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ANNUAL REPORT OF THE

Secretary of the Treasury
ON THE STATE OF THE
FINANCES
FOR THE FISCAL YEAR
ENDED JUNE 30

1918
With Appendices

WASHINGTON
GOVERNMENT PRINTING OFHCE
1919







T R E A S U R Y DEPARTMENT,

Document No. 2826.
Secretary.

UU

CONTENTS.
Page.

Introduction
Cost of the war.
Third Liberty l o a n . . . ;
Fourth Liberty loan.
Treasury certificates of indebtedness
War-savings certificates
Loans to foreign Governments
Foreign exchange
Silver
:..
Gold
Platinum
•
Internal revenue
Glycerin discovery
Federal Keserve System
Amendments to the Federal Reserve act
War Finance Corporation
Capital Issues Committee
.
War Loan Organization.
..
Liberty loan publicity
Speakers' Bureau
Liberty Day
National \A{oman's Liberty Loan Committee
Conversion of Liberty bonds
'.
Exchange and transfer of Liberty bonds
Purchases of Liberty bonds by the Treasury
Liberty loan subscriptions by the military and naval forces
Acceptance of Liberty bonds in payment for merchandise or securities
Acceptance of Liberty bonds as security
Bank loans secured by Liberty bonds or certificates of indebtedness.
Liberty bonds in payment of estate or inheritance taxes
•
Interim certificates, on first Liberty loan
Payment of Spanish-American War bonds
Retirement of one-year Treasury notes
Public moneys
United State's depositaries in foreign countries
Method of providing funds for Army payments in Europe
Auditing of accounts of the Military Establishment abroad
Accounts of Government corporations
War-risk insurance
Insurance of ships' cargoes and seamen
Insurance of fighting forces
,
Work of the Insurance Division.
.^
Compensation to fighting forces and their dependents
First payment of insurance and compensation benefits
Allotments and allowances to dependents
Work of the Advisory Board
Work of the Actuarial Division
Work of the Accounting Division
^ Difficulties of organizing work of bureau
Retirement of civil-service employees
Enemy or ally of enemy insurance companies and other foreign insurance companies
Federal farm-loan system
Assistance to farmers
..".
Deposits of public moneys in drouth-stricken areas
Assistance through the War Finance Corporation
Seed-grain loans to farmers.
Public health




UI

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5
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109

IV

CONTENTS.

Treasury Red Cross Auxiliary
Customs
Representation of Treasury on War Trade Board
International High Commission:
Public buildings
,
,
Goast Guard
General Supply .Committee
7
Panama Canal
Contingent fund
Finances.
Receipts and disbursements
Fiscalyear 1918
General fund
•...
. Summary of general fund transactions
•
Postal Service
United States notes (greenbacks)
Gold reserve fund
Trust f u n d s . . ' . . . . :
Sinking fund
Condition of the Treasury June 30, 1918
Cash in the Treasury June 30, 1918
Comparison of receipts, fiscal years 1917 and 1918
Comparison of disbursements, fiscal years 1917 and 1918
Estimates
Estimated receipts, fiscal- year 1919
Estimated disbursements, fiscal year 1919
Postal Service, 1919
,
Estimated receipts and disbursements, fiscal year 1920
Summary of estimated results to the close of the fiscal year 1920, beginning
with the balance in the general fund of the Treasury, June 30, 1918
Estimates for the fiscal year 1920 as submitted by the executive departments..
Estimated postal revenues for the fiscal year 1920
Estimates for 1920 and appropriations for 1919
Statement of estimates of appropriations for 1920 increased over appropriations
for 1919
Exhibit of appropriations for 1919

Page.
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115
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117
123
124
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125
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129
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129
130 •
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143
143
144
145
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147
148
150
150
150
152

Exhibits accompanying the report on the finances.
Exhibit 1: Table showing unrevised cash expenditures, fiscal years 1917 and
1918
Exhibit 2: Statement of the public debt at close of fiscal year 1918
Exhibit 3: Act of April 4, 1918, authorizing additional issue of bonds
Exhibit 4: Department Circular No. I l l , regulations for the issue of 4J per
cent gold bonds, 1928, third Liberty loan
,
•...:
Exhibit 5: Application for 4^ per cent gold bonds of 1928, third Liberty loan..
Exhibit 6: Application by an incorporated bank or trust company for bonds,
etc
'Exhibit 7: Act of July 9, 1918, to authorize an additional issue of bonds
Exhibit 8: Act of September 24, 1918, an act to supplement the second Liberty
bond act, as amended
Exhibit 9: Department Circular No. 121, regulations governing the issue of 4^
per cent gold bonds of 1933-1938, fourth Liberty loan
Exhibit 10: Application for 4^ per cent gold bonds, 1933-1938, fourth Liberty
loan
Exhibit 11: Application b y an incorporated bank or trust company for coupon
bonds for advance delivery
Exhibits 12 to 37: Treasury certificates of indebtedness
Exhibit 38: Department Circular No. 120, 4 per cent Treasury certificates of
indebtedness
Exhibit 38-A: Statement of the Secretary of the Treasury in connection with
Treasury certificates
Exhibit 39: Department Circular No. 124, 4 j per cent Treasury certificates of
indebtedness
Exhibit 40: Department Circular No. 95, agents of the second class for sale of
war-savings certificates



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159
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174
I75
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185
186
188
215
216
217
219

CONTENTS.

V
Page.

Exhibit 41: Department Circular No. 96, cash agents of the second class for
, sale of war-savings certificates
Exhibit 42: Department Circular No. 101, war-savings certificates, series of
1918, regulations governing the appointment of authorized agents, etc
Exhibit 43: Department Circular No. 108, war-savings certificates, 1918, regulations further defining rights of holders of war-savings certificates
Exhibit 44: Act of April 23, 1918, to conserve the gold supply of the United
States, etc
Exhibit 45: Act of April 5,1918, to provide further for the national security and
defense, etc. (War Finance Corporation)
Exhibit 46: Statement of War Finance Corporation in regard to applications
for direct advances
Exhibit 47: Department Circular No. 114, conversion of United States bonds of
the first Liberty loan, of the first Liberty loan converted, and of the second
Liberty loan
Exhibit 48: Department Circular No. 123, conversion of United States first
Liberty loan 3^ per cent bonds of 1932-1947
Exhibit 49: Department Circular No. 100, interchange and transfer of Liberty
bonds
I
Exhibit 50-A: Regulations defining special arrangements for subscription to
third Liberty loan bonds from persons in the military forces of the United
States
^
^
Exhibit 50-B: Regulations governing termination and reduction of allotments
far subscription to third Liberty, loan bonds from persons in the military
forces of the United States in certain cases
Exhibit 50-C: Regulations defining special arrangements for subscriptions to
fourth Liberty loan bonds for persons in the military forces of the United
States
.'
^
Exhibit 51: Statement of the Secretary of the Treasury relative to acceptance
of Liberty bonds in payment for merchandise
Exhibit 52: Statement of the Secretary of the Treasury, warning against the
exchange of Liberty bonds for other securities
E x h i b i t 53: Department Circular No. 118, regulations concerning full-paid
interim certincates, first Liberty loan
Exhibit 54: Department Circular No. 113, payment of 3 per cent bonds of
1908-1918
-•
Exhibit 55-A: Department Circular No. 92, amended and supplemented,
special deposits of public moneys under act of September 24,1917, as amended
and supplemented
^
Exhibit 55-B: Second supplement to Department Circular No. 92, special deposits of public moneys under act of September 24, 1917, as amended by act
of April 4, 1918
-..
Exhibit 55-C: Department Circular No. 92, amended and supplemented,
special deposits of public moneys under act of September 24,1917, as amended
and supplemented
Exhibit 56-A: Regulations concerning duplicate checks to replace lost, stolen,
or destroyed checks drawn on the Treasurer of the United States by disbursing officers serving in Europe
Exhibit 56-B: Regulations concerning duplicate checks to replace lost, stolen,
or destroyed checks on depositaries in Europe by disbursing officers serving
i n Europe
'
^
Exhibit 56-C: Regulations concerning duplicate checks to replace checks
owned in Europe, drawn on the Treasurer of the United States by disbursing
officers not attached to the Military Establishment
Exhibit 56-D: Regulations concerning duplicate checks to replace checks
owned in Europe, drawn on depositaries in Europe b y disbursing officers not
attached to the Military Establishment
Exhibit 57-A: Act of May 20, 1918, an act amending the act establishing a
Bureau of War Risk Insurance
Exhibit 57-B: Act of June 25, 1918, an act amending the act establishing a
Bureau of War Risk Insurance
Exhibit 57-C: Act of July 11, 1918, an act amending ,the act establishing a
Bureau of War Risk Insurance
,...,
Exhibit 58: Act of January 18, 1918, amending section 32 of the Federal farmloan act
.,




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345

VI

CONTENTS.
Page.

Exhibit 59: Joint Circular No. 1, Treasury and Department of Agriculture,
regulations relative to farmers' seed-grain loans in drouth-stricken areas. —

346

Abstracts of reports of bureaus and divisions.
Treasurer of the United States
355
District of Columbia
1
. 358
Comptroller of the Currency
358
Number of national banks and amount of capital stock, etc., June 29, 1918.
361
Number of national banks organized, insolvent, in voluntary liquidation,
and in operation
:
362
Comparative statement of principal items of resources, etc., National, State,
savings, and private banks, etc
363
Mint Service. ..«
/
363
Operations of the mints and assay offices
363
Stock of coin and bullion in the United States
365
Production of gold and silver
..
365
Industrial arts.
365
Export of gold coin
«
365
Appropriations, expenses, and income
365
Deposits, income, exDenses, and employees, b y institutions
368
Internal revenue
368
Cost of collection
369
Distilled spirits
369
Fermented liquors
•.
*.
370
Tax on wines, cordials, etc. .,
:
370
Income and excess-profits taxes
370
Estate and capital-stock taxes
371
Police functions.
372
Chemical laboratory work
373
Wa,r-risk insurance
373
Allotments and allowances
374
Disbursements
374
Exemption claims.
375
Compensation
375
Insurance
1
»
377
Disbursements by services
380
Contract insurance
,
380
Premiums on war-risk insurance
„.
380
Claims—contract insurance
380
TotaL and permanent disability awards under contract insurance.
383
Soldiers' and sailors' civil relief act
384
Division of Marine and Seamen's Insurance
385
Bureau of Engraving and Printing
337
Customs
389
Tea
..^
394
Office of the Supervising Architect
•
396
Buildings
396
Statement of appropriations
398
Summary of acts carrying appropriations for the fiscal year 1919
398
Public Health Service.
400
Division of Scientific Research
400
Hygienic Laboratory
405
Division of Domestic Quarantine
405
Division of Foreign and Insular Quarantine and Immigration
409
Medical inspection of aliens
'
411
Division of Sanitary Reports and Statistics
412
Division of Marine Hospitals and Relief
413
Division of Personnel and Accounts
414
Commissioned and other officers
.^.
414
Expenditures
'.
415
Miscellaneous Division
415
Recommendations
416
Coast Guard
419
Award of life-saving medals
419
Loans and currency
423
Interest-bearing debt changes during year
. 423
Interest on r e ^ t e r e d bonds.
423
Insular and District of Columbia loans,, changes during year
423



CONTENTS.
Loans and currency—Continued.
•.
Circulation
,
--.---.-.
-.Comparative statement showing changes in circulation
,
Paper custody
Redemption of currency and destruction Of United States securities
Custody of Federal reserve notes, series of. 1914
Division of Public Moneys
i
Division of Bookkeeping and Warrants
.".
The general fund
- -„.
State bonds and stocks owned by the United" States
Secret Service Division
.'
Division of Printing and Stationery..:
.'.i.-.
Printing and binding
X.
''
Stationery
-l
Postage, materials for bookbinder, department advertising
Office of the disbursing clerk
•.;

vn
Page.
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425
425
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426
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428
430
430
430
431
431
432
•...
435
435

Tables accompanying the report on the finances.
Table A.—Statement of the outstanding principal of the public debt of the
United States, June 30, 1918
Table B.—Statement of the outstanding principal, of the public debt of the
United States on the 1st of July of each year from 1856 to 1918, .
inclusive
.>'
Table C.—Analysis of the principal of the interest-bearing public debt of the
United States from July 1, 1856, to July 1, 1918
Table D.—Statement of the issue and redemption of loans and Treasury notes .
and of deposits and redemptions in national-bank note account
for the fiscal year ended June 30, 1918
Table E.—Sinking-fund account for fiscal year 1918::
Table F.—Population, ordinary receipts and disbursements of the Government
from 1840 to 1918, exclusive of postal, 'and per capita on receipts
and per capita on disbursements.......'.'..,
Table G.—Statement showing the ordinary receipts and disbursements of the
Government by months; the legal-tender notes,, net gold, and •
available cash in the Treasury at t h e , e n d of each month; the
monthly redemption of legal-tender notes in gold and the imports
and exports of gold, from July, 1896, to June, 1918, inclusive
Table H.—Statement of the balance in the general fund of the Treasury, in-,
eluding the gold reserve, by calendar years from 1791 to 1842 and
by fiscal years from 1843 to 1918.
'...'.
Table I.—Receipts and disbursements of the United States
Table J.—Internal and customs receipts and expenses of collecting from 1858
to 1918
Table K.—Statement of United States bonds and other obligations, exclusive
of Liberty bonds, etc., received and issued by the Office of the
Secretary of the Treasury from July 1, 1917^ to June 30, 1918
Table L.—Statement of the coin and paper circulation of the United States
from 1860 to 1918, inclusive, with amount of circulation per capita.
Table M.—Collections, expenses, average number of persons employed, and
cost to collect internal revenue, fiscal year ended June 30, 1918..
Table N.—Statement of business of the customs districts ahd ports for the fiscal
year ended June 30, 1918.
.'.'...
Table 0.—Statement, by districts and ports, showing total entries of merchandise, receipts, and expenses for the fiscal year ended June
30,1918..

441
464
466
468
468
469

470
478
479
491
493
494
495
496
534

R E P O R T OF THE T R E A S U R E R :

Receipts and disbursements for 1917 and 1918
Panama Canal
^
Extraordinary disbursements
Receipts and disbursements on account of the Post Office Department
Transactions in the public debt
'.
Currency issued and redeemed
i
P u b l i c d e b t , 1917 and 1918
Payment of interest on registered b onds of the United States
Reserve and trust funds
<:
. Redemption o'f notes in gold
State of the Treasury, general fund—cash in the vaults.




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544,
544
545
545
546
547
547
547
547
548

vm

CONTENTS.

R E P O R T OF THE TREASURER—Continued.

Net available cash balance, 1910 to 1918.
Gold in Treasury from 1910
Bonds held as security for national-bank circulation and deposits
Bonds held as security for postal savings funds
Postal savings bonds and investments therein
Withdrawal of bonds to secure circulation
..^
Depositaries of the United States
•
Public moneys in depositary banks
.
General account of Treasurer of the United States
Gold settlement fund
"....
Monetary stock, 1917 and 1918
Ratio of gold to total stock of money.
Money in circulation
Circulation and population
j
• Paper currency issued directly by the Government
United States notes
Treasury notes of 1890
:
Gold certificates
Silver certificates
:
"
Changes in denominations dming fiscal year 1918
Pieces of United States paper currency outstanding
Denominations outstanding June 30, 1918
Ratio of small denominations to all paper
Cost of paper currency
J
Average life of paper currency
Paper currency prepared for issue and amount issued
Paper currency held in the reserve vault
Paper currency redeemed.
Standard silver dollars
Subsidiary silver coin
Minor coin
Transfers -for deposits in New-. York—money for moving the crops, etc
Telegraphic transfers for foreign coin
Deposits of gold bullion at mints and assay offices, 1916, 1917, and 1918 . .
Shipments of currency from Washington, 1917 and 1918
Recoinage, 1917 and 1918
Redemption of Federal reserve and national currency
Special trust funds and changQs therein during the fiscal year
District of Columbia sinldng fund

Page.

550
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554
555
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576

Tables accompanying the report of the Treasurer.
No. 1.—-Receipts and disbursements for the fiscal year 1918
No. 2.—Receipts and disbursements on account of the Post Office Department for fiscal year 1918
^
No. 3.—Distribution of the General Treasury balance, June 30, 1918
No. 4.—Assets and liabilities of the Treasury offices, June 30, 1918
No. 5.—Assets of the Treasury in the custody of mints and assay offices, June
.30,1918
No. 6.—General distribution of the assets and liabilities of the Treasury
No. 7.—^Available assets and net liabilities of the Treasury at the close of June,
1917 and 1918.
No. 8.—Assets and liabilities of the Treasury in excess of certificates and
Treasury notes at the close of June, 1917 and 1918
No. 9.—Estimated stock of gold coin and bullion, the amount in the Treasury,
and the amount in circulation at the end of each month, from January, 1912
No. 10.—Estimated stock of silver coin, the amount in the Treasury, and the
amount in circulation at the end of each month, from January, 1912;
also silver, other than stock, held in the Treasury
No. 11.—-United I States notes, Treasury notes, Federal reserve notes, and national-bank notes outstanding, in the Treasury, and in circulation
at the end of each month, from January, 1912
No. 12.—Gold certificates and silver certificates outstanding, in the Treasury,
and in circulation at the end of each month, from January, 1912...
No. 13.—Estimated stock of all kinds of money at the end of each month, from
January, 1912
;




i
577
577
577
578
579
580
580
582
582
587
591
595
601

CONTENTS.

IX
Page.

—Estimated amount of all kinds of money in circulation at the end of
No. 14.each month, from January, 1912

602

—Assets of the Treasury other than gold, silver, notes, and certificates
No. 15.at the end of each month, from January, 1912
—Assets of the Treasury at the end of each month, from January, 1912.
No. 16.—Liabilities of the Treasury at the end of each month, from January,
No. 17.1912
—United States notes of each denomination issued, redeemed, and outNo. 18.standing at the close of each fiscal year, from 1911
—Treasury notes of 1890 of each denomination issued, redeemed, and
No. 19.outstanding at the close of each fiscal year, from 1912
No. 20.-—Gold certificates of each denomination issued, redeemed, and outstanding at the close of each fiscal year, from 1913
No. 21.-—Silver certifi.cates of each denomination issued, redeemed, and outstanding at the close of each fiscal year, from 1913
No. 22.-—Amount of United States notes, Treasury notes, gold and silver certificates of each denomination issued, redeemed, and outstanding
at the close of each fiscal year, from 1911
;
No. 23.-—Amount of paper currency of each denomination outstanding at the
close of each fiscal year, from 1911
No. 24.-—Old demand notes of each denomination issued, redeemed, and outstanding June 30, 1918
.......:
No. 25.-—Fractional currency of each denomination issued, redeemed, and
outstanding June 30, 1918
^
No. 26.-—Compound-interest notes of each denomination issued, redeemed,
and outstanding June 30, 1918
No. 27.-—One and two year notes of each denomination issued, redeemed, and
outstanding June 30, 1918
No. 28.-—United States paper currency of each class, together with one and
two year notes and compound-interest notes issued, redeemed,
and outstanding June 30, 1918
—United States notes and Treasury notes redeemed in gold, from 1879,
No. 29.
• . and imports and exports of gold during each fiscal year, from 1901..
—Treasury notes of 1890 retired by redemption in silver dollars, and
No. 30.
outstanding, together with the silver in the Treasury purchased
by such notes, for each month, from January, 1912
—Transactions between the subtreasury and clearing house in New
No. 31.
York during each month, from January, 1912
....'
-^Amount of each kind of money used in settlement of clearing-house
No. 32.
balances against the subtreasury in New York during each month,
from January, 1912
—Balance in the Treasury, amount in Treasury offices and amount in
No. 33.
depositary banks, from 1789 to 1918
•
—Federal reserve and national banks designated depositaries of public
No. 34.
moneys, with the balance held June 30,1918
—Number of national banks with semiannual duty levied, by fiscal
No. 35.
years, and number of depositaries with bonds as security, by fiscal
• years
No 36.—United States bonds retired, from May, 1869, to June 30, 1918
No. 37.—Seven-thirty notes issued, redeemed, and outstanding June 30,1918.
No 38.—Refunding certificates, act of February 26, 1879, issued, redeemed,
and outstanding
—Checks issued by the Treasurer for interest on registered bonds during
No 39.
the fiscal year 1918
.....i
—Interest on 3.65 per cent bonds of the District of Columbia paid durNo 40.
ing the fiscal year 1918
—Coupons from United States bonds and interest notes paid during
No 41.
the fiscal year 1918, classified by loans
—Bonds and other securities retired for the sinking fund during the
No 42.
fiscal year 1918, and total from May, 1869.
—Public debt at the close of June, 19i7 and 1918, and changes during
No 43.
the year
,—Public debt, exclusive of certificates and Treasury notes, at the end
No 44.
of each month, from January, 1912
,—Checks drawn by the Secretary and paid by the Treasurer for interest
No 45.
on registered bonds of the United States during the fiscal year 1918.




603
604
605
606
608
609
610
611
613
615
615
615
615
616
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619
620
622
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632
633
633
633
633
634
634
635
636
637

X

CONTENTS.
Page.

No. 46.—Money deposited in the Treasury each month of the fiscal year 1918
for the redemption of national-bank notes
No. 47.—Amount of currency counted into the cash of the National Bank Redemption Agency and redeemed notes delivered, b y fiscal years,
from 1900
No. 48.—Currency received for redemption by the National Bank Redemption
Agency from the principal cities and other places, by fiscal years,
from 1900, in thousands of dollars...'
No. 49.—Mode of payment for currency redeemed at the National Bank Redemption Agency, by fiscal years, from 1900
No. 50.—Deposits, redemptions, assessments for expenses, and transfers and
repayments on account of the 5 per cent redemption fund of national banks, by fiscal years, from 1900
No. 51.—Deposits, redemptions, and transfers and repayments on account of
the retirement of circulation, by fiscal years, from 1900
No. 52.—Expenses incurred in the redemption of national and Federal reserve
currency, by fiscal years, from 1900
No. 53.—General cash account of the National Bank Redemption Agency for
the fiscal year 1918 and from July 1, 1874
.
No. 54.—^Average amount of national-bank notes outstanding and the redemption, by fiscal years, from 1875 (the first year of the agency)
"
No. 55.—Changes during^ the-fiscal year 1918 in the force employed in the
Treasurer's office

637
638
640
640
640
641
642
643
643
643

R E P O R T OF THE DIRECTOR OF THE M I N T :

Operations of the mints and assay offices
,
645
Silver dollars converted into bullion
'.
645
Platinum depos.its
646
Deposits of gold and silver
•.
646
Refineries
'.
646
Conference of mint officials
647
Institutions of Mint Service
647
Minor assay offices
647
Gold operations
648
Silver operations
648
Coinage
648
Stock of gold and bullion in the United States
648
Production of gold and silver
649
Industrial arts consumption
-.
649
Export of coin
649
Legislation suggested
.'
649
Estimates for the fiscal year 1920
" 649
Appropriations, expenses, and income
•.
649
Electric furnace
•.
649
Additions and improvements
.'
652
Philadelphia Mint-. ,.
652
Denver Mint
652
New York assay office
653
Income and expenses of the fiscal year 1918
653
Deposits, income, expenses, and employees, by institutions, fiscal year 1918.
654
Coinage during the fiscal year
"...
655
Description of the design of the Illinois Centennial half dollar
656
Deposits of foreign gold bullion and coin
656
Deposits of foreign silver bullion and coin
657
Issue of fine gold bare for gold coin and gold bullion
,
657
Balances, receipts, and disbursements of gold bullion
658
Purchase of minor coinage metal for use in domestic coinage
659
Purchase of 'minor coinage blanks prepared for coinage
• 659
Sale of minor coinage metals..
660
Distribution of minor coins
660
Minor coins outstanding
'.
660
Operations of the assay departments
'
661
Proof bullion (1000
fine)
........"
661
Operations of the melting and refining and of the coining departments,
fiscal year 1918
.'
662
Refining operations
664 ,
By-products of Government refineries
^
664




CONTENTS.
R E P O R T OF THE DIRECTOR OF THE MINT—Continued.

XI
*

"Page.

Ingot melts made
665
Fineness of melts ,for gold and silver ingots
665
Commercial and certificate bars manufactured
666
Melts for fine gold and fine silver
6Q6
Ingots operated upon b y coining departments and percentage of coin produced
667
Sweep cellar operations
667
Bullion gains and losses
668
Wastage and loss on sale of sweeps
669
Engraving department
669
Metals sold
"
671
Progress of the numismatic collection
671
Employees
671
Visitors
:.
671
Work of minor assay offices
672
Ore assays
:
672
Gold receipts at Seattle
•
672
Laboratory of the Bureau of the Mint
673
Proceedings of the Assay Commission, 1918
.....
674
Committee on counting
674
Committee on weighing
675
Committee on assaying..,
675
Deposits and purchases of gold during the fiscal year ended June 30, 1918.. 678
Deposits and purchases of silver during the fiscal year ended June 30, 1918. 682
Deposits of gold at United States mints and assay offices since 1873
686
Deposits of silver at United States mints and assay offiices since 1885
687
Imports and exports of United States gold coin since 1870
688
Coinage of the mints of the United States, authority for coining, etc
689
Coinage of gold and silver of the United States since 1873, by fiscal years..
691
Coinage of the mints of the United States, from their organization, by
calendar years
'
692
Combined coinage of the mints of the United States by denominations and
calendar years, since their Organization
^ 698
Stock of money in the United States, June 30, 1918
' 706
Location of moneys of the United States, June 30,1918
".
707
Ownership of gold and silver in the United States, June 30, 1918.
707
Estimated stock of gold and silver in the United States and amount per
capita at the close of each fiscal year since 1873
707
Stock of money in the United States December 31, 1917
709
Location of moneys of the United States December 31, 1917
709
Average commercial ratio of silver to gold each calendar year since 1687...
711
Bullion value of the silver dollar
'..
711
V-alues of foreign coins
.712
Changes in values of foreign coins during 1918
713
World production of gold and silver
'.'.
,
714
Production of gold and silver in the world since the discovery of America..
716
Production of gold and silver in the world since 1860
718
R E P O R T OF THE COMPTROLLEB OF THE. CURRENCY:

Our national banks in war time
:
High efficiency and patriotism of the national banks
A majority of all Liberty bonds sold placed through the national b a n k s . . .
Five years' growth of the national-bank system
•.
Comparison of national-bank suspensions during war period with those
occurring in previous crises
Immunity from failure increasing
Good results from closer adherence to the law and principles of sound banking . .
National-bank earnings greatest on record
Effect of Federal control of railroads on financial conditions in 1918
Banking power of t h e United States
Balance of trade in our favor for war period is gigantic
Comparative growth of National and State banks, for five-year period
National currency issued and redeemed in last fiscal year
.•
Trust powers for national banks
Federal Reserve System
National-bank resources reach unprecedented
figures
:.




719
720
721
722
722
723
724
725
726
727
728
729
730
731
731
7 S3

xn

CONTENTS.

REPORT OF THE COMPTROLLER OF THE CURRENCY—;-Continued.

T&ge.

Increased thoroughness of national-bank examinations
735
Bank officers convicted of criminal violations of law during the year ending
Oct. 31, 1918
738
Condition of national banks at date of each call during the report year
739
Resources—
Loans and discounts
,
740
Amount and classification of loans by national banks in the central reserve cities, etc
742
Three-year comparative statement of loans by national banks in reserve cities and in country banks
743
Classification of loans by national banks in the city of New York,
June, 1914 to 1918
- 743
Overdrafts
744
United States bonds
744
Other bonds, securities, etc
744
Stocks
• 744
Investment securities of national banks classified
744
Domestic and foreign securities held by national banks
745
Bank premises and other real estate owned. 1
746
Due from banks
746
National-bank deposits with Federal reserve banks
747
Specie and gold and silver certificates
747
Exchange for clearing house
748
Liabilities—
Capital, surplus, and undivided profits
748
Circulation outstanding.
748
Due to banks
•
749
Individual deposits
,
749
Bonds and money borrowed
749
Bank acceptances
749
Changes at time of each call, by geographical divisions, of principal items
in reports of condition
750
Relation of capital to deposits, etc., of national banks
751
Percentage of principal items of assets and liabilities of'national b a n k s . .
751
Reserve
752
Geographical classification of loans and deposits of national banks in reserve and other cities having population of over 50,000
753
Growth of national banks as shown on successive calls since 1 9 1 3 . . . .^
755
Productivity of loans and bond investments of national banks
769
Foreign branches of national banks
769
Net earnings and dividends of national banks
771
Organizations and liquidation of national banks
772
Increases and reductions in national-bank capital
781
New charters granted and refused
781
Capital increases and reductions, and liquidations
781
National banks organized since 1900
782
State banks converted into national banks
782
Changes of titles of national banks
785
Voluntary liquidation of national banks
•
786
Failures and suspensions of national banks
788
Causes of failure
791
Legislation recommended
791
To prohibit officers of banks from borrowing from their own banks
791
To limit direct and indirect loans to one individual, firm, or corporation
791
To provide suitable penalty for making of excessive loans
792
To authorize the comptroller to bring proceedings against directors for
losses sustained by bank through violation of the national-bank act.
792
Authority for removal of directors guilty of persistent violations of
the national-bank act
793
Prevent delays in taking directors' oath
,
793
Establishment of appropriate penalties for violations of laws and regulations
793
Anlendment to provide t h a t suits against usurers be brought by Department of Justice....
793
To authorize special interest charges for small loans
793
To prevent or limit overdrafts
.^.:...
793




CONTENTS.

Xni

R E P O R T OF THE COMPTROLLER OF THE CURRENCY—Continued.

Legislation recommended—Continued.
Page.
To limit interest paid on deposits
^
793
Limitation of deposits to eight or ten times capital and surplus
794
Amendment to District laws to p r e v e n t ' ' wildcat" banking
794
To require officers and employees to give surety bonds
794
To require certificates of deposit to be signed b y two officers.
794
To prevent erasures on the books of a bank
794
Standardization of by-laws
794
Rechartered banks should be allowed to use bank-note plates of original bank
794
Engraved signatures for national-bank notes
795
To authorize national banks to establish branches in the United States.
795
To permit branch banks in Alaska and insular possessions
795
To provide a penalty for making false financial statements for the purpose of obtaining credit from national banks
795
To provide punishment for breaking and entering a national bank for
the purpose of theft or robbery
795
To limit investment in bank building.
795
To authorize United States Treasurer to sell bonds securing circulation 30 days after a bank goes into liquidation
796
To require two signatures to all "charge tickets"
796
To provide for vacations and rotation of bookkeepers
796
To require long dormant balances to be deposited in United States
Treasury
796
To allow banks to deduct United States bonds from taxable assets
796
To insure or guarantee all deposits for $5,000 or less
797
Legislation enacted relating to national banks
797
National-bank subscriptions to the Red Cross
799
National-bank employees in Army and Navy
799
Total number male and female employees of national banks and number
entering Army and Navy .
801
Banks other than national
805
State, savings, private banks, and loan and trust companies
805
State banks
i
'.
807
Mutual savings banks
809
Stock savings banks
812
All reporting savings banks
815
Loan and trust companies
816
Private banks
....'
818
Condition of all banks operating under State laws in each State of
the Union
818
Reports of condition of all reported banks in the United States
824
Comparison of principal items for years 1918 and 1917 of national and
other banks
825
National, Federal reserve, and State banks
826
Summary of the combined returns from national and other banks in June,
1918
827
Banking resources and liabilities in each State
829
Comparative statement of resources and liabilities of all banks, 1913-1918.
834
Growth of banks in the United States since 1863
835
Individual deposits in all reporting banks
838
Cash in all reporting banks
838
Money in the United States
*
.
. 839
National-bank circulation
841
Vault account of national-bank currency
841
Denominations of national-bank circulation
842
Monthly statement relating to United States bonds deposited to secure circulation
842
Price and interest realized by investors in United States bonds
842
Bonds available as security for circulation
843
Redemption Of national-bank circulation
844
Profit to national banks on circulation
845
Taxes on national-bank circulation, redemption charges, examiners'
salaries, etc., and expenses of the Currency Bureau
845
•Bonds, etc., securing Federal reserve bank notes
'846
Federal reserve notes
846




XIV

CONTENTS.

R E P O R T OF THE COMPTROLLER OF THE CURRENCY—Continued.

Federal reserve bank notes.
Issue of $1 and $2 Federal reserve bank notes authorized
Interest-bearing debt of the United States
Bank investments in United States bonds
Rates for money in New York
,
Discount rates of the Federal reserve banks
Sterling exchange
".
Transactions of Clearing-House Associations
New York Clearing House
United States Postal Savings System.
Savings banks in the principal countries of the world
Federal farm loan system
.•
Joint stock land banks
Building and loan associations in the United States
Receipts and disbursements for 1917
District of Columbia
Banks and banking in the District of Columbia
Building and loan associations in the District of Columbia
Conclusion

Page.

851
852
854
..'...
855
855
856
856
857
859
860
861
864
' 869
869
870
871
871
872
872
•...

Exhibits accompanying volume 1, report ofthe Comptroller of the Currency.
Exhibit A. Federal guaranty of deposits in national banks
Exhibit B . Number of deposit accounts which exceed |5,000 and the number
and aggregate amount of deposits of $5,000 or less
Exhibit C. Legislation affecting or relating to national banks
Federal reserve and national bank act amendments
Trust powers of national banks
, Change in reserve requirements.
Receipt of fee, commission, gift, etc.: Purchase or sale of assets by or from a
member bank
Consolidation of national banks
American Red Cross contributions
Fourth Liberty bond acts
Fourth Liberty bond act approved July 9, 1918
Fourth Liberty bond act approved September 24, 1918
War Finance Corporation act
Conservation of gold supply act
Civil rights of members of the Military and Naval Establishments
Exhibit D. Liberty loan bonds owned, held as collateral to loans, etc., December 31, 1917
Exhibit E. Liberty loan bonds owned, held as collateral to loans, etc., March
, 4, 1918
Exhibit F . Subscriptions for bonds of the third Liberty loan, as shown by
reports of condition of national banks, May 10, 1918
Exhibit G. Liberty loan bonds owned, amount which banks have contracted
to sell on partial-paym ent plan or otherwise, etc., June 29, 1918
Exhibit H. Liberty loan Q^onds owned, amount which banks have contracted
to sell on partial-payment plan or otherwise, etc., August 31, 1918
Exhibit I. Number and aggregate amount of loans made between March 4,1918,
and May 10, 1918, at rates in excess of- highest rate permissible by law under
written contract
^Exhibit J. Usury and the banks. . :

874
879
879
880
880
880
881
886
886
887
887
887
889
895
897
897
901
906
911
916
921
922

R E P O R T OF THE COMMISSIONER OP INTERNAL R E V E N U E :

Record of growth
'.
New era of taxation.
War revenues
Administrative reorganization
Floor taxes
Incomes and excess profits
.Interpretation
Regulations and forms
Securing returns
Excess profits tax reviewers.
Undisturbed corporate income
Withholding at the source




930
930
931
932
933
935
937
938
939
940
941
.942

CONTENTS.

XV

R E P O R T OF THE COMMISSIONER OF INTERNAL R E V E N U E — C o n t i n u e d .

Incomes and excess profits—Continued.
Page.
Handling returns
942
Collections
943
Information at t h e source
944
Delinquents
944
Audit and verification of returns
945
New auditing program
946
Net estates of decedents
949
Distilled spirits and alcoholic beverages
950
Denatured alcohol
950
Distilleries
951
Fermented liquors
951
Wines and cordials,
951
Tobacco and tobacco manufactm^es
952
Oleomargarine
953
Adulterated butter...
953
Renovated butter
953
Mixed
flour
953
War-stamp taxes
"
953
Public utilities, insurance, and sales b y manufactm'ers, producers, and importers
,
955
Narcotics
955
Conservation of man power and war materials
956
Capital stock of corporations
957
The legal force and its work
958
Court decisions
959, 980
Offers in compromise
:.,
959
Suits and prosecutions
960
Real estate acquired under internal-revenue laws
960
Claims for abatement and refund
\
960
Internal-revenue stamps
961
• Chemical analyses
'
962
Synthetic glycerin
'
963
Campaign of education
963
Statistical work
965
Bureau personnel
'.
•... 966
Internal-revenue field service
968
Recruitment and training
969
Readjustment of salaries. .'.
970
Rearrangement of collection districts
971
Cost of administration
L
972
Prospective legislation
973
Perpetuation of new policy
974
Summary of internal-revenue receipts, years ended June 30, 1917 and 1918,
by sources
•
976
Summary of internal-revenue receipts, years ended June 30, 1917 and 1918,
by collection districts
97.8
Summary of receipts from income and excess profits tax, years ended June
30, 1917 and 1918, by States and Territories
:
,
979
Total internal-revenue receipts, b y fiscal years, 1863-1918
980
Decisions of the courts in internal-revenue cases
980




ANNUAL REPORT ON THE FINANCES.
TREASURY DEPARTMENT,

Washington., December 2^ 1918.
SIR : I have the honor to make the following report:
During the past year the stupendous financial needs of America
and the nations associated with her in the prosecution of the war
have been met. From a peace basis the Nation has gradually adjusted itself to a war basis. Nonessential industry has largely given
way to essential industry.
' The payment into the Treasury of vast sums in war taxes and from
bond sales, and the transformation of our varied and complex
economic life to the supreme task of winning the war, have been
accomplished without shock or financial disturbance. The credit
and business structure of the nation remain sound and strong.
The fundamental fact underlying these great economic achievements has been the inflexible spirit and purpose of America to secure
for the world the blessings of that kind of liberty and ju.stice in
which America was conceived, and without which neither America
nor civilization can exist. Falsely reputed by her enemies to be a
heterogeneous people incapable of united action, America has revealed herself to the world as a solidified, homogeneous, altruistic,
and unselfish nation, willing to expend her blood and treasure without, stint for the vindication of her ideals and the rights of mankind.
The war has been won and peace is assured. Our heroes pn land
and sea have illumined the pages of America's glory with immortal
deeds. Their achievements, with the valorous deeds of their comrades in arms, have given a new meaning to democracy and have
brought a new order into being. May their splendid triumphs be
unmarred by vengeance and unsullied by injustice. May the new
peace of the world be in truth that peace of justice arid humanity
for which America has fought.
The results of the four Liberty^loans are a tribute to the patriotism
of the American people, and to the economic strength of the Nation.
Following the first and second loans, which were discussed in the
Annual Report of the Secretary of the Treasury for 1917, the
third and fourth Liberty loans were offered and largely oversubscribed. Unaccustomed to the purchase of Government bonds, or,
indeed, to the purcha/se of bonds of any sort, the' American people
responded to the calls of the Government with ^the most gratifying
loyalty and patriotism. In the third Liberty loan $4,176,516,850 was
subscribed by more than 18,300,000 people, an- oversubscription of
$1,176,516,850; in the fourth Liberty loan, $6,980,047,000 was subscribed by more than 21,000,000 people, an oversubscription of
$989,047,000.
.
86429°—FI 1918




1

1

2

EEPORT ON THE FINANCES.

These figures indicate the wide distribution of the bonds and the popular character of the loans. I n addition to Liberty bonds, over eight
hundred million dollars have been invested in.war-savings certificates
by the American people. These securities are assets of very great
value in the hands of individuals and represent the benefits of saving
and economy. The hope is earnestly expressed that with the return
of peace the American people will colitinue to foster the habits of
thrift and avoidance of waste. The happiness and prosperity of
every people, individually and collectively, rest upon their ability to
save more than they spend. The campaign for war-savings should
have a permanent effect in stimulating and encouraging peace savings. The habit of thrift is one of the benefits of the war that must
be permanently secured to the American people:
Every effort has been made by the Treasury and related agencies to
strengthen and protect the economic and business situation, whatever
the duration of the war. The special instrumentalities created to
meet the exceptional conditions have proved eminently successful.
The War Finance Corporation has extended assistance to war industries and exercised functions of great value. The Capital Issues
Committee has exerted a beneficial influence, and, as far as possible
under the present law, has regulated the issue of securities in competition with the Government's loans. Farmers have been assisted
through the farm-loan system and special measures have been taken
for their protection in order to preserve the foo'd supply of the nation.
The pressure under which this report must be written, the limited
time for its publication under the requirements of law, together
with the rapidly changing conditions incident to the transition from
war to peace, make it impossible to do more at the moment than to
give a hastily prepared narrative of the work of the Treasury during the past year. The discussion of many of the policies and questions affecting the problems of the Treasury, which I should have
been glad to incorporate, must be deferred to a more favorable time
and when conditions have been more fully developed.
The situation with regard to taxation for the fiscal years 1919
and 1920, however, has developed sufficiently to permit of a review
of the problem at this time and to suggest a program which it is
believed will meet the requirements of the Treasury and at the
same time conserve the business and prosperity of the country. I n
view of the assurance of peace, it has accordingly been recommended
to the. Congress that the pending revenue bill be modified so as to
yield $6,000,000,000 payable in the calendar year 1919 and not less
than $4,000,000,000 payable in the calendar year 1920. This is a reduction of $2,000,000/,000 for 1919 and a further reduction of $2,000,000,000 for 1920, as compared with the original estimate of $8,000,000,000, which was submitted in June, 1918, in preparation for a
long war. The changed situation justifies this reduction, and it
is respectfully suggested that a bill providing for this reduced taxa


SECRETARY OF THE TEEASURY.

3

tion be written into law as promptly as possible, in order that the Treasury may be enabled to put it into effect. Unless the measure becomes
a law in the near future, it will not be physically possible for the
Treasury to frame the necessary regulations and to print and distribute the necessary forms before the returns and taxes will be
due; the enforcement of the law will thereby be imperiled. Aside
from the necessity of prompt determination of the taxes for the year
1919, it is believed to be inoperative that the tax lav7 for the year
1920 be, enacted now in order that the people of the country may
know in advance the rates and the subjects of taxation and the
dimensions of the tax burden that must be imposed and applied
to the business and industry of the country for the calendar year
1919. The wisdom of such action is emphasized by every sound
economic consideration and wise tax policy. I t is desirable and necessary from the viewpoint of the Treasury in financing the period of
readjustment and from the viewpoint of business and labor and
industry generally. We must lift the burdens of taxation from the
people to the greatest possible extent during the period of readjustment now at hand, and by so doing we shall make more certain
the continued prosperity of the country. The situation is discussed
more in detail elsewhere in this report under the heading " Internal
Revenue."
THE COST OF THE WAE.

The foUowing is a statement of revised receipts and expenditures
for the fiscal years ended June 30, 1917, and June 30, 1918:
FISCAL Y E A R E N D E D J U N E 30, 1917.

Receipts:
Ordinary and Panama Canal
Public debt

$1,124,324,795.02
2,428,017,799.61

Total receipts
Expenditures:
Ordinary and
Panama
Canal
$1,107,798,131. 74
Purchase of obligations of
\ foreign Governments.... 885,000,000.00
Payment for Danish West
Indian Islands
25,000,000.00,
Subscriptions to stock, Federal land banks
8,880,315.00
Total ordinary a n d
special expenditures
Public debt

13,552,342,594.63

2,026,678,446.74
677,544,782. 25

Total expenditures

2;704,223,228. 99
FISCAL YEAR E N D E D J U N E 30, 1918.

Receipts:
Ordinary and Panama Canal
Public debt
Total receipts



$4,180,425,155.99
16,974,889,209. 61
21,155,314,365.60

4

EEPOET ON THE FINANCES.

Expenditures:
Ordinary
and
Panama
Canal
$8,392,464,986, 32
Purchase of obligations of
foreign G o v e r n m e n t s . . . . 4,739,434,750.00
Purchase of farm-loan bonds
64,171,551.08
Total ordinary a n d
special expenditures
Public debt

^
13,196,071,287. 40
7,706,879,075.13

Total expenditures

2(),902,950,362. 53

An analysis of the above table for the fiscal year 1917 shows that
exclusive of public debt transactions, the receipts for the year
amounted to $1,124,324,795.02, and expenditures for the year
$2,026,678,446.74, including $885,000,000 on account of the purchase of obligations of foreign Governments. From this it will be
noted that, exclusive of public debt transactions, 55 per cent of the.
expenditures for the year were paid from revenue receipts. If the
purchase of obligations of foreign Governments is deducted from the
total ordinary and special expenditures, that is, expenditures
exclusive of transactions in the public debt, the result is $1,141,678,446.74, and the above figures show that over 98.5 per cent of this
amount was paid from revenue receipts.
A similar analysis of the table of revised receipts and expenditures
for the fiscal year 1918 shows that, exclusive of transactions in the
public debt, the receipts for the year were $4,180,425,155.99, and
expenditures for the year $13,196,071,287.40. These figures indicate that, exclusive of public debt transactions, 31.6 per cent of the
expenditures for the year were paid from revenue receipts. If the
purchase of obligations of foreign Governments is deducted from the
total ordinary and special expenditures, that is, expenditures exclusive of transactions in the public debt, the result is $8,456,636,537.40,
and the above figures show that 49.4 per cent of this amount was
paid from revenue receipts.
If it is assumed that the normal expenditures of the Government
for the fiscal years 1917 and 1918 on a peace basis would have been
$1,000,000,000 for each year, the cost of the war up to June 30, 1918,
would appear to be as shown in the following table:
Total ordinary and special expenditures for
the fiscal year 1917
Estimated normal expenditures for the year..

$2,026,678,446.74
1,000, 000, 000. 00

Estimated war expenditures for fiscal year 1917
$1, 026, 678, 446. 74
Total ordinary and special expenditures for
„
'
the fiscal year 1918....
$13,196,071,287.40
Estimated normal expenditures for the year..
1, 000, 000, 000. 00
Estimated war expenditures for the fiscal year
1918
Total estimated war expenditures to June 30,1918




12,196,071,287.40
13, 222, 749, 734.14

SECEETAEY OF THE TEEASUEY.

5

With regard to the expenditures for 1917 and 1918, it must not be
assumed that the entire amounts stated have been permanently
absorbed because a large part of the expense (including ordinary expenditures and war expenditures) is represented by productive investments and will be reduced by salvage, etc. I t would require several
months to obtain the necessary data to analyze the expenditures for
1917 and 1918 for the purpose.of giving an accurate statement of
capital outlays, salvage, etc. The following table, however, incomplete as it is because of the lack of available information, will serve
to point out some of the Government's investments and expenditures
upon property of a permanent character during the fiscal year 1918:
Navy Department, new vessels, equipage, navy yards, stations, etc
$425,000,000
War Department, land," construction equipment and extension of
buildings (not including cantonments), railroads and marine equipment shop and power machinery, etc., and river and harbor works.. 370,000, 000
Interior Department:.
Reclamation fund
"
.^
5,000,000
Construction and operation of Alaskan railroads
11,000,000
Department of Agriculture, nitrate of soda for resale
"
.
6,250, 000
Treasury Department, public buildings under control of Treasury Department; i.e., post offices, court houses, custom houses, etc.
10,000, 000
Grain Corporation
50, 000,000
War Finance Corporation.
44, 929, 000
United States Shipping Board Emergency Fleet Corporation
770,000,000
Panama Canal construction
4, 000, 000
Purchase of obligations of.foreign Governments.
:
4, 739, 434, 750
Purchase of farm-loan bonds
64,171,000
Total.

,

6, 499, 784, 750

I t should be remembered that the figures in the foregoing tabulation represent costs during war time and do not include any allowance for depreciation.
The cash expenditures for the'^fiscal years 1917 and 1918, as published in the daily Treasury statements, and classified according to
Government departments, and a statement of the public debt as of
June 30, 1918, are attached as Exhibits 1 and 2, respectively.
T H E T H I R D LIBERTY L O A N .

I n the spring of 1918 the condition of the Treasury and the approaching maturities of outstanding certificates of indebtedness made,
it necessary to consider the offering of another Liberty loan. Accordingly, the Secretary of the Treasury sought from the Congress
authority for the necessary changes in terms and conditions of the
proposed new loan.
With the bonds of previous loans selling below par and industrial
and other securities yielding a return much in excess of the interest
rate on Government bonds, the question of the rate of interest on
the new bonds became acute. I t was the general banking opinion
that the rate should be 4^ per cent, and few believed that it



6

REPORT ON T H E FINANCES.

would be possible to sell the necessary large amount of bonds at a
lesser rate. The Treasury, on the other hand, stood firm in the belief
that the rate of interest would not of itself maintain Liberty bonds
at par in the financial markets; that the price of Liberty bonds, even
though quoted at less than par on the exchanges, would not deter
the American people from buying at par the same bonds when
offered by their Government to secure the necessary funds to carry
on the war; that the patriotism of the American people was not
measured by interest rates nor determined by the fluctuations in the
market price of Government bonds on stock exchanges.
The situation was very complex. There could be no denying the
fact that existing issues were selling below par, nor could there be
any refutation of the claim, except by actual experiment, that the
investing public would not buy the new issue at par when the same
bonds could be bought in the open market below par. The Treasury
felt, however, that to raise the interest rate to 4^ per cent would
mean a corresponding increase in the cost of the war and force still
higher interest rates on future issues of industriar and other securiiies, as well as further to depress the price of existing long-term
bonds. On the other hand, it seemed clear that the time had
arrived when every effort should be made to stabilize the interest
rate on Government bonds and to reach a point where there would
no longer be expectation of further increases in rates.
I t was decided, therefore, to recommend that the Congress authorize
the issue of a 4J per cent nonconvertible bond, or an increase iri the
interest rate of one-fourth of 1 per cent instead of an increase of
one-half of 1 per cent. Such a bond, it was believed, would result in
accomplishing two things, first, the stabilization of the interest rate
as far as it was possible to stabilize it in the extraordinary circumstances then existing, and, second, the elimination of the conversion
privilege, which had become no longer necessary for the sale of the
bonds and which in itself had a tendency to create a demand for a
constantly rising rate of interest on successive issues.
Congress by the act of April 4, 1918, known as the third Liberty
bond act (Exhibit 3), indorsed the recommendation of the Treasury
and authorized the issue of a 4:^ per cent nonconvertible bond. A
great saving in interest charges to the Government was thereby effected. As the bonds of the two previous Liberty loans were convertible into bonds of the third Liberty loan, an increase in the interest rate to 4^ per cent would have imposed a large additiona] burden
upon the American people in the way of taxation for naany years
to come. Furtherriiore, all subsequent issues would probably have
had to be at this higher rate of interest, with the inevitably enlarged
interest burden, and it might have been necessary later on to increase
the rate of interest still further.



SECEETAEY OF THE TEEASUEY.

7

, The third Liberty bond act increased also the amount of bonds authorized from $7,538,945,460 to $12,000,000,000. The amount of obligations of foreign Governments engaged in war with the enemies of
the United States which the Treasury was authorized to purchase was
increased from $4,000,000,000 to $5,500,000,000, and the amount of
Treasury certificates of indebtedness authorized to be outstanding at
any one time was increased from $4,000,000,000 to $8,000,000,000.
Under the terms of the new law the bonds issued thereunder were receivable under certain conditions in payment of estate or inheritance
taxes imposed by the United States, and the Secretary was authorized
to purchase each year 5 per cent of each outstanding issue of Liberty
bonds (other than 3^ per cent bonds).
The third Liberty loan w^as offered to the public on April 6, 1918,
the first anniversary of America's declaration of war. The^terms
of the issue are described in Department Circular No. I l l , dated
April 6, 1918, which is attached as Exhibit 4. The form of application for bonds by subscribers generally, and the form of application by incorporated banks or trust companies for bonds to be
sold in lots of $10,000 or less to any one subscriber upon payment in
full by such subscriber, are also attached as Exhibits 5 and 6,
respectively.
The bonds are dated Ma}' 9, 1918, and are payable on September
15,1928. Subscriptions for $3,000,000,000 were invited, and the right
was reserved to allot additional bonds up to the full amount of any
oversubscription. The subscription period extended from April 6,
1918, to May 4, 1918.
The loan was largely oversubscribed. The results by Federal
reserve districts, arranged in the order of percentage of oversubscription, were as follows:
Results of third Liberty loan subscriptions according to Federal reserve
• districts.
District.

Minneapolis...
Kansas City...
St. Louis
Atlanta
Dallas
Philadelphia..
Richmond
Chicago
Boston
San Francisco.
Cleveland
New York
Grand total.
Treasury
b'inal total.

Subscriptions

Percentage of
quota
subscribed.

892,100
$105,000,000
130,000,000
204, 092,800
130,000,000
199, 835,900
90,000,000
137, 649,450
80,000,000
116, 220,650
250,000,000
361, 963,500
130,000,000
186, 259,050
425,000,000
608, 878,600
250,000,000
354; 537,250
210,000,000
•287, 975,000
300,000,000
405, 051,150
900,000,000 1,115, 243,650

172.28
156.99
153.72
152.94
145. 27
144.79
143.27
143.26
141.81
137.13
135.02
123.91

Quota.

3,000,000,000

Subscribers.

Per cent
of population
subscribing.!

1,221,504
1,190,193
1,186,377
584,196
719,210
1,670,229
858,358
3,479,315
1,512,555
1,402,584
1,440,681
3,043,123

23.6
16.0
12.7
, 5.8
12.7
25.2
9.2
24.7
21.7.
21.1
15.4
23:2

4,158,599,100
17,917,750

18,308,325
68,490

17.7

4,176,516,850

18,376,815

1 The percentage of population subscribed is based on theestimated population of the United States on
July 1,1917, namely, 103,620,273.
^




EEPOET ON T H E FINANCES.
Subscription to the third Liberty loan by States.

State.

A labama
Arizona
Arkansas
California
Colorado .
...
Connecticut
Delaware. . . .
D i s t r i c t of Colum bia
Florida
Georgia
Idaho
Illinois......
. . ..
Indiana..
Iowa
Kansas...
Kentucky
Lonisianti..
Maine
Maryland..
Massachusetts
,
Michigan
Minnesota
Mississippi.
Missouri
Montana
Nebraska
Nevada
NewHampshire
New Jersey.
N e w Mexico
New York
N o r t h Carolina
North Dakota..
Ohio
Oklahoma..
Oregon
Pennsylvania
Rhodelsland
S o u t h Carolina.
South D a k o t a
Tennessee
Texas . .
Utah
Vermont.
Virginia
Wasliington..
W e s t Virginia.
Wisconsin
Wyoming
Alaska
Hawaii..
G u a t e m a l a , C. A

Quota.i

'

§14,249,000
4,766,756
15,351,500
133,820,429
19,661,600
41,243,500
8,561,850
12,870.000
11,287,600
28,551,000
7,909,366
197,138,050
62,907,300
71,050,000
29,330,350
25,525,450
26,358,750
12, 762,000
38,259,000
162,386,000
83,600,000"
71,500; 000
12,910,700
78,991,050
9,000,000
30,918,650
2,576,442
10,162,000
91,366,840
3,593,750
819,921,500
IS,655,000
6,500,000
164,079,150
27,809,200
18,470,955
359,170,000
25,000,000
14,625,000
22,000,000
24,205,000
73,910,000
10,300,080
6,600,000
29,809,000
, 29,357,827
21,770,300
53,600,000
4,864,700
687,828
3,610,317

Subscriptions.

P e r cent
quota
subscribed.

162.4
$23,153,850
234.4
11,176,450
147.9
22,709,950
130. 6
174,823,150
31,049,800 • 157.9
168.07
70,319,550
296. 6
25,396,400
219.6
. 25,992,250
159.7
18,031,100
137.6
39,133,050
135.9
10,657,050
141.6
279,253,700
134.6
84,729,200
164.9
117,211,450
163.9
47,390,700
171.9
43,672,600
131.3
34,533,150
144.6
18,348,100
127.3
48,729,800
140.6
228,329,750
128.7
107,671,400
138.1
98,778,000
137.9
17,804,950
140.2
110,811,350
195.9
17,632,750
163.9
50,684,850
183.4
4, 725,250
140.2
14,252,000
153.1
139.914,300
166.9
5,998,500
122
985,559,600
131.8
24,582,250
186
12,100, 400
137.2
225,133,350
141.8
39,404,500
153.2
28,291,700
130.2
467,753,550
114.8
28,717,700
132.8 •
19,426,250
142.9
31,443,600
139.4
33,762,000
131.6
97,322,500
126.7
13,048,650
141.3
9,330,750
147.7
44,048,750
146.1
42,908,350
146.5.
31,913,250
161.3
86,484,250
150.6
7,330,550
252.6
1,737,250
4,819,850 • 133.5
500

Treasury.
Unallocated

4,176,516,850

2,363,939
263,588
1,766 343
3,0'^", 032
988,320
1,245, .373
215 160
396,282
916,185
2,895,841
445,176
6,234,995
2,835, 492
2,224, 771
1,851,870
2,394,093
1,856,954
777,340
1,373,672
3,775,973
3,094,266
2,312,445
1,976,570
3,429,595
472,936
1,284,126
110, 738
444,429
3,014,194
423,649
10,460,182
2,434,381
7.65,319
5,212,085
2,289,855
861,992
8,660,042
625,865
1,643,205
716,972
2,304,629
4,515,423
443,866
364,946
2,213,025
1,597,400
1,412,602
2,527,167
184,970

17,917,750
529,150

Total

Population.

1 Quota assigned by Federal reserve banks.




P e r cent
N u m b e r of populasubscribers. tion s u b scribed.
109,800
53,288
163,015
759,623
177,937
354,38242,940
135.824
77,400
167,000
77,196
1,607,671
479,029
660,942
317,469
191,042
136,600
122,846
253,916
807,410
632,476
598,595
99,888
649,584
113,038
244,484
23,129
88,333
647,382
38,766
2,456,349
81,582
135,044
794,246
272,917
148,588
2,032,704
165,666
87,905
208,354
105,722
611,741
70,905
66,651
173,787
258,335
156,033
530,938
47,049
9,988
17,796

4.62
20.2
9.2
25.07
18.03
28.4
19.9
36.7
8.4
6.1
17.3
25.7
16.1
29.07
17.5
•7.9
7.3
15.8
18.4
21.3
20.4
25.8
5.05
18.9
23.9
17.6
20.9
19.8
21.4
9.1
23.5
3.3
17.6
15.2
11.8
17.2
23.4
26.4
5.3
29
6.54
13.5
15.9
14.8
7.8
16.1
11
21
25.9

68,490
2 103,620,273

18,376,815

^ Estimated population July 1, 1917.

17 7

statement showing estimated number of subscribers to the third Liberty loan, the par valu£ of bonds subscribed for, and subscriptions classified
^
according to denominations.
S50 to $10,000, inclusive.
Federal reserve district
Number
of subscribers.
Boston
New Y o r k . . .
Philadelphia.
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco
Treasury
Total...




1, 509, 840
3,036,980
1, 668,045
1,437,863
857,420
583,495
3,476,765.
1,185,282
1,221,100
1,189,125
7LS, 646
1,401,265
68,489
18,354,315

Par amount.

$189,597,650
523,226,650
259,056,350
255,046,600
145,602,050
109,708,250
468,469,950
161,385,300
160,344,150
179,014,150
94,490,900
219,563,450
5,443,750
2,770,933,150

$10,050 to S50,000,
inclusive.

$50,050 to $100,000,
inclusive.

Number
Number
of sub- Par amount, of subscribers.
scribers.
1,961 $50, 892,800
4,628 127,456,850
28,225,500
1,107
61,106,050
2,249
• 782 19,304,750
13,878,300
596
56,378,000
2,061
20,672,700
949
9,631,150
334
987=. 15,186,000
12,257,700
489
28,598,250
1,093
17,236

443,587,950

Par amount

609 1 $32,220,050
68, 562, 600
763
967
24,239,750
355
30,764,000
106
8,751,100
74
6,426,400
295
26,719,150
89
6,966,100
41
3,509,850
55
4,467,050
53
4,225,000
131
10,014,350
226,865,400

$100,050 to $200,000,
inclusive.

Over $200,000.

Total.

Number
Number
of sub- Par amount. of subscribers.
scribers.

Par amount.

Number
of subscribers.

Par amount.

85
322
59
134
33
16
102
43
20
22
17
52

$24,219,200
50,145.050
9,050, 450
20,979, 800
5,520,100
2,726,500
16,154,600
5,780,450
3,432,050
3,120, 600
3,107,050
7,720,850

60
430
51
80
17
15
92
14
9
4
5
43
1

$57,607,550
345,850,500
41,391,450
37,154, 700
7,080,850
4,910,000
41,156,900
5,031,350
3,975,000
2,305,000
2,140,000
22,078,100
12,474,000

1,512,555
3,043,123
1,670,229
1,440,681
858,358
584,196
3,479,315
1,186,377
1,221,504
1,190,193
719,210
1,402,584
68,490

$354, 537,250
1,115,243,650
361,963,500
405,051,150
186,259,050
137,649,450
608, 878,600
199, 835,900
180,892,100
204,092,800
116,220,650
287,975,000
17,917,750

905

151,956,700

821

583,155,400

18,376,815

4,176,516,850

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CD

Amount of each denomination of the third Liberty loan delivered to subscribers.
[Oct. 15, 1918.]
F e d e r a l R e s e r v e b a n k a n d detail

Total.

S50

$100

$500

$1,000

85,000'

810,000

$54,539,900
626,550

840,941,200
2,313,100

$21,141,000
2,455,500

$131,732,000
4,573,000

826,030,000
2,555,000

$52,430,000
9,650,000

$2,850,000

82,700,000

8326,814.100
27,723,150

55,166,450

43,254,300

23,596,500

136,305,000

28,585,000

62,080,000

2,850,000

2,700,000

354,537,250

116,249,950
913,000

112,265,400
3,613,300

60,50.5,000
3,893,000

555>000,000
7,479,000

50,000,000
3,885,000

155,000,000
.7,140,000

7,200,000

32,100,000

1,049,020,350
66,223,300

Total

117,162,950

115,878.700

64,398,000

562,479,000

53,885,000

162,140,000

7,200,000

32,100,000;

1,115,243,650

Philadelphia:
Coupon
Registered
Undelivered

61,895,300
286,250

51,840,200
1,609,900

29,897,500
1,886,500

116,765,000
4,782,000

22,130,000
2,250,000

58,000,000
3,980,000

1,750,000

3,900,000

340,528,000
20,444,650
990,850

62,181,550

53,450,100

31,784,000

121,547,000

24,380,000

61,980,000

1,750,000

3,900,000

361,963,500

76,273,550
1,034,400

69,927,000
4,971,900

43,677,500
6,768,000

104,980,000
10,093,000

25,415,000
3,930,000

41,100,000
5,150,000

4,900,000

6,800,000

361,373,050
43,647,300
30,800

Total

77,307,950

74,898,900

50,445,500

115,073,000

29,345,000

46,250,000

4,900,000

6,800,000

405,051,150

o

Richmond:
' Coupon
Registered
Undelivered

32,114,400
593,150

34,228,500
2,514,100

20,257,000
3,250,500

54,061,000
6,440,000

10,100,000
2,600,000

14,690,000
2,740,000

1,400,000

900,000

165,450,900
20,437,750
370,400

Ul

Total

32,707,550

36,742,600

23,507,500

60,501,000

12,700,000

17,430,000

1,400,000

900,000

.186,259,050

23,264,600
498,700

27,163,000
1,719,900

16,295,500
2,388,000

41,908,000
5,168,000

5,670,000
2,620,000

6,470,000
2,380,000

450,000

500,000

120,771,100
15,724,600
1,153,750

23,763,300

28,882,900

18,683,500

47,076,000'

8,290,000

8,850,000

450,000

600,000

137,649,460

8100,000

•

Boston:
Coupon
Registered
Total
N e w York:
Coupon
Registered

Total

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Cleveland:
Coupon
Registered
Undelivered

Atlanta:
Coupon
- Registered
Undelivered

850,000

•...-..

.\

Totai




*

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Chicago:
Coupon
Registered

120,265,600
3,762,400

35,020,000
3,670,000

6,950,000

6,400,000

542,513,300
66,365,300

154,563,600

87,241,000

157,646,000

33,360,000

38,690,000

6,950,000

6,400,000

608,878,600

42,862,000
1,197,100

45,120,300
3,782,500

26,432,000
5,046,000

53,820,000'
7,531,000

5,225,000
1,980,000

4,420,000
1,370,000

856,656

200,000

177,879,300
'21,956,600

48,902,800

31,478,000

61,351,000

7,205,000

5,790,000

850,000

200,000

199,835,900

• 56,316,000
5,946,900

18,177,000
3,967,500

27,716,000
3,493,000

6,940,000
980,000

11,330,000
1,800,000

1,100,000

1,200,000

160,589,150
19,918,700
384,250

41,541,450

62,262,900

22,144,500

31,209,000

7,920,000^

13,130,000

1,100,000

1,200,000

180,892,100

43,743,550
1,428,650

50,973,400
5,887,400

26,473,500
6,867,500

36,215,000
9,598,000

' 6,235,000
3,005,000

6,470,000
2,840,000

1,300,000

1,900,000

170,110,450
32,826,550
1,155,800

45,172,200

56,860,800

33,341,000

45,813,000

9,240,000

9,310,000

1,300,000

1,900,000

204,092,800

25,501,850
319,800

27,513,600
945,200

12,075,000
1,372,000

25,476,000
3,599,000

7,105,000
1,990,000

7,170,000
2,240,000

350,000

500,000

104,841,450
11,316,000
63,200

.25,821,650

28,458,800

13,447,000

29,075,000

9,095,000

9,410,000

350,000

500,000

116,220,650

60,354,200
338,450

Total

29,195,000
4,165,000

40,110,150
1,431,300

.'...

143,435,000
14,211,000

44,059,100

St. L o u i s :
Coiioon
Registered

74,385,500
12,855,500

124,028,000

Total

140,212,200
14,351,400

69,601,600
1,161,400

29,950,000
1,485,500

93,322,000
3,042,000

12,315,000
1,350,000

17,740,000
4,130,000

700,000

1,200,000

273,282,800
13,407,350
1,284,850

700,000

1,200,000

287,975,000

Minneapolis:
Registered.
Undelivered

Ul

Total

/

K a n s a s City:
Counon
Registered
Undelivered
Total . Dallas:
Coupon
Registered
Undelivered

.

<i

Total
S a n FranciscoCoupon
Registered
Undelivered

s

Total
Treasury:
Coupon
Registered
Undelivered

Total




21,870,000

60,692,650

.

60,763,000

31,435,500

96,364,000

7,400
.

2,300
100

500

5,000

70,000

^12,400,000

9,700
12,475,600
5,432,450

7,400

2,400

500

5,000

70,000

12,400,000

17,917,750

697,182,450
12,429.750

716,104,700
48,817,100

379,266,500 1,384,430,000
80,014,000
52,236,000

206.360,000
31,310,000

409,840.000
47,160,000

29,800,000

70,700,000

3,793,183,650
372,466,850
10,866,350

709,612,200

764,921,800

431,502,500 1,464,444,000

237,670,000

457,000,000

29,800,000

70,700,000

4,176,616,850

.

Total
G r a n d total:
Coupon
Registered
Undelivered

13,665,000

-

..'.

....
=
.

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Number of bonds of the third Liberty loan delivered.
Coupon.

bO
Total.

Registered.

Denomination.
N u m b e r of
pieces.
$50
$100
5500
11,000
15 000
$10.000
150,000
1100000

13,943,649
7,161,047
758,633
1,384,430
41,272
40,984

Amount.

$697,182,450
716,104,700
379,266,500
1,384,430,000
206,360,000
409,840,000

.*

Total




23,329,915

3,793,183,650

N u m b e r of
pieces.
248,595
488,171
104,472
80,014
6,262
4,716
596
707
933,533

Amount.

.

^ N u m b e r of
pieces.

Amount.

..

812,429,750
48,817,100
62,236,000
80,014,000
31,310,000
47,160,000
29,800,000
70,700,000

14,192,244
7,649,218
863,005
1,464,444
47,534
45,700
696
707

8709,612,200
764,921,800
431,502,500
1,464,444,000
237,670,000
457,000,000
29,800,000
70,700,000

372,466,850

24,263,448

4,165,650,500

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SECEETAEY OF THE TEEASUEY.

13

Third Liberty loan 41 per cent bonds of 1928.
(May 9 to Oct. 15, 1918.)
Amount subscriptions allotted
Paynients received
Balance unpaid

:
84,176,516,850
$4,170,846,247.75
15,670,602. 25
4 176,516, 8 5
Coupon.

Bonds issued:
On subscriptions
On exchanges

Total.

$3,793,183,650
484,200

*
.

1

$372,466,850
51,121,350

84,165,650,500
51,605,550

3,793,667,850

Total
Bonds canceled:
On exchanges
Bv nutchase

Registered.

423,588,200

4,217,256,050

51,121,350
34,935,500

-484,200

51,605,550,
34,935,500

86,056,850

Total....
Bonds outstanding
Bonds deliverable (inclu(ing unpaid amounts)

484,200

86,541,050

3,707,611,000

423,104,000

4,130,715,000
1 10,866,350

Total bonds outstanding and deliverable

4,141,581,350

1 Includes Army subscriptions on special payment plan extending over a 10 months
period.
^
T H E F O U R T H LIBERTY LOAN.

^

C

With the completion of the third Liberty loan the Treasury began
immediate preparations for the financing of the Government during
the summer of 1918. A careful, analysis of the situation justified
the expectation that the expenditures could be met by continuing
the policy of issuing short-term Treasury certificates of indebtedness
until the fall, when it would be necessary to offer another long-term
loan. Accordingly, on June 12, 1918, the question of additional
authority for the issuance of bonds was taken up with the Congress,
with the result that the fourth Liberty bond act was passed and
approved July 9, 1918. (Exhibit 7.)
. .
«
The new act increased the authorization for Liberty bonds from
$12,000,000,000 to $20,000,000,000, and the authorization for the purchase of obligations of the foreign Governments, at war with the
enemies of the United States, from $5,500,000,000 to $7,000,000,000.
During the summer the conditions materially changed, and it
became necessary to give further consideration to the terms and
conditions of the new issue before offering them to the public. The
revenue bill was pending in the Congress and the uncertainties as
to the effect of the new taxes upon income and the market value of
the bonds rendered it essential to adopt measures to make the bonds
as attractive as possible, to protect investors in them, and tG
strengthen further the investment market for Government obligations. The Treasury desired to take every possible precaution not
only to make the new issue a success but to stabilize the rate at 4J
per cent. The situation was explained in detail to the Ways and




14

EEPOET ON THE FINANCES.

Means Committee of the House of Eepresentatives in the following
letter to the chairman of that committee:
WASHINGTON, September 5, 1918.

DEAR ME. KITCHIN : In connection with the tax biU now before the Congress,
and without awaiting its enactment, I feel constrained to bring to your attention a matter affecting the fourth Liberty loan. The delay in the enactment of
the tax bill, the fact that the rates of income surtaxes, to which the interest on
Liberty bonds, except the first Liberty loan, is subject, will be higher, and the
rate of normal income tax on unearned income will be lower, than I had contemplated, materially affect the prospects of the fourth Liberty loan.
I do not mention these things critically, for I realize that the Ways and
Means Committee have labored faithfully and earnestly during the hot summer
months in the consideration and preparation of the tax bill. I have already
expressed my acceptance of a normal tax of 12 per cent without a differential
against unearned incomes, ahd in principle I am now agreed with the committee that a substantial increase in surtax rates will be necessary in order to
produce the indicated revenue.
The market price of Liberty bonds, which responded favorably to the sugges-'
tion of an increased normal tax, from which the bonds will be exempt by their
terms, was depressed by the newspaper reports of a greatly increased surtax,
to whicji the interest on the bonds will be subject. I have been anxious to
stabilize the interest rate upon Government bonds, believing that by so doing
we should be reducing the cost of the war, not only to-day for ourselves, but
in the future, for ourselves and for our brave men who are fighting in France
and who will have little or no opportunity to accumulate and invest in Liberty
bonds though they must upon their return join the army of taxpayers who must
pay this interest. I have sought to avoids the issue of bonds at such a rate and
upon such terms as might .result ultimately, when the war is won, in the accumulation of great wealth in the hands of a relatively small proportion of our
population, carrying interest at a high rate and exempt from taxes.
The magnificent patriotism of our people-and the fervor and efiiciency'of the
Liberty loan organization have made it possible to place the Liberty bonds in
the hands of many millions of persons who had never before been investors in
securities of any kind. Bonds of the third Liberty loan received the widest possible distribution, and I feel that we all owe a duty to the millions of subscribers of smair means, not merely to pay them a fair rate of interest, which
we are doing, but to take such measures as may be necessary to insure to them
a market for the bonds at approximately par in case their necessities are such
as to force them to realize upon the investment which they have made in the
Government's obligations. The bond-purchase fund, which was provided in the
third Liberty bond bill, has been very useful in stabilizing the price of Liberty
bonds, but it has not been, and we could not expect it to be, effective to sustain the price against adverse developments, and in the face of the fact that
the Government's recurring demands upon the absorptive power of the investment community are in such proportions and of such frequency as to prevent
the development of any important buying power in the investment market
between Liberty loan campaigns.
I have been much impressed by the success of the plan which has been adopted
in Canada for the purpose of maintaining the market value of Canada's victory
bonds. A careful study of that plan is being made in the Treasury and by the
War Finance Corporation, and I am glad to learn that the bankers of the
country have been making a similar study. I am not without hope that some
such plan may be made effective in the United States, although conditions here




SECEETAEY OF THE TEEASUEY.

15

are very different and it will not do to depend too much upon the experience of
our neighbor. In any event, it will not do to proceed in this matter abruptly,
nor without the creation of an immense organization country wide in its rami-,
fications. To make such a plan effective, it would ^ be necessary to put an end
to dealings in bonds on the exchanges, and accordingly to substitute an active
and adequate market through the banking houses of the United States acting
in close cooperation with an instrumentality of the Government, probably the
War Finance Corporation. At the same time, it would be necessary to put an
end to the numerous schemes, many of them actually fraudulent, for inducing
inexperienced holders of Liberty bonds to exchange them for merchandise or
property of less inherent value though carrying the promise of^a higher value
or a higher income return. In order that the Treasury may be placed in a
position to carry such plans as these into effect, if they should be found expedient, I suggest for your consideration the present enactment of appropriate
legislation.
Last year I had the privilege of explaining to you and your colleagues on the
Ways and Means Committee very fully the reasons why I advocated making the
income from Liberty bonds subject to income surtaxes. I still believe that
that course was wise and that the arguments advanced in favor of it were
sound. It will not do, however, to press any theory, however sound, to an
extremity, and it is obvious that, as a practical matter, we can not keep the
interest rate on Government bonds stationary, or substantially so, and continue
indefinitely to increase the surtaxes, to which the income from those bonds is
subject, without at the same time limiting the market for Liberty bonds to those
who have little or no surtaxes to pay. Since the bond and tax legislation
which was under discussion in the summer of 1917, and which was enacted in
the fall of 1917, the interest on Liberty bonds has been increased only one-fourth
of 1 per cent, whereas the surtax rates now in contemplation would carry an
increase in the taxes to which the interest on the bonds is subject, rising above
150 per cent increase in some classes. Surtaxes on incomes from $5,000 to
$200,000 would, under the new tax bill, on the average be doubled. In order to
give the numerous small holders of Liberty bonds the advantage of a market
upon which they may sell their bonds in case of necessity, ai^d also to attract
subscriptions from the great number of investors of ample means, but not of
great wealth, it will be necessai^y immediately either to increase the interest
rate or to neutralize the increased surtaxes by freeing the bonds to a limited
extent from such taxes.
I recommend that a portion of the income of these bohds should be free from
surtaxes for the period of the war and for a brief interval thereafter. This
course would make it possible to meet the exigencies of the present situation
and to counterbalance the adverse effect on the market value of Liberty bonds
of the increased surtax rates, and at the. same time would not be open to the
very grave objection which exists against any unlimited or permanent exemption, which would deprive the Government of the United States of the power
to meet its necessities in the future by supertaxes on incomes derived from
Liberty bonds. If the surtax rates should be reduced after the war, the interest
which is fixed in the bonds would continue. Having, as I, believe, in fairness
to the patriotic people who will subscribe for the fourth Liberty loan, to choose
between one of two methods of making the bonds more attractive, neither of
which is wholly satisfactory, I am inclined to recommend at this time that the
holders of these bonds be given a qualified and limited freedom from surtaxes
in respect to their holdings rather than that the interest rate should be increasied. I believe that, on the whole, the wise and expedient thing is to
grant a limited exemption calculated to counterbalance the increase in surtax




16

EEPOET ON THE FINANCES.

rates now contemplated, and which I believe will be only temporary, rather
than to increase the interest rate on Liberty bonds for the life of the bonds.
I am influenced in this determination by the fact that it continues necessary
to sell Liberty bonds in competition with billions of dollars of bonds of the
United States, the various States and municipalities, which are wholly exempt
from surtaxes, as well as from all forms of taxation, so that the person whose
income is subject to surtaxes is apt to make a comparison of the income
return from the Liberty bonds which he is asked to subscribe for, not with
the income return from corporation and other securities • such as carry no
exemption from taxation, but with the income" return from wholly exempt
bonds of the United States and the various States and municipalities.. Under
the existing state of the Constitution and laws, such a comparison can not be
avoided. In these circumstances, we must find a middle ground between the
sound view which would refuse all exemptions from^ surtaxes and the practical
necessity of taking into account the fact that such exemptions will in any
event be gained, as surtaxes are steadily increased, by shifting funds into
governmental. State and municipal bonds, the income from which is exempt
from surtaxes as well as from normal taxes.
In granting such exemption, I think appropriate provision should be made
to the end that those who subscribe for bonds of the fourth Liberty loan may,
to the extent Qf a specified portion of their holdings, participate in the
exemption in respect to bonds of the first Liberty loan converted, the second
Liberty loan converted and unconverted, and the third Liberty loan.
Should, these views commend themselves to the Congress, I believe that
immediate action should be taken, so that the status of the bonds of the fourth
Liberty loan, in respect to taxation, may be promptly known. It is, in fact,
imperative that this status should be quickly known.
There are certain other matters to which I desire to call the attention of
your committee at this time:
The provisions of section 8 of the second Liberty bond act, as amended by
the third Liberty bond act, should be extended so as to authorize the Secretary
to deposit the proceeds arising from the payment of war-profits taxes with
qualified depositary banks and trust companies in the United States in the
same manner as the proceeds of income and excess-profits taxes.
The time has come to make provision for the sale of war-savings certificates
in 1919. The limit of $1,000 on the amount which may be held by any one
person should be made to apply separately to the series which will be issued in
1919, so that one holder may owii $1,000 of that series in addition to $1,000 of
the series of 1918. At the same time the limif of $2,000,000,000.now imposed
on the aggregate amount of the issue should be enlarged, or, better, removed,
for the necessary distribution, of the war-savings stamps among thousands of
post offices and other agencies engaged in making sales over the counter may
make the limit very embarrassing long before the cash receipts of the Treasury
indicate that the limit is about to be reached.
In the negptiations which I have had and am having with or in foreign countries in the effort to stabilize foreign exchange, I find myself seriously hampered
because I am without the freedom of action which is possessed by the finance
ministers of European countries. I may only sell bonds or Treasury certificates
of indebtedness, which involves often international complications, and may not
obtain banking credits nor operate as freely as may be necessary in the effort
to stabilize exchange. Notwithstanding these restrictions, the Treasury has
been'able to make substantial progress in dealing with this difficult problem.
I urge upon you, however, the incorporation in the law of the necessary authority to give greater flexibility to the operations of the Treasury in this respect.




SECEETAEY OF THE TEEASUEY.

17

I believe it is highly desirable at this time t h a t the President should be
empowered to investigate, regulate, or prohibit not only the export or earmarking of gold or silver coin or bullion or currency but also "the hoarding or
melting thereof.
% .
Last March I called the attention of the Congress to the importance of
amending t h e provisions of section 5200 of the Revised Statutes limiting the
amount of loans which national banks may make to any one borrower. A bill
was r e p o r t e d . b y the Banking and Currency Committee of the House (H. R.
10691), passed by the House, and reported with amendments by the Committee
on Banking and Currency of the Senate, but not acted upon by the Senate. The
Senate did pass a bill (S. .4099), dealing to a certain extent with the same
subject matter, prior to the Senate committee report on the House bill; and on
the Senate bill, no action has been taken by the House. I t is essential t h a t this
m a t t e r be disposed of before the fourth Liberty loan is offered.
By way of suggestion and in order the better to formulate my views for your
consideration, I have taken the liberty of preparing a bill which would deal
with t h e various points I have mentioned, in this letter. A draft of this bill
is. inclosed. May I not ask t h a t the jVVays and Means Committee give these
points its immediate attention with a view to the enactment of the necessary
legislation, if my suggestions commend themselves to the committee, in ample
time to become effective before the opening of the fourth Liberty loan campaign
on September 28? I feel t h a t the success of this loan is deeply involved in
this legislation.
Mr. Leffingwell is fully informed of my views concerning these m a t t e r s and
is authorized to speak for me in my absence should the committee desire any
further information.
, ,
Cordially yours,
W.
Hon.

G. MCADOO'.

CLAUDE K I T C H I N ,

Chairman Ways and Means Committee,
House of Representatives, Washington, D . C .
P. S.—I am sending a copy of this letter and t h e inclosure to Senator
Simmons.

These recommendations were embodied, substantially as presented,
in the act approved September 24, 1918 (Exhibit 8), known as the
" Supplement to second Liberty bond act."
One of the most important provisions of the new law was the additional exemption from taxes granted to the bonds. I t was provided that the interest on $30,000 of bonds of the fourth Liberty loan
should be exempt, until two years after the termination of the war,
from surtaxes and excess profits taxes and war-profits taxes. The
taxpayer who subscribed for $30,000 of these bonds and still held
them at the time of making his tax return would also receive an
exemption from such taxes for a like period as to the interest received
after January 1, 1918, on an aggregate amount of $45,000 of bonds
of previous Liberty loans (not including 3^ per cent bond^ of the
first Liberty loan, which are permanently and totally exempt except as to estate and inheritance taxes) and subscribers in lesser
amounts would receive a proportionate similar exemption. The new
86429°—FI 1918

2




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18

EEPOET ON T H E FINANCES.

exemptions were in addition to exemptions already granted to Liberty
bonds under the act of September 24, 1917, as amended.
The fourth Liberty loan was offered to the public on September
28, 1918, through Department Circular No. 121 (Exhibit 9 ) , and
the form of application.for the bonds by subscribers generally, and
the form of application by incorporated banks or trust companies for
coupon bonds for advance delivery, are attached as Exhibits 10 and
11, respectively.
Subscriptions were invited for $6,000,000,000, and the right was
reserved to allot additional bonds up to the full amount of any oversubscription. The subscription period closed on October 19, 1918.
Total subscriptions aggregated $6,989,047,000, an oversubscription of
$989,047,000. I n accordance with his announcement, the Secretary
made allotment in full upon all subscriptions. The estimated number of subscribers was in excess of 21,000,000. This great loan was
oversubscribed in spite of very real difficulties incident to the influenza epidemic which swept over the country during the progress
of the campaign and which caused the abandonment of public meetings on a large scale, the unenacted revenue bill and other unfavorable factors. The oversubscription of this largest of all loans was
the greatest' financial achievement in all history and a wonderful
manifestation of the strength and purpose of the American people.
Following are the approximate final figures qn subscriptions to the
fourth Liberty loan, by Federal reserve districts, arranged in the
order of oversubscription:
District.
Boston
Richmond
Philadelpbia..
Cleveland
Dallas
Minneapolis...
San Francisco.
St. Louis
New York
Atlanta
Kansas City...
Chicago....
Treasury
Total.

Quota.

Subscribed.

$500, 000,000
280, 000,000
500, 000,000
600, 000,000
126, 000,000
210, 000,000
402, 000,000
260, 000,000
1,800, 000,000
192, 000,000
260, 000,000
870, 000,000

$632, 221,850
352; 688,300
598, 763,650
702, 059,800
145 944,450
241 628,-300
459; 000,000
296, 388,550
2,044,778,600
217, 885,200
294, 649,450
969, 209,000
33 829,850

126.44
125.95
119.75
117.00
115.82
115.06
114.17
113.99
113.59
113.48
113.3^
111.40

6,000,000,000

6,989,047,000

116.48

Per cent.

According to preliminary reports received November 6, 1918, payments on account of subscriptions to the fourth Liberty loan as of
October 24, 1918, the first installment date, reached the enormous
total of $4,469,440,410, of which $4,188,466,415 represented payments
in full for subscriptions and $280,973,995 represented installment
payments. Of this amount, $868,516,267.80 was paid in cash, $2,030,790,992.20 by credit in depositaries, and $1,570,133,150 in Treasury
certificates of indebtedness. The following table shows the payments
in detail by Federal reserve districts:



Payments, fourth Liberty loan as cf OH. 24. 1918.
Form of payment.
Federal reserve districts.

Total payment.
In cash.

Boston
New Y o r k . . .
Philadelphia.
Cleveland....
Richmond...
Atlanta
Chicago
St. Louis
Minneapolis - Kansas C i t y . .
DaUas
San Francisco
Total...




$423,792,380.00
1,482,910,135.00
410,058,445.00
450,154,120.00
195,960,930. 00
127,016,980. 00
561, 726,120. 00
204,093,055.00
129,437,765.00
189,620,110.00
099,220.00
• 74,
220,571,150.00

$57,250,646.13
99,568,363.90
"75,791,719.00
106,729,495. 00
72,932,105.00
40,171,073. 00
183,596,454. 00
37,288,180.00
60,606,943.33
53,109,574.36
19,253,944.08
62,217,770.00

4,469,440,410.00

868,516,267.80

By credit.

$267,594,233.87
742,188,771.10
229,472,226. 00
177,475,125.00
94,936,325. 00
70,966,407. 00
144,728,166.00
90,900,875.00
34,780,321.67
67,830,535.64
41,771,125.92
68,146,880.00
2,030,790,992.20

In Treasury
certificates.

Total full
payments.

$98,947,500.00 $400,633,550.00
641,153,000. 00 1,420,561,000.00
104,794,500.00
389,091,200.00
165,949,500.00
422,257,650. 00
28,092,500.00
178,718,000.00
15,879,500.00
116,940,950.00
233,401,500. 00
516,482,150.00
75,904,000.00
193,945,850.00
34,050,500.00
117,070,700.00
68,680,000.00
178,581,700.00
13,074,150.00
66,415,700.00
90,206,500.00
187,767,965.00
1,570,133,150.00

4,188,466,415.00

Total
installment
payments.

$23,158, 830.00
62,349: 135.00
20,967; 245.00
27,896, 470.00
17,242, 930.^00
10,076, 030.00
45,243, 970.00
10,147, 205.00
12,367, 065.00
11,038; 410.00
7,683, 520.00
32,803, 185.00
280,973,995.00

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,

EEPOET ON THE FIISTANCES.

TREASURY CERTIFICATES OF INDEBTEDNESS.

The policy adopted at the beginning of the war of issuing shortterm Treasury certificates of indebtedness in anticipation of the issue
of long-term bonds has been followed throughout the year. This
plan, which operated so successfully in connection with the several
bond issues, was extended by the issue of similar certificates in anticipation of the payment of income and profits taxes.
This method of temporary borrowing between the periods of Liberty
loans has greatly facilitated the war financing of the Government. I t
has permitted the use of the proceeds of the loans gradually over comparatively long periods of time and correspondingly distributed
the payments into the Treasury. This same principle applied in
connection with the issuance of Treasury certificates of indebtedness
in anticipation of taxes likewise assisted very greatly in distributing
the tax payments over a period of time and, together with the machinery established for making temporary deposits with qualified
banking institutions, ih preventing any possible stringency in June,
when the large payments from income and excess-profits taxes
were due.
The proceeds of the second Liberty loan carried the Treasury
well over the close of the calendar year 1917. I n order that the
banks might have as much advance information as possible witho
regard to the requirements of the Treasury, and in order that the temporary financing might be carried out on a systematic scale, the Secretary on February 6, 1918, sent the following message to every
bank and trust company in the United States, outlining the Treasury's program for the ensuing months:
Between now and the time for making the next Liberty loan I shall offer for
' subscription Treasury certificates of indebtedness in amounts of $500,000,000
or more every two weeks. I desire to postpone the next Liberty loan issue
until conditions will insure a wide distribution of the bonds throughout the
country. In order successfully to carry through this program and to provide
for the expenditures for the military operations of the United States and the
allies, I must have the whole-hearted cooperation of the bankers of the United
States, and to that end I request the board of directors or trustees of each
bank and trust company to reserve each week out of its loanable funds for the
use of the Government of the United States about 1 per cent of the gross resources of their institution, not to exceed in the aggregate 10 per cent, and to
invest that amount in Treasury certificates of indebtedness. The. exact amount,
interest rate, date, and maturity (not exceeding 90 days) of each issue of certificates will be announced from time to time by me through the Federal reserve
banks. There is a steady growth in the movement for economy. Banks should
be able by participating in the ""campaign for economy, which means economy
of credit as well as of' expenditure, to teach their customers to save and accumulate the means to buy the Government's certificates and bonds. By this
method a distribution of Treasury certificates of indebtedness should become
possible which will relieve the subscribing banks of at least a part of their
purchases and furnish the means of making payments for the next issue of



SECRETAEY OF THE TEEASUEY.

21

Liberty bonds without undue strain. The needs of the Government for the war
are great and imperative. The resources of the country are ample to meet
these needs, if every bank wiir do its share. I know that, once it is realized
that by complete cooperation all around and by everyone doing his part this
vital and patriotic service can be performed, every bank will do its share. We
are approaching a critical test on the battle fronts in Europe. America's sons
are now actually shedding their blood in the trenches. If the banks, which
are the first line of financial defense, fail to support the Government fuUy in
its necessary operations we shall imperil America's Army and America's safety.
I know that I have only to state the case to command the support of every
patriotic bank and banker. This is a supreme duty of patriotism. May I
count upon you to do your part and to telegraph me immediately, at my expense,
that you will? I am sending this telegram to every bank and trust company
in the Unilted States.
v
I n accordance with this plan certificates were offered at intervals
to the banks for subscription. Including an issue dated January 22,
1918, six issues, aggregating $3,012,085,500, were offered in anticipation of the third Liberty loan. I n the execution of this plan the
Treasury received the patriotic and generous cooperation of the banks
of the country, which deserve great credit for the success of the plan.
Every offering was fully subscribed.
After the completion of the third Liberty loan, preparations were
made for the immediate resumption of the process of temporary
financing through Treasury certificates of indebtedness in anticipation of the fourth Liberty loan in order to meet the mounting expenses of the Government. The plan adopted on February 6, 1918,
of advising the banks in advance, of the Treasury's financial program
for the ensuing months, was continued, and on June 12, 1918, the
following letter was sent to every bank and trust company in the
United, States:
Following the same plan as that announced in my telegram of February 6,
1918, I am writing to inform you of the program for the ensuing four months,
so far as one can be made at this time, in order that every bank and trust
company in the United States may have adequate notice and be able to prepare
itself to meet patriotically the requirements of the Government. I am sending
a similar letter to every bank and trust company in the United States.
This policy, adopted in February last, was successful, and, having fulfilled
expectations in. the sale of certificates of indebtedness prior to the third
Liberty loan, demonstrated that the Government could rely upon the hearty
support and cooperation of the banks when given opportunity in advance to
make necessary preparations.
The expenditures of the Government, as nearly as can be estimated, will
require the sale of certificates of indebtedness up to the 1st of November, 1918,
aggregating approximately $6,000,000,000. This would involve the issue every
two weeks of about $750,000,000 of certificates substantially similar in character
to those issued prior to the third Liberty loan, except that they will have
various maturities, not exceeding four months. For the months of July and
August that program will be followed as nearly as possible.
The first issue of the certificates will be dated June 25; will mature October
25, with interest at 4^ per cent, and similar issues, it ia expected, will be




22

EEPOET ON THE FINANCES.

made on Tuesday of every other week following June 25. It is, however, contemplated that at a convenient and favorable period during the summer an
offering will be made to the general public directly, and through the banks, of
an amount yet to be determined, perhaps $2,000,000,000 of certificates of suitable
maturities for use by taxpayers in paying next year's taxes, viz, taxes payable
June, 1919, levied under existing and pending legislation. To the extent that
certificates of that character are sold, substantially an equivalent reduction
in the amount of the regular fortnightly sale of certificates issued in anticipation of the next Liberty loan will be effected.
In giving this timely advice of the estimated requirements of the Treasury
to all the banks of the country, and, through them, to those who expect to
make payment of taxes in 1919, it is hoped that they will make arrangements
promptly of such a character that no delay will be experienced in the sale and
distribution of Treasury certificates of both issues.
The Federal reserve banks will advise all National and State banks in their
respective districts of the amount of certificates which they are expected to
take from time to time in pursuance of this program, which amount can be figured roughly to equal 2^ per cent of the gross resources of each bank and trust
company for every period of two weeks, or a total of 5 per cent monthly. It will
be remembered that in the February program the amount which the banks were
asked to take was substantially equal to 2 per cent of their gross resources for
each period of two weeks, or a total of 4 per cent monthly. The total number
of biweekly offerings of certificates to be made to the banks will somewhat depend upon the amount to be raised from the public through the sale of tax certificates as above described.
Already more than 700,000 of our splendid American boys are on the soil of
France, and many of them are actually fighting among the heroic defenders
of the \>^estern front. Fresh contingents of American troops are constantly going
forward to France, and this stream will not stop until there is enough of
American manhood and valor on the battle line to defeat the Kaiser and his
minions, and enforce peace upon the righteous basis which will make secure the
liberties of mankind. America's sons are dying daily in those battles of fire
and poison gases that are now raging in France. The heart of every American
must thrill with pride and emotion as he thinks of the sacrifices our sons are
making for our safety and our liberty. The bankers of the United States can
render a peculiarly helpful service to our gallant sons by keeping the Treasury
of the United States supplied with the money required by the Government to
^ furnish every American hero with the things he must have to fight victoriously
or to die gloriously. I am sure that no patriotic banker in the United States
will fail to do his full meed of essential service to his country and to her noble
defenders.

Certificate! were issued in accordance with the plan outlined, the
offerings ranging from $500,000,000 to $750,000,000. These certificates uniformly had a maturity of approximately 120 days and all
bore 4^ per cent interest. Seven issues were offered, and, through
the patriotic cooperation of the banks with the Treasury, every
offering was largely oversubscribed, a total of $4,659,820,000 being
purchased.
Beginning November 30, 1917, and ending May^l5, 1918, the Secretary offered at monthly intervals, in anticipation of the payment
of taxes, certificates of indebtedness, payable June 25, 1918, with




SECEETAEY OF THE TEEASUEY.

23

interest at the rate of 4 per cent per annum. These certificates, were
receivable in payment of income and excess profits taxes, and a total
of $1,624,403,500 were issued.
The same policy is being continued during the current fiscal year
in anticipation of the payment of income and profits taxes. On
August 16, 1918, the Secretary addressed the following letter to taxpayers of the United States:
Those who pay taxes to the Government are contributing to winning the war
no less really and in a spirit no less patriotic than those who buy Liberty bonds
and war-savings certificates. It may, in fact, be justly said that the taxpayer
helps more patriotically than the bond buyer, because to pay taxes is to part
with money—to make a genuine sacrifice—whereas to buy a Government bond
is to lend money on impregnable security—to secure a privilege—not to make a
sacrifice.
Under the war-revenue act, which became a law upon the President's approval on October 3, 1917, some $4,000,000,000 in taxes were imposed and collected. For the fiscal year ending June 30, 1919, we must look forward to
expenditures on the part of the Government, including loans to^the allies, of
nearly double the amount of expenditures for the fiscal year which ended
June 30, 1918, and in order to pay a proper part of our war bills as we go and
.avoid the economic and social evils incident to a disproportionate public debt,
I have, in pursuance of the duty imposed upon me/by law, advised the Congress
that we should raise by taxation for the fiscal year 1919 twice as much as in
1918, viz, $8,000,000,000.
Just as the .number of bondholders in the United Staites has during the
period of the war increased from a few hundred thousand to some twenty million, so will the number of those who have income and profits taxes tp pay
increase from a few hundred thousand to millions.
I know that the Treasury Department can count upon the same loyal and
ungrudging acceptance of the burdens which the war must cast upon those
of us who stay at home and keep the economic and industrial machinery revolving to support our boys in France, as was given in the fiscal year just passed.
In order that those who have income and profits taxes to pay may prepare
themselves in advance for these large payments and accumulate gradually the
funds necessary to meet them, an issue of 4 per cent Treasury certificates of
indebtedness, maturing July 15, 1919, is offered for subscription. These certificates will be accepted at par with an adjustment of accrued interest in payment of income and profits taxes when payable at or before the maturity of
the certificates; and if the purchaser does not liave occasion to use them in that
manner, they will be paid in cash at maturity with interest. A circular describing these certificates (Exhibit 38) is inclosed with this letter. The certificates may be purchased at any Federal reserve bank or through your own
bank or trust company.
Similar certificates were issued in connection with the taxes payable during
the fiscal year just ended to an amount in excess of $1,600,000,000. They were,
I believe, purchased chiefly by large corporations and wealthy persons. I am
addressing this letter to those who have paid income and profits taxes generally
because I believe that the increased taxes, and the probable increase in the
number of taxpayers, make' it desirable that even those whose taxes are
measured in small amounts should be preparing themselves to meet these payments, and that it will be to their advantage to participate in purchases of this
Issue of Treasury certificates.




24

EEPOET ON THE FINANCES.

The taxpayer who buys these certificates contributes in many ways to help in
our great problem of winning the war. First, he pays the Government money before it is due, receiving interest from the Government meanwhile; second, he
practices economy arid thrift and thereby releases goods and services to the Government which are greatly needed for winning the war; third, he saves himself
trouble and money and relieves the banking institutions, to which he would
otherwise have to turn, from the pressure which his failure to prepare in advance for the payment of his taxes would involve;
The man who buys Treasury certificates to the amount of the taxes he will
have to pay, and thereby anticipates their payment, will do a wise and helpful
thing not only for himself but for his country, and will contribute in a most
definite and patriotic way to the triumph of America in her mortal combat with
the enemies of liberty and democracy—the Kaiser's legions of lust and license—
and share in the new glory of America's vindicated ideals of justice and
humanity.

I n accordance with the above letter 4 per cent tax certificates of indebtedness were offered to the public through Department Circular
No. 120, dated August 16, 1918 (Exhibit 38), and public announcement of the same date (Exhibit 34). These certificates are due July
15, 1919. This issue was closed at the close of business November 6,
1918 (Exhibit 38-^A), and the total amount of such certificates sold
was $157,552,500.
^ On November 6, 1918, it was decided to increase the rate on tax certificates of indebt%d^ess from 4 per cent to 4 | per cent, in order
to make the rate equivalent to the rate borne by certificates of indebtedness issued in anticipation of loans. Accordingly, a new
series of tax certificates was offered on that date through Department Circular No. 124 (Exhibit 39), bearing interest at the rate of
4J per cent per annum from November 7, 1918, and payable March
15, 1919. This issue is for .a limited amount, and tax certificates of
the preceding series will be receivable with adjustment of accrued
interest in payment for tax certificates of the new series. I t is the
plan of the Treasury to issue tax certificates periodically with
maturities coinciding with the installment dates for the payment
of income and profit taxes contemplated by the pending revenue bill.
I n addition to the regular certificates it has been necessary from
time to time to issue certificates of very short maturity andj for temporary purposes.
Public announcements of the offerings of the various issues of
Treasury certificates of indebtedness during the fiscal year 1918,and
during part of the fiscal year 1919 are attached as Exhibits 12 to 39.
The following table shows all issues of certificates of indebtedness ,
from the beginning of the wp.r to October 31, 1918:




Issues of certificates of indebtedness.
[Since the beginning of the warfApr. 6,1917-Oct. 31,1918.1
Federal reserve district.
Authorizing act.

Date of issue.

Date of ma- Rate, per
turity.
cent.

Total
amount.
Boston.

Apr. 25,1917 Jimfe 30,1917
May 10,1917 July 17,1917
May 25,1917 July 30,1917
June 8,1917 . . . . . d o

Total.
Issued in anticipation of the second
Liberty loan:
Apr. 24, 1917
Do..
Do...
Sept. 24, 1917
Do
Do

Aug.
Aug.
Sept.
Sept.
Oct.
Oct.

9,1917
28,1917
17,1917
26,1917
18,1917
24,1917

N o v . 15,1917
N o v . 30,1917
Dec. 15,1917
....do
Nov. 22,1917
Dec. 15,1917




Cleveland.

$268,205,000
200,000,000
200,000,000
200,000,000

$15,800,000
12,167,000
11,200,000
18,200,000

$136,150,000
98,512,000
125,300,000
100,500,000

$14,000,000
10,000,000
•9,000,000
10,400,000

$14,000,000
15,000,000
10,800,000
19,100,000

$5,350,000
2,753,000
2,000,000
3,600,000

$8,000,000
2,605,000
1,700,000
1,000,000

57,367,000

460,462,000

43,400,000

58,900,000

13,703,000

13,305,000

300,000,000
250,000,000
300,000,00tf
400,000,000
385,197,000
685,296,000

19,400,000
15,140,000
12,171,000
22,174,000
30,149,000
33,010,000

175,000,000
152,938,000
204,347,000
212,100,000
179,475,000
543,683,000

12,800,000
9,882,000
8,850,000
-20,000,000
24,000,000
13,600,000

33,700,000
24,157,000
25,113,000
34,209.000
38,863,000.
26.471,000

2,800,000
7.235,000
3.180,000
7,004 000
8,323,000
11,472,000

4,300,00
4,848,000
2.280,000
8,289,000
6,535,000
5,883,000

O

H

2,320,493,000

Total.
Issued in anticipation of tho third
Liberty loan:
Sept. 24, 1917
Do
Do
Do
Do
Sept. 24, 1917, as amended Apr.
4, 1918.
Total:

Philadelphia.

868,205,000

Issued in anticipation of the first
Liberty loan:
Apr."24,1917
Do
Do
Do:

NewYork.

..

Jan.
Feb.
Feb.
Mar.
Apr.
Apr.

22,1918
8,1918
27,1918
20,1918
10,1918
22,1918

Apr.
May
May
Juno
July
July

22,1918
9,1918
28,1918
18,1918
9,1918
18,1918

400,000,000
500,000,000
500,000,000
543.032,500
55i;226,500
517,826,500
3,012,085,500

Richmond.

Atlanta.

132,044,000 1,467,543,000

89,132,000

182,513,000

40,014,000

32,135,000

209,685,000
241,322; 000
172,666,500
.193,700,500
215,448,000
222,486,000

22,500,000
30,000,000
33,000,000
38,000,000
38,000,000
35,000,000

26,000,000
34,000,000
44,500,000
48,400,000
46,000,000
39,133,500

7,000,000
12,131,000
18,148,00.0
16,234,500
11,219,000
11,097,000

9,507,000
12,391,000
14,814,000
14,557,000
17,095,000
11,209,000

214,417,000 1,255,308,000

196,500,000

238,033,500

75,829,500

Ul

a

79,573,000

20,025,000
29,134,000
35,369,000
53,690,000
39,731,000
36,468,000

Ul

d

to
Or

bO

Issu£8 of certificates of indebtedness—Continued.
[Since t h e beginning ofthe war 'Apr. 6,1917-Oct. 31,1918.1
Federal reserve district.
Authorizing act.

Date of issue.

Date of maturity.

Rate, per
cent.

Total
amount.
Boston.

Issued in anticipation of the fourth
Liberty loan:
Sept. 24, 1917, as amended Apr.
4,1918.
Do
Do
Do
D6
Do...
Do

June 25,1918

Oct. 24,1918

$839,646,500

July
July
Aug.
Sept.
Sept.
Oct.

Nov. 7,1918
Nov. 21,1918
Dec.
5,1918
Jan. 2,1919
Jan. 16,1919
Jan. 30,1919

753,938,000
584,750,500
575,706,500
639,493,000
625,216,500
641,069,000

9,1918
23,1918
6,1918
3,1918
17,1918
1,1918

4,659,820,000

Total.
Issued in anticipation of internalrevenue taxes, 1918:
Sept.24,1917
Do
Do.:
Do
Sept. 24, 1917, as amended Apr.
' 4,>1918.
Do




56,273,500
48,267,500
49,509, 000
57,424,000
54,710,000
50,378,500

Philadelphia.

Cleveland

Richmond.

^ Atlanta.

$312, .844,500

$53,000, 000

$80,000,000

$19,013,000

$17, 233,500

273,219,500
211,714, 000
207,287,000
210,068,500
216,264,500
249,591,000

53,100,000
36,872,500
38,400,000
42,061,000
45,778,000
46,808,500

^66,550, 000
55,927, 000
52,500,000
74,088,000
59,321,500
52,182,500

15,073,500
16,886,000
14,397,000
18,957, 000
.18,449,000
15,208,000

16,021,500
13,168,500
14,968,500
16,205,500
15,872,000
21,387,500

316,020,000

440,569,000

381,152,500 1,680,989,000

117,983,500

O

n

o

114,857,000

W
Nov.
Jan.
Feb.
Mar.
Apr.

30,1917
2,1918
15,1918
15,1918
15,1918

.do..

iAug.20,1918

July 15,1919

Various, beg inning
Aug.
20,
1918.

1 year from
date of issue.

691,872,000
491,822,500
74,100,000
110,962,000
71,880,000

20,921,000
16,163,500
8,790,500
6,735,500
6,071,500

494,070,500
239,954,000
14,007,500
10.252.500
12,000,500

11,492,000
34,796,000
4,680,000
10,474,500
14,511,500

115,230,500
70,069,500
15,402,500
55,615,500
10,587,500

2,415,000
8,948.500
1,917', 000
2,725,500
2,049,000

1,555,000
5,551,000
1, 269,000
826.000
2,749,500

183,767,000

24,578,000

61,188,000

19,583,000

18,547,000

2,767,000

1,055,500

>
o

1,624,403,500

May 15,1918

June 25,1918
do
,
do
do
June 25,1918

Total.
Issued in anticipation of internalrevenue taxes, 1919:
Sept. 24.1917, as amended Apr.
4,1918.
Special issues to secure Federal
reserve bank notes:
Sept. 24, 1917, as.amended Apr.
4, 1918, and Apr. 23, 1918.

$64,590,000

New York.

83; 260,000

831,473,000

95,537,000.

285,452,500

20,822,000

13,006,000

Ul

1145,245,000

11,394,500

43,428,500

9,822,500

28,279,000

3,872,500

3,139,500

3,750,000

24,955,000

3,356,000

4,458,000

1,886,000

3,298,000

Special issues:
S e p t 24, 1917
Do
Do
Do
:
Do
Do
Do
Do
Do
:
Do
* Do.
. ..
S e p t . 24, 1917, as a m e n d e d A p r .
4,1918.
Do
Do
Do
Do
Do
Do....
Do::::..
...::.:
Do
Do
Do
Do
Do
Do
.-Do
.^...
' Do
Do
:
Do.
Do
Do
Do
Do
Do
Do
Do.
Do
.
Do
Do . :
'.. .
Total




Oct.
Oct.
Oct.
Oct.
Nov.
Nov.
Jan.
Jan.
Feb.
Feb.
Mar.
May

11,1917
16,1917
17,1917
29,1917
15,1917
19,1917
11,1918
15,1918
8,1918
21,1918
8,1918
10,1918

May 17,1918
May 31,1918
.Tune 11,1918
do
J u n e 28,1918
J u n e 29,1918
J u l y 12,1918
Aug. 8,1918
;do
do.
Aug. 16, 1918
Aug. 26, 1918
do
.....do
. . do
. do
. . . do
S e p t . 3,1918
Oct. 7,1918
. . . . do
do
Oct. 25,1918
. . . . do
do
do
Oct. 28,1918
Oct. 29,1918

Oct. 18,1917
do
do
Oct. 31,1917
N o v . 19,1917
N o v . 20,1917
J a n . 15,1918
J a n . 16,1918
F e b . 13,1918
F e b . 26,1918
Mar. 11,1918
M a y 11,1918

4 ,
4
4
2
2
2
2
2
2
2
2
2

100,000,000
10,000,000
20,000,000
20,000,000
150,000,000
150,000„000
50,000,000
• 50,000,000
70,000,000
80,000,000
40,000,000
75,000,000

100,000,000
10,000,000
20,000,000
20,000,000
150,000,000
150,000,000
50,000,000
50,000,000
70,000,000
, 80,000,000
40,000,000
75,000,000

May
June
June
June
June
July
July
Aug.
Aug.
Aug.
Aug.
Aug.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.

2
2
3
3
2
2
2
3
3
3
2
3
3
3
3
3
3
2

40,000,000
60,000,000
10,000,000
15,000,000
195,000,000
190,000,000
15,000,000
20,000,000
10,000,000
15,000,000
15,000,000
10,000,000
20,000,000
10,000,000
20,000,000
10,000,000
.19,000,000
45,000,000
25,000,000
10,000,000
5,000,000
185,000,000
18,000,000
35,000,000
18,000,000
160,000,000
10,000,000

40,000,000
60,000,000

21,1918
1,1918
18,1918
20,1918
29,1918
2,1918
13,1918
13,1918
16,1918
20,1918
17,1918
27,1918
3,1918
6,1918
10,1918
13,1918
17,1918
4,1918
8,1918
10,1918
15,1918
28,1918
26,1918
28,1918
26,1918
29,1918
31,1918

ili
2
2
2
2
2
2
2^

°

'^
Ul

O
i95,6oo,6oo

"
^

•

190,000,000
15,000,000
•

o

15,000,000
. .y

1..

•.

\

W
1^

45,000,000

>
Ul

185,.000,000
IS,000,000

Kl

'V

160,000,000
1,720,000,000

2,000,000,000

18,000,000

.

1 This series was withdrawn oh Nov. 6, 1918, at which time the total amount sold was $157,552,500.
-

••

•

•

S

•

•

bO

Issues of certificates of indebtedness—Continued.

to
00

Federalreserve district.
Authorizing act.

Date of issue.

Date of maturity.

I

Rate, per
cent.
Chicago.

Issued in anticipation of the first
Liberty loan:
Apr.24,1917
Do
Do
Do

St. Louis.

Minneapolis. Kansas City.

Dallas.

San Francisco.

Treasury
pepartment.

1
Apr. 25,1917
May 10,1917
May 25,1917
June 8,1917

June 30,1917
July 17,1917
July 30,1917
do.
,

Issued in anticipation of the second
Liberty loan:
Apr.24,1917
: . . Aug. 9,1917
Do
Aug. 28,1917
Sept. 17,1917
Do
Sept.24,1917
, Sept. 26,1917
Oct. 18,1917
Do
Oct. 24,1917
Do.

$10,400,000
7,045,000
7,200,000
8,100,000

$2,500,000
4,500,000
2,400,000
5,200,000

$8,000,000
9,500,000
7,200,000
5,600,000

$7,000,000
5,525,000
2,400,000
3,300,000

$20,000,000
7,500,000
4,200,000
5,200,000

77,693,000

Total.

$16,400,000
24,893,000
16,600,000
19,800,000

32,745,000

14,600,000

30,300,000

18,225,000

36,900,000

$10,605,000

W
W
10,605,000

=
N o v . 15,1917
N o v . 30,1917
Dec. 15,1917
do
,
Nov.- 22,1917
Dec. 15,1917

15,600,000
15,095,000
. 21,169,000
35,629,000
32,963,000
18,141,000

7,900,000
4,188,000
4,874,000
11,000,000
12,710,000
5,028-, 000

3,700,000
2,025,000
2,000,000
7,000,000
9,541,000
5,205,000

7,100,000
4,542,000
4,619,000
9,000,000
10,600,000
2,178,000

4,700,000
2,430,000
2,367,000
10,595,000
12,038,000
7,217,"000

13,000,000
7,520,000
9,030,000
'23,000,000
20,000,000
13,408,000

=

o

^

H
O

^
:::::::::::

i-^

iH
H

Total.
Issued in anticipation of the third
Liberty loan:
Sept. 24,1917
Do....
Do...
Do
Do
Sept. 24,1917, as amended Apr.
4,1918.
Total




138,597,000

45,700,000

30,359,000
42,352,000
59,168,000
64,414,000
65,850,000
63,212,000

18,090,000
20,064,000
25,709,000
22,842,000
21,181,000
25,698,500

10,750,000
15,000,000
17,000,000
16,000,000
15,600,000
15,000,000

12,000,000
21,411,000
23,736;500
26,116,500
25,000,000
20,260,500

'13,084,000
14,076,000
19,000,000
15,000,000
• 16,602,-500
13,162,500

21,000,000
25,000,000
33,500,000
30,250,000
39,500,000
23,540,500

"i"559,'666

325,355,000

133,584,500

89,350,000

128,524,500

90,925,000

172,790,500

11,895,000

29,471,000

38,039,000

39,347,000

85,958,000

..^

. ^
I I
—

Jan.
Feb.
Feb.
Mar.
Apr.
Apr.

22,1918
8,1918
27,1918
20,1918
10,1918
22,1918

Apr.
May
May
June
July
July

22,1918
9,1918
28,1918
18,1918
9,1918
18,1918

3,ii9,6o6

9

3,389,000
3,828,000

^

I s s u e d i n a n t i c i p a t i o n of t h e fourth
L i b e r t y loan:
Sept. 24,1917, as a m e n d e d A p r .
4, 1918Do
Do
...
Do
Do
:
:
Do
.
Do

24,1918

4§

Total
Issued in a n t i c i p a t i o n of internalr e v e n u e t a x e s , 1918:
S e p t . 24,1917
Do
Do
Do
. .
S e p t . 24, 1917, as a m e n d e d A p r .
4,1918.
°
Do....
Total
Issued i n a n t i c i p a t i o n of i n t e r n a l r e v e n u e t a x e s , 1919:
S e p t . 24, 1917, as a m e n d e d A p r .
4,1918.
Special issues t o secure Federal
reserve b a n k n o t e s :
S e p t . 24, 1917, as a m e n d e d A p r .
4, 1918, a n d A p r . 23, 1918.

Special issues:
S e p t . 24,1917
Do
Do
Do...
Do
Do
Do
Do .
Do
Do..
Do




Nov.
Jan.
Feb.
Mar.
Apr.

30,1917 J u n e 25,1918
2,1918 . . . . . d o
15,1918
do
15,1918
do
15,1918
do

M a y 15,1918

do

4

.

34,654,000

20,000,000

28,410,500

18,481,500

48,000,000

11,938,000

31,260,500
25,952,500
24,056,000
25,501,500
24,17«,500
21,360,000

22,100,000
16,800,000
12,260,000
17,200,000
17,700,000
21,500,000

30,031,500
23,369,000
25,126,000
25,913,000
22,816,000
21,200,000

14,452,000
10,156,000
7,579,500
11,295,500
11,898,500
9,457,000

39,000,000
38,000,000
37,750,000
49,500,000
46,350,000
46,420,000

35,653,000
4,327,000
4,581,000
3,000,000
3,000,000
2,817,000

186,963,000

127,560,000

176,866,000

. 83,320,000

305,020,000

65,316,000

30,139,500
3,833,000
48,054,500
11,168,500
15,709,000
1,661,500
13,286,500- — 2,063,500
901,500
15,742,000

N o v . 7,1918
N o v . 21,1918
Dec. 5,1918
Jan.
2,1919
J a n . 16,1919
J a n . 30,1919

131,481,500

1,743,000
5,230,000
1,255,000
720,000
850,000

1,072,000
17,075,000
498,500
824,500
1,028,000

5,^388,500
15,180,000
1,505,500
1„022,000
1,092,000

4,012,000
19,632,000
7,404,000
6,416,000
• 4,297,500

40,002,500

3,075,000

1,600,000

538,500

4,762,500

6,069,500

162,934,000

Oct.

J u l y 9,1918
J u l y 23,1918
A u g . 6,1918
Sept.. 3,1918
S e p t . 17,1918
Oct. 1,1918

101,203,000
83,310,500
87,292,500
88,279.000
88,878,500
82,759,000
663,204,000

J u n e 25,1918

22,703,000

11,398,000

21,036,500

28,950,500

47,831,000

Ul
Q

>
O

^^

A u g . 20,1918

July

15,1919

4

18,537,500

4,243,000

1,819,000

3,494,500

4,127,000

13,087,500

Various, b e ginning
Aug.
20,
1918.

1 year from
date
of
issue.

2

9,167,000

4,071,000

1,350,000

2,000,000

1,176,000

1,750,000

Oct.
Oct.
Oct.
Oct.
Nov.
Nov.
Jan.
Jan.
Feb.
Feb.
Mar.

Oct. 18,ftl7
do
do
Oct. 31,1917
N o v . 19,1917
N o v . 20,1917
J a n . 15,1918
J a n . 16,1918
F e b . 13,1918
F e b . 26,1918
M a r . 11.1918

11,1917
16,1917
17,1917
29,1917
15,1917
19,1917
11,1918
15,1918
8,1918
21,1918
8,1918

H

W
H

>
Ul
4
4
4
2
2
2
2
2
2
2
2

Kl

.

.-

to
CO

CO

Issues of certificates of indebtedness—Continued.'

O

F e d e r a l r e s e r v e district.
D a t e of issue.

Authorizing act.

D a t e of m a turity.

Rate, per
cent.'
St. Louis.

Chicago.

Special issues—Cont'd.
Sept 24,1917, as a m e n d e d A p r .
4,1918.
Do
Do
Do
Do
. . .
Do
Do .
. .
Do
Do
Do
Do
Do
Do
Do . . : .
Do
Do
Do
Do
o Do
Do.Do..
Do
Do
. .
Do •
Do
.Do........
. ..
Do.
Do




10,1918

May 17,1918
MaV 31,1918
J u n e 11,1918
.
.do
J u n e 28,1918
J u n e 29,1918
J u l y 12,1918
Aug. 8,1918
.do
.do. .
Aug. 16,1918
Aug. 26,1918
.do
...
.do...
do
. ...do
do
S e p t . 3,1918
Oct. 7,1918
do
do
Oct. 25,1918
. . . do
do
do
Oct. 28,1918
Oct. 29,1918

. ^

n

Dallas.

San Francisco.

Treaisury
department.

/May

May

11,1918

2

May
Jime
June
June
June
July
Julv
Aug.
Aug.
Aug.
Aug.
Aug.
Sept.
Sept.
Sept.
Sept.
Sept.
Sept.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Oct.

21,1918
1, l g l 8
18,1918
20,1918
29,1918
2,1918
13,1918
13,1918
16,1918.
20,1918
17,1918
27,1918
3,19.18
6,1918
10,1918
13,1918
17,1918
4,1918
8,1918
10,1918
15,1918
28,1918
26,1918
28^1918
26,1918
29,1918
31,1918

2
2
3
3
2
2
2
3
3
3
2
3
3
3
3
3
3
2
2h
2\

$10,000,000
15,000,000

o

20,000,000
10,000,000
15,000,000

c

1

^

^

•

' f
2
2
2
2
2h

pi
H
O

10,000,000
20.000,000
10,000,000
20,000,000
10,000,000
19,000,000
25,000,000
10,000,000
5,000,000

Q
Ul

35,000,000

.,

$18,000,000
10,000,000

35,000,000

Total

Minneapolis. K a n s a s City.

18,000,000

209,000,000

RECAPITULATION.
Federal reserve district.
Issued-

Total
amount.
Boston.

In anticipation of the first Liberty loan
In anticipation of the second Liberty loan
In anticipation of the third Liberty loan
In anticipation of the fourth Liberty loanj
In anticipation of internal-revenue taxes, 1918
In anticipation of internal-revenue taxes, 1919,
To secure Federal reserve bank notes
Special issues
Total

$868,205,000.
2,320,493,000
3,012,085,500
4,659,820,000
1,624,403,500
145,245,000
61,217,000
2,000,000,000
14,691,469,000

New York.

Philadelphia.

Cleveland.

Richmond.

Atlanta.

$57,367,000 $460,462,000
132,044,000 1,467,543,000
214,417,000 1,255,308,000
381,152,500 1,680,989,000
83,260,000
831,473,000
11,394,500
43,428,500
3,750,000
24,955,000
1,720,000,000

$43,400,000
89,132,000
196,500,000
316,020,000
95,537,000
9,822,500
3,356,000
18,000,000

$58,900,000
182,513,000
238,033,500
440,569,000
285,452,500
28,279,000
4,458,000

$13,703,000
40,014,000
7.5,829,500
117,983,500
20,822,000
3,872,500
1,886,000

$13,305,000
32,135,000
79,573,000
114,857,000
13,006,000
3,139,500
3,298,000

883,385,000 7,484,158,500

771,767,500 1,238,205,000

274,110,500

259,313,500

Issued—

San Francisco, o

Treasury
Department.

Chicago.
In anticipation of the first Liberty loan
In anticipation of the second Liberty loan
In anticipation of the third Liberty loan
In anticipation of the fourth Liberty loan
In anticipation of internal-revenue taxes, 1918
In anticipation of internal-revenue taxes, 1919
To secure Federal reserve bank notes
Special issues
' Total




O

>
Kj

Federal reserve district.
Minneapolis. Kansas City.

Ul

St. Louis.

$77,693,000
138,597,000
325,355,000
663,204,000
162,934,000
18,537,500
9,167,000
35,000,000

$32,745,000
45,700,000
133,584,500
186,963,000
22,703,000
4,243,000
.4,071,000

$14,600,000
29,471,000
89,350,000
127,560,000
11,398,000
1,819,000
1,350,000

$30,300,000
38,039,000
128,524,500
176,866,000
21,036,500
3,494,500
2,000,000

$18,225,000
39,347,000
90,925,000
83,320,000
28,950,500
4,127,000
1,176,000

$36,900,000
85,958,000
172,790,500
305,020,000
47,831,000
13,087,500
1.750,000
18,000,000

209,000,000

1,430,487,500

430,009,500

275,548,000

400,260,500 I 266,070,500

681,337,000

296,816,000

Dallas.

O
H

W
\^
$10,605,000
11,895,000
65,316,000

H'

>
Ul
Kj

32

REPORT O T T H E
N

FINANCES.

WAR-SAVINGS CERTIFICATES.

The sale of United States war-savings certificates and thrift stamps
has been continued throughout tlie year without interruption. Not
only have these securities given every man, woman, and child in
the country, however small their mean's, an opportunity to invest
in the obligations of their Government, but they have been the means
of carrying the message of thrift and economy into every city, town,
and hamlet, and, it is hoped, into every home in the country. I n
addition to yielding over eight hundred millions of dollars to assist
the Government in the prosecution of the war, the war-savings certificates and thrift stamps have been the means of showing the people^
a way to save, and how rapidly, by the habit of thrift, the accumulation of small sums increases their prosperity. This war-time experiment has been so successful that it is hoped that war-savings certificates will become a continuing feature of the Nation's financing
even after the restoration of peace.
The campaign for the sale of war-savings certificates aiid thrift
stamps opened on December 3,1917, under the immediate supervision
of the National War-Savings Committee appointed by the Secretary
of the Treasury. State, county, city, and town committees were
organized throughout the country and a campaign in the interest of
thrift and economy was begun on a nation-wide scale. At first progress was slow. The gospel of thrift had not as yet been preached in
any systematic way. The principle of " business as usual" was the
antithesis of the principle of thrift during the war. The opening of
the campaign resulted in much passive and some active opposition.
The message of war-savings, however, slowly but steadily gathered
increasing momentum. The clamor for "business as usual" was
heard less and less, until it entirely faded away. The appeal of
the war-savings campaign was gradually understood and it exercised a great influence in the readjustment of the economic life of the
Nation.'
From the beginning the Treasury has received the cordial and
effective cooperation of the Postmaster General and the entir'e Postal
Service. I n addition to being on sale at every post oiSce and by
every rural carrier, war-savings certificates were placed on sale
throughout the entire country by agents appointed by the Secretary
of the Treasury, numbering on October 31, 1918, 233,287. All of
these agents patriotically offered their services without compensation.
Up to November 1, 1918, 151,361 war-savings societies had been
formed to foster the spirit of thrift and economy among their members. I t is hoped that these societies will perform an increasingly
important role in the work of stimulating savings.




SECRETARY OF T H E TREASURY.

33

The cash receipts in the Treasury from the sale of war-savings
and thrift stamps by months from December, 1917, to October, 1918,
were as follows:
December, 1917
J a n u a r y , 1918
February, 1918
March, 1918
April, 1918
May, 1918

$10, 236, 451. 32
24, 559, 722.15
41,148, 244. 22
53, 967,864. 49
60, 972, 984.12
57, 956, 640.12

June, 1918
July, 1918
August, 1918
September, 1918
October, 1918

$58, 250, 485. 00
211, 417, 942. 61
129,044,200.62^
97, 614, 581. 48
89,084, 097. 31

Up to November 1, 1918, the cash receipts totaled $834,253,213.44,
representing an average maturity value estimated as slightly in
excess of $1,000,000,000. The total redemptions up to September
30, 1918, were $7,552,839.44, being only 1 per cent of the cash receipts.
After several months of education in the necessity of saving for
the war and in the advantages of the war-savings certificates it
seemed desirable that the country give concrete evidence of its support of the war-^savings movement and a nation-wide enlistment
campaign was inaugurated, culminating on June 28, 1918. I n that
campaign the people were asked to pledge themselves formally to
save and economize and to invest during the year a specified amount
in war-savings certificates.
Early in September, 1918, it was determined that the organization
which had charge of the war-savings campaign should, if possible,
be brought into closer coordination with the efforts of the Liberty loan
committees under the supervision of the War.Loan Organization of
the Treasury. This change was suggested by F . A. Vanderlip, chairman of the National War Savings Committee. The corriespondence
between Mr. Vanderlip and the Secretary, setting out the reorganization in detail, follows:
AUGUST 29,

1918.

DEAR M R . VANDERLIP: Since our conference last week, I have received your
memorandum concerning the war-savings organization, from which the following
is a q u o t a t i o n :
" Present organization.—The Secretary of the T r e a s u r y appointed a National
W a r Savings Committee, consisting of a chairman and four members. Upon
their recommendation, he appointed six Federal directors, each having general
supervision over two Federal reserve districts, and fifty-two State directors,
each of whom h a s complete charge of war-savings activities in his respective,
State or district.
" T h e progress of the campaign to date h a s shown the desirability of a modification of the present organization, to bring about a greater coordination of
existing war-loan organizations, and a closer supervision of war-savings activities by the Treasury Department. '
" SUGGESTED C H A N G E S .

'^Federal reserve district.—It is suggested t h a t the war-savings organizations
be reorganized to conform to Federal reserve district lines, the governor of the
Federal reserve bank in each district to have general supervision over all war86429"—FI 1918
3



34

;

REl'ORT ON T H E FINANCES.

savings activities, occupying the same relation to t h e war-savings organization
t h a t he now does to the Liberty loan organization.
" I t is believed t h a t by placing the war-savings organization u n d e r the supervision of the Federal reserve bank the activities of the war-savings and Liberty
loan committees can be coordinated and eventually consolidated into one warloan organization, thus eliminating existing duplication of effort, and perhaps
decreasing the expense incident to operation.
''Director of w a r savings for F e d e r a l reserve 'districts.—The appointment by
the governor of each Federal reserve bank of a director of w a r savings for the
district is suggested, this director to have, supervision, under the governor, o f
all war-savings activities in the district. H e will pass upon m a t t e r s of policy,
publicity, expenditures and routine management."
The suggestions t h u s made by you follow the lines which were agreed upon
between us in our talk and have my hearty approval. We are agreed also
t h a t t h e national war-savings activities m u s t be assumed by t h e T r e a s u r y
Department. I am, in accordance with your recommendation, advising the governors of the
Federal reserve b a n k s of the future policy as outlined above and suggest t h a t
meetings of the State directors of w a r savings with the governors of their
respective F e d e r a l reserve districts be called by the National W a r Savings
Cominittee to discuss and evolve plans for the harmonious carrying out of the
foregoing arrangenients.
Realizing, as I think we both do, t h a t the work of the National W a r Savings
Committee is now nearly completed and, upon the consummation of the plan
above outlined, will be quite completed, I can not omit to say to you how profoundly I appreciate the service wlfich you have rendered to your country and
to t h e T r e a s u r y D e p a r t m e n t in creating and directing the war-savings organization. I have not been unconscious of the sacrifice of your personal interest
which this involved, more particularly in recent months since the death of Mr.
Stillman and later of Mr. S.terling have made indispensable your attention to
the affairs of the National City Bank, and I w a n t to express to you, for myself
and my T r e a s u r y staff, our appreciation of the spirit of good will and hearty
cooperation in which you entered upon and fulfilled this great service.
May I not ask you to express to the fellow members of your committee, and
the F e d e r a l directors also, my deep appreciation of the loyal and patriotic
service which they have rendered during the months since the w a r savings
movement was initiated.
The organization in Washington, built up by the National W a r Savings Committee, I hope to retain as p a r t of the national organization in t h e T r e a s u r y
Department. From the members of the war-saying organization throughout the
United States I know I can count upon a continuance of the same enthusiastic,
efficient and unselfish service which they have rendered through the months
past, and to all members of the organization I address the earnest request t h a t
they giv.e their hearty cooperation to the measures of reorganization which you
and I have determined will make most effectively for the continuance, growth
and development of their work.
Withi assurance of my high regard, I am,
Cordially yours,
W. G. MCADOO, Secretary.
Hon.

Wiii,iAM G. MCADOO,

SEPTEMBEE 5,

1918.

Secretary of the Treasury, Washington, D. G.
DEAR MR. SECRETARY: I beg to acknowledge your cordial letter of August 29,.
I am truly appreciative of your words of commendation, and I shall t r e a s u r e
your generous acknowledgment of w h a t service I have been able to give.




-

SECRETARY OF THE TREASURY.

35

The plan which you have approved I believe will meet with the commendation of everybody concerned in the war-savings work. It puts the movement on
a permanent basis closely related to the Treksury and properly supervised by
the directors of the Federal reserve banks. It will bring it into harmony with
the Liberty loan activities, and it makes a happy and proper analogy in the
methods of administration with the Liberty loan work. I feel confident that
the work will go forward with steady improvement.
In accordance with your suggestion I am sending copies of your letter to,
the other members of the national committee and to the Federal directors. I
am also ascertaining from the governors of the Federal reserve banks a date
that will be agreeable to each to meet with the State ^directors of their district, and will, on behalf of the National War Savings Committee, ask the
various State directors to meet with the governors of their respective districts
to discuss and evolve plans for carrying out these arrangements.
With the turning over of the responsibilities of the work in accordance with
these plans, the duties of the members of the National War Savings Committee and the Federal directors are concluded. In bringing these duties to a
conclusion I can not refrain from saying that one of the most inspiring
experiences of my life has been the wonderful response to-the call to voluntary
service which has been made by practically every person called upon by the
War Savings Committee. Men and women with important responsibilities
upon their shoulders have laid aside their work and have given unstintedly of
their time and the best that was in them to forwarding this movement.
The association with my coworkers has been an inspiring privilege. We
have all tried to carry out the plan which you conceived when you asked
Congress to authorize this issue of securities, and we have had a deep belief
that of the many constructive measures which you have advanced, this movement will remain as one of the most permanent monuments to the wisdom of
your remarkable administration of the Treasury.
Sincerely yours,
I
F. A. VANDERLIP.

F o r the purpose of carrying out this plan of reorganization the
governors of the Federal reserve banks held meetings with the State
directors of war-savings in their respective districts during the month
of September and discussed plans for the closer coordination of their
loan activities. The governors will assume supervision of the warsavings campaign under the direction of the W a r Loan Organization
of the Treasury.
By the act approved September 24, 1918 (Exhibit 8), the issuance
of an additional $2,000,000,000 in war-savings certificates was authorized, making the total authorizations of these securities $4,000,000,000. The same law repealed the limitation contained in the
original act of September 24, 1917, making it unlawful to sell to
any one person at any one time an amount of war-savings certificates
exceeding $100, and authorized the holding by any one person of
war-savings certificates to an aggregate amount not exceeding $1,000,
maturity value, of each series.
I n accordance with this authority, the Secretary has determined
upon the issue of a new series of war-savings certificates in 1919,




36

REPORT ON THE FINANCES.

maturing January 1, 1924, arid- in practically all respects to be
issued on the same terms and in the same manner as the series of 1918.
A new $5 war-savings stamp, blue in color, bearing the head of Benjamin Franklin, is in preparation for this series. The same thrift
stamps and thrift cards now in use will be continued in 1919 and will
be exchangeable into the new series of 1919 war-savings stamps, payable January 1,1924, in the^same way as the exchange has been made,
during this year into the series of 1918 war-savings stamps.
The details of the appointment of agents and regulations supplementing those published in the annual report of the previous fiscal
year are set forth in Treasury Department Circulars Nos. 95, 96,
101, and 108, attached as Exhibits 40, 41, 42, and 43, respectively.
LOANS TO FOREIGN GOVERNMENTS.

By the acts of Congress of April 24, 1917, September 24, 1917,
April 4,. 1918 (Exhibit 3), and July 9, 1918 (Exhibit 7), authority
was vested in the Secretary of the Treasury on behalf of the United
States, with the approval'of the President, to establish credits in
favor of foreign governments engaged in war with the enemies of the
United States, and, to the extent of the credits so established, from
time to time to purchase at par from such foreign governments, respectively, their several obligations. A total appropriation of $10,000,000,000 was provided for this purpose. Under these authorizations credits have been established in favor of the Governments of
Belgium, Cuba, France, Great Britain, Greece, Italy, Liberia, Eoumania, Russia, and Serbia, and advances have been made to these
Governments as indicated in the following tabulation, which includes
all such credits and advances from April 24,1917, up to November 15,
1918, a period of a little more than 18^ months:
Country.

Credits
established.

Balances under
other
Cash advances. against charges
credits. established
credits.

Belgium
Cuba
France
Great Britain
Greece
Italy
Liberia
Roumania...
Russia
Serbia

$192,520,000
15,000,000
2,445,000,000
3,945,000,000
15,790,000
1,210,000,000
5,000,000
6,666,666
325,000,000
12,000,000

$173,380,000
10,000,000
1,970,000,000
3,696,000,000

Total...

8,171,976,666

'8,714,750

$200,000,000

$19,140,000
5,000,000
275,000,000
249,000,000

15,790,000
1,051,000,000
5,000,000

159,000,000
5,000,000
1,666,666
137,270,250
1,395,000

220,790,000

852,471,916

187,729,750
10,605,000

The currencies needed in France, Great Britain, and Italy for our
war expenditures in those countries have been provided by the respective foreign Governments under an arrangement whereby the
dollar equivalents of the amounts so provided have been made avail-




37

SECRETARY OF THE TREASURY.

able to the respective foreign Governments for use to meet their war
expenditures in the United States, and thus the needs of these Governments for advances from the United States have been reduced by
a corresponding amount. The following tabulation shows the
amounts of the foreign currencies placed at the disposal of the United
States, and the dollar equivalents paid therefor in the United States,
for the period commencing during the month of January, 1918, up
to November 15, 1918:
Country.
France
Great Britain
Italy
Total

Francs.
3,571*436,076.38

Pounds sterling.

24,270,545/1/6

Lire.

39,540,419

Dollar equiva• lent.
$631,275,365.86
115,633,978.20
• 0,284,348.38
752,193,692.44

On the morning of November 15,1918, there remained an available
authorization for the establishment of credits in.favor of foreign
Governments amounting to $1,828,023,334. To what extent these
Governments will require ^further credits before the termination
of the war depends upon factors that can not now be determined.
I t is important that our foreign loans be discontinued as soon as
may be, ha^ving due regard to the conditions of our industries and
the essential needs of the foreign Governments; in the meantime
they should be held down to a minimum. Nevertheless, until certain of the allied countries can resume their normal activities the
United States should be prepared to sell them on credit, even after
the declaration of peace, foodstuffs, raw materials, and manufactured
products of which they may be in need. I shall recommend" the
enactment of legislation extending the authority to establish credits
in favor of foreign Governments for a reasonable period and within
reasonable limits to meet needs growing out of the war.
Valuable information as to the needs of the Governments of the
Allies for war purposes, their urgency, and the necessity of meeting
them from advances by the Uriited States has been furnished from
Europe by the Inter-Ally Council on War Purchases and Finance and
by its president, Oscar T. Crosby, formerly" an Assistant Secretary
of the Treasury and now Special Finance Commissioner of the
United States in Europe.
The Inter-Ally Purchasing Commission, constituted in August,
1917, through formal arrangements entered into by the Secretary of
the Treasury, with the approval of the President, on behalf of the
United States with representatives of the Governments of the Allies,
has been of great assistance both to the foreign Governments concerned and to the Treasury in securing the best results from the ex-




38

BEPORT ON THE FINANCES.

penditure of the advances made. Through the relationship of the
Purchasing Commission to the War Industries Board the purchases
of the Allies have been coordinated with those of the United States.
Demand certificates of indebtedness signed by the duly authorized
representatives of the respective Governments are now held for all
funds which have been advanced and now bear interest equivalent to
the rate of five per cent per annum upon the entire amount advanced.
This rate has been fixed upon consideration of the rate of interest
paid by the United States on Liberty bonds and certificates of
indebtedness and of the loss of revenue resulting from the tax
exemptions accorded to those issues and other incidental costs and
expenses.
FOREIGN E X C H A N G E .

Since the entry of the United States into the war the great bulk of
its exports have moved to the Governments of the Allies in Europe
for war purposes. These exports were in effect sold on credit, since
payment therefor was made from loans granted by the United States.
To preserve the credit of the Governments of the Allies and to maintain their purchasing power in foreign markets, the Treasury has
permitted the support of the exchanges of Great Britain (and
Canada), France, and Italy upon the United States exchange
markets. Therefore the foreign exchange situation during the war
ultimately became a question of the trade balaiu^es of the ^United
States,^ France, Great Britain, and Italy, with the rest of the world
as affected by the collection of the principal and interest of foreign
investments, ocean freight charges, etc.
War restrictions prevented settlement of these balances by gold
shipment, and the checking of imports and the stimulating of exports
(natural methods of dealing with the situation) were complicated
by questions of military necessity for supplies and shipping as well
as" by the question of blockade and other considerations as to the
relations between the belligerents on both sides and neutral countries.
Subject to the limitation of tonnage and other war requirements, it
was most important to pay our adverse foreigTi balances through the
export of commodities otherwise nonessential, and this consideration
was urged upon those departments of our Government having such
matters in hand.
While the United States supported the exchanges of France, Great
feritain, and Italy, exports were almost equally valuable from a purely
exchange standpoint, whether made by the United States or by such
countries. Those countries have been importing vastly more than they
could export, so there was ample^ tonnage for any exports they were
able to make. The need of tonnage for carrying war supplies from the
United States was so great as to make it difficult to provide shipping
space for exports from the United States to European neutrals that



39

SECRETARY OF THE TREASURY.

did not own shipping. The matter of exports to European neutrals
contiguous to the central powers, whether or not they owned shipping, was controlled by considerations of blockade. The possibilities
of export to other parts of the world were limited to the outward
voyage o f t h e tonnage required to bring back needed imports to this
country.
Foreign loans and credits constitute a, means of temporarily relieving the exchange situation and by postponement afford an opportunity to obtain relief by means of proper trade measures. The
Treasury has urged upon the Governments of the Allies the necessity
of their obtaining neutral currencies through loans or credits or the
sale of the foreign securities which they hold. Tlie Treasury also
itself effected arrangements for stabilizing exchange in a number of
neutral countries.
The results achieved by the Governments of the Allies and by the
Treasury materially aided in maintaining the value of the dollar
in foreign countries/. The trend of the exchange market has indicated a very substantial improvement in the exchange rate of the
dollar. The following tabulation will show (1) the highest premiums
reached in certain foreign currencies between April, 1917, and July
31, 1918, (2) the month in which such highest premium was reached,
(3) the highest premium during the month of July, 1918, and (4) the
premium on November 15, 1918:
"
Highest premium between
April, 1917, and July 31,1918.
Currency ofPer ct.

Sweden
Norway
Denmark-.
Holland
Switzerland
Spain
India
Japan
Argentine..
Chile
Peru
Bolivia

Month in which
reached.

69.78 November, 1917.
44.59
do
,
44.59
do
,
29.35 July, 1918.......
35.28 May. 1918
54.15 April, 1918
23.30 September, 1917.
7.82 July, 1918
12.25 December, 1917.
78.24 'Junenl918
20.83 July, 1918
10.25 December, 1917

Highest
Premium
premium, Nov. 15.
July, 1918..
1918.

Per cent.
33.58
17.91
16.79
29.35
31.50
42.75
10.14
7.82
5.61
• 75.48
20.83
8.84

Per cent.
3,: 55
1.68
.75
3.86
3.21
3.63
10.14
9.33
5.04
31.54
3.10
1.64

I n Great Britain, France, Italy, Brazil, and Canada the dollar
was at a premium on November 15,1918.
By virtue of the authority vested in him by the espionage act, approved June 15, 1917, the President, on September 7, 1917, issued a
proclamation and Executive order by the terms of which the Federal
Eeserve Board, subject to the approval of the Secretary of the
Treasury, was authorized to administer certain regulations, prescribed in the proclamation, with respect to the restriction of the




40

REPORT ON THE FINANCES.

exportation of coin, bullion, and currency. These functions are administered by a committee of the board known as its gold export
committee, consisting of three members. A representative of the
Treasury sits with the committee. Before the task of controlling
the movement of gold had been carried very far it became evident
that in order to make this control effective it would be necessary
to establish control of foreign exchange operations. Such control
was found necessary not only to prevent transfers of funds for
enemy account or for the benefit of enemies, but also in order,
as far as possible, to control the causes leading to demands on
our market for gold. Accordingly, under the authority conferred by
the espionage act and the trading with the enemy act, which latter
became a law on October 6, 1917, the President, by an Executive
order of October 12, 1917, vested in the Secretary of the Treasury
'' the executive administration of any investigation, regulation, or
prohibition of any transactions in foreign exchange, export, or earmarking of gold or silver coin, or bullion or currency, transfers of.
credit in any form (other than credits relating solely to transactions
to be executed wholly within the United States), and transfers of evidences of indebtedness or of the ownership of property between the
United States and any foreign country or between residents of one or
more foreign countries by any person within the United States."
This ordei further empowered the Secretary of the Treasury to
require any person engaged in any such Iransaction " to furnish,
under oath, complete information relative thereto." The Secretary
of the Treasury, with the approval of the President, issued an order
on November 23, 1917, adopting certain administrative procedure
for the administration of this power, and designated the Federal
Keserve Board to act as his agency, subject to his .approval, to carry
out such administration.
Subsequently, on January 26, 1918, the President issued an Executive order amending and setting forth in detail regulations in respect
to such administration in order to vest all necessary authority in the
Federal Keserve. Board to act hs the agency of the Secretary of thei
Treasury in the performance of the duties imposed upon it by such
order, and no such transfers can be made by any person living in
the United States other than in the manner prescribed by the regulations. Pursuant to such authority, the Board established a Division of Foreign Exchange, with headquarters in New York City, to
obtain complete reports concerning operations in foreign exchange
and to supervise the transmission of funds to foreign countries.




SECRETARY OF THE TREASURY. •

41

The postal and cable censors have consulted freely with the division
in the censorship of financial mail and telegraph and cable messages.
SILVER.

The act of April 23, 1918, commonly known as the Pittman Act
(Exhibit 44), is entitled "An act to conserve the gold supply of the
United States; to permit the settlement in silver of trade balances
adverse to the United States; to provide silver for subsidiary coinage
and for commercial use; to assist foreign Governments at war with
the enemies of the United States; and for the above purposes to
stabilize the price and encourage the production of silver."
The purpose of this act was to permit the use of silver dollars held in
the, Treasury against outstanding silver certificates, but only with the
concurrent retirement of such icertificates. Silver, as is well known,
is the principal money metal of the Orient. The demand for products
of the Orient for war purposes, such as jute, hides, etc., was very pressing, and it was impossible to settle the adverse trade balances thus
created through the shipment of commodities as in normal times.
The shipment of gold to the Orient is at all times highly undesirable,
because both gold and silver, but particularly goldj are there hoarded
and disappear from commercial use.
I t seemed wise in these circumstances to put to use the silver dollars
lying in the Treasury. This could only be accomplished through
the simultaneous retirement of a corresponding amount of silver certificates. The Pittman Act accordingly authorizes the Secretary of
the Treasury from time to time to retire silver certificates, and as such
certificates are retired to melt or break up and sell as bullion the
silver dollars represented by such certificates up tb the limit of
350,000,000 standard silver dollars. Upon the sale of any such bullion the Secretary of the Treasury is required immediately to direct
the Director of the Mint to purchase in the United States of the
product of mines situated in the United States and of reduction
works so located, an amount of silver equal to the amount necessary
to recoin the silver dollars so melted or broken up. Such purchase is
to be made in accordance with the then existing regulations of the
mint and at the fixed price of $1 per ounce, 1,000 fine.
Silver bullion derived from the melting of standard silver dollars
can be used for the purpose of conserving the existing stock of gold •
in the United States, of facilitating the settlement in silver of trade
balances adverse to the United States, of providing silver for subsidiary coinage and for commercial use, and of assisting foreign Governments at war with the enemies of the United States.
I n order to prevent contraction of the currency, provision is made
for the issue, under the direction of the Federal Keserve Board,
which is authorized, at the request of the Secretary of the Treasury,




. r
42

o

REPORT ON THE FINANCES.

either to permit or to require such issue, of Federal reserve bank
notes in any denomination (including denominations of one and two
dollars) in the aggregate amount of not exceeding the number of
silver dollars melted or broken up. Such Federal reserve bank notes
can be issued only on deposit with the Treasurer of the United States
as security therefor of United gtates certificates of indebtedness or of
United Statbs one-year gold notes.
From time to time, as silver bullion is purchased by the Director
' of the Mint and standard silver dollars are coined thei:efrom to replace the silver dollars originally melted, an equal amount of such
Federal reserve bank notes must be retired. This retirement can at
the proper time be easily effected by permitting the certificates of
indebtedness deposited as security to be paid off at their maturity.
I n pursuance of the authority of the Pittman Act, the Secretary of
the Treasury arranged to sell to the Government of Great Britain
200,000,000 fine ounces of silver for the use of the Government of India. The bullion resulting from the melting of 1,000,000 silver dollars
/ has been allocated to the Director of the Mint for subsidiary coinage.
The demand for the shipment of silver to India was very urgent
and far exceeded the current production of the world's mines. By
making available the silver dollars lying in the Treasury a difficult
situation in India was met. Against delivery of the bullion resulting from the melting of silver dollars, the British Government
agreed to pay for the silver at the rate of $1 per fine ounce, and, in
addition, expenses and value of copper content.
The following tables show various operations under the Pittman
Act up to November 1, 1918:
TABLE I.—Silver dollars melted.
Dollars melted (whereof $19,655,554 represented dollars in the
Treasury and the balance was made available by the retirement of silver certificates)
—
.:$137,465,554
Fine silver weight in ounces
. 106,192,429.466
TABLE II.—Silver certificates withdraivn from circulation and canceled.
,
$1
I
2___
5
10
20—
50
100__500

-^
——

Total face value




Amount net.
— $27, 052, 468
14, 640, 082
67, 505, 420
4,138, 990
3, 345, 740
1,117,100
9, 700 .
500
117,810,000

.

•

SECEETARY OF THE TREASURY.

43

TABLE IIL—Federal reserve bank notes issued.
\

$1
2
5
10

^

Amount.

!___ $30, 324, 000
7, 352, 000
_^- 13, 060, 000
2, 960, 000

-:
Total

53, 696, 000

The Federal reserve bank notes which have been issued, as stated
in the above table, are secured as follows :
One-year 3 per cent Treasury notes
Special 2 per cent certificates of indebtedness
Total

__, $9, 295, 000
44, 401, 000
53; 696, 000

The Pittman Act does not effect any change in the permanent currency structure of the country. Silver dollars are retired and replaced by Federal reserve bank notes, and when silver dollars are in
time recoined Federal reserve bank notes are to be retired, thus automatically restoring the original status. Such retirement is rendered
possible without friction by the fact that such Federal reserve bank
notes are in all cases secured only by short-term obligations of the
United States Government.
GOLD.

The gold monetary stock (coin and bullion used as money) in the
United States on November 1, 1918, is estimated to have been $3,079,800,000. The increase since January 1, 1918, amounted to approximately $39,400,000; since the beginning of the European war,
$1,192,500,000. The portion of the world's gold monetary stock held
by the United States is estimated to be about one-third.
PLATINUM.

I n January, 1918, the facilities of the New York assay office were
placed at the disposal of the Ordnance Department and the War Industries Board for the receipt and treatment of platinum and kindred
metals, to be used by the Government in connection with the manufacture of munitions and in other scientific operations of the War
Department. The assay office at New York was designated for the
purpose by the Treasury at the request of the War Department, and
upon the recommendation of the Bureau of Standards, it being the
one institution under the control of the Government where the difficult
work of refining platinum metals could be successfully undertaken.
Although the force and the facilities of the New York assay office
were severely taxed by the extraordinary increase of its regular
operations on gold and silver since the outbreak of the war, the work
of handling the platinum business of the Government was readily
assumed.




44

REPORT ON T H E FINANCES.

'

Wide publicity was given to the needs of the Government for platinum to be used for war purposeSj in response to which approximately
2,500 deposits were received during the current calendar year. The
gross weight of the deposits approached 55,000 troy ounces, which
carried an estimated value of $4,200,000.
The deposits were received in various forms—from Kussian and
Colombian grains to jewelry and laboratory scrap. They were re;
ceived from every conceivable source and through various agencies,
such as Ked Cross societies and national banks.
The metal is prepared by the New York assay office in the form
of platinum chloride, sponge, bars, gauze, and wire.
INTERNAL REVENUE.

During the past year the Internal Revenue Service has been transformed as the result of the rapid development of internal taxation
and the radical change which has taken place in the character and
complexion of such taxation. For 50 years preceding 1917 the principal sources of internal revenue were the taxes impbsed on fermented
liquors and distilled spirits, and even during 1918 the revenues collected from these sources exceeded in amount the corresponding collections for any previous year. This, however, was due to large
increases in rates, as the industry that produces these beverages is
declining in comparative importance as a source of revenue. Kelatively, thes.e taxes, which have long been the chief subject matter of
the Bureau of Internal Kevenue, have taken a position subordinate to
the direct taxation of income, upon which the principal reliance has
been plaeed in raising the large sums required for the support of the
war program.
During the year ended June 30,1918, the total collections amounted
to $3,694,619,638.72, compared with $3,400,000,000 estimated at the
time the law was in process of enactment that the law would yield.
The collections for the preceding fiscal year were $809,393,640.44 and
exceeded by far the amount collected in any previous year. The
collections and number of transactions with taxpayers during the
fiscal year 1918 exceeded by ten times the revenue yield and number
of transactions of aiiy year prior to the advent of the income tax of
1913. Only about 12 per cent of the entire yield for 1918 was derived
from taxes on the manufacture and sale of fermented liquors and
distilled spirits, compared with 68 per cent for 1912.
The transformation of the policies, organization, and methods of
the service was made necessary not only by the change from a system
bf particular excise taxes to a system of direct income taxes but also
by the increase in the number of transactions and in the relationships
to be established with new taxpayers. The importance of the taxgathering work was magnified by the revenue needs of the country




SECRETARY OF THE TREASURY.

45

and by the effect which the new taxes and increased rates of tax might
have on the industrial structure of the country. Millions of individuals were called upon for the first time to make direct contributions for the support of the Federal Government, and the amount of
tax imposed on thousands of enterprises was so large in comparison
with previous levies that there was much. apprehension of serious
industrial and financial disturbances.
The first step of the department toward meeting the grave responsibilities imposed by the war-revenue legislation was to lay down a
general policy to be followed in the administration of the law.
Without abating in any degree the determination to give full force
and effect to every provision of the law, to preserve intact every
right of the Government, and to secure the entire amount of revenue due from the various classes of taxpayers, it was decided to
invite the cooperation of the people by assuming from the outset an
attitude of helpfulness, sympathetic attention, and scrupulous regard
for the rights of the taxpayer. The practical application of this policy
has extended to every detail of the work and has prompted important
changes in organization and administrative procedure.
For example, the assessment of income and excess-profits taxes obviously required an intimate understanding of actual business conditions. Accordingly, a number of representative men of recognized ability and experience in law, accountancy, and business practice were invited to assist the Commissioner of Internal Kevenue in interpreting
and administering the legislative provisions. Again, for the verification and auditing of tax returns, a corps of experienced accountants was added to the staff and a training school was organized for
the instruction of the employees engaged on this work, which is of
vital concern to the Government and to taxpayers alike. To aid the
Commissioner of Internal Kevenue in reaching decisions in difficult
and important cases arising under the law and regulations, a special
group of advisers was employed. A new division was created for the
express purpose of carrying on a nation-wide campaign, through
every available means qt publicity, to inform and educate the public
regarding the requirements of the law and the procedure to be followed in complying with its provisions. Every effort was made in
the preparation of regulations and forms to facilitate compliance
with the law by the taxpayers. By appropriate instructions, the policy of cooperation with the public was carried into the field force.
Effort has been made to examine every complaint of inequity in the
application of the law, and formal hearings have been granted when
necessary.
The harmonius and, equitable relations which the Internal Kevenue Service has endeavored to establish and maintain with the great
body of citizens have required, as a necessary corollary, the vigorous
pursuit of delinquencies and violations. The taxpaying public, as



46

REPORT ON THE FINANCES.

well as the Government, is interested in the impartial administration of the tax laws and is entitled to expect that persons who,
through ignorance or willful intent, fail to make returns or fail
to make known the full extent of their tax liability shall be brought
to account. In carrying on this work, information regarding the
incomes of possible delinquents has been obtained from every available source and it now appears that several hundred million dollars
additional taxes will be assessed and collected on account of delinquencies and violations for the fiscal year 1918.
The police functions of the Internal Kevenue Service have been of
especial importance during the past year on account of their bearing
on the conservation of man power and food materials. A force of
specially trained revenue agents has been kept constantly in the field
for the purpose of suppressing the illicit manufacture and sale of
intoxicants and narcotic drugs in the vicinity of Army camps and
cantonments and in other localities where the existence of these
practices has become known. This work, as well as the administration of the laws restricting and prohibiting the use of food m.aterials in distilling and brewing, has been carried on effectively.
During the fiscal year 1918 the Bureau of Internal Kevenue has
been able to collect the largest tax ever paid by any country, an
amount which represents a larger proportion of the Nation's war
budget than any other belligerent engaged in the present war has been
able to defray from tax revenues. During the fiscal year 1919, however, the Bureau's task probably will be even greater.
Following the special riiessage delivered by the President to the
Congress on May 27, 1918, the Secretary of the Treasury in June
estimated, on the basis of a long war and din increasing military program, that the expenditures for the fiscal year ending June 30, 1919,
would be. $24,000,000,000, and recommended that one-third of that
amount, or $8,000,000,000,.be raised by taxation.
The conditions were explained in the following letter to the chairman of the Ways and Means Committee of the House of Kepresentatives:
WASHINGTON, D . C , June 5, 1918.

DEAR MR. KITCHIN : Replying to your letter of June 3, and referring to our
recent conferences on the question of new revenue legislation, permit me to
submit the following for youi* consideration:
If the present rate of increase in expenditures should continue for six
months, the Treasury will actually have to disburse during the fiscal year ending June 30, 1919, approximately $24,000,000,000.
This estimate is not based merely upon appropriations,, nor merely upon
estimates made by other departments as to their probable expenditures,
although they have been obtained and considered; it is based upon the actual
experience of the Treasury during the past year, which has shown that actual
expenditures, exclusive of transactions in the principal of the public debt, have
increased at the average rate of $100,000,000 per month since March, 1917.




SECRETARY OF THE TREASURY.

47

You will observe from the inclosed statement that in March, 1917, the expenditures were in round figures $100,000,000. In May, 1918, they were
$1,508,195,000. If there should be no further increase during the coming fiscal
year, the cash expenditures upon the May basis would be more than
$18,000,000,000. If, as seems inevitable, the increase in. expenditures should
continue at the rate of $100,000,000 per month for the next six months, or until
December, 1918, and if thereafter the monthly expenditures should remain stationary until the 30th of June, 1919, the Treasury would have to finance expenditures aggregating $24,000,000,000 during the fiscal year ending June 30,
1919; or, to put it another way, if the average monthly expenditure should
exceed that for the month of May, 1918, by 33^ per cent, we shall spend
$24,000,000,000 in the fiscal year 1919.
In the fiscal year ending June 30, 1918, our cash disbursements will amount
to between $12,500,000,000 and $13,000,000,000. Of this amount, about one-third
will,have been raised by taxes and two-thirds by loans, all of which will be
represented by long-time obligations—that is, bonds of the first, second, and
third Liberty loans and war-savings certificates. We shall thus have completed 15 months of the war with a financial record unequaled, I believe, by
that of any other nation.
We can not wisely contemplate nearly doubling our cash disbursements in the
fiscal year 1919 without providing additional revenue. We can not afford
to rely upon $4,000,000,000 only from taxation, because we shall then have to
rely on raising $20,000,000,000 by loans. This would be a surrender to the
policy of high-interest rates and inflation, with all the evil consequences which
would flov;^ inevitably therefrom, and which would, I firmly believe, "bring
ultimate disaster to the country. We can not afford to base our future financing upon the quicksands of inflation or unhealthy credit expansion. If we are
to preserve the finacial strength of the Nation, we must do sound and safe
things, no matter whether they hurt our pockets or involve sacrifices—sacrifices of a relatively insignificant sort as compared with the sacrifices our
soldiers and sailors are making to save the life of the Nation. The sound thing
to do is unquestionably to increase taxation, and the increases should be
determined upon promptly and made effective at the earliest possible moment.
I doiibt seriously if the Government can be financed with only $4,000,000,000
derived from taxation, because with a tax bill no larger than this sufficient
economies will not be enforced upon the people of America, and without such
economies I see no way in w^hich the great financial operations of the Government can be safely conducted.
On the basis of the present revenue laws we should have to raise in the fiscal
year 1919 $20,000,000,000 by the sale of Liberty bonds or by loans of one sort
or another. I believe that if we are to preserve the soundness and stability of
our financial structure we should raise by taxation not less than ^one-third of
the estimated expenditures for the fiscal year 1919, or $8,000,000,000.
There are also certain general considerations bearing upon the problem of
taxation which I hope I may be permitted to bring to your attention.
The existing excess-profits tax does not always reach war profits. The rates
of excess-profits taxation are graduated, and the maximum is 60 per cent. In
Great Britain there is a flat rate of 80 per cent on all war profits. The Government departments, under great pressure as they are to get necessary war
materials and supplies with the utmost expedition, can not in the nature of
things fix their prices nor guard their contracts in such s way as to avoid
C
the possibility of profiteering. The one sure way is to tax away the excessive
profits when they have been realized. I do not say this in a spirit of criticism
of the corporations or business men of the country, who have for the most part




48

'

REPORT ON THE FINANCES.

loyally supported the Government. In entering into war contracts they take
grave risks. They are called upon to make yast expenditures of capital for
purposes which may prove unproductive after the war. They are not to be
blamed in these circumstances for asking for prices and terms which cover
these risks. On the other hand, when the risk has been liquidated by proper
allowances and the contract has proved profitable the Government should take
back in taxes all profits above a reasonable reward. Under existing law that
does not happen, because the tax rates are not high enough and can not safely be
made high enough, since the test now is not how much of the profits are due
to the war, but what relation the profits bear to the capital invested. A.company with a swollen capital and huge war profits escapes.
Of course, no one objects to reasonable profits;, on the contrary, everyone
should want—and, I am sure, does want—business and enterprise to be rewarded with reasonable or even liberal profits. Prosperity should be preserved, and can be preserved, I believe, on the basis of reasonable profits. The
problem of statesmanship is to establish a just relation between necessary taxa-'
tion and the earning power of the Nation.
This brings me to another consideration of great moment in the .Government's
financial plans. I hope that it will not be, necessary further to increase the
interest rate on Government bonds. The number of subscribers to the three
Liberty loans aggregated 30,000,000. The people who subscribed are impatient
of those who have not. Various plans have been urged upon me for forcing the
people to buy Liberty bonds. The man of small means who buys a $100 bond
wants his neighbor to do so, too. There is a popular demand also for high taxes
upon war profits. There is also a popular demand that all the people should
contribute to financing the war. There should, therefore, be a substantial
increase in the normal income tax rate and a higher tax should be levied upon
so-called unearned than on earned incomes. Income derived from Liberty bonds
would be exempt from this taxation, and the relation between income.from
Liberty bonds and income from other securities would be readjusted without
increasing the rate of interest on Liberty bonds. It would not tax the patriotic
purchasers of Liberty bonds on their holdings, but it would weigh heavily upon
the shirkers who have not bought them. It would make the return from Liberty bonds compare favorably with the return from other securities. It would
give the Government's bonds an essential and necessary advantage over those of
corporate borrowers, and would very greatly decrease the relative advantage
which State ^and municipal bonds now enjoy through the total exemption which
they carry. It would produce a gradual readjustment of the situation in the
investment markets instead of an abrupt one, as would be the case if the interest
rate on Liberty bonds should be increased.
A normal tax falls upon all alike. Therefore, as I pointed out in my statement before the Ways and Means Committee last summer, there is not the same
objection to the exemption from normal income taxes as there is to the exemption
from surtaxes. A substantial increase in the normal income tax is the soundest
and surest way of stabilizing the price of Government bonds. If we have to
increase the interest rate on Government bonds, the inci:eased rate may continue
for 10 to 30 years and some of the bonds which we have issued will go to great
premiums not long after the war is over. If we make the bonds at the present
rate more attractive by increasing the normal tax, then the decrease in taxation
which will follow the close of the war will automatically adjust the situation.
I believe that to stabilize the price of Government bonds by first increasing and
subsequently reducing the normal income taxes, from which the holders of these
bonds are exempt, is sound finance and sound economics.




SECRFiTARY OF THE TREASURY.

49

There is another feature deserving of consideration. We are asking the people
to finance this war, and we are offering them an investment paying 4^ per cent
interest. The people have responded wonderfully to this appeal. In the last
Liberty loan campaign 17,000,000, approximately, subscribed. There is a widespread feeling that many people who are able to do so, especially those who are
making vast profits out of the war, are not doing their part, either in the purchase of Liberty bonds or in the payment of taxes—that they are investing in
corporate stocks and bonds producing high returns instead of in the bonds of.
their own Government producing reasonable returns, when the first duty of
patriotism and self-protection demands that they shall buy Government bonds
for the protection of the Nation in its hour of peril.
There is a natural feeling among the masses of the people that taxation
upon.incomes and upon war profits should be high enough to bring the return
from corporate investments more nearly on a parity with the return from
Government bonds; that the Government should not be forced to compete for
credit with war industries, which are profiting abnormally and which, unless
restrained by the exercise of sound and just taxation, will constantly add to
the difl?iculties of the people of the United States in their effort to supply the
the Government at reasonable interest rates with the credit it needs to fight
successfully this war for liberty.
If I may, without impropriety, offer a suggestion as to the proposed revenue
measure, I should recommend:
(1) That one-third of the cash expenditures to be made during the fiscal
year ending June 30, 1919, be provided by taxation. According to my estimates, this would involve raising $8,000,000,000 through taxation.
(2) That a real war-profits tax at a high rate be levied upon all war profits.
This tax should be superimposed upon the existing excess-profits tax in such
a way that the taxpayer should be required to pay whichever tax is the
greater. The existing excess-profits tax should be amended in certain important particulars so as to remove inequalities.
(3) That there should be a substantial increase in the amount of normal
income tax upon so-called unearned incomes. Under existing law earned
incomes above certain exemptions are taxed 4 per cent as an income tax and
8 per cent as an excess-profits tax, making a total of 12 per cent, while unearned incomes, derived from securities, etc., are taxed only 4 per cent. The
8 per cent tax should be recognized as an income tax, and the rate of 12 per
cent (4 per cent normal and 8 per cent excess profits) should be retained in
respect to earned incomes, while a higher rate than 12 per cent should be
imposed on unearned incomes.
(4) That heavy taxation be imposed upon all luxuries.
Sincerely yours,
W. G. MCADOO.
Hon.

CLAUDE KITCHIN,

Chairman Ways and Means Committee,
House of Representatives.
86429°—FI 1918
4




50

REPORT ON T H E FINANCES.
[Inclosure accompanying letter of June 5, 1918.]

Statement showing classified disbursements, by months, from March, 1917, to
May, 1918, as published in daily Treasury statements.
Ordinary.

July, 1917
August, 1917
September, 1917
October, 1917
November, 1917
December, 1917
January, 1918
February, 1918
March, 1918
April, 1918
May,1918

Other special.

§200,000,000.00
407,500,000.00
277,500,000.00

$27,176,896.12
8,294,354.78
4,962,746.28
919,445.78

S99,950,799.32
289,893,953.00
526,565,555.96
412,723,486.13

402,780,351.45

March ,1917
April, 1917
May, 1917
June, 1917

Foreign loans.

885,000,000.00

41,353,442.96

1,329,133,794.41

208, 299,031.05
,
277, 438,000.64
349, 013,305.34
,
462, 045,359.94
512, 952,035.17
,
611, 297,425.62
715, 302,039.83
675, 209,068.43
819, 955,367.26
910, 756,758.95
: . . . . 1,068,203,026.82

452, 500,000.00
478, 000,000.00
396, 000,000.00
480, 700,000.00
471, 929,750.00
492, 000,000.00
370, 200,000.00
325, 000,000.00
317, 500,000.00
287, 500,000.00
424 000,000.00

1,511,814.92
2,019,363.50
1,364,980.35
1,623,392.68
1,200,022.36
1,914,433.70
4,854,005.86
12,477,917.31
18,338,441.98
17,031,020.28
15,992,206.83

662,310,845.97
757,457,364.14
746,378,285.69
944,368,752.52
986,081, 807.53
1,105,211,859.32
1,090,356,045.69
1,012,686,985.74
1,155,793,809.24
1,215,287,779.23
1,508,195,233.65

S72,773,903.20
81,599,598.22
114,102,809.68
134,304,040.35

6,610,471,419.05 4,495,329,750.00

Total.

78,327,599.67 11,184,128,768.72

Total, Mar. 1, 1917, to May 31
7,013,251,770.50 5,380,329,750.00 119,681,042.63 12,513,262,563.13
1918

. The signing of an armistice in November, 1918, with the consequent prospect of peace, however, materially changed the situation
as to the probable needs of the Government. The problem was
promptly reviewed in the light of developments, with the result that
it was believed that the tax bill for the year 1919 could be reduced
from $8,000,000,000 to $6,000,000,000, and that for the year 1920 the
bill should provide for'taxes of not less than $4,000,000,000. The
situation was presented to the members of the Committee on Finance
of the Senate, before whom the revenue bill was then pending, in the
following letter, dated November 14,1918, addressed to the chairman
of that committee:
WASHINGTON, D . C , November 14, 1918.

MY DEAR SENATOR: The collapse of our enemies necessitates instant reconsideration of the financial problems before the Government, the most immediate
of which is that presented by the new revenue biU now before the Finance
Committee of the Senate. The prompt enactment of a revenue bill is imperative. The existing law is not satisfactory to the country nor to the Treasury.
On the other hand, the revenue bill which passed the House is more stringent
than the changed situation will justify.
In June, in preparing for a long war and an increasing military program,
I estimated the expenditures for the fiscal year ending June 30, 1919, at
$24,000,000,000. The expenditures for the first four months of the fiscal year
1919—that is, for the months of July, August, September, and Octoberaggregated, according to the Treasury Daily Statement, $6,635,922,423.72, or
within $365,000,000 of the amount which I anticipated for that period. The
saving was apparent rather than real, due to the fact that the improved
arrangements which the Treasury was able to make for meeting the requirements of the Army's' disbursing officers abroad released funds which had
accumulated to their credit and made them available for current expenditures,
and also due to certain other adjustments. I have little doubt, therefore, that




SECRETARY OF THE TREASURY.

51

had the war continued, the expenditures would have reached the amount
estimated.
Now, however, there seems every reason to anticipate a large reduction in
the Government's expenditures during the balance of the • fiscal year. How
great that reduction will be it is impossible at the moment- to estimate. Existing contracts will, no doubt, be liquidated to a considerable extent. That
process of liquida;tion might actually result for a time in acceleration of
demands upon the Treasury rather than retardation. The pay of the.Army
and Navy and the expenditures in salaries and wages of the war establish' ments must continue without material change for months to come. It seems
reasonable to, suppose that the decrease in the Government's expenditures can
not be at a very rapid rate, if a wise policy of readjustment and transfer of
activities from a war to a peace basis is followed.
The United States will be the fortunate possessor of foodstuffs, raw materials, and manufactured products of which Europe and the rest of the world
are in dire need. Not all of the Allies can fully pay us in gold, for some have
little and others none to spare; nor in commodities during the period of reconstruction, for some of them will not so soon be able to resume normal activities:
and the United States must be prepared to continue, therefore, to enable the
Governments of the Allies, or some of them, to make purchases on credit. I
shall promptly ask the Congress for authority to continue to establish such
credits and make loans within reasonable limits to these Governments for
purposes growing out of the war.
It is of the utmost importance that such foreign loans should be held down
to a minimum, and as soon as may be discontinued, and that every reasonable
argument should be pressed upon the Governments of the Allies to prepare
themselves and their people to make payment for their exports from the
United States by imports into the United States; that is, in effect, to make cash
payment instead of payment by credit. For the^ period of reconstruction,
however, some of the Allies must have workitig capital in the form of credits
to enable them to pay for the imports without which they can not place themselves and their industries on a peace basis. This is not only the policy which
is actuated by a proper desire to be helpful to the Governments which, with us,
have borne the burden of the war, and to their peoples, but is also the policy
of enlightened selfishness. It is to be apprehended that the sudden cessation
of the extraordinary demands upon our industry and products, consequent
upon the conclusion of the war, may result in sudden reduction of prices and
wages, and even in unemployment, if we are not prepared to continue to sell
on credit to the extent that may be necessary.
These considerations lead me to believe that the Government's expenditures
during the fiscal year ending June 30, 1919, may be in the neighborhood of
$18,000,000,000.
I am inclined to recommend a substantial reduction in the amount sought
to be raised by the House bill. Changes have beerf made or are in contemplation by the Senate which, taken together with the anticipated elimination of
revenue from liquor taxes, would reduce the amount to be raised by the pending
revenue bill from the $8,000,000,000 or more provided for in the House bill, and
originally suggested by me, to some $6,300,000,000. Further changes may, I
think, with safety be made in the bill, with a view to reducing the amount of
taxation to $6,000,000,000, which may be paid in installments during the calendar year 1919. The excess-profits tax rates applicable to the calendar year
1918 should not be greater than those provided for in the existing law of October, 1917, and should be payable only in those cases where such excess-profits




52

REPORT ON THE FINANCES.

tax would yield a larger return than the proposed war-profits tax. The 80 per
cent war-profits tax applicable to the calendar year 1918 should be retained.
Contracts have been made during past months in the expectation of a heavy
war-profits tax. Everyone is agreed that war profits should be taxed. They
must be taxed now.
It is time to look ahead to the future of American business and industry. Our
tax measures should be so devised as to encourage and stimulate rather than
to burden and repress them. I therefore recommend the immediate amendment
of the pending bill so as to provide that, with the collection of the taxes levied
upon war and excess profits for the calendar year 1918, and payable in the year
1919, the war and excess-profits taxes shall come to an end, except in so far as
may be necessary to subject to these taxes profits which, though arising from
contracts entered into during the war period, would, under existing regulations,
technically be profits of 1919 and not profits of 1918. I can think of nothing
which would do more to encourage industry and enterprise than this measure,
carrying with it, as it would, the assurance that with the cessation of war
there will come cessation of taxes on so-called war profits and war excess
profits.
It seems wise to provide, with the elimination for the calendar year 1919 ,of
the war and excess-profits taxes, for a sufficient revenue from corporation and
individual income taxes applicable to the calendar year 1919 to make the total
revenue payable during the calendar year 1920 not less than $4,000,000,000. It
is impossible at this time to make a forecast of the aggregate amount which
the war debt will have reached by the time war contracts have been liquidated
and the reduction of our military forces to a peace basis has been completed.
What will be the Government's necessities when the period of readjustment is
past and the country has fully reached a peace basis can not now be foretold;
but having regard to the interest on the then public debt in excess of the
interest to be received from obligations of foreign Governments, the necessity
of providing from taxes for the gradual retirement of the war debt, and the
certain permanent increase in the expenditures of the Government over, prewar expenditures, the figure of $4,000,000,000 suggested seems a very moderate one.
In connection with the revision downward of the pending revenue bill, I can
not too strongly urge upon you the necessity, so far as the war and excessprofits tax is concerned, of providing necessary safeguards in the form of
adequate provisions for amortization, conservative valuation of inventories,
and the ascertainment of the miniinum income which shall be exempted from
the tax on lines which will insure the taxpayer from injustice and avoidable
injury. Nor can I overemphasize the importance of determining now the basis
of taxation which will apply to the calendar year 1919 as well as to the calendar
year 1918. Business and industry and individual initiative and enterprise are
entitled to know in advance the basis of taxation upon which all the activities
of the Nation must be conducted. Prosperity can not be maintained if business
is kept in uncertainty as to taxation. It is always unfortunate to be C9mpelled
to enact a tax bill at the end of the calendar year, with retroactive effect,
instead of in advance of the calendar year, which would permit contracts and
business arrangements generally to be entered into with certainty as to the
burden of taxation to be borne. This is a gross injustice to business and to all
forms of enterprise. It is costly also to the people at large, as they are required to pay higher prices for their necessities, because producers, in order to
be on the safe side, fix prices on the assumption that taxes may be higher than
they subsequently turn o\it to be. Definiteness and certainty as to the basis of
taxation should be given in the pending bill, not alone as to the calendar year




' SECRETARY OF THE TREASURY.

53

1918 but as to the calendar year 1919. This will enable business and enterprise
to proceed with confidence and courage.
Being reasonably assured of a decreasing rather than an increasing scale
of expenditure, the Treasury could look forward with composure to the necessity of temporary borrowing against the expected revenue, in addition to such
borrowing as may be necessary to meet the excess of current expenditures over
revenue. This gives an opportunity in connection with the pending bill to take
measures which heretofore have been impossible because of the increasing
scale of expenditures, although inherently very desirable, for the spreading of
the payments of income and profits taxes over the entire calendar year instead
of requiring them to be made in the first six months, and I suggest that these
taxes be made payable in four equal installments, say, March 15, June 15,
September 15, and December 15. This will give great additional relief to taxpayers during the period of readjustment now before us and will initiate a
policy which should be to the permanent advantage of the Government. For
many years to come the Government's expenditure for interest and other purposes will be vastly increased, and that expenditure will be spread over the
whole year. It is of the utmost importance that the Government should be
in receipt of revenues through the calendar year about evenly proportioned,
so that it will not be under the necessity of accumulating balances beforehand
or borrowing against anticipated revenue' receipts when we reach again a
peace basis..
To summarize, I venture to recommend:
(1) That the pending revenue bill be revised with a view to yielding $6,000,000,000, payable during the calendar year 1919, and not less than $4,000,000,000
during the calendar year 1920.
(2) That income and profits taxes be payable in four equal quarterly installments, beginning March 15 in each year.
(3) That the excess-profits tax rates in respect to taxes payable in the year
1919 be not higher than those in the existing law.
(4) The amelioration of the provisions with reference to the determination of
war and excess-proflts taxes in respegt to the revenue payable in the year 1919
and the elimination of those taxes in respect to revenue payable in 1920, except
with respect to profits on contracts negotiated during the war period.
(5) That to compensate for any reduction of revenue beyond the desired
amounts above indicated, there should be an increase in the corporation and
individual income tax levies.
I am sending a copy of this letter to Mr. Kitchin, chairman of the Ways and
Means Committee.
Cordially yours,
W. G. MCADOO.
Hon.

F. M. SIMMONS,

Chairman Committee on Finance,
United States Senate.

As a result of the experience gained during the fiscal year 1918 it
is believed that the organization and methods now established in the
Internal Kevenue Service are capable of the expansion and adaptation which will be required to administer effectively the legislation
that is now proposed. But such expansion and adaptation can not
be achieved overnight. They require time as well as larger appropriations for administration. The revenue act of 1917, designed to
produce about three billions and a half, was approved October 3,




54

REPORT ON THE FINANCES.

1917, and could not be put into effect promptly on March 1, 1918,
when the returns from taxpayers were ixormally due. The revenue
bill of 1918, designed to raise a much larger sum, has not yet been
passed at the date of writing this report. Whether such a law—
probably the largest revenue measure ever introduced—can be satisfactoril}^ and effectively administered in the year 1919 depends in
large part upon the promptness with which it is enacted into law.
GlAjcerm discovery.
The chemical laboratory of the Bureau of Internal Kevenue discovered and developed during the year a process of producing,
glycerin synthetically by fermentation of sugar. This was a very
important achievement and afforded the assurance that there' would
be no shortage in the supply of glycerin for the purposes of the war.
During the spring of 1917 information reached the Government
that glycerin was being produced in large quantities in Germany
by a fermenting process, and that by this means the Germans were
able to produce supplies of glycerin ample for their war purposes,
despite the tremendous diminution in available supplies of fats,
from which glycerin is ordinarily recovered. The chemists attached to the laboratory of the Bureau of Internal Kevenue were
authorized to investigate the problem and undertake its solution.
After three months of experimental work in the laboratory the
chemists reported discovery of a synthetic process by which glycerin
could be produced in needed quantities, but that the cost of quantity
production could not be determined from the small-scale operations
to which the laboratory was necessarily restricted. I n order to determine whether the process could be made commercially profitable,
the bureau's experiments were extended to a large industrial chemical
plant. By February, 1918, the process had been tried on a scale
sufficiently large to demonstrate both its effectiveness in producing
glycerin and the feasibility of its commercial exploitation. Detailed reports describing the process were made by the chemists and
these have been made available to the Governments associated with
the United States in the war and to such manufacturers in the
United States as have expressed interest in it or purpose to undertake
the commercial exploitation of the process.
THE FEDERAL RESERVE SYSTEM.

During the past year the Federal Keserve System has.continued to
render important service to the Government and to the banks. I t
is difficult to see how, without the facilities and coordination afforded
by this system, it would have been possible for the country to have




55

SECRETARY OP THE TREASURY.

adapted itself,to the changes necessarily incident to the transition
from a peace basis to a war basis.
Between October 26, 1917, and October 25, 1918, the total of discounted bills held by the Federal reserve banks has grown from
$397,094,000 to $1,546,164,000. Of the latter total $1,092,417,000 is
represented by paper secured by Liberty bonds and Treasury certificates. During the year the reserve banks also increased largely their
open-market operations, as may be seen from the growth of their
holdings of bills bought in the open market from $177,950,000 on
October 26, 1917, to $298,623,000 on the corresponding date of the
present year. The total resources increased from $2,528,365,000 to
$5,270,785,000, of which $2,045,132,000 consists of gold, the gold
holdings of the Federal Keserve System between October 26, l 9 l 7 ,
and October 25, 1918, having increased by $541,696,000, and the
system at present holding about two-thirds of the stock of gold known
to exist in the country.
The effect of the enormous Government loan operations on the
condition of the banks is best shown by the course during the past
year of their loans and discounts, their holdings of Government
securities, and their demand deposits. For the national banks
changes in these three items during the period from June 20, 1917,
to August 31, 1918, were as follows:
Loans and
discounts.!

Government
securities.1

8,818,312
9,055,248
9,535,527
9,390,836
9,139,225
9,260,041
9,620,402
9,493,666

1,076,256
1,158,982
2,354,183
1,624,529
2,120,649
2,657,523
2,116,785
2,455,426

June 20,1917..
Sept. 11,1917.
Nov. 20, 1917.
Dec. 31,1917..
Mar. 4,1918...
May 10,1918..
June 29,1918..
Aug. 31,1918.,

Demand
deposits. I
7,431,029
7,679,370
8,058,948
8,436,395
8,084,148
8,094,688
7,838,150
8,095,749

1 In thousands of dollars.

I t is notable that the condition of the national banks on November 20, 1917, and August 31, 1918, as indicated by the above tabulation, shows but little change; loans and discounts totaling 9.5
billions, demand deposits slightly over 8 billions, and Government
securities held about 2.4 billions. Between the last-named date and
October 18, 1918, the eve of the consummation of the fourth Liberty
loan, according to partial information available, the banks nearly
doubled their holdings of certificates, while maintaining at about the
same level their holdings of Liberty bonds and slightly increasing
their loans secured by United States war obligations.
The gold held by Federal reserve banks and Federal reserve agents,
which amounted, in 1916, to $674,103,000, in November, 1917, had
reached the total of $1,584,328,000, .and amounted on November 1;
1918, to $2,052,229,000.



56

REPORT ON THE FINANCES.

The Federal reserve system has permitted the enormous transactions connected with the financing of the war to be carried through
without shock or disturbance and its services ^will not be less important to the Government and to the Nation in facilitating the
readjustment from a war basis to a peace basis and to assist and
foster thereafter the development of agriculture, industry, and commerce under normal peace conditions.
To facilitate the business of the Treasury the Federal Keserve
Bank of New York during the year opened accounts with the Bank
of Sweden (Sveriges Kiksbank), the Bank of Norway (Norges
Bank), and the Bank of Holland (De Nederlandsche Bank).
The operations of the Federal Keserve Board in connection with
ihe question of foreign exchange are discussed elsewhere in this
report under the heading of " Foreign exchange."
Amendments to the Federal reserve act.
By an act approved September 26, 1918, the Federal reserve act
was amended in various particulars. The manner of electing Class A
and Class B directors was changed; the act was amended in order to
put national banks in the same position as the banks and trust companies of the State in which they are located in regard to the exercise
of trustee powers; Federal reserve notes were authorized to be issued
in denominations higher than $100; the power was vested in the
Federal Keserve Board to reduce, in their discretion, the reserve
requirements of banks in outlying sections^ of reserve and central
reserve cities.
Minor amendments were also passed dealing with transactions
between member banks and their officers and directors and amending certain of the penalty provisions of the act; the provisions limiting loans were likewise amended in certain respects where such
loans were secured by Liberty bonds.
WAR FINANCE CORPORATION.

The War Finance Corporation act (Exhibit 45) was passed to
create an instrumentality to supply essential credits to the war industries of the country. When this legislation was under consideration
it was feared that the Government's enormous borrowings might
absorb so large a proportion of the available funds of the country
as to leave even the Nation's essential industries without the necessary financial resources to adjust their production to the increased
demands of the war. The scheme of the act was that the corporation
should extend financial assistance to these industries primarily indirectly through the banks of the country and only in " exceptional
cases" directly to the war industries themselves. The banks did
not, however, avail themselves to any great extent of the resources




SECRETARY OF THE TREASURY.

57

thus provided. No doubt this was. due in part to the admirable
way in which the Federal Keserve System met the increased demands upon its resources resulting from the war; but however
that may be, the War Finance Corporation has undoubtedly provided additional resources in case of need, the mere existence of
which has had a steadying and highly beneficial effect upon the
financial condition of the country, and in those " exceptional cases,"
where the war industries were unable to obtain the necessary funds
through the ordinary banking channels or from the general public,
the corporation has afforded the necessary relief.
When the corporation was organized it was feared that there
might be demands upon the savings banks of the country which
could not be met without the sale in an unfavorable market of highclass railroad and industrial bonds or other securities owned by
these institutions. I n that case not only would these institutions
themselves have sustained great losses but the general effect on the
value of these high-grade investment securities might have been very
serious. The corporation was therefore authorized to make loans to
these institutions and thus protect the savings of the people. The
means of relief having been provided, the anticipated necessity of
resort by these institutions to the corporation to a large extent
promptty disappeared. I n the meanwhile the market for this class
of securities has improved.
The creation of the corporation illustrates a common phenomenon,
namely, that to afford financial relief it is frequently iiot money
which is needed but the assurance that money may be had should it
be wanted. Not only from what the corporation has actually done,
but perhaps even more by the assurance which it has afforded of
relief in case of need, there is no doubt that the corporation, in the
circumstances of the financial situation arising out of war, has amply
justified its existence. I t involved an entirely new departure in the
financial operations of the Government, and the experiment has
proved successful. The Govermnent has effected loans of a magnitude
heretofore undreamed of, and, though it has absorbed a steadily increasing proportion of the Nation's available funds, industry has not
been starved. The War Finance Corporation has proved itself an
effective instrumentality by which, in part at least, this great result
has been accomplished.
Directors of the corporation, nominated by the President and confirmed by the Senate, took the oath of office on May 17, 1918, the
Board being constituted as follows:
W. G. McAdoo, chairman.
W. P . G. Harding, of Alabama, for two years.
Clifford M. Leonard, of Illinois, for two years.
Eugene Meyer, jr., of New York, for four years.
Angus W. McLean, of North Carolina, for four years.



58

REPORT ON T H E FINANCES. ,

On May 20, 1918, the authority required by statute to commence
business was received from the President and an organization was
effected through the election of W. P . G. Harding as managing director and Sherman Allen as treasurer and secretary pro tempore.
U p to October 31, 1918, applications for aid aggregating $323,329,232.22 have been received by the corporation. This figure includes
only such applications as have been formally brought before the
board of directors; it does not include a large number of preliminary
inquiries regarding contemplated applications for advances, aggregating a large amount, which were considered and acted upon by the
board without ever being formally presented.
From a statement of the corporation for October 31, 1918, given
below, it appears that the total advances made by the corporation
aggregated $67,716,342.49:
Statement of the W a r Finance Corporation, October 31, 1918.
ASSETS.

Due from depositaries:
T r e a s u r e r of the United States
Federal reserve bank, New York, N. Y
Federal reserve bank, St. Louis, Mo

°

$17, 749. 537.13
9,120, 224. 98
32, 000. 00

•

$26, 901, 762.11
Advanced under the provisions of the a c t :
Section 7, p a r a g r a p h No. 1
Section 7, p a r a g r a p h No. 2
Section 8
.
Section 9
Total amount advanced—
Less repayments
^

896, 542. 49
1, 530, 600. 00
550, 000. 00
64, 739, 200. 00
67,716,342. 49
29, 863, 747. 60

Total advances outstanding
United States bonds
United States bonds purchased, not yet delivered
Due from, cattle loan agencies
Accrued interest on obligations when purchased
Accrued interest receivable
:
Expense account " reimbursable "__
F u r n i t u r e and equipment
_
.—

. .37, 852, 594. 89
- ^ 73,400, 634.00
2, 785, 650.93
9,463.51
400,862. ,38 .
814, 532. 06
—113. 24
7, 404. 73

Total

142,173, 017. 85
LIABILITIES.

Capital paid in (authorized, $500,000,000)___
$140,000,000.00
Gross earnings
- - $2, 228, 333. 49
Less administrative expenses:
Salaries
- $50,354.06
P r i n t i n g and stationery
2,455.68
Supplies
81.33
Travel
1,189.75
Sundry
4, 645. 81
58, 726. 63
Net e a r n i n g s Interest collected but not earned
Total




——

——
..

-

2,169, 606. 86
3,410. 99
142,173, 017. 85

SECRETARY OF THE TREASURY.

59

The number of applications from public-utility companies for direct advances under the " exceptional-cases " clause received shortly
after the corporation was organized was so large that the corporation
issued a statement of its position as to this class of applicants. This
statement, which was published on May 27, 1918, is ajttached as
Exhibit 46.
' .
Next to the public utilities, the lumber and coal-mining industries
have been most largely represented among those asking assistance
from the corporation. Applications were also received from manufacturers and producers of various articles and commodities, and
from persons engaged in the cultivation of land and stock raising.
When the corporation was organized 86 applications had already
been received, of which 37 were from public-utility coinpanies for
amounts totaling $185,000,000, of which approximately $136,000,000
was for refunding, etc., and $49,000,000 for improvements, extensions,
and new constructions. Forty-nine of the pending applications were
for niiscellaneous activities aggregating in round figures $8,500,000.
Only three of those applications were from savings banks and loan
associations under section 8-of the act.
Not all of the advances made by the corporation have been for
large sums. Applications for small advances have received the same
attention as those for large amounts. I n cases where advances could
not be made the directors and officers of the corporation have at all
times given their time freely for the purpose of examining the needs
of applicants and have endeavored to give advice and suggestions of
a helpful character. I n many instances these conferences have resulted in accomplishing the purpose sought. There has been hearty
cooperation between the corporation and other departments of the
Government in Washington.
Under the provisions of the act by which the corporation was created. Federal reserve banks are permitted to act as its fiscal agents.
This privilege has been of great assistance, and the corporation has
received valuable cooperation from the 12 Federal reserve banks.
These banks have made and received payments on behalf of the corporation, and also in manjr cases acted as custodians for collateral
taken against advances made. Where necessary, for the convenience
of the borrower, national or State banks have been appointed to act.
The assistance rendered by the corporation to farmers and cattlemen and in financing the movement of crops is covered elsewhere in
this report under the heading " Assistance to farmers."




60

'

REPORT ON T H E FINANCES.
CAPITAL ISSUES COMMITTEE.

In the annual report of the Secretary of the Treasury for the
fiscal year 1917 reference was made to the importance of avoiding
unnecessary capital expenditures during the period of the war in
both public ancrprivate enterprises. A number of corporation executives, bankers, and municipal officers, inspired by the idea that they
should do nothing which would in any way hinder the efforts of the
United States in the prosecution of the war, submitted to the Secretary plans for controlling new enterprises and new issues of securities.
I n view of this evident disposition of cooperation, the Secretary,
pending action by the Congress, requested the Federal Keserve Board
in January, 1918, to pass upon such proposals for new security issues
involving the expenditure of capital as might be referred to it by the
Treasury or otherwise submitted to it and to advise whether or not
such issues should be made. The board consented to undertake this
^ responsible work. Corporations and bankers were urged, before making contracts requiring the use of labor and material or before placing new security issues or agreeing to purchase new security- issues,
to confer with the Federal Keserve Board in order that it might determine whether the particular undertaking then contemplated was
necessary for the public health and welfare or contributed directly
or indirectly toward the winning of the war.
I t was not only a question of the conservation of capital but of
material and labor. I t was realized that private enterprises or improvements which in peace times might be entirely proper should,
during the period of the war, be considered in connection with the
great governmental problems arising out of the military necessities.
To carry on this work, the Federal Reserve Board created a Capital
Issues Committee, which passed upon cases voluntarily submitted to
it. Allen B. Forbes, Henry C. Flower, and Frederick H . Goff were
appointed as an advisory committee and served voluntarily in cooperation with the Capital Issues Committee of the Federal Keserve
Board, consisting of Paul M. Warburg, as chairman, F . A. Delano
and C. S: Hamlin.
I n order to give this plan the sanction of law, and as a necessary
corollary to the provision for the extension of credits by the War
Finance Corporation, ^ Capital Issues Committee was created by
Title I I of the W a r Finance Corporation act, the committee consisting of seven members appointed by the President by and with the
advice and consent of the Senate. The committee was composed of
the following: C. S. Hamlin, as chairman, J . S. Williams and F . A.
Delano, all of whom were members of the Federal Keserve Board,
and Henry C. Flower, Frederick H. Goff, John S. Drum, and Jariies
B. Brown.




SECRETARY OF THE TREASURY.

61

The Secretary of the Treasury recommended to the Congress that
this Capital Issues Committee provided for in the War Finance
Corporation act be given ample powers ofoinvestigation as to proposed new security issues, and also power to prohibit the sale of such
securities as might be determined not to be compatible with the public
interest. The legislation suggested by the Secretary therefore provided penalties for the sale of any such securities without first obtaining the approval of the committee. During the progress of the bill
through Congress, however, the power of the committee, through these
penal provisions, to compel compliance with its determinations was
eliminated. While the committee was given power to investigate proposed sales of securities and to determine whether or not such sales
were compatible with the public interest, no penalties were prescribed
for failure to submit to the committee proposed new security issues.
. I n carrying on its work the committee has therefore been forced to
rely upon the patriotism of persons proposing to issue securities to
submit such issues to the committee, and also upon what moral
pressure the committee could bring to bear to induce the submission
to it of proposed security issues and to compel compliance with its
determinations. This, unfortunately, has had the result that while
the committee has been able to exercise a beneficial and effective control over the patriotic citizen who has voluntarily come before the
committee and has abided by its determination, it has been powerless
to deal with the thoughtless, unpatriotic, or unscrupulous citizen who
has seen fit to pursue unhampered his own course regardless of the
interests of his country.
Unquestionably, however, even in spite of this handicap, the committee has been able to do an effective and helpful work in conserving
the resources of the country and in directing them into channels
where they would be most helpful toward the winning of the war. I t
had examined nearly 2,000 applications from May I7j the date of its
organization, down to October 21,1918, and these applications covered
proposed security issues aggregating approximately $2,350,000,000.
These figures indicate the magnitude of the work. About 20 per
cent of these applications were disapproved, and these were mostly
of a character involving new extensions which would not be contributory to the winning of the war. The prevention of approximately
$450,000,000 of unnecessary issues which could be postponed was an
important contribution to the conservation of the Nation's resources.
The following table further illustrates the work of this committee:




62

REPORT ON T H E FINANCES.

Recapitulation of work of the Capital Issues Committee for the period May 17
to Oct. 21, 1918, inclusive.
Amount passed, classified by purposes.
NumClassification ber of I Total apapof applications. plica-1 plied for.
tions.

States and subdivisions... .
Public utilities.
Manufacturing.
Development..
Commercial and
financial... .
Charitable and
. miscellaneous

Total

Construction arid Working
equipcapital.
ment.

Refund- Exchange,
ing.
etc.

Total
passed.

Total disapproved.

362
227
568
469

$29,734,000 $5,384,000
$147,198,000 S58,653,000
649,843,000 152,651,000 $5,387,000 207,427,0001263,759,000
861,268,000 79,900,000 '56,794,000 187,609,000 412,114,000
341,885,000 31,295,000 6,791,000 35,543,000 78,101,000

$93,771,000 $53,427,000
629,224,0001 20,619,000
736,417,000124,851,000
151,730,000190,155,000

367

346,232,000 12,412,000129,076,000 49,236,000 1181,789,000

272,513,000 73,719,000

450,000

430,000

105,000

325,000

20,000

1,996 2,346,876,000|335,236,000|98,048,000|509,654,000|941,147, OOOJl, 884,085,000 462,791,000
SUMMARY.
Per cent.

Total applied for

.-. $2,346,876,000

100

335,236,000
98,048,000
509,654,000

14
4
22

942,938,000

40

941,147,000
462,791,000

40
20

Amount passed involving use of labor and material
Working capital only
Refunding only
!

Total
Securities passed involving no use of capital, labor, or material, because issued
directly,in exchange of property or other securities, or as stock dividends, bonus,
etc., and withheld from sale for period of the war
Disapproved, mostly for new extensions not necessary at thi.^ time
Total

l,403,93S,00n

WAR LOAN

ORGANIZATION.

The same form of organization which so successfully conducted
the first and second Liberty loan campaigns was continued in the
third and fourth campaigns. With the Secretary of the Treasury
as the directing head, the 12 Federal reserve banks, as fiscal agents
of the Government, continued as the centers of the organization in
their respective districts, operating through Liberty loan committees which were created in every part of the ^country. Banks aiid
bankers, business men, associations and societies, newspapers, press
associations, and thousands of men and women throughout the country patriotically cooperated with the Treasury Department, the
Federal reserve banks, and the Liberty loan committees in assuring
the great success of these loans. They unstintedly gave of their
services and talent in the interest of the Government and are deserving of the Nation's praise and thanks. I t has been estimated
that during the third and fourth campaigns not less than 2,000,000
men and women devoted themselves to the work of distributing
bonds.'




SECRETARY OF THE TREASURY.

63

I n order that the efforts of the Federal reserve banks and Liberty
loan committees might be properly directed and brought into harmony with the Treasury, the War Loan Organization in charge of
Lewis B. Franklin as director was created in the Department.
This organization has general supervision of all the activities directed toward the sale of Liberty bonds and war-savings certificates.
Liberty loan publicity.
A part of the War Loan Organization is the bureau of publicity,
which has charge of the preparation and distribution of posters,
buttons, honor flags, and other material, the preparation of advertising copy, and the dissemination of news relative to the loans.
This bureau has conducted a great nation-wide campaign of educati6n in connection with each loan, pointing out the urgent needs of
the Government in the prosecution of the war, the great value of
Government securities as investments, and endeavoring to inculcate
thrift and saving among all the people of the country. Every avenue
of publicity was availed of and the Treasury received the patriotic
cooperation of all.
Through the cooperation of the War and Navy Departments,
exhibits of captured war material, soldiers' and sailors' equipment,
ordnance, and ammunition were assembled and transported throughout the country, enabling the people, particularly of the more reinote districts, to inspect some of the things for which part of the
money raised by the loans was spent. Veteran soldiers and sailors
and civilian speakers accompanied the trains and urged the people
to subscribe for bonds. In the third campaign 6 of these trains
were used and in the fourth there were 24 completely equipped units.
Much of the material had been captured by American soldiers in
France, and no other single method of arousing enthusiasm met with
greater success.
Speakers^ Bureau.
The Speakers' Bureau, which is also a part of the War Loan
Organization, furnished speakers throughout the, country to arouse
interest in the loans and also had charge of the soldiers and sailors
who assisted in the campaigns.
Liberty Day.

'

.

'

During the second, third, and fourth Liberty loans, three days—
October 24, 1917, April 26, 1918, and October 12, 1918—were designated Liberty Days by proclamation of the Presiderit in order to
stimulate interest in the loans and to set apart one day for a climax
of effort and enthusiasm in each campaign. These holidays were




64

REPORT ON THE FINANCES.

generally observed throughout the country and celebrations were
held in virtually every city, town, and hamlet.
The President's second Liberty loan proclamation follows:
The second Liberty loan gives the people of the United States another opportunity to lend their funds to their Government to sustain their country at
war. The might of the United States is being mobilized and organized to strike
a mortal blow at autocracy in defense of outraged American rights and of the
cause of liberty. BilHons of dollars are required to arm, feed and clothe the
brave men who are going forth to fight our country's battles and to.assist the
nations with whom we are making common cause against a common foe. To
subscribe to the Liberty loan is to perform a service of patriotism.
Now, therefore, I, Woodrow Wilson, President of the United States of
America, do appoint Wednesday, the 24th of October, as Liberty Day; and
urge and advise the people to assemble in their respective communities and
pledge to one another and to the Government that represents them the fullest
measure of financial support. On the afternoon of that day I request that
patriotic meetings be held in every city, town and hamlet throughout the land,
under the general direction of the Secretary of the Treasury and the immediate
direction of the Liberty loan committees which have been organized by the
Federal reserve banks. The people responded nobly to the call of the first
Liberty loan with an oversubscription of more than 50 per cent. Let the response to the second loan be even greater and let the amount be so large that
it will serve as an assurance of unequaled support to hearten the men who are
to face the fire of battle for us. Let the* result be so impressive and emphatic
that it will echo throughout the Empire of our enemy as an index of what
America intends to do to bring this war to a victorious conclusion.
For the purpose of participating in Liberty Day celebrations all employees
of the Federal Government throughout the country whose services can be
spared, may be excused at 12 o'clock, Wednesday, the 24th of October.
In witness whereof, I have hereunto set my hand and caused the seal of the
United States to be aflftxed.
Done in the District of Columbia, this 12th day of October in the year of
our Lord, one thousand nine hundred and seventeen and of the Independence
of the United States of America the one hundred and forty-second.
[SEAL.]

.

WOODEOW WiLSON.,

By the President:
ROBERT LANSING,

Secretary of State.

The President's proclamation for Liberty Day during the third
Liberty loan follows:
An enemy who has grossly abused the power of organized government and
who seeks to dominate the world by the might of the sword, challenges the
rights of America and the liberty and life of all the free nations of the earth.
Our brave sons are facing the fire of battle in defense of the honor and rights
of America and the liberty of nations. To sustain them and to assist our gallant associates in the war, a generous and patriotic people have been called
upon to subscribe to the third Liberty loan.
Now, therefore, I, Woodrow Wilson, President of the United States of
America, do appoint Friday, the 26th day of April, 1918, as Liberty Day. On the
afternoon of that day I request the people of the United States to assemble in
their respective communities and liberally pledge anew their financial support




SECRETARY OF THE TREASURY.

65

to sustain the Nation's cause?. Patriotic demonstrations should be held in every
city, town and hamlet throughout the land under the general direction of the
Secretary of the Treasury and the immediate direction of the Liberty loan
committees organized by the Federal reserve banks. Let the Nation's response
to the third Liberty loan express in unmistakable terms the determination of
America to fight for peace—the permanent peace of justice.
For the purpose of participating in Liberty Day celebrations, all employees
of the Federal Government throughout the country whose services can be
spared, may be excused at 12 o'clock noon, Friday, the 26th of April.
in witness hereof, I have hereunto set my hand and caused the seal of the
United States to be affixed.
Done in the District of Columbia, this 18th day of April, in the year of bur
Lord one thousand nine hundred and eighteen, and of the Independence of tJie
United States of America the one hundred and forty-second.
[SEAL.]

WOODROW WILSON..

By the President:
.ROBERT LANSING,

Secretary of State.

Following is the proclamation by^ the President for ^Liberty Day
during the fourth Liberty loan:
B Y TPIE PRESIDENT OF T H E UNITED STATES OF AMERICA.
A PROCLAMATION.

Every day the great principles for which we are fighting take fresh hold upon
our thought and purpose and make it clearer what the end must be and what
we must do to achieve it. We now know more certainly than we ever knew
before why free men brought the great Nation and Government we love into
existence, because it grows clearer and clearer what supreme service it is to
be America's privilege to render to the world. The anniversary of the discovery of America must therefore have for us in this fateful year a peculiar and
thrilling significance. We should make it a day of ardent rededication to the
ideals upon which our Government is founded and by which our present heroic
tasks are inspired.
Now, therefore, I, Woodrow Wilson, President of the United States of
America, do appoint Saturday, the 12th day of October, 1918, as Liberty Day.
On that day I request the citizens of every community of the United States,
city, town and country side, to celebrate the discovery of our country in order
to stimulate a generous response to the fourth Liberty loan. Commemorative
addresses, pageants, harvest home festivals, or other demonstrations should be
arranged for in every neighborhood under the general direction of the Secretary of the Treasury and the immediate direction of the Liberty Loan Committee in cooperation with the United States Bureau of Education and the
public school authorities. Let the people's response to the fourth Liberty loan
express the measure of their devotion to the ideals which have guided the country from its discovery until now, and of their determined purpose to defend
them and guarantee their triumph.
For the purpose of participating in Liberty Day celebrations all employees
of the Federal Government throughout the country whose services can be
spared may be excused on Saturday, the 12th day of October, for the entire day.
In witness whereof, I have hereunto set my hand and caused the seal of the
United States to be affixed.
86429°—FI 1918
5



66

REPORT ON THE FINANCES.

Done in the District of Columbia this 19th day, of September, in the year
of our Lord one thousand nine hundred and eighteen, and of the Independence
of the United States of America the one hundred and forty-third.
[SEAL.]

WOODROW W I L S O N .

By the President:
ROBERT L A N S I N G ,

Secretary of State.

One of the notable factors in the success of the Liberty loans has
been the work of the women of the United States. ^ I t was with the
belief that the women of the Nation would constitute a powerful
moral force in war finance that the National Woman's Liberty Loan
Committee was appointed by the Secretary of the Treasury in May,
1917. That they, working through the organization effected by this
agency, have not only accomplished this purpose but have also
become an essential element in the actual labors of promoting the
loans constitutes one of the most interesting chapters in the financing
of the war. There is probably no war service in which so many
women have taken more active part than in the raising of money to
pay our war burden. To their energy, their enthusiasm, their zeal,
and their vision is due a great part of the success of the Liberty
loans.
When the United States went into war with Germany the business
of bond selling was a field so new to women that all work within
it has been genuine pioneering. The organization of women for the
task has been the work of the National Woman's Liberty Loan Committee, which has served in cooperation with the Treasury's war-loan
organization. The members of this committee, serving as volunteers,
have performed the work of enlisting more than a half million
women as sellers of Liberty bonds.
The first labors of the members of the committee, after the closing
of the first Liberty loan where their work had been general publicity
of war finance among women, were concerned with the adjustment
of established organizations of women throughout the country to
the established machinery for the raising of the loans. 'Where organization existed, the women of the Nation were organized by
States, while the Treasury's loan organization was based upon the
twelve fiscal divisions of the United States. I t was the problem of
the committee to correlate the two schemes of organization. They
solved it by the appointment of both State and Federal reserve chairmen, the former responsible for actual organization of woinen in
their respective States, the latter serving as the representatives of
the women in dealing with the Liberty loan committees of the respective Federal reserve districts. Liberty loan committees elected




SECRETARY OF T H E TREASURY.

67

the women Federal reserve chairmen members of their executive
committees.
I n this organization during the second Liberty loan 60,000 women
became sellers of bonds. Reports of the women State chairmen,
and of the executive committees of the Federal reserve districts, indicate that the woman's oitganization obtained subscriptions for
$1,000,000,000 of the secohd loan. I n the third loan 500,000
women were enrolled as members of the organization, which had
a woman chairman in almost every county of the United States
and township officers in alniost every township. In. the third loan
the women were again credited with having been the selling agents
of more than.a billion dollars in bonds. I n the fourth loan between
seven and eight hundred thousand women served, but it is not possible at this time to make an estimate of the amount of bond sales
attributable to the woman's orgariization.
No mere recital of results achieved can show the extent of the
service which women have given to the Nation through their participation in war finance. That hundreds of thousands of women
assumed the burden of a new kind of labor, not for themselves
but for their country, is one of the most striking and characteristic facts in relation to the women of America that the war has
developed. The Liberty loans have affordec^ a new proving ground
where the women of the Nation have accepted the opportunity to
demonstrate again their patijiotism, their ability, their consciousness
of the obligations of citizenship, and their steadfastness of soul in
the great and terrible crisis which our country has met.
CONVERSION OF LIBERTY BONDS.

The bonds of the first Liberty loan, bearing interest at the rate of
3^ per cent per annum, are convertible, under the terms of their issue,
into bonds bearing a higher rate of interest whenever the United
States, before the terminatiori of the war with Germany, issues bonds
bearing interest at a rate greater than 3J per cent per annum. This
privilege of conversion with respect t o the 3 | per cent bonds of the
first Liberty loan is recurrent, and upon the issue within the prescribed period of any series of United States bonds, with the exception of short-term obligatioris, at a higher rate of interest than 3^
per cent per annum, the privilege arises. I t must be exercised,
however, with respect to such new issues within six months after the
date of such issues.
;
Accordingly, with the issue of the second Liberty loan, dated
November 15, 1917, and bearing interest at the rate of 4 per cent per
annum, a conversion privilege arose with respect to the bonds of the
first Liberty loan and continued for a period of six months, ending




68

REPORT ON T H E FINANCES.

May 15, 1918. During that period $568,320,050 3^ per cent bonds
of the first Liberty loan were converted into 4 per cent bonds of the
first Liberty loan converted. The bonds issued upon conversion
retained the date of maturity, the terms of redemption, and the dates
of iriterest payment of the 3^ per cent bonds, but otherwise had the
terms of the new issue. Department Circular No. 93, dated October
19, 1917, covering this conversion, appears on page 110 of the report
of the Secretary of the Treasury for the fiscal year 1917. The following is a statement of such conversions:
F o u r per cent convertible gold bonds of 1932-1947 of the first Liberty loan
converted.
[Nov. 15, 1917-May 15, 1918.]
Surrendered for conversion:
F i r s t Liberty loan 3^ per cent interim certificates
F i r s t Liberty loan 3^ per cent coupon bonds
F i r s t Liberty loan 3^ per cent registered bonds
Total

. $473, 919,150
89,103, 200
5, 297, 700
568, 320, 050

Issued upon conversion:
F i r s t Liberty loan converted 4 per cent coupon bondsF i r s t Liberty loan converted 4 per cent registered bonds
Total

498, 277, 300
70, 042, 750
568, 320, 050

The 4 per cent bonds of the second Liberty loan also carried the
privilege of conversion, but this privilege was not recurrent and was
restricted in its exercise to the next following issue of bonds at a
higher rate of interest. The law provided that if the privilege arose^
it must be exercised, if at all, within the period prescribed by the
Secretary of the Treasury following the date of next issue at a higher
rate of interest. The same provision applied to the 4 per cent bonds
issued upon conversion of the 3^ per cent bonds. The third Liberty
loan was issued on May 9, 1918, and bore interest at 4 | per cent.
Accordingly on that date holders of unconverted 3J per cent bonds
of the first Liberty loan, of 4 per cent bonds of the first Liberty Iqan
converted, and of 4 per cent bonds of the second Liberty loan had the
right of converting such bonds into bonds bearing interest at 4 | per
cent. This privilege continued for six months, terminating on November 9, 1918, and can not under existing law be extended. The
subject is covered in Department Circular No. 114, dated May 9,
1918. (Exhibit 47.)
As the 4J per cent bonds of the third Liberty loan are non-convertible the 4 | per cent bonds issued upon conversion of prior issues
likewise are non-convertible, and ^ in accordance with the terms of
their issue the 4 per cent bonds of prior issues have no further rights
of conversion, such privilege having terminated on November 9,1918.
s




SECRETARY OF THE TREASURY.
69
!
,
The following is a statement of the 4^ per cent bonds issued upon
conversion to October 15, 1918:
,
.^i per cent bonds of 1932-1947 (first Liberty loan converted).
Coupon.
Issued upon conversion 3^ per- cent
bonds
::Issued upon conversion 4 per cent
bonds
Total__

J__

Registered.

Total.

$2, 230, 250

$850, 850

$3, 081,100

150, 698, 950

30,119, 250

180, 818, 200

152, 929, 200

30, 970,100

183, 899, :300

41 per cent bonds of 1927-1942 {second Liberty loan converted).
Coupori.
Issued upon conversion second
Liberty loan 4 per cent coupon
bonds
i $1, 392, 447, 550
Issued upon conversion second
Liberty loan 4 per cent regis^
tered bonds
i
Total

\ 1, 392, 447, 550

Registered.

Total.

$40, 927, 750

$1, 433, 375, 300

108, 285, 800

108, 285, 800

149, 213, 550

1, 541, 661,100

The issue of the fourth liiberty loan on October 24, 1918, gave to
the holders of unconverted 3J per cent bonds a new conversion
privilege, which must be exercised with respect to such new issue
within the six-month period ending April 24, 1919. This conversion
privilege is covered in Department Circular No. 123, dated October
24, 1918. (Exhibit 48.)
i
E X C H A N G E AND TRANSFER OF LIBERTY BONDS.

The Treasury has constantly urged upon subscribers and holders of
Liberty bonds the great advantage of registered bonds as against coupon bonds from the standpoint of protection against loss. Safekeeping of bonds payable'to bearer presents a real problem to
persons who do not have access to safe-deposit facilities^ and bonds
in coupon form, if lost or stolen, may not be replaced. On the other
hand, registered bonds may be replaced in such circumstances, and
the owner is protected in his principal and interest. Of course, in
some respects for certain purposes coupon bonds are more desirable.
Passing by delivery, they may be freely negotiated and they may be
used as collateral without formality. But to the person who subscribes for Liberty bonds i as an investment the registered bond
presents greater advantages.:
I n order that no possible' discrimination might exist between the
holder of a registered bond and the holder of a coupon bond, the
former policy of the Governnient with respect to the interchange of
coupon and registered bonds was reversed in connection with Liberty




70

REPORT ON T H E

FINANCES.

bonds, and provision has been made for a free interchange of coupon
and registered bonds. Prior to the Liberty loans either registered
or coupon bonds were issued upon original subscriptions. Thereafter
coupon bonds might be exchanged for registered, but registered bonds
could not be exchanged for coupon bonds. The holder of all issues of
Liberty bonds, however, may exchange registered for coupon, or
coupon for registered, without charge by the United States.
The subject of the interchange and transf er of Liberty bonds is covered in Department Circular No. 100, dated December 26,1917 (Exhibit
49). This circular specifically refers to bonds of the first and second
Liberty loans, but its general provisions apply to all issues. I n order°
that all holders may be fully accommodated in the matter of transfers of registered bonds the circular authorizes executive officers of
all incorporated banks and trust companies in the United States to
witness the execution and acknowledgment of the assignment of such
bonds. As a further act of accommodation to the public. Federal
reserve banks, as fiscal agents of the United States, are utilized as
far as possible in the matter of such exchanges. Coupon bonds bf
one denomination may be exchanged for coupon bonds of another
denomination of the same issue at any Federal reserve bank, and
either coupon or registered bonds may be presented to any Federal
reserve bank for interchange.
Many banks and trust companies and particularly savings banks
have offered their facilities free of charge in the matter of safe-keeping of Liberty bonds of small denominations. The need for suggestions in the matter was so apparent that the department examined
a number of savings bank bond-custody systems already in use and
placed the result, without official indorsement, but in the way of information, at the disposal of savings banks contemplating the establishment of similar systems.
P U R C H A S E S OF LIBERTY BONDS BY T H E TREASURY.

During the winter of 1917-18 the fact that Liberty bonds were
quoted at less than par in the market and that prices showed a downward tendency were unfavorable factors with respect to new loans.
The situation was called to the attention of the Congress by the Secretary in^connection with the consideration of the third Liberty bond
bill and the Congress, in section 6 of the act approved April 4, 1918
(Exhibit 3), authorized the Secretary, from time to time until the
expiration of one year after the war, to purchase bonds issued under
authority of the act approved September 24, 1917, including bonds
issued upon conversion of bonds issued under that act or under the
act approved April 24, 1917, at such prices and upon such terms and
conditions as he might prescribe. Such purchases were limited for




11

SECBfitAfiY OF THE TftEAStfE^.

any 12 months' period to an amount not exceeding one-twentieth of
the par amount of bonds of each series originally issued, and the
average cost of the bonds of any series purchased in any such period
was not to exceed par and accrued interest.
With the passage of the act the authority given in this connection
immediately applied to the! 4 per cent bonds issued upon conversion
of the 3i per cent bonds of the first Liberty loan and to the 4 per cent
bonds of the second Liberty loan, and subsequently, on May 9, 1918,^
applied to the 4J per cent bonds of the third Liberty loan, and to the
4^ per cent bonds issued upon conversion of prior issues at a lower
rate, May 9 being the issue jdate of the third Liberty loan.
As such action was deemed necessary from time to time,* bonds of
the several issues have beeri purchased at the market price. ^ To October 31, 1918, inclusive, the following bonds had been purchased,
canceled, and retired:
j
t
1

First Liberty loan converted bonds-of 1932-1947
Second Liberty loan 4 and 4^ per cent bonds of 19271942
Third Liberty loan 4^ per cent bonds of 192S

Principal
amount
purchased.

Amount of
Amount paid. accrued interest
paid.

S656,000.00

$631,621.80

$10,266.77

172,445,000.00

165,199,543.55

2,845:264.09

70,935,500.00

68,479,278.00

815 812 25

LIBERTY LOAN SUBSCRIPTIONS BY T H E M I L I T A R Y AND NAVAL FORCES.

I n the offerings of each of the Liberty loans the men of the Army
and Navy have responded with extraordinary patriotism. The desire of officers and men to lend to the Government out of their ]Day
is one of the inspiring incidents of the war. By their subscriptions
they have shown the Army and the Navy, whether recruited through
the selective-service act or by voluntary enlistment, to be part and
parcel with the country at large in their understanding of the issues
of the war and in their purpose to use every means to exert the
supreme might of the country to bring the war to a victorious conclusion. Having given themselves, they were not yet content while
more remained to be done. I t is a part of their reward that there was
no more compelling force in aid of the distribution of the loans than
the example of these gallant sons of America.
The entire Army at the time of the first Liberty loan was practically
within the United States, and the expansion in personnel was just
commencing. No special arrangement was made for Army subscriptions as distinguished from those of other citizens. Subscriptions
were made either on the Government plan to the Federal reserve
banks or on private plans offered by individual banks.




72

REPORT ON T H E FINANCES.

For the second Liberty loan subscriptions from the military forces
were taken on a special plan to enable the payments to be spread over
an extended period and to be liquidated by allotments of pay. These
allotments were made to an association of banks formed under the
leadership of the Federal Eeserve Bank of New York in cooperation
with the War Loan Organization of the Treasury Department. These
banks undertook to advance the funds necessary to make payments
for the bonds subscribed for on the dates specified in the Government
plan of payment and to deliver the bonds as their advances were
liquidated through the operation of the allotments of pay.
Congress, in the third Liberty bond act, approved April 4, 1918
(Exhibit, 3), authorized the Secretary of the Treasury to make
special arrangements for subscriptions, at not less than par, from
persons in the military and naval forces of the United States. Acting on.this permission, the Secretary promulgated regulations, on
April 9, 1918, defining special arrangements for such subscriptions to
the third Liberty loan. (Exhibit 50-A.) Under these regulations
allotments of pay to the Secretary of the Treasury, for the purchase
of bonds, were made in accordance with a defined schedule; and
reservation was made of the right to make additional regulations or
orders governing defaulted subscriptions and termination of allotments for any cause.
By these regulations, bonds of the third Liberty loan were offered
to persons in the military forces on a plan of payments extending
over 10 months, instead of the official plan of four payments extending over a period but slightly in excess of three months, thereby
accommodating the terms of offering to the ability of the subscribers
to pay, without depending' upon private cooperation for financing
such extended payments.
• .
On June 22,1918, further regulations were promulgated governing
termination and reduction of allotments for certain causes. (Exhibit
50-B.) These causes were: death of allotter; discharge of allotter
(except in case of an enlisted man discharged for the purpose of
accepting a commission) ; desertion of allotter; and increase of obligation of allotter under the war-risk insurance act, or reduction in
rate of pay, whereby the allotter became unable to provide for his
dependents and take out necessary insurance without reducing the
amount of his pay remaining for personal uses below the sum of
$7.50 per month.
For the fourth Liberty loan substantially the same plan was put
into effect, with respect to the military forces, by regulations issued
September 25,1918. (Exhibit 50-C.) A difference in the number of
days' interest covered by the first interest coupon made necessary a
slight change in the amount of the tenth monthly payment, but in
essential features the plan was the same.




SECRETARY OF THE TREASURY.

73

For the first and second | Liberty loans the Navy Department had
made arrangements, through Federal reserve banks and private
banks, on terms somewhat' similar to those arranged for the Army
in the second loan campaign. After the passage of the third Liberty
bond act the Navy Department preferred to continue the plans used
in the first and second loans, which were working well. For this reason the permission of Congress to offer special arrangements for subscriptions to the naval forces of the United States has not been exercised,
i
Subscriptions to the second, third, and fourth Liberty loans by the
Army and Navy are reported by those departments as follows:
I
Second Liberty loan
Third Liberty loan
Fourth Liberty loan

..•

Army.

$89,803,300 $11,000,000
20,756,650 18,600,000
77,488,000 47,302,000

•
\

Total

Navy.

;

188,047,950

76,902,000

ACCEPTANCE OF LIBERTY BONDS I N P A Y M E N T FOR M E R C H A N D I S E OR
1 SECURITIES.

Actuated no doubt by patriotic motives, but failing to realize the
consequences of their course, numbers of merchants throughout the
country have from time to time accepted Liberty bo'nds in payment for merchandise. I n a public statement issued December 28,
1917 (Exhibit 51), it was pointed out that the use of bonds in that
way discourages savings on the part of the people and increases the
demand upon the common store of goods and materials. The practice
also tends to increase the yolume of bonds placed upon the market
for sale and in this way Iin j ures the credit of the United States.
Since that statement was issued merchants have shown a most helpful
spirit of cooperation and offers of this kind are no longer being made
to any great extent.
A more serious situation involving the exchange of Liberty
bonds for other securities also required attention. I n many cases the
securities offered were of | doubtful value, and in order to protect
the holders of Government'bonds from fraud a public warning (Exhibit 52) against all such exchanges was issued on January 20, 1918.
The newspapers, investment bankers, and Liberty loan committees
have joined in this effort tc^ prevent thtj sale of fraudulent stocks and
bonds and the exchange qf securities, even if of sound value, for
Liberty bonds.
!
I

ACCEPTANCE OF LIBERTY BONDS AS SECURITY.

Under regulations prescribed by the Treasury, bidders and contractors are permitted to deposit coupon or registered Liberty bonds




74

EEPORT ON T H E

FINANCES.

accepted at par, guaranteeing proposals or securing the performance
of contracts. The regulations, however, are restricted to contracts
awarded by the General Supply Committee and to certain classes of
United States internal-revenue bonds. Bidders and contractors have
readily availed themselves of the privilege of using Liberty bonds in
lieu of other acceptable security. With a view to encouraging a wider
use by bidders and contractors of Liberty bonds as security, it is
respectfully recommended that legislation be enacted by the Congress
authorizing bond-approving officers of the Government to accept
Liberty bonds in lieu of any other security which may be offered
wherever a bond is required by law or regulation.
Extension of seven months for the payment of floor taxes on distilled spirits, tobacco manufactures, and certain other commodities
was accorded to taxpayers by section 1002 of the act of October 3,
1917, provided bonds were filed to secure the payment of the tax.
Taxpayers, hoAvever, experienced difficulty in availing themselves of
this relief, because it was impossible for them, in many instances, to
procure satisfactory surety bonds in sufficient amounts. To overcome
this difficulty and obviate the expense of premiums on surety bonds
regulations were issued under which Liberty bonds were acceptable at face value in amounts equal to the tax due in lieu of surety
bonds in double that amount. Nearly $13,000,000 of Liberty bonds
were received under these regulations. A system of recording
the deposits was devised which enabled the receipt, filing, safekeeping, and expeditious return of the bonds on payment of the tax due.
The plan of accepting Liberty bonds in lieu of surety bonds
was later extended so that such securities might be received as collateral, in connection with personal bonds, froiri persons permitted
to use or sell distilled spirits for other than beverage purposes. More
than $100,000 of Liberty bonds were on deposit with the Commissioner of Internal Eevenue under this plan at the close of the
fiscal year.
BANK

LOANS

SECURED

BY LIBERTY BONDS
INDEBTEDNESS.

OR CERTIFICATES

OF

Section 5200, United States Eevised Statutes, which prohibits a
national bank from lending to one person, firm, or corporation an
amount in excess of 10 per cent of the capital and surplus of the lending bank, unless such loans are represented by bills of exchange
drawn against actually existing value or commerciaL or business
paper actually owned by the person negotiating it, was amended by
section 6 of the act approved September 24, 1918 (Exhibit 8 ) , so as
to modify this limitation under certain conditions in respect to loans
secured by Liberty bonds or Treasury certificates of indebtedness.




SECRETARY OF THE TREASURY.

75

• The following is a quotation from a statement issued by the Comptroller of the Currency, prescribing regulations, with the approval of
the Secretary, in accordance with this section as amended:
Section 5200 of the Revised Statutes of the United States as amended by the
supplement to the second Liberty bond act approved September 24, 1918, in
effect permits any national bank, in accordance with such amendment and regulations prescribed pursuant thereto, to lend to a single borrower an amuunt in
excess of 10 per cent of such bank's unimpaired capital and surplus, provided
such excess is secured by at least a like face amount of Liberty bonds or certificates of indebtedness of the United States. The power of national banks to
lend upon the security of Liberty bonds and certificates of indebtedness has
been thus greatly increased. i
Substantially the effect of this amendment and the amended regulations
which have been prescribed pursuant thereto is to permit, until November 1,
1919, any national bank to lend to a single borrower, upon the conditions indicated below, as follows:
!
1. An amount not in excess Of 10 per cent of the bank's unimpaired capital
and surplus, whether or not secured in whole or in part by Liberty bonds or
certificates of indebtedness, as permitted by section 5200, Revised Statutes, prior
to this amendment, and
2. An additional amount, not in excess of 10 per cent of the bank's unimpaired capital and surplus, secured by at least a like face amount of Libertj'
bonds or certificates of indebtedness, as permitted by this amendment to section
5200, Revised Statutes, and
;
3. A further additional amount (not limited) in excess of the sum of the two
foregoing amounts—that is, in 'excess of 20 per cent of the bank's unimpaired
capital and surplus—which must be directly secured by at least $105 face
amount of Liberty bonds or United States certificates of indebtedness for each
$100 of such loans, pursuant to general or specific authority conferred upon the
oflacers of the bank by its board of directors, as permitted by the regulations
prescribed pursuant to this amendment to section 5200, Revised Statutes.
Section 5200 of the Revised Statutes of the United States, as amended by
section 6 of an act entitled "1 Supplement to the second Liberty bond act,"
approved September 24, 1918, reads as follows:
" SEC. 5200. The total liabilities to any association, of any person, or of any
company, corporation, or firm for money borrowed, including in the liabilities
of a company or firm the liabilities of the several members thereof, shall at
no time exceed 10 per centum of the amount of the capital stock of such association actually paid in and unimpaired and 10 per centum of its unimpaired surplus fund: Provided, however, ThSit (1) the discount of bills of exchange drawn
in good faith against actually existing values, (2) the discount of commercial
or business paper actually owned by the person, company, corporation, or firm
negotiating the same, and (3) |the purchase or discount of any note or notes
secured by not less than a like face amount of bonds of the United States
issued since April 24, 1917, or certificates of indebtedness of the United States,
shall not be considered as money borrowed within the meaning of this section;
but the total liabilities to any association, of any pt-rson or of any company,
corporation, or firm upon any note or notes purchased or discounted by such
association and secured by suclJ bonds or certificates of indebtedness shall not
exceed (except to the extent permitted by rules and regulations prescribed by
the Comptroller of the Currency, with the approval of the Secretary of the
Treasury) 10 per centum of such capital stock and surplus fund of such
association."




76

REPORT ON THE FINANCES.

Under authority of section 5200, Revised Statutes, as thus amended, the
Comptroller of the Currency, with the approval of the Secretary of the
Treasury, has prescribed the following amended regulations:
" Until November 1, 1919, or until such later date as the Comptroller of the
Currency, with the approval of the Secretary of the Treasury, may prescribe, any
national bank may purchase or discount, pursuant to general or specific authority conferred upon the ofiicers of the bank by its board of directors, the note or
notes of a person, firm, company, pr corporation maturing in not more than six
months from the date of such purchase or discount, in an amount in excess
of 10 per cent of the aggregate amount of the capital stock actually paid in
and unimpaired and the unimpaired surplus fund of such bank: Provided, Any
such note or notes shall be directly secured by at least 105 per cent of bonds or
certificates of indebtedness of the United States issued since April 24, 1917;
that is to say, there must be pledged as security for each $100 so loaned at
least $105 face value of Liberty bonds or certificates of indebtedness. The
amount which a national bank may thus lend upon Liberty bonds and certificates
of indebtedness under section 5200, Revised Statutes, as amended September
24, 1918, and pursuant to this amended regulation, is in addition to other loans
which such national bank is permitted to make, whether or not such other
loans be secured in whole or in part by Liberty bonds or certificates bf indebtedness."
LIBERTY BONDS I N P A Y M E N T OF ESTATE OR I N H E R I T A N C E

TAXES.

The act of April 4, 1918; provided that bonds of the United
States bearing interest at a higher rate than 4 per cent annually
might be accepted in payment of. any estate or inheritance tax
imposed by the United States if the bonds had been owned continuously by the decedent for at least six months prior to the date
of death. The bonds are receivable at par and accrued interest.
This legislation was designed to stimulate the purchase and holding
of Liberty bonds.
I N T E R I M CERTIFICATES ON FIRST LIBERTY LOAN.

I t was reported in the annual report for the fiscal year 1917 that
5,526,675 full-paid interim certificates, representing completed subscriptions to the first Liberty loan, had been issued through the
Federal reserve banks. These were in the form of bearer obligations, redeemable upon presentation to the Federal reserve bank of
issue, by the delivery of a definitive bond. A number of such certificates have been reported to the department to have been lost by
theft or otherwise, or to have been defaced or destroyed.
The Attorney General advised the Secretary that on satisfactory
proof of loss, defacement, or destruction, bonds might be issued
against these certificates, on proper indemnity, without requiring
the production of the original certificates. Eegulations were thereupon promulgated (Exhibit 53) defining the procedure to be followed in such cases.




SECRETARY OF T H E TREASURY.

77

The occasion for the issue of these interim certificates was the vast
volume of work thrown suddenly on the Bureau of Engraving and
Printing by the first Liberty loan. At the time of the issue of these
regulations the engraving of the definitive bonds had, many months
before, reached the point at which deliveries could be made immediately on presentation of the interim certificates. Consequently,
there was incorporated in the regulations a statement that a reasonable time had elapsed for the presentation of such certificates, and
authority was given to the Federal reserve banks to reiquire holders
presenting certificates thereafter to establish identity with the original subscriber or title from the original subscriber. This notice was
publicly given in order to protect those who might otherwise be
moved to purchase these overdue obligations from a thief or finder. •
PAYMENT OF SPANISH-AMERICAN WAR BONDS.

The 3 per cent loan of 1908-1918 matured on August 1, 1918.
Public notice inviting attention to the fact that such bonds were
payable on that date was given on April 15, 1918, in Department
Circular No. 113 (Exhibit 54). I n accordance with the terms of
their issue and the provisions of the circular, the outstanding bonds
ceased to bear interest on August 1, 1918, when the bonds became
payable.
For the convenience of the public, owners of coupon bonds of this
loan were permitted to present them for payment at any Federal
reserve bank. This action applied to the payment of long-term
bearer obligations of the United States the precedent established
with respect to the payment at Federal reserve banks of short-term
bearer obligations.
The 3 per cent loan of 1908-1918, popularly termed the SpanishAmerican W a r loan, was issued in June, 1898. Subscriptions were
invited for $200,000,000 and in response to that invitation 320,226
subscriptions were received, amounting to more than $1,500,000,000.
Bonds to the amount of $198,792,660 were allotted and of this original issue $132,449,900 were refunded into the 2 per cent consols
of 1930, and $2,397,300 were purchased, the balance, $63,945,460,
maturing on August 1, 1918. To and including October 31, 1918,
$60,878,560 of such bonds had been paid.
RETIREMENT OF ONE-YEAR TREASURY NOTES.

Section 18 of the Federal reserve act provides for'the retirement of
bond-secured circula:tion of the national banks and the refundi»ng of
2 per cent bonds bearing the circulation privilege into one-year 3 per
cent Treasury notes and thirty-year 3 per cent bonds. That provision
of law became operative at the close of the calendar year 1915, and on



78

REPORT ON T H E FINANCES.

April 1, 1916, Federal reserve banks were first authorized to present
2 per cent bonds for conversion. At that time $10,290,600 2 per cent
bonds were presented for conversion and $5,900,600 thirty-year 3 per
cent conversion bonds and $4,390,000 one-year 3 per cent Treasury
notes were issued in lieu thereof. Further amounts of 2 per cent
bonds were presented at each recurring quarter and issues of bonds
and notes inade in lieu thereof until with the issue of April 1, 1917,
$56,256,500 2 per cent bonds had been retired and in lieu thereof
there were outstanding $28,894,500 thirty-year 3 per cent conversion
bonds and $27,362,000 one-year 3 per cent Treasury notes. The bonds
are definitely payable thirty years after date of issue and for convenience all those issued during a calendar year are deemed one
series and are dated January 1 of such calendar year. As the notes,
however, ran for one year only, a new series was issued each quarter.
These notes were payable in gold and the Federal reserve banks to
which they were issued were obligated, on each recurring maturity
on the request of the Secretary of the Treasury, to purchase from
the Treasury an equal face amount of similar notes.
The increased activities in the United States preceding and following the entrance of the United States into the war created additional currency demands, and offers of national banks to retire their
circulation became and have since continued negligible. Nor since
that date have Federal reserve banks been required to purchase 2
per cent bonds. During the first year of the war the notes maturing
at quarterly periods were paid, and, in accordance with the option
given the Secretary under the provisions of the law. Federal reserve
banks were required to purchase an equal amount of similar notes.
This process continued, however, only until April 1, 1918. At that
time the Secretary decided not to exercise his option to have the
banks repurchase the notes then maturing, and $8,212,000 notes then
payable were finally retired. The same policy was followed on July
1,1918, when $4,785,000 of notes were retired, and on October 1,1918,
when a further amount of $5,064,000 of notes was paid.
The following table shows the different classes of 2 per cent bonds
having the circulation privilege which have been retired and the
thirty-year 3 per cent bonds and the one-year 3 per cent Treasury
notes issued in lieu thereof:
Two per cent bonds retired.
Date.

Consols of
1930.

Panamas of
1916-1936.

Panamas of
1918-1938.

Total.

Apr. 1,1916
July 1.1916,
Oct. 1,1916.
Jan. 1.1917.
Apr. 1,1917

$9,990,600
8,938.700
7,193,800
13,838,200
6,664,800

$175,000
627,500
1,975,000
2,037,000
863,300

$125,000
8,000
966,400
2,722,000
231,200

$10,290,600
9,574,200
10,135,200
18,597.200
7,659,300

Total.

46,526,100

5,677,800

4,052,600

66,256,500




79

SECKETARY OF T H E TREASURY.

Three ver cent bonds and notes issued.
Date.

30-year conver- 1-year Treasury
sion bonds.
notes.

.Total.

Apr. 1,1916..
J u l y l , 1916..
Oct. 1,1916..
Jan. 1,1917..
Apr. 1, 1917..

$5,900,600
4,789,200
5,071,200
9,296,200
3,837,300

1 $4,390,000
2 4,785,000
8 5,064,000
< 9,301,000
6 3', 822,000

$10,290,600
9,574,200
10,135,200
18,597,200
7,659,300

Total..

28,894,500

27,362,000

56,256,500

1 Renewed Apr. 1, 1917; not renewed Apr. 1, 1918.
2 Renewed July 1, 1917; noT; renewed July 1, 1918.
3 Renewed Oct. 1, 1917; not renewed Oct. 1, 1918.
< Renewed Jan. 1, 1918; amount outstanding Oct. 31,1918.
'Not renewed Apr. 1, 1918.
PUBLIC MONEYS.

The policy adopted at the beginning of the war of depositing the
proceeds from Liberty loan subscriptions and purchases of certificates of indebtedness in incorporated banks and trust companies
designated by the Secretary as special depositaries for the purpose
has been continued and enlarged.
®
The income and excess profits taxes due in June, 1918, were the
largest tax receipts payable at one time in the history of the country.
Much apprehension was expressed as to the effect upon the financial
structure of the country of the payments of these taxes into the
Treasury, particularly during this period of war when the demands of the Government upon credit facilities were so very great.
These payments became due in the closing days of the fiscal year and
meant the transfer from taxpayers to the Government of a larger
sum of money than ever before attempted.
The situation was met, however, without the slightest tremor of
excitement or disturbance, by the following means:
(1) The sale of $1,624,403,500 of Treasury certificates of indebtedness over a period of several months, which were receivable in payment of income and excess profits taxes due in June, 1918, and referred to elsewhere in this report under the heading " Treasury
certificates of indebtedness," and
(2) The deposit of income and excess profits tax receipts in incorporated banks and trust companies designated by the Secretary for
the purpose.
The latter authority was exercised under the provisions of section 8
of the act of September 24,1917, as amended. Under the plan adopted,
deposits of this character were made beginning in the month of June
in any bank or trust company upon which checks in payment of income or excess profits taxes had been drawn and which had qualified
or should qualify as a depositary for Liberty loan funds. This procedure permitted the banks to offer securities for such deposits of the
character mentioned in Department Circular No. 92, and obviated



80

REPORT ON T H E FINANCES.

the necessity of a bank purchasing additional security to cover such
deposits. This policy rendered unnecessary the withdrawal and
transfer of the large sums paid to the Government at that time on
account of income ,and excess-profits taxes and avoided what unquestionably would have been a heavy strain upon banking institu-^
tions and a curtailment of credit so essential for the purposes of the
war and the business of the country.
The provisions of Department Circular No. 92, of October 6, 1917
(Exhibit H to the Eeport of the Secretary of the Treasury for 1917),
governing special deposits of public moneys under the act of September 24, 1917, were extended by the supplement dated April 10, 1918,
attached as Exhibit 55-A, to deposits of the proceeds of bonds of the
third Liberty loan and Treasury certificates of indebtedness issued
under said act as amended, and were further extended by the supplement dated May 29, 1918, attached as Exhibit 55-B, to deposits arising from the payment of income and excess-profits taxes. Department Circular No. 92 was further amended and supplemented under
(^te of September 21,1918, and is attached as Exhibit 55-C.
At the beginning of the fiscal year 1918 there were 1,577 incorporated banks and trust companies qualified as special depositaries;
4,933 were designated during the fiscal year 1918, and 2,613 were designated between July 1 and October 31, 1918, making a total on the
latter date of 9,123 special depositaries for the proceeds from Liberty
bonds, certificates of indebtedness, and income and excess profits
taxes. The banks so designated included 4,382 national banks and
4,741 State banks and trust companies. Both national and State
banks were designated as such depositaries in every State in the
Union.
The amount of Government deposits in. such depositaries was on
June 29,1918, $1,473,727,000, and on October 31, 1918, $1,678,762,000.
Deppsits in the special depositaries, like deposits in the regular depositaries for Government funds, paid the Treasury interest at the
rate of 2 per cent per annum. The amount of interest received from
such depositaries from the date of their creation in the early part of
the war to October 31,1918, was $19,184,683.65.
UNITED STATES DEPOSITARIES IN FOREIGN COUNTRIES.

For the purpose of enabling the disbursing officers of the Army
and Navy and other branches of the Government service to make
prompt payments and to transact public business in foreign countries
depositaries of public moneys of the United States were appointed in
France, Great Britain, Italy, Spain, Switzerland, Argentina, and
Canada. These depositaries were designated in accordance with the
authority vested in the Secretary of the Treasury under the provisions
of section 8 of the act of September 24, 1917, as amended. Checks



SECRETARY OF THE TREASURY.

81

drawn by disbursing officers on these depositaries are cashed without
charge.
M E T H O D OF PROVIDING F U N D S FOR A R M Y P A Y M E N T S I N EUROPE.

With the increase of Army payments in Europe, it became evident that it was unsatisfactory for Army disbursing officers to draw
their checks in dollars on the Treasurer of the United States, because
of the effect on exchange rates and because of the danger that such
checks would be lost in transmission to the United States. Such
losses cause great inconvenience to payees and holders in Europe,
since they are required by existing statutes to secure duplicate checks
before payments can be made by the Treasurer of the United States.
At first funds were placed with depositaries designated under the
act of September 24, 1917, in France, Great Britain, and Italy, to the
credit of disbursing officers, subject to their checks. Later, as the demand for advances of funds to these disbursing officers under various
appropriations became heavier, a plan was put into effect which makes
it unnecessary to carry large balances to the credit of disbursing officers under particular appropriations. Pursuant to this plan, a
financial requisition officer for France and a financial requisition
officer for Great Britain were appointed by the War Department.
Funds are now placed to the credit of these financial requisition officers with the Treasurer of the United States in Washington, upon
the approval of the War Department's requisitions in their favor.
Fixed working balances in the designated depositaries are carried
in the name of\ the financial requisition officers and these fixed balances
are maintained by transfers chargeable against the credit of these
financial requisition officers with the Treasurer of the United States
at Washington. The funds are actually transferred from accounts
of the Treasurer of the United States which have been established
and are maintained with the French Treasury in Paris and the Bank
of England in London.
Disbursing officers no longer maintain individual credit balances
in the depositaries in France and Great Britain, but draw checks
against the balances therein to the credit of the financial requisition
officers up to the limits of the authorizations given them by the
financial requisition officers. This system has materially reduced the
balances of funds which otherwise would have been carried in depositaries in France and Great Britain. Under it all Government funds
on deposit in France and Great Britain are available to meet Army
payments and only balances carried there in the name of the financial
requisition officers have been charged in the Treasury Daily Statement as disbursements.
Prior to the installation of this system, all funds deposited in
France and Great Britain to the credit of disbursing officers were
86429°—FI 1918




6

82

EEPORT ON T H E FINANCES.

carried on the daily statement as disbursements, although the money
was not actually paid out by disbursing officers until considerably
later.
AUDITING OF ACCOUNTS OF THE MILITARY ESTABLISHMENT ABROAD.

The audit of the accounts of the military establishment abroad was
undertaken during the year in accordance- with the provisions of
section 12 of the act of September 24, 1917. The plan called for the
establishment abroad of a branch of the office of the Comptroller
of the Treasury and a branch of the office of the Auditor for the War
Department, these branch offices having authority to perform abroad
the same duties as are performed by the Comptroller and the Auditor
at the seat of Government with reference to the accounts of the military establishment. The assistant comptroller and the assistant auditor were appointed by the Secretary, and, after organizing a clerical force, left for France in November, 1917. Their offices were
opened in Paris December 29, 1917, and since that time they have
been performing, under the direction of the Comptroller of the Treasury and the Auditor for the War Department, the duties prescribed
in the act.
I n order to facilitate the issuance of duplicate checks in lieu of
those lost or destroyed abroad, the Secretary issued regulations (Exhibits 56-A, 56-B, 56-C, and 56-D) authorizing the a-ssistant comptroller in Paris to approve such duplicates and the bonds given
in connection with them for the protection of the Government. The
handling of these matters abroad avoided the necessity of having all
papers come to Washington.
ACCOUNTS OF GOVERNMENT.CORPORATIONS.

When the United States Shipping Board Emergency Fleet Corporation began operations, its funds were deposited with national
banks in various sections of the country. These funds consisted of
advances from the Treasury Department for purchase and construction of ships, and of collections from sales, rentals, charters, etc.
Under the law the net proceeds from the collections eventually become Treasury receipts. By the end of January, 1918, the funds of
the corporation on deposit with banks amounted to nearly $15,000,000.
After careful consideration, the Secretary decided to offer to the
corporation the facilities afforded by the Treasurer of the United
States for keeping these funds and paying checks of disbursing
agents of the corporation drawn thereon. The offer was accepted
by the corporation on February 28, 1918, and these funds, on deposit
with banks, were transferred to the Treasurer of the United States
gradually so as not to embarrass the banks. The total amount of
checks drawn by the disbursing agents of the corporation from the



SECRETARY OF THE TREASURY.

83

opening of the accounts to October 31, 1918, which were paid h j the
Treasurer of the United States, was $324,515,331.96. The total balances on deposit with the Treasurer of the United States on October
31 for credit of these disbursing agents amounted to $102,784,857.22.
I n this way the Treasurer of the Uiiited States has acted as banker
for the corporation, the stock of which is owned by the Government.
When the United States Housing Corporation began operations
the Secretary similarly offered the facilities afforded by the Treasurer
of the United States for keeping the funds and paying the checks of
its treasurer and disbursing agents. This offer was accepted. The
total amount of checks drawn by the treasurer and disbursing agents
of the Housing Corporation up to October 31, 1918, which were paid
by the Treasurer of the United States, was $10,715,943.22. The total
of balances on deposit with the Treasurer of the United States for
the credit of these disbursing agents on October 31, 1918, was
$23,527,280.69.
The Treasurer of the United States has also served in this way
the War Finance Corporation. The total amount of checks drawn
by the treasurer of that corporation up to October 21, 1918, which
were paid by the Treasurer of the Uriited States, was $19^8,417,187.67.
The total of balances on deposit with the Treasurer to the credit of
the War Finance Corporation on October 31,1918, was $25,901,799.20,
against which there were outstanding checks amounting to
$8,152,262.07.
The Treasurer has performed this service also for the United
States Food Administration Grain Corporation so far as that corporation found convenient.
WAR-RISK INSURANCE.

The war-risk insurance act, under which the Bureau of War Eisk
Insurance is operating, makes generous provision for the fighting
forces of America and for their dependents. No other Government
has e.ver dealt so liberally with its soldiers and sailors and Army
and Navy nurses, nor has any other Government apportioned its
benefits more scientifically and equitably among those who have just
claims upon the gratitude of their country.
The work of the W a r Eisk Insurance Bureau may be generally
described as threefold: (1) That of insuring officers and enlisted
men in the Army and Navy and Army and Navy nurses, and insuring merchant ships and their cargoes^ and officers and crews;
(2) that of compensating men or their dependents for the disability
or the death of such men incurred while in the military or naval
service; (3) that of assisting the familes of enlisted men during the
time that the latter are in the military or naval service. Enlisted
men or their dependents may benefit by all three activities of the



84

REPORT ON T H E FINANCES.

bureau, being eligible for Government insurance, compensation,
and family allowances. Officers are eligible for the insurance and
compensation benefits only.
The nucleus of the present bureau was found in, a bureau created
in September, 1914, for insuring the hulls and cargoes of American
vessels against the risks of war. The functions of this bureau were
increased in June, 1917, to include insurance on the personnel of
the merchant marine. On October 6, 1917, the activities of the
bureau were very greatly enlarged by an act of Congress approved
on that day which made provision for a Division of Military^ and
Naval Insurance i n ^ e bureau, in addition to the Division of Marine
and Seamen's Insurance, already in operation. During the year
that has elapsed since then the work of the bureau has grown so
enormously that it is now one of the largest single administrative
units in the Government service, if not the largest. I t is certainly
one of the greatest business enterprises in the world, and indubitably
the largest life iasurance concern on the globe, havuig on October
31, 1918, nearly thirty-six billions of life insurance in force.
Just what this means can only be realized when one reflects that
the total ordinary life insurance in force in all American companies,
both here and abroad, on January 1, 1918, was only $21,315,000,000,
or less than two-thirds of what the War Eisk Bureau carries./ The
total amount of industrial life insurance in force in all American
companies, both here and abroad, was, on the same date, only
$5,224,000,000. Finally, the total amount of life insurance in force,
both here and abroad, in American fraternal societies and assessment associations on January 1, 1918, great as it is, was only $9,504,000,000, or about a quarter of the amount of insurance in force in
the War Eisk Insurance Bureau. The^amount of insurance taken
out by America's fighters is indeed far beyond what the framers of
the original act imagined it would be, and the administrative and
executive problems connected with it are correspondingly great.
There are 12 separate divisions in the War Eisk Insurance Bureau,
namely. Marine Division, Seamen's Division, Allotment and Allowance Division, Investigation Division, Compensation and Claims
Division, Insurance Division, Accounting Division, Medical Division,
Law Division, Actuarial Division, Chief Clerk's Division, and General Administrative Division. Each one of these divisions has a.
particular work to do. The Marine Division takes care of the insurance on vessels and cargoes; the Seamen's Division has charge of
insurance of seamen who are not in the Military Establishment; the
Allotment and Allowance Division takes care of the forms which
must be made out by every enlisted man as regards allotments and
requests for allowance; the Investigation Division makes all the
investigations which are required to see that the money being dis-




SECRETARY OF THE TREASURY.

85

bursed by the United States Treasury is properly receivable by
the recipients; the Compensation and Claims Division has charge of
all claims for compensation and makes the awards on all war-risk
insurance claims; the Insurance Division receives the applications
for insurance and sets up the necessary records; the Law Division,
as its name implies, attends to the legal work of the bureau; the
Medical Division is advisory to the Compensation and Claims Division ; the Accounting Division makes all disbursements and sends out
all checks to the dependents of soldiers and sailors; the Actuarial
Division has charge of actuarial and statistical matters; the chief
clerk's office looks after the personnel and. supplies of the bureau.
The first two divisions, which are older than all the others, but of
less permanent interest because protection against war risks to ships
and seamen will not be necessary after the establishment of peace,
are assembled under the heading Division of Marine and Seamen's
Insurance, while .the other divisions are grouped under the general
head of Division of Military and Naval Insurance.
In^swrance of ships., cargoes., and seamen.
The Division of Marine and Seamen's Insurance provides protection to American vessels and their cargoes against loss or damage
from the risks of war, insures masters and crews against loss of life
or personal injury from war risks, and compensates seamen in case
of detention by the enemy.
The total losses on all vessels and cargoes from September 2, 1914,
when this division was first created, to June 30, 1918, had amounted
to $20,784,137 in net losses paid, and $15,610,711.20 in losses not yet
paid and in possible outstanding claims. The total premiums received amounted to $43,185,770.57, which was $6,790,922.37 more than
the losses sustained.
The seamen's section by itself, as distinguished from the marine
section, had received premiums amounting to $778,811.85. Against
this the total determined losses and claims awaiting proof was
$197,003. The excess of premiums over claims in this section was
therefore $581,808.85.
I t is interesting to note that the Marine and Seamen's Division,
although charging rates that are considerably lower than the rates
charged by private insurance companies on similar risks, has steadily
shown an excess of premiums over losses and expenses.
Insurance of fighting forces.
Insurance on the lives of fighting men (seamen being nonfighting
employees of the merchant marine) is administered by the Division
of Military and Naval Insurance. All ranks of the fighting forces




86

REPORT ON THE FINANCES.

are given the privilege of buying Govermnent insurance. The law
provides for the issuance of Government insurance contracts to the
commissioned officers and enlisted men and nurses in active service
under the War Department or Navy Department. This insurance
protects the beneficiaries of those insured in case of their death, and
protects the men in the service themselves in case they are totally and
permanently disabled. No less than $1,000 of insurance may be taken
by any individual, and no more than $10,000. This insurance is annual,
renewable term insurance with monthly premiums computed on the
basis of the American Experience Table of Mortality and interest
at 3-J per cent. Since these premiums are calculated without regard
to the extra hazards of war and since they carry no " loading " for
administrative expenses, they are much lower than those offered by
the insurance companies.
The worh of the Insurance Division.
The organization of the Insurance Division is necessarily much
simpler than the organization of a life insurance company, which
must go out and seek its business and medically examine and scrutinize its risks before acceptance is possible. Five separate records
are made from each insurance application, namely, an index card, a
record card, a premium card, a certificate, and an application file.
The .bureau has about 30,000,000 individual records of one kind or
another and has about 3 miles of card or file cabinets 4^ feet high.
On October 31, 1918, the Insurance Division had written 2,652,556
insurance certificates. These certificates are very simple in form and
only recite that the man in service has applied for so much insurance,
payable in the event of his death or total and permanent disability,
subject to the payment of premiums under the law and regulations.
All ranks responded quickly and heartily to the Government's
invitation to take out a policy. On October 6, 1917, when the act
was passed, there were about a million and a half men in the Army.
Even before forms could be printed it was necessary to provide insurance for the men, as many were about to sail. The first applications
came in by telegraph. Since then there has been a steady flow of ^
applications to the bureau. Up to October 31, 1918, 4,090,031 applications for contract insurance had been received. I t is estimated
that these applications cover more than 90 per cent of the Nation's
armed forces. The amount of insurance taken by these men was
$35,762,516,000. New insurance is being written by the bureau at
the average rate of about $1,000,000,000 of insurance for every
10 days. The average amount of insurance taken by each person is
over $8,700,




87

SECRETARY OF THE TREASURY.

Details as to the history of the bureau month by month in receiving applications for insurance are given in the following table:
Insurance contracts.
STATEMENT OF APPLICATIONS RECEIVED IN BUREAU'TO OCT. 31,1918, FOR WAR RISE
INSURANCE ON SOLDIERS AND SAILORS.

Month.

October and November, 1917.
December, 1917
January, 1918
February, 1918
March, 1918.
April, 1918...
May, 1918..,,
June, 1918,
July, 1918.'...
August, 1918
September, 1918
October,19l8
TotaL
Total number of applications
Total amount of insurance applied for
Average amount applied for
Estimated premium income to Oct. 3 1 , 1918

Applications
received in
bureau.

Amount of
insurance
covered.

150,636- $1,292, 484,000
1,555, 807,500
180,305
321,449
2,598, 623,500
658,507
6,153, 310,000
318,983
2,609, 144,000
259,022
2,200,887,500
302,524
2,697, 470,500
338,000
388,486
3, .532,
436,881
4,088, 652,500
496,375
4,641, 855,500
379,945
3,562, 869,500
196,918
1,829, 073,500

4,090,031

Average
amount of
applications.
$8,580
8,629
8,084
7,826
8,180
8,497
8,917
9,093
9,359
9,362
9,377
9,288

35,762,516,000
4, 090, 031
._._— $ 3 5 , 7 6 2 , 5 1 6 , 0 0 0
$8, 744
$142, 543, 137

A t the present writing death claims are now being awarded on
insurance that would amount to about one million dollars a day if
it were paid out in lump sums. The payments, however, are made
in monthly installments extending over 240 months. U p to October
^ 31, 1918, awards had been made on 16,101 insurance claims. The
present value of the future monthly payments to be made in satisfaction of these claims is $122,271,500. The amount of the monthly
payments to the beneficiiaries under these claims is $699,398.38.
Of these awards 4,186 were made under automatic insurance. The
present value of the future monthly payments to be made in satisfaction of these claims is $18,765,000. There were 16 awards included in the above number for total and permanent, disability, involving a total of $72,000 insurance. Each month under' automatic
insurance $104,650 is being disbursed on account of awards made to
October 31,1918.
Under insurance for which application has been made and premiums paid by the soldiers there have been made to October 31,1918,
11,905 awards for death and 10 for total and permanent disability.
The present value of the future monthly payments to be made in
satisfaction of death claims is $103,349,500 and under disability
claims $85,000. The amount of the monthly payment uhder these
awards is $594,748.38.




88

REPORT ON THE FINANCES.

The total expenditures of the bureau on account of military and
naval insurance duririg the first year of granting such insurance is
shown in the following table:
Expenditures on account of military and naval insurance, period ended Oct.
31,1918.
Automatic.
Army
Navy
Marine Corps
Coast Guard.
Total..

Contract

Total.

$885,600.00 $2,474,318.23
275,652.83
233,580.86
8,692.16
lis! 747.79
7
888.29
1,928.23
%8

$3,359,918.23
509,233.69
124,439.95
3,816.52

2,867,607.14

3,997,408.39

1,129,801.25

The Government has been so anxious that every soldier and sailor
should have the benefit of this protection that provision was made to
insure automatically any person in active service on or after April
6, 1917, the date of the declaration of war, who died or became permanently and totally disabled before February 12, 1918, even though
he had not applied for the insurance. Persons entering the service
now are given 120 days within which to apply for insurance. If
they do not accept the unprecedented offer of the Government to
its fighting forces within that time, the offer is not extended or
repeated.
The disposition of the Government to be generous is well exemplified in the insurance provisions of the soldiers' and sailors' civil relief
act, approved March 8, 1918, which are also administered by the
Bureau of War Eisk Insurance. The purpose of these provisions is
to prevent the lapse or forfeiture of insurance on the lives of persons
in the service through their inability to contiriue the paymerit of premiums while in the service. I t is apparent, of course, that only men
of independent income would be able to keep up their payments on
life insurance policies after entering the service, since the pay of
enlisted men would hardly suffice for that and the other demands
made on it. The Government guarantees to the insurance company,
therefore, the payment of premiums on insurance contracts not exceeding a face value of $5,000, when requested to do so by insured
persons in the active service, provided their contracts of insurance
come within the provisions of'the act. The policies will thus be kept
in force and the men in service will have one year after the termination of military service in which to pay any defaulted premiums
bef ore the policy or membership lapses. If the insured has not paid
the premiums by the expiration of the year, the policy will terminate,
and the Government will have the right to be repaid out of the cash
surrender value, if any. These provisions of the soldiers' and sailors'
civil relief act do not affect in any way the insurance issued by the
Bureau of War Eisk Insurance, but the bureau receives the applications for relief and acts on them.



SECRETARY OF THE TREASURY.

89

Since the soldiers' and sailors' civil relief act was approved on
March 8, 1918, applications covering $15,495,469 of insurance have
been received from 9,117 people who desire the benefits of the act.
Of these, 5,705 applications for $9,435,670 of insurance have been
approved, protecting premiums to the amount of $271,262.57.
The effect of these generous Government provisions upon the
morale of the civilian and military forces can scarcely be overrated.
A recent cablegram from Gen. Pershing to the Secretary of the
Treasury indicates how the Army feels about the war-risk insurance
act:
All ranks of the American Expeditionary Forces appreciate deeply the generous measure the Government has taken to provide insurance for their families, in proof of which more than 90 per cent of the men have taken out insurance. Wisely to make provision for their loved ones heartens our men and
strengthens the bonds that unite the Army and people in our strong determination to triumph in our most righteous cause.

Compensation to fighting forces and their dependents.
I n addition to the insurance protection, which must be bought and
paid for, the Government gives its officers and enlisted men, without charge, what is known as compensation benefits. These are
granted by the Government entirely independent of any insurance
that the man may have taken out, and do not need to. be applied
for, as does war-risk insurance. Claim, however, must be made.
The act provides a sliding scale of benefits, depending upon the.
injury and the nature of the man's dependents, and is therefore different from previous pension grants. F o r instance, if the man is
totally disabled and has neither wife nor child living, he would
receive $30 a month; if he has a wife but no child living, $45; if he
has a wife and one child living, $55; and so on. Compensation will
be paid to the totally and permanently disabled soldier, no matter
what his earning ability is after the war. A man who loses both feet,
both hands, or both eyes, or becomes totally blind or helpless and permanently bedridden, will receive, without any restrictions, an annual
income of $1,200. I n addition to all these benefits, a disabled man
gets free medical, surgical, and hospital service, including artificial
limbs, etc. Partial disability is provided for by paying percentages
of the compensation for total disability, and the amount paid takes
account of the average reduction in earning capacity resulting from
the injury. No reduction in benefits results if the soldier succeeds
in overcoming the handicap of a permanent injury, but the bureau
reserves the right to suspend payment of benefits should a man refuse
to take advantage of the vocational opportunities that the Government will provide to better fit him for civilian life.
I t will be seen that the activities of the Investigation Division
and the advice of the Medical Division will become increasingly



90

REPORT ON THE FINANCES.

• *

important and valuable in supporting the work of the Compensation
and Claims Division as the casualty list lengthens. Every casualty
is a potential compensation claim and must be investigated to see
whether the man in the service left anyone within the permitted
class of beneficiaries and also to see, in the cases where men have
become partially disabled, whether there is any decrease in their
earning power.
Up to June 30, 1918, when the act had been in operation eight
months, 15,088 claims for compensation benefits due to the death
of the man in the service had been. received and 1,446 had been
allowed immediately. Of the others, 6,716 were disallowed and the
other 6,926 claims were under investigation. There were three
general reasons why claims were disallowed: The man had no dependents coming within the permitted class; he had parents, but
they were not dependent; and the death of the man had not occurred
in line of duty.
Of 5,405 claims received during the same period for compensation
benefits due to the man in the service having become disabled, 1,091
were allowed, 985 disallowed, and the others subjected to investigation. Eeasons for disallowing this class of claims were that the man
had suffered no decrease in earning capacity, had withdrawn his
claim, had become disabled through misconduct and not while acting
in line of duty, had not been on active duty, and had been discharged
from the service prior to the passing of the war-risk insurance act.
Every effort will be made by officials of the bureau to protect the
taxpaying public from imposition. With the assistance of the
War Department much can be accomplished to this end through
insistence on rigid examination of men as they are discharged from
the Army. If the same elaborate and detailed methods used in determining the physical fitness or unfitness of men while they were
being inducted into the service are employed with the same painstaking care to determirie their exact condition on leaving it, it will be
of inestimable value to the Government in passing upon compensation claims as they arise.
The total amount expended for military and naval compensation
benefits from October 6, 1917, to October 31, 1918, was $1,440,227.96.
The following table shows how the amounts expended for compensation were distributed:
Statement of expenditures on account of military and naval compensation.
To June 30, 1918:
Army
Navy
• Marine Corps
Coast Guard
Miscellaneous
Total



.,

$235, 560. 34
42, 093. 36
3, 694. 73
1, 018. 78
58, 998. 06
$341, 365. 27

SECRETARY OF THE TREASURY.
From July 1 to Oct. 31, 1918:
Army
Navy
Marine Corps
Coast Guard
Miscellaneous

^

$811, 566. 63
102, 026. 07
12, 046. 34
951.16
172, 272. 49

Total

91

•
$1, 098, 862. 69

Grand total

^

1, 440, 227. 96

First payment of insurance and compensation benefits.
The first payment by the United States Government under the
war-risk insurance act to the dependent of a soldier or sailor killed
in action was made to the widowed mother of a gunner's mate killed
October 15,1917, when the U. S. S. Cassin was attacked by a German
submarine.
Being a widowed mother, dependent upon her son for support,
she is entitled to compensation at the rate of $20 per month as long
as she lives, unless she remarries. Inasmuch as her son had not applied for Government insurance, she is entitled to payments under
the automatic insurance provision at the rate of $25 a month for 240
months, as the time for automatic insurance had not expired when
her son was killed. She will receive, therefore, for that length of
time a total of $45 a month from the United States Government.
There is a significant difference between the present war-risk
insurance act and the system of pension legislation which it supplants. Under the pension law the widowed mother mentioned
would have been entitled to $12 a month only. Furthermore, under
the war-risk insurance act she is paid from the time of her son's death.
Under the pension laws payment would commence from some future
date—the date of filing application with the Pension Bureau.
One of the most striking features in connection with the war-risk
insurance act is the practical elimination of abuses created by claim
agents. No claim agents' fees have been allowed in the settlement
of compensation or insurance claims. Dependents have been urged
to deal directly with the Bureau of War Eisk Insurance.
Allotments and allowances to dependents.
The activity of the Bureau of W a r Eisk Insurance which has
thus far most engaged public attention is the work of awarding
benefits to the dependents of enlisted men. The law requires the
man to allot a certain amount of his pay to certain classes of dependents, namely, to a wife, divorced wife to whom alimony has been
decreed, or child. He has no choice in the matter. To certain other
classes, of dependents, namely, parents, grandparents^ brothers,
sisters, and grandchildren, he may, if he wishes, allot part of his pay




92

REPORT ON THE FINANCES.

also. To these allotments the Government adds certain allowances,
the amount of the total allowance in each case being determined by
the number of dependents in a family and the amount of the enlisted
man's habitual contribution to the dependents.
Up to October 31, that is, in the first year of its existence, the
Division of Military and Naval Insurance has issued over seven and
a half million checks. About a million checks are now mailed each
month, the sums paid out in these checks amounting now to over a
million dollars a day. Checks have gone each month to every city
and hamlet of the United States. Many, indeed, have gone to foreign countries. I n June, 20,000 checks were sent to Italy, 5,000 to
the British Isles, 2,000 to France, 550 to China, 500 to Sweden, and
300 to Switzerland. The total payments on allotments and allowances made during the past year have amounted to over $225,000,000,
as shown by the following table:
Expenditures on account of allotment and allowance, period ended Oct. 31, 1918.
Allotment.
Army
•.
Navy
'.
, Marme Corps
Coast Guard.
Total.-

Allowance.

Total.

$110,771,029.52 $81,692,342.44 $192,463,371.96
28,954.586.11
16,617,118.13 13,337,467.98
2,317,274.44.
1,089,279.43
1,227,995.01
1,272,999.55
632,067.77
640,931.78
128,257,074.44

96,761,157.62

225,008,232.06

These payments have ranged in amount from $15 to $50 a month.
The total amount disbursed from December, 1917, to October, 1918,
inclusive, was $225,008,232.06. Of this total, $128,257,074.44 constituted allotment payments, namely, sums deducted from the pay of
soldiers and sailors other than commissioned officers. The remainder,
$96,751,157.62, represented the allowances paid by the Government,
namely, the sums added to the 'allotments in order more adequately
to provide for dependency due to the absence of the breadwinners of
the families.
The work of the Advisory Board.
The Advisory Board, which is authorized under the act to assist
the Division of Military and Naval Insurance in fixing premium
rates and adjusting claims under insurance and compensation, has
been actively at work since the creation of'the bureau.
At the time the bureau was organized this board drew up many
forms and assisted in the organization of the various divisions. I t
also approved the rates of premiums charged for war-risk insurance
and the form of certificate issued for insurance.
o
I t has from time to time been called into consultation on interpretation of the war-risk insurance act and also of the soldiers and sailors' civil relief a c t




SECRETARY OF THE TREASURY.

93

I t has drafted forms of policies in accordance with the provisions
of Article I V of the law. I t has also devoted considerable time to
completing such a schedule of ratings as called for in Article I I I ,
section 302, subsection 2, of the act, which reads as follows:
A schedule of ratings of reduction in earning capacity from specific injuries
or combinations of injuries of a permanent nature shall be adopted and applied
by the bureau.

Furthermore, the Advisory Board has constructed and adopted a
simple formula for obtaining the percentage rating in the case of two
or more disabilities, and also a table for percentages of disability,
running in units from 1 per cent to 99 per cent.
From the organization of the bureau the board has been called into
consultation from time to time regarding the compensation features
of the act.
Tlue work of the Accounting Division.
Mention should be made of the valuable work being performed by
the Actuarial Division of thfe bureau, work that will undoubtedly be
of great scientific value to those interested in the making of insurance rates. The division is rapidly collecting, digesting, and interpreting statistics in 'regard to the mortality and disability experience of American soldiers. The actuary states that already his
division has punched and tabulated two and a half million cards,
representing that number of men who have applied for insurance.
These statistics will be handled in such a way as to give detailed information as to the mortality and disability experience of soldiers
by ages, by months of the year, by arms of the service, by geographical
districts. They will not only be of great interest to the war-risk
statistician but they will have value for the political student and for
the administrator. The Actuarial Division has also installed a system to take care
of quite elaborate statistics on compensations. These statistics will
cover the history of the enlisted man before he entered the service
and also trace his case after disability.
The Actuarial Division has been studying the subject of insurance
after the war and how the provisions in the act are to be carried
out. Many complicated questions will arise, and it is possible to
make preliminary studies that will be helpful in the solution of
those questions.
When the Actuarial Division was organized it was impossible to
obtain in Washington clerical assistants trained in actuarial work.
The division accordingly started a school, in which it has trained
very successfully operators and computers needed for its work.
The work of the Accounting Division.
The problems of the Accounting Division in the bureau are not
especially intricate in nature. The difficulties are due principally



94

REPORT ON THE FINANCES.

to the necessity of handling a large volume of work expeditiously.
The bureau has found it necessary to have accounting machinery
constructed which is especially suited to its needs. When such machinery is completely installed it will be possible to bring the accounting work to the highest possible state of efficiency.
The Accounting Division since the organization of the bureau has
received and examined 1,639,087 awards. Individual accounts have
been kept showing all payments, adjustments, and other transactions
affecting these awards. All live awards which have been certified to
the disbursing officer have been audited in detail.
On account of changes in pay and family status it has been necessary to make adjustments in approximately 500,000 awards.
I n order to insure the accuracy of the work and guard against unauthorized awards being paid, a control system has been established.
All awards made since June 1 have been brought into account under
this system.
Expenditures on account of the appropriations from the creation
of the bureau to October 31, 1918, are as follows:
Allotments
$128, 257, 074. 44
Military and naval family allowance
96, 751,157. 62
Military and naval compensation
1, 440, 227., 96
Military and naval insurance
:__.
3, 997, 408. 39
Losses on war-risk insurance of American vessels, their
cargoes, etc
33, 391, 676. 60
Total-—

-

263, 837, 545. 01

The total number of checks issued during the above period was
7,496,274.
. Difficulties of organizing work of bureau.
The volume of work handled by the War Eisk Insurance Bureau
in the first year of the Military and Naval Division's existence has
been very great. I t has involved literally hundreds of millions of
transactions. The achievements of the bureau are less likely, however, to attract public attention than are its deficiencies or'errors.
Beneficiaries of the bureau take what comes to them easily as a matter
of course, but those whose needs have not received immediate attention are not inclined to consider the gigantic nature of the organization
problem with which the officials of the bureau have been struggling
as sufficient excuse for the delay in the settlement of their individual
cases. I t may not be out of place to point out in this report what gire
some of the difficulties which officials of the bureau haye encountered
in trying to serve the public during its first year.
Once the work of organization is complete the problem of running
the bureau, colossal as is its volume of work, should present no unusual difficulties. The inost pressing problems have been in connection with the work of awarding allotments and allowances to the dependents of enlisted men. When men are no longer drafted, new ap-




SECRETARY OF THE TREASURY.

95

plications for allotments and allowances will cease to come in.
Changes in applications already entered may, however, be expected
for some time. But when the war is over and the fighting forces have
returned to their homes, the work of the section of allotments and
allowances will gradually cease.
As the volume of work in this section of the bureau decreases,
that of the compensation and insurance sections will increase. But
those sections have the advantage of having been organized a year
before they are subjected to any considerable strain. This statement
is, however, only comparatively true, for in two and a half months
after the enactment of the law, applications for $2,500,000,000 of life
insurance had been received by the bureau. As the insurance feature
of the law became effective immediately (indeed the first applications
for insurance came in by telegraph), it was necessary to provide
applications so that those desiring insurance might be able to secure
it immediately. About 12,500,000 forms were printed and distributed
at once with 5,000,000 copies of the act. The bureau started with
approximately 2,000 insurance claims, for the insurance feature of
the act was made retroactive and went back to the date of the declaration of war, April 6, 1917. Between that date and the date of the
passage of the act, October 6, 1917, about 2,000 men in the service
had died. I t will be seen that, without taking into account the
allowance and allotment feature of the law, the task of the insurance
section alone was one of large proportions.
But, since, for the greater part, applications only for insurance
were being received and not payments on msurance fallen due, the
strain of the work in the insurance section at the outset was not to be
compared with the pressing urgency of the task before the allotments
and allowances section. Officials realized keenly that failure to act
promptly and efficiently in that section meant suffering for the dependents of men who had been'called into the military or naval service
and sent overseas or into training camps. Many pitiful cases of need
came to the attention of the bureau, especially as the winter closed in
and the difficulty of obtaining coal and food was felt even by those
not dependent on a Government bureau for support. . I t was plain to
the bureau officials that their first duty to the country was to get
help to the needy families of fighting men as quickly as possible.
- Every effort was bent toward the supreme end of getting checks to
the dependents of soldiers and sailors as quickly as possible. Practically the whole section—both officials and clerks—worked voluntarily at their task for 24 hours without stopping, on several occasions, to get the monthly checks out.
Before even one check could be mailed a prodigious amount of
work had been planned and accomplished. I t was estimated that
the degree of dependency would be about 45 per cent in the Army,




96

REPORT ON T H E FINANCES.

and that, therefore, about 900,000 applications for family allowances would be received as soon as the bureau's doors were open.
Forms had to be printed and sent to applicants in the Army along
the coasts, on the border of Mexico, and wherever United States
troops, seamen, and marines were stationed. These had to be returned
and reviewed, allotments and allowances checked up, award cards
prepared setting forth the correct amounts, the cards turned over to
the accounting division where checks were prepared, and the checks
mailed to beneficiaries. For this work a period of only 1 month
and 25 days was allowed. Theoretically, checks should have been
actually sent out about December 1, 1917, but it was physically impossible for the men in the field to receive the applications, assimilate the instructions, fill out the forms, and get them back to the
bureau, have them examined and acted upon, and payments made by
that date. I t would have been a most difficult task, even had an
efficient corps of clerks been waiting to do the work. But sufficient
clerical and supervisory help of any kind, efficient or inefficient, was
not at first available nor was office equipment—tables, chairs, desks,
and typewriting machines, not to mention the more intricate laborsaving devices used in the modern office.. Nor was there to be had. in
Washington adequate office space for the work.
Under these conditions some errors, naturally, were committed in
launching such a stupendous undertaldng. Practically every error
brought a letter of inquiry or protest to the bureau. Changes in the
circumstances of the allottees, such as the birth of a child after the
departure of the enlisted man or the removal of the allottee to a new
locality, also gave occasion for more letter writing. Every letter
required an answer, which meant that a correspondence problem was
created, the solution of which was second only in importance to the
primary problem of sending checks to soldiers' dependents. Such a
problem had indeed existed from the beginning, for even two days
before the war-risk insurance act was passed authorizing the establishment of the bureau 20 bags of mail, addressed to the bureau, had
been received in Washington. But with the issuance of the first
checks the number of letters received increased enormously. The
bureau found that to answer promptly and accurately about 20,000
letters a day, many of which containing queries that called for exact
knowledge of the organic law, it would be necessary to have a large
corps of well-trained correspondence clerks. Even when the possible
subject matter of such letters had been carefully analyzed and put in
stereotyped form there still remained a large field for the display
of more knowledge and judgment in ^writing these, letters than the
average clerk was likely to possess. I t was decided to establish
a school for training clerks to do this kind of work.
The training school for clerks, which was organized on May 1, has
had a very successful season of six months. The last class is about to



SECRFITARY OF T H E TREASURY.

97

be graduated. During this time the heads of divisions and supervisors
of the work have acted as an instructing faculty.- Students have been
put through rather a severe course of intensive training, which lasted
in each case between two and three weeks. During the four
months—May, June, July, and August—994 people attended the
school, including 876 regular clerks of the bureau, 25 university men,
and 93 teachers from the schools of the District of Columbia. Of
these, all but 10 per cent, or 99 individuals, were later assigned to
work in the bureau. As time goes on the standards of clerical efficiency in the bureau will undoubtedly improve. Even with the available help comparatively untrained, the bureau has answered 3,000,000
letters. Its mailing list is the largest in the Government service.
A principal cause of delay in handling allotment cases has been the
lack of trained and efficient help. The bureau has suffered very
severely from the difficulties of establishing a new organization of
the magnitude required under the conditions existing in Washington. At present no less than 4,000 typists are needed for routine
work. While the total number of those now enrolled is only a little
less than 13,000, the total number of those in training during the
year was probably nearer 20,000. Owing to unsatisfactory living
conditions in Washington many young women who came here out of
patriotic motives to do war work returned to their homes after a very
short experience. During the month of September, indeed, onetwelfth of the clerical force resigned. About 90 per cent of the
bureau's employees are women.
The work of the bureau has been impeded by other causes than the
insufficient numbers of the personnel. These include errors in the
applications of enlisted men, such as errors in the spelling of names or
addresses of allottees and the omi^ion of information which is necessary for making an award; the failure of enlisted men to make allotments to persons dependent upon them for support, this failure being
due sometimes to a desire to escape responsibility toward a dependent,
sometimes to misunderstanding of the questions asked in the application blank; changes of addresses of allottees without proper notification to the bureau; failure of allottees to give sufficient information
to identify the enlisted man referred to when the allottee writes to
the bureau; Anglicized spelling of a proper name by enlisted men
while the allottee adheres to foreign spelling; and finally the impossibflity of identifying an enlisted man by name alone because of
the great number of identical names in a list of 4,000,000.
No one single administrative act since the war began has contributed to the simplification of the bureau's work so much as the
order to give every soldier a serial number.
86429°—FI 1918

7




98

REPORT ON T H E FINANCES.

A man's name will seldom identify him absolutely. There are
literally thousands of men in the Army with names such as John
Brown, John Smith, John Jones, John Williams, and so on. Owing
to the frequent shifting of men from one organization to another,
the name of the organization to which a man was attached has been
of little value in identifying him. The only appellation that can be
given him with absolute certainty that it can not be duplicated is a
number. The order to number the soldiers and attach these numbers
t o all applications sent the W a r Eisk Bureau was not given until
February 28, 1918. By that time between a million and a half and
two million applications had been received by the bureau.
The problem next presented was to attach these numbers to the
proper records on file in the War Eisk Bureau. With literally
thousands of records relating to John Jones, William Smith, and
other soldiers with popular names, it is plain that in many cases
thousands of records had to be searched and examined before the
number assigned to a soldier in the field could be attached to the
papers of that particular soldier. The difficulties arising naturally
from the similarity of names have been greatly increased by the fact
that officers in the field have frequently put on the muster roll only
the soldier's initials instead of his full name, as given in his application to the War Eisk Bureau, and by the fact that the soldier's
place in the Army organization on February 28, 1918, was very often
quite different from what it had been when he made out his applications for allotment and allowance or for insurance. Also, through
errors in telegraphing the first list of numbers to be assigned to
soldiers, about a hundred thousand numbers were assigned in duplicate, which made it necessary for new numbers to be assigned to large
groups of men and much of the work done in the War Eisk Bureau
thrown out as useless.
The bureau has given most careful thought to the problem of
assigning these numbers to the proper records on file in an accurate
and the most expeditious manner possible, and has called to its aid
the best experts in the country. At the present time practically all
the applications received by the War Eisk Bureau carry the soldier's
serial number, and the records are kept by that number; but the
bureau has still a very large number of records to which it has not
been able to attach the serial number. Every effort is being made,
however, to expedite the work.
No account of the achievements of the bureau in the first year of
its existence would be complete without remention of one circumstance which has greatly hampered its work. That is the fact that
no available building in Washington was big enough to hold the
entire bureau, and its different parts have accordingly been housed in
15 separate structures, most of them but poorly adapted to the work.



SECRETARY OF THE TREASURY.

99

The greatest amount of space which it has had under one roof was in
the National Museum, the use of which was ,obtained through the
courtesy of the Board of Eegents of the Smithsonian Institution.
The present unsatisfactory housing conditions will be relieved when
the new Arlington Building is ready for occupancy in a few months.
The texts bf amendments to the war-risk insurance act are attached
as Exhibits 57-A, 57-B, and 57-C.
R E T I R E M E N T OF CIVIL-SERVICE E M P L O Y E E S .

Eecommendation has been made in previous annual reports of the
Secretary for the enactment of an equitable retirement law for
civil-service employees. The necessity for effective action of some
character along this line has been accentuated during this period of
war. I t would seem to be not onlj^- a irieasure of justice to faithful
public servants who have devoted their lives and talents to the Government but it would also be in the interest of economy tod increased efficiency in the administration of the public business.
I n considering this important question the attention of Congress
is respectfully invited to the possibilities of an expansion of the
principle underlying the Bureau of War Eisk Insurance. Humanity
demands that something be done for the civil employees of the Government, and suggestions of pension systems, while praiseworthy as
an effort to render justice and effective as an expedient, would probably not afford a real solution. I t is confidently believed that the
solution lies along the lineS/ of insurance with both the Government
and the civil employees contributing to a scientific plan that will
provide for retirement as well as insurance against death.
E N E M Y OR ALLY OF E N E M Y I N S U R A N C E C O M P A N I E S AND OTHER FOREIGN
INSURANCE COMPANIES.

A very important extraordinary duty arising out of the war which
has devolved upon the Treasury Department has been the licensing
and, supervision of the liquidation of insurance companies, organized
under the laws of enemy countries or their allies, transacting business
in the United States and the licensing and supervision of all other
foreign insurance companies transacting business in the United
States.
Wlien the United States,.entered the war there were 15 German
insurance companies of all kinds and 1 Austrian insurance company transacting business in the United States. These 16 enemy
insurance companies possessed admitted assets belonging to their
American branches aggregating $36,928,271, and their American income for the year 1916 aggregated $27,872,505.
There were also two companies transacting business in the United
States organized under the laws of Bulgaria, an ally of Germany




100

REPORT ON THE FINANCES.

and Austria, and these so-called ally of enemy companies had admitted assets belonging to their American branches aggregating
$4,796,316, and their American income for the year 1916 was
$4,263,598.
There were also 81 insurance companies transacting business in
the United States organized under the laws of foreign countries
other than Germany and Austria and their allies with assets belonging to their American branches aggregating $214,329,124 and
having a premium income for the year of 1916 aggregating $150,112,974.
On April 6, 1917, the President, by proclamation, ordered that all
German insurance companies then operating in the United States
through branch establishments should be permitted to continue the
transaction of their business as lieretofore, provided that no funds be
sent out of the country or be used as a basis^^for establishing enemy
credfts.
This was supplemented by the President's proclamation of July
13, 1917, prohibiting German insurance companies from continuing
the transaction of marine and war-risk insurance either as direct
insurers or reinsurers.
The trading with the enemy act approved October 6, 1917, provided under Section I V that all enemy or ally of enemy insurance or
reinsurance companies doing business within the United States might
within 30 days after the passage of the act'apply to the President for
a license to continue to do business. I t further provided that pending action upon such applications, the companies might continue to
do business in accordance with the terms of the proclamations of
April 6 and July 13. Companies not applying for licenses within 30
days were pro^hibited from doing business in accordance with Sections I I I and X V I of the trading with the enemy act.
By Section X I I of the Executive order of October 12, 1917, the
power of granting or refusing to grant such licenses as vested in the
President by the trading with the enemy act was delegated to the
Secretary of the Treasury.
Two enemy insurance companies, namely, the Cologne Eeinsurance
Co. and the Minerva Eeinsurance & Eetrocession Co., both of Cologne, failed to apply for licenses before November 6 and were forced
to terminate their United States business as (5f November 5, 1917.
The following 16 insurance companies applied for licenses prior to
November 5,1917:
International Reassurance Co. (Ltd.), of Vienna, Austria (fire).
Balkan National Insurance Co., of Sofia, Bulgaria (fire).
First Bulgarian Insurance Co., of Rustchuk, Bulgaria (fire).
Aachen & Munich Fire Insurance Co., of Aix la Chappelle, Germany (fire).
Allianz Insurance Co. (Ltd.), of Berlin, Germany (marine).
Frankfort General Insurance Co., of Frankfort, Germany (casualty).




SECRETARY OF THE TREASURY.

101

Frankona Reinsurance Co., of Berlin, Germany (fire).
Hamburg-Bremen Fire Insurance Co., of Hamburg, Germany (fire).
Mannheim Insurance Co., of Mannheim, Germany (marine).
Mercury Reinsurance Co., of Cologne, Germany (life).
Munich Reinsurance Co., of Aix la Chappelle, Germany (fire).
Nord Deutsche Insurance Co., of Hamburg, Germany (fire).
Nord Deutsche Insurance Co., of Hamburg, Germany (marine branch).
Prussian National Insurance Co., of Berlin, Germany (fire).
Prussian Life Insurance Co., of Berlin, Germany.
South German Reinsurance Co., of Munich, Germany (fire),

On November 7 the Secretary of the Treasury addressed a letter
to the insurance commissioners of the various States advising them
of the enemy and ally of enemy companies that had applied for
licenses and notifying them that these companies were entitled to
continue business subject to the restrictions of the trading with the
enemy act, pending action of the Secretary of the Treasury on their
applications for licenses.
'
A hearing was held by the Secretary of the Treasury on November
15, 1917, concerning the advisability of permitting the enemy or
ally of enemy companies to continue business in this country, and
notice of this hearing was given to all interested parties through
the insurance commissioners of the various States.
Following that meeting, the Secretary of the Treasury announced
his decision that all insurance companies existing under the laws of
enemy or ally of enemy countries, other than life insurance companies, must liquidate their business, subject to the supervision of
the Treasury Department and the Alien Property Custodian.
On November 27, 1917, liquidating licenses were issued to such
companies which prohibited them from accepting new business with
the exception that business might be accepted under existing reinsurance contracts within 45 days from the date of the license. This
clause was given to protect the interests of the American insurance
companies that had outstanding contracts with enemy companies.
The life insurance companies were granted licenses providing for.
a strict supervision of their finances and affairs and allowing them
to continue to accept new business under existing reinsurance treaties.
On July 1, 1918, licenses issued to the life insurance companies were
canceled and liquidating licenses on the same terms as those given
to all other enemy or ally of enemy companies were issued.
Prior to February 1, 1918, only enemy or ally of enemy insurance
companies had been required to obtain licenses to continue or liquidate their United States business. By Executive order of December
7, 1917, the President, acting under the authority of section 4-B of
the trading with* the enemy act, extended to all other foreign insurance companies the provision requiring that a license be obtained
from the Secretary of the Treasury to continue to do business in the
United States after February 1, 1918.



102

REPORT ON T H E

FINANCES.

Pursuant to the above order, licenses were issued to all foreign insurance companies that applied. These licenses prescribed the terms
upon which the foreign companies might continue their United
States business.
" I n addition, an investigation was started to ascertain whether any
such foreign companies were enemy controlled or owned. This investigation is still proceeding and in one instance has led to the
substitution of a liquidating license for the continuing license originally issued, the investigation having shown that the majority of
the company's stocl£ was owned by enemy interests.
On January 15, 1918, regulations entitled " Eegulations for insurance companies concerning custody and transmission of information "
were approved by the Secretary of the Treasury and were issued
to all insurance companies doing business with foreign countries.
These regulations prohibited them from forwarding any bordereaux
or »other form of report or declaration of insurance or reinsurance,
giving particulars of risks assumed on property or other interests
in the United States, or movements of vessels to any country other
than those at war with the enemies of the United States, e:ji:cept with
the permission and under regulations of the Secretary of the
Treasury. Since that time all such bordereaux and reports going
abroad have been sent by the various insurance companies first to the
Treasury Department, in packages addressed and properly stamped,
ready foi* mailing to destination. These packages are received by
the department unsealed and their contents are subject to the iaspection of the department. A t the end of three months they are sealed
and forwarded to the addressee, subject to postal censorship.
T H E FEDERAL F A R M - L O A N

SYSTEM.

The Federal farm-loan system has been of great value to the
farmers of the United States and a great protection to the food
supply of the Nation during the war. At the inception of its operations, the Federal land banks lent money to farmers at the rate
of 5 per cent per annum on a long-time amortization plan. Owing
to the financial conditions produced by the war, it was found necessary to increase the rate of interest to 5^ per cent. The existence
of this systein, operated under Government supervision, granting
long-time loans at reasonable rates of interest, has unquestionably
saved the farmers of the United States from many exactions, foreclosures, and denial of financial accommodations during this period.
The extent of its benefits can not be measured by the aggregate
amount of its loans, great as that amount is. The system has been
a harbor of refuge for the borrowing farmer. Through its competition with other loaning agencies it has reduced interest rates almost
everywhere in the United States and has saved the farmer in large




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SECRFITARY OF T H E TREASURY.

measure from those financial troubles which otherwise must have beset
him. I t has constituted the great governmental agency for financing the basic industry of the United States—Ihat of agriculture.
During the past year loans have been made by the Federal land
banks to the farmers of the United States to the aggregate amount
of $118,528,823. I n the following table will be found a statement
of the loans made by each of the 12 banks in the year ended September 30, 1918, and the aggregate of the loans made by each bank
up to that date:

District.

Federal land b a n k .

Springfield, Mass..
Baltimore, Md
Columbia, S. C . . .
Louisville, K y
N e w Orleans, L a .
St. Louis, Mo
St. P a u l , M i n n . . .
Omaha, Nebr
Wichita, K a n s
Houston, Tex
Berkeley, Cal
Spokane, W a s h . . .

9..
10.
11.
12.
Total.

Loans made
|Sept.30,1917 Aggregate
of loans
t o Sept. 30,
made.
1918.
$4,999,630
4,323,150
6,198,905
7,490,700
8,800,135
8,166,065
17,380,500
14,418,050
10,292,922
11,264,287
7,315,800
17,878,679

175,345
124,050
529,895
499,200
469,790
746i 670
719,800
122,840
266,800
780,774
046,000
422,520

118,528,823

131,903,684

The number of farm-loan associations has almost doubled during
the past 10 months, the total number chartered up to September 30,
1918, being 3,318. This is one indication of the large growth of the
system which is now in operation in every Stp.te in the Union.
The activities of the Federal land banks have not been confined
exclusively to those enjoined upon them by law. The assistance
which they rendered in the execution of the plan for making loans
from the $5,000,000 fund which the President placed at the joint
disposal of the Treasury Department and the Department of Agriculture for the relief of farmers in the drouth-stricken areas of the
West and Southwest is discussed elsewhere in this report under the
heading "Assistance to farmers."
Eecent destructive fires in Minnesota not only caused great and
tragic destruction of life but infiicted great hardships on the farmers of the regions affected. The Federal land bank of St. Paul has
actively interested itself in measures for extending relief to farmers
/who have suffered losses, so far as the proper security could be
offered, and it is believed that these activities will be of value to many
farmers who are peculiarly in need of assistance at this time.
The farm-loan act provided that if, within 30 days after the opening of subscription books, any part of the minimum capitalization
of any one of the Federal land banks should remain unsubscribed, it




104

REPORT ON T H B FINANCES.

should be the duty of the Secretary of.the Treasury to subscribe the
balance thereof on behalf of the United States. I n accordance with
this provision, the subscriptions so made on behalf of the United
States aggregated $8,891,270. The act further provided that, after
subscriptions to capital stock by national farm-loan associations
should amount to $750,000 in any Federal land bank, such bank
should apply semiannually to the pa3^ment and retirement of the
shares issued to represent the original subscriptions 25 per cent of all
sums thereafter subscribed, until such original capital stock was
retired at par. Two of the banks, Spokane and St. Paul, have had
subscriptions to capital stock by farm-loan associations in excess of
$750,000, and 25 per cent of such excess was applied during the month
of November to the payment and retirement at par of a corresponding proportion of stock originally subscribed. I n May, 1919, two
more banks, Omaha and Wichita, will similarly pay arid retire a
proportion of their capital stock, and in November, 1919, the banks at
Houston and probably New Orleans Avill be added to this list.
By an amendment to the farm-loan a"ct, approved January 18,1918
(Exhibit 58), the Secretary of the Treasury was authorized, in his
discretion, upon the request of the Federal Farm Loan Board, from
time to time during the fiscal years ending June 30,1918, and June 30,
1919, respectively, to purchase at par and accrued interest from any
Federal land bank farm-loan bonds to an amount not exceeding
$100,000,000 in either of such fiscal years. I t was further provided
that any Federal land bank might at any time repurchase at par and
accrued interest, for the purpose of redemption or resale, any bonds
so purchased from it and held in the Treasury.
Under this authorization, the Secretary of the Treasury purchased
in the fiscal year ending June 30, 1918, at par and accrued interest.
Federal farm-loan bonds to the par amount of $64,160,000, of which
$55,970,000 were bonds dated November 1, 1917, bearing interest at
the rate of ^ per cent, and $8,190,000 were bonds dated May 1, 1918,
bearing interest at the rate of 5 per cent. The $8,190,000 5 per cent
bonds dated May 1,1918, were subsequently repurchased by the banks
which had issued the same,'for the purpose of resale. The $55,970,000
4J per cent bonds are still held in the Treasury.
ASSISTANCE TO FARMERS.

Early in the year 1918 reports commenced to reach the Treasury
from various sources relative to the financial situation caused in certain sections of the West and Southwest by drouth and severe winter
weather in agricultural communities. Losses of crops and the inability to raise marketable cattle prevented the liquidation of loans
for agricultural and live-stock purposes and created demand for new
accommodation, the urgency of which was intensified by the cumu-




SECRETARY OF T S E TREASURY.

105

lative effect of previous crop failures. Investigation satisfied the
department that these conditions had seriously impaired the ability
of local banking capital to meet the needs of the situation.
The same conditions had to a widespread extent actually deprived
agricultural borrowers of available collateral for further loans.
These conditions became so severe that, apart from the serious
losses to individuals, there was threatened a national loss and the
impairment of the national war»effort at a vital point,, namely, the
production of food for the United States and the nations with which
it was associated as a belligerent.
The aid extended is summarized in the following:
Deposits of public moneys in drouth-stricken areas.
On March 13, 1918, the Secretary of the Treasury advised the
chairman of the Federal Eeserve Bank of Dallas, Tex., ito the effect
that, if he found that banks in the drouth-stricken area were insufficiently supplied with loanable funds, deposits would be made in
national-bank depositaries in drouth-stricken districts up to an aggregate of $5,000,000, having due regard to a fair distribution. On
March 21, 1918, directions were given for the preparation of lists of
applicants and specifying the securities to be taken. Deposits, after
approval of application and approval of collateral, were made direct
by the Treasurer of the United States.
Acting under this authority, applications were made and the entire
fund of $5,000,000 was allotted among 88 national banks in the
drouth-stricken areas in amounts ranging from $5,000 to $250,000,
according to the amounts of the applications and the needs of the district as reported to the department through the Federal Eeserve
Bank of Dallas. These deposits are now being withdrawn.
Assistance through the War Finance Corporation.
On July 22, 1918, the board of directors of the War Finance Corporation, at the suggestion of the Secretary of the Treasury, telegraphed the Federal reserve banks of Dallas, Kansas City, and Minneapolis, requesting them to notify the banks and trust companies in
their respective districts, nonmembers as well as members of the
Federal Eeserve Systiem, of the willingness of the War Finance Corporation to make advances, under section 7 of the War Finance Corporation act, to banks and trust companies which had made loans to
farmers and cattlemen. The corporation also worked out a plan for
inaking advances to banks under section 7 to assist in finaricing the
movement of crops.
When reports reached the Treasury that the live-stock industry,
and particularly breeding stock, in some parts of the country was




106

REPORT ON THE FINANCES.

suffering great hardship by reason of excessive drouth conditions and
cattlemen were experiencing great difficulty in feeding and protecting
their cattle, the War Finance Corporation immediately made arrangements to render assistance. Two directors of the corporation went
to Kansas City late in August, 1918, arid held conferences with representatives of the Federal reserve banks of Kansas City and Dallas
and bankers and cattlemen. As a result of this investigation caittle
loan agencies of the War Finance Corporation were established at
Kansas City, Mo., and Dallas, Tex., for the purpose of making direct
loans to live-stock raisers.
The relief offered by the War Finance Corporation has been availed
of in very large measure and has contributed materially to the preservation of the country's food supply.
U p to and includirig October 31, 1918, the War Finance Corporation had advanced to farmers and live-stock raisers, directly and
indirectly, $940,500, and is committed to further advances of $3,216.000, which will be made when certain details, such as releasing
and filing mortgages, are completed. Of the latter amount $1,216,000
will be advanced direct to live-stock raisers on their notes secured by
chattel mortgages on stock cattle and breeding sheep.
The total of $940,500 has been advanced, as follows:
Through banks to farmers
Through banks to live-stock raisers
:
Through banks for crop-moving purposes
^Direct to live-stock raisers
•.
On warehouse receipts for canned vegetables
Total

^
*

-

$39, 500
331, 500
113, 500
254, 500
201, 500
940,500

The advance on warehouse receipts for canned vegetables represented relief of an acute situation which arose in August, 1918, in
the agricultural districts of New York State, mainly in the northern
counties. I n the two preceding seasons crops had been light.
I n the season of 1918 the acreage planted td vegetables had been
largely extended in response to the urging of the Food Administration. The crop of vegetables and small fruits proved to be a large
one, so that the demands of the canners upon the local banks for moving the crop greatly exceeded the ability of the local banks to meet.
I t was represented to the War Finance Corporation that immediate
assistance was required to save these perishable food products.
The plan devised by the W a r Finance Corporation provided for
the organization of a warehouse company by the canners, which
should issue warehouse receipts for goods stored under a carefully
controlled system at the respective canning plants. These receipts
were made the basis of loans by the War Finance Corporation.




SECKETARY 0¥ THE TREA^tJEY.

107

Seed-grai/n loans to farmers.
On July 26, 1918, the President, at the request of the Secretary of
Agriculture, put at the disposal of the Treasury Department and the
Department of Agriculture, acting in common counsel, the sum of
$5,000,000 from the fund for national security and defense placed at
the disposal of the President by act of Congress approved July 1,
1918. This fund was to be used to enable the farmers in certain
drouth-stricken areas where there had been serious crop failures to
supply themselves with the necessary seed grain for planting.
The Farm Loan Board and the Federal land banks in the affected
districts furnished a convenient and appropriate agency for the distribution of the fund thus made available. The Treasury Department and the Department of Agriculture in conference devised a
plan for making seed-grain loans to farmers in the drouth-stricken
areas, for the primary purpose of enabling them to obtain the seed
and other necessaries to replant their lands and to prevent their
being di:iven from their farms by their misfortunes. The loans were
confined to areas determined by the Department of Agriculture to
have suffered two successive crop failures from severe drouth or
winter killing. The individuals who might be the recipients of the
loans were those who were found by the Department of Agriculture
to have acreage fit for planting, and who, by reason of such crop failures, had exhausted their resources and were without commercial
basis of credit. I t was adopted as a principle that the loans should
not be used to stimulate the planting of wheat or any other grain
where such planting was not wise from an agricultural point of view.
The loans were designed to assist in tiding the farmers who had suffered from the unusually adverse natural conditions over the period
of the stress, to enable them to remain on their farms, to plant such
an acreage as might be determined to be wise under all the conditions, with a view to increasing the food supply of the Nation and to
add to the national security and defense.
The judgment of the Department of Agriculture was made determinative of all the agricultural features of the loans. I t was represented to the Treasury Department that the areas embraced in the
plan covered an extreme variety of soil and weather conditions, from
which it might fairly be expected that a corresponding variety in
crops would result under the conditions existing in a single season of
seedtime and harvest. This fact suggested that a substitute might
be provided for the conventional security for loans, which, under the
very < conditions of the need and the plan, the farmers who would
receive the loans would be unable to furnish. This substitute was a
provision in the plan uniting the farmers in a common interest, so
that the success of those whom fortune favored might in a measure




108

REPORT ON THE PINANCES.

care for those who might again meet with adverse conditions and
failure. Those whose crops reached a fixed standard of yield were
required to contribute to a guaranty fund, administered by the Farm
Loan Board, for the benefit of all who obtained loans under the plan,
and the resulting fund was applicable pro rata to relieve from liability on the loans those whose crops failed to reach a prescribed
standard.
The necessity of protecting the public funds of the United States
to such degree as was compatible with the purposes to be accomplished in giving relief has thus led to a system of agricultural community interest hitherto untried in the great West, and from which
there will be deduced the same data that would result from an experiment on a similar scale in the much-debated subject of crop insurance.
I n order that neither the public moneys nor the time and labor of
the farmers should be wasted in endeavoring to cultivate grain on
lands where competent opinion would deem such planting an improper risk, it was necessary that the lands to be planted be investigated by the Department of Agriculture before making each loan.
The same protection of the funds and of the accomplishment of its
intended purpose dictated that the crop should be actually planted
before the loans were made; and, furthermore, that it should be
planted in a proper and husbandlike manner. This involved a second
inspection of the land by the Department^ of Agriculture, but it also
involved devising a plan by which the farmers should be able to
obtain the seed and plant it before the fund was actually advanced.
This was accomplished by providirig for the issue by the Federal land
hank of the district of a " certificate of approval," which certificate
was to be issued after the land had been first inspected by the Department of Agriculture and approved from an agricultural point of
view and after the other conditions that were the basis for the loan
had been^ shown to be complied with. I n this certificate the Federal
land bank, as financial agerit of the United States, obligated itself to
advance the specified sum to the farmer, or on his written order, upon
receipt of the second certificate of inspection by the Department of
Agriculture, after planting, and upon execution and delivery of the
necessary documents evidencing and securing the loan. The provision
of this certificate authorizing the payment to the order of the applicant farmer enabled him to negotiate it to the seedsman or supply
house as security for the payment of the purchase price of his seed
or supplies, the creditor thus taking the risk only that the farmer
might fail to plant or might fail, to execute the proper documents,
both of which would be against his own interest.
The plans thus outlined have proven successful. Applications for
loans for fall planting of grain received and approved up to October
26, 1918, covered a total of 833,871 acres that would otherwise, in




109

SECRETARY OF T H E TREASURY.

large part, have doubtless been represented by abandoned farms.
This acreage, by States, as reported by the several Federa.! land
banks to that date, is as follows:
state.
Kansas
Oklahoma
Texas
New Mexico
Montana
North Dakota
Washington
Total

Apiproved.

•.
^.

•

...i

Rejected.

Acres.
329,851
271,365
101,300
5,497
101,375
23,098
1,385

Acres.
31,966
29,736
12,943
1,460

. ..i..
•

=
.

-

833,871

J!
76,105

Pending.
Acres.
3,371
13,296
3,447
ISO

0)

(*
0)

20,264

1 No report.
Total amount to be lent on approved applications to date, $2,393,449.

A circular entitled " Joint Circular No. 1," of the Treasury Department and Department of Agriculture, prescribing " Eegulations
Eelative to Farmers' Seed Grain Loans in Drouth-Stricken Areas "
(Exhibit 59), was prepared by the Treasury Department, in collabo' ration with the Department of Agriculture and the Farm Loan
Board, and issued under date of August 2, 1918, by the two departments concerned. I t defines in detail the plan outlined above.
To accomplish the disbursement of the funds with the necessary
expedition, the Federal land banks in the districts affected were
designated as financial agents of the United States under the provisions of section 6 of the act approved July 7,1916.
I t is, as yet, too early to form an opinion of the result of these
loans considered as a fiscal^ operation of the United States. The
field is new and untried. The emergency was immediate and pressing. The ordinary safeguards for the repayment of money that are
dictated b}^ conservative banking practice were, in the nature of the
case, absent; in fact, the usual conditions were reversed, for the
United States, instead of searching for a responsible borrower, was,
to accomplish the intended relief, seeking out those without the
means of obtaining credit as the only ones to whom loans should be
made, and sharing with the farmer, for the benefit of the people at
large, the risk of success or failure of the crop. I t is not, therefore,
by its fiscal results that the plan must be judged as success or
failure, but by the efficiency of the aid extended to food producers,
on whose effort the security of the country so largely depended in
the crisis. From this point of view, the acreage made available
for planting through the distribution of this fund already indicates
success.
PUBLIC HEALTH.

During war it is as essential to establish and maintain proper
sanitary conditions .in the extra-cantonment areas and among the



110

REPORT ON THE FINANCES.

civilian population generally as to secure proper sanitary .conditions
within the military camps. By proper sanitary conditions is meant
the reduction of the disease hazards of the soldier, sailor, and civilian
to the minimum.
The duty of protecting the health of the military forces in civilian territory was placed upon the United States Public Health Service by acts of Congress enacted during the last fiscal year. To maintain the efficiency of the fighting forces it is essential to safeguard
the health of the soldier and sailor outside the cantonment and camp
boundaries.
To secure this reduction of disease hazards involves the establishment of efficient ^health organizations in areas to which the
soldier or sailor has access. Within the camp boundaries such organizations are maintained by the Army or Navy Medical Corps,
making it comparatively easy to secure proper sanitary conditions
and to establish the necessary sanitary safeguards within an area
which is exclusively under military control. To secure a like measure of protection in the civilian areas surrounding camps is, however, a complex problem and one much more difficult of solution.
This duty of protecting the health of the military forces in civilian
areas contiguous to the camps has been performed by the Unijbed
States Public Health Service.
The scope of the work involves proper supervision over water,
food, and milk supplies in the areas to which the soldier and sailor
has access; the proper disposal of human excreta in such areas and
the elimination of breeding places of files and mosquitoes. I t involves also efficient control of communicable diseases and the reduction of the prevalence of those diseases to a minimum. I t is the
policy of the Public Health Service to utilize to the fullest possible
extent existing State and local health organizations and to encourage
their legitimate expansion to the end that the intensified publichealth activity resulting from cooperation of Federal, State and
local authorities will be continued by State and local authorities
after the Federal force is withdrawn.
The necessity for prompt protection of the health of the soldier
was so pressing that in some instances it was found necessary to do
some work in cities which should and eventually will be done by
the local authorities; but in the main the work done has been necessary because of the sudden placing of Federal military camps in
these areas, and is, therefore, a proper charge against Federal appropriations.
The officers in charge and a large part of the personnel are fur^
nished by the Public Health Service, supplemented by personnel
and funds from the American Eed Cross. This Federal organization interlocks with existing local health machinery in making up




SECEETARY OF THE TREASURY.

Ill

the complete sanitary unit. Obviously the amount of work actually
done by Federal officers and employees varies in the different zones
in inverse ratio to the amount of work which State, county, or local
authorities are able and willing to do. I n this work 49 commissioned medical officers and 72 acting assistant surgeons are now engaged. These, together with sanitary engineers, scientific assistants,
epidemiologists, sanitary inspectors, and public-health nurses, make
a total force of over 500, exclusive of laborers, engaged in extracantonment sanitation.
Valuable cooperation has been rendered by the American Eed
Cross in this important work. Soon after the declaration of war
there was organized a Bureau of Sanitary Service, with a commissioned officer of the Public Health Service as director. Through
this bureau funds have been advanced for the establishment of sanitary units which were operated under direction of officers of the
Public Health Service in the extra-cantonment zones. This financial assistance enabled the Public Health Service to establish immediately adequate inspection and public-health nursing activities in
the zones which had become overcrowded on account of the many
soldiers and their families being brought into the areas.
Through the fiscal year to July 31 the American Eed Cross had
advanced $500,300 for the establishment and maintenance of 32
sanitary units throughout these extra-cantonment zones, without which assistance the work could not have been started for a
period of several months in some instances.
I n reducing the hazard to the soldier and sailor from comiriunicable disease of all kinds special effort was necessary to combat
malaria and venereal disease. Measures for the prevention of malaria have been very successfully carried out, and, as a result, ample
protection afforded to the military forces.
A program for combating venereal disease has been formulated
and put into effect upon a nation-wide scale. I t has been recognized that this is largely a civilian problem and that real success
can be secured only by the concerted action of all civilian health
agencies following a uniform program in all States under the direction of the Public Health Service. By the Army appropriation act
of July 9, 1918, Congress authorized the creation of a division, of
venereal diseases in the Bureau of the Public Health Service and
appropriated $200,000 for its establishment and maintenance. This
act also appropriated $1,000,000 for allotment to the States for
the suppression of venereal diseases, $1,000,000 to assist States in
caring for persons detained because of venereal disease, and adequate sums for the research work necessary for the perfection of
better methods of eradication.




112

REPORT ON T H E FINANCES.

The effective organization of industries is of paramount importance
in the successful waging of modern warfare. The essential element
of success in such industrial organizations is a maximum continuous production over a protracted period of time. I n realizing this
end, the most important factor is a constant state of good health on
the part of the workers engaged in such industry. This can be
obtained only by the intelligent supervision and control of sanitary
conditions in industrial plants, by the prevention of occupational
diseases and industrial poisonings, and by the medical care and supervision of the working force.
I t seemed therefore imperative, by reason of war conditions, for
the Public Health Service to exercise, in so far as its available and
very limited facilities permitted, such supervision and control of
sanitary conditions and the health of workers engaged in supplying
the Government with war materials.
^
I t need hardly be pointed out that, because of the authority conferred upon the United States Public Health Service by Congress,
and the Executive order of July 1, 1918, its well-recognized powers
and duties in questions pertaining to the public health, and the studies
previously made in the field of industrial hygiene, this service is
peculiarly fitted to perform such important work.
' Studies of the sanitary and medical care of industrial employees
have been completed at more than 200 plants. Surveys of hygienic
conditions at all navy yards on the eastern coast have been made
in the past few months, and similar surveys of war industries in the
Eastern and Western States have been undertaken on as extensive a
scale as possible.
By virtue of an Executive order promulgated July 1, 1918, all
civil public health activities, carried on by any Federal executive
department or agency especially created for or concerned in the
prosecution of the existing war, were placed under the supervision
and control of the Treasury Department to be administered through
the Public Health Service. There is no question that this Executive
order will prove of the greatest value in increasing the efficiency of
all public health work conducted by the Federal Government.
Among the many undoubted advantages resulting from this promulgation will be the prevention of duplication and the promotion
of economy in administration of Federal public health activities.
I n conformity with the intent of this Executive order, the Public
Health Service has assumed charge of the health and sanitary work
previously conducted by the United States Shipping Board in con-,
nection with the maintenance of sanitary conditions in all shipyards
and communities adjacent thereto, now numbering 170 in the Atlantic, Gulf, Lake, and Pacific States,




SECRETARY OF THE TREASURY.

113

Arrangements have also been completed to have the Public
Health Service assume supervision and control of all medical and
sanitary matters in industrial plants having contracts with the Ordnance Bureau of the.;War Department. Medical and sanitary supervision is also being exercised over the various Government nitrate
plants at Nitro, W. Va.; Muscle Shoals, Ala.; Ancor and Toledo,
Ohio; and plants at Nashville, Tenn, and Eichmond, Va. I n all
these plants measures are being taken to bring about the maintenance
of proper sanitary conditions and the maximum of protection to all
war workers employed in them.
Under the provisions of the same order, and at the request of the
Secretary of Labor, an agreement has been made with the working
conditions service of the Department of Labor for the purpose of
formulating general sanitary codes for industries and establishing
and maintaining adequate health protection for ^workers in war
industries. This work will be extended as rapidly as available facilities will permit, its importance to the industrial population and the
country as a whole being recognized as of paramount importance.
The Public Health Service received for the first time on September
18, 1918, reports of the continued occurrence of a considerable number of cases of influenza at Boston, Mass., and vicinity, a total of
about 2,500 having developed up to that date.
An officer of the service was sent to New England on September 24,
1918, to obtain first-hand information about conditions, and on
September 27, 1918, a request for assistance was received from the
State health authorities of Massachusetts. An officer of the PublicHealth Service was immediately sent to take charge of service activities for the suppression of influenza in all the New England States,
and physicians and the necessary facilities were furnished to him in
sufficient numbers to handle the situation.
I n taking up this work the Public Health Service was handicapped
at the beginning by the lack of necessary funds and medical personnel in adequate numbers. This difficulty was remedied by the
passage by the Congress on October 1, 1918, of a resolution appropriating $1,000,000 for use in combating the epidemic of influenza
and by the perfection of arrangements with the Volunteer Medical
Service Corps and the Eed Cross whereby members of these corps
were mobilized for duty with the Public Health Service to combat
the epidemic which soon swept over the country.
From the beginning the activities of the Public Health Service
were closely coordinated with those of the State departments of
health and local authorities. Assistance was furnished only in those
cases where the facilities of the State and local authorities were
inadequate to. cope with the situation, the purpose being not to sup^
plant but rather to supplement their efforts and in no case to per86429°—Fi 1918



8

114

REPORT ON T H E FINANCES.

form work which could properly be discharged by either State or
local agencies or the citizens themselves.
A long step forward in the field of public health was accomplished
with the approval by the President on October 27, 1918, of Senate
joint resolution No. 63, establishing a reserve corps in the Public
Health Service.
The need for an organization of trained sanitarians ^ and health
officers whose services could be utilized in combating epidemics of
disease and in connection with other emergencies of a public health
"character has long been felt to be a matter of urgent necessity. The
passage by Congress of this measure insures the more efficient
handling of such epidemics and emergencies as may arise in the
future. Eegulations authorized under the terms of this act are
now in course of formulation.
TREASURY RED CROSS AUXILIARY.

A Eed Cross, Auxiliary, composed of women employees of the
Treasury, was organized under the leadership of Mrs., W. G. McAdoo
immediately after the United States entered the war. More than
4,400 of these self-sacrificing women have devoted many hours to
this labor after the close of the official hours of the department.
The result of their work can be better understood by an enumeration
of the articles made with their own hands up to October 31, 1918:
48,14"t surgical dressings. 9,303 knitted garments. 69,322 miscellaneous articles.
1,102 4 x 4 compresses.
737 helmets.
847 9 x 9 compresses.
1,695 handkerchiefs.
3,841 sweaters.
17,090 8 x 4 compresses.
255 napkins.
1,483 mufflers.
7,245 4 x 4 wipes.
29,459 piUowcases.
2,097 pairs socks.
16,300 2 X 2 sponges.
1,097 pairs wristlets.
5,184 sheets.
194 5-yard rolls.
29,916 towels.
48 trench caps.
652 4 X 6 pads.
606 tray cloths.
529 8 x 1 2 pads.
1,41^ hospital garments.
170 wash cloths.
153 12 X 24 pads.
40 utility bags.
841 hospital shirts.
55 tampons.
520 corhfort bags.
571 pairs pajamas.
103 heel rings.
1,477 button bags. ^
2,477 influenza masks.
2,000 muslin bags.
Layettes (69 articles).
14
20
30
4
1

dresses.
jackets.
bootees.
capes.
cap.

1,116 refugee garmentsr.
6
130
604
376

men's shirts.
aprons.
chemises.
pairs drawers.

Total number of articles, 129,969.




SECRETARY OF THE TREASURY.

115

The general output of this auxiliary would care for the extracomfort needs of two or three regiments, and the total value of these
supplies is many times the amount of money expended.
The money to buy the raw materials used by the Treasury Auxiliary has been contributed in small amounts of 50 cents, $1, and $2
by all the officers and employees in the department in Washington
and in the field service. Up to the date of the signing of the armis-.
tice, November 11,1918, $53,465.57 was contributed to this great work
More than 1,000 employees of the Treasury Department were
stricken with influenza during.the epidemic of October, 1918. Many
of these employees lived in crowded rooms in the city of Washington
and were unable to obtain medical attention, adequate food, and other
comforts needed in a sickroom. The women of the Treasury Eed
Cross Auxiliary and the other employees of the department put their
services at the disposal of the Public Health Bureau. Fifty-three
graduate nurses, 18 undergraduate nurses, 34 practical nurses, 58
hospital aids, 1 chemist, 3 dietitians, and 1 matron—a total of 168
employees of the department—volunteered their services and labored
under the supervision of the Public Health Service to relieve the
suffering. The Treasury Eed Cross Auxiliary opened an emergency
diet kitchen and furnished wholesome food three times a day to
sufferers who needed it.
The noble spirit displayed by the women of the Treasury in this
work oan not be sufficiently commended. .^
CUSTOMS.

The aggregate receipts collected by the Customs Service from all
sources during the fiscal year 1918 amounted to $184,851,356, a decrease of $43,296,303 from the aggregate receipts of the preceding
fiscal year. The value of imports for 1918 amount to $2,946,059,403,
an increase of approximately $287,000,000 over those of the preceding fiscal year; while the exports during the fiscal year 1918, which
amounted to $5,928,285,641, decreased approximately $265,000,000
during the same period.
Although there has been a marked decline in customs revenue, due
to war conditions, there has been at the same time a considerable increase in the duties imposed on the customs service. These increased
activities are due in part to the increased volume of imports and
exports and the duties imposed on the service in relation thereto,
and also to additional responsibilities imposed by the acts of Congress approved June 15, 1917, and October 6, 1917, known, respectively, as the espionage act and the trading-with-the-enemy act.
Under these acts the following additional functions are intrusted
to the customs service:
(1) To issue certificates of citizenship to all American seamen;
to muster the crews of all incoming vessels, to establish their iden


\
116

REPORT ON T H E FINANCES.

tity, and to issue to them, if properly identified, identification cards
to permit them shore leave while in port; to guard all vessels to
prevent persons from landing from or boarding same without permits; to again muster the crews of all vessels upon the day of departure, to insure that no unauthorized persons depart from the
United States.
(2) To search all vessels on the day of arrival and again on the
day of departure, in order to prevent the arrival or departure of
enemy agents or other unauthorized persons, such as stowaways and
persons seeking to avoid the draft, and\ to prevent illegal communications from arriving in or leaving the United States, and also
to prevent the carrying of contraband or unlicensed merchandise
in such vessels.
^
(3) To vise the passports of all persons departing from the United
States and to prevent the illegal use of such passports or the use of
forged or otherwise illegal papers.
(4) All merchandise, exported as well as imported, is required to
be licensed by the War Trade Board. This necessitates the checking
of all import entries with the licenses issued therefor and of all
export declarations with the export licenses. I t also" requires the
examination of merchandise intended for exportation, to insure that
all merchandise exported agrees with the license and that no unlicensed merchandise is permitted to leave the United States. A
surveillance is therefore necessary over exports somewhat similar
to that ordinarily exercised by the customs service over imports.
I t also increases the customs surveillance usually required, for the
reason that the volume of our exports is at present several times
greater thari in peace times, and the volume of our imports, notwithstanding the decrease in volume of dutiable merchandise, is at least
as great as at any time prior to the breaking out of the present war.
(5) A general surveillance over tugs, motor boats, and similar harbor craft for the purpose of preventing damage to shipping by the
illegal lading or unlading of stowaways, unlicensed communications,
or merchandise, and a supervision over the movement and anchorage
of vessels for the same purpose.
^
^
(6) The collecting and compiling of special statistics for the use
of the W a r Trade Board, the United States Shipping Board, and other
governmental agencies in the prosecution of the war.
I n addition to these activities, the customs service has been required
to make more frequent statistical reports in order to facilitate the
operations of the War Trade Board and the United States Shipping
Board. I n addition to the reports formerly made to the Department
of Coinmerce, the customs service has during the past fiscal year
made such\statistical reports each 10 days to the United States Shipping Board, the War Trade Board, and the Department of Commerce.




SECRETARY OF THE TBEASURY.

117

In order to do this, the reorganization of the work of compiling statistics of imports and exports commenced during the fiscal year 1917
has been perfected and completed and the necessary data is now being
furnished promptly, to the satisfaction of all governmental agencies
interested.
I n order to perform the increased duties imposed upon the customs
service the department was compelled to undertake a large number of
transfers, detailing men from interior ports of entry at which the
business had fallen off to seacoast ports, and also from the inside
force of the offices of collectors of customs to outside work on the
docks and piers. Even with this shifting of force it was necessary
to apply to Congress for an increased appropriation of $300,000 for
the purpose of enforcing the provisions of the trading with the
enemy act and espionage act.
On February 26, 1918, the Secretary of the Treasury promulgated
regulations, which were approved by the President, vesting in collectors of customs certain powers under the espionage act and Execu' tive order of December 3, 1917, relative to the anchorage and movements of vessels in the navigable waters of the United States during
the period of the war, which included the special licensing of all
lighters, barges, tugs, motor boats, sailboats, and similar craft operating in the harbor or waters of any port of entry. I n pursuance of
these regulations proper safeguards have been placed over the lading
of munitions and the anchorage of munition carrying vessels, and a
uniform procedure has been adopted along the entire seaboard of the
country for the strict supervision over the movements of harbor craft
and coastwise vessels.
REPRESENTATION OF TREASURY ON WAR TRADE BOARD.

The Secretary of the Treasury has continued to be represented on
the W a r Trade Board, thus keeping that board in touch with the
financial policies of the Treasury Department and securing for the
Treasury Department the benefit of full information in. regard to
the trade and blockade policies of the War Trade Board.
THE INTERNATIONAL HIGH COMMISSION.

The International High Commission, which was organized to carry
out the recommendations bf the First P a n American^ Financial Conference, has continued its program during the past year with the
purpose of fostering closer commercial relations between the countries
of the American Continent by the elimination of the obstacles to such
commerce due to lack of uniformity of commercial legislation and
to vexatious and conflicting administrative regulations. The fact
that in each of the Eepublics of the Western Hemisphere there is




118 ,

REPORT ON T H E FINANCES.

now an organized group of jurists and financiers, under the leadership of the respective ministers of finance, cooperating for the purpose of removing such obstacles and bent on securing greater protection and security for all commercial transactions, is a tribute to the
growing spirit of Pan Americanism, and of international solidarity.
Effective technical agreements dealing with commercial and financial matters must be formulated if the expansion of the commerce of
all the countries of America is to proceed upon a satisfactory basis
fundamentally sound in character. The commission, therefore, has
addressed itself to the assembly and analysis of information concerning the underlying problems of international commercial relations in
this hemisphere. I t was furnished by the P a n Ameirican Financial
Conference of 1915 withV program unmistakably technical and nondiplomatic, the adherence to which and realization of which clearly
constitutes a mission quite apart from that of pther national or international agencies previously established. The greater, stability and
ease of international commerce is the goal toward which all the preliminary studies, projects, and correspondence of the International
High Commission and its central executive council steadily converge.
The work of the commission is demonstrating the practical utility of
an organization specifically- charged with the duty of cooperating
with the.industrial.and financial communities of the American nations in constructing an enduring framework of international commercial legislation.
The- chief topics to which the council requested the respective
national sections to give special attention during the year 1918 were
as follows:
(1) An international gold clearance fund treaty draft; (2) an
international treaty draft concerning commercial travelers and their
samples; (3) negotiable instruments legislation, including bills of
exchange, checks, bills of lading, and warehouse receipts; (4) the
procedure for the arbitration of commercial disputes; (5) the further
ratification of the trade mark, copyright, and patent conventions of
1910, especially with a view to the early inauguration of the trademark registration bureaus at Habana and Eio de Janeiro in accordance with the trade-mark convention.
The treaty draft concerning the international gold clearance fund
has met with increased favor. Several Latin American Governments
have signified their acceptance of it in principle. Negotiations are
now beirig conducted through the Department of State, and definite
results are expected in the near future.
Th6 convention concerning commercial travelers and their samples
has been accepted by nearly two-thirds of the American Eepublics,
and is rapidly being negotiated through the proper diplomatic charinels, having already been concluded between Uruguay and the United




SECRETARY OF THE TREASURY.

'

119

States. So far as the United States is concerned, this convention
will be administered by the Department of Commerce, the officials
of which have lent the most cordial cooperation to the International
High Commission in the early stages of the solution of this important
problem of simplifying and standardizing the treatment of commercial travelers and their samples. .
^
In pursuance of the instructions of the commission, at its meeting
in Buenos Aires in the spring of 1916, the council has prepared and
distributed reports on bills of exchange, checks, bills of lading, and
warehouse receipts. The council has urged upon the American
Eepublics the adoption of either The Hague rules on bills of exchange
as modified at the meeting in Buenos Aires or the United States
negotiable instrum'ents act. So far as legislation relating to checks
is concerned, it has recommended The Hague rules on checks as
drafted at the Second Hague Conference of 1912; while with reference to bills of lading and warehouse receipts it has followed the
recommendations of the commission adopted at the Buenos Aires
meeting, in presenting as the basis of national legislation the wellknown uniform acts of the United States on these subjects.
With the assistance of notable jurists in all the sections of the commission, the council was able to prepare a report comparing The
Hague rules in the form recommended by the commission with all
existing American bills of exchange legislation, demonstrating beyond question the advantages of uniformity on the basis of The
Hague system. I t is interesting to note that in so important a field,
one involving all the complex relationships of law, which in LatinAmerican countries mean at least fully as much as they do in our
own country, the commission has been able, after a full and detailed
exchange of views, to secure with relative promptness tangible and
gratifying results. Already the National Congress of one Eepublic
has under consideration a measure designed to be incorporated in
its national code of commerce substantially enacting the Hague
rules in the form recommended by.the council. The council has received assurance that the national legislatures of four other republics will have measures introduced as soon as they are again convened. When it is realized that alterations of this character mean
basic modifications in existing commercial codes and not merely the
amendment of single statutes or of rules of common law, as with us,
it will be seen that our recommendations in this regard must have
had considerable merit even to have gone so far in a period of little
more than a year.
Attention, too, has been given in several countries to the Federal
bills-of-lading act approved August 29, 1916. The provisions of the,
act were made practically operative in Nicaragua during the past
year. Several series of letters on the subject have been circulated.:




120

REPORT ON T H E FINANCES.

The council has again emphasized the importance of adequate
warehouse-receipts legislation in the commercial development of
countries ambitious to increase the exportation of staple commodities, as well as to make more liquid and readily regulated the process
of exportation. The warehouse-receipts act recently adopted in one
of the American Eepublics demonstrates unmistakably the influence
of the uniform act of the United States.
The arbitration of commercial disputes under the model agreement proposed by the Chamber of Commerce of the United States
has proceeded during the past year in a. satisfactory manner, so far
as the citizens of Argentina and the United States are concerned;
and agreements analogous to the one concluded between the Bolsa de
Comercio. of Buenos Aires and the Chamber of Commerce of the
United States have now been concluded between the latter body
and the chambers of commerce of Montevideo and Guayaquil.
Chambers of commerce in other countries ^ report increased interest
in the subject, and the council expresses renewed hope of stimulating
recourse to this direct, inexpensive, and expeditious method of settling commercial disputes.
I n the annual report of last year attention was drawn to the
fact that enough countries had ratified the convention concerning
trade-marks to make it operative for North and Central America
and the West Indies. Pursuant to the stipulations of the convention itself, the Cuban Government in December, 1917, took the first
formal step with a view to set on foot the bureau at Habana. Two
more ratifications are still necessary to make it possible for the Brazilian Government to inaugurate the bureau at Eio de Janeiro; but
the hope is entertained that no long time will elapse before that
bureau may be established and thus the protection of industrial
property will become truly continental.
For the important position of director of the bureau at Habana
a happy selection was made in the person of Dr. Mario Diaz Irizar,
who visited Washington soon after his appointment in order to
consult with the central executive ^couricil. Conferences were arranged relative to the technical regulations and procedure as well
as to the financial resources of the new bureau. The office of the
commission extended all the assistance possible to Dr. Diaz Irizar in
formulating the technical regulations of the bureau and in other ways.
The financial contribution of this Government and the maintenance
of the bureau were made possible in the deficiency act approved November 4,1918, which appropriated $56,450 for the purpose. Similarly,
the quota of the United States toward the cost of erecting a permanent home for the bureau will have to be provided for in due course,
in accordance with the terms of the convention providing that the
expenses of the bureau are to be borne in the same manner and
ratio as those of the Pan American Union—-that is, upon the basis




SECRETA.RY OF THE TREASURY.

121

of population. The unremitting effort of the council has been constantly directed to making this important convention operative, convinced, as it has been, that no more important safeguard for those
engaged in international commerce can be found than in the protection of their trade-marks and other factors of good will. The
council 'has arranged for simultaneous meetings of the various sections to be held at stated intervals, and the chief topic at the first
series of meetings was the ratification and operation of the trademark convention. The successful operation of these bureaus under
the convention of 1910 will confer lasting practical benefits upon
the commerce of all the countries participating, particularly upon
that of the United States.
^
Eenewed interest has been aroused in the patent and copyright
conventions, and the office of the council has cooperated with the
Department of State and the Eegister of Copyright in bringing
about an exchange of the catalogue of copyright entries of the United
States for analogous publications, where, such exist, in the Eepublics
participating in the work of the commission.
With the complex subject of customs administrative regulations
and classification of merchandise the council has been constantly
occupied since the last annual report was submitted. A large volume
of technical correspondence between the ministers of finance and the
office of the council in Washington has resulted in certain concrete
accomplishments. At this time the following facts may be mentioned as of special interest:
The international classification of merchandise for statistical purposes, recommended by the Brussels Conference on Commercial Statistics of 1913 and approved at the meeting of the International High Commission at Buenos Aires
in 1916, will be followed by four countries, and is now being given serious consideration by three others. The Department of Commerce of the United States
is about to publish the commercial statistics of the United States for the year
1917, rearranged in accordance with this international classification. The value
of uniformity in this regard can not be too highly emphasized nor can the commission place too much weight upon the value of the use therein of the uniform money of account formally adopted by the commission. This unit, tentatively denominated the Panamericano, has a theoretical weight of 0.33437
gram gold and is consequently equivalent in value to one-fifth of the United
States dollar. An "American franc " of this sort may rapidly become popular
in international bookkeeping, and even in other types of commercial transactions, and it is perhaps not too rash to look ahead to the day when further
stimulus to the commerce of this hemisphere may be afforded by the use of a
coin of this value which would circulate more freely even than our dollar,
because of its ready approximation to the majority of monetary units of Latin
America.
•
Venezuela has adopted practically all the regulations concerning simplification of consular and harbor regulations, with one or two minor exceptions.
Costa Rica, El Salvador, Honduras, Nicaragua, Guatemala, the Dominican Republic, Cuba, and Peru report the adoption of various recommendations con-




122

«

REPORT ON THE FINANCES.

cerning sanitary visit to ships, simultaneous loading and unloading of vessels,
and standardization of port dues. Nicaragua has adopted recommendations
concerning uniform consular documentation.

Because of the pressing particular interest on the part of exporters
in the secure transaction of conditional sales, the council, in cooperation with the conferences of commissioners on uniform State laws
and with other bodies interested in this subject, has prepared and
proposes to present to the several sections a printed repoit in translation and with commentary of the unifonn conditional sales act
recommended to the several States of this country by the Twentyseventh Conference of Commissioners on Uniform State Laws.
There is reason to hope that substantial progress may be achieved by
the commission in securing greater facility and protection for the
transaction of installment sales.
The vast subject of transportation facilities between the Eepublics
of the American Continent has been the subject of careful and unremitting study by the council. This problem is one that will be made
the Subject of constant interchange of views between the respective
national sections. With reference to postal communications, little is
to be recorded, inasmuch as nearly all Governments are raising instead of reducing postal charges. The commission has been active
in endeavoring to bring about the adjustment of difficulties and the
renewal of the parcel-post convention between Chile and the United
States, and this convention is again in force!
As to cable rates, better cable facilities, and the important subject
of the establishment, operation, and control of wireless telegraph and
telephone facilities, the commission is able to report that direct
telegraph lines are being established on the east coast of South
America, as well as more direct communication in the West Indies,
and that a vigorous progr,am of expansion is being followed by
various wireless telegraph companies. Measures looking to governmental control of wireless systems have received the careful attention of various national sections of the commission.
The commission is considering how it may best facilitate the work
of the perma-nent P a n American railway committee and the establishment of unbroken trunk lines of railways with their corresponding systems of short lines connecting the northern and southern
Eepublics. One of the resporisibilities of the commission is to facilitate the study of international railway-gauge regulations and interriational agreement on customs examination of railway freight.
Similarly, every effort is being made to cooperate with existing agencies in promoting more direct, speedy, and economical maritime
transportation facilities between the southern and northern nations,




SECRETARY OF THE TREASURY.

123

an element of primary importance in the development of not only
commercial but other types of relationships, upon ari enduring basis.
Note must be taken of the cooperation of various bodies which have
appointed committees to assist the International High Commission—
the American Bankers' Association, the Conference of Commissioners on Uniform State Laws, the United States Chamber of Commerce, and the Foreign Trade Council.
Finally, if it is the pleasant duty of the council to report substantial progress in the work of the commission and general agreement
as to its practical character, it is no less under the pleasant obligation of expressing its thanks to the diplomatic representatives of
Latin America in Washington and to the Department of State and
diplomatic representatives of the United States in Latin America
for unfailing courtesy and a sincere spirit of cooperation. The
measure now I under consideration for the further prosecution of the
plans of the commission, and in turn the carrying into effect of the
resolutions of the First Pan American Financial Conference, will
demonstrate still more clearly the value of this cooperation on the
part of business community and governmental representatives.
PUBLIC BUILDINGS.

The paramount demands for labor, material, and transportation
facilities for war purposes demonstrated the need of curtailing, as
far as possible, the expenditures of public funds for other purposes
which could be postponed without detriment to the public interest.
I t was felt that this policy should be applied to the construction of
public buildings, particularly as the cost of material and labor was^
increasing with such rapid strides that the point was soon reached
where it appeared no longer to the Government's interest to continue
to let new contracts for construction work. Accordingly, on December 26, 1917, the Secretary directed that no new buildings or extensions should be placed under contract unless their urgency was
established to the satisfaction of the department. The purpose to
issue this order, and the reasons therefor, were communicated to
the Members of Congress in whose districts public buildings had
been authorized to be constructed, and request was made that the
several communities affected be notified. The patriotic spirit in
which the Treasury's course was received was extremely gratifying.
The changed conditions brought about by the conclusion of the
armistice and the manifest inability of Germany to renew the conflict emphasized the importance of resuming, with as little delay as
possible, the normal industrial activities of peace. I t was felt that
construction work, which" had been delayed because of the necessities
of war, should be resumed, and the Secretary therefore, on November
15, 1918, instructed the Supervising Architect to invite bids for the




124

REPORT ON THE FINANCES.

construction of new buildings and extensions authorized by the
Congress.
*
The postponement during the period mentioned above of the letting
of contracts for the construction of public buildings under the control of this department did not meari that the other activities of the
Supervising Architect's Office ceased. That office is charged with the
administrative work connected with the equipment, care, maintenance,
and repair of the 1,200 public buildings hitherto completed and put in
coinmission. I n addition to that work, which in itself is very extensive, the Supervising Architect's Office has proceeded with the construction of buildings already under contract. There have been completed during the fiscal year 68 buildings and 4 extensioris, represcinting a rate of progress of a buildiag or extension completed, ready for
occupancy, on an average of approximately every five days. This has
been accomplished in spite of extremely unfavorable conditions. New
construction work has also been contracted for in connection with
marine hospitals, quarantine stations, and certain other projects considered urgent.. I n addition to this work, the Supervising Architect's
Office has rendered architectural and engineering services to other
executive departments and independent establishments under the authority contained in section 35 of the omnibus public building act,
approved June 25, 1910, and section 1 of the so-called housing act,,
approved May 16,1918.
•
^

'

COAST GUARD.

I n accordance with the act of January 28, 1915, the Coast Guard
in its entirety has operated throughout the fiscal year as a part of the
naval forces in the prosecution of the war, under the direction, of the
Secretary of the Navy.
The utilization of this highly efficient humanitarian branch of the
public service for war purposes bears out the wisdom of its dual
organization, and there is no doubt that at the close of the war it will
resume its functions under this department with its efficiency unimpaired for the active duties of saving life and property and other
highly important, services of a peace-time character.
GENERAL SUPPLY COMMITTEE.

The price of practically all supplies required by the Government
has increased materially during the past year.^ The contracts which
the Secretary negotiated through the niedium of the General Supply
Committee show, however, substantially lower prices than obtained in
wholesale and retail markets. The demands of the executive departments and independent^ establishments of the Government for all
kinds of supplies and equipment have increased largely on account of
war activities. I n some instances contractors, because of these extraordinary demands, have been unable to fill orders, particularly for im


SECRETARY OF THE TREASURY.

125

mediate delivery. As a consequence, frequent purchases necessarily
have been made in the open market at the best prices obtainable. The
reported purchases to the committee in connection with the contracts
for the fiscar year 1918 exceeded $10,000,000, as compared with
$3,500,000 for the fiscal year 1917.
The creation of the General Supply Committee as a contractirig
agency for the civil departments of the Government has been of very
real value and a great improvement over the old method of contracting for Government supplies. The experience of the last few years,
however, has clearly demonstrated that much money could be saved
the Government and greater efficiency obtained if the powers of the
committee were extended to make it a purchasirig and distributing
bureaii as well as a contracting agency. I t is therefore earnestly
recommended that in the interest of economy and efficiency a'general
bureau of supplies be created in the Treasury Department for the
purpose of contracting for, purchasing, and distributing supplies and
equipment for the Government service in Washington.
Undoubtedly large quantities of supplies and"^ equipment will go
into disuse when the war activities of the Governinent cease. The
bureau of supplies here suggested should also be clothed with authority to collect all material, supplies, and equipment no longer
required for use by the executive departments and independent establishments for reissue to the Government service, as required, or for
condemnation and sale,'provided such action is deemed expedient.
P A N A M A CANAL.

The general fund of the Treasury was charged during the fiscal year
1918 with $20,787,624.92 for Panama Canal account. Of this sum
$4,073,522.73 was for construction work, and the difference, $16,714,102.19, for fortifications and miscellaneous accounts. The total expended for the canal, construction, fortifications, etc., from the general
fund to June 30, 1918, not reimbursed from sale of bonds, was
$301,208,731.94.
By the act of September 24, 1917, as amended. Congress authorized
an issue of $225,000,000 in lieu of the unissued Panama Canal bonds,
and this amount was included in the general authority for the issue
of Liberty bonds.
CONTINGENT FUND.

I respectfully request that the Congress appropriate for the fiscal
year 1920 the sum of $15,000 as a contingent fund for the Secretary
of the Treasury, a like amount having been appropriated for the fiscal
year 1919.
Out of this fund improved methods and economies are being effected
and duplication of work eliriiinated.




126

EEPORT ON THE FINANCES.
I

FINANCES.

The foUowing statements showing receipts, disbursements, estimates, and the condition of the Treasury are submitted:
EECEIPTS AND DISBURSEMENTS.

Fiscal year 1918,
The receipts and disbursement of the Government during the fiscal
year ended June 30, 1918, ;were as follows:
(See details on pp. 133 to 142.)
GENERAL FUND.

Receipts into the general fund, including various trust-fund receipts, but excluding postal revenues:
Customs.
$182, 758,988. 71
Internal revenue—
Income and excess-profits taxes
$2, 838, 999, 894. 28
Miscellaneous
857,043,590.53
^
3,696,043,484.81
Sales of public lands
1,969,455.31
Miscellaneous
. . . . . , 293,238,656.91
To^l ordinary receipts
Disbursements from the general fund for current expenses and capital outlays, including
various trust-fund disbursements, but excluding postal service paid from postal revenues and Panama Canal disbursements:
For civil establishment—
Legislative establishment
Executive proper, including Tariff
Commission, War Trade Board,
Alien Property Custodian, and National Security and Defense
State Department
Treasury Department proper
Bureauof War Risk Insurance.......
Public buildings, construction, sites,
and equipment
,
War Department proper
Department of Justice
Post Office Department proper
Postal deficiencies for prior years
Navy Department proper
,.
Interior Department proper
Department of Agriculture
.
Department of Commerce
Department of Labor
.^
United States Shipping Board
Federal control of transportation systems
-.




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

16,042,052. 69

9,822,595. 51
10,709,278.58
100, 778,915. 43
^68,862,563.40
12,206,527.03
18, 233,466. 75
13, 232, 380. 79
1,934,320.44
2,221,094. 54
1, 834, 613. 77
35, 271,820. 52
46, 759, 461. 46
13, 301,156. 49
5,916, 881. 45
862,026, 889. 34
150,000,000.00

1 Exclusive of allotments of pay.

4,174,010,585.74

SECRETARY O F . T H E TREASURY,

127

Disbursements from the general fund for current expenses and capital outlays, including
various trust-fund disbursements, but ex-,
eluding postal service paid from postal revenues and Panama Canal disbursements—Con.
For civil establishment—Continued.
War Finance Corporation
$55,000,000. 00
Food and Fuel Administrations
55, 330, 675. 75
Council of National Defense
1,093, 858. 55
Interstate Commerce Commission
5, 399, 618. 66
Federal Trade Commission
1,466,423.65
Federal Board for Vocational Education
1,412, 882. 74
Employees' Compensation Commission.
. 719,936.26
Smithsonian Institution and National
Museum
665,728.81
Other independent offices
2,717,927.93
District of Columbia
14,406,410.75
—
$1,.507,367,^81. 29
For War Department—
^
For Military Establishment, $5,645,584,931.93, as follows—
Support of the Army, $4,412,436,479.69;
Military
Academy,
$1,211,737.93, National Guard,
$39,609,063.34; • fortifications,
$1,144,113,490.49;
arsenals,
$20,678,157.89; civilian military
training camps, $5,290,124.59;
registration and selection for
military service, $13,517,308.77;
military posts and miscellaneous, $8,7'28,569.23
^ 5, 645, 584, 93L 93
For rivers and harbors
29, 593, 581. 89
For war miscellaneous,. civil, including national homes, $5,466,602.20;
soldiers' deposit fund,/$479,803.14;
cemeteries, parks, clainis, etc.,
$7,309,952.98
9,170,109.86
5, 684, 348, 623. 68
For Naval Establishment, including construction of new vessels, machinery, armament, equipment, improvement at
navy yards, and miscellaneous
^ 1, 368, 642, 793. 84
For Indian Service
30, 888, 400. 03
For pensions
181,137, 754.12
For interest on the public debt
197, 526, 608. 36
8, 969, 911, 66L 32 .
Deduct difference arising in adjustment of miscellaneous
accounts

3, 379, 395. 29

Total ordinary disbursements

8, 966, 532, 266. 03

Excess of ordinary disbursements

4, 792, 521, 680. 2




Includes aUotments of pay.

128

^

REPORT ON T H E FINANCES.

Special disbursements:
Purchase of obligations of foreign governments
$4,739,434,750.00
Purchase of farm-loan bonds
65,153, 254.15
Total special disbursements
Panama Canal:
Receipts from tolls, etc.
Disbursements for canal

$4,804, 588,004.15
6, 414, 570. 25
20, 787, 624. 92

Excess of canal disbursements

14, 373, 054. 67
9,611,482,739.11

Public debt—issues and deposits:
First Liberty loan.
Second Liberty loan.
Third Liberty loan
War-savings certificates
Certificates of indebtedness
One-year Treasury notes
Deposits to retire Federal reserve bank
notes and national bank notes
Deposits for postal-savings bonds
Total public-debt receipts...".

523,112, 200. 01
3, 807, 863, 516. 00
3,243,045,138.47
352, 769, 265.13
9, 017,»648,500. 00
19,150, 000. 00
10, 279, 650. 00
1,020, 940. 00
16, 974, 889. 209. 61

Public debt—redemptions:
Fu-st Liberty loan
Second Liberty loan
Third Liberty loan
War-savings certificates
Certificates of indebtedness
One-year Treasury notes
Federal reserve bank notes and national
bank notes retired
Miscellaneous redemptions, public d e b t . . .
Total public-debt disbursements

656,000.00
61,050,0,00.00
14, 935,500. 00
2, 971, 967. 80
7, 578, 271, 732. 00
27, 362, 000. 00
21, 611,.225. 00
20, 650. 33
7, 706, 879, 075. i 3

Excess of public-debt receipts over public-debt disbursements
,
...\
Excess of total disbursements over total receipts

9,268,010,134.48
343,472, 604. 63

General-fund balances:
Balance in general fund June 30,1917 (exclusive of disbursing
. officers' credits)
Excess of general-fund disbursements for year

967, 247,123. 48
343,472, 604. 63

Balance in general fund June 30, 1918 (exclusive of disbursing officers' credits)
Disbursing officers' credits, June 30, 1918

623,774,518.85
724, 382, 518. 81

Deduct interest checks and coupons outstanding
Balance in general fund, June 30, 1918, free of ciurent obligations,.
..,




1, 348,157, 037. 66
28, 809, 673. 52
1,319,347,364.14

SECRETARY OF T H E TREASURY.

129

SUMMARY OP GENERAL F U N D TRANSACTIONS.

Fiscal year ended J u n e 30, 1918.
Ordinary receipts, including various trust-fund
. Receipts.
Disbursements.
. receipts, but excluding postal revenues
$4,174, 010, 585. 74
Disbursements for current expenses and capital outlays, including various trust-fund disbursements, but excluding postal service
paid from postal revenues and Panama
Canal disbursements
$8, 966, 532, 266. 03
Special disbursements
'. 4, 804, 588, 004.15
Panama Canal receipts, tolls, etc
6, 414, 570. 25
Panama Canal disbursements
20, 787, 624. 92
Public debt—issues and deposits
16, 974, 889, 209. 61
PubHc debt—redemptions
7, 706, 879, 075.13
Total receipts into the general fund
Excess of disbursements over receipts
Grand total

21,155, 314, 365. 60
343, 472, 604. 63
21, 498, 786, 970. 23 21, 498, 786, 970. 23

POSTAL SERVICE.
(Exclusive of Post Office Department proper, which is included in "civil establishment."]

Postal-revenue receipts
Postal service paid from postal revenues
Excess of receipts

,.

$344, 475, 962. 24
324, 849,188.16
19, 626, 774. 08

UNITED STATES NOTES (GREENBACKS).

Issues to replace worn and mutilated notes
$212, 820, 000
Worn and mutilated notes retired
212, 820, 000
The redemptions during the year of the notes unfit for circulation necessitated the
issue of a like amount thereof to maintain the outstanding aggregate of the notes as
required by law.
GOLD R E S E R V E F U N D .

Balance in reserve fund June 30, 1917...,
$152,979, 025. 63
Balance in reserve fund June 30, 1918.
152, 979, 025. 63
The redemptions of notes for gold from the reserve fund during the year were:
United States notes, $8,285,090.
As the redeemed notes were exchanged each day for gold in t h e general fund, the
reserve was maintained at the fixed sum required by law, including $2,979,025.63
tax on additional circulation received under act ot May 30, 1908.
86429°—FI 1 9 1 8 — 9




130

REPORT ON T H E FINANCES.
TRUST FUNDS.

(Held for the redemption of the notes and certificates for which they are respectively
pledged.) ,
Gold coin and b u l l i o n . . . $1,026, 631, 669
Silver dollars
379, 211,468
Silver dollars 1 8 9 0 . . . . . .
1,851,114

Gold certificates
outstanding
$1,784,480, 669
Less amount in the
Treasury
.....
757, 849,000
Net

1,026, 631, 669

Silver certificates outstanding
Less amount in the
Treasury
Net...

409,215, 000
30,003, 532
379,211,468

Treasury notes (1890)
outstanding
Less amount in the
Treasury

1, 858,000
6,886
1, 851,114

1,407,694,251

Goldcoin

Net

1,407, 694, 251

GOLD SETTLEMENT FUND, FEDERAL RESERVE BOARD.
"... $1,205,082,010
SINKING FUND.

The securities redeemed on account of the sinking fund, included
in general-fund disbursements, were as follows:
Fractional currency
One-year notes of 1863
Funded loan of 1891
Refunding certificates
Funded loan of 1907
.^
Compound-interest notes
Old demand notes
Five-twenties of 1864
Seven-thirties of 1864 and 1865
Totai

^.




'.

$1, 430.33
10.00
100.00
360.00
18, 200.00
260.00
140.00
50.00
100.00
20,650.33

SECRETARY OF T H E TREASURY.
CONDITION OF THE TREASURY J U N E 30,

<

131

1918.

The public debt of the United States at the close of the fiscal year
1918 is set forth in detail, as follows:
N
Interest-bearing debt:
Loan of 1925, 4 per cent
Loan of 1908-1918, 3 per cent
Consols of 1930, 2 per cent
Panama Canal loan, 2 per cent
Panama Canal loan, 3 per cent
Postal savings bonds, 2J per cent
Conversion bonds, 3 per cent
One-year Treasury notes, 3 per cent
Certificates of indebtedness
War sa^dngs certificates
First Liberty loan, 3^ per cent
Second Liberty loan, 4 per cent.
Third Liberty loan, 4i per cent

$118, 489, 900.00
63, 945, 460.00
"... 599,724,050.00
74,901,580.00
60,000,000.00
11,060, 700.00.
28, 894,^ 500.00
19,150,000.00
1, 706, 204,500.00
349, 797, 297.33
\... 1, 988, 791, 294.62
3, 746, 813, 516.00
3, 228,109, 638.47
$11, 985,882,436.42

Debt on which interest has ceased:
Funded loan of 1891..
Loanofl904
'
Funded loan of 1907
Refunding certificates.
Olddebt
Certificates of indebtedness, m a t u r e d . . . .

24, 850.00
13,050.00
487,900.00
11, 200.00
900,550.26
18,805,000.00
20,242,550.26

Debt bearing no interest:
United States notes (greenbacks)
Bank notes, redemption account
Old demand notes
Fractional currency.

346, 681, 016.00
36, 903, 592.00
53, 012.50
6, 845,137.82
390,482,758.32

Total interest and noninterest bearing debt, exclusive of
certificates and notes offset by coin and silver bullion..

12, 396, 607, 745.00

CASH IN THE TREASURY JUNE 30, 1918.
[From revised statements.]

Reserve fund:
.
Gold coin and bullion

$152, 979,025.63

Trustfunds:
Gold coin and bullion
Silver dollars
Silver dollars of 1890.
-

1, 026, 631, 669.00
379,211,468.00
1, 851,114.00
.

Gold settlement fund. Federal Reserve Board:
Gold coin and bullion




1,407,694,251.00
1,205,082,010.00

132

REPORT ON T H E FINANCES,

General fund:
In Treasury offices—
Gold c o i n . . . . I
Standard silver dollars
United States notes
Federal reserve notes
Federal reserye bank notes
National-banknotes
Certified checks on banks
.^...
Subsidiary silver coin
'..
Minor coin
'
Silver bullion (at cost)
Unclassified (unassorted cun-ency,
etc.)
\
Public debt paid, awaiting reimbursement

$95, 262, 262.46
40, 927, 821.00
6, 638, 204.00
28, 319,840.00
186,.895.00
2,045,480.00
42, 014.03
14, 878,278.45
3,132, 800.04
13, 372, 347.04
1,536,896.08
1, 944, 354.41

'• $208,287,192.51
In Federal land banks
In Federal reserve banks.
I n transit.

430,000.00
63, 817, 988.46
21, 559, 883. 75
85, 377,872.21

In special depositaries—
Account of sales of certificates of indebtedness
Liberty loan deposits
Income and excess profits tax deposits.
In national-bank depositaries—
To credit of Treasurer of the United •
States
To credit of other Government officers.
In transit

587, 542, 325.04
10, 079, 683.47
893,716', 816.93
•

1,491,338,825.44

42, 559, 384.43
10, 935, 494.40
24, 027, 493. 24
77,522,372.07

In treasury of Philippine Islands—
To credit of Treasurer of the United .
States
To credit of other Government officers.

580, 583.20
4, 412, 019.15
4,992,602.35

In foreign depositaries—
To credit of Treasurer of t h e United
. States
Deduct current habihties—
National-bank note 5
per cent fund
$27,951,572.12
Less notes in process
of redemption
19,103,938.63
^
Treasurer's checks outstanding
Post Office Department balance
Board of trustees. Postal Savings System
balance
Balance to credit of postmasters, clerks
of court, etc
-..
Undistributed assets of insolvent national
banks.'...



11,026, 503.50
1,878,975,368.08

8,847,633.49
55^, 921. 37
31, 378,913. 29
7,369,091. 83
37,140, 675. 93
910, 63L 76

SECRETARY OF THE TREASURY.
General fund—Continued.
Deposits for—
Redemption of Federal reserve notes
(5 per cent fund)..
Redemption of Federal reserve bank
notes (5 per cent fund).
Retirement of additional circulating
notes, act of May 30, 1908
Miscellaneous redemption accounts...

133

$88, 462, 375. 00
583,700.00
893, 595. 00
17, 900, 250. 20
$194,045,787.87

Balance in the Treasury, June 30, 1918, as
per Financial Statement of the United
States Government
'.[
Settlement warrants, coupons, and checks
outstanding—
Treasury warrants
Matured interest obligations
Disbursing officers' checks...'.

1, 684, 929, 580. 21
36, 606, 344. 79
^ 28, 809, 673. 52
300,166,197. 76
'

Balance in the Treasury, June 30, 1918, free of
current obligations
^
'

365, 582, 216. 07

n , «19, 347, 364.14

Comparison of receipts, fiscal years 1917 and 1918.
1918

Customs
Internalrevenue:
I n c o m e a n d excess profits
taxes
Miscellaneous
•
Sales of p u b l i c l a n d s
Consular fees
Chinese i n d e m n i t y
Prices on coinage, bullion deposits, etc
P a y m e n t of i n t e r e s t b y Pacific
railwr ys
:
T a x on circulation of n a t i o n a l
banks...
I n t e r e s t on obligations of
foreign G o v e r n m e n t s
I n t e r e s t on p u b l i c d e p o s i t s . . .
P r e m i u m on war-risk insurance.......
N i g h t services, c u s t o m service.
C u s t o m s fees, fines, p e n a l t i e s ,
etc
Proceeds of m i l i t i a p r o p e r t y
lost or destroyed
Sales of n a v a l vessels
E a r n i n g s of radio service
N a v y h o s p i t a l a n d clothing
funds, fiines a n d forfeiture^,
etc...
Sales of ordnance m a t e r i a l , etc.
L a n d fees
R e v e n u e s of n a t i o n a l p a r k s . . .
Fees on l e t t e r s p a t e n t
D e p r e d a t i o n s on p u b l i c l a n d s .
Deposits for s u r v e y i n g public
lands..
Oregon a n d Qaliforaia land
g r a n t fund
Proceeds of t o w n sites, Reclam a t i o n Service

191?

Increase, 1918.

S182,758,9S8.71

$225,962,393.38

2.838,999,894.28
8u7,043,590. 53
1,969,455.31
1,249,574. 21
269,679.76

359,685,147.50
449,681,060.23
1,892,893.23
1,507,177.09
535,070.09

$2,479,314,746. 78
407 362,530.30
76,562.08

22,484,886.35

10,957,181.73

11,527,504.62

14,458. 63

3,897.06

10,561.57

3,5^7,075.78

3,611,802.43

Decrease, 1918.

107,496,016.83
11,516,786.20

702,537.69

34,348,312.25
271,428.10

54,726.65

872,758.28

17,821.47

257,602.88
265,390.33

11,526,587.22
296,294.99

702,067.48

$43,203,404.67

10,970.53
48,604.24

107,496,010:83
10,814,248. bl
22,821,12b. 03
24,866.89
170,690.80

6,850.94
291,903.08

29i,"963.'68'
812,265.23
249,916.66
1,191,109. 28
168,113.14
2,100,947.40
36,295.08

2,315,646.51
84,786. 57

97,068.43

110,077.69

1,166,244.59
217,473.87
1,654,131.19

320,033.22
60,990.56

32,442.79
'

168,113.14

48,604.24

353,979.36
'463:021.'9i
214,699.11
48,491. 49
13.009.26

320,033.22
31,250.15

29,740.41

^ E s t i m a t e d w h e r e complete reports a r e n o t available.
2 T h e balance in t h e T r e a s u r y of $1,319,347,364.14 includes $724,382,518.81 d i s b u r s i n g officers' credits
after d e d u c t i n g o u t s t a n d i n g checks a n d is free of c u r r e n t obligations, t h e entire a m o i m t being available
for t h e future (3xpenditures of t h e G o v e r n m e n t .




134

REPORT ON THE FINANCES.
Comparison of receipts, fiscal years 1917 and 1918—Continued.
1918

Forest reserve fund
Immigrant fund
Naturalization fees
Proceeds of seal and fox skins.
Alaska fund
Judicial fees, fines, penalties,
etc
Surplus postal revenues
Estmiated increased postage..
Sales of Government property
Rent of public buildmgs,
grounds, etc
Sales of lands and buildings..
Sales to Indians
Franchise tax
District of "Columbia, general
receipts
Fimds contributed for river
and harbor improvements..
Reimbursements on account
of expenditures made lor
Indian tribes
Assessments on Federal rereserve banks, for salaries,
etc
Assessments on national banks|
for expenses of examiners..
Discount on bonds purchased,
Sale of farm loan bonds
Interest on farni loan bonds...
Miscellaneous

1917

Increase, 1918:

$3,535,239.40
1,017,216.43
569.491.50
104.194.51
306,628.49

$3,515,140.54
854,395.58
456,946.42
183,931.31
210,272.70

$20,098.86
162,820.85
112,540.08

1,146,228.14
9,557,700.75
39,073,000.00
2,104,915.32

846,432.74
5,200,000.00

Decrease, 1918.

299,795.40
4,357,700.75
39,073,000.00
230,028.79

1,874,886.53

96,355.79

479,065.70
275,082.40
176,199. 48
1,134,234.48

228,853.79
797,694.52

9,939,074.93

9,175,671. 77

763,403.16

1,249,125.00

698,450.00

$79,736. 80

550,675.00

46,988.85
1,496,306.98
1,018,392.13
2,478,943.65
6,545,000.00
289,201.84
2,187,583.21

250,211. 91
176,199. 48
1,134,234.48

157,216.99

522,612.12

110,228.14

913,110.10

583,196.88

891,552.79

126,839.34
2,478,943.65
6,54.5,000.00
289,201.84

2,448,100. 79

260.517.58

TBUST FUNDS.

Department of State:
MisceUaneous trust funds.
War Department:
Army deposit funds
Soldiers' Home permanent fund
Miscellaneous trust funds.
Navy Department:
Navy deposit fimd
Marine Corps deposit
fund
Interior Department:
Proceeds of Indian lands.
Indian moneys, proceeds
of labor
Miscellaneous trust funds.
Personal funds of patients, St. Elizabeths
Hospital
Pension money, St. Elizabeths Hospital
.
Navy Pension fund
District of Columbia:.
Miscellaneous trust-fund
deposits
Washington redemption
fund
Police and firemen's relief funds
Other trust funds
Total
Deduct—
Moneys covered by
warrant in year
subsequent to the
deposit thereof
AddMoneys received in
fiscal year but not
covered by warrant.
Ordinary receipts
Panama Canal:
Receipts from tolls, etc...




493,416.13

143,536.32

847,170.61

1,486,106.28

577,948.44
1,020.00

432,802.97
1,020.00

349,879.81
638,935.67
145,145. 47

80,409.00

177,311.27

228,344.06

239,283.88

10,939.82

2,549,723.76

2,995,668.11

445,944.35

13,696,842.00
492,258.36

10,323,313.27
212,779.99

3,373,528.73
279,478.37

66,052.01

39,877.50

16,174.51

69,077.74
2,261.86

83,966.53

437,882.93

413,">988.31

23,894.62

195,099.44

164,573.37

,30,526.07

141,172.15
8,858.81

135,895.16
6,212.39

5,276.99
2,646. 42

4,172,635,828.46

1,118,182,978.18

3,101,752,043.41

47,299,193.13

3,101,752,043.41

47,290,341.38

96,902.27

"2,'26i.'86'

264,029.43

272,881.18

4,172,371,799.03

1,117,910,097.00

14,8S8. 79

8,851.75

1,638,786.71

264,029.43

131,374,757.28

4,174,010,585.74

1,118,174,126.43

3,103,126,800.69

6,414,570.25

6,150,668. 59

263,901.66

47,290,341.38

135

SECRETARY OF T H E TREASURY.
Comparison of receipts, fiscal years 1917 and 1918—Continued.
Increase, 1918.

Decrease, 1918.

1918

1917

$523,112,200.01
3,807,863,516.00
3,243,045,138.47

$1,466,335,094.61

9,017,648,500.00
352,769,265.13
19,150,000. 00
1,020,940.00
10,279,650.00

918,205,000.00

Public debt receipts...,

16,974,889,209.61

2,428,017,799.61

15,517,881,419.60

971,010,009.60

Total receipts, exclusive of postal
Postal revenues
,

21,155,314,365.60
344,475,962.24

3,552,342,594.63
329,726,116.36

18,621,272,121.95
14,749,845.88

1,018,300,350.98

• Total receipts, including postal
21,499,790,327.84

3,882,068,710.99

18,636,021,967.83

1,018,300,350.98

TRUST FUNDS—continued.
Public debt:
First Liberty loan
,
Second Liberty loan
Third Liberty loan
,
Certificates of indebtedness
,
War-savings certificates..
One-year Treasury notes
Postal sa^angs bonds
Bank-note fund

4,390,000.00
1,794,660.00
37,293,045.00

$943,222,894.60
$3,807,863,516.00
3,243,045,138.47
8,099,443,500.00
352,769,265.13
14,760,000.00
773,720. 00
27,013,395.00

Comparison of disbursements, fiscal years 1917 and 1918.
1917

1918

Increase, 1918.

Decrease, 1918.

CIVIL ESTABLISHMENT. '

Legislative:
Senate
i.
H o u s e of R e p r e s e n t a t i v e s
Legislative, miscellaneous
Public Printer
L i b r a r y of C o n g r e s s . . ' . . . .
B o t a n i c Garden
T o t a l legislative'.
E x e c u t i v e proper:
Salaries a n d expenses
Relief, e t c . , American
citizens i n E u r o p e
U n i t e d States Tariff Commi,«;sion
,
Temporary government
for w'estTnrlian Islands
N a t i o n a l security a n d defense, executive
B u r e a u of Efficiency
Civil Service Commission.
E x p e n s e s , trading w i t h
t h e e n e m y act
Alien P r o p e r t y Custodian
W a r T r a d e Board
Total executive p r o p e r .
D e p a r t m e n t of State:
Salaries a n d expenses
Foreign i n t e r c o u r s e D i p l o m a t i c salaries .
Consular salaries
Contingent expenses
of foreign missions.
Post allowances...
Contingencies of consulates
:
Emergencies arising
in t h e D i p l o m a t i c
a n d Consular Service
Legation a n d consular premises
Relief of American
citizens in Mexico
and Germany




$1,905,816.82
5,400,249.72
914,011.58
6,238,825.27
677,107.16
38,090.88

1,444,022.38
15,238.57
14,243.92

16,042,052.69

15,174,101.43

1,512,450.53

245,848.07

228,375.33

17,472'. 74

102,760.66

557,753.03

191,872.83

42,026.50

$1,944,762.48
5,331,470.93
338,291.10
7,682,847.65
692,345.73
52,334.80

\

$3^,945.66
$68,778.79
575,720.48

454,992.37
149,846.33
100,000.00

100,000.00
7,283,577.84
101,165.80
617,550.42

53,375.85
49,000.85
357,266.35

360,000.00
218,530.30
701,289.59
9,822,595.51

644,499.27

7,230,201.99
52,164.95
260,284.07
360,000.00
218,530. 30
701,289.59

1,387,797.91

8,989,789.97

)
554,992.37

637,097.75

471,371.44

165,726.31

920,935.47
1,632,835.25

799,260.49
1,662,811.52

121,674.98

1,089,306.39
233,051.66

486,637.67

602,668.72
233,051.66

662,641.46

487,400.60

175,240.86

223,739. 64

255,640.19

31,900.55

409.78

392,867.75

392,457.97

56,149.73

55,092.00

29,976.27

1,057.73

136

REPORT ON T H E FINANCES.
Comparison of disbursements, fiscal years 1917 and 1918—Continued.
1918

•

1917

Increase, 1918.

Decrease, 1918 *

CIVIL ESTABLISHMENTS—con.
D e p a r t m e n t of State—Con.
R e p r e s e n t a t i o n of interests of foreign
governments
Relief of American
seamen
P a y m e n t to P a n a m a .
P a y m e n t to R e p u b l i c
of Nicaragua
N a t i o n a l security a n d
defense,
Departm e n t of State
Miscellaneous i t e m s . .
T r u s t funds
Total D e p a r t m e n t
of S t a t e
.''.
Treasury Department:
Salaries Secretary's office
a n d divisions thereof
C o n t i n g e n t fund for Secretary
I n t e r n a t i o n a ] H i g h Commission
Contingent expenses of
department
Customs S e r v i c e Collecting
customs
revenues
N a t i o n a l security a n d
defense.
Customs
Service
'..
Refunding excess of
deposits
D e b e n t u r e s or drawbacks
Compensation in lieu
of moieties
Miscellaneous refunds
I n t e r n a l - R e v e n u e Service—
E x p e n s e s of collecting
Refunds a n d r e l i e f s . . .
Miscellaneous
Suppressing counterfeiting a n d other c r i m e s . . .
A c c o u n t i n g offices
Miscellaneous offices
P u b l i c H e a l t h Ser^dce
E p i d e m i c diseases
P r o m o t i n g health of milit a r y forces
War-risk i n s u r a n c e Expenses
Losses
MUitary a n d n a v a l
compensation
Military a n d navaJ
• family a l l o w a n c e . . .
Mihtary and naval
insurance
N a t i o n a l security a n d
defense
Federal
Farm
Lpan
BoardSalaries a n d e x p e n s e s .
Engraving and p r i n t i n g . .
P a p e r , etc., for United
States securities
P r e p a r a t i o n a n d issue o
Federal reserve n o t e s . . .
E x p e n s e s ol o a n s . . .
LossonsUvei dollars m e Ited or broken up
Coast Guard
R e v e n u e vessels..
Independent T r e a s u r y . . .
Mints a n d assay offices...




$2,141.87

$78,253.93

.

117,177.45
250,000.00

309,741.39

2,750,000.00

250,000.00

•2,500,000.00

942,026.77
438,394.17
753,371.19

65,000.00
520,520.10
295,484.74

457,886.45

10,709,278.58

6,130,081.82

5,251,510.93

658,187.44

636,985.36

21,202.08

7,608.26

14,700.84

9,372.63

11,864.31

331,026.86

263,995.62

9,780,048.18

9,850,876.00

$76,112.06

"

• $117,177.45
59,741.39

877,026.77
82,125.93

672,314.17

7,092.58
2,491. 68
67,031.24
70,827. 82

131,305.31

90,856.23

40,449.08

3,610,706.96

2^915,797.09

694,909.87

• 12,063,204.34

16,984,021.34

4,920,817.00

9,941.58
11,439.41

20,028.42
25,482.36

10,086.84
14,042.95

12,091,679.99
3,526,742.89
587,851.16

6,974,140.11
4,352,576.25
674,918.64

232,835,99
2,067,906.51
1,102,355.86
3,183,038.62
267,758.45

171,845.97
1,647,095.49
1,045,472.69
2,654,566.15
391,032.75

825,833. 36
87,067.48
60,990.02
420.811.02
56,883.17
528,472.47
123,274.30
450,102.12

450,102.12
1,768,393.56
22,771,326.05

5,117,539.88

30,171.01
3,295,522.53

1,738,222.55
19,475,803.52

545,012.91

545,012.91

42,249,935.50

42,249,935.50
329,757.54

329,757.54

i , 198,137. 84

1,198,137.84.
200,654. 05
4,188,670.41

138,509.50
4,210,169.04

62,144. 55

508,284. 20

465,061.11

43,223.'09

19,481.02
9,716,951.78

341,377.35
300,773. 22

9,416,178.56

15,465,585.18
6,819,392.04
42,931.88
640,607. 22
1,769,947.82

5,790,021. 68
13,836.24
597,182. 64
1,395, .759.74

15,465,585.18
1,029,370.36
29,095. 64
43,424.58
374,188. 08

21,498.63

321,896.33

SECRETARY OF T H E TREASURY.

137

Comparison of disbursements, fiscal years 1917 and 1918—Continued.
Increase, 1918.

1918
CIVIL ESTABLISHMENTS—con.
Traasury Department—Con.
Public buildingsSites, construction,
and equipment
Current maintenance.
Expositions
Salaries a n d expenses, na.clonal b a n k e x a m i n e r s . .
N a t i o n a l Security a n d
Defense, T r e a s u r y Department
Increased c o m p e n s a t i o n . .
Miscellaneous i t e m s
Special funds—
Philippine
special
funds
N i g h t • services, Customs Ser\ice...•-•...
P o r t o R i c o special
fund...*
Total Treasury Department
War Department:
Salaries a n d expenses
A d d i t i o n a l emploj^ees
T e m p o r a r y office buildings
Public buildings
and
grounds
Total War Department
Navy Department:
Salaries a n d expenses
Interior D e p a r t m e n t :
Salaries a n d expenses,
office of Secretary
General L a n d Office
P u b l i c l a n d s service
P a y m e n t of u n p a i d t a x e s
on l a n d s involved in
Oregon & California R .
R . forfeiture suit
I n d i a n Office
P e n s i o n Office
P a t e n t Office
B u r e a u of E d u c a t i o n
Colleges for agriculture
and t h e mechanic a r t s . .
Geological Survey
B u r e a u of Mines
Office of S u p e r i n t e n d e n t
of Capitol Building a n d
Grounds
National p a r k s
Territorial g o v e r n m e n t s . .
Beneficiaries
Construction, etc., of railroads in Alaska
E n l a r g i n g t h e Capitol
grounas
Increase of compensation.
Interior D e p a r t m e n t . . .
Miscellaneous i t e m s
Special f u n d s R e c l a m a t i o n fund
F i v e , three, a n d t w o
per cent funds, sales
of lands
R e v e n u e s of n a t i o n a l
arks and
Hot
prings. A r k
Deposits for surveying p u b l i c l a n d s
P u b l i c schools, Alask a fund
Miscellaneous t r u s t funds

E

T o t a l Interior Department




$12,206,527.03
6,180,498.99
6,971.65

$12,116,721.40
5,761,302.59
15,369.32

$89,805.63
419,196. 40

1,006,208.37

851,475.57

154,732.80

160,535.57
1,717,754.78
263,202.11

250,917.69

160,535.57
1,717,754.78
12,284.42

637,262.16

295,979.42

341,282.42

271,178.24

305,501.02

Decrease, 1918.

$8,397.67

34,322.78
1,039,685.40

1,039,685.40
181,848,005.86

84,901,906.69

103,393,748.59

4,978,7S9.48
8,141,077.53

2,287,251.93

2,691,537.55
8,141,077.53

i 447,649. 42
,

4,475,484.11

4,475,484.11
638,115.63

411,189.23

226,926.40

18,233,466.75

2,698,441.16

15,535,025.59

1,834,613.77

981,649.66

852,964.11

1,196,275.47
642,801.57
2,391,607.12

770,947.11
650,094.31
2,530,826.-61

425,328.36

1,504,841.60
305,394.77
1,411,407.17
1,511,044.01
333,133.78

313,411.16
1,500,425.93
1,515,147.84
315,536.23

17,597.55

2,500,000.00
1,700,150.66
1,259,650.84

2,500,000.00
1,342,279.94
815,156.50

357,870:72
444,494.34

894,854.71
575,017.01
23,767.63
793,985.56

618,318.78
471,141.61
102,669.59
700,474.67

376,535.93
103,875.40

11,535,605.26

9,407,844.70

2,127,760.56

4,300.45

19,797.83

742,253. 68
168,302.70
5,205,480.25
77,642.01
264,295.66
70,195.66

. 7,292.74
139,219.49

1,504,841.60

162,709.22
4,993,732.25
66,099.70
164,675.52

8,016.39
89,018.76
4,103.83

78,901.96
93,510.89

15,497.38
742,253.68
5,593.48
211,748.00
11,542.31
99,620.14

173,393.57

103,197.91

45,989.57
113,823.38

59,777.92
155,238.04

13,788.35
41,414.66

35,271,820.52

29,249,699.03

6,522,572.96

500,451.47

138

REPORT ON THE FINANCES.
Comparison of disbursements, fiscal years 1917 and 1918—Continued.
1918

1917

Increase, 1918.

Decrease, 1918.

CIVIL ESTABLISHMENTS—con.
P o s t Office D e p a r t m e n t :
Salaries a n d expenses
Deficiency i n p o s t a l revenues
Miscellaneous i t e m s
T o t a l P o s t Office Department...
D e p a r t m e n t of A g r i c u l t u r e :
Salaries a n d miscellaneous
A n i m a l I n d u s t r y , expenses
Meat i n s p e c t i o n , A n i m a l
Industry
F o o t - a n d - m o u t h disease..
I n v e s t i g a t i n g hog cholera
a n d dourine
P l a n t I n d u s t r y , expenses.
P u r c h a s e of seeds
Biological Survey, expenses
Public Roads, expenses..
S t i m u l a t i n g agriculture
a n d f a c i h t a t m g distrib u t i o n of p r o d u c t s
F o r e s t Service
Acquisition of l a n d s for
p r o t e c t i o n of watersheds, navigable
streams
B u r e a u of C h e m i s t r y
S t a t e s R e l a t i o n Service,
expenses
Cooperative
extension
work
W e a t h e r B u r e a u , ^ expenses
1
Increase of compensat i o n , D e p a r t m e n t of
Agriculture
Special f u n d s P a y m e n t s to States
a n d Territories from
National
Forests
fund
R o a d s a n d trails for
States
Miscellaneous
special
funds
T o t a l D e p a r t m e n t of
Agriculture
D e p a r t m e n t of Commerce:
Salaries a n d expenses
B u r e a u of S t a n d a r d s
Census Office
Foreign a n d domestic
commerce
,
Coast a n d Geodetic Survey
Lighthouse
Estabhshment
B u r e a u of Fisheries
I n c r e a s e of compensat i o n , D e p a r t m e n t ol
Commerce
F i s h hatcheries
- Steamboat-Inspection
Service
Miscellaneous i t e m s
Total Department
Commerce.

$1,730,558.49

2,221,094.54
188,467.11

$15,294.84
2,221,094.54

190,158.92

$1,691.81

4,155,414.!

1,920,717.41

2,236,389.38

$16,129,550.61

$7,956,739.43

$8,172,811.18

2,618,213.57

2,202,897.63

415,315.94

3,491,549.92
46,09L14

3,300,513.50
48,830.57

191,036.42

30,550.23
2,099,749.88
245,270.98

$3,739.43

45,366.78
1,969,378.57
243,460.81

130,37L31
1,810.17

544,512.37
1,058,352.97

566,364.18
564,781.16

493,571.81

6,349,055.19
4,203,84L76

3,088,921.09

867,636.14
806,745.21

1,992,066.77
768,246.84

2,820,355.06
2,075,054.37
1,461,985.17

,

^

1,691.81

14,816.55

21,851.81

6,349,055.19
1,114,920.67

38,498.37

1,124,430. 63

26,642.88

2,793,712.18

497,130.64

1,577,923.73

54,206.17

1,407,779.00
686,156.00

686,156.00

848,874.01

695,541.40

153,332.61

226,127.99

211,669.91

14,458.08

150,788.89

152,955.40

46,759,461.46

29,587,148.95

18,339,317.44

i; 340,926.85
1,378,390.93
1,184,192.61

1,000,672.70
784,693.17
1,061,994.67

340,254.15
593,697.76
122,197.94

456,749.15

2,166.51
1,167,004.93

456,749.15

1,116,029.77

1,229,288.05

113,258.28

5,588,181.29
1,105,703.54

5,861,511.86
1,077,415.83

273,330.57

449,871.15
32,598.^10

56,902.09

647,143. 89
1,369.21

620,973.00
7,077.67

26,170.89

11,700,529; 04

2,017,228.75

28,287.71
449,871.15
24,303.99
5,708.46

of

D e p a r t m e n t of L a b o r :
Salaries a n d expenses
B u r e a u of L a b o r Statistics




$1,745,853.33

13,301.156.s^49
200,842.96

170,018.72

30,824. 24

388,476.89

274,292. 76

114,183.13

416,60L30

SECRETARY OF T H E TREASURY.

139

Comparison of disbursements, fiscal years 1917 and 1918—Continued.
1918

1917

Increase, 1918.

Decrease, 1918.

CIVIL ESTABLISHMENTS—con.

Department of Labor—Con.
T^nrfian of Naturalization
Bureau of Immigration...
Regulating immigration..
Immigration stations
N. S. and Def. Dept. of
War Emergency Employment Service
Increase of compensation, Department of
Labor Total Department of
Labor
Department of Justice:
Salaries and expenses
Salaries of j ustices, assistant attorneys, etc
Court of Claims
National security and defense, Department of
Justice
Salaries, fees, etc., of
marshals
Fees of witlnesses.
... Salaries and fees, district
attorneys
Fees of jurors..-.
Fees of clerks'
Fees olcommissioners
Support ol prisoners
Pay 0/ balirFs
....
Miscellaneous expenses,
United States courts -.
Increase of compensation
Department of Justice..
Miscellaneous items
Total Department of
Justice
Independent bureaus and
offices:
Interstate
Commerce
Commission
Federal control of transportation systems
Smithsonian Institution..
National Museum
Zoological Park
Territorial governments..
Salaries^tc., Federal Reserve Board
Council of National Defense
War FinanceCorporation.
Capital Issues Committee.
Advisory Committee for
Aeronautics
United States Employees' Compensation
Commission
Board for Vocational Education
United States Shipping
BoardSalaries and expenses.
Permanent f u n d . . . . .
Emergency shipping
fund
National Security and
Defense
Food and Fuel Administrations
Control of food and fuel..
Bureau of Industrial
Housing and Transportation....




$382,566.97
857,525.45
2,647,574.86
212,104.88
312,757.23

$351,722.91
104,478.03
2,401,114.96
363,342.81
179,845.04

$30,844.06
753,047.42
246,459.90
132,912.19

584,033.85

584,033.85

189,947.37

$151,237.93

189,947.37

140,786.24
265.75

2,489.87

5,916,881.45

3,847,305.10

2,223,038.40

2,345,563.53

1,580,035.69

765,527.84

1,721,235.77
72,390.67

1,660,119.70
67,014.92

61,116.07
5,375.75

1,413,090.19

18,000.00

1,395,090.19

1,586,523.10
1,134,651.08

1,705,682.57
983,150.16

151,500.92

627,416.43
1,109,066.94
226,400.10
267,764.51
728,797.17
224,624.69

616,932.71
1,038,944.73
242,484.62
135,69.1.20
667,333.03
236,437.99

.421,194.56

140,786.24

10,483.72
70,122.21
132,073.31
61,464.14

475,65L77//

2,224.12
153,462.05

119,159.47

16,084.52
11,813.30
54,457.21

177,372.17
1,176,289.88

1,148,830.39

177,372.17
27,459.49

13,232,380.79

10,576,309.48

2,857,585.81

5,399,618.66

5,175,150.12

224,468.54

150,000,000.00
185,560.78
384,362.03
95,806.00
24,801.80

159,141.87
383,253.69
104,126.41
25,642.16

1,532,015.17

594,906.82

937,108.35

1,093,858.55
55,000,000.00
10,000.00

102,024.20

991,834.35
55,000,000.00
10,000.00

80,900.65

15,152.00

65,748.65

719,936.26

228,395.70

1,412,882.74
391,535.18
44,000,000.00
807,575,773.73
10,059,580.43
• 5,330,675.75
50,000,000.00
25,000.00

150,000,000.00
26,418.91
1,108.34

491,540.56
1,412,882.74

64,442.28
6,000,000.00

327,092.90
38,000,000.00
807,575,773.73

8,894,026.70
i

201,514.50

1,165,553.73
5,330,675.75
50,000,000.00
25,000.00

8,320.41
840.36

140

REPORT ON THE FINANCES.
Comparison of disbursements, fiscal years 1917 and 1918—Continued.
1918

1917

Increase, 1918.

Decrease, 1918.

CIVIL ESTABLISHMENTS—con.
Independent bureaus and
offices—Continued.
National Security and
Defense, E x p o r t s A d m i n i s t r a t i v e Board
Federal T r a d e Commission
S t a t e , War, and N a v y
Department Building..
Commissions'.
T o t a l i n d e p e n d e n t bureaus a n d offices
District ofColumbia:
Salaries a n d expenses
Special f u n d s Water department
Washington
Aqueduct
Miscellaneous special
funds
Trust f u n d s Miscellaneous t r u s t fund deposits
Washington redempt i o n fund
Police a n d
firemen's
relief funds
O t h e r t r u s t funds
Total District
Columbia

of
,.

T o t a l civil e s t a b lishments

$250,000.00

$250,000.00

1,466,423.65

$458,573.01

1,007,850.64

451,004. 40
344,205.91

189,331.43
296,200.82

261,672.97
48,005.09

1,135,833,941.69

22,690,367.21

1,113,152,735.25

12,-921,524.51

12,226,924.52

694,599.99

537,996.75

671,564.03

188,605.28

136,578.85

3,443.14

8,400.82

$9,160.77

133,567.28
52,026.43
4,957.68

414,493.43

439,179.63

186,251.17

168,028.04

18,223.13

135,238.11
18,858.36

135,067.62
17,450.42

170,49
1,407.94

14,406,410.75

13,803,193.93

766,427. 98

163,2n.l6

1,507,367,481,29

234,649,248.82

1,283,650,785.69

10,932,553.22

2,336,259,761.87
797,460,465.13
110,390,044.08
1,663,199,383.09
264,243,520.89
403,541,878.96
1,211,737.93
7,025,599.01
39,609,063.34

216,732,787.96
110,798,645.84
6,540,335.98
26,817,469.89
8,103,938.07
7,557,971.29
1,094,300.36
1,854,388.79
-11,014,027.74

2,119,526,973.91
686,661,819.29
103,849,708.10
1,636,381,913.20
256,139,582. 82
395,983,907.67
117,437.57
5,171,210.22
28,595,035.60

24,686.20

WAR DEPARTMENT.
Military Establishment.
Q u a r t e r m a s t e r Corps
P a y , e t c ^ of t h e A r m y i
Medical D e p a r t m e n t
Ordnance D e p a r t m e n t . . .
Engineer Department
Signal Service
Military A c a d e m y
Military posts
National Guard
Civilian m i l i t a r y t r a i n i n g
camps
R e g i s t r a t i o n a n d selection for
m i l i t a r y service
S u p p o r t of d e p e n d e n t families of enlisted m e n
I n c r e a s e of c o m p e n s a t i o n
Miscellaneous i t e m s
Special funds; ordnance m a terial, p o w d e r , etc
T o t a l Military E s t a b lishment

5,290,124. 59

4,040,302.25

1,249,822.34

13,517,308.77

473,500.00

13,043,808.77

2 16,914.78
1,764,005.29
2,041,729.18

5,498,912.33
855,546.65

1,764,005.29
1,186,182.53

47,224.58

36,204.39

11,020.19

5,645,584,93L 93

401,418,331.54

5,249,682,427.50

781,568.78
411,517.16

335,416.18
397,481.50

446,152.60
14,035.66

4,537,882.99

3,969,788.89

568,094.10

928,719.21
349.67

1,051,737.09
529,467.12

5,515,827.11

5,515,827.11

War, miscellaneous, civil.
N a t i o n a l cemeteries
National Parks
N a t i o n a l h o m e s for disabled
soldiers
S t a t e h o m e s for disabled soldiers
Sufferers from floods a n d fire.
Soldiers' H o m e i n t e r e s t account
Monuments
B r i d g e across P o t o m a c R i v e r ,
Georgetown, D . C

98,163.75
28,000.00255,000.00

102,127.66
9,999.01

'

3,963.91
18,000.99
255,000.00

I Includes payments of Army allotments by the Bureau of War Risk Insurance.
«Excess of repayments.




123,017.88
529,117. 45

SECRETARY OF T H E TREASURY.

141

Comparison of disbursements, fiscal years 1917 and 1918—Continued.
1918

1917 '

$116,517.37
494,336.32
177,780.44

$216,415.26
365,663.88

256,230.31

50,117.39

7,172.56

22,686.67

Increase, 1918.

Decrease, 1918.

WAR DEPARTMENT—con.

War, misceUaneous, civil—
Continued.
War claims and relief acts
Increase of compensation
Special funds:
W a g o n r o a d s , etc.,
Miscellaneous

special

Trustfunds:
Pay ofthe Army, deposit
Soldiers' Home permanent

Total War. miscellaneous, civil

$128,672.44
177,780.44

$99,897.89

206,112.92
15,514.11

479,803.14

774,457.04

597,068.16

544,611.32
1,020.00

52,456.84

9,170,109. 86

8,370,989.01

1,866,305.99

24,209,554.99
4,464., 393.81

25,104,702.35
4,688,74L55

919,633.09

694,115.92

294,653.90
1,020.00
1,067,185.14

Rivers and harbors.
Imnrovine rivers
Special funds for rivers and
n arbors
Total rivers and harbors
Total War Department.

895,147.36
224,347.74
225,517.17'

29,593,581.89

30,487,559.82

225,517.17

1,119,495.10

5,684,348,623.68

440,276,880.37

5,251,774,250.66

7,702,507.35

353,532,156.03
58,148,850.00
17,224,199.71

54,926,947.73
7,757,553.92
5,667,419.96

298,605,208.30
50,391,296.08
11,556,779.75

55,693,350.54
189,677,881.54
42,039,835.30

14,168,307.84
21,003,234.29
14,329,555.19

41,525,042.70
168,674,647.25
27,710,280.11

70,406,690.01.

25,918,834.27

44,487,855.74

7,784,602.09
146,544,483.34
2,379,052.34
1130,726,660.36
27,212,201.42
12,578.31
354,980,660.02
201,291.06

1,083,932.94
14,700,241.32
648,580.68.
49,225,370.46
989,845.38
71,503.30
40,653,655.95
744,329.04

6,700,669.15
31,844,242.02
1,730,471.66
81,501,410.12
26,222,356.04

NAVY DEPARTMENT.

Naval Establishment.
Increase of the- Navv
Bureau of Navigation
Bureau of Construction and
Repair
Bureau of Steam Engineering.
Bureau of Supplies and AcBureau of Medicine and Sur-

Judgments, Court of Claims..
General account of advances..
National security and defense, Navy Department...
Special funds:
Naval hospital fund
Ordnance material (proIncrease of compensation.
Clothine fund
Miscellaneous special funds...
Trust funds:
" Pay, Marine Corps, de-

658,477.15

34,501.65

208,127.77

446,815.06

1 959.83
766,843.10

156,899.58
712,093.44

3,520,658.11
6,609,011.04
2 4,490.50

3,494,048.55
1,242.17

314,327,004.07

196,243.73

188,958.88

Pay of the Navy, deposit
fund
Pri 76 monev

124,267.76
123.44
1,368,642,793.84

257,166,437.44

623,975.50
238,687.29
64,749.66
3,520,658.11
• 3,144,962.49

242,379.00
186.84

Total Naval EstabUsh• ment

157,859.41

5,732.67

7,284.85
118,111.24
63.40
1,112,608,893.60

1 Includes payments of allotment by the Bureaa of War Risk Insurance,
8 Excess of repayments.




58,924. 99
543,158.20

1,122,537.20

142

REPORT ON THE FINANCES.
Comparison of disbursements, fiscal years 1917 and 1918—Continued.
1918 »

1917

Increase, 1918.

Decrease, 1918.

INDIAN SERVICE.
1

Current and contingent expenses
Fulfilling treaty stipulations..
Miscellaneous supports
Interest on Indian trust-fund
accounts
Support of Indian schools—
Miscellaneous expenses
Trust funds

1,029,350.40
552,580.01
707,776.85

1,156,026.11
600,872.26
790,426.77

1,579,540.96
4,365,788.40
4,066,848.74
18,586,514.67

1,560,479.34
4,226,146.07
4,221,007.41
18,043,135.59

126,675.71
48 292 25
82,649.92
19,061.62
139,642.33
543,379.08

Total Indian Service...

30,888,400.03

30,598,093.55

702,083.03

Pensions
Interest on the public debt...

181,137,754.12
197,526,608.36

160,318,405.66
24,742,129.42

20,819,348.46
172,784,478.94

8,969,911,661.32

1,147,751,195.26

7,842,329,840.38

154,158.67

Deduct repayments received
in fiscal year but not covered by warrant

3,511,456.20

132,060.91
1,147,619,134.35

7,838,950,445.09

Add repayments covered by
warrant in year subsequent
to the deposit thereof
Ordinary
ments 1

disburse-

Special disbursements:
Purchase of obligations of
foreign governments
Payment for Danish West
Indies
Subscriptions to stock.
Federal land banks
Purchase of farm loan
bonds
.. -

20,169,374.32

3,379,395.29

8,966,400,205.12

411,776.55

20,169,374.32

0

132,060.91

279,856.81

8,966,532,266.03

1,147,898,991.16

7,838,950,445.09

4,739,434,750.00

885,000,000.^00

3,854,434,750.00

147,795.90

25,000,000.00

20,317,170.22

25,000,000.00

8,880,315.00

8,880,315.00
65,153 254.15

65,153,254.15

Total special disbursements

4,804,588,004.15

918,880,315.00

3,919,588,004.15

Panama Canal disbursements

20,787,624.92

19,262,798.32

1,524,826.60

Public debt:
First Liberty loan
Second Liberty loan.
Third Lihorty Inan
Certificates of indebtedness—
2 per cent
3 per cent
3 J per cent
3 | per cent
4 per cent
4^ per cent
War Savings certificates..
1-year Treasury notes, 3
per cent
Bank-note fund
Funded loan of 1907
Miscellaneous re d e m ptions.:

(/ 656,000.00
61,050,000.00
14,935,500.00

656,000.00
61,050,000.00
14,935,500.00

l,005.d00.000.00
74;146.632.00
211,490;100.00
849,993,000.00
4,108,857.000.00
1,328,785,000.00
2,971,967.80

50.000,000.00
394; 123,368.00
188,448,900.00

27,362,000.00
21,611,225.00
18,200.00

• 4,390,000.00
40,564,115.50
13,550.00

2,450.33

7,706,879,075.13

677,544,782.25

Total disbursements,
exclusive of postal.... 21,498,786,970.23
Postal Service, payable from
postal revenues 2
324,849,188.16

2,763,586,886.73

955,000,000.00
23,041,200.00
849,993.000.00
4,108,857,000.00
1,328,785,000.00
2,971,967.80

Total disbursements,
including postal

•

21,823,636,158.39

319,976,736.00

22,972,000.00
4,650.00

4,848.75

PubUc debt disbursements

33,880,315.00

18,952,890.50
2,398.42

7,368,266,317.80

338,932,024.92

18,736;200,083.60 . . . . . . . . • • • . . . . . . «

319,889,904.46

4 ,959,283.70

3,083,476,791.19

18,740,159,367.20

»Exclusive of Panama Canal, public debt, special disbursements, and Postal Service.
2 Exclusive of grants from the Treasury for deficiencies in postal revenues included in expenses of -ivil
establisbment, p. 138.




SECRETARY OF THE TREASURY.

143

a

ESTIMATES FOR THE FISCAL YEARS 1919 AND 1920.

The following tables contain estimates of receipts ,and disbursements for the fiscal years ending June 30, 1919, and June 30, 1920.
The estimates of receipts are based upon existing laws and pending
legislation. The estimates of 'disbursements as contained in the
foUowing tables were made (with the exception of the estimates for
the Treasury Department) not by the Secretary of the Treasury but
by the various departments and governmental agencies concerned.
The figures herein present the latest information received from each
of the departments. The difiiculties of forecasting the expenditures
of the Government have been greatly increased by the changed
situation resulting from the signing of the armistice. The suspension
of hostilities with the prospect of peace came just at the time the
departments were preparing estimates of appropriations and expenditures based upon the continuation of the war. This necessitated a
hasty revision of their estimates, and the result in the nature of
things does not afford a reliable and accurate forecast of the condition of the Treasury for the fiscal years 1919 and 1920.
Fiscal year 1919.
The receipts and disbursements of the Government for the current
fiscal year are estimated upon the basis of existing laws and pending
legislation as follows:
RECEIPTS.

Ordinary receipts:
From customs
i
From internal revenue—
Income and profits tax^
Miscellaneous

$190,000,000
|5,000,000,000
1,100,000,000

6,100,000,000
From sales of public lands
1, 900,000
From miscellaneous sources (including 170,000,000 increased
postage)
:
555,000,000
Total estimated ordinary receipts
6,846, 900,000
• Panama Canal:
Estimated receipts from.tolls, etc
7,000,000
Public debt:
Tliird Liberty loan
|933, 471, 712
Fourth i^iberty loan
6,989,047,000
War-savings certificates (estimated).,
1,200,000,000
Deposits to retire Federal reserve bank notes
and national bank notes
20,000,000
Deposits for postal savings bonds
400,000
Additional bonds authorized by law but not
yet issued
5,025,670,000
Total estimated public debt receipts
14,168, 588,712
Grand total estimated receipts
Partly receivable after June 30 ,1919.



21,022,488,712

144

REPORT ON THE FINANCES.
DISBURSEMENTS.

For civil establishment:
Legislative establishment.,
$17, 348, 928
Executive proper, including Tariff Commission, Ahen Property
Custodian, Committee on Public Information, War Industries
Board, and War Trade Board
15, 557, 880
State Department
10, 245, 441
Treasury Department proper.
88, 433, 000
Public buildings, construction and sites
11, 000, 000
War-risk insurance, 1230,431,028, less premium credits
$250,000,000
1 19, 568, 972
War Department proper
'
24, 345, 000
. Department of Justice
".
15, 8Q0, 000
Post Office Department proper
1, 936, 620
Navy Department proper
2, 333, 256
Interior Department proper
33, 000, 000
Department of Agriculture.
46, 700, 000
Department of Commerce.
15, 000, 000 .
Department of Labor
10, 943, 461
Shipping Board
: . . 1, 924, 359, 814,
Food Administration..
112, 000, 000
Fuel Administration
'.
5, 000, 000
Council of National Defense
400, 000
Federal control for transportation systems
"350, 000, 000
War Finance Corporation
445, 000, 000
Bureau of Industrial Housing and Transportation
100, 000, 000
Federal Board for Vocational Education
4, 512, 000
Interdepartmental Social Hygiene Board
2, 500, 000
Federal TradS Commission
1, 725, 000
Employees' Compensation Commission
1, 500, 000
Capital .Issues Conimittee
377, 488
Interstate Commerce Commission
5, 756, 600
Other independent ofiices and commissions
,
2-, 688, 870
National security and defense
2 20^ 662, 437
" Expenses of loans ^
*
39, 732, 307
Increase of compensation
"
,
25, 000, 000
District of Columbia
15, 750, 000
Total civil establishment
For War Department:
MHtary Establishment
Rivers and harbors
Miscellaneous—War Civil

3, 330, 039,130
•

$14, 694, 398, 088
27, 000, 000
14, 834, 000
14, 736, 232, 088

For Navy Department:
Naval Establishment, exclusive of building
program.
Navy building program




1, 474, 357, 401
250, 202, 803
—

1 Excess of repayment.
a Unallotted balance on Nov. 8,1918.
• Exclusive of costs of any loans that may be hereafter authorized.
>

1,724,560,204

SECRETARY OF THE TREASURY.
For Indian Service
For pensions
For interest on the public debt^

145
$22, 000, 000
220, 000, 000
655,107,269

,

Total estimated ordinary disbursements
20, 687, 938, 691
Special disbursements:
Purchase of obligations of foreign governments ^. $4, 375, 565, 250
Purchase of farm loan bonds
100, 000, 000
4,475,565,250
Panama Canal:
Disbursements for the canal
'.
14,000, 000
Publicdebt:
War-savings certificates.
$12, 000, 000
Eedemption of loan of 1908-1918
63, 945, 460
Certificates of indebtedness outstanding July 1,
1918..'
1,725,009,500
One-year Treasury notes
19,150,000
Retirements of bank notes
25, 000,000
Miscellaneous redemptions of the debt
695, 520, 000
Total estimated public debt disbursements

2, 540, 624, 960

Grand total estimated disbursements

27, 718,128, 901

Estimated excess* of ordinary disbursements over ordinary receipts,
fiscal year 1919
13, 841, 038, 691
Estimated excess of total disbursements over total receipts, fiscal
year 1919
:
'.
6, 695, 640,189
POSTAL SERVICE.

The Post Office Department estimates that under existing laws the
postal revenues for the fiscal year 1919 wiU probably be $354,000,000,
exclusive of increased postage to be deposited in the Treasury under
the law, with expenditures for the Postal Service for the same period
of approximately $345,000,000.
Fiscal year 1920.
I t is estimated that upon the basis of existing laws and pending
legislation the receipts and disbursements for the fiscal year 1920

win be:
RECEIPTS.

Ordinary receipts:
From customs
From internal revenue—
Income and profits taxes ^
IMiscellaneous

$220,000,000
$3, 000, 000,000
1,000,000,000
^

From sales of public lands
From miscellaneous sources (including $72,000,000 increased
postage)
.'
Tptal estimated ordinary receipts

4,000,000,000
2,000,000
712,000,000
4, 934,000, 000

1 Exclusive of interest on any loans that may hereafter be authorized.
2Total authorized purchases of obligations of foreign governments, 110,000,000,000, ofwhich .$885,000,000
were purchased in the fiscal j^ear 1917, and $4,739,434,750 in 1918.
^Partly receivable after June 30, 1920.

86429°—FI 1918



10

146

J

REPORT ON T H E FINANCES.

Panama Canal:
Estimated receipts from tolls, etc
Publicdebt:
War-savings certificates (estimated)
$1, 020,000,000
Deposits to retire Federal reserve bank notes and
national-banknotes
25,000,000
Deposits for issue of postal savings bonds
. 400, 000
Total estimated public-debt receipts
Grand total estimated receipts

$8,000,000

1, 045, 400,000
;

For civil establishment:
DISBURSEMENTS.
Legislative establishment
Executive proper, including Tariff Commission, Alien Property
Custodian, War Industries Board, and War Trade Board
State Department
Treasury Department proper
—
Public buildings, construction and sites
War-risk insurance
War Department proper
Department of Justice
Post Office Department proper
I
.'
Navy Department proper
,
Interior Department proper
'.
Department of Agriculture
Department of Commerce (includes Fourteenth Census)
^
Department of Labor
:
'
Shipping Board
Fuel Administration
Food Administration
Council of National Defense
Federal Board for Vocational Education
i
Interdepartmental Social Hygiene Board
,
Federal Trade Commission
.
Employees Compensation Commission
Capital Issues Comnaittee
Interstate Commerce Commission
>
:
Other independent ofiices and commissions.
District of Columbia
Expense of loans ^
•

5, 987, 400,000
_
_
=
18, 682, 082
5,994, 400
12, 725, 376
98, 956, 265
10,000,000
92, 367, 630
8,178,262
14,188,000
2, 032, 700
3,101, 272
33, 000, 000
50, 000, 000
32, 000, 000
24, 041, 081
579, 277,451
1, 500, 000
12, 000, 000
675, 000
7,182,000
2, 500,000
1, 850, 000
1, 750, 000
450, 000
4, 683, 600
3,131,100
16,000,000
8,000,000

Total civil establishment
1,044,266, 219
For War Department:
Military Establishment
1, 944,185, 965
Rivers and harbors
23,000, 000
Miscellaneous—War Civil
11, 651, 493
For Navy Department:
^' ^^^' ^^7; ^^^
Naval Establishment,' exclusive of building program
$1, 773, 726, 926
Navy building-program
329, 588,000
2,103, 314, 926
For Indian Service
25,000, 000
For pensions
222, 000, 000
For interest on the public debt ^
893, "532,996
Total estimated ordinary disbursements
i Exclusive of cost of any loans that may hereafter be authorized.
*35xclusive of interest on any loans that may hereafter be authorized




6, 266, 951, 599

SECRETARY OF THE TREASURY.

147

Panama Canal:
Disbursements for the canal.
Public debt:
War-savings certificates (estimated)
$10,200, 000
Retirements of Federal reserve bank notes and
national bank notes
30,000,000
Miscellaneous redemptions of the debt
964,020,000
Total estimated public debt disbursement
Grand total estimated disbursements

$13, 500, 000

1,004,220,000
7, 284, 671, 599

Estimated excess of ordinary disbursements over ordinary receipts,
fiscal year 1920
Estimated excess of total disbursements over total receipts, fiscal
year 1920
SUMMARY.

.

1, 332, 951, 599
1, 297,271, 599

^

Estimated results to the close of the fiscal year 1920, beginning ivith the balance in the
general fund of the Treasury JuneSO, 1918.

Fiscal year 1919.
Balance in the Treasury June 30, 1918, as per
financial statiement of the United States
Government
Settlement warrants, coupons, and checks outstanding:
Treasury warrants
• Matured interest obligations
Disbursing officers' checks

$1, 684, 929, 580.21
$36, 606, 344. 79
^ 28, 809, 673.52
300,166,197. 76
365, 582, 216.07

Balance in the Treasury June 30, 1918, free of
^
current obligations
- ^ 1, 319,347,364.14
Add—
^
Estimated ordinary receipts
6,846,900,000.00
Estimated Panama Canal receipts, tolls, etc.
7,000,000.00
Estimated public debt receipts, including
$1,200,000,000 from war-savings certificates and $5,025,670,000 from bonds already authorized but yet to be issued.. .14,168, 588, 712. 00
21, 022, 488, 712. 00
Deduct—
Estimated
Estimated
Estimated
Estimated

22,341,836,076.14
ordinary disbursements.... .s* f 20, 687, 938, 691. 00
special disbursements
4,475, 565, 250.00
Panama Canal disbursements
14, 000, 000.00
public debt disbursements..
2,540, 624, 960. 00
:
27, 718,128, 901. 00

Estimated deficit in general fund June 30, 1919

•.

5, 376, 292, 824. 86

i Estimated where complete reports are not available.
'The balance in the Treasury of $1,319,347,364.14 includes $724,382,518.81 disbursing officers' credits, after
deducting outstanding checks, and is free of all current obligations, the entire amount being available for
the future expenditures of thd Government.
^Exclusive of cost of any loans that may hereafter be authorized.
^Exclusive of interest on any loans that may hereafter be authorized.




148

REPORT ON T H E FINANCES.

Fiscal year 1920.
Estimated ordinary^receipts
Estimated Panama Canal receipts, tolls, etc
('Estimated public debt receipts, including
$1,020,000,000 war-savings certificates

$4, 934,000,000.00
8, 000,000.00"
1,045, 400,000. 00*
5.987,400,000.00

Deduct—
Estimated ordinary disbursements. . . . . . . $6, 266, 951, 599. 00
Estimated Panama Canal disbursements..
13, 500, 000.00
Estimated public debt disbursements
1,004, 220,000. 00
7,284,671,599.00
Estimated excess of disbursements, fiscal year 1920

1, 297,271,599.00

Estimahs of appropriations, Jiscal year 1920.
The estimates of appropriations for the fiscal year 1920, as submitted by the executive departments and ofiices, are as follows:
Legislative establishment
Executive establishment:
Executive proper
$1,079,580.00
Department of State
1,577,140. 00
TreasuryDepartment
52,337,004.88
War Department proper
10,136, 320. 20
State, War, and Navy Department Building, expenses
1,897,500.00
Navy Department proper
3,512, 200. 00
Department of Interior
6,055,455. 00
Post Office Department
v
2,051, 290. 00
Department of Agriculture
30, 048, 786. 00
Department of Commerce
25, 536, 925. 00
" Department of Labor
.1,704, 980. 00
Department of Justice
624, 030. 00
—.
Judicial establishment
Foreign intercourse
Military Establishment:
Support of the Army
1, 916, 016.193.16
Military Academy
6, 032, 862. 70
National Guard
889, 379.00

$8,098,901. 75

136,561, 21L 08
1,410,490. 00
11,042, 236. 66

1,922,938,434.86
Naval Establishment, including increase of the
Navy, $433,985,000
:.
Indian affairs
Pensions
Public works:
Legislative
Treasury Department, public buildings and
works
War Department—
Military—
Fortifications..
$574, 237, 273. 30
Arsenals
842,715.00
. Military posts.
14, 947, 214. 65



2,595,784,546. 05
11,939, 813. 89
220,050,000.00
25,000. 00
3, 871,550. 00

^

SECRETARY OF THE TREASURY.

149

Public works^Continued.
War Department—Continued.
Rivers and harbors.
$19, 870, 500. 00
Other civil public
works:
727, 425. OQ,
PanamaCanal
Navy Department
Department of Interior, including reclamation, fund
Department of Commerce...i
Department of Labor
Department of Justice

$610,625,127. 95
12,216,114.00
48,522,500. 00
9, 750, 250. 00
2, 737, 775.00
773, 500. 00
' 507,000. 00

Postal Service, payable from postal revenues
Miscellaneous:
Legislative
9, 830, 942. 28
Executive
4,901,840.00
Treasury Department
162, 203,410. 50
War Department
6,924,068.15
Department of Interior
12,045,244. 75
Department of Commerce
11,111,040.00
Department of Labor
".
24, 233, 833. 00
Department of Justice
11, 471,023. 15
District of Columbia
'..
. 15, 928, 819. 00
United States Shipping Board
:..
579,452, 500. 00
United States Food Administration
12,000,000. 00
United States Fuel Administration
1,500, 000. 00
Capital Issues Committee
450,000. 00
United States Employees' Compensation
Commission
1, 654,190. 00
Council of National Defense
675,000.00
National Advisory Committee for Aeronautics
325, Oj30. 00
Smithsoidan Institution and National Museum
696,000.00
Interstate Commerce Commission
4, 683, 600. 00
Board of Mediation and Conciliation
50,000. 00
Federal Trade Commission
2,000, 000. 00
Interdepartmental Social Hygiene B o a r d . .
1,100,000. 00
Federal Board for Vocational Education . .
4,000,000. 00
Arlington Memorial Bridge Commission...
25, 000. 00
Rock Creek and Potomac Parkway Commission
500,000.00

$689,028, 816. 95
358,307,577. 00

867,761,510.83
Permanent annual appropriations:
Interest on the public debt
Refunds—
Customs and internal revenue
Other refunds..."
Sinkingfund
Miscellaneous..

893, 532, 996. 00
18,407,000. 00
10,116,000. 00
287,943,883.00
56,743,880.00
1,266,743,759.00

Total estimated appropriations
1920. i . . . . . . .




for
..,

8,089,667,298.07

150

REPORT ON T H E

FINANCES.

Deduct:
Postal Service payable from postal revenues,
$358,307,577; sinking fund requirement,
$287,943,883; Panama Canal, $12,216,114;
an aggregate of

.

$658,467,574.00

Total estimates for ordinary appropriations for 1920
Add estimates for Panama Canal appropriations
for 1920

7,431,199,724.07
12,216,114.00

Total estimated appropriations for
1920, to^ become a charge upon the
general fund
'

7,443,415,838.07

POSTAL SERVICE.

The Post Ofiice Department estimates that the postal revenues for
the fiscal year 1920 will probably amount to $370,000,000, exclusive
of increased postage to be deposited in the Treasury under the law,
with expenditures for the Postal Service for the same period, under
existing la^s, of $352,300,000.
ESTIMATES FOR 1920 AND APPROPRIATIONS FOR 1919.

Comparison of the estimates for 1920 with the appropriations for
1919 shows a decrease in the 1920 estimates of $14,056,315,128.49,
including the Panama Canal, as exhibited in the tables following.
Statement of estimates of appropriations for 1920 increased over appropriations for 1919.
[Excluding sinking-fund requirements, postal service payable from the postal revenue, and public debt.j

Departments, etc.

1920 estimates,
including permanent annual.

1919 appropriations, mcluding
permanent
annual.

Increase, 1920
estimates over
1919 appropriations (4-); decrease (—).

$17,955,644.03
$16,584,595.95
Legislative
i
$1,371,048.08
Executive: '
389,330.00
542,780.00
Executive proper
153, 450.00
50,000,000.00
National security and defense
50,000, 000.00
1,000,590.00
900,000.00
Alien Property Custodian
100, 590.00
1,250,000.00
Committee on Public Information
1,250, 000.00
1,000,000.00
3,150,000.00
War Industries Board
2,150,000.00
2,465,000.00
3,500,000.00
1,035, 000.00
War Trade Board
50,500,000.00
Operations under mineral act
50,500, 000.00
, 400,000.00
200,000.00
Tariff Commission
200, 000.00
^ 726,500.00
661,150.00
Civil Service Commission
65, 350.00
Department of State:
1,577,140.00
962,720.00
Department of State proper
,
614,420.00
11,148,236.66
8,815,826.66
Foreign intercourse.
,
2,332,410.00
Treasury Department:
Treasury Department, exclusive of public
101,799,785.38
85,632,194.83
buildings
—
16,167,590.55
3,871,550.00
4,221,749.00
Public buildings
350,199.00
81,171,000.00
132,367,630.00
War-risk insurance
51,196,630.00
War Department:
10,136,320.20
15,009,323.00 - • 4,873,002.80
War Department proper
Military Establishment—
(Estimates for Military Establishment
for 1920, $2,513,040,637.81; appropriations for 1919, $15,431,684,610.11.
1,916,091,193.16 12,265,205,764.91 -10,349,114,571.75
Army
6,032,862.70
Military Academy
2,665,005.01 -13,367,857.69
889,379.00
National Guard
6,450,150.00 5,560,771.00
574,237,273.30
3,097,324,979.00 - 2,523,087,705.70
Fortifications
842,715.00
7,633,390.00 6,790,675.00
Arsenals
6,621,866.67 +
14,947,214.65
8,325,347.98
Military posts and miscellaneous'
36,086,500.00 22,465,100.00
12,621,400.00
Rivers and harbors
10,696,964.62 •10,439,493.16
267,461.37
Miscellaneous war, civil items




151

SECKETABY OF THE TREASUBY.

Statement of estimates of appropriations for 1920 increased pver appropriations for 1919Continued.

D e p a r t m e n t s , etc.

. 1920 e s t i m a t e s ,
including permanent annual.

Navy Department:
$3,512,200.00
N a v y D e p a r t m e n t proper
Naval Estabhshment—
( E s t i m a t e s for N a v a l E s t a b h s h m e n t for
1920, $2,653,309,926.05; a p p r o p r i a t i o n s for
1919, $1,690,990,298.82.
. N a v a l E s t a b h s h m e n t , exclusive of
2,219,324,926.05
building p r o g r a m
433,985,000.00
N a v y building p r o g r a m
D e p a r t m e n t of t h e Interior: '
D e p a r t m e n t of t h e Interior, exclusive of
31,093,449.75
I n d i a n s a n d pensions
220,050,000.00
Pensions
19,139,813.89
Indians
'.
P o s t Office D e p a r t m e n t :
P o s t Office D e p a r t m e n t , exclusive df P o s t a l
2,051,290.00
Service
:
58,283,786.00
D e p a r t m e n t of A g r i c u l t u r e
39,388,740.00
D e p a r t m e n t of Commerce
26,712,313.00
D e p a r t m e n t of Labor
14,188,043.15
D e p a r t m e n t of Justice
I n d e p e n d e n t offices:
Smithsonian Institution and
National
756,000.00
Museum
,.-.
4,683,600.00
I n t e r s t a t e Commerce Commission
2,000,000.00
F e d e r a l T r a d e Commission
579,452,500.00
U n i t e d States S h i p p i n g Board
12,000,000.00
Food Administration
'
,
1,500,000.00
^Fuel A d m i n i s t r a t i o n
F e d e r a l Control of T r a n s p o r t a t i o n S y s t e m s . ,
W a r F i n a n c e Corpoiration
450,000.00
Capital Issues C o m m i t t e e .
B u r e a u of I n d u s t r i a l H o u s i n g a n d T r a n s p o r tation
,
1,100,000.00
I n t e r d e p a r t m e n t a l Social H y g i e n e B o a r d . . .
675,000.00
Council of N a t i o n a l Defense
7,182,000.00
F e d e r a l B o a r d for Vocational E d u c a t i o n
N a t i o n a l A d v i s o r y C o m m i t t e e for Aero325,000.00
nautics
50,000.00
B o a r d of Mediation a n d Concihation
A r h n g t o n Memorial B r i d g e Commission
- 25,000.00
E m p l o y e e s Compensation Commission
1,654,190.00
R o c k Creek a n d P o t o m a c P a r k w a y Commission.
:
500,000.00
S t a t e , W a r , a n d N a v y D e p a r t m e n t Building
1,897,500.00
I n d i g e n t i n Alaska relief fund
25,000.00
16,878,419.00
District of Columbia
893,532,996.00
"Interest on t h e public d e b t
E x p e n s e s of loans
8,000,000.00
Increase of compensation
Ordinary...
PanamaCanal..

Total.




Increase 1920
e s t i m a t e s over
1919 a p p r o p r i ations (-H); decrease (—).

1919 a p p r o p r i a tions, i n c l u d i n g
permanent
annual.

$4,299,106.73

$786,906.73

1,396,593,298.82 +
294,397,000.00 +

822,731,627.23
139,588,000.00

33,136,958.25
220,050,000.00
18,232,070.00

*"967,''743'89

1,918,250.00
50,610,353.00
14,366,240.34
11,349,401.25
13,892,868.50

133,040.00
7,673,433.00
25,022,499.66
15,362,911.75
295,174.65

655,000.00
5,671,600.00
1,677,540.00
1,807,543,500.00
7,500,000.00
3,500,000.00
500,000,000.00
500,000,000.00
400,000.00

101,000.00
988,000.00
322,460.00
1,228,091,000.00
4,500,000.00
2,000,000.00
500,000,000.00
500,000,000.00
50,000.00

100,000,000.00
2,500,000.00
400,000.00
4,512,000.00

100,000,000.00
1,400,000.00
275,000.00
2,670,000.00

205,000.00
50,000.00

120,000.00

627,410.00

25,000.00
1,026,780.00

2,043,508.50

150,000.00
1,725,870.94
25,000.00
16,082,318.66
655,107,269.00
39,732,306.67
25,000,000.00

796,100.34
238,425,727.00
31,732,306.67
25,000,000.00

7,431,199,724.07
12,216,114.00

21,486,696,311.71
13,034,654.85

-14,055,496,587.64
818,540.85

7,443,415,838.07

21,499,730,966. 56 -14,066,315,128.49

350,000.00
171,629.06

152

REPORT ON THE FINANCES,.
Exhibit of appropriations for 1919,

Appropriations made for the fiscal year 1919 and
for prior years during the second session of the
Sixty-fifth Congress, including revised estimated permanent and indefinite appropriations, .and appropriations for the Postal Service
payable from postal revenues.
»
$27,054,117,070.02
Deduct:
Postal Service for 1919 payable from the
postal re venues....
$377,573,342.00
Postal deficiencies of prior years payable
^
from postal revenues
8,138,687.58
Deficiencies and supplementals for prior
years
1,779,784,208.88
•Sinking fund requirements.
288, 889, 865. 00
Purchase of obligations of foreign governments...'.,...
3,000,000,000.00
Purchase of farm loan bonds
100,000,000,00
—•
^ 5, 554, 386,103. 46
Total appropriations for 1919, exclusive
of sinking fund requirements, deficiencies. Postal Service payable from postal
revenues, purchase of obligations of foreign governments, and purchase of farm
loan bonds

•,

„..

>
21,499,730,966.56

Agreeing with the appropriations for 1919 shown in the preceding table, against
which the estimates of appropriations submitted for 1920 show a decrease of $14,055,496,587.64 in the ordinary and $14,056,315,128.49, including the Panama Canal.

Attention is respectfully called to further divisions of this report,
to wit, the condensed annual reports of the various bureaus and
divisions of the Treasury Department, and the tables accompanying
the report on the finances.
;

W. G. MCADOO,

Secretary,
To the SPEAKER OF THE H O U S E OF REPRESENTATIVES.




EXHIBITS ACCOMPANYING THE REPORT ON THE FINANCES.




153




EXHIBITS.
E X H I B I T 1.

The following table shows the cash expenditures (unrevised) for the
fiscal years ended June 30, 1917, and June 30, 1918, as published in
the daily Treasury statements and classified according to Government Departments:
Expenditures.
Fiscal:^ear 1917.

Fiscal year 1918.

ORDINARY.

Legislative
Executive proper
state Department
Treasury Department
War Department
Department of Justice
Post Office Department
Navy Department
interior Department
Department of Agriculture
Department of Commerce
Department of Labor
United States Shipping Board
Federal contro] of transportation
systems
War Fmance Corporation
Otherindependent offices and co:n,missions
District of Columbia
Interest on pubhc debt
Unclassified .
Total ordinary expenditures..

S15,092,373.97
1,280,484. 85
6,169,316.41
84,294,313.65
358,158,36L12
10,566,401. 25
1,895,578.21
239,632,756. 63
216,415,516.48
29, 547,234. 01
11,689,792.94
, 3,852, i n . 34
14,291,282.96

$15,825,506.72
9,662,847. 53
9,892,898.09
152,500,426.53
4,850,687,186. 88
12,964,628.18
4,173,103. 28
1,278,840,486. 80
244,556,893. 96
42,870,188.28
12,833,808.82
5,469,268.09
770,681,550.83
120,263,996.17
44,929.168.38

7,558,829. 88
13,681,595.39
23,232,376.66
4,314,285.49

51,041,672,611.24

67,574,636.46
14,446,832.46
189,743,277.14
° 28,288,353.44

S7,876,205,058.04

SPECIAL.

19,745.015.02
Panama Canal
Pajmient for West Indian Islands.. 25,000,000.00
Purchase of obligations of foreign
885,000,000.00
Governments
Purchase of farm-loan bonds
Subscription to stock, Federal land
8,880,315.00
banks
Total special expenditures
Total ordmary and special
expenditures

18,296,112.02
4,738,029,750.00
64,171,551.08
938,625,330.02

—

-

1,980,297,941.26

4,820,497,413.10
12,696,702,471.14

PUBLIC D E B T .

Certiflc?.tes of indebtedness redeemed
626,196,844.66
War-savings certificates redeemed'..
Bonds, interest-bearing notes, and
18,398.75
certificates retired
One-year Treasury notes redeemed
(sec. 18, Federal reserve act, approved Dec. 23,1913)
4,390,000.00
National-bank notes and Federal
reserve bank notes retired (acts
of July 14,1890, and Dec. 23,1913). 40,574,115.50
Fir^t Liberty bonds redeemed
Second Libertv bonds redeemed....
Third liiberty bonds redeemed. . . .

7,086,312,732.00
2,727,345.96
20,650.33'
27,362,000.00
21,625,225.00
656,000.00
• 61,050,000.00
14,935,500.00

Total public debt expenditures

671,179,358.91

Grand total expenditures, as
per daily Treasury statement, June 30, 1917
Grand total expenditures, as
per daily Treasury statement June 30 1918. .

2,651,477,300.17




7,214,689,453.29

19,911,391,924.43

;55

E X H I B I T 2.

The following is a statement of the public debt at the close of the
fiscal year 1918:
Public debt, June 30, 1918.
Debt bearing no interest (payable on presentation):
Obligations required to be reissued when redeemed—
United States notes
Less gold reserve

$346, 681, 016. 00
152, 979, 025. 63

Excess of notes over reserve
193, 701, 990. 37
Obligations that will be retired on presentatioii—
Old demand notes.;
• 53, 012. 50
National-bank notes and Federal reserve bank notes assumed b y the United States on deposit of lawful money
for their retirement
36,903,592.00
Fractional currency
.1
6, 845,137. 82
Total

."

•:

Debt on which interest has ceased since maturity (payable on presentation) :
'
Funded loan of 1891, continued at 2 per cent, called for redemption May 18, 1900; interest ceased Aug. 18, 1900
Funded loan of 1891, matured Sept. 2, 1891
Loan of 1904, matured Feb. 2, 1904
p;unded loan of 1907, matured July 2, 1907
Refunding certificates, matured July 1, 1907
Old debt matured at various dates prior to Jan. 1, 1861, and,
other items of debt matured at various dates subsequent to
Jan. 1, 1861
:
,
Certificates of indebtedness, at various interest rates, m a t u r e d . .
Total
156




:....

237,503,732.69

4,000. 00
20, 850. 00
13,050.00
487, 900. 00
11, 200. 00

900,550.26
18, 805, 000. 00
20,242,550.26

Interest-bearing debt {payable on or after specified future dates).
O u t s t a n d i n g J u n e 30, 1918.
T i t l e of loan.

Rate.

Authorizing act.

When
issued.

W h e n r e d e e m a b l e or pay. able.

Interest
payable.

A m o u n t issued.
Registered.

2 percent.
3 per c e n t .

1900.
1898.,

,

4 per c e n t .

1895-]

J u n e 28, 1902, a n d
D e c . 21, 1905.

2 per c e n t .

1906.

do....

1908.

Consols of 1 9 3 0 . . . .
L o a n of 1908-1918.

Mar. 14,1900.
J u n e 13,1898.

L o a n of 1925
P a n a m a C a n a l loan:
Series 1 9 0 6 . . . . . .

J a n . 14, 1875

Series 1908.
Series 1911.
Conversion b o n d s . . .

do..-.:
Aug. 5, 1909, F e b .
4,1910, a n d M a r .
2, 1911.
D e c . 23, 1913
.

1-year T r e a s u r y notes

do

$1,995,700.00
15,127,480.00

S599,724,050.00
63,945,460.00

162,315,400.00

103,283,950.00

15,205,950.00

118,489,900.00

54,631,980.00

48,944,040.00

10,140.00

48,954,180.00

F . , M., A . , N . .

30,000,000.00

25,805,520.00

141,880. O
O
'

25,947,400.00

M., J., S., D .

50,000,000.00

42,962,800.00 o 7,037,200.00

J., A., 3., O .

28,894,50a00

6,250,000.00

22,644,500. 00

28,894,500.00

J., A., J., O .

J 27,362,000.00

2,874,000.00

16,276,000.00

19,150,000.00

J., A., J., O . .
F.,M., A . , N . .
F . , M., A . , N . .

R e d e e m a b l e after A u g .
1916; p a y a b l e A u g .
1936.
R e d e e m a b l e , after N o v .
1918; p a y a b l e N o v .
1938.
P a y a b l e J u n e 1,1961

1,
1,

F . , M., A . , . N . .

1,
1,

.

zn
o

50,000,000.00

O
do..

1916-17..

do

1917-18..-

Various...

1917-18..

Certificates of in. debtedness.
F i r s t L i b e r t y loan
ofl917.

S e p t . 24,1917, a n d
, A p r . 4, 1918.
A p r . 24, 1917

Second L i b e r t y loan
of 1917.

Sept. 24, 1917.

4 a n d 4J per
cent.

Third Liberty loan.
P o s t a l savings b o n d s
(1st t o 13th series).

Apr. 4,1918..
J u n e 25,1910.

4:^ per cent - 1 9 1 8 . . . . :
2h per c e n t . 1911-1917

P o s t a l savings b o n d s
(14th series).

J u n e 25, 1910

2.^ per cent,




Total.

S646,250.150.00 1597,728,350.00
48,817,980.00
198,792,660.00

P a y a b l e after A p r . 1,1930.
R e d e e m a b l e after A u g . 1,
1908; p a y a b l e Aug. 1,
1918.
P a y a b l e after F e b . 1,1925.

3 per c e n t . . 1911.

Coupon.

3^, 4, a n d 1917
4J per cent
1917.....

1918

,

P a y a b l e 30 y e a r s from d a t e
of issue.
P a y a b l e 1 y e a r from d a t e
of issue.
Various, n o t exceeding 1
y e a r from d a t e of issue.
R e d e e m a b l e oji or after-^
J u n e 15, 1932: p a y a b l e
J u n e 15, 1947.
R e d e e m a b l e on or after
N o v . 15, 1927: p a y a b l e
N o v . 15, 1942.
PayableSept.l5,1928....,
R e d e e m a b l e after 1 year
from d a t e of issue: jDayable 20 years from d a t e
of issue.
R e d e e m a b l e after J a n . 1,
1910; p a y a b l e J a n . 1,
1938.-

A t m a t u r i t y . . . 12,098,699,500.00

1,706,204,500.00

June, D e c .

21,989,447,294.62

1,988,791,294.62

May, Nov."

23,807,863,516.00

3,746,813,516.00

Mar., Sept
Jan., J u l y . .

23,243,045,138.47
10,758,560.00

Jan., July.

10,015,540.00

743,020.00

26,360.00

M
H

>
Ul

3,228,109,638.47
10,758,560.00

275,780.00

H

302,140.00

cn

Interest-hearing debt {payable on or aJter specifiedJuture cZa^es)—Continued.

on
00
O u t s t a n d i n g J u n e 30, 1918.

Title of loan.

A u t h o r i z m g act.

Rate.

When
issued.

W h e n r e d e e m a b l e or payable.

Interest
payable.

A m o u n t issued.
Coupon.

Registered.
W a r savings a n d
thrift s t a m p s .
a

S e p t . 24, 1917

Total.

3 A t m a t u r i t y . * S352,769,265.13

§349,797,297.33

12,701,132,104. 22

34 per c e n t . 1917-18.-. P a y a b l e J a n . 1, 1923

11 985 882,436.42

Aggregate of
interest-bear• ing d e b t

1 Excludes matured series.
• 2 These amounts represent receipts of the Treasurer of the United States on account of principal of bonds of the first, second, and third Liberty loans, respectively, to June 30.
3 The average issue price of war savings stamps for the year 1918 with interest at 4 per cent per annum compounded quarterly for the average period to maturity will amount to
$5 on Jan. 1, 1923. Thrift stamps do not bear interest.
<,
* This amount represents receipts of the Treasurer of the United States on account of proceeds of sales of war-savings certificate stamps and United States thrift stamps.
RECAPITULATION.

Gross debt:
Debt bearing no interest
Debt on which interest has ceased
Interest-bearing debt
Gross debt

•

,

$237,503,732.69
20,242,550.26
11,985,882,436.42
."...S

"

H
O
H

"

:

Net debt:
Gross debt
:
Deduct balance in the Treasury free of current obligations

O

...:

12,243,628,719.37
12,243,628,719.37
*. 1,319,347,364.14

W

>
o

tei
02

Net debt ^
•
:
10,924,281,355.23
1 The amount of S5,624,434,750 has been expended in this and the preceding fiscal year from the proceeds of sales of bonds authorized by law for purchase of the obhgations of
foreign Governments. Whenjpayments are received from foreign Governments on account of the principal of their obligations, they must be applied to the reduction of the
mterest-bearing debt of the United States.




EXHIBIT 3.

[PUBLIC—No. 120—65TH CONGRESS.]
[H. R. 11123.]
AN ACT To amend an Act approved September twenty-fourth, nineteen hundred
and seventeen, entitled "An Act to authorise an additional issue of bonds
to meet expenditures for the national security and defense, and, for the
purpose of assisting in the prosecution of the war, to extend additional
credit to foreign governments, and for other purposes."

Be it enacted by the Senate and House of Representatives of the
TJnited States of Am.erica in Congress assembled.^ That the first section of the Act approved September twenty-fourth, nineteen hundred'
and seventeen, entitled "An Act to authorize an additional issue of
bonds to meet expenditures for the national security and defense,
and, for the purpose of assisting in the prosecution of the war, to
extend additional credit to foreign governments, and for other purposes," be, and is hereby, amended to read as follows :
"That the Secretary'of the Treasury, with the approval of the
President, is hereby authorized to borrow, from time to time, on
the credit of the United States for the purposes of this Act, and
to meet expenditures authorized for the national security and defense
and other public purposes authorized by law, not exceeding in the
aggregate $12,000,000,000, and to issue therefor bonds of the United
States, in addition to the $2,000,000,000 bonds already issued or
offered for subscription under authority of the Act approved April
twenty-fourth, nineteen hundred and seventeen, entitled 'An Act to
authorize an issue of bonds to meet expenditures for the national
security and defense, and, for the purpose of assisting in the prosecution of the war, to extend credit to foreign governments, and for
other purposes': Provided., That of this sum $3,063,945,460 shall
be, in lieu of that amount of the unissued bonds authorized by sections one and four of the Act approved April twenty-fourth,'nineteen hundred and seventeen, $225,000,000 shall be in lieu of that
amount of the unissued bonds authorized by section thirty-nine of
the Act approved August fifth, nineteen hundred and nine, $150,000,000 shall be in lieu of the unissued bonds authorized by the joint
resolution approved March fourth, nineteen hundred and seventeen,
and $100,000,000 shall be in lieu of the unissued bonds authorized
by section four hundred of the Act approved March third, nineteen
hundred and seventeen.
" The bonds herein authorized shall be in such form or forms and
denomination or denominations and subject to such terms and con-




159

160

o

REPORT ON T H E FINANCES.

ditions of issue, conversion, redemption, maturities, payment, and
rate or rates of interest, not exceeding four and one-quarter per
centum per annum, and time or times of payment of interest, as the
Secretary of the Treasury from time to time at or before the issue
thereof may prescribe. The principal and interest thereof shall be
payable in United States gold coin of the present stand^ard of value.
" T h e bonds herein authorized shall from time to time first be
offered at not less than par as a popular loan, under such regulations,
prescribed by the Secretary of the Treasury from time to time, as
will in his opinion give the people of the United States as nearly as
may be an equal opportunity to participate therein, but he may make
allotment in full upon applications for smaller amounts of bonds in
advance of any date which he may set for the closing of subscriptions and may reject or reduce allotments upon later applications
and applications for larger amounts, and may reject or reduce allotments upon applications from incorporated banks and trust companies for their own account and make allotment in full or larger
allotments to others, and may establish a graduated scale of allotments, and may from time to time adopt any or all of said methods,
should any such action be deemed by him to be in the public interest:
Provided, That such reduction or increase of allotments of such
bo\ids shall be made under general rules to be prescribed by said
Secretary and shall apply to all subscribers similarly situated. And
any portion of the bonds so offered and not taken may be otherwise
disposed of by the Secretary of the Treasury in such manner and at
such price or prices, not less than par, as he may determine. The
Secretary may make special arrangements for subscriptions at not
less than par from persons in the military or. naval forces of the
United States, but any bonds issued to such persons shall be in all
respects the same as other bonds of the same issue."
SEC. 2. That the last sentence of section two of said Act approved
Seiptember twenty-fourth, nineteen hundred and seventeen, be, and
is hereby, amended to read as follows:
" For the purposes of this section there is appropriated, out of any
money in the Treasury not otherwise appropriated, the sum of
$5,500,000,000, and in addition thereto the unexpended balance of
the appropriations made by section two of said act approved April
twenty-fourth, nineteen hundred and seventeen, oi* so much thereof
as may be necessary: Provided, That the authority granted by this
section to the Secretary of the Treasury to establish credits for foreign Governments, as aforesaid, shall cease upon the termination
of the war between the United States and the Imperial German
Government." o
SEC. 3. That section four of said Act approved September twentyfourth, nineteen hundred and seventeen, is hereby amendeci by adding two new paragraphs, as follows:
" That holders of bonds bearing interest at a higher rate than four
per centum per annum, whether issued (a) under section one, or (b)
upon conversion of four per centum bonds issued under section one,
or (c) upon conversion of three and one-half per centum bonds
issued under said Act approved April twenty-fourth, nineteen hundred and seventeen, or (d) upon conversion of four per centum
bonds issued upon conversion of such three and one-half per centum




SECRETARY OF T H E TREASURY.

161

bonds, shall not be entitled to any privilege of conversion under or
pursuant to this section or otherwise. The provisions of section
seven shall extend to all such bonds.
" If bonds bearing interest at a higher rate than four per centum
per annum shall be issued before July first, nineteen hundred and
eighteen, then any bonds bearing interest at the rate of four per
centum per annum which shall, after July first, nineteen hundred
and eighteen, and before the expiration of the six months' conversion
period prescribed by the Secretary of the Treasufy, be presented for
conversion into bonds bearing interest at such higher rate, shall, for
the purpose of computing the amount of interest payable, be deemed
to have been converted on the dates for the payment of the semiannual interest on the respective bonds so presented for conversion, '
last preceding the date of such presentation."
SEC. 4. That the last sentence of section five of said Act approved
September twenty-fourth, nineteen hundred and seventeen, be, and
is hereby, amended to read as follows:
" T h e sum of such certificates outstanding hereunder and under
section six of said Act approved April twenty-fourth, nineteen hundred and seventeen, shall not at any one time exceed in the aggregate $8,000,000,000."
SEC. 5. That section eight of said Act approved September twentyfourth, nineteen hundred and seventeen, be, and is hereby, amended
to read as follows:
" SEC. 8. That the Secretary of the Treasury, in his discretion, is
hereby authorized to deposit, in such incorporated banks and trust
companies as he may designate, the proceeds, or any part thereof,
arising from the sale of the bonds and certificates of indebtedness
and war-savings certificates authorized by this Act, and arising from
the payment of income and excess profits taxes, and such deposits shall
bear such rate or rates of interest, and shall be secured in such manner,
and shall be made upon and subject to such terms and conditions
as the Secretary of the Treasury may from time to time prescribe:
Provided, That the provisions of section fifty-one hundred and ninetyone of the Revised Statutes, as amended by the Federal reserve Act,
and the amendments thereof, with reference to the reserves required
to be kept by national banking associations and other member banks
of the Federal Eeserve System, shall npt apply ^to deposits of public
moneys by the United States in designated depositaries. The Secretary of the Treasury is hereby authorized to designate depositaries
in foreign countries with which shall be deposited all public money
which it may be necessary or desirable to have on deposit in such
countries to provide for current disbursements to the military aiid
naval forces of the United States and to the diplomatic and consular
and other representatives of the United States in and about such
countries until six months after the termination of the war between
the^United States and the Imperial German Government, and to
prescribe the terms and conditions of such deposits."
SEC. 6. That said Act approved September twenty-fourth, nineteen
hundred and seventeen, is hereby amended by adding four new
sections, to read as follows:
" S E C . 14. That any bonds of the United States bearing interest
at a higher rate than four per centum per annum (whether issued
8642'9°—FI 1918^




11

162

REPORT ON T H E FINANCES.

under section one of this Act or upon conversion of bonds issued
..under this Act or under said Act approved April twenty-fourth,
nineteen hundred and seventeen), which have been owned by any
person continuously for at least six months prior to the date of his
death, and which upon such date constitute part of his estate, shall,
under rules and regulations prescribed by the Secretary of the
Treasury, be receivable by the United States at par and accrued
interest in payment of any estate or inheritance taxes imposed by
the United States, under or by virtue of any present or future law
upon such estate or the inheritance thereof.
"SEC.' 15. That the Secretarj^ of the Treasury is authorized, from
time to time, until the expiration of one year after the termination
of the war, to purchase bonds issued under authority of this Act,
including bonds issued upon conversion of bonds issued under this
Act or said Act approved April twenty-fourth, nineteen hundred and
seventeen, at such prices and upon such terms and conditions as
he may prescribe. The par amount of bonds of any such series
which may be purchased in the twelve months' period beginning on
the date of issue shall not exceed one-twentieth of the par amount
of bpnds of such series originally issued, and in each twelve months'
period thereafter, shall not exceed one-twentieth of the amount of
the bonds of such series outstanding at the beginning of such twelve
months' period. The average cost of the bonds of any series purchased in any such twelve months' period shall not exceed par and
accrued interest.
"For the purposes of this section the Secretary of the Treasury
shall set aside, out of any money in the Treasury not otherwise
appropriated, a sum not exceeding one-twentieth of the amount of
such bonds issued before April first, nineteen hundred and eighteen,
and as and when any more such bonds are issued he shall set aside a
sum not/exceeding one-twentieth thereof. Whenever, by reason of
purchases of bonds, as provided in this section, the amount so set
aside falls below the sum which he deems necessary for the purposes
of this section, the Secretary of the Treasury shall set aside such
amount as he shall deem necessary, but not more than enough to
bring the entire amount so set aside at such time up to one-twentieth
of the amount of such bonds then outstanding. The amount so
set aside by the Secretary, of the Treasury is hereby appropriated
for the purposes of this section, to be available until the expiration
of one year after the termination of the war.
"The Secretary of the Treasury shall make to Congress at the
beginning of each regular session a report including a detailed statement of the operations under this section.
"SEC. 16. That any of the bonds or certificates of indebtedness
authorized by this'Act may be issued by the Secretary of the Treasury
payable, principal and interest, in any foreign money or foreign
moneys, as expressed in such bonds or certificates, but not also in
United States gold coin, and he may dispose of such bonds or certificates in such maimer and at such prices, not less than par, as hemay determine, without compliance with the provisions of the third
paragraph of section one. I n determining the amount of bonds and
certificates issuable under this Act the dollar equivalent of the amount
of any bonds or certificates payable in foreign money or foreign




SECRETARY OF THE TREASURY.

163

moneys shall be determined by the par of exchange at the date of
issue thereof, as estimated by the Director of the Mint, and proclaimed by the Secretary of the Treasury, in pursuance of the provisions of section twenty-five of the Act approved August twentyseventh, eighteen hundred and ninety-four, entitled 'An Act to reduce taxation, to provide reveriue for the Government, and for other
purposes.' The Secretary of the Treasury may designate depositaries in foreign countries, with which.may be deposited as he
may determine all or any part of the proceeds of any bonds or
certificates authorized by this Act, payable in foreign money or
foreign moneys.
"SEC. 17. That the> short title of this Act shall be 'Second Liberty
Bond Act.'"
SEC. 7. That the Act entitled "An Act to authorize an issue of
bonds to meet expenditures for the national security and defense,
and, for the purpose of assisting in the prosecution of the war, to
extend credit to foreign governments, and for other purposes," approved April twenty-fourth, nineteen hundred and seventeen, is
hereby amended by adding a new section to read as follows:
" S E C . 9. That the short title of this Act shall be ' F i r s t Liberty
Bond Act.'"
SEC. 8. That the short title of this Act shall be "Third Liberty
Bond Act."
Approved, April 4, 1918.




EXHIBIT

$3,000,000,000 U N I T E D

STATES

4.

O F AMERICA FOUR AND ONE-

QUARTER PER C E N T G O L D B O N D S OF 1928—

THIRD LIBERTY LOAN.

Dated and bearing interest from May 9, 1918. Due September 15,
1928. Interest payable September 15, 1918, >and thereafter March
15 and September 15.
Authorized by an act of Congress approved September 24, 1917, as
amended by an act of Congress approved April 4, 1918. Offered for
subscription in Department Circular No. I l l , of April, 1918, to be
found on the following pages, to which reference is made for full information concerning the bonds and this offering, and from which
the statements on this page are summarized and to which they are
subject.
Denominations: Coupon and registered bonds, $50, $100, $500,
$1,000, $5,000, $10,000; and registered bonds, $50,000 and $100,000.
Exempt as to principal and interest from all taxation by the
United States, any State, or any of the possessions of the United
States, or by any local taxing authority, except {a) estate or inheritance taxes, and (b) IJnited States graduated additional income
taxes (commonly known as surtaxes) and excess-profits and warprofits taxes. The interest on an amount of bonds and certificates
authorized by said act approved September 24, 1917, or by said act
as amended by .said act approved April 4, 1918, the principal' of
which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from
the taxes provided for in clause (b) above.
Nonconvertible and not subject to call for redemption before maturity.
Bonds receivable at par and accrued interest in payment of United
States estate or inheritance taxes upon the estate of any person who
shall have owried them continuously for at least six months last preceding his death.
Bond purchase fund: The^Secretary of the Treasury is authorized,
from tiriie to time, until the expiration of one year after the termi' nation of the war, to purchase bonds of this issue to an amount not
exceeding, in the first year from the date of issue of such bonds, onetwentieth of the par amount of such bonds originally issued, nor, in
any subsequent year, one-twentieth of the par amount of such bonds
outstanding at the beginning of such subsequent year.
^ Applications must reach the Treasury^ Department, Washington,
D. C , a Federal reserve bank, or a branch thereof named in said circular, or some incorporated bank or trust company within the United
States (not including outlying territories anci possessions) on or before the close of business May 4,1918, the right being reserved by the
164




SECRETARY OF THE TREASURY.

165

Secretary of the Treasury to close the subscription at any earlier date.
All applications for bonds in excess of $10,000 par amount will be
received subject to allotment.
Terms of payment: Five per cent with application on or before May
4, 1918; 20 per cent on May 28, 1918; 35 per cent on July 18, 1918;
40 per cent on August 15', 1918 (with accrued interest from May 9,
1918, on the three deferred installments). Payment in full of any subscription may, if the subscriber so elects, be made, without rebate of
interest, with the application on or before May 4, 1918. Otherwise
payment for the bonds subscribed for must be completed so as to reach
a Federal reserve bank, or a branch thereof, on May 9, 1918, or, with
accrued interest, on May 28, July 18, or August 15, 1918, previous installments having been duly paid.
Amount of issue: Subscriptions for $3,000,000,000 of the bonds are
invited, the right being reserved to allot additional bonds up to the
full amount of any oversubscription.
Delivery: Bonds as described in the circular will be delivered
promptly after completion of payments therefor, but no such deliveries will be made prior to May 9, 1918, except to subscribers for
coupon bonds not in excess of $10,000 par amount who make payment
in full on or before May 4,1918. The right is reserved in making deliveries bef ore May 9 to deliver bonds of the largest denomination or
denominations, not exceeding $1,000, contained in the respective
amounts of bonds subscribed for.
Price, 100 per cent and accrued interest.
TREASURY DEPARTMENT,

Washington, April 6, 1918.

[1918. Department Circular No. I l l of April, 1918. Loans and, Currency.]
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, April 6, 1918.
The Secretary of the Treasury invites subscriptions, at par and
accrued interest, from the people of the United States for $3,000,000,000.of United States of America four and one-quarter per cent
gold bonds of 1928, of an issue authorized by an act of Congress
approved September 24, 1917, as amended by an act of Congress
approved April 4, 1918; the right being reserved to allot additional •
bonds up to the full amount of any oversubscription.
DESCRIPTION OF' BONDS.

Denominations.—-Bearer bonds with interest coupons attached will
be issued in denominations of $50, $100, $500, $1,000, $5,000, and'
$10,000. Bonds registered as to principal and interest will be issued
in denominations of $50, $100, $500, $1,000, $5,000, $10,000, $50,000,
and $100,000. Provision will be made for the interchange of bonds
of different denominations and of coupon and registered bonds and
for the transfer of registered bonds, without charge by the United
States, and under rules and regulations prescribed by the Secretary
of the Treasury.



166

REPORT ON THE FINANCES.

Rate of interest, date of bonds, and maturity.—The bonds will be
dated May 9, 1918, and will bear interest from that date at the rate
of four and one-quarter per cent per annum, payable on September
15, 1918, and thereafter semiannually on March 15 and September
15. The interest payable on September 15, 1918, will be for 129
days. The bonds will mature September 15, 1928. The principal
and interest of the bonds are payable in United States gold coin of
the present standard of value.
Tax exemption.—^The bonds shall be exempt, both as to principal
and interest, from all taxation now or hereafter imposed/^y the
United States, any State, or any of the possessions of the United
States, or by any local taxing authority, except (a) estate or inheritance taxes and {b) graduated additional income taxes, commonly
known as surtaxes, and excess-profits and war-profits taxes, now or
hereafter imposed by the United States, upon the income or profits of
individuals, partnerships, associations, or corporations. The interest
on an amount of bonds and certificates authorized by said act approved September 24,1917, or by said act as amended by said act approved April 4, 1918, the principal of which does not exceed in the
aggregate $5,000, owned by any individual, partnership, association,
or corporation, shall be exempt from the taxes provided for in clause
ib) above.
Nonconvertible and not subject to call for redemption before, maturity.—Th^ bonds of this issue, are not entitled to any privilege of
conversion into bonds bearing a higher rate of interest. The bonds
are not subject to call for redemption before maturity.
Receivable for Federal inheritance taxes.—Any of the bonds which
have been owned by any person continuously for at least six months
prior to the date of his death, and which upon such date constitute
part of his estate, shall, under rules and regulations prescribed by .
the Secretary of the Treasury, be receivable by the United States
at par and accrued interest in payment of any estate or inheritance
taxes imposed by the United States, under or by virtue of any present or future law, upon such estate or the inheritance thereof.
Bond purchase fund.—The Secretary of the Treasury is authorized, from time to time, until the expiration of one year after the
termination of the war, to purchase bonds of this issue at such
prices and upon such terms and conditions as he may prescribe.
The par amount of bonds of this issue which may be purchased in
the 12 months' period beginning on the date of issue shall not exceed one-twentieth of the par amount of such bonds originally issued, and in each 12 months' period thereafter, shall not exceed onetwentieth of the amount of the bonds of such issue outstanding at
the beginning of such 12 months' period. The average cost of the
bonds of this issue purchased in any such 12 months' period shall
not exceed par and accrued interest.
APPLICATIONS.

Official agencies.—The agencies designated by the Secretary of the
Treasury to receive applications for the bonds now offered are the
Treasury Department in Washington, D. C , and the Federal reserve
banks in Boston, New York, Philadelphia, Cleveland (with branches




SECRETARY OF THE TREASURY.

167

at Cincinnati and Pittsburgh), Richmond (with branch at Baltimore), Atlanta (with branch at New Orleans), Chicago ^with
branch at Detroit), St. Louis, Minneapolis, Kansas City (with
branches at Omaha and Denver), Dallas, and San Francisco (with
branches at Portland, Seattle, and Spokane). The Federal reserve
banks have been designated as fiscal agents of the United States to
collate applications, to receive payments, and to make delivery of the
bonds allotted. Subscribers may send their applications, accompanied by the required payment, direct to any of said banks or
branches.
Subscribers'' agencies.—L2iTge numbers of National banks, State
banks, and trust companies, investment bankers, express companies,
newspapers, department stores, and other corporations, firms, and
organizations have patriotically offered to receive and transmit applications for the bonds without expense to the applicants. The
Secretary of the Treasury appreciates the value of these offers, and
will have application blanks widely distributed, through the Federal
reserve banks, to these institutions throughout the country, as well
as to the post offices. No commissions will be paid upon subscriptions, and those who receive .and transmit applications are therefore
rendering the service as a patriotic duty.
F o r m of application.—Applications must be in the form prescribed
by the Secretary of the Treasury and be accompanied by payment of
five per cent of the amount of bonds applied for. Applications must
be for bonds to an amount of $50 or some multiple thereof. At the
option of the subscriber payment in full may be made with the application without rebate of interest, in which case bonds as described
herein, dated and bearing interest from May 9,1918, will be delivered
to the subscriber as soon as possible after the application, accompanied by such payment in full, is received, except that no deliveries
of bonds upon subscriptions in excess of $10,000 will be made prior
to May 9, 1918. If registered bonds are desired and payment in full
is made with the application, the subscriber should fill out the required form appearing on the application blank, in which case registered bonds, dated and bearing interest from May 9, 1918, will be
mailed as promptly as possible to the address given. All applications for bonds in excess of $10,000 par amount will be received subject to allotment.
Time of closing application books.—Applications accompanied by
payment as aforesaid must reach the Treasury Department or a Federal reserve bank, or one of said branches, or some incorporated
bank or trust company within the United States (not including outlying territories and possessions), not later than the close of business
on May 4, 1918, the right being reserved by the Secretary of the
Treasury to close the subscription on any earlier date, to reject any
applications, and to allot less than the amount of bonds applied for.
Applications received by any incorporated bank or trust company on
or before May 4,1918, must, by such bank or trust company, be transmitted to, or covered by its own subscription to, the Federal reserve
bank of the district in which it is located, reaching such Federal
reserve bank not later than the close of business on May 9, 1918,
accompanied by payment as aforesaid.




168

REPORT ON T H E FINANCES.
"

PAYMENTS.

Payment for bonds allotted, in addition to the first installment of
5 per cent on application on or before May 4, 1918, will be required
to be made so as to reach a Federal reserve bank or a branch thereof,
as follows: 20 per cent on May 28,1918; 35 per cent on July 18, 1918;
40 per cent on August 15, 1918, with accrued interest from May 9,
1918, on the three def erred installments. Eeceipt of installment payments made to official agencies prior to payment in full will be
acknowledged by the several Federal reserve banks. Pa3^ments must
be made when and as required under penalty of forfeiture of any and
all installments previously paid and of all right and interest in the
bonds allotted. Payment for bonds allotted in any amount may be
completed without previous notice, but only so as to reach a Federal
reserve bank, or a branch thereof, on May 9, 1918, or, with accrued
interest from May 9, 1918 (the previous installment or installments
halving been duly paid), on May 28, July 18, or August 15, 1918.'
. Payments in IJnited States Treasury certificates of indebtedness.—
Payment of the first installment of 5 per cent, or payment in full
with application on or bef ore May 4, 1918, or completion of payment
on May 9, 1918, may be made in United States Treasury certificates
of indebtedness of any maturity except those maturing April 22,
1918, and June 25, 1918. Payment on other installment dates may be
made in United States Treasury certificates of indebtedness of the
issues, if ariy, maturing pn said installment dates, respectively. Such
certificates will be received at their face value, and the accrued interest thereon, which, in case of payment of the first installment or payment in full on or before May 9, will be computed to May 9, will be
remitted by check to the, subscriber. Treasury certificates thus presented must not be of a larger, face value than the amount then to be
paid on the subscription; and subscribers should obtain certificates in
appropriate denominations in advance. Incorporated banks and
trust companies in the United States, duly, qualified as special de-'
positaries of public moneys, may make payment by credit for bonds
subscribed for for themselves and their customers up to an amount
for which such depositaries, respectively, shall have been qualified in
excess of then existing deposits, when so notified b}^ Federal reserve
banks, but only to the extent that the}^ can not make such payment
in sucii Treasury certificates of indebtedness.
How to muke payments.—It is strongly recommended that subscribers avail themselves of the assistance of their own banks and
trust companies, in which, case they will, of course, make pajmnent
through such institutions. I n cases where they do not do so, subscribers should make payment,,either to the Treasury Department in
Washington or to one of the Federal Reserve Banks in cash, or \)^j
bank draft, certified check, post-office money order, or express company money order, made payable to the order of the Secretary ot
the Treasurer if the application is filed with the Treasury Department in Washington (thus: " T h e Secretary of the Treasury, Third
Liberty Loan Account"), or, if the application is filed elsewhere,
made payable to the order of the Federal Reserve Bank of the
district in which the application is filed (thus: "Federal Eeserve
Bank of
, Third Liberty Loan Account").



SECRETARY OF THE TREASURY.

169

DELIVERY.

Bonds dated May 9, 1918, and bearing interest from that date, will
be delivered after due completion of payment, by the several Federal
Reserve Banks as fiscal agents of the United States as far as practicable in accordance with written instructions given by the subscribers, and, within the United States, its territories and insular
possessions, at the expense of the United States. Bonds as described
in the circular will be delivered promptly after completion of payments therefor, but no such deliveries will be made prior to May 9,
1918, except to subscribers for not in excess of $10,000 par amount of
coupon bonds who make payment in full on or before May 4, 1918.
I n making deliveries before May 9, the right is reserved to deliver
bonds of the largest denomination or denominations, not exceeding
$1,000, contained in the respective amounts of bonds subscribed for.
INTEREST.

As the bonds are dated May 9,1918, no accrued interest will be due
on subscriptions for bonds paid for in full on or before that date.
No rebate of interest will be allowed, either on account of full payment in advance of May 9,1918, or on account of the first installment
of 5 per cent. Upon completion of payment for the bonds on May
28, July 18, or August 15, 1918, the subscriber will be required to
pay accrued interest from May 9, 1918, on the deferred installment
or installments at the rate of 4J per cent per annum.
F U R T H E R DETAILS.

The bonds will be receivable as security for deposits of public
money, but will not bear the circulation privilege.
Coupon bonds will have four interest coupons attached, covering
interest payments up to and including March 15, 1920. On or after
that date holders of these bonds should surrender the same and obtain a new bond or bonds having coupons attached thereto covering
semiannual payments from September 15, 1920, to September 15,
1928, both inclusive. This is to avoid the inconvenience, both to the
United States and to subscribers, incident to the delivery of interim
receipts, and to allow sufficient time for the engraving and printing
of bonds with the full number of coupons attached.
The Secretary of the Treasury may make special arrangements
for subscriptions for the bonds at not' less than par from persons in
the military or naval forces of the Uriited States.
Further details may be announced by the Secretary of the Treasury from time to time, information as to which as well as forms for
application may be obtained from the Treasury Department or
through any Federal Reserve Bank.




W.

G. MCADOO,

Secretary.of ihe Treasury.

E X H I B I T 5.
[Treasury Department, Third Liberty Loan.

Form No. L & C 2. Loans and Currency.!

UNITED STATES OF AMERICA FOUR AND ONE-QUARTER PER CENT
GOLD BONDS OF 1928^THIRD LIBERTY LOAN.
APPLICATION FOR BONDS.

Dated-T o THE SECRETARY OF T H E T R E A S U R Y :

The undersigned hereby applies for $
par amount of
United States Four-and-One-Quarter Per Cent Gold Bonds of 1928,
and agrees to pay par for all bonds allotted on this application and
accrued interest from May 9, 1918, on any deferred installments, in
accordance with the terms of Treasury Department Circular No. I l l
of April, 1918., The sum of $
is inclosed herewith.
Signature of subscriber in full
Address: Number and street
City or town
County
^ State
'
NOTE 1.—This application should be transmitted through the subscriber's
bank, trust company, or other agency acting on his behalf, or it may be filed
direct with the Federal Reserve Bank bf his district or the Treasury Department, Washington, D. C. It must reach some incorporated bank or trust company in the United States (not including outlying territories and possessions),
or a Federal Reserve Bank, or the Treasury Department, on or before the close
of business May 4, 1918.
NOTE 2.—Applications must be accompanied by payment of five per cent of
the amount of bonds applied for or by payment in full.
NOTE 3.—In case payment in full is made hereioith: Coupon bonds as described in the circular, dated and bearing interest from May 9, 1918, will be
delivered to the above address, unless other instructions are given in vv^riting.
Upon any application for an amount of bonds in excess of $10,000 delivery will
not be made before May 9, 1918. In making deliveries before May 9 on applications for $10,000 or less bonds the right is reserved to deliver bonds of the
largest denominations, not exceeding $1,000, contained in the amount applied
for. Indicate below the denominations of the bonds desired. If registered
bonds are desired, fill out the form given below, in which case registered bonds,
dated and bearing interest from May 9, 1918, will be mailed as promptly as possible to the address given below. '
'
Check (X) denomination of bonds desired, if subscription is paid in full.
$50
$100
$500
$1,000
$5,000
$10,000
$50,000
5100,000

(Registered only.^
(Registered only.j

Following forni to be filled out only in case registered bonds are
desired and subscriptiori is fully paid.
)
170



SECRETARY OF T H E TREASURY.

171

Register the bonds covered by above full-paid subscription in
name of:
(Mr.. Mrs., Miss.)

(B'irst name in full.)

(Initial.)

Address: Number and street

(Last name.)

:

City or town
County

State

.

L—

[Reverse of form of application.]

$3,000,000,000 United States of America Four and One-Quarter Per Cent Gold
Bonds of 1928—Third Liberty Loan.




EXHIBIT

6.

[Treasury Department, Loans and Currency.
THIRD

LIBERTY

Form L & C 8.]

LOAN.

A P P L I C A T I O N BY A N INCORPORATED B A N K OR TRUST C O M P A N Y FOR BONDS
TO BE SOLD BY I T I N LOTS OF $ 1 0 , 0 0 0 , OR LESS, TO A N Y O N E SUBSCRIBER
U P O N P A Y M E N T I N F U L L BY S U C H SUBSCRIBER.

Dated
To THE FEDERAL RESERVE B A N K OF

The undersigned hereby applies for $___
par amount of the
United States of America four and one-quarter per cent gold bonds
of 1928 in coupon form to be sold to subscribers therefor according to
the terms of Treasury Department Circular No. I l l , of April, 1918.
Please deliver such bonds to the undersigned as soon as they are
. available.
The undersigned hereby agrees that no bonds shall be delivered
by the undersigned except against payment in full of the par amount
thereof by subscribers whose total subscriptions shall not exceed
$10,000 for any one subscriber; and, in making deliveries to such subscribers, the undersigned hereby agrees to deliver, in so far as practicable, bonds of the largest denomination or denominations, not
exceeding $1,000, contained in the respective amounts of bonds subscribed for.
The unders'gned hereby agrees not to sell, nor to offer for sale, nor
to enter into any agreement for the sale, of any of the bonds obtained
upon this application until after May 9, 1918; but this agreement
shall not prevent sales before said date to subscribers upon payment
in full whose total subscriptions shall not exceed $10,000 for any one
subscriber.'
A. Please charge our account with
- $
_
B. We inclose check fdr
-..
_
$
C. We inclose certificate of advice showing that
there has been deposited with the undersigned
for your account as fisibal agent of the United
States, in accordance with Treasury Department Circular No. 92 as supplemented, the
sum of (see note)
_
$
being the par amount of bonds applied for.
172
,
•

I




SECRETARY OF THE TREASURY.
The undersigned desires to receive coupon
cation in the following denominations:
at
$50
at
$100
at
$500
:
at $1,000
1
at $5,000
•
at $10,000
^

173

bonds upon this appliTotal,
Total,
Total,
Total,
Total,
Total,

$
$
$
$
$
$

:

_
o

Total, $
Signature in full of applicant incorporated bank or trust company
Address in full
B
y
.
_

.

.

.

_

_

_

_

!_.
.

_

NOTE.—If the applicant bank or trust company is duly qualified as a special
depositary of public moneys to an amount in excess of then existing deposits,
payment may be made upon this application by credit upon notification by a
Federal reserve bank. If the applicant is not qualified as a depositary 'as
above, payment must be made by cash, certified check, bank draft, or charge
against its account with a Federal reserve bank.




EXHIBIT 7.

'

[PUBLIC—No. 192—65TH CONGRESS.]
[H. R. 12580.]
AN ACT To authorize an additional issue of bonds to meet expenditures for
the national security and defense, and, for the purpose of assisting in the
prosecution of the war, to extend additional credit to foreign Governments,
and for other purposes.

Be it enacted by the Senate and House of Representatives of ihe
United States of America in Congress assembled. That section one
of the Second Liberty Bond Act, as amended by the Third Liberty
Bond Act, is hereby further amended by striking out the figu r e s " $12,000,000,000" and inserting in lieu therepf the figures
"$20,000,000,000;"
,
'
SEC. 2. That section two of the Second Liberty Bond Act, as
amended by the Third Liberty Bond Act, is hereby further amended
by striking out the figures "$5,500,000,000" and inserting in lieu
thereof the figures " $7,000,000,000."
SEC. 3. That notwithstanding the provisions of the Second Liberty
Bond Act, as amended by the Third Liberty Bond Act, or of the War
Finance Corporation Act, bonds and certificates of indebtedness of
the United States payable/in any foreigri money or foreign moneys,
and bonds of the War Finance Corporation payable in any foreign
money or foreign moneys exclusively or in the alternative, shall, if
and to the extent expressed in such bonds at the time of their issue,
with the approval^ of the Secretary df the Treasiiry, while beneficially
owned by a nonresident alien individual, or by a foreign corporation,
partnership, or association, not engaged in business in the United
States, be exempt both as to principal and interest from any and all
taxation now or hereafter imposed by the United States, any State,
or any of the possessions of the United States, or by any local taxing
authority.
SEC. 4. That any incorporated bank or trust company designated
as a depositary by the Secretary of the Treasury under, the authority
conferred by section eight of the Second Liberty Bond Act, as amended by the Third Liberty Bond Act, which gives security for such deposits as, and to amounts, by him prescribed, may, upon and subject
to such terms and conditions as the Secretary of the Treasury may
prescribe, act as a fiscal agent of the United States in connection with
the operations of selling and delivering any bonds, certificates of
indebtedness or war savings certificates of the United States.
SEC. 5. That the short title of this Act shall be " Fourth Liberty
Bond Act."
Approved, July 9, 1918.
174




EXHIBIT 8.
[PUBLIC—No. 217—65TH CONGRESS.]
[H.N R. 12923,]
AN ACT To supplement the Second Liberty Bond Act, as amended, and for otlier
purposes.

Be it enacted by the Senate and House of Representatives of the
TJnited States of America in Congress assembled, That until the expiration of two years after the date of the termination of the war
between the United States and the Imperial German Government,
as fixed by proclamation of the President—
(1) The interest on an amount of bonds of the Fourth Liberty
Loan the principal of which does not exceed $30,000, owned by any
individual, partnership, association, or 'corporation, shall be exempt
from graduated additional income taxes, commonly known as surtaxes, and excess profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals,
partnerships,.associations, or corporations;
(2) The interest received after January 1, 1918, on an amount of
bonds of the First Liberty Loan Converted, dated either November
15, 1917, or May 9, 1918, the Second Liberty Loan, converted and
unconverted, and the Third Liberty Loan, the principal of which
does not exceed $45,000 in the aggregate, owned by any individual,
partnership, association, or corporation, shall be exempt from such
taxes: Provided, however. That no owner of such bonds shall be
entitled to such exemption in respect to the interest on an aggregate
principal amount of such bonds exceeding one and one-half times
the principal amount of bonds of the Fourth Liberty Loan originally
subscribed for by such owner and still owned by him at the date of
his tax return; and
(3) The interest, on an amoimt of bonds, the principal of which
does not exceed $30,000, owned by any individual, partnership, association, or corporation, issued upon conversion of 3^ per centum
bonds of th(3 First Liberty Loan in the exercise of any privilege arising as a consequence of the issue of bonds of the Fourth Liberty
Loan, shall be exempt from such taxes.
The exemptions provided in this section shall be in addition to the
exemption provided in section 7 of the Second Liberty Bond Act in
respect to the interest on an amount of bonds and certificates, authorized by such Act and amendments thereto, the principal of which
does not exceed in the aggregate $5,000, and in addition to all other
exemptions provided in the Second Liberty Bond Act.
SEC. 2. That section 6 of the Second Liberty Bond Act is hereby
amended by striking out the figures "$2,000,000,000,",and inserting
in lieu thereof the figures " $4,000,000,000." Such section is further
amended by striking out the^words " The amount of war savings cer-




176

176

REPQRT ON T H E FINANCES.

tificates sold to any one person-at any one time shall not exceed $100,
and it shall not be lawful for any one person at any one tiirie to- hold
war savings certificates to an aggregate amount exceeding $1,000,"
and inserting in lieu thereof the words " It. shall not be lawful for
any one person at any one time to hold war savings certificates of
any one series to an aggregate ainpunt exceeding $1,000."
SEC. 3. That the provisions of section 8 of the Second Liberty Bond
Act, as amended by the Tliird Liberty Bond Act, shall apply to the
proceeds arising from the payment of war-profits taxes as well as
income and excess-profits taxes.
SEC. 4. That the Secretary of the Treasury may, during the war
and for two years after its termination, make arrangements in or with
foreign countries to stabilize the foreign exchanges and to obtain foreign currencies and credits in such currencies, and he may use any
such credits and foreign currencies for the purpose of stabilizing or
rectifying the foreign exchanges, and he may designate depositaries
in foreign countries with which may be deposited as he may determine
all or any part of the avails of any foreign credits or foreign currenciesSEC. 5. That subdivision (b) of section 5 of the Trading with the
Enemy Acit be, and hereby is, amendeci to read as follows:
" (b) That the President may investigate, regulate, or prohibit, under
such rules and regulations as he may prescribe, by means of licenses or
otherwise, any transactions in foreign exchange and the export, hoarding, melting, or earmarkings of gold or silver coin or bullion or currency, transfers of credit in any form (other than credits relating
solely to transactions to be executed wholly within the United
States), and transfers of evidences of indebteciness or of the ownership of property between the United States and any foreign country,
whether enemy, ally of eneray, or otherwise,' or between residents oi
one or more foreign countries, by any person within the United
States; and, for the purpose of strengthening, sustaining and broadening the market for bonds and. certificates of indebtedness of the
United States, of preventing frauds upon the holders thereof, and oi
protecting such holders, he may investigate and regulate, by ineans oi
licenses or otherwise (until the expiration of two years after the date
of the termination of the present war with the Imperial German Government, as fixed by his proclamation), any transactions in such bonds
or certificates by or between any person or persons: Provided, Thai
nothing contained'in this subdivision (b) shall be construed to cbnfei
any power to prohibit the purchase or sale for cash, or for notes
eligible for discount at any Federal Reserve Bank, of bonds or certificates of indebtedness of the United States; and he niay require
ariy person engaged in any transaction referred to in this subdivision
to furnish, under oath, complete information relative thereto, including the f)roduction of any books of account, contracts, letters or othei
papers, in connection therewith in the custody or control of sucli
person, either before or after such transaction is completed."
SEC. 6. That section 5200 of the Revised Statutes, as amended, be
and hereby is, amended to read as follows:
" S E C , 5*200. The total liabilities to any association, of any person
or of any company, corporation, or firm for money borrowed, including in the liabilities of a company or firm the liabilities of the severaJ
members thereof, shall at no time exceed^ 10 per centum of the ampunj




SECRETARY OF THE TREASURY.

,177

of the capital stock of such association, actually paid in and unimpaired, and 10 per centum of its unimpaired surplus fund: Provided,
however. That (1) the discount of bills of exchange drawn in good
faith against actually existing values, (2) the discount of commercial
or business paper actually owned by the person, company, corporation, or firm, negotiating the same, and (3) the purchase or discount
of any note or notes secured by not less than a like face amount of
bonds of the United States issued since April 24, 1917, or certificates
of indebtedness of the United States, shall not be considered as money
borrowed within the meaning of this section; but the total liabilities
to ar^y association, of any person or of any company, corporation, or
firm, upon any note or notes purchased or discounted by such association and secured by such bonds or certificates of indebtedness, shall
not exceed (except to the extent permitted by rules and regulatipns
prescribed by the Comptroller of the Currency, with the approval of
the Secretary of the Treasury) 10 per centum of such capital stock
and surplus fund of such association." .
SEC. 7. That the short title of this Act shall be " Supplement to
Second Liberty Bond Act."
Approved, September 24, 1918.
86429°—FI 1918




12

E X H I B I T 9.

$6,000,000,000 UNITED

STATES OF AMERICA FOUR AND ONE-

QUARTER PER C E N T G O L D B O N D S OF 1933-38—
FOURTH LIBERTY

LOAN.

Dated and bearing interest from October 24, 1918. Due October
15°, 1938. Redeemable at the pleasure of the United States at par and
accrued interest on and after October 15, 1933. Interest payable
April 15 and October 15.
Authorized by an act of Congress approved September 24, 1917,
as amended by the acts of Congress approved April 4, 1918, and
July 9, 1918, and supplemented by an act of Congress approved September 24, 1918. Offered for subscription in Department Circular
No. 121, dated September 28, 1918, to be found on the following
pages, to which reference is made for full information concerning the
bonds and this off'ering, and from which the statements on this page
are summarized and to which they are subject.
Amount of issue: Subscriptions for $6,000,000,000 of the bonds
are invited, the right being reserved to allot additional bonds up to
the full amount of any oversubscription.
Denominations: Coupon and registered bonds, $50, $100, $500,
$1,000, $5,000,$10,000; and registered bonds, $50,000 and $100,000.
Applications must reach the Treasury Department, Washington,
D. C., a Federal reserve bank, or a branch thereof, or some incorporated bank or triist company within the United States (not including outlying territories and pjossessions) on or before, the close
of business October 19, 1918, the right being reserved by the Secretary of the Treasury to close the subscription on any earlier date.
Terms of payment: Ten per cent with application on or before
October 19, 1918; 20 per cent on November 21, 1918; 20 per cent on
December 19, 1918; 20 per cent on January 16, 1919; 30 per cent on
January 30, 1919 (with accrued interest from October 24, 1918, on
the four deferred installments). Payment in full of any subscription
may, if the subscriber so elects, be made, without rebate of interest,
with the application on or before October 19, 1918. Otherwise payment for the bonds subscribed for must be completed so as to reach
a Federal reserve bank, or a branch thereof, on October 24, 1918, or,
with accrued interest, on November 21,1918, December 19,1918, January 16, 1919, or January 30, 1919, previous installments having been
duly paid.
,
Delivery: Borids as described in the circular, dated October 24,
1918, and bearing interest from that date, will be delivered promptly
after due completion of payment therefor, and may be delivered prior
to October 24, 1918, to subscribers who make payment in full in cash
on or before October 19, 1918. In making deliveries before October
24, the right is reserved to deliver bonds of the largest denomination
178




'

'^

'

SECRETARY OF THE TREASURY,

'

179

or denominations, not exceeding $1,000, contained in the respective
amounts of bonds subscribed for. Bonds will be delivered by the
several Federal Reserve banks as fiscal agents of the United States
as. far as practicable in accordance with written instructions given by
the subscribers, and, within the United States, its territories and
insular possessions, at the expense of the United States.
Price, 100 per cent and accrued interest.
TREASURY DEPARTMENT,

Washington, September 28, 1918.
[1918.

Department Circular No. 121.

Loans and Currency.]

TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, September 28, 1918.
The Secretary of the Treasury invites subscriptions, at par and accrued interest, from the people of the United States for $6,000,000,000
of United States of America four and one-quarter per cent gold
bonds of 1933-38, of an issue authorized by an act of Congress approved September 24, 1917, as amended by the acts of Congress approved April 4, 1918, and July 9, 1918, and supplemented by an act
of Congress approved September 24, 1918, the right being reserved
to allot additional bonds up to the full amount of any oversubscription.
DESCRIPTION OF BONDS.

Denominations.—Bearer, bonds with interest coupons attached will
be issued in denominations of $50, $100, $500, $1,000, $5,000, and
$10,000. Bonds registered as to principal and interest will be issued
in denominations of $50, $100, $500, $1,000, $5,000, $10,000, $50,000,
and $100,000. Provision will be made for the interchange of bonds
of different denominations and of coupon and registered bonds and
for the transfer of registered bonds, without charge by, the United
States, and under the rules and regulations prescribed by the Secretary of the Treasury.
Rate of interest, date of .bonds, maturity, and redemption.—The
• bonds will be dated October 24, 1918, and will bear interest from
that date at the rate of four.and one-quarter per cent per annum,
payable on April 15 and October 15 in each year. The interest payable on April 15, 1919, will be for 173 days. The bonds will mature
October 15, 1938, but the issue may be redeemed at the pleasure of
the United States on and after October 15,1933, in whole or in part,
at par and accrued interest, on any interest day or days, on six
m.onths' notice given in such manner as the Secretary of the Treasury shall prescribe. I n case of partial redemption the tionds to be
redeemed will be determined b}^ such method as may be prescribed by
the Secretary of the Treasury. From the date of redemption designated in any such notice, interest on bonds called for redemption
shall cease. The principal and interest of the bonds are payable in
LTnited States gold coin of the present standard of value.
Tax exemption.—The bonds shall be exempt, both as to principal
and interest, from all taxation now or hereafter imposed by the




180

'

,

. REPORT ON THE FINANCES.

United. States, any State, or any of the possessions of the Uriited
State's, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly
known as surtaxes, and excess profits and war-profits taxes, now or
hereafter imposed by the United States, upon the income or profits
of individuals, partnerships, associations, or corporations. The interest dn an amount of bonds and certificates authorized by said Act
approved September 24, 1917, and amendments thereto, the principal
of which does not exceed in the aggregate $5,000, owned by any individual, partnership^association, or corporation, shall be exempt from
the taxes provided for in clause (b) above.
I n addition to the foregoing exemptions, until the expiration of
two years after the date of the termination of the war between the
United States and the Imperial German Government, as fixed by
proclamation of the President—
,
>
.
(1) The interest on an amount of bonds of the Fourth Liberty
Loan the principal of which does not exceed $30,000, owned by anyindividual, partnership, association, or corporation, shall be exempt
from graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals,
" partnerships, associations, or corporations;
^
(2) The interest received after January 1, 1918, on an amount of
bonds of the First Liberty Loan Converted, dated either November
15,1917, or May 9,1918, the Second LibertyLoan, couA'Crted and unconverted, and the Third Liberty Loan, £he principal of which does
not exceed $45,000 in the aggregate, owned by any individual, partnership, association, or corporation, shall be exempt from such taxes:
provided, however, that no owner of such bonds shall be entitled to
such exemption in respect to the interest on an aggregate principal
amount of such bonds exceeding one and one-half times the principal
amount of bonds of the Fourth Liberty Loan originally subscribed
for by such owner and still owned by him at the date of his tax return.
Receivable for Federal inheritance taxes.—Any of the bonds which
have been owned by any person continuously for at least six months
prior to the date of his death, and which upon such date constitute
part of his estate, shall, under rules and regulations prescribed by
the Secretary of the Treasury, be receivable by the United States atpar and accrued interest in payment of any estate or inheritance
taxes imposed by the United States, under or by virtue of any present
or future law, upon such estate or the inheritance thereof.
Bond purchase fund.—The Secretary of the Treasury is authorized,
from time to time, until the expiration of one year after the termination of the war, to purchase bonds of this issue at such prices and
upon such terms and conditions as he may prescribe. The par amount
- of bonds of this issue which may be purchased in the 12 months'
period beginning on the date of issue shall not exceed one-twentieth
of the par amount of such bonds originally issued, and in each 12
months' period thereafter, shall not exceed one-twentieth of the
amount of the bonds of such issue outstanding at the beginning of
such 12 months' period. The average cost of the bonds of this issue
purchased in any such 12 months' period shall not exceed par and
accrued interest.



SECRETARY OF THE TREASURY.

181

APPLICATIONS.

Official agencies.—The agencies designated by the Secretary of the
Treasury to receive applications for the bonds now offered are the
Treasury Department in Washington, D. C., and the Federal reserve banks in Boston, New York, Philadelphia, Cleveland (with
branches at. Cincinnati and Pittsburgh), Richmond (with branch at
Baltimore), Atlanta (with branches at New Orleans, Birmingham,
and Jacksonville), Chicago (with branch at Detroit), iSt. Louis (with
branches at Louisville and Memphis), Minneapolis, Kansas City
(with branches at Omaha and Denver), Dallas (with branch at El
Paso), and San Francisco (with branches at Salt Lake City, Portland, Seattle, and Spokane). The Federal reserve banks have been^
designated as fisca;l agents of the United States, to receive applications, to receive payments, and to make delivery of the bonds allotted. Subscribers may send their applications, accompanied by the
required payment, direct to any of said banks or branches.
Subscribers^ agencies.—Large numbers of national banks. State
banks, and trust companies, investment bankers, express companies,
newspapers, department stores, and other corporations, firms, and
organizations have patriotically offered to receive and transmit applications for the bonds without expense to the applicants. The Secretary of the Treasury appreciates the value of these offers and will
have application blanks widely distributed, through the Federal
reserve banks, to these institutions throughout the country. Subscribers' agencies must transmit or cover by their own subscriptions
all applications received by them. No commissions will be paid upon
subscriptions, and those who receive and transmit applications are
therefore rendering the service to subscribers as a patriotic duty.
Only the Federal reserve banks are authorized to act as .fiscal agents
of the United States in connection with the operations of selling and
delivering bonds of the Fourth Liberty Loan.
Form of application.—A.^^\\Q,2it\0Tis must be in the form prescribed
by the Secretary of the Treasury and be accompanied by payment of
10 per cent of the ampunt of bonds applied for. Applications must
be for bonds to an amount of $50 or some multiple thereof. v.-At the
option of the subscriber payment in full may be made with the application without rebate of interest, in which case bonds as described
herein, dated and bearing interest from October 24, 1918, will be delivered to the subscriber as soon as possible after the application, accompanied by such payment in^full, is received. If registered bonds
are desired, the subscriber should fill out the required form appearing
on the application blank, in which/ case registered bonds, dated tod
bearing interest from October 24, 1918, will be issued as promptly
as possible, after payment in full, and mailed to the address given.
Time of closing application books.—Applications accompanied by
payment as aforesaid must reach the Treasury Department or a
Federal reserve bank or one of said branches or some incorporated
bank or trust company within the United States (not including outlying territories and possessions) not later than the close of business
on October 19, 1918, the right being reserved by the Secretary of the
Treasury to close the subscription on any earlier date, to rd]ect any.
applications, and to allot less than the amount of bonds applied for.




182

REPORT ON THE FINANCES.

Applications received by any incorporated bank or trust company on
or before October 19, 1918, must, by such bank or trust company, be
transmitted to, or covered by its own subscription to, the Federal
reserve bank of the district in which it is located, reaching such
Federal reserve bank' not later than the close of business on October
24, 1918, accompanied by payment as aforesaid:
PAYMENTS.

Terms of payment.—Unless payment in full is made with application, payment for bonds allotted, in addition to the first installment
of 10 per cent on application on or before October 19, 1918, must be
made so as to reach a Federal reserve bank or a branch thereof, as
follows: 20 per cent on November 21, 1918; 20 per cent on December
19,1918; 20 per cent on January 16, 1919; 30 per cent on January 30,
1919, with accrued interest from October 24, 1918, on the four deferred installments. Receipt of installment payments made to oificial
agencies prior to payment in full will be acknowledged by the several
Federal reserve banks. Payments must be. made when and as herein
provided under penalty of forfeiture of any and all installments previously paid and of all right and interest in the bonds allotted. Payment for bonds allotted may be sooner completed, but only so as to
reach a Federal reserve bank or a branch thereof on October 24,1918,
or, with accrued interest from October 24, 1918 (the previous installment or installments having been duly paid), on November 21, 1918,
December 19, 1918, or January 16, 1919.
Payment in TJnited States Treasury certificates of iMdebtedness.—
Payment of.the first installment of 10 per cent, or payment in full
with application on or before October 19, 1918, or completion of *payment on October 24, 1918, may be made in United States. Treasury
certificates of indebtedness of Series I V of any maturity, but not in
certificates of the Tax Series of 1919. Paynient on other installment
dates may be made in United States Treasury certificates of indebtedness of the issues, if any, maturing or called for redemption on said
installment dates, respectively. Such certificates will be received at
their face value. The accrued interest thereon, (which, in case of
payment of the first installment or payment in full on or before
October 24, 1918, will be computed to October 24), will ber paid to
the subscriber. Treasury certificates thus presented must not be of
a larger face value than the amount then to be paid on the subscription; and subscribers shoiild obtain certificates in appropriate
denominations in advance.
How to make payments.—It is strongly recommended that subscribers avail themselves of the assistance of their own banks and
trust companies, in which case they will, of course, make payment
through such institutions. I n cases where they do not do sc, subscribers should make payment, either to the Treasury Department
in Washington or to a Federal reserve bank or branch thereof in
cash, or by bank draft, certified check, post-office money order, or
express company money order, made payable to the order of the
Secretary of the Treasury if the application is filed with the Treasury Department in Washington (thus: " T h e Secretary of the
Treasury, Fourth Liberty Loan Account"), or, if the application
is filed elsewhere, made payable to the order of the Federal reserve




SECRETARY OF THE TREASURY.

.183

bank of the district in which the application is filed (thus: " Federal iReserve Bank of
, Fourth Liberty Loan Account").
Incorporated banks and trust companies in the United States, duly
qualified as special depositaries of public moneys under Department
Circular No. 92, as amended and supplemented September 21, 1918,
may make payment by credit for bonds subscribed for for themselves and their customers up to the amount for which such depositaries, respectively, shall be qualified in excess of then existing deposits, when so notified by Federal reserve banks; but the right is
reserved to require that qualified depositaries make payment by credit
only to the extent that they can not make such payment in Treasury
certificates of indebtedness maturing or called for redemption on the
date the payment on bond subscriptions is due at Federal reserve
banks.
DELIVERY.

Bonds as described in the circular, dated October 24, 1918, and
bearing interest from that date, will be delivered promptly after due
completion of payment therefor, and may be delivered prior to
October 24,1918, to subscribers who make payment in full in cash on
or before October 19, 1918. I n making deliveries before October 24,
the right is reserved to deliver bonds of the largest denomination or
denominations, not exceeding, $1,000, contained in the respective
amounts of bonds subscribed for. Bonds will be delivered by the
several Federal reserve banks as fiscal agents of the United States
as far as practicable in accordance with written instructions given
by the subscribers, and, within the United States, its Territories and
insular possessions, at the expense of the United States.
INTEREST.

As the bonds are dated October 24, 1918, no accrued interest will
be due on subscriptions for bonds paid for in full on or before that •
date. No rebate of interest will be allowed, either on account of full
payment in advance of October 24, 1918, or on account of the first installment of 10 per cent. Upon completion of payment for the bonds
on November 21,1918, December 19,1918, January 16, 1919, or January 30, 1919, the subscriber will be required to pay accrued interest
from October 24, 1918, on the deferred installment or installments at
the rate of 4J per cent per annum.
/
F U R T H E R DETAILS.

The bonds will be receivable as security for deposits of public
money, but will not bear the circulation privilege. The bonds are not
entitled to any privilege of conversion into bonds bearing a higher
rate of interest.
Coupon bonds will have four interest coupons attached, covering
interest payments up to and including October 15, 1920. On or after
that date holders of these bonds should surrender the same and obtain a new bond or bonds having coupons attached thereto covering
semiannual payments from April 15, 1921, to October 15, 1938, both
inclusive. This is to avoid the inconvenience, both to the United




184 .

•,, REPORT ON T H E FINANCES.

States and to subscribers.^ incident to the delivery of interim receipts,
and to allow sufficient time for the engraving and printing of bonds
with the full number of coupons attached.
The Secretary of the Treasury may make special arrangements for
subscriptions for the bonds at not less than par from persons in the
military, or naval forces of the United States.
Further details may be announced by the Secretary of the Treasury from time to time, information as to which as well as forms for
application may be obtained from the Treasury Department ,or
through any Federal reserve bank.




W. G. MCADOO,

Secretary of the Treasury.

E X H I B I T 10.
[Treasury Department, Fourth Liberty Loan. Form L & C 87. Loans and Currency.]
U N I T E D S T A T E S OF A M E R I C A F O U R A N D O N E - Q U A R T E R P E R C E N T
GOLD BONDS OF 1 9 3 3 - 3 8 — F O U R T H L I B E R T Y LOAN.
APPLICATION FOR BONDS.

Dated,

, 1918.

T o THE SECRETARY OF T H E T R E A S U R Y :

The undersigned hereby applies for $
par amount of United
States four and one-quarter per cent gold bonds of 1933-38, and
agrees to pay par for all bonds allotted on this application and
accrued interest from October 24, 1918, on any deferred installments,
in accordance with the terms of Treasury Department Circular No.
121, dated September 28,1918. The sum of $
^ is inclosed herewith.

The undersigned desires

tions indicated below.^

^^..^^^ 2

bonds of the denomina-

Signature of subscriber in full:

(Mr., Mrs., Miss.)
(First name in full.)
(Middle name or initial.)
(Last name.)
(Or complete legal name of corporation, partnership, or other subscriber.)

Address: Number and street
City or town __1
County-

,

:

._

State__

^Applications must be accompanied by payment.of ten per cent of the amount
of bonds applied for or by payment in full.
2 strike out the word " registered," or the word " coupon," whichever form
bf bond is not desired. If no preference is indicated, either coupon bonds or
bonds registered in the name of the subscriber may be delivered. Bonds as
described in the circular dated and bearing interest from October'24, 1918,
will be delivered as proinptly as possible after payment in full. Unless otherwise directed in writing, bonds will be delivered to the name and address
written above, and if registered, will be registered in such name and address.
^Indicate denominations of bonds desired. If no indication is given, bonds
of any denomination may be delivered.
No. of bonds.
—

Denomination.
$50
$100
$500
'
$1,000
$5,000
^
$10,000
* $50,000
* $100,000

Amount.
$
.

:
'
TOTAL,

$

• Registered bonds only (which must agree with amount of bonds applied for).

This application should be transmitted through the subscriber's bank, trust
company, or other agency acting on his behalf, or it may be filed direct with
the Federal reserve bank of his district or a branch thereof, or the Treasury
Department, Washington, D. C. . It must reach some incorporated bank or
trust company in the United States (not including outlying territories and
possessions), or a Federal reserve bank, or a branch thereof or the Treasury
Department on or before the close of business October 19, 1918.
185




E X H I B I T 11.
[Treasury Department, Loans and Currency. Form L & C 86.]
FOURTH

LIBERTY

LOAN—APPLICATION

BY

AN

INCORPORATED

B A N K OR T R U S T C O M P A N Y F O R COUPON BONDS F O R
ADVANCE DELIVERY.

Dated
To THE FEDERAL RESERVE B A N K OF
AGENT OF THE UNITED STATES.

_, 1918.
AS FISCAL

The undersigned hereby applies for $
par amount of United
States of America four and one-quarter per cent gold bonds of
1933-38 in coupon form described in Treasury Department Circular
No. 121, dated September 28, 1918, to be delivered to subscribers
therefor. Please deliver such bonds to the undersigned as soon as
they are available.
The undersigned hereby agrees to use its best efforts to obtain subscriptions for said bonds at p a r ; that no bonds shall be delivered by
the undersigned before October 28, 1918, except against payment in
full in cash of the par amount thereof by subscribers; and, in making
deliveries to such subscribers, the undersigned hereby agrees to deliver, in so far as practicable, bonds of the largest denomination or
denominations, not exceeding $1,000, contained in the respective
amounts of bonds subscribed for.
The undersigned hereby agrees not to sell, nor to offer for sale,
nor to enter into any agreement for the sale, of any of the bonds obtained upon this application before October 28, 1918; but this shall
not prevent deliveries before said date to subscribers upon payment
in full in cash at par.
I n payment at par for the amount of bonds hereby applied for—
A. Please charge our account with
$
B. We inclose check for
$
,
C. We inclose certificate of advice showing
that there has been deposited with the
undersigned for your account as fiscal agent of the United States, in accordance with Treasury Department
Circular No. 92 as amended and supplemented September 21, 1918, the sum of
(see note)
.
:
$
186




SECRETARY OF THE TREASURY.

187

The undersigned desires to receive coupon bonds upon this application in the following denominations:
$50 each,$.
of
of $100 each, .
of $500 each, .
of $1,000 each, .
of $5,000 each, .
of $10,000 each.
Total, $
Signature in full of applicant incorporated bank or trust company:
By.____._.__.
Official Title —_
Address in full.
/ JS^OTE.—If the applicant bank or trust company is duly qualified as a special
depositary of public moneys to a sufliicient amount in excess of then existing
deposits, payment may be made upon this application by credit upon notification by a Federal reserve bank. If the applicant is not qualified as a depositary as above, payment niust be made by cash, certified check, bank draft, or
charge against its account with a Federal reserve bank. A qualified depositary
making payment by credit for bonds delivered on this application will not-be
required to pay interest on the resulting deposit for the period prior to October
24, 1918, except upon the amounts and from the dates of payrnents to it by subscribers for bonds delivered upon this application. The depositary will be required to render separate reports to the Federal reserve bank of its district to
date of October 23, inclusive, on Form L. Public Moneys, showing the daily
amounts of such bonds unsold.
^
.




E X H I B I T 12.

TREASURY CERTIFICATES OF INDEBTEDNESS DATED
AUGUST 9, 1917.
WASHINGTON, July 31, 1917.
Secretary McAdoo has decided to resume offerings of United
States Treasury certificates of indebtedness in order to provide fun(is
to meet the requirements of the United States for its own expenditures and for its advances to foreign Governments at war with the
German Government.
The Secretary now offers for subscription at par (through the
Federal reserve banks) $300,000,000 Treasury certificates of indebtedness payable November 15, 1917, with interest at the rate of
3^ per centum per annum from August 9, 1917. Subscriptions will
be.received at Federal reserve banks until 3:00 p. m., August 7, their
local time. Payment for certificates allotted must be made on
August 9 to that Federal reserve bank through which subscription
may have been made. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for.
Interim certificates may be delivered in the first instance, which will
be exchangeable for the definitive certificates of indebtedness when
prepared. Certificates will be in denominations of $1,000, $5,000,
$10,000, and $100,000. The act of Congress approved April 24, 1917,
provides that these certificates shall.be exempt, both as to priricipal
and interest, from all taxation, except estate or inheritance taxes,
imposed by authority of the United States, or its possessions, or by
any State or local taxing authority. Upon ten days' notice given in
such manner as may be determined by the Secretary of the Treasury,
the series of $300,000,000 certificates now offered may be redeemed as
a whole, at par and accrued interest, on or after the date set for the
payment of the first installment, payable after allotment, of the
subscription price of any bonds offered for subscription by the
United States hereafter and before the maturity of the certificates.
The certificates of this series, whether or riot called for redemption,
will be accepted at par, with an adjustment of accrued interest, if
tendered on said installment date as payment on the purchase price
of any such bonds issued and allotted hereafter and before the
maturity of the certificates.
E X H I B I T 13.

TREASURY C E R T I F I C A T E S OF INDEBTEDNESS DATED
AUGUST 28, 1917.
WASHINGTON, August 18, 1917.

Secretary McAdoo offers for subscription at par (through the Federal reserve banks) $250,000,000 of Treasury certificates of indebtedness payable on November 30, 1917, with interest at the rate of 3^
188




SECRETARY OF THE TREASURY.

189

per centum per annum from August 28, 1917.' Subscriptions will be
received at the Federal reserve banks until twelve o'clock noon,
August 25, 1917, their local time.
Payment for certificates allotted must be made on August 28, 1917,
to that Federal reserve bank through which subscription may have
been made. The right is reserved ^to reject any subscription, and to
allot less than the amount of certificates applied for. Interim certificates may be delivered in the first instance, which will be exchangeable for the definitive certificates of indebtedness when prepared.
Certificates will be in denominations of $1,000, $5,000, $10,000, and
$100,000. =
The act of Congress approved April 24, 1917, provides that these
ceriificates shall be exempt, both as to principal and interest, from all
taxation, except estate or inheritance taxes, imposed by authority of
the United States, or its possessions, or by any State or local taxing
authority.
Upon ten days' notice given in such manner as may be determined
by the Secretary of the Treasury, the series of $250,000,000 certificates now offered may be redeemed as a whole, at par and accrued
interest, on or after the date set for the payment ofn.the first installment, payable after allotment, of the subscription price of any bonds
offered for suhscription by the United States hereafter and before the
maturity of the certificates. The certificates of this series, whether
or not called for redemption, will be accepted at par, with an adjustment of accrued interest, if tendered on said installment date as
payment on the purchase price of any such bonds issueci and allotted
hereafter and before the maturity of the certificates.
In connection with the foregoing offering of the second issue of
certificates of indebtedness of the United States preparatory to the
second issue of the Liberty loan, the Secretary of the Treasury announces that the proceeds of these certificates will be deposited with
incorporated banks and trust companies as nearly as may be in proportion to the subscriptions for certificates of indebtedness of this
issue made by and through them respectively, provided, that such
subscribing banks and trust companies make application for such
deposits and qualify therefor, all substantially in accordance with
the procedure laid down in connection with the deposit of the proceeds of Liberty Bonds, and upon the same terms and conditions.
Such deposits will be left as long as the requirements of tlie Government permit, and whenever practicable five days' notice will be given
before withdrawal. I t is expected that certificates of indebtedness
will be issued from time to time somewhat in advance of the immediate requirements of the United States. The primary object of this
is to avoid the financial stress which would result from the concentration of the payments for a great bond issue upon a single day
(which can not be avoided wholly by provision for payment by installments as a great proportion of subscribers prefer to make payment in full on one day as a matter of convenience). Those who acquire certificates of indebtedness, in advance of the bond issue, gradually, without disturbing the money position, purchase exchange
payable where the bond subscriptions must be paid (that is at the
Federal reserve banks), in advance of the date when the payment is
to be made, and meanwhile secure a substantial return upon their
money.'



190

REPORT ON THE FINANCES.
EXHIBIT

14.

TREASURY CERTIFICATES OF INDEBTEDNESS DATED
SEPTEMBER 17, 1917.
WASHINGTON, September 4,, 1917.

Secretary McAdoo offers for subscription at par (through the Federal reserve banks) $300,000,000 of Treasury certificates of indebtedness, payable on December 15, 1917, with interest at the rate of 3^
per centum per annum from September 17, 1917. Subscriptions will
be received at the Federal reserve banks until 12 o'clock noon, Tuesday, September 11,1917, their local time.
Payment for certificates allotted must be made on Monday, September 17, 1917, to that Federal reserve bank to which subscription
may have beeri made. The right is reserved to reject any subscription
and to allot less than the amount of certificates applied for. Upon
•payment for certificates of indebtedness allotted, interim certificates
may be delivered in the first instance by the Federal reserve banks,
which will be exchangeable for the definitive certificates Avhen prepared. As heretofore, certificates will be in denominations of $1,000,
$5,000, $10,000, and $100,000.
The act of Congress approved April 24, 1917, provides that these
certificates will be exempt both as to principal and interest i r o m all
taxation except estate or inheritance taxes imposed by the' authority
of the United States or its possessions or by ajny State or local taxing
authority.
Upon ten days' notice, given in such manner as may be determined
by the Secretary of the Treasury, the series of $300,000,000 certificates
now offered may be redeemed as a whole at par and accrued interest
on or after any date (occurring before maturity of such certificates)
set for the payment of the first installment payable after allotment of
the subscription price of any bonds offered for subscription by the
United States after the date and before the maturity of the certificates. The certificates of this series, whether or not called for redemption, will be accepted at par with adjustment of accrued interest if
tendered on said installment date in payment on the subscription
price then payable of any such bonds subscribed for by and allotted
to holders of such certificates.
' I n connection with the foregoing offering of the third series of
certificates of indebtedness, preparatory to the second issue of the
Liberty loan, the Secretary of.the Treasury announces that qualified
depositaries willbe permitted to make payment by credit for certificates allotted to them for themselves and their customers up to the
amount for which each shall have qualified when so notified by Federal reserve bank, but if qualification is not completed by September
.17, payment must be made in ordinary way, in which case the unexpended proceeds of the certificates will be redeposited as promptly
as qualification can be completed. Full details of the procedure for
qualifying depositaries and all matters in such connection may be
obtained from the Federal reserve banks, fiscal agents of the United
States.
The announcement is again repeated that it is expected the certificates of indebtedness will be issued from time to time somewhat in
advance of the immediate requirements of the United States, the



SECRETARY OF THE TREASURY.

191

primary object of this being to avoid financial stress which might re-'
suit from the concentration of the payments for a great bond issue
upon a single day ( w h i ^ can not be avoided wholly by provision for
payment by installments). Accordingly those who acquire certificates of indebtedness in advance of the bond issue, gradually, without disturbing the money position, purchase exchange payable where
the bond subscriptions must be paid—that is, at the Federal reseWe
banks—in advance of the date when the payment is to be made, and
meanwhile secure a substantial return upon their money.
E X H I B I T 15.
T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
S E P T E M B E R 26, 1917.

WASHINGTON, September 2If,, 1917.

Secretary McAdoo, under authority of the bond act approved by
the President to-day, offers for subscription at par and accrued
interest thrbugh the Federal reserve banks four hundred million
dollars of Treasury certificates of indebtedness, payable December
15th, with interest at the rate of four per cent per annum from
September twenty-six.
Applications will be received at the Federal reserve banks from
Tuesday, September 25th, to twelve o'clock noon (local time) Tuesday, October 2d. The certificates will be in denominations of oiie
thousand, five thousand, ten thousand, and one hundred thousand
dollars. They will be exempt both as to principal and interest from
all taxation now or hereafter imposed by the United States, any
State or any of the possessions of the United States, or by any local
taxing authority, except (a) estate or inheritance taxes, and (b)
graduated additional income taxes, commonly known as surtaxes
and excess-profits and war-profits taxes now or hereafter iniposed
by the United States upon the income or profits of individuals, partnerships, associations, or corporations; and the interest on an amount
of bonds and certificates authorized in the bond act, the principal
of which does not exceed in the aggregate five thousand dollars,
owned by any individual, partnership, association, or corporation,
will be exempt from the taxes provided for in clause (b) above.
Upon ten days' notice, given in such manner as may be determined
by the Secretary of the Treasury, this series of four hundred million
dollars may be redeemed as a whole at par and accrued interest on
and after any date, occurring before maturity of such certificates,
set for the payment of the first installment payable after allotment
of the subscription price of any bonds offered for subscription by
the United States hereafter and before the maturity of such certificates. The certificates of this series, whether or not called for redemption, will De accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment of the subscription price then payable of any such bonds subscribed for by
and allotted to holders of such certificates. As fiscal agent of the
United States, the Federal reserve banks will be authorized to allot
in full in order of receipt of applications up to amounts specified
for each district. Payments may be made at p a r and accrued interest




192

REPORT ON T H E FINANCES.

on and after September twenty-six until October third, inclusive.
After allotment and upon payment Federal reserve banks will issue
interim receipts pending delivery of definitive certificates. Qualified
depositaries will be permitted to make payment by credit for certificates allotted to them, for. themselves and their customers, up to an
amount for which each shall have qualified when so notified by
Federal reserve bank, but if qualification shall not have been completed pa3^ments must be Wade in the ordinary way, in which case
the unexpended proceeds will be redeposited as promptly as qualification is completed.
EXHIBIT 16.
T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
OCTOBER 18, 1 9 1 7 .

WASHINGTON, October 7, 1917.

Secretary McAdoo offers for subspription at par (through the
Federal reserye banks) $300,000,000 of Treasury certificates of indebtedness, payable on Nov. 22,1917, with interest at the rate of four
per centum per annum from Oct. 18, 1917. Subscriptions will be
received at the Federal reserve banks until 3 o'clock p. m., Oct. 15,
1917, their local time.
\
Payment for certificates allotted must be made on Oct. 18, 1917, to
the Federal reserve bank through which subscription may have
been made. The right is reserved to reject any subscription and to
allot less than the amount of certificates applied for. The certificates
will be in denominations of $1,000, $5,000, $10,000, and $100,000.
Certificates will be exempt both as to principal and interest from
all taxation now or hereafter imposed by the United States, any State,
or any of the possessions of the United States, or by any local taxing
authority, except (a) estate and inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes and
excess profits and war profits taxes now or hereafter imposed by the
United States upon the income or profits of individuals, partnerships, associations, or corporations, and the interest on an amourit of
certificates authorized in said act the principal of which does not
exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation shall be exempt from the taxes provided for in clause (b) above.
Certificates of this series will be accepted at par, with adjustment
of accrued interest, if tendered on Nov. 15 in payment on the subscription price then payable on any bonds of the second Liberty loan
subscribed for by and allotted to holders of such certificates. •
Interim receipts may be issued pending delivery of the definitive
certificates.
EXHIBIT 17.

'

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
OCTOBER 2 4 , 1 9 1 7 .

WASHINGTON, October 28, 1917.

Secretary McAdoo to-day announced that under the authority of the
act of Congress approved September 24,1917, for the purposes therein
indicated, and as a convenience to banks and trust compariies and other




SECRETARY OF THE TREASURY.

193

subscribers to the second Liberty loan, and as a further means of
avoiding concentration of payments on bond subscriptions, he will
receive through the Federal reserve banks subscriptions at par and
accrued interest for a limited amount of Treasury certificates of indebtedness. The certificates will be payable December 15, 1917, with
interest at the rate of 4 per cent per annum from October 24, 1917.
Certificates of this series will be accepted at par with an adjustment of
accrued interest if tendered on November 15 or December 15 in payment on the subscription price then payable of any bonds of the second
Liberty loan subscribed for by and allotted to holders of said certificates. Allotments will be made in the order subscriptions are received, and payments at par and accrued interest must be made on
allotment. The right is reserved to reject any subscription and to
allot less than the amount applied for, and to close the subscriptions at
any time without notice. Qualified depositaries will be permitted to
make payment by credit for certificates allotted to them for themselves
or their customers up to the amount for which each shall have qualified
when so notified by Federal reserve bank, otherwise payment must be
made in the ordinary way. The certificates will be issued in denominations of $1,000, $5,000, $10,000, and $100,000.
EXHIBIT 18.
T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
N O V E M B E R 3 0 , 1917.

WASHINGTON, November 21,1917.
Under the authority of the war-loan act approved September
twenty-fourth, 1917, and for purposes therein indicated, and as a
means of avoiding concentration of tax payments on one date the
Secretary of the Treasury through the Federal reserve banks will
receive subscriptions at par and accrued interest for a limited amount
of Treasury certificates of indeptedness payable June twenty-fifth,
1918, with interest at the rate of four per cent per annum from
November thirty, 1917. Subscriptions will be received at Federal
reserve banks. Certificates will be issued in denominations of $500,
$1,000, $5,000,. $10,000, and $100,000. Payment must be made upon
allotment but not before November 30. Any Treasury certificates
of indebtedness now outstanding will be accepted in payment at
par with adjustment of accrued interest. Allotments will be made
in the order that subscriptions are received. The right is reserved
to reject any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice.
As authorized by section ten hundred ten of the war-revenue act approved October third, 1917, collectors of internal revenue will receive
certificates of this issue at par and accrued interest under rules and
regulations to be prescribed by the Secretary of the Treasury in
payment of income and excess-profits taxes when payable at or before
maturity of certificates. TJiese certificates will not be accepted in
payment of or on account of bond subscriptions.
These certificates will be exempt both as to principal and interest
from all taxation now or hereafter imposed by United States, any
State or any of possessions of United States, or by any local taxing
86429°—FI 1918

13




194

REPORT ON THE FINANCES.

authority except (a) estate or inheritance taxes, and (b) graduated
additional income taxes, commonly known as surtaxes, and excessprofits and war-profits taxes, now or hereafter imposed by the United
States upon the income or profits of individuals, partnerships, associations or corporations. The interest on an amount of bonds and
certificates authorized in said act approved September twenty-fourth,
1917, the principal of which does iiot exceed in the aggregate $5,000
owned by any individual, partnership, association, or corporation,
shall be exempt from the taxes provided for in clause (b) above.
After allotment and upon payment Federal reserve banks will
issue interim receipts pending delivery bf definitive certificates.
Qualified depositaries will be permitted to make payment by credit
for certificates allotted to them for themselves or their customers up
to the amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve bank.
EXHIBIT 19.
T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
J A N U A R Y 2, 1918.

WASHINGTON, December 17, 1917.

Under the authority of the war-loan act approved September
twenty-fourth, 1917, and for purposes therein indicated, and as a
means of avoiding concentration of tax payments on one date the
Secretary of the Treasury through the Federal reserve banks will
receive a:pplications at par and accrued interest for a limited amount
of Treasury certificates of indebtedness payable June, twenty-fifth,
1918, with interest at the rate of four per cent per annum from January two, 1918. Subscriptions will be received at Federal reserve
banks. Certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000. After allotmeiit payment must be made
not earlier than January two, 1918, nor later than close of business
January fifteen, 1918. The right is reserved to reject any subscription and to allot less than the amount of certificates applied for and
to close the subscriptions at any time without notice.
As authorized by section ten hundred ten of the war-revenue act
approved October third, 1917, collectors of internal revenue will receive certificates of this issue at par and accrued interest under rules
and regulations to be prescribed or approved by the Secretary of the
Treasury in payment of income and excess-profits taxes when payable
at or before the maturity of the certificates. These certificates will
not be accepted in payment of or on account of bond subscriptions.
These certificates shall be exempt both as to principal and interest
from all taxation now or hereafter imposed by the United States, any
State or any of the possessions of the United States, or by any local ^
taxing authority, except (a) estate or inheritance taxes, and (b)
graduated additional income taxes, commonly known as surtaxes,
and excess-profits and war-profits taxes, now or hereafter imposed
by the United States upon the income o/profits of individuals, partnerships, associations, or corporations. The interest on an amount
of bonds and certificates authorized in said act approved September
twenty-fourth, 1917, the principal of which does not exceed in the
aggregate $5,()00 owned by any individual, partnership, association.



SECRETARY OF THE TREASURY.

195

or corporation, shall be exempt from the taxes provided for iri clause
(b) above.
After allotment and upon payment Federal reserve banks will
issue interim receipts pending delivery of definitive certificates.
Qualified depositaries wull be permitted to make payment by credit
for certificates allotted to them for themselves or their customers up
to the amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve bank.
EXHIBIT 20.
T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
J A N U A R Y 22, 1918.
WASHINGTON, Jan.

17,

1918.

Secretary McAdoo offers for subscription at par and accrued interest (through the Federal reserve banks) $400,000,000 of Treasury
certificates of indebtedness, payable on April 22, 1918, with interest
at the rate of 4 per centum per annum from January 22, 1918. Subscriptions will be received at the Federal reserve banks. Subscription books will close at the close of business Tuesday, January 29,
1918.
Allotments in full will be made in the order the subscriptions are
received in the several districts. Payment at par and accrued interest for certificates allotted must be made on and after January
22, 1918, and on or before January 29, 1918, to the Federal reserve
bank through which subscription may have been made. The right
is reserved to reject any subscription and to allot less than the amount
of certificates applied for, and to close the subscriptions at any time
without notice.
The certificates will be in denominations of $1,000, $5,000, $10,000,
and $100,000.
Certificates will be exempt both as to principal and interest from
all taxation now or hereafter imposed by the United States, any
State, or any of the possessions of the United States, or by any local
taxing authority, except (a) estate and inheritance taxes and (b)
graduated additional income taxes, commonly known as surtaxes
and excess-profits and war-profits taxes now or hereafter imposed
by the United States upon the income or . profits of individuals,
partnerships, associations, or corporations. The interest on an
amount of bonds and certificates authorized in said act the principal
of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation shall be exempt
from the taxes-provided for in clause (b) above.
Upon 10 days' public notice given in such maimer as may be determined by the Secretary of the Treasury this series of four hundred
million dollars may be redeemed as a whole at par and accrued interest on and after any date occurring before maturity of the certificates set for the payment of the first installment of the subscription price of any bonds offered for subscription by the United States
hereafter and before the maturity of the certificate.
Certificates of this series, whether or riot called for redemption, will
be accepted at par, with adjustment of accrued interest, if tendered




196

REPORT ON THE FINANCES.

in payment on the subscription price then payable of any such bonds
subscribed for by and allotted to holders of such certificates.
Interim receipts may be issued pending delivery of the definitive
certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and
their customers up to an amount for which each shall have been
qualified in excess of existing deposits when so notified by Federal
reserve banks.
EXHIBIT

21.

TREASURY CERTIFICATES OF INDEBTEDNESS DATED
FEBRUARY 8,. 1918.
WASHINGTON, February 6, 1918.

Secretary McAdoo to-day announced that he had offered through
the Federal reserve banks an issue of $500,000,000 of certificates of
indebtedness to mature on May 9, 1918, to be oft'ered at par and bearing 4% interest from February 8, 1918.
I n connection with this offer. Secretary McAdoo addressed a
telegram to all national banks. State banks, and trust companies, approximately 25,000 in number, inviting eacli, as a matter of patriotic
duty, to set aside each week about 1% of its gross resources and place
that amount at the disposal of the Government by investing it in
certificates of indebtedness as the Secretary will offer them from
time to time.
I t is expected that these offers will be made at intervals of approximately two weeks. I t is contemplated, if each bank will do its share,
that as a maximum, 10% of the gross resources of the banks, or approximately $3,000,000,000 will be raised between now and the next
Liberty loan, provided that it is necessary to call upon the banks to •
that extent.
The telegram of the Secretary follows:
FEBRUARY 6, 1918.

Between now and the time for making the next Liberty loan I shall offer for
subscription Treasury certificates of indebtedness in amounts of five hundred
million dollars or more every two weeks. I desire to postpone the next
Liberty loan issue until conditions will insure a wide distribution of the bonds
throughout the country. In order successfully to carry through this program
and to provide for the expenditures for the military operations of the United
States and the allies, I must have the whole-hearted cooperation of the bankers
of the United States,.and to that end I request the board of directors or trustees
of each bank and trust company to reserve each week out of its loanable funds
for the use of the Government of the United States about one per cent of the
gross resources of their institutions, not to exceed in the aggregate ten per cent,
and to invest that amount in Treasury certificates of indebtedness. The exact
amount, interest rate, date, and maturity (not exceeding ninety days) of each
issue of certificates will be announced from time to tiine by me through the
Federal reserve banks. There is a steady growth in the movement for economy.
Banks should be able by participating in the campaign for economy, which means
economy of credit, as well as of expenditure, to teach their customers to save
and accumulate the means to buy the Government's certificates, and bonds. By
this method, a distribution of Treasury certificates of indebtedness should
become possible which will relieve the subscribing bnnks of at least a part of
their purchases and furnish the means of making payments for the next issue of
Liberty bonds without undue strain. The needs of the Government for the war
are great and imperative. The resources of the country are ample to meet those
needs, if every bank will do its share. I know that once it is realized that by
complete cooperation all around and by everyone doing his part, this vital and




SECRETARY OF THE TREASURY.

197

patriotic service can be performed, every bank will do its share. We are
approaching a critical test on the battle fronts in Europe. America's sons are
now actually shedding their blood in the trenches. If the banks, which are the
first line of financial defense, fail to support the Government fully in its necessary operations we shall imperil America's army and America's saifety. I know
that I have only to state the case to command the support of every patriotic
bank and banker. This is a supreme duty of patriotism. May I count upon
you to do your part and to telegraph me immediately at my expense that you
will? I am sending this telegram to every bank and trust company in the
United States.
W. G. MCADOO.

I n anticipation of the fii'st and second Liberty loans the Secretary
placed $3,358,000,000 of certificates of indebtedness, which were liquidated by the subsequent Liberty bonds when issued.
In sending this telegram the Secretary hopes to include all banks
of the.country, a great many of which it has not been possible to reach
heretofore, thus broadening the basis of the Treasury's operations.
Subscription books for the $500,000,000 worth of Treasury certificates offered to-dav will close at the close of business Friday, February 15, 1918.
Allotments in full wdll be made in the order the subscriptions are
received in the several districts. Payment at par and accrued interest
for certificates allotted must be made on and after February 8, 1918,
and on or before February 15, 1918, to the Federal reserve bank
through which subscription may have been made. The right is reserved to reject any subscription and to allot less than the amount of
certificates applied for, and to close the subscriptions at any time
without notice.
The certificates will be in denominations of $1,000, $5,000, $10,000,
and $100,000.
Certificates will be exempt both as to principal and interest from
all taxation now or .hereafter imposed by the United States, any
State, or any of the possessions of the United States, or by any
local taxing authority, except {a) estate and inheritance taxes and
(&) graduated additional income taxes, commonly known as surtaxes and excess profits and war profits taxes now or hereafter imposed by the United States upon the incoriie or profits of individuals,
partnerships, associations, or corporations. J h e interest on an amount
of bonds and certificates authorized in said act the principal of
which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation shall be exempt from
the taxes provided for in clause (b) above.
Upon ten days' public notice, given in such manner as may be
determined by the Secretary of the Treasury, this series of five hundred million dollars may be redeemed as a whole at par and accrued
interest on or after any date occurring before maturity of the certificates set for the.payment of the first installment of the subscription
price of any bonds offered for subscription by the United .States
hereafter and before the maturity of the certificate.
Certificates of this series, whether or not called for redemption,
will be accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price
then payable of any such bonds subscribed for by and allotted to
holders of such certificates. ' The certificates of this series will not
be accepted in payment of taxes.



198

REPORT ON T H E FINANCES.

Interim receipts may be issued pending delivery of the definitive
certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and
their customers up to an amount for which each shall have been
qualified in excess of existing deposits when so notified by Federal
reserve banks.
EXHIBIT

22.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
F E B R U A R Y 15, 1918.

WASHINGTON, February IS, 1918.

United States Treasury certificates of indebtedness dated February
15, 1918,,maturing June 25, 1918, acceptable in payment of income
and excess profits taxes and in all respects identical with the certificates dated January 2, 1918, except as to the date of issue and from
which they bear interest, will be made available as soon as they can
be printed. In the meanwhile Federal reserve banks ,are authorized
to issue interim receipts calling for definitive Treasury certificates
dated February 15, as above, instead of certificates dated January 2.
This will relieve subscribers for certificates of this character of the
necessity of paying so much on account of accrued interest. Subscriptions for these certificates at par and accrued interest will be
received by Federal reserve banks and they are authorized until
further -.lOtice to make allotment in full and receive payment with
the subscriptions. About $490,000,000 of the certificates dated January 2 have been sold to date, ^making the tot^al amount of certificates
maturing June 25, 1918, to date, about $1,180,000,000.
EXHIBIT 23.
T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
F E B R U A R Y 2 7 , 1918.

WASHINGTON, February 21,1918.
The Secretary of the Treasury, under the authority of the act approved September 24,1917, offers for subscription at par and accrued
interest, through the Federal reserve banks, $500,000,000 Treasury
certificates of indebtedness payable May 28, 1918, with interest at
the rate of four and one-half per centum per annum from February
27,1918. Applications will be received at the Federal reserve banks.
Subscription books will close at the close of business March 5.
Certificates will be in the denominations of $500, $1,000, $5,000,
$10,000, and $100,000.
Said certificates shall be exempt both as to principal and interest
from all taxation now or hereafter imposed by the United States, any
State or any of the possessions qf the United States, or by any local
taxing authority, except (a) estate or inheritance taxes, and (b)
graduated additional income taxes, commonly known as surtaxes,
and excess profits and war profits taxes, now or hereafter imposed
by the United States, upon the inconie or profits of individuals,
partnerships, associations, or corporations. The interest on an
amount of bonds and certificates authorized in said act the principal




SECRETARY o:^ T^HE TREASURY.

199

of which does not exceed ir^^the aggregate $5,000 owned by any indivdual, partnership, association, or corporation shall be exempt from
the taxes provided for in clause (6) above.
Upon ten days' public notice, given in such manner as may be determined by the Secretary of the Treasury, this series of $500,000,000
of .certificates may be redeemed as a whole at par and accrued interest
on or after any date, occurring before the maturity of such certificates, set for the payment of the first installment of the subscription
price of,any bonds offered for subscription by the United States hereafter and before the maturity of such certificates. The certificates
of this series whether or not called for redemption will be accepted at
' par with adjustment of accrued interest if tendered on such installment date in payment on the subscription price then payable of any
such bonds subscribed for by and allotted to holders of such certificates. The certificates of this series will not be accepted in payment
of taxes.
The right is reserved to reject any subscription and to allot less
than the amount of certificates applied for and to close the subscriptions at any time without notice. As fiscal agents of the United
States, Federal reserve banks are authorizeci and requested to receive subscriptions and to make allotment in full in order of receipt
of applications up to an aggregate in each district as follows:
Boston
New York
.
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
'
Minneapolis
K a n s a s City
Dallas
San Francisco -

$33, 000, 000
194, 000, 000
40, 000, 000
40, 000, 000
15, 000, 000
15, 000, 000
50, 000, 000
25,000,000
17, 000, 000
23, 000,000
18, 000. 000
30, 000, 000

Payment at par and accrued interest for certificates allotted must
be made on and after February 27 and on or before March 5. . After
allotment and upon payment Federal reserve banks wilt issue interim
receipts pending delivery of the definitive certificates. Qualified
depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and their customers up to
an amount for which each shall have been qualified in excess of
existing deposits when so notified by Federal reserve banks.
The subscriptions by districts for the issue dated February 8 were
as follows:
Boston
New York
Philadelphia
Cleveland - Richmond
Atlanta
Chicago
St. Louis
___.
Minneapolis
K a n s a s City
Dallas
San Francisco
Treasury Department

1




-

.
.

$29,134, 000
241, 322, 000
30, 000, 000
-. 34, 000, 000
12,131, 000
^- 12, 391, 000
42, 352. QOO
20,064,000
15, 000, 000
21, 411, 000
14, 076, 000
25,000,000
—
3,119, 000

200

REPORT ON T H E FINANCES.
EXHIBIT

24.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
M A R C H 20, 1918.
WASHINGTON, March 11, 1918.
The Secretary of the Treasury, under the authority of the act
approved September 24, 1917, offers for subscription at par and
accrued interest, through the Federal reserve banks, a minimum of
$500,000,000 Treasury certificates of indebtedness payable June 18,
1918, Avith interest at the rate of four and one-half per centum per
annum from March 20, 1918. Applications will be received at the
Federal reserve banks. Subscription books will close at the close of
business March 22.
Certificates will be in the denominations of $500, $1,000^ $5,000,
$10,000, and $100,000.
Said certificates shall be exempt both as to principal and interest,
from all taxation now or hereafter imposed by the United States,
any State, or any of the possessions of the United States, or by any
local taxing authority, except (a) estate or inheritance taxes, and
(5) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter
imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an
amount of bonds and certificates authorized in said act the principal
of which does not exceed in the aggregate $5,000 owned by any individual, partnership, association, or corporation shall be exempt from
the taxes provided for in clause (6) above.
Upon ten days' public notice, given in such manner as may be
determined by the Secretary of the Treasury, this series of certificates may be redeemed as a whole at par and accrued interest on
or after any date, occurring before the naturity of such certificates,
set for the payment of the first installment of the subscription price
of any bonds offered for subscription by the United States hereafter
and before the maturity of such certificates. The certificates of this
series whether or not called for redemption will be accepted at par
with adjustment of accrued interest if tendered on such installment
date in payment on the subscription price then payable of any such
bonds subscribed for by and allotted to holders of such certificates.
The certificates of'this series will not be accepted in payment of
taxes.
The right is reserved to reject any subscription and to allot less
than the amount of certificates applied for and to close the subscriptions at any time without notice. As fiscal agents of the United
States, Federal reserve banks are authorized and requested to receive
subscriptions up to an aggregate in each district as follows:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago —

^
..




$33, 000,000
173, 000, 000
40, 000, 000
45, 000, 000
18, 000, 000
15, 000, 000
60, 000, 000

201

SECRETARY OF THE TREASURY.
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

$25, 000, 000
15, 000, 000
25,000, 000
18, 000, 000
33, 000, 000

:
!____

__:

Payment at par and accrued interest for certificates allotted must
be made on and after March 20 and on or before March 22. After
allotment and upon payment Federal reserve banks will issue interim
receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make payment by credit for certificates
allotted to them f o'r themselves and their customers up to an amount
for which each shall have been qualified in excess of existing deposits
when so notified by Federal reserve banks.
The number of subscriptions by districts for the issues dated January 22, 'February 8, and February 27 were as follows:
Jan. 22.
Boston
New York
Philadelphia..
Cleveland
Richmond—
Atlanta
Chicago
St. Louis
Minneapohs..
Kansas City..
Dallas
San Francisco

212
275
415
770
158
216
910
1,654

375
515
480
384

Feb. 8.

EXHIBIT

554

471
766
800

1,192

1,200

1,396

730

479
755

558
717

2,424
1,034
1, L93
1 547

2,832
1,401
1,436
1,653

951
930

1,048

6,364

^

Feb. 27.

955
14,472

25.

TREASURY CERTIFICATES OF INDEBTEDNESS DATED
MARCH 15, 1918.
WASHINGTON, March 13, 1918.
United States Treasury certificates of indebtedness dated March
15, 1918, maturing June 25, 1918, acceptable in payment of income
and excess-profits taxes, bearing interest at the rate of four per cent
per annum, and in all respects identical with the certificates dated
February 15, 1918, except as to the date of issue and from which
the}^ bear interest, will be made available promptly. In the meanwhile Federal reserve banks are authorized to issue interim receiptscalling for definitive Treasury certificates dated March 15 as above
instead of certificates dated February 15. This will relieve subscribers for certificates of this character of the necessity of paying
so much on account of accrued interest. Subscriptions for these
certificates at par and accrued interest will be received by Federal
reserve banks, and they are authorized uritil further notice to make
allotment in full and receive payment with the subscription. About
$75,000,000 of the certificates dated February 15 have been sold to
date, making the total amount of certificates maturing June 25, 1918,
to date about $1,255,000,000.




202

REPORT ON TfiE FINANCES.
EXHIBIT

26.

CERTIFICATES OF INDEBTEDNESS DATED APRIL 10, 1918.
WASHINGTON, March 27, 1918.
The Secretary of the Treasury, under the authority of the act approved September 24, 1917, offers for subscription at par and ac' crued interest, through the Federal reserve banks, a minimum of
$500,000,000 Treasury certificates of indebtedness payable July 9,
1918, with interest at the rate of four and .one-half per centum per
annum from April 10,1918. Applications will be received at the
Federal reserve banks. Subscription books will close at the close of
business April 10.
Certificates will be iri the denominations of $500, $1,000, $5,000,
$10,000, and $100,000.
Said certificates shall be exeinpt both as to principal and interest
from all taxation now or hereafter imposed by the United States,
any State or any of the possessions of the United States, or by any
local taxing authority, except {a) estate or inheritance taxes, and
(&) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals,
partnerships, associations, or corporations. The interest on an amount
of bonds and certificates authorized in said act the principal of
which does not exceed in the aggregate $5,000 owned by any individual, partnership, association, or corporation shall be exempt
from the taxes provided for in clause.(5) above.
Upon ten days', public notice, given in such manner as may be
determined by the Secretary of the Treasury, this series of certificates
may be redeemed as a whole at. par and accrued interest on or after
any date, occurring before the maturity of such certificates, set for
the payment of the rirst installment of the subscription price of any
bonds offered for subscription by the United States hereafter and
before the maturity of'such certificates. The certificates of this series
whether or not called for redemption will, be accepted at par with
adjustment of iaccrued interest if tendered on such installment date
in payment on the subscription price then payable of any such bonds
subscribed for by and allotted to holders of such certificates. The
certificates of this series will not be accepted in payment of taxes.
The right is reserved to reject any subscription and to allot less
..than the" amount of certificates applied ^for and to close the subscrip,tions at any time without notice. As fiscal agents of the United
States, Federal reserve banks are authorized and requested to receive subscriptions up to an aggregate in each district as follows:

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



^
-.

-

$33, 000, 000
175, 000, 000
38, 000, 000
..___ 46, 000, 000
18, 000, 000
15, 000, 000
62, 000, 000
25, 000, 000
15, 000, 000
25, 000, 000
15, 000, 000
33, 000, 000

SECRETARY OF THE TREASURY.

203

Payment at par for certificates allotted must be made not later
than April 10. After allotment and upon payment Federal reserve
banks will issue interim receipts pending delivery of the definite
certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and
their customers up to an aniount for which each shall have been
qualified in excess of existing deposits when so notified by Federal
reserve banks.
EXHIBIT

27.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
A P R I L 15, 1918.
WASHINGTON, April 12, 1918.
United States Treasury certificates of indebtedness dated April
15, 1918, maturing June 25, 1918, acceptable in payment of income
and excess profits taxes, bearing interest at the rate of four per cent,
per annum, and in all respects identical with the cei;tificates dated
March 15, 1918, except as to the date of issue and from which they
bear interest, will be made available promptly. I n the meanwhile
Federal reserve banks are authorized to issue interim receipts calling
for definitive Treasury certificates dated April 15 as above instead
of certificates dated March 15. This will relieve subscribers for certificates of this character of the necessity of paying so much on account of accrued interest. Subscriptions for these certificates at
par and accrued interest will be received by Federal reserve banks
and they are authorized until further notice to make allotment in
full and receive payment with the subscription. More than $100,000,000 of the certificates dated March 15 have been sold to date, making
the total amount of certificates maturing June 25, 1918, to date about
$1,360,000,000.
EXHIBIT

28.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
A P R I L 22, 1918.
WASHINGTON, April 12, 1918.
The Secretary of the Treasury under authority of the act approved September 24, 1917, as amended by the act approved April
4, 1918, offers for subscription at par and accrued interest through
Federal reserve banks a minimum of five hundred million dollars
Treasury certificates of indebtedness payable July 18, 1918, with
interest at the rate of four and one-half per'^centum per annum from
April 22, f918. Applications will be received at the Federal reserve
banks. Subscription books will close at the close of business April 25.
Certificates will be in denominations of five hundred, one thousand, five thousand, ten thousand, and one hundred thousand dollars.
Said certificates shall be exempt both as to principal and interest
from all taxation now or hereafter impbsed by the United States,
any State or any of the possessions of the United States, or by any /
local taxing authority, except (a) estate or inheritance taxes, and
(b) graduated additional income taxes, commonly known as surtaxes,




204

REPORT QN THE FINANCES.

and excess profits and war profits taxes, now or hereafter imposed by
the United States upon the income or profits of individuals, partnerships, associations or corporations. The interest on an amount of
bonds and certificates authorized by said act appVoved September
24, 1917, or by said act as amended by said act approved April 4,
1918, the principal of which does not exceed in the aggregate $5,000
owned by any individual, partnership, association, or corporation
shall be exempt from the taxes provided for in clause (b) above.
Upon ten days' public notice given in such manner as may be determined by the Secretary of the Treasury this series of certificates
may be redeemed as a whole ^ t par and accrued interest on or after
May 9, 1918^ The certificates of this series whether or not called
^for redemption will be accepted at par with an adjustment of accrued interest to May 9,. 1918, if tendered on May 4, 1918, in payment
on the subscription price then payable of any bonds of the third
Liberty loan subscribed for by and allotted to holders of such certificates. The certificates of this series, unless called for previous redemption, will be accepted at par with an adjustment of accrued interest if tendered on July 18, 1918, in payment on the subscription
price then pa3^able of any bonds of the third Liberty loan -subscribed
for by and allotted to holders of said certificates. The certificates
of this series will not be accepted in payment of taxes.
The right is reserved to reject any subscription and to allot less
than the amount of certificates applied for and to close the subscriptions at any time without notice. This, it is expected, will be
the last offering of Treasury certificates of indebtedness in anticipation of the third Liberty loan.
As fiscal agents of the United States Federal reserve banks are
authorized and requested to receive subscriptions up to an aggregate
in each district as follows:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
K a n s a s City
Dallas
San Francisco

J

^
^

$35, 000, 000
175, 000, 000
S8, 000, 000
46, 000, 000
18, 000, 000
15^ 000, 000
62, 000, 000
23, 000, 000
15, 000, 000
25, 000, 000
15, 000, 000
33, 000, 000

Payment at par and accrued interest for certificates allotted must
be made on and aft^r April 22, and on or before April 25. After
allotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the definite certificates. , Qualified depositaries will be permitted to make payment by credit for
certificates allotted to them for themselves and their customers up
to an amount for which each shall have qualified in excess of existing deposits when so notified by Federal reserve banks. Payment for
certificates allotted upon this offering may be made at the holder's
option in United States Treasury certificates of indebtedness dated
January 22, 1918, and maturing April 22, 1918, at par with adjustment of accrued interest.
The issue of a minimum of $500,000,000 United States Treasury
certificates of indebtedness dated April 10, 1918, was oversub


205

SECRETARY OF T H E TREASURY.

scribed. The Federal reserve districts of Richmond and St. Louis
were the only districts which did not equal or exceed their tentative
quota. The following is a list of the tentative quota by districts and
a list of the subscriptions allotted:
Tentative
quota.
Boston
New York...
Philadelphia
Cleveland....
Richmond..
Atlanta
Chicago

Subscriptions
allotted.

S33,000,000 $39,731,000
175,000,000 215,448,000
38,000,000 38,000,000
46,000,000 46,000,000
18,000,000
11,219,000
15,000,000
17,095,000
62,000,000 65,850,000

Tentative
quota.
St. Louis
Minneapohs..
Kansas City..
Dallas
San Francisco

EXHIBIT

Total...

Subscriptions
allotted.

S25,000,000 $21,181,000
15,000,000
15,600,000
25,000,000 25,000,000
15,000,000
16,602,500
33,000,000
39,500,000

500,000,000

551,226,500

29.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S
M A Y 15, 1 9 1 8 .

DATED

WASHINGTON, May

13,

1918.

United States Treasury certificates of indebtedriess dated May 15,
1918, maturing June 25, 1918, acceptable in payment of income and
excess-profits taxes, bearing interest at the rate of four per cent per
annum, and in all respects identical with the certificates dated April
15,^ 1918, except as to'^the date of issue and from which they bear interest, will be made available promptly. I n the meajiwhile Federal
reserve banks are authorized to issue interim receipts calling for definitive Treasury certificates dated May 15 as above instead of certificates dated A p r i l 15. This will relieve subscribers for certificates of
this character of the .necessity of paying so much on account of accrued interest. Subscriptions for these certificates at par and accrued interest will be received by Federal reserve banks, and they are
authorized until further notice to make allotment in full and receive
payment with the subscription. More than $70,000,000 of the certificates dated April 15 have been sold to date, making the total amount
of certificates maturing June 25, 1918, to date about $1,430,000,000.
EXHIBIT

30.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S
J U N E 25, 1918.

DATED

WASHINGTON, June 18, 1918.
The Secretary of the Treasury under the authority of the act approved September 24, 1917, as amended by the act approved April 4,
1918, offers for subscription, at par and accrued interest, through
the Federal reserve banks, $750,000,000 or more Treasury certificates
of indebtedness. Series I V A, dated and bearing interest from June
25, 1918, payable October 24, 1918, with interest at the rate of 4^
per cent per annum. Applications will be received at the Federal
reserve banks. Subscription books will close at the close of business
July 2, 1918. Certificates will be issued in denominations of $500,
$1,000, $5,000, $10,000, and $100,000. Said certificates shall be




206

REPORT ON THE FINANCES.

exempt, both as to principal and interest, from all taxation now or
hereafter imposed by the United States, any State, or any of the
possessions of the United States, or by any local taxing authority,
except (a) estate or inheritance taxes, and (b) graduated additional
income taxes, commonly known as surtaxes, and excess-profits and
war-profits taxes, now or hereafter imposed by the United States
upon the income or profits of individuals, partnerships, associations,,
or corporations. The interest on an amount of bonds and certificates
authorized by said act approved September 24, 1917, or by said act
'as amended by said act approved April 4, 1918, the principal of
Avhich does not exceed in the aggregate $5,000, owned by any individual, partnership, association, o'r corporation, shall be exempt from
the taxes provided for in clause (b) above. Upon ten days' public notice, given in such manner as may be determined by the Secretary of the Treasury, the certificates of this series may be redeemed
as a whole at par and accrued interest on or after any date, occurring
before the maturity of such certificates, set for the payment of the
first installment of the subscription price of any bonds offered for
subscription by the United States after the offering and before the
maturity of such certificates. The certificates of this series, whether
or not called for redemption, will be accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price then payable of any such bonds subscribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and will
not be accepted in payment of taxes. The right is reserved to reject
any subscription and to allot less than the amount of certificates applied for and to close the subscriptions at any time without notice. ,
Payment at par arid accrued interest for certificates allotted must be
made on and after June 25, and on or before July 2. After allotment
and upon payment Federal reserve banks will issue interim receipts
pending delivery of the definitive certificates. Qualified depositaries
will be permitted to make payment by credit for certificates allotted
to them for themselves and their customers up to an amount for
which each shall have qi alified in excess of existing deposits when so
notified by Federal reserve banks. As fiscal agents of the United
States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the
receipt of applications up to the following aggregate amounts in
their respective districts:
Boston ^
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago_
St. Louis
Minneapolis
K a n s a s City
DallasSan Francisco




:
^
^
:
_

$68, 000, 000
251, 000, 000
. 53, 000, 000
68, 000,000
26, 000, 000
22, 000, 000
105, 000, 000
30, 000, 000
26, 000, 000
30, 000, 000
18, 000,000
53, 000,000
750, 000, 000

SECRETARY OF THE TREASURY.
EXHIBIT

207

31.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
J U L Y 9, 1918.
WASHINGTON, July 3, 1918.
Secretary McAdoo under the authority of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers
for subscription, at par and accrued interest, through the Federal
reserve banks, $750,000,000 or more Treasury certificates of indebtedness, series I V B, dated and bearing interest from July 9, 1918,
payable November 7, 1918, with interest at the rate of 4^%-per annum. Applications will be received at the Federal reserve banks.
Subscription books will close at the close of business July 16, 1918.
Certificates will be issued in denominations of $500, $1,000, $10,000,
and $100,000. Said certificates shall be exempt, both as to principal
and interest, from all taxation now or hereafter imposed by the
United States, any State, or any of the possessions of the United
States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly
known as surtaxes, and excess profits and war profits taxes, now or
Jiereafter imposed by the United States, upon the income or profits
of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act
approved September 24, 1917, or by said act as amended by said
act approved April 4, 1918, the principal of which does not exceed
in the aggregate $5,000 owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for
in clause (b) above. Upon ten days' public notice, given in such
manner as may be determined by the Secretary of the Treasury, the
certificates of this series may be redeemed as a whole at par and
accrued interest on or after any date, occurring before the maturity
of such certificates, set for the payment of the first installment of the
subscription price of any bonds offered for subscription by the United
States after the offering and before the maturity of such certificates.
The certificates of this series, whether or not called for redemption,
will be accepted at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price
then payable of any such bonds subscribed for by and allotted to
holders of such certificates. The certificates of this series do not bear
the circulation privilege and will not be accepted in payment of
taxes. The right is reserved to reject any subscription and to allot
less than the amount of certificates applied for and to close the subscriptions at any time without notice. Payment at par and accrued
interest for certificates allotted must be made on and after July 9,
and on or before July 16. After allotment and upon payment Federal reserve banks will issue interim receipts pending delivery of the
clefinitive certificates. Qualified depositaries will be permitted to make
payment by credit for certificates allotted to them for themselves
and their customers up to an amount for which each shall have
qualified in excess of existing deposits when so notified by Federal
reserve banks. As fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions
and to.make allotment in full in the order of the receipt of appli


208

REPORT ON THE FINANCES.

cations up to the following aggregate amounts in their respective
districts:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
MinneapoUs
K a n s a s City
DaUas
San Francisco

^
_
^'
:
'

$65, 000, 000
254, 000, 000
53, 000, 000
68, 000, 000
26, 000, 000
22, 000, 000
105,000,000
30, 000, 000
26, 000, 000
30, 000, 000
18, 000, 000
53, 000, 000
750,000,000

EXHIBIT

32.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
J U L Y 2 3 , 1918.
WASHINGTON, July 19, 1918.
I n consequence of the oversubscription of the first two issues of
Treasury certificates in anticipation of the fourth Liberty loan and
the increased returns from war savings certificates and from income
and excess-profits taxes the Secretary of the Treasury finds it possible
to reduce the minimum amount of the third biweekly offering of
Treasury certificates to five hundred million dollars. This, however, is only a minimum amount, and those institutions which have
made arrangements to subscribe their share on the basis of an offering of seven hundred and fifty million flollars will be free to do so.
The Secretary of the Treasury, under the authority of the act
approved September 24, 1917, as amended by the act approved April
4, 1918, offers for subscription, at par and accrued interest, through
the Federal reserve banks, $500,000,000 or more Treasury certificates of indebtedness, Series IV^C, dated and bearing interest from
July 23, 1918, payable November 21, 1918, with interest at the rate
of 4r|% per annum. Applications will be received at the Federal
reserve banks. Subscription books will close at the close of business July 30, 1918. Certificates will be issueci in denominations of
$500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be
exempt, both as to principal and interest, from all taxation now or
hereafter imposed by the United States, any State, or any of the
possessions of the United States, or by any local taxing authority,
except (a) estate or inheritance taxes, and (b) graduated additional
« income taxes, commonly known as surtaxes, and excess-profits and
war-profits taxes, now or hereafter imposed by the United States,
upon the income or profits of individuals, partnerships, associations,
or corporations. The interest on an amount of bonds and certificates
authorized by said act approved September 24, or by said act as
amended by said act approved April 4, 1918, the principal of which
does not exceed in the aggregate $5,000, owned by any individual,
partnership, association, or corporation, shall be exempt from the
taxes provided for in clause (b) above. Upon ten days' public
notice, given in such manner as may be determined by the Secretary
of the Treasury, the certificates of this series may be redeemed as




SECRETARY OF THE TREASURY.

209

a whole at par and accrued interest on or after any date, occurring
before the maturity of such certificates, set for the paymerit of the
first installment of the subscription price of any bonds offered for
subscription by the United States after the offering and before the
maturity of such certificates. The certificates of this series, whether
or not called for redemption, will be accepted at par, with adjustment of accrued interest, if tendered on such installment date in
payment on the subscription price then payable of any such bonds
subscribed for by and allotted to holders of such certificates. The
certificates of this series do not bear the circulation privilege and
will not be accepted in payment of taxes. The right is reserved
to reject any subscription and to allot less than the^amount of certifiicates applied for and to close the subscriptions at any time without notice. Payment at par and accrued, interest for certificates
allotted must be made on and after July 23, 1918, and on or before
July 30, 1918. After allotment and upon payment. Federal reserve
banks will issue interim receipts pending delivery of the definitive
certificates. Qualified depositaries will be permitted to make payment by credit for certificates allotted to them for themselves and
their customers up to an amount for which each shall have qualified
in excess of existing deposits when so notified by Federal reserve
banks. As fiscal agents of the United States, Federal reserve banks
are authorized and requested to receive subscriptions and to make
allotment in full in the order of the receipt of applications up to
amounts specified in their respective districts.
EXHIBIT 33.
T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
A U G U S T 6, 1 9 1 8 .

WASHINGTON, August 1,1918.

I n consequence of the oversubscription of the first three issues of
Treasury certificates in anticipation of the fourth Liberty loan and
the increased returns from war-savings certificates and from income
and excess-profits taxes the Secretary of the Treasury finds it possible
to reduce the minimum amount of the fourth biweekly offering of
Treasury certificates to five hundred million dollars. This, however,
is only a minimum amount, and those institutions which have made
arrangements to subscribe their share on the basis of an offering of
seven hundred and fifty million dollars will be free to do so.
The Secretary of the Treasury under the authority of the act ap- .
proved September 24, 1917, as amended by the act approved April
4, 1918, offers for subscription, at par and accrued interest, through
the Federal reserve banks, $500,000,000 or more Treasury certifi• cates of indebtedness. Series I V D, dated and bearing interest August
6, 1918, payable December 5, 1918, with interest at the rate of 4^%
per annum. Applications will be received at the Federal reserve
banks. Subscription books will close at the close of business August
13, 1918. Certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and'^$100,000. Said certificates shall be exempt, both '
as to principal, and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of
the United States, or by any local taxing authority, except {a) estate
86429"—FI 1918

14




210

REPORT. ON T H E FINANCES.

or inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-prpfits taxes, now
or hereafter imposed by the United States, upon the income or profits ,
of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act
approved September 24, or by said act as amended by said act approved April 4, 1918, the principal of which does not exceed in the
aggregate $5,000, owned by any individual, partnership, association,
or corporation, shall be exempt from the taxes provided for in clause
(b) above. Upon ten days' public notic^e, given in such manner as
may be determined by the Secretary of the Treasury, the certificates
of this series may be redeemed as a whole at par and accrued interest on or after any date, occuring before the maturity of such certificates, set for the payment of the first installment of the subscription price of any bonds offered for subscription by the United States
after the offering and before the maturity of such certificates. The
certificates of this series, whether or not called for redemption, will
be accepted at par, with adjustment of accrued interest, if tendered
on such installment date in payment on the subscription price then
payable of any such bonds subscribed for by and allotted to holders
of such certificates. The certificates of this series do not bear the
circulation privilege and will not be accepted in payment of taxes.
The right is reserved to reject any subscription and to allot less than
the amount of certificates applied for and to close the subscriptions at
any time Avithout notice. Payment at par and accrued interest for
certificates allotted must be made on and after August 6, 1918, and
on or before August 13, 1918. After allotment and upon payment
Federal reserve banks will issue interim receipts pending delivery of^
the definitive certificates. . Qualified depositaries will be permitted
to mal?:e payment by credit for certificates allotted to them for themselves and their customers up to an amount for which each shall have
qualified iri excess of existing deposits when so notified by Federal
reserve banks. As fiscal agents of the United States, Federal reserve
banks are authorized and requested to receive subscriptions and to
make allotment in full in the order of the receipt of applications up
to amounts specified in their respective districts.
EXHIBIT

34.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
A U G U S T 20, 1918.

WASHINGTON, August 16, 1918.

The Secretary of the Treasury under the authority of. the act approved September 24, 1917, as amended by the act approved April 4,
1918, offers for subscription, at par and accrued interest. Treasury
certificates of indebtedness of the United States^ tax series of 1919,
dated and bearing interest from August 20, 1918, payable July 15,
1919, bearing interest at the rate of 4.% ,per annum. Applications
will be received at the Federal reserve banks. ^Bearer certificates,
with interest coupons attached, will be issued in denominations of
$500, $1,000, $5,000, $10,000, and $100,000. Said certificates shall be
exempt, both as to principal and interest, from all taxation now or
hereafter imposed by the United States, any State, or any of the



SECRETARY OF THE TREASURY.

211

possessions of the United States, or by any local taxing authority,
except (a) estate or inheritance taxes, and (b) graduated additional
income taxes, commonly known as surtaxes, and excess-profits and
war-profits taxes, now or hereafter imposed by the United States,
upon the income or profits of individuals, partnerships, associations,
or corporations. The interest on an amount of bonds and certificates
authorized by said act approved September 24, 1917, or by said act
as amended by said act approved April 4, 1918, or by the act approved July 9, 1918, the principal of which does not exceed in the
aggregate $5,000, owned by any individual, partnership, association,
or corporation, shall be exempt from the taxes provided for in
clause (b) above. Certificates of this series will be accepted at par,
with a;n adjustment of accrued interest, under rules and regulations
to be prescribed by the Secretary of the Treasury, in payment of income and profits taxes when payable at or before the maturity of
the certificates. The certificates of this series do not bear the circulation privilege and will not be accepted in paymentxon bond subscriptions. The right is reserved to reject any subscription and to allot
less than the amount of certificates applied for and to close the
subscription at any time without notice. . Payment at par and accrued interest for certificates allotted must be made on allotment.
After allotment and upon payment Federal reserve banks will issue
interim receipts pending delivery of the definitive certificates.
Qualified depositaries will be permitted to make payment by credit
for certificates allotted to them for themselves and their customers
up to an amount for which each shall have qualified in excess of
existing deposits when so notified by Federal reserve banks. As
fiscal agents of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in
full in the order of the receipt of applications until further notice.
Certj^ficates of Series 4A, B, C, and D will be accepted at par with an
adjustment of accrued interest in payment for any certificates of the
series now oft'ered which shall be subscribed for and ^allotted not
later than August 30, 1918.
The fifth biweekly offering of certificates of indebtedness in anticipation of the. fourth Liberty loan will be omitted. No maximum or
minimum amount has been fixed for the present offering of tax
certificates, and no quota have been allotted to the Federal reserve
districts.
E X H I B I T 35.
T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
S E P T E M B E R 3 , 1918.

WASHINGTON, August 27,1918.
Secretary McAdoo, under the authority of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers
for subscription, at par. and accrued interest, through the Federal
reserve banks, $500,000,000 or more Treasury certificates of indebtedness. Series I V - E , dated and bearing interest from September 3,1918,
payable January 2, 1919, with interest at the rate of 4^ per cent per
annum. Applications will be received at the Federal reserve banks.
Subscription books will close at the close of business September 10,



212

REPORT ON THE FINANCES.

1918. Certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000. Said certificates shall be exempt, both
as to principal and interest, from all taxation.now or hereafter im^
posed by the United States, any State, or any of the possessions of
the United States, or by any local taxing authority, except {a) estate
or inheritance taxes, and (6) graduated additional inco'^me taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now
or hereafter imposed by the United States, upon the income or profits
of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act
approved September 24, 1917, or by said act as amended by said act
approved April 4, 1918, or by the act approved July 9, 1918, the
principal of which does not exceed in the aggregate $5,000, owned by
any individual, partnership, association, or corporation, shall be
exempt from the taxes provided for in clause (6) above. Upon ten
days' public notice, given in such manner as may be determined by the
Secretary of the Treasury, the certificates of this series may be re""deemed as a whole at par and accrued interest on or after any date,
occurring before the maturity of such certificates, set fpr the payment
of the first installment of the subscription price of any bonds offered
for subscription by the United States after the offering and before the
maturity of such certificates. The certificates of this series, whether
or not called for redemption, will be accepted at par, with adjustment
of accrued interest, if tendered on such installment date in payment on the subscription price then payable of any such bonds sub- ^
scribed for by and allotted to holders of such certificates. The certificates of this series do not bear the circulation privilege and will not
be accepted in payment of taxes. The right is reserved to reject any
subscriptions and to allot less than the amount of certificates applied
for and to close the subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted musj; be
made on and after September 3,1918, and on or before September lO,
1918. After allotment and upon payment Federal reserve banks will
issue interim receipts pending delivery of the definitive certificates.
Qualified depositories will be permitted to make payment by credit for
certificates allotted to them for themselves and their customers up to
. an amount for which each shall have qualified in excess of existing
deposits when so notified by Federal reserve banks. As fiscal agents
of the United States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the
order of the receipt of applications up to amounts specified in the respective districts.
;

EXHIBIT

36.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
S E P T E M B E R 17, 1918.

WASHINGTON, September 12, 1918.

Secretary McAdoo, under the authority of the act approved September 24, 1917, as amended by the act approved April 4, 1918, offers for subscription, at par and accrued interest, through the
Federal reserve banks, $600,000,000 or more Treasury certificates of
indebtedness. Series I V - F , dated and bearing interest from September 17, 1918, payable January. 16, 1919, with interest at the rate of



ECRETARY OF T H E TREASURY.

213

4^% per annum. Applications will be received at the Federal reserve banks. Subscription books will close at the close of business
September 24, 1918. Certificates will be issued in denominations of
$500, $1,000, $5,000, $10,000 and $100,000. Said certificates shall be
exempt, both as to principal and interest, from alltaxation now or
hereafter imposed by the United States, any State, or. any of the possessions of the United States, or by any local taxing authority, except '
{a) estate or inheritance taxes, and (&) graduated additional income taxes, commonly known as surtaxes, and excess profits and war
profits taxes, now or hereafter imposed by the United States, upon
the income or profits of individuals, partnerships, associations, or
corporations. The interest on an amount of bonds and certificates
. authorized by said act approved September 24, 1917, or by said act
as amended by said act approved April 4, 1918, or by the act approved
July 9, 1918, the principal of which does not exceed in the aggregate $5^000, owned by any individual, partnership, association, or
corporation, shall be exempt from the taxes provided for in clause
(b) above. Upon ten days' public notice, given in such manner as
may be determined by the Secretary of the Treasury, the certificates
of this series may be redeemed as a whole at par and accrued interest
on or after any date, occurring before the maturity of such certificates, set for the payment of the first installment of the subscription price of any bonds offered for subscription by the United States
after the offering and before the maturity of such certificates. The
certificates of this series, whether or not called for redemption, will
be accepted.at par, with adjustment of accrued interest, if tendered
on such installment date in payment on the subscription price then
payable of any such bonds subscribed for by and allotted to holders
of such certificates. The-certificates of this series dojiot bear the
circulation privilege and^ will not be accepted in payment of taxes.
The right is reserved to reject any subscription and to allot less than
the amount of certificates applied for and to close the subscriptions
at any time without notice. Payment at par and accrued interest
for certificates allotted must be made on and after September 17,
1918, and on or before ^September 24, 1918. After allotment and
upon payment Federal reserve banks will issue interim receipts
pending delivery of the. definitive certificates. Qualified depositaries
will be permitted to make payment by credit for certificates allotted
to them for themselves and their customers up to an amount for
which each shall have qualified in excess of existing deposits when
so notified by Federal reserve banks. As fiscal agents of the United ,
States, Federal reserve banks are authorized and requested to receive subscriptions and to make allotment in full in the order of the
, receipt of applications up to amounts specified in the respective districts.
EXHIBIT

37.

T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S D A T E D
OCTOBER 1, 1918.

WASHINGTON, September 2Jp, 1918.

The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended by the act approved Aprfl 4,
1918, offers for subscription, at par and accrued interest, through the




214

REPORT ON T H E FINANCES.

Federal reserve banks, $500,000,000 or rriore Treasury certificates of
indebtedness, Series I V - G , dated and bearing interest from October
1, 1918, payable January 30, 1919, with interest at the rate of 4J%
per annum. Applications will be received at the Federal reserve
banks. Subscription books will close at the close of business October
8, 1918. Certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000. Said certificates shall be exempt, both
as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of
the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes,
commonly known as surtaxes, and excess profits and war profits
taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act approved September 24, 1917, or by said act as
amended by said act approved April 4, 1918, or by the act approved
July 9,1918, the principal of which does not exceed in the aggregate
$5,000, owned by any individual, partnership, association, or corpora- ^
tion, shall be exempt from the taxes provided for in clause (b) above.
Upon ten days' public notice, given in such manner as may be determined by the Secretary of the Treasury, the certificates of this
series may be redeemed as a whole at par and accrued interest on or
after any date, voccurring before the maturity of such certificates,
set for the payment of the first installment of the subscription price
of any bonds offered for subscription by the United States after the
offering and before the maturity of such certificates. The certificates
of this series, whether or not called for redemption, will be accepted
at par, with adjustment of accrued interest, if tendered on such installment date in payment on the subscription price then payable of
any such bonds subscribed for by and allotted to holders of such
certificates. The certificates of this seriefe do not bear the circulation
privilege and will not be accepted in paymerit of taxes. The right
is reserved to reject any subscription and to allot less than the amount
of certificates applied for and to close the subscriptions at any time
without notice. Payment at par and accrued interest for certificates
allotted must be made on and after October 1, 1918, and on or before
October 8, 1918. After allotment and upon payment. Federal reserve banks will issue interim receipts pending delivery of the definitive certificates. Qualified depositaries will be permitted to make
payment by credit for certificates allotted to them for themselves and
their customers up to an amount for which each shall have qualified
in excess of existing deposits when so notified by Federal reserve
banks. As fiscal agents of the United States, Federal reserve banks
are authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to
Amounts specified in the respective districts.




EXHIBIT
[Department Circular No. 120

38.
I^oans and Currency.]

U N I T E D STATES OF AMERICA.

F O U R P E R C E N T T R E A S U R Y C E R T I F I C A T E S OF I N D E B T E D N E S S .
TAX S E E I E S OF

1919.

Dated and bearing interest from August 20, 1918.

Due July 15, 1919.

The Secretary of the Treasury, under the authority of the act
^ approved September 24, 1917, as amended by the act approved April ,
4, 1918, offers for subscription, at par and accrued interest. Treasury
certificates of indebtedness of the United States, tax series of 1919,
dated and bearing interest from August 20, 1918, payable July 15,
1919, bearing interest at the rate of 4 per cent per annum, payable
November 15., 1918, and January 15, March 15, May 15, and July 15,
1919.
*
Applications will be received at the Federal reserve banks.
Bearer certificates, with interest coupons attached, will be issued
in denominations of $500, $1,000, $5,000, $10,000, and $100,000.
Said certificates shall be exempt, both as to principal and interest,
from all taxation now or hereafter imposed by the United States,
any State, or any of the possessions of the United States, or by any
local taxing authority, except (a) estate or inheritance taxes, and
(b) graduated additional income taxes, commonly known as surtaxes,
and excess-profits and war-profit taxes, now or hereafter imposed by
the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of
bonds and certificates authorized by said act approved September 24,
1917, or by said act as amended by said act approved April 4, 1918,'
or by. the act approved July 9, 1918, the principal of which does not
exceed in the aggregate $5,000, owned by any individual, partnership,
association, or corporation, shall be exempt from the taxes provided
for in clause (b) above.
Certificates of this series will be accepted at par, with an adjustment of accrued interest, under rules and regulations to be prescribed
by the Secretary of the Treasury, in payment of income and profits
taxes when payable at Dr bef ore the maturity of the certificates. The •
certificates of this series do not bear the circulation privilege and •
will not be accepted in payment on bond subscriptions.
The right is reserved to reject any subscription and to allot less
than the amount of certificates applied for and to close the subscription at any time without notice. Payment at par and accrued
interest for certificates allotted must be made on allotment. After
allotment and upon payment Federal reserve banks will issue interim
receipts pending delivery of the definitive certificates. Qualified




215

216

REPORT ON THE FINANCES.

depositaries will be permitted to make payment by credit for certificates allotted to them for themslves and their customers up to an
amount for which each shall have qualified in excess of existing
deposits when so notified by Federal reserve banks.
As fiscal agents of the United States, Federal reserve banks are
authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications until further
notice. Certificates of Series IVA, B, C, and D will be accepted at
par with an adjustment of accrued interest in payment for any certificates of the series now offered which shall be subscribed for and
alloted not later than August 30, 1918.
W. G. MCADOO,

Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

August 16, 1918.
EXHIBIT 3 8 - A .

^

S T A T E M E N T BY T H E S E C R E T A R Y OF T H E T R E A S U R Y .

WASHINGTON, November 5, 1918.

I n connection with the issue of Treasury certificates dated November 7 and maturing March 15 it is announced that the issue of 4 per
cent certificates, tax series of 1919, maturing July 15, 1919, will close
at the close of business November 6, 1918.




E X H I B I T 39.
[Department Circular No. 124. Loans and Currency.]
U N I T E D STATES OF AMERICA.

F O U R A N D O N E - H A L F P E R C E N T T R E A S U R Y C E R T I F I C A T E S OF
INDEBTEDNESS.
SEBIESvyT.

Dated and bearing interest from November 7, 1918.
15, 1919.

Due March

The Secretary of the Treasurj^, under the authority of the act approved September 24, 1917, as amended by the act approved April 4,
1918, offers for subscription at par and accrued interest a limited
amount of Treasury certificates of indebtedness of the United States,
Series T, dated and bearing interest from November 7, 1918, payable
March 15, 1919, bearing interest at the rate of four and one-half
per cent per annum.
•
Applications will be received at the Federal reserve banks.
Bearer certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000.
Said certificates shall be exempt, both as to principal and interest,
from all taxation now or hereafter imposed by the United States,
any State, or any of the possessions of the United States, or by any
local taxing authority, except (a) estate or inheritance taxes, and
(b) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon tne income or profits of individuals,
partnerships, associations, or corporations. The interest on an
amount of bonds and certificates authorized by said act approved
September 24, 1917, and amendments thereto, the principal of which
does not exceed in the aggregate $5,000, owned by any individual,
partnership, association, or corporation, shall be exempt from the
taxes provided for in clause (b) above.
Certificates of this series will be accepted at par, with an adjustment of accrued interest, during such time and under such rules and
regulations as shall be prescribed or approved by the Secretary of
the Treasury, in payment of income and profits taxes when payable
at or before the maturity of the certificates. The certificates of this
series do not bear the circulation privilege and will not be accepted
in payment on bond subscriptions.
The right is reserved to reject any subscription and to allot less
than the amount of certificates applied for and to close th§ subscriptions at any time without notice. Payment at par and accrued interest for certificates allotted must be made on November 7, 1918, or
later allotment. After allotment and upon payment Federal re-




217

218

REPORT ON T H E FINANCES.

serve banks will issue interim receipts pending delivery of the definitive certificates. Depositaries duly qualified under department circular No. 92 of Septeniber 21, 1918, will be permitted to make payment by credit for certificates allotted to them for themselves and
their customers up to the amount for which each shall have qualified
in excess of existing deposits when so notified by Federal reserve
banks. Treasury certificates of indebtedness of any issue of Series
I V which shall not have previously matured or been called for
earlier redemption and certificates of the tax series of 1919, with all
unmatured interest coupons attached, will be accepted at par with
an adjustment of accrued interest in payment for any certificates of
the series now offered which shall be subscribed for and a!llotted.
As. fiscal agents of the United States, Federal reserve banks are
authorized and requested to receive subscriptions and to make allotment in full in the order of the receipt of applications up to amounts
indicated by the Secretary of the Treasury to the Federal reserve
banks of the respective districts.
W. G. MCADOO,

Secretary of the Treasury,
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,




November 6^ 1918.

EXHIBIT 40.
[1917. Department Circular No. 95. Loans and Currency.1
A G E N T S OF T H E SECOND CLASS F O R S A L E OF W A R - S A V I N G S
CERTIFICATES.
TREASURY

DEPARTMENT,

O r r i C E OF TEEE S E C R E T A R Y ,

Washington, November 30, 1917.
To agents for sole of war-savings certificates, war-savings certificate
stamps, and TJnited. States thrift stamps:
As provided in Treasury Department Circular No. 94 (War-Savings Circular No. 1), dated November 15, 1917, any agent for the
sale of war-savings certificates, war-savings certificate stamps, and
United States thrift stamps may obtain from a Fed.eral reserve bank
war-savings certificate stamps in excess of $1,000 (maturity value),
for sale to the public, upon deposit of collateral security therefor with
such Federal reserve bank. The terms and conditions upon which
such deposits shall be made are hereinafter set forth. Any agent
who thus obtains war-savings certificate stamps in excess oi $1,000
(maturity value) is sometimes referred to below, and also in Treasury
Department Circular No. 94, as an agent of the second class. All
agents appointed by the Secretary of the Treasury in accordance with
Treasury Department Circular No. 94 will be deemed agents of the
first class except such as become agents of the second class under the
provisions of this circular.
COLLATERAL SECURITY TO BE DEPOSITED AND PLEDGED BY AGENTS OF THE
SECOND CLASS.

To obtain war-savings certificate stamps in excess of $1,000 (maturity value), ari agent must deposit and pledge with a Federal reserve bank, as fiscal agent of the United States (or, by the direction
and subject to the order of such Federal reserve bank, with a custodian or custodians designated by it and under rules and regulations
prescribed by i t ) , as collateral security for the faithful performance
of the obligations assumed by such agent, as provided below. United
States bonds of any Liberty loan or United States certificates of indebtedness of any issue, the par value of which shall be at least equal
to the aggregate amount of war-savings certificate stamps, at the issue
price thereof during December, 1918, as specified in Treasury Department Circular No. 94, plus the aggregate face value of United States
thrift stamps, to be obtained by. such agent (such bonds and certificates of indebtedness, as well as any other securities, the pledge of
which is provided for below, so deposited and pledged, being sometimes referred to below as " collateral security " ) . Any collateral se-




V

219

220

REPORT ON THE FINANCES.

curity deposited with any custodian designated by a Federal reserve
bank shall be deemed deposited with the Federal reserve bank designating such custodian.
I n case the aggregate amount of war-savings certificate stamps, at
such December, 1918, issue price, plus the aggregate face value of
thrift stamps, which any agent shall desire to obtain, shall be $50,bOO
or more, then such agent may deposit and. pledge as collateral security, as herein provided, any securities described in paragraphs {a)
to {h), both inclusive, of Treasury Department Circular No. 92 (Liberty Loan Circular No. 7), daited October 6,191f, at the rates therein
provided. No such security shall, however, be valued at more than
par. No State or municipal bond, obligation, or evidence of indebtedness shall be accepted if the State or municipality has made 'default
in payment of principal or interest during the past 10 years. The
approval and valuation of any such securities are committed to the
several Federal reserve banks acting under the direction of the Secretary of the Treasury.
The withdrawal of securities, the pledging of additional securities,
and the substitution of securities shall be made from time to time, as
required or permitted by the several Federal reserve banks acting
under direction of the Secretary of the Treasury. Each agent, so
long as such agent shall not be in default in respect of any obligation
assumed by such agent, as herein provided, shall be entitled to collect
and retain any and all interest upon the collateral security deposited
and pledged by such agent with a Federal reserve bank.
Any agent, upon depositing and pledging collateral security, as
herein provided, and upon executing, and delivering -to a Federal
reserve bank, a pledge agreement, in Form 1021, hereto attached
(copies of which may be had from any Federal reserve bank), if
recommended by such Federal reserye bank, and approved by the
Secretary of the Treasury, as an agent of the second class, may obtain,
from time to time, from such Federal reserve bank war-savings certificate stamps, taken at such December, 1918, issue price, and United
States thrift stamps, at 25 cents each, up to the collateral value,
taken as provided above, of such collateral security, but not in excess
thereof. Such agent may also obtain an adequate- supply of warsavings certificates and thrift cards.
From time to time, as any such agent shall sell war-savings certificate stamps or thrift stamps and shall pay over the proceeds of any
^uch sales to the Federal reserve bank to which such agent is required
to account, as provided beloAv, additional amounts of such stamps
(war-savings certificate stamps beirig taken at such December,
1918, issue price), in lieu of such stamps so sold, may be obtained
from such Federal reserve bank, not, however, in excess of the aggregate amount of such stamps theretofore sold and for which payment
shall have been inade to such Federal reserve bank, unless additional
collateral security shall be similarly deposited and pledged.
Any agent of the second class may from time to time voluntarily
deposit and pledge additional collateral security with the Federal
reserve bank with which such agent shall have theretofore deposited
and pledged collateral security, as provided above, and thereupon
obtain additional amounts of war-savings certificate stamps and thrift
stamps, up to the collateral value of such additional collateral se-




SECRETARY OF THE TREASURY.

221

curity, upon like terms and conditions as upon the original deposit
and pledge of collateral security.
Any pledge agreement executed by a corporation, or by the legally
/ authorized representative of an unincorporated association acting
on behalf of such association, must be accompanied by a duly certified copy of resolutions, as provided in Form 1022, hereto attached,
duly adopted by the board of directors,, board of trustees, or other
governing body of such corporation or unincorporated association,
as the case may be. I n the first instance, however, a Federal reserve
bank may accept from any corporation a duly certified copy of
resolutions (substantially in Form 1022) duly adopted by an executive committee of the board of directors of such corporation, having
authorit3rto act, when accompanied by a duly certified copy of the
provisions of the by-laws of such corporation, under which such
executive committee may be constituted, but in every such"case there
shall be delivered to such Federal reserve bank within 30 days thereafter a duly certified copy of resolutions of the board of directors
of such corporation, as provided above.
ACCOUNTING

BY AGENTS OF T H E

SECOND

CLASS.

Each agent of the second class, on or before the tenth day of each
month, must render to the Federal reserve bank, with which such
agent shall have deposited and pledged such collateral security, an
account, in Form 1023, hereto attached (copies of which may be
had from any Federal reserve bank), in respect of all war-savings
certificate stamps and .United States thrift stamps obtained by such
agent from such Federal reserve bank and sold by such agent during the preceding calendar month, and stating the respective amounts
of such stamps, if any, remaining unsold in the hands of such agent
at the close of such calendar month.
Each agent of the second class, before or upon the rendering of
any such account, must deposit the aggregate amount of the proceeds
of all sales of war-saving certificate stamps and thrift stamps, obtained as provided above, in such Federal reserve bank, as fiscal agent
of the United States; but each agent of the second class, in accounting for the -proceeds of sales of war-savings certificates stamps and
United States thrift stamps, shall be entitled to a credit of $4 in
respect of each thrift card, bearing its full complement of United
States thrift stamps, transmitted to the Federal reserve bank, as fiscal
agent of the United States, with any account rendered by such agent
to such bank, as provided above.
OBLIGATIONS OF AGENTS OF T H E SECOND CLASS.

Each Federal reserve bank, as fiscal agent of the United States,
shall hold the collateral security, deposited and pledged with such
bank by the several agents of the second class, as collateral security
for the faithful performance of their respective obligations as such
agents, including, among others (but not excluding, by the following
specific enumeration, any other obligation to be performed by such
agents), the obligation—;
(1) Not to sell any Uriited States thrift stamp at any price other
than 25 cents for each stamp, and not to sell any war-savings certifi-




222

REPORT ON THE FINANCES.

eate stamp at any price other than the current issue price of such
stamp during the month in which sold, as specified in Treasury Department Circular No. 94:
(2) Duly to account to a Federal reserve bank, as fiscal agent of the
United States, as provided above, in respect of all war-savings certificate stamps and United States thrift stamps obtained and sold or
remaining unsold:
(3) To cause to be duly paid into the Treasury of the United States,
as provided above, the proceeds of any and all such sales; and
(4) To deliver to a Federal reserve bank, as fiscal agent of the
United States, whenever required by the Secretary of the Treasury,
any and all war-savings certificate stamps. United States thrift
stamps, thrift cards, and war-savings certificates obtained from such
Federal reserve bank but not theretofore issued or sold, and, whenever required, to account forthwith in respect of the proceeds of all
sales of such stairips theretofore made.
Any agent of the second class who shall have fully complied with
all the terms of such agency may at any time surrender such agency
and withdraw the collateral security deposited and pledged by such
agent with a Federal reserve bank, upon delivery to such bank, as
fiscal agent of the Uiiited States, of all war-savings certificate stamps,
and United States thrift stamps (together with all unissued war-savings certificates and thrift cards) obtained from such Federal reserve bank and then held by such agent, and upon duly accounting
and making payment, as herein provided, in respect of all such warsavings certificate stamps and. United States thrift stamps obtained
or sold by such agent.
OTHER DETAILS.

The Secretary of the Treasury reserves the right, from time to
time, to call ,.for the deposit and pledge of additional collateral
security by any agent of the second class and to. withdraw this circular as a whole, or to amend, from time to time, any of the provisions hereof.
The Secretary of the Treasury reserves the right, at any time, to
terminate any agency of the second class and to require any agent
of the second class to deliver to the Secretary of the Treasury, or to
a Federal reserve bank, as fiscal agent of the United States, any and
all war-savings certificate stamps. United States thrift stamps, thrift
cards, and war-savings certificates, obtained from such Federal reserve bank but not theretofore issued or sold by such agent, and to
require any agent of the second class to render any account and to
make payment, at any time or times, in addition to the monthly
account and payment, hereinbefore required, in respect of the proceeds of all sales of such stamps theretofore made and not theretofore
accounted for.
Agents of the second class shall be subject to all of the terms and
provisions of Treasury Department Circular No. 94, so far as applicable, as well as the terms and provisions of this circular.




W. G. MCADOO,

Secretary of the Treasury.

223

SECRETARY OF THE TREASURY.
NAMES

AND

ADDRESSES . OF

THE

Federal Reserve Bank of Boston,
53 State.^ Street, Boston, Mass.
Federal Reserve Bank of New York,
120 Broadway, New York, N. Y.
Federal Reserve Bank of Pliiladelphia,
408 Ctiestnut Street, Philadelphia,
Pa.
Federal Reserve Bank of Cleveland,
V^illiamson Building, Euclid,Avenue and Public Square, Cleveland, Ohio.
Federal Reserve Bank of Richmond,
1109 East Main Street, Richmond,
Va.
Federal Reserve Bank of Atlanta,
Edgewood Avenue and Exchange
Place, Atlanta, Ga.
Federal Reserve Bank of Chicago,
Rector Building, West Monroe and
Clark Streets, Chicago, 111.

SEVERAL

FEDERAL

BESERVE

BANKS.

Federal Reserve Bank of St. Louis,
Broadway and Pine Streets, St.
Louis, Mo.
Federal Reserve Bank of Minneapolis,
Life Building, Third Avenue South
and Fifth Street, Minneapolis,
Minn.
Federal Reserve Bank of Kansas City,
R. A. Long Building, Tenth and
Grand Avenue, Kansas City, Mo.
Federal Reserve Bank of Dallas,
1305 Main Street,. DaUas, Tex.
Federal Reserve Bank of San Francisco,
25 Montgomery Street, San Francisco, Cal.

[Form 1021.]

PLEDGE AGREEMENT.
To the Federal reserve banlc of
, as fiscal agent of the Vnited States:
The undersigned desires to become an agent of the second class for the issue
and sale of war-savings certificates, war-savings certificate stamps, and thrift
stamps, in accordance with the respective provisions of Treasury Department
Circulars Nos. 94 and 95, and to obtain, from time to time, for sale to the
public, as provided in such circulars, war-savings certificate stamps, in excess
of $1,000 (maturity value), and thrift stamps, in the aggregate total amount
.of $
(such war-savings certificate stamps to be taken, at the December,
1918, issue price and such thrift stamps, at 25 cents each), and, as and when
such stamps shall be sold and accounted and paid for, to obtain in lieu thereof,
from time to time thereafter, additional war-savings certificate stamps (at such
December, 1918, issue price) and thrift stamps (at 25 cents each) up to but
not exceeding, at any one time, the total amount stated above.
The undersigned hereby agrees that none of such stamps obtained by the
undersigned shall be sold or disposed of otherwise than as provided in- such
circulars, or either of them, and further agrees faithfully to perform all other
obligations to be performed by agents of the second class, as therein and herein
provided.
The undersigned agrees, in accordance with the provisions of Treasury Department Circular No. 95, before or ifpon the delivery to the undersigned, of
war-savings certificate stamps and thrift stamps, in the aggregate total
amount stated above, to deliver to such Federal reserve bank (or to a custodian
designated by it), and to pledge with such Federal reserve bank, in negotiable
form, and, in the case of coupon bonds, with all unmatured coupons attached,
$
, face amount, of United States bonds of the first Liberty loan;
$
, face amount, of United States bonds of the first Liberty loan
converted;
$_:
, face amount, of United States bonds of the second Libery loan;
$
, face amount of United States certificates and indebtedness;
$
_, face amount, of securities described in Treasury Department
Circular No. 92, which may be deposited and pledged as
provided in' Treasury Department Circular No. 95, and
which are specified in Schedule A, hereto attached;
Total, $
;
to be held by such Federal reserve bank, as fiscal agent of the United States, '
as collateral security for the faithful performance of the obligations of the,
undersigned, now or hereafter from time, to time arising, as an agent of tU^




224

REPORT ON THE FINANCES.

second class for the issue and sale of war-savings certificates, war-savings
certificate stamps, and thrift stamps, in accordance with the respective provisions of Treasury^'Department Circulars Nos. 94 and 95, and of any supplemental
o r amendatory regulations made from time to time as therein provided; the
undersigned, however, so long as not in default hereunder, to be entitled to
collect from time to time and to retain any and all interest upon such collateral
security.
In case the undersigned shall make any default in the faithful performance,
as provided above, of each and every obligation of the undersigned as such agent
of the second class, such collateral security may be sold, in whole or in part, at
one time or from time to time, at public or private sale,, with or without notice
to the undersigned, either as to the time or place of any such sale or sales,
or otherwise, and the proceeds of any such sale or sales shall be applied to
make good any loss or damage sustained by the United States by reason of any
such default or defaults (the amount thereof to be conclusively determined by
the Secretary of the Treasury) and the balance pf such proceeds, if any, after
satisfying and making good any such loss or damage, and after payment of any
and all expenses connected with any such sale or sales, shall, in such case, be
paid over to the undersigned.
Upon delivery to the undersigned of any war-savings certificate stamps or
thrift stamps, desired to be obtained hereunder, this pledge agreement shall
'become binding upon the undersigned, who shall thereupon become an agent of
the second class.
Dated,
, 191^_.
Signature in full
By
_
___
(Authorized signature required.)

Address, number and street
City or» town
County
State
[Form 1022.1

RESOLUTIONS AUTHORIZING PLEDGE AGREEMENT.
I hereby certify that the following resolutions were duly. adopted at a meeting of the board of { *^:^|^f^^3 } of the {,^„%°«fji°^ } named below, which meeting was duly caUed and duly held on the
day of
, 191_-; a
quorum being present, and that said resolutions were spread upon the minutes
of said meeting and remain in full force and effect.
Resolved, That in accordance with the respective provisions of Treasury
Department Circular No. 94 (War-Savings Circular No. 1), dated November 15,
1917, and of Treasury Department Circular No. 95 (War-Savings Circular No. 2),
dated November 30, 1917, _-__
of this { ^^^^^^^^^^^^^ be and
(Name.)

(Title of officer.)

fon behalf of this corporation;
]
he hereby is authorized and directed, as the legally authorized representative [
1 of this association;
J
(1) To execute and deliver to the Federal reserve bank of
a
pledge agreement, a copy of which is hereto annexed, in order to obtain frOm
said Federal reserve bank, from time to time, an aggregate amount of warsavings certificate stamps, taken at the December, 1918, issue price, plus
an aggregate amount of United States thrift stamps, at 25 cents each, aggregating up to, but not in excess of, $
, at any one time, not theretofore sold,
and accounted and paid for, as provided in such pledge agreement; and
(2)To assign to, and to pledge with, said Federal reserve bank, as fiscal
agent of the United States, securities owned by thisj assodat^on 1^^ ^^^
character and amount required by said Treasury Department Circular No.
95 (War-Savings Circular No. 2, as specified in said pledge' agreement, as
collateral security for the faithful performance of each and every obligathis corporation
said
as the legaUy authorized as an agent of the second
representative of this association
class, as provided in said pledge agreement; and further

{




SECRETARY OF THE TREASURY.

225

Resolved, That said Federal reserve bank be, and it hereby is, authorized
and requested to deliver war-savings certificates, war-savings certificate stamps,
thrift stamps, and thrift cards, as specified in such pledge agreement, to
"(Name.)

'

TTitie of officer.)

of thiq / corporation, on behalf of this corporation,
1 association, as the legally authorized representative of this association,
and from time to time to permit said
to withdraw securities and to
substitute other securities and to deposit and pledge additional securities, all
as provided in Treasury Department Circulars Nos. 94 and 95; and further
the
, or any assistant 1

I

.//////.-^TthefegSTXS- ^^' -^ ^« ^-*y ^«.

representative of this association, J
authorized and directed, from time to time, to render accounts and to cause
payments to be made to said Federal reserve bank, as fiscal agent of the
United States, as required by Treasury Department Circular No. 95.
In witness whereof, I,
i , of
,
(Title of officer.)

(Name of corporation or association.)

have hereunto signed my name and affixed the seal of
this
day of
, 191__

,

[Form 1023.]

MONTHLY'"ACCOUNT OF SALES AND HOLDINGS OF WAR-SAVINGS
CERTIFICATE STAMPS AND UNITED STATES THRIFT STAMPS.
Dated,
To Federal reserve bank of
;
as fiscal agent of the United States,

-

, 191—

The undersigned hereby renders the following account of sales of war-savings
certificate stamps and United States thrift stamps made by the undersigned
during the month of
, 191 , and of the respective amounts of such
stamps obtained from such Federal reserve bank, (1) during such month, (2)
held at the close of such month, and (3) held at the close of the preceding
month, and incloses herewith, in accordance with the. provisions of Treasury
Department Circular No. 95 (War-Savings Circular No. 2)—
(a) $
, in cash; or
(&) $
, by bank draft, or by check drawn upon such Federal reserve
bank, or upon any member bank located in such Federal
reserve district, payable to order of " Federal' reserve
bank of
, as fiscal agent of the United States; " or
(c) $
, in United States thrift cards (each with full complement of
thrift stamps attached),
aggregating, in all, $
, in payment of the amount due in respect of such
sales of war-savings certificate stamps and thrift stamps, as shown by such
account.
(Name of agent.)

By
(Official signature required.)
«

86429°—FI 1918




15

(Address.)

226

EEPOKT ON THE FINANCES.
War-savings
certificate
stamps.

United States
thrift stamps.

$

s

Totals.

Balance on hand close of preceding month (number of
stamps)
i
Add amounts obtained during month (number of stamps)
Total
Deduct balances onhand close of month (number of stamps).
Sales during month (numbftr of stamps)..
Gross amount due in respect of such sales
Less amounts, if any, paid during month to such Federal reserve bank, as fiscal agent of the United States

$

Net amount due and inclosed herewith

A similar account must be rendered on or before the tenth day of each month.
No medium of payment other than above provided will be accepted by any
Federal reserve bank, except at its own risk, and no agent shall be entitled
to credit, in respect of any payment to be made by check or draft except when
such check or draft shall be collected by a Federal reserve bank, as fiscal agent
of the United States.




EXHIBIT 41.
[1918. Department Circular No. 96. Loans and Currency.]
C A S H A G E N T S OF T H E SECOND CLASS F O R S A L E OF W A R - S A V I N G S
CERTIFICATES.
OBTAINING WAR-SAVINGS CERTIFICATE STAMPS AND UNITED STATES THRIFT
STAMPS FOR CASH.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, January 2,1918. .
As an alternative to the method provided in Treasury Department
Circular No. 95, any agent for the sale of war-savings certificates,
war-savings certificate stamps, and United States thrift stamps (as
well as individuals, partnerships, corporations, and the duly authorized representatives of labor, fraternal, an(i other associations,
even though not previously appointed agents) maj^ obtain from a
Federal reserve bank, for sale to the public, war-savings certificate
stamps in excess of $1,000 (maturity value), and also United States
thrift stamps, with an adequate supply of war-savings certificates
and thrift cards, upon the conditions stated below.
Anyone desiring to obtain war-savings certificate stamps and
United States thrift stamps as provided in this circular must execute
and deliver to a Federal reserve bank an application on Form. No.
1025, heretofore attached (copies of which-may be had from any Federal reserve bank).
Such application must bear the recommendation of a Federal director of war-savings, a State director of war-savings, or of some
other person acceptable to such Federal reserve bank. Upon approval of such application by such Federal reserve bank the applicant may, from time to time, deposit cash with such Federal reserve bank, as fiscal agent of the United States, and obtain therefor
deliveries of war-savings certificate stamps at the current cost price
thereof during the month in which such stamps shall be obtained,
as stated thereon, and United States thrift stamps at 25 cents each.
Upon delivery of any such stamps the applicant becomes a cash
agent of the second class.
The aggregate amount of war-savings certificate stamps and
United States thrift stamps obtained by any such agent less amounts
reported as sold by such agent shall not exceed the aggregate amount
stated in the application of such agent. Such application may, however, be amended, with the approval of such Federal reserve bank,
so as to include such additional amount of war-savings certificate
stamps and United States thrift stamps as such agent may desire
to obtain.




227

228

'

'

REPORT ON T H E FINANCES.

Each cash agent, of the second class, whenever from time to time
required by the Secretary of the Treasury, shall render a report to
such Federal reserve bank, substantially in Form No. 1026, hereto
attached (copies of which may be had from such Federal reserve
bank), of the number of war-savings certificate stamps and United
States thrift stamps obtained from such Federal reserve bank theretofore sold by such agent.
Any cash agent of the second class who shall have complied with
the terms of such agency may at any time surrender such agency and
redeliver to such Federal reserve bank, as fiscal agent of the United
States, (1) all unsold war-savings certificate stamps and Uniteli
States thrift stamps and (2) all unissued war-savings certificates and
thrift cards obtained by such agent from such Federal reserve bank.
Any cash agent of the seconcl class whose agency shall have been
terminated shall thereupon, and each cash agent of the second class
shall in any event, on or before December 31, 1918, redeliver to such
Federal reserve bank, as fiscal agent of the United States, (1) all
unsold war-savings certificate stamps and United States thrift
stamps and (2) all unissued war-savings certificates and thrift cards
obtained by such agent from such Federal reserve bank.
Upon any redelivery of stamps, as provided in either of the two
preceding paragraphs, such Federal, reserve bank, as fiscal agent
of the United States, shall return to such agent the amount deposited
with such Federal reserve bank by such agent for each war-savings
certificate • stamp redelivered and 25 cents for each United States
thrift stamp redelivered. I n determining the amount deposited
with such Federal reserve bank by any cash agent_of the second class
for war-savings certificate stamps so redelivered, sales shall be
deemed to have been made by such agent in the order in which deliveries of such stamps may have been obtained by such agent, so that
earlier sales shall be deemed to have been made out of earlier deliveries.
The Secretary of the Treasury reserves the right to withdraw this
circular, or to amend from time to time any of the provisions hereof,
and to terminate any agency created hereunder.
W.

G.

MCADOO,

Secretary of the Treasury.
[Form 1025.]
APPLICATION.
T o THE F E D E R A L RESERVE B A N K OF

,

As fiscal agent of the TJnited States:
The undersigned (iesires to become an agent of the second class for
the issue and sale of war-savings certificates, war-savings certificate
stamps, and United States thrift stamps, in accordance with and subject to the respective provisions of Treasury Department Circulars
Nos. 94 and 96, and to obtain from such Federal reserve bank, from
time to time, for sale to the public, as provided in such circulars, warsavings certificate stamps and United States thrift stamps in the
aggregate amount of $ — (the amount to be inserted may be
more than the amount presently desired and should be ample to cover
the agent's requirements), and from time to time to obtain additional



SECRETARY OP TPIE TREASURY.

229

war-savings certificate stamps and United States thrift stamps in
place of stamps reported sold by' the undersigned. Such war-savings
certificate stamps shall be taken at the current cost price thereof
during the month when obtained, as stated thereon, and such thrift
stamps, shall be taken at 25 cents each.
The undersigned hereby agrees—
( a ) ' T o sell war-savings certificate stamps, obtained by the
undersigned, for cash only and at the current cost price
stated thereon;
(b) To sell United States thrift stamps for cash only and at 25
cents each;
(c) To endeavor to sell such stamps as promptly as possible;
and
(d) Faithfully to perform all other obligations of an agent of
the secondi class, as herein and in said circulars provided
or as provided in any supplemental or amendatory regulations.
Upon delivery to the undersigned of any war-savings certificate
stamps or United States thrift stamps desired to be obtained hereunder, the agreement contained in this application shall become
binding upon the undersigned, who shall thereupon become a cash
agerit of the second class.
Dated,
1918.
Signature in full
(Authorized

signature

required.)

• Address, number and street
City or town
,
County
State
:
Application recommended by
:
,
, 1918.
Application approved by Federal reserve bank of
, _.__._, 1918.
By
.
_
[Form 1026.]
REPORT

OF

SALES

OF

WAR-SAVINGS CERTIFICATE
STATES T H R I F T S T A M P S .

STAMPS

Dated

AND

UNITED

._, 1918.

To FEDERAL RESERVE B A N K OF

As fiscal agent of the United States:
The undersigned hereby renders the following report of sales of
war-savings certificate stamps and United States thrift stamps
obtained by the undersigned from such Federal reserve bank:
WarUnited
savings
certificate States thrift
stamps.
stanips.
•Sales to

1918, not previously reported (number of stamps).

* NOTE.—Agents should fill in date'to which they are able conveniently to make report of sales unless
some specific date is required by the Secretary of the Treasury.




230

REPORT ON T H E

FINANCES.

( / / additional stamps are desired to replace stamps sold, the following requisition should be filled in.)
R E Q U I S I T I O N FOR S T A M P S .

The application filed by the undersigned states that the
undersigned desires to obtain war-savings certificate •
stamps and thrift stamps to an amount not in excess of_\$_:
War-savings certificate stamps (obtained but not now
nor heretofore reported sold), at $
each
$
Thrift stamps (obtained, but not now nor heretofore reported sold), at 25 cents each
^
Total
.
Difference (being aggregate amount of such stamps presently obtainable upon deposit of cash)
—
Against which the undersigned desires to obtain, upon deposit of cash therefor, as provided in Treasury Department Circular
No. 96:
War-savings certificate stamps, at $
each_ $
Thrift stamps, at 25 cents each
Total




>(Name of agent.)

By
(Official signature required.)
(Address.)

E X H I B I T 42.
[1918. Department Circular No. 101.

UNITED

STATES

Loans and Currency.]

OF A l i l E R I C A W A R - S A V I N G S
S E R I E S OF 1 9 1 8 .

CERTIFICATES,

REGULATIONS GOVERNING THE APPOINTMENT OF AUTHORIZED AGENTS,
TOGETHER WITH INSTRUCTIONS AND INFORMATION FOR THE GUIDANCE
OF S U C H AGENTS.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, February 19,1918.
APPOINTMENT OF AUTHORIZED AGENTS.

Applications for appointment by the Secretary of the Treasury
as authorized agents for the sale of war-savings certificates, warsavings certificate stamps, and United States thrift stamps, in accordance with Treasury Department Circular No. 94 (War-Savings Circular No. 1), dated November 15, 1917, should be made upon the
forms provided for that purpose and must be transmitted to the
Secretary of the Treasury, Division of Loans and Currency,
Washington.
Such applications should bear the indorsement of a money-order
postmastei* or of an incorporated bank or trust company.
Such applications must also bear the indorsement of the National
War-Savings Committee to be evidenced by the signature of some
person desigTiated by such committee to act on its behalf. Such
last-mentioned indorsement, however, need not be obtained before
such applications are transmitted to the Secretary of the Treasury,
as all applications received without such indorsement will immediately be presented to the National War-Savings Committee, which
will either give or withhold such indorsement, as it may deem advisable.
On approval of any such application by the Secretary of the Treasury, a certificate of appointment of the applicant named therein as
an authorized agent will be forwarded as promptly as possible.
Upon special request of the National War-Savings Committee,
appointments as authorized agents may, in special instances, be
made in advance of actual receipt of applications by the Secretary
of the Treasury, provided the Secretary of the Treasury shall approve such applications and shall be satisfied that such applications
have actually been made and forwarded.
AGENTS OF T H E SECOND CLASS U N D E R TREASURY
CIRCULAR N O . 9 5 .

DEPARTMENT

Any authorized agent desiring to become an agent of the second
class under Treasury Department Circular No. 95 (War-Savings




231

232

REPORT ON T H E FINANCES.

Circular No. 2) must execute and deliver to a Federal reserve, bank
a pledge agreement, on the form to be supplied by such banks (Form
No. 1021), as required by such circular. Any such pledge agreement so executed and delivered will operate as an application by the
person executing the same to become an agent of the second class,
and no other special form of application is required.
Upon receipt of any such pledge agreement executed by an authorized agent, a Federal reserve bank, if willing to recommend the
applicant as an agent of the second class, should execute Form
1035, hereto attached, inserting therein the name and address of
the applicant and the aggregate amount of war-savings certificate
stamps and thrift stamps desired to be obtained by such applicant,
as specified in such pledge agreement. Such form so executed,
together with a copy thereof, should then promptly be forwarded
to the Secretary of the Treasury, Division, of Loans and Currency,
Washington.
Iri due course the Federal reserve bank will, be notified by the
Secretary of the Treasury, by return of a copy of Form 1035, with
appropriate notation thereon, whether or not such applicant to
become an agent of the second class is approved by the Secretary of
the Treasury.
Upon receiving notice of such approval the Federal reserve bank
shall accept the pledge of the collateral security described in the
pledge agreement, and may then, but not prior thereto, make deliveries of war-savings certificate stamps and United States thrift
stamps up to the amount specified in such pledge agreement, upon
the requisitions of such agent of the second class.
Upon special request of the National War-Savings Committee,
applications contained in pledge agreements, to become agents of the
second class, in special instances, may, be approved by the Secretary
of the Treasury upon telegraphic recommendation and notification
from a Federal reserve bank that an applicant has executed and
delivered a pledge agreement and specifying the amount of warsavings certificate sjamps and thrift stamps to be obtained under such
pledge agreement. Such telegraphic recommendation and notification must promptly be confirmed on Form No. 1035 in the manner
provided above.
Any person not previously appointed an authorized agent, desiring to become an agent of the second class under Treasury Department Circular No. 95, must, in addition to executing and delivering
such pledge agreement, make application for appointment as an
authorized agent, which application should accompany Form 1035.
CASH AGENTS OF T H E SECOND CLASS UNDER TREASURY D E P A R T M E N T
CIRCULAR N O . 9 6 .

Cash agents of the second class may be appointed as provided in
Treasury Department Circular No. 96 (War-Savings Circular No.
3), dated January 2, 1918.
SALES OF STAMPS BY PERSONS OTHER T H A N

AUTHORIZED

AGENTS.

Any person, firm, or corporation, whether or not an authorized
agent, may purchase war-savings certificate stamps and United



SECRETARY OF THE TREASURY.

233

States thrift stamps from a money-order post office or other agency,
in amounts not in excess of $100 (maturity value) at any one time,
and may, without becoming an authorized agent, establish a salesstation to resell such stamps for cash at the current cost price, as
indicated thereon; but no such person, firm, or corporation shall
hold more than $1,000 (maturity value) of such war-savings certificate stamps at any one time. An adequate supply of war-savings certificates may be obtained with such stamps at a moneyorder post office or other agency.
CASH R E I M B U R S E M E N T TO AUTHORIZED AGENTS FOR FILLED T H R I F T CARDS.

Any authorized agent (except agents of the second class who have
qualified under Treasury Department- Circular No. 95) who receives in exchange for war-savings certificate stamps thrift cards
with full complements of 16 thrift stamps affixed, and who does
not desire to exchange such filled thrift cards for war-savings
certificate stamps, may secure cash reimbursement therefor at the
rate of $4 for each of such filled thrift cards through the agent's
own bank or trust company, if such bank or trust company is willing
to act for such agent.
Any incorporated bank or trust company is authorized to cash
such filled thrift cards, or to receive them for collection for an
authorized agent. Such bank or trust company is authorized to
forward such filled thrift cards to the Federal reserve bank of its
district, and upon receipt thereof such Fecieral reserve bank, as
fiscal kgent of the United States, will pay such bank or trust company $4 in respect of each filled thrift card so received.
The foregoing provisions apply only to filled thrift cards received
by authorized agents (except agents of the second class under Treasury Department Circular No. 95) in exchange for war-savings certificate stamps. Banks and trust companies must not cash or collect
filled thrift cards except for such authorized .agents.
The Secretary of the Treasury will make provision for the exchange of thrift stamps after December 31, 1918, into war-savings
certificates, series of 1918, upon payment of the additional amount
then required, or intp some other series, or will otherwise protect the
interest of holders of thrift stamps.
I N S T R U C T I O N S AND I N F O R M A T I O N FOR AUTHORIZED
STATIONS.

AGENTS ' A N D SALES

The following instructions and information are furnished for the
guidance of authorized agents for the sale of war-savings certificates,
war-savings certificate stamps, and United States thrift stamps:
1. Promote saving and thrift by selling as many war-savings certificate stamps and United States thrift stamps as possible.
^
2. Agents of the first class and Sales stations should buy warsavings certificate stamps and thrift stamps, as needed for resale to
the public, from money-order post offices or from agents of the second
class. Agents of the second class should obtain such stamps from
a Federal reserve bank.
3. Do not sell war-savings certificate stamps in an amount in excess
of $100 (maturity value) at any one time to any one person other
than an agent. After the purchase and sale of any $100 (maturity




234

REPORT ON THE FINANCES.

value) of war-savings certificate stamps has been definitely completed
by the payment of the money by the purchaser and the delivery of
the stamps by the agent, the agent may sell to the same purchaser
another $100 (maturity value) of such stamps.
4. I t is not lawful for any one person, at any one time, to hold
war-savings certificates (or war-savings certificate stamps) to an
aggregate amount exceeding $1,000 (maturity value).. Therefore,
do not knowingly sell war-savings certificate stamps to any person
holding war-savings certificates (or war-savings certificate stamps)
to an aggregate amount exceeding $1,000 (maturity value), for such
person will not be able to collect upon such war-savings certificates.
5. Sell United States thrift stamps only at 25 cents for each stamp.
6. Sell war-savings certificate stamps only at the current cost price
of such stamps during the month in which sold, as indicated thereon.
7. Issue a war-savings certificate (except to other agents or to persons who have established, or propose to establish,, sales stations)
only when one or more war-savings certificate stamps shall be purchased at the same time and affixed thereto, but make no additional
charge for the war-savings certificate itself.
8. Do not make any charge for a thrift card.
9. Do not distribute envelopes with thrift cards, but only with
war-savings certificates. Thrift cards must not be distributed as
publicity material.
10. Do not issue any war-savings certificates (except to other
agents, or to persons who have established or propose to establish
sales stations) without.writing thereon clearly and legibly the name
and address of the owner in the space provided for that purpose.
The names of holders of thrift cards are not required to be written
thereon, but it is suggested that this be done by the holders themselves.
11. Read carefully Treasury Department Circular No. 94 (WarSavings Circular No. 1), dated November 15, 1917, and,comply with
its provisions.
12. Agents who may neither obtain nor hold at any one time warsavings certificates stamps in excess of $1,000 (maturity value) are
agents of the first class.
13. Any agent desiring to obtain or to hold at any one time warsavings certificate stamps in excess of $1,000 (maturity value) and to
become a^ agent of the second class, should read carefully Treasury
Department Circular No. 95 (War-Savings Circular No. 2) and
Treasury Department Circular No. 96 (War-Savings Circular No. 3),
and comply with the provisions of one or the other of such circulars.
14. Copies of Treasury Department Circulars Nos. 94, 95, and 96
may be obtained from the Treasury Department in Washington or
|tt a Federal reserve bank.
15. Any agent failing to comply with the provisions of any circular
or regulations at any time issued by the Secretary of the Treasury
will be liable to forfeiture of his agency.
16. Sell war-savings certificate stamps for cash only, except that
thrift cards, each with a full complement of 16 United States thrift
stamps attached, should be accepted in payment at $4 each for warsavings certificate stamps, when accompanied by payment in cash
of the difference between $4 and the current cost price of war-savings




SECRETARY OF THE TREASURY.

235

certificate stamps, as provided in Treasury Department Circular
No. 94.
17. Thrift cards, each with a full complement of 16 United States
t h r i f t stamps attached, may be exchanged at a money-order post
office or through an authorized agent for, war-savings certificate
stamps, upon payment in cash of the difference between $4 and the
current cost price of war-savings certificate stamps, as provided in
Treasury Department Circular No. 94.
18. Do not redeem any war-savings certificate stamp or any thrift
stamp. War-savings certificates may be redeemed, as therein provided, only at a money-order post office.
The Secretary of the Treasury reserves the right to withdraw this
circular, or to amend from time to time any of the provisions hereof.
W.

G.

MCADOO,

Secretary of the Treaswry.
[Form 1035.]

____, 191__
To THE SECRETARY OF T H E TREASURY,

Washington, D. C.
SIR: The undersigned hereby notifies the Secretary of the Treasury that—
(Name in full:)
;
(Address, number and street:) of
(City or town:)
:
(County:)
(State:)
r an authorized agent of the Treasury Department for the issue of war-savings
\ certificate stamps and thrift stamps"
whose application to become an authorized agent of the Treasury Department
for the issue of war-savings certificate stamps and thrift stamps is inclosed
herewith
has duly executed and delivered to the undersigned a pledge agreement (Form
No. 1021), as provided in Treasury Department Circular .No. 95 (War Savings
Circular No. 2), dated November 30, 1917, containing an application to become
an agent of the second class for the issue of war-savings certificate stamps and
thrift stamps and stating that the aggregate total amount of such war-savings
certificate stamps, at the December, 1918, cost price, and such thrift stamps, at
25 cents each, desired to be obtained thereunder is $
.
The approval of the Secretary of the Treasury of such application to become
an agent of the seconcl class is hereby recommended by the undersigned.
Very truly, yours,

{

FEDERAL RESERVE BANK OF

By

, 191—
The above-mentioned application is|^^^^^^Jp^|^^g^




_

EXHIBIT 43.
[1918. Department Circular No. 108. Loans and Currency.]
I

IJNITED S T A T E S

OF AMERICA WAR-SAVINGS

CERTIFICATES,

SERIES OF 1918.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, January 21, 1918.
TREASURY REGULATIONS FURTHER DEFINING RIGHTS OF HOLDERS OF
WAR-SAVINGS CERTIFICATES.
I. CERTIFICATES NOT PRESENTED AT MATURITY.

War-savings certificates shall npt bear interest after maturity,
January 1, 1923.
II. LOST OR DESTROYED

CERTIFICATES.

A war-savings certificate which has been lost or destroyed will not
be paid nor will a dupli(iate thereof be issued, unless the certificate has
been registered in accordance with the regulations and instructions
issued by the Postmaster General. I n the event of the loss or destruction of a registered certificate, the registrant may apply to the
post office where the certificate was registered, on forms prescribed
by the Postinaster General, either for the issuance of a duplicate certificate or for the payment thereof. On being satisfied of the facts as to
loss or destruction, the Secretary of the Treasury will, after not less
than three months have elapsed from the time of application, authorize payment, or the issuance to the registered owner of a duplicate
certificate, to be so marked,' on which shall be noted the number of
registered stamps affixed to the original certificate, with the proper
notations of registration. Such certificate shall receive a new registration number. The Secretary of the Treasury may in special cases
where he deems the facts warrant such action, require the claimant to
give a bond of indemnity with approved sureties against any claim
that may thereafter be made on the old certificate. The duplicate
certificate when issued shall stand in the place and stead of the original lost or destroyed certificate for air purposes. After the issuance
of a duplicate certificate, the original shall cease to have validity for
any purpose, and if recovered shall be returned to the post office^ of
registration for cancellation. No duplicate certificate will be issued
after maturity of the original.
HI. CREDITORS' RIGHTS.

Payment of registered or unregistered certificates shall be made
to the owner named thereon notwithstanding any lien, attachment,
236




^

SECRETARY OF T H E TREASURY.

237

trustee process, garnishment, judgment, receivership, levy, execution,
order, decree, or similar process of law, equity, or in bankruptcy directed against the owner thereof, but nothing herein contained shall
excuse the owner from full compliance with, or performance of, any
lawful judgment, order, or decree of a court of competent jurisdiction
with reference to disposition of the proceeds of the certificate. Collection of the certificate by the owner pursuant to such judgment,
order, or decree will be deemed a payment received on behalf of
the owner and not for any other person within the language of the
receipt printed on the certificate, nothwithstanding t^iat the owner
is, by such judgment, order, or decree, required to pay the proceeds to
another person. Neither t h e . United States of America nor any
officer or employee thereof shall be a proper or necessary party to
any suit or action with reference to such certificate or the proceeds
thereof nor be bound by any judgment, order, or decree rendered
or entered therein.
IV. HOLDING

OF

CERTIFICATES

BY CORPORATIONS,
OTHERS.

PARTNERSHIPS,

AND

1. War-savings certificates may be issued in the name of and held
by corporations, partnerships, associations, or joint-stock companies
and may be registered by such holders.
2. Payment of a certificate registered in the name of a corporation,
partnership, association, or joint-stock company shall be made to any
officer or agent designated on the registration card to receive payment,
or to any other officer or agent presenting proof satisfactory to the
Secretary of the Treasury of his or her authority to receive payment.
V. F I D U C I A R I E S . ,

Certificates shall not be issued or registered in the names of fiduciaries in their representative capacities. Should any such certificate be
issued or registered, it will be deemed to be held by the person named
thereon in his or her individual capacity, and all words of description
cr of representative capacity shall be disregarded.
VI. CERTIFICATES ISSUED TO TWO PERSONS.

War-savings certificates may be issued and may be registered in
the names of two persons (but not more than two) in the alternative,
as, for instance, " John Jones " or " Mary Jones." Such certificates
shall be payable to either person named thereon without requiring the
signature of the other person and to the survivor of them without
proof of the other person's death, and upon payment to either pe>rson
the other shall cease to have any interest therein. No other form of
certificate in the iiames of two persons is authorized. I n registering
certificates issued in the alternative both persons named thereon shall
fill out registration cards. I n determining whether the $1,000 limitation on the holdings of a single person has been exceeded, the full
maturity value of certificates held with any other person shall be
adde(i to the full maturity value of certificates held individually, and
the sum must not exceed $1,000.




238

REPORT.ON T H E FINANCES.
V I I . I N F A N T HOLDERS OF WAR-SAVINGS CERTIFICATES.

1. A war-savings certificate held by an infant who is capable of
filling out and signing a registration card may be registered by
such infant.
2. A war-savings certificate held by an infant who is incapable
of filling out and signing a registration card may be registered in
the name of such infant by one of such infant's parents or by a duly
appointed guardian for such infant or by a person with whom such
infant resides, the name of the infant to be signed by the representative, as, for instance, "Mary Smith by John Smith, her father."
3. If a guardian of the property has, to the knowledge of the postmaster from whom payment is demancied, been appointed for an infant holder of a war-savings certificate, payment of the certificate,
whether registered or unregistered, shall be made only to such
guardian.
4. If an infant holder of a war-savings certificate (registered or
imregistered) for whom no such guardian has been appointed, to the
knowledge of the postmaster, is, at the time pityment of such certificate is demanded, of sufficient competency and understanding, in the
opinion of the postmaster, to sign his or her name to the receipt and
to comprehend the nature thereof, payment shall be made directly to
such infant owner. I n the event that such infant is not, in the opinion of the postmaster, of such competency and understanding, payment shall be made to either parent of the infant with whom the infant resides, or, in the event that such infant resides with neither
parent, then to the person with whom such infant resides. I n receipting for the money the representative shall sign the infant's name
as well as the name of such representative.
5. Issuance of a duplicate for, or payment of, a lost or destroyed
certificate which has been registered in the name of an infant shall
be to the infant or to a representative, as hereinabove provided, upon
compliance with the regulations respecting lost or destroyed certificates.
V I I I . DISABILITY OF HOLDERS OF CERTIFICATES.

1. Certificates held by persons legally declared to be incompetent
to manage their affairs, and for whose estate a conservator or other
legally constituted representative has been appointed by a court of
competent jurisdiction, to the knowledge of the postmaster from
whom payment is demanded, shall be paid to such conservator or
legal representative.
2. Certificates held by persons not' legally declared to be incompetent to manage their affairs, who, by reason of infirmity or for other
reasons satisfactory to the postmaster from whom payment is demanded, can lot appear in person to demand payment of his or her
certificates, may be paid to a representative upon compliance by the
owner with instructions prescribed by the Postmaster General.
3. Certificates held by persons under any other disability shall be
paid only to the holders of the certificates, except as provided in the
case of infancy.
I X . REGISTRATION OF CERTIFICATES I N FAVOR OF B E N E F I C I A R Y .

1. Certificates may be registered payable to a single designated
beneficiary in case of death of the owner, as, for instance, " John



SECRETARY OF THE TREASURY.

239

Smith, payable on death to Mary Smith." Such certificates will be
payable to the registrant during his or her lifetime, and to the ^
beneficiary upon death of the registrant, provided the beneficiary be *
then living. ^ If the beneficiary shall predecease the registrant, the
certificate will be payable to the owner as though such beneficial
registration had not been made. Second registration in favor of
another beneficiary, or change of beneficiary,'will not be permitted.
2. Such a certificate may also be registered by the beneficiary upon
the beneficiary's signing a registration card and complying with the
other requirements for registration of the certificate. Unless registered by the beneficiary, the United States will not be liable, in respect of any beneficiary certificate, if payment upon the death of the
owner be made to a person not the true beneficiary thereof:
3. Should the beneficiary die after the death of the owner, but
before payirient of the certificate, the regulations covering payment
of certificates held by a deceased owner shall govern the payment of
the certificate as though the beneficiary were such a deceased owner.
4. The right to designate a beneficiary shall extend only to registered certificates.
X. P A Y M E N T OF WAR-SAVINGS CERTIFICATE H E L D BY DECEASED O W N E R .
o

I n case of the death of the owner of a war-savings certificate (other
than a certificate registered payable to a beneficiary), payment shall
be made to the persons and in the manner hereinafter provided:
1. If the decedent leave a will which is duly admitted to probate,
or die intestate and the estate of such decedent is administered in a
court of competent jurisdiction, payment of such certificate shall be
made only to the duly appointed representative of the estate. Administration will be required before payment of a war-savings certificate will be made in all cases where the gross personal estate of
the deceased owner exceeds $500 in value, unless the estate of such
decedent is exempt from administration under the laws of the State
of decedent's domicile.
2. I n case no legal representative of the decedent's estate is appointed and either the gross personal estate amounts to $500 or less
in value or the Jaw of the State of decendent's domicile specifically
exempts the estate from administration, the certificate shall be paid
to and on the demand of persons equitably entitled thereto in the
opinion of the Secretary of the Treasury, in the following order of
dasses:
First. Husband, wife, next of kin, or other person, who pays the
reasonable funeral expenses, expenses of the last illness, or other preferred claims against the deceased estate.
Second. Creditor for funeral expenses, expenses of last illness, or
)ther preferred claims.
Third. Husband, wife, or next of kin of the deceased, in the folowing order of preference: (1) Husband or wife; (2) child or
children; (3) father; (4) mother; (5) any other of the next of kin
)f the deceased; provided that nothing herein contained shall require
he payment of a single certificate to more than one person.
XI. SIGNING

RECEIPT.

Whenever, pursuant to these regulations, payment of a certificate
s made to a person not the original owner thereof, the receipt



240

REPORT ON THE FINANCES.

printed on the certificate need not be signed, but such person shall
sign a receipt, which shall be pasted on the certificate over the receipt
printed thereon, as follows:
.
Received $
in payment hereof, I hereby certify t h a t I am the identical
person entitled to payment of this certificate under the regulations prescribed
by the Secretary of the Treasury, in lieu of the original owner named above,
and t h a t said original owner (or his estate) does not hold War-Savings Certificates to an aggregate amount exceeding One Thousand Dollars.
(Date.)

(Signature of payee.)
XII..INHERITANCE TAXES.

Payment of the certificate will be made without any deduction for
inheritance, estate, or transfer taxes on death of a deceased owner,
either State or Federal, and no claim shall lie against ^the United
States or any officer or employee thereof for failure to deduct or
withhold any such tax. The person to whom payment of the certificate is made shall be liable for all such taxes, if any shall be
due, and the lien thereof shall attach to the proceeds of the certificate
in his or her hands.
XIII. CHANGE OF NAME.

Where the owner of a certificate has since the issuance of the •
certificate changed his or her nam^e by marriage or by order or
decree of court, the postmaster shall accept the receipt of the owner
signed in his or her own new name, as well as in his or her original
name, upon being satisfied of the identity of the person.
XIV. LIMITATION IN AMOUNT.

If it shall appear that any person has received certificates issued to
such person by way of gift, bonus, dividend, or in any other lawful
manner except the purchase thereof by such person, whereby he or
she holds certificates in excess of an aggregate of $1,000 (maturity
value), the excess amount of certificates shall be immediately surrendered at a money-order post office and shall be paid at their then
value. I n any other case, if it shall appear at the time a certificate is
presented for payment that the person presenting the same holds
certificates to an aggregate amount exceeding $1,000 (maturity
value), the postmaster shall refuse payment of all certificates in excess of such amount and shall demand surrender of certificates held
by such owner until the holdings of such owner are reduced to $1,000
(maturity value). The postmaster shall make appropriate notation
on certificates so surrendered, and shall forward such certificates to
the Third Assistant Postmaster General for transmission to the Secretary of the Treasury. Such certificates shall have no validity for
any purpose. Nothing herein contained shall prevent the payment
of a certificate of a deceased owner to the person entitled thereto under these regulations, without regard to the amount of certificates
already owned by such payee, unless it shall appear that such deceased
owner held certificates to an aggregate amount exceeding $1,000
(maturity value), in which case only $1,000 (maturity value) shall
be paid, and the excess shall be taken up in accordance with the
foregoing.



SECRETARY OP T H E TREASURY.

241

XV. ADMINISTRATION.

The administration of the foregoing regulations shall be in accordance ^with such forms and administrative regulations and instructions and through such assistants or subordinates as the Postmaster
General shall from time to time prescribe, and in accordance with
regulations issued or to be issued by the Secretary of the Treasury.
The right is reserved to make, from time to time, any further or
supplemental or amendatory regulations which shall not modify or
impair the terms and conditions of war-savings certificates issued or
to be issued in pursuance of the act of Congress approved September
24, 1917.
W. G. MCADOO,

Secretary of the Treasury.
86429°—FI 1 9 1 8 — 1 6




EXHIBIT

44.

[PUBLIC—No. 139—65TH CONGRESS.]

[S. 4292.]
AN ACT To conserve the gold supply of the United States; to permit the settlement in silver of trade balances adverse to the United States; to provide
silver for subsidiary coinage and for commercial use; to assist foreign governments at war with the enemies of the United States; and for the above
purposes to stabilize the price and encourage the production of silver.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled. That the Secretary
of the Treasury is hereby authorized from time to time to melt or
break up and to sell as bullion not in excess of three hundred and
fifty million standard. silver dollars now or hereafter held in the
Treasury of the United States. Any silver certificates which may be
outstanding against such standard silver dollars so melted or broken
up shall be retired at the rate of $1 face amount of such certificates
for each standard silver dollar so melted or broken up. Sales of
such bullion shall be made at such prices not less than $1 per ounce of
silver one thousand fine and upon such terms as shall be established
from time to time by the Secretary of the Treasury.
SEC. 2. That upon every such sale of bullion from time to time the
Secretary of the Treasury shall immediately direct the Director of
the Mint to purchase in the United States, of the product of mines
situated in the United States and of reduction works so located, an
amount of silver equal to three hundred and seventy-one and twentyfive hundredths grains of pure silver in respect of every standard
silver dollar so melted or broken up and sold as bullion. Such purchases shall be made in accordance with the then existirig regulations
of the Mint and at the fixed price of $1 per ounce of silver one thousand
fine, delivered at the option of the Director of the Mint at New York,
Philadelphia, Denver, or San Francisco. Such silver so purchased
may be resold for any of the purposes hereinafter specified in section
three of this act, under rules and regulations to be established by the
Secretary of the Treasury, and any excess of such silver so purchased
over and above the requirements for such purposes, shall be coined
into standard silver dollars or held for the purpose of such coinage,
and silver certificates shall be issued to the amount of such coinage.
The net amount of silver so purchased, after making allowance for
all resales, shall not exceed at any one time the amount needed to
coin an aggregate number of standard silver dollars equal to the aggregate number of standard silver dollars theretofore melted or broken
up and sold as bullion under the provisions of this act, but such
purchases of silver shall continue until the net amount of silver so
purchased, after making allowance for all resales, shall be sufficient to
coin therefrom an aggregate number of standard silver dollars equal
to the aggregate number of standard silver dollars theretofore so
melted or broken up and sold as bullion.
242




SECRETARY OF T H E TREASURY.

243

SEC. 3. That sales of silver bullion under authority'of this act may
' be made for the purpose of conserving the existing stock of gold
in the United States, of facilitating the settlement in silver of trade
balances adverse to the United States, of providing silver for subsidiary coinage and for commercial use, and of iassisting foreign governments at war with the enemies of the United States. The allocation
of any silver to the Director of the Mint for subsidiary coinage shall,
for the purposes of this act, be regarded as a sale or resale.
SEC. 4. That the Secretary of the Treasury is authorized, from any
moneys in the Treasury not otherwise appropriated, to reimburse the
Treasurer of the United States for the difference between the nominal
or face value of all standard silver dollars so melted or boken up and
the value of the silver bullion, at $1 per ounce of silver one thousand
fine, resulting from the melting or breaking up of such standard silver
dollars.
SEC. 5.,That in order to prevent contraction of the currency, the
Federal reserve banks may be either permitted or required by the
Federal Reserve Board, at the request of the Secretary of the Treasury, to issue F.ederal reserve bank notes, in any denominations (including denominations of $1 and $2) authorized by the Federal Reserve Board, in an aggregate amount not exceeding the amount of
standard silver dollars melted or broken up and sold as bullion under
authority of this act, upon deposit as provided by law with the Treasurer of the United States as security therefor, of United States certificates of indebtedness, or, of United States, one-year gold notes.
The Secretary of the Treasury may, at his option, extend the time
of payment of any maturing United States certificates of indebtedness deposited as security for such Federal reserve bank .notes for
any period not exceeding one year at any one extension and may, at
his option, pay such, certificates of indebtedness prior to maturity,
whether or not so extended. The deposit of United States certificates
of indebtedness by Federal reserve banks as security for Federal
reserve bank notes under authority of this act shall be deemed to
constitute an agreement on the part of the Federal reserve bank making such deposit that the Secretary of the Treasury may so extend
the time of payment of such certificates of indebtedness beyond the
original maturity date or beyond any maturity date to which such
certificates of indebtedness may have been extended, and that the
Secretary of the Treasury may pay such certificates in advance of
maturity, whether or not so extended.
SEC. 6. That as and when standard silver dollars shall be coined
out of bullion purchased under authority of this act, the Federal
reserve banks shall be required by the Federal reserve board to retire
Federal reserve bank notes issued under authority of section five of
this act, if then outstanding, in an amount equal to the amount of
standard silver dollars so coined, and the Secretary of the Treasury
shall pay off and cancel any United States certificates of indebtedness
deposited as security for Federal reserve bank notes so retired.
SEC. 7. That the tax on any Federal reserve bank notes issued under
authority of this act, secured by the deposit of United States certificates of indebtedness or United States one-year gold notes, shall be
so adjusted that the net return on such certificates of indebtedness,
or such one-year gold notes, calculated on the face value thereof, shall




244

REPORT ON T H E FINANCES.

be equal to the net return on United States two per cent bonds, used
to secure Federal reserve bank notes, after deducting the amount of
the tax upon such Federal reserve bank notes so secured.
SEC. 8. That except as herein provided. Federal reserve bank notes
issued under authority of this act, shall be subject to all existing
provisions of law relating to Federal reserve bank notes.
SEC. 9. That the provisioris of Title V I I of an act approved June
fifteenth, nineteen hundred and seventeen, entitled "An act to punish acts of interference with the foreign relations, the neutrality, and
the foreign commerce of the United States, to punish espionage, and
better to enforce the criminal laws of the United States, and for other
purposes," and the powers conferred upon the President by subsection
(b) of section five of an act approved October sixth, nineteen hundred
and seventeen, known as the " Trading with the enemy act," shall,
in so far as applicable to the exportation from or shipment from or
taking out of the United States of silver coin or silver bullion, continue until the net amount of silver required by section two of this
act shall have been purchased as therein provided.
Approved, April 23,1918.




E X H I B I T 45.
[PUBLIC—No. 121—65TH CONGRESS.]

[S. 3714.]
AN ACT To provide further for the national security and defense, and, for
the purpose" of assisting in the prosecution of the war, to provide credits for
industries and enterprises in the United States necessary or contributory to
the prosecution of the war, and to supervise the issuance of securities, and
for other purposes.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled.
T I T L E I . — W A R F I N A N C E CORPORATION.

That the Secretary of the Treasury and four additional persons (who
shall be the directors first appointed as hereinafter provided) are
hereby created a body corporate and politic in deed and in law by
the name, style, and title of the " War Finance Corporation" (herein
called the Corporation), and shall have succession for a period of
ten years: Provided, Tliat in no event shall the Corporation exercise
any of the powers conferred by this act, except such as are incidental
to the liquidation of its assets and the winding up of its affairs, after
six months after the termination of the war, the date of such termination to be fixed by proclamation of the President of the United
States.
SEC. 2. That the capital stock of the Corporation shall be
$500,000,000, all of which shall be subscribed by the pnited States
of America, and such subscription shall be subject to call upon the
vote of three-fifths of the board of directors of the Corporation, with
the approval of the Secretary of the Treasury, at such time or times
as may be deemed advisable; and there is hereby appropriated, out
of any money in the Treasury not otherwise appropriated, the sum
of $500,000,000, or so much thereof as may be necessary for the purpose of making payment upon such subscription when and as called.
Receipts for payments by the United States of America for or on
account of such stock shall be issued by the Corporation to the Secretary of the Treasury, and shall be evidence of stock ownership.
SEC. 3. That the management of the Corporation shall be vested
in a board of directors, consisting of the Secretary oi the Treasury,
who shall be chairman of the board, and four other persons, to be
appointed by the President of the United States, by and with the
advice and consent pf the Senate. No director, officer, attorney,
agent, or employee of the Corporation shall in any manner, directly
or indirectly, participate in the determination of any question
affecting his personal interests, or the interests of any corporation,
partnership, or association, in which he is directly or indirectly




245

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REPORT ON TH:E FINANCES.

interested; and each director shall devote his time, not otherwise
required by the business of the United States, principally to the
business of the Corporation. Before entering upon his duties, each
of the four directors so appointed, and each officer, shall take an
oath faithfully to discharge the duties of his office. Nothing contained in this or any other act shall be construed to prevent the
appointment as a director of the Corporation, of any ofiicer or employee under the United States or of a director of a Federal reserve
bank.
•
Of the four directors so appointed, the President of the United
States shall designate tAvo to serve for two years, and two for four
years; and thereafter each director so appointed shall serve for four
years. Whenever a vacancy shall occur among the directors so
appointed, the person appointed director to fill any such vacancy
shall hold office for the unexpired term of the member whose place
he is selected to fill. Any director shall be subject to removal by
the President of the United States. Three members of the board
of directors shall constitutB a quorum for the transaction of business.
SEC. 4. That the four directors of the Corporation appointed as
hereinbefore provided shall receive annual salaries, payable monthly,
of $12,000. Any director receiving from the United States any
salary or compensation for services shall not receive as salary from
the Corporation any amount which, together with any salary or
compensation received from the United States, would make the total
amount paid to him by the United States and by the Corporation
exceed $12,000.
SEC. 5. That the principal office of the Corporation shall be located
in the District of Columbia, but there may be established agencies
or branch offices in any city or cities of the United States under rules
and regulations prescribed by the board of directors.
SEC. 6. That the Corporation shall be empowered and authorized
to adopt, alter, and use a corporate seal; to make contracts; to purchase or lease and hold or dispose of such real estate as may be
necessary for the prosecution of its business; to sue and be sued; to
complain and defend in any court of competent jurisdiction. State
or-Federal; to appoint, by its board of directors^ and fix the compensation of such officers, employees, attorneys, and agents as are
necessary for the transaction of the business of the Corporation, to
define their' duties, require bonds of them and fix the penalties
thereof, and to dismiss at pleasure such officers, employees, attorneys,
and agents; and to prescribe, amend, and repeal, by its board of
directors, subject to the approval of the Secretary of the Treasury,
by-laws regulating the manner in which its general business may be
conducted and the privileges granted to it by law may be exercised
and enjoyed, and prescribing the powers and duties of its officers and
agents.
SEC. 7. That the Corporation shall be empowered and authorized
to make advances, upon such terms, not inconsistent herewith, as
it may prescribe, for periods not exceeding five years from the respective dates of such advances:
(1) To any bank, banker, or trust company, in the United States,
which shall have made after April sixth, nineteen hundred and seventeen, and which shall have outstanding, any loan or loans to any




SECRETARY OF THE TREASURY.

247

person, firm, corporation, or association, conducting an established
and going business in the United States, whose operations shall be
necessary or contributory to the prosecution of the war, and evidenced by a note or notes, but no such advance shall exceed seventyfive per centum of the face value of such loan or loans; and
(2) To any bank, banker, or trust company, in the United States,
which shall have rendered financial assistance, directly or indirectly,
to any such person, firm, corporation, or association by the purchase
after April sixth, nineteen hundred and seventeen, of its bonds or
other obligations, but no such advance shall exceed seventy-five per
centum of the value of such bonds or other obligations at the time
of such advance, as estimated and determined by the board of
directors of the Corporation.
All advances shall be made upon the promissory note or notes of
such bank, banker, or trust company, secured by the notes, bonds, or
other obligations, which are the basis of any such advance by the
Corporation, together with all the securities, if any, which such
bank, banker, or trust company may hold as collateral for such notes,
bonds, or other obligations.
The Corporation shall, however, have power to make advances (a)
up to one hundred per centum of the face value of any such loan
made by any such bank, banker, or trust company to any such person, firm, corporation, or association, and (b) up to one hundred per
ceritum of the value at the time of any such advance (as estimated
and determined by the board of directors of the Corporation) of such
bonds or other obligations by the purchase of which financial assistance shall have been rendered to such person, firm, corporation, or
association: Provided, That every such advance shall be secured in
the manner described in the preceding part of this section, and in
addition thereto by collateral security, to be furnished by the bank,
banker, or trust company, of such character as shall be prescribed
by the board of directors, of a value, at the time of such advance (as
estimated and determined by the board of directors of the Corporation), equal to at least thirty-three per centum of the amount advanced by the Corporation. The Corporation shall retain power to
require additional security at any time.
SEC. 8. That the Corporation shall be empowered and authorized
to make advances from time to time, upon such terms, not inconsistent herewith, as it may prescribe, for periods not exceeding one
year, to any savings bank, banking institution or trust company, in
the United States, which receives savings deposits, or to any building
and loan association in the United States, on the promissory note
or notes of the borrowing institution, whenever the Corporation shall
deem such advances to be necessary or contributory to the prosecur
tion of the war or important in the public interest: Provided.^ That
such note or notes shall be secured by the pledge of securities of such
character as shall be prescribed by the board of directors of the Corporation, the value of which, at the time of such advance (as estimated and determiiied by the board of directors of the Corporation)
shall be equal in amount to at least one hundred and thirty-three
per centum of the amount of such advance. The rate of interest
charged on any such advance shall not be less than one per centum
per annum in excess of the rate of discount for ninety-day commercial paper prevailing at the time of such advance at the Federal



248

REPORT ON THE FINANCES.

reserve bank of the district in which the borrowing institution is
located, but such rate of interest shall in no case be greater than the
average rate receivable by the borrowing institution on its loans and
investments made during the six months prior to the date of the
advance, except that where the average rate so receivable by the
borrowing institution is less than such rate of discount for ninetyday commercial paper the rate of interest on such advance shall be
equal to such rate of discount. The Corporation shall retain power
to require additional security at any time.
SEC. 9. That the Corporation shall be empowered and authorized,
in exceptional cases, to make advances directly to any person, firm,
corporation, or association, conducting an established and going
business in the United States, whose operations shall be necessary or
contributory to the prosecution of the war (but only for the purpose
of conducting such business in the United States and only when in
the opinion of the board of directors of the Corporation such person,
firm, corporation, or association is unable to obtain funds upon
reasonable terms through banking channels or from the general
public), for periods not exceeding five years from the respective dates
of such ajdvances, upon such terms, and subject to such rules and
regulations as may be prescribed by the board of directors of the
Corporation. I n no case shall the aggregate amount of the advances
made under this section exceed at any one time an amount equal to
twelve and one-half per centum of the sum of (1) the authorized
capital stock of the Corporation plus (2) the aggregate /amount of
bonds of the Corporation authorized to be outstanding at any one
time when the capital stock is fully paid in. Every such advance
shall be secured by adequate security of such character as shall be
prescribed by the board of directors of a value at the time of such
advance (as estimated and determined by the board of directors),
equal to (except in case of an advance made to a railroad in the possession and control of the President, for the purpose of making
additions, betterments, or road extensions to such railroad) at least
one hundred and twenty-five per centum of the amount advanced
by the Corporation. The Corporation shall retain power to require
additional security at any time. The rate of interest charged on
any such advance shall not be less than one per centum per annum
in excess of the rate of discount for ninety-day commercial paper
prevailing at the time of such advance at the Federal reserve bank
of the district in which the borrower is located.
SEC. 10. That in no case shall the aggregate amount of the advances
made under this title to any one person, firm, corporation, or association exceed at any one time an amount equal to ten per centum of
the authorized capital stock of the Corporation, but this section shall
not apply in the case of an advance made to a railroad in the possession and control of the President, for the purjpose of making additions, betterments or road extensions to such railroad.
SEC. 11. That the Corporation shall be empowered and authorized
to subscribe for, acquire, and own, buy, sell, and deal in bonds and
obligations of the United States issued or converted after September
twenty-fourth, nineteen hundred and seventeen, to such extent aso
the board of directors, with the approval of the Secretary of the
Treasury, may from time to time determine.




SECRETARY OF THE TREASURY.

249

SEC. 12. That the Corporation shall be empowered and authorized
to issue and have outstanding at any one time its bonds in an amount
aggregating not more than six times its paid-in capital, such bonds
to mature not less than one year nor more than five years from the
respective dates of issue, and to bear such rate or rates of interest,
an(i may be redeemable before maturity at the option of the Corporation, as may be determined by the board of directors, but such rate
or rates of interest shall be subject to the approval of the Secretary
of the Treasury. Such bonds shall have a first and paramount floating charge on all the assets of the Corporation, and the Corporation
shall not at any time mortgage or pledge any of its assets. Such
bonds may be issued at not less than par in payment of any advances
authorized by this title, or may be offered for sale publicly or to any
individual, firm, corporation, or association, at such price or prices
as the board of directors, with the approval of the Secretary of the
Treasury, may determine.
Upon such terms not inconsistent herewith as may be determined
from time to time by the board of directors, with the approval of the
Secretary of the Treasury, at or before the issue thereof, any of such
bonds may be issued payable in any foreign money or foreign moneys,
or issued payable at the option of the respective holders thereof either
in dollars or in any foreign money or foreign moneys at such fixed
rate of exchange as may be stated in any such bonds. For the purpose of determining the amount of bonds issued payable in any
foreign money or foreign moneys the dollar equivalent shall be determined by the par of exchange at the date of issue thereof, as estimated
by the Director of the Mint and proclaimed by the Secretary of the
Treasury in pursuance of the provisions of section twenty-five of the
act erititled "An act to reduce taxation, to provide revenue for the
Government, and for other purposes," approved August twentyseventh, eighteen hundred and ninety-four.
SEC. 13. That the Federal reserve banks shall be authorized, subject
to the maturity limitations of the Federal reserve act and to regulations of the Federal Reserve Board, to discount the direct obligations of member banks secured by such bonds of the Corporation and
to rediscount eligible paper secured by such bonds and indorsed by a
member bank. No discount or rediscount under this section shall be
granted at a less interest charge than one per centum per annum above
the prevailing rates for eligible commercial paper of corresponding
maturity.
Any Federal reserve bank may, with the approval of the Federal
Reserve Board, use any obligation or paper so acquired for any purpose for which it is authorized to use obligations or paper secured by
bonds or notes of the United States not bearing the circulation privilege : Provided, however. That whenever Federal reserve notes are issued against the security of such obligations or paper the Federal
Reserve Board may make a special interest charge on such notes,
which, in the discretion of the Federal Reserve Board, need not be
applicable to other Federal reserve notes which may from time to
time be issued and outstanding. All provisions of law, not inconsistent herewith, in respect to the acquisition by any Federal reserve
bank of obligations or paper secured by such bonds or notes of the
United States, and in respect to Federal reserve notes issued against




250

REPORT ON THE PINANCES.

the security of such obligations or paper, shall extend, in so far as
applicable, to the acquisition of obligations or paper secured by the
bonds of the Corporation and to the Federal reserve notes issued
against the security of such obligations or paper.
SEC. 14. That the Corporation shall not exercise any of the powers
granted by this title or perform any business except such as is incidental and necessarily prelimiriary to its organization until it has
been authorized by the President of the United States to commence
business under the provisions of this title.
SEC. 15. That all net earnings of the Corporation not required for
its operations shall be accumulated as a reserve fund until such time
as the Corporation liquidates under the terms of this title. Such
reserve fund shall, upon the direction of the board of directors, with
the approval of the Secretary of the Treasury, be invested in bonds
and obligations of the United States, issued or converted after
September twenty-fourth, nineteen hundred and seventeen, or upon
like direction and approval may be deposited in member banks of
the Federal Reserve System, or in any of the Federal reserve banks,
br be used from time to time, as well as any other funds of the Corporation, in the purchase or redemption of any bonds issued by
the Corporation. The Federal reserve,banks are hereby authorized
to act as depositaries for and as fiscal agents of the Corporation in
the general performance of the powers conferred by this title. Beginning six months after the termination of the war, the date of such
termination to be fixed by a proclamation of the President of the
United States, the directors of the Corporation shall proceed to liquidate its assets and to wind up its affairs, but the directors of the Corporation, in their discretion, may, from time to time, prior to such
date, sell and dispose of any securities or other property acquired by
the Corporation. Any balance remaining after the payment of all
its debts shall be paid into the Treasury of the United States as
miscellaneous receipts, and thereupon the Corporation shall be dissolved.
SEC. 16. That any and all bonds issued by the Corporation shall be
exempt, both as to principal and interest, from all taxation now or
hereafter imposed by the United States, any State, or any of-the possessions of the United States, or by any local taxing authority,
except (a) estate or inheritance taxes, and (b) graduated additiorial
income taxes, commonly known as surtaxes, and excess-profits and
war-profits taxes, now or hereafter imposed by the United States,
upon the income or profits of individuals, partnerships, corporations,
or associations. The interest on an amount of such bonds the principal of which does -not exceed in the aggregate $5,000, owned by
any individual, partnership, corporation, or association, shall be
exempt from the taxes referred to in clause (b). The Corporation,
including its franchise and the capital and reserve or surplus thereof,
and the income derived therefrom, shall be exempt from all taxation
now or hereafter imposed by the Uiiited States, any State, or any of
the possessions of the United States, or by any local taxing authority,
except that any real property of the Corporation shall be subject to
State, county, or municipal taxes to the same extent, according to
its value, as other real property is taxed.




SECRETARY OF T H E TREASURY.

251

SEC. 17. That the United States shall not be liable for the payment of any bond or other obligation or the interest thereon issued
or incurred by the Corporation, nor shall it incur any liability in
respect of any act oi' omission of the Corporation.
SEC. 18. That whoever (1) makes any statement, knowing it to
be false, for the purpose of obtaining for himself or for any other
person, firm, corporation, or association any advance undei* this title,
shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five years, or both.
Whoever willfully overvalues any security by which any such
advance is secured shall be punished by a fine of not more than
$5,000, or by imprisonment for not more than two years, or both.
Whoever (1) falsely makes, forges, or counterfeits any bond,
coupon, or paper in imitation of or purporting to be in imitation of
a borid or coupon issued by the Corporation; or (2) passes, utters,
or publishes, or attempts to pass, utter, or publish, any false, forged,
or counterfeited bond, coupon, or paper purporting to be issued by
the Corporation, knowing the same to be falsely made, forged, or
counterfeited; or (3) falsely alters any such bond, coupon, or paper;
or (4) passes, utters, or publishes as true any falsely altered or
spurious bond, coupon, or paper issued or purporting to have been
issued by the Corporation, knowing the same to be falsely altered or
spurious, shall be punished by a fine of not more than $10,000, or by
imprisonment for not more than five years, or both.
Whoever, being connected in any capacity with the Corporation,
(1) embezzles, abstracts, or willfully misapplies any moneys, funds,
or credits thereof, or (2) with intent to defraud the Corporation or
any other company, body politic or corporate, or any individual, or,
to deceive any officer of the Corporation, (a) makes any false entry
in any book, report, or statement of the Corporation, or (b) without
authority from the directors draws any order or assigns any note,
bond, draft, mortgage, judgment, or decree thereof, shall be punished by a fine of not more than $10,000, or by imprisonment for not
more than five years, or both.
The Secretary of the Treasury is hereby authorized to direct and
use the Secret Service Division of the Treasury Department to detect, arrest, and deliver into custody of the United States marshal
having jurisdiction any person committing any of the offenses punishable under this section.
SEC. 19. That the Corporation shall file quarterly reports with the
Secretary of the Senate and with the Clerk of the House of Representatives, stating as of the first day of each month of the quarter
just ended (1) the total amount of capital paid in, (2) the total
amount of bonds issued, (3) the total amount of bonds outstanding,
(4) the total amount of advances made under each of sections seven,
eighty and nine, (5) a list of the classes and amount of securities
taken under each of such sections, (6) the total amount of advances
outstanding under each of sections seven, eight, and nine, and (7)
such other information as may be hereafter required by either House
of Congress.
The Corporation shall make a report to Congress on the first day
of each regular session, including a detailed statement of receipts
and expenditures.




252

REPORT ON T H E FINANCES.

SEC. 20. Section fifty-two hundred and two of the Revised Statutes
of the United States is hereby amended so as to read as follows:
"SEC.5202. No natidnal banking association shall at any time be
indebted, or in any way liable, to an amount exceeding the amount
of its capital stock at such time actually paid in and remairiing undiminished by losses or otherwise, except on account of demands of
the nature following:
" F i r s t . Notes of circulation.
" Second. Moneys deposited with or collected by the association.
" Third. Bills of exchange or drafts drawn against money actually
on deposit to the credit of the association, or due thereto. .
" Fourth. Liabilities to the stockholders of the association or dividends and reserve profits.
" Fifth. Liabilities incurred under the provisions of the Federal
reserve act.
" Sixth. Liabilities incurred under the provisions of the W a r
Finance Corporation act."
.
TITLE II.—CAPITAL ISSUES COMMITTEE.

SEC. 200. That there is hereby created a committee to be known as
the " Capital Issues Committee," hereinafter called the Committee,
and to be composed of seven members to be appointed by the President of the United States, by and with the advice and consent of the
Senate. At least three of the members shall be members of the
Federal Reserve Board.
No member, officer, attorney, agent, or employee of the Committee
shall in any manner, directly or indirectly, participate in the determination of any question affecting his personal interests, or the interest of any corporation, partnership, or association in which he is
directly or indirectly interested. Before entering upon his duties
each member and officer shall take an oath faithfully to discharge the
duties of his office. Nothing contained iri this or any other act shall
be construed to prevent the appointment as a member of the Committee of any officer or employee under the United States or of a
director of a Federal reserve bank.
The terms during which the several members of the Committee
shall respectively hold office shall be determined by the President of
the United States, and the compensation of the several members of
the Committee who are not members of the Federal Reserve Board
shall be $7,500 per annum, payable monthly, but if any such member
receives any other compensation from any office or employment under
the United States the amount so received shall be deducted from such
salary; and if such other compensation is $7,500 or more, such member shall receive no salary as a member of the Committee. Any
member shall be subject to removal by the President of "the United
States. The President shall designate one of the members as chairman, but any subsequent vacancy in the chairmanship shall be filled
-by the Committee. Four members of the Committee shall constitute
a quorum for the transaction of business.
SEC. 201. That the Committee may employ and fix the compensation of such officers, attorneys, agents, and other employees as may be
deemed necessary to conduct its business, who shall be appointed




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253

without regard to the provisions of the act entitled "An act to regulate and improve the civil service of the United States," approved
January sixteenth, eighteen hundred and eighty-three (volume
twenty-two. United States Statutes at Large, page four hundred and
three), and amendments thereto or any rules or regulations made in
pursuance thereof. No such officer, attorney, agent, or employee
shall receive more compensation than persons performing services of
like or similar character uncier the Federal Reserve Board.
SEC. 202. That all the expenses of the Committee, including all
necessary expenses for transportation incurred by the members or
by its officers, attorneys, agents, or employees under its orders in
making an investigation or upon official business in any other places
than at their respective headquarters, shall be allowed and paid
on the presentation of itemized vouchers therefor approved by the
chairman.
The Committee may" rent suitable offices for its use, and purchase
such furniture, equipment, and supplies as may be necessary, but
shall not expend more than $10,000 annually for offices in the District of Columbia.
The principal office of the Committee shall be in the District of
Columbia, but it may meet and exercise all its powers at any other
place. The Committee may, by one or more of its members, or by
such agents as it may designate, prosecute any inquiry necessary to
its duties in any part of the United States.
SEC. 203. That the Committee may, under rules and regulations to
be prescribed by it from time to time, investigate, pass upon, and
determine whether it is compatible with the national interest that
there should be sold or offered for sale or for subscription any issue,
or any part of any issue, of securities hereafter issued by any person, firm, corporation, or, association, the total or aggregate par or
face value of which issue and any other securities issued by the same
person, firm, corporation, or association since the passage of this act
is in excess of $100,000. Shares of stock of any corporation or association without nominal or par value shall for the purpose of this
section be deemed to be of the par value of $100 each. Any securities which upon the date of the passage of this act iare in the possession or control of the corporation, association, or obligor issuing
the same shall be deemed to have been issued after the passage of
this act within the meaning hereof.
Nothing in this title shall be construed to authorize such Committee to pass upon (1) any borrowing by any person, firm, corporation, or association in the ordinary course of business as distinguished
from borrowing for capital purposes, (2) the renewing or refunding
of indebtedness existing at the time of the passage of this act, (3) the
resale of any securities the sale or offering of which the Committee
has determined to be compatible with the national interest, (4) any
securities issued by any railroad corporation the property of which
may be in the possession and control of the President of the United
States, or (5) any bonds issued by the War Finance Corporation.
Nothing done or omitted by the Committee hereunder shall be
construed as carrying the approval of the Committee or of the United
States of the legality, validity, worth, or security of any securities.
SEC. 204. That there is hereby'appropriated, out of any money in
the Treasury not otherwise appropriated, for the remainder of the




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REPORT ON T H E FINANCES.

fiscal year ending June thirtieth, nineteen hundred and eighteen, and
the fiscal year ending June thirtieth, nineteen hundred and nineteen,
the sum of $200,000 for the purpose of defraying the expenses of the
establishment and maintenance of the Committee, including the payment of the salaries and rents herein authorized.
SEC. 205. That the Committee shall make a report to Congress on
the first day of each regular session, including a detailed statement
of receipts and expenditures, and also including the names of all
officers and employees and the salary paid to each.
SEC. 206. That this title shall continue in effect until, but not after,
the expiration of six months after the termination of the war, the
date of such termination to be determined by a proclamation of the
President of the United States, but the President may at any time
by proclamation declare that this title is no longer necessary, and
thereupon it shall cease to be in effect.
TITLE III.—MISCELLANEOUS.

'

SEC. 300. That whoever willfully violates any of the provisions of
this act, except where a different penalty is provided in this act,
shall, upon conviction in any court of the United States of competent
jurisdiction, be fined not more than $10,000 or imprisoned for not
more than one year, or both; and whoever knowingly participates
in. any such violation, except where a different penalty is provided
in this act, shall be punished by a like fine or imprisonment, or
both.
SEC. 301. That no stamp tax shall be required or imposed upon a
promissory note secured by the pledge of bonds or obligations of the
United States issued after April twenty-fourth, nineteen hundred and
seventeen, or secured by the pledge of a promissory note which
itself is secured by the pledge of such bonds or obligations: Provided,
That in either case the par value of such bonds or obligations shall
equal the amount of such riote.
SEC. 302. That if any clause, sentence, paragraph, or part of this
act shall, for any reason, be adjudged by any court of competent
jurisdiction to be invalid, or, in case any court of competent jurisdiction shall adjudge to be invalid any provisions hereof in respect
of any class or classes of securities, such judgment shall not affect,
impair, or invalidate the remainder of this act, but shall be confined
in its operation to the clause, sentence, paragraph, part, or subject
matter of this act directly involved in the controversy in which
such judgment shall have been rendered. ^
SEC. 303. That the term " securities," as used in this act, includes
stocks, shares of stock, bonds, debentures, notes, certificates of indebtedness, and other obligations.
SEC. 304. That the right to amend, alter, or repeal this act is
hereby expressly reserved.
SEC. 305. That the short title of this act shall be the " War finance
corporation act."
SEC. 306. That all provisions of any act or acts inconsistent with
the provisions of this act are hereby repealed.
Approved, April 5, 1918.




EXHIBIT 46.

WASHINGTON, May 27,1918.

The War Finance- Corporation to-day authorized the following
statement:
I n view of the applications for direct advances which have been
filed with the War Finance Corporation, the directors wish to point
out that an erroneous impression seems to exist in certain quarters
that the corporation is intended primarily to make direct advances
to borrowers under the " exceptional-cases " clause of the act. This,
however, is not the purpose of the act, which was designed primarily
to enable credit to be extencled by the War Finance Corporation
through the banks of the country to " w a r industries"—that is, to
those industries whose operations are necessary or contributory to
the war. I n other words, the resources of the War Finance Corporation are not intended to be loaned directly to war industries unless
in an exceptional case, but only indirectly through the banks. As
the Secretary of the Treasury stated before the committees of Congress when the bill was under consideration, " t h e provision of the
bill permitting direct loans by the corporation, in exceptional cases,
is intended to provide for those rare instances where it may be made
to appear to the corporation that a meritorious borrower is being UUT
wisely discriminated against by the banks." I n the progress of the
bill through Congress advances under the exceptional-cases clause
were further restricted both as to security and as to the amount which
could be advanced—thus indicating the intention of Congress that in
order to obtain an advance under this clause the borrower must show
some exceptional circumstances clearly entitling him to relief.
I n no circumstances was it the intention that the War Finance Corporation should make loans except upon adequate security.
I t is expected that the greatest usefulness of the AVar Finance Corporation will be found in its operations through the banks. As the
Secretary of the Treasury stated before the Senate Finance Committee the organization of the War Finance Corporation should be
regarded " primarily as a measure to enable the banks, * * * to
continue to furnish essential credits for war industries and enterprises which are necessary or contributory to the prosecution of the
war. I n Europe central banks, which correspond to our Federal
reserve, banks in a sense, are permitted to grant to banks and bankers
loans upon stocks and bonds upon certain well-defined terms; but
here the Federal reserve banks are not permitted to do that, the Federal reserve act having specifically contemplated advances of that
character only upon what we call liquid or commercial paper, and
therefore the Federal reserve banks are not permitted to rediscount
any paper for their banks which is secured by fixed investments.
The Federal reserve act does not provide for this, and the War
Finance Corporation is designed as a war emergency to fill this gap."
The corporation was organized to provide an instrumentality to
which the banks of the country could resort to obtain accommodation
on advances made by theiri to war industries upon a character of




255

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REPORT ON TPIE FINANCES.

security not available for rediscount at a Federal reserve bank. I t is
hoped that as need arises the banks of the country will avail themselves of the facilities thus afforded so that they may be amply able
to extend credit to those industries of the country which are necessary
or contributory to the prosecution of the war.
From the applications received by the War Finance Corporation
there seems to be an impression in certain quarters that the corporation was specially designed to provide funds for meeting maturing
obligations, particularly those of public-utility companies. The law
expressly provides that the corporation shall not make direct advances
to provide funds to meet such maturing obligations, except possibly
in some rare case which could clearly be brought within the " exceptional-cases clause." Of course, the corporation will stand ready to
lend its assistance to banks and bankers in proper cases where they
have themselves made advances to war industries, whether for the
purpose of meeting maturing obligations or otherwise, and direct
advances in deserving cases that come clearly within the provisions
of the law.
Holders of maturing obligations, whether of public utilities or of
other concerns which may find themselves unable because of temporary conditions to meet their commitments punctually, should consider
whether in the public interest as well as their own they should not
cooperate by consenting to reasonable renewals. Public-utility companies particularly, in cooperation with the communities in which
they operate, should have the opportunity of adjusting themselves to
the changed conditions brought about by the war.
No machinery has been specially provided for direct purchases of
obligations of the public utilities, whether to meet maturities or otherwise, either through the War Finance Corporation or through any
other governmental agency. The situation of these public utility companies is therefore quite different from that of the railroads, where
Congress has made specific provision for the purchase of their securities by the Government in certain exigencies, yet even the railroads
are expected, wherever possible, to meet their own maturities and to
pay what the money is worth to accomplish that end. I t must be remembered that the railroads are under Federal operation, and their
rates are subject to Federal control, and that the Government is therefore in a position to see to it that their charges shall be sufficient to
meet the cost of the service rendered. I n the case, however, of the
public utilities, neither their operations nor their rates are subject to
Federal control. Wherever the charges do not amount to adequate
compensation for the services rendered, relief can be had only through
the appropriate local authorities, and'time is essential to enable the
companies and the communities in which they operate to reach a
satisfactory solution of this important problem. I t is not a problem
which can be disposed of by having the Federal Government through
the W a r Finance Corporation assume the burden of financing the operations of these local companies except in exceptional circumstances
which may make it a matter of national importance that advances
should be made. The local authorities will no doubt respond as
promptly as possible, in cases where relief is needed because of changed
conditions, as it is clear that the soundness iand efficiency of public
utilities is intimately connected with a vigorous and successful prosecution of the war.




EXHIBIT 47.
[1918. Department Circular No. 114. Loans and Currency.]
C O N V E R S I O N OF U N I T E D S T A T E S BONDS OF T H E F I R S T L I B E R T Y
LOAN, OF T H E F I R S T L I B E R T Y LOAN C O N V E R T E D , A N D OF T H E
SECOND L I B E R T Y LOAN.
TPtEASURY D E P A R T M E N T ,

OFFICE OF THE SECRETARY,

Washington, May 9,1918.
To holders of 3^ per cent gold bonds of 1932-Jp7 of the first liberty
loan; Jf, per cent convertible gold bonds of 1932-1^7 of the first liberty
loan converted; and ^ per cent convertible gold bonds of 1927-1^
of the second liberty loan:
I. PRESENT CONVERSION PRIVILEGE.

I n consequence of the issue this day of a series of United States 4 |
per cent gold bonds of 1928 of the third Liberty loan, holders of the
above-mentioned bonds will, in accordance with the provisions of this
circular, be entitled to convert all or any part of their bonds into an
equal face amount of bonds bearing interest at 4J per cent per annum,
the terms of which will be identical with those of the bonds of the
third Liberty loan, except that such bonds will have the same dates for
the payment of interest, the same dates of maturity of principal, and
the same terms of redemption as the bonds upon the conversion of
which they are respectively issued.
The bonds to be issued upon conversions of {a) Z\ per cent gold
bonds of 1932-47 of the first Liberty loan, and (&) 4 per cent convertible gold bonds of 1932-47 of the first Liberty loan converted, are
designated 4^ per cent gold bonds of 1932-47 of the first Liberty loan
converted, and the bonds to be issued upon conversions of 4 per cent
convertible gold bonds of 1927^2 of the second Liberty loan are designated 4f per cent gold bonds of 1927^2 of the second Liberty loan
converted. Such bonds to be issued upon such conversions are hereinafter more particularly described.
.

I I . DURATION OF PRESENT CONVERSION PRIVILEGE.

The conversion privilege thus arising upon the issue of bonds of
the third Liberty loan must be exercised, if at all, within the period
of six months beginning May 9, 1918, the date of issue of such bonds,
a,nd ending November 9, 1918, both dates inclusive. I t will not be
practicable to make deliveries prior to July 1, 1918, of 4^ per cent
bonds of the first Liberty loan converted or of 4^ per cent bonds of
the second Liberty loan converted, and, as under the act approved
April 4, 1918, holders of 4 per cent bonds of the first Liberty loan
86429°—FI 1918




17

257

258

. REPORT ON T H E

FINANCES.

converted and of 4 per cent bonds of the second Liberty loan, presenting their bonds for conversion after July 1, but not after November
9, 1918, will be entitled to the benefit of the increased interest 'rate
from June 15 and May 15, respectively, without adjustment of interest, it is hoped that holders of such bonds will not present their
bonds for conversion until after July 1, 1918. I n the case, however,
of holders of such bonds who prefer to present their bonds for conversion on or before July 1, 1918, an adjustment of interest will.be
made, which, in the case of'bonds of the first Liberty loan converted,
will, if such bonds are presented for" conversion before June 15, 1918,
require payment to the bondholder, and, if such bonds are presented
for conversion after June 15, 1918, but not after July 1, 1918, will
require payment to the United States, and, in the case of bonds of the
second Liberty loan, will, if such bonds are presented for conversion
before May 15, 1918, require payment to the bondholder, and, if such
bonds are presented for conversion after May 15, 1918, but not after
July 1, 1918, will require paymerit to the United States.
If holders of 4 per cent bonds of the first Liberty loan converted
and holders of 4 per cent bonds of the second Liberty loan will postpone presenting their bonds for conversion until after July 1, 1918,
when the bulk of the work in connection with the third Liberty loan
will be completed, the burden imposed upon the Treasury Department and upon the Federal reserve banks in connection with the con-.
version will be greatly reduced.
I I I . GENERAL PROVISIONS GOVERNING CONVERSIONS. '

Conversions in the exercise^ of the present conversion privilege
may be effected by presentation and surrender of 3^ per cent bonds
of the first Liberty loan, 4 per cent bonds of the first Liberty loan
converted, and 4 pei^ cent bonds of the second Liberty loan, to the
respective Federal reserve banks in Boston, New York, Philadelphia,
Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis,
Kansas City, Dallas, and San Francisco, or to the Secretary of the
Treasury, Division of Loans and Currency, Washington.
Such bonds so presented and surrendered for conversion must be
accompanied by " request for conversion," in the form prescribed by
the Secretary of the Treasury (Form L & C 25, printed at page 9
of this circular, copies of which may Be obtained from any Federal
reserve bank or from the Secretary of the Treasury), signed with the
respecti^ve autograph signatures of the holders of the bonds presented
for conversion.
Registered bonds presented for conversion must be duly assigned
to " the Secretary of the Treasury for conversion " on the form appearing on the backs of registered bonds; such assignments, however,
need not be witnessed. Upon conversion of such registered bonds
registered bonds only will be delivered, inscribed in the respective
names of the registered owners of the bonds surrendered for conversit)n. As the transfer books for registered bonds of the second
Liberty Iqan will be closed i r o m October 16 to November 15, 1918,
both dates inclusive, registered owners of such bonds surrendered for
conversion after October 15, 1918, but not after November 9, 1918,
will on November 15, 1918, receive check for interest at 4 per cent




SECRETARY OF THE TREASURY.

259

per annum for the six months' period ending November 15, 1918,
upori the bonds surrendered for conversion, and, as soon thereafter as
practicable, they will also receive check for the additional interest,
at the rate of J per cent per annum, to which they are respectively
entitled for such period; such checks together aggregating full interest from May 15 to November 15, 1918, at the rate of 4J per cent per
annum upon the bonds of the second Liberty loan converted to be
delivered upon such conversions. Upon conversion of registered
bonds neither change of ownership nor delivery of coupon bonds
will be permitted. Registered bonds will, however, be delivered upon
conversion of coupon bonds if written request therefor be submitted
with request for conversion. Bonds will be delivered in like denominations as the bonds upon the. conversion of which they are respectively issued, unless written request for delivery in other denominations be submitted with request for conversion.
a
No deliveries of i i per cent bonds of the first Liberty loan converted or of Jfi pe'f* oent bonds of the second Liberty loan converted
will be made before July 1, 1918, or such later date as may be determined by the Secretary of the Treasury. I n respect of any bonds
surrendered for conversion before such date the Federal reserve
banks will issue appropriate certificates as receipts therefor. Such
certificates will be inscribed in the respective names of bondholders
signing the requests for conversion accompanying the bonds so surrendered. Such certificates, 'upon surrender thereof to the Federal
reserve banks which executed them, respectively, will entitle the persons whose names are inscribed thereon to delivery, after July 1,
1918, of the 4^ per cent bonds to be issued as provided in this circular upon conversion of the bonds so surrendered. Transfers and
exchanges of 4 | per cent registered bonds of ^the first Liberty loan
converted and of 4^ per cent registered bonds of the second Liberty
loan converted will not be made before August 1, 1918, or such later
date as subsequently may be determined by the Secretary of the
Treasury. The 4^ per cent coupon bonds of the first Liberty loan
converted will have four interest coupons attached covering semiannual interest payments maturing December 15, 1918, and up to
and including June 15, .1920, and the 4J per cent coupon bonds of
the second Liberty loan converted will have four interest coupons
attached covering semiannual interest payments maturing November
15, 1918, and up to and including May 15, 1920. On and after June
15, 1920, and May 15, 1920, respectively, the respective holders of
such bonds should surrender the same and obtain a new. bond or
bonds having coupons attached thereto covering semiannual interest
payments up to and including the respective riiaturities of such
bonds.
Transportation charges upon bonds presented for conversion must
be paid by the holders. Coupon bonds to be delivered upon conversions will, after July 1,1918, or such later date as may be determined
as provided above, either be delivered directly to the holders of the
bonds surrendered for conversion at the time of such surrender, or,
in the absence of other written instructions and remittances to cover
expenses, will be expressed at the owners' risk and expense. Registered bonds to be delivered upon conversions will, after July 1, 1918,
or such later date as may be determined as provided above, be mailed.




260

REPORT ON THE FINANCES.

As the cost of transportation of coupon bonds by express is greater
than by registered mail insured, holders of coupon bonds desiring to
present them for conversion are advised to consult with their own
banks or trust companies, fqr arrangements may be made, as between Federal reserve banks and incorporated banks and trust companies, for transportation, to and from Federal reserve banks by
registered mail insured, of the bonds to be converted and of the
bonds to be issued upon conversions, the charges in each case to .be
paid by the respective holders and to be remitted by the incorporated
banks and trust companies to the Federal reserve banks. Information concerning any such arrangements will be furnished by Federal
reserve banks to incorporated banks and trust companies.
IV. A D J U S T M E N T S OF I N T E R E S T U P O N CONVERSIONS OF 4. PER C E N T C O N 'S'VERTIBLE GOLD BONDS OF 19 2 7 - 4 2 OF T H E SECOND LIBERTY LOAN I N
COUPON A N D REGISTERED F O R M .

\

All 4 per cent coupon bonds of the second Liberty loan surrendered
for conversion must have coupon maturing November 15, 1918, and
subsequent coupons attached. All 4J per cent bonds of the second
Liberty loan converted to be delivered upon conversions will bear
interest at the rate of 4J per cent per annum frorii May 15,1918.
Holders of 4 per cent bonds of the second Liberty loan who desire
to present and surrender such bonds for conversion on or after May
9, 1918, but before May 15, 1918, for the purpose of obtaining exact
adjustments of interest as of the respective dates upon which such
bonds may be su^rrendered for conversion, must present and surrender such bonds for conversion, as, provided above, on or after
May 9, 1918, but before May 15, 1918, and must properly fill in and
sign the form of request for exact adjustment of interest appearing
upon the back of the request for conversion. In such cases, but not
otherwise, such holders will receive as soon as such paj^ment can
conveniently be made, check covering the difference between interest
upon such bonds at the rate of 4 per cent per annum and interest
thereon at the rate of 4J per cent per annum from the respective
dates upon which such bonds shall have been surrendered for conversion to May 15, 1918, in accordance with Interest Table No. 1,
printed at page 11 of this circular. Except in cases where exact adjustments of interest are requested, as provided above, all 4 per cent
bonds of the second Liberty loan presented and surrendered for conversion before May 15, 1918, shall be deemed to have been surrendered for conversion 0^ of May 15, 1918, and no payments to adjust
interest will be made, nor will any such payments be required in
respect of such bonds actually surrendered for conversion on May
15, 1918. Holders of coupon bonds presented and surrendered for
conversion before May 15, 1918, should detach and cash when due
coupon maturing May 15, 1918. Registered owners of registered
bonds presented and surrendered for conversion before May 15,1918,
will receive on May 15,1918, interest thereon at the rate of 4 per cent
per annum from November 15, 1917, to May 15, 1918.
Holders of 4 per cent bonds of the second Liberty loan who present
such bonds for conversion after May 15, 1918, but not after ^July 1,




SECRETARY OF THE TREASURY.

261

1918, must pay to the Unitied States, in the manner provided below,
the difference between interest at the rate of 4 per cent per annum
and interest at the rate of 4J per cent per annum, from May 15,
1918, to the r'espective dates of conversion upon the respective face
amounts of such bonds surrendered for conversion.
V. A D J U S T M E N T S OF I N T E R E S T U P O N CONVERSION OF 4 PER CENT
VERTIBLE GOLD BONDS OF 1 9 3 2 - 4 7 OF T H E FIRST LIBERTY LOAN
VERTED COUPON AND REGISTERED F O R M .

CONCON-

All 4 per cent coupon bonds of the first Liberty loan converted surrendered for conversion must have coupon maturing December 15,
1918, and subsequent coupons attached. All 4 | per cent bonds of the
first Liberty loan converted to be delivered upon conversions of 4 per
cent bonds of the first Liberty loan converted, will bear interest at
the rate of 4^ per cent per annum from June 15, 1918.
Holders of 4 per cent bonds of the first Liberty loan converted, who
desire to present and surrender such bonds for conversion on or after
May 9, 1918, but before June 15, 1918, for the purpose of obtaining
exact adjustments of interest as of the respective dates upon which
such bonds may be surrendered for conversion must present and'^
surrender such bonds for conversion, as provided above, op or after
May 9, 1918, but before June 15, 1918, and must properly fill in and
sign the form of request for exact adjustment of interest appearing
upon the back of the request for conversion. I n such cases, but not
otherwise, such holders will receive as soon as such payment can
conveniently be made, check covering the difference between interest
upon such bonds at the rate of 4 per cent per annum and interest
thereon at the rate of 4J per cent per annum, from the respective
dates. upon which such bonds shall have been surrendered for conversion to June 15, 1918, in accordance with interest table No. 2,
printed at page 12 of this circular. Except in cases where exact
adjustments of interest are requested, as provided above, all 4 per
cent bonds of the first Liberty loan converted presented and surrendered for conversion before June 15, 1918, shall be deemed to
have been surrendered for conversion as of June 15, 1918, and no
payments to adjust interest will be made, nor will any such payments be required in respect of such bonds actually surrendered for
conversion on June 15, 1918. , Holders of coupon bonds, presented
and surrendered for conversion before^June 15, 1918, should detach
and cash when due couppn maturing June 15, 1918.. Registered
owners of registered bonds presented and surrendered for conversion
before June 15, 1918, will receive on June 15, 1918, interest thereon
at the rate of 4 per cent per annum from December 15, 1917, to June
15, 1918.
Holders of 4 per cent bonds of the first Liberty loan converted
who present such bonds for conversion after June 15, 1918, but not
after July 1,1918, must pay to the United States, in the manner provided below, the difference between interest at the rate of 4 per cent
per annum and interest at the rate of 4^ per cent per annum, from
June 15, 1918, to the respective dates of conversion, upon the respective face amounts of such bonds surrendered for conversion.




262
VI.

. REPORT ON THE FINANCES.
A D J U S T M E N T S OF I N T E R E S T U P O N CONVERSIONS OF 3 ^ P E R C E N T GOLD

BONDS OF 1 9 3 2 - 4 7 OF T H E F I R S T L I B E R T Y LOAN I N COUPON AND REGISTERED F O R M .

All ^ per cent coupon bonds of the first Liberty loan surrendered
for conversion must have coupon maturing December 15, 1918, and
subsequent coupons attached. All 4^ per cent bonds of the first
Liberty loan converted to be delivered upon conversions of bonds of
the first Liberty loan will bear interest at the rate of 4^ per cent per
annum from June 15, 1918.
Inconvenience resulting from awkward adjustments of interest,
both to the United States and to holders of bonds of the first Liberty
loan will be avoided if- such holders who desire to convert their holdings effect conversions as of June 15, 1918. As the aniounts involved
in exact adjustirients of interest upon conversions of bonds of the
first.Liberty loan presented for conversion before June 15, 1918, in
many instances will be insufficient to compensate for the inconvenience
connected therewith, such adjustments will not be made unless requested, on the form proAdded for that purpose upon the request for
conversion, as provided below, and except in such cases all 3^ per
cent bonds of the first Liberty loan presented and surrendered for
conversion before June 15, 1918, shall be deemed to have been surrendered for conversion as of June 15,1918. Payments to the United
States to adjust interest will be required on all conversions of 3^ p e r ,
cent bonds effected after June 15, 1918.
A. CONVERSIONS

OF 3 i

P E R CENT COUPON AND REGISTERED
LIBERTY LOAN A S OF J U N E 1 5 , 1 9 1 8 .

BONDS

OF T H E F I R S T .

To effect conversions as of June 15, 1918, 3^ per cent bonds of the
first Liberty loan must be presented and surrendered for coriyersion,
as provided above, on or after May 9, 1918, but not after June 15,
1918.
B. CONVERSIONS OF 3 § PER CENT COUPON AND REGISTERED BONDS OF T H E F I R S T
LIBERTY LOAN ON AND AFTER M A Y 9 , 1 9 1 8 , B U T BEFORE J U N E 1 5 , 1 9 1 8 , W I T H
EXACT A D J U S T M E N T OF I N T E R E S T .

To effect conversions of bonds of the first Liberty loan surrendered
for conversion on or after May 9, 1918, but before June 15, 1918,
with'exact adjustment of interest as of the respective dates upon
which such bonds may be so surrendered,^ holders thereof must present and surrender such bonds, as provided above, and must properly
fill in and sign the form of request for exact adjustment of interest
appearing upon the back of the request for conversion, and in such
cases, but not otherwise, such holders will receive as soon as such
payinent can conveniently • be made, check covering the difference
between interest upon such bonds at the rate of 3^ per cent per annum
and interest thereon at the rate of 4^ per cent per annum from the
respective dates upon which such bonds shall have been surrendered
for conversion to June 15, 1918, in accordance with interest table
No. 3, printed at page 13 of this circular. Holders of coupon bonds
surrendered for conversion, on or before June 15, 1918, should detach
and cash when due coupon maturing June 15, 1918. Registered
owners of registered bonds so surrenclered will receive on June 15,



SECRETARY OF THE TREASURY.

263

1918, interest thereon at the rate of 3J per cent per annum from
December 15, 1917, to June 15, 1918.
'
C. CONVERSIONS OF 3 ^ PER CENT COUPON AND REGISTERED BONDS OF T H E F I R S T LIBERTY
LOAN AFTER J U N E 1 5 , 1 9 1 8 , B U T NOT AFTER NOVEMBER 9 , 1 9 1 8 , W I T H P A Y M E N T S
TO T H E U N I T E D STATES REQUIRED TO A D J U S T I N T E R E S T .

To effect conversions after June 15,1918, but not after November 9,
1918, 3^ per cent bonds of the first Liberty loan must be presented and
surrendered for conversion, as provided above, and the holders thereof
must pay to the United States, in the manner provided in Subdivision
V I I of this circular, the difference between interest at the rate of 3J
per cent per annum and interest at the rate of 4J per cent per annum
from June 15, 1918, to the respective dates of conversion upon the'
respective face amounts of such bonds in accordance with interest
table No. 4, printed at page 14 of this circular.
Payments required to be made to the United States, as provided in
this circular, to cover adjustments of interest upon bonds of the first
Liberty loan surrendered for conversion after June 15, 1918, are
necessary to reimburse the United States for unearned interest which
will be received, either upon the collection of coupons or registered
interest, by holders of bonds issued upon conversion upon the next
interest date after conversion is effected, for the period prior to the
respective dates, of conversion. For example, if bonds of the first
Liberty loan should be converted on July 15,1918, holders thereof on
December 15, 1918, would be entitled to interest at the rate of only
3^ per cent per annum from June 15 to July 15, 1918, though at the
rate of 4J per cent per annum from July 15 to December 15,1918. But
as such holders will receive 4^ per cent bonds of the first Liberty loan
converted, bearing interest at the rate of 4J per cent per annum from
June 15, 1918, to December 15, 1918, payment must be made to the
United States covering the difference between interest at the rate of
3J per cent per annum, which is all such holders are entitled to for the
period from June 15 to July 15, 1918, and interest at the rate of 4^
per cent per annum for such period, which such holders will receive
upon the collection of coupons or registered interest due December 15,
1918. Similar paj^ments are also required to adjust interest in respect of bonds of the second Liberty loan and of the first Liberty loan
converted, whien presented and surrendered for conversion after May
15, 1918, and June 15, 1918, respectively, but not after July 1, 1918.
Similar payments are, however, not required to adjust interest, in respect of bonds of the second Liberty loan or of the first Liberty loan
converted presented for conversion after July 1, 1918, because the
act of Congress approved April 4,1918, provides in effect that holders
of such bonds presented for conversion after that date—for example,
on July 15, 1918—will be entitled to receive interest at the rate of
4 | per cent per annum from May 15, 1918, and June 15, 1918, respectively.
VII.

METHOD

OF

MAKING

PAYMENTS

TO

ADJUST

INTEREST

WHENEVER

REQUIRED.

All payments to the United States required or provided for in this
circular must be made in cash or by post office or express money order,
bank draft, or certified check collectible without exchange at the



264

REPORT ON THE FINANCES.

place where conversion is to be effected, arid payable, if conversion is
to be effected at the Treasury Department, in Washington, to the order
of " Treasurer of the United States Second Conversion Account," or,
if conversion is to be effected at a Federal reserve bank, payable to
" Federal reserve bank of
(Here insert name of city in which bank is located.)

second conversion account," No other forms of payment will be
accepted. Such payments must be sufficient to cover interest up to
the date when such payments will actually be received at the place
where conversion is, to be effected. ^
V I I I . RECURRENT CONVERSION PRIVILEGE OF 3 i PER C E N T BONDS OF T H E
FIRST LIBERTY LOAN.

Holders of bonds of the first Liberty loan, who do not present and
surrender the same for conversion, in accordance with the provisions
of this circular, on or before November 9, 1918, will lose once for all
the conversion privilege arising as a consequence of the issue of the
bonds of the tliird Liberty loan, or of the issue of any additional
bonds of the same series. If, however, any subsequent series of bonds
(not including United States certificates of indebtedness and other
short-term obligatioris) shall be issued by the United States at a
higher rate of interest than 3^ per cent per annum before the termination of the war between the United States and the Imperial German
Government (the date of such termination to be fixed b}^ a proclamation of the President of the United States), the holders of any bonds
of the first Liberty loan, in respect of which the present conversion
privilege shall not have been exercised, shall have the privilege, at
any time within six months after the issue of bonds of such subsequent series (the date of such issue to be fixed by prior public announcement by the Secretary of the Treasury) of converting their
bonds at par—upon presentation and surrender thereof with all unmatured coupons at the Treasury Department, Washington, or at
such other agencies as the Secretary of the Treasury may designate
for the purpose, and upon adjustment of accrued interest to the date
of conversion—into an equal par amount of bonds b^ariiig such
higher rate of interest, and substantially identical with the bonds of
such subsequent series, except that the bonds to be issued upon such
conversion shall be identical with the bonds of the first Liberty loan
as to maturity of principal and of interest and terms of redemption.
IX. N O N R E C U R R E N T CONVERSION PRIVILEGES OF 4 PER C E N T BONDS OF
T H E FIRST LIBERTY LOAN CONVERTED AND OF 4 PER C E N T BONDS OF
TPIE SECOND LIBERTY LOAN.

In respect of any 4 per cent convertible gold bonds of 1932-47 of
the first Liberty loan converted and in respect of any 4 per cent convertible gold bonds of 1927-42 of the second Liberty loan, as to which
the conversion privilege arising as a consequence of the issue of
bonds of the third Liberty loan shall not be exercised withiri the
prescribed period, in accordance with the provisions of this circular,
no further conversion privilege will arise again though bonds are
hereafter issued by the United States bearing interest at a higher
rate or rates than 4 per cent per annum.




SECRETARY OF THE TREASURY.

265

X. DESCRIPTION OF 4 i PER CENT GOLD BONDS OF 1 9 3 2-^4 7 OF T H E FIRST
LIBERTY LOAN CONVERTED, TO BE ISSUED ( a ) U P O N CONVERSIONS OF 3 i
PER C E N T GOLD BONDS OF 19 3 2 - 4 7 OF T H E FIRST LIBERTY LOAN AND ( b )
U P O N CONVERSIONS OF 4 PER C E N T CONVERTIBLE GOLD BONDS OF 1 9 3 2 - 4 7
OF T H E FIRST LIBERTY LOAN CONVERTED.
^

Bearer bonds with interest coupons attached will be issued in denominations of $50, $100, $500, $1,000, $5,000, and $10,000. Bonds
registered as to principal and interest will be issued in denominations
of $50, $100, $500, $1,000, $5,000, $10,000, $50,000, and $100,000.
Provision Avill be made for the interchange of bonds of different denominations and of coupon and registered bonds and for the transfer
of registered bonds without charge by the United States, and under
rules and regulations prescribed by the Secretary of the Treasury.
The bonds will be dated May 9, 1918, and will bear interest at the
rate of four and one-quarter per cent per annum, but only from June
15, 1918, payable semiannually on June 15 and December 15. The
bonds will mature June 15,1947, but the issue may be redeemed on or
after June 15, 1932, in whole or in part, at j)ar and accrued interest,
on three months' published notice, on any interest day; in case of
partial redemption the bonds to be redeemed .to be determined by lot
by such method as may be prescribed by the Secretary of the pTreasury.
The principal and interest of the bonds are payable in United States
gold coin of the present standard of value. The bonds will be receivable as security for deposits of public money, but will not bear the
circulation privilege.
The bonds shall be exempt, both as to principal and interest, from
all taxation,now or hereafter imposed by the United States, any State,
or any of the possessions of the Uni^ted States, or by any local taxing
authority, except (a) estate or inheritance taxes and (b) graduated
additional income taxes, commonly known as surtaxes, and excessprofits and war-profits taxes, now or hereafter imposed by the United
States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and
certificates authorized by the act of Congress approved September
24,1917, or by said act as amended by the act approved April 4,1918,
the principal of which does not exceed in the aggregate $5,000, owned
by any individual, partnership, association, or corporation, shall be
exempt from the taxes provided for in clause (b) ab()ve.
The bonds of this issue are not entitled to any privilege of conversion into bonds bearing a higher rate of interest.
Any of the bonds which have been owned by any person continuously for at least six months prior to the date of his death, and which
upon such date constitute part of his estate, shall, under rules and
regulations prescribed by the Secretary of the Treasury, be receivable
by the United States at par and accrued interest in payment of any
estate or inheritance taxes imposed by the United States, under or by
virtue of any present or future law, upon such estate or the inheritance
thereof.
The Secretary of the Treasury is authorized, from time to time,
until the expiration of one year after the termination of the war, to
purchase bonds of this issue at such prices and upon such terms and
conditions as he may prescribe. The par amount of bonds of this




266

REPORT ON THE FINANCES.

issue which may be purchased in the 12 months' period beginning on
the date of issue shall not exceed one-twentieth of the par amount of
such bonds originally issued, and in each 12 months'period thereafter,
shall not exceed one-twentieth of the amount of the bonds of such
issue outstanding at the beginning of such 12 months' period. The
average cost of the bonds of this issue purchased in any such 12
months' period shall not exceed par arid accrued interest.
X I . DESCRIPTION OF 4 i PER C E N T GOLD BONDS OF 19 2 7 - 4 2 OF T H E SECOND
LIBERTY LOAN CONVERTED TO BE ISSUED U P O N CONVERSIONS OF 4 PER
C E N T CONVERTIBLE GOLD BONDS OF 1 9 2 7 - 4 2 OF T H E SECOND LIBERTY
LOAN.

Bearer bonds with interest coupons attached will be issued in denominations of $50, $100,$500, $1,000, $5,000, and $10,000. Bonds
registered as to principal and interest will be issued in denominations of $50, $100, $500, $1,000, $5,000, $10,000, $50,000, and $100,000.
Provision will be made for the interchange of bonds of different denominations and of coupon anfl registered bonds and for the transfer of registered bonds without charge by the United States and
under rules and regulations prescribed by the Secretary of the
Treasury.
The bonds will be, dated May 9, 1918, and will bear interest at the
rate of four and one-quarter per cent per annum, but only from May
15, 1918, payable semiannually on May 15 and November 15. The
bonds will mature November 15, 1942, but the issue may be redeemed
at the option of the United States on or after November 15, 1927, in
whole or in part, at par and accrued interest, on any interest day,
on six months' notice given in such manner, as the Secretary of the
Treasury shall prescribe. I n case of partial redemption the bonds
to be redeemed will be determined by such method as may be prescribed by the Secretary of the Treasury. The principal and interest
of the bonds are payable in United States gold coin of the present
standard of value. The bonds will be receivable as security for deposits of public money, but will not bear the circulation privilege.
The bonds shall be exempt, both as to principal and interest, .from
all taxation now or hereafter imposed by the United Staites, any
State, or any of the possessions of the United States, or by any local
taxing authority, except (a) estate or inheritance taxes and (b)
graduated additional income taxes, commonly known as surtaxes,
and excess-profits and war-profits taxes, now or hereafter imposed
by the United States upon the income or profits of individuals, partnerships, associations, or corporations." The interest on an amount
of bonds and certificates authorized by the act of Congress approved
September 24, 1917, or by said act as amended by the act approved
April 4,1918, the principal of which does not exceed in.the aggregate
$5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (b) above.
The bonds of this issue are not entitled to any privilege of conversiori into bonds bearing a higher rate of interest.
Any of the bonds which have been owned by any person continuously for at least six months prior to the date of his death, and which
upon such date constit.ute part of his estate, shall, under rules and




/

SECRETARY OF THE TREASURY.

267

regulations prescribed by the Secretary of the Treasury, be receivable
by the United States at par and accrued interest in payment of any
estate or inheritance taxes imposed by the Uriited States under or by
virtue of any present or future law upon such estate or the inheritance
thereof.
The Secretary of the Treasury is authorized, frorii time to time,
until the expiration of one year after the termination of the war, to
purchase bonds of this issue at such prices and upon such terms and
conditions as he may prescribe. The par amount of bonds of this issue
which may be purchased in the 12 months' period beginning on the
date of issue shall not exceed one-twentieth of the par ainount of
such bonds originally issued, and in each 12 months' period thereafter shall not exceed one-twentieth of the amount of the bonds of
such issue outstanding at the beginning of such 12 months' period.
The average cost of the bonds of this issue purchased in any such 12
months' period shall not exceed par and accrued interest.
W.

G. MCADOO,

Secretary of the Treasury,
[Treasury Department.

Loans and Currency. Form L. and C. 25.]

LIBERTY LOAN

REQUEST

FOR CONVERSION.

Only one series of bonds may be entered on this form, and separate forms
must also be used for (1) coupon bonds and (2) registered bonds.
Dated

, 1918.

To the SECRETARY OF THE TREASURY.

The undersigned herewith presents and surrenders—
3i per cent gold bonds of 1932-47 of the first Liberty loan
$
4 per cent convertible gold bonds of 1932-47 of the first Liberty loan
converted
$
4 per cent convertible gold bonds of 1927-42 of the second Liberty
loan__
$
i^ir.i!?-^?pi^/lf^^^^» ^^^ requests that the same be converted into an equal face
amount of 4^ per cent gold bonds according to the terms of Treasury Department Circular No. 114, dated May 9, 1918. Special instructions, if any, are
given by the undersigned on the back hereof.
Autograph signature of holder in full
:.
L
Address, number, and street
•
__„
(For delivery of bonds.)

City or town
^
County
* -r
state
1. (a) If 4 per cent bonds of the second Liberty loan are surrendered for
conversion after July 1, 1918, or {b) if 4 per cent bonds of the first Liberty loan
converted are surrendered for conversion after July 1, 1918, the execution of
the above form is all that is required.
2. (a) If 4 per cent bonds of the second Liberty loan are surrendered for conversion bef ore May 15, 1918, or (&) if 4 per cent bonds of the first Liberty loan
converted are surrendered for conyersion before June 15, 1918, or (c) if 3i per
cent bonds of the first Liberty loan are surrendered for conversion before June
1.5, 1918, unless exact adjustment of interest is requested, the execution of the
above form is all that is required. If, however, exact adjustment of interest
is requested in any case, the form appearing on the back hereof must be executed.
3. (a) If 4 per cent bonds of the second Liberty loan are surrendered for con.version after May 15, 1918, but not after July 1, 1918, or (b) if 4 per cent bonds
of the first Liberty loan converted are surrendered .for conversion after June 15,
1918, but not after July 1, 1918, or (c) if 3i per cent bonds of the first Liberty
loan are surrendered for conversion after June 15, 1918, payment must be made



268

REPORT ON THE FINANCES.

to the.United States of the amounts required to adjust interest. The form
covering remittance appearing on the back hereof must be used.
4. Payments whenever required to adjust interest must be sufficient to coyer
such interest up to the date when such payments will be actually received at
the place of conversion. Such payments must be made in cash, or by post office
or express money order, bank draft, or certified check collectible without exchange at the place where conversion is to be effected, and payable, if conversion is to be effected at the Treasury Department in Washington, to the order
of "Treasurer of the United States second conversion account," or, if conversion is to be effected at a Federal reserve bank, payable to " Federal reserve
bank of
:
^
second conversion
(Here insert name of city in which bank is located,

account." No other forms of payment will be accepted.
5. All registered bonds surrendered for conversion must be assigned to ^" The
Secretary of the Treasury for conversion."
6. Registered bonds will be issued upon conversion of coupon bonds if the
form of request for registered borids appearing on the back hereof is duly executed. Coupon bonds will not be issued upon conversion of registered bonds,
nor will registered bonds be issued in a name othei: than that in which the
registered bonds surrendered are inscribed.

Following forms to be used only for giving special instructions:
I. If registered bonds are desire'd upon conversion of coupon bonds use this
form:
Referring to $
, face amount, of coupon bonds surrendered herewith for conversion, the undersigned hereby requests the issue of registered
bonds inscribed in the name of (Mr., Mrs., or Miss.)

( F i r s t name in full.)

(Middle name or initial.)

Address for interest checks
(Give full address.)

(Last name.)

:
(Number.)

(Street.)

(City.)

(State.)

Signature of person signing request for conversion
IL If exact adjustment of interest is desired use this form.
Referring to $
, face amount, of bonds surrendered herewith for
conversion, the undersigned hereby requests that exact adjustment of interest
be made in respect thereof, computed from the date of receipt hereof, either
by a Federal reserve bank or by the Secretary of the Treasury,
f.May 15, 1918, in case of 4 per cent bonds of second Libety loan, at the
rate or one-fourth per cent per annum.
June 15, 1918, in case of 4 per cent bonds of first Liberty loan converted,
to< at the rate of one-fourth per cent per annum.
June 15, 1918, in case of 3^ per cent bonds of first Liberty loan, at the rate
of three-fourths per cent per annum.
Signature of person signing request for conversion
::
III. If 3^ per cent bOnds of the first Liberty loan are presented for conversion
after June 15, 1918, this form must be used in remitting accrued interest.^
Referring to $
, face amount, of bonds surrendered for conversion
herewith, the undersigned herewith incloses $
, being amount necessary to adjust interest thereon from June 15, .1918, to
, 1918,
in accordance with Interest Table No. 4, appearing in Treasury Department
Circular No. 114, dated May 9, 1918.
Signature of person signing request for conversion..
.
^A similar form should be used to cover remittances when required to adjust interest
upon 4 per cent bonds of the second Liberty loan and of the first Liberty .loan converted,
but in such cases interest table No. 4 must not be used.




269

SEOBETABY OF THE TBEASUBY.

IV. If delivery is desired of bonds in a different denomination or denomina- '
tions from the bond or bonds surrendered use this form:
Referring to $__
,^ face amount, of bonds surrendered for conversion
herewith, the undersigned hereby requests delivery of bonds upon conversion
as follows:
N u m b e r of b o n d s .

Denominations

Total.

$50
. $100
$500 .
$1,000
$5,000
$10,000
•2 $50,000
° 21100,000

$

Total'

1

.

»These amounts must be the same; otherwise request may be disregarded.
2 Coupon bonds are not issued in these denominations.

Signature of person signing request for conversion.
INTEREST TABLE NO. 1.—Amounts payable by the United States to adjust interest upon conversions of 4 per cent convertible gold bonds of 1927-42 of the
second Liberty loan, presented for conversion before May 15 1918, into 4i
per cent gold bonds of 1927~42 of the second Liberty loan converted.
[For example as to use of table see note at end of this interest table.]
Denominations.
Date.
$50
M a v 9,1918
10
11
12
13
14

$0.00
.00
.00
.00
.00
.00

$100
$0.00
.00
.00
•
.00
.00
.00

$500
$0.02
.02
.01
.01
.01
.00

$1,000
$0.04
.03
.03
.02
.01
.01

$5,000 •
$0.21
.17
.14
.10
».07
.03

$10,000
$0.41
.35
.28
.21
.14
.07

$50,000
$2.07
1.73
L38
L04
.69
.35

$100,000
$4.14
3 45
2.76
2 07
L38
69

NOTE.—To ascertain the correct amount to adjust interest upon any given date, run down the date
column until the date is reached upon which the bonds to be converted will be actually surrendered at
the place of conversion, then run across the page to the right until the figure under the denomination
column ofthe particular denomination of bonds to be converted is reached, and then multiply that figure
by the number of bonds of that denomination to be converted. For example, to convert on May 12,1918,
$10,000, face amount, of bonds of the denomination of $1,000 each, the amount to be paid by the Unitea
States, as shown by the foregoing interest table to adjust interest upon a $1,000 bond being $0.02, that
amount must be multiplied by 10, and the result shows that a payment of $0.20 would have to be made
by the United States to adjust interest upon conversion of such bonds upon that date.




270

REPORT ON T H E FINANCES.

INTEREST TABLE No. 2,—Amounts payable by the United S t a t e s to adjust interest upon conversions of k per cent convertible gold bonds of 1932-47
of the first Liberty loan converted, presented for conversion before J u n e 15,
1918, into 41 per cent gold bonds of 1932-47 of the first Liberty loan converted.
[For example as to use of table see note at end of this interest table.]
Denominations.
Date.
$50
May

9, 1918
10
11
12
13
14
U
16
17
18.......
19
20
21
22
23
24
2o'.
2b
27
28
29
30
31
June 1
2
3
4
5
6
7
8
9.
10
11
12
13
14

$100

$0.01
'.01
.01
.01
.01
.01
.01
.01
.01
.01
.01
• .01
.01
.01
.01
.01
.01
.01
.01
.01
.01
.01
.01
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00
.00

$0.03
.02
.02
.02
.02
.02
.02
.02
.02
.02
.02
.02
.02
.02
.02
.02
^ .01
.01
.01
.01
.01
.01
.01
.01
.01
.01
.01
.01
.01
.01
.00
.00
.00
.00
. .00
.00
.00

$500

$1,000
$0.25
.25
.24
.23
.23
.22
.21
.21
.20
.19
.19
.18
.17
.16
.16
.15
.14
.14
.13
.12
.12
.11
.10
.10
.09
.08
'.08
.07
.06
.05
.05
.04
.03
.03
.02
.01
.01

$5,000

$L27
L24
L20
L17
1.13
LIO
L06
L03
LOO
.96
.93.

$10,000 ! $50,000

$2.54
2.47
2.40
2.34
2.27
2.20
2.13
2.06
L99
L92
L85
1.79
L72
L65
Lo8
L51
L44
L37
L30
L24
L17
LIO
LOS
.96
.89

.62
.55
48
.41
.34
.27
.21
.14
.07

$12.71
12.36
12.02
11.68
1L33
10.99
10.65
10.30
9.96
9.62
9.27
8.93
8.D9
8.24
7.90
7.55
7.21
6.87
6.52
6.18
5.84
5.49
5.15
4.81
4.46
4.12
3.78
3.43
3.09
2.75
2.40
2.06
L72
L37
L03
.69
.34

$100,000

$25.41
24.73
24.04
23.35
22.66
2L98
2L29
20.60
19.92
19.23
18.54
17.86
17.17
16.48
15.80
15.11
14.42
13.74
13.05
12.36
11.68
10.99
10.30
9.62
8.93
8.24
7.55
6.87
6.18
5.49
4.81
4.12
3.43
2.75
2.06
L37

NOTE.—To ascertain the correct amount to adjust interest upon any given date, run down the date column until the date is reached upon which the bonds to be converted will be actually surrendered at the
place of conversion, then run across the page to the right until the figure under the denomination column
ofthe particular denomination of bonds to be converted is reacned, and then multiply that'figure by the
number of bonds of that denomination to be converted. For example, to convert on May 12, 1918, $10,000,
face amount, of bonds ofthe denomination of $1,000 each, the amount to be paid by the United States, as
shown by the foregoing interest table to adjust interest upon a $1,000 bond being $0.23, that amount must
be multiplied by 10, and the result shows that a payment of $2.30 would have to be made by the United
States to adjust interest upon conversion of such bonds upon that date.




271

SECRETARY OF THE TREASURY.

INTEREST TABLE No. 3.—Amounts payable by the United States to adjust interest
upon conversions of 3^ per cent gold bonds of 1982-47 of the first Liberty
loan, presented for conversion before June 15, 1918, into 41 per cent gold
bonds of 1932-47 of the first Liberty loan converted.
[For example as to use of table see note at end of this interest table.]
Denominations.
Date.
$50
May

9 1918
10
11
12
13
14
15
16
17
IS
,....
19 . .
20
21
22
23
24
.\...
25
26
27
28........:......
29
30......
31.!
June 1
2
3
4
5
6
7
8.....
9
10
11
12
13....*.
14

$100 '

$0.04
.04
.04
.04
.03
.03
.03
.03
.03
°
.03
.03
" .03
'
.03
.02
.02
.02
.02
.02
.02
.02
.02
.02
.02
.01
.01
.01
.01
.01
.01
.01
.01
.01
.01
.00
.00
.00
.00

$0.08
.07
.07
.07
.07
.07
.06
.06
.06
.06
.06
.05
.05
.05
^ .05
.05
.04
.04
.04
.04
.04
.03
.03
.03
.03
.02
.02
.02
.02
.02
.01
.01
.01
• .01
.01
.00
.00

$500
$0.38
.37
.36
.35
.34
.33
.32
.31
.30
.29
.28
.27
.26
.25
.24
.23
.22
.21
.20
.19
;18
.16
.15
.14
.13
.12
.11
.10
.09
.08
.07
.06
.05
.04
.03
.02
.01

$1,000 •
$0.76
.74
.72
.70
.68
.66
.64
.62
.60
.58
.56
.54
.52
.49
.47
.45
.43
.41
.39
.37
.35
.33
.31
.29
.27
.25
.23
.21
.19
.16
. .14
.12
.10
.08
. • .06
.04
.02

$5,000
$3.81
3.71
3.61
3.50
3.40
3.30
3.19
3.09
2.99
2.88
2.78
2.68
2.58
2.47
2.37
2.27
2.16
2.06
1.96
1.85
1.75
1.65
1.55
1.44
1.34
1.24
1.13
1.03
.93
.82
.72
.62
.52
.41
.31
.21
.10

$10,000
$7.62
7.42
7.21
7.01
6.80
6.59
6.39
6.18
5.98
5.77
5.56
5.36
5.15
4.95
4.74
4.53
4.33
4.12
3.91
3.71
3.50
3.30
3.09
2.88
2.68
2.47
2.27
2.06
1.85
L65
1.44
1.24
1.03
.82
.62
.41
.21

$50,000
$38.12
37.09
36.06
35.03
34.00
32.97
31.94
30.91
29.88
• 28.85
27.82
26.79
25.76
24.73
23.70
•22.66
21.63
20.60
19.57
18.54
17.51
16.48
15.45
14.42
13.39
12.36
11.33
10.30
9.27
8.24
7.21
6.18
5.15
4.12
3.09
2.06
1.03

$100,000
$76.24
74.18
72.12
70.05
67.99
65.93
63 87
61.81
59 75
57.69
55 63
53.57
51 51
49.45
47.39
45.33
43.27
41.21
39.15
37. Od
35.03
32.97
30.91
28.85
26.79
24.73
22.66
20.60
18.54
16.48
14.42
. 12.36
10.30
8.24
6.18
4.12
2.06

NOTE.—To ascertain the correct amount to adjust interest upon any given date, run down the date column
until the date is reached upon which the bonds to be converted will be actually surrendered at the place
of conversion, then run across the page to the right until the figure under the denomination column ofthe
particular denomination of bonds to be converted is reached, and then multiply that figure by the number
of bonds of that denomination to be converted. For example, to convert on May 12^ 1918, $10,000, face
amount, of bonds, ofthe denomination of $1,000 each, the amount to be paid bythe United States, in cases
where exact adjustment of interest is requested, as shown by the foregomg interest table, to adjust interest
upon a $1,000 bond, being $0.70, that amount must be multiplied by 10, and the result shows that a payment of $7 would have to be made by the United States to adjust interest upon conversion of such bonds
upon that date.




272

REPORT ON THE FINANCES.

INTEREST TABLE No. 4.-—Amounts required tu be paid to the United States to
adjust interest upon conversions of 3^ per cent gold bonds of 1932-47 of the
first Liberty loan, presented for conversion after June 15, 1918, into .)i per
cent gold bonds of 1932-47 of the first Liberty loan converted.
[For e x a m p l e as t o use of t a b l e see n o t e at end of t h i s interest table.]
Denominations.
Date.
$50
J u n e 16,1918..
17
18
19
20
21
22
23
24
25

$100

$0.

$0.00
.00
.01
.01
.01
.01
.01
.02
.02
.02
102
.02
.03
.03
.03
.03
.03
.04
.04
.04
.04
.05
.05
.05
.05
.05
.06
.06
.06
.06
• .06
.07
.07
.07
.07
.07

27...
28.29..
30..
J u l y 1..
2..
3..
4..
5..
6..
7..
8.9..
10..
11..
12..
13..
14..
15..
16..
17..
18..
19..
20..
21..
22..
23..
24..
25..
26..
27..
28.29-.
30.31-.
,Aug- • 1 . 2..
3..
4..
5..
6..
7..

.09
.09

9..
10.11..
12..
13..
14..
16..
16..
17-18-19-.
20..
21..
22..
23..
24-.
25-.
26-.
27-.
28..
29..
30.-

ai..



.08

.09
.09
.10
.10
.10
.10
.10
.11
.11
.11
.11
.11
.12
.12
.12
.12
.13
.13
.13
.13
.13
.14
.14
.14
.14
-.14
.15
.15
.15
.15
.15
.16
.16

$500
$0.01
.02
.03
.04
.05
.06
.07
.08
.09
.10
.11
.12
.13
.14
.15
.16
.17
.18
.19
.20
.22
.23
.24
.25
.26
.27
.28
.29
.30
.31
.32
.33
,34
.35
.36
.37
.38
.3.9
.40
.41
.42
.43
.44
.45
.46
.47
.48
.49
.50
.51
.52
.53
.54
.55
.56
.57
.58
.59
.60
.61
.62
.64
.65
.66
.67

.70
.71
.72
.73
.74
.75
.76
.77
.78
.79

$1,000 .
$0.02
.04
.06
.08
.10
.12
.14
.16
• :i8
.20
.23
.25'
.27
.29
.31
.33
.35
.37
.39
.41
.43
.45
.47
• .49
.51
.53
^ .55
.57
.59
.61
.64

1.00
1.02
1.05
1.07
1.09
1.11
1.13
1.15,
1.17'
1.19
1.21
1.23
1.25
1.27
L29
L31
1.33
1.35
1.37
1.39
L41
1.43
1.45
L48
L50
1.52
1.54
1.56
1.58

$5,000
$0.10
.20
.31
.41
.51
.61
.72
• .82
.92
1.02
1.13
1.23
1.33
1.43
1.54
1.64
1.74
1*84
1.95
2.05
2.15
2.25
2.36
2.46
2.56
2.66
2.77
2.87
2.97
3.07
3.18
3.28
3.38
3.48
3; 59
3.69
.3.79
3.89
4.00
4.10
4.20
4.30
4.41
4.51
4.61
4.71
4.82
4.92
5.02
5.12
5.23
5.33
5.43
6.53
5.64
5.74
5.84
5.94
6.05
6.15
6.25
6.35
6.45
6.56
6.66
6.76
6.86
6.97
7.07
7.17
7.27
7.38
7.48
7.58
7.68
7.79
7.89

$10,000
$0.20
.41
.61
.82
1.02
1.23
1.43
1.64
1.84
2.05
2.25
2.46
2.66
2.87
3.07
3.28
3.48
3.69
3.89
4.10
4.30
• 4.51
4.71
4.92
5.12
5.33
5.53
5.74
5.94
6.15
6.35
6.56
6.76
6.97
7.17
7.38
7.58
7.79
7.99
8.20
8.40
8.61
8.81
9.02
9.22
9.43
9.63
9.84
10.04
10.25
10.46
10.66
10.86
11.07
11.27
11.48
11.68
11.89
12.09
12.30
12.50
12.70
12.91
13.11
13.32
13.52
13.73
13.93
14.14
14.34
14.55
14.75
14.96
15.16
15.37
15.57
15.78

$50,000
$1.02
2.05
3.07
4.10
5.12
6.15
7.17
8.20
9.22
10.25
11.27
12.30
13.32
14.34
15.37
16.39
17.42
18.44
19.47
20.49
21.52
22.54
23.57
24.59
25.61
26.64
27.66
28.69
29.71
30.74
31.76
32.79
33.81
34.84
35.86
36.89
37.91
38.93
39.96
40.98
42.01
43.03
44.06
45.08
46.11
r 47.13
48.16
49.18
50.20
51.23
52.25
53.28
54.30
55.33
56.35
57.38
58.40
59.43
60.45
61.48
62.50
63.52
64.55
65.57
66.60
67.62
68.65
69.67
70.70
71.72
72.75
73.77
74.80
75.82
70.84
77.87
78.89

$100,000

273

SECEETABY OP T H E TBEASUBY.

INTEREST TABLE No. 4.—Amoimts r e q u i r e d to be paid to the United S t a t e s to

adjust interest upon conversions of 3^ per cent gold bonds, etc,—Continued.

/

Denominations.

Date.
$50
Sept. 1 1918 . . . .
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
'24
25
26
27
28
'
29
30
Oct. 1
2
, 3
• 4
5
6....
7
8
9
10
11
12...
13
14
15
16
17
18".
19
20
21
22...:
23
24
25
26
27
28.--29
30
•
31
Nov. 1
2
3
4
5
6
7
8
9

$0.08
.08
.08
.08
.08
.09
.09
.09
.09
.09
.09
.09
.09
.09
.09
.10
.10
.10
.10
.10
.10
.10
.10
.10
.10
.11
.11
.11
.11
.11
.11
.11
.11
.11
.11
.12
.12
.12
.12
.12
.12
.12
.12
.12
.13
.13
.13
.13
.13
..13
.13
.13
.13
.13
.14
.14
.14
.14
.14
.14
.14
.14
.14
.14
.15
.15
.15
.15
.15
.15

$100
$0.16
.16
.16
.17
.17
.17
.17
.17
.18
.18
.18
• .18
.18
.19
.19
.19
.19
.19
.20
.20
.20
.20
.20
.21
.21
.21
.21
.22
.'22
.22
.22
.22
.23
.23
.23
.23
.23
.24
.24
.24
.24
.24
.25
.25
.25
.25
.25
.26
.26
.26
.26
.26
.27
.27
.27
.27
.27
.28
.28
.28
.28
.28
.29
.29
.29
.29
.30
.30
.30
.30

$500
$0.80
.81
.82
.83
.84
.85
.86
.87
.88
.89
.90
.91
.92
.93
.94
.95
.96
.97
.98
.99
1.00
1.01
1.02
1.03
1.05
1.06
L07
1.08
L09
1.10
1.11
L12
1.13
L14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
L23
1.24
L25
1.26
1.27
1.28
1.29
1.30
1.31
L32
L33
1.34
1.35
1.36
1.37
1.38
•1.39
1.40
L41
1.42
1.43
1.44
1.45
1.47
1.48
L49
1.50
L51

$1,030 ,
$1.60
1.62
1.64
1.66
1.68
1.70
1.72
1.74
1.76
1.78
1.8Q
1.82
1.84
1.86
1.89
1.91
1.93
1.95
.1.97
1.99
2.01
. 2.03
2.05
2.07
2.09
2.11
2.13
2.15
2.17
2.19
2.21
2.23
2.25
2.27
2.30
2.32
2.34
2.36
2.38
2.40
2.42
2.44
2.46
2.48
2.50
2. .52
• 2.54
2.56
2.58
2.60
2.62
2.64
2.66
2.68
2.70
2.73
2.75
• 2.77
2.79
2.81
2.83
2.85
2.87
2.89
2.91
2.93
2.95
2.97
2.99
3.01

$5,000

$10,000

$7.99 • $15.98
16.19
8.09
16.39
8.20
16.60
8.30
16.80
8.40
' 17.01
8.50
17.21
8.61
17.42
8.71
17.62
8.81
17.83
8.91
18.03
9.02
18.24
9.12
18.44
9.22
18.65
9.32
18.85
9.43
19.06
9.53
19.26
9.63
19.47
9.73
19.67.
9.84
19.88
9.94
10.04 - 20.08
20.29
10.14
20.49
10.25
20.70
10.35
20.90
10.45
21.11
10.55
21.31
10.66
21.52
10.76
21.72
10.86
21.93
10.96
22.13
11.07
22.34
11.17
22.54
11.27
22.75
11.37
11.48 . 22.95
23.16
11.58
23.36
11.68
23.57
11.78
23.77
11.89
23.98
11.99
24.18
12.09
24.39
12.19
24.59
12.30
24.80
12.40
25.00
12.50
25.20
12.60
25.41
12.70
25.61
12.81
25.82
12.91 •
26.02
13.01
26.23
13.11
26.43
13.22
26.64
13.32
26.84
13.42
27.05
13.52
27.25
13.63
27.4613.73
27.66
•13.83
27.87
13.93
28.07
14.04
28.28
14.14
28. 48'
14.24
28.69
14.34
28.89
14.45
29.10
14.55
29.30
14.65
29.51
14.75
29.71
14.86
29.92
.14.96
30.12
15.06

$50,000
$79.92
80.94
81.97
82.99
84.02
85.04
86.07
87.09
88.11
89.14
90.16
91.19
92.21
93.24
94.26
95.29
96.31
97.34
98.36
99.39
100.41
101.43
102.46
103.48
104.51
105.53
106.56
107.58
108.61
109.63
110.66
111.68
112.70
113.73
114.75
115.78
116.80
117.83
118.85.
119.88
120.90
121.93
122.95
123.98
125.00
126.02
127.05
128.07
129.10
130.12
131.15
132.17
133.20
134.22
135.-25
136.27
137.30
138.32
139.34
140.37
141.39
142.42
143.44
144.47
145.49
146.52
147.54
148.57
149.59
150.61

$100,000
$159.84
161.89
163.93
165.98
168.03
170.08
172.13
174.18
176:23
178. 28
180.33
182.38
184. 43
186. 48
188.52
190.57
192.62
194.67
196.72
198.77
200.82
202.87
204.92
206.97
209.02
211.07
213.11
215.16
217.21
219.26
221.31
223.36
225.41
227.46
229.51
231.56
233.61
235.66
237.70
239.75
241.80
243.85
245.90
247.95
250.00
252.05
254.10
256.15
258.20
260.25
262.30
264.34
266.39
268.44
270.49
272.54
274.59
276.64
278.69
280.74
282.79
284 84
286.89
288.93
290.98
293. 03
295. 08
297.13
299.18
301.23

NOTE.—To ascertain the correct amount to adjust interest upon any given date, run down the date
column until the date is reached upon which the bon-Is to be converted will be actually surrendered at the
place of conversion, then run across the pageto the right until the figure under the denomination column of
the particular denomination of bonds to be converted is reached, and then multiply that figure by the
nuJTiber of bonds of that denomination to be converted. For example, to convert on July 9,191S, $10,000, .
face araount, of bonds, ofthe denomination of ?1,000 each, the amount required, as shown by the foregoing
interest table, to adjust interest upon a $1,000 bond being $0.49, that amount must be multiplied by 10,
and the result shows that a payment of $4.90 must be made to the United States to adjust interest upon
conversion of such bonds upon that date.

86429'—FI 1918



18

EXHIBIT 48.
[1918.

Department Circular No. 123.

Loans and Currency.]

C O N V E R S I O N OF U N I T E D S T A T E S F I R S T L I B E R T Y L O A N 3 ^ %
BONDS OF 1 9 3 2 - 1 9 4 7 .
^

TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, October 2If, 1918,
To holders of first Liberty loan 3 ^ % bonds of 1932-1947:
I. PRESENT CONVERSION PRIVILEGE.

In .consequence of the issue this day of a series of the United States
fourth Liberty loan 4^% bonds of 1933-1938, holders of first Liberty
loan 3^% bonds of 1932-1947 will, in accordance with the provisions
of this circular, be entitled to convert all or any.part of their bonds
into an equal face amount of first Liberty loan second converted
4 | % bonds of 1932-1947, hereinafter more particularly described.
II. DURATION OF PRESENT CONVERSION PRIVILEGE.

The conversion privilege thus arising upon the issue of fourth Liberty loan 4:1% bonds of 1933-1938 must be exercised, if at all, within
the period of six months beginning October 24, 1918, the date of
issue of such bonds^ and ending April 24, 1919, both dates inclusive.
III. GENERAL PROVISIONS GOVERNING CONVERSIONS.

Conversions in the exercise of the present conversion privilege
may be effected by presentation and surrender of first Liberty loan
3-|% bonds of 1932-1947 to the respective Federal reserve banks in
Boston, New York, Philadelphia, Cleveland, Eichmond, Atlanta,
Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco, or to the Secretary of the Treasury, Division of Loans and
Currency, Washington. All first Liberty loan 3^% borids of 19321947 in coupon form surrendered for conversion must have coupon
maturing June 15,1919, and subsequent coupons attached.
Such bonds so presented and surrendered for conversion must be
accompanied by "Eequest for conversion," in the form prescribed
by the Secretary of the Treasury (Form L & C 107, printed at page 6
of this circular, copies of which may be obtained from any Federal
reserve bank or from the Secretary of the Treasury), signed with the .
respective autograph signatures of the holders of the bonds presented
for conversion.
Coupon bonds will be delivered upon conversion of coupon bonds,
unless written request, on the form appearing (Form I I I ) upon the
274




SECRETARY OF THE TREASURY.

275

back of the request for conversion, for delivery of riegistered bonds
be submitted with request for conversion, in which case registered
bonds will be delivered. Eegistered bonds presented for conversion
must be duly assigTied to " The Secretary of the Treasury for conversion " on the form appearing on the backs of registered bonds; such
assignments, however, need not be witnessed, unless, as provided
below, delivery is requested, either of coupon bonds or of registered
bonds inscribed in a name other than that of the registered owner
of the registered bonds surrendered for conversion, in either of which
cases assignments of registered bonds surrendered for conversion
must be witnessed, as provided in Treasury Department regulations.
Upon conversion of such registered bonds, registered bonds inscribed
in the^ respective names of the registered owners of the bonds surrendered for conversion will be delivered, unless either (1) written
request on the form appearing (Form I V ) upon the back of the
request for conversion for delivery of coupon bonds be submitted with
request for conversion, in which case coupon bonds will be delivered,
or (2) the registered bonds surrendered for conversion have been duly
assigned by the registered owner (such assignment being duly witnessed as prescribed by Treasury Department regTilations) to an
assignee who shall in turn have assigned such bonds to " The Secretary of the Treasury for conversion," in which case registered bonds
inscribed in the name of such first assignee will be delivered. Transfer books for registered first Liberty loan 3 ^ % bonds of 1932-1947 will
be closed from November 16 to December 15, 1918, both dates inclusive, and during such period no transfer of ownership in respect
of such bonds will be permitted and the respective registered owners
of record on November 15,1918, oi such bonds, though such bonds are
surrendered for conversion during such period, will be entitled to
receive on December 15, 1918, checks for interest due on that date.
Bonds will be delivered in like denominations as the bonds upon conversion of which they are respectively issued, unless written request,
on the form appearing (Form V) upon the back of the request for
conversion, for delivery in other denominations be submitted with
request for conversion.
No deliveries of first Liberty loan second converted 4 1 % bonds of
1932-19^7 will be made before December 16,1918, or before such later
date as may be deterrruined by the Secretary of the Treasury. In respect of any bonds surrendered for conversion before such date, or
before such later date, as the case may be, the Federal reserve banks
will issue appropriate certificates as receipts therefor. Such certificates will be inscribed in the respective names signed to the respective
requests for conversion accompanying the bonds so surrendered.
Such certificates upon surrender thereof to the Federal reserve banks
which executed them, respectively, will entitle the persons whose
names are inscribed thereon to delivery, after December 15, 1918, or
after such later date, as the case may be, of first Liberty loan second
converted 4J% bonds of 1932-1947. '
Transfers and exchanges of registered first Liberty loan second
converted 4J % bonds of 1932-1947 will not be made before January
1, 1919, or such later date as may hereafter be determined by the
Secretary of. the Treasury.
First Liberty loan second converted 4 | % bonds of 1932-1947,
iri coupon for^l, will have four interest coupons attached covering



276

REPORT ON T H E FINANCES.

semiannual interest payments, due June 15, 1919, and up to and including December 15, 1920. On and after December 15, 1920, the
respective holders of such bonds should surrender the same and obtain a new bond or bonds having coupons attached thereto covering
semiannual interest payments up to and including the date of
inaturity of such bonds.
Transportation charges upon bonds presented for conversion must
be paid by the holders. Coupon bonds to be delivered upon conversions will, after December 15, 1918, or such later date as may be determined as provided above, either be delivered directly to the holders of the bonds surrendered for conversion at the time of such
surrender or, in the absence of other written instructions and remittances to cover expenses, will be expressed at the owners' risk and
expense. Eegistered bonds to be delivered upon conversions will,
after December 15, 1918, or such later date as may be determined as
provideci above, be mailed.
As the cost of transportation of coupon bonds by express is greater
than by registered mail insured, holders of coupon bonds desiring to
present them for conversion are advised to consult with their own
banks or trust companies, for arrangements may be made as between
Federal reserve banks and incorporated banks and trust companies,
for transportation to and from Federal reserve banks by registered
mail insured of the bonds to be converted and of the bonds to be
issued upon conversions, the charges in each case to be paid by the
respective holders and to be remitted by the incorporated banks and
trust companies to the Federal reserve banks. Information concerning any such arrangements will be furnished by Federal reserve
banks to incorporated banks and trust companies.
IV. A D J U S T M E N T S OF I N T E R E S T U P O N CONVERSIONS OF F I R S T LIBERTY LOAN
3 ^ % (COUPON OR REGISTERED) BONDS OF 1 9 3 2 - 1 9 4 7 .

Inconvenience resulting from awkward adjustments of interest,
both to the United States and to bondholders will be avoided if such
bondholders as desire to convert their bonds effect conversions as of
Deceniber 15, 1918. As the amounts involved in exact adjustments
of interest upon conversions of first Liberty loan 3^% bonds of 19321947 presented for conversion before December 15, 1918, in many
instances will be insufficient to compensate for the inconvenience
connected therewith, such adjustments will not be made unless
requested on the form provided for that purpose (Form I ) upon the
request for conversion, as provided below, and except in such cases
all first Liberty loan 3^% bonds of 1932-1947 presented and surrendered for conversion before December 15, 1918, shall be deemed
to have been surrendered for conversion as of December 15, 1918.
Payments to the United States to adjust interest loill be required on
conversion of all first Liberty loan 3 ^ % bonds of 1932-1947 presented
for conversion after December 15, 1918.
. '

A. CONVERSIONS AS OF DECEMBER 1 5 , 1 9 1 8 .

To effect conversions as of December 15, 1918, first Liberty loan
3^% bonds of 1932-1947 must be presented and surrendered for conversion, as provided above, on or after October 24, 1918, but before



SECRETARY OF THE TREASURY.

277

December 15, 1918. Holders of coupon bonds surrendered for con• version as of December 15, 1918, should detach and cash when due
coupon maturing December 15, 1918.
B. CONVERSIONS ON OR AFTER OCTOBER 2 4 , 1 9 1 8 , BUT BEFORE DECEMBER
W I T H EXACT A D J U S T M E N T OF I N T E R E S T .

15,

1918,"

To effect conversions of first Liberty loan 2>\% bonds of 1932-1947
surrendered for. conversion on or after October 24, 1918, but before
Deceniber 15, 1918, with exact adjustment of interest as of the respective dates upon which such bonds may be so surrendered, holders
thereof must present and surrender such bonds, as provided above,
and must properly fill in and sign the form of request for exact
adjustment of interest (Form I ) appearing upon the back of the
request for conversion, and in such cases, but not otherwise, such
holders will receive as soon as such payment can conveniently be
made, check covering the difference between interest upon such bonds
at the rate of 3-| per cent per annum and interest thereon at the rate
of 4J per cent per annum from the respective dates upon which such
bonds shall have been surrendered for conveision to December 15,
1918, in accordance with Interest Table No. 1, printed at page 8 of
this circular. Holders of coupon bonds surrendered for conversion
on or before December 15, 1918, should detach and cash when due
coupon maturing December 15, 1918.
C. CONVERSIONS AFTER DECEMBER 1 5 , 1 9 1 8 , BUT NOT AFTER APRIL 2 4 , 1 9 1 9 ,
P A Y M E N T S TO T H E U N I T E D STATES REQUIRED TO A D J U S T I N T E R E S T .

WITH

To effect conversions after December 15, 1918, but not after April
24,1919, first Liberty loan 3^% bonds of 1932-1947 must be presented
and surrendered for conversion, as provided above, and the holders
thereof must pay to the United States, in the manner provided in
Subdivision V of this circular, the difference between interest upon
such bonds at the rate of 3^ per cent per annum and interest thereon
at the rate of 4:J per cent per annum from December 15, 1918, to the
respective dates upon which such bonds shall have been surrendered
for conversion, in accordance with interest table No. 2, printed on
page 9 of this circular.
Payments required to be made to the United States, as provided in
this circular, to cover adjustments of interest upon first Liberty loan
3:|% bonds of 1932-1947 surrendered for conversion after December
15, 1918, are necessary to reimburse the United States for unearned
interest which will be received, either upon the collection of coupons
or registered interest, by holders of bonds issued upon conversion
upon the next interest date after conversion is effected, for the period
prior to the respective dates of conversion. For example, if first
Liberty loan 3^% bonds of 1932-1947 should be converted on January
15, 1919, holders of the bonds issued upon conversion thereof would,
on June 15, 1919, be entitled to interest at the rate of only 3 | per cent
per annum from December 15, 1918, to January 15, 1919, though at
the rate of 4 | per cent per annum from January 15 to June 15, 1919.
But as such holders will have received first Liberty loan second converted 4 | % bonds of 1932-1947, bearing interest at the rate of 4J per
cent per annum from December 15, 1918, to June 15, 1919, payment




278

REPORT ON THE FINANCES.

must be made to the United States covering the difference between
interest at the rate of 3^ per cent per annum, which is all such holders
are entitled to for the period from December 15,1918, to January 15,
1919, and interest at the rate of 4^ per cent per annum for such period,
which such holders will receive upon the collection of coupons or registered interest due June 15, 1919.
V. METHOD OF MAKING PAYMENTS TO ADJUST INTEREST WHENEVER
REQUIRED.

All payments to the United States required as provided in this circular must be made in cash or by post office or express money order,
bank draft, or certified check collectible without exchange at the
place where conversion is to be effected, and payable, if conversion
is to be effected at the Treasury Department, in Washington, to the
I order of " Treasurer of the United States third conversion account,"
or, if conversion is to be effected at a Federal reserve bank, payable
to "Federal reserve bank of
.
(Here insert name of dty in which bank is located.)

third conversion account." No other forms of payment will be accepted. Such payments must be sufficient to cover interest up to the
date when such payments will actually be received at the place where
conversion is to be effected.
VI. RECURRENT CONVERSION PRIVILEGE OF FIRST LIBERTY LOAN 3^ PER
CENT BONDS OF 1 9 3 2 - 1 9 4 7 .

Holders of first Liberty loan 3^% bonds of 1932-1947, who do not
present and surrender the same for conversion, in accordance with
the provisions of this circular, on or before April 24, 1919, will lose
once for all the conversion privilege arising as a consequence of the
issue of fourth Liberty loan 4^% bonds of 1933-1938, or of the issue
of any additional bonds of the same series. If, however, any subsequent series of bonds (not including United States certificates of indebtedness and other short-term obligations) shall be issued by the
United States at a higher rate of interest than 3^ per cent per annum
before the termination of the war between the United States and the
Imperial German Government (the date of such termination to be
fixed by a proclamation of the President of the United States), the
holders of any unconverted first Liberty loan 3 i % bonds of 19321947, shall have the privilege, at any time within six months after
the issue of bonds of such subsequent series (the date of such issue
to be fixed by prior public announcement by the Secretary of the
Treasury) of converting their bonds at par—upon presentation and
surrender thereof with all unmatured coupons, at the Treasury Department, Washington, or at such other agencies as the Secretary of
the Treasury may designate for the purpose, and upon adjustment
of accrued interest to the date of conversion^—into an equal par
amount of bonds bearing such higher rate of interest, and substantially identical with the bonds of such subsequent series, except that
the bonds to be issued upon such conversion shall be identical with
first Liberty loan 3^% bonds of 1932-1947 as to maturity of principal and of interest, and terms of redemption.




SECRETARY OF THE TREASURY.

279

VII. DESCRIPTION OF FIRST LIBERTY LOAN SECOND CONVERTED 4 i PER
C E N T BONDS OF 1 9 3 2 - 1 9 4 7 , DATED OCTOBER 2 4 , 1 9 1 8 , TO BE ISSUED
U P O N CONVERSIONS OF FIRST LIBERTY LOAN 3 i PER C E N T BONDS OF
1932-1947.

Bearer bonds with interest coupons attached will be issued in
denominations of $50, $100, $500, $1,000, $5,000, and $10,000. Bonds
registered as to principal and interest will be issued in denominations of $50, $100, $500, $1,000, $5,000, $10,000, $50,000, and $100,000. Provision will be made for the interchange of bonds of different denominations and of coupon and registered bonds and for
the transfer of registered bonds, without charge by the United States,
and under rules and regulations prescribed by the Secretary of the
Treasury.
The bonds will be dated October 24, 1918, and will bear interest at
the rate of four and one-quarter per cent per annum, but only from
December 15, 1918, payable semiannually on June 15 and December
15. The bonds will mature June 15, 1947, but the issue may be redeemed on or after June 15, 1932, in whole or in part, at par and
accrued interest, on three months' published notice, on any interest
day; in case of partial redemption the bonds to be redeemed to be
determined by lot by such method as may be prescribed by the Secretary of the Treasury. The principal and interest of the bonds are
payable in United States gold coin of the present standard of value.
The bonds will be receivable as security for deposits of public money,
but will not bear the circulation privilege.
The bonds shall be exempt, both as to principal and interest, from
all taxation now or hereafter imposed by the United States, any State,
or any of the possessions of the United States, or by any local taxing
authority, except {a) estate or inheritance taxes and (6) graduated
additional income taxes, commonly known as surtaxes, and excessprofits and war-profits taxes, now or hereafter imposed by the United
States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and
certificates authorized by an act of Congress approved September 24,
1917. and amendments thereto, the principal of which does not exceed
in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for
in clause (5) above.
I n addition to the. foregoing exemptions, until the expiration of
two years after the date of the termination of the war between the
United States and the Imperial German Government, as fixed by
proclamation of the President, the interest on an amount of bonds
of this issue, the principal of which does not exceed $30,000, owned
by any individual, partnership, association, or corporation, shall be
exempt from graduated additional income taxes, commonly known
as surtaxes, and excess-profits and war-profits taxes, now or hereafter
imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations.
The bonds of this issue are not entitled to any privilege of conversion into bonds bearing a higher rate of interest.
Any of the bonds which have been otvned by any person continuously for at least six months prior to the date of his death, and which
upon such date constitute part of his estate, shall, under rules and
regulations prescribed by the Secretary of the Treasury, be receivable



SSO

REPORT ON T H E FINANCES.

by the United States at par and accrued interest in payment of any
estate or inheritance taxes imposed by the United States, under or by
virtue of any present or future law, upon such estate or the inheritance
thereof.
The Secretary of the Treasury is authorized, from time to time,
until the expiration of one 3^ear after the termination of the war, to
purchase bonds of this issue at such prices and upon such terms and
conditions as he may prescribe. The par amount of bonds of this
issue which may be purchased in the 12 months' period beginning on
the date of issue shall not exceed one-twentieth of the par amount of
such bonds originally issued, and in each 12 months' period thereafter
shali not exceed one-twentieth of the amount of the bonds of such
issue outstanding at the beginning of such 12 months' period. The
average cost of the bonds of this issue purchased in any such 12
months' period shall not exceed par and accrued interest.
W. G. MCADOO,

Secretary of the Treasury.
[Treasury Department, Loans and Currency.

Form L and C 107.]

R E Q U E S T F O R C O N V E R S I O N OF F I R S T L I B E R T Y LOAN 3 i % BONDS
OF 1 9 3 2 - 1 9 4 7 .
(Conversion privilege arising October 24, 1918.)
Dated
To THE SECRETARY OF T H E TREASURY.

, 191—;
j

The undersigned herewith presents and surrenders $
, face amount,'of
first Liberty loan 3i% bonds of 1932-1947 i^ I ^^^^.^^^^ j form, and requests
that the same be converted into an equal face amount of first Liberty loan second
converted 4^% bonds of 1932-1947, dated October 24, 1918, according'to the
terms of Treasury Department Circular No. 123, dated October 24, 1918. Special
instructions, if any, are given by the undersigned on the back hereof.
Autograph signature of holder in full
.
2
,
Address, number and street
(For delivery of bonds.)

City or town
,
County
State
(1) If first Liberty loan 3i% bonds of 1932-1947 are surrendered for conversion before December 15, 1918, unless exact adjustment of interest is requested,
the execution of the above form is all that is required. If, however, exact adjustment of interest is requested, the form of request for such adjustment appearing on the back hereof must be-executed (Form I ) .
(2) If first Liberty loan 3^% bonds of 1932-1947 are surrendered for conversion after December 15, 1918, payment must be made to the United States of
the amounts required to adjust interest. The form covering remittance appearing on the back hereof must be used (Form I I ) .
(3) Payments whenever required to adjust interest must be sufficient to cover
such interest up to the date when such paj^ments will be actually received at
the place of conversion. Such payments must be made in cash, or by post office
or express money order, bank draft, or certified check collectible without exchange at the place where conversion is to be effected, and payable, if conversion
is to be effected at the Treasury Department in Washington, to the order of
" Treasurer of the United States third conversion- account," or, if conversion
is to be effected at a Federal reserve bank, payable to " Federal Reserve Bank
of
^
third coaversion account." No other forms
(Here insert name of city in which bank is located.)

of payment will be accepted.
(4) All registered bonds surrendered for conversion must be assigned to
* The Secretary of the Treasury for conversion."
*
(5) Registered bonds will be issued upon conversion of coupon bonds if the
form of request for registered bonds appearing on the back hereof is duly executed (Form I I I ) .



281

SECRETARY OF THE TREASURY.

(6) Coupon bonds will be issued upon conversion of registered bonds if the.
form or request for registered bonds appearing on the back hereof is duly executed (Form IV).
(7) Registered bonds will be issued in a name other than that in which the
registered bonds surrendered for conversion are inscribed only if the bonds surrendered are duly assigned by the registered owner to an assignee who in turn
assigns such bonds to " The Secretary of the Treasury for conversion," and duly
executes the above form.
Form I. If bonds are presented for conversion before December 15, 1918, and
exact adjustment of interest is desired use this form:
Referring to $
, face a.mount, of bonds surrendered herewith for conversion, the undersigned hereby requests that exact adjustment of interest be
made in respect thereof, computed to December 15, 1918, from the date of
receipt hereof, either by a F'ederal reserve bank or by the Secretai^y of the
Treasury.
Signature of person signing request for conversion
Form IL If bonds are presented for conversion after December 15, 1918, this
form must be used in remitting to adjust interest:
Referring to $
, face amount, of bonds surrendered for conversion herewith, the undersigned herewith incloses $
, being amount necessary to
adjust interest thereon from December 15, 1918, to _
, 191__, in accordance
w^ith interest table No. 2, appearing in Treasury Department Circular No. 123,
dated October 24, 1918.
Signature of person signing request for conversion
Form III. If registered bonds are desired upon conversion of coupon bonds
use this form:
Referring to $
, face amount, of coupon bonds surrendered for conversion herewith, the undersigned/ hereby requests the issue of registered bonds
inscribed in the name of
(Mr., Mrs., or Miss.)

( F i r s t name in full.)

(Middle n a m e . o r initial.)

(Last name.)

Address for interest checks
(Give full address.)

(Number.)
• (City.)

(Street.)
(State.)

Signature of person signing request for conversion
Form IV. If coupon bonds are desired upon . conversion of registered bonds
use this form:
Referring to $
, face amount, of registered, bonds surrendered for conversion herewith, such bonds being duly assigned to "The Secretary of the
Treasury for conversion," the undersigned hereby requests the issue of coupon
bonds.
Signature of person signing request for conversion
^_-.^___
Form V. If delivery is desired of bonds in a different denomination or denominations from the bond or bonds surrendered use this form:
Referring to $
,^ face amount, of bonds surrendered for conversion
herewith, the undersigned hereby requests delivery of bonds upon conversion as
follows:
Number of bonds. Denominations.

Total.

$50
$100
$500
$1,000
$5,000
$10,000
2$50,000
2$100,000

1 Total. $
J These amounts must be the same, otherwise request may be disregarded.
2 Coupon bonds are not issued in these denominations.

Signature of person signing request for conversion



i..

^

282

KEPORT ON THE FINANCES.

INTEREST TABLE No. 1.—Amounts payable by the United States to adjust interest upon conversions of flrst Liberty loan 3^ per cent bonds of 1932-194'^^
presented for conversion before Dec. 15^ 1918, into flrst Liberty loan second
converted 4i per cent bonds of 1932-1947, dated Oct. 24, 1918.
(For example a 5 to use of table see note at end of this interest table.]

.'
^•

$50

6

Denominations.

Date.

Oct. 24,1918
25
26 /^
27 ^
28
29
30
31
Nov
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
. 16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Dec
1
2
3
4
5..
6
7
8
9
10
11
12
13
14

. . .

. . .

$0.05
.05
.05
.05
.05
.05
.05
.05
.05
.04
.04
.04
.04
.04
.04
.04
.04
.04
.03
.03
.03
.03
"
.03
.03
.03
.03
.03
.03
.02
.02
.02
.02
.02
.02
.02
.02
• .02
.02
.01
.01
.'01
.01
.01
.01
.01
.01
.01
.01
.00
.00
.00
.00

$100
$0.11
.10
.10
.10
.10
.10
.09
.09
.09
.09
.09
.08
.08
.08
.08
.08
.07
.07
.07
.07
.07
.06
.06
.06
.06
.06
.05
.05
.05
.05
.05
.04
.04
.04
.04
.03
.03
.03
.03
.03
.02
.02
.02
.02
. .02
.01
.01
.01
.01
.01
.00
.00

$500
$0.53
.62
.51
.50
.49

Us
.47
.46
.45
.44
.43
.42
.41
.40
.39
.38
.37
.36
.35
.34
.33
.32
.31
.30
.29
.28
.27
.26
.25
.24
.23
.22
.20
.19
.18
.17
.16
.15
.14
.13
.12
.11
.10
.09
.08
.07
.06
.05
.04
.03
.02
.01

$1,000
$1.07
1.05
1.02
1.00
.98
.96
.94
.92
.90
.88
.86
.84
.82
.80
.78
.76
.74
.72
.70
.68
.66
.64
.61
.59
.57
.55
.53
.51
.49
.47
.45
.43
.41
.39
.37
.35
.33
.31
.29
.27
.25
.23
.20
.18
.16
.14
.12
.10
.08
.06
.04
.02

$5,000
$5.33
5.23
5.12
5.02
4.92
4.82
4.71
4.61
4.51
4.41
4.30
4.20
4.10
4.00
3.89
3.79
3.69
3.59
3.48
3.38
3.28
3.18
3.07
2.97
2.87
2.77
2.66
2.56
2.46
2.36
2.25
2.15
2.05
1.95
1.84
1.74
1.64
l.,54
1.43
1.33
1.23
1.13
1.02
.92
.82
.72
.61
.51
.41
.31
.20
.10

$10,000
$10.66
10.45
10.25
10.04
9.84
9.63
9.43
9.22
9.02
8.81
•
8.61
8.40
8.20
7.99
7.79
7.58
7.38
7.17
6.97
6.76
6.56
6.35
6.15
5.94
5.74
5.53
5.33"
5.12
4.92
4.71
4.51
4.30
4.10
3.89
3.69
3.48
3.28
3.07
2.87
2.66
2.46
2.25
2.05
1.84
1.64
1.43
1.23
1.02
.82
.61
.41
.20

$50,000
$53.28
52.25
51.23
50.20
49.18
48.16
47.13
46.11
45.08
44.06
43.03
42.01
40.98
39.96
38.93
37.91
36.89
35.86
34.84
33.81
32.79
31.76
30.74
29.71
28.69
27.66
26.64
25.61
24.59
23.57
22.54
21.52
20.49
19.47
18.44
17.42
16.39
15.37
14.34
13.32
12.30
11.27
10.25
9.22
8.20
.7.17
6.15
5.12
4.10
3.07
2.05
1.02

$1000,00
$106.5^
104.51
102.46
100.41
98.38
96.31
94.26
92.21
90.16
88.11
86.07
84.02
81.97
79.92
77.87
75.82
73.77
71.72
69.67
67.62
65.57
63.52
61.48
59.43
57. 38
55.33
53.28
51.23
49.18
47.13
45.08
43.03
40.98
38.93
• 36.89
34.84
32.79
30.74
28.69
26.64
" 24.59
22.54
20.49
18.44
16.39
14.34
12.30
10.25
8.20
6.15
4.10
2.05

NOTE.—To ascertain the correct amount to adjust interest upon any given date, run down the date column until the date is reached upcn which the bonds to be converted will be actually surrendered at the place
of conversion, then run across tiie page to the right until the figure under the denomination column of
the particular denomination of bonds to be converted is reached, and then multiply that figure by the
numoer of bonds of that denomination to be converted. For example, to convert on November 12, 1918,
$10,000, face amount of bonds, of the denomination of $1,000 each, the amount to be paid by the United
States, in case an exact adjustment of interest be requested, as shown by the foregomg interest table, to
adjust!nterest upon a $1,000 bond, being $0.68, that amount must be multiplied by 10, and the result shows
that a payment of $6.80 would have to be made by the United States to adjust interest upon conversion
of such bonds upon that date.




283

SECBETAEY OP THE TREASURY.

INTEREST TABLE No. 2.—Amounts required to be paid to the United States to
adjust interest upon conversions of flrst Liberty loan,.3^% bonds of 1932-1947
presented for conversion after D'ecember 15, 1918, into first Liberty loan second converted 41% bonds of 1932-1947, dated October 24, 1918.
[For example as to use of table see note at end of this interest table.]
Denominations.
Date.
$50
Dec. 16,1918
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Jan.
1,1919
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
' 23
24
25
26
27
28.....
29
30
31:
Feb. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15:
16
17
18
19
20
21
22
23
24 .
25
26
27
28

...:..

•:...-..

.. ..

$0.00
.00
.00
.00
.01
.01
.01
.01
.01
.01
.01
.01
:01
.01
.02
.02
.02
.02
.02
.02
.02
.02
.02
.03
.03
.03
.03
.03
.03
.03
.03
.03
.03
.04
.04
.04
.04
.04
.04
.04
.04
.04
.04
.05
.05
.05
.05
.05
.05
.05
.05
.05
.05
.06
.06
.06
.06
.06
.06
.06
.06
.06
.06
.07
.07
.07
.07
.07
.07
.07
.07
.07
.08
-.08
.08




$100
$0.00
.00
.01
.01
.01
.01
.01
.02
.02
.02
.02
.03
.03
.03
.03
.03
.04
.04
.04
.04
.04
.05
.05
.05
.05
.05
.06
.06
.06
.06
.06
.07
.07
.07
.07
.07
.08
.08
i.08.
.08
.08
.09
.09
.09
.09
.09
.10
.10
.10
.10
.11
.11
.11
.11
.11
.12
.12
.12
.12
.12
.13
.13
.13
.13
.13
.14
.14
.14
.14
.14
.15
.15
.15
.16
.16

$500
$0.01
.02
.03
.04
.05
.06
.07
.08
.09
.10
.11
.12
.13
.14
.15
.16
.18
.19
.20
.21
.22
.23
.24
.25
.26
.27
.28
.29
.30
.31
.32
.33
.34
.35
.36
.37
.38
.39
.40
.41
.42
.43
.44
.45
.46
.47
.48
.49
.50
.52
.53
.54
.55
.56
.57
.58
.59
.60
.61
.62
.63
.64
.65
.66
.67
.68
.69
.70
.71
.72
.73
.74
.75
.76
.77

$5,000

$1,000
$0.02
.04
.06
.08
.10
.12
.14
.16
.19
.21
.23
.25
.27
.29
.31
.33
.35
.37
.39
.41
.43
.45
.47
.49
.52
.54
.56
.58
.60
.62
.64
.66
.68
.70
.72
.74
.76
.78
.80
.82
.84
.87
.89
.91
.93
.95
.97
.99
1.01
1.03
1.05
1.07
1.09
Lll
1.13
1.15
1.17
1.20
1.22
1.24
1.26
1.28
1.30
L32
L34
L36
L38
L40
L42
1.44
L46
L48
L50
1.52
1.55

'

$0.10
.21
.31
.41
.52
.62
.72
.82
.93
1.03
1.13
1.24
1.34
1.44
1.55
1.65
1.75
1.85
1.96
2.06
2.16
2.27
2.37
2.47
2.58
2.68
2.78
2.88
2.99
3.09
3.19
3.30
3.40
3.50
3.61
3.71
3.81
3.92
4.02
4.12
4.22
4.33
4.43
4.53
4.64
4.74
4.84
4.95
5.05
5.15
5.25
5.36
5.46
5.56
5.67
5.77
5.87
6.98
6.08
6.18
6.28
6.39
6.49
6.59
6.70
6.80
^6.90
7.01
7.11
7.21
7.31
7.42
7.52
7.62
7.73

$10,000
$0.21
.41
.62
.82
1.03
1.24
1.44
1.65
1.85
2.06
2.27
2.47
2.68
2.88
3.09
3.30
3.50
3.71
3.92
4.12
4.33
4.53
4.74
4.94
5.15
5.36
5.56
6.77
6.98
6.18
6.39
6.59
6.80
7.01
7.21
7.42
7.62
7.83
8.04
8.24
8.45
8.66
8.86
9.07
9.27
9.48
9.68
9.89
10.10
10.30
10.61
10.71
10.92
n.i3
11.33
11.54
11.74
11.95
12.16
12.36
12.57
12.78
12.98
13.19
13.39
13.60
13.80
14.01
14.22
14.42
• 14.63
14.84
15.04
16.25
'15.46

$50,000
$1.03
2.06
3.09
4.12
5.15
6.18
7.21
8.24
9.27
10.30
11.33
12.36
13.39
14.42
15.45
16.48
17.51
' 18.54
19.57
20.60
21.63
22.66
23.70
24.73
25.76
26.79
27.82
28.85
29.88
30.91
31.94
32.97
34.00.
35.03
36.06
37.09
38.12
39.15
40.18
41.21
42.24
43.27
44.30
45.33
46.36
47.39
48.42
49.45
50.48
61.51
62.64
63.67
64.60
55.63
56.66
57.69
68.72
59.76
60.78
61.81
62.84
63.87
64.90
66.93
66.96
67.99
69.02
70.06
7L09
72.12
73.16
74.18
75.21
76.24
77.27

$100,000
$2.06
4.12
6.18
8.24
10.30
12.36
14.42
16.48
18.54
20.60
22.66
24.73
26.79
28.85
30.91
32.97
35.03
37.09
39.15
41.21
43.27
45.33
47.39
49.45
51.51
53.67
65.63
67.69
69.75
61.81
63.87
65.93
67.99
70.05
72.12
74.18
76.24
78.30
80.36
82.42
84.48
86.64
88.60
90.66
92.72
94; 78
' 96.84
98.90
• 100.96
• 103.02
105.08
107.14
109.20
111.26
113.32
115.38
117.45
119.51
121.67
123.63
125.69
127.75
129;81
131.87
133.93
135.99
138.05
140.11
142.17
144 23
146 29
148.35
160 41
152.47
154.63

284

REPORT ON THE FINANCES.

INTEREST TABLE No. 2.—Amounts required to be paid to the United States to
adjust interest upon conversions of flrst Liberty loan 3^ % bonds, etc.—Con.
Denominations.
Date.
$50
Mar.

1, 1919
2
3
4
5
6
7
8
9
10
11
12......
13
14
15......
16.
17
18
19
20
21
22.
23.
24
26.
26
27
28
29......
30
31
Apr. 1
2
3
4
5
6
7
8.:....
9......
10
11......
12
13
14
15
16
17
18......
19
20
' 21
22.,
23......
24

$0.08
.08

$100
$0.16
.16
.16
.16
.16
.17
.17
.17
.17
.18
.18
.18
.18
.18
.19
.19
.19
.19
.19
.20
.20
.20
.20
.20
.21
.21
.21
.21
.21
.22
.22
.22
.22
.22
.23
.23
.23
.23
.23
.24
.24
.24
.24
.25
.26
..26
.25
.25

.26
.27
.27

$500
$0.78
.79
.80
.81
.82
.83
.84
.86
.87
.90
.91
.92
.93
.94
.95
.96
.97
.98
.99
1.00
1.01
1.02
1.03
1.04
1.05
1.06
1.07
1.08
1.09
1.10
a.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.20
1.21
1.22
1.23
1.24
1.25
1.26
1.27
1.28
1.29
1.30
1.31
1.32
1.33
L34

$1,000
$1.67
1.59
1.61
1.63
1.65
1.67
1.69
1.71
1.73
1.76
1.77
1.79
1.81
1.83
1.86
1.88
1.90
. 1.92
1.94
1.96
1.98
2.00
2.02
2.04
2.06
2.08
2.10
2.12
2.14
2.16
2.18
2.20
2.23
2.25
2.27
2.29
2.31
2.33
2.35
2.37
2.39
2.41
2.43
2.45
2.47
2.49
2.51
2.63
2.55
2.58
2.60
2.62
2.64
2.66
2.68

$5,000
$7.83
7.93
8.04
8.14
8.24
8.34
8.45
8.55
8.66
8.76
8.86
8.96
9.07
9.17
9.27
9.38
9.48
9.58
9.68
9.79
9.89
9.99
lO.lO
10.20
10.30
10.41
10.61
10.61
10.71
10.82
10.92
11.02
11.13
11.23
11.33
11.44
11.64
11.64
n.74
n.85
11.95
12.05
12.16
12.26
12.36
12.47
12.57
12.67
12.77
12.88
12.98
13.08
13.19
13.29
13.39

$10,000

$50,000

$16; 66
16.87
16.07
16.28
16.48
16.69
16.90
17.10
17.31
17.51
17.72
17.93
18.13
18.34
18.54
18.76
18.96
19.16
19.37
19.57
19.78
19.99
20.19
20.40
20.60
20.81
21.02
21.22
21.43
21.63
21.84
22.05
22.25
22.46
22.66
22.87
23.08
23.28
23.49
- 23.70
23.90
24.11
24.31
24.62
24.73
24.93
26.14
26.34
25.56
25.76
25.96
26.17
26.37
26.68
26.79

$78.30
79.33
80.36
8L39
82.42
83.45
84.48
85.61
86.54
87.67
88.60
89.63
90.66
91.69
92.72
93.76
94.78
95:81
96.84
97.87
98.90
99.93
100:96
101.99
103.02
104.05
105.08
106.11
107.14
108.17
109.20
' 110.23
111.26
112.29
113.32
114.35
115.38
116.41
117.45
118.48
119.51
120.54
121.57
122.60
123.63
124.66
125.69
126.72
127.75
128.78
129.81
130.84
131.87
132.90
133.93

$100,000
$156.59
158.65
160.71
162.77
164.84
166.90
168.96
171.02
173.08
175.14
177.20
179.26
181.32
183.38
185.44
187.60
189.66
191.62
193.68
195. 74
197.80
199.86
201.92
203.98
206.04
208.10
210.16
212.23
214.29
216.36
218.41
220.47
222.53
224.59
226.66
228. 71
230.77
232.83
234.89
236.95
239.01
241.07
243.13
245.19
247.26
249.31
251.37
253.43
256.49
267.56
259.62
261.68
263.74
265.80
267.86

NOTE.—Toascertainthecorrectamounttoadjustinterestuponanygivendate, r u n down the date column
u n t i l t h e d a t e is reached u p o n w h i c h t h e b o n d s t o be c o n v e r t e d will be a c t u a l l y s u r r e n d e r e d a t t h e place of
conversion, t h e n r u n across t h e page to t h e r i g h t u n t i l t h e figure u n d e r t h e d e n o m i n a t i o n c o l u m n of t h e
p a r t i c u l a r d e n o m i n a t i o n of b o n d s to be converted is reached, a n d t h e n m u l t i p l y t h a t figure b y t h e n u m b e r
of b o n d s of t h a t d e n o m i n a t i o n to be c o n v e r t e d . F o r e x a m p l e , t o convert on J a n u a r y 9,1919, $10;000, face
a m o u n t , of bonds, of.the d e n o m i n a t i o n of $1,000 each, t h e a m o u n t required, as s h o w n b y t h e foregoing
Interest t a b l e , t o adjust i n t e r e s t u p o n a $1,000 bond being $0.51, t h a t a m o u n t m u s t be m u l t i p l i e d b y 10,
a n d t h e result shows t h a t a p a y m e n t of $5.10 m u s t be m a d e to t h e U n i t e d S t a t e s t o a d j u s t interest u p o n
conversion of s u c h b o n d s u p o n t h a t d a t e .




E X H I B I T 49.
[1917. Department Circular No. 100. Loans and Currency.]
I N T E R C H A N G E A N D T R A N S F E R OF L I B E R T Y BONDS.
0

TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, December 26, 1917.
The following regulations will govern transactions involving interchanges of bonds of different denoininations and of coupon and
registered bonds and transfers of registered bonds of the first and
second Liberty loans of 1917 and of the first Liberty loan of 1917
converted:
Denominations in which coupon and registered bonds are issued—
First Liberty loan of 1917:
United States 3^ per cent convertible gold bonds of 1932-1947—
Coupon, $50, $100, $500, $1000.
Eegistered, $100, $500, $1,000, $5,000, $10,000, $50,000,
$100,000.
Second Liberty loan of 1917:
United States 4 per cent convertible gold bonds of 1927-1942—
Coupon, $50, $100, $500, $1,000, $5,000, $10,000. '
Eegistered, $50, $100, $500, $1,000, $5,000, $10,000, $50,000,
$100,000.
First Liberty loan of 1917 converted:
United States 4 per cent convertible gold bonds of 1932-1947—
Coupon, $50, $100, $500, $1,000, $5,000, $10,000.
Eegistered, $50, $100, $500, $1,000, $5,000, $10,000, $50,000,
$100,000.
General provisions.—'R^gisi^v^A bonds are recorded only on the
books of the Treasury Department in Washington, and accordingly
all transactions involving registered bonds must be made at the
Treasury Department, such transactions including interchanges of
registered bonds, interchanges of coupon and registered bonds, and
• transfers of registered bonds. Except for interchanges of registered
bonds not involving change in title, none of these transactions may
be made during the period when the transfer books of registered
bonds are closed, as provided below, as to the particular issue involved.
As interchanges of coupon bonds of different denominations do
not involve the issue or cancellation of registered bonds, such interchanges may be made at any Federal reserve bank as well as at the
Treasury Department in Washington.
No charge will be made for any bonds issued upon exchange or
transfer. Bonds presented for exchange or transfer must be delivered
to the Secretary of the Treasury, Division of Loans and Currency,
Washington (or at the option of the owner to a Federal reserve
bank when coupon bonds are presented for exchange for coupon
bonds), with all transportation charges prepaid. Coupon bonds,




^ •

285

286

• REPORT ON T H E FINANCES.

\

issued upon any exchange will be expressed at the risk and expense
of the several owners to their respective addresses as filled in on the
respective requests for such exchanges, unless such bonds shall be
delivered directly to such owners or their duly authorized representatives upon any such exchange. Eegistered bonds issued upon
exchange or transfer, unless delivered directly to the registered
owner or his duly authorized representative, will be delivered by
registered mail without expense to but at the risk of the registered
owner, except that such bonds will be delivered by express if written
request for such delivery be made, in which case the express charges
must be paid by the registered owner.
Exchange of coupon bonds for coupon bonds of other denominations.—Coupon bonds with all unmatured coupons attached may be
presented at any time for exchange for an equal face amount of
coupon bonds of any other authorized denomination or denominations of the same issue.* Such exchanges may be made at any Federal
reserve bank as well as at the Treasury Department in Washington.
Form 1029 must be used, copy annexed.
Exchange of registered bonds for registered bonds of other denominations.—Eegistered bonds may be presented at any time for exchange for an equal face amount of registered bonds of any other
authorized denomination or denominations of the same issue. No
such exchange involving any change of title may be made when the
transfer books are closed as provided below. I n case of any exchange
involving any change of title the bonds, presented must be duly
assigned. To effect an exchange not involving any change of title
no assignment of the bonds is necessary. Form 1030 must be used,
copy annexed.
Exchange of coupon bonds for registered bonds.—Coupon bonds
with all unmatured coupons attached may be presented at any time
(except when the transfer books are closed as provided below) for
exchange for an equal face amount of registered bonds of any
authorized denomination or denominations of the same issue. Such
coupon bonds must be accompanied by specific instructions for the
issue and delivery of the registered bonds. Form 1031 must be used,
copy annexed.
Exchange of registered bonds for coupon bonds.—^Eegistered bonds
may be presented at any time (except when the transfer books are
closed as provided below) for exchange for an equal face amount of
coupon bonds of any. authorized denomination or denominations of
the same issue. Eegistered bonds so presented for exchange for
coupon bonds must be duly assigned to the " Secretary of the Treasury for exchange " i n the manner prescribed below and must be accompanied by specific instructions for the issue and delivery of the
coupon bonds desired. Form 1032 must be used, copy annexed.
Transfers of registered bonds.—In order to effect the transfer of a
registered bond the registered holder thereof, or some one duly authorized to act for him, must go before one of the officers authorized
by the Secretary of the Treasury to witness assignments, must establish his identity, and in the presence of such witnessing officer must
execute an assignment using the form appearing on the back of the
registered bond. The registered bond must then be sent to the
Secretary of the Treasury, Division of Loans and Currency, Washington, accompanied by specific instructions for the issue and
delivery of the new bonds. Form 1033 must be used, copy annexed.



SECRETARY OF THE TREASURY.

287

The officers authorized to witness the execution and acknowledgment of the assignments of registered bonds are the following:
Judges and clerks of United States courts; United States district
attorneys; collectors qf customs; collectors of internal revenue; Assistant Treasurers of the United States located in Boston, New York,
Philadelphia, Baltimore, Cincinnati, New Orleans, Chicago, St.
Louis, and San Francisco; executive officers of Federal reserve banks
and their branches located in Boston, New York, Philadelphia,
Cleveland, Eichmond (with branch at Baltimore), Atlanta (with
branch at New Orleans), Chicago, St. Louis, Minneapolis, Kansas
City (with branches at Omaha and Denver), Dallas, and San Francisco (with branches at Seattle, Spokane, and Portland) ; executive
officers of national banks and of other incorporated banks and trust
companies organized under the laws of any State,, whether or not
members of the Federal Eeserve System; and in the District of
Columbia the executive officers of any trust company doing business
in said District under the laws of Congress. Eegistered bonds also
may be assigned at the Treasury Department, Washington. I n the
absence of any officer authorized to witness assignments upon application to the Secretary of the Treasury, Division of Loans and Currency, Washington, special authority will be issued for a postmaster
to act. Notaries public are not authorized to witness assignments.
In all cases the officer before whom an assignment is executed and
acknowledged must add his official designation, residence, and seal,
if he has one, same being affixed to the bond. (See Treasury Department regulations for further details regarding assignments.)
Closing of transfer books.—In order to prepare for the payment of
interest the transfer books of registered bonds of the Liberty loans
will close at the Treasury Department, Washington, one month before
the interest-payment date and will reopen on the day following such
interest-payment date. Accordingly, the transfer books will be
closed as follows:
First Liberty loan of 1917:
United States 3^ per cent convertible gold bonds of 1932-194Y—
From close of business November 15 to opening of business
December 16 and from close of business May 15 to opening of business June 16.
Second Liberty loan of 1917:
United States 4 per cent convertible gold bonds of 1927-1942—
From close of business October 15 to opening of business
November 16 and from close of business April 15 to opening of business May 16.
First Liberty loan of 1917 converted:
United States 4 per cent convertible gold bonds of 1932-1947—
From close of business November 15 to opening of business
December 16 and from close of business May 15 to opening of business June 16.
I n case any date for the closing of the transfer books shall fall on
a Sunday, or legal holiday the books shall be closed on the day preceding such date, and in case any date for the opening of the transfer
books shall fall on a Sunday or legal holiday the books shall be
opened on the day following such date.




288

REPORT ON TPIE FINANCES.

During any period when the transfer books for any particular loan
shall he closed no transfers of registered bonds of such loan or interchanges of coupon and registered bonds of such loan will be made,
but if requests for transfers of any such registered bonds or interchanges of any such coupon and registered bonds are received during
any such period the requests will receive attention upon the reopening
of th^ books.
Change of address of owners of registered 5(97i(^5.^Notification of
change of post-office address of the owner of United States registered
bonds should immediately be sent the Secretary of the Treasury,
Division of Loans and Currency, Washington. Notice of change of
address of owner of coupon bonds is not required or desired. I n
sending notification of change of address. Form 1034 must be used,
copy annexed.
Address for communications.—All communications relating to
bonds of the United States and interest thereon should be addressed
to the Secretary of the Treasury, Division of Loans and Currency,
Washington. Copies of any forms appearing in this circular may
be obtained upon application to that office, or to any Federal reserve
bank, or to any Assistant Treasurer of the United States.
General regulations governing bond transactions^—All general regulations of the Treasury Department with respect to transactions in
United States bonds, including the issue of duplicates for bonds
defaced, or destroyed, or for lost registered bonds, will remain in
full force, to which regulations holders of United States bonds are
referred for provisions not included in this circular. The Secretary
of the Treasury reserves the right to withdraw or^'to amend from time
to time all or any of the foregoing regulations.




W. G. MCADOO,

Secretary of the Treasury.

SECRETARY OP T H E

289

TREASURY.

T r e a s u r y Department.
Loans and Currency.
F o r m 1029.

.

FORM OF REQUEST FOR EXCHANGE OF COUPON BONDS FOR COUPON BONDS
OF OTHER .DENOMINATIONS OF SAME ISSUE.
Date —
To t h e

-

SECRETARY OF T H E TREASURY,

(

Division of Loans and Currency, Washington, D. C.
Or—
To t h e

^

.

FEDERAL R E S E R V E B A N K OP

Fiscal Agents of the United S t a t e s ,

The undersigned presents herewith $
face a m o u n t United States coupon bonds of
the
^
Liberty loan of 1917
with all unmatured
( F i r s t or second.)
(If converted loan, so state.)
interest coupons a t t a c h e d thereto, as" follows :
Nuniber of bonds.

Denomination of
bonds.

Serial numbers of bonds.

°

$50
100
500
1,000
5,000
10,000

'

Amount.

• $ . . . '

.

.

.

•

Total amount
and requests in lieu thereof the iss.ue of coupon bonds of said loan a s follows:
Denomination of
bonds.

Number of bonds.

/$50
100
500
1,000
5,000
10,000

Amount.

$

Total amount (which
must correspond exactly witn total
.amount above)
Such last-mentioned bonds are to be forwarded to the undersigned by express a t t h e
risk a n d expense of t h e undersigned a t t h e address given below.
signature(Write plainly.)
Address—
(Street and number.)
( Q t y or fown.)
(State.)

.

NOTE.—$5,000 and $10,000 denomination coupon bonds a r e not available for t h e
Liberty loan of 1917
8 6 4 2 9 ° — F I 1918




19

first

290

REPORT ON T H E

FINANCES.

Treasury Department.
Loans and Currency.
Form 1030. '

i

FORM OF REQUEST FOR EXCHANGE OF REGISTERED BONDS FOR REGISTERED
BONDS OF OTHER DENOMINATIONS OP SAME ISSUE.
Date.
T O the SECRETARY or T H E TREASURY,

Division of Loans and Currency,
Washington, D. C.
i
The undersigned presents herewith $
face amount United States registered bonds ofthe
'(First or second.)
Liberty Loan of 1917
as follows:
(If converted loan, so state.)

Number of bonds.

Denomination of
bonds.

Serial numbers of bonds.

Amount.

$

$

'$..

Total amoun't

and requests in lieu thereof the issue ofregistered bonds of said loan as follows, said bonds to beinscribedin
the same maimer as the bonds presented for exchange:

Number of bonds. ,

Denomination of
bonds.

$

Amount.

[Do not use this space.]

$

N

... ..\.
Total amount
(which
must
correspond exactly with total
amount above).




$.
by mail,
^th^di'^r^^s
collect.

(
Signature.

(Write plainly.)
Address..
(Street and number.)
(City or town.)

"*'

N

(StaVeV)

291

SECRETARY OP THE TKEASURY.
TreasuryDepartment.
Loans and Currency.
Form 1031.
FORM OF REQUEST FOR EXCHANGE OF COUPON BONDS FOR REGISTERED
OF SAME ISSUE.
Date
To the SECRETARY OF THE TREASURY,

BONDS

/

Division of Loans and Currency,
Washington, D . C .
•
The undersigned presents herewith $
face amount United States coupon bonds of the
(First or Second;)
Liberty Loan of 1917
with all unmatured interest coupons attached, as follows:
(If converted loan, so state.)

Number of bonds.

Denomination of
bonds.
"

Serial numbers of bonds.

Amount.

$

$50
100
500
1,000
5,000
10,000

Tota 1 amount
and requests in lieu thereof the issue of registered bonds of said loan as follows:

Number of bonds.

Denomination of
bonds.

$

Total amount
(which must
correspond exactly with total
amount above..

Amount.

[Do not use this space.]

$

$

said bonds to be registered in the name of
" Address for mail and interest checks:
(Street and number.)
(City or town.)
Address for delivery of bonds (to be filled in only in r
case different from mail address above),
Saidlast-mentioned bonds to be forwardedj^^ ^ ^ ^ ' ^ ^ ^i^h charges collect.
Signature.
Address..




(State.)'

292

REPORT ON T H E

FINANCES.

TreasuryDepartment.
Loans and Currency.
Form 1032.

FORM OF REQUEST FOR EXCHANGE OF REGISTERED BONDS FOR COUPON
BONDS OF SAME ISSUE.
Date
To t h e SECRETARY OF T H E TREASURY,

Division of Loans and Currency,
Washington, D : C.
The undersigned presents herewith $
face amount United States registered
bonds of
, Liberty loan of 1917
,
( F i r s t or second.)
(If converted loan, so state.)
duly assigned to t h e Secretary of the T r e a s u r y (for exchange), as follows:

Number of
bonds.-

Name ofregistered holder.

/.

Total amount

'..

Denomination of
bonds.
S.. . .

Amount.

$

•

$

and requests in lieu thereof the issue of coupon bonds of said loan as follows:
Denomination of
bonds.

Number of bonds.

$50
$100
$500
$1,000
$5,000
$10,000
Total amount (which
must correspond exactly with total
amount above)

Amount.

$

$

. '
Such last-mentioned bonds are to be forwarded t o the undersigned by express a t the
risk and expense of t h e undersigned a t t h e address given below :
Signature(Write plainly.)
Address—
(Street and number.)
(City or fown.)
(State.)
NOTE.—$5,000 and $10,000 denomination coupon bonds a r e not available for t h e
Liberty loan of 1917.




first

293

SECRETARY OF THE TREASURY.
Treasury Department.
Loans and (Currency.
Form 1033.

'

FORM OF REQUEST FOR TRANSFER OF REGISTERED BONDS OF SAMEJSSUE.
Date
To the SECRETARY OF THE TREASTJRY,
Division of L o a n s a n d Currency,
Washirlgton, D . C.

The undersigned presents herewith for transfer $
face amount United' States registered bonds of
the
Liberty loan of 1917
(each bond having been duly assigned in
(First or second.}
(If converted loan,; so state.)
the manner prescribed' on the back of such bond), as iollows:
Number of
bonds.

Name of registered holder.

Denomination of bonds.

Amount.

$

$

$..,

Total amount

and requests the transfer thereof per assignments and the issue ofregistered bonds of said loan asfollows:
Number of bonds.

Denomination of bonds.

$

Total amount (which
must
correspond
exactly with, total
amount a b o v e ) . . . . .

Amount.

[Do n o t use t h i s space.]

S..

$..

Said l a s t - m e n t i o n e d b o n d s are t o be forwarded to t h e u n d e r s i g n e d a t t h e address g i v e n J J ^ T ™ « c c , ,-fv.
airt-ru'
•\oy express w i t n
below,
I charges collect.

Signature.
(Write plainly.)

Address...

(Street and numlDcr.)
(City or toA'n.)
'

Treasury Department.
Loans and Currency;
Form 1034.

(State!)

NOTIFICATION OF CHANGE OF POST-OFFICE ADDRESS.
Date
To the SECRETARY OF THE TREASURY,
Division of Loan^ and Currency,
Washington, D . C.

The undersigned owner ofregistered bonds ofthe

Liberty loan of 1917..'

(First or second.)

-

(If converted loan,'so state.)

hereby gives notice of change of post-office address:
Former address:
New address:
Signature of registered owner
. NOTE.—-This notice must be signed in the same form that the name appears on the registered bond in
order that the account may be identified.




EXHIBIT

50-A.

REGULATIONS D E F I N I N G SPECIAL A U R A N G E M E N T FOR SUBSCRIPT I O N TO T H I R D L I B E R T Y L O A N BONDS F R O M P E R S O N S I N T H E
M I L I T A R Y F O R C E S OF T H E U N I T E D S T A T E S .
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, April 9,1918.
Subscriptions from persons in the military forces of the United
States for bonds of the third Liberty loan, pursuant to the first section of the act approved September 24, 1917, as amended by the act
approved April 4, 1918, may be made in accordance with the following regulations:
1. Persons in the military forces of the United States may purchase bonds of the,third Liberty loan by allotments of pay. Such
allotments shall be made to " The Secretary of the Treasury." Allotments must be at the rate of five dollars per month for ten months
for each fifty-dollar bond. Such allotments will commence in the
month of April, 1918, of pay becoming due April 30, 1918, and shall
terminate with allotment of pay becoming due January 31,1919. No
allotment to the Secretary of the Treasury for a different period or
for different months will be permitted. To adjust accrued interest,
bonds purchased on such allotment will bear interest only from September 15, 1918, and in case of coupon bonds will be delivered with
the coupon due September 15,1918, detached, and the purchaser shall
not be entitled to delivery of such coupon. Bonds of denominations
larger than fifty dollars may be subscribed for by alloting the same
multiple of five dollars from each month's pay that the denomination of the bonds subscribed for is of fifty dollars.
2. The provisions of Department Circular No. I l l will apply to
subscriptions by persons in the military forces of the United States
as far as applicable and except as modified by these regulations.
The right is reserved to make from time to time general regulations
or special orders governing cases of defaulted subscriptions and of
termination of allotment for any cause, and to make further or supplemental regulations from time to time defining special arrangements for subscriptions to third Liberty loan from persons in the
military forces of the United States.
R. C. LEFFINGWELL,

. ' •

Acting Secretary.
EXHIBIT

50-B.

R E G U L A T I O N S G O V E R N I N G T E R M I N A T I O N A N D R E D U C T I O N OF
A L L O T M E N T S F O R S U J 5 S C R I P T I 0 N S TO T H I R D L I B E R T Y L O A N
BONDS F R O M P E R S O N S I N T H E M I L I T A R Y F O R C E S OF T H E
U N I T E D S T A T E S I N C E R T A I N CASES.
TREASURY DEPARTMENT,
OFFICE P F THE SECRETARY,

'
Washington, June 22,1918.
1. Allotments of pay made to the Secretary of the Treasury by persons in the military forces of the United States, pursuant to " Regula294



SECRETARY OF THE TREASUJIY.

295

tions defining special arrangements for subscriptions to third libertyloan bonds from persons in the military forces of the United States,"
issued under date of April 9,1918, may be terminated or reduced to a
smaller multiple of $5. per month when necessity therefor arises by
reason of any of the following causes:
(a) Death of allotter.
(b) Discharge of. allotter, except in the case of an enlisted man
discharged for the purpose of accepting a commission.
(c) Desertion of allotter.
(d) Increase of obligation of allotter under the war-risk insurance
act or reduction in rate of pay, whereby the allotter is unabl'e to provide for his dependents and take out necessary insurance without reducing the amount of his pay remaining for personal uses below the
sum of $7.50 per month.
2. Such allotment may be terminated or reduced to a smaller multiple of $5 per month only on approval of the Secretary of War or an
officer designated by him and in accordance with the requirements of
these regulations.
3. Where allotments are terminated by reason of death or discharge
of allotter the allotment may be canceled as of date of commencement
and the amount deducted from pay prior to termination of the allot-"
ment may be repaid to the persons entitled thereto, provided that in
case of termination by reason of discharge after $50 or some multiple
thereof has been deducted from pay, the'allotter shall be entitled to
receive, upon request, bpnds in amounts of $50 or multiples thereof to
the extent that the lace amount thereof has been fully paid and to
receive the balance over the face amount thereof in cash. Such discharged allotter may, upon discharge, complete payments for bonds
subscribed for or for any bonds aggregating at face value a smaller
multiple of $50, by paying the amount de(iucted from pay remaining
to his credit un(ier this regulation, and, in addition thereto, an amount
in cash that will equal the face amount of the bonds on which payment
is to be completed. Bonds delivered pursuant to this regulation will
bear interest only from September 15,1918, and, in the case of coupon
bonds, will be delivered with the coupon due September 15, 1918, detached, and the allotter shall not be entitled to delivery of such coupon.
4. Where allotments are terminated by desertion of allotter any
sum previously deducted from pay shall be forfeited to the United
States.
. ^
5. I n case of reduction of allotment from a larger to a smaller multiple of $5 from each month's pay, the allotment shall continue for the
full allotment period at the reduced monthly amount, and the excess
over the reduced monthly amount, which shall have been deducted
from the pay of the allotter in previous months, may be repaid to the
allotter.
6. The total par value of bonds upon which allotments are discontinued, either by termination or re(iuction pursuant to these regulations in each month, shall be reported monthly to the Secretary of the
Treasury.
These regulations are supplemental to ^'Regulations d e l i n g special
arrangements for subscriptions to third liberty-loan bonds from persons in the military forces of the United States,'^^ dated April 9,1918.




L. S. ROWE,

Acting Secretary.

296

REPORT ON THE FINANCES.
EXHIBIT

50-C.

R E G U L A T I O N S D E F I N I N G S P E C I A L A R R A N G E M E N T S F O R SUBS C R I P T I O N S TO F O U R T H L I B E R T Y L O A N BONDS F R O M P E R S O N S
I N T H E M I L I T A R Y FORGES OF T H E U N I T E D S T A T E S .
TRIEASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, September 25,1918.
Subscriptions from persons in the military forces of the United
States for bonds of the fourth Liberty loan, pursuant to the first
section of. the act approved September 24,' 1917, as amended and
supplemented, may be made dn accordance with the following regulations:
1. Persons in the military forces of the United States may purchase bonds of the fourth Liberty loan by allotments of pay. Such
allotments shall be made to " The Secretary of the Treasury." Allptments must be at the rate of $5 per month for 9 months and $4.83
for the tenth month for each $50 bond. The reduction in amount for
the tenth month is to adjust accrued interest. Such allotments
will commence in the month of October, 1918, of pay becoming due
October 31, 1918, and shall terminate with allotment of pay becoming due July 31,1919. No allotment to the Secretary of the Treasury
for a different period or for different months will be permitted. To
complete the adjustment of accrued interest, bonds purchased on
such allotment will bear interest only from April 15, 1919, and in
case of coupon bonds will be delivered with the coupon due April
15,1919, detached, and the purchaser shall not be entitled to delivery
of such coupon. Boncls of denominations larger than $50 may be
subscribed for by allotting the same multiple of $5 from each month's
pay that the denomination of the bond subscribed for is of $50.,
except in the tenth month, when the same multiple of $4.83 shall be
allotted.
2. The provisions of department Circular No. 121 will apply to
subscriptions by persons in the military forces of the United States
as far as applicable and except as modified by these regulations.
3. Allotments of pay made to the Secretary of the Treasury by
persons in the military forces of the United States, pursuant.to these
regulations, may be terminated or reduced to a smaller multiple of
$5? per month (and of $4.83 for the tenth month) when necessity
therefor arises by reasons of any of the following causes:
(a) Death of allotter.
(&) Discharge of allotter, except in the case of an enlisted man
discharged for the purpose of accepting a commission.
(c) Desertion of allotter.
(d) Increase of obligation of allotter under the war risk insurance act or reduction in rate of pay, whereby the allotter is unable
to provide for his dependents and take out necessary insurance without reducing the amount of his pay remaining for personal uses
below the sum of $7.50 per month.
4. Such allotment, may be terminated or. reduced to a smaller
multiple of $5 per month (and of $4.83 for the tenth month) only
on approval of the Secretary of War or an officer designated by him,,
and in accordance with the requirements of these regulations.




SECRETARY OF THE TREASURY.

297

5. Where allotments. are terminated by reason of death or discharge of alloter, the allotment may be canceled as of date of commencement, and the amount deducted from pay prior to termination of the allotment may be repaid to the persons entitled thereto,
provided that, in case of termination by reason of discharge after
$49.83 or some multiple thereof has been deducted from pay, the
allotter shall be entitled to receive, upon request, bonds in amounts
of $50 or multiples thereof to the extent that $49.83 for each $50
of face value thereof has been fully paid, and to receive the balance
of the amount deducted from pay in cash. Such discharged allotter
may, upon discharge, complete payments for bonds subscribed for,
or for any bonds aggregating at face value a smaller multiple of
$50, by paying the amount deducted from pay remaining to his
credit under this regulation, and, in addition thereto, an amount
in cash that will equal $49.83 for each $50 of face amount of bonds
on which payment is to be completed. Bonds delivered pursuant
to this regulation will bear interest only from April 15, 1919, and, in
the case of coupon bonds, will be delivered with the coupon due
April 15, 1919,,detached, and the allotter shall not be entitled to delivery of such coupon.
6. Where allotments are terminated by desertion of allotter, any
sum previously deducted from pay shall be forfeited to the United
States.
.
^
7. I n case of reduction of allotment from a larger to a smaller
multiple of $5 from each month's pay (and of $4.83 for the tenth
month), the allotment shall continue for the full allotment period at
the reduced monthly amount, and the excess over the reduced
monthly amount, which shall have been deducted from the pay of
the allotter in previous months, may be repaid to the allotter.
8. The total par value of bonds upon which allotments are discontinued, either by termination or reduction pursuant to these regulations, in each month, shall be reported monthly to the Secretary
of the Treasury.
'
9. The right is reserved to make further or supplemental regulations, from time to time, defining special arrangements for subscriptions to the fourth Liberty loan from persons in the military forces
of the United States.




W.

G. MCADOO,

Secretary.

EXHIBIT 51.
^

S T A T E M E N T B Y T H E S E C R E T A R Y OF T H E

TREASURY.

WASHINGTON, D . C , December 28, 1917.

I t has been brought to my attention that numbers of merchants
throughout the country are offering to take Liberty loan bonds of the
first and second issue at par, or, even in some cases at a premium, in
exchange for merchandise. While I have no doubt that these merchants are actuated by patriotic motives, I am sure that they have
failed to consider the effect which the acceptance of their offers, would
have upon the situation. We are making the strongest effort to have
these Government bonds purchased for permanent investment by the
people at large, to be paid for out of the past or future savings of
those who buy them. Purchases thus made not only result in providing funds for the uses of the Government, but they also effect a conservation of labor and material. When the bonds are exchanged for
merchandise, it defeats the primary object of their sale, it discourages
thrift and increases expenditures, thus depriving the Government of
labor and material ijieeded for war purposes. In addition to this, such
bonds when taken in exchange for merchandise must in most cases be
immediately sold in the open market. This naturally tends to depress
the market price of the issue and makes it less easy to sell future issues
at the same rate.
'
\
I hope that the merchants of the country, upon a more careful consideration of this subject, will discontinue their efforts to sell merchandise and take Liberty bonds in payment.
I t is my earnest hope that every purchaser of a Liberty bond will
realize that the only genuine help he gives his Government is by keeping his bond as an investment as long as it is possible for him to do
, so. Where, because of misfortune or imperative necessity, the holder
of a Liberty bond is forced to sell, there can, ot course, be no objection.
'
.

298

•




^

EXHIBIT 52.

S T A T E M E N T B Y T H E S E C R E T A R Y OF T H E

TREASURY.

WASHINGTON, D . C , January 20,1918.
It has been brought to my attention that a large number of patriotic
citizens who subscribed to Liberty loan bonds of both the first and
second issue are being approached from time to time by agents who
have, with too frequent success, induced them to sell their Liberty
loan bonds and take in exchange securities which in a nuinber of cases
have been of very questionable value.
Through the intensive work carried on during the two Liberty loan
campaigns a patriotic army of over ten million bond buyers in this
country has been created. I t is of the utmost importance that the
investments of this army of patriots should be safeguarded in every
possible way and that their action in lending their money to their
Government should not be taken advantage of by irresponsible people ,
seeking solely a profit for themselves.
I therefore warn investors in Liberty loan bonds against exchange of
these evidences of their patriotism for any securities or so-called
securities. While some of the securities, or so-called securities, offered
in exchange for Government bonds are of sound value, there is no
doubt that a large percentage of them are worthless.
I believe it is for the best interests of the people at large, as well
as for their actual protection,, that they disregard all such offers and
hold fast to the best investment in the world; that is, bonds of their
own Government.
Practically all of the substantial and representative investment
houses of the country in cooperation with the Government and many
other patriotic agencies have participated in a most unselfish way in
both Liberty loan campaigns, sacrificing their own interests in order
to contribute their share toward winning the war. < I t is inconceiv^
able that after the magnificent work of distributing Government
bonds, thus accomplished in a large measure by investment houses,
some of the same people should attempt to substitute other securities
for the Government bonds which they have just helped in placing. I t
seems evident that a large majority of such offers made to holders of
Government bonds must be made by the least responsible of the
security merchants, and that suspicion as to the character of the bonds
offered in exchange is fully justified.




299

EXHIBIT 53.
[1918.

Department Circular No. 118.

Division of Loans and Currency.]

REGULATIONS CONCERNING FULL-PAID I N T E R I M CERTIFICATES,
F I R S T L I B E R T Y LOAN.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, July 12, 1918.
The following regulations are prescribed relative to full-paid
interim certificates of the first Liberty loan:
(1) Immediately upon the loss, defacement, or destruction of a
full-paid interim certificate of the first Liberty loan, the owner, better
to protect his interest, should, in writing, notify the Federal reserve
bank by which it was issued of the fact, giving the amount of the
interim certificate, the name and address of the owner, and, if .possible, the date and number of the certificate.
(2) In order to procure the issue of a definitive bond on account of
such interim certificate, the owner thereof must furnish to the Federal reserve bank which issued the original an affidavit, giving the
name and residence of the applicant in full, describing the interim
certificate and any indorsements thereon, giving its amount, the name
of the bank issuing it, and, if possible, the date and number. The
affidavit must also show the interest of the affiant therein and must
state in detail the circumstances attending the loss, defacement, or
destruction. The affidavit must contain every fact within the knowledge of the affiant bearing upon the circumstances and must also
contain any information which affiant has received with reference
thereto from any other person, stating from whom received and
whether or not affiant believes such information to be true. The
omission from the'affidavit of any material fact within the knowledge
of the affiant or of any material information that has been received
by him prior to the making of the affidavit will be sufficient cause to
refuse relief.
The affidavit shall state whether a coupon or registered bond is
desired. If a registered bond is desired, the name in which it is to
be registered, giving prefix (Mr., Mrs., or Miss), first name in full,
middle name or initial, and last name, and address in full with street
and number, city or town, county and State, raust be given.
(3) I n addition to the affidavit of the owner, the material facts
should be proved by the affidavits of all persons acquainted therewith.
If such supporting affidavits are not furnished, the owner's affidavit
must show sufficient facts to satisfy the Department that supporting
affidavits can not be had. The omission to obtain supporting affidavits required by these regulations, where such supporting affidavits
can be obtained,, will be sufficient cause to refuse relief.
300




SECRETARY OF THE TREASURY.

301

(4) The affidavits relative to the circumstances must show the v
specific place of deposit of the missing certificate (that is, if kept in
house or office, it should be shown in what part thereof, whether in
desk, box, etc., arid whether under lock and key; if kept in a bank
vault, name of the bank should be given) and whether or not any
person or persons other than the owner had access thereto. I n the
event of its having been accessible to other parties, their affidavits
in addition to that of the owner should be furnished, showing their
knowledge of the existence of the certificate and of the facts as to its
loss, defacement, or destruction.
(5) I t must be shown by the affidavits of two credible persons,
United States officers if practicable, that the statements of the applicant as set forth in his affidavit are worthy of the confidence of t h e
Treasury Department, and that he is the identical person named in
the application. Like evidence of credibility must accompany the
affidavit of any other person who may have had access to the
certificate.
(6) I n case of a claim on a defaced interim certificate, the certificate or so much thereof as may remain shall be attached.to the
affidavit of the applicant.
(7) All affidavits sworn to before a notary public. United States
commissioner, or a justice of the peace, must be accompanied by a
certificate from the proper court showing that the ofBcer was in
commission on the date of the execution of the document.
The Federal reserve bank which issued the interim certificate will
examine the proof submitted and call upon the applicant to submit
any proof hereinabove re(juired which may be missing. After all
the proof hereinabove required has been made, or after the applicant
has failed for a period of one month after request, or has refused,
to submit' further proof required, the Federal reserve bank shall
transmit the papers to.the Secretary of the Treasury, Division of
Loans and Currency, with a transcript of its record of the issuance
of the interim certificate in question, giving the nuinber and date
thereof, and a report whether such interim certificate has been presented by any other person, whether notice of its existence in the
hands of any other person has been given to such Federal reserve
bank, whether the certificate is identified to its satisfaction with the
record of issuance transmitted, and making recommendation as to
the disposition of the application.
(8) Upon its receipt by the Secretary of the Treasury, such documentary evidence will be referred to the Comptroller of the Treasury for his opinion as to its sufficiency. The applicant will be advised of the decision as soon as it is reached. If it be favorable to
such applicant the Secretary of the Treasury will hold the application until the expiration of six months from the date of the application. If the original interim certificate shall not be found or
presented within such period, a bond of indemnity will be prepared
and forwarded to the applicant for execution, and when this bond
of indemnity shaH have been duly executed, returned to the department, and approved by the Comptroller of the Treasury and the
Secretary, a definitive bond (coupon nr registered), as requested, of
the first Liberty loan of the denomination called for by such interim
certificate will be issued to the applicant.




302

REPORT ON THE FINANCES.

(9) The bond of indemnity shall be for a sum equal to two and onehalf times the principal amount pf the bond called for by such interim
certificate and shall be in the form attached to these regulations. The
sureties shall be three in number, all of whom shall be citizens of the
United States. A married woman will not be accepted as surety. If
a woman acts as surety she must make affidavit of the fact that she is
unmarried. Two of the sureties must show by affidavit that they hold
real estate worth at a' fair valuation more than twice the penalty of
the bond over and above all incumbrances thereon. The third surety
shall make affidavit that he is worth more than twice the penalty of
the bond over and above all liabilities. The statement of the sureties
relative to their responsibility may be investigated by the department,
and any refusal to* disclose material facts bearing on their responsibility will be sufficient cause to reject the surety.
(10) The acts of August 13, 1894, and March 24, 1910, authorize
the acceptance of a surety company duly incorporated and duly
authorized to do business by the Secretary of the Treasury, in lieu of
the three sureties above prescribed. When a surety company has
been duly accepted by the Treasury Department its sufficiency need
not be certified as is reciuired in the case of personal sureties.
(11) I n all cases where notice is given to a Federal reserve bank
that an interim certificate has been lost, defaced, or destroyed, a
caveat wiir be entered against the issue of any bond against such
certificate. Should such certificate be thereafter presented, a full
report of the facts shall be made to the Treasury Department, stating
whether any application by the former holder for relief under these
regulations is pending. No bond shall be issued on any certificate
against which a caveat is entered without special instructions from
the: Treasury Department.
(12) I n case the interim certificate alleged to be lost, defaced, or
destroyed has been presented and honored prior to granting relief
under these regulations, the application will be denied.
(13) The Secretary of the Treasury reserves the right to require
and permit the security to be renewed, strengthened, increased, or
diminished as the facts may warrant, in his opinion, from time to
time.
(14) I n view of the fact that a reasonable time has now elapsed for
the presentation of all outstanding interim certificates of the first
Liberty loan, the Federal reserve banks are authorized, in their discretion, upon presentation of any interim certificate of the first
Liberty loan for the issue of a definitive bond, to require the holder
to establish, by sufficient proof, his or her identity with the original
subscriber, or his or her title from the. original subscriber, and any
other fact that may bear upon the rights of other persons who may
have an interest therein.
(15) Neither the Treasury Department nor any Federal reserve
bank assumes any responsibility to any person who is not the bearer
of the interim certificate at the time of its presentation for exchange
for a definitive bond.
(16) Interim certificates shall hereafter be honored only by the
Federar reserve bank which issued the certificate. No interim certificate shall be issued by any Federal reserve bank, in exchange for
an interim certificate issued by another Federal reserve bank.




L. S. EOWE,

Acting Secretary.

SECRETARY OF THE TREASURY.

303

[Treasury Department, Office of the Secretary, Division of Loans and Currency.
L. & C. 71.]
LOST, DESTROYED, AND D E F A C E D I N T E R I M C E R T I F I C A T E S OF T H E
L I B E R T Y LOAN.

From
FIRST

BOND OF INDEMNITY.

KNOW ALL MEN BY THESE PRESENTS

That we, __
, of
, State of
, as principal, and
, of
, State of
, and
, of
,
State of —
, and
, of
, State of
, as sureties
are held and firmly, bound unto the United States of America in the sum of
$__
lawful money, to be paid to the, said Unijbed States of America, their
agents, or assigns, to which payment well and truly to be made, we bind ourselves, our heirs, executors, administrators, successors, and assigns, jointly and
severally by these presents.
, Sealed with our seals, dated this
day of
, A. D. 19
Whereas full-paid Interim Certificate No.
, dated
, was issued
by the Federal Reserve Bank of
as Fiscal Agent of the United
States of America, whereby the United States agreed that the bearer of said
certificate on surrender thereof to said Federal Reserve Bank would be entitled
to receive, when prepared, definitive 15-30 year 3^ per cent gold bond of the
United States of the First Liberty Loan in the face amount of $
'-, bearing interest from June 15, 1917, and that said certificate and all rights under
and by virtue thereof should pass by delivery thereof; and
Whereas the principal obligor above named represents that he is the owner
of said Interim Certificate and that the same has been lost, defaced, or
destroyed, and has requested that the bond or bonds described therein be issued
to such principal obligor by the United States; and
Whereas the regulations of the Treasury Department of the United States
require the party thus situated to give bond to the United States with sureties
. to indemnify the United States before said bond or bonds described in said
Interim Certificate will be issued:
Now, the condition of this obligation is such that if the above-bounden obligors, their heirs, executors, administrators, successors, and assigns, or any
of them, shall and do well and truly indemnify and save harmless the United
States of America from any loss, liability, claim, or demand whatsoever arising
in any manner from, upon, or by reason of the said Interim Certificate or the
issue to the said principal obligor of any bond or bonds upon the request hereinabove recited, or by reason of the failure of the United States to issue said bond
or bonds or any of them to any holder or bearer of said Interim Certificate,
together with all legal costs and interest upon any amount which the United
States may be required or may be liable to pay in conseq\ience thereof until
paid, without any defalcation or delay, then this obligation to be void; otherwise
to be and remain in. full force.
^
The above-bounden principal obligor hereby consents and expressly agrees to
furnish a new bond .of indemnity, with sufficient surety or sureties, whenever
hereafter the sureties on this obligation, for any reason, in the opinion of the
Secretary of the Treasury, do not afford sufficient protection and security.
(This is a sample of the form of bond prescribed and is not td^be executed.
The applicant will receive a copy for execution after approval of his application.)
Acknowledged before me the
of
__, A. D. 19__, and I
certify that the said
,
, ______—_, and
are each
personally well known to me to be ttie identical persons who signed the foregoing bond.
rs:eAL.J




^

(Official title.)

304

REPORT ON THE
A F F I D A V I T S OF

FINANCES.
SURETIES.

(Sample forms—Not for execution.)
STATE OF

\

County of
r^*
Personally appeared before me, the undersigned,

in and for said

(Title of officer.)

county and State,
^
^

;___, of

, county of

, State

• (Name of affiant.)

of
, who, after being first duly sworn, deposes and says that he is the
sole owner in fee simple of certain real estate situated in the State of
,
county of
•. described as follows:
(Description of property, giving dimensions, location, and character of improvements.)

That the fair valuation of said real estate is $
; that the incumbrances
against said real estate are the following:
-.
:
____. That there is no incumbrance against
said real estate other than as above stated; that the personal indebtedness of
deponent does not exceed $
^-; that he is worth the sum of $
over
and above his just debts and liabilities in property subject to execution and sale
in addition to the real property above described.
This affidavit is made to induce the United States of America to accept the
affiant as surety upon the within bond.
Sworn to before me this
day of
, 19__.
[SEAL.]

(Signature of surety.)

My commission expires..

(Official title.)

STATE OF

, 19 .

\

County of
j^'^'
Personally appeared before me the undersigned

.

.
in and

(Title of officer.)

for said county and State

, of

, county of

,

(Name of affiant.)

State of
, who, after being first duly sworn, deposes and says that
he is the sole owner in fee simple of certain real estate situated in the State
of
^ , county of
_, described as follows:
(l5escription of property, giving dimensions, location, and character of improvements.)

That the fair valuation of said real estate is $
against said, real estate are the following:

; that the incumbrances
:
.__

That there is no "incumbrance against said real estate other than as above
stated; that the personal indebtedness of deponent does not exceed $
That he is worth the sum of $
over and above his just debts and liabilir
ties in property subject to execution and sale in addition to the real property
above described.
'
,
This affidavit is made to induce the United States of America to accept the
affiant as surety upon the within bond.
Sworn to before me this
day of
,
, 19—
[SEAL.]

_

(Signature of surety.)
(Official title.)

My commission expires .




, 19_

SECRETARY OF THE TREASURY.
STATE OF

305

1

County of
/ *
Personally appeared before me,

, in and for said county
(Title of officer.)

and State

, who having been duly sworn deposes and says that he

(Name of affiant.)

is the owner of property subject to execution and sale of a fair value exceeding $
; that his property consists of the following:
that the total amount of his indebtedness and all incumbrances upon and
against said property does not exceed $
__; that this affidavit is made to
induce the United States of America to accept the affiant as surety upon the
within bond.
Sworn to before me this
day of
, 19—
[SEAL.]

My commission expires
86429°—FI 1918
20




1
(Signature of surety.)
(Official title.)

'.

_, 19_

EXHIBIT 54.
[1918.

Department Circular No. 113. Division of Loans and Currency.]
P A Y M E N T OF 3 P E R C E N T BONDS OF 1 9 0 8 - 1 9 1 8 .

TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, April 15, 1918.
Public notice is hereby given that in accordance with the terms of
their issue, the.United States 3 per cent bonds of 1908-1918, issued
under authority of the act of Congress approved June 13, 1898, will
cease to bear interest on August 1, 1918, on which date the principal
of any such bonds then outstanding will be payable.
COUPON BONDS of said issue may be presented for payment to any
Federal reserve bank or to the Treasurer of the United States at
Washington, accompanied by appropriate written advice. (See
reverse for form of advice.) The final interest coupon which will
mature on August 1, 1918^ should be detached for collection of interest before such coupon bonds are presented for payment.
EEGISTERED BONDS of said issue must be duly assigned by the
payees thereof to " The Secretary of the Treasury for payment," the
assignments being dated and acknowledged (witnessed) in the presence of any officer duly authorized by the Secretary of the Treasury
to witness the assignment of United States registered bonds. When
it is desired that payment be made to other than the registered payee,
the bonds must be assigned by the payees thereof to " The Secretary
of the Treasury for payment for account of
." (Here
insert name and address of the person or other in whose favor payment is desired.) Bonds standing in the name of a corporation
should be assigned by some person duly authorized by resolution bf
the board of directors, or similar governing body, and if a properly
certified copy of such authority has hot been previously filed with the
department, must accompany the bonds. Registered bonds so assigned for payment must be forwarded to the Secretary of the Treasury, Division of Loans and Currency, Washington, accompanied by
appropriate written advice. (See reverse for form of advice.) , Unless instructions are received to the contrary remittance covering
payment will be sent to the last address of record of the registered
payee of the surrendered bonds. Interest due August 1,1918, on such
registered bonds will be paid by check in usual manner.
National
banks having any such registered bonds on deposit with the Treasurer
of the United States in trust to secure circulation or deposits of public
money may, by appropriate resolution, authorize the Treasurer to
assign such bonds for payment. A certified copy of the resolution
must be forwarded to the Treasurer accompanied by the Treasurer's
receipts for the bonds to be paid. Blank forms for the resolutions
306




'

V

307

SECRETARY OF T H E TREASURY.

hereinbefore mentioned may be had upon application to the department.
I n order that prompt discharge of the bonds presented for payments may be made, such bonds may be presented in the manner
indicated on and after July 1,1918, but not before. Payment thereof
will be made on August. 1,1918.
L. S. ROWE, Acting Secretary.
[Reverse of circular.]

^

FoEM OF ADVICE TO ACCOMPANY COUPON BONDS PRESENTED FOR P A Y M E N T .
To ttie FEDERAL RESERVE B A N K OF

or
To t h e TREASURER O F ' T H E UNITED STATES, Washington.

The undersigned presents herewith for payment $
.
United States 3 per cent coupon bonds of 1908-1918, as follows:
Number of Denomination.
honds.

Serial numbers.

S20
100
.500
1,000

face amount

Face amount. .

$

.

.

.

.

.

.

•

.

.

.

.

..A

\, *

^"
'

•Total.

and requests remittance covering payment of t h e principal thereof be forwarded
as indicated below.
Signature
.„___ '.^
Adress in full
._
.
DateFORM OF ADVICE TO ACCOMPANY REGISTERED BONDS PRESENTED FOB P A Y M E N T .
T O t h e SECRETARY OF THE TREASURY,
D I V I S I O N OF LOANS AND CURRENCY,

Washington.
The undersigned presents herewith for payment $
face amount
United States 3 per cent registered bonds of 1908-1918, duly assigned to t h e
" Secretary of the T r e a s u r y for payment," a s follows: .
Number of Denomination.
bonds..

"*

$20
100
500
1,000
5,000
10,000

,'*"

Serial numbers.

Face amount.

%....

"Total

'
and requests remittance covering payment of the principal ttierebf be forwarded
as indicated below.
Signature.
^
Adress in full^
^.

Date

..




_——

-..^

30'8

REPORT ON THE FINANCES.
EXHIBIT

55-A.

[1918. Supplement to Department Circular No. 92. Division of Public Moneys.]

SPECIAL DEPOSITS OF PUBLIC MONEYS UNDER THE ACT OF
- CONGRESS APPROVED SEPTEMBER 24, 1917, AS AMENDED B Y
THE ACT OF CONGRESS APPROVED APRIL 4, 1918.
TREASURY DEPARTMENT,
O F F I C E OF THE SECRETARY,

Washington, April 10, 1918.
To Federal Reserve Banks and other banks and trust companies incorporated under the laws of the United States or of any State:
Department Circular No. 92, dated October 6, 1917, hereto attached,^ in relation to special deposits of Government funds in
connection with subscriptions for bonds and certificates of the United
States issued under the act of Congress approved September 24, 1917,
is hereby amended and supplemented as follows:
The provisions of said circular are extended, subject to the provisions hereof, to deposits of the proceeds of bonds of the Third
Liberty Loan and of certificates of indebtedness of the United States
issued under the act of Congress approved September 24, 1917, as
amended bv the act of Congress approved April 4, 1918. ^Applications hereafter made for such deposits should be, and all applications
for such deposits made on and after April 20, 1918, must be, in Form
H2, hereto attached, and accompanied by a certified copy of resolutions duly adopted by the board of directors of the apphcant in Form
J2 hereto attached.
Depositaries already qualified to a sufficient amount pursuant to
Department Circular No. 92 wiU not be required to file new applications or resolutions in connection with deposits of the proceeds of
bonds of the Third Liberty Loan and of certificates of indebtedness
of the United States issued under the act of Congress approved September 24, 1917, as amended by the act approved April 4, 1918, but
will, by the acceptance of such deposits, be conclusively presumed
to have assented to all the terms and provisions hereof.
Qualified depositaries wiU be permitted to make^payment by credit
of amounts due and payable on subscriptions, made by or through
them, for bonds of the Third Liberty Loan, pursuant to Department
Circular No. I l l of AprU, 1918, up to the amount for which each
shall be qualified in excess of existing deposits. In order, however,
to prevent unnecessary dislocation of funds, they should, to the extent that they hold 'Treasury certificates of indebtedness maturing
on the date the payment on bond subscriptions is due at Federal
Reserve Banks, make payment in such Treasury certificates of indebtedness instead of by credit. This does not extend to payment
for bonds for advance delivery.
Qualified depositaries will be permitted to make payment by-credit,
up to the amount for which each shall be qualified in excess of existing deposits, for bonds of the Third Liberty Loan applied for by
them, on form L&C8, for advance delivery, to be sold in lots of
$10,000 or less to any one subscriber.
I For this circular see Exhibit H accorapanying the Annual Report of the Secretary of the Treasury for
m r , pp. 13^136.
/




SECRETARY OF THE TREASURY.

309

The certificate of advice to be issued and forwarded to Federal
Reserve Banks, as provided in Department Circular No. 92 under
the caption HOW DEPOSITS ARE TO BE MADE, must be substantially
in Form K hereto attached.
Any qualified depositary may make payment by credit of aniounts
which its correspondent banks or trust companies would otherwise
pay by check upon such qualified depositary. This may be done
whether such qualified depositary and correspondent bank or trust
company are in the same district or in different districts. In cases
where tney are in different districts the Federal Reserve Bank of the
district where the subscription is made must be notified by telegraph
by the Federal Reserve Bank of the district where payment is made,
and the Federal Reserve Bank of the district where the subscription
is made will accept such telegraphic advice in lieu of payment to it
by the subscriber. Banks and trust companies desiring to avail themselves of this method of payment must give ample notice to the
depositary which they expect to call upon to make payment in order
that such depositary may be prepared to make such payment, and to
avoid the possibility of payment not reaching the Federal Reserve
Bank on time. The object of this procedure is to avoid unnecessary
dislocation of funds and to reduce the float as far as practicable. •
The unexpended cash proceeds, if any, of the sale of any issue of
bonds or certificates will be redeposited among the qualified depositaries making application to receive such redeposits as nearly as may
be in proportion to the subscriptions made by or through tnem.
Eacn depositary will be required to pay interest at the rate of 2
per cent per annum on daily balances, interest payments must be
made when deposits are finally withdrawn, but not less frequently
than quarterly.
The provisions of Department Circular No. 92 not inconsistent
here witn remain in fuU force and effect.
W. G. MCADOO,

Secretary of the Treasury.
[Form H-2—Public Moneys.]
APPLICATION FOB DEPOSITS.

To the Federal Reserve Bank of
fiscal
agents of the United States:
The undersigned bank or trust company. In accordance with the provisions of Treasury Department Circular No. 92, dated October 6,1917, as amended and supplemented
April 10,1918, and pursuant to due action of its board of directors, hereby makes application for the deposit of public moneys with it from time to time under the act of
Congress approved September 24, 1917, as amended by the act approved April 4,1918,
the aggregate amount of such dejSosits not to exceed at any one time $
;
and assigns and agrees to pledge, from time to time, to and with the Federal Reserve
Bank of
, asfiscalagent of the United States, as collateral security
for such deposits as may be made from time to time pursuant to this application,
securities of the character and amount required by said circular.




By:::::;:;;;;::;;:;::;::::::::::::::::::::::::;
President (Vice President).
Street
^ City or town
^
^
State

310

REPORT ON T H E FINANCES.
,, ,
•

[Form J-2—Public Moneys.]

RESOLUTIONS AUTHORIZING APPLICATION FOR DEPOSITS.

I hereby certify that the following resolutions were duly adopted at a meeting of the
board of directors of the below-named bank (trust company), which meeting was
duly called and duly held on the .
. day of
. . , 1 9 1 . . , a quorum being
present, and that the said resolutions were spread upon the minutes of said meeting:
Resolved, That, in accordance with the provisions of Treasury Department Circular
No. 92, dated October 6, 1917, as amended and supplemented April 10,1918, this bank
(trust company) make application for the deposit of public moneys with it from time
to time under the act of Corigress approved September 24, 1917, as amended by the
act approved April 4, 1918, the aggregate amount of such deposits not to exceed at anv
one time %
; and assign and agree to pledge from time to time to and witn
the Federal Reserve Bank of
, asfiscalagent of the United States,
as collateral security for such deposits as may be made froin time to time pursuant
to such application, securities of the character and amount required by said circular;
and
Resolved, That the president, or any vice president, or cashier, or secretary, of the
undersigned bank (trust company) is hereby authorized to make application, assignment, and agreement as aforesaid and from time to time to deliver to and pledge with
said Federal Reserve Bank, or any custodian or custodians appointed by it, securities
of the undersigned bank (trust company) of a character and amount at least sufficient
to secure such deposits according to the terms of said Treasury Department circular,
and from time to time to withdraw securities and to substitute other securities and to
pledge ^nd deposit additional securities.
' In witness whereof I have hereunto signed my name and affixed the seal of
the:
of
,
Cashier {Secretary).
[Form K—Public Moneys.]
CERTIFICATE OP ADVICE.
(Title of bank or trust company.)
(Location.)
....:
•

.

.

..-•..:
-.

•

.

,191...

(^ate.)

I hereby certify that there has been deposited this day with the above bank (trust
company), to the credit of the Federal Reserve Bank of
, as
fiscal agent of the United States, War Loan Deposit Account, to be held subject to
withdrawal on demand, the sum of
dollars, consisting of payment for
ijonds. \accrued interest
Certificates of indebtednessjP^^^^^^^^^^

$

Total
Cashier or Vice President.

(The depositary will forward this to the Federal Reserve Bank of




)

SECRETARY OF THE TREASURY.
EXHIBIT

311

55-B.

(1918. Second Supplepient to Department Circular No. 92. Division of Public Moneys.]

S P E C I A L D E P O S I T S O F P U B L I C M O N E Y S U N D E R T H E ACT O F
CONGIIESS A P P R O V E D S E P T E M B E R 24, 1917, AS A M E N D E D BY
T H E ACT OF C O N G R E S S A P P R O V E D A P R I L 4, 1918.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, May .29, 1918.
To Federal Reserve Banks and other hanks and trust companies incorporated under the laws of the United States or of any State:
Department Circular No. 92, dated October 6, 1917, and the
supplement thereto, dated April 10, 1918, in relation to special
deposits of Government funds in connection with subscriptions for
bonds and certificates of indebtedness of the United States issued
under the act of Congress approved September 24, 1917, are hereby
further supplemented as follows:
The provisions of the said circular and supplement are extended,
subject to the provisions hereof, to deposits of moneys, arising from
the payment of income and excess-profits taxes, made under the act
of Congress approved September 24, 1917, as amended by the act
of Congress approved April 4, 1918. Applications hereafter made
for deposits of public moneys under said acts should be, and all
applications for such deposits made on and after June 5, 1918, must
be, in Form H3 hereto attached, and be accompanied by a certified
copy of resolutions duly adopted by the board of directors of the
applicant in Form J3 hereto attached.
'
Depositaries already qualified to a sufficient amount pursuant to
Department Circular No. 92, or pursuant to said circular as amended
and supplemented under date of April 10, 1918, will not be required
to file anew formal applications or resolutions in connection with
deposits of moneys arising, from the payment of income and excess
profits taxes, but if they desire to receive deposits hereunder, must
so notify the Federal Reserve Bank of the district in which they
are located by letter or telegram; and they will thereby and by the
acceptance of such deposits be conclusively presumed to have
assented to all the terms and provisions hereof. The words/'qualified depositaries'^ in this circular refer exclusively to depositaries
qualified under Department Circular No. 92 and supplements thereto.
Collateral security pledged or to be pledged by qualified depositaries will be conclusively deemed to be pledged as collateral security ,
for deposits of public moneys made under Department Circular No.
92 and supplements thereto, whether arising from the sale of bonds or
certificates of indebteness of the United States or arising from the
payment of income and excess-profits taxes. ..
rayinent of income and excess-profits taxes can not be made by
credit.
I t is intended, out of any unexpended cash proceeds arising from
the payment of income and excess-profits taxes, to make deposits,
through the Federal Reserve Banks, under direction of the Secretary
of the Treasury, with qualified depositaries throughout the United
States, as nearly as may be proportionately, haying regard to the
following three determining factors: (1) The amount of'checks received by collectors of internal revenue on and after June 10, 1918, and



312

REPORT ON THE FINANCES.

until further notice, drawn upon and paid by such depositaries,
respectively, in payment of income and excess-profits taxes; (2) the
amount of Treasury certificates of indebtedness of all issues maturing
June 25, 1918, sold to and through such depositaries, respectively;
and (3) the amount for which such depositaries, respectively, shall
be qualified in excess of existing deposits. I t is the intention that
such deposits shall, as nearly as may be, be made simultaneously with
the payinent of checks drawn upon such depositaries, respectively, in
payment of such taxes. Appropriate instructions will be given to
coUectors of internal revenue and to Federal Reserve Banks.
All deposits will be subject to withdrawal on demand and will bear
interest at the rate of 2 per cent per annum, as provided in the abovementioned circular and supplement. Deposits made hereunder shall
be credited to the ' ' W a r Loan Deposit Account.''
A principal object of the issue of the United States Treasury
certifi-cates of indebtedness maturing June 25, 1918, was to prevent
unnecessary dislocation of funds, and this object would be defeated
if such certificates held by taxpayers were not turned in in payment
of their taxes but were either sold or hypothecated by the taxpayers
and in consequence were presented for payment m cash. In view of
the fact that the aggregate amount of these certificates now issued
exceeds $1,500,000,000 this is important, and banks and trust companies are required to cooperate oy advising their customers to turn
m certificates, to the extent that they have taxes to pay, in payment
of such taxes. No deposit of moneys arising from the payment of
income and excess profits taxes will be made with any depositary
which disregards this requirement.
W. G. MCADOO,

Secretary ofthe Treasury.

[Form H-3—Public Moneys.]
APPLICATION FOR D E P O S I T S .

To the Federal Reserve Bank of
, fiscal agent of
the United States.
.
.
The undersigned bank or trust company, in accordance with the provisions of
Treasury Department Circular No. 92, dated October 6, 1917, as amended and supplemented Apnl 10, 1918,, and May 29, 1918, and pursuant to due action of its board"of
directors, hereby makes application for the deposit of public moneys with it from
time to time under the act of Congress approved September 24, 1917, as amended by
the act approved April 4, 1918, the aggregate amount of such deposits not to exceed
at any one time $-.; and assigns and agrees to pledge, from time to time,
to and with the Federal Reserve Bank of
'.
, as
fiscal agent of the United States, as collateral security for such deposits as may be
made from time to time pursuant to this application, secmities of the character and
amount required by said circular.




By...
Street
dty or town.
State.

President (Vice President).

SECRETARY OF THE TREASURY.

313

[ F o r m 1-3—Public Moneys.)
R E S O L U T I O N S AUTHORIZING APPLICATION FOR DEPOSITS.

I hereby certify that the following resolutions were duly adopted at a meeting of the
board of directors of the below-named bank (trust company), which meeting was
duly called and duly held on the
day of
, 191.., a quorum being present,
and that the said resolutions were spread upon the minutes of said meeting:
Resolved, That in accordance with the provisions of Treasury Department Circular
No. 92, dated Octpber 6, 1917, as amended and supplemented April 10, 1918, and
May 29, 1918,. this bank (trust company) makes application for the deposit of public
moneys with it from time to time under the act of Congress approved September 24,
1917, as amended by the act approved April 4, 1918, the aggregate amount of such
deposits not to exceed at any one time $
, and assign and agree to pledge
from time to time to and with the Federal Reserve Bank of
, as
fiscal agent of the United States, as collateral seciurity for such deposits as may be
made from time .to time pursuant to such application, securities of the character and
amount required by said circular; and
Resolved, That the president,' or any vice president, or cashier, or secretary, of the
undersigned bank (trust company) is hereby authorized to make application, assignment, and agreement as aforesaid and from time to time to deliver to and pledge with
said Federal Reserve Bank, or any custodian or custodians appointed by it, securities
of the under-signed bank (trust company) of a character and amount at least sufficient
to secure such deposits accordin'g to the terms of said Treasury Department circular aa
amended and supplemented as aforesaid, and from time to time to withdraw securities
and to substitute other securities and to pledge and deposit additional securities.
In witness whereof 1 have hereunto signed my name and affixed the seal of the
:
of




Cashier (Secretary).

EXHIBIT

55-C.

[1918. Department Circular No. 92 Amended and Supplemented. Division of Public Moneys.]
S P E C I A L D E P O S I T S OF P U B L I C M O N E Y S U N D E R T H E ACT OF CONG R E S S A P P R O V E D S E P T E M B E R .24, 1917, A S A M E N D E D A N D
SUPPLEMENTED.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, September 21, 1918.
To Federal reserve banks and other banks and trust companies incorporated under the laws of the United States or of any State:
Department Circular No. 92, dated October 6, 1917, and the supplements thereto dated April 10 and May 29, 1918, in relation to
special deposits of public moneys under the act of Congress approved
September 24, 1917. as amended, are hereby amended and supplemented so as tb read as follows:
Any incorporated bank or trust company in the United States
desiring'to participate in deposits of public moneys, however arising,
under the act of Congress approved September 24, 1917, as heretofore
and hereafter amended and supplemented, should make application
to the Federal reserve bank of its district.
Applications hereafter made for deposits of public moneys under
said act should be, and all applications for such deposits made after
September 28, 1918, must be, iij Form H-4, hereto attached, and be
accompanied by a certified copy of resolutions duly adopted by the
board of directors of the applicant in Form J - 4 , hereto attached.
Depositaries already qualified to a sufficient amount pursuant to
Department Circular No. 92, dated October 6, 1917, and said supplements dated April 10 and May 29, 1918, will not be required to
file anew formal applications or resolutions, but if they desire to
receive or retain deposits after September 2b, 1918, must so notify
the Federal reserve bank of the district in which they are located
by letter or telegram; and they will, by the acceptance or retention
01 deposits after September 28, 1918, be conclusively presumed to
have assented to all the terms and provisions hereof, and to the retention of collateral security theretofore pledged as collateral security
hereunder.
I n fixing the maximum amount of deposits for which it will apply,
the applicant bank or trust company should be guided by the amount
of the payments which it expects to have to make, for itself and
others, on account of Liberty bonds and Treasury certificates of
indebtedness and incoine and profits taxes, as the case may be, and,
as well, by any statutory limitations upon the amount of deposits
which the applicant bank or trust company may receive from any one
depositor. Any application may be rejected or the applicant may
314




'

SECRETARY OF T H E TREASURY.

315

be designated for a smaller maximum amount! than that applied for.
After receiving the recommendation of the Federal Reserve Bank,
the Secretary of the Treasury will designate approved depositaries. .
COLLATERAL SECURITY.

Designated depositaries will be required, before receiving deposits,
to qualify by pledging, as collateral security for such deposits, securities of the following classes, to an amount, taken at the rates below
provided, at least equal to such deposits:
(a) Bonds and certificates of indebtedness of the United States
Government, of any issue, including bonds of the Liberty loans and
interim certificates or receipts for payments therefor; all at par.
{b) Bonds issued under the United States farm-loan act and bonds
of the Philippine Islands, Porto Rico, and thCoDistrict of Columbia;
all at par.
(c) The 3^ per cent bonds of the Territory of Haivaii at 90 per
cent of market value; and other bonds of said Territory at market
value.
(d) Bonds of any State of the United States, at market value;
and approved notes, certificates of indebtedness, and warrants issued
by any State of the United States, at 90 per cent of market value.
•{e) Approved bonds of any county, city, or political subdivision
in the United States; and approved notes, certificates of indebtedness,
and warrants witli a fixed maturity issued, by any county 'or city in
the United States which' are direct obligations of the county or city
as a whole, or which are payable from general taxes levied on all
taxable prope^rty in such county or city, all at 90 per cent of market
value; but not including any such bonds which, at the date of this
circular, are at a market price to yield more than five and one-half
per cent per annum, nor any' such other obligations which at the date
of this circular are at a market price to yield more than six per cent
per annum," if held to maturity, according to standard tables of
bond values.
(/) Approved dollar bonds and obligations of foreign Governments (and of the dependencies thereof) engaged in war against
Germany, issued since July 30, 1914, at 90 per cent of the market
value thereof in the United States, and approved dollar bonds and
obligations of any province or city within the territory of any such
foreign Government or dependency, issued since July 30, 1914, at
75 per cent of the market value thereof in the United States.
(g) Approved bonds, listed on some recognized stock exchange,
and notes of domestic railroad companies within the United States;
approved equipment trust obligations of such domestic railroad companies; and approved bonds and notes of domestic electric railway
and traction companies, telephone and telegraph companies, electrip
light, power, and gas companies, and industrial companies, secured
. (directly or by the pledge of mortgage bonds) by mortgage, upon
physical properties in the United States, and listed on some recognized stock exchange, all at 75 per cent of market value; but not
including any such bonds or obligations maturing after October 1,
1925, which, at the date of this circular, are at a market price to
yield more than seven per cent per annum, nor any such bonds or




316

REPORT ON T H E FINANCES^

obligations maturing on or before October 1, 1925, nor any such
notes which at the date of this circular are at a market price to
yield more than eight per cent per "annum, if held to maturity,
according to standard tables^ of bond values.
(A) Commercial paper and bankers' acceptances, having maturity
at the time of pledge of not to exceed six months, exclusive of days
of grace, and which are otherwise eligible for rediscount or purchase
by Federal reserve banks; ahd which have been approved by the
Federal reserve bank of the district in which the depositary is
located, at 90 per cent of face value. All such commercial paper and
acceptances must bear the indorsement of the depositary bank or
trust company.
No security shall be valued at more than par. No State or municipal bond, obligation, or evidence of indebtedness shall be accepted
if the State or municipality has made default in payment of principal
or interest during the past 10 years.
Any bonds or notes of an issue which the W a r Finance Corporation
has agreed to accept or purchase in whole or in part, when conforming in other respects to the provisions of this circular, shall be
acceptable collateral security for deposits of public moneys, without
regard to their interest yield at the date of this circular.
The right is reserved to call for additional collateral security at
any time.
The approval and valuation of securities is committed to the several Federal reserve banks, acting under the direction of the Secretary of the Treasury. The withdrawal of securities, the pledge of
additional securities, and the substitution of securities shall be made
from time to time as required or permitted by the Federal reserve
banks acting under like direction.
SECURITIES COMMITTEES.

Each Federal reserve bank is authorized to designate a committee
or committees, to be composed of experienced bankers, in such city
or. cities i n its district as may be deemed necessary, to be known as
the securities committee. Each securities committee shall consist of
not more than three nor less than two members, who shall serve without compensation. I t shall be the duty of such securities committee
to examine the lists of securities tendered as collateral security for
deposits and to transmit them promptly to the Federal reserve bank
of the district with the committee's recommendation.
C U S T O D Y O F SECURITIES.

All securities accepted as collateral security for deposits hereunder
liiiist be deposited with the Federal reserve bank of the district in
which the depositary is located, as fiscal agent of the IJnited States,
or, by the direction and subject to the order of the Federal reserve
bank, as such agent, with a custodian or custodians designated by it,
and under rules and regulations prescribed by it under the direction
or with the approval of the Secretary of the Treasury.
HOW DEPOSITS ARE TO BE MADE.

Each qualified depositary will be required to open and maintain or
continue for the account of the Federal reserve bank of its^district.



SECRETARY OF THE TREASURY.

317

as fiscal agent of the United States, a separate account for deposits
to be made hereunder, to be known as the war loan deposit account.
^ Qualified depositaries may, if and to the extent from time to time
hereafter authorized by the Secretary of the Treasury, be permitted
to make payment by credit when due of amounts payable on subscriptions made by or through them for Treasury certificates of indebtedness and for Liberty bonds. I n order to make payment by credit
the depositary must notify the Federal reserve bank of the district
by. letter or telegram to reach it on or before the date whe*n such payment is due, and must on said date issue a certificate of advice to such
Federal reserve bank stating that a sum specified (in addition to all
other amounts standing to the credit of said fiscal agent with such
depositary) has been deposited with such depositary for the account
of such Federal reserve bank as fiscal agent of the United States in
the war loan deposit account. Such certificate of advice must be
substantially in Form K hereto attached.
If and to the extent that payment by credit shall be so authorized,
any qualified depositary may make payment by credit of amounts
which its correspondent banks or trust comp'anies would otherwise
pay by check upon such qualified depositary. This may ^ be done
whether such qualified depositary and correspondent bank or trust
company are in the same district or in different districts. I n cases^
where they are in different districts, the Federal reserve bank of the
district where the subscription is made must be notified by telegraph
by the Federal reserve bank of the district where payment is made,
and the Federal reserve bank of the district where the subscription
is made will accept such telegraphic advice in lieu of payment to it
by the subscriber. Banks and trust companies desiring to avail
themselves of this method of payment must give ample notice to the
depositary which they expect to call upon to make payment in order
that such depositary may be prepared to make such payment, and to
avoid the possibility of payment not reaching the Federal reserve
bank on time. The object of this procedure is to avoid unnecessary
dislocation of funds and to reduce the float as far as practicable.
The unexpended cash proceeds, if any, of the sale of any issue of
bonds or certificates will be redeposited among the qualified depositaries making application to receive such redeposits as nearly as may
be in proportion to the subscriptions made by or through them.
Payment of income and profits taxes can not..be made by credit.
I t is intended, out of any unexpended cash proceeds arising from the
payment of income and profits taxes, to make deposits, through the
Federal reserve banks, under direction of the Secretary of the
Treasury, with qualified depositaries throughout the United States,
as may be hereafter announced by the Secretary of the Treasury.
All deposits and withdrawals will be made by the Federal reserve
banks by direction of the Secretary of the Treasury.
The amount deposited with any depositary shall not in the aggregate exceed at any one time (a) the maximum amount for which it
shall have been designated as a depositary, nor {b) the aggregate
amount of the collateral security pledged by it taken at the rates
hereinbefore provided.
"^
W I T H D R A W A L OF DEPOSIT.

All deposits will be payable on demand without previous notice.



318

REPORT ON THE FINANCE'S.
I N T E R E S T ON DEPOSITS.

Each depositary will be required to pay interest at the rate of two
per cent per annum on daily balances. Interest payments must be
made as and when each deposit is withdrawn.
W. G. MCADOO,

. Secretary of the Treaswry.
a

[Form H - 4 — P u b l i c Moneys.]
A P P L I C A T I O N FOR D E P O S I T S .

To the Federal Reserve Bank of

, fiscal agent of theJJmted

. States:

The undersigned bank or trust company, in accordance with the provisions of
Treasury Department Circular No. 92, as amended and supplemented September
21, 1918, and pursuant to due action of its board pf directors, hereby makes
application for deposit of public moneys with it from" time to time under the act
of Congress approved September 24, 1917, as heretofore and hereafter amended
and supplemented, the aggregate amount of such deposits not to exceed at any
one time $
; and assigns and agrees to pledge, from time to time,
to and with the Federal Reserve Bank of
, as fiscal agent of
the United States, as collateral security for such deposits as may be made
from time to time pursuant to this application, securities of the character and
amount required by said circular.

By IIIIIIIIIIZIIIIIIIIIIIIIIIIIi:

President (Vice President).
Street
City or town
State

[Form J - 4 — P u b l i c Moneys.]

/

KESOLUTIONS A U T H O R I Z I N G A P P L I C A T I O N FOR DEPOSITS.

I hereby certify that the following resolutions were duly adopted at a meeting of the board of directors of the below-named bank (trust company), which
meeting was duly called and duly held on the
day of
'., 191—, a
quorum being present, and that the said resolutions were spread upon the
minutes of said meeting:
Resolved, That in accordance with the provisions of Treasury Department
Circular No. 92, as amended and supplemented September 21, 1918, this bank
(trust company) makes application for the deposit of public moneys with it
from time to time under the act of Congress approved September 24, 1917, as
heretofore or hereafter amended and supplemented, the aggregate amount of
such deposits not to exceed at any one time $
; and assign and agree to
pledge from time to time to and with the Federal Reserve Bank of —.
,
as fiscal agent of the United' States, as collateral security for such deposits as
may be made from time to time, pursuant to such applicationy' securities of
the character and amount required by said circular; and
' Resolved, That the president, or any vice president, or cashier, or secretary,
of the undersigned bank (trust company) is hereby authorized to make application, assignment,. and agreement as aforesaid and from time to time to deliver
to and pledge with said Federal reserve bank, or any custodian or custodians
appointed by it, securities of the undersigned bank (trust company) of a character and amount at least sufficient to secure such deposits according to the
terms of said Treasury Department circular as amended and supplemented as
aforesaid, and from time to time to withdraw securities and to substitute
other securities and to. pledge and deposit additional securities.
••
In witness whereof I 'have hereunto signed my name and affixed ;the seal of '
the
. .—,of
.
'




Cashier (Secretary).

SECRETARY OF THE TREASURY.

319

[Form K—Public Moneys.]
CERTIFICATE OF ADVICE.

(Title of bank or trust company.)
(Location.)

, 191(Date.)

I hereby certify that there has been deposited this day with the above bank
(trust company), to the credit of the Federal Reserve Bank of
'.,
as fiscal agent of the United States, V7ar Loan Deposit Account, to be held
subject to withdrawal on demand, the sum of
dollars, consisting of
payment for
i;
Bonas_.....

.

Certificates of indebtedness

1 - e a
interest-----{^cSWest^^^^^^^^^
Total $_

Cashier or Vice President.
(The depositary will forward this to the Federal Reserve Bank of——.
)




EXHIBIT

56-A.

[Treasury Department, Office of the Secretary, Division of Public Moneys. Form 1343A.]
R E G U L A T I O N S C O N C E R N I N G D U P L I C A T E C H E C K S TO R E P L A C E
LOST, S T O L E N , OR D E S T R O Y E D C H E C K S D R A W N ON T H E T R E A S U R E R OF T H E U N I T E D S T A T E S B Y D I S B U R S I N G O F F I C E R S S E R V ING I N EUROPE.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, D. C , June 12,1918.
The following regulations relative to duplicate'checks drawn by
disbursing officers and agents of the Military Establishment of the
United States serving in Europe on the Treasurer of the United
States are prescribed and promulgated:
1. Immediately upon the loss of a check, the owner, to better protect his interest, should in writing notify the Treasurer of the United
States at Washington and the Assistant Comptroller of the Treasury
at Paris of the fact of §uch loss, stating the name of the disbursing
officer or agent by whom it was drawn, describing the check and all
indorsements thereon—giving, if possible, its date, number, and
amount—and requesting that payment of the same be stopped in the
manner-hereinafter provided.
2. I n order to procure the issue of a duplicate check, the party in
interest must furnish the disbursing officer or agent who issued the
original check with proof, stating the name and residence of the
applicant in full, describing the check and its indorsements, showing
his interest therein, detailing the circumstances attending its loss, and
what action, if any, he has taken to stop payment thereon. The
proof must be made and signed before an officer authorized to administer oaths, in accordance with the laws of the place where such proof
is made.
3. H e must also furnish to the same disbursing officer or agent a
bond executed substantially in the form attached to these regulations, which will be furnished to him by the disbursing officer or
agent or by the Assistant Comptroller of the Treasury at Paris.
The penalty of the bond should be in multiples of 5 of the unit of
the currency in which the lost check was drawn and at least equal
-to the amount of the lost check, plus 10 per cent, but in no case less
than $10 or its equivalent at the current rate of exchange. There
shall be two sureties, except that when the amount of the lost check
is less than $10 or its equivalent at the current rate of exchange, a
bond with one satisfactory individual surety may be accepted. I t is
not necessary that sureties be citizens or residents of the United
States. A corporate surety authorized by the Secretary of the Treasury under the act of August 13, 1894, as amended by the act'of
March 23, 1910, may be accepted in lieu of any individual surety.
Th© bond, manner of execution, and surety must be in all respects
/320



SECRETARY OF T H E TREASURY.

321

satisfactory to the Assistant Comptroller of the Treasury at Paris.
United States internal-revenue documentary stamps are not required
on bonds of indemnity executed and delivered beyond the jurisdiction
of the United States.
.
/
4. The proof and the bond, when executed, are to be indorsed by
the officer or agent as having been submitted to him and as being the
proof and security upon which he has acted.
After the expiration of 30 days from the date of the original check
the officer or agent will make a duplicate, which must be an exact
transcript of the original, especial care being taken that the number
and date correspond with those of the original, subject to any special
instructions of the Secretary of the Treasury in particular cases.
Each such check shall bear plainly written or stamped upon the face
thereof the word " Duplicate."
The proof, bond, and duplicate check he will, without delay, forward to the Assistant Comptroller of the Treasury at Paris, who,
upon their receipt, will advise the Treasurer of the United States at
Washington that an application for a duplicate is pending, and the
Treasurer of the United States will immediately inform the Assistant
Comptroller of the Treasury at Paris whether a request has been
made to stop payment of the original, and whether such original
has been presented or paid, and if not paid, a caveat will be entered,
and payment will thereupon be stopped.
5. On receipt of notice from the Treasurer of the United States at
Washington that payment of the check has been stopped, and if the
information obtained is satisfactory to the Assistant Comptroller of
the Treasury at Paris and he approves of the issue of the duplicate
and of tlie accompanying bond, he will certify such approval in
writing, on the papers as well as on the duplicate check, retaining
the bond in his files.
6. Any duplicate check issued in pursuance of .these regulations,
bearing such approval of the Assistant Comptroller of the Treasury,
when properly indorsed by the person to whom it is approved for
payment by the Assistant Comptroller of the Treasury, may be paid
subject to the same rules and regulations as apply to the payment of
original checks; but no duplicate shall be paid if the original has
already been paid.
7. I n case of the loss of a check issued by a United States disbursing officer or agent serving in Europe who is dead or no longer in
the service of the United States, the proof and bond required to be
furnished by the owner of said check to an officer o^ agent in the
service of the United States, prior to the issue of a duplicate check,
should be forwarded to the Assistant Comptroller of the Treasury
at Paris, who will refer them to the proper accounting officer for
examination and the statement of an account in favor of the owner
of said check as provided for in section 3647 of the Revised Statutes
of the United States.
8. Whenever such an account shall have been stated, the proper
accounting officer may transmit to the proper disbursing officer
abroad his certificate of balance due for payment by check instead of
by warrant, and when an officer or agent, who drew ithe lost check, has
been charged with the amount of said lost check, the accounting
officer will notify the Secretary of the Treasury in order that the
86429°—FI 1918



21

322

REPORT ON THE FINANCES.

amount of the check, if remaining to the credit of the officer or agent
with the Treasurer of the United States, may be repaid into the
Treasury and carried to his credit atid to the credit of the proper
appropriation.
9. The Assistant Comptroller of the Treasury at Paris is authorized to require a new bond of indemnity with satisfactory surety,
or sureties, whenever at any time the surety or sureties on the obligation given as above provided do not for any reason, in his opinion, afford the United States sufficient protection and security.
10. No duplicate check will be issued more than three years from
the date of the original check.
I i S. ROWE, Acting Secretary.

[Treasury Department, Office of the Secretary, Division of Public Moneys. Form 1343A.]
BOND OF INDEMNITY AGAINST Loss OF CHECKS DRAWN ON THE TREASURER OF THE
UNITED STATES.

Know all men by these presents, that we

OfTlI-I—"I"I-"—""——IIIIZ——I—-——"--—"-—^
(Post office.)

(Street and number, if in town or city.)

(State or country.)

— J
(Street and number, if in town or city.)
.

(State or country.)

(Street and number, if in town or city.)

(State or country.)

as-principal, and
of
(Post office.)
and
,
of - I
(Post office.)

as sureties, are held and firmly bound unto the United States of America in the
sum of
:
lawful money, to be paid to the said United States of America, or their agents
or assigns; to which payment, well and truly to be made, we bind ourselves, our
heirs, executors, administrators, successors, anil assigns, jointly and severally
by these presents.
Sealed with our seals, and dated this
day of
in the
•year of our Lord one thousand nine hundred and
Whereas, check No.
, dated ,
drawn by
.
^
.
, on the Treasurer of the
United States, to the order of
_
.
for the sum of
'.
1
dollars,
in payment of
, has not been paid by the United States, but
the above-named principal represents that it has been lost, stolen, or destroyed,
and that he is the owner thereof and has requested that payment of said original
be stopped and that a check in the same amount be issued to replace the same.
And whereas the regulations of the Treasury Department of the United States
require the party thus situated to give bond to the United States, with sureties
to indemnify the United States, before another check will be issued or any payment be made on account thereof; and before the Secretary of the Treasury or
officer authorized by him will certify that the amount of the aforesaid check
should be paid; in consideration of the premises and of the execution of this
bond:
Now, the condition of this obligation is such that if the ^above-bounden
obligors, their heirs, executors, administrators, successors, and assigns, or any
of them, shall and do well and truly hold harmless and indemnify the United
States of America, its officers and agents, of and from any and all liability, loss,
claim, and demand whatsoever, arising in any manner by reason of or on account
of said original check, or the stoppage of payment thereof, or the issue or payment of another check to replace the same, together with all legal, costs and
interest until paid, without any defalcation or delay, then this obligation to be
void; otherwise to be and remain in full force and virtue.
The above-bounden principal hereby consents and expressly agrees to furnish a
new bond of indemnity with satisfactory surety (or sureties) whenever hereafter the surety on this obligation, for any reason, in the opinion of the Secre


SECRETARY OF THE TREASURY. ,

323

V

tary of the Treasury, or officer authorized by him, does not afford the United
States sufficient protection and security.
Two witnesses (with address) to each
signature:
\

__
.__

_

_

IIIII—I------IIII-I-II-III
—

FL S 1
[L. S.]

[^- ®-^
I certify that the sureties named in
and who executed the above bond are
^gll known
^Q jjjg r^j^(j are sufficient for the penalty
thereof.

EXHIBIT

56-B.

[Treasury Department, Office of the Secretary, Division of Public Moneys. Form 1343B.]
R E G U L A T I O N S C O N C E R N I N G D U P L I C A T E C H E C K S TO R E P L A C E
LOST, STOLEiSr, OR D E S T R O Y E D C H E C K S D R A W N ON D E P O S I T A RIES I N EUROPE B Y DISBURSING OFFICERS SERVING., IN
EUROPE.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, D. C , June 12, 1918.
The folloAving regulations relative to duplicate checks drawn by
disbursing officers and agents of the Military Establishment of the
United States serving in Europe against funds in depositaries of the
United States in Europe are prescribed and promulgated:
1. Immediately upon the loss of a check the owner, to better protect his interest, should in writing notify the depositary on which it
was drawn of the fact of such loss, stating the name of the disbursing officer or agent by whom it was drawn, describing the check
and all indorsements thereon—giving, if possible, its date, number,
and amount—and requesting that payment of the same be stopped in
the manner hereinafter provided.
2. I n order to procure the issue of a duplicate check the party in
interest must furnish the disbursing officer or agent • who issued '
the original check with proof, stating the name and residence of
the applicant in full, describing the check and its^ indorsements,
showing his interest therein, detailing the circumstances attending
its loss, and what action, if any, he has taken to stop payment
thereon. The proof must be made and signed before an officer
authorized to administer oaths in accordance with the laws of the
place where such proof is made.
3. He must also furnish to the same disbursing officer or agent a
bond executed substantially in the form attached to these regulations, which will be furnished to him by the disbursing officer or
agent or by the Assistant Comptroller of the Treasur}^ at Paris.
The penalty of the bond should be in multiples of five of.the unit
of the currency in which the lost check was drawn and at least equal




324

y

REPORT ON THE FINANCLES.

to the amount of the lost check, plus 10 per cent, but in no case less
than $10 or its equivalent at the current rate of exchange. There
shall be two sureties, except that when the amount of the lost check
is less than $10 or its equivalent at. the current rate of exchange, a
bond with one individual surety may be accepted. I t is not necessary
that sureties be citizens or residents of the United States. A corporate surety authorized by the Secretary of the Treasury under the
act of August 13, 1894, as amended by the act of March 23, 1910,
may be accepted in lieu of any individual surety. The bond, manner of execution, and surety must be in all respects satisfactory to
the Assistant Comptroller of the Treasury at Paris. United States
internal revenue documentary stamps are not required on bonds of
indemnity executed and delivered beyond the jurisdiction of the
United States.
^
4. The proof and the bond, when executed, are to be indorsed by
the officer or agent as having been submitted to him, and as being
the proof and security upon which he has acted.
After the expiration of thirty days from the date of the original
check the officer or agent will make a duplicate, which must be an
exact transcript of the original, especial care being taken that the
number and date correspond with those of the original,^ subject to
any special instructions of the Secretary of the Treasury in particular cases. Each such check shall bear plainly written or stamped
upon the face thereof the word " Duplicate."
The proof, bond, and duplicate check he will, without delay, forward to the Assistant Comptroller of the Treasury at Paris, who,
upon their receipt, will advise the depositary on which the check was
drawn that an application for a duplicate is pending, and the depositary will immediately inform the Assistant Comptroller whether.
a request has been made to stop payment of the original, and whether
such original has been presented or paid, and if not paid, a caveat
will be entered, payment will thereupon be stopped, and the Assistant Comptroller informed thereof.
5. If the information obtained is satisfactory to the Assistant
Comptroller of the Treasury at Paris, and he approves of the issue
of the duplicate and of the accompanying bond, he will certify such
approval in writing, on the papers as well as on the duplicate check,
retaining the bond in his files.
6. Any duplicate check issued in pursuance of these regulations,
bearing such approval of the Assistant Comptroller of the Treasury
at Paris, when properly indorsed by the person to whom its is approved ^f or payment by the Assistant Comptroller of the Treasury,
may be paid subject to the same rules and regulations as' apply to
the payment of original checks; but no duplicate shall be paid if the
original has already been paid.
7. I n case of the loss of a check drawn on a foreign depositary
issued by a United States disbursing officer or agent serving in
Europe who is dead or no longer in the service of the United States,
the proof and bond required to be furnished by the owner of said
check to an officer or agent in the service of the United States, prior
to the issue of a duplicate check, should be forwarded to the Assistant
Comptroller of the Treasury at Paris, who will refer them to the
proper accounting officer for examination and the statement of an




SECRETARY OF

THE TREASURY.

325

account in favor of the owner of said check, as provided for in section 3647 of the Revised Statutes of the United States.
8. Whenever such an account shall have been stated, the proper
accounting officer may transmit to the proper disbursing officer
abroad his certificate of balance due for payment by check instead of
by warrant, and when an officer or agent who drew the lost check
has been charged with the amount of said lost check, the Assistant
Comptroller of the Treasury at Paris, for the purpose of closing the
account, will obtain from the depositary on which the lost check
was drawn, a certificate of deposit to the personal credit of the disbursing officer or agent. Form 1, for the amount of the check, and
forward the same to the Secretary of the Treasury in order that the
amount may be repaid into the Treasury and carried to the credit
of the disbursing officer or agent and to the credit of the proper
appropriation.
9. The Assistant Comptroller of the Treasury at Paris, is authorized to require a new bond of indemnity 'with satisfactory surety, or
sureties, whenever at any time the surety or sureties on the obligation
given as above provided do not for any reason, in his opinion, afford
the United States sufficient protection and security.
10. No duplicate check will be issued more than three years from
the date of the original check.
L. S. ROWE, Acting Secretary.
[Treasury Department, ^Office of the Secretary, Division of Public Moneys. Form 1343B.]
BOND OF INDEMNITY AGAINST Loss OF CHECK DRAWN ON DEPOSITARIES IN EUROPE.

Know all men by these presents, that we,

ofiiiiizi^rirririiiii^ri^
(Post-office address.)

(Street and number, if in town or city.)

(State or country.)

as principal, and
:
of
(Post-office address.)
(Street and number, if in town or city.)
(State or country.)
and
of
(Post-office address.)
(Street and number, if in town or city.)
(State or country.)
as sureties, are held and firmly bound unto the United States of America in the
sum of
,
lawful.money, to be paid to the said United States of America, or their agents
or assigns; to which payment, well and truly to be made, we bind ourselves, our
heirs, executors, administrators, successors, and assigns jointly and severally by
these presents.
Sealed with our seals, and dated this
^ day of
L
, in the
year of our Lord, one thousand nine hundred and
,'
Whereas check No
, dated
drawn by
:
on the
at
to the order of
'.
for the sum of
in payment of
•.
, has not been paid, but the above-named
principal represents that it has been lost, stolen, or destroyed, and that he is
the owner thereof, and has requested that payment of said original be stopped,
and that a check in the same amount be issued to replace the same.
And whereas said check was issued by a disbursing officer of the United
States in payment of a debt due by the United States;
And whereas the regulations of the Treasury Department of the United
States require the party thus situated to give bond to the United States, with
sureties to indemnify the United States, before another check will be issued or
any payment be made on account thereof; and before the Secretary of the
Treasury, or pfficer authorized by him, will certify that the amount of the



326

REPORT ON THE FINANCES.

aforesaid check should be paid, ^in consideration o'f the premises and of the
execution of this bond;
Now, the condition of this obligation is such, that if the above-bounden
obligors, their heirs, executors, administrators, successors, and assigns, or
any of them, shall and do well and truly hold harmless arid indemnify the
United States of America, its officers and agents, of and from any and all
liability, loss, claim, and demand whatsoever, arising in any manner by reason of or on account of said original check, or the stoppage of payment thereof,
or the issue or payment of another check to replace the same, together with
all legal costs and interests until paid, without any defalcation or delay, then
this obligation to be void; otherwise, to be and remain in full force and virtue.
The above-bounden principal hereby consents and. expressly agrees to furnish a new bond of indemnity with satisfactory surety (or sureties) whenever
hereafter the surety on this obligation, for any reason, in the opinion of the
Secretary of the Treasury, or officer authorized by him, does not afford the
United States sufficient protection and security.
Two witnesses, with address, to each
signature:
1

[L. S.]
[L.S.]
:[L.S.]

..

,
,
.

__.

.

^
;

_

~ I certify that the sureties named
in and who executed the above bond
are
, ^
well knowri to me, and are sufficient
for the penalty thereof.

EXHIBIT 56-C.

.

[Treasury Department, Office of the Secretary, Division of Public Moneys. Form 1343C.]

REGULATIONS CONCERNING DUPLICATE CHECKS TO REPLACE
CHECKS OWNED I N EUROPE DRAWN ON THE TREASURER OF
THE UNITED STATES BY DISBURSING OFFICERS NOT ATTACHED
TO THE MILITARY ESTABLISHMENT.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, D. C , August 7,1918.
The following regulations relative to duplicate checks to replace
checks drawn by disbursing officers and agents (other than disbursing officers and agents of the Military Establishment) on the Treasurer of the United States, and lost, stolen, or destroyed while owned
by holders in Europe, are prescribed and promulgated:
1. Immediately upon the loss of a check, the owner, to better protect his interest, should in writing notify the Treasurer of the United
States at Washington and the Assistant Comptroller of the Treasury at Paris of the fact of such loss, stating the name of the disbursing officer or agent by whom it was drawn, describing the check and
all indorsements thereon—giving, if possible, its date, number, and
amount—and requesting that payment of the same be stopped in the
manner hereinafter provided.
2. I n order to procure the issue of a duplicate check the p^rty in
interest must furnish the disbursing officer or agent who issued the
original check with proof, stating the name and residence of the
applicant in full, describing the check and its indorsements, showing




SECRETARY OF THE TREASUEY.

327

his interest therein, detailing the circumstances attending its loss,
and what action, if any, he has taken to stop payment thereon. The
proof must be made and signed before an officer authorized tp administer oaths, in accordance with the laws of the place where such proof
is made.
3. He must also furnish to the same disbursing officer or agent a
bond executed substantially in the form attached to these regulations, which will be furnished to him by the disbursing officer or
agent or by the Assistant Comptroller of the Treasury at Paris.
The penalty of the bond should be in multiples of 5 of the unit of
the currency in which the lost check was drawn and at least equal
to the amount of the lost check plus 10 per cent, but in no case less
than $10 or its e(^uivalent at the current rate of exchange. There
shall be two sureties, except that when the amount of the lost check
is less than $10 or its equivalent at the current rate of exchange a
bond with one satisfactory individual surety may be accepted. I t
is not necessary that sureties be citizens or residents of the United
States. A corporate surety authorized by the Secretary of the
Treasury under the act of August 13, 1894, as amended by the act
of March 23, 1910, may be accepted in lieu of any individual.surety.
The bond, manner of execution, and surety must be in' all respects
satisfactory to the Assistant Comptroller of the Treasury at Paris.
United States internal revenue documentary stamps are not required
on bonds of indemnity executed and delivered beyond the jurisdiction
of the United States.
4. The proof and the bond, when executed, are to be indorsed by
the officer or agent as having been submitted to him and as being the
proof and security upon which he has acted.
After the expiration of 30 days from the date of the original check
the officer or agent will make a duplicate, which must be an exact
transcript of the original, especial care being taken that the number
and date correspond with those of the original, subject to any special
instructions of the Secretary of the Treasury in particular cases.
Each such check shall bear plainly written or stamped upon the face
thereof the word " Duplicate."
The proof, bond, and duplicate check he will, without delay, forward to the Assistant Comptroller of the Treasury at Paris, who,
upon their receipt, will advise the Treasurer of the United States
at Washington that an application for a duplicate is pending, and
the Treasurer of the United States will immediately inform the
Assistant Comptroller of the Treasury at Paris whether a request
has been made to stop payment of the original and whether such
original has been presented or paid, and if not paid a caveat will
be entered, and payment will thereupon be stopped.
5. On receipt of notice from the Treasurer of the United States
at Washington that payment of the check has been stopped, and if
the information obtained is satisfactory to. the Assistant Comptroller
of the Treasury at Paris and he approves of the issue of the duplicate
and of the accompanying bond, he will certify such approval in
writing on the papers as well as on the duplicate check, retaining the
bond in his files.
6. Any duplicate check issued in pursuance of these regulations
bearing such approval of the Assistant Comptroller of the Treasury,



328

REPORT ON THE FINANCES.

when properly indorsed by the person to whom it is approved for
payment by the Assistant Comptroller of the Treasury, may be
paid subject to the same rules and regulations as apply to the
payment of original checks, but no duplicate shall be paid if the
original has already been paid.
7. I n case of the loss of a check issued by a United States disbursing
officer or agent serving in Europe who is dead or no longer in the
service of the United States the proof and bond required to be furnished by the owner of said check to an officer or agent in the service
of the United States prior to the issue of a duplicate check should
be forwarded to the Secretary of the Treasury at Washington, who
will refer them to the proper accounting officer for examination and
the statement of an account in favor of the owner of said check as
provided for in section 3647 of the Revised Statutes of the United
States.
8. Whenever such an account shall have been stated, and an officer
or agent charged with the amount of said lost check, the accounting
officer will notify the Secretary of the Treasury in order that the
amount of the check, if remaining to the credit of the officer or agent
in any United States depositary, may be repaid into the Treasury
and carried to his credit and to the credit of the proper appropriation.
9. The Assistant Comptroller of the Treasury at Paris is authorized to require a new bond of indemnity with satisfactory surety,
or sureties, whenever at any time the surety or sureties on the obligation given as above provided do not for any reason, in his opinion,
afford the United States sufficient protection and security.
10. No duplicate check will be issued more than three years from
the date of the original check.
' JAMES H . MOYLE, Acting Secretary.
[Treasury Department, Office of the Secretary, Division of Public Moneys. Form 1343C.]
BOND OF INDEMNITY AGAINST Loss OF CHECKS DRAWN ON THE TREASURER OF
THE

UNITED

STATES.

Know all men by these presents, that we

_1

5~i^iii!zririiiiiiiizii^iii^^
(Post office.)

(Street and No., if in town or city.)

(State or country.)

(Post office.)

(Street and No-, if in town or city.)

(State or country.)

(Post office.)

(Street and No., if in town or city.)

(State or country.)

as principal, and
of —
and
of

as sureties, are held and firmly bound unto the United States of America in
the sum of
J.
lawful money, to be paid to the said United States of America, or their agents
or assigns; to which payment, well and truly to be made, we bind ourselves,
our heirs, executors, administrators, successors, and assigns, jointly and severally by these presents.
Sealed with our seals, and dated this
day of .
, in the
year of our Lord one thousand nine hundred and
Whereas check No.
, dated
drawn by
.
, on the Treasurer of the
United States, to the order of
for the sum of
.
-'.
dollars,
in payment of
.
, has not been paid by the United States,



SEORETARY OF THE TREASURY.

329

but the above-named principal represents that it has been lost, stolen, or destroyed, and that he is the owner thereof and has requested that payment of
said original be stopped and that a check in the same amount be issued to
replace the same.
And whereas, the regulations of the Treasury Department of the United
States require the party thus situated to give bond to the United States, with
sureties to indemnify the United States, before another check will be issued
or any payment be made on account thereof; and before the Secretary of the
Treasury or officer authorized by him will certify that the amount of the afore-g)
said check should be paid; in consideration of the premises and of the execution
of this bond:
Now, the condition of this obligation is such that if the above-bounden obligors, their heirs, executors, administrators, successors, and assigns, or any of
them, shall and do well and truly hold harmless and indemnify the United
States of America, its officers and agents, of and from any and all liability, loss,
claim, and demand whatsoever, arising in any manner by reason of or on
account of said original check, or the stoppage of payment thereof, or the
issue or payment of another check to replace the same, together with all legal
costs and interest until paid, without any defalcation or delay, then this obligation to be void; otherwise to be and reriaain in full force and virtue.
The above-bounden principal hereby consents and expressly agrees to furnish
a new bond of indemnity with satisfactory surety (or sureties) whenever hereafter the surety on this obligation, for any reason, in the opinion of the Secretary of the Treasury, or officer authorized by him, does not afford the United
States sufficient protection and security.
Two witnesses (with address) to each.
V
signature:
—

[L. S.]
[L. S.]
[L. S.]

I certify that the sureties named in
and who executed the above bond are
well known to
me, and are sufficient for the penalty
thereof.

EXHIBIT

56-D.

[Treasury Department, Office of the Secretary, Division of Public Moneys. Form 1343D.]
REGULATIONS CONCERNING DUPLICATE CHECKS TO REPLACE
CHECKS OWNED I N EUROPE DRAWN ON DEPOSITARIES I N
EUROPE BY DISBURSING OFFICERS NOT ATTACHED TO THE
MILITARY ESTABLISHMENT.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

Washington, Di C , August 7,1918.
, The following regulations relative to duplicate checks to replace
checks drawn by disbursing otTicers and agents (other than disbursing officers and agents of the Military Establishment) against funds
in depositaries of the United States in Europe, and lost, stolen, or
destroyed while owned by holders in Europe, are prescribed and
promulgated:
1. Immediately upon the loss of a check, the owner, to better protect his interest, should in writing notify the depositary on which it
was drawn of the fact of such loss, stating the name of the disbursing
officer or agent by whom it was drawn, describing the check and all




330

REPORT 'ON T H E FINANCES.

indorsements thereon, giving, if possible, its date, number and
amount, andrequesting that payment of the same be stopped in the
manner hereinafter prpvided.
2. I n order to procure the issue of a duplicate check, the party in
interest must,furnish the disbursing officer or agent who issued the
original check with proof, stating the name and residence of the
, applicant in full, describing the check and its indorsements, showing
his interest therein, detailing the circumstances attending its loss,
and what action, if any, he has taken to stop payment thereon. The
proof must be made and signed before an officer authorized to administer oaths, in accordance with the laws of the place where such
proof is made.
3. He must also furnish to the same disbursing officer or agent a
bond executed substantially in the form attached to these regulations, which will be furnished to him by the disbursing officer or
agent or by the Assistant Comptroller of the Treasury at Paris.
The penalty of the bond should be in multiples of five of the unit
of the currency in which the lost check was drawn and at least equal
to the amount of the lost check, plus 10 per cent, but in no case less
than $10 or its eq[uivalent at the'current rate of exchange. There
shall be two sureties, except that when the amount of the lost check
is less than $10 or its equivalent at the current rate of exchange, a
bond with one individual surety may be accepted. I t is not necessary
that sureties be citizens or residents of the United States. A corporate surety authorized by the Secretary of the Treasury under the
act of August 13, 1894, as amended by the act of March 23, 1910,
may be accepted in lieu of any individual surety. The bond, manner
of execution, and surety must be in all respects satisfactory to the
Assistant Comptroller of the Treasury at Paris. United States
internal-revenue documentary stamps are not required on bonds ot
indemnity executed and delivered beyond the jurisdiction of the
United States.
4. The proof and the bond, when executed, are to be indorsed by the
officer or agent as having been submitted to him, and as being the
proof and security upon which he has acted.
After the expiration of thirty days from the date of the original
check the officer or agent will make a duplicate, which must be an
exact transcript of the original, especial care being taken that the
number and date correspond with those of the original, subject to
any speciaf instructions of the Secretary of the Treasury in particular cases. Each such check shall bear plainly written or stamped
upon the face thereof the word "Duplicate."
The proof, bond, and duplicate check he will, without delay, forward to the Assistant Comptroller of the Treasury at Paris, who,
upon their receipt, will advise the depositary on which, the check
was drawn that an application for a duplicate is pending, and the
depositary will immediately inform the Assistant Comptroller
whether a request has been made to stop payment of the original,
and whether such original has been presented or paid, and if not paid,
a caveat will be entered, payment will thereupon be stopped, and the
Assistant Comptroller informed thereof.
5. If the information obtained is satisfactory to the Assistant
Comptroller of the .Treasury at Paris, and he approves of the issue




SECRETARY OF THE TREASURY.

331

of the duplicate and of the accompanying bond, he will certify such
approval in writing, on the papers as well as on the duplicate check,
retaining the bond in his files.
6. Any duplicate check issued in pursuance of these regulations,
bearing such approval of the Assistant Comptroller of the Treasury
at Paris, when properly indorsed by the person to whom it is approved for payment by the Assistant Comptroller^ of the Treasury,
may be paid subject to the same rules and regulations as apply to the
payment of original checks; but no duplicate shall be paid if the
original has already been paid.
7. I n case of the loss of a check drawn on a foreign depositary
issued by a United States disbursing officer or agent serving in Europe who is dead or no longer in the service of the United States,
the proof and bond required to be furnished by the owner of said
check to an officer or agent in the service of the United States, prior
to the issue of a duplicate check, should be forwarded to the Secretary of the Treasury at Washington, who will refer them to the
proper accounting officer for examination and the statement of an
account in favor of the owner of said check, as provided for in section 3647 of the Revised Statutes of the United States.
8. Whenever such an account shall have been stated, and an officer
or agent charged with the amount of said lost check, the accounting
officer will notify the Secretary of the Treasury in order that the
amount of the check, if remaining to the credit of the officer or agent
in any United States depositary, may be repaid into the Treasury
and carried to his credit and to the credit of the proper appropriation.
9. The Assistant Comptroller of the Treasury at Paris is authorized to require a new bond of indemnity with satisfactory surety,
or sureties, whenever at any time the surety or sureties on the obligation given as above provided do not for any reason, in his opinion,
afford the United States sufficient protection and securety.
,
10. No duplicate check will be issued more than three years* from,
the date of the original check.
JAMES H . MOYLE, Acting Secretary.

[Treasury Department, Office of the Secretary, Division of Public Moneys. Form 1343D.]
BOND OF INDEMNITY AGAINST LOSS OF CHECK DRAWN ON DEPOSITARIES IN
EUROPE.

Know all men by these presents, that we,
ofl—
(Post-office address.)

(Street and number, if in town or city.)

(State or country.)

(Post-office address.)
and
of
(Post-office address.)

(Street and number, if in town or city.)
-r

(State or country.)

as principal, and
of

(Street and number, if in town or city.)

'—

(State or country.)

as sureties, are held and firmly bound unto the United States of America in
the sum of
lawful money, to be paid to the said United States of America, or their agents or
assigns; to avhich payment well and truly to be made, we bind ourselves, our
heirs, executors, administrators, successors, and assigns, jointly and severally
by these ^presents.



332

REPORT ON THE FINANCES.

Sealed with our seals, and dated this
day of—
,
in the year of our Lord, one thousand nine hundred and__^
Whereas check No
, dated .
drawn by—
on the
at
to the order of.:
^_^
for the sum of
^
in payment of
, has not been paid,
but the above-named principal represents that it has been lost, stolen, or destroyed, and that he is the owner thereof, and has requested that payment of
said original be stopped, and that a check in the same amount be issued to
replace the same.
'
And whereas said check was issued by a disbursing officer of the United
States in payment of a debt due by the United States;
And whereas the Regulations of the Treasury Department of the United
States require the party thus situated to give bond to the United States, with
sureties to indemnify the United States, before another check will be issued or
any payment be made on account thereof; and before the Secretary of the Treasury, or officer authorized by him, will certify that the amount pf the aforesaid
check should be paid, in consideration of the premises and of the execution
of this bond;,
Now, the conditions of this obligation is such, that if the above-bounden
obligors, their heirs, ^ executors, administrators, successors, and assigns, or
any of them, shall and do well and truly hold harmless and indemnify the
United States of America, its officers and agents, of and from any and all
liability, loss, claim, and demand whatsoever, arising in any manner by reason
of or on account of said original check, or the stoppage of payment thereof,
or the issue or payment of another check to replace the same, together with
all legal costs and interest until paid, without any defalcation or delay, then
this obligation to be void; otherwise, to be and remain in full force and virtue.
The above-bounden principal hereby consents and expressly agrees to, furnish
a new bond of indemnity with satisfactory surety (or sureties) whenever hereafter the surety on this obligation, for any reason, in the opinion of the Secretary of the Treasury, or officer authorized by him, does not afford the United
States sufficient protection and' security.
'
'
.
Two witnesses, with address, to each
signature:
.

:

_ -

""•
__
.
"




:

-_

[L. S.]
[L. S.]
- [ L . s.]

I certify that the sureties named
lj^ ^^^ ^^j^Q executed the above bond
are
^gjj known to me, and are sufficient
for the penalty thereof

EXHIBIT

57-A.

[PUBLIC—'No. 151—65TH CONGRESS.]
[H. R. 11245.]
AN A C T TO amend an Act entitled "An Act to authorize the establishment of
a.Bureau of War Risk Insurance in the Treasury Department," approved
September second, nineteen hundred and fourteen, and an Act in amendment
thereto, approved October sixth, nineteen hundred and seventeen.

Be it enacted by the Senate amd House of Representatives of the
United States- of America in Congress assembled. That section thirteen, article one, of the Act approved October sixth, nineteen hundred and seventeen, entitled "An Act to authorize the establishment
of a Bureau of War Risk Insurance in the Treasury Department,"
be, and is hereby, amended by striking out the following words in the
last sentence: " to regulate the matter of compensation, if any, but in
no case to exceed ten per centum, to be paid to claim agents and attorneys for services in connection with any of the matters provided
for in articles two, three, and four," and insert at the end of the sentence the following words: ''Provided, however. That payment to
any attorney or agent for such assistance as may be required in the
preparation and execution of the necessary papers shall not exceed
$3 in any one case: And provided further. That no claim agent or
attorney shall be recognized in the presentation or adjudication of
claims under articles two, three, and four, except that in.the event of
disagreement as to a claim under the contract of insurance between
the bureau and any beneficiary or beneficiaries thereunder, an action
on the claim may be brought against the United States in the district court of the United States in and for the district in which such
beneficiaries or any one of them resides, and that whenever judgment
shall be rendered in an action brought pursuant to this provision, the
court, as part of its judgment, shall determine and allow such reasonable attorney's fees, not to exceed five per centum of the amount
recovered, to be paid by the claimant in behalf of whom such proceedings were instituted^ to his attorney.
"Any person who shall directly or indirectly solicit, contract for,
charge, or receive, or who shall attempt to solicit, contract for,
charge, or receive, any fee or compensation, except as herein provided, shall be guilty of a misdemeanor, and for each and every
offense shall be punishable by a fine of not more than $500 or by
imprisonment at hard labor for not more than two. years, or by both
such fine and imprisonment," so that the section as amended shall
read as follows:
" S E C . 13. That the director, subject to the general direction of
the Secretary of the Treasury, shall administer, execute, and enforce
the provisions of this Act, and for that purpose have full power and
authority to make rules and regulations not inconsistent with the
provisions of this Act, necessary or appropriate to carry out its purposes, and shall decide all questions arising under the Act, except as
otherwise provided in section five. Wherever under any provision




333

334

REPORT ON THE FINANCES.

or provisions of the Act regulations are directed or authorized to be
made, such regulations, unless the context otherwise requires, shall
or may be made by the director, subject to the general direction of
the Secretary of the Treasury. The director shall adopt reasonable
and proper rules to govern the procedure of the divisions and to
regulate and provide for the nature and extent of the proofs and
evidence and the method of taking and furnishing the same in order
to establish the right to benefits of allowance, allotment, compensation, or insurance provided for in this Act, the forms of application
of those claiming to be entitled to such benefits, the methods of making investigations and medical examinations, and the manner and
form of adjudications and awards: Provided, however. That payment to ariy attorney or agent for such assistance as may be required
in the preparation and execution of the necessary papers shall not
exceed $3 in any one case: And provided further. That no claim
agent or attorney shall be recognized in the presentation or adjudication of claims under articles two, three, and four, except that in the
event of disagreement as to a claim under the contract of insurance
between the bureau and any beneficiary or beneficiaries thereunder
kn action on the claim may be brought against the United States in
the district court of the United States in and for the district in which
such beneficiaries .or any one of them resides, and that whenever
judgment shall be rendered in an action brought pursuant to this
provision the court, as part of its judgment, shall determine and
allow such reasonable attorney's fees, not to exceed five per centum
of the amount recovered, to be paid by the claimant in behalf of
whom such proceedings were instituted to his attorney, said fee to
be paid out of the payments to be made to the beneficiary under the
judgment rendered at a rate not exceeding one-tenth of each of such
payments until paid.
" Any person who shall, directly or indirectly, solicit, contract for,
charge, or receive, or who shall attempt to solicit, contract „ for,
charge, or receive any fee or compensation, except as herein provided, shall be guilty of a misdemeanor, and for each and every
offense shall be punishable by a fine of not more than $500 or by imprisonment at hard labor for not more than two years, or by both
such fine and imprisonment."
SEC. 2. That Article I V of said Act, approved October sixth, nineteen hundred and seventeen, entitled "An Act to authorize the establishment of a Bureau of War Risk Insurance in the Treasury Department," is hereby amended by striking out section four hundred and
five thereof.
Approved, May 20, 1918.
EXHIBIT

57-B.

[PUBLIC—No. 175—65TH CONGRESS.]
[S.4482.]
AN ACT To amend an Act entitled "An Act to authorize the establishment of
a Bureau ^of War Risk Insurance in the Treasury Department," approved
September second, nineteen hundred ^and fourteen, as amended.

Be it enacted by the Senate and Rouse of Representatives of the
United States of America in Congress assembled, That the second



SECRETARY OF THE TREASURY.

335

subdivision (4) of section twenty-two of the Act entitled "An Act to
authorize the establishment of a Bureau of War Risk Insurance in
the Treasury Department," approved September second, nineteen
hundred and fourteen, as amended, relating to the definition of the
term " parent," is hereby amended to read as follows:
"(4) The term ' p a r e n t ' includes a father, mother, grandfather,
grandmother, father through adoption, mother through adoption,
stepfather, and stepmother, either of the person in the service or of
the spouse."
SEC. 2. That four new sections are hereby added to Article I of
said Act, to be known as sections twenty-seven, twenty-eight, twentynine, and thirty, respectively, and to read as follows:
" SEC. 27. That whoever shall obtain or receive any inoney, check,
allotment, family allowance, compensation, or insurance under Articles I I , I I I , or I V of this Act, without being entitled thereto, with
intent to defraud the United States or any person in the militairy or
naval forces of the United States, shall be punished by a fine of not
more than $2,000, or by imprisonment for not more than one year,
or both.
" SEC. 28. That the allotments and family allowances, compensation, and insurance payable under Articles I I , I I I , and IV, respectively, shall not be assignable; shall not be subject to the claims of
creditors of any person to whom an award is made under Articles I I ,
I I I , or I V ; and shall be exempt from all taxation: Provided, That
such allotments and family allowances, compensation, and insurance
shall be subject to any claims which the United States may.have,
under Articles I I , I I I , and IV, against the person on whose account
the allotments and family allowances, compensation, or ins^ranGe is
payable.
" SEC. 29. That the discharge or dismissal of any person from the
military or naval forces on the ground that he is an enemy alien,
conscientious objector, or a deserter, or as guilty of mutiny, treason,
spying,, or any offense involving moral turpitude, or willful and
persistent misconduct shall terminate any insurance granted on the
life of such person under the provisions of Article IV, and shall bar
all rights to any compensation under Article I I I or any insurance
under Article IV.
" SEC. 30. That this Act may be cited as the war-risk insurance
Act." \
^
o
SEC. 3. That section two hundred of said Act is hereby amended
to read as follows:
" S E C . 200. That the provisions of this article shall apply to all
enlisted men in the military or naval forces of the United States,
except the Philippine Scouts, the insular force of ^the Navy, and the
Samoan native guard and band of the. Navy."
SEC. 4. That the second, and third paragraphs of section two
hundred and one of said Act are hereby amended to read as follows:
" The monthly compulsory allotment shall be $15. For a wife
living separate and apart from her husband under court order or
written agreement, or for a former wife divorced, the monthly compulsory allotment shall not exceed the amount specified, in the court
order, decree, or written agreement to be paid to her, and for an illegitimate chird, to whose support the father has been judicially ordered




336

REPORT ON T H E FINANCES.

or decreed to contribute, it shall not exceed the amount fixed in the
order or decree.
" I f there is a compulsory allotment for a wife or child, then a
former wife divorced who has not remarried and to whom alimony
has been decreed, shall hot be entitled to a compulsory allotment, but
shall be entitled to a family allowance as hereinafter provided."
SEC. 5. That section two hundred and three of said Act is hereby
amended to read as follows:
" SEC. 203. That in case one-half of an enlisted man's monthly pay
is not allotted, regulations to be made by the Secretary of War and
the Secretary of the Navy, respectively, may require, under circumstances and conditions as may be prescribed in such regulations, that
any proportion of such one-half pay as is not allotted shall be deposited to his credit, to be held during such period of his service as may
be prescribed. Such deposit shall bear interest at the same rate as
United States bonds bear for the same period, and, when payable,.
shall "be paid principal and interest to the enlisted man, if living,
otherwise'to any beneficiary or beneficiaries he may have designated,
or if there be no such beneficiary, then to the person or persons who,
under the laws of the State of his residence, would be entitled to his
personal property in case of intestacy."
SEC. 6. That the third and fourth paragraphs of section two
hundred and four of said Act are hereby amended to read as follows:
"Class A. I n the case of a inan to his wife (including a former wife
divorced) and to his child or children—
" ( a ) If there is a wife but no child, $15;
,
" ( b ) If there is a wife and one child, $25;
"(c) If there is a wife and two children, $32?50, with $5 per month
additional for each additional child;
" ( d ) If there is no wife, but one child, $5;
"(e) If there is no wife, but two ^children, $12.50;
" ( f ) If there is no wife, but three children, $20;
" ( g ) If there is no wife, but four children, $30, with $5 per.month
additional for each additional child;
" ( h ) If there is a former wife divorced who has not remarri'Cd and
to whom alimony has been decreed, $15.
"Class B. I n the case of a man or woman to a grandchild, a parent,
brother, or sister—
" ( a ) If there is one parent, $10;
" ( b ) If there ai*e two parents, $20;
"(c) I f fthere is a grandchild, brother, sister, or additional parent,
•
•
$5 for each.
" I n the case of a woman, the family allowances for a husband and
children shall be in the same amounts, respectively, as are payable,
in the case of a man, to a wife and children, provided she makes a
voluntary allotment of $15 as a basis therefor, and provided, further,
that dependency exists as required in section two hundred and six."
S E C T . That section two hundred and six of said Act is hereby
amended to read as follows:
" SEC. 206. That family allowances to members of class B shall be
paid only if and while the members are dependent in whole or in part,
on the enlisted man, and then only if and while the enlisted man
makes a monthly allotment of his pay for such members in the following amounts:




SECRETARY OF T H E TREASURY.

337

" ( a ) If an enlisted man is not making a compulsory allotment for
class A the allotment for class B required as a condition to the family
allowance shall be $15;
.
"(b) If an enlisted man is making a compulsory allotment for
class A the additional allotment for class B required as a condition
to the family allowance shall be $5, or if a woman is making an allotment of $15 for a dependent husband or dhild the additional allotment^for the other members of class B required as a condition to the
family allowaiice shall be $5."
SEC. 8. That section two hundred and ten of said Act is hereby
amended to read as follows:
" SEC. 210. That upon receipt of any application for family allowance, the commissioner shall make all proper investigations and
shall make an award, on the basis of which award the amount of the
allotments to be made by the man shall be certified to the War
Department or Navy Department, as may be proper. Whenever the
commissioner shall have reason to believe that an allowance has
been improperly made or that the conditions have changed, he shall
investigate or reinvestigate and may modify the award. The amount
of each monthly allotment and allowance shall be determined according to the family conditions existing on the first day of the month."
SEC. 9. That sections four, six, seven, and eight of this Act shall
take effect on the first day of July, nineteen hundred and eighteen.
SEC. 10. That section three hundred of said Act is hereby amended
to read as follows:
. " SEC. 300. That for death or disability resulting from personal
injury suffered or disease contracted in the line of duty, by any com^ missioned officer or enlisted man or by any member of the Army
Nurse Corps (female) or of the Navy Nurse Corps (female) when
employed in the active service under the War Department or Navy
Department, the United States shall pay compensation as hereinafter
provided; but no compensation shall be paid if the injury or disease^
has been caused by his own willful misconduct: Provided, That for
the purposes of this section said officer, enlisted man, or other member
shall be held and taken to/have been^ in sound condition when examined, accepted, and enrolled for service: Provided further. That this
section, as amended, shall be deemed to become effective as of October sixth, nineteen hundred and seventeen."
SEC, 11. That section three hundred and one of said Act is hereby
amended to read as follows:
" SEC. 301. That if death results from injury—
" If the deceased leaves a widow or child, or if he leaves a mother
or father either or both dependent upon him for support, the monthly
compensation shall be the following amounts:
" ( a ) If there is a widow but no child, $25;
"(b) If there is a widow and one child, $35;
" (c) If there is a widow and two children, $42.50, with $5 for each
additional child up to two;
" ( d ) If there is no widow, but one child, $20;
"(e) If there is no widow, but two children, $30;
" (f) If there is no widow, but three children, $40, with $5 for each
additional child up to two;
" (g) If there is a dependent mother (or dependent father). $20, or
both, $30. The amount payable under this subdivision shall not
86429°—FI 1918-^

22




338

REPORT ON T H E FINANCES.

exceed the difference between the total amount payable to the widow
and. children and the sum of $75. This compensation shall be payable
for the death of but one child, and no compensation for the death of
a child shall be payable if the dependent mother is in receipt of compensation under the provisions of this article for the death of her
husband. Such compensation sTiall be payable whether the dependency of the father or mother or both arises before or after the death
of the' person, but no compensation shall be payable if the dependency arises more than five years after the death of the^ person.
" I f the death occurs before discharge or resignation from service,
the United States shall pay for burial expenses and the return of
the body to his home a sum not to exceed $100, as may be fixed by.
regulations.
" The payment of compensation to a widow shall continue until her
death or remarriage.
*
^
" T h e payment of (Compensation.to or for a child shall continue
until such child reaches the age of eighteen years or marries, or if
such child be incapable, because of insanity, idiocy, or being otherwise permanently helpless, then during such incapacity.
" Whenever the compensation payable to or for the benefit of any
person under the provisions of this section is teririinated by the
happening of the contingency upon which it is limited, the compensation thereafter for the remaining beneficiary or beneficiaries, ,if any,
shall be the amoutit which would have been payable to them if they
had been the sole original beneficiaries.
"As between the widow and the children not in her custody, and
as between children, the amount of the compensation shall be apportioned as may be prescribed by regulation.
" The term ' widow' as used in this se(5tion shall not include one
who shall have married the deceased later than ten years after the
time of injury, and shall include a widower, whenever his condition
is such that, if the deceased person were living, he would have been
dependent upon her for support."
SEC. 12. That subdivision (1) of section three hundred and two of
said Act is hereby amended to read as follows:
"(1) If and while the disability is total, the monthly compensation
shall be the following amounts:
" ( a ) If the disabled person has neither wife nor child living, $30;
" (b) If he has a wife but no child living, $45;
" (c) If he has a wife and one child living, $55;
" ( d ) If he has a wife and two children living, $65;
"(e) If he has a wife and three or more children living, $75;
"(f) If he has no wife but one child living, $40, with $10 for each
additional child, up to two;
"(g) If he has a mother or father, either or both dependent on
him for support, then in addition to the above amounts, $10 for
each;
.
_
" (h) If he is totally disabled and in addition so helpless as to be
in constant need of a nurse or attendant, such additional sum shall
be paid, but not exceeding $20 per month, as the director may deem
reasonable: Provided, hoioever, Th^t for the loss of both feet or
both hands or both eyes, or for becoming totally blind or becoming
helpless and permanently bedridden from causes occurring in the




SECRETARY OF T H E TREASURY.

339

line of duty in the service of the United States, the rate of compensation shall be $100 per" month: Provided further. That where the
rate of ccimpensation is $100 per month, no allowance shall be made
foroa nurse or attendant."
SEC. 13. That subdivision (4) of section three hundred and two
' of said Act is hereby amended to read as follows:
"(4) The amount of each monthly payment shall be determined
according to the family conditions existing on the first day of the
month."
SEC. 14. That two new subdivisions are hereby added to section
three hundred and^ two of said Act, to be known as subdivisions
(5) and (6), respectively, and to read as follows:
"(5) Where the disabled person and his wife are not living together, or where the children are not in the custody of the disabled
person, the amount of the compensation shall be apportioned as may
be prescribed by regulations.
"(6) The term ' w i f e ' as used in thi,s section shall include 'husband ' if the husband is dependent upon the wife for support."
SEC. 15. That where section three hundred and one of said Act is
amended by striking out the provisions that a mother is entitled to
compensation 6nly when she is widowed and substitute provisions
are included to the effect that compensation is payable to a dependent mother or dependent father, such substitute provisions shall be
deemed to be in effect as of October sixth, nineteen hundred and
seventeen.
SEC. 16. That section three hundred and eleven of said Act is
hereby repealed.
SEC. 17. That section three hundred and twelve of said Act is
hereby amended to rea4 as follows:
" SEC. 312. That compensation under this article shall not be paid
while the person is in receipt of service or retirement pay. The
laws providing for gratuities or payments in the event of death in
the service and existing pension laws shall not be applicable after
the enactment of this amendment to any person in the active military
or naval service on the sixth day of October, nineteen hundred and
seventeen, or who thereafter entered the active military or naval
service, or to their widows, children, or their dependents, except in
so far as rights under any such law have heretofore accrued.
" Compensation because of disability or death of members of the
Army Nurse Corps (female) or of the Navy Nurse Corps (female)
shall be in lieu of any compensation for such disability or death
under the Act erititled 'An Act to provide compensation for employees of the United States suffering injuries while in the performance of their duties, and for other purposes,' approved September
seventh, nineteen hundred and sixteen."
SEC. 18. That section three hundred and thirteen of said Act is
hereby amended to read as follows:
" SEC. 313. (1) That if an injury or death for which conipensation
is payable under this article is caused under circumstances creating a
legal liability upon some person other than the United States or the
enemy to pay damages therefor, the director, as a condition to payment of compensation by the United States, may require the beneficiary to assign to the United States any right of action .he may have




340

REPORT ON THE FINANCES.

to enforce such liability of such other person, or if it appears to be
for the best interests of the beneficiary the director may require
him to prosecute the said action in his own name, subject to regulations. The director may require such assignment or prosecution
at any time after the injury or death, and the failure on the part of the
beneficiary to so assign or to prosecute said cause of action in his
own name within a reasonable time, to be fixed by the director,
shall bar any right to compensation on account of the same injury
or death. The cause of action so assigned to the United States
may be prosecuted or compromised by the director, and any money
realized or collected thereon, less the reasonable expenses of such
realization or collection, shall be placed to the credit of the military
and naval compensation appropriation. If the amount placed to
the credit of such appropriation in such case is in excess of the amount
of the award of compensation, if any, such excess shall be paid to
the beneficiary after any compensation award for the same injury
or death is made.
" If a beneficiary or conditional beneficiary shall have recovered,
as a result of a suit brought by him or on his behalf, or as a result of a
settlement made by him or on his behalf, any money or other property
iri satisfaction of the liability of such other person, such money or
other property so recovered shall be credited upon any compensation payable, or which may become payable, to such beneficiary, or
conditional beneficiary by the -United States on account of the same
injury or death.
"(2) If an injury or death for which compensation may be payable under this article is caused under circumstances creating a
legal liability upon some person, other than the United States or
the enemy, to pay damages therefor, then, in order to preserve the
right of action, the director may require the conditional beneficiary
at any time after the injury or death, to assign such right of action
to the United States, or, if it appears to be for the best interests
of such conditional beneficiary, to prosecute the said cause of action
in his own name, subject to regulations. The failure on the part
of the beneficiary to so assign or to prosecute the said cause of action
in his own name within a reasonable time, to be fixed by the director,
shall bar any right to compensation on account of the same injury or
death. The cause of action so assigned may be prosecuted or compromised by the director, and any money realized or collected
thereon, less the reasonable expenses of such realization or collection, shall be paid to such beneficiary, and be credited upon any
future compensation which may become payable to such beneficiary
by the United States on account of the same injury or death.
••(3) The bureau shall make all necessary regulations for carrying
out the purposes of this section. For the purposes of computation
only under this section the total amount of compensation due any
beneficiary shall be deemed to be equivalent to a lump sum equal to
the present value of all future payments of compensation computed
aSjjOf the date of the award of compensation at four per centum, true
discount, compounded annually. The probability of the beneficiary's
death before the expiration of the period during which he is entitled
to compensation shall be determined according to the American
Experience Table of Mortality.




SECRETARY OF THE TREASURY.

341

"A conditional beneficiary is any person who may become entitled
to compensation under this article on or after the death of the
injured person.
" Nothing in this section shall be construed to impose any administrative duties upon the War or Navy Departments."
S E C 19. That section four hundred and one of said Act is hereby
amended to read as follows:
" SEC. 401. That such insurance must be applied for within one
hundre(i and twenty days after enlistment or after entrance into or
employment in the active service and before discharge or resignation,
except that those persons who are in the active war service at the
time of the publication of the terms and conditions of such contract
of insurance may apply at any time within one hundred and twenty
days thereafter and while in such service. Any person in the active
service on or after the sixth, day of April, nineteen hundred and seventeen, who, while in such service and before the expiration of one
hundred and twenty days from and after such publication, becomes
or has become totally and permanently disabled, or dies, or has died,
without having applied for insurance, shall be deemed to have applied for and to have been granted insurance, payable to such person
during his life in monthly installments of $25 each. If he shall die
either before he shall have received any of such monthly installments
„ or before he shall have received two hundred and forty of such
monthly installments, then $25 per month shall be paid to his widow
from the time of his death and during her widowhood, or if there is
no widow surviving him, then to his child or children, or if there is
no child surviving him, then to his mother, or if there is no mother
surviving him, then to his father,- if and while they survive him:
Provided, however. That not more than two hundred and forty of
such monthly installments, including those received by such person
during his total and permanent disability, shall be so paid. The
amount of the monthly installments shall be apportioned between
children as may be provided by regulations."
SEC. 20. That section nineteen of this Act amending section four
hundred and one of the Act entitled "An Act to authorize the establishment of a Bureau-of War Risk Insurance in the Treasury Department," approved September second, nineteen hundred and fourteen,
as amended, shall be deemed to be in effect as of October sixth, nine'teen hundred and seventeen: Provided, That nothing herein shall be
construed to interfere with the payment of monthly installments,
authorized Ito be made under the provisions of said section four hundred and one as originally enacted, for the months up to and including June, nineteen hundred and eighteen: Provided further. That all
awards of automatic insurance under the provisions of said section
four hundred and one as originally enacted shall be revised "as of the
first day of July, nineteen hundred and eighteen, in accordance with
the provisions of said section four hundred and one as amended by
section nineteen of this Act.
SEC. 21. That section four hundred and two of said Act is hereby
amended to read as follows:
'
*
" SEC. 402. That the director, subject to the general direction of
the Secretary of the Treasury, shall promptly determine upon and
publish the full and exact terms and conditions of such contract of




342

REPORT ON THE FINANCES. .

insurance. The insurance shall be payable only to a spouse, child,
grandchild, parent, brother, or sister, and also during total and permanent disability to the injured person, or to any or all of them.
The insurance shall' be payable in two hundred and forty equal
monthly installments. Provisions for maturity at certain ages, for
continuous installments during the life oS the insured or beneficiaries,
or both, for cash, loan, paid up and extended values, dividends from
gains and savings, and such other provisions for the protection and
advantage of and for alternative benefits to the insured and the beneficiaries as may be found to be reasonable and practicable, may be
provided for in the contract of insurance, or from time to time by
regulations. All calculations shall be based upon the American Experience Table of Mortality and interest at three and one-half per
centum per annum, except that no deduction shall be made for continuous installments during the life of the insured in case his total
and permanent disability continues more than tAvo hundred and forty
months. Subject to regulations, the insured shall at all times have
the right to change the beneficiary or beneficiaries of such insurance
without the consent of such beneficiary or beneficiaries, but only
within the classes herein provided. If no beneficiary within the
permitted class be designated by the insured, either in his lifetime or
by his last will and testament, or if the designated beneficiary does
not survive the insured, the insurance shall be payable to such person
or persons within the permitted class of beneficiaries as would under
the laws of the State of the residence of the insured be entitled to his
person property in case of intestacy. If no sucih person survive the
insured, then there shall be paid to the estate of the insured an amount
equal to the reserve value, if any,, of the insurance at the time of his
death, calculated on the basis of the American Experience Table of
Mortality and three and one-half per centum interest in full of all
obligations under the contract of insurance."
Approved, June 25,1918.
EXHIBIT

57-C.

[PUBLIC—No. 195—65TH CONGRESS.]
[H. R. 11048.]
AN ACT To amend the war-risk insurance Act.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled. That the war-risk
insurance Act is hereby amended by adding to such Act a new section,
to be known as section two b, to read as follows:
" SEC. 2b. That when it appears to the Secretary of the Treasury
that vessels of foreign friendly flags, or their masters, officers, or
crews, or shippers or importers in such vessels, are unable in any
trade to secure adequate war-risk insurance on reasonable terms,
thie Bureau of War Risk Insurarice, with the approval of the Secretary, is hereby authorized to make provisions for the insurance by
the United States of (1). such vessels of foreign friendly flags, their
freight and passage moneys, and personal effects of the iiiasters.




SEORETARY OF THE TREASURY.

343

officers, and crews thereof against the risks of war V h e n such vessels
are chartered or operated by the United States Shipping Board or
its agent, or chartered by any person a citizen of the United States,
and (2) the cargoes to be shipped in su^ch vessels of foreign friendly
flags, whether or not they are so chartered. Such insurance on the
vessel, however,, is authorized only when the United States Shippingo
Board or its agent operates the vessel or the charterers are, by the
terms of the charter party or contract with the vessel owners, required
to assume the war risk or provide insurance protecting the vessel
owners against war risk during the term of the charter or hire of the
vessel.
" The Bureau of War Risk Insurance, with the approval of the
Secretary of the Treasury, is also hereby authorized to insure the
masters, officers, and crews of vessels operated or chartered as aforesaid against the loss of life or personal injury by the risk of war
and for compensation during the detention following capture by
enemies of the United States, whenever it appears to the Secretary
that the owners, operators, or charterers of such vessels are unable,
in any trade, to secure such insurance on reasonable terms."
S E C . 2. That section flve of the war-risk insurance Act is hereby
amended to read as follows:
.
" S E C 5. That the Secretary of the Treasury is authorized to establish an advisory board, to consist of three members skilled in the
practices of war-risk insurance, for the purpose of assisting the
Bureau of War Risk Insurance in fixing rates of premium and in
adjustment of claims for losses, and generally in carrying out the
purposes of this Act; the compensation of the members of said board
to be determined by the Secretary of the Treasury, but not to exceed
$20 a day each while actually employed. . He is likewise authorized
to appoint two persons skilled in the practice of accident insurance
for the purpose of assisting the Bureau of War Risk Insurance in the
adjustment of claims for death, personal injury,,or detention; the
compensation of persons so appointed to be determined by the
Secretary of the Treasury, but not to exceed $20 a day each while
actually emploj^ed. J n the event of. disagreement as to the claim for'
losses, or amount thereof, between the said bureau and the parties
to such contract of insurance, an action on the claim may be brought
against the United States in the district court of the United States,
sitting in admiralty, iii the district in which the claimant or his agents
may reside. The Secretary of the Treasury is, in his judgment,
authorized to compromise the claim either before or after the institution of an action therein."
S E C 3. That section nine of the war-risk insurance Act is hereby
amended to read as follows:
" S E C 9. That the President is authorized whenever in his judgment the necessity of further war insurance by the United States shall
have ceased to exist to suspend the operation of this Act, in so far
as the Division of Marine and Seamen's Insurance is concerned,
which suspension shall be made in any event within six months after
the end of the war, but shall not affect any insurance outstanding
at the time or any claims pending adjustment. For the purpose.of
the final adjustment of any such outstanding insurance or claims,
the Division of Marine and Seamen's Insurance may, in the discre-




344

REPORT ON THE FINANCES.

tion of the President, be continued in existence for a period not
exceeding three years after such suspension.
" The words ' end of the w a r ' as used herein shall be deemed to
mean the date of proclamation of exchange of ratification of the
treaty of peace, unless the President shall, by proclamaticm, declare
a prior date, in which case the date so proclaimed shall be deemed
to be the ' end of the w a r ' within the meaning of this Act."
\
Approved, July 11, 1918.




/

EXHIBIT 58.
•,^

[PUBLIC—No. 95—65TH CONGRESS.]
[S. 3235.] .

An Act Amending section thirty-two, Federal Farm' Loan Act,
approved July seventeenth, nineteen hundred and sixteen.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That the Federal
Farm Loan Act, approved July seventeenth, nineteen hundred and
sixteen, is hereby amended by adding at the end' of section thirty-two
the following:
" The Secretary of the Treasury is further authorized, in his discretion, upon the request of the Federal Farm Loan Board, from time
to tim^e during the fiscal years ending June thirtieth, nineteen hundi'ed and eighteen, and June thirtieth, nineteen hundred and nineteen,
respectiyely, to purchase at par and accrued interest with any funds
in the Treasury not otherwise appropriated, from any Federal land
bank, farm loan bonds issued by such bank.
" Such purchases shall not exceed the sum of $100,000,000 in either
of such fiscal years. Any Federal land bank may at any time repurchase at par and accrued interest for the purpose of redemption
or resale any bonds so purchased from it and held in the Treasury.
" The bonds of any Federal land bank so purchased by the. Secretary of the Treasury, and held in the Treasury under the provisions
of this amendment one year after the termination of the pending war,
shall upon thirty days' notice from the Secretary of the Treasury be
redeemed or repurchased by such bank at par and accrued interest.
" The j;emporary organization of any Federal land bank as provided in section four of said Federal Farm Loan Act shall be continued so long as any farm lo^n bonds purchased from it under the
provisions of this amendment shall be held by the Treasury, and until
the subscriptions to stock in such bank by national farm loan associations shall equal the amount of stock held in such bank by the
Government of the United States."
.
S E C 2. That all Acts or parts of Acts inconsistent with this Act
are hereby repealed, and this Act shall take effect upon its passage.
The right to amend, alter, or repeal this Act is hereby expressly
reserved.
Approved, January 18,1918.
'




345

EXHIBIT

59.

[United States of America. Treasury Department. Department of Agriculture. Joint
Circular No. 1.] ^
R E G U L A T I O N S R E L A T I V E TO F A R M E R S ' S E E D - G R A I N LOANS
DROUTH-STRICKEN AREAS.

IN

WASHINGTON, D . C , August 2, 1918.

This circular is issued jointly by the Treausry Department and
the Department of Agriculture, and will define the procedure relative to granting seed-grain loans to farmers in drouth-stricken areas
out of the appropriation for the national security^ and defense provided for under the act of Congress, approved July 1, 1918, and
placed at the disposal of said departments by the President of the
United States under date of July 26, 1918, and from such other
funds as may be appropriated or made available to said departments from time to time for the same purpose.
1. The Federal land banks, upon being designated as financial
agents of the United States, for that purpose, are authorized to
make, and collect when due, seed-grain loans out of the funds above
described, pursuant to these regulations. Their proceedings will be
under the supervision of the Federal Farm Loan Board, and said
board is authorized to instruct said banks in all matters in connection with said loans, subject to these regulations.
2. The. Federal land banks, designated as stated above, may in
turn designate local banks, or other agencies, to represent them in
the taking of applications, the delivery of the certificates of approval, and the receipt, transmission, and recordation of documents.
Neither the Federal land banks, nor any agency acting under them,
shall be entitled to compensation for services rendered under these
regulations.
3. Seed-grain loans may be made tp farmers in areas determined
by the Department of Agriculture to have suffered two successive
crop failures from severe drought or winter killing, and. may be
made to such individuals as may be found by the Department of
Agriculture to have acreage fit for planting, and who, by reason
of such crop failures have exhausted their resources and are without
commercial basis of credit. No loan will be made to any farmer
who has unencumbered real or personal property sufficient to secure
a loan of $300. ^
'^
4. No seed-grain loan will be made to any applicant in excess of
$300, nor in an amount greater than $3 per acre. Applicants must
agree to use seed and inethods approved by the Department of
Agriculture.
5. Applications for seed-grain loans shall be made on the official
form of application, of which a copy is hereto attached, and shall be
verified by the applicant under oath. The application shall describe
the particular acreage to be planted, not in excess of 100 acres. Such
346



SECRETARY OF T H E TREASURY.

347

applications will be investigated by the Department of Agriculture
through such agencies as it may determine, and the approval or disapproval of the application will be certified by its authorized representatives to the Federal land bank of the district upon the forms
provided for that purpose on the official application blank. Approval may be for a less acreage than that applied for. The Federal
land bank of the district will then certify its approval or disapproval
upon the form contained on the application blank, and, if it approve,
it will issue to the applicant its certificate of approval in the form
attached to these regulations.
6. The amount approved for loan pursuant to these regulations
will be paid by the proper Federal land bank to the applicant, or on
his written order, upon receipt by such Federal land bank of the
following documents:
,
(a) Certificate of planting, signed by an authorized representative
of the Department of Agriculture, that a number of acres sufficient
under these regulations to warrant a loan in^the approved amount
have been properly" planted with, proper seed. Such certificate shall
be in the form attached to these regulations. The names and signatures of such authorized representatives will be filed with the several
Federal land banks by the Department of Agriculture.
(b) Promissory note, duly executed by the applicant, for the
amount of the Iqan, payable to the proper Federal land bank as
financial agent of the United States, on October 1,1919, in the Wichita and Houston districts, and on November 1, 1919,'in the St. Paul
and Spokane, districts, as the case may be, with interest at the rateof
6 per cent per annum, and in the form attached to these regulations.
(c) Guaranty fund agreement, duly executed and acknowledged
by the applicant, providing among other things that if the crop
mortgaged as hereinafter provided amounts to an average yield of
7 bushels per acre or more the applicant will contribute to a guarFinty fund at maturity of the above-mentioned note 15 cents per acre
mortgaged (:Qot exceeding 100 acres) for each bushel per acre by
which the average yield exceeds 6 bushels per acre, provided that
the total of such contribution shall not exceed 75 cents per' acre.
Such guaranty fund agreement shall be in the form attached to these
regulations.
(d) Chattel mortgage upon the crop planted on the land described
in the certificate of planting, in favor of the proper Federal land
bank as financial agent of the United States, duly executed by the
applicant in such manner as to entitle it to recordation, and securing
payment of the above-mentioned note and the due performance of
the obligations of the applicant under such guaranty fund agreement,
according to the terms thereof, and containing a provision authorizing such Federal land bank, in the event that the applicant fails at
the proper time to harvest or thrash the crop mortgaged, to enter
upon the premises and harvest or thrash the same, as the case may
be, and to sell the crop and to satisfy the lien of said mortgage and
expenses incurred thereunder from the proceeds of the crop. Such
chattel mortgage will be prepared under the direction of the law
department of the Federal land bank of the district, and shall be
recorded in the proper office under the State laws applicable. In case
such laws require that the original mortgage shall remain in the office
in which the same shall be filed, the Federal land bank may make




348

REPORT ON THE FINANCES.

the loan without requiring that the original be lodged with it, provided that it shall receive in lieu thereof such certificate of the recording officer as shall be sufficient in the opinion of its law department
to assure the bank that the original has been duly executed, delivered,
and recorded in proper form.
7. Actual expenses of the several Federal land banks when shown
by sworn vouchers to have been necessarily incurred for stationery,
telegraphing, printing, or postage, will be allowed and paid, upon
approval of the Federal Farm Loan Board, out of the fund for
farmers' seed grain loans hereinabove referred to. Agencies of the
Federal land banks appointed under these regulations shall not be
entitled to incur any expense chargeable against the United States or
its financial agents.
8. The primary object of farmers' seed grain loans is not to stimulate the planting of an increased acreage of grain in the drought
areas, or even necessarily to secure the planting of a normal acreage,
but rather to assist in tiding the farmers over the period of the stress,
to enable them to remain on their farms to plant such an acreage as
may be determined to be wise under all the conditions, with a view
to increase the food supply of the Nation and to add to the national
security and defense. I t is distinctly not intended to be used to stimulate title planting of wheat or any other grain where such planting
is not wise from an agricultural point of view and where other
activities are safer.
9. The right is reserved to make further supplemental or amendatory regulations relative to farmers' seed grain loans from time to
time, or withdraw these regulations at any time.
L . S. ROAVE,

Acting Secretary of the Treasury.
CLARENCE OUSLEY,

Acting Secretary of Agriculture.
UNITED STATES OF AMERICA, TREASURY DEPARTMENT.
APPLICATION FOR SEED GRAIN LOAN.

Dated
, 1918.
I hereby make application to the Federal Land Bank of
as financial
agent of the United States, for a loan of
($
) upon
acres to
be planted to
upon the following-described land, situated in
(Kind of grain.)

County, State of

:

(Here insert description of land.)

Such loan is to be made from the fund set apart for the aid of farmers in
drouth-stricken areas by the President of the United States, out of the appropriation for the national security and defense provided for under the act
of Congress approved July 1, 1918, or from such other funds as may be appropriated or made available from time to time for the same purpose.
If this, application should be granted, the above-mentioned amount is to be advanced upon delivery to the above-named Federal Land Bank of:
(1) Certificate of planting in the form prescribed in the circular mentioned
below, duly executed by an authorized representative of the Department of
Agriculture;
(2) Promissory note in the form prescribed in the circular mentioned below,
duly executed by the undersigned, for the amount, of such advance, payable to
the above-named Federal land bank, as,financial agent of.the United States,
on
, 1919, and bearing interest at the rate of 6 per cent per annum;



SECRETARY OF THE TREASURY.

349

(3) Guaranty fund agreement, duly executed and acknowledged by the undersigned, in form and in the terms prescribed in a circular issued jointly by the
Secretary of the Treasury and Secretary of Agriculture; such agreement shall
provide, among other things, that if the crop mortgaged, as stated below,
amounts to an average yield of 7 bushels per acre or more, the undersigned will
contribute to a guaranty fund 15 cents per acre mortgaged for each bushel per
acre by which the average yield exceeds 6 bushels per acre, provided that the
total of such contribution shall not exceed 75 cents per acre; and .
(4) Chattel mortgage, duly executed by the undersigned in such manner as
to entitle it to recordation, upon the crops planted on the" land described above,
to secure the payment of the above-mentioned note and the due performance of
the obligations of the undersigned under such guaranty fund agreement. Such
chattel mortgage shall be in form approved by counsel for the above-named"^
Federal land bank. •
I am
years old,
married, and have
children.
I own
acres of land which are mortgaged for $
to
- I own
horse and mules, valued at $
, which are mortgaged for
$
to
__.
I own
cattle, valued at $
, which are mortgaged for $
to
I own

$

hogs, valued at $

, which are mortgaged for $

to

I own

sheep, valued at $

-:_-, which are mortgaged for $

to

I own

to

- farming equipment, valued at $

, which is mortgaged for

I own
which is mortgaged for $
to
I planted ___— acres of
in 1916, from which I harvested
bushels in 1917.
I planted
acres of
in 1917, from which I harvested
bushels in 1918.
I hereby certify that I have
acres under cultivation which I desire to
plant to fan __
in 19:18, but that by reason of crop failures in 1916 and 1917
and encumbrances on my real and personal property, I am unable to procure
seed for planting the same, and that I have not borrowed and can not borrow
money from any bank for the purpose of procuring seed for 1918 planting.
If this apiJlication should be granted I agi^ee to use such seed and methods of
agriculture as may be approved by the Department of Agriculture, through its
local representatives.
(Signature of applicant.)
STATE OF

,

Coimty of

—^
, ss:
, being duly sworn, deposes and says that he has read the
foregoing application, and that the same is true.
(Signature of applicant.)

Sworn to before me this

day of

[SEAL.]

, 1918.
—.

My commission expires

, 191__.

.__,
(Official title.)

NOTE.—This application may be sworn to before any officer authorized to
oaths and having a seal, which must be affixed.

administer

DEPARTMENT OF AGRICULTURE.

I hereby certify that I have investigated the foregoing application; that the
applicant has
the stated acreage fit for planting; that he has the
reputation of being a _.,
farmer and has
the necessary equipment.
I further certify that I have investigated the applicant's statement of his
financial condition, and find the same correct and that he has no commercial
basis of credit. I find that his general reputation is
I therefore recommend that the application be
granted.
Dated this
day of
, 1918.




Agent.

350

REPORT ON T H E FINANCES.
DEPARTMENT OF AGRICULTURE.

The above application is hereby approved, this
. TREASURY

day of

DEPARTMENT.

The above application is hereby approved this
T H E FEDERAL L A N D B A N K

day of _______ 1918.
OF

"

,

(
By

, 1918.

Financial Agent.

___:_.

U N I T E D STATES OF AMERICA, TREASURY DEPARTMENT.
CERTIFICATE OF APPROVAL.

The Federal Land B a n k of
, as financial agent of the
United States, does hereby certify t h a t the application of
,
farmer of
, dated
, 1918, for a seed
grain loan, h a s been duly approved for the sum of $
, a n d . t h a t said
^sum will be advanced to him, or on his w r i t t e n order, by t h i s bank upon receipt o,f a certificate of the Department of Agriculture t h a t
,_ acres of
land specifically described therein and included in said application have been
properly planted, with proper seed, and upon the execution and delivery h y
him to this bank of a note securing the sum loaned, a chattel mortgage upon
the crop planted on the lands described in said certificate, and a g u a r a n t y fund
agreement, as required by Joint Circular No. 1, issued by the T r e a s u r y Dep a r t m e n t and the Department of Agriculture, embodying the regulations relative to farmers' seed grain loans in drouth-stricken areas.
Dated at
— this
day of
i
, 1918. .
T H E FEDERAL L A N D B A N K OF

:

,

As F i n a n c i a l Agent of the United Stateis.
By
DEPARTMENT OF AGRICULTURE.

CERTIFICATE OF PLANTING.

9

I hereby certify t h a t on the
d a y of
, 1918, I investigated the field of
:
farmer of __..
and t h a t he has properly planted, and with proper seed, the following-described
land situated in the county of__°
, State of
to w i t :
:
:

comprising — .
acres.
W i t n e s s my hand this

day of

, nOlS.

(Official title.)
NOTE.—This certificate must describe specifically and with accuracy for use in the chattel mortgage to be given the particular lands on which the approved .planting has been
made. It must not include any land belonging to the farmer which has not been properly
planted or the crops upon which are not intended to be mortgaged.
NOTE.

[Treasury Department—Farmers' Seed Grain Loan.]
The F e d e r a l L a n d B a n k of
,
, —^
, 1918.
(Place.)
(State.)
(Date.)
On
1st, 1919, after date, I promise to pay to The Federal
L a n d B a n k of
— , a s financial agent of t h e United States,
^ dollars, with interest at the r a t e of 6 per cent per
annum, value received.
This note is secured by a chattel mortgage on growing crops, executed by the
undersigned, and bearing even date herewith.




(Signature.)

SECEETARY OF THE TREASURY.

351

GUARANTY . FUND AGREEMENT.

This agreement, made this
day of
.,
, 1918, between
;
, of
, county of
1 ,
State of
, hereinafter called the borrower, party of the
first part, and the Federal land bank of
, .
, as financial
agent of the United States, hereinafter called-the land bank, party of the second
part,
Witnesseth:
Whereas the borrower has made application to the land bank under date of
, 1918, pursuant to Circular No. 1, dated August 2, 1918, issued
jointly by the Treasury Department and the Department of Agriculture, for an
advance from the fund set apart for the aid of farmers in drouth-stricken areas
by the President of the United States, out of the appropriation for the national
security and defense provided for under the act of Congress approved July 1,
1918, or from such other funds as may be appropriated or made available from
time to time for the same purpose; and
Whereas pursuant to said ^application and simultaneously with the execution
and delivery of this agreement the borrower has received an advance of
$
, and has executed and delivered to the land bank his promissory note payable
1, 1919, for the amount of sucli advance,
bearing interest at the rate of 6 per cent per annum, and a chattel mortgage as
required by said circular, to secure the payment of said promissory note and
the due performance of the obligations of the borrower under this agreement;
and
Whereas the.advance by the land bank to the borrower is made pursuant to a
general plan outlined in said circular adopted for a public purpose by the
United States in order to maintain food production by means of assistance to
farmers in dro'uth-sticken areas, and losses are likely to accrue to the United
States and to the borrowers in the operation of said general plan by reason of
local crop failures; and
Whereas it is to the public interest and to the interest of the borrowers who
receive advances pursuant to said general plan that the risk of crop failures
shall be distributed among such borrowers by establishing a guaranty fund to
which every borrower whose crop mortgaged amounts to an average yield of
7 bushels per acre or more shall contribute:
Now, therefore, in consideration of the premises and of the mutual agreements herein contained, the borrower and the land bank do agree as follows:
First. The borrower agrees to pay to the land bank, if the crop mortgaged by
the borrower amounts to an average yield of 7 bushels per acre or more, as a
contribution to said guaranty fund, fifteen (15) cents per acre mortgaged (not
in excess of one hundred (100) acres) for each bushel per acre by which the
average yield exceeds 6 bushels per acre: Provided, however, That the total of
such payments shall not exceed seventy-five (75) cents per acre mortgaged.
The sworn statement of the thresherman who threshes the borrower's crop
shall be conclusive evidence of such average yield per acre mortgaged in the
absence bf fraud. The borrower agrees to make such payment to the land bank
at the maturity of the note hereinbefore described.
Second. The land bank agrees' that all payments made by the borrower under
article first of this agreement, and all similar payments made by borrowers
receiving advances pursuant to said general plan, into said guaranty fund shall
be administered by the Federal Farm Loan Board, as provided in this agreement.
Said guaranty fund shall be applied by the Federal Farm Loan Board at such time
or times after the maturity of the notes given by borrowers receiving advances
under said general plan as it shall deem feasible, to the payment pro rata of
all notes given by borrowers receiving advances under said general plan whose
crops mortgaged prove failures, as defined below, with the interest thereon,
and in case by reason of payments made by any such borrower against his note
the pro rata share applicable thereto shall be more than sufiicient to discharge
the same and the interest thereon, the excess amount of such pro rata share
shall be paid to such borrower; and any balance of such guaranty fund shall be
applied pro rata to borrowers who shall have paid in full their respective contributions to said guaranty fund as provided in article first of this agreement,
to.the extent of their respective contributions. The crop mortgaged of any borrower under said, general plan shall be deemed a failure within the. meaning of
this agreement if the average yield per acre does not amount to more than 5
bushels. The average yield per acre shall be determined, in the absence of fraud.




352

REPORT ON THE FINANCES.

by the sworn statement of the thresherman threshing the crop, or by the certificate of a representative of the Department of Agriculture who has examined the
crop in question, or, in the absence of such evidence, by such other evidence as
shall be deemed sufiicient by the Federal Farm Loan Board or representative
designated by it for that purpose.
Third. The obligations of the borrower under this agreement are several and
independent and may be enforced by the land bank as financial agent of the
United States without regard to the performance or nonperformance by any
other borrower receiving advances pursuant to said general plan of his obligation under any similar agreement.
Fourth. Neither this agreement nor any interest therein, nor in the guaranty
fund hereby established, is assignable.
In witness whereof, the borrower has executed this agreement under his hand
and seal, and the land bank has caused this agreement to be duly executed the
day and year first above written.
[SEAL.]
T H E FEDERAL LAND BANK OF

By

?

,

As Financial Agent of the United States.

STATE OF

County of
ss:
Acknowledged before me this
day of
,-, 1918, and I certify
that the said
is personally well known to me to be the
identical person named in said agreement as the borrower and who signed the
same.
\
(Official title.)

NOTE.—This acknowledgment may be taken before any ofliicer authorized to
take acknowledgments under the laws of the State where executed, or an officer
of a national bank, or of a bank designated by the Federal land bank of the district to represent it in taking applications for farmers' seed-grain loans.




ABSTRACTS OF REPORTS OF BUREAUS AND DIVISIONS

86429°—Fl 1918

23




353




ABSTRACTS OF REPORTS OF BUREAUS AND DIVISION'S.
The following is a summary of tlie reports of the various bureaus
and divisions of the Treasury Department:
TREASURER OF 'THE UNITED STATES.

The ordinary receipts in 1918 were $4,174,010,585.74, an increase
of $3,055,836,459.31 as compared with those of 1917. The ordinary
disbursements were $8,966,532,266.03, an increase of $7,818,633,274.87
by like comparison. The net result for the year on ordinary account
was a deficit of $4,792,521,680.29.
During thefiscal year 1918 the disbursements made on account of
the Panama Canal were $20,787,624.92, while the receipts from tolls,
etc., were $6,414,570.25. The net excess of disbursements over
receipts was $14,373,054.67, which was paid out of the general fund
of the Treasury.
Extraordinary expenditures of public moneys were made during
the fiscal year 1918 under provisions of law as follows: Purchase of
obligations of foreign Governments engaged in. war with the enemies
of the United States, $4,739,434,750; and purchase of Federal farm
loan bonds, $65,153,254.15, making a total of $4,804,588,004.15.
The transactions affecting the principal of the public debt during
the fiscal year 1918 were as follows: Eeceipts for postal savings bonds,
actof June 25,1910, $1,020,940; for retirement of national-banknotes,
act of July 14, 1890, $10,279,650; for one-year Treasury notes, act
of December 23, 1913, $19,150,000; for certificates of indebtedness,
acts of September 24, 1917, and April 4, 1918, $9,017,648,500; for
first Liberty loan, act of April 24, 1917, $523,112,200.01; for second Liberty loan, act of September 24, 1917, $3,807,863,516; for
third Liberty^loan, act of April 4, 1918, $3,243,045,138.47; and
for war savings and thrift stamps, act of September 24, 1917,
$352,769,265.13, making a total of $16,974,889,209.61 received
while the disbursements on account of principal of matured loans
and fractional currency were $20,650.33; for national-bank notes
canceled and retired, $21,611,225; for one-year Treasury notes,
$27,362,000; for certificates of indebtedness retired, $7,578,271,732;
for United States bonds purchased and retired, $76,641,500; and for
war savings stamps purchased and retired, $2,971,967. 80, making a




355

356

REPORT ON THE FINANCES.

total disbursement for the debt of $7,706,879,075.13. The net result
was an excess of receipts of $9,268,010,134.48.
The balance in the Treasury of the United States on June 30, 1918,
(exclusive of credits to disbursing officers), was $623,774,518.85
as against a balance (excluding credits to disbursing officers) on June
30, 1917, of $967,247,123.48, showing a decrease for the year of
$343,472,604.63.
The redemptions from the reserve fund during the fiscal year 1918
were, in United States notes, $8,285,090. The redeemed notes were,
under the provisions of the act of March 14, 1900, immediately
exchanged for gold, and thereby the reserve was maintained in volume and character.
The gold in the Treasury at the close of the fiscal year 1918
amounted to $2,479,954,967.09, an increase of $154,482,931.22 as
compared with that of 1917. Set apart for the respective uses, it
was held on the following accounts: Reserve fund, $152,979,025,63;
trust funds (for redemption of gold certificates in actual circulation),
$1,026,631,669; gold settlement fund of Federal Reserve Board,
$1,205,082,010; and in general fund (belonging to the Treasury),
$95,927,821.
The imports of gold during the year were $124,413,483, the exports
$190,852,224, and the net excess of exports $66,438,741.
The currency distributed from the Treasury in Washington during
the fiscal year 1918 to the subtreasuries and to the banks .amounted
to $844,415,479, a decrease of $509,070,141 as compared with that
of the preceding year.
The balance of public moneys on deposit in designated depositaries
at the close of the fiscal year 1918 was, in Federal land banks^ $430,000;
in Federal reserve banks, $63,817,988.46; in special depositaries,
$1,491,338,825.44; in national banks, $53,494,878.83; in treasury of
Philippine Islands, $4,992,602.35; and in foreign depositaries,
$11,026,503.50; making a total of $1,625,100,798.58.
At the close of the fiscal year 1918 the general stock of money in
the United States amounted to $6,741,072,294, an increase of
$1,333,082,268 as compared with that of 12 months earlier. The
growth in gold was $56,642,275; in subsidiary silver coin, $33,581,861;
ih Federal reserve notes, $1,300,172,485; in Federal reserve bank
notes, $2,653,755; and in national-bank notes, $8,785,475, while the
standard silver dollars decreased $68,753,583. There was no change in
the volume of United States notes. The money in circulation
increased in volume by $615,851,792, and amounted to $5,379,427,424
on June 30, 1918. The circulation per capita was $50.81, and the
share of gold to whole circulation 35.92 per cent.
The notes and certificates of United States paper currency issued
during the fiscal year numbered 354,519,271 pieces, of the total value



SECRETARY OF THE TREASURY.

357

of $753,124,000. The redemptions were 355,450,960 pieces, * of the
total value of $1,145,163,000. The pieces redeemed were 931,689
more than those issued and the amount was $392,039,000 more than
the amount issued during the year. The pieces outstanding number
417,007,241, of the total value of $2,543,234,685. The average cost
of each piece of United States paper currency issued and redeemed is
about 1.526 cents, and the annual cost of maintenance of the currency
issued by the National Government averages slightly more than onefifth of 1 per cent of the amount outstanding.
National-bank notes amounting to $326,626,485 were presented for
redemption during the fiscal year 1918. This sum was 46.10 per cent
of the average circulation outstanding. Of the notes received at the
Treasury, $45,462,100 were fit for use and were returned to the banks
of issue for further circulation.
Federal reserve notes amounting to $63,130,640 were presented for
redemption during the year, of which $15,893,550 were fit for use and
were returned to banks and agents for further circulation.
'Federal reserve bank notes amounting to $2,990,635 were presented for redempti