The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
ANNUAL REPORT OF THE
SECRETARY OF THE TREASURY
ON
THE STATE OF THE
FINANCES
FOR THE FISCAL YEAR
ENDED JUNE 30
1928
WITH APPENDICES
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1929
TREASURY
DEPARTMENT
Document No. 2996
Secretary
^50
CONTENTS
Page
Business and financial conditions during the fiscal year 1928
Business conditions
Financial conditions
Receipts
.^
Expenditures
The surplus
--Estimates of receipts and expenditures
Estimates of previous years
,
Estimates for the fiscal years 1929 and 1930 compared with actual
amounts for the fiscal year 1928
Condition of the Treasury
The public debt
General review of operations
Refunding of second Liberty loan completed
Refunding the third Liberty loan..
'
Resume of refunding operations
.
Cumulative sinking fund
General fund of the Treasury. -•.
The currency trust fund and the gold reserve fund
Gold held for the Federal Reserve Board
Revenue act of 1928
_.
Survey of Bureau of Internal Revenue
.
Status of work
Office of the general counsel
'
Final agreements
.
Collection of revenues from transferees
Reopening of cases
Personnel
Treasury administration of alien and mixed claims
Obligations of foreign governments
France
Belgium
Czechoslovakia and Yugoslavia
Greece
Austria
.
Revision of paper currency designs
Federal farm loan system
Reorganization of Farm Loan Bureau
Operations of Federal land banks
Operations of joint stock land banks
1.
Receiverships
Operations of Federal intermediate credit banks
Indictments for violations of law
1
1
4
6
11
12
15
15
18
21
21
21
24
25
28
29
30
32
32
32
35
35
36
41
42
43
44
44
51
52
53
6353
55'
57
69'
59'
62
636365
66"
IV
CONTENTS
Pag©
Federal public buildings program
66
General
66
Pro j ects outside the District of Columbia
_69
Projects in the District of Columbia
.
69
Revision of the circulation statement of United States money inaugurated
December 31, 1927.
.
.
70
Silver transactions under the act of AprU 23, 1918, known as the Pittman
Act.
___.
71
The Pittman Act
71
Silver dollars melted
,
72
Purchase of silver bullion
73
Recoinage
.
74
Purchase of the Cape Cod Canal
75
Gold exports to and monetary stabilization in foreign countries in 1928..
76
Bureau of Customs
- 79
Coast Guard
.
83
Bureau of Engraving and Printing
^
.
_".,
84
Prohibition law enforcement
..
84
INarcotic law enforcement
85
Public Health Service
.
86
Recommendations for legislation
89
Austrian debt
89
Greek debt
.
.
.
89
Tax exemption of Federal bonds
* 89
Surety bonds
:
90
* ADMINISTRATIVE REPORTS OF BUREAUS AND DIVISIONS
Accounts and Deposits, Office of the Commissioner of
.
Receipts from Germany
.
.
Army costs
^
._
Mixed claims
:
Railroad obligations
„ Section 204
Section 209
Section 210
.
-.-..
Securities owned by the United States Government
Trust funds administered by the Treasury
^
Adjusted service certificate fund
— ^--.
Civil service retirement and disability fund
District of Columbia teachers' retirement fund
Foreign Service retirement and disabihty fund
Library of Congress trust fund
United States Government life insurance fund
Division of Bookkeeping and Warrants
.--.
Summary of receipts and expenditures
The general fund
^
Warrants issued during the fiscal year 1928 adjusted to basis of
daily Treasury statements (revised)
_-.
District of Columbia account of revenues and expenditures
Alien Property Custodian account
State bonds and stocks owned by the United States
95
95
95
9,6
97
97
'97
98
99
100
100
100
102
102
103
105
106
106
107
108
109
109'
110
CONTENTS
Accounts and Deposits, Office of t h e Commissioner of—Continued.
Division of Deposits
^
General depositaries
Limited depositaries
Insular depositaries
Foreign depositaries
.
.Special depositaries
Amount of deposits
Interest on deposits
..
Actuary, Government
.
.
Appointments, Division of
— .
Employees of t h e Treasury D e p a r t m e n t
Number
.
Retirement
Section of surety bonds
Budget and improvement committee
Chief clerk and superintendent, office of.
Housing of Treasury activities
General improvements
Seville exposition
Personnel
Coast Guard
i
Protection to navigation
Ice patrol
i
Winter cruising
Removal of derelicts
'
:
Anchorage and movements of vessels
V
'.
Page
111
111
111
111
111
111
112
112
113
115
115
115
115
110
11S«
120
120
121
121
121
123
124
124
124
125
125
Regattas
.
125
Enforcement of customs and other laws
125
Liquor smuggling
._
125
Cruises in northern waters
.
125
Northern Pacific halibut
fishery
12.6
Communications
126
Telephones and cables
^.
126
Radio126
Equipment.:
^
127
Floating equipment
127
Aviation
128
Ordnance
128
The academy, stations, bases, repair depot, etc
129
Coast Guard Academy
129
Stations and bases
129
Repair depot
130
Personnel
.
130
Recruiting
,
. 130
Welfare
131
Award of life-saving medals.
131
Appropriations, expenditures, and balances
131
Comptroller of the Currency
133
National banks organized, consolidated, insolvent, in voluntary liquidation, and in existence
133
Condition of national banks
.
135
Banks other than national
137
All reporting banks
138
VI
CONTENTS
Page
Customs service
...
^
...
. Volume of business
Receipts
.
Enforcement activities
...
Expenditures and statistics
Undervaluations
Rugs
.
Cotton velvets
Embroideries and laces from China
Tie silks
Panama hats.'
Ladies' hand bags
Artificial silk yarn
Antiques
Books
Cork board
Inland waterway traffic
__
Airports
Special agency activities
^
Disbursing clerk
Engraving and Printing, Bureau of
Enrollment and disbarment of attorneys and agents, committee on
Financial and economic research, section of
Internal Revenue, Bureau of
General
.....
Internal revenue receipts
.,
Refunds
Cost of administration
Income Tax Unit
Production
Additional revenue
Claims and overassessments.:
The audit in Washington
The audit in the
field
-.
Records division...
Increase in returns showing large incomes
Personnel
MisceUaneous tax unit
.
Estate taxes
MisceUaneous taxes
.
Tobacco taxes
Appeals and review section
Accounts and collections unit
Collection accounting division
Collectors' personnel, equipment, and space division
Disbursement accounting division
General counsel's office
Appeals division
Interpretative I division
Interpretative II division
Penal division^
CivU division
Administrative division
142
142
142
143
144
145
145
145
145
145
146
146
146
146
146
146
146
147
147
150
151
158
160
162
162
162
162
163
163
163
163
164
164
164
165
165
166
166
167
168
169
169
170
170
172
173
173
173
174
175
175
176
177
CONTENTS
VII
Fast
Mint Bureau
Institutions of the mint service
_;
.-_
Gold and silver receipts and transfers
-.
. Gold operations
.
.__
Silver operations.-Refineries
.
.
Coinage
—
Regular domestic coinage
Commemorative coin
Coinage for foreign governments
Additionsand improvements
.
Expenses, income, etc
Gold and silver in the United States
Stock of coin and monetary buUion
. Production of gold and silver
. Industrial consumption of gold and silver
.
Net export of domestic gold coin
Personnel classification officer
Appeals and classification sheets
Efficiency ratings
Prohibition, Bureau of
...
Organization and procedure
Activities
Personnel.
Narcotics...
Public debt service
^
Division of Loans and Currency
Issue and retirement of securities
.....
Individual registered accounts activities
Claims
.
...
Safe-keeping of securities
Mutilated paper and redeemed currency
Publicity
Personnel
Register of the Treasury
Division of public debt accounts and audit
^
...
Division of paper custody
Public Health Service
.
Division of sanitary reports and statistics
.
.
Division of foreign and insular quarantine and immigration
Quarantine transactions... .
Medical inspection of aliens ._
Examination of alien passengers abroad
Division of domestic quarantine
Division of scientific research
Division of marine hospitals and relief
Division of venereal diseases
Division of personnel and accounts..
Personnel
;_.
Financial statement
:
.
Secret Service Division
.
178
178
178
178
178
179
179
179
179
180
180
180
181
181
181
182
182
183
183
184
185
185
186
188
188
190
190
190
192
193
193
193
194
194
194
197
200
201
201
202
202
203
203
204
206
208
209
210
210
211
212
VIII
CONTENTS
^
Page
Supervising Architect, Office of the
Operations under the public buildings construction program
General
Projects outside the District of Columbia
Projects in the District of Coluihbia
Remodeling and enlarging public buildings
Status of sites
.
War claims
Expenditures, liabilities, and unencumbered balances
Supply, Division of
Expenditures from various appropriations
.
Purchases and issues of stationery supplies
Shipments and inventories
•
Printing and binding
Postage
.
Department advertising
"
Engraving work
General Supply Committee..
Treasurer of the United States
War Finance Corporation
,
214
214
214
215
217
218
220
220
221
224
224
227
228
230
232
232
232
232
237
242
EXHIBITS
THE PUBLIC DEBT
Issue of November, 1927
Exhibit 1. Offering of certificates of indebtedness. Series TJ-1928 (33:^ per
cent) (press release, November 7, 1927, with Department Circular
No. 389)
..
Exhibit 2. Subscriptions and allotments, certificates of indebtedness,
Series TJ-1928 (from press releases, November 11, 1927, and November
15, 1927, r e v i s e d ) . . . :
245
247
Issue of December, 1927
Exhibit 3. Offering of certificates of indebtedness. Series TD-1928 (3J^
per cent) (press release, December 8, 1927, with Department Circular
No. 390)
-.
Exhibit 4. Subscriptions and allotments, certificates of indebtedness.
Series TD-1928 (from press releases, December 13, 1927, and December
14, 1927)...^
-
248
250
Issue of January, 1928
Exhibit 5. Offering of Treasury notes. Series C-1930-32 ( 3 ^ per cent) in
exchange for third Liberty loan bonds (press release, January 9, 1928,
with Department Circular No. 392)
Exhibit 6. Subscriptions to Treasury notes. Series C-1930-32
_.
251
254
Issues of March, 1928
Exhibit 7. Offering of certificates of indebtedness. Series TD2-1928 (3M
per cent) and Series TM-1929 (3^^ per cent) (press release, March 8,
1928, with Department Circular No. 395)
Exhibit 8. Subscriptions and allotments, certificates of indebtedness.
Series TD2-1928, and Series TM-1929 (from press releases, March 13,
1928, and March 14, 1928)
.
.
254
256
CONTENTS
IX
Purchase of third Liberty loan bonds. May, 1928
Page
Exhibit 9. Offer to purchase third Liberty loan bonds at 100^^2 (press
release. May 11, 1928)
.-.
Exhibit 10. Termination of offer to purchase third Liberty loan bonds
(press release. May 16, 1928)
257
258
Issues of June, 1928
Exhibit 11. Offering of certificates of indebtedness. Series TD3-1928
(4 per cent) and Series TM2-1929 {Z}i per cent) (press release, June 6,
1928, with Department Circular No. 400)..
.
Exhibit 12. Subscriptions and allotments, certificates of indebtedness.
Series TD3-1928 and Series TM2-1929 (from press releases, June 9,
1928, and June 12, 1928, revised)
258
260
Purchase of third Liberty loan bonds, June, 1928
Exhibit 13. Offer to purchase third Liberty loan bonds at 100^^2 (press
release, June 11, 1928)
Exhibit 14. Extension of time in offer to purchase third Liberty loan
bonds (press release, June 21, 1928)
Exhibit 15. Termination of offer to purchase third Liberty loan bonds
(press release, July 5, 1928)
^
261
262
262
Issue of July, 1928
Exhibit 16. Offering of Treasury bonds of 1940-1943 (3^^ per cent) (press
release, July 5, 1928, with Department Circular No. 405)
Exhibit 17. Cash subscriptions and allotments. Treasury bonds of 19401943 (from press releases, July 9, 1928, July 11, 1928, and July 12, 1928,
revised)
.
_.
Exhibit 18. Exchange subscriptions to Treasury bonds of 1940-1943
(from press release, July 27, 1928)
.
262
266
267
Purchase of third Liberty loan bonds, August, 1928
Exhibit 19. Offer to purchase third Liberty loan bonds at 100}^2 and par
(from press release, August 1, 1928)
268
Issue of September, 1928
Exhibit 20. Offering of certificates of indebtedness. Series TJ-1929 (4J^
per cent) (press release, September 7, 1928, with Department Circular
No. 408, and press release, September 8, 1928)
Exhibit 21. Subscriptions and allotments, certificates of indebtedness,
Series TJ-1929 (from press releases, September 12, 1928, September 13,
1928, and September 20, 1928, revised)
268
271
Issue of October, 1928
Exhibit 22. Announcement of prospective issue of securities in October,
1928 (press release, September 27, 1928)
.
Exhibit 23. Offering of certificates of indebtedness. Series TS-1929 (4M
per cent) (press release, October 8, 1928, with Department Circular
No. 410)
•.-.
._
Exhibit 24. Subscriptions and allotments, certificates of indebtedness,
Series TS-1929 (from press releases, October 11, 1928, and October 15,
1928, revised)
.
272
273
274
X
CONTENTS
Miscellaneous
Page
Exhibit 25. Notice of payment of third Liberty loan at maturity (Department Circular No. 403, July 2, 1928)
275
TAXATION
Exhibit 26. Some Observations on Our Federal Tax System, an address
by Undersecretary of the Treasury Mills, November 11, 1927, before
the stockholders of the Federal Reserve Bank of Boston and before the
Economic Club of Worcester
Exhibit 27. Letter of Secretary of the Treasury Mellon to Lewis E. Pierson,
president Chamber of Commerce of the United States, December 2,
1927, concerning the chamber's referendum on Federal taxation
Exhibit 28. Letter of Secretary of the Treasury Mellon to Senator Smoot,
December 29, 1927, concerning the revenue bill (revenue act of 1928)..
Exhibit 29. Tax Reduction, an address by Undersecretary of the Treasury
Mills, March 29, 1928, before the Chicago and Cook County Bankers'
Association, Chicago, 111
Exhibit 30. Statement by Secretary of the Treasury Mellon before the
Senate Finance Committee, April 3, 1928
Exhibit 31. Announcement of hearings on regulations for consolidated
returns (press release, August 14, 1928)
278
285
288
291
296
305
OBLIGATIONS OF FOREIGN GOVERNMENTS
Austria
Exhibit 32. Statement of Secretary of the Treasury MeUon concerning
the proposal to subordinate lien of United States to permit new loan
to Austria (press release, February 21, 1928)
Exhibit 33. Message of the President to the Congress submitting a report
of the Secretary of the Treasury concerning the Austrian debt proposal
(pressrelease, March 20, 1928)
...
Exhibit 34. Statement by Acting Secretary of the Treasury Mills before
the Committee on Ways and Means concerning the Austrian debt proposal (pressrelease, AprU 10, 1928)
...
305
306
310
Belgium
Exhibit 35. Final exchange of obligations under funding agreement (press
release, March 5, 1928)
314
Greece
Exhibit 36. Statement of Secretary of the Treasury Mellon concerning
the proposed debt settlement with Greece (press release, December 5,
1927)
Exhibit 37. Message of the President to the Congress submitting a report
of the Secretary of the Treasury concerning the Greek debt proposal
(S. Doc. No. 51, 70th Cong., 1st sess.)
Exhibit 38. Statement of Secretary of the Treasury MeUon before the
Committee on Ways and Means with reference to the bill to authorize
the settlement of the indebtedness of the Greek Government to the
United States (press release, February 15, 1928, with supplement)
314
316
'
327
CONTENTS
XI
Kingdom of the Serbs, Croats, and Slovenes
Page
Exhibit 39. An act to authorize the settlement of the indebtedness of the
Kingdom of the Serbs, Croats, and Slovenes
336
General
Exhibit 40. Statements of the Treasury covering payments received from
the several foreign governments on account of their indebtedness to the
United States (press releases, December 15, 1927, and June 15, 1928)..
337
MONEY AND BANKING
Exhibit 41. Decision of the Comptroller General of the United States,
dated November 29, 1922, relative to revoking certain allocations of
silver under the act of AprU 23, 1918
Exhibit 42. Letter of the Comptroller General of the United States, dated
September 4, 1923, addressed to the vice chairman of the Senate Committee of Gold and Silver Inquiry, affirming the decision of November
29, 1922, relative to revoking certain allocations of silver under the act
of AprU 23, 1918.Exhibit 43. Function of the Federal Reserve System, extract from an
address by Secretary of the Treasury Mellon, January 19, 1928, before
the Charlotte Chamber of Commerce, Charlotte, N. C
Exhibit 44. New distinctive paper for United States currency (Department
Circular No. 394, February 1, 1928)
Exhibit 45. Letter of Undersecretary of the Treasury Mills to Dr. Albert
Shaw, editor of the American Review of Reviews, July 23, 1928, relative to charges that the Federal reserve system has been administered
for the advantage of stock-market speculators
Exhibit 46. Gold status of gold-par currencies, October 31, 1928
341
345
347
350
351
354
ALIEN PROPERTY AND MIXED CLAIMS
Exhibit 47. Disposition of Alien Property and Mixed Claims, extract from
an address by Undersecretary of the Treasury MiUs, December 10, 1927,
at Buffalo,'N. Y
Exhibit 48. Regulations governing payments on account of awards of the
Mixed Claims Commission, United States and Germany (Department
Circular No. 397, March 15, 1928, and Department Circular No. 407,
August 14, 1928)
.
Exhibit 49. Participating certificate, dated March 15, 1928, issued by the
Secretary of the Treasury to the Alien Property Custodian, representing
an investment- of $25,000,000 as authorized by the settlement of war
claims act of 1928
.
356
362
368
MISCELLANEOUS
Exhibit 50. Statement of Secretary of the Treas'ury Mellon concerning
alleged dumping of German steel products (press release, December 23,
1927)-...
:
.
Exhibit 51. Statement of Secretary of the Treasury Mellon concerning
Russian gold declined by the New York Assay Office (press release,
March 6, 1928)
.
Exhibit 52. Statement of Secretary of the Treasury Mellon concerning
the findings of the board appointed by him to inquire into the facts
and circumstances surrounding the loss of the U. S. S. S-4 (press release,
May 7, 1928)
368
369
369
xn
CONTENTS
Phge
Exhibit 53. Notice of call of bonds of the Boston, Cape Cod & New York
Canal Co. (press release, June 18, 1928, with Department Circular No.
401)
Exhibit 54. Developing the Nation's Capital, an address by Secretary of
the Treasury Mellon, October 18, 1928, at the annual Founders' Day
exercises of the Carnegie Institute, Pittsburgh, Pa
376
377
TABLES
RECEIPTS AND EXPENDITURES
General tables
Table 1. Receipts and expenditures for the fiscal year 1928, classified
according to funds (revised daily statement basis)
..
Table 2. Comparison of detailed receipts for the fiscal years 1927 and 1928
(warrant basis)
.
Table 3. Comparison of detailed expenditures chargeable against ordinary
receipts for the fiscal years 1927 and 1928 (checks issued basis)
Table 4. Summary of ordinary receipts, expenditures chargeable against
ordinary receipts, and surplus or deficit, for the fiscal years 1916 to 1928
(daily statement basis)
•
Table 5. Ordinary receipts, expenditures chargeable against ordinary receipts, and surplus or deficit for the fiscal years 1916 to 1928 (daily statement basis)
Table 6. Receipts and expenditures for the fiscal years 1791 to 1928 (warrant basis)
Table 7. Summary of ordinary receipts, expenditures chargeable against
ordinary receipts, and excess of receipts or expenditures, by months,
from July 1, 1926, to October 31, 1928 (daily statement basis)
Table 8. Expenditures, by months, classified according to departments and
establishments, for the fiscal year 1928 (daily statement basis)
391
393
399
407
408
412
424
425
Specific receipts and expenditures
Table 9. Comparison of detailed internal revenue receipts for the fiscal
years 1927 and 1928 (collection basis)
1
Table 10. Internal revenue receipts, by sources, for the fiscal years 1863
to 1928 (collection basis)
Table 11. Internal revenue receipts, by months, total, and by present
major sources, July, 1926, to September, 1928 (collection basis)
Table 12. Internal revenue receipts, by States and Territories, for the fiscal
years 1927 and 1928 (collection basis)
Table 13. Customs duties (estimated), value of imports entered for consumption, and ratio of duties to value of dutiable imports and to value
of all imports, for the years 1867 to 1927 (on basis of reports of the
Bureau of Foreign and Domestic Commerce)
Table 14. Customs duties (estimated), an4 ratio of duties to value of
dutiable imports, by tariff schedules, for the years 1890 to 1927 (on
basis of reports of the Bureau of Foreign and Domestic Commerce)
Table 15. Customs statistics, by districts, for the fiscal year 1928 (collection basis)
.
Table 16. Customs receipts, by districts, for the fiscal year 1928 (warrant
basis)
:
Table 17. Panama Canal receipts and expenditures for the fiscal years
1903 to 1928 (warrant basis)
430
431
436
438
440
442
448
452
453
CONTENTS
xm
Estimates of receipts and appropriations
Page
Table 18. Actual receipts for the fiscal year 1928 and estimated receipts
for the fiscal years 1929 and 1930 (on basis of reports from the Bureau
of the Budget)
Table 19. Appropriations for 1929 compared with estimates of appropriations for 1930 (on basis of reports from the Bureau of the Budget).
Table 20. Appropriations for the fiscal years 1914 to 1929, including estimated permanent and indefinite appropriations and deficiencies for prior
years
.
Table 21. Accountability statement of appropriations, by acts of Congress,
placed upon the books of the Treasury during the fiscal year 1928
Table 22. Appropriations, expenditures, amounts carried to surplus fund,
and unexpended balances for the fiscal years 1911 to 1928
PUBLIC
453
456
^
457
460
464
DEBT
Public debt outstanding
Table 23. Pubhc debt outstanding June 30, 1928, by issues
Table 24. Description of the public debt issues outstanding June 30, 1928.
Table 25. Principal of the public debt outstanding at the end of each
fiscal year from 1853 to 1928
Table 26. Preliminary statement of the public debt outstanding October
31, 1928, by issues (daily statement basis)
Table 27. Interest-bearing debt outstanding June 30, 1928, classified
according to kind of security and callable period or payable date
Table 28. Interest-bearing bonds, notes, and certificates of indebtedness
outstanding June 30, 1928, by issues and denominations
Table 29. Liberty bonds. Treasury notes, and certificates of indebtedness
which matured during the fiscal year 1928, outstanding June 30, 1928,
by issues and denominations
Table 30. Registered interest-bearing bonds, outstanding, number of
registered accounts, June 30, 1928, amount of interest payable and
number of checks drawn during the fiscal year 1928, classified by issues. _
Table 31. Unmatured Liberty bonds and Treasury bonds outstanding, by
months, from January 31, 1926, to June 30, 1928, classified by denomination and form
Table 32. Interest-bearing debt outstanding at the end of each month
from February 28, 1917, to June 30, 1928
.
465
468
476
477
479
480
483
484
485
486
Transactions in the public debt during the fiscal year 1928
Table 33. Public debt retirements chargeable against ordinary receipts
during the fiscal year 1928, and cumulative totals to June 30, 1927 and
1928
Table 34. Summary of transactions in interest-bearing and noninterestbearing securities during the fiscal year 1928
.
^
Table 35. Summary of transactions in interest-bearing securities during
the fiscalyear 1928
.
Table 36. Transactions in interest-bearing pre-war bonds, by issues, during the fiscal year 1928
Table 37. Transactions in interest-bearing Liberty bonds and Treasury
bonds, by issues, during the fiscal year 1928
Table 38. Transactions in interest-bearing Treasury notes, by issues, during the fiscal year 1928
.
491
494
496
49a
4,99
502:
XIV
CONTENTS
Pag©
Table 39. Transactions in interest-bearing certificates of indebtedness, by
issues, during the fiscal year 1928
Table 40. Transactions in Treasury (war) savings securities, by issues,
during the fiscal year 1928
Table 41. Transactions in noninterest-bearing securities, by issues, during
the fiscal year 1928
.
Table 42. Treasury bonds, Treasury notes, and certificates of indebtedness
issued through each Federal reserve bank and the Treasury Department
during the fiscal year 1928
504
506
508
511
Transactions in public debt securities from date of inception
Table 43. Transactions in interest-bearing securities outstanding, by
issues, June 30, 1928, from date of inception, showing reconciliation of
account of the Treasurer of the United States with security account
Table 44. Transactions in second and third Liberty loan bonds from date
of inception to October 31, 1928
_
513
517
Transactions in the public debt by years
Table 45. Transactions in the public debt for the fiscal years 1917 to 1928.
Table 46. Net increases {-{-) and net decreases (—) in the public debt,
by issues, for the fiscal years 1918 to 1928 (warrant basis)
Table 47. Public debt retirements, by issues, for the fiscal years 1918 to
1928 (revised daily statement basis)
Table 48. Reconciliation of public debt issues and retirements with (1)
public debt retirements, by sources, (2) balance in the general fund, and
(3) outstanding public debt, for the fiscal years 1918 to 1928 (revised
daily statement basis)
Table 49. Sources qf debt increase and decrease for the fiscal years 1916 to
1928 (daily statement basis)
:
519
520
526
529
532
Interest on the public debt
Table 50. Interest on the public debt, payable, paid, and outstanding unpaid for the fiscal year 1928
Table 51. Interest paid on the public debt, by issues, for the fiscal years
1918 to 1928 (warrant basis)
Table 52. Trend of rates of interest payable on outstanding public d e b t . .
534
535
541
CONDITION OF THE TREASURY EXCLUSIVE OF PUBLIC DEBT LIABILITIES
Table 53. Current assets and liabilities of the Treasury at the close of the
fiscal years 1926, 1927, and 1928 (revised daily statement basis)
Table 54. Net balance in the general fund at the end of each month, from
October, 1915, to September, 1928 (daily statement basis)
Table 55. Securities owned by the United States Government, June 30,
1928.-.-
543
545
546
TRANSACTIONS WITH RAILROADS
Table 56. Payments to carriers from July 1, 1927, to June 30, 1928, pro• vided for in section 204 of the transportation act, 1920, as'amended, for
reimbursement of deficits on account of Federal control
Table 57. Obligations of carriers acquired pursuant to section 207 of the
transportation act, 1920, as amended
Table 58. Payments to carriers from July 1, 1927, to June 30, 1928, under
the guaranty provided for in section 209 of the transportation act, 1920,
as amended, and payments by carriers to the United States under the
same section
548
548
549
CONTENTS
XV
'
Page
Table 59. Loans to carriers under section 210 of the transportation act,
1920, as amended, and repayments on such loans from July 1, 1927, to
June 30, 1928, with loans outstanding June 30, 1927, and June 3P, 1928.
549
STOCK AND CIRCULATION OF MONEY IN THE UNITED STATES
Table 60. Stock of money, money in the Treasury, in the Federal reserve
banks, and in circulation at the end of each fiscal year from 1860 to 1928.
Table 61. Stock of money, classified by kind, at the end of each fiscal year
from 1860 to 1928
Table 62. Money in circulation, classified by kind, at the end of each
fiscal year from 1860 to 1928
Table 63. Money in circulation, classified by kind, June 30, 1928
550
552
554
556
PERSONNEL
Table 64. Comparison of the number of employees in the departmental
and field services of the Treasury on June 30, 1927 and 1928
^^Table 65. Number of persons retired or now retained in the departmental
and field services of the Treasury under the civil service retirement act.
Table 66. Number of employees in the departmental service of the Treasury in Washington, by months, from June 30, 1927, to August 31, 1928.
558
558
559
MISCELLANEOUS
Table 67. Principal of the funded and unfunded indebtedness of foreign
governments to the United States, the accrued and unpaid interest
thereon, and payments on account of principal and interest, as of November 15, 1928
Table 68. Money cost of the World War to the United States Government
to June 30, 1928
Table 69. Insular and District of Columbia loans outstanding, and
changes during the fiscal j^ear 1928
Table 70. Estimated amount of whoUy tax-exempt bonds outstanding, by
years, from June 30, 1913 to 1926, and, by months, from January, 1927,
to August, 1928, classified by type of obligor
Table 71. Partially tax-exempt United States securities outstanding, by
months, from April, 1917, to September, 1928
560
561
565
567
569
APPENDICES TO REPORT ON THE FINANCES
REPORT OF THE TREASURER:
Receipts and expenditures for fiscal years 1927 and 1928
Pay warrant transactions
Foreign exchange purchased
Collection items
:
District of Columbia securities
Panama Canal
.
..
Payment of coupons from United States securities
Payment of interest on registered securities of the United States
Checking accounts
Transactions on accounts of the Post Office Department
District of Columbia teachers' retirement fund..
Transactions in the public debt
Statement of the public debt outstanding June 30, 1928
Public debt retirements chargeable against ordinar}^ receipts
Statement of the Treasury, reserve and trust funds
.-
..
.
573
575
576
577
577
577
578
578
578
578
579
579
581
582
583
XVI
CONTENTS
R E P O R T OF THE T R E A S U R E R — C o n t i n u e d .
' .
The general fund
Net avaUable cash balance, 1919 to 1928
T h e gold reserve f u n d . .
.
Gold fund, Federal Reserve Board
Gold in t h e Treasury, 1919 to 1 9 2 8 . - - _
Securities held in t r u s t
:
Withdrawal of bonds to secure circulation
Postal savings bonds and investments therein
Special t r u s t funds
Depositaries of the United States
Public moneys in depositary banks
Interest on public moneys held by depositary banks
Restoration of depositary balances
Coin and gold bar shipments or transfers
Recoinage of gold, silver, and minor coins
Purchases of gold bullion a t t h e mints and assay offices
Stock of metallic money in t h e United States
Redemption of Federal reserve and national currency
Shipments of paper currency from Washington
Outstanding currency
Old demand notes
Fractional currency
United States notes
Gold certificates
Silver certificates
Treasury notes of 1890
'.
United States paper currency, bj^ denominations, held in reserve
United States paper currency prepared for issue and a m o u n t issued,
by fiscal years from 1919
United States p a p e r currency issued, by m o n t h s , during t h e fiscal
years 1927 and 1928
.
United States paper currenc}^ redeemed, b}^ m o n t h s , during t h e fiscal
years 1927 and 1928
.'
United States paper currency issued, redeemed, and outstanding for
t h e fiscal year 1928
United States p a p e r currenc}^ outstanding, b}^ months, during t h e
fiscal years 1927 and 1928
-..Ratio of small denomijiations to all paper currency ouststanding
P a p e r currenc)^ by denominations, outstanding J u n e 30, 1927 and
1928
".
Legal tender qualities of United States currenc}^
General account of t h e Treasurer of t h e United States
Tables from t h e r e p o r t of t h e Treasurer—
No. 1. General distribution of t h e assets and liabilities of t h e
Treasury, J u n e 30, 1928
No. 2. Available assets and liabilities of t h e Treasur}^ a t the close
of June, 1927 and 1928
.
No. 3. Distribution of t h e General Treasur.y balance, J u n e 30,
1928
'.
.
N o . 4. Assets of t h e Treasur}^ other t h a n gold, silver, notes, and
certificates at t h e end of each m o n t h , from Julj^, 1925
No. 5. Assets of t h e T r e a s u r y a t t h e end of each m o n t h , from
July, 1925
1
Pag&
583
584
584
585
585
586
587
587
588^
590
590590'
591
592
592
593
594
594
595
595
595
596
597
597
598599
599
600
60O
601
601.
602'
. 602
602
605
607'
609
610'
611
611
612:
CONTENTS
XVII
R E P O R T OF T H E T R E A S U R E R — C o n t i n u e d .
•
Tables from t h e report of the T r e a s u r e r — C o n t i n u e d .
Page
No. 6. Liabilities of the Treasurj^ a t the end of each m o n t h ,
from July, 1925
612
No. 7. United States notes of each denomination issued, redeemed, and outstanding a t t h e close of the fiscal years 1925,
1926, 1927, and 1928
.
^
613
No. 8. Gold certificates of each denomination issued, redeemed,
and outstanding a t the close of the fiscal years 1925, 1926, 1927, i
and 1928
614
No. 9. Silver certificates of each denomination issued, redeemed,
and outstanding a t t h e close of t h e fiscal years 1925, 1926,
1927, and 1928
.
615
No. 10. Treasury notes of 1890 of each denomination issued,
redeemed, and outstanding a t t h e close of t h e fiscal years
1925, 1926, 1927, and 1928
616
No. 11. A m o u n t of United States notes, gold and silver certificates, and Treasury notes, of each denomination issued, redeemed, and outstanding a t t h e close of each fiscal year from
1925
617
No. 12. Federal reserve banks (with branches) and national b a n k s
designated as depositaries of public moneys, with t h e balance
held J u n e 30, 1928
.
618
No. 13. Old demand notes of each denomination issued, redeemed,
and outstanding June 30, 1928
620
No. 14. Fractional currency of each denomination issued, redeemed, and outstanding J u n e 30, 1928
620
No. 15. Compound-interest notes of each denomination issued,
•'
redeemed, and outstanding J u n e 30, 1928
621
No. 16. One and two year notes of each denomination issued,
redeemed, and outstanding J u n e 30, 1928
621
No. 17. Seven-thirty notes, issued, redeemed, and outstanding
J u n e 30, 1928
.
.
.
621
No. 18. Refunding certificates, act of F e b r u a r y 26, 1879, issued,
redeemed, and outstanding J u n e 30, 1928
621
No. 19. Public debt obligations retired during t h e fiscal year
1928
622
No. 20. N u m b e r of banks with semiannual d u t y levied, by fiscal
years, and n u m b e r of depositaries w i t h bonds as security a t
close of each fiscal year from 1919
.
626
No. 21. Checks issued by t h e Treasurer for interest on registered
bonds during t h e fiscal year 1928
" 626
No. 22. Coupons from United States bonds and interest notes
paid during the fiscal year 1928, classified by l o a n s .
627
No. 23. Checks paid by t h e Treasurer during t h e fiscal year 1928
drawn by t h e Secretary in p a y m e n t of interest on coupon
bonds
^
627
No. 24. Checks drawn by t h e Secretary and paid b}^ t h e Treasurer for interest on registered bonds and notes of t h e United
States during t h e fiscal year 1928
628 ,
No. 25. Money deposited in the Treasury each m o n t h of the fiscal
year 1928 for the redemption and retirement of• national-bank
notes
628
13606—29—FI 1928
2
XVIII
CONTENTS
R E P O R T OF T H E T R E A S U R E R — C o n t i n u e d .
Tables from t h e report of t h e T r e a s u r e r — C o n t i n u e d .
No. 26. A m o u n t of currency counted into t h e cash of t h e N a tional B a n k R e d e m p t i o n Agency a n d redeemed notes delivered,
by fiscal years, from 1919 t o 1927, a n d by m o n t h s during t h e
fiscal year 1928
.
No. 27. Currency received for redemption by t h e National B a n k
Redemption Agency from t h e principal cities a n d other places,
by fiscal years, from 1919
No. 28. Mode of p a y m e n t for currency redeemed a t t h e National
Bank Redemption Agency, b y fiscal years, from 1919
.
No. 29. Deposits, redemptions, assessments for expenses, a n d
transfers a n d r e p a y m e n t s on account of t h e 5 per cent r e d e m p tion fund of national a n d Federal reserve b a n k s , b y fiscal
years, from 1919
.
No. 30. Deposits a n d redemptions on account of t h e retirement of
circulation, by fiscal years, from 1919
JNo. 3 1 . Expenses incurred in t h e redemption of national a n d
Federal reserve currency by fiscal years, from 1919
No. 32. A m o u n t of national-bank notes redeemed a n d assorted
during t h e fiscal j^ear 1928, a n d t h e assessment for expenses of
redemption
.,
No. 33. A m o u n t a n d n u m b e r of pieces of Federal reserve notes
and Federal reserve b a n k notes redeemed during t h e fiscal
year 1928, a n d t h e assessment for expenses of redemption
No. 34. General cash account of t h e National B a n k R e d e m p t i o n
Agency for t h e fiscal year 1928, a n d from July 1, 1874
No. 35. N u m b e r of notes of each kind of currency a n d denomination redeemed a n d delivered by t h e National B a n k R e d e m p tion Agency during t h e fiscal year 1928
No. 36. Average a m o u n t of national-bank notes oustanding a n d
t h e redemptions, by fiscal years, from 1875 (the first year of
t h e agency)
.
No. 37. Federal reserve notes, canceled a n d uncanceled, forwarded by Federal reserve b a n k s a n d branches, counted a n d
delivered t o t h e Comptroller of t h e Currency for credit of
Federal reserve agents, by fiscal years, from 1916
No. 38. A m o u n t of money outside of t h e Treasury, t h e a m o u n t
held b y Federal reserve b a n k s a n d agents, a n d t h e a m o u n t in
circulation, t h e per capita, a n d t h e estimated population of
t h e United States, on t h e last d a y of each m o n t h from July,
1926, revised
.
No. 39. T o t a l a m o u n t expended on account of t h e P a n a m a Canal,
the receipts covered into t h e Treasury, a n d t h e proceeds of
sales of bonds t o t h e close of t h e fiscal year 1928
Pago
629
630
630
630
631
631
632
633
633
634
636
636
637
637
REPORT";OF T H E D I R E C T O R O F T H E M I N T (ABRIDGED) :
Operations of t h e m i n t s a n d assay offices
• Institutions of t h e mint service
Coinage
.
Gold operations
Silver operations
Refineries
.
Commemorative coin
Stock of coin a n d m o n e t a r y bullion in t h e United States
.-
.
639
639
639
640
640
640
641
641
. CONTENTS
XIX
REPORT OF THE DIRECTOR OF THE MINT—Continued.
^
Operations of the mints and assay offices—Continued.
Production of gold and silver
Industrial consumption of gold and silver
Import and export of domestic gold coin
Appropriations, expenses, and income
Deposits of gold and silver, income, expenses, and employees,
by institutions, fiscal year 1928
Coinage
Issue of fine gold bars for gold coin and gold buUion
.
Receipts and disbursements of gold bullion and balances on
hand
Purchase of minor-coinage metal for use in domestic coinage
Minor-coin distribution costs
Minor coins outstanding
'.
Operations of the assay departments
Operations of the melting and refining and of the coining depart*
ments, fiscal year 1928
:
Engraving department
Employees
Work of the minor assay offices
Laboratory, Bureau of the Mint
Assay commission's annual test of coin
Tables from the report of the Director of the Mint—
Deposits and purchases of gold during the fiscal year 1928
Deposits and purchases of silver during the fiscal year 1928
Deposits of gold at United States mints and assay offices since
1873
.
Deposits of silver at United States mints and assay offices since
1873
Authority for United States coinage, by denominations, with
standard weight and fineness, and total coined
i
Coinage of each rnint, by value, with grand total pieces, since
organization to close of business December 31, 1927
Coinage of each mint during the past 10 calendar years
Combined gold coinage of the mints of the United States, by
denominations and calendar years, since their organization
Combined silver coinage of the mints of the United States, by
denominations and calendar years, since their organization
Combined minor coinage of the mints of the United States, by
denominations and calendar years, since their organization
Total gold, silver, and minor coinage of the United States, by
calendar y e a r s . . .
Stock of money in the United States on June 30, 1928
Location, ownership, and per capita circulation of United States
money, June 30, 1928
Estimated monetary stock of gold and silver in the United States
and the amount per capita at the close of each fiscal year since
1873
Location, ownership, and per capita circulation of United States
money, December 31, 1927
Monetary stock of gold in the United States since 1873
Average price of an ounce of gold in London and United States
equivalent since 1870 .
Page
641
641
642
642
643
643
644
645
646
646
646
647
647
654
655
655
656
658
660
662
664.
665
666
669
670
672
674
676
678
680
681
682
683
684
685
XX
CONTENTS .
R E P O R T OF THE D I R E C T O R OF THE M I N T — C o n t i n u e d .
Tables from t h e report of t h e Director of t h e M i n t — C o n t i n u e d .
Average commercial ratio of silver t o gold each calendar year
since 1687, with gold considered as of legal m o n e t a r y value
R a t i o of silver t o gold, as affected by World W a r . ,
Bullion value of t h e silver dollar a t t h e a n n u a l average price of
silver each calendar year since 1837
Values of foreign coins, October 1, 1928
Changes in value of foreign coins during 1928
M o n e t a r y stock of principal countries of t h e world, e n d of calendar year 1926
M o n e t a r y stock of principal countries of t h e world, end of calendar year 1927
World production of gold a n d sUver, 1926 a n d 1927
Production of gold a n d silver in t h e world since 1860
Production of gold a n d silver in t h e world since t h e discovery of
America
page
686
686
687
687
689
690
694
698
701
702
R E P O R T O F T H E C O M P T R O L L E R O F T H E C U R R E N C Y (ABRIDGED) :
Pending legislation, taxation of national banks
Legislation recommended—
A m e n d m e n t s to national bank a c t
A m e n d m e n t s t o t h e laws of t h e District of Columbia
Operation under t h e act of F e b r u a r y 25, 1927, commonly known as
t h e M c F a d d e n Act, amending t h e national banking laws—
Branch banking
Domestic branches of national banks
National banks in t h e t r u s t
field
Organization and liquidation of national b a n k s
National bank failures
Bank failures other t h a n national
National bank circulation
Redemption of national a n d Federal reserve b a n k circulation
National banks of issue
Condition of national b a n k s a t d a t e of each report called for during
t h e year
Condition of national banks October 3, 1928
Resources
Liabihties
National bank liabilities on account of bills payable a n d r e d i s c o u n t s - .
Loans a n d discounts of national banks
Comparative s t a t e m e n t of loans a n d discounts, including rediscounts,
m a d e b y national banks during t h e last three fiscal jesivs
Comparative changes in d e m a n d a n d time deposits, loans a n d discounts, United States G o v e r n m e n t a n d other bonds a n d securities,
and t h e a m o u n t of lawful reserve of national b a n k s since J u n e 30,
1924
United States Government securities held b y national banks in reserve
cities a n d States
I n v e s t m e n t s of national banks
j
Savings depositors a n d deposits in national banks
Per capita individual a n d savings deposits in all reporting b a n k s
Earnings, expenses, a n d dividends of national banks
National banks classified according t o capital stock
.
National bank examiners
705
707
709
710
711
713
716
717
722
722
725
725
725
727
727
727
730
731
736
736
737
739
744
746
747
761
762
CONTENTS
R E P O R T OF THE COMPTROLLER OF THE C U R R E N C Y — C o n t i n u e d .
XXI
Page
Federal reserve banks
769
Federal reserve b a n k discount rates
771
Discount rates prevailing in Federal reserve b a n k a n d b r a n c h cities..
771
Rates for money in New York
•
774
New York clearing house
776
Clearing house associations in t h e 12 Federal reserve b a n k cities a n d
elsewhere
776
Banks other t h a n national
776
State (commercial) banks
779
Loan a n d t r u s t companies
780
Principal items of resources a n d liabilities of loan a n d t r u s t companies
in June of each year, 1914 t o 1928
782
Stock savings banks
783
M u t u a l savings b a n k s
784
Depositors a n d deposits in m u t u a l a n d stock savings banks
786
, Private banks
789
All reporting banks other t h a n national
791
Principal items of resources a n d liabilities of all reporting banks other
t h a n national on or a b o u t J u n e 30, 1924 t o 1928
^
793
National banks
794
All reporting b a n k s in t h e United States a n d possessions
' 796
Individual deposits in all reporting banks
806
Resources and liabilities of aU reporting banks, J u n e 30, 1924 t o 1 9 2 8 .
807
Cash in all reporting b a n k s
808
Money in t h e United States
-'
808
Banks in t h e District of Columbia
.
812
Earnings, expenses, a n d dividends of b a n k s other t h a n national in
t h e District of Columbia
812
Building a n d loan associations in t h e District of Columbia
813
Building a n d loan associations in t h e United States
814
M o n e t a i y stocks in t h e principal countries of t h e world
815
Federal land banks
816
Joint-stock land banks
817
Federal intermediate credit banks
. 819
National agricultural credit corporations
820
United States Postal Savings System
821
School savings banking
826
Savings banks in principal countries of t h e world
827
Resources of leading foreign banks of issue
830
Expenses of t h e Currency Bureau
831
R E P O R T OF T H E COMMISSIONER OF I N T E R N A L R E V E N U E (ABRIDGED) :
Collections
Cost of administration
Income T a x Unit
.
Examination of r e t u r n s - - 1
Relation of personnel in numbers a n d cost t o p r o d u c t
Additional revenue
Claims a n d overassessments
L
T h e pending job
Cases for excess-profits t a x j^ears p e n d i n g - T a x years 1917 t o 1925, inclusive
Current years
833
835
835
835
835
• 835
836
836
837
837
838
XXII
CONTENTS
R E P O R T O F T H E C O M M I S S I O N E R OF I N T E R N A L R E V E N U E — C o n t i n u e d .
Income Tax Unit—Continued.
T h e audit in Washington
T h e audit in t h e
field
Organization changes
Policy a n d procedure changes
.--.
Present organization
Field. procedure division
.
Field divisions
».
Audit review division
Clearing division
Records division
Personnel
.
Surplus p r o p e r t y
..
I m p r o v e m e n t s planned
Final closings in t h e u n i t
Final closing of cases
Increase in returns showing large incomes
.-.
C o m p a r a t i v e s u m m a r y of work accomplished for fiscal years
ended J u n e 30, 1924, t o J u n e 30, 1928, inclusive
Economies effected
Concentration of activities
I m p r o v e d procedure
^
Other economies
.
Reduction in force a n d p a y roll
Special advisory committee
Miscellaneous T a x U n i t
.
.
Personnel a n d p a y roU
Taxes collected
Appeals a n d review section
^
E s t a t e t a x division
Miscellaneous division
.
Tobacco division
Accounts a n d Collections Unit
Collection accounting division
.
Collectors' personnel, equipment, a n d space division
Disbursement accounting division
Office of t h e General Counsel
Appeals division
^
Interpretive division I
Interpretive division I I
Penal division
Civil division
.i_.
Administrative division
.
.
Bureau a n d field personnel
.
Tables from t h e report of t h e Commissioner of I n t e r n a l R e v e n u e —
S u m m a r y of m o n t h l y internal revenue receipts, years ended
J u n e 30, 1927 a n d 1928, by sources
S u m m a r y of internal revenue receipts, years ended J u n e 30,
1927 a n d 1928, by sources
S u m m a r y of internal revenue receipts, years ended J u n e 30,
1927 a n d 1928, b y collection districts
.
Page
838
839
840
842
845
845
845
846
846
848
850
851
851
851
853
853
857
868
868
869
870
871
871
874
874
874
875
875
877
882
884
884
887
888
889
889
891
892
894
896
899
900
901
901
913
914
CONTENTS
XXIII
R E P O R T OF T H E C O M M I S S I O N E R OF I N T E R N A L R E V E N U E — C o n t i n u e d .
Tables from t h e r e p o r t of t h e Commissioner—Continued.
S u m m a r y of internal revenue receipts, year ended J u n e 30,
1928, b y States
.
Sunimary of income t a x .-receipts from corporations a n d individuals, year ended J u n e 30, 1928, b y States
S u m m a r y of receipts from income t a x , years ended J u n e 30,
1926, 1927, a n d 1928, by States, with per cent of increase or
decrease in 1928 compared w i t h 1927
T o t a l internal revenue receipts, years ended J u n e 3 0 , 1 8 6 3 - 1 9 2 8 . .
I n t e r n a l revenue t a x on products from Philippine Islands, years
ended J u n e 30, 1927 a n d 1928, by articles taxed
I n t e r n a l revenue t a x on products from P o r t o Rico, years ended
J u n e 30, 1927 a n d 1928, b y articles taxed
Page
915
916
917
918
918
918
R E P O R T OF T H E F E D E R A L F A R M L O A N B O A R D ( A B R I D G E D ) :
Progress in reorganization
Reconstruction a n d results
.
Expenses
Management
.
Changes
Directors as active officers
Appointments
:
Securities
.
Bonds
Debentures
Real e s t a t e
Examinations
B a n k examinations
N a t i o n a l farm loan association examinations
T o t a l n u m b e r of examinations
Correlation of examining and appraisal work
Uniform system of accounts
•_
Appraisals
Appraisers
Reviewing appraisers
.
E x a m i n a t i o n of m o r t g a g e loans
Statistics
S t a t e m e n t s of condition
Changes in s t a t e m e n t s
Office of t h e secretary a n d general counsel
Legal division
.
Indexing of minutes
Files
Securities division
Registrars
Custodian of securities
Receiverships
A m e n d m e n t s t o rules a n d regulations of t h e F a r m Loan Board
Federal land b a n k s
.
Capital
1
Loans
Purposes of loans
Foreclosures
Bonds
..
919
919
921
921
922
922
923
924
924
924
925
926
927
927
928
929
929
930
930
930
931
931
931
932
933
933
934
934
934
935
935
936
936
936
936
937
939
939
940
XXIV
CONTENTS
R E P O R T OF T H E F E D E R A L F A R M L O A N B O A R D — C o n t i n u e d .
F e d e r a l land bankvs—Continued.
I n t e r e s t rates
.
Condition of t h e b a n k s
•
T h e P o r t o Rico b r a n c h
Limit on land bank loans in Porto Rico
T h e Spokane Commission
Criminal prosecutions
.
National farm loan associations
.,
Compensation of secretary-treasurers
Size of associations
I n v e s t m e n t of reserves
.
Charters
Joint-stock land b a n k s
Capital
Loans
Purposes of loans
Foreclosures
.
Bonds
I n t e r e s t rates
Condition of t h e b a n k s
Crirninal m a t t e r s
Section 8 of t h e C l a y t o n A n t i t r u s t Act
Receiverships of t h r e e joint-stock land banks
Power t o assess stockholders
K a n s a s City Joint Stock L a n d B a n k of K a n s a s City, M o
Bankers Joint Stock L a n d B a n k of Milwaukee
Ohio Joint Stock L a n d B a n k of Cincinnati
Federal i n t e r m e d i a t e credit banks
Capital
:
Loans to cooperative m a r k e t i n g associations
Discounts
T o t a l loans a n d discounts
,
Debentures
I n t e r e s t rates
E a r n i n g s a n d franchise tax
P o r t o Rico branch
.
Criminal prosecutions
Fiscal agency
^
Conferences with b a n k officers
Personnel
'
Appendix...
INDEX
Page
941
942
943
944
944
945
945
946
947
947
948
948
948
949
950
950
951
952
953
953
954
954
955
956
957
958
959
959
959
960
961
961
962
963
963
964
964
965
965
965
967
SECRETARIES OF THE TREASURY AND PRESIDENTS UNDER WHOM
THEY SERVED
NOTE.—Robert Morris, the first financial officer ofthe Government, was Superintendent of Finance from
1781 to 1784. Upon the resignation of Morris, the powers conferred upon him were transferred to the " Board
of the Treasury." Those who finally accepted positions on this board were John Lewis Gervais, Samuel
Osgood, and Walter Livingston. The board served until Hamilton assumed oflace in 1789.
Term of service
Secretaries of Treasury
From—
To—
Sept. 11,1789
Feb. 3,1795
Jan. 1,1801
May 14,1801
Feb. 9,1814
Oct. 6,1814
Oct. 22,1816
Mar. 7,1825
Mar. 6,1829
Aug. 8,1831
May 29,1833
Sept. 23,1833
July 1,1834
Mar. 6,1841
Sept. 13,1841
Mar. 8,1843
July 4,1844
Mar. 8,1845
Mar. 8,1849
July 23,1850
Mar. .7,1853
Mar. 7,1857
Dec. 12,1860
Jan. 15,1861 I
Jan. 31,1795
Dec. 31,1800
May 13,1801
Feb. 9,1814
Oct. 5,1814
Oct. 21,1816
Mar. 6,1825
Mar. 5,1829
June 20,1831
May 28,1833
Sept. 22,1833
June'25,1834
Mar. 3,1841
Sept. 11,1841
Mar. 1,1843
May 2,1844
Mar. 7,1845
Mar. 6,1849
July 22,1850
Mar. 6,1853
Mar. 6,1857
Dec. 8,1860
Jan. 14,1861
Mar. 6,1861
Alexander Hamilton, New York
Oliver Wolcott, Connecticut..
Samuel Dexter, Massachusetts
Albert Gallatin, Pennsylvania »__.
George W. Campbell, Tennessee
Alexander J. Dallas, Pennsylvania
W m . H . Crawford, Georgia..^
Richard Rush, Pennsylvania «
'Samuel D. Ingham, Pennsylvania '
Louis McLane, Delaware
Wm. J. Duane, Pennsylvania
Roger B. Taney, Maryland <
Levi Woodbury, New Hampshire*
Thomas Ewing, Ohio 6
Walter Forward, Pennsylvania ^
John C. Spencer, New York »
Geo. M. Bibb, Kentucky
Robt. J. Walker, Mississippi»
Wm. M. Meredith, Pennsylvania
Thos. Corwin, Ohio
James Guthrie, Kentucky
Howell Cobb, Georgia i«
Philip F. Thomas, Maryland
| John A. Dix, New York
Presidents
Washington.
.Washington, Adams.
Adams, Jefferson.
Jefferson, Madison.
Madison.
Madison.
Madison, Monroe.
Adams, J. Q.
Jackson.
Jackson.
Jackson.
Jackson.
Jackson, Van Buren.
Harrison, Tyler.
Tyler.
Tyler.
Tyler, Polk.
Polk.
— Taylor, Fillmore.
Fillmore.
Pierce.
..» Buchanan.
Buchanan.
I Buchanan.
1 While holding the office of Secretary of the Treasury, Gallatin was commissioned envoy extraordinary
and minister plenipotentiary Apr. 17, 1813, with John Quincy Adams and James A. Bayard, to negotiate
peace with Great Britain. On Feb. 9, 1814, his seat as Secretary of the Treasury was declared vacant
because of his absence in Europe. William Jones, of Pennsylvania (Secretary of the Navy), acted
ad interim Secretary of the Treasury from Apr. 21,1813, to Feb. 9,1814.
« Rush was nominated Mar. 5, 1825, confirmed and commissioned Mar. 7,1825, but did not enter upon
the discharge of his duties until Aug. 1,1825. Samuel L. Southard, of New Jersey (Secretary of the Navy),
served as ad interim Secretary of the Treasury from Mar. 7, to July 31,1825.
» Asbury Dickens (chief clerk), ad interim Secretary of the Treasury from June 21 to Aug. .7,1831.
* McClintock Young (chief clerk), ad interim Secretary of the Treasury from June 25 to 30,1834.
* McClintock Young (chief clerk), ad interim Secretary of the Treasury from Mar. 4 to 5,1841.
« McClintock Young (chief clerk), ad interim Secretary of the Treasury Sept. 12,1841.
T McClintock Young (chief clerk), ad interim Secretary of the Treasury from Mar. 1 to 7,1843.
» Spencer resigned as Secretary of the Treasury May 2, 1844; McClintock Young (chief clerk), ad interim Secretary of the Treasury from May 2 to July 3, 1844.
» McClintock Young (chief clerk), ad interim Secretary of the Treasury from Mar. 6 to 7,1849.
»• Isaac Toucy, of Connecticut (Secretary of the Navy), acted as Secretary of the Treasury ad interim
from Dec. 10 to 12,1860.
XXV
XXVI
SECRETARIES OF T H E TREASURY
Secretaries of the Treasury and Presidents under whom they served—Continued
Term of service
Secretaries of Treasury
FromMar.
July
Mar.
Mar.
Mar.
June
July
Mar.
Mar
Nov.
Sept.
Oct.
Mar.
Apr.
Mar.
Feb.
Mar.
Mar.
Feb.
Mar.
Mar.
Mar.
Dec.
Feb.
Mar.
7,1861
5,1864
9,1865
12,1869
17,1873
4,1874
7,1876
10,1877
8,1881
14,1881
25,1884
31,1884
8,1885
1,1887
7,1889
25,1891
7,1893
6,1897
1,1902
4,1907
8,1909
6,1913
16,1918
2.1920
Presidents
ToJune
Mar.
Mar.
Mar.
June
June
Mar.
Mar.
Nov.
Sept
Oct.
Mar.
Mar.
Mar.
Jan.
Mar.
Mar.
Jan.
Mar.
Mar.
Mar.
Dec.
Feb.
Mar.
30,1864 Salmon P. Chase, Ohio »
...
3,1865 Wm. P. Fessenden, M a i n e "
3,1869 Hugh McCulloch, Indiana " "
16,1873 Geo. S. Boutwell, Massachusetts...,
3,1874 Wm. A. Richardson, Massachusetts
20,1876 Benj. H. Bristow, Kentucky "
9,1877 Lot M. Morrill, Maine
3,1881 John Sherman, Ohio "
13,1881 Wm, Windom, Minnesota »^
4.1884 Chas. J. Folger, New York •«
30,1884 Walter Q. Gresham, Indiana
7.1885 Hugh McCulloch, Indiana •<
31,1887 Daniel Manning, New York
6,1889 Chas. S. Fairchild, New York
29,1891 Wm. Windom, Minnesota " "
6,1893 Chas. Foster, Ohio...
5,1897 John Q. Carlisle, Kentucky
31,1902 Lyman J. Gage, Illinois
3,1907 L. M, Shaw, Iowa
7,1909 George B. Cortelyou, New York
5,1913 Franklin MacVeagh, Illinois
15,1918 W. G. McAdoo, New York
1,1920 Carter Glass, Virginia
3,1921 David F. Houston, Missouri
4.1921
Andrew W. MeUon, Pennsylvania..
Lincoln.
Lincoln.
Lincoln, Johnson.
Grant.
Grant.
Grant.
Grant, Hayes.
Hayes.
Garfield, Arthur.
Arthur.
Arthur.
Arthur, Cleveland.
Cleveland.
Cleveland, Harrison.
Harrison.
Harrison, Cleveland.
Cleveland, McKinley.
McKinley, Roosevelt.
Roosevelt.
Roosevelt.
Taft.
Wilson.
Wilson.
Wilson.
Harding, Coolidge.
H George Harrington, District of Columbia (Assistant Secretary), ad interim Secretary of the Treasury
from July 1 to 4, 1864.
1* George Harrington (Assistant Secretary), ad interim Secretary of the Treasury from Mar. 4 to 8,1865.
»3 John F. Hartley, of Maine (Assistant Secretary), ad interim Secretary of the Treasury from Mar. 5
to 11, 1869.
" Hugh McCulloch was Secretary frora Mar, 9,1865, to Mar. 3,1869, and also from Oct. 31, 1884, to Mar.
7,1885.
i» Charles F. Conant, of New Hampshire (Assistant Secretary), ad interim Secretary of the Treasury
from June 21 to 30 (July 6), 1876.
»« Henry F. French, of Massachusetts (Assistant Secretary), ad interim Secretary of the Treasury from
Mar. 4 to 7, 1881.
17 William Windom was' Secretary from Mar. 8,1381, to Nov. 13, 1881, and also from Mar. 7,1889, to Jan.
29, 1891.
18 Charles E. Coon, of New York (Assistant Secretary), ad interim Secretary of the Treasury from
Sept. 4 to 7, 1884; Henry F. French, of Massachusetts (Assistant Secretary), ad interim Sept. 8 to 14, 1884;
Charles E. Coon ad interim Sept. 15 to 24, 1884.
i» A. B. Nettleton, of Minnesota (Assistant Secretary), ad interim Secretary of the Treasury from Jan.
30 to Feb. 24, 1891.
UNDERSECRETARIES OF THE TREASURY AND PRESIDENTS AND
SECRETARIES UNDER WHOM THEY SERVED
Term of service
Undersecretaries i
9
From—
To—
July 1,1921
Nov. 20,1923
Mar. 4,1927
Nov. 17,1923
Jan. 31,1927
S. Parker Gilbert, jr.. New Jersey
Garrard B. Winston, Illinois
Ogden L. Mills, New York
1 Office established act June 16,1921.
Secretaries
Presidents
Mellon
Harding, Coolidge.
Mellon.... Coolidge.
Mellon.... Coolidge.
ASSISTANT SECRETARIES OF T H E TREASURY
XXVH
ASSISTANT SECRETARIES OF THE TREASURY AND PRESIDENTS
AND SECRETARIES UNDER WHOM THEY SERVED
Term of service
Assistant Secretaries i
. From—
Mar. 13,1857
Charles B. Penrose, Pennsylvania.
Allen A. Hall, Pennsylvania
William L. Hodge, Tennessee
Peter G. Washington, District of
Columbia.
Jan. 16,1861 Philip Clayton, Georgia
Mar. 13,1861
July 11,1865
Mar. 18,1864
June 15,1865
Jan.
Nov. 30,1867
Mar.
Oct.
Nov.
Mar.
12,1849
10,1849
16,1850
14,1853
5,1865
Secretaries
Presidents
Meredith
Meredith, Corwin.
Corwin, Guthrie..
Guthrie, C o b b . . . .
Taylor.
Taylor, Fillmore.
Fillmore, Pierce.
Pierce, Buchanan.
ToOct.
Nov.
Mar.
Mar.
9,1849
15,1850
13,1853
12,1857
Cobb, T h o m a s , . Buchanan.
Dix.
George Harrington, District of Chase, Fessenden, Lincoln, Johnson.
Columbia.2
McCulloch.
Maunsell B. Field, New Y o r k . . . Chase, Fessenden, Lincohi, Johnson.
McCulloch.
William E . C h a n d l e r , New Fessenden, Mc- Lincoln, Johnson.
Culloch.
Hampshire.
John F. Hartley, Maine
McCulloch, Bout- Johnson, Grant.
well, Richardson, Bristow.
Edmund Cooper, Tennessee
McCulloch
Johnson.
William A. Richardson, Massa- Boutwell
. . Grant.
chusetts.
Frederick A. Sawyer, South Caro- Richardson, Bris- Grant.
tow.
lina.
Charles F. Conant, New Hamp- Bristow, Morrill, Grant, Hayes.
shire.
Sherman.
Curtis F. Burnam, Kentucky
Bristow
Grant.
Henry F. French, Massachusetts. Morrill, Sherman, Grant,
Hayes,
Garfield, Arthur,
Windom, FolCleveland.
ger, Gresham,
McCulloch,
Manning.
Richard C. McCormick, Arizona- Sherman
Hayes.
John B. Hawley, Ulinois
Hayes.
Sherman
J. Kendrick Upton, New Hamp- Sherman, Win- Hayes, Garfield,
shire.
dom, Folger.
Arthur.
John C. New, Indiana
Arthur.
Folger
Charles E. Coon, New York
Folger, Gresham, Arthur, Clevelandj
McCulloch,
Manning.
Charles S. Fairchild, New York.. Manning
Cleveland.
William E. Smith, New York.... Manning
_. Cleveland..
Hugh S. Thompson, South Caro- Manning, Fair- Cleveland, Harrilina.
son.
chUd, Windom.
Isaac N. Maynard, New Y o r k . . . Fairchild, Win- Cleveland, Harridom.
son.
Harrison.
Windom
George H. Tichner, Dlinois
George T. Batchelder, New York 8 Windom
Harrison.
A. B. Nettleton, Minnesota
Windom, Foster. . Harrison.
Oliver L. Spaulding, Michigan... Windom, Foster, Harrison, Cleveland.
Carlisle.
•
July 11,1865
May
Dec. 2,1867
Mar. 20,1869
May 31,1868
Mar. 17,1873
Mar. 8,1873
June 11,1874
July
1,1874
Apr. 3,1877
Mar. 4,1875
Aug. 12,1876
June 30,1876
Mar. 9,1885
Apr. 3,1877
Dec. 9,1877
Apr. 10,1880
Dec. 8,1877
Mar. 31,1880
Dec. 31,1881
Feb. 28,1882
Apr. 17,1884
Apr. 16,1884
Nov. 10,1885
Mar. 14,1885
Nov. 10,1885
July 12,1886
Apr. 1,1887
June 30,1886
Mar. 12,1889
Apr.
6,1887
Mar. 11,1889
Apr.
Apr.
July
July
1,1889
1,1889
22,1890
23,189Q
July
Oct.
Dec.
June
4,1875
20,1890
31,1890
1,1892
30,1893
1 Office established act Mar. 3, 1849; appointed by the Secretary. Act Mar. 3, 1857, made the office
presidential.
' Act Mar. 14, 1864, provides one additional Assistant Secretary.
« Act July 11,1890, provides for an additional Assistant Secretary.
ASSISTANT SECRETARIES OF T H E TREASURY
XXVIII
Assistant Secretaries of the Treasury and Presidents and Secretaries under whom
they served—Continued
Term of service
Assistant ,Secretariesi
1
From—
Apr. 27,1891
Nov. 22,1892
Dec. 23,1892
Apr. 12,1893
Apr. 13,1893
July
1,1893
Apr.
Apr.
7,1897
7,1897
June 1,1897
Mar. 13,1899
Mar. 6,1901
Mar. 5,1903
May 27,1903
Mar. 5,1905
July
Jan.
Apr.
Mar.
1,1906
22,1907
23,1907
17,1908
Apr. 5,1909
Apr. 19,1909
Nov. 27,1909
June 8,1910
Apr 4,1911
July 20,1912
Mar. 24 1913
Aug. 1,1913
Oct.
Mar.
Aug.
Aor.
June
Oct.
1.1913
24,1914
17,1914
17 1917
22,1917
5,1917
Oct. 30,1917
Secretaries
Presidents
ToHarrison.
Foster
Oct. 31,1892 Lorenzo Crounse, Nebraska
Foster
Mar. 3,1893 John H. Gear, Iowa
Harrison.
Apr. 3,1893 Genio M. Lambertson, Nebraska. Foster, Carlisle... Harrison, Cleveland.
Apr. 7,1897 Charles S. Hamlin, Massachu- Carlisle, Gage
Cleveland,
Mcsetts.
Kinley.
Mar. 31,1897 William E. Curtis, New York.... Carlisle, Gage
Cleveland,
McKinley.
May 4,1897 Scott Wike, Illinois
Carlisle, Gage
Cleveland,
McKinley.
Mar. 10,1899 William B. Howell, New Jersey Gage
McKinley.
Mar. 4,1903 Oliver L. Spaulding, Michigan... Gage, Shaw
McKinley, Roosevelt.
Gage
McKinley.
Mar. 5,1901 Frank A. Vanderlip, Illinois.
Gage, Shaw
June 3,1906 Horace A. Taylor, Wisconsin
McKinley, Roosevelt.
Gage, Shaw
McKinley, RooseApr. 15,1903 MUton E. Ailes, Ohio
velt.
• Shaw
Mar. 5,1905 Robert B. Armstrong, Iowa
Roosevelt.
Shaw
Jan. 21,1907 Charles H. Keep, New York
Roosevelt.
Nov. 1,1909 James B. Reynolds, Massachu- Shaw, Cortelyou, Roosevelt, Taft.
MacVeagh.
setts.
Mar. 15,1908 John H. Edwards, Ohio
Shaw, Cortelyou.. Roosevelt.
Shaw
Feb. 28,1907 Arthur F Statter Oregon
Roosevelt.
Roosevelt.
Mar. 6,1909 Beekman Winthrop, New York . Cortelyou.....
Apr. 10,1909 Louis A. Coolidge, Massachusetts Cortelyou, Mac- Roosevelt, Taft.
Veagh.
June 8,1910 Charles D. Norton, Illinois
MacVeagh
Taft.
Apr. 3,1911 Charles D. Hilles, New Y o r k . . . . MacVeagh
Taft.
July 31,1913 James F. Curtis, Massachusetts.. MacVeagh, Mc- Taft, Wilson.
Adoo.
Taft.
July 3,1912 A. Piatt Andrew, Massachusetts. MacVeagh
Mar. 3,1913 Robert 0 . Bailey, Illinois
MacVeagh
Taft.
Sept. 30,1913 Sherman P. Allen, Vermont
MacVeagh, Mc- Taft, Wilson.
Adoo.
Feb 2 1914 John Skelton Williams Vireinia McAdoo
Wilson.
Wilson.
Aug. 9,1914 Charles S. Hamlin, Massachu- McAdoo...
setts.
Oct 1 1917 Bvron R Newton New York
McAdoo
- Wilson.
Wilson.
Jan. 26,1917 William P. Malburn, Colorado._ McAdoo.-..
Mar. 15,1917 Andrew J Peters, Massachusetts McAdoo
. . . . Wilson.
Wilson.
Aug. 28,1918 Oscar T Crosbv Vireinia
McAdoo
McAdoo, Glass... Wilson.
Nov. 20,1919 Leo S. Rowe, Pennsylvania.'.
Aug. 26,1921 James H. Moyle, Utah
McAdoo, Glass, Wilson, Harding.
Houston, Mellon.
July 5,1920 Russell C.Leffingwell,<NewYork McAdoo, Glass, Wilson.
Houston.
1 Office established act Mar. 3,1849; appointed by the Secretary. Act Mar. 3, 1857, made the office
presidential.
« Act Oct. 6, 1917, provided for two additional Assistant Secretaries for duration of war and six months
after.
ASSISTANT SECRETARIES OF T H E TREASURY
XXIX
Assistant Secretaries of the Treasury and Presidents and Secretaries under whom
they served—Continued
Term of service
Assistant Secretaries i
From—
To-
Dec. 15,1917
Sept. 4,1918
Jan. 31,1919
June 30,1920
Mar.
Nov.
June
July
Dec.
Dec.
5,1919
21,1919
15.1920
6,1920
4,1920
4,1920
Nov.
June
Apr.
June
May
Mar.
15,1920
14,1920
14,1921
30,1921
31,1921
4,1921
Mar.
May
Dec.
Mar.
July
July
Apr.
Dec.
Aug.
Nov.
16,1921
4,1921
23,1921
3,1923
9,1923
1,1924
1,1925
28,1926
1,1927
7,1927
Mar.
July
July
July
Nov.
Nov.
July
31,1925
9,1923
25,1922
13,1926
19,1923
6,1927
31,1927
Thomas B. Love, Texas
Albert Rathbonei New York
McAdoo, Glass.-McAdoo, Glass,
Houston.
Jouett Shouse, Kansas .
Glass, Houston
Glass, Houston...
Norman H. Davis, Tennessee
Houston, Mellon..
Nicholas Kelley, New York
S.Parker Gilbert, jr.. New Jersey^ Houston, Mellon..
Houston, MellonEwing Laporte, Missouri
Angus W. McLean, North Caro- Houston
lina.
Eliot Wadsworth, Massachusetts. Mellon.
Edward Clifford, Illinois
Mellon
Elmer Dover, Washington
Mellon
McKenzie Moss, Kentucky
Mellon
Garrard B. Winston, Illinois».... Mellon
Charles S. Dewey, Illinois
Mellon
Lincoln C. Andrews, New York.. Mellon
Carl T. Schunehian, Minnesota.. Mellon
Seymour Lowman, New Y o r k . . . Mellon
Henry Herrick Bond, Massachu- Mellon
setts.
1 Office established act Mar. 3,1849; appointed by the Secretary.
presidential.
«Became Undersecretary July 1,1921.
• Became Undersecretary Nov. 20,1923.
Presidents
Secretaries
Wilson.
Wilson.
Wilson.
Wilson.
Wilson, Harding.
Wilson, Harding.
Wilson, Harding.
Wilson.
Harding, Coolidge.
Harding.
Harding.
Harding, Coolidge.
Harding, Coolidge.
Coolidge.
Coolidge.
Coolidge.
Coolidge.
Coolidge.
Act Mar. 3, 1857, made the office
ASSISTANTS TO THE SECRETARY OF THE TREASURY ^ AND PRESIDENTS AND SECRETARIES UNDER WHOM THEY SERVED
Term of service
From—
To-
Sept. 11,1789
Mar. 6,1917
May 8,1792
Mar. 4,1921
Assistants to the Secretary
Secretaries
Presidents
Tench Coxe, Pennsylvania
George R. Cooksey, District of Columbia.
Hamilton
McAdoo, Glass,
Houston.
Washington.
Wilson.
1 Office established Sept. 2,1789; abolished act May 8, 1792; reestablished act Mar. 3,1917. Appointed
by the Secretary.
XXX
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS O F T H E
T R E A S U R Y D E P A R T M E N T AS O F O C T O B E R 3 1 , 1 9 2 8
OFFICE OF THE SECRETARY
ANDREW W . MELLON
Secretary of the Treasury.
OGDEN L . M I L L S . _ _ _ _ ^ _ _
CARL T . SCHU;NEMAN
SEYMOUR LOWMAN
Undersecretary of the Treasury.
Assistant Secretary of the Treasury.
...Assistant Secretary ofthe Treasury.
H E N R Y H E R R I C K BOND
JOHN KIELEY.,
W. NORMAN T H O M P S O N
C H A R L E S R . SOHOENEMAN
Assistant
. . Assistant
Assistant
Assistant
H . R. SHEPPARD
L. C. M A R T I N . .
FRANCIS C . R O S E
'
F R A N K A. B I R G F E L D . _ _ ^
JOHN F. EBERSOLE
Secretary of the Treasury.
to the Secretary.
to the Undersecretary.
to the Undersecretary.
Assistant to Assistant Secretary.
Assistant to Assistant Secretary.
Assistant to Assistant Secretary.
Chief Clerk and Superintendent.
Chief, Section of Financial and Economic
Research.
JOSEPH S. MCCOY
Government Actuary.
W. H . M O R A N
EDWARD F . B A R T E L T
Chief, Secret Service Division.
Chief, Division of Bookkeeping and Warrants.
. . , C h i e f , Division of Appointments.
. . ' C h i e f , Section of Surety Bonds.
Chief, Division of Supply.
Superintendent of Supplies, General Supply
Committee.
JAMES. E . H A R P E R
THOMAS L . L A W R E N C E
D A N C . VAUGHAN
ROBERT L E FEVRE
J O H N L . SUMMERS
- . . Disbursing Clerk.
SPECIAL STAFF ASSISTANTS
.ELLSWORTH C . ALVORD
DAVID E . F I N L E Y .
ALBERT G . R E D P A T H
EDWARD J. CUNNINGHAM
Special Assistant to the Secretary.
Special Assistant to the Secretary.
Special Assistant to the Undersecretary.
Member of the War Loan Staff.
CONSULTING ARCHITECTURAL SPECIALISTS
E D W A R D H . B E N N E T T , Chairman.
LOUIS AYRES.
ARTHUR BROWN, Jr.
WILLIAM B ; DELANO.
MILTON B . MEDARY, Jr.
L o u i s A. SIMON.
P U B L I C DEBT SERVICE
WILLIAM S . B R O U G H T O N .
S. R. JACOB.S
-_.
WALTER 0 . ; W O O D S
-.-•
F R A N K A. D E G R O O T
C H A R L E S Ni MCGROARTY^
M E L V I N R . • LOAFMAN
;
M A U R I C E A. E M E R S O N
'
Commissioner of the Public Debt:
Deputy Commissioner.
Register ^of the Treasury.
Assistant Ue^gister of the Treasury.
Chief, Division of Loans and Cuxrency.
Chief, Division of Accounts and Audit.
Chief, Division of Paper Custody.
OFFICE OF THE COMMISSIONER OF ACCOUNTS AND DEPOSITS
ROBERT G . HAND
Commissioner of Accounts and Deposits.
DANIEL W . BELL__
Deputy Commissioner,
EDWARD D . BATCHELDER
Chief, Division of Deposits.
OFFICE OF THE COMPTROLLER OF THE CURRENCY
JOSEPH W . MCINTOSH
E. W I L L E Y STEARNS
F. G. A WALT
.EUGENE H . GOUGH
Comptroller of the Currency.
Deputy Comptroller.
Deputy Comptroller.
. . .Deputy .Comptroller.
J! W. P O L E
ROBERT D . GARRETT
Chief, National Bank Examiners.
Supervising Receiver, Insolvent
Bank Division..
JOHN G . HERNDON
Chief Clerk.
National
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
XXXI
OFFICE OP THE TREASURER OF THE UNITED STATES
H . THEODORE T A T E
Treasurer of the United States.
FRANK J. F . T H I E L
Assistant Treasurer.
VACANT
W.F.WARNER
Assistant Treasurer.
Chief Clerk.
.
OFFICE OF THE COMMISSIONER OF INTERNAL REVENUE
DAVID H . BLAIR
Commissioner of Intrenal Revenue.
HARRIS F . MIRES
Assistant to the Commissioner.
R. M . EsTES...'
Deputy Commissioner.
CHARLES B . A L L E N
CLARENCE M . CHAREST
Deputy Commissioner.
General Counsel.
o
PROHIBITION SERVICE
JAMES M . DORAN
A L F OFTEDAL
VACANT
.
LEVI G . NUTT
Commissioner of Prohibition.
Assistant Commissioner of Prohibition.
Deputy Commissioner of Prohibition. .
. . Deputy Commissioner of Prohibition.
.
CUSTOMS SERVICE
ERNEST W . C A M P
Com,missioner of Customs.
FRANK D O W . .
JOSEPH D . NEVIUS
NATHANIEL G . V A N D O R E N .
THOMAS B . M C K A I G
Assistant Commissioner of Customs.
Deputy Commissioner of Customs,
Deputy Commissioner of Customs.
Assistant Deputy Commissioner of Customs.
MINT BUREAU
R O B E R T J, GRANT
Director ofthe Mint.
MARY M . O'REILLY
Assista,nt Director.
FEDERAL FARM LOAN BUREAU
EUGENE MEYER
'.
J O H N J. G U I L L
L O U I S J. P E T T I J O H N .
ALBERT C . WILLIAMS
GEORGE R . COOKSEY
FLOYD R . HARRISON
F a r m Loan Commissioner.
..-. Memher.
'Member.
Member.
Member.
Member.
L
CHESTER MORRILL
.
VINCENT R . M C H A L E
Secretary and General Counsel.
Chief Examiner.
BUREAU OF ENGRAVING AND PRINTING
ALVIN W . H A L L
Director of the Bureau of Engraving and
•Printing.
.
Assistant Director {Administrative).
Assistant Director {Production).
.:.______ Assistant Director {Service).
CLARK R . LONG
J E S S E E . SWIGART
VACANT
PUBLIC HEALTH SERVICE
H U G H S . GUMMING
THOMAS PARRAN, J R
C. C. P I E R C E
A. M. STIMSON
F . C . SMITH. _
W. F . D R A P E R
FRANCIS A. CARMELIA
R A L P H C . WILLIAMS
D . S. MASTERSON
.
Surgeon General.
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
• : : Assistant Surgeon
Chief Clerk.
General.
General.
General.
General.
General.
General.
General
XXXII
ORGANIZATION O F T H E TREASURY D E P A R T M E N T
UNITED STATES COAST GUARD
R E A R ADMIRAL F . C . BILLARD
Commandant.
CAPT. B . M . CHISWELL
K E N D A L L J. M I N O T
OLIVER M . MAXAM
Assistant Commandant.
Chief, Division of Materiel.
Chief, Divison of Operations.
OFFICE OF THE SUPERVISING ARCHITECT
JAMES A. W E T M O R E
H E N R Y G.- SHERWOOD.GEORGE O . VON NERTA
Acting Supervising Architect.
Executive Officer.
Technical Officer.
STANDING DEPARTMENTAL COMMITTEES
Budget and Improvement Committee
S. R. JACOBS, Chairman.
W. N . T H O M P S O N ,
D . S. B L I S S .
F . A. B I R G F E L D .
W. O. W O O D S .
L. C. M A R T I N .
D. W. B E L L .
J. Hr S C H A E F E R .
MARVIN WESLEY.
M . E . SLINDEE.
F . G . L A W T O N , Secretary.
Committee on Enrollment and Disbarment of Attorneys and Agents
S. R. JACOBS, Chairman.
J A M E S B . C O R R I D O N , Vice Chairman.
H . C. ARMSTRONG.
P . R. BALDRIDGE,.
O. V. E M E R Y .
J. E . H A R P E R .
L A W R E N C E B E C K E R , Attorney.
W I L M E R G . P L A T T , Secretary.
Committee on Personnel
F . A. BIRGFELD, Chairman.
J. E . H A R P E R .
S. R. J A C O B S .
Committee on Civil Service Retirement
F. J. F . T H I E L , Chairman.
F . A. B I R G F E L D .
J. E . H A R P E R .
E . W. C A M P .
W. N . T H O M P S O N .
Committee on. Simplified Ofiice Procedure
F . A. B I R G F E L D , Chairman.
H. T. T A T E .
W. T. S H E R W O O D .
J. L. NUBER.
d.
H
Iz
« ° t-1
S5S
sIc
19^
±
$2 5
^Sg
d 3 =
±% I
151
ORGANIZATION OF THE TREASURY DEPARTMENT
^
UJ
I
l-
g5
o
<
H
tt!
O
13606—29—Fll 9 2 8-
XXXIII
ANNUAL REPORT ON THE FINANCES
TREASURY DEPARTMENT,
Washington, November 20, 1928.
SIR : I have the honor to make the following report:
The increasing dependence of Federal revenues upon income
taxation and the close correspondence during recent years between
changes in revenue receipts and changes in business conditions have
made it more necessary than ever before for the Treasury to have at
its command all available information pertaining to general business
conditions for the purpose of preparing estimates of revenues. The
intimate connection between public debt operations and current
money market conditions also requires that the Treasury have
accurate knowledge of financial conditions.
BUSINESS AND FINANCIAL CONDITIONS DURING THE FISCAL YEAR
1928
" Business conditions
The salient business changes of the year are revealed by an analysis
of the volume of production and trade, published reports of profits
of manufacturing and mining companies, trends in commodity prices,
and agricultural conditions.
Volume of business.—According to recognized indexes the physical
volume of industrial production at the beginning of the fiscal year
was nearly on a par with a year earlier, but soon fell off, reaching a
low point in November and December, 1927. Recovery took place
in January, and the monthly volume thereafter was sustained about
equal to the same months of the preceding year. The total for the
year was 3 per cent below the prior year. Measured by carloadings
of freight there was a 5 per cent decline, but nearly four-fifths of ;the
loss was in the combined loadings of coal and ore.
Automobile production experienced a major turn for the better
during the year. Monthly figures after adjustment for seasonal
tendencies indicate that the general decline which began in November, 1925, reached its lowest point in November and December, 1927.
The year ended with June-July production nearly 35 per cent above
June-July, 1927, although the total for the 12 months was 12 per cent
below the prior year. Steel ingots production followed much the
i
2
REPORT ON THE FINANCES
same course as automobile production, but the total for the year
was only 5 per cent below the preceding year. .
Building contracts awarded totaled 2.4 per cent more in value
than during the prior year, increases being shown for the contracts
classified as residential, public works and utilities, and educational.
New high records for specific months were established for October,
February, April, May, and June. Since the months showing the
greatest gains fell largely in the last quarter of the fiscal year the
resulting stimulus to business activity was to some extent postponed
to the following year.
Business profits.—The decline of business during the fiscal year is
reflected in the earnings of manufacturing and mining companies,
the net income shown in the published reports of 150 identical corporations (exclusive of General Motors and United States Steel) declining about 7 per cent as compared with the prior year. There were
substantial differences in the trend of earnings of the various companies included in the tabulation. The reduction in earnings of
manufacturing and mining companies was due primarily to the
production and price situation in two important industries, steel and
oil. Profits of the steel companies declined about one-fourth, the
decline for the United States Steel Corporation being similar to that
for the other steel companies, while profits for the oil companies
were reduced by nearly one-half. Companies in other industrial
groups had in the aggregate an increase of 4 per cent over the preceding year. For this group of companies each quarter, except the
opening quarter of the year, showed some gain over the corresponding
period in the preceding year. The groups of companies showing
increases for the year were those engaged in manufacturing of
automobiles and accessories, food and food products, tobacco products, chemicals, and miscellaneous other products. A decline was
shown by the group of companies producing railway equipment,
various types of machinery, and miscellaneous metal products.
Commodity prices.—Prices at wholesale for all commodities were
over 4 per cent higher at the end of the fiscal year than at the beginning, according to the index numbers of the Bureau of Labor Statistics, which in terms of 1926 as a base rose from an average of 93.9 in
June and July, 1927, to 97.9 in June and July, 1928. In May, 1928,
this index number reached the highest point since 1926, due largely
to the substantial advance from March to May in the prices of
agricultural commodities and their products.
Although prices rose over 4 per cent between the beginning and
the end of the year and the physical volume of industrial production
•declined 3 per cent for the whole year, the money value of business
transacted as measured by the volume of check payments outside
New York City was 8.9 per cent greater in June and July, 1928, than
SECRETARY OF THE TREASURY
S
in June and July, 1927, and 7.7 per cent greater for the whole year.
This contrast is accounted for by a greater velocity of deposits, and
an expansion of transactions purely financial in nature.
Trade.—Domestic trade statistics during the fiscal year revealed
no evidence of a general decline in consumers' buying power, but a
trend toward more direct marketing. The average monthly sales of
wholesale firms were slightly smaller in 1928 than in 1927, and those
of department stores experienced slight change. Sales of mail-order
houses rapidly increased, the sales reported with seasonal adjustment being greater in all but one month in 1928, as compared
with the same months in 1927, and reaching a record total in June,
1928. Among the chain stores even greater advances were generally reported; the 5-and-lO-cent stores, the grocery stores, the
drug stores, and the candy stores showing (with the exception of
one month in one type of store) larger sales every month than a
year ago, and each month making a new high record.
Export trade had an aggregate value in the year 1927-28 of
$4,877,000,000, which was 1.8 per cent less than in the preceding year
but was larger than in any other year since 1920-21. Imports reached
a total value of $4,146,000,000, a decrease of 2.5 per cent as compared
with 1926-27. Foreign trade developments during the past fiscal
year corresponded rather closely to the changes in domestic business.
Exports of merchandise showed less than the usual seasonal increase
in the first half of the year, and enlarged foreign demand for the
products of our factories aided the recovery of domestic business in
the last half of the year: Decreases in the value of crude materials
and foodstuffs exported were largely offset by the continued expansion
of our exports of manufactured articles. The value of imports was
somewhat smaller than in either of the two preceding fiscal years as
a result of decreases in the prices of many of the leading import
materials such as crude rubber, raw silk, unmanufactured tobacco,
and semimanufactured tin.
Agriculture.—Agriculture as a whole made substantial gains.
There was an increase both in prices and in total cash returns for
the crops and products of the year 1927-28 as compared with those
of the year 1926-27, this increase representing the net result of gains
in some products and losses in others. The average prices received
by farmers during the fiscal year increased about 7 per cent while
there was a slight decrease in the prices paid by farmers for their
purchases, according to the price data compiled by the United States
Department of Agriculture. The advantage of this increase in average
prices per unit produced was partly offset by a decrease iu volume.
As the net effect of these two forces, the estimated gross cash income
from farm products increased in the fiscal or crop year 1927-28
4
'
REPORT ON T H E FINANCES
by $279,000,000, or 2.9 per cent, as compared with the preceding
crop year. During the year inventory values of livestock and farm
equipment also increased but land values declined slightly, so that
the net inventory increase was estimated at $132,000,000. A survey
of all the products indicates that the improvement was confined
primarily to cotton and grain, particularly corn. While the gross
income from these crops increased, the total gross income from meat
products (primarily pork), dairy and poultry products, and fruits and
vegetables decreased. Since the close of the fiscal year, however, the
position of producers of animal products has been more favorable,
owing to the abundance of cheap feed crops and advancing prices
for animal products.
Financial conditions
The important financial developments of this year are those pertaining to the gold movement, the operations and policy of the Federal
reserve system, the change in the general banking or credit situation,
and the financing of new construction and enterprise by security
issues.
Gold movement.—The monetary gold stock of the United States was
near its highest point of over $4,600,000,000 at the beginning of this
fiscal year, but declined during the fiscal year nearly $500,000,000,
or more than one-tenth of our total stock. Since the close of the year
the changes have been small. This gold movement has had'farreaching effects. I t has contributed to the restoration and fortification of the gold basis for the currencies of the various countries. I t
has influenced our credit situation and the policy of the Federal
Reserve Board.
The gold standard for currencies is firmly established to-day.
During the year Argentina, Ecuador, Estonia, France, Greece, Italy,
Norway, and Poland returned to a gold basis, and England and other
countries strengthened their gold positions. The return of France
to gold payments in June practically completed the monetary restoration of Europe. Such a favorable currency situation abroad contributes to the recovery of economic activity and stimulates general
world trade. In this improvement the United States has had a
vital interest both as an exporting and as an importing country.
Federal reserve banMng.—Between June 30, 1927, and June 30, 1928,
there was an increase of more than $500,000,000 in the total amount
of credit the Federal reserve banks were called upon to provide, due
largely to the unprecedented gold exports. The increase in Federal
reserve credit took the form of an increase in borrowing by member
banks. Owing to the traditional reluctance of American banks to
remain in debt and the policy of the Federal reserve banks to discourage continuous indebtedness, the banks found themselves at the
SECRETARY OF THE TREASURY
5
close of the year in a position to lend much less freely than a year
previous. This was reflected in increased money rates.
It was the policy of the Federal reserve system in the summer and
early fall of 1927 to favor easier money conditions. The principal
reasons were: First, the European exchanges were weak, and unless
money rates were eased in the United States there might be a movement of funds into this country and a consequent necessity of raising
rates abroad, to the disadvantage of world trade and particularly to the disadvantage of American agriculture; and, second,
business in the United States was in a period of decline and it was
possible to foresee at that time that industrial unemployment might
occur in the winter months. It was believed that easier money would
ameliorate such conditions. Thereupon the Federal reserve banks
purchased securities in the open market. Money rates reached a low
point in August. Gold exports began in the following month and
the Federal reserve banks continued to purchase securities to offset
the unfavorable effects of such exports upon our money market.
As it became apparent, first, that the objects of the policy originally
adopted were being accomplished, and, second, that speculation was
growing, the policy was reversed. From the middle of December
onward the reserve banks stopped offsetting gold exports by the
purchase of securities, and allowed gold exports to work their usual
effects on the credit situation. In January the system went further.
More than $100,000,000 of securities were sold. Between the latter
part of the month and March 1 the discount rates of all of the Federal
reserve banks were raised from 33^ to 4 per cent. The loss of gold by
export and the sale of securities forced the banks to increase their
borrowings. However, the action taken early in the year unquestionably was not effective with reference to speculation, partly due to
the activities of powerful groups of speculators, and partly due to the
fact that the public in general believed and acted as if the price of
securities would indefinitely advance.
When it became apparent in March that repeated increases in
credit were again taldng place for speculative purposes, the Federal
reserve system resumed its sale of securities and discount rates were
still further increased in April, May, June, July, and August. The
discount rate at all Federal reserve banks was 4 per cent on June 30,
1927. One year later the rate at all Federal reserve banks was 43^
per cent. There were increases to 5 per cent, becoming effective
from July 11 to August 1, 1928, in all Federal reserve banks except
those in Kansas City, Minneapolis, Dallas, and San Francisco.
The general banlcing situation.—Total loans and investments of all
banks in the United States increased during the fiscal year nearly
$3,500,000,000, or about 6J^ per cent, the largest percentage of
B^nnual growth since that of the year ended June, 1925. As to the
6
REPORT ON T H E FINANCES
types of credit showing the greatest increase, the most detailed data
now available relate to reporting member banks in the leading cities
which between June 29, 1927, and June 27, 1928, increased their
commercial loans 3 per cent, their loans secured by United States
bonds and other bonds and stocks 12.5 per cent, and their
holdings of investments 10 per cent. There has been no dearth
of funds at reasonable rates for regular banking customers. While
the prevailing rates for call money used in the security market near
the end of June, 1928, had advanced 2)4. per cent, the average of
customers' rates on commercial loans in New York City moved upward only about three-eighths of 1 per cent, and prime commercial
paper was quoted at small increases varying from one-half to threefourths of 1 per cent.
New security issues.—The new security issues (excluding refundings) of domestic borrowers totaled $5,969,198,000 in the fiscal year
or 8 per cent above the preceding year, and those of foreign borrowers totaled $1,498,464,000, or 12 per cent above the previous year.
These domestic and foreign security issues combined were $605,000,000
greater in the fiscal year 1928 than in the prior year. The distribution of such an increased volume of securities has been facilitated by
rising bond prices as well as by increased bank loans based on
securities as collateral, and by increaseli bank investment in securities.
RECEIPTS
The total ordinary receipts of the Federal Government during the
fiscal year 1928 were $4,042,348,156, a decline of over $87,000,000
from the fiscal year 1927. The trend in receipts by major sources, as
compared with preceding years, is shown in Diagram 2.
Decreases totaling $110,956,914 in receipts from taxation as compared with the preceding year were slightly offset by increases in
miscellaneous receipts. The amounts of increase and decrease in the
major sources, as compared with the fiscal year 1927, are shown in
the following table:
[On basis of daily Treasury statements (unrevised); in millions of dollars]
1927
Receipts
1928
Increase
C+)or
decrease
(-)
Customs
Income taxes
-. Miscellaneous internal revenue.- .
.
Foreign government obligations. _
All other securities
. . .
- ,_
Trust fund receipts (reappropriated for investment)
._
All other. _
Grand total
- -
.
.
-
605.5
2, 225.0
644.4
206.1
153.2
48.6
246.7
569.-0
2,173.9
62L0
208.9
173.6
63.4
232. 5
-36.5
—51.1
—23.4
+2.8
+20.4
+14.9
-14.2
4,129.4
4,042. 3
—87. 1
SECRETARY OF THE TREASURY
7
Receipts from taxation, strictly spealdng, represent that portion
of the Government revenue which is derived from authorized levies
upon the people to secure funds for the conduct of governmental
activities. Nontax receipts are composed of amounts received by the
Government incidental to the performance of its various functions.
Among these are receipts of interest and principal payments from
Government-owned obligations; receipts from Panama Canal toUs,
receipts from sales of surplus property, which represent the liquidation of property purchased by the Government in preceding
years; and receipts from trust funds, which are invested as specified
MILLION
DOLLARS
5,000
4,000
ALL OTHER
CUSTOMS
3.0OO
MISCELLANEOUS
INTERNAL REVENUE
2,000
INCOME AND
PROFITS TA^ES
1,000
1923
1924
1925
1926
1827
1926
D I A G R A M 2.—Principal sources of o r d i n a r y receipts for t h e fiscal years 1923 t o 1928
for the particular trust. The decline in tax receipts of about
$111,000,000 therefore represents a reduction in the amount taken
directly from the people for the running of the Government. About
$53,000,000 of the decreased tax receipts, however, were due to
smaller collections of back taxes, that is, taxes due in prior years,
leaving a decrease of about $58,000,000 in the current tax collections.
This reduction in tax collections was due largely to the changes in
productivity of specific sources of taxes considered in detail in the
following paragraphs, and should not be confused with the tax
reduction in the revenue act of 1928, enacted May 29, 1928, and
not effective, in the main, until after the close of the fiscal year 1928.
8
-
REPORT ON T H E FINANCES
Receipts from customs, which had reached new high levels during
the fiscal years 1926 and 1927, amounting in the latter year to $605,000,000, declined to $569,000,000 in 1928, or by about $36,000,000.
This reduction resulted primarily from smaller imports of a few important commodities, chiefly cane sugar and unmanufactured tobacco.
Duties collected on sugar usually produce about one-fourth of the
customs receipts. Imports of sugar declined from 8,841,000,000 to8,089,000,000 pounds, or 8.5 per cent. Imports of unmanufactured
tobacco, which also ranks among the six leading customs producers,,
declined sharply, the quantity of imports being 12.8 per cent and thevalue 23.3 per cent less than in the preceding fiscal year. For this
decrease, a falling off in imports of tobacco leaf for cigarettes was
largely responsible. Other customs-producing commodities showing
declines were combing wool, woolen fabrics, flaxseed, fruit and nuts,
olive oil, diamonds, and manganese ore.
Income tax receipts were also below those of the preceding fiscal
year, yielding $2,174,000,000 as compared with $2,225,000,000 in
1927, or $51,000,000 less. The decrease in collections from taxes
due in prior years, or back taxes, already mentioned, decreased from
$331,000,000 in 1927 to $278,000,000 in 1928, or about $53,000,000,.
which sum is approximately equal to the decline shown by the total
of income taxes. Smaller collections from back taxes had been
anticipated by the Treasury in October, 1927, due to the reduced
volume of unaudited returns of the war years, which were a major
source of back taxes in preceding years. The present status of theaudit of income tax returns is summarized on pages 35 to 44. The
current income tax collections remained practically unchanged.
There are two causes for the fact that the current income tax collections were approximately the same in the two fiscal years: First, the
collections in any one fiscal year are based on the incomes of two
calendar years, which tends to decrease variations in collections from
one fiscal year to the next; and, second, the reduction in yield from
corporation taxes for 1927 was approximately offset by an increase inthe yield of individual taxes.
The volume of income tax collections for the fiscal years 1927 and
1928 depended on the income of corporations and individuals returned
for the calendar years 1925, 1926, and 1927. Collections for the
fiscal year 1927 were composed of collections during the last half of
the calendar year 1926 on 1925 incomes and during the first half of
the calendar year 1927 on 1926 incomes, while collections for the fiscal
year 1928 were composed of collections during the last half of the
calendar year 1927 on 1926 incomes and during the first half of the
calendar year 1928 on 1927 incomes. Thus, the high incomes received
in the calendar year 1926, a peak year in business, were reflected in
tax collections in both the flscal years 1927 and 1928.
SECRETARY OF THE TREASURY
9
Regarding the second contributing factor, the offsetting changes in
corporation and individual income taxes for the calendar year 1927,
it should be noted that the income of corporations is affected somewhat differently by changes in business conditions than is the income
of individuals. For instance, corporation profits might fall off in
any single year, but dividends paid that year might remain undiminished or even increase owing to the high profits of previous years.
Moreover, in so far as gains from the sale of capital assets are concerned, these form a larger part of income returned by individuals
than by corporations; and these likewise are more directly afl'ected
by the values acquired over a series of years rather than by the
current business conditions of a single year. During 1927, corporation
incomes declined considerably as a result of the recession in business.
On the other hand, individual incomes in the important taxpaying
groups increased because of the increased income from dividends and
from profits from sales of real estate, stocks, and bonds, due to the
high level of prosperity which has prevailed in recent years. The
net result was that the combined taxes collected from corporations and
individuals during the first half of the calendar year 1928 were
approximately equal to the collections during the same period of the
preceding year, the decline in corporation taxes being offset by the
increase in individual taxes.
Receipts from miscellaneous interDal taxes declined from
$644,000,000 to $621,000,000, or $23,000,000. Increased collections
from tobacco products and from documentary stamps were more
than offset by decreases from estates and automobiles. These changes
are summarized graphically in Diagram 3. Collections from the
estate tax declined from $100,000,000 to $60,000,000, because of the
reduced rates and increased credits provided in the revenue act
approved February 26, 1926. The provisions of this act were made
effective on estates of decedents dying after the date of enactment,
the payment of tax being due one year after death, subject to
extension in cases of undue hardship. Thus few collections under the
1926 act were made prior to the end of the fiscal year 1927, and the
fiscal year 1928 was the first to show the full effects of the new rates.
As additional States may increase inheritance tax rates, the eft'ect of
the credit granted by the act of 1926 for State taxes up to 80 per
cent of the Federal tax will be to depress further collections from
this source. Collections from passenger automobiles declined about
$15,000,000, reflecting both the reduced level of automobile production during the fiscal year and the repeal of the tax in the revenue
act of 1928 toward the end of the year. Tobacco taxes, on the other
hand, continued to follow the steady upward trend of recent years^
due largely to collections on cigarettes. Collections from all tobacco
taxes increased from $376,000,000 in 1927 to $396,000,000 in 1928,
10
REPORT ON T H E FINANCES
Documentary stamps, including playing cards, produced $49,000,000,
or about $12,000,000 more than in the preceding year, due to the
extraordinary volume of new financing during the year, stamps being
required on all new issues of stocks and bonds; and to the unprecedented activity of the stock market, the stamp tax on capital stock
transfers alone yielding $24,000,000 as compared with $17,000,000 the
preceding year.
The most noteworthy feature of the miscellaneous internal revenue
taxes is the steadily mounting volume of collections on tobacco, which
in recent years have been increasing at a rate varying from about 5 to
7 per cent each year. These collections yielded 64 per cent of the
MILLION
DOLLARS
1.000
BOO
'600
ALL OTHER
ADMISSIONS AND DUES
DOCUMENTARY STAMPS
INCLUDING PLAYING CARDS
ESTATE
TAX
400-
AUTOMOBILE
200
TOBACCO
TAX
TAXES
1926
1927
1928
1923
1924
1925
DIAGRAM 3.—Principal sources of miscellaneous internal revenue collections for the fiscal years 1923 to
1928
miscellaneous internal revenues in the fiscal year 1928. The tobacco
taxes constitute not only the major source of internal revenue other
than income taxes, but also the source which has been least affected by
changing business conditions.
Miscellaneous receipts from nontax items increased from $654,500,000 in 1927 to $678,400,000 in 1928, or about $23,900,000. Considerably more than half of these receipts are derived from Government assets which are in the process of liquidation, such as interest
and principal payments on Government-owned securities, and sales
of surplus property. Small amounts are derived from a wide variety
of minor sources. The more important changes during 1928 were in
the receipts from Government-owned securities. Proceeds from
Government-owned securities, other than foreign obligations, were
SECRETARY OF THE TREASURY
11
$173,600,000, or $20,000,000 larger than in the preceding year. Receipts from railroad securities increased considerably while those
from Federal farm loan securities and other securities declined. The
total of railroad obligations owned on June 30, 1928, was about
$75,000,000, showing that the volume of receipts to be derived in 1929
and later years will be much smaller than in 1928. Other receipts,
exclusive of those for trust funds, declined about $14,000,000.
A comparison of the ordinary receipts for the fiscal year 1928 with
the estimates of such receipts submitted' to Congress in December,
1927, indicates that the estimates were unusually accurate both
as to the total of ordinary receipts and as to the receipts from the
major sources. The accuracy of the estimates is more fully discussed on pages 15 to 17.
EXPENDITURES
Total expenditures chargeable against ordinary receipts during the
fiscal year 1928 were $3,643,519,875, or $149,935,356 more than in
the preceding year. Total ordinary expenditures (i. e., excluding the
public debt retirements chargeable against ordinary receipts) were
$3,103,264,854, or $129,235,180 more than in the preceding fiscal
year. Public debt retirements chargeable against ordinary receipts
totaled $540,255,020, or $20,700,176 more than in the preceding
year.
Of the major groups to which expenditures are allocated in the
accounts, some exhibited increases and some decreases. The increases
of general interest were as follows:
Treasury Department
Refunds of receipts
War Department
War Finance Corporation (decrease in credits)
Shipping-Board
Investment of Government life insurance trust funds
Navy Department
United States Veterans' Bureau
Postal deficiency
Department of Agriculture
Department of Commerce
Department of Justice
Panama Canal
_'___
District of Columbia
.
$44,088, 608
32, 410, 265
29, 732, 027
23, 252, 741
15, 870, 316
14, 385, 596
12,426, 395
9, 854, 420
4, 817, Oil
3, 627, 392
3, 443, 416
2, 781, 197
2, 143, 534
1, 833, 102
The increase shown for the Treasury Department is accounted for,
in the main, by $50,000,000, appropriated under the settlement of
war claims act of 1928, all of which was charged to this department
this year.
The increase in refunds of receipts was largely due to the fact t h a t
certain internal revenue refunds for 1927 were postponed until 1928
12
REPORT ON THE FINANCES
because of a change in the revenue law. Of the increase shown for the
War Department about $12,500,000 was due to river and harbor work,
about $3,000,000 each to the Air Service and the Militia Bureau, and
about $5,000,000 on accountof construction, improvement, and repair
of buildings, hospitals, and Army camps. The decrease in credits to
expenditures of the War Finance Corporation which shows as an
increase in expenditures was due to the heavy and almost final liquidation in the prior fiscal year. Increased expenditures for the Navy
Department are accounted for by increases of about $7,000,000 for
the Bureau of Aeronautics, about $4,500,000 for general expenditures
of the Marine Corps, and about $2,000,000 for the Bureau of Construction and Repair.
The more important decreases were as follows:
Interest on the public debt
State Department.
Interior Department
Adjusted service certificate fund
Legislative establishment
$55, 255, 102
4, 890, 597
3, 707, 211
3, 401, 513
3, 276, 277
The decrease shown for the State Department is accounted for
primarily by the fact that the last annual payment of $5,000,000 was
made in September, 1926, under the Colombian treaty. The legislative establishment decrease is due to the expenditure of over
$3,000,000 during the fiscal year 1927 for land for the enlargement of
f the Capitol grounds.
This year for the first time it is possible to make a comparison
of expenditures with the preceding year on the basis of checks issued.
Figures on this basis give a more complete statement of expenditures
actually made, but the totals do not vary greatly from those based
on the daily Treasury statement, unrevised. On the basis of checks
issued, total expenditures chargeable against ordinary receipts were *
$3,647,255,787 during the fiscal year 1928, as compared with$3,493,837,765 during the preceding year. This indicates an increase
of $153,418,022, or 4.4 per cent. ^Total ordinary expenditures (i. e.,
excluding the public debt retirements chargeable against ordinary
receipts) increased $132,735,846, or 4.5 per cent, and, exclusive of
interest on the public debt and refunds of receipts, increased
$155,285,263, or 7.6 per cent.
THE SURPLUS
Ordinary receipts during the fiscal year 1928, on the basis of
daily Treasury statements, exceeded expenditures chargeable
against those receipts by $398,828,281. Most of this surplus,
or $367,358,710, had already been expended by the close of the
fiscal year for retirement ojE the public debt, in addition to
13
SECRETARY OF THE TREASURY
retirements during ' the year of $540,255,020 chargeable against
ordinary receipts. The remainder of the surplus was in the Treasury
on June 30, 1928, as a part of the net balance in the general fund and
was applied to public debt retirement in July, 1928.
The surplus for the fiscal year 1928 was $237,000,000 less than in the
preceding year, as a result of reductions in ordinary receipts and
increases in expenditures chargeable against those receipts. The
principal items of change are shown in the following table:
Principal changes in ordinary receipts and expenditures chargeable against ordinary
receipts, fiscal year 1928 as compared with 1927
[On basis of daily Treasury statements (unrevised); in millions of dollars]
Ordinary receipts
Customs
Income taxes
Miscellaneous internal revenueRailroad securities
_
All other securities except foreign..
All other receipts ._
Total
Net change.- _
Increase
74.7
3.5
78.2
..
Decrease
36.5
51.1
23.4
54.3
165.3
87.1
Expenditures chargeable against
ordinary receipts
General expenditures
._
Interest on public debt
Refund of receipts...
Postal deficiency
Operations in special accounts...
Government life insurance fund..
Public debt retirements chargeable against ordinary receipts..
Another . . .
Total
Net change
_
Increase
95.6
32.4
4.8
37.6
14.4
20.7
205.5
149.9
Decrease
55.3
'z
55.6
The nature and significance of the surpluses of recent years have
not been generally understood by those interested in Federal
finances. There are three possible outcomes for the Federal
Badget of any year. The Budget may balance exactly, show a surplus of ordinary receipts over expenditures chargeable against those
receipts, or show a deficit of ordinary receipts under expenditures
chargeable against those receipts. The Federal Government is committed to the principle of a balanced Budget—that is, of providing
sufficient revenues each year for the financing of the expenditures
of that year. In the process of returning to normal conditions following the war period, some excess of revenue was to be expected
because of the character of some of the sources and the difficulty in
ascertaining when they would become available. To provide insufficient revenues is fiscally unsound, since deficits must be met by
borrowing, and continuous borrowing weakens public credit. A
balanced Budget has been especially important when, as in recent
years, there is a large debt outstanding. To increase such a debt
through deficits in meeting the Budget expenditures from year to
year would be contrary to the principles and traditions of the Federal
Government. On the other hand, if this debt be reduced by such
incidental surpluses as occur, then the condition of the finances of
the Federal Government are to that extent strengthened.
14
REPORT ON T H E FINANCES
I t frequentjly happens that all receipts and all expenditures for a
future fiscal year can not be precisely foreseen. The volume of
certain receipts, such as those from liquidating surplus supplies or
those representing special and irregular repayment of loans advanced
by the Government, can not be accurately estimated. Likewise,
the exact volume of expenditures for any one year can not be determined, since the expenditures resulting from new legislation can not
be foreseen by the administration. Consequently, if a precise balance
in the Budget were forecast on the basis of estimable receipts and
estimable expenditures it would frequently be turned into a deficit.
The budgetary experience since the war is an illustration of uncertain surpluses resulting from the process of adjusting high war taxation
and extensive war-time expenditures to a peace-time basis of governmental activities. Each fiscal year since 1919 has resulted in a
surplus, which has been applied to debt reduction, varying in amounts
from $86,723,771 in 1921 to $635,809,922 in 1927, as shown in the
following table:
Ordinary receipts, expenditures chargeable against ordinary receipts, and surplus
1920 to 1928
[On basis of daily Treasury statements (unrevised)]
Fiscal y e a r
1920
1921. _
1922
1923
1924
1925
1926
1927__
1928
-.
-
Total ordinary
receipts
$6, 694, 565,388
5, 624,932,960
4,109,104,150
4,007,135,480
4,012,044,701
3,780,148, 684
3,962, 755, 690
4,129, 394,441
4,042,348,156
Expenditures
chargeable
against o r d i n a r y
receipts
$6, 482,090,191
5, 538, 209,189
3, 795, 302,499
3, 697,478,020
3, 506, 677, 715
3, 529, 643,446
3, 584,987, 873
3,493, 584, 519
3, 643, 519, 875
Surplus
$212,475,197
86,723,771
313, 801, 651
309 657 460
505,366,986
250, 505, 238
377, 767, 817
635, 809,922
398 828 2fil
The chief explanation for these surpluses is in the receipts side of
the Budget. Receipts have not declined as much as expenditures.
Expenditures chargeable against ordinary receipts declined sharply
during the fiscal years 1920 to 1923 from $6,482,000,000 to $3,697,000,000, and have since remained below the latter figure,«reaching
their lowest point, $3,494,000,000, during the fiscal year 1927.
Receipts, on the other hand, declined from $6,695,000,000 in 1920 to
$3,780,000,000 in 1925, except for a slight increase in 1924, increased
in 1926 and 1927, and remained above $4,000,000,000 in 1928.
Contrary to the general belief, the surpluses have not been due
primarily to the taxes collected during the various years, but to
unusual receipts accompanied by annual savings due to the observance of strict economy in making expenditures under the appropria-
SECRETARY OF THE TREASURY
15
tions. During the fiscal years 1923-1928 amounts varying from
$216,000,000 to $398,000,000 were derived from spurces of a temporary nature. As much as $331,000,000 was secured in a single recent
year from back taxes on incomes, the major source of which has been
the retarded audit of returns of war years. The chief characteristic
of these unusual sources of receipts is that they will yield little or no
revenue in future years. The back tax collections during the fiscal
years 1923 to 1927 depended largely on the retarded audit of the
income-tax returns of the war years. Such returns under high tax
rates have yielded unusually large back tax collections as compared
with the returns of more recent years. Although there are still a
small number of these early returns pending settlement, most of such
collections have now been made. Consequently it is expected that
the volume of back tax collections will decline. Of the railroad and
Federal farm loan securities owned by the Government, sales of which
have yielded appreciable amounts in recent years, only $74,608,948 of
railroad and $555,700 of farm loan securities remained on hand June
30, 1928. The disposal of war supplies has already ceased to yield
more than small amounts of revenue.
The experience of the Treasury has demonstrated that the surpluses
have been moderate when considered on the basis of the more permanent sources of revenue, and that the policy of the Government
has been sound in providing for a balanced budget on the basis of the
reasonably assured receipts and the reasonably assured expenditures,
and in applying such surpluses as occurred to the reduction of the
huge war debt. This is all the more true since the proceeds frcim the
realization of capital assets acquired largely through war loans have
been very properly applied to the retirement of war debt rather than
to current expenditures.
ESTIIMATES OF RECEIPTS AND EXPENDITURES
Estimates of previous years
Diagram 4 shows the estimated and actual receipts, expenditures
and surpluses during the past five years, thus indicating the relation of
differences between estimated and actual receipts and expenditures to
the difference between the estimated and actual surpluses. The estimates shown are those submitted to Congress seven months before the
end of the particular fiscal year with the exception of 1926, for which
year estimates are those prepared just after the passage of the revenue
act of 1926. Percentages of difference inserted over the bars for each
year provide a comparison of the accuracy of the estimates.
Three estimates are now prepared and published for each fiscal
year. The first is in the budget for the particular fiscal year presented
13606—29—FI 1928
4
16
REPORT ON T H E FINANCES
to Congress in the December preceding the beginning of the fiscal year.
The second appears in the report of the Director of the Bureau of the
Budget about eight months later, or just after the opening of the
fiscal year. The third is presented to Congress in December of the
particular fiscal year. Special estimates are prepared at other times
for use in recommending tax reductions. Estimated tax receipts and
certain estimated miscellaneous receipts are prepared for the Bureau
of the Budget by the Treasury. The estimated tax receipts represent
the results of three independent estimates:. (1) by the administrative
bureaus for making collections, i. e., the Bureau of Customs and the
Bureau of Internal Revenue; (2) by the Government Actuary and
BILLION
X>OLLARSi
BILLION
^DOLLARS
5r
ORDINARY
ERR08
RECEIPTS
»N e S T I M A T E - P E R C E N T
- 2 . 9 -4.7 -5A -2.5 -t-0.8
EXPENDITURES CHARGEABLE.
AGAINST ORDINARY RECEIPTS
CRROR
IN E S T I M A T E - PER CENT
+1.7 +0.1 +0.9 -t43 -0.6
ESTIMATED
ACTUAL
+4
'3f
SURPLUS
4t
If
.Pm d i fxl D^ Mi
1924 1925 1926 1927 1928
DIAGRAM 4.-
1924 1925 1926 19E7 1928
1924 1925 1926 1927 1928
-Estimated ordinary receipts, expenditures chargeable against ordinary receipts, and the
surplus, compared with actual amounts for the fiscal years 1924 to 1928
(3) by the Section of Financial and Economic Research. These
independent estimates are coordinated and reconciled under the direct
personal supervision of the Undersecretary of the Treasury. The
-estimated receipts from miscellaneous sources are prepared for
the Bureau of the Budget by the respective departments having
jurisdiction over the various activities. The estimated expenditures
are furnished by the Bureau of the Budget and are based on a careful
survey of the needs of departments and bureaus and with complete
knowledge of the appropriations to be recommended by the President
to Congress for the year in question. These estimates, however, do
n o t include expenditures which may result from new legislation.
SECRETARY OF THE TREASURY
17
An analysis of the diagram shows that the estimates for the fiscal
year 1928 were remarkably accurate. Estimated total ordinary
receipts were $4,075,600,000, compared with $4,042,300,000 actual
receipts. The difference of $33,300,000 is extremely small compared
with the total figure. The discrepancy amounts to only 0.8 of 1 per
cent as compared with percentages ranging from 2.5 to 5.4 for the
fiscal years 1924 to 1927. Estimated expenditures chargeable against
ordinary receipts were $3,621,300,000, compared with actual expenditures of $3,643,500,000. The difference of $22,200,000 is only
0.6 of 1 per cent of the expenditures. The estimate is better than
in each of the preceding four years except 1925. More accurate
estimates for expenditures must obviously be expected than for
receipts, because the financial requirements of the Government's
activities can be more definitely canvassed than can the numerous and
diverse conditions influencing receipts from the various taxes and
from other sources. As a result df the accuracy of the estimated
receipts and expenditures for 1928, the surplus for the year was
more accurately estimated than in the preceding four years.
Of the estimated receipts, those from income taxes and from miscellaneous sources were particularly accurate. Income tax receipts
were estimated at $2,165,000,000 and the actual receipts were
$2,173,900,000, a difference of only $8,900,000, or 0.4 of 1 per cent,
as compared with differences varying from 0.4 to 5.7 per cent in
the four preceding fiscal years. For receipts from miscellaneous
sources, the estimates of $670,100,000 were within $8,300,000 or 1.2
per cent of the results, as compared with variations from 6.3 to 19.4
per cent for the fiscal years 1924 to 1927. Estimates for customs and
for miscellaneous internal revenue were less accurate. Customs
were estimated to yield $602,000,000, which was 5.8 per cent above
' t h e results for the year, the largest discrepancy since 1924. Miscellaneous internal revenue estimates of $638,500,000 were within 2.8
per cent of the final results, as compared with variations since 1924
from 0.3 of 1 per cent to 3.8 per cent.
On the whole, the accuracy of the estimated receipts for the fiscal
year 1928 showed signs of substantial progress by the Treasury in
estimating receipts and indicated more favorable conditions for making such estimates. Estimated total receipts of over $4,000,000,000,
within 0.8 of 1 per cent of the actual results, are as accurate as can
be reasonably expected when individual items such as customs,
corporation income taxes, individual income taxes, back taxes on
incomes, estate taxes, taxes on documentary stamps, and miscellaneous receipts from diverse administrative functions are subject
to a wide variety of conditions, each of which may be affected by some
unusual circumstance.
18
REPORT ON T H E FINANCES
Estimates for the fiscal years 1929 and 1930 compared with actual
amounts for the fiscal year 1928
The following table summarizes cash receipts and expenditures
during the fiscal year 1928 and the estimated receipts and expenditures for the fiscal years 1929 and 1930 on the basis of the latest
information received from the Bureau of the Budget:
Summary of receipts and expenditures for the fiscal year 1928, on the basis of daily
Treasury statements {unrevised), and estimated receipts and expenditures for the
fiscal years 1929 and 1930
1928
Net balance in the general fund at the beginning of fiscal
$234, 057, 410
year. —
_
.._.
._.
Receipts:
4, 042,348,156
Ordinary
1 2, 691, 322, 593
Publicdebt
Total
1930
$265,526, 981
$234,057,410
3, 831, 735, 661
2, 207, 668, 887
3,841, 295,829
1, 028,856, 218
6, 304, 931, 529
5,104, 209,457
3, 252, 274,119
542,471,350
2, 276,128, 650
234,057,410
3, 227, 652, 047
553,067, 600
1, 089, 432, 400
234, 057, 410
6,967, 728,159
6, 304, 931, 529
5,104, 209,457
693,633,921
725, 714,123
707,000, 000
790,495, 830
735,000,000
806, 209, 325
32, 080, 202
83,495, 830
71, 209,325
6, 967, 728,159
Expenditures:
3,103, 264, 855
Ordinary
540, 255,020
Public debt chargeable against ordinary receipts
1 3, 058, 681, 303
other public debt
265, 526,981
Net balance in the general fund at close of fiscal year...,
Total
1929
POSTAL SERVICE
P o s t a l receipts
Postal expenditures
-..
Deficiency in postal receipts^
1 Other public debt expenditures and public debt receipts, as shown in this statement, are exclusive of
$4,164,017,000 Treasury certificates issued and retired within the same fiscal year.
2 The postal deficiency for 1928 and the estimated postal deficiencies for 1929 and 1930 are included in the
ordinary expenditures shown above and in the general classification of ordinary expenditures and estimated ordinary expenditures on p. 19.
Ordinary receipts, and expenditures chargeable against ordinary
receipts, for the fiscal year 1928, on the basis pf daily Treasury statements (unrevised), with corresponding estimates for the fiscal years'
1929 and 1930, are shown in detail in the table on p. 19. Ordinary
receipts include all receipts other than those arising from public debt
transactions. Ordinary expenditures exclude all expenditures for the
retirement of the public debt. Expenditures chargeable against
ordinary receipts include ordinary expenditures and the retirements
of the public debt from the sinking fund and from special earmarked
receipts, such as repayments of the indebtedness of foreign governments. Expenditures chargeable against ordinary receipts do not
include retirements of the public debt from the surplus and from a
reduction in the general fund balance and other public debt expenditures arising from public debt transactions. The estimates in the
table are on the basis of the latest information received from the
Bureau of the Budget.
19
SECRETARY OP THE TREASURY
Receipts and expenditures for the fiscal year 1928, on the basis of daily Treasury statements {unrevised), and estimated receipts and expenditures for the fiscal years 1929
and 1930
1928
1930
Ordinary
Customs..
Internal revenue:
I n c o m e tax
Miscellaneous i n t e r n a l r e v e n u e .
Miscellaneous receipts:
Proceeds of G o v e r n m e n t - o w n e d s e c u r i t i e s Foreign obligations ^—
Principal
....
Interest
_
R a i l r o a d securities
:.
All other securities
T r u s t fund receipts ( r e a p p r o p r i a t e d for investment)
Proceeds sale of s u r p l u s p r o p e r t y
P a n a m a C a n a l tolls, e t c
Receipts from miscellaneous sources credited
direct to a p p r o p r i a t i o n s
_.
o t h e r miscellaneous
Total ordinary receipts.
$568,986,188. 50
i $582,000,000.00
1 $582,000,000.00
2,173,952, 556. 73
621,018,665.64
2,165,000,000.00
577, 500,000.00
2,175, 000,000.00
559,000, 000.00
2, 794,971, 222. 37
2, 742, 500,000.00
2, 734,000,000. 00
47, 841,166. 70
161,084, 775. 99
164,407,076.01
9,153, 397.94
38, 747, 660.00
160, 340,908.00
6, 791,155. 00
4,449,902.00
39, 350, 607.00'
151, 819, 502. 00
31, 276, 726. 00
5, 207,000. 00
63, 395,443. 58
8, 770, 250. 64
28,141,474. 61
64, 204,117.00
9,078, 665.00
28,056,000. 00
65,143,110.00
6,712,765.00
28,056,000.00
8,519,116.49
187,078,043. 36
8, 653,021.00
186, 914, 233.00
7,855. 523. 00
189, 874, 596. 00
678, 390, 745. 32
507, 235, 661.00
525, 295, 829.00
4,042, 348,156.19
3,831, 735, 661.00
3, 841, 295, 829.00
16,402, 048.28
589, 497.19
11, 607, 071. 23
195, 648, 941. 27
390, 540, 803. 49
27, 600, 254. 81
276, 692. 81
331, 335, 491.98
298, 999, 534. 09
159,914, 696. 27
34, 383, 165. 32
9, 821, 480. 97
401, 324, 833.17
35,681, 462. 45
39, 399, 622. 44
17,999, 287.00
468,080.00
12, 951, 391.00
204, 261,442.00
417, 225, 627. 00
27, 751, 720.00
19, 520, 299.00
450,000.00
14,466, 831.00
197,184, 265.00
443,497, 381.00
28,171,000. 00
384, 619, 100.00
297, 742, 215. 00
161, 510, 724.00
40, 905, 000.00
11, 667, 000.00
422, 890, 883. 00
42, 662, 412. 00
39, 463, 423.00
361, 795, 000.00
291, 253, 069. 00
165, 230, 754. 00
52,153, 000.00
10, 637, 362. 00
422, 646, 890.00
40,804, 301 00
39, 377, 107.00
EXPENDITURES
Ordinary {checks and w a r r a n t s paid, etc.)
General expenditures:
Legislative e s t a b l i s h m e n t
E x e c u t i v e proper
State Department
Treasury Department
War Department
^
D e p a r t m e n t of Justice
P o s t Office D e p a r t m e n t
Navy Department...
Interior D e p a r t m e n t
D e p a r t m e n t of Agriculture
D e p a r t m e n t of C o m m e r c e
,
D e p a r t m e n t of L a b o r
_
,
U . S. V e t e r a n s ' B u r e a u
o t h e r i n d e p e n d e n t offices a n d commissions..
D i s t r i c t of C o l u m b i a
Total
D e d u c t unclassified i t e m s . .
1,953,525,595.77
198, 55f 39
2,082,118, 304. 00
2,087,187,259.00
Total
I n t e r e s t on p u b l i c d e b t
R e f u n d s of receipts:
Customs
Internal revenue
P o s t a l deficiency
P a n a m a Canal
O p e r a t i o n s in special accounts:
Railroads
. W a r F i n a n c e Corporation
Shipping Board
Alien p r o p e r t y funds
A d j u s t e d service certificate fund ^..
1, 953, 327,041. 38
3 731,764,476.30
2,082,118,304.00
675, 000, 000.00
2,087,187, 259. 00
640,000, 000.00
21,856,901.13
148,286,060.13
32,080,202. 46
10,448,879.83
21,516, 500.00
151,956,000.00
83,495,830.00
10,070, 368.00
21, 515, 500.00
146, 541,000.00
71, 209,325.00
10, 111, 000.00
4 619, 721. 67
< 3,813,040. 77
34,881,713,16
4 351,151. 52
111, 817,839.69
1,450,000.00
< 500,000.00
32,000,000.00
4 500,000.00
111, 220,000.00
51,600,000.00
4 500,000.00
112,000,000.00
2,054,000.00
I n c l u d e s $2,000,000 e s t i m a t e d b y D e p a r t m e n t of C o m m e r c e for t o n n a g e tax, receipts on account of w h i c h
are covered i n t o t h e T r e a s u r y as customs r e v e n u e .
2 T h e above figures u n d e r t h e h e a d i n g of " P r o c e e d s of G o v e r n m e n t - o w n e d securities—foreign obligat i o n s , " do not include $406,566,762, representing obligations of t h e F r e n c h G o v e r n m e n t given on account
of t h e sale of w a r supplies, w h i c h m a t u r e d u r i n g t h e fiscal y e a r 1930. T h e s e obligations are included in
t h e total d e b t of F r a n c e to t h e U n i t e d States, t h e funding of w h i c h is p r o v i d e d for in t h e d e b t s e t t l e m e n t
a g r e e m e n t of April 29, 1926. If t h i s a g r e e m e n t is ratified prior to t h e m a t u r i t y of these obligations, t h e
t o t a l p a y m e n t d u e t h e r e u n d e r in t h e fiscal year 1930 will b e $35,000,000.
3 I n c l u d e s $1,342,135.76 accrued discount on war-savings certificates of m a t u r e d series.
< Excess of credits (deduct).
« F o r details of this account see p . 100. T h e difference b e t w e e n a m o u n t s of above charges a n d t h e a m o u n t s
a p p r o p r i a t e d for i n v e s t m e n t is d u e to w o r k i n g balance required for use of V e t e r a n s ' B u r e a u in m a k i n g
a u t h o r i z e d p a y m e n t s from t h e fund.
20
REPORT ON T H E FINANCES
Receipts and expenditures for the fiscal year 1928, on the basis of daily Treasury^
statements {unrevised), and estimated receipts and expenditures for the fiscal years
1929 and 1930—Continued.
1928
1929
1930
EXPENDITURES—continued
Ordinary—Continued
Civil service r e t i r e m e n t a n d d i s a b i h t y fund
I n v e s t m e n t of t r u s t funds:
G o v e r n m e n t life i n s u r a n c e fund .
D i s t r i c t of C o l u m b i a teachers' r e t i r e m e n t f u n d .
Foreign service r e t i r e m e n t fund
. . _
General railroad contingent fund
_. _
T o t a l o r d i n a r y expenditures
P u b l i c d e b t r e t i r e m e n t s chargeable against ord i n a r y receipts:
Sinking fund
P u r c h a s e s from foreign r e p a y m e n t s
Received from foreign g o v e r n m e n t s u n d e r
debt settlements
_
Received from estate taxes
P u r c h a s e s from franchise tax receipts (Federal
reserve b a n k s a n d Federal i n t e r m e d i a t e
credit b a n k s )
Forfeitures, gifts, etc
Total
$109,272. 28
$19,950,000. 00
$20, 500,000.00-
61, 701,568.44
513,917. 75
80,938.85
1,179,957. 39
62, 724,117. 00
580,000.00
294, 000. 00
900, 000. 00
64, 558,110 00
585. 000.00290,853 00
3,103, 264,854. 83
3, 252, 274,119. 00
3, 227, 652, 047. 00'
354, 741, 300. 00
19,068,000. 00
370,182,050. 00
10, 219, 300. 00
379, 524,100. OOlO, 783, 500. 00'
162, 736, 050. 00
1, 500. 00
160,995,000.00
160,185,000. 00-
618, 367. 05
3,089, 803. 25
875,000. 00
200, 000. 00
2, 375,000. 00'
200,000. 00'
540,255,020. 30
542,471,350.00
553,067, 600.00
T o t a l e x p e n d i t u r e s chargeable against ord i n a r y receipts
3,643. 519,875.13
3,794, 745,469. 00
3,780,719,647.00
Excess of o r d i n a r y receipts over t o t a l expenditures
chargeable against o r d i n a r y r e c e i p t s , ,
398,828,281. 06
36, 990,192. 00
60,576,182.00'
Public debt expenditures and receipts for the fiscal year 1928, by
types of issue, with corresponding estimates for the fiscal years 1929
and 1930, are given in the following table. Public debt expenditures
and public debt receipts, as shown in this table, are exclusive of
Treasury certificates issued and retired within the same fiscal year.
They include, however, exchange transactions in public debt issues.
Public debt expenditures and receipts for fiscal year 1928, on the basis of daily Treasury
statements {unrevised),^ and estimates for the fiscal years 1929 and 19S0
1928
1929
•
1930
EXPENDITURES
Certificates of i n d e b t e d n e s s
. .
T r e a s u r y notes a n d ' certificates of i n d e b t e d n e s s
(adjusted service series).
Second L i b e r t y L o a n b o n d s
Third Liberty Loan bonds
V i c t o r y notes
T r e a s u r y notes a n d b o n d s , a n d other L i b e r t y b o n d s
T r e a s u r y (war) savings certificates
R e t i r e m e n t s of F e d e r a l reserve b a n k notes a n d
n a t i o n a l - b a n k notes
L o a n of 1925
Old d e b t i t e m s
Total public debt expenditures
$687,346,000. 00 $1, 252, 000, 000. 00
$1, 000, 000, 000.00
34,500,000.00
918,816,250.00
1, 275, 351,950. 00
963, 750. 00
474, 735, 750. 00
178, 828, 376. 70
20,600, 000. 00
25, 000, 000. 00
1, 260,000, 000. 00
500, 000. 00
175, 000, 000. 00
125, 000, 000. 00
21,500,000.00
5,000,000. 00
25, 000, 000. 00
500, 000.00
555, 000, 000. 00
15, 000,000. 00
27, 686, 920. 00
81, 200. 00
626,126. 73
20, 000,000. 00
20, 000,000.00
3,598,936,323.43
500, 000. 00
5o5,555.55
2,818, 600, 000. 00
1, 642, 500,000. 00
1 Public debt expenditures and public debt receipts, as shown in this statement, are exclusive of Treasury
certificates issued and retired within the same fiscal year.
21
SECBETARY OF THB TREASURY
Public debt expenditures and receipts for fiscal year 1928, on the basis of daily Treasury
statements {unrevised), and estimates for the fiscal years 1929 and 1930—Con.
EXPENDITURES—continued
Deduct public debt expenditures chargeable
against ordinary receipts:
Sinking fund
_
Purchase of Liberty bonds from foreign repayments
Received from foreign governments under
debt settlements
_
Received from estate taxes
Retirement from Federal reserve bank and
Federal intermediate credit bank franchise
tax receipts
_
-.
Retirements from gifts, forfeitures, etc.
Total
Total public debt expenditures exclusive
of public debt expenditures chargeable
against ordinary receipts
1928
1929
1930
$354, 741, 300. 00
$370,182, 050.00
19,068,000.00
10, 219,300 00
10, 783, 500.00
162, 736,050.00
1. 500 00
160,995, 000 00
160,185,000. 00-
618, 367.05
3,089,803 25
540, 255, 020 30
875, 000 00
200,000 00
542, 471, 350 00
2, 375, 000. 00
200,000. 00
553,067, 600. 00'
3.058,681,303 13
2, 276,128,650 00
. 25,121, 597 50
17,052,125 51
25, 000, 000 00
10, 000, 000 00
25, 000, 000. 00
500, 000.00'
2, 649,148,870 00
2,691,322,593 01
2,172, 668,887 06
2, 207,668,887 06
1, 003,356, 218. 00^
1, 028,856, 218. 00'
1367,358,710 12
2 68,459, 762 94
60, 576,182.00^
$379, 524,100. 00'
1,089,432, 4.00.00
RECEIPTS
Deposits to retire Federal reserve bank notes and
national-bank notes
Treasury savings securities.
Other new issues of securities, including Treasury
notes and certificates
Total pubhc debt receipts
Excess of public debt retirements over the retirements chargeable against ordinary receipts due
to indicated surplus and decrease in general
fund balance
1 Surplus, $398,828,281.06. Difference of $31,469,570.94 carried forward to 1929 as an increase in generalfund balance, and used for debt retirement in that fiscal year.
2 Estimated surplus, $36,990,192. The sum of $68,459,762.64 includes $31,469,570.94 referred to in note 1.
CONDITION OF THE TREASURY
On June 30, 1928, the gross public debt of the United States Government amounted to $17,604,290,563, and the net balance (cash) in
the general fund of the Treasury on the basis of daily Treasury statements (revised) was $260,190,331. These figures represent a decrease
of $905,883,703 in the pubhc debt, and an increase in the net balance'
(cash) of the Treasury of $27,592,210 in the fiscal year 1928.
Bullion and coin amounting to $2,142,800,228 on June 30, 1928,,
held in trust by the Treasury against United States currency outstanding showed a decrease of $108,825,946 during the fiscal year.
Bullion and coin, amounting to $1,387,650,413 on June 30, 1928^
held in trust by the Treasury for the Federal Keserve Board, show^ed a
-decrease of $324,352,523 during the fiscal year.
Operations with reference to these items during the fiscal year are
discussed in more detail immediately following.
THE PUBLIC DEBT
General review of operations
During the fiscal year 1928 the gross debt of the United States
was reduced from $18,510,174,266.10 to $17,604,290,562.93. The reduction accordingly was $905,883,703.17, and of this amount $540,246,020.30 was discharged from ordinary receipts in accordance with
the established debt payment program, and $365,637,682.87 was dis
22
REPORT ON T H E
FINANCES
charged from the surplus of receipts over expenditures chargeable
against those receipts.
The gross public debt is comprised of (a) interest-bearing debt,
(b) matured debt upon which interest has ceased, and (c) debt bearing no interest. With respect to interest-bearing debt, exclusive of
1-day special certificates of indebtedness, $3,348,715,208.70 was issued
and $4,281,964,078.20 was retired during the year. Of the latter
amount, $893,511,594.50 was discharged, $3,348,715,208.70 was replaced with other interest-bearing debt, and $39,737,275 was transferred to matured debt upon wliich interest has ceased. With respect
to matured debt upon which interest has ceased, $9,112,850 was dis-
1916
191V
1918
1919
1920
19Z1
I9W
1923 1 9 2 4
1925
1926
1927
1928
DIAGRAM 5.—Interest-bearing public debt outstanding from January, 1916, to June, 1928
charged during the year, resulting, with the transfer above stated, in
a net increase of $30,624,425 in this type of debt. The debt bearing
no interest was decreased by $3,259,258 during the year. On the basis
of the interest-bearing debt outstanding at the beginning and at the
end of the year the annual interest charge was reduced from $722,675,000 to $671,353,000, or some $51,000,000.
During the fiscal year, for the regular quarterly financing, six issues
of Treasury tax certificates of indebtedness were offered to the public
for cash subscriptions on the quarterly tax-payment dates. In addition, in connection with the refunding of the second and third Liberty
loans, an additional issue of Treasury certificates was offered in
November, 1927, for cash and exchange subscriptions, and two issues
23
SECRETARY OF THE TREASURY
of Treasury notes were offered, one for cash and exchange in September, 1927, and the other for exchange subscription only in Januq^y, 1928. A brief account of these issues follows. The circulars
governing these issues, together with public announcements concerning them, will be found with the appended exhibits.
In order to meet the maturities of two series of certificates of.
indebtedness and to provide, in part, for the refunding or payment of
the second Liberty loan called for redemption on November 15, 1927,
two offerings and allotments were made for September 15, 1927: (1)
An issue of 3 per cent Treasury tax certificates of indebtedness, with
six months' maturity, in amount $250,577,500, and (2) an issue of
S}4 per cent 3-5-year Treasury notes in amount $619,495,700. The
PtR CENT
5.5
5.0
4.5'
jT-
'^.0
/
3.5
^
-\
/
3.5
/
E.5
'
3.0
/
J
2.0
1916
DIAGRAM I
1917
1<D18
1919
1920
1923
1924
1925
1926
1927
1928
-Ratio of the computed annual interest charge to the amount of interest-bearing public debt
outstanding at the end of each month, from June 30, 1916, to June 30,1928
latter was offered for cash subscription and for exchange subscription payable in second 434's. Cash subscriptions of $250,522,600
and exchange subscriptions of $368,973,100 were accepted. To
place additional funds in the Treasury for the payment of second
Liberty loan bonds, an issue of 3J^ per cent Treasury certificates of
indebtedness, with seven months' maturity, was offered and allotted
for November 15, 1927—the amount being $422,051,200, all for cash
except $2,304,200, for which second Liberty loan bonds were tendered
in payment. On December 15, 1927, about $335,000,000 43^ per
cent Treasury notes became due. To meet its requirements the
Treasury offered and allotted for this date an issue of 3 ^ per cent
Treasury tax certificates of indebtedness maturing in one year—
$261,761,000 in amount.
24
REPORT ON T H E FINANCES
As a further step in the refunding program, an issue of 33/^ per cent
Treasury notes was offered for January 16, 1928, only in exchange for
third Liberty loan bonds. By this means $607,399,650 third L i b ^ l y
loans bonds were refunded into 33^ per cent 3-5-year Treasury notes.
For regular quarterly financing required in March, 1928, two series
of Treasury certificates of indebtedness were offered and allotted,
for March 15, 1928—Series TD2, at 33^ per cent, maturing in
nine months, ^nd Series TM-1929, at 3 ^ per cent, maturing in one
year of which $201,544,500 of the former and $360,947,000 of the
latter were issued. To meet the fourth quarter's requirements,
two further series of Treasury certificates of indebtedness were offered
and allotted for June 15, 1928—Series TD3-1928, for six months at
4 per cent, in amount $216,371,500, and Series TM2-1929, for nine
months at 3 J^ per cent, in amount $211,784,000.
Refunding of second Liberty loan completed
I t will be recalled that in March, 1927, the first step had been taken
in the refunding or retirement of over 53^ billion dollars of Liberty
bonds, involving those of the second and third Liberty loans, all
hearing interest at 434 per cent except a small remainder of the
•original issue of bonds of the second Liberty loan, in amount $20,^48,350, which bore interest at 4 per cent. In my report for the
fiscal year 1927 the steps taken for the refunding of the second Liberty
loan were set forth, the report being carried to October 31, 1927,
when there remained outstanding $757,545,500 bonds of this loan
ivhich were due for payment on November 15, 1927, pursuant to their
call for redemption. In the same connection reference was made
:a,bove to the issue of 33^ per cent Treasury certificates of indebtedness
on November 15, 1927. This issue of 33^ per cent certificates, in the
amount of $422,051,200, completed the refunding of the second
Liberty loan on the tenth anniversary of its issue, and provided for
the payment of the balance outstanding except for inconsiderable
amounts not presented for which special provision was unnecessary.
The original issue of this loan on November 15, 1917, was for
$3,807,865,000. The amount outstanding had been reduced to
$3,104,520,050 on February 28, 1927, when the refunding of the issue
was decided upon. Of this balance, $1,976,990,200 was exchanged
directly for other issues at lower rates of interest, $580,149,750 was
redeemed for account of the cumulative sinking fund or from surplus
.money, $524,450 was redeemed from miscellaneous sources, $527,170,500 was paid on presentation pursuant to the call, and $19,685,150
payable on presentation remained outstanding on October 31, 1928.
SECRETARY OF THE TREASURY
25
Refunding the third Liberty loan
The refunding of the second Liberty loan 4 per cent and 434
per cent bonds having been completed, consideration was next
:given the outstanding third Liberty loan 4J^ per cent bonds which,
by their terms, were due for payment on September 15, 1928.
T h e third Liberty loan bonds were issued on May 9, 1918, in the
^aggregate amount of $4,175,650,050, and on December 31, 1927,
there remained outstanding $2,147,653,150.
This was obviously
too great an amount to let run to maturity date, and the disposition
of a considerable amount before that date, through refunding or
payment, was wholly desirable. The first step was taken on
January 9, 1928, when announcement was made of an offer to
holders of third Liberty loan bonds of an issue of 3-5-year 33^ per
cent Treasury notes, Series C-1930-1932. The new notes were similar to those of Series A and Series B 1930-1932 offered during the
prior year to holders of second Liberty loan bonds. The new notes
were dated January 16, 1928, with maturity on December 15, 1932,
b u t callable on and after December 15, 1930, and were issued only
in exchange for third Liberty loan bonds. Exchanges were made as
of January 16, 1928, at par. In order that owners of third Liberty
loan bonds might be compensated for the premium at which the third
Liberty loan bonds were then selling, interest was prepaid in full to
March 15, 1928, on third Liberty loan bonds presented for exchange,
without deduction on account of the earlier redemption. The offer
terminated on January 23, 1928, and a total of $607,399,650 par
amount of third Liberty loan 4 ) ^ per cent bonds was exchanged for
the new 33^ per cent Treasury notes.
Meanwhile, from time to time as funds were available, purchases of
third Liberty loan bonds were made from surplus mone}^ during the
fiscal year 1928. Such purchases ordinarily were made at the market
through the agency of the Federal reserve banks, and $160,062,000
aggregate face amount was so purchased. This procedure was varied
on two occasions. On May 11,1928, a public oft'er was made to purchase, at the option of holders, up to $50,000,000 face amount at
1 0 0 ^ and accrued interest. Under this offer, which terminated on
May 15, 1928, $51,291,450 face amount was tendered and purchased.
Again, on June 11, 1928, a similar public offer was made to purchase
up to $125,000,000 face amount with price fixed at 1 0 0 ^ and
accrued interest. This offer first expired on June 19, but was then
extended, and was finally terminated on July 5, 1928, at which time
$103,639,850 face amount of bonds had been tendered and purchased.
Accordingly, in the aggregate $314,993,300 face amount third Liberty
loan 434 per cent bonds were purchased from surplus of receipts
during the fiscal year 1928.
26
REPORT ON T H E FINANCES
The three issues of 3-5-year 3^/2 per cent Treasury notes, Series
A, B, and C 1930-1932, provided adequate maturities to meet the
requirements of the permanent debt reduction program between the
maturity of the third Liberty loan bonds and the earliest redemption
date of other outstanding Liberty bonds. Therefore, it seemed desirable, if an opportune time arose, to replace a part of the maturing
thirds with other bonds maturing in the period after the final maturity
date of the fourth Liberty loan. Accordingly, on July 5, 1928, a
new issue of 12-15-year 3 ^ per cent Treasury bonds was offered to
the public. Cash subscriptions were invited at par, with the amount
of the issue for cash fixed at $250,000,000, or thereabouts, and exchange subscriptions, in payment of which only third Liberty loan
bonds might be tendered, were also invited at par but with the provision that interest would be prepaid in full to September 15, 1928, on
any third Liberty loan bonds presented in payment. Cash subscriptions were closed on July 7, 1928, when subscriptions aggregating
$743,367,700 had been received, of which $251,521,400 were accepted.
Exchange subscriptions were closed on July 31, 1928, the aggregate
amount tendered being $107,521,550, all of which were accepted,
Accordingly, the total of the issue was $359,042,950.
On July 1, 1928, the appropriation for the cumulative sinking
fund for the fiscal year 1929 became available, and thereafter was
utilized for the purchase of third Liberty loan bonds for retirement
before maturity. Under authority given the Federal reserve banks
to purchase at the market, $60,553,650 face amount were retired prior
to the public offer made on August 1, 1928, to purchase, at the option
of holders, third Liberty loan bonds at lOOj^ to August 15, 1928, and
thereafter at par, together with accrued interest to date of the optional,
purchase. Under this offer, which expired at the close of business
September 14, 1928, $66,378,050 face amount was purchased at
1 0 0 ^ and $35,419,100 face amount was purchased at par. The
total retirements of third Liberty loan bonds for account of the
1929 sinldng fund account, prior to the maturity of the bonds on
September 15, 1928, were accordingly $162,350,800. The balance
of the available sinking fund appropriation was applied to the redemption of third Liberty loan bonds at or after maturity.
The various steps taken since January 1, 1928, had reduced the
amount of third Liberty loan bonds outstanding to approximately
$955,000,000 due for payment on September 15, 1928. In addition
to the remaining proceeds of the cash sale of 3 ^ per cent bonds of
1940-1943, and the expected quarterly tax receipts on September
15, 1928, it was estimated that some $525,000,000 should be made
available for the Treasury on September 15 to meet the third Liberty
loan maturity and at the same time provide for other public expendi-
SECRETARY OF THE TREASURY
27
tures including those for the sinking fund on and after that date.
Accordingly, on September 7, 1928, announcement was made of an
oft'ering of 9-month 43^ per cent Treasury certificates of indebtedness. Series TJ-1929, dated and bearing interest from September 15,
1928, and maturing June 15, 1929. The amount of the offering was
placed at $525,000,000 or thereabouts. The offer provided that
third Liberty loan bonds would be accepted in payment, and that
for such subscriptions allotments would be made in full.
The subscription books for this issue closed on September 11, 1928.
Cash subscriptions aggregating $446,452,000, and exchange subscriptions aggregating $102,858,700 were accepted. The total of the
issue accordingly was $549,310,700.
Experience has demonstrated that in the case of the long term war
issues, which were widely distributed, maturing bonds are not all
presented on the maturity date, but a large number are presented
for redemption over a considerable period of time. This was true in
the case of the third Liberty loan, for, while $955,000,000 of this loan
was outstanding on September 14, 1928, only $475,000,000 was presented on September 15, 1928, and up to and including September 25,
1928, only $733,000,000 had been presented. Accordingly, in order
to avoid borrowing in excess of actual needs and to save unnecessary
interest charges, the Treasury on September 15, 1928, in connection
with the aforementioned offering of certificates of indebtedness, made
provision for the redemption of such third Liberty loan bonds as
might reasonably be anticipated would be presented for payment
prior to October 15, 1928.
The final step in the program of financing occasioned by the
maturity of the third Liberty loan was announced on October 8, 1928,
when cash subscriptions, at par and accrued interest, were invited
for an offering of ll-raonth 4 ^ per cent Treasury certificates of
indebtedness. Series TS-1929, dated and bearing interest from October 15, 1928, and maturing September 15, 1929. The amount of the
offering was placed at $300,000,000 or thereabouts. On the date of
this oft'ering there were still outstanding about $150,000,000 of third
Liberty loan bonds. In addition, there were about $150,000,000 in
interest payments on the public debt becoming payable on October
15, 1928. This issue, therefore, together with cash on hand, was
intended to provide not only for outstanding thirds but also for the
Treasury's requirements up to December 15, 1928.
The subscription books for this issue closed on October 9, 1928.
Subscriptions aggregating $838,700,000 were received, of which
$308,806,000 were accepted.
With this issue the refunding of the third Liberty loan was completed in so far as special provision for the retirement of the loan was
28
REPORT ON THE FINANCES
necessary. The operations since December 31, 1927, may be summarized as follows:
Summary of transactions—refunding the third Liberty loan
Balance outstanding Dec. 31, 1927
$2, 147, 653, 150'
Exchanged for other issues:
Before maturity—
3H per cent Treasury notes, Series
C-1930-32
$607, 399, 650
3J^ per cent Treasury bonds of 194043
107,521,550
At maturity—
43^ per cent certificates of indebtedness, Series TJ-1929
102, 858, 700
817, 779, 90(>
Retired for cumulative sinking fund ^
365, 325, 800
Retired from surplus money prior to maturity. _ 314, 993, 300
680, 319, 100'
Balance redeemed or redeemable at or after maturity from proceeds of other issues, or from available tax receipts
TotaL.
-
-
2 549^ 554^ 150,
2, 147, 653, 150'
The third Liberty loan refunding operations carried out since^
December 31, 1927, indicate an important reduction in interest
charges. On the basis of the above statement and computing thesaving only on actual exchanges for other issues and on retirementsfor the cumulative sinking fund and from surplus money, an annual
reduction in interest charges of $34,152,819.44 is indicated.
Resume of refunding operations
The refunding or retirement of the second and third Liberty
loans was definitely undertaken in March, 1927, There remained
outstanding on February 28, 1927, $5,264,526,950 aggregate amount
of second and third Liberty loan bonds, all bearing interest at 434
per cent, except $20,848,350 bearing interest at 4 per cent. Of this
amount outstanding, since March, 1927, there has been refunded
through direct exchanges for other issues $2,794,732,700; there has
been redeemed from ordinary receipts for account of the cumulative
sinking fund, $700,067,100, and for miscellaneous accounts, $5,900,000,
and there has been redeemed from surplus money, $567,401,750. F o r
the discharge of the balance of $1,196,425,400 the proceeds of other
issues for cash have been utilized except for the small amount outstanding payable on presentation, for which no special provision is
necessary.
1 Includes $202,976,000 of the balance of appropriation for 1929 applied to payments at and after maturity.
* Includes outstanding balance payable on presentation.
29>
SECRETARY OF THE TREASURY
On the basis of the actual exchanges for other issues a reduction
in interest charges of $20,373,676 annually is shown. On the basisof the retirements for account of the cumulative sinking fund, miscellaneous, and surplus money, a reduction in interest charges of
$54,115,726 annually is shown. Accordingly, a total reduction in^
interest charges of $74,489,402 annually appears as directly attributable to the retirement of the second and third Liberty loans.
In addition to effecting the refunding or retirement of these twoloans and the important reduction in interest charges, another primary purpose of the operation has been accomplished, for maturitisehave largely been rearranged to meet the requirements of the established debt-payment program.
Cumulative sinking fund
For the fiscal year 1928 an appropriation of $355,081,401.18 was
available for debt retirement through the cumulative sinking fund.
This appropriation, in accordance with the provisions of section 6
of the Victory Liberty loan act approved March 3, 1919, as amended,
was derived as follows:
Unexpended balance from 1927
$83. 80
Appropriation for 1928:
Initial credit
.__ 253, 404, 864. 87
2J^ per cent of the aggregate amount of Liberty bonds
and Victory notes outstanding on July 1, 1920, less
an amount equal to the par amount of any obligations of foreign governments held by the United
States on July 1, 1920.
Secondary credit
101, 676, 452. 51
The interest which would have been payable during
the fiscal year for which the appropriation is made
on the bonds and notes purchased, redeemed, or
paid out of the sinking fund during such year or in
previous years.
Total
-
355, 081, 401. l a
Debt aggregating $354,741,300 face amount was retired during
the year at a total principal cost of $355,080,563.11, as follows:
Par amount
4MiP6r cent Treasury notes, Series A-1927 __
Second 4*s
Second 43>^'s - .
.
. . _ _.
Total
Principal cost
$20,000,000
654,900
334,086,400
$20,087,500.00
655,186.27"
334,337,876. M\
354,741,300
355,080,563.11
An unexpended balance of $838.07 has been carried over to the^
fiscal year 1929.
30
REPORT ON T H E FINANCES
The cumulative sinking fund was established on July 1, 1920. The
following shows the operations by fiscal years to the end of 1928:
Appropriation
available i
Fiscal year
1921
1922
1923
1924__1925
1926
]927_
1928
-
-
-
-
-
Total
-
E x p e n d e d (principal cost)
D e b t retired
(par a m o u n t )
$256,230, 010. 66
274, 516,965.89
284,156,439.19
294,927,023. 26
306,666,759. 52
321,184, 577. 22
336,890, 916. 27
355,081,401.18
$254,844, 576. 50
274,481, 902.16
284,149,754.16
294, 927,019. 57
306, 666, 736.01
321,184,468. 20
336,890,832. 47
355,080, 563.11
$261, 250,250
275,896,000
284,018,800
295,987,350
306,308,400
317 091,750
333,528,400
354, 741,300
2,428, 226, 690.25
2,428, 225,852.18
2,428,822, 250
1 Unexpended balance included in appropriation available for each year, but excluded from total.
expended balance $838.07 at end 1928.
Un-
The particular issues retired during this period follow:
Title
Liberty bonds:
First z y ' s
First 4's.
First 4M's
Second 4's
Second 4M's
Third i H ' s . . .
Fourth 4K's
Victory notes:
33^'s.-4^'s
Treasury notes:
5 y per cent Series B-1924
i H per cent Series A-1925
i H per cent Series B-1925
i y per cent Series C-1925
i H per cent Series A-1926
i H per cent Series B-1926.
i y per cent Series A-1927
i H per cent Series B-1927
Total
Par amount
Principal cost
$11,000
1,000
24,850
670,900
374, 735,400
896, 550,200
13, 943, 650
$11,000.00
1,000. 63
24,855.00
671,196. 27
374,988, 667. 88
903, 239, 575. 91
13,867,063. 25
106,186,900
610,584,150
104, 542, 256. 28
604, 769,347.07
103,000,000
101,000,000
11,315,900
113,199, 900
1,018,300
9, 564, 200
26,798,000
60, 217,900
103,028,635.62
101,004,123. 53
11,279,715.38
113,196,011.61
1, 018,300.00
9,485,492. 59
26,880, 711.16
60, 217,900. 00
2,428,822, 250
2,428,225,852.18
GENERAL FUND OF THE TREASURY
All cash receipts of the Government, except as otherwise authorized
by law, are credited into the general fund and all expenditures are
made therefrom. This fund shows the assets in the Treasury in the
form of cash and deposit credits, and certain current liabilities set
off against such assets. The net balance of this fund represents the
working cash balance required in connection with the receipts and
expenditures of the Government. The net change from the close of
the previous fiscal year is accounted for as follows:
SECRETARY OF THE TREASURY
31
Summary of the net change in the general fund balances between June SO, 1927,
and June SO, 1928, on the basis of daily Treasury statements {revised)
Amount
Net balance per daily Treasury statement, June 30, 1927..
Deduct net excess of expenditures over receipts in June reports subsequently received. _
Net balance June 30, 1927 (revised)
E.Kcess of ordinary receipts over expenditures chargeable against ordinary receipts in the
fiscal year 1928
$234, 057,409. 85
1,459, 289. 37
232,598,120. 48
393, 229,893. 24
625,828,013. 72
Total to be accounted for.
365,637,682.87
Public debt retirements from surplus revenue
(This is additional to $540,246,020.30 sinking fund and other debt retirements
chargeable against ordinary receipts.)
Net balance in the Treasury June 30, 1928 (revised)
260,190,330. 85
625,828,013. 72
TotaL
General fund of the Treasury, June SO, 1928 {revised figures)
In Treasury offices:
Gold...
standard silver dollars
United States notes
Federal reserve notes
Federal reserve bank notes
National-banknotes.
Subsidiary silver coins..
Minor coins
Silver bullion (at cost)
Unclassified (collections, etc.)
-
-..
_
.'
$158,195,548.59
7,227,931.00
3,021,104.00
658,410.00
101,210.00
53,700.00
2,691,642.51
2,845,027.66
7,782,476.74
2,207,454.98
In Federal reserve banks:
To credit of Treasurer of United States
In transit.
23,647,738. 55
6,276,634.04
In foreign depositaries:
To credit of Treasurer of United States
To credit of other Government officers
In transit...
83,304. 52
288,807. 58
370.00
In treasury of Philippine Islands:
To credit of Treasurer of United States
In transit..
871,176.73
933.38
$184, 784, 505. 48
29,924, 372. 59
In special depositaries: Account of sales of Treasury bonds and certificates ofi ndebtedness. 245,730,779.32
Jn national-bank depositares:
To credit of Treasurer of United States
6,785,348.93
To credit of other Goviernment officers
18,724,939.58
In transit
2,566,978.76
28,077, 267. 27
372,482.10
872,110.11
9,761,516.87
Deduct current liabilities:
Federal reserve note 5 per cent fund (gold)
Less notes in process of redemption...
$150, 632,176.90
932,115.00
National-bank note 5 per cent fund
Less notes in process ofredemption
24,835,349.34
19,472,396.00
•
Treasurer's checks outstanding..
1
Post Office Department balance
Board of trustees. Postal Savings System, balances
Balance to credit of postmasters, etc
Retirement of additional circulating notes (act of May 30, 1908)
Uncollected items, exchanges, etc
Balance in Treasury June 30, 1928
13606—29—FI 19 2 8
5
,
149,700,061.90
5, 362,953. 34
3,800,213. 02
8, 851,108.76
7,776,151.89
50,545,764.88
2,430. 00
3, 532, 502. 23
229,571,186.02
260,190,330.85
32
REPORT ON THE FINANCES
THE CURRENCY TRUST FUND AND THE GOLD RESERVE FUND
The respective amounts of gold coin and bullion, and silver dollars
held in the Treasury on June 30, 1928, against equal amounts of
outstanding gold certificates, silver certificates, and Treasury notes
of 1890, were as follows:
Gold coin and bullion
Silver dollars
Silver dollars, 1890
Total
.
.
-
$1, 513, 730, 839
471, 726, 701
1, 303, 600
1, 986, 761, 140
On June 30, 1928, the gold reserve against United States notes and
Treasury notes of 1890 was $156,039,088, an increase of $618,367 on
account of franchise tax receipts from the earnings of the Federal
reserve banks and Federal intermediate credit banks which the Secretary of the Treasury, exercising the discretion given him under
provisions of existing law, directed should be applied to supplement
this gold reserve. The United States notes, for which this reserve is
held, are outstanding in the amount of $346,681,016, a sum which is
fixed by law. When such notes are received they are reissued. The
Treasury notes of 1890,. for which this gold reserve is also held, were
outstandmg on June 30, 1928, in the amount of $1,303,600. When
such notes are received they are not reissued.
GOLD HELD FOR THE FEDERAL RESERVE BOARD
The Treasury also holds in trust a large amount of gold for the
account of the Federal Reserve Board. This is known on the books
of the Treasury as '^ Gold fund. Federal Reserve Board,^^ and amounted
on June 30, 1928, to $1,387,650,413, a decrease of $324,352,523 in
the fiscal year. The fund is an aggregate of net deposits of gold
made by the Federal reserve banks, principally for the purpose of
effecting clearance settlements among themselves, and by the Federal
reserve agents of gold received by them as part of the security against
outstanding Federal reserve notes.
REVENUE ACT OF 1928
For the fourth time since 1920, the condition of Federal finances
has permitted a reduction in taxation. Economical management of
expenditures, a sound poUcy of debt retirement, and the prosperity
of the country have combined to make possible in rapid succession
one tax reduction after another. The various revenue acts since the
war have been enacted as promptly as the volume of ordinary receipts
in excess of expenditures chargeable against those receipts indicated
taxes in excess of government needs. These acts have eliminated
many levies of the war period, such as excise taxes on sales and war
and excess profits taxes, and have relieved undue burdens on the
SECRETARY OF THE TREASURY
33
various classes of taxpayers by reducing income tax rates and increasing exemptions and credits. Such a method of gradually establishing
a peace-time revenue system from extensive war taxes at high rates
requires that in each revision attention be directed to those remaining
taxes and rates which are the least desirable for a permanent revenue
system.
The major changes in taxes and rates in the revenue act of 1928
were as follows:
Corporation income tax: The rate of tax was reduced from 133^ to 12 per
cent, applicable to incomes of 1928 and succeeding years The ''specific credit "
allowed domestic corporations having a net income of $25,000 or less was increased
from S2,000 to.S3,000.
Individual income tax: The maximum net income on which ah earned income
credit is allowed was increased from $20,000 to $30,000.
Automobile tax: The tax of 3 per cent on manufacturers' sales of passengen
automobiles was repealed.
Admissions and dues: Amounts paid for admissions to theaters and other
places of amusement of $3 or less were exempted from tax as compared with 75
cents or less under the preceding act. On admissions of $5 or more to prize
fights, however, the rate was increased from 10 to 25 per cent. The annual
club dues exempted from tax were increased from $10 to $25.
Miscellaneous: The amount withheld at the source was increased in ihe case
of certain tax-free covenant bonds owned by nonresident aliens foreign corporations, and unknown holders. The tax of 1 cent per gallon on cereal beverages
was repealed. The tax was reduced on still wines from 16 cents, 40 cents, and
$1, to 4, 10, and 25 cents, respectively, per gallon according to alcoholic content;and on grape brandy from 60 cents to 10 cents per proof gallon. The special
tax on retailers of narcotics was reduced from $6 to.$3 per annum. The tax on
the use of foreign-built boats was repealed, but the term ''motor boat" in the
tariff act of 1922 was defined to include yachts and pleasure boats.
The reduction in the tax rate on corporation incomes will have the
largest effect on the volume of tax receipts. The change applies to
incomes for the calendar year 1928, and will therefore not affect
income tax collections until the calendar year 1929, or until the last
half of the fiscal year 1929. Corporation taxes had not been reduced
since the revenue act of 1921 when the normal rate on income was
increased from 10 to 123^ per cent as a partial offset to the repeal of
the excess profits tax; and this rate was again increased by the revenue
act of 1926 from 123^^ to 133^ per cent at the time of the repeal of
the capital stock tax. In the meantime, other forms of business ownership conducted by individuals and partnerships received successive
tax reductions in the revenue acts of 1921, 1924, and 1926. The
resulting inequality in tax rates was adjusted in part by the changes
in corporation income taxes in the revenue act of 1928. The effective
tax rate on large corporations was reduced by about 11 per cent^
while that on small corporations was reduced by more than this
percentage.
34
REPORT ON THE FINANCES
The repeal of the tax on passenger automobiles ranks next in importance as to the effect on tax receipts. Of the excise taxes levied
on sales during the war, those on manufacturers^ sales of automobiles, parts, and accessories were the most important revenue producers, and yielded 15 to 17 per cent of the miscellaneous internal
revenue receipts during the fiscal years 1923-1926. The taxes were
repealed on auto trucks and on parts and accessories by the revenue
act of 1926 and on passenger automobiles by the revenue act of 1928.
All the excise taxes on manufacturers' sales are now eliminated,
except a tax of negligible importance on pistols and revolvers.
In addition to revenue reductions amounting, for the first full
3^ear under the 1928 act, to approximately $222,000,000'net, the new
revenue act contains many provisions which will assist materially in
the Treasury's efforts to bring about substantial administrative
simplicity. The present Treasury policy and the application and
probable eft'ectiveness of the various provisions are discussed in
detail elsewhere in the report.
There was also a very substantial step toward simplicity of form
in the revenue act of 1928. A rearrangement of the income tax
title makes it unnecessary for ordinary taxpayers whose income is
derived from ordinary transactions to examine the many necessarily
complicated provisions applicable to extraordinary taxpayers or to
extraordinary transactions. The income tax title is applicable only
to the taxable year 1928 and thereafter, and the revenue act of 1926
remains in force for prior years. The estate tax and miscellaneous
taxes are not repeated. The use of bold-face type, descriptive
headings of sections and subsections, and a new system of paragraphing and indention produce a convenient separation of sections and
subsections.
The changes in Federal taxation since the war may be briefi}^
appraised by the amount of total tax reduction in dollars and by the
character of the remaining tax system. A very rough measure of
the reduction under each revision is a comparison of the receipts
during the last 12 months under the old act with what might have
been collected had the new act been effective for that year. Such
•estimates of recurring reductions in tax collections under the respective revenue acts were:
Revenue
. Revenue
Revenue
Revenue
act of
actof
act of
act of
1921
1924
1926
1928
$663, 000, 000
519, 000, 000
422, 000, 000
._ 222, 000, 000
During this period of tax reduction, however, there has been a large
increase in the taxable resources, due to the normal growth of the
country and to the remarkable prosperity. Had these estimates
SECRETARY OF THE TREASURY
35
been made on the basis of the later and larger taxable resources the
recurring reductions shown would be considerably larger.
As a result of tax revisions since the war, the internal revenue
system consists primarily of three groups of taxes: The income tax
on corporations, the graduated income tax on individuals, and the
tax on various tobacco products. These three sources produce
approximately 95 per cent of the internal revenue and 78 per cent
of the customs and internal revenue. The remainder of the internal
revenue comes from a number of taxes, each of which produces a
comparatively small amount, such as stamp taxes on playing cards
and on a variety of documents, including issues of capital stock,
capital stock transfers, and sale§ of produce for future delivery; a
graduated tax on estates of decedents which is no longer an important
source of revenue due to the decreased rates and the increased credits
under the 1926 act, expecially the credit which is allowed for State
inheritance taxes paid up to 80 per cent of the Federal tax; taxes on
distilled spirits, fermented liquors, admissions and dues; and the
taxes on oleomargarine, narcotics, and other products.
SURVEY OF BUREAU OF INTERNAL REVENUE
In October, 1927, there was published as Volume I I I of the Report
of the Joint Committee on Internal Revenue Taxation a survey of the
administration of the income and profits taxes, prepared and submitted by the Treasur}^ Department. This survey frankly faced a
condition of congestion in the Board of Tax Appeals and the office
of the general counsel that called for an immediate remedy. The
seriousness of the situation was not minimized. Definite recommendations were made for its correction.
I t is fitting at this time to contrast the present situation with that
disclosed in the survey, pointing out in what respects an improvement
can be noted, and in what matters further effort is needed.
Status of worlc
The work of the Bureau of Internal Revenue is on a more current
basis now than when the survey was prepared with respect to the .
accumulation of returns for the war years, and the returns filed in
recent years.
On October 14, 1927, there awaited audit in the Bureau of Internal
Revenue 5,716 returns for 1917 to 1921, inclusive (the excess-profits
tax 3^ears). On September 28, 1928, these had been reduced to 2,375
returns. Most of these are pending on claims for refund, having
been closed once by the bureau and reopened on the taxpayer's own
request. In the survey the number of cases arising in the war years
and still awaiting original audit were also set forth, together with the
36
REPORT ON THE FINANCES
status of the cases and the reason for the delay, the latter information
being stated on pages 14-16 of the survey. The progress made in
reducing the number of such cases is indicated by the following:
Number of cases arising in the war years and still awaiting original audit
As of
As stated Sept.
1,
in survey
1928
Year
1917
1918
1919
1920
69
295
440
800
-
31
74
122
182
On October 14, 1927, the total number of returns for all years prior
to 1926 awaiting audit was 325,129. On September 28, 1928, the
total was only 35,454, and if we add the unaudited returns for 1926,
the total was only 89,885.
On October 1, 1928, out of 2,321,368 returns for 1927 referred to
Washington, only 450,686 remained to be closed, 1,870,682 having
been completely audited and closed. On October 1, 1927, 32 per
cent of the 1925 returns and 24 per cent of the 1926 returns remained
unclosed. On October 1, 1928, we find only 2.22 per cent of the 1926
returns remaining to be closed and but 19.4 per cent of the 1927
returns.
At the time of the survey there were 1,803 offers iri compromise,
and approximately 18,000 claims for refund were awaiting determination. On October 1, 1928, there were only 1,449 offers in compromise
and approximately 13,287 claims pending.
The following table indicates the progress of the bureau in reducing
the accumulation of cases, while keeping pace with current returns as
filed:
Balances of returns on hand at end of fiscal periods from 1923 to 1928
June 30, 1923
JuneSO, 1924
June 30, 1925
3,032,544
2,430,055
2, Oil, 084
June 30, 1926
June 30, 1927
June 30, 1928
742, 740
474, 535
328, 186
I t is therefore fair to conclude that the work of the Income Tax
Unit is current, and so weir established upon this foundation that it
undoubtedly will remain so.
Ofiice of the general counsel
As was recognized in the survey, the burden on the general counsel's
oflace had been greatly increased by bringing the unit to a current
basis. A large number of appeals had accumulated in the Board of
Tax Appeals, requiring the services of an increased number of trial
SECRETARY OF THE TREASURY
37
attorneys of experience and ability' with a corps of assistants to
prepare cases for trial. In this respect it, can not be said that the
situation has improved, although various remedies are in operation.
On June 30, 1927, there were 18,481 appeals pending in the Board
of Tax Appeals. These cases involved asserted deficiencies aggregating approximately $571,804,490. On September 30, 1928, the
number had increased to 21,075 and the amount involved to approximately $691,391,890; (It should be noted that there is considerable
duplication in both figures of amounts involved, due to duplicate
assessments against corporations of a consolidated group and against
each of the groups of transferees under section 280 of the.Tevenue
act of 1926.)
The situation is not as discouraging, however j as these figures
standing alone would indicate. Certain agencies are now effectively
at work and as a result a trend toward improvement is clearly
perceptible.
One of these agencies, the special advisory committee, was created
in the summer of 1927 to apply settlement methods to these pending
appeals. I t consists of 14 members, with 58 conferees in Washington and 32 representatives of the committee acting as conferees
in the offices of the revenue agents in charge. These conferees, who
are carefully chosen and trained, confer with taxpayers and attempt
primarily to settle cases where the facts are in dispute. The possibility of a prompt and effective settlement of cases by such a picked
group was recognized in the survey, and a year's work has demonstrated the value of the plan. In that period the committee has
considered 5,748 appealed cases, 2,777 cases about to be appealed
(in 60-day letter status), and 24 miscellaneous cases. Of these, 3,288
appeals, 2,088 60-day letter cases and 15 miscellaneous cases have
been recommended for settlement. The cases proposed for settlement have resulted in assessments totaling $36,805,184.59.
The success of this work was demonstrated at an early date in the
year, and plans were perfected for the creation of a similar agency,
now known as the review division, in the general counsel's office,
to attempt similar settlement work in cases involving primarily
questions of law and mixed questions of law and fact. In certain
of these cases settlement is advantageous to the Government.. Many
cases involve a number of issues, each of which is a fairly close question of law without precedents and not of general importance. On
some of these issues the bureau may profitably yield in exchange for
similar concessions by the taxpayer. I t is, in a word, the introduction into the realm of tax administration of the ordinary business
man's method for adjusting disputes. Litigation has proven expensive and on the average relatively unprofitable to the bureau.
In a tax case, the taxpayer usually possesses all the evidence and
38
R E P O R T ON THE FINANCES
produces aU the witnesses. Litigation therefore means uncertainty
as to result, long delays, and expense. Settlement methods serve to
keep the tax problem on an administrative basis, where it belongs;
to reach results more promptly benefiting both the Government and
the taxpayer; and in the long run to produce more revenue.
This review division was created early in July, 1928, and has been
functioning a short time. I t is expected that in the fiscal year of
1929 its work will be fully as productive of results as that of the
special advisory committee. To October 1 it has accomplished the
settlement or disposal of 212 cases pending before the Board of Tax
Appeals.
1926
19 eb
192.6
i9a7
1924
DIAGRAM 7.—Number of appeals docketed, formal decisions rendered, and total number of appeals disposed of by the Board of Tax Appeals, from July, 1924, to September, 1928
• A third factor that makes for improvement is the different point
of view that is increasingly evident in the unit itself. Conferees and
auditors have been brought into direct contact with the special
advisory committee and, by exchange of auditors, meetings for general
discussions, and the reading of the committee's recommendations in
specific cases, have acquired more and more the same point of view.
This is reflected in the results of conferences in the unit, where in
recent months 74 per cent of all conferences on deficiencies asserted
resulted in a complete and final adjustment of all items. This has
permitted the establishment of a rule that in no case where an opportunity for a conference has been granted in the unit (and such opportunity is always given except in cases of jeopardy assessments or in
which the statute is about to expire) will the special advisory commit-
39
SECRETARY OF THE TREASURY
tee give a hearing before a petition is filed with the Board of Tax
Appeals. This gives the committee a greater proportion of time to
devote to the accumulation of appeals.
That the work of the unit is more effective in recent months is
definitely shown by the decrease in appeals to the Board of Tax
Appeals, as shown by the following table comparing the number of
appeals in 1928 with those in the corresponding months of 1927:
1927
January..
February.
March...
April
May
June
July
1,125
1,408
1,038
1,993
1,050
525
645
1927
1928
1928
478
333
• 93 August
1, 62
September.
81
1, 13
1, 06
40
444
Total
,294
Decrease.
•7, 350
1, 944,
or 20.9
per cent
1924
1925
I9a6
1927
'\SZe>
DiiAGRAM 8.—Output of the Board of Tax Appeals, the special advisory committee, and the review division
of the general counsel's office
^^ That the work of the special advisory committee also has been
more effective during this same period is shown by the increase in
the number of disposals by the board, either by decision, dismissal,
or stipulation, as follows:
1927
January..
February
March...
April
May
June
July
378
471
572
511
419
506
283
1928
. 1928
539
621
828
745
764
{65
616
August
SeptemberTotal....
Increase-
328
407
3,875
591
628
6,297
2,422,
or 62. 5
per cent
40
REPORT ON THE FINANCES
With 1,944 fewer appeals and 2,422 more disposals, definite progress
has been made. The fact remains, however, that although there has
been a decrease in the number of appeals, the appeals which are taken
involve a disproportionate amount of deficiencies. In other words,
it is on the whole the smaller cases that are being adjusted in the
unit while the larger cases are being taken to the Board of Tax
Appeals. This is in part due to a failure on the part of taxpayers'
representatives to appreciate the value of a conference in the unit,
and in part due to the reluctance of certain auditors and conferees
to make concessions on doubtful issues in cases involving large
amounts. The bureau is making a strenuous effort to correct both
of these tendencies, as it is just as important that the larger cases
be disposed of by administrative action rather than'by litigation as
to accomplish the disposal of the smaller cases in this way.
With these two agencies effectively at work, coupled with emphasis
on efforts for settlement in the unit itself, it is anticipated that during
this fiscal year further substantial strides will be made toward solving
the problem. A program of settlement work such as has been
described can not be introduced except by degrees. I t calls for
the introduction of a new point of view, by educational means,
in the minds of a group accustomed to more rigid methods that too
often ended in litigation. Great care has been taken in selecting and
training those to whom this power is intrusted, and the exact scope
of their authority has been carefully mapped out. All settlements
are subject to careful check and review to insure the proper exercise
of discretion and to insure that the work is proceeding along consistent,
safe, and reasonable lines. I t is to be expected that the eflSciency
and accomplishments of these groups will steadily increase and that
the new point of view will finally permeate the organization of the
bureau, and influence every auditor, revenue agent, and conferee,
because of the force of example and the direct educational methods
now being used. As a result of this, numerous conferences and
appeals will be eliminated because large numbers of minor differences
will be adjusted at the outset. With this end in view, it is recognized
that the agencies wliich have been created to correct the present
situation must be regarded as temporary and that the ultimate
solution of the problem must be in the hands of the entire bureau
personnel, especially in the field organization.
I t is necessary to point out that in two particular respects the
policy of the department as herein outlined is being hampered and
delayed. One is the fact that certain accountants and attorneys,
acting as representatives of the taxpayer, purposely delay final
adjustment of the tax problem and encourage litigation in order to
increase their own compensation. The number of such men is
relatively small, but the fact remains that in many cases such delay
SECRETARY OF THE TREASURY
41
is deliberately sought. This the taxpayer does not realize, and it is
therefore incumbent on each taxpayer for his own protection to make
certain that he has employed a representative who will earnestly
seek an early adjustment of differences and be willing to meet the
bureau half-way in the settlement of doubtful items. This means a
speedy settlement and less expense for accounting and legal services.
The other matter which should be corrected is the failure of many
taxpayers to present all the evidence at the very outset when the
return is examined by the revenue agent. In many cases a little
evidence, but insufficient, is presented to the revenue agent; further
evidence is secured and prepared for conference before the revenue
agent in charge, but again all of the facts are not presented; at the
conferences later held in Washington before the Income Tax Unit the
same insufficient evidence is relied upon; and after the case has been
appealed, the taxpayer at last takes the time to secure all the facts
and all the evidence for presentation to the special advisory committee. At this point his contentions are conceded. The result is a
long delay which is expensive, both to the Government and to the
taxpayer. I can not too strongly emphasize the importance of a full
and complete presentation of the taxpayer's contentions in the first
instance.
Final agreements
I t was recommended in the survey: ^'The movement already
begun to stimulate closing agreements under section 1106 (b) of
the revenue act of 1926 should be continued." The bureau has
adopted every means to encourage taxpayers to avail themselves
of these final agreements. In every case where the original assessment has been changed an invitation is sent the taxpayer to execute
such an agreement after the audit of the case in the field and at
Washington has been definitely concluded and there are no further
points at issue. As a result the number of these agreements has
increased very greatly during 1928 as contrasted with 1927.
Month
1927:
July
August
September.
October
November.
December.
Number of I Month
agreements
1928:
^
20
33
82
73
187
158
I
January
February
March
April
May
June_J
July
August
September
Number of
agreements
425
573
820
466
985
1,487
178
1, 441
2,819
1 The enactment of the 1928 tax law necessitated the preparation and execution of new forms, which
accounts for the comparatively small number of agreements consummated in July, 1928.
42
REPORT ON T H E FINANCES
The taxpayer has been assured that the presentation of such an
agreement for execution by the department does not result in a reexamination of the case. While such an agreement will not be executed
prior to the complete closing of the case, the proposal for such an
agreement never results in a reaudit.
The survey also recommended that section 1106 (b) of the 1926
act be amended to permit closing agreements whenever the taxpayer
and the Government's representative should agree upon the tax liability. Under the 1926 act payment of the tax was a condition precedent to the filing of such an agreement. Under section 606 of the
revenue act of 1928 payment is no longer essential. The agreement
merely determines the liability for all time and payment is made
thereafter in accordance with the agreement. Furthermore, under
the 1928 act agreements may be filed from time to time with reference to specific issues in the case, such as invested capital, rates of
depreciation, valuation, and amortization. I t is contemplated that
there will be an increasing use of the agreement form on matters
such as these where the taxpayer and the bureau finally reach an
agreement, so that as the case proceeds through the audit certain
issues will be definitely settled which may not then be reopened
merely because after a lapse of time in the audit some different auditor
or conferee or attorney has a different point of view on the matter
involved, or a court or Board of Tax Appeals decision requires a
change in the position taken, either in favor of, or adverse to, the
taxpayer. Obviously these special agreements on specific issues will
be used only after the most careful investigation and review.
Collection of revenues from transferees
Section 280 of the 1926 act (included in the 1928 act as section 311)
has been very effective in closing the doors to a well-known and
much-abused method of tax evasion, by providing for the assessment,
collection, and payment of taxes for which transferees and fiduciaries
of the property of taxpayers are liable. Although a complete compilation of the statistics is not available, actual collections by procedure under this section, from the date of the enactment of the 1926
act to May 31, 1928, are in excess of $6,300,000, and the amounts
assessed or proposed for assessment are $102,000,000, by far the
greater percentage of which is pending before the Board of Tax
Appeals and a very substantial percentage of which should ultimately
be collected. During the entire period prior to the establishment of
this procedure, less than $500,000 was collected as a result of equity
proceedings, about $120,000 of which was collected pursuant to
court decrees and the balance paid in settlement after the proceedings
SECRETARY OF THE TREASURY
43
were begun, out of a total of more than $24,800,000 involved in the
proceedings.
Reopening of cases
I t was recognized in the survey that one of the great problems
of the bureau was the reopening of cases once decided. I t is impossible to prevent the reopening of a case on a claim for refund
after payment of a deficiency, since the filing of such a claim is a
condition precedent to bringing suit. Apart from this class of reopenings, however, the department receives numerous requests for the
reopening of cases for the purpose of further argument, the production of additional evidence, reconsideration in view of subsequent
court or board decisions, reconsideration in view of adjustments made
in prior or subsequent year returns and other reasons. Certain of
these requests are properly granted. A great majority are, however,
denied in accordance with the general policy of the department that
a case once closed shall be considered as finally closed. I t is also the
general policy never to reopen a case for reconsideration unless it is
fairly evident that such reopening would result in a reduction of the
tax. All applications, however, are treated upon their individual
merits by a special group in the office of the Deputy Commissioner in
Charge of the Income Tax Unit. The number of applications received and disposed of during the seven months, December 1, 1927, to
June 30, 1928, were as follows:
Total requests for reopening received
Requests, initiated by taxpayer, denied
Requests, initiated by taxpayer, allowed
Requests, initiated by unit, denied
Requests, initiated by unit, allowed
Total requests for reopening considered
Active requests on hand, July 1, 1928
-...
2, 604
1,091
355
166
534
2, 146
458
Section 608 (b) of the revenue act of 1928 prohibits the reopening
of a claim for refund after the expiration of the period of limitation
for filing suit if the commissioner disallowed the claim after the
enactment of the act. The reopening of claims decided prior to the
enactment of the act was specifically excluded from the section in
order not to prejudice taxpayers who had relied upon the provisions
of a Treasury decision (T. D. 3240) and accordingly had not instituted their suits within the time prescribed. This Treasury decision
has now been revoked and a new decision promulgated (T. D. 4235),
which will carry this policy into force. An eff'ort has been made to
prevent reopening in all cases where the taxpayer could not have
relied upon the existence of the former Treasury decision. This section of the 1928 act and the new decision will very effectively reduce
the number of claims reopened.
44
REPORT ON THE FINANCES
Personnel
As the survey pointed out, the entire success of the work of
the bureau depends, in the last analysis, upon creating and holding
a trained and competent personnel. In past years the turnover in
organization has been very large, due to the comparatively large
remuneration for services paid by outside interests. The bureau
can never compete with salaries paid by large corporations for tax
accountants or advisers. I t can, however, by the payment of certain
reasonable amounts, hold in the service men who recognize advantages
of Government employment in addition to direct compensation; and
a policy of granting reasonable increases to retain men who are especially valuable is now definitely established. As a result of such a
policy, 15 additional men have been placed in the general counsel's
office in a salary grade having a maximum of $7,500, 15 in the Income
Tax Unit in the same grade, and 50 in the Income Tax Unit in a grade
having a maximum of $6,000. I t is believed that in addition to the
direct benefit from the retention of these men in the service this policy
gives the entire organization an incentive to remain longer in Government service because employees perceive ahead a real possibility of
advancement to larger salaries than they are now receiving.
Conclusions.—While the present situation does not show a complete
solution of the problems presented in the survey, it is believed that
the agencies created, which have over a short period of time demonstrated their value, are sufficient to make certain a great improvement
during the fiscal year 1929. The trend in recent months has been
favorable and a substantial inroad has been made in the accumulation
of appeals. In addition, it is confidently believed that a new method
of approach to the problem has been created, that its feasibility has been
demonstrated and that the effectiveness thereof will be increasingly evidenced in the present year and thereafter. The settlement of tax cases
is being taken from the field of litigation and made a matter of administration, as it should be, except in those rare cases which really require
litigation.
TREASURY ADMINISTRATION OF ALIEN AND MIXED CLAIMS
During the past year the enactment of the ^^ settlement of war claims
act of 1928," approved by the President on March 10, 1928, disposed
of the last of the major postwar problems. Almost eight years had
elapsed after the cessation of hostilities before any attempt was made
by legislation to settle the questions involved. Many bills had been
introduced in Congress for the return of alien property held by the
United States and for various amendments to the trading with the
enemy act affecting particular interests, but no general plan had been
presented for the disposition of alien property and for the final settlement between the United States and Germany, Austria, and Hungary
SECEETARY OF THE TREASURY
45
of other questions left over from the war. Congress provided in the
trading with the enemy act that the alien property seized should be
held until^after the war and disposed of as it should direct, and in the
joint resolution, approved July 2, 1921, declaring peace between the
Central Powers and the United States, Congress directed that none of
this alien property should be returned until suitable provision had
been made by the enemy Governments for the satisfaction of all
claims of the United States and its nationals against those Governments as a result of losses suffered during the war by reason of acts
for which those Governments were responsible. I t obviously would
have been unjust to American claimants for this Government to
authorize the return of the alien property held by it without demanding suitable provision by the respective Governments for the payment
of the claims of our nationals.
Another question closely connected with such a general settlement
between the United States and those Governments was that of making
provision for the payment of the claims of the German, Austrian, and
Hungarian nationals against the United States for the use of ships,
patents, and a radio station seized during the war.
In March, 1926, therefore, the Treasury prepared a comprehensive
plan for the settlement of all these questions between the United
States and Germany; the settlement of similar questions as connected
with Austria and Hungary were not sufl&ciently developed at that
time to be included. The plan provided for (1) payment of the
awards of the mixed Claims Commission, United States and Germany; (2) ascertainment and payment of compensation due private
owners of German ships, patents, and a radio station taken a n d u s e d
by the United States; and (3) disposition of the German property
held by the Alien Property Custodian. Serious opposition, however,
developed to this plan and it was accordingly laid aside.
In the second session of the Sixty-ninth Congress the Ways and
Means Committee reported a bill which had the approval of both
German and American claimants and which passed the House of
Representatives. The bill, slightly amended, by the Senate Finance
Committee was submitted to the Senate but failed of passage due
to pressure of legislation at the end of the session. I n the first
session of the Seventieth Congress the Ways and Means Committee
recommended what was practically the same bill as reported by the
Senate Finance Committee in the preceding session with the addition
of a provision for disposing of similar matters between the United
States and Austria and Hungary. This bill became a law on March
10, 1928, and is loiown as the ^'Settlement of war claims act of 1928."
The plan of settlement is essentially of a compromise character, but
the compromise is based on equity. Ultimately all claims will be
paid in full but each of the three groups, into which the claimants
are divided, is required to accept a delay in the payment of part
46
:
REPORT ON T H E FINANCES
of their claims. The United States Government does not receive
any payments on account of its own claims until all others are
liquidated in full.
This act authorizes the creation of a German special deposit account
in the Treasury into which shall be deposited the funds derived from
(1) the 23^ per cent share of the United States in the Dawes annuities
available for reparations, received in payment of claims of American
citizens against Germany; (2) the investment by the Alien Property
Custodian of the share of the so-called unallocated interest fund
belonging to German nationals in noninterest-bearing participating
certificates; (3) the investment by the Alien Property Custodian of
the 20 per cent of the value of the property of German nationals
temporarily withheld in 5 per cent participating certificates; (4) the
appropriations made by Congress to pay for the awards of the arbiter
relating to claims of German nationals against the United States,
50 per cent of which was made available to pay the awards of the
Mixed Claims Commission, United States and Germany; and (5) the
earnings and profits on the investment of such funds.
After reserving 50 per cent of the appropriations made by Congress
for payment of the awards of the arbiter as directed by subsection (d)
of section 4 of the act, the Secretary of the Treasury is authorized
and directed to make payments out of this German special deposit
account in the following order of priority:
1. On account of expenses of administration incurred by the Treasury (limited to $25,000 per annum) and the arbiter.
2. On account of awards in full of the Mixed Claims Commission
attributable to death or personal injury.
3. On account of awards in full, other than for death and personal
injury, the amount of which, together with interest to January 1, 1928,
does not exceed $100,000.
4. Of $100,000 on account of each award, other than for death and
personal injury, the amount of which, together with interest to
January 1, 1928, exceeds $100,000, provided that no person shall be
paid an amount in excess of $100,000, irrespective of the number of
awards made on his behalf.
5. Additional payments on account of awards specified under (4)
in such amounts as will make the aggregate of all payments equal to
80 per cent of the amount payable as of January 1, 1928 (principal of
awards and accrued interest to Jan. 1, 1928), on account of all awards
entered by the Mixed Claims Commission.
6. On account of accrued interest on the participating certificates
evidencing the investment by the Alien Property Custodian of 20
per cent of the German property temporarily withheld.
7. On account of accrued interest on the principal of awards specified under (4) above and on the 50 per cent of awards of arbiter, funds
for which were used to pay American claimants. .
SECRETARY OF THE TREASURY
47
8. On account of (a) participating certificates evidencing the investment by the Alien Property Custodian of 20 per cent of the German
property temporarily withheld; (b) 50 per cent of awards of the
arbiter to German nationals on account of ships, patents, and a radio
station, funds for which were used to pay American claimants; and
(c) amounts due in respect of the awards of the Mixed Claims Commission specified under (4) above, such payments to be made on a
proportionate basis.
9. On account of the noninterest-bearing participating certificates
evidencing the investment by the Alien Property Custodian of the
share of the unallocated interest fund belonging to German nationals.
10. Of any further amounts received into the Treasury as miscellaneous receipts on account of the awards made on behalf of the
United States.
In addition to the foregoing the Secretary of the Treasury is authorized and directed, out of the 50 per cent of the appropriations made
by Congress on account of the awards of the arbiter for ships, patents,
and a radio station and reserved for that purpose, to make payments
in respect of the tentative awards of the arbiter and to make such
further payments, after all awards have been finally determined, as
will make the aggregate of such payments equal to 50 per cent of the
amounts awarded by said arbiter.
The act also created in the Treasury an Austrian special deposit
account and ati Hungarian special deposit account into which, respectivel}^, are to be deposited all funds received on account of (1) the
appropriations made by Congress to pay the awards of the arbiter
made on behalf of Austrian and Hungarian nationals; (2) the sums
transferred b}^ the Alien Property Custodian which are held as the
property of the Austrian or Hungarian Governments, as the case may
be; and (3) the funds received from Austria or Hungar^^-, as the case
may be, on account of the awards of the Tripartite Claims Commission. The Secretary of the Treasury is authorized and directed to
pay out of the Austrian or Hungarian special deposit accounts (1)
the expenses of administration incurred by the Arbiter; (2) on account
of the awards of the Tripartite Claims Commission entered against
Austria or Hungary and in favor of American nationals; (3) on
account of the awards of the arbiter entered against the United
States and in favor of Austrian or Hungarian nationals; and (4) any
balance remaining in said deposit accounts after making the payments authorized to the Austrian, Hungarian, or United States
Governments as their respective interests may appear. No funds
have yet been deposited in either the Austrian or Hungarian special
deposit account and no awards of the Tripartite Claims Commission
have been certified to the Treasury.
I n order not to delay payment on account of the awards of the o
Mixed Claims Commission, United States and Germany, longer than
13606—29—FI 19 2 8——6
48
REPORT ON T H E FINANCES
absolutely necessary, the Treasury made every effort to have the
regulations and forms for making application for payment available
as soon as possible. The regulations and application forms covering
the payments directed by paragraphs (2), (3), and (4) of subsection
(c) of section 4 of the settlement of war claims act of 1928 were therefore issued on March 15, 1928, just five days after the approval of the
act. The awards of the commission were certified by the Secretary
of State to the Treasury in the order of priority set out in the act,
the first being certified under date of March 30, 1928.
Many of the applications first filed under the regulations were
defective and had to be returned, which caused some delay in the
payments. The first checks were issued, however, on April 16, 1928,
approximately one month after the passage of the act.
After substantially all payments under these paragraphs had been
made by the Treasury, amended regulations were issued on August 14,
1928, covering further payments on account of the awards over
$100,000. Claimants which had received a payment of $100,000 on
this class of awards were given a further payment of 30 per cent of the
amount payable as of January 1, 1928, under date of August 22, 1928.
Copy of the regulations as amended and form for making application
for payment will be found as Exhibit 48, page 362.
In view of the provisions of the act making the decisions of the
Secretary of the Treasury, in respect of the funds to be paid on
account of the awards, final and conclusive and not subject to review
by any other officer of the Government, it was deemed advisable to
exercise extraordinary care in maldng the payments in order to avoid
all possible errors. I t has been the procedure, therefore, after a complete administrative examination of all the records in each case has
been made, to transmit all such records to a separate division of this
department for a complete and detailed audit before the checks are
mailed. Accordingly, every case has^ been carefully handled and a
complete accounting of all payments has been made. All questions
of a legal nature, such as estate cases, terminations and dissolutions
of corporations and partnerships, and cases of $500 and less, for determination by the Secretary of the Treasury, have been passed upon
by experienced lawyers of the Treasury.
Up to October 31, 1928, the Treasury has made payments, in the
aggregate amount of $71,922,344.16, on account of the awards of
the Mixed Claims Commission, United States and Germany, from
which there was deducted $359,612.12 representing one-half of 1 per
cent for reimbursement to the United States on account of expenses
incurred, making the net payments to claimants $71,562,732.04. The
following summary statement shows, by class, the number and
amount of awards certified to the Treasury by the Secretary of
State, and the amount paid on account and the balance due as of
October 31, 1928:
Number and amount of awards of the Mixed Claims Commission, United States and Germany, certified to the Treasury by the Secretary of
State; andlthe amount paid and balance due, by class, as of October 31, 1928
Class II
Class I
Total
number Total amounts
Awards on
. of
Awards of
Number
Number
account of
awards
of
$100,000 and
of
death and
awards
less
awards personal
injury
Awards certified
1. Amount due on account:
Principal of awards.
Less amounts paid by Alien Property Custodian
4,403 $111,839, 555. 24
48,012. 60
Interest to Jan. 1,1928, at rates specified in awards
Total payable as of Jan. 1,1928 . .
. _. ._ ___ . .
Interest thereon to date of payment, or if unpaid, to Oct. 31,1928,
at 6 per cent per annum as specified in the settlement of war
claims act of 1928
_
Total amount due claimants...
...^
_
2. Payments made on account up to Oct. 31,1928:
Principal of awards
Interest to Jan. 1,1928, at rates specified in awards
Interest at 5 per cent from Jan. 1,1928, on total amount payable
as of J a n . l , 1928, to date of payment, as directed by the settlement of war claims act of 1928
3,686
Total payments to Oct. 31,1928
Less one-half of 1 per cent deduction from each payment to reimburse the United States for expenses (covered into miscellaneous receipts).. _
Net payments made to claimants up to Oct. 31,1928
3. Balance due on account:
Principal of awards
Interest to Jan. 1,1928, at rates specified in awards
_
Accrued interest at 5 per cent from Jan. 1,1928, on total amount
payable as of Jan. 1,1928, to Oct. 31,1928.
Balance due claimants as of Oct. 31,1928
. _"
'
Class III
Number
of
awards
282
Awards over
$100,000
$94,177, 693.16
$3, 442,937. 75
3, 715 $14,218,924. 33
48,012. 50
111, 79i; 542.74
49,365,059. 70
723,113.05
14,170,911.83
6,498, 205. 66
42,143,740. 99
161,156, 602.44
4,166,050. 80
20, 669,117.49
136,321,434.15
406
o
5,862, 467. 27
93,484.95
594, 376. 52
6,174,605.80
167,019,069.71
4,259,535.76
21,263,494. 01
141,496,039.95
12,761, 212. 96
6,829, 766.49
1 49,009,280. 54
64,859,431.25
6,479,121.45
370
3,088,937.75
649,354.96
3,316
683,791.46
• 76,720.13
508,071.33
71,922,344.16
3,814,012.84
19,099,050.78
49,009,280. 64
359, 612.12
19,070.05
95,495.60
245,046.47
3,794,942. 79
19,003,565.18
48, 764,234.07
i
o
w
Ul
Pi
71, 562, 732. 04
717
89,075,852. 48
742,197. 26
5, 278, 675.81
95,096, 725. 55
36
354,000.00
73, 758.09
17,764.82
445, 522.91
399
1,409, 698. 87
668,439.17
86,305.19
2,164,44^. 23
282
87,312,153.61
5,174,605.80
92, 486, 759.41
1 Payments on this class of awards are first applied on account of the total amount payable as of Jan. 1, 1928, as directed by the settlement of war claims act of 1928, untO total
of all payments on the three classes equals 80 per cent of the amount payable Jan. 1, 1928. This amount represents payments of $100,000 and an additional 30 per cent on account
to each claimant (less one-half of 1 per cent). Payment of accrued interest since Jan. 1,1928, on this class of claims deferred in accordance with act.
Ul
^
QQ
50
REPORT ON THE FINANCES
The funds available for making these payments consisted of: (1)
$25,000,000 taken from the so-called unallocated interest fund; (2)
$25,000,000 representing one-half of the appropriation made -for part
payment of awards of the arbiter for ships, patents, and radio station;
(3) $22,689,375.88 received from Germany on account of the awards
of the Mixed Claims Commission; and (4) $1,408,468.58, earnings and
profits collected from the investments of such funds. The $25,000,00Q
was taken over from the unallocated interest fund on March 15, 1928,
and, as required by the act, the Alien Property Custodian holds as
evidence a noninterest-bearing participating certificate, copy of which
may be found as Exhibit 49, page 368. The $40,000,000 authorized
to be taken over from the funds of the Alien Property Custodian,
representing 20 per cent of German property temporarily retained,
will not be called by the Treasury until actually needed. According
to the best estimates available at this time, practically all of it will
be required to make payments on account of those awards already
entered by the commission but not yet ready for payment, those yet
to be entered under the agreement of August 10, 1922, and those to be
entered under the reopening provisions of the settlement of war claims
act of 1928. These awards are all to be paid in the same manner
and order of priority as the awards heretofore paid. As these funds
to be taken over from the Alien Property Custodian bear interest at
the rate of 5 per cent per annum from the date deposited in the
German special deposit account, it is obvious that it should be called
only in such amounts and at such times as will enable its immediate
use in payments to American nationals on account of their awards,
with the resultant stoppage of interest at the same rate.
The following statement shows the funds deposited in the German
special deposit account and the payments made therefrom up to
October 31, 1928:
.
Receipts:
Unallocated interest fund
$25, 000, 000. 00
Appropriation for ships, patents, and
radio station
50, 000, 000. 00
Receipts from Germany {2)4 per cent of
Dawes annuities available for reparations)
-22,689,375.88
Earnings and profits on investments
1,408,468.58
Payments:
" $99^ 097, 844. 46
On account of the awards of the Mixed
Claims Commission as shown in above
statement
.
71, 562, 732. 04
One-half of 1 per cent deduction from payments (covered into miscellaneous receipts)
359, 612. 12
Advances for expenses of Treasury (limited to $25,000 per annum)
7, 175. 00
Advances to arbiter for expenses
17, 500. 00
71, 947, 019. 16
Balance available in German special deposit account (ineluding investments)
27, 150, 825. 30
51
SECKETAEY 03? T H E TEEASUEY
Made up as follows (principal costs):
$8,500,000, face amount 3 % per cent
Treasury certificates, Series TM-1929-_
$8,500,000, face amount 3 % per cent
Treasury certificates, Series TM2-1929_
$9,641,200, face amount 434 per cent
fourth Liberty loan bonds
Cash balance
$8, 468, 110. 70
8, 495, 468. 75
9, 981, 654. 87
205, 590. 98
$27, 150,825. 30
Of the above-mentioned balance, the sum of $25,000,000 has been
reserved to make payment on account of the awards of the arbiter
for ships, patents, and a radio station belonging to German nationals
and seized by the United States during the war. The remaining
balance will be used to make payment on account of the unpaid
awards already certified to the Treasury as soon as properly executed
applications are filed.
OBLIGATIONS OF FOREIGN GOVERNMENTS
The Treasury received during the fiscal year 1928, on account of
the indebtedness of foreign governments to the United States, the
sum of $208,925,942.69, of which $47,841,166.70 represented principal
and $161,084,775.99 represented interest. - Since the close of the fiscal
year and up to November 15, 1928, additional payments have been
received, amounting to $10,183,528.63^ all of which was for interest
on account of the obligations given by France for surplus war materials purchased on credit.
All of the funding agreements concluded contain a provision allowing the respective governments to pay their interest or principal due
under the terms thereof in any obligations of the United States
issued since April 6, 1917, such obligations to be taken at par and
accrued interest to date of payment. The Government of Great
Britain has consistently taken advantage of this provision. Belgium,
Finland, and Italy have each on one occasion made payment in
obligations of the United States.
The statement below shows the total payments received up to the
end of the fiscal 3^ear on account of the principal of the funded
indebtedness:
I n XJnited States obligations
Cash
Country
Face a m o u n t
Belgium.
Czechoslovakia
Finland—
Great Britain
Hungary
Italy
Lithuania,
Rumania
Yugoslavia
.
Total
.
.
.
. . .
.-.
.
_ .
_,
_.
$4, 200, 040.44
9, 000, 000. 00
191, 000. 00
35, 723. 62
40, 355. 50
10, 000, 000. 00
125, 692. 50
900, 000. 00
600, 000. 00
25,092,812.06
Accrued interest to d a t e of
. payment
$2, 428, 700. 00
$21, 259. 56
44,850. 00
119, 742, 700. 00
150. 55
221, 57G. 38
5, 000,000. 00
127, 216, 250. 00
242, 985. 94
T o t a l principal p a y m e n t s
$6, 650,000.00
9, 000,000.00
236, 000. 00
120,000, 000. 00
40, 355. 50
15,000, 000. 00
125, 692. 50
900, 000.00
600,000.00
152, 552.048. 00
52
E-EPORT ON T H E FINANCES
The following statement shows the total payments received up to
the end of the fiscal year on account of interest due on the funded
indebtedness:
In United States obligations
In bonds of
debtor
governments
Country
Belgium..
Estonia
Finland
Great Britain
Hungary
Latvia
Lithuania
Poland
$43,555. 50
313, 860.00
Total
Cash
Face amount
Accrued
interest to
date of
pajmient
$4,865,000. 00 $1,116,250. 00
$9,750.00
350,000. 00
550. 72
1,312,419. 28
154, 750.55
49, 761, 377.17 697,896,500. 00 2,522,122. 83
220,400.11
170, 000. 00
418,439. 24
5, 750,000. 00
•
357,415. 50 62, 847, 635. 80
699,166,500.00
2, 532, 423. 65
Total interest
payments,
including
funded interest
$5,990,000. do
350,000 00
1,467, 720. OO
760, ISO, 000.00
263, 955. 61
170, 000. 00
732, 299. 24
5, 750, 000. 00
764, 903, 974.86
France
The agreement with France providing for the funding of its
indebtedness to the United States, concluded April .29, 1926, has not
been ratified by either the French Government or the United States.
The French Government has continued to make payments amounting
to over $20,000,000 per annum on account of interest on its obligations given for surplus war m'aterials; and, in accordance with an
exchange of letters between the French Treasury and the United
States Treasury, copies of which are shown in last year's annual
report, France has made payments on June 15, 1927, and on June 15,
1928, of amounts sufficient to equal practically the annuities provided for these years under the funding agreement. The payments
on June 15, 1927, amounting to $10,000,000,^. and on June 15, 1928,
amounting to $11,250,000, were applied on account of principal of
the demand obligations given for cash advances. I t is understood
that the total of these payments, including the interest payments on
account of the obligations given for surplus war material, will be
applied toward the first annuities due under the funding agreement
when it has been ratified.
The following statement shows the amount of payments received
from France since June 15, 1925, which will be applied toward the
annuities due under the funding agreement on ratification, and the
amounts payable under that agreement:
Fiscal year
1926
1927.
1928
-
-
Total
NOTE,—Additional $10,183,528.63 received since June 30, 1928.
Payments
received
Annuities due
under funding
agreement
$20, 368, 057. 25
30, 368, 940. 06
31, 644, 482.17
$30, 000,000. 00
30, 000,000.00^
32, 500,000. 00.
82, 381,479; 48
92, 500, 000. 00
SECRETARY OF THE TREASURY
53-
Belgium
The Government of Belgium delivered to the Treasury on March
5, 1928, new obligations provided for in the funding agreement in
exchange for the old obligations held. (See Exhibit 35, p. 314.)
Czechoslovakia and Yugoslavia
Czechoslovakia, and Yugoslavia have not exchanged their obligations, although payments have been received regularly under the
funding agreements concluded with these Governments. The agreement with Yugoslavia was ratified by the United States by act of
Congress, approved March 30, 1928, and negotiations are now inprogress for the exchange of the obligations provided for in the
agreement. A copy of the act of Congress will be found as Exhibit
39, page 336.
Greece
During the past year the Secretary of State and the Secretary
of the Treasury conferred with the Greek minister at Washington for the purpose of finding a basis for the settlement of the indebtedness of the Greek Government to the United States and of the
differences arising out of the tripartite-loan agreement dated February 10, 1918. Under the terms of this agreement the Governments of
the United States, Great Britain, and France agreed to advance under
certain conditions to the Greek Government in equal shares a sum
not to exceed 750,000,000 francs. The purpose of these credits was t o
aid the Greek Government in obtaining the credits required for the
conduct of Greece's military operations against the central powers.
They were intended to be used as security for the issues of the National Bank of Greece in the same amount, which were to be turned
over to the Greek Government for expenditures in Greece for the
purposes named in the agreement.
Under this agreement and by virtue of the Liberty bond acts, the
Secretary of the Treasury established credits in favor of the Greek
Government in the amount of $48,236,629.05, with the understanding,,
as set out in the agreement, that the full amount of the credits would
be made available during the war whenever the foreign balances of
tJie Greek Government and the national bank should fall below
100,000,000 francs; and that six months after the conclusion of peace
the balance of such credits would be available without restriction. I n
1919 the United States agreed with the Government of Greece to a
modification of the agreement so as to permit advances before the
conclusion of peace. The total advances made against the credits
established amounted to $15,000,000, leaving credits on the books of
the Treasury aggregating $33,236,629.05.
54
REPORT ON T H E FINANCES
Many attempts have been made to settle the indebtedness of the
Greek Government to the United States, but very little progress
has been made because the Greek Government contended that it
was entitled to the full amount of the advances stipulated in the
1918 agreement, while the United States contended that by reason
of certain subsequent acts of the Greek Government it was relieved
from making any further advances thereunder. Greece has shown
that it borrowed 750,000,000 drachmae from the National Bank of
Greece on the security of the credits established by the Governments
of the United States, Great Britain, and France, and that the full
amount was expended for the purposes contemplated by the agreement. The American consul general at Athens has reported to this
Government that the commission set up by the agreement to control
expenditures approved a total of 682,134,693.54 drachmae of the
expenditures made by the Greek Government and that the Greek
Government expended an additional amount more than sufficient to
make up the full 750,000,000 drachmae borrowed from the National
Bank of Greece, but that these additional expenditures were never
approved by the commission because it held no further meetings
after they were submitted to it. On this basis the Greek Government contended that it was justified in requesting the full amount
of the advances under the 1918 agreement. The reports showed that
the plan of operations outlined for Greece to pursue in connection
with the agreement was fully complied with and that the United
States received full consideration as contemplated by that agreement.
The Government of Great Britain advanced under this agreement
the sum of £6,540,000, while no advances have been made by the
Government of France. Believing that the Government of the
United States would not want to fall short of any support that
might be furnished by the Government of Great Britain, the settlement between the Greek Government and the Government of Great
Britain was taken as a basis for the proposed settlement submitted
to the Congress last February. As Great Britain has advanced
approximately $31,826,910 and the United States has advanced only
$15,000,000, which together with interest amounted on January 1,
1928, to $19,659,836, it would require an additional advance of
$12,167,074 from the Government of the United States to equal the
advances made by the Government of Great Britain.
The proposal, therefore, which was recommended to the Congress
provides for an authorization to conclude an agreement with the
Greek Government along the following lines:
1. The $15,000,000 of principal owed by the Greek Government, and
interest at 4 ^ per cent to December 15, 1922, and on the amount then
due at 3 per cent to January 1, 1928, are to be funded over a period
of 62 years on the basis of the Greco-British settlement, except that
SECRETARY OF THE TREASURY
55
during the first three years the payments are to be reduced in order
to alleviate the present financial situation.
2. The Government of the United States is to advance to the
Greek Government an additional sum of $12,167,000 which is to bear
interest at the rate of 4 per cent per annum, with a sinking fund
sufficient to retire the debt in 20 years and with the understanding
that the Greek Government is to forego all claims for further
advances under the 1918 agreement.
The Greek Government will furnish as security for the new loan
the revenues at present under control of the International Financial
Commission established by the law of February 26, 1898, in so far as
these revenues are not required for' the service of the loans having
a prior charge u,pon said revenues. This loan is also to enjoy the
same security and guaranties as the £9,000,000 loan sanctioned by
the Council of the League of Nations, set forth in the Geneva protocol
dated September 15,1927.
I t is also understood that the full amount of this advance will be
turned over to the Refugee Settlement Commission for the purpose
of completing the humanitarian work of caring for the refugees
who have been added to the population of Greece as a result of
recent events in the Near East.
I t is believed that this proposed settlement is fair to both Governments in that it adjusts fairly all the differences between the two
countries.
Copies of the statement of the Secretary of the Treasury issued to
the press on December 5, 1927; of the message of the President to
the Congress, dated February 6, 1928, submitting a report of the
Secretary of the Treasury, dated February 4, 1928; and the statement of the Secretary of the Treasuiy before the Ways and Means
Committee on February 15, 1928, regarding this proposed settlement
will be found as Exhibits 36, 37, and 38, pages 314, 316, and 327.
AustQ'ia
The Government of the United States holds a bond of the Austrian Government in the principal amount of $24,055,708.92, given
in payment for supplies furnished for Austrian relief in 1919 and
1920. This obligation is dated September 4, 1920, and by its terms
matured January 1, 1925, but under the terms of the joint resolution
of Congress approved April 6, 1922, the Secretary of the Treasury
extended the maturity date until June 1, 1943, and at the same time
subordinated the lien enjoyed by the United States for the purpose
of permitting the Austrian reconstruction loan of 1923.
The reconstruction loan of 1923, which amounted to about
$125,000,000, was not sufficient to complete Austria's reconstruction
56
REPORT ON THE FINANCES
program. I t was necessary to expend approximately $75,000,000 for
stabilizatipn and budgetary needs and the remaining $50,000,000 was
expended for capital purposes of a productive character.
The Austrian Government has now made application to the League
of Nations for authority to float a new loan in the amount of
725,000,000 Austrian schillings, or about $100,000,000, for the purpose of continuing the program of reconstruction. I t is understood
that out of the proceeds of this loan about $41,000,000 will be used
for telegraph and telephone systems and $62,000,000 for railways.
The relief debts of Austria to European governments and the
United States, amounting to about $95,000,000, enjoy " a first charge
upon all the assets and revenues of Austria." They rank ahead of
Austria's reparation obligations. The relief bonds and the reparation obligations have now been subordinated to the reconstruction
loan of 1923. I t is not possible to float the proposed loan of $100,000,000 as long as the relief bonds and the reparation obligations
have a prior lien on Austria's assets.
Request has been made, therefore, of all of the relief creditor governments'and the Eeparation Commission to subordinate the liens that
they now hold in favor of this new contemplated loan. In this connection it may also be necessary to extend the time bf payment of
these obligations for an additional period. I t is understood that
practically all of the foreign governments concerned have already
informed the Austrian Government that they are willing to take the
desired action providing that - all other governments in a similar
position do likewise. I n the opinion of the Treasury the United
States should not delay any reconstruction program in Austria; and,
in view of the fact that substantially all the other governments holding relief bonds have agreed to this further subordination of their
liens, the United States should likewise subordinate its lien and
extend the time of payment.
• The Austrian Government has assured the Government of the
United States that it is prepared to make a settlement cf all the relief
debts. All the relief bonds are of similar tenor and contain the following clause:
The Government of Austria agrees that no payment will be made upon or
in respect pf any of the obligations of said series issued by the Government of
Austria before, at, or after maturity, whether for principal or for interest,
unless a similar payment shall simultaneously be made upon all obligations of
the said series issued by the Government of Austria in proportion to the
respective obligations of said series.
I n view of the terms of the bonds, Austria can not malie a definitive
settlement of the relief obligations without the agreement of all nine
•of the creditor governments concerned. I t is extremely desirable,
therefore, that the executive branch of the Government be author-
SECRETARY OF THE TREASURY
57
ized to settle the whole matter, with the limitation that our debt
should be settled on terms no less favorable than those granted the
other creditor governments, and on the understar^ing that the security now enjoyed be not released except in so far as necessary to
permit the flotation of the contemplated reconstruction loan. A bill
introduced in the last session of Congress will, if enacted, give the
Secretary of the Treasurj^ the authority to join with the other creditor governments in the necessary action to carry out the proposals
contemplated. The United States should be prepared to act
promptly when the time comes to take definite action.
A copy of the press release of the Secretar}^ of the Treasury dated
February 21, 1928, a copy of the message of the President to the
Congress under date of March 20, 1928, inclosing a letter dated
March 19, 1928, from the Secretary of the Treasury, and a statement
by the Acting Secretary of the Treasury before the Ways and Means
Committee on April 10, 1928, covering this subject, will be found as
Exhibits 32, 33, and 34, pages 305, 306, and 310.
REVISION OF PAPER CURRENCY DESIGNS
In former reports some account has been given of the revision of the
paper currency designs which had been undertaken and which
involved a reduction in size. During the past year so much progress
was made on the preliminary work that early in the summer it was
possible to commence actual printing, and since then the Bureau of
Engraving and Printing has been steadily producing the new currency.
The new size for the paper currency is 63^ by 2^1 inches. The
principle of denominational designs has been strictly followed. The
back designs are uniform for each denomination irrespective of kind.
T h e face designs, likewise, are characteristic for each denomination as
regards the important protective features, with only sufficient
variation in detail to indicate the kind. Five kinds of paper currency
are now issued—United States notes, silver certificates, gold certificates, 'Federal reserve notes, and national-bank notes. The new
designs of the reduced size will initially affect all issuable denominations of all these kinds except national-bank notes. In all probability a conclusion as to the possible retirement of the national-bank
circulation., through exercise of the call privilege attaching to the
2 per cent consols which arises after April 1, 1930, will be reached
before the department can issue national-bank notes in the reduced
size. The Federal reserve act originally contemplated the retirement
of the national-bank currency. The problem was discussed fully in
the annual report for 1924. Considerable time having elapsed, it is
felt advisable to submit the matter to the Congress for decision at the
present session. In the event nationalrbank notes are continued in-
58
REPORT ON T H E FINANCES
definitely as a part of the money circulation of the United States, the
Treasury will be prepared to apply the new designs to such notes and
to make them avai]jable in the reduced size within a reasonable time
after the issue of other kinds of currency in the reduced size.
The portraits assigned to the faces, and the pictorial embellishments as provided for the backs, of the several denominations, are as
follows:
Denomination
$1
$2
$5..
$10
$20
$50
$100
$500
$1,000
$5,000
$10,000
Portrait on face
Washington
Jefferson
Lincoln..
Hamilton
Jackson.
Grant
Franklin. . . .
McKinley
Cleveland . . .
Madison
Chase..
_
Pictorial embellishment on back
Ornate "one."
Monticello.
Lincoln Memorial.
Treasury.
White House.
Capitol.
Independence Hall.
Ornate "five hundred."
Ornate "one thousand."
Ornate "five thousand."
Ornate "ten thousand."
The Treasury seals and the serial numbers will be imprinted in the
following colors:
Silver certificates
United States notes
Gold certificates
Federal reserve notes
National-bank notes
^
i
Blue.
Red.
Yellow.
Green.
Brown
For the reduced-size currency a new type of distinctive paper has
been adopted. The paper basically is of the type developed during the
past few years with a higher folding endurance, particularly in the
cross direction, than the paper formerly in use. The use of small segments of silk fiber as a distinctive feature has been retained, but the
segments are scattered throughout the sheet and not localized in rows
as formerly. The reason for the change is that, as a test of validity,
dependence may not be placed on an outstanding characteristic, which,
in itself, inherently affords no protection.
I t is believed that the new currency with definitely characteristic
denominational designs, with the engraved work, particularly the
portraits, and with the printing, executed by operators at the Bureau
of Engraving and Printing with their usual degree of excellence, will
afford maximum protection against counterfeiting and raising of
denominations. With the confusion in designs heretofore existing
wholly eliminated, the public should be able readily to test the genuineness of the several denominations.
The production program for the reduced-size currency is advancing
with a view to the issue of the new currency on or about July 1, 1929.
Although production is the basic factor, other factors enter into the
situation and may finally determine the actual time of the initial issue,
as well as whether all kinds (except national-bank notes) and all
SECRETARY OF THE TREASURY
59
denominations shall be issued simultaneously, or separately, or in
certain combinations.
The fact is appreciated that two sizes of currency concurrently in
circulation will cause inconvenience to the public. In arranging for
the issue of the reduced-size currency and the retirement of the old
size, the Treasury and the Federal reserve banks will do everything
possible to minimize this inconvenience. As the Federal reserve banks
are the principal agencies for currency supply, they will be utilized for
the initial issue, and thereafter new currency will be paid into circulation in regular course under the established procedure. In due course
a definite public announcement will be made regarding the plans for
the initial issue of the reduced-size currency, and full information will
be sent every banking institution throughout the countr}^ in ample
time so that arrangements may be made to participate in the initial
distribution.
FEDERAL FARM LOAN SYSTEM
Reorganization of Farm Loan Bureau
Since the reorganization of the Farm Loan Board in May, 1927, as
stated in my last annual report, the Farm. Loan Bureau has been
undergoing a thorough reorganization. Substantial results have been
accomplished and material progress has been made in every branch of
the work during the past year. I t is the aim of the reorganized
board to place the system on a basis of the highest-efficiency in order
that it may render to agriculture the largest service possible in accordance with the purposes of the farm loan act. The personnel of the
bureau has been increased and strengthened and its methods have
been improved. The supervision of the board over the banks of the
system has been made closer and more effective, particularly through
better examinations. Measures have been adopted to correct unsatisfactory conditions that had developed in some of the banks, and the
board has cooperated with their directors in strengthening their
personnel in order that they may be adequately equipped to deal
with their present problems and function effectively in the future.
The farm loan system has demonstrated its soundness and usefulness, and the measure of its success and service rests in very large
degree upon the competence of the management of the banking units
that compose it and the effectiveness of their supervision. The steps
taken to improve its operations and the results achieved have increased public confidence, and there is every reason to look forward
with optimism to the future.
The work of reorganization has been a large undertaking, and,
while much has been accomplished, much remains to be done. The
program can be carried out only on the basis of adequate appropriations, and it is hoped, therefore, that the Congress will approve the
60
REPORT ON T H E FINANCES
estimates that have been submitted for the next fiscal year and the
supplemental estimates for the current fiscal year. As the Congress
is aware, the expenses of the bureau as authorized by the appropriations are assessed against the banks under the law and are not a charge
against the Treasury.
One of the major problems that confronted the board was the reorganization of the examining division and the staff of land bank
and national farm loan association examiners. The force of land
bank examiners has been increased, their work is being properly directed, and examinations are being made more systematically and
thoroughly than ever before. An important step in the improvement of the work of the land bank examiners was the issuance during
the year of a book of instructions that comprehensively outlines the
examining procedure. The examination reports are being carefully
analyzed and reviewed in the examining division, and matters requiring adjustment or correction are taken up with the banks. Letters
of criticism are directed to the banks by the chief examiner, and are
followed up until the causes of criticism are eliminated.
The staff of national farm loan association examiners also has beeB
increased with the view of examining each of the 4,672 associations at
least once a year. . During the period required to build up the staff
much time has been devoted to training new men, and many associations have received unusual attention because of irregularities,
unsatisfactory conditions, and, in some cases, shortages that were not
revealed in the p-ast largely because of infrequent and inadequate
examinations. After one round of effective examinations the problem will be simplified. As in the case of land bank examinations, the
reports of the national farm loan association examiners are carefully
reviewed, analyzed, and followed up in the examining division.
With the assistance and cooperation of the Bureau of Efficiency,
the examining division has practically completed the preparation of
a uniform classification^of accounts for all the land banks of the
system. This will simplify the accounting work of the banks and
facilitate the comparison on a common basis of the statements of one
bank with those of another.
The forms for the monthly reports of condition made to the board
by the Federal and joint stock land banks and Federal intermediate
credit banks have been revised, and these reports are now submitted
in more complete and comprehensive form. The board issues
consolidated and individual statements of condition of the banks of
the system to the public on the basis of these reports. It is therefore
important that they reflect accurately the condition of the respective
banks. Genuine progress has been made in this respect. The public
statements are now issued quarterly, instead of monthly^ in printed
form.
SECRETARY OF THE TREASURY
61
Steps have been taken for the preparation of more satisfactory
statistics of the operations of the system. There has been organized
a unit, the chief source of the bureau's statistics, which audits
and checks the monthly reports of the banks and collects and collates
other statistical data. The statistics, which will be built up gradually,
will be of service to the board and banks and informative to the public.
The appraisal division has been made a coordinate unit, having
a chief reviewing appraiser and an assistant chief reviewing appraiser
in charge, both of whom are trained appraisers. This division supervises the work of the 12 reviewing appraisers and of the land bank
appraisers who number about 400, and examines the loans offered
as collateral security for farm loan bonds. Both functions are highly
important, since the quality of the loans and the security behind the
bond issues are largely dependent upon accurate appraisals. The
supervision of the appraisers in the field is performed directly through
the reviewing appraisers. In addition to checking and constructively
criticizing the work of land bank appraisers in order to increase their
efficiency, the reviewing appraisers reappraise or supervise the reappraisal of real estate owned by the banks. These reappraisals govern
the values at which such farms may be carried by the banks as assets.
The reviewing appraisers also investigate the qualifications of applicants for the position of land bank appraiser and make recommendations regarding such appointments.
The analysis of loans submitted by the banks for approval as collateral security for farm loan bonds is made by mortgage loan
examiners in the appraisal division. The personnel is being strengthened and the work improved. A chief mortgage loan examiner, who
has had six years of practical appraisal experience, has been appointed.
From time to time appraisers have been called in from the field to
assist in the work. This practice not only has aided in keeping abreast
of the examining work when the volume grew large but also provided
valuable experience for the appraisers.
A competent legal staff has been organized. In supervising the
operations of the Federal land banks, joint stock land banks (including
three in receivership), Federal intermediate credit banks, and national
farm loan associations, the board is confronted with numerous questions that have important legal aspects. There are many provisions
pf the farm loan act in regard to which the banks have followed varying and diverging policies. This situation is being corrected by the
proper constructions of the law, and by requirements which are of
uniform application.
Many other steps have been taken to coordinate, correlate, and improve the activities of the bureau and to introduce sounder policies
into the operating units of the system. Many of the banks confronted with difficulties have succeeded in obtaining the services of
62
REPORT ON T H E FINANCES
executives of demonstrated ability and fitness. Mismanagement or
poor management creates heavy burdens and ultimately serious
trouble for any bank, and in such cases the remedy is to be found only
in reorganized and improved personnel. The system has been
materially benefited by what has been done in this direction.
The banks of the system generally have shown a disposition to
cooperate \vith the board in the work of reorganization and in bringing
about the adoption of sound policies and practices. The effects are
seen in the improved condition of many of the banks and an apparent
determination on the part of the managements to conduct their business on sound principles. Most of the banks of the system are in
good condition, and during the past year those with difficult problems
have, under the stimulus of the Farm Loan Board^s effective supervision, diagnosed their troubles and adopted means calculated to solve
them and to guard against their recurrence. These are gratifying
achievements that justify a feeling of confidence in the situation.
Banks with relatively large accumulations of acquired real estate
have been encouraged to organize efficient real estate sales departments to dispose of the lands involved as soon as possible. Progress
has been made in this connection and sales are increasing. During
the past few years farm lands have been offered in a ^'buyers' m a r k e t "
because of the large available supply, but there is evidence that the
bottom has been reached and that the tide has turned in many sections. I t appears to be the consensus that a gradual and steady improvement in the situation may be expected. This will be a material
factor in accelerating the solution of the problems of banks owning a
large number of farms.
Operations of Federal land banlcs
During the fiscal year 1928 the Federal land banks closed 31,703
loans, amounting in the aggregate to $117,234,200. The net amount
of mortgage loans outstanding as of June 30, 1928, was $1,184,655,783.80, and the amount of farm loan bonds issued by Federal land
banks and outstanding on the same date, including $204,746.25 of
bonds matured or called for redemption, was $1,160,954,146.25.
These amounts represent increases of 4.8 and 5.3 per cent, respectively,
over the loans and bonds outstanding on June 30, 1927.
During the year two banks decreased their loan rate from 53^ to
53^ per cent and two others decreased their rate from 5)4 to 5 per
cent. Only two banks are now making loans at 534 P®r cent. All
other Federal land banks are making loans on a 5 per cent basis.
National farm loan associations increased in number during the
fiscal year from 4,667 to 4,672.
The combined capital stock of all Federal land banks on June 30,
1928, amounted to $63,886,000, of which $62,591,380 was owned by
SECRETARY OF THE TREASURY
63
national farm loan associations; $738,805, by borrowers through
agents; $115, by individual subscribers; and $555,700, by the Federal
Government. The latter figure was decreased from $842,008 during
the year through retirement in the usual manner. The 12 banks
reported legal reserves totaling $11,492,689.90, other reserves of
$672,704.23, and undivided profits of $3,754,620.02.
Operations of joint stocTc land banlcs
During the fiscal year two joint stock land banks were placed in the
hands of receivers and two were merged with other banks, reducing
the number of operating banksnfrom 54 to 50, including one in process
of voluntary liquidation.
Loans numbering 8,682 and amounting to $48,094,126.33 were
made by joint stock land banks during the year.
The combined capital stock of all operating joint stock land banks
on June 30, 1928, as shown by reports submitted by them to the
Farm Loan Board, was $41,590,960.24; legal. reserves were $5,036,811.21; and surplus paid in, surplus earned, undivided profits, and
other capital accounts were $5,952,718.16. The net amount of
mortgage loans outstanding as of June 30, 1928, was $609,580,339.72,
ahd the amount of farm loan bonds issued by joint stock land banks
and outstanding on June 30, 1928, was $591,801,100, including
$65,500 bonds matured or called for redemption. In addition, the
three banks in receivership had $48,856,612.26 of mortgage loans and
$61,518,600 of bonds outstanding.
Receiverships
As stated in my last annual report, three joint stock land banks
have been placed in the hands of receivers in order to conserve their
assets and to protect the interests of all concerned. These banks and
the dates when the receivers were appointed are:
Kansas City Joint Stock Land Bank of Kansas City, Mo
Bankers Joint Stock Land Bank of Milwaukee, Wis
Ohio Joint Stock Land Bank of Cincinnati, Ohio
May 4, 1927
July 1, 1927
Sept. 1, 1927
The respective receivers have continued to make every effort to
ascertain the tr'ue condition of the banks of which they have charge
in order to make full information available to the security holders.
A statement Tegarding each receivership is published in the quarterly
report issued by the bureau.
The case of the Kansas City bank has been especially difficult
because of the chaotic condition of its affairs. Its relations with
subsidiary or affiliated concerns have complicated the situation
greatly, and much litigation regarding various phases of the receivership operations is pending in the courts. No assessments have been
1360&—29—FI 19 2 8
7
64
REPORT ON T H E FINANCES
levied upon the shareholders of the bank and no formal call has yet
been issued for the filing of proofs of claims. Protective committees
have been formed by both the stockholders and bondholders arid have
been giving consideration to the possibility of reorganizing the bank>,
but no reorganization plan in detailed, definitive form has been submitted to the Farm Loan Board for formal action. The receiver
issued a preliminary report concerning the affairs of the bank as of
October 19, 1927. He also made a supplemental report dated J a n uary 4, 1928, in the form of a letter to the bondholders' protective
committee, in which additional information was given. W. R.
Compton, of St. Louis, served as receiver from May 4, 1927, t o
February 15, 1928, when he resigned; and H. M. Langworthy, of
Kansas City, who had been the receiver's counsel, was appointed as
his successor.
The bondholders and stockholders of the Bankers Joint Stock Land
Bank also have formed protective committees, and plans of reorganization have been discussed, but no detailed, definitive plan has been
submitted to the Farm Loan Board for consideration. The valuation of the assets of that bank by the receiver, Howard Greene, of
Milwaukee, showed a deficit in excess of the amount of its capital
stock; and, in accordance w^ith the recommendation of the receiver,,
the Farm Loan Board, on January 11, 1928, levied an assessment
upon the shareholders of the bank to the extent of $1,200,000, or
100 per cent of its capital stock, to be paid by them ratably on or
before the first day of March, 1928. The board authorized thereceiver to grant an extension of time without interest to any shareholder who paid 25 per cent of his assessment on or before that datf^
and who tendered a written obligation, satisfactorily guaranteed,
to pay the balance in three installments of 25 per cent each on or
before April 1, May 1, and June 1, 1928. The payments made to^
September 1, 1928, upon this assessment aggregated $451,575. Formal oall was issued for the filing of proofs of claims, the expiration
date on which was August 31, 1928. Up to that date claims had
been filed covering bonds deposited to the extent of $15,077,500.
Two reports regarding the condition of this bank have been published
by the receiver, one as of December 31, 1927, and the other as of
March 31, 1928, and during the summer a detailed appraisal of t h e
assets of the bank was begun.
Valuation of the assets of the Ohio Joint Stock Land Bank by t h e
receiver, J. S. Horton, also showed a deficit in excess of its capital
stock. On April 6, 1928, in accordance with the receiver's recommendation, the Farm Loan Board levied an assessment upon the
shareholders to the extent .of $250,000, or 100 per cent of the capital
stock of the bank. As in the case of the Milwaukee bank, an extension of time without interest was granted to any shareholder \vho^
SECRETARY OF THE TREASURY
65
paid 25 per cent of his assessment on or before May 16, 1928, and
gave a written obligation, satisfactorily guaranteed, to pay the
balance in three installments of 25 per cent each on or before June
16, July 16, and August 16. Up to September 1, 1928, the total
amount paid in on account of these assessments aggregated $37,500,
Formal call has been issued for the filing of proofs of claims, t h e
expiration date on which was September 17, 1928. Up to that date,,
claims had been filed covering bonds in the amount of $1,210,300..
A report regarding the condition of the bank was issued by the receiver
a,s of March 31, 1928.
Operations of Federal intermediate credit banlcs
During the fiscal year these banks made original loans to cooperative marketing associations of $33,963,057.23 and granted renewals of
$17,305,493.01. These amounts brought the total original advances
to cooperative marketing associations from organization to June 30,
1928, to $234,975,015:09, and the total renewals to $149,736,383:90.
The amount outstanding on that date was $13,489,734.79.
Original rediscounts in the amount of $59,275,936.35 and renewals
aggregating $28,118,982.64 also were made by these banks during
the last fiscal year. These rediscounts brought the totals from
organization to June 30, 1928, to $207,297,975.48 for original rediscounts and $92,615,225.15 for renewals. The amount in force at
the. end of the fiscal year was'$55,488,50:9.99.
Under the law, 50 per cent of the net earnings of the Federal intermediate credit banks each year must be paid into the Treasury as a
franchise tax. The amount of net earnings for the calendar year
1927, after deducting reserves of $428,777.89, was $737,551.75, and
the amount of franchise tax paid into the Treasury was $368,775.88.
This compares with earnings of $827,226.13, after deducting reserves
of $377,734.49, in 1926 and a franchise tax payment of $413,613.07
in that year.
On June 30, 1928, the surplus, reserves, and undivided profits
accounts of the 12 banks aggregated $2,745,860.58. This represents
an increase over the amount on, June 30, 1927, of 20.4 per cent.
At the close of the year the rediscount rate was 43^ per cent for
eight banks, 5 per cent for two banks, and 534 P^r cent for the remaining two banks. The rate on direct loans was 43^ per cent for eight
banks, 5 per cent for three banks, and 53^ per cent for one bank. I n
recent months, on account of general money conditions, it has been
necessary for the banks to pay higher rates on their debentures, and
several of them have been compelled, therefore, to advance the interest
Tates on their loans and rediscounts since June 30, 1928.
66
REPORT ON THE FINANCES
Indictments for violations of law
During the year two trials of former officers and directors of joint
•stock land banks, charged with violations of law in connection with
the operations of the banks, were held, one at Mankato, Minn., and
the other at Kansas City, Mo. The trial at Mankato of former
-officers and directors of the Southern Minnesota Joint Stock Land
Bank, of Minneapolis, Minn, (formerly of Redwood Falls, Minn.),
resulted in the conviction of two of the defendants, one of whom
was sentenced to nine years' imprisonment in the Federal penitentiary at Leavenworth and fined $11,000 and the other was fined
$1,000. The trial at Kansas City, Mo., of former officers and directors of the Kansas City Joint Stock Land Bank, of Kansas City,
Mo., now in receivership, resulted in the conviction of two defendahtsV one of whom was sentenced to six years' imprisonment in the
Federal penitentiary at Leavenworth and fined $25,000 and the
other was sentenced to one year and one day imprisonment. Trials
on other indictments charging violations of the Federal farm loan
act and the postal laws are pending in the Federal courts.
As stated in my last annual report, substantial losses were sustained by the Federal Intermediate Credit Bank of Columbia, largely
as the result of improper conduct on the part of officers of a credit
corporation for which the bank had rediscounted a large volume of
farmers' notes. Indictments against former officers of that corporation were presented to the United States court at Columbia, S. C ,
alleging the making of false statements for the purpose of obtaining
advances from the Federal Intermediate Credit Bank of Columbia in
violation of section 211 (b) of the Federal farm loan act, and a conspiracy in the same connection in violation of section 37 of the United
States criminal code. The trial of the defendants on the charge of
conspiracy was held at Columbia from January 9, 1928, to February
14, 1928, and resulted in the conviction of three of the defendants,
two of whom were sentenced to serve two years in the Federal penitentiary at Atlanta, Ga., while a third was sentenced to six months in
the county jail. Trials on the indictments for violation of section 211
(b) of the Federal farm loan act have not yet been held.
FEDERAL PUBLIC BUILDINGS PROGRAM
General
Since the submission of the report on the state of fiinances for
the fiscal year 1927, the public building act of May 25, 1926, which
includes an authorization of $100,000,000 for new projects outside the
District of Columbia, has been amended so as to provide an additional $100,000,000 for the same purpose. This is exclusive of a
67
SECEETAEY OP T H E TEEAStTBT
J'L.VN
ojdx fS'\\\\ /-^VkUhincilcn ~
•in thr Tr'rrilorC- of rofimti'
- . ^ ..r.Ml-^lh'SKlt,-.!
.J.
O
ViRoisi.i .~.i .MAmi..i>,)
SEATcfihiirCoVF.KSS
'.•
'„ll,rli,
IJIcar-''
.
ZBE^EIBBBEIBI
^
.•^A?.55. N .
ED [30080005" <^EaE]F
!^BBlp&&^Bisa0BBBElg^.B
loqjJanaloiyofilielJlan.^ ^
•' - " 7 ' " -
pn. IVOA/W'..^/-^ '"
DIAGRAM 9.—L'Enfant map of Washington, 1791
DIAGRAM 10.—Plan of portion of Washington, D. C , showing certain proposed developments, 1928
1. Triangle development. 2. Municipal group. 3. City Post Office. 4. Union Station. 5. Senate Office Building. 6. Supreme Court. 7. Library of Congress.
8. House Office Building. 9. Capitol. Building. 10. Department of Agriculture. 11. National Museum. 12. National Art Gallery. 13. Washington Monument.
14. Treasury Building. 15. White House. 16. State, War, and Navy Building. 17. Interior Department. 18. Lincoln Memorial. 19. Memorial Bridge to Arlington.
SECRETARY OE THE TREASURY
69
$15,000,000 authorization for increasing limits of cost of buildings
previously authorized.
Under the second $100,000,000 authorization very satisfactory progress is being made with the survey of the public building situation
by members of the joint committee of the Treasury and Post Office
Departments, aided by representatives of those departments, and it
is believed that the joint report covering the allocation of the second $100,000,000 will soon be in readiness for submission to the
Congress.
Under this act 251 projects have been authorized to date, of which
244 are for the country at large and 7 for the District of Columbia.
Those for the country at large involve a cost of $134,893,134.76, and
those for the District of Columbia involve $45,825,000; the purchase
of the so-called triangle property in the District of Columbia is also
authorized at a limit of cost of $25,000,000, of which $9,680,000 has
been appropriated. The total limit of expenditure for any one year
is $35,000,000, of which not to exceed $10,000,000 may be expended
for projects in the District of Columbia, with the provision that,
beginning with the fiscal year 1928, funds not expended in one year
may be used to augment expenditures during the following year.
Projects ouhide the District of Columbia
Of the 244 projects for the country at large, 137 include sites for
additional land. Therefore, projects which did not require the purchase of land were given first attention, and other projects were taken
up in the order in which clear title is vested in the United States.
Fifty-three contracts have been let for buildings and extensions, of
which nearly one-half are completed. Fifty-one projects are on the
drafting boards in various stages of progress involving a total limit
of cost of $37,319,500. Buildings outside the District of Columbia
completed, under construction, on the boards, etc., involve a total of
$48,804,857.
Projects in the District of Columbia
For the District of Columbia there are two projects involving no
construction; one is an authorization for the purchase of a site only
for the Supreme Court, condemnation proceedings for which are now
in progress, and the other involves the purchase of a completed building, transactions for which have been consummated and the building
is now occupied by a bureau of the Department of Agriculture.
Projects authorized in the District of Columbia and involving
construction are as follows: Two additional stories have been added
to the Liberty Loan Building under a limit of cost of $375,000. A
contract is in force for the construction of the administration build-
70
REPORT OlSr THE PINANCES
ing for the Department of Agriculture under a limit of cost of
$2,000,000. The drawings for an extension to the Government Printing Ofiice, under a limit of cost of $1,250,000, are practically completed and a contract is expected to be let at an early date. There
is an authorization for an extensible building in the rear of the present
Department of Agriculture Building for which it is necessary to
acquire two city blocks by condemnation; this proceeding has been
instituted and drawings for this project have been prepared, the total
limit of cost being $5,750,000.
Other projects authorized for the District of Columbia are included in the development known as the triangle, bounded by Pennsylvania Avenue, Sixth, B, and Fifteenth Streets, NW. There is an
appropriation of $225,000 for water maii;LS, sewers, etc., in the triangle
area, and these improvements are nearing completion. A board of
consultants has been appointed to coordinate not only the buildings
already authorized, but those which are expected to be authorized.
After much study and the preparation of many sketches, a.design
for a dignified group of buildings has been developed. I t includes
the following buildings on which construction has been started or
will shortly be started: Internal Revenue Building—Although the
greater portion of the site for this building belongs to the Government it was necessary to acquire an additional block by condemnation; a foundation contract is now in force; drawings for the
superstructure are practically completed and it is expected to let a
contract in January, 1929; the total hmit of cost for this project
is $10,000,000. Department of Commerce Building—The rough excavation for this building has been completed; the foundation contract was let in October, 1928, to be followed six months later by
a contract for the superstructure; the hmit of cost for this project
is $17,500,000. Archives Building—Condemnation proceedings are
in progress to acquire land in the triangle for this building and
studies for this project have been made.
Buildings in the District of Columbia completed, under construction, on the boards, etc., involve a total of $44,100,000.
REVISION OF THE CIRCULATION STATEMENT OF UNITED STATES
MONEY INAUGURATED DECEMBER 31, 1927 i
On December 31, 1927, an important revision of the circulation
statement was,inaugurated, which made five changes in t h a t
statement:
(1) Since the establishment of the Federal reserve system, dollar
credits acquired in this country by foreign banks have often been
1 Beginning June 30, 1922, a change in the method of calculating money in circulation included only
money outside of the Treasury and the Federal reserve banks in that figure. On that date also gold bullioD
and foreign gold coin held by the Federal reserve banks were for thefirsttime included in the stock of gold.
SECRETARY OF THE TREASURY
71
converted into gold and held here in trust for the account of such
banks., This process is known as ^'earmarking'' gold. The title of
such gold is actually vested in the foreign bank, the gold is no longer
counted in the holdings of the Federal reserve banks, and is consequently no longer a part of the stock of gold in the United States.
In the revised form of statement earmarked gold coin is. excluded
from the stock of gold and stock of money figures, and hence from
the gold and money in circulation. (Earmarked gold bullion had
never been included.)
(2) The title to the gold shown on Federal reserve bank statements as ''gold with foreign agencies'' or "gold held abroad" is
actually vested in the Federal reserve banks, and consequently such
gold is in reality a part of the gold stock of the United States. Hence,
in the revised form of statement gold held abroad for account of the
Federal reserve banks is included in the holdings of those banks, and
in gold and total money stock figures.
(3) Minor coin (the nickel 5-cent piece and the bronze 1-cent piece,
exclusive of obsolete pieces) never before shown is included in the
stock. Treasury, Federal reserve bank, and circulation figures.
(4) The circulation statement hitherto has been prehminary in
nature, based in part on figures which did not represent conditions
on the date to which ascribed; and revised figures were calculated
only for June 30 of each year. The monthly circulation statement is
now published each month in revised form, based on end-of-the-month
data.
(5) The statement is now dated for the end of the month (instead
of as heretofore for the first day of the succeeding month) since the
basic figures used in the statement represent the situation at the
close of the last business day of the month.
Monthly circulation statement figures revised in accordance with
the best available data have been calculated and appear for June 30
of each year from 1860 to 1928 in Tables 60, 61, and 62, pages 550,
552, and 554 of this report.
SILVER TRANSACTIONS UNDER THE ACT OF APRIL 23, 1918,
KNOWN AS THE PITTMAN ACT
During the fiscal year 1928, recoinage of the silver dollars, melted
under the terms of the Pittman Act, was completed. A resume of
the Treasury's silver operations under this act follows:
The Pittman Act
The act of April 23, 1918, was 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
72
REPORT ON THE FINANCES
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." A t the time of the passage of the act Great
Britain was in urgent need of the precious metals for use in India.
The only possible source of sufficient silver to meet the war emergency
was the United States Treasury stock of silver dollars. Congress,
therefore, passed the act of April 23, 1918, which authorized the melting or breaking up and sale as bullion of not to exceed 350,000,000
silver dollars from the large stock of silver dollars in the United
States Treasury. The act also authorized the use of silver dollars
and of silver purchased under the act for the manufacture of domestic subsidiar}^ silver coins (halves, quarters, and dimes); the
sale of silver bullion for commercial use and for conserving the gold
supply of the United States and permitting the settlement in silver
of trade balances adverse to the United States. Provisions also were
made in the act for the retirement of a corresponding amount of
silver certificates outstanding against the silver dollars melted; for
the issuance of Federal reserve bank notes to prevent contraction of
the currency on account of the retirement of silver certificates; for
the purchase of domestically produced silver at the fixed price of $1
per ounce; for the recoinage of the dollars melted; and, upon recoinage, for the retirement of the Federal reserve bank notes.
Silver dollars melted
Melting of silver dollars was commenced immediately after the
act was passed, and was vigorously prosecuted at the Philadelphia
and San Francisco Mints and at the New York Assay Office, until
in May, 1919, 259,121,554 silver dollars had been melted and the
200,032,325.64 fine ounces of bullion resulting therefrom had been
sold to Great Britain. The bullion was sold to Great Britain at
$1 per fine ounce, plus a charge estimated to cover the cost of
melting, recoining, and other incidentals, with the intent that the
United States Government should neither gain nor lose by the transaction. I n addition to the 259,121,554 silver dollars so melted and
sold to Great Britain, 11,111,168 silver dollars were melted and
assigned for subsidiary silver coinage. However, this transaction
was subsequently canceled, and the silver dollars so melted were
replaced with silver dollars coined from silver in kind. There follows a statement showing in detail the number of dollars melted:
SECRETARY OF THE TREASURY
73.
Amounts and sources of dollars converted into bulUon for sale to Great Britain
Item
Philadelphia
Mint
San Francisco
Mint
New York
Assay Office
Sources of coin converted to bullion:
Mint stock
$58,534, 554. 00 $39,001,000.00
Transferred from Treasury at
Washington
25,000,000.00
87,686,000.00
Transferred from subtreasury at
New York . .
$26,500,000.00
Transferred from New Orleans
12,400,000.00
10,000,000.00
MintFace value of dollars converted for sale. 158, 620, 554. 00 74,001,000.00
26,500,000.00
Fine ounces sold the British Govern122,527,558. 54 57,176,287.40. 20,328,479. 70
ment at $1 per ounce
Loss by conversion and sale,_
Total
$97,635,654.00
112,686,000.00
26, 500,000.00
22,400,000.00
259,121, 554. 00
200,032, 325. 64
59,089,228. 36
Weight and value of 11,111,168 silver dollars assigned for subsidiary coinage amd
the mints to which they were assigned
Fine ounces
September, 1918, San Francisco Mint (uncirculated coin at $1 per fine ounce)
November, 1919, Philadelphia Mint (uncirculated coin at face value, $1.29
per fine ounce)
_
November, 1920, Denver Mint (circulated coin at $1.29 per fine ounce)
Total
772,997.89
Face value
$1,000,000
7,734,375.00
82,357.24
10,000, OOO
111, 168
8,589,730.13
11, 111, 168
The total number of silver dollars melted, including the 11,111,168
assigned for subsidiary coinage, was 270,232,722. Many of the dol-^
lars melted had been in circulation and had become reduced below'
legal weight by abrasion, and an appropriation to cover this loss was
made in the act of April 23, 1918.
Pv/rchase of silver bullion
The purchase of domestically produced silver bullion for replacing the silver dollars converted to bullion and sold to Great Britain
was commenced in May, 1920, and all purchases of silver required to
replace the silver dollars so sold were completed in June, 1923, with
the exception of about 190,000 ounces representing incomplete deliveries of amounts accepted up to June, 1923. Deliveries on account
of the 190,000 ounces were completed in July, 1927. The quantity of
silver required for recoining 259,121,554 silver dollars of exact legal
silver content, disregarding the question of operative losses, was
200,414,327.07 fine ounces. Monthly receipts of purchased silver by'
the mint service institutions during the 3-year period from May,
1920, to June, 1923, averaged approximately 5,000,000 ounces, the
purchases absorbing practically the entire silver production of the
United States for this period. These purchases were made at the
fixed price of $1 per fine ounce, while the market rate -during this
time was usually below 70 cents.
74:
REPORT ON T H E FINANCES
I n October and December, 1920, a total of 6,000,000 fine ounces of
silver bullion purchased under section 2 of the act of Aj)ril 23, 1918,
were assigned to the subsidiary coinage account of the Philadelphia
Mint for subsidiary coinage. However, 4,341,753.61 ounces of this
silver were not used for that purpose, and the orders assigning that
amount for subsidiary coinage were revoked in February, 1922, and
the silver bullion was restored to the Pittman silver account. The
order covering the balance of the 6,000,000'ounces of bullion, that is,
1,658,246.39 ounces, and also the order assigning 11,111,168 silver
dollars to the Director of the Mint for conversion into subsidiary
silver coins were revoked in December, 1922, on the authority of a decision of the Comptroller General of the United States, dated November 29, 1922, which was subsequently affirmed by him in his ruling of
September 4, 1923, addressed to Hon. Key Pittman, vice chairman of
the Senate Committee of Gold and Silver Inquiry. (See Exhibits 41
and 42, pp. 341 and 345.)
When the 11,111,168 silver dollars and the 6,000,000 ounces of
Mlver bullion referred to were assigned to the subsidiary coinage
accounts, and at all times during the period that this silver was so
assigned, there was on hand in the mint service institutions, in the
subsidiary silver accounts of the mint service, a sufficient quantity
of silver bullion procured for subsidiary coin manufacture to take
care of the subsidiary coinage requirements of the Government. At
the time of such assignments the bullion was either not located in the
institutions where required for use or it was in an unrefined state,
although, as stated, there was a sufficient quantity on hand in the
subsidiary coinage accounts. By canceling the orders assigning
the 11,111,168 silver dollars and the 1,658,246.39 ounces of bullion
for subsidiary coinage the Government avoided purchasing more
silver than was actually needed for subsidiary coinage and for carryi n g out the provisions of the Pittman Act.
Recoinage
JRecoinage of the 270,232,722 silver dollars melted, which amount
includes the 11,111,168 silver dollars assigned for subsidiary coinage,
was completed in April, 1928. Such recoinage was begun in February, 1921, which was as soon as postwar demands for other coins that
were in active circulation permitted, and continued whenever the
mint facilities were available for the purpose until April, 1928,
when, as stated, all of the silver dollars melted had been recoined.
The currency situation is now the same as before the passage of the
act of April 23, 1918, so far as operations under that act are concerned, and the monetary stock of United States silver dollars was
neither decreased nor increased by that act.
SECRETARY OF THE TREASURY
75
The cost of coining (recoining) silver dollars is° approximately
$10 per thousand. A table showing the recoinage by fiscal years of
silver dollars under the act of April 23, 1918, follows:
,
Silver dollars
^.
,
Silver dollars
Fiscal year:
1921
1922
1923
1924
1925
recoined
$19, 043,000
92, 388, 473
110, 715, 000
11, 870, 000
18,308, 000
Fiscal year:
1926
1927
1928
recoined;
$11, 432, 700
4,456, 900
2, 018, 649
Total
270, 232,722
-,.
PURCHASE OF THE CAPE COD CANAL
I n accordance with the provisions of the contract dated July 29j
1921, executed by the Boston, Cape Cod & New York Canal Co. and
the Secretary of War on behalf of the United States, as ratified by
act of Congress approved January 21, 1927 (44 Stat. 1010), purchase
of the Cape Cod Canal by the United States was effected late in t h e
afternoon of March 30, 1928. The purchase price provided by th©
contract was $5,500,000 cash and the assumption by the Government,
of the payment of $6,000,000 of 50-year first-mortgage 5 per cent gold
bonds, due January 1, 1960, issued by the Canal Co., together with
interest thereon from the date title to the canal passed to the United
States as certified by the Attorney General, such bonds being secured
by an indenture of mortgage from the Canal Co. to the Old Colony
Trust Co. of Boston, Mass., as trustee.
The actual cash payment made to the Canal Co. was $5,325,833,339
being the contract cash pric6 of $5,500,000, less $100,000', which the
Canal Co. guaranteed by paragraph 4 of the contract to be the
minimum balance in its treasury at the time of passing of title, and
less a further deduction of $74,166.67, representing accrued interest
on the bonds of the Canal Co. for the period from January 1, 1928^
to the date title passed, which accrued interest by agreement of the
parties was retained by the United States and paid upon the
presentation and surrender of the July 1, 1928, interest coupons.
The contract of July 29, 1921, as ratified by the act of CongresSy
provided that at any time after title to the canal passed the United
States should have an opportunity of discharging the lien of all
bondholders, at a cost no greater than par and accrued interest,, and
that the Canal Co. at the time the purchase price was paid should
deliver a written agreement by the owners of at least 95 per cent of
the bonds described above (the bonds to be stamped in such, a way
as to make the agreement binding on subsequent holders) that they
or subsequent holders would surrender for cancellation and accept
payment of the bonds at their par value, together with accrued interest at such place and on any interest installment date the- Seere-
76
REPORT ON T H E FINANCES
tiary of the Treasury might designate, notice of the time and place
of payment to be given by publication for 10 consecutive days in any
newspaper in New York City which the Secretary of the Treasury
might select, the first publication to be at least six months prior to
the date fixed for payment. I n compliance with these provisions of
the contract the Canal Co. delivered to the Treasury written agree-s
^ ments executed by all the bondholders and surrendered the entire
issue of bonds to the Federal Reserve Bank of New York for the
purpose of having the proper legend stamped thereon, as instructed
by the Treasury. The legend was stamped on each of the bonds,
after which the bonds were returned to the owners.
On June 18, 1928, the entire issue of the bonds of the Canal Co.
was called for payment on January 1, 1929, which was the nearest
interest payment date after giving the six months' notice provided
for by the contract. A copy of the call for payment and statement
of the Secretary made public in connection therewith appears as
Exhibit 53, page 376 of this report.
GOLD EXPORTS TO AND MONETARY STABILIZATION IN FOREIGN
COUNTRIES IN 1928
From the autumn of 1920 through August, 1927, there was an
almost continuous fiow of gold to the United States from abroad,
except for five months at the turn of 1924 and 1925. In September,
1927, a substantial outward movement began and has continued for
nearly a year. The monthly net exports or imports of gold, the net
amounts earmarked or released from, earmark, and the combined
effect of these two upon our monetary gold stock from July 1, 1927,
through October, 1928, were as follows:
Increase
Excess of
(+) or
imports
decrease
(+) or
( - ) in
exports ( - ) earmarked
gold
July, 1927.
August, 1927--..
September, 1927.
October, 1927-..
. November, 1927.
December, 1927.
January, 1928...
February, 1928..
March, 1928
April, 1928
.May, 1928
June ,1928
July, 1928
'^August, 1928
September", 1928.
October, 1928....
'
+8,935
-1-6,353
-11,465
- 8 , 642
-53,184
-67,418
-13,766
-11,120
-94,853
-91,150
- 8 1 , 721
-79,932
-63,859
+747
+463
+13, 320
+184
-2,501
-9,000
-25,001
-40,000
- 8 , 500
+5, 500
+2,868
+35,800
+45, 740
-26, 539
+30,053
+60,947
+5,916
-1,200
+1,200
Corrected
net imports (+)
or exports
(-)
+9,119
+3,852
-20,465
-33,643
-93,184
-75,918
-8,266
-8,252
-59,053
-45,410
-108,260
-49,879
- 2 , 912
+6, 663
-737
+14, 520
Despite this loss of gold through exports and earmarking amounting
t o about $500,000,000 during the fiscal year, our present total gold
stock is greater than at any time previous to September, 1923, repre
•77
SECRETARY OF T H E TREASURY
sents more than 40 per cent of the central gold holdings of the world,
and is nearly four times as large as that held in any other country.
The gold reserve held by the Federal reserve banks is about $1,000,000,000 in excess of legal requirements, although the reserve ratio of
these banks fell from 74.3 per cent to 63.4 per cent during the fiscal
year. I t was 67.2 per cent on October 31.
The gold export movement from this country during the year has
contributed to the increase in the gold stock of a number of foreign
countries. Changes in the gold holdings of the central banks and
governments of the principal countries of the world and in the operating reserve ratios of the central banks of these countries during
the last fiscal year were as follows:
[End of June figures]
C e n t r a l gold holdings (in
millions of dollars)
Country
1927
U n i t e d States
France
Great Britain
Argentina
Japan
Spain
Germany.
Italy.
Netherlands . . - . - . - . . .
O t h e r countries
_
Total
' Treasury and Federal reserve banks.
Increase
( + ) or decrease ( - )
1928
4,202
875
740
452
544
501
429
226
162
1,287
1 3, 732
2 1,136
838
616
542
503
496
257
175
1,437
1-470
+261
+98
+164
-2
9,417
9,732
+315
+2
+67
+32
+13
+150
R e s e r v e position of
central
banks
ratio of reserve
material to notes
a n d deposits (per
cent)
1927
74.3
66.2
30.0
20.0
47.9
57.0
34.0
39.7
62.8
1928
63.4
2 77. 7
33.4
37.1
47.7
58.9
40.4
52.3
72.2
2 Partly estimated.
The increase in central gold holdings in foreign countries and the
rise in the reserve ratios of foreign central banks have not resulted
entirely from the transfer of gold from the United States to those
countries. Their gold holdings have been augmented by new gold
production available for monetary use, which has amounted to about
$200,000,000 of the $400,000,000 production for the year, gold obtained from hoards, especially in France, and gold released from
pledge, particularly that held by the Bank of England. A contributing factor has been the decrease in India's demand for gold as compared with years previous to the establishment there of the gold
elxchange standard.
The gold exports from the United States have been important in
promoting the return of the currencies of various countries to a gold
78'
REPORT ON THE FINANCES
basis. The major part of these exports went to the following
countries:
France
Argentina
Brazil___United Kingdom
Germany
Italy
Uruguay
Poland
^
-
$257, 000, 000
131, 000, 000
._
55, 000, 000
41, 000, 000
27, 000, 000
20, 000, 000
11, 000, 000
8, 000, 000
The exports to France, the chief recipient of gold from the United
States, to Argentina, second in the list, and to Italy and Poland were
definitely connected with their return to the gold standard, while
exports to Brazil and Uruguay were a part of the preparations for
such reform. Gold purchases by Germany have strengthened the
reserve position of the Reichsbank, and the exports to England occurred during the legislative consideration of the amalgamation of
the currency issues of the bank and the treasury, the last step in
England's monetary reconstruction.
Steady progress has been made, particularly in the last three years,
toward the return to gold or gold exchange standards in foreign countries. Salvador, Lithuania, Latvia, Colombia, Sweden, and Austria
were put on a gold basis between January, 1920, and June, 1924.
Germany followed in October, 1924, and the currencies of England,
Australia, New Zealand, South Africa, Netherlands, Dutch East
Indies, Hungary, and Danzig were stabilized in April and May, 1925.
Chile, Finland, Canada, Belgium, Denmark, Czechoslovakia, Guatemala, and India followed at various times between July, 1925, and
July, 1927. During the fiscal year 1928, Ecuador, Argentina, Poland,
Italy, Estonia, Norway, Greece, and France were added in the months
of August, October, and December, 1927, January, May, and June,
1928.
The French stabilization is an important step in the return of the
world currencies to stability in terms of gold, and is particularly significant for world finance and trade because in recent months world
money markets have been considerably affected by the large movement of funds in connection with French financial reconstruction.
Legal stabilization of the French currency on a gold basis became
effective on June 25, 1928. The value of the franc was fixed at 65J^
milligrams of gold, 9/lOths fine. The gold parity between the franc
and the dollar is thereby fixed at 3.9179 cents per franc or 25.5239
francs to the dollar, a rate approximately equal to that under the
de facto stabilization of the French currency during the preceding
year and a half. At present France has a form of gold bullion standard which can become the traditional gold .standard without further
79
SECRETARY OF THE TREASURY
legislation. The Bank of France is given the option of paying its
notes either in gold coin or in gold bullion of a certain minimum
quantity, now fixed by the bank at 215,000 francs. The fixed
limit on the issue of Bank of France notes has been removed and
the bank is required by law to maintain a minimum gold reserve of
35 per cent of its notes and other demand liabilities. I t is note^
worthy that the French Government did not require a foreign loan
and that the Bank of France did not obtain a central bank credit,,
such as was secured by central banks of several other countries in
connection with their stabilization programs.
The gold status of all countries whose currencies are linked with
gold in any manner are shown in Exhibit 46, page 354 of this report.
BUREAU O F C U S T O M S
Customs receipts during the fiscal year 1928 failed to maintain the
high levels of the two preceding years but remained above receipts for
the fiscal years 1924 and 1925. The latter were the first two complete
years of operation of the present tariff rates. Collections from
customs and from the tonnage tax which are included together under
the heading '^customs collections'' were $568,156,592 during the past
fiscal year, or $38,000,000 less than in the fiscal year 1927 and
$12,000,000 less than in 1926 but about $20,000,000 more than in
each of the years 1924 and 1925.
The decline in customs in 1928 was due to both the general import
situation and the trade situation affecting important customs-producing commodities. The general trade situation is summarized by
fiscal years in the following table:
Merchandise exports and imports, the trade balance, and customs collected, fiscal
years 1924-1928
[In millions of dollars]
1924
1925
1926
1927
1928...
-
Exports
Imports
4,312
4,865
4,753
4,968
4,877
3,554
3,824
4,465
4,252
4,146
Excess
of exports Customs
over
collected
imports
758
1,040
289
716
731
545^
549
580.
606
568.
The significant feature of the trade situation in recent years is the
decline in trade balance in 1926, due to the unusual increase in imports,
and the recovery of the trade balance in 1927 and 1928 as a result of
declines in imports and increases in exports. These changes in imports have resulted from changes in the volume and the prices of
commodities imported.
13606—29—FI 1928
8
80
REPORT ON THE FINANCES
Commodities entering the country free of duty have been an
important factor in the high value of all imports during the fiscal
year 1926 and in the subsequent decreases in 1927 and 1928. In the
first place, duty-free imports have constituted between 64 and 66 per
cent of the value of total imports for consumption during the last three
years, as compared with less than 60 per cent in 1924 and 1925, the
preceding years under the present tariff rates. In the second place,
the high prices of certain duty-free imports in 1926 and the decrease
in their prices in 1927 and 1928 are responsible in a considerable degree
for the changes in total value of all imports in those years. For example, the high price of crude rubber during the fiscal year 1926 was
responsible for the greater proportion of the increased value of total
imports of that year and the subsequent decline in its price was a
factor in the decreased import values in 1927 and 1928. Other important free-of-duty imports, the quantities or value of' which have
declined in recent years, are raw silk, tea, and coffee.
The 10 imports of the United States having the highest value in the
fiscal year 1928 were raw silk, crude rubber, coffee, cane sugar, paper
and paper manufactures, hides and skins, petroleum and its products,
furs and fur manufactures, paper-base stocks, and tin, totaling
almost half the value of merchandise imports. The imports of crude
rubber and of raw silk amount to about 75 per cent of the world's
total .production of these commodities, while the value of imported
coffee is about 50 per cent of the world's total production. Only one
of the commodities listed above, cane sugar, is among the leading
customs producers. Looking at imports from the point of view of
Government customs revenue, the six leading sources are cane sugar,
unmanufactured tobacco, wool and mohair, manufactures of wool,
manufactures of cotton, and manufactures of silk. The tariff on
these items produces half the customs, while the imports of these commodities are less than 15 per cent of the total imports.
With special reference to the fiscal year 1928, total imports declined as a result of decreases in both the volume and prices of commodities imported. Import prices were, on the whole, about 5 per
cent below the preceding year. Decreased volume of imports was
shown for such important commodities as rubber, cane sugar, wool
and mohair, petroleum products, unmanufactured tobacco, oil seeds,
cocoa or cocoa beans, and tea.
The changes in the imports of these chief customs-producing commodities during the fiscal year 1928 as compared with 1927 are shown
below:
81
SECEETAEY OP THE TEEASUEY
Quantity (in
millions)
1927
Sugar, cane
pounds..
Tobacco, unmanufactured
do
Wool and mohair
do
Wool manufactures, including yarns
Cotton manufactures, including yarns
Silk, manufactured
1928
8,841
93
271
81
248
Value] (in millions)
1927
1928
$254.0
76.7
83.7
74.0
64.3
41.9
$234. 3
58.8
79.5
81.8
68.0
42.5
Per cent increase
(+) or decrease
(-)
Quantity
-8.5
-12.8
-8.5
Value
-7.8
-23.3
-5.1
+10.6
+5.7
+1.4
Since all merchandise brought into the United States from foreign
countries, whether free or dutiable, must be entered and subjected to
an examination to determine its character and classification, the
work involved in clearing importations has steadily increased, as
shown by the following comparative table of entries of various kinds
filed during the past five fiscal years:
Entries
1924
Consumption:
206,154
Free
Dutiable . .
416,469
Informal
164,102
Mail 638, 773
Baggage declarations
339, 541
Warehouse and rewarehouse
55,129
Immediate transportation without appraisement.
• 124,898
Transportation and exportation
103, 401
Warehouse withdrawals:
205, 807
Duty paid
41, 337
Another..
7,247
All other entries
117, 757
Drawback notices of intent
13, 971
Drawback entries
Total..
1927
1928
209, 319
226, 382
428, 989
459, 726
182, 505 • 196,036
742,917
768,811
340, 685
383, 607
58, 983
60, 235
246, 257
486, 274
209, 002
786, 683
392,128
63, 294
246, 577
495, 695
214, 777
825, 925
400, 894
66,048
133,164
107, 033
144, 664
117, 621
148, 321
120, 417
143, 757
115, 270
216, 957
39, 558
12, 457
164, 672
21,477
222,097
38,425
27,451
192,070
24, 388
249, 671
38, 677
14, 034
220, 871
25, 230
251, 758
36, 572
13,752
241, 757
26, 950
1925
1926
2, 434, 586 2, 658, 746 2,861, 513
3,000, 859 3,079, 732
During the fiscal year auditors from the General Accounting Office
visited the headquarters ports throughout the United States for the
purpose of examining the accounts and records of collectors of
customs. The differences and disallowances resulting in these field
audits, as in the preceding fiscal year, were negligible, thus confirming
the thoroughness and efficiency of the administrative examination
made by the comptrollers of customs.
During the year a survey of facilities for inspecting international
highway traffic along both the Canadian and Mexican borders was
made by the Bureau of Customs jointly with the Bureau of Immigration with a view to providing adequate facilities for expediting the
inspection of this type of traffic and for protecting more adequately
the interests of the Government. Plans were formulated for the
construction of standard types of inspection offices for joint use by
the Customs and Immigration Services to be located on the highways
at the borders, thus enabling the Government officers better to control
82
REPORT ON T H E FINANCES
international highway traffic, resulting in more complete enforcement
of the laws governing crossings at the borders and better protection
to the revenue. These structures will also provide facilities, protected
from the elements, for the inspection of automobiles, thereby improving the service rendered to the public, and promoting efficient
inspection of automobile traffic. Authority and initial appropriations
for the construction of 16 buildings out of the 49 projects recommended were secured during the year.
Instructions were issued discontinuing the registration of American
automobiles of tourists leaving the United States. Since the information contained on the customs registration cards heretofore issued to
tourists on leaving the country is found on State registration cards,
the latter are now accepted in lieu of the card formerly issued by
customs. This simplified procedure results in the saving of much
time of customs officers, which is being applied to much better
advantage in the more thorough inspection of incoming traffic.
During the year a system was devised and inaugurated for the
collection of outstanding accounts. Although the system was not
applied until the latter part of the fiscal year, the results thus far
accomplished have fully established the wisdom of creating this
activity. A number of accounts remaining open several years have
already been closed and many others are in process of adjustment.
The number of accounts outstanding will be reduced to a minimum
and recourse to the United States courts to enforce collection in many
instances obviated through the application of this system.
During the year a committee on which the Bureau of Customs is
represented was formed by the Chief Coordinator for the purpose of
making an investigation of the alleged duplication in the collection
and compilation of statistics of water-borne commerce. A survey
was made of the data compiled and disseminated by collectors of
customs and the findings were submitted for consideration of the
committee. Although the transactions occurring in the offices of
collectors of customs form the original sources from which the greater
portion of statistics on water-borne commerce is published by all
Governmental agencies, no duplication was found of reports prepared
by customs officers.
During the preceding fiscal year the Bureau of Customs in conjunction with the Bureau of Immigration devised a system and formulated regulations whereby the collection and deposit of the head
tax on aliens entering the United States from Canada was to be
handled by collectors of customs. The practice, which was put intO'
effect with the beginning of the fiscal year 1928, has resulted in the
prompt and efficient handling of these transactions and greatly
reduced the delays encountered in the settlement of head tax deposits
in the past.
83
SECRETARY OF T H E TREASURY
COAST GUARD
In a number of the activities of the Coast Guard during the year,
the results of operations exceeded the records of previous years. A
comparison of the principal operations during the fiscal years 1927
and 1928 follows:
. 1927
Number of persons saved or rescued from peril..
Instances of assistance rendered
.
Value of vessels assisted, including cargoes
Number of persons on vessels assisted..
Number of derelicts and obstructions removed
Number of persons in distress cared for
Instances of assistance rendered to other branches of Federal
Government
Number of regattas, marine parades, and boat races patrolled
. and supervised
Number of vessels boarded and examined in enforcinglaw
Number of vessels seized or reported for violations of law
Increase (+)
or decrease
1928
(-)
3,313
5,508
$37, 801, 357
14,496
136
3,983
6,846
$39, 479, 729
17, 383
167
690
+670
+1, 338
+$1, 678, 372
+2,887
+31
-209
274
381
+107
84
65, 710
1,554
+45
- 2 , 513
-234
39
68, 223
1,788
In connection with the enforcement of the laws of the United
States with respect to customs, navigation, and motor boats, the
duties of the Coast Guard were continued during the year and were
satisfactorily performed.
The law-enforcement work of the Coast Guard relative to the
prevention of the smuggling of liquor into the United States from
the sea has been prosecuted with very satisfactory results. This
illicit traffic has been tremendously reduced and *^rum r o w " has
been eliminated. The general situation, however, continues to
demand constant and unremitting attention and activity.
Of the 10 Coast Guard cutters authorized by the act of June 10,
1926, appropriations have been made for the completion of five
cutters. Three of these have been launched and two are in course
of construction. Appropriation has also been made to commence
three more of the cutters and design plans are being prepared.
The standards of morale and discipline among the enlisted force
of the Coast Guard have been very high. The increase in the percentage of reenlistments and the decrease in desertions indicate a
spirit of contentment and of loyalty to the service that i s ' most
gratifying.
During the year the Secretary of the Treasury, under the provisions of law, awarded 50 life-saviQg medals of honor (2 gold and 48
silver) and 2 second-service silver bars in recognition of bravery
exhibited upon an American vessel or in the rescue or attempted
rescue of persons from drowning in waters over which the United
States has jurisdiction.
Attention is again invited to the need of appropriate measures to
remedy the very unsatisfactory physical conditions existing at the
84
REPORT ON THE FINANCES
Coast Guard Academy at New London, Conn. I t is hoped that
some means will be found that will permit this national institution
to be put in a condition befitting its uses and purposes.
Some of the Coast Guard (life-saving) stations along the coasts are
in a state of deterioration and dilapidation on account of old age and
usage. They should be rebuilt, repaired, or improved as the necessities of the case indicate. The funds appropriated from year to
year are not sufficient to meet the actual requirements. This matter
deserves consideration.
BUREAU OF ENGRAVING AND PRINTING
The output during the fiscal year 1928 was only 1.4 per cent less
than that in the record-breaking year of 1927 and was accomplished
with reductions of 6.5 per cent in expenditures and 2.3 per cent in
personnel as compared with the previous year. A new low record
for spoilage of all classes of currency was established in 1928. The
specific improvements and savings are described on pages 151 to 157.
PROHIBITION LAVi^ ENFORCEMENT
The past year has seen the inauguration of additional administrative measures with respect to prohibition law enforcement that will
have the effect of further developing the coordination between the
three Treasury services concerned with enforcement of these laws.
Provision has been made for periodic, regional conferences between
representatives of the Coast Guard, Bureau of Customs, and Bureau
of Prohibition for the discussion of current problems in each locality.,
These conferences make effective the coordination of these three services along practical lines. The division of foreign control has continued to receive and place at the disposal of all three services detailed
information concerning the movement of ships identified as being
engaged in the international illicit liquor trade. This coordinated
action has been so effective during the past fiscal year as to diminish
the activity of those heretofore engaged in smuggling liquor. For
instance, only 5,000,000 gallons of liquors were identified in foreign
ports as destined for the smuggling trade presumably bound for the
United States. In the preceding year the quantity of liquor so
identified was 14,000,000 gallons. These comparative figures refiect
in quantitative manner the substantial improvement that has taken
place in the control of liquor smuggling into the United States.
The Bureau of Prohibition has inaugurated a policy of controlling
the primary production of industrial alcohol by directly relating the
amount that may be produced to the ascertained legitimate consumption. The operation of the first year of this control policy has been
very favorable, and surplus production which in times past has
SECRETARY OF THE TREASURY
85
created a very grave problem in law enforcement has been practically
eliminated. With the further improvement in permissive administration under the decentralized policy, it may be stated that diversion
of legal liquor, including industrial alcohol, is no longer the major
problem of domestic law enforcement. Illicit manufacture of
spirits from sugars and grain is the principal source of supply of the
domestic market. The investigative forces of the Bureau of Prohibition have been directed against the large commercial operators
with the result that the seizures of illicit distilleries are smaller as
regards the size of the unit captured. This is indicative of the breaking up of the large and profitable illicit manufacturing operations.
Very close cooperation is maintained with the Department of
Justice and the joint efforts are being directed towards the apprehending of conspirators who are directing the financial and commercial operations of these illicit liquor rings.
NARCOTIC LAW ENFORCEMENT
The general situation with respect to the manufacture, sale, and
consumption of narcotic drugs lawfully imported into the United
States continues to be satisfactory, and it is believed that an even
smaller percentage of narcotic drugs lawfully brought into and manufactured within the United States was diverted to illicit channels
during the past fiscal year than was the case during the fiscal year 1927.
The prevention of illicit introduction of narcotic drugs into the
United States for the purpose of supplying the nonmedical addicts
continues to be the principal problem of IFederal law-enforcement
officers. Some of the factors favoring the trade are the ease with
which the drugs may be obtained in foreign countries; the large volume
of general trade; the extensive coast and border lines of this country;
the ease with which the drugs may be concealed; and the large
profits to be realized, due to the inability of domestic addicts to obtain
their supply otherwise, attracting the most astute international
criminals to the traffic. There are indications, however, that the
number of addicts in the United States is on the decrease. Cooperation of foreign governments has been sought in an endeavor to curb
at the source illicit shipments destined for the United States.
The division of foreign control of the Treasury Department, through
the medium of the State Department, has perfected agreements for the
direct exchange of evidence and information between the Federal
Narcotic Unit and the corresponding departments of a number of
European governments with reference to persons engaged ih the
illicit traffic in narcotic drugs. These agreements are of far-reaching
international importance and are entirely independent of the activities of the League of Nations with respect to this question.
86
REPORT ON THE FINANCES
The salient features of these agreements are as follows:
(1) The direct exchange, between the Treasury Department and
the corresponding office in the foreign country, of information and
evidence with reference to persons engaged in the illicit traffic. This
includes such information as photographs, criminal records, finger
prints, Bertillion measurements, description of the methods which
the persons in question have been found to use, the places from which
they have operated, the partners they have worked with, etc.
(2) The immediate direct forwarding of information by letter or
cable as to the suspected movements of narcotic drugs, or of those
involved in smuggling drugs, if such movements might concern the
other country.
The following Governments are parties to these agreements: France,
Great Britain, Germany, Belgium, Czechoslovakia, Italy, Spain,
Netherlands, Japan, Free City of Danzig, and Greece.
During the fiscal year, at its October, 1927, term, the United States
Supreme Court rendered two decisions in cases which involved the
act of December 17, 1914, known as the Harrison narcotic law, as
amended. One of these decisions again upheld the constitutionality
of the principal penal provision of'section 2 of the act, and the other
sustained a conviction under section 1 of the act in a case involving
unauthorized possession of narcotic drugs. Both of these decisions
have the effect of strengthening the position of the Government with
reference to the usual types of prosecution under this law.
PUBLIC HEALTH SERVICE
Health conditions generally were relatively good throughout the
world during the year, and final figures will probably show an unusually low death rate for the United States. In this country the
death rates from infiuenza and pneumonia were low, and the death
rate for typhoid fever in 41 States was 5.5 per 100,000 population—
19 per cent lower than the rate for 1926 and 35 per cent lower than
t h a t for 1925. At the beginning of the century the rate was 30 per
100,000. The tuberculosis death rate for 41 States was 77.3 per
100,000 population—the lowest ever recorded for those States.
Outbreaks of yellow fever occurred in both hemispheres during the
fiscal year 1928, indicating that endemic foci exist and that this disease must still be regarded as a potential danger. The disease was
reported in the Belgian Congo, on the West Coast of Africa, and
toward the close of the fiscal year occurred in several ports as well
as points m the interior of Brazil.
Bubonic plague, spread by commerce, is present on every continent.
During the fiscal year it was reported from one district on the island
of Hawaii, and two human cases were reported in California, where
the infection came from ground squirrels.
SECRETARY OF THE TREASURY
87
Although the acute phases of the Mississippi flood occurred for the
most part prior to July 1, 1927, the task of preventing the development and spread of epidemics and communicable diseases began when
the refugees returned to their homes, and lasted throughout the year.
Through the plan of establishing efficient whole-time county health
departments in 86 counties most seriously affected by the flood,
satisfactory health conditions have been maintained.
In July and August of 1927 there was a somewhat alarming increase
in the number of cases of pellagra, a disease which is due to the lack
of a properly balanced diet and which commonly follows periods when
people are compelled to restrict their diet. The distribution of
brewers' yeast to those affected was recommended by the Public
Health Service, and the yeast was made available through the offices
of the American Red Cross. The use of this substance arrested a
large number 'of cases and prevented the development of others.
The county health units in the flood area provided an effective means
for the distribution of the yeast and instruction in its use." The
yeast, while allaying the symptoms and preventing the, disease to
^some extent, can by no means be considered a satisfactory substitute
for the proper kinds of food.
The marine hospitals and other relief stations of the Public Health
Service have continued to furnish medical and hospital care to seamen
from American merchant vessels and to other legal beneficiaries.
The Congress has, from time to time, extended these benefits, espe^
cially to Government employees with duties related to maritime
industries. The longshoremen's and harbor workers' compensation
act, approved March 4, 1927, the increase in the personnel of the
Coast Guard from less than 5,000 in 1923 to nearly 12,000, and the
act of May 18, 1928, entitling retired officers and retired enlisted men
to medical treatment at marine hospitals and out-patient offices have
greatly increased the demand for medical relief. The Director of the
Veterans' Bureau has requested that facilities be made available in
marine hospitals for increased numbers of patients at Cleveland,
Detroit, Buffalo, Baltimore, New Orleans, and Portland, Me., and
has continued to use all beds not otherwise needed at the marine
hospitals in Pittsburgh, Key West, Evansville, Louisville, and other
ports where Veterans' Bureau hospitals are lacking. The merchant
marine act, approved May 22, 1928, will probably lead to a rapid
expansion of the American merchant marine under private ownership,
with a further increase in the demand for medical services.
To meet these growing obligations, larger and better marine
hospitals have been authorized in certain important ports—^v^,
Detroit, New Orleans, San Francisco, and Galveston. Provision has
been made for the purchase of a suitable building for an out-patient
office in Philadelphia. I t is anticipated that funds authorized by
the act approved February 24, 1928, will be allotted for the con
SB
REPORT ON THE FINANCES .
struction of fireproof buildings at the marine hospital, Stapleton,
N. Y., to replace inflammable structures and increase the capacity,
and also to provide new marine hospitals at Baltimore and Seattle
and additional hospital facilities in other important ports.
Following the ratification by the Senate, the President on June 21,
1928, proclaimed the International Sanitary Convention, signed at
Paris in 1926, which revised the convention of 1912 and brought up
to date provisions for the international control of dangerous communicable diseases.
At the request of the British Ministry of Health, the Surgeon
General, who was in Europe at the time attending an international
meeting, and Surgeon J. P. Leake sat with distinguished scientists
who had been appointed to investigate the public health dangers consequent upon the use of certain chemicals used in motor fuel. I t is
gratifying to know that the British Government reached the same
decision with reference to the lack of danger from these substances
which' had already been reached by the committee of scientists
-appointed by this Government to consider the question.
The plan for conducting abroad the medical examination of intending immigrants, which proved extremely advantageous in other
•countries, was with equal success extended early in the fiscal year to
'Genoa, Naples, and Palmero, Italy; and to Prague, Czechoslovakia.
Modifications were made in the quarantine practice which relieved
from quarantine inspection vessels engaged exclusively in trade between ports in the United States and ports in the possessions and dependencies, unless quarantinable diseases should be prevalent at the
port of departure.
Another beneficial modification in quarantine procedure, as concerns
vessels plying exclusively between United States ports and uninfected
foreign ports, was to base fumigation of such vessels for rodent destruction on the presence of rat infestation' as shown by inspection.
Heretofore this class of vessels had been fumigated periodically. The
new system is logical and in conformity with the spirit of the International Sanitary Convention of 1926.
In the administration of the work of the Public Health Service, the
need of additional officers in the regular commissioned corps is one that
has been pressing in the past few years. Since the beginning of the
examination of intending immigrants at American consulates in the
country of origin, which has been in operation in Europe and the
British Isles since 1925, the number of medical officers required for
this work has increased until at the present time approximately 16
per cent of the regular corps are assigned to this duty. The many
advantages of performing the medical examination of intending
immigrants prior to the granting of consular visas have been so apparent that the existing procedure will not doubt continue; and since it
has been necessary to withdraw officers from other work to meet the
SECRETARY OF THE TREASURY
89
need abroad, provisions should be made for their replacement for
work in this country.
RECOMMENDATIONS FOR LEGISLATION
Austrian debt
I recommend that the Congress enact the bill introduced in the
last session authorizing the Secretary of the Treasury, in his discretion, to subordinate, for a period not exceeding 30 years from January 1, 1929, the lien of the United States on Austria's assets and
revenues to the extent necessary to permit the flotation of the new
loan proposed, subject, of course, to satisfactory notiflcation that the
other governments and the Reparation Commission agree to take
similar action; and authorizing the Secretary of the Treasury, with
the approval of the President, to conclude an agreement for the settlement of the indebtedness of Austria to the United States upon terms
and conditions no less favorable than the terms and conditions
granted by Austria to any of the other relief creditor governments.
The Austrian debt situation is summarized on pages 55 to 57.
Greek debt
I recommend that the Congress enact the bill introduced in the
last session authorizing the Secretary of the Treasury to conclude a
debt agreement with the Greek Government. The proposed settlement will assure to the United States the repayment in full over a
period of 62 years of the $18,125,000 to be funded. I t will discharge
what may fairly be considered a moral obligation, resulting from the
1918 agreement, by advancing a sum of money to be wholly devoted
to constructive work of great humanitarian as well as economic value,
which loan will bear an adequate rate of interest and be amply secured
by pledged revenue. The Greek debt situation is summarized on
pages 53 to 55.
Tax exemption of Federal bonds
I recommend that the Congress consider an amendment of the
second Liberty loan act, as amended, authorizing the Secretary of
the Treasury to exempt further issues of securities from the surtax
as well as the normal tax.
The enactment of such an amendment would not interfere with the
subsequent adoption of a constitutional amendment permitting the
Federal and the State Governments to tax so-called tax-exempt
securities, should the Congress and the States deem such an amendment desirable. But pending the adoption of such an amendment,
there is no reason why the Treasury Department in marketing
securities should be at a disadvantage as compared with States and
90
REPORT ON T H E FINANCES
their subdivisions, or why there should be discrimination against
individual investors who desire to acquire United States Government securities.
If States and their political subdivisions continue to issue securities which are wholly tax-exempt at the rate of a billion dollars a
year, the Federal Government should not be limited to the issuance
of securities exempt only from the normal income tax. Although
United States securities held by corporations are tax-exempt because
corporations are subject only to the normal tax, such securities in
the hands of individuals are subject to surtaxes. The yield on
United States securities for individual investors, therefore, does not
compare favorably with the yield on State and municipal securities
which are issued free from all taxation.
The Treasury Department is sometimes criticized because its
securities are not more widely distributed. The present conditions,
however, discourage ownership by individuals. United States securities are sufficiently attractive to corporations so that they wish to
take the entire block of new issues offered. For this reason the price
which corporations are willing to pay inevitably fixes the price at
which securities are marketed. Since the income of corporations
from such securities is wholly tax-exempt, whereas the individual
income therefrom is subject to surtax rates, the corporations can pay
a price which makes the securities unattractive to the individual
investor. Such a situation is undesirable. During the war Government securities were very widely distributed. At that time it w^as
held, and rightly held, desirable that if Government securities were
to be issued in large blocks, they should be held by as many separate
holders as possible rather than by a few large holders. Under the
present circumstances, however, when the war loans are gradually
being refunded into securities bearing a lower rate of interest, the
number of holders of United States securities tends constantly to
become more limited.
Surety bonds
I renew the recommendation contained in previous annual reports
that there be authorized higher standards for financial requirements
of surety companies writing bonds in favor of the United States,
adequate and satisfactory control of records pertaining to claims
against such companies and to the number and character of obligations which they assume in favor of the United States, a limitation
upon the acceptance of bonds from individuals as sureties, and uniform procedure with respect to the forms of bonds taken by the
various departments and establishments of the Government. It is
urged that such revisions of the existing law as will meet these requirements as they exist to-day shall have the careful consideration of the
Congress.
SECRETARY OF THE TREASURY
91
Attention is invited to the attached reports of the various bureaus
and divisions of the Treasury Department and to the exhibits and
tables accompanying the report on the finances.
A. W.
MELLON,
Secretary of the Treasury.
To THE SPEAKER OF THE H O U S E OF REPRESENTATIVES.
ADMINISTEATIVE EEPOETS OF
BUEEAUS AND DIVISIONS
93
ADMINISTRATIVE REPORTS OF BUREAUS AND DIVISIONS
OFFICE OF THE COMMISSIONER OF ACCOUNTS AND DEPOSITS
Receipts froTm Germamj
Under the terms pf the agreement providing for the distribution
of the Dawes annuities, signed at P,aris on January 14, 1925, the
United States is entitled to receive annually from Germany certain
payments on account of the reimbursement of the costs of the United
States army of occupation aiid the awards of the Mixed Claims Commission established in pursuance of the agreement of August 10, 1922,
between the United States and Germany.
Army costs.—Under this agreement the United States is entitled
to receive out of the Dawes annuities paid by German}^ the sum of
55,000,000 gold marks per annum as reimbursement of the costs of
the American army of occupation. This annual payment constitutes
a first charge on cash made available for transfer by the transfer
committee out of the Dawes annuities, after the provision of the sums
necjessary for the service of the 800,000,000 gold-mark German external loan, 1924, and the costs of certain commissions specified in the
agreement, No otlier charges can take precedence over the Army
costs of the United States without the consent of this Government.
The arrangement heretofore made for receiving the share of the
United States on this account in monthly installments has operated to
the entire satisfaction of the Treasury, and an arrangement similar
thereto has been made for the fifth annuity year. During the fourth
annuity year, ended August 31, 1928, the United States received on
this account the 55,000,000 gold marks provided for in the agreement
of January 14, 1925, or the equivalent of $13,101,216.70, making a
total received to this date of 110,000,000 gold marks or $26,159,156.17.
The Army cost account as of September 1,1928, stood as follows:
Total Army cost charges (gross), including expenses of Interallied Rhineland High Commission (American department)- $292,663,435.79
Credits to Germany:
Armistice funds (cash requisition on German Government)
$37, 509, 605. 97
Provost
fines
159, 033. 64
Abandoned enemy war material
5, 240, 759. 29
Armistice trucks
1, 532, 088. 34
Spare parts for armistice trucks
355, 546. 73
Coal acquired by army of occupation
756. 33
44,797,790.30
247,865,645.49
13606—29—FI19 2S
9
95
96
REPORT ON THE FINANCES
Payments received:
Under the Army cost agreement of May
25, 1923, which v was superseded by
agreement of Jan. 14, 1925
$14, 725,154. 40
Under Paris agreement of Jan. 14, 1925
26,159,156.17
$40, 884, 310. 57
Balance due as of Sept. 1, 1928
206,981,334.92
Mixed claims.—Pursuant to the agreement of January 14, 1925,
the'United States is also entitled to receive out of the Dawes annuities paid by Germany for the purpose of satisfying the awards of the
Mixed Claims Commission established in pursuance of the agreement
of August 10, 1922, between the United States and Germany, 2 ^ per
cent of that part of the annuities available for distribution as repara^
tions, provided that the sum payable shall not in any year exceed
45,000,000 gold marks.
During the third and fourth annuity years an arrangement hais been
in effect with the Government of Germany substantially analagous to
an agreement for the financing of deliveries in kiiid, which has
enabled the United States to realize more currently on its 2 ^ per
cent share. In view of the satisfactory manner in which it has
operated, a similar arrangement has been made for the fifth annuity
year, beginning September 1, 1928.
During the fourth annuity year, ended August 31, 1928, the United
States received on this account 30,163,566.83 gold marks, or the equivalent of $7,192,319.24, making total receipts to Angpst 31, 1928,. of
88,799,715.65 gold marks, or the equivalent of $21,112,452.90.
The payments made by the Treasury on account of the awards of
the Mixed Claims Commission, United States and Germany, pursuant to the settlement of war claims act of 1928, are discussed on
pages 44 to 51 of this report.
The following statement shows as of August 31, 1928, the liability
of the Government of Germany on account of the awards entered by
the Mixed Claims Commission which have been certified to the
Treasury:
Principal of awards certified to the Treasury..
$111, 820, 063.49
interest at the rates specified in the awards up to Aug. 31,
1928
-—
53, 070,124. 25
164,890,187.74
Received from Germany up to Aug. 31, 1928, under Paris agreement of Jan. 14, 1925
i:^_______
Balance due Sept 1, 1928
2i; 112, 452. 90
143, 777, 734. 84
164, 890,187. 74
The interest has been computed at the rates specified in the awards
and, in order to show the liability of Germany up to the end of the
Dawes year, the interest has been computed to August 31, 1928.
SECRETARY OF THE TREASURY
97
Rait/road obligations
The principal amount of railroad obligations held b}^ the United
Jtates was reduced by $154,795,501.84 during the fiscal year, leaving
bligations on hand aggregating $74,608,948.38. The amounts reeived on account of principal were as follows:
lquipment trust notes.^_. ...
transportation act, sec. 207
'ransportation act, sec. 210
Total
^___
.
—
$3:3, 600-. 00
77, 642, 465.17
77,119, 436. 67
154, 795, 501. 84
The reduction on account of equipment, trust notes, was due to
layment of notes of the Minneapolis & St. Louis Railroad Co.,
laturing during the fiscal year. The reduction in obligations under
ection 207 was due to the reorganization of the Chicago, Milwaukee & St. Paul Railway Co., and refinancing by the New York,
few Haveii & Hartford Railroad Co., and;the Kansas, Qklahoiha &
irulf Railroad Co. For detailed statement see Table 57,^pa'ge-548. *
The reduction in obligations under section 210 was due also in
•art to the reorganization of the Chicago, Milwaukee & St. Paul
lailway Co., which resulted in the payment in cash of the carriers'
Dans aggregating $35,000,000; $41,149,700 was received from carriers
jYiO were able to refinance in the investment market a t lower interest
ates, thus enabling them to liquidate their obligations held by the
irovernment; and $969,736.67 was due to payment on account of
laturing obligations.
The total receipts on account of railroad securities for the fiscal
ear as shown by the daily Treasury statements were $164,407,076.01,
f which $154,795,501.84 was on account of principal and $9,611,74.17 was on account of interest.
Section 201^..—This section provides for reimbursement of deficits
f the so-called " short-line " railroads during Federal control. Paylents made by the Government to carriers during the fiscal 3^ear oh
lis account aggregated $618,693.72, making total payments to June
3, 1928, of $10,956,130.56, of which $9,037,575.16 has been paid to
irriers direct and $1,918,555.40 has been paid to the Director General
f Railroads on account of amounts certified to be due from the carers to the President as operator of the transportation systems under
'ederal control. (See Table 56, p. 548.)
Section 209.—This section provides for the guaranty of net railway
perating income during the six months' period immediately followig the termination of Federal control on March 1, 1920. During
le fiscal 3^ear there was paid to the carriers on this account the sum
f $31,337.01, which, after deducting repayments of $1,649,269.13
lade during the fiscal year by carriers on account of overpayments
ader this section, makes the total net payments to June 30, 1928,
98
REPORT ON THE FINANCES
$531,705,635.17. The overpayments reported in the last annual re
port to the Buffalo, Susquehanna Railroad Corporation, the Chicago
Indianapolis & Louisville Railway Co., and the Northern Pacific Rail
way Co. were liquidated during the fiscal year. The following car
riers are still indebted to the United States on account of overpay
ments made under the provisions of paragraphs (g) and (h) of thii
section:
Fort Dodge, Des Moines & Southern R. R. Co
.
$64,136. 4i
Great Northern. Ry. Co
1, 329, 785. 9J
Minneapolis & St. Louis R. R. Co., receiver
292, 022. 2^
Missouri & North Arkansas R. R. Co., receiver
41, 375.4<
Oregon Electric Ry. Co. (subsidiary Spokane, Portland & Seattle
Ry. C o i —
—
25, 741. 8
Spokane, Portland & Seattle Ry. Co
^
^
104,273.4:
. 1 , 857, 335. 4-
I n some cases these claims are in litigation and the others hav<
been placed in the hands of the Attorney .General of the Unitec
States.
F o r a detailed statement showing partial and final payments t<
carriers and amounts received from carriers see Table 58, page 549
Seotion 210,—This section established a revolving fund o
$300,000,000 to be used for loans to railroads under the condition
set forth in a certificate of the Interstate Commerce Commissioi
authorizing each loan, and also for paying judgments, decrees, an(
awards rendered against the Director General of Railroads. No ne^
loans are now being made because the time for making applicatioi
therefor has expired. The expenditures by the Director Genera
during the fiscal year for this purpose amounted to $357,638.06, mak
ing total net expenditures to June 30, 1928, of $33,477,177.39.
For a stateinent showing the principal amount of, obligations helc
as of June 30, 1927 and 1928, on account of loans made see Table 59
page 549.
The following statement shows the amounts of principal and inter
est due from carriers in default as of June 30, 1928, on account o:
their obligations for loans under this section:
Name of carrier .
Aransas Harbor Terminal R y . . .
Des Moines & Central Iowa R. R
Gainesville & Northwestern R. R. Co
Minneapolis & St. Louis R; R. Co
Missouri & North Arkansas Ry. Co
Salt Lake & Utah R. R; Co
Virginia Blue Ridge R. R. Co
Virginia Southern R. R. Co
_-.
Waterloo, Cedar Falls & Northern Ry. CoWichita Northwestern Ry. Co
Total
Principal
•in default
$50, 000.00
75,000.00
47,100.00
106, 000. 00
Interest
in default
$57,015.00
22,.-500. 00
392,. 687. 00
721, 222. 81
183, 314. 55
12, 720.00
9,120.00
491,400. 00
103,072. 50
Total
in. default
$50, 000. C
57, 015. C
97,500. C
392, 687. C
721. 222.8
230,414. 5
' 118, 720. C
9,120. C
491, 400. C
103, 072. t
278,100. 00 1, 993, 051. 86 2,271,15LS
99
SECRETARY OF THE TREASURY
Securities owned by the United States Govern/inent
The aggregate amount of securities owned by the Government on
Tune 30, 1928, as compiled from the latest reports received, was
511,108,951,205.90, as against $11,288,039,038.95 on June 30, 1927,
L decrease of $179,087,833.05. A summary comparison of the holdngs at the end of the last two fiscal years is as follows:
Nummary of securities owned by the Vnited States Governnient on June 30,
1927 and 1928
June 30, 1927
i'oreign obligations:
Received under debt settlements
Another
Capital stock of war emergency corporations
lailroad obligations
Capital stock of Panama R. R
Capital stock of Inland Waterways Corporation
Capital stock of Federal land banks..
Capital stock of Federal intermediate credit banks
Miscellaneous securities received by War and Navy Departments and U . S . Shipping Board
June 30,1928
$6,818,154, 785.43
4,094,393,840.16
$7,198,879,927.95
3,705,667,045.90
10,912,648,625. 59
48,911,396.00
230,484,076.05
7,000,000.00
4,000,000.00
842,008.00
25,000,000.00
10,904,546,973.83
55,097,998.51
74,608,948.38
7,000,000.00
5,000,000.00
555,700.00
25,000,000.00
59,252,'933. 31
37,141,585.18
11,288,039,033.95
11,108,951,205.90
The principal decreases are in the railroad obligations, amounting
in round figures to $156,000,000, and in miscellaneous securities received by the War and Navy Departments and the United States
Shipping Board, amounting to $22,000,000. The large decrease.in
bhe principal amount of railroad obligations is due to the reorganization of the Chicago, Milwaukee & St. Paul Railroad Co., by which
the Government received approximately $50,000,000; and also to the
fact that the money market was such that the carriers were able
to refinance their obligations held by the Government at much lower
interest rates, thereby saving for themselves substantial interest
charges.
The increase of $6,000,000 in the capital stock of war emergency
corporations is the result of a bookkeeping transaction due to the
procedure of offsetting the deposits made by the corporations with
the Treasury against such capital stock holdings. An additional
$1,000,000 on account of the capital stock of the Inland Waterways
Corporation was called for during the year to give the corporation
a greater working capital.
I t will be noted that there has been a substantial change in the
classes of foreign obligations held but that the net effect on the total
amount held was not appreciable. This change was due principally
to the exchange of the funded bonds of the Belgian Government for
the old obligations held pursuant to the terms of the debt settlement.
A detailed statement of the securities held on June 30, 1928, will
be found as Table 55, page 546.
100
REPORT ON T H E FINANCES
Trust fvm^ds administered by the Treasury
Adjusted service certificate fund.—Investments for the account oi
the adjusted service certificate fund were made during the fiscal year
1928 in special issues of Treasury notes bearing interest at the rate
of 4 per cent per annum, in accordance with the procedure outlined
in the annual report of the Secretary of the Treasury for the fiscal
year 1925.
The investments made during the year amounted to $123,400,000,
of which $112,000,000 represented funds appropriated by Congress
,and $11,400,000 was derived from interest on investments. Redemptions during the year, to provide funds for authorized payments,
amounted to $34,500,000, on which interest amounting to $868,951.63
was paid to the date of redemption.
A statement of the condition of the fund as of June 30, 1928, is as
follows:
Adjusted service certificate fundi a s of J u n e 30, 1928
F U N D ACCOUNT
Appropriations:
To J u n e 30, 1927
Available J a n . 1, 1928
Interest on investments
$336, 000, 000. 00
112, 000, OOO. 00
23, 882,124.19
1
471,882,124.19
Checks issued by Veterans' B u r e a u against credits from fund
and paid by t h e T r e a s u r e r of the United States
Balance in fund J u n e 30, 1928
68, 730, 323. 45
403,151,800.74
FUND ASSETS
Investments:
4 per cent T r e a s u r y
Dated J a n . 1,
1,1930
Dated J a n . 1,
1,1931
Dated Mar. 5,
1,1931
Dated J a n . 1,
1,1932
Dated J a n . 1,
1,1933
notes—
1925, m a t u r i n g
Jan.
1926, m a t u r i n g
Jan.
^
$31, 500, 000. 00
53, 500, 000. 00
1926, m a t u r i n g J a n .
70, 000, 000. 00
1927, m a t u r i n g
Jan.
1928, maturing
Jan.
123, 400, 000. 00
123, 400, 000. 00
Balance to credit of disbursing oflScer of t h e Veterans' B u r e a u .
Total fund assets
401,800,000.00
1, 351, 800. 74
403,151, 800. 74
Civil service retircTment and disability fund.—During the fiscal
year 1928 the Treasury continued to make investments for account of
the civil service retirement and disability fund in special issues of
Treasury certificates and notes bearing interest at the rate of 4 per
SECRETARY OF THE TREASURY
101
cent per annum in accordance with the procedure outlined in the
Annual Report of the Secretary of the Treasury for the fiscal year
1926.
Credits to the fund during the fiscal year aggregated $29,502,856.23,
of which $26,454,611.68 was on account of deductions from basic compensation of employees and service credit payments and $3,048,244.55
represented interest and profits on investments. Expenditures on
account of refunds to employees, annuities, etc., amounted during the
fiscal year to $14,792,709.64, as compared with $13,429,092.90 for the
previous year. The total earnings and profits on investments to June
30, 1928, amounted to $13,211,143.86.
I n order to begin the financing of the liability of the Government
in connection with this fund, Congress provided during the last session an initial appropriation of $19,950,000. This sum was placed to
the credit of the fund on July 1, 1928, and was invested as of that
date in special issues of Treasury notes bearing interest at the rate of
4 per cent per annum, payable on June 30 of each year. I t is contemplated that an annual appropriation will hereafter be made for this
fund until the liability of the Government has been fully covered.
The appropriation should be available for investment on July 1 of
each year.
The following statement shows the status of the fund as ol June 30,
1928:
Civil se7^ice retirement a n d d/isaMUty fund, J u n e 30, 1928
Credits:
On account of deductions from basic compensation of employees and service credit payments from Aug. 1, 1920,
to J u n e 30, 1928
$142, 729,500. 09
On account of interest and profits on investments from
Aug. 1, 1920, to J u n e 30, 1928
13, 211,143. 86
Less disbursements' on account ofi-annuities and refunds—.
Total
_j___
155,940,643.95
72, 806, 212.18
83,134, 431. 77
Assets:
$22,695,050 face amount of fourth Liberty
loan 4^/^ per cent bonds at principal
cost of^
1
$22,399,454.01
$31,200j00O face amount 4 per cent special
T r e a s u r y notes, payable J u n e 30, 1931— 31,200,000.00
$14,400,000 face amount 4 per cent special
T r e a s u r y notes, payable J u n e 30, 1932__ 14, 400, 000. 00
$14,800,000 face amount 4 per cent special
T r e a s u r y notes, payable J u n e 30, 1933— 14, 800, 000.00
82,799,454.01
102
REPORT ON T H E
FINANCES
Unexpended balances t o credit of—
Disbursing officer
___.
F u n d (Division of Bookkeeping and W a r rants)
$217, 368. 04
117, 609. 72
$334, 977. 76
Total
83,134, 431. 77
District of Golvmibia. teachers'^ retirement fvnnd.—During the fiscal
year ended June 30, 1928, the Treasurer of the United States made
investments for account of this fund in Federal farm loan bonds
and in Philippine Islands bonds. The Federal.farm loan bonds purchased were $75,320 face amount of 4 per cent bonds at a principal
cost of $74,285.95; $294,440 face amount of 4^/4 per cent bonds at a
principal cost of $297,787.74; $58,600 face amount of 41/2 per.cent
bonds at a principal cost of $60,109.25; $43,680 face amount at a
principal cost of $45,405.92; and $1,000 face amount of 5 per cent
bonds at a principal cost of $1,030. The other investments consisted
of $182,000 face amount of 4 % per cent Philippine Islands bonds at
a principal cost of $197,669.56.
Of the $165,450 face amount of third Liberty loan .414 per cent
bonds held on June 30, 1927, $162,000 face amount were sold on
March 30, 1928, at 100 §|, the proceeds of which amounted to
$162,759.38 and accrued interest; and $3,450 face amount were held
and redeemed at maturity. The principal cost of these bonds to the
fund amounted to $157,611.47. The profit on these transactions
amounted to $8,597.91.
The securities in the investment account on June 30, 1928, were as
follows:
Security
First Liberty loan 4J4 per cent bonds.__
Third Liberty loan i l i per cent bonds._
Fourth Liberty loan 43^ per cent bonds.
i H per cent Treasury bonds of 1947-1952
4 per cent Federal farm loan bonds
43^ per cent Federal farm loan bonds
i y per cent Federal farm loan bonds...
i H per cent Federal farm loan bonds
6 per cent Federal farm loan bonds
i y p'er cent Philippine Islands bonds. ._
Face
amount
Principal
cost
$26, 850.00
3,450. 00
735,750.00
10,000.00
75,320.00
664,740.00
416,940.00
91,480.00
1,000.00
182,000.00
$27,529.64
3,455.72
704,371.27
10,000.00
74,285.95
671,739.36
426,283:96
94,729.65
1,030.00
197,669. 56
2,207,630. 00
2,211,095.01
Foreign Service retirement and disability fwnd,—Investments for
account of the Foreign Service retirement and disability fund were
made during the fiscal year 1928 in special issues of Treasury certificates and notes bearing interest at the rate of 4 per cent per annum,
in accordance with the procedure outlined in the Annual Report of
the Secretary of the Treasury for the fiscal year 1927.
SECRETARY OF THE TREASURY
103
Credits to the fund during the fiscal year aggregated $169,509.73,
of which $154,322.08 was on account of deductions from basic compensation of employees and service credit payments, and $15,187.65
represented interest and profits on investments. Net advances to the
disbursing ofiicer of the State Department for the payment of annuities and refunds, etc., amounted during the fiscal year to $97,841.58,
as compared to $74,000.for the previous year. The total interest and
profits to June 30, 1928, amounted to $34,992.88.
During the fiscal year Congress provided an initial appropriation
of $213,000 to be available for investment on July 1, 1928, for the
beginning of the financing of the liability of the Government in
connection with this fund. This amount was invested on July 1,
1928, in special issues of Treasury notes in accordance with the
usual procedure.
All of the securities in the investment account of the fund on June
30, 1928, were held in safe-keeping by the Division of Loans and
Currency of this department and the Federal Reserve Bank of New
York. ,
The following statement shows the status of the fund as of June 30,
1928:
Foreign Service retirement and disability fund, June 30, 1928
Credits:
On account of 5 per cent deductions from basic compensation of
employees subject to the Foreign Service act
$600, 417.05
Interest and profits on investments
34, 992.88
AU other
...
2, 673.38
638,083.31
Leas net advances to disbursing oioacer of State Department for the
payment of annuities, etc
_
^
295, 787. 83
Balance in the fund June 30, 1928
342, 295.48
Assets:
Jg79,150 face amount fourth Liberty loan 4^/4 per
cent bonds
$81,069.85
$152,000 face amount 4 per cent Treasury notes
due June 30, 1933
152,000.00
$108,500 face amount 31/2 per cent Treasury notes,
Series A-1930-32
108, 500. 00
341,569.85
$339,650
Unexpended balance June 30, 1928———
Total fund assets
725.63
342, 295. 48
Library of Congress tnost fuind.—Under the act of March 3, 1925, a
Library of Congress trust fund board, consisting of the Secretary of
the Treasury, the chairman of the Joint Committee on the Library,
the Librarian of Congress, and two persons appointed by the Presi-
104
REPORT ON T H E FINANCES
dent, is authorized to accept, receive, hold, and administer such gifts
or bequests of personal property for the benefit of, or in connection
with, the Library, its collections, or its service as may be approved by
the board and by the Joint Committee on the Library. The moneys
or securities given or bequeathed to the board are required to be
receipted for by the Secretary of the Treasury, who is authorized
to invest, reinvest, or retain investments, as the board may determine.
In accordance with the policy adopted by the board, investments and
reinvestments of the principal of trust funds are made in interestbearing securities of high rating.
The earnings credited to the fund during the fiscal year amounted
to $17,825.45, making total earnings received to June 30, 1928, of
$26,574.44.
•-•'••-••' •
During the fiscal year the board received a donation from Mr.
Archer M. Huntington of $105,000 face amount of Central Pacific
Railway Co. 4 per cent first and refunding mortgage bonds, the income from which is to be used annually in accordance with the terms
of the donation for purchases of books relating to Spanish,. Portuguese, and South American arts, crafts, literature^.and history, which
have not been published more than 10 years previously. Mr. Huntington made a further donation of $5Q,000 in cash, the income from
which is known as the Hispanic Society fund and iapplicable as
an honorarium, within the judgment of the Librarian, in maintaining
a " chair" of " T h e Literature of Spain and Portugal in the Library
of Congress." This amount was invested in first and refunding
5 per cent bonds of the Missouri Pacific Railroad Co. at a total cost
of $49,707.50, leaving an uninvested balance of $292.50.
A donation was also received from the Carnegie Corporation of
$75,000 in cash for the endowment of a chair of fine arts. This
amount was invested in $52,000 face amount of 4i/2 per cent first
mortgage collateral bonds of the Commonwealth Edison Co. at a
principal cost of $50,177.50 and $25,400 face amount of 41/^ per cent
first mortgage bonds of the New England Telephone & Telegraph Co.
at a principal cost of $24,751.75, leaving* an uninvested balance in
this trust of $70.75.
The board received during the year, as a result of securities held
on account of the donation of Mrs. Elizabeth Sprague Coolidge, subscription rights to 1514 shares of common stock of the Commonwealth
Edison Co. and 28% shares of common stock of the American Telephone & Telegraph Co. These subscription rights were sold on
the market for $3,023.65, which, together with an uninvested balance
of $62.50, was available for investment. Of this amount available
$1,024.50 was expended for $1,000 face amount of 4i^ per cent first
mortgage bonds of the New England Telephone & Telegraph Co.,
leaving an uninvested balance of $2,061.65. This balance was invested
after the close of the fiscal year.
105
SECRETARY OF THE TREASURY
The following statement shows the securities received by and purchased for account of the board up to June 30, 1928. All the securities are held in safe-keeping by the Treasurer of the United States,
subject to the order of the Secretary of the Treasury for account of
the board.
Library of Congress trust fund board s^ecurities held on June 30, 1928
Name of security
Face
amount
Rate
per centl
Class of security
Elizabeth Sprague Coolidge donation
Central Illinois Public Service Co
Chicago Railways Co.
Great Northern Ry. Co
Houston Home Telephone Co
Potosi & Rio Verde Ry. Co...
Public Service Co. of Northern Illinois
Rio Grande Southern R. R. Co..J
Utah Power & Light Co
Jacob M. and Tillie Fine and Charles and
Birdie Fine.
American Ship Building Co
American Telephone & Telegraph Co
American Window Glass Machine Co
Board of Trade Building Trust of Boston...
Commonwealth Edison C 0 - . . . . 1 .
Elgin National Watch Co
Mexican Northern Ry. Co
1...
Public Service Co. of Northern Illinois
New England Telephone & Telegraph Co..
$1.000.00
5,000.00
10,000.00
100.00
1,463. 20
13,000.00
1,000.00
10,000.00
10, 000.00
10,000.00
17,100. 00
2,500.00
700. 00
12,400.00
9,375.00:
800.00
5,000.00
16,400.00
First and refunding mortgage bonds.
First mortgage bonds.
General mortgage bonds.
First mortgage bonds.
Do.
First and refunding mortgage bonds.
First mortgage bonds.
Do.
53^1 Promissory note.
5
5
7
5
6
5
4
5
Common stock.
Do.
Do.
Do.
Do.
Do.
Do.
Preferred stock. .
First mortgage bonds.
Carnegie donation
New England Telephone & Telegraph Co..
Commonwealth Edison Co
25,400.00
52,000. 00
4H First mortgage bonds.
First mortgage collateral bonds.
Archer M. Huntington donation
Central Pacific Ry Co
Missouri Pacific R. R. Co.
James B. Wilbur donation 1
105,000.00.
49, 500. 00
Public Service Co. of Northern Illinois..
First and refunding mortgage bonds.
Do.
Preferred stock.
William E. Benjamin donation
Standard Oil Co. of California
32,500.00
Common stock.
R. JR. Bowker donation 2
Detroit Edison Co
German Government..
Japanese Government .
Austrian Government.
Total
5,000.00
2,000. 00
'2,000.00
1,000.00
First mortgage bonds.
German external loan.
Sinking fund gold bonds.
Sinking fund bonds, guaranteed loan.
500,238.20
1 Four-sevenths of income'retained for the present by the donor.
2 Life interest in six-sevenths of income retained under terms of donation.
United States Government life insurance fund.—Under the provisions of section 18 of the act approved December 24, 1919, as
amended March 4, 1923, the Secretary of the Treasury is required
to invest in interest-bearing obligations of the United States or
in bonds of the Federal land banks all moneys received in payment of premiums on converted insurance in excess of authorized
payments. Due to the act approved March 3, 1927, authorizing
the Director of the United States Veterans' Bureau to make loans
to veterans upon their adjusted service certificates out of the
106
REPORT ON THE FINANCES
United States Government life insurance fund, the funds available
for investment during the past year have been very small in amount.
Practically all of the funds available during the fiscal year under
review were used to make loans to veterans, but whenever the
ctccumulated funds exceeded the requirements for this purpose and
the authorized payments, the excess was invested in 4^4 per cent
fourth Liberty loan bonds and 3 % per cent Treasury notes. During the year the Treasury purchased $8,644,250 face amount of these
securities at a total cost of $9,474,110.43, while the Director of the
Veterans' Bureau reported loans to soldiers of $48,290,142.35.
Monthly j:.eports are made by the Treasury to the Veterans' Bureau
of all securities in the fund and the principal cost thereof as the result
of investments made by the Secretary of the Treasury, and periodic
verifications of the security holdings are made through reports
rendered to the director by the safe-keeping ofiices.
The securities held in the fund on June 30, 1928, were as follows:
Par value
First Liberty loan i}4 per cent bonds
Fourth Liberty loan 4M per cent bonds
i}4 per cent Treasury bonds
s y per cent Treasury notes, Series A-1930-32
Total
..."
i}4 per cent Federal farm loan bonds
i y per cent Federal farm loan bonds
Total investments made by the Secretary ofthe Treasury..
Loans to veterans as reported by the Director of the U. S. Veterans'
Bureau
Total investments in the fund
.:
Principal cost
$6,639, 900. 00
60, 247, 900. 00
49,173,200.00
500, 000. 00
.$6, 316, 209. 21
58, 972, 332. 23
49, 201,905. 28
498, 750. 00
116, 561,000. 00
114, 989,196. 72
32, 550, 000. 00
69, 200,000. 00
32, 477, 590. 04
69, 742,644. 40
218,311,000.00
217, 209,431.16
73, 759,862. 45
73,769,862.46
292, 070, 862.45
290,969,293.61
Division of Bookkeepmg and Warrants
Surrrniofry of receipts and expenditu/res,—^A summary of receipts
and expenditures during the fiscal year ended June 30, 1928, adjusted
to the basis of daily Treasury statements, revised, is set forth in the
following table:
Ordinary receipts
Expenditures chargeable against ordinary receipts
Surplus of ordinary receipts over total expenditures
chargeable against ordinary receipts
Surplus revenues applied to reduction of the public debt in
addition to $540,246,020.30 debt, retirements chargeable
against ordinary receipts
Surplus revenues reflected in increase in balance of general
fund of the Treasury on June 30, 1928, compared with
June 30, 1927
:
Total surplus revenues accounted for, as above
$4, 038, 235, 512. 48
3, 645, 005, 619.24
393, 229, 893. 24
365, 637, 682'. 87
27, 592, 210. 37
393, 229, 893. 24
SECRETARY OF THE TREASURY
107
Public debt receipts-.—^
—
—.1
$6,855,340,716.01
Public debt expeniiitures,- including' public • debt expenditures
chargeable against ordinary receipts
7, 761, 224,419.18
Excess of total public debt expenditures over public
debt receipts-.
—^—,
.
——
905, 883, 703.17
Public debt retirements chargeable against ordinary receipts.
Public debt retirements from surplus revenues
:
,
Net reduction in public debt during fiscal year, as
above^
^
Total.ordinary and publicdebt receipts
Total ordinary and public deht expenditures
Excess of all receipts over all expenditures
Balance
ments
Balance
nien'ts
540, 246, 020. 30
365, 637,682. 87
905, 883, 703.17
10, 893, 576, 228.49
10, 865,984, 018.12
27, 592,210.37
in general fund on basis of daily Treasury state(revised) June 30, 1927-___—^
'..-^
in general fund on basis of daily Treasury states
Ci^^ised) June 30,'19^^
232, 598,120. 48
.
260,190, 330. 85
Net increase in balance in. general fund June 30, 1928,
over such amount June 30, 1927
'.—
27, 592, 210. 37
Th^ general fv/nd,—
Balance according to the daily Treasury statement, June 30,
1927 (unrevised)
-__
Deduct net excess of expenditures over receipts in June
reports subsequently received
.
234,057,409.85
1, 459, 289. 37
232, 598,120. 48
Excess of receipt warrants
over payment warrants,
fiscal year 1928
'$60,942,917.16
Increase in unpaid warrants
June 30, 1928, as compared with June 30,1927228, 922. 70
$6i, 171, 839. 86
Deduct decrease in book credits of disbursing OflScers and agencies with the
Treasurer, June 30, 1928, as compared with
June 30, 1927
33, 579, 629. 49
27,592,210.37
Balance held by the Treasurer of the United States,
June 30, 19281
.
Balance held by the Treasurer, according to daily Treasur^^
statement, June 30, 1928 (unrevised)
Deduct net excess expenditures over receipts in June reports
subsequently received
:
260,190, 330. 85
265,526,980.79
5, 336, 649. 94
260,190, 330. 85
I
^ After adding $51.50 for increase in uncovered moneys and deducting $308.25 for
relief of John Burke, former Treasurer United States, under act of June 3, 1922.
108
REPORT ON T H E FUSTANCES
Warrants issued dv/rmg the fiscal year 1 9 ^ adjusted to basis of
daily Treasury statements {revised) .—The following table shows the
total number of warrants issued and the gross amounts involved on
account of the receipts and expenditures recorded during the fiscal
year, adjusted to basis of daily Treasury statements (revised) :
Number
General classes.
^ Receipt w a r r a n t s :
Ordinary
Public debt
Total.jJ^.
P a y a n d transfer w a r r a n t s :
Ordinary
Public debt
Total
R e p a y a n d counter w a r r a n t s :
Ordinary
Publicdebt...
.. .
Total
.
.
.
.
794
14
$3, 878,196, 748. 48
6,. 855, 340, 716.01
-f$160,038,764.00
$4, 038, 235, 512. 4 8
6,-855,340,716.01
808
10,733,537,464.49
+160,038,764.00
10,893,576. 228. 49
66, 276
35
4,060,560,111.50
7, 761,352, 595. 28
+19,082,831.42
» 4,079, 642, 942.92
2 7, 761,352, 595. 28
60,311
11,821, 912, 706. 78
+19,082,831.42
11,840,995, 538. 20
1,194
22:
1,149,190, 240.10
. 128,176,10.
-174,306,896.12
974,883,343.98
128,176.10
1,216
1,149, 318,416. 20
-174,306,896.12
975, Oil, 520.08
2, 911, 369,871.40
7, 761, 224,419.18
+193, 389, 727, 54
13,104,759,598.94
2 7, 761, 224,419.18
10, 672, 594, 290. 58
+193,389, 727. 54
10,865,984, 018.12
966, 826, 877. 08
< 905,883, 703.17
- 3 3 , 350, 963.54
8 933,475,913. 54
* 905, 883, 703,17
- 3 3 , 350, 963. 54
8 27,592,210.37
P a y w a r r a n t s (net):
Ordinary.
Public debt
Total
—
Excess of receipts over
tures:
Ordinary
Public debt
Total
W a r r a n t s issued
(amount)
Adjustments
to
basis of daily
Treasury statem e n t , revised,
on a c c o u n t of
d i s b u r s i n g oflS- Adjusted figures
cers' credits, u n - .on.basis of daily
• p a i d w a r r a n t s , > T r e a s u r y states
merits, revised f
uncovered.JHOjaeys,
a n d receipts credited
direct t o a p p r o priations
—
expendi-
60, 943,173. 91
-..-..-."_.
G r a n d total of w a r r a n t s issued
•
62,335
••
. . > • •
.
.
.
.
.
»
.
,
. ; .
23, 704,768, 587.47
1 Exclusive of $540,246,020.30 public debt expenditures (retirements) chargeable against ordinary receipts.
2''liicluiies amount-referred t o i n note 1.
3 Without deducting amount referred to in note 1. The excess of ordinary receipts over total expenditures chargeable against ordinary receipts was $393,229,893.24, as shown on p. 406.
* Excess of expenditures; repi-esents net reduction in the public debt,
« Represents increase in general fund balance.
Receipt accounts to the number of 1,191, representing receipts from
customs, internal revenue, public lands, miscellaneous sources, Panama
Canal tolls, a)nd public debt, and appropriation accounts to the number 5,734, covering expenditures for all executive departments, other
Government establishments, the District of Columbia, and the public
debt, have, been credited and charged, respectively, to the general
fund of the Treasury, deta;ils of which are shown on pages 391 to 406
of this report.
Transfer and counter warrants amounting to $1,489,616,251.70 were
issued for adjustment of appropriation accounts, largely for the
service of the Army and Navy, without affecting the general fund.
109
SECRETARY OF THE TREASURY
Appropriation warrants were issued to the number of 455, crediting., detailed--aiDspropriatioh accounts with amounts provided by law
for disbursement, and transfer appropriation and surplus fund warrants charging and crediting detailed appropriation accounts to the
number of 311, a total of 766.
District of Columbia account of revenues omd expenditures.-—The
total charges and credits to the District of Columbia for the fiscal
year ended June 30, 1928, on the basis of warrants issued, as shown
by the District of Columbia ledger of revenues and expenditures
esJ:,aMishei^i^^^^
the act of June 29, 1922 (42 Stat. 669),
were as follows:
General funds
Special funds
Trust funds
Total
...
Balance June 30,1927 .
$11,451,944.16
Revenues, fiscal year 1928
1 27,474,960.80
United States contribution, act May 21,
1928
9,000,000.00
$754, 562.00
2,827,876.65
$416,837. 92
2 2,474,778.55
$12,623,344.08
32, 777, 616.00
47,926,904.96
1 34,659,603. 75
3, 582,438.65
2,985, 207.83
2,891, 616.47
2 2, 531,393. 56
64,400,960. 08
40,176, 205.14
13,267,301. 21
597,230.82
360, 222. 91
14,224, 754.94
Expenditures, fiscal year 1928
Balance June 30,1928
9,000,000.00
1 Exclusive of $454,645.41 general revenues of the District of Columbia covered into the Treasury to credit
of "Policemen and firemen's relief fund (trust fund)" under act of Sept. 1, 1916, vol. 39, p. 718, sec. 12, to
meet deficiencies in said fund.
2 Includes $454,645.41 referred to in note (1).
Alien Property Custodiam account.—Under the provisions of the
act of Congress approved October 6, 1917, and the proclamations and
Executive orders issued thereunder by the President, the Secretary
of the Treasury purchased and exchanged during the year for account
of the Alien Property Custodian United States securities of a par
value of $79,350,500. There were on hand on July 1, 1927, similar
securities of a par value of $179,868,000. Securities amounting to
$79,838,500 were sold or redeemed during the year, the proceeds being
reinvested as available, and $23,741,200 was transferred to the German
special deposit ai'ceount in accordance with the provisions of the settlement of war claims act of 1928, as explained hereinafter. The total
face amount of such securities carried by the Secretary of the Treasury in trust for the Alien Property Custodian on June 30, 1928, was
$155,638,800.
Under decision of the Supreme Court of the United States, dated
May 24, 1926, in the case of Max Henkels, appellant, v. Howard
Sutherland, as Alien Property Custodian, and Frank White, as
Treasurer of the United States of America, and opinions of the Attorney General, dated August 25, 1926, and July 7, 1927, rendered
in connection therewith, there has been paid to eligible claimants to
September 15, 1928, upon certificates of the Alien Property Custodian, the sum of $4,232,690.01, and to the Alien Property Custodian
110
REPORT'ON THE FINANCES
for administrative: expenses the sum of $56,342.81, while the sum of
$64,104.58 was withheld from claimants pending the, determination
of income tax liability, if any, making a total of $4,353^137.40, which
represents both earnings accrued on investments to March 4, 1923, of
$3,670,119.76, and earnings on such earnings of $683,017.64.
Paragraph 1 of subdivision (b) of section 25 of the trading with
the enemy act, approved October 6, 1917, as amended by section 10
of the settlement of war claims act of 1928, approved March 10, 1928,
authorized and directed the Alien Property Custodian to invest in
one or more participating certificates issued by the Secretary of the
Treasury the sum of $25,000,000, representing the German share
(estimated) of the unallocated interest fund derived from earnings
accruing prior to March 4, 1923, on investments of money deposited
in the Treasury by the Alien Property Custodian, and earnings accrued upoii such earnings subsequent to March 4, 1923. I n accordance therewith and acting under the authority contained in paragraph 1 of subdivision (b) of section 4 of the act of March 10, 1928.
supra, the Secretary of the Treasury transferred on March 15, 1928.
to the German special deposit account, created by section 4 of the
settlement of wiar claims act of 1928, from securities held by the
Treasury for account of the Alien Property Custodian, $23,741,200,
face amount of 4% per cent fourth Liberty loan bonds, the aggregate
transfer, including premiums and interest accrued thereon, involving
the sum of $24,999,978.21. The remaining $21.79 was transferred by
check drawn on funds held by the Treasury for accbuht of the Alien
Property Custodian.
The total amount paid during the fiscal year 1928, upon authorizations of the Alien Property Custodian and the Attorney General,
was $6,715,500.99.
State bonds and stocks ovMed by the Urdted States.—The following statement shows the nonpaying State bonds and stocks, formerly
in the Indian trust fund, now in the Treasury, belonging to the
United States:
state
Louisiana. _
. . . . . .
North Carolina.Tennessee
Total
.
Principa-l
Interest
coupons
due and
unpaid
$37,000.00
$17,220.00
335,666. m%
157,830. 51
372, 666. 66%
175, 050. 51
(0
(0
1 By an act approved May 29, 1928, Congress appropriated the sum of $118,035.69 in settlement of the indebtedness of the United States to the State of North Carolina for advances during the War of 1812-1815,
including interest, $167,339.88, and the proceeds of certain cotton seized by the United States in 1865 and
1866, incliiding interest, $96,835.81, a total of $264,175.69, less'the amount due the United States on account
of $58,000 face amount of bonds of the State of North Carolina held by the United States and $88,140 accrued
interest thereon. Details relating to the settlement are set forth in Senate Document No. 50, Seventieth
Congress, first session.
^SECRETARY OF T H E TREASURY
H I
A history of these State stocks and bonds is given in House Document No. 263, Fifty-fourth Congress, second session.
Division of Deposits
Government deposits with banks during the fiscal year 1928 were
carried with Federal reserve banks and their branches, special
depositaries, foreign depositaries, national-bank depositaries, depositaries designated under the provisions of the act approved May 7,
1928, and depositaries in the insular possessions of the United States.
The average deposits carried with depositary banks were substantially
the same,as during the previous year. The only outstanding change
in the depositary system was brought about by the act approved May
7, 1928, which authorized the Secretary of the Treasury to designate
as depositaries of public moneys, State banks and trust companies
.which are-members of the Federal reserve system, and to require such
banks to act as financial agents of the Government. This act places
member State banks and trust companies upon a parity with national
banks with respect to all Government deposits.
A brief summary of the changes within the depositary system of
the Treasury during the fiscal year 1928 follows:
General depositaries,—On June 30, 1927, there were 321 general
depositaries, and on June 30, 1928, 318 banks held such designation.
During the fiscal year 1928, 10 banks were designated general depositai;ies of public moneys and 13 were discontinued as such depositaries.
Adjustments in the fixed balance of nine general depositaries were also
made during the year. At the close of the fiscal year 1927 deposits
to the credit of the Treasurer of the United States in general depositaries totaled $6,832,264.08, as against $6,472,887.64 on June 30, 1928.
Limited depositaries.—Diivmg t h e ' fiscal year 1928 the Treasury"^
designated 51 additional limited depositaries and discontinued 45.
Deposits held by general and limited depositaries to the credit of
Government officers other than the Treasurer of the United States
on June 30, 1927, totaled $18,549,177.58, and on June 30, 1928, such
deposits amounted to $17,876,541.76.
Insular depositoHes.—During the fiscal year 1928 the Treasury
maintained seven insular depositaries, located in the Canal Zone, Philippine Islands, and Porto Rico. The total Government deposits on
June 30, 1927, were $1,935,198.13 and on June 30, 1928, $2,032,035.84.
Foreign depositaries.—The Treasury maintained depositaries of
public moneys in foreign countries during the fiscal year 1928, as
follows: 2 in China, 3 in England, 3 in France, 1 in Haiti, 1 in Italy,
and 2 in Panama, with deposits totaling $511,607.43 on June 30, 1927,
and $372,112.10 on June 30, 1928.
Special depositaries,—During the fiscal year 1928, 212 special depositaries were designated and 4,472 discontinued. The compara13606—29—FI 1928
10
112
REPORT ON T H E FINANCES
tively large number of discontinuances resulted from the Treasury's
policy of revoking the designatipn of all special depositaries which
do not maintain active accounts.
Amount of deposits.—The following table indicates the distribution of Government deposits among the various classes of depositaries
at the close of business on June 30, 1928:
Government deposits with hanks, June SO, 1928
Type of, depositary
Federal reserve banks and branches..
Special depositaries.
^
Foreign depositaries:
To credit of Treasurer ofthe United States
To credit of other Government oflBcers
General depositaries:
To credit of Treasurer of the United S t a t e s . , . . .
General and limited depositaries:
To credit of other Government oflScers
Insular depositaries:
To credit of Treasurer of the United States
To credit of other Government oflScers
_
Philippine Treasury to credit of the Treasurer of the United States .
Total
Amount of
$23, 647, 738. 55
245, 730, 779. 32
83,304. 52
288,807.58
i, 472,887. 64
, 876, 541. 76
312, 461. 29
848,397. 82
871,176. 73
296,132,095. 2 1
Interest on deposits.—All Government depositaries, except Federal, reserve, banks, are required to pay interest at the rate of 2 per
cent per annum upon daily balances. The interest received upon
deposits with special depositaries during the fiscal year 1928 was
$4,328,982.76, and the total received from, this source from April 24,
1917, to June 30, 1928, was $77,974,983.45. Interest received from
other depositaries during the year was $512,694.01, and the total
amount received from June 1, 1913, when this requirement became
effective, to June 30, 1928, was $19,442,467.99.
GOVERNMENT ACTUARY
The iOffice of the Government actuary, during the fiscal year 1928
has kept a record of the daily market prices of all outstanding securities of thei United St ates.x The investment; value of these securities,
.based upon their prices, in each case, has been computed. These statistics have been embodied in circular form, printed and issued as
" Government Actuary, Form A." Form A, dated July 1, 1927,
contained a daily record of 14 different classes of United States
bonds and two series of notes. Form A, dated June 1, 1928, covered
13 different classes of bonds and three different series of notes. Of
all the securities so listed, only three were pre-war issues.
I n addition to circular Form A, the investment value of certain
United States bonds, and of the notes and certificates outstanding,
based upon their closing New York market price, has been computed
daily upon receipt of such quotations from the Federal Reserve Bank
of New York, by wire, immediately upon the close of the New York
Stock Exchange.
Estimates of the population of the United States have been prepared as of each month of the year. Also estimates of the population
as of the 1st of July, 1928, for each State, territory, and possession
of the United States.
Numerous estimates as to the revenues of the United States have
also been made.
Numerous tables have been prepared, such as a statement of the
profit or loss on national-bank circulation, interest tables, and a
series of comprehensive amortization tables for use by the Farm Loan
Board.
Verification of numerous computations of other offices have also
been made, including verification of certain other amortization tables.
The actuary, as one of the Board of Actuaries connected with the
civil service retirement law, has attended the conferences of the
board and has appeared before congressional committees as a member
of this board in connection with the annuities of retired employees
as affected by pending legislation. The annual report of the board
was approved by this office.
Extensive studies have been made of the finances of the Government, especially as to the revenues. The conclusions derived therefrom were for the use of the department and of the Congress.
113
114
REPORT ON T H E FINANCES
The Ways and Means Committee of the House and. the Finance
Committee of the Senate were furnished with information, estimates, and statistics while engaged in preparation of the revenue
act of 1928. The actuary during the time this act was under consideration was in constant attendance with the committees or with
the Senate.
Statistics of various kinds, were furnished upon request during the
year to committees, to Congressmen, to other offices, and to other
inquirers.
The personnel of the office for the year 1928 consisted of the actuary
and two other employees.
DIVISION OF APPOINTMENTS
Employees of the Treasu/ry Depa/rtment
Number,—From June 30, 1927, to August 31, 1928, there was no
large reduction in the personnel of the Treasury Department in
Washington such as there had been for several years previous.
There was, however, a net decrease of more than 300 employees in
the permanent force, most of this reduction having occurred in the
Internal Revenue Bureau and the Bureau of Engraving and Printing. Due to the large building program authorized by Congress it
was necessary for the Office of the Supervising Architect to increase
its permanent force, and the Customs and Coast Guard headquarters
found it necessary to make slight increases in the personnel in order
to meet the demands made upon these branches of the service. On
August 31, 1928, the Division of Loans and Currency showed an
increase of 327 employees over June 30, 1927. This increase, however, is due to temporary appointments and temporary transfers
from the Bureau of Engraving and Printing in connection with the
redemption of Liberty bonds and war-savings certificates. A majority of the other bureaus and divisions of the Treasury show slight
decreases in the personnel. The number of employees in the departmental service of the Treasury classified according to bureaus and
offices at the end of each month from June, 1927, to August, 1928, is
shown in Table 66, page 559, of this report.
H a d it not been necessary to increase the enlisted force of the
Coast Guard by more than 500 men, the field personnel of the Treasury would have shown a slight decrease from June 30, 1927, to June
30, 1928. A comparison of the number of employees in the departmental and field services of the Treasury on June 30, 1927, and June
30, 1928, is contained in Table 64, page 558.
Retirement,—From September 1,1927, to August 31,1928, 259 persons were retired from the departmental and field services of the
Treasury Department, and since the retirement act went into effect
on August 20, 1920, 2,711 persons have been retired. A t the present
time 150 persons above the retirement age are retained in the Treasury Department in Washington and 625 in its field service. Due to a
provision of the law that after August 20, 1930, no employee shall be
continued in the civil service of the United States beyond the age of
retirement for more than four years, a number of these continuances
115
116
REPORT ON THE FINANCES
have been approved by the Civil Service Commission to August 20,
1930, only.
Table 65, page 558, shows the number of persons retired and the
number retained in the departmental and field services ofthe Treasury
under the provisions of the act of July 3, 1926, amending the act of
May 22, 1920, and the amendments thereto.
Section of surety bonds ..
The number and amount of fidelity and surety bonds now required
in the operations of the various branches of the Government is becoming more important each year. This importance is emphasized
through the number of insurance companies that are competing for
the business.
On June 30, 1928, 67 companies were authorized by the Treasury
to do this business, and applications from 7 additional companies
which were pending before the department have since been approved
and the perinits issued, making a total of 74 companies now authorized. I n addition to the 74 companies holding certificates direct
from the Secretary of the Treasury to execute or reinsure bonds in
favor of the United States, 32 other companies reported to the department for reinsurance purposes other than bonds running to the Government. The certificate of one company was terminated during the
past year because of its retirement from the business.
I t is interesting to note that since 1921 the number of insurance
companies competing for the Government's business has more than
doubled. and their resources have greatly increased. I n 1921, 32
companies were writing Government bonds, and they reported assets
totaling $299,000,000, liabilities of $208,000,000, and combined capital
and surplus of $90,000,000. The 67 companies authorized on June
30, 1928, reported $769,000,000 in assets, $490,000,000 in liabilities,
and combined capital and surplus of $279,000,000. These figures
do not include the 7 additional companies since authorized or the 32
reinsurers. Under the provisions of existing law the Treasury must
pass upon the value of the assets reportied by these companies and
determine the sufficiency of the reserves to meet their liabilities. As
a result of these appraisals the department issues a rating chart
twice a year for the information and guidance of all branches of
the Government taking surety bonds.
During the past seven years there has been no failure of any surety
company writing bonds for the United States. The department has,
however, found it necessary to request a refinancing and reorganization in a number of cases. There are a few companies that are
engaged in a refinancing at this time. This is especially important
wherever it can be done, because it not only saves great expense other-
SECRETARY OF THE TREASURY
117
wise necessary to examine the files throughout the various departments and agencies of the Government, to determine what outstanding bonds must be reexecuted in other companies and ascertain the
amount of existing claims, but it also effects a very material saving
to bonded employees who would otherwise have to take out new bonds
and pay new premiums.
The importance of the casualty and surety business generally is
especially reflected through the fact that in 1927 companies handling
' such business received' approximately $100,000,000 in fidelity and
surety premiums and over $700,000,000 in miscellaneous casualty
premiums. Accurate data are not available, but it is reasonably estimated that surety companies authorized by this department are now
writing over 200,000 different bonds annually in favor of the United
States, ranging in penalty from a nominal sum of $50 to several
millions. This includes all bonds taken in the operations of the
Postal Service, the Immigration Service, and the Federal courts.
Under the provisions of existing law Government employees must
pay from their private funds the premium on bonds which they are
required-to'give to the United- States. No reliable data are available
as to what this annual cost is, nor are there any available statistics on
the cost to the Government of contract bonds. The contractor
naturally includes this premium cost in his contract price and consequently the same is indirectly paid by the Government.
The existing law under which surety companies are authorized to
write bonds on behalf of the United States is not applicable to the
Philippine Islands. I t would be especially advantageous to the
Departments of the War and Navy, and other branches of the Government having activities in the Philippine Islands, if the law could
be amended so as to permit surety companies organized under the
laws there to qualify as surety on bonds in favor of the United States.
I t is recommended that such an amendment have the careful consideration of Congress at the next session.
BUDGET AND IMPROVEMENT COMMITTEE
The budget and improvement committee is responsible, under the
direction of the Undersecretary and budget officer, for the preparation and examination of Treasury estimates of appropriations and
for the improvement of administrative methods and procedure within
the Treasury Department. I n addition to examining all estimates
the committee makes inquiries as to the reserves which may be set
up under the various appropriations and considers other matters
affecting expenditures of the department. I t makes inquiries along
various lines with the purpose of improving methods and procedure,
and from time to time, under special instructions, makes a detailed
examination of some particular office or service of the department.
Its reports and recommendations thereon are submitted to the Secretary of the Treasury through the budget officer of the department.
For the fiscal year 1930, heads of bureaus and offices submitted estimates, exclusive of interest on and retirement of the public debt payable from ordinary receipts and the amounts for the support of the
Bureau of the Budget, aggregating $379,539,933.50, which included
$152,977,536.70 for annual appropriations, $26,432,396.80 for permanent and indefinite appropriations and special funds, $145,000,000
for refunding internal revenue taxes illegally collected, $47,000,000
for public buildings construction under the act of May 25, 1926, and
$8,130,000 for acquisition of land in the so-called " T r i a n g l e " in
Washington, D. C. The President allocated to the Treasury Department as a tentative maximum amount $341,352,049.80, including
$144,915,153 for annual appropriations, $26,436,896.80 for permanent
and indefinite appropriations, $130,000,000 for refunding internal
revenue taxes, $35,000,000 for public buildings construction, act of
May 25, 1926, and $5,000,000 for acquisition of " Triangle " properties.
After careful examination by the committee and on its recommendations the Secretary of the Treasury made net deductions of
$1,810,768.20 in the estimates for annual appropriations and approved $144,914,675.68 as the regular e3timates and $6,252,092.82 as
a supplemental statement of the absolutely necessary requirements
of the department under these appropriations. The sum of $157,215
was also deducted from the estimates of expenditures under permanent arid indefinite appropriations and special funds and $26,275,181.80 approved as the estimated expenditures. There were also
118
SECRETARY OF THE TREASURY
119
approved as supplemental items the amounts of the estimates in
excess of the allocation by the President on account of refunding
internal revenue taxes, public buildings construction, act of May
25, 1926, and acquisition of the " Triangle " properties.
During the fiscal year 1928 supplemental and deficiency estimates
were submitted aggregating $141,231,036.17, of which $43,000,000
was for refunds of internal revenue taxes, $50,000,000 for payments
under the settlement of war claims act, and $35,428,083.56 for public
buildings construction under the act of May 25, 1926, and for the
acquisition of the " T r i a n g l e " properties. After examination by
the committee these estimates were revised and reduced to
$140,895,251.17.
At the beginning of the fiscal year 1928, general reserves amounting to $1,410,585 were set aside from appropriations for that year
to meet extraordinary or emergency demands that might arise. Subsequently, additional reserves of $575,388 were added and reserves
amounting to $509,130 were released, leaving a balance of $1,476,843
in the general reserve at the close of the fiscal year.
For the fiscal year 1929, heads of bureaus and offices recommended
reserves amounting to $778,580. After examination by the committee
$176,720 wa3 added, making a total for the year of $955,300.
The budget and improvement committee was appointed July 8,
1922. I t has examined estimates for the budgets of 1924 to 1930,
inclusive, as well as supplemental and deficiency estimates. As a
result of its examinations and on its recommendations, items aggregating $61,325,085.54 have been disapproved and deducted from said
estimates before they were transmitted to the Bureau of the Budget.
OFFICE OF CHIEF CLERK AND SUPERINTENDENT
Housing of Treasury activities
The inauguration of the public building program in the District of
Columbia made it necessary in the fall of 1927 to move several
Treasury activities which were housed in Government property on
the Department of Commerce site, squares 227 to 230, inclusive. To
provide space in which to locate a part of the Coast Guard Service
occupying quarters in the Graham Building in square 227, it was
necessary to recondition the G. A. R. or Cornwall Building at 1412
Pennsylvania Avenue.
The uncurrent files of the Secretary's office occupying the entire
ground floor of the Graham Building were moved into restored
quarters at 1418-20 Pennsylvania Avenue NW. The cabinet shop
located for some time in the building on Fifteenth Street near D
was moved into remodeled quarters in the rear of the Oxford Hotel
at Fifteenth Street and Pennsylvania Avenue. The pooled garage •
under the control of the Treasury Department, occupying three
separate buildings at Fourteenth and D Streets NW., was moved into
one rented building at 1709 Kalorama Road NW.
All of the moving and practically all of the work of rehabilitation
was performed by the chief clerk's forces supplemented by help received from the Public Buildings Commission. This work was
accomplished with a minimum expenditure of funds.
I n the spring of 1928 a part of the forces of the Bureau of Internal
Revenue was moved by the Public Buildings Commission from
Treasury Annex No. 2, located on squares 229 and 230, to rented
quarters in the Press Building at Fourteenth and F Streets NW.
Two additional stories to the Liberty Loan Building at Fourteenth
and Water Streets having been completed, part of the force of the
Division of Loans and Currency and the employees of the Division
of Public Debt Accounts and Audit were moved from the Auditors'
Building at Fourteenth and B Streets SW. to the Liberty Loan
Building.
I n order to recondition the Auditors' Building, into which the Register of the Treasury was scheduled to move, it was necessary to have
certain underpinning work performed as well as a complete renovation
of that portion of the building not already occupied by the Bureau
120
SECRETARY OF T H E TREASURY
121
of Engraving and Printing. This was accomplished at a minimum
of expense by utilizing to the utmost the forces of the chief clerk's
office supplemented by assistance from the Public Buildings Commission. B}^ the end of June, 1928, the Register's office had to a considerable degree been moved from the rented quarters at 119 D Street
NE. to the Auditors' Building.
These moves affecting the Division of Loans and Currency and the
office of the Register of the Treasury were the first of the permanent
moves in connection with the general public building program in the
District of Columbia.
General improvements
During the past two years a number of very definite improvements
have been made at the Treasury Building looking to the welfare
and comfort of the personnel.
The "cash room," which from the nature of its work might be
called the " United States Bank," was completely modernized and
the entire room reconstructed from an appropriation provided by
Congress. This was the most important improvement which has
been made in the building for many years.
At the freight door, where all the money shipments are handled, a
shelter was erected in order to protect the employees from the
weather. A shelter was also constructed in the courtway of the building for the protection of firemen and engineers whose daily duty
requires outdoor transit from one boiler room to another.
. The lighting system has been standardized and improved to the
great benefit of the employees.
The old and inadequate wooden shelving in the file room, assigned
for the housing of financial records of the office of the Treasurer of
the United States, was removed and modern steel construction
installed.
Seville exposition
The chief clerk, under his designation as contact officer for the
department in connection with the exposition to be held at Seville,
Spain, in the spring of 1929, has completed as far as possible the
assigned tasks, and the exhibits limited to the Public Health Service
and the Bureau of Engraving and Printing are in course of preparation and will be ready for shipment at the designated time.
Personnel
. The efficiency of the forces assigned to the chief clerk and superintendent has been greatly increased, due to the introduction of
122
REPORT ON T H E FINANCES
mechanical equipment, such as a baler for taking care of the waste
paper, a motor-driven lawn mower, electrically driven machines in
the cabinet shop, replacing old hand machines, and other like equipment. These installations have made it possible to turn out a greater
amount of work without an increase in personnel.
Placing uniforms on the guard force has dignified this activity and
has been commented on most favorably. This force has been reorganized along military lines by establishing offices of captain, lieutenant, and sergeant.
COAST GUARD
The principal operations of the Coast Guard during the fiscal year
1928 were as follows:
Lives saved or persons rescued from peril
Persons on board vessels-assisted
—-'.
Persons in distress cared for
_-:_—
__.—^__
Vessels boarded and papers examined
Vessels seized or reported for violations of law
Fines and penalties incurred by vessels reported
.—
Regattas and marine parades patrolled
Instances of lives saved and vessels assisted-^Instances of miscellaneous assistance
Derelicts and other obstructions to navigation removed or destroyed—^
:
Value of vessels assisted (including cargoes)
Value of derelicts recovered and delivered to owners
Persons examined for certificates, aslifeboat men
•.
3,983
17,383
690
65, 710
1, 554
$279, 510
84
3, 262
3, 584
167
$39,479,729
$103,520
4, 261
Comparisons with the operations of preceding years establish new
records for parts of the activities of this service. The persons saved
or rescued from peril during the year numbered 3,983, being 670 in
excess of the year 1927, a record never before attained since the present organization of the Coast Guard in 1915. The total number of
instances of assistance rendered during the year was 6,846, also the
largest in the history of the service and exceeding last year's number
by 1,338. The value of vessels assisted, including their cargoes, was
$39,479,729, being $1,678,372 in excess of last year's amount. There
were 167 derelicts and other obstructions to navigation removed or
destroyed, exceeding last year's number by 31.
There were 17,383 persons on board vessels assisted as compared
with 14,496 for the year 1927. The persons in distress cared for by
service agencies numbered 690; last year the number was 899. During the year 65,710 vessels were boarded and examined in the interests
of the enforcement of laws of the United States; in 1927 the number
was 68,223. The vessels seized or reported for violations of law
numbered 1,554 as against 1,788 last year. I t is believed that the
decrease shown in the last two items is an indication of the disposition of certain operators of craft to obey the law.
The instances of assistance rendered to other branches of the Federal Government numbered 381, being 107 more than during the year
1927.
123
124
REPORT ON T H E FINANCES
The Coast Guard continues to uphold,,and year by year to improve,
its record in the primary work of the service—the preservation of
life and property from the perils of the sea. The law-enforcement
activities having to do with the prevention of smuggling of liquor
into the United States from the sea, while calling heavily on the resources, energies, and vigilance of the service, have not resulted in any
diminution of effort in the direction of the normal duties of saving
Jives.
Protection to navigation
Ice patrol.—The international service of ice patrol in the vicinity of
the Grand Banks of Newfoundland along the trans-Atlantic steamship lanes was prosecuted during the season of 1928 by the Coast
Guard cutters Modoc and Mojave^ based on Halifax, Nova Scotia,
with the Coast Guard cutter Tampa as the stand-by vessel. " The
patrol was inaugurated on March 20, 1928, Yfhei^i the Mojave sailed,
from Boston, Mass., on this duty. The Modoc left Boston in sufficient time to relieve the Mojave and these two vessels continued the
patrol throughout the season, one relieving the other every .15 days.
The vessels cruised a total of 18,083 miles, including the runs to and
from the base. The routine broadcasts transmitted numbered 380.
Ice information and other information were .given to vessels on request in 113 instances. The total number of vessels cooperating with
the patrol was 489. Ice and obstruction reports received by radia
numbered 644. Medical treatment was given by radio in four instances. The most^ gratifying cooperation was had during the patrol
from ship and shore stations. A commissioned officer of the Coast
Guard, designated as ice observation officer, accompanied the cutters
throughout the patrol. The patrol was discontinued on June 22,.
1928.
Winter cruising,—On November 5, 1927, the President, upon the
recommendation of the Secretary of the Treasury, designated the following-named Coast Guard cutters to perform for the season of
1927-28 the customary special winter cruising upon the coast toafford such aid to distressed navigators as their circumstances might
require: Ossipee^ Tampa^ Redkving, Mojave, Acushnet, Tuscarora,.
Seneca, Seminole, Gresham, Mcmning, Carrabasset, Modoc, and.
Ycmiacram,
The cruising covered the period from December 1, 1927, to March.
31, 1928, inclusive. I t developed that the Seneca, which was undergoing a general reconditioning, was unable to leave the shipyard in.
time to participate in this work during the season. The Mojave andi
the Modoo were detached from the duty on February 15 and March.
1, 1928, respectively, for assignment to the international ice patrol.
SECRETARY OF THE TREASURY
125
The cutters engaged in the cruising traveled about 55,257 miles
and afforded assistance to 18 vessels in distress, the value of which,
including their cargoes, was more than five and one-half million
dollars. There were 676 persons on board the vessels assisted. The
cutters also boarded 207 vessels and removed 8 obstructions to
navigation.
Removed of derelicts,—During the year the vessels and stations
of the service removed from the paths of marine commerce 167 derelicts and other floating dangers and obstructions to navigation. The
estimated value of property involved in these transactions, so far as
known, amounted to $103,520.
Anchorage amd movements of vessels.—The enforcement of the laws
and regulations governing the anchorage and movements of vessels
at ports and other places where Federal regulations are in effect
was continued by utilizing, as, formerly, Coast Guard personnel and
equipment. The general plan and arrangement of this activity remain
substantially unchanged.
Regattas,—During the year service units patrolled and supervised
84 regattas, marine parades, and boat races, and, informally, a
number of other events of like character of local interest.
Enforcement of customs amd other lams
The enforcement by the Coast Guard of the customs laws of the
country and the laws relating to navigation and motor boats was
satisfactorily performed during the year.
Liquor smuggling,—The law-enforcement work of the service for
the prevention of smuggling of liquor into the United States from
the sea was vigorously and earnestly prosecuted throughout the year.
Very gratifying results were obtained; and the amount of liquor
smuggling on our coasts, that existed before the Coast Guard was
augmented for this particular duty, has been tremendously curtailed.
The so-called " rum row " has been eliminated. The situation, however, requires unremitting and constant activity on the part of the
Coast Guard. There remains some liquor smuggling on our coasts
and a considerable amount of such smuggling on the Great Lakes.
I t is believed that the Coast Guard has accomplished all that is possible in this work with its present resources.
Cruises in northern waters,—The patrol of the waters of the North
Pacific Ocean, Bering Sea, and southeastern Alaska was conducted
during the season of 1927 by the Coast Guard cutters Algonquin,
Haida, Unalga, Northland, and Snohomish, This patrol, which is
carried on annually by the Coast Guard, has for its primary purpose
the enforcement of the convention of July 7,1911, between the United
126
REPORT ON T H E FINANCES
States, Great Britain, Russia, and Japan, and the laws and regulations for the protection of the fur seal and sea otter and of game, the
fisheries, and fur-bearing animals of Alaska. I n the prosecution of
their duties the cutters cruised about 46,000 miles, transported 381
persons, afforded medical aid to 192 persons, boarded 147 vessels, and
assisted 7 vessels in distress.
The patrol for the season of 1928 is being carried on by the Coast
Guard cutters Algonquin, Haida, Unalga, Northland, and Snohomish,
Northern Pacific halibut fishery,—The patrolling of certain waters
off the coast of Washington and southeastern Alaska for the enforcement of the law with respect to halibut fishing was performed this
year by the Coast Guard cutters Unalga and Snohomish, The Unalga
was engaged on the duty from November 13 to November 18, 1927,
and the Snohomish on various dates between November 17, 1927, and
February 15, 1928. This work is performed for the Bureau of
Fisheries, Department of Commerce.
Gomrnivmcatiorhs
The communications service is concerned with the provision, construction, operation, and maintenance of all Coast Guard communication facilities, the design and development of materials, and the
instruction and training of the personnel connected therewith. The
methods of communication in use are the telegraph, telephone, radiotelegraph, radiotelephone, radio compass, visual signals, and underwater sound signals.
Telephones and cables,—The Coast Guard owns and operates a
telephone line system of approximately 2,650 mile^, including about
490 miles of submarine cable. This system provides telephone service for all Coa^t Guard stations and a large number of other Government agencies.
During the year new submarine cables were laid between the
mainland and Block Island, R. I., and across the entrances to Delaware Bay and Chesapeake Bay, to replace old and worn-out cables.
Other new cables were laid as replacements across certain inlets
along the east coast between New York and Cape Hatteras. General
overhauling and repairing of the lines, as needed, were continued.
There is need of renewing approximately 30 miles of submarine
cable along the coast of Florida. The present cables are in such bad
condition as to make repairs impossible.
Radio.—The program for modernization of the radio equipment of
vessels and other units, begun a few years ago, has continued. All
work connected with the actual installation has been performed by
Coast Guard personnel, resulting in a considerable saving to the
Government.
SECRETARY OF THE TREASURY
127
I n October, 1927, the International Radiotelegraph Conference was
held in Washington. Lieuts. E. M. Webster and R. J. Mauerman,
United States Coast Guard, represented the Treasury Department
at the conference and assisted in the formulation of the convention
and the regulations attached thereto. The convention was ratified by
the Congress, and is in process of ratification by other nations of the
world.
An officer of the Coast Guard continues to represent the Treasury
Department on the Interdepartmental Radio Advisory Committee,
which committee coordinates certain governmental activities and acts
in an advisory capacity to the Secretary of Commerce.
Equipment
. Floating equiprmnt.—On June 30, 1928, there were in the service
in commission 17 cruising cutters of the first class and 16 of the
second class, 25 Coast Guard destroyers, 38 harbor cutters and harbor
launches, thirty-three 125-foot patrol boats, thirteen 100-foot patrol
boats, one hundred and ninety-seven 75-foot patrol boats, 6 other
patrol boats, 73 cabin picket boats, and 32 open picket boats. This
floating equipment does not include the primarily life-saving boat
equipment attached to Coast Guard cutters and stations.
By act approved June 10, 1926, the Congress authorized the construction and equipment of 10 Coast Guard cutters to be designed
and equipped for Coast Guard duties, at a cost not to exceed $9,000,000. I n the second deficiency act, fiscal year 1926, approved July 3<
1926, the sum of $1,000,000 was appropriated to commence the construction of three of these cutters. Subsequently funds were appropriated to complete the three cutters and to commence the construction of two more. Since last year's report funds have been appropriated to complete these 2 cutters and to commence 3 more
of the 10 cutters. Design plans for the last-named three cutters
are in course of preparation. Five of the ten cutters are being
built under contract by the Bethlehem Ship Building Corporation
(Ltd.), at the Fore River plant, Quincy, Mass., and have been named,
respectively, • Chelan, Pontchartrain, Tahoe, Champlain, and Mendota. The Chelam,, the Pontchartrain, and the Tahoe have been
launched and will have builder'si trials eaiijr in the fall.
I t is very important that the entire building program of the 10
cutters be brought to completion as early as possible, ,and it is hoped
that the necessary funds will soon be provided. There is increasing
need for all these vessels.
During the year the Seneca was reconditioned and modernized
under contract at a private shipyard. Modern auxiliary machinery
13606—29^Fii92 8
11
•
128
REPORT ON THE FINANCES
was installed throughout, and the accommodations for the crew were
greatly improved.
Aviation.—Five seaplanes have been in operation during the year
at strategic points along the eastern seaboard. Three of these are
Loening amphibian planes and two are of the Voight UO type. An
air station with three planes has been in operation on Ten Pound
Island, off Gloucester, Mass., and conducted as an auxiliary to the
Coast Guard section base at Gloucester. Another station with two
planes has been in operation at Cape Ma}^, N. J., and conducted as
an auxiliary to the Coast Guard section base at Cape May. Due to
the increasing activities in alien and liquor smuggling off the Florida
coa.st during the earl}^ part of 1928, it was found necessary to establish a temporar}?^ air station at Fort Lauderdale, Fla., as an adjunct to
the Coast Guard section base at Fort Lauderdale. Two UO-type
planes operated from this base during January, February, and March
and performed efficient service in cooperation with Coast Guard
destroyers and jDatrol craft. During the year these five seaplanes
cruised a distance of approximateh^ 62,000 miles in searching coastal
sea areas and in cooperating with floating Coast Guard craft in sighting vessels in distress and law violators.
Ordnance,—Many changes have been made in the ordnance equipment of the Coast Guard during the year which make for increased
efficiency and effectiveness. Among them are the following: All
4-inch 50-caliber guns of the service are now equipped with both
foot firing mechanisms and combination electric and percussion-firing
mechanisms. One-pounder, subcaliber attachments and Mark X V I
gun-firing keys have also been installed, so that these guns now
conform to the same type on vessels of the Navy. The salvo latches
on the 5-inch 51-caliber guns and the lock plates on practically all
3-inch 50-caliber guns have been modified. Most of the guns, except
1-pounders, are now equipped with the Alemite lubricating system.
Deflection converters have been installed on the range keepers of the
destroyers, and four cutters have been supplied with range keepers.
An adequate number of rifles and pistols has been placed on all
patrol boats, and all .38-caliber revolvers have been replaced with .45caliber Colt automatic pistols.
There was a large increase in the percentage of units holding battle
practices and small-arms practice.. More interest has been shown
throughout the service, and it is hoped that during the coming 3^ear
practically every Coast Guard unit will take advantage of the opportunities for improving gunnery and small-arms efficiency.
Three .22-caliber rifle ranges have been constructed; the range at
Ediz Hook, Port Angeles, Wash., has been rebuilt, and plans are
under consideration looking to the establishment of a 1,000-yard rifle
range at Cape May, N. J .
SECRETARY OF T H E TREASURY
129
The cooperation of the Army, Navy, and Marine Corps and the
many courtesies extended to the Coast Guard by these services in
connection with the training of personnel and the maintenance of all
ordnance equipment are La^atefully acknowledged.
The academy, statioois, bases, repair depot, etc.
'
Coast Guard Academy,—There Avere 73 cadets under instruction
at the Coast Guard Academy, New London, Conn., at the close of the
fiscal year. The resignations of 12 cadets were accepted during the
year, 2 were dismissed for misconduct, and 1 was drowned by falling
overboard during the cadet cruise. On May 15, 1928, 10 cadets were
graduated and commissions w^ere issued to them as ensigns, effective
as of the date of graduation. As a result of the examination held in
June, 1927, 51 cadets were appointed. Entrance examinations were
held June 27, 1928, and as a result of these examinations 38 appointments have become effective.
As stated in last year's report, the practice cruise for 1927 of the
Alexander Hamilton Avas entered upon June 1, 1927, but when only a
few days out she lost her propeller and had to be towed back to New
London. The Coast Guard cutter Mojave took up the cruise, leaving
New London on June 25, 1927. The Mojave visited London,, England; Antwerp, Belgium: Havre, France; Coruna, Spain; Casablanca, Africa; Funchal, Madeira, and Hamilton, Bermuda, arriving at the academy, New London, Conn., on the return voyage
August 25, 1927. The cruise was very successful and of marked
benefit to the cadets.
The Alexander Hamilton and the Coast Guard destroyer Shaia
entered upon the practice cruise for 1928, leaving the academy June
1, 1928. Owing to the increased number of cadets and the limited
accommodations on the Alexander Hamilton it was necessary that an
additional vessel accompany the Alexander Hamilton on this cruise,
which was in progress at the close of the fiscal year.
Reference is again made to the very unfavorable physical conditions existing at the Coast Guard Academy. The annual reports
for the past several years have pointed out what these conditions
are and how important it is that they be corrected. I t is earnestly
hoped that this matter may have early attention.
Stations and bases.—On June 30, 1928, there were 251 Coast Guard,
(life-saving) stations in an active status. There were 2 floating section bases, 1 destroyer floating flag office {Argus), 14 shore section,
bases, and 2 subbases established for law-enforcement purposes. T h e
service craft attached to these bases operate primarily against smuggling activities.
Rebuilding, repairs, im.provements, alterations, and additions, more
or less extensive in character, were completed during the year at 30^
130
REPORT ON THE FINANCES
Coast Guard (life-saving) stations and at certain other shore units.
Minor repairs were made to the buildings and accessories at 114
Coast Guard (life-saving) stations and certain other shore units.
Contracts were awarded or work was begun in the course of the year
for repairs, alterations, improvements, etc., at tAvo Coast Guard (lifesaving) stations.
I t is very necessary that means be found to remedy the unfavorable
physical conditions at some of the Coast Guard (life-saving) stations.
Attention has been invited in former reports to the urgent need for
rebuilding some of the stations and repairing and improving others
on account of their dilapidated condition. The funds appropriated
that are applicable to the purpose are not sufficient to meet all of
these requirements. The establishment of a number of new stations
has been authorized by the Congress, but there are no available funds
with which to build them.
Rep<£r depot.—During the year the following-named Coast Guard
vessels were overhauled at the Coast Guard repair depot at Curtis
Bay, Md.: Apache, Carrabasset, Greshmn, Manhattom, Mam^ning, Mascoutin, Pequot, Seminole, and Yomhmcram, The Seneca was outfitted
at the depot.
Alterations and repairs were undertaken on ten 125-foot patrol
boats. The overhauling and repairing of a number of 100-foot patrol
boats and 75-foot patrol boats were also undertaken during the year.
The usual manufacture of small supplies and articles of equipment
for service use was continued. Ninety-four standard boats for service
use and four motor self-bailing surfboats for the Navy Department
were constructed by the boatbuilding shop at the depot.
Per'sonnel
On June 30, 1928, there were on the active list of the Coast Guard
305 regular commissioned officers and 65 temporary commissioned
officers, 73 cadets, 63 chief warrant officers, 425 regular warrant
officers, 415 temporar37' warrant officers, 10,392 enlisted men, and 39
civilian employees in the field.
Recruiting.—On July 1, 1927, the recruiting service of the Coast
Guard comprised 9 main stations and 35 substations located at
various points in the country. During the fiscal year 1928 there
were 8,621 applicants for reenlistment, of which number 1,842 were
enlisted, the remainder being rejected for physical disability and
other disabling causes. On March 7, 1928, due to the consistent high
percentage of reenlistments and the continued decrease in the number
of early discharges and desertions, it was necessary to suspend all
recruiting iri order to keep Avithin the prescribed strength. On June
7, 1928, recruiting was resumed at all stations and sub3tations.
SECRETARY OF THE TREASURY
131
On June 30, 1927, the enlisted personnel of the Coast Guard numbered 9,924. At the close of the fiscal year ended June 30, 1928,
there were 10,392 enlisted men in the service, an increase of 468.
During the year many recruits were trained at the Coast Guard
receiAdng unit. New London, Conn., and in order that they might
become fully acquainted with service routine and processes a destroyer
Avas utilized as a training ship at that station with excellent results.
Welfare.—Realizing to what a great extent the efficiency of the
service depends upon the morale of its personnel, the Coast Guard
has endeavored to use to the best advantage every available means
for promoting the welfare of its enlisted men. Within the past
year the excellent educational facilities of the Marine Corps Institute have generously been extended to the men of the service and the
opportunity to enroll in courses tending to increase their professional
education has been eagerly accepted by a large number. The continued assistance of the training division of the Bureau of Navigation, Navy Department, has also been of great value. The Coast
Guard is very grateful for the cooperation of both of these educational agencies. There is such abundant evidence of the appreciation
of the mien that it is earnestly hoped it may soon be possible to carry
on a more extensive welfare program.
Award of life-saving medals
The Secretary of the Treasury, under the provisions of law,
awarded during the year 50 life-saving medals of honor (2 gold and
48 silver) and .2 second service silver bars in recognition of bravery
exhibited upon an American vessel or in the rescue or attempted
rescue of persons from drowning in waters over which the United
States has jurisdiction.
Appropriations, expenditures, and balances
The appropriations available for the Coast Guard for the fiscal
year 1928, the expenditures therefrom, and the balances are as
follows:
Appropriation, " Salaries, office of Coast Guard, 1928 "
$260, 000. 00
Expended and obligated
257,918.03
Unobligated balance
2,081.97
Appropriation, " Pay and allowances. Coast Guard, 1928 "
19, 000,000. 00
Expended and obligated
17,779,161. 89
^
Unobligated balance
Appropriation, " Fuel and water, Coast Guard, 1928 "
Expended and obligated
Unobligated balance
1, 220,838.11
1
3,100,000. 00
2, 679, 456. 52
420, 543. 48
132
REPORT ON THE FINANCES
Appropriation, " Outfits, Coast Guard, 1928 "
Expended and obligated
Unobligated balance
Appropriation, " Rebuilding and repairing stations, etc., Coast
Guard, 1928 "___
Expended and obligated
Unobligated balance
$1, 700, 000. 00
1, 592,127.47
107, 872. 53
366, 600. 00
359, 536.19
7, 063. 81
Appropriation, " Death gratuities, Coast Guard, 1928 "
35, 000. 00
Expended and obligated
30, 762.30
Unobligated balance
4, 237', 70
Appropriation, " Mileage, etc.. Coast Guard, 1928 "
365, 000. 00
Expended and obligated
;-^32, 655. 28
Unobligated balance
32, 344. 72
Appropriation, " Draft animals, Coast Guard, 1928 "
30,000. 00
Expended and obligated
21, 295. 71
Unobligated balance
S, 704. 29
Appropriation, " Communication lines. Coast Guard, 1928 "
155,000. 00
Expended and obligated
l51, 694.4.1
Unobligated balance
3, 305. 59
Appropriation, '' Civilian employees. Coast Guard, 1928 "
79, 000. 00
Expended and obligated
74, 369. 81
Unobligated balance
4, 630.19
Appropriation, " Contingent expenses. Coast Guard, 1928 "
250,000. 00
Expended and obligated
248, 206. 70
Unobligated balance
Appropriation, '* Repairs to Coast Guard vessels, 1928 "
Expended and obligated
Unobligated balance
Appropriation, " Construction and equipment of Coast Guard cutters, 1927 and 1928 " :
Unobligated balance June 30, 1927
Expended and obligated
Unobligated balance
'.
Appropriation, ** Construction and equipment of Coast Guard
cutters, 1928 "
Expended and obligated
Unobligated balance
.—
Appropriation, " Construction and equipment of Coast Guard
cutters, 1928 and 1929 "
Expended and obligate(^-
1, 793. 30
2, 000, 000. 00
1, 987, 961.12
12, 038. 88
674,026. 09
673, 924. 60
101. 49
1, 700, 000. 00
1, 673,161. 93
26, 838. 07
666, 000. 00
666, 000. 00
COMPTROLLER OF THE CURRENCY
National banks organised, consolidated, insolvent, in voluntary liquidation, and in existence
From the inauguration of the national banking system in 1863 to
June 30, 1928, charters have been issued to 13,220 national banking
associations, of which 7,745 are in existence. By reason of liquidations, consolidations, and failures, 5,475 associations have been
terminated.
The authorized capital of the banks in existence on June 30, 1928,
Avas $1,598,007,615, an increase during the fiscal year of $116,728,000.
While charters were issued during the year to 123 associations, there
was a net decrease of 99 in the number of banks—that is, from 7,844
to 7,745—^by reason of voluntary liquidations, receiA^erships, and
consolidations.
Summaries of operations during the last year relating to the
number and capital of national banks organized, increases and reductions of capital, Avith number of national banks organized under
various acts of Congress, and number closed for various reasons during the existence of the system, together with the number organized,
consolidated, failed, liquidated, and in existence in each State and
geographical division, are shown in the statements folloAving:
Orgamzation, capital stock changes, and liquidations of national tanks during
the fiscal year 1928
Total
Number of
banks
Charters granted
Increases of capital (270 banks i)..
Restorations to solvency
Voluntary liquidations.
Receiverships 2
_
Decreases of capital (10 banks)
Closed under consolidation act of Nov. 7,1918, and amount
of capital decrease incident thereto..
Capital
Number of
banks
$25,580,000
128, 590, 500
.200,000
138
72
$154, 370, 500
24,785,000
i, 745,000
1, 762, 500
6, 745,000
2 234
Net decrease in banks
Net increase in capital.
Charters in force June 30, 1927, and authorized capital..
Charters in force June 30,1928, and authorized capitalJ
Capital
99
2 38,037, 500
"7,'844
116, 728,000
1,481, 279,615
7,745
1, 598, 007, 615
1 Includes 6 increases-aggregating $22,900,000, which were effected as a result of consolidations under the
act of Nov. 7, 1918, and 21 increases aggregating $28,170,000, incident to the consolidation of State banks
with national banks under the act of Feb. 25, 1927 and 74 increases by stock dividends aggregating
$15,013,500.
2 Includes 8 banks with aggregate capital of $395,000, which had been previously reported in voluntary
liquidation.
133
134
REPORT ON THE FINANCES
Number of national "banks organized since February 25, 1863, numher passed out
of the system, and number in existence June SO, 1928
Organized under—
Act of Feb. 25, 1863
Act of June 3, 1864
Gold currency act, July 12, 1870
Act Mar. 14, 1900
. 456
8,122
10
— 4,632
Total number of national banks organized
Voluntary liquidations
Expirations of corporate existence
Consolidations under act Nov. 7, 1918
Receiverships, exclusive of tbose restored to solvency
13, 220
3, 904
208
211
1,152
Total number passed out of the system
5, 475
Number now in existence
7, 745
Number of national banks organized, consolidated under act November 7, 1918,
insolvent, in voluntary liquidation, and in escistence on June SO. 1928, by
States
Organized
states, etc.
Maine
New Hampshire
AT'ermont
Massachusetts
R h o d e Island
Connecticut.
.
Total New England states
NewYork
N e w Jersey
Pennsylvania
Delaware
Maryland
D i s t r i c t of Columbia
.
.
_
.
.
...
Total Eastern States
Virginia
W e s t Virginia
N o r t h Carolina
S o u t h Carolina
Georgia ._
Florida
Alabama...
Mississippi..
Louisiana
Texas
Arkansas.
.
Kentucky...
Tennessee..
.
.
. . . .
. .
.
T o t a l Southern States
Ohio
Indiana
Illinois
Michigan
Wisconsin
Minnesota.
Iowa
Missouri
. .
_
.
T o t a l M i d d l e States
.
. . . .
I n liquidation
I n existence
1
1
1
.7
2
3
4
7
16
1
6
57
13
22
174
49
44
65
65
46
152
13
, 65
794
15
34
359
386
919
377
1,148
29
128
30
29
11
21
52
10
54
1
3
I
275
56
19.8
11
42
10
563
300
875
18
83
13
2,631
65
122
592
1,852
234
163
128
113
168
112
162
68
86
1,045
123
231
194
10
3
2
5
4
1
7
8
15
16
19
18
13
3
8
66
14
6
11
51
33
34
32
63
30
42
28
42
325
27
79
75
166
119
77
60
82
63
107
36
33
644
81
]40
103
113
73
76
349
65
118
. . . .
Consolidated
u n d e r act I n s o l v e n t
N o v . 7,
1918
i
2,826
2
10
1
6
5
50
204
861
1,711
634
399
708
265
240
450
501
270
17
6
4
2
4
3
3
7
37
23
34
17
13
65
87
17
246
142
184
113
66
99
137
111
334
228
486
133
157
283
274
135
3,467
46
293
1,098
2,030
•
135
SECEETAEY OF THE TREASXJEy
Number of national banks organized^ consolidated under act November 7, 1918,
insolvent, in voluntary Uquidation, and in existence on June SO, 1928, by
States—Continued
North Dakota
South Dakota
Nebraska
Kansas.-.
Montana
Wyoming
Colorado
New Mexico .
Oklahoma
^
Total Western States....
Washington .
Oregon
California
Idaho
Utah
Nevada
Arizona
Consolidated
I n liquiu n d e r act I n s o l v e n t d a t i o n
N o v . 7,
1918
Organized
states, etc.
-
. . . .
Total Pacific States
Alaska
Hawaii.Porto Rico - -
3
59
61
46
48
62
12
28
24
56
45
41
147
131
53
19
50
25
320
138
98
159
251
72
26
124
29
336
2,475
15
396
831
1,233
203
136
6
31
14
23
26
4
2
3
57
29
224
30
12
4
9
109
93
228
50
103
365
527
1
4
1
4
2
243
201
353
434
189
57
205
78
715
1
1
1
4
2
3
4.87
106
38
16
29
12
1,015
20
2
5
6
•1
Total Alaska and island possessions
Total United States
I n existence
12
13, 220
211
1,152
" 20
10
17
6
6
4,112
7,745
Condition of natio^ial banks
A summary of the resources and liabilities of reporting national
banks in the continental United States, Alaska, and Hawaii on June
30,1928, as compared Avith June 30, 1927, is as follows:
Summary of condition of repoi^ting national banks on June SO, 1927 and 1928
Classification
J u n e 30, 1927
Number of banks
June 30, 1928
Increase (+) or
decrease ( - )
7,796
7, 691
—105
$13,955, 696,000
9, 788,000
6, 393, 218,000
680, 218,000
115, 817,000
1, 967,950,000
1,406,052,000
191,054,000
947,946,000
364, 204,000
550,000,000
$15,144, 995,000
10,138,000
7,147,448,000
721, 229,000
125, 680,000
1, 885,967, 000
1,453,383,000
207,156,000
756,176, 000
315,113,000
740,954,000
+$1,189,299,000
+350,000
+754, 230,000
+41, Oil, 000
+9, 863,000
-81,983,000
+47,331,000
+16,102,000
-191,770,000
+49,091, 000
+190,954,000
26, 581,943,000
28, 508, 239,000
+1,926, 296,000
1, 474,173,000
1, 256,945,000
508,421,000
70, 326,000
650,946,000
1, 593, 856,000
1,419, 695,000
557,437, 000
83,753,000
649,095,000
2,738,017,000
386, 567,000
+119, 683,000
+162,750, 0 J
+49,016,00
+13,427, 00
-1,851,0D
-118,920,00
-152,423,00
RESOURCES
Loans and discounts, including rediscounts.:
Overdrafts
Investments, including premiums on bonds
Banking house, furniture, and fixtures
other real estate owned
Due from banks
Lawful reserve with Federal reserve banks
Checks and other cash items
Exchanges for clearing house
Cash on hand.Other resources
Total
LIABILITIES
C a p i t a l Stock paid in
Surplus
U n d i v i d e d profits, less expenses a n d taxes paid
Reserved for taxes,, interest, etc., accrued - N a t i o n a l - b a n k circulation__
D u e to banks
Certified checks a n d cashiers' checks
2, 856,937,000
538,990,000
136
REPORT ON THE FINANCES
Summary of condition of reporting national banks, on June SO, 1927 am,d 1928Continued
Classification
June 30,1927
Increase (+) or
decrease (—)
June 30, 1928
LIABILITIES—continued
Dividend checks outstanding
Individual deposits, including postal" savings
United States deposits
Notes and bills rediscounted
Bills payable, including borrowed money
Other liabilities
-
- .
Total
Ratio of loans and discounts to total deposits (per
cent)
$18, 239, 353,000
139, 843,000
120,024, 000
248,018,000
477,967,000
$28,404,000
19, 300,433,000
185,916,000
179,077,000
622,108,000
763, 881,000
$+28,404,000
+1,061,080,000
+46,073,000
+59,053,000
+374,090,000
+285,914,000
26,581,943,000
28, 508,239,000
+1,926, 296,000
64.09
66.90
+2. 81
The resources and liabilities of the national banks on the date of
each report since June 30,1927, are shown in the following statement:
Abstract of repo7'ts of condition of national banks at the date of each report
since June SO, 1927
[In t h o u s a n d s of dollars]
Classification
J u n e 30,
F e b . 28,
J u n e 30,
D e c . 31,
Oct. 10,
1927—7,796 1927—7,804 1927—7,765 1928—7,734 1928—7,691
banks
banks
banks
banks
banks
RESOURCES
L o a n s a n d discounts (including rediscounts)!
13, 955, 696
Overdrafts
9,788
U n i t e d States G o v e r n m e n t
securities
owned
2,596,178
O t h e r b o n d s , stocks, securities, etc., o w n e d . 3, 797, 040
C u s t o m e r s ' liability a c c o u n t of a c c e p t a n c e s .
253,131
680, 218
B a n k i n g house, furniture, a n d fixtures
O t h e r real estate o w n e d
115, 817
Lawful reserve w i t h F e d e r a l reserve b a n k s . 1,406,052
I t e m s w i t h F e d e r a l reserve b a n k s i n process
of collection
496, 916
Cash in vault
364, 204
1, 044, 653
A m o u n t d u e from n a t i o n a l b a n k s . .
A m o u n t d u e from other b a n k s , b a n k e r s ,
426, 381
a n d t r u s t companies
947, 946
E x c h a n g e s for clearing house
101, 574
C h e c k s on other b a n k s in t h e s a m e p l a c e . . .
89. 480
O u t s i d e checks a n d other cash i t e m s
R e d e m p t i o n fund a n d d u e from U . S.
32, 917
Treasurer
_._.
17, 721
U . S. G o v e r n m e n t securities borrowed
B o n d s a n d securities, other t h a n U n i t e d
3,826
States, borrowed
J..
242,405
O t h e r assets
14,366, 926
14. 503
14,831, 259
10,313
14,399,447
12,156
15,144,995
10,138
2, 675, 542
3, 941,438
283, 589
698, 516
122,161
1, 413, 792
2, 747, 854
4,151, 944
369,855
700, 337
122,885
1, 509, 253
2, 900,896
4,180, 004
375,185
712,278
123, 653
1, 457,431
2,891,167
4, 256, 281
414, 573
721,229
125, 680
1,463,383
502, 036
375, 251
1,125,872
520, 399
361, 376
1,177,334
454,166
370, 228
1, 058, 531
448,182
316,113
1, 020,320
459,842
790,496
86,479
86, 832
473,881
675, 661
106, 281
106, 363
427,247
645, 738
70, 286
76, 918
417,466
766,176
106, 789
100,367
33, 079
14, 780
33, 306
20, 743
32,849
13, 979
33,050
17,877
2,948
219, 742
3,550
241,625
3,810
258,886
3,358
272,096
26, 581, 943
27, 213,824
28,164,219
27,673, 687
28, 608,239
1, 474,173
1, 256, 945
1,499, 384
1, 273, 029
1, 528, 509
1, 314,438
1, 537, 214
1, 330, 096
1, 693,856
1, 419, 695
508, 421
70,326
R e s e r v e d for taxes, interest, etc., a c c r u e d .
N a t i o n a l - b a n k notes o u t s t a n d i n g
650, 946
D u e t o Federal reserve b a n k s
36, 379
A m o u n t d u e t o national b a n k s
976,119
A m o u n t d u e t o other b a n k s , b a n k e r s , a n d
1,844, 439
t r u s t companies
223,884
Certified checks o u t s t a n d i n g
315,106
Cashiers' checks o u t s t a n d i n g
D i v i d e n d checks o u t s t a n d i n g
10, 923, 729
D e m a n d deposits.
T i m e deposits (including postal s a v i n g s ) . . 7, 315, 624
139, 843
U n i t e d States deposits
e 1,776,123
Total deposits
17, 746
U . S. G o v e r n m e n t securities borrowed
571,482
78, 521
649,886
36,107
1,076,860
530, 753
76, 451
650,373
39, 381
1, 045,133
558, 647
73, 625
646, 656
33, 732
1,008,176
567, 437
83, 753
649, 095
35, 618
885,197
Total.
LIABILITIES
C a p i t a l stock p a i d i n
S u r p l u s fund
U n d i v i d e d profits, less expenses a n d taxes
1 I n c l u d e s customers* liability u n d e r l e t t e r s of c r e d i t .
1,894,696
281, 479
227, 217
10, 924, 311
7, 590, 944
255, 624
22,287,238
14, 787
2,110, 933
1, 900, 773
209, 079
68, 669
244,182
358,410
1,192
29, 620
11, 230, 047 10,826, 357
7, 992,213
7,808,437
169, 473
63,379
22,860, OOS 22,279, 082
13, 979
20, 967
1,817,202
78, 943
307, 624
28,404
11, 003, 796
8, 296, 638
185, 916
22,639,337
17,877
137
SECRETAEY OF THE 'TEEASTJEY
Abstract of reports of condition of national banks at the date of each report since
June SO, i9^7—Continued
[In thousands of dollars]
F e b . 28,
J u n e 30,
D e c . 31,
J u n e 30,
Oct. 10,
1927—7,796 1927—7,804 1927—7,766 1928—7,734 1928—7,691
banks
banks
banks
banks
banks
Classification
LIABILITIES—continued
B o n d s a n d securities, other t h a n U n i t e d
States, borrowed
A g r e e m e n t s to r e p u r c h a s e U . S. Governm e n t or other securities sold
^
Bills p a y a b l e (including all obligations
representing m o n e y borrowed other t h a n
rediscounts). _
N o t e s a n d bills rediscounted
Acceptances of other b a n k s a n d foreign bills
of exchange or drafts sold w i t h indorsement
L e t t e r s of credit a n d travelers' checks o u t s t a n ding
^*
Acceptances executed for customers a n d t o
furnish dollar exchange less those p u r chased or discounted
_
Acceptances executed b y other b a n k s .
Liabilities other t h a n t h o s e . s t a t e d a b o v e . .
Total
3,826
2,948
3,650
3,810
3,358
3,629
3,046
12,843
12,524
7,217
248, 018
120, 024
235,759
80, 571
410,149
71, 233
302,199
92, 499
622,108
179,077
111, 010
157,422
194, 530
208,867
227, 745
15, 449
10, 684
9,220
12,156
17, 931
248,184
20,353
57, 870
278, 967
18,44.4
61, 657
374,852
14,606
91,842
376, 076
17,121
110,137
411, 76?
19,173
58,814
26,681,943
27, 213,824
28,164, 219
27,573, 687
28,508, 239
Banks other than national
A summary of the resources and liabilities of reporting banks other
than national in the continental United States, Alaska, and insular
possessions, on June 30, 1928, as compared with June 30, 1927, is as
follows:
Resources and liabilities of banks other than national on June SO, 1928, compa/red with June SO, 1927
[In thousands of dollars]
Classification
Number
.-
J u n e 30,1927
J u n e 30, 1928
Increase ( + ) or
decrease ( - )
19,265
18, 622
—743
23,314, 682
33, 662
10, 861, 876
899, 887
283, 656
1,999,498
24, 397,072
40, 269
11, 624,366
942,467
278, 287
1, 730,441
+1,082,390
+ 6 , 607
+762,491
+ 4 2 , 580
-6,369
— 269 057
1, 526„ 902
869,936
172, 231
643, 692
944, 594
1,652,467
674,375
142,391
572,732
1,038, 232
41, 650, 615
43, 066,089
+125, 566
— 222,661
—29, 840
- 7 0 , 960
+ 9 3 . 638
+ 1 , 615,474
1,902,325
2, 507, 682
622,786
1,432,400
680,953
1,931, 666
2, 725, 834
668,924
1,343, Oil
421,013
28, 601
33,944, 265
36,900
140, 240
+29,341
+ 2 1 8 262
+46,139
—89 389
-159,940
+ 2 8 , 601
+1,051,064
- 1 7 , 281
+32,137
624,721
1, 200,914
+271,358
+106,192
+ 1 , 616, 474
RESOURCES
L o a n s a n d d i s c o u n t s (including rediscounts)
Overdrafts
I n v e s t m e n t s (including p r e m i u m s on bonds)
B a n k i n g house (including furniture a n d
fixtures).,
o t h e r real estate owned
D u e from b a n k s
'
Lawful reserve w i t h Federal reserve b a n k s or other
reserve agents
Checks a n d other cash items
Exchanges for clearing house
Cash on h a n d
O t h e r resources—Total
LIABILITIES
C a p i t a l stock paid in
Surplus
U n d i v i d e d profits (less expenses a n d taxes p a i d ) - .
D u e to b a n k s
_
Certified checks a n d cashiers' checks o u t s t a n d i n g .
D i v i d e n d checks o u t s t a n d i n g
. . .
I n d i v i d u a l deposits (including postal savings)
U n i t e d States deposits (exclusive of postal savings)
N o t e s a n d bills rediscounted
Bills p a y a b l e (including all obligations representing m o n e y borrowed other t h a n rediscounts)
O t h e r liabilities
Total.
32, 893, 201
64,181
108,103
353,363
1,096, 722
41, 660, 616
43,066,089
138
REPORT ON THE FINANCES
All reporting banks
[National, State (commercial), savings, and private banks, and loan and trust
companies]
The total number of reporting banks on June 30, 1928, was 26,213
banks, which included 7,691 national banks and 18,522 banks other
than national. A comparison of the resources and liabilities of all
reporting banks on June 30,1927, and June 30,1928, follows:
Resources and liabilities of all reporting banks on June SO, 1928, compared with
June SO, 1927
[In thousands of dollars]
Classification
June 30, 1927
Number..
° June 30, 1928
Increase (+) or
decrease (—)
26, 213
RESOURCES
Loans and discounts (including rediscounts)
Overdrafts
Investments (including premiums on bonds)
Banking house (including furniture and fixtures).
Other real estate owned
Due from banks
Lawful reserve with Federal reserve banks or other
reserve agents-_
Checks and other cash items
Exchanges for clearing house..
Cash on hand.Other resources
Total.
37, 270,378
43,450
17, 255,093
1, 580,106
399,473
3,967,448
39, 542,067
50,407
18,771, 814
1, 663, 696
403,967
3, 616,408
+2, 271, 689
+6, 957
+1, 516, 721
+83, 591
+4,494
-351,040
2,932,964
1,060,990
1,120,177
1,007, 896
1,494, 594
3,105, 840
854, 531
898, 667
887, 845
1, 779,186
68,132, 558
71, 574,328
+3,441,770
3, 526, 522
4,145, 529
1, 226, 361
83,763
649, 096
4,081,028
807, 580
67,006
63, 244,698
+149,024
+381,002
+95,155
+13,427
- 1 , 861
-208,309
-312,363
+67,005
+2,112,144
+172, 886
-206,459
-221, 610
-120, 051
+284, 592
LIABILITIES
Capital stock paid in
Surplus
Undivided profits (less expenses and taxes paid)..
Reserved for taxes, interest, etc., accrued L
National bank circulation.
-Due to banks
Certified checks and cashiers' checks outstanding.
Dividend checks outstanding
Individual deposits (including postal savings)
United States deposits (exclusive of postal savings). _Notes and bills rediscounted
Bills payable (including all obligations representing money borrowed other than rediscoimts)
'-Other liabilities
Total..
I Reported separately by natioual banks only.
3, 376,498
3, 764, 527
1,131, 206
70,326
650,946
4, 289, 337
1,119, 943
51,132, 564
194,024
228,127
222, 816
319,317
+28,792
+91,190
601, 381
1, 573, 689
1, 246, 829
1,964,796
+646,448
+391,106
:8,132, 558
71, 674,328
+3,441, 770
Resources and liabilities of all reporting hanks, 1922-1928
[In t h o u s a n d s of dollars]
Classification
1927—27,061
banks
1928—26,213
banks
1923—30,178
banks
1924—29,348
banks
1925—28,841
banks
1926—28,146
banks
I 27,860, 443
74, 600
12, 647, 567
5,414, 241
1, 276, 631
1, 574, 608
829, 892
847, 386
1 30, 416,577
57, 982
13, 672, 547
5, 597,150
1, 432, 217
1,196,075
797,101
865, 262
1 31, 427, 717
56, 334
14, 228, 745
6,121,093
1,590, 269
1,992,370
911,500
816, 672
1 33,883,733
60, 259
15,400,113
6, 774, 392
1, 736,685
2,181,137
951, 286
1, 079, 532
1 36, 233,490
49,470
15,815,141
6,769,061
1,851, 967
2,037, 661
996,620
1,140,152
37, 270, 378
43,450
17, 256,093
6, 900,402
1, 979, 678
2,181,167
1,007,896
1 1,494, 594
39, 642,067
60,407
18, 771,814
6, 722,248
2, 067, 663
1,753,098
887,845
1, 779,186
50,425, 367
54,034,911
57,144, 690
62, 057,037
64,893, 362
68,132,558
71, 574, 328
2,943 950
2, 697, 409
933,843
725, 748
652, 505
37,194, 318
128, 887
3, 244, 386
2, 004, 321
3, 062,367
2, 799, 494
964,145
720, 001
368,110
40,034,196
238, 439
3, 610, 211
2, 267, 949
3,114, 203
2, 967,359
971, 730
729, 686
664,857
42, 954,121
152, 302
3, 92S, 292
1,662,140
3,169, 711
3,173,334
1, 007,439
648, 494
698,861
46, 766, 942
147, 220
4, 370,909
2, 075,127
3, 273, 303
3,471,968
1,063,171
651,155
655, 649
48,882, 296
187,827
4, 330, 605
2, 377, 388
3,376, 498
3,764,527
1,131, 206
650,946
1,119,943
61,132, 554
194,024
4, 289, 337
2,473, 523
3, 626,522
4,146,529
1, 226,361
649,096
8 864, 585
53, 244, 698
222, 816
4, 081,028
3, 614,694
50,425, 367
64, 034, 911
57,144, 690
62, 057,037
64, 893, 362
68,132, 658
71,574, 328
1922—30,389
banks
RESOURCES
L o a n s a n d discounts (including r e d i s c o u n t s ) . .
Overdrafts
B o n d s , stocks, a n d other securities
D u e from other b a n k s a n d b a n k e r s 2
R e a l estate, furniture, etc.3
C h e c k s a n d other cash i t e m s ^ . .
C a s h on h a n d
_
O t h e r resources
Total
-..
Total
O
>
Kl
LIABILITIES
C a p i t a l stock paid i n . . .
S u r p l u s fund
O t h e r u n d i v i d e d profits
._
Circulation (national b a n k s )
Certified checks a n d cashiers' checks
Individual deposits..
U n i t e d States deposits
D u e to other b a n k s a n d b a n k e r s
O t h e r liabilities ^
Ul
o
w
H
>
zn
Kl
» I n c l u d e s acceptances r e p o r t e d b y n a t i o n a l b a n k s .
2 I n c l u d e s lawful reserve w i t h Federal reserve b a n k s .
3 I n c l u d e s real estate o w n e d other t h a n b a n k i n g house.
< I n c l u d e s exchanges for clearing house.
8 I n c l u d e s d i v i d e n d checks o u t s t a n d i n g .
9 I n c l u d e s bills p a y a b l e a n d rediscounts.
CO
140
REPORT ON T H E FINANCES
The following statement shows the number of national banks,
June 30, 1928, in each State, with the amount of capital and aggregate assets, in comparison with similar information for all reporting
banks:
Ntimber, capital, and assets of national banks and all reporting) banks, June
30,1928, by States
1
All b a n k s , including n a t i o n a l
banks
National banks
s t a t e s , etc.
Number of
banks
1.
2.
3.
4.
5.
6.
66
55
46
152
13
65
Maine.
New Hampshire
VermontMassachusetts...
Rhode Island
Connecticut .
Virginia
W e s t Virginia
N o r t h Carolina
South Carolina.
Georgia
Florida
Alabama
Mississippi
Louisiana
Texas
Arkansas
•
Kentucky
.
Tennessee
34.
36.
36.
37.
38.
39.
40.
41.
42
North Dakota
South Dakota
Nebraska
Kansas
Montana
Wyoming
Colorado
N e w Mexico
Oklahoma
43
44
45.
46.
47.
Washington
Oretzon
California
Idaho
Utah.
1,103
221,435
8, 359, 308
1,146
572
1,628
61
238
42
711, 269
138, 779
359, 890
10, 672
43, 279
24, 517
20, 043, 236
2, 813, 501
6,835, 244
164, 238
967, 568
326,438
1,847'
670,861
11, 682,925
3, 687
1, 288,406
31,150, 226
166
119
77
68
81
63
107
36
33
638
79
140
103
30, 534
13,454
15, 513
9,400
18,830
. 15,865
17,020
5,560
9,739
83, 720
7,115
20,481
18, 364
401, 921
200, 790
202.940
136, 761
283,988
260, 772
239, 610
95, 276
128, 671
1,099,369
102,052
308, 268
273,303
494
330
618
262
454
302
357
34.4
229
1,386
437
583
507
60,121
34,811
38,494
19,533
41,846
33, 577
28,886
16,943
32, 086
118, 034
22,124
45,139
42,152
689,890
442, 276
'519, 691
246, 039
478, 259
487,141
372,936
283, 626
535,139
1,411,888
269. 065
• 633,454
549, 357
1,700
265,696
3, 733, 711
6,203
533, 746
6,917, 760
i
331
227
484
133
157
279
270
134
58,170
32,675
112,083
30,970
27,175
36,917
23,056
44, 685
900,137
460, 531
2,080, 624
630, 529
489, 690
673,840
360, 208
668, 331
1,051
1,028
1,816
784
967
1,134
1,372
1,365
182, 775
78,807
284,479
122,774
64, 756
61, 776
68, 940
118, 531
3, 377, 038
1, 221, 263
4,897, 094
2,407 855
1,138, 517
1,149, 707
1, 019, 438
1, 618, 488
Western [
-
2,015
365, 730
6,263,890
9,617
982,838
16,829,400
136
97
158
250
70
26
123
29
333
5,520
4,695
14,305
18,033
6,330
2,310
12,460
2,086
92,628
81,090
251,847
269,260
98,943
42,844
271,943
35,398
439,509
489
412
904
1,114
203
86
285
58
668
1,583,452
. 4, 219
170,560
2, 619, 689
352
243
496
140
32,257
21,653
217,688
6,343
11,634
663,348
336, 547
4, 023,179
106, 716
186,822
._
_ .
-
-
- -.
i
-
. .
. .
1
1,222
T o t a l W e s t e r n States
- -
$483,033
322,925
278, 620
5, 261, 042
684,946
1,428, 742
2, 273, 577
-
_
$13,301
6,630
8, 076
134,758
14,366
44,405
6,950,960
1, 013,432
3,215, 960
26, 666
306, 708
169, 299
--
Total
MiddleStates
Aggregate
assets (000
omitted)
128,120
.
Ohio-..
Indiana
Illinois
Michigan
Wisconsin
Minnesota
Iowa
Missouri
140
123
105
446
37
262
Capital
(000
omitted)
334, 220
51, 620
154, 576
1,684
18, 234
10, 527
T o t a l S o u t h e r n States
26.
27.
28.
29.
30.
31.
32.
33.
$161,451
83, 727
77,145
1, 553, 532
65, 733
331,989
Number of
banks
662
299
871
18
84
13
NewYork
NewJersey
Pennsylvania
_
Delaware
Maryland
D i s t r i c t of C o l u m b i a .
T o t a l E a s t e r n States
13.
14.
15.
16.
17.
18.
19.
2021.
22.
23.
24.
25.
$7, 570
5,400
5,210
83, 018
4,870
22, 062
Aggregate
assets (000
omitted)
386
Total New England States..
7^
S
'9.
10
11.
12.
Capital
(000
omitted)
109
93
222
46
20
26,906 1
91, 633 1
19,865
12, 620
128, 677
3, 205
3, 650
343,861
226, 522
2, 216,833
63,938
69, 447 1
105 1
11,928
12,167
33,737
41,981
11,445 1
4,285
17,975
3, 240
33,802
•
162,314
179, 234
542, 784
543, 602
191, 027
73, 002
34.7,474
48,214
532, 038
141
SECEETAEY OF THE TEEASUEY
Number, capital, and assets of national banks and all reporPmg banks, June
30, 1928, by States—Contmw^a
All banks, including national
banks
National banks
States, etc.
Number of
banks
48. Nevada
49. Arizona
Total Pacific States
50.
51.
62.
53.
Alaska
The Territory of Hawaii
Porto Rico
Philippines
Total possessions
;.
_
Total United States and
possessions
Capital
(000
omitted)
Aggregate
assets (000
omitted)
Number of
banks
Capital
(000
omitted)
Aggregate
assets (000
omitted)
35
46
1,416
$3,437
5,216
$49, 069
98,090
297, 928
6,362,771
5,146
10,189
17
23
16
12
915
8,340
8,319
13,036
14,133
116, 202
67,293
148,487
15, 336
68
30,609
345,176
10
15
$1,600
1,626
$21,305
34,443
616
171,042
2,956,349
4
2
276
600
6
876
7,691
1,593,-856
28, 608, 239 26, 213
3, 626, 522
71,574,328
CUSTOMS SERVICE
Volumrn of hu^ness
The comparative statement of entries of merchandise for the fiscal
years 1927 and 1928, printed below, is indicative of a steady increase
in the number of importations of foreign merchandise:
Number of entries
fiscal year—
Class of entries
1928
Consumption:
Free
Dutiable
Informal
Mail...
Baggage declarations
Warehouse and rewarehouse
Immediate transportation without appraisement
Transportation and exportation
Warehouse withdrawals, duty paid
Warehouse withdrawals, all other
All other entriesDrawback notices of intent
Drawback entries
Total entries
246, 257
486,274
209, 002
786, 683
392,128
63,294
148, 321
120, 417
249,671
38,677
14,034
220,871
26,230
3,000,859
246, 577
495,696
214, 777
826,926
400,894
66,048
143,757
116,270
251, 768
36, 672
13, 762
241, 757
26, 960
3,079,732
Receipts
The receipts for the fiscal year fell below those of the previous
and record year of 1927 by $37,515,872. A total of $568,156,593 was
collected in customs duties and covered into the Treasury during the
fiscal year 1928, as compared with $605,672,465 during the fiscal year
1927.
Collections of miscellaneous receipts for the fiscal year 1928
amounted to $2,560,721, an increase of 60 per cent over the prior year.
Total refunds increased from $20,285,317 in 1927 to $21,945,260 in
1928; Comparative figures showing in detail the total collections,
refunds, and net receipts from all sources for the fiscal years 1927 and
1928 are shown in the following table:
142
143
SECEETARY OP THE TEEASUEY
Collections, refunds, and net receipts from customs for the fiscal years 1927
and 1928
1927
Collections:
Duties
MiscellaneousSale of u n c l a i m e d m e r c h a n d i s e . .
Sale of a b a n d o n e d goods.
.
Sale of s e i z u r e s . .
C u s t o m s fees, etc
.
Fines.
•
$605, 672, 465
._
$568,156,593
$7, 281
6,807
213,349
74,030
2, 259, 264
$1, 796
8,285
100,450
106,140
1, 377,197
Total
Refunds:
Refunds of excessive d u t i e s . .
Drawback payments
1928
.
N e t c u s t o m s receipts from all sources
7,617, 307
14,327,953
7,804,035
12,481,282
686,981, 016
o ^QQ yoj^
570, 717,314
607,266,333
.
.
Ol
O/tC OCA
548, 772, 064
The proceeds derived from the sale of unclaimed and abandoned
merchandise and seizures do not represent the total amount received
from such sales and deposited in the Treasury. Under the terms of
the tariff act of 1922 amounts equal to the duties that would have
accrued on the merchandise if regularly imported and entered are
deducted from the proceeds and deposited as duties. The amounts in
the foregoing table consequently show only the balances remaining
from the proceeds of sales after deduction of duties.
Enforcement activities
During the year the patrol activities for the prevention of smuggling on both the northern and southern borders and at numerous
ports along the Atlantic and Pacific seaboards were under the supervision of collectors of customs, it being held that all illegal introductions into the United States, whether liquor or other merchandise,
constituted smuggling under the customs laws. Beginning with the
next fiscal year collectors of customs will be charged with the direct
supervision of all land patrol activities under the Treasury Department. The patrol consists of approximately 530 officers, and the
direct supervision of this activity by customs resulted in greater
coordination of services and equipment anS increased efficiency and
economy.
During the year several seizures and recoveries involving large
sums of money were effected. In one instance a vessel valued at
$75,000 and its cargo, having an appraised value of $233,112, were
seized. Another case was that of the recovery of $410,302.86 from
one importer representing a compromise offer in connection with an
importation of wool on the skin. Numerous shi^Dments of spurious
antiques have been intercepted, with the result that in one instance
13606—29—FI 19 28
-12
144
REPORT ON THE FINANCES
certain artistic articles entered as "antiques" were found to be of
modern manufacture, and approximately $40,000 in duties collected.
Large seizures of liquors were made by customs officers at the seacoast ports, as well as by the*"customs patrols along the Canadian and
Mexican borders. I n one district the total appraised value of all
seizures exceeded $1,500,000. Patrol officers operating automobiles
in the performance of their official duties covered a distance of
1,736,251 miles at a cost for maintenance and operation of $0,042 per
mile. The cost of acquiring forfeited automobiles for official purposes for the fiscal year 1928 amounted to $11.35 per car, as compared
with $29.50 for 1927.
The total number of seizures made during 1928, amounting to
28,030, represents an increase of 48 per cent, and the total appraised
value of $7,843,424 shows a gain of approximately 31 per cent over
comparable figures for the fiscal year 1927.
The table below indicates in detail the number of seizures and the
appraised values thereof, classified by certain groups of commodities,
lor the fiscal 3^ears 1927 and 1928:
1927
Class of commodities
Beads and beaded articles
Furs Jewelry and precious stones
Laces and embroideries-_
_
Livestock, farm, dairy, and meat products
Perfumery and toilet articles
Silk, linen, woolen, and cotton goods.
All other, except as detailed below..
•.
Vehicles, etc., used in transporting liquors:
Automobiles
Boats
Horses and mules
.
Horse-drawn vehicles
Liquors
Alcohol
.
Narcotics
Total
Appraised
value
_
_
._
.
-
Number of
seizures
$1,326
r
30,144
370, 636
11,670
12. 230 • 4,350
2,865
174,958
147,907
[
.
.-.
.
-
1928
Appraised
value
Number of
seizures
$8,881
37, 733
318,055
4,113
44,316 > 6,767
1,568
743,769
694,531
456, 449
r 604,009
789, 221
1,078, 944
4,197
14,407
4,724 >14.374
1,204
> 21,095
2,012,327
3, 551, 690
3,402,959
3, 645,360
416,040
277,854
145
161,841
368,620
168
6,992,167
18, 869
7, 843,424 . 28,030
Expenditu/res and statistics
Other statistics, indicating the volume of customs transactions in the
several districts, vahies of imports and exports, the cost of collection, collections made, etc., are published in. Table 15, page 448, of this
report. Collections for the fiscal year 1928 fell below those of the
previous year by approximately 6 per cent. Expenditures increased
over 2 per cent due to expanded activities. The cost of collection per
dollar increased from $0.0285 to $0.0308, a difference of $0.0023.
SECRETARY OF THE TREASURY
145
Undervaluations
Rugs.—The investigation concerning market values of rugs was
concluded during the year and the values now used for appraisement
purposes on practically all imported Oriental rugs have resulted in
additions amounting to $1,398,904 by importers on making entry
during the year just closed.
Cotton velvets.—The close of the fiscal year 1928 m.arks the conclusion of a reappraisement case involving the value of cotton velvets
imported from Germany and consigned for sale in the United States.
In 1924 these velvets were advanced in value, appraisement being
made at the United States value. On reappraisement the trial judge
fixed the value at 10 per cent above the invoice price; on appeal to reappraisement the Customs Court sustained the invoice value, holding
that there existed neither a foreign, export, nor United States value
for the merchandise in question. Following this decision a foreign
investigation was made by customs representatives and upon receipt
of their report the merchandise which had previously been appraised
at the United States value was appraised at the price at which similar goods were being sold for home consumption. Upon final decision by the court the United States value was fixed as the proper
basis of appraisement.
^ _
This case marks the first, advance in value on appraisement of
German cotton velvets in a great many years and the values finally
fixed by the Customs Court are. 18 per cent higher than the consular
invoice values. The invoice value of merchandise imported during
1928 amounted to approximately $315,000. Additional duties coliected in consequence of this ultimate decision aggregated $60,000.
Embroideries and laces from China,—Great difficulty has been experienced in obtaining what is considered proper values for embroideries and laces from China, largely owing to the necessity of
relying upon reports which by reason of the distance are not always
specific on the case under consideration and have to be applied in a
general way. Reports from the Orient have proved of little value,
largely for the reason that they were not directly applicable to the
particular cases before the court. Notwithstanding this difficulty, the
appraiser of merchandise in New York has succeeded in bringing
about voluntary additions by the importers, together with the
abandonment of such cases as they had pending in the customs court.
The additional duty collected during the year amounted to approximately $300,771 and will continue to be paid on subsequent entries.
I'ie silks,—An investigation disclosed that there was neither a foreign nor an export value on tie silks. The merchandise was invoiced
at the cost of production and was appraised on the basis of the United
States selling price, resulting in additions to value by the importers
of $231,000.
146
REPORT ON THE FINANCES
.
Pania/fna hats.—Some of the Panama hats imported into the United
States were purchased in Ecuador in United States dollars and also
in Ecuadorian currency through agents who charge 10 per cent for
their services; the difference of value between the two classes of
purchases being the agent's commission of 10 per cent. The purchases in United States currency were taken as the export value to
ihe United States and adopted as the appraised value with a resulting advance in the purchases through agents amounting to an additional value of $145,000.
Ladies^ hand bags.—A very careful examination of ladies' hand
bags entered " a s of silk" is necessary by the appraiser, as such
articles are frequently found to be ornamented with beads or embroidered or to have their chief value in artificial silk or metal. The
diversified rates found applicable resulted in the collection of additional duty to the amount of $76,665.
Ai-'tificial silk yam.—An investigation of imports of artificial silk
yarn from Italy resulted in additions of approximately $150,000 by
the importers on entry on account of the difference between home
and export values. On artificial silk yarns from Germany the appraiser at New York is including a bonus ailoAved by the German
manufacturer to the home customers as a part of the export value,
the importers having deducted a similar amount on entry as a discount. The amount involved approximates $80,000. Appeals are
pending in the Customs Court.
Antiques.—Duties collected during the fiscal year 1928 on so-called
antiques, found upon examination by the appraiser of New York to
be not over 100 years old, amounted to about $180,000 on furniture
and $55,000 on textiles.
Books.—Additions to home market value made by the appraiser
at New York on importations of books from England totaled
$370,766.
Cork board {cork insulation).—Investigations conducted by the
.appraiser of merchandise at New York and by the customs representatives abroad have disclosed that systematic undervaluation
ranging from 10 to 15 per cent was practiced by at least eight
importers of cork board. The value of invoices held without action
by the appraiser in the last fiscal year amounts to more than $500,000,
and it is understood that the importers will accept the higher valuation determined by the appraiser.
Inland waterway traffic
The increase in movement of imported merchandise under bond by
inland waterways, particularly through the St. Lawrence River, has
necessitated the establishment of bonded elevators to facilitate the
SECRETARY OF THE TREASURY
147
economical transfer of shipments. Importations by this route have
continued to expand, and the establishment of bonded elevators and
erection of new docks fully equipped with modern unloading devices
presage greater development of importations through this artery of
transportation. A number of the smaller type of vessels entered
Great Lake ports direct from foreign ports by sea; several large
cargoes of wood pulp, originating in Sweden, having been transshipped in smaller vessels from Montreal, Canada. Cargoes of iron
pipe from Belgium and china clay from England have also been
brought in direct from foreign ports. There has also been an appreciable increase in importations arriving at New Orleans and forwarded in bond to Minneapolis and St. Paul via the Mississippi
River Barge Lines. This waterway is also used to a large extent for
the shipment of Canadian wheat in bond through the United States
for export at New Orleans.
Airports
Aircraft are now becoming a factor in foreign trade. During the
past fiscal year, pursuant to the authority contained in the air commerce act of 1926, airports of entry were designated at Key West,
Fla.; St. Paul, Minn.; Seattle, Wash.; and San Juan, Porto Rico,
where airplane service between those ports and foreign countries
for passengers and mail had already been established. Petitions
have been filed for the designation of several other airports of entry,
which it is expected will shortly be used by aircraft coming from
foreign countries. While foreign air traffic has thus far been confined to contiguous or near-by countries, it is rapidly becoming
important as a medium of commercial transportation.
Special agency activities
The activities during the fiscal year of the special agency service,
customs, fully justified the expectation of increased efficiency, foreshadowed in the report for the preceding fiscal year. An increased
number of ports and districts were examined; an increased number
of drawback investigations were made, resulting in important changes
in drawback policy and procedure; foreign investigations continued
to increase in number and importance; investigations directed
toward the prevention and detection of fraud were stimulated by
closer supervision and by an improved esprit de corps; arrests, indictments, convictions, seizures, fines, penalties, and forfeitures were all
augmented in number and value, with resultant good effect upon
regular customs collections; enforcement investigations were noteworthy in both number and result; and cooperation with United
148
REPORT ON THE FINANCES
States attorneys. Coast Guard, and prohibition officers, and with representatives of other departments and bureaus was improved and
strengthened. The creation of special investigating units by grouping especially skilled investigating officers under expert supervision
was extended by the formation of a unit to handle smuggling of
diamonds and precious stones. Provision for separate maintenance
of this unit after the close of the fiscal year was made by Congress.
A unit specializing in the investigation of liquor smuggling was
organized. A standing committee on customs examinations was created to harmonize and standardize this procedure, insuring more
frequent tests of the efficiency with which field units of the Customs
Service function in collecting the revenue from customs.
The following table shows the results during the past year of such
special agency activities, so far as direct results can be measured
in dollars and cents, or by count of individual cases:
Number of ports examined
Number of drawbacL: investigations
Number of foreign investigations
Number of arrests
Number of convictions-Number of acquittals
Failures to indict
Indictment cases pending
Number of seizures made
.
Number of seizures appraised
Number of seizures released or pending
Appraised value of seized merchandise
Proceeds of sale of seized merchandise
Merchandise entered free but found dutiable
Fines imposed by United States courts
Fines, penalties, and forfeitures incurred, exclusive of court
BaU forfeited
Amount of increased and additional duties collected
Amount deposited in offers of compromise
80
1, 493
2,338
1, 023
224
37
140
140
1,206
958
80
$1, 760, 090. 32
85,^276.92
74, 513. 72
^_
58, 401.10
fines- 984,667. 46
186, 850.00
565,002. 87
1, 557, 097.10
The benefits accruing from this work are apparent in improved
customs administration, better appraisement methods, and increased
revenues.
Cooperation with the Department of State (Consular Service) developed the need of a manual, which has been prepared for issuance
to consular and customs officers abroad, as well as for use in the
Foreign Service School. This manual explains and interprets the
various words and phrases contained in section 402 of the tariff act
as to what constitutes " v a l u e " of imported merchandise. I t contains, in brief and simple form, the substance of court decisions and
departmental rulings. There are also sections on marking, dumping,
rules of tariff construction, and invoicing.
SECRETARY OF THE TREASURY
14.9
The Customs Information Exchange continued to review and disseminate vital facts regarding market values, basis of appraisement,
violations of law, and other pertinent information, as shown below:
Number
Number
Number
Number
Number
Number
of
of
of
of
of
of
appraisers' reports of value received—
appraisement appeal reports received
advanced value reports received
changes in value circulated
requests for investigations abroad
antidumping investigations made
:
15,390
10,885
12, 265
4,213
1,022
19
The Customs Information Exchange issues, in addition to the
documents indicated in the above table, a weekly bulletin giving information regarding various price lists and summarized memoranda
of various customs attaches' reports received during the week. Also
differences in value and classification which develop in the course of
the regular work of this bureau are forwarded to the Treasury
Department at Washington for information and action. The exchange also prepares and distributes index cards containing summaries of Treasury decisions which are sent'out weekly, and similar
cards covering drawback decisions are sent out monthly. There is
likewise distributed weekly, the circular giving the dates of sailing
of vessels from foreign ports for America, this information being
essential to the appraisement of merchandise imported on such
vessels.
The antidumping unit functions within the Customs Information
Exchange and investigates suspended dumping of foreign merchandise. These investigations are of especial value and importance in
the protection of the revenue and to American industry, and involve
unusual difficulties, including the procurement of facts regarding
costs of production, both foreign and domestic, of similar merchandise for comparative purposes.
DISBURSING CLERK
The following is a summary of the work performed by the office
of the disbursing clerk during the fiscal year 1928:
•
Number
Disbursements:
Checks (salaries, expenses, supplies, etc.)
Cash (salaries)...
Checks (refunding taxes illegally collected)
Total
Collections on account of rents, sales, etc
Vouchers paid .
.
.
..
Schedules of claims for tax refunds
Appropriations under which disbursements were made
.
_. _
Amount
286,562
191,104
160,170
$38,829,535.75
15,924,836.43
141,947,073.59
637,836
196, 701,446.77
3,993
238,500
8,;621
520
1,601,938.98
The cash payments and the checks for salaries, expenses, supplies,
etc., cover disbursements for all bureaus and divisions of the Treasury
Department in the District of Columbia (except the Bureau of
Engraving and Printing), and a large portion of the salaries and
expenses outside the District of Columbia under the Public Health
Service, the Supervising Architect's Office, the Bureau of Internal
Revenue, the Bureau of Prohibition, the Federal F a r m Loan Board,
the Comptroller of the Currency, the Coast Guard, the Secret Service,
the Bureau of Customs, and the Public Debt Service (Division of
Loans and Currency).
Collections represent moneys received and accounted for on account
of rents of buildings and sites, sales of public property, etc., under
various bureaus and offices of the department.
Under the order of the Secretary of the Treasury, effective July 1,
1927, the procedure was adopted of requiring all vouchers forwarded
to the disbursing clerk for payinent to be scheduled by the administrative bureaus and offices.. This system has produced satisfactory
results.
150
BUREAU OF ENGRAVING AND PRINTING
During the fiscal year 1928 slightly less work was accomplished by
the bureau than during the record-breaking year of 1927. Deliveries totaled 483,455,932 sheets, as compared with 490,264,868 sheets
for the previous year, a decrease of 6,808,936 sheets, or 1.39 per cent.
There was a decrease of 13,308,071 sheets of currency, bonds, notes,
and certificates, and miscellaneous work, and an increase of 6,499,135
sheets of revenue and customs stamps.
The average number of persons employed in 1928 was 4,979, as
compared with 5,097 in 1927, a decrease of 118 persons, or 2.32 per
cent.
There was expended during 1928 a total of $9,734,996.41, as compared with $10,415,742.42 in 1927, a decrease of $680,746.01, or 6.53
per cent. Expenditures in each of the four appropriations in 1928
were less than in 1927, as follows:
Salaries
Compensation of employees
Plate printing
Materials and miscellaneous expenses
.
Per cent
0.15
1. 72
4.15
21.74
I t should be noted that although the number of sheets produced
decreased 1.39 per cent, the personnel was decreased by 2.32 per cent
and expenditures were reduced 6.53 per cent as compared with the
previous fiscal year.
The bureau had a balance on June 30, 1928, of 22,591,222 sheets of
currency backs and 30,007,225 sheets of currency backs and faces,
aggregating 52,598,447 sheets, as compared with 27,913,317 sheets of
backs and 20,945,385 sheets of backs and faces, aggregating 48,858,702
sheets on June 30, 1927, a net increase of 3,739,745 sheets. This
increase is accounted for by a decrease of 5,322,095 sheets of backs
and an increase of 9,061,840 sheets of backs and faces.
I n conformity with the announcement of the department on May
26, 1927, preliminaiy arrangements have been made for the production of currency of a smaller size. The designs for all classes of
currency, excepting national-bank notes, have been prepared and
approved. The size of the new note will be 6 ^ by 2 | ^ inches; the
size of the present note is 7iV by 3 % inches. The new face designs
are similar to those now appearing on the large-size notes, except for
a change in the portrait on certain denominations. The back designs
151
152
REPORT ON T H E FINANCES
on the $2, $5, $10, $20, $50, and $100 denominations differ from the
present designs in that they carry vignettes of public buildings. The
designs on backs of all other denominations are ornate, similar to
those now in use.
During the latter part of this year the production of plates for the
new currency was undertaken. This Avork progressed rapidly so
that approximately 442 plates of various denominations have been
manufactured to the present time. A large number of these plates
have been sent to.press and are now in use in connection with the
printing of currency backs.
Contracts have been awarded for the purchase of new, or the alteration of practically all the old, equipment needed for the production
of small notes. Ten new numbering, sealing, and separating machines were ordered at a cost of $150,000 during the early part of
the year. One of these presses has been delivered, and additional machines will soon be on hand. A contract for seven additional machines, which constitute the balance of the numbering, sealing, and
separating presses that will be needed, was recently awarded at a cost
of $115,500. The alteration of 50 trimming machines in the examining division has also been arranged for at a cost of $13,230.
I n the last ^^ear's report reference was made to experiments in
connection with a paper wiper to replace a cotton-rag wiper on
flat-bed printing presses. The experiments indicated that the plan
was practical, and during the year a gradual change from the cotton
rag to the paper wiper was undertaken. On July 1, 1928, paper
wipers were in use on approximately 75 per cent of the presses. The
use of wiping paper will discontinue the operation of that part of
the rag laundry where the muslin rags are reconditioned for re-use by
washing and starching. The personnel of the laundry has been substantially reduced, and surplus employees have been reassigned to
other divisions where their services could be utilized.
Spoilage was again slightly decreased so that the total of 2.02
per cent for the year established a new low record. The following is
a statement of the percentage of spoilage since 1917:
Year
1917- . . .
1918
1919.
1920
1921.
1922
_.
Percentage
3.81
4.63
6.48
5.44
7.39
6.63
Percentage
Year
1923
1924....
1925
1926
1927
1928
-
7.11
12.69
5.80
3.70
2.11
2.02
I t is doubtful whether it will be possible to reduce spoilage below
the figure for the year 1928. As a matter of fact, there may be a
slight increase during the next few years due to the introduction of
SECRETARY OF THE TREASUEY
153
small notes, as considerable experimental work will be necessary. A
continuance of the methods of salvaging notes, discussed in last year's
report, explains the reduction in spoilage during 1928, as compared
with the fiscal year 1927.
Platering (pressing) currency in eight-subject size instead of foursubject size, referred to in last year's report, was completed in so far
as it was possible to make this plan effective. National-bank notes
and salvaged half sheets of other currency are the only classes now
platered on a four-subject basis. A substantial saving has been realized through the adoption of this plan.
Through the cooperation of the Bureau of Standards an important
advance in the method of manufacturing electrolytic plates was accomplished during the year. Electrolytic plates were formerly made
by depositing electrically alternate layers of nickel and copper to a
master plate called an " alto." This shell was then " sweated " to a
steel base to give the plate rigidity. A new solution whereby iron is
deposited directly to the master plate to the thickness of the ordinary
steel plate has been introduced. Under this plan the " s w e a t i n g "
operation will be eliminated and the cost of production reduced approximately 25 per cent. As the plates will be one solid piece, many
of the difficulties previously experienced by shells separating from
the bases will have been eliminated. The application of chromium
on all electrolytic plates has been continued, with the result that the
life of the plates has been substantially increased.
A few changes in the method of manufacturing postage stamps
with a view to improving the quality of the stamps were adopted
during the year. The number of perforations was slightly increased,
thereby permitting an easier separation of the stamps. Fine grooves
were cut into the gumming rollers so as to permit of the application
of a greater quantity of gum to the surface of the stamp. A softer
and more absorbent paper, which permitted a deeper penetration of
gum and ink, was adopted. The number of breaker marks on the
back of the stamp was reduced from an average of four and five
marks to one mark. Reports from the users of large quantities of
stamps indicate that the tearing and adhesive qualities of stamps have
improved since the introduction of these changes.
At the request of the Prohibition Bureau, a change was effected
during the latter part of the year in the design and in the method of
printing physicians' prescription blanks. The printing is now being
accomplished by the offset process, eight subjects to the sheet, instead
of by the plate-printing process, six subjects to the sheet. This
change has resulted in a small saving to the bureau, but the savingwas offset by increases in orders beyond the original estimates.
Orders for Federal reserve notes were curtailed during the last
three months of the fiscal year. The Federal Reserve Board had
154
REPORT ON T H E FINANCES
estimated its requirements for the year as 48,210,000 four-subject
sheets, whereas only 34,716,000 sheets were delivered, a decrease of
13,494,000 sheets. Due primarily to this large and unanticipated
reduction, the bureau was overemployed during the latter p a r t of the
year. To relieve the situation without dismissing hundreds of employees for that period, a rotating furlough program was put into
effect. Under this program, which proportionately affected practically every employee in the bureau, an average of 800 employees was
on furlough each day during the period April 23 to June 30, 1928.
Among some of the major mechanical improvements during the
year were the installation of humidifiers in the surface printing
division and of automatic interlocking devices on elevators. Through
the use of humidifiers the humidit}?- of the offset section of the surface
printing division has been uniformly maintained, thereby eliminating aggravating press troubles formerly caused bj^ dry and curled
paper. The installation of interlocks on the elevators, Avhich prevents the operation of the elevator while the doors are open, was
effected in the interest of the prevention of accidents.
At the request of this bureau a complete inspection of the seven
boilers located in the buildings north of the main building w^as made
by the Steamboat Inspection Service of the Department of Commerce.
Some of these boilers are more than 20 years old, and an inspection
was desired to determine their safety under the required steam pressure. The Department of Commerce inspectors reported all of the
boilers to be safe and in excellent condition considering the length of
time they have been in service.
At the direction of the Supervising Architect's Office, specifications
w^ere prepared and bids invited for the installation of a new substation for the conversion of power purchased by this bureau. The
present equipment, which is of the 25-cycle type, is to be replaced by
equipment of the 60-cycle type, in order that the substation at this
bureau may tie in with the substation to be erected for the new
Department of Agriculture buildings. The accepted bid price for
13 switches, 4 rotary converters, and 6 transformers, amounts to
$147,195. The installation of the new equipment will be accomplished during the coming fiscal year by the engineering force of the
bureau.
Arrangements were completed during June for a change in the
method of handling and controlling stocks of nondistinctive blank
paper issued to this bureau by the division of paper custody of the
Public Debt Service. This new plan provides for the requisitioning
and issuing of the required quantities of certain classes of nondistinctive blank paper in full packages instead of sheets and for the
maintenance of these stocks of blank paper on the package basis in
the surface-printing division prior to printing. The plan also pro
155
SECRETARY OF THE TREASURY
vides for the installation of locking devices on the presses of this
division so that the paper after issue may be retained on the presses
until printed.
Through periodical counts of securities in process, the audit
committee of the Division of Public Debt Accounts and Audit, Public
Debt Service, again made a complete audit of all the securities in
process in this bureau. The committee supervised approximately
100 audits and checked every class and denomination of securities
printed. A monthly verification of proof impressions reported by
the engraving division for destruction and an inventory of proof
impressions retained in that division were also effected.
The planning unit, which is headed by an investigator from the
Bureau of Efficiency, continued to submit many constructive recommendations and suggestions, A considerable part of the effort expended by this unit during the year was devoted to the task of assisting in substituting paper in lieu of rag wipers on power presses.
A comparative statement of receipts and expenditures for the fiscal
vears 1927 and 1928 follows:
1927
Appropriated by Congress:,
Salaries
Compensation of employees
Plate printing
Materials and miscellaneous expenses
Reimbursements to appropriations from other bureaus for work completed:
Compensation of employees
Plate printing
^
Materials and miscellaneous expenses ^
Total
Net
1928
Increase
$470, 000. 00 $465,000. 00
3,893, 000. 00 3, 659, 690. 00
1,916, 900. 00 1, 888, 000. 00
1,487, 600. 00 1,160, 000. 00
$5,000.00
233,410.00
28,900.00
327,600." 00
1, 742,629.11 1, 557, 204. 61
509,435. 82
437,466.48
1, 013, 730. 51 • 883,471. 79 '
185,424. 60
71,969. 34
130, 258. 72
11,033,195. 44 10,050,732. 88
-
982,462. 66
—
982,462. 56
Expended:
Salaries .
Compensation of employees 2
Plate printing
Materials and miscellaneous expenses
Total 3
465, 083.19
464, 270.19
6, 298, 613.16 6, 207, 373. 70
2,407,050. 08 2, 307,153. 64
2, 244, 995. 99 1, 756,198. 88
813. 00
91, 239.46
99, 896. 44
488, 797.11
10, 415, 742. 42 9, 734,996. 41
680, 746. 01
Net
Unexpended balance:
Salaries
.
_.
Compensation of employees
Plate printing
Materials and miscellaneous expenses
Total
Net
Decrease
680, 746.01
_
4, 916. 81
337, 016. 96
19, 285. 74
256,234. 62
729.81
9,420. 91
18,312. 84
287, 272. 91 $31,038.39
617, 453.02
315, 736. 47
31,038.39
4,187. 00
327,695. 04
972. 90
332, 754.94
301, 716. 55
1 An additional amount of $31,669.56, received from sale of by-products and useless property, was deposited
to the credit of the Treasurer of the United States as miscellaneous receipts.
2 Includes $14,000 and $11,000 transferred to Bureau of Standards for research work in the fiscal years 1927
and 1928,'respectively.
3 Includes $231,632.42 and $277,212.25 transferred to retirement fund in the fiscal years 1927 and 1928,
respectively.
156
REPORT ON T H E FINANCES
A comparative statement of deliveries of finished work in the fiscal
years 1927 and 1928 follows:
Sheets
Face v a l u e
Classes
1928
Currency:
U n i t e d States notes
Silver certificates
G old certificates
National-bank currency.
Federal reserve notes
Total.
B o n d s , notes, a n d certificates:
Pre-war b o n d s
Liberty bonds
Treasury bonds
T r e a s u r y notes
Certificates of i n d e b t e d n e s s
Insular b o n d s Porto Rican
Phihppine
Farm loan-bonds....
Collateral t r u s t d e b e n t u r e s . . . .
P h i l i p p i n e t r e a s u r y certificates
N o t e s for t h e B a n k of t h e P h i l i p p i n e I s l a n d s
I n t e r i m certificates for Federal reserve banksu
I n t e r i m transfer certificates for postal savings bonds.
I n t e r i m certificates for P o r t o R i c a n b o n d s
I n t e r i m certificates for P h i l i p p i n e Islands b o n d s
SpecimensTreasury bonds..
T r e a s u r y notes
Certificates o f i n d e b t e d n e s s
Insular b o n d s Porto Rican
Philippine
Consolidated F e d e r a l farm loan b o n d s
Total.
Stamps:
., •
CustomsJI...
Internal r e v e n u e U n i t e d States (includes o p i u m )
Philippine
Porto Rican
Virgin I s l a n d s
Specimens, U n i t e d States
Postage s t a m p s U n i t e d States
U n i t e d States s u r c h a r g e d ' ' C a n a l Z o n e "
Phihppine..
Specimens, U n i t e d States
Postal s a v i n g s
Total..
Miscellaneous:
Checks
Drafts
Warrants
Commissions
Certificates.
Transportation requests.
Liquor permits
o t h e r miscellaneous
Specimens
Total
G r a n d total..
24,075,000
153, 250. 000
13,925,000
14, 249, 996
42, 685, 000
21, 628, 000
153, 854, 000
11, 368, 000
14,999, 232
34, 716, 000
$338,060, 000
615,416,000
627,400, 000
525, 758, 050
1, 260, 220, 000
248,084,996
236, 565, 232
3,366,854, 050
4,915
182,416^1
485, 633H
256, 525
61, 325
2,450
3,150
1, 042, 295 ,
31, 400
1, 020, 000
25, 000
1,000
1,770
11,4253^
188, 828V6
30, 771%
241,400 I
94, 350
110, 714, 380
825, 647, 300
377, 830, 000
2, 475,050, 000
3,829, 000, 000
17, 391/,
2,526
423,856
8,665
757,400
181,150
13,185, 000
2, 526, 000
153,102,840
226, 975, 000
3,404. 250
3, 513, 250
4,750
3,926
1
iy\
2
3
2
3,117,889%
65,000
14
4
3
1, 966, i65i^
8,020,948,020
67, 500
Subjects, 1928
2,190,000'
87, 307, 5 2 0 ^
67, 619
743, 729
86, 285, 027^1
73,457
678, 499
300
4
7,876,'550,442
9, 219, 200
68, 379, 072
30, 000
2
139,392,361
31,166%
549,870
147,102,085
20, 343%
529, 968Vo
16, 717, 532, 564
2,427,800
52,816, 200
1,552
278,400
•
71^Vff
3,621.
228,160,858f?6, 747, 812
13,950
49, 780
93, 012
1, 283, 083
295,495
2, 321, 929%
96,057
10,901,123%
490, 264, 867-l-f^^
25TVO
2,784
234,-659;993|-t-g
24,718,425,232
6, 384, 294%
700
50, 080
100, 674%
1, 359,148
153, 285,
1,945, 666%
265,379%
5,012-H
31,925,160
3,000
250,400
62, 660
3, 521, 697
766,425
11, 881,900
7, 567, 936
20,590
10, 264, 240^-M-
55,999, 758
483,455,931|-f|
157
SBCBETAE.Y OF T H E TEEASUEY
The following statement shows total deliveries made, total expenses,
and average number of employees engaged by the bureau since 1878:
Fiscal year
1878.
1879.
1880.
1881.
1882.
1883.
1884.
1885.
1886.
1887.
1888.
1889.
1890.
1891.
1892.
1893.
1894.
1895.
1896.
1897.
1898.
1899.
1900.
1901.
1902.
1903.
Total number of sheets Expenditures
delivered
13,098, 756
21, 394, 030
23, 438, 798
26,017, 661
31,112,484
33, 330, 746
30, 205, 865
28,217,706
26, 655, 496
32, 652, 207
38,040, 984
39, 207,164
36, 512, 719
46, 390, 381
52, 608,438
48,853, 528
65, 516, 961
70,886,033
85, 050, 595
86,174, 766
92, 979, 478
112,161,122
116, 909, 423
121, 558, 291
139,167, 359
155, 743. 691
$538,861. 33
814,077. 01
883,171. 95
901,166. 26
936, 757. 62
1,104, 986. 43
977, 301. 85
965,195. 47
763, 207. 84
794,477. 90
948, 995. 83
932, 577. 78
1, 012, 789.18
1, 265, 263. 29
1, 316, 586. 89
1, 238, 464. 36
1, 317, 389. 61
1, 439, 265. 94
1, 469, 359. 70
1,450,611.86
1, 570, 598. 46
1,884,441.39
2, Oil, 702. 01
2, 393, 494. 26
2, 967, 091. 74
3,136,477. 73
Average
number
of employees
522
804
905
958
1,011
1,173
1,193
1,133
886
840
895
917
992
1,161
1, 358
1,333
1,380
1,427
1,619
1,605
1,623
1,903
1,999
2,364
2,672
2,850
Fiscal year
1904.
1905.
1906.
1907.
1908.
1909.
1910.
1911.
1912.
1913.
1914.
1915.
1916.
1917.
1918.
1919.
1920.
1921.
1922.
1923.
1924.
1925.
1926.
1927.
1928.
Average
Total number of sheets Expenditures number
of emdelivered
ployees
159, 918,061
165, 354, 514
180, 289, 766
201,123, 528
210, 589,197
239,405, 723
252, 710,864
262,806,113
262, 434, 739
287,192,192
280, 272, 828
307, 634, 334
300, 711, 800
343, 345,005
396, 790, 285
447, 464,105
402, 711, 759
438, 694, 824
416, 820,113
411, 546, 429
431, 868, 658
464, 869, 695
482, 307,106
490, 264, 868
483, 455, 932
$3,159, 940. 69
3, 292,217. 06
3, 355,186. 23
3, 849,064. 39
3,841, 173. 60
4, 355,935. 65
4, 375,365. 57
4,180, 284.20
4, 319.246. 57
4, 449,726. 22
4, 372,922. 81
5,039, 204.80
5, 066,048. 72
6, 324,118.70
9, 086,303. 90
11, 571,186.10
11, 854,171. 45
13, 965,-233: 57^
10, 812,756. 38
10,106, 320.28
9, 401,925. 68
10, 041,457. 46
10, 483,674. 68
10,415, 742. 42
9, 734,996. 41
2,928
3.002
3,084
3,437
3,572
3,977
3, 964
3,814
3,899
3,920
3,932
4,119
4,048
4, 221
6,214
7,508
6,912
7,097
6,416
5, 535
4, 980
5, 098
5,173
6,097
4,979
COMMITTEE ON ENROLLMENT AND DISBARMENT OF ATTORNEYS
AND AGENTS
The committee on enrollment and disbarment of attorneys and
agents, created by Department Circular No. 230, dated February 15,
1921, is responsible for the examination of applicants wishing to
practice as attorneys, agents, or other representatives before the
Treasury Department or offices thereof, and receives complaints, conducts hearings, and makes inquiries concerning violations of the regulations by enrolled practitioners. The conclusions of this committee
in each case are submitted as recommendations to the Secretary of the
Treasury.
During the fiscal year 1928 the applications for enrollment of
2,804 attorneys and agents were approved and 50 were disapproved.
Since the organization of the committee in 1921, 22,729 applications
have been approved and 393 disapproved. Some 8,600 persons were
enrolled prior to the organization of the committee, and many of
them are now in active practice.
Practitioners before the department, whether attorneys or agents,
are held to the highest standards of the legal profession. Any con-«
duct held to be disreputable by the courts in disbarment proceedings
against attorneys would be ground for the rejection of an applicant
for enrollment or the discipline of an enrolled attorney or agent.
Numerous complaints reach the committee that an enrolled attorney
or agent has violated the laws and regulations governing practice or
otherwise engaged in improper or disreputable practice. All complaints are carefully investigated and if found sufficient to warrant
action a formal complaint is prepared by the committee's attorney.
If the respondent's answer is accepted as satisfactory, the complaint
is dismissed; otherwise a formal hearing is held by the committee, at
which the respondent may appear in person and be represented by
counsel. After the hearing the committee reports to the Secretary
its findings of facts, and if it is found that the complaint has been
proven the committee recommends that the respondent be disbarred,
suspended for a definite period, or reprimanded.
i
On June 30, 1927, formal complaints against 84 individuals were
awaiting final disposition. During the past year 83 new complaints
were filed. I n 11 cases the answer of the respondent was accepted as
sufficient and the complaint dismissed. I n 1 case the enrollment of
the individual was canceled. I n 44 cases formal hearings were held;
158
SECRETARY OF THE TREASURY
159
in 3 of these cases it was found that the charges were not proven and
the complaints were dismissed. I n 41 cases the charges were found
proven in whole or in part, and the Secretary imposed penalties as
fdllows: Sixteen were disbarred from further practice before the
Treasury Department, 11 were suspended from practice for various
periods, and 14 were reprimanded. A t the close of the year there
were 111 complaints awaiting final disposition. Since the organization of the committee in 1921, 54 practitioners have been disbarred,
72 have been suspended for various periods, and 97 have been reprimanded.
I t is the policy of this committee, when deemed advisable, to give
an attorney or agent opportunity to show cause why formal disbarment proceedings should not be instituted against him, 15 such cases
occurring during the year,
13606—29—PI1928
13
SECTION OF FINANCIAL AND ECONOMIC RESEARCH
, The section of financial and economic research in the office of the
Secretary of the Treasury was established in June, 1927, taking over
the staff and duties of the section of statistics organized in September, 1920. I t is the function of this section to supplement the
work of the administrative divisions of the Treasury in providing
information and analysis not within the province of such divisions.
The activities of the section during the fiscal year 1928 are summarized below under four general divisions of the work pursued:
1. Confidential studies were made providing information for the
guidance of Treasury officials in formulating the policies of the
department. There were prepared during the fiscal year 1928 further
studies regarding the effect of changes in economic and administrative conditions on tax receipts, to be used as a basis for estimating
such receipts. The work on corporation income taxes was extended
to include a statistical analysis of the relation of business conditions
to factors determining the corporate income subject to tax, namely,
the gross income of all corporations and the deductions of various
kinds therefrom to determine the net income. Also an analysis was
made of the degree to which changes in the net income of selected
corporations are representative of the changes for all corporations.
I n this connection an index was prepared of the quarterly published
reports of corporation profits. The results of these investigations
were used in estimating the corporation income tax to be returned
for the calendar year 1928. A special detailed study was made of the
sources of back tax collections, thus bringing together the combined
effect ori these collections of the work of the Income Tax Unit, the
Accounts and Collections Unit, the Board of Tax Appeals, and the
general counsel's office. The results of this study formed a basis for
estimating the back tax collections for the fiscal years 1929 and 1930.
Analyses previously prepared regarding receipts from other tax
sources were continued. Numerous suggestions for changes in the
tax data compiled for Treasury use developed from the above studies.
The study of specific statistical series relating to monthly changes
in general economic and financial conditions was continued. The
results were systematically presented for current Treasury use in
desk and wall charts.
2. Under the ^general supervision of the Undersecretary of the
Treasury, the annual report of the Secretary of the Treasury for
160
SECRETARY OF THE TREASURY
161
1927 was outlined, assembled, edited, and indexed, and part of the
material in the body of the report was prepared by this section.
Work was begun on a cumulative index of the annual reports of the
Secretary of the Treasury for the years 1913-1927. The section also
assisted in editing the Statistics of Income for 1926.
Data in articles discussing various phases of our public finances
appearing in periodicals, encyclopedias, etc.j under Treasury authorization, and in addresses delivered by Treasury officials were assembled in this section. Material and statistics were furnished as
requested, data checked, and statements verified.
3. The financial and economic information service to Members of
Congress and to the general public was continued. A diversified correspondence was handled covering Treasury financing and accounting, taxation, public debt, currency. Federal reserve system, banking,
investment, corporate finance, business cycles, interest rates, foreign
exchange, national wealth and income, economic theory and history,
financial history, and similar topics. Many of these letters required
considerable research, statistical compilation and analysis, and careful
presentation.
Tabulations of special information were prepared periodically
for general use. An estimate was issued each month of the taxexempt securities outstanding at the end of the month, including an
estimate of the total outstanding State, local. Territorial, and insular
indebtedness. This estimate is based on decennial census statistics,
projected by appropriate statistical methods. There was also prepared each month a statement of the maturities of the public debt
by classes for the succeeding 5-year period. During the session of
Congress there was prepared and distributed daily a digest of the
progress of financial and banking legislation.
I n cooperation with the Federal Reserve Board, further revision
was made in the monthly Circulation Statement of United States
Money, with regard to the data on gold stock, minor coin, and other
matters.
4. The general Treasury library, containing a large number of
valuable and extensive series of official publications of the Treasury,
of other Government bureaus, and of Congress, is a part of this section. Also, a library of standard and recent books and of important domestic and foreign periodicals is maintained and administered for the use of the section and of the entire Treasury staff.
There was also continued an index of material in current periodicals
and other publications on subjects of interest to the Treasury.
BUREAU OF INTERNAL REVENUE
General
Internal revenue receipts.—Receipts from internal revenue taxes
during the fiscal year 1928, compared with 1927, were as follows:
Sources
I n c o m e tax: ^
Corporation
Individual.-_
Total
E s t a t e s of d e c e d e n t s . .
Distilled spirits a n d alcoholic beverages
R e c e i p t s u n d e r national p r o h i b i t i o n
T o b a c c o manufactures, e t c . .
Oleomargarine, a d u l t e r a t e d a n d process or renov a t e d b u t t e r , filled cheese, a n d mixed flour
B o n d s of i n d e b t e d n e s s , capital stock issues, capital
stock transfers, sales pf produce for future delivery,
p l a y i n g cards, e t c . . .
Excise taxes, m a n u f a c t u r e r s ' , including a u t o m o biles, etc
C o r p o r a t i o n s , on capital stock '
U s e of y a c h t s , pleasure boats, etc
.
Admissions to t h e a t e r s a n d o t h e r places of a m u s e m e n t , a n d club dues
,
Narcotics: O p i u m , coca leaves, etc., including
special taxes of i m p o r t e r s , m a n u f a c t u r e r s , a n d
dealers
..-.
I n t e r n a l r e v e n u e collected t h r o u g h c u s t o m s offices..
O t h e r miscellaneous receipts 3
T o t a l miscellaneous taxes
T o t a l receipts from all sources *
Increase (-}-) or
decrease (—)
1928
$1,308,012,632.90 $1,291,846,989.25 -$16,166,543.65
911,939,910.82
882,727,113.64 -29,212,797.18
2,219,952,443.72
2,174,573.102.
-45,379,340.83
100,339,861.96
21,195,651.96
602,876.72
376,170,206.04
60,087,233.97
16,307,796.45
925,252.22
396,450,041.03
-40,262,617.99
-6,887,765.51
+422,375.50
+20,279,835.99
3,186,297.13
3,422,702.90
+237,405.77
37,345,561.43
48,829,208.24
+11,483,656.81
66,829,031.21
8,970,230.93
7,966.72
51,936,691.28
8,688,602.39
9,763.47
-14,892,439.93
-281,728.54
+1,796.76
28,376,657.48
28,077,941.91
-298,715.57
797,825.32
40,302.99
1,969,337.30
690,432.41
21,216.94
1,615,751.68
-107,392.91
-19,086.05
-453,585.72
645,730,686.19
616,962,434.79
-29,768,251.40
2,866,683,129.91
2,790,635,537.68
-76,147,592.23
1 I n c l u d e s income t a x on Alaska railroads (act of J u l y 18, 1914) a m o u n t i n g t o $18,827.34 for 1927 a n d
$14,668.19 for 1928.
2 T a x d u e prior to J u l y 1,1926.
8 I n c l u d e s $1,915,745.36 for 19.'^.7 a n d $1,467,626.93 for 1928, d e l i n q u e n t taxes collected u n d e r repealed laws.
< T h e figures concerning intei'nal revenue receipts as given in t h i s s t a t e m e n t differ from such figures
carried in other T r e a s u r y s t a t e m e n t s showing t h e financial condition of t h e G o v e r n m e n t , because t h e
former represent collections b y i n t e r n a l r e v e n u e officers t h r o u g h o u t t h e c o u n t r y , including deposits b y
p o s t m a s t e r s of a m o u n t s received from sale of i n t e r n a l revenue s t a m p s a n d deposits of i n t e r n a l r e v e n u e
collected t h r o u g h customs offices, while t h e l a t t e r represent t h e deposits of these collections in t h e T r e a s u r y
or depositaries d u r i n g t h e fiscal year concerned, t h e differences being d u e to t h e fact t h a t some of t h e collections in t h e l a t t e r p a r t of t h e fiscal y e a r can not be deposited, or are not reported t o t h e T r e a s u r y as
deposited u n t i l after J u n e 30, t h u s carrying t h e m into t h e following fiscal year as recorded in t h e s t a t e m e n t s
s h o w i n g t h e condition of t h e T r e a s u r y .
Refunds.—In the foregoing statement of receipts no deductions
have been made on account of refunds, which during the fiscal year
1928 were paid from the several appropriations as follows:
Refunding taxes illegaUy coUected:
1926 and prior years
1927 and prior years
1928 and prior years
_,
Net total
162
$98, 503. 80
9, 666. 78
142, 285, 396. 59
142, 393, 567.17
SECRETARY OF T H E TREASURY
163
The interest allowed on claims for refunds under provisions of the
revenue acts of 1921,1924,1926, and 1928, amounting to $28,258,170.93,
is included in the above statement. There was a total of 9,378 schedules containing 168,501 claims. I n addition to the foregoing statement of refunds, two schedules containing two claims, amounting to
$10,652.91, were paid from funds provided under the act of July 27,
1912. These claims included interest in the amount of $6,602.82.
There were also 29 schedules containing 50 claims, amounting to
$8,511.90, paid from funds provided under the act making appropriations for refunding automobile and cigar taxes, 1926 and 1927.
Cost of administration.—The expenditures in administering the internal revenue tax laws for the fiscal year 1928 were $32,599,845.35,
not including expenditures for refunding internal revenue collections
and taxes illegally collected, which are in no sense administrative expenses. The aggregate receipts of internal revenue were $2,790,535,537.68, which makes the cost of operation for the fiscal year 1928,
$1.17 for each $100 collected, compared with $1.15 for each $100 collected for the fiscal year 1927, or an increase of 1.7 per cent.
Income Tax Unit
Production.—During the fiscal year 1928 the work of the Income
Tax Unit was brought to a current basis. Production was the greatest in the history of the unit. Conditions are such that the balance
of cases on hand, including the 1927 returns, can be handled within
the next 12-month period and that a current tax audit can be maintained. Changes in organization and improved procedure contributed in large measure to the result, which was accomplished with a
reduced personnel and at less cost than in prior years.
The total number of returns examined and closed was 3,247,703
(2,529,569 individual and partnership and 718,134 corporation), compared with 2,482,021 for the previous fiscal year, an increase of
765,682, or 30.9 per cent.
Additional revenue.—The amount of additional revenue made
available was approximately $250,000,000, which figure represents
tax and interest assessed in cases where no jeopardy was involved
after complete consideration of all evidence. The greater part of
this amount was tax agreed to by taxpayers, and the full amount is
collectible. During the year deficiency taxes and interest thereon in
the sum of $293,861,079.90 were assessed, compared with $276,096,454.33 assessed during the previous year. Of the total $198,108,881.39 was assessed in Washington under regular procedure, while
$27,767,846.73 was handled under the provisions of mimeograph No.
3552, the effect of which is to shorten the interest period and permit
the routing of deficiency-tax cases, agreed to by taxpayers, from reve
164
REPORT ON THE FINANCES
nue agents to collectors for listing and immediate collection. Because
it was felt that collection would be jeopardized by delay, assessments
totaling $45,685,725.80 were made without allowing the taxpayers
the right of appeal prior to assessment. Interest upon deficiency
taxes in the amount of $22,298,625.98 is included in the total amount
stated as assessed.
The amount of $18,481,864.62 was made available for immediate
collection during the year as a result of the rejection of claims in
abatement and claims for credit.
Claims and overassessments,—Allowances w^ere scheduled in respect
of 30,525 cases where taxpayers had filed claims and in respect of
56,136 cases where no claims were filed by taxpayers. The total
amount of overassessments stated was $208,398,978.14. Of this
amount, $95,280,950.93 was refunded and $113,118,027.21 abated or
credited. Interest in the total sum of $26,402,332.59 was paid on
the amounts refunded or credited. The number of claims rejected
was 15,506, and the amount involved in such claims was $289,631,791.76. The total number of claims disposed of during the year was
46,031 and the money involved in such claims was more than onehalf billion dollars. The number of claims filed during the year was
43,981 and the amount involved $486,603,619.26. During the previous
year claims to the number of 47,808, involving $462,896,449, were received. A t the end of the fiscal year 12,818 claims were pending
settlement. This is the smallest number of claims remaining unadjusted at the close of any fiscal year since the enactment of the war
revenue acts. Because certain provision^ of the 1928 act are retroactive, an appreciable increase was noted in the number of claims
for refund filed during the closing months of the fiscal year.
The audit in Wa^shington,—The number of income tax returns
pending before the Washington divisions of the Income Tax Unit on
June 30, 1928, was as follows:
1917
1918
1919
1920
1921
1922
..
-
241
324
398
523
536
836
1923
1924
1925
1926
1927
1, 788
7, 299
8, 606
8, 246
669
29, 466
The audit in the field.—During the year revenue agents submitted
recommendations with respect to 968,576 cases as compared with
688,816 during 1927, an increase of 279,760, or 40 per cent, in the
number of cases handled. Except for a limited number of 1927
returns, the 968,576 returns handled during the year by the offices
of the internal revenue agents in charge were those filed for 1926 or
prior years.
SECRETARY OF THE TREASURY
165
Of the 968,576 returns, concerning which recommendations were
made by revenue agents, investigations were made in 466,266 cases.
Of that number 257,816 represented thorough audits; while in 208,450
cases the activity of the field was directed to securing an explanation
of specific items which, to be allowed as deductions, etc., demanded
further consideration and support. I n 502,310 cases the field concluded, after a second survey involving no contact with taxpayers,
that the returns involved should be accepted as filed.
Deficiency taxes were proposed as a result of the work of the field
agents in 195,086 cases, and overassessments were determined in
58,643 returns. Agreements were secured by internal revenue agents
in 176,590 of the changed cases. Returns to the number of 714,847
were recommended to be accepted as filed.
The field force also classified 2,638,484 returns for 1927 during
the fiscal yesn- and recommended that 2,120,690 be accepted as filed,
and designated 2055258 for office audit and 312,536 for field investigation.
On June 30, 1928, the pending job of the field divisions of the
Income Tax Unit was to handle during the fiscal year 1929, 378,106
returns, of which 196,104 were already filed. Of the 378,106 returns
to be examined, 233,276 are for the taxable year 1927 and the remainder, 144,830, are for 1926 and prior years.
Records division.—During the 3^ear 2,007,592 individual returns
and 494,475 corporation returns were received and filed. Of these
returns, 517,703 were forwarded to the several revenue agents and
267,105 to collectors for investigation. There w^ere assembled and
forwarded to the proper destination for audit review 364,629 reports
of agents. Approximately 75,000 cases and related documents were
controlled and forwarded to the general counsel. I n answer to requests, there were furnished 34,255 copies of returns, reports, and
schedules, for which, under a procedure established just prior to the
beginning of the fiscal year 1928, taxpayers and their agents paid the
unit $13,417.31. Claims to the number of 43,961 were received and
assembled. Of this number, 12,371 were forwarded to revenue agents
for examination and rejDort.
Increase in retwns showing large incomes.—Comparison of the
number of returns^ filed in 1922 with the number filed in 1927 shows
the 1040's (individual returns), reporting net income of $5,000 and
over, increased from 525,606 to 894,868, or 70 per cent. The rate of
increase rises sharply for each higher income class.' I n the class
from $50,000 to $100,000 the increase is 135 per cent; from $100,000
to $300,000, 279 per cent; and for $300,000 and over, 547 per cent.
Similar results are shown for 1120's (corporation returns), the
rate of increase in the number of returns being greatest for the higher
income classes. The number of 1120's reporting net income increased
166
REPORT ON THE FINANCES
from 171,230 filed in 1922 to 258,134 in 1927, or 51 per cent. The
number in the class from $5,000 to $50,000 increased 54 per cent. For
the classes between $50,000 and $1,000,000 the increase ranges from
90 to 98 per cent. For returns showing net income between $1,000,000
and $5,000,000 the increase was 92 per cent; and for $5,000,000 and
over, 206 per cent.
The increased number of returns showing large incomes filed during this period, although indicating in volume the augmented responsibilities of the unit, presents but half the picture. The total net
income reported by individuals having net incomes of $5,000 and
over increased during this period from $6,362,000,000 to $13,228,000,000, that is, 108 per cent; and for the several higher income classes
the rate of increase ranges from 139 per cent to 651 per cent. For
individuals with net incomes of $300,000 and over the net income increased from $154,000,000, reported on the returns filed during 1922,
to $1,153,000,000 on returns filed in 1927.
For corporations the growth in financial operations is'^even more
marked. The total gross income of corporations increased from
$91,000,000,000 to $142,000,000,000, and for corporations reporting
net income increased from $60,000,000,000 to $118,000,000,000, and
the net income of these corporations increased from $4,336,000,000
to $9,673,000,000.
Personnel.—The condition of the work, brought about by improvements in procedure and better administration, made possible a reduction in the working force of the unit.
On June 30, 1928, the technical personnel of the Washington office
numbered 940 and the clerical force 1,340, a total of 2,280; while on
June 30,1927, there were 1,240 technical ,and 1,390 clerical employees,
a total of 2,630 on the rolls. Notwithstanding the increased production, a reduction of 350 employees was accomplished in the Washington force during the year.
The field force was increased by 94 technical and 54 clerical employees. There were assigned to the field on June 30, 1928, 2,861
technical and 779 clerical employees, a total of 3,640; while at the
close of the previous fiscal year there were 2,767 technical and 725
clerical, or a total of 3,492 employees. Of the additional personnel
assigned to the field 92 auditors and 17 clerks were transferred from
the Washington office.
The net reduction of 202 in personnel will result in an annual saving
in salaries of $441,860.
Miscellaneous Tax Unit
The Miscellaneous Tax Unit is charged with the administration
of all taxes other than income tax. The unit is composed of three
divisions, namely, estate tax division, miscellaneous division, tobacco
SECRETARY OF THE TREASURY
167
division, and an appeals and review section which is attached to the
office of the deputy commissioner in charge. The capital stock tax
division was abolished March 12,1928, and a capital stock tax section
was created in the miscellaneous division for the purpose of completing the remaining work in connection with the audit of returns,
determination of assessments, and adjustment of claims.
Estate taxes,—Estate tax collections amounted to $60,087,233.97,
compared with $100,339,851.96 for 1927. The decrease is due, first,
to the increase of the specific exemptions from $50,000 to $100,000, as
provided in section 303 (a) (4) of the revenue act of 1926; and
second, to the 80 per cent credit provision in section 301 (b) of
the same act, and to consequent legislation by most of the States iri
which the greater part of the estate taxes were collected, designed to
enable the States themselves to collect and absorb the full 80 per cent
credit.
The field force, which operates under the direction of the deputy
commissioner through the internal revenue agents in charge, was
reduced 10 per cent during the year. During the same period there
was a decrease of 25 per cent in the number of new estate tax returns
filed, with the result that there were approximately 2,000 less cases
on hand in the field than in 1927. The field force submitted 10,540
estate tax and 43 gift tax major reports, compared with 12,899 estate
tax and 396 gift tax major reports in 1927.
There were filed 9,373 new estate tax and 27 delinquent gift tax
returns, compared with. 12,538 estate tax and 2,523 gift tax returns
for 1927. The number of returns audited was 11,328, compared with
16,087 for the previous year, while the office personnel handling cases
was reduced by 11. There were 1,284 cases awaiting audit at the
close of the year.
The number of refund claims on hand July 1, 1927, was 387, involving $13,350,524. There were received during the year 2,020
refund claims, involving $17,104,410.18. The number of refund
claims allowed was 1,792, amounting to $14,646,874.89, including
$1,106,770.15 interest and $587,523.48 allowed as overassessments
without claims. The number of refund claims rejected was 412, involving $8,992,121. There were 203 refund claims on hand June 30,
1928.
There was one abatement claim on.hand July 1, 1927, involving
$4,482.90; and during the year 690 were received, involving $3,137,112.85. The number of abatement claims allowed was 627, amounting
to $3,888,284.49, iricluding $796,761.23 allowed as overassessments
without claims; and the number rejected was 22, involving $17,967.26,
leaving 42 abatement claims, involving $32,105.23, on hand at the
close of the fiscal year.
168
REPORT ON THE FINANCES
There were 21 claims for refund of gift tax on hand July 1, 1927,
involving $414,524.12, and the number received during the year was
429, involving $3,164,061.50. The nuinber of such claims allowed was
267, amounting to $2,005,197.51, including $267,023.97 interest and
$57,094.63 allowed as overassessments without claims; and the number rejected was 130,, involving $1,367,119.39. The number of claims
for refund of gift tax on hand J u n e 30, 1928, was 53, involving
$530,387.32. There were received during the year 12 claims for
abatement of the gift tax, amounting to $51,065.28, all of which were
allowed.
There were pending at the beginning of the year 367 protest
letters, and during the year 1,177 vv^ere received. There were 1,382
such letters disposed of, involving $29,566,776.44, leaving 162 on hand
at the close of the year.
The files on June 30, 1928, contained 152,528 estate tax cases and
2,593 gift tax cases.
Miscellaneou)s taxes.—Receipts from admissions, dues, and excise
taxes for the year amounted to $80,014,533.19, compared with $95,205,688.69 for 1927. This decrease is due to the repeal of the excise
tax on automobiles, effective May 29, 1928. Collections from miscellaneous stamp and special taxes during the year were $52,261,674.61,
compared with $40,538,815.28 for 1927. The increase was largely due
to the record-breaking volume of sales and transfers of stock during
the fiscal year. Collections of delinquent capital stock tax during the
year amounted to $8,688,502.39, closely approximating the collections
for 1927. Receipts under internal revenue laAvs relating to distilled
spirits, fermented liquors, and narcotics for the fiscal year 1928 were
$15,998,228.86. The total receipts from taxes administered in this
division were $156,962,939.05.
During the fiscal year 24,921 claims were received and reopened,
compared with 26,973 received and reopened during 1927. There
were 28,809 claims adjusted, compared with 23,766 claims adjusted
during 1927, leaving 5,977 on hand June 30, 1928, compared with
9,865 on hand at the close of the preceding year.
During the year there was allowed $613,528.97 as interest accrued
on taxes refunded, compared with $578,184.22 allowed during 1927.
A total of $224,566,075.94, representing 266,183 items, was approved by the commissioner on miscellaneous assessment lists, which
embrace all assessments of taxes administered by this unit. These
lists carried $34,569,799.37, representing 29,495 additional assessments resulting from office audit and field investigations. The
amount of interest paid and assessed on the miscellaneous tax lists
totaled $2,213,136.78.
On July 1, 1927, there were on hand 5,739 offers in compromise,
amounting to $752,387.05, which had been submitted in settlement of
SECRETARY OF T H E TREASURY
169
liabilities incurred in connection with sales, tobacco, capital stock,
estate, gift, spirits, and narcotics, and miscellaneous stamp and special taxes. There were 20,591 offers received during the year, aggregating $1,501,445.98; 22,055 disposed of in the sum of $1,758,098.61,
and 4,275 offers, aggregating $495,734.42, on hand June 30, 1928. Of
the 22,055 offers handled 21,079 were accepted for amounts aggregating $1,546,300.12.
Although the capital stock tax was repealed as of July 1, 1926,
there were assessed during the year delinquent and additional taxes
amounting to $10,544,788.75. Of this amount $320,078.10 was reported from the field and $10,224,710.65 was found due upon the
audit of returns in the bureau.
There were on hand at the beginning of the year approximately
96,000 unaudited returns. During the year there were received and
reopened 59,120 returns. All of these returns have been audited and
closed, with the exception of about 1,000, which are awaiting the
receipt of additional evidence.
Tobacco taxes,—Collections from tobacco taxes during the year
reached a new high mark, amounting to $396,450,041.03, an increase
of $20,279,835.99 compared with the previous year. The total collections exceed total internal revenue receipts from all sources for
any year prior to 1915.
Contributing to the total was the record collection of $301,752,588.34 in taxes on small cigarettes, an increase of $22,824,026.53 compared with the previous year, and comprising 76.11 per cent of the
total tobacco taxes collected. Another record was established by the
collection of $7,461,354.90 in taxes on snuff, an increase of $553,690.26 compared with the previous year; the collection of tax from
this source during 1928 was greater than for any preceding year.
The steady increase in the tax payment and consequent consumption
of snuff is unaccountable, unless it has to some extent supplanted
chewing tobacco.
A total of $355,436,797.15, or 89.65 per cent of the total tobacco
tax receipts, was collected in the following States: North Carolina,
$204,473,504.55; Virginia, $61,482,169.10; New^ York, $32,910,253.29;
Pennsylvania, $16,134,581.79; New Jersey, $16,021,290.10; Ohio,
$12,369,107.52; California, $12,045,890.80.
Appeals and review section.—The appeals and review section holds
hearings in cases arising under the various tax laws administered
by this unit; renders, on request from the heads of divisions, opinions
on law questions arising in connection with the administration of
such laws; and reviews the action taken by the divisions on all claims
for refund or abatement allowed for amounts in excess of $500.
The majority of the hearings are held in connection with estate
170
REPORT ON THE FINANCES
taxes, but a large number involve the various excise taxes such as
documentary stamp, sales, and taxes on admissions and dues, etc.
During the fiscal year 547 hearings were held and 683 formal opinions
prepared on cases in which hearings had been held or on which
formal opinion had been requested by heads of divisions. There
were reviewed by this section during the year 3,203 claims for refund
and abatement, and estate and gift tax cases resulting in certificates
of overassessment.
At the close of the fiscal year there were 47 cases awaiting hearings
scheduled for later dates; 18 cases in the hands of members of this
section awaiting further evidence from the taxpayers; 3 cases in the
hands of members awaiting supplemental reports from the field;
8 cases under consideration where all evidence had been submitted;
also 20 cases finally acted upon by this section but awaiting attention of the valuation section of the estate tax division.
Accou/nts and Collections Unit
The accounts and collections unit, which is charged with the
administration of matters involving 64 collection districts, is divided into three divisions—the collection accounting division; the
collectors' personnel, equipment, and space division; and the disbursement accounting division.
Collection accounting division,—The collection accounting division
is charged with the following duties: The construction of accounting
systems for use in collectors' offices, the preparation of instructions
to collectors of internal revenue on office and field activities, auditing
revenue and special deposit accounts of collectors of internal revenue,
issuing internal revenue stamps, and compiling statistics for officials
of the Treasury Department and the public. The collection accounting division also is charged with the duty of preparing, in conjunction with the Income Tax Unit, the procedure for the preliminary
examination in collectors' offices of more than 2,000,000 corporation
and individual income tax returns. The preparations of the procedure for the intensive audit of the smaller individual returns on
Form 1040-A, and also of a number of the larger individual returns
on Form 1040, is a duty of the collection accounting division.
One of the important changes in policy was in connection with
the audit of individual income tax returns on Form 1040. Prior to
the filing period in 1927, collectors of internal revenue had retained
in their offices for intensive audit a number of the smaller Form
1040.
During the year the supervisors of accounts and collections submitted 109 reports covering the examination of the accounts of collectors of internal revenue compared with 119 reports during the
fiscal year 1927. The reduction in the number of examinations is
SECRETARY OF THE TREASURY
171
accounted for by the fact that it was necessary to detail a number
of supervisors to special duties outside their divisions. However,
every collector's office was examined at least once and most of them
twice during the year. The supervisors of accounts and collections
installed in office eight new collectors and four acting collectors.
After having taken the necessary administrative action in connection therewith, collectors of internal revenue transmitted to the
bureau, or otherwise disposed of during the fiscal year, 156,341
claims compared with 238,665 during the fiscal year 1928, a reduction
of 82,324 claims. The number of claims on hand in collectors' offices
at the end of the year was 1,377, compared with 3,144 at the close of
the previous fiscal year.
There was filed in collectors' offices during the fiscal year a total
of 5,900,465 tax returns of which 5,229,652 were income tax returns
of various classes. These returns were properly controlled, listed for
assessment, and transmitted to the Bureau of Internal Revenue by
the offices of collectors of internal revenue within the required time.
A total of 7,813,530,878 revenue stamps, valued at $458,899,806,561/2,
was issued to collectors of internal revenue, compared with 7,615,505,838 stamps, valued at $439,166,373.74, issued to collectors during
the fiscal year 1927. Internal revenue stamps were returned by collectors of internal revenue and by the Postmaster General and
credited in their accounts to the value of $13,234,670.94.
The drive to clear the collectors' records of all outstanding tax
assessments which were in a collectible status was continued during
the fiscal year 1928. With respect to the number of items eliminated
from the old lists, the past year has been the most successful yet experienced. The number of outstanding assessments now on the records is only a small portion of the number outstanding when the drive
was begun three years ago.
A strenuous effort was made to complete all field investigations in
connection with the capital stock tax, which has been repealed. Several thousand investigations were completed by collectors' offices during the latter part of the fiscal year 1928. This work is now practically completed.
During the year one division office and one stamp office were discontinued. At the close of the fiscal year 1928 there were in existence 64 collectors' offices, 31 division offices, and a total of 46 stamp
offices, 17 of which are operated in conjunction with division offices.
Special attention was given by collectors' field forces to the serving
of warrants for distraint, the verification of information returns on
Form 1099, the investigation of tax returns assigned to collectors for
audit, and the conduct of delinquent drives. A total of 79,222 warrants for distraint was served, which resulted in the collection of
172
REPORT ON T H E FINANCES
'
$41,266,037. At the beginning of the fiscal year there were in the
hands of the collectors' field forces 29,255 warrants for distraint compared with 20,097 warrants at the close of the year.
An average of 1,696 deputy collectors made a total of 312,027
revenue-producing investigations, including the service of warrants
for distraint. The total amount collected and reported for assessment during the fiscal year was $64,671,443. The average number of
investigations made per deputy and the average amount of tax collected and reported for assessment for the past fiscal year w^ere,
respectively, 180 and $38,132.
The special force of internal revenue agents, working under the
direction of the Accounts and Collections Unit, collected and reported
for assessment $2,043,705, an average of $140,940 per agent. As the
result of the activities of field deputy collectors working under the
direction of collectors of internal revenue and the special squads
working under the direction of supervisors of accounts and collections, the total amount of taxes collected and reported for assessment amounted to $66,715,148.
During the year deputy collectors made field investigations of
345,572 income tax returns. At the beginning of the fiscal 5^ear
1928 there were in the hands of deputy collectors 173,867 income tax
returns for field investigation, while at the close of the fiscal year
th^^e were only 10,688 income tax returns.
Deputy collectors during the year made 5,446,937 investigations
on the basis of Form 1099 and other information returns. At the
beginning of the fiscal year there were in the hands of deputy collectors for investigation 2,644,149 information returns, compared
with 1,281,797 returns at the close of the fiscal year. Most of these
information returns on hand at the close of the year pertained to
the taxable year ended December 31, 1927, and had only recently
been dispatched to collectors' offices.
Collectors'^ persormel, equipment, amd space division.—At the close
of the fiscal year 1927 there was in the internal revenue collection service a total authorized force, including collectors, of 5,294 employees,
at an annual salary rate of $10,351,200. A t the close of the fiscal
year 1928 there was a total authorized force, including collectors, of
5,138 employees, at an annual salary rate of $10,133,380. During the
year there was a net reduction of 156 in the total number of positions
and $217,820 in the annual salary rate, or, in other words, the reduction amounted to approximately 2.9 per cent of the total authorized
force and 2.1 per cent of the annual salary rate. A total of $109,473
was expended for the employment of temporary help in collectors'
offices, compared with $88,520.17 during the preceding fiscal year.
The increase of $20,952.83 in expenditures for temporary assistance
is due to the fact that collectors' offices are now charged with the
SECRETARY OF THE TREASURY
173
preliminary examination of the income tax returns and the further
fact that many of the districts were charged with the auditing of
Form 1040 income tax returns.
During the fiscal year 1928, $267,106.08 was expended for the
rental of quarters for collectors' offices and branches thereof, compared with $273,782.97 during the preceding fiscal year. The decrease of $6,676.89 was brought about by the discontinuance of several
branch offices housed in commercial space and through reductions in
rental under existing leases.
Disbursement accounting division.—The disbursement accounting
division administratively examined and recorded 1,213 monthly accounts of collectors of internal revenue and internal revenue agents
in charge, together with 52,930 supporting vouchers, in addition to
which 3,668 expense vouchers of employees and 5,778 vouchers covering passenger and freight transportation and miscellaneous expenses
were audited and passed to the disbursing clerk of the Treasury
Department and General Accounting Office for payment. The
monthly pay rolls of the bureau were examined and currently
recorded.
General counseVs office
The work of the general'counsel's office, which embraces the legal
phases of the whole field of Federal taxation, is divided into six
divisons—appeals, interpretative I, interpretative I I , penal, civil,
and administrative.
Appeals division.—The work of the appeals division was confined
to handling appeals before the Board of Tax Appeals filed by taxpayers from proposed assessments of deficiencies in income and
profits taxes, estate and gift taxes, and in cooperation with the
Department of Justice in handling appeals from decisions of the
board to courts of appeals.
A greater number of cases were disposed of during the fiscal
year 1928 than during any previous year since the organization
of the board; the total was 7,089, compared with 5,256 during
the fiscal year 1927; 3,969, during the year 1926; and 1,726, during the year 1925. Of the total number disposed of during the
year 3,479 were closed by stipulation without hearings before the
board, compared with 2,683 stipulated during the previous year.
A total of 10,262 new appeals were filed with the board during the
year, and 21,639 were pending at the close of the year, a net increase
of 3,158 over the number pending at the close of business June 30,
1927, and a net increase in the amount involved before the board of
approximately $155,000,000. The net increase in pending appeals
at the close of business June 30, 1928, was the smallest of any prior
174
REPORT ON THE FINANCES
period; the net increase on June 30, 1927, over the previous year was
approximately 6,000, and the net increase on June 30, 1926, over the
previous year w,as a little less than 9,000. The total amount involved
in all appeals pending at the close of the fiscal year 1928 was $697,366,559.34. The total amount proposed for assessment iri 7,089 cases
disposed of during the year was $135,390,741.32, of which the board
approved $58,255,176.61. The number of cases disposed of and the
amounts of proposed and approved deficiencies include those dismissed by the board for lack of jurisdiction.
Forty attorneys in the appeals division were assigned to trial work
before the board at the close of June 30, 1928, with average assignments of approximately 540 cases each. Divisions of the board held
hearings in San Francisco, Calif.; Denver, Colo.; Boston, Mass.;
Grand Rapids, Mich.; Chicago, 111.; Kansas City, Mo.; Tulsa, Okla.;
Cincinnati, Ohio; Atlanta, Ga.; New Orleans, La.; Des Moines, Iowa;
St. Paul, Minn.; F o r t Worth, Tex.; Lincoln, Nebr.; Los Angeles,
Calif.; New York City; Portland, Oreg.; St. Louis, Mo.; and Seattle,
Wash., during the year. Attorneys from this division were assigned
to represent the commissioner at all field hearings.
Interpretative I division.—This division considers questions relating to the income and excess-profits tax provisions of the several
revenue acts, as well as those questions of procedure, particularly in
connection with liens and distraints, which arise in connection with
the administration of the internal revenue laws. I t also passes
finally upon all matter proposed for publication in the " Internal
Revenue Bulletin."
Specific questions are submitted for opinion by other branches of
the Bureau of Internal Revenue and by outside correspondents.
These are answered in the form of memoranda or letters. Letters,
proposed mimeographs, or memoranda, prepared elsewhere in the
bureau, are submitted for review and comment.
The assignment of members of the division to several of the sections of the Income Tax Unit continued. This practice has proved of
great benefit in the audit work, there being at hand a representative
of the general counsel's office promptly to advise in matters covered
by positive precedent.
The following table shows the work of this division for each of
the last three fiscal years and the increase from year to year:
Jacketed cases
On hand at beginning of year
Received during year
Disposed of during year
On hand at end of year
1926
_
236
236
894
894
813
813
317
317
1927
317
317
1,623
1,624
1,624
316
316
316
2,221
2,115
422
SECRETARY OF THE TREASURY
175
The average number of attorneys in the division for the year was
37, an increase of 6 over the preceding fiscal year. On this basis the
output per capita shows an increase of about 9 per cent. The increase
in the number of cases left over at the close of business June 30,
1928, is due to 106 claims in abatement undisposed of out of 208
received during the year.
Interpretative I I division.—The work of this division is as follows:
(1) Interpreting the provisions of law relating to the following
taxes—admissions and dues, beverage, capital stock, gift, estate, excise, insurance, legacy, occupational, oleomargarine, special, stamp,,
telegraph and telephone, tobacco, transportation; (2) preparing and.
reviewing regulations. Treasury decisions, informal memoranda, and
letters relating to such taxes; (3) reviewing and approving claims
for refund of all taxes involving a net refund of $50,000 or more,
and all cases involving a proposed refund and/or credit of any income,
war-profits, excess-profits, estate, or gift taxes for any year or years
in excess of $75,000; (4) preparing statements of fact to be sub-,
mitted to the Joint Committee on Internal Revenue Taxation as;
required by section 710 of the revenue act of 1928; (5) assisting iri;
the drafting of contemplated revenue legislation relating to the
above taxes; (6) supervising the disposition of real estate acquired by
the Government under the provisions of internal revenue laws, and,,
with the approval of the Secretary, authorizing the sale at public
vendue of the interest of the United States in such realty.
The number of interpretative cases on hand June 30, 1928, was 40,,
^ compared with 38 on hand July 1, 1927. There was one miscellane-.
ous tax claim on hand J u n e 30, 1928, compared with five on hand
July 1, 1927. The number of income tax claims on hand June 30,
1928, was 127, compared with 260 on hand July 1, 1927. There was
one income tax deficiency protest on hand July 1, 1927, and none on
hand June 30, 1928.
During the year the division conducted 117 hearings and prepared
statements of fact to be submitted to^the Joint Committee on Internal
Revenue Taxation in 459 cases. Regulations 73,. 34, and 8 were considered and revised. There were 14 real estate cases pending July 1,
1927; during the year 14 were received and 6 disposed of, leaving 22
cases pending July 1, 1928. There were 4 quitclaim deeds executed
and delivered. On July 1, 1927, 22 cases were pending wherein sales,
of real estate had been made by collectors to private purchasers at
sales under distraint proceedings; 16 similar cases were received
during the year, making a total of 38. The number of such cases,
closed during the year was 20, leaving 18 cases pending July 1, 1928.
Penal division.—Cases handled by the penal division are classified
as (1) interpretative and (2) law cases. These are subdivided so
13606—29—FI 19 2 8
14
176
REPORT ON THE FINANCES
that under each classification there are income tax cases and miscellaneous tax cases, the latter consisting of the large variety of cases
other than those involving income taxes.
At the beginning of the year 679 cases were pending in the penal
division; during the year 1,219 cases were received, compared with
1,076 during the previous fiscal year, an increase of 143. There were
1,898 cases under consideration during the fiscal year 1928, as against
1,843 during the previous fiscal year, an increase of 55. There were
1,199 cases disposed of, compared with 1,164 during the previous
fiscal year, an increase of 35. There were, therefore, 699 cases pending June 30, 1928, as against 679 on June 30, 1927, a net increase of
20. Special effort was made finally to dispose of the older cases,
including those which had been in the division" longest and those
involving the earlier tax years. This effort has been very successful
and a considerable number of the older cases have now been closed.
However, certain cases of this character, such as those in litigation,
can not finally be disposed of until the litigation ends.
Attorneys from the penal division frequently are sent to various
points throughout the United States to render assistance requested
by United States attorneys in criminal cases, and under appointment
as special assistants to the Attorney General to conduct grand jury
proceedings, jury trials, and other court proceedings in collaboration
with United States attorneys.
Civil division.—The civil division, in cooperation with the Department of Justice and the various United States attorneys, handles all
civil internal revenue cases arising in the Federal district courts, the
United States Court of Claims, and the Supreme Court of the District of Columbia, together with a limited number of cases originating in State courts.
The number of civil internal revenue cases decided by the Federal
courts during the year was 328. Of these 194 were decided for the
Government, 128 against the Government, and 6 partly for the Government and partly for the taxpayer.
The number of civil cases pending on June 30, 1928, was 3,642,
compared with 2,808 at the end of the previous fiscal year.
During the year 2,148 new civil cases were received and 1,315 civil
cases were closed. Offers in compromise in pending suits received
during the year numbered 179. The number of compromise cases disposed of, including those pending before the fiscal year 1928, was 203—
78 being rejected and 125 accepted. The total amount of taxes claimed
on these compromises was $4,507,946.76, and $1,058,495.29 was accepted in lieu thereof.
While the Department of Justice and the United States attorneys
acting under its jurisdiction are charged with the responsibility for
the conduct df this litigation, they welcome and encourage the assist
SECRETARY OF THE TREASURY
177
ance of the general counsel's office in the preparation of pleading-?,
the assembling of evidence, the preparation of briefs, and the actual
trial or argument of cases in court.
The civil division in a similar manner handles all claim.s for taxe:?
filed in bankruptcy and receivership cases pending in both Federal
and State courts. Compromise of taxes owing by insolvent taxpayers and estates in process of administration are taken care of by a
section attached to the division and maintained for that special purpose.
I n order to bring about closer cooperation with United States attorneys, collectors of internal revenue, and internal revenue agents in
the handling of Federal tax matters, the bureau during the ^^ear extended its policy of establishing branch offices of,the general counsel'?
office in the field. At the beginning of the fiscal year legal representatives of the bureau were permanently assigned to New York, Chicago,
a..nd San Francisco. The attorney at San Francisco represented the
bureau in the 11 Rocky Mountain and Pacific Coast States. During
the year it became apparent that the western territory was too large
to be efficiently served by one branch office. The territory therefore
has been divided and an additional representative assigned to the
northwestern States of Washington, Oregon, Montana, and Idaho
i\dth headquarters at Seattle. The headquarters of the representative in the remaining southwestern States were changed to ^Los
Angeles. An additional attorney was assigned to Chicago. Branch
offices have also been established at Boston, Pittsburgh, and Miami,
Administrative division,—The administrative division is charged
with the supervision of the library, manuscripts, mail and records,
supplies and equipment, and editorial matters arising in and affecting
the work of the office.
•; • •
MINT BUREAU
Institutions of the mint service
During the fiscal year 1928, 10 mint service institutions were m
operation; coinage mints at Philadelphia, San Francisco, and Denver;:
an assay office at New York, which makes large sales of fine gold
bars; mints at New Orleans and Carson City conducted as assay
offices; and assay offices at Boise, Helena, Seattle, and Salt Lake City..
The six last-named institutions are, in effect, bullion-purchasing
agencies for the large institutions and also serve the public by making
assays of ores and bullion. Electrolytic refineries are operated at the
New York, Denver, and San Francisco institutions.
Gold and silver receipts ond transfers
Gold operations,—Gold acquired by th'e Government at the several,
mint service institutions during the fiscal year 1928 totaled $177,774,995.60. United States gold coin received by the mints for recoinage
amounted to $2,216,232.43; transfers of gold between mint offices
totaled $231,983,809.30; the aggregate amount of gold received by
the several mint service institutions during the fiscal year 1928 was
$411,975,037.33, which compares with $238,773,524.60 during the prior
year.
Silver operations.—Receipts of purchased silver during the fiscal
year 1928 totaled 5,568,967.37 fine ounces, the average cost of which
was 57.09+ cents per ounce, total cost being $3,179,578.24. Of this
amount of 5,568,967.37 fine ounces, a total of 2,492,013 was silver
contained in gold deposits. Silver received in exchange for barsbearing the Government stamp totaled 791,516.86 fine ounces; United
States silver coin received for recoinage totaled 2,818,357.02 fineounces, the recoinage value being $3,896,121.68; silver deposited in.
trust by other governments totaled 642,585.27 fine ounces; and transfers between mint service offices totaled 543,661.40 fine ounces, making the aggregate quantity of silver received by the several mint,
service offices during the fiscal year 10,365,087.92 fine ounces, as compared with 11,626,939.85 ounces during the prior year.
The New York market price of silver during the fiscal year 1928averaged $0.5757; the lowest price was $0.544375 on August 8, 11, and.
22,1927, and the highest price, $0.639375 on May 24,1928.
178
SECRETARY OF THE TREASURY
179
Refineries
The mint service refineries that are operated at New York, Denver,
and San Francisco, produced 2,396,394 fine ounces (82.16 tons) of
•electrolytically refined gold during the past fiscal year, which compares with 2,752,093 fine ounces (94.35 tons) in the prior year; and
3,153,131 fine ounces (108.1 tons) of electrolytically refined silver,
which compares with 3,690,118 firie ounces (126.5 tons) during the
prior year. As in the previous year, the Denver refinery operated
only during the last half of the year.
The stock of gold and silver in unrefined bullion on hand was
reduced during the past year to 431 tons, a decrease of about 6 tons as
•compared with the prior year's reduction of about 45 tons.
Coinage
Regular domestic coirmge,—The salient features as regards coinage
during the fiscal year 1928 have been the increased demand for gold
•coin for export, the reduced requirement of coins below the dollar
for home circulation, and the completion of the coinage of silver
-dollars to replace those melted during the World War. The total
value of domestic coinage executed was $262,356,797 for 252,776,335
pieces, as compared with the prior year's $102,653,129.50 for
310,960,019 pieces. The value of this fiscal year's domestic gold coinage was $249,595,000; silver dollars, $2,018,649; subsidiary silver,
:$6,937,418; nickel, $2,315,850; and bronze, $1,489,880. The mints at
Philadelphia, San Francisco, and Denver all made gold, silver, nickel,
;and bronze coins, but no silver dollars were made this year by the
Denver Mint.
Commwmorative coin.—The Hawaiian half-dollar silver coin was
;authorized by act of Congress approved March 7, 1928, to commemorate the one hundred and fiftieth anniversary of the discovery of
Hawaii by Capt. James Cook. The design of the model was based
upon a sketch submitted by Miss Juliette May Eraser, a Honolulu
:artist, through the Cook Sesquicentennial Commission of HonolulUj
Hawaii, and the model was executed by Mr. Chester Beach, sculptor.
O n the obverse the coin carries a likeness of Capt. James Cook with
his name as the " Discoverer of Hawaii," also legends and inscriptions required by basic law, including the words " half dollar." On
the reverse is the likeness of a native chief with flowing robe and
-spear, gaining thej summit of a hill and extending his hand in wel*come; behind him is a coconut tree, and in the distance a Hawaiian
village of grass huts along Waikiki Beach at the foot of Diamond
Hill. The dates " 1778-1928 " appear and also the legend " E Pluribus
Unum."
180
REPORT ON THE FINANCES
Coinage for foreign governments.—Coin for foreign governments
amounting to 2,490,000 pieces was made during the past fiscal year
at the Philadelphia Mint only; it consisted of Ecuadorian silver—
320,000 2-sucre pieces and 1,120,000 1-sucre pieces; and Nicaraguan
silver—200,000 25-centavo pieces, 250,000 10-centavo pieces, 100,000
nickel 5-centavo pieces, and 500,000 bronze 1-centavo pieces.
Combined domestic and foreign pieces coined this fiscal year total
255,266,335, as compared with 318,059,019 pieces the year before. The
supply of coins in the Treasury has been kept well in advance of the
demands of the public.
Additions and irmprovenrvents
Many improvements in equipment and processes have been effected
during the year. Chief among them are chromium plating of dies,
coin collars, machinery parts, and models, and changes and improvements in the construction of coin presses and automatic weighing
machines, in the method of cleaning silver blanks, and in the process
of sand-blasting medals. A new type of reducing machine has greatly
facilitated the preparation of more perfect coin and medal dies.
Mechanical devices have been developed and installed by the staff of
mint scientists for the handling of bars and ingots, and consequently
time and labor have been greatly conserved.
Expenses, income, etc.
Appropriations available for mint service during the fiscal year
1928 totaled $1,681,950, and reimbursements to appropriations for
services rendered amounted to $37,617.16, making a total of
$1,719,567.16.
Expenses amounted to $1,682,260.46, of which $1,627,202.87 was
chargeable to appropriations and $55,057.59 chargeable to income.
For the fiscal year 1929 the Congress, with the concurrence of the
Treasury Department, consolidated the 20 appropriations for the 10
mint service field institutions into 4 appropriations. This adds
to administrative flexibility and reduces accounting work.
The income realized by the Treasury from the mint service aggregated $6,408,493.98, of which $5,935,092.15 was seigniorage. The
seigniorage included $457,267.23 on the coinage of silver dollars,
which amount offsets an equal loss which was incurred when the
silver dollars were melted and sold under the terms of the Pittman
Act. The seigniorage on subsidiary silver coin was $2,293,468.10; on
nickel coin, $1,888,382.91; and on bronze coin, $1,295,973.91.
SECRETARY OF THE TREASURY
181
Summary of appropriations, expenses, and balances, fiscal year 1928
Salaries a n d
wages
Items
Contingent
expenses
Transportation of b u l lion a n d coin
Total
$1,342,470.00
24, 368.66
$316,100.00
13,248. 50
$23,380.00
$1,681,950.00
37,617.16
.
1, 366,838. 66
1, 324,170.82
329, 348. 60
279, 925.18
23,380.00
23,106.87
1, 719,567.16
1,627, 202.87
U n e x p e n d e d balances
42, 667.84
49,423. 32
273.13
92, 364. 29
Appropriations
_
E a r n i n g s credited a p p r o p r i a t i o n s
Total available—
Expenses --
-.
The number and value of deposits, transfers, gross income, and
expenses for the fiscal year 1928, and the number of employees on
June 30, 1928, at each institution, are shown in the following table:
Deposits of gold and silver, income, expenses, and employees, by institutions
Institutions
Num- Number of
ber of Coining value
demint
of gold a n d
posits service
silver
of gold . t r a n s received'
and
fers
silver
Gross
income
Gross
expense
Excess of
income (-(-)
or of expenses ( - )
Employees,
June
30,
1928
Philadelphia
San Francisco
Denver
New York
N e w Orleans
Carson C i t y
Boise
Helena
Seattle
Salt L a k e C i t y
10,650
12, 352
2,964
14, 659
457
209
274
210
1,315
43
34,512 $245,425,007.21 $3,942,016.31
2,009 44, 292, 536. 92 1, 334,923. 05
288 21,070, 737. 05
843, 733. 85
598 104,486,921. 66
280, 379. 69
1, 560,093. 07
778. 50
234, 811. 70
460. 48
232, 639. 82
1,051. 34
.222,088.98
558. 03
3,870. 60
§" 6,172, 723. 89
,722.13
34,845. 80
$747, 507. 44 +$3,194,508.87
290, 629. 79 +1,044, 293. 26
205, 099. 40
+638,634.45
335, 051. 94
- 5 4 , 672. 25
13, 270.15
-12,491.65
5, 847. 56 0 - 6 , 387.08
7, 569.98
- 6 , 518. 64
- 5 , 785. 29
6, 343. 32
27,430.14
- 2 3 , 559. 54
- 3 , 4 9 2 . 44
i , 214. 57
324
119
79
121
7
3
4
3
11
2
Total
Mint Bureau
43,133
37,415 423, 732,406.10 6,408,493. 98 1, 642,964. 29 + 4 , 765, 529. 69
- 3 9 , 296.17
39, 296.17
673
14
43,133
37,415 423, 732,406.10 6,408,493. 98 1, 682, 260.46 + 4 , 726, 233. 52
687
Fiscal 3^ear 1927.___-_.. 41, 920
2,876 256,867, 676. 67 9, 416,010. 56 1, 668, 244. 53 + 7 , 747, 766. 03
686
G r a n d total
1 Gold valued at $20.67+ per fine ounce, silver for standard dollars valued at $1.29 + per fine ounce, and
silver for subsidiary coin at $1.38 + per fine ounce.
Gold and silver in the United States
»
Stock of coin and monetary bullion,—On June 30, 1928, the estimated stock of domestic coin in the United States was $2,284,650,422,
of which $1,328,989,679 was gold, $539,961,701 standard silver dollars,
$299,010,231 subsidiary silver coin, and $116,688,811 minor coin.
The stock of gold bullion in the mints, assay offices; and Federal
reserve banks on the same date was valued at $2,780,173,216, a de-.
crease during the year of $480,455,059; the stock of silver bullion was
10,866,021.04 fine ounces, an increase of 1,797,671.16 fine ounces.
Production of gold amd silver.—Domestic gold production during
the calendar year 1927 was $45,418,600, as compared with $48,269,600
in 1926. The output has declined to under 45 per cent of that for the
record year 1915, when the total was $101,035,700.
182
REPORT ON THE FINANCES
Silver of domestic production during 1927 totaled 60,434,441
ounces, valued at $34,266,328; this compares with 62,718,746 ounces,
valued at $39,136,497, for 1926, and with 74,961,075 fine ounces,
Talued at $37,397,300, the record production of 1915.
Industrial consumhption of gold and silver,—Gold consumption in
the industrial arts during the calendar year 1927 is estimated at
.'$59,318,728, of which $32,857,491 was new material.
Silver used in the arts is estimated at 38,648,717 fine ounces, of
which 28,493,290 fine ounces was new material.
As compared, with the prior year, silver consumption was about
750,000 ounces less, and gold consumption decreased about $15,000,000.
Net export of domestic gold coin.—The net export of domestic gold
coin during the fiscal year 1928 was $218,739,072; during the prior
fiscal year there was a net export of $5,500,953. • During the 14 fiscal
years since the opening of the World War, 1915 to 1928, there has
been a net export of domestic gold coin of $1,159,958,251, although
the net balance of imports and exports of both gold coin and bullion
was an import of approximately $1,900,000,000 during the same
period. Since 1870 the net export of domestic gold coin has been
$2,037,607,315.
PERSONNEL CLASSIFICATION OFFICER
Appeals and classification sheets
The total number of employees affected by appeals made during tho
fiscal year 1928 exceeded the number for the preceding fiscal year by
more than 40 per cent. Individual appeals numbered 470, and in
addition there were 21 appeals on behalf of groups of workers involving 465 employees, making the total number of jobs involved in all
of the appeals 935. Of this total number, appeals were approved
by the department as affecting 614 jobs, while 321 were disapproved
as being without merit, the total of 935 cases being transmitted tothe Personnel Classification Board with departmental action indicated in each case. Of the 935 cases thus presented to the board, &
w^ere subsequently withdrawn and canceled, and the board approved
69 and disapproved 199,, leaving with the board at the close of the
fiscal year 661 appeals still pending.
The Personnel Classification Board carried over from the fiscal,
year 1927 a total of 199 appeals from classification allocations, which
appeals were disposed of during the first six months of the fiscal year
1928 as follows: Approved as recommended, 50; disapproved, 140;.
and withdrawn or canceled, 9.
I n view of the number of appeals from original allocation as made
between July 1, 1924, and June 30, 1927, it was expected by those
handling classification work that the allocation of the many classes
of jobs and the handling of so large a number of appeals would have
a stabilizing effect on the forces generally so that during the fiscal
year 1928 the number of appeals would be somewhat reduced over
the previous year. On the contrary, the total number of appeals
materially increased, and, save for the fact that in a number of instances the investigation of one job in a group of workers was sufficient to weigh the merits of the case of the entire group, the current
force would have been unable to cope with the situation.
A considerable number of the appeals handled during the year
were those of employees who had previously appealed and had been
denied an improved allocation by the board. Incident to the investigative work it has developed that a certain number of appeals have
been presented by employees for the sole purpose of obtaining increased compensation. A large majority of these cases were found
to be without any real merit and are included in the total number
disapproved not only by the classification officer of the department,,
but, in the first instance, by the administrative head.
183
184
REPORT ON THE FINANCES
I n addition to the customary number of classification sheets coming from the various activities, new classification sheets were submitted to the Personnel Classification Board in accordance with a
request dated May 29, 1928, for all positions which at that time were
allocated to grades 4, 5, 6, and 7 of the professional and scientific
service, and grades 11, 12, 13, and 14 of the clerical, administrative,
and fiscal service.
Efficiency ratings
Still further improvement was made during the year looking to a
uniform procedure within the activities of the department in connection with the efficiency ratings as given to the eriiployees. A very
definite cooperation on the part of the administrative heads has been
responsible for this progress and has been extremely helpful in maintaining the policy of the department as laid down in the order dated
J u l y 9, 1925, that in making recommendations for promotion it be
shown that the person in whose favor the recommendation is made is
the furthest removed from the eligible salary according to/ the most
recent efficiency rating, or that an explanation accompany the recommendation indicating the reason for selecting some person other than
the one furthest removed
BUREAU OF PROHIBITION
Organization a/nd procedure
The Bureau of Prohibition as a separate entit}^ in the Treasury
Department w^as created by the act of March 3, 1927. During the
past fiscal year the organization of the bureau at Washington has
been developed according to the functions performed by the various
units. The narcotic division supervises operations under the Harrison Narcotic Act and its amendments. The legal division carries
on the legal duties of the bureau. The technical division operates the
bureau laborator}^ and has supervision of matters pertaining to permits. The field division is engaged in enforcement operations. The
administrative division consists of the personnel, accounting, supplies,
statistics, and mail sections.
Organizations of the offices of administrators are being set up
5iccording to the divisions of the bureau organization. The contacts
of the bureau with the field offices are facilitated by this arrangement,
and the efficiency of operations is largely enhanced. Every assistance is being rendered by bureau representatives to the administrators in establishing their local offices in conformity with a standard
plan of organization.
The force of special agents operating from Washington and other
division headquarters in the field has been further developed duringthe year. A section of plant control has been established in this
service to conduct technical inspections of breweries, alcohol plants,
denaturing plants, and wineries. Another section was created to
make a survey of the criminal records of cases involving violations
of the national prohibition act. A system of records of violations
v^ill be maintained, including the fingerprints and criminal record
o i each person convicted of a felony under the national prohibition
act. By this means it will be possible to identify the habitual prohibition violator.
During the year the official prescription issued by the Government
for use of doctors in prescribing liquor for medicinal purposes was
revised. The new prescriptions present a more simple system, the
use of which will relieve pharmacists of considerable record work,
and also make possible a closer official check, providing field officers
vidth information in cases of violation of the law. The cover pages
o i the book contain complete instructions for the physician, and the
prescription form carries information for the guidance of the phar-
185
186
•
REPORT ON THE FINANCES
macist and the patient. The new forms convey to the doctor and to
the pharmacist the impression of Government cooperation and determination to limit the use of the prescription to laAvful purposes.
Activities
Prohibition agents made 75,307 arrests during the fiscal j^ear 1928;.
and seized 6,934 automobiles, valued at $3,057,132.09, and 81 boats,
valued at $144,240. As the result of the work of such agents prohibition cases against individuals were terminated in Federal courts,
resulting in 58,813 convictions, of which number 15,793 were given
jail sentences. The courts imposed sentences aggregating 5,631 years
and fines amounting to $7,031,109.66. I n addition to these sentences
the courts suspended, paroled, and probated sentences amounting tO'
2,665 years and $381,049.50.
Special attention was given to the enforcement of the provisions
of the internal revenue laws, national prohibition act, and WillisCampbell Act imposing civil penalties for the illegal manufacture,
sale, and diversion to beverage use of intoxicating liquors. Proceedings for the enforcement of such liabilities arising from violations
occurring subsequent to the organization of administrative districts
on September 1,1925, are initiated in administrators' offices; and such
proceedings in cases where the liabilities were incurred by violations
committed previous to that date are initiated by the assessment and
compromise section of the law division in the bureau. The total
collections resulting from demands and settlements effected by administrators amounted to $665,573.19 for the fiscal year, an increase of
81 per cent over the total realized in the fiscal year 1927. The total
amount realized from demands and settlements effected by the assessment and compromise section in the bureau was $474,374.96. Of the
total of $1,139,948.15 of settlements effected both by administrators
and the bureau, $1,109,518.82 w^as accepted by the commissioner,,
with the approval of the Secretary and the concurrence of the Attorney General in all cases in which suits had been brought, the remainder being rejected or not reached for final action before the
close of the fiscal year. The total of $1,109,518.82 accepted is an
increase of $90,549.11 over the amount accepted in the previous fiscal
year.
There were considered 440 applications for pardons for persons
serving sentences for violation of the national prohibition act, 29'
of which were recommended for approval, 307 recommended for
rejection, 70 returned to the Department of Justice without recommendation, 15 conditionally recommended or sentence modified, and
19 referred to other departments.
SECRETARY OF T H E TREASURY
187
A total of 1,218 applications was considered for parole of persons
serving sentences for violation of the national prohibition act, 3 of
which w^ere-recommended for approval, 875 for rejection, and 1 for
modification of sentence, 165 were returned to the Department of Justice without recommendation, and 174 referred to other departments.
The technical division conducts the chemical work of the Bureau
of Prohibition as well as work of this character for the Bureau of
Internal Revenue in Washington. I t supervises generally the activities of the chemical laboratories of the Bureau of Prohibition in the
field. I t also has supervision of work relating to the provisions of
Title I I I of the national prohibition act and regulations issued pursuant thereto and conducts work relating to the permissive use of
intoxicating liquors under Title I I of the national prohibition act.
The modification of the formulas for specially denatured alcohol
which are of greatest importance to both industry and enforcement
ha.s occupied a substantial portion of the time of three chemists in
the Washington laboratory. Substantial and important results have
already been secured and the entire completely denatured alcohol
production has been placed on a much stronger basis. Research work
is being continued in the Washington laboratory with the hope of
further strengthening ,the specially denatured alcohol formulas with
the view not only of safeguarding the alcohol but also for the purpose of making these formulas more adaptable for use in the arts
and industries. The completely denatured alcohol situation is in a
better condition than has ever existed since the passage of the
national prohibition act.
There are at present only two completely denatured alcohol
formulas authorized, and reports from the field officers indicate they
are not being diverted for illegal use by reason of the difficulty of
manipulating them so that potable alcohol can be produced. The
authorization of gasoline as an alternative denaturant for kerosene
for completely denatured alcohol formula No. 1 has been of great
benefit to the varnish and shellac trade. The withdrawal of several
specially denatured alcohol formulas and the substitution of others
for use in certain lines of industry has greatly benefited the industries involved, and has substantially reduced diversion to illegal
purposes.
During the fiscal year 1928, there were produced 169,149,904.83
proof gallons of alcohol, a decrease of 15,173,112.14 proof gallons
compared with the quantity produced' during the preceding year.
An important contributing cause of this decrease in the quantity of
alcohol produced was the policy initiated January 1, 1928, of limiting
the production of industrial alcohol to the actual need of legitimate
industry. This plan called for a production of 121^ per cent less
alcohol than that produced during the fiscal year 1927. Each Indus
188
REPORT ON THE FINANCES
trial alcohol plant was allotted a fixed quota of the total alcohol to
be produced with a provision that only 40 per cent of their total
quota for the year could be produced during the first six months of
the calendar year 1928, provided that legitimate industries did not
require an excess of that quantity. This program has been of great
benefit to the alcohol industry and the trade by preventing an overproduction of alcohol and avoiding unstable conditions in the trade
in regard to their raw niaterial.
Personnel
The act of March 3, 1927, creating the Bureau of Prohibition,
made all positions in the bureau, except that of commissioner, subject to the civil service laws, and the term of office of any person
transferred from the Internal Revenue Bureau to the Bureau of
Prohibition, and not theretofore under civil service, was made to
expire six months after the effective date of the act. During the
year the Civil Service Commission, in cooperation with the Treasury
Department, has carried forward the provision of the law relating
to the civil service in the Bureau of Prohibition. The effect of this
statute is already being felt in the service of this bureau, and a
marked improvement has been brought about in the personnel. The
service is now on a much more stable and efficient basis. There does
not appear to be any doubt that the placing of the prohibition employees in the civil service has been a very effective step in the
enforcement of the law.
At the close of the fiscal year there were 339 permanent and 7
temporary employees on the bureau rolls in the office at Washington, and 4,057 permanent and 85 temporary employees in the field
service, making a total of 4,396 permanent and 92 temporary employees on the rolls of the Bureau of Prohibition on June 30, 1928.
The personnel on June 30, 1927, consisted of 4,269 permanent and
17 temporary employees.
Narcotics
v
On June 30, 1928, there were 318,937 registrations under the Harrison narcotic law, as amended; 296 persons were registered as importers and. manufacturers, 1,784 as wholesale dealers, 50,601 as retail dealers, 145,379 as practitioners, and 120,877 as dealers in and
manufacturers of untaxed narcotic preparations, the latter number
including registrants not required to pay special tax by reason of
paying another tax under the act.
There were 4,738 convictions under the Harrison Narcotic Act and
smoking opium act, for which the courts imposed sentences aggregating 8,786 years 4 months and 28 days and fines amounting to $184,-
SECRETARY OF THE TREASURY
189
213.99, compared with 7,088 years 10 months and 1 day, and $175,127.90, respectively, for the previous year. A total of 1,221 cases were
compromised, the aggregate amount collected being $67,210.95. During the fiscal year 1927 there were 8,851 cases of criminal character
reported, whereas during the last fiscal year 8,653 such cases were
reported, a decrease of 198 cases. This, however, does not indicate
less activity or less effective operation of the field force, as more
effort was concentrated on the larger illicit purveyors of drugs, which
is reflected by the increase of 1,697 years 6 months and 27 days in
sentences over the sentences imposed for the fiscal year 1927.
I n order to curb the illicit shipments of narcotic drugs into the
United States, agreements have been perfected with 11 foreign governments for the direct exchange of evidence and information with
reference to persons engaged in this traffic. The 11 governments are
as follows: France, Great Britain, Germany, Belgium, Czechoslovakia, Italy, Spain, Netherlands, Japan, Free City of Danzig, and
Greece.
PUBLIC DEBT SERVICE
Division of Loans and Currency
This division is the active agent of the Secretary for the issue of all
public ""debt obligations of the United States and for conducting
transactions in such obligations after i^ue. I t is also responsible
for the issue of bonds or other obligations of Porto Rico and the
Philippine Islands, for which the Treasury Department acts as
fiscal agent. The division undertakes the safe-keeping of public
debt and insular loan securities for certain Government offices. I t
also counts and delivers to the destruction committee United States
currency canceled as unfit, and mutilated paper (spoilage, etc.) received from the division of paper custody and the Bureau of Engraving and Printing.
Issue amd retirement of securities,—The following is a summary of
the activities during the fiscal period in connection with the issue
and retirement of securities:
Registered
•Stock shipments to Federal reserve banks:
For exchange transactions
Allotment for original issue
-.
Original issue by the division..
•Securities issued on exchange..
Total securities issued and shipped.
Nonregistered
Total
$1, 340, 865,450.00
4, 812, 206,400.00
$1, 340, 865,450. 00
4,812,206,400.00
13, 685, 257^, 040.00
520,935, 375.00
6,153,071,860. 00
24,405,030.00
50, 523,800.00
6,153,071,850.00
3, 709, 662,070. OC
571,459,175.00
4, 206,192,415.00
6, 228,000, 680. 00 10,434,193,095.00
RETIREMENTS
:Securities retired on exchange
Securities retired for redemption 2
Other secmities retired (i. e. claims, credit, and
exchange authorization retirements)
Total securities retired..
321,843, 005. 00
3 4,062, 539,305.00
324, 588,190.00
249, 616,170.00
671,459,175.00
3, 232,476. 50 4, 055, 771, 840. 50
6, 020. 00
324, 693, 210.00
252,863, 665. 50
4,951, 824, 225. 50
1 4, 249, 203,420. 00 7,036,323,380. 00
11,286,626,800.00
4, 698,970, 660. 00
STOCK ACTIVITIES
Securities received from Bureau of Engraving
and Printing
Securities restored to stock by Federal reserve
banks
Securities canceled and delivered to Register of
Treasury
192,064, 576.00
44,841, 000.00
44,841,000.00
541,806,000.00
733,870,675. 00
• 1 Includes $3,481,500,000 special 1-day certificates of indebtedness.
2 Represents face value of securities redeemed.
3 Includes $18,750 which does not appear in the oflBcial pubhc debt figures^of redemption until the fiscal
year 1929. Includes $3,481,500,000 special 1-day certificates of indebtedness.
The detail of transactions in public debt securities is presented in
formal statements elsewhere in the report, but of special note are the
190
SECRETARY OF THE TREASURY
191
following data regarding new issues and retirements covering transactions handled by the division and not including transactions conducted by the Federal reserve banks.
New issues by the division—not including stock shipments to Federal reserve banks—consisted of 3 % per cent Treasury bonds of
1943-47, amounting to $52,716,350, of which $50,113,700 were in registered form; 2% per cent postal savings bonds (thirty-third and
thirty-fourth series) amounting to $1,582,720, of which $1,471,340
were in registered form; 3i/^ per cent bearer Treasury notes, series
B and C, 1930-1932, aggregating $15,180,000; and registered 4 per
cent Treasury notes, interim certificates, and certificates of indebtedness aggregating $151,099,000, of which $123,400,000 was for the
World War adjusted service certificate fund, $27,400,000 was for the
civil service retirement and disability fund, and $299,000 was for the
Foreign Service retirement and disability fund. I n addition, original issues of Philippine Islands and Porto Rican securities were
made in total amount of $7,584,000.
All outstanding bonds of the second Liberty loan were called for
redemption and ceased to bear interest on November 15, 1927; as a
consequence of which, registered bonds to the amount of $167,537,600
w^ere retired. From July 1, 1927, to the date of redemption there
were retired second Liberty loan registered bonds amounting to
$60,262,800 in exchange for new issues of Treasury bonds. Treasury
notes, and certificates of indebtedness; $19,341,700 by purchases for
the cumulative sinking fund; and $4,661,100 by purchases with surplus money in the Treasury. Other retirements of second Liberty
loan bonds for redemption amounted to $91,600. During the fiscal
year an exchange offering was made in connection with the third
LibertjT- loan which resulted in the retirement of registered third 4i4's
to the amount of $60,229,250. There were also retired third 414's
amounting to $22,279,050 purchased with surplus money in the Treasury, and $400 received in payment of inheritance tax. There was an
enormous volume of Treasury savings certificates handled for redemption during the fiscal year which necessitated an increase in
personnel and changes in procedure in the interests of economy and
efficiency. Treasury savings certificates of the face value of $179,411,475 were retired in this fiscal year as against $65,851,325 in the
fiscal year 1927 and $32,189,375 in the fiscal year 1926. There was a
greater increase in work than is apparent from these figures of money
values, however, as the denominational value of Treasury savings certificates is low^, averaging, about $150 per piece, and they are in registered form requiring examination of demand for payment, numerical posting, and the release of registration. i?he number of pieces
handled for redemption during the year was 1,293,311. I n the month
1360G—29—FI 192 8
15
192
REPORT ON T H E FINANCES
of January, 1928, 676,688 pieces fell due for payment, and in the
months of December and January of the next fiscal year approximately 375,000 pieces will mature. Besides the foregoing, other retirements for redemption amounted in the aggregate to $60,456,865.50
not including the special one-day certificates of indebtedness.
Individual registered accounts activities.—In connection with public debt registered issues, individual accounts are maintained and
interest is paid periodically in the form of checks.
The interest-bearing accounts open June 30, 1928, were as follows:
Number of
accounts
Pre-war loans
Liberty and Treasury loans..
Treasury notes and certificates ofindebtedness (i. e., special fund accounts)..
Total
^
Principal
12,828 $745, 639, 740
1, 248, 806 2, 992,488, 350
462, 352,000
1, 261, 642 4, 200,480,090
Largely due to the call of the second Liberty loans for redemption
and partial refunding and retirement operations in connection with
the third 414s, the amount of Liberty bonds. Victory notes, and
Treasury bonds in registered form, including interest-bearing and
noninterest-bearing accounts, decreased during the year from
$3,409,586,850 to $2,996,424,050, a loss of $413,162,800; and the individual accounts maintained for these bonds and notes decreased from
1,630,443 to 1,259,987, a loss of 370,456 accounts. Of the 269,763
second Liberty loan individual registered accounts, representing
$292,848,500 principal, which were open at the beginning of the fiscal
year, only 10,124 accounts for $3,721,050 remained on June 30, 1928.
The third Liberty loan accounts were reduced during the year approximately 18 per cent, from 467,905 to 385,473, and the principal
of the same approximately 34 per cent, from $440,693,650 to $289,219,400. However, registered exchange transactions—i. e.,, exchanges
by registered holders of registered bonds for coupon bonds—were
considerable, amounting to $75,673,000 in third 4i^'s and $37,417,150
in second 4's and second 4i^'s. Notwithstanding the great pressure
of work resulting from the redemption operations, the discharge of
registration in connection with the individual accounts was handled
on a current basis.
There was a net gain in the registered principal of unmatured
pre-war loans of $1,837,910 and a gain of approximately 103 accounts. There were 446,033 individual accounts for registered Liberty
bonds. Victory notes, and Treasury bonds closed and 28,102 accounts
decreased, representing the retirement of securities amounting to
$898,221,900 par value. I n connection with the same loans, 75,577 new
accounts amounting to $485,059,100 principal were opened, $50,113,700
193
SECRETARY OF THE TREASURY
of which represented the original issue of 3 % per cent Treasury
bonds of 1943-47. Forty-one thousand three hundred and ninetyseven changes of address for the mailing of interest checks were made
on the registered accounts during the year.
Interest on registered Liberty and Treasury bonds was paid on
due dates in the form of 2,633,527 checks amounting to $127,438,330.49
and on registered securities of the pre-war loans in the form of
44,743 checks amounting to $15,521,388.30. This does not include
final interest on the second Liberty loan due November 15,1927, which
was paid by the Treasurer of the United States at redemption.
Interest on registered Treasury notes of the adjusted service and
civil service retirement and disability series was paid in the form of
four checks aggregating $13,272,000. There were received from the
Bureau of Engraving and Printing 2,729,000 checks as stock, and
there was canceled and delivered to the destruction committee stock
consisting of 96,746 checks.
Claims.—Claims for relief on account of lost, stolen, destroyed, and
mutilated securities handled by the division during the fiscal year
were as follows:
Number Number
Par amount
of
of
of securities
claims securities
(pieces).
:
4,154
11,289
$1,447,830. 00
Settled:
By reissue or redemption of securities.
By recovery of securities
By disallowance of claims
2,018
1,444
5,860
3,234
380
802,791. 75
819,160. 00
87, 935. 00
Received
Total settled
3,530
1, 709,886. 75
Safe-keeping of securities,—At the beginning of the year there were
securities, amounting to $496,053,775, in safe-keeping for various
Government offices, against which formal, audited receipts were outstanding. Throughout t t o year securities amounting to $251,206,000
were received for saf^^|<eping and receipts therefor issued, and
securities amounting td1||46,649,475 were delivered from safe-keeping
upon the surrender of Outstanding receipts, leaving a balance of
securities amounting to .$600,610,300 in safe-keeping June 30,1928.
Mutilated paper and redeemed currency.—^Mutilated paper verified
3nd delivered to the destruction committee consisted of 20,180,772
sheets and coupons, of which 19,737,625 were received from the Bureau of Engraving and Printing and 443,147 from the division of
paper custody. Redeemed currency counted and delivered to the
destruction committee during the year amounted to 700,763,621 pieces,
representing $1,599,898,563.68, detailed as follows:
194
REP6RT ON T H E FINANCES
Number of
pieces
.
United States notes
Silver certificates
Gold certificates
Treasury notes .
Fractional currency
79.404, 629
574, 934,154
46,417, 503
3,214
4,121
Face value
$318, 960, 550. 00
580,051, 600. 00
700,864, 650. 00
20, 854. 00
909. 68
Publicity.—The division maintains a mailing list in addition to its
list of holders of registered securities for the purpose of placing new
public debt offerings, notices of redemption, and such matters before
the public. Approximately 3,100,000 printed circulars and 484,000
circular letters were distributed during the year by this means.
Persorvnel.—There was a large turnover in the personnel of the
division this fiscal year^ owing to the redemption activities related
above. There were on the rolls at the beginning of the year 1,064
employees. During the year 68 employees were transferred to other
bureaus, 730 resigned, and 4 were 'retired, while there were 597
employees appointed, 162 transferred from other bureaus, and 128
reinstated. A net increase in force of 85 employees thus resulted,
leaving 1,149 employees on the rolls at the end of the fiscal year 1928.
Register of the Treaswry
The Register of the Treasury is charged with the final audit and
custody of all retired Federal securities, including interest coupons.
The register regularly certifies to the Comptroller General as to the
credits due the Treasurer of the United States for amounts expended
in the redemption of securities and also establishes the credits due the
Federal reserve banks and the Division of Loans and Currency for
securities forwarded by them for retirement on account of exchanges,
replacements, transfer of registration, etc.
During the fiscal year 1928, 46,090,952 security documents, with a
-face value of $12,757,348,583.72, were retired in the register's office.
^Of that number 36,688,479, aggregating/$8,257,306,114.00 in face
Talue, w^ere redemptions of public debt securities, 31,594,180 of which,
"with a face value of $523,051,307.24, were interest coupons redeemed
for cash. There were 2,402,779 security documents, aggregating
$2,928,039,575, Tctired on account of exchanges. Securities canceled
and retired, because no longer appropriate for issue, amounted to
6,999^586 pieces and aggregated $1,572,002,256.21 in face value.
Exchanged and unissued securities affecting the insular loans are
also functioned in the register's office and are included in the above
figures. The total retirement fig*ures set forth above include 108
pieces, amounting to $638.51, which were redeemed an account of
District of Columbia loans.
195
SECRETARY OF THE TREASURY
A t the close of the fiscal year 1927 there w^ere 429 employees on
the rolls of the register's office. During the fiscal year 1928 there
were 25 additions and 19 separations, making a net increase of 6 and
bringing the total number of employees to 435.
The expenditures for salaries, supplies, rent, etc., during the year
amounted to $720,258.66.
I n addition to the audit of the securities and the maintenance of
the records and accounts relating thereto, the register's office maintains numerical ledgers that disclose in detail the source from which
each issued bearer security that relates to the public debt was received,
and disclose the final disposition of each such document. The maintenance of the record referred to facilitates answering inquiries that
are made by various agencies of the Federal Government and by the
general public. The inquiries made and answered during the fiscal
year 1928 aggregated over 75,000 items.
The following statement sets forth by class, pieces, and face value
the securities received, examined, and filed during the fiscal years
1927 and 1928, respectively:
Summary of securities received, examined, and filed in the register's office
duriAig the fiscal years 1927 and 1928
1927.
1928
Class of security
Amount
Pieces
Pieces
Amount
REDEEMED
Bearer
U n i t e d States securities:
P r e - w a r loans
L i b e r t y loans
_.
..
Treasury bonds
T r e a s u r y notes
_
Certificates of i n d e b t e d n e s s .
T r e a s u r y (war) savings s e c u r i t i e s . . .
I n t e r e s t coupons
Securities n o t affecting p u b l i c d e b t :
D i s t r i c t of C o l u m b i a loans
D i s t r i c t of C o l u m b i a
interest
coupons
Total
. .
132
$50, 610 00
598,159 1, 992, 946, 200 00
1,480
10,000, 000. 00
317,114 1,119, 511, 900. 00
54, 705
859, 354,000.00
735, 674
1, 765, 206. 31
1 37, 202, 729 1 661, 272, 544. 52
90
2, 656,052
$27,910.00
1, 858,965, 800. 00
98, 582
92,193
618,687
31, 594,180
471, 715, 250.00
1, 357,116,000.00
1,122, 606. 34
523,051, 307. 24
550. 00
4
1,100 00
11
6
54 75
97
88.51
38,910,003
4, 544, 901, 615 58
34, 859, 892
4, 211, 999, 512. 09
75
58, 420
162, 630.00
174,711,350.00
584
600, 913
9
2,067, 900, 000. 00
64, 762,180 63
113. 64
35
484,339
15
185
483
1, 343, 635
3
60,140.00
337,309,000.00
150,000. 00
18, 500,000.00
3, 510, 247,000. 00
179, 041,079.17
21.25
Registered
U n i t e d States securities:
P r e - w a r loans
L i b e r t y loans . . .
Treasury bonds
T r e a s u r y notes
Certificates of i n d e b t e d n e s s
T r e a s u r y (war) savings s e c u r i t i e s . . .
I n t e r e s t checks ( L i b e r t y loans)
Total
Total redeemed
560,001
2, 307, 536, 274 27
1, 828, 695
4, 045, 307, 240. 42
39,470,004
6,852,437, 889. 85
36, 688, 587
8, 257, 306, 752. 51
196
REPORT ON T H E FINANCES
S u m m a r y of securities received, examined, and filed in the register's office during
the fiscal years 1927 amd 1928—Continued
1927
1928
Class of security
Pieces
Amount
Pieces
Amount
R E T I R E D ON ACCOUNT OF EXCHANGES
FOR OTHER SECURITIES, ETC.
Bearer
United States securities:
Pre-war loans
. .
Liberty loans
Treasury bonds
. . .
Treasury notes._
First s y per cent Liberty loan
interim certificates
Standard full-paid interim certificates
Certificates of indebtedness
Securities not affecting public debt:
Insular possessions loans
Total
$368,670.00
594, 305, 500. 00
222,252, 600. 00
614, 357, 750.00
$594. 670. 00
909, 020, 550. 00
213, 624, 900. 00
433, 793,950. 00
540
1, 780, 553
65, 265
80, 251
96
13,600. 00
107
11,409.00
10
- 58, 078
4,823, 500. 00
569, 842, 500. 00
75, 519
846,650, 200. 00
727
727,000. 00
3,764
2, 559, 704 2,132,440, 670. 00
2,005,999
2, 281, 673, 020. 00
10,917
368, 788
8,892
2
4, 659
59. 333, 880. 00
474,484,400. 00
86, 259, 750.00
20,000, 000. 00
983, 025. 00
813
2, 364, 378
67, 554
68, 049
3, 729, 000.00
Begistered
United States securities:
Pre war loans
..
. , .
Liberty loqns
Treasurv bonds
Treasury notes
Treasury (war) savings securities..
Securities not affecting public debt:
Insular possessions loans
Total
"
Total retired on account
exchanges, etc
9,992
374,206
4,863
62, 720, 890. 00
509, 874,400. 00
31, 769, 500. 00
7,315
1,474, 566. 00
2,600
6,045, 500. 00
3, 522
6, 305, 500. 00
398,976
601, 884, 855.00
396,780
646, 360, 555. 00
2, 958, 680 2,734,325,525.00
2, 402, 779
2,928, 039, 575. 00
UNISSUED STOCK R E T I R E D
'
Bearer
United States securities:
Pre-war loans
loans
Liberty
Treasury bonds
Treasury notes.
....
Certificates of indebtedness
Treasury (war) savings securitiesInterest coupons
Securities not affecting public debt:
Insular possessions loans
Total
8,062
911, 428
179
114,930
119, 564
39
6,836,293
17,890,000.00
197,800, 600.00
306, 400. 00
323, 680, 300. 00
691,832, 500. 00
203. 00
377, 354,066. 51
47, 649
200
145, 736
126, 955
28,913,250.00
10, 000. 00
233,846,450. 00
853, 510, 600. 00
6, 052,452
255,457, 381. 21
3
3,000.00
8,200
8, 200, 000.00
7,990,498
1, 508,867,068. 51
6, 381,092
1, 379, 937, 681.21
24.094
221
8
2
63,190,250.00
2, 809, 550. 00
18, 500.00
No value.
12
615,086
53
101
1
18
127, 500. 00
187, 669,900. 00
138,450. 00
No value.
No value.
1,725.00
Registered
United States securities:
Pre-war loans..
Liberty loans
Treasurj'^ bonds .
Treasury notes
Certificates of indebtedness
Treasury (war) savings securitiesSecurities not affecting public debt:
Insular possessions loans
Railroad loans
Cherokee certificates of indebtedness
District of Columbia loans
Total
Total unissued stock retired
26
1,325.00
12,811
8,840
31,339,000.00
42, 449, 000. 00
660
2,271
6, 500,000.00
2, 243,000.00
3,223
48,823
147, 660, 626.00
618, 494
8,039,321
1,666,417, 693. 61
6,999,586
4,127,000.00
192,064, 576.00
1, 672, 002, 256. 21
197
SECEETARY OF T H E TREASTJRY
Summary of securities received, examined, and filed in the register's ofiice durvng
the fiscal years 1927 and 1928—Continned
1927
1928
Class of security
Pieces
Amount
Pieces
Amount
RECAPITULATION
Bearer
United States securities:
Pre-war
loans
._
Liberty loans
Treasury bonds
Treasury notes
First 3H per cent Liberty loan interim certificates
Standard full-paid interim certificates
Certificates of indebtedness
Treasury (war) savings securities
Interest coupons
...
Securities not affecting public debt:
Insular possessions loans . . .
District of Columbia loans
District of Columbia interest coupons
Total
9,007
$18, 635,280.00
3,873,965 3, 099,767,360. 00
69,213
223, 931, 300.00
600, 093 1,876, 986,150.00
630
4,384,154
65,465
324, 569
$394.480.00
2,482,184, 650.00
222,262, 600. 00
1,319,919,450.00
13, 600.00
107
11,400.00
10
4,823, 500.00
232, 347 2,021,029,000. 00
735, 713
1,765,409.31
1 44,039,022 1 938,626,610.03
294, 667
618,687
37, 646, 632
3,057,276, 800. 00
1,122,606. 34
778, 508, 688.45
11, 964
11
11,929,000.00
550.00
95
730
4
730,000.00
1,100.00
6
64. 76
97
88.51
49,460, 206 8,186, 209,354. 09
43, 246,983
7,873,610,213. 30
34,161
116,073, 770.00
432,847
687, 395,300. 00
31, 788,000.00
4,871
2
No value,
684 2,067,900,000.00
508, 254
66, 238,070. 63
9
113.64
10, 964
1,468, 213
8,960
288
484
1,348,312
3
59, 621, 520. 00
999,463,300. 00
86, 548, 200.00
38, 500,000.00
3, 510, 247,000.00
180,026,829.17
2L26
Registered
United States securities:
Pre-war loans
Liberty loans
Treasury bonds
Treasury notes
.. . .. . .
Certificates of indebtedness
Treasury (war) savings securities...
Interest checks (Liberty loans)
Securities not affecting public debt:
Insular possessions loans
Railroad loans . . . . . . .
Cherokee certificates of indebtedness
. -.
District of Columbia loans
Total
.
Grand total
15,411
8,840
37,384,500.00
42, 449,000.00
550
2,271
6,500,000.00
2,243,000.00
6,745
9,432, 500.00
1, 007,800 3, 056,971,754. 27
2,843,969
4,883,738,370.42
50,468,005 11, 243,181,108. 36
46,090,952
12,757,348,583. 72
I Audit figure is used instead of the received figure.
Division of Public Debt Accounts and Audit
This division maintains administrative control accounts over all
official transactions in public debt securities of all issues and over all
transactions involving the receipt, custody, and issue of distinctive
silk fiber and nondistinctive paper used for printing public debt
securities. United States currency, national-bank notes. Federal reserve notes. United States postage stamps, internal revenue stamps,
and other miscellaneous securities and documents. .These control
accounts relate to transactions conducted by the Division of Loans and
Currency, the office of the Register of the Treasury, the Division of
Paper Custody, the Bureau of Engraving and Printing, and Federal
reserve banks as fiscal agents of the United States. They show an
accounting for all paper used in the printing of public debt securities, currency, and other issues, from the time of manufacture by the
198
REPORT ON THE FINANCES
contractor through its various stages until it is delivered by the
Bureau of Engraving and Printing as finished product in the form
of securities or currency to the administrative offices of issue, or until
it is delivered to the destruction committee and destroyed as mutilated; and an accounting for all public debt securities from the time
of delivery by the Bureau of Engraving and Printing, through the
various transactions in which they may be handled as stock or issued
to the public, until they are surrendered to the Treasury, canceled,
and retired against payment, or upon authorized transactions in
exchange for other securities where they are either held indefinitely
or finally delivered to the destruction committee and destro3^ed.
This division also conducts physical audits of distinctive and nondistinctive paper in the custody of the custodian of paper and the
Bureau of Engraving and Printing, and of securities in other administrative Treasury activities held as stock or in safe-keeping,
unclaimed securities, surrendered securities canceled and retired or in
process of retirement; of registered interest checks in stock, held as
unclaimed, or canceled and delivered for destruction; of registered
bondholders' accounts; of numerical registers reflecting the issues
and retirements of public debt securities] and those outstanding; and
of various accounting records relating to security and security-paper
transactions.
The maintenance of the control accounts, together with the periodic physical audits of securities,) and the examinations of the
numerical registers to insure agreement between the aggregate par
value of the number of pieces of various denominations of each class
of security shown outstanding in those registers and the department's
official record.of the amount of each form of public debt outstanding,
provide the best possible proof of the integrity of the public debt.
The amount of each form of public debt securities outstanding is
determined and certified each month. This division also prepares
estimates of expenditures in future fiscal years for the cumulative
sinking fund and on account of interest on the public debt for budget
purposes; determines and certifies amounts to be credited periodically
to the sinking fund, interest payable on all classes of public debt
securities on their respective interest payment dates, and outstanding
unpaid interest as at the end of each month; and maintains interest
accounts which reflect in detail all items of interest payable, paid, and
outstanding.
The tables relating to the public debt, prepared in this division
and incorporated in another section of this report, indicate the«volume of transactions reflected in the controlling accounts of this division. A summary of the physical audits conducted during the fiscal
year is as follows:
•
199
SECRETARY OF THE TREASURY
Physical audits, fiscal year 1928
Description
Pieces, etc.
I n Division of L o a n s a n d C u r r e n c y :
Securities, unissued stock
Securities in safe-keeping..
U n c l a i m e d securities
S u r r e n d e r e d securities in process of r e t i r e m e n t
I n t e r e s t checks, u n i s s u e d stock
Void interest checks held for reference
I n t e r e s t checks held f o r . d e s t r u c t i o n . .
U n c l a i m e d interest checks
Registered b o n d h o l d e r s ' accounts
N u m e r i c a l records of registered b o n d s a n d notes—entries e x a m i n e d .
N u m e r i c a l records of coupon bonds—entries e x a m i n e d .
Security records—prewar loans—analysis of receipts, issues, retirem e n t s , o u t s t a n d i n g b y denominations—entries examined
I n Office of Register of t h e T r e a s u r y :
U n i s s u e d b o n d s , notes, a n d c e r t i f i c a t e s . . .
P a s t d u e interest check numericals—entries examined.__
P a i d p a s t d u e interest checks
N u m e r i c a l records of coupon b o n d s , notes, a n d certificates—entries
examined
R e t i r e d b o n d s , notes, a n d certificates
._:.
I n D i v i s i o n of P a p e r C u s t o d y : N o n d i s t i n c t i v e paper, unissued s t o c k sheets..
I n office of Commissioner of t h e P u b l i c D e b t :
Specimen securities
Special certificates of i n d e b t e d n e s s , b l a n k , u n i s s u e d stock
I n office of T h i r d Assistant P o s t m a s t e r General: Cash credits, T r e a s u r y
(war) savings
...1...
--.
_
I n B u r e a u of E n g r a v i n g a n d P r i n t i n g : D i s t i n c t i v e silk fiber a n d nond i s t i n c t i v e paper, p r i n t e d or in process of printing—sheets
Value
$7,182, 776, 725. 00
599, 722, 750. 00
23, 772. 98
18, 684,148. 00
507,002
4,504
96, 746
359, 793
127, 592
3, 274, 667
936, 300
1,158, 234. 51
1,168, 255, 750. 00
2,144, 454
4,880, 631, 350. 00
117,110
30,400
11, 960
1,035, 318,000. 00
759, 625.16
29, 696, 950
2, 234, 553
"4,'i9i,'86i,"300"00
1 25, 205, 062
1,334
338
422, 699. 31
2 98, 560,484
1 I n c l u d e s 23,603,500 pieces package c o u n t e d .
2 I n c l u d e s 25,570,456 pieces p a c k a g e c o u n t e d .
Detail of audits of distinctive silk fiber and nondistinctive paper in the Bureau
of Engraving and Printing
Class of paper
Currency
Bonds, certificates,
etc
Postage.
Revenue
Miscellaneous
Total
Number
of
aud- Wetting
its
Sheets audited in various divisions
Examining
25 7,913, 517 57,320,813
Sm-face
printing
Numbering
Postage
454, 652 2, 615, 766
EnOr- gravders ^ing
Total
sheets
7
68, 304, 645
6, 758, 579
149
96
96
258
...... 19, 583,488
95 7,950, 582 57, 349,194 23, 885, 765 2, 615, 756 6, 758, 579
606
2 98, 560,484
8
17
40
5
36,065
28, 381 2, 098, 621
1,000
19, 582, 392
1, 750, 200
2,163, 216
6. 758, 675
1, 750, 460
N O T E . — F r a c t i o n a l sheets disregarded in obtaining aggregate totals. Sheets c o u n t e d in each a u d i t were
found in agreement w i t h b u r e a u records a n d reconciled w i t h controlling accounts in Division of P u b l i c D e b t
Accounts and Audit.
200
REPORT ON THE FINANCES
Division of paper custody
''
Operations of the divisioii of paper custody during the fiscal year 1928
Kind
Distinctive paper for United States currency. Federal reserve notes, and national-bank currency,
s y by i z y , type A
Distinctive paper for United States currency. Federal reserve notes, and national-bank currency,
13.625 by 17.125, type B
nited States bond paper
Internal revenue paper
Postage stamp paper
Check paper
Parchment, artificial parchment, and parchment
deed paper
Miscellaneous paper
Philippine Islands:
Distinctive paper for national-bank circulating
notes. Treasury certificates and notes for the
Bank of the Phihppine Islands...
Internal revenue paper
Postal card
Porto Rican internal revenue paper
Total.
Received
On hand
from
July 1, 1927 contractors
Issued to
bureau
Sheets
30,432, 952
Sheets
235, 547, 007
Sheets
242,137, 817
Sheets
23,842,142
947
607
232
738
4,192,000
513,000
75, 752, 399
8,171
2, 606, 061
17,003
676,646
77,433, 396
2, 296, 403
2, 606, 799
4,174,997
5, 666,401
27, 364, 610
1,496,000
1,344,000
154,010
1,981, 769
199, 548
4,126,802
218,102
4,142,538
135, 466
1,966,033
5,829,
29,045,
3, 784,
1, 344,
468, 367
111, 489
22, 538
644
913,
66,
60,
309,
190,
178,
43,
162,
000
790
000
070
.On h a n d
J u n e 30,
1928
511
279
503
614
1,190, 856
39,035
147, 000
73,176,193
324, 293, 848
330,103, 611
67,366, 530
1,626
224
3
9,606
526
9,259
1,973
257
3
Rolls postage stamp paper
Rolls internal revenue paper
Rolls United States security paper.
Custody of Federal reserve notes, series 1914 ctncZ 1918
Federal reserve bank
On hand
July 1, 1927
Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapohs..
Kansas City..
Dallas
San Francisco.
$140,800,000
276,440,000
179, 260, 000
121, 660,000
118,480,000
81, 060, 000
210,100, 000
52,180, 000
34, 620, 000
47, 960, 000
39, 640, 000
124, 260, 000
Total...
1,425,460, 000
Received
$91, 280, 000
273, 940, 000
125, 900, 000
187,840, 000
60,100,000
47, 600,000
175, 040,000
43, 600,000
33, 500, 000
41, 600, 000
41, 000,000
139,120, 000
Issued
On hand
June 30, 1928
$116, 000,000
307, 900, 000
130, 300,000
156, 280, 000
50, 280,000
45, 800, 000
171,200,000
51,320, 000
18, 600, 000
26, 220,000
29,280,000
194,680, 000
$116,080, 000
241,480,000
174,860,000
153, 220,000
128, 300,000
82, 760,000
213,940, 000
44,360,000
49, 520,000
63, 240,000
61, 360,000
68, 700,000
1, 260, 220, 000 1, 297,860, 000
1,387,820,000
PUBLIC HEALTH SERVICE
Division of sanitary repoo^ts and statistics
Reports of the prevalence of diseases dangerous to the public health
were received from the United States and from countries throughout
the world wherever records are kept. The reports from this country
were secured largely through the cooperation of State and city health
departments. Reports from foreign countries were received through
officers of the Public Health Service stationed abroad, American
consuls, and from foreign governments. The Public Health Service
cooperates with the health section of the League of Nations, the
International Office of Public Hygiene, and the Pan American Sanitary Bureau in the collection and prompt dissemination of information mutually valuable regarding the outbreak and prevalence of
communicable diseases.
During the year the method of tabulating the reports of quarantinable diseases from foreign countries or ports as published in the
Public Health Reports was changed so as to enable quarantine officers
to see at a glance the prevalence and immediate progress of the
disease in each place from which reports are received.
The weekly Public Health Reports, publication of which was continued throughout the fiscal year, contains current information of
the prevalence of diseases dangerous to the public health in the
United States and abroad and articles on subjects of interest to
public health workers, especially the results of scientific investigations in the realm of public health. The more important of these
articles are reprinted for economical distribution and some are issued
as supplements to the Public Health Reports.
The collection, compilation, and publication of laws, ordinances,
and regulations pertaining to the public health were continued during the fiscal year. Abstracts of court decisions of interest to health
workers were prepared and published from time to time. Work was
done on the compilation of laws, regulations, and court decisions
pertaining to the collection of morbidity reports.
A revision of the mailing lists of the Public Health Service during
the year resulted in a reduction of approximately 5,000 addresses.
A total of 236,728 copies of publications were distributed, as compared with 319,471 during the preceding fiscal year. The reduction
was necessary because of the limited appropriation available for
printing.
201
202
REPORT ON THE'FINANCES
Nearly 4,000 stereopticon slides were loaned to universities, officers
of the Public Health Service, and others during the year. Lack of
funds for replacements and new slides has restricted the usefulness
of this service.
Radio broadcasts were issued regularly twice each month, and these
were sent out by the Navy radio station at Washington, D. C , and
53 other stations throughout the country.
Division of foreign and insular quarantine amd inwiigration
Quarantine transactions.—During the fiscal year 25,091 vessels and
2,787,631 persons were inspected by quarantine officers. Of these,
18,667 vessels, 887,912 passengers, and 1,085,385 seamen were inspected
upon arrival at stations in the continental United States; 2,964 vessels, 158,407 passengers, and 223,296 seamen were inspected at insular
stations; and 3,460 vessels, 314,285 passengers, ,and 118,346 seamen
were inspected at foreign ports prior to embarkation for the United
States.
Of the passengers who embarked at European ports, 56,320 were
vaccinated and 66,509 were deloused under the supervision of medical
officers of the service. Their clothing and baggage, amounting to
66,324 pieces, were disinfected.
A total of 5,637 vessels were fumigated either because of the occurrence of disease on board or for the destruction of rodents; and 23,371
rats were recovered, 18,821 of which were examined for plague
infection.
The efforts of the service to exclude quarantinable disease from
the United States and its possessions were successful. During the
3?'ear only 7 cases of smallpox, 1 case of leprosy, and 2 cases of
typhus fever reached our quarantine stations. The prophylactic
measures applied by Public Health Service officers at foreign ports
of departure undoubtedly helped to prevent the arrival of cases of
plague, yellow fever, and cholera.
At the suggestion of the Surgeon General, the Panama Canal Zone
authorities adopted the international standard form of bill of health
as prescribed for use under the Pan American Sanitary Code. This
now permits the elimination of the requirement for quarantine inspection at the United States port of arrival for those vessels engaged in
intercoastal trade which have not called at foreign ports enroute, but
which have stopped in the Panama Canal Zone and taken on cargo
or passengers. I t will facilitate the movement of intercoastal vessels
and remove a requirement which has been frequently the basis of
technical quarantine violations, resulting in the infliction of mitigated
penalties.
The form of certificate covering ship fumigation for deratization,
and also used for reporting deratization exemption, which was
SECRETARY OF T H E TREASURY
203
evolved and used bj^ the Public Health Service for the past year and
a half, has been formally adopted by the Office International
d'Hygiene Publique, and is now prescribed for international usage
under the terms of the International Sanitary Convention.
During the year the requirements for taking out American bills
of health in foreign ports have been clarified and somewhat modified,
which will benefit shipping without lessening the quarantine precautions; and this, too, is expected to result in the removal of a fairly
frequent basis of technical violation of quarantine requirements.
The schedule of charges for quarantine services rendered at the
national quarantine stations was revised, principally downward, during the year so that such charges are now better equalized and representative of the average actual cost of such services.
The Public Health Service took over from the local boards of
health and during the past fiscal year assumed charge of the quarantine activities in the ports of Beverly, Salem, Lyiin, Plymouth, and
New Bedford, Mass., and New London, Conn. Arrangements were
also made for the performance of the necessary quarantine and medical immigration inspections in connection with the establishment of
air ports of entry in a number of ports.
A new station was opened at Roma, Tex., to serve the newly constructed bridge crossing the Rio Grande at that point, which opened
March 1, 1928. There are also now pending or under actual construction several other international bridges across the Rio Grande
at various points, and w^hen these are completed it will be necessary
to make further provision for the medical examinations required,
Similarly, the administration of the medical examination of arriving
aliens along the Canadian border has been strengthened and extended, particularly east of the Great Lakes, in which sector increased
facilities have been provided.
Medical inspection of aliens,—There were 1,178,482 alien passengers and 928,423 alien seamen examined by medical officers at the
various stations. Of this nuinber, 16,473 passengers and 2,117 seamen
were "certified" in accordance with the act of Congress, approved
February 5, 1917.
The most important causes of certification of alien passengers
were: Trachoma, 548; tuberculosis, 186; feeble-mindedness, 167; insanity, 131; syphilis, 160; and gonorrhea, 444.
Of the alien seamen certified, 77 were for trachoma, 35 for tuberculosis, 291 for syphilis, 356 for chancroid, and 627 for gonorrhea.
Examination of alien passengers abroad.—There were 167,033 applicants for immigration visas examined by medical officers abroad.
Of this number, 2,409 were reported to the consular officers as afflicted
with one or more of the diseases listed in class A as mandatorily ex-
204
REPORT ON THE FINANCES
cludable; 14,868 were reported as afflicted with a disease or condition
listed in class B as liable to affect their ability to earn a living; 2,408
of the applicants reported in class A and 5,342 of those reported in
class B were refused immigration visas by the consular officers because of the result of the medical examination.
Of 159,283 aliens who had been given a preliminary medical examination abroad and to whom visas had been issued, onlj^ 17 were
certified upon arrival at a United States port as being afflicted with
class A diseases, resulting in mandatory deportation.
Division of domestic quarantine
The plan for meeting the health problems in the area affected by the
Mississippi flood in the spring of 1927 has been carried out and has
proved successful. No epidemics have developed and there has been
no great increase in the incidence of communicable diseases either in
refugee camps or among the inhabitants of the flooded area after
returning to their homes.
As provided by the plan, county health units consisting in most
instances of a medical health officer, a public health nurse, a sanitary
inspector, and an office assistant were established in 83 counties in 7
States, as follows: Louisiana, 2 1 ; Kentucky, 24; Arkansas, 20; Mississippi, 9; Missouri, 5; Tennessee, 3 ; and Illinois, 1. I n every county
the local authorities recognized their obligation to meet the share of
expense allotted to them, and with few exceptions the money w^as
appropriated and made available. I n a few instances in which the
counties were unable to pay, the other agencies carried on the necessary work with the understanding that such counties would assume
their share as soon as funds were available.
The organization, establishmerit, and supervision of the county
health units were accomplished for the most part by officers of the
Public Health Service who were assigned to the various State departments of health for this purpose. The cooperative agencies, consisting of the Public Health Service, the State departments of health, the
county authorities, and the Rockefeller Foundation, carried out the
provisions of the original plan described in the report for the preceding year and worked in perfect accord. The assistance of the
Rockefeller Foundation was of inestimable value, not only in contributing funds and acting in an advisory capacity but also in establishing a training center at Indianola, Miss., for health officers, public
health nurses, and sanitary inspectors prior to their assignments in
the counties.
The activities of the county health units in the flood area are outlined briefly as follows:
SECRETARY OF THE TREASURY
205
1. Sanitation:
InstaUation of sanitary toilets.
Restoration of old or inadequate toilets.
Installation of septic tanks.
Effecting sewer connections.
Effecting water connections.
Safeguarding and improving wells and cisterns.
Safeguarding milk supplies.
Safeguarding food supplies.
Screening and otherwise protecting against flies and mosquitoes.
Abating nuisances.
2. Communicable disease control:
Visits to cases, carriers, contacts, suspects.
Isolation or quarantine of above.
• 3. Immunizations:
Antityphoid vaccinations.
Antismallpox vaccinations.
Toxin-antitoxin administrations for prevention of diphtheria.
4. Child hygiene:
Examinations of school children and securing correction of defects
found.
Instruction of midwives.
Instruction in health habits and hygiene.
5. Laboratory examinations:
Securing specimens of blood, sputum, throat cultures, etc., necessary
for diagnosis of communicable diseases and forwarding to State
laboratories for examination.
Securing and forwarding water and milk samples for examination.
6. Educational:
Lectures.
Distribution of literature.
Preparation of newspaper articles.
Personal conferences.
Office visits.
The occurrence of two cases of bubonic plague in California, in
which the infection was acquired from ground squirrels, and the
reports of these plague-infected animals in various parts of that
State point impressively to the fact that this dangerous reservoir
of infection is an endemic focus of bubonic plague in the North
American Continent, and emphasizes the menace to the public health
which exists as a result of failure to combat this condition by adequate measures.
Measures for the prevention of interstate shipments of shellfish
from polluted waters have been carried out in cooperation with State
boards of health and conservation commissions. Approval of State
certificates as to safe growing areas is given by the Public Health
Service when justified, and lists of dealers in producing States who
have met the requirements of the State and Federal authorities are
published for the information of health authorities in consuming
States. Information concerning States whose facilities and methods
206
REPORT ON THE FINANCES
are not approved, with the reasons for failure to receive approval,
are also forwarded to health authorities of consuming States when
necessary. No such notifications have been necessary during the year.
Measures for insuring safer water supplies on interstate carriers
are in operation, as are those for preventing the interstate spread of
disease by infected persons or things.
Trachoma eradication work is in progress in Missouri, Tennessee,
Kentucky, and Arkansas. Assistance in the diagnosis and control of
this disease has also been given the State health authorities of other
States upon their request.
The twenty-sixth annual conference of State and Territorial health
authorities with the Public Health Service was held at St. Paul,
' Minn., June 8 and 9, 1928, with representatives of 33 States in
attendance.
Division of scientific research
The Public Health Service has continued during the past year to
prosecute studies of public health subjects which fall within the
domain of a Federal health service. These studies, as has been stated
in previous reports, may be grouped into two categories which are
more or less w^ell defined, although overlapping occurs with advantage : The investigation of principles of basic sciences which apply to public health problems and the solution of immediate difficulties which are encountered in practical health work. I n this way
not only is the daily work of the health official facilitated but the
foundation is laid for more enlightened work in the future.
The continuation of studies, described under the same captions for
several years past, has been desirable either on account of the exceptional difficulty of the subject or of its inclusive nature, or because
changes in the human environment have necessitated a shifting of
the points of attack. The work on Rocky Mountain spotted fever
is an instance of a problem of extreme difficulty where an aggregate
of many years' work reached its culmination in the preparation of a
vaccine which has a high protective power against this disease.
During the year successful efforts were made to simplify and improve
the process of manufacture so that an adequate supply might be produced. The stream pollution investigations are an example of studies
continued over a long period of time because of the inclusive nature
of the subject. When the multiplicity of conditions imposed both
by nature and by man are considered as they affect the pollution and
the purification of streams, the complexity of the problem becomes
evident. Some of these studies above mentioned have been directed
to the formulation of generally applicable principles; and others to
the solution of immediate difficulties, such, for example, as are en-
SECRETARY OF THE TREASURY
207
countered when tw^o or more States desire to cooperate in remedying
a menacing pollution of boundary waters. As an example of studies
long continued under the same caption because changing conditionshave altered the problem, the malaria investigations may be chosen.
I n this case, although natural conditions continue to offer difficult
problems for rural populations, the activities of man himself have
brought up new and important questions of malaria control. The
vast scale of hydroelectric water impounding projects in naturally
malarious regions has made this potential source of increased malaria
prevalence very important. A t the same time the practical development of the airplane, used to distribute Paris green dust over mosquito-breeding areas, has furnished a remedy which the Public Health
Service investigations have shown to be effective under selected
conditions.
The investigations, grouped under the heading "Industrial H y giene," have continued to yield information of value both to employers and employed in industry, and furnish an excellent example
of the satisfaction to be derived from recourse to the experimental
method for the solution of apparent difficulties of adjustment. The
studies of specific dust hazards have been virtually completed, and
the emphasis has been shifted to dangers which are introduced by
new methods, chiefly chemical, which are spreading rapidly in
industry.
Progress has been made iri the child hygiene studies of the service,.
and a number of publications have been prepared based upon material
gathered from the same population group over a period of several
years. The studies of the sanitary control of milk by cities have
progressed favorably. The advantages of adopting uniform methods over a considerable geographic ,area have become apparent in theresulting improvement of the sanitary quality of milk, which has
gone hand in hand with a remarkable increase in the consumption of
the product of progressive producers.
The studies of the salt marsh mosquito problem have made satisfactory progress and .a report, covering the varied conditions encountered throughout the vast coast line and the existing remediesfor them, will be forthcoming upon their completion.
The H3^gienic Laboratory has continued to produce valuable information on a wide variety of timely public health subjects. Its standardization of the new scarlet fever biological products has put the
modern attack upon this disease upon a safe and practicable basis..
I t s further investigations into undulant fever, transmitted to man
from cattle and swine suffering from contagious abortion, have stimulated interest among the public health and medical professions, resulting in the discovery of an unsuspected prevalence. I n one State13606—29—FI1928
16
208
,
REPORT ON T H E FINANCES
this disease in man has beeri estimated to outrank, in importance,
typhoid fever and the paratyphoid fevers combined. Means of
prevention have been suggested.
Increased interest and activity in the great cancer problem has
characterized" the work of the service during the past year. This has
been due to the development within the service of several promising lines of investigation. Upon seeking the counsel of a group of
some of the most prominent cancer students of the country the prosecution of this work on an enlarged scale was indorsed and a suitable
program laid down. The encouraging work has consisted in the main
of the successful treatment of cancers in the lower animals by electric
currents of extremely high frequency and of the development of a
new means of measuring cellular activity.
Division of nnarine hospitals and relief
The segregation of lepers in accordance with the act approved
February 3,1917, has been continued with marked success, the various
States sending their leper patients to the marine hospital (National
Leper Home) at Carville, La., instead of maintaining, as formerly,
many small segregated groups in various parts of the country. Approximately 300 lepers are now under treatment there, of whom 73
from 18 different States were admitted during the past year. Eighteen patients died and 11, having recovered, were discharged. The
results of treatment are very encouraging and a hopeful spirit prevails among the patients, who are cooperating with commendable
zeal in the routine and rigorous therapeutics.
A total of 349,199 beneficiaries applied at the marine hospitals
and other relief stations of the Public Health Service for medical
services, of whom 244,040 were patients requiring treatment and
105,159 were applicants for physical examinations for purposes other
than treatment. Of those applying for treatment, the majority were,
as usual, seamen from American merchant vessels. One million three
hundred and fifty-four thousand five hundred and forty-five hospital
days and 638,794 out-patient treatments were furnished. The hospitals admitted many injured beneficiaries and many with acute
surgical diseases, as well as considerable numbers afflicted with tuberculosis, syphilis, and other contagious diseases. Nine hundred and
fifty-three deaths occurred. Large numbers of seamen were given
physical examinations to assist^the Department of Commerce to comply Avith the shipping act approved March 5, 1915, which provides
that 65 per cent of all seamen on American vessels must be. ablebodied seamen with certain minimum physical requirements. Large
and increasing numbers of physical examinations are also made for
the Civil Service and the Employees' Compensation Commissions.
'
SECRETARY OF THE TREASURY
209
Yision and color-vision tests of all pilots, masters, and engineers
•seeking licenses have been routinely made for the Steamboat Inspection Service, and ship's officers instructed and examined in the
principles of first aid. Special examinations have been made for the
'Committee on Claims, House of Representatives, and special medical investigations for the Employees' Compensation Commission. I n
cooperation with the customs officers and the Bureau of Prohibition,
certificates for medicinal liquors have been issued, after determination of needs in each instance, to 8,726 vessels, American and foreign.
Permits for the purchase of narcotics required for use aboard vessels have also been issued, as the departmental regulations require,
to 185 vessels. Medical advice has been furnished by radio to many
ships at sea. This means of communication is also frequently used
by vessels to secure prompt ambulance service. Whenever requested
by the Department of Labor, detained immigrants are received and
treated by the Public Health Service. The marine hospital on Ellis
Island was operated, as heretofore, for the Bureau of Immigration,
although an average of more than 200 merchant seamen, for whom
accommodations are lacking in the overcrowded marine hospital at
Stapleton, are constantly under treatment. Money collected for the
care of immigrants, foreign seamen, and other pay patients, and
from miscellaneous sources for sundry services, and turned into the
General Treasury, amounted to $260,921.06. To enable the Public
Health Service to meet its growing obligations, it will be necessary
to increase the appropriations in order to augment the personnel at
certain relief stations.
Division of veniereal diseases
The development of scientific research for the more effective prevention and treatment of syphilis and gonorrhea continued to occupy
the major part of the attention of the division of venereal diseases.
Field studies were continued to determine more accurately the prevalence of gonorrhea and syphilis in the general population. These
studies now have been made in communities having a total population
of more than 12,000,000 and have shown marked variation in the
prevalence of these diseases, being relatively infrequent in rural
communities but very prevalent in the urban areas.
Laboratory and clinical studies were initiated at the United States
marine hospital at Stapleton; studies were made in a series of cases
of syphilis treated by nonspecific protein therapy; the effect of hot
baths on the course of syphilis was observed at the Hot Springs
clinic; further studies in immunity in syphilis were conducted; and
studies of the immunologic problems in connection with gonorrhea
were continued.
210
REPORT OF THE FINANCES
Particular attention was given to the development of effective
methods of preventing venereal diseases among beneficiaries of the
Public Health Service. Cooperation with the several State boards
of health was continued by the assignment of trained personnel to a
number of States to study and recommend improvements in their
venereal-disease control measures.
Division of personnel and accounts
Peo'sonnel.—At the end of the fiscal year the regular commissioned
corps of the Public Health Service included the Surgeon General, 3
assistants surgeons general at large, 24 senior surgeons, 133 surgeons,
23 passed assistant surgeons, and 64 assistant surgeons. Twenty officers of the service were on waiting orders. During the year one
death and four resignations occurred in the.corps.
On June 30, 1928, 65 reserve officers were on active duty, this number including 1 assistant surgeon general, 1 senior dental surgeon, 8
surgeons, 7 dental surgeons, 8 passed assistant surgeons, 14 passed
assistant dental surgeons, 23 assistant surgeons, and 3 assistant dental
surgeons.
Following is a list showing the entire personnel of the service as
of July 1, 1928:
Commissioned medical officers, regular corps
Commissioned officers. Reserve Corps
.
Acting assistant surgeons
Attending specialists and consultants
Contract dental surgeons
Internes
Scientific personnel, general
Pharmacists
Scientific personnel. Hygienic Laboratory
Administrative assistants
Druggists
'Nurses
Aides
Dietitians
Laboratorians
Pilots—
Marine engineers
Clerks
All other employees
Total
_
—
'.
248
65
488
265
36
• 12
25
35
24
1910
4063a
17
2^
~—
35
36
- 434
2, 543
4, 760-
This total includes all part-time employees and all persons who
are paid on a fee basis or on a per diem basis when actually employed. I t is exclusive, however, of 4,450 persons appointed, at
nominal compensation, to assist in the collection of information and
reports relating to disease prevalence. These persons are for the
SECRETARY OF THE TREASURY
211
most part officers and employees of health departments. State and
local, who transmit to the bureau epidemiologic data collected by
those agencies.
Financial statement.—A statement of appropriations and expenditures for the fiscal year 1928 follows:
Appropriated
Appropriation title
Salaries, oflQce of Surgeon General."
Pay, etc., commissioned oflQcers and pharmacists
Pay of acting assistant surgeons
Pay of other employees
Freight, transportation, etc
Maintenance, Hygienic Laboratory
Preparation and transportation of remains of oflQcers.
Books..
Pay of personnel and maintenance of hospitals
Quarantine ser vice. _
,
Preventing the spread of epidemic diseases
Field investigations of public health
Interstate quarantine service
Studies of rural sanitation
Control of biologic products
Expenses, division of venereal diseases
Survey of salt marsh areas, South Atlantic and Gulf States..
Total
Expended
$103,000.00
1,200, 000.00
300,000.00
990,000.00
25, 000. 00
43, 000. 00
2,000.00
500.00
I 6,816,963. 22
485, 000.00
495, 388.00
280, 000.00
• 71, 000.00
85,000.00
45, 000. 00
70, 000.00
16, 525.96
$102,428.96
1,199,860. 36
297,017:61
983,827.99
24,961. 36
42,983.93
496. 59
6, 795,840. 23
474, 678.42
400,042.15
278, 893. 64
68, 361. 75
80,173.84
44, 458. 55
69,456. 33
16,522.39
10,028,377.18
9,880,004.10
1 Includes $363,057.30 reimbursement for care and treatment of Veterans' Bureau patients and $4,014.92
miscellaneous reimbursements.
The revenues derived from operations of the Public Health Service
during the fiscal year 1928 and covered into the Treasury as miscellaneous receipts are as follows:
Source
Inspection, fumigation, and disinfection of vessels at national quarantine stations...
Care and treatment of pay patients in hospitals and at relief stations (other than Veterans'
Bureau patients)
Sale of rations
:
Sale of obsolete, condemned, and unserviceable property
Commissions on pay telephones installed in Service buildings
Rent of land and buildings
Unclassified
Total
-
$537, 673. 52
86, 757. 71
16, 986. 61
29, 584. 71
328. 97
150. 00
1, 058. 32
672, 539. 84
SECRET SERVICE DIVISION
Nine hundred persons were arrested by agents of the service, or h y
their direction, during the fiscal year 1928 on charges involving counterfeiting of the obligations of the United States and forgery, as
well as miscellaneous offenses against the Federal statutes relating
to the Treasury DepartAient and its several branches. Of this total
number taken into custody, 146 were note counterfeiters, 171 were note
raisers and passers of altered currency, 137 were coin counterfeiters
and passers, 265 were check forgers, 14 were apprehended for negotiating stolen or forged bonds, and 81 were held for violation of the
adjusted service compensation act.
During the year 10 new counterfeit note issues made their appearance, several of which were excellently produced specimens which
circulated in different sections of the country, while the remainder
were crude productions and therefore quickly detected. Counterfeit
notes aggregating $140,573.05, including fractional currency, and
altered notes aggregating $53,868 were captured or seized during the^
year by agents of the service, and counterfeit coins aggregating
$21,128.57 were also confiscated in connection with raids and subsequent arrests. Agents captured or seized 374 plates for printing
counterfeit obligations and securities, 78% molds for counterfeiting
coins, and 12 dies, together with a large quantity of miscellaneous materials and apparatus, including photographic outfits, printing
presses, plating outfits, assortments of inks, acids, chemicals, scales,,
ladles, crucibles, files, lenses, rollers, babbitt metal, ruling machinesfor plates, steel drills, engraving tools, needles, paper cutters, magnifying glasses, erasers, pens, pencils, brushes, printing tables,,
burnishers, and wringer presses. A large number of stolen Treasury
checks, either in blank or fraudulently prepared for negotiation, wererecovered during the year.
y
Of the total number of persons arrested, 487 were convicted and
sentenced, 35 were acquitted, 234 were held for court action, 4 died^
while awaiting trial, and the others were variously disposed of, some
being committed to insane asylums and others turned over to military or police authorities.
During the year agents investigated 1,230 forged check cases, 311
bond cases, 36 war-savings stamp cases, and 5 cases involving the
fraudulent use of transportation requests. I n connection with the212
SECRETARY OF T H E TREASURY
213
investigation of forged check cases agents received and transmitted
to the department in restitution $8,326.42.
I n taking cognizance of violations of section 704, adjusted service
compensation act, involving altered adjusted service certificates,
agents investigated 307 cases, resulting in 81 arrests, in all parts of
the country.
With the establishment during the past 12 months of 10 subdistricts
and through a wider distribution of agents in specified areas, this
service has performed more efficiently and expediently the added
duties imposed by law in enforcing the adjusted service compensation
act and the Federal farm loan act, and in investigating the counterfeiting and forgery of transportation requests, and especially check
forgery cases.
Comparison of the amount of counterfeit money captured or seized
during the year with the number of new issues reported for the same
period would serve to indicate the effective measures employed by
the service in suppressing this activity in its incipiency.
Exclusive of the specific activities herein enumerated, the service,
through its agents, investigated 200 miscellaneous cases which are
not listed for various reasons, including 21 persons arrested and later
dismissed on account of insufficient evidence, 25 apprehended on
suspicion and turned over to other agencies for prosecution, and 4
note passers taken into custody in Canada by Dominion authorities
on information furnished by this service.
OFFICE OF THE SUPERVISING ARCHITECT
Operations under the public buildings construction program^
General,—^A summary of public building operations during the
fiscal year 1928 follows:
Operations m connection with post offices, customhouses, courthouses, marine
hospitals, quarantine stations, etc., and miscellaneous ivork for the year 1928
Number of buildings completed (occupied or ready for occupancy)
at the end of the fiscal year 1927, exclusive of marine hospitals
and quarantine stations
1, 321
New buildings completed during the fiscal year 1928, exclusive of
marine hospitals and quarantine stations
21
1, 342
Buildings placed under contract during the fiscal year 1928, exclusive of hospitals, etc
.
^Of these, two completed within the fiscal year
23
2
21
Buildings placed under contract prior to July 1, 1927, and not completed
June 30, 1928
.
5
Total buildings completed and in course of erection June 30, 1928,
exclusive of marine hospitals and quarantine stations
1, 368
(NOTE.—Twenty-four projects authorized under the previous public
building act of 1926 have been absorbed by subsequent authorizations and appropriations.)
Extensions, etc., completed during year 1928
Extensions in course of construction
Major miscellaneous projects authorized in various deficiency acts placed
under contract and in various stages of completion
Number of marine hospitals and quarantine stations
2
2
13
. 57
(Cleveland, M. H., involving a number of buildings under construction to take place of old hospital. Chicago, M. H., remodeling,
involving many buildings; nearing completion.)
Total number of buildings and extensions authorized in acts approved July 3, 1926, Mar. 5, 1928, May 29, 1928, etc., including
buildings in District of Columbia, marine hospitals, quarantine
stations, and extensions
251
Sites only _;
5
Total building projects
214
246
SECRETARY OF THE TREASURY
Of. these buildings and extensions, there were placed under contract,
at the end of fiscal year 1928, the following buildings outside the
District of Columbia
Number of buildings placed under contract in District of C'olumbia
(exclusive of twoi large contracts for excavations, foundations,
etc.)
215
51
2
53
Total remaining building and extension projects to be carried out under
public building program at the end of fiscal year 1928
.
(Of these, 29 projects involve expenditures of from $500,000 to $1,000,000,
and 35 from $1,000,000 to $17,500,000.)
193
Major miscellaneous projects authorized vn various deficiency acts placed under
contract and in various stages of completion on June SO, 1928
Limit of cost
Carville, La., water supply
Cincinnati, Ohio, conduit wiring
.
Columbia River, Astoria, Oreg.j wharf repairs
Key West, Pia., marine hospital, remodeling, ete
Marcus Hook, Pa., new boiler
New Haven, Conn., water supply renewal
New York, N. Y., court house and post oflice, reconstructing roof
New York, N. Y., customhouse, water supply system renewal
New York, N. Y., marine hospital, improving existing facilities
New York, N. Y., quarantine station, restoration chemical storage
Pittsburgh, Pa., post office and court house, removal boilers, etc
St. Louis, Mo., marine hospital, improving existing facilities
San Francisco, Calif., mint, additional vaults
Total
$30,000
50, 000
9,000
6,000
21, 000
16,000
12, 000
33, 500
23, 000
12, 000
25,000
10,000
90,000
337,500
Projects outside the District of Columbia,—Two hundred and fortyfour projects have been authorized for the country at large, 137 of
which include sites or additional land. Therefore, projects which did
not require the purchase of land were given first attention, and other
projects were taken up in the order in which clear title is vested in
the United States. The selection of sites, which usually presents
difficulties, consumes considerable time, and the securing of title after
selection requires from 6 to 12 months. The status of sites is given
under a separate heading.
Fifty-three contracts have been let for buildings and extensions,
of which nearly one-half are completed. The following table shows
the status of contracts which were authorized under the acts of
J u l y 3, 1926, March 5, 1928, and May 29, 1928, and under contract at
the end of the fiscal year 1928:
216
REPORT ON T H E FINANCES
Ldmit of cost and location of buildings and extensions placed under contract at
end of the fiscal year 1928, wMch were authorized in the acts of July S, 1926,
March 5,1928, and May 29, 1928
Projects
L i m i t of cost
Completed
Not completed
$565,000
Akron, Ohio.
90,000 Athens, Tenn
80,000
Batavia, HI.
230,000 Bayonne, N . J
425,000
Birmingham, Ala.
65,400 Branford, Conn
86,000 Buffalo, Wyo
Caribou, Me.
70,000
66,000 Central City, Nebr _
54, 000 Chamberlain, S. Dak
rChicago, 111., Marine Hos1 233, 000
\ pital.
2184,000
90, 000 Cody, Wyo
Coeur d'Alene, Idaho.
250, 000
Des Moines, Iowa.
665,000
Donora, Pa.
95,000
Durango, Colo.
200,000
East Orange, N. J,
285,000
Fallon, Nev.
90, 000
Fort Fairfield, Me.
90,000
Globe, Ariz.
166,000
Jamestown, N. Dak.
200, 000
75,000 Lancaster, "s. C
Las Vegas, N . Mex.
161,000
,
125, 000 Leominster, Mass
185, 500 Lewistown, Pa
,
Long Island City, N . Y.
475, 000
Madison, Wis.
636, 652
Marianna,
Fla
116,000
85, 000 McKees Rocks, Pa
Metropolis, 111.
90, 000
Mill ville, N. J..
90, 300
Missoula,
Mont. •
400,000
,
296,000 Montclair, N. J
76,000 Montevideo, Minn
100,000 Mount Carmel, 111
102, 000 Newburyport, Mass
91,405 Paris, Tex
(contract
60, 000 Prescott, Ark.
96, 200
80,000
256, 000
70, 000
110, 000
1, 500, 000
70, 000
72, 000
800, 000
2,000, 000
375,000
awarded before public
building program).
Red Bluff, Calif
Sandpoint, Idaho
Sandusky, Ohio
Shelbyville, Ky
Tarentum, Pa
Tomah, Wis
Washington, D. C , Liberty
loan (2 additional stories).
196, 000
235,000
75, 000
600, 000
13,860,367
26 completed.
I Section 3.
Southbridge, Mass.
Syracuse, N. Y.
Utica, N. Y.
Washington, D. C , administration building, Department of Agriculture.
Williamson, W. V P .
Wilson, N. C.
Winchester, Mass.
Yonkers, N. Y.
28 not completed.
« Section 5.
Fifty-one projects are on the drafting boards in various stages
of progress involving a total limit of cost of $37,319,500, and among
these are 19 projects involving expenditures of from $500,000 to
$6,425,000, as follows: Asheville, N. C , $650,000; Baltimore, Md.,
$3,300,000; Boston, Mass., $4,750,000; Brooklyn, N. Y., $2,700,000;
SECRETARY OF THE TREASURY
217
Dallas, Tex., $1,250,000; Detroit, Mich., marine hospital, $600,000;
Duluth, Minn., $1,200,000; Fargo, N. Dak., $600,000; Juneau, Alaska,
$775,000; Lancaster, Pa., $500,000; Memphis, Tenn., customhouse,
$900,000; Milwaukee, Wis., $1,850,000; New Orleans, La., marine
hospital, $1,800,000; Pittsburgh, Pa., $6,425,000; Richmond, Va.,
$1,500,000; San Francisco, Calif., marine hospital, $1,640,000; Springfield, 111., $850,000; Tucson, Ariz., $540,000; and Worcester, Mass.,
$800,000.
Buildings outside the District of Columbia completed, under construction, on the boards, etc., involve a total of $48,804,857.
Projects in the District of Golumibia.—For the District of Columbia there are two projects involving no construction; one is an
authorization for the purchase of a site only for the Supreme Court,
condemnation proceedings for which are now in progress, and the
other involves the purchase of a completed building, transactions for
which have been consummated. This building is now occupied by a
bureau of the Department of Agriculture.
Projects authorized in the District of Columbia and involving
construction are as follows: Two additional stories have been added
to the Liberty Loan Building under a limit of cost of $375,000. A
-contract is in force for the construction of the administration building for the Department of Agriculture under a limit of cost of
$2,000,000. The drawings for an extension to the Government Printing Office, under a limit of cost of $1,250,000, are practically completed and a contract is expected to be let before fall. There is an
authorization for an extensible building in the rear of the present
Department of Agriculture Building for which it is necessary to
-acquire two city blocks by condemnation; this proceeding has been
instituted and drawings for this project have been prepared, the total
limit of cost being $5,750,000.
Other projects authorized for the District of Columbia are in-cluded in the development known as the triangle, bounded by Pennsylvania Avenue, Sixth, B, and Fifteenth Streets NW. There is an
appropriation of $225,000 for water mains, sewers, etc., in the triangle
area, and these improvements are nearing completion. A board of
-consultants has been appointed to coordinate not only the buildings
.already authorized, but those which are expected to be authorized.
After much study and the preparation of many sketches, a design
for a dignified group of buildings has been developed. It includes
the following buildings on which construction has been started or
will shortly be started: Internal Revenue Building—Although the
.greater portion of this site for this building belongs to the Govern.ment it was necessary to acquire an additional block by condemnation; a foundation contract is now in force; drawings for the
.-superstructure are practically completed and it is expected to let a
218
REPORT ON THE FINANCES
contract in the late summer; the total limit of cost for this project
is $10,000,000. Department of Commerce Building—The rough excavation for this building has been completed; it is expected to let
the foundation contract in the early fall, to be followed a few nionths
later by a contract for the superstructure; the limit of cost for this
project is $17,500,000. Archives Building—Condemnation proceedings are in progress to acquire land in the triangle for this building
and studies for this project have been made.
Buildings in the District of Columbia completed, under construction, on the boards, etc., involve a total of $44,100,000.
Remodeling and enlarging public buildings
Under the appropriation of $500,000 for " Remodeling and enlarging public buildings," 102 buildings received attention at a cost of
$499,663.18. In 64 of these the contracts involved major changes
and ranged from $1,012.05 to $24,594.40. The total space gained
under the entire appropriation was 103,298 square feet, at an average
cost per square foot of $4.83.
Public buildings remodeled or enlarged, the amount of the Contract, and the
space gained during the fiscal year 1928
Location
Work
Aberdeen, S. Dak., post oflice
Amarillo, Tex., post oflice
Ashland, Ohio, post office
Austin, Tex., new post oflice
Baltimore, Md., immigration station..
Birmingham, Ala., post oflice.
Brooklyn, N, Y., post oflice...
Buffalo, N. Y., marine hospital..
Carville, La., marine hospital
Centraha, 111., post oflice
Charlotte, N. C , post oiEce and com'thouse...
Chicago Heights, 111., post oflQice..
^ Columbus, Ind., post ofince
Delaware, Ohio, post oflice
Dothan, Ala., post oflice
Elgin, 111., post oflice
Elizabeth City, N. C , post oflice
Ellsworth, Me., post office
El Paso, Tex., post office
Fergus Falls, Minn., post office...
Fort Stanton, N. Mex., marine hospital
Fort Worth, Tex., post office
Galveston, Tex., post office and customhouse.
Goldsboro, N. C , post office
Harrisonburg, Va., post office
Helena, Mont., post office
Houston, Tex., old post office
Johnson City, Tenn., post office
Johnstown, Pa., post office
Kalamazoo, Mich., post office
Kansas City, Mo., post office
Kewanee, 111., post office
,
Extension
do
do..
Attic changes
Space for prohibition
quarters.
Extension
Mailing vestibule extension.
Interior changes
Extension
isolation
building.
Quarters for judge..
Mailing vestibule extension.
doExtra to extension
Extension. Money-order changes...
Extension..
Library for judge
Extension
Mezzanine
Extension
Miscellaneous changes. .
Interior changes
Flooring over light well..
Extension
do..
Interior changes
Interior changes for customs, etc.
Extension
Changes in lobby
Extension mailing vestibule.
Miscellaneous changes..
Extension to driveway
incident to last year's
changes.
Amount of
contract
$4,486. 09
1,012.05
4, 600.00
gained in
square
feet
3, 661.00
15, 307. 49
2,100
300
150
300
30,000
14, 032. 00
. 9,001.00
2,350
9,350
15,138. 00
4, 319. 09
2,000
1,196
4, 967. 00
8, 469.13
485
265
17, 281. 00
2, 800. 00
24,143. 00
4, 274. 20
17,427. 50
1, 575. 00
4,147. 00
4, 758. 38
21, 003. 40
7, 397. 80
1, 266. 00
1, 203. 00
14, 529. 00
2, 649. 85
4,113. 58
11, 203. 35
3,100
400
1,539
450
800
964
2,448
2,256
.400
. 150
1,600
294
400
2,000
18, 207. 00
5, 048. 00
2,850. 50
1,280
500
336
1,118. 00
1, 900. 00
200
1,600
219
SECBETARY OF THE TREASURY
Public buildings remodeled or enlarged, the amount of the contract, and the
space gained du7Hng the fiscal year 1928—Continued
Location
Lexington, Ky., post office
Lowell, Mass., post office
Marlboro, Mass., post office
Michigan City, Ind., post office.'.
Minneapolis, Minn., post office
Montgomery, Ala., post office
Nashville, Tenn., post office and courthouse..
Newark, N. J., old post office
_^
New Brighton, Pa., post office
.^.
New Orleans, La., m i n t . . i
New York, N. Y.:
Barge office
Courthouse
Marine hospital
Quarantine station
Pasadena, Cahf., post office
Philadelphia, Pa.:
Customhouse
Post office
Portland, Me., marine hospital
Portsmouth, N. H., post office and customhouse..
Red Oak, Iowa, post office
Rochester, N. Y., post office
St. Augustine, Fla., post office '.
St. Louis, Mo.:
Marine hospital
Post office
St. Paul, Minn., post office
San Antonio, Tex., post office
San Diego, Calif., post office and customhouse..
Selma, Aia., post office
Shenandoah, Iowa, post office
Springfield, Mo., post office and courthouse
Sterling, 111., post office
Terre Haute, Ind., post office..
Total of 64 major items...
Total of 38 miscellaneous items.
Grand total.
Work
Amount of
contract
Space
gained in
square
feet
Extension
Miscellaneous changes. .
Extension
Additional to extension..
Extension to workroom..
Extension
Miscellaneous changes..
Offices on fourth floor
Miscellaneous changes. .
Additional changes
$14, 526. 00
1, 695.00
3,897.00
4, 393. 00
3,996. 00
5, 791. 00
5, 455. 00
4, 612. 75
1, 500. 00
1,050. 39
1, 617
900
300
400
1,792
550
300
400
150
150
Changes for the compensation board.
Miscellaneous changes..
do
do..
Mezzanine and interior
changes.
7,478. 00
450
3, 495. 00
1, 044. 00
1,815.19
22, 641. 70
300
200
180
1,856
Miscellaneous changes..
do
Interior changes
Extension
Miscellaneous changes..
do
Interior changes
2, 565. 00
1, 915. 00
7, 395. 96
18, 822. 75
5, 350. 00
5, 256. 00
1, 790.16
200
170
5,700
3,430
200
400
100
Miscellaneous changes..
do....
Law library and courtroom.
Miscellaneous changes..
Extension
do
do
Miscellaneous changes..
Extension..
Changes
5, 800. 00
7, 709. 27
12, 644. 40
680
1,000
2,000
1,131. 60
24, 594. 40
23,438. 26
16, 693. 85
2, 616. 00
10,195. 00
2, 500. 00
150
3,600
2,370
1,774
480
1,156
250
487, 694. 98
11, 968. 20
102,108
1,190
499, 663.18
103,298
The office is called upon to make examinations of the structural
safety of the various buildings in Washington, D. C , under the control of the Treasury Department, as well as other departments, and
also to give to various departments technical advice which, in some
cases, involves the preparation of drawings and specifications. One
case in point is the contract recently let for safeguarding the dome
of the National Museum Building, calling for extremely careful
engineering work and involving an expenditure of upward of
$50,000. Drawings have been started for a hospital building of 250
beds for the National Home for Disabled Volunteer Soldiers at
Marion, Ind., at an estimated cost for this project of $700,000.
The office is carrying out two construction projects not included in
the public building program, viz, new United States appraisers'
stores. New York City, $8,000,000, and marine hospital, Cleveland,
Ohio, approximately $1,500,000.
220
REPORT ON THE FINANCES
Status of sites
Of the 127 new cases where sites and additions to sites for projects
outside of the District of Columbia were appropriated for by the
acts of March 5 and May 29, 1928, proposals have been solicited in
124 cases, reports received from site agents in 92 cases, and selections made in 60 cases and referred to the Department of Justice
for report on title. These sites and additions to sites, together with
four others appropriated for under prior acts, involve a total expenditure of approximately $7,850,000. Of the remaining 32 cases on
which reports of site agents have been received, some definite action
will be taken before the end of the calendar year. There are also
32 cases now in process of examination by site agents, action in
which is expected to be had in the near future.
As to the District of Columbia program, the department is awaiting the results of condemnation proceedings on squares 727 and 728
(United States Supreme Court sites), which will be completed
shortly; condemnation of squares 263 and 264 (Department of Agriculture) ; and condemnation of squares 380, 381, and 382 (Archives
Building). The Government acquired title to square 350 (Internal
Revenue Building site) and all parcels comprising additional land in
square 624 (Government Printing Office). Title has been acquired,
by purchase, to the Southern Railway Building (square 256), and
negotiations are under way for acquisition by private purchase of the
remaining small parcels in this square. A large property (the
President Theater) in square 349 has been offered to the Government
at $250,000, a price much below the assessed value, and a contract
entered into for its purchase. The Department of Justice will
shortly be requested to proceed with the condemnation of squares
292, 293, 294, and 295, as a part of the program for acquiring the
entire triangle, and negotiations are under way for other properties
in that area.
War claims
Under the acts of August 25, 1919, March 6, 1920, J a n u a r y 22,
1923, and May 29, 1928, which permitted the filing of claims for
the relief of contractors and subcontractors, and others, for reimbursement of losses alleged to be due to war conditions, 193 claims,,
including special claims, were paid up to July 1, 1928, making a
total payment of $2,650,000, the total amount of appropriations
made by the Congress up to date. Included in the above was the
claim of George A. Clayton, deceased, for the construction of the
SECRETARY OF THE TREASURY
221
post office and courthouse building at Opelika, Ala. The amount of
this claim, as allowed, was $10,361.94, but the balance remaining of
the appropriations made by the Congress amounted to $9,755.48. It
was impossible, therefore, to pay the full amount of this claim, and
there remains due a balance of $606.46 for the appropriation of
which an estimate will be submitted to the Congress.
Two special acts (private No. 271 and private No. 274) were
passed during the .last session of the Congress, on May 29, 1928. A
claim of $7,106.96 has been filed under the first of these acts in
behalf of J. H. B. Wilder, contractor for the construction of the postoffice building at Forsyth, Ga., and is now pending. A claim under
the second act in favor of the Tanksley-Drumright Stone Cut Co.
was not filed until after the close of the fiscal year 1928, and will be
given consideration.
There are pending 58 claims awaiting audit and 1 claim awaiting
court decision. The status of war claims at the close of business
June 30,1928, is shown in the following table:
343 claims filed in original amount to June 30, 1928
$3, 392,040. 53
194 claims paid up to June 30, 1928 (including special claim of
Mahoney Construction Co., and partial payment on George A.
Clayton claim No. 149)
2,650,000.00
Total amount of appropriations to date
2, 650, 000.00
58 claims awaiting audit and submission of evidence (including
claim of J. H. B. Wilder, filed under the special act)
116,467.49
1 claim. No. 251, Delayney, trustee for Benefette, et al
12, 569. 57
91 claims disallowed, and amount disallowed on the Mahoney
Construction Co. claim up to June 30, 1928, as noted in June
30, 1927, report
529, 848. 88
Total amount of claims disallowed, withdrawn, and paid
3,179, 848. 88
Additional amount found due but not paid because of lack of
appropriations
606. 46
Expenditures, liabilities, and unencunribered balances
The total expenditures of the Office of the Supervising Architect
from July 1,1927, to June 30,1928, contract liabilities charged against
appropriations, and unencumbered balances were as follows:
222
REPORT ON THE FINANCES
Expenditures, contract liabilities, and unencumbered balances, fiscal year 1928
Expenditures
S t a t u t o r y roll
Sites a n d a d d i t i o n a l l a n d
C o n s t r u c t i o n of n e w b u i l d i n g s . . .
ExteuvSions to b u i l d i n g s
.•_.
Miscellaneous special i t e m s
R e n t of b u i l d i n g s
V e t e r a n s ' hospitals
R e m o d e l i n g a n d enlarging p u b h c b u i l d i n g s
Relief of contractors, e t c . , for p u b l i c b u i l d i n g s u n d e r
Treasury Department
H o s p i t a l construction, P u b l i c H e a l t h Service
H o s p i t a l facilities, etc., for w a r p a t i e n t s
L a n d s a n d other p r o p e r t y of t h e U n i t e d S t a t e s
R e p a i r s a n d preservation
Mechanical equipment
V a u l t s a n d .safes
Operating supplies
General e x p e n s e s . .
F u r n i t u r e a n d repairs
O p e r a t i n g force..
-A.dditional lock-box e q u i p m e n t
R e n t of t e m p o r a r y q u a r t e r s
O u t s i d e professional services
Total.
1 Includes
2 Includes
3 Includes
«Includes
«Includes
'«Includes
7 Includes
$347, 964. 72
3, 742,478. 09
4,481,441. 27
923, 560. 72
116, 261. 36
C o n t r a c t liar
bilities charged U n e n c u m b e r e d
against a p p r o - balance, J u n e
30, 1928
priations
$1,044,047.25
7, 652, 511. 54
1,040, 595. 93
221,614. 04
$12,035. 28
20,133,200.00
37, 231,864. 76
5,826,866. 32
164, 750. 72
495,186. 24
606. 46
14, 774. 28
9, 755. 48
3, 269. 05
236. 22
138.17
1,024,615.02
554,803. 63
127,989.16
2,856,470. 69
999,828. 91
747, 989. 82
6,621, 578.14
10.00
49, 611. 00
208, 344. 65
113,631.65
73, 559. 85
49, 794. 28
273,107.21
77, 383. 41
163.237. 49
580, 261. 34
15,085. 00
23,334. 32
807. 37
1 21,081. 02
19,158. 63
2 10,824. 40
3 379,844. 61
i 735,240. 93
«82, 260. 07
0 25,847.80
10, 985. 57
22, 702. 03
^ 277, 792. 00
367, 611. 23
23,311,532.34
11. 282, 908. 44
65, 327,841.18
$2,500 reserve, 1928.
$5,000 reserve, 1927; $5,000 reserve, 1928.
$5,000 reserve, 1927; $5,000 reserve, 1928.
$21,849.50 reserve, 1927; $25,000 reserve, 1928.
$5,000 reserve, 1927; $5,000 reserve, 1928.
$10,000 reserve, 1927.
$5,000 reserve, 1928.
The following statement, prepared pursuant to the act approved
June 6, 1900 (31 Stat. 592), shows the public buildings under the
control of the Treasury Department and the aggregate expenditures
to June 30, 1928, in connection therewith:
Aggregate expenditures to June SO, 1928, for buildings under the control of the
Treasury Department, and the unencumbered balance of appropriations
Building
Post office, courthouse, customhouse,
etc
Courthouse _ _
_
Customhouse
Marine hospital.
Post office
Quarantine station
Veterans' hospital
Miscellaneous
Total. _
Construction
Extensions,
alterations,
and special
items
Annual
repairs
Total expenditures,
June 30, 1928
$103, 737,172. 62 $16,616,050. 50 $17, 322, 498. 89 $137, 675, 722. 01
386,189. 01
42, 223. 99
317,907:05
746,320. 05
23,112, 241. 60
3,396, 633. 33
2, 327, 712. 61
28,836, 587. 64
4,326, 299. 44
3, 406, 072. 88
3, 082, 226. 74
10, 814, 599. 08
87, 373, 542. 65
3,971, 904. 22
9, 370, 629. 95
100, 715,976. 72
3, 075,007. 45
2, 293, 297. 61
1,384, 299. 54
6, 752, 604. 60
• 493,355. 47
369, 076. 52
104, 010. 20
966, 442.19
31, 836,384. 33
4, 293, 695. 41
6, 467, 885. 60
41, 597,965. 34
254,340,192. 47
34, 388,954. 46
39, 377, 070. 58
328,106, 217. 51
SECEETAEY OE THE TEEASTTRY
223
Aggregate expenditures to June SO, 1928, for buildings under the control of the
Treasury Department, and the unencumbered balance of appropriations—
Continued
Building
Cost of sites
Post office, courthouse, customhouse,
etc
'Courthouse
Customhouse
Marine hospital
Post office
Quarantine station
Veterans' hospital
Miscellaneous..
$20, 252,821. 07
238,334. 69
3> 783,322. 33
714,238. 97
29,132,096.85
308,837.60
Total
13606—29—FI 1928
160,000. 00
36,000. 00
686,042. 25
11,505:00
$1,377,614. 50
638,320. 24
6,160. 00
754,650. 06
2,824,164. 91
29,888.10
$16, 617,323. 60
2, 795,732.35
183,488. 00
2,083,861. 09
14,431, nt.66
237,1 4.66
3, 284,923. 70
27,007,376.44
1,044,047.25
8,814,-721. 61
63,356,681.80
$151, 500. 00
12, 383, 299. 34
66,812,950.86
-17
Outstanding liabilities chargeable against appropriations Unencumbered
balance of appropriations
Buildings
Sites
DIVISION OF SUPPLY
The first appropriation for the Division of Supply, as such, became
available at the beginning of the fiscal year 1928. F o r five years
prior thereto the division had operated, under the name " Bureau of
Supply," with personnel detailed to it from the several bureaus and
offices of the department under authority of Department Circular
No. 283, dated March 28,1922. On June 30,1927, the existence of the
bureau of supply and the division of printing terminated and their
functions were taken over on July 1 by the Division of Supply.
The Division of Supply, in the office of the Secretary, is the central
procuring or purchasing agency of the Treasury Department, and,
as such, does the purchasing for all local and field activities, with the
exception of those from appropriations for the Bureau of Engraving
and Printing (which are exempted by law), the Coast Guard, and to
some extent the Bureau of the Mint. I t is charged also with certain
duties closely related to purchasing, such as accounting for funds
appropriated or allotted to it; supervision over printing and binding
for the Treasury Department and engraving work by the Bureau
of Engraving and Printing for all departments and establishments,
unless money, bonds, or stamps are involved; control over newspaper
and periodical advertising for the department; routing of all freight,
express, and parcel-post shipments; and warehousing and distribution of stationery and miscellaneous supplies, including blank books
and forms, to Washington and field offices of the Treasury Department. The appropriations to the department for purchases of stationery, for printing and binding, and for postage are under its
administrative control, and it exercises immediate supervision over
the work of the General Supply Committee.
Expenditu/res from various appropriations
The total cost of purchases made by the Division of Supply during
each of the past five fiscal years from specified appropriations from
w^hich allotments were made to the division to cover expenditures
made by it, and also purchases chargeable to appropriations from
which no allotments were made, are shown in the following table:
224
SECRETARY OF T H E TREASURY
225
Expenditures by Division of Supply, fiscal years 1924-1928, hy appropriations
Bureaus and offices, and titles of
appropriations
Chief clerk and superintendent:
Contingent expenses. Treasury Department—
Carpets and repairs
File holders and cases.
_...
Freight, telegrams, etc...
Fuel, etc
Furniture, e t c . . .
Furniture, 1924-25
Gas, etc
Motor vehicles
•_.
Miscellaneous items
Newspaper chppings and books. _.
Rent
Labor-saving machines. Treasury Department.
^
—
operating expensesTreasury Department Annex
Annex Building, Fourteenth and
B streets N W_Darby Building.
Library, Treasury Department
1924
23,167.95
4,730.17
14,345.77
493.83
14,650.00
$494.02
3,979.50
9,886.50
19,663.58
4,422.57
1,991.8^1
20,859.45
7,496.24
13,220.33
483.53
14,649.92
$496.17
4,943.55
10,230.05
24,924.57
4,901.43
Total..
Division of Bookkeeping and Warrants:
Contingent expenses, public moneys
Bureau of Customs: Collecting the revenue from customs
1926
1927
.1928
$498.93
3,996.87
9,856.30
18,396.30
4,480.25
$496.57
4,974.21
9,904.21
18,002.16
7,462.68
18,144.52
6,976.42
12,769.81
985.16
14,650.00
18,392. 51
9,351.86
11,439.41
997.28
12,500.00
1,079.55
23,425.88
10,946.33
934.49
7,.966. 51
36.00
19,169.44
6,104.52
5, 694.85
19,909.58
13,799.36
13,924.13
39,016.44
13,949.21
12,935.35
11,988.56
11,877.40
2,224.25
33,053.86
3,981.04
3,820.51
i,660.{
3,824.36
1,999.75
1,466.56
1,000.00
125,146.53
114,298.72
Total.
Division of Supply:
stationery. Treasury Department
Printing and binding. Treasury Department
Postage, Treasury Department
Materials for bookbinder. Treasury
Department.
General Supply CommitteeTransfer of office material, supplies, and equipment
Salaries, General Supply Committee
Salaries and expenses. General
Supply Committee
1925
0)
133,812.92
120,102.51
342,962.44
368,948.86
(0
247.49
49.84
111,436.68
105,606.55
(0
0)
(0
458,566. 67 446,043.39
2 788,641.70 2 892,136.93
1,000.00
1,000.00
(3)
(3)
41,339.73
77,188.71
115,683.58
430,729. •
3,193.67
«46,117.7
448, 808.83
487,477.3 1,363,881.85 1,453, 885. 52
2,442.41
2,875.39
179,643.84
216,122.10
Pubhc Health Service:
Pay of personnel and maintenance of
hospitals
1, 568,170. 661, 736, 589. 681, 632, 874. 1, 570, 880. 711, 794, 610. 31
Quarantine service
303,170. 67 311, 462. 22 296, 458. 24 311, 630. 66 276, 242. 06
Interstate quarantine service
204. 92
363. 47
474. 99
6, 247. 36
3, 520. 65
Interstate quarantine service, 1925-26..
1,989. 66
7,115. 34
Maintenance of Hygienic Laboratory..
33, 831.94 33,815.11 33,959. 64 33, 689. 88 34,-250.08
Field investigations
12, 369. 70 17, 624. 55 15, 600. 72 20, 901.09
23,851. 61
Preventing the spread of epidemic
diseases
37,495. 77 21, 704. 93 33,845.45
23,470. 63
36,957.08
Preventing the spread of epidemic
diseases, 1925-26
7, 200. 62 25,165.13
Expenses, division of venereal diseases.
4, 423. 69
4, 541.
2, 302. 06
4, 572. 22
i, 373. 97
Control of biologic products
26, 658.
26, 452. 97 22, 671. 28 18, 087. 66 19,815.91
Books
494.
499. 93
493. 24
448. 24
497. 96
studies of rural sanitation
200. 00
130.
40.00
Quarantine station, Boston, Mass
. "08.
3,110. 00
Marine hospital. Savannah, Ga..
4,811.
7,059. 74
7, 641. 33
Marine hospital, Baltimore, Md
..
6,395.
Marine hospital. New Orleans, La
885.26
Survey of salt marsh areas. South
Atlantic and Gulf States
1, 610. 29
1, 083. 94
Total.
1, 983,116. 442,188,128. 86 2, 067, 386.85 2, 000, 813. 562,195, 203. 53
Supervising Architect:
Repairs and preservation of public
buildings....
107,456.18 102,176. 61 101, 089. 89 109, 039. 01 104, 692. 86
Mechanical equipment for public
buildings
95, 259. 00 87,493. 86 96,140. 22 9I, 730. 90 101,009. 61
I Appropriation accounting not done by Division of Supply.
•'Includes receipts from sales of custoniis forms (reimbursed to the appropriation) and certain expenditures for printing and binding from appropriations other than printing and binding.
»Included in appropriation for printing and binding.
*The purchase and accounting for supplies for the Bureau of Customs assumed Apr. 1, 1924.
226
REPORT ON THE FINANCES
Expenditures by Division of Supply, fiscal years, 1924-1928, hy appropriations—
Continued
- Bureaus and offices, and titles of
appropriations
1924
1926
1926
1927
1928
Supervising Architect—Continued.
Vaults and safes for public buildings.._ $53, 925.18 $69, 971. 69 $70,980. 62 $49,196.71 $100,310.02
27, 625. 56
33, 705.64
General expenses of public buildings.._
12, 981. 63
13, 567. 69
7,128.17
Furniture and repairs of same for public buildings
.
441,397. 27 656, 379. 79 654,956. 75 634, 303.43 619,069.99
Operating supplies for public buildings. 1, 219,901. 83 1, 212, 801.10 1,161,803.46 1,100, 269. 29 1,097,299.34
1, 925, 066. 63 2,031,804. 68 1,998, 537. 62 1,912,164.90 2. 05fi. 087. 4fi
Total . .
Bureau of Internal Revenue: Collecting
the internal revenue
Bureau of Prohibition: Enforcement of
narcotic and national prohibition acts ^..
311, 279. 34
369, 278. 26
194, 899. 85
194, 086.16
236,890. 74
124, 974. 85
174,135. 48
133, 092. 76
212,828.371
225, 267.08
Public debt service:
Expenses of loans (act Sept. 24, 1917,
as amended and extended)
•.
Salaries and expenses incident to foreign loans and transportation acts
Public debt service
." .
20, 825.18
3, 940. 36
7, 214.13
3, 632. 68
27,182.47
Total
T r e a s u r e r of t h e U n i t e d States: R e p a i r s to
canceling a n d c u t t i n g m a c h i n e s
3.60
52, 073. 71
45, 699. 65
33,621.26
36, 506. 44
23,066.11
72, 902. 39
49, 640. 01
40, 735. 39
40,139.12
50, 248. 58
141.77
67.95
T o t a l a p p r o p r i a t i o n s a n d allotments
.
. .
5, 057, 085.10 5, 577, 763. 24 5, 276,985.12 6,122,899.48 6, 549,879.12
P u r c h a s e s from a p p r o p r i a t i o n s from w h i c h
68, 980. 00 132,147. 66 . 41, 269. 26 107,144. 60
88, 953. 96
no a l l o t m e n t s were m a d e ^
G r a n d total
.
...
5,146, 039.06 6, 646, 743. 24 5,409,132. 78 6,164,168.74 6, 657,023. 62
6 Under supervision of Commissioner of Internal Revenue prior to fiscal year 1927.
8 Appropriation accounting for these purchases was done by bureaus and offices for which the purchases
were made.
The foregoing expenditures involved the examination and audit
for payment through the disbursing clerk of the Treasury Department of 94,402 vouchers in 1928 and 87,982 in 1927, an increase of
6,420.
The possible cash discounts for prompt payment of bills aggregated $19,607.50 and $12,377.65 in 1928 and 1927, respectively, of
which only $319.35 in 1928 and $234.71 in 1927 were lost, due generally to failure of vouchers requiring certifications of field offices
to reach the division for approval for payment within the discouiit
periods. The increase in cash discounts saved to the department
during 1928, over the amount saved in 1927, was $7,145.21, while the
total amount lost was less than 2 per cent of the possible total.
Formal purchase orders to the number of 40,700 were placed by
the division during the fiscal year 1928, compared with 38,886 in the
preceding fiscal year. This is exclusive of 4,624 orders for, or authorizations to purchase, ice, wood, coal, fuel oil, subsistence supplies,
etc. The 40,700 orders were placed principally with annual or other
term contractors, but purchases in the open market required the
preparation and circulation among approximately 100,000 prospective bidders of 7,408 sets of specifications and invitations for proposals in 1928, against 7,025 in 1927, or an increase of 383.
227
SECRETARY OF THE TREASURY
The division has continued its policy of routing freight and express shipments for the several bureaus, offices, and services of the
department as far as its limited personnel permits, but experience
has shown that considerable losses to the Government are possible
unless an efficient traffic organization is provided to route carefully
every shipment made.
Purchases and issues of stationery supplies
Of the $470,000 appropriated to the department for the purchase
of stationery supplies during the fiscal year 1928, $429,877.14 was
expended and $40,122.86 reverted to the Treasury. I n addition there
was expended $16,166.25 from other appropriations for this class
of supplies, making a total expenditure of $446,043.39, compared
with $458,556.57 during the fiscal year 1927, or a decrease of
$12,513.18. This decrease in expenditures resulted in spite of purchases from the stationery appropriation, by direction of the Comptroller General, of many items not previously chargeable to it.
Rubber stamps, costing approximately $7,000, afford a conspicuous
example of such items.
The appropriations, reimbursements, and expenditures for articles of stationery for the past five years are summarized in the
following table:
Appropriations, reimbursements, aiid expenditures for stationery, fiscal years
1924-1928
1924
Appropriation _
Reimbursements
Available credits
Total expenditures
Balance
1925
1926
1927
1928
$349,815.00 $350,000. 00 $437,760.00 $480,000. 00 $470,000.00
16,110. 04
16,166. 26
. . . 122,719.08 83,332.85 67,440.62
472, 534. 08 433,332. 85 605,200. 62 495,110.04
441,764. 69 426, 286. 29 436,405.17 458,556. 57
30, 769.39
7,047. 66
68,796.36
36,663.47
486,166. 26
446,043.39
40,122.86
Due to the maintenance by the department of active warehouse
stocks of stationery supplies, which are replenished from time to
time as needed, the value of actual issues of such supplies varies
from figures of expenditures, the difference being reflected in a
decrease or an increase in the stock on hand. For instance, during
the last fiscal year the value of supplies issued aggregated $468,534.43,
compared with expenditures of only $446,043.39, necessitating a further decrease of $22,491.04 in the value of stock on hand. The issues
for 1928 were $4,867.76 in excess of those for the preceding fiscal year.
At the organization of the Division of Supply in 1922 and the
consolidation of the department's stationery stores, there was a large
excess of these supplies, but there has been an average annual decrease
228
REPORT ON THE FINANCES
of nearly $42,000 in inventory, until the stock is now far below the
amount required for prompt and efficient service in filling requisitions. Normal consumption in 1929 will, as a matter of fact, practically wipe out the active stock on hand,^ and it will eventually become
necessary to ask for funds to restore a reasonable working stock of
supplies, in order that the department may not be embarrassed by
being deprived of supplies essentially necessary to carry on its work.
The value of stationery supplies issued to each bureau, office, and
service of the department during each of the last five fiscal years are
shown in the following table:
Issues of stationery supplies to bureaus, offices, and services of the Treasury
Department, fiscal years, 1924-1928
B u r e a u , office, or service
1924
1925
1926
1927
$1, 576. 06
941. 49
476. 21
6,192. 02
679. 55
2, 783.81
4, 235. 52
1,057. 99
99.93
7, 961.47
334. 23
2,048. 75
67,686. 75
$1, 630. 22
474. 80
5, 209. 33
481. 67
7, 863. 68
667. 36
2,914. 29
936. 56
1,364. 34
117. 29
7,821. 33
50.33
2, 031. 67
67,099. 34
$1,617. 03
675. 52
3,452. 37
514. 77
8, 227.46
543. 20
2,358. 03
707. 76
1,629. 29
643. 24
8,541. 22
36.56
1, 732. 77
63,138. 35
675.00
119.69
2,610. 35
5,000. 57
5.86
920. 97
202,179. 89
943. 22
2, 065. 72
2, 004. 71
128. 47
47, 911. 64
23, 545. 90
551.19
155. 36
2,282.42
3,647. 07
9.58
919. 66
233, 878.-04
1, 284. 48
1, 414. 68
1, 689. 97
177. 79
27, 738. 50
23, 508.17
723. 51
$1,042. 38
626. 39
136. 50
1,096.25
6,924. 79
368.28
6,886. 96
1,020. 76
1, 757. 38
1,027.06
5,429.24
51.41
1, 627. 69
72,030.83
806.85
671. 29
2,422.03
4, 209. 63
15.38
1, 017. 80
203, 234.04
962. 96
1, 737.42
1, 686.13
3,979.86
4, 249. 95
14.15
1,023. 77
195,135.01
1,134. 70
1, 315.10
1, 666. 92
16, 327. 47
16,443. 31
16, 344.10
50,420. 09
20, 581. 34
2, 564. 77
22,120. 62
845. 54
4, 002. 54
8, 304. 21
24, 520. 08
71.40
588. 82
4, 755. 34
10, 396. 03
25,172. 03
50.69
823. 51
7,425. 29
8, 791. 39
26, 909. 04
5.00
929. 27
6, 338. 75
9, 678.39
25, 640.16
12.84
20, 000.00
20, 335. 68
492, 032. 09
122, 719. 08
437, 256. 01
83,332.85
453, 224. 24
67, 440. 52
463, 666. 67
15,110. 04
468, 634.43
16,166. 25
369, 313. 01
353, 923.16
385, 783. 72
448, 556. 63
452,368.18
Secretary, U n d e r s e c r e t a r y , a n d Assistant
Secretaries
— $1,805.31
827.08
A p p o i n t m e n t s Division
B o a r d of T a x Appeals
Division of Bookkeeping a n d W a r r a n t s —
6,695. 07
B u r e a u of E n g r a v i n g a n d P r i n t i n g
1.352. 60
B u r e a u of t h e B u d g e t .
1,415.52
Division of S u p p l y
4, 756. 39
General S u p p l y C o m m i t t e e . . . .
1, 201. 68
Chief clerk a n d s u p e r i n t e n d e n t
98.68
Division of Accounts a n d Deposits
13,879.61
Comptroller ofthe Currency
618. 62
C o n t i n g e n t expenses, n a t i o n a l c u r r e n c y
2,076.81
C u s t o d i a n s of p u b l i c buildings
77,574. 73
C u s t o m s Service
pn Collector, San J u a n , P . R
D i s b u r s i n g clerk
903. 68
Division of Deposits
147. 63
Federal F a r m L o a n B o a r d
3,125. 70
Federal Reserve B o a r d
4,634.67
Government actuary
21.15
Insolvent n a t i o n a l - b a n k fund
,.
446.43
Internal Revenue Bureau
206, 677. 23
Mint Bureau
2, 027. 76
National bank examiners....
4, 659.48
N a t i o n a l b a n k r e d e m p t i o n agency
2, 823.34
P r i n t i n g di vision._
233. 27
Prohibiton Bureau
71, 734. 94
P u b l i c D e b t Service
35, 756.47
Expenses of loans
P u b l i c H e a l t h Service.__
17,453.17
Second P a n A m e r i c a n Conference
49. 34
Secret Service
_
1, 067. 73
Supervising Architect
3, 724. 91
T r e a s u r e r of t h e U n i t e d States
10, 250.82
Coast G u a r d
15, 353. 69
W a r F i n a n c e Corporation
44.90
E x p e n d e d for t r a n s p o r t a t i o n ( p a r t l y estimated)
_._
Total
R e i m b u r s e d from other a p p r o p r i a t i o n s . .
T o t a l charged to s t a t i o n e r y a p p r o priation
(1)
48, 058. 81
25, 583.17
1928
0)
1 Included in Division of S u p p l y .
Shipments and inventories
Shipments of stationery and miscellaneous supplies from the warehouse of the Division of Supply in Washington to field offices
totaled 17,933 packages, boxes, etc., weighing 662 tons, in 1928, com-
229
SECRETARY OF THE TREASURY
pared with 14,849 packages, etc., weighing 629 tons, in 1927. The
shipments in 1928 consisted of 5,408 franked parcels, weighing 16,224
pounds; 2,046 parcel-post packages, weighing 24,657 pounds, and
costing $1,326.89 in postage;. and 10,479 express and freight boxes,
crates, etc., weighing 1,284,289 pounds (of which only 5,681 pounds
were shipped by express). The freight and express shipments required the use of 3,393 Government bill^ of lading in 1928, against
2,911 in 1927. There were consequently increases in 1928 of 3,084
packages, etc., and 66,081 pounds (33 tons) in weight.
Shipments by mail of blank books and forms in 1928 aggregated
11,477 sacks, containing 299,310 packages, weighing 895,395 pounds,
or nearly 448 tons; compared with similar shipments in 1927 of
7,725 sacks, containing 254,750 packages, weighing 545,000 pounds,
or 272 tons. This increase was due to the additix)n to these shipments
of Prohibition Service forms, which were not handled by the Division
of Supply prior to the last fiscal year.
The total of all warehouse shipments to field offices during the
year was 1,110 tons, compared with 901 tons during 1927, or nearly
3 ^ tons for ^^ch working day. The increase over 1927 was 209
tons, or more than 23 per cent.
A summary of changes in the value of stocks of stationery supplies
for the past five fiscal years is shown in the following table:
Changes in value of stocks of stationery supplies, fiscal years 1924-1928
1924
1925
1926
1927
1928
$215, 442. 22 $156, 290. 37 $162, 070. 26 $167,399. 28 $162, 367.96
On hand at beginning of fiscal year
441, 764. 69 426,285. 29 436,405.17 468,666.67 446,043. 39
Purchased
during year
Hi
•^ * TotaL.
657, 206.91 581, 675. 66 598,475.43 616,955. 85 608, 411. 35
Add value of stationery articles received
from various divisions as surplus for
17,983. 72
9,851.13
17,386.40
reissue.
y.
Less value of stationery articles transferred
to General Supply Committee as siirplus
Value available for issue
ssued during the vear...
On hand at end of year
Inventory value June 30 L_.
Inventory value July 1 1 . . .
.
657, 206. 91 699, 659. 38 608, 326. 66 633,341.25
4,887.93
3, 519.08
608, 411. 35
880. 00
652, 318. 98 699, 559. 38 604,807.48 633,341. 25
492, 032. 09 437, 256. 01 453, 224. 24 463, 666. 67
607, 531.36
468, 534.43
160, 286.89 162, 303.37 161, 583. 24 169, 674.68
138,996.92
160, 286.89 162,303. 37 151, 383. 24 169, 674. 68
165, 290. 37 162, 070. 26 157,399. 28 162, 367.96
138,996. 92
132, 742.06
1 Inventory values are readjusted July 1 of each year in accordance with new prices on contracts effective
in that date, and invoices are based on replacement costs at dates of shipment.
The July 1, 1928, inventory revealed a stock of 36,819,478 blank
books and forms, valued at $141,970, compared with 32,239,145,
valued at $121,665, a year ago. The 1928 inventory included, however, 6,705,700 forms, valued at $36,170, for the Prohibition Service,
which were carried for the first time. Thus there was a decrease in
inventory of other forms of 2,125,367, valued at $15,865. Internal
230
REPORT ON THE FINANCES
Revenue Service forms, the stock of which is held by the Bureau of
Internal Revenue, are excluded from these figures.
Printing and binding
The appropriation for printing and binding for the fiscal year
1928 was $820,000, of which $785,912.16 was expended and $34,087.84
reverted to the Treasury. To these expenditures should be added
$44,085.18 reimbursed from sales of customs forms and $62,139,59
expended from other appropriations. Thus there were total expenditures of $892,136.93 for all classes of printing and binding handled
through the Division of Supply.
The increase in 1928 of $103,495.23 in the total expenditures for
printing and binding was due to several causes, the more important
being an increase of $32,155.07 in reimbursable items, extraordinary
expenditures of about $26,000 resulting from the passage of the revenue act of 1928, and the omission of normal expenditures of about
$44,000 in 1927 (caused by a reduction in stocks of blank forms of
more than $14,000 and approximately $30,000 expended in 1926 for
1927 requirements).
Expenditures for printing and binding, by bureaus, offices, and
services for each of the last five fiscal years are shown in the following
table:
Appropriations, expenditures, and reimbursements for printing and binding,
fiscal years 1924-1928'
SUMMARY
1924
Appropriation, printing and binding,
Treasury Department..
Reimbursements from sales of customs forms
Expended from other appropriations..
Total available
Total expenditures
Balance --
_
.
$930,000.00
1925
1926
1927
1928
$850,000.00 2 $834,760.00 2 $836,000.00 $820,000.00
39,064.56
90,998.49
39,169. 52
31,873.03
42, 616.61
36,129.43
43, 673.86
30,496.85
44,085.18
62,139. 69
1,060,053.06
969,207.21
921, 032. 66
912,817.43
913, 496.94
884, 276.96
909,069. 70
788,641.70
926, 224. 77
892,136.93
8,216.12
29,219.99
120,428.00
34,087.84
90,846.84
E X P E N D I T U R E S FROM APPROPRIATION FOR P R I N T I N G AND BINDING, BY BUREAUS, OFFICES, AND DIVISIONS
Secretary, Undersecretary, and Assistant Secretaries-_
$8,863.32
$6,938. 77 $10,084.21 $12,964. 76 $13, 737. 30
944. 22
1,457.94
1, 293.68
674. 29
1, 210. 78
Appointments Division
18, 919. 63
11, 641.61
10,172. 77
17,144.45
8,967.94
Bookkeeping and Warrants Division. 7,185.81
6, 723.40
6, 741.10
6,454.77
Bureau of Engraving and Printing
7, 500.17
69, 277.14
71,315. 06
Bureau of Prohibition 3
7, 728.87
30,141. 79
2, 643.15
4, 618.44
Division of Supply
3,998.46
29,886.11
36,006. 28
18, 313.45
23,424.38
27,147.60
General Supply Committee
25,827.11
Bureau ofthe Budget
2, 083.00
Chief clerk and superintendent
1,641. 78
1, 623. 94
1,382. 67
1,331.46
» Figures subject to slight variations, due to necessary delays in receiving bills from the Public Printer
for certain items until pending work is completed after the close of each fiscal year.
2 Exclusive of $82,500, available for 1926-27 (44 Stat. 868), which was not expended.
8 Included under Bure'^u of Internal Revenue prior to 1927.
231
SECRETARY OF T H E TREASURY
Appropriations, expenditures, and reimbursements for printvng and bvndimg,
fiscal years 1924-1928—Contmued
E X P E N D I T U R E S F R O M A P P R O P R I A T I O N FOR P R I N T I N G AND B I N D I N G , BY BU
REAUS, O F F I C E S , AND DIVISIONS—Continued
1925
Commissioner of Accounts and Deposits
Committee on enrollment and disbarment
Comptroller of the Currency
Custodians of public buildings
Customs:
Bureau
Service
Special agency
Disbursing'clerk.-.a.'.
Division of Deposits.
Federal Farm Loan Bureau.
Government actuary
Internal Revenue:
Bureau
Prohibition enforcement
Service
Loans and Currency Division ^
Mint:
Bureau
_
Service
National-bank depositaries
Printing division
..—-'.
Pubhc Debt Service ^
Public Health:
Bureau
Service
Register of the Treasury *
Secret Service
Supervising Architect._
Treasurer ofthe United States
Coast Guard:
Bureau
Service
Materials for bookbinder
Miscellaneous
Total..
1926
1927
1928
$119.19
$183. 34
$61.31
$123.39
$123.55
156.05
18,778.13
1,603.62
30.61
23, 618. 36
2,306.81
49.16
24,356. 31
1, 269. 27
28, 922. 67
1,805.13
27,962.32
1,002.08
64,015. 73
5,486. 27
36, 698. 33
830.16
804.17
6L69
3,132.43
1,775.89
5,481.10
42, 563.90
839.81
712. 29
44.48
6, 631. 28
34,089.02
1,389.86
630.36
29.96
4,066. 68
36, 968. 64
434. 69
649.69
1,719.19
1, 670.86
33,830.92
62,978.04
386,836.61
2, 232.90
64,794. 81
54,241. 68
341, 576. 22
2,436.43
66,991. 04
86,777.77
179,002. 79
2,640. 68
211,310.33
2.814.17
3,416.34
2,169.41
2, 817. 27
202.92
22,127.79'
3.406.92
2,684.86
.3,273.00
516.39
20,361.39
3,337.26
2, 516.82
2,120.98
180. 22
24,036. 20
3.662.18
2,940.12
2, 661.54
20,000.68
88,387.01
2,432.16
679. 48
406.61
2,371.11
13,020.72
76.854. 90
4,369.27
713.08
296. 33
2,766.24
11,167.76
103,650.62
4,182.11
88,129,44
8,107.57
327.96
6,876.49
11,908.81
382.91
3,041.80
12,966.83
24, 230.46
11,407. 61
19, 610. 64
14,677. 24
18,477.33
23,824.35
22,378.10
34,813.40
61,225.74
11,985.41
22,160.93
256.48
46,374.47
62,902. 52
53,847.64
839,164. 26
841,794.88
805,630. 01
714, 572.00
785,912.16
622. 66
46.44
5,043. 67
1,426. 23
468,006. 66
2, 604.41
6,787.12
2,824.33
326.92
.26,366.97
93,099. 49
628.06
724.31
1,868. 68
10,675.71
(fi)
1,662. 28
(fi)
(fi)
R E I M B U R S E D AND E X P E N D E D F R O M O T H E R A P P R O P R I A T I O N S
Agricultural C r e d i t C o r p o r a t i o n
B u r e a u of E n g r a v i n g a n d P r i n t i n g
Collecting t h e r e v e n u e from c u s t o m s . .
C o n t i n g e n t expenses, n a t i o n a l currency
C u s t o m s Service b l a n k forms 6
E x p e n s e s of loans (act Sept. 24, 1917,
as a m e n d e d a n d extended)
F e d e r a l farm loan b a n k s . .
F e d e r a l F a r m L o a n B u r e a u , miscellaneous expenses
Insolvent national bank f u n d . . .
Internal Revenue Bureau
_
N a t i o n a l b a n k examiners-_ _
.. ..
National Bank Redemption Agency..
N a t i o n a l Sesquicentennial E x h i b i t i o n P u b l i c D e b t Service
P u b l i c H e a l t h Service
W o r l d W a r Foreign D e b t C o m m i s sion
^_.;--^--.-._
TotaL-
..-
$898.47
$724.21
$20. 65
2,803. 68
$340.05
$1, 682.99
17.66
658.49
39,054. 66
869.44
39,159. 62
749.14
42,616.51
1,254. 59
43,573.85
3, 562.08
44,085.18
138. 64
252. 68
671. 59
1, 551.83
2, 695.46
7,729.73
12,190.48
3,994.06
9,469. 58
9,816. 99
68,349.09
60.00
6,828. 9 1 .
687.32
24, 249. 84
3,734. 37
2, 247.05
2, 737.36
3,156.02
6,440.16
2, 393.18
12,404.44
11,202. 82
1,629. 61
10,337.13
2, 620.42
12,182. 61
11, 630.46
20.00
39.00
3, 359.01
155. 30
157.97
'666.08
3,614.06
130,052. 95
71,032.55
78,746.94
74,069.70
106,183.06
• Public Debt Service includes Register of the Treasury for 1927 and 1928, and the greater part of Loaiis
and Currency Division printing for all years.
»Included in Division of Supply.
« Reimbursed to printing and binding appropriation.
232
REPORT ON T H E FINANCES
Postage
The expenditures for postage for the fiscal year 1928 to prepay
matter addressed to Postal Union countries and for postage for the
Treasury Department were as follows: For postage stamps for
department use, $819.90; for transmission of matter addressed to
Postal Union countries through the Bureau of International Exchanges, $147.55; for publications mailed by the Superintendent of
Documents for the department, $32.55; a total of $1,000, corresponding with the exact amount of the appropriation for the purposes
described. '
Depa/rtment advertisvng
Authorizations to publish advertisements were issued to 3,027
newspapers and periodicals in the fiscal year 1928, compared with
2,543 in 1927, an increase of 484, while expenditures thus authorized
increased from $23,062.39 in 1927 to $25,884.62 in 1928, an increase
of $2,822.23. Careful auditing of vouchers for the foregoing expenditures prior to payment resulted in disapprovals of $887.76 in
charges.
Engraving' w\ork
A total of 48,411,232 engraved forms were approved by this office
for execution by the Bureau of Engraving and Printing for the
several departments and establishments of the Government during
the fiscal year 1928, compared with 53,279,070 in the preceding year.
The following table gives the quantity of each class of forms constituting these totals:
1927
Class
Checks
—
Drafts
Warrants
Commissions
Certificates
Transportation requests
Liquor permits..-.,
- .
__
......
Total
1928
33,722,685
31,000
244,400
64,127
3,357,283
1,477,475
14,392,100
31,925,160
3,000
250,400
62,650
3,621,697
766,426
11,881,900
63,279,070
48,411,232
General Supply Committee
An increase of $1,328,875.99 is shown in purchases made under
General Supply Committee contracts during the fiscal year 1928
over those for 1927. Purchases as .reported to the committee, and
233
SECRETARY OF THE TREASURY
which aggregate $8,835,799.40, represent increased consumption of
practically all classes of commodities, as there was no general
increase in cost.
, There was an increase of $10,614.58 in the amount derived from
the disposition of surplus property. This increase occurred principally in the transfers to other Government activities, which amounted
to $44,267.72. There was also realized the sum of $143,881.53 from
public and contract sales, making a total of $188,149.25 deposited in
the Treasury from this source.
These transactions for the fiscal years 1926, 1927, and 1928 are
summarized in the following table:
Summary of transactions of the Oeneral Supply Committee for the fiscal years
1926, 1927, and 1928
1926
1927
1928
-
1928 compared with
1927—
Increase
(+)or
decrease
(-)
Purchases from General Supply Committee
contractors..
$6, 726,600.35 $7,606,923.41 $8,835,799. 40 -F$l, 328,875.99
Receipts from disposition of surplus property:
Auction sales
.
Contract sales.
Transfers to Government activities
Total
Grand total
83, 310. 32
130,929.07
48,450.84
66,258.13
79,190.92
33,086. 62
96,739. 80
47,141. 73
44,267. 72
4-31,481.67
-32,049.19
+11,182,10
262,690.23
177,634. 67
188,149. 26
+10,614.68
6,988,290.68
7,684,458.08
9,023,948.66
+1,339, 490.67
234
REPORT ON THE FINANCES
The activities of the General Supply Committee are summarized
in the following tables:
Value of purchases reported by executive depa/rtments under contracts negotiated
hy the Secretary of the Treasury through the General Supply Committee, fiscal
years 1919-1928, hy classes
Class N o . i
l-_
2
34
5
6__
78.
9
1011...
12.13-14-_
15 - 16-1718
19
20
:::::.::::.
Total.
Class N o . i
1
2. . . .
3
4
6
6
.
7
8...
910-11-12
13--.
14- —
15.1617
18.
19
20.Total
1919
1920
1921
1922
$2,103, 974. 31
138, 763. 59
78, 288. 54
102,438. 75
54, 671. 79
174, 502. 43
31,253.09
100, 930. 01
1,429,884.65
171, 593. 89
188, 363. 21
121, 814. 71
5, 262. 73
3, 234. 22
2, 630, 664. 35
3,121. 64
N o purchases
1, 088, 558. 88
.509, 022. 58
1, 485,154. 81
$1, 641,112. 03
97, 032. 92
262,145. 21
163, 939. 37
63, 631.37
158.241.44
142;-954. 84
116,397.28
999, 664. 35
458, 324. 05
207, 816. 93
161,280.90
21, 269. 55
38, 297. 73
1, 326, 218.87
3, 282. 69
7, 579. 38
475,466. 85
486, 719. 30
795, 689. 76
$2,149,091. 04
181, 574. 90
206,681.43
96, 875. 4S
83, 308. 28
183. 775. 30
48; 126. 03
149, 400.10
809, 858. 98
407, 640. 9S
128,896. 55
148,757. 20
20, 692. 25
45, 583. 09
1,314,772.50
4,444.08
N o t advertised
223, 516. 45
. 486, 263. 77
634,976. 99
$1,371,881. 92
87,847. 50
190, 714. 63
179, 357. 34
64, 064. 59
112,954. 79
124, 815. 24
204, 822. 37
615, 965. 65
345,089. 87
99,050. 86
237, 055.15
11, 289. 56
32,451.41
1,167, 779.99
1. 504. 57
50,473.15
189,413. 01
464, 000.10
541,393.94
$1,395, 355.96
88, 299. 77
187, 917.10
111, 762. 45
98,682. 99
191, 409. 05
183,059. 86
192, 563.04
724,315.31
382, 231. 21
104, 535. 44
240, 303.40
7,003.15
22,444. 69
858, 537.47
3, 018. 71
76, 772. 58
382,308.85
487, 269.89
486,180.97
10,321,438.18
7, 627, 064.82
7, 324,145.40
6, 091, 925. 54
6, 223,961. 89
1924
1925
1926
1927
1923
1928
$1,419,197. 94
98, 555. 86
233,839. 35
89, 481.42
80, 007. 80
203,468. 87
179, 341.14
190, 733. 65
669, 787. 33
408,683.87
108, 753. 32
243,486.19
3. 719. 91
14, 730. 42
823, 926. 76
1, 510. 05
96, 633. 21
662, 764. 81
512, 363. 95
457, 633. 39
$869, 003. 38
113,113.63
245,870. 79
105, 523. 69
111, 470. 86
194, 093. 22
230, 667. 23
159, 860. 70
859, 060. 67
445,897. 01
121, 599. 64
259, 412. 90
3, 863. 47
16, 784. 63
805, 073. 74
1,546.47
151, 972. 75
969, 308.68
488, 564. 46
492, 507. 67
$860, 650. 96
134, 354. 67
314, 642.71
106, 719.49
118, 689. 42
185. 063. 50
233,224.35
233, 751.49
764, 243. 55
575,135.43
124., 608. 39
254,731. 02
4, 312. 4.2
20, 649. 20
718, 717. 03
1, 513. 03
485, 911. 78
665, 294. 70
463, 593. 34
459, 893. 87
$1,061,239.13
159,'282.15
227, 621. 29
82,147. 46
82, 866. 60
245, 273. 92
319, 628. 68
258,115. 25
985, 528. 50
518, 680. 39
119, 322. 63
324, 734. 73
3, 946. 56
17,198. 46
742, 568. 22
1, 698. 92
485, 966. 53
930, 583. 00
462, 719. 56
477,801.43
$869,388.99
245,242.94
260, 920.31
90,996.39
87,365.32
297,926.12
349,708. 43
396,046.01
953,572.00
733,671.30
139,800.50
287, 500.93
3,144.17
25, 270.63
740,061.64
972.47
1,041,051.47
1,158,713.99
639,039.86
615,416.93
6,498, 619. 23
6, 645,195. 64
6, 725, 600. 35
7, 506, 923. 41
8,835,799.40
I Class No.—
1. stationery, paper and paper articles, and drafting supplies.
2. Hardware, metals, brief cases, hand bags, and leather.
3. Dry goods, clothing, boots and shoes, flags, wearing apparel, window shades, and cordage.
4. Drugs and medicines, and chemicals.
5. Laboratory apparatus, and hospital appliances and surgical instruments.
6. Electrical, engineering, and plumbing supplies.
7. Lumber, millwork, excelsior, sawdust, packing boxes, building materials, slag, stone, and
asphalt, oil, and tar for road building.
8. Brushes, glass, lubricants, fuel oils, paints, and painters' supplies.
9. Furniture and floor coverings.
10. Groceries and provisions, cleaner, polish, floor wax, floor-polishing compound, scouring compound, soap and soap dispensers, meat, fish, lard, oleomargarine, and household supplies.
11. Forage, flour, and seed.
12. Photographic supplies, meteorological instruments, apparatus, and towers, and meat-inspection
supplies.
13. Engraving, printing, and lithographic supplies (excluding supplies for the Government Printing
Office and the Bureau of Engraving and Printing).
14. Ice.
15. Incandescent electric lamps.
16. In'candescent gas-lamp supplies.
17. Automobile accessories, tires, and tubes.
.18. Computing, addressing, dictating, duplicating, folding, sealing, and typewriting machines;
labor-saving devices; typewriter exchange allowances, repair parts, and equipment.
19. Electric service.
20. Telephone service.
NOTE.—Total purchases, ah classes, for the fiscal year 1913 were $2,728,767.64; 1914, $2,382,203.62; 1915»
$2,567,497.54; 1916, $2,714,883.17; 1917, $3,734,923.85; and 1918, $10,180,021.31.
235
SECRETARY OP THE TREASURY
Receipts from surplus and salvaged materials disposed of by General Supply
Committee, fiscal years 1921-1928
Fiscal y e a r
1921
11922
1923.-1...
1924
1925
1926
. .
1927
1928 ---
'.
Auction
sales
Contract
sales 1
Transfers
$20,186.32
79,695. 35
114,492. 74
179, 613.00
63,112. 81
83,310. 32
65, 258.13
96,739.80
$3, 230. 45
138,129. 25
130, 390.40
165,'972. 77
130,929.07
79,190. 92
47,141. 73
$989, 234. 25 $1, 009, 420. 67
685,097.35
767, 923.15
324,376. 77
576,998. 76
150,002. 96
460,006. 36
307,114.19
78,028. 61
48,450. 84
262, 690. 23
33, 085. 62
177,534. 67
44, 267. 72
188,149. 25
Total
1 Includes estimated amounts of $76,000 in 1923 and 1924 and $80,000 in 1926, and actual amounts of
$50,633.58 in 1926, $29,704.41 in 1927, and $23,029.36 in 1928, received from the sale of waste paper from the
various departments, the receipts for which do not pass through the General Supply Committee but are
paid direct to the selling services and deposited in the Treasury by them.
Number of specifications mailed hy the Oeneral Supply Committee, bids received,
contracts entered into, items on which aivards and no awards were made, and
samples received and retaAned, fiscal year 1928
Sets of
specifications
mailed
Class N o . '
1
2
3...
4 ...
6
6
7
8
9
10.
11 .
12
13
14
15
16
_
17
18
19...
20
.
.
.
.
-
Total
8,100
912
7,800
570
468
684
346
2, 300
587
9,000
360
316
126
18
55
11
714
226
32, 593
^ See titles of classes on preceding page.
Contracts
B i d s received
Samples
received
Number
314
105
183
67
69
74
43
90
68
541
30
46
13
3
6
1
79
48
1
1
1,782
4,739
843
1, 572
104
1,040
591
114
593
424
3,505
87
125
62
394
74
14,267
177
58
128
42
46
63
29
51
40
302
36
41
9
2
6
1
32
41
1
1
1,096
Award
items
3,246
2,441
1,586
1,096
1,106
1,354
1,009
666
1,469
891
304
1,730
58
40
115
67
764
1,396
39
121
19,498
Samples
retained
No award
items
814
293
. 340
37
317
187
26
98
281
538
64
71
45
114
159
108
48
137
155
109
8*4
109
107
42
212
16
69
18
8
40
23
3,198
1,471
236
REPORT ON THE FINANCES
Statement of surplus property received and issued hy the General Supply Committee, by departments and establishments, fiscal year 1.928
Departments and establishments
Agriculture Department
Alien Property Custodian..
American Battle Monuments Commission
Botanic Gardens
Board of Mediation
Columbia Institution for Deaf
Commerce Department
District of Columbia
•
Federal Board for Vocational Education
Federal Trade Commission...
General Accounting Oflice.General and Special Claims Commission
Government Printing Office
House of Representatives
Interior Department
Interstate Commerce Commission
Justice Department
Labor Department
Library of Congress
National Advisory Board for Aeronautics..
National Training School for Boys
Navy Department
:
National Guard of the District of Columbia
Panama Canal
Pan American Union.
Post Office Department
Pubhc Buildings and Parks of National Capital..
Reclaimed salvage
Smithsonian Institution
—
state Department
Treasury Department
U. S. Bureau of Efficiency..
U. S. Civil Service Commission
—
U. S. Railroad Administration
t j . S. Shipping Board
U. S. Grain Corporation.
U. S. Employees Compensation Commission
U. S. Tariff Commission
—
U, S. Veterans' Bureau
War Department
White House
Total
Receipts
(invoice
price)
$373.00
L70
Issues
Costi
Charge«
$7, 744. (
$6, 520.82
6.97
30.00
40.50
35.00
3, 607. 28
4,171. 22
.52
195. 27
8.62
4.72
30.00
38.50
35.00
3,149. 74
3,845. 82
.62
151.17
8.52
600. 98
2, 342. 50
1, 201. 72
1, 732. 69
707. 92
72.57
148. 85
6L18
166. 33
506.14
107. 00
809.40
. 110.50
9, 914. 53
715. 72
384. 82
1, 768. 40
1,135. 96
1, 338. 61
620. 52
68.76
146. 01
53.68
166. 33
443.14
107. 00
809. 40
82.87
9, 867. 58
715. 72
132. 50
4, 208. 20
6, 852.15
16.13
495.99
117. 85
4,139. 65
6, 040.10
16.38
494. 74
47,024. 27
3,913. 89
2, 027. 30
106. 37
82.62
20, 232. 09
87, 336. 60
70.00
322. 06
976.40
662. 72
28.60
70.00
266. 82
976. 27
543. 78
27.00
275,204.72
48,709.32
44, 267. 72
8, 606.90
107.16
6,172. 79
8, 288. 87
809. 00
9, 226. 53
60.00
10, 350. 00
""'sso.'oo'
.10
2,497. 94
292. 55
260. 80
67, 383. 34
1 Original cost of surplus property as shown by transfer invoices.
2 Sales of surplus property to the departments.
Recapitulation of surplus property, stores account of Oeneral Supply Committee,
July 1, 1927, to June Si
Balance of stores as of June 30, 1927
$40,648.88
Transferred to the General Supply Committee during the fiscal
year 1928
275, 204. 72
Total
Net sales
Discounts allowed on above
Net proceeds from auction sales—
Difference between-invoiced value and proceeds from auction sales
Balance on hand June 30, 1928
Total
Net decrease in stores during fiscal year 1928
315, 853. 60
44, 267. 72
4,441. 60
96, 739. 80
137,885.38
32, 519.10
315, 853.60
242, 685. 62
TREASURER OF THE UNITED STATES
During the fiscal year 1928 the total ordinary receipts from all
sources (exclusive of postal revenues) on the basis of daily Treasury
statements, revised, were $4,038,235,512.48, a decrease of $90,187,375.13
as compare^d with those for the fiscal year 1927. The cash expenditures chargeable against ordinary receipts amounted to $3,645,005,619.24. The net result for the fiscal year was an excess of $393,229,893.24 of ordinary receipts over total expenditures chargeable against
ordinary receipts.
Receipts from tolls, etc., for movement of tonnage through the
Panama Canal during the fiscal year 1928 were $28,134,345.42, as
compared with $25,544,701.45 for the previous year. Disbursements
made on account of the canal, exclusive of fortifications, on the basis
of warrants drawn (not cash expenditures) were $10,659,442.27 for
the fiscal year 1928 as against $7,613,376.03 for the fiscal year 1927.
The receipts and expenditures on account of the principal of the
public debt during the fiscal year 1928 are shown in the following
statement:
Receipts on account of—
Certificates of indebtedness
^
$5, 406, 536, 700. 00
Treasury notes and certificates of indebtedness (foreign
service retirement fund series)
299,000.00
Treasury notes and certificates of indebtedness (adjusted
service series)
.
^
.
123, 400, 000. 00
Treasury: notes and certificates of indebtedness (civil
service retirement fund series)^
27,400,000.00
Treasury notes
l-._-____—
1, 226, 895, 350. 00
Treasury bonds
27, 053,100. 00
Treasury savings securities^
..
17, 052,125. 51
Postal Savings bonds—1, 582, 720.00
Deposits for .retirement of national-bank notes—^
25,121, 597. 50
Total
-__-__
._
___^
1.. 6, 855, 340, 593. 01
Expenditures on account of—
Certificates of indebtedness—__.
—___^—^—,___
Certificates of indebtedness (foreign service retirement
fund series)
.__—___.___^
..
Treasury notes and certificates of indebtedness (adjusted
service series)
4,838,616,000.00
147, 000, 00
34, 500,000.00
237'
238
REPORT ON THE FINANCES
Certificates of indebtedness (civil service retirement fund
series)
$12, 600, 000. 00
Treasury notes.
471, 715, 250. 00
Treasury bonds
150,000. 00
War savings securities
.
77,123. 25
Treasury savings securities
178, 749, 876. 20
First Liberty bonds.
.
4, 050. OO
Second Liberty bonds
1, 273, 632, 250. 00
Third Liberty bonds
918, 816, 250. 00
Fourth Liberty bonds
2, 862, 850. 00
Victory notes
959, 400. 00
Other debt items
707, 326. 7a
National-bank notes and Federal reserve bank notes—
27, 686, 920; 00
2
Total
7, 761, 224, 296.18
Excess of expenditures
905, 883, 703.17
The retirements of the debt were effected as follows:
From—
Cumulative sinking fund
Purchases and retirements from foreign repayments
Received from foreign governments under debt settlements
Received for estate taxes
Purchases and retirements from franchise tax receipts
(Federal reserve and Federal intermediate credit
banks)
Forfeitures, gifts, etc
Total
Surplus of ordinary receipts applied to public debt retirements
Total
_—_—
$354,741,300.00
19, 068, 000. 00
162, 736, 050. 00
1, 500. 00
618,367.05
3, 080. 803. 25 .
540', 1246, 020. 30
365, 637, 682. 87
905, 883, 703.17
There have been large changes in the gold holdings of the Treasury
during the fi;scal year just closed. The amount on hand J u n e 30,1927,
was $3,651,406,435.42. There was a gradual increase until October
25, when the total slightly exceeded $3,700,000,000. From t h a t date
on, however, there has been a heavy decrease. The balance on hand
June 30, 1928, was $3,215,615,888.92, a decrease of $435,790,546.50 for
the fiscal year. This decrease is attributed almost entirely to gold
exports which were unusually heavy during the year." The imports
of gold were $129,139,694 and the exports $627,102,149. Set a p a r t
for the respective use^, the gold was held on the. following accounts:
For. redemption of gold certificates outstanding
Gold fund. Federal Reserve Board
Gold > reserve
General fund
_^^ _—__..i
Total
_
.
^^.$1,513,730,839.00
. 1, 387, 650,413.30
^ 156, 039, 088. 03
^_.____
158,195, 548. 59
3,215. 615, 888.92
SECRETARY OF THE TREASURY
. 239^
The balance in the gold fund of the Federal Reserve Board at the
close of the fiscal year 1927 was $1,712,002,935.92. During the fiscal
year 1928 deposits were made therein aggregating $1,355,870,174.60'
and withdrawals therefrom amounted to $1,680,222,697.22, leaving a
balance on June 30, 1928, of $1,387,650,413.30.
The Secretary of the Treasury, exercising the discretion given him
under provisions of existing law, directed that the aggregate amount,
of franchise tax receipts paid into the Treasury by the Federal
reserve banks and Federal intermediate credit banks on account of
earnings for the calendar year 1927 be applied to supplement thegold reserve against United States notes and Treasury notes of 1890established by the act of March 14, 1900. Therefore the gold reservereceived an increase during the fiscal year of $618,367.05.
Of the amount shown in the general fund, $150,632,176.90 was held
for the redemption of Federal reserve notes.
Public moneys on deposit in designated Government depositaries,,
exclusive of items in transit, on June 30, 1928, amounted to $296,132,095.21, distributed as follows:
Depositaries—
I n Federal reserve banks
I n special depositaries
I n foreign depositaries
In national-bank depositaries
I n insular depositaries
I n Philippine treasury
Total
$23,647,738.55245,730,779.32
372,112.10
24, 349, 429. 40'
1,160, 859.11
-___
871,176. 73.
^
296,132, 095 21
During the fiscal year 1928 interest amounting to $512,694.01 accrued on balances held by general and limited national-bank, foreign,,
and insular depositaries; and $4,328,982.76 on balances arising from
the sales of bonds, notes, and certificates of indebtedness, making a
total of $4,841,676.77.
Funds aggregating $117,456,764 were transferred by wire through
Federal reserve banks and branches to national-bank and insular
depositaries and the Philippine treasury to restore balances depleted
by cashing Government checks and warrants during the fiscal year
1928, as against $121,539,768 during the fiscal year 1927.
United States bonds to the amount of $665,658,650, pledged to.
secure national-bank note circulation, were in the custody of the
Treasurer at the close of the fiscal year 1928. United States bond&
and other securities held to secure public deposits in national banks
amounted to $47,142,250, and securities held for the safe-keeping of
postal deposits in postal savings depositaries amounted to $174,432,822. Under the provisions of law or by direction of the Secretary of the Treasury, the Treasurer of the United States is custodian
13606—29—FI 19 2 8
18
240
REPORT ON T H E FINANCES
of several special trusts consisting of bonds and other obligations
to the amount of $11,335,040,837.54%. The aggregate amount of
the trust accounts is $12,222,274,559,542/3.
The proceeds of currency counted into the Treasurer's cash by the
National Bank Redemption Agency during the fiscal year amounted
to $560,178,172.45. Of this sum $539,204,786.50 was iii national-bank
notes, $607,924 in Federal reserve bank notes, $20,191,495 in Federal
reserve notes, and $173,966.95 in United States currency. Payments
for currency redeemed were made as follows: I n Treasurer's checks,
$345,941.11; by bank credits for direct receipts in Treasurer's office,
$23,284,049.50; by credits to Federal reserve banks and branches in
general account as transfers of funds for direct remittances, $535,751,209; for remittances by member banks, $795,592.84; and h j
credits in other accounts, $1,380. Canceled and uncanceled Federal
reserve notes amounting to $1,387,941,550 were received from Federal
reserve banks and branches for credit of Federal reserve agents.
Such notes are settled for between the Federal reserve banks and the
Federal reserve agents either directly or by adjustments in their
redemption funds, and are, therefore, not taken into the cash accounts of the National Bank Redemption Agency. The number of
notes counted, sorted, and delivered by the agency during the fiscal
year was 209,856,286.
The number of pieces of paper currency issued directly by the
Government (gold certificates, silver certificates, and United States
notes) during the fiscal year 1928 was 697,620,300 with a valuation
of $1,492,540,000; as against 634,132,800 pieces with a valuation of
$1,406,168,000 for the fiscal year 1927, an increase of 63,487,500 in
the number of pieces and $86,372,000 in the amount.
The gold certificates outstanding decreased $106,110,500 and the
Treasury notes of 1890, $20,854, while the silver certificates increased
$1,812,200, and the United States notes remained; unchanged. Treasury notes are no longer issued and the amount outstanding is gradually being redeemed. United States notes are issued and redeemed
in the same amount under the provisions of the act of May 31, 1878.
The shipments of United States paper currency from the Treasury in Washington to Treasury offices, Federal reserve banks, and
others during the fiscal year 1928 amounted to $1,474,460,976 as
against $1,345,635,218 for the previous year.
During the current fiscal, year the Treasurer's office authorized
and directed shipments or transfers of gold bars and of current gold,
silver, and minor coins between the Treasury, mints, the New York
Assay Office, and Federal reserve banks arid branches fpr use in public
disbursements and exchanges and for special purposes to an aggregate amount of $578,124,426.47. Shipments of uncurrent coins to the
SECRETARY OF THE TREASURY
241
mints from the Treasury and from Federal reserve banks and
branches were authorized in the amount of $8,317,921.75.
During the fiscal year 1928 funds requisitioned and advanced to
United States disbursing officers by accountable warrants aggregated $2,460,117,269.89 and Treasurer's checks issued on settlement
warrants in payment of claims settled by the Comptroller General
of the United States, General Accounting Office, aggregated $121,867,623.56, which latter amount includes claims settled in foreign
currencies by drafts purchased at a total cost of $51,826.32. Drafts
in foreign currencies were also purchased for other departments and
bureaus amounting to $36,152.79. Accountable warrants aggregating
$8,495,119,564.48 were also issued, increasing the gold reserve ,and
reimbursing the Treasurer for public debt principal and interest
payments.
Checks drawn on this office by Government disbursing officers were
paid during the fiscal year 1928 to the number of 34,415,506, an increase over the previous fiscal year of 1,673,788 checks. Balances to
the credit of disbursing officers and Government agencies in 3,112
accounts on June 30, 1928, .amounted to $363,143,835.24, a decrease of
$33,759,318.12 in the total of such balances in 3,334 accounts on
June 30, 1927.
WAR FINANCE CORPORATION
The War Finance Corporation has been in liquidation since January 1, 1925. By the act approved April 4, 1928, its charter was extended for a period of one year, until April 4, 1929.
The amount advanced by the corporation for all purposes, from
its creation in May, 1918, to October 15, 1928, was $690,429,900, of
which $688,003,000 has been repaid. The amount carried on the corporation's books on October 15,1928, was $768,700, of which $200,000
represented war loans and $568,700 agricultural and livestock loans
(including expense advances of $16,700).
During the year ended October 15, 1928, the exj^ense advances
made by the corporation aggregated $151,900. During the same
period the repayments on account of the corporation's agricultural
and livestock loans, including $160,000 on account of expense advances, totaled $2,273,000, of which $1,089,700 was repaid by banking
institutions and $1,183,300 by livestock loan companies.
242
EXHIBITS
243
«
EXHIBITS
THE PUBLIC DEBT
Issue of November, 1927
EXHIBIT
1
Offervng of certificates of indel)tedness. Series TJ-1928 {Sy^ per
cent) {press release, No^eniber 7, 1927, with Department Circular No, 889)
The Treasury announces an offering of 7-month 3 % per cent
Treasury certificates of indebtedness, dated and bearing interest from
November 15, 1927, and maturing on June 15, 1928. The certificates
are tax certificates, and the amount of the offering is $400,000,000,
or thereabouts.
The Treasury will accept in payment for the new certificates the
4 per cent and 4 % per cent bonds of the second Liberty loan. I t will
be remembered that the second Liberty loan bonds are called for
redemption on November 15,1927, and that interest thereon ceases on
that date.
A copy of the official circular is attached.
[Department Circular No. 389]
The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription, at
par and accrued interest, through the Federal reserve banks. Treasury certificates of indebtedness of Series TJ~1928, dated and bearing
interest from November 15,1927, payable June 15, 1928, with interest
at the rate of 3 % per cent per annum.
Applications will be received at the Federal reserve banks.
Bearer certificates will be issued rn denominations of $100, $500,
$1,000, $5,000, $10,000, and $100,000. The certificates will have one
interest coupon attached, payable June 15, 1928.
The certificates of said series shall be exempt, both as to principal
and interest, from all taxation now or hereafter imposed by the
United States, any State, or any of the possessions of the United
States, or by any local taxing authority, except {a) estate or inheritance taxes, and (&) graduated additional income taxes, commonly
known as surtaxes, and excess-profits and war-profits taxes, now or
hereafter imposed by the United States, upon the income or profits
of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act
245
246
REPORT ON T H E FINANCES
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.
The 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
pa3''able at the maturity of the certificates. The certificates of this
series will be acceptable to secure deposits of public moneys, but will
not bear the circulation privilege.
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 Secretary of the Treasury also reserves the right to make allotment in full upon applications for smaller amounts, to make reduced allotments upon, or to
reject, applications for larger amounts, to make preferred allotments
upon applications for which second Liberty loan 4 per cent bonds of
1927-1942 (hereinafter referred to as second 4's) and second Liberty
loan converted 4% per cent bonds of 1927-1942 (hereinafter referred
to as second 4%'s) are tendered in payment, and to make classified
allotments and allotments upon a graduated scale; and his action in
these respects will be final. Allotment notices will be sent out
promptly upon allotment, and the basis of the allotment will be
publicly announced.
Payment at par and accrued interest for certificates allotted must
be made on or before November 15, 1927, or on later allotment.
After allotment and upon payment. Federal reserve banks may issue
interim receipts pending delivery of the definitive certificates. Any
qualified depositary will be permitted to make payment by credit for
certificates allotted to it for itself and its customers up to any
amount for which it shall be qualified in excess of existing deposits,
when so notified by the Federal reserve bank of its district, except
upon subscriptions for which second Liberty loan bonds are tendered
in payment. Bonds of the second 4's and second 4%'s, called for redemption on November 15, 1927, will be accepted at par, in pa^^ment
for any certificates of the series now offered which shall be subscribed
for and allotted, with an adjustment of the interest accrued, if any,
on the certificates of the series so paid for.
Bonds of the second 4's and second 414's tendered in payment for
any certificates of the series now offered should be presented when
the subscription is tendered. The bonds must be delivered at the
expense and risk of the holder. Coupons dated November 15, 1927,
which will become payable on that date, should be detached from any
bonds of the second 4's or second 414's in coupon form so tendered,
and such coupons should be collected by the holders in regular course.
All coupons bearing dates subsequent to November 15, 1927, must be
attached to such coupon bonds when presented. Second 4's and
second 4%'s in registered form tendered in payment for certificates
subscribed for must be assigned by the registered payee or assigns
thereof, or by their duly constituted representatives, to " The Secretary of the Treasury for redemption," in accordance with the general
regulations of the Treasury Department governing assignments for
SECRETARY OF THE TREASURY
247
transfer or exchange into coupon bonds. Final interest due November
15,1927, on registered bonds so tendered will not be paid by interest
checks in regular course but will be covered by payments to be made
simultaneously with the delivery of the certificates upon allotted
subscriptions. Facilities for transportation of bonds by registered
mail insured may be arranged between incorporated banks and trust
companies and the Federal reserve banks, and holders may take
advantage of such arrangements, when available, utilizing such incorporated banks and trust companies as their agents. Incorporated
banks and trust companies are not agents of the United States under
this circular.
As fiscal agents of the United States, Federal reserve banks are
authorized and requested to receive subscriptions and to make allotments on the basis and up to the amounts indicated by the Secretary
of the Treasury to the Federal reserve banks of the respective
districts.
A. W.
MELLON,
Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
November 7, 19^7,
To the investor:
Almost any banking institution in the United States will handle your subscription for you, or you may make subscription direct to the Federal reserve
bank of your district. Your special attention is invited to the terms of subscription and allotment as stated above, and to the fact that bonds of the second
4's and second 4%'s will be accepted at par in payment for any certificates of
the series now offered which shall be subscribed for and allotted.
EXHIBIT 2
Subscriptions and allotments, certificates of indebtedness, Series
TJ-1928 {from press releases, November 11, 1927, and November
15,1927, revised^)
Secretary Mellon announced that subscriptions for the issue of
Treasury certificates of indebtedness of Series TJ-1928, 3 % per
cent, dated November 15, 1927, maturing June 15, 1928, closed at
the close of business on November 9, 1927. Reports received from
the 12 Federal reserve banks show that for the offering, which
was for $400,000,000, or thereabouts, total subscriptions aggregate
$1,105,587,600. Cash subscriptions for the offering aggregated
$1,103,283,400 and the total of such cash subscriptions allotted was
$419,747,000. Subscriptions for which second loan 4 per cent and
414 pel* cent bonds were tendered in payment aggregated $2,304,200,
which amount was allotted in full.
Allotments on cash subscriptions, were made as follows: Subscriptions in amounts not exceeding $100,000 for any one subscriber were
allotted 50 per cent, but not less than $100 on any one subscription;
subscriptions in amounts over $100,000 but not exceeding $1,000,000
for any one subscriber were allotted 40 per cent, but not less than
1 Revised Dec. 15, 1927.
248
REPORT ON T H E FINANCES
$50,000 on any one subscription; and subscriptions in amounts over
$1,000,000 for any one subscriber were allotted 30 per cent, but not
less than $400,000 on any one subscription.
The subscriptions and allotments were divided among the several
Federal reserve districts as follows:
Federal reserve district
Boston
New York
•Philadelphia.
Cleveland
Richmond
Atlanta
,
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco.
Total...
Cash subscriptions
Total cash and Exchange
allotted
(alexchange sub- subscriptions al- lotment on
a
scriptions re- lotted
(full
graduated
ceived
allotment)
Total allotment
$108, 248, 200
335, 683,100
101, 383, 300
72, 063, 700
35, 892, 200
59, 705, 500
129, 349,400
25, 667, 000
14,4.81, 300
15, 500, 200
42, 714, 700
164,899, 000
$47, 000
487, 000
8,400
537, 500
399, 700
25, 500
163,100
128, 500
6,700
246, 200
151, 800
102,800
$45, 243, 800
110,412, 600
43, 100, 700
26, 949, 400,
14, 831, 700
27, 970, 000
57, 398,100
10, 069, 500
6,252,400
7, 162, 800
18, 559, 500
51, 796, 500
$45,290, 800
110,899, 600
43,109,100
27,486, 900
15, 231,400
27, 995, 500
57, 561, 200
10,198,000
6, 259,100
7,409,000
18, 711, 300
51,899, 300
1,105, 587, 600
2, 304, 200
419, 747, 000
422, 051, 200
Issue of December, 1927
EXHIBIT
3
Offering of certificates of indebtedness, Series TD-1928 (<^^ per
cent) {press release, December 8, 1927, with Department Circular
No. S90)
The Treasury is to-day announcing its December financing which
takes the form of an offering of one-year 3i/4 pei* cent Treasury
certificates of indebtedness, dated and bearing interest from December 15, 1927, and maturing December 15, 1928. The certificates are
tax certificates and the amount of the offering is $250,000,000, or
thereabouts. The Treasury will accept, in payment for the new
certificates 4% per cent Treasury notes of Series A-1927, maturing
December 15, 1927, but such subscriptions will not be given preferred
allotment.
About $336,000,000 of Treasury notes of Series A-1927 become
payable on December 15, 1927. Also, about $75,000,000 in interest
payments on the public debt become due on that date.
The present offering, with the December tax and other receipts,
will cover the Treasury's cash requirements until March.
The text of the official circular follows:
[Department Circular No. 390]
The Secretary of the Treasury, under the authority of the act
approved September 24, 1917, as amended, offers for subscription, at
par and accrued interest, through the Federal reserve banks, Treas-
SECRETARY OF THE TREASURY
249
ury certificates of indebtedness of Series TD-1928, dated and bearing
interest from December 15, 1927, payable December 15, 1928, with
interest at the rate of 3l^ per cent per annum, payable semiannually.
Applications will be received at the Federal reserve banks.
Bearer certificates will be issued in denominations of $500, $1,000,
:$5,000, $10,000, and $100,000. The certificates will have two interest
coupons attached, payable June 15, 1928, and December 15, 1928.
The certificates of said series 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 b}'^ the United States, upon the income or profits
•of individuals, partnerships, associations, or corporations. The
interest on an amount of bonds and certificates authorized by said
act approved September 24, 1917, and amendments thereto, the principal of which does not exceed in the aggregate $5,000, owned by any
individual, partnership, association, or corporation, shall be exempt
from the taxes provideci for in clause {b) above.
The 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 payable at the maturity of the certificates. The certificates of this series
will be acceptable to secure deposits of public moneys, but will not
bear the circulation privilege.
The right is reserved to reject any subscription and to allot less
than the amount of certificates ap^Dlied for and to close the subscriptions at any time without notice. The Secretary of the Treasury also
reserves the right to make allotment in full upon applications for
smaller amounts, and to make reduced allotments upon, or to reject,
applications for larger amounts, and to make classified allotments
and allotments upon a graduated scale; and his action in these
respects will be final. Allotment notices will be sent out promptly
upon allotment, and the basis of the allotment will be publicly
announced.
Payment at par and accrued interest for certificates alloted must
be made on or before December 15,1927, or on later allotment. After
allotment and upon payment. Federal reserve banks may issue interim receipts pending delivery of the definitive certificates. Any
qualified depositary will be permitted to make payment by credit
for certificates allotted to it for itself and its customers up to any
amount for which it shall be qualified in excess of existing deposits,
when so notified by the Federal reserve bank of its district. Treasury notes of Series A-1927, maturing December 15, 1927, will be
accepted at par, in payment for any certificates of the series now
offered which shall be subscribed for and allotted, with an adjustment of the interest accrued, if any, on the certificates of the series so
paid for.
As fiscal agents of the United States, Federal reserve banks are
authorized and requested to receive subscriptions and to make allot-
250
REPORT ON THE FINANCES
ments on the basis and up to the amounts indicated by the Secretarj'^ of the Treasury to the Federal reserve banks of the respective
districts.
A. W.
MELLON,
Secretary of the Treasury,
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
Decemi^r 8,1927.
To the investor:
Almost any banking institution in the United States will handle your subscription for you, or you make subscription direct to the Federal reserve bank
of your district. Your special attention is invited to the terms of subscription
and allotment as stated above. If you desire to purchase, at the market price,
certificates of the above issue after the subscriptions close, or certificates of
any outstanding issue, you should apply to your own bank, or, if it can not
obtain them for you, to the Federal resei*ve bank of your district, which will
then endeavor to fill your order in the market.
EXHIBIT 4
Subscriptions amd allotments, certificates of indebtedness. Series
TD-1928 {from press releases, December 13, 1927, and. December
U , 1927)
Secretary Mellon announced that subscriptions for the issue of
Treasury certificates of indebtedness, dated December 15, 1927, Series
TD-1928, 3 ^ per cent, maturing December 15, 1928, closed at the
close of business on December 9, 1927. Reports received from the
twelve Federal reserve banks show that for the offering, which was
for $250,000,000, or thereabouts, total subscriptions aggregate $1,290,117,500. The total of subscriptions allotted was $261,761,000.
Allotments on subscriptions were made as follows: Subscriptions
in amounts not exceeding $1,000 were allotted 50 per cent, but not
less than'$500 on any one subscription; subscriptions in amounts over
$1,000 but not exceeding $100,000 were allotted 30 per cent, but not
less than $500 on any one subscription; subscriptions in amounts over
$100,000 but not exceeding $1,000,000 were allotted 25 per cent, but
not less than $30,000 on any one subscription; and subscriptions in
amounts over $1,000,000 were allotted 15 per cent, but not less than
$250,000 on any one subscription.
The subscriptions and allotments were divided among the several
Federal reserve districts as follows:
Federal reserve
district
Boston
NewYork
Philadelphia
Cleveland
Richmond
Atlnnln
Chicago-
Total subT o t a l subscrip- scriptions altions received
lotted
...
$96,171, 500
480, 678, 500
134, 354, 500
92,160,000
50, 043, 500
59, 239, 500
131, 630, 000
$22,741,000
82, 066, 500
25, 613,000
20, 422, 500
12, 788, 500
16, 619, 500
27,119,000
F e d e r a l reserve
district
St. L o u i s . Minneapolis
Kansas City
Dallas.
San Francisco
Total
Total subT o t a l subscrip- scriptions altions received
lotted ,
$25, 604,000
14, 553, 000
17, 839, 000
47, 345, 500
140,498, 500
$7, 007, 500
4, 247,000
5, 382, 500
13, 381, 500
24,372, 500
1, 290,117, 600
261, 761,000
SECRETARY OF THE TREASURY
251
Issue of January, 1928
\
EXHIBIT
5
Offering of Treasury notes, Series C-19S0-S2 {8^2 V^"^ ^ent) in exchcmge for third Liberty loa/rh bonds {press release, Jarmary 9,
1928, with Department Circular No, 892)
The Treasury announces that on January 16 it will issue new 3^/2
per cent Treasury notes. Series C-1930-32, in exchange for third
Liberty loan 4^4 per cent bonds of 1928.
The new notes will be dated and bear interest from January 16,
1928, will mature December 15, 1932, and will be callable on and
after December 15, 1930. ; These notes will be issued only in exchange for the third Liberty loan bonds, and the amount to be
issued Avill be limited by the amount of such bonds tendered and
accepted.
The third Liberty loan bonds mature on September 15, 1928, and
will not bear interest after that date. The present exchange offering gives holders of the third Liberty loan bonds an opportunity to
exchange their.bonds as of January 16, 1928, par for par, for Treasury notes bearing 31/2 per cent interest from January 16, 1928.
Those taking advantage of this offer will receive, when the new notes
are delivered, interest in full to March 15, 1928, on their third Liberty loan bonds, without deduction because of the earlier redemption. This interest payment will compensate holders of these bonds
for the premium at which the bonds are now selling.
The Secretary of the Treasury reserves the right to close the
'offering at any time without notice.
The text of the official circular follows.
[Department Circular No. 392]
To holders of third Liberty loan liX/^ per cent bonds of 1928:
1. The Secretary of the [Treasury offers for subscription, at par,
through the Federal reserve banks, in exchange for third Liberty
loan 414 per cent bonds of 1928 (hereinafter referred to as third
4%'s), Treasury notes of Series C-1930-32 of an issue of gold notes
of the United States authorized by the act of Congress approved
September 24, 1917, as amended. The amount of the issue will be
limited to the amount of third 414's tendered and accepted.
2. Third Liberty loan 414 per cent bonds of 1928 will mature on
September 15, 1928, and will not bear interest after that date. Interest on any third 414's surrendered and accepted in exchange for
the Treasury notes herein offered will be paid in full to Slarch
15, 1928.
DESCRIPTION OF NOTES
3. The notes will be dated January 16, 1928, and will bear interest
from that date at the rate of 31/2 per cent per annum payable on
June 15, 1928, and thereafter semiannually on December 15 and
June 15 until the principal amount becomes payable. The notes
252
REPORT ON T H E
FINANCES
will mature December 15, 1932, but may be redeemed at the option
' of the United States on and after December 15, 1930, in whole o r
in part, on any interest day or days, on six months' notice of redemption given in such manner as the Secretary of the Treasury may
prescribe. I n case of partial redemption the notes to be redeemed,
will be determined by such method as may be prescribed by the Secretary of the Treasury. From the date of redemption ciesignated
in any such notice, interest on the notes called for redemption shall
cease. The principal and interest of the notes will be payable in
United States gold coin of the present standard of value.
4. Bearer notes with interest coupons attached will be issued in
denominations of $50, $100, $500, $1,000, $5,000, $10,000, and
$100,000. The notes will not be issued in registered form. The notes
will be acceptable to secure deposits of public moneys, but will not
bear the circulation privilege.
5. The notes of this series 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 taxeSy
and {b) graduated additional income taxes, commonly known as
surtaxes, and excess-profits and war-profits taxes, now or hereafter
imposed b}^ the United States, upon the income or profits of individuals, partnerships, associations, or corporations.
6. The notes of this series will be accepted at par during such time
and under such rules and regulations as shall be prescribed or
approved by the Secretary of the Treasury, in payment of income
and profits taxes payable at the maturity of the notes, and, with,
respect to any such notes that may be called for prior redemption,
will be receivable in like manner and for the same purpose at the
redemption date fixed.
APPLICATION AND ALLOTMENT
7. Applications will be received at the Federal reserve banks, as
fiscal agents of the United States. Banking institutions generally
will handle applications for subscribers, but only the Federal reserve
banks are authorized to act as official agencies.
8. The right is reserved to reject any subscription, in whole or in
part, and to allot less than the amount of notes applied for, and to
close the subscriptions at any time without notice, and the act of
the Secretary of the Treasury in these respects will be final.
PAYMENT
9. Payment for any notes allotted may be made only through the
surrender of a like principal amount of third 414's which will be accepted at par, and, at the time of delivery of the notes, interest on
any such thircl 4l^'s so surrendered and accepted will be paid in full
to March 15, 1928. Third Liberty loan 4^4 per cent bonds tendered
in payment for notes subscribed for should be presented when the
subscription is tendered. If any subscription is rejected in whole or
in part, any bonds which may have been tendered and not accepted
will be returned to the subscriber.
SECRETARY OF T H E TREASURY
SURRENDER
OF
25S
BONDS
10. Surrender of coupon bonds,—Third 4^/4's in coupon form tendered for exchange for Treasury notes issued hereunder should be
presented and surrendered to a Federal reserve bank. The bonds
must be delivered at the expense and risk of the holder. Facilities
for transportation of bonds by registered mail insured may be arranged between incorporated banks and trust companies and the
Federal reserve banks, and holders may take advantage of such arrangements when available^ utilizing such incorporated banks and
trust companies as their agents. Incorporated banks and trust companies are not agents of the United States under this circular.
11. Coupons dated March 15, 1928, and September 15, 1928, must
be attached to such coupon bonds when presented. At the time of
delivery of the Treasury notes of Series C-1930-32 (or interim certificates) upon allotted subscriptions. Federal reserve banks will pay
to the subscriber or his authorized agent the interest from September
15, 1927, to March 15, 1928, on the coupon third 414's surrendered
in exchange.
12. Surrender of registered bonds.—Third 414's in registered form,,
tendered for exchange for Treasury notes issued hereunder, should be
assigned by the registered payee or assigns thereof to " The Secretary
of the Treasury for redemption," in accordance with the general
regulations of the Treasury Department governing assignments for
transfer or exchange into coupon bonds, and thereafter should be presented and surrendered to a Federal reserve bank. The bonds must
be delivered at the expense and risk of the holder. At the time of
delivery of the Treasury notes of Series C-1930-32 (or interim certificates) upon allotted subscriptions. Federal reserve banks will pay to^
the subscriber or his authorized agent the interest from September 15,.
1927, to March 15, 1928, on the registered third 414's surrendered in
exchange.
13. The Federal reserve banks, as fiscal agents of the United States,,
are hereby authorized and requested to receive subscriptions for Treasury notes hereunder, to receive third 4i/4's tendered in exchange, to
make allotments of subscriptions on the basis and up to the amounts
indicated to them by the Secretary of the Treasury, and to make delivery of Treasury notes on full-paid subscriptions allotted, and, pending delivery of definitive notes, to issue interim certificates.
F U R T H E R DETAILS
14. Any further information which may be desired as to the exchange of third 41/4's for Treasury notes under the provisions of this
circular may be obtained upon application to a Federal reserve bank.
The Secretary of the Treasury may at any time, or from time to time,
prescribe supplemental or amendatory rules and regulations governing the exchange, and may terminate the offer at any time in hi&
discretion.
•A. W. MELLON,
Secretary of the Treasury,
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
Washington, January 9, 1928.
254
REPORT ON T H E FINANCES
EXHIBIT 6
SubscHptions to Treasury notes. Series G-1980-82
Secretary Mellon announced on January 16, 1928, that the privilege
of exchanging third Liberty loan 414 per cent bonds for the new 3i/^
per cent Treasury notes of Series C-1930-32 would terminate at the
close of business on Monday, January 23. Exchange subscriptions
in the mails or otherwise in transit before midnight on January 23
would be accepted.
Subscriptions by Federal reserve districts, together with those received direct by the Treasury Department, are set forth below:
Federal reserve
district
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Total amount of
subscriptions
$18,094, 350
411, 205, 950
16, 510, 500
39, 528, 850
6, 960, 300
2, 961, 800
59,278,150
13, 272, 550
Federal reserve
district
MinneapoUs
Kansas City.
Dallas
San Francisco
Treasury
Total
Total amount of
subscriptions
$6, 215, 000
—
10,171, 350
5, 223, 35a
8, 512,100
9,465,450
607,399,650
Issues of March, 1928
EXHIBIT 7
Offering of certificates ofindebtedness. Series.TD2-1928 {8^4^ per
cent) amd Series TM^1929 X^% V^'^ cent) {press release, March 8,
1928, with Department Circular No. 895)
The Treasury is to-day announcing its regular March financing,
which takes the form of an offering of Treasury certificates of indebtedness in two series, both dated and bearing interest frorti March
15, 1928, one series at 3 % per cent, being for nine months, maturing
December 15, 1928, and the other series at 3 % per cent, being for one
year, maturing March 15, 1929. The amount of the nine-months'
offering is $200,000,000, or thereabouts, and the amount of the oneyear offering is $360,000,000, or thereabouts. The Treasury will
accept in payment for the new certificates, at par. Treasury certificates of indebtedness of Series TM-1928 and TM2-1928, both
maturing March 15, 1928. Subscriptions for which payment is to
be tendered in certificates of indebtedness maturing March 15, 1928,
will be allotted in full, up to the amount of the respective offerings.
About $514,000,000 of Treasury certificates of indebtedness become
payable on March 15, 1928. Also, about $83,000,000 in interest payments on the public debt become payable on that date.
The present offering, with tax and other receipts, will cover the
Treasury's cash requirements until June.
A copy of the official circular is attached.
SECRETARY OF T H E TREASURY
255
[Department Circular No. 395]
The Secretary of the Treasury, under the authority of the act approved September 24, 1917, as amended, offers for subscription,
at par and accrued interest, through the Federal reserve banks, treasury certificates of indebtedness, in two series, both dated and bearing
interest from March 15, 1928, the certificates of Series TD2-1928
being payable on December 15, 1928, with interest at the rate of 3 %
per cent per annum, payable on a semiannual basis, and the certificates
of Series TM-1929 being payable on March 15, 1929, with interest at
the rate of 3 % per cent per annum, payable semiannually.
Applications will be received at the Federal reserve banks.
Bearer certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000. The certificates of Series TD2-1928
will have two interest coupons attached, payable June 15, 1928, and
December 15, 1928, and the certificates of Series TM-1929 two interest coupons attached, payable September 15, 1928, and March 15,
1929.
The certificates of said series 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, and amendments thereto, the principal
of which does not exceed in the aggregate $5,000, owned by any
individual, partnership, association, or corporation, shall be exempt
from the taxes provided for in clause (6) above. The certificates
of these series will be accepted at par during such time and under
such rules and regulations as shall be prescribed or approved by the
Secretary of the Treasury, in payment of income and profits taxes
payable at the maturity of the certificates. The certificates of these
series will be acceptable to secure deposits of public moneys, but will
not bear the circulation privilege.
The right is reserved to reject any subscriptions and to allot less
than the amount of certificates of either or both series applied for
and to close the subscription as to either or both series at any time
without notice. The Secretary of the Treasury also reserves the
right to make allotment in full upon applications for smaller amounts,
and to make reduced allotments upon, or to reject, applications for
larger amounts, and to make classified allotments and allotments
upon a graduated scale; and his action in these respects will be
final. Allotment notices will be sent out promptly upon allotment,
and the basis of the allotment will be publicly announced.
Payment at par and accrued interest for certificates alloted must
be made on or before March 15, 1928, or on later allotment. After
allotment and upon payment Federal reserve banks may issue interim receipts pending delivery of the definitive certificates. Any
qualified depositary will be permitted to make payment by credit for
certificates allotted to it for itself and its customers up to any amount
for which it shall be qualified in excess of existing deposits, when
13606—29—FI 192 8
19
256
REPORT ON THE FINANCES
SO notified by the Federal reserve bank of its district. Treasury
certificates of indebtedness of Series TM-1928 and TM2-1928, both
maturing March 15, 1928, will be accepted at par in payment for
any certificates of the series now offered which shall be subscribed
for and allotted, with an adjustment of the interest accrued, if any,
on the certificates of the series so paid for.
As fiscal agents of the United States, Federal reserve banks are
authorized and requested to receive subscriptions and to make allotments on the basis and up to the amounts indicated by the Secretary
of the Treasury to the Federal reserve banks of the respective
districts.
A. W. MELLON,
Secretary of the Treatswry,
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
March 8,
To the investor:
Almost any banking institution in the United States will handle your
subscription for you, or you may make subscription direct to the Federal
reserve bank of your district. Your special attention is invited to the terms
of subscription and allotment as stated above. If you desire to purchase, at
the market price, certificates of the above issues after the subscriptions close,
or certificates of any outstanding issue, you should apply to your own bank,
or, if it can not obtain them for you, to the Federal reserve bank of your
district, which will then endeavor to fill your order in the market.
EXHIBIT 8
Subscriptions and allotments, certificates of indehtedness. Series
TD2-1928 and Series TM-1929 {from press releases, March 18,
1928, and March H , 1928)
Secretary Mellon announced that subscriptions for the two issues
of Treasury certificates of indebtedness. Series TD2-1928, 3l^ per
cent, dated March 15, 1928, maturing December 15, 1928, and Series
TM-1929, 33/8 per cent, dated March 15, 1928, maturing March 15,
1929, closed at the close of business on March 10, 1928.
Reports received from the 12 Federal reserve banks show that for
the offering of 31/4 per cent certificates of Series TD2-1928, which was
for $200,000,000, or thereabouts, total subscriptions aggregate $340,070,000, and that for the offering of 3 % per cent certificates of Series
TM-1929, which was for $360,000,000 or thereabouts, total subscriptions aggregate $660,703,000. As previously announced, subscriptions
in payment of which Treasury certificates of indebtedness of Series
TM-1928 and Series TM2-1928, both maturing March 15, 1928, were
tendered, were allotted in full. Upon these exchange subscriptions
$107,058,500 have been allotted. Allotments on the cash subscriptions
for 314 per cent certificates of Series TD2-1928 were made as follows:
All subscriptions in amounts not exceeding $10,000 for any one subscriber were allotted in full. Subscriptions in amounts over $10,000
but not exceeding $100,000 for any one subscriber were allotted ^80
per cent, but not less than $10,000 on any one subscription; subscriptions in amounts over $100,000 but not exceeding $500,000 for any one
257
SECRETARY OF THE TREASURY
subscriber were allotted 70 per cent but not less than $80,000 on any
one subscription; subscriptions in amounts over $500,000 but not
exceeding $1,000,000 for any one subscriber were allotted 50 per cent
but not less than $350,000 on any one subscription; and subscriptions
in amounts over $1,000,000 were allotted 40 per cent but not less than
$500,000 on any one subscription.
Allotments on cash subscriptions for 3 % per cent certificates of
Series TM-1929 were made as follows: All subscriptions in amounts
not exceeding $1,000 for any one subscriber were allotted in full.
Subscriptions in amounts over $1,000 but not exceeding $10,000 for
any one subscriber were allotted 80 per cent, but not less than $1,000
on any one subscription; subscriptions in amounts over $10,000 but
not exceeding $100,000 for any one subscriber were allotted 70 per
cent, but not less than $8,000 on any one subscription; subscriptions in
amounts over $100,000 but not exceeding $1,000,000 for any one subscriber were allotted 50 per cent, but not less than $70,000 on any one
subscription; and subscriptions in amounts over $1,000,000 were allotted 40 per cent, but not less than $500,000 on any one subscription.
The subscriptions and allotments were divided among the several
Federal reserve districts as follows:
F e d e r a l reserve
district
Total subscriptions
received
Total subscriptions
allotted
Total
Total subscriptions
allotted
SERIES TM-1929
SERIES TD2-1928
Boston
New York
Philadelphia
Cleveland
Richmond
v
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas City
Dallas
S a n Francisco
Total subscriptions
received
Federal reserve
district
$12,883, 500
155, 325, 000
26, 570, 500
16, 360, 000
25, 658, 500
17,419, 000
23, 628, 500
6,974, 000
1, 929, 500
7, 371, 500
9, 646, 000
36, 304, 000
$9,335,000
90,450, 500
14,'255, 500
9,.585, 000
15, 522,000
12,983, 000
15,631,500
3,;784, 500
1,!504, 500
4,604,000
6, 279, 500
17,609,500
340, 070, 000
201,544,500
Boston
NewYork......
Philadelphia
Cleveland
Richmond.
Atlanta..
Chicago
St. L o u i s . . .
Minneapolis
Kansas City..
Dallas.
San Francisco
Total
_
d.
_
$49,162,500
251,182,000
44,850, 000
32, 608, 500
25, 326,000
39, 696,000
95, 031, 500
18, 827,000
7, 770, 500
13, 003, 000
19,103,000
64,143, 000
$27,124,000
140, 222, 500
26, 255, 500
15,412,000
15,134, 000
24, 277,000
51, 570, 500
9, 283, 500
5,112, 500
7, 700, 000
11, 202, 500
27, 653, 000
660, 703,000
360, 947, 000
Total subscriptions, both series_
Total allotmsnts^ both series
$1,000,773,000
562,491, 500
Purchase of third Liberty loan bonds, May, 1928
EXHIBIT 9
Off^er to purchase third Liberty loan bonds at 1 0 0 ^ {press release,
May 11, 1928)
Secretary Mellon to-day announced that he has authorized the
Federal reserve banks to purchase, at the option of holders, up to
$50,000,000 aggregate face amount of third Liberty loan 414 per cent
bonds, which mature September 15, 1928, at 1 0 0 ^ and accrued interest to the date of such optional purchase. This offer will remain open
until the close of business on Friday, May 18, 1928, and without further notice will terminate on May 18, 1928, or at such earlier date as
the full amount shall have been tendered.
258
REPORT ON THE FINANCES
EXHIBIT 10
Termination of offer to purchase third Liberty loan bonds {press
release. May 16, 1928)
Secretary Mellon announced that the privilege of teitdering third
Liberty loan 414 per cent bonds for sale to the United States, under
authorizations as publicly announced on May 11, expired yesterday,
May 15, and no further tenders will be accepted.
Under the terms of the department's announcement of May 11 the
Federal reserve banks were authorized to purchase, at the option of
holders, up to $50,000,000 aggregate face amount of third 4l^'s, which
mature September 15, 1928, at lOOg^ and accrued interest to the date
of such optional purchase. The announcement further provided that
the offer would be terminated without further notice on May 18,1928,
or on such earlier date as the full amount shall have been tendered.
Since the Federal reserve banks had received tenders of bonds aggregating the required amount, the Treasury exercised its right to terminate the offer, and accordingly no further tenders of third 4i/i's
under this authorization will be accepted.
Issues of June, 1928
EXHIBIT 11
Offering of certificates of indebtedness. Series TD8-1928 (.^ per cent)
and Series TM2-1929 {8% per cent) {press release, J u n e 6, 1928,
with Department Circular" No. JfiO)
The Treasury is to-day announcing its regular June financing,
Avhich takes the form of an offering of Treasury certificates of indebt'edness in two series, both dated and bearing interest from June 15,
1928, one series at 4 per cent, being for six months and maturing
December 15, 1928, and the other series at 3 % per cent, being for
nine months and maturing March 15, 1929. The amount of each of
these two offerings is $200,000,000 or thereabouts.
The Treasury will accept in payment for the new certificates, at
p a r . Treasury certificates of indebtedness of Series TJ-1928, maturing June 15, i928. Subscriptions for which payment is to be tendered
in certificates of indebtedness maturing June 15,1928, will be allotted
in full up to the amount of the respective offerings.
A copy of the official circular is attached.
About $400,000,000 of Treasury certificates of indebtedness become
payable on June 15, 1928. Also about $85,000,000 in interest payments on the public debt become payable on that date.
The Treasury expects at an early date this month to invite tenders
of third Liberty loan bonds for purchase by the Treasury on account
of surplus money.
SECRETARY OF THE TREASURY
259
[Department Circular No. 400]
The Secretary of the Treasury, under the authority of the act
approved September 24, 1917, as amended, offers for subscription, at
par and accrued interest, through the Federal reserve banks, Treasury
certificates of indebtedness, in two series, both dated and bearing interest from June 15, 1928, the certificates of Series TD3-1928 being
payable on December 15, 1928, with interest at the rate of 4 per cent
per annum, payable on a semiannual basis, and the certificates of
Series TM2-1929 being payable on March 15, 1929, with interest at
the rate of 3 % P^i* cent per annum, payable on a semiannual basis.
Applications will be received at the Federal reserve banks.
Bearer certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000. The certificates of Series TD3-1928
will have one interest coupon attached, payable December 15, 1928,
and the certificates of Series TM2-1929, two interest coupons attached, payable September 15, 1928, and March 15, 1929.
The certificates of said series shall be exempt, both as to principal
and interest, from all taxation now or hereafter imposed by the
United States, any State, or any of the possessions of the United
States, or by any local taxing authority, except {a) estate or inheritance taxes, and (&) graduated additional income taxes, commonly
known as surtaxes, and excess-profits and war-profits taxes, now or
hereafter imposed by the United States, upon the income or profits
of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by said act
approved September 24, 1917, and amendments thereto, the principal
of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from
the taxes provided for in clause (&) above. The certificates of these
series will be accepted at par during such time and under such rules
and regulations as shall be prescribed or approved by the Secretary of
the Treasury, in payment of income and profits taxes payable at the
maturity of the certificates. The certificates of these series .will be
acceptable to secure deposits of public moneys, but will not bear
the circulation privilege.
The right is reserved to reject any subscription and to allot less than
the amount of certificates of either or both series applied for and
to close the subscriptions as to either or both series at any time
without notice. The Secretary of the Treasury also reserves the right
to make allotment in full upon applications for smaller amounts,
and to make reduced allotments upon, or to reject, applications for
larger amounts, and to make classified allotments and allotments upon
a graduated scale; and hi3 action in these respects will be final. Allotment notices will be sent out promptly upon allotment, and the
basis of the allotment will be publicly announced.
Payment at par and accrued interest for certificates allotted must
be made on or before June 15, 1928, or on later allotment. After
allotment and upon payment Federal reserve banks may issue interini
receipts pending delivery of the definitive certificates. Any qualified
depositary will be permitted to make payment by credit for certificates allotted to it for itself and its customers up to any amount for
which it shall be qualified in excess of existing deposits, when so noti-
260
REPORT ON THE FINANCES
fied by the Federal reserve bank of its district. Treasury certificates
of indebtedness of Series TJ-1928, maturing June 15, 1928, will be
accepted at par in payment for any certificates of the series now
offered which shall be subscribed for and allotted, with an adjustment
of the interest accrued, if any, on the certificates of the series so
paid for.
As fiscal agents of the United States, Federal reserve banks are
authorized and requested to receive subscriptions and to make allotments on the basis and up to the amounts indicated by the Secretary
of the Treasury to the Federal reserve banks of the respective
districts.
A. W.
MELLON,
Secreta/ry of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
June 6,1928,
To the investor:
Almost any banking institution in the United States will handle your subscription for you, or you may make subscription direct to the Federal reserve
bank of your district. Your special attention is invited to the terms of
subscription and allotment as stated above. If you desire to purchase, at
the market price, certificates of the above issues after the subscriptions close,
or certificates of any outstanding issue, you should apply to your own bank, or,
if it can not obtain them for you, to the Federal reserve bank of your district,
which will then endeavor to fill your order in the market.
EXHIBIT 12
Subscriptions and allotments, certificates of indebtedness. Series T D 8 . 1928 and Series TM2-'1929 {from press releases, J u n e 9, 1928, and
Jum.e 12,1928, revised ^)
Secretary Mellon announced that subscriptions for the two issues
of Treasury certificates of indebtedness. Series TD3-1928, 4 per cent,
dated June 15, 1928, maturing December 15, 1928, and Series T M 2 1929, 3 % per cent, dated June 15, 1928, maturing March 15, 1929,
closed at the close of business on June 7, 1928.
Reports received from the 12 Federal reserve banks show that for
the offering of 4 per cent certificates of Series TD3-1928, which was
for $200,000,000 or thereabouts, total subscriptions aggregate $738,266,000, and that for the offering of 3 % per cent certificates of Series
TM2-1929, which was also for $200,000,000, or thereabouts, total
subscriptions aggregate $254,097,500. As previously announced, subscriptions in payment of which Treasury certificates of indebtedness
of Series TJ-1928, maturing June 15, 1928, were tendered, were
allotted in full. Upon these exchange subscriptions $134,838,000
have been allotted. Allotments on the cash subscriptions for 4 per
cent certificates of Series TD3-1928 were made as follows: Subscriptions iri amounts not exceeding $10,000 for any one subscriber were
allotted 50 per cent, but not less than $500 on any one subscription;
subscriptions in amounts over $10,000, but not exceeding $100,000 for
any one subscriber were allotted 40 per cent, but not less than $5,000
1 Revised June 19. 1928.
261
SECRETARY OF THE TREASURY
on any one subscription; subscriptions in amounts over $100,000, but
not exceeding $500,000 for any one subscriber were allotted 20 per
cent, but not less than $40,000 on any one subscription; and subscriptions in amounts over $500,000 were allotted 10 per cent, but not less
than $100,000 on any one subscription. Allotments on cash subscriptions for 3 % per cent certificates of Series TM2-1929 were made
as follows: All subscriptions in amounts not exceeding $10,000 for
any one subscriber were allotted in full. All subscriptions in
amounts over $10,000 for any one subscriber were allotted 80 per cent,
but not less than $10,000 on any one subscription.
The subscriptions and allotments were divided among the several
Federal reserve districts as follows:
Federal reserve
district
Total
subscriptions
received
Total
subscriptions
allotted
$41,225, 500
336,854, 000
54,453, 500
28,428,000
18, 229, 500
36,045,000
57, 295,000
15, 391, 500
9, 685, 500
11, 360, 000
27, 333,000
101,965, 500
$12,457, 500
129,171, 000
9, 677, 500
5, 960, 000
5, 032, 500
10,999,000
12,149, 500
4,109, 500
3,708, 500
3, 728, 000
8, 065, 000
11, 313, 500
738, 266,000
216,371, 500
F e d e r a l reserve
district
SERIES TD3-1928
Total
subscriptions
allotted
$4,910, 500
92, 432, 000
10,814,000
12, 031,000
5,818, 500
14,428, 500
18, 258,000
8,875,000
2, 832,000
4, 586, 500
17, 361, 500
61, 750, 000
$4,161, 500
79,856,000
8,977, 000
9,808,000
4, 965, 000
11,993, 500
15, 065, 000
7, 254, 500
2, 353,000
3, 900, 500
14,009,000
49,441,000
254, 097, 500
211, 784, 000
SERIES TM2-1929
Boston .
_
..
New York
Philadelphia
.
Cleveland
Richmond
. . . .
Atlanta
Chicago
St. Louis
MinneapoliSKansas City
Dallas
San Francisco
Total
Total
subscriptions
received
Boston
NewYork
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City..
Dallas
San Francisco
Total
Total snbscriptions, both seriesTotal allotments, both series
$992, 363, 500
428, 155, 500
Purchase of third Liberty loan bonds, June, 1928
EXHIBIT
13
Offer to purchase third Liberty loan bonds at 100-^ {press release^
June 11, 1928)
Secretary Mellon to-day announced that he has authorized the
Federal reserve banks to purchase, at 100-^^^ and accrued interest, at the
option of holders, up to $125,000,000, or thereabouts, aggregate face
amount of third Liberty loan 4i/4 per cent bonds, which mature September 15, 1928. This offer will remain open until the close of
business on Tuesday, June 19, 1928, and without further notice will
terminate on that date, or on such earlier date as the full amount
shall have been tendered. Payment for coupon bonds tendered and
accepted will be made on June 20. Payment for registered bonds
tendered and accepted will be made on June 20^ or on such later
<late as registration shall have been discharged.
262
REPORT ON T H E FINANCES
E X H I B I T 14
Extension of time in offer to pu/rchase third Liberty loan bonds
{press release, Jun/ie 21, 1928)
Secretary Mellon announced that under the Treasury's recent offer
to purchase third Liberty loan 4 ^ per cent bonds at 1 0 0 ^ and
accrued interest. Federal reserve banks have received tenders of
such bonds aggregating approximately $75,000,000.
The Secretary further stated that while the privilege of tendering these bonds for sale had formally expired at the close of business on June 19,, in accordance with previous announcement. Federal reserve banks have to-day been authorized to purchase at the
option of the holders until further notice, at 1 0 0 ^ and accrued
interest to date of payment, any additional third Liberty loan 414's
which may hereafter be tendered.
- Third Liberty loan 414 per cent bonds will mature on September
15, 1928, and will cease to bear interest on that date.
EXHIBIT 15
Termination of offer to purchase third Liberty loan "bonds {press
release, J u l y 5,1928)
Secretary Mellon announced that the authorization given Federal
reserve banks under date of June 21, 1928, to purchase, at the option
of the holders, until further notice, at par and two thirty-seconds and
accrued interest, any third Liberty loan 4i/4 per cent bonds that might
be tendered, was terminated at the close of business Thursday, July 5,
1928.
0^5
J
,
Issue of July, 1928
EXHIBIT
16
Offering of Treasury bonds of 191^0-1^3 (^% per cent) {press release,
J u l y 5,1928, with Department Circular No, Jfi5)
The Treasury announces an offering of Treasury bonds of 19401943, dated and bearing interest from July 16, 1928, at the rate of 3 %
per cent, maturing June 15, 1943, and callable on four months' notice,
in whole or in part, on and after June 15, 1940. The offering will be a
combined offering for cash and in exchange for outstanding third
Liberty loan bonds.
The amount of the cash offering will be $250,000,000, or thereabouts. The books for cash subscriptions will open on July 5, 1928,
and may close without notice within a few days thereafter. Cash
subscriptions are invited as of August 1, 1928, at par and accrued
interest. I n other words, payment upon allotted cash subscriptions
should not be made until August 1, 1928, and should include not only
the par amount of bonds allotted but also the accrued interest thereon
SECRETARY OF T H E TREASURY
263
from July 16, 1928, to August 1, 1928. The Treasury will not make
delivery of the new bonds on allotted cash subscriptions until
August 1.
The amount of the exchange offering will be limited by the amount
of the third 414's tendered and accepted. . Exchange subscriptions are
invited at par. Interest on any third 414's surrendered and accepted
upon allocatted exchange subscriptions will be paid in full to September 15, 1928. Accordingly, at the time of delivery of the new
Treasury bonds the Federal reserve banks will pay to the subscriber
or his authorized agent the interest from March 15, 1928, to September 15,1928, on the third 4%'s surrendered in exchange. Delivery
of the new bonds on exchange subscriptions will be made on and after
July 16,1928, upon acceptance of the third 414's tendered in exchange.
The exchange offering will be kept open for a limited period—
probably until July 31—but the Secretary of the Treasury reserves
the right to close the exchange offering, as well as the cash offering,
at any time without notice.
Attention is invited to the fact that the third Liberty loan bonds
mature September 15, 1928, and that interest thereon will cease on
that date.
If the amount of exchange subscriptions received by the Treasury is
such that the allotted subscriptions to the combined offering aggregate $500,000,000 or thereabouts, there will be no further offering of
long-term bonds in connnection with the maturity of the thirds.
A copy of the ofiicial circular is attached.
[Department Circular No. 405]
The Secretary of the Treasury invites subscriptions, from the
people of the United States, for 3 % per cent Treasury bonds of
1940-1943, of an issue of gold bonds of the United States authorized
by the act of Congress approved September 24, 1917, as amended.
Cash subscriptions are invited at par and accrued interest. The
subscription books for the cash offering will open on July 5, 1928,
and may close without notice within a few days thereafter. The
Treasury will not make delivery of the new bonds on allotted cash
subscriptions until August 1, 1928, at which time payment at par
with accrued interest from July 16, 1928, to August 1, 1928, must be
made. Payment should not be made upon allotted cash subscriptions
until August 1, 1928. The amount of the issue for cash will be
$250,000,000, or thereabouts.
Exchange subscriptions, in payment of which only third Liberty
loan 4% per cent bonds of 1928 (hereinafter referred to as third 4 ^ ' s )
may be tendered, are invited at par. Interest on any third 41/4's
so surrendered and accepted will be paid in full to September 15,1928.
On and after July 16, 1928, delivery of the new bonds on exchange
subscriptions will be made upon acceptance of the third 414's tendered in exchange. The amount of the issue upon exchange subscriptions will be limited to the amount of third 4 ^ ' s tendered and
accepted.
264
REPORT ON T H E
FINANCES
DESCRIPTION OF BONDS
The bonds will be dated July 16, 1928, and will bear interest from
that date at the rate of 3 % per cent per annum payable on December 15, 1928, on a semiannual basis, and thereafter semiannually on
June 15 and December 15 in each year until the principal amount
becomes payable. The bonds will mature June 15, 1943, but may be
redeemed at the option of the United States on and after June 15,
1940, in whole or in part, at par and accrued interest, on any interest
day or days, on four months' notice of redemption 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.
From the date of redemption designated in any such notice, interest
on the bonds called for redemption shall cease. The principal and
interest of the bonds will be payable in United States gold coin of
the present standard of value.
Bearer bonds with interest coupons attached will be issued in
denominations of $50, $100, $500, $1,000, $5,000, $10,000, and $100,000.
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 an,d registered bonds and for
the transfer of registered bonds, without charge by the United
States, under rules and regulations prescribed by the Secretary of
the Treasury.
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 (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 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
(5) above.
The bonds will be acceptable to secure deposits of public moneys,
but do not bear the circulation privilege and are not entitled to any
privilege of conversion. The bonds will be subject to the general
regulations of the Treasury Department, now or ^hereafter issued,
governing United States bonds.
APPLICATION AND ALLOTMENT
Applications will be received at the Federal reserve banks, as fiscal
agents of the United States. Banking institutions generally will
handle applications for subscribers, but only the Federal reserve
banks are authorized to act as official agencies. With respect to subscriptions to the cash offering, attention is invited to the fact that
while delivery of the new bonds and payment therefor are not to be
SECRETARY OP THE TREASURY
.
265
made until August 1, 1928, applications must nevertheless be submitted promptly after the opening of the subscription books on July
5,1928.
The right is reserved to reject any subscription and to allot less
than the amount of bonds applied for and to close the subscriptions
at any time without notice, and the act of the Secretary of the
Treasury in these respects will be final. The Secretary of the
Treasury also reserves the right to make allotment in full upon
applications for smaller amounts, and to make reduced allotments
upon, or to reject, applications for larger amounts, and to make
classified allotments and allotments upon a graduated scale; and
his action in these respects will be final.
PAYMENT
Cash subscriptions.—Payment at par and accrued interest from
July 16, 1928, to August 1, 1928, for any bonds allotted on cash subscriptions must be made on August 1, 1928.^ Any qualified depositary will be permitted to make payment, as of August 1, 1928, by
credit for bonds allotted to it for itself and its customers up to any
amount for which it shall be qualified in excess of existing deposits,
when so notified by the Federal reserve bank of its district.
Exchange subscriptions.—Payment for any bonds allotted, on exchange subscriptions may be made only in third 4i/4's, which will be
accepted at par. Interest from March 15, 1928, to September 15,
1928, on the third 4i/4's so accepted will be paid in full at the time of
aelivery of the Treasury bonds of 1940-1943 (or interim certificates)
upon allotted subscriptions. Payment for bonds subscribed for
should be made when the subscription is tendered. If any subscription is rejected in whole or in part, any bonds which may have been
tendered and not accepted will be returned to the subscriber.
SURRENDER OF BONDS
Surrender of coupon bonds.—Third 4i/4's in coupon form tendered
in exchange tor Treasury bonds issued hereunder should be presented and surrendered to a Federal reserve bank. The bonds must
be delivered at the expense and risk of the holder. Facilities for
transportation of bonds by registered mail insured ma}^ be arranged
between incorporated banks and trust companies and the Federal
reserve banks, and holders may take advantage of such arrangements
when available, utilizing such incorporated banks and trust companies as their agents. Incorporated banks and trust companies are
not agents of the United States under this circular.
Coupons dated September 15, 1928, must be attached to the coupon bonds of the third 414's when presented. At the time of delivery of the Treasury bonds df 1940-43 (or interim certificates) upon
allotted subscriptions. Federal reserve banks will pay to the subscriber or his authorized agent the interest from March 15, 1928, to
September 15, 1928, on the coupon third 4%'s surrendered and
accepted in exchange.
1 The accrued interest for this period for each $1,000 face amount of bonds is
$1.47540976.
I
266
REPORT ON THE FINANCES
Surrender of registered bonds.—Third 414's in registered form,
tendered in exchange for Treasury bonds issued hereunder, should
be assigned by the registered payee or assigns thereof to " The
Secretary of the Treasury for* exchange for Treasury bonds to be
delivered to
" (name of personate whom delivery is to be
made to be inserted in assignment), in accordance with the general
regulations of the Treasury Department governing assignments for
transfer or exchange into coupon bonds, and thereafter' should be
presented and surrendered to a Federal reserve bank. The bonds
must be delivered at the expense and risk of the holder. At the time
of delivery of the Treasury bonds of 1940-43 (or interim certificates) upon allotted subscriptions. Federal reserve banks will pay
to the subscriber or his authorized agent the interest from March 15,
1928, to September 15, 1928, on the registered third 4i/i's surrendered in exchange.
The Federal reserve banks, as fiscal agents of the United States,
are hereby authorized and requested to receive subscriptions for
Treasury bonds hereunder, to receive third 414's tendered in exchange, to make allotments of subscriptions on the basis and up to
the amounts indicated to them by the Secretary of the Treasury, and
to make delivery of Treasury bonds on full-paid subscriptions
allotted, and, pending delivery of definitive bonds, to issue interim
certificates.
F U R T H E R DETAILS
Any further information which may be desired as to the issue of
Treasury bonds under the provisions of this circular may be obtained
upon application to a Federal reserve bank. The Secretary of the
Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the exchange,
and may terminate the offer at any time in his discretion.
A. W.
MELLON,
Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
J u l y 5, 1928.
To the vnvestor:
Almost any banking institution in the United States wiU handle your subscription for you, or you may make subscription direct to the Federal reserve
bank of your district. Your special attention is invited to the terms of subscription and allotment as stated above, and to the fact that third Liberty loan bonds
may be exchanged for the Treasury bonds offered. Further attention is directed
to the fact that the third Liberty loan bonds of 1928 mature on September 15,
1928, and will cease to bear interest on that date.
EXHIBIT
17
Gash subscriptions and allotments. Treasury bonds of 194.0-191^3
{from press releases, July 9, 1928, J u l y 11, 1928, and July 12,
1928, revised'')
Secretary Mellon announced that subscriptions for the cash offering
of 3 % per cent Treasury bonds of 1940-43, dated July 16,1928, closed
at the close of business on Saturday, July 7, 1928. The closing of
1 Revised Sept. 5. 1928.
267
SECRETARY OF THE TREASURY
the cash subscriptions does not affect the privilege of exchanging
third Liberty loan bonds for the new bonds.
The total amount of cash subscriptions received was $743,367,700,
and the total of cash subscriptions allotted was $251,521,400.
The subscriptions and allotments were divided among the several
Federal reserve districts as follows:
Federal reserve
district
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis.._
Total cash
Total cash
subscriptions subscriptions
received
allotted
$92,982,750
203,924,450
123, 734,150
62, 202,150
36,395,250
32,304,850
98, 553,400
21,260,750
$43,109,600
65, 504, 650
32,888, 000
21, 548, 650
13,972,900
15, 279,150
35,020,800
7, 665,500
Federal reserve
district
Minneapolis.Kansas C i t y . .
Dallas
San Francisco
Treasury
Total
Total cash
Total cash
subscriptions subscriptions
received
allotted
$7,549,850
13, 622, 350
13, 248,850
37, 681, 550
7,350
$4,484,460'
6,051,060'
6,472,460
9,630, 350
3,950
743, 367,700
251, 521.400
The above figures relate to cash subscriptions only. The allotment
of cash subscriptions was made on the following basis: All cash subscriptions in amounts not exceeding $1,000 for any one subscriber
were allotted in full. Cash subscriptions in amounts over $1,000, but
not exceeding $100,000, were allotted 60 per cent, but not less than
$1,000, on any one subscription; cash subscriptions in amounts over
$100,000, but not exceeding $500,000, were^ allotted 50 per cent, but
not less than $60,000 on any one subscription; cash subscriptions in
amounts over $500,000, but not exceeding $1,000,000, were allotted
30 per cent, but not less than $250,000 on any one subscription; and
cash subscriptions in amounts over $1,000,000 were allotted 20 per
cent, but not less than $300,000 on any one subscription.
EXHIBIT 18
Exchange subscriptions to Treasury bonds of 19Jfi-li,8 {from, press
release, July 27, 1928 "•)
Acting Secretary Mills to-day announced that the privilege of exchanging third Liberty loan 414 per cent bonds for the new 3 % per
cent Treasury bonds of 1940-43 wull definitely expire on Tuesday,
July 31, 1928. Exchange applications in the mails or otherwise in
transit before midnight on July 31 will be accepted.
The offering of 3 % per cent Treasury bonds of 1940-43 was first
announced on July 5. Through the use of the radio, newspaper
advertisements, placards, and other methods of publicity, the Treasury has endeavored to inform every holder of third 4%'s of the
exchange privilege, and banks throughout the country have lent their
assistance in communicating information to their customers.
1 Final figures, Sept. 5, 1928.
268
REPORT ON T H E FINANCES
The exchange subscriptions were divided among the several Federal
reserve districts as follows:
Boston
New York
PhUadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis—
$2, 778,400
43, 274, 400
3, 521, 950
11, 434,000
2, 219,100
1, 399, 000
15, 402, 650
5, 466, 350
Minneapolis
K a n s a s City
Dallas
San Francisco
Treasury
Total
$3, 563, 550
8, 016, 750
3, 773,400
4, 563, 300
2,108, 700
107, 521, 550
P u r c h a s e of third L i b e r t y loan bonds, A u g u s t , 1928
E X H I B I T 19
Offer to purchase third Liberty loom bonds at 1 0 0 ^ and par
{from press release, August 1, 1928)
Acting Secretary Mills to-day announced that beginning to-day and
continuing until further notice, he has authorized the Federal reserve banks to purchase, at the option of holders, third Liberty loan
41/4 per cent bonds, for account of the sinking fund. Such purchases
will be made at lOOo^ to August 15, 1928, and thereafter at par,
together with accrued interest to the date of such optional purchase. Coupon bonds presented for purchase must have September
15, 1928, coupons attached. Eegistered bonds presented for purchase must be assigned to " The Secretary of the Treasury for purchase " in accordance with established regulations, and accrued interest thereon will be paid to date of discharge of registration.
Issue of September, 1928
E X H I B I T 20
Offering of certificates of indebtedness. Series TJ-1929 (^i^ per
cent) {press release, September 7,1928, with Department Circular
No, 408, and press release, September 8,1928)
SEPTEMBER 7,
1928.
The Treasury is to-day announcing its September financing, which
takes the form of an offering of 9-month 4 ^ per cent Treasury
certificates of indebtedness, dated and bearing interest from September 15, 1928, and maturing June 15, 1929. The amount of the offering is $525,000,000, or thereabouts.
The Treasury will accept in payment for the new certificates, at
par, third Liberty loan bonds, maturing September 15, 1928. Subscriptions for which payment is to be tendered in third Liberty loan
bonds maturing September 15, 1928, will be allotted in full up to
the amount of the offering.
About $970,000,000 of the third Liberty loan bonds are still outstanding and become payable on September 15, 1928. Also, about
$70,000,000 in interest payments on the public debt become payable
on that date.
SECRETARY OF T H E TREASURY
269
The final redemption of the third Liberty loan brings to a close
the vast operations begun by the Treasury in 1927, which, in the
course of 18 months, have resulted in the refunding or retirement of over five billions of Liberty loan bonds accompanied by
important reduction in interest charges. Of $5,264,000,000 of second
and third Liberty loan bonds outstanding in February, 1927, all but
$20,000,000 of which bore a 414 per cent rate of interest, about
$1,300,000,000 will have been retired from sinking fund and surplus.
The balance has been replaced by bonds bearing 3 % per cent interest, by three five-year notes bearing 3 ^ per cent interest, all with
maturity or call dates convenient for sinking fund purposes, and
by short-term certificates, including the issue now off'ered, all maturing on quarterly tax payment dates.
The text of the official circular follows.
[Department Circular No. 408]
The Secretary of the Treasury, under the authority of the act
approved September 24, 1917, as amended, offers for subscription, at
par and accrued interest, through the Federal reserve banks. Treasury
certificates of indebtedness of Series TJ-1929, dated and bearing
interest from September 15, 1928, payable June 15, 1929, with interest
at the rate of 41/2 per cent per annum, payable on a semiannual basis.
Applications will be received at the Federal reserve banks.
Bearer certificates will be issued in denominations of $100, $500,
$1,000, $5,000, $10,000, and $100,000. The certificates will have two
interest coupons attached, payable December 15, 1928, and June 15,
1929.
The certificates of said series 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, 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.
The certificates of this series will be accepted at par during such
time and under such rules and regulations as shall be prescribed or
approved by the Secretary of the Treasury in payment of income
and profits taxes payable at the maturity of the certificates. The
certificates of this series will be acceptable to secure deposits of public
moneys, but will not bear the circulation privilege.
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 Secretary of the Treasury also
reserves the right to make allotment in full upon applications for
smaller amounts, to make reduced allotments upon or to reject appli-
270
REPORT ON THE FINANCES
cations for larger amounts, and to make classified allotments and
allotments upon a graduated scale; and his action in these respects
will be final. Subscriptions in payment for which third Liberty loan
4 % per cent bonds of 1928 (hereinafter referred to as third 4 ^ ' s )
are tendered, will be allotted in full up to the amount of the offering.
Allotment notices will be sent out promptly upon allotment, and the
basis of the allotment will be publicly announced.
Payment at par and accrued interest for certificates allotted must
be made on or before September 15, 1928, or on later allotment.
After allotment and upon payment Federal reserve banks may issue
interim receipts pending delivery of the definitive certificates. Any
qualified depositary will be permitted to make payment by c,redit
for certificates allotted to it for itself and its customers up to any
amount for which it shall be qualified in excess of existing deposits,
when so notified by the Federal reserve bank of its district. Bonds
of the third 414's, maturing on September 15, 1928, will be accepted
at par in payment for any certificates of the series now offered which
shall be subscribed for and allotted, with an adjustment of accrued
interest, if any, on the certificates of the series so paid for.
Bonds of the third 4 ^ ' s tendered in payment for any certificates
of the series now offered should be presented when the subscription
is tendered. The bonds must be delivered at the expense and risk
of the holder. Coupons dated September 15, 1928, which become
payable on that date, should be detached from any bonds of the
third 4%'s in coupon form so tendered, and such coupons should be
collected by the holders thereof in regular course. Third 4i/4's
in registered form tendered in payment for certificates subscribed
for must be duly assigned to " The Secretary of the Treasury fol
payment," in accordance with the general regulations of the Treasury
Department governing such assignments. Final interest due September 15, 1928, on registered bonds of the third 414's so tendered
will not be paid by interest checks in regular course but will be
covered bv payments to be made simultaneously with the delivery of
the certificates (or interim receipts) upon allotted subscriptions.
Facilities for transportation of bonds by registered mail insured may
be arranged between incorporated banks and trust companies and
the Federal reserve banks, and holders may take advantage of such
arrangements, when available, utilizing such incorporated banks and
trust companies as their agents. Incorporated banks and trust companies are not agents of the United States under this circular.
As fiscal agents of the United States, Federal reserve banks are
authorized and requested to receive subscriptions and to make allotments on the basis and up to the amounts indicated by the Secretary of the Treasury to the Federal reserve banks of the respective
districts.
SEPTEMBER 8,
1928.
Referring to the Treasury's current offering of 4 % per cent certificates of indebtedness of Series TJ-1929, dated September 15, 1928,
and maturing June 15, 1929, attention is directed to the fact that
the subscription books for this issue may close within a few days
SECRETARY OF THE TREASURY
271
without further notice, and for this reason holders of third Liberty
loan 414 per cent bonds who desire to exchange their bonds for the
new certificates, as well as cash subscribers, should enter their subscriptions at the earliest possible opportunity. I n view of the fact
that third Liberty loan bonds will mature on September 15, holders
of such bonds may have gained the erroneous impression that they
will have until that date to make the exchange, but, as above stated,
the subscription books will be open for only a limited period, possibly
a few days, and any applications received after the closing of the
books will be rejected.
I n anticipation of the maturity of the third Liberty loan on Sep,tember 15, 1928, many holders of these bonds have already forwarded
their bonds, either direct or through their local banks, to a Federal
reserve bank or the Treasury Department for payment on September
15. Holders of third 4%'s who have already surrendered their bonds
for payment, but who now desire to exchange their bonds for the
new 41^ per cent Treasury certificates of indebtedness, may do so
provided their application is received before the closing of the subscription books. I n such cases they should file their application for
the new certificates through the same agency which they utilized in
surrendering their third Liberty loan bonds for payment, in order
that the necessary change of transaction may be made.
E X H I B I T 21
Subseriptions and allotments, certifioates of indebtedness. Series
TJ-1929 {from\ press releases, September 12, 1928, September 18^
1928, and September 20,1928, revised')
Secretary Mellon announced that the subscription books for theoffering of $525,000,000 of 9-month 4% per cent Treasury certificates
of indebtedness. Series TJ-1929, closed at the close of business Tuesday, September 11. The closing of the subscription books applies
not only to cash subscriptions, but also to those subscriptions
in payment for which third Liberty loan 414 per cent bonds might
be tendered, aiid accordingly any subscriptions entered after theclosing date will be rejected.
Eeports received from the 12 Federal reserve banks show that
the total subscription for the offering of Series TJ-1929 aggregated
$1,019,739,200. Of this amount $102,858,700 represent subscriptions
in payment for which third Liberty loan 414 per cent bonds weretendered, which subscriptions have been allotted in full. Allotments
on the $916,880,500 cash subscriptions were made as follows: All cash
subscriptions in amounts not exceeding $10,000 for any one subscriber
were allotted in full. Cash subscriptions in amounts over $10,000 but
not exceeding $100,000 for any one subscriber were allotted 80 per
cent, but not less than $10,000 on any one subscription; cash subscriptions in amounts over $100,000 but not exceeding $500,000 for
any one subscriber were allotted 60 per cent but not less than $80,000'
for any one subscription; cash subscriptions in amounts over $500,0001 Revised Nov. 1, 1928.
13606—29—FI 1928
20
272
REPORT ON T H E FINANCES
but not exceeding $1,000,000 for any one subscriber were allotted 40
per cent but not less than $300,000 on any one subscription; and cash
subscriptions in amounts over $1,000,000 were allotted 30 per cent but
not less than $400,000 on any one subscription.
The subscriptions and allotments were divided among the several
Federal reserve districts as follows:
Total exTotal cash
change sub- subscriptions
scriptions
received
received
Federal reserve districts
Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.
Treasury
$5,493,600
$76,499,200
287,153,100
31,509,600
63,045,400
4,921,700
59,099,000
10, 912,000
23,949,400
2,970,100
47,971,300
1, 234,400
96,126,600
13,435,600
30,331,100
7,711,100
4, 691, 000 14,311,400
8, 762, 700 22,547,800
43,338,900
3,149,800
152,230,500
5,095,300
276,900
2,971,900
Total..
102,858, 700
916,880,600
Total subscriptions
allotted
(cash and
exchange)
$49,694,900
141, 316,100
37,721, 700
43,370,500
20,158, 000
34, 655, 200
67,432,100
25,442,000
14, 860,000
24, 373,600
29, 537,900
67,533,900
3, 214, 800
649,310,700
$1,019,739,200
549,310,700
Total subscriptions received.
Total subscriptions allotted..
Issue of October, 1928
E X H I B I T 22
Announcement of prospective issue of securities in October, 1928
(press release, September 27, 1928)
Secretary Mellon to-day announced that, in accordance with established procedure, notice has been given to the banks of the country,
through the Federal reserve banks, that there will be an offering oi
Treasury securities early in October. This new issue will complete
the program of financing occasioned by the maturity of the. third
Liberty loan on September 15 last. Experience has demonstrated
that in the case of the long-term war issues, which were widely distributed, maturing bonds are not all presented on the maturity date
but a large number are presented for redemption over a considerable
period of time. In the case of the third, Liberty loan bonds, $955,000,000 were outstanding on September 14. Only $475,000,000 were
presented on September 15, and up to and including September 25,
$733,000,000 had been presented. Accordingly, in order to avoid
borrowing in excess of actual needs and to save unnecessary interest
charges, the Treasury Department on September 15, in connection
with its usual quarterly financing, made provision for the redemption
of such third Liberty loan bonds as might reasonably be anticipated
would be presented for j)ayment prior to October 15. The October
issue of securities, which in amount will be substantially smaller than
the offering dated September 15, is intended to furnish the necessary
SECRETARY OF THE TREASURY
273
funds to redeem the third Liberty loan bonds still outstanding, as well
as to provide for the financial needs of the Government up to
December 15, 1928.
EXHIBIT
23
Ofering oj certificates of indebtedness. Series TS-1929 { 4 ^ per cent)
(j>ress release, October 8, 1928^ with Department Circular No. 410)
The Treasury is to-day offering for subscription, at par and accrued
interest, through the Federal reserve banks, an issue of 11-month
4M per cent Treasury certificates of indebtedness of Series TS-1929,
dated and bearing interest from October 15, 1928, and maturing
September 15, 1929. The amount of the offering is $300,000,000, or
thereabouts.
Applications will be received at the Federal reserve banks.
Bearer certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000. The certificates will have two interest
coupons attached payable March 15 and September 15, 1929.
About $150,000,000 of third Liberty loan bonds, which became payable on September 15,1928, are still outstanding. Also, about $150,000,000 in interest payments on the public debt become payable on
October 15, 1928. This issue, together with cash now on hand, will
provide for the Treasury's requirements up to December 15, 1928.
The text of the official circular follows:
[Department Circular No. 410]
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
October 8, 1928,
The Secretary of the Treasury, under the authority of the act
approved September 24, 1917, as amended, offers for subscription,
at par and accrued interest, through the Federal reserve banks. Treasury certificates of indebtedness of Series TS-1929, dated and bearing
interest from October 15, 1928, payable September 15, 1929, with
interest at the rate of 4 ^ per cent per annum, payable on a semiannual basis.
Applications will be received at the Federal reserve banks.
Bearer certificates will be issued in denominations of $500, $1,000,
$5,000, $10,000, and $100,000. The certificates will have two interest
coupons attached, payable March 15, 1929, and September 15, 1929.
The certificates of said series shall be exempt, both as to principal
and interest, from all taxation now or hereafter imposed by the
United States, any State, or any of the possessions of the United
States, or by any local taxing authority, except {a) estate or inheritance taxes, and (&) graduated additional income taxes, commonly
known as surtaxes, and excess-profits and war-profits taxes, now or
hereafter imposed by the United States, upon the income of 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
274
REPORT ON THE FINANCES
by any individual, partnership, association, or corporation, shall be
exempt from the taxes provided for in clause (b) above.
The certificates of this series will be accepted at par during such
time and under such rules and regulations as shall be prescribedfor
approved by the Secretary of the Treasury in payment of income
and profits taxes payable at the maturity of the certificates. The
certificates of this series will be acceptable to secure deposits of public
moneys but will not bear the circulation privilege.
The right is reserved to reject any subscription and to allot less
than the amount of certificates apphed for and to close the subscriptions at any time without notice. The Secretary of the Treasury
also reserves the right to make allotment in full upon apphcations
for smaller amounts, and to make reduced allotments upon, or to
reject, apphcations for larger amounts, and to make classified allotments and allotments upon a graduated scale; and his action in
these respects will be final. Alloment notices will be sent out
promptly upon allotment, and the basis of the allotment will be
pubUcly announced.
Payment at par and accrued interest for certificates allotted must
be made on or before October 15, 1928, or on later allotment. After
allotment and upon payment, Federal reserve banks may issue
interim receipts pending deUvery of the definitive certificates. Any
quahfied depositary will be permitted to make payment by credit
for certificates allotted to it for itself and its customers up to any
amount for which it shall be quahfied in excess of existing deposits,
when so notified by the Federal reserve bank of its district.
As fiscal agents of the United States, Federal reserve banks are
authorized and requested to receive subscriptions and to make allotments on the basis and up to the amounts indicated by the Secretary
of the Treasury to the Federal reserve banks of the respective districts*
A. W.
MELLON,
Secretary qf the Treasury,
To the investor:
Almost anj'- banking institution in the United States will handle your subscription for you, or you may make subscription direct to the Federal reserve
bank of your district. Your special attention is invited to the terms of subscription and allotment as stated above. If you desire to purchase, at the
market price, certificates of the above issue after the subscriptions close, or
certificates of any outstanding issue, you should apply to your own bank, or,,
if it can not obtain them for you, to the Federal reserve bank of your districtj,
which will then endeavor to fill your order in the market.
EXHIBIT
24
Subscriptions and allotments^ certificates ofindebtedness, Series TS-1929'
. {from press releases, October 11,1928, and October 15,1928, revised ')
Secretary Mellon announced that subscriptions for the issue of
Treasury certificates of indebtedness. Series TS-1929, 4 ^ per cent,,
dated October 15, 1928, maturing September 15, 1929, closed at the
close of business on October 9, 1928. Reports received from the 12
Federal reserve banks show that for the offering, which was for $300,-iRevisedNov. 2,1928.
275
SECRETARY OF THE TREASURY
000,000, or thereabouts, total subscriptions aggregate some $838,700,000. The total of subscriptions allotted was $308,806,000,^
Allotments on subscriptions were made as follows: Subscriptions
in amounts not exceeding $1,000 were allotted ih full; subscriptions
in amounts over $1,000 but not exceeding $10,000 were allotted 80
per cent, but not less than $1,000 on any one subscription; subscriptions in amounts over $10,000 but not exceeding $50,000 were
allotted 70 per cent, but not less than $8,000 on any one subscription;
subscriptions in amounts over $50,000 but not exceeding $500,000
were allotted 50 per cent, but not less than $35,000 on any one
subscription; subscriptions in amounts over $500,000 but not exceeding $1,000,000 were allotted 30 per cent, but not less than $250,000
on any one subscription; and subscriptions in amounts over $1,000,000
were allotted 20 per cent, but not less than $300,000 on any one
subscription.
The subscriptions and allotments were divided among the Several
Federal reserve districts as follows:
Federal reserve district
Boston
New York...
Philadelphia.
Cleveland..Richmond
Atlanta
Chicago
St. Louis
Total subscriptions
received
Total subscriptions
allotted
$61, 512, 500 $23,716,600
319,928, 000 83,797,000
76,092, 500 29, 700,000
57,601,600
24,898, 500
34, 479, 500 17, 568, 500
42, 662, 600 23,356, 000
70,027,000
32, 111, 500
24, 233, 000 11,888,000
Federal reserve district
Minneapolis..
Kansas City..
Dallas
San Francisco.
Treasury
Total...
Total subscriptions
received
$11,077, 600
27,838, 600
38,174, 000
74, 637, 500
436,000
838, 700, 000
Total subscriptions
allotted
$6,834, 500
13,020, 500
20, 306,000
21, 299,000
310,000
308,806,000
Miscellaneous
EXHIBIT 25
Notice of payment of third Liberty loan at maturity {Department
Circular No', 408, July 2, 1928)
To holders of third Liberty loan bonds and others concerned:
1. Notice of payment,—Public notice is hereby given that, in accordance with their terms and pursuant to the provisions of Treasury Department Circular No. I l l , dated April 6,1918, all outstanding third
Liberty loan bonds, otherwise known as United States of America
414 per cent gold bonds of 1928, and hereinafter referred to as third
414's, will cease to bear interest on September 15,1928, on which date
the principal of any such bonds then outstanding will be payable,
together with the interest then accrued thereon.
2. Presentation and surrender of coupon bonds for payment.—Third
4 ^ ' s in coupon form should be presented and surrendered to any
Federal reserve bank or branch, or to the Treasurer of the United
States, at Washington, for payment on September 15, 1928. The
bonds must be delivered at the expense and risk of the holder, and
should be accompanied by appropriate written advice. (See F o r m
P . D. 1267, hereto attached.) Facilities for transportation of bonds
by registered mail insured may be arranged between incorporated
banks and trust companies and the Federal reserve banks, and holders
276
REPORT ON THE FINANCES
may take advantage of such arrangements, when available, utilizing
such incorporated banks and trust companies as their own agents.
Incorporated banks and trust companies are not agents of the United
States under this circular.
Coupons dated September 15, 1928, which become payable on that
date, should be detached from aiiy third 4 ^ ' s presented for payment
on September 15, 1928, and such coupons should be collected by the
holders thereof in regular course.
3. Presentation ana^ swrrender of registered bonds for payment,—
Third 4%,'s in registered form presented and surrendered for payment must be assigned by the registered payees or assigns thereof, or
by their duly constituted representatives, to " T h e Secretary of the
Treasury for payment," in accordance with the general regulations
of the Treasury Department governing such assignments, and thereafter should be presented and surrendered to any Federal reserve
bank or branch or to the Treasury Department, Division of Loans
and Currency, Washington, for payment on September 15, 1928. The
bonds must be delivered at the expense and risk of the holder and
should be accompanied by appropriate written advice. (See Form
P . D. 1268, hereto attached.)
If assignment for payment is made by the registered holder of
record, payment of principal and interest will be made to the registered holder at his last address of record, unless written instructions
to the contrary are received from such registered holder. If assignment for payment is made by an assignee holding under proper
assignment from the registered holder of record, or by a duly constituted representative of such registered holder or assignee, payment
of principal and interest will be made to such assignee or representative, at the address specified in the form of advice. Assignment in
blank, or other assignment having similar effect, will be recognized,
and in that event payment of principal and interest will be made to
the person surrendering the bonds for payment, since under such
assignments the bonds become in effect payable to bearer. I n case
it is desired to have payment of the registered bonds made to some
one other than the registered holder of record, without intermediate
assignment, the bonds may be assigned to " T h e Secretary of the
Treasury for payment for account of—
55.
(Here insert name and address of payee desired)
but assignments in this form must be completed before acknowledgment and not left in blank. Assignments in blank, or assignments
having similar effect, should be avoided, if possible, in order not to
lose the protection afforded by registration.
The transfer books for registered bonds of the third Liberty loan
will not close prior to September 15,1928, but any such bonds received
on and after September 1, 1928, bearing assignments for transfer or
exchange will be considered as having been presented for payment
on September 15, 1928, and will be treated accordingly. Final interest due on September 15, 1928, will not be paid by interest checks in
regular course but will be covered by payments to be made simultaneously with the payments on account of principal.
277
SECRETARY OF THE TREASURY
4. Presentation prior to September 15,1928.—In order to facilitate
the payment of third 4l^'s on September 15, 1928, any such bonds
may be presented and surrendered in the manner herein prescribed,
at any time after August 1,1928, for payment on September 15, 1928.
Such early presentation by holders, in advance of September 15, 1928,
will insure prompt payment of principal and interest when due on
September 15, 1928. This is particularly important with respect to
registered bonds, for payment can not be made until registration shall
have been discharged at the Treasury Department. I t will expedite
payment if bonds are presented to Federal reserve banks or branches.
5. Further information.—Any further information which may be
desired as to the payment of third 4i/4's under this circular may be
obtained from any Federal reserve bank or branch, or from the commissioner of the public debt. Treasury Department, Washington,
where copies of the Treasury Department regulations governing
assignments also may be obtained. The Secretary of the Treasury
may at any time, or from time to time, prescribe supplemental or
amendatory rules and regulations governing the matters covered by
this circular.
A. W. MELLON,
Secretary of the Treasury,
IMPORTANT.—Third Liberty loan bonds are due for payment on
September 15, 1928. Prior to that date holders of such bonds may
be offered the privilege of exchanging their bonds for other interestbearing obligations of the United States. Holders who may desire
to avail themselves of an exchange privilege, if and when offered,
"should request their bank or trust company to notify them when
information regarding any such exchange offering is received. Holders of registered bonds will receive direct advice if any exchange
privilege is offered.
[Treasury Department, Public Debt. Form P. D. 1267]
FORM
OF
ADVICE TO ACCOMPANY T I I I R D LIBE3RTT LOAN 4 % PER C E N T
COUPON FORM PRESENTED FOR P A Y M E N T A T M A T U R I T Y
BONDS
IN
To the Federal Reserve Bank of
or
Treasurer of the United States, Washington, D. C.:
Pursuant to the provisions of Treasury Department Circular No. 403, dated
July 2, 1928, the undersigned presents and surrenders herewith for payment
$
, face amount, of third Liberty loan 4% per cent bonds in coupon
form, with coupon due September 15, 1928, detached as follows:
Number of bonds
Denomination
$50
100
600
1,000
6,000
10,000
Total
Serial numbers of bonds
1
Face
amount
278
REPORT ON THE FINANCES
and requests that remittance covering payment therefor be forwarded to the
undersigned at the address indicated below.
(Signature)
(Address in full)
(Date)
[Treasury Department, Public Debt. Form P. D. 1268]
FORM
OF
ADVICE TO ACCOMPANY T H I R D LIBERTY LOAN 4^/4 PER CENT
. REGISTERED FORM PRESENTED FOR P A Y M E N T AT M A T U R I T Y
BONDS
IN
To the Federal Reserve Bank of
or
Treasury Department, Division of Loans and Currency, Washington, D. C.:
Pursuant to the provisions of Treasury Department Circular No. 403, dated
July 2, 1928, the undersigned presents and surrenders herewith for payment
$
, face amount of third Liberty loan 4i^ per cent bonds in registered
form, inscribed in the name of
and duly assigned to " The Secretary of the Treasury for payment," as follows:
Number of bonds
Denomination
Serial numbers of bonds
Face
amount
$50
100
600
1,000
6,000
10,000
60,000
100, 000
Total
and requests that remittance coveringj)ayment therefor be forwarded to the
undersigned at the address indicated below.
(Signature)
(Address in full)
(Date)
TAXATION
EXHIRIT 26
'" Some Observations on
Undersecretary of the
the stockholders of the
the Economic Club of
Our Federal Tax System^'' an address by
Treasury MiUs, November 11, 1927, before
Federal Reserve Bank of Boston and before
Worcester
For the fourth time in seven years the state of Federal finances
is such as to permit a substantial reduction of taxes. The prosperity
of the country, a sound policy of debt retirement, and wise and
economical management of public affairs have combined to produce
this favorable situation. The causes are obvious enough; yet, in
their eagerness to avail themselves of the fruits, some people seem
inclined to overlook the facts and to create a situation which will
make difficult like efficiency in the future. As I shall point out
a little later, excessive or ill-advised tax reduction is not without its
serious consequences.
SECRETARY OF THE TREASURY
279
Kather from accident than from design, our Federal tax system
is, on the whole, a well-balanced and equitable one. By that I mean
that direct taxes—or, as I use this term, those taxes that are not,
generally speaking, passed on to the consumer—and indirect taxes—
or those that are passed on—are fairly well apportioned. As a consequence, there is a reasonable distribution of the burden in accordance with ability to pay. We received last year in direct taxes—that
is, income or estate taxes—approximately $2,320,000,000, and in indirect taxes—that is, customs and miscellaneous internal revenue—
approximately $1,150,000,000.
I t is obvious that the scales lean very definitely in favor of those
who are not subject to direct taxes; and, while such lack of balance
is unquestionably proper, yet inequalities do exist that are hard to
justify, inequalities that will necessarily be accentuated should some
of the existing excise taxes be repealed. They are traceable, in the
main, to two causes: First, the number of direct taxpayers making a
real contribution to the support of government is too limited; in the
second place, the rates imposed on some classes of direct taxpayers
are out of line. Under the first head I classify individual income
taxpayers; under the second, corporations or their stockholders.
Under the revenue act of 1926 more than 44 per cent of the
individual taxpayers were relieved from income tax payments. I n
1924, 4,489,698 individuals returned taxable net income, whereas in
1925 the number had fallen to 2,501,166. F o r 1925, 9,560 taxpayers
returning net income in excess of $100,000 returned about 49 per
cent of the total tax returned; and 327,018 individuals returning net
income of $10,000 and over returned $701,497,726 out of a total of
$734,555,183. I n other words, of those reporting taxes due, 2,174,148
individuals returned approximately $33,000,000 of tax, while 327,018
individuals returned $701,000,000 of tax. According to these returns,
less than three-tenths of 1 per cent of our population returned 9 5 ^
per cent of our total income t a x ; about 1.9 per cent, returned 4i/^
per cent and the remaining 97.8 per cent of the population returned
no tax whatever. For those returning taxable net income not in
excess of $5,000, the rate was twenty-nine one-hundredths of 1 per
cent. For those.returning taxable income in excess of $5,000, but not
in excess of $10,000, fifty-eight one-hundredths of 1 per cent.
These figures make it only too clear that, in so far as individuals
are concerned, the income tax has ceased to be a national tax and
has become a class tax of very limited character. This is a situation
which must be accepted. The water is over the dam. But, as between
individual income taxpayers, some of the inequalities should be
ironed out by revision of the rates applicable to the so-called intermediate brackets.
Turning now to our second group, that is to say, the corporations
or their stockholders, you will have noted that I treat the corporation income tax as a direct tax which, according to the definition I
have given, implies that it is not passed on to the consumer, and
must, therefore, be paid by the stockholder. I know that many
business men will challenge such a conclusion, but, leaving aside
the indirect effects of such a tax, more especially when levied at
high or excessive rates, and admitting that thei'e are exceptions to
the rule, my individual opinion is that, except under unusual cir«
280
REPORT ON THE FINAINVJES
cumstances, a tax on net income can not be shifted by the person on
whom it is laid in the form of an addition to price. This, I repeat,
is simply my own personal conclusion, but it is supported by competent authority.
I t is in agreement with the work of the committee on national
debt and taxation of Great Britain, charged with the duty of investigating the incidence of income.tax. That committee decided
that the issue could be reduced to a question of fact subject to
statistical study. Such a study was made by them for the two
fiscal years 1920-21 and 1922-23, the income tax returns of a sample
of all public companies or corporations being used as a source for the
necessary data. The tabulated data indicated:
(1) A significant proportion of the total sales in each industry
were made at no profit or at a loss during each quarter of the two
years studied.
(2) The median range of sales were made at no profit or' at small
profit ratios.
(3) The trend of profits during the quarter periods studied followed the trend in prices.
The conclusion of the committee was that prices are determined in
the immediate market, and that the marginal producer's—those making no profits—control a significant proportion of the volume of
sales at any time. Under such circumstances it would be impossible
to shift the tax. The committee stated:
We conclude that the broad economic argument is true over the whole field,
and for approximately the whole of the time, any exceptions being local or
temporary and insuflicient to invalidate it.
Conditions in this country do not seem to be essentially different.
Preliminary Statistics of Income for 1926 show that whereas 249,000
returns of corporations reported a profit, no less than 164,000 reported
deficits for taxation purposes aggregating over $2,000,000,000.
I t seems probable, therefore, that in the main our present tax of
13l^ per cent on the net income of corporations ultimately comes
out of the pockets of the owners of the corporations—the stockholders.
Certainly there is no economic justification for postponing the reduction of a rate admittedly out of line, on the theory that the entire
tax was passed on to the consumer last year and that an immediate
. reduction must, therefore, necessarily spell a bonus to the
corporations.
I t has been estimated that there are some 3,000,000 stockholders
in the United States. There are probably more. These 3,000,000
stockholders pay more than their just share of taxes not only as
compared with other income-tax payers, but as compared with all
other classes of taxpayers. I n so far as the individual income tax
payers are concerned, it must be remembered that there are only
2,500,000 of them, that the average rate of tax on their income has
been reduced to 4.20 per cent; that less than 9,000 pay at the rate
of 131/^ per cent on their taxable income; and that that rate applies
only to net incomes in excess of $110,000, whereas the 3,000,000
stockholders are taxed at the rate of 13i/^ per cent on their proportionate share of tb^ income of the corporations, and this irrespective
of whether their individual income is sufficiently great to subject
them to the individual income tax at that rate, or, for that matter,
to any individual income tax at all.
SECRETARY OF THE TREASURY
281
Comparing the tax paid b}'' corporations—that is, by their stockholders—with all other classes of taxpayers, it will be found that
last year, exclusive of back taxes, the former as such contributed
$1,125,000,000 to the Federal Government, as contrasted with $763,000,000 paid by individual income-tax payers, many of them, of
<jourse, stockholders, and with $1,150,000,000 paid through indirect
taxes by our entire population of 114,000,000 people. There is no
logic or justice in such a discrimination. There are, to be sure, many
advantages in the corporate form of conducting business, but these
certainly do not constitute sufficient justification for such a disproportionate tax burden.
Looking, then, at the whole picture, and not just selfishly at some
particular part, the most important feature of any tax revision
program should be a reduction of the corporation tax rate, and from
a negative standpoint, if we desire to retain some measure of balance
between direct and indirect taxes, there should be no further repeal
at present of existing excise or indirect taxes. I t must not be
forgotten that, whatever the intentions of the framers of the 1926
revenue act, the results as shown by the first full year of its operation
were that indirect taxes yielded $197,000,000 less and direct taxes
$192,000,000 more. Automobile taxes were reduced about $72,000,000.
There are, to be sure, other desirable changes, such as the revision
of rates applicable to the intermediate individual income tax brackets
and the repeal of the Federal estate tax.
I n undertaking, however, this or any other tax revision, there are
two outstanding factors which must be kept constantly in mind—
first, the revenue needs of the Government; and secondly, strict adherence to the sound financial practices that have hitherto prevailed.
Substantial tax reduction is assured in any event, and even if it were
not, after three tax revisions downward our present situation is by
no means intolerable. Under these happy circumstances, there can
be no conceivable excuse for abandoning the sound principle of a
balanced budget, and by a balanced budget I mean that revenues shall
be adequate to cover all expenditures in any given fiscal year, so that
it will be unnecessary to resort to borrowing in order to meet expenditures chargeable against ordinary receipts. We have been pretty
critical of foreign countries when they, under most difficult circumstances, have failed to observe the principle of a balanced budget, and
have prided ourselves on our strict adherence to this principle. I t
is surprising, therefore, to see responsible business men advising the
Congress to follow a course that will almost inevitably lead to an
unbalanced budget. I am referring to those gentlemen who, without
detailed and careful study of either expenditures or probable receipts,
are urging tax reductions that in the aggregate far exceed the figures
indicated as possible by the official estimates. They do not criticize
the estimates in detail; they do not point out in what respects, if any,
they err; they satisfy themselves and expect others to be satisfied
with the argument that in the past surpluses have exceeded estimates,
and on the strength of that argument alone they urge the Congress to
reduce taxes by $400,000,000, with a continuing surplus of only $275,000,000 in sight. They would not run their own businesses on any such
haphazard basis, and they should not advise public servants to run
282
REPORT ON THE FINANCES
the public business along lines less conservative than they observe in
protecting their private interests.
Just a word about these so-called excessive surpluses of the past
few years. I t is interesting to note that if we exclude back tax collections, less internal revenue refunds, and the receipts from the disposal of such capital assets a railroad securities, farm loan bonds,
assets of the War Finance Corporation, and surplus war material, in
the year 1923 there would not have been a surplus, but a deficit of
$89,000,000; in the year 1924, a surplus of but $169,000,000; in the
year 1925, a deficit of $93,000,000; in the year 1926, a surplus of
$162,000,00; and, in 1927, a surplus of $221,000,000, instead of $635,000,000; while the surpluses of 1928 and 1929, exclusive of special receipts from the above-named sources, are estimated at $137,00,000 and
$199,000,000, respectively. Of the $2,000,000,000, approximately, of
debt retired from surplus during the five fiscal years ending June
30, 1927, no less than $1,700,000,000 is accounted for by these special
temporary items, and no less than $900,000,000 from the realization
of capital assets. I t must be conceded that there could be no better
application of the proceeds of the sale of capital assets than to the
reduction of the national debt. These figures present a pretty complete answer to those people who, far from rejoicing over the existence of these surpluses and our consequent ability to reduce the
burden of the national debt, deplore them as evidences of an imaginary injustice to taxpayers.
For my part, I am confident that the great body of the American
people desire to see the finances of the Federal Government so conducted that a policy will be maintained which without fail will insure
a balanced budget year in and year out, and at the same time permit
the steady reduction of the national debt at a reasonably rapid rate.
There is no immediate danger in so far as the second policy is concerned, but the day is not far distant when, in the name of tax reduction and of relieving the present generation, we may be urged to
reduce the amount applicable to sinking-fund retirements or to
change the provision of law whereby the repayment of the principal
of our foreign debts is applied to the reduction of our national debt.
Indeed, the second proposition has already been advanced in responsible quarters.
Such suggestions do not take into consideration how heavy debt
service charges are—we had paid some $8,000,000,000 in interest on
our war debt up to June 30 last—and how rapidly they increase with
the length of the life of the debt. Thus, for instance, if we retire a
debt of $25,000,000,000 uniformly over a 25-year term, and pay an
average rate of interest of 4% per cent, the total interest cost will be
$16,000,000,000. If the term is made 30 years, over $3,500,000,000 is
added to the total interest. If 62 years is taken, as some persons
have urged, total interest would be $46,272,000,000, or nearly twice
the original principal. So, whereas a 25-year program would cost a
total of $41,000,000,000, a 62-year program would cost $71,000,000,000.
Along with tax reduction, the economic and orderly management
of the public debt has been the special problem of the Treasury since
the close of the war. I wish now to direct your attention to a particular phase of this problem, namely, the tax-exempt feature of Federal
bonds
SECRETARY OF THE TREASURY
283
As early as 1921 the Treasury favored an amendment to the Constitution permitting the United States to tax incomes derived from
securities issued by the States and their political subdivisions after
the ratification of the amendment, and conversely, permitting each
State to tax the income derived by its residents from securities issued
under the authority of the United States. As recently as 1925 the
Treasury Department has called the attention of the Congress to the
evils arising from the existence of great masses of tax-exempt securities which offered to the wealthy the means of avoiding the payment
of income taxes to the Federal Government. I n the Sixty-seventh
Congress a resolution providing for an amendment to the Constitution
along the lines above indicated passed the House, but was not acted
on by the Senate. I n the Sixty-eighth Congress a similar resolution
was defeated in the House by 41 votes. No further action looking
to the submission of such an amendment to the States has been taken.
I t is probable that the time when such an amendment could have
been effective has passed. There are now outstanding $15,946,000,000
of wholly tax-exempt securities, of which $il,841,000,000 have been
issued by the States and their political subdivisions, $145,000,000 by
territories and insular possessions, $2,165,000,000 by the United States
Government, and $1,795,000,000 by the Federal farm loan system.
Since these securities are being issued at the rate of over $1,000,000,000 a year, it is apparent that so many will be in existence before
the constitutional amendment in question could be submitted and
accepted by the necessary number of States that it would be ineffective. Moreover, the revenue act of 1926 reduced surtax rates to such
an extent that the inducement to avoid them by resort to investment
in tax-exempt securities has to a very large extent disappeared. The
statistics of income for 1925 show that the total amount of tax-exempt
securities returned by individuals was $5,041,000,000. The income
received from these securities amounted to $230,000,000. H a d these
securities been fully taxable, the revenue to the Government would
not have been in excess of $11,000,000.
Given all these circumstances, I have reached the conclusion that
the reasons which led the Treasury to urge the adoption of a constitutional amendment relating to tax-exempt securities have been so
modified by time and subsequent events, including the failure of two
separate Congresses to act in the matter, as to justify a reconsideration
of the problem and the following conclusions:
If States and their political subdivisions are to continue to issue
tax-exempt securities at the rate of $1,000,000,000 a year, there is no
logical reason why the Federal Government should continue to issue
its securities under a provision of law which only permits exemption
from the normal tax. This puts the Federal Government at a
serious disadvantage, a disadvantage which is very considerably
mitigated, however, owing to the fact that corporations are subject
only to the normal tax and that United States securities held by corporations are therefore tax-exempt. On the other hand,.this very
situation makes it difficult, if not impossible, for the United States
Government to sell new issues of its securities to individual investors.
United States securities are sufficiently attractive to corporations so
that the latter are more than willing to take the entire block of new
issues offered from time to time. This being the case, the price which
284
REPORT ON THE FINANCES
corporations are willing to pay inevitably fixes the price at which
the United States is able to market its securities; and since the
corporations are wholly tax-exempt on their income from such securities, whereas the individual income derived from these securities
is subject to the surtax, the former are in a position to pay a price
which /might w^ell make the securities unattractive from the standpoint of the individual investor. Thus, for instance, the Treasury
3 % per cent bonds were selling on October 4 on a basis to yield 3.25
per cent. On that basis they would have yielded to a man with an
income of $100,000 from other sources, after tax payment, but 2.60
per cent; to a man with an income of $50,000, 2.83 per cent; and to
a man with an income of $25,000, 3.02 per cent; whereas, the corporation would get the full yield of 3.25 per cent. Three and one-half
per cent 3-5 year Treasury notes were selling on October 4 on a basis
to yield 3.51 per cent; they would yield but 2.81, 3.05, and 3.26 to
individual investors with incomes of $100,000, $50,000, and $25,000,
respectively, as compared with a yield of 3.51 to the corporation.
The corporations were thus able to obtain the full advantage of the
extraordinary quality of a United States security from the standpoint of safety, and because of this tax-exempt feature obtain a return equivalent, in so far as the 3 % per cent Treasury bonds are
concerned, to 3.76 per cent on a taxable security, and in so far as the
3 ^ per cent Treasury notes are concerned, equivalent to 4.06 on a
taxable security. But this obviously is not true of the individual
investor.
The Treasury Department is sometimes criticized for not making
a greater effort to distribute its securities more widely. The situation above described'under which United States securities are wholly
tax-exempt when held by corporations, but not wholly tax-exempt
when held by individuals, makes it impossible to do so. Such a situation is undesirable. During the war. Government securities were
very widely distributed, as the result of vigorous campaigns conducted in every community, and which reached almost every home.
At the time, it was held, and rightly held, that it was desirable, if
Government securities were to be issued in large blocks, that they
should be held by as many separate individuals as possible rather than
in the hands of a few large holders. Such a feeling was sound. I t
is still sound to-day. But under existing circumstances, as the war
loans are gradually being refunded into securities bearing a lower rate
of interest—and there would be no justification, of course, for not
refunding them—the number of holders of United States securities
tends constantly to become more limited.
How could it be otherwise, when States and municipalities are in.
a position to issue their securities free from all taxation ? . The average rate of interest paid by all States on their total indebtedness during 1926 was about 4.14 per cent. New York municipal stock with a.
life of 30 years sells on a basis to yield 4 per cent to the individual
investor, while the man with an income of $25,000 will receive but a
net yield of 3.02 per cent on a 16-20 year 3 % per cent United States.
Government bond. Moreover, even after Federal taxes, he can receive approximately 4 per cent on the highest grade of public utility
bonds.
These figures make it perfectly apparent that in so far as the
individual investor is concerned, the United States Government is
SECRETARY OF THE TREASURY
285
at a serious disadvantage to-day in marketing its securities because
of the provision in the Liberty loan act which limits the tax-exempt
privilege to the normal tax. Under these circumstances, the Treasury
Department believes that the Congress should give serious consideration to an amendment of the second Uiberty loan act, as amended,
authorizing the Secretary of the Treasury in issuing securities in
the future to make them exempt from the surtax as well as the
normal tax.
The enactment of such an amendment would not in any way interfere with the adoption of an amendment permitting the taxation of
so-called tax-exempt securities, should Congress and the States deem
this to be desirable. But, pending its adoption, there is no reason
why the Treasury Department should be put at a disadvantage in
the marketing of its securities as compared with States and their
subdivisions, or why individual investors who desire to acquire
United States Government securities should be discriminated against.
Taking the long-time view of the situation, I believe that the enactment of such a constitutional amendment is desirable, for. I consider
it inconsistent with our principles of democratic government that our
laws be so framed as to permit any class of our citizens to escape
their just tax obligations.
EXHIBIT 27
Letter of Secretary of the Treasury Mellon to Lewis E, Pierson,
president Gharriber of Commerce of the United States, December 2,
1927, concerning the chamber'^s referendum on Federal taxation
DECEMBER 2,
LEWIS E . PIERSON,
1927.
Esq.,
President Chamber of Commerce of the United States,
288 Broadway, New York, N. Y.
M Y DEAR MR. PIERSON : I have your letter of November 23, inclosing
a copy of the pamphlet^ embodying the Chamber of Commerce's
referendum on Federal taxation and giving the votes cast on the
various propositions submitted. I have read the pamphlet with care,
as well as your public statement of November 30,^ in which in the
face of official figures showing such a reduction to be excessive, you
reaffirm the chamber's advocacy of a $400,000,000 tax reduction. I
note that in your public statement you confine your figures to the
fiscal year 1928, as to which there is no dispute, and refrain from
giving any data as to the year 1929, in which year the Treasury estimated the surplus will not exceed $274,000,000, and the Budget
Bureau's figures, which are more recent and increase the expenditure
estimate, indicate the surplus will be $252,000,000 or $22,000,000 less.
What has surprised me most, both in your public statements and
in the report of your committee on taxation submitted to your
members upon which their vote was based, is the entire absence of
1 Chamber of Commerce of the United States of America—Referendum No. 50 on the
Report of the Committee on Federal Taxation. Washington, D. C.^ Oct. 7, 1927.
2 Reported in New York Times, Nov. 30, 1927.
286
REPORT ON THE FINAIFCES
detailed figures as to future revenues and expenditures, without
which it is impossible to prepare a budget or to express an opinion
as to its soundness. I n estimating probable surplus, probable ex- .
penditures are fully as important as receipts. The report of your
committee contains no estimate of expenditures for the fiscal year
1929. Indeed, as far as 1929 is concerned, at the time your report
was prepared such figures were not even available to this department
and could, therefore, not have been available to your committee.
Budget estimates must be based on a detailed analysis of known
needs, not on generalization.
Moreover, when figures are given in your report they are in some
instances evidently based oh a surprising misconception of the facts.
Thus, in giving the figures for the yield of the corporation income
tax for the fiscal year 1927, the report states that the rate was 13 per
cent during the first half of the fiscal year. As a matter of fact, it
was 13% per cent. Again the report treats the yield as if it were
wholly derived from current revenue, whereas a very considerable
sum is included from taxes due from prior years. Such carelessness
is excusable, perhaps, in a general discussion. I t is likely to lead to
very serious errors in the preparation of a budget. Certainly it is
hard to defend in a report which furnishes the basis for an attack
on official estimates prepared with great care after taking into consideration all known factors.
The Chamber of Commerce lays great stress on past surpluses.
Analyzing some of the factors which contributed to these surpluses,
it is interesting to note that if we exclude back tax collections less
internal revenue refunds, and the receipts from the disposal of such
capital assets as railroad securities, farm loan bonds, assets of the
War Finance Corporation, and surplus war material, in the year 1923
there would not have been a surplus but a deficit of $89,000,000; in
the year 1924 a surplus of but $169,000,000 instead of $505,000,000;
in the year 1925 a deficit of $93,000,000; in the year 1926 a surplus of
$162,000,000 instead of $377,000,000; and in 1927 a surplus of $221,000,000 instead of $635,000,000; while the surpluses of 1928 and 1929,
exclusive of special receipts from, the above-named sources, are estimated at $137,000,000 and $199,000,000, respectively. These figures
will hardly support your contention that there is ample reason to
believe that current revenues can be reduced by $400,000,000 per
annum with safety. Of the $2,000,000,000, approximately, of debt
retired from surplus during the five fiscal years ending June 30 last,
no less than $1,700,000,000 is accounted for by these special or temporary items, including no less than $900,000,000 from the realization
of capital assets. I t must be conceded that there could be no better
application of the proceeds of the sale of capital assets than to the
reduction of the national debt.
I n my statement before the Ways and Means Committee, I pointed
out that the revenue from temporary sources must disappear in the
course of the next year or two. The report of your committee
answers this argument with the statement that " similar predictions
have been made in the past only to be disproved by later developments." This is hardly worthy of a business men's report. How can
receipts be realized from as3ets which no longer exist? Eeceipts
from Federal farm loan bonds and other minor securities amounted
SECRETARY OF THE TREASURY
287
to $34,000,000 in 1926 and to $63,000,000 in 1927. The Government
holds no more farm loan bonds. Eeceipts from the War Finance
Corporation assets amounted to $19,000,000 in 1926 and to $27,000,000
in 1927. The War Finance Corporation has been practically liquidated and not more than • $6,000,000 can be realized from this
source in the future. Eeceipts from railroad securities amounted
in 1926 to $36,000,000, in 1927 to $89,000,000, and we will receive in
1928 probably $169,000,000. But in 1929 not more than $24,000,000
is anticipated from this source and after that little or no revenue
can be expected under thi^ head, for the very simple and good
reason that only $49,000,000 principal amount of railroad obligations
will be left out of the $230,000,000 held on June 30, 1927.
The Treasury's estimates, as to expenditures are based on the
figures furnished by the Budget Bureau, which submits them after
a careful survey of the needs of all departments and bureaus and
with complete knowledge of the appropriations to be recommended
to the Congress for the year in question. I t must be noted that
the estimates of expenditures submitted to the Ways and Means
Committee did not include increased ex]3enditures which may result
from new legislation such as flood relief. The present Treasury
estimates of receipts are based on a careful analysis of (1) probable
receipts from miscellaneous sources in the light of past experience
and taking into consideration the periods in which the proceeds of
capital assets still in hand are likely to be realized; (2) a careful
study of probable future tax collections on account of previous years,
commonly known as back tax collections, based on the number of
cases on hand, the current monthly rate of yield from this source,
and an estimate of the amount involved in unsettled cases; and (3)
in so far as current tax and customs receipts are concerned, on the
assumption that neither in 1928 nor in 1929 will the yield fall 3ubstantially below that of the fiscal year 1927, in spite of the fact that
business in the calendar year 1927 has not apparently reached the
high level of 1926, a fact that must affect tax receipts for the
last half of the fiscal year 1928 and the first half of the fiscal year
1929. ^
^
Detailed figures have been submitted to the Ways and Means Com-mittee. If the chamber of commerce will point out to me in what
respects these figures are inaccurate, either in the case of estimated
receipts or of estimated expenditures, I shall welcome its criticism.
They were prepared after studies made independently by three experts having access to all of the facts. The estimates for 1929 as
finally submitted to the committee exceeded the average of the
estimates of these individual expert3 by over $45,000,000. I mention
this in order to disprove the charge that has been made that the
Treasury deliberately errs on the side of conservatism.
With some of the recommendations of the chamber of commerce
I am in'accord. I believe that the corporation tax rate should be
reduced, though circumstances do not permit as sweeping a reduction as you advocate; and I favor the repeal of the Federal estate
tax. I can not agree, however, to the wisdom of repealing the
excise tax on the sale of automobiles or on admissions and club dues.
One of the reasons for my disagreement is well stated in your owm
report, though it has apparently been neglected in framing your
13^06^29—n 19?8-^^—^21
288
REPORT^ ON THE FINANCES
recommendations. Your report states, referring to the corporation
tax, "Eeliance to such a large extent on one source of income is a
doubtful fiscal policy, since any vicissitudes such as a business depression, which would materially affect this one source of revenue,
might seriously embarrass the financial operations of the Government." A t least until the war debt has been materially reduced,
the Federal .Government should not rely exclusively on the income
tax on corporations and individuals, the tobacco tax, and customs
duties. Such a base is altogether too narrow, and as your own report
well states, too great reliance on one source of income is a doubtful
fiscal policy.
Finally let me take serious exception to the statement in the report
that " tliere would be no great cause for alarm even though a deficit
should, through unexpected developments, arise in any year." F o r
the United States Government to borrow to pay for current expendi-tures would in my judgment be inexcusable. A balanced budget is
an essential element of any sound fiscal system, and, as long as I am
Secretary, the Treasury Department Avill resist the undermining of
this principle and will continue to advocate a tax system adequate
to produce every year the revenues necessary to meet current expenditures.
Very sincerel}^ 3^ours,
A. W. MELLON,
Secretary of the Treasury.
E X H I B I T 28
Letter of Secretary of the Treasury Mellon to Senator Smoot, December 29,1927, concerning the revenue bill {revenue act of 1928)
DECEMBER 29, 1927.
Hon. EEED SMOOT,
United States Senate, Washington, D. C,
: I have your letter with reference to the
revenue bill now before the Senate Finance Committee, which reads
as follows:
M Y DEAR SENATOR SMOOT
MY DEAR MR. SECRETARY : It is reported that it is the opinion of the Treasury
Department and the Bureau of the Budget that a tax reduction of about
$225,000,000 is all that is warranted by the present estimate of the national
finances. As the bill before the Senate Finance Committee carries a reduction
of about $290,000,000, I should like to inquire whether any additional information has been secured which would modify the original estimates, or whether
you still consider that they are correct. Do they take into account probable
expenditures called for by new legislation? As they appear to be based on an
estimate of the taxable income of corporations and individuals for the year
1927, I assume it would be impossible to secure more accurate figjires before
the tax returns on income for 1927 are filed and the first payments made, which
would be the 15th of March, 1928. If more accurate estimates could be made at
that time, what would be the effect of not passing the bill until after March
15th? Would it make the administration of the law more difficult for the
Government or materially inconvenience the taxpayer? My object in making
these inquiries is to ascertain what course should be pursued, in order to
comply with the requirements of the law passed by the Congress, which requires
a yearly balancing of the Budget.
Very truly yours,
REED SMOOT.
SECRETARY OF THE TREASURY
289
I n reply I wish to state that in the Budget message which the
President transmitted to Congress on December 7, 1927, the surplus
for the fiscal year 1929 is estimated at $252,540,283, which represents the excess of estimated total receipts over estimated expenditures, including debt retirement from the sinking fund provided for
by law and from foreign repayments in accordance with existing
legislation and procedure. The revenue bill which was adopted by
the House of Eepresentatives on December 15 will, it is estimated,
reduce internal revenue receipts by approximately $290,000,000. This
is $38,000,000 in excess of the estimated surplus and $65,000,000 in
excess of the figure set by the Treasury as the maximum possible tax
reduction. The disregard of the official estimates, and the adoption
of a revenue bill which fails to provide revenue adequate to meet
expenditures as presented in the Budget, has created a new and
serious situation.
Estimates of probable expenditures are made by the Director of
the Budget. Estimates of probable revenue are made by the Secretary of the Treasury. I have consulted the Director of the Budget
and he informs me that he sees no reason to change in any way the
estimates of expenditures for the fiscal year 1929 contained in the
Budget message. I n this connection it should be noted that those
estimates do not include any expenditures that may be occasioned
by new legislation; such, for example, as measures for flood relief,
financing the return of the alien property, agricultural relief, for
the purchase of the so-called Triangle in Washington, for increases
of the Navy, for increasing the maximum of annual expenditures for
public buildings, and providing for the Boulder Dam and the Muscle
Shoals projects. Three of the measures above referred to were
adopted by the House immediately after the passage of the revenue
bill; namely, the alien property bill authorizing $50,000,000 to
$100,000,000 expense, the bill authorizing the purchase of the Triangle at a cost of $25,000,000, and the bill authorizing the expenditure of an additional $10,000,000 a year for public buildings. These
three already call for $35,000,000 to $85,000,000 expense in 1929.
I have reviewed the estimates of probable revenue for the fiscal
year 1929 submitted by this department to the President and to the
Congress, and I am satisfied, based on existing information, that
these estimates, if they err, err on the side of liberality.
I t is apparent, therefore, that unless the Senate modifies the tax
reduction provided for in the House bill, and unless the two Houses
ultimately agree to limit tax reduction to the figure recommenced
by the Budget message, estimated receipts will not be adequate to
meet estimated expenditures as submitted in the Budget.
I n the present tax bill before your committee, evidently on the
assumption that they were inaccurate, the official estimates have to a
large extent been disregarded. While I am satisfied that the estimates of revenue are as accurate as can be made from available
data, and certainly no figures have been submitted which in any way
challenge their accuracy, it is nevertheless true that the estimates
were made in the absence of definite knowledge as to the taxable
income of the calendar year 1927, both of corporations and of individuals. Taxable income received during the calendar year 1927
directly affects income tax receipts during the first six months of
290
REPORT ON THE FINANCES
the fiscal year 1929. I n making its estimates for the fiscal year
1929 the Treasury Department assumed that the current income tax
yield would be equal to that of the fiscal year 1927, one-half of
which was based on the income of the calendar year 1926. I t appears at the moment as if corporate net incomes, in' the aggregate, of
the calendar year 1927 will fall below those of the calendar year
1926 by not less than 6 per cent nor more than 10 per cent. This was
pointed out to the Ways and Means Committee during the course of
its hearings. I t is, however, but an estimate.
The income tax is such an important element in our Federal revenue system that it may almost be said to be the controlling factor
in the revenue field. For instance, in the fiscal year 1927, out of
total receipts from customs and internal revenue aggregating $3,475,000,000^ in round figures, the income tax yielded $2,225,000,000,
approximately.
Income tax returns are directly affected by business conditions and
rise or fall with them. This is well illustrated by the following
figures:
If the gross income of corporations in 1927 as compared with 1926
should fall off 10 per cent, revenue from this source would fall off by
approximately $200,000,000, according to the estimate made by Mr.
McCoy, the Government actuary, and this without taking into consideration the loss in tax on the incomes of individuals. This is on
the assumption that the rate is to remain at 131/2 per cent. If the rate
is reduced to 1 1 % per cent, and if the other provisions of the House
bill relating to corporate taxation become law, and if in addition there
is a falling off in gross income of corporations of 10 per cent as compared with the year 1926, the loss in revenue from that source alone
will aggregate for the calendar year 1928 approximately $350,000,000.
I t is impossible to secure more accurate information before March
15 next, when the returns for the calendar year 1927 will be filed.
Only after that date will we be in a position to know with reasonable
definiteness the income for the calendar year 1927 reported for tax
purposes on which we may rely for tax receipts during the first half
of the fiscal year 1929.
Also, it will be easier then to determine whether receipts from back
taxes are to continue at a high level, or whether the decreased receipts
from back taxes, which have been expected for some' time, have definitely set in. Present indications are that they have. During the first
five^months of the present fiscal year, as compared with the same
months a year ago, back tax collections aggregated $88,930,000, as
compared with $112,683,000. Our estimate of back tax collections for
the present fiscal year is $280,000,000. To' obtain this amount it will
be necessary for us to collect an average of $23,300,000 a month. For
the first five months of the present fiscal year the average is a little
less than $18,000,000 per month.
Finally, as pointed out above, the estimated expenditures in the
Budget message do not take into consideration new legislation.
Through a careful survey by your committee, it should be reasonably
clear what additional expenditures are to be occasioned by new
legislation.
You inquire what would be the effect of not passing the bill until
after March 15, so as to permit the Congress to act on the basis of
SECRETARY OF THE TREASURY
291
reasonable certainty, at least in so far as the first half of the year
1929 is concerned. I n the usual course of congressional action it
would not pass until very near that date anyway.
On the assumption that a tax reduction bill Avill become law at the
present session of Congress, delay will occasion no loss to the taxpayers, or inconvenience either to them or to the Government from
an administrative standpoint. I n so far as excise taxes are concerned, it is just as easy to make their reduction or repeal effective
on April 15 as it is on March 15. In so far as corporation income
taxes are concerned, the House bill makes the new law effective as of
January 1, 1927. I t is therefore of no consequence, except as the
first installments, payable on March 15, may be affected, whether the
bill becomes law in March or in April. I t is true that if the bill
becomes law on the later date, then March 15 payments will have
to be made on the basis of the revenue act of 1926. But it is perfectly possible, without inconvenience, to adjust any subsequent reduction in rates to the installments remaining unpaid and falling
due on June 15, September 15, and December 15, or by returning a
part of any payments made in full. And this is likewise true of
individuals, should the Congress finally decide to grant relief to
those whose incomes fall in the middle brackets.
I t seems to me both the taxpayers and the Government have
nothing to lose by postponing the final enactment of the tax reduction bill until after the 15th of March. From the standpoint of
the taxpayers, as the estimate of probable revenues at that time will
be more reliable than the present Trea°sury estimates, they will be
relieved of the risk of obtaining no tax reduction at all this year,
or facing the even worse situation of a bill which provides a reduction in excess of that which revenues permit. From the standpoint
of the Government, and particularly of this department, charged
as it is with the responsibility of carrying out the debt reduction
program, it is of the greatest importance that we should be able to
proceed with the full knowledge that the revenues of the Government will be adequate to meet its expenditures.
Very truly yours,
(Signed)
A. W. MELLON,
Secretary of the Treasury
EXHIBIT 29
^'*Tax Reduction,^'^ an address by Undersecretary of the Treasury
Mills, March 29, 1928^ before the Chicago and Cook County
Bamkers"^ Association, Chicago, III.
In his annual message to the Congress, the President last December recommended tax reduction. The Treasury Department had
• previously submitted estimates indicating a surplus of $474,000,000,
subsequently modified to $454,000,000, for the fiscal year 1928, and
of $252,000,000 for the fiscal year 1929, the year for which Ave are now
budgeting. The estimates were based on the assumption that current
receipts from income tax, customs, and miscellaneous internal revenue, would in the aggregate equal those of 1927, and, in so far as
the first two are concerned, these were the highest in five years. In
292
REPORT ON THE FINANCES
fact, customs receipts for 1927 established a record for all time. On
the expenditure side, no allowance was made for such increases as
might Tesult from new legislation. Based on these surplus figures,
the Treasury advised that tax reduction should not exceed $225,000,000, pointing out that the 1928 surplus was not a safe guide
owing to the large amount realized this year on capital assets, such
as $162,000,000 of railroad securities, which constitute revenue of a
nonrecurring character.
The Ways and Means Committee reported a revenue bill which
reduced current taxes by approximately $233,000,000 annually, but
the House of Eepresentatives increased the reduction to about
$289,000,000, or $64,000,000 in excess of the maximum suggested
as a safe limit by the Treasury Department.
While the measure was pending before the committee and the
House, claims were advanced in some quarters that the Treasury had
grossly underestimated the revenue, more particularly income taxes;
that the 1928 surplus would equal that of 1927, and that at least
$400,000,000 would be available in 1929 for tax reduction.
Accordingly, the Senate Finance Committee decided that since
March collections would indicate the revenue that might be expected
from income taxes during this calendar year, which includes six
months of the fiscal year 1929, it would be the part of wisdom to wait
until the March returns were in. Moreover, it Avas obAdous that, with
three more months of legislative activity back of them, expenditures
could be estimated much more accurately on April 1 than on January 1.
Well, the ides of March have come and gone and the Treasury
estimates have not met their Brutus, though you can rest assured
that the w^eapons, even though they may be but pencils, have been
kept well sharpened all the while. Tax reduction is still possible and
highly desirable, and as to the amount possible the Treasury proves
to have been much nearer right than its critics.
I am not in a position to giA^e you final figures, since our analysis is
not completed. They Avill be presented to the Senate Finance Committee on April 3. But I can say that for the fiscal year 1928 our
estimates of receipts appear to be extraordinarily accurate. With a
total aggregating over $4,000,000,000 and based on figures noAv available, the error, if any, Avill not amount to more than a very few million
dollars either way, less than a small fraction of 1 per cent. We
appear to have somewhat overestimated customs and miscellaneous
internal revenue receipts, but in the matter of income taxes Ave estimated that the latter would practically equal 1927 collections, and
this appears to be accurate. I admit that not so long since I Avas
afraid our estimate was too high, as corporate profits in 1927 appeared to be loAver than in the calendar year 1926. I still believe
that corporate profits w^ere loAver, but whatever revenue loss has
resulted therefrom has been apparently fully made up by an increased .
income of taxpaying individuals. This last is not at all surprising
for three reasons: (1) Dividends in 1927 reflected the high corporate
earnings of 1926; (2) there was unquestionably a large turnover of
capital assets, resulting in considerable profit; and (3) the reduced
and reasonable surtax rates continued favorably to aft'ect tax receipts,
as predicted by the Treasury Department.
SECRETARY OF THE TREASURY
293
On the expenditure side the Budget Director also evidently used
a sharp pencil in making up his estimates. Thus, were it not for
the settlement of war claims act recently enacted, which will cost
$50,000,000 this year, our $454,000,000 surplus estimate for 1928 w^ould
stand. As it is, it must be recluced by about the amount of this extra
charge.
Coming now to the fiscal year 1929—that is, the year beginning
July 1 next, which for tax reduction purposes is the test year—I see
no reason, in so far as current receipts from customs, income tax, and
miscellaneous internal revenue are concerned, to change our opinion
that they will in the aggregate approximate the 1927 and 1928 totals.
I n so far as the first six months of 1929 are concerned, that opinion
has already been confirmed by the March collections. I t is based on
the actual experience of the last 27 months, while any other figures
involve an attempt to forecast the course of business for the next nine
months. You business men know how difficult this is in the case of a
single enterprise. You don't need to be told what reliance can be
placed on such a speculation applied to the entire United States. I
believe the wise course from a Treasury standpoint is to proceed on
the assumption that the prosperity of 1928 will about equal that of
1926 and 1927. If it exceeds it, the difference will at best only affect
six months of the next fiscal year. If there is any better basis on
Avhich to rest our estimates, it has ^^et to be suggested.
*
*
*
*
*
*
*
Assuming, then, that current tax revenue in the next fiscal year
equals that of this year, and that there are no further large appropriations to bring the total of expenditures above the 1928 level,
where does it leave us? I t is possible even without detailed figures
to make a rough estimate. I n this year's surplus of $400,000,000
there are approximately $150,000,000 more of receipts from the
realization of capital assets than will be available next 3^ear. I n
addition, collections from back taxes may well fall off about
$60,000,000. Deducting these items from this year's estimated surplus
and assuming that expenditures may be $25,000,000 lower, gives us a
surplus of approximately $215,000,000 in 1929. This estimate may be
modified by our final analysis, but in my judgment it is substantially ,
accurate, always remembering that in estimating receipts aggregating
almost $4,000,000,000 to be collected over a period of a year, beginning three months hence, a l^per cent margin of error would not seem
to be excessive. I t should be noted, however, that these figures, while
they include all additional expenditures resulting from legislation
enacted prior to this date, do not take into consideration bills that
may become laAv between now and adjournment, such as flood and
farm relief measures.
All of which means that the Treasury Department is in a position
to recommend to the Senate Finance Committee, subject to some
modifications, the tax reduction and revision program presented last
fall to the House of Eepresentatives: A reduction of the corporation
income tax rate; some additional measure of relief to the smaller
corporations; a modified revision of the income tax rates applicable
to the middle brackets; and the repeal of the Federal estate tax.
The time has come to revise the corporation tax rates doAvnward.
Business conducted under corporate form is overtaxed as compared
294
REPORT ON T H E FINANCES
with individual enterprises and partnerships. This is particularly
true of the small corporation with a limited net income. We are apt
to think of the interests of a corporation as distinct from those of
the stockholders. As a matter of fact, they are very closely related,
and as far as Federal income taxation is concerned there is no sound
reason why a group of individuals doing business as a corporation
should pay higher rates than the same group of individuals doing
business as partners. The discrimination has been excused in part
on the theory that it made no great difference as the tax was in any
event jDassed on to the consumer. With some exceptions, notably in
the public utility field, I am satisfied that a tax on net income can not
be passed on. This being so, the millions of individual owners of
corporate stock are to-day contributing at the rate of 13i/^ per cent
on their proportionate share of the income of the corporation, whereas
the two and one-half million individuals who return taxable net
income are taxed at the average rate of 4.20 per cent. This discrepancy is altogether too great, particularly when you consider that
in the case of the individual a rate of 13l^ per cent on net income is
paid by less than 9,000 individuals and these with net incomes in
excess of $110,000.
The discrimination seems to bear with particular hardship on the
smaller corporations owned by comparatively few people. The
Treasury Department made a study of a number of these and found
that the chief stockholders in corporations having net incomes of
$55,000 or less would, Avithout exception, pay a smaller tax to the
Federal Government had they done business as partners rather than
as a corporation, and in 86 per cent of the cases where the net income
of the corporation was $100,000 or less a similar condition is true.
The Treasury Department suggested to the Ways and Means Committee that the OAvners of the closely held corporation with a small
net income be allowed to file its income tax return as if it were
a partnership and be taxed on the partnership basis. The suggestion
did not, however, seem to meet with faA^or either in the Ways and
Means Committee or in the Plouse. The former repjorted a provision which granted relief to the smaller corporation with net incomes
not in excess of $25,000 by raising the exemption from $2,000 to $3,000.
This is hardly adequate and is in some respects open to criticism,
but the Treasury Department is not inclined to oppose this measure
of relief.
We can not, hoAvever, agree to the provision adopted by the House,
which seeks to introduce the principle of a graduated tax in the corporation field. The only justification for a graduated tax is that it
is based upon ability to pay. I t is quite proper that an individual
having a net income of a million dollars should pay at a higher rate
than an indiAddual haAdng a net income of $10,000, since the former
has greater tax-paying ability than the latter. But in the case of
corporations, the size of the net income has nothing to do with the
corporation's ability to pay unless there is taken into consideration
the controlling factor of capital invested in the business. The excessprofits tax was an attempt to grade the corporation tax in accordance with ability to pay but, of course, took into consideration the
capital factor. I t was generally assumed to be theoretically sound,
but in practice could not.be successfully administered. With the
capital factor eliminated, however, it could not be considered even
SECRETARY OF THE TREASURY
295
theoretically sound. There is no reason if I invest $1,000 in a million
dollar corporation, from which I only receive a 5 per cent dividend,
why the fruits of my investment should be reduced by 13l^ per cent
tax before I receive them, while if I invest the same $1,000 in a
$50,000 corporation, from which I receive a 20 per cent dividend,
the income is to be reduced by not more than 5, 7, or 9 per cent. A
graduated tax on corporations has no place in our income tax law.
The revenue act of 1926 effected a drastic cut in the maximum surtax rates and at the same time sharply reduced normal taxes. While
those whose income falls in the so-called' intermediate brackets received some benefit by way of a downward revision, there is no doubt
but that they did not fare as well as those taxpayers with either a
very large or small income. I n justice to them, and in the interest
of a better balanced schedule of rates, there should be some revision
of the rates applicable to the intermediate brackets as suggested by
the Treasury Department.
The Treasury has consistently maintained that an estate tax
should not form a part of our Federal peace-time tax system. At a
time when the costs of our State and local governments are rising
steadily, and when because of their unbalanced tax systems the burden is being borne to an unnecessary degree by those with the least
ability to pay, the States should not be deprived, even in part, of the
proceeds of a tax intended primarily to reach wealth. I n advocating
repeal of the Federal estate tax I do not want to be understood as
opposing the inheritance or estate form of taxation, but I believe that
by tradition, legal theory, and revenue necessity these taxes belong
to the States rather than to the Federal Government.
Much pressure has been brought to bear on Congress to do away
Avith a number of excise or indirect taxes. The drive has been directed more particularly at the 3 per cent automobile tax which, inasmuch as it is levied on the factory or wholesale price, is in so far as
the consumer is concerned, really a 2 per cent tax. The insistent
demand does not appear to have come irom automobile purchasers,
but rather from the manufacturers Avho admittedly do not pay the
tax.
As a matter of principle it is difficult to justify the repeal of this
tax. Levied at a low rate, it imposes no particular hardship. Yet,
by reason of the broad base on which it rests, it produces substantial
revenue. As matters stand to-day, the cost of our Federal Government is borne to a very large extent indeed by the comparatively few
individuals who pay direct taxes. By this I do not mean to say that
indirect taxes—^that is, those taxes that are passed on to the consumer and are therefore paid by everyone—do not yield a substantial
revenue. They do, but to reduce them further will produce a very
ill-balanced tax system under which our National Government will be
supported not by the entire body of our citizens but by a limited
class. Moreover, from a fiscal standpoint, the Federal Government
can not afford to see its tax system resting on too narrow a base, such
as would be the case if for all practical purposes we relied exclusively
on customs, income, and tobacco taxes. Even minor changes in business conditions would then necessarily result in wide fluctuations in
revenue receipts. We should face periodically excessive surpluses
or deficits. The stability essential to any sound budget and fiscal
296
REPORT ON THE FINANCES
system would be lacking, for a broad rather than a narrow base, and
a diversified rather than a restricted system of taxation are the very
fundamentals of stability.
All of this sounds serious and formidable enough. As a matter
of fact, we are confronted with a very simple problem. We find
ourselves once more in the fortunate position when our Federal
taxes may again be reduced by a very substantial amount. I t is
almost equally satisfactory to be able to say that the situation indicates very clearly what taxes should enjoy the benefit of reduction.
We do not need to call in experts nor to indulge in deep calculations.
'Eeliei can be granted where it is obviously most justified by a few^
simple changes. There is no occasion for protracted delay and long
argument. We knoAv to-day, as Avell as we shall ever know, until
after the tax collections are in, just what amounts are available for
tax reduction. We should know without difficulty just where to
apply the reductions. There is nothing left now but to act.
EXHIBIT 30
Statement by Secretury of the Treasury Mellon before the Senate
Finance Committee, April 8, 1928
I understand that the Senate Finance Committee has delayed
the consideration of the revenue bill in order to haA^e the benefit
of the information furnished by the March income tax collections
and more accurate estimates as to probable expenditures than were
available in January. That information is now available.
Based on the most recent figures the Treasury Department estimates a surplus of approximately $400,000,000 in 1928 and of approximately $212,000,000 in 1929.
The fiscal year 1928 is almost over. We are now budgeting for
the fiscal year 1929. The surplus of total receipts over total expenditures in 1929 is the measure of possible tax reduction. With a
surplus of $212,000,000 reasonably certain the Treasury recommends
that taxes be reduced by about $200,000,000.
The estimates submitted to the Ways and Means Committee in
October indicated a surplus of $454,000,000 in 1928, and of $274,000,000, subsequently modified to $252,000,000, in 1929. On the basis
of these estimates the Treasury Department recommended a tax reduction of $225,000,000, pointing out, however, that the figures submitted made no provision for increased expenditures due to new
legislation. I t thus appears that the surpluses as originally estimated for 1928 and 1929 have now been reduced by $53,000,000 and
$40,000,000, respectively, while the limit of possible tax reduction
has been lowered by $25,000,000.
These reductions are due to changes in the expenditure rather than
in the receipt side of the statement. Expenditures show an increase
of $47,000,000 for 1928 and of $85,000,000 for 1929. The increased
estimated expenditures for 1928 and the consequent reduction of the
estimated surplus by about $50,000,000 are accounted for practically
by a single item. The settlement of war claims act recently enacted
authorizes an appropriation of $50,000,000 which should become
297
SECRETARY OF THE TREASURY
available and be expended this fiscal year. The $85,000,000 increase
for 1929 over the previous estimates is accounted for principally by
increased appropriations for the Veterans' Bureau, Navy and W a r
Departments, postal deficiency, and an enlarged building program.
The committee will doubtless call on the Budget Director to explain
the various items of increase.
On the receipt side, while there are a number of minor modifications
in the present estimates as compared with the earlier ones, the total
receipts for 1928 show a reduction of only $6,000,000 as compared
with original estimates: That is, a total of $4,069,000,000 instead of
$4,075,000,000.
I t is notcAvorthy, in vicAv of all the criticism, that the March collections completely confirm the accuracy of the Treasury's estimate of
current income tax collections for both 1928 and 1929.
The 1929 estimate of receipts shows an increase of $45,000,000
accounted for as follows:
Customs and miscellaneous internal revenue figures have been reduced by $15,000,000 and $10,545,000, respectively, in conformity
with the actual experience of the first nine months of this fiscal year.
Miscellaneous receipts are $25,000,000 higher, due in the main to a
trust fund item which is a " Avash " transaction and appears on both
the receipt and expenditure side of the statement, and to a transfer
of railroad receipts from 1928 to 1929. The estimate of back tax
collections has been increased by $40,000,000, and current receipts by
$5,000,000. Back tax collections are a most uncertain item and
the Treasury so stated to the Ways and Means Committee, but the
speeding-up process which is now taking place through the special
advisory committee and other further reforms, which it is hoped will
be put into effect, should increase the back tax revenue next year
over what was anticipated five months ago.
Table A, which I submit herewith, shows the October, 1927, estimates of receipts and the Budget expenditure figures compared with
the receipts and expenditures noAv estimated. Table B shows the
principal changes in receipts as compared with the previous estimates.
TABLE A.—Estimated receipts and expenditures for fiscal years 1928 and 1929
(submitted in Decemlyer, 1927) and revised estvmates prepared in March,
1928
1929
1928
October, 1927,
estimate
March, 1928,
estimate
October, 1927,
estimate
March, 1928,
estimate
RECEIPTS
Customs.-•Internal revenue:
Income t a x Current.
i
Back taxes..
Miscellaneous
Miscellaneous receipts
Total receipts .
._
$602,000,000
$587,000,000
$602,000,000
$587,000,000
1,885,000,000
280,000,000
638, 545,000
670,053,091
1,890,000,000
280,000,000
634,000,000
678, 267, 729
1,885,000,000
180,000,000
640, 545,000
501,952,314
1,890,000,000
220,000,000
630,000,000
527,721,229
4,075,598,091
4,069, 267,729
3, 809,497,314
3,854,721,229
3,621,314,285
3,668,003,279
3,556,957,031
3, 642,021,345
454,283,806
401,264,450
252,540, 283
212,699,884
EXPENDITURES
Total
Estimated surplus .
298
REPORT ON T H E
FINANCES
TABLE B.—Fiscal year 1929—Changes betweeri estimates of October, 1927, a/nd
March, 1928
Decrease
Receipts:
Customs
Income tax—
Current
_Back taxes
Miscellaneous internal revenue . .
Miscellaneous receipts
$15,000,000
. . .
.....
_
Increase
.
.
_. . .
. _ ._
..
$5,000,000
40,000,000
10,545,000
1 25,769,000
25, 545,000
Net increase.
Expenditures
.-
70,769,000
25,545,000
45,224,000
1 85,064,000
Net decrease in estimated surplus
Estimated surplus last fall
Revised estimate, March, 1928-
39,840,000
•
-.
252,540,000
212,700,000
J Includes $13,015,000 increase in both receipts and expenditures account United States Government Ufe
Insurance fund under Veterans* Bureau.
So much for the present modifications of the October estimates
which Ave felt the committee would want fully explained.
Let me noAv take up in detail and seek to justify our estimates of
receipts and expenditures for the fiscal year 1929. They are the
all-important and controlling figures, for they and they alone indicate
the measure of possible tax reduction.
Total receipts and expenditures are estimated as follows:
Customs
Tonnage tax
-
$585, OOO, 000
2, 000', 000
587, 000,000
Internal revenue:
Current income tax
Back income taxes
Miscellaneous internal revenue
$1, 890, 000, 000
220' 000, 000
630', 000', OOO
Total internal revenue
Miscellaneous receipts
2, 740, 000, 000
527, 721, 000
Total receipts
Total expenditures
Surplus
3, 854, 721, 000
3, 642,021,000
-
212, 700, 000
CUSTOMS RECEIPTS
Customs duties are relied on to yield $585,000,000.
This is the amount which receipts to date indicate will be collected
in 1928. I t is true that in 1927 the high figure of $603,000,000 was
reached but the average receipts for the 5-year period, 1923 to 1927,
inclusive, amounted to but $568,000,000. So that 1927 appears to be
out of line and 1928 to furnish a more accurate guide.
I N C O M E TAX RECEIPTS
Current income tax is estimated to produce $1,890,000,000.
There was collected from this source in the fiscal year 1927
$1,889,000,000. The Treasury Department has consistently taken the
SECRETARY OF THE TREASURY
299
position that income tax collections for the fiscal year 1927, based as
they were in part on the income of the calendar year 1925 and in part
on the income of the calendar year 1926, both highly prosperous years,
furnish the safest basis on Avhich to estimate current income tax collections, both in the fiscal year 1928 and 1929. Our judgment has
been amply sustained by the March collections. I n so far as 1928 is
concerned, total current collections to April 1 aggregate approximately $1,418,000,000, as compared with $1,422,000,000 on April 1,
a year ago. This means that current collections for the fiscal years
1927 and 1928 will be almost identical. The 1927 and 1928 collections
are derived from the income of three calendar years, namely, 1925,
1926, and 1927. Because of this Avide range and of their remarkable
uniformity they seem to furnish a definite standard of Avhat collections may be expected under present rates, given normal conditions
of prosperity.
But March collections did not alone confirm 1928 estimates. They
established pretty definitely that current tax collections for the first
six months of the fiscal year 1929 Avill not vary materially from the
first half of 1927 and 1928, thus confirming our estimates. The only
element of uncertainty then applies to the last six months of the fiscal
year 1929, ending June 30,1929, for income tax collections during this
period will be based on income of the calendar year 1928. I t would
take a very wise man to prophesy the course of business during
the next nine months. Yet this is what inust be done if actual
figures are to be discarded in favor of speculative ones. Moreover,
there is nothing to indicate that business conditions will differ materially during the balance of the calendar year from those which have
prevailed during the last 24 months. Even should there be a marked
upward swing it can at best but affect six months of the fiscal
year 1929.
Clearly it is wiser to base estimates of future receipts on the record
of what may be considered standard years, rather than to venture on
the uncertain ground of speculation and assumption. This, in any
event, is the position taken by the Treasury in preparing and presenting these estimates.
BACK TAX COLLECTIONS
I t is expected that $220,000,000 may be derived from back tax
collections as compared with $331,000,000 (actual) in 1927 and
$280,000,00 (estimated) in 1928. The following statistics account,
in the main, for the probable falling off in back tax collections.
On June 30, 1926, there were on hand in the bureau for years prior
to 1925, 487,000 cases; on June 30, 1927,154,000 cases; and on December 31, 1927, 66,000 cases, of which 12,000 were refund cases which
could produce no additional revenue. But these figures do not tell
the complete story. The character of the problem is changing.
I t is being transferred from the Internal Eevenue Bureau proper
to the General Counsel's Office and to the Board of Tax Appeals.
This is the logical and inevitable development of the insistence on
treating the collection of an incom^e tax as a legal rather than as an
administrative problem. As of March 1, 1928, taxes involved in
300
REPORT ON T H E
FINANCES
appeals pending before the Board of Tax Appeals aggregated
$685,526,232. Such an amount would seem to promise much in the
way of future revenue. But consider these results. From July 1,
1927, to February 29, the board has closed cases involving approximately $81,000,000 of deficiencies asserted, sustaining only
$33,000,000, or 41 per cent. Thirty-three million dollars in eight
months is not quite so promising from a revenue standpoint, particularly when you consider that in many of these cases further appeals
will be taken to the Circuit Court of Appeals. But the significant
figure is the percentage one. The Government on these appeals is
winning out only to the» extent of 41 per cent of the deficiencies
asserted, even after including items not in dispute. If this means
anything it means that any number of these cases should never have
gone to the board but should have been disposed of by agreement.
A sensible system of administration would permit the settlement of
cases whenever the odds on a question of law are all against the
Government instead of compelling litigation. A change of policy
in this respect appears to be highly desirable, and the department
is seriously considering such a change unless this committee and the
Ways and Means Committee should advise to the contrary.
There is no use minimizing the seriousness of the situation. I t is
not too much to say that the whole carefully thought-out machinery
which Avas hopefully set up in 1924 is threatened with a complete
breakdoAvn. I n spite of splendid work done by the so-called advisory committee, which was created last October, in the last six
months 60 per cent of the deficiencies asserted were appealed to the
Board of Tax Appeals. There were pending on March 1, 21,381
cases before that board, and working with the utmost expedition
the board can only dispose of about 3,000 cases a year except by
stipulation.
MISCELLANEOUS INTERNAL REVENUE
Miscellaneous internal revenue is estimated to yield $630,000,000.
as compared with $645,000,000 in 1927 (actual) and $634,000,000 in
1928 (estimated). The principal changes from 1927 are a decrease
in the estate taxes from $100,000,000 to $50,000,000; a decrease of
$8,000,000 in the tax from alcoholic spirits due principally to a change
in the rate effectiA'-e January 1, 1928; a loss of $8,000,000 due to the
final cleaning up of the repealed capital stock tax cases; an increase
of $44,000,000 in the tobacco tax, resulting from steadily mounting
cigarette sales; and an increase of $8,000,000 in stamp tax collections.
The returns from the estate tax under the new law have fallen off
much more rapidly than anticipated. Eeceipts from July 1 to March
1, this year, amounted to but $42,000,000 as compared with $72,000,000
last year. Eeceipts averaging slightly in excess of $5,000,000 a month
indicate a total of approximately $65,000,000 for 1928 as compared
with an estimate of $80,000,000. I t is difficult to belicA^e t h a t there
will not be a further falling off next year as the number of estates to
which the higher rates apply diminishes and the 80 per cent rebate
proAdsion becomes increasingly effective.
From the automobile tax $65,000,000 is expected, as contrasted with
$66,000,000 in 1927 and $63,000,000 this year. Collections to March L
aggregated $35,000,000, as compared with $42,000,000 a year ago.
301
SECRETARY OF THE TREASURY
MISCELLANEOUS
RECEIPTS
Miscellaneous receipts are estimated at $527,000,000, or $127,000,000
and $151,000,000 lower than in 1927 and 1928, respectively. The
answer is not far to seek. We realized on railroad and other' securities and on other capital assets, including receipts from the War
Finance Corporation not classified as miscellaneous receipts, $192,000,000 in 1927; we will realize $189,000,000 this fiscal year, while
there is but $38,000,000 from this source in sight in 1929.
Two items more than account for the difference between the
$400,000,000 surplus of 1928 and the $212,000,000 surplus of 1929,
and neither can properly be classified as ordinary revenue; $151,000,000 less from the realization of capital assets and $60,000,000
less in collections from back taxes.
The same two items alone account for a reduction in receipts of
$265,000,000 below the 1927 figures.
On the receipt side, then, the whole story may be summed up by
saying that the diminishing surpluses are caused, not by the falling
off of ordinary current revenue, but by the rapid disappearance of
certain receipts of an extraordinary and nonrecurring character.
I t is fair to say that to this extent this and last year's abnormally
large surpluses are fictitious and misleading.
Table C shows customs and internal revenue receipts for the fiscal
year 1927 (actual) and the fiscal years 1928 and 1929 (estimated).
TABLE C -
-Actual and estimated customs and internal revenue receipts fiscal
years 1927, 1928, 1929
Actual, 1927
Customs
-Customs, tonnage tax
. . .
$603,000,000
2,000,000
.
Estimated,
1928 .
Estimated,
1929
$585,000,000 ^ $585,-000,000
2,000,000
2,000,000
605, 000,000
587, 000, 000
1, 889,000,000
331, 000, 000
1, 890, 000, 000
280, 000, 000
1, 890,000, 000
220,. 000, 000
2, 220, 000, 000
646, 000, 000
2,170,000, 000
634, 000,000
2,110, 000, 000
630, 000, 000
Total internal revenue
2, 866, 000, 000
2, 804, 000, 000
2, 740,000,000
Total customs and internal revenue..
3,471, 000, 000
3, 391, 000, 000
3, 327,000, 000
100,300,000
21, 200,000
376, 200, 000
18,000, 000
10,400, 000
66,400, 000
37, 300, 000
3,200, 000
65, 000. 000
16, 000, 000
400, 000, 000
18, 500, 000
10,000,000
63, 000, 000
45, 000, 000
3, 500, 000
50, 000,000
13, 000,000
420,000, 000
18, 500,000
10, 000,000
65,000,000
45,000, 000
3, 500,000
Total customs
Internal revenue: i
Current income tax
Back income taxes
.
.
Total income tax . .
..
Miscellaneous internal revenue (see details below) i
Miscellaneous internal revenue: i
Estate tax
°_
Alcoholic spirits
Tobacco
Admissions
. . . .
Club dues..
Automobiles
__
stamp taxes
Oleomargarine, etc .
Miscellaneous, including capital stock tax, prohibition and narcotic taxes. .
...
587,000,000
13, 000,000
13, 000, 000
5,000, 000
646, 000, 000
634, 000,000
630,000,000
»1927 figures of internal-revenue collections are on basis of Report of Internal Revenue Bureau.
302
REPORT ON THE FINANCES
RECOMMENDATIONS
On the basis of a surplus of $212,000,000 the Treasury makes the
following recommendations:
1. That the general corporation income tax rate be reduced from
13% to 12 per cent and that the rate applicable to insurance companies be reduced from 12% per cent to 12 per cent. I t is estimated
these changes Avill occasion a loss in revenue of approximately $123,000,000.
2. That the rates applicable to the so-called intermediate brackets,
running from $14,000 to $75,000, of the individual income tax be
revised in accordance with the attached table, resulting in a decrease
in revenue of about $50,000,000.
3. That the Federal estate tax be repealed as of January 1, 1928,
which will occasion a loss of but $7,000,000 in 1929.
4. That the income derived from American bankers' acceptances
held by foreign central banks of issue be exempted from tax. The
loss of revenue will be negligible.
The Treasury further approves the following provisions of the
House bill affecting the revenues:
1. The increase in the exemption from $2,000 to $3,000 in the case
of corporations with incomes not in excess of $25,000. I t is estimated this will cost approxiinately $12,000,000.
2. The increase in the exemption from 75 cents to $1 in the case of
the admissions tax, resulting in a reduction in rcA^enue of about
$8,000,000.
3. The repeal of the tax on cereal beverages, which produced $185,000 in 1927.
4. The reduction in the tax on wines, resulting in a loss of revenue of $930,000.
The total tax reductions covered by these recommendations aggregate' $201,115,000.
I t should be noted, hoAvever, that while the estimates of expenditures just submitted include all expenditures resulting from legislation enacted up to the present time, they do not include any expenditures that may result from flood relief legislation adopted during
this session of Congress. Assuming that $30,000,000 is expended foi
flood relief during the next fiscal year the surplus of $212,000,000
Avill be reduced to $182,000,000.
On the basis of a $182,000,000 surplus the Treasury recommends:
1. That the general corporation tax rate be, reduced, from 13%
to 12 per cent and the rate applicable to insurance companies be
reduced from 12% to 12 per cent. As already stated the loss in
reA^enue will amount to $123,000,000.
2. A revision of the rate applicable to the intermediate brackets
resulting in a loss of $50,000,000.
3. The repeal of the estate tax, resulting in a loss of $7,000,000.
4. Eepeal of cereal bcA^erage tax and reduction of wine tax.
Or a total tax reduction of $181,115,000.
These recommendations are fully discussed in the report presented
by the Treasury to the Ways and Means Committee and in the report
of the Ways and Means Committee with both of which the Finance
SECRETARY OF T H E TREASURY
303
\
Committee is undoubtedly familiar. I t seems unnecessary, therefore,
to review the grounds on which they are based.
The Treasury desires, however, in the interest of sound tax principles, earnestly to renew its protest against the repeal of the automobile tax. The insistent demand for the repeal of this tax does
not come from the automobile purchasers but from the manufacturers
and dealers, Avho have organized an intensive propaganda, and of
necessity do not look at our tax problem as a whole, but concentrate
their attention on the one tax which they believe affects their own
interests.
Tax revision on the basis of meeting the demands of special interests inevitably leads to serious maladjustments of the burdens. As
a matter of principle it is difficult to justify the repeal of this tax.
Levied at a IOAV rate it imposes no particular hardship, yet by reason
of the broad base on which it rests it produces substantiar revenue.
The cost of our Federal Government is already borne to a very
large extent indeed, Avhen we consider the size of our population, by
the comparatively small number that pay direct taxes. A further
material reduction in indirect taxes will produce a very ill-balanced
tax system under which our National Government will be supported
not by the entire body of our citizens, but by a limited class. The
cost of the Government of all should not be borne by the few.
Moreover, from a fiscal standpoint the Federal Government can
not afford to see its tax system resting on too narrow a base such as
will be the case if for all practical purposes Ave rely exclusively on
customs, income, and tobacco taxes. Under such conditions even
minor changes in business would necessarily result in wide fluctuations in revenue receipts. We should face periodically excessive surpluses or deficits, requiring frequent revisions of rates, which, in
turn, would have a most disturbing effect on the course of business.
A broad, rather than a narrow base, and a diversified, rather than a
restricted system of taxation, are the very fundamentals of budgetary
stability.
GRADUATED TAX ON CORPORATIONS
The Treasury also desires to go on record as opposing the introduction of the principle of a graduated tax in the corporation field
as provided for in the House bill. There is no souncl justification
for graduating the rate of tax on corporation income in accordance
with the size, of the income. We do so in the case of individuals
because the incomes of individuals, generally speaking, are a fair
measure of their ability to pay taxes. This, hoAvever, is not true of
corporations unless there be taken into consideration the factor of
capital invested in the business. There is iio reason why if I invest
a thousand dollars in a million-dollar corporation which only earns
a 5 per cent profit the fruits of my investment should be reduced by
13% per cent before I receiA'^e them, Avhile if I invest the same thousand dollars in a fifty-thousand dollar corporation, which earns a
20 per cent profit, the income is to be reduced by not more than 5,
7, or 9 per cent. The adoption of the principle of graduated taxes
applied to corporations will inevitably lead back to the excess-profitb
tax which, impossible of administration, and generally discredited,
was repealed in 1921.
13606—29—FI 19 2 8
^22
304
REPORT ON THE FINANCES
SUETAX BATES
Suggested change in surtax rates from those of the 1926 revenue act
1926 r e v e n u e act
Proposed plan
I n c o m e t a x zones
$10,000 t o $14,000
$14,000 to $16,000
$16,000 to $18,000
$18,000 to $20,000...
$20,000 to $22,000
.
$22,000 to $24,000
$24,000 to $28,000
$28,000 to $32,000
$32,000 t o $36,000 . .
$36,000 to $40,000
$40,000 to $44,000....
$44,000 to $48,000
$48,000 t o $52,000.
$52,000 to $56,000
$56,000 to $60,000
$60,000 to $64,000
$64,000 to $70,000
$70,000 to $80,000
$80,000 to $100,000
Over $100,000
.
Rates
Per cent
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
.
:
Rates
I n c o m e tax zones
Per cent
1
2
3
4
5
. .
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
$10,000 t o $14,000
$14,000 t o $18,000
$18,000 to $22,000
$22,000 to $26,000
$20,000 t o $30,000$30,000 t o $34,000
$34,000 to $38,000. .
$38,000 to $42,000
$42,000 t o $ 4 6 , 0 0 0 . . .
$46,000 to $50,000
$50,000 to $54,000
$54,000 to $58,000
$58,000 to $62,000
$62,000 to $66,000...
$66,000 to $70,000
$70,000 to $75,000...
$75,000 to $80,000
$80,000 to $90,000--$90,000 to $100,000
Over $100,000
Individual income tax upon certain specified taxat)le net incomes—Married
person with two dependents, with no capital gains nor dividends, and with
earned income of $10,000
R e v e n u e act 1924
Taxable net
income
$10,000 . . . $12,000
....
$14,000
$16,000
$18,000
$20,000 .
$22,000
$24,000
$26,000
$28,000
$30,000
$32,000
$36,000
$40,000
$45,000
$50,000
. .
$55,000
$60,000
$65,000
$70,000
$75,000
$80,000
$90,000
$100,000
$150,000
$200,000
$300,000.
$500,000
$1,000,000
Normal
tax
$141
235
355
475
595
715
835
955
1,075
1,195
1,315
1,435
1,675
1,915
2,215
2,515
2,815
3,115
3,415
3,715
4,015
4,315
4,915
5,515
8,515
11,515
17, 515
29, 515
59, 515
R e v e n u e act 1926
Surtax
T o t a l tax
Normal
tax
0
$20
40
80
140
220
320
440
580
740
920
1,120
1,540
2,040
2,730
3,540
4,470
5,480
6,570
7,780
9,090
10,480
13, 540
17, 020
30, 520
54, 020
92, 020
170, 020
370, 020
$141
255
395
555
735
935
1,155
1,395
1,655
1,935
2,235
2,555
3,215
3,955
4,945
6,055
7,285
8,595
9,985
11, 495
13,105
14, 795
' 18,455
22, 535
39, 035
65, 535
109, 535
199, 535
429, 535
$83.25
143. 25
237. 25
337. 25
437. 25
537. 25
637. 25
737. 25
837. 25
937. 25
1, 037. 25
1,137. 25
1, 337. 25
1, 537. 25
1, 787. 25
2, 037. 25
2, 287. 25
2, 537. 25
2, 787. 25
3, 037. 25
3, 287. 25
3, 537. 25
4, 037. 25
4, 537. 25
7, 037. 25
9, 537. 25
14, 537. 25
24, 537. 25
49, 537. 25
Surtax
T o t a l tax
0
$83. 25
$20
163. 25
40
277.25
80
417. 25
140
577. 25
220
757. 25
320
957. 25
440
1,177. 25
580
1,417. 25
7201, 657. 25
880
1, 917. 25
1,040
2,177. 25
1,400
2, 737. 25
1,800
3, 337. 25
2,360
4,147. 25
2,980
5, 017. 25
3,660
5, 947. 25
4,400
6, 937. 25
5,210
7, 997. 25
6,060
9, 097. 25
6,960
10, 247. 25
7,860
11, 397. 25
9,760
13, 797. 25
11, 660
16,197. 25
21, 660
28, 697. 25
31, 660
41,197. 25
51, 660
66,197. 25
91, 660 116,197. 25
191, 660 241,197, 25
Suggested s u r t a x r a t e s
Surtax
0
$20
40
80
120
180
240
320
400
500
600
720
980
1,280
1,710
2, 200
2,760
3,380
4,060
4,800
5,600
6,450
8,250
10,150
20,150
30,150
50,150
90,150
190,150
T o t a l tax
$83. 25
163. 25
277. 25
417. 25
557. 25
717. 25
877.26
1,057. 25
1, 237. 25
1,437. 25
1, 637.25
1,857. 25
2, 317. 25
2, 817. 25
3,497. 25
4, 237. 25
5, 047. 25
5, 917. 25
6,847. 25
7, 837. 25
8,887. 25
9, 987. 25
12, 287. 25
14, 687. 25
27,187. 25
39, 687. 25
64, 687. 25
114, 687. 25
239,687.25
SECRETARY OF THE TREASURY
EXHIBIT
305
31
Announcement of hearings on ^regulations for consolidated returns
{press release, August 14, 1928)
The revenue act of 1928 imposes upon the Treasury the duty to
prescribe regulations, for the taxable year 1929 and thereafter, for
the filing of consolidated returns by affiliated corporations and the
determination of the tax liability of, and the collection of the tax
from, affiliated corporations filing consolidated returns.
The Treasury appreciates keenly?' the importance and difficulty of
the task with which it is confronted, and believes that the presentation of the views and suggestions of persons familiar with consolidated return problems of the taxpayers will be of invaluable assistance. Accordingly, it is proposed to hold public hearings, beginning
September 10, 1928, and continuing through September 15, 1928, or
until the hearings may properly be closed. The hearings will be
stenographically reported, and written memoranda may be filed.
The hearings will be held in room 276 of the Treasury Building
and will begin each morning at 9.30 and continue until 5.30, with
an adjournment for one hour at 12.30. They will be held before
a committee composed of Henry Herrick Bond, Assistant Secretary
of the Treasury, David H. Blair, Commissioner of Internal Eevenue,
Clarence M. Charest, general counsel of the Bureau of Internal
Eevenue, and Ellsworth C. Alvord, special assistant.to the Secretary
of the Treasury. Every effort will be made to arrange hours in
conformity with the expressed desires of those to be heard, although
it can well be appreciated that departures may possibly be necessary.
Communications should be addressed directly to Assistant Secretary
Bond, Treasury Department, Washington, D. C. Persons requesting
a hearing will h^e advised as soon as possible of the date and hour
assigned.
OBLIGATIONS OF FOREIGN GOVERNMENTS
Austria
EXHIBIT
32
Statement of Secretary of the Treasury Mellon concerning the proposal to subordinate lien of United States to permit new loan to
Austria {press release, February 21, 1928)
The Government of the United States holds a bond of the Austrian
Government in the principal sum of $24,055,708.92, given in payment for supplies furnished for Austrian relief in 1919 and 1920.
The bond is dated September 4, 1920, and by its terms matured
January 1, 1925, but under the terms of the so-called Lodge Eesolution of April 6, 1922, the Secretary of the Treasury extended the
maturity date until June 1, 1943, and at the same time subordinated
the lien enjoyed by the United States for the purpose of permitting
the reconstruction loan of 1923.
306
REPORT ON THE FINANCES
Certain other Governments—namely, Denmark, France, Great
Britain, Italy, the Netherlands, Norway, Sweden, and SAVHzerland—hold relief bonds of similar character in the sum of about
$85,000,000. They likewise agreed to subordinate their liens to the
reconstruction loan of 1923, which in addition was guaranteed by
several of these Governments.
The relief bonds enjoy " a first charge upon all the assets and
revenues of Austria." The principal exception to this first charge
is that in favor of the 1923 reconstruction loan. The relief bonds
rank ahead of Austria's reparation obligations.
The Austrian Government now desires to float a new loan of about
$100,000,000 for the continuation of the program of reconstruction.
The proceeds would be applied to the repair, improvement, and
reequipment of the Austrian railway, telegraph, and telephone
systems.
The lien enjoyed by the relief bonds makes it difficult, if not impossible, for Austria to obtain the necessary funds for this purpose.
Accordingly the Austrian Government has requested the Governments holding Austrian relief bonds and also the reparation commission to subordinate their liens in favor of the new loan.
The Treasury is advised that all of the foreign governments concerned have already informed the Austrian Government that they
are willing to take the desired action, providing that all of the governments in a similar position do likewise. I t is further understood that the Eeparation Commission has similarly agreed to subordinate the reparation lien on Austria's assets and revenues in favor
of the new loan. The Austrian Government has requested the Government of the United States to take similar action. Since unanimous consent is required, failure of the United States to join the
other governments concerned in granting Austria's request would
constitute a barrier to the floating of the new ^reconstruction loan.
That matter has been carefully considered by the Secretary of
State and the Secretary of the Treasur}^, and it is proposed to recommend to Congress that the Secretary of the Treasury be granted the
authority in his discretion to subordinate the lien of the United
States on Austria's assets and revenues to the extent necessary to
permit the flotation of the loan now proposed, subject, of course,
to satisfactory notification that the other governments and the
reparation commission agree to take similar action.
E X H I B I T 33
Message of the President to the Congress submitting a report of the
Secretary of the Treasury concerning the Austrian, debt proposal
{press release, March 20,1928)
To the Congress of the United States:
I am submitting herewith for your consideration a copy of a
report of the Secretary of the Treasury regarding the action proposed to be taken by the Government of the United States in respect
of the debt of Austria to this Government.
SECRETARY OF THE TREASURY
307
The action proposed by the Secretary of the Treasury has my
approval. I recommend that the Congress enact the legislation necessary to enable the United States to join with the other relief creditors
ih permitting Austria to obtain the additional capital urgently
needed for continuing its economic reconstruction, and to authorize
the Secretary of the Treasury to conclude an agreement for the settlement of Austria's debt to the United States.
(Signed)
CALVIN COOLIDGE.
T H E W H I T E HOUSE,
March 20,1928.
MARCH 19,
1928.
I have the honor to submit the following report in respect of the debt of Austria to the United States
Government, with particular reference to the request submitted by
the Austrian Government for the subordination of the lien enjoyed
by the Government of the United States under the terms of the
relief bond of the Austrian Government held by the Treasury Department to a ncAv loan to be issued for reconstruction purposes, and
other questions related thereto.
I t will be recalled that during 1919 and 1920, conditions in Austria
Avere so serious that the United States and a number of European
governments found it necessary to furnish foodstuffs and other relief
supplies on credit. The act of Congress approA^ed March 30, 1920,
authorized the United States Grain Corporation, with the approval
of the Secretary of the Treasury, to furnish flour on credit " to relieve populations in the countries of Europe or countries contiguous
thereto suffering for the w^ant of food." Pursuant to that legislation,
flour was sold to Austria, and the Government of the United States
now holds an Austrian bond in the principal sum of $24,055,708.92,
given in payment therefor. Certain other Governments^—namely,
Denmark, France, Great Britain, Italy, the Netherlands, Norway,
Sweden and Switzerland—hold relief bonds' of similar character in
the sum of about $95,000,000. The relief bonds of 1920 enjoy " a
first charge upon all the assets and revenues of Austria." They rank
ahead of Austria's reparation obligations.
The bond held by the United States is dated September 4, 1920,
and by its terms matured January 1, 1925. I n 1922 conditions in
Austria were such as to necessitate financial assistance from abroad
in order to permit the stabilization of the currency, the balancing of
the budget, and the resumption of the economic life of the country.
The credit of Austria was at a low ebb. No exterior loan could be
floated as long as relief loans and reparations constituted prior
charges on Austria's assets and revenues. Accordingly, the relief
creditors, including the United States, and the Eeparation Commission, agreed to subordinate their liens to permit the flotation of a
reconstruction loan. Under the terms of the so-called Lodge Eesolution of April 6, 1922, the Secretary of the Treasury extended the
maturity date of the relief bond held by the United States Government until June 1, 1943, and at the same time agreed to subordinate
the lien enjoyed by the United States for the purpose of permitting
the reconstruction loan of 1923. The Lodge Eesolution, which set
M Y DEAR MR. PRESIDENT:
308
REPORT ON THE FINANCES
forth the urgent need for relieving Austria from the immediate
burden of the lien, reads as follows:
Whereas the economic structure of Austria is approaching collapse and great
numbers of the people of Austria are, in consequence, in imminent danger of
starvation and threatened by diseases growing out of extreme privation and
starvation; and
AA^hereas this Government wishes to cooperate in relieving Austria from the
immediate, burden created by her outstanding debts: Therefore be it
Resolved by the Senate and House of Representatives of the Uriited States
af America in Congress assembled, That the Secretary of the Treasury is hereby
authorized to extend, for a period not to exceed twenty-five years, the time of
payment of the principal and interest of the debt incurred by Austria for the
purchase of flour from the United States Grain Corporation, and to release
Austrian assets pledged for the payment of such loan, in whole or in part, as
may in the judgment of the Secretary of the Treasury be necessary for the
accomplishment of the purposes of this resolution: Provided, however, That
substantially all the other creditor nations, to wit, Czechoslovakia, Denmark,
France, Great Britain, Greece, Holland, Italy, Norway, Rumania, Sweden,
Switzerland, and Yugoslavia, shall take action with regard to their respective
claims against Austria similar to that herein, set forth. The Secretary of the
Treasury shall be authorized to decide when this proviso has been substantially
complied Avith.
The action of the Secretary of the Treasury under the authority of
the resolution was taken on June 9, 1923.
I n 1923 a reconstruction loan amounting to about $125,000,000 was
floated by Austria in the United States and European countries.
This loan was guaranteed by several of the European governments.
I t saved Austria from economic and social disintegration and collapse. The program of reconstruction led to the stabilization of
Austrian currency during 1923 and the balancing of the Austrian
budget by 1924. I t has been balanced ever since.
Austria's economic reconstruction, however, has not been completed and the capital resources of the country are not adequate to
the task. The Austrian Government now desires to float a new
loan in the net amount of 725,000,000 Austrian schillings, or about
$100,000,000, for'the continuation of the program of reconstruction.
The proceeds would be applied to capital expenditures, that is, to
the repair, improvement and reequipment of the Austrian railway,
telegraph and telephone systems. The lien enjoyed by the relief
bonds makes it difficult, if not impossible, for Austria to obtain
the necessary funds for these purposes. Accordingly, the Austrian Government has requested the governments holding Austrian relief bonds and the Eeparation Commission to subordinate
their liens in favor of the new loan for a period not exceeding 30
years.
The Treasury Department is advised by the Department of State
that all of the foreign governments concerned have already informed
the Austrian Government to the effect that they are willing to
subordinate their liens, providing all of the governments in a similar
position, and the Eeparation Commission, do likewise. I t is further
understood that the Eeparation Commission has agreed to subordinate the reparation lien on Austria's assets and revenues in favor of
the new loan. The Austrian Government has requested the Government of the United States to take similar action. Since unani-
SECRETARY OF THE TREASURY
309
mous consent is required, failure of the United States to join the
other governments concerned in granting Austria's request would
constitute a barrier to the floating of the new reconstruction loan.
Since the proposed loan would be for a term of 30 years, and
the relief bonds mature in 1943, the mere subordination of the lien
may not be sufficient to permit the flotation of the new loan. The
Austrian Government is at present negotiating with the Government
of the United States and the other relief creditor governments terms
of payment of the relief bonds so as to provide for the liquidation
of the indebtedness over a period of years. All of the relief bonds
are of similar tenor and contain the following clause:
The Government of Austria agrees that no payment will be made upon or in
respect of any of the obligations of said series issued by the Government of
Austria before, at, or after maturity, whether for principal or for interest,
unless a similar payment shall simultaneously be made upon all obligations
of the said series issued by the Government of Austria in proportion to the
respective obligations of said series.
The Austrian GoA^ernment has assured the GoA^ernment of the
United States that it intends to make a settlement of the relief debt
at the earliest practicable date, and that it is prepared to make with
the United States a settlement on a basis no less favorable to the
United States than that made with the other relief creditor governments, or any of them.
I n view of the terms of the bond, as set forth above, Austria can
not make a definitive settlement of the relief obligations without the
agreement of all nine of the creditor governments. Such a settlement obviously may take some time, and it might well be impossible
to submit the terms of settlement to the Congress at this session. This
in turn might mean the indefinite postponement of the flotation of the
new loan, Avhich is urgently needed. Under these circumstances it is
extremely desirable that the executive branch of the Government
should have the authority to dispose of the whole matter, with the
limitation that our debt should be settled on terms no less favorable
than those granted the other governments, and on the understanding
that the security now enjoyed be not released except in so far as necessary to permit the flotation of the contemplated reconstruction loan.
I am strongly of the opinion that the United States should not
take a position that would obstruct any proper and well-considered
measures for furthering Austria's reconstruction, particularly since
such measures will tend to promote our commercial intercourse with
Austria and should increase Austria's capacity to repay its indebtedness to the United States.
The matter has been given careful consideration by the Secretary
of State and myself, and I suggest that, if you approve, legislation
be sought from Congress authorizing the Secretary of the Treasury,
in his discretion, to subordinate, for a period not exceeding 30 years
from January 1, 1929, the lien of the United States on Austria's
assets and revenues to the extent necessary to permit the flotation
of the loan now proposed, subject, of course, to satisfactory notification that the other governments and the Eeparation Commission,
agree to take similar action; and authorizing the Secretary of the
Treasury, with the approval of the President, to conclude an agreement for the settlement of the indebtedness of Austria to the United
310
REPORT ON THE FINANCES
States upon terms and conditions no less favorable than the terms
and conditions granted by Austria to any of the other relief creditor
governments.
Faithfully yours,
(Signed)
A. W. MELLON,
Secretary of the Treasury,
The
PRESIDENT,
The White House.
E X H I B I T 34
Staterrhent by Acting Secretory of the Treasury Mills before the
Cormwttee on Wo/ys and Meaois concerning the Austrian debt proposal {press release, April 10,1928)
During 1919 and 1920 conditions in Austria Avere so serious that
a large portion of the population Avas threatened Avith starvation.
The United States and a number of European Governments as a
humanitarian measure furnished the necessar}^ foodstuffs and other
relief supplies, and since the economic condition of Austria was such
as to preclude the possibility of payment in cash, these supplies were
furnished on credit. This Avas done in accordance with an act of
Congress approved March 30, 1920, which authorized the United
States Grain Corporation, Avith the approval of the Secretary of
the Treasury, to furnish flour on credit " to relieve populations in
the countries of Europe or countries contiguous thereto suffering
for Avant of food." The Government of the United States received
and now holds an Austrian bond in the principal sum of
$24,055,708.92, giA^en in payment of the supplies aboA^e mentioned.
The other Governments concerned, namely, Denmark, France, Great
Britain, Italy, the Netherlands, Norway, Sweden, and Switzerland,
hold relief bonds of similar character in the sum of about $95,000,000.
The relief bonds of 1920 enjoyed '' a first charge upon all of the
assets and revenues of Austria." They rank ahead of Austria's
reparation obligations.
The bond held by the United States by its terms matured January
1, 1925. I n 1922, hoAvever, Austria was threatened Avith a complete
economic collapse. Financial assistance Avas necessary to permit the
stabilization of the currency, the balancing of the budget, and the
resumption of the economic life of the country. No exterior loan,
however, could be floated as long as relief loans and reparations constituted prior charges on Austria's assets and revenues. Accordingly
the relief creditors, including the United States, and the Reparation
Commission, agreed to subordinate their liens to permit the flotation
of a reconstruction loan. Under the terms of the so-called Lodge
Eesolution of April 6, 1922, the Secretary of the Treasury extended
the maturitj^ date of the relief bond held by the United States Government until June 1, 1943, and at the same time agreed to subordinate
• the lien enjoyed by the United States for the purpose of permitting
the reconstruction loan of 1923. The Lodge Eesolution reads as
follows:
SECRETARY OF THE TREASURY
311
AA^hereas the economic structure of Austria is approaching coUapse and great
numbers of the people of Austria are, in consequence, in imminent danger of
starvation and threatened by diseases growing out of extreme privation and
starvation; and
Whereas this Government wishes to cooperate in relieving Austria from the
immediate burden created by her outstanding debts: Therefore be it
Resolved 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 to extend, for a period not to exceed twenty-five years, the time of
payment of the principal and interest of the debt incurred by Austria for the
purchase of flour from the United States Grain Corporation, and to release
Austrian assets pledged for the payment of such loan, in whole or in part, as
may in the judgment of the Secretary of the Treasury be necessary for the
accomplishment of the purposes of this resolution: Provided, however, That
substantially all the other creditor nations, to wit, Czechoslovakia, Denmark,
France, Great Britain, Greece, Holland, Italy, Norway, Rumania, Sweden,
Switzerland, and Yugoslavia, shall take action with regard to their respective
claims against Austria similar to that herein set forth. The Secretary of the
Treasury shall be authorized to decide when this proviso has been substantially
complied with.
I n 1923 a reconstruction loan amounting to about $125,000,000 Avas
floated by Austria in the United States and European countries.
The loan was a 7 per cent loan, maturing in 20 3^ears. I t was
guaranteed, principal and interest, by several European Governments, as follows:
Per cent
Great Britain to the extent of
France
Czechoslovakia
Italy
Belgium
Sweden
Denmark
Holland
,
24%
2,41/2
2:4l^
20%
2l
2
1
1
The loan saved Austria from economic and social disintegration
and collapse. The program of reconstruction led to the stabilization
of Austria's currency during 1923 and the balancing of the Austrian
budget by f 924. I t has been balanced ever since. About $75,000,000
of the $125,000,000 was applied for urgent purposes such as stabilization and budgetary needs. Approximately $50,000,000 has been expended for capital purposes of a productive character. Austrian's
economic reconstruction, hoAvever, has not been completed and the
capital resources of the country are not adequate to the task. The
Austrian Government now desires to float a new loan in the amount
of 725,000,000 Austrian schillings, or about $100,000,000, for the continuation of the program of reconstruction. I t is our understanding
that the proceeds of the loan will be devoted to the following
purposes:
$41,000,000 for telegraph and telephone systems,
$62,000,000 for raihvays.
The telephone and telegraph expenditures are to be largely applied
to the construction of long-distance cables and installations connected
therewith. The construction program is intended to extend over a
period of five years and it is planned to put the Austrian telephone
and telegraph systems in a position to handle through business which
it is believed will be of a profitable character.
312
REPORT ON TB:E F I N A N C E S
Railway expenditures are subdivided as. follows:
$7,000,000 for electrification,
$19,000,^ 000 for heavier rails, bridges, and general reconstruction,
$23, 000, 000 for rolling stock,
$10, 000, 000 for automatic brakes.
As in the case of the telegraphs and telephones, these expenditures
are to extend over a five-year period. The necessity of repairing and
modernizing all of Austria's communication systems during the next
five years is stated to be so outstanding that it overshadow^s all other
considerations. One of the most important of the very few assets
left to Austria by the peace treaty is undoubtedly its geographical
and consequently its commercial position. Austria is compelled to
make the utmost use thereof if it intends to assure its future.
Austria's railways, roads, and other means of communication must
be brought up to date. Backwardness in this respect, it is argued,
would mean a gradual elimination of Austria from the main system
of European traffic. I n this connection, it is obviously to the interests
of the United States as one of Austria's creditors that the necessary
capital should be made available to Austria for productive purposes
of this character. The strengthening of Austria's economic organization must of necessity increase her ability to meet her obligations.
Austria, however, is not in a position to float the proposed loan as
long as the relief bonds and reparation obligations have a prior lien
over Austria!s assets. Accordingly the Austrian Government has
requested the governments holding Austrian relief bonds and the
Eeparation Commission to subordinate their liens in faA^or of the
new loan for a period not exceeding 30 years.
We understand that all of the other relief creditors have agreed to
subordinate their liens, providing all of the governments in a similar
position and the Eeparation Commission do likewise. I t is further
understood that the Eeparation Commission lias agreed to-^ubordinate
the reparation lien on Austria's assets and revenues in lavor of the
new loan. The Austrian Government has requested the Government
of the United States to take similar action, and one of the provisions
of the bill now before you will give to the Secretary of the Treasury
the authority to do so. Let me make this entirely clear. Unanimous
consent is required. If the United States refuses to join the other
governments concerned in granting Austria's request, it will be
impossible for Austria to float the neAv reconstruction loan and the
United States GoA^ernment will have to assume full responsibility
for the failure.
But the Austrian Government has not simply come forAvard Avith
a request that the lien which Ave hold on Austrian assets be subordinated to the new loan. Austria has at the same time made an
offer to settle the outstanding relief obligations. The proposed terms
of settlement have been submitted not only to the United States Government but to all of the relief creditors. I t is understood that they
have received favorable consideration; in fact, the majority of the
relief creditors have already stated that they are acceptable.
The Treasury Department Avould have preferred to follow in this
instance the course pursued in the case of other debt settlements and
to have submitted to the Congress a definite debt settlement agreement
SECRETARY OF THE TREASURY
313
either for ratification or for the purpose of obtaining the necessary
authority to make such an agreement. We are, however, not in a
position to do this while negotiations are still proceeding with some
of the other creditor governments. There are nine relief creditors,
vvhich means that Austria must deal Avith nine separate governments.
I t is obvious that the same terms of settlement must be granted to all
of the relief creditors and no one relief creditor can be favored at the
expense of the others. This, in turn, implies that there must be agreement on the part of nine governments, and while progress is being
made as rapidly as could be expected, complete agreement among all
concerned may take a little time.
In the meanwhile, the Congress may have adjourned and unless
the authority is granted the Secretary of the Treasury to effect a
settlement on behalf of the United States, the Avhole question will
have to go over for another year. I n the meanwhile Austria Avill find
herself unable to float the contemplated loan and to obtain funds
urgently needed for the capital expenditures above described.
The bill now before you provides t h a t :
The Secretary of the Treasury, with the approval of the President, is hereby
authorized to conclude an agreement for the settlement of the indebtedness of
Austria to the United States, but th^ terms and conditions of such settlement
shall not be less favorable than the terms and conditions granted by Austria
to any of the other relief creditor governments.
With this limitation, the Congress should be willing to grant this
authority to the Secretary of the Treasury, even if it is not possible at
this time to submit in detail the terms of the proposed settlement.
The position of the United States must be largely governed by the
attitude of our fellow creditors. I t is quite proper to insist that the
United States shall in no event receive less favorable terms of settlement than any other creditor, but it is fair to assume that the people
of the United States will not insist on more exacting terms of settlement than those demanded by Austria's European creditors, many of
Avhom are debtors to the United States. I n this connection it should
be noted that the United States Government only holds 20 per cent of
the relief bonds, whereas the European creditors hold 80 per cent.
I n considering this whole proposition, it should not be forgotten
that the loan originated largely from humanitarian and charitable
motives. We furnished the food supplies on credit in order to save
millions from starvation. The economic condition of Austria was
such at the time that it could not reasonably have been anticipated
that the amount of the credit would ever be recovered in full. I n
this respect, this loan is on a different basis from war and postwar
loans made to countries whose economic condition was in no wise
comparable to that of Austria.
We are now in a position to clean up this whole matter upon
reasonable terms and at the same time to put Austria in a position
where she can float a new loan for the purpose of completing the
reconstruction program which has to date yielded such satisfactory
results. The Treasury Department is strongly of the opinion that
the United States Government should join the other relief creditors
in effecting a prompt settlement, and should not under any circumj^tances take a position that would obstruct proper and well-considered measures for furthering Austria's reconstruction.
314
REPORT ON THE FINANCES
Belgium
EXHIBIT
35
Final exchange of obligations under funding agreement {^presn
release, March 5, 1928)
The Secretary of the Treasury announced:
Final steps were taken to-day in connection with the funding of
the indebtedness of the Kingdom of Belgium to the United States.
Viscount de Lantsheere, first secretary of the Belgian Embassy at
Washington, delivered to the Treasury 120 gold bonds of his Government in the principal amount of $413,580,000, receiving in exchange the original obligations given by his Government in connection Avith cash advances and surplus war materials sold by the United
States Liquidation Commission (War Department). The difference
between the principal amount of the boncis delivered and the principal amount of the debt as funded represents the principal amount of
$4,200,000 of such bonds paid off since the date as of which the
funding agreement became effective.
The act approving the Belgian settlement was signed by the President April 30, 1926. The debt-funding agreement has likewise been
approved by the Belgian Government.
Greece
EXHIBIT
36
Statement of Secretory of the Treasury Mellon concerning the
proposed debt settlement with Greece {press release, December
5, 1927)
The Secretary of State and the Secretary of the Treasury have
for some months past conducted conversations with the Greek minister at Washington looking to the settlement of the indebtedness
of the Greek Government to the Government of the United States,
Avhich as of January 1, 1928, will amount, principal and interest, to
the sum of $19,659,836.
The indebtedness arose by virtue of an agreement dated February
10, 1918, under the terms of which the Governments of the United
States, Great Britain, and France agreed to advance to the Greek
Government by equal shares not to exceed 750,000,000 francs. The
object of this agreement was to aid the Greek GoA^ernment in procuring in Greece the credits required for the conduct of Greece'smilitary operations against the Central PoAvers. Advances were to
be subject to the approval of an Interallied Financial Commission,
composed of one representative from each of the signatory Governments, and the use of the funds Avas to be controlled by this commission and by a military commission similarly established. The
reports of the American consul general at Athens, who represented
ihe United States on this commission, show that Greek expenditures
under the agreement reached the total of 682,134,693.54 drachmas
(the drachma being equivalent at par to the gold franc). There
SECRETARY OF THE TREASURY
315
is no doubt but that Greece expended for war purposes under the 1918
agreement an amount largely in excess of the advances she has
since received.
Upon the recommendation of the American delegate on the financial commission, credits to the amount of $48,236,629.05 were established by the Treasury of the United States, with the approval of
President Wilson, in favor of Greece from June 20, 1918, to July 31,
1919. The first actual advance was made by our Government to
Greece on December 15, 1919, the second on January 16, 1920, and
the third on September 24, 1920. All told, Ave actually advanced
$15,000^,000.
The Greek Government has consistentl}^ contended that it was
entitled to further advances up to the full amount of the credits
established by the Treasury of the United States. On the other
hand, the Government of the United States has taken the position
that events AA^hich transpired subsequent to November, 1920, relieved
it from making any further advances. This difference of opinion
has heretofore prevented the reaching of an agreement for the settlement of the indebtedness of the Government of Greece to the
United States.
I n April, 1927, the British and Greek Governments reached an
agreement for the settlement of the indebtedness of the Greek Government to the British Government Avhich had arisen under the
terms of the agreement of February 10, 1918, Great Britain having
advanced approximately 6,540,000 pounds, or $31,826,910. Under
the terms of this settlement the obligation is to be discharged ovei
a period of 62 years at a low rate of interest, and all claims for
further advances under the 1918 agreement were waived by the Greek
Government.
In the recent conversations with the Greek minister the British
debt settlement with Greece was taken as a basis, our position being
that the United States GoA^ernment Avas entitled to as favorable a
settlement as that accorded to Great Britain. The Greek Government conceded the soundness of this contention, but pointed out that
in order to enjoy as favorable a settlement as that accorded to Great
Britain the United States Government should in fairness advance a
sum as great as that advanced by Great Britain under the terms of
the 1918 agreement. Great Britain having advanced the equivalent
of approximately $31,826,910, and the sum advanced by the United
States Government being $15,000,000, wdiich with interest to January
1, 1928, at 5 per cent amounts to $19,659,836, the amount of ncAV
money to be advanced by our Government in order to reach the
amount advanced by Great Britain is $12,167,074.
I t is proposed, therefore, to recommend that the Congress authorize
the concluding of an agreement Avith the Greek Government on the
following basis:
The $15,000,000 of principal OAved by the Greek Government, with
interest at 4^4 per cent up to December 15, 1922, and on the amount
then due interest at 3 per cent to January 1, 1928, to be funded over
a period of 62 years on the basis of the Greco-British settlement, save
that during the first three years the payments to be in reduced
amounts.
316
REPORT ON THE FTNANCES
The United States Government to advance $12,167,000 to the
Greek Government at 4 per cent, with sinking fund for retirement
in 20 years; the Greek Government to forego all claims for further
advances under the 1918 agreement.
The Greek Government will furnish as security for the ncAv loan
the rcA^enues at present under the control of the International Financial Commission established by the law of February 26,1898, in so far
as the yield of these revenues is not required for the service of the
loans having a prior charge upon the said revenues.
The loan is to enjoy the same securities and guarantees,as the
£9,000,000 loan sanctioned by the Council of the League of Nations,
as set forth in the protocol dated Geneva, September 8, 1927, and the
service of this loan is to be administered and assured by the International Financial Commission. As of 1927, the excess of revenues
at present under the control of the International Financial Commission OA^er those required for the service of the loans having a prior
charge amounts to approximately $28,000,000, and therefore the
service of the proposed $12,167,000 loan will be amply secured.
Pending the assumption of control by the International Financial
Commission, the Greek Government undertakes to assign the unpledged revenues to the American minister at Athens as security for
the service of the loan.
Eecent events in the Near East have involved for Greece a very
considerable displacement of population. The total number of refugees added to the population of Greece amounts to about 1,500,000,
or more than 30 per cent of the population. I n 1923 there was organized by formal and official agreement a Eefugee Settlement Commission, of Avhich the chairman, according to the organic articles, must
always be an American citizen. Mr. Henry Morgenthau was the
first chairman; and Mr. Charles B. Eddy is now chairman. The
task of this commission is to establish the refugees in productive
work. I n 1924 a loan of over $59,000,000 Avas floated in the world
markets under the auspices of the League of Nations for the purposes
of the Eefugee Settlement Commission. Great progress has been
made, but much remains to be done to complete this humanitarian
Avork. The proceeds of the $12,167,000 loan to be made by the United
States Government to the Greek Government are to be applied in
their entirety to the work of the Eefugee Settlement Commission.
EXHIBIT
37
Message of the President to the Congress submitting a report of the
Secretary of the Treasury concerning the Greek debt proposal
{S, Doc, No. 51, 70th Cong,, 1st sess.)
To the Congress of the United States:
I am submitting hercAvith for your consideration a copy of the
report of the Secretary of the Treasury regarding the proposed plan
for the settlement of the debt owed by Greece to the United States
SECRETARY OF THE TREASURY
317
and of the differences existing between the two Governments arising
out of the tripartite loan agreement entered into at Paris under date
of February 10, 1918.
The plan of settlement has my approval, and I recommend that the
Congress enact the necessary legislation authorizing it for the following reasons:
I t provides for the funding of the Greek war debt to our Government and for the settlement of the Greek claim for further advances
under the tripartite loan agreement made during the Avar. While
our Government is to advance some tweh^e millions to Greece, the
loan is amply secured, is to be repaid over a period of 20 years at an
adequate rate of interest, and is to be used exclusively for reconstruction work of great humanitarian as well as economic value. This
loan discharges what the Greek Government has consistently contended is a legal and moral commitment of our Government.
CALVIN COOLIDGE.
T H E W H I T E HOUSE,
February 6,1928,
TREASURY DEPARTMENT,
Washington, February 4-) 1928.
: I have the honor to submit the following report regarding the terms of the proposed plan for the settlement
of the debt owed by Greece to the United States and the differences
existing between the two Governments arising out of the tripartite
loan agreement entered into at Paris under date of February 10, 1918.
On January 1, 1928, the indebtedness of the Greek Government to
the Government of the United States amounted, principal and interest at 5 per cent per annum, to the sum of $19,659,836. The indebtedness arose by Adrtue of an agreement dated February 10, 1918,
under the terms of Avhich the Governments of the United States,
Great Britain, and France agreed to advance to the Greek Government by equal shares not to exceed 750,000,000 francs. The object
of this agreement was to aid the Greek Government in procuring
in Greece the credits required for the conduct of Greece's military
operations against the Central PoAvers. Advances Avere to be subject
to the approval of an Interallied Financial Commission, composed
of one representative from each of the signatory Governments, and
the use of the funds Avas to be controlled by this commission and
by a military commission similarly established. The reports of
the American consul general at Athens, Avho represented the United
States on this commission, shoAv that Greek expenditures under the
agreenient reached the total of 682,134,693.54 drachmas (the drachma being equivalent at par to the gold franc). There is no doubt
but that Greece expended for war purposes under the 1918 agreement
an amount largely in excess of the advances she has since received.
Upon the recommendation of the American delegate on the Interallied Financial Commission, the Secretary of the Treasury, with the
approval of President Wilson, established on the books of the
M Y DEAR MR. PRESIDENT
318
REPORT ON THE FINANCES
Treasury the following credits in favor of Greece for which the
Treasury holds the obligations of that Government:
Amount
June 20, 1918
Dec. 3, 1918
Mar. 25, 1919
July 31, 1919
$15, 790, 000. 00
23, 764, 036. 00
3, 858, 930. 00
4, 823, 663. 05
48, 236, 629. 05
Against these credits the Treasury made cash advances as follows:
Amount
Dec. 15, 1919
Jan. 16, 1920
Sept. 24, 1920
^
$5, 000, 000
5, 000, 000
5, 000, 000
All told, we advanced $15,000,000, leaving credits amounting to
$33,236,629.05 remaining on the books of the Treasury. No further
advances were made after the fall of the Greek Government in 1920^
the incoming regime not being recognized by the United States for
a considerable j)eriod of time. MeauAvhile, the Greek Government
committed certain acts which were construed by this Government as
violations of the 1918 agreement. Secretary Houston stated to the
Senate Committee on the Judiciar}^', and I assured the Committee
on Ways and Means, that no further advances would be made to
Greece without first submitting the matter to Congress.
The Greek Government has consistently contended that it was
entitled to further advances up to the full amount of the credits
established by the Treasury of the United States. On the other
hand, the Government of the United States has taken the position
that events which transpired subsequent to November, 1920, relieved
it from making any further advances. This difference of opinion has
heretofore prevented the reaching of an agreement for the settlement
of the indebtedness of the Government of Greece to the United States.
In April, 1927, the British and Greek Governments reached an
agreement for the settlement of the indebtedness of the Greek Government to the British Government which had arisen under the terms
of the agreement of February 10,1918, Great Britain having advanced
approximately £6,540,000, or $31,826,910. Under the terms of this
settlement the obligation is to be clischarged over a period of 62 years
at a low rate of interest and all claims for further advances under
the 1918 agreement were waived by the Greek Government. Shortly
after the conclusion of the above-mentioned Greco-British settlement
the Greek minister at Washington took up with the Departments of
State and of the Treasury the question of reaching an agreement
regarding the Greek indebtedness to the United States. The Greek
Government refused to enter into any agreement for the funding of
this indebtedness unless the matter of additional credits was considered at the same time. So strong is the Greek Government's
conviction of its rights under the 1918 agreement that it has been
willing at all times to submit the matter of additional credits to arbitration. I n the conversations with the Greek minister, the British
debt settlement Avith Greece was taken as a basis, our position being
that the United States Government was enitled to as favorable a
settlement as that accorded to Great Britain. The Greek Governmeiit conceded the soundness of this contention, but pointed out that
SECRETARY OF THE TREASURY
319
in order to enjoy as favorable a settlement as that accorded to Great
Britain the United States Government should in fairness advance a
sum as great as that advanced by Great Britain under the terms of
the 1918 agreement. Great Britain having advanced the equivalent
of approximately $31,826,910, and the sum advanced by the United
States Government being $15,000,000, Avhich with interest to January 1, 1928, at 5 per cent, amounts to $19,659,836, the ainount of
new money to be advanced by our Government in order to reach the
amount advanced by Great Britain is $12,167,074.
As a result of the conversations betAveen the Greek ministry and
the Departments of State and of the Treasury, the Secretary of State
and the Greek minister at Washington exchanged notes which set
forth the terms of the proposed settlement. This proposed plan of
settlement has been formally approved by the Greek Chamber of
Deputies. Copies of the above notes, dated January 18, 1928, a
copy of the note No. 156 of the Greek minister, dated January 28,
1928, certifying the approval of the proposed plan by the Greek
Chamber of Deputies, together Avith copies of the reply dated January
31, 1928, of the Secretary of State thereto, and of his letter, dated
January 31, 1928, transmitting all these copies of documents to me,
are inclosed. The terms of the proposed settlement are as follows:
1. The $15,000,000 of principal owed by the Greek Government
to the United States with interest at 4^/4 P&i' cent up to December 15,
1922, and on the amount then due with interest at 3 per cent to
January 1, 1928, amounting in all to $18,127,922.67, less the sum of
$2,922.67 to be paid in cash upon execution of the agreement, is to be
funded over a period of 62 years. There are listed below the payments to be made by the Greek Government to the United States
under this settlement:
J u l y 1, 1928
$20, 000
J a n . 1, 1929
20, 000
J u l y 1, 1929
^ - 25,000
J a n . 1, 1930
25, 000
J u l y 1, 1930
30, 000
J a n . 1, 1931
30, 000
J u l y 1, 1931
110,000
J a n . 1, 1932
110, 000
J u l y 1, 1932
-_—
130, 000
J a n . 1,1933
130, 000
J u l y 1, 1933, and semiannually thereafter to J a n . 1, 1938, 10 pajnnents
each of
150,000
J u l y 1, 1938, a n d semiannually thereafter to J a n . 1, 1990, 104 payments
each of
.
175, 000
2. The Greek Government is to forego all claims for further advances under the tripartite loan agreement dated February 10, 1918,
v^^hich agreement, so far as the United States and Greece are concerned, is to be regarded as terminated.
3. The United States will advance to the Greek Government $12,167,000 at 4 per cent per annum, payable semiannually, with provisions for a sinking fund to retire the loan in 20 years.
4. The Greek Government undertakes to limit the amount to be
borrowed under the terms of the Greek loan protocol signed at
Greneva September 15, 1927, to an amount which when added to the
proposed loan from the United States of $12,167,000 will yield an
effective sum equivalent to not more than £9,000,000 sterling.
13606—29—FI 19 2 8
23
320
REPORT ON THE FINANCES
5. The Greek Government will furnish as securities for the new
loan described in paragraph 3 above, the revenues at present under
the control of the International Financial Commission established
by the law of February 26, 1898, in so far as the yield of these revenues is not required for the service of the loans having a prior
charge upon the said revenues, as enumerated in Annex I I to the
Greek loan protocol signed at Geneva September 15, 1927. The loan
described in paragraph 3 above is to rank with and is to share the
same securities as the loan approved by the Council of the League
of Nations on September 15, 1927, and as set forth in the Greek
loan protocol signed at Geneva September 15, 1927. I n the event
of there occurring in any year a default in the payment of the service of the ncAv loan described in paragraph 3 above, the ratio in
which that loan is to share the same securities as the loan set forth
in the Greek loan protocol signed at Geneva September 15, 1927,
shall be the same as that which the amount of the annual service
charge due the United States bears to the amount of the annual service
charge due the holders of the bonds issued in accordance with the
above-mentioned Greek loan protocol as modified in amount by paragraph 4 above. The amounts required for the service of the loan described in paragraph 3 aboA^e shall be and remain a charge on the revenues above mentioned, ranking immediately after such prior charges
upon the said revenues as were in existence on September 14,1927, and
as enumerated in Annex I I of the Greek loan protocol signed at Geneva
September 15, 1927, and the Greek Government acknowledges that
such revenues shall stand charged accordingly. The Greek Government undertakes to have the service of the loan assured by the
International Financial Commission. Subject to the obligations
resulting from prior charges thereon, the revenues above mentioned
shall be held and applied by the International Financial Commission
for the purpose of meeting the periodical service of the loan and of
making up any past defaults should they have occurred. The United
States is to be under no obligation with respect to the proposed loan
of $12,167,000 until the Greek Government secures the above-mentioned assurance of the service of the loan by the International
Financial Commission.
6. The $12,167,000 proposed to be loaned by the United States to
Greece shall be turned over in its entirety by the latter country to the
Eefugee Settlement Commission, to be expended by the said commission in the carrying out of its refugee settlement work. •
The funding of the existing indebtedness over a period of 62 years
is in accord with the terms of our debt settlements with the other
countries. The proposed settlement compares favorably with the
settlements made with Italy and Yugoslavia. The present value of
the payments to be received under the proposed settlement on a basis
of 4 per cent per annum, payable semiannually, amounts to $6,787,000
or about 34% per cent of the original amount due. On the same
basis, the Italian settlement represents 261/2 per cent, the Yugoslav
settlement 33 per cent, and the Belgian settlement 49 per cent.
The proposed advance of $12,167,000 by the United States to
Greece is to bear interest at the rate of 4 per cent per annum, payable
SECRETARY OF THE TREASURY
321
semiannually, with a sinking fund sufficient to retire the whole
amount in 20 years. The annual service will amount to approximately $889,500. The service of the loan is to be under the administration of the International Financial Commission and is to have as
security the revenues at present under the control of the commission.
For the year 1927 the estimated excess of revenues controlled by the
commission over the sum required for the service of loans having prior
charges amounts to the equivalent of approximately $28,000,000.
The proceeds of this loan are to be used entirely for the work of
the Eefugee Settlement Commission. The 1,500,000 refugees that
Greece was compelled to provide for, constituted an increase in its
population of more than 30 per cent. The task which the Greek
Government is now facing is that of establishing the refugees in
productive work, which will add, of course, to the economic strength
and resources of the country. To do this requires considerable
capital. I n 1924 a loan of over $59,000,000 was floated in the
world's financial markets for this purpose under the auspices of the
League of Nations. I t is provided in the fundamental articles of
the Eefugee Settlement Commission that the chairman of the commission shall always be an American citizen. The first chairman
Avas Mr. Henry Morgenthau, who was succeeded by Mr. Charles P .
HoAvland, who in turn was succeeded by the present chairman,
Mr. Charles B. Eddy. Under their leadership great progress has
been made, but much remains to be done to complete this great
task, which is no longer in an experimental stage. I t is a case of
helping those who have shown determination to help themselves. I t is to be noted that the rate of interest to be paid by Greece
on this proposed advance for refugee settlement Avork is slightly in
excess of the average rate now being paid by the United States on its
outstanding public debt.
The settlement of the Greek debt will conclude, so far as is possible, at this time, the funding of all the war debts owed to the United
States. There will remain the debts of Armenia, where there is no
government in existence; of Austria, in which case Congress authorized the extension of the time for the payment of principal and
interest for a period of 20 years; and of Eussia, where there is no
government recognized by the United States.
I n considering this settlement, I called together such former
members of the World War Foreign Debt Commission as were in
Washington and laid the proposed settlement before them for consideration. The members present were Messrs. Kellogg, Hoover,
Smoot, Burton, Crisp and myself. All, except Mr. Crisp, agreed
that the settlement should be recommended to the Congress for
approval.
I suggest, therefore, if the proposed settlement meets Avith your
approval, that it be transmitted to Congress with your recommendation that legislation be enacted authorizing the concluding of an
agreement with the Greek Government on the basis of the foregoing.
Faithfully yours,
A. W.
MELLON,
Secretary of the Treasury.
The PRESIDENT,
The White House,
322
REPORT ON T H E FINANCES
DEPARTMENT OF STATE,
Washington, January 81, 1928.
The
SECRETARY OF THE TREASURY.
S I R : I have the honor to inclose a copy of each of the following
documents:
*"
.
(1) Note from the Greek minister at Washington to the Acting
Secretary of State, dated January 18, 1928, setting forth the minister's understanding of the terms of the proposed plan for the settlement of the debt owed by Greece to the United States and of the
differences existing between the tAvo Governments arising out of the
tripartite loan agreement entered into at Paris under date of February 10, 1918.
(2) Note from the Acting Secretary of State to the Greek minister at Washington, dated January 18, 1928, confirming the minister's
understanding of the terms of the proposed plan of financial settlement between Greece and the United States.
(3) Note No. 156 of January 28, 1928, from the Greek minister at
Washington to the Secretary of State informing the Secretary that
the Greek Chamber of Deputies on January 27, 1928, unqualifiedly
approved the proposed terms of financial settlement set forth in the
notes exchanged between the Greek minister at Washington and the
Acting Secretary of State on January 18, 1928.
(4) Note from the Secretary of State to the Greek minister at
Washington, dated January 31, 1928, acknOAvledging the minister's
note of January 28, 1928.
I have the honor to be, sir, your obedient servant, F R A N K B . KELLOGG.
LEGATION DE GRECE,
Washingtofn, January 18, 1928,
H. E. Mr. EGBERT E . OLDS,
Acting Secretary of State, Washington, D. C.
a result of informal conversations which I have
had with representatives of the Departments of State and of the
Treasury, I have the honor to set forth my understanding of the
terms of the proposed plan for the settlement of the debt owed by
Greece to the United States and of the differences existing between
the two Governments arising out of the tripartite loan agreement
entered into at Paris under date of February 10, 1918.
Under the above-mentioned agreement there Avere set up on the
books of the United States Treasury credits in the amount of $48,236,629.05, against which the National Bank of Greece issued its
notes for an equivalent amount and these were used by my Government for the payment of the costs it incurred in the prosecution of
the war against the central powers.
During 1919 and 1920 cash advances in the aggregate amount of
$15,000,000 were made b}^ the United States against the credits so
established, leaving a balance of established credits on the books
of the Treasury in favor of my Government amounting to $33,236,629.05. The Treasury of the United States has refused to make
further advances against this credit balance. As you are aAvare,
EXCELLENCY: A S
SECRETARY OF 1?HE TREASURY
323
my Government has consistently claimed that it is entitled to
receive from the United States the full amount of the credit for
$48,236,629.05, for which Greek obligations are at present in the
possession of the United States Treasury. So convinced, indeed,
has my GoA^ernment been of the justice of its claim that it would
have been Avilling at any time to propose and accept arbitration.
Nevertheless, because of the pressing need to secure immediately
the funds necessary to complete the refugee settlement work, my
Government is willing to forego these claims. The refugee problem
is vital to Greece; her future is closely bound up Avith her ability to
care for the one and a half million men, Avomen, and children who
sought refuge Avithin her territories' in 1922 and 1923. Much has
been accomplished, but much remains to be done. Without additional financial assistance the Avork of the Eefugee Settlement Commission must, come to an end in the immediate future. The work of
that commission has been carried on under the chairmanship, successively, of three distinguished Americans—Mr. Henry Morgenthau, Mr. Charles P . HoAvland, aiid Mr. Charles B. Eddy". To their
devoted services Greece in general and the Greek refugees in particular owe more than can well be expressed in words. I t is with these
thoughts in mind that the Greek Government has authorized me to
state that the proposed terms set forth beloAV are acceptable to i t :
1. The $15,000,000 of principal owed by my Government to the
United States with interest at 4i/4 per cent up to December 15, 1922,
and on the amount then due with interest at 3 per cent to January
1, 1928, amounting in all to $18,127,922.67, less the sum of $2,922.67
to be paid in cash upon execution of the agreement, is to be funded
over a period of 62 years. There are listed beloAv the payments to
be made by the Greek Government to the United States under this
settlement:
July 1, 1928
Jan. 1, 1929
$20,000
20,000
July
Jan.
July
Jan.
July
Jan.
July
Jan.
25,000
25,000
30,000
30,000
110,000
110, 000
130,000
130, 000
1,
1,
1,
1,
1,
1,
1,
1,
1929
1930
1930
1931
1931
1932
1932
1933
.
.
_,
July 1, 1933, and semiannually thereafter to Jan. 1, 1938, 10 payments
each of
,
150, 000
July 1, 1938, and semiannually thereafter to Jan. 1, 1990, 104 payments
each of
175, 000
2. The Greek Government is to forego all claims for further advances under the tripartite loan agreement dated February 10, 1918,
Avhich agreement, so far as the United States and Greece are concerned, is to be regarded as terminated.
3. The United States will advance to the Greek Government
$12,167,000 at 4 per cent per annum, payable semiannually, with
provisions for a sinking fund to retire the loan in 20 years.
4. The Greek Government undertakes to limit the amount to be
borrowed under the terms of the Greek loan protocol signed at Geneva
September 15, 1927, to an amount which when added to the proposed
324
REPORT ON THE FINANCES
loan from the United States of $12,167,000 will yield an effective
sum equivalent to not more than £9,000,000 sterling.
5. The Greek Government will furnish as securities for the new
loan described in paragraph 3 above the revenues at present under
the control of the International Financial Commission established by
the law of February 26, 1898, in so far as the yield of these revenues
is not required for the service of the loans having a prior charge
upon the said revenues, as enumerated in Annex I I to the Greek
loan protocol signed at Geneva September 15, 1927. The loan described in paragraph 3 above is to rank with and is to share the same
securities as the loan approved by the Council of the League of
Nations on September 15, 1927, and as set forth in the Greek loan
protocol signed at Geneva, September 15, 1927. I n the event of
there occurring in any year a default in the payment of the service
of the new loan described in paragraph 3 above, the ratio in which
that loan is to share the same securities as the loan set forth in the
Greek loan protocol signed at Geneva September 15, 1927, shall be
the same as that which the amount of the annual service charge due
the United States bears to the amount of the annual service charge
due the holders of the bonds issued in accordance with the abovementioned Greek loan protocol as modified in amount by paragraph
4 above. The amounts required for the service of the loan described
in paragraph 3 above shall be and remain a charge on the revenues
above mentioned, ranking immediately after such prior charges upon
the said revenues as Avere in existence on September 14, 1927, and
as enumerated in Annex I I of the Greek loan protocol signed at
Geneva September 15, 1927, and the Greek Government acknowledges that such revenues shall stand charged accordingly. Th(S
Greek Government undertakes to have the service of the loan assured by the International Financial Commission. Subject to the
obligations resulting from prior charges thereon, the revenues above
mentioned shall be held and applied by the International Financial
Commission for the purpose of meeting the periodical service of the
loan and of making up any past defaults should they have occurred.
The United States is to be under no obligation Avith respect to the
proposed loan of $12,167,000 until the Greek Government secures
the above-mentioned assurance of the service of the loan by the
International Financial Commission.
6. The $12,167,000 proposed to be loaned by the United States to
Greece shall be turned over in its entirety by the latter country to
the Eefugee Settlement Commission, to be expended by the said
commission in the carrying out of its refugee settlement work.
I am authorized to state that the Greek Government undertakes
to submit the above terms immediately to the Chamber of Deputies
with a view to securing its approval.
I shall be glad to receive your confirmation of the accuracy of my
understanding of these terms.
Accept, excellency, the renewed assurance of my highest consideration.
C H . SIMOPOULOS.
SECRETARY OF THE TREASURY
325
DEPARTMENT OF STATE,
Washington, Jamiary 18, 1928.
Mr.
CHARALAMBOS SIMOPOULOS,
Minister of Greece.
SIR : I have the honor to acknowledge the receipt of your note of
January 18, 1928, and to confirm your understanding of the terms
of the proposed plan of financial settlement betAveen Greece and
the United States reached as a result of informal conversations v/hich
you have had with representatives of the Departments of State and
of the Treasury. These terms as set forth in your note under acknowldgment are as follows:
1. The $15,000,000 of principal owned by the Greek Government
to the United States, with interest at 4i/4 per cent up to December
15, 1922, and on the amount then due with interest at 3 per cent to
January 1, 1928, amounting in all to $18,127,922.67, less the sum of
$2,922.67 to be paid in cash upon execution of the agreement, is to
be funded over a period of 62 years. There are listed below the
payments to be made by the Greek Government to the United States
under this settlement:
July 1, 1928
$20, 000
J a n . 1, 1929
,
20, 000
July 1, 1929
25,000
J a n . 1, 1930
.__H
25,000
July 1, 1930
30, 000
Jan. 1, 1931
30', 000
July 1, 1931
110, 000
J a n . 1, 1932
110, 000
J u l y 1, 19321
130, 000
J a n . 1, 1933
130, 000
J u l y 1, 1933, and semiannually thereafter to J a n . 1, 1938, 10 payments
each of
^
150,000
J u l y 1, 1938, and semiannually thereafter to J a n . 1, 1990, 104 pay-ments each of
175, 000
2. The Greek Government is to forego all claims for further adA^ances under the tripartite loan agreement, dated February 10, 1918,
Avhich agreement, so far as the United States and Greece are concerned, is to be regarded as terminated.
3. The United States will advance to the Greek Government
$12,167,000, at 4 per cent per annum, payable semiannually, with
provisions for a sinking fund to retire the loan in 20 years.
4. The Greek Government undertakes to. limit the amount to be
borrowed under the terms of the Greek loan protocol signed at
Geneva September 15, 1927, to an amount which when added to
the proposed loan from the United States of $12,167,000 will yield
an effective sum equivalent to not more than £9,000,000.
5. The Greek Government will furnish as securities for the new
loan described in paragraph 3 above, the revenues at present under
the control of the International Financial Commission established by
the law of February 26, 1898, in so far as the yield of these revenues
is not required for the service of the loans having a prior charge upon
the said revenues as enumerated in Annex I I to the Greek loan
protocol signed at Geneva, September 15, 1927. The loan described
in paragraph 3 above is to rank with and is to share the same securities as the loan approved by the council of the League of Nations on
September 15,1937, arid a^ set f qrth in the Greek loan protocol signed
326
REPORT ON THE FINANCES
at Geneva, September 15, 1927. I n the event of there occurring in
any year a default in the payment of the service of the new loan
described in paragraph 3 above, the ratio in which that loan is to
share the same securities as the loan set forth in the Greek loan
protocol signed at Geneva, September 15, 1927, shall be the same as
that which the amount of the annual service charge due the United
States bears to the amount of the annual service charge due the
holders of the bonds issued in accordance with the above-mentioned
Greek loan protocol as modified in amount by paragraph 4 above.
The amounts required for the service of the loan described in paragraph 3 above shall be and remain a charge on the revenues abovementioned, ranking immediately after such prior charges upon the
said revenues as were in existence on September 14, 1927, and as
enumerated in Annex I I of the Greek loan protocol signed at Geneva,
September 15, 1927, and the Greek Government acknowledges that
such revenues shall stand charged accordingly. The Greek Government undertakes to have the service of the loan assured by the International Financial Commission. Subject to the' obligations resulting
from prior charges thereon, the revenues above-mentioned shall be
held and applied by the International Financial Commission for the
purpose of meeting the periodical service of the loan and of making
up any past defaults should they have occurred. The United States
is to be under no obligation with respect to the proposed loan of
$12,167,000, until the Greek Government secures the above-mentioned assurance of the service of the loan by the International
Financial Commission.
6. The $12,167,000 proposed to be loaned by the United State?
to Greece shall be turned over in its entirety by the latter country tr
the Eefugee Settlement Commission to be expended by the said commission in the carrying out of its refugee settlement work.
I note your statement that you are authorized to say that these
proposed terms are acceptable to the Greek Government which undertakes to submit them immediately to the Chamber of Deputies with
a view to securing its approval.
I have the honor to inform you that the proposed terms set forth
in your note and recapitulated above are acceptable to the executive
branch of the Government of the United States, and that the President upon the recommendation of the Secretary of State and of the
Secretary of the Treasury will submit them to the Congress of the
United States wdth a view to obtaining the necessary authorization
from that body.
Accept, sir, the rencAved assurances of my highest consideration.
EGBERT E . OLDS,
Acting Secretary of State.
No. 156.
LEGATION DE GRECE,
Washington, Jarmary 28, 1928.
EXCELLENCY : I am instructed by my Government to inform you
that the Greek Chamber of Deputies having on January 27, 1928,
unqualifiedly approved the proposed terms of financial settlement
set forth in the notes which I exchanged with the Acting Secetary
of State on January 18, 1928, the approval and acceptance of the
SECRETARY OF THE TREASURY
327
said terms by the Greek Government is in all respects complete.
I shall not fail to communicate to you in due course an authentic
text of the instrument setting forth this approval as well as authorization in proper form for me to sign such instruments as may be necessary to give effect to the terms of the above-mentioned financial
settlement.
Accept, excellency, the renewed assurance of my highest consideration.
C H . SIMOPOULOS,
Minister of Greece.
His Excellency, Mr. FRANK B . KELLOGG,
Secretary of State, etc., etc., Washington, D, C.
DEPARTMENT OF STATE,
Washington, JamMOry 81,1928.
S I R : I have received your note No. 156 of January 28, 1928, in
which, under instructions from your Government, you inform me
that the Greek Chamber of Deputies having on January 27, 1928,
unqualifiedly approved the proposed terms of financial settlement
set forth in the notes which you exchanged with the Acting Secretary
of State on January 18, 1928, the approval and acceptance of the
said terms by the Greek Government is in all respects complete.
I note your further statement that you will in due course communicate to me an authentic text of the instrument setting forth this
approval as well as authorization in proper form for you to sign such
instruments as may be necessary to give effect to the terms of the
above-mentioned financial settlement.
Accept, sir, the renewed assurances of my highest consideration.
FRANK B . KELLOGG.
Mr. CHARALAMBOS SIMOPOULOS,
Minister^ of Greece.
EXHIBIT 38
Statement of Secretary of the Treasury Mellon before the Committee
on Ways and Means with reference to the bill to authorize the
settlement of the indebtedness of the Greek Government to the
United States {press, release, Februa/ry 15,1928, with supplement)
The Secretary of State and the Secretary of the Treasury have for
some months past conducted conversations with the Greek minister at
Washington looking to the settlement of the indebtedness of the
Greek Government to the Government of the United States, which as
of January 1, 1928, amounted, principal and interest, to the sum of
$19,659,836. As a result of these conversations, a proposed plan of
settlement was agreed to which was embodied in notes exchanged
between the Secretary of State and the Greek minister at Washington on January 18, 1928. The President has recommended that the
Congress authorize the Secretary of the Treasury to sign, with his
approval, a definite agreement for the settlement of the Greek debt
328
REPORT ON THE FINANCES
and of the differences arising out of the tripartite loan agreement ol
February 10, 1918, which legislation is now before your committee
for consideration.
The .indebtedness arose by virtue of an agreement dated February
10, 1918, under the terms of which the Governments of the United
States, Great Britain, and France agreed to advance to the Greek
Government, by equal shares, not to exceed 750,000,000 francs. The
object of this agreement and the benefits to be derived by the United
States were set forth in a letter from Secretary of the Treasury
McAdoo to President Wilson dated December 8,1917. Quoting from
a cable from Assistant Secretary Crosby, the letter pointed out that
it was agreed that Greece should increase its active army from three
divisions to at least nine divisions, which Avould require about 600,000,000 francs for munitions and supplies for army and navy, and
750,000,000 francs for payment of soldiers, sailors, and other local
military expenditures. France and Great Britain agreed to provide
the munition and supplies fund. Conditioned upon their supplying,
this fund of 600,000,000 francs, the United States was to join with
France and Great Britain in supplying the 750,000,000 francs. . The
cable further said: " Colonel House and General Bliss join in recommending our joining in support of Greece in view of urgent military
necessity and upon principle that we should join with Great Britain
and France in supporting military programs of weaker nations
whose military cooperation may be of aid in accomplishing desired
victory, even though involving advance for expenditures outside our
country." The loan was approved by President Wilson under date
of December 10, 1917. Under the agreement Greece was to expend
750,000,000 francs of its own resources for the above-mentioned purposes. The United States, France, and Great Britain Avere to open
on their books in equal shares credits to the Greek Government
amounting to 750,000,000 francs, against Avhich credits the National
Bank of Greece was to issue its bank notes. Actual advances on the
credits were to be made during the war should the foreign balances
of the Greek treasury and the National Bank of Greece fall below
100,000,000 francs, and in any event, to be immediately available six
months after the conclusion of the peace.
Advances were to be subject to the approval of an Interallied Financial Commission, composed of one representative from each of the
signatory governments, and the use of funds was to be controlled by
this commission and by a military commission similarly established.
The reports of the American consul general at Athens, who represented the United States on this commission, showed that Greek expenditures under the agreement reached the total of 682,134,693.54
drachmas. One-third of that amount expressed in dollars aggregates
$43,883,998.62. Actually, Greece spent the full 750,000,000 francs,
though owing to the failure of the Interallied Financial Commission
to meet, the balance of these expenditures was not formally checked.
What I want to emphasize at this point is that the United States
Government on February 10, 1918, agreed to advance to the Greek
Government one-third of 750,000,000 francs, providing the Greek
Government expended that amount for war purposes, at a time when
General Bliss stated it was an urgent military necessity. No one disputes that Greece actually spent the money for those war purposes.
SECRETARY OF THE TREASURY
329
The United States has received, therefore, the full consideration
contemplated by the agreement in so far as Greece is concerned.
I n any event, upon the recommendation of the American delegate
on the financial commission, credits to the amount of $48,236,629.05 were
established by the Treasury of the United States with the approval
of President Wilson in favor of Greece, on the following dates:
June 20, 1918
December 3, 1918
March 25, 1919
July 31, 1919
$15, 790,000. 00
23, 764, 036. 00
3,858,930.00
4,823,663.05
4S> 236, 629. 0'5
A t the same time the obligations of the Greek Government in these
amounts, bearing interest at 5 per cent from the date advances were
actually made, were received by our Go Adornment, and are still held
by us.
The first actual advance was made by our Government to Greece
on December 15, 1919; the second on January 16, 1920; and the third
on September 24, 1920. All told, we actually advanced $15,000,000.
The Greek Government has consistently contended that it is
entitled to further advances up to the full amount of the credits
established by the Treasury of the United States. Both Secretary
Houston and I, however, assured the Congress that no further advances would be made without bringing the matter to its attention.
The whole problem was presented to the Debt Funding Commission
in 1926. The commission took the position that events Avhich transpired subsequent to November, 1920, from a legal standpoint relieved
the United States from making any further advances. I may interjecT^iTere, howevei", that I have submitted this proposed settlement
to such members of the former Debt Funding Commission as are in
Washington, namely. Secretary Kellogg, Secretary Hoover, Senator
Smoot, and Eepresentatives Burton and Crisp, and that with the
exception of the latter all agree as to the advisability of making the
agreement now before you. Up to the present time, however, this
difference of opinion as to whether further advances should be made
or not, which existed between the Greek Government and our Government, has prevented the reaching of an agreement for the settlement of the indebtedness of the Government of Greece to the Government of the United States. I t should be added that the Greek
Government has been so convinced of the soundness of its position
as to express its entire willingness to submit the question to
arbitration.
After the Debt Funding Commission had failed to reach an agreement with the Greek Debt Commission in 1926, no further negotiations took place until the summer of 1927.
I n April, 1927, the British and Greek Governments reached an
agreement for the settlement of the indebtedness of the Greek
Government to the British Government which had arisen under the
terms of the agreement of February 10, 1918, Great Britain having
advanced approximately 6,540,000 pounds, or $31,826,910. Under
the terms of this agreement the obligation is to be discharged over
a period of 62 years, at a low rate of interest, and all claims for
further advances under the 1918 agreement are waived by the Greek
Government.. Our Government notified the Greek Government that
330
REPORT ON THE FINANCES
it expected as favorable treatment as that received by Great Britain.
Subsequently, the Greek minister received instructions from his
Government to take up the question of the settlement of the debt of
his Government to the United States, and conversations were begun
between the Greek minister and representatives of the State and
Treasury Departments. Our position from the first was that the
United States was entitled to as favorable a settlement as that
accorded Great Britain. The Greek Government conceded the
soundness of this contention, but pointed out that in order to enjoy
as favorable a settlement as that accorded Great Britain, the United
States Government should in fairness advance a sum as great as that
advanced by Great Britain under the terms of the 1918 agreement.
Great Britain having advanced the equivalent of approximately
$31,826,910, and the sum advanced by the United States Government
being $15,000,000, which with interest to January 1, 1928, at 5 per
cent amounts to $19,659,836, the amount of new money to be advanced
by our Government in order to reach the amount advanced by Great
Britain is $12,167,074.
The basis of the present proposed settlement is the very definite
proposition that while the United States has the right to demand
that Greece should settle with us on as favorable terms as those
given Great Britain, the United States on its part would certainly
expect not to fall short of any other nation in carrying out the terms
of an agreement entered into in common, or to deal less fairly and
generously with Greece than Great Britain actually has.
Expressed generally, the terms of the proposed agreement, are as
follows:
1. The $15,000,000 of principal owed by the Greek Government to
the United States with interest at 414 per cent up to December 15,
1922, and on the amount then due with interest at 3 per cent to January 1, 1928, amounting in all to $18,127,922.67, less the sum of
$2,922.67 to be paid in cash upon execution of the agreement, is to be
funded over a period of 62 years. There are listed below the payments to be made by the Greek Government to the United States
under this settlement:
July 1, 1928
Jan. 1, 1929
July 1, 1929
—
Jan. 1, 1930 July 1, 1930
.
:
Jan. 1, 1931
July 1, 1931
Jan. 1, 1932
_-^
July 1, 1932
Jan. 1, 1933
July 1, 1933, and semiannually thereafter to Jan. 1, 1938, 10 payments
each of
—
July 1, 1938, and semiannually thereafter to Jan. 1, 1990, 104 payments
each of
___^
$20, 000
20,000
25, 000
25,000
30,000
30, 000
110,000
110, 000
130, 000
130, 000
150, 000
175,000
The funding of the existing indebtedness for a period of 62 years
is in accord with our debt settlements with other countries. The
proposed settlement compares favorably with the settlements made
with Italy and Yugoslavia. The present value of the payments to
be received under the proposed settlement, on a basis of 4 per cent per
annum, payable semiannually, amounts to $6,787,000, or about 34i^
SECRETARY OF THE TREASURY
331
per cent of the original amount due. On the same basis, the Italian
settlement represents 26^^ per cent; the Yugoslav settlement 33 per
cent, and the Belgian settlement 49 per cent.
•
2. The Greek Government is to forego all claims for further advances under the tripartite loan agreement dated February 10, 1918,
which agreement, in so far as the GoA^ernments of the United States
and Greece are concerned, is to be regarded as terminated.
3.. The United States will advance to the Greek Government $12,167,000 at 4 per cent per annum, payable semiannually, with provisions for a sinking fund to retire the loan in 20 years.
4. The service of this loan is to be administered and assured by the
International Financial Commission. The Greek Government will
furnish as securities for the new loan the revenues at present under
the control of the International Financial Commission in so far as the
yield of these revenues is not required for the service of the loans
having a prior charge upon the said revenues. As of 1927, the excess
of revenues at present under the control of the International Financial
Commission over those required for the service of the loans having a
prior charge, are estimated to amount to approximately $28,000,000.
Inasmuch as the annual service of the new loan, principal and interest, will amount to approxiniately $889,500, it is obvious that the
loan will be amply secured.
5. The proceeds of this loan are to be used entirely for the Avork of
the Eefugee Settlement Commission. Eecent events in the Near East
haA^e involved for Greece a very considerable displacement of population. The total number of refugees added to the population of Greece
amounts to about 1,500,000, or more than 30 per cent of the population. I n 1923 there was organized by formal and official agreement,
and according to the terms of a statute enacted by the Greek Legislature, the Eefugee Settlement Commission, of which the chairman,
according to the organic articles, must always be an American citizen. Mr. Henry Morgenthau Avas the first chairman, and Mr. Charles
B. Eddy is now chairman. The task of this commission is to establish the refugees in productive work. I n 1924 a loan of over $59,000,000 was floated in the world markets for the purposes of the Eefugee
Settlement Commission. Great progress has been made, but much
remains to be done to complete this humanitarian work. The proceeds of the, $12,167,000 loan to be made by the United States Government to the Greek Government are to be applied in their entirety
to the work of the Eefugee Settlement Commission.
The proposed settlement will assure to the United States the
repayment in full over a period of 62 years of the $18,125,000 to be
funded. I t will discharge what may fairly be considered a moral
obligation resulting from the 1918 agreement by the advance of a
sum of money to be wholly devoted to constructive work of great
humanitarian as well as economic value, which loan will bear an adequate rate of interest and be amply seicured by pledged revenue.
But the committee and the Congress may ask why they should
vote to authorize a further advance to Greece when in a memorandum
prepared for the Debt Funding Commission considerable doubt is
expressed as to the legal obligation of the United States to make
further advances under the 1918 agreement in view of what had
332
REPORT ON T H E FINANCES
transpired since 1920. The legal points raised at that time may be
summarized as folloAvs:
(1) That Francfe had failed to make any advances under the 1918
agreement, and that in 1921 Greece agreed to forego any further
claims upon Great Britain, though it does not appear that this lastmentioned agreement was ever ratified by the Greek Parliament. I t
was suggested that the original agreement was a joint undertaking,
and that the failure of France and Great Britain to live up in full
to their share of the agreement would release the United States. The
agreement, hoAvever, was to make advances in equal shares, and, to
say the least, it is very questionable Avhether such an agreement constituted a joint undertaking. To hold it to be a joint undertaking
would be to admit that the United States Avas liable for the full
amount of 750,000,000 francs, Avhich, of course, was never contemplated.
(2) That under the terms of the 1918 agreement Greece undertook to use no new security for an exterior loan without the assent
of the Governments of the United States, France, and Great Britain;
whereas in 1923 Greece funded a demand loan owed to the Canadian
Government and undertook to assign to the service of the bonds the
surplus of revenues received by the Greek Government from the
International Financial Commission. The Greek Government contends that the mere earmarking of certain revenues to the service of a
particular loan does not constitute giving new security, and contends
that there was no need of obtaining the assent of the three countries
in the case of the Canadian loan. I t points out, furthermore, that
the following year in the case of the refugee loan, where revenues
were actually pledged, it did request and obtain the assent of our
GoA^ernment and that our Government evidently considered the agreement as still in effect at that time, as its assent was given.
(3) That Greece ceased payment of interest on the $15,000,000
advanced by the United States. The facts are that Greece continued
to pay interest for a year after we had ceased making advances.
(4) That under the agreement made in 1919, under the terms of
which Greece was to expend in this country all moneys advanced and
to furnish bimonthly reports, Greece had failed to furnish adequate
reports. There does not appear to be any dispute as to the funds
having been expended in this country.
I do not deem it necessary to discuss these points in detail and from
a legal standpoint. I t is apparent that each and every one of them
constitutes a legal defense which it is not too much to say is of a
highly technical character. They furnish a field for interminable
legal controversy, with probably a good legal argument whichever
side of the question be taken.
I do not believe that our Nation should interpret its obligations
under a contract to Avhich it is a party on any such narroAv basis, or
be influenced in its decision by legal considerations of so technical a
character. The question to be determined is, did the United States
undertake to make advances to the Greek Government provided the
Greek Government expended a given sum of money for war purposes ?
Did the Greek Government actually expend the funds for the purposes contemplated by the agreement? I n other words, has the Greek
SECRETARY OF THE TREASURY
333
Government fulfilled the essential parts of the original contract?
The expenditure of the 750,000,000 francs for war purposes Avas the
essential consideration received by us in return for our promise to
make the advances. No one disputes that the expenditures Avere made
for the purposes contemplated. I t is clear, therefore, that the United
.States Government has received the consideration in return for Avhich
it undertook to make the advances.
We have steadfastly, and sometimes in the face of severe criticism,
maintained the principle of sanctity of international obligations.
When it comes to interpreting our OAvn, Ave should not construe them
too narroAvly.
As Secretary Houston stated before a Senate committee, " Well, I
think if this Government made its commitment to do a certain thing
during the Avar, for war purposes, and had a certain agreement, if the
terms were complied with and they should come forward with a
request for the advance, in strict compliance it would be bad faith
not to make it." (Asked if he cited the Greek a'greement Avith reference to the statement just made, Secretary Houston replied in the
affirmative.) " I should find difficulty, myself, in refusing to comply
with the commitments. If Ave made a commitment and they satisfy
the terms of it, I do not see how Ave can refuse to comply with it.
And, furthermore, to put it on the very loAvest plane, I think it would
be very bad business for this country* to commence to fail to keep
commitments, because .we have A^ery large amounts due us."
Even admitting that Greece was guilty of infractions of the letter
of the agreement such as to relieve us, from a strict legal standpoint,
of any further obligation, there remains nevertheless a moral obligation which should not be ignored, particularly when we consider that
we have received in full the consideration originally contemplated
and that the infractions of the agreement occurred at a subsequent
date. While these violations of the original agreement might well
justify our refusal to recognize in full its existing validity, there
would nevertheless remain the moral factor, Avhich should be
recognized in tlie concluding of a new agreement. This is in effect
what we are doing by granting to Greece those credits Avhich she
needs at present for the humanitarian work of refugee settlement,
and the granting of which the Greek GoA^ernment admits Avill discharge in full any obligations that may have arisen b}^ virtue of the
1918 agreement.
After a painstaking study of the entire record, my conclusion is
that, while the events of the last 10 years may have modified and
altered the nature of the original obligations, there nevertheless remains a commitment of a moral character of sufficient weight to
justify our making an advance to Greece in the very moderate amount
which the Greek Government now asks for, for the highly humanitarian purpose specified in this agreement. Greece on her part
recognizes her obligation by making a definite commitment as to the
payment of her debt. Thus this agreement adjusts all differences
between the two countries. Should it fail, these differences must
remain unadjusted for years, a constant source of irritation, particularly as they will necessarily involve a feeling on both sides that
something in the nature of a breach of faith is involved.
334
REPORT ON THE FINANCES
The settlement of the Greek debt will conclude, so far as is possible
at this time, the funding of all the Avar debts owing to the United
States. There Avill remain the debts of Armenia, Austria, and of
Eussia.
SUPPLEMENT
A
Washington, December 8,1917.
I have received, through the State Department, a cable from Assistant Secretary Crosby containing the following passage Avith reference to Greece:
DEAR MR. PRESIDENT:
Referring to Greece Supreme War Council at Versailles. Meeting concluded.
House voting afl5rmatively that it is of prime military importance that Venizelos
should return to Greece. Satisfied with support Allies and asked finance section
of Inter-Allied Conference to prepare plan for such support. After prolonged
conference following plan satisfactory^ to Venizelos and his Finance Minister
Diomides is unanimously recommended to Governments of United States, France,
and Great Britain military requirements of Greece for coming year based on
report of France finance and military missions involving promptly increasing
active army from present three divisions to at least nine divisions will require
about six hundred million francs for munitions and supplies for Army and Navy
herein called munition and supplies fund and seven hundred fifty million francs
for payment of soldiers and sailors and other local military expenditures, including certain arrears herein called military funds. France and Great Britain
have agreed to provide munition and supply fund reserving for determination
until after conclusion of peace extent and manner of their reimbursement by
Greece in light of various considerations, including results of terms of peace to
Greece. I have declined to recommend participation by the United States in
this advance because of extent to which European political questions which
do not concern us may be involved in ultimate settlement. Representatives of
Great Britain and France recognize fairness of this position but may later urge
that we share this, burden. Conditioned upon this fund being supplied by
France, Great Britain recommends that United States joint with France and
Great Britain in supplying military fund of seven hundred fifty million francs
upon following terms: Advances to be provided as required under supervision
of military and financial commissions sitting at Athens, including representatives of United States, France, and Great Britain and Greece. I believe our
present minister and military attache, if there is one, will be sufficient representation for us in commissions above mentioned. Advances to take form of
credits in dollars, francs, and sterling which will serve as basis for Greek bank
notes, Greece to have right actually to draw against these credits during the
war only in case balances abroad of Greek Treasury and National Bank should
fall below one hundred million francs. Six months after conclusion-of peace
credit can be drawn upon without restriction. The three powers joining in
advances are to receive Greek five per cent obligations loan fifteen years after
cessation of hostilities, Greece agreeing that no pledges shall be created in favor
of any subsequent exterior loan without consent of three lending governments.
So long as and to extent that Greece does not draw against credits, interest on
obligations will be remitted. Obligations to be received by United States to
contain special provisions meeting the requirements of our September law.
Agreement contains other details for protection of lenders.. Colonel Plouse and
General Bliss join in recommending our joining in support of Greece in view of
urgent military necessity and upon principle that we should join with Great
Britain and France in supporting military programs of weaker nations whoso
military cooperation important to aid in accomplishing desired victory even
though involving advance for expenditures outside our country. If plan approved will agree upon precise amount dollar credit td represent our third in
the aggregate advance herein for convenience expressed as seven hundred fifty
million francs. Greek minister at Washington will be authorized to sign
obligations.
I am disposed to feel that, in view of the joint recommendation
of Colonel House, General Bliss, and Mr. Crosby, that this be done,
SECRETARY OF THE TREASURY
335
we should join with Great Britain and France and advance one-third
of the 750,000,000 francs to Greece although this does involve expenditures outside of our country. If you approve, may I ask that
you indicate your approval upon this letter, carrying as it will the
establishment of a credit for Greece of 250,000,000 francs, or approximately $44,000,000 at the current rate of exchange.
Cordially yours,
W.
G. MCADOO,
Secretary,
T H E PRESIDENT,
The White House.
T H E W H I T E HOUSE.
Approved: 10 December, 1917.
WooDROAv W I L S O N .
I n this connection the time-table of events is indeed significant.
1. February 10, 1918. Agreement by the United States, Great
Britain, and France to loan 750,000,000 "francs to Greece.
2. Throughout the winter and spring of 1918 the Greek Army was
reorganized and reequipped, and on the Macedonian front Greek
troops gradually replaced British and French troops recalled to the
western front, until the ncAV Greek Army had been so greatly in-creased that it represented the largest allied, contingent.
3. May 30, 1918. The ncAv Greek Army was successfully tested
out in battle in the attack on Skra-di-Legen.
4. September 16, 1918. Beginning of the allied offensive on the
Macedonian front, which culminated in the decisive allied victory.
The allied armies were composed of 9 Greek divisions, 8 French,
5 Serbian, 4 British, and li/^ Italian. Both Franchet d'Esperey
(commander in chief of the allied armies in Macedonia) and General
Milne declared that the Greek Army had proved a decisive factor in
the victory. The British general said: "Without the aid of the
Greek forces, the present victory could not have been obtained."
5. September 29, 1918. Armistice signed between the Entente
Allies and Bulgaria.
Says General Ludendorff: " There were no illusions about the seriousness ol
the situation created by the collapse of Bulgaria." (Ludendorff's Own Story.
Vol. II, p. 369.)
Count Burian, Minister for Foreign Affairs for Austria and Hungary (1915-17
and 1918), declares: "Fate took its course. AVhen the Balkan Army with the
newly enrolled Greek troo.ps developed a strong ofi:ensive, the Bulgarian troops
fled. A terrible experience for the veteran army accustomed to victory, it was
a shattering blow, not only to the weakening morale of the other armies in the
field but also to the morale of the people at home. * * *
•" In dealing with the military situation the Central Powers took steps to
establish a new shortened front against the advance of the Entente troops
through Serbia. In this they were not successful, as the following days soon
showed. Nothing could now check the unrestrained development of events
within the monarchy and Germany, which now took their headlong course,
under the influence of a kind of panic that everything had been lost." (Austria
in Dissolution. Burian, p. 395.)
October 30, 1918. Armistice signed between the Entente Allies
and Turkey.
13606—29—FI 19 2 8—-24
336
REPORT ON THE FINANCES
''
Kingdom of the Serbs, Croats, and Slovenes
EXHIBIT
39
[Public—No. 231—70th Congress—H. R. 367]
An act to authorize the settlement of the indebtedness of the Kingdom
of the Serbs, Croats, and Slovenes
Be it enacted by the Senate and House of Representatives of the
Vnited States of America in Congress assembled, That the settlement
of the indebtedness of the Kingdom of the Serbs, Croats, and
Slovenes to the United States of America made by the World War
Foreign Debt Commission and approved by the President upon the
terms and conditions as set forth in Senate Document Numbered 106,
Sixty-ninth Congress, first session, is hereby approved in general
terms as follows:
SEC. 2. The amount of the indebtedness to be funded after alloAving
for certain cash payments made by the Kingdom of the Serbs, Croats,
and Slovenes is $62,850,000, which has been computed as follows:
Principal of obligations acquired for cash
advanced under Liberty Bond Acts
$26, 126, 574. 59
Accrued and unpaid interest at 4^4 per centum
per annum to December 15, 1922
4, 073, 423. 14
Principal of obligations acquired by Secretary
of War for surplus war supplies sold on
credit
24,978,020. 99
Accrued and unpaid interest at 434 per centum.
per annum to December 15, 1922
3, 358, 790. 45
28, 336, 811. 44
58, 536, 809. 17
Accrued interest at 3 per centum per annum
from December 15, 1922, to June 15, 1925..
Credits:
Payments on account of principal since
December 15, 1922
Interest thereon at 3 per centum to June
15, 1925
$30, 199, 997. 73
4, 390, 260. 69
62, 927, 069. 86
66, 709. 19
3, 248. 28
.69,957.47
Total net indebtedness as of June 15,
1925
To be paid in cash upon execution of
agreement____
Total indebtedness to be funded into
bonds___
62, 857, 112. 39
7, 112. 39
62, 850, 000. 00
SEC. 3. The principal of the bonds shall be paid in annual installments on June 15 of each year up to and including June 15, 1987, on
a fixed schedule subject to the right of the Kingdom of the Serbs,
Croats, and Slovenes to postpone such payments falhng due after
June 15, 1937, for tAVO years, such postponed payment to bear interest at the rate of 4 ^ per centum per annum. The amount of the
annual principal installments during the first five years shall be
$200,000. Commencing with the sixth year the annual principal
SECRETARY OF THE TREASURY
337
installment shall increase $25,000 a year for the succeeding seven
years. Commencing with the thirteenth year the annual principal
installment will be $400,000, the subsequent annual principal installments increasing until in the sixty-second year of the debt funding
period the final principal installments shall be $2,406,000, the aggregate principal installments being equal to the total principal of the
indebtedness to be funded into bonds.
SEC. 4. The Kingdom of the Serbs, Croats, and Slovenes shall have
the right to pay off additional amounts of principal of the bonds on
June 15 and December 15 in any year.
SEC. 5. The bonds to be issued shall bear no interest until June 15,
1937, and thereafter shall bear interest at the rate of one-eighth of
1 per centum per annum from June 15, 1937, to June 15, 1940; at the
rate of one-half of 1 per centum per annum from June 15, 1940, to
June 15, 1954; at the rate of 1 per centum per annum from June 15,
1954, to June 15, 1957; at the rate of 2 per centum per annum from
June 15, 1957, to June 15, 1960, and at the rate of 33^ per centum per
annum after June 15, 1960, all payable semiannually on June 15 and
December 15 of each year, until the principal thereof shall have
been paid.
SEC. 6. Any payment of interest or principal may be made at the
option of the Kingdom of the Serbs, Croats, and Slovenes in any
United States Government obligations issued after April 6, 1917,
such obligations to be taken at par and accrued interest.
Approved, March 30, 1928.
General
EXHIBIT
40
Statem£nts of the Treasury covering payments received from the
several foreign governments on acoount of their indebtedness to the
United States {press releases, December 15, 1927, and JUMC 15,
1928)
DECEMBER 15,
1927.
The Treasury to-day received payments amounting to $96,544,830.88
from the following foreign governments on account of their funded
indebtedness to the United States:
GREAT B R I T A I N
The tenth semiannual payment of interest and the fifth annual
installment of principal on the funded indebtedness of Great Britain
to the United States under the terms of the debt settlement approved
by the act of February 28, 1923. The total payment amounted to
$92,575,000, of which $67,575,000 was for interest and $25,000,000 for :
principal, and as authorized by the terms of the settlement was made
in obligations of the United States which were accepted at par. The
obligations were $92,575,000 face amount 41/2 per cent Treasury notes,
Series A, 1927, maturing December 15, 1927.
338
REPORT ON THE FINANCES
BELGIUM
The fifth semiannual payment of interest on the postarmistice
funded indebtedness of the Government of Belgium due the United
States under the teriris of the debt settlement approved by the act oi*
April 30, 1926. The pa^^ment, amounting to $1,125,000, was made
in cash.
CZECPIOSLOVAKIA
The fifth semiannual installment of principal on the funded indebtedness of the Government of Czechoslovakia due the United States
under the terms of the debt settlement approved by the act of May
3, 1926. The payment, amounting to $1,500,000, was made in cash.
ESTONIA
The fourth semiannual payment on account of the funded indebtedness of the Government of Estonia tO' the United States under
the terms of the debt settlement approved by the act of April 30,
1926. The payment amounted to $75,000, which was made in cash.
The balance will be funded in accordance with option given the
Government of Estonia in the debt-settlement agreement.
FINLAND
The tenth semiannual payment of interest and the fifth annual
installment of principal of the funded indebtedness of the Government of Finland due the United States under the terms of the debt
settlement approved by the act of March 12,1924. The total payment
amounted to $182,210, of which $132,210 was for interest and $50,000
for principal. The payment was made in cash.
HUNGARY
The eighth semiannual payment of interest and the fo^urth annual
installment of principal on the funded indebtedness of the Government of Hungary due the United States under the terms of the debt
settlement approved by the act of May 23, 1924. The total payment
amounted to $39,724.53, of which $29,289.53 was for interest and
$10,435 was for principal. Of the last-mentioned amount $235 represented payment on account of principal of the temporary bonds
given for one-half the interest accruing on the bonds originally issued
under the debt settlement. The payment Avas made in cash.
LITHUANIA
The seventh semiannual payment of interest, except that part to be
funded, on the funded indebtedness of the Government of Lithuania
to the United States under the terms of the debt settlement approved
by the act of December 22, 1924. The total payment amounted to
$47,896.35, which was made in cash. The remainder of the interest,
amounting to $44,542.50, will be funded in accordance with the option
given the Government of Lithuania in the debt-settlement agreement.
'
SECRETARY OF T H E TREASURY
339
POLAND
The sixth semiannual payment on account of the funded indebtedness of the Government of Poland to the United States under the
terms of the debt settlement approved by the act of December 22,
1924. The payment amounted to $1,000,000, which was made in cash.
The remainder due will be funded in accordance with the option given
the Government of Poland in the debt-settlement agreement.
The obligations of the United States accepted in connection with
the British payment have been canceled and retired and the public
debt reduced accordingly.
J U N E 15,
1928.
The Treasury to-day received payments amounting to $90,757,665.01
from the following foreign governments on account of their indebt•^dness to the United States:
GREAT B R I T A I N
The elcA^enth semiannual payment of interest on the funded indebtedness of Great Britain to the United States under the terms of the
debt settlement approved by the act of February 28, 1923. The total
payment amounted to $67,200,000, and as authorized by the terms of
the settlement, Avas. made in obligations of the United States which
were accepted at par and accrued interest Avith a small cash adjustment. The obligations were $66,617,100 face amount of 3l^ per cent
Treasury notes. Series A-1930-1932, the accrued interest being
$582,899.63 and the cash adjustment 37 cents.
FRANCE
A payment of $11,250,000 by France on account of its existing debt
to the United States, exclusive of the debt arising from the purchase
of surplus war materials, on the same conditions as set out in the
exchange of letters of March 1, 1927, betAveen the treasuries of the
two countries concerned, covering the payment made June 15, 1927.
The amount has been applied as a payment on account of the principal of the demand obligations given by France for cash advances
under the Liberty bond acts.
ITALY
The third annual installment of principal on the funded indebtedness of Italy to the United States under the terms of the debt
settlement approved by the act of April 28, 1926. The total payment
amounted to $5,000,000, and was made in cash.
BELGIUM
The sixth semiannual payment of interest and the third installment of principal on the funded indebtedness of the Government of
Belgium to the United States under the terms of the debt settlement
approved by the act of April 30, 1926. The total payment amounted
to $3,575,000, and, as authorized by the terms of the settlement, was
340
REPORT ON THE FINANCES
made in obligations of the United States, which were accepted at
par and accrued interest with a small cash adjustment. The obligations were $3,543,950 face amount of 3i^ per cent Treasury notes of
Series A 1930-1932, the accrued interest being $31,009.56 and the
cash adjustment $40.44. $1,125,000 was for interest and $1,200,000
for principal on the post-armistice debt, and $1,250,000 for principal
on the prearmistice debt.
CZECPIOSLOVAKIA
The sixth semiannual installment of principal on the funded indebtedness of the Government of Czechoslovakia to the United States
under the terms of the debt settlement approved by the act of
May 3, 1926. The payment amounting.to $1,500,000 Avas made in
cash.
ESTONIA
The fifth semiannual payment on account of the funded indebtedness of the Government of Estonia to the United States under the
terms of the debt settlement approved by the act of April 30, 1926.
The payment amounted to $100,000, Avhich was made in cash. The
balance will be funded in accordance with the option given the
Government of Estonia in the debt-settlement agreement.
FINLAND
The eleventh semiannual payment of interest on the funded indebtedness of the Government of Finland to the United States under
the terms of the debt settlement approved by the act of March 12,
1924. The total payment amounted to $131,460, which was made
in cash.
HUNGARY
The ninth semiannual payment of interest on the funded indebtedness of the Government of Hungary to the United States under the
terms of the debt settlement approved by the act of May 23, 1924.
The total payment amounted to $29,133.01, which was made in cash.
LATVIA
The fifth semiannual "pa3^ment on account of the funded indebtedness of the Government of Latvia to the United States under the
terms of the debt settlement approved by the act of April.30, 1926.
The payment amounted to $40,000 and was made in cash. The
balance will be funded in accordance Avith the option given the
Government of Latvia in the debt-settlement agreement.
LITHUANIA
The eighth semiannual payment of interest, except that part to
be funded, and the fourth annual installment of principal on the
funded indebtedness of the Government of Lithuania to the United
States under the terms of the debt settlement approved by the act
of December 22, 1924. The total payment amounted to $82,072, of
SECRETARY OF THE TREASURY
341
which $48,564.50 was for interest and $33,507.50 for principal.
The payment was made in cash. The balance of the interest amounting to $44,542.50 will be funded in accordance with the option given
the Government of Lithuania in the debt-settlement agreement.
POLAND
The seventh semiannual payment on account of the funded indebtedness of the Government of Poland to the United States under the
terms of the debt settlement approved by the act of December 22,
1924. The payment amounted to $1,250,000, Avhich was made in
cash. The balance due will be funded in accordance with the option
given the Government of Poland in the debt-settlement agreement.
RUMANIA
The third annual installment of principal on the funded indebtedness of the Government of Eumania to the United States under the
terms of the debt settlement approved by the act of May 3, 1926.
The payment amounting to $400,000 was made in cash.
YUGOSLAVIA
The third annual installment of principal on the funded indebtedness of the Government of Yugoslavia (Serbs, Croats, and Slovenes)
to the United States under the terms of the debt settlement of May
3, 1926. The payment amounting to $200,000 was made in cash.
The obligations of the United States accepted in connection with
the British and Belgian payments have been cancelled and retired
and the public debt reduced accordingly.
MONEY AND BANKING
EXHIBIT
41
Decision of the Comptroller General of the United States, dated November 29, 1922, relative to revoking certain allocations of silver under
the act of April 28, 1918
The honorable the SECRETARY OF THE TREASURY.
S I R : I have your letter of November 2, 1922, requesting decision
as to whether you are authorized to revoke certain allocations of
silver made pursuant to the terms of the act of April 23, 1918 (40
Stat. 535), for subsidiary silver coinage.
The act of April 23, 1918 (40 Stat. 535), generally known as the
Pittman Act, 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.'*
342
REPORT ON I H E FINANCES
Section 1 of the act, among other things, authorized the Secretary
of the Treasury from time to time to melt or break up and sell as
bullion, at prices not less than $1 per ounce of silver 1,000 fine, not
in excess of 350,000,000 standard silver dollars then or thereafter
held in the Treasury of the United States.
Section 2 of the act provided, among other things, upon every
such sale of bullion from time to time, that the Secretary of the
Treasury 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 371.25
grains of pure silver in respect to every standard silver dollar as
melted or broken up and sold as bullion, such purchases to be made
at the fixed price of $1 per ounce of silver 1,000 fine.
Section 3 of the act provided, among other things, that the allocation of any silver to the Director of the Mint for subsidiary coinage
shall, for the purposes of the act, be regarded as a sale or resale.
Section 4 of the act provided an appropriation 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 broken up
and the value of the silver bullion, at $1 per ounce of silver 1,000 fine,
resulting from the melting or breaking up of such standard silver
dollars.
In the submission it is stated that an allocation was made on September 7, 1918, for subsidiary coinage, of the silver bullion to be
obtained from melting 1,000,000 standard silver dollars. The
1,000,000 standard silver dollars thus allocated produced 772,997.89
fine ounces of silver. The subsidiary silver account was charged
therefor at the rate of $1 per fine ounce, total $772,997.89, and the
loss occasioned by the transaction, the difference between the nominal
or face value of the 1,000,000 standard silver dollars and the sale
price of the ounces of fine silver produced therefrom, $227,002.11,
was accounted for as an expenditure chargeable under the appropriation contained in section 4 of the act.
On November 28, 1919, an allocation was made of 10,000,000
standard silver dollars (these were coins which had not been in circulation) and on November 6, 1920, an allocation was made of 111,168
standard silver dollars (these were old coins which had been in circulation). Both allocations were made on the basis of $1.29 + per fine
ounce or the equivalent of the nominal or face value of the dollar.
In melting or brealdng up the 10,000,000 uncirculated standard silver
dollars the legal weight in fine ounces was produced, but in melting
or breaking up the 111,168 standard silver dollars, which had been
in circulation, the legal weight in fine ounces was not produced, there
being a loss of 3,624.26 fine ounces, which loss was attributed to abrasion of the coins due to their circulation. The net fine ounces of
silver thus produced were charged to the subsidiary silver account
but the value charged was on the basis of the legal weight of the
standard silver doUar at the rate of $1.29 -1- per fine ounce. This constituted an overcharge of the value of 3,624.26 fine ounces at $1.29 -iper fine ounce, total $4,685.91, against the subsidiary silver account.
To adjust this matter the Treasury Department division will state a
settlement charging the loss of $4,685.91, resulting from abrasion,
under the appropriation contained in section 4 of the act and credit-
343
SECRETARY OF THE TREASURY
ing a like amount to the subsidiary silver account, the necessary
details, etc., for making the transfer to be furnished by the Treasury
Department.
An allocation for subsidiary coinage of 6,000,000 fine ounces of
silver at $1 per fine ounce was made pursuant to letters of the Assistant Secretary of the Treasury of October 18 and December 18, 1920.
Pursuant thereto 3,458,246.39 fine ounces and $3,458,246.39 were
actually charged to the standard silver account and the balance,
2,541,753.61 fine ounces and $2,541,753.61 was held temporarily in
abeyance; that is, the balance was not actually charged out of the
standard silver dollar bullion account. On February 11, 1922, the
balance of this allocation, 2,541,753.61 ounces and $2,541,753.61, not
actually charged to the subsidiary silver account, together with
1,800,000 fine ounces and $1,800,000 actually charged to the subsidiary
silver account, were revoked. Pursuant thereto 1,800,000 fine ounces
and $1,800,000 were credited to the subsidiary silver account and a
like amount in fine ounces and dollars was charged to the standard
silver dollar bullion account.
The following is a statement of the allocations, etc.:
Date of allocation
Sept. 7, 1918..
Nov. 28, 1919..
Nov. 6, 1920...
Oct. 18, 1920.Dec. 18, 1920.-
standard
silver
dollars
allocated
Net ounces
of bullion
allocated
1,000,000
10,000,000
111, 168
1, 658, 246. 39
Rate per
ounce
$1.00
1.29-f
1.29-11.00
Fine ounces
produced
Value charged
772, 997.89
7,816. 732. 24
$772, 997.89
10, 111, 168. 00
1, 658, 246. 39
1, 658, 246.39
12, 542,412.28
Loss resulting from melting or breaking up, to be adjusted
4,685.91
10, 247, 976. 52
12, 537, 726. 37
The precise questions of the submission are (1) Avhether you are
authorized to revoke the remaining balance of all allocations, 10,247,976.52 fine ounces, if so (2) Avhat amount is properly for credit to
the subsidiary silver account, and (3) whether, if the revocation of
the balance is authorized, there is authority of law for recoining the
bullion thus transferred to the standard silver dollar bullion account.
The matters will be considered in the order stated:
(1) From information received from the office of the Director of
the Mint the subsidiary silver account shows a balance of 12,944,786
fine ounces of silver on hand, and in the submission you state:
In these circumstances to carry over 10,000,000 fine ounces of silver bullion
in the subsidiary silver account means the carrying in the general fund of the
Treasury of a dead asset which has no value for the purpose of making Government payments, with the result that the Treasury is obliged to borrow correspondingly larger amounts to meet its current requirements, at an interest cost
ranging from 33^ to 434 per cent. Assuming for the purposes of illustration an
average interest rate on Government borrowings of about 4 per cent and that this
amount of silver bullion were held as a dead asset for a period of even two years,
the result would be a loss to the Government in interest charges amounting to
about $800,000 for the two-year period.
In these circumstances, and in order to avoid this loss in its current operations,
the Treasury would like, if possible under the law, to revoke the allocation of the
remaining 10,247,976.52 fine ounces of silver and restore this amount of silver
bullion to the standard silver dollar account. The effect of this action would
344
REPORT ON THE FINANCES
be to permit the Treasury to proceed with the coinage of this amount of silver
bullion into standard silver dollars, against which silver certificates could be issued
and paid out in the ordinary course of Government payments, * * *.
Section 2 of the act provides:
* * * Such silver so purchased may be resold for any of the purposes
hereinafter specified in section 3 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 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 shaU 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.
Nothing appears why the balance of the allocations may not be
revoked if the silver allocated for subsidiary coinage is not now
needed for that purpose. The revocation of the allocations not alone
reheves against the carrying of a dead asset but reduces the quota
of silver to be purchased under the act from the domestic producers,
etc., the act providing that the necessary purchases to reinstate the
amount sold to be made at the rate of $1 per fine ounce, a figure
approximately 50 per cent higher than the present market price.
(2) The cost value of the reported balance of 12,944,786 fine
ounces of silver now in the subsidiary silver account is given as
$11,994,224. This cost value after the credit thereto of the amount
of $4,685.91, loss due to abrasion, is $11,994,224 less $4,685.91, or
$11,989,538.09. The present balance reflects an average fine ounce
value somewhat less than the fine ounce value at Avhich the several
allocations were made, hence it will be impracticable in revoking
the allocations to transfer back to the dollar account the same value
transferred therefrom to the subsidiary silver account. The present
average fine ounce value resulted from the acquisition of silver at
varying prices and the charging out of such of the silver as was
used in subsidiary coinage at the average cost per fine ounce. The
transfer pursuant to the revocation of bhe allocations of 10,247,976.52 fine ounces of silver may be made by crediting the subsidiary silver account with that many fine ounces at the rate of $1
per fine ounce thus leaving in the account a balance of 2,696,810
fine ounces with a value of $1,741,562.09 equal to an average fine
ounce rate of approximately the present market value.
(3) The matter of coining into standard silver dollars of such of
the bulhon purchased under the act and of bulhon produced by
melting or breaking up standard silver dollars, which was allocated
and charged to the subsidiary silver account and which allocations
are authorized to be revoked and recharged to the standard silver
dollar bulb'on account, is for administrative consideration. There
appears sufficient authority therefor under the act if you conclude
that this be done.
Respectfully,
(Signed)
J. E . M C C A R L ,
Comptroller. Gejiercd,^
SECRETARY OF THE TREASURY
345
E X H I B I T 42
Letter of the Comptroller General of the United States, dated September
4J 1928, addressed to the vice chairman of the Senate Committee of
Gold and Silver Inquiry, afiirming^ the decision of November 29, 1922,
relative to revoking certain allocations of silver under the act of April
28, 1918
Hon.
K E Y PITTMAN,
Vice chairman of the Senate Committee of
Gold and Silver Inquiry, United States Senate.
M Y D E A R SENATOR: I have your letter of July 17, 1923, requesting
reconsideration of decision of November 29, 1922, which involved
(1) whether the Secretary of the Treasury was authorized to revoke
the remaining balance, 10,247,976.52 fine ounces of silver allocated
under the act of April 23, 1918 (40 Stat. 535); if so (2) Avhat amount
Avas properly for credit to the subsidiary silver account; and (3)
whether, if the revocation of the balance was authorized, there was
authority of law for recoining the bullion thus transferred to the
standard silver dollar bullion account.
I t appears from the papers transmitted that there exists a disagreement betAveen the Senate commission of which you are vice
chairman and the Treasury Department as to whether the latter
lawfully administered the act of April 23, 1918 (40 Stat. 535), there
appearing lack of agreement as to certain facts and conflicting opinions
as to the intent of certain provisions of the legislation. I have
examined all of the material submitted most carefully but see no
good end to be served by attempting a determination of which is
right and which wrong as to the disputed facts, there being no duty
in this office to require the Secretary of the Treasury to effect purchases of silver under the act cited even if I should conclude from the
facts and the law that such purchases should be made.
The prime matter for the consideration of this office upon the
submission made by the Secretary of the Treasury was the amount to
be credited to, and the manner of crediting, the subsidiary silver
account, pursuant to the revocation of the allocations, which revocations, in part, had been accomplished prior to the submission of the
matters to this office for consideration. In this connection, see that
part of the decision wherein it was said:
On February 11, 1922, the balance of this allocation, 2,541,753.61 ounces, and
$2,541,753.61, not actually charged to the subsidiary silver account, together
with 1,800,000 fine ounces and $1,800,000 actually charged to the subsidiary
silver account, were revoked.
The submission also requested decision as above pointed out,
whether the Secretary of the Treasury was authorized to revoke
allocations made under the act of April 23, 1918, for subsidiary
coinage, and it was held that *^ nothing appears why the balance of
the allocations may not be revoked if the silver allocated for subsidiary coinage is not now needed for that purpose.^^ While, in the
form submitted, the question was not one for primary determination
by this office, inasmuch however, as the substance of the question if
submitted in different form and contemplating an expenditure of
public funds might properly have required decision it was thought
346
REPORT ON THE FINANCES
proper in view thereof and its relation to the other matters submitted,
to disregard the form and express the views of this office thereon.
This office acted upon the understanding that the so-called Pittman
silver allocated had, in large part at least, actually been made into
subsidiary coins, but also Avith the understanding that such allocations and the use of such allocated silver for subsidiary coins was not
made necessary by a shortage of silver otherwise available for subsidiary coinage, but because of the more ready adaptability and availability to subsidiary coinage of the allocated silver than the mint
stock of silver, which, as a whole, Avas ample.and otherwise available
for subsidiary coinage. To state the matter in different Avay, it was
clearly made to appear to this office, and it is not understood now to
be questioned, that the allocations of so-called Pittman silver, though
such silver Avas largely used for subsidiary coins, were unnecessary
except from the standpoint of convenience; the mint stock of silver as
a whole, otherwise available for subsidiary coinage, at all times being
more than ample to meet the current needs for subsidiary coinage.
In this connection the submission forming the basis bf the decision of
November 29, 1922, read, in part:
* * * It further appears that the allocations of silver for subsidiary coinage under the act were made in part, to make up shortages at the individual
coinage mints, rather than for the mint service as a whole, and in part to supply
refined silver infmediately available for coinage, where the silver already on hand
was unrefined. To this extent, therefore, it may be said that the allocations under
the act were made in order to adjust the subsidiary coinage accounts of the several
mints, rather than to meet a deficiency in the mint service as a whole.
Much of what is urged as mandatory as to purchases of silver
upon allocation of silver dollars for subsidiary coinage, is in connection with the provision in the act of 1918 that such aUocation shall be
regarded as a sale or resale for the purposes of the act, it being also
provided in the act that upon every sale of bullion the Secretary of
the Treasury shall immediately direct the Director of the. Mint
to purchase silver equal to a certain number of grains pure silver in
respect of every stamped silver dollar melted or broken up and sold
as bullion. I t is a reasonable interpretation of the provision that an
allocation of dollars for subsidiary coinage should be regarded as a
sale was to give an authority for purchase as to which authority there
might otherwise be doubt, it being a transaction within the department and not clearly within the sales provision of the act, and thus
the authority.be permissive rather than mandatory to make purchases
on account of such transactions. At least taking it in connection with
the showing that there was at all times and exclusive of the allocations, a sufficiency of silver in the subsidiary coin stock, the revoldng
of the allocations so as to permit restoration to the standard silver
dollar stock the silver no longer needed in the subsidiary coin stock,
to my mind does not necessarily suggest conflict with that provision
in section 3 which is clearly mandatory as to a true sale such as a sale
of bullion for commercial use.
Upon the submission of the matter by the Secretary of the Treasury
I was, and now am, unable to bring myself to believe this provision
mandatory so as to require that an allocations, however and for whatever purposes made, be treated as irrevocable sales.
Sincerely yours,
(Signed)
J. E . M C C A R L ,
ComptroUer General
SECRETAPuY OF T H E TREASURY
347
EXHIBIT 43
Function of the Federal Reserve Systerm, extract from am, addres's by
Secretary of the Treasury Mellon, January 19, 1928, before the
Cha/rlotte Chamber of Comrmerce, Charlotte, N, C,
The Federal reserve system has made it possible, for the first time
in our history, to mobilize the banking resources of the country and
to place them at the.serAdce of any section that has need of them.
For the first time business can go forward, freed from the fear that
at any moment, from causes remote or unforeseen, a financial crisis
might develop and threaten every one with ruin.
The old system, under which we operated prior to the passage of
the Federal reserve act, was notable for its scattered and immobile
banking reserves and a credit inelasticity which rendered it totally
inadequate for the country's needs. I t was unequal CA^en to meeting
the seasonal demands during the crop-moving period; and, in times
of financial stringency, it operated to aggravate, rather than to
relieve, panic symptoms.
National banks could issue currency only when secured by Government bonds; consequently they Avere unable to increase the currency in times when it was most needed. Banks outside of the great
financial centers could expand their credit facilities only by borroAving from the larger metropolitan banks, with the result that all loans
in the end converged on New York. Instead of a coordinated system of banks, with a common reservoir of credit, we had a large
number of independent banking units, which in times of stress struggled against each other, and never Avorked together as part of one
great financial structure. .
These defects were cured by the establishment of the Federal reserve system. The twelve regional banks, under the responsible coordinating influence of the Federal reserve board, can effect that
prompt mobilization of reserves which is so essential in preventing
panics. These banks are also able to provide the country with an
elastic currency, Avhich expands or contracts with seasonal and trade
needs. I t is possible to supply the farmers and the trade with adequate currency during the crop-moving period and to effect the necessary contraction when the seasonal requirements have been met.
The reserves of each regional bank are available, through the discounting privilege, to all other F'ederal reserve banks. The funds of
the central reservoir can be diverted to any bank in the system which
has need of them, so that the financing of an increasing or decreasing
volume of business can be accomplished with ease.
The Federal reserve system was put into operation just prior to
the outbreak of the World W a r and was obliged to establish itself
in public confidence during a period of unprecedented strain in the
financial world. The channels of world trade had been suddenly
and violently disorganized. The outbreak of war stopped the flow
abroad of many exports and this country was flooded with a surplus
of cotton and other commodities, which to a great extent proved
unmarketable until the new trade currents had established themselves. Then cotton and food and manufactures which were needed
for war purposes began to flow abroad in even greater quantities
348
REPORT ON THE FINANCES
than before. Agriculture and industry expanded rapidly, necessitating an enormous increase in credits, which, fortunately, the banks
of the Federal reserve system and the other banks of the country
were able to supply.
When this country entered the Avar in 1917, the strain upon the
banking structure became even greater. I t was necessary to support
our military establishment and at the same time to make advances
to the nations associated with us in carrying on the war. Our national debt increased from $1,281,000,000 on April 5, 1917, to $25,484,000,000 on June 30, 1919. I n the floating of the Liberty loans
the Federal reserve banks acted as the fiscal agents of the Government and their assistance in this and many other ways proved
invaluable.
When the war was over and the nation was obliged to adjust itself
to new conditions, it was the steadying influence of the Federal
reserve system that brought the country safely through the necessary
period of post-war readjustment with a minimum derangement and
prevented the financial crisis from degenerating into a panic. As a
result there was no serious impairment in our financial structure at
a time when such a calamity would have had most disastrous consequences throughout the entire world.
The service which the Federal reserve system rendered to the country during this period can not be overestimated. And yet, the system, as you know, has been violently, attacked because it failed to
do the impossible and to avert the losses suffered in getting the overexpanded agencies of production, both agricultural and industrial,
back on a normal, peace-time basis.
As bankers you know how groundless is the charge that the Federal reserve banks contracted agricultural credits. As a matter of
fact, far from contracting agricultural credits during the period of
falling prices, the Federal reserve banks expanded bank credits and
increased the volume of circulating notes in the agricultural States.
The Federal Eeserve Bank of Eichmond, for instance, during the
calendar year 1920 increased its rediscounts by more than $10,000,000 and expanded its note issue by nearly the same amount. A similar expansion of credits was made by the Federal Eeserve Bank of
Atlanta and the other banks in the great agricultural areas.
These facts speak for themselves and justify the assertion that,
without the assistance rendered by the Federal reserve banks, it
would have been difficult, if not impossible, for the country to have
come safely through the period of deflation or for our financial
structure to have weathered the enormous strain to which it was
subjected at that time.
What the Federal reserve system has been able to do for this
country, it is now doing to a lesser degree for the world at large.
I t is to-day one of the important factors in the effort which is being
made to achieve world stabilization.
When Great Britain made the momentous decision to reestablish
the pound upon a gold basis at its former value, it meant that the
old standard for financial transactions was to continue and that
Amierica was not to be. left holding the world's supply of a metal
for which the other nations might be seeking a substitute. Great
credit is due to the Federal reserve banks for the part which they
SECRETARY OF T H E TREASURY
349
played in bringing about this result. These banks extended large
credits to the Bank of England, and the British Treasury arranged
for additional credits with private American b°ankers. Great Britain
has been on a gold basis now for more than tAvo years and has not
used a single dollar of these credits; nevertheless, without the support furnished by the Federal reserve banks, I do not believe that
stabilization would have taken place at the time when it actually
occurred.
The movement back to gold has continued steadily and other
nations, including Belgium and more recently Italy, have been added
to the list of countries maintaining the gold standard. I n the plans
for the stabilization of the rest of Europe the participation of the
Federal reserve system is equally necessary, and in all this the
interests of the American farmer and manufacturer are vitally
concerned.
The nations of the world must be reestablished on a sound finan.cial basis if our surplus products are to find an export market.
Only in this way can business compute in advance the price which it
must pay for raw materials and figure more accurately on the price
which can be secured for the finished products. If this can be done
business can operate on a larger scale and increase its foreign purchases, which means a greater demand for our oAvn surplus prodxicts
and an expansion in business here and in other countries as well.
I t is indeed fortunate in this disturbed period in monetary affairs,
when so large responsibility for Avorld stability has been placed upon
this country, that we have in the Federal reserve system an agency
capable not only of exercising an important influence toward stability
in our own money markets but also of aiding in financial reconstruction abroad.
The work which the Federal reserve system is doing is along
sound constructive lines. But the greatest mistake would be to
expect the impossible. I t is not a panacea for all the financial and
economic ills which may befall the country. Neither the Federal
reserve system nor any other system can control prices. The most
that system can do is to influence to a limited extent from time to
time the total volume of credit and its cost. While credit is one
factor in influencing prices it is neither the only factor nor the controlling one, and it would be asking the Federal reserve system to
perform the impossible if it is to be charged with the responsibility
for controlling prices merely because it can exercise a limited control
over the amount of credit available.
The Federal reserve system has been in operation now for 13 years.
During this time it has so established itself in the confldence of the
country that Congress last year extended the charters of the Federal
reserve banks for an indeterminate period. This act was one of
the most important pieces of legislation that has passed Congress
since the war, for it insured the continuance of the Federal reserve
system as an integral part of our banking structure.
I t is left for us to make certain that the system shall not be
endangered by loading it doAvn with extraneous or impossible tasks.
I t has already justified its existence, and it will be indispensable in
any future financial crisis which may arise. But if the system is to
do this it must never be impaired by changes which interfere with the
350
REPORT ON T H E FINANCES
12 regional banks in the exercise of their primary function as reserve
institutions in providing credit and currency for the country.
I know that you c^n be counted on always to give the Federal
reserve system your strong and unqualified support. I t is a matter
on which we can all agree regardless of politics, for the Federal
reserve system was established under a Democratic President and
its continued existence has been assured under a Eepublican President. I n matters of such general concern as banking—and may I
add, taxation also—it seems to me that partisan politics should not
enter. These are fundamental questions which vitally affect the
welfare of the whole country, and when that welfare is involved we
should think not of class or sectional or partisan advantage but of
what is economically sound and for the best interest of the country.
EXHIBIT
44
New distinctive paper for United States currency {Department
Circular No, 894, February 1, 1928)
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
Washington, February 1, 1928,
1. Notice is hereby given that the Secretary of the Treasury, by
authority of Isuw, has adopted a new distinctive paper for use in
printing United States currency and other securities.
2. The new distinctive paper is a cream-white bank-note paper
Avhich closely resembles in general appearance the paper now in use.
The distinctive feature of the new paper consists of small segments
of red and blue silk fiber incorporated in the body of the paper while
in process of manufacture and evenly distributed throughout.
3. The new distinctive paper shall be used for printing currency
of the reduced size, including United States notes, gold certificates,
silver certificates. Federal reserve notes, and national bank notes.
The use of the present distinctive paper adopted on July 30, 1891,
the distinctive feature of Avhich consists of localized red and blue
silk fiber incorporated in the body of the paper while in the process
of manufacture so placed as to form perpendicular stripes, will be
continued for any printing of currency of the present size hereafter
required.
4. After the issue of the reduced size currency, the ncAv distinctive
paper shall thereafter be used for the printing of interest-bearing
securities of the United States, and for any other printing where
the use of distinctive paper is indicated; provided, however, that any
then existing stocks of blank paper containing the present distinctive feature may be utilized.,
5. The Secretary of the Treasury hereby gives notice that the new
distinctive paper, together with any other distinctive paper heretofore adopted for the printing of paper currency or other obligations
or securities of the United States is and will be subject to the provisions of section 150 of the United States Criminal Code, approved
March 4, 1909 (sec. 5430 of the Eevised Statutes; sec. 264 of title 18
of the United States Code), which provides, in part, as follows:
SECRETARY OF T H E TREASURY
351
Whoever shall have or retain in his control or possession, arter a distinctive
paper has been adopted by t h e Secretary of the Treasury for the obligations
and other securities of t h e United States, any similar paper adapted to the
making of any such obligation or other security, except under the authority of
the Secretary of the T r e a s u r y or some other proper ofiicer of the United States,
shall be fined not more than $5,000, or imprisoned not more t h a n 15 years, or
both.
6. The provisions of Department Circular No. 121, dated July 30,
1891, are modified accordingly.
A. W.
MELLON,
Secretary of the Treasury.
EXHIBIT 45
Letter of Undersecretary of the Treasu/ry Mills to Dr, Albert
Shaw, editor of The American Revie%o' of Revievjs, J u l y 28,1928,
relative to charges that the Federal reserve systerm has been administered for the advantage of stock market speculators
J U L Y 23,
1928.
: I n your letter of July 7 you ask me to comment
()j^ * * * charges that the Federal reserve system has been administered for the advantage of the stock market speculators.
The charge is grossly unfair and is not substantiated by the facts,
as Avill be borne out from a brief review of the fiscal year which
closed on June 30, last.
The total of brokers' loans on June 27, 1928, was $4,159,000,000,
shoAving aji increase of something over $1,000,000,000 for the year.
Much the largest part of this increase, however, was in brokers' loans
" f o r account of others," which means largely corporations, individuals, and foreign banks. This growth "for account of others" does
not represent a groAvth in deposits and involves no additional reserve
requirements for member banks, and, therefore, no additional use of
reserve bank credit. The growth in brokers' loans for account of
domestic banks Avas about $150,000,000 for the year, and taking into
consideration legal reserve requirements it is conservative to say
that the growth in reserve bank credit Avhich can be traced to the
growth in brokers' loans is certainly not more than between fifteen
and twenty million dollars.
While brokers' loans are the most important element in measuring
stock market speculation, in order to obtain a true picture it is
necessary to go a little further and consider the total security loans
made by banks, though a large part of these can not be regarded as
truly speculative.
Security loans of all reporting member banks of the Federal
reserve system increased from June, 1927, to June, 1928, by some
$727,000,000, Avhich includes most of the $150,000,000 of brokers'
loans above referred to. This total probably accounted for an increase in reserve bank credit of from fifty to sixty million dollars..
From the above figures I think it is fair to say that in the course
of the 12 months certainly not more than $50,000,000 of Federal
reserve bank credit found its way through various channels to the
DEAR DOCTOR SHAAV
13606—29—Fll 92 8
25
352
REPORT ON THE FINANCES
speculative markets, as compared with a total increase in Federal
reserve bank credit of $522,000,000. This large increase can not
be attributed, then, except in a minor degree, to speculation.
Before considering the policy of the Federal reserve system over
this period of time let us ascertain first what was the cause of the
increase in Federal reserve bank credit. I t is not far to seek. Between the middle of May, 1927, and the end of the last fiscal year
gold exports and gold earmarked amounted to about $580,000,000.
Changes in the stock of monetary gold are one of the fundamental
factors Avhich determine the volume of member bank indebtedness
at the Federal reserve banks. There are offsetting factors, such as
a decrease in currency needs, Avhich in this fiscal year declined by
$120,000,000. But in order to meet the demand for gold that was
made on them, the member banks were obliged either to increase
their borroAvings at the reserve banks or to reduce their own deposits,
which latter Avould have meant, generally speaking, a decrease of
their loans and investments by ten to fifteen times the amount
borrowed from the Federal reserA^e banks. As a matter of fact,
the member banks borroAved the equivalent of the gold exports from
the reserve banks and at the same time increased their own loans
and investments. I n the face of a heavy gold export, we have witnessed an increase in the volume of credit in excess of the requirements of trade and industry, and that, I think, is the real cause for
concern in the Avhole situation.
I n the meanwhile, once member banks are heavily in debt to the
Federal reserve banks, they feel more keenly the pressure of Federal
reserA^e rates. Increased discount rates, together Avith the traditional reluctance of American banks to remain in debt and the policy
of the Federal reserve banks to discourage continuous indebtedness,
tend to diminish the readiness of banks to lend freely to their customers. This, in turn, is reflected in the stiffening of interest rates,
such as we have witnessed.
And now let us turn to the policy of the Federal reserve system,
beginning Avith the summer of 1927. I n the summer and early fall
the Federal reserve system threw its influence in favor of easier
money conditions. As has been repeatedly pointed out, the principal reasons were: First, the European exchanges were weak, and
unless money rates Avere eased here there might be a movement of
funds to this country and a consequent necessity of raising rates
abroad, to the disadvantage of Avorld trade and prices, and particularly to the disaclA^antage of American agriculture; second, business in the United States was in a period of decline and it Avas
possible to foresee at that time the industrial unemployment which
in fact developed in the Avinter. I t Avas believed that easier money
might ameliorate those conditions. This is illustrated by the chart
on industrial production; and the price chart indicates that prices of
farm products made a sharp recovery in the late summer of .1927.
The policy was effective in just those particulars whi
@FedFRASER