout the United States. During the fiscal year 1952,
there were seven field institutions in operation: Coinage mints in
Philadelphia, Pa.; San Francisco, Calif.; and Denver, Colo.; assay
olfices in New York, N. Y., and Seattle, Wash.; a gold bullion depository in Fort Knox, Ky.; and a silver bullion depository in West Point,
N. Y., which is an adjunct of the New York Assa37^ Office.
The coinage mints receive, process, assay, move, and store gold and
silver. They also issue gold licenses, sell gold for legitimate Indus-,
trial, professional, and artistic uses and sell silver for industrial use.
I n addition to coinage, medals, medal dies, other decorations, and
proof coins are manufactured at the Philadelphia Mint. During the
fiscal year 1952, the Philadelphia Mint delivered to the Department
of Defense and other Federal agencies a total of 62,155 service medals
and other distinguishing decorations. In addition, 3,289 medals of a
national character were sold to the public. At the mints located in
San Francisco and Denver and at the assay office in New York,
electrolytic refineries are maintained for refining gold and silver.
During the fiscal year 1952, the refineries produced by the electrolytic
process 1,040,198 fine ounces (36 tons) of gold and 1,262,800 fine
ounces (43 tons) of silver.
•With the exception of manufacturing coins, the assay offices perform
functions similar to the coinage mints. The mints and assay offices
manufactured a total of 12,539 issue bars containing 4,003,146 fine
ounces (137 tons) of gold and a total of 1,769 issue bars containing
377,071 fine ounces (13 tons) of silver during the fiscal year. The
Seattle .Assay Office makes commercial assays of gold, silver, lead,
zinc, and copper ores, and the New York Assay Office makes assays of
platinum group metals.
The mints and assay offices processed 9,308 deposit transactions and
17,329 assay determinations in connection with deposits and purchases of gold valued at $1,745,864,861, and silver amounting to
81,273,745 fine ounces during the fiscal year 1952. Included were
17 deposit transactions and 544 assay determinations for intermint
transfers of gold valued at $10,003,758, and silver amounting to
279,521 fine ounces.
The bullion depositories are maintained solely for the storage of
bullion. The Bureau of the Mint held 667,040,273 fine ounces of gold
bullion valued at $23,346,409,526.73 on June 30, 1952; and on the
same date 1,323,621,448.92 fine ounces of silver bullion, of which
1,281,109,243.41 fine ounces were held in regular account, and
42,512,245.51 fine ounces were held in special account,

166

1952 REPORT OF THE SECRETARY OF THE TREASURY

The Government's holdings of gold, silver, coins, and other items
are protected by modern protective devices and armed guards twentyfour hours per day, every day of the year.
As of June 30, 1952, there were 60 persons on the roll of the Bureau
of the Mint in the headquarters office in Washington, D. C , and 960
in the field, making a total personnel of 1,020 which compared with a
total of 966 for the preceding fiscal year.
For further detailed information, refer to the Annual Report oj
the Director oj The Mint, Fiscal Year ending June SO, 1952.
Production during fiscal year.1952

The major activity of the Bureau of the Mint is to produce coins
to supply the business needs of the country. Generally, the demand
for coins follows the trend of business activity. The variations
in coinage requirements are therefore unpredictable; if business
activity is at a peak, the demand is great; if otherwise, the demand
slacks off. As an illustration of one of the variants, the outbreak of
the conflict in Korea in June 1950 precipitated a wave of scare buying
which drastically increased demands on the Bureau for coins. During
the first six months following the outbreak in Korea, the Bureau sent
into circulation over a bUlion coins, mostly pennies. Coin demand
mounted from a half billion in fiscal 1950 to about \ji billion in fiscal
1951 and 1952. Total production during the fiscal year 1952 amounted
to 1,551,096,448 pieces of all denominations with a total value of
$92,412,255.99. Production of this vast quantity of coins during this
period consumed 1,933 tons of silver, 3,994 tons of copper, 106 tons
of nickel, and 182 tons of zinc and tin, with a grand total of 6,215 tons
avoirdupois.
Of the billion and one-half pieces produced by the several mints
during this fiscal year, a total of 1,370,986,996 pieces was issued.
The pieces in greatest demand were:
Dimes, 246,869,831 pieces, face value
Nickels, 89,824,824 pieces, face value
Pennies, 875,211,968 pieces, face value.__-_

$24, 686, 983. 10
4, 491, 241. 20
8,752, 119. 68

At the beginning of this fiscal year, there was practically no inventory reserve of finished coins or work in process. Demand for coins
ran far ahead of production. For the first six months of fiscal 1952,
production faUed to meet requirements. At the end of December 1951,
the mints were practically out of coins. During this period, the mints
had produced and delivered 920,000,000 coins.
Owing to the inadequate supply of coins, the Treasurer of the United
States and the Federal Reserve Banks and branches found it necessary
to ration coins in the early months of fiscal 1952. Wide appeals to the
public, by radio, the press, and television, to return idle coins to
normal channels of trade were helpful.
While the demand for coins centered on pennies, primarily because
of the sales tax imposed by nearly every State, the introduction of
vending machines and parking meters accounted for the demand for
other coins of smaU denominations. The almost universal need for
pennies, however, was stimulated also by the cash and carry system
of merchandising wherein odd-cent prices are charged.
Although it was ^'touch and go" during the early months of this
fiscal year and despite the fact that the mints had practically no

ADMINISTRATIVE

167

REPORTS

beginning inventory, nevertheless, the demand was satiated by the
end of the year, and began to slacken with the result that as of
June 30, 1952, the stock of coins on band amounted to 242,593,334
subsidiary silver and minor coins.
Management improvement

An active management improvement program has-been in effect
during the fiscal year 1952. Program techniques include periodic
surveys and inspections of operations in the mint plants, conferences
of operating officials and appointment of special committees, comparisons of operating costs in each mint, motion picture training programs,
periodic progress reporting by individual management committees in
each plant, and similar methods.
t P^P^^^-^-^^ii^'^i^^'-A large number of improved methods and procedures has been
adopted in connection with the nianagement program in recent years,
resulting in substantial reductions in coinage production costs.
Although salary costs have increased approximately 75 percent during
the past several years, coinage costs are actually 19 percent lower
today than they were several years ago. Reductions in coinage unit
costs during the past year, resulting from perfection and extension of
technical improvements instaUed during previous years, and improvements adopted in fiscal 1952, are shown in the following table.
Coinage production posts—per- 1,000 pieces
l-cent

Fiscal year
1961 1952

---

$1.21
1.10

6-cent
$3.22
2.99

10-cent
$2.10
1.71

26-cent
$4.61
3.49

60-cent
$7.59
6 79

Estimated savings on an annual basis from management projects
completed during the past year, explained later in this report, amount
to $82,00D.
Modernization oj Philadelphia Mint.—Technicians from several
prominent rolling mUl coinpanies have surveyed and studied the
available space at the PhUadelphia Mint to determine if more efficient
equipment can be utilized in the present building. The plan selected
by the mint caUs for the revamping of present machinery with minimum building alterations. Efforts will be made to provide for mechanization of operations in the melting and rolling division to permit
processing of a 400-pound bronze ingot in place of the present 30pound size. This will bring the Philadelphia operations in line with
those at the Denver Mint. Estimated savings would pay for equipment costs in about four years.
Construction oj. electronic weighing machine.—In collaboration with
technicians from the Bureau of the Mint, the Bureau of Standards
has undertaken construction of an electronic automatic coin-blank
weighing machine. A working model has been completed successfully during the past year. I t is expected that a complete weighing
machine will be constructed within the next several months and it is
anticipated that this type of equipment wiU reduce coin-blank weighing costs when funds become avaUable for the purchase of additional
units.
Increased production jrom dies and collars.—As the result of long
and careful study of steel used in the production of coinage dies and

168

1952 REPORT OF THE SECRETARY OF THE TREASURY

collars, together with research as to heat treating and hardness
penetration, there has been an increase in average coinage production
from individual dies and collars. Savings were also realized from
lower die production costs. (Estimated annual savings, $20,000.)
Increasing thickness oj bronze ingot.—At the Philadelphia Mint in
1951, a wider bronze ingot was adopted. The thiclaiess of this ingot
has now been increased from )^-inch to %-inch, resulting in the production of longer strips and a reduction in the number of discarded
blanks from strip ends. Further savings were accomplished in rolling
operations following an intensive study of procedures which permitted the elimination of a number of passes through the rolling mills,
resulting in a rolling production increase without additional labor.
(Estimated annual savings, $12,000.)
Improved operation and maintenarice oj coin presses.—rA program
has been adopted for training coinage press operators and die setters
to do a more efficient job in. caring for their machines, thereby preventing unnecessary lost time from improper machine functioning or
mechanical failure. An improved method for feeding coinage blanks
to coin presses has reduced the number of press shut-do^^ms. Press
operating speeds have been increased for all denominations, which
together with other improvements has resulted in increased press
output. (Estimated annual savings, $14,000.)
Installation oj overhead conveyors in Coining Division:—Overhead
conveyors have been installed in the operating divisions at the San
Francisco Mint, permitting mechanical handling of coinage blanks in
10,000-ounce containers as contrasted with the former practice of
handling 800-ounce containers manuall3^ Work stoppage at frequent
intervals to empt3^ the small containers has been eliminated and
operators can now devote more time to their machines. (Estimated
annual savings, $11,000.)
Installation oj second vibrating riddle.-—The original vibrating riddle
installed at the Philadelphia Mint proved to be very satisfactory,
warranting acquisition of additional equipment of this type. This
new equipment, which replaces the old st3de rocldng-type riddle,
screens out imperfect coin blanks, chips, crescents, half-moons, etc.
Vibratory feeders have also been installed to feed blanks to the riddle,
permitting a more even fiow of blanks across the riddle screen and
reducing manpower requhements. (Estimated annual savings,
$8,500.)
Increased mold lije jor water-cooled unit.—Original castings for the
water-cooled molds gave poor service as a result of both warping and
cracking. A new type of casting made of gray iron has been adopted,
which has received special treatment to overcome porosity. The
gray iron castings are showing a longer life, with less warping, than
the old type. (Estimated annual savings, $4,000.)
Improvement oj upsetting operations.—Coinage blanks are processed
in a milling machine for the purpose of obtaining a slightly upset edge
before feeding to the coinage press. Upsetting operations have been
improved by changing the shape of the groove in the disc and segment
on the milling machine, eliminating jamming of blanks in the machines
and yielding greater production. (Estimated annual savings, $2,500.)
Sajety program.-T-'Eeich operating division in the several mints has
a safety committee, composed of supervisors, foremen, and workmen,

ADMINISTRATIVE REPORTS

169

which meets once each month to discuss potential accident hazards
in the division and reports in writing to the superintendent's safety
committee. The latter committee meets monthly, inspects the entire
plant, and makes recommendations for changes to the superintendent.
Copies of safety committee reports, and reports of all accidents, are
analyzed in the Director's office and suggestions for improving the
safety program are rela3^ed to the mints. The following comparison
indicates the substantial progress made in the safet37^ program.
Comparison of accident records
Fiscal year
1952
Frequency r a t e '
Severity rate 2

16.10'
.46

Fiscal year
1951
46.45
.88

1 The number of disabling injuries per 1,000,000 man-hours worked.
2 The number of days lost per 1,000 man-hours worked.

Motion picture training program.—Motion pictures of mechanical
operations in each mint are used, in connection with comparative cost
statements, to demonstrate the most efficient coinage methods to
officials, supervisors, and workers. As new procedures are developed
at any plant, motion pictures are taken of each improvement so that it
may also be adopted at the other plants, if feasible. These films of
mint operations are also shown to mint personnel to develop a spirit
of competition and a thorough cost consciousness. FUms of operations
in outside industry similar to the mint are reviewed, for improved
procedures or new ideas which could be adopted in the mint, and. films
on shop safet37^ are shown to emplo3^ees periodically.
Incentive awards program.—Continuing publicity was given to the
incentive awards program during the past 3^ear through the use of
various methods. Total awards under this program in 1952 amounted
to $4,715, including one group award for efficiency, under Title X of the
act approved October 28, 1949 (63 Stat. 971). This award was made
for recommended changes, most of which were put in effect in 1951,
providing estimated annual savings of $720,400.
Accounting improvement program.—Additional progress has been
made in the accounting improvement program during the past year,
particularly in the fields of bullion and monetary accounting, and cost
accounting. Revised bullion accounting procedures have been
adopted, including a new journal and improved general ledgers, and
the Bullion Accounting Manual has been completed. Cost accounting forms have been revised to conform with budget activity classifications, and progress has been made on revision of the Cost /Accounting Manual. Attention is also being given to revision of the General
Accounting Manual and necessary changes are being made in accordance with instructions issued in connection with the Joint Accounting
Improvement Program, or to reflect the adoption of new or revised
accounting procedures more suitable to the mint's operations.
Miscellaneous projects.—Miscellaneous improvement, projects include: (a) Decreases of clerical personnel, (b) increased capacity of
feeding system for 18-inch breakdown miU, and (c) greater utilization
of supervisory personnel on a production basis. (Estimated annual
savings, $10,000.)

170

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Bureau of Narcotics ^
The Bureau of Narcotics administers a program designed to deal
with the control of sources of the Ulicit supply of drugs on international,
national, and local levels.
National^, the Bureau is charged with the investigation, detection,
and prevention of violations of the Federal narcotic and marihuana
laws and of the Opium Poppy Control Act of 1942, and related statutes. The scope of the Bureau's operations is gradually enlarging
as additional drugs are made subject to these laws. Opium and coca
leaves and their derivatives have been under national cohtrol since
1915; marihuana has beeii under control since 1937; isonipecaine
was brought under control in 1944; and under the act of March 8,
1946 (26 U. S. C. 3228 (f)), 11 recently developed synthetic narcotics
were brought under control through findings by the Secretary of the
Treasur3r, proclaimed by the President, that the drugs possessed addiction liability simUar to morphine.
Opium, coca leaves, marUiuana, and their more important derivatives also have been under international control under the several
Opium Conventions of 1912, 1925, and 1931. Under the International
Protocol of November 19, 1948, two additional opium derivatives,
isonipecaine, and the eleven synthetic drugs were found to have addicting qualities simUar to morphine or cocaine and have been brought
under international control during the year by a procedure similar to
that provided in our national legislation.
Important and effective aid in discouraging the Ulicit traffic in
narcotics and marihuana has been already afforded by Public Law 255,
82d Congress, First Session, approved November 2, 1951, which
provided for mandatory minimum penalties for violation of these laws,
particularly for second and third offenders. To further the coordination of Government activities in supervising the traffic in, and
arranging for scientffic research with respect to narcotic drugs and
marihuana, the President on November 2, 1951, signed Executive
Order No. 10302 creating the Interdepartmental Committee on Narcotics, composed of one representative from each of the Departments
of the Treasury, State, Defense, Justice, and Agriculture, and of the
Federal Security Agency. The Commissioner of Narcotics has been
named chairman of this committee.
The Bureau directs its principal activities toward the suppression
of the illicit traffic in narcotic drugs and marihuana and the control
of the legitimate manufacture and distribution of narcotics through the
customary channels of trade. I t issues permits for import of the crude
narcotic drugs and for export and in-transit movements of narcotic
drugs and preparations. The Bureau supervises the manufacture and
distribution of narcotic substances within the country and has
authority to issue licenses for the production of opium poppies to meet
the medical needs of the country if and when such production should
become in the public interest. Cooperation is given to States in
local narcotic legislation and enforcement and to the Department of
State in the discharge of the internationar obligations of the United
States concerning the abuse of narcotic drugs and marffiuana.
During the fiscal year 1952, the total, quantity of narcotic drugs
1 Further information concerning narcotic drugs is available in the separate report of the Commissioner of
Narcotics.

ADMINISTRATIVE

171

REPORTS

seized in Ulicit traffic within the United States amounted to 3,330
ounces, in comparison with 1,082 ounces seized in 1951. Seizures
of marffiuana amounted to 1,064 pounds bulk, and 16,393 cigarettes,
as compared with 961 pounds bulk and 22,479 cigarettes in 1951.
Substantial progress was made during the year in driving out some of
the biggest racketeers m illicit narcotics. Many principal dealers m
Ulicit drugs were caught and convicted, and heavy prison sentences
were imposed under the new legislation of November 1951.
Thefts of narcotics from persons authorized to handle the drugs
increased slightly in number during 1952 but the quantity stolen
decreased.
During the fiscal yeai: there were approximately 400,000 persons
registered with collectors of internal revenue under the Federal
narcotic and marffiuana laws to engage in legitimate narcotic and
marffiuana activities.
The table following shows for the fiscal year the number of violations
of the narcotic and marffiuana laws by persons registered to engage in
legitimate narcotic and marffiuana activities and by persons who have
not qualified by registration to engage m such activities, as reported
by Federal narcotic enforcement officers.
Number of violations of the narcotic and m a r i h u a n a laws reported during the fiscal
year 1952 with iheir dispositions and penalties
Narcotic laws
Registered persons
Federal
Court

Federal
Court

State
Court

Pending July 1, 1951
Reported during 1952:
Federal L_
__
Joint 1
--

Marihuana laws, nonregistered persons
Federal
Court

State
Court

201

1,288

566

246
19

2,499
469

712
337

465

4,256

1,615

Total to be disposed ofConvicted:
Federal
Joint
Acquitted: •
Federal
Joint
Dropped:
Federal
Joint
Compromised: 2
Federal
Joint

Nom-egistered persons

41
7
2
151
4

933
281

1,046
125

400
231

82
68

36
11

16
' 6

16
13

8
4

313
92

54
47

169
97

22
18

Total disposed of

260

2,960

1,128

Pending June 30,1962 .

205

1, 296

487

Sentences imposed:
Federal
Joint
Total
Fines imposed:
Federal
Joint
Total

Yrs. Mos.
74
6
10
6
.- 86
—
_

$12, 260
1,250
13, 600

Yrs. Mos. Yrs. Mos. Yrs. Mos. Yrs. Mos. Yrs. Mos.
21
— 2,748
973 10 164
9
3
6 1,157
11
485
8 122
815 . 9
157
1
8
21
— 3,564
4 1,459
6 287
3 1,314
$98,149
30, 426
128, 676

$413
4,673
4,986

$14, 487
7, 253,
21, 740

$1, 919
3,970
' 6,889

1 Federal cases are made by Federal officers working independently while joint cases are made by Federal
and State officers working in cooperation.
2 Represents 26 cases which were compromised in the sum of $8,620.

172

19 52 REPORT OF THE SECRETARY OF THE TREASURY

In foreign countries, investigation, surveillance, and negotiation
are undertaken to restrict the amount of narcotic drugs entering
this country. Through cooperation with the Turkish and Italian
Governments, agents of the Bureau of Narcotics have reduced the
quantities of heroin and opium available to the illicit trade in the
United States. Similar cooperation by the Peruvian Governmeht has
very substantially reduced the cocaine traffic in this country. The
Bureau is continuously on guard against the large supplies of opium
which are available in Communist China.
The importation, manufacture, and distribution of opium and its
derivatives are subjected to a system of quotas and allocations designed
to secure their proper distribution for medical needs. Additional
quantities of opium were imported during the year. Coca leaf imports
were sufficient both for medicinal purposes and for the manufacture
of nonnarcotic flavoring extracts.
The quantity of narcotic drugs exported in 1952 was considerably
lower than in 1951, but the export total is not significant in comparison
with the quantity used domestically. The manufacture of opium
derivatives continued high, principally because of the high medical
consumption of codeine and papaverine.
National defense operations also have increased the responsibilities
of the Bureau of Narcotics. The mobilization of large numbers of
troops has increased the number of special requests from the militaiy
forces for aid by the Bureau of Narcotics in dealing with the traffic
in narcotics in and near military installations; in problems incidental
to the drafting of addicts; and in cases in which narcotic addiction
has been given false.l.3^ as a reason to escape the draft. In addition,
the National Resources Board has given the Bureau of Narcotics
complete control of national supplies of narcotic drugs for civil defense.
The Board will rely on the Bureau for supplies of adequate amounts,
safe storage, and avaUability for immediate distribution to disaster
points.
Substantial progress was made in this Bureau during the fiscal year
1952 in the field of management improvement. The Bureau's accounting system was reviewed and improved; the financial management procedure was modified to assure more effective utilization of
appropriations; a comprehensive management schedule for the retirement and disposition of Bureau records was put into operation; and
certain modffications were made in the frequency and content of
returns submitted by manufacturers of narcotics.
Committee on Practice
The Committee on Practice receives and acts upon applications of
attorneys and agents for admission to practice before the Treasury
Department. I t makes inquiries, holds hearings and in general acts
as the administrative and advisory agency in all matters pertaining
to practice, makes reconimendations to the Secretar3^ of the Treasur3^,
and performs other duties prescribed by Department Circular No.
230, revised December 7, 1951.
The committee also receives and acts upon applications of individuals, corporations, partnerships, and associations for customhouse
brokers' licenses, issues customhouse brokers' licenses, makes recom-

ADMINISTRATIVE REPORTS

173

mendations to the Secretary of the Treasury, and performs other
duties as prescribed by Department Circular No. 559, revised June 1,
1949.
The following statement summarizes the work of the Committee
for the year 1952.
Attorneys and agents:
Number
Applications for enrollment approved6, 152
Applications for enrollment disapproved
14
Applications withdrawn on advice of the Committee
72
Applications withdrawn with prejudice
1
Applications abandoned
3
Special enrollment to practice before the Bureau of Internal llevenue:
Applications approved by reason of examination given by the Committee on Practice.
"
4
Applications approved pursuant to standards and procedures based
upon former service with the Treasury .Department (sec. 12, Department Circular No. 230, revised)
76
Applications of former employees denied
9
Applications abandoned
_-_
82
Applications withdrawn
16
Complaints disposed of pursuant to Sec. 5 (b) of the Administrative Procedure Act, as amended (5 U. S. C. 1004 (b)):
Resignations submitted in order to evade proceedings in disbarment
and accepted by the committee. Names ordered stricken from
the roll
7
Resignations submitted in order to evade proceedings in disbarment
and accepted by the committee with prejudice
1
Formal complaints against enrolled persons:
Pending July 1, 1951
2
Filed during the year
1
Pending June 30, 1952.'
3
Revision of the roster commenced Jan. 1, 1952, pursuant to 31 CFR
10.6(d):
Renewed enrollment cards issued
41, 737
Customhouse brokers:
Applications for licenses approved
65
. Applications withdrawn
4
Applications abandoned
2
Applications denied
^
.
1
Licenses canceled
'
37
Licenses revoked pursuant to Sec. 641 (a) Tariff Act of 1930, as
amended
4

Since the organization of the Committee on Practice in 1921, 103,515^
applications for enrollment have been approved and 949 ^ disapproved;
259 practitioners have been disbarred from further practice before
the Treasury Department, 140 have been suspended from practice
for various periods, 184 have been reprimanded, and 76 resignations
have been accepted.
On November 19, 1951, the Code of Federal Regulations was
amended to provide that all enrollment cards issued prior to January 1,
1952, shall be void after March 31, 1952, and that applications for
renewals could be made at any time between January 1, 1952, and
June 30, 1952 (31 CFR 10.6 (d)). During the last six months of the
fiscal year 1952, therefore, the major efforts of the Committee on
Practice were devoted to issuing renewed enrollment cards and revising and bringing up to date the roster of enrollees.
I n order to handle this increased workload more expeditiously and
economically, certain field offices of the Bureau of Internal Revenue
•" Revised.

174

19 52 REPORT OF THE SECRETARY OF THE TREASURY

were requested to assist in issuing the renewed enrollment cards. By
June 30, 1952, renewed enrollment cards had been issued to almost
42,000 of the 97,000 persons on the roster. About half of these were
issued by the committee headquarters and half by Internal Revenue
field offices. During this same period new applications showed a
marked acceleration, with the result that there were almost 2,000
more new enrollees admitted during fiscal 1952 than for the corresponding period last year.
Another amendment to the Code of Federal Regulations, 31 CFR
10.6 (e), issued on December 7, 1951, provided that enrollment cards
issued after January 1, 1952, will expire automatically 5 years from
date of issue.
Tax Advisory Staff of the Secretary
The Tax Advisory Staff of the Secretary has as its principal responsibUity the economic analysis and preparation of material for use by
the Secretary in the formulation of Treasury; tax policies.
I n assisting the Secretary to discharge his responsibilities in the
field of Federal taxation, the Staff explores the basic economic considerations involved in the Administration's tax programs and in tax
questions presented to the Secretary by the President, committees of
the Congress, individual Members of Congress, other Government
agencies, and the public. This requires broad economic surveys of tax
problems, the assembly and presentation of statistical materials, and
analysis of the effects of alternative programs or measures for meeting
revenue requirements. Upon request, information is furmshed to
the House Committee on Ways and Means, the Senate Finance Committee, and the Joint Committee on Internal Revenue Taxation.
These responsibilities also involve the consideration of State and
local taxation in relation to Federal tax problems and the relationship
between the United States and foreign tax systems.
During the fiscal year 1952, the work of the Tax Advisory Staff was
concerned primarUy with the preparation of material m connection
with the Revenue Act of 1951, which became law on October 20, 1951,
and with the development of the President's 1952 tax program to
provide at least enough additional revenues to reach the revenue goal
proposed last year, by elimmating loopholes and special privileges, and
by tax rate mcreases. This program was outlmed by the President m
his Economic Report and Budget Message to the Congress on January
16 and 21, 1952, respectively.
During the second half of the fiscal year the Staff prepared for use of
the congressional tax committees a report on how the prmcipal provisions of the Excess Profits Tax Act of 1950 operated durmg the calendar year 1950, the first year m which it was partially applicable.
In the field of Federal-State and local tax relations the Staff prepared
a study entitled 'Tederal-State-Local Tax Coordmation" for the use
of the special Subcommittee on Coordination of Federal, State, and
Local Taxes of the Committee on Ways and Means, mvestigatmg the
problems of overlappmg and duplication of Federal, State, and local
taxes pursuant to House Resolution 414, passed by the House of
Representatives on September 27, 1951. This study, published on
March 7, 1952, as a committee print, brmgs up to date the discussions
of the problems of tax coordination considered in the 1942 report of the

ADMINISTRATIVE REPORTS

175

special committee. The Staff also prepared a study for the Staff of the
Jomt Committee on the Economic Report on the proposed constitutional amendment to limit Federal mcome, estate, and gift taxes to 25
percent, which was mcluded m their comprehensive report on this
subject.
I n the field of mternational tax relations the Staff participated m the
negotiation of tax conventions with several foreign countries. Income
and estate tax treaties with Fmland and an estate tax treaty with
Switzerland were signed and submitted to the Senate for approval.
Office of the Technical Staff
The Office of the Technical Staff in the Office of the Secretary
serves as a technical staff for the Secretary on matters relating to
Treasury financing, public debt management, and various general
economic problems arising in connection with Treasury activities.
For use in policy decisions in these fields the Technical Staff works
out possible courses of action, and keeps Treasury officials informed
of shifts in the basic economic and fiscal situation. Primary factors
in debt management policy are the outlook for net cash flow into or
out of the Treasury and the outlook for Federal budget receipts,
expenditures, surplus or deficit, the debt, the cash balance, and the
general state of the economy.
For each financing operation the Technical Staff draws iip alternative plans, including what specific securities might be offered to tap
various sources of new funds or in exchange operations. Terms for
such securities are reviewed, including rate of interest, maturity, call
period, negotiability, eligibUity as collateral, redemption privileges
accorded to holders, and restrictions as to the amount of purchases or
holdings by different classes of investors.
The Technical Staff analyzes the relation of these securities to the
maturity schedule and interest cost of the public debt, the effect of
their issuance on the market prices and ownership distribution of
outstanding Government securities, and the impact of the Treasury's
public debt operations on the banking system, the money supply, and
the over-all credit structure. Alternative courses of action are
weighed as to the probable effect on the general economy, with special
reference to their inflationary or deflationary impact.
The Technical Staff also works out analyses of the assets and the
investment position of the various classes of investors, with particular
regard to their problems in managing their Federal security portfolios.
I t reviews the relative desirability of cash pay-offs to, and additional
borrowing from, each investor class, and the types of securities best
suited to the requirements of each class.
The Technical Staff work also includes discussions with consulting
committees composed of leading bankers, insurance men, bond dealers,
and others. The committees represent the American Bankers Association, the Investment Bankers Association, the Life Insurance
Association of America and the American Life Convention, the National Association of Mutual Savings Banks, the Government Security
Dealers group, and others. The groups confer with the Secretary from
time to time and discuss their respective situations as well as the general aspects of public debt management. On these occasions the

176

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Secretary usually has the Technical Staff review developments and
outline the problems ahead in the field of debt management. After
these meetings the Technical Staff' prepares reports for the Secretary
to integrate the various reports and recommendations which have been
received.
The facilities of the Technical Staff' also are utilized b3^ the Secretary
for the preparation of official estimates of Government receipts for
incorporation in the President's annual budget message and in intervening budget revisions. Similarly, estimates of the revenue effects
of proposed and pending legislation are prepared.
Technical mathematical analyses needed in connection with financing and public debt problems also are prepared. This work is under
the supervision of the Government Actuary, who is an Assistant
Director of the Technical Staff. He is responsible for reports on
actuarial matters involved in Treasur3^ operations, and prepares
actuarial estimates required by statute with respect to the operations
of Government trust funds. The Secretary of the Treasury is charged
with the duty of handling the investments and other operations for
most of these funds.
United States Coast Guard
General

The primary duties of the Coast Guard are to enforce or assist m
the enforcement of all applicable Federal laws upon the high seas
and waters subject to the jurisdiction of the United States; to administer laws and promulgate and enforce regulations for the promotion of safety of life and property on the high seas and on waters
subject to the jurisdiction of the United States, unless specifically
delegated by law to some other^ department; to develop, establish,
maintam, and operate, with due regard to the requirements of national
defense, aids to maritime navigation, ice-breaking facilities, and rescue
facilities for the promotion of safety on and over the high seas and
waters subject to the jurisdiction of the United States; and to maint a m . a state of readiness to function as a specialized service of the
Navy in time of war.
In the fiscal year 1952 the Coast Guard carried out numerous
important assignments in support of national security and defense
measures, in addition to performing the other duties previously
summarized. Its specialized training and facilities equipped the
Coast Guard to assume these added military responsibilities without
curtaUing its normal peacetime functions.
The readiness with which the Coast Guard met the new military
demands indicates the attainment of a high degree of efficiency,
training, and morale. The added duties were carried out without
disturbing the Coast Guard's peacetime status as a service under the
Department of the Treasury, and close liaison and working arrangements were maintained with the Navy and Department of Defense
to coordinate planning and insure. the wise and economical use of
Coast Guard resources and trained personnel.
While the bulk of Coast Guard activities are designed primarily
to meet peacetime needs, all of these activities have taken on added
importance since the outbreak of hostilities in Korea and the increase

ADMINISTRATIVE REPORTS

177

in shipments of defense materials abroad. I t is recognized that any
delay in maritime shipping would retard the defense program.
In order to carry out the numerous and varied new duties which
relate to and support national defense, the Coast Guard expanded
moderately. Military personnel on active duty at the end of the
fiscal year was 35,082, compared with 29,284 in 1951. This increase
was considered the minimum needed to man facUities and operations
which were added to meet military requirements. In addition, personnel was required to augment search and rescue facilities in overseas
areas and to extend port security coverage in this country. A more
detailed account of the activities referred to here will be found in
appropriate sections which follow.
Law enforcement

The port security program carrying out Executive Order 10173,
which was begun in 1951 to provide for the safeguarding of vessels,
harbors, ports,, and waterfront facilities in the United States, was
contmued in 1952. The purpose of this program is the protection of
waterfront facUities and of vessels in port. Under this program, measures to prevent sabotage include the security screening of seamen,
longshoremen, pilots, and waterfront workers, and others required to
have access to restricted waterfront facilities and vessels in port.
Persons to be employed aboard merchant vessels are checked to determme whether they were security risks, and durmg the year 170,328
merchant mariners' documents bearing evidence of security clearance
were issued to individuals. A total of 775 security appeal hearings
was granted to those who were classed as poor security risks.
In the other category of longshoremen, warehousemen, pilots, and
waterfront workers, 196,951 persons were screened and 188,301 port
security cards were issued, while 827 hearings were granted upon
appeal by persons who had been found to be poor security risks.
An air detachment consisting of three helicopters and required
personnel was established on a test basis at the air station, Brooklyn,
N. Y., and has been operating since March 4 in support of port
security operations. This is the first unit of its type.
The volume of enforcement activities of the year is indicated by
the following statistics.
Vessels boarded
39, 552
Reports of violation of the Motorboat Act, 1940 (46 U. S. C. 526)__.
2, 710
Reports of violations of the Oil Pollution Act, 1924 (33 U. S. C. 431) _.
244
Reports of violations of Port Security Regulations
4, 564
Permits issued to load or discharge explosives
1, 090
Total tonnage of explosives covered by above permits.
1, 593, 973
Explosive loadings supervised
757
Inspections of other hazardous cargo
6, 377
Regattas patrolled
,
830

In addition to the general enforcement of Federal laws on the high
seas and territorial waters of the United States, the Coast Guard assisted other departments and agencies of the Government having
primary responsibUity for the enforcement of the Oil Pollution Act,
anchorage regulations, laws relating to internal revenue, customs, immigration, quarantine, and the conservation and protection of wildlife
and the fisheries. Full cooperation was extended to all Federal and
to many State and municipal law enforcement agencies.
221052—53

178

19 52 REPORT OF THE SECRETARY OF THE TREASURY

. Illustrative of 'such cooperation was participation by Coast Guard
aviation personnel in the location of 190 illicit distilleries. Discovery
of these distilleries is estimated to have prevented the loss of $119,263
in revenue.
Assistance operations

I n the operation of rescue facilities for the promotion of isafety on
and over the high seas and waters subject to the jurisdiction of the
United States, the Coast Guard employed its available facilities to the
maximum advantage.
The Coast Guard maintains an organization of surface craft, aircraft,
lifeboat stations, bases, and radio stations, together with operation
and communications centers (rescue coordination centers), in its several
districts and areas located within and without the continental United
States. The assistance rendered and the emplo3maent of equipment
and personnel during the fiscal year is shown in the following statistics.
Number of assistance calls responded to^
Number of instances of major assistance 2
Number of instances of minor assistance
Value of vessels and aircraft assisted (including cargo)
Lives saved or persons rescued from peril
Vessels refloated
Disabled vessels towed to port

15, 555
4, 197
7, 166
$319, 721, 552
5, 855
797
6, 203

1 The differences in the number of calls responded to and the number of instances of assistance rendered
represent those cases in which the Coast Guard responded but in which assistance was given by some
other source or was no longer needed or possible.
2 The term "major assistance" as used here means those rescue incidents wherein immediate danger to
the person or craft is involved and which, without the rendering of Coast Guard assistance, probably would
have resulted in death; serious injury to persons, au-craft, or vessels; shipwreck; or great financial loss from
damage to the craft.

The following illustrate major cases of assistance rendered during
the year.
On January 9, the S. S. Pennsylvania broadcast thai she had sustained a 14-foot crack in her port side. A tremendous sea was
running, and the wind exceeded bb miles per hour. The master advised that the vessel was foundering and that 45 men were abandoning
ship in four lifeboats 665 miles west of Cape Flattery, Wash. The
Coast Guard used all the facilities at its command in the area, and the
coordinated use of Navy, Air Force, and Royal Canadian Air Force
facilities in an attempt to locate and rescue the survivors of the vessel.
Fifty-one aircraft from all services and 18 surface vessels participated
in the search. Some of the debris was located, including one overturned lifeboat, but no survivors were found.
On February 18, during a severe ^'northeaster'' off the New England
coast, the ' T 2 " tankers S. S. Fort Mercer and S. S. Pendleton broke
in half. Coast Guard vessels, aircraft, and lifeboat stations, working
under severe winter conditions, rescued and removed 62 persons from
the foundering ships or from the water with a loss of only 5 lives.
Certain of the participating Coast Guard personnel involved performed
duty above and beyond that associated with normal duty, for which
they were commended by the Secretary of the Treasury and awarded
the Treasury's life saving medal.
Immediately following the crash of a commercial overseas transport
aircraft off the San Juan Harbor on April 11, Coast Guard forces coordinated with the Air Force and the Navy to rescue 17 of the 69
persons on board.

ADMINISTRATIVE REPORTS

179

On April 7, the breakup of ice in the Mississippi River and its
tributaries at Bismarck, N. Dak., and above, and on the Big Sioux,
created the worst flood conditions in that area in thirty years. Coast
Guard personnel rendered assistance in that major disaster, utilizing
small boat equipment, mobile radio stations, automotive equipment,
helicopters, and fixed wing aircraft. The Coast Guard evacuated
stranded persons, transported critical relief supplies, evacuated livestock from low ground, transported personnel engaged in levee construction, and generally assisted the Red Cross, local, State, civil,
and mUitary authorities.
Marine inspection and safety measures

During the year no passenger lost his life as a result of casualties
on inspected and certificated American passenger vessels.
Among the duties which the Coast Guard performed in promoting
safety of life and property on all vessels subject to the navigation and
vessel inspection laws of the United States were issuance of certificates of inspection; investigation of marine casualties; enforcement of
manning requirements, citizenship requirements, and requirements
for the mustering and drilling of crews; approval of plans for the construction, repair, and alteration of vessels; shipping and protection of
merchant seamen; licensing and certificating of officers, pilots, and
seamen; administration of load line requirements; promulgation and
enforcement of rules for lights, signals, speed, steering, sailing, passing, anchorage, movement, and towlines of vessels, and of regulations
governing the transportation of explosives and other dangerous cargoes
on board vessels; regulations for outfitting and operating motorboats;
inspection of equipment hazardous to those employed on vessels;
licensing of motorboat operators, regulation of regattas and marine
parades; and promulgation and enforcement of rules governing the
gas freeing of merchant marine vessels incident to repairs and
inspections.
June 1952 marked both the delivery of the S. S. United States and
the completion of its initial annual inspection. Not only is this the
largest passenger vessel ever built in this country (53,309 gross tons),
but also the fastest merchant vessel in the world. Capable of carrying 2,000 passengers in peacetime and of being quickly converted to
carry more than 12,000 troops in wartime, the United States was
built to the highest modern safety standards, exceeding those of any
vessel previously built. The delivery marked the completion of
extensive work incident to the testing and approval of equipment
especially designed for this vessel, as well as the approval of the many
plans covering its construction, and the installation of electrical and
mechanical equipment required by Coast Guard safety regulations.
A total of 17,281 plans and blueprints covering the construction or
material alteration of merchant vessels was reviewed or acted upon.
Close cooperation was maintained with the many organizations carrying on research or engaged in the development of specifications which
can be applied to the design, construction, and repair of merchant
vessels and their equipment. Required safety equipment for merchant vessels was examined and tested and 253 items were granted
technical approval.
On November 19, 1951, Itaty deposited its ratification of the 1948

180

1952 REPORT OF THE SECRETARY OF THE TREASURY

Convention for the Safety of Life at Sea. As this brought the number
of ratifications to fifteen, the Convention, by its terms became effective
November 19, 1952.
This Convention materially affects the safety requirements for
passenger vessels and cargo vessels of 500 gross tons and over, engaged
in internationar trade. From the standpoint of direct effect on the
maritime industry, action for implementation of the 1948 Convention
is one of the more important accomplishments of the year. The
Merchant Marine Council of the Coast Guard held public hearings
and solicited cooperation and assistance of the merchant marine
industry and other persons concerned or affected. Approximately
1,400 pages of material concerning the proposed regulations, which
comprise a rearrangement of almost 60 percent of the present regulations, were distributed to all who had expressed an interest in the
various safety subj ects under consideration.
The active interest and response to requests for comments on the
proposed regulations indicate that when the new regulations are
finally promulgated there will exist substantial agreement between all
segments of the merchant marine industry. The new arrangement
of safety regulations wiU be published in Chapter I of Title 46, Code
of Federal Regulations.
Six public hearings of the Merchant Marine Council were held
regarding pUot rules, classification of inland waters and high seas in the
southeastern Alaska area, classification of waters in southeastern
Alaska for inspection purposes, dangerous cargo regulations, navigation regulations for the St. Mary's River in Michigan, security of
vessels and waterfront facihties, marine engineering regulations, and
specification for various types of safety equipment. All written
and oral comments, data, and suggestions received from private
enterprise and industry were considered and, where possible, were
incorporated in the amendments to the regulations.
The Merchant Marine Council Committee held 22 regular meetings.
Preliminary consideration was given to proposed amendments to
regulations, proposed legislation aft'ecting the merchant marine, and
other matters affecting safety at sea. Panels of consultants composed
of outstanding representatives from industry assisted the committee.
There were 2,879 marine casualties reported during the year, of
which 2,072 received detaUed investigation, 28 of the most serious by
formal Marine Boards of Investigation. The nature of the remaming
807 casualties did not warrant detaUed mvestigation. There were
312 lives lost in 86 marme casualties, includmg 11 lives lost m the
burning of the Danish vessel S. S. Eiria m the Columbia River.
Ten vessels of over 1,000 gross tons were lost as a result of marine
casualties: The motor vessel Southern Isles, the barges Umnak Island
and Wollaston, the S. S. Flying Enterprise, S. S. Pennsylvania, S. S.
George Walton, S. S. William Eaton, S. S. Pendleton, S. S. Marie H.
Brown, and S. S. Erria.
Certain of these mishaps led to an extensive review of the ship
fracture situation. The review indicated that the record of new
ships built since 1945 has been excellent. This was attributed to
knowledge gained from experience, testing, and technical study.
With respect to existing vessels built during World War II, the position was not so satisfactory, because many of the improvements

ADMINISTRATIVE

181

REPORTS

developed since the war coiUd not be applied to vessels already buUt.
I t was decided that further corrective action should be taken on ' ' T 2 "
tankers, including an increase in the longitudinal strength of these
ships. A manual suggesting, satisfactory loading and baUasting
procedures on tankers is now under preparation.
The following is a digest of marine inspection activities.
Number
of vessels
Annual inspections completed >
Drydock examinations
-..
Reinspections
--Special surveys (passenger vessels)
_
Special examinations by traveling inspectors of passenger and tank vessels
Miscellaneous inspections
Undocumented vessels numbered under provisions of act of June 7, 1918 (46
u s e 288)»
,—.
Violations ofnavigation and vessel inspection laws
Factory inspections 3

6,687
6,270
2,624
174
294
16,378

Gross tonnage of
vessels
22,105,202
27,682, 682
9,228,643

393,'790
3,797

»Incliides 225 vessels, totaling 337,377 gross tons, which were conversions or new construction completed
during the year.
3 The total of vessels numbered is 67,745 less than that reported for the fiscal year 1951, due mostly to the
removal from the records of 66,747 vessels which are exempt from the numbering requirements. This
represents a net reduction of 998 vessels.
3 There were factory inspections of 703,515 items of equipment. The heavy increase in factory inspections
is accounted for by (1) a considerable number of extensive boiler repair jobs ordered in the Cleveland marine
inspection zone on vessels equipped with boilers which had been in service many years and (2) replenishment of stocks of boiler repair materials manufactured inthe Cleveland zone but stocked elsewhere.

Merchant marine personnel.—The licensmg and certfficating of
merchant marine personnel included the issuance of a total of 144,602
documents. Of this number, 48,551 were issued to persons who had
no previous serv^ice m the merchant marme, and 950 were' licenses
issued to radio officers under the provisions of the act of May 12, 1948
(46 U. S. C. 229 (c)). In the interest of national defense, 7,941
mdividual waivers of manning requirements for merchant vessels were
issued. Shipping commissioners supervised the execution of 17,650
sets of shipment and discharge shippmg articles.
Merchant Marine Investigating XJnits in major United States ports
and Merchant Marine Details in London, Antwerp, Bremerhaven,
Naples, Trieste, and Piraeus continued to operate in the administration
of (iiscipline in the merchant marine. During the year a total of 8,964
mvestigations of cases mvolving negligence, mcompetence, and misconduct were made. As a result, charges were preferred and hearings
held on 1,134 cases by civUian examiners.
Aids to navigation

On June 30, 1952, there were maintained 37,838 aids to navigation
m the navigable waters of the United States, its Territories, possessions, the Trust Territory of the Pacific Islands, and at overseas
military bases. These aids consisted of many different devices,
ranging from simple unlighted wooden spar buoys to light stations,
lightships, and loran networks.
During the year, 929 new aids were established and 882 aids were
discontmued, an increase of 47. These changes in aids to navigation
were necessary because of the ever-changmg natural channels and the
completion of rivers and harbors improvements. At the end of the

182

1952 REPORT OF THE SECRETARY OF THE TREASURY

year, 36 loran stations operated by the Coast Guard were supplying
long-range navigational service to ahcraft and ships. These mcluded
a new loran chain of three stations in Japan.
Ocean stations

Coast Guard ships transmitted 61,488 weather reports, made
52,080 radio contacts with aircraft, rendered assistance to 35 cases, and
cruised 807,912 mUes in connection with the ocean station program
during the year. Ocean station vessels provided search and rescue,
communications, air navigation facilities, and meteorological services
in the ocean areas regularly traversed by ahcraft of the United States
and other cooperating governments. As of the end of the year, the
Coast Guard operated five stations in the Pacific Ocean (an increase
of two since 1951) and five stations in the North Atlantic Ocean.
An additional North Atlantic station is maintained by the Coast
Guard two-thirds of the time, with the Netherlands operatmg it the
remammg one-third.
Bering Sea Patrol

The Bering Sea Patrol was carried out by the U. S. C. G. C. Northwind from June 4 to October 5, 1951. The purposes of this annual
patrol are the protection of life and property; protection of the seal
herds and other wUd life; law enforcement and transportation of a
floating court in the administration of justice; the furnishing of
medical and dental assistance to natives and others in remote localities
in the areas contiguous to the Bering Sea and Arctic Ocean; and the
logistics, support of isolated Coast Guard facilities. During the
patrol the Northwind cruised 12,460 mUes, carried 26 passengers on
missions in the interest of the general public, transported 76.8 tons
of freight and 184.1 tons of fuel oU for Government agencies, and rendered medical treatment to 243 persons and dental treatment to
496 persons.
International Ice Patrol

The post-season activities of the International Service for Study
and Observation of Ice Conditions in the North Atlantic for 1951
consisted of an oceanographic survey by the U. S. C. G. C. Evergreen
from July 7, 1951, to August 3, 1951, in the area northerly from the
Grand Banks to Baffin Bay.
Preliminary aerial reconnaissance flights by aircraft operating from
Argentia, Newfoundland, commenced on February 13, 1952. The
Office of the Commander, International Ice Patrol, was established
at Argentia on March 5. Aerial reconnaissance by either one or two
long-range aircraft, dependmg upon actual ice conditions, continued
untU June 16 when it was determined that no seasonal ice menace
existed to the recognized routes across the North Atlantic and the
patrol for the 1952 season was discontinued. During three of the
last four years, ice conditions have been such that a surface patrol
has not been necessary. The Evergreen made three patrols in carrying
out the program of oceanographic surveys in the region of the Grand
Banks, and plans were made for a post-season oceanographic cruise
to the northward.

ADMINISTRATIVE REPORTS

183

Facilities, equipment, construction, and development

Floating units.—The larger ships in active commission at the end
of the year consisted of 192 cutters of various types, 62 patrol boats,
36 lightships, 42 harbor tugs, and 10 buoy boats, an increase of 14
vessels over the previous year. During the year they cruised 3,216,617
mUes, compared with 2,742,949 mUes the previous year.
Included in the 192 cutters is the C. G. C. Courier, SL 339-foot vessel
equipped with radio broadcasting facUities and manned and operated
by the Coast Guard to assist in carrying out the Voice of America
program of the Department of State.
In addition to the larger ships there were 262 motor surfboats,
177 motor lifeboats, 1,254 miscellaneous motorboats, 1,966 nonpowered craft, and 75 barges in operation.
By utilization of modern assembly Ime methods, one hundred 40foot steel utUity boats,' newly designed by the Coast Guard, were
constructed at the Coast Guard Yard. Contract designs were completed for a new 95-foot diesel-powered seagoing steel patrol cutter
as a replacement unit for vessels now approaching obsolescence.
Construction of the first of the new boats is scheduled at the yard
late in 1952.
The keel for lightship WAL-613, to replace Ambrose Lightship in
New York Harbor, was laid at the yard in January, with delivery
scheduled for September.
The C. G. C. Dione (WFC-107) was reactivated at the yard for
assignment to search and rescue duty in the Gulf of Mexico.
Diesel main propulsion and auxUiary power were installed in the
C. G. C. Fir (WAGL-212). Extensive alterations were also made to
the living compartments and buoy handling gear. A considerable
saving in fuel and repah is expected to result from this conversion.
Shore establishments.—Shore establishments at the end of the
fiscal year consisted of 12 district offices, 3 section offices, 4 inspection offices, 1 aircraft repair and supply base, 9 air stations, 11 air
detachments, 151 lifeboat stations, 12 bases, 36 depots, 333 manned
light stations, 60 light attendant stations, 36 loran transmitting
stations, 46 marine inspection offices, 6 merchant marine details
located in foreign ports, 15 radio stations, 1 academy, 1 training
station, 20 recruiting stations, 1 receiving center, 5 rifie ranges,
4 ship training detachments (mobUe units), 2 supply centers, 10 supply
depots, and 1 shipyard. In addition to the foregoing, captain of the
port offices, supplemented by port security units, were maintained
in major shipping centers.
The construction of new port security facilities, including small
boat berthing, was 95 percent complete on June 30. The new Gulf
of Alaska Loran Chain was substantially completed and all stations
were **on the air" by March. The Hawaiian Loran Chain reconstruction was completed and all stations ready for operation by June.
The Philippine Chain was rehabilitated, a new station was erected
at Falalop, the Cocos station was reconstructed, and work was started
on rebuilding the facilities at Saipan. I n the Ryul^yus Chain, the
stations at both Okinawa and Iwo Jima were rehabilitated.
The Coast Guard Academy Memorial Chapel at New London,
Conn., was completed and dedicated. At the same location, work is

184

19 52 REPORT OF THE SECRETARY OP THE TREASURY

proceeding on the first umt of a new galley and mess hall building.
Rehabilitation was under way at the training stations—Cape May,
N. J., Groton, Conn., and Alameda, Calif. Other work in progress
inclucies rehabilitation of loran stations at Cape Blanco, Oreg., and
Point GrenvUle, Wash.; and construction of new industrial facilities
at Base, Sault Ste. Marie, Mich.; Depot, St. Louis, Mo.; Aircraft
Repair and Supply Base, Elizabeth City, N. C ; and Depot, Guam.
Engineering design was started on projects for reconstruction of the
loran stations at French Frigate Shoals, Hobe Sound, Fla., Point
Arguello, Calif., and Point Arena, Calif.; for a new light station at
Mayport, Fla., to replace a lightship; for expansion of Air Detachment facilities at Annette Island, Alaska; and for rescue coordination
centers for search and rescue units on islands in the Pacific and Atlantic
Oceans.
During the year the Coast Guard also repaired and maintained
20,000 fixed structures at shore units, including minor lighted aids to
navigation, and 22,000 buoys. Approximately 6,800 construction
and repair projects were undertaken. Of this number, 678 were
major projects of which 399 were completed during the year.
Aircraft.—During the year the Coast Guard operated 113 fixed and
rotary wing aircraft deployed from nine air stations and eleven air
detachments. Air detachments outside the United States proper
were located at Argentia, Newfoundland; San Juan, P. R.; Honolulu,
T. H.; Guam, M. I.; Sangley Point, P. I.; Kodiak, Alaska; and
Annette Island, Alaska.
I n carrying out various duties, 10,664 sorties were fiown for a
total of 29,185 hours. Aircraft transported 1,469,453 poimds of
supplies and equipment in logistic support of Coast Guard shore
units at isolated stations in the Western Pacific Area.
Twenty new fixed and rotary wing aircraft were acquired as replacements for over-age aircraft, with attendant improvements in speed,
range, and utility. Further progress in standardization and safety
was realized. Helicopter rotor and transmission improvements were
installed to provide longer life and structural integrity. The overhaul of specified helicopter components also was standardized and
centralized to insure safer operations and longer use. The helicopter
hoisting mechanism was improved and a new helicopter fuel tank
installation has resulted in improved range and versatility. A
procurement program for the twenty-man collapsible life raft was
initiated. These life rafts wUl replace the current wooden airborne
lifeboats and are expected to result in decided monetary savings as
well as better performance.
New developments.—Electronics equipment was improved through
application of the following new techniques: The automatic trackmg
loran receiver has been developed further so that it is now feasible to
use a repeater indicator in the cockpit within direct view of the pUot.
This repeater presents two hues of position so that a navigational fix
is immediately avaUable. A prototype of this equipment is now under
construction and it is expected the equipment wUl be used during the
next annual ice patrol.
A project was begun to make slave loran stations completely
automatic. One loran station, which was established to provide extra
coverage for the entrance to New York Harbor, has been running

ADMINISTRATIVE REPORTS

185

completely automatically durmg the past fiscal year. This proved
to be entirely reliable. A project was started durmg the year to
design radar reflectors for use on Coast Guard motor lifeboats in
order that shore based coastal surveUlance radars might be used
to direct these boats alongside distressed craft, and to further direct them on a safe return passage. Preliminary tests indicate that
a considerable improvement can be realized in the radar reflection
characteristics of motor lifeboats. A project is under way to provide
an automatic radio call device for use at mobile and fixed units where
a continuous radio watch cannot be maintained. This will permit
selected shore radio stations, which are designated to maintain radio
guard, to establish radio communication with units so equipped at
any time instead of being limited to scheduled watch periods. Field
tests of this equipment are planned during the fiscal year 1953.
Other testing and development programs were focussed on methods
of reducing the cost of repetitive maintenance, on improvements
which could reduce the unit cost of service, and on developments in
fields where the Coast Guard has basic statutory responsibility. The
following activities are illustrative of these programs. The frequency,
of buoy pamting was changed from one year to every two years and
routine haulmg for painting of some 2,500 wooden boats was decreased
from an average of three times a year to one annual hauling for wooden
bottom painting. This was made possible by the development of
improved paint systems for buoys and wooden boats. Decreases in
costs of small boat hull construction and maintenance possibly may
result from the use of laminated glass fiber boats. Twenty such
boats were designed and built so that this potential saving may be
evaluated. A redesign of all standard types of buoys is in process to
improve their visual and radar characteristics and at the same time
decrease both the cost per unit of service rendered and the average
unit cost of replacements. The work loads of the industrial activities
of the Coast Guard were analyzed and work diverted or reassigned
in many cases to obtain a more efficient utilization of manufacturmg
and repair facilities. Manufacturing and repair methods are under
study with a view to simplifying designs and processes. The explosive
properties of ammonium nitrate were investigated under the guidance
of the National Academy of Sciences.
Ship Structure Committee.—The Secretary of the Treasury convened
the Ship Structure Committee in 1946 to assist the Coast Guard in
carrying out its primary responsibility for the safety of life at sea.
The committee is charged with conducting a research program
mtended to improve the hull structures of ships. Under the Chairmanship of the Engineer in Chief, the committee is composed of
members from various agencies concerned with ships; i. e.. Navy
Department, Maritime Administration, and the American Bureau of
Shipping. The National Academy of Sciences—National Research
Council contributes important technical assistance and advice.
Although the committee has originated many important improvements in the field of ship structure, much remains to be learned. The
need for this program was emphasized by the ship casualties which
occurred durmg the wmter gales of 1951-1952,

186

19 52 REPORT OF THE SECRETARY OF THE TREASURY

Personnel

Active, military, and civilian.—On 30 June 1952, the mUitary
personnel strength of the Coast Guard on.active duty was 35,082
and consisted of 3,151 commissioned officers, 459 commissioned
warrant officers, 357 cadets, 479 warrant officers, and 30,636 enlisted
men. The foregoing represents a net mcrease for the year of 519
commissioned officers and 5,261 enlisted men. The authorized force
of civUian employees was 2,467 salaried personnel, 3,366 wage board
employees, and 595 part time lamplighters, an increase of 297 over
the total authorized for 1951.
Smce the expansion program requiring the recall of reserve officers
began about two years ago, many reserve officers have been completmg the requhed period of obligated service. The numbers released
to mactive duty at theh request are becoming more numerous each
month. Contmued appointment of new reserve officers and recall of
others to active service will be necessary to offset this loss.
A program of postgraduate, specialized, and advanced trammg was
afforded, to selected officers to increase their value. The expanded
mannmg program in connection with the port security and the mUitary
readmess programs necessitated the assignment of many officers to
refresher and short courses m antisubmarme warfare traming, damage
control, explosives loadmg, firefighting, etc. A special course in
fire prevention was set up at Illmois Institute of Technology, Chicago.
Other officers were tramed at the U. S. Naval Magazine, Port Chicago,
Calif., and the Army Military Policy Replacement Trammg Center,
Camp Gordon, Ga.
The Officer Candidate School was established at the Academy for
indoctrination trammg of candidates for commissions for temporary
service or extended active duty as reserve officers.
On June 6, 77 cadets were graduated from the Academy, and commissioned as ensigns. In the 1952 Nation-wide competitive examination for appomtment as cadets, 487 received passing grades from
among 1,425 who took the exammation. From this number 225
were appomted as the Class of 1956. The 1952 summer practice
cruise was made aboard the cutters Campbell and Eagle, and mcluded
visits to European ports.
On November 1, 1951, an accelerated military readiness program
was authorized for the Coast Guard which provided for an increase of
5,396 enlisted men. By April 1, 1952, nearly all of the personnel
were enlisted. The executive orders providing mvoluntary extension
of enlistments were applied. Personnel whose enlistments were
involuntarily extended were permitted to reduce the extended time
by agreemg to enlist m the Reserve followmg discharge.
Of the 20,940 men who applied for enlistment in the Coast Guard,
9,126 were enlisted, 3,558 were rejected physically, 6,959 were rejected
for other reasons, 626 were accepted but faUed to enlist, and 671
applications were pending on June 30, 1952. A total of 8,141 recruits
reported to the recruit traming centers at Cape May, N . J., and
Alameda, Calif., the remaining newly enlisted personnel.being assigned
to duty without receiving basic training.
To meet the new enlisted personnel demands of military readiness,
the trammg station at Groton, Conn., was expanded to capacity; and
increased quotas were obtained in Navy, Army, and other schools,

ADMINISTRATIVE REPORTS

187

The average number of men in trammg per month was 1,579, and the
total number graduated from all schools was 6,782. The MUitary
Police, Explosive Loading, Fhefighting, and Sonar Schools accounted
for the greater part of this total, and six other schools for the balance.
Correspondence courses were m great demand; the Coast Guard
Institute had a current enrollment in all courses of 8,825.
The Coast Guard continued its program of cooperation m the
trammg of foreign nationals and foreign exchange students by opening the facUities of the Groton Trammg Station to those mterested ffi
aids to navigation, loran, and related subjects, and by arrangmg
visits to Coast Guard Headquarters and other operational facUities.
Four Cuban naval officers and representatives from Japan, Haiti,
Canada, Israel, India, Okinawa, and Iraq spent varying periods of
time studying and observing Coast Guard activities.
Public Health support.—On June 30, 1952, 82 U. S. Public Health
Service officers were on duty, distributed as follows: 34 medical
officers, 38 dental officers, 9 nurse officers, and 1 scientist officer.
Three new motorized dental units were assigned to the 5th, 7th,
and 8th Districts. The units embraced the latest engineering concepts,
and those for the 7th and 8th Districts were provided with ah
conditionmg.
Second year resident medical officers were contmued for duty on
ocean weather stations A, B, and C These stations were manned
throughout the year. Five full time medical officers were detailed
to the western area for duty on ocean weather stations S and V.
Coast Guard Reserve.—At the end of the fiscal year the strength
of the Reserve had reached 10,904 distributed as follows: On extended
active duty, 926 officers and 683 enlisted; on mactive duty, 2,588
officers and 6,707 enlisted.
Port security continued to be the major trainmg program, both m
number of units and personnel. By June 30, 42 Organized Reserve
Trainmg Units, Port Security, were in operation, with 268 officers
and 2,849 enlisted members associated m paid drUl status. This was
an mcrease over the previous year of 7 units, 44 officers, and 857
enlisted members.
The vessel augmentation program, ffi which 2 experimental Organized Reserve Trainmg Units had been established ffi the fiscal year
1951, was expanded to 15 units, with 76 officers and 285 enlisted men
associated ffi paid drUl status.
Inter-service aviation training'^was'^'mitiated on an organized basis
with the Navy, and 18 officers and 4 enlisted men were assigned in paid
drUl status. In addition, ^S officers and 5 enlisted men were associated
with Naval Reserve units ffi drUl pay status ffi other types of mterservice trammg programs.
As more Reserve personnel were absorbed into organized trammg
programs and others were recalled to active duty, the Volunteer Reserve Traming units were reduced both in number of units and ffi
personnel. By June 30, 31 units were operating with 360 officers and
146 enlisted members.
As the end of the fiscal year approached, however, various measures
designed to stimulate expansion of the Volunteer Reserve Traming
units were under way. In anticipation of the establishment at some
future time of organized trammg units in aids to navigation, the es

188

1952 REPORT OF THE SECRETARY OF THE TREASURY

tablishment of volunteer units for this type of trainmg was authorized
and encouraged.
Special efforts were made to provide two weeks of active duty for
training to supplement and complete the year's drill sessions for members of organized units. Trammg courses were set up for this purpose
in five port cities to provide practical work in port security, while
members of vessel augmentation units were trained aboard Coast
Guard vessels. A total of 386 officers and 2,436 enlisted members
received two weeks of active duty training.
Military justice.—This was the mitial year of the operation of the
Uniform Code of MUitary Justice. A total of 1,484 cases was received for processmg. This figure included 34 general courts martial,
406 special courts martial, and 1,044 summary courts martial. Appellate review by the Board of Review was required in 27 general and
93 special court martial cases. In the remainder of the cases appellate review was completed either by the General Counsel or by an
officer of the Coast Guard havmg authority to convene general courts
martial. Eight Board of Review cases were appealed to the United
States Court of Military Appeals, six by petition of the accused and
two upon certffication by the General Counsel. The Court of MUitary
Appeals affirmed 6 cases, reversed 1, and 1 is now pending.
Administration

Achievements in improvement of general management and admmistration durmg the fiscal year were facUitated by field surveys covermg major functional areas of the Coast Guard and supportmg activities. On the basis of background developed by private consultants in previous years, installation and follow-up of improvements
were undertaken in Merchant Marine Safety, Operations, Engffieerffig,
Personnel, and Fmance and Supply. Numerous simplffications ffi
practices and procedures have been instituted. Tightened fiscal administration requhements have been clarffied through the issuance of
a Manual oj Budgetary Administration which combmes policies and
instructions governing budget formulation and execution ffi a formal
financial plan tied dhectly to the operatmg program.
Fiscal management.—Shortly before the beginning of the fiscal year
1952 installation of the new accounting system was completed and an
admmistrative reorganization was adopted at Headquarters which,
amoQg other things, placed all fiscal activities under a newly created
Comptroller. The fiscal year 1952 has been a period during which
both the operation of the accounting system and the organization of
the enthe financial administration have been improved.
^ The first summarized comprehensiye financial report of the Coast
Guard was prepared from the accounts and records mamtamed under
the new system for the month of August 1951. This report has been
issued monthly since that date. An internal audit program was developed and audits of six districts and four Headquarters units were
made during the fiscal year. The internal audit program has proved
to be a most important part of financial administration.
Although some administrative problems still exist relative to obtamffig the desired currency of reports and the accuracy and use of
accounting data for management purposes, the accountmg improve-

ADMINISTRATIVE REPORTS

189

ment program was completed in all major aspects except property
accounting. I t is planned to proceed with this latter task durffig the
fiscalyear 1953.
Supply program.—In the supply program, the basic framework for
improved distribution and mventory control of stocks was completed
with the installation of the last of the 10 district supply depots and fficorporation of inventory control at the twenty industrial activities
where the scope of operations warrants this control.
One result has been the bringing into controlled inventory much
usable material heretofore not properly identified, and, the disposal
of much unusable, obsolete, or scrap material. Another result has
been improved geographic distribution of stocks. A third result is
better consolidation of procurement actions.
I n addition, arrangements for support by the Navy, Army, or
General Services Administration have been clarified or improved in
respect to all items which can be obtained from those sources.
Personnel sajety program.—During the fiscal year accidental injuries
to civilian employees were reduced 50 percent below those in 1951.
The reduction is attributed to improved organization and the positive
assignment of responsibilities for safety. I t is expected that these
same factors wUl eventually reduce military injuries and motor
vehicle accidents to a corresponding degree. Fire damage during
the fiscal year showed a gratifying dollar reduction.
The Coast Guard also is concentrating on off-duty injuries especially off-duty motor vehicle fatalities. A permanent motor vehicle
operator's record, contained on a single sheet, was developed. I t
quickly furnishes any deshed information concerning accidents, violations, and all operators' permits issued during the enthe career of
military or civilian personnel who operate Coast Guard vehicles.
Surplus property.—During the year, surplus property with an
acquisition value of $944,721 was transferred to other Government
agencies and $1,819,565 was sold or donated to educational institutions under General Services Administration regulations.
Disposal oj iron and steel scrap.—All units have continued an active
participation in the iron and steel scrap drive, which in 1952 resulted
in the recovery of 3,875 tons of vital materials. The sum of $135,290
was realized from the sale of this scrap.
Coast Guard Auxiliary

The Coast Guard Auxiliary ended the fiscal year with 12,804
members and 7,596 facilities. The primary activity of this volunteer
nonmilitary orgamzation, which is active in 151 commumties, is the
promotion of safety and efficiency in the operation of small boats.
Attainments of the Auxiliary included the examination and passing
of 19,368 small boats which met the statutory requirements for
equipment, the patrolling of 343 regattas, the rendering of assistance
to 2,074 small boats, and the graduation of 626 nonmembers from a
course of instruction in seamanship and small boat handling.
Auxiliary units in most of their localities have promoted and supported much publicity directed at safety upon the waters. These
activities, coupled with examples of good practices, averted many
tragedies.

190

1952 REPORT OF THE SECREITARY OF THE TREASURY

Funds available, obligations, and balances

During the fiscal year 1952, the sum of $6,300.00 was expended for
mustering-out payments under the provisions of the act of February
3, 1944, as amended (38 U. S. C. 691). In settlement of unused leave,
under the act of August 9, 1946 (37 U. S. C. 37), $8,911.18 was paid to
43 claimants.
The following table shows the amounts available for the Coast
Guard during 1952, and the amounts of obligations and unobligated
balances.
Funds available
Operatingexpenses
.-.
Reserve training
Retired pay
_..
Acquisition, construction, and improvements:
Acquisition, construction, and improvements
Acquisition of vessels and shore facilities
Establishing and improving aids to navigation
Special projects, aids to navigation
Subtotal

.-.

•-.-,.

Total appropriated funds

Miscellaneous funds:
Payments, Armed Forces Leave Act of 1946 (allotment to Treasury, Coast Quard)
Coast Guard Academy, donation for chapel. Treasury
Department
United States Coast Guard gift fund
..
Total miscellaneous funds
Working funds established by advances from other
Government agencies:
Department of Defense:
Department of the Navy
Department of the Army
Federal Security Agency
-.
Department of Commerce
Department of State
Total working funds.
Grand total

$188,781,000
1,850,000
16,647,000
22, 290, 204
43. 055
-635
-1,002

Net total obli- Unobligated
gations
balances
$180,900,862
1, 706.887
16, 442,187
17,896,446
-56, 465
-863
-1,002

$7,880,138
143,113
204,813
4,393, 758
99, 520
228

22, 331, 622

17,838,116

4,493, 506

229, 609, 622

216,888, 052

12, 721, 670

-5,836

33,876
100

23, 540
100

10, 336

28,140

17,804

10,336

7, 626, 720
313
556, 200
176
495,600

7, 463, 431
313
556, 200
-55
495, 297

163,289
231
303

8, 678,383

8, 514, 560

163,823

238.316,145

225, 420, 416

12,895,729

United States Savmgs Bonds Division
Treasury policy of encouraging national thrift through investment
in^ savings bonds is centered in the United States Savings Bonds
Division. The 17-year experience of the savings bonds program has
demonstrated that during periods of war and defense the purchase
of savings bonds strengthens our economy by reinforcing our mUitary
power and helps to stabilize the economy after. these emergencies
are over. Savings bonds bought during the war created a financial
reserve of purchasing power which enabled their holders at the end
of the war to spend their current incomes freely. This freedom of
spending was a factor in our avoidance of postwar recession such as
has shortly followed every other major war in our history.
There are two continuing objectives of the Umted States Savings
Bonds Division: (1) to increase the number of buyers of savings
bonds; and (2) to encourage established investors to keep their maturing Series E bonds for an additional 10-year period. The magmtude
of the over-all program is indicated by gross sales of savings bonds of
$3.9 billion during the fiscal year 1952 and by the volume of savings

ADMINISTRATIVE REPORTS

191

bonds outstanding at the end of the year amounting to $57.7 billion.
(Details of sales, redemptions, and amounts outstanding, by series,
will be found on pages 627 through 639.)
Automatic extension of maturing Series E bonds in 1951, and the
subsequent revisions of terms of Series E bonds, the substitution of
Series J and Series K bonds for Series F and Series G bonds, and the
introduction of the new current fficome bonds. Series H , which occurred
in 1952, placed upon the Division responsibility for making these
revisions known to bondholders and potential bondholders. The
importance of publicizing the automatic extension privilege alone is
indicated by the fact that during the next five fiscal years (1953-1957)
more than $20 billion Series E bonds are scheduled to fall due under
the original 10-year maturity plan.
Shortly after the defense mobilization was begun in the summer of
1950, the Division expanded its goal to increase the number of persons
buying savings bonds on regular purchase plans through deductions
by employers from wages and salaries. PayroU savings plan participants increased substantially between January and June 1951 and,
despite the difficulties caused by the high rate of labor turnover, the
number participating in the fiscal year 1952 increased stUl further.
Substantial gains in the number of payroll savers were made in the
steel, automobUe, glass, and meat packing industries. Outstanding
was the campaign among the employees of the ahcraft manufacturing
industry which resulted in adding over 115,000 new participants.
The successes of this program were due to the cooperation of top
executives of certain large compames which assumed leadership, the
person-to-person canvassing conducted by a number of these companies, and the assistance given the Savings Bonds staff throughout
the country by the 28 outstanding industrialists comprising the
National Payroll Savings Advisory Committee. As of June 30, 1952,
it is estimated that 7,500,000 persons were enlisted in the payroll
savings plan, compared with 5,800,000' participating on June 30, 1951.
A somewhat similar automatic savings program is that for selfemployed and professional persons. I n this program, designated
the bond-a-month plan, the purchaser authorizes his bank to debit
his checking account regularly for the price of a savings bond. The
bank then issues and delivers the bonds as a free service to depositors.
New efforts were made during the year to bring more farm operators
into a regular purchase program. Under the equipment reserve plan
farmers buy bonds in order to accumulate cash reserves which ultimately will be used to replace worn-out mechanized farm machinery.
The farmers invest in bonds each year an amount equivalent to the
allowable deductions for depreciation on their mechamzed equipment. Since this amounts to an average of about 10 percent of the
original cost, when the machines are 10 years old there are available
bond reserves amounting to the cost price, plus the interest accrued
on the bonds. Farm organizations themselves originated this plan.
An exact count is not feasible, but farmers participating in this
regular purchase plan at the end of 1952 numbered in the thousands
and were increasing rapidly.
The Umted States Savings Bonds Division is administered by a
small headquarters staff, and has field representatives in each State,
the District of Columbia, and the Territory of Hawaii. This nucleus
is augmented by many thousands of volunteers who are organized

192

1952 REPORT OF THE SECRETARY OF THE TREASURY

on a.nation-wide basis and who serve under State and local advisory
chairmen who, in turn, are aided by national advisory committees.
As a means of increasing the effectiveness of the Division, plans
were made during 1952 for a systematic review of methods and operations as a basis for making continuous improvements. Extensive
studies of the role of the.volunteer were initiated and a program was
developed to expand and improve volunteer activity.
A comprehensive reorganization of the Division took place during
the year ffi order to clarify application of effort and to define more
clearly the several areas of responsibility. In Washmgton, four
basic units replaced the previously existing eight. The new units,
each of which is supervised by an assistant dhector, are: Sales Operations, Program Development, Advertising and Promotion, and Admmistration. Four liaison officers were named to make regular
visits to State offices, to gather reports of progress, and to report to
headquarters the problems which must be overcome. In the field,
emphasis was placed on employment of personnel equipped to handle
all aspects of the savmgs bonds program rather than specialized
phases.
At headquarters, the staff of Program Development, in collaboration with other units, is responsible for developing programs, which
are then turned over to Sales Operations to put into eft'ect. Advertismg and Promotion develops programs to mcrease sales by use of
formulas provided by Program Development, and provides technical
services in graphic and dramatic form through publications, radio
and television, scripts, press, motion pictures, and other media.
During the fiscal year 1952, the advertismg industry and advertisers
contributed nearly $55,000,000 worth of time and space for savmgs
bonds advertismg, the greatest amoimt in any year since World War I I .
This contribution (brought about largely by the efforts of volunteers)
came through allocations of the Advertising CouncU (a voluntary
nonprofit group organized to" support public service programs);
national networks, local radio and television stations; national
magazmes; daUy and weekly newspapers; business publications;
farm journals; outdoor advertismg; transportation advertising;, and
through national and local advertisers and theh agencies.
United States Secret Service
The powers and duties of the United States Secret Service are defined
in 18 U. S. C. 3056, as amended by Public Law 79, 82d Congress,
approved July 16, 1951. Its major functions, under dhection of the
Secretary of the Treasury, are protection of the person of the President
of the United States and members of his immediate famUy, of the
President-elect, and of the Vice President at his request; the detection
and arrest of persons committing any offenses agaffist obligations and
securities of the United States and of foreign governments; the detection and arrest of persons violating certain laws relatffig to the Federal
Deposit Insurance Corporation, Federal land banks, joint-stock land
banks, and national farm loan associations, as specified in 18 U. S. C.
3056; and the detection and arrest of any persons violating any laws
of the United States directly concernffig official matters admffiistered
by and under the dhect control of the Treasury Department.
The Secret Service also dhects activities of the White House Police

ADMINISTRATIVE REPORTS

193

Force, which protects the Executive Mansion and grounds; and of the
Uniformed Force, which protects.the Treasury Building and other
buUdings housing Treasury Department activities, and the currency
and other obligations and securities of the United States in production,
storage, and transit.
Management improvement

A headquarters Management Committee was organized durffig the
year to study ideas and suggestions for improvffig systems and procedures. Administrative operations of several sections were streamlined, several forms were abolished, work space was rearranged, and
controls for supplies and equipment were simplified and improved.
The Secret Service completed a thorough inspection of its headquarters office, which resulted in the disposal of more than 500 cubic
feet of obsolete records and made avaUable 57 filing cabinets. This
obviated the necessity of buying an equivalent number of new cabinets
which would have cost nearly $5,000. Through destruction or other
disposal of files and records on its continuing records rethement
program, in the field offices, the Secret Service disposed of an additional 450 cubic feet of records occupying 281 square feet of fioor space.
Inspections of Secret Service field offices under the regional inspection system established the previous year were completed, and many
recommendations for increased efficiency were made and adopted.
A formal training agreement was drafted by the Management
Committee after conferences with representatives of the Personnel
Division, to provide for systematic promotions to positions as special
agents for male clerks of the Secret Service and also for qualified
members of the Uniformed Force. I t is expected that the agreement,
if approved, wUl provide an incentive for young clerical employees and
guards, and will establish a clear-cut promotion policy for such personnel.
Preliminary plans were completed for the specialized trammg of
Secret Service special agents as a supplement to existmg Treasury
training schools. Inauguration of a proposed 4-week course awaits
preparation of the final draft of the curriculum and the selection of
competent instructors. A special traming course for the White House
Police is also ffi preparation. This course wUl deal with various phases
of security techniques, crowd control, and protection of persons and
property. A practical outdoor pistol course was planned and inaugurated for the training of Secret Service agents. White House Police,
and members of the Uniformed Force. Members of these three units
were also given special trammg in first aid and ffi combatink atomic,
biological, and chemical warfare.
A compilation of various court decisions and opinions of the General
Counsel of the Treasury Department and of the Attorney General,
bearmg dhectly upon matters of interest to the Secret Service, was
begun and will be issued to investigative personnel for study.,
A proposal to raise the numerical limitation of the White House
Police Force from 133 to 170 was enacted into law (Public Law 418,
82d Cong., approved June 28,1952).
At the suggestion of the House Appropriations Committee, the
Secret Service cooperated with the General Counsel of the Treasury
Department ffi draftmg a proposed law to provide for payment of
$10,000 to the beneficiary of a Federal law-enforcement officer kffied
221052—53

194

1952 REPORT OF THE SECRETARY OF THE TREASURY

111 the performance of his duty as the result of a personal mjury mflicted by another. Action on the.draft is pendmg.
In expanding its crime prevention program, the Secret Service distributed a new revised edition of the **Know Your Money^' booklet
and completed and distributed to field offices new framed displays of
genuine and counterfeit bills, to be shown in banks and other business
ffistitutions.
A new 16 milliineter educational motion picture,^The
Secret Service Story,'' produced in November 1951, without cost to
the Government, shows how to detect counterfeit money and combat
the forgery of Government checks, and how the Secret Service protects the President of the United States. This film is shown to civic
groups and ffi high schools.
Protective and security activities

Upon completion of the renovation of the White House, after the
President and his famUy moved from Blair House into the Executive
Mansion, protection by the White House Police and Secret Service
agents at Blah House was discontinued. Beginning April 22, the
White House was opened to the public daUy except Sunday and Monday, and the White House Police were required to supervise and control crowds of visitors averaging from 6,000 to 8,000 a day.
The U. S. Supreme Court refused to review the case of Oscar
Collazo, Puerto Rican Nationalist who was wounded November 1,
1950, when he and an accomplice shot down White House Police
officers at the Blah House in an abortive attempt to assassinate President Truman. August 1, 1952, was the date set for Collazo's execucution, but the President commuted the sentence to life imprisonment.
The Uniformed Force of the Secret Service safeguarded more than
$500 billion of currency, stamps, bonds, and other obligations and
securities ffi transit, production, and storage.
Enforcement activities

The arrests of four Chicago counterfeiters ffi February halted the
widespread chculation of counterfeit $10 and $20 bUls in major cities
of the country and paved the way for more intense investigations of
forged Government checks. The Chicago case was climaxed by the
purchase of $100,000 in counterfeit bUls by an undercover agent. As
of June 30, all four principals were awaiting prosecution.
Although counterfeiting took a downward trend as the result of
these arrests, the public lost $374,002.15 in counterfeit bUls and
$5,859.84 ffi counterfeit coins passed on unsuspectffig merchants and
cashiers.' In addition, the Secret Servdce captured $393,802.25 in
counterfeit bUls and $266.70 in counterfeit coins before they could be
chcffiated, and arrested 279 persons for violating the counterfeiting
laws. Agents seized 9 plants responsible for the manufacture of 17
issues of counterfeit bffis.
In one case ffi Buffalo, N . Y., the Secret Service discharged its responsibUity for protecting the currency of other countries. In AprU
about 30 counterfeit $10 Canadian notes were passed ffi Buffalo. The
culprit was arrested on AprU 21 and admitted passing about 30 similar
notes and usffig the proceeds to buy Ulicit narcotics for himself and his
friends. He was sentenced to serve 2ji years in a Federal penitentiary.
The following table summarizes seizures of counterfeit money durffig
the fiscal years 1951 and 1952.

195

ADMINISTRATIVE. REPORTS
Counterfeit money seized—fiscal years 1951 and 1952
1951
Counterfeit and altered notes seized:
After being circulitcd . ._
Before being circulated
Total
Counterfeit coins seized:
After being circulated
Before being circulated
Total

--.

$512,987.53
917,943.95

1952

Percentage
Increase, or increase,
or
decrease (—) decrease
(—)'

$374,002.15 -$138,985.38
393,802.25 -524,141. 70

-27.1
—57.1

- 1,430,931.48

767,804.40

-663,127.08

-46.3

8,200.15
305.20

5,859.84
266. 70

-2,340.31
-38.50

-28.5
-12.6

_..

Grand total..-

8, 505.35

6,126.54

-2.378.81

-28.0

1,439,436.83

773, 930.94

-665,505.'89

-46.2

Number of investigations of criminal and noncriminal activities
fiscal years 1951 and 1952
1951

Criminal cases:
Making or passing:
Counterfeit notes
_.
Counterfeit coins
Altered obligations
Forgery of Government checks
stolen or forged bonds
Protective research cases
Miscellaneous..
Total Noncriminal
Grand total..

1952

Percentage
Increase, or increase,
or
decrease (—) decrease
(—)

948
78
231
38,102
6,569
3,422
368

860
67
310
30,091
4,900
2,831
393

-88
-11
79
-8,011
-1,669
-591
25

—9.3
—14.1
34.2
-21.0
—25.4
-17.3
6.8

49,718
2,361

39.452
3,012

-10,266
651

—20.6
27.6

52,079

42,464

-9,615

—18.5

The forgery and fraudulent negotiation of Government checks continued to be more thaii a two-iriillion-dollar racket. The Secret Service
had on hand 9,009 forged checks and received 28,586 forged checks for
investigation during 1952. Of these, 30,091 forged check cases involving $2,385,750.50 were investigated. Special agents arrested
2,144 p.ersons for check forgery and developed several unusual cases.
I n Washington, D. C , for example, coincidence trapped a narcotic
addict when he stole and forged a check payable to a woman. He
remembered that he had an acquaintance with the same surname as
the payee, and he asked him to cash the check. The check happened
to belong to the mother of the acquaintance, and her son took it away
from the forger and delivered it to the rightful owner. The forger was
arrested by Secret Service agents and confessed that he stole the
check to get money to buy illicit drugs. He was sent to the U. S. Public
Health Service hospital at Lexington, Ky., to undergo treatment for
his addiction. His motive for forgery followed a growing pattern
among other drug addicts.
I n New York City two men who had progressed from the use of
marihuana to addiction to heroin were arrested as check forgers.
Drugs cost each of them $70 a day, and to satisfy their craving they
stole more than 250 checks before they were arrested and sentenced
to 3 years each.
Testmg his theory that three can live as cheaply as one, a man in

196

1952 REPORT OF THE SECRETARY OF THE TREASURY

Brooklyn, N. Y., married two women, established a home for each,
and divided his time between them. He spent 4 days a week with one
wife, 3 days with the other, posing as a traveling salesman whose work
kept ffim away from home part time. Actually his only ^^business^'
was stealing and forging Government checks, using the proceeds to
maintain his two homes. When arrested by Secret Service agents he
said he had come to the conclusion that "two wives are just too many
for one man to support.'^
Forgeries of stolen savings bonds added to the enforcement burden
of the Secret Service, which had on hand 2,425 forged bonds and received 4,227 more for investigation. Of these, 4,900 cases were closed
representing $379,208.85. There were 105 persons arrested for bond
forgery.
I n addition to counterfeiters and forgers, the Secret Service arrested
159 persons for other crimes, making a total of 2,687 persons arrested.
There were 2,422 convictions, representing 98.0 percent of convictions
in cases that went to trial.
Prison sentences totaled 2,884 years and additional sentences of
2,538 years were suspended or probated. Fines in criminal cases
prosecuted totaled $23,734.02.
Cases of all types received for investigation, including counterfeiting
and forgery cases, aggregated 39,884, and although 42,464 cases were
completed during the year, there were 9,952 cases still awaiting investigation as of June 30.
The following tables constitute a statistical summary of Secret Service investigations, arrests, and dispositions for the fiscal years 1951
and 1952.
Number of arrests and cases disposed of, fiscal years 1951 and 1952
1951

Arrests for:
M a k i n g or passing:
Counterfeit notes
Counterfeit coins
Altered obligations
Forgery of G o v e r n m e n t checks
Violation of Gold Reserve A c t
Stolen or forged b o n d s . _ _ . ^
P r o t e c t i v e research cases
False claim cases.
Miscellaneous

TotalCases disposed of:
Convictions in connection w i t h :
Counterfeit notes
Counterfeit coins
Altered obligations
_.
Forgery of G o v e r n m e n t checks.
Violation of Gold Reserve A c t
Violation of F a r m L o a n A c t .
Stolen or forged bonds
P r o t e c t i v e research c a s e s . False claim c a s e s . . .
Miscellaneous

...

Total
.:
Acquittals
Dismissed, n o t i n d i c t e d , or died before t r i a l .
T o t a l cases disposed of..

Increase, or
decrease (—)

1952

PercentaG:e
increase, or
decrease (—)

276
31
44
2,174
9
114
85
19
20

188
17
74
2,144
13
105
74
43
29

-88
-14
30
-30
4
-9
-11
24
9

-31.9
—45.2
68.2
—1.4
44.4
—7.9
—12.9
126.3
45.0

2,772

2,687

-85

-3.1

183
25
43
2,031
8
1
108 ' "
79
8
21

187
21
58
1,963
7

4
-4
15
-68
-1
-1
-18
-7
-5

2,2
-16.0
34.9
-3.3
-12.5
—100 0
-16.7
—8 9
-62.6

2,507
30
264

2,422
49
214

-85
19
-50

-3.4
63 3
-18.9

2,801

2,685

-116

—4.1

"'90'
72
3
21

EXHIBITS

197

Summary of Treasury Activities Since June 25, 1946
Exhibit 1.—Appendixes A through D
APPENDIX A.

MANAGEMENT OF THE PUBLIC DEBT

In the Annual Report of ihe Secreiary of the Treasury for ihe Fiscal Year 1951,
there appears as exhibit 22 the reply by the vSecretary of the Treasury to the
inquiries by the Subcommittee on General Credit Control and Debt Management
of the Joint Committee on the Economic Report. Included in the answers to
Questions 17 and 18, beginning on page 247 of the 1951 report, is a description
of the issues involved in the policy discussions between the Treasury and the
Federal Reserve System from the end of World War I I until the accord announced
by these agencies on March 4, 1951, and a description of the nature of that accord.
There is set forth below a continuation of the discussion in the 1951 report to
bring the material included therein forward so as to cover the period through
December 31, 1952.
D E B T MANAGEMENT—MARCH 4, 1951,

TO DECEMBER 31,

1952

The period following the announcement of the accord between the Treasury
and the Federal Reserve was devoted primarily to the working out of the matters
which had been under intensive discussion between the two agencies prior to
March 4, 1951.
There was, first, the matter of long-term bonds overhanging the market and
being offered for sale daily in large amounts by insurance compames, savings
banks, and other long-term investors. Some $13)^ billion of long-term bonds
were removed from the marketable supply through the Treasury's offer to exchange
a 2% percent Investment Series bond for the two longest-term marketable restricted 2}^ percent bonds outstanding. Pressure on prices in the long-term area
continued, nevertheless, and prices started to decline shortly after the accord
announcement, when ofiicial support was withdrawn from the market. By May
15, 1951, prices (on a bid basis) of the longest-term Treasury bond had dropped
to 962%2. Prices fluctuated within a 4 point range, thereafter, going as low as
952^2 and as high as 98^5^2 during the balance of 1951 and as,low as 95%2 and as
high as 99^2 during 1952.
The exchange offering and the downward price movement of long-term bonds
slowed down the liquidation of securities by long-term investors, but did not
immediately terminate such transactions in their entirety. Life insurance companies, for example, sold $1}^ billion of restricted long-term 2)^'s between April 1,
1951, and May 31,1952, to secure funds to meet their mortgage and corporate bond
commitments, even though prices were substantially below par. Selling from this
source, however, dried up beginning in June 1952, although the companies did not
actively enter the market on the buying side.
Treasury analyses throughout the period indicated that as long as the defense
program required a large volume of new plant and equipment and as long as
veterans were encouraged by favorable terms to acquire new housing, long-term
investors as a group were likely to be on the selling side of the Government
security market, or, at any rate, would not be vigorous purchasers of Government
securities. There were some particular members of the group, however—including
some pension funds and eleemosynary institutions—who were buying limited
amounts of Government securities in counteraction to the general trend. To
satisfy their needs and to test the extent of the long-term market, the Treasury
reoffered the nonmarketable 2% percent bonds on Ma'y 19, 1952, on a part cash,
part exchange basis. The response to this offering was limited, with cash subscriptions from private investors totaling $318 million.
The exchange offering, the downward price movements of long-term bonds,
and the increased yields on shorter-term securities, were coupled during a part
of the period with (1) a voluntary credit restraint program, (2) the intensive use of
selective controls, and (3) the allocation of critical materials. These factors
together served to affect the attitude of lenders; but there is some doubt as to
the extent to which they were successful in actually restraining credit expansion.
199

200

1952 REPORT OF THE SECRETARY OF THE TREASURY

The fact is that credit appeared to be available in reasonable quantities to most
borrowers throughout the period, although at rates of interest somewhat higher
than had prevailed previously. Commercial bank loans to private borrowers
(including investments in private securities) increased by $9^i billion (from the
end of March 1951 to October 29, 1952) and it is estimated that the net increase in
private loans and investments of life insurance companies, mutual savings banks,
and savings and loan associations totaled $18>^ billion from the end of March 1951
to December 31,1952.
The second major matter that had to be worked out after the announcement
of the accord between the Treasury and the Federal Reserve concerned the
refunding of the large volume of short-term securities callable or maturing during
the ensuing months. The refunding of maturing issues was accomplished successfully—but at a level of interest rates substantially higher than had existed
prior to March 1951. All securities maturing between April 1951 and December
1952 (except one small bond issue) were refunded into short-term securities
(certificates and notes) bearing coupons from V/g percent to 2}^ percent and
terms to maturity from 9% to 14 months, as the Treasury adjusted its offerings
to the easing and tightening of the market within the framework of the Federal
Reserve discount rate of 1% percent.
A number of taxable 2 percent and 2% percent bonds became callable during
the period. All opportunities to caJ them were passed over, however, in view of
the fact that the new market level made it impossible to refund these securities
at a significant saving in interest.
The third matter relating to the public debt that had to be worked out during
the period between March 1951 and December 1952 was the raising of new funds
by the Treasury to finance the defense mobilization program. The volume involved did not turn out to be as large as originally expected because the defense
program expanded more slowly than called for by the early schedules. The
Treasury confined the major portion of its new money offerings to short- and
medium-term obligations; since, as indicated above, there was no significant
volume of long-term funds available. During the third quarter of 1951 and in
the second quarter of 1952, new money in the aggregate amount of $3}^ billion
was raised through increases in the regular weekly offerings of Treasury bills. In
the fall of 1951, two series of new tax anticipation bills were offered in an aggregate amount of $2}^ billion. These were designed as a medium for the investment of funds accrued by corporations to meet the concentration of tax payments
on March 15 and June 15 of each year. In June 1952, some $4 billion was raised
through the offering of an intermediate-term bond. This was acquired primarily
by npnbank investors on original subscription, but substantial bank participation
developed during the secondary distribution in the market. Finally, in the last
quarter of 1952, the Treasury again offered two series of tax anticipation bills,
totaling $4J^ billion. This offering sufiiciently replenished the Treasury's cash
balance to obviate any need to raise additional new money before the spring of
1953.
Other public debt management operations during the period included a number
of measures designed to readjust yields on nonmarketable issues to the new levels
of interest rates in the market. In May 1951, the yields on Treasury savings
notes were adjusted to put them in line with the yields of short-term marketable
securities. In May 1952, the yields of savings bonds were raised, both for the
intermediate periods prior to maturity and for the entire period to maturity. In
the case of the E bond, the yield was also improved if the bond was held for an
additional period after the original maturity. A new H bond was added to the
savings bond series to provide a current income option to persons buying savings
bonds in denominations of $500 or higher.
APPENDIX B. REPORT TO THE TAXPAYERS ON IMPROVEMENTS
AND REORGANIZATION OF THE BUREAU OF INTERNAL REVENUE
SINCE JUNE 1946. (DISTRIBUTED WITH PRESS RELEASE IN
SEPTEMBER 1952.)
FOREWORD

If the taxpayer is to understand what his government is doing, he must be
informed. One of the responsibilities of the government is to inform him.
The story that is told in these pages is one that few citizens could know if it were
not made available by those who possess the facts. The story to my mind is an

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important and unusual chapter in the history of one of our most vital agencies,
the Bureau of Internal Revenue.
It is a remarkable story of determined progress toward improvements. As is
frequently true when travelling a long road through developing and expanding
territory, we came upon one bad spot. It was found, unfortunately, that there
were some employees who could not resist temptation and fell into irregularities.
These have been firmly and courageously eliminated. While this bad spot slowed
the way momentarily, the real story represents a period of persistent and successful
effort to overcome extraordinary difficulties and to shape a service that fully merits
public confidence.
My associates in the Treasury and I are proud to have had a part in these
achieveraents. They could not have been brought about, however, without the
tireless and unstinting (efforts of the Commissioner of Internal Revenue and the
great body of associated workers in the Bureau itself; or without the alert interest
and assistance of Congress and its committees . concerned with internal revenue affairs: The Senate Committee on Government Operations, the House
Committee on Expenditures in the Executive Departments, the House Committee on Ways and Means, the Senate and House Appropriations Committees, the
Senate Finance Committee, the Joint Committee on Internal Revenue Taxation,
the King Subcommittee on Administration of Internal Revenue Laws of the House
Ways and Means Committee, and the Kefauver Special Senate Committee to
Investigate Organized Crime in Interstate Commerce. Finally, this progress
would not have been possible without the wholehearted and unflagging encouragement and backing of President Truman.
I am sure the taxpayer will find this story one well worth his interest and his
reading. The success of the efforts that have been made to provide the citizen
with a sound internal revenue system will depend in considerable part on his
understanding of what has been done and what is being done to give him the best
possible service.
JOHN W .

SNYDER,

Secreiary of the Treasury.
A MEMORANDUM TO THE TAXPAYER FROM THE TAX COLLE'CTOR ^

The average American taxpayer doesn't enjoy paying taxes. Nevertheless, he
pays them willingly and conscientiously, as his duty and his privilege in a free
democracy.
It is one of the great strengths of this Nation and a tribute to the faith and
loyalty of its citizens that relatively few American taxpayers have to have the
tax collector knock on their door to get their taxes. The great majority of taxpayers pay their taxes voluntarily and pay them in full, as the law prescribes,
with no more demand than a notice of when they are due.
When he pays out a sizable part of his earnings for the support of his government, the taxpayer expects, as a matter of course, that the collection of his taxes
will be handled fairly, efficiently, and honestly.
This is a memorandum to the taxpayer to report to him on the kind of job that
his tax collector has been doing in handling the dollars entrusted to him each year.
This is not just a routine report. It is made because of many important and
far-reaching changes that have taken place over the past six years in the Federal
tax collecting system.
It is a story that can't be told in a headline, like the accounts of wrongdoing by
a relatively few of the revenue personnel about which the taxpayer has read and
heard. This is a story of unusual service and performance, in the face of great
difficulty, by the great mass of "right doers" in the revenue service, whose records
have withstood the most searching scrutiny. It is an account of changes that
have been wrought in the last six years to transform the revenue agency from a
prewar organization, whose basic structure was fashioned during the Civil War,
to a modern, efficiently controlled business operation capable of discharging the
greatly magnified responsibilities placed on it during World War II.
Many of these changes have affected the taxpayer directly. All of them affect
him indirectly. They involve his money and his government. Therefore, they
are his business.
1 Certain data used in the original text of this document have been revised herein to reflect final figures
for the fiscal year 1952.

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1952 REPORT OF THE SECRETARY OF THE TREASURY
SOMETHING ABOUT THE TAX COLLECTING JOB

Like all the principal fiscal responsibilities of the Government, the collection of
Federal taxes is a function of the Department of the Treasury. All domestic
revenues are collected through the Bureau of Internal Revenue, which is the
world's biggest banking business.
The duties of the Bureau of Internal Revenue involve much more than receiving
and processing the annual tax return and tax estimate that the average individual
files each year.
They include also the handling of tax returns from proprietorships and corporations, excess profits taxes, the tax represented by the stamps on cigarettes and
liquor, the Federal tax paid in the store on jewelry, toiletries, and other items,
taxes on the gains of gamblers; taxes on theater admissions, telephone service,
telegrams; taxes on inheritances and gifts; and taxes on safety deposit boxes,
train, air, and bus tickets, slot machines, marihuana, adulterated butter, oil
transported in pipelines.
To go on, the Bureau collects social security and unemployment taxes, railroad
retirement taxes, and taxes withheld from wages on account of individual income
taxes.
It does more than just collect and record these taxes. It also checks them as
to accuracy and investigates a large number of them in detail.
It makes refunds on overpayments running into billions, and similarly collects
billions in taxes not originally reported, either through error or for purposes of
evasion. It investigates cases of evasion and recommends criminal or civil action
where appropriate.
Just to add a few more things, the Bureau also issues permits for distillers and
manufacturers of firearms, registers manufacturers of renovated butter, supervises
and controls the bonding of whisky, and regulates the manufacture and use of
liquor bottles.
This still doesn't cover everything that the Bureau does, nor describe the
difiiculties of many of these operations. But it will serve to show the complexity
and broad scope of the Bureau's problems.
THE SIZE OF THE BUREAU's JOB

Something of the size of the Bureau's job can be given in a few broad facts:
In the fiscal year ending June 30, 1952, the Bureau collected more than $65
billion in taxes, received nearly 90 million tax returns and handled over 100,000,000
other related information documents.
It audited and investigated 4,055,000 returns, and as a result asserted additional taxes of nearly $2 billion more than had been reported as due.
It investigated 3,872 cases of suspected fraud, and recommended prosecution in
1,247 cases, about 34 percent of which were iri the ''gambler and racketeer"
classification. During the year. On the basis of the Bureau's evidence and testimony, 1,063 indictments, some still awaiting trial, and 563 convictions and pleas
of guilty or nolo contendere were obtained in criminal tax fraud cases by the
Department of Justice.
These responsibilities were carried out with a force of some 57,000 people.
The cost of collecting the taxpayer's dollar was held to. less than half a cent—
42/100 of a cent in fiscal year 1952, to be exact. That is one of the lowest costs
on record since the inauguration of the modern income tax which began with the
ratification of the 16th Amendment to the Constitution in 1913. It is less than
half of the cost per dollar during the twenties.
Even so, the Bureau has not been able to do all that needs doing. Because
first things must come first, work must be concentrated on the basic job of mass
collections and the more pressing special jobs, such as racketeering and major
evasion. Consequently, much by way of revenue due the Government annually
but not reported goes by the board for lack of funds to provide sufficient manpower
to audit, investigate, and enforce collections on all the returns involving understatements. For the same reason, the Bureau is unable to refund much that has
been overpaid. To the extent, however, that returns can be examined, the
Bureau voluntarily makes refunds of unintentional overpayments as readily as it
asserts added taxes in-the case of underpayments.

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THE NATURE OF THE BUREAU's JOB

The collection of taxes involves an especially personal and intimate relationship
between the citizen and his government. Paying taxes and voting represent the
two functions that the average citizen regularly performs personally and directly,
rather than through representative means, in the exercise of the privileges and
obligations of citizenship.
The tax collector is equally the trustee of the taxpayer and the government.
He must see that each citizen pays his full taxes as required by law. He must
also see that no taxpayer is favored or discriminated against, or is overcharged,
if he can prevent it.
The tax collector also is the confidante of the citizen, in that he is entrusted not
only with the taxes paid, but also with detailed facts about the citizen's personal
and private financial affairs which are disclosed in the tax return.
The Congress has determined by law that this confidence must be respected.
The public disclosure of tax-return information, except under specified conditions,
is prohibited by law as being an unwarranted invasion of the citizen's privacy and
as possibly endangering the willingness of the citizen to make full disclosure of his
affairs, on which our voluntary system of self-assessment and payment is based.
This required secrecy on tax returns sometimes results in public misunderstanding as to the Bureau's willingness to make full public disclosure of tax cases
which have become matters of controversy. Responsible review of any tax case
is, however, provided. Three congressional committees may on request examine
any tax return. A congressional committee staff regularly reviews all refunds of
more than $200,000, and these records are open to the public. All tax cases
brought before the United States Court of Tax Appeals or any other court, and
all prosecutions for fraud become public records. The President may also, by
Executive order,. authorize public disclosure of tax returns, and has, in fact,
recently empowered the Secretary of the Treasury, at the latter's request, to
release information on cases where tax debts are compromised in accordance with
ability to pay, if this appears to serve the public interest.
A compromise of tax debts also is not always understood. The power to accept
a compromise offer is vested by law in the Commissioner of Internal Revenue.
A compromise usually involves a case where there is no dispute as to the amount
the taxpayer owes. The Government settles for a lesser amount if that is all that
the Government can collect because the taxpayer has nothing more with which
to pay. These may be persons gone bankrupt, widows whose inheritance has
been only a tax debt, others who have suffered sharp business losses.
The cases the public is most likely to hear about are the relatively few which
involve large tax amounts. By far the largest number of cases compromised or
removed from the collection records are those of small taxpayers. No field agent
or lower official can write off a tax debt on his own authority. All compromise
cases must be reviewed and approved at several levels, with final approval at the
top administrative level.
The public attention given to large tax cases also sometimes leads to the impression that large taxpayers are treated more leniently than small ones. This is
not true. The large taxpayer is, in fact, given more thorough and careful attention. The taxpayer reporting an income of $25,000 or more is sure to have his tax
report audited and examined at least every two years. The taxpayer with earnings under $5,000 will rarely hear from the tax collector unless he has claimed an
exemption to which he is not entitled. Examination has shown that 7 out of 10
of the $25,000 and over returns are likely to be in error, but errors, except for
exemption claims, are rare among those reporting less than $5,000.
The Government also concentrates its heaviest enforcement artillery on the
potential cases of fraud and tax evasion, including gamblers and racketeers.
Thirty-four percent of the cases recommended for prosecution in fiscal 1952 were
in the gambler and racketeer category.
These are some of the things about the nature of tax collecting with which the
average taxpayer is often not familiar. They are, nevertheless, matters which
concern him because they involve not only the proper and effective conduct of the
Government's business, but also, in the case of taxes, his own personal affairs and
interest.
WAR STRAINS BROUGHT TAX STRAINS

The foregoing portrays in brief the Bureau's operations in 1952.
story could not have been told six years earlier.

The same

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1952 REPORT OF THE SECRETARY OF THE TREASURY

Present performance did not just happen. The taxpayer may be aware of some
changes and improvements affecting him directly that have taken place since the
end of the war in the collection of his taxes. He probably knows httle or nothing
of the critical problems ih tax administration brought on by the war or of the
things that have been done since the war to solve them. This report is to tell
him something of those problems and how they have been met.
No taxpayer needs to be reminded that one of the costs of World War II was
higher taxes. Even though his earnings also increased, higher taxes created
problems for him.
They also created serious problems for his tax collector. During the war
years these are some of the things that happened to the Bureau of Internal
Revenue and its operations:
Within a few years the Bureau grew from a $5 billion to more than a $40 billion
business. Its collection job was multiplied eight times in dollar volume from
1940 to 1946.
Its customers quadrupled, from nearly 20 million to more than 80 million, in
tax returns filed during the same period.
Its work force, however, expanded only two and a half times, from 22,000 to
near its present 57,000 level.
These magnified tasks had to be met with a prewar machinery that was neither
designed nor equipped to handle them. They were aggravated by many new and
complex taxes imposed and superimposed during the war—excise taxes (taxes on
things), income taxes, victory taxes, excess profits taxes—and by major changes
in the methods of tax collecting, notably the withholding tax. While in the long
run adding greatly to convenience and effectiveness of tax paying and tax collection, this new pay-as-you-go tax system called for basic changes in tax collection
administration that had to be made in the mid-stream of war.
Fundamentally the collection job was transformed into that of collecting a
broad-based mass tax. The former job was concerned with taxpayers with fairly
substantial incomes who generally kept records, utilized the services of accountants, maintained bank accounts, and possessed a general knowledge of tax requirements. Practically overnight this tax was extended to the millions of modest
income people whose records were scanty, who were untrained in tax requirements,
often had no bank accounts, and changed jobs frequently. New and difficult
problems were thus forced upon the people of the Bureau.
The Bureau's difficulties during the war years were further increased by the
severe shortage of manpower and mechanical equipment and the necessity for
rapid training of new personnel when it could get them.
The Bureau met these tasks as many another .emergency had to be met in those
times. It pinpointed its hmited facilities, putting them to work in areas where
enforcement was needed most. The increasing tax revenues were kept flowing
to help pay the cost of the Nation's successful fight to defend itself and the world
against conquest and enslavement.
But the Bureau emerged from the war much the worse for wear, and with a still
gigantic job ahead of it.
Individual tax returns were being received twice as fast as they could be handled.
The backlog of individual returns continually mounted.
The investigation of corporate and profits taxes had fallen nearly two years
behind.
It was taking twelve months or more to make refunds to taxpayers who had
overpaid their taxes, particularly through the withholding tax.
Furthermore, as taxes increased, the temptation among many taxpayers to
avoid and evade these higher taxes and the danger of fraud also increased. Wartime tax evasion by black market operators added another diflEicult area of enforcement. On this front, the Bureau could spare only limited manpower from its
most essential functions to obtain better enforcement and collection. The best
that could be done with the limited manpower was to spot those most troublesome
areas and concentrate upon them.
War's end brought some initial relief by increasing the availability of manpower,
as servicemen were demobilized. Personnel was added particularly to expand
enforcement activities to collect more of the taxes due by ferreting out evasion
and prosecuting fraud.
But a great deal more than added personnel was needed. A thorough, drastic,
and far-reaching revision of the whole tax collecting mechanism was essential to
catch up with the past and to keep up with the future of a world-power economy,

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with its expanding population and production and with a large part of the huge
war bill still to be paid.
,
Six

YEARS OF RECONVERSION AND MODERNIZATION

While the war was on, neither time nor manpower permitted the large-scale
overhauling that was needed in the organization and methods of the Bureau of
Internal Revenue to meet its multiplied responsibilities.
With the war strains over but with the postwar strains still ahead, the new
Secretary of the Treasury, John W. Snyder, launched a concerted program to
overhaul, streamline, and modernize the whole tax collection system.
The program was started in October 1946, when Secretary Snyder called to
Washington all the key revenue officials to plan and initiate this transformation
of a near-century-old organization.
The October meeting was the first of a continuing series of moves and actions
through the ensuing months and years that began to take form in major changes
and innumerable lesser improvements in the Bureau's methods and administration.
Oflficially this was labelled the "Management Improvement Program." In every
day terms, it meant cutting red tape, speeding up operations, cutting down
overhead, streamlining administration, replacing obsolete methods with modern
ones, getting more done with the same manpower and money, making both tax
paying and tax collecting simpler.
It was not just an overnight job. The unremitting job of catching up and
keeping up with the heavy workload of tax collections had to go on, as incomes
and the volume of returns increased. The plant could not be closed down for
repairs, or for new models, or for retooling and replanning the assembly lines.
Furthermore, much of what had to be done was trail-blazing. History and
experience just didn't provide any precedents of foreknowledge on the best ways
to collect $65 billion from some 90-odd million taxpayers. Consequently, many
major changes were first tried oul on a "pilot" basis. After sufficient experience
and adjustment, they were extended to general use if they worked, discarded if
they didn't.
A S U M M A R Y OF RESULTS

Here, in broad terms, is what the Bureau of Internal Revenue accomplished
under this six-year program of efficiency, economy, and modernization: Measured
up to its new $65 billion responsibilities; caught up with the war backlog; assumed
new duties, such as the wagering tax, new social security taxes, and launched an
all-out drive on racketeer tax evaders; handled more work at less cost; and thereby
expanded enforcement efforts with a resulting increase, for a single year, of $800
million in unreported and unpaid taxes—about three times the entire annual cost
of operating the Bureau.
A more detailed accounting of the program's results is given later in this section.
The Bureau has not as yet, however, been able fully to realize all its goals,
including more complete audit and examination of income tax returns which, if
manpower permitted, would produce substantial amounts of additional revenue.
STRATEGY OF THE IMPROVEMENT PROGRAM

Bringing experience and management skill from every source, inside and outside the Government, from the lowest level field worker to the most skilled
management experts in the country, to bear on the up-dating of" the Bureau's
organization and operations—this was the strategy of the campaign to solve the
war-born problem of increased tax collection.
The grass roots had to be tapped, the Secretary felt, to make the program really
effective and to reach the people in the field down to the last of the clerks who
handle the multitudinous tasks connected with notices, returns, queries of millions of taxpayers.
A work simplification program was initiated at the grass roots level to provide
training and instruction down to the lowest supervisory level in simplifying and
organizing work operations eflSciently. Some 2,200 improvements in operations
and procedures resulted.
Employee incentive awards were established, with cash awards offered to
employees at all levels who produced ideas or suggestions that paid off.
At the top levels, major changes were shaped, on the basis of recommendations
of the Bureau's key oflacials, and as a result of top-level studies.

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19 52 REPORT OF THE SECRETARY OF THE TREASURY

A special committee on administration was set up by the Revenue Commissioner, and later, at the Secretary's direction, a management staff was established
as part of the Commissioner's office.
A management committee was also established by the Secretary in the Treasury
Department to serve as a consulting group for improved management throughout
the Department, including the Bureau of Internal Revenue. Later the Secretary
created a Special Committee to Direct the Management Studies of the Bureau of
Internal Revenue, composed of well-qualified people from both inside and outside
the Government, and headed by an experienced businessman and former Under
Secretary of the Treasury, A. L. M. Wiggins.
The Congress also took an active interest in the improvement of the Bureau's
operations. The House Committee on Appropriations made a number of recommendations, and the Advisory Group to the Joint Committee on Internal Revenue
Taxation also submitted a series of recommendations. ~ Virtually all of these
recommendations were adopted.
One of the outstanding management firms in the country, Cresap, McCormick,
and Paget, was engaged in September 1948, to make a comprehensive analysis
of organization iand procedures in the collectors' offices with recommendations
for improvement. When this study was completed, the firm was engaged to do a
similar study on the organization of the Bureau itself.
WHAT T H E PROGRAM

DID

To give a better idea of what this meant, here are some of the things that were
done.
Aiding ihe taxpayer.—Much of what goes on in the collection of taxes is of no
direct concern tq the taxpayer—unless it goes wrong. But some of it does affect
him directly and the taxpayer plays an important part in making tax collecting
more efficient and less costly. The easier it is for the taxpayer to file, the easier
becomes the job of the tax office.
When the taxpayer makes an error, it means work and expense in the tax office,
as well as added work and possible inconvenience and annoyance to the taxpayer.
Most taxpayers today, when they think back, know how greatly the standard
tax forms have been simplified. For most wage earners, the income tax return
can now be made out in a few minutes.
Four out of five taxpayers who use the long form, 1040, take the standard
deduction rather than attempting to itemize all the possible deductible items, from
depreciation on a rented room to interest on the mortgage. That saves his time
and it saves the collector's time and the Government's money. Most of these
forms are now checked and verified electronically.
From 15 to 20 milhon taxpayers with earnings of less than $5,000 merely fill in
certain data on Form 1040A, send it in with the withholding form provided by the
employer, and the tax office computes the tax. This is done by remarkable electronic machines that can compute a return in l/70th of a second. If the taxpayer
has overpaid his tax, he receives a refund; if he has underpaid, he is billed for the
balance.
Some other aids with which the taxpayer is now familiar and which he accepts
as a normal service are these: The simple and understandable instructions he now
receives with his tax notice, telling him not only what income is taxable but also
what he doesn't have to pay on; the booklet, Your Federal Income Tax, one of the
Government's most widely read documents, giving a comprehensive account of
income tax matters in man-in-the-street language and sold through the Superintendent of Documents for 25 cents; and the punch-card notices the taxpayer
now receives that enable the tax offices to handle notices and payments mechanically.
All of these developments are outgrowths of the efforts and ideas to simplifj^
and modernize tax collections. The results are better service to the taxpayer and
more efficient and economical performance by the tax collector.
Modernized methods.—To anyone who would go through a large tax collection .
office today and compare it with several years ago, probably the most striking
visible change would be in the modern, devices and equipment that have replaced
much of the hand-handling of the past. This change, though well advanced, is
still going on.
When the war expansion in revenue workload came, it was obvious that mechanization was the answer to many workload problems. But that couldn't be achieved
during the war.

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One of the primary objectives of the management improvement program
has been to convert manual operations to labor-saving and mechanical methods
as rapidly and as extensively as was feasible. Today much of that progress has
been achieved through the electronic and mechanical marvels of the modern
business world.
Electronic computers, punch-card recording machines, electric typewriters,
high-speed posting machines, mechanical validators for tax stamps, devices in
distilleries that automatically measure the volume of alcohohc beverages and
record the tax—all of these and others have been developed, tried out, and installed
as rapidly as possible to multiply the output af the Revenue Bureau's manpower.
Refunds on overpayments to some 30 miUion taxpayers as a result of the withholding tax, which run annually close, to two billion dollars, have been speeded
up through modern rnethods to the point where most of them are now mailed out
in approximately a month after the March 15 closing date for tax returns. During
the war, when the withholding tax was initiated, as much as twelve months was
required for refunds. This speed-up of refunds is not only a welcome service to
the taxpayer who usually wants to recover his excess payments as soon as possible,
but it also represents a significant savings to the Government in interest payments
that would otherwise have to be made on these sums.
Such interest payments have been cut by $3 million in a single year through
the speed-up of these refunds.
A standardized mailing system has been instituted in tax offices to effect a
$500,000 savings annually.
A new flat-package mailing system for income tax forms has been tried out
successfully and will be instituted generally at a savings of $350,000 per year.
Space-saving has been another economy goal. One of the first steps taken was
to convert the voluminous files and records of the revenue establishment to
microfilm, saving acres of file cabinets and storage space. Initial savings ran to
more than a mihion dollars, and an estimated $100,000 annually is being saved
through microfilming as new files and records must be added.
Red tape cutting.—SimpMfying administrative procedures, reducing the volume
of forms, reports, and copies, is a continuous necessity in any large organization to
streamline operations and save waste motion and manpower. During the past
six years such red tape cutting has been a. major point of attack in improving the
Bureau's operations.
Some examples:
A detailed review was made of relationships between the field offices and Washington. Where some centralization was desirable in making effective use of
modern mechanized and mass servicing operations, decentrahzation of functions
increased efficiency and economy in matters that could otherwise be adequately
handled at the field level.
The flow of reports, forms, copies, and actions that came in from the field to
Washington was examined to determine if "this trip is necessary." For many
things, it was and is necessary. For many it was found to serve no useful purpose.
Routine actions and functions were left with the field offices, and many lesser
decisions and determinations delegated to them.
The result was to speed up operations and to cut down greatly the volume of
reports, copies, duplicate reviews and approvals, and file records.
Combining reports for withholding tax and social security tax on a single form
saved $250,000 a year.
Consolidating administrative operations has been another important means of
increasing efficiency and reducing the number of forms and reports and the
overhead.
The administration of alcoholic beverage and of tobacco taxes has been consolidated irito a single unit, permitting better enforcement coverage of the alcohol
and tobacco industries.
Since the same field agents handle and investigate both income and estate and
gift taxes, the administration of estate and gift taxes was combined with the
income tax administration, permitting consolidation of reports and instructions.
Modern cost accounting systems were set up in the collector's office to make it
possible to relate staff size more accurately to the actual work requirements.
Top-side administration was also tightened by consolidating all operating
functions into one group and all technical functions into another group, with
each group reporting to a single Assistant Commissioner.
A separate Inspection Service was established reporting directly to the Commissioner on the performance and conduct of Bureau offices and employees.

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195 2 REPORT OF THE SECRETARY OF THE TREASURY

What ihe employees did.—One of the most significant and useful contributions
in improving the Bureau's operations was that made by the. rank and file of the
employees. On January 14, 1947, the Secretary of the Treasury set up a Department Committee on Employee Awards, and invited all einployees to send in their
ideas and suggestions for improved operations. Cash incentive awards were made
to employees whose ideas paid off in economies.
The Commissioner invited employees from all levels of the Internal Revenue
Service to participate. The service responded.
They sent in 15,065 recommendations of how the work could be done faster,
better, and cheaper. Of these, 2,285 were adopted. The result was an estimated
savings of $664,000 annually to the Government.
Many of the suggestions appeared trivial on their face—an unneeded copy or
superfluous form eliminated, or a simpler method of indexing some records. But
when applied throughout the service, they added up. One man who made a
suggestion that he felt was hardly worth the time and notice of Washington,
was amazed to receive a cash award of $375 for his proposal. It had been adopted
with a resulting annual saving to the Government of $37,500.
The idea involved in this suggestion provided for the discontinuance of the
stamping or imprinting of the Internal Revenue Collection District on withholding receipts, Forms W-2, at the time they are detached from the income tax
returns. The elimination of this operation saved 28,040 man-hours which were
, released for other purposes.
The highest award paid to date was $725. This suggestion involved an improvement in the business schedule of the income tax return. Form 1040, relating to
"cost of goods withdrawn for personal use." In addition to bringing in substantial additional revenue, the change has decreased administrative costs through
follow-up investigations to an extent estimated at approximately $161,500
annually.
Other suggestions.—Examples of other suggestions are: Devices helpful to telephone operators in handhng calls on frequently requested and often busy numbers;
elimination of unnecessary markings on tax returns; improved methods of standardization, samphng, manufacturing, and testing of various types of distilled and
fermented beverages; revision of interoffice forms and records to reduce typing;
addressographing addresses on cover of pamphlets to avoid use of envelopes;
methods for speeding up lines of waiting taxpayers; and development of a method
for the detection and estimation of heroin in the presence of other alkaloids.
ADDING UP THE BENEFITS

Some of the money savings resulting from specific measures have already been
mentioned. But they are merely examples of the full benefits that are disclosed
in some of the over-all results of the Bureau's operations.
Here are some of the results:
With only a 3 percent increase in personnel over the six years, the Bureau of
Internal Revenue has absorbed a 13 percent increase in income tax returns, a
144 percent increase in those over $10,000—those requiring more work and individual attention—and a 61 percent increase in corporate income tax returns, as
well as catching up on the wartime backlog. Expanding population, increased
earnings, and business expansion have continued to add to the Bureau's workload
during the postwar period.
But that is not all.
Additional tax assessments and collections on unpaid taxes-^money the Government would not otherwise have collected—were nearly $800,000,000, or 55
percent, greater in 1952 than in 1946.
This resulted from diverting more manpower from the processing of tax returns,
which must be done but produces no additional revenue, to the examining and
investigating of tax returns which failed to report the full taxes owing to the
Government. For every dollar spent in this field, the Government has collected
on an average an additional $20. Manpower savings through streamlining and
modernization of mass handling of returns has made this increased collection
effort possible.
An audit control program was instituted to identify the types of programs that
held greatest promise of "pay dirt"—those most likely to be incorrect or understated—and efforts were concentrated most heavily on these returns. Intensive
studies have been made to analyze the nature and extent of enforcement and

EXHIBITS

209

management problems in different tax categories in order to focus effort on the
most productive areas and avoid wasted effort.
In addition, issuance of warrants to collect taxes reported but not paid increased
to a total of about $400 milhon, about twice the amount six years before.
Investigations and prosecutions of tax frauds were also stepped up through the
release of more manpower as part of the drive to collect more taxes due the
Government. In fiscal year 1952 suspected fraud cases investigated were increased 20 percent over the previous year, criminal prosecutions recommended
jumped 105 percent, and convictions and pleas of guilty or nolo contendere
obtained through the Department of Justice were about 75 percent greater.
Claims for additional taxes and penalties involved in the cases investigated by
the Bureau special agents totaled more than $250 million.
The stepped-up activity in fraud investigations resulted in considerable part
from increased efforts undertaken at the Secretary of the Treasury's direction to
investigate racketeering-type cases, following the Kefauver Committee disclosures. Special racket squads, involving 2,300 top enforcement officers, were
organized under John B. Dunlap, who shortly thereafter became Commissioner.
Thirty-four percent of the cases recommerided for prosecution in fiscal 1952 were
in the gambler or racketeer category.
In addition, the Bureau for the first time had the job of initiating and enforcing
the new wagering tax enacted by the Congress.
Both the racket squad drive and the wagering tax enforcement, however, have
impeded other operations. Since no funds were provided by the Congress for
either of these activities, they have had to be carried on at the expense of other
functions. Necessarily, the diversion of these forces to these new and special
duties removes them from the work force available for the regular audit of tax
returns and limits the recovery through these channels accordingly.
This is the six year story of the efforts of the Treasury Department and the
Bureau of Internal Revenue to revamp, modernize, and overhaul the Nation's
tax collecting system. Seldom has any large government operation undergone
so intensive and complete scrutiny and change or been so extensively transformed
in so short a time. The program is not completed even now—indeed, it may never
end, for improvement measures will have to go on as conditions change. The
effect and the dividends of the improvements thus far made are also only partially
realized. Much of the benefit and savings is still to come in future years.
T H E BUREAU GETS REORGANIZED

In view of the changes wrought under the improvement program, a "reorganization" of the Bureau of Internal Revenue on top of all that was done may seem
superfluous.
Efforts to improve the Bureau's management and operations, however, made
evident a need for something more fundamental. Functions could be improved
within limits, but some of them could not be changed because the Bureau's
basic legal structure did not permit it.
The Bureau had developed over the years on a framework originahy established
during the Civil War, when the first income tax was imposed. (The Supreme.
Court later ruled the income tax unconstitutional and it was necessary to amend
the Constitution before the present-day income tax could be levied.) In 1862
the first collector's offices were set up for the purpose of gaining acceptance and
cooperation of the taxpayers and forwarding the tax cohections to Washington./
The number of collector's offices increased to 64, with responsibility chiefly for
collecting the various types of taxes. Meanwhile, the policy, enforcement, and
administration of the various major types of taxes were carried on by separate
units in Washington and the field, with the Commissioner as the only common
point of administrative control. The revenue operation was handled through
some 200 different offices throughout the country. This made for diverse and
scattered administrative direction and difficulty for the taxpayer who had to
deal with different offices on different problerns.
The collectors, moreover, were political appointees, not career civil servants,
and their tenure was of uncertain duration.
Modernization and improved management and direction were limited by this
kind of organizational framework, which no longer fitted the times. The business
of revenue administration had become a complex and special field where merit,
training, and experience, protected by secure tenure, were essential.
221052r—53

210

1962 REPORT OF THE SECRETARY OF THB TREASURY

Out of the management studies and surveys, a plan was developed to reorganize
the Bureau along modern lines. These proposals were embodied in Reorganization
Plan No. 1 for 1952 which President Truman sent to the Congress on January 14,
1952. It became effective two months later with congressional assent, and was
to be put into effect by December 1 of the same year.
WHAT THE REORGANIZATION PROVIDED

Here is what the Reorganization Plan did:
It eliminated the political appointment of collectors and brought all Bureau
personnel, except the Commissioner, under civil service appointment and the
merit system.
It established not more than 25 district offices to be headed by a District
Commissioner. These offices were to have full administrative responsibility for
all internal revenue activities within a designated area, regardless of function or
kind of tax. The District Commissioner was to report directly to Washington.
It abolished the coDector's offices and in their stead established not more than
70 local area offices under the direction and supervision of the district offices,
with a Director of Internal Revenue in charge of each. These are the offices
with which the taxpayer will deal on virtually all revenue matters, whether it is
to pay a tax or to appeal a ruling. It is the.intentiori, in time, to have all these
functions, now physically scattered, brought together under one roof.
The act provided for three Assistant Commissioners in Washington, one for
operations, one for technical rulings and decisions, one for the Inspection Service.
WHAT THE REORGANIZATION ACCOMPLISHED

Here are some of the things that this reorganization will mean in terms of
improved service to the public and the taxpayer:
It will provide a one-stop service for the taxpayer to take up any revenue matter
without leaving his State.
It will make possible the development of a strong corps of trained and experienced tax administrators available to serve where they are needed, by making
them all a part of the career service, by giving them continuit}'' of tenure on the
basis of their merits, and by permitting key officials to be moved from one area
to another as needed, whereas in the past cohectors were required to be residents
of the areas they served.
It will streamline administration and make for tighter control and more
efficient direction by providing for the Directors' field offices to be supervised
by the District Commissioners' offices, which in turn will report directly to
Washington.
It will permit the extension of many improvements by permitting consolidation
of more mass operations in the district offices, the delegation of more operating
functions to the taxpayer level, and the extension of modern mechanized operations which could not previously be economicaUy applied in offices serving less
populated areas and having smaller workloads.
The act also maintains the recently created Inspection Service, through which
the Commissioner and the Secretary of the Treasury will have a direct line of
supervision and information on the performance of offices and the conduct of
personnel independent of administrative and operating channels, and will be
better able to maintain high standards of service and behavior throughout the
country.
Full development of the benefits of the new organization will require time, but
the fundamental steps have now been taken.
T H E INTERN..\L REVENUE SERVICE

Without the steady flow of revenue from the people, government would cease
to function. A strain on the revenue system is in effect a strain on the heart
of government. A breakdown in its functions affects all functions.
That is why extraordinary measures were called for and taken to regenerate
the Bureau's operations after the strains of war. That, too, is why unusual
and'special safeguards have beer instituted to assure among revenue service
personnel a high level of competence, complete integrity, and freedom from
personalinterests that may conflict with public responsibility.

EXHIBITS

211

Better supervision, closer surveillance, and improved training of personnel
were among the needs brought out by the program to improve the Bureau's
service and to repair the effects of the strains of war. For these strains had
had their effect on the people as well as on the operations.
A PROGRAM TO IMPROVE PERSONNEL

Here are measures that have been taken to root out failures in the service
and insure and safeguard high standard performance and conduct in the future:
Long-standing policies of the Bureau have called for thorough character checks
and statements on financial worth and interests by persons appointed to positions
of trust; the bonding of all employees handling pubhc funds; investigation of
any reports of improper activities by employees; and a periodic check of office
operations.
These measures have been augmented and strengthened by other actions
designed to eliminate any who are unworthy and to assure that only persons
of integrity and competence are.admitted to and retained in the service.
Some 32,000 Internal Revenue employees holding positions of trust are now
required periodically to fill out detailed financial questionnaires, and to disclose
any outside interests that might bear on their Bureau employment.
Income tax returns of all enforcement and other key personnel in the service
have been audited as a check on their sources of outside income.
The Inspection Service has been established as a separate division to investigate
and check on the performance and conduct of employees, and to keep the Commissioner and the Secretary of the Treasury apprised of personnel activities
and problems at all levels independently of operating and administrative channels.
At the request of Internal Revenue Commissioner John B. Dunlap, the Civil
Service Commission has set higher minimum standards for appointment of
enforcement officers.
An improved training program for Bureau personnel has been set up.
The Secretary of the Treasury and the Commissioner of Internal Revenue
have amplified and reemphasized basic rules laid down for the conduct of employees. They include prohibition against accepting gifts, fees, or favors from
taxpayers or attorneys involved in matters before the Bureau; and avoidance
of outside activities or interests that may be in conflict with their employment
by the Bureau or the Federal Government.
The elimination of political appointments and the coverage of all employees
and staff under the merit system have further strengthened these procedures
and the control and direction of employees' performance and conduct.
THE WAYWARD ELIMINATED

These measures to protect the full integrity of the Internal Revenue Service
were strengthened when it was discovered that some employees had failed in their
public responsibilities. Separations for cause in fiscal year 1952 resulting from
investigations instituted over a much longer period are given in the following
table.
Number of separations during the fiscal year 19 62
Number of separations
July 1,1951-June 30,
1952

Cause of separation

Acceptance of gratuities, bribes, etc
Embe!5iilement involving U. S. Govemment funds or property
Failure of employee to pay proper tax
Falsification or distortion of Government reports, records, etc
Total

.
.

53
24
21
5
103

In addition to the above separations, 71 employees in 1952 were separated
for miscellaneous reasons involving such matters as personal misconduct, failure
to properly discharge duties, infractions of the rules and regulations, etc. (Total
number of employees in the Bureau of Internal Revenue July 1,1951: 57,557.)

212

19 52 REPORT OF THE SECRETARY OF THE TREASURY

When the first irregularities began to be uncovered, considerably before they
were brought to congressional and pubhc attention. Secretary of the Treasury
Snyder personally instructed the Commissioner of Internal Revenue to get to the
bottom of every evidence or report of misconduct. Full investigations were
ordered in all instances of alleged wrongdoing, and a sweeping review of personnel
was instituted by the Commissioner with the Secretary's full support.
Investigation showed that the great body of workers in the Revenue Service
. had shouldered the added burdens ably and without deviation from sound principles of public service. They had responded vigorously to their leadership to
increase their output, improve their efficiency, and adjust to new methods and
demands.
This was not true of all. Some were unequal to handling their greater tasks
and responsibihties. Others succumbed to temptations for personal gain. More
vigorous measures to stamp out and prevent wrongdoing were added to the task
of reconstructing the Bureau's operating machinery, while the job of collecting the
Nation's taxes went on without interruption.
The situation was summed up by Commissioner John B. Dunlap in these words:
"While our main attention was focused on solutions of our management problems brought on by the vast wartime increase in our tax system, some of the men
charged with the responsibility for proper administration of our Internal Revenue
Service proved too little or too weak for their heavy public trust."
With few exceptions, those who proved too little or too weak were discovered
and investigated by the Bureau itself, and action was taken, ranging from dismissal to criminal prosecution, as soon as the facts could be established.
Congressional committees, particularly the King Subcommittee of the House
Committee on Ways and Means, also undertook investigation under their special
powers, with the full cooperation of the Bureau and the Secretary of the Treasury.
Every personnel file of.the Bureau since 1945 was made available to the Committee
along with the cooperation of the Bureau's agents. Referring to the Bureau's
assistance. Chairman King of the House Subcommittee said:
"One of the most satisfactory experiences I have had in the course of our work
has been to have the cooperative and able assistance of special agents and revenue
agents. Some of the Committee's most difficult investigations could not have
been carried out as successfully as they were without the persevering and skilled
help we received."
Weeding out wrongdoers was only half the job. Strengthening the controls,
supervision, and training of personnel to protect against future laxness and assure
high performance standards were equally essential. Additional measures were
instituted to maintain in all offices and personnel the honesty and integrity that
generally characterizes the Bureau's employees. Full integrity in the service has
to go along with modern efficiency.
STEPS TO HIGHER STANDARDS

In brief, this is the story of what the Bureau and the Department of the Treasury
have done to bring the quality of the Revenue Service personnel to the same high
standards that have been set for the efficiency of its operations:
1. Thorough investigation has eliminated those shown to be unequal to presentday tasks or unworthy of public trust and has firmly established the integrity of
the great body of Revenue Service employees;
2. Action has been successfully taken to recover or prevent any known financial
loss to the Government resulting from wrongdoing in the service. The taxpayer's
dollar has been thoroughly protected;
3. Political appointments have been eliminated, and all personnel below the
Commissioner have been brought under.the merit system; and
4. Through reorganization and special safeguards, closer supervision and direct
control of performance and conduct have been instituted, and training systems
have b6en undertaken to better equip revenue workers to fulfill their duties and
obhgations as pubhc servants.
WHAT LIES AHEAD

The proper functioning of any organization, public or private, depends fundamentally on the quality and effort of the people who man it and, particularly in a
large operation, the opportunity given these people, through effective organization,
methods, and administrative direction and supervision, to apply their efforts
successfully to their functions.

EXHIBITS

213

The six-year effort of the Department of the Treasury and the Bureau of
Internal Revenue has been directed toward developing the type of organization
and machinery that will most efficiently meet the newly enlarged and complex
responsibilities of collecting the Nation's taxes and toward assuring a service of
competent workers and leaders to carry out these responsibilities.
The Bureau's ability to do the full job, how^ever, by increasing its examining
and enforcement activities so that all taxpayers are assessed the full taxes they
legally owe the Government and no taxpayer is overcharged on his tax bill, still
depends on sufficient personnel to expand these operations. Even with the high
level of efficiency achieved, enforcement staff has not yet equaled the full measure
of needed enforcement work. Adequate funds for this purpose remain a necessity
for a fully adequate tax collecting job.
The management improvement program and the Reorganization Plan have,
nevertheless, largely accomplished the administrative and operating changes that
were necessary. The personnel was for the most part already available, but its
effectiveness and quality have been strengthened both by the administrative improvements and by the protections and assurances that have been provided for
quality service and performance. These have included the full establishment of
career service, based on the merit system and the reward and promotion of those
who earn it, the elimination of wrongdoers in high or low places, greater safeguards against failures in public responsibility, and the enlistment of the efforts
of the whole body of workers in the continued improvement and maintenance of
the tax collecting operation.
Much of this accomplishment is in effect and producing results, while some of
it promises its major returns in future years. The Bureau of Internal Revenue
is, however, already a rejuvenated and strong organization, and the imperfections
that resulted from the strains of wartime expansion have either been remedied or
are being progressively overcome.
Commissioner John B. Dunlap, himself a career revenue employee, who. helped
fashion the reorganization plan and is now putting it into effect, and who carried
out the final clean-up of wrongdoers after his appointment in 1951, has this to
say of his confidence in the Bureau's future:
"I believe that the vast majority of our people are just as fully devoted to their
duty as any employees you could find in any business. It's a shame that those
who have gone wrong have blackened the reputation of those who are trying to
do an excellent job.
"I feel that the Internal Revenue Bureau is in a healthy condition.. I will
never lose faith in the people in the Internal Revenue Service."
Secretary of the Treasury John W. Snyder, when he launched the improvement
program of the Bureau three months after he took office in 1946, had told its
officials at that time:
"You are urged to make a continuous effort to simplify procedures, streamline
operations, obtain a higher degree of efficiency, improve the effective utilization
of personnel, and to eliminate work and expenditures which are not essential to
good administrative practice and sound fiscal policy."
In August 1952, with the establishment of the new headquarters organization in
Washington under the Reorganization Plan, Secretary Snyder was able to say:
"This plan marks the culmination of long and earnest efforts to remold the
Revenue Service into a modernized agency, better able to discharge its tremendous
task of administering the revenue system of our country . . . As the changes in
the Bureau's operating machinery are implemented, we are assured of increased
efficiency, high integrity, and equitable, impartial administration of the internal
revenue statutes . . . I know every employee of the Bureau from top to bottom
will respond wholeheartedly and that with the completion of the reorganization
and the revitalizing of the Revenue Service, we will have the soundest revenuecollecting agency in history, manned by capable and trustworthy men and
women.
"The American people are entitled to a Federal Revenue Service of top efficiency, of unquestioned integrity, and of maximum operating economy. We are
confident that today the Bureau is providing this type of service."
CHRONOLOGY OP ACTIONS TAKEN TO IMPROVE ADMINISTRATION IN THE BUREAU
OF I N T E R N A L R E V E N U E

October 7-9, 1946: Conference of collectors and internal revenue agents in
Washington. The conference, called by the Secretary, stirred interest in better

214

1952 REPORT OF THE SECRETARY OF THE TREASURY

management in the Bureau of Internal Revenue and resulted in the submission
of a number of plans for improving the operations of the Internal Revenue Service.
Many of these ideas and suggestions were adopted in 1947 and 1948 after study
and experiments showed they were worth while.
October 31. 1946: The Secretary addressed a letter to all Bureau chiefs urging
the streamlining of operations and other administrative improvements.
November 15, 1946: Special Committee on Administration in Bureau of
Internal Revenue appointed. This committee appraised the ideas and suggestions
submitted by key officials at the October conference and immediately afterward.
Its final report was submitted in August 1947. Over 100 of the ideas or plans were
adopted and placed in effect in the past 5 years. Some of these were: (a) microfilming of records, commencing in 1947; (b) revision of internal forms, from 1946
to date; (c) new sorting and filing methods for processing returns; (d) reduction
of interest payments through improved procedures in scheduling refunds; (e)
change in tolerance used in computing taxes on form W-2, to simplify adjustments
between the taxpayer and the Government; and (f) use of pre-assembled forms
where practicable to increase productivity and improve service.
Other projects begun in 1947 which resulted in improvements in operations
included:
The microfilming program, to preserve permanent records but save space and
equipment required for records storage. This is now one of the standard practices
of the Bureau of Internal Revenue and over $100,000 per year which would otherwise be required for file cabinets and storage space is now saved. The value of
file cabinets and floor space released by this program to date is over $1,300,000.
Improvements were worked out in the scheduling of payments for refund,
accelerating the process sufficiently to save over $3,000,000 in interest charges
during one year by getting refunds to taxpayers more promptly.
The procedure for paying alcohol taxes by bottlers was simplified. Instead
of the proprietor having to submit bottling tank forms to the storekeeper-gauger
for verification, then to a deputy collector with the remittance, then the receipted
form back to the storekeeper-gauger for release of the spirits for botthng, the new
procedure eliminates all of the delay. The proprietor may now purchase stamps
in advance, attach the exact value to the bottling tank form, and present the form
with attached stamps to the storekeeper-gauger who releases the spirits to be
bottled.
The use of transfer stamps on all containers of industrial.alcohol transferred
in bond from one bonded warehouse to another was eliminated as investigation
revealed there was sufficient protection to the revenue without them.
January 14, 1947: Letter to Bureau heads announced the appointment of a
Treasury Department Committee on Employee Awards. The committee was
organized in January and began planning for a program. The regulations and
instructions were issued in June and the formal announcement to employees
inviting them to participate by submitting suggestions was made on July 30.
Since that time Bureau of Internal Revenue employees have submitted over
14,500 suggestions. Of these 2,170 have been adopted and 1,876 cash awards
made. Estimated first-year's savings total $663,900. This is still a very vital
and active program, 24 suggestions were adopted last month. Most of these
improvements are small, an improvement in form, or the elimination of an
unnecessary step in a procedure, but when an organization is handling forms by
the milhons, 50,000,000 income tax returns and 40,000,000 other tax returns per
year, these small savings in time and work are enormously multiphed in some
cases.
March 25, 1947: Letter to Bureau heads urging again their accelerated efforts
toward improvements to reduce expenditures.
June 1947: Inauguration of work simplification program. The program was
begun with a "pilot" installation in the collector's office in St. Paul, Minn. The
program might be called the grass-roots approach to managenient improvement,
as it starts with the lowest level of management, the first-line supervisor, and
trains him to apply simple techniques of management analysis. Within 5 years
it has resulted in the installation of more than 2,200 improvements, and an
active interest in better management among the lowest supervisory levels of the
internal revenue service.
November 1, 1947: A Wage and Excise Tax Division was formed in cohectors'
offices by combining the Miscellaneous and Employment Tax Divisions and the
Withholding Tax Subdivision of the Income Tax Division. This permitted the

EXHIBITS

215

consolidation of certain forms and records and the performance of a better coordinated service to taxpayers.
February 1948: Report by the House Committee on Appropriations. This
committee report made a number of recommendations for improving the operations
of the Bureau of Internal Revenue.
February 20, 1948: The Secretary instructed the Commissioner to augment
the Commissioner's staff to have the function of broad-scale management.
March 23, 1948: Organizational meeting of the Treasury Department Management Committee was held. This committee was established to act as a consulting
organization for improving management throughout the Department.
April 22, 1948: The Commissioner's management staff was established by the
Commissioner's order. The management staff has as a primary objective the
improvement of management in the Bureau of Internal Revenue. It has taken
a position of leadership in management activities since that time.
April 1948: Report of the Advisory Group to the Joint Committee on Internal
Revenue Taxation was released. This report made a number of recommendations,
among them:
(a) The estabhshment of a management staff in the Commissioner's office.
(6) The decentralization of all routine work to the field offices leaving Washington a supervisory and management headquarters.
(c) The extension of the use of depositary receipts.
(d) Improvements in tax return forms.
(e) The use of modern sampling techniques to measure the adequacy of enforcement methods and the volume of ^tax evasion.
(/) The employment of outside management specialists to study the organization and operations of the Bureau of Internal Revenue.
All of these recommendations were accepted and became objectives, for installation as rapidly as possible.
July 2, 1948: By Order No. S-784, the Secretary established a Committee to
Direct the Management Studies of the Bureau of Internal Revenue. . Hon.
A. L. M. Wiggins was named chairman. This committee brought together a
group of highly qualified men, from both inside and outside of Government, and
focused their attention on the management problems of the Bureau of Internal
Revenue for purposes of discussion and analysis. It has been most helpful in its
advice to the Commissioner of Internal Revenue and in expediting improvements.
September 1948: Congress authorized the employment of a firm of management
consultants to make a comprehensive survey in the Bureau of Internal Revenue.
September 30, 1948: The services of Cresap, McCormick, and Paget were obtained to analyze the organization and procedures of the collector's offices. Their
recommendations were received in 1949.
There were also numerous other developments, during 1948 which improved the
organization and operations of the Bureau of Internal Revenue, such as—
Successful experiments w.ere conducted in the collector's office in Cleveland on
the use of punch-card tabulating equipment for computing tax liability on W-2
returns.
Orders were issued for the retention of excise tax returns in the collectors' offices
instead of being forwarded to Washington. This eliminated a duplicate copy
which had been retained in the collector's office, and, also, the handling of original
returns in the Washington office.
Photocopying was introduced in many offices to reduce the typing workload and
relieve the shortage of typists and stenographers.
Your Federal Income Tax booklet was rewritten in nontechnical language and
became a best seller.
The instructions to taxpayers enclosed with their income tax return forms were
clarified so the taxpayer would know not only what he should report but what he
had a legal right to omit or deduct.
The new form 1040A was introduced to simplify computation of tax liability by
collectors and insure better compliance with income tax law requirements.
Authority to approve routine personnel actions was decentralized to field
officials. "
'
'
Authority was decentralized to the collectors to approve special refunds of
social security taxes.
Estate and Gift Tax Division transferred from Miscellaneous Tax Unit to
Income Tax Unit, providing closer linking of field and headquarters' offices as all
field examinations of estate and gift tax returns were performed in the field by
revenue agents.

216

1952 REPORT OF THE SECRETARY OF THE TREASURY

The surveying, classifying, and storing of 2,500,000 individual income tax
returns, previously performed in Washington, were transferred to the field.
January 29, 1949: Final report of management consulting firm on study of
collectors offices received. It was a comprehensive and detailed document with
many plans and recommendations for improvement in the organization and
operations of the Bureau of Internal Revenue.
February 1949: The same firm, Cresap, McCormick, and Paget, was engaged to
study the organization of the Bureau of Internal Revenue (previous study was on
collectors' offices).
Spring 1949: Punch-card tabulating equipment was extended to seven additional
collection districts from original installation in Cleveland. In 1948, equipment
had been used only for 1040A income tax returns, and in 1949, the experiments
were extended to 1040 income tax returns, 1040 ES returns, and related documents.
Summer 1949: Tests were made as recommended in report of the management
consulting firm.
1. Use of electric typewriters, continuous forms, dual roller platens, as posting
machines for processing individual income tax returns.
2. Discontinuing of separate accounts to record: (a) collection of accrued
penalties and interest; (b) collections obtained after abatement bf assessments as
uncollectible; (c) excess collection of income and withholding taxes.
3. Use of new and simplified scheme for block numbering of returns to reduce
typing and proofreading.
4. IJse of validating machines and bank-proofing machines for processing and
control of remittances; also adaptation of cash-register machines to validate
special tax stamps.
••
5. Simplified procedure for control and disposition of unclassified collections.
6. Use of high-speed posting machines with direct subtraction using continuous
carbon-interleaved forms for preparing accounting records.
August 1949: Report of management consulting firm Cresap, McCormick, and
Paget, on organization of the Bureau of Internal Revenue was received. It
includedanumber of recommendations for organizational and procedural changes.
November 14, 1949: Division of responsibilities between two assistant commissioners. The Commissioner of Internal Revenue issued an order. defining the
authority and responsibility of the two Assistant Commissioners. Ohe was given
supervision over the technical functions of the Bureau of Internal Revenue and
the other was given supervision over the operating activities of the Bureau. This
provided a logical division of the organization responsibilities and provided more
adequate assistance to the Commissioner.
Fall 1949: The Processing Division was given the task of inserting and mailing
income tax forms and instructions for several collectors' offices. By the fall of
1951 this was extended to 37 collectors' offices. Economies were achieved with
mass-production methods impossible with the job being done in 64 collectors'
offices where skilled tax-collecting personnel were directed to this nontechnical
task.
December 16, 1949: Collectors were delegated authority to make refunds under
$10,000. This results in collectors processing about 100,000 overassessments per
year instead of their being sent into the Washington office for review and
scheduling.
Many other management improvements were made in 1949. Some of the more
important ones are: •
The audit control program was placed in operation. This involved the sample
selection of individual income tax returns for field investigation to determine the
compliance of taxpayers and the direction of investigative efforts to the best
advantage.
New procedures were adopted for processing information documents. These
were directed at accelerating the processing, saving tirne, and obtaining better
utilization of the documents in auditing returns.
Post audit review work was redesigned to cover the results pf audit of individual
income tax returns by collectors and to stress uniformity in field application of
the tax laws and regulations.
Collectors were delegated full authority to assert delinquency penalties for late
filing of all types of returns.
Collectors were delegated responsibility for the handling of all requests for
certified copies of individual income tax returns, and also for the transcript
service for the States in respect to such returns.
January 1, 1950: Federal Insurance Contributions Act and income tax with-

EXHIBITS

217

held combined in one form. This saves work for the taxpayer and saves Bureau
of Internal Revenue about $250,000 per year in costs of processing these returns.
Also, this permitted extension of the depositary receipt system to Federal Insurance Contributions Act taxes.
January-April.: Electronic computers were used with punch-card tabulating
equipment for calculating tax liability on income tax returns.
Spring 1950: Agreements were made with 5 States for cooperation in the investigation of income tax returns of residents of those States. (Wisconsin, North
Carolina, Kentucky, Montana, and Colorado.)
September 1, 1950: Bulk gauging tanks were installed in internal revenue
bonded warehouses, which saved considerable time of storekeeper-gaugers. Loss
allowance schedule was eliminated in connection with remission claims filed by
warehousers of distilled spirits. This reduces the workload for both Government
and taxpayer. Eliminated tax payment of distilled spirits prior to bottling in
bond and arranged for payment when cases are removed from bond. This simplified tax payment procedure and eliminated delay in releasing cases from bond.
Eliminating reporting of wine gallons as well as proof gallons and tax gallons.
This simplified reporting, and reduced work of storekeeper-gaugers and audit
clerks. Delegated to district supervisors the authority to approve qualified
documents for alcohol production plants. This reduced departmental workload
and costs.
October 30, 1950: Discontinued preparation of separate reports of concurrent
examination of income tax returns covering 2 years or more, which saved costs
equivalent to salaries of revenue agents and typists.
Numerous other improvements were made during the course of the year.
These included the following: Eliminated certain nonproductive arithmetic
verification procedures. Numerous minor delegations of authority were issued,
such as the authority to collectors, acting collectors, and deputy collectors to sign
various forms and documents for the Commissioner. These delegations simplified
procedures and expedited action.
January 1951: Operational cost system installed in collectors' offices. Provided data for businesslike cost control in collectors' offices. This facilitates
operations analysis and makes it possible to staff offices on the basis of workload.
January-April: New Office of Budget and Finance was created. The first
three of Bureau of Internal Revenue's regional finance oflfices were established to
provide better and more economical fiscal service.
July 1, 1951: Uniform stock-control system was adopted to provide for better
control of stock issues, inventories, and requisitions for replacement. Decentralized stationery procurement was effected to simplify procurement of those items.
New system of administrative control over budget and expenditures was adopted
covering obligations and expenditures in the offices of those collectors who handle
their own accounting. New system of appropriation accounting was also placed
in effect to simplify appropriation expense accounts.
September 1951: Report of survey of management improvement facilities of
the Bureau of Internal Revenue completed by committee appointed by the
Secretary and the Commissioner.
October 1951: Internal Revenue Inspection Service established. This will
provide effective inspection of field offices for both efficiency and integrity.
November 14, 1951: Tobacco tax functions transferred from Excise Tax Division to new Alcohol and Tobacco Tax Division. This consolidates field inspection
and enforcement activities in one staff for both kinds of taxes.
November 2, 1951: The Income Tax Unit was reorganized to reduce the number of primary organizational units from 13 to 5 eliminating 113 positions.
During the year several other changes to improve the operations of the Bureau
of Internal Revenue were also made. These included: Decentralized to collectors
the audit of Form 940, annual return of emploj^er of more than eight persons under
the Federal Unemployment Tax Act (formerly handled by Employment Tax
Division in Washington). This expedited the process by having collectors deal
directly with the State unemployment compensation agencies. Installed new
^ method of processing monthly returns of manufacturers of tobacco products and
annual accounts of dealers in leaf tobacco, which eliminated clericar work. Allowed revenue agents to authorize payment of claims up to $3,000 on prima facie
evidence without field examination so their efforts could be directed to more
productive examinations. Installed a procedure for alphabetical prefix in classification and numbering of income tax returns to provide for quick identification
of the class of return and simplify numbering.
,'

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December 11, 1951: Procedure in the consideration of criminal fraud cases
revised by eliminating the health of the taxpayer as a basis for refrairiing from
recommending criminal prosecution for tax violations.
January 8, 1952: Establishment of a more efficient procedure in the routing of
criminal tax evasion cases by providing for a direct referral of such cases from the
field by the district penal attorney of the Bureau to the Department of Justice.
January 10, 1952: Further improvement in the. handling of criminal fraud
cases by abandonment of the former policy under which criminal prosecution was
not recommended in cases where taxpayers made voluntary disclosures of intentional violation of the internal revenue laws prior to the initiation of the investigation by the Bureau.
January 14, 1952: The President's Reorganization Plan No. 1 of 1952, for the
Bureau of Internal Revenue submitted to Congress by President Truman.
The reorganization will include a realinement of activities in the field and in
Washington. The separate field offices engaged in different specialized activities,
for example, will largely be consolidated. It is expected that the new organization
will be more efficient and provide better service to the taxpayer. .
January 30, 1952: Ten task forces were established to work out details of plans
and procedures for the proposed reorganization under plan No. 1.
March 14, 1952: Reorganization Plan No. 1 became effective.
March: Use of fiat package for mailing income tax forms and instructions.
For the first time a manufactured flat package of forms and instructions was used
for two States, Indiana and Massachusetts. It will be used in all districts in the
future. The experiment was very successful. Higher manufacturing costs were
more than offset by savings in labor.
April: Standard mail-opening methods. The standardized mail-room system
installed in all collectors' offices was very successful, will save about $500,000 per
year. It provides much more rapid and efficient handling of mail and remittances
with a marked saving in labor. It will be refined and strengthened in all collectors'
offices during 1952.
CONCLUSION

The foregoing chronology of the actions taken and the improvements made in
management and operations pf the Bureau of Internal Revenue clearly sets out
the painstaking care that went into the complete reorganization of the Bureau,
which culminated in the final step represented by the President's Reorganization
Plan No. 1 of 1952, which was adopted by the Congress on March 14, 1952.

APPENDIX C. OBJECTIVES OF UNITED STATES FOREIGN FINAN- CIAL POLICY AND PROGRAMS UNDERTAKEN IN CARRYING OUT
SUCH POLICIES SINCE JUNE 1946
I. ROLE OF THE TREASURY IN INTERNATIONAL FINANCE

The 6 years from 1946 to 1952 have been years of continuous and rapidly
changing problems in internationar finance. Decisions by the United States Government on foreign financial policy questions have assumed major importance.
In these years the United States Grovernment has played a significant role in the
development of international institutions concerned with financial problems. It
has financed extended programs of assistance to foreign countries, individually and
in groups, both directly through its own agencies and indirectly through international bodies of which it is a member.
The Secretary of the Treasury, as the chief financial officer of the Government,
advises the President and participates actively in policy decisions by the Administration on matters in which financial problems are necessarily intertwined with
political, strategic, and other aspects of public pohcy. These problems are considered in the Cabinet and in interdepartmental bodies, some of which have been
established by legislation or Executive order, and others of which are constituted
on a less formal basis.
.*
Under the Bretton Woods Agreements Act, the Secretary of the Treasury is
Chairman of the National Advisory Council on Interriational Monetary and
Financial Problems, which has a responsibihty to the President and to the Congress
for the coordination of United States policy in international monetary and financial affairs, and gives policy guidance to the United States representatives on the

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219

International Monetary Fund and the International Bank for Reconstruction and
Development. The other members of the Council are the Secretary of State, the
Secretary of Commerce, the Chairman of the Board of Governors of the Federal
Reserve cjystem, the Chairman of the Board of Directors of the Export-Import
Bank, and the Director for Mutual Security. The Secretary of the Treasury has
also served as the United States Governor of the International Monetary Fund and
the International Bank for Reconstruction arid Development and in this capacity
has represented the United States at the seven annual meetings which have been
held since their establishment. In consultation with the National Advisory Council, the Secretary administers the Anglo-American Financial Agreement. This
agreement, which represents the largest single loan transaction of the United
States since the war, has led to frequent consultations with the United Kingdom
relaxing to major objectives of the two countries in international monetary problems. Under the Gold Reserve Act of 1934, the Secretary is responsible for the
gold transactions of the United States and for the development of basic gold
pohcies.
The responsibilities of the Treasury involve frequent exchange of views with the
finance ministers, central bank governors, and other financial officers of foreign
countries. At the annual meetings of the International Monetary Fund and the
International Bank, the Secretary has met with the Governors and other representatives of the 54 nations now included in their memberships. These annual
meetings have also provided the occasion for informal consultations with the
representatives of foreign countries who have had problems to discuss with the
United States. The Secretary, and the Assistant Secretary supervising international finance, have also made short inspection trips in foreign areas, such as the
survey of conditions in Western Europe made in 1949. Later in that year there
were formal meetings in Washington with the British Chancellor of the Exchequer
and the Canadian Finance Minister to discuss financial problems of common
interest. These meetings, under the chairmanship of the Secretary of the Treasury, included representatives of other departments.
Throughout this period close attention has been given to financial developments
abroad through contacts with representatives of foreign governments in Washington and through Treasury representatives stationed in key foreign capitals.
As the economic recovery and the mutual, security programs have developed,
the Secretary of the Treasury has been in close consultation with the State Department, the Defense Department, and the Mutual Security Agency, and has attended
sessions of the North Atlantic Treaty Organization along with the Secretary of
State, the Secretary of Defense, and the Director for Mutual Security. When
the Marshall Plan, under the impact of the threat of aggression, evolved into the
Mutual Security Program, it soon became apparent that many of the key problems in the security program were financial in nature, and that the mutual arrangements which the allied countries were developing involved activities which were,
primarily the responsibihty of their finance ministers, particularly in the NATO
programs. The Secretary of the Treasury became a member of the United States
team in these problems at the NATO meetings in Ottawa and Rome in 1951 and
in Lisbon in 1952. To maintain a continuous intersessional review of these
problems, arrangements were made for consultation between the Treasury Department and the United States special representative in Europe. The Treasury has
continually emphasized that appropriate weight should be given to the financial
factors, both domestic and international, in the development of United States
policy and relationships with foreign countries.
II. FOREIGN FINANCIAL POLICY OBJECTIVES

Throughout this period of rapidly changing and complex problems, the United
States Government has followed a consistent pattern of international financial
policy. This policy has sought to insure that the exigencies of current problems
should not lead to an abandonment of the principles of free transactions in the
money markets of the world. United States policy has had three major aspects:
(1) Free and unencumbered conduct of international financial transactions
in the United States, and the maintenance of a stable gold market to sup-.
port that freedom;
(2) The creation and development of a community of sovereign nations
dedicated to the principle that the economic health of its several members
depends upon orderly and cooperative practices in the field of international trade and financial transactions; and

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19 52 REPORT OF THE SECRETARY OF THE TREASURY

(3) Financial assistance t o foreign countries of three t y p e s —
(a) Loans a n d grants t o assist in solving fundamental reconstruction
a n d r e a r m a m e n t problems.
(b) Short-terin, revolving-fund advances t o assist in solving problems
created by less fundamental disequihbria.
(c) Loans t o develop the latent resources of underdeveloped countries.
T h e following sections deal with these aspects of-the Treasury's activities.
III.

G O L D AND F O R E I G N E X C H A N G E P O L I C I E S OF T H E U N I T E D S T A T E S
GOVERNMENT

T h e maintenance of a stable international value of t h e dollar has been t h e
keystone of United States policies on gold a n d foreign exchange. T h r o u g h o u t
t h e postwar period, t h e United States Government has continued its willingness
t o b u y gold a t $35 per fine ounce a n d t o sell gold freely a t t h a t price t o foreign
governments, or central banks, for legitimate monetary purposes. This policy
of stabilizing the dollar price of gold has facihtated the use of gold a n d dollars as
means of setthng international balances a n d has been a major factor of stability
in world finance.
T h e Secretary of t h e Treasury during this period has consistently resisted pressures t o increase t h e price of gold. On numerous occasions he has publicly stated
t h a t t h e pohcy of maintaining t h e dollar price of. gold would be unchanged and
t h a t t h e maintenance of this stable value was in t h e interest not only of t h e United
States, b u t of t h e international trading world as well. I n his most recent s t a t e m e n t on this subject, in September 1952 a t a press conference in Mexico City,
he said:
" T h e views of m y Government concerning t h e importance of maintaining
unchanged t h e p a r value of t h e United States dollar in terms of gold are well
known. T h e stability of t h a t relationship has been firmly endorsed by t h e Congress of t h e United States.
" W e beheve t h a t our policy promotes financial stability in t h e United States
a n d t h a t this is of great importance not only t o ourselves b u t t o t h e rest of t h e
world. Internationally, t h e assurance of a stable link between t h e United States
dollar and gold mutually reinforces t h e confidence of t h e world both in gold a n d
in t h e United States dollar."
T h e Treasury has made large purchases and sales of gold to implement this
policy. In t h e 6-year period July .1, 1946-June 30, 1952, United States monetary
gold transactions with foreign governments a n d central banks resulted in net gold
purchases of $3,983 milhon. Between July 1, 1946, a n d the currency devaluations
of September 18, 1949, United States net gold purchases a m o u n t e d t o $5,206
million, a n d between September 20, 1949, a n d t h e Communist a t t a c k on Korea
in J u n e 1950, our net gold sales reached $468 million. I n t h e 12-month period
following the Korean invasion, July 1, 1950-June 30, 1951, United States net gold
sales were $2,425 milhon. A reversal in t h e t r e n d of United States gold t r a n s actions during t h e fohowing year, July 1, 1951-June 30, 1952, brought t h e net
United.States gold purchase t o $1,670 million.
T h e United States Government has consistenly maintained t h e principle t h a t
foreign exchange t r a d i n g in t h e United States a n d in United States dollars should
be tree of any restrictions imposed by this Government. I n this way, importers
are able t o purchase goods where it is t o their greatest a d v a n t a g e a n d exporters
fco sell in t h e best m a r k e t as far as United States regulations are concerned.
Our gold pohcy has been an adjunct t o t h e pohcy of freedom from exchange
restrictions. In accordance with t h e Gold Reserve Act of 1934, t h e T r e a s u r y
alone holds the monetary gold stock of t h e United States. While t h e Treasury
sells gold for customary industrial a n d artistic purposes t o American nationals,
a n d to foreign governments or central banks for legitimate monetary purposes,
t h e concentration of gold reserves in t h e hands of t h e Treasury bolsters the strength
a n d stability of t h e dollar. The United States also, through its own regulations
affecting trading in gold, has tried, to assure t h a t gold would be used not t p build
private hoards, b u t t o strengthen currencies, t o settle international p a y m e n t s ,
a n d t o serve useful artistic and industrial purposes.
T h e regulations u n d e r t h e Foreign F u n d s Control a n d Foreign Assets Control
of t h e Treasury h a v e n o t been used for balance-of-payments reasons or as a
device for controlling normal exchange transactions. T h e y have been concerned
solely with supporting t h e defense of t h e United.States.
D u r i n g t h e second World War, t h e Foreign F u n d s Control was established

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221

in the Treasury under the powers delegated to the Secretary of the Treasury by
the President under Section 5 (b) of the Trading With the Enemy Act, as amended.
The basic purposes of the control were, first, to prevent the seizure by the Axis
countries of financial assets in the United States belonging to invaded countries
and their nationals, and, second, to prevent the enemy countries from using
their own assets to the detriment of this country. At the conclusion of hostilities,
steps were taken promptly to unblock these assets in which there was no enemy
interest so that they could be used by their owners and the countries concerned
for their normal requirements. The unblocking procedures'were based essentially upon the certification of nonenemy interest by the authorities of the countries
involved. Iri 1948, a comprehensive survey was made of those assets still blocked,
and information thereon was supplied to the pertinent countries participating
in the European Recovery Program. Assets which were not unblocked by the
erid of September 1948 were transferred to the jurisdiction of the Office, of Alien
Property in the Department of Justice for ultimate vesting.
With the entry of-Communist China into the Korean conflict, a new problem^
arose. The Secretary of the Treasury, in the exercise of the authority coriferred
by the Trading With the Enemy Act, issued, effective December 17, 1950, regular
tions blocking the assets in the United States of Communist China and North
Korea, and their nationals. The Division of Foreign Assets Control was established under the Secretary's authority to administer the regulations. A cerisus
of Chinese and North Korean assets was also taken to facilitate administration.
'A major feature of the Foreign Assets Control has been the prohibition of the
importation of goods into the United States in which a blocked national has had an
interest since the effective date. The sales of such goods in this country would
have furnished the Communists with foreign exchange urgently needed in their
Korean aggression. Licenses have been issued, however, for payments to China
for such matters as remittances to American missionaries and businessmen
stranded in China. Rigorous enforcement measures have been applied to cases
of violation.
IV.

INTERNATIONAL MONETARY COOPERATION

The postwar international financial policy of the United States has been
predicated on the principle that the economic health of the free world depends
upon orderly and cooperative practices in the field of international transactions.
An effective international payments system, allowing for a normal flow of investment, rests in part on appropriate exchange rates and policies and in part on
internal measures to maintain financial stability. The United States has joined!
with other countries in seeking greater international monetary stability through
the International Monetary Fund and through special financial arrangements,
with particular countries.
Secretary Snyder has continually emphasized the interdependence of internal
and external measures intended to bring about international equilibrium. Thus,
international cooperation in the establishment and maintenance of exchange rates
and exchange policies depends upon the actions of individual governments in
maintaining internal stabihty. Inflation can undermine an existing pattern of
exchange rates and has frequently entailed government control of payments and
trade. Recognizing that a rational pattern of trade and investment must be
based on economic considerations, the Secretary has, in his statements to the
Governors of the Fund and on other occasions called attention of foreign countries
to these basic considerations. In the course of these years, considerable progress
has been made in cooperating countries in restraining inflation, improving fiscal
systems, approaching budgetary equilibrium, and applying credit policies directed
toward placing their economies on a sound financial basis. The Secretary,
through his consultation with foreign governments and in his public pronouncements, has influenced the course of these developments and has emphasized the
importance of these firiancial considerations in the formulation of our own foreigri
financial policy.
The International Monetary Fund was established as the vehicle for international consultation, agreement, and coordination on matters of foreign exchange
policies and practices. Its purpose of building a world of stronger and freer
currencies through orderly processes of establishment and modification of exchange
rates, and through the provision of short-term financial assistance to its
members, has been fully consistent with United States policy in international
affairs. Both the Fund, and the United States Government have looked to
a world of freer trade and exchange as a means of improving the standards

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1952 REPORT OF THE SECRETARY OF THE TREASURY

of living of the members, and attaining high levels of useful production, employment, and trade. The influence of the United States has been brought to bear
in the Fund continually in the direction of evolving sound policies for the reduction
of exchange barriers and the use of the Fund's resources when such use would
contribute toward the attainment of the Fund's basic objectives.
In this connection the United States had made an effort to facilitate the flow
of imports, as Secretary Snyder pointed out to the Governors of the International
Monetary Fund:
". . . Our tariff rates have been substantially reduced by a succession of steps
resulting from agreements with other countries directly, or through the mechanism
of the (jreneral Agreement ori Tariffs and Trade. It was pointed out to us by
some of our friends that in some ways the procedures of our customs administration placed unnecessary obstacles in the way of imports. I am pleased to say
we recognized these difficulties and many of the cumbersome procedures which
could be corrected by administrative action have been removed. We have
recommended to the Congress the modification of a number .of items which have
been embodied in our statutes and it is my hope and expectation that the next
Congress will complete action on the Customs Simplification Bill.
"Encouraging as this progress in facilitating imports has been, I am hopeful
that future years will see further action by the United States in implementing
its liberal trade policy to permit our friends abroad to earn their way more and
more through trade based on competitive production and prices and sound
international investment rather than on extraordinary assistance and continuing"
aid programs. In short, I should like to add my hearty endorsement to the
recently expressed motto of one of our colleagues when he called for 'Trade not
aid.' "
The growth in United States' purchases of goods from abroad (see chart B,.
"The U. S. Balance of Payments", p. 235) has been encouraging:
". . . We have been pleased to see our imports grow significantly, and we
hope increasingly to see our friends abroad enabled to pay their way by selling more
goods competitively in the world markets, including our own, Which has been one
of sustained high level demand for many years. At the end of World AVar II our
imports amounted to $4 billion annually. Today the annual rate is $11 billion.
Although part of this represents price increases, the actual volume of imports
has about doubled since the end of the war."
In Fund discussions. Secretary Snyder and other representatives of the United
States have stressed the importance of realistic exchange rates but also emphasized
that a pattern of exchange rates could not continue to be satisfactory for world
trade unless exchange adjustments were accompanied by adequate internal
financial measures and increased levels of production, which would make it possible
to maintain these rates with a minimum of regulation. Secretary Snyder, in
presenting the financial aspects of the Marshall aid program to the congressional
committees, drew these considerations to the attention of the.Congress. Since
his statements were widely qu9ted in the press here and abroad, they clarified
the position of the United States Government ori this issue. In the course of
presenting the financial recommendations of the Administration on the progi-am,
Secretary Snyder in 1948 stated to the Congress that:
"The adjustment of some exchange rates may be expected in the course of
European recovery. Inflation in Europe in certain instances has given rise to
exchange rates which result in an overvaluation of the currencies in relation to the
dollar . . . The difficulties in setting exchange rates under present conditions are
such that, although the rates of some of the participating countries will certainly
have to be adjusted, the timing of these adjustments will vary from country to
country. Accordingly, it would not be good policy for us to insist upon an acrossthe-board modification of exchange rates before we extend aid. . . ."
in discussing the exchange rate question in the course of the congressional
presentation in February 1949 the Secretary stated:
"It would be a tragic mistake to act on the assumption that at the present
time devaluation would, of itself, solve the problem of Europe . . . When I
discussed the exchange rate question with this cominittee a year ago, I pointed
out to the committee that the modification of exchange rates may have serious
repercussions on the domestic economy of the country concerned. Devaluation
implies a rise in prices of imported foods and raw materials unless the difference .
is made up by subsidies. Premature devaluation may thus have the effect of
increasing inflationary pressures and may, therefore, give only a temporary
stimulus to exports. Since devaluation may have adverse internal political con-

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223

sequences, governments are reluctant to change their rates until the need is clearly
demonstrated. Consequently, the exchange rate must be considered along with
the other measures of internal financial stabilization.
"The National Advisory Council has studied this question from time to time
over the last year, and we did not conclude that the time was ripe for widespread
exchange rate adjustments. This does not mean that we will hold to the same
views in 1949. . . . The Council believes that the exchange rate question should,
be reviewed with a number of the European countries in the course of the next
year. The objective will be to explore with these countries the extent to which
they can improve their balance-of-payments position with the Western Hemisphere, and whether or not changing the par value of their currencies will be
conducive to this result."
The Secretary in both' statements emphasized that the International Monetary
Fund was the forum for discussion and the authority for approval of modification
of exchange rates. The Fund in its own studies and reports dealt with the balanceof-payments problem of the member countries. In its annual report (April 30,
1949) the Fund called attention to the problem of inflation in its member countries
and their difficult payments problems in financing their requirements from the
Western Hemisphere through their trade. It called attention to the desirability
of expanding exports at competitive prices, but noted that exchange adjustment
must go hand-in-hand with other measures necessary to produce stability. It
also called attention to the emergence of a divided world market, one based on
low dollar prices, and the other on high prices in inconvertible, or "soft," currencies.
In September 1949, immediately after the conclusion of the Annual Meeting
ofthe Fund's Board of Governors, a widespread adjustment of exchange rates
took place. Following these substantial exchange rate adjustments, the trend
in the balance of payments of foreign countries was favorable, as was clearly reflected in the United States own balance of payments. The current deficit of the
rest of the world with this country, which had been running at about $1,750
million per quarter in the first three quarters of 1949, dropped sharply thereafter
to $1,126 milhon in the last quarter of 1949, and to $727 milhon and $817 milhon in
the first two quarters of 1950, respectively. This favorable general trend operated
clearly ih the case of Marshall Plan countries, whose entire dollar deficit on current
account dropped from about $2.7 billion in the first three quarters of 1949 to
about $1.5 billion in the three quarters following. In addition, these countries
were able to add $1.5 billion to their gold and dollar reserves between September
30, 1949, and June 30, 1950. In the case of the sterling area alone, the dollar
deficit of $692 million in the three quarters before devaluation was wiped out in
the three quarters after, and the sterling area's gold and dollar reserves increased
from the low point of $1,340 million at the time of devaluation to $2,422 million
on June 30, 1950. While the devaluations alone do not account for all of these
favorable results, they undoubtedly contributed substantially thereto.
The International Monetary Fund, in its Second Annual Report on Exchange
Restrictions, commented on the general improvement as follows:
"In the last quarter of 1949 and the first half of 1950—i. e., in the period between the currency adjustments of September 1949 and the outbreak of hostilities
in Korea—there was a general movement in the direction of greater equilibrium
in the payments positions of most countries of the world. Import restrictions
still worked to limit purchases of goods originating in the United States and other
'hard currency' countries, such as Canada. Nevertheless, the basic payments
problem which had plagued the world throughout the postwar period—the socalled 'dollar shortage'— was substantially alleviated even before the outbreak of
hostilities in Korea."
The invasion of Korea, however, set off a.new series of disturbances which to a
large extent obscured the effects of exchange adjustment. Prices rose as the result
of stockpiling and speculative purchase of commodities, particularly industrial
raw materials. Increased mihtary preparation added to the inflationary factors
in many countries so that the pattern of trade was considerably disturbed. One
of the consequences was a considerable shift in the United States balance of payments. Aside fram exports paid from United States assistance, United States
exports fell below imports, and gold moved from the United States to sterling
area and other raw-materials-producing countries. In some countries there were
suggestions that this reversal in the international payments picture indicated the
desirability of an upward revaluation of^other currencies with^respect to the dollar.

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1952 REPORT OF THE SECRETARY OF THE TREASURY

The National Advisory Council opposed any general revision of exchange rates
at the time, and Secretary Snyder, in a press conference June 5, 1951, stated:
"It seems to me that the current inflationary situation has two characteristics
which must not be lost sight of when remedies to deal with it are being considered.
First, the problem is common to the whole free world, and secondly, it is a common
problem because it results from,the impact of the mutual defense effort. The
»appreciation of c^urrencies is not, in my view, a solution for a. world-wide inflationary situation. Fundamentally, we must deal with this problem through measures such as taxation, credit controls, allocation of scarce materials, and similar
methods which can be applied in all countries. Appreciation of currencies under
current conditions is likely to have the effect merely of giving a temporary advantage to a particular,area to the detriment of the defense effort as a whole and
also to the detriment of the economic situation in the rest of the world.
"In my opinion, there is no justification for such a course of action at a time,
when the United States is engaged in a great rearmament effort and is making a
major contribution to friendly countries in that effort."
The International Monetary Fund has stressed with its members the importance
•of relaxing their excharige restrictions and of simplifying their multiple-currency
systems as initial steps-looking toward their ultimate elimination. In accordance ,
with the Articles, in 1952 the Fund began consultations with the members still
retaining exchange restrictions. These consultations have promoted mutual
understanding among members, while providing technical advice on exchange
problems—a necessary preliminary toward the eventuaLreduction of exchange
barriers.
The International Monetary Fund provides financial assistance in connection
with short-term requirements for foreign exchange, associated with its consultations with foreign countries on their exchange and financial policies. These advances are expected to facilitate the objectives of the Fund and to be outstanding
for a relatively short period of 3 to 5 years. To date the transactions of the Fund
amount to about $900 million. In the earlier period these drawings served to
meet some of the dollar requirements of the European countries before the adoption of the European Recovery Program. In recent years the Fund's transactions
have been related to short-term deficits arising from seasonal difficulties, crop
failures, changes in prices, shifts in the pattern of trade, and lag of receipts behirid
expenditures, or other factors which could be expected to remedy themselves
within a relatively short period of, say, 3 to 5 years. Within a period of a few
years new crops, or reversed shifts in trade or policies may place them in position
to repay any credits advanced in the period of difficulty. The National Advisory
Council has advised the United States Executive Director in the development of
policies in the Fund which will meet some of the immediate financial requirements
of its members and facilitate the carrying out of programs in the exchange policies
in line with the Fund's objectives.
Stabilization loans or credits on a larger scale than those provided in this manner
through the International Monetary Fund were considered by the National Advisory Council at the beginning of the European Recovery Program. Such loans
have been recognized as of possible value in appropriate situations, but not as
substitutes for programs aimed at reconstruction, economic recovery, or development. Secretary Snyder in his statement to the Congress in 1948, speaking as
Chairman of the National Advisory Council said in part:
'^
"After progress has been made toward internal stabilization in the European
countries by balancing budgets, increasing production, and expanding trade, the
time will arrive when it may be appropriate to make stabilization loans which
would give greater assurance to the" people of the participating, countries that the
stabilization will be permanent . . . A stabilization loan to be effective should
come when there is reasonable assurance that the internal situation of the country
concerned is satisfactory . . . "
Up to.the present time it has appeared that the continuing fundamental difficulties
in Europe's balance of payments have not made it appropriate to consider the
extension of stabilization credits to European countries.
In addition to cooperation in the internatipnal exchange field'through the Fund,
the United States Government has undertaken a broad program of financial reconstruction in a number of countries whose exchange relationships were of direct
importance to the United States.
"The largest of these programs was with the United Kingdom. In 1945, the
Congress authorized the Secretary of the Treasury tg enter into an agreement

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225

with the United Kingdom whereby the United States extended a credit of $3,750
million to that country. This loan was to be used to assist the United Kingdom in
meeting its immediate postwar balance-of-payments problems and to assist the
country in moving toward convertibility and the elimination of restrictions on
payments. The Secretary of the Treasury, who administers this agreement for
the United States, has frequently consulted with the Chancellor of the Exchequer
and other British officials on the problems arising from the agreement and the
ways and means by which Britain could move to a less restrictive pattern of trade.
Formal consultations of this sort were held in 1949 and less formal discussions
have been held frequently. In December 1951, Britain made the first payment of
interest and principal on this loan in accordance with its terms.
In 1946, the Philippines requested substantial budgetary and rehabilitation
loans from the United States Government. A Joint Philippine-American Finance
Commission, including representatives of the Treasury Department, made a
thorough study of the entire budgetary and financial situation of the Philippine
Government. The Mission's interim and final report of 1947 outlined a comprehensive and integrated financial, monetary, fiscal, and trade program for the
recovery and development of the Philippines and provided a basis for a number of
actions taken by the Philippine and the United States Governments. In order
to provide short-term budgetary assistance to the Philippine Government, and at
the same time to effect a satisfactory settlement of the outstanding obligation of
the Government of the Philippines to return certain peso funds, an agreement
with the Philippines was negotiated by the Treasury and signed ori November 6,
1950.
In 1947, Secretary Snyder signed a new exchange stabihzation agreement with
representatives of Mexico, amplifying and extending similar arrangements which
dated back to 1941. This agreement, the purpose of which was to assist in
stabihzing the dollar-peso rate of exchange and in maintaining the convertibility
of the Mexican peso, provided that under appropriate conditions the Treasury
would purchase pesos up to the equivalent of $50 million. In June 1949, Mexico
established a new par value in agreement with the International Monetary Fund,
and Secretary Snyder entered into a Supplemental Stabilization Agreement which
added $12 milhon to the $13 million then remaining under the original agreement.
In 1950, Mexico was able to repurchase frorn the Treasury all of the pesos previously sold under the agreement. . In 1951, a new agreement providmg for purchase
up to $50 million was signed, but Mexico has not found it necessary to draw on
the sum available. These stabilization operations, combined with the 1949
exchange adjustment, have been notably successful. The exchange rate between
the Mexican peso and the dollar has been maintained on a stable and fully convertible basis, and Mexico has been able to strengthen its international financial
position.
In the Western Zones of Occupied Germany, the Treasury cooperated actively
with the Defense and State Departments in the planning and carrying out of the
currency reform of June 1948. Such a reform had become crucial to any rapid
recovery of the German economy from the effects of wartime inflation and
destruction as well as from the impeding consequences of quadripartite occupation. Soviet occupation of a part of Germany meant that plans for a monetary
reform in the Western Zones had to be based on a careful assessment of the
economic and financial consequences, among others, of such an operation, and
that the technical preparations for the reform required unusual care. The
Bureau of Engraving and Printing undertook the designing and printing of the
new Deutsche Mark and Treasury speciahsts in International Finance participated actively over several months in the intensive work involved in the development and initiation of the plan for currency reform. This reform was highly
successful in halting continued inflation and disorganization in the economy of
Western Germany and in initiating a phenomenal and continuing recovery in
the external as well as the internal situation of Western Germany.
The Treasury participated actively in efforts to achieve internal financial
stability in Japan during the occupation peiiod. The early years of the Japanese
postwar economy were characterized by acute inflationary conditions which
impeded economic recovery both internally and internationally. In the fii-st
half of 1948, the National Advisory Council reviewed the Department of the
Army appropriation request for fiscal 1948-49 for relief and rehabihtation of
Japan. It also reviewed problems related to the practicability of establishing a
single exchange rate in Japan. Treasury technicians and those of other^ NAG
agencies at that time expressed concern over the inflationary situation in Japan
221052—^3

226

1952 REPORT OF THE SECRETARY OF THE TREASURY

and recommended to the. Council that in order to make the aid effective and to
permit the early establishment of unitary exchange rate, a vigorous antiinflatioriary program should be adopted immediately by. the Japanese Government.
These recommendations were in turn presented to Japanese authorities by the
Supreme Commander for the Ahied Powers (SCAP), although the program was
only, partially enacted. In December of the same year, the National Advisory
Council was requested to review the Army Department's fiscal 1949-50 request
for assistance to Japan. The recommendations resulting from this review again
called for corrective internal measures, most of which were subsequently adopted
by the Japanese Government. During 1948 and early 1949, two special missions,
which included representatives of the Treasury, were sent to Japan to assist and
advise Japanese and SCAP officials on the problems- of establishing a unitary
exchange rate and carrying out the stabilization program. The stabilization
resulting from these efforts was impressive and provided a further stimulus to
the recovery of the Japanese economy.
V. UNITED STATES ECONOMIC ASSISTANCE PROGRAMS

At the end of the war many of the alhed countries were unstable politically,
faced with threats of attack.from the outside and subversion from within, w^hile
their: industrial plant had deteriorated and their international trade had been
disrupted by the war. Many of them faced.serious problems of inflation arising
from the breakdown of their fiscal systems, the inadequacies of their taxation
measures, and the expansion of credit by their central and commercial banking
systems. It was recognized that under these circumstances complete rehance
for the economic recovery of the Western World could not be placed upon normal
capital flows, nor on the internal efforts of these countries themselves. Accordingly, steps were taken to provide economic assistance toward the reconstruction
of the European eponomies. .
The United States provided economic assistance in the period immediately
following the war in a variety of forms, including grants of money and supplies,
loans, and transfers of goods and services on a deferred payments basis. Substantial credits, covering lend-lease goods in the "pipe-line," surplus materials
located abroad and surplus merchant vessels, were made available to foreign
countries. The United States also' financed about 70 percent of the operations
of the United Nations Rehef and Rehabihtation Administration, which transferred large quantities of food, fuel, and industrial raw materials to war-devastated countries. Loans by the Export-Import Bank played a significant role in
this period, following an increase by $2.8 bilhon in the lending authority of the
iBank for the purpose of enabhng the Bank to undertake loans for reconstruction
purposes.
By the end of 1947, foreign countries had received grant assistance from the
United States amounting to approximately $6 bilhon, including almost $2 billion
in lend-lease supphes and $2 bilhon in civilian supplies provided for occupied
areas. Credits of all kinds by United States agencies in.the same peridd totaled
shghtly more than $8 billion, including the loan under the Anglo-American
Financial Agreement. Provision of assistance on this scale by a number of
United States agencies, with differing statutory authority and practices, created
difficult problems of coordination. The National Advisory Council carried out
its responsibility for the coordination of these programs.
Another important means, of dealing with these problems was the International
Bank for Reconstruction and Development, which had been created in full
recognition that the Bank would make its loans, at least in the initial period,
primarily from use of the United States subscription and the sale of its securities
in the United States market. In the first 3 years of its operations, most of the
Bank's loans were made for reconstruction purposes to European countries
(France, The Netherlands, Belgium, and Denmark), to assist them in restoring
their economies. Thereafter the Bank'pro vided more of its funds for economicdevelopme.nt purposes in other areas. By the end of 1947, dollar disbursements
of the Bank totaled about $300 million.
By 1947, when European countries had borrowed heavily and were losing
monetary reserves, it .became clear that the magnitude of the reconstruction
problem was greater than had been anticipated and that it would not be possible
to finance the , needs of. the European countries through lending operations,
either through the securities market or through public lending institutions. While
Congress had. pro vided special assistance for a few countries whose economies

EXHIBITS

227

were in poorest condition and whose borrowing capacity was least, it became
evident that further economic assistarice would have to be financed principally
without expectation of repayment. In 1946 and 1947, the National Advisory.
Council had coordinated the terms upon which outstanding obhgations were
funded and new assistance provided by the lending institutions. But it concluded
its report (House Doc. No. 365, 80th Cong., 1st Sess.) for the period ending
March 31, 1947:
"As of March 31, 1947, almost all United States governmental resources authorized for foreign financial assistance, excluding United States participation in the
International Monetary Fund and the International Bank, had been committed
to foreign countries. It has during the period under review become increasingly
clear that such resources as remain available will not, by reasons either of their
amount or of the nature of developing needs abroad, prove adequate for. the
accomplishment of the purposes for which foreign financial assistance has been
provided. The question of the extent to which this country will need to provide
additional assistance to foreign countries cannot be. readily answered. The
agencies represented on the National Advisory Council are giving continuing
consideration to this matter."
Following Secretary Marshall's now famous Harvard speech, agencies of the
Government began to formulate a program for assistance to the European
countries. The National Advisory Council gave extended consideration to the
financial terms upon which aid should be extended and to the obligations which
the participating countries should assume as a condition to receiving aid. Secretary Snyder, as Chairman of the National Advisory Council, presented its
recommendations on these matters to the congressional committees. After a
year's experience with the program, the Secretary again appeared before the
committees to lay before them additional recommendations. In each of the
successive years, the financial terms of the aid programs have been considered
by the Council, and the Council's recommendations have formed an important
part of the Administration's program. The legislation as. enacted made the
Administrator for Economic Cooperation a member of the Council, thus irisuring
that the European Recovery Program would be fully coordinated with other
international financial policies and programs of the United States.
While the details of the Council's recommendations have necessarily varied
somewhat from year to year as conditions have changed, a few Of their ;basic
principles may be mentioned here. From the beginning, the. Council recommended that the bulk of the assistance should be provided on a grant basis. It
held that the European countries were already heavily obligated on account of
previously incurred debts, and that a great.increase in charges for servicing loans
would burden their balances of payments for the future so as to prevent the
reemergence of normal investment standards. As Secretary Snyder stated to
the Senate Committee on Foreign Relations on January 14, 1948, and the House.
Committee on Foreign Affairs on January 21, 1948:
" . . . We must keep in mind that these countries have already incurred an
obligation for large annual payments of interest and amortization arising from
the dollar loans extended to them over a period of years by the United States
Government or the United States private capital market. We should take care
not to insist that these countries contract additional dollar debts which will
absorb so much of their dollar earnings as to operate to the disadvantage of future
trade and private investment. If the entire aid for.European countries were
to be on a loan basis, it would be practically impossible for them to meet the
additiorial annual charges from their earnings of dollars, even after trade and
investment return to normal. . . . "
The Secretary emphasized that the assistance was to be given conditionally
to raeet a temporary need, and that its purpose should be so to strengthen the
economies of the participating countries that by the termination of the program,
they could become self-supporting and free from dependence on extraordinary
assistance. To this end, more than aid was required. The value of extraordinary
assistance would be greatly impaired unless the participating couiitries themselves took the difficult steps necessary to bring about increased production,
expanded trade, and financial stability. In this connection. Secretary Snyder
emphasized the importance of controlling inflation through appropriate fiscal
and monetary policies, including increased rates of taxation, improvement of
fiscal administration, curtailment of postponable expenditures, and sound credit
and debt policies. He recommended the use of the local currency counterpart
of United States assistance for the reduction of the outstanding debts of the

228

1952 REPORT OF THE SECRETARY OF THE TREASURY

governmenta, particularly to the central banks, as an important deflationary
device, though to some extent these funds might be usefully employed to stimulate
production. These recommendatioris were substantially embodied in the authorizing legislation by the Congress.
The European Recovery Program was broader in scope and larger in amount
than the special programs developed in the immediately preceding years. These
programs were largely for the provisioli of immediate relief. The European
Recovery Program on the other hand was for reconstruction and not relief. In
the course of the 4 years 1948 through 1951, the European countries received
over $10 billion in grant funds, including the capital contributed to the European
Payments Union. In addition, more than $1 billion was provided through special
credit arrangements under the Economic Cooperation Act.
On the whole, the emphasis of United States foreign aid in.the immediate postwar period was predominantly economic, being iriitially concerned with the
problems of immediate relief and later with the problem of economic recovery
from the effects of the war. As time progressed, however, the need for rebuilding
the defenses of the free world became increasingly apparent. The initial rriajor
step in this direction was the Greek-Turkish Aid program, begun in 1947. Later
it became necessary to provide for defense needs in the foreign aid program on
a broad scale. In October 1949, the Mutual Defense Assistance Act was enacted
by the Congress for the purpose of promoting defense in the free world. As
in the case of the European Recovery Program, the financial policy aspects of
the Mutual Defense Assistance Program were reviewed by the National Advisory
Council.
In 1951, the various foreign aid programs of the United States were brought
together in the Mutual Security Program, which embraces military, economic,
and technical assistance. This program, which was authorized in the Mutual
Security Act of 1951, marked the completion of shift in emphasis of the foreign
aid program toward the security needs of the non-Communist world. The
financial aspects of the Mutual Security Program were reviewed by the National
Advisory Council at the request of the President, in the same manner as the
Council had reviewed earlier aid programs. Coordination of the financial aspects
of the Mutual Security Program with other aspects of the international financial
policy of the United States was assured by the designation of the Director for
Mutual Security as a member of the National Advisory Council, replacing the
Administrator for Economic Cooperation.
The development of the Mutual Defense Assistance Program and the Mutual
Security Program has been geared closely with the assumption by the United States
of its obligations in the North Atlantic Treaty Organization and in other international defense arrangements. It has already been pointed out that the importance of the financial commitments made by the United States in these defense
arrangements has given the Secretary of the Treasury an important role in international discussions of these problems, particularly in the North Atlantic Treaty
Organization. This active and continuous participation by the Secretary has been
essential in assuring that financial considerations are given appropriate attention
in carrying out these arrangements with foreign countries.
The foregoing review of the foreign assistance programs of the Uriited States
since the war has emphasized the major aspects of these programs. There have
been in. addi tion a number of significant special foreign assistance programs.
A very large amount of assistance in the form of-civilian supplies was provided
in the first years after the war, primarily to Italy, Germany, and Japan. There
was a program of aid to Yugoslavia, and a program of economic assistance to the
Philippines.
In addition to the programs already mentioned, the Export-Import Bank has
since the end of the war continued its lending operations, and has made a nuinber
of loans, many for economic development purposes, to finance projects in many
parts of the world, including Latin America, Africa, and Asia, as well as Europe..
The Bank has also financed the production of strategic and other materials required by the United States defense program. The activities of the International
Bank since the postwar reconstruction loans have been directed primarily to economic development in many parts of the world and have emphasized development
loans to underdeveloped countries. The lending activities of the International
Bank have been consistent with the objectives of the United States in this field
and have constituted an important and significant part of the efforts of the free
world to improve the situation. The National Advisory Council has regularly

EXHIBITS

229

reviewed credits of this type by the Export-Import Bank and has. formulated the
position of the United States with regard to International Bank loans.
President Truman's Point IV program, initiated in this period, has as its main
objective the provision of technical assistance to underdeveloped couritries. It
includes, also, the encouragement of the flow of investment capital. Extensive
consideration was given by the National Advisory Council to the financial aspects
of the Point IV program, including the obstacles to private foreign investments
and the need for negotiating investment treaties. The desirability of various
forms of guaranties by this Government and of changes in United States tax
measures was studied and recommendations made. Congress later authorized a
program of technical assistance, to be carried out through the Technical Cooperation Administration, and enacted certain investment guaranty ineasures for the
encouragement of foreign investment.
The magnitude, terms, and geographic coverage of the foreign aid programs of
the United States are indicated in tables I and II and chart A, pages 231, 232, and
234. Table III shows the extent to which the operations of the International Monetary Fund and International Bank have made dollars available to foreign countries.
Chart B illustrates the importance of United States foreign aid in the United
States balance of payments.
VI. SUMMARY AND CONCLUSIONS

In the international aspects of his work, as in the domestic, the Secretary of the
Treasury has responsibility for maintaining the stability and strength of the Nation's currency. Through his administration of the national gold policy and other
financial policies related to our position as the strongest financial power in the
postwar world, the United States has provided leadership directed toward the
improvement of the international monetary system.
Throughout the 6-year period the United States dollar has been consistently the
most widely desired currency in the world, and its strength and stability have
never been questioned. Most foreign countries have forbidden their citizens to >
hold United States dollars and, through trade and exchange restrictions, have
limited their freedom to obtain United States products. Progress toward sounder
international monetary arrangements has in practice been dependent upon a closer
approach by foreign countries to economic and financial stability.
In September 1952, the Secretary stated to the Governors of the International
Monetary Fund at the annual meeting in Mexico City:
"We hope to achieve this goal through internal financial stability and through
expanded multilateral trade and world-wide currency convertibility based on
realistic exchange rates and on an internationally competitive price mechanism.
This irieans we should free ourselves as much as possible from hampering restrictions whether they take the form of restrictive tariffs, quotas, prohibitions,
exchange restrictions, or other artificial supports or devices. In this way we hope
to foster sound and efficient production and trade at a high level and to assure the
best possible allocation of resources for the benefit of all of us."
The broad international financial policy objective of the United States during
this period has been (a) to preserve and foster the greatest practicable degree of
freedom from ..restrictions on international financial transactions, in order to
attain high levels of world trade arid facilitate international investment, (b) to
promote efficient production throughout the world, and (c) to encourage balance
in international accounts through realistic exchange rates and sound internal
financial policies.
The past 6 years have seen, not only the tremendous task of recovery and reconstruction from the most destructive war in history, but also—eyen before that
task could be accomplished—the new task of dealing with the distortions resulting
from a great rearmament effort in the face.of a new and massive threat to the security of the free world. The United States economy has demonstrated that it could
meet the challenge of these tremendous changes with remarkable resiliency. For
a variety of reasons foreign countries have not, however, generally demonstrated
the same degree of ability to overcome the obstacles faced. Both in the conversion
to peacetime activity and in the reconversion to partial mobilization, major
economies throughout the world have demonstrated less flexibility and fundamental strength, and greater vulnerability to change and more tendency to
inflation.
The problems of monetary policy both in terms of the internal economy and
external payments relations are necessarily ever present and vary in form with

230

1952 REPORT OF THE SECRETARY OF THE TREASURY

changes in the ebb and flow of economic activity. The Soviet threat and the
necessity of maintaining adequate defense clearly indicate that for the foreseeable
future the problems of monetary policy will be in the forefront of national and
international thinking. In the period which we are facing as in the postwar period
through which we have passed, the free nations of the world must have under
continuous review exchange practices and policies and their impact on their flow
of trade and payments.
The Secretary of the Treasury has continually emphasized the importance of
measures leading toward internat financial stability, and in the close relationship
of these measures to achieving a sound balance of payments. As he said in addressing the Governors of the International Monetary Fund (September 4, 1952):
"But if we are to preserve our internal and external stability we must merit the
unpopular role our office calls upon us to play, and take the difficult road of those
fiscal and monetary measures suggested in the Fund Report which can minimize
inflationary pressures rather thari relying—with more or less futility—on measures
to control them once they are created. Because of the permeating and corroding
effects of inflation on economic and social stability, it is a source of deep gratification to me that our United States Congress has been willing to increase taxes three
times in less than two years in order to help meet our necessarily increased expenditures. Through these and other measures we have been enabled to complete six
years of postwar finance with a pet budget surplus of over $3 billion."
The importance of these measures is heightened by the new burdens of defense:
" . . . Burdensome as present defense programs are, they seem likely to continue for a sustained period. Moreover, they represent only part of the total
domestic economic activities of some countries and only a small or insignificarit
part in other countries. The bulk of the economies of the world are still devoted to
civilian activities. Financing our defense burdens through the easy policy of
infiation can only hinder our progress in sound reconstruction and development,
by distorting our allocation of resources and our production, by threatening both
domestic savings and monetary reserves, and by enhancing baiance-of-payments
difficulties, which would lead to the introduction or strengthening of undesirable
foreign exhange and trade practices.
"The measures to be taken are wefl known to you gentlemen. They include:
" 1 . Increased production of essential goods and increased productivity from
available capacity and resources.
"2. Postponement of less essential Government and civhian expenditures.
"3. Restriction of investment and credit to essential purposes,
"4. Increased taxation directed to reduction of less essential civilian expenditures and to the promotion of essential and efficient production.
"5. Encouragement of savings.
"6. Minimum reliance on controls and restrictions domestically and internationally.
"7. Rates of exchange which are realistic and which contribute to international balance and the removal of restrictions.
"These measures are well known. They are hard and difficult. But they are
the road to real strength and independence. ' It is the heavy responsibUity of my
colleagues here—of Finance Ministers, Central Bank Governors, and their associates—to take the lead in their couritries in making effective the difficult but
rewarding policies which will, in fact, produce increased economic as well as political and military strength. These are measures which will achieve internal and
external balance. These are measures which will stabilize and maintain the purchasing power of currencies and preserve the value of savings. These are measures
which will help achieve and maintain the social and economic stability which are
"riecessary for the preservation of freedom and for higher standards of living for all.
"We have a choice. We can take the easy road of inflation and restrictionism
which leads to instability and weakness.' Or we can take the hard road to strength
and independence—the road to morietary stability and freedom. These are the
Fund and Barik objectives. It is my fervent hope that for the sake of the future
of our" countries arid for the future of the Fund and Bank we will all take the more
constructive road."

231

EXHIBITS

TABLE 1.—Foreign aid programs ofthe V. S. Government: grants and credits utilized
in the postwar period, hy calendar years
[In millions of dollars!
Utilized iii the postwar period (calendar years)
Total
utilized

Program

1948

1947

July1946 December
1945

6,122

5,713

6,224

5,680

2,140

5,430

4,302

2,098

2,592

1,267

2,804

3,797

1,490

2,309
149

2,731
73

3,713
85

1,394
96

320

506

1,081

1,504

990

1,055

671

1,081

2
1,512
19

18
1,020
147

806
654
1404

1,121
343
1794

625

868

1,470

479

640
216
12

1,470

479

1961

1960

1949

35,437

4,957

4,601

24,388

4, 544

4,155

10,549

2,458

European Recovery Program
10,147
402
Far East Program (including K o r e a ) . . . . . .

Total, all programs
Total, grants

.._

Economic cooperation.

Lend-Lease and civilian supplies^
Lend-Lease
Civilian supplies
(Credit offsets to grants) ^

6,128
1,945
6,439
J 1,256

UNRRA, post-UNRRA, and interim aid. .

3,443

UNRRA
Post-UNRRA
Interim aid

2,589
299
556

322
12

606

(2)

(2)
(2)

1
11

"""si"

Other grants

4,268

1,766

846

551

545
682

Mutual-defense assistance
Greek-Turkish aid
Philippine rehabilitation
_
Chinese stabilization and military aid
Technical assistance and inter-American
aid
-.
International refuecee assistance
•
Internationai Children's Fiind
Palestine relief
Donations of agricultural surplus
Yugoslav aid
American Red Cross

2,040
659
631
243

1,573
9
12
3

467
69
166
5

170
203
44

348
130
72

74
86

185
241
81
59
81
38
10

48
8
6
24
46
38

27
52
15
20
36

30
71
18
15

16
89
27

11,050

413

446

692

1,411

Total, credits

(2)

240 .

117

33
15

106

46
19
15

11
2

4,126

3,089

873

Export-Import Bank.. .
200
429
824 1,037
204
185
68
2,937
Economic Cooperation
476
428
1,131
70
157
•662
12
48
764
War-account settlements
(3)
1,388
185
Other lend-lease and surplus property
2
32
248
650
263
1,276
6
309 3,006
4,319
737
136
84
47
Other loans and commodity credits
Anglo-American Financial Agreement
3,750
300 2,850
600
Indian loan
106
106
Spanish loan
17
17
United Nations loan.. _
22
20
3
58
13
Commodity credits
86
283
27
27
137
7
Miscellaneous loans
70
105
35
(3)
(3)
(3)
(3)
1 Minus.
2 Minus less than $500,000.
' Less than $500,000.
NOTES.—Lend-Lease was supplied principally to European countries and China. Civilian SuppUes
have been administered by the Army and Navy as aid to occupied areas, Germany, Austria, Italy, Japan,
Korea, and the Ryukyus.
UNRRA—The United States Government contributions to UNRRA totaled $2.7 billion out of a total
UNRRA program of $3.9 billion. UNRRA assistance went principally to European countries and China.
Interim aid was administered by the Department of State and the Economic Cooperation Administration
under the act of December 17, 1947 (Public Law 389, 80th Cong.). Assistance was rendered to Austria,
France, and Italy principally during flrst half of 1948.
Greek-Turkish assistance under the act of May 22, 1947 (Public Law 76, 80th Cong.), was administered
by the Department of State and included civilian as well as military aid.
Philippine rehabilitation has been authorized for war damage compensation (private war damage claims),
transfer of excess Army stocks, and restoration of public property and essential public services.
China—The stabilization grant of $260 million was administered by the Treasury Department under
the act of February 7,1942 (Public Law 442, 77th Cong.). Military aid to China was administered by the
Executive Oflice of the President and terminated in April 1949. Chinese aid consisted of grants administered by the Economic Cooperation Administration under the Economic Cooperation Program for China.
Surplus property includes that aid rendered through the War Assets Administration, the Office of Foreign
Liquidation (Commissioner, and the Maritime Commission.
Lend-Lease credits have resulted from lend-lease settlements including some goods on inventory and
billings for some shipments since VJ-day.
Miscellaneous loans were largely made by the Department of Agriculture, the Army, Reconstruction
Finance Corporation, and Department of State.
SOURCE.—Department of Commerce.

232

1952 REPORT OF THE SECRETARY OF THE TREASURY

TABLE II.—Summary of postwar U. S. Government foreign grants and credits:
July 1, 1945, to December 31, 1951, hy area
[In millions of dollars]
Utilized
Net
postwar
aid

Area

Total, all areas

Grants

Credits

Total

Grants

Credit
repayments

32,980

36,437

24,388

11,050

2,457

690

1,767

Total, Europe

25, 431

26,856

17, 679

9,176

1,425

547

878

E R P participants
Other Europe

23, 786
1, 645

26,108
1,748

16, 473
1,207

8,635
541'

1, 322
103

508
40

815
63

6,095
513
257
2
9
987

6,601
767
49
143
32
988

5, 550
207
1

1,051
560
48
143
13
58

506
255
107
142
23
1

475
254
14
142
3
1

Asia
Latin America
Africa
Canada
Oceania
Unallocated

Total

Returned and repaid

- -

19
,931

93
20

1 Less than $500,000.
2 Minus.
NOTE.—See footnotes to table 1.
SOURCE.—Department of Commerce.

TABLE III.—International Monetary Fund and International Bank dollar assistance
, to foreign countries through June 30, 1952
[In millions of dollars]

Tptal

Total assistance
Fund sales of dollars 1
Bank dollar disbursements 2

1, 640. 6
813. 2
827.4 .

Jan.June
1952
129.1
40.6
88.5

Calendar years
1951
123.3

1950
67.2

6.6
116.7 "'67."2"

1949

1948

163.4

396.1

761 5

IOL 5
6L9

202.8
193.3

461 7
299 8

1947

1 United States quota $2,750 million, of which $687.5 million was paid in gold and $2,062.5 million in
dollars.
2 United States subscription was $3,175 million, of which $635 million was paid in dollars. Through June
30, 1952 the international Bank sold $450 million of bonds in the United States.
SOURCE.—International Bank and International Monetary Fund.

233

EXHIBITS

TABLE IV.—The IJnited States balance of payments, July 1, 1945, to June 30, 1952
[In millions of dollars]
M e a n s of financing
T o t a l exports
Net movements
of goods a n d
Total imports
services (0
of goods a n d U . S. Govern- L i q u i d a t i o n
services (')
Miscellaneous
m e n t sources of gold (3) a n d
(0
dollar assets
(2)

Period

119, 999

74, 526

36,824

1, 996

6, 653

10, 531

7,739

2,384

6 0-10

418

10, 589
9,658

7,301
7,853

2, 236
2,456

562
6-1,014

490
363

7,642
6,793

6, 889
. 5,278

2,018
2,267

6 - 2 . 507
6-1,134

1,242
382

7,191
8,765

4, 747
4,968

2,610
3,337

6-362
364

196
96

8,286
8,806

5,376
4,980

2, 766
2,302

6-74
854"

218
670

9, 728
10, 068

4,198
4,091

2,516
3, 327

2,084
2, 378

931
272

7, 506
7,235
7, 201

3,635
3,328
4,143

2,408
2,569
3,629

1,109
823
6 - 1 , 077

354
515
506

Total postwar
19.'i2; January-.Tunfi
1951:
July-December
January-June
..1950:
.July-December
Jan uary-June
1949:
July-December
January-June
1948:
J u l y - D e c e m b e r ._
January-June
1947:
July-December
January-June
1946:
July-December
January-June
.
1945: J u l y - D e c e m b e r

1 Exports and imports include not only merchandise but also transportation, travel, income on investments, and miscellaneous services, the latter two both private and government.
2 Data on U. S. Government sources are net of unilateral transfers to the United States and capital repayments. Included are pensions, annuities, and claims against the U. S. Government, as well as loans
and property credits.
3 Includes gold sold out of current production abroad, as well as liquidation of existing foreign holdings.
4 Shows net dollar disbursements by the International Monetary Fund and the International Bank
(see footnote 5), U. S. net private remittances, U. S. net private long- and short-term capital outflow, and
errors and omissions.
6 Includes transactions of the International Monetary Fund and the International Bank, formerly under
"Miscellaneous."
6 Negative flgures are due to the net foreign acquisition of dollar assets and purchases of gold from the
United States, which are a result of an excess of the means of flnancing over United States exports.
SOURCE.—Department of Commerce.

to
CHART A

CHART B

iiilHlMiiiiMMi^

236

1952 RE1>0RT OF THE SECRETARY OF THE TREASURY

APPENDIX D. IMPROVEMENTS AND CHANGES IN WORKING OPERATIONS OF THE TREASURY DEPARTMENT SINCE JUNE 1946
FISCAL YEAR

1947

BACKGROUND

World War II brought on a period of tremendous increase in Treasury activities. New functions were added to the Department while existing functions
expanded at a very rapid rate. A few examples of this great expansion of workload are shown below and compared with workload processed during fiscal 1947.
A complete table on workload data is found at the end of this Appendix.

1947

1940
Tax returns flled : .
_
Persons examined by Customs
Sheets of all types of printing...
Checks issued
_
,
Checks paid
_.
Pieces of outstanding public debt securities requiring servicing
Coins produced
Cases completed (counterfeiting, check forgeries, bond
cases, etc.)
__
_.

19,199,932
48, 552,327
446,846,250
106,743, 925
130,578,489

81,447,923
72,977,244
684,369, 362
134,541,597
348,749,450

91,723,748
78,947, 553
559,452,273
160,637,192
260,056,000

25,009, 543
768,091,000

646,692, 593
1,658,127,100

600,808,010
\, 016,485, 295

22,945

43,884

50,202

The war created other problems such as scarce manpower, an influx of unskilled, inexperienced workers on the labor market, and the unavailability of
equipment. These factors were coupled with the pressure of a war situation in
which speed was often more important than cost. The end of the war brought
with it the inevitable retrenchment in expenditures. This general tightening of
the belt worked definite hardships on some bureaus of the Treasury where the
workload either continued at a high war level or actually increased beyond levels
previously experienced.
During the latter part of the fiscal year 1947 some Treasury bureaus were
forced to adopt the policy of suspending all hiring and promotion of personnel in
order to assure that administrative costs would remain within available appropriations. One major bureau could not fill vacancies created by resignations,
deaths, or dismissals during the last four months of the fiscal year, despite the
fact that its workload was increasing. These factors acceiituated the difficulty
involved in converting from wartime to peacetime operations.
It became increasingly apparent that management improvement was required
in order that the workload could be handled by the existing personnel or even by
fewer people.
START OF THE MANAGEMENT IMPROVEMENT PROGRAM IN THE TREASURY

When Secretary Snyder took office in 1946, the Department was in the initial
stages of reconverting to peacetime operations. The Secretary decided that it
was an appropriate time for a period of general stock-taking in the Department.
The Treasury bureaus accordingly were requested to reexamine their operations
with a view to promoting maximum efficiency and economy. They were requested
also to report to the Secretary steps taken or contemplated to reduce expenditures;
and to indicate the results obtained or expected.
Plans were then made for concerted effort to improve management and several
fundamental decisions were made at this time which proved to be sound in practice
and which are still being followed.
First, it was decided that the responsibility for improving operations should be
placed on bureau heads and line officials of the Department. In other words, a
large organization and methods staff would not be built up at the departmental
level and vested with this responsibility. Bureau heads were, however, encour*aged to employ organization and methods specialists to advise and assist them in
carrying out-their management improvement responsibility.
Although the decision was made to place responsibility for management improvement in the operating bureaus, it was recognized that central direction and a
system of inspection by the Secretary and his staff assistants would be essential to

EXHIBITS

237

the success of an all-out improvement effort. The Secretary, therefore, assumed
an active role in the management of operations.
The Under Secretary and Assistant Secretaries have had an active part in the
management improvement program. Each was given his own area of operation
and adequate authority to carry out his assigned responsibilities.
The second fundamental decision made by the Secretary at this time was that
primary emphasis in the management improvement effort should be placed on
maximum employee participation, since it was believed that therein lay one of the
major keys to the success of the improvement program. This led to the adoption of the ''Work Simplification" and ''Cash Awards for Suggestions" programs
which together are designed to enlist as many people as possible in the Department's management improvement endeavor.
WORK SIMPLIFICATION

Work simplification, which has been used with success in private industry and
in other parts of the Government service, might be called the grass roots approach
to management improvement. It is designed to teach supervisors at all levels of
organization how to analyze and improve the operations of their own units. The
program was first installed on a pilot study basis in thCoBureau of Internal Revenue.
Following its acceptance and notable success there, it was adopted by all of the
other major bureaus. It has proved to be a highly effective means of utilizing
the talents and skills of the Treasury's own employees in a concerted and continuing attack on management problems.
CASH AWARDS FOR SUGGESTIONS

An important corollary of any improvement effort which depends in part on
employee participation for its success is a system for rewarding employees who
make suggestions which result in improvement. In August 1946, Congress passed
a law enabling Government agencies to pay cash awards for such suggestions. In
January 1947, the President issued Executive Order No. 9817 which implemented
the law passed by the Congress. By the end of June 1947, the Department had
prepared all of the necessary regulations and instructions and adopted the employee suggestion program to further encourage employee participation in the
over-all improvement efforts. The Secretary estabhshed a Treasury awards
committee composed of bureau representatives and certain other key officials to
administer the. program; and the Administrative Assistant to the Secretary set
up facilities for the committee in his own office.
MONTPILY REPORT OF ACTIVITIES

In September 1946, the Secretary requested all bureau heads to submit a recurring monthly report of the principal activities showing current as well as anticipated developments in their respective bureaus. The.reports are sent to the
Administrative Assistant Secretary where they are analyzed, digested, and compiled into a single document entitled "Monthly Report for the Secretary on
Treasury Activities." The reports serve the dual purpose of keeping.the Secretary and the top. staff informed of bureau activities, and of stimulating bureau
heads to improve their reporting systems and to use the information gathered to
achieve better control over their operations.
SIGNIFICANT DEVELOPMENTS AND ACCOMPLISHMENTS

, .'

The fiscal year 1947 brought increased collection of customs revenue, .indicating
arrival of goods from foreign countries which had long been.absent' from our
markets because of war conditions. This year also saw the final steps taken to
return all Coast Guard functions to the Treasury Department from the Navy
Department. The functions of the Office of Contract Settlement, the Appeals
Board, and the Contract Settlement Advisory Board were transferred to the
Treasury Department.
Some of the more significant accomplishments of the first year's efforts toward
management improvement in the Treasury Department are listed below:
Armed forces leave bonds were printed on tabulating cards instead of in the
conventional manner with savings to the Bureau of the Public Debt of $171,000
in printing costs alone, plus potential savings in processing operations conservatively estimated at $100,000 annually.

238

1952 REPORT OF THE SECRETARY OF THE TREASURY

Machine equipment used in savings bonds sales and redemptions processing
operations in Federal Reserve Banks were consolidated in main offices to provide
fuher utilization of equipment and personnel, with estimated annual savings of
approximately $1 million. These changes were effected in the latter part of
fiscal 1947 and early fiscal 1948. At about this same time a system of management reports was installed which included information on the utilization of rented
equipment in the Federal Reserve Banks used in connection with public debt
transactions. During the first 3 months of stressing maximum utilization of
equipment, 233 pieces were taken off rental at an annual saving of approximatelv
$128,000. •
A report section in the Bureau of the Public Debt was abolished and the redistribution of essential work was made to other sections with annual savings of
approximately $80,000. The Chicago office of the Bureau microfilmed registration stubs thereby releasing 20,471 square feet of space and eliminating the need
for purchasing 2,980 file cabinets which, would have cost $300,000. The bond
stubs were sold as scrap paper for $34,000.
The simplification of the bookkeeping methods for outstanding liabilities and
streamlining of accounting procedures through reorganizing and redistributing
work resulted in an annual savings of approximately $135,000 in the Division of
Disbursement. Production standards were established in the Division's field
offices which resulted in a reduction of 266 employees.
Progress continued on the Space Control Program during the year. Rental
savings of about $625,000 annually were made through moving Treasury activities
from commercial to Government-owned space. Of this figure, about $500,000
represented direct savings to Treasury appropriations while $125,000 represented
space released in the District of Columbia and was reflected in the funds of the
Public Buildings Administration.
The Bureau of, Internal Revenue established a Special Committee on Administration to consider and recommend definite management improvement actions.
The recommendations of this committee were submitted in August 1947; however, most of the spade work and findings are attributable to fiscal year 1947.
Over 100 suggestions made by this committee were later approved and pub into
effect. Some of the measures under way during the year in the Bureau of Internal
Revenue designed, to promote efficiency included the microfilming of records,
revision of internal forms, experimentation with new sorting and filing methods,
reduction of interest payments through improved procedures in scheduling refunds,
aud the use of preassembled forms. A long-range study looking to the eventual
reorganization of the Bureau of Internal Revenue was begun during fiscal 1947.
The Department also initiated a long-range prograin to recruit outstanding
young college graduates, particularly in the fields of law, business, public administration, and accounting.
The Treasury was represented in the Civil Service Administrative Intern
Program during the year when its nominee qualified for the training. This program, conducted on an interdepartmental basis, is designed to provide a continuing
source of potential administrators and key personnel for Government agencies.
FISCAL YEAR

1948

BACKGROUND

Work simplification, initiated in the Bureau of Internal Revenue in 1947,
was expanded during fiscal 1948 to the Fiscal Service (consisting of the Bureau of
Accounts, the Bureau of the Public Debt, and the Office of the Treasurer of the
United States), the Bureau of Federal Supply, the United States Secret Service,
and the Office of Administrative Services. This year brought the first results of
the cash awards for suggestions program which had been inaugurated during the
last month of fiscal 1947. It also brought the creation of another device to foster
management improvement—the use of management committees. In this year,
also, the Department profited from the studies of outside management consultants.
USE OF MANAGEMENT CONSULTING FIRMS

Although officials of the Department believed that within the Treasury lay a
vast storehouse of fruitful ideas for improvement which should be tapped and
explored, they did not want to overlook the benefits which can be realized from
an outside approach to organizational problems. It was believed that private
management consulting firms, with their extensive knowledge of modern business

EXHIBITS

239

methods and practices, could be extremely helpful in assisting in the Department's improvement programs.
For these reasons, management consulting firms which had been authorized
by the Congress were employed in fiscal 1948 to make comprehensive surveys of
the Bureau of Customs and the United States Coast Guard. This marked the
first time the Department had made use of outside firms to study and improve
its organization and procedure. Both of these studies were implemented through
steering committees which were made up of officials from the interested bureaus
and from the Office of the Secretary.
MANAGEMENT COMMITTEES

In fiscal 1948 the Administrative Assistant to the Secretary proposed to the
Secretary the establishment of a Treasury Department Management Committee
to coordinate and stimulate efforts to improve management, to serve as a forum
for the exchange of management information, and to consider certain over-all
problems of management in the Department. The Secretary subsequently
appointed a committee with a membership chosen from among the key officials
in the various Treasury bureaus and designated the Administrative Assistant to
the Secretary as chairman. It has proved invaluable, particularly when an
emergency arises, to have such a group which can be called together quickly to
decide collective action.
Just before the end of the fiscal year, the Secretary established a committee to
direct management studies of the Bureau of Internal Revenue. Thie steering
committees which had been established to study the recommendations made by
the private management consultants proved so effective that several bureaus
have since established similar groups to act in an advisory capacity to top management.
DEVELOPMENTS AND ACHIEVEMENTS

In fiscal 1948 an ambitious program to mechanize large portions of the operations of the collectors' offices in the Bureau of Internal Revenue was initiated.
An experiment in Cleveland with tabulating machines used in connection with
handling income tax returns showed much promise and plans were made for the
extension of machine usage to other large collectors' offices.
Early in the fiscal year 1948, a congressional committee, the Joint Committee
on Internal Revenue Taxation, made a study of the enforcement of the internal
revenue laws to ascertain the number of deputy collectors, revenue agents, and
other personnel that should be employed by the Bureau of Internal Revenue in
order to insure maximum net returns from taxes imposed by such laws. The
Appropriations Committee of the House of Representatives also made a complete
investigation into the affairs of the Bureau in the early part of the year. The.
investigators, in reports to the respective committees, set forth their findings and
made recommendations covering many phases of the Bureau's operations, including suggestions for strengthening the central administrative organization and for
increasing the over-all enforcement activities. The reports were considered in
connection ^with the appropriation of funds for 1949 and, on the basis of the
investigators' findings, the Bureau's appropriation was increased by over $5}^
million for the purpose of strengthening enforcement operations. The recommendations were also considered in the long-range study to reorganize and modernize the Bureau which had been started in fiscal 1947.
A large-scale microfilming program designed to reduce the space and to release
equipment required for storage, and to make records more accessible, was pursued
by the Bureau of Internal Revenue in fiscal 1948. Approximately 98 percent of
the storage space required for the records was saved and filing cabinets valued at
some four times the cost of the microfilming project were released for use elsewhere.
Following the discontinuance of the Canadian border patrol at the close of the
fiscal year 1947, consideration was given to similar action along the Mexican
border. In cooperation with the Immigration Service, some rearrangement of
the duties of Customs and Immigration employees was effected on a pilot study
basis at a considerable saving for both agencies. This later resulted in an annual
savings of approximately $308,000.
The method of port patrol in the Customs Bureau was changed by substituting
radio patrol cars for the traditional foot patrol. Savings amounted to $472,500
in fiscal 1948, with recurring savings on an annual basis of approximately $530,000.

240

1952 REPORT OF THE SECRETARY OF THE TREASURY

A comprehensive management survey of the Bureau of^^Customs was^undertaken by McKinsey and Company, a firm of management consultants. A large
majority of the recommendations have been appro ved.,and put into effect. A
number of the other recommendations were included in the Customs Simplification Bill of 1950, which has not yet been enacted into law.
Revision of production methods in the Bureau of Engraving and Printing for
processing cigarette stamps resulted in annual savings of approximately $84,000.
The method of printing fermented malt liquor stamps was changed from plate
printing to the offset method, which reduced the annual cost by approximately
$58,000.
A comprehensive survey of the United States Coast Guard was undertaken by
Ebasco Services, Incorporated. The recommendations made by the company
have become an integral part of the broad and continuing management improvenaent program of the Coast Guard.
An important study was undertaken jointly by the General Accounting Office,
the Treasury Department, and the Bureau of the Budget, to attack the problem
of improving the Government's accounting system in the light of the responsibihties and interest of the three agencies. The Accounting Systems Staff of the
Bureau of Accounts was assigned the responsibility for carrying out the Treasury
Department's role in this major project.
The microfilming of savings bonds was commenced in the Bureau of the Public
Debt, thus providing the Department with a permanent film record of redeemed
securities. At the close of the fiscal year some 52 mihion of the more than
237 million bonds received had been microfilmed.
Another major improvement in savings bonds redemption and reissue procedures, affecting Federal Reserve Banks and the Chicago office of the Bureau
of the Public Debt, was placed in effect during the year. This change permitted
Federal Reserve Banks to complete the redemption and reissue of certain savings
bonds without sending the bonds to the Public Debt office, with the result that
savings of approximately $841,000 were realized.
EMPLOYEE SUGGESTION PROGRAM

The employee suggestion program got off to a good start in fiscal 1948. This
"justified the Secretary's belief that the individual on the job could make a worthwhile contribution to the management improvement- effort if given the opportunity. During the year, 6,879 suggestions were submitted by employees. Of
this number 305 were adopted during the year. Savings resulting from adopting
the suggestions amounted to $221,357 and employees were paid a total of $7,660
for their ideas. Response to the suggestion program was so enthusiastic that the
committee process which had been established for handling the suggestions could
not keep up with the volume. As a consequence, only 3,000 of the suggestions
submitted were processed and at the fiscal year-end almost 3,900 suggestions .were
still awaiting action by the local committees or the central committees in Washington.
FISCAL YEAR

1949

BACKGROUND

The general administration of the Treasury Department during fiscal 1949 was
marked by significant extensions of certain management techniques already in
use in the Treasury. Employment of outside management consultants was
extended to the Bureau of Internal Revenue. Applications of the findings of
management studies of the Bureau of Customs and the United States Coast
Guard, conducted by McKinsey and Company and Ebasco Services, Incorporated,
respectively, were carried much further, although a final evaluation of these
studies could not be made at the close of the year because of the long-range character of many of the proposals. Throughout the year, work simplification continued to be emphasized in the principal operating bureaus of the Department.
All of these programs have been in line with a general management program to
simplify organization and streamline operations.
There were also certain steps taken to improve budgeting in the Office of the
Secretary. One of the more important budget improvements: was the assimilation of the budget of the Division of Personnel into the budget of the Office of
the Secretary. This step brought the Office of Personnel into the group design
nated as the Office of the Secretary. The responsibilities of the Director of
Personnel were hot changed inasmuch as he continued to advise the Office of the

EXHIBITS

241

Secretary on personnel policy and to supervise the Department's decentralization of personnel operations which has been under way for some time.
The Treasury's program to release commercial space and make use of federally
owned or controlled space moved forward steadily during the year and resulted in
estimated savings of some $561,000.
DEVELOPMENTS^AND ACHIEVEMENTS

Continuing emphasis was given to public education aids by the Bureau of
Customs. An illustrated folder. Customs Hints, which was written in simple,
nontechnical language, was issued to assist travelers and others having contacts
with the Bureau of Customs.
During 1949, the Customs Bureau eliminated the southwest border patrol with
isavings of approximately $439,000 on an annual basis.
A systematic review of all the accounting and auditing procedures in the United
iStates Coast Guard was instituted, with a view toward streamlining operations
and providing for the elimination of overlapping and duplication. Improvements
linder way during this fiscal year included: (a) decentralization of detailed accounting to districts; (b) centralized consolidation of reports and analyses for management purposes; (c) use of site audits and reduction of departmental post-audits
to the maximum permissible extent; and (d) establishment of an adequate system
of cost accounting. A pilot study in the Fifth Coast Guard District was planned
for the fiscal year 1950 with extension to the other districts as rapidly as possible.
A study of existing supply procedures in the Coast Guard initiated in February
of this year was directed coward: (a) more efficient methods of procurement; (b)
better inventory control with reduced cost; (c) faster filling of supply orders; and
(d) improved distribution of stocks.
On February 27, 1949, an aerial ice patrol operating from Newfoundland was
introduced. It continued until June 15. Ice patrol by vessel was neither required nor established during the 1949 season.
During fiscal 1949, the Coast Guard continued to study the management report
submitted by the Ebasco management consultants, and action on 119 of the 193
. recommendations was completed. A central management group was established
to deal with the general improvement guidelines to be established in accordance
with the recommendations of the consulting firm.
A special board of officers convened early in 1949 to investigate the necessity
for operating each Coast Guard hfeboat station, light station, and lightship.
This board, as part of its study, held public hearings in the localities concerned to
determine whether the fachity need be continued.
The preparation of tax refund checks by what is known as the "transfer posting
method" proved satisfactory in the 1948 experiment and was extended in fiscal
1949 by the Division of Disbursement. This method not only facilitates the
preparation of the check but also reduces the cost of typing and the possibilities
of errors in transcription. Effective January 1, 1949, the making of check payments in the name of the Chief Disbursing Officer was discontinued in all regional
offices except Washington, D. C , and assistant disbursing officers commenced
making disbursements and rendering accounts in their own names. The change
was made in order to facilitate the audit and settlement of disbursing officers'
accounts.
The Bureau of Engraving and Printing pursued its equipment modernization
program during fiscal 1949 with the purchase of 20 new flat-bed printing presses
equipped with automatic polishers and semiautomatic feedboards and with the
awards of contracts for the manufacture of automatic polishers and semiautomatic
feedtooards to equip 150 of the old presses. It is calculated that these modernized
presses will make it possible to increase currency production by approximately
30 percent and will save something over $1 million each year. The installation
of a new method of pressing currency by hydraulic press resulted in annual savings
of approximately $63,000. Reduction in the size of paper for printing revenue
stamps and standardization of the size of other paper used in printing saved
almost $50,000.
The Bureau of Internal Revenue continued its program of simplifying the filing
of the tax returns for the millions of people who had begun to pay taxes for the
first time during the war. The Bureau also continued its program for developing
a mechanized system to handle the mass operations which had developed. The
Bureau completely rewrote the booklet. Your Federal Income Tax, in order to preiSent in nontechnical language a well-rounded statement of the individual income
221052—53

242

1952 REPORT OF THE SECRETARY OF THE TREASURY

tax laws and regulations. About 265,000 copies of the revised booklet were sold
in 1949, and it received very favorable comment by the public and the press.
The new combined quarterly return form for withholding tax and employment
tax, tested in the Maryland office of the Bureau of Internal Revenue, was found
successful and was placed in effect in other offices as of January 1, 1950. This
form not only simplifies the work of the taxpayer, but also makes possible savings
to the Bureau which are estimated conservatively at more than a quarter of a
million dollars annually.
The Bureau of Internal.Revenue employed Cresap, McCormick, and Paget, a
firm of management consultants, to make a study of collectors' offices and a survey of the Bureau's entire departmental and field organization, looking towards
substantial structural and procedural changes in the organization. This was a
continuation of the long-range study initiated in fiscal 1947.
Responsibility for all surveying and classifying of individual income tax returns
for audit purposes was decentralized to field offices of the Bureau of Internal
Revenue. An audit control program of sample selection of individual income tax
returns for field investigations aimed at better voluntar}'' compliance by taxpayers
and more effective direction of investigative effort was also initiated by the Bureau
during fiscal 1949.
New procedures were established for retaining all individual income tax returns
and more than 95 percent of all excise tax returns in collectors' offices of the Bureau, thus eliminating their shipment to and filing in the Washington office.
Additional decentralization of administrative services in the Bureau of Internal
Revenue was achieved during fiscal 1949 by transferring certain personnel records
to field offices and by greatly enlarging the authority of the field offices to approve
personnel action. Important progress was made in the mechanizing of operations
in collectors' offices, particularly in the rapid acceleration of microfilming programs and the installation of punch card tabulating equipment and procedures in
seven additional collection districts.
A revision of the procedures in the Chicago office of the Bureau of the Public
Debt for establishing and maintaining Series F and G savings bonds accounts
resulted in annual savings of $168,000.
The Bureau of the Mint developed a new water-cooled mold for casting silver
ingots mechanically instead of by hand thereby reducing the accident hazard for
workers who previously had to handle hot molds and ingots. The Mint Bureau
also developed a universal silver ingot to be used for all silver coins, thus eliminating the need for casting separate ingots for ten-, twenty-five-, and fifty-cent pieces.
INCENTIVE AWARDS PROGRAM

During the fiscal year 1949, the number of suggestions received from employees
continued at the very high level of. 5,155 suggestions. The rate of examination of
suggestions improved considerably, 5,414 suggestions were examined by suggestion
committees. Of the number of suggestions reviewed, 828 were adopted for which
awards totaling $17,595 were authorized. Savings attributable to the adopted
suggestions amounted "to over $288,000 during the year. The quality of suggestions received improved noticeably, resulting in a 15 percent adoption rate in
1949, indicating that the employees were giving considerable thought to the
development of their suggestions. The increased attention to the processing of
suggestions by the many local committees and a departmental committee resulted
in a reduction in the backlog of pending suggestions from over 3,800 in 1948 to
3,595 at the close of the fiscal year 1949. The Department granted 16 salary
increases for superior accomplishment which amounted to step increases totaling
$2,700. In addition, five exceptional civilian service honors and two meritorious
civilian service honors were granted.
FISCAL YEAR

1950

BACKGROUND

The importance of improving the administration of the Government was
reaffirmed on July 29, 1949, when the President issued an Executive order calling
for aggressive, systematic appraisal, and iinprovement of oj)erations, and creating
the President's Advisory Committee on Management Improvement. This action
gave great stimulus to the program, particularly because of a requirement that the
Bureau of the Budget review the results, and full advantage was taken of this
opportunity to reemphasize the Management Improvement Program in the Treas

EXHIBITS

243

ury Department. On August 9, the Secretary of the Treasury assigned to the
Treasury Department Management Committee responsibility for advising and
assisting him in carrying out the directives of the Executive order and in accelerating the Department's management program which had been established in 1946.
This same year saw the passage of the Classification Act of 1949. Title X of
that act supported the Executive order in requiring that the departments make
systematic reviews of their operations and added"the requirement that one purpose
of such reviews shall be the identification of individuals and groups who are
rendering outstanding service and their reward in either cash or salary increases.
In other words, this new legislation made it possible for the first time to give cash
awards for efficiency.
During this year the Bureau of Federal Supply was transferred from the Department to the General Services Administration by an act of Congress. At the time
of the transfer, the Bureau of Federal Supply was concerned chiefly with determination of policies and methods of procurement, warehousing and distribution of
supplies, and acquisition of services required by executive agencies. It also was
responsible for standardizing forms and for disposal of surplus personal property.
In addition, the Bureau performed certain functions for Treasury bureaus in
connection with the acquisition of forms and other printed matter which were
retained in the Department by order of the Director, Bureau of the Budget and
assigned by TD Order No. 117 to the Office of Administrative Services. Some
of these functions were subsequently decentralized to the several bureaus.
DEVELOPMENTS AND ACHIEVEMENTS

The joint accounting project which was announced in January 1949 by the
Comptroller General of the United States, the Secretary of 'the Treasury, and the
Director of the Bureau of the Budget, continued during the year. The new
Budget and Accounting Procedures Act of 1950 which was to become law in fiscal
1951 gave official recognition to the joint accounting program by establishing it as
a permanent function.
Performance budgeting was introduced in the Federal Government during the
fiscal year 1950. This new type of budgeting placed emphasis on analyzing the
cost of services by functions or activities. When this new system was introduced,
a booklet entitled Performance Reporting was prepared in-the Treasury Department. The purpose of this booklet was to explain to the various bureaus and
offices of the Department the benefits which would be reahzed in budgeting and
general management by changing the accounting and reporting systems to an
activity basis. Since its pubhcation, hundreds of copies of the booklet have been
sent on request to other Government agencies, research groups, universities, and
even to some foreign governments.
Scientific control weighing and testing procedures, which were adopted by the
Bureau of Customs in 1949 for sugar, wool, and tobacco, were extended to other
products in 1950. The Bureau also conducted a scientific analysis to determine
the quantity of wool which would have to be sampled in order to gauge accurately
the clean content; results of the study led to a reduction in the number of bales
required.
The Bureau of Customs completed a pamphlet entitled Customs Information
for Exporters to the United Staies during 1950; and its initial distribution received
widespread approval. As in the case of Customs Hints, every effort was made to
widen the distribution of this pamphlet and it was translated into five foreign
languages.
On an international basis, technical discussions were held on customs procedure
and laws affecting trade among eleven countries. A meeting of customs and
fpreign trade experts of Britain, Canada, and the United States was held from
(October 31 to November 8, 1949. Subsequently, similar discussions were held
with representatives of eight additional countries. Information was exchanged
on customs practices, and techniques were explored for classification and valuation of merchandise, assessment of penalties, marking requirements, accounting
and auditing, sample-weight and testing, and treatment of currency exchange
practice. The ehmination of certified consular invoices for a substantial portion
of imports was announced by the Commissioner of Customs in March of 1950,
and a new customs duty bond to expedite clearance of merchandise was provided,
to go into effect July 19, 1950.
.
. During the year also, legislation was drafted and introduced in Congress to
modernize and simphfy United States customs requirements beyond the present
limits of administrative action.
• ' ^

244

1952 REPORT OF THE SECRETARY OF THE TREASURY

The Bureau of Engraving and Printing continued the comprehensive modernization program commenced in the preceding fiscal year. The installation of
auxiliary pohshers and semiautomatic feedboards on 251 of the old style intaglio
plate printing presses, used for the printing of currency and other engraved worky
was completed during the year. As a result of this conversion, the output of
these presses ultimately will be increased about 30 percent, thereby effecting
estimated annual savings of over $1 milhon.
The five modern offset presses installed by the Bureau of Engraving and
Printing during the year print revenue stamps in 800-subject sheets, thereby
doubling the output of the old type press; and the three new typographic presses
for over-printing revenue stamps and checks have a productive capacity about
25 percent greater than the obsolete presses which they replaced. An improved
method of packing sheets of postage stamps for delivery was adopted. The new
method facilitated the packing operation and afforded greater protection to the
stamps while in transit.
Officials of the Bureau of-Engraving and Printing worked closely with members
of the Bureau of Accounts in conducting a survey of the fiscal activities in the
Bureau of Engraving and Printing. Following the survey, preparatory work
was begun on the installation of a business-type budget and accounting system
in the Bureau. An illustrative budget was prepared on this basis and submitted
to the Congress together with a request for legislation authorizing the Bureau to
operate on an entirely reimbursable basis beginning with the fiscal year 1952.
A new form of Government check was designed by the Fiscal Service showing
the amount in one place on the check instead of two places. This change not
only facilitated payment of the checks but effected savings in the preparation of
addressograph plates and in modifications of these plates. Payments in certain
foreign countries were further facilitated by a new procedure effected May 1,
1950, which permitted the drawing of checks on the Treasurer of the United
States by the United States disbursing officers of the Department of State in
lieu of making drafts on the Secretary of State.
Improvements of Fiscal Service procedures in connection with withheld taxes
resulted in earlier use of tax money by the Government. This is computed to be
worth about $1,500,000 annually on the basis of the lowest rate of interest on
public debt obhgations. An additional $1 million is being saved on an annual
basis which represents one-half the interest on depositary bonds formerly allotted
to commercial banks to compensate them for expenses for handling withheld taxes.
Extension by the Division of Disbursement of.the use of transfer posting
equipment to Atlanta, St. Louis, Boston, and Dallas during the fiscal year .1950
resulted in an estimated additional saving of $25,000.
The Bureau of the Pubhc Debt, through improved procedures for processing
paid interest coupons, effected savings of $50,000 a year on an annual basis.
The discontinuance of their St. Louis Regional Office and transfer of its functions
to the regional offices at Chicago and Cincinnati resulted in $100,000 of annual
savings while the discontinuance of the Los Angeles Regional Office and transfer
of its functions to the regional offices at Chicago and Cincinnati resulted in a
saving of $150,000 a year. The abolishment of the activity concerned with
payroll savings in the Reports Unit of the Division of Loans and Currency will
save $50,000 a year. In all, the Bureau can point to many improvements which
cumulate something in excess of $500,000 on an annual basis.
Certain functions which had been performed by the Bureau of Federal Supply
were transferred to the Office of the Treasurer of the United States on July 1,
1949, when the Bureau of Federal Supply was transferred from the Treasury
to the General Services Administration. Subsequently, the Treasurer's Office
made arrangements with each of the various Federal Reserve Banks which
enabled them to obtain shipments of material and forms for use in Treasury
business directly from the contractor. This not only relieved the Treasurer's
Office of maintaining immense stocks at headquarters but in many instances,
actually reduced budgetary requirements for transportation purposes.
The Treasurer's Office also discontinued the administrative audit on paid
interest coupons and in this manner effected recurring savings on an annual
basis of $80,000.
The Bureau of Internal Revenue continued its program of microfilming documents during fiscal 1950. Approximately 167 milhon index cards and forms
were microfilmed. Fihng cabinets at an estimated value of $335,000 and floor
space worth an annual rental value in excess of $67,000 were released as a conse^
quence.

EXHIBITS

245

During the year, an additional punch card and tabulating installation was
made in the Collector's Office of the Bureau of Internal Revenue at Philadelphia.
Exploratory work was done on extension of tabulating procedures in accounting
and record-keeping operations. Electronic computers (amazing machines capable
of computing the tax liability on a return in 1/70 of a second) were installed in
several collectors' offices for use in computation and verification.
The Bureau of Internal Revenue completed field work on the audit control
program for 1948 tax returns. The information obtained was summarized and
analyzed in a series of reports distributed to field officers to assist them in the
;selection of returns for investigation and audit. Field work on the 1949 tax
year audit control program was initiated. This program involved fewer returns
Ibut was expanded to include corporation income tax and certain excise taxes as
well.
In order to explore the possibilities of cooperative Federal-State audits, arrange-ments were made for cooperation in the investigation of income tax returns
•with two States—Wisconsin and North Carohna. Similar arrangements were
Hater made with three additional States. It is hoped that these experiments will
lead to improvements in the pattern and method of Bureau-State cooperative
enforcement and to the further extension of these cooperative efforts to other
States.
In line with the expanded scope of the work in the Bureau of Internal Revenue,
and in accordance with the Bureau's long-range study to modernize its organization structure and operating methods, a comprehensive survey was made of
the Bureau's budgetary and accounting processes by representatives of the
Treasury Department's Budget Office and the Bureau of Accounts. Their
reports and recommendations were submitted on January 25, 1950, and a number
of their suggestions were placed in effect.
As a pilot operation, an office was set up in Boston to handle disbursement
accounting functions on a centralized basis for all local Internal Revenue offices
in that city.
The Bureau of the Mint conducted a survey of accounting practices in the
jriint field offices. A number of improvements and revisions were made in the
accounting procedures which would provide additional information and data for
management purposes and also for budget presentation. In connection with
this survey, a new accounting manual was drafted.
The massive melting and rolling equipment in the Denver Mint, which a
year previous was in the experimental stage of operation, was brought to a high
istate of efficiency. This equipment processes a 400-pound bronze ingot in
place of the 6-pound ingot formerly processed in small rohing mills. It also
(eliminated the hand-pouring method previously used.
A new type of water-cooled mold, invented by mint technicians at the Philadelphia Mint, resulted in a 23 percent reduction in silver ingot melting cost during
:the year. Experiments were conducted to utilize this equipment for production
of nickel and bronze ingots.
With the installation of more powerful motors on the rolling mills at the San
Francisco Mint, provision was made for the processing of longer and wider ingots
and an increase in coin. production ranging from 100 percent to 300 percent
resulted.
During fiscal 1950, the United States Coast Guard was allotted money from the
"Fund for Management Improvement, Executive Office of the President,"
for the purpose of contracting with outside management consultants to conduct
studies of the requirements for refining the allocation of available personnel
by proper grades and ratings among the several operational functions and the
many and diverse facilities of the Coast Guard Service, and to study the requirement for furthering efficiency and economy in the operation of the Coast Guard
Yard at Curtis Bay, Md. All preliminary arrangements for the two studies were
made in fiscal 1950; the actual studies, however, did not begin until fiscal 1951.
Procedures for a new accounting system were completed by the Coast Guard
and representatives of the Fiscal Service during the year and installation of the
system was made in headquarters in October 1949. A pilot installation was also
made in the Fifth District at Norfolk, Va., in March 1950 and as a result of
experience gained in this installation, revisions of accounting procedures were
.made preparatory to extending the system to other district offices.
During this year, the supply program of the Coast Guard was further developed.
With counterfeiting more prevalent than at any time since 1935, the Secret
[Service took a number of steps toward more effective suppression. Extensive

246

1952 REPORT OF THE SECRETARY OF THE TREASURY

centralized files on all counterfeiting offenders and suspects were established in
order to coordinate the investigations by field offices. The Service acted to expand
its public information program by participating in "Counterfeit Clinics" sponsored
by several Federal Reserve Banks; distributing several thousand postcard-sized
warnings of counterfeiting notes in circulation and new framed exhibits of genuine
and counterfeit bills for the information of banks, merchants, civic organizations,
business groups, and others; and distributing the pamphlet Know Your Money
to cashiers, merchants, and the general public.
The Secret Service completed plans during.fiscal 1950 for reorganizing its
field force effective July 1, 1950. The 56 field offices, instead of being under
the control of 14 supervising agents, are independent units, each under a special
agent-in-charge who reports directly to the Chief of the United States Secret
Service. Four regional inspectors, with headquarters in the Chief's Office, make
regular systematic inspections of field offices in their respective regions so that
. there is direct and continuing liaison between the Chief and the Special Agentin-Charge of each field office. Other management improvements during the
year included the installation of a standardized filing system in all Secret Service
offices, and the preparation of a new manual prescribing procedures for all Secret
Service personnel.
INCENTIVE AWARDS PROGRAM

The employee suggestion program tapered off during 1950 as could reasonably
be expected; however, ,2,939 suggestions were submitted by Treasury employees.
The awards committee processed 3,861 suggestions. Of this number 915 were
adopted and cash awards totaling $16,355 were authorized for savings amounting
to $252,726. The percent of adoption climbed to 23.6 percent in 1950 as compared
with 15.2 percent in 1949 and considerably less in 1948.
Title X of Public Law 429 of the 81st Congress (the Classification Act of 1949),
provides for payment of cash awards to employees who contribute to the efficiency
of operations. During 1950 the Treasury Department granted one award under
Title X, which incidentally was the first efficiency award granted by any Government agency. This award was granted to 54 employees in the Division of Disbursement of the Bureau of Accounts for efficiency in the tremendous job of
issuing checks under the National Service Life Insurance Dividend Program.
The total award amounted to $1,500 and was granted to the employees for saving
$158,000 in the conduct of the program.
In addition to the awards mentioned above, 20 Superior Accomplishment
Awards were issued to employees during the year under Title VII of the Classification Act of 1949. The total salary increases amounted to $2,279. The Department also granted six exceptional civhian seivice honors and two meritorious
civilian service honors to Treasury employees.
FISCAL YEAR

1951

BACKGROUND

The Treasury Department program for improvement of management was
intensified during the fiscal year 1951, and was given substantial impetus through
adoption, on July 31, 1950, of Reorganization Plan No. 26 of 1950. The plan
transferred to the Secretary of the Treasury all functions of the Department
with minor exceptions. It also created the position of Administrative Assistant
Secretary to strengthen the over-all management of the Department. Under
these provisions, in the course of the year, the Secretary issued 16 delegations of
authority to bureau heads with permission for redelegation to lower organization
levels.
Through this clarification and transfer of powers, the reorganization plan provided areas for management improvement which hitherto had not been available.
During 1951, staff members of the Office of the Administrative Assistant
Secretary conducted comprehensive surveys of organizations and operations in
three major bureaus or services while limited review was started in two others.
Members of the staff of the Fiscal Assistant Secretary participated with bureau
personnel and representatives of several Federal Reserve Banks on six major
procedural and management improvement projects during the fiscal year. .

EXHIBITS

247

DEVELOPMENTS AND ACHIEVEMENTS

The Bureau of Accounts effected management savings totaling over $500,000
on an annual recurring basis. Revision of withholding tax procedure accounted
for a saving of $63,000. Further utilization of the transfer posting method of
preparing checks added $128,000 of savings to those previously realized by the
use of this system, while further application of automatic punching on addressograph equipment and other addressing machine improvements amounted to
$116,000 annually. Microfilming checks, ribbon re-inking devices, dual purpose
check-signing machines, work simplification suggestions, and other miscellaneous
management improvement projects accounted for the.remainder,of the savings.
In the Bureau of Customs, the abolition of inspector positions involved in dual
screening on the Canadian and Mexican borders resulted in approximately
$100,000 annual savings. An improved method of testing wool samples with a
small-sized tool resulted in a production increase and in an annual saving of
$15,000. The installation of IBM equipment in the New York Accounts Division
of the Bureau of Customs resulted in bringing the billing and payment of reimbursable overtime compensation to a current status and, in addition, released four
inspectors for regular inspection duty with estimated savings of some $17,000
a year. Employee suggestions, work simplification improvements, and other
miscellaneous projects amounted to $70,000, bringing total savings to more
than $200,000 on an annual recurring basis.
The installation of automatic polishers and semiautomatic feedboards on flatbed presses, started during the 1950 fiscal year by the Bureau of Engraving and
Printing, was just about completed in the fiscal year 1951, with resulting savings
estimated at about $1,600,000 a year. The development and use of non-offset
green ink for printing currency enabled the Bureau to eliminate certain manual
operations which would save an estimated $963,000 on an annual basis. The
installation of automatic take-off devices on printing presses permitted the
elimination of one printer's assistant from each press and savings of almost
$700,000 a year. These and other major improvements effected during the year
made it possible for the Bureau to save, on an annual basis, a total amount of
$4,695,000.
The Bureau of the Mint continued its improvement program and as a result
could point to over $700,000 in savings attributable to improvements installed
during the year. The installation of magnetic strip gauges on rolling mills in the
Philadelphia Mint accounted for some $75,000 a year, while the adoption of a
wider bronze ingot in that Mint permitted the saving of $135,000 annually. In
all, the Philadelphia Mint is credited with some $276,000 of annual recurring
savings. The Denver Mint effected a saving of over $39,000 through increased
efficiency in the handling of large bronze ingots; $100,000 through the adaptation
of new equipment to silver and nickel ingots; and an additional $121,000 of
annual savings through other management improvement projects. The San
Francisco Mint reduced its annual expenses by more than $184,000. Of this
amount, $70,000 was saved through the adoption of a wider ingot for all alloys;
$60,000 by the construction of a universal water-cooled mold; and $54,000 through
improved material handling, more efficient processing of minor metals and ingots,
and improved methods of feeding blanks into annealing furnaces.
In the Office of the Treasurer of the United States, the reorganization of the
Claims Section of the Division of Securities, the further use of punch card checks,
and conversion from manual to mechanical count of whole currency permitted
the saving of $94,000 on an annual basis.
The Bureau of the Public Debt continued its management improvement
program during fiscal 1951, with a total annual saving of $682,000. Of this
total, $146,000 resulted from further installation of electronic machines for
counting unfit currency retired from circulation. These electronic counters,
through a system of fanning the currency across a-beam of light faster than the
eye can perceive, count the number of bills in each package. An annual saving
of $72,000 was realized through the transfer of distinctive paper custody functions
from the Bureau of the Public Debt to the Bureau of Engraving and Printing.
The long-range study to reorganize and streamline the Bureau of Internal
Revenue continued to receive attention. Certain basic concepts had developed
and a general plan of organization began to take shape. The policy of compulsory
examination of the taxpayers' books and records in all claims cases of over $1,000
was revised to allow claims up to $3,000 without such field examination if they
were found to be valid prima facie. This resulted in annual savings of $430,000,

248

1952 REPORT OF THE SECRETARY OF THE TREASURY

which financed additional audit and investigative work on more productive cases.
The installation of bulk gauging tanks in 57 internal revenue bonded warehouses
provided savings of over $200,000 on an annual basis. A procedure was instituted
for centralized stuffing and mahing of forms and instructions which saved the
Bureau $140,000. In ah, through these and other improvements, the Bureau
effected savings during 1951 of $1,356,000.
During the latter part of the fiscal year, the Coast Guard received two reports
covering surveys by outside management consulting firms. The firm of Booz,
Allen, and Hamhton made a detailed classification survey of the military and
civilian positions at fourteen selected "type" stations to determine the extent to
which job classification is applicable to the Service and to develop methods and
procedures for continuing the process to cover all jobs. The report has been
combined with the over-all management plan as a long-range program. The
firm of Cresap, McCormick, and Paget conducted a survey of the Coast Guard
Yard at Curtis Bay, Maryland, to further efficiency and economy of operation.
A major reorganization of Coast Guard headquarters was accomplished on
May 1, 1951, concluding a project which had been under active consideration
since 1948. Major aspects of the reorganization were: (1) The establishment
of positions of Chief of Staff and Deputy Chief of Staff with responsibility for
general administration, for the initiation, development, and review of basic
policies and programs, and for functioning as management advisers to the Commandant; and (2) the establishment of a comptroller-type organization having
responsibility for supervision and coordination of the activities of accounting,
audit, budget, cost analysis, statistical services, and supply.
In the field of general management, an interesting and worth-while development
was the preparation of a booklet entitled Guide for Appraisal of Treasury Operations. This booklet was developed by a committee whose members were selected
from the Office of the Administrative Assistant Secretary and several of the larger
bureaus of the Department. The purpose of the booklet was to establish a uniform
system of appraisal of operations throughout the Department in such a manner
that all levels of supervision would be brought into the picture. The booklet
established certain guide lines to be followed in conducting the type of systematic
appraisal contemplated by the President in his Executive Order No. 10072 and
by the Bureau of the Budget in its Budget Circular A-44. It was felt also that
the booklet could serve the additional purpose of introducing to unexperienced
or untrained supervisors some of the more important management aspects of
their jobs. Initial steps were taken by each bureau to carry out the program
and to institute follow-up measures to assure that periodic appraisals would be
made.
The passage of the Budget and Accounting Procedures Act of 1950 provides
the basis for widespread improvement and modernization of budget, accounting,
and auditing procedures throughout the Government. Treasury Department
personnel assisted in the drafting of this law, cited by the President as the most
important piece of legislation in this field since the Budget and Accounting Act
of 1921. The Bureau of Accounts, following the enactment of the Budget and
Accounting Procedures Act of 1950, pursued a vigorous program in cooperation
with the General Accounting Office to amend and revise regulations governing
accounting and reporting in all Federal agencies.
INCENTIVE AWARDS PROGRAMS

Employees submitted 2,243 suggestions during the year and the Department
adopted 513 for which awards totaling $13,095 were paid. This fiscal year the
savings attributable to employees' suggestions reached an all-time high when
some $341,500 of annual recurring savings resulted. During the year, local
suggestion committees acted upon more suggestions than were received, thereby
enabling the Department to close the fiscal year with a smaller backlog of suggestions than at any other time in the history of the program. The rate of adoption
continued at a high level with a fraction over 20 percent of suggestions processed
being adopted.
There was one individual efficiency award granted during the year, which
amounted to $100, for the contribution of an idea which resulted in an annual
recurring savings of $970. There were also twelve salary increases granted for
superior accomplishments which totaled $1,305. Six exceptional civilian service
and six meritorious .civilian service honoris ,we,re granted Treasury employees
.during fiscal 1951,.

EXHIBITS
FISCAL YEAR

249
1952

BACKGROUND

The program for improvement of the organization, management, and operations
of the Treasury Department was continued on a broad scale during the fiscal year
1952. Joint surveys of management facilities were made in four major bureaus
by departmental and bureau personnel. Work in connection with the joint
accounting program continued as did the long-range plan of developing completely
adequate and modern accounting systems in the several bureaus of the Department. Fiscal 1952 saw the issuance of a revised and more comprehensive handbook for Treasury employees in which strong emphasis was placed on employee
participation in the management improvement effort. A monthly newsletter
on management activities was introduced during the year designed for general
distribution and pointing out significant developments in the management field
with high lights on major accomplishments as they occurred. The purpose of the
newsletter was to stimulate and maintain interest in the over-all management
improvement effort as well as to serve as a medium for interchange of ideas.
During the year, the study of the 'Bureau of Internal Revenue continued and
culminated in the approval of Reorganization Plan No. 1 of 1952. Under this
plan and Reorganization Plan No. 26 of 1950, the Secretary issued 20 directives
involving delegations of authority, transfer of functions, and reorganizations.
DEVELOPMENTS AND ACHIEVEMENTS

Of major importance during the year was the adoption of Reorganization Plan
No. 1 of 1952. This plan became effective March 15, 1952, with congressional
assent. The reorganization which resulted from almost six years of study and
planning, provided authority for sweeping changes in the organization structure,
operating methods, and internal controls of the Bureau of Internal Revenue. It
provided the basis for development of a strong, revitalized career staff throughout
the Bureau. (See pp. r57 to 160 of this report for further details of the reorganization plan.)
The initial phases of the reorganization were effected during the later part of
fiscal 1952, including the establishment of the Chicago and New York City
districts. The remaining districts were established on or before December 1,
1952, the date set by congressional mandate for completion of the establishment
of such offices.
As a result of studies of operations in the Bureau of Customs, a complete
reorganization plan was worked out. Many features of the plan required congressional approval, and proposals authorizing extensive changes in the Customs
Service were introduced in (Jongress. • One proposal, the Customs Simplification
Bill, was passed by the House in 1951.. Hearings were held by the Senate Finance
Committee in April 1952, but no final action had been taken, however, by the
time that Congress adjourned. Another proposal. Reorganization Plan No. 3 of
1952, placing collectors of customs under civil service, was sent to the Congress
by the President in April 1952. It was, however, rejected by the Senate in June
1952.
Improvements in service and savings in operating costs already initiated in the
Bureau of Customs as a result of the intensive studies of operations are substantial. Further substantial progress can be made if congressional approval is
given to the Customs Simplification Bill mentioned above.
Following a preliminary survey of the organizational structure, procedures, and
programs of the United States Savings Bonds Division by departmental staff,
a more intensive study was made by the consulting firm of McKinsey and Company. As a result of the two studies, important organizational changes were
made in the Division.
The most significant development in the fiscal management field was effected
on July 1, 1951, when a new procedure for collection of taxes under the Railroad
Retirement Tax Act was instituted. The new procedure provided for monthly,
instead of quarterly, collection of taxes and for appropriations based on the exact
amount of taxes collected rather than on estimated amounts of taxes to be collected.
The changes in procedure resulted in a reduction of approximately $5,000,000
annually in the amount of interest paid to the railroad retirement trust fund for
the use of invested monies.
The management improvement efforts in the Bureau of Accounts are credited
with annual recurring savings amounting to almost $462,000. The extension of

250

1952 REPORT OF THE SECRETARY OF THE TREASURY

the transfer posting method of preparing checks saved almost $35,000 on an annual
basis. Application of improved techniques in the National Service Life Insurance
Dividend Program amounted to $61,000. Microfilming checks, instead of preparing check copies, resulted in annual savings of almost $18,000. Extending the
use bf voucher schedules accounted for savings on an annual basis of $66,000. The
iinprovement in the design of addressograph equipment will save almost $51,000
a year.
On August 4, 1950) the 81st Congress passed Public Law 656 which provided
for a business-type working capital fund method of financing the activities ofthe
Bureau of Engraving and Printing, with further provision for the performance of
work on a reimbursable basis. The installation of required procedures was made
and, beginning the first day of this fiscal year, the Bureau began operating under
the new method of financing.
Many other significant management improvements were developed, and installed by the Bureau of Engraving and Printing during the year, some of which
were initiated in the previous year. The elimination of certain operations
through the use of nonoffset green ink for printing curreticy backs effected savings
in fiscal 1952 of almost $381,000 over and. above thbse reported in fiscal 1951.
The elimination of one printer's assistant from back presses due to the installation
of automatic take-off devices resulted in further savings of $61,000 this year.
These and other improvements enabled the Bureau to save in excess of $683,000
on an annual recurring basis.
. '
Continued progress was made as a result of the management improvement
efforts in the Bureau of Internal Revenue. Projects installed during this fiscal
year are expected to produce savings of almost $1,300,000 on a recurring annual
basis. The main improvements include: The reorganization of the Income Tax
Division to consolidate 13 branches into 5 branches, with a saving of $300,000 a
year; installation of bulk gauging tanks in 20 additional. warehouses, with a
saving of approximately $50,000 a year; an improved method of mailing income
tax forms, resulting in an estimated saving of $352,000; development of a standardized mail-room system resulting in annual savings of $500,000; and continuation of the microfilming and records disposal program, with an additional saving
of $400,000 in 1952.
The Bureau of the Mint directed its efforts primarily toward perfecting and
extending technical improvements which were installed in some of the mints last
year. These efforts included the study and consideration of the problem involved
in a contemplated program for complete modernization of the Philadelphia Mint.
Substantial reductions in operating expenses are expected to result from these
long-range efforts, possibly in fiscal 1953 or 1954. During the year, numerous
experiments were made in heat-treating procedures which resulted in a considerable increase in the average coinage production from individual dies and
collars resulting, in monetary savings of $20,000 a year. A further increase in
the thickness of bronze ingots led to additional savings of $12,000. A program
was. adopted for training coinage press operators and die setters to do a more
efficient job in caring for the machines, thus preventing unnecessary lost time
from improper machine functioning or mechanical failures. These efforts, it is
estimated, will show annual savings of $14,000. Overhead conveyors were installed in the San Francisco Mint which permitted mechanical handling of coinage
blanks in 10,000-ounce containers rather than the 800-ounce containers handled
manually. This will save about $11,000 annually. In all, the mint installed
devices and methods in the fiscal year 1952 which refiect savings of $82,000 on, an
annual basis. Other significant management actions where savings are not
measurable were: The conduct of a comprehensive safety program; improvements
in the accounting system; and the conduct of a training program through the use
of motion pictures of operating techniques.

EXHIBITS

. :

251

The Bureau of the Public Debt continued its management program. A conveyor belt counting machine was devised which provides for counting and bagging
straps of currency. This machine will save the Bureau $18,700 on an annual
basis. The elimination of a processing unit and the combining of its functions
in the Division of Loans and Currency wUl result in annual recurring savings of
almost $17,000. The installation of a tabulating card system in the Office of the
Register of the Treasury to control shipments of securities resulted in savings of
$18,000. A reorganization of the Interest Couppn Audit Section will result in
annual savings of about $10,000. The Bureau's management improvement efforts
produced savings in 1952 which, when extended on an annual basis, amount to
almost $344,000. Of these savings, the suggestion program is credited with over
$25,000, while the work simplification program produced results which amounted
to over $35,000 of savings.
The management improvement efforts in the Office of the Treasurer of the
United States resulted in annual savings amounting to $205,000. The continuing
program to encourage agencies to convert from paper to card checks produced
additional annual savings of $46,500. A survey of transportation facilities and
costs for shipping card checks from the various Federal Reserve Banks to Washington was made, resulting in renegotiations of contracts with trucking and carloading concerns. This action will result in recurring savings of $50,000 a year.
The establishment of a production-hne method in the 40-foot boat building
program enabled the United States Coast Guard Yard to reahze. nonrecurring
savings of $797,000. The development of a new paint for painting the bottoms
of wooden boats will save $75,000 a year. Four years of tests resulted in a changeover from annual painting of buoys to painting every two years. I^is action will
save about $150,000 annually. These and other improvement projects accounted
for recurring savings of $491,000.
Management actions taken in areas where results are not identifiable in terms
of dollar savings include: Development and installatibn of a formalized internal
audit program tq augment inspection activities and effect improvements in the
conduct of fiscal activities throughout the Coast Guard; revision and refinement
of systems for reporting work-load statistics for operations. Merchant Marine
safety, supply depots and certain fiscal activities; establishment of inventory
control and reporting systems at 2Q bases and depots; and consohdation of
engineering and deck inspections of tank barges, seagoing barges and small craft
to provide more uniformity of inspections and better utilization of personnel.
A revised procedure for procuring and distributing promotional materials .
enabled the United States Savings Bonds Division to effect savings, which,
extended on an annual basis, will amount to $30,000 a year. During fiscal 1952
the Division also initiated studies in connection with mailing list procedures and
preliminary findings indicate that beginning in fiscal 1953, recurring annual
savings will amount to $10,000 a year.
A request by the United States Secret Service for two-way radio communication in Detroit, Mich., was approved, the installation to begin as soon as possible.
Specifications and estimates were also obtained for possible installation of an
"electric eye" to protect certain buildings and grounds. Such equipment was
considered adequate security protection and would save manpower by eliminating
certain guard patrols. The Secret Service also drafted a plan providing for
systematic promotion of male clerks and members of the guard force to positions
as Secret Service Special Agents. This would not only provide for better utilization of personnel but would also open the way for clerical employees to advance
through the organization as agents.
The departmental records management efforts were stimulated during the
fiscal year 1952 through the initiation of a Joint Records Management Program
between the Treasury, National Archives, and General Services Administration
to increase the use of the storage facihties in Federal Records Centers throughout
the United States. An initial shipment of 696 four-drawer file cases of inactive
personnel records was shipped from Washington to the St. Louis Federal Records
Center. This program is estabhshed on a continuing basis and will result in the
transfer to the Federal Records Centers of, as yet, unestimated quantities of
records from Treasury offices.

252

1952 REPORT OF THE SECRETARY OF THE TREASURY
.

, INCENTIVE AWARDS

. .

Through the efforts of the several bureaus to stimulate the employee suggestion
program, the number of suggestions received increased over the last fiscal year.
Employees submitted 2,862 suggestions and local suggestion committees processed 2,695 suggestions. Of the number processed, 579 were adopted. Savings
attributable to adopted suggestions amounted to almost $144,000 during the year
and cash awards totaling $12,915 were paid.
.The part the individual employee has played in the Department's management
improvement efforts can be illustrated by a summary of what employee suggestions have accomplished. During the five full years, of the suggestion program,
employees have submitted over 20,000 suggestions. Treasury committees have
acted upon 17,539 of the suggestions. Of this number 3,140 have been put into
effect. Savings of $1,247,362 have accrued to the Department through the
efforts*of employees who have received awards totaling $67,620. In addition to
the monetary savings attributable to the suggestions, other benefits have accrued
which cannot be reduced to terms of dollars and cents. More efficient and
effective operations and better service to the general public and to other departments and agencies of the Government are attributable in no small measure to
employee suggestions.
The Department also granted 44 salary increases for superior accomplishments
during fiscal 1952 with total awards amounting to $4,815. Two group awards
for efficiency were granted uhder Title X of the Classification Act of 1949 to 18
people who, through their collective efforts, saved the Department $728,000.
Total cash awards of $5,300 were granted to these two groups. In addition,
there were five individual Title X awards granted during the year which amounted
to $1,175 in all for attainments which enabled the Department to save over
$52,000 a year.
Four exceptional civilian service honors and two meritorious civilian service
honors were granted ih the fiscal year 1952 to Treasury employees who performed
their assignments in such an exeniplary manner as to qualify for the Department's
two highest honors.
A r^sum6 of the several parts of the Incentive Awards Program is shown on
page 254,

T A B L E I . — Treasury Department, s u m m a r y of workload
Principal workload factors

1947

1948

1949

1950

82, 624,960
270, 216
92, 841, 730
91, 723, 748
Tax returns filed
93, 810,164
81, 447,923
Additional tax assessments resulting from enforcement activities. $1, 280,218, 000 $1, 928,610, 000 $1, 897,015,000 $1, 891,679,000 $1, 747,692, 000 $1, 856,603,000
1,332, 022
1, 269,981
977,393
Entries of merchandise into U. S. A. examined
_.
1, 196,888
1,250, 292
1,096, 042
92, 657,923
956,174
977, 244
Persons entering U. S. A. examined....
83, 702, 906
78, 947, 553
81, 917, 393
52,079
47,119
43, 844
45, 621
50, 202
42, 504
Secret Service cases completed
6,306
4,980
2,944
3,472
3,367
6,163
Violations of narcotic and marihuana laws found
2,189, 124,000
1, 643,724,000
1,324, 788,000
1, 682,640, 000
1, 493,028,000
1, 353,060, 000
Pieces of currency manufactured
040,
821
072,
652
471,
795
258,
917
491,
235
420,336
44,
643,
42,
372,
39,
404,
Stamps manufactured.-42, 363,
42, 008,
40, 026,
803, 919, 798
729, 297, 594
Sheets of all types of printing
684, 369,362
574, 605.065
659, 452, 273
746, 199, 561
820,
778
257,
226
485,
295
1,167,
497,
271,
769
U. S. coins produced
1, 658,127,100
802, 922.066
911,
2,016,
179, 872,470
189, 736,578
Checks issued
134, 641,597
162, 485,273
175, 735,576
160, 637,192
664,374
922,
399
699,158
887,
630
481,
451
4,
989,195
4,
Depositary receipts for withholding taxes functioned
3,
3,
3,
267, 843, 238
Checks paid
^
269, 320,659
348', 749, 450
256, 400, 871
236, 227,957
260, 056, 000
Pieces of U. S. currency redeemed
1, 696,213, 648
1, 799,873, 896
1,486, 780,885
1, 635,673,115
1, 748,990, 571
1,723, 880, 598
Savings bonds issued
67, 891, 478
68, 132,047
63, 039, 508
150, 147,000
69, 067,148
72, 940, 930
Savings bonds retired
84. 952, 771
90, 521, 679
97, 422.512
196, 104, 000
85, 804,807
128, 424, 231
583,163
Interest checks issued for Series G bonds
7, 807,308
7, 112,908
8, 712, 497
8, 728, 609
8, 305, 660
069, 272
Regular Treasury securities issued
10, 614, 420
2, 233, 714
2, 079, 266
3, 844,000
3, 364, 202
687,992
410,059
Regular Treasury securities retired
3, 901, 595
10, 210, 863
6,887,000
3, 114,050
629,093
757, 660
896,104
857, 600
715,186
795,956
Interest checks issued for regular Treasury securities
835,614
330, 713
Pieces of outstanding Public Debt securities requiring servicing.
603, 317,868
600, 808,010
646, 692, 693
626, 193, 866

768'
$1,840,162, 000
1, 275,338
105,191, 103
42, 464
4, 281
2, 356, 464,566
45, 458, 225,966
834, 899,-736
1, 651, 096,448
189,543, 370
4, 906,586
305, 326,000
1, 778, 671,397
77, 052,521 i^
82, 752,857 CQ
8, 550,628
2, 180, 200
2, 933;
659, 385
500,025, 801

254

1952 KEPORT OF THE SEGRETARY OF THE TREASTTRY
TABLE IL— Incentive awards program, employee suggestions
Awards authorized

Number

Annual
savings

Fiscal year
Submitted
1948 . . .
1949.--.
1950
1951
1952

Total..

Adopted

Rejected

Number

Amount

6,879
5,156
2,939
2,243
2,862

306
828
916
513
679

2,720
4, 586
2,946
2,031
2,116

178
.599
960
459
552

$7,660
17, 595
16,355
13,095
12, 915

$221,357
288,072
252, 726
341, 501
143, 706

20,078

3,140

14, 399

2,748

67, 620

1, 247, 362

T A B L E I I I . — Title X—Efficiency awards
Individual awards

Group awards
Fiscal year

Number of Number of Amount of
awards
people
awards

1960
1951
1952
Total

Savmgs

Number

Amount

Savings

$1,500

$168,000

5,300

728,000

1
'5

100
1,175

970
52,177

3 1

6,800

886,000

1,275

53,147

T A B L E I V . — S a l a r y increases for superior accomplishment
Number

Fiscal year
1949
1950
1951
1952

-.
. .

Total .

Total increases
16
20
12
44

$2,700
2,279
1,306
4,816

11,099

T A B L E V.—Honor awards
Civilian service honors
Fiscal year
Exceptional
1949
1950
1951
1962

.. .
Total

Meritorious
5
6
6
4

2
2
6
2

Public Debt Operations
Treasury Certificates of I n d e b t e d n e s s and Treasury Bond
Exhibit 2,—Offering of 1 % percent certificates of Series B-1952
[Department Circular No. 891. Public Debtl
TREASURY DEPARTMENT,

Washington, J u l y 16, 1951.^
I.

O F F E R I N G OF C E R T I F I C A T E S

1. T h e Secretary of the Treasury, p u r s u a n t to the a u t h o r i t y of the Second
Liberty Bond Act, as amended, invites subscriptions, a t par, from the people of
the United States for certificates of indebtedness of the United States, designated
V/^ percent Treasury certificates of indebtedness of Series B-1952, in exchange
for Treasury notes of Series E - 1 9 5 1 , m a t u r i n g August 1, 1951.
II.

DESCRIPTION OF CERTIFICATES

1. The certificates will be d a t e d August 1, 1951, a n d will bear interest from t h a t
date a t the rate of 1% percent per a n n u m , payable with the principal a t m a t u r i t y
on J u l y 1, 1952. They will n o t be subject to call for redemption prior to m a t u r i t y .
2. T h e income derived from the certificates shall be subject to all taxes, now or
hereafter imposed under the I n t e r n a l Revenue Code, or laws a m e n d a t o r y or s u p p l e m e n t a r y thereto. The certificates shall be subject to estate, inheritance, gift,
or other ekcise taxes, whether Federal or State, b u t shall be exempt from all taxation now or hereafter imposed on the principal or interest thereof by a n y State,
or a n y of the possessions of the United States, or by a n y local taxing authority.
3. The certificates will be acceptable to secure deposits of public moneys. T h e y
will n o t be acceptable in p a y m e n t of taxes.
4. Bearer certificates will be issued in denominations of $1,000, $5,000, $10,000,
$100,000, a n d $1,000,0C0. The certificates wih not be issued in registered form.
5. The certificates will be subject t o . t h e general regulations of the Treasury
D e p a r t m e n t , now or hereafter prescribed, governing United States certificates.
III.

S U B S C R I P T I O N AND A L L O T M E N T

PAYMENT

1. P a y m e n t a t par for certificates allotted hereunder m u s t be made on or before
August 1, 1951, or on later allotment, a n d m a y be made only in Treasury notes
of Series E - 1 9 5 1 , m a t u r i n g August 1, 1951, which will be accepted a t par, a n d
should accompany the subscription. The full a m o u n t of interest due on the notes
surrendered will be paid foUowing acceptance of the notes:
V.

GENERAL PROVISIONS

255

256

1952 REPORT OF THE SECRETARY OF THE TREASURY

for certificates allotted, t o m a k e delivery of certificates on fuU-paid subscriptions
aUotted, a n d t h e y m a y issue interim receipts pending delivery of t h e definitive
certificates.
2. The Secretary of t h e T r e a s u r y m a y a t a n y t i m e , or from t i m e to t i m e , p r e scribe s u p p l e m e n t a l or a m e n d a t o r y rules a n d regulations governing t h e offering,
which will be c o m m u n i c a t e d p r o m p t l y to t h e Federal Reserve B a n k s .
J O H N W . SNYDER,
Secretary of ihe Treasury.

Exhibit 3.—Details of certificate i s s u e s a n d a l l o t m e n t s
Circulars p e r t a i n i n g t o o t h e r issues of T r e a s u r y certificates of indebtness during
t h e fiscal j^ear 1952 are similar in form to t h e circular shown as exhibit 2 a n d
therefore are n o t r e p r o d u c e d in t h i s r e p o r t .
However, t h e essential details r e garding each issue are s u m m a r i z e d in t h e following t a b l e , a n d t h e final aUotments
of new certificates in exchange for m a t u r i n g or called securities are shown in t h e
succeeding t a b l e .
S u m m a r y of information contained i n circulars pertaining to Treasury certificates of
indebtedness issued during ihe fiscal year 1952

Date of Numberof
circular circular

1951
Jiily 16

891

Sept. 4

892

Sept. 18
Oct.

Dec.

897

1952
Feb. 18
June 16

911

Certificates of indebtedness issued and
securities exchanged for new issues

1^% Series B-1952
Exchanged for 1M% Series E-1951 notes
maturing Aug. 1,1951.
VA% Series C-1952
Exchanged for 3% Treasury bonds of
1951-55 (dated Sept. 15,1931) called for
redemption Sept. 16,1951.
»
VA% Series D-1962
.
Exchanged for \]4% Series A-1951 notes
maturing Oct. 1,1951.
VA% Series E-1952....
Exchanged for—
1K% Series F-1951 notes maturing
Oct. 16,1951.
1)4.% Series G-1951 notes maturing
Nov. 1,1961.
VA% Series F-1952
Exchanged for 2 ^ % Treasury bonds of
1961-53 (dated Dec. 22,1939) called for
redemption Dec. 15,1951.
VA% Series A-1953
Exchanged for VA% Series A-1952 certificates maturing Apr. 1,1952.
VA% Series B-1953
Exchanged for VA% Series B-1952 certiflcates maturing July 1,1952.

Date of
issue

Allotment
Date sub- payment
Date of scription date on
books or before
maturity
closed
(or on
later allotment)

1951
Aug. 1

1952
July 1

1951
July 19

Sept. 15

Aug. 15

Sept. 7 1 Sept. 15

Oct.

Sept. 1

Sept. 21

Oct.

Oct. 15

Oct.

' Oct. 15

Dec. 15

Dec.

6 3 Dec. 16

1952
Mar. I

1953
Feb. 15

1952
1952
Feb. 21 * Mar. 1

July

June 1

June 19

1951
Aug. 1

July

1 Final interest due Sept.^16,1951, on the called bonds surrendered was paid as follows; On coupon bonds
by'payment of the Sept* 15,, 1951, coupon; and on registered bonds by checks drawn in accordance with the
assignments oh the bonds surreiidered;'
<«';2 Following .acceptance of.the surrendered notes, the full amount of interest due on Series. F-1951 notes
wasipaid, and accrued interest from Oct.'l, 1,950^ to Oct. 16,1951 ($12.97945 per $1,000), was paid on Series
' G-1951 notes'. ••
• ' -• V •; c; ! i. ">) i- ci ;
'. 3 "Final interest due Dec. 15,1951, on the called bqnds, surrendered was paid as follows: On coupon bonds
'by payment of Dec. 15,1951, coupons; and bn registered'bonds by checks drawn in accordance with assignments on the surrendered bonds. :
'
'
'
< Following acceptance of surrendered certificates, accrued interest from June 15, 1961, to Mar. 1, 1962,
$13.31967 per $1,000, was paid.
. .... c :\. . \ . . ; ... l,',.:
:.•...•..,-..•.%.-. >-, ...•.-.•-

Treasury ceriificates of indebtedness issued in exchange for matured or called securities hy Federal Reserve districts, fiscal year 1952 '
[In thousands of dollars]

VA% Series C VA% Series B - 1952 certificates
exchanged for
1952 certificates
3% Treasury
exchanged for
b o n d s of 1951-55
1M% Treasury
( d a t e d S e p t . 15,
n o t e s Series
E-1951, m a t u r i n g 1931) called for
r e d e m p t i o n Sept.
A u g . 1,1951
15, 1951

Federal Reserve district

1 Boston
£ New York.....
Philadelphia
Cleveland. _
Cincinnati
.V.
Pittsburgh..:.....
Richmond
_'.
iBaltimore.......v....
• ,, . C h a r l o t t e
.J.........
"Atlanta
:.::..-.
B i r m i n g h a m . ' . .•...._•__..
Jacksonville. _
NashviUe^,
1
N e w Orleans .'_"_".",-..
xChicago
_.
'St. L o u i s . . . •
Little Rock...........
Louisville... . .
Memphis
rMTinneapoli."?,
......
•Kansas C i t y . .
Dallas.^._
:
.
. E l Paso
H o u s t o n :_
San Antonio
San F r a n c i s c o . . .
Los A n g e l e s . . .
Portland
Salt L a k e C i t y .
.;
Seattle
Treasury

T o t a l a l l o t m e n t s o n exchanges. .-._ . . .
"Maturing or called securities red e e m e d for cash or carried t o
matured debt
Total matured
securities...

VA% Series E-1952 certificates exchanged for—
VA% Series D 1952 certificates
exchanged for
1 M % Treasm-y 1}4% T r e a s u r y I H %
Treasury
n o t e s Series F - n o t e s Series G n o t e s Series
Tota
1951, m a t u r i n g
1951, m a t u r i n g
A-1951, m a t u r i n g
N o v . 1,1951
O c t . 15, 1951
Oct. 1,1951

39,749
334,363
13,202
60,568
1,916
3,309
1,633
964
1,321
773
96
417
155
618
76,208
21,043
268
10,344
419
4,094
9,867
909
104
619
275
5,708
2,630
149
382
533
567

39,663
773,376
.77,967
48,981
9, 765
11.658
9,033
4,119
5,119
44,968
8,791
8,076
9,165
26,392
263,564
67,424
4,681
22,838
4,831
62,947
98,769
19,256
3,308
.15,744
7,862
56,683
100,055
4,064
1,616
15,779
16,072

28,641
6,159,112
29,514
40,756
16,083
9,702
15,506
7,475
6,070
18,182
5,440
3,035
4,631
13,977
198,000
32,490
2,143
14,381
4,008
37,012
92,679
29,727
2,038
12,367
8,122
48,125
14,149
2,615
1,648
10,505
5,283

40,625
3,911,398
40,365
85,632
14,360
32,599
8,567
11,968
2,284
29,369
6,735.
5,800
7,570
25,690
284,940
36,334
4,921
16, 666
6,845
80,866
104,187
24,558
3,019
44,014
8,188
68,836
23,388
7,362
1,038
10, 330
39, 257

69,266
9,070,510
69,879
126,388
30,443
42,301
24,073
19,4438,354
47, 551
12,176
8,835
12, 201
39,667
482,940
68,824
7,064
30,947
10,853
. 117,878
196,866
54,286
5,067
56,381
16,310
116,961
37,637
9,977
2,686
20,835
44, 540

6,216,849

583,202

1,832,446

5,873.416

4,987,611

10,861,027

135,293

172,227

85,921

67,162

266,464

6,361,142

756,429

1,918,367

6,940,578

6,253,075

69,852
3,236,186
117,702
122,310
27,836
19,142
22,687
12,027
29,242
70,146
16,313
13,117
18,568
42,803
590, 516
97,923
6,067
32,088
26,292
99.516
181,267
36,454
2,345
32,867
11,199
146,642
103,616
6,621
3,714
14,672
6, 229

44,885
639,247
20,579
83,428
4,384
11,616
4,973
4,668
1,814
6,232
105
256
204
1,387
130,948
11,050
101
9,409
5,146
13, 677
29,006
3,967
621
3,004
8,547
15,175
450
120
870
6,865

172,956
6,906,979
97,746
205,190
62,095
91,565
41,403
65,155
31,86479,108
19,071
19,036
38,359
64,058
814,472
128,073
14,075
63,674
22,494
130,685
252,661
68,926 .
6,318
59,826
25,919
157,414
142,150
16,788
8,368
20,807
51,828

1,062,634

8,867,962

332,626

56,417

656,115

11,193,653

1,118,061

9,524,077

called

1 Allotment amounts for VA% Series B-1953 certificates will be shown in the 1953 aimual report.

1 3 ^ % Series F 1952 certificates VA% Series A 1953 certificates
exchanged for
exchanged for
2 H % Treasury
b o n d s of 1951-53 VA% Series A ( d a t e d D e c . 22, 1952 certificates
1939) called for
m a t u r i n g April
redemption Dec.
1, 1952
15,1951

tei
><i
a
HH
bd
3
^

258

1952 REPORT OF THE SECRETARY OF THE TREASURY

Exhibit 4.—Call, August 14, 1951, for redemption on D e c e m b e r 15, 1951, of 2}i
percent Treasury bonds of 1951-53, dated D e c e m b e r 22, 1939 ( p r e s s r e l e a s e of
August 14, 1951)
The Secretary of the Treasury announced t o d a y t h a t all outstanding 2% percent
Treasury bonds of 1951-53, dated December 22, 1939, d u e December 15, 1953,
are called for redemption on December 15, 1951. There a r e now outstanding
$1,118,051,100 of these bonds.
T h e 2 percent Treasury bonds of 1951-55, which are also callable on December
15, 1951, will n o t be called for redemption on t h a t d a t e .
T h e text of t h e formal notice of call is as foUows:
Two

AND O N E - Q U A R T E R

PERCENT TREASURY BONDS
D E C E M B E R 22, 1939)

O F 1951-53

(DATED

To Holders of 2}i Percent Treasury Bonds of 1951-53 {Dated Decemher 22, 1939),
and Others Concerned:
1. Public notice is hereby given t h a t all outstanding 2% percent Treasury
bonds of 1951-53, dated December 22, 1939, d u e December 15, 1953, are hereby
called for redemption on December 15, 1951, 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 interestbearing obligations of t h e United States, in which event p u b h c notice will hereafter
be given and an official circular governing the exchange offering will be issued.
3. Full information regarding t h e presentation a n d 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 N o . 666,
dated July 21, 1941.
J O H N W . SNYDER,

Secretary of the Treasury.

Exhibit 5.—Call, November 14, 1951, for redemption on M a r c h 15, 1952, of 2}^
percent Treasury bonds of 1952-54, dated M a r c h 3 1 , 1941 (press release of
' November 14, 1951)
The Secretary of t h e Treasury announced t o d a y t h a t all outstanding 2% percent
Treasury bonds of 1952-54, dated March 31, 1941, due March 15, 1954, are called
for redemption on March 15, 1952. There are now outstanding $1,023,568,350
of these bonds.
T h e 2 percent Treasury bonds of 1951-53, which are also caUable on March 15,
1952, will n o t be called for redemption on t h a t date.
T h e text of t h e formal notice of call is as follows:
T w o AND O N E - H A L F P E R C E N T T R E A S U R Y B O N D S OF 1952-54
M A R C H 3 1 , 1941)

(DATED

To Holders of 2}^ Percent Treasury Bonds of 1952-54 {Dated March 3 1 , 1941),
and Others Concerned:
1. Public notice is hereby given t h a t aU outstanding 2J^ percent Treasury bonds
of 1952-54, dated March 31, 1941, due March 15, 1954, are hereby called for redemption on March 15, 1952, on which date interest on such bonds will cease.
2. Solders of these bonds may, in advance of the redemption date, be offered
t h e privilege of exchanging all or a n y p a r t of their called bonds for other interestbearing obligations of t h e United States, in which event public notice will hereafter
be given and a n 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 2 1 , 1941.

J O H N W . SNYDER,

Secretary of ihe ^Treasury.

EXHIBITS

259

Exhibit 6.—Ofifering of 2 % percent Treasury b o n d s of 1957-59 and allotments
[Department Circular No. 898. PubHc Debt]
TREASURY

DEPARTMENT,

Washington, February 18, 1952.
I.

O F F E R I N G OF B O N D S

1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e a u t h o r i t y of t h e Second
Liberty Bond Act, as amended, invites subscriptions, a t p a r with an a d j u s t m e n t
of accrued interest as of March 15, 1952, from t h e people of the United States
for bonds of t h e United States, designated 2% percent Treasury bonds of 1957-59,
in exchange for 2% percent Treasury bonds of 1952-54, d a t e d M a r c h 3 1 , 1941,
due March 15, 1954, called for redemption on March 15, 1952. T h e a m o u n t of
t h e offering under this circular will be limited to t h e a m o u n t of Treasury bonds
of 1952-54 tendered in exchange a n d accepted.
II.

D E S C R I P T I O N OF B O N D S

1. T h e bonds will be d a t e d March 1, 1952, a n d will bear interest from t h a t
date a t t h e r a t e of 2 ^ percent per a n n u m , payable on a semiannual basis on Sept e m b e r 15, 1952, a n d thereafter on March 15 a n d September 15 in each year
until the principal a m o u n t becomes, p a y a b l e . T h e y will m a t u r e March 15, 1959,
b u t m a y be redeemed a t t h e option of the United States on and after March 15,
1957, in whole or in p a r t , a t p a r and accrued interest, on any interest day or days,
on 4 m o n t h s ' notice of redemption given in such m a n n e r as the Secretary of the
Treasury shall prescribe. I n case of partial redemption the bonds to be redeemed
will be determined by such m e t h o d as m a y be prescribed by the Secretary of the
T r e a s u r y . F r o m t h e date of redemption designated in any such notice, interest
on t h e bonds called for redemption shall cease.
2. T h e income derived from the bonds shall be subject to all taxes now or
hereafter imposed under t h e I n t e r n a l Revenue Code, or laws a m e n d a t o r y or
supplementary t h e r e t o . The bonds shall be subject to estate, inheritance, gift,
or other excise taxes, whether Federal or S t a t e , b u t shall be exempt from all
t a x a t i o n now or hereafter imposed on t h e principal or interest thereof by any
S t a t e , or a n y of t h e possessions of the United States, or by any local taxing
authority.
3. T h e bonds will be acceptable to secure deposits of public moneys.
4. Bearer bonds with interest coupons a t t a c h e d , a n d bonds registered as to
principal a n d interest, will be issued in denominations of $500, $1,000, $5^000,
$10,000, $100,000, a n d $1,000,000. Provision wiU be made for the interchange
of bonds of different denominations a n d of coupon a n d registered bonds, a n d for
t h e transfer of registered bonds, under rules a n d regulations prescribed b y t h e
Secretary of t h e T r e a s u r y .
5. T h e bonds will be subject to the general regulations of the Treasury D e p a r t m e n t , now or hereafter prescribed, governing United States bonds.
III.

S U B S C R I P T I O N AND A L L O T M E N T

PAYMENT

1. P a y m e n t a t p a r for bonds allotted hereunder m u s t be made on or before
M a r c h 1, 1952, or on later allotment, a n d m a y be made only in Treasury bonds
of 1952-54, called for redemption March 15, 1952, which will be accepted a t par,
a n d should accompany t h e subscription. Coupons d a t e d March 15, 1952, m u s t

260

1 9 5 2 REPORT OF TJEiE SiSCJRETARY OF T H E

TREASUEY

be a t t a c h e d to such bonds in coupon form when surrendered. I n t h e case of
coupon bonds, t h e full six m o n t h s ' interest to March 15, 1952, on t h e bonds to
be surrendered ($12.50 per $1,000) will be credited, accrued interest from March
1, 1952, to March 15, 1952, on the bonds to be issued ($0.91346 per $1,000) wiU
be charged, a n d t h e difference ($11.58654 per $1,000) will be paid to the s u b scribers on March 1, 1952, or on later delivery of t h e new bonds. I n t h e case of
registered bonds, final interest due March 15 will be computed on t h e same basis
a n d will be paid by checks drawn in accordance with the assignments on t h e
bonds surrendered.
V. A S S I G N M E N T OF R E G I S T E R E D B O N D S

1. Treasury bonds of 1952-54 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 t h e 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 and
Currency, Washington, D . C. The bonds m u s t be delivered a t the expense a n d
risk of t h e holder. If the new bonds are desired registered in the same name as
the bonds surrendered, the assignment should be to " T h e Secretary of t h e Treasury
for exchange for 2% percent Treasury bonds of 1957-59"; if t h e 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 2 ^ percent Treasury bonds of 1957-59 in t h e
name of
" ; i f new bonds in coupon form are desired, the assignm e n t should be to " T h e Secretary of t h e Treasury for exchange for 2 ^ percent
Treasury bonds of 1957-59 in coupon form to be d e l i v e r e d t o
".
VI.

GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are authorized
a n d requested to receive subscriptions, to make aUotments on the basis a n d up
to the a m o u n t s indicated by the Secretary of the Treasury to the Federal 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,
a n d t h e y m a y issue interim receipts pending delivery of t h e definitive bonds.
2. T h e Secretary of the Treasury m a y a t a n y time, or from time to time,
prescribe supplemental or a m e n d a t o r y rules a n d regulations governing t h e
offering, which will be communicated p r o m p t l y to t h e Federal Reserve B a n k s .
J O H N W . SNYDER,

Secreiary of the Treasury.
Allotments of 2y% percent Treasury bonds of 1957-59 issued in exchange for 2ji
percent Treasury bonds of 1952-54
Federal Reserve district

Boston
jNew York
Philadelphia...-.
(Cleveland
Cincinnati...
Pittsburgh...
rRiichmond
Baltimore
Charlotte
.A'tlanta
(Birmingham.
.Jacksonville..
Nashville
iNew Orleans.
(Chicago
iSt. Louis
Little Rock..

Subscriptions
received and
aUotted
$43, 873, 500
640,351, 500
23,840,500
5,386, 600
.6,205,500
5,977,000
6,494, 500
8,140,000
195, 500
3,860, 500
295,000
217, 500
238,000
1, 469,000
78, 443, 500
13, 683, 500
443,000

Federal Reserve district

St. Louis—Continued
Louisville
Memphis..
Minneapolis
Kansas City
Dallas
ElPaso
Houston..
San Antonio
San Franciisco...
Los Angeles
Portland
Salt Lake City....
Seattle
Treasury
_.
Total

Subscriptions
received and
allotted

$2,443,000
517,000
7,268,000
16,151,500
3,627,500
16, 500
6, 712,000
1,195, 500
38,036, 500
7,829,500
868, 500
62, 500
2,395,000
1, 674, 500
926,812,000

EXHIBITS

261

Exhibit 7.—Offering of 2^8 percent Treasury b o n d s of 1958
[Department Circular No. 910. Public Debt]
TREASURY DEPARTMENT,

Washington, J u n e 16, 1952.
I.

O F F E R I N G OF B O N D S

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 the Second
Liberty Bond Act, as amended, invites subscriptions, a t par a n d accrued interest,
from t h e people of t h e United States for bonds of t h e United States, designated
2% percent Treasury bonds of 1958. The a m o u n t of t h e offering is $3,500,000,000,
or thereabouts.
2. Subscriptions from others t h a n commercial banks for their own account
will not be restricted in a m o u n t .
3. Subscriptions from commercial banks for their own account will be restricted
in each case to an a m o u n t not exceeding the combined capital, surplus, and
undivided profits, or 5 percent of the total deposits, as of December 31, .1951,
whichever is greater, of the subscribing bank. Commercial banks are defined
for this purpose as banks accepting demand deposits.
II.

D E S C R I P T I O N OF B O N D S

1. T h e bonds will be dated July 1, 1952, and wUl bear interest from t h a t date
a t t h e rate of 2 ^ percent per a n n u m , payable on a semiannual basis on December
15, 1952, a n d thereafter on June 15 and December 15 in each year until t h e
principal a m o u n t becomes payable. They will m a t u r e June 15, 1958, and will
not be subject to call for redemption prior to m a t u r i t y .
2. T h e income derived from the bonds shall be subject to all taxes now or
hereafter imposed under t h e Internal. Revenue Code, or laws amendatory or
s u p p l e m e n t a r y thereto. The bonds shall be subject to estate, inheritance, gift,
or other excise taxes, whether Federal or State, b u t shall be exempt from all
' t a x a t i o n now or hereafter imposed on t h e principal or interest thereof by a n y
State, or a n y of the possessions of t h e United States, or by any local taxing
authority.
3. T h e bonds will be acceptable to secure deposits of public moneys.
4. Bearer bonds with interest coupons attached, a n d bonds registered as t o
principal a n d interest, wiU be issued in denominations of $500, $1,000, $5,000,
$.10,000, $100,000, a n d $1,000,000. Provision wiU be made for the interchange
of bonds of different denominations and of coupon a n d registered bonds, a n d for
t h e transfer of registered bonds, under rules a n d regulations prescribed by t h e
Secretary of t h e Treasury.
5. T h e bonds will be subject to t h e general regulations of the Treasury D e p a r t m e n t , now or hereafter prescribed, governing United States bonds.
III.

S U B S C R I P T I O N AND A L L O T M E N T

1. Subscriptions will be received a t the Federal Reserve Banks and branches
a n d a t the Treasury D e p a r t m e n t , Washington. Commercial banks, which for
this purpose are defined as banks accepting demand deposits, may submit s u b scriptions for account of customers, b u t only the Federal Reserve Banks and t h e
T r e a s u r y D e p a r t m e n t are authorized to act as official agencies. Others t h a n
commercial banks will not be permitted to enter subscriptions except for their
own account. Subscriptions from commercial banks for their own account will
be received without deposit. Subscriptions from all others must be accompanied
by p a y m e n t of 10 percent of t h e a m o u n t of bonds applied for.
2. The Secretary of the Treasury reserves t h e right to reject any subscription,
in whole or in p a r t , t o allot less t h a n the a m o u n t of bonds applied for, a n d to
close t h e books as to a n y or all subscriptions a t a n y time without notice; and a n y
action he m a y take in these respects shall be final. Subject to these reservations,
a n d to t h e limitations on commercial bank subscriptions prescribed in section I
of this circular, a n d within t h e limitation of t h e a m o u n t of the offering, subscriptions for a m o u n t s u p to a n d including $100,000 from commercial banks, a n d
subscriptions in a n y a m o u n t s from all other subscribers, will be allotted in full
a n d subscriptions for a m o u n t s over $100,000 from commercial banks will be
allotted on a percentage basis, to be publicly announced when allotments are

made. AUotmerit notices will be sent out promptly upou aUotment*

262

1952 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 or completed on or before July 1, 1952, or on later allotment. In
every case where payment is not so completed, the piayment with application up
to 10 percent of the amount of bonds applied for shall, upon declaration made
by the Secretary of the Treasury in his discretion, be forfeited to the United
States. Any qualified depositary wiU 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

i.-. 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 allotmerit 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.
JOHN W . SNYDER,

Secreiary of ihe Treasury.
Treasury Bills
Exhibit 8.—Inviting tenders for Treasury bills dated September 13, 1951 (press
release of September 6, 1951)
The Secretary of the Treasury, by this public notice, invites tenders for $1,200,000,000, or thereabouts, of 91-day Treasury bills, for cash and in exchange for
Treasury bills maturing September 13, 1951, in the amount of $1,001,228,000, to
be issued on a discount basis under competitive and noncompetitive bidding as
hereinafter provided. The bills of this series will be dated September 13, 1951,
and will mature December 13, 1951, when the face amount will be payable without
interest. They will be issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and branches up to the
closing hour, two o'clock p. m.. Eastern Daylight Saving time, Monday, September 10, 1951. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of
competitive tenders the price offered must be expressed on the basis of 100, with
not more than three decimals, e. g., 99.925. Fractions may not be used. It is
. urged that tenders be made on the printed forms and forwarded in the special
envelopes which will be supplied by Federal Reserve Banks or branches on
application therefor.
Others than banking institutions will not be permitted to submit tenders except
for their own account. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in
investment securities. Tenders from others must be accompanied by payment
of 2 percent of the face amount of Treasury bills applied for, unless the tenders
are accompanied by an express guaranty of payment by an incorporated bank or
trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and branches, following which public announcement will be made
by the Secretary of the Treasury of the amount and price range of accepted bids.
Those submitting tenders will be advised of the acceptance or rejection thereof.
The Secretary of the Treasury expressly reserves the right to accept or reject
any or all tenders, in whole or in part, and his action in any such respect shall be
final. Subject to these reservations, noncompetitive tenders for $200,000 or less
without stated price from any one bidder will be accepted in full at the average
price (in three decimals) of accepted competitive bids. Settlement for accepted
tenders in accordance with the bids must be made or completed at the Fedieral

263

EXHIBITS

Reserve Bank on September 13, 1951, in cash or other immediately available
funds or in a like face amount of Treasury bills maturing September 13, 1951.
Cash and exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing bills accepted in
exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the 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
treatment, as such, under the Internal Revenue Code, or laws amendatory or
supplementary thereto. The bills 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. For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States shall be considered to be interest.
Under Sections 42 and 117 (a) (1) of the Internal Revenue Code, as amended by
Section 115 of the Revenue Act of 1941, the amount of discount at 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, the owner of Treasury bills (other
than life insurance companies) issued hereunder need include in his income tax
return only the difference between the price paid for such bills, whether on original
issue or on subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the return is
made, as ordinary gain or loss.
Treasury Department Circular No. 418, as amended, and this notice, prescribe
the terms of the Treasury bills and govern the conditions of their issue. Copies
of the circular may be obtained from any Federal Reserve Bank or branch.
Exhibit 9.—Acceptance of tenders for Treasury bills dated September 13, 1951
(press release of September 11, 1951)
The Secretary of the Treasury announced last evening that the tenders for
$1,200,000,000, or thereabouts, of 91-day Treasury bills to be dated September
13 and to mature December 13, 1951, which were offered on September 6, were
opened at the Federal Reserve Banks on September 10.
The details of this issue are as follows:
Total applied for
$1, 913", 013, 000
Total accepted (includes $164,138,000 entered on a .
noncompetitive basis and accepted in full at the
average price shown below)
1, 202, 609, 000
Average price (equivalent rate of discount approximately 1.646 percent per annum)
99.584
Range of accepted competitive bids:
High (equivalent rate of discount approximately
1.543 percent per annum)
99.610
Low (equivalent rate of discount approximately
1.650 percent per annum)__
99. 583
(71 percent of the amount bid for at the low price was accepted.)
Total applied
for

Federal Reserve district
Boston
NewYork
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis .
Kansas City
Dallas
.
San Francisco

. . .

. . . . .

...'

.
. ^.. ^

—-

Total

-. . .. -.

.. . . .
-

Total accepted

$23,866,000
1,397,280,000
26,728,000
70,656,000
36.535,000
20,746,000
189, 374,000
19,421,000
9.050,000
' 47, 920,000
50,893,000
20,544,000

$21,336,000
816,937,000
10,848,000
39,565,000
31, 763,000
20,152,000
150, 772,000
16, 599,000
9, 050,000
28,672.000
37,996,000
18,919,000

1,913,013,000

1,202,609,000

264

1952 REPORT OF THE SECRETARY OF THE TREASURY

Exhibit 10.—Inviting tenders for the Tax Anticipation Series of Treasury bills
dated October 23, 1951 (press release pf October 11, 1951)
The Secretary of the Treasury, by this public notice, invites tenders for
$1,250,000,000, or thereabouts, of 144-day Treasury bills, to be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided.
The bills of this series will be designated Tax Anticipation Series, they will be
dated October 23, 1951, and will mature March 15, 1952. They will be accepted in
payment of income taxes due on March 15, 1952, and to the extent they are not
presented for this purpose the face amount of these bills will be payable without
interest at maturity. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity
value).
Tenders wiU be received at Federal Reserve Banks and branches up to the
closing hour, 2 o'clock p. m.. Eastern Standard time, Wednesday, October 17, 1951.
Tenders will not be received at the Treasury Department, Washington. Each
tender must be for an even multiple of $1,000, and in the case of competitive
tenders the price offered must be expressed on the basis of 100, with not more than
three decimals, e. g., 99.925. Fractions may not be used. It is urged that tenders
be made on the printed forms and forwarded in the special envelopes which wiU
be supplied by Federal Reserve Banks or branches on application therefor.
Others than banking institutions will not be permitted to submit tenders except
for their own account. Tenders will be received without deposit from incorporated
banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2
percent of the face amount of Treasury bills applied for, unless the tenders are
accompanied by an express guaranty of payment by an incorporated bank or
trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and branches, following which pubhc announcement will be made
by the Secretary of the Treasury of the amount and price range of accepted bids.
Those submitting tendeis will be advised of the acceptance or rejection thereof.
The Secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be final.
Subject to these reservations, noncompetitive tendeis for $200,000 or less without
stated price from any one bidder will be accepted in full at the average price (in
three decimals) of accepted competitive bids. Settlement for accepted tenders
in accordance with the bids must be made or completed at the Federal Reserve
Bank in cash or other immediately available funds on October 23, 1951, provided,
however, any qualified depositary will be permitted to make payment by credit
in its Treasury tax and loan account for Treasury bills allotted to it for itself and
its customers up to any amount for which it shall be qualified in excess of existing
deposits when so notified by the Federal Reserve Bank of its district.
The income derived from Treasury bills, whether interest or gain from the sale
or other disposition of the bills, shall not have any exemption, as such, and loss
from the sale or other disposition of Treasury bills shall not have any special
treatment, as such, under the Internal Revenue Code, or laws amendatory or
supplementary thereto. The bills 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 ariy State, or any
of the possessions of the United States, or by any local taxing authority. For
purposes of taxation the amount of discount at which Treasury bills are originally
sold by the United States shall be considered to be interest. Under Sections 42
and l i 7 (a) (1) of the Internal Revenue Code, as amended by Section 115 of the
Revenue Act of 1941, the amount of discount at which bills issued hereunder are
sold shaU 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, the owner of Treasury bills (other than hfe insurance companies) issued hereunder need include in his income tax return only the difference

265

EXHIBITS

between the price paid for such bills, whether on original issue or on subsequent
purchase, and the amount actually received either upon sale or redemption at
maturity during the taxable year for which the return is made, as ordinary gain
or loss.
Treasury Department Circular No. 418, as amended, and this notice prescribe
the terms of the Treasury bills and govern the conditions of their issue. Copies
of the circular may.be obtained from any Federal Reserve Bank or branch.

Exhibit 11.—Acceptance of tenders for the Tax Anticipation Series of Treasury
bills dated October 23, 1951 (press release of October 18, 1951)
The Secretary of the Treasury announced last evening that the tenders for
$1,250,000,000, or thereabouts, of Tax Anticipation Series 144-day Treasury bills
to be dated October 23, 1951, and to mature March 15, 1952, which were offered
on October 11, were opened at the Federal Reserve Banks on October 17.
The details of this issue are as follows:
Total applied for
$3, 302, 398, 000
Total accepted (includes $249,351,000 entered on a
noncompetitive basis and accepted in full at the
average price shown below)
1, 250, 958, 000
Average price (equivalent rate of discount approximately 1.550 percent per annum)
99. 380
Range of accepted competitive bids (excepting two
tenders totahng $65,000):
High (equivalent rate of discount 1.470 percent per
annum)
99. 412
Low (equivalent rate of discount 1.580 percent
per annum)
99. 368
(64 percent of the amount bid for at the low price was accepted.)

Federal Reserve district
Boston
New York
Philadelphia.
Cleveland
Richmond
Atlanta
Chicago
St. Louis
MinneapolisKansas City..
Dallas.San Francisco
TotaL..

Total applied
for
$89, 215,000
., 618, 686,000
92, 718,000
236, 231, 000
112, 514,000
128,013,000
390,304,000
64, 607, 000
73,050, 000
96, 445, 000
113,309.000
287,406,000
3,302,398,000

Total accepted
$36. 775,000
459, 604,000
40. 690. 000
121, 243,000
68,363.000
81,449,000
153,989, 000
26,815.000
31, 762, 000
42,995. 000
87,437, 000
99,836,000
1, 250,958,000

Exhibit 12.—Summary of Treasury bill information contained in press releases
Press releases pertaining to the Regular Series of Treasury bill issues during
the fiscal year 1952 were similar in form to exhibits 8 and 9 on pages 166 and 167
of the 1951 annual report and, beginning with the issue dated September 13, 1951,
to exhibits 8 and 9 of this report. The press releases for the November 27, 1951,
Tax Anticipation Series are similar in form to exhibits 10 and 11 of this report.
Therefore the releases are not reproduced in this report but the essential details
regarding each issue are summarized in the following table.

Summary of information contained in press releases ^ pertaining to Treasury hills issued during the fiscal year 1952
M a t u r i t y v a l u e (in t h o u s a n d s of dollars)

Prices a n d rates

T e n d e r s accepted
! D a t e of
issue

D a t e of
of m a turity

Days
to maturity

C o m p e t i t i v e b i d s accepted

T o t a l b i d s accepted

to
Total
applied
for 2

Low

High
T o t a l accepted 2

O n competitive
basis 2

On noncompetiF o r cash
t i v e basis 2 3

I n exchange

Average
price per
hundred

Equival e n t average r a t e *
(percent)

Price p e r
hundred

Equivalent rate *
(percent)

Price per
hundred

F nosi
1 19

' 26
Aug. 2
9
16
23
30
Sept. 6
13
20
27
Oct.

4
11
18
26
Nov. 1
8
15
23
29
Dec. 6
13
20
27

Equivalent rate *
(percent)

1951
Oct. 4
11
18
26
Nov. 1
8
15
23
29
Dec. 6
13
20
27

91
91
91
91
91
91
91
92
91
91
91
91
91

1,822,114
1,964,371
2,031,496
1.992,151
1,954,581
1,891,016
2,079, 708
1,992, 746
1,998,093
1,918,043
1,913,313
1,930,124
1,772,737

1,200,829
1,201,731
1,201,811
1,200,544
1,300,619
1,300,416
i; 300,403
1,100, 662
1,100,636
1,102, 785
1,202,909
1,202,700
1, 200,936

1,087,081
1,070,095
1,047,673
1,051,542
1,159, 695
1,156,193
1,145, 501
947,902
968,412
992, 266
1,038,471
1,039,674
1,058.287

113,748
131,636
. 154,138
149,002
140,924
144, 223
154,902
152, 760
132, 224
110, 519
164,438
163,026
142,649

1,142,718
1,055,022
1,150,797
1,152,917
1,266,824
1,184,094
1,099,970
1,039,881
978,152
1,024,355
1,157,684
1,146,674
1,162,229

58, 111
146,709
51,014
47, 627
33, 795
116, 322
200,433
60, 781
122,484
78,430
45, 225
56, 026
48,707

99. 695
99. 592
99. 605
99. 598
99. 593
99.583
99. 580
99. 578
99.584
99. 584
99. 584
99. 584
99.584

1.603
L615
1.562
1.591
1.611
1.651
L660
1.651
1. 645
1.646
L646
1. 644
1.647

99. 650
99. 650
8 99. 609
99. 637
99.637
* 99.637
99. 637
6 99. 600
99. 608
99. 601
99. 610
99. 610
99. 612

L385
L385
L547
L436
L436
L436
1.436
1.565
1.551
1.578
L543
1. 543
1.535.

99. 590
99. 590
99. 603
99. 595
99. 590
99. 579
99. 577
99.676
99.682
99.583
99. 583
99. 583
99. 581

L622
L622
1.571
] . 602
1.622
L665
1.673
1.659
L654
1.650
1.650
L650
L668

1952
Jan.
3
10
17
24
31
Feb. 7
14
21
28
Mar. 6
13
20
27

91
91
91
91
91
91
91
90
91
91
91
91
91

2,022, 794
2,163.121
1, 922,682
2,129,556
2, 216,954
2,164,864
2,128,135
2,188,450
1,954,339
1,940,272
1,883,243
1,796,750
1,612,476

1,201,520
1, 200, 685
1, 200, 321
1,200,782
1,301,680
. 1,300, 275
1,302,909
1,101,712
1,100,033
1,103,622
1, 200,454
1,200,816
1,204,475

1,054,693
1,023,774
1,022,380
1,021,781
1,129,349
1,115,197
1,140,171
897,985
945,308
1,056,180
1,022,783
1,021,047
1,065,639

146,827
176,911
177,941
179,001
172,331
185,078
162,738
203,727
154,725
147,442
177,671
179,769
138,836

1,134,120
1,165,893
1,140,487
1,133,542
1, 256,675
1,235,776
1,252,499
1,064,678
1,007,672
1,068,849
1,147,941
1,121,066
1,148,998

67,400
44, 792
59,834
67, 240
45,005
64,499
50,410
37,034
92,361
34,773
62, 513
79,750
65,477

99. 584
99. 602
99. 592
99. 597
99. 591
99. 593
99. 591
99. 604
99. 593
99.587
99. 570
99. 564
99. 529

1. 646
1.576
1.616
1.593
1.617
L610
1.619
1.685
1.609
1. 632
1.700
1.725
1.866

99. 612
99. 621
99. 615
99. 611
99. 620
99. 620
99. 618
99. 610
99.611
99. 604
99. 600
99. 600
7 99. 600

1.'535
L499
1.523
L539
1.503
L503
1. 511
L560
L539
L567
L682
L582
1.682

99. 582
99. 600
'99. 588
99. 595
99. 589
99. 591
99. 589
99. 602
99. 591
99.586
99. 665
99. 560
99. 512

L654
L682
1.630
1.602
1.626
L618
1.626
1.592
L618
1.638
1.721
L741
1.931

O
O

R e g u l a r Series

Julyj 6
. 12

M
ZP

o
W
>

m»
Jan. 3
10
17
24
Feb. 31
7
14
21
28
Mar. 6
13
20
27
Apr. 3
10
17
24
May 1
8
15
22
29
June 6
12
19

•

Apr.

May

June

July

Aug.

Sept.

3
10
17
24
1
8
16
22
29
6
12
19
26
3
10
17
24
31
7
14
21
28
4
11
18
25

91
91
91
91
91
91
91
91
91
91
'91
91
91
91
91
91
91
91
91
91
91
91
91
91
91
91

2,118,102
2,105,060
2,178,925
2,195,412
2, 283, 776
2,136,185
2,182,739
1,913,918
1,783,403
1,713,491
2,308,342
1,963,017
2,067,766
2,185,987
2,312,827
2, 287,190
2,383,036
2,492,320
2,226,687
2,438,961
2,416,828
2,061,641
1,928,877
2,015,147
2,049,300
1,999,100

1, 201,148
1, 201,177
1,202,401
1, 200,690
1,301,435
1,302,174
1,301,570
1,099,998
1,101,051
1,100,491
1, 200,138
1,200,632
1,201,069
1,201,505
1,401,772
1,400,888
1,400,587
1,502,963
1,303,148
1,500,972
1,303,390
1,300,474
1,300,077
1,200,784
1,202,416
1,200,060

1,049,212
976,893
984,307
989,161
1,120,589
1,119,419
1,102, 739
914,504
951,455
964,657
1,017,092
1,000,856
1,025,706
1,032,743
1,198,038
1,191,893
1,185, 527
1,327, 236
1,118,522
1,297,739
1,108,059
1,140,127
1,160, 605
1,003,823
990,065
1,019,743

151,936
224,284
218,094
211,529
180,846
182,755
198,831
185,494
1'49, 596
135,834
183,046
199, 776
175,363
168, 762
203,734
208,995
216,060
175,728
184,626
203,233
195,331
160,347
139,472
196,961
212, 351
180,317

1,136,258
1,147,829
1,150,399
1,140, 529
1, 252,662
1,242,342
1,242, 638
1,039,473
1,058,663
1,060,653
1,146,441
1,148, 641
1,160,470
1,161,412
1,355,449
1,330,161
1,329,874
1,443,069
1, 227,983
1,416,796
1, 244,305
1,247,446
1, 262,750
1,152,247
1,160,376
1,160,293

64,890
53,348
62,002
60,161
48,783
69,832
58,932
60,525
42,388
39,938
53,697
61,991
40,599
40,093
46,323
70,727
70,713
59,894
75,165
84,176
59,085
53,028
37,327
48, 537
42,040
39, 767

99. 524
99. 574
99. 574
99.596
99. 598
99. 600
99. 585
99. 619
99.606
99. 581
99. 549
99. 595
99. 597
99. 596
99. 588
99. 583
99. 591
99. 573
99. 568
99. 564
99. 572
99. 563
99. 561
99. 557
99. 589
99. 575

1.883
1.687
1.685
1.599
1.689
1.584
1.643
L507
1.563
1.657
1.784
1.601
1.593
1.698
1.629
1.650
1.616
1.691
L710
L725
1.694
1.728
1.737
1. 753
1.626
1.682

.99. 608
8 99.583
9 99.583
99.608
99. 625
99. 625
99. 625
99. 625
99. 630
99. 616
99. 610
99.603
99. 620
99. 615
99. 615
99.608
99.608
99. 615
10 99. 592
99. 583
99. 595
99. 596
99. 588
99.583
99. 592

L651
L650
1.650
1.551
L484
1.484
1.484
L484
1.464
1.519
1.543
1.671
1.503
1.623
1.623
1.651
1.561
L623
1.614
1.650
1.602
1.598
1.630
1.650
1.614
1.590

99.520
99. 571
99. 572
99.593
99. 581
99. 615
99. 600
99. 570
99. 645
99. 691
99. 596
99. 594
99.585
99. 681
99.590
99. 671
99. 566
99. 562
99. 571
99. 560
99.558
99. 555
99.588

1.899
L697
1.693
1.610
1.698
1.690
1.668
1.52a
1.682
1,701
1.806
1.61&
1.602
1.606
L642
1.658
1.622
1.697
1.717
L733
1.697
1.741
1.749
1.760
1.630
1.705

ms
M a r . 16
J u n e 16

144
201

3, 285,223
3,358,901

1,233,783
1, 248,825

1,001,607
855,904

232,176
392,921

1,233,783
1,248,825

N O T E . — A m o u n t of m a t u r e d issues will b e found in t a b l e 23.
1 P r e s s release i n v i t i n g t e n d e r s for T r e a s u r y bills is d a t e d 7 d a y s before d a t e of issueP r e s s release a n n o u n c i n g a c c e p t a n c e of t e n d e r s is d a t e d 2 d a y s before d a t e of issue. Closi n g d a t e on w h i c h t e n d e r s for issue are a c c e p t e d is 3 d a y s before d a t e of issue.
> F i g u r e s a r e final a n d differ in m o s t cases from t h o s e s h o w n i n press releases a i m o i m c I n g d e t a i l s of p a r t i c u l a r issue.
8 N o n c o m p e t i t i v e t e n d e r s for $200,000 or less w i t h o u t s t a t e d price from a n y o n e b i d d e r
w e r e a c c e p t e d i n full a t a v e r a g e price for accepted c o m p e t i t i v e b i d s .
< B a n k d i s c o u n t basis.

1-4

T a x A n t i c i p a t i o n Series
1951
O c t . 23
N o v . 27

99. 380
99.164

1.550
1. 497

11 99. 412
12 99.229

1.470
1.381

99. 368
99.158

1.580
L508

« E x c e p t $400,000 a t 99.635 a n d $200,000 a t 99.620.
fl E x c e p t $100,000 a t 99.630.
T E x c e p t $10,000 a t 99.958.
8 E x c e p t $100,000 a t 99.695.
fi E x c e p t $400,000 a t 99.600; $1,000,000 a t 99.595; a n d $1,000,000 a t 99.690.
10 E x c e p t $200,000 a t 99.610.
11 E x c e p t $60,000 a t 99.600 a n d $5,000 a t 99.428.
12 E x c e p t $5,000 a t 99.925; $200,000 a t 99.592; $600,000 a t 99.380; $300,000 a t \ 1.370; a n d
$100,000 a t 99.368.

268

1952 REPORT OF THE SECRETARY OF THE TREASURY

Exhibit 13.—Sixth amendment, May 13, 1952, to Department Circular No. 41S,
relating to the issue and sale of Treasury bills
TREASUKY DEPARTMENT,

Washington, May 13, 1952.
Paragraph 5 of Department Circular No. 418, as amended (31 CFR 309.5), is
hereby revised to read as follows:
*'SEC. 309.5. Treasury bills will be acceptable at maturity value to secure
deposits of public moneys; they will not bear the circulation privilege. The Secretary of the Treasury, in his discretion, when inviting tenders for Treasury bills,
may provide that Treasury bills of any series whl be acceptable at maturity
value, whether at or before maturity, under such rules and regulations as he shall
prescribe or approve, in payment of income and profits taxes payable under the
provisions of the Internal Revenue Code. Notes secured by Treasury bills are
eligible for discount or rediscount at Federal Reserve Banks by member banks,
as are notes secured by bonds and notes of the United States, under the provisions
of Section 13 of the Federal Reserve Act. They will be acceptable at maturity,
but not before, in payment of interest or of principal on account of obligations
of foreign governments held by the United States."
JOHN W . SNYDER,

Secreiary of the Treasury

Treasury Bonds, Investment Series
Exhibit 14.—Offering of additional issue of 23^ percent Treasury Bonds, Investment Series B-1975-80, and allotments
[Department Circular No. 907. Public Debt]
TREASURY DEPARTMENT,

Washington, May 19, 1952.
1. 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 interest, from the people of the United States for bonds of the United States,
designated 2% percent Treasury Bonds, Investment Series B-1975-80, for cash
or, as provided in section IV hereof, for cash and in exchange for the following
listed Treasurv bonds:
2>^ percent bonds of 1965-70, dated Feb. 1, 1944, due March 15, 1970
2>^ percent bonds of 1966-71, dated Dec. 1, 1944,. due March 15, 1971
2>^ percent bonds of 1967-72, dated June 1, 1945, due June 15, 1972
2% percent bonds of 1967-72, dated Nov. 15, 1945, due Dec. 15, 1972
2. Commercial banks (which for this purpose are defined as banks accepting
demand deposits) are excluded from this offering except to the extent they may
offer to exchange bonds of the four issues enumerated above which they acquired
prior to December 31, 1945, on a basis of 25 percent cash and 75 percent bonds.
3. The amount of the offering under this circular is not specifically limited,
but the bases upon which subscriptions will be accepted are restricted as set forth
in section IV hereof.
IL DESCRIPTION AND TERMS 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, Investment Series B-1975-80, issued pursuant to Department Circular No. 883, dated March 26, 1951, will be freely
interchangeable therewith, are identical in all respects therewith (except that
interest on the bonds issued under this circular will accrue from April 1 or October 1
1952, next preceding the date of payments therefor), and are described in the
following quotation from Department Circular No. 883:
*'l. The bonds will be dated April 1, 1951, and will bear interest from that
date at the rate of 2% percent per annum, payable semiannually by check on
October 1, 1951, and thereafter on April 1, and October 1 in each year until the

EXHIBITS

269

principal amount becomes payable. They will mature April 1, 1980, and will
not be redeemable prior thereto except as follows:
(a) They may be redeemed at the option of the United States on and after
April 1, 1975, 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 shaU 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 sucb
notice, interest on the bonds called for redemption shall cease.
(b) They may be redeemed at the option of the duly colistituted representa
tives of a deceased owner's estate, at par and accrued interest to the date oi
payment 1 if at the time of death they constitute part of the decedent's estate,
and the Secretary of the Treasury is authorized by the representatives to apply
the entire proceeds of redemption to the payment of Federal estate taxes. Bond?
submitted for redemption hereunder must be duly assigned to 'The Secretary
of the Treasury for redemption, the proceeds to be paid bo the Collector of Internal
Revenue at
for credit on Federal estate taxes due from estate of
' The bonds must be accompanied by Form PD 1782 2
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 sthl in force and effect. Upon payment of the
bonds appropriate, memorandum receipt wiU be forwarded to the representatives,
which wiU be followed in due course by formal receipt from the CoUector of
Internal Revenue.
''2. Although the bonds are payable only at maturity, except as provided in the
preceding paragraph, they may, at the owner's option, as provided in Department
Circular No. 884, be exchanged for V/i percent five-year marketable Treasury notes
to be dated AprU 1 and October 1 of each year during the life of the bond. If
the bonds surrendered are in order for exchange, the new notes will ordinarily be
issued within ten calendar days from the date of surrender to the Treasury
Department or to a Federal Reserve Bank or branch. The notes to be issued
wiU bear the April 1 or October 1 date next preceding the date of the exchange.
Interest will be adjusted to the date on which the exchange is made. Partial
exchange of the bonds in multiples of $1,000, and reissue of the remainder, will
be permitted.
" 3 . The bonds will not be acceptable to secure deposits of public moneys, but
they may be used as collateral for loans and may be pledged as security for the
performance of an Obhgation or for any other purpose. In the event of a default
on the loan or in the performance of the obligation, the pledgee will have the
right only to exchange the bonds for 1}^ percent five-year marketable Treasury
notes. The bonds may not be sold or discounted, and are not transferable in
ordinary course, but they may be transferred (by way of reissue) (1) to successors
in title, (2) (in the event of the death of the owner) to legatees, next of kin, and
other persons entitled, in accordance with the provisions of Department Circular
No. 300, and (3) to State supervisory authorities in pursuance of any pledge
required under State law. A bond which has been registered in the title of a
State supervisory authority may be reissued in the name of the original owner
upon assignment by such authority for that purpose. The term 'successors'
as used in this paragraph includes but is not limited to succeeding organizations,
succeeding trustees, and persons entitled upon the termination of a trust or the
dissolution of a fund or organization. Judgment creditors, trustees in bankruptcy, and receivers of insolvents' estates will be entitled only to exchange the
bonds for Iji percent five-year marketable Treasury notes. Persons entitled to
reissue under the provisions of this paragraph wiU succeed to aU the rights and
privileges of the registered owners.
"4. The income derived from the bonds shall be subject to all taxes now or
hereafter imposed under the Internal Revenue Code, or laws amendatory or supplementary thereto. The bonds shaU 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.
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.
2 Copies of Form PD 1732 may be obtained from any Federal Reserve Bank or from the Treasury
Department, Washington, D. C.

270

1952 REPORT OF THE SECRETARY OF THE TREASURY

"5. The bonds wiU be issued only in registered form, and in denominations of
$1,000, $5,000, $10,000, $100,000, $1,000,000, and $10,000,000.
"6. Except as otherwise specifically provided in this circular, Treasury Bonds
of Investment Series B-1975-80 issued hereunder will be subject to the general
regulations of the Treasury Department, now or hereafter prescribed, governing
United States bonds. The regulations in Department Circular No. 815 (which
govern 2% percent Treasury Bonds of Investment Series A-1965), will not govern
Treasury Bonds of Investment Series B-1975-80. All questions concerning
bonds issued hereunder and transactions pertaining thereto should be submitted
to a Federal Reserve Bank or branch or to the Treasury Department, Division
of Loans and Currency, Washington 25, D. C."
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.
Where subscriptions are to be paid for in installments, as provided in section IV
hereof, delivery of 10 percent of the total par amount of bonds subscribed for,
adjusted to the next highest $1,000, will be withheld from all subscribers except
incorporated banks and trust companies until payment of the total amount subscribed for has been completed. In every case where payment is not so completed,
the 10 percent so withheld shall, upon declaration made by the Secretary of the
Treasury in his discretion, be forfeited to the United States.
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or ih 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.

BASES FOR ENTERING SUBSCRIPTIONS AND MAKING PAYMENT

1. Subscriptions for the 2 ^ percent Treasury Bonds, Investment Series
B-1975-80, offered hereunder may be entered, except by commercial banks as
defined in section I hereof, as follows:
(a) The new bonds subscribed for may be paid for in full in cash, at par and
accrued interest from April.1, 1952, or
(h) Not less than 25 percent of the par amount of the bonds subscribed for
must be paid in cash and the remainder by exchange, par for par, of
any of the bonds of the four issues enumerated in section I hereof, with
cash adjustments of accrued interest to date of payment."
2. The par amount of new bonds subscribed for by commercial banks as defined
in section I hereof may be paid.for only on the basis of 25 percent cash and 75
percent in bonds eligible for exchange hereunder, with cash adjustments of
accrued interest to date'of payment.
3. Payment for the new bonds may be made in fullon June 4, 1952, or may be
made in four equal installments on June 4, August 1, October 1, and December
1, 1952. On installment payments, not less than 25 percent of the par amount
of new bonds paid for by each installment must be paid in cash, following which
the new bonds will be delivered to the subscriber in due course. Subscribers
may, if they wish, accelerate their installment payments in whole or in part.
4. Where the new bonds are paid for in full in cash, the appropriate amount of
accrued interest calculated in accordance with the table at the end of this circular should be included in the payment. Accrued interest on bonds to be exchanged will be credited, and accrued interest on the new bonds to be issued will
be charged as shown in the table, except as to registered bonds presented during
periods the transfer books are closed. Where a net amount is to be,collected
from the subscriber, the remittance should accompany the securities tendered
in exchange. Where a net amount is to be paid to the subscriber, it will be
paid, in the case of coupon bonds following their acceptance, and in the case
of registered bonds following discharge of registration. Current, and all
subsequent coupons should be attached to coupon bonds presented for exchange.
In the case of registered bonds tendered in exchange during the period the transfer books therefor are closed, interest on such bonds from the date of payment
for the new bonds to the next interest payment date wiU beColle'cted t r o m t h e

271

EXHIBITS

subscriber and the owner of record will receive the full half-year's interest due
on that date in regular course. The transfer books are closed for one month
prior to each interest payment date.
5. Any qualified depositary will be permitted to make payment by credit for
the cash portion of the payment for new bonds allotted to it for itself and its
customers up to any amount for which it may be qualified in excess of existing
deposits.
V. ASSIGNMENT OF REGISTERED BONDS

1. Treasury bonds of 1965-70, Treasury bonds of 1966-71, Treasury bonds of
1967-72, due June 15, 1972, or Treasury bonds of 1967-72, due December 15,
1972, in registered form tendered in exchange 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 transfer or exchange, in one of the forms hereafter set forth, and thereafter should be
presented and surrendered to a Federal Reserve Bank or branch or to the Treasury
Department, Division of Loans and- Currency, Washington, D. C. 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 2%
percent Treasury Bonds, Investment Series B-1975-80." If the new bonds are
desired registered in another name, the assignment shoiild be to "The Secretary
of the Treasury for exchange for 2% percent Treasury JBonds, Investment Series
B^1975-80, in the name of
"
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
and to make delivery of bonds as provided herein, 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.
JOHN W .

SNYDER,

Secretary of the Treasury.
Table of interest adjustments per $1,000 in connection with offering of 2% percent
Treasury Bonds, Investment Series B-1975-80 under Department Circular
No. 907

Bonds surrendered!

Exchange as of June 4,1952:
2H% Treasury bonds of 1966-70
. . ..
23^% Treasury bonds of 1966-71
_
2H% Treasury bonds of June 1967-72
2H% Treasury bonds of Dec. 1967-72
Exchange as of August 1,1952:
2H% Treasury bonds of 1966-70 .
_-_
2H% Treasury bonds of 1966-71
_
2H% Treasury bonds of June 1967-72
2M% Treasury bonds of Dec. 1967-72
- .
.
Exchange as of October 1,1962:
2H% Treasury bonds of 1965-70
2H% Treasury bonds of 1966-71
2H% Treasury bondsof June 1967-72
2H% Treasury bonds of Dec. 1967-72..^
Exchange as of December 1,1952:
2V^% Treasury bonds of 1965-70
—
2>^% Treasury bonds of 1966-71
2V^% Treasury bonds of June 1967-72
._
2H% Treasury bonds of Dec. 1967-72...-—

Accrued
Accrued
interest to be interest
to be
credited on
charged
on
bonds sur- bonds issued
rendered

}

$5.60272

$4.80874

}

11.74863

4.80874

}

9.44293

9.16667

}

3.21038

9.16667

1.10497

None

}

7.37706

None

6.31768

4.60862

11.54372

4.60852

---- }.
-—
}
1

i IMPORTANT.—For adjustments with respect to registered bonds tendered In exchange during the period
the transfer books therefor are closed, see section IV, paragraph 4, of this circular.

272

1952 REPORT OF THE SECRETARY OF THE TREASURY

Where installment payments are accelerated and made on dates other than the
four dates specified, accrued interest will be computed in accordance with the
following daily decimals:
On bonds of 1965-70 and 1966-71 to Sept. 15, 1952_
$0. 067934783
On bonds of 1965-70 and 1966-71 from Sept. 15, 1952
. 069060773
On the two bonds of 1967-72
. 068306011
On bonds of B-1975-80 to October 1, 1952
. 075136612
On bonds of B-1975-80 from October 1, 1952
. 075549451
2% percent Treasury Bonds, Investment Series B-1975-80 (additional issue) issued
for cash and in exchange for 2ji percent Treasury honds of 1965-70, dated February 1, 1944i 2ji percent Treasury bonds of 1966-71, dated Decemher 1, 1944i 2ji
percent Treasury bonds of 1967-72, dated June 1, 1945, and 2}i percent Treasury
bonds of 1967-72, dated Novemher 15, 1945 i
[In thousands of dollarsl
Federal Reserve district
Boston.-_
_-_New York
Philadelphia.-..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
_
Minneapolis..
Kansas City...
Dallas
San Francisco
Treasury
Government investment accounts.
Total

Cash
Exchange
Total
subscriptions subscriptions subscriptions
$12,230
163.287
21,928
12, 504
10.330
10,106
28,836
5,512
3,038
6,004
6,492
37,600
508
132,025

$35,215
471,247
64,864
36,172
30,732
26,866
80,340
16,284
8,524
14,910
18.706
110,412
1,312
391,775

$47,445
634,534
86,792
48,676
41,061
36,972
109,176
21.796
11,562
20,913
25,199
148,012
1,821
523,800

450,400

1,307,360

1,767,759

1 Amounts are from press release of June 6,1952.

United States Savings Bonds
Exhibit 15.—First amendment, January 9, 1952, to Department Circular No. 885,
clarifying the extended maturity value of Series E United States savings
bonds
[Department Circular No. 885. Public Debt]
TREASURY DEPARTMENT,

Washington, January 9, 1952.
To Owners of United States Savings Bonds of Series E and Others Concerned:
Pursuant to the Second Liberty Bond Act, as amended, Subpart B of Department Circular No. 885, dated March 26, 1951, is hereby amended and revised to
read as follows:
SUBPART B—FURTHER INTEREST AFTER MATURITY

SEC. 329.3. Owners of bonds of Series E, which mature on and after May 1,
1951, have the option of retaining the matured bonds for a further 10-year period
and earning interest upon the maturity values thereof, payable at the rate of 2J^
percent simple interest per annum, if redeemed during the first 7}^ years, as provided in the table of redemption values at the end of these regulations, and payable
at a higher rate thereafter so that the aggregate return for the 10-year extension
period wiU be about 2.9 percent compounded semiannually. NO ACTION IS
REQUIRED OF OWNERS DESIRING TO TAKE ADVANTAGE OF THE
EXTENSION. MERELY BY CONTINUING TO HOLD THEIR BONDS

EXHIBITS

273

AFTER MATURITY OWNERS WILL EARN FURTHER INTEREST IN
ACCORDANCE WITH THE SCHEDULE SET FORTH IN THE TABLE AT
THE END OF THESE REGULATIONS.!
SEC. 329.4. Interest hereunder accrues at the end of the first half-year period
following maturity and each successive half-year period thereafter. If the ^onds
are redeemed before the end of the first half-year period following maturity, the
owner is entitled to payment only at the face value thereof.
JOHN W . SNYDER,

Secretary of the Treasury.
Exhibit 16.—Ninth amendment, January 18, 1952, to Department Circular No.
530, broadening the conditions under which XJnited States savings bonds
registered in the names of two individuals as coowners may be reissued
TREASURY DEPARTMENT,

Washington, January 18, 1952.
To Owners of United Staies Savings Bonds and Others Concerned:
Pursuant to Section 22 (a) of the Second Liberty Bond Act, as amended (55
Stat. 7, 31 U. S. C. 757c), Section 315.45 (b) of Department Circular No. 530,
Sixth Revision, dated February 13, 1945 (31 CFR 315), as amended, is hereby
further amended, effective February 1, 1952, to read as follows:
"SEC. 315.45 (b) Reissue during the lives of both coowners.—Except as otherwise
specifically provided by these regulations, a bond held in coownership may be
reissued during the lives of both coowners only upon the request of both and
under the following specific circumstances:
(1) in the name of either coowner, alone, or with a new coowner or with a
beneficiary:
(i) if the coowner whose name is to remain on the bond is related to the
coowner whose name is to be eliminated as coowner either as husband or wife,
parent or child, brother or sister, grandparent or grandchild, uncle or aunt, or
nephew or niece; the term 'child' includes a child legally adopted as well as a
stepchild; the terms 'brother' and 'sister' include brothers and sisters of the
half blood as well as those of the whole blood, stepbrothers, and stepsisters and
brothers and sisters through adoption. Provided, however. That the Treasury
reserves the right to reject any application for reissue hereunder, in whole or in
part, upon a determination that the transaction would tend to evade or defeat
the purposes of the limitation on holdings or the restriction against the transferability of savings bonds;
(ii) if one of the coowners is married after the issue of the bond; and
(iii) if the coowners are divorced or legally separated from each other, or
their marriage is annuUed, after the issue of the bond.
Requests for reissue of any of the above three classes should be made on the
current revision of Form PD 1938 and should be signed by both coowners. Such
requests wiU not be approved unless the coowner whose name is to be eliminated
from the boiid is of full age and legally competent. A minor coowner may
execute the form if (in the opinion pf the certifying officer) he is of sufficient
competency and understanding to comprehend the nature of the transaction and
reissue of all the bonds is to be made in the name of such minor alone or, if he so
requests, with another coowner or a beneficiary.
(2) If the bond is of Series F or G, it may be reissued in the name of a trustee
of a living trust created by both coowners for the benefit of both, in whole or in
part, during their lifetime, whether or not containing an absolute power of revocation in the grantors. Requests for reissue under this provision should be made on
Form PD 1851 and wiU not be approved unless both coowners are of full age and
legally competent."
JOHN W . SNYDER,

Secreiary of ihe Treasury.
» The first sentence of Sec. 329.3 of Subpart B as originally issued stated that interest upon the maturity
values of the bonds would accrue at the rate of 2}^ percent simple interest per annum for the first 7^ii years,
whereas the last sentence of that section makes it clear that the rate of accrual is governed by the schedule
set forth in the table at the end of the regulations. Actually the schedule provides for the accrual of interest
at a rate higher than 2\i percent for the 7 to 7yi year period following maturity, although such rate is collectible during (but not before) the 7}^ to 8 year period (which in the schedule is designated as the 17}.^ to 18
year period after issue date). The purpose of this amendment is to render clear this attractive feature of the
extended maturity value of bonds of Series E.
221052—53

274

1952 REPORT OF THE SECRETARY OF THE TREASURY

Exhibit 17.—Tenth amendment, April 29, 1952, to Department Circular No. 530,
regulations governing United States savings bonds
TREASURY DEPARTMENT,

Washington, April 29,, 1952.
To OU)ners of United States Savings Bonds and Others Concerned:
Pursuant to Section 22 (a) of the Second Liberty Bond Act, as amended (55
Stat. 7, 31 U. S. C. 757c), certain sections of Department Circular No. 530, Sixth
Revision (31 CFR 315), as amended, are further amended as follows:
SEC. 315.5 is amended by substituting for the letters " F " and "G" wherever
found in the section the letters " F , " "G," "J," and "K."
SEC. 315.8 is amended by revising subsection (b) to read as follows:
"(b) Series R^$5,000 (maturity value) up to and including the calendaryear 1947, $10,000 (maturity value) for the calendar years 1948 to 1951, both',
inclusive, and $20,000 (maturity value) for the calendar year 1962 and for.eachi
calendar year thereafter."
Also by relettering subsection (f) as (g) and by inserting a new subsection
lettered (f) reading as follows:
"(f) Series J and K.—$200,000 (issue price) for each calendar year, of either
series or of the combined aggregate of both."
SEC. 315.9 (b) is amended by striking out the last sentence and substituting
therefor the following:
"In the case of bonds of Series F, G, J, and K the computation shall be based
upon issue prices."
SEC. 315.9. (d) is amended by substituting a semicolon for the period'at the end
of the subsection and adding thereto the following:
"or (5) with respect to bonds of Series G, those issued.in exchange for matured'
bonds of Series E under the terms of Department Circular No. 885, as amended;
or (6) with respect to .bonds of Series K, those issued in exchange for matured,
bonds of Series E under the terms of Department Circular No. 906."
SEC. 315.10 is amended by striking out the parenthetical expression and substituting therefor the following:
"(in the case of bonds of Series G or Series K)'"^
SEC. 315.19 is amended by revising the last sentence of the section to read: ^^'
"At present Series G and Series K constitute the only issues of current income
savings bonds."
SEC. 315.23 (b) is amended by revising the caption to read "Series F, G, J, and
K" and by substituting " Series F, G, J, and K" for "Series F or G" in the first
line of the subsection.
. '
,
• .
SEC. 315.23 (c) is further amended by substituting for the letter "G" wherever
it appears the letters " G " and "K," and by substituting for the letter " F " the
l e t t e r s " F " and "J." The subsection is further amended by inserting the words
"under the foregoing provisions" foUowing the word "maturity" in the next to the
last sentence, and by adding at the end of the subsection the following:
"Bonds of Series G issued, in exchange for matured bonds of Series E under
the provisions of Department Circular No. 885, as amended, an(i bonds of
Series K issued in exchange for matured bonds of Series E und^r the provisions of Department Circular No. 906, may be redeemed at par at any time
after 6 months from the issue date, at the option of the owhers, on the firstday of any calendar month foUowing one calendar month's notice in writing;
of intention to redeem."
SEC. 315.28 is amended by substituting for the letters " F " and " G " the letters:
" F , " "G," "J," or "K."
SEC. 315.45 (b) as amended is further amended by substituting in subparagraph(2) for the letters " F " and "G" the letters " F , " "G,'' " J , " or "K."^
'

JOHN W. SNYDER,

Secretary of the Treasury,.

EXHIBITS

275

Exhibit 18.—Third revision, April 29, 1952, of Department Circular No. 653,
offering of Series E United States savings bonds
TREASURY

DEPARTMENT,

Washington, April 29, 1952.
Department Circular No. 653, Second Revision, dated August 31, 1943, as
amended and supplemented (31 CFR 316), is hereby revised effective May 1,
1952, to read as follows:
SEC. 316.1. Offering of bonds.—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 which hereinafter
are referred to as bonds of Series E, These bonds wiU be substantially a continuation of the Series E bonds heretofore available, but wUl mature 9 years and 8
months from the issue date and will have an investment yield of approximately 3
percent per annum compounded semiannually, if held to maturity. The sale of
bonds of Series E issued hereunder will continue until terminated by the Secretary
of the Treasury.
SEC. 316.2. Description.—Bonds of Series E will be issued only in registered
form. See section 316.6 for information concerning registration. They wUl be
issued in denominations of $25, $50, $100, $200, $500, $1,000, and $10,000. Each
bond will bear the facsimile signature of the Secretary of the Treasury, and wiU
bear an imprint of the Seal of the Treasury Department. - At the time of issue,
the issuing agent will inscribe on the face of each bond the name and address of
the pwner and the,name of the coowner or beneficiary, if any; will enter the issue
date of the bond; and will imprint the agent's .dating stamp (to show the date the
bond is actually inscribed). A bond of Series E shall be valid only if an authorized
issuing agent receives payment therefor, duly inscribes, dates, and stamps the
. bond, and delivers it to the purchaser or his agent.
Sec. 316.3. Term.—A bond of Series E will 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. This date is the issue date and the bond will mature and be
payable at face value 9 years and 8 months from such issue date; but with the
option on the part of the owner to retain it after maturity at further interest as set
forth in section 316.13. The issue date is the basis for determining the redemption periods or the niaturity date of the bond, and should not be confused with the
date appearing in the issuing agent's stamp, which indicates the actual date the
bond is. inscribed. The bonds may not be called for redemption by the Secretary
of the Treasury prior to maturity, but any bond may be redeemed prior to maturity, at any time after two months from the issue date, at the owner's option, at
fixed redemption values.
SEC. 316.4. Interest.—Bonds of Series E will be issued on a discount basis at
75 percent of their maturity value. No interest as such will be paid on the bonds,
but they will increase in redemption value at the end of each half-year period from
the issue date, with an additional increase for the period from 9 years and 6 months
to 9 years and 8 months from the issue date, as shown in table A at the end of this
circular. The investinent yield will be approximately 3 percent per annum compounded semiannually, if the bonds are held to maturity (but the yield wUl be
less if the owner exercises his option to redeem a bond prior to maturity) ;• the .
bonds will have a further investment yield of approximately 3 percent per annum
compounded semiannually for each half-year period they are held after maturity
under the option granted to owners in section 316.13.
SEC. 316.5. 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 E (which are issued on a discount basis), and the redemption
value received therefor shall be considered as interest, and such interest is not
exempt from income or profits taxes now or hereafter imposed under the Internal
Revenue Code or laws amendatory or supplementary thereto./ 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.
.•
1 For further information concerning the taxable ahd exempt status under Federal tax laws of the interest
(increment in value) on United States savings bonds issued on a discount basis (including bonds of Series E ) ,
and alternate methods of reporting such interest, see Internal Revenue Mimeograph, Coll. No. 6327, dated
November 9,1948.
.
•
. ,

276

1952 REPORT OF THE SECRETARY OF THE TREASURY

SEC. 316.6. Registration.—(a) Authorized forms.—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. Full information regarding authorized forms of registration
and rights thereunder will be found in the regulations currently in force governing
United States savings bonds.
(6) Restrictions.—Only 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 temporarUy residing abroad, and nonresident
aliens employed in the United States by the Federal Government or an agency
thereof may be named as owners, coowners, or designated beneficiaries of bonds
of Series E issued pursuant to this circular, or of authorized reissues therepf,
except that on original issues of bonds, but not on reissues, such persons may name
as coowners or beneficiaries of their bonds American citizens permanently residing
abroad or nonresident aliens who are not citizens of enemy nations. American
citizens permanently residing abroad and nonresident aliens who become entitled
to bonds under the regulations g!;overning United States savings bonds,^ by right
of survivorship or otherwise, will not have the right to reissue but may hold the
bonds without change of registration with the right to redeem them at any time
in accordance with their terms.
SEC. 316.7. Limitation on holdings.—The amount of Series E bonds originally
issued during the calendar year 1952 (and each calendar year thereafter) that
may be, held by any one person at any one time shall not exceed $20,000 (maturity
value), computed in accordance with the provisions of the regulations governing
United States savings bonds.
SEC, S16.S. Nontransferability.—Bonds of Series E wUl 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, after they are duly issued they may not be sold, discounted, hypothecated as coUateral 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 owner, during his lifetime, and thereafter his estate
or heirs..
SEC. 316.9. Issue prices of bonds.—The issue prices of the various denominations
of bonds of Series E follow:
Denomination (maturity value)
Issue (purchase) price

$25.00 $50.00 $100.00 $200.00 $500.00 $1,000.00 $10,000.00
$18.75 $37.50 $76.00 $150.00 $375.00
$760.00 $7,500.00

SEC. 316.10. Purchase of bonds.—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 offices 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 other agencies as have been duly qualified as issuing agents;
(3) at Federal Reserve Banks and branches and at the Treasury Department,
Washington 25, D. C.
(6) On mail order.—By mail upon application tp 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 form of exchange, including
personal checks, will be accepted, subject to cpllection. Checks, or other forms
of exchange, should be'drawn to the order of the Federal Reserve Bank or 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 (31 CFR Part 203) wiU 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.
(c) 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 purchasing bonds of Series E.
i Se$|Departw^Pt Circular No, 53Q, Qwpcent revision.

EXHIBITS

277

(d) Savings stamps.—Savings stamps, in authorized denominations, 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 bonds of Series E. Albums, for affixing
the stamps, will be available without charge, and such albums will be receivable,
in the amount of the affixed stamps, on the purchase price of savings bonds.
SEC. S16.11. Bonds purchased before new stock is available.—Until bonds have
been printed and supplied to issuing agents Series E bonds in the form on sale
prior to May 1, 1952, will be issued for purchases made under this circular.
BONDS OF SERIES E PURCHASED IN THE INTERVAL UNTIL THE
NEW STOCKS ARE AVAILABLE WILL CARRY THE NEW RATE AND
REDEMPTION VALUES AND ALL OTHER PRIVILEGES AS FULLY AS IF
EXPRESSLY SET FORTH IN THE TEXT OF THE BONDS THEMSELVES.
The owners, if they desire to do so, may exchange such bonds at any Federal
Reserve Bank or branch or at the Treasury Department, Washington 25, D. C ,
for bonds in the new form (with the same registration and issue dates), when the
latter become available; but they need not do so because all paying agents will
redeem ALL bonds of Series E bearing, issue dates on and after May 1, 1952, in
accordance with the schedule of redemption values set forth in table A at the
end of this circular.
SEC. 316.12. Delivery of bonds.—Issuing agents are authorized to deliver bonds
of Series E 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 deliveries elsewhere will be
made. If purchased by citizens of the United States temporarily residing abroad,
the bonds will be delivered at an address in the United States, or held in safekeeping, as the purchaser may direct.
SEC. 316.13. Retention of Series E honds (heretofore or hereafter issued) at further
interest after maturity.^—Owners of Series E bonds heretofore or hereafter issued
who wish to continue their investment beyond maturity have the option of retaining their matured bonds for a 10-year period after maturity (hereafter referred to
as the "extension pe^riod") and of earning interest upon the maturity values thereof
in accordance with the provisions of (1), (2), and (3) hereof. This option is as
binding on the United States as if expressly set forth in the text of the bonds.
NO ACTION IS REQUIRED OF OWNERS DESIRING TO TAKE ADVANTAGE THEREOF. MERELY BY CONTINUING TO HOLD THEIR
BONDS AFTER MATURITY OWNERS WILL EARN FURTHER INTEREST IN ACCORDANCE WITH THE SCHEDULE OF REDEMPTION
VALUES SET FORTH IN THE PERTINENT TABLES REFERRED TO
BELOW. Interest under these provisions accrues at the end of the first half-year
period following maturity and at the end of each successive half-year period thereafter. If the bonds are redeemed before the end of the first half-year period following maturity, the owner is entitled to payment only at the face value thereof.
(1) Series E bonds bearing issue dates of May 1, 1941, through April 1, 1942.—
Such bonds earn interest after maturity at the rate of 2)^ percent simple interest
per annum, if redeemed during the first 7}i years of the extension period, in accordance with the schedule of redemption values in table B at the end of this circular,
and at a higher rate thereafter so that the aggregate return for the extension period
will be approximately 2.9 percent per annum, compounded semiannually.
(2) Series E bonds bearing issue dates of May 1, 1942, through April 1, 1952.—
Such bonds will earn interest after maturity at the rate of approximately 3 percent
per annum compounded semiannually for each half-year period of the extension
period and are redeemable in accordance with the schedule of redemption values
in table C at the end of this circular.
(3) Series E bonds bearing issue dates on and after May 1, 1952.—Such bonds
will earn interest after maturity at the rate of approximately 3 percent per annum
compounded semiannually for each half-year period of the extension period and
will be redeemable in accordance with the schedule of redemption values in table
A at the end of this circular.
The term "owners" as used in this section and section 316.14 includes registered
owners, coowners, surviving beneficiaries, next of kin and legatees of deceased
3 During any war emergency the Treasury may suspend deliveries to be made at its risk and expense from
or to the continental United States and its Territories, insular possessions, and the Canal Zone, or between
any of such places.
< The basic provisions governing the option of owners of Series E bonds to retain their bonds at further
interest after maturity were originally set forth in Department Circular No. 885.

278

1952 REPORT OF* THE SECRETARY OF THE TREASURY

owners, and persons who have acquired bonds pursuant to judicial proceedings
against the owners, except that judgment creditors, trustees in bankruptcy, and .
receivers of insolvents' estates will have the right only to payment in accordance
with the regulations governing United States savings bonds.
SEC. 316.14. Exchange of matured bonds of Series E for bonds of Series K.—.
Owners of matured Series E bonds who prefer to have a current income bond rather
than to exercise their right to retain the bonds for the extension period may
exchange them in amounts of $500 (maturity value) or multiples thereof for bonds
of Series K subject to the provisions of Department Circular No. 906 dated April
29, 1952.
SEC. 316.15. Federal income tax as applied to matured Series E bonds.—(a) A taxpayer who has been reporting the increase in redemption value of his Series E
bonds, for Federal income tax purposes, each year as it accrues, must continue to
do so if he retains the bonds under section 316.13, unless in accordance with income
tax regulations (Regulations 111, section 29.42-6) the taxpayer secures permission
from the Commissioner of Internal Revenue to change to a different method of
reporting income from such obligations. A taxpayer who has not been reporting
the increase in redemption value of such bonds currently for tax purposes may in
any year prior to final maturity, and subject to the provisions of section 42 (5) of
the Internal Revenue Code and of the regulations prescribed thereunder, elect
for such year and subsequent years to report such income annually. Holders of
Series E bonds who have not reported the increase in redemption value currently
are required to include such amount in gross income for the taxable year of actual
redemption or for the taxable year in which the pieriod of extension ends, whichever
is earlier.
,
'
(6) Taxpayers who exchange their matured Series E bonds for Series K bonds
(see section 316.14) must report the difference between the purchase price of their
Series E bonds and the maturity value thereof in their returns for the year in which
the bonds mature to the extent to which such difference has not been reported in
previous returns. The interest payable on the Series K bonds issued upon exchange must be reported as income for the taxable year in which received or
accrued.
(c) If further information concerning the income tax is desired, inquiry should
be addressed to the Collector of Internal Revenue of the taxpayer's district or to
the Bureau of Internal Revenue, Washington 25, D. C.
;
SEC. 316.16. Safekeeping.—Series E bonds 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 utUized. Arrangements may be made for such safekeeping at the time of purchase, or subse.quently.
SEC. 316.17. Lost, stolen, or destroyed bonds.—If a Series E bond is lost, stolen,
or destroyed, a substitute may be issued or payment may be obtained upon
identification of the bond and proof of its loss, theft, or destruction. The owner
should keep a description of his bonds by series, denomination, serial number,
and name of coowner or beneficiary, if any, apart from the bonds, and in case
of loss, theft, or destruction should immediately notify the Bureau of the Public
Debt, Division of Loans and Currency, 536 South Clark Street, Chicago 5, Illinois,
briefiy stating the facts and describing the bonds. , Full instructions for obtaining
substitute bonds or payment wiU then be given.
5. Safekeeping facilities may be offered at some branches of Federal Reserve Banks^ and hi such connection
an inquiry may be addressed to the branch.

EXHIBITS

279

SEC. 316.18. Payment pr redemption (in general).—A Series E bond may be redeemed at the option of the owner at any tirrie after two months from the issue
date at the appropriate redemption value as shown in the tables of redemption
values at the end of this circular, table A for bonds dated On and after May 1,
1952, table B for those dated May 1, 1941, through April 1, 1942, and table C
for those dated May 1, 1942, through April 1, 1952. A Series E bond in a denomination higher than $25 (maturity value) may be redeemed in part but only in
the amount of an authorized denomination or multiple thereof. Payment will
be made upon presentation and surrender of the bond by the owner to authorized
paying agencies as follows:
(1) Incorporated banks, trust companies, and other financial institutions.—An
individual (natural person) whose name is inscribed on the face of a Series E bond
either as owner or coowner in his own right may present such bond (unless marked
"DUPLICATE") to any incorporated bank or trust company or other financial
institution which is qualified as a paying agent under the provisions of Department
Circular No. 750 or any revision of or amendment thereto. If such bond is in
order for payment bythe paying agent, the owner or coowner,upon establishing
his identity to the satisfaction of the paying agent and upon signing the request
for payment and adding his home or business address, may receive immediate
payment of the current redemption value.
(2) Federal Reserve Banks, branches, and Treasurer of the United States.—
Owners of Series E bonds may also obtain payment upon presentation of the bonds
to a Federal Reserve Bank or branch or to the Treasurer of the United States,
Washington 25, D. C , with the request for payment on the bond duly executed
and certified in accordance .with the pro visions,of the regulations governing savings bonds...
.
I .;• ! '
SEC. 316.19. Payment or redemption in the case of disability or death.—In case
of the disabihty 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'Bureau of the Pubhc Debt, Division of Loans and Currency, 536 South Clark Street, Chicago 5, Illinois, before
the request for payment is executed.
.SEC. ZIQ.20. General provisions.—(a) Regulations.—All Series E bonds 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.
Such regulations may require, among other things, reasonable notice in case of
presentation of Series E bonds for redemption prior to maturity. The present
regulations are set forth in Treasury Department Circular No. 530, current
revision, copies of which may be obtained on application to the Treasury Department or to any Federal Reserve Bank or branch.
(h) Reservaiion as to issue of bonds.—The Secretary of the Treasury reserves
the right to reject any apphcation for Series E bonds, in whole or in part, and to
refuse to issue or permit to be issued hereunder any such bonds in any case or
any class or classes of cases if he deems such action to be in the public interest,
and his action in any such respect shall be final.
(c) Preservation of existing rights.—Nothing contained in this circular shall be
construed to limit or restrict any existing rights which owners of Series E bonds
have acquired under the circulars previously in force..
(d) Fiscal agents.—YederoX 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 Series E bonds.
'
(e) Reservation as to terms of circular.—The Secretiary 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.

• ' JOHN W . SNYDER,

Secretary of the Treasury,

280

1952 REPORT OF THE SECRETARY OF THE TREASURY
T A B L E A . — U N I T E D STATES SAVINGS B O N D S — S E R I E S E

TABLE OF R E D E M P T I O N VALUES AND INVESTMENT YIELDS FOR BONDS BEARING ISSUE DATES BEGINNING
MAY 1, 1952

Table showing: (1) How bonds of Series E bearing issue dates beginning May 1,
1952, by denominations, increase in redemption value during successive half-year
periods following issue or date of original maturity; (2) the approximate investment yield on ihe purchase price from issue date to the beginning of each half-year
period; and (3) the approximate investment yield on ihe current redemption value
from the beginning of each half-year period (a) to maturity or (b) to exiended
maturity. Yields are expressed in terms of rate percent per annum, compounded
semiannually.
Maturity value..
Issue price

$25.00 $50.00 $100.00 $200.00 $500.00 $1,000.00 $10,000
750.00
7,500
18.75 37.50
76.00 150.00 375.00

APPROXIMATE INVESTMENT YIELD 2

(1) Redemption values during each half-year period 1
(Values increase on first day of period shown)

(3) On cur(2) On purrent rechase price demption
from issue value from
beginning
date to
of each
beginning
half-year
of each
period
1
half-year
(a) to
period»
maturity

Period after issue
date

FirstMyear
$18.75 $37.50 $75.00 $150.00 $375.00
$750.00 $7,500
7,540
V^ to 1 year—
18.85 37.70
75.40
150.80 377.00
764.C)
7,620
1 t o IV^ years
19.05 38.10
76.20
152.40 381.00
762.03
7,720
I H t o 2 years
77.20
154.40 386.00
772.03
19.30 38.60
7,820
2 t o 2 H years
782.00
19.55 39.10
78.20 156.40 391.00
7,920
2 ^ t o 3 years
__ 19.80 39.60
79.20 158.40 396.00
792.00
8,020
3 t o 33^ y e a r s . .
160.40 401.00
802.00
20.05 40.10
80.20
8,120
3M t o 4 years
20.30 40.60
81.20
162.40 406.00
812.00
8,220
4 t o 4V^ y e a r s . j
20.55 41.10
82.20 164.40 411.03
822.0)
8,360
4M t o 5 years
20.90 41.80
83.60
167.20 418.03
836.00
8,500
5 t o 5V^ years
21.25 42.50
85.00
850.01
170.00 425.03
8,640
6M t o 6 y e a r s
21.60 43.20
86.40 172.80 432.03
864.0)
8,780
6 t o 6V2 years
21.95 43. ?0
87.80 175. 60 439.03
878.0)
8,920
6 H t o 7 years
. 22.3D 44.60
89.20 178.40 446.03
892.0)
9,060
7 t o 7M years
'. 22. 65 45.30
90.60 181.20 453.03
906.00
9,200
7M t o 8 years
_. 23.03 46. CO
92.00
184.00 460.00
920.00
9,360
8 t o 8V^ years
23.4)
46.80
93.60
187.20 468.03
936.0)
9,520
83^ t o Oyears
23.8 D 47.60
95.20 190.40 476.03
952.00
9,680
6 t o 9M years
24.20 48.40
96.80 193.60 484.00
968.00
9M years t o 9 years
and 8 months
24.60 49.20
98.40 196.80 492.00
9,840
984.00
M a t u r i t y value (9
years and 8 m o n t h s
from issue d a t e ) . . . $25.00 $50.00 $100.00 $200.00 $500.00 $1,000.00 $10,000
P e r i o d after
maturity date
First 3^ year
V^ to 1 year
1 t o I M years
I M t o 2 years
2 to 2V^ years
2V^ to 3 years
3to3Myears-_
3M to 4 years
4 t o 4 H years
4M t o 5 y e a r s
5 t o 5M y e a r s
5 ^ t o 6 years
_.
6 t o 6M y e a r s
6M t o 7 years
7 t o 7M years
7M t o 8 y e a r s
8 t o 8 H years
8M t o 9 years
9 to 9V^ y e a r s . . . . . . .
9M to 10 years
Extended maturity
value (10 years
from original maturity date) *

Percent
0.00
1.07
1.59
1.94
2.10
2.19
2.26
2.28
2.30
2.43
2.52
2.59
2.64
2.69
2.72
2.74
2.79
2.83
2.86

Percent
33.00
3.10
3.16
3.19
3.23
3.28
3.34
3.41
3.49
3.50
3.51
3.54
3.58
3.64
3.74
3.89
4.01
4.26
4.94

2.88

9.92

3.00
(b)to
extended
maturity

Extended maturity period
$25.00 $50.00 $100.00
25.37 50.75 101.50
25.75 51.50 103.00
26.12 52.25 104.50
26.50 63.00 106.00
26.90 53.80 107.60
27.30 54.60 109.20
27.70 55.40 110.80
28.10 56.20 112.40
28.50 67.00 114.00
28.95 57.90 115.80
29.40 58.80 117.60
29.85 59.70 119.40
30.30 60.60 121. 20
30.75 61.50 123.00
31.20 62.40 124.80
31.65 63.30 126.60
32.15 64.30 128.60
32.65 65.30 130.60
33.15 66.30 132.60

$10,000
10,150
10,300
10,450
10,600
10,760
10,920
11,080
11,240
11,400
11,580
11,760
11, 940
12,120
12,300
12,480
12, 660
12,860
13,060
13,260

3.00
3.00
3.00
2.99
2.99
2.99
2.99
2.99
2.98
2.98
2.98
2.99
2.99
2.99
2.99
2.99
2.99
2.99
2.99
3.00

$33.67 $67.34 $134.68 $269.36 $673.40 $1,346.80 $13,468

3.00

$200.00
203.00
206.00
209.00
212.00
215.20
218.40
221.60
224.80
228.00
231. 60
235. 20
238.80
242.40
246.00
249. 60
253.20
257. 20
261.20
265.20

$500.00 $1,000.00
507.50 1,015.00
516.00 1,030.00
522.60 1,045.00
530.00 1,060.00
538.00 1,076.00
546.00 1,092.00
554.00 1,108.00
562.00 1,124.00
•570.00 1,14.0.00
579.00 1,158.00
588.00 1,176.00
597.00 1,194.00
606.00 1,212.00
615.00 1, 230.00
624.00 1,248.00
633.00 1,266.00
643.00 1,286.00
653.00 1,306.00
663.00 1,326.00

1 2-month period in tho case of the 9M-year to 9-year and 8-month period.
« Calculated on basis of $1,000 bond (face value).
8 Approximate investment yield for entire period from issuance to maturity.
* 19 years and 8 months after issue date.

3.00
3.00
3.00
3.01
3.02
3.02
3.02
3.03
3.04
3.05
3.04
3.04
3.03
3.04
3.06
3.07
3.12
3.10
3.10
3.14

281

EXHIBITS
TABLE B—UNITED STATES SAVINGS BONDS—SERIES E
TABLE OF R E D E M P T I O N VALUES AND INVESTMENT YIELDS
FOR BONDS BEARING ISSUE DATES FROM MAY 1, 1941, THROUGH APRIL 1, 1942

Table showing: (1) How bonds of Series E hearing issue dates from M a y 1, 1941,
through A p r i l 1, 1942, by denominations, increase i n redemption value during
successive half-year periods following issue or date of original maturity; (2) the
approximate investment yield on the purchase price from issue date to the beginning
of each half-year period; and (3) ihe approximate investment yield on the current
redemption value from the heginning of each half-year period (a) to maturity or (h)
io extended maturity.
Yields are expressed i n terms of rate percent per a n n u m ,
corapounded semiannually.
Maturity value.
Issue price

Period after issue date

First M y e a r . . .
M to 1 year
1 to IM years
IM to 2 years
2 to 2M years—
2M to 3 years
3 to 3M years
3M to 4 years
4 to 4M years
_
4M to 6 years
6 to 6M years
5M to 6 years
6 to 6M years
_
6M to 7 years
7 to 7M years..
7M to 8 years
8 to 8M years
8M to 9 years
_
9 to 9M years
_
9M to 10 years
Maturity value (10 years
from issue date)

$25.00
18.76

$100.00
75.00

$500.00
376.00

$1,000.00
760.00

(3) On current redemption
value from
begirming
of each
half-year
period (a)
to maturity

$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

Percent
0.00
.00
.67
.88
.99
1.06
1.31
1.49
1.62
1.72
1.79
1.85
1.90
2.12
2.30
2.46
2.67
2.67
2.76
2.84

Percent
3 2.90
3.05
3.15
3.25
3.38
3.52
3.68
3.66
3.76
3.87
4.01
4.18
4.41
4.36
4.31
4.26
4.21
4.17
4.12
4.08

$1,000.00

2.90

$18. 75
18. 76'
18.87
19.00
19.12
19.26
19.50
19.75
20.00
20.25
20.50
20.75
21.00
21:50
22. CO
22.60
23.00
23.50
24. CO
24.60

$37. 50
37. 53
37.75
38.03
38.25
38.53
39.00
39.60
40.00
40.50
41.00
41.50
42. CO
43. CO
44.00
45.00
46.00
47. CO
48. CO
49.00

$75.00
75.03
75.50
76.00
76.53
77.00
78.00
79.00
80. CO
81. CO
82. CO
83. CO
84. CO
86. CO
88.00
90.00
92.00
94.00
96.00
98.00

$375.00
375.0)
377.5)
380.00
382.53
385. CO
390.03
395.03
400. C 3
405. C 3
410. CO
• 415. C 3
420. C )
430. C)
440.00
450. 00
460. 00
470. C 3
480.0)
490.00

$25.00

$50.00

$100.00

$500.00

(b) to extended
maturity

Extended maturity period

$25.00
25.3 L
26.62
26.94
26.25
26.53
26.87
27.1)
27.5)
27. J1
28.12
28.44
28. 76
29. C 3
29.37
30. C 3
30.67
31.23
32. CO
32.67

$60.00
60.62
61.26
61.87
62.6)
63.12
63.76
64.37
65. C 3
66.62
66.25
56.87
67.60
68.12
68.76
60. C 3
61.23
62.67
64.00
66.33

$100.00
101.26
102.6)
103. 75
106.0)
106. 26
107.5)
108. 76
110. CO
111.25
112. 60
113. 76
115.00
116. 25
117.63
120.00
122. 67
126. 33
128.00
130. 67

$500.00
506. 25
612.5)
518. 76
525. C )
531.26
.637. 50
643. 75
560. CO
656. 26
662. 50
568.76
675. ( )
581. 25
587. 5).
600.0)
613.33
626.67
.640.0)
653.33

$1,000.00
J. 012. 50
1, 025. 00
1, 037. 50
1. 050.00
1, 062. 50
1, 075.00
1, 087. 50
1.100.00
1,112.60
1,125. 00
1,137. 50
1,150.00
1,162.50
1,176.00
1, 200.00
1, 226. 67
1.253.33
1, 280.00
1,306.67

$33.33

$66.67

$133.33

$066.67

$1,333.33

•» Calculait^d On basis,ot$1,000 bond (face value).
a Approximate irivestmeiit yield for entire period from issuance to maturity.
s 20 years froin issiie' date J

APPROXIMATE
INVESTMENT
YIELD i

(2) On purchase price
(1) Redemption values during each half-year period from issue
date to be(Values increase on first day of period shown)
ginning of
each halfyear peiiod

Period after maturity date

First M year
M to 1 year
1 to IM years
IM to 2 years
2 to 2M years
2M to 3 years
3 to 3M years
3M to 4 years
4 to 4M years
4M to 5 years
5 to 5M years
6M to 6 years
6 to 6M years
6M to 7 years
7 to 7M years
7M to 8 years
8 to 8M years...
8M to 9 years
9 to 9M years
9M to 10 years...
Extended niat|3rity value
(10 years . ffor^ original
maturity d a t e ) '

$60.00
37.60

2.90
2.88
2.86
2.84
2.82
2.81
2.79
2.77
2.75
2 74
2.72
2.71
2.69
2.67
2.66'
2.70
2.76
2.79
2.83
2.87

2.90
2.92
2.94
2.97
3.01
3.05
3.10
3.16
3.23
3.32
3.43
3.56
3 73
3.96
H.26
4.26
4.21
4.17
4.12
4.08

~''-^l54v.'

282

1952 REPORT OF THE SECRETARY OF THE TREASURY
T A B L E C — U N I T E D STATES SAyiNGs-BONDS—SERIES

TABLE OF REDEMPTION VALUES AND INVESTMENT YIELDS
FOR BONDS BEARING ISSUE DATES FROM MAY 1, 1942, THROUGH APRIL 1, 1952

Table showing: (1), How bonds of Series E bearing issue dates from M a y 1, 1942,
through April 1, 1952, by denominations, increase in redemption value .during
successive half-year periods following issue or date of original maturity; (2) the
approximate investment yield on the purchase, price from issue date to the beginning
of each half-year period; and. (3) the approximate investrnent yield on the current
redemption value from the beginning pf each half-year period (a) to maturity or (b)
to extended maturity. Yields are expressed in terms of,rate percent per annum,
compounded semiannually.
' , •,
M a t u r i t y value:.
Issueprice

P e r i o d after issue
date

APPROXIMATE

$10.00 $25.00 $50.00 $100.00 $200.00 $500.00 $1,000.00
75.00 150.00 375.00
7.50
18.75 37.60
750.00

(1) R e d e m p t i o n values d u r i n g each half-year period
(Values increase ori ^first d a y of period shbwri)

$750. 00
$7.50 $18. 75 $37.50 $75. 00 $150.00 $375. 00
First M year
75.00 150. 00 375. 00
18.75 37.50
750.00
7.50
M t o 1 yean
75.60 151. 00 377. 50
18.87 37.75
755. 00
7.55
1 to I M y e a r s L
76.00 152. 00 380. 00
760. 00
.7.60 19.00 38. 00
I M to 2 y e a r s .
76. 50 153.00 382. 50
765.00
7.65 > 19.12 38.25
2 to 2M years
77.00 154.00 385. 00
770. 00
'7.70 19.25 38.50
2M to 3 years.:
78.00
780. 00
7 80 19.50 .39.00
156.00 390. 00
3 to 3M y e a r s . - . - 79.00 158. 00 395. 00
790. 00
7.90
19.75 39.50
3M to 4 y e a r s . i . . .
80.00 .160. OQ 400.00.
800.00
8.00
20.00 40.00
4 to 4M y e a r s . :
81.00
810.
00
405.
00
8.10
162.00
20. 25 4,0. 50
4M to 5 years
....
820. 00
8.20 .20.50 ,41.00 ••82.00 164.00 410. 00
5 to 5M y e a r s . : .
830.
00
415.
00
8.30
166.
00
20.75
83.00
41. 50
5M to O y e a r s . :
840.00
8.40
21.00 42.00
84.00 168.00 420r00
6 to 6M years
860. 00
8.60
86.00 172.00 430. 00
21. 50 43.00
6 M t o 7 years..,
880. 00
8.80
,88. 00 176. 00 440.00
22. 00 44.007 to 7M years
900. 00
450.00
9.00
.180.
00
90.
00
45.00
22. 50
7M to 8 years
920.00
9.20
92. 00 184.00 460. 00
23.00 4G. 00
. 8 to 8M years
940. 00
470.
00
9.40
188.
00
94.00
47.00
23.50
8 ^ to 9 years
960. 00
9.60
96.00 192. 00 480.00
24.00 ,48.00
Oto 9M y e a r s . :
980.00
490.00
9.80
196.00
98.00
24.50
49.00
. 9M to 10 years
M a t u r i t y v a l u e (10
years from issue
date).....
$10.00 $25.00 $50.00 $100.00 $200. po $500.00 $1,000.00
f Period after
maturity date
$10.00 $25.00
FirstMyear
10.15 25.37
M to 1 year
10.30 25.75
1 to I M years
10.46 26.12
I M t o 2 years
10.60 26.50
2 to 2M years
. 2Mto3 years.:
, 10.76 26.90
10.92 27.30
3 to 3M years
11.08 •27. 70
3M to 4 y e a r s .
11.24 28.10
4 to 4M years
11.40 28.50
' 4M to 5 years
11.68 28.95
5 to 6M years
11:76 29.40
5M to 6 years
11. 94 29.85
6 to 6M years
12.12 30. 30
6M to 7 y e a r s
12.30 30.75
• 7 t o 7M years
12.48 31.20
7M to 8 years
12.66 31. 65.
. 8 to 8M years
12. 86 32.15
8M to 9 years
13.06 32.65
9 to 9M years
13.26 33.16
9M t o 10 years
. Extended maturity
•' v a l u e
(10 y e a r s
from original ma$13.47 $33.67
turity date) 8

iNViESTMENT
YIELD 1

(2) On purchase price
from issue
d a t e to
begiiming
of each
half-year
period

Percent
0.00
.00
.67

$50.00 $100.00
50.75 101. 50
51.50 10'3.00
62. 25 104. 50
53.00 106.-60
53.80 107.60
54.60 109.20
55. 40. 110. 80
66.20 112.40
57.00 114.00
67.90 115.80
68.80 117. 60
69.70 119.40
60.60 121.20
, 61. 50' 123; 00
62.40 124. 80
63.30 126. 60
64.30 128. 60
'65.30 130. 60
66.30 132.60

$200.00.
203.00
206.00
209. 00
212. 00
215. 20
218.-40
221. 60
224.80

228. ob
231. 60
235.-20
238.80
242.40
246.00
249. 60
253. 20
. 257. 20
; 261. 20
265. 20

$500.00 $1,000.00
507. 50 1,015.00
515.00' 1, 030.00
522.50 1, 045. 00
530. 00 • 1, 060.00
538. OO- 1, 076.00
646. 00 1, 092. 00
654.00 1,108. 00
562. 00 1,124. 00
670. 00 1,140.00
679.00 1,158. 00
588. 00 1,176. 00
597. 00 1,194. 00
606. 00 1, 212.00
615.00 1,230.00.
624.00 1, 248.00.
633.00 1, 266.00
643.00 1, 286.00
653.00 1, 306. 00
663.00 1,326.00

$67.34 $134.68 $269.36 $673.40 $1,346.80

Percent
S2.90

3.05
3.15
3.25
3.38
3.62
3.58
. 3.66
3.75
r
3.87
.
4.01
.4.18
'4:41
4.36
.
4.31
4.26
4.21
4.17
4.12
4.08

2.90
(b) to extended
maturity

E x t e n d e d m a t u r i t y period

' C a l c u l a t e d on basis of $1,000 b o n d (face value)*.
2 A p p r o x i m a t e i n v e s t m e n t yield for entire peridd from Issuance to original m a t u r i t y , 8 20 years from issue d a t e .
' '

1.06
1.31
1.49
1.62
1.72
1. 79
1.85
1.90
-2.12
2.30
2.45
2.57
2.67
2.76
2.84

(3) On curr e n t redemption
value from
beginning
of each
half-year
period (a)
to m a turity

,2.90
2.90
2.90
2.91
2.90
2.91
• 2.91
2.91
2.91
2.91
2.92
2.92
2.93
2.93
2.93
.2.932.93
2.94
.2.94
2.94

2.95

.3.00
3.00
3.00
3.01
3.02
3.02
3.02
3; 03
3; 04
3.05
3.04
3.04
3.03
3.04
3.05
3.07
3.12
3.10
3.10
3.14

EXHIBITS

283

Exhibit 19.—Ofifering of Series J and Series K United States savings bonds
[Department Circular No. 906. Public Debtl
,

'•

TREASURYDEPARTMENT,

, . , . . .
Washington, April 29, 1952. .
SEC. 333.1. Offering of bonds.—The Secretary of the Treasury, pursuant to the
authority of the Second Liberty Bond Act, as-amended (31 U. S. C. 757c), offers
for sale to the peopie o f t h e United States, on and after May 1, 1952, United
States savings bonds of Series J and Series K, which may hereinafter be referred
to as bonds of Series J and Series K. Bonds of both series will be sold for cash,
and in addition bonds of Series K will be issued in exchange for matured United
States savings bonds of Series E (hereinafter referred to as bonds of Series E):
Bonds of Series J and Series K issued during the calendar year 1952 will be designated Series J-1952 and Series K-1952, respectively, and those'of "either series
which may be issued in subsequent calendar years will be similarly designated
by the series letter, J or K, followed by the year of issue. . This offering of bonds
of Seriesi J and Series K will. continue until terminated by the Secretary of
theTreasury."
. • .,: .
...
SEC. 333.2. Description.—Bonds of Series J and Series Kwill be issued only in
registered form. See section 333.6 hereof for information concerning registrar
tion. • They will be issued in denominations of $25 and $100 for Series J only,
and $500, $1,000, $5,000, $10,000, and $100,000 .(maturity values), for both
Series J and Series K. Each borid will bear the facsimile signature of the Secretary of the Treasury, and will bear an imprint of the Seal of the TreasuryDepartment. At the time of issue the issuing agent will inscribe on the face of each
bond the name and address of the. owner and the name of the coowner or beneficiary, if any; will enter the issue date of the bond; and will imprint the issuing
agent's dating stamp (to show the date the bond is actually inscribed.) A.'bond
of Series J or Seriies, K shall be valid only if an authorized issuing agent receives
payment therefor, duly inscribes, dates, and stamps the* bond, and delivers it to
the purchaser or his agent.
^ SECi 333.3. Term.—Each bond of Series J,- and each bond of Series K sold for
cash, will 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. This date is the
issue date, and the bond will mature and be^ payable at face value 12 years from
such issue ciat;e.\ The issue.date is the basis for.determining redemption periods
and the maturity date of the bond and s.hould not be confused with the date in
the issuing agent's stamp, which indicates the date the bond is actually inscribed.
The issue date of a bond of Series'K issued in exchange for matured bonds of
Series E will be determined in accordance with rule (3) in section 333.10 (G)
hereof. Thg bonds of either series may not be called for redemption by the Secretary of the Treaisury prior to maturity, .but any bond may be redeemed prior
to maturity, after 6 months from the issue date, at the owner's option, at fixed
redemption ..values.
SEC. 333.4. Interest.—(a) Bonds of Series / w i l l be issued pn a "discount,basis
of 72 percent of."their maturity value. ,No interest as such wilLbe paid on the
bo.nds, but they will increase in! redemption Value at the end of each half-year
period from issue date until.maturity, when the fa.ce amount, becomes payable.
Tlie ihcremeiit in value will'be payable only upon redemption.of the bonds. A
table .of redeiription values appears on each bond. The purchase price pf bonds
of S.erie.s J has been-fixed so as to afford an investment yield of approximately
2.76 percent per annum compounded s'emiarinually if the borids are held to maturity; if the-owner exercises his QP tiori to redeem a borid prior to maturity the
investment yield will be less.!. . ,
•
\
'
.,
(b) Bonds of Series K will be issued at par, and will, bear interest at-the. rate
of 2.76 percent per anhum;from issue date,^payable, se'mianhually, beginriing 6
months from issu^ date. • Interest will be paid by chec.k drawn to the order of
the registered owrier or coowners. Interest will cease at maturity, or, in case of
redemption, before riiaturity, at the end.of the interest period next preceding the
date of redeniptio.n, except that, if the date of redemption falls on an interest
payment date, interest will cease on that date. The difference betwee.n the face
amount of the bond and the redemption value fixed for any period represents an
adjustirient (or ref und) '6f mterest. Accordingly, if ah owner who is no.t' erititled
to redemption, at par bef ore'•maturity exerciseis his option to redeem a b.iprid; prior
J See table A appended to this circular.

•

284

1952 REPORT OF THE SECRETARY OF THE TREASURY

to maturity, the investment yield will be less than the interest rate on the bond.^
See section 333.15 (b) hereof for information concerning redemption at par
before maturity.
SEC. 333.5. 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 J (which are issued on a.discount basis), and the redemption value received therefor (whether at or before maturity) shall be considered
as interest, and that interest and interest on bonds of Series K are not exempt
from income or profits taxes now or hereafter imposed under the Internal Revenue Code or laws amendatory or supplementary thereto.^ 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.
SEC. 333.6. Registration.—(a) Authorized forms.—Bonds of Series J and Series
K may be registered only in one of the following forms:
(1) In the names of natural persons (that is, individuals), whether adults or
minors, in their own right, as follows: (i) In the name of one person; (ii) in the
names of two (but not more than two) persons as coowners; and (iii) in the name
of one person payable on death to one (but not more than one) other designated
person.
(2) In the names of private or public organizations (including private corporations, partnerships and unincorporated associations, and States, counties, public corporations, and other public bodies) in their own right; but not in'the names
of commercial banks, which are defined for this purpose as those accepting demand
deposits.
(3)' In the names of any persons or organizations, public or private, as fiduciaries (except where the fiduciary would hold the bonds merely or principally as
security for the performance of a service).
Full information regarding authorized forms of registration will be found in the
regulations currently in force governing United States savings bonds.
(b) Restrictions.—Only residents (whether individuals or others) of theUnited
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 nonresident aliens employed in the United States by the Federal
Government or an agency thereof, may be named as owners, coowners, or designated beneficiaries of Series J and Series K bonds issued pursuant to this circular,
or of authorized reissues thereof, except that on original issues of bonds, but not
on reissues, such persons may name as coowners or beneficiaries of their bonds
American citizens permanently residing abroad or nonresident aliens who are not
citizens of enemy nations. American citizens permanently residing abroad and
nonresident aliens who become entitled to bonds under the regulations governing
United States savings bonds, by right of survivorship or otherwise, will not be
entitled to reissue, but will have the right (1) to retain the bonds without change
in registration, (2) to receive interest on bonds of Series K, and (3) to receive
payment either at or before maturity on bonds of Series J or Series K.
SEC. 333.7. Limitation on holdings.—The amount of bonds of Series J or Series
K, or the combined aggregate amount of bonds of both series originally issued
during any one calendar year to any one person that may be held by that person
at any one time, iricluding those registered in the name of that person alone and
those registered in the name of that person and another person as coowner, is
$200,000 (issue price), computed in accordance with the provisions of the regulations governing United States savings bonds. Bonds of Series K issued in exchange
for matured bonds of Series E are not included in computing the owner's holdings,
for the purpose of applying the limitation on holdings.
SEC. 333.8. Nontransferability.—Bonds of Series J and Series K 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, after they are duly issued, they may not be sold, discounted, hypothecated as collateral for a loan or the performance of a service, or
2 See table B appended to this circular.
? For further information concerning the taxable and exempt status under Federaltax laws of the interest
(increment in value) on United States savings bonds issued on a discount basis (including bonds of Series
J), and alternate methods of reporting such interest, see Internal Revenue Mimeograph, Coll. No. 6327,
B. A. No. 1680, dated November 9 ,1948.

285

EXHIBITS

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 owner, during his lifetime, and thereafter
his estate or heirs.
SEC. 333.9. Purchase of bonds for cash.—(a) Agencies.—Bonds of Series J and
Series K may be purchased only at Federal Reserve Banks and branches, and at
the Treasury Department, Washington 25, D. C. Customers of commercial
banks and trust companies may be able to arrange for the purchase of such bonds
through such institutions, but only the Federal Reserve Banks and branches and
the Treasury Department are authorized to act as ofiicial agencies, and the date of
receipt of application and payment at an official agency will govern the dating of
the bonds issued.
(b) Issue prices.—The following table shows the issue prices of the various denominations of bonds of Series J and Series K:
Denomination
(maturity value)

$25
$100
$500
$1,000
$5,000
$10,000
$100,000

Issue or purchase price
Series J
$18
$72
$360
$720
$3,600
$7,200
$72,000

Series K

$500
$1,000
$5,000
$10,000
$100,000

(c) Applicaiion.—ln applying for bonds under this circular, care should be
taken to specify whether those of Series J or Series K are desired, and there must
be furnished: (1) instructions for registration of thc bonds to be issued, which must
be in one pf the authorized forms (see sec. 333.6 (a)); (2) the post office address of
the owner; (3) the address for delivery of the bonds; and (4) in the case of bonds
of Series K the address for mailing interest checks. The application should be forwarded to a Federal Reserve Bank or branch, or to the Treasurer of the United
States, Washington 25, D. C , accompanied by a remittance to cover the purchase
price as shown in subsection (b) hereof. Any form of exchange, including personal
checks, will be accepted, subject to collection. Checks or other forms of exchange
should be drawn to the order of the Federal Reserve Bank or 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 (31 CFR Part 203) will 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 iexeess of existing deposits, when so notified by the Federal Reserve Bank of its district.
(d) 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 purchasing bonds of Series J or Series K.
SEC. 333.10. Issue of honds of Serie's K in exchange for matured bonds of Series
E.—(a) Exchange option.—Owners of United States savings bonds of Series E
which have matured or will mature on or after May 1, 1952, who prefer to have
an investment paying current income rather than to exercise their right to cash
them in accordance with their terms, or, as provided in Treasury Department
Circular No. 653, Third Revision, to retain them for a further period, up to ten
years, during which they would continue to earn interest, have the option of
exchanging such bonds for bonds of Series K bearing special privileges as set forth
in subsection (b) hereof. The exchange will be governed by the rules set forth in
subsection (c) hereof.
(b) Special privileges.—The Series K bonds issued upon exchange will be redeemable at par, at the owner's option, AT ANY TIME after 6 months from the
issue date upon one calendar month's notice, as provided in section 333.15 hereof
and will be specially stamped. Such bonds will not be included in computing
the owner's holdings for the purpose of applying the limitation on holdings. See
section 333.7 hereof. In all other respects the Series K bonds issued upon exchange will have the same terms and conditions, including restrictions on registration, as those sold for cash.

286

1952 REPORT OF THE SECRETARY OF THE TREASURY

(c) Rules governing exchanges.—The following .rules will govern the exchangee of
matured bonds of Series E for bonds of Series K'i
,, ,
(1) The Series K bonds issued upon exchange will be registered in the .names
of the owners of the matured Series E bonds, in any authorized form pf registration; the term "owners" includes registered owners, coowners,. surviving^.beneficiaries, next of kin and legatees of deceased owners v^ho were not survived by a
coowner or beneficiary, and persons who .have acquired b.onds. pursuant^ to judicial proceedings against the owners, except that judgment creditors, trustees in
bankruptcy, and receivers of insolvents' estates, will have the right lOnly to payment in accordarice with the regulations governing United States savings bonds.
(2); Series K bonds will be issued upon exchange only in authorized denominations ($500, $1,000, $5,000, $10,000, and $100,000).
(3): The bonds of Series E must be presented to a Fe.deral ;Reserve Bank or
branch or to the Treasury Department,. Washington 25, D. ;C.,, for exchange .not
later than two calendar months after the month of maturity and the bonds of
Series K issued upon exchange will be dated as of the first day of the month in
which the Series E bonds mature, except that if an owner desires to accumulate
a number of Series E bonds for exchange for bonds of Series K in any authorized
denomination he may accumulate such bonds during any twelve consecutive
calendar months and present them for exchange not later than two calendar
months after the month of maturity of the last bond in the group to be exchanged,
and the Series K bonds issued upon, such exchange will be. dated on a weighted
average dating basis which will afford an adequate interest adjustment^ for the
period during which the owner has accumulated the bonds of Series E* for the
exchange, provided that in any event the bonds of Series K will not be dated earlier
than May 1, 1952.
(4) No cash adjustment will be permitted in connection with the issue of
bonds of Serie^ K in exchange for bonds of Series E; the bonds of Series K to be
issued upon exchange must be paid for in full with bonds of Series E in accordance
with the. foregoing rules.
'
•
.-: ,
SEC. 333.11. Delivery of bonds.—^Authorized issuing agencies will deliver bonds
of Series J and Series K either in person, or by mail at the risk and expense of the
United States, at the address giyen by the purchaser, but only within the United
States, its Territories and insular possessions,,and the Canal Zone.'^ No mail
deliveries elsewhere will be made. If purchased by-citizens of the United States
temporarily residing abroad, the bonds will be - delivered at an .address in the
United States, or held in safekeeping, as the purchaser may direct. , . •
SEC. 333.12. Interim receipts.—Until such time.as definitive bonds of Series J
and Series K are ready for issue, .purchasers of these bonds will, receive interim
receipts, which may be exchanged for definitive bonds when available. , No increment will accrue, and no interest will be payable, on interim receipts as such, but
the bonds issued in exchange for interira. receipts will have the same issue.dates as
the corresponding interim receipts, and increment or interest, will accrue on'the
bonds from such issue dates. In order to avoid delay in the'receipt.of the first
interest payment on bonds of Series K, interim receipts for such bonds should, be
submitted to the issuing agency for exchange as soon as possible after the bonds
become available.
SEC. 333.13. Safekeeping.—Bonds of Series J and Series K 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 FederalReserve Banks,^ as fiscalagents
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.
; ,
.
,. ,,;. ^,
.
SEC. 333.14. Lost, stolen, or destroyed bonds.—If a bond of Series J or .Series K is
lost, stolen, or destroyed, a substitute may be issued Or paymentmay be obtained
upon identification of the bond and proof .of its loss, theft, or destruction. The
owner should keep a description of his bonds by series, denomination, serial number
and name of coowner or beneficiary, if any, apart from the bonds, and in case of
loss, theft, or destruction should imme.diately notify the Bureau of the Public
< During any war emergency the Treasury may suspend deliveries to be made at its risk and expense
from or to the continental XTnited States and its Territories, insular possessions, and the Canal-Zone, or
between any of such places. "
. . - , . •
. . .
8 Safekeeping facilities may be offered at some branches of Federal Reserve Banks, and in such connection
an inquiry may be addreissed to the branch.
.. / ,

EXHIBITS

287

Debt, Division of Loans and Currency, 536 South Clark Street, Chicago 5, Illinois,
briefly stating the facts and describing the bonds. Full instructions for obtaining
substitute bonds or payment will then be given.
SEC. 333.15. Payment or redemption.—-(a) General.—-A bond of Series J or
Series K will be paid at par at maturity, following the execution of the request for
payment and presentation to a Federal Reserve Bank or branch, or to the Treasury
Department, Washington 25, D. C. The request for payment must be, executed
and certified in accordance with the provisions of the applicable regulations. A
bond of Series J or Series K will be'redeemed, in whole or in part (in the amount of
an authorized denomiriation or multiple thereof), at the option of the owner, at the
appropriate redemption value, at any ..time after 6 months from the issue date,but
only Ori" the first day of a calendar month and upon one calendar month's notice in
writing of desire to redeem by trie owner. The presentation of the bond bearing a
duly executed request for payment will be accepted as notice. Formal notice, to
be effective, must be received by a Federal Reserve Bank or branch, or the Treasury Department, and the bond must be presented to the same agency not less than
20daysbefore the redemption date fixed by the notice. .
. (b) • Redemption of Series K bonds at par before maturity.—Bonds of Series K may
be redeemed at par, in whole or in part, (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 a;ny 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
$500. In any case request for redemption, at par must be received by the Bureau
ofthe Public Debt, Division, of Loans and Currency, 536 South Clark Street,
Chicago 5, Illinois, or by a Federal Reserve Bank or branch in.accordance with the
regulations governirig savings bonds. In addition bonds of Series K issued in.
exchange for matured bonds of Series E under the provisions of section 33.3.10
hereof may be redeemed at-par at the owner's option AT ANY TIME.after 6
months from the issue date, on one calendar month's notice.
•
(c) Disability or death!—In case ofthe 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
Bureau of,the Public Debt, Division of Loans and Currency, 536 South Clark
Street, Chicago 5, Illinois, before the request for payment is executed.
SEC. 333.16. General 'provisions.—(a) Regulations.^AU. bonds of Series..J and
Series K 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 are set forth in Treasury Depart- .
ment Circular No. 530, copies,of which may be obtained on application to the
Treasury Department or to any Federal Reserve Bank or branch.
•
(b) Reservation as to issue of bonds.—The Secretary of the Treasury reserves the
right to reject any application for bonds of either Series J or Series K, in whole or
in part, and to refuse to issue or permit to be issued hereunder any such bon.ds 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.
(c) Fiscal agents.—Federal Reserve Banks and branches, as fiscal agents of the
Umited 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 J and Series K and they may
issue interim receipts pending delivery of the definitive bonds.
(d) Reservation as to terms of circular.—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.
(e) Bonds of Series F and Series G.—The sale of United States savings.bonds of
Series F and Series?G for cash, pursuant to Treasury Department Circular No. 654,
Third Revision, dated September 12, 1950, is hereby terminated, effective at the
close of business April 30,1952.

JOHN W .

SNYDER,

Secreiary of ihe Treasuryo

288

1952 REPORT OF THE SECRETARY OF THE TREASURY
TABLE A.—UNITED STATES SAVINGS BONDS—SERIES J
TABLE OF R E D E M P T I O N VALUES AND INVESTMENT YIELDS

Table showing: (1) How United States savings honds of Series J, 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 ihe
beginning of each half-year period; and (3) ihe approximate investment yield on the
current redemption value from the beginning of each half-year period to maturiiy.
Yields are expressed in terms of rate percent per annum, compounded semiannually.
Maturity value..
Issueprice

Period after issue
date

First Myear
M t o I year
1 to IM years
IMto 2 years
2 to 2M years..
2M to 3 years
3 to 3M years
3M to 4 years
4 to 4M years
4M to 5 years
6to5i.i years
6M to Oyears
6 to 6M years
6M to 7 years
7 to 7M years
7M to 8 years
8 to 8M years
8M to 9 years
9 to 9M years
9Mto 10 years
10 to lOM years
lOMto 11 years
11 to IIM years
IIM to 12 years
Maturity value (12
years from issue
date)
-

$25.00 $100.00 $500.00
18.00
72.00 360.00

$1,000
720

$5,000 $10,000 $100,000
3,600
7,200 72,000

(1) Redemption values durmg each half-year period
(Values increase on first day of period shown)

$72.40 $362.00
72.90 364.50
73.50 367. 50
74.20 371.00
76.00 375.00
75.90 379.50
76.80 384.00
77.80 389.00
78.90 394.50
80.00 400.00
81.20 406. 00
82.40 412.00
83.70 418. 50
85.00 425.00
86.40 432.00
87.80 439.00
89.20 446.00
90.60 453.00
92.10 460. 60
93.60 468 00
95.20 476.00
96.80 484.00
98.40 492.00

$724

^25.00 $100.00 $500.00

$1,000

18.22
18.37
18.55
18.75
18.97
19.20
19.45
19.72
20.00
20.30
20.60
20.92
21.25
21.60
21.95
22.30
22.66
23.02
23.40
23.80
24.20
24.60

729
735
742
760
759
768
778
789
800
812
824
837
850
864
878
892
906
921
936
952
968
984

$7,240
7,290
7,360
7,420
7,600
7,590
7,680
7,780
7,890
8,000
8,120
8,240
8,370
8,600
8,640
8,780
8,920
9,060
9,210
9,360
9, 520
9,680
9,840

$72,400
72,900
73, 600
74,200
75,000
75,900
76,800
77,800
78,900
80,000
81,200
82,400
83,700
85,000
86,400
87,800
89,200
90,600
92,100
93,600
95,200
96,800
98,400

1.11
1.26
1.38
1.61
1.64
1.77
1.85
1.95
2.04
2.12
2.20
2.26
2.33
2.39
2.45
2.60
2.64
2.67
2.61
2.64
2.68
2.71
2.73

$5,000 $10,000

$100,000

2.76

$3,620
3,645
3,675
3,710
3,750
3,796
3,840
3,890
3,945
4,000
4,060
4,120
4,185
4,250
4,320
4,390
4,460
4,530
4,605
4,680
4,760
4,840
4,920

1 Calculated on basis of $1,000 bond (face value).
' Approximate investment yield for entire period from issuance to maturity.

(2) On purchase price
from issue
date to
beginning
of each
half-year
period
Percent

Not redeemable.

m. 10

Approximate investment yield *
(3) On current redemption
value from
beginning
of each
half-year
period t o '
maturity
Percent
3 2.76
2.83
2.89
2.96
3.01
3.05
3.09
3.13
3.16
3.18
3.21
3.23
3.25
3.26
3.28
3.28
3.28
3.29
3.32
3.32
3.33
3.31
3.28
3.25

289

EXHIBITS
TABLE B—UNITED STATES SAVINGS BONDS—SERIES K
TABLE O F R E D E M P T I O N VALUES AND INVESTMENT YIELDS

Table showing: (1) How United States savings bonds of Series K (paying a current
return ai the rate of 2.76 percent per annum on the purchase price, payable semiannually) change in redemption value, by denominations, during successive halfyear periods following issue; (2) the approximate investment yield on ihe 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 ihe beginning of each
half-year period to maturity. Yields are expressed in terms of rate percent per
annum, compounded semiannually, and take into account the current return.
Maturity value.
Issueprice

$500.00
600.00

$1,000
1,000

$5,000
6,000

$10,000
10,000

$100,000
100,000

(2) On purchase price
from issue
(1)'Redemption values during each half-year^period
date to
(Values change on first day of period shown)
beginning
of each
half-year
period

Period after issue date

First M y e a r . . . .
M to 1 year
1 to 1^^ years
l}i to 2 years.
2 to 2M years.
2V^ to 3 years
3 to 3M years
3M to 4 years
4 to 4M years
41,^ to 5 years
6 to 5V^ years
5 ^ to 6 years.
6 to 6M years
6M to 7 years
7 to 7M years
7M to 8 years..
8 to 8M years..8li to 9 years
9 to 9M years
9M to 10 years...
10 to lOM years
lOM to 11 years
11 to UM years
UM to 12 years
Maturity value (12 years
from issue date)

Percent

Not redeemable..
$496.00
492. 50
489. 50487. 50
485. 50
484. 50
483. 50
483. 00
483.00
483. 50
484.00
484. 50
485.00
486.00
487.00
488.00
489.00
490. 50
492.00
493. 50
495.00
496. 50
498.00
$500.00

$992

$4,960

978
981
984
987
990
993
996

4,880
4,890
4,905
4,920
4,935
4,950
4,965
4,980

$9, 920
9,850
9,790
9,750
9,710
9, 690
9,670
9,660
9,660
9,670
9,680
9,690
9,700
9,720
9,740
9,760
9,780
9,810
9,840
9,870
9,900
9,930
9,960

$1,000

$5,000

$10,000

4,925
985
4,895
979
4,875
975
4,855
971
969 ' 4,845
4,835
967
4,830
966
4,830
966
4,835
967
4,840
968
4,845
969
4,850
970
4,860
972
4,870
974
, 976

'"$99,200
98,500
97,900
97, 500
97,100
96,900
96, 700
96, 600
96, 600
96, 700
96,800
96,900
97,000
97,200
97,400
97, 600
97,800
98,100
98,400
98, 700
99,000
99,300
99,600

1.16
1.26
1.37
1.62
1.62
1.76
1.84
1.94
2.03
2.13
2.21
2.27
2.33
2.39
2.44
2.49
2.53
2.57
2.61
2.65
2.68
2.70
2.73

$100,000

2.76

1 Calculated on basis of $1,000 bond (face value).
2 Approximate investment yield for entire period from issuance to maturity.

221052—53-

Approximate investment yield ^

-20

(3) On current redemption
value from
beginning
of each
half-year
period to
maturity .
Percent
2 2.76
2.84
2.92
2.99
3.05
3.12
3.16
3.21
. 3.25
3.27
3.29
3.31
3.33
3.36
3.37
3.39
3.41
3.43
3.43
3.43
3.44
3.46
3.48
3.67

290

1952 REPORT OF THE SECRETARY OF THE TREASURY

Exhibit 20.—Seventh revision, May 21, 1952, of Department Circular No. 530,
regulations governing United States savings bonds
TREASURY DEPARTMENT,

Washington, May 21, 1952.
To Owners of United States Savings Bonds and Others Concerned:,
Pursuant to Section 22 of the Second Liberty Bond. Act, as amended. (49 Stat.
21, as amended; 31 U. S. C. 757c), Department Circular No. 530, Sixth Revision,
dated February 13, 1945 (31 CFR 315), as amended, is hereby further aniended
and issued as a Seventh Revision to read as follows:*
SUBPART

A—APPLICABILITY

SEC. 315.1. Applicdbility of regulation's.—These regulations, published for the
information and guidance of all concerned, apply generally to all United States
savings b.onds of all series of whatever designation and bearing any issue dates
whatever, except as otherwise specifically provided herein. They become effective with respect to bonds of Series H on June 1, 1952.
'

SUBPART B—REGISTRATION

SEC. 315.2. General.—United States savings bonds are issued only in registered
forihi The name and post office (mailing) 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 authprized
issuing agent. The form of registration used must express the actual ownership
of and interest in the bond and, except as otherwise specifically provided in these
regulations, will be considered as conclusive of siich ownership and interest. The
Treasury Department will recognize no notices of adverse claims to savings bonds
and will enter no stpppages or caveats against.payment in accordance with the
registration of the bonds'. No designation of an attorney, agent, or other representative to request or.receive payment on behialf 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 the Canal Zone), citizens of the United States temporarily
residing abroad, and nonresident aliens employed in the United States by the
Federal Government or an agency thereof may he named as owners, coowners, or
designated beneficiaries of savings bonds, whether on original issue or authorized
reissue, except that such'persons may name as coowners or beneficiaries of their
bonds citizens,of the .United States permanently residing abroad or nonresident
aliens who are not citizens of enemy nations. Citizens of the United States
permanently residing abroad and nonresident aliens who become entitled to bonds
under these regulations, by right of survivorship or otherwise, will not have the
right to reissue but will have the right (1) to retain the bonds without change of
registration, (2) to receive interest on current income bonds, and (3) to redeem
any bonds in accordance with their terms.i
SEC. 315.4. Authorized forms of registration, Series E and H, and general pro^
visions relating to their use.—
(a) Forms of registration.—Except as provided in (4) hereof, bonds of Series E
and H may be registered only in the names of individuals (natural persons),
whether adults or minors, in their own right in one of the following forms-:
(1) One person.—In the name of one person, for example-:
"John A. Jones."
(2) Two persons—Coownership form.—In the names, of two (but not more
than two) persons in the alternative as coowners, for example:
"John A. Jones OR Mrs. Ella S. Jones."
No other form of registration establishing coownership is authorized.
» Under the terms of Executive Order No. 8389, as amended, and the regulations'issued thereunder, bonds
may not be issued or paid to nationals (as defined in said order) of blocked countries or to nationals of enemycountries, whether or not residing in the United States, unless_such nationals are generally or specially
licensed under the terms of the order.

EXHIBITS

291

(3) Two persons—Beneficiary form:—In the name'of one (but not more than
one) person, payable, on death to one (but not more than one) other person, for
example:
"John A. Jones, payable on death to Miss Mary E. Jones." .
"Payable on death to" may be abbreviated as "p. o. d." The first person
named is hereinafter ref erred, to as the owner oi* registered owner,, and the
second person named as the beneficiary or designated beneficiary.(4) Treasurer of ihe United States as coowner or beneficiary.^—In the name, .of
the owner with the. Treasurer of the United States as coowner or as beneficiary.
A bond so registered may not be reissued to eliminate pr change the .coowner or
the beneficiary, and upon the death of the owner will become the, property of
the United States.
.,
(b). General provisions relating to forms of registration.—
. (1) Names and titles.—The full name of the owner, and that of: the coowner or
beneficiary, if any, should be used and should be the name by vvhich the person is
ordinarily known or that under which he does business; if there are two given
names the initial of one may bemused, and if a person is habitually known or does
business by initials only of his given names, registration may be in such form., • In
the case of women, the name should be preceded by "Miss," or "Mrs.'Vand a
married woman's own given name should be used, not that of her husband, for
example, "Mrs. Mary A. Jones," not "Mrs. Frank B. Jones." The name.may
by preceded by any applicable title such as "Dr.", "Rev.", etc. The use .of
suffixes such as "Sr." and "Jr." is desirable whenever applicable. Suffixes such
as "M. D." and "D. D." Ihay also be used.
• .
: ;
(2) Minors.—A minor, whether or not under legal guardianship,.;may be
named as owner, coowner, or beneficiary on bonds purchased by another person
with such person's own funds. ,A minor.may name a.coowner or beneficiary on
bonds purchased by him from his wages, earnings,,or other money in his possession. But bonds.purchased by another person with funds already belonging.to a,
minor should be registered in the name of the minor alone, follov^ed by. an appropriate reference if the minor is under legal guardianship, as, for.example,. "John
Smith, a minor under legal guardianship", or "John Smith, a.minor under legal
guardianship of Henry C. Smith."
.
.
: •. •, .
(3) Incompeients.—Bonds should not be registered in the name of-an incompetent, who is defined for this purpose as a person under disability for reasons other
than minority, unless a legal representative of his estate has been appointed. If
a representative has been appointed the bonds should be registered in the name of
the incompetent followed by the addition of appropriate words, for. example,
"Frank Jones,.an incompetent under legal guardianship (or conservatorship)" or
"Frank Jones, an incompetent .under legal guardianship (or conservatorship) of
Henry Smith."
(4). Terms.—The terms "guardian", "legal guardian", or "legal representative",
as. used in this subpart, refer to. a guardian or representative of the estate appointed
by a court or otherwise legally qualified and to a custodian duly designated by the
Veterans Administration. These terms do not refer to. a • voluntary or natural
guardian such as a parent, including a parent to whom- custody of .a child has been
awarded through divorce proceedings or a parent by adoption through court
proceedings.
SEC. 315,5. Authorized forms of registration, Series F, G, J, -and i^,-^B,bnds of
Series F, G, J, and K,may be registered in the same forms and subject to the same
conditions as set forth in section 315.4,, and. .in the names of .fiduciaries, corporations, associations, and partnerships, as owners (not as coowners or beneficiaries),
except as follows: (1) they may not be registered in the name ofa trusi:ee under
a statute, regulation, agreement, or other instrument where the funds used represent merely security for the performance of a duty or obhgation, and (2) they may
not be registered in the name of a commercial bank, except as a fiduciary, unless
thie bonds have been or should- be specifically offered for sale to. such banks for
their own account; a commercial bank is defined for this purpose as one accepting
demand deposits.^' The following forms are authorized for such registration:. ,
(a) Executors, administrators, guardians, etc.—In the name of one or more exec2 There have been occasional special offerings of bonds of Series F and G which, for limited periods, com,mercial banks (haviiig savings deposits or issuing certain time certificates of deposit) were eligible to purchase
for their own account. Examples of such special offerings are set forth in Treasury Department Circulars
Nos. 729, 730, 740, 741, 755, 766, and in the Seventh Amendmentto Department Circular No. 630,-Sixth Revision. There is no present authorization for commercial banks to purchase savings bonds for their own
account.

292

1952 REPORT OF THE SECRETARY OF THE TREASURY

utors, administrators, guardians, conservators, or other representatives of a single
estate appointed by a court of competent jurisdiction or otherwise legally quahfied,
all of whose names must be included in the registration, followed by adequate
identifying reference to the estate, for example:
"John Smith, executor of the will (or administrator of the estate) of Henry
J. Smith, deceased," or "William C. Jones, guardian (or conservator, etc.)
of the estate of James D. Brown, a minor (or an incompetent)."
Bonds belonging to a trust which an executor is authorized to administer under the
terms of the will, although he is not named as trustee, may be registered in accordance with the following example:
"John Smith, executor of the will of Henry J. Smith, deceased, in trust for
Mrs. Jane Smith, with remainder over."
If a guardian or other legal representative holds a common fund for the account of
two or more estates or wards, bonds should be registered in the name of the representative for each such estate or ward separately, even though the representative
was appointed in a single proceeding. A father or mother, as such, or as natural
guardian, is not considered a fiduciary for purposes of registration.
(b) Trustees.—In the name and title of the trustee, or trustees, of a single duly
constituted trust estate (which will be considered as an entity) substantially in
accordance with the forms set forth in subparagraphs (1) to (5) including, unless
otherwise indicated therein, an adequate identifying reference to the trust instrument or other authority creating the trust. In each instance the trustee, or all the
trustees if there are more than one, should be designated by name and title except
as provided in subparagraphs (3) to (5) and as follows: If the trustees are too
numerous to be designated in the inscription by names and title, registration may
be in the form, for example, "John Smith, Henry Jones, et al., trustees under the
will of William C. Brown, deceased", or "Trustees under the will of WiUiam C.
Brown, deceased;" if the instrument creating the trust authorizes the trustees to
act as a board, registration may be by title only, as, for example, "Trustees of the
Lotus Club, Washington, Indiana, under Article X of its constitution." The
following forms-of registration are authorized under this subsection:
(1) Trustee under will, deed of trust, or similar instrument.—In the name of the
trustee or trustees under a will, deed of trust, agreement, or similar instrument,
for example:
"John C. Brown and the First National Bank, trustees under the will of
Henry C. Brown, deceased," or "The Second National Bank, trustee under
an agreement with George E. White, dated February 1, 1935."
(2) Trustees of pension, retirement, or similar fund.—In the names and title, or
title alone, of trustees of a pension or retirement fund or of an investment, insurance, annuity, or similar fund or trust, but in all such cases the fund will be regarded
as an entity regardless of the number of beneficiaries or the manner in which their
respective interests are estabhshed or determined. Segregation of individual
shares as a matter of bookkeeping or as a result of individual agreements with
beneficiaries or the express designation of individual shares as separate trusts will
not operate to constitute separate trusts under these regulations. Such trusts
will not be deemed to terminate, in whole or in part, upon the death of any person,
for the purpose of redemption at par under the provisions of section 315.23 (c).
(3) Trustees or board of trustees of lodge, church, society, or similar organization.—
In the title of the trustees or the board of trustees who hold in trust the legal title
to the property of a lodge, church, society, or similar organization, followed
preferably by reference to the appropriate provisions of its constitution or bylaws,
for example:
"Trustees of Jamestown Lodge No. 1000, Benevolent and Protective Order
of Elks, under Section 10 of its bylaws;" "Trustees of the First Baptist
Church, Akron, Ohio, acting as a board under Section 15 of its bylaws;"
or "Board of Trustees of the Lotus Club, Washington, Indiana, under
Article X of its constitution."
(4) Public officers, corporations or bodies as trustees.—In the titles of public
oflScers or the names of pubhc corporations or public bodies acting as trustees
under express authority of law, for example:
"Sinking Fund Commission, trustee of State Highway Certificates of Indebtedness Sinking Fund, under Section 5972, Code of South Carolina;"
or "Warden, Illinois State Penitentiary, Joliet Branch, Trustee of Inmates'
Amusement Fund, under Chapter 23, Sections 34a and 34b, Illinois Revised Statutes, 1941."
(5) School officers ds trustees for henefit of student body, etc.—In the title of a

EXHIBITS

293

principal or other officer of a public, private, or parochial school, as trustee for
the benefit of the student body, or a class, group or activity thereof, for example:
"Principal, Western High School, in trust for Class of 1945 Library Fund."
A written agreement of trust will not be required if the amount to be purchased
does not exceed $250 (maturity value).
(c) Private organizations (corporations, associations, partnerships, etc.).—In the
name of any private organization (for commercial banks see section 315.5), using
in each case the full legal name of the organization without mention of any officer
or member by name or title, but making reference, if desired, to a particular book
account or fund (not a trust), as follows:
(1) ^ corporation.—A business, fraternal, religious or other private corporation, followed, preferably, by the words "a corporation" (unless.the fact of incorporation is shown in the name), for example:
"Smith Manufacturing Company, a corporation;" or "Jones and Brown,
Inc."
(2) An unincorporated association.—An unincorporated lodge, society, or
similar self-governing association, followed, preferably, by the words "an unincorporated association," for example, "The Lotus Club, an unincorporated association." The term "an unincorporated association," should not be used to
describe a trust fund, a partnership, or a business conducted under a trade name.
(3) A partnership.—A partnership, considered as an entity, followed by the
words "a partnership," for example:
"Smith and Brown, a partnership," or "Acme Novelty Company, a partnership."
(4) Other organizations.—A church, hospital, home, school, or similar institution, regardless of the manner in which it is organized or governed or title to its
property is held, for example:
"Shriners' Hospital for Crippled Children, St. Louis, Missouri," "St. Mary's
Roman Catholic Church, Albany, New York," or "Rodeph Shalom Sunday
School, Philadelphia, Pennsylvania."
(d) States and public corporations.—In the full legal name or title of the
owner or custodian of public funds, other than trust funds, as follows:
(1) Any sovereignty, as a State, or any public corporation, as a county, city,
town or school district, for example:
"State of Maine," or "Town of Rye, New York."
(2) Any board, commission, or other pubhc body duly constituted by law, for
example:
"Maryland State Highway Commission."
(3) Any public officer designated by title only, for example:
"Treasurer, Ciby of Chicago."
The registration may include reference, if desired, to a particular book account or
fund (not a trust).
SEC. 315.6. Unauthorized registration.—Savings bonds inscribed in a form not
' substantially in agreement with those authorized by this subpart will not be considered as validly issued and will be accepted only for a refund of the purchase
price, except in those cases in which reissue can be made under the provisions of
these regulations.
SEC. 315.7. Forms of registration on reissue.—Bonds reissued under the provisions of these regulations may be issued in any form of registration permitted by
the regulations in effect on the date of original issue, with respect to bonds of that
series.
SUBPART C—LIMITATION ON HOLDINGS

SEC. 315.8. Amount which may be held.—The amounts of savings bonds of Series
E, F, G, H, J, and K issued during any one calendar year that may be held by
any one person at any one time are limited as follows:
(a) Series E.—$5,000 (maturity value) for each calendar year up to and including the calendar year 1947, $10,000 (maturity value) for the calendar years
1948 to 1951, inclusive, and $20,000 for the calendar year 1952 and each calendar
year thereafter.
(b) Series F and G.—$50,000 (issue price) for the calendar year 1941, and
$100,000 (issue price) for each calendar year thereafter, of either series or of the
combined aggregate of both, except that institutional investors of certain designated classes which were specifically authorized in official circulars to purchase
^eri^s F and Series G bonds in excess of $100,000 (issue price), may hold the

294

1952 REPORT OF THE SECRETARY OF THE TREASURY

bonds purchased pursuant to such authorizations in addition to the amounts
which they are, otherwise authorized to hold.3
(c) /Series H.—$20,000 (maturity value) for each calendar year.
(d) Series / ond K:—$200,000 (issue price) for each calendar year, of either
series or of the combined aggregate of both.
'SEb. 315.9. Computation of amount.—^In computing the amount of savings bonds
of any one series issued during aiiy one calendar year held by any one person at
any. one time fpr 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 term "persori" shall mean any legal entity, including but not limited
to an individual, a partnership, a corporation (public or private), an unincorporated association or a trust estate, and the holdings of each person, individually
arid in a fiduciary capacity, shall be computed separately.
(h) In the case of bonds of Series E and H, the computation shall be based upon
maturity values. ' In the case of bonds of Series'F, G, J, and K, the computation
shall be based upon issue prices.
.
.
'
.
(c) Except as provided, in subsection (d), there must be taken into account:
(1) all bonds .originally'issued to and registered in the name bf that person alone;
and (2) all bonds originally issued to and registered in the name of that person as
coowner or reissued, at the request of the original owner,, to add the name of that
person as coowner or to designate him as coowner instead'of as beneficiary, except
that the amount of bonds bf Series E and H held in coownership form may be applied to the holdings of either of the coowners, but will not be applied to both, or
the ariiount may be apportioned betweeri them.
(d) There need not be taken intb account: (1) bonds of which that person is
merely the designated beneficiary; (2) bonds in which his'interest is only that of a.
beneficiary under, a trust; (3) those to which he is entitled as sui*viving designated
beneficiary upon the death of the registered owner, as an heir or legatee of the
deceased,registered owner, or by, virtue ofthe termination of a trust or the happening of any other event; (4) with respect to bonds of Series E, those purchased with
the proceeds of matured bonds of Series A, Series CJ-1938, Series D-1939, Series
D-1940 arid Series D-1941,.where such matured bonds were.presented by an individual (natural person in.his own right) owner or coowner for that purpose and
the Series E bonds are registered in his name in any form of registration authorized
for that series; (5) with respect to bonds of Series G, those issued in exchange for
matured bonds of Series E under the provisions of Treasury Department Circular
No. 885, as amended; (6) with respect to.bonds of Series K, those issued in ex/
change for matured bonds' of Series E under the provisions of Treasury Depart- {
ment Circular No. 906; or (7) an amount of bonds of Series E or Series H equal (
+.n
n.nv PvrifiSR
h p -rpiRRnp
to any
excess bnlHIirto-s
holdings -whir:}!
which xvmilri
would nf.hprwisp.
otherwise hp
be p.rPfl.tpH
created hbyv tthe
reissue nf
bf hnriHs
borids /
of that series registered in the name of that person to eliminate the name of /
another person as coowner under the provisions of section 315.45 (b) (1).
(e) Nothing herein cpntained shall be construed to invalidate any holdings ^'
within or, except as provided iri subsection (c) above, to validate any holdings in \
excess of the authorized limits, as computed under the regulations in force at the '
time such holdings were acquired.
•' SEC. 315.10. Disposition, of excess.—If any person at any time acquires saVings
bonds issubd during any oriie calendar year in excess of the prescribed amount, the
excess must be immediately surrendered for' refund of the purchase price, less (in
the case of current income bonds) any interest which may have been paid thereon,'.
or for such other adjustment as-may be possible.
SUBPART D—LIMITATION ON TRANSFER AND JUDICIAL PROCEEDINGS

SEC. 315.11. Not transferablk-^Sa.yings bonds are not transferable and are
payable only to the' owners named thereon, except in case of the disability'or
death of the owner, authorized reissue, or as otherwise specifically provided'in
this subpart, but in any event only in accord-aince with the provisions of these
regulations. A savings bond may not be hypothecated or pledged as collateral
for a loan or used as security for the performance of an obligation, except as
provided in section 315.12.
3 There have been special offerings on-the occasion of which institutional investors have been permitted
to purchase bonds of Series F and G in excess of the regular iannual limitation (see tho Seventh arheridment
to Department Circular No. 530, Sixth revision) and also special offerings (see footnote 2, exhibit 20) in
which commercial banks (that is, banks accepthig demand deposits) have been permitted to purchase
liuiitied anippjits of such bonds for iheir own account, although ordinarily Lhey are not eligible to do so.

EXHIBITS

295

.SEC. 315.12. Pledge with the Secretary of the Treasury or Federal Reserve Bariks.-.—
A sayings bond may be pledged by the registered owner in lieu of surety under
the provisions of Department Circular No. 154, as amended, if the bond approving
officer is the Secretary of the Treasury, in which case an irrevocable power of
attorney shall be executed authorizing the Secretary of the Treasury to request
payment. A savings bond may also be deposited as security with a Federal
Reserve Bank under the provisions of Department Circular No. 657 by an
institution certified under that circular as an issuing agent for savings bonds of
Series E.
SEC. 315.13. Judicial proceedings (judgment, creditors, trustees in bankruptcy,
receivers of insolvents^ estates, and conflicting claimants).—A claim against an
owner or coowner of a savings bond and conflicting claims as to owriership of or
interest in such bond as between coowners or the registered owner and a designated
beneficiary, will be recognized when established by valid judicialproceedings and
payment br reissue wilf be made, upon presentation and surrendier of the bond,
except as follows:
^^
(1) No such proceedings will be recognized if they would give effect to an
attempted voluntary transfer inter vivos of the bond or would defeat or impair
the rights of survivorship conferred by these regulations upon a surviving coowner
or beneficiary.
•'..
:.
(2). Ajudgment creditor, a trustee in bankruptcy, or a receiver of an insolvent's
estate.will have the right to payment (but not to reissue) and a judgment creditor
.vwill be limited.to payment,at the redemption value current thirty days after the
. termination of.the judicial proceedings or current at the time the bond is received,
.whichever is smaller. .
\ ,>
.
(3) If a debtor, or bankrupt, or insqlyent, is not the sole owner of the bond,
payment will be made only to the extent of his interest therein, which must.be
determined by the court or otherwise validly established.
A divorce decree ratifying or confixming a property agreement between husband
•and wife or ptherwise settling their respective interests in savings bonds, :wiU.be
recognized'and will not be regarded as a proceeding giving effect to an attempted
voluntary; .transfer for the purpose of this section.
SEC. 31*5.14. Evidence necessary.—To establish the validity,of judicialproceedings there must be submitted a certified copy of a final judgment or decree of
court knd of any necessary supplementary proceedings. If the judgment or
decree of court .was rendered more than six months prior to presentation of the
bond there must also .be submitted a certificate from the clerk of the. court, under
,the.court's seal and dated within six months of the presentation of the; bond, ,
showing that the judgment or decree is in fullforce and effect. A trustee in
barikruptcy.should submit proof of.his authority in.the form of a certificate from
. the referee showing that he is the duly elected and qualified trustee, together with
a certificate from the clerk of the United States District Court of the particular
district, under, seal, showing the incumbency of the referee and authenticating
his signature. . !
, ,
.
;
SEC. 315.15. Notice of pending proceedings not accepted.—1>\either the Treasury
Pepartment nor any agency for the issue, reissue,-or redemption of sayings bonds
will accept notices of adverse claims or of pending judicial proceedings, or undertake
to protect the interests of litigants who do not have possession of the bonds.
SUBPART E-:—SAFEKEEPING FACILITIES

•

. .

SEC. 315.16. Safekeeping of bonds,,—A savings bond will be held in safekeeping,
without charge, by the Secretary of the Treasury if the holder so desires. In
such conneJction the Secretary will utilize the fajcilities of the Federial Reserve
Banks, as fiscal agents of the. United States,^ and. those of-the Treasurer of the
United States'. Application forms for safekeeping may.be secured, frbin postmasters, Federal. Reserve Banks, or the Treasury Departirierit.
SUBPART F — L O S T , STOLEN, MUTILATED, DEFACED,, OR DESTROYED BONDS ,

SEC. 315/17. Relief in case of loss, etc., after receipt by oit;ner.—Under the provisions of Sec. 8, 50 Stat. 481, as amended (31 U. S. C.''738a), relief either by the
issue of a substitute bond or by payment may be given in case of the loss, theft,
•, destruction, mutilation, or defacement of a savings borid after receipt by the.owner
.< Safekeeping facilities may be offered at,some branchesof, Federal Reserve Banks, and in such connection
ah inquiry may be addressed to the birahch.
•'•
..;-, . .,..,..'

296

1952 REPORT OF THE SECRETARY OF THE TREASURY

or his representative. In any such case immediate notice of the facts, together
with a complete description of the bond (including series, year of issue, serial
number, and name and address of the registered owner) should be given to the
Bureau of the Public Debt, Division of Loans and Currency, 536 South Clark
Street, Chicago 5, Illinois. That division will thereupon furnish an appropriate
form and full instructions for presenting the evidence necessary to secure relief
under the law. If such bond is subsequently recovered, immediate notice of
such recovery should be given to the Division of Loans and Currency (at the
address above) in order that delay may be avoided upon a later presentation of
the bond for payment or authorized reissue.
SEC. 315.18. Relief in case of nonreceipt.—If a savings bond, on original issue or
on reissue, is not received from the issuing agent or agency by the registered
owner or other person to whom the bond was to be delivered, the issuing agent
or agency should be notified as promptly as possible and given all the information
available in regard to the transaction. Appropriate instructions and fornis, if
necessary, will then be furnished the owner reporting nonreceipt.
SUBPART G—^INTEREST

SEC. 315.19. General.—United States savings bonds are issued in two forms:
(1) appreciation bonds, issued on a discount basis and redeemable before maturity
at increasing fixed redemption values; and (2) current income bonds, issued at
par, bearing interest payable semiannually ^ and redeemable before maturity at
par or at fixed redemption values less than par, as hereinafter provided. Bonds
of Series E, F, and J are appreciation bonds, and those of Series G, H, and K are
current income bonds.
. SEC. 315.20. Appreciation honds.—All savings bonds issued on a discount basis
increase in redemption value at the end of the first year or half-year ^ from issue
date and at the end of each successive half-year period thereafter until their
maturity, when the full face amount becomes payable. Bonds of Series E will
continue to increase in redemption value after maturity for ten years in accordance
with the provisions of Department Circular No. 653, Third Revision, and tables
of redemption values appended thereto. The increment in value on appreciation
bonds is payable only on redemption of the bonds, whether before, at, or after
maturity.
SEC. 315.21. Current income bonds.—The interest on current income bonds is
payable semiannually,^ beginning six months from issue date. Except for
redemption at par as provided in section 315.23 (c) of subpart H, full advantage
of interest at the rates specified on bonds of Series G or K may be secured only
if the bonds are held to maturity; if they are redeemed before maturity at current
redemption values the difference between the face .or full maturity value and the
current redemption value then payable in accordance with the table printed on
each bond will represent an adjustment of interest for the rate appropriate for
the shorter term, as set forth in the tables appended to the circulars announcing
the issue of such bonds. Interest payments on bonds of Series H will be based
on a graduated scale of amounts (as shown in the table at the end of Treasury
Department Circular No. 905), and if the bonds are redeemed before maturity
the investment yield for the period the bonds are held will be at a lesser rate
than if held until maturity.
(a) Method of interest payments.—Interest due on a current income bond will
be paid on each interest payment date by check drawn to the order of the person
or persons in whose name the bond is inscribed, in the same form as their names
appear in the inscription on the bond, except that in the case of a bond registered
in the form "A, payable on death to B", the check will be drawn to the order of
A alone until the Bureau of the Public Debt, Division of Loans and Currency, 536
South Clark Street, Chicago 5, Illinois, receives notice of A's death, from which
date the payment of interest will be suspended until such time as the bond is
presented for payment or reissue. Interest so withheld will be paid to the person
found to be entitled to the bond. Checks issued in payment of interest on a bond
registered in the names of coowners will be drawn to the order of "A or B " and
will be mailed to the address of record of the payee first named unless otherwise
,» The final interest on bonds of Series H covers a period of 2 months, from 9H years to matarity. .
« Series E bonds issued on or'before April 30,1952, and Series F bonds, the sale of which terminated April
30,1952, increase in redemption value at the end of the first year from issue date; Series E bonds issued on;::.and
after May, 1,1962, and Series J bonds, the sale of which began on May 1,1952, increase in redemption, .value
at the end of the first Aa//-y«ar from issue date.

EXHIBITS

297

specifically directed or until the Bureau of the Pubhc Debt, Division of Loans
and Currency, 536 South Clark Street, Chicago 5, Illinois, receives notice of his
death. Upon receipt of notice of the death of the coowner to whom interest is
being mailed the interest will be mailed to the other coowner, if hving, or, if not,
will be held subject to the claim of the representatives of or persons entitled to the
estate of the last surviving coowner.
(b) Change of address.—An owner or coowner of current income bonds should
promptly notify the Bureau of the Public Debt, Division of Loans and Currency,
536 South Clark Street, Chicago 5, Illinois, of any change in the address for delivery of interest checks. The notice should refer to all bonds for which it is
desired that the address be changed and should describe each bond by date,
serial number, series (including year of issue), and inscription appearing on the
face of the bond.
(c) Reissue during interest period.—If a current income bond is reissued for
any reason between interest payment dates, interest for the entire period \\all be
paid on the next interest payment date, by check drawn to the order of the person
in whose name the bond is reissued- Ordinarily, if a bond is received for reissue
less than one month prior to an interest payment date, reissue cannot be effected
until after such interest payment date.
(d) Termination of interest.—Interest on current income bonds will cease at
maturity, or, in case of redemption before maturity, at the end'of the interest
period next preceding the date of redemption, except that, if the date of redemption falls on an interest payment date, interest will cease on that date. For
example, if a bond on which interest is payable on January 1 and July 1 is redeemed on September 1, interest will cease on July 1 and no adjustment will be
made on account of interest for the period July 1 to September 1. In case of
authorized reissue in another form of registration, the interest on the original
bond will cease on the last day of the interest period next preceding the date of
reissue and interest on the new bond will begin on the following day. The same
rules apply in case of partial redemption or partial reissue with respect to the
amount redeemed or reissued.
(e) Endorsement of checks.—Interest checks must be endorsed by the payee,
either personally or by an attorney in fact, in accordance with the requirements
of the Treasurer of the United States. A form for the appointment of such
attorney may be obtained from the Treasurer of the United States or from any
Federal Reserve Bank. In case of the death of the payee the check may be
endorsed by the legal representative, if any, of his estate. If no legal representative has been or is to be appointed, and if the amount due from the United States
does not exceed $500, the Treasurer of the United States, Washington 25, D. C ,
or a Federal Reserve Bank, will,"upon request, furnish special instructions.
(/) Nonreceipt or loss of check.—If an interest check is not received or is lost
after receipt, the Bureau of the Public Debt, Division of Loans and Currency,
536 South Clark Street, Chicago 5, Ilhnois, should be notified of the facts and
should be given information, concerning the amount, number, and inscription of
the bonds, as well as a description of the check, if possible, in case of loss after the
check is received. Upon receipt of this information appropriate instructions wiU
be given.
SUBPART H — G E N E R A L PAYMENT AND REDEMPTION PROVISIONS

SBC. 315.22. Payment at or after maturity.—Owners of bonds of Series E have
the option of receiving the full face or maturity value thereof at maturity or of
retaining such bonds after maturity for a further period of not more than 10
years and earning interest upon the maturity values thereof, at rates specified in
Department Circular No. 653, Third Revision, and the tables of redemption
values appended thereto. Such interest will accrue at the end of each half-year
period following maturity, until the end of the 10-year period. A bond of any
series other than Series E will be paid or redeemed at or after maturity at its full
face or maturity value only, pursuant to its terms. In any case payment will
be made only following presentation and surrender of the bond for that purpose.
The request for payment must be duly signed and certified as^ jprovided herein,
unless (1) the bond is presented by an individual owner or coowner to an incorporated bank or trust company or other paying agent, as provided (for bonds of
Series A to E only) in section 315.29, or (2) the bond is accepted by any such
paying agent for payment, or for presentation to a Federal Reserve Bank for

298

1952 REPORT OF THE SECRETARY OF THE TREASURY

payment, without the owner's signature to the request for payment,^ as provided
(for bonds of any series) in Treasury Department Circular No. 888.
SEC. 315.23. Redemption before maturity.-Bursuant tb its terms, a savings bbndl
may not be called for redemption by the Secretary of the Treasury prior to*
maturity, but may be redeemed in whole or in part at the option of the owner,
prior to maturity, under the terms and conditions set forth in the offering circular
of each series and in accordance with the provisions of these regulations ifollowing
presentation and surrender as provided, in this subpart.
„ (a)' Series E.—A bond bf Series E will be redeemed at any time after two monthsfrom, the issue date without advance notice, at the appropriate redemption value;
as showri in the table printed on the bonds.
(b) Series F,G, H, J, and K.—A bond of Series H will be redeemed AT PARy
and a bond of Series F, G, J, or K will be redeemed at the appropriate redemption'
value as^ shbwri in the table printed on the bond, in either case after six months
from the issue date and on one month's notice in writing to (1) a Federal Reserve
Bank or branch, (2) the Bureau of the Pubhc Debt, Division of .Loans and Currency, 536 South Clark Street, Chicago 5, Ilhnois, or (3) the Treasury Department, Washington 25, D. C. Such notice may be given separately or by presenting and surrendering the bond with a duly executed request for paymentthereof.. Payment will be made as of the first day of the first month following
by at least one full calendar month the date of receipt of riotice. For example,^
if the notice is received on June 1, payment will be made as of July 1, but if notice
is received between June 2 and July 1, inclusive, payment will be made as of
Augu.st 1. If notice is given separately, the bond must be presented and surrendered with .a duly executed request for payment to the same agency to which
notice is given not less than 20 days before the date on which payment is to be
made. For example, if the notice is received on June 15, the bond should be
received not later than July 12. (See section 315.21 for provisions as to interest
in case current income bonds are redeemed prior to maturity.)
(c) Series G and. K: Redemption at par.—Bonds of Series G and K (but riot of
Series F or J) will be redeemed at par before maturity, after six months from the
issue date, at the option of the owners, on the first day of the first month following
by at least one full calendar month the date of receipt of notice of intention to
redeem, given as provided in subsection (h) hereof, under the following limitations
and conditions:
(1) Bonds of Series G and K may be so redeemed (i) upon the death of an
owrier or coowner, if a natural person, or (ii) in the case of bonds held by a trustee
or other fiduciary, upon the termination of the trust or other fiduciary estate by
reasori of the death of any person, except that if the trust or other fiduciary
estate is terminated only in part, redemption at par will be made to the extent
of not more than the pro rata, portion of the trust or fiduciary estate so terminated^
The notice of intention to redeem must specify that redemption at par is desired.
If desired and so stated in the request for payment or separate notice of intention
to redeem, payirientmay be postponed to the second interest payment date follbwing" the daite of death; otherwise, payment will be made in regular course. A
death certificsite or other competent proof of death must accompany the bonds or
the notice. In no case of redemption at par under the provisions of this paragraph will the owner be entitled to interest beyond the second interest payment
date following'the date of death.
(2) Bonds pf Series G and Series K issued in exchange for matured bonds of
Series E under the provisions of Department Circular No.' 885, as amended^ and!
pepartment Circular No. 906, respectively, may be so redeemed at par at .any
time.
.
(d) Withdrawal of request for redemption.—An owner who has presented and^
surrendered a savings bond to the Treasury Department or a Federal Reserve
Bank for payment with an appropriate request for payment may withdraw, such
request if\'notice of intent to withdraw is , given to and received by the same
agency to which the bond was presented, prior to the issuance of the check in
payment. IJnder these same conditions an executor or administrator may
withdraw .a,request for redemption executed by the owner and presented and sur-.
rendered to the. Treasury Departmerit or a Federal Reserve Bank prior to the
owner's d^ath, except where the presentation and surrender of the bond has cut
off the rights of survivorship under the provisions of subpart L or subpart M.
The terrii '.'presented and surrendered" as used in this subsection means tlie
actual receipt of the bond by the Treasury Department or a Federal Reserve Bank
/during the lifetime of the pwner.

EXHIBITS

299

SEC. 315.24. Form and execution of requests for payment.—Requests for payment
of savings bonds, unless otherwise authorized in a particular case, must be executed
on the form appearing on the back of the bond to be surrendered. Unless otherwise specifically requested, payment, pursuant to a duly executed request, will be
made on the earliest day.consistent with these regulations.
;
,: *
(a) Date of request.—Ordinarily, requests executed more than six months before
the date of receipt of a bond for payment will not be accepted.
• . (h) Identification and signature of owner.—The registered owner in whose name
the bond is inscribed, or such other person as may be entitled to payment under
the provisions of these regulations, must appear before one of the officers authorized
to certify requests for payment (see section 315.25), establish his identity and in
the presence of such officer sign the request for payment in ink, adding in the space
provided the address to which the check issued in payment is to be mailed....A
signature made by mark (X) must be witnessed.by at least one person in addition
to the certifying officer and must be attested by endorsement inthe blank, space,
substantially as follows: ''Witness to the above signature by mark", followed by
the signature and address of the witness. If the name of the registered.owner or
other person entitled to payment, as it appears in the registration or in evidence
on file at the Bureau of the Public Debt, Division of. Loans and Currency, has been
changed by marriage or in any other legal manner, the signature to the request
for payment should show both names and the manner in which the change was
made, for example, "Miss Mary T. Jones, now by marriage Mrs. Mary T. Smith",
or "Jung Smelt, now by court order John Smith." In case of a change of name
other than by marriage the request should be supported by satisfactory proof of
such change, unless already on file. No request signed in behalf of the owner or
person entitled to payment by an agent or a person acting, under a power of
attorney will be recognized by the Treasury Department except as provided in
section 315.12.
. .
. . .
(c) Certification of request.—After the request for payment has been signed by
the owner the certifying officer should complete and sign the certificate appearing
at the end of the form for request for payment, and the bond should then be preisented and surrendered as provided in section 315.28.
SEC. 315.25. Certifying officers.—The following-officers are authorized to certify
jequests for payment:
(a) At United States post offices.—Any postmaster, acting postmaster, or inspector in charge, or other post office official or clerk heretofore or hereafter designated for the purpose. One or more of these officials will be found at every
United States post office, classified branch, or station. A post office official or
clerk other than a postmaster, acting postmaster or inspector in charge, should
certify in the name of the postmaster or acting postmaster, followed by .his' qwn
signature and official title, for example, "John Doe, postmaster, by Richard Roe,
postal cashier." Signatures of these officers should be authenticated by a legible
imprint of the post office dating stamp.
"
.
.
(b) At banks, trust companies, and branches.—Any officer of anj'- bank or trust
company incorporated in the United States or its Territories (including Puerto
Rico), or domestic or foreign branch of such bank or trust company, including
those doing business in the Territories or possessions of. the United States under
Federal charter or organized under Federal law. Federal Reserve Banks, Federal
land banks, and Federal home loan banks; and any employee of any such bank or
trust company expressly authorized by the corporation for that purpose, who
should sign over the title "Designated Employee." Certifications by any of these
officers or designated employees should be authenticated by either a legible
impression of the corporate seal of the bank or trust company or, in the case of
banks or trust companies and their branches which are authorized and duly
qualified issuing agents for bonds of Series E, by a legible imprint of the issuing
agent's dating stamp.. Federal Reserve Agents and Assistant Federal Reserve
Agents, located at the several Federal Reserve Banks, are also authorized to certify
requests for payment.
...
(c) Issuing agents not hanks or trust companies.—Any officer of a corporation
not a bank or trust company, and of any other organization, which is a duly qualified issuing agent for bonds of Series E. All certifications by such officers must
ibe authenticated by a legible imprint of the issuing agent's dating stamp.
(d) Commissioned officers and warrant officers of the Armed Forces.—Commissioned
fofficers and warrant officers of the Armed Forces of the United .States, (including
rthe Army, Navy, Air Force, Marine Corps, and Coast Guard), but only for
imembers (and the families of members) of such forces and civihan,employees at

300

1952 REPORT OF THE SECRETARY OF THE TREASURY

posts or bases or stations (such certifying officer should indicate his rank and
state that the person signing the request is one of the class whose requests he is
authorized to certify).
(e) United States officials.—Judges, clerks, and deputy clerks of United States
courts, including United States district courts for the Territories, possessions, and
Canal Zone; United States Commissioners; United States attorneys; United States
collectors of customs and their deputies; United States collectors of internal revenue and their deputies (or. Directors of Internal Revenue and internal revenue
agents); the officer in charge of any home, hospital, or other facility of the Veterans'
Administration, but only for patients and members of such facilities; certain
officers of Federal penal institutions designated for that purpose by the Secretary
of the Treasury and certain officers of the United States Public Health Service
Hospitals at Lexington, Kentucky, and at Fort Worth, Texas, and of United States
Marine Hospitals at Fort Stanton, New Mexico, and Carville, Louisiana, designated for that purpose by the Secretary of the Treasury (in each case, however,
only for inmates or employees of the institution involved).
(/) Officers authorized in particular localities.—Certain officers in the Treasury
Department; the Governors and Treasurers of Hawaii, Puerto Rico, and Alaska;
the Governor and Commissioner of Finance of the Virgin Islands; the Governor
and Director of Finance of Guam; the Governor and Director of Administrative
Services of American Samoa; the Governor, paymaster or acting paymaster, and
collector or acting collector of the Panama Canal; and postmasters and acting
postmasters in the Bureau of Posts of the Canal Zone.
(9) I'^ foreign countries.—In a foreign country requests for payment may be
signed in the presence of and be certified by any United States diplomatic or
consular representative, or manager or other officer of a foreign branch of a bank
or trust company incorporated in the United States, whose signature is authenticated by an impression of the corporate seal or is certified to the Treasury Department. If such an officer is not available, requests for payment may be
signed in the presence of and be certified by a notary or other officer authorized to
administer oaths, but his official character and jurisdiction should be certified
by a United States diplomatic or consular officer under seal of his office.
(h) Special provisions.—In the event none of the officers authorized to certify
requests for payment of savings bonds is readily accessible, the Commissioner of
the Public Debt, the Deputy Commissioner of the Pubhc Debt in Charge of the
Chicago Office, or a Federal Reserve Bank, is authorized to make special provision for any particular case.
SEC. 315.26. General instructions to certifying officers.—Certifying officers should
require positive identification of the person signing a request for payment and
will be held fully responsible therefor. In all cases a certifying officer must affix
to the certification his official signature, title, address and seal or dating stamp,
and the date of execution. Officers of Veterans' Administration Facilities, Public
Health Service Hospitals, Marine Hbspitals, and Federal penal institutions, should
use the seal of the particular institution or service, where such seal is available.
If a certifying officer, other than a post office official, officer of a bank or trust
company, or officer of an issuing agent, does not possess an official seal, that fact
should be made known and attested.
SEC. 315.27. Interested person not to certify.—No person authorized to certify
requests for payment may certify a request for payment of a bond of which he is
the owner, or in which he has an interest, either in his own right or in any representative capacity.
SEC. 315.28. Presentation and surrender—all series.—Except for cases coming
within the provisions of section 315.29, after the request for payment has been
duly signed by the owner and certified as above provided, the bond should be
presented and surrendered to (1) a Federal Reserve Bank or branch, (2) the
Bureau of the Public Debt, Division of Loans and Currency, 536 South Clark
Street, Chicago 5, Illinois, or (3) the Treasury Department, Washington 25, D. C.
Usually payment will be expedited by surrender to a Federal Reserve Bank. In
all cases presentation will be at the expense and risk of the owner, and, for his
protection, the bond should be forwarded by registered mail if not presented in
person. Payment will be made by check drawn to the order of the registered
owner or other person entitled and mailed to him at the address given in his
request for payment.
SEC. 315.29. Optional procedure limited to bonds of Series A to E, inclusive,
in names of individual owners or coowners only.—An individual (natural person)
whose name is inscribed on the face of a bond of Series A, B, C, D, or E, either

EXHIBITS

301

as owner or coowner in his own right, may present such bond (unless marked
"DUPLICATE") to any incorporated bank or trust company or any other organization qualified as a paying agent under the provisions of Department Circular
No. 750. If such bond is in order for payment by the paying agent, the owner
or coowner, upon establishing his identity to the satisfaction of the paying agent
and upon signing the request for payment and adding his home or business address,
may receive immediate payment at the appropriate redemption value, as provided in sections 315.22 and 315.23. Even though the request for payment has
been signed, or signed and certified prior to the presentation of the bond, nevertheless the paying agent is required to establish to its satisfaction the identity
of the owner or coowner requesting payment and such paying agent may require
the owner or coowner to sign again the request for payment. No charge will
be made to the owner. This method of presentation is authorized notwithstanding
the provisions of any Treasury Department circulars offering the bonds for sale
and notwithstanding any instructions which may be printed on the bond and is
optional with individual owners. Bonds of Series A, B, C, D, or E requiring
documentary evidence to support rederiaption, or presented for partial redemption
and bonds of Series F, G, H, J, and K, are not eligible for payment at these paying
agencies.
SEC. 315.30. Partial redemption.—A savings bond of any series in a denomination greater than $25 (maturity value) may be redeemed in part at current
redemption value but only in amounts corresponding to authorized denbminations
of not less than $25 (maturity value), upon presentation and surrender of the
bond to (1) a Federal Reserve Bank or branch, (2) the Bureau of the Public Debt,
Division of Loans and Currency, 536 South Clark Street, Chicago 5, Illinois,
or (3) the Treasury Department, Washington 25, D. C , all in accordance with
this subpart. Partial redemption may not be effected at incorporated banks
or trust companies. In any case in which partial redemption is authorized,
before the request for payment is signed there should be added to the first senterice
of the request the words "to the extent of $
(maturity value), and reissue of the remainder." Upon partial redemption of a savings bond the remainder will be reissued as of the original date as provided in subpart I. For
payment of interest on current income bonds in case of partial redemption, see
subpart G.
SEC. 315.31. Nonreceipt or loss of checks issued in payment.—In case a check in
payment of a bond surrendered for redemption is not received within a reasonable
time, or in case such check is lost after receipt, notice should be given to the same
agency to which the bond was surrendered for payment, accompanied by a description of the bond by series, denomination, serial number, and registration. The
notice should state whether or not the check was received and should give the
date upon which the bond was forwarded. Instructions will be given as to the
necessary procedure to secure a duplicate. It should be borne in mind, in connection with bonds of Series F, G, H, J, and K, that payment is made only on
the first day of a calendar month and only at least one full calendar month following actual receipt of the notice of intention to redeem, and a check cannot be
expected until that time.
SUBPART I—GENERAL REISSUE AND DENOMINATIONAL EXCHANGE

SEC. 315.32. General.—Reissue of a savings bond will be restricted to a form of
registration permitted by the regulations in effect on the date of original issue
of the bond and will be made only upon surrender of the bond and only in accordance with the provisions of those regulations. Reissue of a savings bond will
be made only in the following instances:
(a) To correct an error in the original issue, upon appropriate request supported by satisfactory proof of such error unless the error was made by the
issuing agent.
(b) To show a change in the name of an owner, coowner, or designated beneficiary, upon his request, supported by satisfactory proof of the change of name if
for any reason other than marriage.
(c) To exchange bonds of Series E originally issued on or after May 1, 1952,
on uncurrent bond stock for bonds of that series on current stock, as soon as the
latter is available, upon the request of the owner or either coowner. Such
exchange is not necessary, however, because aU paying agents will redeem ALL
bonds of Series E bearing issue dates on and after May 1, 1952, in accordance
with the new schedule of redemption values, as set forth in table A at the end
of Treasury Department Circular No. 653, Third Revision.

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(d) As otherwise specifically prbvided in these regulations.
SEC! 315.33. Requests for reissue.—-Requests for reissue should be made on
appropriate forms, which may be obtained from any Federal Reserve Bank or
branch or the Bureau of the Public Debt, Division of Loans and Currency, 536
South' Clark Street, Chicago 5, Illinois, and should be signed by the persons
authoriized. urider these regulations to inake such requests. If the request is
by -reason of a change bf name, the signature should show both'names and the
manner iri which the change took'place, as, for example, "Miss Mary T. JOnes,
riow by marriage Mrs. Mary T. Smith." A request for reissue under sectiori
315'.32' (a)y (5) and (d) must be signed in the presence of and be certified by an
officer authorized under subpart H to certify requests for payriaent.
SEC. 315.34. Agericies authorized io make reissue.—Reissues under section 315.32
(6), (c) and (d) may be madfe only at (1) a Federal Reserve Bank or branch, (2)
the Bureau of the Public Debt, Divisiori of Loans and Currency, 536 South
Clark Street, Chicago 5,'Illinois, or (3) the Treasury Department, Washington
25, D C ,
' Sec. 315,35. Effective date.—In any case of authorized reissue the Treasury
Department will treat the receipt by a Federal Reserve Bank or the Treasury
Department of a bond and appropriate request for reissue thereof, as determining
the date upon which-reissue is effectiye.
SEC! .315.36. Description of bonds on reissue.—The new bonds will be of the same
series, will bear the same issue date, and will have the same tights and privileges
as the bonds surrendered.^
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SEC. 315.37. Denominational exchange.—"Exchange as between authorized
denbminations will not be permitted except in cases of partial redemption or
authorized reissue and then only in authorized denominations of not less than $25
(maturity value).
SUBPART J—MINORS AND PERSONS UNDER OTHER LEGAL DISABILITY

SEC. 315.38. Payment to legal guardians.—If the form of .registration of a savings
bond indicates that the owner is a minor or has been judicially declared to be
incompetent to manage his estate and that a guardian or similar representative has
been appointed for the estate of such minor or incompetent by a co.urt having
jurisdiction or is otherwise legally qualified, payment will be made only to such
guardian, or similar legal representative. In such case the request for payment
appearing on the back of the bond should be signed by the guardian or other legal
representative as such, for example, ','John A.-Jones, guardian (committee) of the
estate'Of Henry W. Smith, a minor (an incompetent)." Unless the form of registration gives the name of the representative, there must be submitted in; support
of the request a certificate or a certified copy of the letters of appointment from
the-.court making the appointment under the seal of the court. Except in the case
of corporate fiduciaries, such certificate or certification should state that the
appointment is in full force and should be dated not more than six months prior
to the date of presentation of the bond for payment. See subpart O for payment
provisions applicable to bonds registered in the names of guardians and similar
fiduciaries. Where the form of registration does not indicate that the owner is a
minor for whose estate a guardian has been appointed, a notice that such guardian
has been appointed will not be accepted by the Treasury Department for the
purpose of preventing payment to the minor or to a parent or other person on
behalf of the minor as provided in the two following sections. However, if a legal
guardian presents for paj^ment a bond so registered accompanied by proof of his
appointment, payment will be made to such guardian.
SEC. 315.39. Payment to minors.—Unless the form of registration of a savings
bbnd indicates that the owner is a minor for whose estate a guardian or similar
legal representative has been appointed or is otherwise duly qualified, payment
will be made direct to such minor presenting the bond for payment if, at the time
payment is requested, he is of sufficient competency and understanding to sign his
name to the request and to compreherid the nature of such act. In general, the
fact that the request for payment has been signed by a minor and duly certified iri
accordance with subpart H will be accepted as .sufficient proof of such competency
and understanding; . • • ^ • • '
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SEC. 315.40. Payment to a parent or other person on behalf of a minor.—If the
owrier of a savings bond is a minor and the form of regis tr at io undoes nbt indicate
. jl Reissues of bonds of Series E sold before. May 1,1952, will continue to be made, from bond stocks carrying :
thesame'tablesof redemption values arid^ather details appearing on the origmal bonds . .
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303

that a guardian or similar legal representative of the estate of such minor has,.been
appointed by a court or is otherwise legally qualified, and if such minor owner is
not of sufficient competency and understanding to execute the request for payment,
payment will be made to either parent of the minor with whom he resides, or if the
minor does not reside with either parent, then to the person who furnishes his
chief support. Such parent or other person must surrender the bond with the
request for payment properly executed, and furnish a certificate, which, may be
typed on the back of the bond, showing his right to act for the minor. If a parent
signs the request, the certificate and signature thereto should be in substantially
the folio wing form:
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"I certify that I am the nao ther (or father) of John C. Jones and the person
• with whom he resides. . He is
years of age and is not of su.fficient competency
. and understanding to sign this request.
;
- Mrs. Mary Jones on behalf of John C. Jones,.."
Hf a person other than a parent signs the request, the certificate and signature
^thereto, including a reference to the person's relationship, if any, to the minor,
.should be in substantially the following form:
. "I certify that John C. Jones does not reside with either parent and that I furnish
>his chief support. He is .
years of agei and is not of sufficient competericy
:.and understanding to sign this request. *
Mrs. Alice Brown, grandmother, on behalf of John C!Jones'."
.'The Treasury Department may in any particular case require further proof that
:^^the minor is not of sufficient cornpetency and understanding to execute the request
tfor payment and of the right of the person executing the request to act on behalf
of the minor.
SEC. 315.41. Payment to voluntary guardian of person under disability.—In a,nj
case where the adult owner of a bond has been judicially declared incompetent or
such incompetency is otherwise satisfactorily established, and no duly qualified
legal representative of his estate is acting, and the entire gross value of his personal
estate does, not exceed $500, payment will be made to a member of his family or
other person acting as voluntary guardian, upon presentation of,satisfactory proof
that the proceeds of the bond are required for the purchase of necessaries,for the
incompetent or for his wife or minor children or other persons deperident upon him
for support. Application for such payment should be made only on appropriate
forms, which may be obtained from the Bureau of the Public Debt, Division of
. Loans and Currency, 536 South Clark Street, Chicago 5, Illinois, or any Federal
• Reserve Bank. The request for payment should not be executed, nor the bond
'.presented, until the application has been approved and instriictibris have been
: given by the Treasury Department.
SEC. 315.42. Reissue in the case of a minor.—A savings bond bf which a minor is
the. owner, or iri which he has an interest, may be reissued upon an authorized
Teissue transaction under the following coriditions:
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(1) Reissue wiU be restricted to a form of registration which preserves the
existing ownership or interest of the minor, except that a minor of sufficierit competency and understanding to sign his name to the request and to comprehend the
nature of such act, shall have the right to request reissue to add a coowner or
beneficiary to a bond registered in his name alone or to which he is.erititled in his
own right.
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(2) Reissue will be subject to the terms antd conditions prescribed by sections
315.38, 315.39, and 315.40 of this subpart, governing a request,for payment'of
such bond.
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SUBPART K-TTSINGLE NAME—ADDITION OF COOWNER, ETC;

SEC. 315.43. Payment or reissue.—A savings bond registered in the riame of orie
^person in his own right without a coowner or beneficiary, or to which one person
is entitled in his own right under these regulations, will be paid to such person
during his lifetime upon a duly executed request for payment. Upon the death of
.the owner, such bond, if not previously redeemed, will be considered as"belonging
to his estate and will be paid or reissued accordingly. (See subpart N.)
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SEC. 315.44. Reissue for certain purposes.—A savings bond registered in the name
of one person in his own right, or to which one persori is shown to be entitled in his
own right under these regulations, may be reissued, upon appropriate're quest*
for the follbwing purposes:
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(a) Addition of a coowner.—Reissue in the name of the owner with that of
another natural person as coowner. Bonds reissued in accordance with this
'subsection upon request of the original owner will be considered-for the purposes

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1952 REPORT OF THE SECRETARY OF THE TREASURY

of computation of holdings under subpart C of these regulations as originally
issued in both names, and no reissue will be effective which results in any one
person holding bonds in excess of the established limit for the-series to which the
bonds belong. Requests for reissue under this subsection should be made on
Form PD 1787.
(6) Addition of a beneficiary.—Reissue in the name of the owner with that of
another natural person as designated beneficiary. Requests for reissue under the
provisions of this subsection should be made on Form PD 1787.
(c) A trustee of a living trust.—Reissue in the name of a trustee of a living trust
created by the owner for his benefit, in whole or in part, during his lifetime,
whether or not containing an absolute power of revocation in the grantor; but such
reissue will be allowed only in the case of bonds of those series which may be
originally issued in the name of a trustee. Requests for reissue under this subsection should be made on Form PD 1851.
SUBPART L—Two NAMES—COOWNERSHIP FORM

SEC. 315.45. Payment or reissue.—A savings bond registered in the names of
two persons as coowners in the form, for example, "John A. Jones or Mrs. Mary
C. Jones," will be paid or reissued as follows:
(a) Pay